Eldorado slumps on news of C$590mln Integra acquisition

Shares in Eldorado Gold Corp (NYSE:EGO) slumped on Monday after the low-cost gold producer agreed to snap up the 83% of Integra Gold Corp (CVE:ICG) it doesn’t already own.

Eldorado said the acquisition – worth around C$590mln – would expand its mining opportunities in the Eastern Abitibi region of Canada.

“From previous experience of building and operating gold mines in Canada, I am excited about Eldorado’s entry into the Eastern Abitibi region of Canada,” said Eldorado chief executive George Burns in a statement.

Integra shareholders can choose to receive cash, shares or a mix of both as part of the deal. If they opt for cash, they’ll receive C$1.2125 – a 50% premium to Friday’s closing price.

If they choose to be paid in stock, they’ll receive 0.2425 Eldorado shares while if they go for the mix option they’ll get 0.18188 of an Eldorado share plus C$0.30313 in cash.

Once the deal goes through, it is expected that existing Eldorado shareholders will hold 90% of the combined company, with ex-Integra investors holding the remaining 10%.

The acquisition comes at something of a juncture for Eldorado and its investors.

The company recently put plans to expand its flagship Kisladag mine in Turkey on hold, while it also put off a development decision on a project over in Brazil as it cited the lower gold price.

Last year the company also ended its 11 years of operations in China after is sold off its two mines and a development project for US$600mln in cash.

Eldorado shares shed 7.5% to trade at US$3.38 in early deals on Monday while, predictably, the Integra stock price surged 40% higher to C$1.12.

Story by ProactiveInvestors