The miner is seeking as much as $1.5 billion for its four Chinese projects, the people said, asking not to be identified as the matter is private. The assets have drawn interest from companies including China National Gold Group Corp., the nation’s biggest producer of the commodity, as well as Zhaojin Mining Industry Co., Zijin Mining Group Co. and Jiangxi Copper Co., they said.
Eldorado, based in Vancouver, said Oct. 30 it hired Bank of America Corp. to lead a proposed Hong Kong initial public offering of the Chinese business. The company, which also has operations in Turkey, Greece and Brazil, has three operating mines in China that produce about 300,000 ounces of gold a year.
Exploring both a sale and an IPO, known as a dual-track process, can help propel a deal by pressuring buyers to act before a stock offering puts the company in public investors’ hands. Krista Muhr, a spokeswoman for Eldorado in Vancouver, declined to comment. Representatives for the four potential bidders didn’t answer phone calls seeking comment.
A price of $1.5 billion would be “very attractive” for the Chinese assets, said Steven Green and Daryl Young, analysts at TD Securities Inc. A sale or IPO would allow Eldorado to concentrate on its European operations, they said today in a note.
Eldorado plans to seek about $250 million from an initial public offering of the business if the listing plans move forward, a person familiar with the matter said. It aims to submit an application to Hong Kong’s stock exchange next year, according to the person.
Shares of Eldorado rose 2.2 percent to C$5.96 at 2:21 p.m. in Toronto. They have fallen 15 percent in the past 12 months, compared with a 24 percent decline in the Standard & Poor’s/TSX Global Gold Sector Index. Gold futures fell to as low as $1,137.10 an ounce, a four-year low.
The company’s assets in China include the Tanjianshan open pit mine, located in northwestern China’s Qinghai province, and the White Mountain underground mine in Jilin province close to the border with North Korea, according to its website.
In February, Chinese private equity firm CDH Investments Fund Management Co. agreed to spend $40 million for a 20 percent stake in Eldorado’s Eastern Dragon project, situated near the Russian border. Eldorado aims to resume construction at the mine next summer after it receives approvals from the Chinese government, Chief Executive Officer Paul Wright said on an Oct. 31 conference call with analysts.
Copyright 2014 Bloomberg. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.