Friday, December 4, 2009

Eldorado-Sino Gold Merger Update

EGO is moving forward with its acquisition of Sino Gold. Sino shareholders approved the takeover on Thursday, 12/2 with almost unanimous consent. This deal creates a premier intermediate gold producerin China and Turkey with current production of 550,000 ounces/year from 4 different mines. Expected production growth by 2013 of beyond 1 million ounces. The transaction will increase EGO's share count from about 400 million shares to 535 million, which will increase its market cap almost 50%. Proven and probable reserves will go from 7,561 (000 oz Au) to 12,668 and revenue is expected to go from $518 million to $760 million.

This deal just increases the size and growth potential of EGO without having any adverse or beneficial effect on immediate EPS.

Gold got crushed today (12/4), down to $1,150 an ounce and EGO's price went down 3.45% to $13.43 with it. We're still positive on EGO and I am confident in owning it. If gold hits a temporary road block, UASBIG would have an opportunity to turn our EGO position into a full one at a much cheaper price.

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