Eldorado Gold CEO George Burns answers questions during a news conference in Athens in 2017. Eldorado, which has mines in Quebec and Turkey, is close to starting production on a development asset in Greece.Petros Giannakouris/The Associated Press
Eldorado Gold Corp. ELD-T, a Vancouver-based company that owns multiple mines overseas, is buying Foran Mining Corp. FOM-T for $3.8-billion, adding the McIlvenna Bay copper and zinc development in Saskatchewan to its portfolio of gold assets.
Like many miners around the world, Eldorado is hunting for copper because the critical mineral is expected to be in heavy demand for decades. For this reason, McIlvenna Bay was recently referred to Canada’s new Major Projects Office, an initiative spearheaded by Prime Minister Mark Carney to fast-track regulatory approvals of large energy, mining and infrastructure investments deemed by Ottawa to be in the national interest.
McIlvenna Bay, however, is already permitted and construction was 85-per-cent complete as of the end of December, which speaks to the skepticism some critics have voiced about the MPO’s role with some of its early projects.
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Eldorado’s largest producing mines are in Quebec and Turkey, and it is close to starting production on a new development in Greece. By acquiring McIlvenna Bay, Eldorado is hoping investors will like that it is not only adding copper, which will comprise 15 per cent of the combined company’s revenue, but also growing with a young mine that will be in production for years.
“By bringing together two high-quality, fully financed development assets – Skouries in Greece and McIlvenna Bay in Saskatchewan, Canada – which are both on budget and on schedule to achieve commercial production in mid-2026, the combined company will offer a clear and compelling re-rate opportunity,” Eldorado’s management said in a news release. Reratings occur when investors award companies with higher premiums relative to their net asset values. In other words, the shares are “rated” higher.
If the deal is approved, it will cap off a remarkable five-year run for Foran. A new management team was put in place in late 2020, and the company has since permitted, financed and built most of its mine.
So far, though, investors are skeptical of the opportunity. Eldorado’s shares fell 8.5 per cent on the Toronto Stock Exchange, while the S&P/TSX Capped Gold Index was flat. Foran’s shares fell 5 per cent.
Under the deal terms, Foran shareholders will receive 0.1128 common shares of Eldorado and one cent in cash for each of their Foran shares. Because the acquisition is mostly paid for in shares, the purchase price has already shrunk because Eldorado’s stock price is dropping.
It is a volatile moment for precious metals miners. Gold companies have been on a tear of late, because the price of bullion has more than doubled since the start of 2024. Eldorado’s shares have tripled in price over the same period, sending its market value above $10-billion.
But in the past two weeks, precious metals prices have turned quite volatile, which may give Foran’s investors some concern. After peaking around US$5,600 an ounce late last week, the price of bullion plummeted 16 per cent in two days.
As for copper, its own price is on a major tear, now trading for around US$5.80 a pound, up about 35 per cent from a year ago. Yet until mid-December Foran’s share price had been mostly flat for almost three years.
Early Monday, analysts questioned the purpose of the acquisition. Eldorado is close to finishing construction of its new copper-gold project in Greece, and Foran is also close to completing its own mine construction. Both miners are primed to profit off their hard work over the past five years, and aren’t in need of financing from one another.
Asked about the acquisition reasoning on a conference call, Foran executive chair Dan Myerson reiterated the importance of being a bigger company. “We’ll rerate two brand-new copper-gold assets together. I think it’s just going to be tremendously powerful,” he said.
He also said it makes sense for Foran’s next phase. “Over the last five years, when we essentially started the company, our focus was to permit the mine, to finance the mine and to build the mine. Now we’ve done that, and we had to look at the next step for growth. And that’s how the match and marriage happened,” he said.
If shareholders approve the transaction, the combined miner will remain headquartered in Vancouver and will do business under the Eldorado Gold name. Mr. Myerson, who previously ran Glencore PLC’s zinc business in Canada, will join Eldorado’s board of directors.
Over the past five years, Foran has attracted a number of well-known backers, including Fairfax Financial and Ontario Teachers’ Pension Plan.
For overseeing the growth, Mr. Myerson was granted six million stock options in 2020 that could be exercised at 20 cents apiece by late 2025. He recently exercised the options for a total of $1.2-million, and this batch of shares alone is now worth $37-million.