Qatar Holding has agreed to lend Toronto-listed European Goldfields $750 million to fund the development of its two Greek gold mines, the company has announced.
Once they are in operation, Goldfields will become Europe's biggest gold producer, with annual output of 350,000 ounces, Qatar Holding said in a statement.
As part of the arrangement, Qatar Holding will acquire 9.9% equity in the company from existing shareholders, with additional options and warrants to increase its equity holding in future to become a major shareholder.
The transaction reflects the outcome of an MoU between Qatar and Greece. The funding facility and related issuance of warrants will be subject to exclusivity, definitive documentation as well as regulatory and shareholder approval.
Subsequent to successful closing of this transaction, Qatar Holding will become a significant shareholder and key strategic partner of European Goldfields.
European Goldfields is a developer and producer of gold resources, with 10 million ounces of gold reserves located within the European Union.
Its existing resource portfolio includes an operating mine in Greece, as well as three significant deposits in Greece and Romania.
Taking into account all the reserves and deposits in place, European Goldfields has total estimated gold equivalent resources of 24 million ounces.
It is envisaged that this investment, together with other assets in the resources and commodities sector, will in future form part of the portfolio to be managed by Qatar Holding Gold & Resources LLC, a wholly-owned subsidiary of Qatar Holding.
Ahmad Mohamed Al-Sayed, the Managing Director and Chief Executive Officer of Qatar Holding, said: "Our latest investment helps to further diversify our investment portfolio in the commodities sector, with a specific position in gold resources and another long-term partner secured for the future. We see the transaction as one that will create significant value for all shareholders."
Martyn Konig, Executive Chairman and President of European Goldfields, added: "The funding facility from Qatar Holding represents not only a significant commitment to the company, but also to Greece. This transaction marks another very significant milestone on our path to becoming the largest gold producer in Europe."
"We are delighted to welcome Qatar Holding as a significant shareholder and key strategic partner of European Goldfields," he added.
