Eldorado Gold Corp (TSX: ELD) plans to sell a minority stake in its stalled Eastern Dragon project to Chinese private equity firm CDH Investments, the Canadian miner said on Monday.
CDH will acquire 20 percent of the gold mine in the northern Chinese province of Heilongjiang for US$40 million in cash.
Eldorado said it expected CDH to help complete the development of Eastern Dragon.
The mine was nearly finished in 2011 when a key permit was delayed, and construction is now on hold. Eldorado took a US$524.9 million charge on the carrying value of the project in the fourth quarter.
Private equity funds, which traditionally have only been niche players in mining, have raised billions in the last two years for funds focused on the sector.
Some expect private equity to play a much bigger role in the industry in the future. A tough market has many miners looking to sell assets or bring in new investors, and buyers are scarce.
Shares of Eldorado slipped 0.8 percent to C$7.90 in early trading on the Toronto Stock Exchange.
Based in Vancouver, Eldorado is low-cost gold producer with over 20 years of experience building and operating gold mines in Europe, Asia and South America.
Located in China’s Heilongjiang province, Eastern Dragon has gold reserves of 764,000 ounces, measured and indicated gold resources of 852,000 ounces, and an inferred gold resource of 190,000 ounces.
(This story has been edited by Kirk Falconer, Editor, peHUB Canada)
Photo courtesy of Shutterstock