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Despite a downward trend, investors remain eager to give money to miners. Skouries, March 2023, GreeceHandout

Mining continues to prop up Canada’s otherwise moribund equity financing market, with Eldorado Gold Corp. ELD-T the latest to throw Bay Street a bone.

Vancouver-based Eldorado tapped BMO Capital Markets and National Bank Financial last week to lead a bought deal share offering worth between $135-million and $155-million, depending on whether an over-allotment option is exercised. The deal comes amid a dearth of stock sales, as many public companies remain paralyzed by a combination of economic uncertainty and market volatility.

“It is a challenging market still to get deals done,” Eldorado chief executive George Burns said in an interview. “We are fortunate that ours closed and we got the funding.”

The total value of new stock issues in Canada in the first quarter fell 36 per cent year-over-year to $2.6-billion from $4.1-billion, according to financial data service Refinitiv. Compared with the most recent 10-year first-quarter average of $10.6-billion, the start of this year was down an even more precipitous 75 per cent.

Despite the downward trend, investors have remained eager to give money to miners. More than two-thirds of stock sales in the first quarter – 84 of 121 deals – were done by mining companies, and Mr. Burns said several banks tried to get a piece of Eldorado’s deal.

BMO and National Bank “were pretty bullish, but they weren’t alone,” he said. “We had other banks pitching that they could get a bought deal done if we wanted to go in that direction, [and] we felt comfortable that multiple banks believed the market would be there for us.”

Eldorado went with BMO and National Bank because both were members of the syndicate behind the company’s untapped revolving credit facility, Mr. Burns said.

BMO declined to comment on its role in the deal, which is set to close on June 7. Part of what made Eldorado’s latest financing unique, however, was that it came on the heels of the company announcing a strategic investment from the European Bank for Reconstruction and Development (EBRD) worth $81.5-million.

The EBRD deal – a private placement that sees the bank acquire roughly 3.4 per cent of the company at its current $13 share price – was almost three years in the making, Mr. Burns said. While the proceeds from the bought deal are destined for various purposes, the EBRD money is earmarked for Eldorado’s controversial Skouries gold and copper mine in northern Greece.

“The first step was getting EBRD,” Mr. Burns said. “Once we had that in line, we stepped back and said: If we were going to do anything else, now is the time to do it, and decided to do the bought deal at the same time.”

At a cost of US$845-million and projected average annual production of 140,000 ounces of gold and 67 million pounds of copper, Skouries is expected to be Eldorado’s primary growth driver once it begins production in 2025. But it has taken a very long time to reach this point; Eldorado first acquired the rights to the project in 2013.

Over the past decade, Skouries has faced intense local opposition. It is located in one of the oldest forests in Greece. Clashes between workers and protesters in 2015 resulted in several injuries, and the company halted development from 2017 through 2021 as resistance grew to the point that it became a subject of academic research.

“A fruitful social struggle has emerged against this project, both in the rural site and in the urban Greek metropolis,” reads an excerpt of a study published in a 2017 edition of the journal City.

Natalia Lacorzana, head of natural resources at the EBRD, said in a statement that the plan is for the EBRD to “play an important role in ensuring that the Skouries project is developed and operated in line with best environmental and social practices, in particular in relation to stakeholder engagement.”

The EBRD is “a very credible party when it comes to ESG issues and community relations,” Mr. Burns said.

As a result, Eldorado was able to bolster investor confidence in the bought deal.

“For us, it provided somewhat independent credibility,” he said.

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