Eldorado and Sino Gold Announce Business Combination Conference Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Paul Burchell - Dundee Securities - Analyst : A couple of questions, Paul. First of all, just are there any lockup agreements in place, other than your own, obviously, with the existing Sino shareholders?

Question: Paul Burchell - Dundee Securities - Analyst : Okay. And I note that Sino's discretionary spending, G&A, exploration, are relatively small right now. I'm just wondering, though, what kind of synergies you might expect going forward with the new co.

Question: Paul Burchell - Dundee Securities - Analyst : Okay. And offices in Australia, I imagine those will probably be closed. without the prior written consent of Thomson Reuters. 'Thomson Reuters' and the Thomson Reuters logo are registered trademarks of Thomson Reuters and its affiliated companies. AUGUST 26, 2009 / 3:00PM, ELD.TO - Eldorado and Sino Gold Announce Business Combination Conference Call

Question: Paul Burchell - Dundee Securities - Analyst : Okay. And then finally, and I'll let other people in, you did not discuss the Beyinhar project, the fourth project that Sino brings in. Any update on

Question: Paul Burchell - Dundee Securities - Analyst : Okay. Fair enough. Thanks very much, Paul.

Question: Terence Ortslan - TSO and Associates - Analyst : Thanks. Could you talk about, please, the advisers on both sides, who they are, and the law firms at all?

Question: Terence Ortslan - TSO and Associates - Analyst : Okay. Thanks for that. In terms of share distribution, talk of other kind of synergies, Paul, with respect to (inaudible) Sino Gold shares are held versus yours, do you see any issue with respect to too many shares being concentrated in certain areas, thereby there could be some issues of getting the right rationalization of number of shares outstanding in certain places? without the prior written consent of Thomson Reuters. 'Thomson Reuters' and the Thomson Reuters logo are registered trademarks of Thomson Reuters and its affiliated companies. AUGUST 26, 2009 / 3:00PM, ELD.TO - Eldorado and Sino Gold Announce Business Combination Conference Call

Question: Terence Ortslan - TSO and Associates - Analyst : There are no shareholder base of Sino Gold -- there is in Europe and North America, aren't they?

Question: Terence Ortslan - TSO and Associates - Analyst : Okay, all right. That's all for the time being. Thanks, Paul.

Question: Kerry Smith - Haywood Securities - Analyst : I just had a couple of questions. Firstly, on this valuation that has to be done, this independent valuation of Sino Gold, have they appointed somebody to do that already?

Question: Kerry Smith - Haywood Securities - Analyst : Okay, but that presumably has to happen fairly quickly, because that has to be incorporated into the document. And as I remember in Australia, they actually generate some sort of an NPV or some sort of a calculation for that valuation. Is that right?

Question: Kerry Smith - Haywood Securities - Analyst : Okay, okay. And Paul, does this transaction require any approvals in China at all? without the prior written consent of Thomson Reuters. 'Thomson Reuters' and the Thomson Reuters logo are registered trademarks of Thomson Reuters and its affiliated companies. AUGUST 26, 2009 / 3:00PM, ELD.TO - Eldorado and Sino Gold Announce Business Combination Conference Call

Question: Kerry Smith - Haywood Securities - Analyst : Okay, so it is just the Foreign Investment Review Board in Australia and then the regulatory essentially is the --

Question: Kerry Smith - Haywood Securities - Analyst : Okay. And then just so I am clear, on the vote by Sino Gold, that 75% of the shares have to vote in favor of the transaction, right?

Question: Kerry Smith - Haywood Securities - Analyst : And is that -- oh, okay. So it's 75% of those voted, not --

Question: Kerry Smith - Haywood Securities - Analyst : Okay, of those voted. And it has to be at least 50% of the holders of those -- of the entire shareholder base. Is that right?

Question: Kerry Smith - Haywood Securities - Analyst : Okay, okay. And Paul, you talked a bit about sort of your strategy --

Question: Kerry Smith - Haywood Securities - Analyst : Yes, of course. Of course. And you talk about the strategy sort of China, the Aegean Region, let's call it, and then South America, which I guess technically is Brazil right now, which is where you are operating. Are there any provinces in China that you wouldn't want to be active in, that have issues that you wouldn't want to be involved in? Or is China pretty much an open book?

Question: Kerry Smith - Haywood Securities - Analyst : Okay. And can you just remind me who the partner is at Jinfeng? Because they have 82%, Sino. I'm just curious who the other 18% is owned by. Is it owned by sort of the local bureau or the local province?

Question: Kerry Smith - Haywood Securities - Analyst : Okay. And maybe Earl can answer this. Do you have any sense as to what the pro forma G&A and the pro forma exploration budget might be for the combined entity on a go-forward basis?

Question: Kerry Smith - Haywood Securities - Analyst : Okay. That's great. Thanks very much.

Question: David Haughton - BMO Capital Markets - Analyst : Good morning, Paul and the team. I have a question for you with regards to the top-up facility for Gold Fields. Can you just explain what the situation is with regards to the 19.8% stake that you recently acquired from them?

Question: David Haughton - BMO Capital Markets - Analyst : Just having a look at some of the documentation there, there was a provision that if an acquisition was to occur within the first six months, that it may not apply. So you are saying that it shall apply?

Question: David Haughton - BMO Capital Markets - Analyst : Okay. All right. And with regards to the due diligence that you are undertaking by the 14th of September, it is described as a confirmatory due diligence. Is this an in-depth analysis that could make or break the deal, or is this a little bit different to that?

Question: David Haughton - BMO Capital Markets - Analyst : Okay. And as far as the tenure of the assets go in China, they are -- there is no difficulty in change of ownership rules or anything like that that could trigger a hiccup in [tenure]?

Question: David Haughton - BMO Capital Markets - Analyst : Okay, the other area with regards to China is that Sino Gold has got a -- quite a remarkable process of being able to move their assets through development, and a lot of intellectual property in regards to exploration, together with operating in China. Is it your intention to keep as many of the executives within the Sino Gold team as possible? without the prior written consent of Thomson Reuters. 'Thomson Reuters' and the Thomson Reuters logo are registered trademarks of Thomson Reuters and its affiliated companies. AUGUST 26, 2009 / 3:00PM, ELD.TO - Eldorado and Sino Gold Announce Business Combination Conference Call

Question: David Haughton - BMO Capital Markets - Analyst : Okay. The only exception, I guess, to that would be [Jaiku] at this stage would just be providing a consulting service for an undetermined period of time.

Question: David Haughton - BMO Capital Markets - Analyst : All right. And do you envisage any synergistic savings as a result of your consolidated footprint within China, or should we just consider that we would have the same level of expenditure G&A-wise as the two separate entities?

Question: David Haughton - BMO Capital Markets - Analyst : Okay. And just following from Kerry's question -- I think it was Kerry's -- oh, it might have been Paul's -- as far as their asset pipeline goes, you feel comfortable with all of them, with the exception of the heap leach operation, that even in Sino Gold's evaluation, the grade was a little bit skinny from the oxide.

Question: David Haughton - BMO Capital Markets - Analyst : All right. Well, thank you very much, Paul.

Question: David Stein - Cormark Securities - Analyst : Most of my questions are answered, but I did want to get some details on Eastern Dragon, which looks like it is very low cost and looks really good. The 1.25 per house cost that Sino is, I guess, guiding to, I assume that includes silver byproducts, or is net of silver byproducts. And if so, how much silver per year would that mine be producing?

Question: David Stein - Cormark Securities - Analyst : Okay, all right. That is really all I have then. Thanks.

Question: Don MacLean - Paradigm Capital - Analyst : Good morning, guys. Maybe for those of us who are not quite as familiar with Sino Gold, Paul, can you sort of characterize -- you'd said your cash cost of 340 in 2009 and you expect to stay that way. But could you characterize the longer-term outlook for the three Sino assets that you were looking at? That is, maybe you could give us a bandwidth of where you would expect their long-term cash costs, total cash costs to be. Would it be 350 to 400 or 400 to 450 or 300 to 350?

Question: Don MacLean - Paradigm Capital - Analyst : Great. And just on page 12, the production outlook, is that on a consolidated basis or based on your percentage -- current percentage ownerships? The total production represented there? without the prior written consent of Thomson Reuters. 'Thomson Reuters' and the Thomson Reuters logo are registered trademarks of Thomson Reuters and its affiliated companies. AUGUST 26, 2009 / 3:00PM, ELD.TO - Eldorado and Sino Gold Announce Business Combination Conference Call Unidentified Company Representative That is 100%.

Question: Chris Mancini - GAMCO - Analyst : Do you know if the transaction was taxable to the Sino Gold shareholders, to a US-based Sino Gold shareholder?

Question: Chris Mancini - GAMCO - Analyst : Okay. But it's tax-free to Australian shareholders?

Question: Chris Mancini - GAMCO - Analyst : Okay, great. Thanks a lot.

Question: Dan Rollins - UBS Securities - Analyst : Good morning, just a quick question. Given your New York listing, is there any -- can you confirm if you will need to have or if a shareholder vote by Eldorado shareholders is needed or could be required?

Question: Dan Rollins - UBS Securities - Analyst : Okay, perfect. And just a really quick question. I guess when you are running the valuation on this, is there a certain gold price you used to evaluate it, or did you just sort of -- how did you come up with the valuation to --?

Question: Dan Rollins - UBS Securities - Analyst : Okay, perfect. Thanks a lot.

Question: Anita Soni - Credit Suisse - Analyst : Most of my questions have been answered. Just one remaining about the -- can you just walk me through how much shareholder approval is required? You said it is ex your 20%, or 19.9%. And that is -- really just deduct that from 50%, is that how it works?

Question: Anita Soni - Credit Suisse - Analyst : Okay, all right. Thank you.

Question: Kerry Smith - Haywood Securities - Analyst : Paul, the options in the warrants that are within Sino, are they going to be paid out, or are they actually going to get rolled over at the exchange ratio into options and warrants in Eldorado?

Question: Kerry Smith - Haywood Securities - Analyst : Okay, so they are going to be paid out then? Okay.

Question: Kerry Smith - Haywood Securities - Analyst : Okay. And then just on the Jinfeng operation, Paul, Jake has talked in the past about an expansion of Jinfeng. And I'm just wondering when you looked at it, is that something that you still -- that you think makes sense, that is something that should be done? And I can't remember what the CapEx was, but if you can just remind me what the CapEx was and the timing.

Question: Kerry Smith - Haywood Securities - Analyst : Okay. And just maybe sort of a more strategic question. If you look at the pro forma company, and say it is 850,000 ounces in 2011 or 2010, and a large proportion of that would be production coming from China, do you have a number strategically that the Board would be comfortable with saying that we would like our production out of China to be no more than 75% of our total production, or 50%, or whatever the number is?

Question: Kerry Smith - Haywood Securities - Analyst : Okay, that's great. Thanks very much.

Question: Robert Eisbruck - RBC - Analyst : You mentioned that you had a high level of confidence in the remaining due diligence. I'm just curious as to why you announced the deal prior to completing that due diligence.

Question: Robert Eisbruck - RBC - Analyst : Okay. And then second, you mentioned that there is going to be some valuation work being done. Is it possible that the exchange ratio could change based on that valuation?

Question: Robert Eisbruck - RBC - Analyst : Okay, thanks.

Question: David Christie - Scotia Capital - Analyst : Just a couple quick -- I didn't quite catch you. You said that you expect you are going to close in early December. Is that right?

Question: David Christie - Scotia Capital - Analyst : And when is the vote going to be, or the tendering date?

Question: David Christie - Scotia Capital - Analyst : Sorry. I know you said it; I just didn't quite catch it.

Question: David Christie - Scotia Capital - Analyst : Okay, that's great. And maybe just for Earl, there is a bit more debt than you guys are used to in the new company. What is the sort of plans there?

Question: David Christie - Scotia Capital - Analyst : Okay. What is the CapEx for the Eastern Dragon?

Question: David Christie - Scotia Capital - Analyst : So it's pretty tiny; you guys can handle that.

Question: David Christie - Scotia Capital - Analyst : Okay, good. And one more question on exploration. I think someone else was talking about it a bit. Just where do you see the most upside potential of the projects there -- that you have here? I'm sure you guys have something where you are dreaming a little higher than what is there. without the prior written consent of Thomson Reuters. 'Thomson Reuters' and the Thomson Reuters logo are registered trademarks of Thomson Reuters and its affiliated companies. AUGUST 26, 2009 / 3:00PM, ELD.TO - Eldorado and Sino Gold Announce Business Combination Conference Call

Question: David Christie - Scotia Capital - Analyst : So it is open down-dip and plunge?

Question: David Christie - Scotia Capital - Analyst : And (multiple speakers) what you get is what there is basically?

Question: David Christie - Scotia Capital - Analyst : Okay. Now your assets in (inaudible) are quite far apart really, right, so it doesn't really give you any synergies as far as management in China, does it?

Question: David Christie - Scotia Capital - Analyst : Okay. One final question. You said you didn't need any Chinese approvals, but have you talked to the Chinese government about the deal? Is there any discussion that has had to happen?

Question: David Christie - Scotia Capital - Analyst : Okay, great. Thanks a lot, Paul.

Question: Matt Lubman - Tiedemann & Company - Analyst : Hi. This is Matt Lubman. I actually had a question that was somewhat along the lines of a question that was just asked. I wanted to ask if there was any precedent for similar transactions for mining companies in China that have occurred, and whether or not they have required government approval in the past.

Question: Matt Lubman - Tiedemann & Company - Analyst : Right. I'm thinking in the mining sector in particular, actually. Because wouldn't there be relevant Chinese mining regulations that sometimes have questions about change of controls at the asset level?

Question: Matt Lubman - Tiedemann & Company - Analyst : Okay, very good. Thank you.