LEXPERT MAGAZINE
|
MARCH 2017 11
Vancouver-based Eldorado Gold Corp.,
a global low-cost gold producer, currently
has mines in Greece, Turkey, Romania,
Serbia, Brazil — and until recently China.
With more than 7,000 employees around
the world, it first entered China in 2005.
Just a decade later, however, Eldorado
wanted out.
In 2014, the company revealed it was
looking for ways to increase the market
value of the three Chinese mines it had
acquired in China over the years. In 2009,
the company bought Australia's Sino Gold
Mining's assets in China for US$1.84 bil-
lion. e deal included the Jinfeng gold
mine in Guizhou province, the White
Mountain mine in Jilin province, and the
Eastern Dragon development project in
Heilongjiang province.
en, just five years later, in November
2014, Eldorado President and Chief Ex-
ecutive Officer Paul Wright announced
that Eldorado wanted to monetize those
Chinese assets so that it would have more
financial flexibility and could put the pro-
ceeds towards its internal project pipelines
in other countries.
Eldorado explored selling assets as well
as listing its Chinese assets in Hong Kong
in an initial public offering — a so-called
"dual-track" process designed to propel po-
tential buyers to act before the stock offer-
ing puts the assets in public hands. It said
it was seeking about US$1.5 billion for its
Chinese mines. And then it waited.
Finally, on April 26, 2016, Eldorado an-
nounced the sale of its 82-per-cent interest
in its Jinfeng mine to China National Gold
Group for US$300 million cash. And
then, less than three weeks later, on May
16, Yintai Resources Co. Ltd., putting up
the equivalent of a US$30-million reverse
break fee, agreed to buy Eldorado's stakes
in White Mountain, Tanjianshan and
Eastern Dragon for US$600 million.
Late in the negotiations, Blake, Cassels
& Graydon LLP was brought in to help
Yintai seal the deal, which closed Novem-
ber 22. Michael Laffin, chair of Blakes Asia
region initiative, and Zaichi Hu, a Blakes
Vancouver partner with extensive experi-
ence in China, tell the tale of the firm's role
in the acquisition.
LEXPERT: Blakes has had an office in Bei-
jing since 1988. Eldorado Resources had
been the biggest foreign mining company
in China when it decided to sell these last
remaining assets there. How did Blake,
Cassels & Graydon come to be involved
with Yintai? Was there a prior relationship
from your firm's years in Beijing?
Michael Laffin (Blake, Cassels & Gray-
don LLP, for Eldorado): We were retained
through the recommendation of the finan-
cial advisor to Yintai.
LEXPERT: Blakes was ranked the No. 1
Canadian firm in China by deal count in
2016. Beyond those credentials, were there
The Pullout Puzzle
other reasons you were recommended for
the Yintai gig?
Zaichi Hu (Blakes, for Eldorado): e Ca-
nadian financial advisor and Blakes had
worked together on other deals, so we
knew each other well. Behind the rank-
ings, we are well-known in the China mar-
ket for our solid China deal experience, bi-
lingual China practice team and presence
in China through our Beijing office, so we
were a natural choice for Yintai.
LEXPERT: Once Blakes was brought in,
Mike, what were you seeking skills-wise for
the Blakes people you put on your team?
Laffin: Yintai needed support of Cana-
dian counsel in negotiating the Canada
law-governed transaction document, clos-
ing the transaction and communicating
with Chinese counsel responsible for due
diligence and Chinese regulatory issues.
We assembled a team with extensive ex-
perience acting for Chinese companies on
M&A transactions, and knowledge of the
Chinese regulatory environment.
LEXPERT: Zaichi, you were a former part-
ner for six years at a big Chinese law firm
in Beijing. Now you're with Blakes in Van-
couver. With your fluency in Mandarin
and 20 years of experience counseling mul-
tinationals with interests in China, that
had to be more than handy in an asset sale
like this.
Hu: Coincidentally, the lead Chinese coun-
sel to Yintai was my former partner at a
major Chinese law firm, so that was help-
ful in communicating the needs of Yintai
and discussing due diligence and Chinese
regulatory issues.
LEXPERT: ere were a lot of firms involved
in this deal from a number of countries —
China, Canada, Australia, Hong Kong.
Besides the obvious language barrier, what
Eldorado Gold first entered China in 2005. Just a decade later, the company wanted out
INTERVIEW BY ANTHONY DAVIS
Michael Laffin
Blake, Cassels
& Graydon
LLP (for Yintai
Resources)
Zaichi Hu
Blake, Cassels
& Graydon LLP (For
Yintai Resources)
ON THE DEAL
