European Goldfields, which has agreed a C$2.5 billion ($2.4 billion) takeover by Canadian group Eldorado Gold, is hoping to keep an investment deal with Qatar's sovereign wealth fund as a fall back option.

Qatar Holdings agreed in October to provide a $600 million project financing loan to European Goldfields, which has development stage assets in Greece and Romania, in its first investment in a gold miner. It also provided a $150 million loan note and a related warrant issue, and became a major shareholder, with a 9.9 percent stake.

Eldorado's strong balance sheet means European Goldfields is unlikely to need the cash from Qatar if the takeover goes through -- but it does need two-thirds of shareholders to back the deal when they vote in February.

All we are doing with the Qatari financing is postponing or adjourning the vote technically, European Goldfields' chief financial officer Tim Morgan-Wynne told reporters on a conference call. We will just push the voting on the Qatari transaction until after shareholders have been able to vote on this (Eldorado deal).

He said chairman Martyn Konig had spoken to the Qataris, who were kept abreast of talks, and everything is moving on track.

Qatar declined to comment on the future of the financing package or on the takeover, which could see the Gulf state make a profit on its shares. It bought stock at an average of C$10 -- below the C$13.08 per share value of the Eldorado offer.

European Goldfields shareholders had been due to vote this week on the Qatar financing. That ballot will be postponed until shareholders vote in mid February on the proposed takeover.

Analysts said Eldorado's offer was broadly in line with multiples offered in the sector, though some said it failed to fully reflect the inherent value of European Goldfields' main assets, as they are not yet in production -- despite a nearly 50 percent premium to European Goldfields' closing share price on Dec. 5, the last trading day before it disclosed approaches.


European Goldfields has been seen as a potential target after it won a permit to run two goldmines in northern Greece that could turn it into a mid-tier miner and one of Europe's largest primary gold producers.

Earlier this month, the company said it had received preliminary approaches from third parties, but analysts said it was unclear there were other buyers waiting in the wings.

Whilst slightly on the low side versus our target price, given the friendly nature of the bid, the immediate share premium and the synergies with Eldorado we do not expect a bidding war to break out, despite there being plenty of valuation upside remaining, Numis Securities analyst Andy Davidson said.

Davidson said he had a long-term target price for European Goldfields, which currently only produces a small amount of zinc and lead from its Stratoni operation in Greece, above 1,200 pence once the gold projects were in production.

We did have a number of approaches and I could not really speculate on whether we are going to have people streaming over the hills with hostile competing offers at this point, Morgan-Wynne said.

The mining sector has yet to see a long-awaited M&A wave fuelled by tumbling valuations, but analysts have said they expect to see more deals from cash-rich miners buying out smaller companies who need cash to develop their resource base.

European Goldfields said it expected Greece, home to its flagship assets, to back the deal.

The key thing for the Greek government and the people of Greece is that these assets are brought into production. The scale of job creation and the spill-out benefits of getting these projects built ... is huge, Morgan-Wynne said.

The miner plans to invest about 1.3 billion euros in the Greek gold project which, in full operation, will employ about 1,800 people.

European Goldfields announced the takeover bid on Sunday and said it would back the offer. Eldorado has long been named as a suitor, largely because of the project overlap the two companies have in Greece and Turkey.

European Goldfields' London-listed shares were changing hands at 764 pence at 1330 GMT, valuing the company at around 1.4 billion pounds ($2.2 billion).