Sino Gold Mining Ltd will make an announcement on a potential takeover transaction, it said on Wednesday, amid market talk that Canada's Eldorado Gold Corp could be a bidder.

Eldorado bought a 19.9 percent stake in Sino Gold, which operates China's second-biggest gold mine, from South Africa's Gold Fields in June, and there has been talk Eldorado could launch a full takeover.

The big speculation is obviously that the biggest shareholder is looking to push its stake up, said Chris Weston, institutional dealer with IG Markets.

It looks pretty logical that Eldorado could get involved.

Under Australian laws, a company acquiring 20 percent stake in another is required to make a full takeover bid.

Sino Gold, which has a market value has about A$1.7 billion ($1.5 billion), said in a statement there was no certainty a transaction would proceed.

It also reported an 11 percent rise in first-half underlying profit to A$22.2 million and said it aims to double its gold production by 2012 to more than 400,000 ounces.

It said in August that it plans to double gold production by 2012.

($1=A$1.19) (Reporting by Denny Thomas;)