The Frontier Pacific Mining Corp (FRP) - Eldorado Gold Corp (ELD) merger represents a unique situation in that the entire rationale behind ELD's unsolicited offer, and FRP's subsequent rejection, are base solely on a single gold mining project: Perama Hill (Greece).

The issues here are twofold and require an enormous amount blind speculation (for the lack of a better phrase) in order to assess this very complex situation. First, and most immediate, is the Greek government's current consideration of the required permits needed for Frontier to actually mine Perama Hill. This process involves the Greek House of Parliament, which is an entity this publication has never encountered and certainly has yet to find any precedent or viable information regarding mining permits. It can only tentatively be surmised that this is a fairly routine process for governments/regulators in mining permit situations, and that the company's assessment of the permit grants within the next few months is accurate. Again, this is highly tentative.

Second, is the issue of the actual value of the mine if/when FRP is able to exploit the Perama Hill Project successfully. As with any mining or natural resources venture, there is absolutely no guarantee that the mined property will result in the anticipated yields.

In this case, ELD is clearly convinced that Perama Hill will succeed and is using the permit delay as a opportunity to sway shareholders. Although this is technically a savvy move and a fairly adequate offer, it does not seem likely under the circumstances that FRP shareholders will have much enthusiasm for ELD's attempt at the current level.

At this point, it is therefore anticipated that ELD will need to increase its offer above the C1.00 level in order to convince FRP into entering serious negotiations. This is, again, a very tentative assessment and based on the assumption that the Perama Hill permits will be granted by the Greek government within the next three months.

Disclosure: We have no positions of any kind, in any security. We are a completely neutral source of research and analysis.

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