Qatar Holding had committed to lend Toronto-listed European Goldfields US$750 million to fund the development of its two Greek gold mines. Once they are in operation, Goldfields will become Europe's biggest gold producer, with annual output of 350,000 ounces, the company said Monday. Qatar Holding will lend Goldfields $600 million over seven years, at an interest rate of 7 percent over six-month Libor (London Interbank Offered Rate), secured against Goldfields' Greek assets, plus an additional $150-million unsecured loan. In return, Qatar will receive options to buy 15 percent of Goldfields at $9.08 (Canadian) a share. The two Goldfields' mines in Greece are expected to reach full production in 2015 and generate about 1,500 jobs. The company is also active in Romania, where rival Toronto-listed mining company Gabriel Resources has been struggling for more than a decade to develop its vast Rosia Montana project in Transylvania. The project has been fought every step of the way by heritage and environmental groups. Goldfields' has gold reserves of 10 million ounces in the European Union. Its Stratoni lead-zinc-silver mine in Greece is in production. Qatar Holding already owns a 9.9 percent stake in Goldfields and has share options for another 5 percent. If Qatar exercises all its options, it would own 30 percent of the company, making it the largest shareholder. The company was having trouble financing its gold projects because of the plunging mining market and the Greek debt crisis. In a statement, Martyn Konig, executive chairman and president, said: "These transactions deliver a definitive solution to a number of key issues overhanging the company: We have secured debt financing which, in terms of both size and coupon, is otherwise unavailable in today's challenging market conditions, thereby delivering a complete financing solution to our projects." Greek prime minister George Papandreou pumped up the Qatari investment as evidence that Greece, in spite of its deepening recession as the austerity programs kick in, is not a lost cause. "We have built a very strong bond of mutual respect, and we Greeks are especially pleased that this bond leads to investments in our country," he said after a meeting with Ahmad Al-Sayad, CEO of Qatar Holding. Last year, Qatar Holding and Greece signed a memorandum of understanding. Their goal is to identify billions of euros of investment opportunities in the country. Qatar Holding owns Harrods department store in London. Its parent, Qatar Investment Authority, Qatar's sovereign wealth fund, has been an aggressive buyer of high-profile foreign assets in recent years. Among the investments in its portfolio are Volkswagen, Fisker Automotive, London Stock Exchange, Miramax Films and French soccer team Paris Saint
