Eldorado Gold Corporation

Eldorado Gold Corporation

July 11, 2005 08:30 ET

AFCAN and Eldorado Sign Definitive Agreement

TORONTO, ONTARIO AND VANCOUVER, BRITISH COLUMBIA--(CCNMatthews - July 11, 2005) - AFCAN Mining Corporation (TSX:AFK) ("Afcan, the "Company" or "we") and Eldorado Gold Corporation (TSX:ELD) (AMEX:EGO) ("Eldorado") are pleased to announce the satisfactory completion of due diligence in connection with Eldorado's acquisition of all of the issued and outstanding shares of Afcan, which was previously announced on May 31, 2005. A special committee of independent directors of Afcan recommended that Afcan's Board of Directors approve the transaction. The Board of Directors of each company have unanimously approved the acquisition and the companies have signed a definitive agreement (the "Agreement") dated July 8, 2005 governing the acquisition.

A Special Meeting of the Afcan shareholders and warrant holders is scheduled to be held September 8, 2005. The transaction is expected to close on September 16, 2005 and remains subject to the approval of Afcan shareholders and warrant holders, court approval and regulatory approval.

Under the terms of the Agreement, Afcan shareholders will receive one common share of Eldorado for every six and one-half (6.5) common shares of Afcan. Based on the 30-day volume weighted average trading price for Eldorado common shares on the Toronto Stock Exchange as of May 30, 2005 of Cdn$2.88, the transaction values each Afcan share at Cdn$0.44, a premium of 25% to Afcan shareholders based on Afcan's 30-day volume weighted average trading price. Eldorado will issue approximately 20.4 million common shares under the transaction such that at closing it will have approximately 296.9 million common shares outstanding. In addition, Eldorado will issue one Eldorado warrant for every 6.5 outstanding Afcan warrants. Each Eldorado warrant will have an exercise price equal to 6.5 times the exercise price of the Afcan warrant in respect of which such Eldorado warrant was exchanged and will have a term to expiry which is the same as such Afcan Warrant. All other terms and conditions of the Eldorado warrants will be substantially similar to those of the Afcan warrants.

The Agreement also provides that the Company will make a credit facility available to Afcan in the amount of US$15 million. Loans under the facility shall bear interest at a rate equal to LIBOR plus 3% per annum. Proceeds of the credit facility will be used primarily to fund the Tanjianshan Gold Project in Qinghai Province in Western China (the "Tanjianshan Project") and the Company's obligations relating to the acquisition of the Tanjianshan Project. The Board of Directors of each company has approved and executed a term sheet relating to the credit facility, and, pursuant to the term sheet, Eldorado and Afcan will enter into a definitive loan agreement over the next few weeks. The credit facility is subject to early termination if the acquisition transaction does not close as contemplated.

Afcan is an emerging gold developer that owns an 85% interest in the Tanjianshan Gold Project in Qinghai Province in Western China. The transaction will join Eldorado's development, operations and financial strength with Afcan's high quality Tanjianshan development and exploration project to create one of the leading foreign gold developers in China.

The President and CEO of Afcan, David G. Netherway stated, "The market has shown that this merger is a very good deal for both companies. The loan agreement allows construction to continue on schedule and budget. Meanwhile, exploration drilling at both the deposits has commenced."

AFCAN is an emerging gold producer in China and owns 85% of the TJS Project at Tanjianshan in Qinghai Province. Construction has commenced on the 150,000 ounce/year project which should be in production by 3rd quarter, 2006. There are 23 additional anomalies on the 341 km2 licence currently under investigation.

On behalf of

AFCAN Mining Corporation

David G Netherway

President and Chief Executive Officer

Certain of the statements made in this release are forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, which involve known and unknown risk, uncertainties and other factors which may cause the actual results, performance or achievements of the Company, or industry results, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Forward-looking statements in this release include statements regarding the anticipated benefits of the proposed business combination, estimates relating to mineral reserves, future gold production and mine life, and other statements regarding future events on the Company's or Afcan's properties, or otherwise relating to the Company or Afcan. Forward-looking statements are subject to a variety of risks and uncertainties including but not limited to gold price volatility; impact of any hedging activities, including margin limits and margin calls; discrepancies between actual and estimated production, between actual and estimated reserves, and between actual and estimated metallurgical recoveries; mining operational risk; regulatory restrictions, including environmental regulatory restrictions and liability; risks of sovereign investment; speculative nature of gold exploration; dilution; competition; loss of key employees; additional funding requirements; and defective title to mineral claims or property, as well as those factors discussed in the section entitled "Business - Risk Factors" in the Company's Annual Information Form, Form 40F dated March 30 ,2005 for the fiscal year ended December 31, 2005. We do not expect to update forward-looking statements continually as conditions change and you are referred to the full discussion of the Company's business contained in the Company's reports filed with the securities regulatory authorities in Canada and the U.S.

The securities described herein have not been and will not be registered under the United States Securities Act of 1933, as amended, and may not be offered or sold in the United States or to, or for the account or benefit of, U.S. persons absent registration or an applicable exemption from registration requirements.

Note to U.S. Investors. While the terms "mineral resource", "measured mineral resource," "indicated mineral resource", and "inferred mineral resource" are recognized and required by Canadian regulations, they are not defined terms under standards in the United States and normally are not permitted to be used in reports and registration statements filed with the SEC. As such, information contained in this report concerning descriptions of mineralization and resources under Canadian standards may not be comparable to similar information made public by U.S companies in SEC filings. With respect to "indicated mineral resource" and "inferred mineral resource" there is a great amount of uncertainty as to their existence and a great uncertainty as to their economic and legal feasibility. It can not be assumed that all or any part of an "indicated mineral resource" or "inferred mineral resource" will ever be upgraded to a higher category. Investors are cautioned not to assume that any part or all of mineral deposits in these categories will ever be converted into reserves.

Afcan Mining Corporation's shares trade on the Toronto Stock Exchange (TSX:AFK). Eldorado Gold Corporation's shares trade on the Toronto Stock Exchange (TSX:ELD) and the American Stock Exchange (AMEX:EGO). The TSX has neither approved nor disapproved the form or content of this release.

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