The deal would create a company with a market capitalisation of about C$11bn ($10.59bn).

The company’s shareholders will be offered 0.85 Eldorado share and C$0.0001 in cash for each European Goldfields share they own.

Current Eldorado shareholders will own about 78% of the combined company while shareholders of European Goldfields will hold around 22% on a fully diluted basis, upon completion of the deal.

The firm expects to increase annual production to reach more than 1.5 million ounces of gold by 2015 and said it plans to produce 650,000 ounces of gold by the end of this year, reports Reuters.

Canada-based European Goldfields has gold reserves of ten million ounces within the European Union.

Eldorado is a gold producer and developer with operations in Brazil, China, Greece, and Turkey and its surrounding regions.