European Goldfields said an investment deal with Qatar Holdings will enable it to fully finance projects in Greece at a time when its options were narrowing due to fiscal and economic uncertainty in the country.

The London-listed shares in European Goldfields jumped as much as 23 percent on Monday after Qatar's sovereign wealth fund agreed at the weekend to provide a $600 million seven-year loan to the miner in its first investment in the gold sector.

Something that has been hanging over us for a number of months has been the uncertainty and turbulent markets particularly in Greece, Chairman Martyn Konig told investors on Monday. Our financing solutions were gradually being squeezed more and more.

Unsecured loan notes with warrants for $150 million will also be offered to existing shareholders in European Goldfields .

The proceeds will fully finance the development of the Skouries and Olympias gold projects in Greece and the Certej project in Romania which the company hopes will transform it into a mid-tier gold producer with output of around 400,000 ounces a year by 2014.

This is a positive statement in our view as it significantly de-risks the project in this uncertain economic environment, Canaccord Genuity said on Monday.

M&A TARGET?

The miner's shares have come under increasing pressure in the last couple of weeks. The stock is down 41 percent in 2011, even though it has secured a key permit to develop the Skouries and Olympias projects and gold prices have risen about 17 percent.

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