BHP becomes SolGold's largest shareholder
The world’s largest miner, BHP, is investing a further $22-million in London- and Toronto-listed SolGold, a move which the Ecuador-focused junior sees as an endorsement of its strategy to become a copper/gold major.
BHP acquired a further 77-million shares at 22.15p each - a premium of about 13% - in the company.
The major will also be issued 1:4 options, exercisable at 37p within five years.
The transaction makes BHP the largest shareholder in SolGold with 282 721 826 shares, or about 14.7% of SolGold’s diluted share capital, overtaking Australian gold miner Newcrest by a small margin.
“SolGold's view is that the agreement endorses its view of SolGold's commanding Ecuadorean copper and gold exploration footprint, and in particular the robust Alpala deposit,” commented SolGold CEO Nick Mather, welcoming BHP’s position.
The deal, at a premium to the market closing price of Friday and without the burden of market risk and capital raising fees, presents a strong opportunity for SolGold and its shareholders, he added.
SolGold, which owns 85% of the Cascabel project, in Ecuador, traded 12% stronger on Monday at 21.95p each by midday in London.
SolGold stated that it had invited BHP to provide secondees for the technical effort for the completion of feasibility studies at the Cascabel project and its regional exploration effort.
The involvement of BHP technical staff into the project may prompt Newcrest into making an offer for the business, analysts at London-based SP Angel said in a note to clients.
SolGold released its preliminary economic assessment (PEA) on the Alpala project in May 2019 and recently updated the PEA report to include wider metal price, capital expenditure and operational expenditure ranges. The revision indicated ranges in net present value from about $2.5-billion to about $6.1-billion.
SolGold is working on a prefeasibility study on Alpala for completion by the end the first quarter next year.
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