Has BHP Billiton (BHP) identified a new gold/copper rush?
For a year or more, BHP has said that it is looking to copper and oil and gas for future expansion ideas – yesterday it popped with another idea – buying a stake in a small Brisbane-based miner with what appears to be a large and very promising gold/copper prospect in Ecuador in South America.
SolGold, which is listed on the Aim exchange in London (and not the ASX), released a statement last night revealing that BHP has approached the company on Saturday looking to buy a 10% stake, appoint a director, paying more for a controlling interest in the company’s flagship Cascabel project in northwestern Ecuador. The deal would see BHP outlaying $US30 million, or 22 US cents a share. SolGold had a market value of 229 million pounds.
Overnight, the shares jumped 20% to 20 pence, or 24.8 US cents, indicating the market thinks BHP will have to offer more to succeed. At 20p, the company had a market value of almost a quarter of a billion pounds.
SolGold directors rejected the approach, saying in the statement:
"The Board of SolGold (with Scott Caldwell abstaining due to his personal interest and that of Guyana Goldfields Inc. through participation in the US$33 million financing with Maxit and Newcrest), after examination of the BHP Proposal and consultation with its legal advisors, has determined the BHP Proposal is NOT in the best interests of SolGold and its shareholders and it is not a superior proposal in comparison to the previously announced US$33 million financing with Maxit and Newcrest for a number of reasons.”
From the anouncement it seems BHP has tried to gazump Newcrest and Maxit of Canada and bring a halt to that deal.
The deal also includes an offer by BHP to spend $US275 million to acquire 70% of the company that oversees SoldGold’s flagship Cascabel project in the Imbabura province of northwest Ecuador. The 70% stake would come out of SolGold’s 85% holding in Exploraciones Novomining S.A (ENSA), which owns the Cascabel project.
SolGold’s executive director, Nick Mather, said, "We are very pleased to see BHP join a growing list of international mining companies that are interested in investing in SolGold; however, the current US$33 million financing with Maxit and Newcrest is the preferred option at this time as it leaves us in control of this very exciting project at Cascabel.
"There is considerable upside in the additional 13 targets as well as the existing and growing Alpala deposit. We have developed the exploration models and strategies to an advanced level, we are well funded and we are intent on delivering and retaining that upside substantially, for all SolGold shareholders.”
SolGold has recently announced capital raisings involving Maxit Capital LP and Newcrest International Ltd, both undertaken at substantial premiums to previous raisings. The Newcrest deal would see it pay 8p a share for more than 135.8 million SolGold shares, giving it a 10% stake.
The cost will be $US10.8 million. SolGold shareholders will vote on this and the Maxit deal at a meeting on October 13 in Brisbane.
Once these raisings are completed, SolGold will have raised USD48 million in funding to continue the exploration and development of its flagship Cascabel Project. Also as a result of these raisings, Mr Scott Caldwell (CEO of TSX‐listed Guyana Goldfields Inc) joined the SolGold Board on 9 September 2016. Mr Caldwell is a mining engineer with over 30 years of experience building and operating gold and base metal mines worldwide, including USA, Canada, Russia, Zimbabwe, Chile and Indonesia.
Cascabel, the Company’s world class flagship copper‐gold porphyry project, is located in North West Ecuador in the northern section of the Andean Copper Belt. SolGold owns 85% of Exploraciones Novomining S.A. (“ENSA”) and approximately 11% of TSX‐V‐listed Cornerstone Capital Resources, which holds the remaining 15% of ENSA, the Ecuadorian registered company which holds 100% of the Cascabel concession.
"To date SolGold has completed geological mapping, 25km of soil sampling, 14km and an additional 9km Induced Polarisation and Magnetotelluric “Orion” surveys over the Alpala cluster and Aguinaga targets respectively. By June 2016, the Company had also completed approximately 23,700m of drilling and expended a total of approximately USD33m on the program, corporate costs and investments into Cornerstone. Intense diamond drilling is planned for the next 12 months with multiple drill rigs,” SolGold said in the statement.
To date, SolGold has drill tested only one of the 14 targets, being Alpala and the company says it is planning a resource statement for Alpala later in 2016..
SolGold says that after "a comprehensive review of the geology and prospectivity of Ecuador, SolGold and its subsidiaries have also applied for additional exploration licences in Ecuador over a number of additional promising porphyry copper gold targets elsewhere in the Country.”
"In Queensland, Australia the Company is evaluating the future exploration plans for the Mt Perry, Rannes and Normanby projects. Joint venture agreements are being investigated for a joint venture partner to commit funds and carry out exploration to earn an interest in the tenements.
"SolGold retains interests in its original theatre of operations, the Solomon Islands in the South West Pacific, where the 100% owned, as yet undrilled, Kuma prospect exhibits surface geological characteristics which are traditionally indicative of a large metal rich copper gold intrusive porphyry system.
"SolGold intends in the future to apply intellectual property and experience developed in Ecuador to target additional world class copper gold porphyries at Kuma and other targets in Ecuador and Argentina, the company said.
