BHP Billiton Ltd. [BHP-NYSE, BHPLF-OTC] has agreed to invest a further US$22 million in SolGold Plc [SOLG-TSX, LSE], a copper-gold exploration and development company with assets in Ecuador, Solomon Islands and Australia.
Under the deal, BHP has agreed to acquire 77 million SolGold shares at 22.15 pence per share. It will also be issued 1:4 options (19.25 million) exercisable at 37 pence within five years.
As a result, BHP will become SolGold’s largest shareholder by a small margin with 282.7 million shares or approximately 14.7% of the company’s share capital. That’s up from about 11% previously. Solgold said it views the BHP support as an endorsement of the SolGold strategy to become a copper-gold-producing major.
News of the transaction comes after SolGold recently released a Preliminary Economic Assessment for the Alpala copper-silver-gold deposit on its 85%-owned Cascabel Project in northern Ecuador.
According to the PEA, the project can produce an average of 207,000 tonnes of copper, 438,000 ounces of gold and 1.4 million ounces of silver in concentrates per year over the first 25 years of operations.
Pre-production capital expenditures are forecast at approximately US$2.4-US$2.8 billion. The PEA also foresees total capital expenditures, including a life-of-mine sustaining Capex of US$10.1-US$10.5 billion, depending on the production scenario.
The company said a Pre-Feasibility Study is expected to be completed in December 2019, with a definitive Feasibility Study scheduled for completion at the end of 2020.
SolGold CEO Nicholas Mather said he is pleased to welcome BHP’s increased interest in the company.
“SolGold’s view is that the agreement endorses its view of Solgold’s commanding Ecuadorian copper and gold exploration footprint, and in particular the robust Alpala deposit,” he said.
SolGold shares eased 1.23% or $0.005 to 40 cents on Monday November 25. They trade in a 52-week range of 27.5 cents and 76 cents. Australia’s Newcrest Mining Ltd. [NCM-ASX] was previously SolGold’s biggest investor.
SolGold recently said drilling at its Cascabel copper-gold project in the country’s high north has revealed previously unknown mineralization, further increasing the potential size of one of the biggest copper discoveries in recent years.
The Cascabel Project is a porphyry copper-gold deposit located in the Imbabura province of northwestern Ecuador, which lies within the under-explored northern section of the richly endowed Andean Copper Belt.
The tenement is situated on the margin of the Eocene and Miocene metallogenic belts which are renowned for hosting some of the world’s largest porphyry copper and gold deposits, like the giant La Escondida Copper Mine in Chile, which is the world’s largest producer of copper and hosted within the same age host rocks as Cascabel.
To date, exploration activity has identified 15 potential porphyry centres at Cascabel, at Alpala Central, Alpala Northwest, Alpala Southeast, Hematite Hill, Alpala East, Alpala West, Alpala South, Moran, Trivinio, Carmen, Cristal, Aguinaga, Tandayama-America, and Parambas.
Back in January, 2019, SolGold released a NI 43-101 compliant technical report containing an updated resource estimate for the Alpala deposit.
According to the technical report, the Alpala mineral resource now stands at 2.0 billion tonnes grading 0.60% copper equivalent (at 0.2% copper equivalent cut-off) in the indicated category, and 900 million tonnes of 0.35% copper equivalent (at 0.2% copper equivalent cut-off) in the inferred category.
The contained metal content stands at 8.4 million tonnes of copper and 19.4 million ounces of gold in the indicated category and 2.5 million tonnes of copper and 3.8 million ounces of gold in the inferred category.