BHP is set to become SolGold’s largest shareholder after securing an agreement to invest a further $US22 million ($32.5 million) in the company.
Under the agreement, BHP will subscribe for 77 million SolGold shares for an aggregate subscription price of just over £17 million.
This investment will increase BHP’s interest in SolGold from 11.1 per cent to 14.7 per cent, inching it ahead of Newcrest Mining as SolGold’s largest shareholder.
SolGold is the majority owner and operator of the Cascabel porphyry copper-gold project in Ecuador, so with BHP’s support it will fund further exploration in Cascabel’s Alpala deposit.
The company is working on a pre-feasibility study for the Alpala deposit, which should be completed by the end of the first quarter of 2020.
SolGold chief executive officer Nicholas Mather said the company viewed BHP’s support as an endorsement on its strategy to become a copper gold producing major.
“SolGold is pleased to welcome BHP into a further position in the company,” Mather said. “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.”
BHP has agreed to pay 22.15 pence per SolGold share, representing a 9.3 per cent premium to the 20-day volume-weighted average London Stock Exchange price of 20.26 pence.
Under the subscription terms, BHP will also receive options over 19.25 million SolGold shares, which will be exercisable until November 25 2024, at a price of 37 pence per share.
It has also agreed not to discuss or collude with other shareholders about a change of control or acquisition of additional shares in SolGold for two years without SolGold’s consent.
In October 2018, BHP lifted its interest in SolGold from 6 per cent to 11.2 per cent, when it invested £43 million in the company, paying 45 pence per SolGold share.