(Adds quote from SolGold CEO)
By Clara Denina and Zandi Shabalala
LONDON, July 7 (Reuters) - Australia's Newcrest Mining Ltd
has hired investment bank RBC Capital Markets to
explore options for its 13.57% stake in gold and copper producer
SolGold, two sources said, after it contested SolGold's
latest fundraising initiative.
The Ecuador-focused company agreed in May a financing
package of up to $150 million and a $15 million bridge loan for
its Alpala project with streaming company Franco-Nevada
defying Newcrest, which had urged it to raise funds via equity.
Australia's biggest listed gold producer is seeking advice
on its options for the stake it holds in SolGold, but no
conclusion has been reached on whether to sell or buy more, two
sources close to the matter said on condition of anonymity.
Gold deals are worth nearly $40 billion since the
start of 2019, data from Refinitiv showed. The precious metal is
at its highest in around eight years.
Copper is also in demand for renewable energy and electric
vehicles and new deposits are rare and increasingly difficult to
recover.
Newcrest declined to comment on the bank mandate.
It said it had withdrawn its director Craig Jones from
Solgold's board because of "management's approach to funding the
company".
"The royalty transaction coupled with an expensive bridge
loan could lead to a transfer of significant risk to existing
SolGold shareholders," Newcrest told Reuters in an email.
Canada's RBC declined the comment.
"The funding ... to get to a development decision at Alpala
will be mainly done using the Franco royalty deal because it is
considerably less dilutive to all shareholders than deeply
discounted equity proposals mooted by Newcrest," SolGold Chief
Executive Nick Mather said in an email to Reuters.
SolGold needs to secure more than $2.5 billion to complete
its Alpala project, expected to start production of copper and
gold in 2025.
Newcrest was supplanted as SolGold's top shareholder when
BHP, the world's biggest miner, increased its stake to 15.31% in
2019. It is currently at 13.64% after a recent share placement.
BHP has a standstill agreement that runs out in October,
which prevents it from buying new shares in SolGold.
($1 = 1.4430 Australian dollars)
(Reporting by Clara Denina and Zandi Shabalala; editing by
Barbara Lewis and David Evans)
SolGold (SOLG)