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Once BHP and Newcrest take control, they are expected to buy out 50% of the royalty option awarded to Franco Nevada by former boss Nick Mather. They cannot acquire the remaining 50% under the terms of the royalty deal announced in September 2020.

The accord with Franco Nevada was derided at the time by the two majors as royalty deals involve surrendering a portion of future profits in exchange for development capital. Newcrest said it would have been better to have gone for an equity raise. The issue spilt into a period of infighting that was resolved when Mather stood down and Cuzzubbo took over.

For BHP, acquiring a much larger stake in SolGold makes sense. Despite talk of a mega-merger before too long, BHP is understood to be reluctant to buy at the top of the market and before its oil merger with Woodside is completed in the next few months. In the absence of immediate, big bang M&A action, Henry is likely to continue to seek out advanced exploration assets, and SolGold fits the bill. He views it as a relative rarity: there aren't many large-scale undeveloped copper assets up for grabs, from one side of the world to the other.
Henry knows he must diversify away from iron ore (about 60% of earnings) so he needs to get bigger in copper and nickel, and successfully add potash to the portfolio through the development of the Jansen project in Canada.

Ecuador has opened its doors to foreign miners in recent years in a bid to cut its reliance on oil and gas and leverage its position as a producer of metals critical for the energy transition. Gina Rinehart's Han**** Prospecting, Codelco, First Quantum, Southern Copper, Atico Mining Corp and Solaris are either on the ground or have acquired concessions, while Blackrock has emerged as a significant investor.

SolGold owes much to Mather, co-founder and driver of the project. He remains a non-executive director, a 3.96% shareholder and head of DGR Global, the ASX-listed project generator which speaks for more than 8% of SolGold's equity.

Mather has talked in the past about "not giving it away" when speaking speculatively about a potential bid from BHP and/or Newcrest.

We'll find out more precisely what he means soon enough.

Joint BHP-Newcrest bid for SolGold 'within months'

The smart money is on a joint bid for London-listed SolGold by BHP and Newcrest Mining, as early as June.

Both miners have acquired minority stakes in SolGold which controls the enormous Cascabel copper-gold concession in mining-friendly Ecuador.

Sources say BHP CEO Mike Henry has been persuaded to go with Newcrest because of the latter's expertise in block caving.

An alliance would assuage investors' fears of ‘execution risk.' Block caving issues have hampered progress at Oyu Tolgoi in Mongolia where Rio Tinto is undertaking a tricky and expensive expansion programme.
Problems at Oyu Tolgoi haven't been lost on Henry who is said to favour an ownership model similar to Escondida, the Chilean copper operation jointly controlled by BHP and Rio.

Said one analyst: "It was initially going to be one giant block cave, and that was proved to be too ambitious. The trouble with block caves is that unless you have a nice vertical ore body, a nice regular shape, you're going to have huge amounts of dilution, as it wanders up and down, left and right etc."

It's rumoured Henry and Newcrest boss Sandeep Biswas have recently held talks to cut a takeover deal. The two companies are expected to bid following the release in May of the long-delayed Alpala preliminary feasibility study.

The Alpala deposit is the main target at the Cascabel concession, located on the northern section of the heavily endowed Andean Copper Belt.
SolGold is one of the largest holders of mining concessions in Ecuador, but Cascabel is the most advanced. The Cascabel-Alpala property contains a resource of 2.6 billion tonnes at 0.53% copper equivalent. Annual metal production in the first 25 years was estimated in the 2019 preliminary economic assessment (PEA) at 207,000 tonnes of copper; 438,000oz of gold and 1.4Moz of silver in concentrate. The estimated mine life is 50 years.

The PEA assumed lower copper and gold prices than we have today, but at the time, analysts were concerned by a capex number of close to $3bn.

A scaled down PFS is expected from new SolGold CEO Darryl Cuzzubbo, a former BHP executive, appointed at the end of 2021.

Some analysts expect the 2019 forecast of Alpala's net present value (between $4.1 billion to $4.5bn) to be cut by up to 30% - keeping initial capex within tight limits.

Via Minera

May 15, 2022.- At the end of the week it was learned that Jason Ward, a geologist with more than 25 years of experience and president of SolGold Ecuador, had submitted his resignation and that the company was in the final stages of hiring a new boss in the country.

Ward was also SolGold's head of Exploration and one of the professionals who led the team that, from 2012 to date, has been trying to carry out the Cascabel project in northern Ecuador.
Precisely for this project, SolGold presented its pre-feasibility study on April 20, a document long awaited by the local mining sector.

According to the report, the feasibility study would be presented in the middle of next year and if the assumptions of the operation came true, Cascabel could start producing approximately 210,000 tons of copper and 350,000 ounces of gold in 2029.

Ward's skills transcended the field of geology and were instrumental in making Cascabel now a project with a good chance of becoming a mine. He not only led the drilling of more than 300,000 meters in the northern part of the country, but he practically did it without the conflicts associated with mining activity appearing.

He managed to successfully manage teams that worked in very different, distant and challenging social, physical and geological terrains. He has worked in Australia, Japan, Fiji, Solomon Islands, New Caledonia, Oman, Switzerland, Peru, Laos, Papua New, Argentina, Chile, Brazil, Mexico and Ecuador.

Engineer Ward has a Bachelor of Applied Science, Geology and is a Fellow of the Australasian Institute of Mining and Metallurgy. He expresses himself fluently in Spanish.

In Ecuador, he promoted several initiatives for environmental protection and water care that allowed SolGold, as operator of the Cascabel project, to project an image of a company that respects nature, water resources and promotes community relations that promote the prosperity of families.

Jason Ward led the team that in 2019 planted a million trees in the direct and indirect area of ??influence of the project, that is, the parishes of La Carolina, Lita and their surroundings, with the aim of recovering the natural dynamics of the ecosystems disturbed.

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