RE: Solg5 Sep 2018 20:00
This is the Afr article pinot (and everyone).
BHP positions itself in looming battle for Solgold
Nick Mather is bullish about the prospects for Solgold.
BHP is understood to have locked up exploration acreage in close proximity to the Ecuadorian tenement that has made Brisbane-based explorer Solgold a takeover target, suggesting there is serious intent behind BHP's $49 million investment in the explorer's scrip.
BHP acquired 6.1 per cent of Solgold's London-listed shares on Tuesday evening, in a move that was not flagged to Solgold management and comes almost two years after BHP first revealed its interest in the copper and gold explorer.
The purchase triggered a 23 per cent surge in Solgold's London shares on Wednesday evening, and suggests the explorer could yet be the subject of a bidding war between BHP and Newcrest Mining, given the latter owns 14.5 per cent of Solgold and has loomed as its most likely acquirer over the past two years.
Solgold has published encouraging drilling results from its Cascabel tenement in northern Ecuador, raising hopes the geology in the region is effectively a continuation of the copper-rich belt that has turned Ecuador's southern neighbours (Peru and Chile) into major copper exporters.
BHP already owns copper mines in Peru and Chile, and has joined Fortescue Metals Group, Newcrest and Gina Rinehart's Hancock Prospecting in pegging exploration ground in Ecuador.
Combining adjacent assets is one of the most tried and trusted ways to create value in the resources sector, and BHP is understood to have secured strategically located tenements in relation to Cascabel in Ecuador's Imbabura Province.
Solgold chief executive Nick Mather said BHP was not the only Australian company that had sought to get close to Solgold.
"Hancock Prospecting are on our southern border," he told The Australian Financial Review on Wednesday.
Mr Mather, whose effective ownership in Solgold is close to 5 per cent, said BHP had not informed him of its plan to buy the 6.1 per cent stake off Solgold's existing shareholder Guyana Goldfields Incorporated.
"We didn't know about that, but it is good to see that BHP loves copper, loves Ecuador, loves our management team and loves Alpala," he said, in reference to the main drilling target in the Cascabel tenement.
Solgold shot to prominence in October 2016 when BHP and Newcrest vied for the right to acquire a strategic stake in the company, which at that stage had drilled just 17 holes in the Cascabel tenement.
Solgold chose to partner with Newcrest (which paid $US22.8 million for 10 per cent of the company at the time) rather than BHP, which offered a higher price for Solgold shares but also sought to buy control of the Solgold subsidiary that held Cascabel.
Newcrest has since subscribed for more Solgold shares on several occasions, sending the explorer's market capitalisation as high as $1 billion at one stage in 2017.
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