Article (2)29 Nov 2022 14:10
Instead, Mather and then Cuzzubo plumped for royalty deals with Franco Nevada and then Osisko, designed to provide SolGold with upfront finance in exchange for conceding profits once the mine is in operation. The royalty arrangements angered both Newcrest and BHP leading to boardroom clashes. Mather said in a YouTube interview recently the majors want us to pump out cheap equity and by way of their pre-emption rights take control of the company without having to offer the sort of premium one would expect with this sort of …. Recruiting the Chinese has certainly ratcheted up the bid tension - with action probable in the first half of 2023. But a fly in the ointment that few have considered is the reaction to any Chinese takeover by Washington or the Ecuadorian government. The Chinese have overtaken the US to become the largest overseas investor in Ecuador. The South American country’s first large-scale copper mine, the Mirador project operated by a subsidiary of Chinese consortium CRCC-Tongguan, began production in mid-2019. But recently the wind has been blowing the other way with many in Ecuador, as elsewhere, angered by onerous interest rates charged by the Chinese for loans designed to cement Beijing’s global trade offensive. As a result, the Americans are no longer viewed with as much suspicion as they once were. Last year, the US International Development Finance Corporation struck a deal to help Ecuador repay billions in loans to China and boost development in exchange for excluding Chinese companies from its telecom networks. The US cause has been helped by the election of centre-right businessman Guillermo Lasso as Prime Minister after years of rule by left-leaning administrations. What will Lasso’s position be if the Chinese look like acquiring SolGold? Will he come under any pressure from the US? Another wild card is linked to the widespread opposition to mining in Ecuador, especially by indigenous communities who tend to live in areas where minerals are found. Last month, there were huge demonstrations in Ecuador’s capital Quito by protestors who want to block six gold-mining concessions in the Choco Andino forest. They cited threats to water sources, nature and their local businesses. Lasso will have to play his cards carefully despite his stated intention that he wants to boost mining in Ecuador to make it less dependent on oil. The battle of Solgold is reaching a climax but, frankly, anything could happen.
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