BHP Billiton has entered into an agreement with Guyana Goldfields to acquire the latter’s 6.1-percent stake in SolGold, which owns the Cascabel porphyry copper-gold project in Ecuador.
SolGold is the owner and operator of the Cascabel porphyry copper-gold project in Ecuador. Through the terms of agreement, BHP will acquire 103.1 million SolGold shares from Guyana Goldfields.
The company is paying 26.59 pence per share, representing a 20-percent premium to the 20-day volume-weighted average LSE price of SolGold shares, totaling around 27,423,000 pounds for the transaction.
According to Guyana Goldfields, the transaction is set to come in at around US$35 million, with BHP’s purchase price of the 103.1 million shares valued at US$10 million.
The company expressed satisfaction about the investment in a statement, explaining that the proceeds from the sale will go towards debt reduction and general corporate purposes.
“We are extremely pleased to have entered into this sale agreement with BHP,” Guyana President and CEO Scott A. Caldwell said. “The sale of our shares in SolGold will significantly strengthen our balance sheet and will leave us well positioned to deliver on our targeted production growth over the near term.”
Cascabel, which SolGold says is its flagship project, is located in the Imbabura province of Northwest Ecuador. The deposit features a cluster of targets referred to as Alpala, which had its maiden mineral resource estimate published in January.
The estimate across both indicated and inferred classifications came in at 1.08 billion tonnes at 0.68 percent copper equivalent, with a contained metal content of 5.2 million tonnes of copper and 12.3 million ounces of gold.
BHP CEO Andrew Mackenzie explained that the investment in SolGold will give BHP access to a high-quality copper exploration project in Ecuador, which he says is a highly prospective location.
“Consistent with our positive long-term outlook, copper is a key exploration focus for BHP as we seek to replenish our resource base and grow this important business,” he commented in a separate statement.
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Securities Disclosure: I, Olivia Da Silva, hold no direct investment interest in any company mentioned in this article.