Ecuadorian Mining Minister comment on BHP stake in Cascabel Ecuadorian Mining Minister comment on BHP stake in Cascabel Project
Solgold Not Ruling Out Potential Takeover by BHP Billiton
S&P Global Intelligence
Nov. 9, 2016 by Angela Kean
https://marketintelligence.spglobal.com/our-thinking/news/solgold-not-ruling-out-potential-takeover-by-bhp-billiton
SolGold Plc is expecting BHP Billiton Group to make another play for its Cascabel copper-gold project in Ecuador via a potential takeover, a move the Latin America-focused explorer may well agree to at the right price.
"It would be probably odd for them to have put that much effort into a proposal and then just leave it alone," CEO Nicholas Mather told SNL Metals & Mining Nov. 9 on the sidelines of the International Mining and Resources Conference in Melbourne, Australia.
"I can't speculate about what BHP or any other major might or might not do, but [Cascabel] is a tier one discovery."
In October, the SolGold board and shareholders rejected BHP Billiton's competing offer for a stake in the Cascabel project in favor of Newcrest Mining Ltd. and Maxit Capital LP's initial US$33 million bid for a 10% stake.
BHP Billiton offered US$30 million for a 10% stake in SolGold as well as US$275 million to acquire the company's 85% interest in Exploraciones Novomining SA, which holds the Cascabel project tenements.
Ecuadorian Mining Minister Javier Cordova Unda told SNL Nov. 8 that BHP Billiton was still looking at Cascabel and he was certain that the mining heavyweight would have another go at trying to acquire a stake in the project.
Mather said SolGold would consider a takeover offer from BHP Billiton if the price was right.
"All of the management of SolGold is heavily invested in it," he said. "We are shareholders, we think like shareholders. We don't accept anything because it will do, we constantly strive to be the best in every aspect of our exploration program and the way we fund it and the way we spend our money.
"The presence and attention of Guyana Goldfields Inc. and Maxit Capital advising us and helping us raise the money we just have at premiums to the share price goes a long way to demonstrating that the value of SolGold is way, way above what the market is pricing it at."
The interest in Ecuador from Australian miners is picking up, with Fortescue Metals Group Ltd. and Hancock Prospecting Pty Ltd. also among the miners making a move on the Latin American country.
Ecuador expects Australian investment in its mining sector to continue to grow.
"Even though until now it hasn't been really high, we expect it to grow a lot from Australia because we are seeing a lot of companies … not only Newcrest but BHP, Fortescue, and Hancock are looking really close at Ecuador," Cordova Unda told SNL.
"So hopefully we'll get that investment a lot higher than it has been in the last couple of years. If things continue to go the way that they have been going in the last year, I believe that Australia will be one of the main countries investing in Ecuador in mining."
SolGold's Mather told SNL that the company has applied for a number of other porphyry copper-gold exploration tenements in the country and has earmarked US$44 million for the development of the Cascabel project as well as the new exploration areas.
Ecuador has set itself a target of US$8 billion worth of foreign investment by 2024, but Cordova Unda believes it could be a lot higher.
"This year we have about US$200 million already," he said. "We expect to close the year at between US$300 million and US$400 million this year. We expect to have US$1 billion in investment just in mining in 2017."
Ecuador also has several projects, including Cascabel, in development and close to production, as well as 314 exploration applications for new concessions, with four attracting investment commitments worth about US$40 million.
"We feel that just in exploration it is going to be a couple of hundred million dollars in the next couple of years," Cordova Unda said. "I believe we should go over US$10 billion [in foreign investment by 2024]."