Mining giant BHP has agreed to acquire Guyana Goldfields’ stake of 6.1% in SolGold, which is the majority owner and operator of the Cascabel Project, a porphyry copper-gold deposit in Ecuador.
As per the terms of the deal, BHP will purchase 103.1 million shares in SolGold from Guyana Goldfields at a price of £0.26592 ($0.34) per share. The total consideration of the deal comes to around $35m.
SolGold is currently a copper gold exploration-stage company which has assets across Ecuador, Solomon Islands and Australia. The company is listed on London Stock Exchange (LSE) and the Toronto Stock Exchange.
According to BHP CEO Andrew Mackenzie, the investment in SolGold would give the company exposure to the high-quality Cascabel Project located in the Imbabura province. The copper exploration project is said to be a largely prospective location for the mining major.
Mackenzie said: “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.”
Guyana Goldfields, which is a Canada-based mid-tier gold producer, had bought its 6.1% stake in SolGold for $10m, with the current transaction marking a 3.5x return on the initial investment.
Guyana Goldfields president & CEO Scott A.Caldwell said: “We are extremely pleased to have entered into this sale agreement with BHP. 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.”
The transaction is anticipated to be closed shortly after meeting customary closing conditions.
In June, BHP signed an agreement to sell its Cerro Colorado copper mine in Chile to EMR Capital, in a deal worth up to $320m. The sale agreement for the Chilean copper mine followed BHP’s announcement to move ahead with the development of the $3.4bn South Flank iron ore project in the Pilbara region in Australia.