SolGold in talks to finance long-life Ecuador copper project

Luminex Resources

20/05/2019 18:39

* Newcrest, BHP have jostled for position
    * Ecuador seen as relatively low risk
    * BHP has no comment on any further stake

    By Barbara Lewis
    JOHANNESBURG, May 20 (Reuters) - SolGold  SOLG.L  is in
talks with financiers keen to invest in its Ecuadorian
copper-gold prospects and mining major BHP  BHP.AX   BHPB.L 
could increase its stake in the company, SolGold's chief
executive said on Monday.
    In a preliminary economic assessment of the Alpala
copper-silver-gold deposit in northern Ecuador released earlier,
London-listed SolGold said annual copper output should be
207,000 tonnes for the first 25 years of a mine life of roughly
half a century.  urn:newsml:reuters.com:*:nFWN22V042
    Ecuador has attracted a flurry of interest from big miners
eager to increase their exposure to copper. The highly
conductive metal is in demand for use in renewable energy and
electric vehicles, but big, new deposits are rare. 
    Diversified majors particularly favour such large-scale,
long-life projects as SolGold promises.
    CEO Nick Mather said the next steps included permit
discussions with the Ecuadorian government and talks with
potential investors.
    He declined in a telephone interview to name the parties
involved but said SolGold was open to all sorts of financing
structures.
    He said that BHP, SolGold's second biggest shareholder, has
room to increase its stake. 
    BHP declined to comment, but Refinitiv data shows it has
just over 205 million shares in SolGold, below a threshold of a
little more than 246 million set by an agreement last year, when
BHP said it would not go beyond that without SolGold consent.
    
    MORE PROMISING ASSETS
    Australia's Newcrest Mining  NCM.AX  is SolGold's biggest
investor with 15.3%, while BHP has 11.2%. urn:newsml:reuters.com:*:nL3N1WV5TS
    "This is a company that is attracting people who have a
bullish outlook for the copper market," Mather said.
    A definitive feasibility study is expected by the end of
2020 and a development decision should be taken around the same
time on Alpala, the most advanced SolGold prospect, which is in
Ecuador's Cascabel region.
    Other assets in SolGold's Ecuadorian portfolio could be even
more promising, Mather said.
    BHP, which gets the biggest share of its earnings from iron
ore, has also increased its Ecuador exposure with an outline
deal with Canada's Luminex Resources  LR.V , which has
gold-copper prospects.  urn:newsml:reuters.com:*:nFWN216091
    Copper constitutes the second biggest share of BHP's
earnings and it has an operating stake in the world's biggest
copper mine Escondida in Chile. Escondida produces more than 1
million tonnes annually, although production fell in the first
quarter.  urn:newsml:reuters.com:*:nT5N22C006 
    While the outlook for iron ore is clouded by uncertainties
over Chinese consumption and trade, copper is expected to see
strong demand on rising levels of electrification and as the
world shifts towards renewable power. urn:newsml:reuters.com:*:nL5N22J5I2
    As the most obvious copper deposits become depleted, Ecuador
appeals because the government is considered investor-friendly
when some resource-holding nations are imposing increasingly
tough terms.  urn:newsml:reuters.com:*:nL8N21F70M  L5N22W2ML 

 (Reporting by Barbara Lewis; editing by Emelia
Sithole-Matarise)
 ((Barbara.hm.Lewis@thomsonreuters.com; +44 207 542 2932;
Reuters Messaging:
barbara.hm.lewis.thomsonreuters.com@reuters.net))