BHP (ASX,NYSE:BHP) has entered into an agreement with Guyana Goldfields (TSX:GUY) to acquire the company’s 6.1 percent interest in SolGold (TSX,LSE:SOLG), the owner and operator of the Cascabel porphyry copper–gold project in Ecuador.
Through the terms of agreement, BHP will acquire 103.1 million shares in SolGold from Guyana Goldfields.
The company is paying 26.59 British pence per share, representing a 20 percent premium to the 20-day volume-weighted average LSE price of SolGold shares, totalling around £27,423,000 for the transaction.
According to Guyana Goldfields, the transaction is set to total around US$35 million, while the company’s initial purchase price of the 103.1 million shares was US$10 million.
The company expressed its joy of receiving a 3.5x return on the investment in a statement, while also explaining that the proceeds from the sale would 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 in the statement. “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 refers to as 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 would give BHP access to a high quality copper exploration project in Ecuador, which is apparently a highly prospective location for the company.
“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 said in a statement.
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Securities Disclosure: I, Olivia Da Silva, hold no direct investment interest in any company mentioned in this article.
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From:: Investing News Network