BHP doubles stake in Ecuador-focused SolGold

BHP has paid around US$60 million to increase its stake in Ecuador-focused gold miner SolGold to 11.2%, rivalling the 14.5% stake held by Australia’s largest listed gold firm Newcrest Mining.

The latest investment nearly doubles BHP’s ownership in SolGold, after the world’s biggest miner first bought into the company just six weeks ago, taking its total spend to $85 million.

BHP described SolGold’s Cascabel project in Ecuador as a high-quality copper exploration project, with Ecuador seen as a highly perspective region with geology similar to top copper producer Chile.

“This additional investment in SolGold strengthens our strategic position in the Cascabel copper exploration project,” said BHP’s president minerals Americas, Danny Malchuk.

“BHP has clearly ramped-up its willingness to pursue this project,” said RBC analyst Paul Hissey in a report, adding that it was not clear how the rival holdings would be resolved.

While BHP possesses more capital to potentially deploy, Newcrest has technical skills suited to large scale bulk underground mining, he said. Newcrest is one of a select few miners with block caving experience – the unconventional mining method that may be best suited at Cascabel.

Along with several majors in the mining industry, BHP is seeking new opportunities to expand its copper portfolio after recovering from the price crash of 2015-16.

Clamour for new sources of copper is growing based on increased demand from the renewable energy and electric vehicle industries, however new viable deposits are increasingly few and far between.