BHP, Newcrest participate in SolGold raising

Brisbane-based SolGold is chasing big copper and gold targets in Ecuador and has been the subject of ongoing takeover speculation. Picture: Thinkstock

Peace appears to have broken out at the British and Canadian-listed explorer SolGold, with BHP and Newcrest both taking up their entitlements in last week’s $95m capital raising in London to maintain the competitive tension on the register of the highly rated copper and gold play.

Capitalised at about £670m ($1.2bn) Brisbane-based SolGold is chasing big copper and gold targets in Ecuador and has been the subject of ongoing takeover speculation after both BHP and Newcrest took substantial equity positions in the company.

But a running dispute over the best way to fund development of the company’s Alpala project, part of its Cascabel tenement group, led to an acrimonious year for SolGold in 2020, after the company chose to take up a financing facility with Franco Nevada instead of tapping the market in an equity raising.

The deal handed Franco Nevada a net smelter royalty over future production at Alpala, and raised the hackles of both major miners — and other institutional shareholders — who collectively delivered a
44.7 per cent vote against the
re-election of managing director Nicholas Mather to the SolGold board shortly before Christmas.

In January Mr Mather announced he would step down as CEO after 13 years at its helm, and the decision appears to have allowed a reconciliation of sorts between SolGold and the two major miners jockeying for position on its register.

Ahead of last week’s £53.1m raising by SolGold, Mr Mathers held about 4 per cent of SolGold stock. ASX-listed DGR Global, of which he is managing director, held another 9.8 per cent.

Mr Mathers took up 392,156 shares in the 28.7p raising, although it is not clear whether DGR — which finished March with $2.6m at bank — took part in the issue.

But sources say both BHP and Newcrest, which each held a 12.3 per cent stake in the explorer ahead SolGold’s trip to the market, both took up their full entitlement to maintain their positions on its register as the company continues work on a prefeasibility study on Alpala, due before the end of the year.

With copper on a tear this year, hovering around $US10,000 a tonne on the London Metal Exchange, and big projects in short supply, interest in SolGold is likely to rise as delivery of the Alpala PFS nears.