(Reuters) – Global miner BHP (BHP.AX) has struck a deal to pay $35 million for a 6.1 percent stake in SolGold (SOLG.L), giving it a share in the promising Cascabel copper-gold project in Ecuador after an earlier attempt failed.
SolGold’s share price leapt around 17 percent as the market took BHP’s acquisition as a vote of confidence in the project, while BHP shares (BLT.L) slipped one percent by 1330 GMT.
BHP’s Chief Executive Andrew Mackenzie said the investment provided exposure to a high quality copper exploration project in Ecuador, a “highly prospective” location.
In common with other miners that have recovered from the price crash of 2015-16, BHP is seeking to grow its asset base and is keen on copper. The metal is expected to be in demand for use in renewable energy and electric vehicles, but new opportunities are scarce.
The deal sets the stage for a potential showdown with Australian gold miner Newcrest Mining Ltd (NCM.AX), the top shareholder in SolGold, Cascabel’s majority owner and operator, with a 14.54 percent stake.