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By Rhiannon Hoyle
SYDNEY--BHP Billiton Ltd. (BHP.AU) said it will almost double its stake in copper explorer SolGold PLC (SOLG.LN) as the world's largest mining company seeks to boost its exposure to a metal used in everything from smartphones and electric vehicles to air conditioners.
BHP, which last month bought a roughly 6% interest in the company that runs the Cascabel copper and gold project in Ecuador, said on Tuesday it will raise its stake to a little over 11% via a private placement under which SolGold will issue 100 million shares to BHP.
"Ecuador is a highly prospective region for the next generation of copper supply," BHP President Minerals Americas Danny Malchuk said in a statement.
BHP and other global miners have been racing to increase bets on copper amid expectations demand for electric vehicles and consumer products in China will spark a boom in demand and prices for the metal.
BHP said it will pay 45 pence per share--or 45 million pounds (US$59 million) for the stake--which is a 32% premium to the 20-day volume-weighted average on London's stock exchange. It is also pricier than the 26.592 a share BHP spent last month to buy its initial 103-million-share interest from Guyana Goldfields Inc.
Under the latest agreement, BHP has the right to nominate one director to SolGold's board although has agreed not to acquire further shares for two years without the company's consent.
"This additional investment in SolGold strengthens our strategic position in the Cascabel copper exploration project, and is consistent with BHP's strategy to replenish our copper resource base and grow the business," said Mr. Malchuk.
SolGold in 2016 rejected an offer from BHP to invest in the company and develop its flagship Cascabel project, instead picking a competing investment by Australia-based Newcrest Mining Ltd. (NCM.AU) and Maxit Capital LP.
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(END) Dow Jones Newswires
October 15, 2018 18:31 ET (22:31 GMT)
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