NCMCD Newcrest Mining Ltd

By Alex MacDonald

LONDON--Shares in SolGold PLC (SOLG.LN) rose Monday after the miner rejected an offer from mining giant BHP Billiton Ltd (BHP) to invest in the company and develop its flagship Cascabel copper-gold project in Ecuador, preferring a competing investment by Australia-based Newcrest Mining Ltd. (NCM.AU) and Maxit Capital LP.

The Brisbane-based U.K.-listed miner with assets in Ecuador, the Solomon Islands and Australia, said its board has unanimously rejected BHP Billiton's offer to purchase a 10% stake in SolGold for $30 million in cash and then spend $275 million on the Cascabel project in return for 70% of SolGold's 85% stake in the project.

SolGold's board said the BHP proposal is highly conditional and implied a significant discount to SolGold's current trading price and financing with Maxit and Newcrest.

The BHP offer was conditional, among other things, upon SolGold shareholders voting on Oct. 13 against a $33 million share placement with Newcrest Mining and Maxit Capital at 16 pence a share. "We are very pleased to see BHP join a growing list of international mining companies that are interested in investing in SolGold; however, the current $33 million financing with Maxit and Newcrest is the preferred option at this time as it leaves us in control of this very exciting project at Cascabel," said SolGold Executive Director Nick Mather.

SolGold is aiming to produce Cascabel's first resource report this year but work has been delayed by the discovery of high-grade mineralization in Hole 17 at the Alpala target, the only one of 14 targets to be drilled to date.

The company found 150 meters of ore containing 1.54% copper and 2.05 grams of gold per metric ton of rock at Hole 17.

SolGold shares were up 11% at 18.5 pence a share as of 0832 GMT, resulting in a market capitalization of GBP226 million ($281 million).

-Write to Alex MacDonald at alex.macdonald@wsj.com

(END) Dow Jones Newswires

October 10, 2016 05:15 ET (09:15 GMT)

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