BHP Billiton has taken a minority stake in London-listed SolGold as it steps up the hunt for a new source of copper.
The FTSE 100 giant has bought a 6.1pc holding in SolGold from Guyana Goldfields for a total sum of £27m, paying 26.6p a share - a 20pc premium to its closing price. SolGold is exploring the Cascabel copper-gold project in northwest Ecuador, which is thought to be a highly prospective deposit.
BHP has declared the hunt for more copper a priority as the metal is in high demand for its conductive properties.
Chief executive Andrew Mackenzie said: “Consistent with our positive long-term outlook, copper is a key exploration focus for BHP as we seek to replenish our resource base and grow this important business.”
The Anglo-Australian miner has declared an interest in SolGold before, having had a bid to buy 10pc of the company rejected two years ago. Its offer had come with some strings attached, including a desire to appoint a member to the board. SolGold opted instead to do a funding deal with Newcrest Mining of Australia, which now has a 14.5pc stake.
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Earlier this year SolGold declared itself “elated” by confirmation of a large new copper deposit called Alpala in Ecuador that could be “the tip of the iceberg”.
Chief executive Nick Mather told The Telegraph at the time: “The world is increasingly short of copper and mining companies have been remiss in not keeping up development capital to their operations.”
Analysts at Berenberg said: “Having another major mining company invested in the business speaks to the potential scale of SolGold’s exploration and development portfolio. The fact that BHP has transacted at a premium valuation is likely to be a significant positive for the shares.”
SolGold declined to comment on BHP’s investment. Its shares jumped 13.5pc to 24.24p in afternoon trade.
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