JOHANNESBURG - Anglo-Australian multinational mining group, BHP, said on Tuesday that it has entered into a share subscription agreement with SolGold Plc (SolGold) under which SolGold will issue 100 million shares to BHP.
SolGold is the majority owner and operator of the Cascabel porphyry copper-gold project in Ecuador. Following completion of the private placement by SolGold, expected to occur on Friday, BHP's interest in SolGold would increase from six percent to 11.2 percent.
BHP has agreed to pay 45 pence per SolGold share, which represents a 32 percent premium to the 20 day volume-weighted average London Stock Exchange price of 34 pence per share as determined on 15 October 2018.
Danny Malchuk, BHP president minerals Americas, said Ecuador was a highly prospective region for the next generation of copper supply.
"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," Malchuk said.
Under the share subscription agreement, BHP has the right to nominate one director to the SolGold board. BHP also has anti-dilution rights for a two year period to allow it to preserve its shareholding at 10 percent.
BHP has agreed not to acquire further shares in SolGold for a period of two years without SolGold’s consent. For a period of two years, BHP also agreed to support proposed change of control transactions relating to, and capital raising up to a limit by SolGold, provided these actions have the support of 60 per cent of SolGold's shareholders.