Ecuador court gives green light for Silvercorp, Salazar’s El Domo project
The ruling removes the last major obstacle for the $250 million project, located 150 km northeast of Guayaquil.
Shares in Ecuador-focused miner SolGold (LON:SOLG) soared Friday after it announced it had raised $41.2 million through a shares placement backed by Newcrest International Pty Ltd, a subsidiary of Newcrest Mining (ASX:NCM), Australia’s biggest gold producer.
The placing is at a 15% premium to SolGold’s closing price on Thursday and at a 12% discount to its peak share price of 46.75p on May 26.
Investors reacted positively to the news and the stock was trading almost 12% higher in London to 39.73p at 3:10PM BST. In the past year, the Aussie miner’s shares have risen more than 12-fold as it drilled out its Cascabel copper-gold project in Ecuador.
The Aussie miner’s shares have risen more than 12-fold in the past year as it drilled out its Cascabel copper-gold project in Ecuador.
$40 million worth of shares were placed with Newcrest’s subsidiary, the company said, adding that the move will take Newcrest’s holding in SolGold to 14.5% from 10%.
The remaining $1.2 million has been placed with Ecuadorian investors, which SolGold said further endorses the market’s confidence in Cascabel, located in the northern portion of the Andean copper belt in Ecuador, renowned for hosting almost half the world’s copper known reserves.
As part of securing the placement, SolGold has agreed a revision to the subscription agreement with Newcrest Mining, to include an anti-dilutionary right to participate in any new equity raisings for a period of 12 months at a level of 14.5%.
After that period, the terms of the original subscription agreement continue, providing Newcrest with anti-dilutionary rights at a 10% level until August 30, 2019.
“The arrangement with Newcrest, particularly in the area of technical liaison over the past six months since their original investment into SolGold, has been pleasingly smooth and the SolGold board and management are encouraged by this further endorsement of the technical merits and management’s commitment to the Cascabel project,” Chief Executive Nick Mather said in a statement.
Ecuador has been quickly gaining ground as a mining investment destination in Latin America thanks to a revised regulatory framework and a major investor engagement campaign that has already attracted around 420 applications for concessions in less than a year.
Currently, the country’s emerging mining sector employs 3,700 people, but the government estimates the figure will rise to about 16,000 in the 2017-2020 period.
