Mining giant BHP Billiton Limited (ASX: BHP) has unsuccessfully attempted to snare highly sought after mining minnow SolGold from under the noses of Newcrest Mining Limited (ASX: NCM).
According to reports in the Financial Times, over the weekend BHP Billiton made a conditional, non-binding offer to acquire a 10% stake in Brisbane-based SolGold for US$30 million.
But SolGold's management rebuffed the proposal from BHP Billiton, believing it to not be in the best interests of SolGold's shareholders. Instead the board intends on moving forward with the US$33 million proposal from Newcrest Mining and Toronto-based Maxit Capital.
SolGold's executive director Nick Mather had this to say on the matter:
"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 US$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. There is considerable upside in the additional 13 targets as well as the existing and growing Alpala deposit. We have developed the exploration models and strategies to an advanced level, we are well funded and we are intent on delivering and retaining that upside substantially, for all SolGold shareholders."
Although SolGold is still at the exploration stage with just 17 holes drilled so far at the Cascabel deposit in Ecuador, the results have caused a great deal of excitement.
According to The Australian Financial Review, Cascabel's copper, gold, and zinc deposit has been compared to the Oyu Tolgoi copper mine in Mongolia owned by Rio Tinto Limited (ASX: RIO).
It is not hard to see why people are getting excited. After all, the Oyu Tolgoi mine holds one of the largest undeveloped high grade copper deposits in the world and is targeting 500,000 tonnes of copper production per year.
Clearly this is a big win for Newcrest, but I wouldn't suggest jumping in and investing on the back of it. There's still a long way to go before any production will commence at Cascabel, and a lot can change between now and then.
