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SolGold’s $US2.3 billion investment

Curious about how BHP (ASX:BHP) and Newmont/Newcrest will react to the news that London-based, Ecuador-focused SolGold has garnered a new ally in the form of the country’s government and a $US2.3 billion investment?

BHP owns 10.36% of SolGold, while Newmont acquired 10.31% when it took control of Newcrest, and clients of Sydney brokerage firm Bell Potter collectively own 9.36%—totaling around 30%, making them the largest group of investors.

Additionally, Chinese copper giant Jianxi, holding around 6%, joins the major industry investors. However, its track record in the Americas isn’t stellar, having lost its stake in First Quantum’s Cobre Panama mine.

SolGold shares surged over 23% on Wednesday with news of the deal, closing up over 17%, though they remain down over 20% for the year.

The investment represents the largest in Ecuador’s mining history, separate from the government’s committed $US311 million for the Cascabel project.

SolGold’s recent Pre-Feasibility Study (PFS) for Cascabel revealed a significant reduction in pre-production capital costs, now estimated at $US1.55 billion compared to $US2.75 billion previously.

Despite concerns about inflation, SolGold remains optimistic, citing Cascabel’s potential as one of South America’s top 20 copper-gold prospects. Construction is slated to begin next year, though investor confidence seems shaky given recent share price fluctuations.

Cascabel boasts indicated resources of 2.050 billion tonnes, containing 8.4 million tonnes of copper and 19.4 million ounces of gold, along with inferred resources of 900 million tonnes containing 2.5 million tonnes of copper and 3.8 million ounces of gold.