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05/12/19

21:04

Post #: 41822890
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Originally posted by GeoNeo ↑

On 25th November this year BHP raised its stake in an Ecuadorian copper and goldmine developer Solgold with a further £17 million pound investment.

This takes BHP stake to 14.7 per cent from 11.1 per cent

https://www.msn.com/en-us/money/noa...e-in-solgold-to-147-for-22-million/ar-BBXm48m

https://www.businesslive.co.za/bd/companies/2019-11-25-bhp-bets-on-e-cars-and-e-cities-with-stake-in-solgold/

£17 million for and additional 3.6 percent stake gives an implied current value of around £460 million (uk pounds).It’s currently trading at a discount to this at around£320 million (uk pounds) which translates to between$608 and $874 million AUD.

The main reason behind BHP increasing it's stake is to leverage into the 2013 discovery at Alpala which became a major discovery with it's fifth drill hole

"This fifth drill-hole marks the discovery of the high-grade world-class Alpala porphyry
copper-gold deposit, with an overall interval of 1306 m at 0.62 % Cu and 0.54 g/t Au, including 552 m at 1.03 % Cu and 1.05 g/t Au from a 778 m down-hole depth."

http://www.solgold.com.au/alpala/

You may well be tempted to compare this with what has recently been announced at Oak Dam West - and you may be inclined to agree with some analysts that the grades are uninspiring given what we have seen recently at Oak Dam West.

https://www.copyright link/companies/mining/solgold-s-copper-plan-is-uninspiring-20190522-p51pxy

But what this move does demonstrate is that BHP is very bullish on the copper price and are prepared to pay for increased exposure to great development options.

They however are not alone in this view - other majors are currently positioning themselves as best they can also. For example BHP have been competing with Newcrest for control of Solgold with Newcrestcurrently holding a 15.23% stake (subject to dilution following BHPs recent purchase)

https://www.australianmining.com.au/news/newcrest-ups-stake-in-solgold/

Should CHK make a discovery with high grades at Horse Well the example above demonstrates why interest from majors is not only implied but expected. Given the bullish outlook for copper and scarcity of highly prospective tenements such as Horse Well you could imagine majors such as BHP and FMG taking on a small risk stake to facilitate drilling and then paying for a higher stake later should a discovery transpire.

As Solgold has shown you don’t always need to go down traditional paths and give away the farm. Plus there is always room for more than one party at the table.

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@GeoNeo
Thanks for your great input.

You said,
"Should CHK make a discovery with high grades at Horse Well the example above demonstrates why interest from majors is not only implied but expected. "

Will CHK spend to make a discovery?

If so, risk factors of spend v reward?

Given their location, the likelihood of a major taking ownership or funding drilling?
Likely time frame?

Interesting to see the outcome of current negotiations.

Thanks again for your input.

CHK Price at posting: 1.2¢ Sentiment: None Disclosure: Held
2 Upvote

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