LONDON (Reuters) - Copper and gold explorer SolGold (>> SolGold plc) on Friday said it was raising $41.2 million (32.25 million pounds), on top of more than $30 million announced in October, as it widens its search for resources in Ecuador after already finding one world class asset.
Ecuador has been increasing its profile as a country open to foreign mining and has shifted its resource focus from oil and gas as its reserves dwindle and oil prices <LCOc1> stagnate, analysts say.
The world's biggest miner BHP (>> BHP Billiton Limited) (>> BHP Billiton Plc) rated SolGold's mineral exploration prospects sufficiently highly to seek a deal but SolGold rebuffed it in favour of an agreement with Australian gold miner Newcrest Mining (>> Newcrest Mining Limited).
According to a share placement announced on Friday, Newcrest will pay a further $40 million to increase the size of its stake to 14.54 percent as part of a placing to raise a total of $41.2 million.
That adds to last October's agreement that Newcrest would spend $22.86 million buying new shares equivalent to 10 percent of SolGold, while private investment firm Maxit got 4.43 percent of the company for $10.1 million.
CEO Nick Mather said the new placement at a 15.5 percent premium to Thursday's closing price and a discount to SolGold's peak share price of 46.75 pence in May this year was a vote of confidence.
The share price rose nearly 10 percent on Friday and has climbed more than 64 percent this year.
Mather said Ecuador was underexplored, especially compared with Chile, the world's biggest copper producer, where miners have been complaining about dwindling ore quality and rising costs.
Abundant reserves of gold found in association with copper add to the appeal of mining in a more northerly country.
"The great thing about the North Andean copper belt is it gets increasingly gold-rich," Mather said.
"The copper miners will say the gold will pay for the cost of producing copper and the gold miners will look at it vice versa."
SolGold's flagship project in Ecuador is named Cascabel and exploration so far implies it is a major new high-grade copper and gold find to rival some of the largest existing mines, such as Grasberg in Indonesia, controlled by Freeport McMoran Inc (>> Freeport-McMoran), and Oyu Tolgoi in Mongolia, controlled by Rio Tinto (>> Rio Tinto Limited) (>> Rio Tinto).
With a market capitalisation of more than 500 million pounds ($639 million) on AIM, London's market for growing companies, SolGold is seeking to move to a standard listing on the London Stock Exchange.
It is also seeking a listing in Toronto, which will be considered by the Toronto Stock Exchange on June 21.
(additional reporting by Alexandra Valencia in Quito; Editing by Elaine Hardcastle)
By Barbara Lewis