(Adds detail, analyst comment)
The world's biggest miner BHP (BHP) on Tuesday nearly doubled its stake in SolGold Plc SOLG.L , bolstering its position against top shareholder Newcrest Mining (NCM) as it eyes SolGold's promising Cascabel copper-gold project in Ecuador.
BHP, which bought in to SolGold just six weeks ago, has paid almost $60 million to increase its holding to 11.2 percent, not far off the 14.5 percent stake held by Newcrest, Australia's biggest listed gold miner.
The mining giant has described Cascabel as a high-quality copper exploration project, while Ecuador is seen as a highly prspective region with geology similar to top copper producer Chile.
"BHP has clearly ramped-up its willingness to pursue this project," said RBC analyst Paul Hissey in a report, adding that it was not clear how the rival holdings would be resolved.
While BHP had deeper pockets, Newcrest had technical skills linked to large scale bulk underground mining, he said.
Under the deal, BHP will pay SolGold 45 million pounds ($59.2 million) for 100 million new shares in the company, at a 28 percent premium to the stock's last close, taking its total spend on the developer to $85 million.
"It's not of financial consequence for them (BHP), but it's one of the things you need to do to get your foot on future deposits. To me it sounds like they are both endorsing what these guys have found," said Morningstar analyst Mathew Hodge.
SolGold did not offer an immediate comment. Newcrest declined to comment.
In common with other miners that have recovered from the price crash of 2015-16, BHP is seeking new opportunities to expand its copper portfolio.
The highly conductive metal is in hot demand for use in renewable energy and electric vehicles, but new deposits are rare and increasingly difficult to recover.
"This additional investment in SolGold strengthens our strategic position in the Cascabel copper exploration project," BHP President Minerals Americas, Danny Malchuk said in a statement.
SolGold may have a closer affinity with Newcrest than BHP, analysts have said, given the major deposit is a copper gold porphyry system that could be best mined by using a block cave method.
Block caving involves hollowing out an ore body and allowing it to collapse under its own weight. It has a smaller environmental footprint than open pit mining. Newcrest is one of a handful of miners that has block cave experience, at its Cadia gold mine in Australia's state of New South Wales.
BHP said that subject to certain exceptions, it will not acquire more shares in SolGold for two years without SolGold's consent, but will be allowed to maintain its shareholding at 10 per cent and will also get a board seat.
($1 = 0.7601 pounds)
