SolGold weighs higher Jiangxi bid as copper M&A heats up

[Ben Graham]

Ecuador-focused miner SolGold (LON: SOLG) has opened the door to a takeover from China’s Jiangxi Copper (JCC), which returned with a higher all-cash proposal valuing the company at about £842 million ($1.13 billion).

JCC, already SolGold’s largest shareholder with 12.2%, first approached the company in November 23 with a non-binding proposal that was rejected. On November 28, it came back with a 26-pence offer that the board also rebuffed. The latest 28-pence bid marks JCC’s third attempt and lifts the price by 7.7%. 

SolGold said it would recommend shareholders accept the fresh bid if JCC tables it as a firm offer on those terms. 

Earlier interest from BHP (ASX: BHP) and Newmont (NYSE: NEM), which own 10.4% and 10.3%, faded after funding disputes and scope changes at the Cascabel copper-gold project in northern Ecuador.

Jiangxi Copper, already SolGold’s largest shareholder with a 12.2% stake, had approached SolGold in November with a 26-pence-per-share offer, but the board rejected it. SolGold’s board had previously rejected a separate non-binding proposal from the Chinese group on November 23.

JCC is now offering 28 pence per share marks the Chinese company’s third proposal to acquire SolGold and a 7.7% increase from its previous 26-pence-per-share bid that was rejected last month.

Copper deals frenzy

The move comes as copper assets attract intense interest on expectations of a looming supply crunch driven by electrification. The heightened demand has sparked major dealmaking attempts, including BHP’s unsuccessful runs at Anglo American (LON: AAL).

Canada’s Teck Resources (TSX: TECK.A | TECK.B) is in the final stages of completing a $53 billion merger with Anglo that would create a top-five global copper producer with 1.35 million tonnes of annual output, edging past Chile’s Escondida mine’s 2024 production of 1.28 million tonnes. 

Investors unsure

Despite the sweetened proposal, SolGold’s shares fell more than 10% to 25.1 pence on Friday. They were last trading at 25.75p, still below the bid price, as investors showed caution toward large mining deals.

The offer still faces Chinese regulatory approval for outbound investment, a process JCC has started but one that has become more complex under tighter scrutiny in Beijing.

A successful acquisition would hand JCC full control of SolGold’s flagship Cascabel project in Imbabura Province, one of South America’s largest undeveloped copper-gold resources

JCC, which operates in countries including Peru, Kazakhstan and Zambia, has support from major SolGold shareholders BHP, Newmont and Maxit Capital, which together hold 40.7%.