* BHP takes 6.1 percent stake from Guyana Goldfields in SolGold
* Newcrest already holds 14.6 percent stake
* SolGold rebuffed a BHP offer for a 10 pct stake in 2016 (Adds price, context on size of stake, share price, Toronto opening)
By Melanie Burton
Sept 5 (Reuters) - Global miner BHP has struck a deal to pay $35 million for a 6.1 percent stake in SolGold , giving it a share in the promising Cascabel copper-gold project in Ecuador after an earlier attempt failed.
SolGold’s share price leapt around 17 percent as the market took BHP’s acquisition as a vote of confidence in the project, while BHP shares slipped one percent by 1330 GMT.
BHP’s Chief Executive Andrew Mackenzie said the investment provided exposure to a high quality copper exploration project in Ecuador, a “highly prospective” location.
In common with other miners that have recovered from the price crash of 2015-16, BHP is seeking to grow its asset base and is keen on copper. The metal is expected to be in demand for use in renewable energy and electric vehicles, but new opportunities are scarce.
The deal sets the stage for a potential showdown with Australian gold miner Newcrest Mining Ltd, the top shareholder in SolGold, Cascabel’s majority owner and operator, with a 14.54 percent stake.
“It’s a pretty attractive asset. It’s early stage but the geology looks prospective,” said a Melbourne-based analyst for a fund manager, who declined to be named due to company policy.
“This basically means that Newcrest isn’t going to have it all to themselves. I think if I was Newcrest or SolGold management, I would be a bit nervous about BHP being in there.”
Any stake of more than 5 percent gives a shareholder the right to requisition a general meeting and circulate a resolution under English company law.
SolGold rejected an offer by BHP to take a 10 percent stake in the firm in October, 2016, for $30 million. At the time, it also offered to spend a further $275 million for up to 70 percent of Cascabel, an offer the company rejected because it did not want to lose control.
Wednesday’s 27.4 million pound ($35.5 million) deal to buy Guyana Goldfields’ 6.1 percent stake is pitched at a 20 percent premium to the 20-day average share price.
Guyana Goldfields opened unchanged in Toronto.
SolGold may have a closer affinity with Newcrest than BHP, given the major deposit is a copper gold porphyry system that could be best mined by using a block cave method, analysts said.
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.
Rio Tinto also has experience of block caving at its Oyu Tolgoi copper mine in Mongolia. ($1 = 0.7714 pounds) (Reporting by Melanie Burton in MELBOURNE; additional reporting by Aaron Saldanha and Karthika Namboothiri and Barbara Lewis; editing by Richard Pullin and Elaine Hardcastle)