May 11, 2020 / 10:09 AM / in 3 months

BHP-backed SolGold agrees funding of up to $150 mln from Franco-Nevada

LONDON, May 11 (Reuters) - BHP-backed SolGold Plc, the copper-gold company focused on Ecuador, has agreed a financing package of up to $150 million with streaming company Franco-Nevada Corp to develop its Alpala project, sending its shares up by around 10%.

Toronto-listed Franco-Nevada, which provides miners and oil and gas producers with upfront cash in exchange for future production, will receive a perpetual 1% net smelter return (NSR) interest from SolGold.

An initial funding of $100 million could be increased to $150 million, which would also increase the NSR for Franco Nevada, the company said in a release.

SolGold will spend the coming months developing a feasibility study of the Alpala project that is expected to start production of copper and gold in 2025, Ingo Hofmaier, SolGold's executive general manger – Project & Corporate Finance - told Reuters by phone.

The company, which earlier this year strengthened its takeover defence by adding U.S. investment bank Citi to its advisors, is in talks with investors and banks to secure an overall $2.7 billion needed to complete the project, Hofmaier said.

BHP , the world's biggest miner, owns 15.31% of the Brisbane-based miner, while Australian gold miner Newcrest Mining Ltd owns 15.23% of it, Refinitiv data shows.

SolGold's share price at 0940 GMT was up 9% 26.90 pence, after reaching 30.25 earlier. It outperformed the wider sector, which fell around 1%. (Reporting by Clara Denina; editing by Barbara Lewis)

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