Imbabura province in Ecuador, where SolGold and BHP are looking for deposits on par with the world's largest copper mines in Peru and Chile

Imbabura province in Ecuador, where SolGold and BHP are looking for deposits on par with the world's largest copper mines in Peru and Chile


Investors are manoeuvring in SolGold's stock, as the company bumps-up drilling at Cascabel in Ecuador


In Ecuador's mountainous jungle, mules are lugging parts around a mining camp owned by an Australian company, SolGold, as it gets ready to bump-up drilling on a potentially vast new copper discovery.
     In Brisbane, London and Toronto, investors are meanwhile manoeuvring in the company's stock, which has rocketed from under 4p to nearly 40p in the last twelve months.
     Mining giant BHP, Australian gold group Newcrest and Toronto-based Guyana Goldfields have all circled SolGold, betting that its Cascabel project in the Andes is a globally hefty deposit, on par with the world's largest copper mines to the south in Peru and Chile.
     But with over 1.5 billion shares outstanding, SolGold's directors have been scrambling to try and mop-up stock and tighten-up the company's shareholder register, to fend off an early

     “We think it's the best discovery since Oyu Tolgoi,” says Toronto-based banker Bob Sangha, who has raised capital for SolGold and is a large investor via his company Maxit Capital. “They've had phenomenal drill results. We're obviously talking our own book, but we're convinced this is one of the best mineral discoveries and there's a lot more to come. They've only tested a few of the many targets.”

     A year ago, SolGold's shares were getting dangerously close to zero: its cash levels were falling, Ecuador was an unfashionable address and SolGold's CEO Nick Mather, a hard-headed Australian, was averse to issuing yet more stock to accelerate drilling.
     “He crawled around the property with one drill-rig,” says a buy-side analyst whose fund was an early investor in SolGold. “The market wasn't recognising the value of the discovery he had and he wasn't going to allow the same old capital raise at 3p or 4p to brokers who flip after the first week, so he waited.” “Let the market come to me,” Mather told one fund in London at the time.
     A year on and SolGold's self-belief has been rewarded: drilling at Cascabel hit over a

kilometre of rock grading over 1 per cent copper equivalent. It was “nothing short of extraordinary,” Mather said, and “one of the best results in the history of mineral exploration.”
     In October, Newcrest dived in, pumping $23m into the company at 16p, joining Guyana Goldfields as an investor. BHP then tried to buy into the underlying Cascabel project, but was publicly rebuffed. “Nick told them where to go,” one analyst says, “which I think he took great delight in doing.” Then Newcrest upscaled its investment, pumping in another $40m at 41p, paying a premium to SolGold's share price.
     Cashed-up, SolGold now has four rigs turning on the property and is aiming for ten by the end of the year, punching into targets along a 1.3km-long corridor.
     Its focus to date has been on one deposit, Alpala, but the company is now lumbering-up to test a second, Aguinaga, to demonstrate that it is sitting on a much larger mineralised system. “At the moment, Alpala isn't quite big enough to be a stand-alone operation,” according to The Angry Geologist, a metal-mad anonymous blogger based in Paraguay. But if Aguinaga matches Alpala, the entire land package will easily add up to a large new mine.
     It would be a slam-dunk victory for...