In morning trade the BHP Billiton Limited (ASX: BHP) share price has drifted lower despite announcing the acquisition of a stake in a highly coveted copper and gold operation.
At the time of writing the mining giant's shares are down almost 1% to $32.83.
What has happened?
This morning BHP announced that it has entered into an agreement with Guyana Goldfields Inc. to acquire its 6.1% interest in SolGold Plc, the majority owner and operator of the Cascabel porphyry copper-gold project in Ecuador.
This isn't the first time that BHP has been interested in acquiring a stake in London-listed SolGold. In 2016 BHP made a conditional, non-binding offer to acquire a 10% stake in SolGold for US$30 million. But SolGold's management rebuffed the proposal and later accepted a bid from gold mining giant Newcrest Mining Limited (ASX: NCM).
BHP may regret not increasing its bid for the stake. The 6.1% stake it has agreed to buy today will come at a cost of £27.4 million (US$35.2 million).
Why are miners interested in SolGold?
The main attraction to SolGold is its Cascabel porphyry copper-gold project in Ecuador which has been compared to the world class Oyu Tolgoi copper mine in Mongolia owned by Rio Tinto Limited (ASX: RIO).
BHP chief executive officer, Andrew Mackenzie, stated that the investment in SolGold would give the company exposure to a high-quality copper exploration project in Ecuador, which is a highly prospective location for BHP.
He said that: "Consistent with our positive long-term outlook, copper is a key exploration focus for BHP as we seek to replenish our resource base and grow this important business."
Should you invest?
While the purchase of this small stake isn't necessarily a game-changer at this stage, I wouldn't be surprised if BHP has its eyes on acquiring the whole of SolGold in the future. If the Cascabel porphyry copper-gold project lives up to the hype, that could be a smart way for the miner to invest a portion of its mountain of cash.
In light of this, I feel BHP remains a good investment option, just as long as a trade war doesn't hurt global economic growth and demand for commodities.