Adventus Mining Corporation (TSXV: ADZN) (OTCQX: ADVZF) and Luminex Resources Corp. (TSXV: LR) (OTCQX: LUMIF) have combined in an all-share transaction to push Ecuador´s El Domo-Curipamba copper-gold project into production.
The combined company will own one of the largest gold-copper portfolios in Ecuador covering 135,000 hectares across 13 projects. The portfolio has received US$50 million in joint venture partner spending to date.
El Domo project has a completed feasibility study centred on a shallow and high-grade copper-gold deposit. It is also supported by a contract with Ecuador´s government and is waiting for construction authorization, expected in the first half of 2024.
The combined company will own 98.7 per cent of the Condor Project, which is located next to Lundin Gold Inc.´s (TSX: LUG) (Nasdaq Stockholm: LUG) (OTCQX: LUGDF) Fruta del Norte project and Tongling Nonferrous Metals Mirador copper project.
In 2021, a preliminary economic assessment was conducted, revealing that Condor could operate for 12 years, producing 187,000 ounces of gold annually. The assessment also showed a favourable financial outlook with a US$562 million after-tax net value.
The combined company will have concurrent US$17 million of equity financing with participation by Ross Beaty and Wheaton Precious Metals Corp. (NYSE: WPM) (TSX: WPM). Beaty is the founder of the leading silver producer Pan American Silver Corp. (NYSE: PAAS) and the chairman of Equinox Gold Corp. (NYSEAMERICAN: EQX).
The transaction also has the support of local Ecuadorian investors and equity investors including Altius Minerals Corp. (TSE: ALS) and the consulting firm Lumina Group.
“Adventus is pleased to welcome Mr. Ross Beaty, members of the Lumina Group, and new investors as we continue the advancement of the El Domo Project towards future cash-flowing operations,” Adventus CEO Christian Kargi-Simard said in a statement on Tuesday.
“For Adventus shareholders, the new capital and acquisition of Luminex’s Condor Project and other properties allows the creation of a stronger and more diversified company with one of the largest copper-gold exploration portfolios in Ecuador.”
Under the arrangement agreement, Luminex shareholders will receive 0.67 Adventus shares for each share held. Adventus shareholders will own about 61 per cent, while Luminex shareholders will own about 39 per cent. Ross Beaty will be one of the largest shareholders with around 13 per cent.
The transaction is expected to be completed by January 2024.
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El Domo-Curipamba copper-gold project is located in central Ecuador around 150 kilometres north east of Guayaquil. The feasibility study for El Domo showed that the project can be a low-cost supplier of copper, gold and zinc, generating cash flows after taxation of US$449 million over the initial six years of production.
Luminex CEO Marshall Koval said the merger gives Luminex shareholders a more immediate re-rating and return potential from the advancement of the project.
In December last year, Salazar Resources Limited (TSXV: SRL) (OTCQB: SRLZF) and Adventus signed an investment contract with the Government of Ecuador to develop the El Domo project until March 2033.
In 2022, Adventus secured a project financing package of over US$235 million with Wheaton Precious Metals and Trafigura for the future construction of El Domo.
Under the government contract, the companies have financial, tax and legal incentives such as the exemption of import and export duties and the ability to import contractor equipment from free-trade countries without duties.
Five years ago Adventus Mining and Salazar Resources entered into an agreement allowing Adventus to earn a majority interest in the project by funding exploration and development expenditures of US$25 million over five years. Adventus funds capital costs to production and receives 95 per cent of the free cashflows until all investments are repaid.
