Goldgroup Mining commits US$75M to Luca receipt offering
The proposed subscription would leave Goldgroup with about US$91 million in cash before costs and other commitments.
Mara Quinlan
Goldgroup Mining Inc. CVEGORO NYSEAMERICANGORO FRA55G said Monday it committed US$75 million to Luca Mining Corp. CVELUCA OTCMKTSLUCMF for a stake tied to Luca's proposed Cozamin mine purchase. Goldgroup said the investment would leave about US$91 million of its approximately US$166 million cash balance, before transaction costs and other committed uses.
Goldgroup shares fell 4.0 per cent to US$3.36 on NYSE American NYSEAMERICANGORO at 4 p.m. EDT Monday. Luca shares fell 0.88 per cent to C$1.12 on the TSX Venture Exchange CVELUCA at 4 p.m. EDT Monday.
Luca said Sept. 28 Goldgroup will take US$75 million of its US$110 million brokered subscription receipt offering, or a different amount that gives Goldgroup about 19.9 per cent ownership after the proposed acquisition. Luca intends to use the offering's net proceeds toward the cash portion of the mine purchase, while Goldgroup plans to fund its subscription from existing cash.
Luca's Sept. 21 purchase agreement sets the Cozamin price at US$290 million upfront, comprising US$275 million in cash and US$15 million in Luca shares. A further US$35 million is due on the first closing anniversary, payable in cash or Luca shares, and up to US$60 million more is contingent on higher copper prices. Both the receipt offering and the proposed mine purchase remain subject to their own closing conditions.
Goldgroup raised about US$121.8 million on Sept. 25 through a non-brokered placement of 33.38 million units at US$3.65 each. Its Sept. 28 announcement says proceeds from that placement are among the existing cash it plans to use for the Luca subscription. Goldgroup's US$91 million remaining-cash estimate precedes transaction costs and other committed uses.
"The Investment Commitment replaces the US$75 million equity backstop that Trafigura Pte Ltd. had previously provided to Luca for the Cozamin Acquisition," Goldgroup said in its Sept. 28 release.
The receipts convert one for one into Luca shares when escrow conditions are met, including conditions for the Cozamin purchase and required approvals. Goldgroup can elect earlier conversion only if its stake stays at or below 19.9 per cent and Luca does not need a shareholder vote. The TSX Venture Exchange must approve the placement, including Goldgroup's participation and investor rights.
Those rights allow Goldgroup to nominate two Luca directors while it owns at least 10 per cent of Luca's outstanding shares. They also include participation in future equity offerings and protection against dilution, subject to conditions in Luca's Sept. 28 announcement. The projected 19.9 per cent stake depends on receipt conversion and the Cozamin acquisition closing.
Read more: Goldgroup Mining raises US$122M, issues 33.38M units
Shares and warrants from Goldgroup's Sept. 25 placement remain subject to a Canadian statutory hold ending Jan. 26, 2027.
