Goldgroup Mining invests C$101.1M in Luca Mining subscription receipts
Receipt conversion would give Goldgroup a 19.9 per cent stake after the Cozamin acquisition, with board nomination rights tied to ownership.
Ines Halvorsen
On Oct. 14, a C$101.1 million investment closed as Goldgroup Mining Inc. CVEGORO NYSEAMERICANGORO FRA55G bought subscription receipts to help finance a Mexican mine acquisition, the company said on Thursday. It paid C$1 apiece for 101,123,662 receipts.
The investment is in Luca Mining Corp. CVELUCA OTCMKTSLUCMF FRAZ68, where Goldgroup expects a 19.9 per cent holding on a non-diluted basis after the Cozamin acquisition and full receipt conversion. Goldgroup held no Luca securities before the investment.
Luca said on Oct. 14 that net financing proceeds will partly fund the acquisition's cash consideration, with proceeds held in escrow pending release conditions. The financing remains subject to final TSX Venture Exchange approval, and its initial escrow release deadline is Feb. 28, 2027.
Goldgroup shares closed at C$4.59 on the TSX Venture Exchange on Oct. 14, down 4.6 per cent, according to Google Finance's CVEGORO quote at 4 p.m. EDT. That close preceded Thursday's completion announcement.
Goldgroup operates the Don David and Cerro Prieto gold mines in Mexico. In its Sept. 28 commitment announcement, the company said it intended to fund the investment from existing cash, including proceeds of a private placement completed on Sept. 25 that raised approximately US$121.8 million gross.
The outlay ties part of Goldgroup's recently raised capital to Luca's acquisition financing. Its September cash forecast was before transaction costs and other committed uses; Thursday's announcement did not provide an updated cash balance.
For Luca holders, full conversion would expand the share count and bring a new substantial shareholder with rights to maintain its stake through future equity financings and certain dilutive issuances. Those rights, and the right to nominate two directors, apply once Goldgroup beneficially owns at least 10 per cent of outstanding Luca shares and continue while that threshold is maintained.
"Goldgroup acquired the Subscription Receipts as part of its strategy of evaluating strategic investments and M&A opportunities in the mining sector," the company said in Thursday's release.
Luca's Sept. 21 acquisition announcement describes Cozamin as an underground copper-silver mine in Zacatecas, Mexico. The agreed consideration is US$290 million upfront, plus up to US$95 million in deferred and contingent payments.
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Receipt Conversion Requires Release Conditions
Each receipt can become one Luca common share without further payment once the release conditions are satisfied or waived where permitted. Those conditions include satisfaction of all conditions precedent to completing the Cozamin acquisition.
Goldgroup can elect earlier conversion, but shares issued through that conversion cannot exceed 19.9 per cent of Luca's outstanding shares on a non-diluted basis without the required shareholder and regulatory approvals.
Luca's October financing terms allow extensions if acquisition closing is delayed by missing regulatory approvals. If the release conditions fail by the applicable deadline, or an earlier termination event occurs, escrowed proceeds and interest are returned proportionately and the receipts are cancelled.
The initial deadline is 5 p.m. EST on Feb. 28, 2027, with up to two successive one-month extensions for missing acquisition regulatory approvals.
