ADVZF - Adventus and Luminex Announce Merger to Create a Growth-Focused Copper-Gold Company in Ecuador | Benzinga
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TORONTO, Nov. 21, 2023 (GLOBE NEWSWIRE) -- Adventus Mining Corporation ("Adventus") (TSXV:ADZN) (OTCQX:ADVZF) and Luminex Resources Corp. ("Luminex") (TSXV:LR) (OTCQX:LUMIF) are pleased to announce that they have entered into an arrangement agreement (the "Arrangement Agreement"), pursuant to which Adventus will acquire all of the issued and outstanding common shares of Luminex (the "Luminex Shares"), in exchange for common shares of Adventus (the "Adventus Shares"), by way of a plan of arrangement (the "Transaction", with the resulting entity referred to as the "Resulting Issuer"). The Transaction will create a combined company that intends to lead the advancement of the El Domo-Curipamba copper-gold project (the "El Domo Project") towards production and consolidates a large and prospective gold-copper development and exploration portfolio in Ecuador totalling over 135,000 hectares which includes the preliminary economic assessment ("PEA") stage Condor gold project (the "Condor Project"). Further details of the Transaction are outlined below.
Transaction Highlights
- Exceptional Shareholder Base & Renewed Support – Brings together the support of members of Mr. Ross Beaty's Lumina Group, local Ecuadorian investors and strategic and equity investors that include Altius Minerals Corporation ("Altius") and Wheaton Precious Metals Corp. ("Wheaton"). A concurrent financing for approximately US$17.1 million, with participation by Mr. Ross Beaty and Wheaton is expected to be completed as part of the Transaction (described below).
- Well-Capitalized Copper-Gold Company – Transaction establishes a well-capitalized copper-gold company focused on the advancement of the El Domo Project and consolidation of one of the largest exploration portfolios in Ecuador for future growth potential. The El Domo Project, with a completed feasibility study centred on a shallow and high-grade copper-gold dominant deposit1 , is supported by an investment contract with the Government of Ecuador and is on track for a construction decision in the first half of 2024.
- Large Pipeline Gold Project – 98.7% ownership of the gold-copper Condor Project, adjacent to Lundin Gold's Fruta del Norte project and Tongling / China Rail's Mirador project. A PEA was completed in 2021 highlighting a 12-year operation producing 187k ounces of gold per year and a US$562 million after-tax NPV5% and a 20.3% after-tax IRR at US$1,760/oz gold2.
- Industry Leading Exploration Portfolio – Combined exploration portfolio totalling over 135,000 hectares across 13 projects will be one of the largest land packages in Ecuador with approximately US$50 million in joint venture partner spending to date, and which continues to see funding interest from third parties.
- Synergy & Cost Savings – Post Transaction, the Resulting Issuer will be led by a strengthened board, and a management team with a proven history and in-country track record of discovery, exploration success, mine building, operations, community engagement and monetization. The Resulting Issuer is expected to save approximately US$2 million per annum through synergies.
- Value Creation & Potential for Shareholders – Expected to directly add liquidity and a greater following, while establishing a path to production at the El Domo Project: one of the highest grade and lowest capital intensity copper-gold projects globally.
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1 The El Domo Project feasibility study is a NI 43-101 Technical Report entitled: "NI 43-101 Technical Report - Feasibility Study - Curipamba El Domo Project - Central Ecuador", filed on SEDAR+ on December 10, 2021.
2 The PEA is preliminary in nature and includes inferred mineral resources that are considered too speculative geologically to have the economic considerations applied to them that would enable them to be categorized as mineral resources, and there is no certainty the PEA will be realized. Mineral resources that are not mineral reserves do not have demonstrated economic viability. The Condor Project PEA was based on the July 28, 2021 mineral resource estimate and base case economics were calculated using a gold price of $1,600 per ounce and a silver price of $21.00 per ounce, details of which, together with a summary of capital and operating expenditure estimates, assumptions and qualifications used by the qualified persons in preparing the PEA and the underlying mineral resource estimate, are disclosed in the report.
Christian Kargl-Simard, President and CEO of Adventus, commented: "This Transaction is an exciting opportunity to unite complementary assets, teams, and investors to create value for all Adventus and Luminex shareholders. 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. 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."
Marshall Koval, CEO of Luminex, commented: "We are very pleased to be entering into this combination with Adventus. The Adventus team has done a tremendous job advancing the El Domo Project from an exploration and PEA stage project to the expected start of construction in the first half of 2024. This combination gives Luminex shareholders a more immediate re-rating and return potential from the advancement of the El Domo Project, while reinforcing the growth and new discovery potential of the combined exploration portfolio."
Concurrent with the Transaction, Adventus and Luminex plan to raise approximately US$17.1 million in equity, as a combination of US$13.5 million in a fully committed non-brokered private placement (the "Non-Brokered Private Placement") of subscription receipts of Adventus (the "Subscription Receipts"), and approximately C$5 million (approximately US$3.64 million based on the US$/C$ exchange rate on November 21, 2023) in a brokered "bought deal" private placement (the "Bought Deal Private Placement", and together with the Non-Brokered Private Placement, the "Concurrent Financing") of units (the "Units") of Adventus, co-led by Raymond James Ltd. and National Bank Financial Inc?., on their own behalf and on behalf of a syndicate of investment dealer?s (collectively, the "Underwriters"). In respect of the Non-Brokered Private Placement, Adventus and Luminex have received firm commitments for US$13.5 million in total, comprised of lead orders from Mr. Ross Beaty, Wheaton, and certain of Luminex's existing Ecuadorian investors. Further details of the Concurrent Financing are outlined below.
Altius, Adventus' largest shareholder, has agreed to extend its outstanding US$4 million unsecured convertible debenture until December 31, 2024, subject to completion of the Non-Brokered Private Placement (the "Loan Amendment"). As Altius is an insider of Adventus, the Loan Amendment constitutes a "related party transaction" within the meaning of Multilateral Instrument 61-101 – Protection of Minority Security Holders in Special Transactions ("MI 61-101"). The Loan Amendment is exempt from the formal valuation and minority approval requirements of MI 61-101 as, at the time it was agreed to, neither the fair market value thereof, nor the fair market value of the consideration therefor, exceeds 25% of Adventus' market capitalization.
Transaction Terms
Pursuant to the terms and conditions of the Arrangement Agreement, the holders of the issued and outstanding Luminex Shares will receive 0.67 Adventus Shares for each one (1) Luminex Share held (the "Exchange Ratio"). Luminex options that are outstanding at the time of completion of the Transaction shall be exchanged in accordance with the Exchange Ratio for similar securities to purchase Adventus Shares on substantially the same terms and conditions, and outstanding warrants of Luminex will become exercisable, based on the Exchange Ratio, to purchase Adventus Shares on substantially the same terms and conditions. The Transaction will be carried out by way of a court-approved plan of arrangement under the Business Corporations Act (British Columbia).
Upon completion of the Transaction, the Resulting Issuer will continue to be listed as a Tier 1 mining issuer on the TSX Venture Exchange ("TSXV") under the same Adventus name and ticker symbol, as well as on the OTCQX. Prior to completion of the Concurrent Financing, existing shareholders of Adventus will own approximately 61% of the Resulting Issuer and existing shareholders of Luminex will own approximately 39% of the Resulting Issuer on an undiluted basis. Mr. Ross Beaty is expected to be the only shareholder post completion of the Transaction and the Concurrent Financing to own greater than 10% of the issued and outstanding shares of the Resulting Issuer, owning approximately 13% on an undiluted basis.
The Arrangement Agreement contains customary reciprocal deal-protection provisions including non-solicitation covenants and a right to match ...