(NewsDirect)
Luca Mining Corp. (the “ Company ” or“ Luca ”, formerly Altaley Mining Corporation) is pleased toannounce an overall financing package of up to CAD $33,200,000 (the“ Financing Package ”) in place of the previously proposedrights offering (the “ Rights Offering ”) (see theCompany’s news release dated December 6, 2022). The FinancingPackage is comprised of a private placement and two strategic debtsettlements, as described below.
FinancingHighlights
- Strengthening the Company’s balance sheetthrough a strategic debt conversion of approximately CAD$8,000,000with its offtake partner Trafigura and CAD$4,900,000 with its leadinvestor Calu Opportunity Fund LP.
- Private placement, toraise gross proceeds of up to approximately CAD $20.3 million
- Net proceeds will allow the Company to complete constructionof its Tahuehueto phase 1 goal of 500 tonnes per day by Q2 2023 andanticipates construction of the 1,000 tpd project before the end of2023.
Financing Package
The Company will not be proceeding with itspreviously announced Rights Offering due to significant interest inan equity raise by way of private placement at a higher price than itwould have been able to conduct the Rights Offering. Accordingly, theCompany has arranged a strategic debt conversion with its offtakepartner Trafigura De Mexico, S.A. de C.V. (“ Trafigura ”)inthe amount of US$5,800,000 (approximately CAD $8,000,000) andconcurrently has arranged an additional financing (the“ Financing ”), comprised of a private placement and debtsettlement, to raise gross proceeds of up to approximately CAD $25.2million (of which $4.9M (the “ Initial Advance ”) hasbeen advanced and deployed by the Company), for its 100% ownedTahuehueto Gold project and for working capital purposes. Net proceedswill allow the Company to complete construction of its Tahuehuetophase 1 goal of 500 tonnes per day (“ tpd ”) and makesubstantial progress on construction towards completion of phase 2, at1000 tpd. The Company anticipates that the additional capital achievedfrom Tahuehueto preproduction revenues will allow the Company tocomplete construction of the 1,000 tpd project before the end of2023.
The Companyhas received significant support in the Financing from CaluOpportunity Fund, LP (“ Calu ”), which is a lender to theCompany and was the proposed stand-by guarantor under the plannedRights Offering (discussed above). Calu advanced CAD $9,180,000 (the“ Total Advance ”) to the Company under the Rights Offeringguarantee, of which the Company has spent the Initial Advance of CAD$4,900,000 over recent months to continue the construction of theTahuehueto Mine. [A1] Accordingly, Calu has graciously agreed toconvert the Initial Advance plus invest an additional estimated amountof CAD $5,250,000 and become the lead investor in the Financing. Inaccordance with the policies of the TSXV as the Initial Advance hasalready been spent on operations by the Company, that amount of theFinancing must be processed as a debt settlement (the “ DebtSettlement ”) which will be completed on the same terms as thePrivate Placement described below, and together with the PrivatePlacement comprises the Financing.
Pursuant to the Private Placement, the Companyintends to sell up to 58,000,000 units from treasury (the“ Units ”) at a price of CAD $0.35 per Unit for aggregategross proceeds of up to CAD $20,300,000. The Company reserves theright to oversubscribe the Private Placement by 20%, pursuant to whichthe Company may sell an additional 11,600,000 Units for gross proceedsof up to CAD $4,060,000 should there be significant additionaldemand.
Each Unitshall consist of one common share of the Company (a “ UnitShare ”) and one-half of one transferable share purchase warrant(each whole warrant, a “ Warrant ”). Each Warrant shallentitle the holder thereof to acquire one additional common share (a“ Warrant Share ”) at a price of CAD $0.50 per Warrant Sharefor a period ending two (2) years (the “ Expiry Date ”)following the closing of the Private Placement (the “ ClosingDate ”), subject to an acceleration clause.
If, at any time betweenthe Closing Date and the Expiry Date, the closing price of theCompany’s common shares (“ Shares ”) on the TSXV exceeds$0.90 for 15 consecutive trading days, then the Company will earn theright, by providing notice (the “ Acceleration Notice ”) tothe Warrant holder via a news release, to accelerate the Expiry Dateof the Warrants to that date which is 30 days from the date of theAcceleration Notice (the “ Accelerated Expiry Date ”). Insuch instance, all Warrants that are not exercised prior to theAccelerated Expiry Date will expire on the Accelerated ExpiryDate.
The Companyexpects Calu to subscribe for an estimated amount of CAD $5,250,000(15,000,000 Units, the “ Calu PP Investment ”) which togetherwith the Debt Settlement of 14,000,000 Debt Settlement units (the“ DS Units ”) having the same terms as the above PrivatePlacement Units, represents an overall $10,150,000 investment in theCompany by Calu.
The completion of the Calu PP Investment and Debt Settlement,together with the previously announced debt settlement between theCompany and Calu, would result in Calu becoming the Company’sControl Person, holding approximately 33% of the Company’s thenoutstanding Shares, on an undiluted basis.
Trafigura DebtConversion & Loan Waivers
Concurrently with the Financing the Company has agreed withTrafigura to waivers on loans existing under three loan agreements inplace for both the Campo Morado and Tahuehueto subsidiaries. Theremaining balances for the loans (prior to the above debt settlement)to Campo Morado are CAD $6.7 million, and that for Tahuehueto is CAD$17.2m. The agreed terms for the waivers are as follows:
- A waiver of 12 months(commencing November 30 th , 2022) for the Tahuehuetoloan
- A waiver of 6 months (commencing November30 th , 2022) for the Campo Morado loans
Trafigura has alsoagreed to convert US $5.8 million of the outstanding loans(approximately CAD $8 million) into common shares at CAD $0.35 pershare plus 6,750,000 non-transferable share purchase warrants (the“ Trafigura Warrants ”) and entered into amending agreementsin respect of its outstanding loans. Each Trafigura Warrant will beexercisable into one common share of the Company at a price of CAD$0.43 per share for a period ending three (3) years from their date ofissue. Pursuant to the amending agreements, the overall loan amountoutstanding will decrease from approximately US $17 million toapproximately US $11 million. As per the above, Trafigura has agreedto waive principal payments for the Real de la Bufa (Tahuehueto) loanto November 2023, and the Campo Morado loans to May 2023. The Companyexpects to finalize documentation with Trafigura upon closing of thePrivate Placement.
Messages from CEO
Mike Struthers, CEO of Luca Mining, stated:“ This is a transformational period for the Company. The FinancingPackage is a major step in the Company’s restructuring, combiningthe conversion of significant debt and infusion of substantial newcapital, which on closing will result in a major improvement to theCompany’s balance sheet. Strong financial backing, taking furthersteps to restructure the balance sheet, the name change and addingadditional strength to the board over the coming months, are allimportant elements towards making 2023 a very successful year for LucaMining.
Weare particularly grateful to Calu and Trafigura for continuing to workwith us to progress the completion of the Tahuehueto Mine. We believe their decision to convert a sizeable portion of their loans intoequity, which will result in Calu and Trafigura becoming the twolargest shareholders, demonstrates their confidence in management andLuca Mining’s development and growth plans. The Company has offtakeagreements in place with Trafigura for concentrate from both the CampoMorado and Tahuehueto mines. Tahuehueto will achieve crucialmilestones this year, and we also expect our existing operation atCampo Morado to have a strong performance in 2023. The support ofexisting and new investors is vital to making all thishappen .”
Allsecurities issued in connection with the Financing Package will besubject to a four month plus one day hold period under applicableCanadian securities laws. The Financing Package is subject to theapproval of the TSXV.
Certain insiders of the Company are expected to participate inthe Financing. This participation by insiders in the Financingconstitutes a related party transaction as defined under MultilateralInstrument 61-101 -- Protection of Minority Security Holders inSpecial Transactions . However, the Company considers suchparticipation would be exempt from the formal valuation and minorityshareholder approval requirements of MI 61-101, as the fair marketvalue of the Units subscribed for by the insiders and theconsideration for the Units paid by such insiders, would not exceed 25per cent of the Company's market capitalization.
The Private Placementwill be available to existing securityholders of the Company utilizingBC Instrument 45-534 - Exemption from Prospectus Requirements forCertain Trades to Existing Securityholders and other provincialequivalents (collectively, the “ Existing Security HolderExemptions ”). The Company will make the Private Placementavailable to all shareholders of the Company as of March 31, 2023 (the“ Record Date ”) who are eligible to participate under theExisting Security Holder Exemptions and who have notified the Companyof their intention to participate in the Private Placement. TheExisting Security Holder Exemptions limit a shareholder to a maximuminvestment of $15,000 unless the shareholder certifies in thesubscription agreement that they have obtained advice regarding thesuitability of the investment from a registered investment dealer orotherwise qualifies to rely on another private placement exemption.
In thesubscription agreement, shareholders will be required to certify that,on or before the Record Date, they acquired and held, Shares. Eachexisting shareholder on the Record Date will be entitled to purchaseShares which will be allocated by the Company on a first come, firstserved basis such that it is possible that a subscription receivedfrom a shareholder may not be accepted by the Company if the PrivatePlacement is over-subscribed. Any person who becomes a shareholder ofthe Company after the Record Date shall not be entitled to participatein the Private Placement under the Existing Security HolderExemptions.
Inconnection with the Private Placement, the Company intends to payfinders’ fees (the “ Finders’ Fees ”) in cash andsecurities, as permitted by TSXV policy and applicable securitieslaws. It is expected the Finder’s Fees will be paid in cash equal to6% of the proceeds plus Warrants equal to 6% of the number of Unitsplaced by the applicable finder.
About Luca MiningCorp.
Luca Mining Corp is a Canadian based mining companywith two 100% owned Mexican gold, silver, and base metal miningprojects.
Luca's Tahuehueto mining project is innorth-western Durango State, Mexico, where construction of an initial500 tpd operation is well advanced. The second stage, the 1000 tpdproject, will follow immediately after commissioning the initialstage. The operation is generating gold, silver, lead, and zinc inconcentrates.
Campo Morado is an operating polymetallic basemetal mine in Guerrero, Mexico, currently producing at an average ofapproximately 2,400 tonnes per day, generating zinc and copperconcentrates with significant precious metal credits.
Visit:www.lucamining.com
On Behalf of the Board ofDirectors
(signed) “Mike Struthers”
MikeStruthers
CEO and Director
Cautionary NoteRegarding Production Decisions and Forward-LookingStatements
Neither TSX Venture Exchange nor its RegulationServices Provider (as that term is defined in the policies of the TSXVenture Exchange) accepts responsibility for the adequacy or accuracyof this release.
It should be noted that Luca declaredcommercial production at Campo Morado prior to completing afeasibility study of mineral reserves demonstrating economic andtechnical viability. Accordingly, readers should be cautioned thatLuca’s production decision has been made without a comprehensivefeasibility study of established reserves such that there is greaterrisk and uncertainty as to future economic results from the CampoMorado mine and a higher technical risk of failure than would be thecase if a feasibility study were completed and relied upon to make aproduction decision. Luca has completed a preliminary economicassessment (“PEA”) mining study on the Campo Morado mine thatprovides a conceptual life of mine plan and a preliminary economicanalysis based on the previously identified mineral resources (seeNews Release dated November 8, 2017, and April 4, 2018). ).Furthermore, It should be noted that Luca intends to commencepre-production and ramp up to full commercial production at Tahuehuetoprior to completing a feasibility study of mineral reservesdemonstrating economic and technical viability. Accordingly, readersshould be cautioned that Luca’s pre-production and productiondecisions will be made without a comprehensive feasibility study ofestablished reserves such that there is greater risk and uncertaintyas to future economic results from the Tahuehueto mine and a highertechnical risk of failure than would be the case if a feasibilitystudy were completed and relied upon to make such productiondecisions. Luca has completed a positive pre-feasibility study (the“Pre-Feasibility Study”) and updated mineral reserves/resourcesestimates at its flagship Tahuehueto Mine that provides a conceptuallife of mine plan and a preliminary economic analysis based on a 1,000tonne per day operation (see News Release dated March 7, 2022)
Statements contained in this news release that are nothistorical facts are "forward-looking information" or"forward-looking statements" (collectively,"Forward-Looking Information") within the meaning ofapplicable Canadian securities laws. Forward-Looking Informationincludes but is not limited to conditions or financial performancethat are based on assumptions about future economic conditions andcourses of action; the timing and costs of future activities on theCompany's properties, such as production rates and increases;success of exploration, development and bulk sample processingactivities, and timing for processing at its own mineral processingfacility on the Tahuehueto project site. In certain cases,Forward-Looking Information can be identified using words and phrasessuch as "plans," "expects," "scheduled,""estimates," "forecasts," "intends,""anticipates" or variations of such words and phrases. Inpreparing the Forward-Looking Information in this news release, theCompany has applied several material assumptions, including, but notlimited to, that the current exploration, development, environmentaland other objectives concerning the Campo Morado Mine and theTahuehueto Project can be achieved; that commencement ofpre-production mining and milling operations at Tahuehueto willproceed as planned; the continuity of the price of gold and othermetals, economic and political conditions, and operations.Forward-Looking Information involves known and unknown risks,uncertainties and other factors which may cause the actual results,performance, or achievements of the Company to be materially differentfrom any future results, performance or achievements expressed orimplied by the Forward-Looking Information. There can be no assurancethat Forward-Looking Information will prove to be accurate, as actualresults and future events could differ materially from thoseanticipated in such statements. Accordingly, readers should not placeundue reliance on Forward-Looking Information. Except as required bylaw, the Company does not assume any obligation to release publiclyany revisions to Forward-Looking Information contained in this newsrelease to reflect events or circumstances after the date hereof or toreflect the occurrence of unanticipated events.
ContactDetails
Glen Sandwell
+1 604-684-8071
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