Luca Mining (TSXV: LUCA) has signed a binding commitment from Goldgroup Mining that will give Goldgroup a 19.9% stake in the company. Luca is using the equity to help pay for a string of acquisitions in Mexico.
Goldgroup will invest US$75 million through Luca’s previously announced US$110 million bought deal private placement. The final amount can move so that it equals a 19.9% interest on a non-diluted pro forma basis once the Cozamin acquisition closes. The commitment replaces an equity backstop of up to US$75 million that Trafigura Pte Ltd. provided when the financing was first announced.
Goldgroup will receive subscription receipts at the offering’s C$1.00 issue price. Each receipt converts into one Luca share once escrow release conditions are met, including the closing of the Cozamin deal and the receipt of regulatory approvals. Goldgroup can also choose to convert earlier, as long as the conversion does not take its holding above 19.9% or require a shareholder vote.
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Goldgroup also gets investor rights. While it holds at least 10% of Luca’s outstanding shares, it can nominate two directors to the board and has equity participation and anti-dilution rights, subject to certain conditions.
Closing still requires TSX Venture Exchange approval.
The proceeds will cover part of the cash Luca owes Capstone Copper for the Cozamin copper-silver mine in Zacatecas. Luca agreed on September 21 to buy the mine for US$290 million upfront, made up of US$275 million in cash and US$15 million in Luca shares. It could also pay up to US$95 million more in deferred and copper price-linked contingent payments.
A US$300 million financing package backs the purchase. Besides the bought deal, it includes a US$40 million private placement with Wheaton Precious Metals and Taurus, a US$125 million senior secured loan from Taurus and Macquarie, and a US$25 million silver stream from Wheaton. Based on consensus estimates, Luca expects Cozamin to more than double its 2027 production profile.
Four days before the Cozamin deal, the company also agreed to buy the El Barqueño project from Agnico Eagle. The 32,000-hectare property in Jalisco has a historical estimate of 399,265 indicated gold equivalent ounces at 1.47 g/t, plus 650,046 inferred ounces at 1.43 g/t.
Luca already operates the Campo Morado and Tahuehueto mines. It expects both acquisitions to close in the fourth quarter.
Luca Mining last traded at $1.13 on the TSX Venture.
