Luca Mining (TSXV: LUCA) has agreed to acquire the Cozamin copper-silver mine in Mexico’s Zacatecas state from Capstone Copper (TSX: CS) for up to US$385 million, a deal the company expects to more than double its 2027 production.
Luca will pay US$290 million upfront, made up of US$275 million in cash and US$15 million in Luca shares issued to Capstone at C$1.00 apiece. Another US$35 million is due on the first anniversary of closing, payable in cash or stock at Luca’s discretion.
The remaining US$60 million is tied to copper prices. Capstone can collect 1 payment in each of 2027, 2028 and 2029 if the average LME copper cash price clears set thresholds, ranging from US$10 million at US$7.00/lb to US$20 million at US$8.51/lb.
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Covering the upfront cash requires a US$300 million financing package. It includes a C$155 million (US$110 million) bought deal of subscription receipts led by National Bank, with Trafigura backstopping up to US$75 million, and a US$40 million concurrent placement with Wheaton Precious Metals and Taurus. Taurus and Macquarie are providing a US$125 million, 4-year acquisition loan, and Wheaton is contributing a further US$25 million through an additional silver stream.
That stream sits on top of an existing one that already takes 50% of Cozamin’s refined silver. The new arrangement adds another 15% until 500,000 ounces have been delivered. Luca will also hedge 25% of Cozamin’s forecast copper sales for 36 months starting in 2027.
Cozamin has been in continuous production for 20 years. Its flotation plant can handle up to 4,400 tonnes per day and has averaged roughly 3,670 tonnes per day over the past 5 years, with mine output rather than mill capacity acting as the constraint.
Capstone’s historical reserve-based mine plan runs through 2030. Luca says it will not adopt that plan, and intends to spend well beyond the roughly US$2 million a year recently put into exploration in an effort to extend mine life.
Based on consensus estimates, Luca projects combined 2027 net revenue of about US$598 million and operating cash flow of roughly US$223 million. That compares with 2025 net revenue of US$177 million and operating cash flow of US$37 million.
“The acquisition of Cozamin represents a transformational step for Luca,” said CEO Dan Barnholden. He added that the mine has consistently replaced depletion over nearly 2 decades, with large portions of its mineralized systems still open and underexplored.
Luca expects the added cash flow to help fund the El Barqueño project it agreed to buy from Agnico Eagle last week, along with its Campo Morado expansion.
The transaction is expected to close in the fourth quarter of 2026, pending approval from Mexico’s federal antitrust commission and the TSXV. The cash payment carries a ticking fee of US$700,000 a month if closing slips past October 31.
Luca Mining last traded at $1.11 on the TSX Venture.
