In a significant development for Ecuador’s mining industry, Canadian junior Adventus Mining (TSXV:ADZN) (OTCQX:ADVZF) is set to acquire Luminex Resources (TSXV:LR) (OTCQX:LUMIF), forming a new entity focused on copper-gold development in Ecuador. The transaction, structured as a merger, entails Adventus Mining absorbing Luminex, with Luminex shareholders receiving 0.67 of an Adventus share for each share they hold. This move is expected to consolidate the two companies’ strengths, leading to a more robust presence in the South American mining landscape.
Adventus chief executive Christian Kargl-Simard commented in a press release: “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.”
The newly formed company, which will continue to operate under the Adventus name and ticker, will focus on advancing two primary projects in Ecuador. The El Domo-Curipamba copper-gold deposit, currently at the feasibility stage, is recognized for its high copper-gold grades and low capital intensity. It has garnered interest from the Ecuadorian government and is undergoing environmental consultations, with a construction decision anticipated in the first half of 2024. The other key project is the Condor gold project, in the preliminary economic assessment (PEA) stage. Located in southeastern Ecuador, near the Fruta del Norte mine and the El Mirador copper mine, the Condor project’s preliminary economic assessment, completed in 2021, predicts a 12-year operation producing 187,000 ounces of gold annually.
The merger will create a company with one of the largest exploration portfolios in Ecuador, encompassing over 135,000 hectares across 13 projects. This expansion reflects a strategic move to consolidate a significant presence in a country rich in mining potential.
The business combination has garnered support from influential figures in the mining sector, including geologist and entrepreneur Ross Beaty’s Lumina Group, local Ecuadorian investors, and strategic equity investors like Altius Minerals and Wheaton Precious Metals. Post-transaction, Adventus shareholders are set to own 61% of the new entity, with Luminex shareholders owning the remaining 39%. Ross Beaty is expected to be the sole shareholder with more than 10% of the issued and outstanding shares. Concurrent with the transaction, the companies announced a financing round of approximately $17.1 million, with participation from Beaty and Wheaton.
Mining is a significant contributor to Ecuador’s economy, ranking as the fourth-largest source of income last year, following oil, bananas, and shrimp, and contributing $2.8 billion to the state’s coffers. However, the sector faces challenges, including growing opposition to extractive activities. According to the country’s Chamber of Mining, this opposition is impeding nearly $1 billion in potential investment and delaying about 100 projects over the next two years. Despite these challenges, projects like SolGold’s (LON: SOLG) Cascabel copper-gold project, which recently received a 25-year license renewal, demonstrate the ongoing potential and interest in Ecuador’s mining sector.
This merger between Adventus and Luminex represents a strategic consolidation in the industry, aiming to leverage the strengths of both companies to advance copper-gold mining projects in Ecuador, a region with significant untapped potential.
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|Lincoln Minerals Limited