In a move to diversify its holdings and expand its geographical reach, Canadian miner Silvercorp Metals (TSX: SVM) (NYSE American: SVM) has announced the acquisition of Adventus Mining (TSXV: ADZN) for $146 million. The all-stock deal grants Silvercorp a 75% interest in the El Domo copper-gold project located in Ecuador.
Silvercorp Gains Copper-Gold Project in Ecuador
The acquisition agreement, announced on Friday, involves Silvercorp issuing 0.1015 of a common share for each Adventus share acquired. This represents a 31% premium on the 20-day volume-weighted average price of both companies’ shares. Following the acquisition, Silvercorp shareholders will own approximately 81.6% of the combined company, while Adventus shareholders will hold the remaining 18.4%.
Commenting on the deal, Silvercorp Chairman and CEO Rui Feng said the acquisition creates “a new globally diversified green metals producer.” He added that Silvercorp’s expertise will be valuable in bringing the El Domo project to production.
The El Domo project is an advanced-stage copper-gold deposit with a completed feasibility study. The study envisions a 10-year mine life with an average annual production of over 10,000 tonnes of copper. The project boasts high-grade copper reserves and a low capital intensity, making it attractive for development.
Adventus Previously Partnered with Salazar Resources
Prior to the acquisition by Silvercorp, Adventus held a 75% interest in the El Domo project, with Canadian miner Salazar Resources (TSXV: SRL) holding the remaining 25%. Adventus earned its majority stake by fulfilling a $25 million exploration spending requirement.
Under a joint venture agreement, Adventus was responsible for funding the project’s capital costs until production begins. The company would also receive a larger share of the project’s free cash flow until its investments are recouped.
Silvercorp believes its experience in mine construction can accelerate the development of El Domo. The company has a proven track record of building mines and processing facilities, and it has the financial resources to fully fund the project through construction.
The El Domo project benefits from an existing investment protection agreement with the Ecuadorian government and holds all the necessary permits for development, including environmental licenses.
Silvercorp Acquires Additional Exploration Properties
In addition to El Domo, Adventus holds several other exploration properties in Ecuador, including the Condor project, which is at the preliminary economic assessment stage. Condor has the potential to be a long-life mine producing significant quantities of gold and silver.
The acquisition of Adventus provides Silvercorp with a strategic foothold in South America and a promising copper-gold project with significant development upside. The company’s expertise and financial resources position it well to advance El Domo and potentially unlock the value of Adventus’s other exploration assets.
Source: Mining.com
