Ecuador-focused copper-gold exploration and development company Adventus (TSXV:ADZN) and Vancouver-based Luminex Resources (TSXV:LR) have entered into a merger. The resulting combined company will work towards the advancement of the El Domo copper-gold project.
Here to give The Market Herald Canada readers the details is Luminex CEO Marshall Koval and Adventus President and CEO Christian Kargl-Simard.
TMH: Tell us about the agreement between Adventus and Luminex. What is the significance behind this decision to put these two companies together?
Kargl-Simard: Marshall and I, we sat down in September at the Beaver Creek conference and from the beginning we had really great alignment and a combined vision to grow a significant copper-gold company focused in Ecuador. And together we’re clearly stronger, more relevant going into 2024 and beyond.
TMH: And Marshall, how does this transaction benefit Luminex in the advancement of its Condor project?
Koval: Yeah, there’s a couple areas where it really benefits us. First of all, the Luminex team and people that’ll stay on the board and some of the expertise we have in mine development will assist Adventus with the El Domo construction.
That’s one aspect, but it gives the joint company a development pipeline project in Condor where we have made a significant discovery beyond the PEA that we put out in 2021. And that PEA had about a $387 million NPV at $1,600 gold and about $500 million sort of at $1,760.
So we’ll be able to advance the Condor project, it’ll be the second development project behind El Domo and that really helps the combined company. El Domo will have been built, but we will have learned how to operate in Ecuador, build it, constructing and operating a project by then.
So that’s one of the main reasons to look at this merger.
TMH: And Christian, how does the transaction benefit Adventus and its construction-ready El Domo project, and how does this combination create a better entity moving forward?
Kargl-Simard: We love the Luminex properties. So Adventus has three copper-gold projects or gold-copper projects. Luminex adds approximately 10 additional projects that are gold, copper, copper-gold. So, the complement of assets in a combined portfolio results in an immediate to long-term pipeline of growth projects in Ecuador.
So clearly a very, very good fit. Adventus has a very strong shareholder register on its own and so does Luminex. And you combine these two registers together and I would argue we have one of the best shareholder registers in the junior mining sector.
If you can get Ross Beaty onto a register, it’s an amazing confirmation of assets and people. And I think combined we’re much stronger both in the capital markets and advancing our assets in Ecuador.
So together a combined reputation capacity empowers us to do significantly more in Ecuador and within the global capital markets. And it also results in G and A savings as well, which we expect to be about $2 million a year.
TMH: Alright. And alongside the transaction, Adventus and Luminex plan to raise just over $17 million U.S. Can you break down the details of this raise and the use of the proceeds?
Kargl-Simard: This has been a very challenging market in 2023 to raise capital for junior companies. So a really important part of this transaction is mirroring our shareholder bases and our ability to raise capital as a combined group. So, there’s two parts to this transaction. The first part is a non-brokered private placement of $13.5 million U.S., which is fully committed by three to four significant shareholders.
So that’s broken down as Wheaton Precious Metals, which is a major shareholder of Adventus, Ross Beaty and a group of Ecuadorian entrepreneurial investors. Alongside that, we did a brokered bought deal private placement for $5 million, which is oversubscribed and that is meant to allow long-term investors of Luminex and Adventus to participate alongside the strategic long-term investors.
TMH: And Marshall, on the non-broker private placement side, you have received commitments for $13.5 million U.S. with a strong base, which includes Ross Beaty. What can you share about his and some of the other backer’s involvement?
Koval: I’ve been working with Ross since 2004 and we entered Ecuador looking at development exploration type projects, but (in a) similar timeframe we started Equinox Gold and it’s a producing gold company.
I think in the market today, we really see a lot more interest in advanced development stories and production stories. And that’s been part of Ross’ interest in this deal, (which) is looking at what we’ve done and accomplished in Luminex.
We have about 6 million, 6 and a half million ounces of gold in the resource categories and we still have a way to go with development, but this gives us an opportunity to get a re-rating towards a producer.
Obviously, the construction hopefully will start in the next six, eight months, in that timeframe and then we’ll see the company transform from an explorer-developer to a joint company into a producer.
And that was a lot of interest. And then the Ecuadorian groups that are a very diversified group of individual businessmen throughout the country, and they’ll really help us with in-country knowledge, in-country financing and help us navigate some of the politics as well. They tend to be apolitical, so being strong businessmen, they can work with any administration.
TMH: Alright. And Christian, what is the expected news flow over the next six months?
Kargl-Simard: We expect a lot of news flow.
In October of this year, we received one of our key secondary permits to construct El Domo. We have four more secondary permits to go. We’ve got our final environmental license, which is in the final stages.
So, I think we’re kicking up the momentum on final permits for completion in the first half of next year. There’s the preparation for the start of construction at El Domo in Q2 of next year. And Marshall and I are going to sit down here and talk about this in more details, but we have now 13 projects in Ecuador, all of them very prospective.
There’s a ton of optionality there and we are now top two, maybe three largest concession holders in Ecuador. Any major company that is interested in Ecuador has to talk to us.
So, I think there’s a lot of opportunity in terms of deals to be done on our assets, but at the same time we’re drilling multiple projects while we’re getting ready to construct a major mine. So, I think that’s going to be more bespoke in terms of news flow on exploration, but there’s a lot to be done there.
Adventus Mining trades on the TSXV under the symbol ADZN and Luminex Resources trades on the TSXV under the symbol LR . You can stay updated at https://www.adventusmining.com/ or https://luminexresources.com/.
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