Concurrent US$17.1 Million of Equity Financing with Participation by Ross Beaty and Wheaton Precious Metals Corp.
Adventus and Luminex announce merger. (Credit: Khusen Rustamov from Pixabay)
Adventus Mining Corporation (“Adventus”) (TSXV: ADZN) (OTCQX: ADVZF) and Luminex Resources Corp. (“Luminex”) (TSXV: LR) (OTCQX: LUMIF) are pleased to announce that they have entered into an arrangement agreement (the “Arrangement Agreement”), pursuant to which Adventus will acquire all of the issued and outstanding common shares of Luminex (the “Luminex Shares”), in exchange for common shares of Adventus (the “Adventus Shares”), by way of a plan of arrangement (the “Transaction”, with the resulting entity referred to as the “Resulting Issuer”). The Transaction will create a combined company that intends to lead the advancement of the El Domo-Curipamba copper-gold project (the “El Domo Project”) towards production and consolidates a large and prospective gold-copper development and exploration portfolio in Ecuador totalling over 135,000 hectares which includes the preliminary economic assessment (“PEA”) stage Condor gold project (the “Condor Project”). Further details of the Transaction are outlined below.
Exceptional Shareholder Base & Renewed Support – Brings together the support of members of Mr. Ross Beaty’s Lumina Group, local Ecuadorian investors and strategic and equity investors that include Altius Minerals Corporation (“Altius”) and Wheaton Precious Metals Corp. (“Wheaton”). A concurrent financing for approximately US$17.1 million, with participation by Mr. Ross Beaty and Wheaton is expected to be completed as part of the Transaction (described below).
Well-Capitalized Copper-Gold Company – Transaction establishes a well-capitalized copper-gold company focused on the advancement of the El Domo Project and consolidation of one of the largest exploration portfolios in Ecuador for future growth potential. The El Domo Project, with a completed feasibility study centred on a shallow and high-grade copper-gold dominant deposit1 , is supported by an investment contract with the Government of Ecuador and is on track for a construction decision in the first half of 2024.
Large Pipeline Gold Project – 98.7% ownership of the gold-copper Condor Project, adjacent to Lundin Gold’s Fruta del Norte project and Tongling / China Rail’s Mirador project. A PEA was completed in 2021 highlighting a 12-year operation producing 187k ounces of gold per year and a US$562 million after-tax NPV5% and a 20.3% after-tax IRR at US$1,760/oz gold2.
Industry Leading Exploration Portfolio – Combined exploration portfolio totalling over 135,000 hectares across 13 projects will be one of the largest land packages in Ecuador with approximately US$50 million in joint venture partner spending to date, and which continues to see funding interest from third parties.
Synergy & Cost Savings – Post Transaction, the Resulting Issuer will be led by a strengthened board, and a management team with a proven history and in-country track record of discovery, exploration success, mine building, operations, community engagement and monetization. The Resulting Issuer is expected to save approximately US$2 million per annum through synergies.
Value Creation & Potential for Shareholders – Expected to directly add liquidity and a greater following, while establishing a path to production at the El Domo Project: one of the highest grade and lowest capital intensity copper-gold projects globally.
Christian Kargl-Simard, President and CEO of Adventus, commented: “This Transaction is an exciting opportunity to unite complementary assets, teams, and investors to create value for all Adventus and Luminex shareholders. Adventus is pleased to welcome Mr. Ross Beaty, members of the Lumina Group, and new investors as we continue the advancement of the El Domo Project towards future cash flowing operations. 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.”
Marshall Koval, CEO of Luminex, commented: “We are very pleased to be entering into this combination with Adventus. The Adventus team has done a tremendous job advancing the El Domo Project from an exploration and PEA stage project to the expected start of construction in the first half of 2024. This combination gives Luminex shareholders a more immediate re-rating and return potential from the advancement of the El Domo Project, while reinforcing the growth and new discovery potential of the combined exploration portfolio.”
Concurrent with the Transaction, Adventus and Luminex plan to raise approximately US$17.1 million in equity, as a combination of US$13.5 million in a fully committed non-brokered private placement (the “Non-Brokered Private Placement”) of subscription receipts of Adventus (the “Subscription Receipts”), and approximately C$5 million (approximately US$3.64 million based on the US$/C$ exchange rate on November 21, 2023) in a brokered “bought deal” private placement (the “Bought Deal Private Placement”, and together with the Non-Brokered Private Placement, the “Concurrent Financing”) of units (the “Units”) of Adventus, co-led by Raymond James Ltd. and National Bank Financial Inc., on their own behalf and on behalf of a syndicate of investment dealers (collectively, the “Underwriters”). In respect of the Non-Brokered Private Placement, Adventus and Luminex have received firm commitments for US$13.5 million in total, comprised of lead orders from Mr. Ross Beaty, Wheaton, and certain of Luminex’s existing Ecuadorian investors. Further details of the Concurrent Financing are outlined below.
Altius, Adventus’ largest shareholder, has agreed to extend its outstanding US$4 million unsecured convertible debenture until December 31, 2024, subject to completion of the Non-Brokered Private Placement (the “Loan Amendment”). As Altius is an insider of Adventus, the Loan Amendment constitutes a “related party transaction” within the meaning of Multilateral Instrument 61-101 – Protection of Minority Security Holders in Special Transactions (“MI 61-101”). The Loan Amendment is exempt from the formal valuation and minority approval requirements of MI 61-101 as, at the time it was agreed to, neither the fair market value thereof, nor the fair market value of the consideration therefor, exceeds 25% of Adventus’ market capitalization.
Pursuant to the terms and conditions of the Arrangement Agreement, the holders of the issued and outstanding Luminex Shares will receive 0.67 Adventus Shares for each one (1) Luminex Share held (the “Exchange Ratio”). Luminex options that are outstanding at the time of completion of the Transaction shall be exchanged in accordance with the Exchange Ratio for similar securities to purchase Adventus Shares on substantially the same terms and conditions, and outstanding warrants of Luminex will become exercisable, based on the Exchange Ratio, to purchase Adventus Shares on substantially the same terms and conditions. The Transaction will be carried out by way of a court-approved plan of arrangement under the Business Corporations Act (British Columbia).
Upon completion of the Transaction, the Resulting Issuer will continue to be listed as a Tier 1 mining issuer on the TSX Venture Exchange (“TSXV”) under the same Adventus name and ticker symbol, as well as on the OTCQX. Prior to completion of the Concurrent Financing, existing shareholders of Adventus will own approximately 61% of the Resulting Issuer and existing shareholders of Luminex will own approximately 39% of the Resulting Issuer on an undiluted basis. Mr. Ross Beaty is expected to be the only shareholder post completion of the Transaction and the Concurrent Financing to own greater than 10% of the issued and outstanding shares of the Resulting Issuer, owning approximately 13% on an undiluted basis.
The Arrangement Agreement contains customary reciprocal deal-protection provisions including non-solicitation covenants and a right to match any superior proposal as defined in the Arrangement Agreement. Under certain circumstances, Adventus or Luminex would be entitled to a termination fee of US$1,200,000. In connection with the Transaction, certain officers of Luminex shall agree to receive part of any change of control amounts owed in the form of Luminex Shares, which shall have a deemed value per Luminex Share equal to C$0.194 per share (the “Change of Control Share Settlement”). Any Change of Control Share Settlement is subject to the approval of the TSXV.
Complete details of the Transaction will be included in a management information circular to be delivered to Luminex securityholders in the coming weeks.
The completion of the Transaction is subject to a number of terms and conditions, including without limitation the following: (a) approval of the Luminex securityholders, as described below; (b) approval of the TSXV; (c) approval of the British Columbia Supreme Court; (d) there being no material adverse changes in respect of either Adventus or Luminex; (e) a minimum of US$13.5 million in gross proceeds from the Concurrent Financing (which is fully committed, see Concurrent Financing below), and other standard conditions of closing for a transaction of this nature. There can be no assurance that all of the necessary approvals will be obtained or that all conditions of closing will be satisfied.
The Transaction is subject to the approval at a special meeting of Luminex securityholders by (i) 662/3% of the votes cast by Luminex shareholders, (ii) 662/3 % of the votes cast by Luminex shareholders and optionholders, voting together as a single class, and (iii) if required, a simple majority of the votes cast by the Luminex shareholders, excluding the votes cast by certain persons as required by MI 61-101. Adventus and Luminex are arm’s length parties and, accordingly, the Transaction is not a related party transaction.
Upon closing of the Transaction, the board of directors of the Resulting Issuer (the “Resulting Issuer Board”) will be comprised of eight (8) members, including three (3) nominees from Luminex. Mr. Christian Kargl-Simard will remain serving as President, CEO and Director of the Resulting Issuer and lead the combined management and project team. The head office will continue to be in Toronto, Canada.
The Resulting Issuer Board is expected to be led by Mr. Mark Wellings and is anticipated to include Ms. Karina Rogers, Mr. Leif Nilsson, Mr. David Darquea Schettini, Mr. David Farrell and Mr. Ron Halas as independent directors, and Mr. Christian Kargl-Simard and Mr. Marshall Koval as non-independent directors. Advisors to the Resulting Issuer Board will continue to be Mr. Christian Aramayo and Mr. Gerardo Fernandez; Adventus also anticipates the addition of Mr. Leo Hathaway in an advisory role.
Source: Company Press Release