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Shares of JCHX Mining Management experienced an increase following its announcement to move forward with a complete acquisition of CMH Colombia, the company holding development rights to Colombia’s Alacrán copper-gold-silver mine. This decision comes just a week after two key partners withdrew from the deal.
The company’s stock closed up by 4.3%, reaching CNY75.70 (approximately USD10.95) per share, while the broader Shanghai market saw a marginal rise of 0.1%.
A Swiss subsidiary of the firm, Veritas Resources, plans to make a one-time cash payment of USD128 million to acquire all mining rights and assets of Cordoba Minerals in Colombia. This includes the remaining half of CMH Colombia that the company hasn’t yet fully acquired, aiming to expedite the preparatory phase for developing the Alacrán mine.
Last May, the company announced intentions to buy a 50% stake in CMH through Veritas for a price range of USD108 million to USD128 million, depending on copper prices at the time on the London Metal Exchange. The purchase involved issuing new shares to Naipu Mining Machinery and two other investors to fund the acquisition.
Earlier this month, Naipu and another investor withdrew from the deal citing concerns over increasing regulatory risks and difficulties in raising funds. As a result, the company’s capital contribution increased from USD25.4 million to USD122.3 million, and its ownership stake in Veritas is set to rise to 97.5%, from the initial 55%.
On February 3, Naipu announced it would not complete the stake acquisition in CMH due to Cordoba Minerals requesting adjustments to the payment terms, pending environmental approval from Colombia’s authorities, and escalating geopolitical tensions worldwide.
In response, the company agreed to modify the purchase terms, removing the environmental approval from the Colombian environmental authority as a prerequisite and accepting Cordoba Minerals’ latest proposal on how the transaction price will be determined. The company noted that so far, there have been no significant obstacles from local regulators and expressed eagerness to start development, driven by rising precious metal prices.
This deal is considered a related-party transaction because the company owns about 19% of Cordoba Minerals, making it the second-largest shareholder, and a senior executive from its controlling shareholder also serves as a director there. Additionally, the company owns a 50% stake in CMH Colombia.
The Alacrán mine is an open-pit operation expected to recover approximately 797 million pounds of copper, 550,000 ounces of gold, and 5.35 million ounces of silver over its lifecycle, according to a feasibility study provided by the company.
The total estimated investment for developing the project is USD420.4 million, to be split among Veritas shareholders in proportion to their holdings, as per initial plans.
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