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Shares of Naipu Mining Machinery took a sharp plunge after the Chinese mining equipment supplier decided to back out of acquiring a stake in CMH Colombia, the company that holds development rights to Colombia’s Alacrán copper, gold, and silver mine.
Naipu’s stock closed down 17 percent today at 40.86 Chinese yuan (about $5.89 USD) in Shenzhen. The company announced it would no longer proceed with the acquisition because of several factors: Colombia’s environmental licensing authority had yet to approve the deal, Cordoba Minerals, a partner in the joint venture, requested revisions to the payment terms, and heightened global geopolitical tensions increased uncertainties.
Last May, JCHX Mining Management disclosed its plan to purchase the remaining share of CMH Colombia through its Swiss subsidiary, Veritas Resources, for between $108 million and $128 million—dependent on copper prices at the time on the London Metal Exchange. To fund this, Veritas planned to issue new shares to Naipu and other investors.
Once finalized, Veritas was set to develop the Alacrán mine, including constructing facilities for producing copper concentrate and gold-silver concentrate. The project was anticipated to take around two years to build, with an estimated mine lifespan of approximately 14.2 years.
The total investment for the Alacrán project was projected at $420.4 million, to be split among Veritas shareholders based on their ownership stakes, according to initial plans. In May, Naipu had stated its intention to invest up to $51.3 million to acquire nearly a 23 percent stake, making it the second-largest shareholder.
The Alacrán deposit is an open-pit operation expected to yield approximately 797 million pounds of copper, 550,000 ounces of gold, and 5.35 million ounces of silver during its lifetime, as detailed in the project feasibility study provided by JCHX.
JCHX has not yet disclosed how Naipu’s withdrawal might influence its acquisition strategy. Its stock declined slightly today, closing at 75.33 yuan in Shanghai.
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