The proposed C$200-million acquisition of Ecuador-focused copper and gold explorer Adventus Mining by Canadian mining company Silvercorp Metals has hit a snag, companies disclosed on Friday.
Announced in April as an all-share offer targeting TSX-V-listed Adventus Mining, the deal was poised to pivot Silvercorp, traditionally focused on China, into the South American market.
Central to the acquisition is Adventus’ El Domo project. However, litigation challenging the environmental licence for the copper project has emerged as a potential hurdle to completing the deal.
Silvercorp asserts that litigation, aimed at voiding the environmental licence, constitutes a “material adverse effect”, thereby failing to fulfill a condition outlined an arrangement agreement.
Last week, Silvercorp notified Adventus that it was not prepared to close the arrangement as planned on July 5. Nevertheless, the company indicated willingness to engage in discussions to extend the deadline for closing the deal beyond July 31.
In a separate statement, Adventus expressed disagreement with Silvercorp’s interpretation that the litigation, announced last month, represented an unmet condition for closing.
Adventus stressed that it would safeguard the interests of its securityholders and indicated that it would pursue necessary measures to uphold the arrangement.
“While Adventus may continue to have discussions with Silvercorp about the completion of the arrangement, Adventus reserves all of its rights in the event that Silvercorp fails to close the arrangement as required by the arrangement agreement, including by the ‘outside date’ under the agreement of Juley 31,” said Adventus.
The transaction has already gained shareholder approval and was cleared by the Ontario Superior Court on July 2.
Adventus is advancing the majority-owned Curipamba copper/gold project, which has a completed feasibility study on the shallow and high-grade El Domo deposit. With the merger with Luminex Resources, Adventus owns the Condor gold project and a large exploration project portfolio that spans over 135 000 ha – one of the largest holdings in Ecuador.
According to a December 2021 feasibility study, El Domo will produce an average of 10 463 t/y of copper and 21 390 t/y copper-equivalent over its ten-year mine life at a C1 production cash cost of $1.14/lb and an all-in sustaining cost of $1.26/lb copper-equivalent. The study estimates a capital cost requirement of $248-million.