Chinese mining company CMOC Group has agreed to acquire Canada’s Lumina Gold in an all-cash deal valued at C$581-million.
The transaction, announced on Monday, will mark a step forward for the development of the Cangrejos gold project in Ecuador.
“After advancing the Cangrejos project for over ten years and taking it from no defined resources to being poised to be one of the largest gold projects globally, the Lumina Group is excited for the transition of the Cangrejos project to CMOC,” said Lumina CEO Marshall Koval.
“This transition is the culmination of more than a decade of work advancing Cangrejos from grassroots to one of the world’s largest undeveloped gold projects,” said Koval.
“[We] look forward to working with CMOC and all existing stakeholders to ensure the successful future development of the project.”
The Chinese-backed company will pay C$1.27 a Lumina share, representing a 71% premium to the company’s 20-day volume weighted average and a 41% premium to the April 17 closing price. The transaction, to be completed via a court-approved plan of arrangement, has the backing of shareholders holding 52.3% of Lumina’s stock.
In tandem with the acquisition agreement, CMOC has agreed to provide $20-million in interim financing through the purchase of unsecured convertible notes. The notes, maturing in April 2026 and bearing 6% yearly interest, are convertible into Lumina shares at C$1.00.
The transaction includes standard deal protections, including a C$23.3-million break fee and a C$2.8-million expense reimbursement clause. Lumina retains a fiduciary out, allowing it to accept a superior proposal, subject to CMOC’s right to match.
According to Lumina, the Cangrejos project, in south-west Ecuador, is one of the biggest undeveloped gold projects globally, boasting a 26-year mine life. The latest available prefeasibility study outlined average payable production of 371 000 oz/y of gold and 41-million pounds a year of copper, with gold accounting for nearly 80% of the project‘s revenue. On a gold-equivalent basis, average output is expected to reach 469 000 oz/y over the life-of-mine.
The project is designed to scale up over time, starting as a 30 000 t/d operation in its first three years, doubling to 60 000 t/d in year four and reaching 80 000 t/d by year seven.
At base-case prices, the project delivers an after-tax net present value of $2.2-billion and a 17.2% internal rate of return. Initial capital costs are estimated at $925-million, and all-in sustaining costs are projected at $671/oz, net of by-product credits.