Luca to Acquire Mexico's Cozamin for Up to US$385 Million in 2026 Q4

en.Wedoany.com Reported - Luca Mining Corp. (TSXV:LUCA, OTCQX:LUCMF) has signed a definitive agreement to acquire 100% interest in the Cozamin underground copper mine in Zacatecas State, Mexico, from Capstone Copper Corp. (TSX:CS), for consideration of up to US$385 million, expected to close in Q4 2026, subject to approval by Mexico's Federal Economic Competition Commission and the TSX Venture Exchange (TSXV). The economic effective date of the transaction is October 31, 2026, with cash flow accruing to Luca from November 1; at closing, the asset is expected to carry US$20 million to US$30 million in cash, and Luca states the transaction is immediately accretive.

Of the consideration, US$290 million is upfront, comprising US$275 million in cash and US$15 million in Luca shares; US$35 million is payable 12 months after closing, in cash or shares; and the remaining US$60 million is contingent on copper prices—if the London Metal Exchange (LME) average copper price reaches US$7.00, US$7.76, and US$8.51 per pound, Capstone receives US$10 million, US$15 million, and US$20 million per year, respectively, applicable to each year from 2027 to 2029. Of the US$300 million financing, Taurus and Macquarie provide US$125 million in term debt; National Bank of Canada Capital Markets leads a C$155 million (approximately US$110 million) bought-deal subscription receipt offering at C$1.00 per receipt; and a concurrent private placement of C$56 million (approximately US$40 million) is subscribed by Wheaton Precious Metals (TSX:WPM, NYSE:WPM) and Taurus. Wheaton is also providing a US$25 million silver stream, and Trafigura has committed equity backstop support.

Cozamin was previously recapitalized by Capstone using proceeds from a US$150 million Wheaton stream transaction in 2020, funding a new paste backfill plant and dry-stack tailings facility. The processing plant is designed for 4,400 tonnes per day, currently approximately 3,700 tonnes; 2025 production was 25,300 tonnes of copper at a C1 cash cost of US$1.32 per pound, with the mine site approximately 5 kilometers from Zacatecas City. As of December 31, 2025, historical reserves stand at 6.7 million tonnes at 1.40% copper grade and 42.2 g/T silver grade, supporting operations to approximately 2030; when the mine was built about 20 years ago, its mine life was only eight years. Half of its silver is already committed to Wheaton, so extending the mine life extends the value of the stream transaction.

CEO Dan Barnholden estimates the mine generates approximately US$140 million to US$150 million in site-level free cash flow annually after sustaining capital; presentation materials cite Visible Alpha estimates of US$133 million in unlevered free cash flow for 2026 and US$139 million for 2027. Funds will be used for Cozamin exploration, further investment in Campo Morado and Tahuehueto, and development of El Barqueño. Prior to the transaction, Luca had minimal debt; pro forma debt is approximately US$126 million, with repayment amortizing quarterly starting six months after financial closing, and it must hedge 25% of Cozamin's copper production from 2027 to 2029. Barnholden notes the share price is approximately C$1.00 per share, with operating cash flow estimated at approximately 42 cents per share next year, valuing the company at less than three times cash flow.

Luca plans to increase annual exploration spending at Cozamin from approximately US$2 million to US$3 million in recent years under Capstone to US$7 million to US$10 million. The El Barqueño gold project announced the same day was acquired from Agnico Eagle Mines (TSX:AEM, NYSE:AEM), located in Jalisco; Agnico acquired it in 2014 and drilled approximately 225,000 meters over ten years, with exploration spending of approximately US$75 million. Luca has converted it to an underground mine design, estimating potential annual production of 50,000 to 75,000 ounces of gold equivalent, with total resources across all categories of approximately 1 million ounces, gold grade above 1.5 g/T, with associated silver and base metals; due to local land-use designation changes, it is estimated to take 12 to 18 months before returning to site drilling.

Upon completion of the transaction, Cozamin will become Luca's third producing asset after Campo Morado and Tahuehueto, and with El Barqueño, a total of four, with copper accounting for approximately 45% of its 2027 pro forma revenue.