Capstone Copper (TSX:CS) is selling its Cozamin mine in Zacatecas, Mexico, to Luca Mining (TSX-V:LUCA) in a deal worth up to US$385 million ($540.7 million) as it looks to strengthen its balance sheet.
Under a definitive agreement announced on Monday, Capstone will receive an upfront cash payment of US$275 million from Luca for the underground copper-silver operation.
Luca will also pay US$15 million in shares at closing, followed by another US$35 million — payable in cash or shares — one year later.
Capstone could receive a further US$60 million in cash through contingent payments tied to annual average copper prices.
“The transaction optimises our portfolio and further strengthens our balance sheet, enabling us to redeploy capital into our high-return growth projects,” Capstone Copper CEO Cashel Meagher says.
Two decades of production
Cozamin, located 3.6km northwest of Zacatecas, has been operating since 2006. At the time, the mine had a processing capacity of 1,000 tonnes per day and just three years of reserves.
Successful exploration has since extended its mine life to 2030, while processing capacity has more than quadrupled.
According to Capstone, Cozamin is forecast to average 20,000 tonnes of copper and 1.3 million ounces of silver annually between 2023 and 2030, at average C1 costs of US$1.51 per payable pound of copper.
“Cozamin has been an important part of our portfolio, providing stability and strong cash flows as Capstone has matured into a diversified copper producer,” Meagher says.
Luca adds third mine
For Luca, the acquisition is expected to more than double its 2027 production profile, increase cash flow generation, and boost its exposure to copper and silver.
“We are acquiring a long-standing, cash-generating underground mine with established infrastructure, a strong operating history and significant remaining mineral potential, while materially increasing our production and cash flow profile,” Luca CEO Dan Barnholden says.
The transaction adds a third producing asset in Mexico to Luca’s portfolio, alongside the Campo Morado polymetallic operation in Guerrero and the Tahuehueto gold-silver mine in Durango.
Barnholden also highlighted further exploration potential at Cozamin, noting the operation has consistently replaced mined material through nearly two decades of production.
“The mine has consistently replaced depletion through nearly two decades of production, yet substantial portions of the mineralised systems remain open and underexplored,” Barnholden says.
Capstone Copper is an Americas-focused copper mining company headquartered in Vancouver, Canada, with assets in the US, Mexico, and Chile.
Luca Mining is a Canadian Mexican-focused base and precious metals producer operating the Campo Morado and Tahuehueto mines.
Write to Jackson Chen at Mining.com.au
Image: Capstone Copper
