Cordoba sells 50% stake in Colombian project to China’s JCHX for $100m

Cordoba Minerals (TSXV: CDB) announced on Thursday that it has entered a strategic arrangement with JCHX Mining Management to jointly develop the company’s flagship Alacran copper-gold-silver project in Colombia. JCHX is a leading mining construction companies in China, and currently a shareholder of Cordoba.

As part of the arrangement, JCHX will purchase a 50% ownership interest in the Alacran project for total consideration of $100 million. The payment will be made in three installments: $40 million cash upon closing, expected by the end of Q1 2023; $40 million cash payable upon completion of a feasibility study for Alacran and submission of the project’s environmental impact assessment (EIA); and $20 million cash payable once approval of the EIA is obtained, which must be within two years.

JCHX will advance a bridge loan of $10 million in cash to Cordoba, which is expected to be funded prior to the end of December 2022, following the signing of the milestone agreements.

Cordoba first publicized an initial strategic relationship with JCHX in November 2019, when the latter made a C$11 million investment for a 19.9% stake in the company. The new arrangement would see the companies become joint venture partners on the Alacran project, which Cordoba acquired in June 2020.

“With JCHX’s continual unwavering confidence in Cordoba, it comes with no surprise when the time came for the Alacran project to find a partner, we conclusively arrived at JCHX,” stated Cordoba president and CEO Sarah Armstrong-Montoya in a news release.

“It is a huge advantage to have a vastly experienced mining and construction expert join us at the project level to support the development of the Alacran project, especially given that JCHX brings the added benefit of being very familiar with Cordoba,” she added.

Located 390 km northwest of Bogotá and 160 km north of Medellín, the Alacran project is positioned to be the largest copper mine in Colombia in the near future. In 2018, Alacran was declared a “Project of National Interest” by the Colombian government, which denotes a significantly high priority for the country.

An independent preliminary feasibility study published in early 2022 gave the Alacran project an after-tax net present value (at 8% discount) of $415.1 million and an internal rate of return of 25.4%, with a 2.9-year payback period. Initial capital expenditures are estimated at $434.9 million.

Financial analysis shows that 60% of the initial capital expenditure can be financed by debt. This would improve the after-tax IRR to 27.2%, but marginally reduce the NPV to $394.5 million.

Over an estimated 13-year mine life, Alacran would have average annual production of 68.8 million lb. copper, 55,000 oz. gold, and 386,000 oz. silver, processing 22,000 tonnes of ore per day.

The Alacran mine is expected to generate $190.4 million in government royalty revenue plus $514.2 million in income tax revenue to support government and social programs in Colombia and local communities.

Cordoba is currently advancing the project towards the feasibility stage through drilling. To date, the 2022 drill campaign has continued to demonstrate high-grade copper-gold mineralization within the Alacran deposit and confirm the strong correlation with the PFS block model.

An updated resource estimate will be prepared after completion of the current 25,000-metre infill drilling program.

Shares of Cordoba Minerals surged 27.5% by 1:15 p.m. ET on news of the latest arrangement with JCHX. As a result, the company’s market capitalization went up to C$44.6 million.