Friedland-backed Cordoba sells Alacrán copper project

Cordoba Minerals (TSXV: CDB; US-OTC: CDBMF) has agreed to sell its remaining half-interest in the Alacrán copper project to a consortium of investors including China’s JCHX for cash of up to $128 million (C$178 million).

The Alacrán project is positioned to be Colombia’s largest copper mine, and the government has already designated it a “project of national interest.” Alacrán is permitted and in the advanced development stage.

Ivanhoe Electric (NYSE-A: IE; TSX: IE), where mining billionaire Friedland is executive chairman, owns 63% of Cordoba. Following the sale, Cordoba’s sole asset will be the Perseverance copper project in Arizona, which it is exploring under a joint venture with Bell Copper (TSXV: BCU; US-OTC: BCUFF). Ivanhoe Electric is developing the Santa Cruz copper project in the same state. 

Thursday’s deal includes an initial cash payment of $88 million plus a deferred payment of $12 million once the project reaches commercial production (or three years after closing, whichever is earlier). In addition, Cordoba could earn either $8 million or $28 million in contingent payments depending on the copper market at the time of commercial production.

On Toronto markets in Canadian dollars, Cordoba Minerals surged to a new 52-week high of 92¢ apiece on Wednesday in Toronto before the announcement, when its trading was halted. The company has a market capitalization of $83.8 million. Shares in Ivanhoe Electric gained 3% on Thursday afternoon in Toronto to $8.96 each for a market capitalization around $1.17 billion. 

Track record

In late 2022, JCHX partnered with Cordoba on Alacrán by acquiring a 50% stake for $100 million. At the time, the Chinese firm was already a strategic shareholder of Cordoba, and currently owns 19.8% of its stock.

“This transaction represents an opportunity to expedite the advancement of the Alacrán project,” commented Sarah Armstrong-Montoya, president and CEO of Cordoba. “With a strong track record in delivering large-scale international mining projects on budget and ahead of schedule, JCHX is well-positioned to unlock the full potential of the Alacrán deposit alongside its consortium partners.”

Once built, the open pit mine is expected to produce nearly 800 million lb. of the red-colored metal, plus economic amounts of gold and silver, over 14 years, according to a feasibility study from 2023. The project’s after-tax net present value was estimated at $360 million (at an 8% discount), with an internal rate of return of 24% and a payback period of three years. Its initial capital cost was pegged at $420 million.

The Alacrán deposit in the municipality of Puerto Libertador is part of Cordoba’s larger San Matias exploration property, which will also be sold to the consortium.