Adventus finalizes US$55M Trafigura offtake for El Domo; looks to raise another US$40M in debt

Adventus Mining (TSXV: ADZN) has finalized a US$55-million offtake financing agreement with Trafigura for the construction of its 75%-owned El Domo-Curipamba copper-gold project in Ecuador. 

Of the total US$248-million estimated project capex, Adventus has now locked down US$235.5 million. The development is a joint venture with Salazar Resources (TSXV: SRL). 

The total US$235.5-million financing was previously announced in January, including a US$185-million streaming deal with Wheaton Precious Metals (TSX: WPM; NYSE: WPM). 

The now definitive agreement with Trafigura consists of a US$45-million senior debt facility, US$5 million of which can be accessed early for preconstruction activities at El Domo. The remainder of the cash consideration will be payable in two instalments during construction, subject to certain conditions. 

The deal includes an offtake agreement that gives Trafigura rights to certain concentrates produced over the life-of-mine. Adventus has also issued 13.5 million common share purchase warrants to Trafigura priced at 51.3¢ per common share. If fully exercised, the warrants could give Adventus $7 million in return for 8% of Adventus’s shares on a partially diluted basis. 

Adventus Mining’s Curipamba project in Ecuador. Credit: Adventus Mining

Adventus is in talks to raise another $40 million in debt to “serve as an optional future cash buffer” for the project. It has so far only drawn down US$2.5 million of the total funds secured. 

The company is also waiting for the government to approve the start of the Environmental Social Impact Assessment (ESIA) process, which is expected to take six months. In a note to clients, Haywood Securities mining analyst Pierre Vaillancourt noted that the process has already been delayed by two months because of protests against the government. 

“This timeframe means that the final ESIA could be granted in 1Q23 instead of the original completion date of 4Q22,” he wrote. “The project has a mining licence already, so construction could start with the receipt of the ESIA. Despite the schedule slippage, ADZN is maintaining a construction start for 2Q23.” 

A feasibility study was completed last fall for the project showing positive economics for an open pit mine at the El Domo VMS deposit. 

The project has an after-tax net present value (at an 8% discount rate) of US$259 million and an internal rate of return of 32%. The mine would have a 14-year life, producing a total of 100,274 tonnes of copper, 17,344 tonnes of lead, 176,166 tonnes of zinc, 335,928 oz. of gold, and 8.6 million oz. of silver. 

Adventus shares recently traded at 43¢ per share in a 52-week window of 36¢ and $1.10. The junior has a market capitalization of $71.5 million.