China-based CMOC Group—the largest producer of cobalt—announced an all-cash acquisition of Canadian mining company Lumina Gold for C$581 million. After the deal closes, CMOC will gain control over the Cangarejos gold-copper project, one of the largest undeveloped gold assets located in southwest Ecuador.
This deal is based on C$1.27 per Lumina share, which represents a 71% premium to Lumina’s 20-day volume-weighted average and a 41% premium to the company’s April 17 closing price. It is structured through a court-approved plan of arrangement and has already gained support from shareholders holding 52.3% of Lumina’s outstanding shares.
This agreement includes deal protections like a C$23.3 million termination fee payable by Lumina under certain circumstances and a C$2.8 million expense reimbursement clause in CMOC’s favor. Lumina will have a fiduciary out so it can consider potentially better proposals.
CMOC will also buy unsecured convertible notes to provide US$20 million in interim financing to Lumina. The notes mature in April 2026, carry a 6% annual interest rate, and convert into Lumina shares at C$1 per share. This financing would support ongoing development at Cangrejos before the transaction’s closing.
Advisors/Counsel: Moelis & Company is acting as financial advisor to Lumina. And RBC Capital Markets has provided a fairness opinion to the Lumina Board. Borden Ladner Gervais, Skadden Arps Slate Meagher & Flom, and Tobar ZVS are acting as legal counsel to Lumina in Canada, the U.S. and Ecuador, respectively. BMO Capital Markets is working as financial advisor to CMOC. And McCarthy Tétrault, Bustamante Fabara, and Flor Bustamante Pizarro & Hurtado are acting as legal counsel to CMOC in Canada and Ecuador, respectively. PricewaterhouseCoopers is acting as tax advisor to CMOC.
KEY QUOTE:
“After advancing the Cangrejos project for over 10-years and taking it from no defined resources to being poised to be one of the largest gold projects globally, the Lumina Group is excited for the transition of the Cangrejos project to CMOC. The Lumina team looks forward to working with CMOC and all existing stakeholders to ensure the successful future development of the project.”
Marshall Koval, CEO of Lumina
