Capstone Mining Corp. [CS-TSX] said Tuesday it has agreed to merge with Mantos Copper, a Chilean-focused company that is run by British investment firm Audley Capital Advisors and Orion Mine Finance.
Upon completion of the transaction, Mantos will be renamed Capstone Copper Corp and will remain headquartered in Vancouver. It will also apply to have its shares listed on the Toronto Stock Exchange.
The transaction will establish Capstone Copper as a premier copper producer with a diversified portfolio of high-quality, long life operating assets focused on the Americas with an extensive pipeline of near-term organic growth opportunities.
It will feature a 2021 copper production base of 175,000 tonnes of copper from four mines and 4.9 million tonnes of copper reserves.
On November 29, 2021, Capstone shares closed at $6.15 and currently trade in a 52-week range of $6.64 and $1.80.
Capstone is a Canadian base metals mining company with a focus on copper. Its portfolio includes the Pinto Valley copper mine in Arizona, and the Cozamin copper-silver mine in Zacatecas, Mexico. In addition, Capstone holds a 70% interest in Santo Domingo, a large scale, fully-permitted, copper-iron-gold project in Region 111, Chile, in partnership with Korea Resources Corp.
Earlier this year, the company closed a US$150 million streaming agreement with Wheaton Precious Metals Corp. (WPM-TSX, WPM-NYSE) covering 50% of the silver production at Capstone’s Cozamin mine.
Capstone described the deal as transformational, giving it one of the lowest debt positions amongst base metal producers at a time when he is expecting significant copper production and cash flow growth.
In 2021, Capstone has said it expects to produce between 175 and 190 million pounds of copper at a cash cost of between US$1.75 and US$1.90 per pound.
The company is currently advancing two operational growth projects (at Cozamin and Pinto Valley) in a bid to sustain 200 million pounds of copper production, starting in 2022.
Under the deal announced Tuesday, each Capstone shareholder will received one newly issued Capstone Copper share for each Capstone share held. Existing Mantos shareholders will continue to hold Capstone Copper shares.
Once the transaction is complete, former Capstone and Mantos shareholders will collectively own 60.75% and 39.5% of Capstone Copper respectively.
John MacKenzie, Executive Chairman and founder of Mantos, will become CEO of Capstone Copper. Darren Pylot, currently President and CEO of Capstone, will become Executive Chair of the new company.
The combined company anticipates production growth of over 45% by 2024 to 260,000 tonnes of copper annually form fully financed projects.
Upon completion of the transaction, Mantos’ largest shareholder, funds managed by Orion Resource Partners, will become an approximately 32% shareholder of Capstone Copper.