Cordoba Minerals and JCHX Sign Milestone Agreements to Jointly-Develop the Alacran Project in Colombia JCHX to Acquire 50% of Cordoba's Alacran Project Stake for a Total Cash Consideration of US$100 Million
Cordoba Minerals and JCHX Sign Milestone
Agreements to Jointly-Develop the Alacran
Project in Colombia
JCHX to Acquire 50% of Cordoba's Alacran Project Stake for a
Total Cash Consideration of US$100 Million
Vancouver, British Columbia--(Newsfile Corp. - December 8, 2022) - Sarah Armstrong-Montoya,
President and Chief Executive Officer of Cordoba Minerals Corp. (TSXV: CDB) (OTCQB: CDBMF)
("Cordoba" or the "Company"),
announced today that Cordoba and JCHX Mining Management Co., Ltd.
("JCHX") have agreed to a strategic arrangement for the joint-development of the company's flagship
Alacran Project in Colombia.
Key terms of the milestone agreements signed on December 7, 2022:
JCHX - through a wholly owned subsidiary, will purchase a 50% ownership interest in CMH
Colombia S.A.S. ("CMH"), a company existing under the laws of Colombia for an aggregate
consideration of US$100 million (approximately C$136 million).
CMH will own 100% of the Alacran Project and henceforth, be the joint venture vehicle for Cordoba
and JCHX in this strategic project level partnership.
JCHX will satisfy the purchase price of US$100 million as follows:
At closing of the transaction, US$40 million will be payable in cash and is expected to occur before
the end of Q1 2023.
A second installment of US$40 million is payable in cash upon completion of a Cordoba board
approved Feasibility Study of the Alacran Project, and the submission of the Environmental Impact
Assessment ("EIA") to the relevant Colombian Government authority.
A third and final installment of US$20 million is payable in cash once the approval of the EIA is
obtained, which must be within two years of the transaction's closing date. Should the EIA not be
approved by the second anniversary of the closing date, JCHX will have the option to elect not to
complete this third and final installment, which will result in JCHX being diluted to 40% and
Cordoba increasing to a majority 60% shareholding in CMH.
JCHX will advance a bridge loan of US$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 and
conditional upon JCHX shareholder approval. Upon closing of the transaction, the entire balance
owing under the bridge loan and accrued interest will be applied towards the first installment
payment as a payment in kind.
Closing of this transaction is subject to (among other customary conditions):
FOR CORDOBA: Approval from the TSXV and approval of shareholders (excluding JCHX
and Ivanhoe Electric Inc.).
FOR JCHX: Approval from the Board of Directors, shareholders, China's State
Administration of Foreign Exchange, and Beijing Municipal Bureau of Commerce.
The bridge loan comes into effect immediately upon execution of the Bridge Loan Agreement, with
the advance occurring immediately after approval from the JCHX board and shareholders, and is
expected to be by the end of December 2022. The remainder of the transaction agreements do
not become effective until JCHX obtains shareholder approval, which is expected to be completed
in mid-January 2023.
Relationship with JCHX
Cordoba first publicized an initial strategic relationship with JCHX on November 18, 2019, announcing a
C$11 million investment by JCHX in Cordoba for a 19.9% stake. This notable transaction successfully
closed on January 17, 2020, which marked the commencement of JCHX's partnership with Cordoba.
Immediately following this investment, the Company welcomed Dr. Peng Huaisheng, President of JCHX
Group Co., Ltd. ("JCHX Group") to the Cordoba board.
"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," commented Ms. Sarah
Armstrong-Montoya, President and CEO of Cordoba.
Signing of the Investor Rights Agreement in Beijing on January 16, 2020.
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JCHX Group's Chairman, Wang Xiancheng, maintains his confidence in Cordoba and the Alacran
Project by remarking: "JCHX very much appreciates partnering with a company dedicated to excellence
and innovation - especially alongside a formidable female CEO, which speaks volumes about the
pioneering culture of Cordoba. At JCHX, we always aspire to pave the way for distinction through
determination and hard-work, and we certainly support the efforts of our partner in vigilantly establishing
best ESG practices."
Key decisions to be governed by a Joint Venture Shareholders' Agreement
A Joint Venture Shareholders' Agreement ("JV SHA") will govern the strategic relationship between
Cordoba and JCHX, and will set forth the general responsibility and authority of the CMH board of
directors ("CMH board"), in addition to the entitlements of each shareholder. The JV SHA, which will be
entered at closing, provides for among other things:
The CMH board will comprise of four individuals, of which two directors will be nominated by
Cordoba and the other two directors will be nominated by JCHX; and for so long as the
shareholdings in CMH remain 50%-50%, a Cordoba representative will serve as the Chairperson
of the Board of Directors, and will possess a casting vote on all matters subject to a list of reserved
matters.
Cordoba will be appointed as the operator and manager of the Alacran Project pursuant to a
Management Services Agreement and will be responsible for setting the annual programs and
budgets for the CMH board's approval.
JCHX (or its affiliate) has right of first offer to bid on the Engineering, Procurement and
Construction (EPC) and Detailed Design Agreement contracts, provided that Cordoba has the
right to open the process out to competitive tender; with JCHX having the right to match any
competitive bid.
JCHX (or its affiliate) shall be entitled to up to 100% of the offtake from production under the
current Feasibility Study of the Alacran Project, provided that they are paying fair market value and
they are the most competitive offer (including a matching right for other third-party proposals).
During a site visit by JCHX to Colombia in April 2022, Dr. Huaisheng Peng, President of JCHX Group
(left), and Ms. Sarah Armstrong-Montoya, President and CEO of Cordoba (center), met with Mr. Orlando
Benítez Mora, the current Governor of the Córdoba region (right).
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"As a fellow mining veteran, I must say it has not been easy for our industry to operate during a global
pandemic. But what I have witnessed during this unprecedented time, is Cordoba's commitment to its
employees and stakeholders, and it was particularly noticeable on the visit to the Alacran Project earlier
this year," commented Dr. Huaisheng Peng, President of JCHX Group.
Ongoing drilling confirms the metrics of the 2022 Pre-Feasibility Study
Cordoba continues to steadily advance the Feasibility Study for the Alacran Project, and throughout the
course of the 2022 in-fill drilling program, the company announced several compelling high-grade copper
visual intercepts - which are typically associated with gold, that further confirm the various metrics
presented in the Pre-Feasibility Study ("PFS") issued in January 2022 and entitled "NI 43-101 Technical
Report and Prefeasibility Study, San Matias Copper-Gold-Silver Project, Colombia", effective January
11, 2022 (available on SEDAR at
www.sedar.com
).
After Tax
Pre Tax
Total Initial Capital Costs
US$435 M
Unlevered Free Cash Flow
US$873 M
US$1,388 M
NPV (8% discount)
US$415 M
US$735 M
IRR
25.4%
36.1%
Payback
2.9 Years
2.2 Years
Long-term consensus pricing for Cu is US$3.60/lbs, Au is US$1.650/oz, Ag is US$21/oz
In the latest series of drilling announcements by the Company, assay results continue to demonstrate
high-grade copper-gold mineralization within the Alacran Deposit and confirm the strong correlation with
the PFS block model. An updated mineral resource estimate will be prepared after completion of the
current 25,000-m in-fill drilling program to capture the shallow high-grade zones identified in the core of
the resource area and also the multiple Carbonate Base Metal veins intersected in high-grade
structures.
A drill rig currently at the Alacran Project completing the 25,000-m initial phase of the 40,000-m in-fill
drilling program.
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"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," commented Ms. Sarah Armstrong-Montoya, President and
CEO of Cordoba. "Furthermore, during my tenure at this Company, I have witnessed JCHX's willingness
to step up as a partner and espouse the objectives and vision of the Company - which unequivocally
includes expanding the array of opportunities for the Colombian people and help broaden the already
synergistic Sino-Colombian relationship."
The Alacran Project deemed of national significance to the Colombia Government
The Alacran Project is positioned to be the largest copper mine in Colombia in the near future.
The
Colombian Government along with industry specialists have unanimously deemed the copper metal
fundamentally imperative for the new electrification and transitional energy era.
In 2018, the Alacran Project was declared a "
Project of National Interest"
by the Colombian
Government, which denotes a significantly high priority for the country. As such, Cordoba continues to be
met with exceptional enthusiasm by the Alacran Project host nation.
Situated in the south of the Córdoba region within the municipality of Puerto Libertador, the Alacran
Project is determined to make significant environmental and social contributions to the host
communities. Examples of current programs include:
Environmental Conservation Initiative: A program enabling the Company to work alongside the
local communities in inducing environmental conservation;
Community Outreach Programs: The outreach programs are designed to cover all demographics
of our local communities, including supporting women in pursuing a path of entrepreneurship;
Sustainable Future Mission: A mission focused on facilitating the economic empowerment of the
surrounding communities by equipping future generations with the necessary proficiencies and
resources to develop long-lasting and self-sustaining businesses.
Community Outreach Program
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Environmental Conservation Initiative
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Global investor call with Cordoba's senior management on Monday, December 12, 2022
Cordoba's senior management team will host a global investor call on Monday, December 12, 2022, at
11:00 AM PST to discuss the details of this strategic partnership with JCHX and also provide a general
corporate update. Details of the call will be sent via email to registered parties of Cordoba's e-mailing
list and also posted on the Cordoba website, please visit,
www.cordobaminerals.com
.
Related Party Transaction
The transactions with JCHX constitute a "related party transaction" within the meaning of Multilateral
Instrument 61-101 -
Protection of Minority Security Holders in Special Transactions
("
MI 61-101
")
because JCHX and its affiliates are significant (holding, in aggregate, greater than 10%) shareholders of
Cordoba. In addition, another significant shareholder of Cordoba, Ivanhoe Electric Inc. ("Ivanhoe"),
stands to benefit from the transaction as part of the proceeds will be used to repay certain debt owed to
Ivanhoe by Cordoba. Consequently, the transaction is subject to minority shareholder approval
requirements set forth in MI 61-101.
The transactions will require the approval of a simple majority of the votes cast at a special meeting of
Cordoba shareholders ("
Cordoba Meeting
"), that will exclude JCHX and Ivanhoe and their respective
affiliates, and any other persons required to be excluded in accordance with MI 61-101 of the Canadian
securities regulatory authorities. As a related party transaction, the board of directors of Cordoba (the
"
Board
") constituted a special committee of independent directors (the "
Special Committee
") for the
purposes of, among other things, considering the transactions, reviewing, directing and supervising the
process to be carried out by the Company and its professional advisors in assessing and negotiating
the transaction, and considering and making recommendations to the Board with respect to the
transaction. The Special Committee is composed of Mr. William Orchow as chair, and Dr. Diane
Nicolson. In considering the transaction the Special Committee retained Osler, Hoskin & Harcourt LLP
as its independent legal counsel and Haywood Securities Inc. ("Haywood") as its independent financial
advisor.
Haywood has provided a fairness opinion in respect of the transactions. The Company is exempt from
the requirement to obtain a formal valuation in accordance with MI 61-101. A copy of the fairness opinion
will be included in the management information circular to be sent to Cordoba shareholders. In addition,
Haywood has provided an opinion to the Special Committee, stating that, in their opinion and subject to
the assumptions, limitations and qualifications contained in the fairness opinion, as of the date of the
fairness opinion, the consideration to be paid pursuant to the transactions is fair, from a financial point of
view, to the shareholders of the Company (other than JCHX and its affiliates). After careful consideration
and deliberation, the Special Committee determined that the transactions are in the best interests of
Cordoba and are fair to shareholders of the Company (other than JCHX, and its
affiliates) and
unanimously recommended to the Board that the Board approve the transactions. Following receipt of
the unanimous recommendation by the Special Committee, the Board determined that the transactions
are in the best interests of Cordoba and are fair to shareholders of the Company (other than JCHX and
its affiliates) and unanimously approved the transactions.
Further information regarding the transactions will be contained in a management information circular
that Cordoba will prepare, file and mail to its shareholders in advance of the Cordoba Meeting. Copies
of the main transaction documents and management information circular will be available in due course
on SEDAR at
www.sedar.com
.
Technical Information & Qualified Person
The technical information in this release has been reviewed, verified and approved by Mark Gibson,
P.Geo., a Qualified Person for the purpose of National Instrument 43-101 -
Standards of Disclosure for
Mineral Project
("NI 43-101"). Mr. Gibson is the Chief Operating Officer of Cordoba and of Ivanhoe
Electric Inc., Cordoba's majority shareholder, and is not considered independent under NI 43-101.
Further information about the Pre-Feasibility Study and accompanying reserve estimate, including a
discussion about assumptions, parameters, methods and risks, can be found in the PFS Technical
Report.
About JCHX
Established in 1997, through its continuous and rapid development, JCHX Mining Management Co., Ltd
has become one of the top mining construction companies in China. The Company is mainly engaged in
mine development and construction, contract mining and research & development of mining
technologies.
JCHX is capable of providing comprehensive and professional services to the industry, as it has built a
reputation for its integrity and credibility. The Company specializes in underground mine development
and construction, and production mining, especially in large-section declines and tunnels development.
With an extensive fleet of mining equipment supported by highly trained employees, the Company can
provide solutions for a variety of projects, even those with the most complex geological conditions.
JCHX strives to build safe and eco-friendly projects with the spirit of high quality and efficiency through
cost-effective approaches.
JCHX is completing the underground development at the Kamoa-Kakula Copper Project, after recently
completing construction of the twin production declines. The Kamoa-Kakula Copper Project is located in
the Democratic Republic of Congo and is jointly operated by Ivanhoe Mines and Zijin Mining Group.
More information on JCHX and their current projects is available on their website:
www.jchxmc.com
.
About Cordoba
Cordoba Minerals Corp. is a mineral exploration company focused on the exploration, development and
acquisition of copper and gold projects. Cordoba is developing its 100%-owned San Matias Copper-
Gold-Silver Project, which includes the Alacran deposit and satellite deposits at Montiel East, Montiel
West and Costa Azul, located in the Department of Cordoba, Colombia. Cordoba also holds a 51%
interest in the Perseverance Copper Project in Arizona, USA, which it is exploring through a Joint
Venture and Earn-In Agreement. For further information, please visit
www.cordobaminerals.com
.
ON BEHALF OF THE COMPANY
Sarah Armstrong-Montoya, President and Chief Executive Officer
Information Contact
Ran Li +1-604-689-8765
Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the
policies of the TSX Venture Exchange) accept responsibility for the adequacy or accuracy of this
release.
Forward-Looking Statements
This news release includes "forward-looking statements" and "forward-looking information" within the
meaning of Canadian securities legislation. All statements included in this news release, other than
statements of historical fact, are forward-looking statements including, without limitation, but not
limited to, statements with respect to the transactions with JCHX, the expected approvals and closing
of the transactions, the funding of the bridge loan, the use of proceeds from the transactions, the
benefits of the transactions, the JV SHA,
the preparation of an updated mineral resource statement;
geological interpretations; Feasibility Study; Environmental Impact Assessment permitting;
community engagement activities; results of the current exploration and interpretations thereof;
mineralization potential; and contemplated drilling and development programs. Forward looking-
statements include predictions, projections and forecasts and are often, but not always, identified by
the use of words such as "anticipate", "believe", "plan", "estimate", "expect", "potential", "target",
"budget" and "intend" and statements that an event or result "may", "will", "should", "could" or "might"
occur or be achieved and other similar expressions and includes the negatives thereof.
Forward-looking statements are based on a number of assumptions and estimates that, while
considered reasonable by management based on the business and markets in which Cordoba
operates, are inherently subject to significant operational, economic, and competitive uncertainties,
risks and contingencies. Such assumptions and estimates include, but are not limited to, obtaining
the necessary approvals and consents to complete the transactions with JCHX, assumptions with
respect to the status of community relations and the security situation on site and in Colombia;
general business and economic conditions; continuity of drilling programs; the availability of
additional exploration and mineral project; the supply and demand for, inventories of, and the level
and volatility of the prices of metals; relationships with strategic partners and significant shareholders;
the timing and receipt of governmental permits and approvals; the timing and receipt of community
and landowner approvals; changes in regulations; political factors; the accuracy of the Company's
interpretation of drill results; the geology, grade and continuity of the Company's mineral deposits; the
availability of equipment, skilled labour and services needed for the exploration and development of
mineral properties; currency fluctuations; and impact of the COVID-19 pandemic.
There can be no assurance that forward-looking statements will prove to be accurate and actual
results, and future events could differ materially from those anticipated in such statements. Important
factors that could cause actual results to differ materially from the Company's expectations include
failure to obtain necessary consents and approvals, conditions to the completion of the transactions
not being satisfied, actual exploration results, continuity of drilling programs, interpretation of
metallurgical characteristics of the mineralization, changes in project parameters as plans continue to
be refined, future metal prices, availability of capital and financing on acceptable terms, general
economic, market or business conditions, uninsured risks, regulatory changes, delays or inability to
receive required approvals, uncertainties relating to epidemics, pandemics and other public health
crises, including COVID-19 or similar such viruses, and other exploration or other risks detailed
herein and from time to time in the filings made by the Company with securities regulators, including
those described under the heading "Risks and Uncertainties" in the Company's most recently filed
MD&A. The Company does not undertake to update or revise any forward-looking statements, except
in accordance with applicable law. Readers are cautioned not to put undue reliance on these forward-
looking statements.
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