Silvercorp’s $147M acquisition stalled as lawsuit challenges key Ecuador project – Salazar Resources (OTC:SRLZF), Adventus Mining (OTC:ADVZF)

Canadian miner Silvercorp Metals‘ SVM planned takeover Adventus Mining ADVZFEcuadorian copper and gold exploration company faces potential obstacles due to legal challenge to environmental permit for key Adventus House copper design.

The C$200 million ($147 million) all-stock deal announced in April would have given Silvercorp a 75% stake in El Domo. However, a customary closing condition was that there would be no material adverse effects. Silvercorp said the potential cancellation of an environmental permit constituted such an effect.

“The Company will continue to monitor and evaluate the litigation and the circumstances surrounding it and remains open to working with Adventus to complete the transaction if the closing conditions in Silvercorp’s favor are met,” the company said in a statement.

Read Now: Mining Industry Groups Call for Reactivation of Mining Bureau

The legal issue involves a local lawsuit alleging that the project’s environmental permitting process did not comply with Ecuadorian mining laws, which mandate public consultation. Adventus and its partner, Salazar’s Resources SRLZFThey claim to have documented evidence, but a local judge’s verdict could take two to three months, and a potential appeal could extend that time by another six months. However, the environmental permit remains valid during the court proceedings.

Despite the obstacles, Silvercorp has expressed interest in extending the agreement beyond the original July 31 date. Adventus, for its part, disagrees with Silvercorp’s interpretation, stating that the company “reserves all rights in the event Silvercorp fails to close the agreement as required by the agreement, including the ‘outside date’ under the July 31 agreement.”

The Curipamba-El Domo project, the centerpiece of this acquisition, is a joint venture between Adventus and Salazar Resources. The project’s feasibility study, completed in December 2021, predicts average annual production of 10,463 tonnes of copper and 21,390 tonnes of copper equivalent over a 10-year mine life.

The study estimated the required capital expenditure at $248 million and identified proven and probable mineral reserves of 6.5 million tonnes, with significant quantities of copper, gold, zinc, silver and lead.

If the El Domo project is completed, it will be only the third operating mine in Ecuador, the other two being Mirador in Ecuacorriente copper mine and Fruta del Norte by Lundin Mining Gold mine.

Read more:

Benzinga Mining is the bridge between mining companies and retail investors. Contact [email protected] to begin!

Photo: Shutterstock