Deal Check: Goldgroup found its target. C$101 million into Luca Mining, listed at the same Vancouver office suite

On September 25 we wrote that Goldgroup raised US$122 million without a broker and had not said what it would buy. Now we know where most of it went.

On October 15 Goldgroup Mining said it bought 101,123,662 subscription receipts of Luca Mining at C$1.00 each, an investment of C$101,123,662. On conversion that is "approximately 19.9%" of Luca's shares. Goldgroup says it owned no Luca securities before.

What the money is for

Luca agreed on September 21 to buy the Cozamin mine in Zacatecas, Mexico, from Capstone Copper for US$290 million upfront (US$275 million cash and US$15 million in Luca shares), US$35 million on the first anniversary of closing, and up to US$60 million more if copper prices run higher in 2027 to 2029. Luca pays a ticking fee of US$700,000 a month from October 31 until closing.

To fund it, Luca closed on October 14 a C$155 million bought deal of receipts at C$1.00, led by National Bank Financial, plus C$56,363,600 of receipts sold to Wheaton and Taurus. By our arithmetic, Goldgroup's receipts are about 65% of the bought deal and about 48% of the C$211 million total.

The fine print

The receipts convert only when release conditions are met, including the conditions to close Cozamin. Luca's September release set an escrow outside date of February 28, 2027. Until then, Goldgroup's money is a bet on a closing, not a stake in a mine.

Goldgroup's September 28 commitment release said it would put in US$75 million "or such other amount representing a 19.9%" interest, replacing a US$75 million equity backstop from Trafigura. It also said it expected to keep about US$91 million in cash afterwards. As long as it owns 10% or more, Goldgroup can nominate two Luca directors and take part in future financings to keep its stake.

The address

Goldgroup's October 15 release lists its office as Suite 410, 1111 Melville Street, Vancouver, and gives the same suite for Luca. Neither release we read explains why the two companies share an address, or says whether they share directors, officers or management. Goldgroup says only that it "intends to assess opportunities relating to its investment in Luca." An early warning report is due on SEDAR+ under Luca's profile; that filing is the next place to look.

Sources: Goldgroup, October 15; Goldgroup, September 28; Luca Mining, October 14; Luca Mining, September 21 (reprint).