Adventus wins ruling on environmental permit, but Silvercorp deal remains in jeopardy
Copper-gold developer Adventus Mining (TSXV: ADZN) received a significant boost on Thursday after a lawsuit challenging the environmental license issued to its flagship El Domo-Curipamba project in Ecuador was knocked back in court.
In early June, a protective action was filed against both the Ministry of Environment, Water, and Ecological Transition of Ecuador (MAATE) and the office of the Attorney General of Ecuador, while also naming Adventus’ Ecuadorian subsidiary as an interested third party in the suit.
The lawsuit specifically raised procedural allegations about the sufficiency of the consultative process followed by MAATE in issuing the permits. A successful challenge would effectively see Adventus’ environmental permit revoked.
However, during this week’s court proceedings, it was ruled that this consultative process complied with application legal requirements in Ecuador.
According to Adventus, as the legal action did not raise any allegations about the substance of the El Domo-Curipamba environmental permit itself, the company was allowed to continue construction on the project while the lawsuit was outstanding.
Meanwhile, the group of locals who filed the action is expected to appeal the decision, which the company estimated could take an additional three to six months.
Silvercorp deal
The legal challenge to Ecuadorian authorities, despite the positive ruling, has put Adventus’ previously announced takeover by Silvercorp Metals (TSX: SVM) in jeopardy.
Earlier this month, Adventus was notified by Silvercorp, which has been seeking to diversify outside of China, that the protective action counts as a “material adverse effect” (MAE) representing an unmet condition to closing the transaction, which it disagreed with.
With the court ruling, the company has notified Silvercorp that it intends to commence the necessary pre-closing steps, setting a deadline of July 31, 2024, for completion. Meanwhile, Silvercorp’s stance remains the same, that the legal action constitutes an MAE.
Should the merger fail to close the arrangement by then, Adventus said it will bring the case to the Ontario Superior Court of Justice on account of Silvercorp’s breach of the arrangement agreement.
Ecuador’s next mine
The El Domo-Curipamba project represents Ecuador’s next big mine after Mirador and Lundin’s Fruta del Norte. Adventus has a 75% interest in the project, with Salazar Resources (TSXV: SRL) holding the other 25%.
A feasibility study published late 2021 envisioned a 10-year operation with average annual production of 10,463 tonnes of copper, or 21,390 tonnes of copper-equivalent. This will be mined from total reserves of 6.5 million tonnes at 1.93% copper, 2.52 g/t gold, 2.49% zinc, 45.7 g/t silver and 0.25% lead.
Construction of the El Domo-Curipamba project was scheduled to begin in June, following the granting of key water permits, but is now delayed.
Shares of Adventus Mining closed Thursday’s session 14.7% higher at C$0.43 apiece, for a market capitalization of C$190.9 million. Salazar Resources also gained 7.7%, with a market capitalization of C$14.1 million.
