LUCA CLARIFIES TRAFIGURA EARLY WARNING REPORT

Rhea-AI Summary

Luca Mining Corp. (TSXV: LUCA) (OTCQX: LUCMF) has clarified an Early Warning Report issued by Trafigura Beheer B.V. regarding a debt restructuring agreement. The agreement, announced in December 2023, involved converting a US$5.8 million loan into a non-interest-bearing three-year convertible debenture. The debenture, held by Trafigura's subsidiary Urion Holdings, was recently finalized after meeting certain conditions.

If fully converted, Urion would acquire approximately 22,540,457 Luca shares, representing about 11.65% of the company. Combined with existing holdings, Trafigura would indirectly own 12.48% of Luca's outstanding shares. The conversion price is based on a US$ to CAD$ rate of 1.30602 as of August 22, 2024. Luca currently benefits from the non-interest-bearing loan facility, as the debenture has not been converted.

Positive

• Conversion of US$5.8 million loan to non-interest-bearing convertible debenture
• Potential for improved cash flow due to non-interest-bearing nature of the loan
• Continued strong relationship with Trafigura, including offtake agreements for both mines

Negative

• Potential dilution of existing shareholders if convertible debenture is exercised
• Significant ownership concentration (12.48%) with Trafigura if fully converted

News Market Reaction – LUCMF

-7.39%

1 alert

-7.39% News Effect

On the day this news was published, LUCMF declined 7.39%, reflecting a notable negative market reaction.

Data tracked by StockTitan Argus on the day of publication.

VANCOUVER, BC, Aug. 27, 2024 /PRNewswire/ - Luca Mining Corp. ("Luca" or the "Company") (TSXV: LUCA) (OTCQX: LUCMF) (Frankfurt: Z68) wishes to clarify a Form 62-103F1 Early Warning Report (the "EWR") issued today by Trafigura Beheer B.V. ("Trafigura").

The EWR relates to a debt restructuring agreement entered into between Luca and Trafigura on December 11, 2023. The debt restructuring related to the conversion of an outstanding loan in the amount of US$5,800,000 (the "Principal Amount") into a non-interest-bearing three-year term convertible debenture (the "Convertible Debenture").  The transaction was announced by the Company through news releases dated December 6, 2023 and January 19, 2024.

As Trafigura wished for the Convertible Debenture to be held by its subsidiary Urion Holdings (Malta) Limited ("Urion") and the Convertible Debenture was to be secured, the Convertible Debenture was conditionally issued into escrow, subject to being formally executed and released once Trafigura and the Company were able to amend existing security agreements to insert Urion into same (the "Condition Precedent"). That process has taken several months and was finally completed in Mexico last week, such that the Condition Precedent was met, and Convertible Debenture could be formally perfected and released from escrow. 

The Convertible Debenture matures on January 11, 2027 and should Urion choose to convert same, then based on a US$ conversion price to CAD$ of 1.30602 as of August 22, 2024, the conversion of the Convertible Debenture would result in Urion acquiring approximately 22,540,457 common shares in the capital of Luca (the "Luca Shares"), representing approximately 11.65% of the Luca Shares (after giving effect to the conversion of the full amount of the Convertible Debenture). Should that event occur, then Trafigura would own indirectly through Urion 24,365,457 Luca Shares, representing approximately 12.48% of the issued and outstanding Luca Shares, based on 170,862,081 Luca Shares being currently outstanding. Even though the Convertible Debenture was issued into escrow in January this year, since Trafigura, indirectly through Urion has just perfected the right to acquire the above shareholding in Luca, it was required to issue the EWR upon the Convertible Debenture finally being signed and released from escrow.

At the time the time the debt restructuring was agreed, Luca's shares were trading at CAD$0.29. The Convertible Debenture has not been converted and neither Trafigura nor Urion have given Luca any indication whether they intend to convert same. In the meantime, the Company receives the benefit of a non-interest-bearing loan facility.

The Company continues to enjoy an excellent working relationship with Trafigura, which has offtake agreements in place for both the Campo Morado and Tahuehueto mines.

On Behalf of the Board of Directors

(signed) "Ramon Perez"

Ramon Perez, President

About Luca Mining Corp.

Luca Mining (TSXV: LUCA) (OTCQX: LUCMF) (Frankfurt: Z68) is a diversified Canadian mining company with two 100%-owned producing mines in Mexico.  The Company produces gold, copper, zinc, silver and lead from these mines that each have considerable development and resource upside. 

The Campo Morado mine, is an underground operation located in Guerrero State, a prolific mining region in Mexico. It produces copper/lead and zinc concentrates with precious metals credits. It is currently undergoing an optimisation program which is already generating significant improvements in recoveries and grades, efficiencies, and cashflows.

The Tahuehueto Gold, Silver Mine is a new underground operation in Durango State, Mexico, within the Sierra Madre Mineral Belt which hosts numerous producing and historic mines along its trend. The Company is commissioning its mill capacity to 1,000 tonnes per day, and key test work and production ramp-up is underway, to increase production by 2H 2024.

The Company expects its operations to start generating positive cash flows in 2024.  Luca Mining is focused on growth with the aim of maximizing shareholder returns.

For more information, please visit: www.lucamining.com 

Cautionary Note Regarding Production Decisions and Forward-Looking Statements 

It should be noted that Luca declared commercial production at Campo Morado prior to completing a feasibility study of mineral reserves demonstrating economic and technical viability. Accordingly, readers should be cautioned that Luca's production decision has been made without a comprehensive feasibility study of established reserves such that there is greater risk and uncertainty as to future economic results from the Campo Morado mine and a higher technical risk of failure than would be the case if a feasibility study were completed and relied upon to make a production decision. Luca has completed a preliminary economic assessment ("PEA") mining study on the Campo Morado mine that provides a conceptual life of mine plan and a preliminary economic analysis based on the previously identified mineral resources (see news releases dated November 8, 2017, and April 4, 2018).

Furthermore, Luca intends to declare commercial production at the Tahuehueto gold, silver mine prior to completing a feasibility study of mineral reserves demonstrating economic and technical viability. Accordingly, readers should be cautioned that Luca's production decision has been made without a comprehensive feasibility study of established reserves such that there is greater risk and uncertainty as to future economic results from the Tahuehueto gold, silver mine and a higher technical risk of failure than would be the case if a feasibility study were completed and relied upon to make a production decision. Luca has completed a prefeasibility study on the Tahuehueto gold, silver mine (see news releases dated April 26, 2022).

Statements contained in this news release that are not historical facts are "forward-looking information" or "forward-looking statements" (collectively, "Forward-Looking Information") within the meaning of applicable Canadian securities laws. Forward Looking Information includes, but is not limited to, possible events, conditions or financial performance that are based on assumptions about future economic conditions and courses of action; the timing and costs of future activities on the Company's properties In certain cases, Forward-Looking Information can be identified using words and phrases such as "plans," "expects," "scheduled," "estimates," "forecasts," "intends," "anticipates" or variations of such words and phrases. There can be no assurance that Forward-Looking Information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on Forward-Looking Information. Except as required by law, the Company does not assume any obligation to release publicly any revisions to Forward-Looking Information contained in this news release to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.  

Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

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SOURCE Luca Mining Corp.

FAQ

What is the value of the convertible debenture issued by Luca Mining (LUCMF) to Trafigura?

The convertible debenture issued by Luca Mining to Trafigura's subsidiary Urion Holdings is valued at US$5,800,000, which was the principal amount of the original loan.

When does the convertible debenture for Luca Mining (LUCMF) mature?

The convertible debenture issued by Luca Mining (LUCMF) matures on January 11, 2027.

How many shares of Luca Mining (LUCMF) would Trafigura own if the debenture is fully converted?

If the debenture is fully converted, Trafigura would indirectly own 24,365,457 Luca Mining (LUCMF) shares, representing approximately 12.48% of the issued and outstanding shares.

What is the conversion price for the Luca Mining (LUCMF) convertible debenture?

The conversion price for the Luca Mining (LUCMF) convertible debenture is based on a US$ to CAD$ exchange rate of 1.30602 as of August 22, 2024.