Chinese mining contractor & EPC services provider JCHX takes stake in Colombia’s Cordoba Minerals

Posted by Paul Moore on 18th November 2019

Cordoba Minerals Corp has announced that Chinese mining contractor and EPC major JCHX Mining Management Co Ltd (JCHX) has agreed to make a strategic investment in the company, acquiring a 19.9% stake in Cordoba to advance the San Matias copper-gold-silver project in Colombia. Under the terms of the strategic cooperation and investment agreement signed on November 16, 2019 in Beijing, China, Cordoba will issue 91,372,536 common shares to JCHX through a private placement at a price of C$0.12 per share, yielding gross proceeds to Cordoba of approximately C$11 million. Cordoba intends to use the proceeds for completing the work required to secure mining approvals at San Matias, to further explore in the San Matias district and for working capital and general corporate purposes.

“We are very pleased to have JCHX as a strategic investor in Cordoba,” stated Eric Finlayson, President and CEO of Cordoba and also President of Cordoba’s majority shareholder High Power Exploration (HPX). “JCHX has an exemplary record for delivering mining and construction projects on time and on budget, and leveraging its global experience will be critical as we begin the transition from junior explorer to mine builder. We look forward to this next phase of our company’s evolution and we will continue to explore and drill in the San Matias district.”

Wang Xiancheng, Chairman of JCHX, stated, “Our strategic investment into Cordoba is JCHX’s major overseas investment upstream in the mining sector, which is in line with our corporate strategy. We have accumulated in-depth experience as a mining EPC contractor and moving along the value chain is our logical step forward. We are very much impressed with the quality of Cordoba’s assets and management team, and with this strategic investment, we are confident to yield a win-win through cooperation with Cordoba and Cordoba’s major shareholder HPX.”

Cordoba’s Special Advisor in China, Peter Zhou, who also serves as Special Advisor to Robert Friedland in China, commented: “JCHX has a long-standing relationship with the Ivanhoe group of companies. Over the past few years, JCHX has been involved with a broad range of mining projects that Mr Friedland has founded and is developing. We are very pleased to see the cultivation of mutual trust that has resulted in JCHX’s strategic investment. JCHX’s successful track record in mining development and its corporate capability will be truly complementary to Cordoba and HPX.”

Upon closing of the private placement, Cordoba and JCHX will enter into an investor rights agreement which will provide for certain key provisions:

  • JCHX will be entitled to nominate representatives to Cordoba’s Board of Directors in proportion to its shareholding (up to a maximum of 20% of the board seats), with one nominee to be added based on JCHX’s 19.9% interest;
  • JCHX will be granted anti-dilution rights to enable it to maintain its ownership interest;
  • JCHX will have a right of first offer to be appointed as the Engineering Procurement Construction (EPC) contractor in connection with any future mining development on the San Matias Project; and
  • JCHX will have a right of first offer in respect of any sale of an equity interest in the San Matias project.

HPX will remain Cordoba’s majority shareholder and its ownership will reduce to approximately 60%. HPX will extend up to US$1.6 million in additional loan advances to Cordoba under the existing grid promissory note, with the understanding that the advances will be repaid from the proceeds of the JCHX private placement, to cover short-term general administrative activities and on-going work on the Mining Technical Work Plan (Programa de Trabajo y Obras or “PTO”) and the Environmental Impact Assessment (EIA) for the Alacran deposit that will be due and payable prior to closing of the JCHX transaction.

The Cordoba-JCHX transaction is conditional upon the approval by the TSX Venture Exchange and other customary recordals and registration with certain Chinese regulatory agencies. Receipt of all necessary approvals and completion of the transaction is expected to occur before the end of January 2020.