Luca adds 3rd Mexican property in $60M Agnico deal

Luca Mining (TSXV: LUCA; US-OTC: LUCMF) is moving to expand its Mexican footprint through the proposed $60-million (C$83-million) purchase of the El Barqueño gold-silver-copper project from Agnico Eagle Mines (TSX, NYSE: AEM), giving the emerging Canadian producer a third asset in the country.

Luca’s agreement for the 320-sq.-km property in Jalisco state, about 100 km west of Guadalajara, initially requires no cash payment, according to a statement Thursday. Luca instead will issue Agnico $10 million worth of shares when the transaction closes, probably in the fourth quarter. It’s also committed to make $30 million in deferred payments tied to drilling and commercial production, plus another $20 million linked to production.

El Barqueño offers “an attractive, early-stage addition to Luca’s longer-term growth pipeline, adding a large and prospective project with growth potential from a major at limited upfront cost,” National Bank Financial mining analyst Alex Terentiew said in a note.

Permitting hurdles

Significant hurdles will need to be overcome if El Barqueño is to become a mine. The site isn’t permitted for exploration drilling as portions of its concessions fall under Jalisco’s ecological territorial planning program.

The deal’s structure gives Luca a way to acquire a sizeable development asset while deferring much of the consideration until the project advances. The company can elect to make the $30 million of contingent payments in cash, shares or a combination of the two, subject to certain conditions.

Agnico will receive a 2% net smelter return royalty on production from portions of the property containing currently defined resources. Luca can reduce that royalty to 1% by paying $12.5 million to repurchase half of it. Northern deposits at El Barqueño are already subject to royalties averaging about 3.7%, while the southern deposits have no existing royalties.

The lack of an exploration permit is “the key reason why the transaction is attractively structured” for Luca, Terentiew said. The agreement “allows Luca to de-risk El Barqueño before making larger capital commitments,” while preserving cash for upcoming funding requirements at the company’s Campo Morado mine, where an expansion technical study is underway.

Luca’s other Mexican operation is the Tahuehueto gold-silver underground mine in Durango, where the company is also seeking to expand known mineralization.

Legal challenge

A legal challenge is under way in Jalisco to contest the application of the state’s planning program to concessions – such as El Barqueño – that predate it. Luca says it will continue working with Agnico on the legal process and pursue a pathway to restore exploration and development activities.

If permits are secured, Luca plans to establish a new mineral resource, define exploration targets and examine development options. The project could support both open-pit and underground mining, Luca says.

The property is estimated to hold 8.43 million indicated tonnes grading 1.24 grams gold per tonne, 5.15 grams silver and 0.21% copper for contained metal of 335,421 oz. gold, 1.4 million oz. silver and 38.9 million lb. copper, according to December 2025 data.

Vancouver-based Luca isn’t treating that estimate as a current resource. A qualified person will need to verify the historical drilling and assays and incorporate new information – such as updated metal prices – before a current estimate can be established, the company says.

El Barqueño has already seen extensive exploration. Agnico drilled about 225,000 metres, primarily between 2015 and 2018, bringing total historical drilling to roughly 300,000 metres. Mineralization has been identified at several northern deposits, including Azteca-Zapoteca-Cuauhtémoc, Angostura, Peña de Oro and Socorro, as well as southern zones including El Rayo, Soledad, Bolas and Highway.

“While El Barqueño may not have been sufficiently material to compete for capital within Agnico’s portfolio, we believe it could become a meaningful project for Luca,” Terentiew said.

Luca shares rose 1.4% to C$1.11 Thursday morning in Toronto, valuing the company at about C$305 million ($219 million). Agnico jumped 3.7% to C$283.40 for a C$143.7 billion market capitalization.