Sierra Metals may get out of liquidity crunch by Kolpa merger

Chicago, Nov. 11 – Sierra Metals Inc., on the brink of insolvency, may get rescued through a business combination with Compania Minera Kolpa, according to a press release.

Arias Resource Capital and Kolpa have proposed a business combination with a concurrent financing.

Sierra stated in an Oct. 18 press release that it was facing liquidity challenges and that its operating may be impacted.

The business combinations would be effected through a share exchange.

Sierra shares would be exchanged at a rate of C$0.33 per share, a 27% premium to the closing price on Nov. 10.

There would be a concurrent $30 million convertible financing for 5% debentures with a five-year term from a strategic investment firm.

Additional financing may be provided, if deemed necessary.

Sierra Metals, according to the Prospect News archive, took out a $100 million credit facility at Libor plus 315 basis points in 2019 that is coming due in March.

Sierra Metals is a Canadian-based polymetallic mining company with mines in Peru and Mexico. Kolpa is a mining company which operates Peru.

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