Kuya Silver signs LOI to acquire Camila plant

Executive Summary

• Kuya Silver Corp. has signed a Letter of Intent (LOI) to acquire 100% of Sociedad Minera de Responsabilidad Ltd. Camila 2008 (SMRL Camila), the owner of the permitted Planta de Procesos Camila flotation plant in Peru.
• The acquisition is a strategic move to vertically integrate Kuya Silver’s operations, eliminating toll-milling costs for its flagship Bethania silver project and gaining direct control over processing schedules and metallurgical optimization.
• The transaction involves a purchase price of $7.8 million, subject to due diligence, with plans to expand the plant's capacity from 150 tpd to 300-350 tpd through an estimated additional capital investment of $700,000 to $1.0 million.

Key Details

• Transaction Structure: Letter of Intent (LOI) to acquire 100% of SMRL Camila.
• Target Asset: Planta de Procesos Camila, a conventional flotation plant currently processing Kuya Silver’s mineralized material on a toll-milling basis.
• Purchase Price: $7.8 million USD.
• Conditions Precedent: Satisfactory completion of confirmatory legal, financial, environmental, and technical due diligence.
• Current Plant Capacity: 150 metric tonnes per day (tpd).
• Planned Capacity Expansion: Target to increase production capacity to 300–350 tpd.
• Expansion Capital Cost: Estimated additional capital investment of $700,000 to $1.0 million USD to expand capacity; estimates to be validated by a third-party engineering firm post-transaction.
• Strategic Rationale:
  • Eliminate toll-milling costs and scheduling uncertainties.
  • Optimize metallurgical recoveries for silver, lead, zinc, copper, and gold.
  • Gain operational control over processing schedules and ore blend strategies.
  • Leverage the plant's strategic location (164 km from Bethania project, 48 km from Huancayo) and existing infrastructure (hydroelectric grid connection).
• Technical Validation: Technical content reviewed by Gerardo Acuna (Qualified Person), though he has not yet verified technical data related to the Camila plant, which remains part of the due diligence process.

Notable Quotes

• "This milestone transaction advances Kuya Silver's strategy to develop in-house processing capacity to vertically integrate its operations, capture operating synergies, derisk and expand its platform for silver production growth, while improving margins in the current strong silver price environment."
• "Securing the Camila plant would provide a clear and expedited path to bringing processing in-house, immediately eliminating future toll-milling costs and associated scheduling uncertainties."
• "Direct ownership of the plant is expected to deliver a multifaceted strategic advantage... This operational control is the foundation for reducing per-tonne processing costs, which should have a positive impact on operating cash flow, margins and the overall economic performance of the project."