Hilway Metal Mining Co., Ltd. (SVM.US) has left a “key player” overseas.

Recently, Hilway announced that the company has completed the acquisition of Canadian Adventus Mining Company, and the transaction consideration is about 0.2 billion Canadian dollars (about 1.05 billion yuan).

Over the years, Hilway has always insisted on active exploration in production and mining areas, increasing storage to extend the service life of mines, and seeking mergers and acquisitions of high-quality, rapid commissioning and profitable projects around the world. The successful acquisition of Adventus this time further complements its blueprint for diversified development.

Next, let's start with this announcement and discuss in more depth. What kind of game of chess did Sylvie play behind this? How should it be understood from an investor's point of view?

1. Obtain high-quality assets to help the company build a new engine for growth

Judging from this acquisition, Hilway's acquisition target Adventus is a Canadian mining company focusing on Ecuadorian exploration and development of mineral resources for copper and gold deposits.

According to reports, Adventus owns 75% of the El Domo copper-gold project in Ecuador, one of the world's high-grade copper and gold projects. According to a feasibility study published by Adventus, El Domo's resources are 10.1 million tons, containing 22.9 million tons of metallic gold, 438.2 tons of silver, 0.208 million tons of copper, 0.255 million tons of zinc, and 0.023 million tons of lead.

Another project owned by Adventus, the Condor Gold and Silver Project, is a large-scale gold and silver project. According to the 2021 pre-feasibility study report, the gold and silver mine has resources of 0.335 billion tons, containing 206.3 tons of gold metals, and 961 tons of silver. In addition to this, Adventus also has 12 other exploration projects, plus the El Domo copper-gold project and the Condor gold and silver project, covering a total area of about 1,350 square kilometers.

There is no doubt that this acquisition will bring considerable economic benefits to Sylvie.

Furthermore, on August 6, Hilway issued an announcement stating that the Ecuadorian government's energy and mining department issued a phased change resolution for the El Domo-Curipamba project, which also meant that the El Domo copper-gold project would shift from exploration to development. Therefore, after completing the acquisition, Hilway can begin development and construction of this project. According to the company's estimates, the project is expected to be put into operation in the second half of 2026. Based on the current near-spot price, the net present value of the project after tax is approximately $0.35 billion (8% discount rate).

The Condor project is also an extremely attractive asset. According to the pre-feasibility study report, the Condor project can produce an average of about 5.8 tons (0.187 million ounces) of gold per year within a 12-year service period. According to the current gold price of 2,420 US dollars/ounce and total maintenance cost (AISC) estimates, gold mining alone can bring in more than 0.3 billion US dollars in revenue. If you take into account the current rising price of gold, Condor's earnings level is expected to increase further.

Photo Credit: Oriental Wealth

At the same time, the trade system between our country and Ecuador has also been continuously improved in recent years.

According to public information, the “Free Trade Agreement between the Government of the People's Republic of China and the Government of the Republic of Ecuador” has been mutually implemented since May 1, 2024. China and Eritrea have each gradually abolished tariffs on about 90% of the tax items, raised the level of trade and investment liberalization and facilitation between the two countries, and promoted the all-round upgrading of bilateral economic and trade cooperation. This has formed a better market environment for trade between the two countries, and also provides a strong guarantee for the subsequent normal operation of Hilway's projects in the region.

II. The deeper logic behind the acquisition: the ambition to shape a multi-country and diversified development pattern

For Sylvie, the acquisition of Adventus was not only a performance-level boost. If we further observe Sylvie's strategic actions in recent years through this incident, we will find that a blueprint for globalization and diversification behind it is slowly unfolding.

In recent years, Hilway has experienced a transformation from exploration to operation and production in China. With the accumulation of experience and capital, it has the ability to extend growth. This incident is a new experiment in the company's merger and acquisition operation. Seen from this perspective, the company efficiently integrates external industrial resources through various forms, uses its own rich experience in resource exploration, mining, production management, etc., to collaboratively build an overseas mineral development and operation system to achieve a multi-country development pattern.

Furthermore, judging from the types of resources in this acquisition project, it will significantly increase Hilway's diversified metal reserves and increase gold and copper, thereby stabilizing or increasing its overall earnings, thereby diversifying corporate risks and helping the company grow in the long term.

Looking back, we can see that Hilway's global development path has fully begun. With its professional advantages, Hilway can enable the development and operation of high-quality projects, thus forming a good demonstration effect. Its overseas expansion will also become easier, and the “flywheel effect” of Hilway's virtuous cycle has turned around.

Therefore, the company is expected to steadily advance its business in more international markets and build a stable basic market for long-term sustainable growth. There is reason to expect that in the future, Hilway will occupy an important position in the global mining market.

III. Concluding Remarks

Finally, let's go back to the capital market valuation level. Following the announcement, Regent Financial raised the target price of Hilway from $5.1 to $5.41. By the close of trading on August 6, Hilway's stock price was only $3.21. There is almost 70% room for growth compared to the target price of $5.41. Seen from this, in the eyes of industry analysts, the stock price of Sylvie is seriously undervalued.

Predictably, along with the company's successful acquisition of Adventus, the empowerment of new projects is expected to help Sylvie open up new growth space and increase financial revenue. Looking deeper, the company is expected to continuously enhance global resource integration and allocation capabilities, and further shape a multi-country and diversified development pattern. As an investor, betting on a company with such potential for growth is not a win-win decision.