Emerita Resources (TSX.V: EMO): A Deep Dive into Alleged Corruption at the Aznalcóllar Tender Process

A detailed review of the overwhelming evidence and explosive court findings

If you’ve been tracking the drama unfolding in Spain’s mining sector, you know the Aznalcóllar (AZN) mine saga has all the elements of a classic public scandal—allegations of corruption, political interference, and a juicy legal battle. Emerita Resources, a junior Canadian mining company, has been fighting a drawn-out legal war over the rights to this significant US$25 Billion (insitu value estimate) zinc-copper-lead asset, alleging that the bidding process was corrupt and rigged in favor of a local consortium with insider connections.

Let’s unpack some of the extensive evidence from court filings and why this situation could hold major upside for investors betting on a fair legal outcome ahead of the 40 day, 16 defendant trial scheduled for March 3, 2025.

To do so, this analysis is accompanied by some direct, choice quotes from both the Seville Provincial (Superior) Court No.3’s May 27, 2021 opinion and the Seville Court of Investigation No. 3’s June 25, 2021 opinion. The presiding judges were Judge Mercedes Alaya and Judge Patricia Fernandez respectively.

I believe these lay bare the strength of Emerita’s legal position.

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Emerita’s Legal Fight: The Corruption Runs Deep

Emerita has been relentless in pursuing justice, alleging not just prevarication (abuse of power) but also bribery, influence peddling, and misappropriation of public funds.

The Seville Provincial Court ran an exhaustive investigation, indicating that Emerita’s evidence supports claims of systemic corruption​. After the investigation, the court concluded crimes were committed and ordered the oral trial (for conviction & sentencing) to commence next March.

The Court of Investigation subsequently abided by the Provincial Court’s mandate and issued additional indictments while increasing the number of accused from 9 to 16 and the crimes charged from 3 to 4.

The Aznalcóllar mine’s tender process, initiated in 2014, has been marred by controversy from the start. Emerita, one of three original bidders, claims the tender was not only mishandled but outright manipulated to favor Minorbis, a subsidiary of the Magdaleno brother’s Magtel Group. This entity was cobbled together just a month before the tender, with no prior mining experience and only €3,000 in initial capital​.

The evidence, as presented in court documents, is damning: the tender was awarded despite clear signs of foul play, including improper influence exerted by top officials.

According to the investigation, certain officials allegedly had a personal direct hand in securing the tender for Minorbis. The documents reveal that certain officials allegedly were actively involved in drafting bid-related documents and received copies of Minorbis’s technical proposal before it was even officially submitted—a clear breach of transparency rules​.

In one particularly revealing instance, certain official’s involvement was described as “chain influence peddling” designed to manipulate the decision-making process at multiple levels, which even included modifying the criteria mid-process to benefit Minorbis.

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Inappropriate Calls: The Smoking Gun

One of the most telling episodes in evidence centers around a series of inappropriate calls that occurred during the tender process.

Court documents detail an encounter on April 11, 2014, when a representative of Minorbis approached Emerita's team with a bold proposition: to merge both projects to ensure a joint win in the tender.

It is alleged that to back up his claims of insider influence, the representative declared that they held sway over key decision-makers. The claim was immediately followed by a prediction that the Secretary General of the Ministry of Innovation would contact Emerita’s team within minutes. Sure enough, a call occurred confirming the representative’s claims of insider coordination. This call, acknowledged by the Secretary General of the Ministry of Innovation in subsequent legal proceedings, suggests a deeply embedded network of corruption that bypassed the established tender protocols and tilted the playing field.

The inappropriate nature of this call, made directly from the Ministry to Emerita’s representative, indicates more than just insider information—it suggests direct interference aimed at coercing Emerita into accepting a rigged process. It is one of the clearest examples of how Minorbis’s representatives allegedly used their political connections to intimidate competitors and influence the outcome of the tender​. In fact, it was later discovered that phone calls were made on weekends and at other inappropriate times between the Magdaleno brothers and Officials during the tender process.

The call was just one of many incidents cited by Emerita as evidence of unfair competition. As evidence shows, these calls were not isolated incidents but part of a broader strategy to ensure that Minorbis’s bid succeeded regardless of its lack of experience, lower financial commitment, and minimal social investment​.

Indeed, in addition to this call, the court noted that an analysis of the emails between the Minister of Innovation and the Magtel representatives demonstrated a “personal relationship of trust, of trips, of contacts on weekend, at night… and the constant intermediation of the former in the business affairs of the latter.” (Page 14: 5-27-21)

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Grupo México's Questionable Role in the Tender Process:

The involvement of Grupo México in the tender process was convoluted and raised serious concerns about the fairness and legality of the proceedings.

1. Joint Bid with Minorbis

Grupo México was presented as a co-bidder with Minorbis, as evidenced by the formal bid submitted on April 16, 2014, by Isidro López Magdaleno, representing both entities​. This joint offer was surprising, as it is typically the bidder, not the administration, that determines who participates in the tender. The offer was officially submitted under the name “Minorbis-Grupo México”, yet Grupo México's actual role in the tender was minimal​.

The judges wrote in their indictment:

“the brothers Mario and Isidro Lopez Magdaleno… promoted and favored as inducers the confusion in the Identity of the bidders (Minorbis or Minorbis-Grupo México) endorsed by the relationship and intervention of Mr. Fernández Guerrero in the entire processing of the contest”

(Page 9: 6-25-21)

Then, to convolute things further, the tender was awarded on February 25, 2015 to a company that didn’t exist. Minera Los Frailes, which was only incorporated on May 6, 2015 and owned by Grupo México 97.5% and Minorbis 2.5%, accepted the tender award on May 11, 2015, 16 days after the acceptance period expired. Not surprisingly, the signed tender award has gone missing.

Here is the timeline as stated by the court :

“it is necessary to take into account the following dates:

1. the call for the tender took place on January 13, 2014;

2. the presentation of the offer by Minorbis-Grupo Mexico took place on April 16, 2014;

3. the telephone call from Vicente Guerrero (Minister of Innovation) to the representative of Emerita, at the request of the Magtel Group, took place on April 11, 2014;

4. the resolution to move on to the Second Phase took place on July 14, 2014;

5. the decision to award the tender took place on February 25, 2015 and Minera Los Frailes accepted it on May 11, 2015.”

(Page 14: 5-27-21)

2. Failure to Meet Requirements.

Despite being listed as a co-bidder, Grupo México did not comply with the legally necessary requirements to advance to the second phase of the tender. These requirements included proper accreditation of legal personality and capacity to act—both of which Grupo México failed to fulfil​.

In stark contrast, Nyrstar, the third bidder, was  disqualified for similar shortcomings. This raises questions about why Grupo México was allowed to proceed while Nyrstar was not​.

3. Minorbis’s Limited Capacity.

Minorbis, which took the lead in the joint bid, was also grossly underqualified. It had only €3,000 in capital, had been established less than a month before the tender, and lacked both financial and technical solvency​. Despite these glaring inadequacies, Minorbis was allowed to continue in the bidding process, largely due to its claimed association with Grupo México, which was portrayed as providing external support. This claim, however, was unsupported by any formal agreement, as evidenced by the absence of a binding memorandum of understanding or joint declaration at the time of bidding.

In summary of above, the judges stated in their opinion that:

“…the bidding entity Minorbis was created expressly for participation in the competition, barely 20 days before the presentation of its offer, with €3,000 of share capital and, more importantly and obviously, without any experience in the mining sector. From this fact it was rational to infer not only that it did not meet the requirements stipulated in the competition rules, but also that the mining rights it acquired would not be its own. And that this was so expressly described in the Memorandum of Understanding. Likewise, objectively, the “Joint Declaration” document did not contain any commitment to form a consortium between Minorbis and Grupo México, as can be seen from the literal wording of the aforementioned document, a conclusion that is also reached in a resounding manner in the police report included in Volume II of the proceedings. From the above, it can be concluded that the cited resolutions were dictated or authorized with full knowledge of their patent illegality.”

(Page 9: 5-27-21)

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Arbitrary Decisions by the Contracting (Tender) Committee:

The decision to allow Minorbis-Grupo México to advance to the second phase, despite their failure to meet basic requirements, was arbitrary and lacked a logical basis. The Contracting Committee appeared to ignore the clear lack of proven experience, which was a mandatory requirement given the complexity and environmental sensitivities of the Aznalcóllar project​. The committee's decision to accept Minorbis’s questionable “Joint Declaration of Commitment” to form a consortium, dated May 2014, served to circumvent the established solvency rules​

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Manipulation of the Points System:

Typical of many public tenders, there is supposed to be a non-biased way to assign value to different bids for an asset. A critical aspect of the corruption in the Aznalcóllar tender was the manipulation of the points system used to evaluate the bids. New criteria, which were not part of the original terms of the tender, were introduced during the second phase, a change that worked to Minorbis’s advantage.

For example, the points system was altered from a 0 to 5 scaling system to a non-scaling system of 0 or 5 for the economic evaluation of respective tenders. With 5 then being awarded, if the economic value of any tender was simply positive.

This led to both tenders being awarded the full 5 points, even when Emerita’s bid was demonstrably greater in value contributing €641.5 million compared to Minorbis-Grupo México’s at just €304.6 million.

Coupled with that was Emerita’s substantial commitments to social investment, environmental remediation, and infrastructure development (€375 million) in contrast to Minorbis-Grupo México’s significantly lower commitments to social and labor benefits (only €27 million), which was clearly woefully inadequate.

The judges concluded in their original ruling of 19 October 2016 and reaffirmed in their indictment of 27 May 2021 :

“…that the same score was given to any economic result that was not negative (folio 955), without distinguishing in each case the best offer in each of the sections, despite there being a numerical difference of many millions of euros given that the Emerita project represented an investment of 641.5 million euros and the Minorbis-Grupo Mexico project 304.6 million, leading in the opinion of this court to conclusions that could not respond to legality as well as to arithmetic and common sense, and that allegedly determined that Minorbis won the tender.”

(Page 10: 5-27-21)

In total, Minorbis won the tender by scoring 75.9 points compared to Emerita’s 73.6 points, despite Emerita's bid being more than double in overall economic value​.

The evidence shows that this category alone cost Emerita the tender, as the new criteria unfairly benefited Minorbis.

Based on all this alleged conduct, the judges ruled that:

“For all these reasons, the suspects are charged with the alleged commission of the crimes of administration prevarication in the three phases of the contest.”

(Page 11: 6-25-21)

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Appeals by the Accused Parties:

Subsequent to the ruling in which 16 people were charged, all had the opportunity to appeal.

The court carefully reviewed each appeal, considering whether any significant errors had been made in the original proceedings. Concerns about the handling of evidence, the roles of specific commission members, and potential conflicts of interest were all weighed.

While it acknowledged some minor procedural issues, the court ultimately found that the key decisions had been correctly handled, and the appeals were dismissed.

All avenues of appeal for the 16 accused have now been exhausted.

Here is the judge’s dismissal of the appeals of the top four accused:

“For all the above reasons and given  the  set  of  evidence  that  provisionally  exists  against  the  appellants  for  the  crimes,  among  others,  of  influence  peddling,  prevarication,  fraud  against  the  administration  and  embezzlement  through  disloyal  management,  due  to  their  status  as  possible authors  in  the  first  and  inducers  in  the  others,  the  appeal  must  be  dismissed.

For all the reasons set forth above, the appeals of the Attorney of the Andalusian Government, Maria José Asencio Coto, Mario and Isidro López Magdaleno are dismissed, and we partially uphold the appeal of Vicente Cecilio Fernández Guerrero.

THE COURT AGREES:  To dismiss the appeals of the Attorney of the Junta de Andalucía, María José Asensio Coto and Mario and Isidro López Magdaleno and Minorbis against the order of March 8, 2021 and to partially uphold the appeal of Vicente Cecilio Fernández Guerrero against said resolution, revoking it in order to issue a new order to initiate Abbreviated Procedure in which the punishable act of the latter  is  specified,  including  the  typical  elements  of  the  different  crimes  attributed  to  him,  adapting the rest of the story to them, with an ex officio declaration of the costs incurred in this appeal.

Notify this resolution to the parties, letting them know that there is no recourse against it.”

(Page 20: 5-27-21)

Note: The partially upheld appeal by the minister of innovation was in respect to the charge of bribery.

This charge was subsequently dropped, while the remainder of the charges stood, and his appeal dismissed.

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The Next Steps:

The stage is set with 5 judges & 3 levels of court having ruled crimes were committed with the oral trial (for conviction & sentencing) commencing in 4 months (March 2025).

The Court has now reserved up to 40 sessions including days in March, April, May, June and July 2025.

The 16 defendants face sentences totaling up to 348 years in prison for the alleged rigging of the Aznalcóllar mining tender and have been charged with one or more of the following 4 crimes:

1.      Influence peddling;

2.      Administration prevarication (in the three phases of the contest);

3.      Fraud against the administration;

4.      embezzlement through disloyal management.

The Administrative Superior Court of Andalusia has agreed to Emerita’s request to withhold its resolution with respect to the Aznalcollar administrative case and tender until the Criminal Court trial is resolved.

Importantly, only one of the 16 is required to be convicted or plead guilty for the administration court to invalidate the award resolution to Minera Los Frailes and allow the Junta to award the Aznalcollar tender to Emerita.

Spanish law stipulates that if a crime is proven in awarding a public tender, then the tender must be awarded to the next highest qualified bidder. In this case, Emerita is the only qualified bidder remaining.

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The Economic Prize:

What’s at stake is over US$25 Billion in very economic resources located in an extremely mining friendly jurisdiction with access to water, power, labor, roads, and EU subsidies.

The Aznalcollar Project Public Tender (which includes the Los Frailes and Aznalcollar mines) was endorsed by all levels of the Spanish Government, and once granted, will allow the mines to be put back into production, which will likely produce profitably for multiple generations.

This tier-1, world-class project contains 4 known deposits to date with a total resource estimate potentially exceeding 200 million tons. 

The two largest deposits were previously production drilled (Los Frailes and Aznalcollar) by Boliden with the resources defined to 350 meters in depth and booked with the Spanish Government.

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The Los Frailes Mine, 70-million-ton resource including a 28 million ton high-grade underground resource grading: 

Zn 6.65% Pd 3.87% Cu 0.29% Ag 84 g/t

4.1 Billion pounds of Zinc

2.4 Billion pounds of Lead

179 Million pounds of Copper

76 Million ozs of Silver

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The Aznalcollar Copper-Silver Mine, 90-million-ton resource including 43 million ton high-grade underground resource grading: 

Zn 3.33% Pd 1.77% Cu 0.44% Ag 67 g/t Au 1g/t

3.15 billion pounds of zinc

1.67 billion pounds of lead

416 Million pounds of copper

1.38 million ozs gold

93 million ozs silver

*Note both high-grade deposits are open for expansion at depth below 350 meters.

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The insitu value of the remaining high-grade resources amenable to underground mining techniques within just these 2 deposits exceeds US$25 Billion at an average of US$358 per ton or 11.5% ZiEq as of Nov 1st 2024.

Placing a conservative 5% of known insitu value on this resource equates to roughly C$5.80 per share. And that’s before any expansion of the resource below 350 meters and exploitation of other neighboring potential mines that Emerita is currently exploring.

A High-Stakes Investment Opportunity:

For investors, the Emerita story represents a potentially highly rewarding, special situation play at the current share price of C$0.57. Additionally, the current price is almost entirely backstopped by Emerita’s 100% owned Iberian Belt West (IBW) asset alone, which is not discussed in this article, and that is currently funded by a newly put together debt facility.

The Aznalcóllar package is not just any asset—it’s a historically significant mine with large zinc, copper, and lead deposits. A legal victory for Emerita would not only lead to a dramatic rerating of the stock but also set a precedent for how public contracts are awarded in Spain.

If Emerita wins its case, it could receive the rights to develop the mine and/or potentially a substantial damages award. In either scenario, the company stands to benefit significantly, given the current demand for base metals driven by the global energy transition. Emerita’s management has also shown determination and legal savvy, winning several key court battles that increase its chances of ultimate success​.

And let’s not forget that Emerita is no novice when it comes to Herculean legal battles. It won its Iberian Belt West mining assets in a similar tender tussle from Trafigura/Matsa in 2020.

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Conclusion: Betting on Justice

Emerita Resources is far from a typical mining investment. It’s a legal battle, a bet on regulatory reform, and a story of David versus Goliath in the Spanish mining sector. The evidence of corruption is extensive and well-documented, with Emerita’s legal team achieving significant victories that bolster their case for a favorable outcome.

With a firm timeline in place, the potential upside could be transformative for Emerita and its shareholders. For investors who can stomach the legal risks and believe in the principles of fair competition, Emerita offers a compelling opportunity.

A price target of C$4.00 per share on the first conviction or plea deal seems reasonable given the value should be north of C$6.00 a share on being awarded the tender and the initiation of subsequent development.

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For additional context, refer Emerita Resources’ news releases below:

June 24, 2021

https://www.emeritaresources.com/news-and-media/news-releases/emerita-provides-update-on-aznalcollar-court-proceedings-spain

July 9, 2021

https://www.emeritaresources.com/news-and-media/news-releases/emerita-provides-update-on-new-developments-in-aznalcollar-court-proceedings-spain

Nov 25 2022

https://www.emeritaresources.com/news-and-media/news-releases/court-date-has-been-scheduled-for-aznalcxf3llar-criminal-trial

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