Hudbay plans to mine one of North America’s most promising untapped copper deposits after reaching a deal to buy a junior miner.
Hudbay announced Monday an all-scrip agreement to scoop up Augusta Resource Corp., which owns the Rosemont copper property in the southern US, for $555 million (all figures in Canadian dollars).
“We look forward to working with the board and management of Augusta to bring this transaction to a conclusion and to advancing the Rosemont project within Hudbay,” Hudbay President and Chief Executive Officer David Garofalo said in a news release.
The deal caps off nearly five months of failed attempts by Hudbay to assume full ownership of Augusta after years as a minority shareholder.
Worth more
The transaction is worth $15 million more than the $540 million originally offered in early February as part of Hudbay’s initial hostile takeover bid.
Monday’s deal is a friendly takeover that will see Hudbay hand over 0.315 of a Hudbay share, along with 0.17 of a warrant to acquire a Hudbay share, for each Augusta share.
Augusta’s board of directors, which rebuffed earlier overtures from Hudbay, is unanimously recommending that shareholders accept the revised offer.
The board has also agreed to terminate Augusta’s shareholder rights plan, which had been used to block Hudbay’s hostile takeover bid.
“After a thorough process to consider all of our alternatives, we are pleased to have agreed on a mutually beneficial transaction representing a successful conclusion to our value-maximizing process,” said Richard Warke, Augusta’s executive chairman, in the release. “We believe this is a fair transaction for Augusta shareholders.”
The Vancouver-based Augusta owns the Rosemont project near Tucson, Arizona, which is expected to enter production in early 2017.
Hudbay has been keen on Rosemont since initially investing $30 million in Augusta in 2010.
Garofalo said previously that Hudbay views Rosemont “as an attractive complement to our existing portfolio of high quality, long-life assets that fits well with our construction timeline” at the Constancia copper mine in Peru.
Hudbay’s last operating mine in the US was the Balmat zinc mine in New York State. It closed in 2008.
