Hudbay wants a Toronto-based mineral resource company to assume full ownership of VMS Ventures.
Hudbay announced Monday that it has entered into a voting and support agreement with Royal Nickel Corp (RNC).
Under the deal, Hudbay will vote in favour of RNC’s proposed offer to acquire all of the issued and outstanding common shares of VMS Ventures by way of a plan of arrangement.
Under the terms of the arrangement, VMS shareholders would receive an aggregate of 36 million common shares, about C$3.5 million cash and the payment of a dividend in-kind of about 29.98 million North American Nickel common shares currently held by VMS.
Hudbay currently owns 17,585,000 common shares of VMS, the Vancouver-based company that has a 30 per cent stake in the Reed mine located between Flin Flon and Snow Lake.
Completion of the transaction is subject to a number of conditions, including court approvals and a favourable vote of a majority of the VMS shareholders, VMS said in a news release.
With a projected lifespan of five years, Reed mine entered commercial production in 2014. As of March 2015, ore production totalled 40,100 tonnes, according to VMS.
VMS discovered the Reed deposit in 2007, the same year Hudbay found the much larger Lalor deposit near Snow Lake.
