The Reminder is making its archives back to 2003 available on our website. Please note that, due to technical limitations, archive articles are presented without the usual formatting.
Jonathon Naylor Editor HudBay Minerals will grow further beyond northern Manitoba with its anticipated purchase of a promising copper project in Peru. The Constancia project is the chief asset of Norsemont Mining, the Toronto-based junior miner HudBay plans to buy in a massive $520 million deal. "This transaction helps solidify HudBay's position as one of the leading mid-tier mining companies with an enhanced growth pipeline in stable, mining-friendly jurisdictions," HudBay President and CEO David Garofalo said in a news release. "Our reliable operations in low-risk jurisdictions combined with our strong financial position complement our ability to execute a focused growth strategy of acquiring porphyry and VMS (volcanogenic massive sulfide) deposits with exploration upside in the Americas." Reserves Norsemont owns 100 per cent of the Constancia project in southern Peru. As of Sept. 2009, the project had proven and probable mineral reserves of 277 million ore tonnes grading 0.43 per cent copper, 0.012 per cent molybdenum, 0.05 grams per tonne gold and 3.7 grams per tonne silver. Based on the preliminary results of a recently released optimization study, Constancia is expected to annually produce 172 million pounds of copper and two million pounds of molybdenum in concentrate, at attractive cash costs, over a 15-year mine life. HudBay said its future combined copper production is expected to grow about 145 per cent between 2011 and 2016, thanks in part to Constancia going into full production. See 'Peru...' on pg. 6 Continued from pg. 1 With $1.2 billion of available cash and credit lines, and revenue from existing operations, the HBMS parent said it is "in an excellent position" to develop Constancia into an active mine. Besides encouraging mineral reserves, the project already has an "excellent infrastructure" in place, HudBay said. Norsemont CEO Patrick Evans said HudBay's "strong balance sheet and exceptional technical expertise" place the HBMS parent well "to accelerate the development of the Constancia project far sooner than Norsemont could have achieved independently." Evans added that "Peru will benefit significantly through HudBay's participation in that country's well-established and rapidly growing mining industry." HudBay's takeover bid is not yet a done deal yet. A support agreement between Norsemont and HudBay contains provisions that allow the Norsemont board of directors to terminate the arrangement. Unsolicited The board could then enter into an agreement with respect to an unsolicited, superior proposal under certain circumstances, subject to, among other things, matching rights in favour of HudBay and payment of a $21.6 million termination fee. But the Norsemont board is recommending the company's shareholders tender their Norsemont shares to HudBay's bid. Norsemont shareholders will receive 0.2617 HudBay shares and $0.001 in cash, or $4.50 in cash, subject to a maximum aggregate cash consideration of $130 million. "Our offer permits Norsemont's shareholders to continue to participate in the development of the Constancia project with the added benefit of exposure to HudBay's profitable operations and world-class Lalor development project [near Snow Lake]," said Garofalo. Full details of HudBay's takeover bid will be included in a circular to be mailed to Norsemont shareholders before the end of the month. The bid will be open for acceptance for a period of no less than 35 days and will be subject to certain customary conditions, which may be waived by HudBay in its discretion.12/1/11
