Hudbay Minerals Inc. (“Hudbay”) (TSX,
NYSE: HBM) and Copper Mountain Mining Corporation
(“Copper Mountain”) (TSX: CMMC) (ASX: C6C) are pleased to
announce today that they have filed a joint management information
circular dated May 15, 2023 and related meeting materials (the
“Meeting Materials”) in connection with their respective special
meetings of shareholders (the “Meetings”) scheduled to be held on
June 13, 2023. The purpose of the Meetings is to seek approval for
certain matters in connection with their previously announced
transaction whereby Hudbay will acquire all of the issued and
outstanding common shares of Copper Mountain, pursuant to a court
approved plan of arrangement under the Business Corporations Act
(British Columbia) (the “Transaction”).
The Transaction
The Transaction will create a premier
Americas-focused copper mining company that is well-positioned to
deliver sustainable cash flows from an operating portfolio of three
long-life mines, as well as compelling organic growth from a
world-class pipeline of copper expansion and development projects.
All assets in the combined portfolio are located in the tier-one
mining-friendly jurisdictions of Canada, Peru and the United
States. The combined company will be the third largest copper
producer in Canada based on 2023 estimated copper productioni.
Under the terms of the Transaction, each Copper
Mountain shareholder will receive 0.381 of a Hudbay common share
for each Copper Mountain common share held, representing a 23%
premium to Copper Mountain shareholders based on Hudbay’s and
Copper Mountain’s 10-day volume-weighted-average share prices on
April 12, 2023 (being the last trading immediately prior to the
Transaction announcement). The Transaction requires the approval of
at least 66 2/3% of the votes cast by the shareholders of Copper
Mountain, a simple majority of the votes cast by shareholders of
Copper Mountain excluding the votes required to be excluded by
Multilateral Instrument 61-101 – Protection of Minority Security
Holders in Special Transactions, and a simple majority of the votes
cast by shareholders of Hudbay. In addition to shareholder
approvals, the Transaction is subject to final court approval and
the satisfaction of certain other customary closing conditions for
transactions of this nature. The Toronto Stock Exchange has
conditionally approved the listing of the Hudbay common shares to
be issued in connection with the Transaction, and the requisite
regulatory approval for the Transaction under the Competition Act
(Canada) has been obtained. It is currently anticipated that the
effective date of the Transaction will occur in late June 2023.
Board of Directors’ Recommendations and
Key Stakeholder Support
The Board of Directors of each of Hudbay and
Copper Mountain unanimously approved the Transaction and recommend
that each of their respective shareholders vote
“FOR” the Transaction.
Zeta Resources Limited, the largest shareholder
of Copper Mountain, holding 21,359,745ii Copper Mountain shares
representing approximately 9.96% ownership of Copper Mountain on a
non-diluted basis, intends to vote in favour of the
Transaction.
GMT Capital Corp., the largest shareholder of
Hudbay, holding 30,779,920iii Hudbay shares representing
approximately 11.75% ownership of Hudbay on a non-diluted basis,
intends to vote in favour of the Transaction.
Katsuyoshi Isaji, Managing Executive Officer and
President, Metals Company, Mitsubishi Materials Corporation, the
25% minority owner of the Copper Mountain Mine, commented, “We
fully support the combination of Hudbay and Copper Mountain. We
have long respected the operating expertise of Hudbay and are
excited to further our relationship as joint venture partners. We
believe that the Copper Mountain Mine is a high-quality asset, and
we look forward to continuing to unlock its full potential for the
benefit of all stakeholders.”
Strategic Rationale of the
Transaction
The combination of Hudbay and Copper Mountain is
on-strategy with strong industrial logic that will offer both sets
of shareholders compelling benefits, as highlighted below:
- Scale
– A larger-scale platform with three long-life
operating mines with exploration and expansion upside, three
large-scale development projects and one of the largest mineral
resource bases among intermediate copper producers;
- Diversification
– A geographically balanced portfolio in tier-one
mining jurisdictions with approximately 55% of net asset valueiv
(“NAV”) estimated to be from North American assets and 45% of NAV
estimated to be from South American assets;
- Copper-Focused
– A copper-focused portfolio with expected 2023
copper production of more than 150,000 tonnes in the second
quartile position on the copper cost curve,v complemented by
meaningful gold production;
- Efficiencies
– An estimated US$30 million per year of operating
efficiencies and corporate synergies after three years, including
approximately US$20 million per year from operating cost reductions
through the application of Hudbay’s operating efficiency practices
to the Copper Mountain mine;
- Deleveraging
– Well-positioned for accelerated deleveraging in
the near-term from increased diversification of cash flows and
enhanced exposure to rising copper prices;
- Capital Allocation
– An ability to maximize value from a larger
organic growth pipeline by more efficiently allocating capital to
projects that yield the highest risk-adjusted returns; the combined
company’s greater cash flow generation and strong balance sheet
will enhance the ability to advance brownfield expansion
opportunities and prudently develop Hudbay’s Copper World project
in Arizona, which will deliver meaningful growth to the combined
company; and
- Valuation Re-rating
Potential – The strategic and financial
benefits from the Transaction ultimately position the combined
company for a valuation re-rating.
Additional details with respect to the reasons
for the Transaction as well as its potential benefits and risks are
described in the Meeting Materials, which Hudbay and Copper
Mountain shareholders are urged to read in their entirety.
The Meetings
Hudbay Meeting: The Hudbay
meeting will be held on June 13, 2023 at 10:30 a.m. (Toronto time),
subject to any adjournment or postponement thereof, in a virtual
only format via live webcast available online at
https://web.lumiagm.com/265891707, using the password
“hudbayspecial” (case sensitive). The record date for determining
the Hudbay shareholders entitled to receive notice of and vote at
the special meeting was the close of business (Toronto time) on
April 28, 2023.
Copper Mountain Meeting: The
Copper Mountain meeting will be held on June 13, 2023 at 9:00 a.m.
(Vancouver time), subject to any adjournment or postponement
thereof, in a virtual-only format via live webcast available online
using the virtual shareholder meeting platform at
www.virtualshareholdermeeting.com/CMMC2023. The record date for
determining the Copper Mountain shareholders entitled to receive
notice of and vote at the special meeting was the close of business
(Vancouver time) on April 25, 2023.
Mailing of the Meeting Materials is in process
and shareholders of Hudbay and Copper Mountain should expect to
receive their respective Meeting Materials shortly. Hudbay and
Copper Mountain shareholders are encouraged to read the Meeting
Materials carefully and in their entirety. The Meeting Materials
are also available on SEDAR under each company’s profile at
www.sedar.com, under Hudbay’s profile on EDGAR at www.sec.gov,
under Copper Mountain’s profile on the ASX at www.asx.com.au, on
Hudbay’s website at www. https://www.hudbayminerals.com and on
Copper Mountain’s website at www.cumtn.com.
Shareholder Questions and Assistance
Hudbay Shareholders: If you
have any questions or need assistance voting, you can contact
Kingsdale Advisors at 1-866-581-1571 (toll-free in North America)
or 1-416-623-2514 (collect outside North America) or by email at
contactus@kingsdaleadvisors.com. To keep current with and obtain
information about voting your shares, please visit
www.HudbayPOA.com.
Copper Mountain Shareholders:
If you have any questions or need assistance voting, you can
contact Kingsdale Advisors at 1-855-682-2031 (toll-free in North
America) or 1-416-623-4172 (collect outside North America) or by
email at contactus@kingsdaleadvisors.com. To keep current with and
obtain information about voting your shares, please visit
www.CopperMountainPOA.com.
About Hudbay Minerals Inc.
Hudbay (TSX, NYSE: HBM) is a diversified mining
company with long-life assets in North and South America. The
company’s Constancia operations in Cusco (Peru) produce copper with
gold, silver and molybdenum by-products. Its Snow Lake operations
in Manitoba (Canada) produce gold with copper, zinc and silver
by-products. Hudbay has an organic pipeline that includes the
Copper World project in Arizona and the Mason project in Nevada
(United States), and its growth strategy is focused on the
exploration, development, operation, and optimization of properties
it already controls, as well as other mineral assets it may acquire
that fit its strategic criteria. Hudbay’s mission is to create
sustainable value through the acquisition, development and
operation of high-quality, long-life deposits with exploration
potential in jurisdictions that support responsible mining, and to
see the regions and communities in which the company operates
benefit from its presence. Further information about Hudbay can be
found on www.hudbay.com.
About Copper Mountain Mining
Corporation
Copper Mountain owns 75% of the Copper Mountain
Mine, which is located in southern British Columbia near the town
of Princeton. The Copper Mountain Mine produces approximately 100
million pounds of copper equivalent on average per year. Copper
Mountain trades on the Toronto Stock Exchange under the symbol
“CMMC” and Australian Securities Exchange under the symbol “C6C”.
Additional information is available on Copper Mountain’s web page
at www.CuMtn.com.
Forward-Looking Information
This release contains certain “forward looking
statements” and certain “forward-looking information” as defined
under applicable Canadian and U.S. securities laws. Forward-looking
statements and information can generally be identified by the use
of forward-looking terminology such as “may”, “will”, “should”,
“expect”, “intend”, “estimate”, “anticipate”, “believe”,
“continue”, “plans” or similar terminology. The forward-looking
information contained herein is provided for the purpose of
assisting readers in understanding management’s current
expectations and plans relating to the future. Readers are
cautioned that such information may not be appropriate for other
purposes.
Forward-looking statements relate to future
events or future performance and reflect Hudbay’s and Copper
Mountain’s expectations or beliefs regarding future events.
Forward-looking statements include, but are not limited to
statements with respect to the consummation and timing of the
Transaction; timing for the delivery of the Meeting Materials;
approval by shareholders of Hudbay and Copper Mountain; the
satisfaction of the conditions precedent to the Transaction; the
strengths, characteristics and potential of the Transaction; growth
potential and expectations regarding the timing, receipt and
anticipated effects of court and other consents and approvals;
non-withdrawal of regulatory approvals; the impact of the
Transaction on shareholders of Hudbay and Copper Mountain and other
stakeholders and other anticipated benefits of the Transaction. By
their very nature, forward-looking statements involve known and
unknown risks, uncertainties and other factors that may cause our
actual results, performance or achievements to be materially
different from any future results, performance or achievements
expressed or implied by the forward-looking statements. Such
factors include, amongst others, risks related to failure to
receive approval by shareholders of Hudbay and Copper Mountain, the
required court and other consents and approvals to effect the
Transaction, the potential of a third party making a superior
proposal to the Transaction, the possibility that the definitive
arrangement agreement could be terminated under certain
circumstances.
Forward-looking information are based on
management of the parties' reasonable assumptions, estimates,
expectations, analyses and opinions, which are based on such
management's experience and perception of trends, current
conditions and expected developments, and other factors that
management believes are relevant and reasonable in the
circumstances, but which may prove to be incorrect. Such factors,
among other things, include: business integration risks;
fluctuations in general macroeconomic conditions; fluctuations in
securities markets; fluctuations in spot and forward prices of
copper or certain other commodities; change in national and local
governments, legislation, taxation, controls, regulations and
political or economic developments; risks and hazards associated
with the business of mineral exploration, development and mining
(including environmental hazards, industrial accidents, unusual or
unexpected formations pressures, cave-ins and flooding);
discrepancies between actual and estimated metallurgical
recoveries; inability to obtain adequate insurance to cover risks
and hazards; the presence of laws and regulations that may impose
restrictions on mining; employee relations; relationships with and
claims by local communities and indigenous populations;
availability of increasing costs associated with mining inputs and
labour; the speculative nature of mineral exploration and
development (including the risks of obtaining necessary licenses,
permits and approvals from government authorities); and title to
properties.
Hudbay and Copper Mountain undertake no
obligation to update forward-looking information except as required
by applicable law. Such forward-looking information represents
management's best judgment based on the information currently
available. No forward-looking statement can be guaranteed and
actual future results may vary materially. Accordingly, readers are
advised not to place undue reliance on forward-looking statements
or information.
For investor and media inquiries, please
contact:
Hudbay
Candace BrûléVice President, Investor
Relations (416) 814-4387 candace.brule@hudbay.com
Copper MountainTom HaltonDirector, Investor
Relations and Corporate Communications(604)
682-2992Tom.Halton@CuMtn.com
i Sourced from company filings and Wood Mackenzie research.ii
Sourced from Zeta Resources Limited’s SEDI filing reflecting
holdings as of April 24, 2023.iii Sourced from GMT Capital Corp.’s
EDGAR filing reflecting holdings as of March 31, 2023.iv NAV is
based on analyst consensus estimates at Transaction announcement on
April 13, 2023.v Based on Wood Mackenzie’s 2023 by-product C1
copper cost curve (Q4 2022 dataset).
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