Feb 10 (Reuters) – Canada’s HudBay Minerals Inc has
offered to buy shares of Augusta Resource Corp it does
not already own for C$2.96 per share in stock, to gain access to
Augusta’s Rosemont copper deposit in Arizona.
According to a 2012 feasibility study, Augusta’s Rosemont
project is expected to produce 243 million pounds of copper per
year, which could be as much as 10 percent of United States’
copper output, potentially making the project the third largest
copper mine in the country.
Augusta shareholders will be entitled to receive 0.315 of
HudBay common share for each Augusta common share held, giving
the deal an equity value of about C$428 million ($386.91
million). HudBay said the enterprise value of the deal could be
about C$540 million.
The per share offer represents a premium of 18 percent over
Augusta’s Friday closing price of C$2.51 on the Toronto Stock
Exchange.
“We view the Rosemont project as an attractive complement to
our existing portfolio of high quality, long-life assets that
fits well with our construction timeline at Constancia,”
HudBay’s Chief Executive David Garofalo said in a statement.
HudBay’s Constancia copper project is located in the
South-eastern Andes of Peru.
Augusta said late on Sunday that its board will meet this
week to discuss the HudBay offer and has urged its shareholders
not to take any action until the company decides on the next
course of action.
HudBay currently owns 23.1 million shares in Augusta,
representing about 16 percent of the company’s outstanding
shares. HudBay made its initial investment in Augusta in 2010.
