Hudbay Minerals, Copper Mountain shareholders approve merger

The deal hands Hudbay the Copper Mountain copper mine in British Columbia, located about 20 km south of Princeton and 300 km east of the port of Vancouver. 

It also makes the combined company Canada’s third largest copper miner, after Teck Resources (TSX: TECK.A/TECK.B; NYSE: TECK) and Vale (NYSE: VALE), with an estimated 2023 production of 53,000 tonnes.

The transaction the latest in a wave of buyout offers across the mining sector, as companies rush to expand their copper footprint. 

The metal is a hot target as it is seen as indispensable to the global energy transition from fossil fuels.

Hudbay Minerals said the acquisition will result in an estimated US$30 million per year of operating efficiencies and corporate synergies. These include nearly US$20 million annually from operating cost reductions through the application of the company’s operating efficiency practices to the copper mine.

Under the terms of the deal, each Copper Mountain shareholder will receive 0.381 of a Hudbay common share for each Copper Mountain common share held. 

The transaction values the single-asset copper company at $2.67 per share.

Existing Hudbay and Copper Mountain shareholders will own about 76% and 24% of Hudbay, respectively.

The combined company will own three long-life operating mines Constancia in Peru, as well as Snow Lake and Copper Mountain in Canada, with exploration and expansion upside. 

It will also have three large-scale development projects — Mason, Copper World and Llaguen—  and one of the largest mineral resource bases among intermediate copper producers.

The parties expect their joint copper production this year to surpass the 150,000 tonnes in the second quartile position on the copper cost curve.

The strategic and financial benefits from the deal, expected to close on or around June 20, position the combined company for a valuation re-rating, according to Hudbay.