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HudBay Minerals Agrees to Buy Norsemont for C$520 Million to Add Peru Mine

HudBay Minerals Inc., a Canadian metals producer, said it agreed to acquire Norsemont Mining Inc. for C$520 million ($524 million) to add the Constancia copper project in Peru.

HudBay will pay 0.2617 of a share and 0.1 cent for each Norsemont share, or $4.50 a share for a maximum consideration of C$130 million, the Toronto-based companies said today in a statement. The offer is 33 percent more than Norsemont’s share price based on the companies’ volume-weighted average trading prices in the 20 trading days ended Jan. 7, HudBay said.

Bringing Constancia into production will more than double HudBay’s copper output from this year to 2016, the company said. The project is expected to produce 172 million pounds of copper and 2 million pounds of molybdenum annually over a 15-year mine life.

Norsemont rose 22 cents, or 5.2 percent, to C$4.49 as 3:59 p.m. in Toronto Stock Exchange trading. HudBay fell 55 cents, or 3.3 percent, to C$16.21.

There were $3.27 billion of takeovers of copper-producing companies completed last year, according to data compiled by Bloomberg. The average premium paid in the 36 deals was 25 percent.

Copper for three-month delivery traded at a record $9,754 a metric ton on the London Metal Exchange on Jan. 4. The metal has gained 23 percent in the past 12 months.

To contact the reporter on this story: Simon Casey in New York at scasey4@bloomberg.net.

To contact the editor responsible for this story: Simon Casey at scasey4@bloomberg.net.

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