HudBay Minerals Inc. (HBM), building a copper mine in Peru, will offer to acquire the rest of Augusta Resource Corp. (AZC) to gain control of its copper project in Arizona in a deal valuing the target at C$428 million ($388 million).
HudBay, which owns 16 percent of Augusta, will bid 0.315 of one of its shares for each of Augusta’s, worth about C$2.96 based on the most recent closing price, Toronto-based HudBay said yesterday in a statement. The offer, which HudBay said gives Augusta an enterprise value of C$540 million, represents an 18 percent premium to Augusta’s last closing price.
Buying Vancouver-based Augusta will give HudBay ownership of the $1.2 billion Rosemont copper project in Arizona as it nears the final stages of permitting, David Garofalo, CEO of HudBay, said in the statement. HudBay said it’s better positioned than Augusta to finance development of Rosemont, for which Augusta has had difficulty securing necessary approvals.
“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 time line at Constancia” in Peru, Garofalo said in the statement.
HudBay’s offer will be open until March 19 and requires approval from regulators and Augusta shareholders, HudBay said. Letitia Cornacchia, a spokeswoman for Augusta, didn’t immediately return phone and e-mail messages outside of normal working hours.
BMO Capital Markets and GMP Securities LP are acting as financial advisers to Hudbay.
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