Hudbay Minerals Inc. (TSX: HBM) (NYSE: HBM) will be acquiring Vancouver’s Copper Mountain Mining Corporation (TSX: CMMC) (ASX: C6C) in a US$429 million all-share deal to create what the two companies say will be the third largest Canadian copper producer.
The two miners announced the news on Thursday and the new combined company is expected to produce approximately 150,000 tonnes of the metal annually from long-life mines located in Canada, Peru and the United States.
Hudbay and Copper Mountain estimate that the deal will result in US$30 million per year of operating efficiencies and corporate synergies, including about US$20 million annually from reductions in operating expenses as a result of Hudbay’s efficient operating practices at the Copper Mountain Mine.
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Hudbay has two open-pit copper and gold mining operations in Peru: Constancia and Pampacancha. The company also has two open-pit mines in the U.S., namely the Copper World Complex in Arizona and the Mason project in Nevada.
“This transaction represents a unique opportunity to combine complementary assets and leverage our technical expertise to create value for the shareholders of both Hudbay and Copper Mountain,” said Hudbay’s President and CEO Peter Kukielski.
‘With an expanded copper production profile, a low-cost position on the copper curve and an enviable copper growth pipeline, the combined company is expected to generate robust cash flows through the cycle and achieve attractive returns by efficiently allocating capital to the highest risk-adjusted return opportunities in the combined project portfolio,” added Kukielski.
Copper Mountain’s flagship operation is the Copper Mountain Mine in southern British Columbia, located about 20 kilometres south of Princeton.
“The mine is now at a point where it will benefit from the additional support available from Hudbay’s strong in-house technical services team. There also remains significant potential to unlock further value by leveraging the best practices of both companies,” said Copper Mountain’s President and CEO Gil Clausen.
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Other copper producers operating in British Columbia include Surge Copper Corp. (TSX-V: SURG) OTCQX: SRGXF) (FSE: G6D2), NorthWest Copper (TSX-V: NWST) (OTCQX: NWCCF) and Coast Copper Corp. (TSX-V: COCO).
Hudbay’s stock price rose by 2.14 per cent on Thursday to $7.17 on the Toronto Stock Exchange and has been on a steady incline for the past month, increasing by 13.79 per cent.
Copper Mountain’s shares rose by 18.81 per cent Thursday to $2.68 on the TSX and have risen by 39.12 per cent over the past month.
rowan@mugglehead.com
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