TORONTO (miningweekly.com) – Canadian base metals miner HudBay Minerals will sell all the shares it owns in Lundin Mining, for a handsome C$236-million, the firm announced on Monday.

The company expects to make a before-tax gain of C$100-million on the shares, which represent 16,7% of Lundin, and will be sold to GMP Securities, HudBay said.

Lundin shares dropped 12,3% on Monday, to C$2,57 a share by 15:59 in Toronto. HudBay rose 0,5%, to C$8,11 a share.

HudBay bought the shares last year as part of a planned takeover of Lundin, but the deal was broken off in February, because of opposition from HudBay shareholders.

HudBay's CEO, Allen Palmiere, resigned less than a month later, and was replaced by director Colin Benner, who only held the position for a couple of weeks, before the company's whole board was ousted following a proxy battle.

The new board, led by Wesley Voorheis, re-appointed Palmiere's predecessor, Peter Jones, as CEO.

In December, HudBay bought 97-million Lundin shares in December for about C$135,8-million, to provide Lundin with working capital until the proposed takeover because effective.

At the time, the company in need of funds, as sharply lower metals prices rendered some operations unprofitable.

However, after closing some mines, one of which has since been sold, and completing a C$188,6-million equity offering last month, Lundin is now in a much better position, CEO Phil Wright said last week.

When the HudBay transaction was broken off, the companies agreed that HudBay could nominate one director to Lundin's board and have right of first refusal on any asset sales by Lundin.

With the announcement by HudBay that the shares will be sold, these obligations and rights have now all been terminated.

“We believe this brings the HudBay arrangements to a final satisfactory conclusion," Wright said in a separate statement.

To subscribe to Mining Weekly's print magazine email subscriptions@creamermedia.co.za or buy now.