TORONTO (miningweekly.com) – Canadian base-metals producer HudBay Minerals is not talking to any potential buyers for the firm, newly reinstated CEO Peter Jones said on Wednesday.
“I can state quite clearly, there are currently no negotiations under way concerning the sale of the company.”
Jones was CEO of HudBay until January 2007, when he was replaced by Allen Palmiere, but was reappointed to the position in March this year, by a new board of directors appointed at HudBay after a successful proxy battle led by shareholder SRM Global Master Fund.
A strategic review of the company's plans and operations is currently under way, and is expected to be outlined at a shareholders meeting on June 19, Jones said.
HudBay has halted some operations, because of low metals prices, and will also need to develop a closure plan for its copper smelter, in Flin Flon.
The strategic review will include a broad operational plan, although at this point, current metal prices are not seen as justifying the reopening of the Balmat zinc mine, in New York, or the Chisel zinc operation, in Manitoba.
In fact, a "very significant" price increase will be neccessary to warrant consideration of the restart of Balmat in the future, Jones said.
As far as organic growth is concerned, the company is working on a scoping study on what will likely be its next major mine - the Lalor zinc and precious metals discovery in Manitoba, Jones said.
It is also trying to firm up plans for power supply to the Fenix nickel project, in Guatamala, which it bought last year, but put on hold just two months later because of slumping metals prices and difficult credit markets.
A cost-effective power solution, coupled with improving zinc prices, will likely open the way for the project to get moving again.
Finally, HudBay will continue to assess opportunities to put its strong balance sheet to work through acquisitions.
"Asset valuations in the mining industry remain attractive, and we are assessing acquisitions as we develop HudBay's strategic plan," Jones said.
The company will target assets with relatively low costs, rather than specific base metals.
The previous board had held talks with a number of parties on a potential takeover, although these negotiations were terminated before the board changeover.
There has since been speculation that HudBay could be sold, after the company hired investment advisers last month to advise on potential transactions, and a subsidiary of India's Vedanta Resources bought a 9,5% share in the company.
However, Jones said on Wednesday that developing the company's projects and identifying accretive acquisitions were more likely to create value for shareholders than a potential sale.
“It is fair to say that a sale of the company is a much lower priority,” he said.
HudBay will consider any attractive offer, and won't shut the door to the possibility, “but we are not aggressively pursuing the sale of the company”, Jones said.
SRM launched a proxy battle to replace the board and Palmiere, after the firm's failed attempt to buy fellow Canadian base-metals miner Lundin Mining.