Toronto-headquartered Hudbay Minerals has announced the acquisition of Mason Resources – the owner of the Mason Ann copper project in Nevada – for C$31-million, despite shareholder Waterton Global Resource Management previously requesting a moratorium on any near-term acquisitions.
Announcing the transaction after the market closed on Wednesday, Hudbay president and CEO Alan Hair said that, although the TSX- and NYSE-listed miner believed the most significant opportunities for long-term value creation was through exploration and mine development, the acquisition of Mason fitted its “stringent” criteria.
He explained that the company targeted copper deposits in mining-friendly jurisdictions, with the potential to be long-life low cost operations once developed.
“It provides us access to a copper deposit in Nevada with measured and indicated resources comparable to Constancia and Rosemont at a cost of approximately 30% of our 2018 exploration budget. We have followed the Ann Mason project for quite some time as a shareholder and believe it is an ideal fit for our project pipeline,” Hair said.
The Ann Mason deposit, located in the Yerington district of Nevada, has a measured and indicated mineral resource of 1.4-billion tonnes, grading 0.32% copper, 0.006% molybdenum, 0.03 g/t gold and 0.65 g/t silver and an inferred mineral resource of 623-million tonnes grading 0.29% copper, 0.007% molybdenum, 0.03 g/t gold and 0.66 g/t silver using a 0.2% copper cutoff.
Mason president and CEO Stephen Scott said that the project was of a scale that meant it was not feasible for the junior to develop it on a standalone basis, without considerable equity dilution and financial risk.
The news of the transaction comes as Waterton – a 7% shareholder of Hudbay – last month asked the miner to avoid any near-term acquisition or joint ventures, after market speculation surfaced that it was in talks to buy Chilean miner Mantos Copper.
Waterton also wants changes to the board, citing Hudbay’s “atrocious” market performance, and has called for a special shareholders meeting.
Hudbay stated that it was considering the requisition and that it would respond in due course.
Meanwhile, Hudbay also announced its third-quarter operating and financial results, announcing net profit and earnings a share of C$22.8-million and C$0.09 a share, respectively, compared with C$36.3-million and C$0.15 a share, respectively, in the prior-year quarter.
The company explained that its cash generated from operating activities decreased from $167.9-million in the third quarter of 2017, to C$113.8-million, owing to lower realised prices for all commodities, lower sales volumes of copper and higher operating costs. This was partially offset by increases in sales volumes of precious metals and zinc.
Revenue decreased from C$380.18-million to $362.65-million.
Compared with the same quarter of 2017, production of contained copper-equivalent metal in concentrate decreased by 10%, primarily as a result of lower production in Manitoba. The decrease in Manitoba production was partially offset by higher copper production at Constancia, in Peru, arising from improved mill throughput and recoveries.
The Manitoba operations produced 26 228 t of zinc, 7 506 t of copper and 26 118 oz of gold-equivalent precious metals. Zinc production was 28% lower compared with the same period in 2017 as a result of lower grades at Lalor and 777, in line with the mine plan. The Reed mine closure in August negatively affected contained copper production compared with the third quarter of 2017.
The Peru operations produced 32 976 t of copper, which was about 7% higher than production in the third quarter of 2017, owing to higher throughput and improved recoveries. The molybdenum plant continued to operate at higher rates during the quarter, resulting in the production of 370 t of molybdenum. Production for the first three quarters of 2018 for all commodities increased owing to improved mill throughput and higher recoveries, partially offset by lower copper grades in accordance with the mine plan. Production results to date are on track to meet full year guidance.