Canadian miner Hudbay Minerals (TSX, NYSE: HBM) has shrugged off some shareholders concerns about the company not being in position to buy new assets, and announced the acquisition of Mason Resources (TSX:MNR) for C$31 million (about $24m).
Disclosing the deal after the market closed on Wednesday, Hudbay president and chief executive officer Alan Hair said that while the company believed the most significant opportunities for long-term value creation was through exploration and mine development, purchasing Mason fitted its "stringent" criteria.
By buying Mason Resources, Hudbay gains access to the company's Ann Mason copper project, located in the Yerington district of Nevada.By grabbing Mason, Hudbay gains access to the company's Ann Mason copper project located in Nevada, a deposit in mining-friendly jurisdiction, with the potential to be long-life low cost operation once developed.
Hair noted Ann Mason holds measured and indicated resources comparable to the company's Constancia and Rosemont mines at a cost of roughly 30 percent of Hudbay's 2018 exploration budget.
The copper deposit, located in the Yerington district of Nevada, contains measured and indicated mineral resources 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 cut-off.
News of the acquisition comes despite Waterton Global Resource Management - which holds about 7 % of Hudbay - last month asked it to avoid any near-term acquisition or joint ventures, following media reports the Canadian firm was in talks to buy Chilean miner Mantos Copper.
The private equity firm also wants changes to the board for what it considers an "atrocious" market performance, and has called for a special shareholders meeting.
Hudbay Minerals mines for zinc and copper, primarily in Canada's Manitoba province, but it also has operations in Peru and Arizona. Its shares were trading almost 14% higher in Toronto on Thursday late morning at C$5.89 and were up 13.5 % in New York at 11:11 a.m. local time, at $4.44.