Vancouver, BC and Toronto, ON, October 31, 2018 - Mason Resources Corp. (TSX:MNR; OTCQB: MSSNF – “Mason”) and Hudbay Minerals Inc. (TSX & NYSE: HBM – “Hudbay”) are pleased to announce that they have entered into an arrangement agreement (the “Arrangement Agreement”) pursuant to which Hudbay will acquire the remaining 86% of the issued and outstanding common shares of Mason that it does not already own (the “Arrangement”). All currency is stated in Canadian dollars, unless otherwise indicated.
Under the Arrangement, Mason shareholders will receive $0.40 in cash for each Mason common share they own. The Arrangement values Mason at $31 million, representing an attractive premium to recent Mason trading. The enterprise value to Hudbay, net of Mason’s cash and Hudbay’s current 14% ownership in Mason, is approximately US$15 million.
Stephen Scott, President and Chief Executive Officer of Mason, comments, “We are excited to be announcing this transaction. We are very pleased with the progress we have made establishing the Ann Mason project as a world-class and highly prospective copper deposit. The acquisition by a well run, diversified, cash flowing base metal producer ensures a faster and lower risk development path for the Ann Mason project. Given its significant scale, it is not feasible for Mason to develop the mine on a stand-alone basis in a timely fashion and without considerable equity dilution and financial risk. The acquisition of Mason by Hudbay provides an opportunity for shareholders to realize immediate value from their investment in Mason.”
Alan Hair, President and Chief Executive Officer of Hudbay, comments, “The acquisition of the Ann Mason project is another step in Hudbay’s consistent strategy of accretive acquisitions of scarce, high-quality copper resources in mining-friendly jurisdictions. Ann Mason is an ideal fit for Hudbay’s development pipeline and is at the stage where we can apply our exploration expertise, advance technical studies and leverage our proven mine development team to create value for our shareholders.”
Mason is the 100% owner of the Ann Mason deposit located in the Yerington District of Nevada. Ann Mason has a National Instrument 43-101 – Standards of Disclosure for Mineral Projects (“NI 43-101”) compliant 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 cut-off. For complete disclosure of Mason’s mineral resource estimate refer to the 2017 Updated Preliminary Economic Assessment on the Ann Mason Project, Nevada, U.S.A. with an effective date of March 3, 2017, available under Mason’s profile at www.sedar.com and on Mason’s website at www.MasonResources.com.
Summary of the Arrangement
The Arrangement is structured as a plan of arrangement pursuant to the Business Corporations Act (British Columbia) and will require the approval of the Supreme Court of British Columbia and the approval of: (i) at least two-thirds of the votes cast by Mason shareholders; and (ii) a majority of the votes cast by Mason shareholders excluding Hudbay and any other persons required to be excluded in accordance with Multilateral Instrument 61-101 — Protection of Minority Security Holders in Special Transactions (“MI 61-101”), at a special meeting of Mason shareholders which is expected to be held in December 2018.
The Board of Directors of Mason (the “Board”), having received a unanimous recommendation from a special committee of the Board consisting entirely of independent directors (the “Special Committee”) has unanimously approved the Arrangement and recommends that Mason shareholders vote in favour of the Arrangement. The Special Committee, in conducting its review of the Arrangement, was advised by Canaccord Genuity Corp. as its financial advisor. In addition, the Special Committee obtained a formal, independent valuation in accordance with MI 61-101 and a fairness opinion from Haywood Securities Inc. (“Haywood”). The independent valuation was prepared by Haywood under the supervision of the Special Committee, and determined that, in Haywood’s opinion, based upon and subject to the assumptions, limitations and qualifications set forth therein, the fair market value of the Mason common shares is in the range of $0.25 to $0.56 per Mason common share. In addition, Haywood has provided the Special Committee and Board with a fairness opinion, stating that in its opinion, based upon and subject to the assumptions, limitations, and qualifications set forth therein, the consideration to be received by Mason shareholders (other than Hudbay) under the Arrangement is fair, from a financial point of view, to the Mason shareholders (other than Hudbay).
In connection with the Arrangement, all of the directors and senior officers of Mason as well as Mantos Copper (Bermuda) Limited (the “Locked-Up Shareholders”) have entered into customary support agreements with Hudbay pursuant to which they have agreed to vote their Mason shares, representing 19.8% of the issued and outstanding Mason shares, in favour of the Arrangement. Together with Hudbay, the Locked-Up Shareholders hold 33.7% of the issued and outstanding Mason common shares.
Holders of Mason options and warrants that are in-the-money will receive cash consideration equal to the purchase price less the exercise price of each Mason option or warrant.
In addition to the aforementioned approvals, completion of the Arrangement is subject to other customary conditions. The Arrangement is not, however, subject to any regulatory approvals. The Arrangement is expected to close in December 2018.
The Arrangement Agreement provides for customary non-solicitation covenants on the part of Mason and a right in favour of Hudbay to match any unsolicited superior proposal. In the event that the Arrangement is not completed in certain circumstances, Mason has agreed to pay Hudbay a termination fee of $1.6 million.
The full details of the Arrangement and the MI 61-101 valuation will be set out in a management information circular, which will be mailed to Mason shareholders and filed with the Canadian securities regulatory authorities during November 2018. The documents will also be available under Mason’s profile on SEDAR (www.sedar.com) and on Mason’s website (www.MasonResources.com).
Mason’s financial advisors are Canaccord Genuity Corp. and Haywood Securities Inc. and its legal advisor is Borden Ladner Gervais LLP.
Hudbay’s financial advisor is BMO Capital Markets and its legal advisor is Goodmans LLP.
Robert Cinits, P.Geo., Mason’s Chief Operating Officer, a Qualified Person as defined by NI 43-101 has approved the technical information in this news release.
About Mason Resources Corp.
Mason Resources Corp. is a well-funded Canadian company focused on copper exploration and development in the U.S.A. The company’s key asset is its 100% owned Ann Mason project – an extensive, prospective land package located in the Yerington District of Nevada. The Ann Mason project hosts two copper-molybdenum porphyry deposits, Ann Mason and Blue Hill, as well as numerous earlier-stage or untested priority targets. The Ann Mason deposit is currently at a PEA level and is among the largest undeveloped copper porphyry resources in Canada/U.S.A. The excellent infrastructure, year-round access, strong community support and clear permitting process are all factors that contribute to making Yerington, Nevada one of the best mining jurisdictions in the world. Mason also holds a 100% interest in the Lordsburg property, an exciting earlier-stage copper-gold porphyry project, located within an historic mining district in New Mexico.
Hudbay (TSX, NYSE: HBM) is an integrated mining company primarily producing copper concentrate (containing copper, gold and silver), zinc concentrate, molybdenum concentrate and zinc metal. With assets in North and South America, the company is focused on the discovery, production and marketing of base and precious metals. Directly and through its subsidiaries, Hudbay owns four polymetallic mines, four ore concentrators and a zinc production facility in northern Manitoba and Saskatchewan (Canada) and Cusco (Peru), and a copper project in Arizona (United States). The company’s growth strategy is focused on the exploration and development of properties it already controls, as well as other mineral assets it may acquire that fit its strategic criteria. Hudbay’s vision is to be a responsible, top-tier operator of long-life, low-cost mines in the Americas. Hudbay’s mission is to create sustainable value through the acquisition, development and operation of high-quality, long-life deposits with exploration potential in jurisdictions that support responsible mining, and to see the regions and communities in which the company operates benefit from its presence. The company is governed by the Canada Business Corporations Act and its shares are listed under the symbol "HBM" on the Toronto Stock Exchange, New York Stock Exchange and Bolsa de Valores de Lima.
Hudbay Minerals Announces Third Quarter 2018 Results.
TORONTO, Oct. 31, 2018 (GLOBE NEWSWIRE) -- Hudbay Minerals Inc. (“Hudbay” or the “company”) (TSX, NYSE:HBM) today released its third quarter 2018 financial results. All amounts are in U.S. dollars, unless otherwise noted.
Earnings per share of $0.09 and cash from operating activities of $113.8 million in the third quarter of 2018.
Achieved record mill throughput and copper recoveries at Constancia.
Trade-off studies have been completed and Hudbay believes the refurbishment of the New Britannia mill is the optimal processing scenario for the Lalor gold and copper-gold zones.
Entered into a friendly agreement to acquire Mason Resources Corp. (“Mason”), owner of one of the largest undeveloped copper porphyry resources in North America, for an enterprise value of approximately $15 million.
“In Q3 we executed well against our strategic priorities and generated strong earnings and cash flow as we continued to focus on developing and operating our portfolio of high-quality assets in mining friendly jurisdictions,” said Alan Hair, president and chief executive officer. “Record mill throughput and record copper recoveries at our Constancia mine reflected the success of optimization efforts we have been making over the past several years. We are also very encouraged by the progress we have made at Lalor, where we believe we can enhance the long-term value of the Manitoba business by refurbishing the New Britannia gold mill.”
Hudbay believes the most significant opportunities for long-term value creation are through exploration and mine development. The company’s track record of successful exploration, industry-leading development and mine ramp-up, and highly efficient operation of the Constancia mine in Peru, along with its long history of responsible, mining life-cycle experience in Manitoba provides Hudbay with a competitive advantage to create long-term shareholder value. Hudbay considers acquisition opportunities against a number of criteria; the company targets copper deposits in mining-friendly jurisdictions, with the potential to be long-life low cost operations once developed. Potential opportunities should involve a meaningful operating role for Hudbay and be accretive to NAV/share and/or reserves/resources per share.
“Hudbay's acquisition of Mason meets our stringent acquisition criteria and is a unique opportunity to create value with our proven ‘drill and build’ strategy,” stated Mr. Hair. “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. We’re pleased to acquire a deposit of this scale at an early stage and we look forward to applying our exploration, engineering, permitting and construction expertise to unlock the project’s potential and maximize value for our shareholders.”
Net profit and earnings per share in the third quarter of 2018 were $22.8 million and $0.09, respectively, compared to net profit and earnings per share of $36.3 million and $0.15, respectively, in the third quarter of 2017.
In the third quarter of 2018, cash generated from operating activities was $113.8 million, which decreased from $167.9 million in the same period of 2017 due to lower realized prices for all commodities, lower sales volumes of copper and higher operating costs, partially offset by increases in the sales volumes of precious metals and zinc.
Net profit and earnings per share in the third quarter of 2018 were affected by, among other things, the following items:
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