• Creates 150,000-tonnes-per-year copper producer with long-life mines and a world-class pipeline of
organic copper growth projects
• Combined company creates the 3rd largest copper producer in Canada
• All-share combination based on strong industrial logic and compelling value for shareholders
• Complementary assets with opportunity to unlock US$30 millioni per year in operating efficiencies and
corporate synergies
• Repositions the combined company for a valuation re-rate as a larger, more diversified copper producer
with enhanced liquidity
Toronto, Ontario, April 13, 2023 – Hudbay Minerals Inc. (“Hudbay”) (TSX, NYSE: HBM) and Copper Mountain
Mining Corporation (“Copper Mountain”) (TSX: CMMC, ASX: C6C) are pleased to announce that they have entered
into a definitive agreement (the “Arrangement Agreement”) pursuant to which Hudbay will acquire all of the issued and
outstanding common shares of Copper Mountain, pursuant to a court approved plan of arrangement (the “Transaction”).
The Transaction will create a premier Americas-focused copper mining company that is well-positioned to deliver
sustainable cash flows from an operating portfolio of three long-life mines, as well as compelling organic growth from
a world-class pipeline of copper expansion and development projects. All assets in the combined portfolio are located
in tier-one mining-friendly jurisdictions of Canada, Peru and the United States. The combined company represents the
third largest copper producer in Canada based on 2023 estimated copper productionii
.
Peter Kukielski, Hudbay’s President and Chief Executive Officer, commented, “This transaction represents a unique
opportunity to combine complementary assets and leverage our technical expertise to create value for the shareholders
of both Hudbay and Copper Mountain. We estimate that this combination could unlock US$30 million per year in
operating efficiencies and corporate synergies, and it is accretive to Hudbay’s key per share metrics. With an expanded
copper production profile, a low-cost position on the copper curve and an enviable copper growth pipeline, the combined
company is expected to generate robust cash flows through the cycle and achieve attractive returns by efficiently
allocating capital to the highest risk-adjusted return opportunities in the combined project portfolio. Most importantly,
the combined company will be underpinned by our shared commitment to the highest safety and ESG standards.”
Edward Dowling, Copper Mountain’s Chair of the Board of Directors, stated, “The strategic rationale of the transaction
is compelling on many levels, and the combined company is well-positioned to create sustainable value for all
stakeholders. This transaction provides Copper Mountain shareholders with an attractive premium and the opportunity
to participate in a more diversified portfolio of three operating assets and a leading organic copper growth pipeline.”
Gil Clausen, Copper Mountain’s President and Chief Executive Officer, added, “We are very pleased to be entering
into this combination with Hudbay. The Copper Mountain team has done a tremendous job as seen through the positive
momentum at the mine, and I am extremely proud of the team’s efforts. The mine is now at a point where it will benefit
from the additional support available from Hudbay’s strong in-house technical services team. There also remains
significant potential to unlock further value by leveraging the best practices of both companies.”
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Strategic Rationale of the Transaction
The combination of Hudbay and Copper Mountain is on-strategy with strong industrial logic that will offer both sets of
shareholders compelling benefits, as highlighted below:
• Scale – a larger-scale platform with three long-life operating mines with exploration and expansion upside, three
large-scale development projects and one of the largest mineral resource bases among intermediate copper
producers;
• Diversification – a geographically balanced portfolio in tier-one mining jurisdictions with approximately 55% of
net asset valueiii
(“NAV”) estimated to be from North American assets and 45% of NAV estimated to be from South
American assets;
• Copper-Focused – a copper-focused portfolio with expected 2023 copper production of more than 150,000
tonnes in the second quartile position on the copper cost curveiv
, complemented by meaningful gold production;
• Efficiencies – an estimated US$30 millioni per year of operating efficiencies and corporate synergies, including
approximately US$20 million per year from operating cost reductions through the application of Hudbay’s
operating efficiency practices to the Copper Mountain mine;
• Deleveraging – well-positioned for accelerated deleveraging in the near-term from increased diversification of
cash flows and enhanced exposure to rising copper prices;
• Capital Allocation – an ability to maximize value from a larger organic growth pipeline by more efficiently
allocating capital to projects that yield the highest risk-adjusted returns; the combined company’s greater cash
flow generation and strong balance sheet will enhance the ability to advance brownfield expansion opportunities
and prudently develop Hudbay’s Copper World project in Arizona, which will deliver meaningful growth to the
combined company; and
• Valuation Re-rating Potential – the strategic and financial benefits from the Transaction ultimately position the
combined company for a valuation re-rating.
Transaction Terms
Under the terms of the Arrangement Agreement, each Copper Mountain shareholder will receive 0.381 of a Hudbay
common share for each Copper Mountain common share held.
The Transaction consideration represents approximately C$2.67 per Copper Mountain common share and a US$439
million equity value based on Hudbay’s closing share price on April 12, 2023. The Transaction consideration represents
a 23% premium to Copper Mountain shareholders based Hudbay’s and Copper Mountain’s 10-day volume-weightedaverage share prices on April 12, 2023.
Copper Mountain’s and Hudbay’s respective officers and directors have entered into voting support agreements
pursuant to which they have agreed, among other things, to vote their shares in favor of the Transaction.
Following the closing of the Transaction, the Board of Directors of Hudbay will include two directors from the Board of
Directors of Copper Mountain, and the management team of Hudbay will include select members from the management
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team of Copper Mountain. In addition, existing Hudbay and Copper Mountain shareholders will own approximately 76%
and 24% of Hudbay, respectively.
In light of the Transaction, Gil Clausen has postponed his retirement and will remain as President and Chief Executive
Officer of Copper Mountain until closing.
Transaction Conditions and Timing
The Transaction will be implemented by way of a court-approved plan of arrangement under the Business Corporations
Act (British Columbia). The arrangement will require the approval of at least 66 2/3% of the votes cast by the
shareholders of Copper Mountain at a special meeting of Copper Mountain shareholders held to consider the
Transaction. The issuance of shares by Hudbay under the Transaction is subject to the approval of a simple majority
of the votes cast by Hudbay shareholders at a special meeting of Hudbay shareholders.
In addition to shareholder approvals, the Transaction is subject to the satisfaction of certain other closing conditions
customary in transactions of this nature, including clearance under the Competition Act (Canada), B.C. court approval
and applicable stock exchange approvals.
The Arrangement Agreement contains customary reciprocal deal-protection provisions including non-solicitation
covenants and a right to match any Superior Proposal (as defined in the Arrangement Agreement). Under certain
circumstances, Hudbay and Copper Mountain would be entitled to a termination fee equal to a percentage of respective
equity values.
The Transaction is expected to be completed late in the second quarter or early in the third quarter of 2023. Following
completion of the Transaction, the shares of Copper Mountain will be de-listed from the Toronto Stock Exchange and
the Australian Securities Exchange.
Board of Directors’ Recommendations
After consultation with its financial and legal advisors, the Board of Directors of Hudbay unanimously approved the
entering into of the Arrangement Agreement. The Board of Directors of Hudbay recommends that Hudbay shareholders
vote in favor of the Transaction.
TD Securities Inc. has provided a fairness opinion to the Hudbay Board of Directors, stating to the effect that, as of the
date of such opinion and based upon and subject to the assumptions, limitations and qualifications stated in such
opinion, the consideration to be paid by Hudbay in the Transaction is fair, from a financial point of view, to Hudbay.
Copper Mountain appointed a special committee of independent directors (the “Copper Mountain Special Committee”)
to consider and make a recommendation with respect to the Transaction. Based on the unanimous recommendation
of the Copper Mountain Special Committee, and after consultation with its financial and legal advisors, the Board of
Directors of Copper Mountain has unanimously approved the entering into of the Arrangement Agreement. The Board
of Directors of Copper Mountain recommends that Copper Mountain shareholders vote in favor of the Transaction.
CIBC World Markets Inc. and Origin Merchant Partners have each provided a fairness opinion to the Copper Mountain
Board of Directors and the Copper Mountain Special Committee, to the effect that, as of the date of such opinion and
based upon and subject to the assumptions, limitations and qualifications stated in such opinion, the consideration to
be received by the Copper Mountain shareholders is fair, from a financial point of view, to such shareholders.
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Advisors and Counsel
Citi is acting as financial advisor to Hudbay and Goodmans LLP and Baker McKenzie LLP are acting as legal counsel
to Hudbay.
CIBC Capital Markets is acting as financial advisor to Copper Mountain and Davies Ward Phillips & Vineberg LLP is
acting as legal counsel to Copper Mountain and the Special Committee.
Analyst and Investor Webcast and Conference Call
Hudbay and Copper Mountain will host a joint conference call on Thursday, April 13, 2023, at 8:30 a.m. ET to discuss
the Transaction. A copy of the presentation and webcast audio will be available on Hudbay’s website following the
conference call.
Conference Call and Webcast Details:
Date: Thursday, April 13, 2023
Time: 8:30 a.m. ET
Webcast: www.hudbay.com
Dial in: 1-416-915-3239 or 1-800-319-4610
About Hudbay Minerals Inc.
Hudbay (TSX, NYSE: HBM) is a diversified mining company with long-life assets in North and South America. The
company’s Constancia operations in Cusco (Peru) produce copper with gold, silver and molybdenum by-products. Its
Snow Lake operations in Manitoba (Canada) produce gold with copper, zinc and silver by-products. Hudbay has an
organic pipeline that includes the Copper World project in Arizona and the Mason project in Nevada (United States),
and its growth strategy is focused on the exploration, development, operation, and optimization of properties it already
controls, as well as other mineral assets it may acquire that fit its strategic criteria. 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. Further information about Hudbay can be found on www.hudbay.com.
About Copper Mountain Mining Corporation
Copper Mountain owns 75% of the Copper Mountain Mine, which is located in southern British Columbia near the town
of Princeton. The Copper Mountain Mine produces approximately 100 million pounds of copper equivalent on average
per year. Copper Mountain trades on the Toronto Stock Exchange under the symbol “CMMC” and Australian Stock
Exchange under the symbol “C6C”. Additional information is available on the company’s web page at www.CuMtn.com