Hudbay Minerals to acquire Mitsubishi Materials’ 25% interest in Copper Mountain

Hudbay Minerals (HBM) has entered into an agreement with Mitsubishi Materials Corporation (MIMTF) to acquire MMC’s 25% interest in Copper Mountain Mine, the 100% owner of the Copper Mountain mine, for $4.5M in an upfront cash payment and up to $39.75M in deferred and contingent cash payments. In addition, Hudbay will be solely responsible to settle any of CMBC’s outstanding obligations, including an intercompany loan owing to Hudbay, of which 25% represents approximately $104M. The cash consideration of the Transaction consists of: $4.5M payable on the closing date of the Transaction; $21M in seven annual deferred payments of $3M each, which will commence on the 12-month anniversary of the closing date of the Transaction; and up to $18.75M in five additional contingent payments of $3.75M each, which will be payable in the years following New Ingerbelle achieving certain minimum annual operating thresholds. MMC’s right to the contingent payments concludes on the 15-year anniversary of the closing date of the Transaction. Continued long-term relationship with MMC: Hudbay’s proportion of the copper concentrate offtake from the Copper Mountain mine will increase from 0% to 15% from the closing date of the Transaction until the 15-year anniversary of such closing date, with MMC continuing as an 85% offtake partner. Following the 15-year anniversary, Hudbay will be entitled to 100% of the copper concentrate offtake. MMC secondees will continue to contribute to Copper Mountain for a period of five years following the closing of the Transaction. Subsequent to closing the Transaction, Hudbay intends to review the corporate structure of its Canadian entities, which may result in tax synergies through the sharing of tax pools between its various Canadian entities. In addition, Hudbay’s credit base will be enhanced following the Transaction, with CMBC becoming a wholly owned subsidiary and guarantor. The Transaction is expected to close in the second quarter of 2025, subject to the satisfaction of certain conditions customary in transactions of this nature.