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Hudbay Minerals has reached an agreement to buy United Copper & Moly’s 7.95 percent interest in the Rosemont copper project.
Hudbay Minerals (TSX:HBM,NYSE:HBM) has reached an agreement to buy United Copper & Moly’s 7.95 percent interest in the Rosemont copper project.
The agreement with UCM will also entail terminating all of the company’s remaining earn-in and take-off rights for US$45 million. Three annual payments of US$10 million are also factored into the agreement, and are set to begin from July 1, 2022 onward.
As stated in the press release:
In connection with the transaction, Hudbay has agreed to release UCM from any and all obligations in relation to the Rosemont project, including project loans representing its proportionate share of joint venture expenditures incurred beyond its initial earn-in investment. UCM is jointly owned by Korea Resources Corporation and LG International Corp.
In addition to simplifying the ownership structure, the transaction also removes the current governance structure with UCM, which was inherited from the previous owner of Rosemont. This allows Hudbay to have greater strategic flexibility with respect to capital structure and project financing options, and Hudbay intends to evaluate a variety of options, including the addition of a new, committed joint venture partner for the development of Rosemont. The company expects to carry out this process in parallel with advancing the initial development of Rosemont, with the objective to ultimately hold an approximate 70 percent interest in the project and maintain operatorship.
The UCM transaction is expected to close not later than April 25, 2019, subject to the approval of the parties’ respective boards of directors and the execution of a definitive agreement.
Alan Hair, Hudbay’s President and CEO, commented:
“There is continued positive momentum at Rosemont as we recently received our section 404 water permit and we look forward to advancing the project into construction as we finalize a prudent financing strategy. As part of our financing strategy, we will shortly launch a process to seek a development joint venture partner for Rosemont. We expect there will be substantial interest in a minority stake given recent precedent transactions and Rosemont’s unique status as a world-class, shovel-ready copper project in the United States.”
Click here to read the full press release from Hudbay Minerals.