Augusta Resource Corp. Finally Agrees to HudBay Mineral Inc. Takeover
It took some sweet talking, and a little more money, but Augusta Resource has finally agreed to be acquired by HudBay Minerals Inc.
On Monday, Augusta agreed to the deal after HudBay increased its offer by 10 percent to $555-million. The acquisition, however, wasn’t an easy one.
For months, August tried to fend off HudBay’s “lowball” and”grossly inadequate” bid to acquire the company and its large, development-stage Rosemont copper project in Arizona. Augusta believed Hudbay was being too stingy with its early bidding, undervaluing the company and its asset.
As the hostile takeover grew, Augusta adopted a shareholder-rights plan to temporarily block any bids by HudBay. Their plan, however, encountered unexpected setbacks as a string of bad news regarding permits pushed Augusta’s share price below HudBay’s all-stock offer.
HudBay has tried to acquire Augusta since 2010. This year, the miner extended its bid for Augusta seven times before striking this deal.
"After a thorough process to consider all of our alternatives, we are pleased to have agreed on a mutually beneficial transaction representing a successful conclusion to our value maximizing process," said Augusta chairman Richard Warke in a statement.
Although Augusta has agreed to the offer, another company can still mount a counter offer. HudBay would be allowed to match the proposal and if the deal falls apart completely, Augusta would be required to pay HudBay a $20 million fee.
Vale invests $150mn to extend life of Manitoba operations
Vale has announced a $150mn CAD investment to extend current mining activities in Thompson, Manitoba by 10 years while aggressive exploration drilling of known orebodies holds the promise of mining well past 2040.
Global energy transition is boosting the market for nickel
The Thompson Mine Expansion is a two-phase project. The announcement represents Phase 1 and includes critical infrastructure such as new ventilation raises and fans, increased backfill capacity and additional power distribution. The changes are forecast to improve current production by 30%.
“This is the largest single investment we have made in our Thompson operations in the past two decades,” said Mark Travers, Executive Vice-President for Base Metals with Vale. “It is significant news for our employees, for the Thompson community and for the Province of Manitoba.
“The global movement to electric vehicles, renewable energies and carbon reduction has shone a welcome spotlight on nickel – positioning the metal we mine as a key contributor to a greener future and boosting world demand. We are proud that Thompson can be part of that future and part of the low carbon solution.”
Vale continues drilling program at Manitoba
Coupled with today’s announcement, Vale is continuing an extensive drilling program to further define known orebodies and search for new mineralization.
“This $150mn investment is just one part of our ambitious Thompson turnaround story. It is an indicator of our confidence in a long future for the Thompson operations,” added Dino Otranto, Chief Operating Officer for Vale’s North Atlantic Base Metals operations.
“Active collaboration between our design team, technical services, USW Local 6166, and our entire Thompson workforce has delivered a safe, efficient and fit-for-purpose plan that will enable us to extract the Thompson nickel resources for many years to come.”
The Thompson orebody was first discovered in 1956 by Vale (then known as Inco) following the adoption of new exploration technology and the largest exploration program to-date in the company’s history. Mining of the Thompson orebody began in 1961.
“We see the lighting of a path forward to a sustainable and prosperous future for Vale Base Metals in Manitoba,” said Gary Annett, General Manager of Vale’s Manitoba Operations.