Inside the Hostile Takeover Battle for Augusta Resources Copper Mine
With HudBay extending its offer, Augusta Resource and shareholders are refuting the brutal conquest of the Rosemont copper project
It’s nothing personal, just business.
A hostile takeover is underway in the copper industry as fellow Canadians battle it out over the acquisition of Augusta Resource Corp. and its lucrative Rosemont project. The mining company HudBay Minerals Inc. has officially extended its offer for the company, which was set to expire on Monday, to May 16.
The Company announced on Monday it had extended its offer to acquire all of the outstanding common shares of Augusta Resource, including the Rosemont project in Arizona, a copper-molybdenum-silver mine that is currently being built. The mine will be the third-largest copper operating in the United States and supply 10 percent of the country’s copper mineral.
Last year investors in Augusta adopted a shareholder rights plan following HudBay’s acquisition of a large stake in the company. On Friday, investors voted overwhelmingly to keep in place the rights plan, or “poison pill”, which holds back the all-share takeover by HudBay for a couple of months.
The plan, however, will be terminated on July 16, 2014 if Augusta cannot find an offer before then.
A shareholder rights plans – sometimes called poison pill – makes an acquisition by a hostile bidder prohibitively costly by increasing the number of shares a company has by allowing shareholders to purchase additional shares at a substantial discount to the market price.
HudBay, which already owns a 16 percent stake in Augusta, has offered 0.315 of a HudBay share for each Augusta share, valuing the company at about $443-million.
Augusta said it has signed confidentiality agreements with more than 10 entities and is aggressively engaged in talks with possible bidders that can top HudBay. The company is accused of “swooping in at the last minute” with an offer it has characterized as “opportunistic”, “lowball” and “grossly inadequate.”
The Rosemont copper project has proven and probable reserves of 5.9 billion pounds of copper and 194 million pounds of molybdenum with annual production set for 243 million pounds of copper, 5.4 million pounds of moly and 2.9m ounces of silver over its 21-year life.
Augusta Resource Corp. is a base metals company focused on advancing the Rosemont Copper deposit in Arizona.
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.