Today's News Post says HudBay can pay more for Augusta Resource
Augusta Resource Corp (2) (C:AZC)
Shares Issued 145,394,597
Last Close 2/11/2014 $3.27
Wednesday February 12 2014 - In the News
Also HudBay Minerals Inc (C:HBM) In the News
The Financial Post reports in its Wednesday edition Augusta Resource jumped to $3.20 on Monday after HudBay Minerals unveiled its $428-million hostile takeover offer for the copper miner. The Post's Jonathan Ratner, writing in Trading Desk, says the all-stock bid for Augusta was priced at $2.96 per share, which hints at a better offer. RBC analyst Patrick Morton thinks HudBay can pay $3.38 per share for Augusta. Mr. Morton's net asset value model for Augusta is based on the bankable feasibility study released in 2012 for its Rosemont copper project in Arizona. The analyst also applied modest 10-per-cent capex and 15-per-cent opex inflation. This yielded a prefinancing net asset value of $7.62 per share for Augusta. Factoring in the sharp gain in the stock on Monday, Augusta trades at 0.42 times NAV. HudBay trades at 0.92 times NAV, "meaning that there is little to no dilution risk on a NAV basis if HudBay increases its bid," the analyst said. At $3.38 per share, he noted the offer would imply a price-to-NAV of 0.44x, which is well below the average for comparable deals of 0.75 per cent. Meanwhile, Canaccord Genuity analyst Gary Lampard does not expect Augusta shareholders to accept the current bid from HudBay.