National Bank 06:19 AM EDT, 04/14/2023 (MT Newswires) -- National Bank of Canada revised Copper Mountain Mining (CMMC.TO)'s stock rating to tender from outperform after Hudbay Minerals (HBM.TO) on Thursday agreed to acquire the company.
The combined company will be the third largest copper producer in Canada based on estimated copper production, with assets located in tier-one mining-friendly jurisdictions of Canada, Peru and the US, the bank noted.
National Bank does not expect any additional bidders for Copper Mountain given the bilateral negotiation process and opportunities provided by the combined portfolio in terms of near-term operational improvements and longer-term optionality.
Each Copper Mountain shareholder will receive 0.381 of Hudbay common shares, representing a 23% premium to Copper Mountain shareholders based on each company's 10-day volume-weighted-average share prices.
The deal is scheduled for completion late in the second quarter or early in the third quarter, upon which Copper Mountain shares will be delisted from the TSX and ASX.
The deal provides Copper Mountain shareholders with a stronger balance sheet to allocate capital toward expanding the Copper Mountain mine, as well as asset diversification and compelling longer-term organic growth from expansion and development projects, National Bank said.
Hudbay expects operating synergies of US$30 million per year, including US$20 million per year from operating cost reductions by applying Hudbay's operating efficiency practices, the bank said.