Shares of Aquila Resources (TSX: T.AQA, Stock Forum) powered 27% higher to 23.5 cents Thursday, as the company announced that it has entered into a subscription, option, and joint venture agreement with HudBay Minerals (TSX: T.HBM, Stock Forum), granting HudBay the right to acquire a majority interest in Aquila's Back Forty project in Michigan.
Under the agreement, HudBay has agreed to subscribe for 12,141,051 common shares of Aquila, a 14.9% undiluted ownership interest, at 18 cents per share for an investment of C$2.2 million.
After the subscription is completed, HudBay will have an option to acquire a 51% ownership interest in the Back Forty Project, an exploration-stage volcanogenic massive sulfide deposit, by spending US$10 million within three years and the right to further increase its ownership to 65% by completing a feasibility study, submitting an application for permitting the project and making certain option payments.
Upon HudBay acquiring a 51% interest in the project, the parties will form a joint venture, with HudBay acting as operator.
"HudBay brings to the project extensive development and operating expertise, as well as financial resources and marketing expertise for the metals to be produced at Back Forty. The transaction announced today will allow us to maintain our timeline for development of the Project, and is a strong fit with the Aquila strategy of working to create shareholder value by participating in building and maintaining economically sound, environmentally responsible operations with a focus on safety and social responsibility," says Thomas O. Quigley, president and CEO of Aquila.
Shares of HudBay were down 0.8% to $8.39 Thursday.
On the Aquila Bullboard Thursday, slowlyiturn said: “As a shareholder of Aquila I am really happy about this HudBay announcement. I've been hoping that a larger player would take an interest in the property. HudBay has the money and the expertise, it's such a good fit. I must congratulate the people at both companies for making this happen.”
Meanwhile, on the HudBay Bullboard, boxerbear noted: “I have to admit to not seeing that one coming. On first look I see some possible legal issues associated with the Menominee River (not sure if this has any direct impact on us)”…
