VANCOUVER, British Columbia and TORONTO, Oct. 31, 2018 (GLOBE NEWSWIRE) -- Mason Resources Corp. (TSX:MNR;
OTCQB: MSSNF – “Mason”) and Hudbay Minerals Inc. (TSX & NYSE: HBM – “Hudbay”) are pleased to announce that they have entered into
an arrangement agreement (the “Arrangement Agreement”) pursuant to which Hudbay will acquire the remaining 86% of the issued and
outstanding common shares of Mason that it does not already own (the “Arrangement”). All currency is stated in Canadian dollars,
unless otherwise indicated.
Under the Arrangement, Mason shareholders will receive $0.40 in cash for each Mason common share they own. The
Arrangement values Mason at $31 million, representing an attractive premium to recent Mason trading. The enterprise value to
Hudbay, net of Mason’s cash and Hudbay’s current 14% ownership in Mason, is approximately US$15 million.
Stephen Scott, President and Chief Executive Officer of Mason, comments, “We are excited to be announcing this
transaction. We are very pleased with the progress we have made establishing the Ann Mason project as a world-class and highly
prospective copper deposit. The acquisition by a well run, diversified, cash flowing base metal producer ensures a faster and lower
risk development path for the Ann Mason project. Given its significant scale, it is not feasible for Mason to develop the mine on a
stand-alone basis in a timely fashion and without considerable equity dilution and financial risk. The acquisition of Mason by
Hudbay provides an opportunity for shareholders to realize immediate value from their investment in Mason.”
Alan Hair, President and Chief Executive Officer of Hudbay, comments, “The acquisition of the Ann Mason project
is another step in Hudbay’s consistent strategy of accretive acquisitions of scarce, high-quality copper resources in
mining-friendly jurisdictions. Ann Mason is an ideal fit for Hudbay’s development pipeline and is at the stage where we can apply
our exploration expertise, advance technical studies and leverage our proven mine development team to create value for our
shareholders.”
Mason is the 100% owner of the Ann Mason deposit located in the Yerington District of Nevada. Ann Mason has a
National Instrument 43-101 – Standards of Disclosure for Mineral Projects (“NI 43-101”) compliant Measured and Indicated
mineral resource of 1.4 billion tonnes grading 0.32% copper, 0.006% molybdenum, 0.03 g/t gold and 0.65 g/t silver and an Inferred
mineral resource of 623 million tonnes grading 0.29% copper, 0.007% molybdenum, 0.03 g/t gold and 0.66 g/t silver using a 0.2%
copper cut-off. For complete disclosure of Mason’s mineral resource estimate refer to the 2017 Updated Preliminary Economic
Assessment on the Ann Mason Project, Nevada, U.S.A. with an effective date of March 3, 2017, available under Mason’s profile at
www.sedar.com and on Mason’s website at www.MasonResources.com.
Summary of the Arrangement
The Arrangement is structured as a plan of arrangement pursuant to the Business Corporations Act
(British Columbia) and will require the approval of the Supreme Court of British Columbia and the approval of: (i) at least
two-thirds of the votes cast by Mason shareholders; and (ii) a majority of the votes cast by Mason shareholders excluding Hudbay
and any other persons required to be excluded in accordance with Multilateral Instrument 61-101 — Protection of Minority
Security Holders in Special Transactions (“MI 61-101”), at a special meeting of Mason shareholders which is expected to be
held in December 2018.
The Board of Directors of Mason (the “Board”), having received a unanimous recommendation from a special
committee of the Board consisting entirely of independent directors (the “Special Committee”) has unanimously approved the
Arrangement and recommends that Mason shareholders vote in favour of the Arrangement. The Special Committee, in conducting its
review of the Arrangement, was advised by Canaccord Genuity Corp. as its financial advisor. In addition, the Special Committee
obtained a formal, independent valuation in accordance with MI 61-101 and a fairness opinion from Haywood Securities Inc.
(“Haywood”). The independent valuation was prepared by Haywood under the supervision of the Special Committee, and determined that,
in Haywood’s opinion, based upon and subject to the assumptions, limitations and qualifications set forth therein, the fair market
value of the Mason common shares is in the range of $0.25 to $0.56 per Mason common share. In addition, Haywood has provided the
Special Committee and Board with a fairness opinion, stating that in its opinion, based upon and subject to the assumptions,
limitations, and qualifications set forth therein, the consideration to be received by Mason shareholders (other than Hudbay) under
the Arrangement is fair, from a financial point of view, to the Mason shareholders (other than Hudbay).
In connection with the Arrangement, all of the directors and senior officers of Mason as well as Mantos Copper
(Bermuda) Limited (the “Locked-Up Shareholders”) have entered into customary support agreements with Hudbay pursuant to which they
have agreed to vote their Mason shares, representing 19.8% of the issued and outstanding Mason shares, in favour of the
Arrangement. Together with Hudbay, the Locked-Up Shareholders hold 33.7% of the issued and outstanding Mason common shares.
Holders of Mason options and warrants that are in-the-money will receive cash consideration equal to the
purchase price less the exercise price of each Mason option or warrant.
In addition to the aforementioned approvals, completion of the Arrangement is subject to other customary
conditions. The Arrangement is not, however, subject to any regulatory approvals. The Arrangement is expected to close in December
2018.
The Arrangement Agreement provides for customary non-solicitation covenants on the part of Mason and a right in
favour of Hudbay to match any unsolicited superior proposal. In the event that the Arrangement is not completed in certain
circumstances, Mason has agreed to pay Hudbay a termination fee of $1.6 million.
The full details of the Arrangement and the MI 61-101 valuation will be set out in a management information
circular, which will be mailed to Mason shareholders and filed with the Canadian securities regulatory authorities during November
2018. The documents will also be available under Mason’s profile on SEDAR (www.sedar.com) and on Mason’s website (www.MasonResources.com).
Advisors
Mason’s financial advisors are Canaccord Genuity Corp. and Haywood Securities Inc. and its legal advisor is
Borden Ladner Gervais LLP.
Hudbay’s financial advisor is BMO Capital Markets and its legal advisor is Goodmans LLP.
QUALIFIED PERSON
Robert Cinits, P.Geo., Mason’s Chief Operating Officer, a Qualified Person as defined by NI 43-101 has approved
the technical information in this news release.
About Mason Resources Corp.
Mason Resources Corp. is a
well-funded Canadian company focused on copper exploration and development in the U.S.A. The company’s key asset is its 100% owned
Ann Mason project – an extensive, prospective land package located in the Yerington District of Nevada. The Ann Mason project hosts
two copper-molybdenum porphyry deposits, Ann Mason and Blue Hill, as well as numerous earlier-stage or untested priority targets.
The Ann Mason deposit is currently at a PEA level and is among the largest undeveloped copper porphyry resources in Canada/U.S.A.
The excellent infrastructure, year-round access, strong community support and clear permitting process are all factors that
contribute to making Yerington, Nevada one of the best mining jurisdictions in the world. Mason also holds a 100% interest in the
Lordsburg property, an exciting earlier-stage copper-gold porphyry project, located within an historic mining district in New
Mexico.
About Hudbay
Hudbay (TSX, NYSE: HBM) is an integrated mining company primarily producing copper concentrate (containing
copper, gold and silver), zinc concentrate, molybdenum concentrate and zinc metal. With assets in North and South America, the
company is focused on the discovery, production and marketing of base and precious metals. Directly and through its subsidiaries,
Hudbay owns four polymetallic mines, four ore concentrators and a zinc production facility in northern Manitoba and Saskatchewan
(Canada) and Cusco (Peru), and a copper project in Arizona (United States). The company’s growth strategy is focused on the
exploration and development of properties it already controls, as well as other mineral assets it may acquire that fit its
strategic criteria. Hudbay’s vision is to be a responsible, top-tier operator of long-life, low-cost mines in the Americas.
Hudbay’s mission is to create sustainable value through the acquisition, development and operation of high-quality, long-life
deposits with exploration potential in jurisdictions that support responsible mining, and to see the regions and communities in
which the company operates benefit from its presence. The company is governed by the Canada Business Corporations Act and its
shares are listed under the symbol "HBM" on the Toronto Stock Exchange, New York Stock Exchange and Bolsa de Valores de Lima.
Forward-Looking Information
This news release contains forward-looking statements within the meaning of the United States Private
Securities Litigation Reform Act of 1995 and forward-looking information within the meaning of applicable Canadian securities laws.
Forward looking statements include, but are not limited to, statements regarding the anticipated Arrangement and the timing and
anticipated benefits thereof. Such forward-looking statements involve known and unknown risks, uncertainties and other
factors which may cause Hudbay and/or Mason’s actual results, performance or achievements to be materially different from any
future results, performance or achievements expressed or implied by the forward-looking statements. Such factors include, among
others, the risk that the Arrangement does not close on a timely basis or at all or that some or all of the anticipated benefits
thereof are not achieved; unanticipated costs, expenses or liabilities; discrepancies between actual and anticipated
production, mineral resources and metallurgical recoveries; the size, grade and continuity of deposits not being interpreted
correctly from exploration results; the results of preliminary test work not being indicative of the results of future test work;
risks related to international operations, including legal and political risk; risks associated with changes in the attitudes of
governments to foreign investment; changes in project parameters as plans continue to be refined; inability to upgrade Inferred
mineral resources to Indicated or Measured mineral resources; inability to convert mineral resources to mineral reserves;
conclusions of economic evaluations; fluctuations in commodity prices and demand; changing foreign exchange rates; actions by
government authorities; the availability of funding on reasonable terms; the impact of changes in interpretation to or changes in
enforcement of, laws, regulations and government practices, including laws, regulations and government practices with respect to
mining, foreign investment, royalties and taxation; the terms and timing of obtaining necessary environmental and other government
approvals, consents and permits; title disputes; limitations on insurance coverage; the availability and cost of necessary items
such as power, water, skilled labour, transportation and appropriate smelting and refining arrangements; as well as other
uncertainties and risk factors set out in filings made from time to time with Canadian securities regulators, including, without
limitation, Hudbay’s and Mason’s Annual Information Forms for the financial year ended December 31, 2017, each of which is filed on
SEDAR; and any misjudgements in the course of preparing forward-looking statements.
Actual results, developments and timetables could vary significantly from the estimates presented. Readers
are cautioned not to put undue reliance on forward-looking statements. Hudbay and Mason disclaim any intent or
obligation to update publicly such forward-looking statements, whether as a result of new information, future events or otherwise.
Additionally, Hudbay and/or Mason undertake no obligation to comment on analyses, expectations or statements made by third parties
in respect of Hudbay and/or Mason, their financial or operating results or their securities.
