TORONTO, March 13, 2019 (GLOBE NEWSWIRE) -- Hudbay Minerals Inc. (“Hudbay” or the “company”)
(TSX, NYSE: HBM) announced today that it has reached an agreement with United Copper & Moly LLC (“UCM”)
to purchase UCM’s 7.95% interest in the Rosemont project, and to terminate all of UCM’s remaining earn-in and off-take rights, for
upfront cash consideration of US$45 million, plus three annual installments of US$10 million per year, commencing July 1, 2022. In
connection with the transaction, Hudbay has agreed to release UCM from any and all obligations in relation to the Rosemont project,
including project loans representing its proportionate share of joint venture expenditures incurred beyond its initial earn-in
investment. UCM is jointly owned by Korea Resources Corporation and LG International Corp.
“This transaction simplifies the ownership structure and improves our financial flexibility for the development
of Rosemont,” said Alan Hair, Hudbay’s president and chief executive officer. “There is continued positive momentum at Rosemont as
we recently received our section 404 water permit and we look forward to advancing the project into construction as we finalize a
prudent financing strategy. As part of our financing strategy, we will shortly launch a process to seek a development joint venture
partner for Rosemont. We expect there will be substantial interest in a minority stake given recent precedent transactions and
Rosemont’s unique status as a world-class, shovel-ready copper project in the United States.”
In addition to simplifying the ownership structure, the transaction also removes the current governance
structure with UCM, which was inherited from the previous owner of Rosemont. This allows Hudbay to have greater strategic
flexibility with respect to capital structure and project financing options, and Hudbay intends to evaluate a variety of options,
including the addition of a new, committed joint venture partner for the development of Rosemont. The company expects to carry out
this process in parallel with advancing the initial development of Rosemont, with the objective to ultimately hold an approximate
70% interest in the project and maintain operatorship.
The UCM transaction is expected to close not later than April 25, 2019, subject to the approval of the parties’
respective boards of directors and the execution of a definitive agreement.
Rosemont is one of the world’s best undeveloped copper projects delivering a 15.5% after-tax unlevered IRR at a
copper price of $3.00 per pound based on the 2017 Feasibility Study published by Hudbay. Rosemont is expected to produce
approximately 127,000 tonnes of copper annually at a cash cost of $1.14 per pound (net of by-product credits) over the first 10
years of operations.
CIBC Capital Markets acted as Hudbay’s financial advisor on the purchase of UCM’s interest in the Rosemont
project.
Forward-Looking Information
This news release contains forward-looking information within the meaning of applicable Canadian and United
States securities legislation. Forward-looking information includes, but is not limited to, the completion of the acquisition of
the minority joint venture interest of Rosemont and a planned process to seek a joint venture partner and commence development of
Rosemont. Forward-looking information is not, and cannot be, a guarantee of future results or events. Forward-looking information
is based on, among other things, opinions, assumptions, estimates and analyses that, while considered reasonable by the company at
the date the forward-looking information is provided, inherently are subject to significant risks, uncertainties, contingencies and
other factors that may cause actual results and events to be materially different from those expressed or implied by the
forward-looking information.
The material factors or assumptions that Hudbay identified and were applied by the company in drawing
conclusions or making forecasts or projections set out in the forward-looking information include, but are not limited to,
obtaining the final permits for Rosemont and obtaining any required joint venture partner approvals to advance the project, the
timing and possible outcome of pending litigation related to the Rosemont permits, no significant unanticipated litigation or
delays to the development of Rosemont and the availability of financing to develop Rosemont.
The risks, uncertainties, contingencies and other factors that may cause actual results to differ materially
from those expressed or implied by the forward-looking information may include, but are not limited to, risks generally associated
with the mining industry, such as economic factors (including future commodity prices, currency fluctuations, energy prices and
general cost escalation), as well as the risks discussed under the heading “Risk Factors” in Hudbay’s most recent Annual
Information Form.
Should one or more risk, uncertainty, contingency or other factor materialize or should any factor or assumption
prove incorrect, actual results could vary materially from those expressed or implied in the forward-looking information.
Accordingly, you should not place undue reliance on forward-looking information. Hudbay does not assume any obligation to update or
revise any forward-looking information after the date of this news release or to explain any material difference between subsequent
actual events and any forward-looking information, except as required by applicable law.
About Hudbay
Hudbay (TSX, NYSE: HBM) is an integrated mining company primarily producing copper concentrate (containing
copper, gold and silver), 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 three
polymetallic mines, four ore concentrators and a zinc production facility in northern Manitoba and Saskatchewan (Canada) and Cusco
(Peru), and copper projects in Arizona and Nevada (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. Further information about Hudbay
can be found on www.hudbay.com.
For further information, please contact:
Candace Brûlé
Director, Investor Relations
(416) 814-4387
candace.brule@hudbay.com