WINNIPEG, MANITOBA--(CCNMatthews - April 24, 2006) - HudBay Minerals
Inc. (TSX:HBM) ("HudBay" or the "Company") is pleased to announce that
it has filed a preliminary short form prospectus in each of the
provinces of Canada in connection with a proposal to issue new common
shares of HudBay ("Common Shares") as an incentive for holders of its
publicly-traded warrants (the "Warrants") to exercise such Warrants
during a 30-day early exercise period (the "Early Exercise Period")
expected to commence on or about June 2, 2006 (the "Early Warrant
Exercise"). If all Warrants are exercised during the Early Exercise
Period, HudBay will:
- receive gross proceeds of approximately C$107.9 million on or before July 4, 2006 (the "Early Exercise Expiry Date");
- issue approximately 34.2 million Common Shares; and
- issue approximately 2.1 million additional Common Shares as an
incentive for the exercise of the Warrants, representing approximately
1.6% of the fully diluted outstanding shares.
The Early Warrant Exercise is intended to align the capital needs of
the Company with the Warrant exercise proceeds and simplify the
Company's capital structure. The proceeds of the Early Warrant Exercise
will be used by HudBay for general corporate purposes including future
growth opportunities and potential debt repayment. The details of the
Warrants are set out in the table below. The Warrants will continue to
trade on the Toronto Stock Exchange (the "TSX") during the Early
Exercise Period.
Exercise Price
Stock Exercise Basis Exercise Price per
Symbols Expiry Date per Warrant (1) per Warrant Common Share
----------- ----------- --------------- -------------- -------------
TSX: HBM.WT Dec 21, 2009 1/30th of one CC$0.10 C$3.15
Common Share
(1) Warrants trade on the TSX on a pre-consolidation basis.
Accordingly, each 30 Warrants are exercisable for one Common Share.
HudBay is proposing to amend the terms of the Warrants, which were
issued on December 21, 2004 pursuant to a warrant indenture (the
"Warrant Indenture") entered into with Equity Transfer Services Inc., as
warrant agent, and expire on December 21, 2009, such that holders of
the Warrants would be entitled to receive the Common Shares issuable
upon the exercise of the Warrants plus an additional fraction of a
Common Share (as set forth in the table below) provided such holders
exercise their Warrants during the Early Exercise Period.
Illustrative Early Exercise of 3,000 Warrants
---------------------------------------------------------------------
Fraction of Additional
New Share for each
Warrant exercised
during the Early Warrants What is What is
Exercise Period Owned Paid on Exercise Received
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0.002 3,000 C$3.15 per Common Share 106 Common
(C$0.105 per Warrant) Shares (1)
(1) 100 Common Shares for the exercise of 3,000 Warrants, plus 6
additional Common Shares to induce exercise
If at least 66 2/3% of the Warrants are exercised during the Early
Exercise Period, each unexercised Warrant will be automatically
exchanged, without any further action on the part of the warrantholder
(including payment of the exercise price thereof or any other additional
consideration) for a fraction of a Common Share, in accordance with the
following formula: (A) 1/30, or approximately 0.0333 (being the total
number of Common Shares issued upon exercise of each Warrant outside of
the Early Exercise Period) plus (B) 0.002 multiplied by 50% (being one
half of the inducement per Warrant) minus © $0.105 divided by
the lesser of (i) the volume weighted average trading price (the
''VWAP'') of the Common Shares on the TSX for the five trading days
ending on the Early Exercise Expiry Date, and (ii) the closing price of
the Common Shares on the Early Exercise Expiry Date.
The transaction is subject to the receipt of all required regulatory
approvals and consents, including approval by disinterested
shareholders and holders of Warrants. The Board of Directors has
received fairness opinions from GMP Securities L.P. (with respect to
shareholders) and BMO Nesbitt Burns Inc. (with respect to holders of
Warrants), and has determined that this transaction is fair to holders
of Warrants and shareholders. The required shareholder approval will be
sought at HudBay's annual and special meeting of shareholders to be held
on June 1, 2006 with a record date of May 2, 2006. The required
approvals of holders of the Warrants will be sought at a meeting of
holders of Warrants to be held on June 1, 2006 with a record date of May
2, 2006 and HudBay expects to mail a management information circular to
its shareholders on or about May 5, 2006 and to mail a management
information circular to its holders of Warrants on or about May 5, 2006.
The amendment of the Warrants requires approval by holders of 66 2/3%
of the Warrants voting in person or by proxy at the meeting of holders
of Warrants and the approval by a simple majority of disinterested
holders of the Warrants. The transaction requires approval of a simple
majority of the votes cast by disinterested shareholders at the meeting
of shareholders.
HudBay has filed a preliminary short form prospectus in each of the
provinces of Canada, which remain subject to regulatory approval, to
qualify the distribution of the Common Shares issuable upon the exercise
of the Warrants. A copy of the preliminary short form prospectus dated
April 21, 2006 relating to the distribution of such Common Shares will
be available on www.sedar.com under HudBay's profile.
The Common Shares to be issued upon exercise of or exchange for
Warrants have not been and will not be registered under the U.S.
Securities Act of 1933, as amended (the "U.S. Securities Act") or any
state securities laws and may not be offered or sold within the United
States or to, or for the account or benefit of, U.S. persons unless
registered under the U.S. Securities Act and applicable state securities
laws or an exemption therefrom is available. Notwithstanding the
foregoing, a Warrantholder who is in the United States or who holds a
Warrant for the account or benefit of a U.S. person must be an
"Institutional Accredited Investor" (an "Accredited Investor", as
defined in Rule 501(a) of Regulation D under the U.S. Securities Act,
that satisfies the requirements of Rule 501(a)(1), (2), (3) or (7)) and
must deliver the subscription form and representation letter required by
the Warrant Indenture by the Early Exercise Expiry Date in order to
exercise their Warrants and receive Common Shares or to have their
Warrants exchanged for Common Shares. Any such Warrantholder who does
not comply with such requirements will not be permitted to exercise or
exchange their Warrants and receive Common Shares, and their Warrants
will remain outstanding following the completion of the transaction.
GMP Securities L.P. and BMO Nesbitt Burns Inc. are acting as financial advisors to HudBay with respect to the transaction.
About HudBay
HudBay is an integrated mining and metal company that operates mines
and concentrators in northern Manitoba and a metal production complex
in Flin Flon, Manitoba. The company also owns a zinc oxide production
facility in Brampton, Ontario, a copper refinery in Michigan and the
Balmat zinc mine in New York state, which is being re-opened.
Cautionary Note Regarding Forward-Looking Statements
This press release contains "forward-looking statements", within the
meaning of applicable Canadian securities legislation, concerning the
business, operations and financial performance and condition of HudBay.
Forward-looking statements include, but are not limited to, statements
with respect to the future price of gold, silver and copper, the
estimation of mineral reserves and resources, the realization of mineral
reserve estimates, the timing and amount of estimated future
production, costs of production, capital expenditures, costs and timing
of the development of new deposits, success of exploration activities,
permitting time lines, currency exchange rate fluctuations, requirements
for additional capital, government regulation of mining operations,
environmental risks, unanticipated reclamation expenses, title disputes
or claims and limitations on insurance coverage. Generally, these
forward-looking statements can be identified by the use of
forward-looking terminology such as "plans", "expects" or "does not
expect", "is expected", "budget", "scheduled", "estimates", "forecasts",
"intends", "anticipates" or "does not anticipate", or "believes", or
variations of such words and phrases or state that certain actions,
events or results "may", "could", "would", "might" or "will be taken",
"occur" or "be achieved".
Forward-looking statements are subject to
known and unknown risks, uncertainties and other factors that may cause
the actual results, level of activity, performance or achievements of
HudBay, to be materially different from those expressed or implied by
such forward-looking statements, including but not limited to: risks
related to the integration of acquisitions; risks related to
international operations; risks related to joint venture operations;
actual results of current exploration activities; actual results of
current reclamation activities; conclusions of economic evaluations;
changes in project parameters as plans continue to be refined; future
commodity prices; possible variations in ore reserves, grade or recovery
rates; failure of plant, equipment or processes to operate as
anticipated; accidents, labour disputes and other risks of the mining
industry; delays in obtaining governmental approvals or financing or in
the completion of development or construction activities, as well as
those factors discussed in the section entitled " Risk Factors" in
HudBay's Annual Information Form for the year ended December 31, 2005,
available on www.sedar.com.
Although HudBay has attempted to identify important factors that could
cause actual results to differ materially from those contained in
forward-looking statements, there may be other factors that cause
results not to be as anticipated, estimated or intended. There can be no
assurance that such statements will prove to be accurate, as actual
results and future events could differ materially from those anticipated
in such statements. Accordingly, readers should not place undue
reliance on forward-looking statements. HudBay does not undertake to
update any forward-looking statements that are incorporated by reference
herein, except in accordance with applicable securities laws.
This press release is not an offer of securities for sale in the
United States. The securities have not been and will not be registered
under the United States Securities Act of 1933, as amended. Securities
may not be offered or sold in the United States absent registration or
an exemption from registration. Any public offering of securities that
may be made in the United States will be made by means of a prospectus
that may be obtained from the issuer and that will contain detailed
information about the company and management, as well as financial
statements.
IF YOU HAVE ANY QUESTIONS OR REQUIRE ASSISTANCE CONCERNING THE EARLY EXERCISE WARRANT TRANSACTION, PLEASE CONTACT:
KINGSDALE SHAREHOLDER SERVICES INC.
North America Toll-Free Phone: 1-866-588-6864
Outside North America Call Collect: 416-867-2272
E-mail: shareholder@kingsdalecapital.com
FOR FURTHER INFORMATION PLEASE CONTACT:
HudBay Minerals Inc.
Don Bain
Director, Investor Relations
(204) 949-4272
(204) 942-8177 (FAX)
don.bain@hbms.ca
or
HudBay Minerals Inc.
Suite 1906 - 201 Portage Avenue
Winnipeg, MB R3B 3K6
www.hudbayminerals.com