TORONTO, ONTARIO, Feb 23, 2009 (Marketwire via COMTEX News Network)
-- HudBay Minerals Inc. ("HudBay Minerals", "the company")(TSX:HBM) has
entered into a termination agreement with Lundin Mining Corporation
("Lundin Mining") (TSX:LUN)(OMX:LUMI)(NYSE:LMC) whereby the companies
have agreed to terminate the previously announced arrangement agreement
in which HudBay Minerals agreed to acquire all of the outstanding shares
of Lundin Mining, subject to the satisfaction of certain conditions
(the "Transaction").
HudBay Minerals entered into the Transaction
because it met the company's criteria for accretive acquisitions:
long-term shareholder value creation, superior cash operating costs,
long reserve life, enhanced production profile and geographical
diversity. However, the company believes that, due to current market
conditions, its shareholders will not approve the Transaction in
the vote required by the Ontario Securities Commission's ("OSC") January
23, 2009 decision. The company has had very strong feedback from many of
its shareholders indicating that they would vote against the
Transaction. This negative shareholder sentiment is further evidenced by
the market reaction to the announcement of the signing of the
arrangement agreement and the subsequent rebound in HudBay Minerals'
share price following the OSC's decision. In addition, HudBay Minerals'
advisors have indicated that, based on discussions with significant and
influential HudBay Minerals shareholders and their experience in similar
situations, the shareholders of HudBay Minerals would not approve the
Transaction if put to them.
"The decision to terminate the
Transaction was not an easy one for the board," said Allen J. Palmiere,
HudBay Minerals' chief executive officer. "However, after hearing from
many of our shareholders over the last three months and
considering the market reaction to the OSC decision, we believe this is
in the best interests of the company and its stakeholders in the current
circumstances. We remain financially strong, and are resolved to use
our strengths to build HudBay Minerals into a Canadian globally
diversified major base metals mining company."
HudBay Minerals
will retain its 19.9% ownership stake in Lundin Mining that it acquired
in December 2008. In consideration of terminating the Transaction and in
recognition of HudBay Minerals' ownership position, HudBay Minerals
received the following favourable concessions from Lundin Mining, which
would not have been otherwise available to HudBay Minerals had the
Transaction proceeded to a shareholder vote and was subsequently voted
down:
- As long as HudBay Minerals owns ten per cent (10%) or more of the outstanding common shares of Lundin Mining,
HudBay Minerals shall be entitled to have one nominee on the Board of Directors of Lundin Mining;
-
As long as HudBay Minerals owns ten per cent (10%) or more of the
outstanding common shares of Lundin Mining, HudBay Minerals shall have
the right to maintain its then current level of ownership of the common
shares of Lundin Mining in the event of any public or private
distribution of Lundin Mining common shares by Lundin Mining, subject to
certain limited exceptions;
- HudBay Minerals shall have a right
of first offer in the event of any proposed sale or transfer of
material assets of Lundin Mining during the six month period following
the date of termination of the arrangement agreement; and
- Each
of HudBay Minerals and Lundin Mining releases the other in respect of
any and all claims arising from the arrangement agreement. Neither party
will be liable for the
payment of any termination fees to the other.
As a result of the
agreement to terminate the Transaction, the company will not ask its
shareholders to approve the Transaction at the previously announced
special meeting of shareholders scheduled for March 25, 2009 ("the
Meeting"). The business of the Meeting will be to consider the removal
of HudBay Minerals' existing Board of Directors and elect a slate of
replacement directors proposed by SRM Global Master Fund Limited
Partnership. HudBay Minerals intends to mail a proxy circular with
respect to the Meeting shortly.
HudBay Minerals Inc.: Strength to Build the Future
HudBay
Minerals Inc. (TSX:HBM) is a Canadian integrated mining company with
assets in North and Central America principally focused on the
discovery, production and marketing of base metals. The company's
objective is to increase shareholder value through
efficient operations, organic growth and accretive acquisitions, all
while maintaining its financial strength. A member of the S&P/TSX
Composite Index and the S&P/TSX Global Mining Index, HudBay Minerals
is committed to high standards of corporate governance and
sustainability.
Forward-looking Information
This news
release contains "forward-looking information" within the meaning of
applicable securities laws. Forward-looking information includes, but is
not limited to, information concerning the proposed business
combination between HudBay and Lundin and matters relating thereto.
Generally, forward-looking information 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 statements that certain actions,
events or results "will", "may", "could", "would", "might", or "will be
taken", "occur", or "be achieved". Forward-looking information is based
on the views, opinions, intentions and estimates of management at the
date the information is made, and is based on a number of assumptions
and subject to a variety of risks and uncertainties and other factors
that could cause actual events or results to differ materially from
those anticipated or projected in the forward-looking information
(including the actions of other parties who have agreed to do certain
things and the approval of certain regulatory bodies). Many of these
assumptions are based on factors and events that are not within the
control of HudBay and there is no assurance they will prove to be
correct. Factors that could cause actual results or events to vary
materially from results or events anticipated by such forward-looking
information include court and/or other regulatory approval, action by an
intervening party or parties, future agreements reached with third
parties, changes in market conditions, variations in ore grade or
recovery rates, risks relating to international operations, fluctuating
metal prices and currency exchange rates, changes in project parameters,
the possibility of project cost overruns or unanticipated costs and
expenses, labour disputes and other risks of the mining industry,
failure of plant, equipment or processes to operate as anticipated as
well as those risk factors discussed in the Annual Information Form for
the year ended December 31, 2007 for HudBay available at www.sedar.com.
Although HudBay has attempted to identify important factors that could
cause
actual actions, events or results to differ materially
from those described in forward-looking information, there may be other
factors that cause actions, events or results not to be anticipated,
estimated or intended. There can be no assurance that forward-looking
information will prove to be accurate, as actual results and future
events could differ materially from those anticipated in such
information. HudBay undertakes no obligation to update forward-looking
information if circumstances or management's estimates or opinions
should change except as required by applicable securities laws. The
reader is cautioned not to place undue reliance on forward-looking
information.
This news release and the information contained
herein does not constitute an offer of securities for sale in the United
States and securities may not be offered or sold in the United States
absent registration or exemption from registration.
(HBM-G)
SOURCE: HudBay Minerals Inc.
HudBay Minerals Inc.
Annemarie Brissenden
Manager, Investor Relations
(416) 362-0615
Email: annemarie.brissenden@hudbayminerals.com
Website: www.hudbayminerals.com
Copyright (C) 2009 Marketwire. All rights reserved.
News Provided by COMTEX