Hudbay said it would offer 0.315 of a share for each Augusta share, which represents a 62% premium to Augusta's 20-day average trading price. Hudbay is a copper- and zinc-mining company based in Toronto with a Peruvian copper asset by the name Constancia. Hudbay said that the acquisition of Augusta's Rosemont project will enhance its portfolio of long-life, low-cost mining projects.
Rosemont is an Arizona-based copper mine that Augusta said it expects, when ramped up, will account for as much as 10% of U.S. copper production.
Hudbay already owns 16% of Augusta and said it has been considering an acquisition of Augusta for four years, since it began its investment in the company in 2010.
The advance of its production at Constancia provides an optimal opportunity to move on the Rosemont project, Hudbay said. Hudbay also recognized on a conference call that it expects other bidders might move on Augusta. It is Augusta's fiduciary responsibility to shop the company, Hudbay said and it expects that they will do so.
Hudbay also said it knows exactly what its price for Augusta is, and it will tender its 16% interest if another bidder tops the offer. The presumption is that the initial bid is not the final offer.
Augusta shares traded Monday up about 25%, to $2.85, at a premium of about 30 cents, or 12%, to the current bid.