Hudbay looking for new Rosemont development partner as it buys out UCM
Base metals miner Hudbay will buy out the minority partner in its Rosemont copper project for $75-million, in a move which CEO Alan Hair said on Wednesday would simplify the ownership structure and provide greater flexibility for the introduction of a new committed joint venture (JV) partner for the development of the US copper project.
The company will purchase United Copper and Moly’s (UCM’s) 7.95% interest in the Rosemont project and would terminate all UCM’s remaining earn-in and offtake rights for an upfront cash consideration of $45-million and three yearly instalments of $10-million a year.
UCM is jointly owned by Korea Resources and LG International Corp.
Hair said that as part of Hudbay’s financing strategy for Rosemont, it would launch a process to seek a development JV 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.”
The company aims to ultimately hold about 70% interest in the project and maintain operatorship.
Hudbay recently received its Section 404 water permit for the Rosemont project, in Arizona, although activists were quick to voice their opposition to the openpit copper mine.
Rosemont has a 15.5% after-tax unlevered internal rate of return at a copper price of $3.00/lb, based on the 2017 feasibility study published. Rosemont is expected to produce about 127 000 t/y of copper at a cash cost of $1.14/lb (net of by-product credits) over the first ten years of operations.
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.
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