Hudbay Minerals Inc. (TSX:HBM) company history: the story so far

History

Hudbay bought Peru's Constancia copper project, sold Fenix, funded Manitoba and Peru development with US$750 million of notes, then launched a C$150 million share sale in January 2014.

2011-2012: Buying Constancia, selling Fenix

On January 10, 2011, HudBay agreed to buy Norsemont Mining, owner of the Constancia copper project in Peru, in a take-over bid valuing Norsemont's equity at about $520 million. Norsemont holders could take 0.2617 HudBay shares plus $0.001, or $4.50 in cash, with total cash capped at $130 million. If all chose shares, former Norsemont holders would own about 17% of HudBay. Holders of about 35.6% of Norsemont had committed to tender. HudBay said it expected copper output to grow about 145% from 2011 to 2016.

On August 5, 2011, HudBay agreed to sell its Fenix ferro-nickel project in Guatemala to the Solway Group for US$140 million cash at closing, plus US$30 million if certain conditions were met. It expected a non-cash charge of about $212.7 million. Management said Fenix did not fit its focus on VMS and porphyry deposits (two types of metal deposit), and the proceeds were meant to support Lalor and Constancia. Closing was expected in the third quarter of 2011, but the filings seen do not confirm it.

In 2012 the company filed technical reports on both projects: a pre-feasibility study on Lalor in Manitoba, effective March 29, 2012, and a Constancia report effective October 15, 2012. The portions seen carried no figures.

2013-2014: Borrowing, then equity

Hudbay paid for development mainly with debt. It issued US$500 million of 9.50% senior unsecured notes due 2020 in September 2012. On June 20, 2013, it added US$150 million, priced at 102% for gross proceeds of US$153 million. On December 9, 2013, it added US$100 million at 100%, bringing the notes to US$750 million. The money was for general corporate purposes and for developing Lalor and Reed in Manitoba and Constancia in Peru. In June 2013, Scotiabank and CIBC also committed to replace the US$300 million revolving credit facility with a US$100 million, three-year one that would remove or revise the EBITDA-based covenants. Completion was not confirmed.

On January 9, 2014, Hudbay agreed to sell 18,200,000 new common shares at C$8.25, for gross proceeds of C$150,150,000, with an over-allotment option for up to 2,730,000 more shares. It was the first equity raise after the note issues, and it diluted existing holders. Closing was scheduled for about January 30, 2014. As of January 10, 2014, the Fenix sale, the closing of this offering and the revolver replacement were all unconfirmed in the filings seen.

Written from the 7 story beats below (2011 to 10 Jan 2014), which come from the company's own announcements and filings.

Beat by beat

The events that changed the company's story, in plain English, each written against everything known about the company at the time. The dot shows whether it was good, bad or neutral for shareholders.

2014

10 Jan
On January 9, 2014 Hudbay agreed with underwriters to sell 18,200,000 new common shares at C$8.25 each, for gross proceeds of C$150,150,000, with an over-allotment option for up to 2,730,000 more shares (C$172,672,500 in total if fully used). Closing was scheduled for about January 30, 2014, subject to approvals, and the money is for general corporate purposes, including flexibility to pursue opportunities to advance its growth strategy. For shareholders this means new shares being issued, so existing holders' ownership share is diluted, which is a first equity raise after the 2012-2013 note issues.
capital raising announcement

2013

11 Dec
On December 9, 2013 Hudbay closed another US$100 million of its 9.50% senior unsecured notes due 2020, priced at 100% for US$100 million of gross proceeds. This brings the notes to US$750 million, after US$500 million in September 2012 and US$150 million in June 2013. Proceeds are for general corporate purposes and developing Lalor and Reed in Manitoba and Constancia in Peru.
debt financing
21 June
On June 20, 2013 Hudbay closed a sale of an additional US$150 million of its 9.50% senior unsecured notes due 2020, priced at 102% for gross proceeds of US$153 million. These add to the US$500 million of the same notes issued in September 2012, and the money is for general corporate purposes and developing Lalor and Reed in Manitoba and Constancia in Peru. Scotiabank and CIBC also committed, subject to customary conditions, to replace the existing US$300 million revolving credit facility with a US$100 million, three-year facility that would remove or revise the EBITDA-based financial covenants; this was not yet completed in the filing.
debt financing

2012

7 Nov
Filed on November 7, 2012, this carries a technical report on the Constancia project in Peru (effective October 15, 2012), prepared for Hudbay by Cashel Meagher and Michael Humphries. It covers Constancia and Pampacancha, the assets gained through the Norsemont deal, and follows the 2011 aim of a construction decision. The portion shown does not include the resource, reserve, cost or economic figures, so none are stated here.
resource reserve update
2 Apr
Filed on March 30, 2012, this carries a Hudbay technical report (pre-feasibility study, effective March 29, 2012) on the Lalor deposit at Snow Lake, Manitoba, plus consents and certificates from four Hudbay-employed qualified persons. It continues the Lalor development thread from the 2011 outlook. The portion shown does not include the study's reserve, cost or economic figures, so no numbers are stated here.
resource reserve update

2011

8 Aug
On August 5, 2011 HudBay agreed to sell its entire interest in the Fenix ferro-nickel project in Guatemala to the Solway Group for US$140 million cash at closing plus US$30 million if certain conditions are met during Solway's development. HudBay expects a non-cash charge of about $212.7 million for Fenix in its quarter ended June 30, 2011, and closing was expected in the third quarter of 2011. Management said Fenix did not fit its focus on VMS and porphyry deposits, and the proceeds are meant to support Lalor and Constancia.
asset acquisition disposition
11 Jan
On January 10, 2011 HudBay agreed to buy Norsemont Mining, owner of the Constancia copper project in Peru, through a take-over bid valuing Norsemont's equity at about $520 million. Norsemont shareholders can take 0.2617 HudBay shares plus $0.001, or $4.50 cash, with total cash capped at $130 million; if all elect shares, former Norsemont holders would own about 17% of HudBay. Holders of about 35.6% of Norsemont (including HudBay's own 1.1%) are committed to tender; HudBay says it expects copper output to grow about 145% from 2011 to 2016. This extends the December 2010 growth plans (Lalor) to a second major project.
business combination