Hudbay Completes Upsized Bought Deal Equity Offering

Rhea-AI Summary

Hudbay Minerals (TSX, NYSE: HBM) has successfully closed its public offering of 42,366,000 common shares, raising US$402,477,000. This includes 5,526,000 shares from the full exercise of the over-allotment option. The shares were priced at US$9.50 each. The joint bookrunners of the deal were RBC Capital Markets and BMO Capital Markets, with several other financial institutions co-managing. The funds will support growth initiatives, debt repayments, and general corporate purposes, specifically enhancing operations at Copper Mountain and evaluating projects at Constancia and New Britannia.

Positive

• Hudbay raised US$402,477,000 from the public offering, exceeding initial expectations.
• The offering included the full exercise of the 15% over-allotment option, indicating strong investor demand.
• Funds will be used for strategic growth initiatives, including mine pre-stripping and mill optimization.
• Debt repayments will enhance balance sheet flexibility.
• The involvement of reputable financial institutions like RBC Capital Markets and BMO Capital Markets adds credibility.

Negative

• Issuance of 42,366,000 shares could lead to shareholder dilution.
• The share price of US$9.50 might be viewed as undervalued by some investors.
• Depending on market conditions, there is no guarantee that the investments will yield expected returns.

Financial Analyst

Hudbay Minerals' completion of the upsized bought deal equity offering is noteworthy. By successfully raising US$402.5 million through the issuance of 42,366,000 Common Shares, Hudbay has significantly bolstered its financial position. This capital infusion will enable the company to accelerate its key growth initiatives, such as mine pre-stripping activities and mill optimization at Copper Mountain. These endeavors are expected to enhance operational efficiency and output, potentially improving revenue streams in the near term. Additionally, the company's plan to use part of the proceeds for debt repayment under its '3P' plan indicates a strategic effort to reduce financial leverage, enhancing balance sheet flexibility. This move is likely to engender investor confidence, showcasing prudent financial management. However, the dilution of existing shares should be considered, as it could impact earnings per share (EPS) in the short term. Overall, the equity offering aligns with Hudbay's strategic objectives and positions it well for future growth.

Market Research Analyst

Hudbay's equity offering brings several implications for stakeholders. The involvement of a syndicate of prominent underwriters like RBC Capital Markets and BMO Capital Markets reflects strong institutional support and confidence in Hudbay's prospects. The funds raised will support not only immediate operational enhancements but also longer-term projects such as evaluating mill throughput at Constancia and New Britannia. These initiatives can create significant value if successful, contributing to Hudbay’s competitive positioning in the market. For retail investors, this could mean potential stock appreciation driven by improved operational performance and strategic debt management. Nonetheless, market sentiment will need to remain favorable and Hudbay must deliver on its planned improvements to justify this capital raise and mitigate concerns over share dilution.

Mining Expert

Hudbay's decision to allocate part of the proceeds towards accelerating pre-stripping and mill optimization at Copper Mountain is a strategic play to enhance productivity. Pre-stripping is essential for accessing high-grade ore bodies and can lead to substantial cost savings over time. Similarly, mill optimization efforts can increase throughput and recovery rates, directly impacting profitability. The focus on these areas suggests that Hudbay is prioritizing operational efficiency and cost-effectiveness. The evaluation of mill throughput enhancements at Constancia and New Britannia further underscores a forward-looking approach to maximizing asset performance. These efforts, if executed well, could result in significant operational gains and drive long-term shareholder value.

TORONTO, May 24, 2024 (GLOBE NEWSWIRE) -- Hudbay Minerals Inc. (“Hudbay” or the “Company”) (TSX, NYSE: HBM) is pleased to announce that the Company has closed its previously announced public offering of common shares of the Company (the “Common Shares”). The underwriters exercised the full over-allotment option to purchase an additional 15% of the Common Shares in connection with the Offering. The Company issued, on a bought deal basis, 42,366,000 Common Shares, including 5,526,000 Common Shares pursuant to the exercise of the over-allotment option, at a price of US$9.50 per Common Share for aggregate gross proceeds of US$402,477,000 (the “Offering”).

The Offering was completed pursuant to an underwriting agreement dated May 22, 2024 entered into between the Company and a syndicate of underwriters led by RBC Capital Markets and BMO Capital Markets, as Joint Bookrunners, and CIBC Capital Markets, National Bank Financial, Scotiabank and TD Securities as co-lead managers, and including Barclays Capital, Canaccord Genuity, Bank of America Merrill Lynch, Cormark Securities, ING Bank, Haywood Securities, Raymond James, Stifel Nicolaus, Eight Capital, and Paradigm Capital as co-managers.

The Company intends to use the net proceeds of the Offering to fund near-term growth initiatives, including acceleration of mine pre-stripping activities and mill optimization initiatives at Copper Mountain, to enhance balance sheet flexibility through debt repayments as part of its "3P" plan for a sanctioning decision on Copper World, to evaluate mill throughput enhancement opportunities at Constancia and New Britannia, and for general corporate purposes, as further described in the Prospectus Supplement (as defined below).

This news release shall not constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of these securities in any province, state or jurisdiction in which such offer, solicitation or sale would be unlawful prior to the registration or qualification under the securities laws of any such province, state or jurisdiction.

Forward-Looking Information

This news release and the previously announced press releases relating to the Offering contains “forward-looking information” and “forward-looking statements” within the meaning of applicable Canadian and United States securities legislation (collectively herein referred to as “forward-looking information”). All forward-looking information in news release is qualified by this cautionary note. Often, but not always, forward-looking information can be identified by the use of words such as “plans”, “expects”, “budget”, “guidance”, “scheduled” “estimates”, “forecasts”, “strategy”, “target”, “intends”, “objective”, “goal”, “understands”, “anticipates” and “believes” (and variations of these or similar words) and statements that certain actions, events or results “may”, “could”, “would”, “should”, “might” “occur” or “be achieved” or “will be taken” (and variations of these or similar expressions).

Forward-looking information herein includes, but is not limited to, statements related to the use of proceeds of the Offering and Hudbay’s business, objectives, strategies, and intentions. Forward-looking information is not, and cannot be, a guarantee of future results or events.

Forward-looking information is based on, among other things, opinions, assumptions, estimates and analyses that, while considered reasonable by the Company at the date the forward-looking information is provided, inherently are subject to significant risks, uncertainties, contingencies and other factors that may cause actual results and events to be materially different from those expressed or implied by the forward-looking information. Readers should refer to the prospectus supplement dated May 22, 2024 (the "Prospectus Supplement") to Hudbay’s short form base shelf prospectus dated March 28, 2024 (the "Prospectus") filed with the securities regulatory authorities in each of the provinces and territories of Canada and included in its registration statement on Form F-10 filed with the U.S. Securities and Exchange Commission, and the documents incorporated by reference therein, for further disclosures in respect of the risks, uncertainties, contingencies and other factors that may cause actual results to differ materially from those expressed or implied by the forward-looking information herein. Subject to applicable securities law requirements, Hudbay undertakes no obligation to update or revise any forward-looking information after the date of any forward-looking information whether as a result of new information, future events or otherwise or to explain any material difference between subsequent actual events and any forward-looking information.

About Hudbay

Hudbay (TSX, NYSE: HBM) is a copper-focused mining company with three long-life operations and a world-class pipeline of copper growth projects in tier-one mining-friendly jurisdictions of Canada, Peru and the United States.

Hudbay’s operating portfolio includes the Constancia mine in Cusco (Peru), the Snow Lake operations in Manitoba (Canada) and the Copper Mountain mine in British Columbia (Canada). Copper is the primary metal produced by the company, which is complemented by meaningful gold production. Hudbay’s growth pipeline includes the Copper World project in Arizona (United States), the Mason project in Nevada (United States), the Llaguen project in La Libertad (Peru) and several expansion and exploration opportunities near its existing operations.

The value Hudbay creates and the impact it has is embodied in its purpose statement: “We care about our people, our communities and our planet. Hudbay provides the metals the world needs. We work sustainably, transform lives and create better futures for communities.” Hudbay’s mission is to create sustainable value and strong returns by leveraging its core strengths in community relations, focused exploration, mine development and efficient operations.

For further information, please contact:

Candace Brûlé
Vice President, Investor Relations
(416) 814-4387
investor.relations@hudbay.com

FAQ

What did Hudbay Minerals achieve with its recent public offering?

Hudbay Minerals raised US$402,477,000 by issuing 42,366,000 common shares at US$9.50 each.

Why did Hudbay Minerals issue 42,366,000 common shares?

Hudbay issued these shares to fund growth initiatives, debt repayments, and general corporate purposes.

What is the significance of the over-allotment option in Hudbay's offering?

The over-allotment option, fully exercised, added 5,526,000 shares, indicating high investor interest.

Which financial institutions managed Hudbay's equity offering?

The offering was led by RBC Capital Markets and BMO Capital Markets, among others.

How will Hudbay Minerals use the proceeds from the equity offering?

Proceeds will fund mine pre-stripping, mill optimization, debt repayments, and other corporate purposes.