Copper Mountain Mining merging with Hudbay in a mouth-watering US$439m deal

Nick Sundich Nick Sundich, April 14, 2023

Copper Mountain Mining (ASX:C6C) is joining forces with fellow copper producer Hudbay Minerals (NYSE:HBM) in a deal that creates the 3rd largest copper producer in Canada. The deal led to a re-rating of Copper Mountain shares and the companies predict there will be further re-rating down the track.

 

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Copper Mountain Mining down 25% in 12 months

It has been a difficult year for Copper Mountain Mining shareholders with shares down 25%. After reaching all time highs in early 2022, prices underwent a major correction due to China’s COVID-zero policy.

 

Copper Mountain Mining (ASX:C6C) share price chart, log scale (Source: TradingView)

 

Individual issues impacted the company too. Its production fell due to quality problems with its supplier, damages to the company’s mining crushers and even a cyber attack.

In the December quarter of 2022, revenues came in at $90.3m, down from $136.8m, while it made a net loss of $0.10 per share compared to an $0.11 per share gain 12 months prior.

 

Biting the dust?

In this context, shareholders might consider a takeover bid rejected as being opportunistic, even if at a premium. This deal, however, was accepted.

Copper Mountain Mining and Hudbay told shareholders this deal would create the 3rd largest copper produce in Canada with 150kt per annum. It could also unlock US$30m per year in operating efficiencies and corporate synergies.

The deal values Copper Mountain at US$439m and would see it de-listed both from the ASX and TSX. It has been unanimously endorsed by the Copper Mountain board, although it is subject to shareholder approval.

 

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