Hudbay secures $600M investment from Mitsubishi for 30% JV stake in Copper World

[Yellow large dump truck in Utah copper mine seen from above]
RiverRockPhotos/E+ via Getty Images

Hudbay Minerals (NYSE:HBM [https://seekingalpha.com/symbol/HBM]) +13.2% pre-market Wednesday after posting better than expected Q2 adjusted earnings [https://seekingalpha.com/news/4484440-hudbay-minerals-beats-top-line-and-bottom-line-estimatesreaffirms-fy-production-guidance] and announcing an agreement from Mitsubishi (OTCPK:MSBHF [https://seekingalpha.com/symbol/MSBHF]) to acquire a 30% interest [https://seekingalpha.com/pr/20199008-hudbay-announces-600-million-strategic-investment-from-mitsubishi-corporation-for-30-percent] in the Copper World project in Arizona for a $600M initial cash contribution, comprising $420M for a 30% equity interest in Copper World at closing and $180M as a matching contribution within 18 months of closing.

Hudbay (NYSE:HBM [https://seekingalpha.com/symbol/HBM]) said Mitsubishi's (OTCPK:MSBHF [https://seekingalpha.com/symbol/MSBHF]) $600M initial investment and pro-rata equity capital contributions provide significant financial flexibility by reducing Hudbay's estimated share of the remaining capital contributions to ~$200M based on PFS estimates, and defers its first capital contribution to 2028 at the earliest based on PFS estimates.

Hudbay (HBM [https://seekingalpha.com/symbol/HBM]), which also operates copper and gold mines across the Americas, estimates the fully permitted Copper World project could yield 85K tons/year of copper when developed, with an expected mine life of 20 years.

"Securing Mitsubishi as a 30% partner in Copper World is an important milestone for Hudbay as we establish a long-term strategic partnership to advance this high-quality copper project towards sanctioning and to unlock significant value in our copper growth portfolio," Hudbay (HBM [https://seekingalpha.com/symbol/HBM]) CEO Peter Kukielski said.

MORE ON HUDBAY MINERALS AND MITSUBISHI

* Hudbay Minerals: Record Results And New Projects At A Bargain Price [https://seekingalpha.com/article/4797542-hudbay-minerals-record-results-and-new-projects-at-a-bargain-price]
* Hudbay Minerals: Improved Balance Sheet, Potential For Growth [https://seekingalpha.com/article/4772166-hudbay-minerals-stock-improved-balance-sheet-potential-for-growth]
* Mitsubishi: Betting Big On Natural Gas With Potential U.S. Acquistion, Yet Fairly Valued For Now [https://seekingalpha.com/article/4798008-mitsubishi-corp-betting-big-on-natural-gas-with-us-acquisition-yet-fairly-valued-for-now]