Hudbay Minerals Inc. reached an agreement with United Copper & Moly LLC to purchase the latter's 7.95% interest in the Rosemont copper project in Arizona and to terminate all of its remaining earn-in and off-take rights.
Hudbay will pay US$75 million, comprising US$45 million in cash upfront and three annual US$10 million installments starting July 1, 2022. Closing is expected by April 25.
The company also said March 13 that it will release United Copper & Moly from all obligations related to the project, including project loans representing its share of joint venture expenditures incurred beyond its initial earn-in investment.
Hudbay President and CEO Alan Hair said the transaction simplifies the project's ownership structure and improves the company's financial flexibility related to the development.
Hair added that the company will soon start looking for a development joint venture partner for Rosemont.
Hudbay expects to carry out the process in conjunction with initial project development. The company is ultimately aiming for about a 70% interest in the project while remaining the operator.
A 2017 feasibility study on Rosemont estimated a net present value of US$496 million, at a 10% discount rate, with a 15.5% internal rate of return and a 5.2-year payback period.