Hudbay Minerals (TSX:HBM,NYSE:HBM) is doubling down on Arizona, striking a deal to acquire Arizona Sonoran Copper Company in a transaction that would create North America’s third-largest copper district.
The deal gives Hudbay 100 percent ownership of the Cactus project in southern Arizona, adding it to the company’s existing Copper World development and establishing what the company describes as a major copper hub in the state.
Under the definitive arrangement agreement, Hudbay will acquire all outstanding shares of Arizona Sonoran that it does not already own in an all-share transaction. The offer represents a 30 percent premium to ASCU’s closing price that day and a 36 percent premium based on the companies’ 20-day volume-weighted average prices.
“The acquisition of ASCU is a highly compelling transaction that further enhances Hudbay’s copper growth platform in the US. Cactus is a high-quality, large-scale copper development asset in a mining jurisdiction that we know well,” CEO and President Peter Kukielski said in the company’s press release Monday (March 2).
“Together with the advancement of Copper World, this transaction creates one of the most significant copper districts in North America and reinforces Hudbay’s position as a premier copper growth company.”
Hudbay currently produces roughly 125,000 tons of copper annually. With Copper World and near-term optimization projects, the company sees a pathway to more than 250,000 tons per year by 2030.
The addition of Cactus offers potential to lift annual output beyond 350,000 tons, positioning Hudbay as a leading supplier of domestically refined US copper cathode.
Copper World is expected to produce about 92,000 tons of copper annually by 2030, while Cactus could add approximately 103,000 tons per year once developed.
Cactus hosts proven and probable reserves of 5.3 billion pounds of copper with expected annual production of 103,000 tons over a 20-year mine life. Copper World, meanwhile, contains 4.6 billion pounds of copper, with expected annual output of 93,000 tons over the same period.
Cactus sits on private land in Arizona and is fully permitted under a 2021 preliminary economic assessment, though amendments will be required for the 2025 prefeasibility study.
Together, the projects could create the second-largest US copper cathode district.
Hudbay also outlined several potential efficiencies, including redeploying the Copper World construction team to Cactus, using sulphuric acid produced at Copper World to leach oxide ore at Cactus, and achieving between US$5 million and US$10 million in annual corporate savings.
For Arizona Sonoran shareholders, the transaction offers an upfront premium while retaining exposure to Cactus through ownership in a larger, diversified producer.
Securities Disclosure: I, Giann Liguid, hold no direct investment interest in any company mentioned in this article.