Arizona Sonoran Copper Company Inc. (TSX:ASCU | OTCQX:ASCUF) (“ASCU” or the “Company”) is pleased to announce that Hudbay Minerals Inc. (TSX, NYSE: HBM) (“Hudbay”) has agreed to subscribe for 11,852,064 common shares of the Company (“Common Shares”) in a non-brokered private placement (“Private Placement”) at a price of C$1.68 per Common Share (the “Issue Price”) for total consideration of C$19,911,467. Closing is expected to occur on or about January 30, 2025, subject to certain customary closing conditions. Proceeds of the Private Placement are to be allocated to drilling, exploration, technical studies and advancement of the Cactus copper project in Arizona (“Cactus” or the “Project”), and for general corporate purposes.
George Ogilvie, Arizona Sonoran President and CEO commented, “We are pleased and appreciative to welcome this further endorsement of our Project and the go-forward plan, by the team at Hudbay. It is the Company’s objective to develop Cactus to be a significant producer of copper cathodes for direct use by industry in the State of Arizona and the larger US supply chain. We welcome Hudbay, a mid-tier base metal producer with decades of base metal successes in the Americas and a strong existing footprint in Arizona, as a larger and increasingly engaged shareholder, able to lend its experience and expertise as we advance and develop Cactus.”
Peter Kukielski, Hudbay President and CEO commented, “Cactus is an exciting copper development project in Arizona. We see the US as a tier-1 mining jurisdiction and this investment increases our exposure to another high-quality development project in the region as we continue to advance our Copper World project.”
Hudbay currently holds 2,870,800 shares, representing 2.12% of the Company’s issued and outstanding Common Shares prior to giving effect to the Private Placement. Post-closing of the Private Placement, Hudbay will own approximately 9.99% of the Common Shares of ASCU.
In connection with the Private Placement, Hudbay and ASCU will enter into an investor rights agreement, pursuant to which Hudbay will have certain customary rights and obligations, provided Hudbay maintains certain ownership thresholds in ASCU, including: (i) the right to participate in equity financings and top-up its holdings in relation to dilutive issuances in order to maintain its pro rata ownership in ASCU at the time of such issuance(s); and (ii) observer rights at meetings of the technical and sustainability committee of the Company’s board of directors and certain other customary information access rights. In addition, pursuant to the terms of the investor rights agreement, Hudbay will agree to vote on a basis consistent with the voting recommendations of ASCU’s board of directors or management in respect of various ordinary course matters presented at the Company’s 2025 and 2026 annual shareholder meetings.
The Private Placement is expected to close on or about January 30, 2025, and is subject to the receipt of customary regulatory approvals, including approval by the TSX. The Common Shares to be issued in connection with the Private Placement will be subject to a statutory hold period in accordance with applicable securities laws.
Scotiabank is acting as financial advisor, and Bennett Jones LLP as legal advisor, to the Company, in connection with the Private Placement.
