By Robb M. Stewart

Hudbay Minerals moved to buy the outstanding stake in a copper mine in western Canada in a deal worth up to $44.25 million, securing control of the operation and supplies of an industrial metal increasingly in demand.

Hudbay said Thursday it entered an agreement with Mitsubishi Materials to buy its 25% interest in the Copper Mountain mine, an open pit operation in southern British Columbia that also produces gold and silver as by-product metals.

The deal will include $4.5 million payable when the transaction closes, which is expected by mid-year, $21 million in seven annual payments that will begin on the one-year anniversary of the deal closing, plus up to $18.75 million in five additional contingent payments when a nearby expansion project known as New Ingerbelle hits certain annual operating thresholds.

Hudbay will also take full responsibility for Copper Mountain's debts, including an intercompany loan owing to Hudbay, a quarter of which represents about $104 million.

The Copper Mountain mine is a key asset for Hudbay, and President and Chief Executive Peter Kukielski said consolidating ownership fits with a strategy of growing copper production in mining-friendly areas and will strengthen Hudbay's position as a "North American copper champion."

Copper is viewed as essential to everything from electric vehicles to the data centers powering the AI boom. The price of the industrial metal has shot up this year, in part driven by many countries focus on securing supplies of critical minerals. President Trump recently signed an executive order to streamline U.S. permitting processes and boost government financing for minerals projects.

The current mineral reserve estimates for Copper Mountain support a mine life until 2043, and Hudbay has flagged upside potential.

Annual production from Copper Mountain is expected to average about 44,000 metric tons of copper and 28,600 ounces of gold over the next three years. Hudbay said optimization activities should see 2027 copper production jump to 60,000 tons.

With the deal to consolidate ownership, Hudbay's proportion of the copper concentrate offtake at the Copper Mountain mine will increase from nothing currently to 15% from the closing date of the transaction. Then following the 15-year anniversary Hudbay will be entitled to 100% of the copper concentrate offtake.

Hudbay, whose portfolio of operations also include Constancia mine in Peru and Snow Lake operations in Manitoba, said Thursday its copper production is expected to remain stable on last year's output and average 144,000 tons a year over the next three years. Output is expected to rise roughly 17% over 2024 levels to 161,000 in 2027 thanks to work at Copper Mountain.

Gold production is forecast to average 253,000 ounces a year over the next three years, it said, reflecting strong production in Manitoba and a contribution from high grade gold zones in Peru this year.

Write to Robb M. Stewart at robb.stewart@wsj.com

(END) Dow Jones Newswires

March 27, 2025 08:01 ET (12:01 GMT)

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