Hudbay and Copper Mountain Combine to Create a Premier Americas-Focused Copper Producer

13 Apr 2023 15:12 CEST

• Creates 150,000-tonnes-per-year copper producer with long-life mines and a
world-class pipeline of organic copper growth projects

• Combined company creates the 3rd largest copper producer in Canada

• All-share combination based on strong industrial logic and compelling value
for shareholders

• Complementary assets with opportunity to unlock US$30 millioni per year in
operating efficiencies and corporate synergies

• Repositions the combined company for a valuation re-rate as a larger, more
diversified copper producer with enhanced liquidity


Toronto, Ontario, April 13, 2023 – Hudbay Minerals Inc. (“Hudbay”) (TSX, NYSE:
HBM) and Copper Mountain Mining Corporation (“Copper Mountain”) (TSX: CMMC, ASX:
C6C) are pleased to announce that they have entered into a definitive agreement
(the “Arrangement Agreement”) pursuant to which Hudbay will acquire all of the
issued and outstanding common shares of Copper Mountain, pursuant to a court
approved plan of arrangement (the “Transaction”).

The Transaction will create a premier Americas-focused copper mining company
that is well-positioned to deliver sustainable cash flows from an operating
portfolio of three long-life mines, as well as compelling organic growth from a
world-class pipeline of copper expansion and development projects. All assets in
the combined portfolio are located in tier-one mining-friendly jurisdictions of
Canada, Peru and the United States. The combined company represents the third
largest copper producer in Canada based on 2023 estimated copper productionii.

Peter Kukielski, Hudbay’s President and Chief Executive Officer, commented,
“This transaction represents a unique opportunity to combine complementary
assets and leverage our technical expertise to create value for the shareholders
of both Hudbay and Copper Mountain. We estimate that this combination could
unlock US$30 million per year in operating efficiencies and corporate synergies,
and it is accretive to Hudbay’s key per share metrics. With an expanded copper
production profile, a low-cost position on the copper curve and an enviable
copper growth pipeline, the combined company is expected to generate robust cash
flows through the cycle and achieve attractive returns by efficiently allocating
capital to the highest risk-adjusted return opportunities in the combined
project portfolio. Most importantly, the combined company will be underpinned by
our shared commitment to the highest safety and ESG standards.”

Edward Dowling, Copper Mountain’s Chair of the Board of Directors, stated, “The
strategic rationale of the transaction is compelling on many levels, and the
combined company is well-positioned to create sustainable value for all
stakeholders. This transaction provides Copper Mountain shareholders with an
attractive premium and the opportunity to participate in a more diversified
portfolio of three operating assets and a leading organic copper growth
pipeline.”

Gil Clausen, Copper Mountain’s President and Chief Executive Officer, added, “We
are very pleased to be entering into this combination with Hudbay. The Copper
Mountain team has done a tremendous job as seen through the positive momentum at
the mine, and I am extremely proud of the team’s efforts. The mine is now at a
point where it will benefit from the additional support available from Hudbay’s
strong in-house technical services team. There also remains significant
potential to unlock further value by leveraging the best practices of both
companies.”

Strategic Rationale of the Transaction

The combination of Hudbay and Copper Mountain is on-strategy with strong
industrial logic that will offer both sets of shareholders compelling benefits,
as highlighted below:

• Scale – a larger-scale platform with three long-life operating mines with
exploration and expansion upside, three large-scale development projects and one
of the largest mineral resource bases among intermediate copper producers;

• Diversification – a geographically balanced portfolio in tier-one mining
jurisdictions with approximately 55% of net asset valueiii (“NAV”) estimated to
be from North American assets and 45% of NAV estimated to be from South American
assets;

• Copper-Focused – a copper-focused portfolio with expected 2023 copper
production of more than 150,000 tonnes in the second quartile position on the
copper cost curveiv, complemented by meaningful gold production;

• Efficiencies – an estimated US$30 millioni per year of operating efficiencies
and corporate synergies, including approximately US$20 million per year from
operating cost reductions through the application of Hudbay’s operating
efficiency practices to the Copper Mountain mine;

• Deleveraging – well-positioned for accelerated deleveraging in the near-term
from increased diversification of cash flows and enhanced exposure to rising
copper prices;

• Capital Allocation – an ability to maximize value from a larger organic growth
pipeline by more efficiently allocating capital to projects that yield the
highest risk-adjusted returns; the combined company’s greater cash flow
generation and strong balance sheet will enhance the ability to advance
brownfield expansion opportunities and prudently develop Hudbay’s Copper World
project in Arizona, which will deliver meaningful growth to the combined
company; and

• Valuation Re-rating Potential – the strategic and financial benefits from the
Transaction ultimately position the combined company for a valuation re-rating.

Transaction Terms

Under the terms of the Arrangement Agreement, each Copper Mountain shareholder
will receive 0.381 of a Hudbay common share for each Copper Mountain common
share held.

The Transaction consideration represents approximately C$2.67 per Copper
Mountain common share and a US$439 million equity value based on Hudbay’s
closing share price on April 12, 2023. The Transaction consideration represents
a 23% premium to Copper Mountain shareholders based Hudbay’s and Copper
Mountain’s 10-day volume-weighted-average share prices on April 12, 2023.

Copper Mountain’s and Hudbay’s respective officers and directors have entered
into voting support agreements pursuant to which they have agreed, among other
things, to vote their shares in favor of the Transaction.

Following the closing of the Transaction, the Board of Directors of Hudbay will
include two directors from the Board of Directors of Copper Mountain, and the
management team of Hudbay will include select members from the management team
of Copper Mountain. In addition, existing Hudbay and Copper Mountain
shareholders will own approximately 76% and 24% of Hudbay, respectively.

In light of the Transaction, Gil Clausen has postponed his retirement and will
remain as President and Chief Executive Officer of Copper Mountain until
closing.

Transaction Conditions and Timing

The Transaction will be implemented by way of a court-approved plan of
arrangement under the Business Corporations Act (British Columbia). The
arrangement will require the approval of at least 66 2/3% of the votes cast by
the shareholders of Copper Mountain at a special meeting of Copper Mountain
shareholders held to consider the Transaction. The issuance of shares by Hudbay
under the Transaction is subject to the approval of a simple majority of the
votes cast by Hudbay shareholders at a special meeting of Hudbay shareholders.

In addition to shareholder approvals, the Transaction is subject to the
satisfaction of certain other closing conditions customary in transactions of
this nature, including clearance under the Competition Act (Canada), B.C. court
approval and applicable stock exchange approvals.

The Arrangement Agreement contains customary reciprocal deal-protection
provisions including non-solicitation covenants and a right to match any
Superior Proposal (as defined in the Arrangement Agreement). Under certain
circumstances, Hudbay and Copper Mountain would be entitled to a termination fee
equal to a percentage of respective equity values.

The Transaction is expected to be completed late in the second quarter or early
in the third quarter of 2023. Following completion of the Transaction, the
shares of Copper Mountain will be de-listed from the Toronto Stock Exchange and
the Australian Securities Exchange.

Board of Directors’ Recommendations

After consultation with its financial and legal advisors, the Board of Directors
of Hudbay unanimously approved the entering into of the Arrangement Agreement.
The Board of Directors of Hudbay recommends that Hudbay shareholders vote in
favor of the Transaction.

TD Securities Inc. has provided a fairness opinion to the Hudbay Board of
Directors, stating to the effect that, as of the date of such opinion and based
upon and subject to the assumptions, limitations and qualifications stated in
such opinion, the consideration to be paid by Hudbay in the Transaction is fair,
from a financial point of view, to Hudbay.

Copper Mountain appointed a special committee of independent directors (the
“Copper Mountain Special Committee”) to consider and make a recommendation with
respect to the Transaction. Based on the unanimous recommendation of the Copper
Mountain Special Committee, and after consultation with its financial and legal
advisors, the Board of Directors of Copper Mountain has unanimously approved the
entering into of the Arrangement Agreement. The Board of Directors of Copper
Mountain recommends that Copper Mountain shareholders vote in favor of the
Transaction.

CIBC World Markets Inc. and Origin Merchant Partners have each provided a
fairness opinion to the Copper Mountain Board of Directors and the Copper
Mountain Special Committee, to the effect that, as of the date of such opinion
and based upon and subject to the assumptions, limitations and qualifications
stated in such opinion, the consideration to be received by the Copper Mountain
shareholders is fair, from a financial point of view, to such shareholders.

Advisors and Counsel

Citi is acting as financial advisor to Hudbay and Goodmans LLP and Baker
McKenzie LLP are acting as legal counsel to Hudbay.

CIBC Capital Markets is acting as financial advisor to Copper Mountain and
Davies Ward Phillips & Vineberg LLP is acting as legal counsel to Copper
Mountain and the Special Committee.

Analyst and Investor Webcast and Conference Call

Hudbay and Copper Mountain will host a joint conference call on Thursday, April
13, 2023, at 8:30 a.m. ET to discuss the Transaction. A copy of the presentation
and webcast audio will be available on Hudbay’s website following the conference
call.

Conference Call and Webcast Details:

Date: Thursday, April 13, 2023
Time: 8:30 a.m. ET
Webcast: www.hudbay.com

Dial in: 1-416-915-3239 or 1-800-319-4610

About Hudbay Minerals Inc.

Hudbay (TSX, NYSE: HBM) is a diversified mining company with long-life assets in
North and South America. The company’s Constancia operations in Cusco (Peru)
produce copper with gold, silver and molybdenum by-products. Its Snow Lake
operations in Manitoba (Canada) produce gold with copper, zinc and silver
by-products. Hudbay has an organic pipeline that includes the Copper World
project in Arizona and the Mason project in Nevada (United States), and its
growth strategy is focused on the exploration, development, operation, and
optimization of properties it already controls, as well as other mineral assets
it may acquire that fit its strategic criteria. Hudbay’s mission is to create
sustainable value through the acquisition, development and operation of
high-quality, long-life deposits with exploration potential in jurisdictions
that support responsible mining, and to see the regions and communities in which
the company operates benefit from its presence. Further information about Hudbay
can be found on www.hudbay.com.

About Copper Mountain Mining Corporation

Copper Mountain owns 75% of the Copper Mountain Mine, which is located in
southern British Columbia near the town of Princeton. The Copper Mountain Mine
produces approximately 100 million pounds of copper equivalent on average per
year. Copper Mountain trades on the Toronto Stock Exchange under the symbol
“CMMC” and Australian Stock Exchange under the symbol “C6C”. Additional
information is available on the company’s web page at www.CuMtn.com.

Forward-Looking Information

This release contains certain “forward looking statements” and certain
“forward-looking information” as “defined under applicable Canadian and U.S.
securities laws. Forward-looking statements and information can generally be
identified by the use of forward-looking terminology such as “may”, “will”,
“should”, “expect”, “intend”, “estimate”, “anticipate”, “believe”, “continue”,
“plans” or similar terminology. The forward-looking information contained herein
is provided for the purpose of assisting readers in understanding management’s
current expectations and plans relating to the future. Readers are cautioned
that such information may not be appropriate for other purposes.

Forward-looking statements relate to future events or future performance and
reflect Hudbay’s and Copper Mountain’s expectations or beliefs regarding future
events. Forward-looking statements include, but are not limited to statements
with respect to the consummation and timing of the Transaction; approval by
Copper Mountain’s and Hudbay’s shareholders; the satisfaction of the conditions
precedent to the Transaction; the strengths, characteristics and potential of
the Transaction; growth potential and expectations regarding the timing, receipt
and anticipated effects of court, regulatory and other consents and approvals;
the impact of the Transaction on shareholders of Hudbay and Copper Mountain and
other stakeholders and other anticipated benefits of the Transaction. By their
very nature, forward-looking statements involve known and unknown risks,
uncertainties and other factors that may cause our actual results, performance
or achievements to be materially different from any future results, performance
or achievements expressed or implied by the forward-looking statements. Such
factors include, amongst others, risks related to failure to receive approval by
Copper Mountain shareholders, the required court, regulatory and other consents
and approvals to effect the Transaction, the potential of a third party making a
superior proposal to the Transaction, the possibility that the Arrangement
Agreement could be terminated under certain circumstances.

Forward-looking information are based on management of the parties' reasonable
assumptions, estimates, expectations, analyses and opinions, which are based on
such management's experience and perception of trends, current conditions and
expected developments, and other factors that management believes are relevant
and reasonable in the circumstances, but which may prove to be incorrect. Such
factors, among other things, include: business integration risks; fluctuations
in general macroeconomic conditions; fluctuations in securities markets;
fluctuations in spot and forward prices of copper or certain other commodities;
change in national and local governments, legislation, taxation, controls,
regulations and political or economic developments; risks and hazards associated
with the business of mineral exploration, development and mining (including
environmental hazards, industrial accidents, unusual or unexpected formations
pressures, cave-ins and flooding); discrepancies between actual and estimated
metallurgical recoveries; inability to obtain adequate insurance to cover risks
and hazards; the presence of laws and regulations that may impose restrictions
on mining; employee relations; relationships with and claims by local
communities and indigenous populations; availability of increasing costs
associated with mining inputs and labour; the speculative nature of mineral
exploration and development (including the risks of obtaining necessary
licenses, permits and approvals from government authorities); and title to
properties.

Hudbay and Copper Mountain undertake no obligation to update forward-looking
information except as required by applicable law. Such forward-looking
information represents management's best judgment based on the information
currently available. No forward-looking statement can be guaranteed and actual
future results may vary materially. Accordingly, readers are advised not to
place undue reliance on forward-looking statements or information.

For investor and media inquiries, please contact:

Hudbay
Candace Brûlé
Vice President, Investor Relations
(416) 814-¬4387
candace.brule@hudbay.com

Copper Mountain
Tom Halton
Director, Investor Relations and Corporate Communications
(604) 682-2992
Tom.Halton@CuMtn.com







________________________
i Pre-tax annual synergies achieved over the course of 3 years.
ii Sourced from company filings and Wood Mackenzie research.
iii NAV is based on analyst consensus estimates.
iv Based on Wood Mackenzie’s 2023 by-product C1 copper cost curve (Q4 2022
dataset).

More information:
Access the news on Oslo Bors NewsWeb site

587561_HBMNR6_HBMCMMCMerger_FINAL.pdf