MINING FINANCE / INVESTMENT

Hudbay Minerals may be looking for buyer - or may be on acquisition trail

Hudbay Minerals hares rose 6.3 percent as a newspaper report said the company was considering options, including sale as it hires bank to examine options.

Posted: Monday , 27 Apr 2009

TORONTO (Reuters) - 

Shares of HudBay Minerals (HBM.TO: Quote) surged more than 6.3 percent on Friday on speculation that the company might be bought following a report that it had hired an investment bank to examine strategic options.

The Globe and Mail newspaper quote HudBay chief executive Peter Jones as saying the Winnipeg, Manitoba-based miner has hired a bank to examine options that could include sale of the company or acquisitions of other miners.

Anonymous sources cited by the paper pegged TD securities as the bank.

TD would not comment and HudBay CEO Jones was not available for comment.

By mid-afternoon, the company's shares had risen 44 Canadian cents to C$7.39 on the Toronto Stock Exchange.

David Whetham, a fund manager at Scotia Cassels, said HudBay's solid cash position makes it both an attractive target and a potential buyer.

"It sounds like they're definitely looking to grow by acquisition, but at the same time, if somebody comes in with an offer, it could go both ways," he said.

He said HudBay's copper smelter in Flin Flon, Manitoba, could deter a potential buyer.

The smelter is expected to shut in the next few years as tighter emissions standards are phased in.

The Globe cited industry sources as saying state-controlled mining firms in China were potential suitors for the company.

2ND TRY AS CEO

Jones began his second stint as HudBay's CEO last month after a failed attempt to take over fellow Canadian miner Lundin Mining (LUN.TO: Quote) prompted a shareholder revolt that forced the company's former board and management to step down.

Jones's first turn as CEO ended when he was pushed out in January 2008 for not seeking acquisitions aggressively enough. He said in March that HudBay would try to expand through takeovers, and may be open to overtures from larger players.

Jones was part of a slate put forward by shareholder SRM Global Master Fund, which wanted HudBay to distribute its war chest of approximately C$700 million to shareholders.

But Jones has said the company will only do that if attempts to expand through acquisition fail.

The company also said in March that it had had discussion with third parties concerning a possible sale of the company, but no discussions were underway at that time.

($1=$1.21 Canadian) (Reporting by Cameron French and Pav Jordan; editing by Janet Guttsman)

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