HudBay Minerals Inc. [HBM-TSX, NYSE] on Wednesday July 10 said that Alan Hair has stepped down as he company’s President and CEO and as a director of the company. Hair spent more than 20 years with Hudbay and was instrumental in the company’s growth, serving as Chief Operating Officer from 2012 to 2015 before being appointed President and CEO in 2016.
Peter Kukielski has been named interim CEO. Kukielski has more than 30 years of extensive global experience within the base metals, precious metals and bulk materials sectors, having overseen operations across the globe. The board has launched a search for Hair’s permanent successor, a process that may include internal and external candidates.
Hudbay shares advanced on the news, rising 2.38% or 15 cents to $6.45 on volume of 519,042. The shares are trading in a 52-week range of $4.50 and $10.42.
News of Hair’s departure comes after HudBay and Waterton Global Resource Management Inc. reached a settlement agreement regarding the proxy contest for HudBay’s board of directors.
Waterton Global Resource Management is a private equity firm, which owns 12% of HudBay’s outstanding shares.
Under the agreement, Waterton won the right to appoint three of the 11 board seats. The board pledged to launch the search for a new Chair.
The deal was viewed as positive because it eased fears that Waterton might dump its Hudbay shares if it lost the proxy battle.
HudBay is an integrated mining company, primarily producing copper concentrate (containing copper, gold and silver), zinc concentrate and zinc metal. The company owns four polymetallic mines, four ore concentrators and a zinc production facility.
The operations are located in northern Manitoba and Saskatchewan, Peru and Arizona.
The Waterton board nominees were Peter Kukielski, Daniel Muniz Quintanilla, and David Smith.
HudBay’s current Chair Alan Hibben agreed to remain in that position until a successor is found. He is expected to retire from the board at the 2020 annual general meeting.
Waterton and HudBay recently clashed over media speculation that HudBay was in talks to buy Mantos Copper SA, a Chilean private miner owned equally by Audley Capital and Orion Mine Finance. Published reports said Mantos was seeking a buyer to fund its expansion plans.
Waterton responded by saying it was opposed to the idea. It expressed the view that HudBay should not be pursuing growth for the sake of empire building.
Waterton also said if HudBay intended to begin construction of the Rosemont copper project in Arizona in the first quarter of 2019, it could face an imminent funding requirement of $1.1 billion. “This reinforces, from a capital allocation perspective, the need to terminate any potential negotiations for new acquisitions immediately, and specifically acquisitions like the Mantos transaction,” Waterton said.
HudBay recently announced that it has completed the permitting process at its Rosemont Project. Rosemont is an open-pit copper-molybdenum-silver porphyry-skarn deposit located in Arizona. It is expected to be one of the largest copper mines in the U.S., accounting for 10% of total U.S. copper production.
HudBay said the project has achieved a key milestone after receiving the approved Mine Plan of Operations (MPO) from the U.S. Forest Service. The issuance of the MPO is the final administrative step in the permitting process.
Rosemont is expected to produce approximately 127,000 tonnes of copper annually at a cash cost of US$1.14 per pound (net of by-product credits) over the first 10 years of operations.