Why Augusta Resource Corp. Shares Skyrocketed

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of Augusta Resource Corp. (NYSEMKT: AZC  ) soared 25% today after HudBay Minerals (NYSE: HBM  ) agreed to acquire the rest of the Vancouver-based miner that it doesn't already own for about C$540 million.

So what: The all-stock deal -- 0.315 of a HudBay share for each Augusta share held -- values Augusta at roughly C$2.96 per share and represents a premium of about 18% to its closing price on Friday. HudBay is making the move primarily to advance Augusta's Rosemont Copper deposit near Tucson, Ariz., but judging by its own stock's 5% pullback today, Mr. Market isn't exactly thrilled with the price management is offering to do it.

Now what: If accepted by Augusta, HudBay expects the transaction to be significantly accretive to its key per-share metrics. "The Offer presents a unique opportunity for Augusta shareholders to receive a substantial premium and participate in Hudbay's low-cost, long-life assets in mining friendly jurisdictions with world-class copper production growth," said HudBay CEO David Garofalo. "We strongly believe in the merits of this transaction and the benefits to both companies' shareholders." So while Augusta's upside might be limited at this point, HudBay's potentially bolstered production prospects might be worth looking into. 

More compelling resource picks
Record oil and natural gas production is revolutionizing the United States' energy position. Finding the right plays while historic amounts of capital expenditures are flooding the industry will pad your investment nest egg. For this reason, The Motley Fool is offering a comprehensive look at three energy companies set to soar during this transformation in the energy industry. To find out which three companies are spreading their wings, check out the special free report "3 Stocks for the American Energy Bonanza." Don't miss out on this timely opportunity; click here to access your report -- it's absolutely free. 


Read/Post Comments (0) | Recommend This Article (0)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2833076, ~/Articles/ArticleHandler.aspx, 12/22/2014 3:04:47 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement