January 10, 2011 / 11:58 AM / 8 years ago

UPDATE 3-HudBay to buy Norsemont Mining for C$398 mln

* Deal worth C$4.39/shr, premium of 3 pct

* Norsemont holders to get 0.2617 HudBay shrs, C$0.001 cash

* Deal to up HudBay’s copper prodn by 145 pct by 2016

* RBC Capital Markets adviser to HudBay

* Cutfield Freeman & Co. Ltd adviser to Norsemont (Updates deal value based on latest number of shares outstanding; adds details, shares)

By Abhiram Nandakumar

BANGALORE, Jan 10 (Reuters) - Canada’s HudBay Minerals Inc (HBM.TO) agreed to buy Norsemont Mining Inc NOM.TO to gain access to a major copper deposit in Peru, in a cash-and-stock deal valued at about C$397.5 million (about $400 million).

The offer values Norsemont at C$4.39 per share, a 3 percent premium to the stock’s Friday close.

Norsemont holders will get 0.2617 of HudBay shares and 0.1 Canadian cents for each share held, or C$4.50 in cash, with the maximum cash consideration at C$130 million.

Norsemont, which has about 90.6 million shares outstanding, expects the deal to close in the first quarter of this year, a company spokesman told Reuters.

HudBay said Norsemont directors and certain other shareholders, who together hold about 35.6 percent, have agreed to tender their shares.

RBC Capital Markets advised HudBay on the deal while Cutfield Freeman & Co Ltd advised Norsemont.

Norsemont can, under the deal, accept a superior, unsolicited bid by paying HudBay a termination fee of C$21.6 million.

HudBay did not immediately return calls seeking comment.

The acquisition of Norsemont, which owns the Constancia copper project in Southern Peru, is expected to boost HudBay’s copper production by about 145 percent by 2016, HudBay said.

Constancia is expected to produce 172 million pounds of copper annually and 2 million pounds of molybdenum in concentrate over a 15-year mine life.

Shares of HudBay were down about 3 percent at C$16.30 in late morning trade on Monday on the Toronto Stock Exchange. Its New York-listed shares were also down about 3 percent at $16.42

Toronto-based Norsemont’s shares were up about 5 percent at C$4.50, at more than seven times their 30-day average volume, making the stock the third most actively traded on the exchange. ($1=.9913 Canadian Dollar) (Reporting by Abhiram Nandakumar; Editing by Unnikrishnan Nair)

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