HudBay responds to concerns by certain shareholders (December 10, 2008)

HudBay Minerals has just posted on its website ( a governance presentation to certain shareh...

HudBay Minerals has just posted on its website ( a governance presentation to certain shareholders’ concerns relating to the company’s proposed acquisition of Lundin Mining Corporation.

                Among the highlights of the presentation are the following statements with respect to the proposed acquisition of  Lundin:

                *Hudbay’s independent directors concluded the acquisition is value-enhancing for the company’s shareholders after carefully reviewing HudBay’s current fiscal position and the opportunities presented by the acquisition of Lundin.

                *The two HudBay directors who serve on the board of Lundin did not participate in or attend any meetings where the Lundin acquisition was discussed.

                *There will be no change of control of HudBay as a result of the acquisition of Lundin. Allen J. Palmiere will remain HudBay’s CEO, six of the nine members of  HudBay’s board will remain directors of HudBay following the acquisition, and the company does not expect any single shareholder will own more than 10% of the shares of HudBay following the closing of the acquisition.

                *The C$135 million loan proposed to be made to Lundin is a bridge to the C$135 million private placement contemplated by the subscription agreement between HudBay and Lundin pending regulatory approval of the private placement. In agreeing to the loan, HudBay carefully considered Lundin’s financial position aand Lundin’s possible alternatives to the proposed arrangement with HudBay, including the possibility of Lundin selling assets with strategic value to HudBay and the possibility of Lundin engaging in a combination transaction with a competitor to HudBay.

                *The exchange ratio to Lundin’s shares was determined through arm’s length negotiation and involved the consideration of a number of factors, including the fundamental values of Lundin’s assets compared to that of HudBay’s assets, the recent trading prices for shares of HudBay and Lundin, the current instability in the stock and financial markets, and the possibility of Lundin seeking an alterantive to a transaction with HudBay.

                *The independent directors carefully considered whether a meeting of HudBay shareholders should be called to approve the acquisition, but concluded on the information and advice provided to them that there was no legal, regulatory or corporate requirement to conduct a vote, and to do so would not allow HudBay to offer Lundin sufficient certainty that the acquisition would be completed, a condition precedent in the negotiation of the acquisition.

                In closing, HudBay said it remains committed to completing the acquisition and says the  company has consistently communicated to its shareholders its intention to creat value by building scale and scope through opportunistic investments that complement it’s existing operations.

                As the head line reads, HudBay is responding to the concerns of certain shareholders and one of those that has strongly voiced its position on the HudBay/Lundin situation is Jaguar Financial.

                In a four-page statement released late last week, Jaguar Financial went into great detail (far too complex to feature here) saying in part that “Jaguar considers the proposed HudBay and Lundin transaction to be a related party transaction requiring HudBay shareholder approval….” Jaguar owns 1,500,000 common shares of HudBay representing approximately one per cent of the issued shares.

                Anyone interested in hearing more about Jaguar’s position is invited to contact Company Chairman and Chief Executive Officer Vic Alboini  at 416-644-8110.                                                                                                                                                           &n bsp;                                                                        



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