MINING REPORTER
When Peter R. Jones took over the top job at HudBay Minerals Inc. in March, he said the company would buy back its own shares only as a last resort if all other uses of its bulging balance sheet had been exhausted.
It seems Mr. Jones is hedging his bets now. HudBay said yesterday that it has asked regulators to approve a plan to buy back up to 13.7 million shares, or 9 per cent of its stock.
With about $845-million on its balance sheet, HudBay is cash-rich but growth-challenged. While management has said it is looking for acquisitions, some investors want the company, which mines zinc and copper near Flin Flon, Manitoba, to return cash to shareholders.
Among them is SRM Global Master Fund, a Monaco hedge fund that led a proxy battle to oust HudBay's previous board and reinstate Mr. Jones as CEO. SRM, which was once the company's largest shareholder but has since reduced its holding to less than 10 per cent, has lobbied for a share buyback or special dividend.
HudBay cautioned yesterday that the new plan does not commit it to buying back shares, but will allow it to "opportunistically" repurchase stock from time to time.
The company said it "remains committed to pursuing growth organically and through acquisitions."
Toronto-based HudBay's second-quarter profit rose to $89.4-million from $33.2-million last year, thanks in part to a $100-million gain from selling a stake in Lundin Mining, which offset lower metal prices. Revenue fell to $197-million from $284-million.
© The Globe and Mail
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