HudBay Minerals reaches deal to sell interest in Fenix mine in Guatemala | CanadianBusiness.com
HudBay Minerals reaches deal to sell interest in Fenix mine in Guatemala
By The Canadian Press | August 05, 2011
TORONTO – HudBay Minerals Inc. said Friday it has agreed to sell its interest in a Guatemala nickel mine to the Solway Group for US$170 million.
In a statement, chief executive officer David Garofalo said the Fenix project is “robust” and “warrants development,” but it doesn’t fit HudBay’s strategy.
“We believe that the sale proceeds will further strengthen our balance sheet as we develop our Lalor and Constancia projects,” he said.
“We are also pleased to see the project in the hands of an experienced ferro-nickel operator, such as the Solway Group, which is committed to the development of Fenix.”
Solway Group, based in Cyprus, is made up of various mining, metals, chemicals, cement and real estate companies.
HudBay said it will receive US$140 million at closing, which is expected to take place during the third quarter. It will get another US$30 million once Solway meets certain conditions as it develops the mine.
HudBay expects to record a $212.7-million non-cash charge against its results for the three months ended June 30 related to Fenix.
Earlier this year, a group of 11 women from Guatemala filed a suit in Canada against the company alleging gang rapes in 2007 at the Fenix project.
HudBay, which didn’t own the mining operations when the alleged offences occurred, has said it would investigate allegations that security personnel, along with members of the police and military, attacked the women.
However, the company said the accusations in the lawsuit contradict available information and that it would defend itself “vigorously against them.”
HudBay’s main operations are in Manitoba where it has its flagship mine in Flin Flon.