Deal overview

Hudbay Minerals Inc. (TSX, NYSE: HBM) and Arizona Sonoran Copper Company Inc. (TSX: ASCU; OTCQX: ASCUF) have entered into a definitive Arrangement Agreement under which Hudbay will acquire all issued and outstanding common shares of ASCU not already owned by Hudbay¹. The all-share transaction, announced on 2 March 2026, gives Hudbay 100% ownership of ASCU’s flagship Cactus project, a large-scale porphyry copper development in Pinal County, Arizona.

Hudbay currently holds approximately 20.8 million ASCU common shares, representing approximately 9.99% of ASCU’s outstanding basic shares. Combined with Copper World — Hudbay’s advanced-stage copper development project also in Arizona — the transaction establishes what is expected to become the third largest copper district in North America.

“The acquisition of ASCU is a highly compelling transaction that further enhances Hudbay’s copper growth platform in the U.S. Cactus is a high-quality, large-scale copper development asset in a mining jurisdiction that we know well. Together with the advancement of Copper World, this transaction creates one of the most significant copper districts in North America and reinforces Hudbay’s position as a premier copper growth company, while preserving financial flexibility and delivering long-term value for shareholders.”

— Peter Kukielski, President and Chief Executive Officer, Hudbay Minerals

Transaction terms

Under the Arrangement Agreement, each ASCU shareholder will receive 0.242 of a Hudbay common share for each ASCU common share held. Based on Hudbay’s closing share price on the Toronto Stock Exchange (TSX) on February 27, 2026, the implied consideration is approximately C$9.35 per ASCU share and a total equity value of approximately US$1,480 million. The enterprise value to Hudbay, net of its existing equity ownership in ASCU, is approximately US$1,278 million.

Following closing, existing Hudbay shareholders will own approximately 89% of the enlarged company, while ASCU shareholders will own approximately 11%.

The Arrangement Agreement includes customary deal protection provisions: a non-solicitation covenant from ASCU, a right for Hudbay to match any Superior Proposal, fiduciary out rights for ASCU, and a termination fee payable by ASCU under certain circumstances. Directors and senior officers of ASCU holding approximately 1.1% of ASCU’s voting securities have entered into voting support agreements in favour of the Transaction.

“This transaction delivers ASCU shareholders compelling value today while preserving meaningful exposure to the long-term upside of Cactus. Through ownership in Hudbay, our shareholders will gain immediate exposure to strong cash flow generation from a larger, diversified and well-capitalized operating platform, while continuing to participate in the long-term value of Cactus and adding exposure to Hudbay’s Copper World project as part of a new major copper hub in Arizona.”

— George Ogilvie, President and Chief Executive Officer, Arizona Sonoran Copper Company

Strategic rationale

Hudbay has framed the acquisition as a continuation of its Americas-focused growth strategy, consolidating two complementary copper development assets in a jurisdiction it knows well. The combined Copper World and Cactus pipeline in Arizona is expected to form the third largest copper district in North America and potentially the second largest district of copper cathode production in the United States.

The transaction also strengthens Hudbay’s position as a supplier of domestically produced refined copper in the United States — a strategic advantage as demand for U.S.-sourced critical minerals grows. Copper World and Cactus are both expected to produce copper cathode, with potential annual copper production of 92,000 tonnes from Copper World by 2030 and a further 103,000 tonnes from Cactus after Copper World. Hudbay also sees meaningful operational synergies between the two adjacent Arizona assets, including the potential to redeploy the Copper World construction team to Cactus and to use sulphuric acid produced at Copper World to leach oxide ore at Cactus, with approximately US$5 to US$10 million in estimated annual corporate synergies.

The all-share structure preserves Hudbay’s financial flexibility and balance sheet capacity, avoiding the need for dilutive equity issuance or debt financing to fund the acquisition consideration. The addition of Cactus is expected to be accretive to Hudbay on a net asset value per share basis and on a reserves and resources per share basis.

“We are delighted to have the opportunity for our Cactus project to be sequenced into Hudbay’s portfolio of long-life and high-quality assets in the Americas. As part of Hudbay, the financial dilution and execution risks of constructing Cactus are significantly lessened, providing a clear path to copper cathode production. More importantly, in joining with Hudbay, we put the project in the good hands of the 3rd largest copper producer listed on the New York Stock Exchange, and in what will become the 3rd largest copper district in North America.”

— David Laing, Chair of the Board of Directors, Arizona Sonoran Copper Company

The Cactus project

The Cactus project is a brownfield copper development located in Pinal County, Arizona on privately held land. The project hosts a large-scale porphyry copper resource and benefits from in-place infrastructure, including highway and rail access, a state-led permitting process, and onsite permitted water access. A Pre-Feasibility Study (PFS) completed by ASCU in October 2025 outlined a generational open-pit copper mine with robust economic returns.

Hudbay intends to update the PFS following closing of the transaction, applying its own technical and project design assumptions to optimise the development plan. Cactus is positioned as a lower-risk copper development project benefiting from established state and community relationships, existing infrastructure, and a supportive regulatory environment in Arizona.

Together with Copper World — Hudbay’s advanced copper project also in Arizona — the combined Arizona assets provide a pathway to scale Hudbay’s annual copper production from approximately 125,000 tonnes today to more than 250,000 tonnes by 2030, and potentially more than 350,000 tonnes over the longer term as Cactus is brought into production.

Cactus Mine Excavation View Looking Northwest. Photo Credit: Arizona Sonoran Copper Company Inc.

Timeline and conditions

The Transaction requires approval by 66⅔% of the votes cast by ASCU shareholders; 66⅔% of votes cast by ASCU shareholders and securityholders voting together as a single class; and a simple majority of votes cast by ASCU shareholders excluding certain interested parties in accordance with Multilateral Instrument 61-101. The special meeting of ASCU securityholders is expected to be held in May 2026.

In addition to shareholder approval, closing is subject to U.S. and Canadian regulatory approvals, court approval, and stock exchange approvals. Subject to the receipt of all necessary approvals, the Transaction is expected to close in Q2 2026, at which point ASCU shares will be de-listed from the Toronto Stock Exchange.

TD Securities Inc. is acting as financial advisor to Hudbay, with National Bank Financial Inc. as strategic advisor, and Goodmans LLP as legal counsel. Scotiabank is acting as financial advisor to ASCU, with Origin Merchant Partners providing an independent fairness opinion to the ASCU Board, and Osler, Hoskin & Harcourt LLP and Paul, Weiss, Rifkind, Wharton and Garrison LLP acting as legal counsel to ASCU.