Canadian miner Hudbay Minerals has strengthened its position in -listed Arizona Sonoran Copper Company (ASCU), agreeing to acquire 11.85-million common shares in a private placement valued at C$19.91-million.

The investment increases Hudbay’s stake in ASCU from 2.12% to 9.9%, signalling support for the company’s Cactus copper project, in Arizona.

ASCU says proceeds of the private placement will be allocated to drilling, exploration, technical studies and advancement of the Cactus project and for general corporate purposes.

The issue price of C$1.68 a share represents a 15% premium to the five-day volume weighted average price of the common shares on the TSX as of the close of trading on January 7.

Hudbay has also agreed to subscribe for additional common shares to maintain its 9.99% interest in ASCU in the event that pre-emptive rights held by certain other existing shareholders are exercised in connection with the private placement.

“We are pleased and appreciative to welcome this further endorsement of our project and the go-forward plan, by the team at Hudbay. It is the company’s objective to develop Cactus to be a significant producer of copper cathodes for direct use by industry in the State of Arizona and the larger US supply chain,” says ASCU president and CEO George Ogilvie.

“We welcome Hudbay, a mid-tier base metal producer with decades of base metal successes in the Americas and a strong existing footprint in Arizona, as a larger and increasingly engaged shareholder, able to lend its experience and expertise as we advance and develop Cactus.”

Hudbay president and CEO Peter Kukielski describes Cactus as an “exciting copper development” project in Arizona.

“We see the US as a tier-1 mining jurisdiction and this investment increases our exposure to another high-quality development project in the region as we continue to advance our Copper World project,” he says.

In connection with the private placement, Hudbay and ASCU will enter into an investor rights agreement, pursuant to which Hudbay will have certain customary rights and obligations, provided Hudbay maintains certain ownership thresholds in ASCU.

This includes the right to participate in equity financings and top-up its holdings in relation to dilutive issuances in order to maintain its pro rata ownership in ASCU at the time of such issuance; and observer rights at meetings of the technical and sustainability committee of the company’s board of directors and certain other customary information access rights.

In addition, pursuant to the terms of the investor rights agreement, ASCU says Hudbay will agree to vote on a basis consistent with the voting recommendations of ASCU’s board of directors or management in respect of various ordinary course matters presented at the company’s 2025 and 2026 annual shareholder meetings.

The private placement is expected to close on or about January 30, and is subject to the receipt of customary regulatory approvals, including approval by the TSX.

ASCU says the common shares to be issued in connection with the private placement will be subject to a statutory hold period in accordance with applicable securities laws.

Scotiabank is acting as financial adviser, and Bennett Jones as legal adviser, to the company, in connection with the private placement.