HudBay Minerals Inc. (TSX:HBM)(NYSE:HBM) today announced it has entered into a subscription agreement with Halo Resources Ltd. (TSX VENTURE:HLO)(FRANKFURT:HRLN) providing for the sale to HudBay on a private placement basis of 3,655,000 units of Halo at a purchase price of C$0.50 per Unit for total consideration of C$1,827,500.
Each Unit consists of one common share of Halo (a "Share") and one-half of one Share purchase warrant (a "Warrant"). Each whole Warrant will entitle HudBay to acquire one Share at an exercise price of C$0.60 at any time during the 24-month period following the closing of the transaction.
In addition to certain customary conditions (including approval of the listing of the Shares to be issued to HudBay), the subscription is conditional on Halo completing an additional private placement financing (the "Concurrent Financing") involving the issuance of not less than 4,345,000 units, and not more than 6,345,000 units, such units having the same composition, terms and price as the Units offered for sale to HudBay.
Upon closing of the subscription, HudBay will own and have control over 3,898,167 Shares (representing 14.5% of the issued and outstanding Shares, assuming the minimum number of units are issued in the Concurrent Financing), and will own 1,827,500 Warrants. On a partially-diluted basis, following exercise of the Warrants, HudBay would hold 19.9% of the issued and outstanding Shares, assuming the minimum number of units are issued in the Concurrent Financing. Pursuant to the subscription agreement, Halo has granted to HudBay the right to participate in future equity financings that might be undertaken by Halo (for so long as HudBay holds at least five percent of the issued and outstanding Shares) on a basis that would permit HudBay to maintain its then current percentage equity ownership of Halo.
Under the terms of an option agreement announced on December 21, 2009, HudBay has the right to earn up to a 67.5% joint venture interest in Halo's Cold and Lost properties in the Sherridon district of Manitoba. HudBay intends to complete an updated National Instrument 43-101 resource estimate for the Lost property in the first quarter of 2011.
The acquisition of the Units is being made to assist in the financing, exploration and development of Halo's mineral properties in the Sherridon region.
Source: HudBay Minerals Inc.