HudBay dissidents take control of company board of directors

TORONTO - HudBay Minerals Inc. (TSX:HBM) said Monday that its board of directors has resigned, clearing the way for the appointment of a slate of directors nominated by a group of dissident shareholders and the replacement of interim chief executive Colin Benner.

The new board, backed by Monaco-based hedge fund SRM Global Master Fund LP, appointed Peter Jones as Hudbay's new chief executive.

"I am excited about leading HudBay and working with its employees once again and truly building on the company's financial strength," Jones said in a statement.

The zinc producer said the new board also understands that the company has had talks concerning a possible sale of the company but no discussions are currently underway.

The old board, which had unsuccessfully pursued an unpopular takeover of Lundin Mining Corp. (TSX:LUN), had faced defeat at a shareholder meeting on Wednesday that has now been cancelled.

The new board includes Jones, chairman Wesley Voorheis, Bruce Barraclough, Brian Gordon, Alan Roy Hibben, Warren Holmes, John Knowles and Alan Lenczner.

Earlier this month, Allen Palmiere stepped down as chief executive and a member of HudBay's board in the wake of its failed takeover of Lundin and the proxy battle for control of the company.

The Lundin deal turned controversial after HudBay shareholders were originally told they couldn't vote on the deal. The Ontario Securities Commission later ruled that a vote must be held because the transaction - which would have more than doubled the number of outstanding HudBay shares - would undermine "the quality of the marketplace" if it went ahead without approval.

Lundin shareholders overwhelmingly approved the merger a few days after the OSC's ruling, but it seemed likely that HudBay shareholders would vote it down and the deal was scrapped late last month.

Opposition to the merger was spearheaded by Jaguar Financial Inc. (TSX:JFI), a relatively small merchant bank, but SRM, the Ontario Teachers' Pension Plan and Corriente Master Fund had also called for HudBay to hold a shareholder vote.

SRM owns approximately 11 per cent of HudBay. It has denied wanting to take over HudBay.

HudBay, long thought to be a takeover target, is a Toronto-based integrated mining company with its main operations in northern Manitoba and Saskatchewan, plus other operations in Central America.

Shares in HudBay, which announced the board change after the close of markets, were up 28 cents at $5.80 on the Toronto Stock Exchange on Monday.