Canada's third biggest zinc and copper producer HudBay Minerals Inc announced that it will buy Skye Resources Inc for around CAD 437 million in stock to acquire the troubled Fenix nickel project in Guatemala.

Under the friendly deal, HudBay will pay 0.61 of a share for each Skye share and will also pump about CAD 95 million into Skye by way of a private placement.

Following completion of the Transaction the combined company's profile will include
1. A large increase in reserves and resources
2. A diversified multi-metal resource base
3. An attractive mix of producing, development and exploration assets that provides a solid platform for future growth
4. A strong balance sheet with a pro forma cash balance of approximately CAD 861 million, no debt and solid operating cash flow going forward

Mr Allen Palmiere president & CEO of HudBay said that "We believe that this Transaction represents excellent value for our shareholders. Today's announcement reflects one of the key elements of our strategy building scale and scope through opportunistic investments to complement HudBay's existing operations. This is a tremendous addition to HudBay's development pipeline and provides important diversification to the company's existing portfolio.”

Mr Colin K Benner vice chairman & CEO of Skye said that "The planned combination is a great opportunity for Skye's shareholders and for Guatemala. This agreement merges the world class ferronickel Fenix Project with a company with the financial and technical capacity to move it forward rapidly and I encourage Skye shareholders to vote in favor of this transaction. HudBay is a large, exceptionally well-managed and respected Canadian mining company with roots going back over 80 years. We are very pleased to become a significant part of this much larger and stronger enterprise and support their plans for future growth in the pursuit of becoming an international mining house."