EX-99.3 4 dex993.htm DISCLOSURE LETTER FROM NORSEMONT MINING INC. TO HUDBAY MINERALS INC. Disclosure Letter from Norsemont Mining Inc. to Hudbay Minerals Inc.

Exhibit 99.3

January 9, 2011

HudBay Minerals Inc.

Suite 2501, Dundee Place

1 Adelaide Street East

Toronto, Ontario

M5C 2V9

Norsemont Mining Inc. – Disclosure Letter

Ladies and Gentlemen:

We refer to the support agreement (the “Agreement”) dated the date hereof between HudBay Minerals Inc. (“HudBay”) and Norsemont Mining Inc. (the “Company” or “Norsemont”) relating to the Offer whereby Norsemont will be acquired by HudBay. This is the disclosure letter referred to in the Agreement as the “Disclosure Letter” and we hereby disclose to you the information set out in this letter for the purpose of the Agreement. Terms and expressions defined in the Agreement and not otherwise defined herein have the same meanings in this letter. All values are expressed in Canadian dollars unless noted otherwise.

 

1. Neither Norsemont nor any of the subsidiaries of Norsemont take any responsibility for any opinion which may have been expressed by any person other than Norsemont or any forecast or projection in any information or document by such person unless any such opinion, forecast or projection is expressly warranted in the Agreement.

 

2. Norsemont and HudBay acknowledge and agree that neither this Disclosure Letter nor any disclosure made in or by virtue of it shall constitute or imply any representation, warranty, assurance or undertaking by Norsemont not expressly set out in the Agreement and neither this Disclosure Letter nor any such disclosure shall have the effect of, or be construed as, adding to or extending the scope of any of the representations and warranties of Norsemont in the Agreement.

 

3. The fact that any item of information is contained herein shall not be construed as an admission of liability under any applicable law, or to mean that such information is required to be disclosed in or by the Agreement, or to mean that such information is material. Such information shall not be used as a basis for interpreting the terms “material,” “materially,” “materiality,” “Material Adverse Effect” or any similar qualification in the Agreement.

 

4. Matters disclosed in this Disclosure Letter are not necessarily limited to matters required by the Agreement to be disclosed in this Disclosure Letter. Such additional matters are set forth for information purposes and do not necessarily include all matters of a similar nature. Unless otherwise stated herein, all of the information contained in this Disclosure Letter is provided as of the date of this Disclosure Letter.

 

5. The following matters are specifically disclosed:

 

Agreement Reference

   

Disclosure

4.2 – Capitalization    See Schedule 4.2
4.3 – Ownership of Subsidiaries    See Schedule 4.3
4.5 – No Violations    See Schedule 4.5
4.10 – The Company Financial Statements    See Schedule 4.10
4.16 – No Undisclosed Liabilities    See Schedule 4.16
4.17 – Litigation    See Schedule 4.17
4.18 – Taxes    See Schedule 4.18
4.20 – Leased Property    See Schedule 4.20
4.23 – Contracts    See Schedule 4.23
4.24 – Interest in Mineral Rights    See Schedule 4.24
4.27 – Permits    See Schedule 4.27
4.28 – Pension and Employee Benefits    See Schedule 4.28
4.29 – Insurance    See Schedule 4.29
4.31 (e) – Environment    See Schedule 4.31(e)
4.32 – Restrictive Covenants    See Schedule 4.32
4.33(a) – Employment Arrangements and Collective Agreements    See Schedule 4.01(m)

[Signatures on the following page]

 

2.

 

Yours truly,
NORSEMONT MINING INC.
By:  

“Patrick Evans”

  Name:   Patrick Evans
  Title:   Chief Executive Officer

Accepted this 9th day of January, 2011 as the Disclosure Letter.

 

HUDBAY MINERALS INC.

By:

  

“Kenneth Gillis”

 

Name:

   Kenneth Gillis
 

Title:

   Senior Vice President,
    Corporate Development

 

3.

SCHEDULE 4.2

Capitalization

Outstanding Options as at January 7, 2011 are as follows:

INTENTIONALLY DELETED

[Private Information]

 

4.

Outstanding Purchase Warrants as at January 7, 2011 are as follows:

INTENTIONALLY DELETED

[Private Information]

 

5.

Outstanding RSUs as at January 7, 2011 are as follows:

INTENTIONALLY DELETED

[Private Information]

 

6.

Outstanding convertible notes as at January 7, 2011 are as follows:

Note 1

 

Date of Issuance    Principal
Amount		      Interest Rate    Conversion Price    Conversion Expiry and
Maturity Date		  

December 19, 2008

    $ 6,000,000       8% per annum    $1.70 per share      December 19, 2011   

INTENTIONALLY DELETED

[Private Information]

Note 2

 

Date of Issuance    Principal
Amount		      Interest Rate    Conversion Price    Conversion Expiry and
Maturity Date		  

March 31, 2009

    $ 3,800,000       8% per annum    $1.70 per share      March 31, 2012   

INTENTIONALLY DELETED

[Private Information]

 

7.

SCHEDULE 4.3

Ownership of Subsidiaries

 

Company Subsidiary   Percentage of Ownership
Norsemont Peru S.A.C.  

99% owned by Norsemont

1% owned by Robert Baxter(1)(2)

 

(1)

As required by the laws of Peru, there must be more than one shareholder in a corporation.

(2)

Mr. Baxter has assigned all of his rights in Norsemont Peru S.A.C. to the Company.

 

8.

SCHEDULE 4.5

No Violations

None

 

9.

SCHEDULE 4.10

Company Financial Statements

None

 

10.

SCHEDULE 4.16

Liabilities

Material Liabilities

None

Indebtedness among the Company and any of its subsidiaries

See Schedule 4.2, “Capitalization”, under the subheading “Outstanding convertible notes as at January 7, 2011”.

 

11.

SCHEDULE 4.17

Litigation

INTENTIONALLY DELETED

[Subject of on-going litigation]

 

12.

SCHEDULE 4.18

Taxes

None

 

13.

SCHEDULE 4.20

Leased Properties

 

Lessee   Leasehold Interest Holder   Agreement
Norsemont Mining Inc.   Redcliffe Property Managers  

Office lease

 

Suite 1002, 40 University

Avenue, Toronto, Ontario

Norsemont Peru S.A.C.   Redcliffe Property Managers  

Office lease

 

Amador Merino Reyna 267 of

701 San Isidro, Lima, Peru

 

14.

SCHEDULE 4.23

Material Contracts

 

1. Employment Agreement, dated June 1, 2007, between the Company and Patrick Evans pursuant to which Mr. Evans is employed as the Company’s Chief Executive Officer.

 

2. Employment Agreement, dated December 1, 2010, between the Company and Robert Baxter pursuant to which Mr. Baxter is employed as the Company’s President and Chief Operating Officer

 

3. Employment Agreement, dated October 1, 2007, between the Company and Christopher Reynolds, pursuant to which Mr. Reynolds is employed as the Company’s Vice President, Finance and Chief Financial Officer.

 

4. INTENTIONALLY DELETED - [Private Information]

 

5. INTENTIONALLY DELETED - [Private Information]

 

6. Warrant Indenture between the Company and Computershare Trust Company of Canada, dated November 3, 2009.

 

7. Warrant Indenture between the Company and Computershare Trust Company of Canada, dated May 25, 2009.

 

8. Shareholders Rights Plan of the Company dated May 29, 2006.

 

9. See Schedule 4.2, “Capitalization”, under the subheading “Outstanding convertible notes as at January 7, 2011”.

 

15.

SCHEDULE 4.24

Mineral Rights

Section 4.24(b) – Mineral Rights

Constancia Property

Concessions:

 

Concession Name    Code    Concession
Granted		    Concession Holder    Hectares  

Peta 5

    05006089X01    28-11-1989    Livitaca      934.52   

Katanga J

    05004406X01    29-03-1990    Mitsui      400.00   

Katanga Q

    05005529X01    09-05-1990    Katanga      150.01   

Katanga K

    05004407X01    16-07-1990    Mitsui      300.00   

Peta 6

    05006090X01    29-10-1996    Katanga      1000.00   

Santiago 4

    010083495    23-12-1996    Mitsui      34.16   

Santiago 3

    010083695    25-03-1997    Mitsui      700.58   

Santiago 5

    010083295    30-04-1997    Mitsui      602.12   

Katanga V

    010248497    31-10-1997    Mitsui      100.00   

Katanga T

    010248397    15-11-1997    Mitsui      100.00   

Santiago Apostol I

    010229294    31-03-1998    Mitsui      424.49   

Peta 17

    0506198AX01    13-12-1999    Katanga      49.05   

Peta 7

    05006198X01    13-12-1999    Katanga      351.70   

On November 23, 2007, 11 mining applications were submitted to Ingemmet to cover new areas with a total of 7700 hectares. The mining applications were granted to Norsemont according to the following chart:

 

Concession

Name

    Code    Concession
Granted		    Resolucion Jefatural    Area (Ha)  

Constancia 17

    01-06147-07    05.05.08    001061-2008-INGEMMET/PCD/PM      700   

Constancia 18

    01-06148-07    21.04.08    000937-2008-INGEMMET/PCD/PM      400   

Constancia 19

    01-06149-07    12.05.08    001175-2008-INGEMMET/PCD/PM      700   

Constancia 20

    01-06150-07    12.05.08    001234-2008-INGEMMET/PDC/PM      600   

Constancia 21

    01-06151-07    12.05.08    001422-2008-INGEMMET/PCD/PM      700   

Constancia 22

    01-06152-07    12.05.08    001291-2008-INGEMMET/PCD/PM      600   

Constancia 23

    01-06153-07    18.04.08    000872-2008-INGEMMET/PCD/PM      1000   

Constancia 24

    01-06154-07    17.04.08    000724-2008-INGEMMET/PDC/PM      800   

Constancia 25

    01-06155-07    17.04.08    000717-2008-INGEMMET/PCD/PM      800   

Constancia 26

    01-06156-07    18.04.08    000874-2008-INGEMMET/PCD/PM      600   

Constancia 27

    01-06157-07    12.05.08    001421-2008-INGEMMET/PCD/PM      800   

 

16.

In addition, the Company also entered into an auction at the Ministry of Energy and Mines for 12 additional claims in 2007 and received notification in 2008 that the claims were granted to the Company. The mining applications were granted to the Company according to the following chart:

 

Concession Name    Code    Concession
Granted		    Resolution    Area (Ha)  

Constancia 5

    01-00253-07    01/03/2007    D.M. Titulado D.L. 708      1000   

Constancia 6

    01-00254-07    01/03/2007    D.M. Titulado D.L. 708      1000   

Constancia 7

    01-00255-07    01/03/2007    D.M. Titulado D.L. 708      1000   

Constancia 8

    01-00256-07    01/03/2007    D.M. Titulado D.L. 708      900   

Constancia 9

    01-00257-07    01/03/2007    D.M. Titulado D.L. 708      1000   

Constancia 10

    01-00258-07    01/03/2007    D.M. Titulado D.L. 708      100   

Constancia 11

    01-00259-07    01/03/2007    D.M. Titulado D.L. 708      1000   

Constancia 12

    01-00260-07    01/03/2007    D.M. Titulado D.L. 708      1000   

Constancia 13

    01-00261-07    01/03/2007    D.M. Titulado D.L. 708      1000   

Constancia 14

    01-00262-07    01/03/2007    D.M. Titulado D.L. 708      1000   

Constancia 15

    01-00263-07    01/03/2007    D.M. Titulado D.L. 708      1000   

Constancia 16

    01-00264-07    01/03/2007    D.M. Titulado D.L. 708      300   

INTENTIONALLY DELETED

[Private Information]

 

17.

SCHEDULE 4.27

Permits

None

 

18.

SCHEDULE 4.28

Pension and Employee Benefits

Section 4.28(a) – List of Employee Plans

 

1. Stock Option Plan of the Company, dated as of July 12, 2007, under which the Company may grant incentive stock options for the purchase of common shares of the Company to its officers, directors and consultants.

 

2. Restricted Stock Unit Incentive Plan, adopted by the board of directors of the Company on September 24, 2007 and approved by the Company’s shareholders on November 7, 2007.

 

3. Standard health, medical, dental disability, life insurance and vacation benefits are provided to all employees of the Company and its subsidiary.

Section 4.28(d)

None

 

19.

SCHEDULE 4.29

Indemnification and Insurance

Insurance policies

LOGO

 

20.

SCHEDULE 4.31(e)

Environmental Permits

Norsemont Peru S.A.C. holds an approved Environmental and Social Impact Assessment for the Constancia Project issued by Peru’s Ministry of Energy and Mines.

 

21.

SCHEDULE 4.32

Restrictive Covenants

None

 

22.

SCHEDULE 4.33

Employment Agreements and Collective Agreements

Section 4.33(a)(i)

 

1. Certain severance and termination payments, as well as certain payments in case of a change of control in the Company are due to Mr. Christopher Reynolds in accordance with the terms of Mr. Reynolds’ employment agreement with the Company.

 

2. Certain severance and termination payments, as well as certain payments in case of a change of control in the Company are due to Mr. Robert Baxter in accordance with the terms of Mr. Baxtepr’s employment agreement with the Company.

 

3. Certain severance and termination payments, as well as certain payments in case of a change of control in the Company are due to Mr. Patrick Evans in accordance with the terms of Mr. Evans’ employment agreement with the Company.

 

4. INTENTIONALLY DELETED - [Private Information]

 

5. INTENTIONALLY DELETED - [Private Information]

Section 4.33(a)(ii)

None

 

23.