TORONTO (Reuters) - Hudbay Minerals (HBM.TO) shares plunged more than 20% on Thursday after a court ruling barred the company from proceeding with construction at one of its biggest copper projects in the U.S.
The U.S. District Court for Arizona on Wednesday challenged the U.S. Forest Service’s June 2017 decision that enabled the company to advance its plans for its Rosemont project.
Hudbay shares sank 18.4% in morning trading, after earlier falling as much as 24.8% to C$5.08 in Toronto. The company said on Thursday it plans to appeal the ruling.
“We are extremely disappointed with the Court’s decision. We strongly believe that the project conforms to federal laws and regulations that have been in place for decades,” Hudbay’s interim Chief Executive Officer Peter Kukielski said in a statement.
Following the 2017 decision, Hudbay received a water permit and approval of its mine plan for Rosemont in March, allowing it to move forward with development. The company had planned to begin construction of Rosemont by the end of this year, paving the way for first production from the mine by the end of 2022.
Those plans led opponents, including local tribes and environmental groups to turn to the courts to prevent Hudbay from starting work on the project, saying it would cause “irreparable harm” to the area, the Arizona Daily Star reported in May.
“We caution investors of near-term turbulence given today’s Rosemont news in addition to the Company’s recent Management change,” analysts at Credit Suisse wrote in a note. “Finding a joint venture partner at this time to de-risk the Rosemont project will likely be delayed as well.”
Bloomberg reported in May that Hudbay was preparing to sell a 30% stake in the project.
Hudbay said last month CEO Alan Hair had stepped down, with recently elected board director Kukielski taking over as his temporary replacement.
Kukielski, backed by private equity firm Waterton Global Resource Management, was elected to the board following the settlement of a protracted proxy fight between Hudbay and the activist investor, who had demanded changes to the company’s board and management.
Reporting By Nichola Saminather; Editing by Bernadette Baum and Susan Thomas