Waterton threatens Hudbay’s positive momentum and the value of your investment. Waterton is seeking to control Hudbay by replacing the Chair, CEO and 80% of the Board – an unwarranted change that would damage Hudbay’s positive momentum and threaten the value of your investment. Shareholders should be concerned that Waterton may be putting its own interests ahead of those of other shareholders.


Waterton claims it has mining expertise but it has never built a mine and has limited operating history. Waterton’s track record is one of value destruction. In many cases, Waterton ultimately acquired the primary assets of the company in which it invested via bankruptcy proceedings.

In one current and concerning example, Gryphon Gold, a now bankrupt mine operator, has alleged that Waterton engaged in fraud and intentional misrepresentation:

“The Defendants [Waterton] engaged in a predatory scheme to divest Gryphon and its shareholders of the entirety of the value of the [Borealis] Mine by virtue of the Debt-For-Equity Swap, installing officers and directors at Gryphon whom would assist with their efforts.

[Waterton]’s loans to Gryphon were purposely structured to lead to an immediate default, whereby Waterton would take over control of the [Borealis] Mine, and once such control was secured, Waterton engaged in a systematic ploy to (i) divert valuable gold/silver-laded carbon to a holding pond during Gryphon’s bankruptcy and to (ii) purposely undermine and prevent the Mine’s ability to extract gold and derive profits to the detriment of Gryphon and its shareholders.” 

  • Complaint filed by Gryphon Gold Corporation against Waterton Global Resource Management Inc. in the second judicial district courtof the state of Nevada


Hudbay’s good faith efforts to constructively engage with Waterton have been met with changing demands and increasing hostility from a first time activist shareholder that has repeatedly withheld or manipulated information. Shareholders should be concerned that, time and again, Waterton has failed to act in good faith:

  • August 31, 2018 - Waterton has an initial meeting with CEO Alan Hair and claims it is not a shareholder. Public filings later disclose that Waterton owned 4.1% of Hudbay at the time;


  • October 4, 2018 – Waterton calls for an acquisition moratorium – a highly unusual approach to corporate governance that fundamentally undermines one of the central stewardship responsibilities of the Board. Chair Alan Hibben contacts Waterton by phone, attempting to address their concerns and agrees to further discussions;


  • October 16, 2018 – Chair Alan Hibben again contacts Waterton by phone, attempting to address its concerns. One day later (October 17), Waterton makes misleading comments about the prior day’s private discussion;


  • October 19-23, 2018 – Despite Hudbay’s efforts to address Waterton’s concerns constructively, Waterton announces its intention to call a special meeting to consider a non-binding resolution in respect of potential acquisitions and submits a formal meeting requisition on October 23;
  • November 1, 2018 – Chair Alan Hibben and another independent director meet with Waterton. Waterton indicates it is now focused on changing the Board. Mr. Hibben invites Waterton to submit a term sheet summarizing its requests;

  • November 4, 2018 – Waterton delivers a term sheet in which it demands to have three of its unidentified nominees plus an additional independent director acceptable to Waterton appointed to the Board. Waterton also demands that a Waterton employee be given access to Hudbay’s confidential information and participate in Board discussions as a “Board Observer”;

  • November 7 & 12, 2018 – In good faith, the Board sends Waterton two letters and repeatedly invites it to share names of director candidates it thinks could add value. Waterton refuses to engage and chooses to escalate to a proxy contest;

  • December 13, 2018 – Waterton announces intention to replace 80% of the Board, including the Chair and CEO, changing its demands from acquisition moratorium to a highly disruptive wholesale change of the Board and management;

  • January 16, 2019 – Waterton announces its slate of nominees, resorting to smear tactics in an attempt to discredit Hudbay’s highly-qualified Board and management team;

  • February 19, 2019 – Waterton releases a presentation – again escalating its rhetoric but essentially endorsing Hudbay’s existing strategic plan; and

  • March and early April, 2019 – Waterton rebuffs multiple attempts to reach a reasonable settlement and insists on proceeding with an unnecessary, costly and distracting proxy contest.


The Board attempted to negotiate in good faith with Waterton as far back as November 2018. The result of this engagement was a term sheet from Waterton with a demand for disproportionate Board representation and special rights that no other shareholder would have.

In particular, Waterton demanded unique access to confidential information in the form of a Board Observer – a Waterton employee who would be entitled to attend all Board and committee meetings and receive all confidential materials that go to the Board, as well as all written communications between management and members of the Board.

Waterton Refused to Engage with Hudbay’s Board

Despite Waterton’s ill-advised request for an acquisition moratorium and outrageous Board Observer demand, the Board repeatedly asked Waterton to share the names of director candidates it thought could add value. Waterton refused to engage and chose to escalate to a proxy contest. At the time, the activism research service 13D Monitor noted that Waterton’s approach to negotiations was unreasonable.

“Waterton previously wanted to settle the terms and conditions of a settlement before even disclosing the identities of its potential director nominees. Clearly, the identities of potential nominees is paramount in deciding the terms of a settlement…Experienced activists place great value on transparency, something that Waterton appears to be significantly lacking.”

Misleading TSR “Analysis”

Waterton issued an investor presentation in February. At the beginning of its document, Waterton highlights that it “spent millions of dollars performing exhaustive research on the company’s leadership, strategy and portfolio.” The result of this effort is a 74-page document that is long on general rhetoric and short on specifics.

Instead, Waterton’s presentation relies heavily on TSR data that it has clearly manipulated to support its criticisms of Hudbay. In particular:

  • In its “analysis” of Hudbay’s TSR, Waterton selected an artificial end date of October 4, 2018. This date, conveniently for Waterton, preceded Hudbay meeting a number of key operational and development milestones. As shareholders know, achieving these milestones has driven significant gains in Hudbay’s share price since then; and
  • Waterton also created its own “peer group” for Hudbay, which includes companies that are far larger or which operate in different jurisdictions and with different metals. This transparent attempt to create a false narrative was not lost on some stakeholders and sell-side analysts.

“We find this [Waterton’s chosen peer group] aggressive. The chosen peer group includes a number of companies that we would question as direct comparable to Hudbay…”

Waterton is Not Like Other Shareholders

By now, it should be clear that Waterton is different from other shareholders. Waterton is a mining private equity fund that competes with Hudbay for assets. In the past, Waterton expressed interest in acquiring assets – including a stake in Rosemont, Ann Mason and Lordsburg – that are now owned by Hudbay. Waterton has not provided any information regarding its intentions with respect to those assets if it obtains majority control of the Board.

In addition, Waterton continues to demand substantial change to Hudbay’s Board and management team. Why would it want to disrupt Hudbay’s positive momentum… unless it has another agenda it hasn’t revealed?


Despite the “millions of dollars” Waterton claims to have spent analyzing Hudbay, Waterton has failed to present any meaningful suggestions on how Hudbay should operate any differently than it does so today. In fact, Waterton’s February presentation includes the key milestones it suggests Hudbay should pursue in respect of Rosemont, Constancia and Lalor – all of which Hudbay has since accomplished or is on track to complete. This recycling of Hudbay’s existing milestones is, as far as we can tell, as close as Waterton comes to articulating a strategic plan for the company.

“Waterton outlines what we would call a very high-level plan for Hudbay…the plan contains few specifics…”


Waterton’s slate does not have the experience or skills required to make a positive contribution to the Board and in fact, there are material concerns with the suitability of a number of Waterton’s nominees to act as directors of your company:

  • Three of Waterton’s nominees have zero independent public company board experience;
  • Waterton’s proposed Board Chair has never served as an independent director on a public company board, let alone as Chair; and
  • Waterton’s proposed Chief Executive Officer has just over one year of public company CEO experience.

Richard Nesbitt (Proposed Chair)

x No independent public Board experience
x No mining experience
x Waterton has not disclosed Isser Elishis’ (Waterton’s Managing Partner) connection as Richard Nesbitt’s former colleague
x In 2015, shareholders at CIBC voted down Nesbitt’s excessive compensation package that allowed Nesbitt and the former CEO to collect a total of over $25 million despite being replaced

Mr. Nesbitt is best known for his time at CIBC. What is less known – and what Waterton failed to disclose – is that Isser Elishis, Waterton’s Managing Partner, Chief Investment Officer and leader of its proxy fight, was in a reporting relationship with Mr. Nesbitt at HSBC Canada. Now Mr. Elishis would like to place his former colleague at the head of Hudbay’s Board of Directors as its “independent” Chair.

While Waterton’s self-interested actions are well documented, Mr. Nesbitt is also associated with similar concerns. CIBC shareholders in 2015, which would have allowed Mr. Nesbitt and CIBC’s former CEO to collect over $25 million in compensation, despite being replaced. Hudbay shareholders expect its Board of Directors to put shareholder interests first and to refrain from attempting to extract excessive compensation from the company.

Peter Kukielski

Mr. Kukielski, Waterton’s suggestion for Chief Executive Officer, has repeatedly failed in leadership roles and as a mining operator:

x Less than one year of CEO experience at Nevsun prior to receiving an unsolicited take-over bid for the company

x During his tenure as Executive Vice-President and Chief Operating Officer at Teck Resources, capital costs more than doubled (plus $3bln) at Teck’s Galore Creek project, leading to a suspension of construction activities only six months after Teck acquired the asset
x Capital costs more than doubled (plus $2bln) at Petaquilla (Cobre Panama) as well
    x Teck announced Peter Kukielski’s resignation the following day
x Anemka Resources failed to acquire assets under his leadership as CEO during a period of distressed asset sales
x Peter Kukielski has limited experience on public boards and was by serving as a director of South32 while competing for assets at Anemka

“We believe that [Teck] management has taken a SEVERE CREDIBILITY HIT after agreeing to enter into (Galore Creek) just six months ago” (Emphasis added)

Unfortunately, it was more of the same during Mr. Kukielski’s short tenure as CEO of Nevsun, as that company consistently failed to meet guidance under his leadership. To the extent value was created at Nevsun under Mr. Kukielski’s watch, this was largely a function of Mr. Kukielski being in the right place at the right time when an unsoliticed offer was made for the company.


Ernesto Balarezo

Waterton promotes Mr. Balarezo’s South American experience and his ability to secure stakeholder buy-in. Unfortunately, Mr. Balarezo has a track record of failure in this regard. Mr. Balarezo was the General Manager of Hochschild Mining’s Peruvian mines in 2009, when all four of its mines faced employee protests.

Months later, Hochschild Mining requested the assistance of the Peruvian government to remove protestors from one of its exploration projects.

Also extremely concerning is Mr. Balarezo’s safety track record. Under Mr. Balarezo’s watch, there were 14 fatalities at Hochschild Mining & Gold Fields La Cima, 13 violations at the Ares mine and another 5 violations at Gold Fields La Cima which incurred fines.

Mr. Balarezo’s track record is inconsistent with the high ESG standards of Hudbay and its director nominees and suggests that not only is he is not a suitable candidate to join your Board of Directors, but Hudbay’s association with his ESG performance history could significantly damage the positive community relationships we have carefully established over years of stakeholder engagement.

Daniel Muñiz Quintanilla

Mr. Muñiz Quintanilla’s “Peruvian/South American expertise” brings with it a history of fatalities and work stoppages.

Southern Copper

Mr. Muñiz Quintanilla was a Director at Southern Copper when protests against Southern Copper resulted in four fatalities. The company has faced continued opposition to its Tia Maria project and failed to obtain social licence for the project.

“[Southern Copper] is involved in sever ESG controversies. A mining accident in 2006 that led to the death of 65 workers has resulted in long-running strikes at three of its other mines in Mexico. The company has faced continued community opposition to the proposed Tia Maria mine expansion in Peru due to concerns over environmental contamination. Residents have also protested the amount and distribution of royalties at [the Cuajone and Toquepala] mines in Peru. Further, the company has faced fines and investigations stemming from a chemical spill at its Buenavista mine in Mexico [totaling USD 15.3 million].”

It should not be surprising that ISS has recommended that shareholders WITHHOLD from voting for Mr. Muñiz Quintanilla at Southern Copper for 10 consecutive years – from 2008 through 2017.

Grupo Mexico

Mr. Muñiz Quintanilla was also the Chief Financial Officer at Grupo Mexico, which has also suffered from a high rate of
lost time incidents. During Mr. Muñiz tenure, there were 36 fatalities at Southern Copper and Grupo Mexico.

Hudbay takes great pride in its environmental, social and governance track record. Mr. Muñiz Quintanilla’s track record in this regard is inconsistent with that of Hudbay and its director nominees, and could damage our positive community relationships by association if elected to a leadership role with Hudbay.

David Deisley

David Deisley has limited public board experience, having only served on the board of a small-cap company with a market cap of US$33 million. Mr. Deisley would not provide a complementary skillset to Hudbay’s nominee directors.

Emily Moore

To Hudbay’s knowledge, Ms. Moore has never served as a director of a public company. Ms. Moore has limited experience and would not provide a complementary skillset to Hudbay’s nominee directors.


x Waterton is a 12% shareholder that is proposing to replace 80% of the Board

x Waterton has provided no alternative strategic plan

x Waterton’s proposed Chair and CEO do not have the experience, expertise or track record to deliver long-term shareholder value


x Waterton’s Slate has limited independent board experience

x Waterton’s Slate has an alarming environmental and social track record that may negatively impact Hudbay’s community relations

x Waterton’s Slate has jeopardized its credibility and independence by endorsing Waterton’s flawed analysis and lack of alternative strategic plan

Do not jeopardize the value of your investment in Hudbay. Vote only the GREEN proxy for Hudbay’s director nominees.

Investor Inquiries

Laurel Hill 
North America: 1-877-452-7184
Other: +1-416-304-0211

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