Hudbay's Constancia copper mine in Peru. Courtesy of Hudbay Minerals

Resource investment firm Waterton Global Resource Management is not happy with the direction the Canadian miner Hudbay Minerals has taken and is calling for a special meeting of Hudbay’s shareholders to rally them against the miner’s acquisition plans.

Hudbay said on Tuesday it had received Waterton’s request and “will review the requisition and respond in due course.”

The conflict between the two became public on Oct. 5, when Waterton issued a press release with a letter from Waterton CIO Isser Elishis demanding an “acquisition moratorium” until Hudbay’s 2019 annual meeting. At the time the private equity firm had a 4.8 per cent stake in Hudbay. In the release, Waterton claimed that members of its investment team had met with Hudbay CEO Alan Hair and vice president of corporate development Eugene Lei at the end of August. At that meeting, Waterton said it had been assured that Hudbay was not looking to purchase any new assets.

The day before, however, a report from Bloomberg stated that Hudbay was in talks to purchase Mantos Copper, a Chilean mining company, for approximately $1 billion.

In response to the Bloomberg report, Hudbay said it would not comment on rumors but that it has a “consistent strategy of optimizing the value of its current operations and evaluating growth opportunities that are complementary to its current business,” and that it “continues to adhere to this strategy.”

On the news, the company’s share price, which has been in decline since January continued to slide and closed the following day 10 per cent down.

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Waterton followed up last week with another letter from Elishis admonishing Hudbay’s board of directors for seeking to purchase more assets in a “destructive empire building exercise or perhaps more nefariously” as a plan to entrench its members’ positions on the board. Waterton cites the board’s collective 0.12 per cent ownership of the company, in comparison to the firm’s now 7 per cent stake, as evidence that they are disconnected from the company’s performance.

“The Hudbay management team is failing on multiple fronts, including by missing the Street's earnings consensus, missing its own operational costs guidance, missing its own permitting guidance, failing to secure critical land rights and failing to provide cogent, and sensible, strategic plans for key assets,” Elishis wrote. Because of these supposed failings, Waterton has argued the company would be negotiating the new acquisition from a place of weakness and its efforts would be better devoted to developing its existing assets, particularly its Rosemont project in Arizona, which will need to be financed before it can be built.

 “The current Board and management are making a mess out of a portfolio of world class assets.” Waterton said that Hudbay had refused its request for a moratorium, and that it was only willing to hold a meeting with Waterton to discuss the moratorium and a possible change in the board of directors in November, a condition that Elishis referred to as “categorically unacceptable.”

When reached for comment, Hudbay corporate communications director Scott Brubacher said Waterton has only been an investor in Hudbay for a short time. He said representatives from the equity firm had only met or spoken with Hudbay twice before sending its initial press release, and that Waterton has been quick to run to the press with its concerns.

“Hudbay’s Board Chair invited the shareholder to meet with him and other Directors on November 1st or November 2nd, following the release of Hudbay’s third quarter results on October 31. The shareholder responded with the press release,” Brubacher wrote. “Hudbay appreciates the investments its shareholders have made and is committed to creating and growing sustainable value.”

On Tuesday, Hudbay said that despite Waterton’s protests, its representatives had agreed to a Nov. 1 meeting. The company said it is “disappointed with [Waterton’s] abrupt decision to initiate what could be an expensive and distracting proxy contest to reiterate the views that it has already clearly communicated publicly and to the board.”

Waterton did not immediately respond to requests for comment.