Hudbay Minerals Inc. (“Hudbay” or the “company”) (TSX,
NYSE:HBM) is pleased to announce increased mineral
reserves and resources for its Lalor mine and nearby satellite
deposits, and a new mine plan that includes the processing of gold
and copper-gold ore at the company’s New Britannia mill. An updated
National Instrument (“NI”) 43-101 Technical Report for Lalor will
be filed on SEDAR by the end of the first quarter of 2019. All
amounts are in U.S. dollars, unless otherwise noted.
Summary
- Lalor annual gold production set to more than double from
current levels once the New Britannia mill is refurbished with
average annual production of approximately 140,000 ounces during
the first five years at a sustaining cash cost, net of by-product
credits, of $450 per ounce1, positioning Lalor as one of the
lowest-cost gold mines in Canada
- Gold recoveries are estimated to increase to 93% at the New
Britannia mill compared to 53% at the Stall mill
- Lalor’s reserve update increased in-situ contained gold by 65%,
copper by 23%, zinc by 11% and silver by 15%2
- Drilling defined higher quality gold zone reserve estimates
with increased gold grades
- The capital cost required to refurbish the New Britannia mill
is estimated at $95 million – a low capital-intensity, low-risk
brownfield expansion
- Lalor’s life-of-mine production increased gold by 91%, copper
by 16%, zinc by 13% and silver by 21%3
- Current reserve life of 10 years could be extended with
successful conversion of additional mineral resources at Lalor and
additional resources at Hudbay’s satellite deposits in the Snow
Lake region within trucking distance of Stall and New
Britannia
- Hudbay’s extensive land package in the Chisel Basin and around
Snow Lake provides significant additional upside for further gold
and base metals exploration
“We are pleased to demonstrate the significant
value we have unlocked so far by leveraging our exploration
expertise, our existing processing infrastructure and several
inexpensive acquisitions to develop a compelling strategy to
maximize the value of our gold mineralization at Lalor and nearby
deposits,” said Alan Hair, Hudbay’s president and chief executive
officer. “With our extensive experience operating responsibly in
Manitoba, we look forward to delivering on this strategy over the
next several years by refurbishing the New Britannia mill,
substantially increasing our gold production at low cash costs and
realizing additional value through continued exploration
success.”
Overview
Lalor was discovered in 2007 on 100% owned land
using Hudbay’s innovative exploration techniques and it is the
largest VMS deposit found in the Snow Lake region to-date. In 2009,
the company commenced construction of Lalor with initial ramp
access from the Chisel North mine. Construction of the main
production shaft was approved in 2010 and was completed on time and
on budget, achieving commercial production in 2014, a mere seven
years from initial discovery. Hudbay acquired the New Britannia
gold mill in 2015 for approximately $10 million as a potential
long-term processing option for the Lalor gold and copper-gold
zones. Since acquiring New Britannia, Hudbay has conducted
significant technical work to assess the grade, tonnage,
mineability and metallurgy of the gold and copper-gold zones at
Lalor to support and de-risk the investment required to refurbish
New Britannia and maximize the net present value of Lalor.
Most recently, Hudbay has focused on drilling
and test mining in the gold-rich Lens 25, and has confirmed the
existence of a continuous high grade core of mineralization within
the wider lower grade mineral resource estimates reported in the NI
43-101 technical report for Lalor dated March 31, 2017 (the “2017
Technical Report”) and most recently updated in Hudbay’s annual
information form dated March 29, 2018 (the “2018 AIF”). In
parallel, Hudbay has revised its geological model of the
copper-gold rich Lens 27, which better reflects the steeper
orientation of the mineralization observed during core logging.
This re-interpretation indicates there is a simpler and more
consistent mineralized envelope and, together with additional
drilling conducted in 2018, has resulted in an increase in tonnage
of this high grade mineralization.
Refurbishing New Britannia is expected to
significantly increase gold production from Lalor and enable new
gold and copper-gold exploration opportunities in the Snow Lake
region by having an operating processing facility with
substantially higher gold and copper recoveries. New Britannia was
placed on care and maintenance in 2005 by its previous owner after
producing 1.6 million ounces of gold and it demonstrates the
opportunity to create additional value through owning multiple
processing facilities in the Flin Flon and Snow Lake regions as
Hudbay pursues low-risk brownfield development opportunities.
Based on the detailed work completed in the last
12 months, Hudbay believes that the refurbishment of the New
Britannia mill, including the addition of a copper flotation
circuit, is the optimal processing solution for Lalor, as it
capitalizes on existing infrastructure, significantly grows gold
production from a deposit that is unencumbered by any royalties or
streams and offers further upside potential from nearby satellite
deposits.
The New Britannia development plan contemplates
completion of detailed engineering by February 2020, environmental
permitting completion in April 2020 and construction activities
occurring between June 2020 and August 2021, with plant
commissioning and ramp-up occurring during the fourth quarter of
2021. The estimated capital expenditures and the schedules for
completion and plant ramp-up are deemed to be low risk since this
project involves industry standard equipment and proven processing
technology in a brownfield environment. Permitting activities
started in 2018 and are proceeding in line with the development
plan.
The revised mine plan for Lalor supports a 10
year mine life, based solely on proven and probable reserves, and
utilizes the existing mining capacity of 4,500 tonnes per day at
Lalor for the first six years of the mine plan. The technical work
completed supports 4,500 tonnes per day as the optimal mining rate
to maximize net present value, although the Lalor production shaft
has the potential to hoist at higher throughput rates. The
production plan has the copper-gold rich ore feeding a refurbished
New Britannia mill starting in 2022 at an average feed rate of
1,100 tonnes per day at 6.7 g/t gold and 1.2% copper for seven
years based on the current reserve estimate. The New Britannia mill
is expected to achieve gold recoveries of approximately 93%
compared to current gold recoveries of approximately 53% at the
Stall mill. An estimated investment of $95 million (C$124 million)
will be required between 2019 and 2021 for the refurbishment of the
New Britannia mill, including the addition of a copper flotation
and dewatering circuit and a pipeline to direct the tailings to the
existing Anderson facility. Of this, approximately $10 million is
expected to be incurred in 2019 as part of Hudbay’s growth capital
expenditure plans.
Between 2019 and 2021, the Stall mill is
expected to process approximately 3,500 tonnes per day and
approximately 1,000 tonnes per day of Lalor base metal ore is
expected to be transported to the Flin Flon mill for processing.
Based on the current reserves, starting in 2022, Stall mill
throughput will gradually decrease from approximately 3,200 tonnes
per day to approximately 1,800 tonnes per day.
The updated resource model at Lalor includes 5.9
million tonnes of inferred mineral resources, which has the
potential to extend the mine life beyond 10 years while feeding
both the Stall and New Britannia mills (see Lalor Mineral Resource
Estimates table below). In addition, the mineral resources at
Hudbay’s satellite deposits in the Snow Lake region, including the
copper-gold WIM deposit acquired last year for C$0.5 million from
Alexandria Minerals Corporation, the former gold producing New
Britannia mine and the zinc-rich Pen II deposit could provide feed
for the Stall and New Britannia processing facilities and further
extend the mine life (see “Regional Exploration Potential” section
below).
Lalor Mineral Reserve and Resource
Estimate The updated estimate of mineral reserves at Lalor
has increased in-situ contained gold by 65%, copper by 23%, zinc by
11% and silver by 15%, relative to the previous estimate of mineral
reserves in Hudbay’s 2018 AIF, adjusted for 2018 production
depletion.
Lalor Mineral Reserve Estimates |
Tonnes |
Zn Grade (%) |
Au Grade (g/t) |
Cu Grade (%) |
Ag Grade (g/t) |
Base Metal Zone |
|
|
|
|
|
|
Proven |
|
5,137,000 |
7.13 |
2.37 |
0.76 |
26.31 |
Probable |
|
5,552,000 |
4.19 |
3.52 |
0.44 |
27.39 |
Gold Zone |
|
|
|
|
|
|
Proven |
|
58,000 |
2.65 |
5.46 |
0.80 |
39.09 |
Probable |
|
2,928,000 |
0.31 |
6.74 |
1.09 |
23.08 |
Total proven and probable |
|
13,675,000 |
4.46 |
3.78 |
0.70 |
26.11 |
Note:
- Totals may not add up correctly due to rounding.
- Mineral reserves are estimated as of January 1, 2019.
- Mineral reserves are estimated at a minimum NSR cut-off of
C$96.19 per tonne for waste filled mining areas and a minimum of
C$104.58 per tonne for paste filled mining areas.
- Estimates are based on the following metals price and foreign
exchange rate assumptions: zinc price of $1.17 per pound (includes
premium), copper price of $3.10 per pound, gold price of $1,260 per
ounce and silver price of $18.00 per ounce, and an exchange rate of
1.25 C$/US$.
- For further information regarding data verification, quality
assurance / quality control and risks associated with the estimate
of the mineral reserves at the Lalor mine, please refer to the 2018
AIF.
Hudbay is implementing a more stringent approach
to resource reporting for underground deposits. With this approach,
the potential for economic extraction of the mineral resource
estimates at Lalor are reported within the constraint of a ‘stope
optimization envelope’ process similar in concept to a
Lerchs-Grossman pit shell for an open pit deposit. This excludes
from the resource estimate small individual resource blocks that
may meet an economic cut-off criteria on an individual basis but
could not be aggregated into mineable shapes.
There are no measured or indicated resources
reported for Lalor in 2019. The measured and indicated resources
reported in the 2018 AIF have all been converted to mineral reserve
estimates or deemed uneconomic.
The updated estimate of inferred mineral
resources at Lalor has increased the in-situ contained gold by 21%,
copper by 51%, and silver by 21% while zinc has decreased by 17%,
relative to the 2018 AIF.
Lalor Mineral Resource Estimates (Exclusive of
Mineral Reserves) |
Tonnes |
Zn Grade (%) |
Au Grade (g/t) |
Cu Grade (%) |
Ag Grade (g/t) |
Base Metal Zone |
|
|
|
|
|
|
Inferred |
|
1,385,000 |
2.30 |
4.49 |
0.70 |
43.58 |
Gold Zone |
|
|
|
|
|
|
Inferred |
|
4,516,000 |
0.35 |
4.38 |
1.08 |
20.42 |
Total inferred |
|
5,901,000 |
0.81 |
4.41 |
0.99 |
25.85 |
Note:
- Totals may not add up correctly due to rounding.
- Mineral resources are estimated as of January 1, 2019.
- Mineral resources are estimated at a minimum NSR cut-off of
C$96.19 per tonne.
- Estimates are based on the following metals price and foreign
exchange rate assumptions: zinc price of $1.17 per pound (includes
premium), copper price of $3.10 per pound, gold price of $1,260 per
ounce and silver price of $18.00 per ounce, and an exchange rate of
1.25 C$/US$.
- Mineral resources do not include mining dilution or recovery
factors.
- Mineral resources that are not mineral reserves do not have
demonstrated economic viability.
- For further information regarding data verification, quality
assurance / quality control and risks associated with the estimate
of the mineral resources at the Lalor mine, please refer to the
2018 AIF.
Mine Plan
The revised mine plan for Lalor mineral reserves
optimizes net present value by preserving gold-rich ore for
processing at the New Britannia mill and zinc-rich ore for the
Stall mill, which is expected to result in significantly higher
gold and copper recoveries. Life-of-mine production of gold,
copper, zinc, and silver has increased by 91%, 16%, 13% and 21%,
respectively, compared to the 2017 Technical Report for the period
starting January 1, 2019.
|
2019 |
2020 |
2021 |
2022 |
2023 |
2024 |
2025 |
2026 |
2027 |
2028 |
LOM |
Base Metal Ore |
Ore
Mined |
tonnes (000s) |
1,589 |
1,481 |
1,559 |
1,135 |
1,251 |
1,144 |
894 |
612 |
667 |
512 |
10,844 |
Ore
Mined |
tpd |
4,353 |
4,057 |
4,271 |
3,110 |
3,428 |
3,134 |
2,449 |
1,677 |
1,827 |
1,403 |
- |
Cu
Grade |
% Cu |
0.63% |
0.62% |
0.64% |
0.58% |
0.51% |
0.46% |
0.51% |
0.53% |
0.56% |
0.72% |
0.58% |
Zn
Grade |
% Zn |
5.43% |
6.37% |
6.18% |
5.92% |
5.94% |
5.93% |
3.98% |
3.40% |
4.28% |
4.82% |
5.49% |
Au
Grade |
g/t Au |
2.41 |
2.12 |
2.75 |
2.35 |
2.78 |
2.50 |
4.7 |
4.69 |
4.52 |
4.66 |
3.02 |
Ag
Grade |
g/t Ag |
22.96 |
28.57 |
28.23 |
26.04 |
24.48 |
24.66 |
28.35 |
26.15 |
28.15 |
37.57 |
26.80 |
Gold Ore |
Ore
Mined |
tonnes (000s) |
- |
- |
- |
473 |
380 |
500 |
547 |
330 |
285 |
319 |
2,832 |
Ore
Mined |
tpd |
- |
- |
- |
1,295 |
1,041 |
1,370 |
1,499 |
904 |
781 |
874 |
- |
Cu
Grade |
% Cu |
- |
- |
- |
0.94% |
1.43% |
2.21% |
1.29% |
0.31% |
0.39% |
0.92% |
1.17% |
Zn
Grade |
% Zn |
- |
- |
- |
0.35% |
0.41% |
0.33% |
0.20% |
0.30% |
0.30% |
1.86% |
0.48% |
Au
Grade |
g/t Au |
- |
- |
- |
6.99 |
6.64 |
5.97 |
6.22 |
6.74 |
8.10 |
7.14 |
6.72 |
Ag
Grade |
g/t Ag |
- |
- |
- |
25.04 |
22.40 |
22.81 |
19.23 |
19.90 |
29.86 |
28.82 |
23.48 |
Total Ore |
Ore
Mined |
tonnes (000s) |
1,589 |
1,481 |
1,559 |
1,607 |
1,631 |
1,644 |
1,441 |
941 |
952 |
830 |
13,676 |
Ore
Mined |
tpd |
4,353 |
4,057 |
4,271 |
4,403 |
4,468 |
4,504 |
3,948 |
2,579 |
2,608 |
2,274 |
- |
Cu
Grade |
% Cu |
0.63% |
0.62% |
0.64% |
0.68% |
0.72% |
0.99% |
0.81% |
0.45% |
0.51% |
0.79% |
0.70% |
Zn
Grade |
% Zn |
5.43% |
6.37% |
6.18% |
4.28% |
4.65% |
4.23% |
2.54% |
2.31% |
3.09% |
3.69% |
4.46% |
Au
Grade |
g/t Au |
2.41 |
2.12 |
2.75 |
3.71 |
3.68 |
3.56 |
5.28 |
5.41 |
5.59 |
5.61 |
3.78 |
Ag
Grade |
g/t Ag |
22.96 |
28.57 |
28.23 |
25.75 |
24.00 |
24.10 |
24.89 |
23.96 |
28.66 |
34.21 |
26.11 |
Note: Tonnes per day (“tpd”) assumes 365
operating days a year.
Metallurgical Recoveries
|
LOM
Average |
Base Metal Ore Through Stall |
Recovery to Copper Concentrate |
Cu |
83.6% |
Au |
52.9% |
Ag |
53.3% |
Recovery to Zinc Concentrate |
Zn |
93.2% |
Base Metal Ore Through Flin Flon |
Recovery to Copper Concentrate |
Cu |
84.4% |
Au |
63.2% |
Ag |
53.7% |
Recovery to Zinc Concentrate |
Zn |
87.0% |
Gold Ore Through New Britannia |
Recovery to Copper Concentrate |
Cu |
93.9% |
Au |
63.1% |
Ag |
55.1% |
Recovery to Doré |
Au |
30.2% |
Ag |
22.8% |
Overall Precious Metals Recovery |
Au |
93.3% |
Ag |
77.8% |
Production Profile
Compared with the 2017 Technical Report
life-of-mine plan, with the inclusion of the New Britannia mill,
net revenue at Lalor has shifted from primarily zinc to primarily
gold in the updated production profile, positioning Lalor as a
primary gold mine with significant zinc, copper and silver
by-products. The life-of-mine net revenue from Lalor is
approximately 50% precious metals, 33% zinc and 17% copper4. Once
the New Britannia mill is operational in 2022, revenue from
precious metals through the remaining life-of-mine is expected to
be approximately 60% of total revenue. Significant zinc and copper
revenue provides diversified commodity exposure.
Contained Metal |
2019 |
2020 |
2021 |
2022 |
2023 |
2024 |
2025 |
2026 |
2027 |
2028 |
LOM |
Cu |
tonnes (000s) |
8 |
8 |
9 |
10 |
10 |
15 |
11 |
4 |
4 |
6 |
83 |
Zn |
tonnes (000s) |
79 |
88 |
89 |
63 |
70 |
64 |
32 |
18 |
26 |
23 |
552 |
Au |
ounces (000s) |
69 |
58 |
75 |
143 |
137 |
138 |
172 |
114 |
119 |
108 |
1,134 |
Ag |
ounces (000s) |
651 |
692 |
725 |
781 |
742 |
764 |
749 |
478 |
547 |
513 |
6,644 |
Note: Production includes metal contained in
concentrate and doré.
Unit Operating Costs and Cash
Costs
Unit Operating Costs |
|
LOM Average |
Mining |
C$/tonne |
$92.04 |
Milling – Stall |
C$/tonne |
$25.72 |
Milling – New Britannia |
C$/tonne |
$41.63 |
Note:
- Unit operating costs exclude general and administrative costs
related to shared services incurred in Flin Flon and allocated
between 777 and Lalor mines.
- Mining costs include costs to truck approximately 1,000 tonnes
per day from Lalor to Flin Flon until New Britannia is operating in
2022.
Lalor’s significant by-product credits reduce
its cash operating costs and sustaining cash costs on both a zinc
and gold basis. During the first five years of operation with New
Britannia (2022 to 2026), Lalor is estimated to produce
approximately 140,000 ounces of gold annually at a sustaining cash
cost, net of by-product credits, of $450/oz. This positions Lalor
to be one of the lowest cost gold mines in Canada.
Cash
Costs |
2019 |
2020 |
2021 |
2022 |
2023 |
2024 |
2025 |
2026 |
2027 |
2028 |
LOM |
Zinc
Basis |
Contained zinc |
tonnes (000s) |
79 |
88 |
89 |
63 |
70 |
64 |
32 |
18 |
26 |
23 |
552 |
Cash costs |
US$/lb |
$0.61 |
$0.73 |
$0.55 |
($0.05) |
$0.03 |
($0.18) |
($1.21) |
($0.87) |
($0.68) |
($1.08) |
$0.09 |
Sustaining cash costs |
US$/lb |
$1.04 |
$1.14 |
$0.78 |
$0.26 |
$0.22 |
($0.04) |
($0.95) |
($0.77) |
($0.67) |
($1.07) |
$0.35 |
Gold
Basis |
Contained gold |
ounces(000s) |
69 |
58 |
75 |
143 |
137 |
138 |
172 |
114 |
119 |
108 |
1,134 |
Cash costs |
US$/oz |
($672) |
($308) |
$35 |
$268 |
$211 |
$85 |
$333 |
$581 |
$448 |
$278 |
$198 |
Sustaining cash costs |
US$/oz |
$400 |
$1,051 |
$616 |
$571 |
$416 |
$229 |
$442 |
$618 |
$456 |
$279 |
$473 |
Note:
- ”LOM” refers to life-of-mine.
- Cash costs include all onsite (mining, milling and general and
administrative) and offsite costs associated with Lalor and are
reported net of by-product credits. By-product credits calculated
using the following assumptions: zinc price of $1.28 per pound in
2019, $1.27 per pound in 2020, $1.17 per pound 2021 and long-term
(includes premium); gold price of $1,250 per ounce in 2019, $1,300
per ounce in 2020 and 2021, $1,250 per ounce in 2022 and long-term;
copper price of $3.00 per pound in 2019, $3.10 per pound in 2020,
$3.20 per pound in 2021 and 2022, and $3.10 per pound long-term;
silver price of $16.50 per ounce in 2019, $18.00 per ounce in 2020
and long-term; C$/US$ exchange rate of 1.30 in 2019 and 1.25 in
2020 and long-term.
- Sustaining cash costs incorporate all costs included in cash
costs calculation plus sustaining capital expenditures.
Capital Expenditures
The growth capital estimate at New Britannia was
engineered to a pre-feasibility level by Aecom and includes a 20%
contingency. The scope of the project includes the addition of a
new flotation building, new crushers, screen deck, flotation
circuit, thickener for the copper concentrate, filter press, acid
wash vessel, reagent packages, lime silo, instrumentation systems,
transformers and an emergency generator. In addition, two new
pipelines will flow thickened tailings from New Britannia to Stall
while reclaim water and copper concentrate will flow from Stall to
New Britannia. This arrangement will facilitate environmental
monitoring, make use of the paste plant efficiently and reduce the
moisture content of the copper concentrate produced at Hudbay’s
Snow Lake operations.
The development plan contemplates detailed
engineering being completed by February 2020 and environmental
permitting being completed in April 2020 with construction
activities occurring between June 2020 and August 2021 and plant
commissioning and ramp-up occurring during the fourth quarter of
2021.
The estimated capital expenditures and the
schedules for completion and plant ramp-up are deemed to be low
risk since this project involves industry standard equipment and
proven processing technology in a brownfield environment.
Permitting activities started in 2018 and are proceeding in line
with the development plan.
Of the $95 million growth capital estimate,
approximately $10 million is expected to be incurred in 2019 as
part of Hudbay’s growth capital expenditures budget.
The total sustaining capital and growth capital
expenditures are shown below.
Capital
Expenditures |
|
2019 |
2020 |
2021 |
2022 |
2023 |
2024 |
2025 |
2026 |
2027 |
2028 |
LOM |
Sustaining Capital |
|
|
|
|
|
|
|
|
|
|
|
|
Capitalized development |
C$ millions |
$64 |
$57 |
$44 |
$33 |
$20 |
$12 |
$9 |
$5 |
$1 |
- |
$246 |
Mine equipment and buildings |
C$ millions |
$9 |
$35 |
$10 |
$11 |
$14 |
$8 |
$14 |
- |
- |
- |
$102 |
Stall equipment and buildings |
C$ millions |
$4 |
$3 |
$1 |
$1 |
$1 |
$1 |
- |
- |
- |
- |
$11 |
Shared general plant |
C$ millions |
$11 |
$3 |
- |
- |
- |
- |
- |
- |
- |
- |
$14 |
Environmental |
C$ millions |
$8 |
- |
- |
$8 |
- |
$4 |
- |
- |
- |
- |
$21 |
Total sustaining capital |
C$ millions |
$97 |
$98 |
$55 |
$54 |
$35 |
$25 |
$23 |
$5 |
$1 |
- |
$394 |
Total sustaining capital |
US$ millions |
$74 |
$76 |
$42 |
$42 |
$27 |
$19 |
$18 |
$4 |
$1 |
- |
$303 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Growth Capital |
|
|
|
|
|
|
|
|
|
|
|
|
New Britannia capital |
C$ millions |
$13 |
$69 |
$42 |
- |
- |
- |
- |
- |
- |
- |
$124 |
New Britannia capital |
US$ millions |
$10 |
$53 |
$32 |
- |
- |
- |
- |
- |
- |
- |
$95 |
Note: Totals may not add up correctly due to rounding. ”LOM”
refers to life-of-mine. Canadian dollar capital expenditures
converted to U.S. dollar capital expenditures at an exchange rate
of 1.30 C$/US$.
Regional Exploration
Potential
Hudbay has identified several satellite deposits
in the Snow Lake region that could provide additional feed for both
New Britannia and Stall.
Regional Deposits Mineral Resource
Estimates |
Tonnes (million) |
Zn Grade (%) |
Au Grade (g/t) |
Cu Grade (%) |
Ag Grade (g/t) |
Indicated Resources (Exclusive of Mineral
Reserves) |
|
|
|
|
|
WIM |
3.9 |
0.26 |
1.57 |
1.71 |
6.68 |
Pen II |
0.5 |
8.89 |
0.35 |
0.49 |
6.81 |
Total indicated |
4.4 |
1.19 |
1.44 |
1.58 |
6.69 |
Inferred Resources |
|
|
|
|
|
Lalor base metal zone |
1.4 |
2.30 |
4.49 |
0.70 |
43.58 |
Lalor copper-gold zone |
4.5 |
0.35 |
4.38 |
1.08 |
20.42 |
WIM |
0.7 |
0.37 |
1.76 |
1.03 |
4.65 |
Pen II |
0.1 |
9.81 |
0.30 |
0.37 |
6.85 |
|
Birch & 3 Zone |
1.7 |
- |
5.34 |
- |
- |
|
New Britannia |
2.8 |
- |
4.51 |
- |
- |
Total New Britannia zones |
4.4 |
- |
4.82 |
- |
- |
Total inferred |
11.2 |
0.57 |
4.35 |
0.59 |
14.01 |
Note:
- Totals may not add up correctly due to rounding.
- Mineral resources that are not mineral reserves do not have
demonstrated economic viability.
- Mineral resources in the above tables do not include mining
dilution or recovery factors.
- For further information regarding the mineral resource estimate
for the Lalor mine, please refer to the Lalor Mineral Resource
Estimates table above.
- WIM mineral resources reported based on a 1.3 CuEq% cut-off for
the underground portion, and a 0.5% cut-off for the open pit
portion, assuming processing recoveries of 90% for copper and zinc
and 70% for gold and silver, and using long-term prices of $3.00
per pound copper, $1,200 per ounce gold, $1.00 per pound zinc and
$15.00 per ounce silver. A 20m crown pillar below the open pit
bottom is excluded from resources.
- Pen II mineral resources are estimated at a minimum NSR cut-off
of C$65 per tonne and assume that the Pen II mineral resources
would be amenable to processing at the Stall mill.
- New Britannia mineral resource estimates have been reported at
a minimum true width of 1.5 metres and with a cut-off grade varying
from 2 grams per tonne (at 3 Zone and the lower part of New
Britannia) to 3.3 grams per tonne (at Birch and for the upper part
of New Britannia).
A map accompanying this announcement is available at
http://www.globenewswire.com/NewsRoom/AttachmentNg/3e65eb60-7b34-462b-8c69-94ad35c802a7
The WIM deposit was acquired by Hudbay in the
third quarter of 2018 for approximately C$0.5 million. WIM is a
copper-gold deposit that starts from surface and is located
approximately 15 kilometres by road from New Britannia. Golder
Associates was engaged by Hudbay following the acquisition to
independently validate the previous mineral resource estimates.
Golder has confirmed that WIM hosts an indicated resource of 3.9
million tonnes grading 1.7% copper, 1.6 g/t gold, 6.7 g/t silver
and 0.26% Zn plus an inferred resource of 0.7 million tonnes
grading 1.0% copper, 1.8 g/t gold, 4.7 g/t silver and 0.37% zinc.
Hudbay is developing a mine plan and conducting metallurgical
testing on the WIM deposit with the objective to upgrade the
measured and indicated resource to a mineral reserve. WIM has the
potential to be developed via an underground ramp and could feed
the New Britannia mill after the richest portions of the Lalor
reserves and resources have been depleted.
New Britannia is a former producing gold mine
that produced approximately 600,000 ounces between 1949 and 1958
and an additional 800,000 ounces between 1995 and 2005. Significant
mineral resources remain accessible at New Britannia as well as in
the nearby Birch and 3 Zone with some investment in the existing
mining infrastructure. WSP was engaged in 2018 to audit and restate
the historical resource estimates previously reported for these
deposits. Based on this recent work, WSP has re-estimated a
combined inferred resource of 4.4 million tonnes grading 4.8 g/t
gold. Hudbay plans to initiate technical studies in the second half
of 2019 to determine the technical and economic viability of the
existing mineral resources and the potential to process this
material at the New Britannia mill.
Pen II is a low tonnage and high-grade zinc
deposit that starts from surface and is located approximately six
kilometres by road from the Stall mill. Based on recent infill
drilling, Hudbay has updated the resource model in 2018 to reflect
of 0.5 million tonnes of indicated resources at 8.9% Zn, 0.5% Cu,
0.4g/t Au and 6.8 g/t Ag and of 0.1 million tonnes of inferred
resources at 9.8% Zn, 0.4% Cu, 0.3 g/t Au and 6.9 g/t Ag. Pen II
could constitute a supplemental source of feed for the Stall mill.
In 2019, Hudbay will continue metallurgical testing, infill
drilling on the inferred resource estimates and technical studies
in an attempt to confirm the technical and economic viability of
the mineral resource estimates.
Next Steps
In 2018, Hudbay spent C$14 million on major
airborne and ground geophysical surveys as well as on surface
exploration drilling in the Flin Flon and Snow Lake areas. This
work was instrumental in identifying several base metal and gold
targets that are to be tested in 2019 with a comparable exploration
budget. In parallel, the company plans to spend approximately C$4
million on in-mine exploration at Lalor with the intent to convert
inferred resources to indicated mineral resources and add
additional inferred mineral resources in base metal and gold-rich
mineralization. Hudbay will continue to advance engineering
studies on Lalor and its satellite deposits in an attempt to
continue to increase the tonnage of the mineral reserve estimates
and the estimated operating life of the Snow Lake processing
facilities at or near full capacity.
Qualified Person
The technical and scientific information
contained in this news release that is related to the estimate of
mineral reserves and resources at Lalor and the Lalor life of mine
plan has been approved by Olivier Tavchandjian, P. Geo, Hudbay’s
Vice President, Exploration and Geology. Mr. Tavchandjian is a
qualified person pursuant to NI 43-101.
A detailed description of the key assumptions,
parameters and methods used to estimate the mineral reserves and
resources disclosed in this news release, as well as data
verification procedures and a general discussion of the extent to
which the estimates of scientific and technical information may be
affected by any known environmental, permitting, legal title,
taxation, sociopolitical, marketing or other relevant factors, will
be provided by the end of the first quarter of 2019 in a NI 43-101
technical report to be filed by Hudbay on SEDAR at
www.sedar.com.
The inferred mineral resources referenced in
this news release are considered too speculative geologically to
have the economic considerations applied to them to enable them to
be categorized as mineral reserves and are therefore not included
in the mine plan. It cannot be assumed that the inferred mineral
resources will be successfully converted to mineral reserves
through further drilling.
Forward-Looking
Information
This news release contains forward-looking information within the
meaning of applicable Canadian and United States securities
legislation. All information contained in this news release, other
than statements of current and historical fact, is forward-looking
information. Often, but not always, forward-looking information can
be identified by the use of words such as “plans”, “expects”,
“budget”, “guidance”, “scheduled”, “estimates”, “forecasts”,
“strategy”, “target”, “intends”, “objective”, “goal”,
“understands”, “anticipates” and “believes” (and variations of
these or similar words) and statements that certain actions, events
or results “may”, “could”, “would”, “should”, “might” “occur” or
“be achieved” or “will be taken” (and variations of these or
similar expressions). All of the forward-looking information in
this news release is qualified by this cautionary note.
Forward-looking information includes, but is not
limited to, the anticipated Lalor mine plan, including assumptions
as to the recoveries, production profile, costs and expansion
potential, the expected benefits of refurbishing the New Britannia
mill, the expected capital investment required to refurbish the New
Britannia mill and implement the Lalor mine plan, expectations
regarding Hudbay’s ability to covert inferred mineral resources at
Lalor and the nearby satellite deposits into higher confidence
categories and bring them into the mine plan, expectations
regarding the schedule for processing ore at the New Britannia
mill, anticipated exploration and development plans for the Snow
Lake region, including the strategy for further technical and
economic studies on the satellite deposits, the possibility of
developing a sustainable, low-cost gold business in Manitoba,
anticipated metals prices and the anticipated sensitivity of the
company’s financial performance to metals prices, estimation of
mineral reserves and resources, mine life projections and
sustaining capital and reclamation costs. Forward-looking
information is not, and cannot be, a guarantee of future results or
events. Forward-looking information is based on, among other
things, opinions, assumptions, estimates and analyses that, while
considered reasonable by the company at the date the
forward-looking information is provided, inherently are subject to
significant risks, uncertainties, contingencies and other factors
that may cause actual results and events to be materially different
from those expressed or implied by the forward-looking
information.
The material factors or assumptions that Hudbay
identified and were applied by the company in drawing conclusions
or making forecasts or projections set out in the forward-looking
information include, but are not limited to:
- the schedule for the refurbishment of the New Britannia mill
and the success of the company’s Lalor gold strategy;
- the success of mining, processing, exploration and development
activities at Lalor;
- the scheduled maintenance and availability of the Stall and New
Britannia processing facilities;
- the accuracy of geological, mining and metallurgical
estimates;
- anticipated metals prices and the costs of production;
- the supply and demand for metals the company produces;
- the supply and availability of all forms of energy and fuels at
reasonable prices;
- no significant unanticipated operational or technical
difficulties;
- the execution of Hudbay’s business and growth strategies,
including the success of its strategic investments and
initiatives;
- the availability of additional financing, if needed;
- the ability to complete project targets on time and on budget
and other events that may affect the company’s ability to implement
the Lalor life-of-mine plan;
- the timing and receipt of various regulatory and governmental
approvals;
- the availability of skilled personnel for Lalor’s ongoing
operations and the gold development project;
- ongoing employee and union relations;
- maintaining good relations with the communities in which the
company operates, including the First Nations communities
surrounding the Lalor mine;
- no significant unanticipated challenges with stakeholders at
the company’s Manitoba business unit;
- no significant unanticipated events or changes relating to
regulatory, environmental, health and safety matters;
- no contests over title to the company’s properties, including
as a result of rights or claimed rights of aboriginal peoples;
- no significant unanticipated litigation; and
- no significant and continuing adverse changes in general
economic conditions or conditions in the financial markets
(including commodity prices and foreign exchange rates).
The risks, uncertainties, contingencies and
other factors that may cause actual results to differ materially
from those expressed or implied by the forward-looking information
may include, but are not limited to, risks generally associated
with the mining industry, such as economic factors (including
future commodity prices, currency fluctuations, energy prices and
general cost escalation), uncertainties related to the development
and operation of the Lalor mine, risks related to the new Lalor
mine plan, including the schedule for the refurbishment of the New
Britannia mill and the ability to convert inferred mineral resource
estimates to higher confidence categories, dependence on key
personnel and employee and union relations, risks in respect of
aboriginal and community relations, rights and title claims,
operational risks and hazards, including unanticipated
environmental, industrial and geological events and developments
and the inability to insure against all risks, failure of plant,
equipment, processes, transportation and other infrastructure to
operate as anticipated, compliance with government and
environmental regulations, including permitting requirements and
anti-bribery legislation, depletion of the company’s reserves,
volatile financial markets that may affect the company’s ability to
obtain additional financing on acceptable terms, the failure to
obtain required approvals or clearances from government authorities
on a timely basis, uncertainties related to the geology,
continuity, grade and estimates of mineral reserves and resources,
and the potential for variations in grade and recovery rates,
uncertain costs of reclamation activities, the company’s ability to
abide by the covenants in its debt instruments and other material
contracts, tax refunds, hedging transactions, as well as the risks
discussed under the heading “Risk Factors” in Hudbay’s most recent
Annual Information Form.
Should one or more risk, uncertainty,
contingency or other factor materialize or should any factor or
assumption prove incorrect, actual results could vary materially
from those expressed or implied in the forward-looking information.
Accordingly, you should not place undue reliance on forward-looking
information. Hudbay does not assume any obligation to update or
revise any forward-looking information after the date of this news
release or to explain any material difference between subsequent
actual events and any forward-looking information, except as
required by applicable law.
Note to United States Investors
This news release has been prepared in
accordance with the requirements of the securities laws in effect
in Canada, which may differ materially from the requirements of
United States securities laws applicable to U.S. issuers.
About Hudbay
Hudbay (TSX, NYSE: HBM) is an integrated mining
company primarily producing copper concentrate (containing copper,
gold and silver), molybdenum concentrate and zinc metal. With
assets in North and South America, the company is focused on the
discovery, production and marketing of base and precious metals.
Directly and through its subsidiaries, Hudbay owns three
polymetallic mines, four ore concentrators and a zinc production
facility in northern Manitoba and Saskatchewan (Canada) and Cusco
(Peru), and copper projects in Arizona and Nevada (United States).
The company’s growth strategy is focused on the exploration and
development of properties it already controls, as well as other
mineral assets it may acquire that fit its strategic criteria.
Hudbay’s vision is to be a responsible, top-tier operator of
long-life, low-cost mines in the Americas. Hudbay’s mission is to
create sustainable value through the acquisition, development and
operation of high-quality, long-life deposits with exploration
potential in jurisdictions that support responsible mining, and to
see the regions and communities in which the company operates
benefit from its presence. The company is governed by the Canada
Business Corporations Act and its shares are listed under the
symbol "HBM" on the Toronto Stock Exchange, New York Stock Exchange
and Bolsa de Valores de Lima. Further information about Hudbay can
be found on www.hudbay.com.
For further information, please contact:
Candace BrûléDirector, Investor Relations(416)
814-4387candace.brule@hudbay.com
________________________
1 Sustaining cash cost per ounce of gold
produced, net of by-product credits, is a non-IFRS financial
performance measure with no standardized definition under IFRS.
All-in sustaining cash cost includes all operating and sustaining
capital costs, including mining, milling and G&A, associated
with Lalor gold production and is reported net of by-product
credits. By-product credits are based on the following assumptions:
zinc price of $1.28 per pound in 2019, $1.27 per pound in 2020,
$1.17 per pound 2021 and long-term (includes premium); copper price
of $3.00 per pound in 2019, $3.10 per pound in 2020, $3.20 per
pound in 2021 and 2022, and $3.10 per pound long-term; silver price
of $16.50 per ounce in 2019, $18.00 per ounce in 2020 and
long-term; C$/US$ exchange rate of 1.30 in 2019 and 1.25 in 2020
and long-term.
2 Increase in in-situ contained metal in
estimated reserves compared to the previous estimate of mineral
reserves in Hudbay’s annual information form dated March 28, 2018,
adjusted for 2018 production depletion.
3 Increase in life-of-mine contained metal in
concentrate and gold doré produced compared to the 2017 Technical
Report for the period starting January 1, 2019.
4 Net revenue calculated net of zinc refining
and using the following assumptions: zinc price of $1.28 per pound
in 2019, $1.27 per pound in 2020, $1.17 per pound 2021 and
long-term (includes premium); gold price of $1,250 per ounce in
2019, $1,300 per ounce in 2020 and 2021, $1,250 per ounce in 2022
and long-term; copper price of $3.00 per pound in 2019, $3.10 per
pound in 2020, $3.20 per pound in 2021 and 2022, and $3.10 per
pound long-term; silver price of $16.50 per ounce in 2019, $18.00
per ounce in 2020 and long-term; C$/US$ exchange rate of 1.30 in
2019 and 1.25 in 2020 and long-term.
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