Hudbay Minerals Inc. (“Hudbay” or the “company”) (TSX,
NYSE:HBM) today released its annual mineral reserve and
resource update. All amounts are in U.S. dollars, unless otherwise
noted.
“We have continued to grow our copper and gold
mineral reserves and resources through successful exploration in
Peru, Snow Lake and Arizona,” said Peter Kukielski, Hudbay’s
President and Chief Executive Officer. “While we already have a
solid production growth profile for many years to come, our
exploration efforts over the past year have been successful in
replacing what we have mined, adding reserves to our life of mine
plans and expanding our resource base to position us for additional
long-term reserves growth. This is another example of our proven
track record of delivering value through exploration, and we look
forward to continuing to advance our leading organic pipeline of
copper exploration and development assets for the next stage of
growth at Hudbay.”
Constancia Operations
Mine planning gains and economic re-evaluations
have resulted in additional mineral reserves at Constancia which
have largely offset 2021 mining depletion. Current mineral reserve
estimates at Constancia total 521 million tonnes at 0.31% copper
with over 1.6 million tonnes in contained copper. As a result,
Constancia’s expected mine life has been extended one year to 2038.
The copper contained in inferred mineral resources has also
increased in 2022 due to the inclusion of the Constancia Norte
underground mineral resource estimates.
In 2021, Hudbay completed a positive scoping
study which resulted in an inferred mineral resource estimate of
6.5 million tonnes at 1.2% copper in two high grade skarn lenses
located below the open pit in the Constancia Norte area. The study
concluded these two lenses could be mined by underground methods
starting in 2029 to supplement the open pit production. Please
refer to Figure 1 for a cross-section of the conceptual underground
mine design at Constancia Norte. The company intends to conduct
infill drilling and an internal pre-feasibility study in hopes of
converting the underground mineral resources to mineral reserves
for inclusion in the mine plan for the Constancia operations.
Hudbay released an updated mine plan for
Constancia in 2021 that reflected an increase in copper and gold
production from 2022 to 2025 as the higher grades from the
Pampacancha deposit enter the mine plan. The updated mine plan
incorporates higher-grade reserves including the Constancia Norte
pit extension. With the incorporation of Pampacancha and the
Constancia Norte pit extension, annual production at Constancia is
expected to average approximately 105,000 tonnes of copper and
60,000 ounces of gold over the next seven years, an increase of
approximately 35% and 20%, respectively, from 2021 levels.
Current mineral reserves and resources
(exclusive of reserves) for Constancia and Pampacancha as of
January 1, 2022 are summarized below.
Constancia OperationsMineral Reserve and
Resource
Estimates1,2,3,4,5 |
Tonnes |
Cu Grade(%) |
Mo Grade(g/t) |
Au Grade(g/t) |
Ag Grade(g/t) |
Constancia Reserves |
|
|
Proven |
|
426,200,000 |
0.29 |
82 |
0.042 |
2.90 |
Probable |
|
56,800,000 |
0.24 |
69 |
0.043 |
3.06 |
Total Proven and Probable - Constancia |
|
483,000,000 |
0.28 |
80 |
0.042 |
2.92 |
Pampacancha Reserves |
|
|
Proven |
|
36,400,000 |
0.65 |
177 |
0.368 |
5.26 |
Probable |
|
1,600,000 |
0.52 |
234 |
0.259 |
6.33 |
Total Proven and Probable - Pampacancha |
|
38,000,000 |
0.65 |
179 |
0.364 |
5.30 |
Total Proven and Probable |
|
521,000,000 |
0.31 |
87 |
0.065 |
3.09 |
Constancia Resources |
|
|
Measured |
|
123,800,000 |
0.22 |
64 |
0.038 |
2.07 |
Indicated |
|
118,200,000 |
0.22 |
65 |
0.037 |
2.08 |
Inferred – Open Pit |
|
51,000,000 |
0.30 |
77 |
0.054 |
2.69 |
Inferred – Underground |
|
6,490,000 |
1.20 |
69 |
0.137 |
8.62 |
Pampacancha Resources |
|
|
Measured |
|
9,200,000 |
0.37 |
63 |
0.293 |
5.71 |
Indicated |
|
1,500,000 |
0.39 |
152 |
0.223 |
6.63 |
Inferred |
|
6,800,000 |
0.33 |
102 |
0.286 |
5.01 |
Total Measured and Indicated |
|
252,700,000 |
0.23 |
65 |
0.048 |
2.23 |
Total Inferred |
|
64,300,000 |
0.40 |
79 |
0.087 |
3.53 |
Note: totals may not add up correctly due to
rounding.1 Mineral resources are exclusive of mineral reserves
and do not have demonstrated economic viability.2 Mineral
resources do not include factors for mining recovery or
dilution.3 The open pit mineral reserves and resources are
estimated using a minimum NSR cut-off of $6.40 per tonne and
assuming metallurgical recoveries (applied by ore type) of 86% for
copper on average for the life of mine, while the underground
inferred resources at Constancia Norte are based on a 0.65% copper
cut-off grade.4 Long-term metal prices of $3.45 per pound
copper, $11.00 per pound molybdenum, $1,500 per ounce gold, and
$20.00 per ounce silver were used to estimate mineral reserves and
resources.5 Mineral resources are based on resource pit
designs containing measured, indicated, and inferred mineral
resources.
Peru Regional Exploration
Hudbay controls a large, contiguous block of
mineral rights with the potential to hold mineable deposits within
trucking distance of the Constancia processing facility, including
the past producing Caballito property and the highly prospective
Maria Reyna and Kusiorcco properties. Exploration agreement
discussions with the communities of Uchucarcco and Anahuichi on the
Maria Reyna, Kusiorcco and Caballito properties are in
progress.
Drilling continues at the Llaguen copper
porphyry target in northern Peru with a total of 9,250 metres in 21
holes completed to-date. Assays have been received for eight holes
and all holes have intersected mineralization. Based on the
positive results from the initial drilling, a second phase of
drilling has been initiated aimed at defining an initial inferred
mineral resource estimate for Llaguen in the third quarter of
2022.
Other Constancia Updates
In March 2022, Hudbay obtained approval from
Peru’s National Environmental Certification Service for Sustainable
Investments (SENACE) of a third amendment to the Environmental and
Social Impact Assessment (“ESIA MOD III”) for Constancia. The ESIA
MOD III will allow for the optimization of the water balance and
management plan, an alternate road for concentrate transportation,
improvements to the tailings management facility dam design
criteria and other operational benefits. This approval was obtained
with technical input from the National Water Authority, the
Ministry of Agrarian Development and Irrigation, and the Ministry
of Culture.
The company also signed an addendum to its
framework agreement with the province of Chumbivilcas in March
2022. Under the agreement, Hudbay will contribute to the district
municipalities, assist with the return to classes in the education
sector and continue to provide employment opportunities within the
province.
Snow Lake Operations
As a result of exploration success in 2021,
additional mineral reserves were identified at Lalor and the 1901
deposit, which are expected to extend the mine life of the Snow
Lake operations by one year until 2038, maintaining the 17-year
mine life. Resource to reserve conversion has more than offset 2021
mining depletion with a net gain for all metals, including an
additional 218,000 ounces of gold contained in reserves after
adjusting for 2021 mining depletion.
Refurbishment and commissioning activities at
the New Britannia gold mill were completed in July 2021 and the
construction of the new copper flotation facility at New Britannia
was completed in October 2021, ahead of the original schedule. The
copper facility consists of an innovative and first-of-its-kind
flotation circuit based entirely on Jameson cells, a modern
pneumatic flotation design that offers a compact layout, low-cost
process and flexible flowsheet. Following a brief commissioning
period, the New Britannia mill achieved commercial production on
November 30, 2021. Full design throughput rates and recoveries are
expected to be achieved in the second quarter of 2022, a mere six
months after commissioning.
Hudbay released an updated mine plan for the
Snow Lake operations in 2021 that reflected an increase in annual
gold production to over 180,000 ounces on average during the next
six years due to the incorporation of the New Britannia mill, which
represents an increase of more than 55% from 2021 levels. The
updated mine plan reflects the third phase of the company’s Snow
Lake gold strategy focused on expanding and further optimizing
operations. These expansion and optimization initiatives include
increasing the production rate at Lalor to 5,300 tonnes per day by
the end of 2022 following the closure of the 777 mine, increasing
the throughput rate at the Stall mill to 3,800 tonnes per day,
incorporating mineral reserves from the 1901 deposit into the mine
plan, and implementing a recovery improvement project at the Stall
mill to increase copper and precious metal recoveries. There also
remains potential to further enhance the Snow Lake operations
through exploration opportunities and additional mill processing
projects.
Current mineral reserves and resources
(exclusive of reserves) for Lalor, 1901 and other Snow Lake
satellite deposits as of January 1, 2022 are summarized below.
Lalor Mine and 1901 DepositMineral Reserve
and Resource
Estimates1,2,3,4,5,6,7 |
Tonnes |
Zn Grade(%) |
Au Grade(g/t) |
Cu Grade(%) |
Ag Grade(g/t) |
Base Metal Zone Reserves |
|
|
Proven – Lalor |
|
6,420,000 |
5.57 |
2.6 |
0.47 |
29.5 |
Proven – 1901 |
|
1,260,000 |
8.00 |
2.2 |
0.32 |
24.7 |
Probable – Lalor |
|
1,300,000 |
4.02 |
3.2 |
0.50 |
32.4 |
Probable – 1901 |
|
380,000 |
10.01 |
0.7 |
0.29 |
31.0 |
Total Proven and Probable - Base Metal |
|
9,360,000 |
5.86 |
2.6 |
0.45 |
29.3 |
Gold Zone Reserves |
|
|
Proven – Lalor |
|
3,590,000 |
0.82 |
5.9 |
0.62 |
28.5 |
Proven – 1901 |
|
50,000 |
1.22 |
3.8 |
0.78 |
18.7 |
Probable – Lalor |
|
4,190,000 |
0.53 |
5.1 |
1.05 |
27.9 |
Probable – 1901 |
|
20,000 |
0.51 |
1.6 |
1.89 |
5.3 |
Total Proven and Probable - Gold |
|
7,850,000 |
0.67 |
5.4 |
0.85 |
28.1 |
Total Proven and Probable (Base Metal and
Gold) |
|
17,200,000 |
3.50 |
3.9 |
0.64 |
28.7 |
Base Metal Zone Resources |
|
|
Inferred – Lalor |
|
1,960,000 |
5.72 |
1.5 |
0.31 |
30.4 |
Inferred – 1901 |
|
670,000 |
6.04 |
1.4 |
0.22 |
27.8 |
Total Inferred - Base Metal |
|
2,630,000 |
5.80 |
1.5 |
0.29 |
29.7 |
Gold Zone Resources |
|
|
Inferred – Lalor |
|
4,170,000 |
0.28 |
5.1 |
1.56 |
29.0 |
Inferred – 1901 |
|
1,260,000 |
0.39 |
4.9 |
1.49 |
20.8 |
Total Inferred - Gold |
|
5,430,000 |
0.31 |
5.1 |
1.54 |
27.1 |
Total Inferred (Base Metal and Gold) |
|
8,060,000 |
2.10 |
3.9 |
1.13 |
28.0 |
Note: totals may not add up correctly due to
rounding.1 Mineral resources are exclusive of mineral reserves
and do not have demonstrated economic viability.2 Mineral
resources do not include factors for mining recovery or
dilution.3 Base metal mineral resources are estimated based on
the assumption that they would be processed at the Stall
concentrator while gold mineral resources are estimated based on
the assumption that they would be processed at the New Britannia
concentrator.4 Long-term metal prices of $1.15 per pound zinc,
$1,500 per ounce gold, $3.45 per pound copper, and $20.00 per ounce
silver with an exchange rate of 1.30 C$/US$ were used to estimate
mineral reserves and resources.5 Lalor mineral reserves and
resources are estimated using a minimum NSR cut-off of C$117 per
tonne for waste filled mining areas and a minimum of C$127 per
tonne for paste filled mining areas.6 Individual stope gold
grades at Lalor were capped at 10 grams per tonne as a prudent
estimate until reserves-to-mill reconciliations can be developed to
support the recovery of higher-grade gold. This capping method
resulted in an approximate 3% reduction in the overall gold reserve
grade at Lalor.7 1901 mineral reserves and resources are
estimated using a minimum NSR cut-off of C$110 per tonne.
Snow Lake Regional Deposits - GoldMineral
Reserve and Resource
Estimates1,2,3,4,5,6,7,8 |
Tonnes |
Zn Grade(%) |
Au Grade(g/t) |
Cu Grade(%) |
Ag Grade(g/t) |
Probable Reserves |
|
|
WIM |
|
2,450,000 |
0.25 |
1.6 |
1.63 |
6.3 |
3 Zone |
|
660,000 |
- |
4.2 |
- |
- |
Total Probable (Gold) |
|
3,110,000 |
0.20 |
2.2 |
1.28 |
5.0 |
Inferred Resources |
|
|
Birch |
|
570,000 |
- |
4.4 |
- |
- |
New Britannia |
|
2,750,000 |
- |
4.5 |
- |
- |
Total Inferred (Gold) |
|
3,320,000 |
- |
4.5 |
- |
- |
Note: totals may not add up correctly due to
rounding.1 Mineral resources are exclusive of mineral reserves
and do not have demonstrated economic viability.2 Mineral
resources do not include factors for mining recovery or
dilution.3 Gold mineral resources are estimated based on the
assumption that they would be processed at the New Britannia
concentrator.4 Long-term metal prices of $1.15 per pound zinc,
$1,500 per ounce gold, $3.45 per pound copper, and $20.00 per ounce
silver with an exchange rate of 1.30 C$/US$ were used to confirm
the economic viability of the mineral reserve estimates.5 WIM
mineral reserves are estimated using a minimum NSR cut-off of C$150
per tonne, assuming processing recoveries of 98% for copper, 88%
for gold and 70% for silver based on processing through New
Britannia mill's flotation and tails leach circuits.6 3 Zone
mineral reserves are estimated using a minimum NSR cut-off of C$150
per tonne, assuming processing recoveries of 85% for gold based on
processing through New Britannia mill's leach circuit.7 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 the lower part of New Britannia) to 3.5
grams per tonne (at the upper part of New Britannia).8 Mineral
reserves and resources were initially estimated using metal price
assumptions that vary marginally over the assumptions used to
estimate mineral reserves at Lalor. In the Qualified Person’s
opinion, the combined impact of these small variations does not
have any impact on the mineral reserve and resource estimates.
Snow Lake Regional Deposits – Base
MetalMineral Reserve and Resource
Estimates1,2,3,4,5,6,7 |
Tonnes |
Zn Grade(%) |
Au Grade(g/t) |
Cu Grade(%) |
Ag Grade(g/t) |
Indicated Resources |
|
|
Pen II |
|
470,000 |
8.89 |
0.3 |
0.49 |
7 |
Talbot |
|
2,190,000 |
1.79 |
2.1 |
2.33 |
36 |
Total Indicated (Base Metals) |
|
2,660,000 |
3.04 |
1.8 |
2.01 |
31 |
Inferred Resources |
|
|
Watts |
|
3,150,000 |
2.58 |
1.0 |
2.34 |
31 |
Pen II |
|
130,000 |
9.81 |
0.3 |
0.37 |
7 |
Talbot |
|
2,450,000 |
1.74 |
1.9 |
1.13 |
26 |
Total Inferred (Base Metals) |
|
5,730,000 |
2.39 |
1.3 |
1.78 |
28 |
Note: totals may not add up correctly due to
rounding.1 Mineral resources are exclusive of mineral reserves
and do not have demonstrated economic viability.2 Mineral
resources do not include factors for mining recovery or
dilution.3 Base metal mineral resources are estimated based on
the assumption that they would be processed at the Stall
concentrator.4 Watts mineral resources are estimated using a
minimum NSR cut-off of C$150 per tonne, assuming processing
recoveries of 90% for copper, 80% for zinc, 70% for gold and 70%
for silver.5 Pen II mineral resources are estimated using a
minimum NSR cut-off of C$75 per tonne.6 Watts and Pen II
mineral resources were initially estimated using metal price
assumptions that vary marginally over the assumptions used to
estimate mineral resources at Lalor. In the Qualified Person’s
opinion, the combined impact of these small variations does not
have any impact on the mineral resource estimates.7 Includes
100% of the Talbot mineral resources reported by Rockcliff Metals
Corp. in its 2020 NI 43-101 technical report published on SEDAR.
Hudbay currently owns a 51% interest in the Talbot project.
Snow Lake Regional Exploration
Exploration efforts in 2021 increased inferred
mineral resources at Lalor and 1901 by 1.1 million tonnes despite
delays in underground drill programs caused by COVID-19 related
restrictions. This increases the total inferred mineral resources
at Lalor and 1901 to 8.1 million tonnes, which have the potential
to maintain the 5,300 tonnes per day production level beyond 2028
and further extend the mine life.
Hudbay is actively conducting surface and
underground winter drilling activities in the Snow Lake area,
primarily focused on the copper-gold rich feeder zone at the 1901
deposit, the drilling gap between 1901 and lens 17 at Lalor, and a
high-priority geophysical target located immediately north of
Lalor. In addition, the company continues to compile results from
ongoing infill drilling programs at Lalor and 1901.
Rosemont and Copper World
Projects
The Rosemont and Copper World deposits are 100%
owned by Hudbay and are located predominantly on wholly owned
private land in Pima County, Arizona.
Current mineral reserves and resources
(exclusive of reserves) for Rosemont as of January 1, 2022 are
summarized below.
Rosemont ProjectMineral Reserve and
Resource
Estimates1,2,3,4,5 |
Tonnes |
Cu Grade(%) |
Mo Grade(g/t) |
Ag Grade(g/t) |
Proven |
|
426,100,000 |
0.48 |
120 |
4.96 |
Probable |
|
111,000,000 |
0.31 |
100 |
3.09 |
Total Proven and Probable |
|
537,100,000 |
0.44 |
116 |
4.57 |
Measured |
|
161,300,000 |
0.38 |
90 |
2.72 |
Indicated |
|
374,900,000 |
0.25 |
110 |
2.60 |
Total Measured and Indicated |
|
536,200,000 |
0.29 |
104 |
2.64 |
Inferred |
|
62,300,000 |
0.30 |
100 |
1.58 |
Note: totals may not add up correctly due to
rounding.1 Mineral resources are exclusive of mineral reserves
and do not have demonstrated economic viability.2 Mineral
resources do not include factors for mining recovery or
dilution.3 Blocks were classified as Proven or Probable in
accordance with CIM Definition Standards 2014.4 Mineral
reserves were estimated using metal prices of $3.15 per pound
copper, $11.00 per pound molybdenum and $18.00 per ounce silver.
Metallurgical recoveries of 90% copper, 63% molybdenum and 75.5%
silver were applied. No metallurgical recovery of molybdenum and
silver from oxide ore is projected. An NSR cut-off value of $6.60
per tonne was assumed, based on process recoveries and total
processing and general and administrative operating
costs.5 Mineral resources are constrained within a computer
generated pit using the Lerchs-Grossman algorithm and were
estimated based on the following long-term metals prices: $3.15 per
pound of copper; $11.00 per pound of molybdenum; and $18.00 per
ounce of silver. Metallurgical recoveries of 85% copper, 60%
molybdenum and 75% silver were applied to sulfide material.
Metallurgical recoveries of 40% copper, 30% molybdenum and 40%
silver were applied to mixed material. A metallurgical recovery of
65% for copper was applied to oxide material. NSR was calculated
for every model block and is an estimate of recovered economic
value of copper, molybdenum, and silver combined. Cut-off grades
were set in terms of NSR based on current estimates of process
recoveries and total processing and general and administrative
operating costs of $6.10 per tonne for oxide, mixed and sulfide
material.
The Copper World project consists of seven
deposits extending over seven kilometres, including Bolsa, Broad
Top Butte, Copper World, Peach, Elgin, South Limb and North Limb,
with mineralization closer to surface than at Rosemont.
Current mineral resources for the Copper World
project as of January 1, 2022 are summarized below.
Copper World ProjectMineral Resource
Estimates1,2,3,4,5,6 |
Tonnes |
Cu Grade(%) |
CuSS Grade(%) |
Mo Grade(g/t) |
Ag Grade(g/t) |
Potential Flotation Processing Method |
|
|
Indicated |
|
180,000,000 |
0.37 |
0.07 |
136 |
2.7 |
Inferred |
|
91,000,000 |
0.36 |
0.05 |
129 |
3.8 |
Potential Leach Processing Method |
|
|
Indicated |
|
92,000,000 |
0.34 |
0.27 |
- |
- |
Inferred |
|
51,000,000 |
0.35 |
0.27 |
- |
- |
Total Resources |
|
|
Indicated |
|
272,000,000 |
0.36 |
0.14 |
90 |
1.8 |
Inferred |
|
142,000,000 |
0.36 |
0.13 |
83 |
2.4 |
Note: totals may not add up correctly due to rounding.1 CIM
definitions were followed for the estimation of mineral resources.
Mineral resources that are not mineral reserves do not have
demonstrated economic viability.2 Mineral resources are
reported within an economic envelope defined by a pit shell
optimization algorithm and assuming a selective mining unit of
50x50x50 feet. This pit shell is defined by a revenue factor of 1.0
assuming operating costs adjusted and updated from the 2017
Rosemont Feasibility Study.3 Mineral resource estimates were
reported using a cut-off of 0.1% Cu and were separated by potential
processing method into flotation and leach if they respectively had
a CuSS/Cu ratio below or above a threshold of 50%.4 Metal
recovery estimates assume that this mineralization would be
processed at a combination of facilities, including copper and
molybdenum flotation and heap and/or run-of-mine leach pads
followed by solvent extraction and electrowinning.5 CuSS
represents the copper grade in oxides.6 Specific gravity
measurements were estimated from core box weights validated by
industry standard laboratory measurements.
The global resource estimate for Copper World
includes near surface, higher grade indicated mineral resources of
96 million tonnes at 0.57% copper, including 0.27% copper in
oxides, and inferred mineral resources of 31 million tonnes at
0.71% copper, including 0.27% copper in oxides. The higher grade
resource has the potential to be mined earlier in the mine life.
Resources comprise both sulphide and oxide mineralogy that are
potentially amenable to flotation and heap leach processing
methods, respectively.
Potential Synergies Between Copper World and
Rosemont
Approximately 33 million tonnes of inferred
mineral resources at the Bolsa deposit were considered to be waste
in the resource pit shell used for the NI 43-101 Technical Report
Feasibility Study for Rosemont dated March 30, 2017 (“2017 Rosemont
Feasibility Study”). For that study, these tonnes were accounted
for as pre-stripping since there were no mineralized intersections
available at the time. Any ability to convert Bolsa mineral
resources to reserves would be expected to result in less waste
being mined at Rosemont, thereby reducing costs and energy
consumption per tonne of ore mined.
The Rosemont deposit also contains oxide
mineralization that was previously classified as waste, which may
be able to be processed with the oxide mineralization at Copper
World. This would increase metal production while further reducing
costs and energy consumption per tonne mined at Rosemont.
It is expected that additional synergies will be
identified as Hudbay continues to close the drilling gap between
Bolsa and Rosemont.
Continued Regional Exploration Success
The company has increased the number of drill
rigs at Copper World to seven to conduct infill drilling and to
support future economic studies. There remain several opportunities
to further extend economic mineralization within the private land
limits at Copper World and Rosemont. As shown in Figure 2, there is
opportunity to extend the mineralization north and south of Bolsa
through infill drilling to bridge the gaps. There are also
potential marginal extensions to the south of the Copper World
deposit and to the east of the North Limb and South Limb
deposits.
Preliminary Economic Assessment Progressing
Well
The technical studies for Copper World are
well-advanced and the results will be incorporated into a
Preliminary Economic Assessment (“PEA”) contemplating the
development of the Copper World deposits in conjunction with the
Rosemont deposit. The PEA is also expected to reflect preliminary
expectations of potential synergies between Copper World and
Rosemont. Hudbay is on track to publish the PEA results in a NI
43-101 Technical Report in the first half of 2022.
Mason Project
The Mason project is a large greenfield copper
deposit located in the historic Yerington District of Nevada and is
one of the largest undeveloped copper porphyry deposits in North
America. Mason’s measured and indicated mineral resources are
comparable in size to Constancia and Rosemont. Hudbay views the
Mason project as a long-term option for future development and a
strong component of its pipeline of long-term growth opportunities.
Since acquiring Mason, Hudbay has consolidated a prospective
package of patented and unpatented mining claims contiguous to the
Mason project and has advanced a number of technical studies
including a revised resource model and PEA.
The Mason PEA was completed in April 2021 and
contemplates a 27-year mine life with average annual copper
production of approximately 140,000 tonnes over the first ten years
of full production. At a copper price of $3.25 per pound, the
after-tax net present value using a 10% discount rate is $773
million and the internal rate of return is 15%.
There is opportunity to further enhance the
project economics through exploration for higher grade satellite
deposits on Hudbay’s prospective land package in Nevada, including
Mason Valley. The Mason Valley property hosts several historical
underground copper mines that were in production in the early
1900s. Much of the Mason Valley property is located on Hudbay’s
wholly owned private lands and contains highly prospective skarn
mineralization. An initial drill program to test the Mason Valley
skarn properties is planned for late 2022.
Current mineral resource estimates for Mason as
of January 1, 2022 are summarized below.
Mason ProjectMineral Resource
Estimates1,2,3,4,5 |
Tonnes |
Cu Grade(%) |
Mo Grade(g/t) |
Au Grade(g/t) |
Ag Grade(g/t) |
Measured |
|
1,417,000,000 |
0.29 |
59 |
0.031 |
0.66 |
Indicated |
|
801,000,000 |
0.30 |
80 |
0.025 |
0.57 |
Total Measured and Indicated |
|
2,219,000,000 |
0.29 |
67 |
0.029 |
0.63 |
Inferred |
|
237,000,000 |
0.24 |
78 |
0.033 |
0.73 |
Note: totals may not add up correctly due to
rounding.1 Mineral resource estimates that are not mineral
reserves do not have demonstrated economic viability.2 Mineral
resource estimates do not include factors for mining recovery or
dilution.3 Metal prices of $3.10 per pound copper, $11.00 per
pound molybdenum, $1,500 per ounce gold, and $18.00 per ounce
silver were used to estimate mineral resources.4 Mineral
resources are estimated using a minimum NSR cut-off of $6.25 per
tonne.5 Mineral resources are based on resource pit designs
containing measured, indicated, and inferred mineral resources.
777 Mine
The 777 mine is scheduled to close in June 2022
after more than 17 years of steady operations. The mine is expected
to operate at approximately 2,700 tonnes per day with a continued
focus on mining out the remaining reserves by completing the
necessary ground rehabilitation to access old workings and remnant
stopes. In connection with the depletion of reserves at 777, Hudbay
will be commencing the closure of the Flin Flon complex, including
decommissioning the 777 mine and Flin Flon zinc plant. The Flin
Flon mill and tailings facilities will be put on care and
maintenance. The company expects to spend approximately $25 million
in 2022 on costs related to the closure of the Flin Flon complex
and the transition to care and maintenance. These costs are
expected to be recorded as other operating expenses, and
approximately half of these costs relate to closure and transition
costs in the second and third quarters of 2022, while the remainder
relates to care and maintenance costs in the second half of
2022.
Current mineral reserves for the 777 mine as
of January 1, 2022 are summarized below. There are no
mineral resource estimates exclusive of mineral reserve estimates
for 777.
777 MineMineral Reserve
Estimates1 |
Tonnes |
Cu Grade(%) |
Zn Grade(%) |
Au Grade(g/t) |
Ag Grade(g/t) |
Mineral Reserves |
|
|
Proven |
|
459,000 |
1.24 |
5.01 |
1.78 |
32 |
Total Proven Reserves |
|
459,000 |
1.24 |
5.01 |
1.78 |
32 |
Note: totals may not add up correctly due to
rounding.1 Metal prices of $1.32 per pound zinc (includes
premium), $1,800 per ounce gold, $4.00 per pound copper, and $24.00
per ounce silver with an exchange rate of 1.27 C$/US$ were used to
confirm the economic viability of the mineral reserve
estimates.
Flin Flon Tailings Reprocessing
Opportunity
Hudbay is exploring an opportunity to
potentially reprocess the Flin Flon tailings in the future. In
early January 2022, the company commenced a confirmatory drill
program on the tailings facility in Flin Flon. Pending positive
metallurgical results, the company plans to advance the project
with the completion of a PEA. This opportunity could utilize the
Flin Flon concentrator, with modifications, after the closure of
the 777 mine, creating operating and economic benefits in northern
Manitoba and Saskatchewan. It could also provide the opportunity to
redesign the closure plans, increase metal production, defer or
reduce certain closure costs and reduce the environmental impacts
of the tailings facility.
Other Corporate Updates
Hudbay has been experiencing limited rail car
availability in Manitoba due to recent weather-related impacts and
higher-than-normal railcar demand in the rail network in Canada. As
a result, first quarter sales volumes in Manitoba are likely to be
impacted, and any resulting excess copper concentrate and refined
zinc inventory buildup is expected to normalize during the second
quarter of 2022.
Qualified Person and NI
43-101
The technical and scientific information in this
news release related to the company’s material mineral projects has
been approved by Olivier Tavchandjian, P. Geo, Vice President,
Exploration and Geology. Mr. Tavchandjian is a qualified person
pursuant to NI 43‑101. Additional details on the company’s material
mineral projects, including a year-over-year reconciliation of
reserves and resources, is included in Hudbay's Annual Information
Form for the year ended December 31, 2021 (the “AIF”), which is
available on SEDAR at www.sedar.com.
The Mason PEA is preliminary in nature, includes
inferred resources that are considered too speculative to have the
economic considerations applied to them that would enable them to
be categorized as mineral reserves and there is no certainty the
preliminary economic assessment will be realized.
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 differ from the requirements of United States
securities laws. Canadian reporting requirements for disclosure of
mineral properties are governed by the Canadian Securities
Administrators’ National Instrument 43-101 Standards of Disclosure
for Mineral Projects (“NI 43-101”).
For this reason, information contained in this
news release containing descriptions of the company’s mineral
deposits may not be comparable to similar information made public
by United States companies subject to the reporting and disclosure
requirements under the United States federal securities laws and
the rules and regulations thereunder. For further information on
the differences between the disclosure requirements for mineral
properties under the United States federal securities laws and NI
43-101, please refer to the company’s AIF, a copy of which has been
filed under Hudbay’s profile on SEDAR at www.sedar.com and the
company’s Form 40-F, a copy of which will be filed on EDGAR at
www.edgar.com.
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, production, cost and capital and exploration
expenditure guidance, expectations regarding first quarter sales
volumes in Manitoba and the normalization of the inventory buildup
in the second quarter, expectations regarding the impact of
COVID-19 and inflationary pressures on the cost of operations,
financial condition and prospects, expectations regarding the
Copper World project, including future drill programs, potential
synergies with Rosemont and the timeline for completing a
preliminary economic assessment, expectations regarding the Snow
Lake gold strategy, including anticipated timelines for achieving
target throughput and recoveries at the New Britannia mill,
increasing the mining rate at Lalor to 5,300 tonnes per day and
implementing the Stall mill recovery improvement program,
expectations regarding the Flin Flon closure process and the
transition of personnel and equipment to Snow Lake, expectations
regarding the potential to reprocess Flin Flon tailings in the
future and the possible benefits of such a project, the potential
and Hudbay’s anticipated plans for advancing the mining of its
properties surrounding Constancia and elsewhere in Peru,
anticipated mine plans, anticipated metals prices and the
anticipated sensitivity of the company’s financial performance to
metals prices, events that may affect its operations and
development projects, anticipated cash flows from operations and
related liquidity requirements, the anticipated effect of external
factors on revenue, such as commodity prices, estimation of mineral
reserves and resources, mine life projections, reclamation costs,
economic outlook, government regulation of mining operations, and
business and acquisition strategies. 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
has identified and applied in drawing conclusions or making
forecasts or projections are set out in the forward-looking
information include, but are not limited to:
- Hudbay’s ability to continue to
operate safely and at full capacity despite COVID-19 related
challenges;
- the availability, global supply and
effectiveness of COVID-19 vaccines, the effective distribution of
such vaccines in the countries in which the company operates, the
lessening of restrictions related to COVID-19, and the anticipated
rate and timing for each of the foregoing;
- the ability to achieve production
and cost guidance;
- improved railcar availability in
Manitoba in the second quarter;
- no significant interruptions to
operations due to COVID-19 or social or political unrest in the
regions Hudbay operates;
- a positive preliminary economic
assessment in respect of Copper World will present opportunities to
unlock value at Rosemont;
- the successful outcome of the
Rosemont litigation;
- the ability to ramp-up the New
Britannia mill to target throughput and recoveries and achieve the
anticipated production;
- the economic prospects of
reprocessing Flin Flon tailings;
- the success of mining, processing,
exploration and development activities;
- the scheduled maintenance and
availability of Hudbay’s 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 business and
growth strategies, including the success of the company’s 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
Hudbay’s ability to develop its projects;
- the timing and receipt of various
regulatory and governmental approvals;
- the availability of personnel for
exploration, development and operational projects and ongoing
employee relations;
- maintaining good relations with the
labour unions that represent certain of Hudbay’s employees in
Manitoba and Peru;
- maintaining good relations with the
communities in which Hudbay operates, including the neighbouring
Indigenous communities and local governments;
- no significant unanticipated
challenges with stakeholders at various projects;
- 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 Indigenous peoples or challenges to the validity of
Hudbay’s unpatented mining claims;
- the timing and possible outcome of
pending litigation and no significant unanticipated
litigation;
- certain tax matters, including, but
not limited to current tax laws and regulations, changes in
taxation policies and the refund of certain value added taxes from
the Canadian and Peruvian governments; 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 associated with COVID-19
and its effect on the company’s operations, financial condition,
projects and prospects, uncertainties related to the closure of the
777 mine and the Flin Flon operations, the direct and indirect
impacts of the change in government in Peru, future uncertainty
with respect to the Peruvian mining tax regime and social unrest in
Peru, risks generally associated with the mining industry, such as
economic factors (including future commodity prices, currency
fluctuations, energy prices and general cost escalation in the
current inflationary environment), uncertainties related to the
development and operation of Hudbay’s projects, risks related to
the ongoing Rosemont litigation process and other legal challenges
that could affect Rosemont or Copper World, risks related to the
new Lalor mine plan, including the continuing ramp-up of the New
Britannia mill and the ability to convert inferred mineral resource
estimates to higher confidence categories, risks related to the
technical and economic prospects of reprocessing Flin Flon
tailings, the potential that additional financial assurance will be
required to support the updated Flin Flon closure plan, dependence
on key personnel and employee and union relations, risks related to
political or social instability, unrest or change, risks in respect
of Indigenous and community relations, rights and title claims,
operational risks and hazards, including the cost of maintaining
and upgrading the company's tailings management facilities and any
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 Hudbay’s
reserves, volatile financial markets that may affect its 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
comply with its pension and other post-retirement obligations, 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 headings “Financial Risk
Management” and “Outlook” in Hudbay’s Management’s Discussion and
Analysis for the year ended December 31, 2021 and “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.
About Hudbay
Hudbay (TSX, NYSE: HBM) is a diversified mining
company primarily producing copper concentrate (containing copper,
gold and silver), zinc metal and silver/gold doré. 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, development,
operation and optimization of properties it already controls, as
well as other mineral assets it may acquire that fit its strategic
criteria. 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 BrûléVice President, Investor Relations(416)
814-4387candace.brule@hudbay.com
Figure 1: Constancia Norte Underground Mine
DesignAdditional inferred mineral resource estimate of 6.5
million tonnes at 1.2% copper defined in two high grade skarn
lenses (North Skarn and South Skarn) located below the open pit in
the Constancia Norte area. The planned underground access and
surface infrastructure is located entirely outside of the reserves
pit
design.https://www.globenewswire.com/NewsRoom/AttachmentNg/23ea71bf-9ab0-49fe-b6e7-a7b614ad774c
Figure 2: Copper World Continued Exploration
PotentialFurther potential exists to extend economic
mineralization within private land limits at Copper World,
including bridging the gap to the north and south of the Bolsa
deposit and extending mineralization to the south of the Copper
World deposit and to the east of the North Limb and South Limb
deposits.https://www.globenewswire.com/NewsRoom/AttachmentNg/14010b96-aabb-41e7-b3f5-4b78e76de14c
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