Hudbay Minerals Inc. (“Hudbay” or the “company”)
(TSX, NYSE: HBM) today released its
annual mineral reserve and resource update and issued new
three-year production guidance. All amounts are in U.S. dollars,
unless otherwise noted.
“Our greenfield exploration efforts successfully
increased our copper mineral resources last year with the release
of our Copper World PEA and the initial resource estimate at
Llaguen,” said Peter Kukielski, Hudbay’s President and Chief
Executive Officer. “Our 2023 exploration program is focused on
high-potential opportunities to expand mineralization near our
operations in Peru and Manitoba to position us for additional
long-term reserves growth. We already have long lives at our
existing operations, and we expect to add to our robust production
outlook by leveraging our proven track record of delivering value
through exploration and development as we advance our quality
pipeline of growth assets.”
Constancia Operations
Current mineral reserve estimates total 492
million tonnes at 0.30% copper with approximately 1.5 million
tonnes of contained copper. Constancia’s expected mine life has
been maintained and extends until 2038. The copper contained in
measured and indicated mineral resources has increased in 2023 due
to infill drilling success in converting inferred mineral
resources.
Hudbay released an updated mine plan for
Constancia in 2021 that reflected an increase in copper and gold
production as the higher grades from the Pampacancha deposit were
expected to enter the mine plan over the 2022 to 2024 period. The
mine plan also incorporated higher-grade reserves from the
Constancia Norte pit extension. In late 2022 and early 2023,
regional road blockades in Peru limited the ability to transport
fuel and concentrate, but the Constancia mill continued to steadily
operate as the company implemented risk mitigation plans with
strong support from the local communities. As a result of
processing stockpiles to lower fuel consumption in early 2023,
Pampacancha’s mine life has now been extended into the first half
of 2025. Annual production at the Constancia operations is expected
to average approximately 110,000i tonnes of copper and 87,000i
ounces of gold over the next three years, a respective 23% and 49%
increase from 2022 levels.
In 2021, Hudbay also completed an internal
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.
Current mineral reserves and resources
(exclusive of reserves) for Constancia and Pampacancha as of
January 1, 2023 are summarized below.
Constancia OperationsMineral Reserve and
Resource
Estimates1,2,3,4 |
Tonnes |
Cu Grade (%) |
Mo Grade (g/t) |
Au Grade (g/t) |
Ag Grade (g/t) |
Constancia Reserves |
|
|
Proven |
|
411,200,000 |
0.28 |
79 |
0.041 |
2.85 |
Probable |
|
46,500,000 |
0.23 |
79 |
0.038 |
2.84 |
Total Proven and Probable - Constancia |
|
457,700,000 |
0.28 |
79 |
0.040 |
2.85 |
Pampacancha Reserves |
|
|
Proven |
|
34,100,000 |
0.59 |
153 |
0.320 |
4.98 |
Probable |
|
300,000 |
0.17 |
306 |
0.119 |
2.29 |
Total Proven and Probable - Pampacancha |
|
34,400,000 |
0.59 |
155 |
0.319 |
4.96 |
Total Proven and Probable |
|
492,100,000 |
0.30 |
85 |
0.060 |
2.99 |
Constancia Resources |
|
|
Measured |
|
118,400,000 |
0.20 |
62 |
0.036 |
1.86 |
Indicated |
|
140,700,000 |
0.23 |
73 |
0.040 |
2.20 |
Inferred – Open Pit |
|
56,700,000 |
0.27 |
82 |
0.044 |
1.86 |
Inferred – Underground |
|
6,500,000 |
1.20 |
69 |
0.137 |
8.62 |
Pampacancha Resources |
|
|
Measured |
|
9,100,000 |
0.35 |
103 |
0.230 |
6.01 |
Indicated |
|
300,000 |
0.16 |
173 |
0.173 |
2.62 |
Inferred |
|
900,000 |
0.15 |
118 |
0.103 |
2.86 |
Total Measured and Indicated |
|
268,500,000 |
0.22 |
69 |
0.045 |
2.18 |
Total Inferred |
|
64,100,000 |
0.36 |
81 |
0.054 |
2.56 |
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 are based on
resource pit design and 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 $3.60 per pound copper,
$12.00 per pound molybdenum, $1,650 per ounce gold, and $22.00 per
ounce silver were used to estimate mineral reserves and
resources.
Constancia and Pampacancha In-Mine
Exploration
A drill program is underway at the Pampacancha
deposit to test the potential to add an incremental phase to the
reserve pit at depth. The company is also planning a limited drill
program and technical evaluations at the Constancia deposit to
confirm the economic viability of adding an additional mining phase
to the current mine plan that would convert a portion of the
mineral resources to mineral reserves. The results from these drill
programs and technical and economic evaluations are expected to be
incorporated in the next annual mineral reserve and resource
update.
Maria Reyna and Caballito Exploration
Hudbay controls a large, contiguous block of
mineral rights with the potential to host mineral deposits within
trucking distance of the Constancia processing facility, including
the past producing Caballito property and the highly prospective
Maria Reyna property. The company commenced early exploration
activities and ground geophysical surveys at Maria Reyna and
Caballito after completing a surface rights exploration agreement
with the community of Uchucarcco in August 2022. Surface
investigation activities together with baseline environmental and
archaeological activities necessary to support drill permit
applications have been completed. Drill permit applications are
expected to be submitted in May. Ground activities and geophysical
surveys are underway and field evidence confirms that both
Caballito and Maria Reyna host sulfide and oxide rich copper
mineralization in skarns, hydrothermal breccias and large porphyry
intrusive bodies.
Peru Logistics and Mining Activities
Normalized
Social unrest and road blockades in Peru,
following a change in the country’s political leadership in
December 2022, have continued to abate since mid-February 2023.
Transportation of Constancia’s concentrate and critical supplies
has now returned to normal. As a result, Hudbay has significantly
decreased the level of concentrate inventories at site to less than
7,000 wet metric tonnes as of the end of March from a peak of
47,000 wet metric tonnes in mid-February. Hudbay has been able to
complete several port shipments in March and expects to reach
normal concentrate inventory levels at the port in April, ahead of
schedule.
In addition, full mining activities resumed in
the Pampacancha pit in February and the period of higher stripping
from March to June is progressing well with mining of higher-grade
ore now expected in the second quarter of 2023, slightly ahead of
schedule.
Snow Lake Operations
Current mineral reserve estimates in Snow Lake
total 18 million tonnes with approximately 2.1 million ounces in
contained gold, and the expected mine life of the Snow Lake
operations has been maintained and extends until 2038. With the
Snow Lake operations achieving higher production levels after the
full ramp-up of the New Britannia mill in 2022 and the transition
of the Flin Flon workforce and equipment to the Lalor mine,
exploration activities are now prioritizing step-out drilling to
identify opportunities for meaningful additions to the mineral
resource base to support future growth.
Exploration efforts in 2022 focused on
increasing inferred gold resources at the 1901 deposit, which
offset converted inferred mineral resources at Lalor. As a result,
total gold contained in inferred resources was unchanged at 1.7
million ounces. This indicates a potential to maintain strong
production levels beyond 2030 and further extend the mine life in
Snow Lake.
Hudbay has been executing a multi-phased gold
strategy in Snow Lake since 2019, which has resulted in increased
annual gold production from optimization initiatives, including
higher processing capacity and gold recoveries since the start-up
of the New Britannia mill in late 2021. As a result, annual gold
production from Snow Lake increased to 146,233 ounces in 2022, New
Britannia’s first full year of production, representing a 110%
increase from 69,657 ounces in 2020. The New Britannia mill
consistently achieved its nameplate capacity of 1,500 tonnes per
day throughout 2022 and is expected to operate at 1,650 tonnes per
day in 2023 with the opportunity to further exceed targeted levels
in the future. Annual gold production from Snow Lake is expected to
average more than 190,000i ounces over the next three years, which
represents a further increase of 30% from 2022 levels.
There are several opportunities to enhance the
Snow Lake operations through exploration upside and mill processing
projects. The Stall mill recovery improvement program is currently
well-advanced and is expected to result in higher gold and copper
recoveries starting in the second quarter of 2023. Hudbay has also
completed an internal pre-feasibility study on a second phase of
the Stall mill recovery improvement program which demonstrates the
potential for a further increase in gold recoveries at Stall
starting in 2025 by producing a lead concentrate through gravity
separation.
The Lalor mine continues to advance several key
initiatives to increase efficiency and support higher production
levels beyond the current 4,650 tonnes per day, including building
long-hole inventory, improving stope muck fragmentation and
optimizing the development drift size. The company is also focused
on maximizing production from the shaft to enable more ore to be
hoisted to surface while reducing inefficient trucking of ore via
the ramp, which is expected to lower operating costs and greenhouse
gas emissions.
Current mineral reserves and resources
(exclusive of reserves) for Lalor, 1901 and other Snow Lake
satellite deposits as of January 1, 2023 are summarized below.
Lalor Mine and 1901 DepositMineral Reserve
and Resource
Estimates1,2,3,4,5,6,7 |
Tonnes |
Au Grade (g/t) |
Zn Grade (%) |
Cu Grade (%) |
Ag Grade (g/t) |
Base Metal Zone Reserves |
|
|
Proven – Lalor |
|
5,977,000 |
2.5 |
5.17 |
0.42 |
28.7 |
Proven – 1901 |
|
1,278,000 |
2.2 |
8.14 |
0.30 |
27.4 |
Probable – Lalor |
|
522,000 |
2.6 |
4.59 |
0.36 |
30.3 |
Probable – 1901 |
|
245,000 |
0.8 |
10.7 |
0.30 |
25.2 |
Total Proven and Probable - Base Metal |
|
8,022,000 |
2.5 |
5.77 |
0.39 |
28.5 |
Gold Zone Reserves |
|
|
Proven – Lalor |
|
3,345,000 |
5.1 |
0.77 |
0.54 |
29.2 |
Proven – 1901 |
|
101,000 |
2.9 |
1.32 |
1.00 |
19.2 |
Probable – Lalor |
|
3,779,000 |
5.5 |
0.41 |
1.12 |
25.6 |
Probable – 1901 |
|
54,000 |
1.7 |
0.45 |
1.82 |
5.6 |
Total Proven and Probable - Gold |
|
7,279,000 |
5.3 |
0.59 |
0.86 |
27.0 |
Total Proven and Probable (Base Metal and
Gold) |
|
15,303,000 |
3.8 |
3.31 |
0.61 |
27.8 |
Base Metal Zone Resources |
|
|
Inferred – Lalor |
|
1,947,000 |
1.7 |
5.56 |
0.34 |
32.0 |
Inferred – 1901 |
|
312,000 |
1.5 |
5.86 |
0.19 |
32.0 |
Total Inferred - Base Metal |
|
2,259,000 |
1.7 |
5.60 |
0.32 |
32.0 |
Gold Zone Resources |
|
|
Inferred – Lalor |
|
3,764,000 |
5.0 |
0.27 |
1.68 |
26.4 |
Inferred – 1901 |
|
1,599,000 |
5.5 |
0.30 |
0.85 |
16.5 |
Total Inferred - Gold |
|
5,363,000 |
5.1 |
0.28 |
1.43 |
23.5 |
Total Inferred (Base Metal and Gold) |
|
7,622,000 |
4.1 |
1.86 |
1.10 |
26.0 |
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 $1.20
per pound zinc, $1,650 per ounce gold, $3.60 per pound copper, and
$22.00 per ounce silver with an exchange rate of 1.33 C$/US$ were
used to estimate mineral reserves and resources.5 Lalor mineral
reserves and resources are estimated using NSR cut-off ranging from
C$137 to C$168 per tonne assuming a long hole mining method and
depending on the mill destination. 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$166 per tonne assuming the material is
mined via post pillar cut-and-fill methods and is processed at the
Stall mill.
Snow Lake Regional Deposits - GoldMineral
Reserve and Resource
Estimates1,2,3,4,5,6,7,8 |
Tonnes |
Au Grade (g/t) |
Zn Grade (%) |
Cu Grade (%) |
Ag Grade (g/t) |
Probable Reserves |
|
|
WIM |
|
2,450,000 |
1.6 |
0.25 |
1.63 |
6.3 |
3 Zone |
|
660,000 |
4.2 |
- |
- |
- |
Total Probable (Gold) |
|
3,110,000 |
2.2 |
0.20 |
1.28 |
5.0 |
Inferred Resources |
|
|
New Britannia |
|
2,750,000 |
4.5 |
- |
- |
- |
Birch |
|
570,000 |
4.4 |
- |
- |
- |
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 |
Au Grade (g/t) |
Zn Grade (%) |
Cu Grade (%) |
Ag Grade (g/t) |
Indicated Resources |
|
|
Pen II |
|
470,000 |
0.3 |
8.89 |
0.49 |
6.8 |
Talbot |
|
2,190,000 |
2.1 |
1.79 |
2.33 |
36.0 |
Total Indicated (Base Metals) |
|
2,660,000 |
1.8 |
3.04 |
2.01 |
30.9 |
Inferred Resources |
|
|
Watts |
|
3,150,000 |
1.0 |
2.58 |
2.34 |
31.0 |
Pen II |
|
130,000 |
0.3 |
9.81 |
0.37 |
6.8 |
Talbot |
|
2,450,000 |
1.9 |
1.74 |
1.13 |
25.8 |
Total Inferred (Base Metals) |
|
5,730,000 |
1.3 |
2.39 |
1.78 |
28.3 |
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.
Lalor Near-Mine Exploration
Hudbay commenced a winter drill program in
January 2023 with four drill rigs testing the down-dip gold and
copper extensions of the Lalor deposit, in the first step-out
drilling in the deeper zones at Lalor since the initial discovery
of the gold and copper-gold zones in 2009 and 2010. A total of
eight widely spaced drill holes have been planned to test the down
dip extension of Lalor over a two kilometre by one kilometre area
during the 2023 winter drilling season, as shown in Figure 1. Four
of these holes have been completed to-date and all holes have
intersected the alteration zone that hosts the Lalor
mineralization, with two holes intersecting copper bearing sulfides
identified from core logging. These results confirm that the
alteration zone hosting the mineralization mined at Lalor continues
down dip for two kilometres from its existing known extent. Once
the 2023 drilling program is completed, all holes will be assayed
and probed to guide the next campaign of exploration.
One additional drill rig is testing a
geophysical anomaly located within 400 metres of existing Lalor
underground infrastructure. Four drill holes have been completed
during the winter drill program and assay results from base metal
and copper-gold mineralized intercepts identified from core logging
are pending.
3-Year Production Outlook
The consolidated copper and gold production
guidance demonstrates the continued growth from the company’s
brownfield investments in Peru and Manitoba. Consolidated copper
production over the next three years is expected to increase to
114,000i tonnes, 130,500i tonnes and 116,000i tonnes, respectively,
which represents an increase of 9%, 25% and 11%, respectively, from
2022 levels. Consolidated gold production over the next three years
is expected to increase to 285,500i ounces, 296,500i ounces and
258,500i ounces, respectively, which represents an increase of 30%,
35% and 18%, respectively, from 2022 levels.
Peru’s three-year production guidance reflects
higher copper and gold grades from Pampacancha into the first half
of 2025. The mine plan has been re-sequenced to reflect the impacts
in early 2023, as noted previously, resulting in higher copper and
gold production from Pampacancha continuing into 2025. This is
expected to lead to an 18%i and 109%i increase in copper and gold
production, respectively, in 2025 compared to the mine plan issued
in 2021.
Manitoba’s three-year production guidance
reflects higher throughput at the Lalor mine and the New Britannia
mill starting in 2023, as well as positive impacts from the first
phase of the Stall mill recovery improvement program beginning in
the second quarter of 2023. Gold production in 2025 also reflects
preliminary expected impacts from the second phase of the Stall
mill recovery improvement program.
3-Year Production OutlookContained Metal
in Concentrate and Doré1 |
2023 Guidance |
2024 Guidance |
2025 Guidance |
Peru |
|
|
|
|
Copper |
tonnes |
91,000 - 116,000 |
107,000 - 132,000 |
94,000 - 120,000 |
Gold |
ounces |
83,000 - 108,000 |
96,000 - 117,000 |
53,000 - 64,000 |
Silver |
ounces |
2,210,000 - 2,650,000 |
2,600,000 - 3,100,000 |
2,400,000 - 3,000,000 |
Molybdenum |
tonnes |
1,300 - 1,600 |
1,600 - 1,900 |
1,400 - 1,700 |
|
|
|
|
|
Manitoba |
|
|
|
Gold |
ounces |
175,000 - 205,000 |
175,000 - 205,000 |
175,000 - 225,000 |
Zinc |
tonnes |
28,000 - 36,000 |
35,000 - 43,000 |
35,000 - 45,000 |
Copper |
tonnes |
9,000 - 12,000 |
9,000 - 13,000 |
7,000 - 11,000 |
Silver |
ounces |
750,000 - 1,000,000 |
800,000 - 1,000,000 |
900,000 - 1,200,000 |
|
|
|
|
|
Total |
|
|
|
|
Copper |
tonnes |
100,000 - 128,000 |
116,000 - 145,000 |
101,000 - 131,000 |
Gold |
ounces |
258,000 - 313,000 |
271,000 - 322,000 |
228,000 - 289,000 |
Zinc |
tonnes |
28,000 - 36,000 |
35,000 - 43,000 |
35,000 - 45,000 |
Silver |
ounces |
2,960,000 - 3,650,000 |
3,400,000 - 4,100,000 |
3,300,000 - 4,200,000 |
Molybdenum |
tonnes |
1,300 - 1,600 |
1,600 - 1,900 |
1,400 - 1,700 |
1 Metal
reported in concentrate and doré is prior to smelting and refining
losses or deductions associated with smelter terms. |
Copper World Project
The 100% owned Copper World project is located
in Pima County, Arizona, approximately 50 kilometres southeast of
Tucson. The Copper World project includes seven deposits discovered
in 2021, together with the East deposit (formerly known as the
Rosemont deposit). The new deposits were defined after the
completion of an expanded drill program following a successful
initial drill program in 2020. A new resource model was completed
for the Preliminary Economic Assessment (“PEA”) of Copper World in
2022, which included a revised resource model for the East deposit
that applied resource classification criteria calibrated on
historical performance at Constancia and controlled grade
over-smoothing and incorporated the newly discovered deposits. This
resulted in a 17% increase in contained copper in measured and
indicated resources and a 328% increase in contained copper in
inferred resources, as compared to the mineral resources in the
2017 feasibility study for the East deposit.
The Copper World PEA contemplates a two-phased
mine plan with the first phase reflecting a standalone operation
with processing infrastructure on Hudbay’s private land and mining
occurring on patented mining claims. Phase I is expected to require
only state and local permits and reflects a 16-year mine life.
Phase II extends the mine life to 44 years through an expansion
onto federal land to mine the entire deposits. Phase II also
contemplates an expansion of the processing facilities and would be
subject to the federal permitting process.
At a copper price of $3.50 per pound, the
after-tax net present value of Phase I using a 10% discount rate is
$741 million with an internal rate of return of 17%. With the
inclusion of Phase II, the after-tax net present value of the total
project using a 10% discount rate increases to $1,296 million and
an internal rate of return of 18%. The valuation metrics are highly
sensitive to the copper price and at a price of $4.00 per pound,
the after-tax net present value of Phase I and the total project,
using a 10% discount rate, increases to $1,193 million and $1,903
million, respectively, and the internal rate of return in Phase I
and the total project increases to 21% and 22%, respectively. For
information regarding the limitations of a PEA, please refer to the
Qualified Person and NI 43-101 statement at the end of this news
release.
Current mineral resource estimates for the
Copper World project as of January 1, 2023 are summarized
below.
Copper World ProjectMineral Resource
Estimates1,2,3,4,5 |
Tonnes |
Cu Grade (%) |
CuSS Grade (%) |
Mo Grade (g/t) |
Ag Grade (g/t) |
Flotation Material |
|
|
Measured |
|
687,000,000 |
0.45 |
0.05 |
138 |
5.1 |
Indicated |
|
287,000,000 |
0.36 |
0.06 |
134 |
3.6 |
Inferred |
|
210,000,000 |
0.36 |
0.05 |
119 |
3.9 |
Leach Material |
|
|
Measured |
|
105,000,000 |
0.37 |
0.26 |
- |
- |
Indicated |
|
94,000,000 |
0.35 |
0.26 |
- |
- |
Inferred |
|
52,000,000 |
0.40 |
0.29 |
- |
- |
Total Resources |
|
|
Measured and Indicated |
|
1,173,000,000 |
0.41 |
0.09 |
114 |
3.9 |
Inferred |
|
262,000,000 |
0.37 |
0.10 |
95 |
3.1 |
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 constrained
within a computer-generated pit using the Lerchs-Grossman
algorithm. 3 Estimate of the mineral resource is based on the
following metals prices: $3.45 per pound of copper; $11.00 per
pound of molybdenum; and $20.00 per ounce of silver.4 Mineral
resource estimates were reported using a 0.1% copper cut-off grade
and an oxidation ratio lower than 50% for flotation material and a
0.1% soluble copper cut-off grade and an oxidation ratio higher
than 50% for leach material.5 Estimate of the mineral resource does
not account for marginal amounts of historical small-scale
operations in the area that occurred between 1870 and 1970 and is
estimated to have extracted approximately 200,000 tonnes, which is
within rounding approximations of the current resource
estimates.
Focused on De-risking Activities at Copper
World
Following the release of the Copper World PEA,
Hudbay has continued to execute its strategy to de-risk the
project. Pre-feasibility activities for the private land Phase I of
the Copper World project are well-advanced and are expected to
support the conversion of mineral resources to mineral reserves and
optimize the layout and sequencing of the mineral processing
facilities, in addition to evaluating other upside opportunities.
Pre-feasibility level engineering of the main processing facility,
together with geotechnical and hydrogeological site investigation
activities, were completed by the end of 2022. In late 2022, Hudbay
submitted the applications for an Aquifer Protection Permit and an
Air Quality Permit to the Arizona Department of Environmental
Quality. Hudbay continues to expect to receive these two remaining
state permits in 2023. The other key state permit, the Mined Land
Reclamation Plan, was received in 2022. A pre-feasibility study for
Phase I of the Copper World project is expected to be released in
mid-2023.
Upon receipt of the state level permits, the
company expects to conduct a bulk sampling program at Copper World
to continue to de-risk the project by testing grade continuity,
variable cut-off effectiveness and metallurgical strategies. Hudbay
also intends to initiate a minority joint venture partner process
following receipt of permits, which will allow the potential joint
venture partner to participate in the design and funding of
definitive feasibility study activities in 2024.
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. The Mason project’s measured and indicated mineral
resources are comparable in size to Constancia. Hudbay views the
Mason project as a long-term future development asset as part of
the company’s pipeline of high-quality copper 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 the completion of a PEA on
Mason.
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 $3.50 per pound, the
after-tax net present value using a 10% discount rate is $1,191
million and the internal rate of return is 18%. For information
regarding the limitations of a PEA, please refer to the Qualified
Person and NI 43-101 statement at the end of this news release.
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 within 15 kilometres of the planned
processing infrastructure for the Mason project and contains highly
prospective skarn mineralization. A conductivity-resistivity IP
ground survey conducted in the fourth quarter of 2022 was
successful in identifying the mineralization associated with the
historical mines and confirmed the potential for both high-grade
skarn targets as well as a large porphyry target below the
historical mines. These results, in combination with a
re-interpretation of geological data from past operating mines and
previous exploration data, will be used to finalize a drill plan to
test these targets in late 2023.
Current mineral resource estimates for Mason as
of January 1, 2023 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.
Llaguen Project
The Llaguen project is a copper-molybdenum
porphyry deposit located near the city of Trujillo, the third
largest city in Peru. Llaguen is at moderate altitude and in close
proximity to existing infrastructure, including water supply, the
Trujillo Nueva electric power substation (located 40 kilometres
away) and the port of Salaverry (located 62 kilometres away).
Hudbay completed a 28-hole confirmatory drill program in 2021 and
2022 which confirmed and extended the footprint of the known
mineralization and highlighted the existence of a high-grade zone
in the center of the deposit.
After completing an initial mineral resource
estimate in November 2022, Hudbay initiated preliminary technical
studies, including metallurgical test work as well as geotechnical
and hydrogeological studies, which are expected to be incorporated
into a preliminary economic assessment for the Llaguen project.
Additional exploration drilling is warranted on the Llaguen
property to test the areas of the deposit that remain open and the
several untested geophysical targets in the area to fully define
the regional extent of the mineralization. The current mineral
resource is also surrounded by a large halo of low grade hypogene
copper mineralization, not currently included in the mineral
resource estimate, but for which metallurgical test work could
assess the potential for economic sulfide heap leaching via
commercially available technologies.
Current mineral resource estimates for Llaguen
as of January 1, 2023 are summarized below.
LlaguenMineral Resource
Estimates1,2,3,4,5,6 |
Metric Tonnes |
Cu (%) |
Mo (g/t) |
Au (g/t) |
Ag (g/t) |
CuEq (%) |
Indicated Global (>= 0.14%
Cu) |
271,000,000 |
0.33 |
218 |
0.033 |
2.04 |
0.42 |
Including Indicated High-grade (>= 0.30% Cu) |
113,000,000 |
0.49 |
261 |
0.046 |
2.73 |
0.60 |
Inferred Global(>= 0.14%
Cu) |
83,000,000 |
0.24 |
127 |
0.024 |
1.47 |
0.30 |
Including Inferred High-grade (>= 0.30% Cu) |
16,000,000 |
0.45 |
141 |
0.038 |
2.60 |
0.52 |
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. This pit shell is defined by a revenue
factor of 0.33 assuming operating costs adjusted from Hudbay’s
Constancia open pit operation.3 Long-term metal prices of $3.60 per
pound copper, $11.00 per pound molybdenum, $1,650 per ounce gold
and $22.00 per ounce silver were used for the estimation of mineral
resources.4 Metal recovery estimates assume that this
mineralization would be processed at a combination of facilities,
including copper and molybdenum flotation.5 Copper-equivalent
(“CuEq”) grade is calculated assuming 85% copper recovery, 80%
molybdenum recovery, 60% gold recovery and 60% silver recovery.6
Specific gravity measurements were estimated by industry standard
laboratory measurements.
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, Senior Vice
President, Exploration and Technical Services. Mr. Tavchandjian is
a qualified person pursuant to NI 43‑101 (as defined below).
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, 2022 (the “AIF”), which is available on
SEDAR at www.sedar.com.
The Copper World PEA and the Mason PEA are
preliminary in nature, include 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
assessments 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 under Hudbay’s
profile 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, statements regarding the company’s production, cost and
capital and exploration expenditure guidance, expectations
regarding the company’s exploration program and anticipated results
therefrom, expectations regarding the impact of inflationary
pressures on the company’s cost of operations, financial condition
and prospects, expectations regarding the Copper World project,
including with respect to the company’s plans for a pre-feasibility
study and the estimated timelines and pre-requisites for
sanctioning the project, expectations regarding the permitting
requirements for the Copper World project and permitting related
litigation, the company’s ability to continue to increase
production at Lalor and throughput at the New Britannia mill, the
anticipated timing and benefits of completing the Stall recovery
improvement program, the anticipated timing for reaching normal
concentrate inventory levels at port in Peru, expectations
regarding the ability to conduct exploration work on the Maria
Reyna and Caballito properties and to advance related drill plans
and to submit related drill permit applications, expectations
regarding the duration and potential impact of short-term mine plan
changes implemented at Constancia, expectations regarding the
ability for the company to reduce greenhouse gas emissions,
expectations regarding the prospective nature of the Maria Reyna
and Caballito properties, the anticipated impact of brownfield
growth projects on the company’s performance, anticipated expansion
opportunities in Snow Lake, anticipated drill programs, 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 were applied in drawing conclusions or making
forecasts or projections set out in the forward-looking information
include, but are not limited to:
- the ability to achieve production
and cost guidance;
- the ability to achieve
discretionary spending reductions without impacting
operations;
- no significant interruptions to
operations due to social or political unrest in the regions Hudbay
operates, including the navigation of the complex environment in
Peru;
- no interruptions to the company’s
plans for advancing the Copper World project;
- the ability to ramp up exploration
in respect of the Maria Reyna and Caballito properties and to
advance related drill plans and to submit related drill permit
applications;
- the ability to continue to increase
production at Lalor;
- the ability to reach normal
concentrate inventory levels at port in Peru;
- the success of mining, processing,
exploration and development activities;
- the scheduled maintenance and
availability of the company’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 the company’s
business and growth strategies, including the success of its
strategic investments and initiatives;
- the availability of additional
financing;
- the ability to complete projects on
time and on budget and other events that may affect the company’s
ability to develop its projects;
- the timing and receipt of various
regulatory and governmental approvals;
- the availability of personnel for
the company’s exploration, development and operational projects and
ongoing employee relations;
- maintaining good relations with the
labour unions that represent certain of the company’s employees in
Manitoba and Peru;
- maintaining good relations with the
communities in which the company operates, including the
neighbouring Indigenous communities and local governments;
- no significant unanticipated
challenges with stakeholders at the company’s 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 the
company’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, political and social risks in
the regions Hudbay operates, including the uncertainty with respect
to the political and social environment in Peru and its potential
impact on the company’s mining operations, risks generally
associated with the mining industry and the current geopolitical
environment, including future commodity prices, currency and
interest rate fluctuations, energy and consumable prices, supply
chain constraints and general cost escalation in the current
inflationary environment, uncertainties related to the development
and operation of the company’s projects, risks related to the
Copper World project, including in relation to permitting,
litigation, project delivery and financing risks, risks related to
the Lalor mine plan, including the ability to increase the rate of
production, 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 the company’s reserves, volatile
financial markets and interest rates 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 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 heading
“Risk Factors” in the company’s most recent Annual Information Form
and under the heading “Financial Risk Management” in the company’s
management’s discussion and analysis for the year ended December
31, 2022.
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 with long-life assets in North and South America. The
company’s Constancia operations in Cusco (Peru) produce copper with
gold, silver and molybdenum by-products. Its Snow Lake operations
in Manitoba (Canada) produce gold with copper, zinc and silver
by-products. Hudbay has an organic pipeline that includes the
Copper World project in Arizona and the Mason project in Nevada
(United States), and its 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. Further information about Hudbay can be
found on www.hudbay.com.
For investor and media inquiries, please
contact:
Candace BrûléVice President, Investor
Relations (416) 814-4387 candace.brule@hudbay.com
Figure 1: Lalor Deep 2023 Winter Drilling
Surface drilling to test the deeper extensions
of the Lalor deposit was initiated in January 2023. Widely spaced
drill holes are exploring a large footprint of approximately two
kilometres by one kilometre down dip of Lalor.
A photo accompanying this announcement is available at
https://www.globenewswire.com/NewsRoom/AttachmentNg/8429cd35-8aec-46e4-ae89-f4318d6c811c
_____________________
i Calculated using the mid-point of the guidance
range.
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