Hudbay Minerals Inc. (“Hudbay” or the “company”)
(TSX, NYSE: HBM) today provided an update
on its annual mineral reserve and resource estimates and
exploration activities. All dollar amounts are in US dollars,
unless otherwise noted.
“We are extremely pleased with our exploration
success over the past 12 months in Manitoba where we’ve doubled the
mine life in Snow Lake and more than doubled Lalor’s annual gold
production from current levels,” said Peter Kukielski, Hudbay’s
President and Chief Executive Officer. “In addition to replacing
the ore that was mined at Constancia last year, we are also
encouraged by recent drilling results north of the Constancia pit
where high-grade skarn mineralization has been intersected. Hudbay
has a proven track record of delivering value through the drill bit
and successfully extending the life of our mines, demonstrating one
of the many ways we can leverage our core competencies to create
value.”
Lalor Mine and Snow
Lake Operations
Phase One of Snow Lake Gold Strategy
In February 2019, Hudbay announced the results
from its first phase of its Snow Lake gold strategy which
repositioned Lalor as a gold mine with precious metals contributing
a majority of the life-of-mine revenues. The first phase resulted
in a 65% increase in Lalor’s gold reserves and was the first mine
plan that included the processing of gold and copper-gold ore at
the company’s New Britannia mill. Several years of detailed work
was completed in advance of the phase one mine plan, including
significant drilling and test mining of the Lalor gold and
copper-gold zones, and trade-off studies on the various processing
solutions for the gold ore. The New Britannia mill was determined
to be the optimal processing solution for Lalor gold, as it
capitalizes on existing infrastructure and is expected to achieve
gold recoveries of approximately 93% compared to the current gold
recoveries of approximately 53% at the Stall mill. The phase one
gold mine plan contemplated Lalor’s annual gold production more
than doubling from then current levels to approximately 140,000
ounces over the first five years once the New Britannia mill is
refurbished.
Phase Two of Snow Lake Gold Strategy
Over the last 12 months, the company has
executed on the second phase of its Snow Lake gold strategy,
focusing on extensive infill and exploration drilling at Lalor and
advancing engineering studies on the regional deposits in Snow
Lake. This has resulted in a significant increase in the mineral
reserves and mineral resources for Lalor and the nearby satellite
deposits, including a 35% increase in total Snow Lake gold reserves
to 2.2 million ounces. Lalor’s current reserve estimate has added
more than a year to its mine life, and with the inclusion of the
reserves at the nearby satellite deposits, the mine life of the
Snow Lake operations now totals 18 years. Based on the updated
reserve, Lalor’s life-of-mine gold production increased by 41%i
compared to the previous mine plan, and annual gold production is
expected to average greater than 150,000 ounces over the first
eight years after the New Britannia mill is refurbished, which is
more than double the current annual gold production from Lalor and
9%iii higher than the previous mine plan. Lalor will remain a
low-cost gold mine with sustaining cash costsiv, net of by-product
credits, of approximately $655 per ounce over the first eight years
once New Britannia is in production, positioning Lalor in the
lowest quartile on the global all-in sustaining cost curve.
The revised 18-year mine plan for the Snow Lake
operations utilizes the existing mining capacity of up to 4,500
tonnes per day at the Lalor mine for the first ten years followed
by the mining of the gold-rich WIM and 3 Zone deposits for the last
eight years of the mine plan. Please refer to Figure 1 for a map
outlining the location of the various Snow Lake deposits within
trucking distance of the New Britannia mill and other regional
infrastructure.
Under the revised mine plan, the New Britannia
gold mill will operate at its maximum capacity of 1,500 tonnes per
day from 2022 to 2030 by processing Lalor’s current reserves at
average grades of 6.4 grams per tonne gold and 1.0% copper. From
2030 to 2037, New Britannia is expected to operate at a processing
rate between 1,200 to 1,500 tonnes per day at average grades of 2.2
grams per tonne gold and 1.3% copper, as the Lalor feed is replaced
by WIM and 3 Zone (see “Snow Lake Mine Plan” below).
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, is expected to be
developed via an underground ramp and is located approximately 15
kilometres by road from New Britannia. The 3 Zone deposit was
acquired by Hudbay as part of the acquisition of the New Britannia
mine and mill. 3 Zone is a ramp-access deposit located within the
existing mining infrastructure at the past producing New Britannia
mine.
The New Britannia mill development plan
contemplates construction activities occurring between June 2020
and August 2021, with plant commissioning and ramp-up occurring
during the fourth quarter of 2021. This timing assumes no delays or
deferrals due to the impact of the COVID-19 coronavirus or related
liquidity considerations, which remains a risk we continue to
prudently assess and monitor. All key environmental permits for the
project have been obtained.
Snow Lake Mine Plan
|
2020 |
|
2021 |
|
2022 |
|
2023 |
|
2024 |
|
2025 |
|
2026 |
|
2027 |
|
2028 |
|
2029 |
|
2030 |
|
LOM |
Lalor Base Metal Ore |
Ore Mined |
tonnes (000s) |
1,575 |
|
1,506 |
|
1,035 |
|
997 |
|
1,035 |
|
1,035 |
|
1,035 |
|
738 |
|
521 |
|
518 |
|
176 |
|
10,170 |
|
Ore Mined |
tpd |
4,351 |
|
4,160 |
|
2,859 |
|
2,754 |
|
2,859 |
|
2,859 |
|
2,859 |
|
2,038 |
|
1,438 |
|
1,431 |
|
485 |
|
- |
|
Cu Grade |
% Cu |
0.64 |
% |
0.65 |
% |
0.61 |
% |
0.57 |
% |
0.60 |
% |
0.55 |
% |
0.61 |
% |
0.63 |
% |
0.73 |
% |
0.75 |
% |
0.29 |
% |
0.62 |
% |
Zn Grade |
% Zn |
5.60 |
% |
5.36 |
% |
5.74 |
% |
5.67 |
% |
4.51 |
% |
5.01 |
% |
5.65 |
% |
4.78 |
% |
4.83 |
% |
4.19 |
% |
5.70 |
% |
5.25 |
% |
Au Grade |
g/t Au |
2.55 |
|
3.28 |
|
2.72 |
|
2.86 |
|
2.70 |
|
2.76 |
|
3.86 |
|
3.83 |
|
3.91 |
|
3.75 |
|
1.51 |
|
3.08 |
|
Ag Grade |
g/t Ag |
26.68 |
|
28.21 |
|
31.38 |
|
30.84 |
|
26.34 |
|
32.34 |
|
33.37 |
|
30.55 |
|
23.55 |
|
25.77 |
|
21.62 |
|
29.00 |
|
Lalor Gold Ore |
Ore Mined |
tonnes (000s) |
- |
|
69 |
|
540 |
|
540 |
|
540 |
|
540 |
|
540 |
|
540 |
|
537 |
|
540 |
|
459 |
|
4,845 |
|
Ore Mined |
tpd |
- |
|
191 |
|
1,492 |
|
1,492 |
|
1,492 |
|
1,492 |
|
1,492 |
|
1,492 |
|
1,484 |
|
1,492 |
|
1,267 |
|
- |
|
Cu Grade |
% Cu |
- |
|
1.12 |
% |
0.81 |
% |
0.99 |
% |
0.91 |
% |
0.83 |
% |
0.83 |
% |
0.85 |
% |
1.55 |
% |
1.54 |
% |
0.62 |
% |
1.00 |
% |
Zn Grade |
% Zn |
- |
|
0.38 |
% |
0.48 |
% |
0.92 |
% |
0.78 |
% |
0.35 |
% |
0.62 |
% |
0.95 |
% |
0.63 |
% |
0.47 |
% |
0.69 |
% |
0.65 |
% |
Au Grade |
g/t Au |
- |
|
5.83 |
|
6.62 |
|
6.19 |
|
5.33 |
|
6.42 |
|
7.37 |
|
5.41 |
|
6.70 |
|
6.71 |
|
7.15 |
|
6.41 |
|
Ag Grade |
g/t Ag |
- |
|
20.69 |
|
26.67 |
|
22.08 |
|
24.37 |
|
23.52 |
|
32.91 |
|
26.54 |
|
29.33 |
|
26.66 |
|
28.24 |
|
26.59 |
|
Total Ore - Lalor |
Ore Mined |
tonnes (000s) |
1,575 |
|
1,575 |
|
1,575 |
|
1,537 |
|
1,575 |
|
1,575 |
|
1,575 |
|
1,278 |
|
1,058 |
|
1,058 |
|
634 |
|
15,015 |
|
Ore Mined |
tpd |
4,351 |
|
4,351 |
|
4,351 |
|
4,246 |
|
4,351 |
|
4,351 |
|
4,351 |
|
3,530 |
|
2,923 |
|
2,923 |
|
1,753 |
|
- |
|
Cu Grade |
% Cu |
0.64 |
% |
0.67 |
% |
0.68 |
% |
0.72 |
% |
0.71 |
% |
0.65 |
% |
0.68 |
% |
0.72 |
% |
1.15 |
% |
1.15 |
% |
0.53 |
% |
0.74 |
% |
Zn Grade |
% Zn |
5.60 |
% |
5.14 |
% |
3.94 |
% |
4.00 |
% |
3.23 |
% |
3.41 |
% |
3.93 |
% |
3.16 |
% |
2.70 |
% |
2.29 |
% |
2.08 |
% |
3.77 |
% |
Au Grade |
g/t Au |
2.55 |
|
3.39 |
|
4.06 |
|
4.03 |
|
3.60 |
|
4.02 |
|
5.06 |
|
4.50 |
|
5.33 |
|
5.26 |
|
5.58 |
|
4.16 |
|
Ag Grade |
g/t Ag |
26.68 |
|
27.88 |
|
29.77 |
|
27.76 |
|
25.66 |
|
29.31 |
|
33.21 |
|
28.85 |
|
26.49 |
|
26.22 |
|
26.41 |
|
28.22 |
|
|
2030 |
|
2031 |
|
2032 |
|
2033 |
|
2034 |
|
2035 |
|
2036 |
|
2037 |
|
LOM |
WIM Ore |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ore Mined |
tonnes (000s) |
104 |
|
414 |
|
438 |
|
438 |
|
401 |
|
316 |
|
288 |
|
49 |
|
2,448 |
|
Ore Mined |
tpd |
286 |
|
1,133 |
|
1,200 |
|
1,200 |
|
1,100 |
|
867 |
|
788 |
|
134 |
|
- |
|
Cu Grade |
% Cu |
1.22 |
% |
1.62 |
% |
1.47 |
% |
1.72 |
% |
1.71 |
% |
1.71 |
% |
1.67 |
% |
1.70 |
% |
1.63 |
% |
Zn Grade |
% Zn |
0.09 |
% |
0.18 |
% |
0.32 |
% |
0.42 |
% |
0.28 |
% |
0.17 |
% |
0.13 |
% |
0.13 |
% |
0.25 |
% |
Au Grade |
g/t Au |
0.76 |
|
1.24 |
|
1.55 |
|
1.74 |
|
1.82 |
|
1.82 |
|
1.68 |
|
1.87 |
|
1.60 |
|
Ag Grade |
g/t Ag |
4.64 |
|
6.01 |
|
5.66 |
|
6.51 |
|
6.67 |
|
6.92 |
|
6.76 |
|
6.86 |
|
6.31 |
|
3 Zone Ore |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ore Mined |
tonnes (000s) |
- |
|
- |
|
- |
|
- |
|
38 |
|
219 |
|
219 |
|
187 |
|
662 |
|
Ore Mined |
tpd |
- |
|
- |
|
- |
|
- |
|
103 |
|
600 |
|
600 |
|
511 |
|
- |
|
Cu Grade |
% Cu |
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
Zn Grade |
% Zn |
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
Au Grade |
g/t Au |
|
|
|
|
3.40 |
|
4.17 |
|
4.17 |
|
4.46 |
|
4.21 |
|
Ag Grade |
g/t Ag |
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
Total Ore - Satellite Deposits |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ore Mined |
tonnes (000s) |
104 |
|
414 |
|
438 |
|
438 |
|
438 |
|
535 |
|
507 |
|
235 |
|
3,110 |
|
Ore Mined |
tpd |
286 |
|
1,133 |
|
1,200 |
|
1,200 |
|
1,203 |
|
1,467 |
|
1,389 |
|
645 |
|
- |
|
Cu Grade |
% Cu |
1.22 |
% |
1.62 |
% |
1.47 |
% |
1.72 |
% |
1.56 |
% |
1.01 |
% |
0.95 |
% |
0.35 |
% |
1.28 |
% |
Zn Grade |
% Zn |
0.09 |
% |
0.18 |
% |
0.32 |
% |
0.42 |
% |
0.26 |
% |
0.10 |
% |
0.07 |
% |
0.03 |
% |
0.20 |
% |
Au Grade |
g/t Au |
0.76 |
|
1.24 |
|
1.55 |
|
1.74 |
|
1.96 |
|
2.78 |
|
2.76 |
|
3.93 |
|
2.15 |
|
Ag Grade |
g/t Ag |
4.64 |
|
6.01 |
|
5.66 |
|
6.51 |
|
6.10 |
|
4.09 |
|
3.84 |
|
1.42 |
|
4.97 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Note: Tonnes per day (“tpd”) assumes 365
operating days a year. LOM refers to life-of-mine.
Snow Lake Metallurgical Recoveries
|
LOM Average |
Base Metal Ore Through Stall |
Average Lalor Ore Recoveries |
Cu |
83.6 |
% |
Au |
52.9 |
% |
Ag |
53.3 |
% |
Zn |
93.2 |
% |
Gold Ore Through New Britannia |
Average Lalor Ore Recoveries |
Cu |
93.9 |
% |
Au |
93.3 |
% |
Ag |
77.8 |
% |
Average WIM Ore Recoveries |
Cu |
97.7 |
% |
Au |
88.4 |
% |
Ag |
69.8 |
% |
Average 3 Zone Ore Recoveries |
Au |
85.0 |
% |
|
|
|
Snow Lake Production Profile
Lalor MineProduction |
2020 |
2021 |
2022 |
2023 |
2024 |
2025 |
2026 |
2027 |
2028 |
2029 |
2030 |
LOM |
Cu |
tonnes (000s) |
8 |
9 |
9 |
10 |
10 |
9 |
9 |
8 |
11 |
11 |
3 |
97 |
Zn |
tonnes (000s) |
81 |
74 |
55 |
52 |
43 |
48 |
54 |
32 |
23 |
20 |
9 |
492 |
Au |
ounces (000s) |
74 |
102 |
158 |
151 |
136 |
154 |
192 |
139 |
146 |
146 |
103 |
1,501 |
Ag |
ounces (000s) |
783 |
829 |
956 |
851 |
828 |
914 |
1,087 |
778 |
665 |
625 |
382 |
8,698 |
WIM MineProduction |
2030 |
2031 |
2032 |
2033 |
2034 |
2035 |
2036 |
2037 |
LOM |
Cu |
tonnes (000s) |
1 |
7 |
6 |
7 |
7 |
5 |
5 |
1 |
39 |
Zn |
tonnes (000s) |
- |
- |
- |
- |
- |
- |
- |
- |
- |
Au |
ounces (000s) |
2 |
14 |
19 |
22 |
21 |
17 |
14 |
3 |
110 |
Ag |
ounces (000s) |
10 |
56 |
54 |
65 |
61 |
50 |
44 |
8 |
347 |
3 Zone MineProduction |
2030 |
2031 |
2032 |
2033 |
2034 |
2035 |
2036 |
2037 |
LOM |
Cu |
tonnes (000s) |
- |
- |
- |
- |
- |
- |
- |
- |
- |
Zn |
tonnes (000s) |
- |
- |
- |
- |
- |
- |
- |
- |
- |
Au |
ounces (000s) |
- |
- |
- |
- |
3 |
25 |
25 |
23 |
76 |
Ag |
ounces (000s) |
- |
- |
- |
- |
- |
- |
- |
- |
- |
|
|
|
|
|
|
|
|
|
|
|
Note: Production includes metal contained in
concentrate and doré.
Snow Lake Unit Operating Costs and Cash
Costs
Unit Operating Costs |
|
LOM Average |
Mining – Lalor |
C$/tonne |
$ |
110.20 |
Mining – WIM |
C$/tonne |
$ |
73.44 |
Mining – 3 Zone |
C$/tonne |
$ |
68.41 |
Milling – Stall |
C$/tonne |
$ |
28.01 |
Milling – New Britannia |
C$/tonne |
$ |
39.01 |
|
|
|
|
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.
Gold Cash Costs |
|
2020 |
|
|
2021 |
|
2022 |
|
2023 |
|
2024 |
|
2025 |
|
2026 |
|
2027 |
|
2028 |
|
2029 |
2022-2029 Avg. |
Gold Production |
ounces(000s) |
|
74 |
|
|
102 |
|
158 |
|
151 |
|
136 |
|
154 |
|
192 |
|
139 |
|
146 |
|
146 |
|
153 |
Cash Costs |
US$/oz |
$ |
(95 |
) |
$ |
151 |
$ |
371 |
$ |
507 |
$ |
584 |
$ |
524 |
$ |
387 |
$ |
624 |
$ |
434 |
$ |
456 |
$ |
480 |
Sustaining Cash Costs |
US$/oz |
$ |
966 |
|
$ |
980 |
$ |
848 |
$ |
805 |
$ |
882 |
$ |
720 |
$ |
460 |
$ |
685 |
$ |
443 |
$ |
466 |
$ |
657 |
|
|
|
2030 |
|
|
2031 |
|
2032 |
|
2033 |
|
2034 |
|
2035 |
|
2036 |
|
2037 |
2030-2037 Avg. |
LOM Avg. |
Gold Production |
ounces(000s) |
|
105 |
|
|
14 |
|
19 |
|
22 |
|
24 |
|
41 |
|
39 |
|
25 |
|
36 |
|
94 |
Cash Costs |
US$/oz |
$ |
669 |
|
$ |
154 |
$ |
309 |
$ |
160 |
$ |
212 |
$ |
263 |
$ |
312 |
$ |
346 |
$ |
410 |
$ |
423 |
Sustaining Cash Costs |
US$/oz |
$ |
815 |
|
$ |
1,312 |
$ |
855 |
$ |
175 |
$ |
709 |
$ |
728 |
$ |
583 |
$ |
346 |
$ |
700 |
$ |
697 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Note:
- Production includes metal contained in concentrate and
doré.
- Cash costs include all onsite (mining, milling and general and
administrative) and offsite costs associated with Lalor, WIM and 3
Zone and are reported net of by-product credits. By-product credits
calculated using the following assumptions: zinc price (includes
premium) of $1.18 per pound in 2020, $1.08 per pound in 2021 to
2023, $1.17 per pound long-term; copper price of $2.65 per pound in
2020, $3.00 per pound in 2021, $3.10 per pound in 2022 and
long-term; silver price of $16.00 per ounce in 2020, $16.50 per
ounce in 2021 to 2023, and $17.00 per ounce long-term; C$/US$
exchange rate of 1.30 for current and long-term.
- Sustaining cash costs incorporate all costs included in cash
costs calculation plus sustaining capital expenditures.
- Cash costs and sustaining cash costs are non-IFRS financial
performance measures with no standardized definition under IFRS.
For further details on why Hudbay believes cash costs are a useful
performance indicator, please refer to the Company's most recent
Management's Discussion and Analysis for the year ended December
31, 2019.
Snow Lake Capital Expenditures
Capital Expenditures |
|
|
2020 |
|
2021 |
|
2022 |
|
2023 |
|
2024 |
|
2025 |
|
2026 |
|
2027 |
|
2028 |
|
2029 |
Sustaining Capital |
Lalor Sustaining Capital |
C$ millions |
$ |
102 |
$ |
111 |
$ |
98 |
$ |
58 |
$ |
53 |
$ |
39 |
$ |
18 |
$ |
11 |
$ |
2 |
$ |
2 |
Total Sustaining Capital |
US$ millions |
$ |
79 |
$ |
85 |
$ |
75 |
$ |
45 |
$ |
41 |
$ |
30 |
$ |
14 |
$ |
8 |
$ |
1 |
$ |
1 |
Growth Capital |
New Britannia Capital |
C$ millions |
$ |
105 |
$ |
48 |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
Total Growth Capital |
US$ millions |
$ |
80 |
$ |
37 |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
Capital Expenditures |
|
|
2029 |
|
2030 |
|
2031 |
|
2032 |
|
2033 |
|
2034 |
|
2035 |
|
2036 |
|
2037 |
Sustaining Capital |
WIM Sustaining Capital |
C$ millions |
|
- |
$ |
20 |
$ |
21 |
$ |
13 |
|
- |
|
- |
|
- |
|
- |
|
- |
3 Zone Sustaining Capital |
C$ millions |
|
- |
|
- |
|
- |
|
- |
|
- |
$ |
16 |
$ |
25 |
$ |
14 |
|
- |
Total Sustaining Capital |
US$ millions |
|
- |
$ |
15 |
$ |
16 |
$ |
10 |
|
- |
$ |
12 |
$ |
19 |
$ |
10 |
|
- |
Growth Capital |
WIM Development |
C$ millions |
$ |
50 |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
3 Zone Development |
C$ millions |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
Total Growth Capital |
US$ millions |
$ |
39 |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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$/US$.
Snow Lake Mineral Reserves and Resources
Current mineral reserves and resources
(exclusive of reserves) for Lalor and other Snow Lake satellite
deposits as of January 1, 2020 are summarized below.
Lalor Mine Mineral Reserve and Resource
Estimates1,2,3,4 |
Tonnes |
Cu Grade (%) |
Zn Grade (%) |
Au Grade (g/t) |
Ag Grade (g/t) |
Base Metal Zone Reserves |
|
Proven |
7,276,000 |
0.57 |
6.27 |
2.42 |
29 |
Probable |
1,739,000 |
0.60 |
4.15 |
3.83 |
31 |
Gold Zone Reserves |
|
Proven |
1,748,000 |
1.37 |
1.11 |
6.70 |
24 |
Probable |
4,251,000 |
0.83 |
0.42 |
6.21 |
27 |
Total Proven and Probable |
15,015,000 |
0.74 |
3.77 |
4.16 |
28 |
Base Metal Zone Resources |
|
Inferred |
454,000 |
0.34 |
7.32 |
2.16 |
21 |
Gold Zone Resources |
|
Inferred |
3,945,000 |
1.31 |
0.31 |
4.69 |
26 |
Total Inferred |
4,399,000 |
1.21 |
1.03 |
4.43 |
26 |
|
|
|
|
|
|
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 reserves and resources
calculated using metal prices of $1.17 per pound zinc (includes
premium), $1,375 per ounce gold, $3.10 per pound copper, $17.00 per
ounce of silver.3 Mineral reserves are estimated at an NSR cut-off
of $101 per tonne for waste filled mining areas and a minimum of
$113 per tonne for paste filled mining areas.4 Mineral resources
are estimated at a minimum NSR cut-off of $101 per tonne.
Snow Lake Regional Deposits - Gold Mineral Reserve and
Resource Estimates |
Tonnes |
Cu Grade (%) |
Zn Grade (%) |
Au Grade (g/t) |
Ag Grade (g/t) |
Probable Reserves1 |
|
|
WIM |
|
2,448,000 |
1.63 |
0.25 |
1.6 |
6.3 |
3 Zone |
|
662,000 |
- |
- |
4.2 |
- |
Total Probable (Gold) |
|
3,110,000 |
1.28 |
0.20 |
2.2 |
5.0 |
Inferred Resources2 |
|
|
Birch |
|
569,000 |
- |
- |
4.4 |
- |
New Britannia |
|
2,753,000 |
- |
- |
4.5 |
- |
Total Inferred (Gold) |
|
3,222,000 |
- |
- |
4.5 |
- |
|
|
|
|
|
|
|
Note: totals may not add up correctly due to rounding.1 WIM
mineral reserves are estimated at a minimum net smelter return
(“NSR”) cut-off of C$150 per tonne, assuming processing recoveries
of 98% for copper, 88% for gold and 70% for silver, and using
long-term prices of $3.10 per pound copper, $1,375 per ounce gold
and $17.00 per ounce silver. 3 Zone mineral reserves are estimated
at a minimum NSR cut-off of C$150 per tonne, assuming processing
recoveries of 85% for gold, and using a long-term price of $1,375
per ounce gold.2 Mineral resources are exclusive of mineral
reserves and do not have demonstrated economic viability. 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).
Snow Lake Regional Deposits – Base Metals Mineral Reserve
and Resource Estimates1 |
Tonnes |
Cu Grade (%) |
Zn Grade (%) |
Au Grade (g/t) |
Ag Grade (g/t) |
Indicated Resources |
|
|
Pen II |
|
469,000 |
0.49 |
8.89 |
0.35 |
6.8 |
Total Indicated (Base Metals) |
|
469,000 |
0.49 |
8.89 |
0.35 |
6.8 |
Inferred Resources |
|
|
1901 |
|
2,065,000 |
0.25 |
9.67 |
0.87 |
30.3 |
Watts |
|
3,153,000 |
2.34 |
2.58 |
0.95 |
31 |
Pen II |
|
132,000 |
0.37 |
9.81 |
0.3 |
6.9 |
Total Inferred (Base Metals) |
|
5,350,000 |
1.48 |
5.49 |
0.9 |
30.1 |
|
|
|
|
|
|
|
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. 1901 mineral resources are
estimated at a minimum NSR cut-off of $170 per tonne, assuming
processing recoveries of 73% for copper, 94% for zinc, 48% for gold
and 47% for silver, and using long-term prices of $3.10 per pound
copper, $1,260 per ounce gold, $1.10 per pound zinc and $18.00 per
ounce silver. Watts mineral resources are estimated at a minimum
NSR cut-off of $150 per tonne, assuming processing recoveries of
87% for copper, 80% for zinc, 65% for gold and 64% for silver, and
using long-term prices of $3.10 per pound copper, $1,375 per ounce
gold, $1.10 per pound zinc and $17.00 per ounce silver. Pen II
mineral resources are estimated at a minimum NSR cut-off of $75 per
tonne and assume that the Pen II mineral resources would be
amenable to processing at the Stall mill.
Phase Three of Snow Lake Gold Strategy and Exploration
Upside
Exploration efforts at the Lalor mine were
highly successful in 2019 with the definition of additional mineral
resources at Lalor. The updated resource model at Lalor includes
4.4 million tonnes of inferred mineral resources, which have the
potential to extend the Lalor mine life beyond the current estimate
of ten years. A new copper-gold rich lens, called Lens 17, is
included in the updated inferred mineral resource estimate for
Lalor. Lens 17 contains an inferred mineral resource of 0.8 million
tonnes at 3.0% copper, 3.7 grams per tonne gold and 18 grams per
tonne silver. Please refer to Figure 2 for a 3D image of Lens 17,
including the location of the drill holes and a conceptual
development plan. Lens 17 and other lenses at Lalor, including the
copper-gold rich Lens 27, remain open down plunge and offer
opportunities to further expand Lalor’s resource base once suitable
underground drilling platforms have been established over the next
two years.
In addition, the mineral resources at Hudbay’s
satellite gold deposits in the Snow Lake region, such as Birch and
the New Britannia deposit, could provide feed for the New Britannia
processing facilities and further extend the mine life. New
Britannia and Birch are mineralized zones at the past producing New
Britannia gold mine that would be accessible with some investment
in the existing mining infrastructure.
The 1901 deposit is located approximately
half-way between the former Chisel North mine and the Lalor mine at
a depth between 500 metres to 700 metres and within 1,000 metres of
the existing haulage ramp to Lalor. The 1901 deposit could provide
additional feed for the processing facilities in Snow Lake. On
August 8, 2019, Hudbay published an initial inferred mineral
resource estimate for the zinc-rich 1901 deposit discovered six
months earlier. Since August 2019, the company has considered
various options to develop the 1901 deposit and is completing a
drill program aimed at converting a significant portion of the
inferred mineral resources to an indicated category and to define
an initial inferred mineral resource for the gold mineralization
previously intersected between two lenses of zinc-rich
mineralization. Hudbay intends to provide an update on the mineral
resource estimates and development options for the 1901 deposit
with its annual reserve and resource update in March 2021.
The Watts and Pen II deposits present additional
opportunities to further optimize the Snow Lake operations.
Confirmatory drilling conducted during 2019 at the 100% owned Watts
deposit supported an initial inferred mineral resource estimate of
approximately 3.2 million tonnes at 2.34% copper, 2.58% zinc, 0.95
grams per tonne gold and 31 grams per tonne silver. The Watts
deposit is located approximately 95 kilometres from the Stall
concentrator and is in close proximity to roads and power lines.
Please refer to Figure 1 for a map of the location of the Watts
deposit. Watts was discovered by the company in 1982 with the
majority of the drilling being conducted between 1996 and 2008.
Considering the available processing capacity at the Stall
concentrator and recent drilling successes which expanded the
volume of high-grade copper mineralization at Watts, Hudbay is now
confident that the potential for economic extraction of the Watts
deposit has been established to a level sufficient to report an
initial inferred mineral resource estimate.
Pen II is a low tonnage and high-grade zinc
deposit that starts from surface and is located within trucking
distance of the Stall mill. In 2019, Hudbay defined an indicated
resource estimate of 0.5 million tonnes at 8.9% zinc. Pen II could
constitute a supplemental source of feed for the Stall mill. Hudbay
expects to continue metallurgical testing, infill drilling and
technical studies in an attempt to confirm the technical and
economic viability of the resource.
In 2020 and 2021, additional technical studies
and exploration activities will be conducted to confirm how the
Lalor in-mine exploration targets and the regional gold and base
metal satellite deposits could be incorporated in the consolidated
business plan of the Snow Lake operations.
For additional details on the Lalor mine and the
company’s Snow Lake operations, refer to the technical report
titled “NI 43-101 Technical Report, Lalor and Snow Lake Operations,
Manitoba, Canada”, effective January 1, 2019, which was filed on
March 28, 2019 on Hudbay’s profile on SEDAR at www.sedar.com and on
EDGAR at www.sec.gov.
777 Mine
Based on the most recent estimate of mineral
reserves, the 777 mine life has been extended to the end of the
second quarter of 2022.
Current mineral reserves and resources
(exclusive of reserves) for 777 as of January 1, 2020 are
summarized below.
777 Mine Mineral Reserve and Resource
Estimates1 |
Tonnes |
Cu Grade (%) |
Zn Grade (%) |
Au Grade (g/t) |
Ag Grade (g/t) |
Mineral Reserves |
|
|
Proven |
|
2,122,000 |
1.44 |
4.55 |
2.01 |
27 |
Probable |
|
459,000 |
1.11 |
4.11 |
1.75 |
26 |
Total Proven and Probable |
|
2,581,000 |
1.38 |
4.47 |
1.96 |
27 |
Mineral Resources |
|
|
Measured |
|
370,000 |
2.02 |
3.69 |
1.97 |
25 |
Indicated |
|
140,000 |
1.02 |
3.85 |
1.57 |
26 |
Total Measured and Indicated |
|
510,000 |
1.75 |
3.74 |
1.86 |
26 |
Inferred |
|
210,000 |
1.48 |
5.22 |
3.11 |
40 |
|
|
|
|
|
|
|
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. Mineral reserves and resources
calculated using life-of-mine (2020-2022) average metal prices of
$2.92 per pound copper, $1.11 per pound zinc (includes premium),
$1,392 per ounce gold, $16.33 per ounce silver and using a C$/US$
exchange rate of 1.30.
Constancia Mine
In 2019, infill drilling and economic
re-evaluations have provided the basis to convert measured and
indicated mineral resources to mineral reserves which have largely
offset 2019 mining depletion. As a result, an additional year has
been added and the expected mine life has been maintained at 17
years. Inferred mineral resources have also increased in 2020 due
to higher long-term price forecasts in the NSR cut-off value used
for reporting.
Current mineral reserves and resources
(exclusive of reserves) for Constancia as of January 1, 2020 are
summarized below.
Constancia Mine Mineral Reserve and Resource
Estimates1 |
Tonnes |
Cu Grade (%) |
Mo Grade (g/t) |
Au Grade (g/t) |
Ag Grade (g/t) |
Constancia Reserves |
|
|
Proven |
|
408,800,000 |
0.28 |
85 |
0.035 |
2.76 |
Probable |
|
77,500,000 |
0.27 |
70 |
0.044 |
3.58 |
Total Proven and Probable - Constancia |
|
486,300,000 |
0.28 |
83 |
0.036 |
2.89 |
Pampacancha Reserves |
|
|
Proven |
|
32,400,000 |
0.59 |
178 |
0.368 |
4.48 |
Probable |
|
7,500,000 |
0.62 |
173 |
0.325 |
5.75 |
Total Proven and Probable - Pampacancha |
|
39,900,000 |
0.60 |
177 |
0.360 |
4.72 |
Total Proven and Probable |
|
526,600,000 |
0.30 |
90 |
0.061 |
3.03 |
Constancia Resources |
|
|
Measured |
|
122,700,000 |
0.18 |
55 |
0.028 |
1.77 |
Indicated |
|
154,300,000 |
0.20 |
65 |
0.033 |
1.87 |
Inferred |
|
83,100,000 |
0.18 |
43 |
0.036 |
3.39 |
Pampacancha Resources |
|
|
Measured |
|
11,400,000 |
0.41 |
101 |
0.245 |
4.95 |
Indicated |
|
6,000,000 |
0.35 |
84 |
0.285 |
5.16 |
Inferred |
|
10,100,000 |
0.14 |
143 |
0.233 |
3.86 |
Total Measured and Indicated |
|
294,400,000 |
0.20 |
63 |
0.045 |
2.01 |
Total Inferred |
|
93,200,000 |
0.18 |
54 |
0.057 |
3.44 |
|
|
|
|
|
|
|
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. Mineral reserves and resources
calculated using metal prices of $3.10 per pound copper, $11.00 per
pound molybdenum, $17.00 per ounce silver and $1,375 per ounce
gold. The Constancia and Pampacancha reserve pits consist of
operational pits of proven and probable reserves and are based on
metal prices noted, metallurgical recoveries applied by ore type
(between 84.4% to 90.5%), and processing costs of $4.54 per tonne
milled, general and administrative costs of $1.60 per tonne milled
and mining costs of $1.30 and $1.35 per tonne moved (waste and ore,
respectively).
Constancia North Drilling
Hudbay completed a drill program of seven holes
in December 2019 to test a possible extension of copper porphyry
and high-grade skarn mineralization occurring within 300 metres of
the edge of the current Constancia pit. The location of the drill
holes with respect to the existing Constancia pit is shown in
Figure 3. The occurrence of high-grade skarn mineralization in two
historical holes drilled in 2007 and 2008 was confirmed with this
program, including seven new intersections of copper porphyry and
high-grade copper-gold-silver skarn comparable to the
mineralization currently mined at Constancia. These intersections
warrant further exploration in 2020 to confirm if additional
mineral resources could be defined and potentially support an
extension of the Constancia pit to the north. Significant
historical and recent drill intersections north of the Constancia
pit are summarized below.
Hole ID |
From |
To |
Intercept1 |
Cu2,3 |
Au2,3 |
Ag2,3 |
(m) |
(m) |
(m) |
(%) |
(g/t) |
(g/t) |
CO-19-306 |
368.0 |
408.6 |
40.6 |
0.52 |
0.79 |
17.89 |
CO-19-307 |
42.0 |
62.0 |
20.0 |
0.20 |
0.03 |
3.55 |
CO-19-308 |
35.0 |
57.0 |
22.0 |
0.24 |
0.07 |
2.03 |
CO-19-310 |
263.0 |
361.0 |
98.0 |
1.10 |
0.08 |
5.93 |
CO-19-311 |
90.3 |
118.0 |
27.7 |
0.54 |
0.45 |
11.78 |
CO-20-314 |
73.0 |
100.0 |
27.0 |
0.23 |
0.03 |
16.55 |
CO-20-315 |
19.0 |
86.0 |
67.0 |
0.31 |
0.00 |
3.28 |
CO-07-1094 |
305.0 |
348.0 |
43.0 |
1.54 |
0.23 |
3.28 |
CO-08-2154 top |
24.0 |
59.9 |
35.9 |
0.25 |
0.21 |
11.47 |
CO-08-2154 bottom |
217.3 |
346.0 |
128.7 |
0.82 |
0.05 |
13.56 |
|
|
|
|
|
|
|
1 True widths cannot be estimated at this stage given the
uncertainties of the skarn mineralization geometry.2 All copper,
gold and silver values are uncut.3 Specific gravity results are
pending - assay results are length weighted.4 Historical drill
results from 2007 and 2008.
Hole ID |
From (m) |
To (m) |
Azimuth at Intercept |
Dip at Intercept |
Core Size |
Easting |
Northing |
Elevation |
Easting |
Northing |
Elevation |
CO-19-306 |
200,774 |
8,400,155 |
3,925 |
200,764 |
8,400,152 |
3,886 |
261 |
-76 |
HQ |
CO-19-307 |
200,842 |
8,400,371 |
4,235 |
200,837 |
8,400,366 |
4,216 |
227 |
-69 |
HQ |
CO-19-308 |
200,850 |
8,400,385 |
4,252 |
200,846 |
8,400,389 |
4,231 |
316 |
-75 |
HQ |
CO-19-310 |
200,768 |
8,400,676 |
4,085 |
200,784 |
8,400,647 |
3,993 |
153 |
-70 |
HQ |
CO-19-311 |
200,622 |
8,400,633 |
4,240 |
200,632 |
8,400,622 |
4,216 |
140 |
-57 |
HQ |
CO-20-314 |
200,826 |
8,400,101 |
4,199 |
200,833 |
8,400,100 |
4,173 |
92 |
-75 |
HQ |
CO-20-315 |
200,883 |
8,400,328 |
4,259 |
200,874 |
8,400,316 |
4,194 |
222 |
-77 |
HQ |
CO-07-109 |
200,762 |
8,400,618 |
4,055 |
200,777 |
8,400,602 |
4,018 |
135 |
-60 |
HQ |
CO-08-215 top |
200,889 |
8,400,237 |
4,256 |
200,877 |
8,400,237 |
4,222 |
270 |
-70 |
HQ |
CO-08-215 bottom |
200,827 |
8,400,238 |
4,073 |
200,790 |
8,400,237 |
3,950 |
268 |
-73 |
HQ |
|
|
|
|
|
|
|
|
|
|
Constancia Regional Potential
Along with successfully reaching an agreement to
acquire the surface rights at Pampacancha, Hudbay has continued to
progress its negotiations to conclude community agreements granting
exploration access to the past producing Caballito property and the
highly prospective Maria Reyna and Kusiorcco properties. In 2019,
Hudbay concluded an agreement with the Collana Vellile community
for exploration access to two exploration targets located less than
10 kilometres southwest of the Constancia mine and has initiated
baseline and exploration/technical activities required to access
and conduct drilling on these properties. Also, after reaching an
exploration agreement with the Quehuincha community in early 2019
and subsequently completing the required Consult Previa process,
the company has obtained a drill permit to test a high-grade skarn
target on the Quehuincha North property located 11 kilometers to
the north of Constancia. Please refer to Figure 4 for a map
highlighting the location of the regional targets within trucking
distance to the Constancia mine and processing facilities.
Other Development Assets
Rosemont is a copper development project,
located in Pima County, Arizona, approximately 50 kilometres
southeast of Tucson. The Rosemont project is expected to be an open
pit, shovel and truck operation and has an expected 19-year mine
life. There were no changes to Rosemont’s reserves and resources
during 2019. In the first half of 2019, Rosemont received the
Section 404 Water Permit from the U.S. Army Corps of Engineers and
the U.S. Forest Service (“USFS”) approved Rosemont’s Mine Plan of
Operations (“MPO”) following an extensive Environmental Impact
Statement process. The issuance of the MPO was the final
administrative step in the permitting process. On July 31, 2019,
the U.S. District Court for the District of Arizona (“Court”)
issued a ruling in two of the lawsuits challenging the U.S. Forest
Service’s issuance of the Final Record of Decision (“FROD”) for the
Rosemont project (the “US Mining Law Litigation”). The Court ruled
to vacate and remand the FROD thereby delaying the expected start
of construction of Rosemont. In December of 2019, Hudbay and the
U.S. Department of Justice each filed a notice of appeal in respect
of the Court’s decision in the US Mining Law Litigation to the U.S.
Ninth Circuit Court of Appeals. Hudbay expects the appeals process
to take approximately two years and remains committed to evaluating
all options to advance the Rosemont 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 have not changed over the past year and are comparable in
size to Constancia and Rosemont. Hudbay views the Mason project as
a long-term option for potential future development and a strong
addition to its pipeline of long-term growth opportunities. In the
fourth quarter of 2019, Hudbay acquired a prospective package of
patented and unpatented mining claims contiguous to the Mason
project. The land package, known as the Mason Valley properties, is
an exploration stage project that includes past producing mines and
has the potential to provide additional mineral resources to the
Mason project. The company has also entered into an option
agreement to acquire an 80% interest in the Gray Hills unpatented
mining claims in Lyon County, Nevada, located approximately 25
kilometres southeast of the Mason project, as part of its land
consolidation strategy in the Yerington district.
Corporate Update
As announced on March 20, 2020, the company
initiated a temporary and orderly shutdown of operations at
Constancia after the Peruvian government declared a state of
emergency causing the manufacturing and transport of critical
mining supplies to be restricted. The state of emergency in Peru
has since been extended until April 12, 2020. A smaller workforce
has been maintained at Constancia to oversee critical aspects of
the operation, with the overarching goal of facilitating a quick
and efficient ramp up back to normal levels once the regional
situation improves.
In Manitoba, Hudbay’s mines continue to operate
and ship concentrate and zinc metal. The team is actively engaging
with its employees, contractors and the local communities to manage
the evolving situation and is implementing its business
preparedness plan, including planning activities in the event the
company needs to reduce or cease operations or construction
activities in the future. The company’s focus is on maintaining
business continuity and a safe environment for its workers and the
communities.
Hudbay continues to prudently manage its
liquidity position and currently has approximately $300 million in
cash and cash equivalents. The company proactively amended its
credit facilities in February 2020 to provide additional near-term
flexibility and is evaluating a variety of liquidity and capital
spending options if the current environment persists. The company
has the ability to defer a majority of its 2020 growth capital
expenditures at Pampacancha and the New Britannia gold mill. The
company will continue to monitor the macro-environment and the
status of its operations to assess the potential impacts on its
annual guidance disclosure and expects to provide an update with
its first quarter results.
The company also acknowledges that on March 23,
2020, Fitch Ratings has assigned a first-time Long-Term Issuer
Default Rating of ‘B+’ to Hudbay and Hudbay Peru S.A.C., a
'BB+'/'RR1' rating to the company's senior secured revolving credit
facilities and a 'B+'/'RR4' rating to the unsecured notes, and a
“stable” outlook on its rating.
Non-IFRS Financial Performance
Measures
Cash cost and sustaining and all-in sustaining
cash cost per ounce of gold produced are shown because the company
believes they help investors and management assess the performance
of its Snow Lake operations, including the margin generated by the
operations and the company. Unit operating costs are shown because
the measures are used by the company as a key performance indicator
to assess the performance of its mining and processing operations.
These measures do not have a meaning prescribed by IFRS and are
therefore unlikely to be comparable to similar measures presented
by other issuers. These measures should not be considered in
isolation or as a substitute for measures prepared in accordance
with IFRS and are not necessarily indicative of operating profit or
cash flow from operations as determined under IFRS. Other companies
may calculate these measures differently. For further details on
these measures, including reconciliations of historical unit
operating costs and cash costs per pound of copper produced to the
most comparable IFRS measures, please refer to page 42 of Hudbay’s
management’s discussion and analysis for the three and twelve
months ended December 31, 2019 available on SEDAR at www.sedar.com
and footnote “iv” to this news release.
Qualified Person
The scientific and technical information
contained in this news release related to the Constancia mine and
Rosemont project has been approved by Cashel Meagher, P. Geo,
Hudbay’s Senior Vice President and Chief Operating Officer. The
scientific and technical information related to the company’s other
material mineral projects contained in this news release has been
approved by Olivier Tavchandjian, P. Geo, Hudbay’s Vice-President,
Exploration and Geology. Messrs. Meagher and Tavchandjian are
qualified persons pursuant to NI 43 101. For a description of the
key assumptions, parameters and methods used to estimate mineral
reserves and resources at Hudbay’s material properties, 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,
please see the technical reports for the company’s material
properties as filed by Hudbay on SEDAR at www.sedar.com.
Additional details on the company’s material
properties, including a year-over-year reconciliation of reserves
and resources, is included in Hudbay's Annual Information Form for
the year ended December 31, 2019, which is available on SEDAR at
www.sedar.com.
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”). Subject to the SEC
Modernization Rules described below, the United States reporting
requirements are currently governed by the United States Securities
and Exchange Commission ("SEC") Industry Guide 7 (“SEC Industry
Guide 7”) under the Securities Act of 1933, as amended.
The definitions used in NI 43-101 are
incorporated by reference from the Canadian Institute of Mining,
Metallurgy and Petroleum (“CIM”) – Definition Standards adopted by
CIM Council on May 10, 2014 (the “CIM Definition Standards”). For
example, the terms “mineral reserve”, “proven mineral reserve” and
“probable mineral reserve” are Canadian mining terms as defined in
NI 43-101, and these definitions differ from the definitions in SEC
Industry Guide 7. Furthermore, while the terms “mineral
resource”, “measured mineral resource”, “indicated mineral
resource” and “inferred mineral resource” are defined in and
required to be disclosed by NI 43-101, these terms are not defined
terms under SEC Industry Guide 7.
Under SEC Industry Guide 7 standards, a “final”
or “bankable” feasibility study is required to report reserves and
the primary environmental analysis or report must be filed with the
appropriate governmental authority. Further, under SEC Industry
Guide 7, mineralization may not be classified as a “reserve” unless
the determination has been made that the mineralization could be
economically and legally produced or extracted at the time the
reserve determination is made. Reserve estimates contained in this
news release may not qualify as “reserves” under SEC Industry Guide
7. Further, until recently, the SEC has not recognized the
reporting of mineral deposits which do not meet the SEC Industry
Guide 7 definition of “reserve”.
The SEC adopted amendments to its disclosure
rules to modernize the mineral property disclosure requirements for
issuers whose securities are registered with the SEC under the
Securities Exchange Act of 1934, as amended. These amendments
became effective February 25, 2019 (the “SEC Modernization Rules”)
with compliance required for the first fiscal year beginning on or
after January 1, 2021. The SEC Modernization Rules replace the
historical disclosure requirements for mining registrants that were
included in SEC Industry Guide 7, which will be rescinded from and
after the required compliance date of the SEC Modernization
Rules. As a result of the adoption of the SEC Modernization
Rules, the SEC now recognizes estimates of "measured mineral
resources", "indicated mineral resources" and "inferred mineral
resources". In addition, the SEC has amended its definitions of
"proven mineral reserves" and "probable mineral reserves" to be
“substantially similar” to the corresponding CIM Definition
Standards, incorporated by reference in NI 43-101.
United States investors are cautioned that while
the above terms are “substantially similar” to CIM definitions,
there are differences in the definitions under the SEC
Modernization Rules and the CIM Definition Standards. Accordingly,
there is no assurance any mineral reserves or mineral resources
that the Company may report as "proven mineral reserves", 'probable
mineral reserves", "measured mineral resources", "indicated mineral
resources" and "inferred mineral resources" under NI 43-101 would
be the same had the Company prepared the reserve or resource
estimates under the standards adopted under the SEC Modernization
Rules.
United States investors are also cautioned that
while the SEC will now recognize "measured mineral resources",
"indicated mineral resources" and "inferred mineral resources",
investors should not assume that any part or all of the
mineralization in these categories will ever be converted into a
higher category of mineral resources or into mineral reserves.
Mineralization described using these terms has a greater amount of
uncertainty as to their existence and feasibility than
mineralization that has been characterized as reserves.
Accordingly, investors are cautioned not to assume that any
"measured mineral resources", "indicated mineral resources", or
"inferred mineral resources" that the Company reports are or will
be economically or legally mineable.
Further, "inferred mineral resources" have a
greater amount of uncertainty as to their existence and as to
whether they can be mined legally or economically. Therefore,
United States investors are also cautioned not to assume that all
or any part of the "inferred mineral resources" exist. In
accordance with Canadian rules, estimates of "inferred mineral
resources" cannot form the basis of feasibility or other economic
studies, except in limited circumstances where permitted under NI
43-101.
For the above reasons, 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.
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 and potential revisions to such guidance,
anticipated production at the company’s mines and processing
facilities, expectations regarding the impact of the COVID-19
pandemic on our operations, financial condition and prospects,
expectations regarding the timing of mining activities at the
Pampacancha deposit, the anticipated timing, cost and benefits of
developing the Rosemont project and the outcome of litigation
challenging Rosemont's permits, expectations regarding the Lalor
gold strategy, including the refurbishment of the New Britannia
mill, and the possibility of optimizing the value of the gold
resources in Manitoba, the future potential of the 1901 deposit,
including the possibility of identifying additional gold resources,
the possibility of converting inferred mineral resource estimates
to higher confidence categories, the potential and the company’s
anticipated plans for advancing its mining properties surrounding
Constancia and the Mason project, anticipated mine plans,
anticipated metals prices and the anticipated sensitivity of the
company’s financial performance to metals prices, events that may
affect the 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
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 duration of the state of emergency in Peru and the
company's ability to resume operations at Constancia;
- no significant interruptions to the company's operations in
Manitoba or significant delays to its development projects in
Manitoba and Peru due to the COVID-19 pandemic;
- the availability of spending reductions and liquidity
options;
- the timing of development and production activities on the
Pampacancha deposit;
- the timing of the Consulta Previa and permitting process for
mining the Pampacancha deposit;
- the timing for reaching additional agreements with individual
community members and no significant unanticipated delays to the
development of Pampacancha;
- the successful completion of the New Britannia project on
budget and on schedule;
- the successful outcome of the Rosemont litigation;
- 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, if needed;
- the ability to complete project targets 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 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;
- 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 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 the
COVID-19 pandemic and its effect on our operations, projects,
financial condition and prospects, the political situation 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),
uncertainties related to the development and operation of the
company’s projects (including risks associated with the litigation
affecting the Rosemont project), risks related to the U.S. district
court's recent decisions to set aside the U.S. Forest Service's
FROD and the Biological Opinion for Rosemont and related appeals
and other legal challenges, risks related to the new Lalor mine
plan, including the schedule and cost for the refurbishment of the
New Britannia mill and the ability to convert inferred mineral
resource estimates to higher confidence categories, risks related
to the schedule for mining the Pampacancha deposit (including risks
associated with COVID-19, the Consulta Previa process, risks
associated with reaching additional agreements with individual
community members and risks associated with the rainy season in
Peru, and the impact of any schedule delays), dependence on key
personnel and employee and union relations, risks related to
political or social 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, 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 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.
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. The company 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) and zinc metal. 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 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 investor and media inquiries, please
contact:
Candace BrûléDirector, Investor Relations
(416) 814-4387 candace.brule@hudbay.com
Figure 1: Snow Lake Location Map
is available at
https://www.globenewswire.com/NewsRoom/AttachmentNg/fcb0ea38-13d6-47ea-a7b3-15e1a98be28e
Location of Snow Lake regional deposits,
existing mines, processing mills and transportation
infrastructure.
Figure 2: Lalor Potential Mine Life
Extension is available at
https://www.globenewswire.com/NewsRoom/AttachmentNg/b5c04b5c-f2ff-481b-be7f-5a6d9852ccf4
3D view of Lens 17 proposed development and
potential Lalor mine life extension.
Figure 3: Drilling North of the
Constancia Pit is available at
https://www.globenewswire.com/NewsRoom/AttachmentNg/d9dfc780-f36d-4f81-8b9c-50f6ea10247a
3D view of drilling north of the current
Constancia reserve and resource pit shells. The black lines
represent drill holes without significant mineralized
intersections.
Figure 4: Constancia Regional
Targets is available at
https://www.globenewswire.com/NewsRoom/AttachmentNg/ebf41d73-3eb7-4446-94e8-ccd7dac5bcc4
Map of the exploration targets located within
trucking distance to the Constancia mine and processing
facilities.
_______________i Life-of-mine gold metal
contained in concentrate and doré starting in year 2020.ii Based on
S&P Global’s 2020 all-in sustaining cost curve.iii Average
annual gold production of 152,768 ounces from 2022 to 2029 in the
new mine plan compared to average annual gold production of 140,800
ounces from 2022 to 2026 in the previous mine plan.iv 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. Sustaining cash cost includes all operating
(mining, milling and G&A) and sustaining capital costs
associated with Lalor and Snow Lake gold production and is reported
net of by-product credits. By-product credits are based on the
following assumptions: zinc price (including premium) of $1.18 per
pound in 2020, $1.08 per pound in 2021 and 2022, and $1.17 per
pound long-term; copper price of $2.65 per pound in 2020, $3.00 per
pound in 2021, and $3.10 per pound in 2022 and long-term; silver
price of $16.00 per ounce in 2020, $16.50 per ounce in 2021 and
2022, and $17.00 per ounce long-term; C$/US$ exchange rate of 1.30
in 2020 and long-term.
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