The Reminder is making its archives back to 2003 available on our website. Please note that, due to technical limitations, archive articles are presented without the usual formatting.
Jonathon Naylor Editor Hudbay lost $6.1 million in the latest quarter, adding to a pool of red ink that threatens to turn 2012 into another unprofitable year. But the company blamed the loss on 'significant items' it 'does not view as part of its core operations,' including foreign exchange losses, investments in junior miners and certain transaction costs. CEO David Garofalo said in a news release last week that Hudbay's 'underlying business in northern Manitoba' showed 'consistency,' with overall production and performance for the year 'within expectations.' With Hudbay also securing US$1.25 billion of capital in the quarter, he said the company has advanced 'plans for significant growth in copper, gold and zinc production over the next three years from three new mines now under construction.' Two of those three mines, Lalor and Reed, are located in the Snow Lake area, while the third, Constancia, is in Peru. See 'Loss...' on pg. 3 Continued from pg. 1 Hudbay's third-quarter loss of $6.1 million followed a second-quarter loss of $30.4 million and a first-quarter profit of $8 million. For the first three quarters of 2012, Hudbay is now in the red to the tune of $28.5 million. Compared to the third quarter of 2011, revenues were down $67.7 million, to $144.6 million, in the latest three-month period. Hudbay said this was mainly due to lower sales of copper and gold. In last year's third quarter, the company drew down an unusually high copper concentrate inventory from its Flin Flon operations. Overall revenue for the first three quarters of 2012 is down $114.9 million from the same period last year, with the company blaming lower sales volumes and weaker metal prices. Manitoba operations produced 20 per cent less ore in quarter 3 of this year compared to the same quarter in 2011. The planned closure of the Trout Lake mine, which ended its run in June, was offset partly by the start of production at Lalor. At Lalor, as of Sept. 30, Hudbay had invested about $305 million of a $704-million capital budget and entered into an additional $76 million in commitments. In the latest quarter, Hudbay commissioned Lalor's hoisting system in the main ventilation shaft, which is now capable of hoisting 1,400 tonnes of combined ore and waste per day. First ore production from the base metal lens no. 10 began in August, and to the end of September the company had hoisted over 14,000 tonnes of ore. Underground mobile equipment was delivered and Hudbay is now in the process of commissioning the fleet. Snow Lake's Chisel North mine workforce has transitioned to Lalor and established ore faces on the 810- and 825-metre levels. A contractor is continuing to ramp from the 840-metre level to the 910-metre level and will develop to the 910-metre production shaft station. The main production shaft, sunk to about 325 metres, is now a third of the way complete. Water-bearing seams slowed the shaft's progress in September, but it has now advanced beyond the level where seepage occurred. The first full year of production from the main shaft is expected in 2015. Processed Lalor ore will be processed at the nearby Snow Lake concentrator until completion of the production shaft and new concentrator, which is expected in late 2014. A new copper flotation circuit was installed in the Snow Lake concentrator to maximize copper recoveries from Lalor ore until processing shifts to the new concentrator. Basic engineering for the new concentrator is ongoing with value engineering reviews and design optimization underway. Hudbay has placed orders for the surface crusher and the SAG and ball mills, with delivery still on schedule. Meanwhile, at the Reed mine now under development, the focus in the third quarter was the completion of the portal trench excavation. Of Hudbay's $72-million capital budget for Reed, the company had invested about $16 million and entered into an additional $13 million in commitments as of Sept. 30. Hudbay has completed the installation of a new office and dry complex, installed power to the ramp and site via onsite diesel generators, poured the foundations for the shop and warehouse, and installed a ventilation fan, silencers and heater at the portal in preparation for ramp development and onset of winter conditions. Hudbay's workforce of development miners, electricians and mechanics are staying at an onsite camp. Necessary materials and mobile equipment for initial ramp development is onsite, and the first portal development round was taken in October. The company said the Reed project is on schedule with initial production expected by the fourth quarter of 2013 and full production by the first quarter of 2014. Further from home, the latest quarter saw Hudbay approve a US$1.5 billion investment in Peru's Constancia copper project. The Constancia development schedule contemplates nine quarters of construction, with initial production in late 2014 and full production starting in the second quarter of 2015. Of the US$1.5 billion capital budget, Hudbay had invested about US$154 million and entered into an additional US$322 million in commitments as of Sept. 30. Front-end engineering and design work at Constancia is complete. The principal construction permit was granted in June and other required permits are expected in the ordinary course. Site activity to date includes completion of a 2,100-bed camp, which is scheduled to expand to 3,000 beds by the end of this year to accommodate peak construction needs. Major long lead items are secured and include mills, crushers, flotation cells, pumps, regrind mills and mine equipment, including trucks, shovels and drills. Bids have been received from multiple electrical power providers and costs and availability are anticipated to fall within operating cost budget assumptions, Hudbay said. Exploration is ongoing at Constancia with the goal of expanding the current resource. Last year, 2011, was by far Hudbay's worst financial year since scooping up its Flin Flon and Snow Lake operations, as the company lost $161.9 million.
