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.
Hudbay will slash about $100 million in spending over the next 17 months, but the company says Flin Flon and Snow Lake operations will proceed as usual. Reacting to a weak market, Hudbay will reduce sustaining capital expenditures in Manitoba by $20 million and lower company-wide exploration by $30 million, among other cuts. 'Spending reductions are planned throughout all areas of Hudbay and the Flin Flon and Snow Lake areas are no exception,' said Brad Lantz, vice-president of Hudbay's Manitoba operations. Lantz said the company has made 'significant improvements' in recent years that 'should enable us to reduce spending over this critical period.' 'Operations in Flin Flon and Snow Lake will continue in the normal course through this period,' he added. But that doesn't mean there won't be changes. In addition to spending cuts, Hudbay plans to delay construction of the new concentrator at the Lalor mine near Snow Lake. Originally set to open in late 2014, the concentrator is now expected to launch operations in late 2016 or early 2017. As such the company will spend $9 million to expand, by mid-2014, production capacity at the existing Snow Lake concentrator to 2,700 tonnes per day. See 'Reas...' on pg. Continued from pg. That is expected to accommodate Lalor ore until the end of 2016, letting Hudbay delay spending an estimated $325 million on a new concentrator. 'The upgrade of the Snow Lake concentrator coincides nicely with planned development at Lalor and it allows us to process Lalor ore in Snow Lake,' Lantz said. Hudbay said it will continue engineering and optimization work for the new concentrator, reassessing timing for construction of the facility following completion of an updated Lalor mine plan later this year. The Lalor mine itself, as well as the Reed mine further outside Snow Lake, 'remain on track and on budget,' Lantz said. 'They have maintained schedule and cost spending and are very important aspects of the significant increased growth that Hudbay will start to deliver beginning in 2014 and beyond,' Lantz said. As for exploration, although expenditures are being cut, some important work will proceed. Lantz said Hudbay expects to establish a drift in early 2014 to allow for underground exploration of gold and copper zones at Lalor. Underground exploration at 777, Flin Flon's last active mine, will also continue, he said. Target generation Above ground, Lantz said surface exploration will focus on 'target generation' in the Flin Flon Greenstone Belt in an effort to locate the company's next major mine. 'An emphasis is being placed on data collection and geophysical work to identify priority exploration targets in the area,' he added. Hudbay had originally planned to spend $40 million on exploration in 2013, with slightly more than half of the funds dedicated to the Flin Flon-Snow Lake area. No figures were available as to what Hudbay anticipated to spend on exploration in 2014 prior to announcing its new cost-cutting measures. After capital expenditures and exploration are reduced, Hudbay still has about another $50 million to cut throughout the next 17 months _ the rest of 2013 and all of 2014. The lion's share of those cuts, $46 million, will stem from a lowered stock dividend, and $4 million will come from reductions at the corporate level. News of the spending cuts follows word that Hudbay lost $52.7 million in the second quarter of 2013. That was virtually the same amount by which overall revenue dropped compared to the same quarter of 2012, a fact Hudbay attributed to lower sales volumes, mainly due to the closure of the Trout Lake and Chisel North mines and sagging metal prices. Second-quarter production in Flin Flon and Snow Lake was down 11 per cent compared to the same period last year, again due to the Trout Lake and Chisel North closures. Production losses were partially offset by early production from Lalor. Though Hudbay has now lost more than $230 million since the start of 2011, and has not had a profitable year since 2010, Lantz said the company is in 'exciting times.' Hudbay says it remains on track to meet its production and operating cost projections this year. Though Hudbay continues to bleed red ink operationally, its bank account is bulging. As of June 30 the company had total available and committed liquidity of about $1.5 billion, including cash and cash equivalents of some $1.1 billion. In releasing its latest financial figures last week, the Toronto-based Hudbay also announced the appointment of Sarah B. Kavanagh and Igor Gonzales to its board of directors.
