After yet another quarterly loss, Hudbay has unveiled plans to boost production and save money at its lone Flin Flon mine.
The company was $11.8 million in the red for the third quarter, citing a $34.5-million impairment loss related to equipment liquidation and deposits at its Arizona division.
In the fourth quarter, Hudbay forecasts improved metal output and lower production costs at 777 Mine as the company begins to reap anticipated benefits from a mine fleet renewal.
“As part of our capital plans in 2015, we purchased scoops and trucks for 777 to upgrade the fleet,” wrote Rob Winton, vice-president, Manitoba Business Unit, in an email. “This new equipment will reduce maintenance costs and improve equipment availability, which ensures consistent production. By increasing production, unit costs will fall ($/tonne is lower as you improve the tonnes mined).”
In Flin Flon and Snow Lake, Hudbay said the volume of ore processed in Q3 was “relatively consistent” with the same quarter of 2014. Gold, zinc and copper grades were up 17 per cent, six per cent and five per cent, respectively.
Silver grades, however, fell 15 per cent due to normal mine sequencing, the company said.
Operating expenses per tonne of ore were up 34 per cent in northern Manitoba. Hudbay cited higher commercial production at Snow Lake operations, which have higher unit costs, and increased unit expenses at Flin Flon operations due to lower output at 777.
Company-wide, Hudbay has now lost $90.7 million in 2015. Nevertheless, the company reported massive year-over-year production increases thanks to its Constancia Mine in Peru.
Compared to the third quarter of 2014, company-wide copper production this year went up 389 per cent, silver increased 329 per cent, gold went up 45 per cent and zinc increased seven per cent.
While operating cash flows benefitted from these increases, they were partly offset by lower prices for all metals, Hudbay said.
The company said it still expects to achieve its 2015 production and expense targets at all operations.
Mining operations at Constancia went as planned in Q3, Hudbay said, though shipments of copper concentrate to the port were constrained by truck driver availability and truck turnaround time due to roadwork.
As a result of that and a rapid ramp up, concentrate on site rose to about 65,000 tonnes at quarter end – though the company said significant progress has been made in moving this excess concentrate from the mine site to the port.
Hudbay said the equipment impairment loss in Arizona, site of the proposed Rosemont copper mine, followed the completion of a value engineering process.
That process deemed certain equipment previously purchased or ordered by Augusta Resources, a company Hudbay purchased in 2014, to be unsuitable for the design goals at Rosemont.
“…different equipment will better meet Rosemont’s objectives while observing permitting commitments,” Hudbay said in a news release.
Though it happened on Nov. 2, after Q3 ended, Hudbay also announced that it has completed the sale of Balmat Holding Corp.
As part of a three-way deal, Arizona-based Star Mountain Resources acquired Balmat Holding Corp. – including the idle Balmat zinc mine in New York State.
On closing, Hudbay received 550,000 shares of Star Mountain and $1 million in cash. Hudbay previously received $500,000 in upfront deposit payments and is entitled to receive up to an additional $15.5 million in future cash payments or, at Star Mountain’s election, $7 million in cash within three months of the closing date.
