Hudbay’s efforts to extend the life of its last remaining Flin Flon mine remain a work in progress.
The company has been drilling within 777 mine in search of untapped ore that would justify the mine’s existence beyond another seven years.
“We continue to test geologically favourable areas through our underground exploration program so that we can expand 777’s mine life,” said Hudbay spokesperson Daniel Weinerman, “but as of [Wednesday], 777’s current current reserves suggest a mine life to 2021.”
Weinerman said exploratory drilling from the underground platform at 777 has yielded some minor intersections of mineralization.
Hudbay has also been conducting geophysical surveys on surface to identify drilling targets, he said.
“As per Hudbay policy, we will disclose any noteworthy drill results by way of a news release,” Weinerman said.
While Hudbay’s drilling contractor is currently on a two-week shutdown, its work at 777 will resume in August, he said.
Elsewhere, Weinerman said the exploration drift at
Lalor mine near Snow Lake is on schedule to be completed in the second half of this year.
Hudbay will provide an update to its Lalor exploration program in its quarterly report next week, he said.
Hudbay is devoting $15.8 million – nearly 80 per cent of its 2014 exploration budget – to the search for viable deposits in northern Manitoba.
Almost all of the money will be used to explore sites near existing Hudbay deposits, a tried and true company strategy.
For Hudbay, part of success with this approach will mean pinpointing a mine that, unlike Lalor and Reed outside Snow Lake, are in close proximity to Flin Flon.
In an interview with The Reminder in January, Brad Lantz, vice-president of Hudbay’s Manitoba Business Unit, said the company is optimistic that 777 can last longer than currently projected.
Lantz said 777 was originally projected to run out of ore in 2014-15, but successful exploration pushed the expiry date to 2021. Just last year, an expansion of the mine, 777 North, entered production.
During a presentation in Flin Flon three years ago, Hudbay CEO David Garofalo was candid in his confidence in 777.
Addressing the Chamber of Commerce, Garofalo displayed a chart illustrating how Hudbay’s mines in the region often stretch far past initial projections.
“777, by Flin Flon Greenstone [Belt] standards, is still a very young deposit,” he said during a February 2011 visit.
While he did not consider 777 “a world-class deposit,” Garofalo did label it “a blue-chip operation.”
What is sometimes lost in the public dialogue around 777 is that while it is the only active mine within Flin Flon’s borders, it is by no means the entire Hudbay enterprise.
That said, 777 does supply crucial feed for Hudbay’s Flin Flon processing operations. In 2013, the company projected that 78 per cent of its tonnage would come from 777, but that was with very limited production from Lalor and Reed.
A closure of 777 without a new mine to replace it would thus mean some layoffs not only at the mine, but also within the processing operations.
Not to be overlooked in the discussion around 777 is an ongoing lawsuit between Hudbay and Callinan Royalties, a Vancouver-based company.
Callinan is suing Hudbay for allegedly failing to share in full profits from 777. Callinan is entitled to 6.66 per cent of profits from both 777 and the now-defunct Callinan mine. Hudbay must also pay Callinan 25 cents for every tonne of ore milled from the mines.
Complicating matters, a blog on The Mining Newsletter website noted, is the fact that Callinan owns the 777 Deeps property, better known as the War Baby deposit.
As TMN described it, War Baby “sits directly in the middle” of 777 and therefore “has to be acquired by Hudbay as the source of mill feed most convenient to and in the way of Hudbay’s operations in the region.”
