Hudbay has more clarity on the lifespan of its mines – and it’s a good news, bad news scenario for northern Manitoba.
The company announced last week that 777 mine is expected to close in late 2020. Hudbay had previously been using the more vague timeframe of either 2019 or 2020.
The new projection gives Flin Flon’s last remaining mine another three years – plus three to nine months – of operations.
It’s based on resource estimates at 777 as of Jan. 1, 2017. As of that date, the mine contained 4.47 million tonnes of proven and probable tonnes of ore.
Under Hudbay’s plans, the closure of 777 will have a significant ripple effect on Flin Flon operations. It will prompt the closure of the mill, while the zinc plant could remain open at a reduced capacity if sufficient cost savings can be secured.
Elsewhere, Hudbay has reduced the expected lifespan of Lalor mine – but with one important caveat.
Lalor, located near Snow Lake, will operate for an estimated 10.5 additional years, down from the 14 years previously projected. This would take the mine to the latter half of 2027.
Hudbay spokesman Scott Brubacher said the new “compressed” lifespan is the result of plans to increase production at the Stall concentrator, which is fed by Lalor ore.
The company’s new plan for Lalor boosts Stall production by 50 per cent to 4,500 tonnes of ore per day starting in the third quarter of 2018. Zinc production at the mine is expected to rise 27 per cent in 2017, to 90,000 tonnes.
Hudbay is also refurbishing the former New Britannia gold mill, which it purchased in 2015. The company expects the mill to achieve significantly higher gold recoveries than the Stall concentrator.
Construction of a paste backfill plant to serve Lalor is expected to be completed in the first quarter of 2018 for a total estimated cost of US$50 million, of which US$40 million was included in Hudbay’s 2017 growth capital guidance.
While Hudbay’s plan reduces Lalor’s projected lifespan, Brubacher said the company is “firmly optimistic” about the potential for more discoveries in the Lalor area and has budgeted $4 million for exploration this year.
“Our enhancements to the Lalor mine plan offer low-cost, near-term zinc production growth with potential future gold production upside, and positions our Manitoba business unit to be a strong contributor to Hudbay’s results for many years to come,” Alan Hair, Hudbay president and CEO, said in a news release.
Hudbay’s revised estimates continue to see Reed mine, located between Flin Flon and Snow Lake, set to close in late 2018. The company’s smallest mine, Reed employed about 60 full-time workers as of February.
Hudbay said its proposed Rosemont copper mine in Arizona is projected to have a 19-year lifespan, demonstrating “robust economics” on the estimated $1.9 billion project capital cost.
The company cannot say when Rosemont might be developed, noting work is conditional upon receipt of final permits.
“The Rosemont project is expected to be one of the first new copper mines to be built when copper prices improve and, once approved, has the capacity to generate strong returns for Hudbay shareholders,” said Hair.
Hair said Hudbay’s Manitoba and Peru operations are expected to generate strong cash flow that can be reinvested in Rosemont in order to grow long-term copper production.
Life of mines
Hudbay’s updated projections for the lifespan of its mines:
777 mine Flin Flon.................................. late 2020
Lalor mine Snow Lake.................................. latter 2027*
Reed mine northern Manitoba.................................. late 2018
Constancia mine Peru.................................. 2036
Rosemont mine US.................................. 19 years from start of production
* Hudbay is optimistic that exploration can extend the life of Lalor
