Hudbay releases Lalor mine expansion, Flin Flon shutdown plans

Plan stays same for 2021 mill, zinc plant, 777 shutdown

Hudbay has announced a major expansion of Snow Lake operations, but has little good news on the future of Flin Flon’s mining facilities.

In advance of the company’s fourth quarter report release last week, the company announced that gold production at Hudbay’s Lalor mine would more than double by 2022.

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The company announced a $124 million investment, including $10 million this year, to refurbish the New Britannia mill, expected to almost double gold recovery rates.

Hudbay plans to use the Flin Flon mill facilities and Stall mill to process material until 2021, processing about 3,500 tonnes a day at Stall and about 1,000 tonnes a day in Flin Flon.

Hudbay released an updated resource and reserve estimate along with the announcement of the Lalor expansion, showing an additional 5.9 million tonnes of inferred mineral resources at and around the mine property. The increased estimate may extend the lifespan of the mine past its currently estimated nine years.

“The updated Lalor mine plan demonstrates the significant value we have unlocked so far by leveraging our existing processing infrastructure and several inexpensive acquisitions to develop a compelling strategy to maximize the value of our gold mineralization at Lalor and nearby deposits,” said Hudbay president and CEO Alan Hair during the company’s fourth quarter results release.

Hair touted ongoing success with other Hudbay operations, including the Rosemont copper mine project in Arizona, the Constancia copper mine in Peru and the recently acquired Ann Mason project in Nevada, added to the fold last year as part of Hudbay’s purchase of Canadian mining company Mason Resources.

Mines in Hudbay’s Manitoba Business Unit saw a hit in overall productivity in the fourth quarter, due in large part to the closure of the company’s Reed mine last summer. Operating costs for the unit increased in the fourth quarter, with higher mine costs at 777 and Lalor and maintenance costs at the Flin Flon cited as reasons for the increase, along with the Reed closure.

The company reported an estimated loss of around $3.5 million in the last quarter of 2018, compared to a profit of nearly $94.3 million in the last quarter of 2017. Hair said the reason for the change is due to lower realized prices for zinc and copper.

Flin Flon

Hair provided some insight into the pending shutdown of Hudbay’s Flin Flon operations, confirming that the facilities will shut down by the end of 2021 and the company is in the process of finalizing aspects of the closure, including putting portions of the Flin Flon and 777 facilities in care and maintenance.

“We’re actually working through all aspects of the Flin Flon closure planning. Basically, we announced that it looks as if it will close by the end of 2021, currently. There’s a number of studies in place to see what’s the best way to maximize the value of those assets,” said Hair.

“The current thought is that we put the Flin Flon concentrate and tailings facility in some form of care and maintenance.”

Hair used New Brittania as an example of a mining project with a successful restart after a lengthy period in care and maintenance, adding mine sites with existing infrastructure and tailings facilities will have value for mining companies hoping to start operations.

“If you look at New Britannia, we acquired it in 2015 and it had already been in care and maintenance since 2005. We’re going to bring it into operation close to 20 years after it was put into care and maintenance,” he said.

“These assets with associated tailings facilities that are already permitted are obviously very valuable and provide optionality for developing future deposits that wouldn’t necessarily support the capital associated with that level of infrastructure.”

Hair mentioned the cost to close operations at the 777 facility is around $2.5 million, followed by decisions on how to use assets at the mine.

“It’s a stand-alone entity. There’s about $2.5 million associated with closing that. Then we have to make the decision on how best to optimize the remaining process assets, and that is part of some of the studies that are currently ongoing,” he said.

“In terms of what form the ongoing care and maintenance might take, that’s some of the details we’re working through. There’s always a trade-off between what level of care and maintenance you go with and the ultimate restart cost. That all has to be completed.”

The reopening of the New Britannia mill in 2022 comes mere months after the existing plan for the Flin Flon area – which includes a likely shutdown of 777 mine and the Flin Flon zinc plant and mill – ends their shut down operations in 2021.

Exploration

Hudbay also provided information into exploration of the greater Flin Flon area, mentioning more details about the company’s surveys last year. Airborne geophysical surveys took place about 40 kilometres south of Flin Flon, covering an area around 400,000 hectares in size stretching down to around Goose Lake.

“That generated a number of targets, the nature of which the terrain down there lends itself to more winter exploration. We’re actually growing some of those targets this year as well,” said Hair.

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