TMX, NYSE – HBM 2021 No. 8 Hudbay Announces Updated Constancia and Snow Lake Mine Plans and Provides Annual Reserve and Resource Update Global Increase to Copper and Gold Reserves
- Hudbay’s total mineral reserves increase by approximately 170,000 tonnes of contained copper and 360,000 ounces of contained gold compared to the prior year’s estimates after adjusting for mining depletion in 2020.
- New three-year production guidance issued; consolidated copper and gold production are expected to increase by 36% and 125%i, respectively, by 2023 from 2020 levels as Hudbay brings online its Pampacancha and New Britannia growth projects.
- Pampacancha and New Britannia growth projects are nearing completion with a total of approximately $80 million remaining to be spent in 2021.
- Hudbay’s two flagship producing assets, Constancia and the Snow Lake operations, each have a 17-year mine life (to 2037) based on current reserves.
Constancia Highlights
- Constancia reserves increase by 33 million tonnes at a grade of 0.48% copper and 0.115 grams per tonne gold, resulting in an increase of approximately 11% in contained copper and 12% in contained gold over the prior year’s reserves, after adjusting for mining depletion in 2020.
- Improved Constancia mine plan incorporating higher grades from Pampacancha from 2022 to 2025 and the new Constancia North reserves to extend the medium-term production profile.
- Average annual copper production at Constancia over the next eight years increases to approximately 102,000 tonnes at an average cash cost and sustaining cash cost of $1.18 and $1.71ii, respectively, per pound of copper produced net of by-product credits.
- Constancia’s total copper and gold production increases by 12% and 9%, respectively, compared to the same period in the previous mine planiii.
Snow Lake Highlights
- Snow Lake mineral reserves continue to increase year-over-year as successful resource-to-reserve conversion more than offsets mining depletion.
- Advanced phase three of Hudbay’s Snow Lake gold strategy through various mining and milling optimization opportunities.
- Improved Snow Lake mine plan contemplates an increase in Lalor’s mining rate to 5,300 tonnes per day in 2023, from a planned 4,500 tonnes per day previously, and the incorporation of the mining of the 1901 deposit by 2026.
- Annual gold production from Lalor and the Snow Lake operations increases to over 180,000 ounces during the first six years of New Britannia production at the lowest quartile cash cost globallyiv
- Snow Lake’s gold, copper and silver production increases by 18%, 35% and 27%, respectively, from 2022 to 2027 compared to the previous mine plan.
Toronto, Ontario, March 29, 2021 – Hudbay Minerals Inc. (“Hudbay” or the “company”) (TSX, NYSE: HBM) today announced that it has filed updated National Instrument 43-101 (“NI 43-101”) technical reports in respect of its 100% owned Constancia copper mine in Peru and its 100% owned Lalor and Snow Lake gold-zinc mining and milling operations in Manitoba. The company also released its annual mineral reserve and resource update and issued new three-year production guidance. All dollar amounts are in US dollars, unless otherwise noted.
“We are excited to publish these updated mine plans, which solidify our copper and gold production growth over the next several years,” said Peter Kukielski, Hudbay’s President and Chief Executive Officer. “Our project execution, operational optimization and exploration efforts over the past year have been successful in setting up the business for this next phase of growth, which sees Constancia’s annual copper production above 100,000 tonnes for the next eight years and Snow Lake’s annual gold production over 180,000 ounces once New Britannia is fully operational. We also continue to maintain our low-cost profile as demonstrated by the cash costs in our updated mine plans. Hudbay has a proven track record of delivering value through exploration, mine development and successful operations, and we look forward to continuing to create value through leveraging our core competencies.”
Constancia Mine
The company has released an updated mine plan for its Constancia operations that reflects an increase in copper and gold production from 2022 to 2025 as the higher grades from the Pampacancha deposit enter the mine plan. The updated mine plan incorporates higher-grade reserves including the Constancia North pit extension (please refer to Figure 1 for a view of the extended Constancia pit). With the incorporation of Pampacancha and Constancia North, annual production at Constancia is expected to average approximately 102,000 tonnes of copper and 58,000 ounces of gold over the next eight years, an increase of 40% and 367%, respectively, from 2020 levels, which were partially impacted by an eight-week temporary mine interruption related to a government-declared state of emergency. Constancia’s total copper and gold production increases by 12% and 9%, respectively, compared to the same period in the company’s previous NI 43-101 technical report dated March 26, 2018iii.
Constancia maintains its low-cost profile with average cash cost and sustaining cash cost of $1.18 and $1.71, respectively, per pound of copper produced, net of by-product credits, over the next eight years. The total sustaining capital reflects the additional tonnes incorporated into the mine plan, modifications to mine sequence, optimizing material rehandling activities, updated cost environment and further capital investments in the tailings facility to continue to maintain high industry tailings standards. Growth project capital includes remaining Pampacancha development expenditures in 2021 (excluding any remaining land-user agreement costs), the capital costs associated with the implementation of a recovery optimization program scheduled for 2023, the installation of a pebble crusher expected to be in operation by 2024, and the development of a water reservoir in 2025 as part of the company’s water management efforts.
Limited pre-development activities continue on site at Pampacancha to ensure pre-stripping activities can begin immediately after an agreement with the remaining land user family is completed. Hudbay has made significant progress with the remaining land user family and expects to reach an agreement in the coming weeks. First production from Pampacancha continues to be expected in the second quarter of 2021.
In March 2021, Constancia received a upgraded score of “AA” across all the tailings management indicators in the Mining Association of Canada’s Towards Sustainable Mining (“TSM”) program as per an annual self-assessment completed in 2020. This rating was higher than Constancia’s “A” rating in 2019 and exceeded the company’s target of maintaining a minimum of an “A” rating on all five TSM tailings indicators.
Summary of Constancia Updated Mine Plan
A summary of key production and cost details from the updated Constancia mine plan can be found below. For further details, please refer to the section titled “Constancia Updated Mine Plan Detailed Information” at the end of
| Constancia Operations | 2021 | 2022 | 2023 | 2024 | 2025 | 2026 | 2027 | 2028 | 2021-2028 | 2029-2037 | LOM | |||
| Avg. | Avg. | |||||||||||||
| Contained Metal in Concentrate | ||||||||||||||
| tonnes Cu Production (000s) | 80 | 108 | 117 | 128 | 91 | 95 | 91 | 106 | 102 | 68 | 1,431 | |||
| ounces Au Production (000s) | 45 | 97 | 93 | 127 | 28 | 25 | 21 | 27 | 58 | 19 | 631 | |||
| ounces Ag Production (000s) | 1,977 | 1,942 | 2,619 | 2,782 | 2,210 | 2,452 | 2,122 | 2,601 | 2,338 | 1,717 | 34,160 | |||
| tonnes Mo Production (000s) | 1.3 | 1.4 | 2.5 | 1.6 | 1.9 | 1.3 | 1.6 | 1.6 | 1.6 | 1.0 | 22.1 | |||
| Capital Expenditures | ||||||||||||||
| Sustaining Capital1 $ millions | $127 | $66 | $158 | $81 | $114 | $66 | $125 | $66 | $100 | $50 | $1,248 | |||
| Growth Project $ millions Capital | $4 | - | $30 | - | $17 | - | - | - | - | - | $51 | |||
| Copper Cash Costs | ||||||||||||||
| Cash Cost, net of $/lb Cu by-product credits2 | $1.37 | $0.97 | $0.80 | $0.74 | $1.48 | $1.47 | $1.37 | $1.27 | $1.18 | $1.71 | $1.38 | |||
| Sustaining Cash Cost, net of by- $/lb Cu product credits2 | $2.30 | $1.39 | $1.44 | $1.05 | $2.08 | $1.82 | $2.03 | $1.58 | $1.71 | $2.09 | $1.83 |
1 After the impact of capitalized stripping.
2 By-product credits calculated using the gold and silver deferred revenue drawdown rates for 2021 and the following commodity prices: gold price of $1,800 per ounce for 2021, $1,700 per ounce for 2022, $1,650 per ounce for 2023, $1,600 per ounce for 2024 and $1,500 per ounce long-term; silver prices of $25 per ounce for 2021, $23 per ounce for 2022, $20 per ounce for 2023, $19 per ounce for 2024 and $18 per ounce long-term; molybdenum prices of $11 per pound for 2021 and $10 per pound for 2022 and longterm. Sustaining cash cost calculated on the same basis as used in the company’s quarterly financial disclosures, which incorporates all costs included in cash cost plus sustaining capital expenditures, payments on capital leases, capitalized exploration, royalties, cash payments on long-term community agreements, and accretion and amortization of decommissioning obligations. Cash cost and sustaining cash cost are non-IFRS financial performance measures with no standardized definition under IFRS. For further details on why Hudbay believes cash costs are a useful performance indicator, please refer to the company's most recent Management's Discussion and Analysis for the three and twelve months ended December 31, 2020.
Constancia Mineral Reserves and Resources
Proven and probable reserves at Constancia increased by 33 million tonnes at a grade of 0.48% copper and 0.115 grams per tonne gold, resulting in an increase of approximately 11% in contained copper and 12% in contained gold over the prior year’s reserves, after adjusting for mining depletion in 2020. This more than replaces what was depleted from mining operations during the year, resulting in the addition of one year to Constancia’s mine life, which has been maintained at 17 years. The increase in reserves was primarily as a result of the 2019 and 2020 drill program at Constancia North, which intersected shallow porphyry and skarn mineralization and contributed to an extension of the Constancia reserve pit by approximately 300 metres to the north. The increase in gold content was also partly due to the correction of a low bias in the historical drillhole database at Constancia.
Constancia North also contributed to an improvement in the head grade of the Constancia mine mineral resource estimates: measured and indicated copper grades increased to 0.22% from 0.19% and inferred copper grades increased to 0.30% from 0.18%. A significant portion of the Constancia North resource estimate is classified as inferred due to wide drill spacing but there remains the opportunity to upgrade these inferred resources to a higher classification as the company completes infill drilling. There also remains further opportunity to extend the Constancia North resources by incorporating steeply dipping high-grade skarn mineralization through a potential underground operation and a scoping study is expected to be completed in 2021. The mineralization remains open down plunge to the north.
Current mineral reserves and resources (exclusive of reserves) for Constancia as of January 1, 2021 are summarized below.
| Constancia Mine | Cu Grade | Mo Grade | Au Grade | Ag Grade | |
|---|---|---|---|---|---|
| Mineral Reserve and Resource | Tonnes | (%) | (g/t) | (g/t) | (g/t) |
| Estimates1,2,3,4,5 | |||||
| Constancia Reserves | |||||
| Proven | 436,500,000 | 0.29 | 83 | 0.041 | 2.88 |
| Probable | 56,100,000 | 0.25 | 69 | 0.045 | 3.09 |
| Total Proven and Probable - Constancia | 492,600,000 | 0.29 | 82 | 0.042 | 2.90 |
| Pampacancha Reserves | |||||
| Proven | 32,400,000 | 0.59 | 178 | 0.368 | 4.48 |
| Probable | 7,500,000 | 0.62 | 173 | 0.325 | 5.75 |
| Total Proven and Probable - Pampacancha | 39,900,000 | 0.60 | 177 | 0.360 | 4.72 |
| Total Proven and Probable | 532,500,000 | 0.31 | 89 | 0.066 | 3.04 |
| Constancia Resources | |||||
| Measured | 125,200,000 | 0.22 | 65 | 0.038 | 2.11 |
| Indicated | 118,300,000 | 0.22 | 65 | 0.037 | 2.05 |
| Inferred | 46,600,000 | 0.30 | 73 | 0.054 | 2.72 |
| Pampacancha Resources | |||||
| Measured | 11,400,000 | 0.41 | 101 | 0.245 | 4.95 |
| Indicated | 6,000,000 | 0.35 | 84 | 0.285 | 5.16 |
| Inferred | 10,100,000 | 0.14 | 143 | 0.233 | 3.86 |
| Total Measured and Indicated | 260,900,000 | 0.23 | 67 | 0.052 | 2.27 |
| Total Inferred | 56,700,000 | 0.27 | 86 | 0.086 | 2.92 |
Note: totals may not add up correctly due to rounding.
1 Mineral resources are exclusive of mineral reserves and do not have demonstrated economic viability.
2 Mineral resources in the above tables do not include mining dilution or recovery factors.
3 Metal prices of $3.10 per pound copper, $11.00 per pound molybdenum, $1,500 per ounce gold, and $18.00 per ounce silver were used to estimate mineral reserves and resources.
4 Mineral reserves and resources are estimated using a minimum net smelter return (“NSR”) cut-off of $6.14 per tonne and assuming metallurgical recoveries (applied by ore type) of 85.8% on average for the life of mine.
5 Mineral resources are based on resource pit designs containing measured, indicated, and inferred mineral resources.
Peru Regional Exploration
The company continues to advance regional exploration programs in Peru. In February 2021, drilling commenced on the Quehuincha North high-grade skarn target located approximately 10 kilometres from Constancia’s processing facilities. Exploration agreement discussions with the community of Uchucarcco on the Maria Reyna and Caballito properties are progressing. Maria Reyna is a prospective copper skarn-porphyry target and Caballito is a pastproducing copper oxide mine, both of which are located within 10 kilometers north of Constancia. Hudbay also expects to commence drilling at its Llaguen property in the second quarter of 2021, after receiving all required drill permits in 2020. Llaguen is a copper porphyry target located in northern Peru, near the city of Trujillo and in close proximity to existing infrastructure.
For additional details on the Constancia mine, please refer to the technical report titled “NI 43-101 Technical Report, Constancia Mine, Cuzco, Peru”, effective January 1, 2021, which was filed on March 29, 2021 under Hudbay’s profile on SEDAR at www.sedar.com and will be filed on EDGAR at www.sec.gov.
Lalor Mine and Snow Lake Operations
Snow Lake Gold Strategy History - Phases One and Two
In 2019, Hudbay announced the results from the first phase of its Snow Lake gold strategy, which repositioned Lalor as a gold mine with precious metals contributing a majority of the life-of-mine revenues. The first phase included a 65% increase in Lalor’s gold reserves and was the first mine plan that contemplated the processing of gold and copper-gold ore at the company’s New Britannia mill. Several years of detailed work was completed in advance of the phase one mine plan, including significant drilling and test mining of the Lalor gold and copper-gold zones, and tradeoff studies on the various processing solutions for the gold ore. The New Britannia mill was determined to be the optimal processing solution for Lalor gold, as it capitalizes on existing infrastructure and is expected to achieve gold recoveries above 90%, compared to gold recoveries of approximately 53% at the Stall mill at that time. The phase one gold mine plan contemplated Lalor’s annual gold production more than doubling from then current levels to approximately 140,000 ounces over the first five years once the New Britannia mill is refurbished.
In March 2020, the company announced the second phase of its Snow Lake gold strategy, focusing on extensive infill and exploration drilling at Lalor and advancing engineering studies on the regional deposits in Snow Lake. This resulted in a 35% increase in total Snow Lake gold reserves to 2.2 million ounces and extended the mine life of the Snow Lake operations to 2037 through extending the Lalor mine life to 10 years and mining the gold-rich WIM and 3 Zone deposits over the last eight years. Lalor’s life-of-mine gold production increased by 41% and annual gold production was contemplated to be greater than 150,000 ounces over the first eight years after the New Britannia mill is refurbished.
Advancing Phase Three of the Snow Lake Gold Strategy
Over the past twelve months, Hudbay has advanced the third phase of its Snow Lake gold strategy focusing on expansion and further optimization of operations. This updated mine plan contemplates an increase in annual gold production from Lalor and the Snow Lake operations to over 180,000 ounces during the first six years of New Britannia’s operation at industry-low cash cost and sustaining cash cost, net of by-product credits, of $412 and $788 per ounce of gold, respectively. Mineral reserves increased year-over-year, which resulted in no change to Snow Lake’s mine life (to 2037) as the company accelerated future reserves with a higher production rate at Lalor and Stall. This enhanced mine plan incorporates the results from several optimization initiatives, including:
- Early gold production at New Britannia - In 2020, Hudbay identified the opportunity to install modular copper flotation cells to achieve gold production earlier than expected in 2021. As a result, ramp-up and first production at the gold plant is now expected early in the third quarter of 2021, ahead of the original schedule.
- Increased Lalor Mining Rate to 5,300 tonnes per day - In the fourth quarter of 2020, Hudbay allocated additional mining resources from 777 to Lalor while the 777 shaft repairs were being completed. As a result, and in combination with other technical and operational improvements, Lalor’s mine output increased by an average of 650 tonnes per day above the normal level during this period. After confirming the additional mining capacity, Hudbay determined that an optimal production rate for Lalor is 5,300 tonnes per day, matching the milling capacity of Snow Lake once New Britannia is commissioned. This higher rate is expected to begin after the 777 mine closes in mid-2022 and compares to 4,500 tonnes per day in the previous mine plan.
- Adding 1901 Deposit to the Mine Plan - After releasing an upgraded resource estimate for the 1901 deposit in August 2020, Hudbay initiated engineering activities to support a prefeasibility study. As part of this study, the company developed a viable mine plan for the zinc-rich zones at the 1901 deposit to supplement production from Lalor and take advantage of the future processing capacity at the Stall mill. This resulted in the addition of 1.58 million tonnes of reserves at a grade of 7.9% zinc. Production from the 1901 deposit is expected to commence in 2026 at a rate of approximately 1,000 tonnes per day. Please refer to Figure 2 for a view of the mine design layout at 1901.
- Higher Throughput at Stall - Hudbay has been pleased with the recent performance of the Stall mill, which has achieved better than expected throughput rates. The updated mine plan assumes Stall will achieve a throughput rate of 3,800 tonnes per day, compared to 3,500 tonnes per day in the previous mine plan.
- Increased Copper and Precious Metal Recoveries at Stall - In 2020, Hudbay completed a feasibility study and a test program exploring various technological upgrades to the flowsheet at the Stall mill. The total cost to implement these upgrades is $19 million (C$24 million) and is expected to increase Stall’s copper recoveries to between 91% and 95%, gold recoveries to between 64% and 70%, and silver recoveries to between 65% and 74%, a significant increase from the assumed recoveries in the previous mine plan of 84% copper, 53% gold and 53% silver. The project is expected to commence in 2022 and be in operation by early 2023.
These mine plan enhancements optimize the processing capacity of the Snow Lake operations in a manner that maximizes the net present value of the operations. As a result of these initiatives, the production of gold, copper and silver are expected to increase by 18%, 35% and 27%, respectively, from 2022 to 2027 compared to the previous mine plan.
Summary of Snow Lake Updated Mine Plan
A summary of key production and cost details from the updated Snow Lake mine plan can be found below. For further details, please refer to the section titled “Snow Lake Updated Mine Plan Detailed Information” at the end of
| Snow Lake Operations1 | 2021 | 2022 | 2023 | 2024 | 2025 | 2026 | 2027 | 2022-2027 | 2028-2037 | LOM | |||
| Avg. | Avg. | ||||||||||||
| Contained Metal in Concentrate and Doré | |||||||||||||
| ounces Au Production (000s) | 115 | 160 | 190 | 191 | 208 | 184 | 162 | 182 | 54 | 1,753 | |||
| ounces Ag Production (000s) | 824 | 946 | 1,134 | 1,150 | 1,188 | 1,182 | 1,298 | 1,150 | 340 | 11,120 | |||
| tonnes Cu Production (000s) | 10 | 11 | 13 | 11 | 16 | 11 | 12 | 12 | 6 | 142 | |||
| tonnes Zn Production (000s) | 61 | 51 | 46 | 46 | 35 | 46 | 57 | 47 | 20 | 541 | |||
| Capital Expenditures2 | |||||||||||||
| Sustaining Capital $ millions | $83 | $96 | $67 | $62 | $62 | $66 | $48 | $67 | $18 | $664 | |||
| Growth Project Capital $ millions | $77 | $19 | - | - | - | - | - | - | - | $96 | |||
| Gold Cash Costs | |||||||||||||
| Cash Cost, net of by- $/oz Au product credits3 | ($275) | $361 | $434 | $440 | $393 | $454 | $382 | $411 | $647 | $421 | |||
| Sustaining Cash Cost, net of by-product $/oz Au credits3 | $550 | $1,027 | $784 | $766 | $690 | $812 | $680 | $793 | $972 | $812 |
1 Includes production and costs for Lalor, 1901, WIM and 3 Zone.
2 Canadian dollar capital expenditures converted to U.S. dollar capital expenditures at a C$/US$ exchange rate of 1.27 in 2021, 1.28 in 2022, 1.29 in 2023 and 1.30 long-term.
3 By-product credits calculated using the following assumptions: zinc price of $1.20 per pound in 2021, $1.15 per pound in 2022, $1.10 per pound in 2023 and long-term; copper price of $3.75 per pound in 2021, $3.30 per pound in 2022, $3.10 per pound in 2023 and long-term; silver price of $25.00 per ounce in 2021, $23.00 per ounce in 2022, $20.00 per pounce in 2023, $19.00 per ounce in 2024, and $18.00 per ounce long-term; C$/US$ exchange rate of 1.27 in 2021, 1.28 in 2022, 1.29 in 2023 and 1.30 for long-term. Sustaining cash cost incorporate all costs included in cash costs calculation plus sustaining capital expenditures. Cash cost and sustaining cash cost are non-IFRS financial performance measures with no standardized definition under IFRS. For further details on why Hudbay believes cash costs are a useful performance indicator, please refer to the company's most recent Management's Discussion and Analysis for the year ended December 31, 2020.
Snow Lake Mineral Reserves and Resources
Current mineral reserves and resources (exclusive of reserves) for Lalor, 1901 and other Snow Lake satellite deposits as of January 1, 2021 are summarized below.
| Lalor Mine and 1901 Deposit | Zn Grade | Au Grade | Cu Grade | Ag Grade | |
|---|---|---|---|---|---|
| Mineral Reserve and Resource | Tonnes | (%) | (g/t) | (%) | (g/t) |
| Estimates1,2,3,4,5,6 | |||||
| Base Metal Zone Reserves | |||||
| Proven – Lalor | 6,860,000 | 5.79 | 2.6 | 0.50 | 29 |
| Proven – 1901 | 890,000 | 6.61 | 2.0 | 0.40 | 28 |
| Probable – Lalor | 1,190,000 | 4.32 | 3.2 | 0.64 | 32 |
| Probable – 1901 | 690,000 | 9.49 | 1.4 | 0.25 | 30 |
| Gold Zone Reserves | |||||
| Proven – Lalor | 3,950,000 | 1.03 | 5.2 | 0.60 | 28 |
| Probable – Lalor | 3,630,000 | 0.53 | 5.7 | 1.16 | 28 |
| Total Proven and Probable | 17,200,000 | 3.68 | 3.8 | 0.66 | 29 |
| Base Metal Zone Resources | |||||
| Inferred – Lalor | 590,000 | 3.48 | 2.8 | 0.31 | 55 |
| Inferred – 1901 | 310,000 | 6.44 | 2.0 | 0.85 | 25 |
| Gold Zone Resources | |||||
| Inferred – Lalor | 5,610,000 | 0.35 | 4.6 | 1.17 | 26 |
| Inferred – 1901 | 480,000 | 0.55 | 6.7 | 0.72 | 37 |
| Total Inferred | 6,990,000 | 0.89 | 4.5 | 1.05 | 29 |
Note: totals may not add up correctly due to rounding.
1 Mineral resources are exclusive of mineral reserves and do not have demonstrated economic viability. Mineral resources in the above tables do not include mining dilution or recovery factors.
2 Mineral reserves and resources are estimated using a minimum NSR cut-off of C$105 per tonne for waste filled mining areas and a minimum of C$116 per tonne for paste filled mining areas.
3 Metal prices of $1.10 per pound zinc, $1,500 per ounce gold, $3.10 per pound copper, and $18.00 per ounce silver with an exchange rate of 1.30 C$/US$ were used to confirm the economic viability of the mineral reserve estimates.
4 For Lalor, individual stope gold grades were capped at 10 grams per tonne as a prudent estimate until reserves to mill reconciliations can establish that the high-grade gold can indeed be entirely recovered. This capping method resulted in the reduction of the global gold reserve grade by approximately 3%.
5 Base metal mineral resources are estimated based on the assumptions that they would be processed at the Stall concentrator while gold mineral resources are estimated based on the assumption that they would be processed at the New Britannia concentrator, which is currently being refurbished.
6 1901 mineral resources were initially estimated using metal price assumptions that vary marginally from the assumptions used for reserves. In the Qualified Person’s opinion, the combined impact of these small variations does not have any impact on the mineral resource estimates.
| Snow Lake Regional Deposits - Gold | Zn Grade | Au Grade | Cu Grade | Ag Grade | |
|---|---|---|---|---|---|
| Mineral Reserve and Resource | Tonnes | (%) | (g/t) | (%) | (g/t) |
| Estimates1,2,3,4,5,6,7 | |||||
| Probable Reserves | |||||
| WIM | 2,450,000 | 0.25 | 1.6 | 1.63 | 6.3 |
| 3 Zone | 660,000 | - | 4.2 | - | - |
| Total Probable (Gold) | 3,110,000 | 0.20 | 2.2 | 1.28 | 5.0 |
| Inferred Resources | |||||
| Birch | 570,000 | - | 4.4 | - | - |
| New Britannia | 2,750,000 | - | 4.5 | - | - |
| Total Inferred (Gold) | 3,320,000 | - | 4.5 | - | - |
Note: totals may not add up correctly due to rounding.
1 Mineral resources are exclusive of mineral reserves and do not have demonstrated economic viability.
2 Mineral resources in the above tables do not include mining dilution or recovery factors.
3 Metal prices of $1.10 per pound zinc, $1,500 per ounce gold, $3.10 per pound copper, and $18.00 per ounce silver with an exchange rate of 1.30 C$/US$ were used to confirm the economic viability of the mineral reserve estimates.
4 WIM mineral reserves are estimated using a minimum NSR cut-off of C$150 per tonne, assuming processing recoveries of 98% for copper, 88% for gold and 70% for silver based on processing through New Britannia mill's flotation and tails leach circuits.
5 3 Zone mineral reserves are estimated at a minimum NSR cut-off of C$150 per tonne, assuming processing recoveries of 85% for gold based on processing through New Britannia mill's leach circuit.
6 New Britannia mineral resource estimates have been reported at a minimum true width of 1.5 metres and with a cut-off grade varying from 2 grams per tonne (at the lower part of New Britannia) to 3.5 grams per tonne (at the upper part of New Britannia). 7 Gold mineral resources are estimated based on the assumption that they would be processed at the New Britannia concentrator, which is currently being refurbished.
| Snow Lake Regional Deposits – Base Metal | Zn Grade | Au Grade | Cu Grade | Ag Grade | |
|---|---|---|---|---|---|
| Mineral Reserve and Resource | Tonnes | (%) | (g/t) | (%) | (g/t) |
| Estimates1,2,3,4,5,6,7 | |||||
| Indicated Resources | |||||
| Pen II | 470,000 | 8.89 | 0.3 | 0.49 | 7 |
| Talbot | 2,190,000 | 1.79 | 2.1 | 2.33 | 36 |
| Total Indicated (Base Metals) | 2,660,000 | 3.04 | 1.8 | 2.01 | 31 |
| Inferred Resources | |||||
| Watts | 3,150,000 | 2.58 | 1.0 | 2.34 | 31 |
| Pen II | 130,000 | 9.81 | 0.3 | 0.37 | 7 |
| Talbot | 2,450,000 | 1.74 | 1.9 | 1.13 | 26 |
| Total Inferred (Base Metals) | 5,730,000 | 2.39 | 1.3 | 1.78 | 28 |
Note: totals may not add up correctly due to rounding.
1 Mineral resources are exclusive of mineral reserves and do not have demonstrated economic viability.
2 Mineral resources in the above tables do not include mining dilution or recovery factors.
3 Watts and Pen II mineral resources were initially estimated using metal price assumptions that vary marginally over the assumptions used for mineral reserves at Snow Lake. In the Qualified Person’s opinion, the combined impact of these small variations does not have any impact on the mineral resource estimates.
4 Watts mineral resources are estimated using a minimum NSR cut-off of C$150 per tonne, assuming processing recoveries of 90% for copper, 80% for zinc, 70% for gold and 70% for silver.
5 Pen II mineral resources are estimated using a minimum NSR cut-off of C$75 per tonne.
6 Base metal mineral resources are estimated based on the assumption that they would be processed at the Stall concentrator. 7 The above resource estimate table includes 100% of the Talbot mineral resources reported by Rockcliff Metals Corp. in its 2020 NI 43-101 technical report published on SEDAR. Hudbay currently owns 51% interest in the project.
Future Snow Lake Upside Opportunities
Lalor In-Mine Exploration
Exploration efforts at the Lalor mine continued to be successful in 2020 with the definition of an additional 1.8 million tonnes of mineral resources. This increases total inferred mineral resources at Lalor to 6.2 million tonnes. The inferred resources have the potential to extend the Lalor mine life beyond the current estimate of ten years and maintain the 5,300 tonnes per day production level beyond 2027. The increase in Lalor’s mineral resource estimate was due to up-dip and down-dip extensions along strike from existing lenses as well as the inclusion of gold mineralization located in the immediate footwall and hanging wall of the base metal lenses where recent drilling and economic evaluation increased the confidence to include them in the Lalor inferred mineral resources.
Snow Lake Regional Deposits
There are several deposits in the Snow Lake region that present additional opportunities to further optimize the Snow Lake operations, including the Watts, Pen II and Talbot deposits as described below:
- Watts (100% owned by Hudbay) - confirmatory drilling conducted during 2019 supported an initial inferred mineral resource estimate of approximately 3.2 million tonnes at 2.34% copper, 2.58% zinc, 0.95 grams per tonne gold and 31 grams per tonne silver. The Watts deposit is located approximately 95 kilometres from the Stall concentrator and is in close proximity to roads and power lines. Considering future available processing capacity at the Stall concentrator and recent drilling success, which expanded the volume of high-grade copper mineralization at Watts, Hudbay is confident that the potential for economic extraction of the Watts deposit has been established to a level sufficient to report an initial inferred mineral resource estimate.
- Pen II (100% owned by Hudbay) - Pen II is a low tonnage and high-grade zinc deposit that starts from surface and is located within trucking distance of the Stall mill. In 2019, Hudbay defined an indicated resource estimate of 0.5 million tonnes at 8.9% zinc. Pen II could constitute a supplemental source of feed for the Stall mill. Hudbay expects to continue metallurgical testing, infill drilling and technical studies in an attempt to confirm the technical and economic viability of the resource.
- Talbot (51% owned by Hudbay) - the Talbot deposit is located approximately 200 kilometres southeast of the Stall and New Britannia mills. Rockcliff Metals Corp. conducted several drilling campaigns between 2014 and 2019 that led to the declaration by Rockcliff of a NI 43-101 indicated mineral resource estimate of 2.2 million tonnes at 2.3% copper, 2.1 grams per tonne gold, 1.8% zinc, 36 grams per tonne silver and an inferred mineral resource estimate of 2.4 million tonnes at 1.1% copper, 1.9 grams per tonne gold, 1.7% zinc and 25.8 g/t silver. Hudbay has the right to extend its ownership of Talbot to 65% by incurring expenses related to the development of the project.
1901 Deposit Gold Zones
There remains further upside potential to upgrade the inferred resources in 1901 gold zones and incorporate them into the Snow Lake mine plan once there is processing capacity at the New Britannia mill. Once the 1901 deposit is developed, the company will have the underground access required to efficiently drill the gold zones with the tighter drill spacing required to upgrade the inferred resource estimate to the indicated category.
Future Mill Processing Projects
As the Lalor mine matures and additional satellite ore sources are identified to supplement feed to the Stall and New Britannia mills, metallurgical projects are advancing to match the configuration of the mills to the requirements of the ore. The company is advancing several other projects through metallurgical testing and early-stage engineering, such as the potential to treat the tails from the Stall mill to recover additional gold and the potential to expand the New Britannia mill to its historical rate of 2,000 tonnes per day.
For additional details on the Lalor mine and the company’s Snow Lake operations, please refer to the technical report titled “NI 43-101 Technical Report, Lalor and Snow Lake Operations, Manitoba, Canada”, effective January 1, 2021, which was filed on March 29, 2021 under Hudbay’s profile on SEDAR at www.sedar.com and will be filed on EDGAR at www.sec.gov.
777 Mine
Based on the most recent estimate of mineral reserves, there has been no change to the expected mine life for 777, which is expected to be depleted by the end of the second quarter of 2022. The mine is expected to produce at a rate of approximately 2,800 tonnes per day for the remaining mine life. Hudbay has begun its transition planning ahead of the 777 mine closure, including preparation for the training and transfer of personnel from Flin Flon to Snow Lake. The company plans to close and decommission the 777 mine and zinc plant upon the depletion of 777 reserves. The Flin Flon concentrator and tailings impoundment area will be kept on care and maintenance, which will provide optionality should another mineral discovery occur in the Flin Flon area.
Current mineral reserves and resources (exclusive of reserves) for 777 as of January 1, 2021 are summarized below.
| 777 Mine | Cu Grade | Zn Grade | Au Grade | Ag Grade | |
| Tonnes | |||||
| Mineral Reserve and Resource Estimates1 | (%) | (%) | (g/t) | (g/t) | |
| Mineral Reserves | |||||
| Proven | 1,125,000 | 1.59 | 5.09 | 2.23 | 31 |
| Probable | 399,000 | 1.11 | 4.46 | 1.86 | 30 |
| Total Proven and Probable | 1,524,000 | 1.46 | 4.93 | 2.13 | 31 |
| Mineral Resources | |||||
| Measured | 120,000 | 1.21 | 7.12 | 2.31 | 39 |
| Indicated | 90,000 | 1.77 | 4.83 | 1.61 | 31 |
| Total Measured and Indicated | 210,000 | 1.45 | 6.13 | 2.01 | 35 |
| Inferred | - | - | - | - | - |
Note: totals may not add up correctly due to rounding.
1 Mineral resources are exclusive of mineral reserves and do not have demonstrated economic viability. Mineral reserves and resources calculated using life-of-mine (2021-2022) average metal prices of $2.90 per pound copper, $1.04 per pound zinc (includes premium), $1,767 per ounce gold, $20.67 per ounce silver and using a C$/US$ exchange rate of 1.30.
3-Year Production Outlook
Consolidated copper and gold production are expected to increase by 36% and 125%, respectively, by 2023 from 2020 levels as Hudbay brings online its Pampacancha and New Britannia growth projects. These growth projects more than offset the lost copper and gold production from 777 after its closure in mid-2022.
Peru’s 2021 production guidance assumes mining of Pampacancha will begin in the second quarter, with the initial phase of lower copper grades, but higher gold grades, expected to continue for the balance of the year before higher copper grades are forecast to enter the mine plan in 2022 and 2023.
Manitoba’s 2021 production guidance reflects an increase in Lalor’s mine throughput to 4,650 tonnes per day, from the previous 4,500 tonnes per day, as the recent trend of stronger production from the mine is expected to continue. Lalor’s mine throughput is expected to further increase to 5,300 tonnes per day starting in 2023 due to technical and operational improvements and the allocation of mining resources from the 777 mine after its closure in 2022. Manitoba’s 2023 production reflects higher copper, gold and silver recoveries at the Stall mill as a result of the implementation of various mill flowsheet enhancements in 2022.
| 3-Year Production Outlook Contained Metal in Concentrate1 | 2021 Guidance | 2022 Guidance | 2023 Guidance |
| Peru Copper tonnes 72,000 - 88,000 95,000 - 120,000 105,000 - 130,000 Gold ounces 40,000 - 50,000 85,000 - 105,000 85,000 - 105,000 Silver ounces 1,800,000 - 2,170,000 1,700,000 - 2,100,000 2,300,000 - 2,800,000 Molybdenum tonnes 1,400 - 1,700 1,200 - 1,500 2,200 - 2,800 Manitoba2 Gold ounces 150,000 - 165,000 160,000 - 180,000 175,000 - 195,000 Zinc tonnes 96,000 - 107,000 60,000 - 70,000 40,000 - 47,000 Copper tonnes 20,000 - 24,000 14,000 - 16,000 11,000 - 13,000 Silver ounces 1,200,000 - 1,400,000 1,000,000 - 1,200,000 1,000,000 - 1,200,000 Total Copper tonnes 92,000 - 112,000 109,000 - 136,000 116,000 - 143,000 Gold ounces 190,000 - 215,000 245,000 - 285,000 260,000 - 300,000 Zinc tonnes 96,000 - 107,000 60,000 - 70,000 40,000 - 47,000 Silver ounces 3,000,000 - 3,570,000 2,700,000 - 3,300,000 3,300,000 - 4,000,000 Molybdenum tonnes 1,400 - 1,700 1,200 - 1,500 2,200 - 2,800 |
1 Metal reported in concentrate and doré is prior to smelting and refining losses or deductions associated with smelter terms. 2 Manitoba production guidance assumes the 777 mine is depleted at the end of the second quarter of 2022, resulting in lower copper and zinc production after its closure.
Rosemont Project
Rosemont is a copper development project, located in Pima County, Arizona, approximately 50 kilometres southeast of Tucson. The Rosemont project is expected to be an open pit, shovel and truck operation and has an expected 19year mine life based on current reserves. There were no changes to Rosemont’s reserves and resources during 2020. The appeal of the unprecedented Rosemont court decision with the U.S. Court of Appeals for the Ninth Circuit continues with a decision expected in the second half of 2021.