Investments to start paying off this year, says Hudbay

The company is expanding the Constancia mine, in Peru, through the development of the Pampacancha satellite deposit and received its mining permit at the start of 2021.

However, a mining land user agreement remains outstanding and, combined with new Covid restrictions imposed late last month, Hudbay said on Thursday that it no longer expected to mine four-million tonnes of ore from the deposit by June 30.

The Covid-19 restrictions implemented in Peru on January 26 will remain in place until at least February 28, at which point the government will reassess the situation.

“If we fail to meet this milestone, the company will be required to deliver an additional 8 020 oz of gold to Wheaton Precious Metals in equal quarterly instalments, at prevailing market prices, starting September 30, 2021. Hudbay and Wheaton are currently in discussions about, among other things, alternatives to defer the additional gold deliveries over the Pampacancha mine life,” Hudbay stated.

At New Britannia, in Canada, the project remains on track for first gold pour in the third quarter. Once the mill is fully ramped-up, average yearly gold production from Lalor is expected to increase to more than 150 000 oz, starting in 2022 at cash costs and sustaining cash costs, net of by-product credits, of approximately $480/oz and $655/oz, respectively, during the first eight years of the gold plant`s operation.

Total project spending on the New Britannia refurbishment project is about $13-million over budget.

RESULTS
Meanwhile, Hudbay said that it had achieved its 2020 production and unit cost guidance in Peru and Manitoba. Manitoba’s copper production exceeded the top end of the guidance range and refined zinc metal production was higher than it had been in over ten years.

When compared with 2019 production levels, 2020 copper production in Peru was lower owing to lower copper grades, as well as an eight-week suspension of Constancia operations owing to a government-declared state of emergency at the onset of the Covid-19 pandemic.

Consolidated cash cost per pound of copper produced, net of by-product credits, was $0.60 in 2020, a decrease compared with $0.83 in 2019, mainly as a result of increased by-product credit revenues, partially offset by lower copper production from lower grades at Constancia and reduced Constancia production from the eight-week suspension of operations.

Hudbay reported a net loss and loss a share of $144.6-million and $0.55, respectively, compared with a net loss and loss a share of $343.8-million and $1.32, respectively, in 2019. The 2019 loss was mainly caused by an after-tax impairment charge of $242.1-million recorded in Hudbay’s investment in the Rosemont project.