HUDBAY GOES FOR THE GOLD AT
Snow Lake One-third of the miner’s revenue will come from precious metals by 2022 By Alisha Hiyate
H
udbay Minerals’ 777 mine and Flin Flon mill in Manitoba will be closing in 2022, but that same year, investments in another mine in the province – Lalor near Snow Lake – will begin to pay off in a big way. The 90-year-old base metals company is in the middle of transitioning its Lalor mine into one that derives the majority of its revenue from precious metals. Thanks to this shift, by 2022, Hudbay estimates 33% of its overall revenue will come from gold and silver, up significantly from 18% in 2019. Copper, the company’s main focus, will continue to generate more than half of its revenues – 52% in 2022 vs. 58% in 2019. Peter Kukielski, Hudbay’s president and CEO, says the company’s Snow Lake gold strategy can be traced back to 2007, when it discovered Lalor, a volcanogenic massive sulphide deposit that hosts gold and silver as well as copper and zinc. “Lalor was put into production in 2014, but as we started drilling deeper, we discovered that there was a zone with higher gold content,” Kukielski told CMJ in an interview in late May. The discovery inspired the company to purchase the 1,500 t/d New Britannia gold mine and mill, located 16 km east of Lalor, in 2015, for $10 million. Hudbay plans to refurbish the mill to process gold-rich Lalor ore by 2022. The New Britannia mill will recover 93% of the
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MINING JOURNAL
gold in Lalor ore, compared with 53% at Hudbay’s existing Stall 3,800 t/d base metals mill. “(Our gold strategy is) highly reliant on our completing the New Britannia mill refurbishment over the course of this year and next,” said Kukielski, who was appointed as interim president and CEO of Hudbay in mid-2019 before winning the job permanently in January. “But we’re very confident that we’ll do it and we’ve prefunded it with a gold prepay so that we can continue to spend on the New Britannia refurbishment no matter what the environment looks like.” That “environment” is one of consider-
able uncertainty thanks to the coronavirus pandemic. But while the pandemic has pushed down base metals prices, it has lifted precious metals, underscoring their countercyclical nature and allowing Hudbay to fully fund the New Britannia refurbishment with a forward sale of gold announced in early May. The US$115-million gold prepay arrangement is based on gold forward curve prices averaging US$1,682 per oz. Under the deal, the company will deliver a total of 79,954 oz. gold in 2022 and 2023, representing 25% of Lalor’s forecast production for those two years. www.canadianminingjournal.com
