HudBay Minerals Inc. [HBM-TSX, NYSE] has secured the surface rights for a satellite deposit located near the company’s flagship Constancia copper-gold mine in Peru.
This marks the first big win for Peter Kukielski who was recently named permanent President and CEO of HudBay after serving as interim CEO since July, 2019 following the departure of predecessor Alan Hair.
HudBay said the community of Chilloroya has formally approved a surface rights agreement with HudBay for the Pampacancha satellite deposit. With the completion of this agreement, the company said it expects to be mining ore from the deposit in late 2020.
HudBay is an integrated mining company, primarily producing copper concentrate (containing copper, gold and silver), zinc concentrate and zinc metal. The company owns four polymetallic mines, four ore concentrators and a zinc production facility.
The operations are located in northern Manitoba and Saskatchewan, Peru and Arizona.
“We are very pleased to have reached a Pampacancha agreement with the community,” Kukielski said. “I have been impressed with the team’s work and appreciate the years of effort to achieve this goal. Pampacancha adds high-grade copper and gold ore into the Constancia Mine plan, lowering future cash costs for the mine and increasing operating cash flows at Constancia. Not only was Constancia one of the best project development and ramp-up successes of recent project builds, Constancia is also one of the lowest cost open pit copper mines in South America,” he said.
“This could not have been achieved without our long-term commitments to, and partnership with, our local communities, and this successful agreement further validates our social acceptance to operate in Peru,” Kukielski added.
News of the deal was announced after the close of trading on February 18, 2020. On Wednesday February 19, HudBay shares advanced 3.7% or 15 cents to $4.20 on volume of 1.45 million. The shares are currently trading in a 52-week range of $3.81 and $10.42.
Constancia is primarily a copper mine, situated in southern Peru and consists of the Constancia and Pampacancha deposits. The secondary metals are molybdenum and silver. Commercial production was achieved in April, 2015.
The Pampacancha deposit is expected to serve as a material grade sweetener to the Constancia ore feed over the 2021 to 2025 period. The capital expenditure associated with the project is expected to be US$70 million, according to a Scotiabank report.