Hudbay PEA pegs Copper World capex at US$1.9 billion

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HudBay Minerals Inc.  [HBM-TSX, NYSE] has announced a robust preliminary economic assessment (PEA) for its Copper World copper-molybdenum-silver deposit in Arizona.

The PEA reflects a two-phase mine plan contemplating the development of the Copper World deposits in conjunction with an alternative plan for part of the adjacent Rosemont deposit, with a focus on near-term production solely from private lands and patented mining claims, supporting an initial 16-year mine life sourced from both oxide and sulphide ore.

Based on an average concentrator design throughput of 60,000 tonnes per day and an oxide heap leach of 20,000 tonnes per day, the project is expected to yield average copper production of 86,000 tonnes at relatively low cash costs of US$1.15 per pound and sustaining cash costs of US$1.44 per pound.

The project includes an SX/EW facility and a concentrate leach facility designed to yield total copper cathode of 100,000 tonnes per year (the ore feed shortfall will be sourced from purchased third party concentrate).

The Phase 1 project has an estimated capital spend of US$1.9 billion and includes a 20% contingency on direct capital costs.

A prefeasibility study (PFS) on Phase 2 is anticipated to be completed by the second half of 2022, followed by a definitive feasibility study by the end of 2023. The company anticipates the receipt of all required state and local permits for Phase 1 during 2023.

Phase 1 has a projected three-year construction timeline and Hudbay noted that a sanctioning decision could be made as early as 2024.

The longer-dated Phase 11 mine plan expands the footprint to federal lands and increases the sulphide concentrator capacity to 90,000 tonnes per day, which serves to extend the estimated mine plan to 44 years (incremental capex of US$885 million)

Hudbay recently received a favourable decision from a U.S. District Court in relation to the Copper World project.

Hudbay has said it sees the Copper World discovery as a “very interesting, either alternative or add-on” to the adjacent Rosemont project, which has been in legal limbo for over two years after a U.S. Federal Court blocked construction. The court overturned the Final Record of Decision issued by the U.S. Forest Service in mid-2017.

According to a maiden estimate, Copper World hosts an indicated mineral resource of 272 million tonnes at 0.36% copper and an inferred resource of 142 million tonnes at 0.36% copper, containing 3.3 billion pounds of copper.

This resource estimate includes near surface, higher grade indicated mineral resources of 96 million tonnes at 0.57% copper and inferred resources of 31 million tonnes at 0.71% copper, containing 1.7 billion pounds of copper with the potential to be mined earlier in the life of a production cycle.

Copper World is made up of seven discrete deposits that contain a mix of both sulphide and oxide ore.

On Wednesday Hudbay shares advanced on the news, rising 1.24% or $0.095 to $7.72 on volume of 653,810. The shares are trading in a 52-week range of $11.17 and $6.48.


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