HudBay Minerals Announces 2012 Production Guidance and Capital and Exploration Budgets
New Copper Mine to Be Constructed at Reed
(firmenpresse) - TORONTO, ONTARIO -- (Marketwire) -- 12/19/11 -- HudBay Minerals Inc. (TSX: HBM)(NYSE: HBM) -
Highlights
HudBay Minerals Inc. ("HudBay", the "company") (TSX: HBM)(NYSE: HBM) today released its production guidance and its exploration and capital expenditure budgets for 2012.
"Throughout our operating history in the Flin Flon Greenstone Belt, we have seen a strong correlation between exploration dollars spent and mineral discoveries, which is why we have committed $54 million, in the belief that we can replicate this success across the Americas," said David Garofalo, president and chief executive officer. "We have also committed to $296 million in capital expenditures to grow our production profile, including the commencement of development of the Reed copper project, the ongoing construction at Lalor and continued procurement and engineering activities at Constancia, where we expect to make a full project decision in the first quarter of 2012."
Production Decision Made at Reed Copper Project
Today, HudBay's Board of Directors approved a capital investment of $71 million towards the construction of the 70% owned Reed copper project. A summary of the project's economics follows (100% basis):
The Reed copper project will have a very limited environmental footprint with ore being trucked to HudBay's Flin Flon concentrator. Production at Reed is scheduled to begin at the 260 metre level from Zones 10 and 20 and in Zone 30 from the 135 metre level during the second half of 2013. In 2018, mining at Reed is expected to finish in Zone 30 from the 85 metre level, in Zone 20 from the 110 metre level and in Zone 10 on the 285 metre level. To view a long section of the proposed mine plan at Reed visit .
The preliminary economic assessment prepared by the company in respect of the Reed deposit is preliminary in nature, includes inferred resources that are considered too speculative geologically to have the economic considerations applied to them that would enable them to be categorized as mineral reserves, and there is no certainty the preliminary economic assessment will be realized.
2012 Guidance on Production from Existing Mines
Full year 2011 production of all metals remains on track to achieve our previous guidance. Contained copper metal production in concentrate in 2012 is expected to be lower than 2011 because of the pending closures of the Trout Lake and Chisel North mines during 2012, while precious metal and zinc production are expected to remain essentially unchanged from 2011 levels.
Major Commitment to Growth Opportunities
HudBay's board of directors has approved a capital budget for 2012 of $391 million, of which $296 million is allocated toward growth opportunities. Capital expenditures at Lalor are expected to total approximately $147 million. With the ramp from Chisel North to Lalor completed on time and on budget, the focus at Lalor has turned to completion of the ventilation shaft to allow first ore production up the temporary hoisting facilities by the middle of 2012.
Other major activities at Lalor will include the commencement of production shaft sinking early in 2012, delivery of underground equipment and completion of engineering and procurement for the new concentrator.
Capital expenditures at Constancia for the first quarter of 2012 and other capitalized costs in Peru are expected to total approximately $107 million, in addition to the approximately $45 million of capital expenditures expected to have been incurred by the end of 2011. HudBay expects to make a formal production decision in respect of Constancia in the first quarter of 2012, at which time the company intends to provide a further update on expected Constancia capital spending.
HudBay is well positioned to fund these growth investments with available liquidity of approximately $1.1 billion and no debt. Subject to a project construction decision by the board of directors, the company also intends to arrange additional debt financing at the Constancia project level to maintain optimum financial flexibility.
Consistent Commitment to Exploration in 2012
HudBay is planning another year of strong exploration investments in 2012 with total budgeted expenditures of approximately $54 million, which would enable over 130,000 meters of drilling across the company's portfolio. Within the Flin Flon Greenstone Belt, the company intends to explore near HudBay's active and historical mining areas as well as fund grassroots exploration projects. In South America, HudBay expects to continue exploration activities at Constancia along with funding other initiatives within Peru, Chile and Colombia. Exploration spending in North America will include spending on the Back Forty project, Tom and Jason deposits and other opportunities.
Exploration expenditures at Constancia for the first quarter of 2012 are expected to total approximately $2 million. HudBay intends to provide an update on Constancia exploration spending for the full year 2012 at the time of a formal project decision, expected in the first quarter of 2012.
Mines
Strong production is expected again in 2012 from HudBay's flagship 777 mine. Copper grades at 777 are expected to be slightly higher than reserve grades mainly due to the areas planned for mining during 2012. Operating costs are expected to be similar to costs experienced in the past several years. Costs in the first and fourth quarters are expected to be higher due to additional heating and other seasonal costs.
With the Trout Lake and Chisel North mines nearing the end of their mine-life, mining is expected to continue to be challenging. Closure of the Trout Lake mine is expected in June of 2012 once the deposit is exhausted. Some copper/gold ore is expected to be mined at Chisel North in 2012, which will be transported to the Flin Flon concentrator for processing. Unit operating costs are expected to remain high due to the complex nature of these late-stage mining operations and reduced cost capitalization given the short remaining mine life.
Grades in any particular quarter may vary from the annual guidance above based on the areas mined in that quarter. Costs in any particular quarter can also vary from the annual guidance above based on a variety of factors including the scheduling of maintenance events and seasonal heating requirements.
Flin Flon and Snow Lake Concentrators
Ore milled at the Flin Flon concentrator is expected to be somewhat lower than in 2011 due to reduced production from the Trout Lake mine, with correspondingly higher unit operating costs. Recoveries are expected to be consistent with recent experience. Estimated concentrate production at the Snow Lake concentrator includes a combination of Chisel North ore early in 2012 and Lalor ore in the second half of 2012. Costs for the Snow Lake concentrator include the cost to truck concentrates from Snow Lake to Flin Flon. Costs in any particular quarter can also vary from the annual guidance above based on a variety of factors including the scheduling of maintenance events and seasonal heating requirements.
Flin Flon Zinc Plant
HudBay's domestic zinc concentrate production in 2012 is expected to supply approximately 74.5% of total zinc metal production. An additional 56,000 tonnes of zinc concentrate is expected to be purchased from third parties.
Operating costs at the zinc plant are expected to be similar to 2011 levels. Costs in any particular quarter can also vary from the annual guidance above based on a variety of factors including the scheduling of maintenance events and seasonal heating requirements.
Reed Copper Project Assumptions and Qualifications
Qualified Person
The technical and scientific information in this news release has been prepared by or under the supervision of Robert Carter P.Eng., HudBay's Manager, Project Evaluation. Mr. Carter is a "qualified person" for purposes of National Instrument 43-101.
Forward-Looking Information
This news release contains "forward-looking information" within the meaning of applicable Canadian and United States securities legislation. Forward-looking information includes, but is not limited to, information with respect to the Company's ability to meet production forecasts, execute on exploration plans, and finance and develop the Reed copper project and its key development projects, the ability of management to execute on key strategic and operational objectives, exploration expenditures and activities and the possible success of such exploration activities, the timing and amount of estimated future production, costs of production, capital expenditures, costs and timing of the development of new deposits, mineral pricing, mine life projections, and business and acquisition strategies. Often, but not always, forward-looking information can be identified by the use of forward-looking words like "plans", "expects", or "does not expect", "is expected", "budget", "scheduled", "estimates", "forecasts", "intends", "understands", "anticipates", or "does not anticipate", or "believes" or variations of such words and phrases or statements that certain actions, events or results "may", "could", "would", "might", or "will be taken", "occur", or "be achieved".
Forward-looking information is based on the opinions and estimates of management as of the date such information is provided and is subject to known and unknown risks, uncertainties and other factors that may cause the actual results, level of activity, performance or achievements of HudBay to be materially different from those expressed or implied by such forward-looking information, including the ability to develop and operate its key projects on an economic basis and in accordance with applicable timelines, the ability to receive all regulatory permits required to construct and operate the Lalor, Constancia and Reed projects, geological and technical conditions, the ability to meet required solvency tests to support a dividend payment, risks associated with the mining industry such as economic factors (including future commodity prices, currency fluctuations and energy prices), failure of plant, equipment, processes and transportation services to operate as anticipated, dependence on key personnel and employee relations, environmental risks, government regulation, actual results of current exploration activities, possible variations in ore grade or recovery rates, permitting timelines, capital expenditures, reclamation activities, land titles, and social and political developments and other risks of the mining industry as well as those risk factors discussed or referred to in HudBay's Annual Information Form for the year ended December 31, 2010 under the heading "Risk Factors". Although HudBay has attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking information, there may be other factors that cause results not to be as anticipated, estimated or intended.
In addition, certain forward-looking information in this MD&A relate to prospective results of operations, financial position or cash flows based on assumptions about future economic conditions or courses of action.
Such information is provided in attempt to assist the reader in identifying trends and anticipated events that may affect HudBay's business, results of operations and financial position and may not be appropriate for other purposes. There can be no assurance that forward-looking information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such information. Accordingly, readers should not place undue reliance on forward-looking information.
HudBay does not undertake to update any forward-looking information, except as required by applicable securities laws, or to comment on analyses, expectations or statements made by third parties in respect of HudBay, its financial or operating results or its securities.
Note to United States Investors
Information concerning our mineral properties has been prepared in accordance with the requirements of Canadian securities laws, which differ in material respects from the requirements of SEC Industry Guide 7. Under Securities and Exchange Commission (the "SEC") Industry Guide 7, mineralization may not be classified as a "reserve" unless the determination has been made that the mineralization could be economically and legally produced or extracted at the time of the reserve determination, and the SEC does not recognize the reporting of mineral deposits which do not meet the United States Industry Guide 7 definition of "Reserve".
In accordance with National Instrument 43-101 - Standards of Disclosure for Mineral Projects ("NI 43-101") of the Canadian Securities Administrators, the terms "mineral reserve", "proven mineral reserve", "probable mineral reserve", "mineral resource", "measured mineral resource", "indicated mineral resource" and "inferred mineral resource" are defined in the Canadian Institute of Mining, Metallurgy and Petroleum (the "CIM") Definition Standards for Mineral Resources and Mineral Reserves adopted by the CIM Council on December 11, 2005. While the terms "mineral resource", "measured mineral resource", "indicated mineral resource" and "inferred mineral resource" are recognized and required by NI 43-101, the SEC does not recognize them. You are cautioned that, except for that portion of mineral resources classified as mineral reserves, mineral resources do not have demonstrated economic value. Inferred mineral resources have a high degree of uncertainty as to their existence and as to whether they can be economically or legally mined.
Under Canadian securities laws, estimates of inferred mineral resources may not form the basis of an economic analysis. It cannot be assumed that all or any part of an inferred mineral resource will ever be upgraded to a higher category. Therefore, you are cautioned not to assume that all or any part of an inferred mineral resource exists, that it can be economically or legally mined, or that it will ever be upgraded to a higher category. Likewise, you are cautioned not to assume that all or any part of measured or indicated mineral resources will ever be upgraded into mineral reserves. You are urged to consider closely the disclosure on the technical terms in Schedule A "Glossary of Mining Terms" of HudBay's annual information form for the fiscal year ended December 31, 2010, available on SEDAR at and incorporated by reference as Exhibit 99.1 in HudBay's Form 40-F filed on March 31, 2011 (File No. 001-34244).
HudBay Minerals Inc.
HudBay Minerals Inc. (TSX: HBM)(NYSE: HBM) is a Canadian integrated mining company with assets in North and South America principally focused on the discovery, production and marketing of base and precious metals. The company's objective is to maximize shareholder value through efficient operations, organic growth and accretive acquisitions, while maintaining its financial strength. A member of the S&P/TSX Composite Index and the S&P/TSX Global Mining Index, HudBay is committed to high standards of corporate governance and sustainability.
(HBM-G)
Contacts:
HudBay Minerals Inc.
John Vincic
Vice President, Investor Relations and
Corporate Communications
(416) 362 0615
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Datum: 19.12.2011 - 11:00 Uhr
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