HudBay Minerals eyes further growth in Peru – by Euan Rocha ( – April 10, 2012)

HudBay seeks to replicate its Manitoba model in Peru

TORONTO, April 10 (Reuters) – Base metals miner HudBay Minerals is looking at expanding its asset base in Peru as it seeks to create a new hub that will replicate the successes enjoyed at its mines in the Canadian province of Manitoba, the company’s top executive says.

HudBay, which traces its roots back more than 80 years to the Flin Flon mine in northern Manitoba, has used much of the infrastructure developed at Flin Flon for decades, moving gradually from one deposit to the next.

“We are trying to do the same thing in Peru,” said HudBay Chief Executive David Garofalo. “We are building a large 70,000 to 80,000 tonne a day concentrator there and we’ve tied up about 22,000 hectares of real estate along the trend and we’re looking to tie up more.

“When you build a concentrator of that scale, you expect it will be operating for 50 or 60 years, not 15 or 20 years, much like the concentrators we built in Manitoba. hose were built with 10 or 12 year deposits underneath them at the time, but here they are operating many, many decades hence.”

Toronto-based HudBay made its initial foray into Peru via its C$520 million ($521 million) acquisition of miner Norsemont in 2011. That deal gave HudBay control of the Constancia copper-gold project in southern Peru, which is set to start production in 2015.

Despite the hurdles that Newmont Mining and other larger miners have faced in the Andean nation, Garofalo said he believes that Peru offers promising growth prospects.

Newmont’s Conga project in Peru has faced strong opposition from farmers and local government officials, and work at the site has been stalled for months. HudBay has so far had no major issues with locals living near its Constancia project, and Garofalo said the company’s consultation process is a model that other companies ought to replicate.

“What we would like to do is systematically add satellite deposits around the Constancia deposit,” he said. “That is very much what we are pursuing and that’s what we’d like to do.

“We’ve already identified a significant number of near-surface anomalies that we can start to drill in very short order and maintain that exploration growth that has been so vital to our business.”


HudBay plans to roughly triple the size of its copper output over the next four years to 125,000 tonnes a year, largely on the back of production from Constancia, along with smaller gains from its Lalor and Reed projects in Manitoba, which are set to go into production shortly.

“What we’re looking to do now is add other development-stage assets to perpetuate that growth beyond 2016,” Garofalo said. “I expect in the next year or so, we’d tuck in another development-stage asset – one that we engineer and grow further – so that we can put it in a position to start construction by 2015.”

Garofalo said HudBay is not looking at any large takeovers, saying such deals typically don’t deliver real value to shareholders.

“We don’t have any grand visions about how big we should be. Scale is not as important as growth from high-quality long-life assets. Growth for growth’s sake is not we are after.”

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