Dual-listed Hudbay Minerals is preparing for the next phase of growth, focusing on mining the high-grade Pampacancha satellite deposit, in Peru, and completing the refurbishment of the New Britannia gold mill, in Canada.
Both projects, CEO Peter Kukielski says, require low capital intensity, but will yield high returns with short paybacks on the invested capital. Hudbay has budgeted $170-million in growth capital for 2020, $80-million of which will be spent at the Manitoba operations, $70-million in Peru and $20-million in Arizona.
The Manitoba spending relates to the New Britannia mill refurbishment, where construction activities are set to start in the second quarter of this year.
Hudbay notes that the New Britannia mill refurbishment costs, at about $115-million over 2020 and 2021, are higher than the original estimate of $95-million, mainly owing to the introduction of new instruments to improve mill efficiency, as well as labour cost inflation and some cost escalation on equipment.
Once the New Britannia gold mill is in operation by 2022, gold is expected to account for more than 60% of revenues at Lalor with gold production expected to grow to about 140 000 oz/y at a sustaining cash cost of about $450/oz over the first five years.
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