TMX, NYSE – HBM 2020 No. 7 Hudbay Provides Annual Reserve and Resource Update
TMX, NYSE – HBM
2020 No. 7
Hudbay Provides Annual Reserve and Resource Update
• 41%i increase in Lalor’s life-of -mine gold production from the previous mine plan, including an increase in
average annual gold production to over 150,000 ounces during the first eight years of New Britannia
production at the lowest quartile all-in sustaining cost globallyii
• 35% increase in total Snow Lake gold reserves to 2.2 million ounces, supporting an 18-year mine life for the
Snow Lake operations
• Successful exploration efforts at Lalor and in the Snow Lake region added to the mineral resource inventory
and offset the conversion of mineral resources to reserves; initial inferred resource estimates announced for
high-grade copper-gold Lens 17 at Lalor and nearby Watts base metal deposit
• Recent drilling intersections north of the Constancia open pit highlight the potential for porphyry copper and
high-grade skarn mineralization within the limit of the currently permitted mining areas
• Community agreement reached on two targets located southwest of Constancia; continuing to advance
community relations and technical activities on other regional properties near Constancia
• Conducted strategic land consolidation near the Mason project, including a large package of claims hosting
potential for high-grade skarn deposits
Toronto, Ontario, March 30, 2020 – Hudbay Minerals Inc. (“Hudbay” or the “company”) ( TSX, NYSE: HBM)
today provided an update on its annual mineral reserve and resource estimates and exploration activities. All dollar
amounts are in US dollars, unless otherwise noted.
“We are extremely pleased with our exploration success over the past 12 months in Manitoba where we’ve doubled
the mine life in Snow Lake and more than doubled Lalor’s annual gold production from current levels ,” said Peter
Kukielski, Hudbay’s President and C hief Executive Officer. “ In addition to replacing the ore that was mined at
Constancia last year, w e are also encouraged by recent drilling results north of the Constancia pit where high-grade
skarn mineralization has been intersected . Hudbay has a proven track record of d elivering value through the drill bit
and successful ly extending the life of our mines, demonstrating one of the many ways we can leverage our core
competencies to create value.”
Lalor Mine and Snow Lake Operations
Phase One of Snow Lake Gold Strategy
In February 2019, Hudbay announced the results from its first phase of its Snow Lake gold strategy which
repositioned Lalor as a gold mine with precious metals contributing a majority of the life -of-mine revenues. The first
phase resulted in a 65% increase in Lalor’s gold reserves and was the first mine plan that included the processing of
gold and copper -gold ore at the company’s New Britannia mill. Several years of detailed work was completed in
advance of the phase one mine plan, including signif icant drilling and test mining of the Lalor gold and copper -gold
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2020 No. 7
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zones, and trade-off studies on the various processing solutions for the gold ore. The New Britannia mill was
determined to be the optimal processing solution for Lalor gold, as it capitalize s on existing infrastructure and is
expected to achieve gold recoveries of approximately 93% compared to the current gold recoveries of approximately
53% at the Stall mill. The phase one gold mine plan contemplated Lalor’s annual gold production more than doubling
from then current levels to approximately 140,000 ounces over the first five years once the New Britannia mill is
refurbished.
Phase Two of Snow Lake Gold Strategy
Over the last 12 months, the company has executed on the second phase of its Snow Lake gold strategy, focusing on
extensive infill and exploration drilling at Lalor and advancing engineering studies on the regional deposits in Snow
Lake. This has resulted in a significant increase in the mineral reserve s and mineral resources for Lalor and the
nearby satellite deposits , including a 35% increase in total Snow Lake gold reserves to 2.2 million ounces. Lalor’s
current reserve estimate has added more than a year to its mine life, and with the inclusion of the reserves at the
nearby satellite deposits, the mine life of the Snow Lake operations now totals 18 years . Based on the updated
reserve, Lalor’s life-of-mine gold production increased by 41% i compared to the previous mine plan, and annual gold
production is expected to average greater than 150,000 ounces over the first eight years after the New Britannia mill
is refurbished, which is more than double the current annual gold production from Lalor and 9% iii higher than the
previous mine plan. Lalor will remain a low-cost gold mine with sustaining cash cost siv, net of by -product credits, of
approximately $655 per ounce over the first eight years once New Britannia is in production, positioning Lalor in the
lowest quartile on the global all-in sustaining cost curve.
The revised 18-year mine plan for the Snow Lake operations utilizes the existing mining capacity of up to 4,500
tonnes per day at the Lalor mine for the first ten years followed by the mining of the gold-rich WIM and 3 Zone
deposits for the last eight years of the mine plan. Please refer to Figure 1 for a map outlining the location of the
various Snow Lake deposits within trucking distance of the New Britannia mill and other regional infrastructure.
Under the revised mine plan, the New Britannia gold mill will operate at its maximum capacity of 1,500 tonnes per day
from 2022 to 2030 by processing Lalor’s current reserves at average grades of 6.4 grams per tonne gold and 1.0%
copper. From 2030 to 2037, New Britannia is expected to operate at a processing rate between 1,200 to 1,500
tonnes per day at average grades of 2.2 grams per tonne gold and 1.3% copper, as the Lalor feed is replaced by
WIM and 3 Zone (see “Snow Lake Mine Plan” below).
The WIM deposit was acquired by Hudbay in the third quarter of 2018 for approximately C$0.5 million. WIM is a
copper-gold deposit that starts from surface, is expected to be developed via an underground ramp and is located
approximately 15 kilometres by road from New Britannia. The 3 Zone deposit was acquired by Hudbay as part of the
acquisition of the New Britannia mine and mill. 3 Zone is a ramp-access deposit located within the existing mining
infrastructure at the past producing New Britannia mine.
The New Britannia mill development plan contemplates construction activities occurring between June 2020 and
August 2021, with plant commissioning and ramp-up occurring during the fourth quarter of 2021. This timing assumes
no delays or deferrals due to the impact of the COVID -19 coronavirus or related liquidity considerations , which
remains a risk we continue to prudently assess and monitor. All key environmental permits for the project have been
obtained.
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2020 No. 7
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Snow Lake Mine Plan
2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 LOM
Lalor Base Metal Ore
Ore Mined tonnes
(000s) 1,575 1,506 1,035 997 1,035 1,035 1,035 738 521 518 176 10,170
Ore Mined tpd 4,351 4,160 2,859 2,754 2,859 2,859 2,859 2,038 1,438 1,431 485 -
Cu Grade % Cu 0.64% 0.65% 0.61% 0.57% 0.60% 0.55% 0.61% 0.63% 0.73% 0.75% 0.29% 0.62%
Zn Grade % Zn 5.60% 5.36% 5.74% 5.67% 4.51% 5.01% 5.65% 4.78% 4.83% 4.19% 5.70% 5.25%
Au Grade g/t Au 2.55 3.28 2.72 2.86 2.70 2.76 3.86 3.83 3.91 3.75 1.51 3.08
Ag Grade g/t Ag 26.68 28.21 31.38 30.84 26.34 32.34 33.37 30.55 23.55 25.77 21.62 29.00
Lalor Gold Ore
Ore Mined tonnes
(000s) - 69 540 540 540 540 540 540 537 540 459 4,845
Ore Mined tpd - 191 1,492 1,492 1,492 1,492 1,492 1,492 1,484 1,492 1,267 -
Cu Grade % Cu - 1.12% 0.81% 0.99% 0.91% 0.83% 0.83% 0.85% 1.55% 1.54% 0.62% 1.00%
Zn Grade % Zn - 0.38% 0.48% 0.92% 0.78% 0.35% 0.62% 0.95% 0.63% 0.47% 0.69% 0.65%
Au Grade g/t Au - 5.83 6.62 6.19 5.33 6.42 7.37 5.41 6.70 6.71 7.15 6.41
Ag Grade g/t Ag - 20.69 26.67 22.08 24.37 23.52 32.91 26.54 29.33 26.66 28.24 26.59
Total Ore - Lalor
Ore Mined tonnes
(000s) 1,575 1,575 1,575 1,537 1,575 1,575 1,575 1,278 1,058 1,058 634 15,015
Ore Mined tpd 4,351 4,351 4,351 4,246 4,351 4,351 4,351 3,530 2,923 2,923 1,753 -
Cu Grade % Cu 0.64% 0.67% 0.68% 0.72% 0.71% 0.65% 0.68% 0.72% 1.15% 1.15% 0.53% 0.74%
Zn Grade % Zn 5.60% 5.14% 3.94% 4.00% 3.23% 3.41% 3.93% 3.16% 2.70% 2.29% 2.08% 3.77%
Au Grade g/t Au 2.55 3.39 4.06 4.03 3.60 4.02 5.06 4.50 5.33 5.26 5.58 4.16
Ag Grade g/t Ag 26.68 27.88 29.77 27.76 25.66 29.31 33.21 28.85 26.49 26.22 26.41 28.22
2030 2031 2032 2033 2034 2035 2036 2037 LOM
WIM Ore
Ore Mined tonnes
(000s) 104 414 438 438 401 316 288 49 2,448
Ore Mined tpd 286 1,133 1,200 1,200 1,100 867 788 134 -
Cu Grade % Cu 1.22% 1.62% 1.47% 1.72% 1.71% 1.71% 1.67% 1.70% 1.63%
Zn Grade % Zn 0.09% 0.18% 0.32% 0.42% 0.28% 0.17% 0.13% 0.13% 0.25%
Au Grade g/t Au 0.76 1.24 1.55 1.74 1.82 1.82 1.68 1.87 1.60
Ag Grade g/t Ag 4.64 6.01 5.66 6.51 6.67 6.92 6.76 6.86 6.31
3 Zone Ore
Ore Mined tonnes
(000s) - - - - 38 219 219 187 662
Ore Mined tpd - - - - 103 600 600 511 -
Cu Grade % Cu - - - - - - - - -
Zn Grade % Zn - - - - - - - - -
Au Grade g/t Au 3.40 4.17 4.17 4.46 4.21
Ag Grade g/t Ag - - - - - - - - -
Total Ore - Satellite Deposits
Ore Mined tonnes 104 414 438 438 438 535 507 235 3,110
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(000s)
Ore Mined tpd 286 1,133 1,200 1,200 1,203 1,467 1,389 645 -
Cu Grade % Cu 1.22% 1.62% 1.47% 1.72% 1.56% 1.01% 0.95% 0.35% 1.28%
Zn Grade % Zn 0.09% 0.18% 0.32% 0.42% 0.26% 0.10% 0.07% 0.03% 0.20%
Au Grade g/t Au 0.76 1.24 1.55 1.74 1.96 2.78 2.76 3.93 2.15
Ag Grade g/t Ag 4.64 6.01 5.66 6.51 6.10 4.09 3.84 1.42 4.97
Note: Tonnes per day (“tpd”) assumes 365 operating days a year. LOM refers to life-of-mine.
Snow Lake Metallurgical Recoveries
LOM Average
Base Metal Ore Through Stall
Average Lalor Ore Recoveries
Cu 83.6%
Au 52.9%
Ag 53.3%
Zn 93.2%
Gold Ore Through New Britannia
Average Lalor Ore Recoveries
Cu 93.9%
Au 93.3%
Ag 77.8%
Average WIM Ore Recoveries
Cu 97.7%
Au 88.4%
Ag 69.8%
Average 3 Zone Ore Recoveries
Au 85.0%
Snow Lake Production Profile
Lalor Mine
Production 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 LOM
Cu tonnes (000s) 8 9 9 10 10 9 9 8 11 11 3 97
Zn tonnes (000s) 81 74 55 52 43 48 54 32 23 20 9 492
Au ounces (000s) 74 102 158 151 136 154 192 139 146 146 103 1,501
Ag ounces (000s) 783 829 956 851 828 914 1,087 778 665 625 382 8,698
WIM Mine
Production 2030 2031 2032 2033 2034 2035 2036 2037 LOM
Cu tonnes (000s) 1 7 6 7 7 5 5 1 39
Zn tonnes (000s) - - - - - - - - -
Au ounces (000s) 2 14 19 22 21 17 14 3 110
Ag ounces (000s) 10 56 54 65 61 50 44 8 347
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3 Zone Mine
Production 2030 2031 2032 2033 2034 2035 2036 2037 LOM
Cu tonnes (000s) - - - - - - - - -
Zn tonnes (000s) - - - - - - - - -
Au ounces (000s) - - - - 3 25 25 23 76
Ag ounces (000s) - - - - - - - - -
Note: Production includes metal contained in concentrate and doré.
Snow Lake Unit Operating Costs and Cash Costs
Unit Operating Costs LOM Average
Mining – Lalor C$/tonne $110.20
Mining – WIM C$/tonne $73.44
Mining – 3 Zone C$/tonne $68.41
Milling – Stall C$/tonne $28.01
Milling – New Britannia C$/tonne $39.01
Note:
1. Unit operating costs exclude general and administrative costs related to shared services incurred in Flin Flon and allocated
between 777 and Lalor mines.
2. Mining costs include costs to truck approximately 1,000 tonnes per day from Lalor to Flin Flon until New Britannia is operating
in 2022.
Gold Cash Costs 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2022-2029
Avg.
Gold Production ounces
(000s) 74 102 158 151 136 154 192 139 146 146 153
Cash Costs US$/oz ($95) $151 $371 $507 $584 $524 $387 $624 $434 $456 $480
Sustaining Cash
Costs US$/oz $966 $980 $848 $805 $882 $720 $460 $685 $443 $466 $657
2030 2031 2032 2033 2034 2035 2036 2037 2030-2037
Avg. LOM Avg.
Gold Production ounces
(000s) 105 14 19 22 24 41 39 25 36 94
Cash Costs US$/oz $669 $154 $309 $160 $212 $263 $312 $346 $410 $423
Sustaining Cash
Costs US$/oz $815 $1,312 $855 $175 $709 $728 $583 $346 $700 $697
Note:
1. Production includes metal contained in concentrate and doré.
2. Cash costs include all onsite (mining, milling and general and administrative) and offsite costs associated with Lalor, WIM and
3 Zone and are reported net of by-product credits. By-product credits calculated using the following assumptions: zinc price
(includes premium) of $1.18 per pound in 2020, $1.08 per pound in 2021 to 2023, $1.17 per pound long-term; copper price of
$2.65 per pound in 2020, $3.00 per pound in 2021, $3.10 per pound in 2022 and long-term; silver price of $16.00 per ounce in
2020, $16.50 per ounce in 2021 to 2023, and $17.00 per ounce long-term; C$/US$ exchange rate of 1.30 for current and long-
term.
3. Sustaining cash costs incorporate all costs included in cash costs calculation plus sustaining capital expenditures.
4. Cash costs and sustaining cash costs are non-IFRS financial performance measures with no standardized definition under
IFRS. For further details on why Hudbay believes cash costs are a useful performance indicator, please refer to the Company's
most recent Management's Discussion and Analysis for the year ended December 31, 2019.
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Snow Lake Capital Expenditures
Capital Expenditures 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029
Sustaining Capital
Lalor Sustaining Capital C$ millions $102 $111 $98 $58 $53 $39 $18 $11 $2 $2
Total Sustaining Capital US$
millions $79 $85 $75 $45 $41 $30 $14 $8 $1 $1
Growth Capital
New Britannia Capital C$ millions $105 $48 - - - - - - - -
Total Growth Capital US$
millions $80 $37 - - - - - - - -
Capital Expenditures 2029 2030 2031 2032 2033 2034 2035 2036 2037
Sustaining Capital
WIM Sustaining Capital C$ millions - $20 $21 $13 - - - - -
3 Zone Sustaining Capital C$ millions - - - - - $16 $25 $14 -
Total Sustaining Capital US$ millions - $15 $16 $10 - $12 $19 $10 -
Growth Capital
WIM Development C$ millions $50 - - - - - - - -
3 Zone Development C$ millions - - - - - - - - -
Total Growth Capital US$ millions $39 - - - - - - - -
Note: Totals may not add up correctly due to rounding. ”LOM” refers to life- of-mine. Canadian dollar capital expenditures converted
to U.S. dollar capital expenditures at an exchange rate of 1.30 C$/US$.
Snow Lake Mineral Reserves and Resources
Current mineral reserves and resources (exclusive of reserves) for Lalor and other Snow Lake satellite deposits as of
January 1, 2020 are summarized below.
Lalor Mine
Mineral Reserve and Resource Estimates1,2,3,4 Tonnes Cu Grade
(%)
Zn Grade
(%)
Au Grade
(g/t)
Ag Grade
(g/t)
Base Metal Zone Reserves
Proven 7,276,000 0.57 6.27 2.42 29
Probable 1,739,000 0.60 4.15 3.83 31
Gold Zone Reserves
Proven 1,748,000 1.37 1.11 6.70 24
Probable 4,251,000 0.83 0.42 6.21 27
Total Proven and Probable 15,015,000 0.74 3.77 4.16 28
Base Metal Zone Resources
Inferred 454,000 0.34 7.32 2.16 21
Gold Zone Resources
Inferred 3,945,000 1.31 0.31 4.69 26
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Total Inferred 4,399,000 1.21 1.03 4.43 26
Note: totals may not add up correctly due to rounding.
1 Mineral resources are exclusive of mineral reserves and do not have demonstrated economic viability.
2 Mineral reserves and resources calculated using metal prices of $1.17 per pound zinc (includes premium), $1,375 per ounce gold,
$3.10 per pound copper, $17.00 per ounce of silver.
3 Mineral reserves are estimated at an NSR cut-off of $101 per tonne for waste filled mining areas and a minimum of $113 per tonne
for paste filled mining areas.
4 Mineral resources are estimated at a minimum NSR cut-off of $101 per tonne.
Snow Lake Regional Deposits - Gold
Mineral Reserve and Resource Estimates Tonnes Cu Grade
(%)
Zn Grade
(%)
Au Grade
(g/t)
Ag Grade
(g/t)
Probable Reserves1
WIM 2,448,000 1.63 0.25 1.6 6.3
3 Zone 662,000 - - 4.2 -
Total Probable (Gold) 3,110,000 1.28 0.20 2.2 5.0
Inferred Resources2
Birch 569,000 - - 4.4 -
New Britannia 2,753,000 - - 4.5 -
Total Inferred (Gold) 3,222,000 - - 4.5 -
Note: totals may not add up correctly due to rounding.
1 WIM mineral reserves are estimated at a minimum net smelter return (“NSR”) cut-off of C$150 per tonne, assuming processing
recoveries of 98% for copper, 88% for gold and 70% for silver, and using long-term prices of $3.10 per pound copper, $1,375 per
ounce gold and $17.00 per ounce silver. 3 Zone mineral reserves are estimated at a minimum NSR cut-off of C$150 per tonne,
assuming processing recoveries of 85% for gold, and using a long-term price of $1,375 per ounce gold.
2 Mineral resources are exclusive of mineral reserves and do not have demonstrated economic viability. New Britannia mineral
resource estimates have been reported at a minimum true width of 1.5 metres and with a cut-off grade varying from 2 grams per
tonne (at the lower part of New Britannia) to 3.5 grams per tonne (at the upper part of New Britannia).
Snow Lake Regional Deposits – Base Metals
Mineral Reserve and Resource Estimates1 Tonnes Cu Grade
(%)
Zn Grade
(%)
Au Grade
(g/t)
Ag Grade
(g/t)
Indicated Resources
Pen II 469,000 0.49 8.89 0.35 6.8
Total Indicated (Base Metals) 469,000 0.49 8.89 0.35 6.8
Inferred Resources
1901 2,065,000 0.25 9.67 0.87 30.3
Watts 3,153,000 2.34 2.58 0.95 31
Pen II 132,000 0.37 9.81 0.3 6.9
Total Inferred (Base Metals) 5,350,000 1.48 5.49 0.9 30.1
Note: totals may not add up correctly due to rounding.
1 Mineral resources are exclusive of mineral reserves and do not have demonstrated economic viability. 1901 mineral resources are
estimated at a minimum NSR cut-off of $170 per tonne, assuming processing recoveries of 73% for copper, 94% for zinc, 48% for
gold and 47% for silver, and using long-term prices of $3.10 per pound copper, $1,260 per ounce gold, $1.10 per pound zinc and
$18.00 per ounce silver. Watts mineral resources are estimated at a minimum NSR cut-off of $150 per tonne, assuming processing
recoveries of 87% for copper, 80% for zinc, 65% for gold and 64% for silver, and using long-term prices of $3.10 per pound copper,
$1,375 per ounce gold, $1.10 per pound zinc and $17.00 per ounce silver. Pen II mineral resources are estimated at a minimum
NSR cut-off of $75 per tonne and assume that the Pen II mineral resources would be amenable to processing at the Stall mill.
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Phase Three of Snow Lake Gold Strategy and Exploration Upside
Exploration efforts at the Lalor mine were highly successful in 2019 with the definition of additional mineral resources
at Lalor. The updated resource model at Lalor includes 4.4 million tonnes of inferred mineral resources, which have
the potential to ex tend the Lalor mine life beyond the current estimate of ten years. A new copper -gold rich lens,
called Lens 17, is included in the updated inferred mineral resource estimate for Lalor. Lens 17 contains an inferred
mineral resource of 0.8 million tonnes at 3.0% copper, 3.7 grams per tonne gold and 18 grams per tonne silver.
Please refer to Figure 2 for a 3D image of Lens 17 , including the location of the drill holes and a conceptual
development plan. Lens 17 and other lenses at Lalor, including the copper -gold rich Lens 27, remain open down
plunge and offer opportunities to further expand Lalor’s resource base once suitable underground drilling platforms
have been established over the next two years.
In addition, the mineral resources at Hudbay’s satellite gold deposits in the Snow Lake region, such as Birch and the
New Britannia deposit, could provide feed for the New Britannia processing facilities and further extend the mine life.
New Britannia and Birch are mineralized zones at the past producing New Britannia gold mine that would be
accessible with some investment in the existing mining infrastructure.
The 1901 deposit i s located approximately half -way between the former Chisel North mine and the Lalor mine at a
depth between 500 metres to 700 metres and within 1,000 metres of the existing haulage ramp to Lalor. The 1901
deposit could provide additional feed for the proce ssing facilities in Snow Lake. On August 8, 2019, Hudbay
published an initial inferred mineral resource estimate for the zinc -rich 1901 deposit discovered six months earlier.
Since August 2019, the company has considered various options to develop the 1901 deposit and is completing a
drill program aimed at converting a significant portion of the inferred mineral resources to an indicated category and
to define an initial inferred mineral resource for the gold mineralization previously intersected between two lenses of
zinc-rich mineralization. Hudbay intends to provide an update on the mineral resource estimates and development
options for the 1901 deposit with its annual reserve and resource update in March 2021.
The Watts and Pen II deposits present additional opportunities to further optimize the Snow Lake operations.
Confirmatory drilling conducted during 2019 at the 100% owned Watts deposit supported an initial inferred mineral
resource estimate of approximately 3.2 million tonnes at 2.34% copper , 2.58% zinc, 0.95 grams per tonne gold and
31 grams per tonne silver . The Watts deposit is located approximately 95 kilometres from the Stall concentrator and
is in close proximity to roads and power lines. Please refer to Figure 1 for a map of the location of the Watts deposit .
Watts was discovered by the company in 1982 with the majority of the drilling being conducted between 1996 and
2008. Considering the available processing capacity at the Stall concentrator and recent drilling successes which
expanded the volume of high-grade copper mineralization at Watts, Hudbay is now confident that the potential for
economic extraction of the Watts deposit has been established to a level sufficient to report an initial inferred mineral
resource estimate.
Pen II is a low tonnage and hi gh-grade zinc deposit that starts from surface and is located within trucking distance of
the Stall mill. In 2019, Hudbay defined an indicated resource estimate of 0.5 million tonnes at 8.9% zinc. Pen II could
constitute a supplemental source of feed for t he Stall mill. Hudbay expects to continue metallurgical testing, infill
drilling and technical studies in an attempt to confirm the technical and economic viability of the resource.
In 2020 and 2021, additional technical studies and exploration activities will be conducted to confirm how the Lalor in-
mine exploration targets and the regional gold and base metal satellite deposits could be incorporated in the
consolidated business plan of the Snow Lake operations.