TMX, NYSE – HBM 2021 No. 8 Hudbay Announces Updated Constancia and Snow Lake Mine Plans and Provides Annual Reserve and Resource Update Global Increase to Copper and Gold Reserves
TMX, NYSE – HBM
2021 No. 8
Hudbay Announces Updated Constancia and Snow Lake Mine Plans and Provides
Annual Reserve and Resource Update
Global Increase to Copper and Gold Reserves
• Hudbay’s total mineral reserves increase by approximately 170,000 tonnes of contained copper and 360,000
ounces of contained gold compared to the prior year’s estimates after adjusting for mining depletion in 2020.
• New three -year production guidance issued; c onsolidated copper and gold production are expected to
increase by 36% and 125%i, respectively, by 2023 from 2020 levels as Hudbay brings online its
Pampacancha and New Britannia growth projects.
• Pampacancha and New Britannia g rowth projects are nearing completion with a total of approximately $80
million remaining to be spent in 2021.
• Hudbay’s two flagship producing assets , Constancia and the Snow Lake operations, each have a 17-year
mine life (to 2037) based on current reserves.
Constancia Highlights
• Constancia reserves increase by 33 million tonnes at a grade of 0.48% copper and 0.115 grams per tonne
gold, resulting in an increase of approximately 1 1% in contained copper and 12% in contained gold over the
prior year’s reserves, after adjusting for mining depletion in 2020.
• Improved Constancia mine plan incorporating higher grades from Pampacancha from 2022 to 2025 and the
new Constancia North reserves to extend the medium-term production profile.
• Average annual copper production at Constancia over the next eight years increases to approximately
102,000 tonnes at an average cash cost and sustaining cash cost of $1.1 8 and $1.71ii, respectively, per
pound of copper produced net of by-product credits.
• Constancia’s total copper and gold production increases by 12% and 9%, respectively, compared to the
same period in the previous mine planiii.
Snow Lake Highlights
• Snow Lake mineral reserves continue to increase year -over-year as successful resource -to-reserve
conversion more than offsets mining depletion.
• Advanced phase three of Hudbay’s Snow Lake gold strategy through various mining and milling optimiza tion
opportunities.
• Improved Snow Lake mine plan contemplates an increase in Lalor’s mining rate to 5,300 tonnes per day in
2023, from a planned 4,500 tonnes per day previously , and the incorporation of the mining of the 1901
deposit by 2026.
• Annual gold production from Lalor and the Snow Lake operations increases to over 180,000 ounces during
the first six years of New Britannia production at the lowest quartile cash cost globallyiv
• Snow Lake’s gold, copper and silver production increases by 18%, 35% and 27%, respectively, from 2022 to
2027 compared to the previous mine plan.
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Toronto, Ontario, March 29, 2021 – Hudbay Minerals Inc. (“Hudbay” or the “company ”) (TSX, NYSE: HBM)
today announced that it has filed updated National Instrument 43 -101 (“NI 43-101”) technical reports in respect of its
100% owned Constancia copper mine in Peru and its 100% owned Lalor and Snow Lake gold-zinc mining and milling
operations in Manitoba. The company also released its annual mineral reserve and resource update and issued new
three-year production guidance. All dollar amounts are in US dollars, unless otherwise noted.
“We are excited to publish these updated mine plans , which solidify our copper and gold production growth over the
next several years,” said Peter Kukielski, Hudbay’s President and Chief Executive Officer. “ Our project execution,
operational optimization and exploration efforts over the past year have been successful in setting up the business for
this next phase of growth , which sees Constancia’s annual copper production above 100,000 tonnes for the next
eight years and Snow Lake’s annual gold production over 180,000 ounces once New Britannia is fully operational.
We also continue to maintain our low -cost profile as demonstrated by the cash costs in our updated mine plans.
Hudbay has a proven track record of d elivering value through exploration, mine development and successful
operations, and we look forward to continuing to create value through leveraging our core competencies.”
Constancia Mine
The company has released an updated mine plan for its Constancia operations that reflects an increase in copper
and gold production from 2022 to 2025 as the higher grades from the Pampacancha deposit enter the mine plan. The
updated mine plan incorporates higher-grade reserves including the Constancia North pit extension (please refer to
Figure 1 for a view of the extended Constancia pit ). With the incorporation of Pampacancha and Constancia North,
annual production at Constancia is expected to average approximately 102,000 tonnes of copper and 58,000 ounces
of gold over the next eight years, an increase of 40% and 367%, respectively, from 2020 levels , which were partially
impacted by an eight -week temporary mine interruption related to a government -declared state of emergency .
Constancia’s total copper and gold production increases by 12% and 9%, respectively, compared to the same period
in the company’s previous NI 43-101 technical report dated March 26, 2018iii.
Constancia maintains its low -cost profile with average cash cost and sustaining cash cost of $1.1 8 and $1. 71,
respectively, per pound of copper produced , net of by -product credits, over the next eight years. The total sustaining
capital reflects the additional tonnes incorporated into the mine plan , modifications to mine sequence, optimizing
material r ehandling activities, updated cost environment and further capital investments in the tailings facility to
continue to maintain high industry tailings standards . Growth project capital includes remaining Pampacancha
development expenditures in 2021 (excluding any remaining land-user agreement costs), the capital costs associated
with the implementation of a recovery optimization program scheduled for 2023, the installation of a pebble crusher
expected to be in operation by 2024, and the development of a wat er reservoir in 2025 as part of the company’s
water management efforts.
Limited pre -development activities continue on site at Pampacancha to ensure pre -stripping activities can begin
immediately after an agreement with the remaining land user family is completed. Hudbay has made significant
progress with the remaining land user family and expects to reach an agreement in the coming weeks . First
production from Pampacancha continues to be expected in the second quarter of 2021.
In March 2021, Constancia received a upgraded score of “AA” across all the tailings management indicators in the
Mining Association of Canada ’s Towards Sustainable Mining (“TSM”) program as per an annual self -assessment
completed in 2020. This rating was higher than Constancia’s “A” rating in 2019 and exceeded the company’s target of
maintaining a minimum of an “A” rating on all five TSM tailings indicators.
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Summary of Constancia Updated Mine Plan
A summary of key production and cost details from the updated Constancia mine plan can be found below. For
further details, please refer to the section titled “ Constancia Updated Mine Plan Detailed Information” at the end of
this news release.
Constancia Operations 2021 2022 2023 2024 2025 2026 2027 2028 2021-2028
Avg.
2029-2037
Avg. LOM
Contained Metal in Concentrate
Cu Production tonnes
(000s) 80 108 117 128 91 95 91 106 102 68 1,431
Au Production ounces
(000s) 45 97 93 127 28 25 21 27 58 19 631
Ag Production ounces
(000s) 1,977 1,942 2,619 2,782 2,210 2,452 2,122 2,601 2,338 1,717 34,160
Mo Production tonnes
(000s) 1.3 1.4 2.5 1.6 1.9 1.3 1.6 1.6 1.6 1.0 22.1
Capital Expenditures
Sustaining Capital1 $ millions $127 $66 $158 $81 $114 $66 $125 $66 $100 $50 $1,248
Growth Project
Capital $ millions $4 - $30 - $17 - - - - - $51
Copper Cash Costs
Cash Cost, net of
by-product credits2 $/lb Cu $1.37 $0.97 $0.80 $0.74 $1.48 $1.47 $1.37 $1.27 $1.18 $1.71 $1.38
Sustaining Cash
Cost, net of by-
product credits2
$/lb Cu $2.30 $1.39 $1.44 $1.05 $2.08 $1.82 $2.03 $1.58 $1.71 $2.09 $1.83
Note: Totals may not add up correctly due to rounding. “LOM” refers to life-of-mine total.
1 After the impact of capitalized stripping.
2 By-product credits calculated using the gold and silver deferred revenue drawdown rates for 2021 and the following commodity
prices: gold price of $1,800 per ounce for 2021, $1,700 per ounce for 2022, $1,650 per ounce for 2023, $1,600 per ounce for 2024
and $1,500 per ounce long-term; silver prices of $25 per ounce for 2021, $23 per ounce for 2022, $20 per ounce for 2023, $19 per
ounce for 2024 and $18 per ounce long-term; molybdenum prices of $11 per pound for 2021 and $10 per pound for 2022 and long-
term. Sustaining cash cost calculated on the same basis as used in the company’s quarterly financial disclosures, which
incorporates all costs included in cash cost plus sustaining capital expenditures, payments on capital leases, capitalized exploration,
royalties, cash payments on long-term community agreements, and accretion and amortization of decommissioning obligations.
Cash cost and sustaining cash cost 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 three and twelve months ended December 31, 2020.
Constancia Mineral Reserves and Resources
Proven and probable reserves at Constancia increased by 33 million tonnes at a grade of 0.48% copper and 0.115
grams per tonne gold, resulting in an increase of approximately 11% in contained copper and 12% in contained gold
over the prior year’s reserve s, after adjusting for mining depletion in 2020 . This more than replace s what was
depleted from mining operations during the year, resulting in the addition of one year to Constancia’s mine life, which
has been maintained at 17 years. The increase in reserves was primarily as a result of the 2019 and 2020 drill
program at Constancia North , which intersected shallow po rphyry and skarn mineralization and contributed to an
extension of the Constancia reserve pit by approximately 300 metres to the north. The increase in gold content was
also partly due to the correction of a low bias in the historical drillhole database at Constancia.
Constancia North also contributed to an improvement in the head grade of the Constancia mine mineral resource
estimates: measured and indicated copper grades increased to 0.22% from 0.19% and inferred copper grades
increased to 0.30% from 0.1 8%. A significant portion of the Constancia North resource estimate is classified as
inferred due to wide drill spacing but there remains the opportunity to upgrade these inferred resources to a higher
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classification as the company completes infill drilling. There also remains further opportunity to extend the Constancia
North resources by incorporating steeply dipping high-grade skarn mineralization through a potential underground
operation and a scoping study is expected to be completed in 2021. The mineralization remains open down plunge to
the north.
Current mineral reserves and resources (exclusive of reserves) for Constancia as of January 1, 2021 are summarized
below.
Constancia Mine
Mineral Reserve and Resource
Estimates1,2,3,4,5
Tonnes
Cu Grade
(%)
Mo Grade
(g/t)
Au Grade
(g/t)
Ag Grade
(g/t)
Constancia Reserves
Proven 436,500,000 0.29 83 0.041 2.88
Probable 56,100,000 0.25 69 0.045 3.09
Total Proven and Probable - Constancia 492,600,000 0.29 82 0.042 2.90
Pampacancha Reserves
Proven 32,400,000 0.59 178 0.368 4.48
Probable 7,500,000 0.62 173 0.325 5.75
Total Proven and Probable - Pampacancha 39,900,000 0.60 177 0.360 4.72
Total Proven and Probable 532,500,000 0.31 89 0.066 3.04
Constancia Resources
Measured 125,200,000 0.22 65 0.038 2.11
Indicated 118,300,000 0.22 65 0.037 2.05
Inferred 46,600,000 0.30 73 0.054 2.72
Pampacancha Resources
Measured 11,400,000 0.41 101 0.245 4.95
Indicated 6,000,000 0.35 84 0.285 5.16
Inferred 10,100,000 0.14 143 0.233 3.86
Total Measured and Indicated 260,900,000 0.23 67 0.052 2.27
Total Inferred 56,700,000 0.27 86 0.086 2.92
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 resources in the above tables do not include mining dilution or recovery factors.
3 Metal prices of $3.10 per pound copper, $11.00 per pound molybdenum, $1,500 per ounce gold, and $18.00 per ounce silver were
used to estimate mineral reserves and resources.
4 Mineral reserves and resources are estimated using a minimum net smelter return (“NSR”) cut-off of $6.14 per tonne and
assuming metallurgical recoveries (applied by ore type) of 85.8% on average for the life of mine.
5 Mineral resources are based on resource pit designs containing measured, indicated, and inferred mineral resources.
Peru Regional Exploration
The company continues to advance regional exploration programs in Peru. In February 2021, drilling commenced on
the Quehuincha North high -grade skarn target located approximately 10 kilometres from Constancia’s processing
facilities. Exploration agreement discussions with the community of Uchucarcco on the Maria Reyna and Caballito
properties are progressing. Maria Reyna is a prospective copper skarn -porphyry target and Caballito is a past -
producing copper oxide mine, both of which are located within 10 kilometers north of Constancia. Hudbay also
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expects to commence drilling at its Llague n property in the second quarter of 2021, after receiving all required drill
permits in 2020. Llaguen is a copper porphyry target located in northern Peru, near the city of Trujillo and in close
proximity to existing infrastructure.
For additional details on the Constancia mine, please refer to the technical report titled “NI 43 -101 Technical Report,
Constancia Mine, Cuzco, Peru”, effective January 1, 2021, which was filed on March 29, 2021 under Hudbay’s profile
on SEDAR at www.sedar.com and will be filed on EDGAR at www.sec.gov.
Lalor Mine and Snow Lake Operations
Snow Lake Gold Strategy History - Phases One and Two
In 2019, Hudbay announced the results from the 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 included a
65% increase in Lalor’s gold reserves and was the first mine plan that contemplated 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 significant drilling and test mining of the Lalor gold and copper -gold zones, and trade-
off studies on the vario us processing solutions for the gold ore. The New Britannia mill was determined to be the
optimal processing solution for Lalor gold, as it capitalizes on existing infrastructure and is expected to achieve gold
recoveries above 90%, compared to gold recoveries of approximately 53% at the Stall mill at that time . 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.
In March 2020, the company announced 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
resulted in a 35% increase in total Snow Lake gold reserves to 2.2 million ounces and extended the mine life of the
Snow Lake operations to 2037 through extending the Lalor mine life to 10 years and mining the gold-rich WIM and 3
Zone deposits over the last eight years . Lalor ’s life-of-mine gold production increased by 41% and annual gold
production was contemplated to be greater than 150,000 ounces over the first eight years after the New Britannia mill
is refurbished.
Advancing Phase Three of the Snow Lake Gold Strategy
Over the past twelve months , Hudbay has advanced the third phase of its Snow Lake gold strategy focusing on
expansion and further optimization of operations. This updated mine plan contemplates an increase in annual gold
production from Lalor and the Snow Lake operations to over 180,000 ounces d uring the first six years of New
Britannia’s operation at industry-low cash cost and sustaining cash cost, net of by -product credits, of $ 412 and $788
per ounce of gold , respectively. Mineral reserves increased year -over-year, which resulted in no change t o Snow
Lake’s mine life (to 2037) as the company accelerated future reserves with a higher production rate at Lalor and Stall.
This enhanced mine plan incorporates the results from several optimization initiatives, including:
• Early gold production at New Britannia - In 2020, Hudbay identified the opportunity to install modular copper
flotation cells to achieve gold production earlier than expected in 2021. As a result, ramp -up and first
production at the gold plant is now expected early in the third quarter of 2021 , ahead of the original
schedule.
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• Increased Lalor Mining Rate to 5,300 tonnes per day - In the fourth quarter of 2020, Hudbay allocat ed
additional mining resources from 777 to Lalor while the 777 shaft repairs were being completed. As a result,
and in combination with other technical and operational improvements, Lalor’s mine output increased by an
average of 650 tonnes per day above the normal level during this period . After confirming the additional
mining capacity, Hudbay determined that an optimal production rate for Lalor is 5,300 tonnes per day ,
matching the milling capacity of Snow Lake once New Britannia is commissioned . This higher rate is
expected to begin after the 777 mine closes in mid -2022 and compares to 4,500 tonnes per day in the
previous mine plan.
• Adding 1901 Deposit to the Mine Plan - After releasing an upgraded resource estimate for the 1901 deposit
in August 2020, Hudbay initiated engineering activities to support a prefeasibility study. As part of this study,
the company developed a viable mine plan for the zinc-rich zones at the 1901 deposit to supplement
production from Lalor and take advantage of the future processing capacity at the Stall mill. This resulted in
the addition of 1.58 million tonnes of reserves at a grade of 7.9% zinc. Production from the 1901 deposit is
expected to commence in 2026 at a rate of approximately 1,000 tonnes per day. Please refer to Figure 2 for
a view of the mine design layout at 1901.
• Higher Throughput at Stall - Hudbay has been pleased with the recent performance of the Stall mill , which
has achieved better than expected throughput rates. The updated mine plan assumes Stall will achieve a
throughput rate of 3,800 tonnes per day, compared to 3,500 tonnes per day in the previous mine plan.
• Increased Copper and Precious Metal Recoveries at Stall - In 2020, Hudbay completed a feasibility study
and a test program exploring various technological upgrades to the flowsheet at the Stall mill. The total cost
to implement these upgrades is $19 million (C$24 million) and is expected to increase Stall’s copper
recoveries to between 91% and 95%, gold recoveries to between 64% and 70%, and silver recoveries to
between 65% and 74%, a significant increase from the assumed recoveries in the previous mine plan of
84% copper, 53% gold and 53% silver. The project is expected to commence in 2022 and be in operation by
early 2023.
These mine plan enhancements optimize the processing capacity of the Snow Lake operations in a manner that
maximizes the net present value of the operations. As a result of these initiatives, the production of gold, copper and
silver are expected to increa se by 18%, 3 5% and 27%, respectively, from 2022 to 2027 compared to the previous
mine plan.
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Summary of Snow Lake Updated Mine Plan
A summary of key production and cost details from the updated Snow Lake mine plan can be found below. For
further details, please refer to the section titled “Snow Lake Updated Mine Plan Detailed Information” at the end of
this news release.
Snow Lake Operations1 2021 2022 2023 2024 2025 2026 2027 2022-2027
Avg.
2028-2037
Avg. LOM
Contained Metal in Concentrate and Doré
Au Production ounces
(000s) 115 160 190 191 208 184 162 182 54 1,753
Ag Production ounces
(000s) 824 946 1,134 1,150 1,188 1,182 1,298 1,150 340 11,120
Cu Production tonnes
(000s) 10 11 13 11 16 11 12 12 6 142
Zn Production tonnes
(000s) 61 51 46 46 35 46 57 47 20 541
Capital Expenditures2
Sustaining Capital $ millions $83 $96 $67 $62 $62 $66 $48 $67 $18 $664
Growth Project Capital $ millions $77 $19 - - - - - - - $96
Gold Cash Costs
Cash Cost, net of by-
product credits3 $/oz Au ($275) $361 $434 $440 $393 $454 $382 $411 $647 $421
Sustaining Cash Cost,
net of by-product
credits3
$/oz Au $550 $1,027 $784 $766 $690 $812 $680 $793 $972 $812
Note: Totals may not add up correctly due to rounding. “LOM” refers to life-of-mine total.
1 Includes production and costs for Lalor, 1901, WIM and 3 Zone.
2 Canadian dollar capital expenditures converted to U.S. dollar capital expenditures at a C$/US$ exchange rate of 1.27 in 2021, 1.28
in 2022, 1.29 in 2023 and 1.30 long-term.
3 By-product credits calculated using the following assumptions: zinc price of $1.20 per pound in 2021, $1.15 per pound in 2022,
$1.10 per pound in 2023 and long-term; copper price of $3.75 per pound in 2021, $3.30 per pound in 2022, $3.10 per pound in 2023
and long-term; silver price of $25.00 per ounce in 2021, $23.00 per ounce in 2022, $20.00 per pounce in 2023, $19.00 per ounce in
2024, and $18.00 per ounce long-term; C$/US$ exchange rate of 1.27 in 2021, 1.28 in 2022, 1.29 in 2023 and 1.30 for long-term.
Sustaining cash cost incorporate all costs included in cash costs calculation plus sustaining capital expenditures. Cash cost and
sustaining cash cost 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, 2020.
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Snow Lake Mineral Reserves and Resources
Current mineral reserves and resources (exclusive of reserves) for Lalor , 1901 and other Snow Lake satellite
deposits as of January 1, 2021 are summarized below.
Lalor Mine and 1901 Deposit
Mineral Reserve and Resource
Estimates1,2,3,4,5,6
Tonnes
Zn Grade
(%)
Au Grade
(g/t)
Cu Grade
(%)
Ag Grade
(g/t)
Base Metal Zone Reserves
Proven – Lalor 6,860,000 5.79 2.6 0.50 29
Proven – 1901 890,000 6.61 2.0 0.40 28
Probable – Lalor 1,190,000 4.32 3.2 0.64 32
Probable – 1901 690,000 9.49 1.4 0.25 30
Gold Zone Reserves
Proven – Lalor 3,950,000 1.03 5.2 0.60 28
Probable – Lalor 3,630,000 0.53 5.7 1.16 28
Total Proven and Probable 17,200,000 3.68 3.8 0.66 29
Base Metal Zone Resources
Inferred – Lalor 590,000 3.48 2.8 0.31 55
Inferred – 1901 310,000 6.44 2.0 0.85 25
Gold Zone Resources
Inferred – Lalor 5,610,000 0.35 4.6 1.17 26
Inferred – 1901 480,000 0.55 6.7 0.72 37
Total Inferred 6,990,000 0.89 4.5 1.05 29
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. Mineral resources in the
above tables do not include mining dilution or recovery factors.
2 Mineral reserves and resources are estimated using a minimum NSR cut-off of C$105 per tonne for waste filled mining areas and
a minimum of C$116 per tonne for paste filled mining areas.
3 Metal prices of $1.10 per pound zinc, $1,500 per ounce gold, $3.10 per pound copper, and $18.00 per ounce silver with an
exchange rate of 1.30 C$/US$ were used to confirm the economic viability of the mineral reserve estimates.
4 For Lalor, individual stope gold grades were capped at 10 grams per tonne as a prudent estimate until reserves to mill
reconciliations can establish that the high-grade gold can indeed be entirely recovered. This capping method resulted in the
reduction of the global gold reserve grade by approximately 3%.
5 Base metal mineral resources are estimated based on the assumptions that they would be processed at the Stall concentrator
while gold mineral resources are estimated based on the assumption that they would be processed at the New Britannia
concentrator, which is currently being refurbished.
6 1901 mineral resources were initially estimated using metal price assumptions that vary marginally from the assumptions used for
reserves. In the Qualified Person’s opinion, the combined impact of these small variations does not have any impact on the mineral
resource estimates.