TSX, NYSE – HBM 2019 No. 10 Hudbay Announces Plans for Early Works Program at Rosemont and Provides Annual Reserve and Resource Update
TSX, NYSE – HBM
2019 No. 10
Hudbay Announces Plans for Early Works Program at Rosemont and Provides
Annual Reserve and Resource Update
Toronto, Ontario, March 28, 2019 – Hudbay Minerals Inc. (“Hudbay” or the “company”) ( TSX, NYSE: HBM)
today announced that its Board of Directors (“Board”) has approved an early works program at its Rosemont project ,
and provided its annual mineral reserve and resource update. All dollar amounts are in US dollars, unless otherwise
noted.
Summary
• Announced $122 million Rosemont early works program; this amount is included in the $1,921 million capital
cost estimate for Rosemont.
• Rosemont minority joint venture process to commence shortly.
• By proceeding with early works and financing activities in parallel, Hudb ay’s management expects to seek
Board approval to commence Rosemont construction by the end of 2019 ; this would enable first production
by the end of 2022;
• Lalor mine achieved production of 4,500 tonnes per day in the first quarter of 2019.
• Filed updated technical report for Lalor reflecting increase in reserves and resources and revised mine plan
announced in February 2019.
• 777 mine life extended to second quarter of 2022.
• Continuing to advance community relations and technical activities on properties near Constancia.
“We are pleased to be moving forward at Rosemont and look forward to carrying out the early works in parallel with
financing activities for the project,” said Alan Hair, Hudbay’s president and chief executive office r. “We continue to
drive momentum across our business with the Lalor mine’s successful ramp up to 4,500 t onnes per day , extending
777’s mine life into 2022 and moving Rosemont forward in a prudent manner.”
Rosemont Project
The permitting process at Rosemont concluded with the receipt of the Section 404 Water Permit from the U.S. Army
Corps of Engineers and the Mine Plan of Operations from the U.S. Forest Service in March 2019. Hudbay is now in a
position to move the project forward with development.
As previously disclosed, Hudbay’s agreement to acquire United Copper & Moly LLC ’s 7.95% interest in Rosemont
provides Hudbay with greater strategic flexibility with respect to capital structure and project fi nancing alternatives.
Hudbay intends to evaluate a variety of options, including the addition of a new, committed joint venture partner for
the development of Rosemont. The company expects to carry out this process in parallel with advancing the initial
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development of Rosemont, with the objective to ultimately hold an approximate 70% interest in the project while
maintaining operatorship.
As part of the initial development plans, Hudbay’s Board has approved an early works program with spending of $122
million over and above the $20 million of Rosemont spending previously included in 2019 growth capital expenditure
guidance. The early works program will be funded from cash on hand of $515 million as at December 31, 2018.
The $122 million early works program is part of Rosemont’s total project capital cost estimate of $1,921 million as
disclosed in the National Instrument 43 -101 technical report dated March 30, 2017 (“2017 Technical Report”) for
Rosemont and will fund the following activities:
• Funding the construction of a water pipeline and power transmission line to site , which are critical long-lead
items that are necessary to initiate heavy civil works at site.
• Advancing critical path engineering and geotechnical work to support long -lead procurement and de-risk the
project schedule and cost estimate.
• Archaeological site work to prepare key areas for construction.
• Spending on permit-related mitigation activities and owner’s costs.
Hudbay plans to move ahead with early works and financing activities in parallel in 2019 and expects to seek Board
approval to commence the construction of Rosemont by the end of the year; this would enable first production by the
end of 2022.
Rosemont, located in Arizona, is one of the world’s best undeveloped copper projects delivering a 15.5% after -tax
unlevered IRR at a copper price of $3.00 per pound based on the 2017 Technical Report. Rosemont is expected to
produce approximately 127,000 tonnes of copper an nually at a cash cost of $1.14 per pound , net of by -product
credits, over the first 10 years of operations.
Current mineral reserves and resources (exclusive of reserves) for Rosemont are summarized below.
Rosemont Project
Mineral Reserve and Resource Estimates1 Tonnes Cu Grade
(%)
Mo Grade
(%)
Ag Grade
(g/t)
Mineral Reserves2,3
Proven 426,100,000 0.48 0.012 4.96
Probable 111,000,000 0.31 0.010 3.09
Total proven and probable 537,100,000 0.45 0.012 4.58
Mineral Resources3
Measured 161,300,000 0.38 0.009 2.72
Indicated 374,900,000 0.25 0.011 2.60
Total measured and indicated 536,200,000 0.29 0.011 2.64
Inferred 62,300,000 0.30 0.010 1.58
Note: totals may not add up correctly due to rounding.
1 Based on 100% ownership of the Rosemont project.
2 Blocks were classified as Proven or Probable in accordance with CIM Definition Standards 2014.
3 Mineral reserves and resources calculated using metal prices of $3.15 per pound copper, $11.00 per pound molybdenum and
$18.00 per ounce silver.
On March 27, 2019, opponents of the Rosemont project filed a lawsuit against the U.S. Army Corps of Engineers
challenging, among other things, the issuance of the Section 404 Water Permit in respect of Rosemont. Thi s lawsuit
is one of many challenges against the Rosemont permitting process and Hudbay is confident the permits will continue
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to be upheld.
Constancia Mine
Current mineral reserves and resources (exclusive of reserves) for Constancia as of January 1, 2019 are summarized
below.
Constancia Mine
Mineral Reserve and Resource Estimates1 Tonnes Cu Grade
(%)
Mo Grade
(g/t)
Au Grade
(g/t)
Ag Grade
(g/t)
Constancia Reserves
Proven 421,800,000 0.30 94 0.035 2.87
Probable 72,000,000 0.23 72 0.035 3.06
Total proven and probable - Constancia 493,800,000 0.29 91 0.035 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 533,700,000 0.31 97 0.059 3.03
Constancia Resources
Measured 169,400,000 0.18 50 0.028 2.19
Indicated 180,500,000 0.20 56 0.034 2.16
Inferred 50,800,000 0.24 43 0.046 2.41
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 367,300,000 0.20 55 0.042 2.31
Total inferred 60,900,000 0.22 60 0.077 2.65
Note: totals may not add up correctly due to rounding.
1 Mineral reserves and resources calculated using metal prices of $3.00 per pound copper, $11.00 per pound molybdenum, $18.00
per ounce silver and $1,260 per ounce gold.
In January 2018, Hudbay acquired control of a large, contiguous block of mineral rights to explore for mineable
deposits within trucking distance of the Constancia processing facility, including the past producing Caballito property
and the highly prospective Maria Reyna and Kusi orcco properties. Hudbay has commenced permitting, community
relations and technical activities required to access and conduct drilling on these properties and has been successful
in reaching an agreement covering two of the properties to date with plans to drill in the fourth quarter of 2019.
The Caballito property, located approximately three kilomet res northwest of Constancia, is a 120 -hectare (297-acre)
concession block and is the site of the former Katanga mine, which was operated by Mitsui Mining & Smelting Co.,
Ltd. and Minera Katanga at different times between the late 1970s and early 1990s. The d eposit at Caballito is
believed to consist of narrow skarn bodies developed in the contact between limestone and monzonite porphyries
with copper, silver and gold mineralization in hypogene sulfides.
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The Maria Reyna property, located within ten kilomet res of Constancia, is a 5,850 -hectare (14,456-acre) concession
block. In 2010, diamond drilling by a previous optionee of the Maria Reyna property intersected copper skarn,
breccias and porphyry mineralization. Geophysical surveys and geological mapping have also been conducted on the
property and Hudbay believes that the area remains very prospective for additional discoveries.
Negotiations with a local community to secure surface rights over the Pampacancha deposit are progressing,
following the election o f a new community council in the fourth quarter of 2018. Hudbay continues to take a
disciplined, measured and patient approach to these negotiations , as this has proven to be an effective way of
engaging in previous instances and is consistent with its proven long-term strategy for securing social license and
developing its business in Peru.
Lalor Mine
The Lalor mine achieved ore production of more than 4,500 tonnes per day in February 2019 and production since
then has been in line with expectations.
In February 2019, Hudbay announced increased mineral reserves and mineral resources for the Lalor mine and
nearby satellite deposits, and a new mine plan that includes the processing of gold and copper -gold ore at the
company’s New Britannia mill. The company expects Lalor annual gold production to more than double from current
levels once the New Britannia mill is refurbished in 2022 . Average annual production of approximately 140,000
ounces is expected during the first five years, at a sustaining cash cost, net of by-product credits, of $450 per ounce1,
positioning Lalor as one of the lowest-cost gold mines in Canada.
Current mineral r eserves and resources (exclusive of reserves ) for Lalor as of January 1, 201 9 are summarized
below.
Lalor Mine
Mineral Reserve and Resource Estimates1 Tonnes Cu Grade
(%)
Zn Grade
(%)
Au Grade
(g/t)
Ag Grade
(g/t)
Base Metal Zone Reserves
Proven 5,137,000 0.76 7.13 2.37 26.31
Probable 5,552,000 0.44 4.19 3.52 27.39
Gold Zone Reserves
Proven 58,000 0.80 2.65 5.46 39.09
Probable 2,928,000 1.09 0.31 6.74 23.08
Total proven and probable 13,675,000 0.70 4.46 3.78 26.11
Base Metal Zone Resources
Inferred 1,385,000 0.70 2.30 4.49 43.58
Gold Zone Resources
Inferred 4,516,000 1.08 0.35 4.38 20.42
Total inferred 5,901,000 0.99 0.81 4.41 25.85
Note: totals may not add up correctly due to rounding.
1 Mineral reserves and resources calculated using metal prices of $1.17 per pound zinc (includes premium), $1,260 per ounce gold,
$3.10 per pound copper, $18.00 per ounce of silver and using a C$/US$ exchange rate of 1.25.
The updated resource model at Lalor includes 5.9 million tonnes of inferred mineral resources, which have the
potential to extend the mine life beyond 10 years while feeding both the Stall and New Britannia mills. In addition, the
mineral resources at Hudbay’s satellite deposits in the Snow Lake region, including the copper -gold WIM deposit, the
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former gold producing New Britannia mine and the zinc -rich Pen II deposit could provide feed for the Stall and New
Britannia processing facilities and further extend the mine life.
The following table summarizes the current mineral resource estimates for the Snow Lake regional deposits
(excluding Lalor).
Snow Lake Regional Deposits (excl. Lalor)
Mineral Resource Estimates Tonnes Cu Grade
(%)
Zn Grade
(%)
Au Grade
(g/t)
Ag Grade
(g/t)
Indicated Resources
WIM1 3,900,000 1.71 0.26 1.57 6.68
Pen II2 500,000 0.49 8.89 0.35 6.81
Total indicated 4,400,000 1.57 1.24 1.43 6.69
Inferred Resources
WIM1 700,000 1.03 0.37 1.76 4.65
Pen II2 100,000 0.37 9.81 0.30 6.85
Total inferred (base metals) 800,000 0.95 1.55 1.58 4.93
Birch & 3 Zone3 1,700,000 5.34
New Britannia3 2,800,000 4.51
Total inferred (gold) 4,500,000 4.82
Note: totals may not add up correctly due to rounding.
1 WIM mineral resources reported based on a 1.3% CuEq cut -off for the underground portion, and a 0.5% cut -off for the open pit
portion, assuming processing recoveries of 90% for copper and zinc for gold and silver, and using long -term prices of $3.00 per
pound copper, $1,200 per ounce gold, $1.00 per ounce zinc and $15.00 per ounce of silver.
2 Pen II mineral resources are estimated at a minimum NSR cut -off of C$65 per tonne and assumed that the Pen II mineral
resources would be amenable to processing at the Stall mill.
3 New Britannia mineral resource estimates have been reported at a minimal true width of 1.5 metres and with a cut -off grade
varying from 2 grams per tonne (at the 3 Zone and the lower part of New Britannia) to 3.3 grams per tonne (at Birch and for the
upper part of New Britannia).
Hudbay continues to conduct drilling on the recently announced new discovery in the Snow Lake region and is
encouraged by the mineralization intersected in the recent holes. Assays are pending and the company expects to
provide an update in due course.
For additional details on the Lalor mine and the company’s Snow Lake Operations, refer to the technica l report titled
“NI 43-101 Technical Report, Lalor and Snow Lake Operations, Manitoba, Canada”, effective January 1, 2019, which
was filed on Hudbay’s profile on SEDAR today at www.sedar.com and will be filed on EDGAR at www.sec.gov.
777 Mine
The 777 mine life has been extended to the second quarter of 2022, from the end of 2021, based on the most recent
estimate of mineral reserves.
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Current mineral reserves and resources (exclusive of reserves) for 777 as of January 1, 2019 are summarized below.
777 Mine
Mineral Reserve and Resource Estimates1 Tonnes Cu Grade
(%)
Zn Grade
(%)
Au Grade
(g/t)
Ag Grade
(g/t)
Mineral Reserves
Proven 2,169,000 1.80 4.44 1.77 26.45
Probable 1,384,000 0.97 3.75 2.03 21.65
Total proven and probable 3,552,000 1.48 4.17 1.87 24.58
Mineral Resources
Indicated 375,000 1.13 4.05 1.79 29.57
Inferred 395,000 1.43 5.03 3.09 40.44
Note: totals may not add up correctly due to rounding.
1 Mineral reserves and resources calculated using metal prices of $ 3.10 per pound copper, $1.24 per pound zinc (includes
premium), $1,283 per ounce gold, $17.50 per ounce silver and using a C$/US$ exchange rate of 1.267.
Ann Mason
The following table sets forth the estimates of the mineral resources at the Ann Mason project in Nevada.
Ann Mason Project
Mineral Resource Estimates1 Tonnes Cu Grade
(%)
Mo Grade
(%)
Au Grade
(g/t)
Ag Grade
(g/t)
Indicated 1,400,000,000 0.32 0.006 0.03 0.65
Inferred 623,000,000 0.29 0.007 0.03 0.66
Note: totals may not add up correctly due to rounding.
1 For additional details relating to the estimates of mineral resources at the Ann Mason project, refer to the technical report dated
March 3, 2017 and filed on SEDAR by Mason Resources Corp.
Hudbay is currently drilling on one of the targets at Ann Mason and expects to continue exploration activities
throughout the remainder of 2019.
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Non-IFRS Financial Performance Measures
Cash cost, sustaining and all-in sustaining cash cost per pound of copper produced are shown because the company
believes they help investors and management assess the anticipated performance of its operations, including the
margin generated by the operati ons and the company. These measures do not have a meaning prescribed by IFRS
and are therefore unlikely to be comparable to similar measures presented by other issuers. These measures should
not be considered in isolation or as a substitute for measures pr epared in accordance with IFRS and are not
necessarily indicative of operating profit or cash flow from operations as determined under IFRS. Other companies
may calculate these measures differently. For further details on these measures, including reconcil iations to the most
comparable IFRS measures, please refer to page 45 of Hudbay’s management’s discussion and analysis for the
three months and year ended December 31, 201 8 available on SEDAR at www.sedar.com and EDGAR at
www.sec.gov.
Qualified Person
The scientific and technical information contained in this news release related to the Constancia mine and Rosemont
project has been approved by Cashel Meagher, P.Geo., our S enior Vice President and Chief Operating Officer. The
scientific and technical information related to the Lalor and 777 mines contained in this news release has been
approved by Olivier Tavchandjian , P. Geo., our Vice President, Exploration and Geology . Mes srs. Meagher and
Tavchandjian are qualified persons pursuant to NI 43 -101. For a description of the key assumptions, parameters and
methods used to estimate mineral reserves and resources, as well as data verification procedures and a general
discussion of the extent to which the estimates of scientific and technical information may be affected by any known
environmental, permitting, legal title, taxation, sociopolitical, marketing or other relevant factors, please refer to the NI
43-101 technical reports as filed by Hudbay on SEDAR at www.sedar.com.
Additional detail s on the company’s material properties, including a year -over-year reconciliation of reserves and
resources, is included in Hudbay's Annual Information F orm for the year ended December 31, 201 8, which will be
filed on SEDAR at www.sedar.com.
Note to United States Investors
This news release has been prepared in accordance with the requirements of the securities laws in effect in Canada,
which differ from the requirements of United States securities laws.
Canadian reporting requirements for disclosure of mineral properti es are governed by the Canadian Securities
Administrators’ National Instrument 43 -101 Standards of Disclosure for Mineral Projects (“NI 43 -101”). Subject to the
SEC Modernization Rules described below, the United States reporting requirements are currently governed by the
United States Securities and Exchange Commission ("SEC") Industry Guide 7 (“SEC Industry Guide 7”) under the
Securities Act of 1933, as amended.
The definitions used in NI 43-101 are incorporated by reference from the Canadian Institute of Mining, Metallurgy and
Petroleum (“CIM”) – Definition Standards adopted by CIM Council on May 10, 2014 (the “CIM Definition Standards”).
For example, the terms “mineral reserve”, “proven mineral reserve” and “probable mineral reserve” are Canadian
mining terms as defined in NI 43 -101, and these definitions differ from the definitions in SEC Industry Guide 7.
Furthermore, while the terms “mineral resource”, “measured mineral resource”, “indicated mineral resource” and
“inferred mineral resource” are defi ned in and required to be disclosed by NI 43 -101, these terms are not defined
terms under SEC Industry Guide 7.
Under SEC Industry Guide 7 standards, a “final” or “bankable” feasibility study is required to report reserves and the
primary environmental a nalysis or report must be filed with the appropriate governmental authority. Further, under
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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 l egally produced or extracted at the time the reserve determination
is made. Reserve estimates contained in this news release may not qualify as “reserves” under SEC Industry Guide
7. Further, until recently, the SEC has not recognized the reporting of mine ral deposits which do not meet the SEC
Industry Guide 7 definition of “reserve”.
The SEC adopted amendments to its disclosure rules to modernize the mineral property disclosure requirements for
issuers whose securities are registered with the SEC under the Securities Exchange Act of 1934, as amended. These
amendments became effective February 25, 2019 (the “SEC Modernization Rules”) with compliance required for the
first fiscal year beginning on or after January 1, 2021. The SEC Modernization Rules repla ce the historical disclosure
requirements for mining registrants that were included in SEC Industry Guide 7, which will be rescinded from and
after the required compliance date of the SEC Modernization Rules. As a result of the adoption of the SEC
Modernization Rules, the SEC now recognizes estimates of "measured mineral resources", "indicated mineral
resources" and "inferred mineral resources". In addition, the SEC has amended its definitions of "proven mineral
reserves" and "probable mineral reserves" to be “substantially similar” to the corresponding CIM Definition Standards,
incorporated by reference in NI 43-101.
United States investors are cautioned that while the above terms are “substantially similar” to CIM definitions, there
are differences in the definitions under the SEC Modernization Rules and the CIM Definition Standards. Accordingly,
there is no assurance any mineral reserves or mineral resources that the Company may report as "proven mineral
reserves", 'probable mineral rese rves", "measured mineral resources", "indicated mineral resources" and "inferred
mineral resources" under NI 43 -101 would be the same had the Company prepared the reserve or resource
estimates under the standards adopted under the SEC Modernization Rules.
United States investors are also cautioned that while the SEC will now recognize "measured mineral resources",
"indicated mineral resources" and "inferred mineral resources", investors should not assume that any part or all of the
mineralization in these categories will ever be converted into a higher category of mineral resources or into mineral
reserves. Mineralization described using these terms has a greater amount of uncertainty as to their existence and
feasibility than mineralization that has been characterized as reserves. Accordingly, investors are cautioned not to
assume that any "measured mineral resources", "indicated mineral resources", or "inferred mineral resources" that
the Company reports are or will be economically or legally mineable.
Further, "inferred mineral resources" have a greater amount of uncertainty as to their existence and as to whether
they can be mined legally or economically. Therefore, United States investors are also cautioned not to assume that
all or any part of the "i nferred mineral resources" exist. In accordance with Canadian rules, estimates of "inferred
mineral resources" cannot form the basis of feasibility or other economic studies, except in limited circumstances
where permitted under NI 43-101.
For the above reasons, information contained in this news release containing descriptions of the Company’s mineral
deposits may not be comparable to similar information made public by United States companies subject to the
reporting and disclosure requirements under the United States federal securities laws and the rules and regulations
thereunder.
Forward-Looking Information
This news release contains “forward -looking information” within the meaning of applicable Canadian securities laws
and “forward looking statement s” within the meaning of the “safe harbor” provisions of the U.S. Private Securities
Litigation Reform Act of 1995. We refer to such forward -looking statements and forward -looking information together
in this news release as forward -looking information. Al l information contained in this news release, other than
statements of current and historical fact, is forward -looking information. Often, but not always, forward -looking