Hudbay Minerals Targets Copper Growth as Snow Lake Gold Reserves Surge 60%

Key Points

• Snow Lake gold reserves increased 60%, adding approximately 150,000 ounces and supporting expected production of about 185,000 ounces annually for the next five years. Hudbay estimates the added reserves represent nearly $1 billion in value.
• Hudbay expects to make a final investment decision on its Copper World project within weeks, with construction potentially completed in the third quarter of 2029 and production ramping up in 2030. Updated costs will account for inflation, tariffs and higher steel prices.
• The company aims to build a U.S. copper business producing roughly 350,000 tonnes annually by around 2035 through Copper World, Cactus and Mason, while maintaining its broader goal of reaching about 500,000 tonnes of annual copper production.

HudBay Minerals NYSE: HBM outlined expanded gold reserves at its Snow Lake operations in Manitoba, a forthcoming investment decision for its Copper World project and a longer-term plan to build a larger U.S. copper business, according to comments from Chief Executive Officer Peter Kukielski.

Kukielski said the company’s Snow Lake update added 60% to its life-of-mine gold assets. The revised reserve plan supports annual gold production of about 185,000 ounces for the next five years, with potential for production to continue beyond that period.

Relative to Hudbay’s 2021 mine plan, the update represents an additional 150,000 ounces of gold, which Kukielski said equates to nearly $1 billion in added value. He said the company also sees further potential at the Britannia Gold Project, a group of deposits associated with the New Britannia mill and former mine.

The Britannia area was mined until the early 2000s, when it was shut down because of gold prices, Kukielski said. Hudbay believes geological structures may link Britannia resources with nearby, nearly contiguous deposits and plans additional exploration.

Gold cash flow supports copper growth

Kukielski said gold has become an increasingly important source of free cash flow for Hudbay and is helping fund investment in the company’s copper pipeline. He said the company continues to see substantial upside at Snow Lake and does not intend to sell the business absent what he described as a “knockout preemptive offer.”

Hudbay expects to release a definitive feasibility study for Copper World before reporting third-quarter results, with a final investment decision expected in the next several weeks. The decision is progressing alongside Hudbay’s partner, Mitsubishi Corporation, which has its own approval process, Kukielski said.

Following an investment decision, Hudbay expects to advance detailed engineering, order long-lead equipment and begin construction. Kukielski described Copper World as a 2.5-year build, with construction completion targeted for the third quarter of 2029, followed by ramp-up and full production in 2030.

The prior preliminary feasibility study, issued in October 2023, estimated Copper World capital costs at $1.5 billion, including $200 million of equipment financing. Kukielski said updated costs will reflect inflation, tariffs, and sharply higher steel prices. He did not provide a revised capital estimate before release of the definitive feasibility study, but said Hudbay expects escalation to be broadly in line with analyst expectations.

He added that the company is considering early expansion-related work at the concentrator, including a larger footprint, concrete, piping and pumping capacity. Wheaton Precious Metals has agreed to pay Hudbay $70 million if the concentrator is expanded during the first five years, Kukielski said.

U.S. copper pipeline and operating assets

Hudbay intends to maintain its project sequence following its acquisition of Arizona Sonoran. The company expects to update the Cactus pre-feasibility study after completing Copper World’s definitive study, followed by a definitive feasibility study that could be completed in the second half of 2028.

• Copper World is expected to add roughly 90,000 tonnes of annual copper production.
• Cactus could add about 103,000 tonnes annually and enter production in 2031 under the base case.
• Mason is undergoing a pre-feasibility study and could add 110,000 tonnes or more after a permitting process expected to take three to four years.

Kukielski said the projects could create a U.S.-based copper business producing roughly 350,000 tonnes annually by around 2035. Combined with Canadian and Peruvian operations, Hudbay could become a half-million-tonne copper producer by the middle of the next decade, he said.

At Copper Mountain, acquired in 2023, Hudbay is nearing the end of a three-year stabilization and optimization effort, Kukielski said. The company expects about 30,000 tonnes of copper production this year and 60,000 tonnes next year. He said the operation could generate about $200 million of free cash flow next year.

In Peru, Kukielski said Constancia is expected to sustain roughly 90,000 tonnes of annual copper production through the decade through throughput and operational improvements. Hudbay is also pursuing permits to explore the Maria Reyna and Caballito satellite deposits, though he said production from those assets is unlikely before the early 2030s.

Hudbay has no net debt, Kukielski said. The company’s capital-allocation priority is funding Copper World and Cactus without issuing equity. He said Hudbay aims to provide sustainable dividends after Copper World is completed, while remaining open to value-accretive acquisitions similar to Copper Mountain.

About HudBay Minerals (NYSE:HBM)

Hudbay Minerals Inc is a Canadian mining company focused primarily on the exploration, development and operation of copper assets. The company also produces gold, zinc, silver and molybdenum as byproducts or additional products from its mining operations.

Hudbay operates the Constancia open-pit copper-molybdenum mine in southern Peru, along with the nearby Pampacancha satellite deposit. In Manitoba, Canada, the company operates the Lalor polymetallic mine and the Snow Lake processing facilities, which produce copper, zinc, gold and silver.

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