Hudbay Minerals Inc. announced the results of the preliminary economic assessment (PEA) of its 100% owned Copper World Complex in Arizona, which includes the recently discovered Copper World deposits along with the Rosemont deposit.
Phase I reflects a standalone operation on private land and patented mining claims over a 16-year mine life with average annual copper production of approximately 86,000 metric tons (mt) at cash costs and sustaining cash costs of $1.15 and $1.44 per pound of copper respectively, generating an after-tax net present value (10%) of $741 million and an internal rate of return of 17%.
Phase I also includes a 60,000 tons-per-day (t/d) sulfide concentrator, a 20,000 t/d oxide heap leach, an SX/EW facility and a concentrate leach facility with an initial capital cost estimate of approximately $1.9 billion. The concentrator is intended to expand to 90,000 t/d in Phase II.
The processing facilities are planned to have annual production capacity of 100,000 mt of copper cathode during Phase I and 125,000 mt of copper cathode during Phase II.
Phase II expands mining activities onto federal land and extends the mine life to 44 years with average annual copper production of approximately 101,000 mt at cash costs and sustaining cash costs of $1.11 and $1.42 per pound of copper, respectively. Phase II provides additional optionality with an after-tax net present value (10%) of $555 million and an internal rate of return of 49%.
“The Copper World Complex PEA represents the next leg of copper growth at Hudbay, generating significant value for all of our stakeholders with robust project economics and many benefits for the community and local economy in Arizona,” President and CEO Peter Kukielski said. “We have been successfully executing an alternative Arizona strategy since 2019 to deliver this attractive project, which is significantly de-risked and has the potential to nearly double our annual copper production while maintaining Hudbay’s first quartile cash cost positioning.
“Through applying our core competencies of exploration, mine planning and project development, the Copper World Complex is expected to be the next major copper operation in the United States, delivering the copper needed to meet domestic electrification and decarbonization supply chain needs,” he added.
Hudbay has been evaluating alternative options to unlock value from its Arizona mineral assets since the July 2019 ruling from the U.S. District Court to vacate the final record of decision issued by the U.S. Forest Service relating to its Rosemont copper deposit. The FROD was based upon a standalone development plan for the Rosemont deposit utilizing federal land as set forth in Hudbay’s 2017 feasibility study and technical report.
In the fall 2019, the company began pursuing a private land development plan, including exploring nearby patented mining claims in the historic Helvetia mining district. The company initiated a drill program in 2020 to confirm historical drilling in this past-producing region, and the drill program was further expanded throughout 2021 after continuing to receive encouraging results. Four deposits were discovered in early 2021 with oxide and sulfide mineralization occurring at shallow depths on Hudbay’s wholly-owned patented mining claims. By September 2021, the exploration program had identified seven mineral deposits over a seven-kilometer strike area. An initial mineral resource estimate was declared at the Copper World deposits in December 2021, which was larger and at a higher level of geological confidence than expected.
Hudbay has been acquiring additional private land in the area to support an operation entirely on private land. The company now holds approximately 4,500 acres of private land and patented mining claims, which are enough to support the first 16 years of production at the Copper World Complex.
Following the recent exploration success on patented mining claims and ongoing litigation uncertainty regarding the project design set forth in the 2017 Feasibility Study, Hudbay began to evaluate alternative design options to unlock value within this prospective district. This included remodeling the 2017 mineral resources, incorporating the new mineral resources from successful exploration results and completing new metallurgical testing work, which led to a comprehensive review of the mine plan, process plant design, tailings deposition strategies and permitting requirements for the new project.
In June 2021, Hudbay initiated the state-level permitting process for the project with an application for its Mined Land Reclamation Plan, which was subsequently approved by the Arizona State Mine Inspector in October 2021. The MLRP approval included a requirement for reclamation cost bonding prior to initiating work on the company’s private lands and represented the first step in the permitting process for a private land operation.
An aquifer protection permit and air quality permit are the remaining key state-level permits required for a private land operation, which, along with other minor permits, are expected to be advanced in the second half of 2022. Hudbay previously received aquifer protection and air quality permits for the 2017 design of the Rosemont project and these permits have been successfully upheld through litigation.
Hudbay does not believe any federal permits are required for Phase I of the mine plan for the Copper World Complex.
