During the 30 minute address, he talked about future production growth and a pipeline full of properties that the company currently has in its portfolio. He noted the significant copper, gold, and zinc production growth that is anticipated as new developments such as Lalor and Constancia are put into production and pointed out the production upside of others, such as the Reed and Back Forty properties.
"We've had excellent performance from our operations," said the CEO at the outset of his address. "We've met our targets quarter in quarter out, both from a volume standpoint and a cost standpoint in an environment where there is double digit inflation costs."
He explained how HudBay has been able to contain costs quite well within their existing operations, and noted what really underpins that capability is the workforce the company has. "I was very fortunate to inherit a balance sheet of close to a billion dollars in cash, but I think the most important thing I inherited was a workforce of 1300 employees with an average of 20 years of experience with the company, who know how to get things done... and know how to build projects," Garofalo stated with a note of pride in his voice. "Over our history, we have discovered, built and operated 26 mines. And we have successfully shut down 19 of them and handed the keys back to the government. So really when you look at all the aspects of a mine life cycle. We do that as well as anybody in the business."
As the CEO normally does when he speaks of the Lalor property, he noted how far and how fast the project has come. "With Lalor, considering we only made a go ahead decision a few weeks after I joined on in 2010, it's remarkable the physical progress we've had on site," he said. "All the structural steel has been erected, the ramp is already 75% complete. The vent raise is already about 60 meters down. The temporary hoist and headframe was erected and commissioned back in July. The hoist house and headframe on the main production shaft has been erected and we should start sinking in the fourth quarter. So by the time the snow flies this fall, all of our construction will move indoors and underground, significantly reducing the risk associated with getting this project up and running."
Still speaking on Lalor, Garofalo told the gathering that the operation has gone 8.5 months with only a single lost time accident. "A guy had a hernia," he said. "When you consider that we put the discovery hole down in 2007 and we are pulling up our first production ore in the second quarter of next year (up the ramp and up the vent raise), that is warp speed by mining standards. What that speaks to is the receptivity to mining in Northern Manitoba - in granting permits, but also to the expertise of our people. We built this mine 26 times before... in fact, we have already locked in over half of our capital expenditures with zero escalation. The only variable is the concentrator." Garofalo says that the only reason it is a variable is that the costs are quite new. It was just a few month ago that they made the decision to build a new concentrator at the mine mouth, rather than refurbish the old facility.
From an exploration standpoint, HudBay's current drilling has been entirely from surface. He noted that they had delineated Lalor's 32,000,000 ton deposit containing 4,000,000 oz of gold from surface drilling alone. "We haven't gotten underground yet," said Garofalo. "But by the first quarter of next year, along with the ramp and ore, we will have our first drill set up underground, into the base metal zones. Zones 10 and 11, we will be able to access more readily. That was a bit of a surprise to me. The guys just told me about it a few weeks ago. We weren't expecting to get drills set up until the fourth quarter from our exploration platform into the gold zone. So we'll have those as well by Q4 2012. Then we'll be able to significantly accelerate our exploration from underground. This deposit remains wide open at depth and we are still hitting high grade copper/gold mineralization well outside the known resource envelopes."
Also of note, the CEO said that a decision to construct a gold plant will be made prior to Lalor's higher grade gold mineralization being mined. In respect to the Reed Copper Project, they expected to submit the application for an advanced exploration permit in the third quarter of 2011 and anticipate a construction decision by the end of 2011.
MJ Written by Marc Jackson Editor Underground Press Newspaper Snow Lake, Manitoba