WIM Project (Snow Lake, Manitoba)Hudbay has a 2,700 tpd multi-metal milling facility at Snow Lake. In addition, they purchased the 2,000 tpd New Britannia Mill - a gold only mill - in 2015.
As a result, Hudbay now has 4,700 tpd in total milling capacity at Snow Lake.
Hudbay`s main Snow Lake mine is copper-zinc focused at the top, gold only in the middle and copper-gold at further depth.
Last year, I mentioned that Hudbay was looking at pushing the gold only ore (in the deposit) over to the 2,000 tpd New Britannia Mill for processing.
Hudbay`s CEO was on BNN tv today (from PDAC). He confirmed this plan. It will soon be in place.
I also mentioned last year that this move will eventually free up capacity at their original 2,700 tpd Snow Lake VMS mill - to add more VMS ore, either from their own VMS deposit, or other VMS deposits in the area, like Alexandria`s WIM (VMS) deposit.
I had also mentioned that Hudbay will run low on Snow Lake area ore at some point over the next several years. Hudbay`s CEO also commented briefly on this subject matter today. Although he (essentially) acknowledged that the deposit is heading in this direction (shortwhat limited mine life), he did mentioned that exploration potential is strong in the area and Hudbay has been finding deposits to process for 80 years in manitoba.
As also mentioned in the past, I think there eventually needs to be some sort of partnership with Alexandria and Hudbay, be it an outright sale of WIM to Hudbay, an exploration and development J/V with Hudbay, or some sort of option arrangement with Hudbay.
It doesn`t make financial sense for Alexandria to build its own processing facilities when Hudbay has capable facilities in the area (both Snow Lake Mill and Fin Flon Zinc Recovery).
Hudbay is going through some difficult times with debt issues in South America. They might begin to focus on Manitoba again once things become more stable for them in South America, and also once the copper price is more stable.
They will eventually need to address the ore depletion issues in Manitoba though.
Alexandria`s WIM deposit has about 4.6 million tonnes of ore currently (most in the advance M&I resource category - thus very advanced stage deposit). If we use an ore feed rate of 2,000 tpd, we are looking at 5 or 6 years of mill feed.
That would represent major mill capacity contribution and buy Hudbay significant time to explore for additonal resources around Snow Lake.
Also of note, about 8% of WIM`s resource is open-pittable, thus the first year of mining can be done early - with less upfront capex - and any cash flow from open pit mining can go towards building the underground mine.
In addition, there are opportunities to grow the 4.6 million tonne deposit, as there are numerous exploration opportunities on the property. There may also be adjacent exploration properties - if available cheaply during this mineral depresssion period.
I think it is only logical for Alexandria and Hudbay to have discussions at some point (at least it would be wise to find a win win for both companies) - perhaps after Hudbay`s situation is more stable. Alexandria has VMS ore in the neighbourhood (and strong exploration upside) and Hudbay will be looking for ore feed soon or within the next few years.