TD updateHudbay Minerals Inc. (HBM-T) C$6.29 Copper World: Mined in America for America Greg Barnes Derick Ma, CFA, CPA, CA
Event Yesterday, Hudbay hosted a presentation discussing the recently published PEA study on the Copper World project in Arizona.
Impact: NEUTRAL The concentrate leach facility is not a "must-have", but it adds optionality and operational synergies. The current project scope (which includes sulfide leaching) is management's preferred option due to the potential cost benefits and environmental impacts of directly producing copper cathode at site. However, the company expects to continue to assess and evaluate the technical, metallurgical, and chemical aspects of the proposed flowsheet in the forthcoming prefeasibility study and management stated that it is not tied to any concept and has not ruled out any options at this point. Management noted that the project does not need sulfide leaching to be economic (with sulfide leaching adding only ~1-2% to the overall IRR of 17%). Furthermore, concentrate leaching circuit could be treated as a standalone project that could be built and phased in at a later date, with the mine initially selling copper concentrate.
Mined in America for America. In our view, an added potential benefit of producing copper cathode on-site is that it improves the company's social license to operate. The re-envisioning of the project to mine, process, and sell a strategic metal for energy transition domestically in the U.S. could help alleviate some of the public opposition previously faced by the predecessor Rosemont project, in our view.
There is plenty of time to decide on Phase 2. The Phase 1 project has a 17- year mine life and management noted that even if federal permits were received, the earliest the Phase 2 project could be brought forward in the current mine plan is year 7 (or ~2034 if a construction decision is made in 2024).
That being said, we expect that if the project is completely unencumbered by space and permitting challenges from day one, the mine plan would likely look very different from the one currently proposed. In management's own words, this is not the optimal mine plan for Copper World, but a workable mine plan to move the project forward.