TD UPDATENew Target $10.00
Event HBM provided YE2022 reserves and three-year production guidance. Impact: NEUTRAL Contained copper in P&P reserves at Constancia is down ~8% y/y reflecting depletion. M&I resources have increased, on a contained copper basis by ~2%.
HBM noted that the mine life at Constancia has been maintained and extends until 2038. A drill program is underway at the Pampacancha deposit to test the potential to add an incremental phase to the reserve pit at depth. The company is also planning a limited drill program and technical evaluations at the Constancia deposit to confirm the economic viability of adding an additional mining phase to the current mine plan that would convert a portion of the mineral resources to mineral reserves - the results will be incorporated into the YE2023 reserve/resource update.
At Snow Lake, total gold contained in P&P reserves for Lalor and the 1901 zone declined by ~3.4%, to ~1.87 million ozs reflecting mining depletion. HBM noted that the expected life of the Snow Lake operations has been maintained and extends until 2038.
Hudbay commenced a winter drill program in January 2023 with four drill rigs testing the down-dip gold and copper extensions of the Lalor deposit; first step-out drilling in the deeper zones at Lalor since the initial discovery of the gold and copper-gold zones in 2009 and 2010. Four of these holes have been completed to-date and all holes have intersected the alteration zone that hosts the Lalor mineralization, with two holes intersecting copper bearing sulfides identified from core logging.
HBM's three-year production guidance is in line with our expectations and reflected in our model. Annual copper production from Constancia is expected to average 110,000 tonnes over the next three years; we are modeling a peak of 121,000 tonnes in 2024. Mining of higher-grade ore at Pampacancha is expected in Q2/23 and higher grades are expected to continue into 2025, after the delays experienced in early 2023.
Annual gold production from Snow Lake is expected to average more than 190,000 ounces over the next three years; we are modeling ~188,000 ozs on average.