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Posted on April 12, 2011
(Corrects output figure to annual in third paragraph.)
HudBay Minerals Inc. (HBM), a Canadian metals producer, plans to start building a $1 billion copper mine in Peru next year as it expands into Latin America, Chief Executive Officer David Garofalo said.
Toronto-based HudBay aims to start production at its Constancia mine in the southern Andes at the end of 2014, Garofalo said yesterday in a telephone interview. The company, which this year is spending $116 million on the mine’s design and engineering, will make a final decision in January, he said.
“This project is very robust economically,” Garofalo said. “We hope to scale up the current design of 85,000 tons of annual production after we increase reserves through exploration work this year.”
The company, which produces copper, zinc, gold and silver, seeks to expand its project portfolio to replace aging mines in Canada’s Manitoba province, he said. HudBay added the Constancia project after it agreed in January to acquire Toronto-based Norsemont Mining Inc. (NOM) for C$520 million ($541 million).
Development of the mine “is not contingent” on the April 10 presidential election results in Peru, Garofalo said. Opposition candidate Ollanta Humala, who has pledged to renegotiate contracts with foreign mining companies if elected, won the first round of voting on April 10 and faces a June runoff against first-term Congresswoman Keiko Fujimori.
“We’re confident that democratic institutions will enable the country to ride out any candidate,” Garofalo said. “The balance of Congress reflects the maturity of democracy in Peru.”
Copper supply may be constrained “for the rest of the decade” if Humala is elected president, as companies including Freeport-McMoRan Copper & Gold Inc., and Rio Tinto Group delay projects, Citigroup Inc. analysts including David Thurtell said in a report today.
HudBay, which also is developing a nickel mine in Guatemala, is seeking assets in Brazil, Colombia and Chile to expand metals production, Garofalo said.
The company, which has a market capitalization of $2.7 billion, is seeking financing for its 50 million-pound-a-year nickel project in Guatemala, where it is finishing work on a feasibility study, he said. Production is slated to average 48.5 million pounds annually over the 20-year life of the Fenix mine, according to the company’s website.
Hudbay will make a decision in July on a concentrator plant at its $560 million Lalor deposit in Canada, Garofalo said. The company will start gold production at the mine in the second quarter of 2012, he said.
HudBay fell 61 cents, or 3.7 percent, to C$15.94 at 4 p.m. in Toronto Stock Exchange trading. The stock has dropped 12 percent this year.
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