Hudbay Minerals Inc. (NYSE:HBM) Q4 2023 Earnings Call Transcript

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And so that’s the nearest term one that we see. We have a number of other satellite deposits that we have in our portfolio. There’s probably, if you add them all up, there’s over 15 million tonnes of these satellite deposits and we have teams looking at them as we speak. Our successes at New Britannia, the teams that just continue to please us, the mill in the quarter, we ramped up to over 1,800 tonnes per day in the last months of December and we’re running very close to 2,000 as we speak. And so, there — in fact, if I comment on New Brit as we just recently got the permit, yesterday, to go to 2,500 tonnes per day. And so our goals will be to put more gold through there, which frees up more capacity for base metal at Stall. And so 1901 is the start.

Talbot, we just with the Rockcliff acquisition. We — now we own the whole thing back again. Teams are looking at it and we have exploration plans to test some geophysical anomalies nearby, and we’re also looking at Bur. Bur, if you recall, was a high zinc-based metal line. It was a high focus at the time prior to the discovery of Lalor. And then when Lalor happened, it sort of got shelved, but now with the mill capacity, teams are looking at all of these at the same time. So there’s a lot of ones that we already know about and we’re looking at them in very different ways and the exploration we hope to extend further the copper-gold as well at Lalor to extend the life and that’s just a natural progression for us. There’s more I could talk for a long time on it, maybe offline, but it’s very existing.

Jackie Przybylowski: Thanks. Maybe just a follow-up quickly on that. I guess, is it fair to say that with the satellite deposits not using the shaft at Lalor, your overall production from the Snow Lake camp could go up with extra capacity in the mills and not being shaft-constrained, is that the right way to think about it?

Andre Lauzon: Yeah, absolutely, and we’re not shaft-constrained yet, so there’s still room in the shaft, and our intention is the 1901 someday, once we get it coming in the near future, that’ll go up the shaft as well. But yes, those additional fees, it’s just like Reed mine. There’s a number of all these smaller, one million to three million to four million tonne deposits. They’re not the big anchor like Lalor, but we’re looking at them. If they run like some of them need roads and the like, if they run like a logging operation and only run through in the winter time if need be, but others might be a steady, small, high margin producer. So, yeah, there’s lots of opportunities.

Peter Kukielski: I’m going to — sorry, carry on, Jackie?

Jackie Przybylowski: No, sorry, I was just kind of — I just wanted to ask Andre to repeat that, the 1901 would go up the shaft, you said.

Andre Lauzon: 1901 will go up the shaft, and so one of the things we’re trialing this year with the 1901 is some battery electric vehicles, and it’s a downhill run with the battery electric trucks. and we see that as a positive from the greenhouse gas perspective. But going downhill, recharging is our plan, the trucks, and coming back up on battery. So it’s a — and we do have the capacity. The teams have done a great job in terms of increasing the skip capacity and optimizing the uptime in the shaft, but only also increasing the amount of material and volume that we can put into the measuring flask and the skips.

Jackie Przybylowski: Thank you.

Peter Kukielski: I was just going to add, Jackie, to what Andre was saying. So go back to my comment that Andre and I were in Manitoba last week, and I have to tell you that the atmosphere there is electric. So there’s all of this exploration stuff going on, but the collaboration amongst the team towards performance improvement is just amazing. So a lot of you and a lot of our investors visited Constancia in September last year, and you saw the sort of interaction and the pride that exists amongst the team there and how they’re doing, exactly the same thing exists in Manitoba right now, and we just can’t wait to show that. And now we’re busy sort of sowing those seeds at Copper Mountain, and it’s going to be fun.

Jackie Przybylowski: That’s fantastic. Yeah, it was a great atmosphere in Peru. Thanks very much and congrats again.

Peter Kukielski: Thank you.

Operator: Thank you. Your next question is from Stefan Ioannou from Cormark Securities. Please ask your question.

Stefan Ioannou: Yeah, thanks very much, guys, and again, great to see the quarter. Just curious, in Peru, obviously, you mentioned, obviously, permits or applications to drill at Caballito and Maria Reyna are either in or going in and planning to drill those projects as you can, any sort of timeline and when you think you might actually have those permits? I know it’s kind of been vague and a bit of a vague sort of timeline, but any guidance on that?

Peter Kukielski: Yeah. Hi, Stefan, thanks. So, we submitted the Maria Reyna permit application in November. We’re in the process of putting the Caballito 1 together. We expected to submit it in the first half of the year, so in the next several months. The rough guess of the time that it takes to get one of these approved is roughly a year. So, I assume that by — during 2025, we’ll be able to start drilling. But I think that one of the things that I would observe is that we have — once again, a very large contingent of Peruvian government officials coming to PDAC. And I’m sure that there’ll be lots of discussions with PDAC about the process and how to streamline it, and I’m pretty sure we’ll get a lot of support from the Peruvian government to start — to streamline the process. But I think, from a planning perspective, we imagine it’s going to take roughly a year to get those permits.

Stefan Ioannou: Okay, great. That’s helpful. And then great, shifting gears over to Manitoba, it’s great to see New Brit running so well, and the fact that you’re closer to 2,000 tonne a day now and then you just mentioned that you’ve got a permit now to go to 2,500, just sort of curiosity, is there — is that could you get to the 2,500 by just continuing to push hard on that thing or at some point do you have to invest some more capital into it to actually get it there?

Andre Lauzon: So, this is all very, very low capital improvements that the teams are looking at, and so right now — in the month of January, they’ve been trialing to send more Stall, call it, base metal light feed, not really heavy base metal feed that wasn’t traditionally thought or envisioned for New Britannia, and they’ve been successful at getting it with just slight decreases in recovery, but significantly better gold recoveries than we would get at Stall. So we’re able to send more of the feed that we’re currently producing and generate more gold ounces out the door. So there’s a real drive and focus on it. And so right now, our current process, we send copper concentrate over to be processed at New Brit through a pipeline, and right now, with the base metal feeds that we’re putting over to New Britannia, we’re producing so much copper there now that our filter presses can’t keep up.

So what they’re contemplating is repurposing that pipeline, where we were sending the copper concentrate over to New Brit to be filtered, to use that pipeline as a tailings line to go the other way and put a filter in to manage copper at Stall, which is low CapEx. We just put in two there, two new ceramic filters. So very low CapEx and it’s — we’re looking at dialing up the gold recovery and we’ll see, especially as 1901 comes online in the future, there’ll be a lot more to come.

Stefan Ioannou: Okay, great to see. And maybe just one last one for me real quick, following on Jackie’s question, obviously a lot of excitement in Manitoba, in Snow Lake, should we be thinking at all about Flin Flon right now or is all this excitement actually focused in Snow Lake proper?

Peter Kukielski: Hi, look, Flin Flon is — I’m going to let Andre comment further, Flin Flon is — we’re very focused on Flin Flon as well, and a separate team is looking after Flin Flon and tailings, addressing those tailings recovery potential. There’s two obviously — there’s two initiatives. One is on the traditional tailings, and the other is the [ZPL] (ph) tailings from the zinc plant. And we’re making a fair amount of progress there. I think the goal initially is to reduce our environmental performance and turn it into a cash-neutral camp, and if not, turn it into a mine that actually produces cash flows. But it’s progressing well. Andre, any comments on from your side?

Andre Lauzon: I think you hit it. So, yes, the Marubeni exploration, we’re expecting to get an agreement with them shortly there on a plan. We have all the targets laid out and drills are ready to go, just waiting for us to sign that agreement. And it was really exciting, like Peter said, there’s two different tailings. The Zinc plant tails, like the zinc plant tails is something that is very low risk, right? It’s very low risk from the perspective. We had a flow sheet designed metallurgically. It was there. It’s been sitting on the shelf for years and so it’s something that’s relatively, I’d say, for an open pit, it’s very high NSR. I won’t say what it is. They think that it’s very early. We’re hoping to see some studies on it in the near future.

And the cobalt blue process around the bigger Flin Flon tails, that’s progressing very well. And they’ve been successful at converting pyrite to pyrrhotite, which Peter described as what that does is we’re working at eliminating the acid generation of the tails, and basically wiping out any water treatment out for the next 100 years is our goal, and so we see that as a huge upside. It almost becomes, like Peter said, another mine, and we own it, and so the teams are working very hard at that.

Stefan Ioannou: Okay. So, bottom line, don’t forget about Flin Flon. All right, great. Thanks very much for the time, guys. Appreciate it.

Operator: Thank you. There are no further questions at this time. I will now hand a call back to Candace Brule for the closing remark.

Candace Brule: Great. Thank you, operator, and thank you, everyone, for joining us today. If you have any further questions, feel free to reach out to our investor relations team. Thank you.

Operator: Thank you. Ladies and gentlemen, the conference has now ended. Thank you all for joining. You may all disconnect.

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