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Fenix capex not likely much changed from last $1bn estimate – Hudbay
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9th June 2010
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TORONTO ( – The price tag to build the Fenix nickel project in Guatemala will probably not be significantly different from the last published figure of $1-billion, Hudbay Minerals CFO David Bryson said on Wednesday.

HudBay plans to complete an updated feasibility study for the project in the third quarter of this year, and will likely make a final decision on whether to go ahead with the project towards the end of the year, he confirmed in a presentation to the RBC Global Mining and Metals conference in Toronto.

“This is a substantial project; the last cost estimate for this project was in the order of about $1-billion, including power. I don't expect it to change dramatically from that cost estimate,” Bryson said.

The project is fully permitted by the Guatemalan government, and early construction had actually begun in 2008 before the project was put on hold, which means that most of the work is already done and the current feasibility study is more a matter of optimisation, Bryson said.

The mine planning is being refined, and the company has been assessing lower-cost power supply options. The firm has said on previous occasions it could opt for either hydropower or coal-fired thermal generation.

“We think we've made some progress there and we think that we will have a credible power strategy to put forward in the feasibility study,” Bryson said.

Fenix is expected to produce some 50-million pounds a year at least 25 years of mine life, and more than that in the first five or ten years.

HudBay acquired the Fenix nickel project in 2008 when it bought Skye Resources, but froze work in November that year because of market conditions at the time.

Brazil's Vale (previously Vale Inco) holds the right to market ferronickel produced from the asset.

HudBay also has said it is looking at potential partners to help finance the project.

Although it is a nickel laterite deposit, Fenix is a nickel smelting, rather than a leaching operation.

High-pressure acid-leach nickel operations have received bad press in the last few years, as projects have been delayed and at least one – BHP Billiton's Ravensthorpe mine in Australia which has since been bought by First Quantum Minerals – was eventually halted.

HudBay continues to look for a new CEO, after the resignation last year of Peter Jones, Bryson said.

The Toronto-based company mines zinc, copper, gold and silver from its 777 and Trout Lake mines, in Flin Flon, and announced in October last year it would restart the Chisel North mine and concentrator in Snow Lake, Manitoba, to feed its zinc smelter in Flin Flon.

The company is also developing a zinc, copper and gold discovery, Lalor, near the Chisel operations in Manitoba.

HudBay announced last year it would close its copper smelter in Flin Flon and the White Pine refinery in Michigan.

The smelter will be shut on Friday this week, Bryson said.

Edited by: Liezel Hill


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