Toronto-listed miner Hudbay Minerals on Tuesday announced a positive preliminary economic assessment (PEA) for the Mason copper project, in Nevada, reinforcing the project’s standing in the company’s pipeline of long-term growth options.
The PEA suggests that Mason, which was acquired in 2018, has the potential to more than double Hudbay’s current copper production levels, with output averaging 140 000 t/y in the first ten years of production.
If brought into production, Mason will be the third-largest copper mine in the US and will operate for 27 years.
“The Mason PEA demonstrates the success of Hudbay’s consistent growth strategy and our team’s ability to create value from accretive acquisitions of high-quality copper projects in mining-friendly jurisdictions,” said Hudbay president and CEO Peter Kukielski.
“We added Mason to our development pipeline portfolio in 2018 and have since leveraged our integrated core competencies of exploration, mine planning and project development to demonstrate that Mason is a quality long-term development project in our robust organic growth pipeline.”
The mine plan assumes the construction of a 120 000 t/d conventional flotation concentrator and an initial capital cost estimate of $2.1-billion.
At a copper price of $3.10/lb, the after-tax net present value (NPV), using a 10% discount rate, is $519-million and the internal rate of return (IRR) is 13.7%. The valuation metrics are highly sensitive to the copper price and at a price of $3.25/lb, the after-tax NPV, using a 10% discount rate, increases to $773-million and the IRR increases to 15.4%.
The plan includes 1.1-billion tonnes at 0.34% copper-equivalent, 98% of which is from the measured and indicated categories. Mason’s 2.2-billion-tonne measured and indicated resource estimate is about twice the size of Hudbay’s Constancia and Rosemont deposits and is one of the largest greenfield copper projects in the Americas.
Hudbay’s share price closed 4% up on Tuesday at C$9.94 a share, giving the company a market capitalisation of C$2.6-billion.