Hudbay scraps Rosemont copper reserves estimate

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Hudbay Minerals has reclassified the amount of copper at its proposed Rosemont mine made by former owner Augusta Resource Corporation as “historical estimates” rather than as current mineral reserves.

“A qualified person has not done sufficient work for us to classify Rosemont’s mineral reserves or resources as current mineral reserves or resources,” the Toronto-based company stated in its Annual Information Form for 2014 released on March 30.

The lack of a “qualified person” raises questions over Augusta’s previous feasibility studies that provided resource estimates for the proposed open pit copper mine in the Santa Rita Mountains on the Coronado National Forest southeast of Tucson.

Augusta’s feasibility studies released in 2007, 2009 and 2012 were required to meet Canadian regulatory standards by having a “qualified person” make resource estimates. Continue reading

Posted in Feasibility Study, Hudbay, Investors | 2 Comments

Hudbay fails to disclose permit revocation in financial filings

Hudbay Minerals does not disclose in its most recent financial filings that an Arizona court on March 6 revoked the air pollution permit for its proposed $1.5 billion Rosemont copper project.

Hudbay has not issued any press releases concerning the permit revocation nor did the Toronto-based company disclose the fact in its Annual Information Form released on March 30.

Instead, Hudbay’s annual financial disclosure statement submitted to Canadian and U.S. regulators makes an affirmative statement that there only two outstanding permits needed, neither of which is the air permit.

“The remaining required key permits are the final Record of Decision from the U.S. Forest Service and the Clean Water Act Section 404 Permit from the U.S. Army Corps of Engineers,” Hudbay’s AIF states. Continue reading

Posted in Air Quality, Hudbay, Investors | 1 Comment

Hudbay union approves preliminary strike vote in Manitoba

Members of the International Association of Machinists and Aerospace Workers working at Hudbay Mineral’s Manitoba mines overwhelming voted Tuesday in favor of a strike that could occur no sooner than April 21.

The Flin Flon Reminder is reporting that members of the IAM Local 1848 voted 97 percent in support of a strike. The vote doesn’t guarantee that a strike will occur, but does give the IAM’s 190 members that option.

“The fact that management will not put forward their monetary package leaves the IAM with little choice,” Rene Beauchamp, IAM president told the Reminder. “We must do everything in our power to get management to negotiate.”

Another round of negotiations is scheduled for April 14.

Hudbay’s primary Canadian mining operations are centered in the small town of Flin Flon, Manitoba, about 475 miles north of Winnipeg.

The strike vote comes three days after Hudbay increased its revolving credit line with several Canadian lenders to $300 million.

“The new US$300 million revolving credit facility is on substantially similar terms to the US$100 million credit facility that it replaced and was co-arranged by The Bank of Nova Scotia and Canadian Imperial Bank of Commerce,” Hudbay stated in a news release. “It is intended to provide the company with additional liquidity as its Constancia project ramps up to commercial production and to support the growth of its business.”

Hudbay has completed construction of the $1.7 billion Constancia mine and has begun operations at the facility located southeast of Lima, Peru in the Andes. The company expects to begin commercial production at the 80,000 tons per day copper mine in the second quarter of this year.

Constancia dwarfs the combined size of Hudbay’s three Manitoba copper mines. Hudbay projects Constancia will produce between 100,000 and 125,000 tonnes of copper concentrate in 2015. The company’s three Manitoba mines combined are projected to produce between 40,000 and 50,000 tonnes of copper concentrate. (A tonne is equal to 2,204.6 pounds.)

Hudbay’s 777 mine in Flin Flon has long been the epicenter of the company’s operations.  The development of the Constancia mine in Peru that is served by a nonunion workforce marks an historic shift away from Manitoba.

Hudbay is projecting that it will have sufficient cash flow from internal operations generated primarily by Constancia to finance construction of its planned Rosemont open pit mine in the Santa Rita Mountains on the Coronado National Forest southeast of Tucson.

The company is projecting construction on the $1.5 billion Rosemont project will begin in 2016 with first copper production in 2018. Hudbay, however, still lacks key state and federal permits to build the mine including the Air Pollution Control Permit that was overturned earlier this month by an Arizona court and a federal Clean Water Act permit.

The first pickets have already appeared during the ongoing contract negotiations between Hudbay and its 1,000-member plus unionized workforce. The Reminder reported on Jan. 26 that about 20 members of the United Steelworkers Local 7106 carried pickets and marched from Hudbay’s main gate at the 777 Mine through downtown Flin Flon to support the union’s bargaining team.

According to the Reminder, the union’s bargaining team is working towards non-monetary demands with Hudbay, including a change to workers’ grievance packages. The negotiations, according to Steelworkers interviewed by the Reminder, are not going well.

United Steelworker Jason Donaghy told the Reminder that the union’s bargaining team continues to hear “no, no, no” from Hudbay.

“At the end of the day, no one wants a work stoppage – that wouldn’t benefit anyone in the Flin Flon/Snow Lake area, including Hudbay,” Donaghy is quoted as saying to the Reminder. “I hope they can work together for our futures and come to an agreement (that) works for everyone.”

Union members are also complaining that a no-strike provision in place for 15 years that expired on Dec. 31 left workers pay far below industry average. Hudbay management disagreed with the union assessment.

“We have benchmarked our wages throughout the organization to our peers, and believe we offer fair wages with attractive benefit and bonus plans,” Rob Winton, vice-president of Hudbay’s Manitoba Business Unit, told the Reminder in a Jan. 30 article.

Winton stated he was confident that contract negotiations would be successful.

“Hudbay is committed to negotiating with our seven unions from a professional- and business-focused basis, and I am confident in our negotiating team’s ability to achieve a fair agreement that benefits all of our employees.”

Production problems are surfacing at  777 Mine, causing significant impact on Hudbay’s operations. Last October, the 777 had an “unscheduled two-week shutdown”, according to an Oct. 29, 2014 Hudbay news release announcing 3rd Quarter earnings.

“As a result of reduced metal production from the 777 mine year-to-date and an unscheduled two-week shutdown of the 777 shaft in October, contained zinc, gold and silver in concentrate from the Flin Flon area are likely to be below guidance for 2014,” the release stated.

Hudbay has not provided any details of what caused the unscheduled shutdown.

Posted in Labor | 4 Comments

Court rescinds Rosemont’s state air quality control permit

A Maricopa County (AZ) Superior Court judge today rescinded the state air quality control permit for Toronto-based Hudbay Mineral’s proposed Rosemont copper project in Arizona.

Judge Crane McClennen reversed the Arizona Department of Environmental Quality’s (AzDEQ) January 2013 decision to issue the air pollution permit for the proposed mile-wide, half-mile deep open pit copper mine planned for the Santa Rita Mountains on the Coronado National Forest southeast of Tucson.

“This Court concludes there was not substantial evidence to support the action of the AzDEQ, and the action of the AzDEQ was contrary to law, was arbitrary and capricious, and was an abuse of discretion,” the ruling states.

The ruling sends Rosemont’s air quality permit back to AzDEQ “for further consideration using the proper criteria.” Continue reading

Posted in Air Quality | 7 Comments

Pima County to challenge state’s water quality certification for Rosemont

Pima County (AZ) will challenge the Arizona Department of Environmental Quality’s decision last month to issue a Clean Water Act Section 401 Certification for Hudbay Mineral’s proposed Rosemont copper project.

The Pima County Board of Supervisors voted 4-1 Tuesday to appeal the state’s controversial Feb. 3 decision to certify that the Rosemont open pit copper project “will not violate applicable surface water quality standards.”

The 401 Certification is required before the U.S. Army Corps of Engineers can issue a permit under Section 404 of the Clean Water Act that is needed to begin construction of the proposed $1.5 billion project.

Pima County Supervisor Ray Carroll, whose district includes the proposed mine in the Santa Rita Mountains, said the state’s certification ignored the mine’s impacts on water pollution and reduction in stream flows. Continue reading

Posted in Groundwater, Hudbay, water | 1 Comment