Hudbay Minerals Inc. CEO David Garofalo will leave the parent company of the Rosemont Copper project at the end of the year to take over the helm of Goldcorp, one of the world’s largest gold miners.
Hudbay’s Chief Operating Officer Alan T.C. Hair will become Hudbay’s next CEO.
Hair has been the company’s leader of its international operations that include the company’s largest mine in Peru and the Rosemont project in the Santa Rita Mountains on the Coronado National Forest southeast of Tucson.
“Alan is responsible for every aspect of the Company’s operations, business development, technical services, exploration and corporate social responsibility,” according to Hudbay’s website.
Hair has over 30 years of mining and metals industry experience and has been with Hudbay since 1996, holding leadership roles in operations or business development throughout, and was appointed Senior Vice President and Chief Operating Officer in June 2012.
In an interview with the Toronto Globe & Mail, Garofalo praised his successor’s operational prowess and promised the transition will be seamless. Mr. Hair, a 20-year HudBay veteran, has overseen the construction of three mines in recent years “on time and on budget” and he is well versed in all aspects of the company’s business.
“He’s been at my hip for the last five years … helping to formulate strategy and implement it,” Garofalo said.
Garofalo’s surprise resignation announced at the close of trading on Friday, Dec. 4 stunned investors and the company’s stock dropped 14 percent over the next four trading sessions on the NYSE. The stock has fallen from a peak of $18.70 in December 2010 to Thursday’s close of $3.95 during Garofalo’s tenure.
Garofalo leaves Hudbay after overseeing a period of rapid growth with the opening of two new mines in Canada and the Constancia open pit copper mine in Peru, which is by far its largest operation. He also leaves the company with $1.2 billion in debt that is putting a squeeze on its cash flow.
“With copper prices plummeting from $2.90 per pound in May 2015 to $2.06 per pound as of this writing, Hudbay Minerals is not having a very good 2015, and things could get even worse heading into 2016,” according to a Dec. 10 story in Seeking Alpha, an investment website.
Garofalo is featured in the documentary film “Flin Flon Flim Flam” on Hudbay’s worldwide operations and its plans for the Rosemont mine that will be broadcast at 4 p.m., Sunday on KGUN-9.
In an interview with the Financial Post, Garofalo said he is leaving HudBay at a logical time. All four of the company’s mines are now operating well, and it is still gearing up to develop the Rosemont project in Arizona.
Rosemont is in the permitting process and still needs to obtain an Air Quality Control Permit from the state and a federal Clean Water Act permit before construction could begin on the proposed $1.5 billion open-pit mine that would dump its waste on more than 3,000 acres of the Coronado National Forest.
“This is a natural pausing point for me to jump without disrupting the company’s activities in any way,” Garofalo told the Financial Post.
During his tenure at Hudbay, Garofalo was well known for investing in junior miners and for making bold acquisitions, such as last year’s hostile takeover of Augusta Resource Corp., owner of the Rosemont copper project in Arizona, The Globe & Mail reported.
Garofalo stressed that acquisitions are not about growing for growth’s sake. “Miners that have focused simply on increasing ounces of production haven’t typically done very well,” he told the Globe & Mail.
He says his key yardstick is net asset value – essentially, the net present value of future cash flows. Driving down costs, extending mine lives and making new discoveries are other ways to expand net asset value, he said.
If Hudbay continues with this business philosophy under Hair’s leadership, the company’s impact on southern Arizona could be profound and long-lasting. Hudbay has additional mining prospects in the Santa Rita Mountains that could extend mining operations many years beyond the 22-year life projected for Rosemont.
Aside from attempting to obtain the needed permits for the Rosemont project in the face of significant opposition from local governments and activists, Hair will also oversee Hudbay’s legal strategy in defending the company in three, high-profile civil suits pending in Toronto related to its former operations in Guatemala.
The company is facing civil charges alleging gang rapes, a murder and a shooting that left a man paralyzed. The litigation marks the first time a Canadian company is being held legally-accountable in Canada for alleged actions of an overseas subsidiary.