Toronto-based Hudbay Minerals Inc. continues to cut spending on its Rosemont copper project and is now emphasizing developing major projects in Manitoba and Peru before it turns its attention to constructing the $1.5 billion open pit mine in the Santa Rita Mountains on the Coronado National Forest southeast of Tucson, according to company information released last week.
Hudbay’s deemphasis on Rosemont comes at the same time the U.S. Army Corps of Engineers Los Angeles district office in July recommended denial of a federal Clean Water Act permit needed to construct the mine. The Army Corps regional office in San Francisco is reviewing the recommendation and is expected to make a decision later this winter.
Hudbay CEO Alan Hair told investment analysts in a Nov. 3 conference call the company expects to issue an updated Rosemont technical report in the 1st Quarter of 2017 “outlining the feasibility work completed to date and an updated reserve and resource estimate.”
Investment analysts appear to have written off any possibility of Rosemont being developed in the next two years. Mathew Fields of Bank of America Merrill Lynch stated “we can get forget about Rosemont for while” when he asked about Hudbay’s capital expenditure plans for 2017 and 2018, according to a transcript of the conference call published by Yahoo Finance.
Hudbay slashed spending on Rosemont to $22 million in the first nine months of 2016, down from $30 million for the same period in 2015, according the company’s 3rd Quarter Management Discussion and Analysis.
The reduced spending is even more pronounced for the three months ending Sept. 30. In 2015, Hudbay spent $14.4 million in the 3rd Quarter compared to $5.1 million for the same period this year.
Hair told analysts Hudbay expects to focus future capital spending on upgrading operations at its Lalor Mine in Snow Lake, Manitoba in 2017 and 2018. Lalor is an underground gold, zinc and copper mine. The company has plans to expand its operations at the Constancia open-pit copper mine in Peru by developing a satellite pit called Pampacancha, with the bulk of the capital spending beginning in early 2018.
Hair was vague on the level of capital spending in Manitoba and Peru, but said further details will be released in upcoming technical reports.
Hudbay posted $33.6 million profit in the 3rd Quarter, compared with a loss of $11.8 million for the same period in 2015 when Hudbay took a $21.4 million impairment charge related to equipment it inherited from the 2014 acquisition of Vancouver, B.C. junior mining company Augusta Resource Corporation, the company stated in a Nov. 3 press release.
Hudbay’s cash and cash equivalents fell during the 3rd Quarter from $294 million on June 30 to $277 million on Sept. 30, according to the company’s 3rd Quarter Presentation posted on its website. Hudbay’s long term debt fell from $1.168 billion as of June 30 to $1.105 billion on Sept. 30.