Hudbay Minerals announces results of enhanced PFS for Copper World project

Hudbay Minerals announced the results of the enhanced pre-feasibility study for Phase I of its 100%-owned Copper World project in Arizona. “The PFS for Phase I of Copper World significantly enhances the economics and de-risks the project through higher levels of engineering, a simplified project design, lower upfront capex and a longer mine life,” said Peter Kukielski, Hudbay’s President and Chief Executive Officer. “Copper World is an attractive copper growth project for Hudbay and our stakeholders, generating strong project returns and bringing many benefits to the community and local economy in Arizona. We will continue to be prudent with our financing plans for Copper World as we remain focused on meeting all of the prerequisites for project sanctioning as laid out in our 3-P plan in October 2022.” The PFS reflects the results of the company’s further technical work on the first phase of the Copper World project. Phase I is a standalone operation requiring state and local permits only. Phase I has a mine life of 20 years, which is four years longer than the Phase I mine life that was presented in the preliminary economic assessment published in June 2022 due to an increase in the capacity for tailings and waste deposition as a result of optimizing the site layout. The second phase of the project is expected to involve an expansion onto federal lands with an extended mine life and enhanced project economics. Phase II would be subject to the federal permitting process and has not been included in the PFS results. Phase I contemplates average annual copper production of 85,000 tonnes over a 20-year mine life, at average cash costs and sustaining cash costs of $1.47 and $1.81 per pound of copperi, respectively. A variable cut-off grade strategy allows for higher mill head grades in the first ten years, which increases annual production to approximately 92,000 tonnes of copper at average cash costs and sustaining cash costs of $1.53 and $1.95 per pound of copperi, respectively. At a copper price of $3.75 per pound, the after-tax net present value of Phase I using an 8% discount rate is $1.1 billion and the internal rate of return is 19%. The valuation metrics are leveraged to higher copper prices and at a price of $4.25 per pound, the after-tax NPV of Phase I increases to $1.7 billion, and the IRR increases to 25.5%. In the flotation only scenario, the project has an after-tax NPV of $863 million, an after-tax IRR of 18.7% and a payback period of 5.3 years at $3.75 per pound copper. At a copper price of $4.25 per pound, the flotation only NPV increases to $1.5 billion and the IRR increases to 25.7%. These economics demonstrate the project is robust even without the concentrate leach facility, providing Hudbay with flexibility to optimize the project in the future through funding the addition of the concentrate leach facility with operating cash flows or potential government incentives for critical minerals processing.