Guidance

Summary:

  • On a consolidated basis, Hudbay’s copper production exceeded 2017 guidance and production of zinc and precious metals were within 2017 guidance ranges.
  • Production results were achieved with strong safety performance, including zero lost time accidents at the Constancia mine in 2017.
  • Three-year collective bargaining agreements have been entered into with Hudbay’s unionized workforces at each of its Manitoba and Peru operations, providing labour stability.
  • Production of copper contained in concentrate in 2018 is forecast to decrease by approximately 15% compared to 2017 production, as the Constancia mine shifts to the lower-grade hypogene ore in the main pit, in line with the mine plan, and the Reed mine closes.
  • Production of zinc contained in concentrate in 2018 is forecast to decrease by approximately 13% compared to 2017 production, as zinc grades at Lalor and 777 are lower, in line with the respective mine plans.
  • Production of precious metals contained in concentrate in 2018 is forecast to increase by approximately 31% compared to 2017 production, primarily due to a planned increase in precious metals production from the Lalor mine in Manitoba and the expected start of mining at the Pampacancha deposit in Peru.
  • Exploration budget of $50 million, focused on exploration near existing processing infrastructure in Manitoba and Peru, as well as grassroots exploration properties in Chile and British Columbia.
  • Sustaining capital expenditures are expected to be $135 million, a decrease of approximately 27% from the previous year, as a major raise of the Constancia tailings management facility was successfully completed in 2017. 

Contained Metal in Concentrate1

2018 Guidance

2017 Production

2017 Guidance

Manitoba2

 

 

 

 

Copper

(tonnes)

27,500 - 32,500

37,411

32,500 – 42,500

Zinc

(tonnes)

105,000 - 130,000

135,156

125,000 – 150,000

Precious Metals3

(ounces)

120,000 - 145,000

106,918

90,000 – 110,000

 

 

 

 

 

Peru

 

 

 

Copper

(tonnes)

95,000 - 115,000

121,781

100,000 – 115,000

Precious Metals3

(ounces)

65,000 - 85,000

51,493

55,000 – 65,000

 

 

 

 

 

Total

 

 

 

 

Copper

(tonnes)

122,500 - 147,500

159,192

132,500 – 157,500

Zinc

(tonnes)

105,000 - 130,000

135,156

125,000 – 150,000

Precious Metals3

(ounces)

185,000 - 230,000

158,411

145,000 – 175,000

1 Metal reported in concentrate is prior to refining losses or deductions associated with smelter terms. 
2 Includes 100% of Reed mine production; Hudbay owns a 70% interest in the Reed mine.
3 Precious metals production includes gold and silver production on a gold-equivalent basis. Silver converted to gold at a ratio of 70:1. 

Capital Expenditure Guidance

2018 Capital Expenditure Guidance1

 Millions

 

Sustaining Capital 

 

Manitoba

85

Peru2

50

Total Sustaining Capital

135

Growth Capital 

 

Manitoba 

Peru 

Arizona3

20

45

35

Total Growth Capital

100

  

Capitalized Exploration

10

Total Capital Expenditure

245

1 Excludes capitalized interest.
2 Includes capitalized stripping costs.
3 Capitalized spending.

2018 Exploration Guidance

Millions

 

Peru

20

Manitoba

15

Generative and Other

15

Total Exploration Expenditures

50

Capitalized Spending

(10)

Total Exploration Expense

40

 

Production and Unit Cost Guidance by Business Unit

2018 Production and Unit Cost Guidance
By Business Unit
Manitoba Operations
777, Lalor and Reed2
Peru Operations
Constancia
Total
Contained Metal in Concentrate Produced1
Copper (tonnes) 27,500 – 32,500
95,000 – 115,000 122,500 – 147,500
Zinc (tonnes) 105,000 – 130,000
- 105,000 – 130,000
Precious Metals (oz)3 120,000 – 145,000 65,000 – 85,000 185,000 – 230,000
Combined Unit
Operating Costs ($/tonne ore
processed)
4
C$110 – 123 US$7.5 – 9.2

1 Metal reported in concentrate is prior to refining losses or deductions associated with smelter terms.
2 Includes 100% of Reed mine production; Hudbay owns a 70% interest in the Reed mine.
3 Precious metals production includes gold and silver production on a gold-equivalent basis. Silver converted to gold at a ratio of 70:1.
4 Reflects combined mine, mill and G&A costs per tonne of milled ore. Peru costs are presented in USD and reflect the deduction of expected capitalized stripping costs. Manitoba costs are presented in CAD and include the cost of ore purchased from the joint venture partner at the Reed mine. 

2018 Production and Unit Cost Guidance

Flin Flon Zinc Plant

Zinc Metal Produced  (tonnes)

100,000 – 115,000

Unit Operating Costs1

C$0.40 - $0.50/lb

1 Forecast unit operating costs are calculated on the same basis as reported unit operating costs in Hudbay’s quarterly and annual management’s discussion and analysis.

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