Hudbay Minerals (TSX:HBM) has become the sole owner of the Copper Mountain mine in southern British Columbia after acquiring Mitsubishi Materials’ 25% stake in the operation. The deal, valued at $44.25 million, aligns with Hudbay’s broader strategy of increasing copper production in mining-friendly regions across North America.
The Canadian mining company announced the transaction on Thursday, detailing that the purchase involves an initial upfront payment of $4.5 million. The remaining amount will be paid in a structured format: $21 million will be paid in seven equal annual installments, while the final $18.75 million will be disbursed in five equal payments contingent on achieving specific operating milestones.
In addition to the stake acquisition, Hudbay has agreed to assume all outstanding debt associated with the Copper Mountain operation, including approximately $104 million in loan obligations owed to Mitsubishi.
Copper Concentrate Offtake Agreement
As part of the agreement, Hudbay will gain a share of Copper Mountain’s copper concentrate offtake for the first time. The company’s proportion will increase from zero to 15%, while Mitsubishi will retain an 85% share. This arrangement will remain in place for 15 years, coinciding with the period in which the Japanese firm is entitled to the contingent payments. Once Mitsubishi’s right to these payments expires, Hudbay will take full control of the mine’s copper concentrate offtake.
Hudbay’s chief executive officer, Peter Kukielski, emphasized the strategic importance of the transaction. “This transaction is aligned with our strategy of growing copper production in mining-friendly jurisdictions and further strengthens Hudbay’s position as a North American copper champion,” Kukielski stated.
Operational Enhancements and Production Expansion
Copper Mountain has been a significant asset for Hudbay since its initial acquisition in June 2023 as part of a $439 million deal. Since taking control, Hudbay has implemented a three-year optimization plan aimed at improving operational efficiency.
Following the latest acquisition, Hudbay has outlined a new mine plan aimed at nearly doubling production through various operational upgrades. The company plans to:
• Remobilize idle haul trucks to improve material movement.
• Open additional mining faces to enhance ore extraction.
• Accelerate stripping operations to access higher-grade ore more quickly.
A major component of Hudbay’s expansion strategy at Copper Mountain involves the conversion of a third ball mill into a second semi-autogenous grinding (SAG) mill. This upgrade is expected to ramp up mill throughput in the second half of 2024, with a target of achieving 50,000 tonnes per day by 2026.
Over the next three years, Copper Mountain is projected to produce approximately 44,000 tonnes of copper and 28,600 ounces of gold. Once Hudbay’s optimization initiatives are fully implemented, copper output is expected to reach 60,000 tonnes annually. This would represent a more than 200% increase compared to Hudbay’s attributable copper production levels in 2024.
The Copper Mountain mine, located about 20 kilometers south of Princeton, BC, operates as an open-pit mining operation. It currently holds approximately 346 million tonnes of mineral reserves, with an average grade of 0.25% copper and 0.12 grams per tonne gold. These reserves are estimated to contain 850,000 tonnes of copper and 1.3 million ounces of gold, supporting a mine life projected to extend until 2043.
With full ownership now secured, Hudbay is positioned to implement long-term development plans aimed at maximizing production efficiency and sustaining operations for nearly two more decades.
The above references an opinion and is for information purposes only. It is not intended to be investment advice. Seek a licensed professional for investment advice. The author is not an insider or shareholder of any of the companies mentioned above
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