Hudbay Minerals continues to make history in Manitoba

1 of 4Excavation on the Reed copper project trench began in June 2012. — Don Peake, Hudbay, photo

2 of 4The Reed copper project, situated 120 kilometres east of Flin Flon, Manitoba, is expected to begin production by the fourth quarter of 2013. — Don Peake, Hudbay, photo

3 of 4Materials and equipment from Hudbay's Trout Lake Mine, which closed in June 2012, have begun arriving at the Reed copper project site. — Don Peake, Hudbay, photo

4 of 4This shows the surface infrastructure of Hudbay's wholly owned Lalor project, located 210 kilometres east of Flin Flon, Manitoba. — AirScapes International Inc. photo

This year in August, mining giant Hudbay Minerals celebrated 85 years of success in Manitoba. The company is not only proud of its history but excited about the future with its new Reed Copper Mine already under construction and the redevelopment of its Lalor project. Lalor is believed to hold the second largest metal deposit in the Flin Flon Greenstone Belt and the largest pre-development deposit discovered in the Flin Flon/Snow Lake region of Manitoba.

Hudbay's president and CEO, David Garofalo, said Hudbay has been around since 1927 and it all started with the Flin Flon deposit, which was mined for upwards of six decades.

"It has turned out to be a longstanding business with multiple mines being brought into development," said Garofalo. "The Reed Copper Mine and Lalor will represent the 27th and 28th mines. We have revitalized the camp at Lalor and are reinvesting about $800 million into its development. Then, along with Reed, we have created another generation of new mines which will see us through multiple decades from here."

For the first time in decades, at the beginning of 2012, three mines were running at the same time: the 777 Mine, Trout Lake and Chisel North. Trout Lake shut down in June after 30 years of production and Chisel North will be shutting down this year as well. So, just as production at Lalor starts to ramp up, Reed will follow shortly after to again have three mines in full production. Hudbay will be spending more than $2.5 billion over the next few years on these projects. Its flagship 777 Mine in Flin Flon will receive a $20-million expansion, Lalor near Snow Lake will be receiving the previously stated $800 million and the new joint-venture Reed Copper Mine near Snow Lake will be getting $71 million for its development.

"The Reed Copper Mine in a lot of ways represents the bread and butter of what we've done so well over 85 years," said Garofalo. "For every Lalor or 777 or Flin Flon deposit, we have found six or seven Reeds. These findings are as important to perpetuating our business in northern Manitoba as the big deposits, as they allow us to feed our industrial complex that we've built over 85 years."

Garofalo said right now the company has two—soon to be three—concentrators, a zinc refinery and about 1,300 employees in northern Manitoba. He said Hudbay has been able to experience considerable success in bringing smaller satellite deposits like Reed into production on a very cost-efficient, high-rate-of-return basis by leveraging off this infrastructure they already have in place.

For instance, all of the ore from the Reed Copper Mine will be trucked to the existing Flin Flon complex for processing. The company has the spare capacity there, now that Trout Lake has shut down. The Reed site has been in construction since March and is now fully mobilized, with construction expected to be complete by December. Hudbay is currently driving a ramp into the deposit. The first ore should be ready for production in the third quarter of 2013. The infrastructure, according to Garofalo, is not very complicated because of the relative shallowness of the deposit as well as its close proximity to the highway. The current reserves at Reed are sufficient for 5½ years of production.

The potential for growth and jobs is also great for the region. Garofalo said Hudbay is looking at zero layoffs this year—and it's because the company has been able to move its employees around from the mines that have or will shut down to the new opportunities at Reed and Lalor. Furthermore, Hudbay expects to add about 200 employees over the next five years as Reed and Lalor ramp up production.

A joint venture with the exploration company VMS Ventures means Hudbay owns 70 per cent and VMS has 30 per cent.

"We are always proud to partner with a junior mining company like VMS," said Garofalo. "They do a great job on grassroots exploration and we do a very good job on development projects, so it marries up the two skill sets."

Garofalo could not be more excited for the future of Hudbay with all these projects coming to fruition and he is honoured that he gets to be a part of it.

"I feel extremely privileged to be running the company," said Garofalo. "I really feel like a custodian to a great company with a long legacy. Back in the '20s and '30s, Hudbay became a global mining giant and I think it speaks to the sense of community and the expertise of our people that have been able to perpetuate the business for so long. I feel like I'm at the helm at just the right time because we're revitalizing our business in northern Manitoba by investing more than we ever have in mine development."