HudBay production shifts to own turf

Annual production of copper and zinc concentrates from the mines of HudBay Minerals (HBM-T) increased in 2004, while the company’s smelter in Flin Flon, Man., produced less metal because it bought much less third-party concentrate.

The move may signal increased reliance on in-house production as a source of feed for the smelter. Treatment charges for zinc concentrates, in particular, have been squeezed as demand for open-market concentrate has increased.

The smelter produced 110,200 tonnes zinc metal in 2004, down from 117,900 tonnes in 2003, though its production of zinc from the four HudBay mines was up 15,300 tonnes to 108,400 tonnes. Similarly, copper production at Flin Flon was down 6,500 tonnes to 76,900 tonnes in 2004, with production from third-party concentrates falling 8,100 tonnes.

Byproduct gold production increased to 79,000 oz., from 61,000 oz. in the previous year, while silver production was fractionally higher at 1.1 million oz.

Precious metal credits in the Flin Flon ores are higher than they were in the smelter’s purchased concentrates.

Meanwhile the local mines all increased production rates in 2004. HudBay’s new 777 mine, near Flin Flon, produced 975,900 tonnes of ore grading 4.5% zinc and 2.9% copper during the year, its first in full commercial production. In 2003 the mine delivered 709,200 tonnes grading 4% zinc and 2.8% copper.

The new mine is to be the mainstay of HudBay’s production in coming years. At year-end the company pegged 777’s proven and probable reserves at 16.6 million tonnes grading 4.7% zinc and 2.4% copper, plus 2.2 grams gold and 28.2 grams silver per tonne.

The Trout Lake mine, also near Flin Flon, shipped 916,100 tonnes of ore grading 5.3% zinc and 1.5% copper in 2004, an increase over the previous year’s 872,700 tonnes grading 4.8% zinc and 1.2% copper. Trout Lake, which began hoisting ore in 1982, still has 3.3 million tonnes of reserves grading 4.3% zinc, 1.6% copper, 1.2 grams gold and 14.6 grams silver per tonne.

At the Konuto mine across the Saskatchewan border, annual production rose to 327,200 tonnes grading 4.1% zinc and 2.1% copper, up from 321,500 tonnes at 3.9% zinc and 2.1% copper in 2003. At year-end, Konuto’s remaining reserves were 218,000 tonnes grading 4.1% zinc, 0.9% copper, 2.2 grams gold and 6.9 grams silver, or about eight months production at current rates.

The Chisel North mine at Snow Lake delivered 327,900 tonnes at grades of 10% zinc and 0.2% copper, an increased tonnage from 2003, when the mine produced 303,200 tonnes at 11.3% zinc and 0.2% copper. Its reserves stood at 1.5 million tonnes running 8.7% zinc, 0.2% copper, 0.4 grams gold and 19.8 grams silver at the end of 2004.

HudBay’s Zochem unit, in Brampton, Ont., produced 38,700 tonnes zinc oxide during the year, up 2,000 tonnes from the previous year.

HudBay’s management buyout from former parent Anglo American (AAUK-Q) is effectively complete now that the company is moving its head offices to Winnipeg from Toronto. Two Toronto-based officers, Douglas Scharf and Peter George, are resigning, leaving only one director, Richard Brissenden, from the company’s previous incarnation as OntZinc.