Hudbay’s Snow Lake discovery could stretch mine life past 2038

The first discovery in a decade at Hudbay Minerals’ (TSX: HBM; NYSE: HBM) Lalor mine in Snow Lake, Man., has given it a run at finding another anchor deposit to extend the life of its operations beyond 2038.

The company’s winter drilling program had uncovered a trove of new mineralized zones, Hudbay said late Thursday in a news release. One drill rig exploring a geophysical anomaly northwest of Lalor has yielded strong results outlining a series of base metal and copper-gold zones, including a high-grade copper-gold-silver zone. The find indicates the potential to enhance near-term production and significantly extend the mine’s life.

“In our first step-out and down-plunge drill program since the initial discovery of the gold and copper-gold lenses at Lalor more than a decade ago, the results demonstrate the potential to replicate our exploration success through the discovery of additional high-grade zones that could enhance near-term production and further extend mine life,” the company’s president and CEO Peter Kukielski said in the release.

The drill program focused on testing a geophysical anomaly about 500 meters northwest of the existing underground infrastructure. This targeted exploration successfully intersected a series of base metal and copper-gold zones.

Among the notable Snow Lake-area holes was hole CH2302 which intersected three mineralized zones, including 7 metres of 3% zinc and 15.1 grams silver per tonne; 3.5 metres of 3.8% copper, 3.75 grams gold per tonne and 104.5 grams silver per tonne; and 7.5 metres of 3.9% zinc and 7.5 grams silver, leaving industry experts buzzing with excitement.

According to Hudbay, silver, the most mobile metal in a volcanogenic massive sulphide (VMS) system, is often an indicator of nearby significant base metal mineralization. This presence of abundant silver in isolation from other metals suggests the immediate proximity of more substantial mineralization. This finding heightens expectations for further discoveries of base and precious metals in the area.

Moreover, recent borehole electromagnetic surveys have identified multiple conductive horizons in the vicinity. Hudbay is already at work, generating targets and formulating plans for future drilling campaigns. The proximity of these mineralized intersections to the existing Lalor underground infrastructure provides an opportunity to enhance the near-term mine plan for Lalor. The potential extension of production and the discovery of new high-grade zones could significantly increase the mine’s output and profitability.

Cook Lake acquisitions

Amid the Lalor discovery, Hudbay also solidified its position in the region through strategic land acquisitions. The agreements with multiple landholders have increased the company’s holdings in the Snow Lake area by more than 250%, securing an extensive total of 2,690 sq. km. This vast land package offers an exciting canvas for further exploration and the possibility of finding additional valuable mineral deposits.

In particular, the acquisition of the Cook Lake properties has raised eyebrows in the mining community. These properties, located within 10 km of the Lalor mine, have historical drilling data indicating polymetallic mineralization, including copper, zinc, gold, and silver.

This discovery is even more compelling because the historical drilling was limited to an average depth of only 275 meters, a mere fraction of Lalor’s current known mineralization depth extending from 600-1,500 meters depth.

 

The Cook Lake properties represent an untapped opportunity, as modern deep geophysics have yet to explore them. As a result, the potential for new deposits on the same favourable mineralized horizons as other known deposits in the area, including Lalor, 1901, and Chisel, adds to the allure of this acquisition.

The excitement doesn’t end there for Hudbay. The recent agreement to acquire Rockcliff Metals has bolstered its regional land consolidation efforts. Rockcliff is a prominent landholder in the Snow Lake area, boasting more than 1,800 sq. km across its properties.

The proposed acquisition will provide Hudbay with additional exploration properties, including land adjacent to its Pen II deposit—a significant low-tonnage, high-grade zinc deposit located within trucking distance of the Lalor mine.

This strategic move aims to enhance the company’s mining operations and optimize logistics for transporting valuable minerals.

Pierre Vaillancourt, a mining analyst from Haywood Securities, underscored the significance of these exploration results.

“We believe the step-out and down-plunge areas from Lalor, as well as the extensive claims, provide the opportunity of finding a new anchor deposit to extend the life of Hudbay’s Snow Lake operations beyond 2038,” the analyst said in a note to clients on Friday.

The analyst’s insights further emphasize the potential long-term value creation and growth prospects for Hudbay in Snow Lake.

Hudbay has three long-life operations: the Constancia mine in Cuzco (Peru), the Copper Mountain mine in British Columbia, and Snow Lake. Its development projects involve the Copper World project in Arizona, the Mason project in Nevada, and the Llaguen project in La Libertad (Peru).

Hudbay shares in Toronto last traded at $7.64, having touched $4.39 and $8.47 over the past 12 months. It has a market capitalization of $2.6 billion.