Hudbay becomes sole owner of Copper Mountain mine in British Columbia

Hudbay Minerals (TSX, NYSE: HBM) has consolidated ownership of the Copper Mountain mine in southern British Columbia, a move that aligns with the Canadian miner’s strategy to boost its copper production in North America.

On Thursday, Hudbay said it is acquiring Mitsubishi Materials’ 25% stake in the mine for $44.25 million in cash, of which $4.5 million is paid upfront and $21 million paid in seven equal annual installments. The remaining $18.75 million will consist of five equal payments contingent on certain operating milestones.

Hudbay said it will also assume all of Copper Mountain’s debt, including approximately $104 million in loan obligations from Mitsubishi.

As part of its agreement with Mitsubishi, Hudbay’s proportion of the copper concentrate offtake from the Copper Mountain mine will increase from zero to 15%, while the Japanese firm will continue as an 85% offtake partner. This partnership will last for 15 years, until Mitsubishi’s right on the contingent payments expire, after which Hudbay will be entitled to 100% of the copper concentrate offtake.

“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,” Hudbay’s chief executive officer Peter Kukielski said in a news release.

Copper Mountain “is a key asset for Hudbay, and we have been encouraged by the progress of our three-year optimization plan,” Kukielski added, referring to the operational enhancements such as increased mill performance since acquiring the mine in June 2023 in a $439 million deal.

Following the acquisition, Hudbay laid out a new mine plan to nearly double Copper Mountain’s production following various operational upgrades, including remobilizing idle haul trucks, opening additional mining faces and accelerating stripping to access higher-grade ore.

For this year, the company plans to convert a third ball mill to a second SAG mill, which is anticipated to result in the ramp-up of mill throughput in the second half of the year and towards 50,000 tonnes per day in 2026.

Over the next three years, Copper Mountain is expected to produce 44,000 tonnes of copper and 28,600 ounces of gold. Upon completion of Hudbay’s optimization activities, the copper production is expected to reach 60,000 tonnes, representing a more than 200% increase from attributable production levels in 2024, Hudbay estimates.

Located about 20 km south of Princeton, BC, the open pit mine has about 346 million tonnes in reserves at 0.25% copper and 0.12 gram per tonne gold, containing 850,000 tonnes of copper and 1.3 million oz. of gold. The current reserves are expected to support a mine life until 2043.