Hudbay secures key permit for Arizona copper project
TORONTO – Hudbay Minerals Inc . (TSX, NYSE: NYSE:) has received an Aquifer Protection Permit from the Arizona Department of Environmental Quality for its Copper World project, marking a significant step in the project’s development. The permit, granted on August 29, 2024, is part of a series of state-level permissions the company is securing to advance the project, which is anticipated to notably enhance its production capacity.
Copper World, located approximately 50 kilometers southeast of Tucson in Pima County, Arizona, is expected to produce 85,000 tonnes of copper annually over a 20-year mine life. This addition is projected to boost Hudbay’s consolidated copper output by more than 50% from existing levels. The operation is poised to become a substantial contributor to the U.S. domestic copper supply chain, with plans to sell the entire “Made-in-America” copper cathode output to domestic customers.
The receipt of the Aquifer Protection Permit follows the approval of the Mined Land Reclamation Plan by the Arizona State Mine Inspector in October 2021, which was upheld against legal challenges in May 2023. Hudbay is also progressing with the Air Quality Permit, the final key state-level permit required for the project, with the public comment period set to conclude in September 2024.
The company’s President and CEO, Peter Kukielski, highlighted the permit as a significant de-risking event for Copper World, bringing the project closer to full authorization. In addition to environmental permits, Hudbay’s disciplined financial planning for the project includes a “three prerequisites plan” consisting of permits, a definitive feasibility study, and a prudent financing strategy.
Hudbay’s financial performance has been strong, with $824 million in Adjusted EBITDA and a substantial reduction in net debt by $559 million for the twelve months ending June 30, 2024. This has improved the company’s net debt to adjusted EBITDA ratio to 0.8x, surpassing the targeted 1.2x ratio ahead of schedule.
The company expects to begin feasibility studies for Copper World and has increased its 2024 growth capital spending in Arizona by $25 million. A decision to sanction Copper World is not anticipated until early 2026, following the completion of the permitting process and other prerequisites.
Hudbay is also bolstering its Arizona team with key leadership roles to support the project’s advancement. The company’s commitment to the community includes plans to create more than 400 direct jobs and up to 3,000 indirect jobs in Arizona, with competitive wages and benefits, and partnerships with local workforce training programs.
This development is based on a press release statement from Hudbay Minerals Inc.
In other recent news, Hudbay Minerals, Inc. reported steady progress in its second quarter 2024 financial and operational results, highlighting strong cost control and improved cash cost guidance. The company is on track to meet its annual production guidance, with Q2 copper production at 29,000 tons and gold production at 59,000 ounces. Hudbay Minerals has also notably reduced its net debt by over $550 million in the past year, bringing the net debt to adjusted EBITDA ratio down to 0.8x.
In terms of operations, the New Britannia mill’s performance exceeded expectations, contributing to gold production efficiency. Furthermore, the company is advancing its growth initiatives, particularly in its Manitoba and British Columbia operations. Hudbay Minerals is also executing operational stabilization and optimization plans at the Copper Mountain mine in British Columbia.
Looking ahead, Hudbay Minerals expects to achieve its 3-year annual operating efficiencies target of $20 million. The company is advancing the Copper World project in Arizona, with expected permit approvals in the second half of 2024. Additionally, exploration efforts in Manitoba are ongoing, with potential for extending mineralization and identifying new deposits. These are among the recent developments for Hudbay Minerals.
InvestingPro Insights
Hudbay Minerals Inc. (HBM) has been making headlines with its Copper World project, but what do the numbers say about the company’s financial health and market performance? According to InvestingPro data, Hudbay’s market capitalization stands at $3.13 billion, reflecting investor confidence in the company’s value. Its price-to-earnings (P/E) ratio has been adjusted to 31.37 for the last twelve months as of Q2 2024, indicating that the company is trading at a lower multiple relative to its near-term earnings growth. This could suggest that Hudbay’s stock may be undervalued given its growth prospects.
InvestingPro Tips highlight that Hudbay’s net income is expected to grow this year, which aligns with the company’s ambitious expansion plans for Copper World. The project’s potential to increase copper production capacity by over 50% could be a significant driver of this anticipated growth. Additionally, the company has maintained dividend payments for 15 consecutive years, a testament to its financial stability and commitment to shareholder returns.
With revenue growth reaching 59.49% for the last twelve months as of Q2 2024, Hudbay appears to be on a robust growth trajectory. This is further supported by a strong free cash flow yield, as implied by the company’s valuation. For investors looking for more insights, there are additional InvestingPro Tips available that delve deeper into Hudbay’s financials and market performance. In fact, there are 11 more tips listed on InvestingPro that can provide a more comprehensive understanding of the company’s outlook.
As Hudbay Minerals Inc. moves forward with the Copper World project, these financial metrics and expert insights from InvestingPro can help investors make informed decisions about the company’s stock. For more detailed analysis and tips, interested individuals can visit https://www.investing.com/pro/HBM.
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