HudBay Minerals Inc., a Canadian metals producer, is looking for a partner to develop its $1.55 billion Constancia mine in Peru to free capital for other projects, said Cashel Meagher, the company’s vice president for South American operations.
HudBay, which has $1.5 billion in cash, aims to line up a second Peruvian copper project once production starts at Constancia in the southern Andean region of Cuzco, Meagher said. HudBay is also studying gold and copper properties in Colombia and Chile respectively, he said.
“Now that this project is financed, much of the risk is gone as it’s under construction and we have community agreements,” Meagher said today in an interview at the Lima Stock Exchange. HudBay would prefer to partner with “the type of company that would want to take some of the product, and we want to be the operator.”
The Toronto-based company, which is also developing the $700 million Lalor and $72 million Reed projects in Canada, plans to increase copper production fivefold and double gold output by 2015, Meagher said. HudBay, which added Constancia after it bought Norsemont Mining Inc. last year, listed its Toronto-traded shares on the Lima Exchange last week.
Hudbay, which has invested $154 million in Constancia to date, plans to spend $900 million next year, he said. The mine is slated to produce 118,000 metric tons of copper a year at a cost of 66 cents per pound during the first five years of operations before slowing to 77,000 tons at a cost of $1.11 per pound.
The company is “actively” exploring the copper-rich area around the Constancia project, which lies near Xstrata Plc’s Tintaya mine, Meagher said. Hudbay also holds an 11 percent stake in Panoro Minerals Ltd., which is looking to develop the Cotabambas copper property near Cuzco.
“We’re just scratching the surface,” he said. “We believe the area will yield further copper mines and be as prolific as the northern Atacama desert in Chile.”
HudBay, the 20th listing on the Lima Exchange this year, may be included in Lima’s General Stock Index starting in June 2013 as the share is expected to be more liquid than many exploration companies that trade in Lima, the exchange’s General Manager Francis Stenning said today.
HudBay fell 0.1 percent to C$9.11 at the close in Toronto. The stock has dropped 10 percent this year.