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Hudbay releases Rosemont feasibility study, updated Lalor mine plan

A feasibility study on Hudbay Minerals Inc.'s 80%-owned Rosemont copper project in Arizona estimated a net present value, at a 10% discount rate, of US$496 million with a 15.5% internal rate of return and a 5.2-year payback period.

Rosemont is expected to produce an average of 102,000 tonnes of copper per year over a 19-year mine life, for a total output of 1.9 million tonnes, according to the March 30 release.

Cash costs are estimated to average US$1.29 per pound of copper, with sustaining cash costs of US$1.65 per pound of copper and total on-site unit costs of US$7.92 per ton milled.

Development capital is estimated at US$1.92 billion over a three-year construction period, while total sustaining capital is estimated at US$1.17 billion.

United Copper & Moly LLC has an option to acquire up to a 20% interest in Rosemont. The feasibility results are reported on a 100% ownership basis.

Hudbay expects to secure about US$800 million in project-level funding from existing sources with a substantial portion of the remaining required funding to be met through free cash flow generation from the company's operations in Peru and Manitoba.

"The Rosemont project is expected to be one of the first new copper mines to be built when copper prices improve and, once approved, has the capacity to generate strong returns for Hudbay shareholders," President and CEO Alan Hair said in the statement.

Rosemont hosts proven and probable reserves totaling 592 million tons grading 0.45% copper, 0.012% molybdenum and 0.13 oz/t of silver, as of March 30.

Hudbay also updated the mine plan for its Lalor zinc mine in Manitoba, incorporating an increased throughput rate of 4,500 tonnes per day at the Stall concentrator, compared to the current rate of 3,000 tpd.

As a result, zinc production is expected to increase to 90,000 tonnes contained in concentrate this year, up from 71,000 tonnes in 2016.

The new Lalor mine plan for the Stall mill estimates a mine life of 10.5 years, with average annual output of 63,800 tonnes of zinc, 8,100 tonnes of copper, 66,100 ounces of gold and 623,300 ounces of silver.

CapEx is estimated at C$117 million for 2017 and 2018, with total sustaining capital of C$220 million.

The company is also completing feasibility work on the gold zone and copper-gold zone at Lalor, targeting an additional 1,500 tpd through the New Britannia mill to fully utilize Lalor's 6,000-tpd shaft capacity.

Lalor hosts proven and probable reserves totaling 14.2 million tonnes grading 5.12% zinc, 2.61 g/t of gold, 0.69% copper and 26.50 g/t of silver, as of Jan. 1.