Constancia: Expansion to Pampacancha and Constancia North

Throughout 2020, while also managing the challenge of the pandemic, the team at Constancia reached key agreements with local communities, invested in technical innovations and upgrades, and drilled the Constancia north target adjacent to the Constancia pit. These achievements will help position the mine as the vibrant hub of a thriving, multi-generational mining operation.

In February, we secured a surface rights agreement with the community of Chilloroya. The agreement, which gives Hudbay access to the Pampacancha deposit near Constancia, further demonstrates the strength of Hudbay’s relationships with local communities. In keeping with International Finance Corporation standards (PS5 and PS7), we also conducted individual negotiations with each land possessor and worked to make sure we made offers consistent with our framework, and we completed this process in April 2021. Once it comes on stream, Pampacancha will add high-grade copper and gold ore to the Constancia mine plan, lowering future cash costs and increasing operating cash flows.

In 2011, Peru enacted the Consulta Previa (Prior Consultation) process, which regulates prior consultation with Indigenous populations on matters where their collective rights could be affected. While these consultations, which also involve Hudbay, are time consuming, they contribute to the development of projects that are sensitive and responsive to local concerns, which, in turn, contributes to the success and sustainability of the project over the long term.

COVID-19 delayed the Consulta Previa consultation process conducted between the communities adjacent to Pampacancha and the Peruvian government, but it was completed at the end of 2020, and mining began in the second quarter of 2021. During 2020, Hudbay made progress toward establishing exploration agreements for the properties of Maria Reyna, Caballito and Kusiorcco and concluded an agreement to commence drilling at Quehuincha.

Our exploration team completed a successful drill program, defining the northern extension of the Constancia deposit (Constancia North) in 2020. The encouraging results have been integrated into our 2021 update of mineral resource and reserve estimates. We also pursued a wide range of production-focused efforts within the mine. Our efforts included measuring and mapping ore hardness across defined blocks with Constancia’s orebody, improving the performance of the mine’s advanced process control system and doing early-stage work on recovery improvement projects and tonnage capacity increases. Even at this early stage, we have identified an opportunity to potentially improve copper recoveries by up to two to three percent.

The common thread that runs through all these measures and achievements is that they help expand the resource base available to Constancia’s processing infrastructure while extending the mine’s viability. At Constancia, Hudbay is set up to do what we do best: optimizing a low-cost, long-life mining operation that will create lasting value for our stakeholders.