HudBay Minerals Inc. 2010 Annual Report

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OPERATIONS Consistent operating results underpin HudBay’s strong overall performance. Ongoing investments in our mines, facilities, equipment and people enable us to realize the full potential of our assets and retain our skilled and dedicated workforce. 14 HudBay Minerals Inc. 2010 Annual Report
Mining Operations Production comes predominantly from our 777 mine, which has been a consistent, low-cost producer of zinc, copper, gold and silver since 2004. The mine operated at full capacity in 2010 with strong copper grades. Production of contained metal in concentrate from our three operating mines (777, Trout Lake and Chisel North) met our 2010 targets. However, sales of copper concentrate lagged production due to limited rail car availability. In 2010, we commenced the $20-million 777 North expansion, which involves driving a ramp from the surface to the 440‐metre level to access gold, silver, copper and zinc zones that are connected to the underground workings of the 777 mine. Upon completion, 777 North will supply additional ore feed to the Flin Flon concentrator and zinc plant, and facilitate the development of an underground exploration platform to evaluate exploration opportunities near the mine. It will also help to sustain employment as the Trout Lake mine reaches the end of its mine life towards the end of 2011. Production is expected to begin in 2012 at a rate of 330 tonnes per day, producing approximately 5,500 tonnes of copper metal and 20,000 tonnes of zinc metal over the six-year life of the project. The Chisel North mine was reopened in the second quarter of 2010, after having been on care and maintenance since January 2009 due to low zinc prices at the time. The mine is near the Lalor development project, and the restart enables us to share resources and infrastructure between the project and the operations for optimum efficiency. Production at Chisel North is projected to end in 2012, at which time we expect to be able to access the base metals zone at Lalor. Contained metal production in concentrate in 2011 is expected to be similar to 2010, as we anticipate reduced production at Trout Lake will be offset by a full year of production at Chisel North and higher production and copper grades at the 777 mine. OPERATIONS snapshot Mine and Mill Production 2010 2011 Forecast Copper (tonnes) 52,413 40,000–55,000 Zinc (tonnes) 77,314 70,000–90,000 Precious metals 1 (ounces) 101,233 95,000–120,000 1 Precious metals production includes gold and silver production. Silver is converted to gold equivalent at a ratio of 60:1. Flin Flon Complex Our integrated metallurgical complex at Flin Flon includes a concentrator, a state-of-the-art zinc plant and, until recently, a copper smelter. We closed the 80-year-old copper smelter in June 2010, and began selling our copper concentrate to thirdparty copper smelters. The smelter was integral to operations at the Flin Flon complex and its closure required us to reconfigure infrastructure and processes at the site – and to invest heavily in employee training to ensure continued safe and efficient operations. We commissioned a new copper filter plant to dewater concentrate prior to shipping, and installed concentrate loading facilities. We also invested in an electric boiler to replace the steam formerly produced by the copper smelter, which is required to heat our facilities and to provide process steam for the zinc plant. It is a credit to our people that the projects were completed on time and on budget. As a result of the smelter closure, approximately 235 jobs were eliminated. However, through attrition, early retirement and retraining, we were able to limit the number of personnel reductions to about 85, and we continue to create jobs in the area. HudBay Minerals Inc. 2010 Annual Report 15
Page 1 and 2: In our veins HudBay Minerals Inc. 2
Page 3 and 4: ● operations Flin Flon, Manitoba
Page 5 and 6: In 1927, our subsidiary Hudson Bay
Page 7 and 8: Operations HudBay’s operating min
Page 9 and 10: Q: What do you think investors need
Page 11 and 12: Strength in Management (left to rig
Page 13 and 14: $ 902 million Record production fro
Page 15 and 16: Lalor The Lalor project is on a fas
Page 17: Fenix The Fenix nickel project in G
Page 21 and 22: Flin Flon Greenstone Belt Of the to
Page 23 and 24: 2011 Exploration Expenditures ($ mi
Page 25 and 26: Human Health Risk Assessment in Fli
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MANAGEMENT’S DISCUSSION AND ANALY
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Consolidated Balance Sheets As at D
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Corporate and Shareholders’ Infor
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HudBay Minerals Inc. 2010 Annual Re
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HudBay Minerals Inc. 2010 Annual Report

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