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Hudbay Minerals Announces US$115 Million Gold Prepay to Fully Fund Snow Lake Gold Growth
TORONTO, May 07, 2020 (GLOBE NEWSWIRE) -- Hudbay Minerals Inc. (“Hudbay” or the “company”) (TSX, NYSE: HBM) today announced that the company has entered into a
About this update from Hudbay Minerals Inc
[{"type":"text","content":" TORONTO, May 07, 2020 (GLOBE NEWSWIRE) -- Hudbay Minerals Inc. (“Hudbay” or the “company”) (TSX, NYSE: HBM) today announced that the company has entered into a gold forward sale and prepay arrangement (“Gold Prepay”) with a syndicate of its existing lenders whereby the company will receive an upfront payment of US$115 million in exchange for delivering a total of 79,954 gold ounces in 2022 and 2023 based on gold forward curve prices averaging approximately US$1,682 per ounce. The upfront payment is not subject to any conditions and will be paid on May 11, 2020. “We are pleased to bolster our liquidity position and prefund the entire capital budget for the New Britannia gold mill refurbishment, which is a low-risk, high-return investment with a short payback that is expected to more than double our gold production in Snow Lake to over 150,000 ounces per year by 2022,” said Peter Kukielski, Hudbay’s President and Chief Executive Officer. “This transaction allows us to take advantage of the strong gold price environment at a forward price that is significantly higher than our internal gold price forecasts used for reserve calculations and budgeting.” The Gold Prepay was executed by National Bank Financial, as lead arranger, and includes Bank of Montreal, ING Capital Markets LLC and Canadian Imperial Bank of Commerce as counterparties. The highlights of the Gold Prepay are as follows: Upfront proceeds of US$115 million to fund 100% of the New Britannia gold mill refurbishment budget over the course of the next 18 months, which is expected to increase Lalor’s annual gold production to over 150,000 ounces commencing 2022. Delivery of 3,331 gold ounces on a monthly basis for a total of 79,954 ounces over a 24-month period from January 2022 to December 2023. Delivery represents approximately 25% of Lalor’s forecasted annual gold production in each of 2022 and 2023 and approximately 3.6% of total Snow Lake gold reserves, though delivery can be satisfied by gold production from any of Hudbay’s mines. Average forward price of US$1,682 per ounce based on the gold forward curve at the monthly delivery schedule. An attractive cost of capital of approximately 5.95% per annum using the average forward price of US$1,682 per ounce, or an implied cost of capital of approximately 2.7% using current consensus gold prices for 2022 and 2023...