Constancia (Peru)

Operator: Hudbay
Location: Peru
Term of Stream: Life of Mine
Stream Parameters: 100% of silver production and 50% of gold production
Upfront Consideration: US$430M
Cost Quartile: 1st
Primary Metal: Copper

Project Overview

The Constancia mine is a large, low-cost, and long-life open pit mine, producing copper, molybdenum, silver and gold. Production began as expected during the fourth quarter of 2014 and achieved commercial production on April 30, 2015.

The processing plant at Constancia is designed to process a nominal throughput of 81,900 tonnes per day of ore and average annual throughput of 29 million tonnes per year from the Constancia open pit and Pampacancha satellite deposit. The principal products of the concentrator are copper and molybdenum concentrates. The tailings are pumped to the tailings management facility for storage and water is returned via parallel piping to the process plant for reuse.

The Constancia deposit is a porphyry copper-molybdenum system, which includes copper-bearing skarn mineralization. Multiple phases of monzonite and monzonite porphyry have intruded a sequence of sandstones, mudstones and micritic limestone of Cretaceous age. The Pampacancha deposit is a porphyry related Skarn system, with minor local increases in copper-gold.

Precious Metal Purchase Agreement

On August 7, 2012, Silver Wheaton entered into an agreement with Hudbay to acquire 100% of the silver production from its Constancia mine. On November 4, 2013, the agreement was amended to include the acquisition of an amount equal to 50% of the life of mine payable gold production from the Constancia mine.

Silver Wheaton paid Hudbay total cash consideration of US$430 million, representing US$295 for the silver production and US$135 for the gold production. In addition, Silver Wheaton will make ongoing payments of the lesser of US$5.90 per ounce of silver and US$400 per ounce of gold (both subject to an inflationary adjustment of 1% beginning in the fourth year) or the prevailing market price per ounce of silver delivered. Silver Wheaton is not required to share in any ongoing capital or exploration expenditures at the Constancia mine.

More Information

For further information about the Constancia mine, please visit Hudbay Minerals Inc.’s website at www.hudbayminerals.com. Cost quartile information is sourced from Wood Mackenzie byproduct cost curves for gold, zinc/lead, copper, nickel, and silver mines.

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