Hudbay Minerals Inc. (TSX, NYSE: HBM) and Mitsubishi Corporation have formally approved the final investment decision to proceed with the construction and development of Copper World, a 70%-owned Hudbay project located approximately 50 kilometres southeast of Tucson, Arizona. According to the company's press release, issued on October 21, 2026 via GlobeNewswire, Mitsubishi holds the remaining 30% stake under a joint venture agreement signed with Hudbay in January 2026. First production is targeted for the second half of 2029, and the project is described by the company as the next major copper mine in the United States.
The decision is supported by a definitive feasibility study (DFS) covering the project. In the Base Case, the DFS supports mineral reserves of 390 million tonnes at 0.47% copper over a 15-year mine plan, with all major permits for construction and initial operations already obtained, according to Hudbay. At a long-term copper price of $5.00 per pound, the Base Case shows an unlevered net present value at 8% of $1,241 million, an internal rate of return of 16.8% and a payback period of 5.4 years.
Initial growth capital is estimated at $2,070 million in 2026 dollars, net of $127 million of anticipated equipment financing, to be spent over a 36-month period before commercial production. The DFS also presents an Extension Case with a 37-year mine life, which relies only on measured and indicated mineral resources totalling 1,048 million tonnes and requires federal permits by year 10 of operations. At the same $5.00 per pound long-term price, the Extension Case shows an unlevered net present value at 8% of $2,510 million and an internal rate of return of 18.8%.
Hudbay notes that the Extension Case requires expansion beyond the project's private landholdings onto unpatented lode and mill site claims starting in year 10. On production, Hudbay says that following a concentrator expansion to 90,000 tons per day in year five, annual copper production in the Base Case averages 122,000 tonnes between years five and twelve, excluding low-grade stockpile years at the end of the mine life. The company states that the project adds more than 100,000 tonnes of annual copper production over the first 10 years.
The Base Case shows a life-of-mine average cash cost of $1.70 per pound of copper. Hudbay also states that Copper World's capital intensity is approximately $22,600 per annual copper tonne and that this compares favourably with peer copper projects, although the peer comparison data is shown only in a figure in the release. The funding structure is a central element of the announcement.
Hudbay says it will fund only one-quarter of the project capital cost and that its first capital contribution is deferred to 2028. The funding plan includes Mitsubishi's $600 million initial investment, a $230 million deposit from Wheaton under the existing precious metals stream, $127 million of equipment financing, and approximately $650 million of low-cost debt financing at the asset level, alongside Mitsubishi's future pro-rata equity contributions. On this basis, Hudbay expects a levered IRR to itself of 32% in the Base Case at $5.00 per pound copper, and 44% in the Extension Case at $6.00 per pound copper.
Hudbay also disclosed changes to its corporate financing. The company's senior secured credit facilities are being upsized from $450 million to $700 million and extended from November 2028 to November 2030, with the transaction expected to close in the fourth quarter. The facility includes an option to increase its size by a further $150 million.
Hudbay states that its pro forma liquidity as of June 30, 2026 was approximately $1.3 billion after adjusting for the expected increase. The company now expects growth expenditures related to the Copper World joint venture to total $245 million in 2026, an increase of $110 million related to project construction and development costs in the fourth quarter. The updated mineral reserve estimate of 390 million tonnes at 0.47% copper compares with 385 million tonnes at 0.54% copper in the 2023 pre-feasibility study (PFS).
Hudbay attributes the lower grade to a mine plan with a pit approximately 20% smaller than in the 2023 PFS, which reduces the strip ratio. Measured and indicated resources, inclusive of reserves, total 1,236 million tonnes at 0.40% copper, while inferred resources increased 5% in contained copper metal, according to the company. Hudbay also highlights a concentrate leach facility under evaluation.
Using the Extension Case, the company says the facility adds approximately $226 million to the after-tax net present value at 8%, rising to $377 million at the time of sanctioning, assuming a 10% cathode premium to the $5.00 per pound long-term copper price. Hudbay says that the facility would allow production of copper cathode in Arizona, reducing logistics costs and emissions associated with overseas shipping and smelting of concentrate. The company has not yet committed to this option and says it will continue to evaluate it based on market conditions and potential government incentives.
In terms of local impact, Hudbay expects Copper World to generate more than $1.1 billion in total U.S. taxes over the 15-year Base Case mine life, including approximately $200 million in taxes to the state of Arizona and $362 million in local property taxes. In the Extension Case, total U.S. taxes are projected at $3.7 billion over 37 years. The company also expects the project to create more than 1,000 construction jobs, 500 permanent operating roles and up to 3,000 indirect employment opportunities in Arizona.
Hudbay's executives framed the decision in strategic terms. Peter Kukielski, Hudbay's Chief Executive Officer, said the approval 'represents a significant milestone' for the company, its partners and the copper landscape in the U.S. Eugene Lei, Hudbay's President and Chief Financial Officer and Chair of the Copper World Joint Venture Board, said the project will establish a low-capital intensity, high-margin operation.
Taro Abe, Chief Operating Officer of Mitsubishi's Critical Minerals Division, said the decision marks 'the beginning of a new phase for the joint venture.' These statements are company views and not independent analyst assessments. Hudbay states that global copper market fundamentals are expected to be strong, with a structural deficit emerging in the near to medium term, and that global mine production is expected to struggle to keep pace with demand driven by electrification and the rapid expansion of datacentres. The company also expects the United States to remain a net importer of copper during this period.
The press release does not include spot or futures price data from the LME, COMEX or SHFE. The release contains extensive forward-looking information and cautionary language. Hudbay identifies risks including commodity price and currency fluctuations, permit amendments required for the expansion projects, the pre-feasibility level of estimates for those expansions, potential litigation, changes in law and policy, and risks linked to the former Rosemont Copper project, which was held by Augusta.
Investors are also reminded that the DFS is prepared under Canadian NI 43-101 standards, which differ from U.S. disclosure requirements. A technical report under NI 43-101 will be filed on SEDAR+ and EDGAR.
Source: markets.businessinsider.com