HudBay to spend $85 million on mine

October 13, 2009
DCN News Services

Phase One starts now, Phase Two and Three to cost $365 million

HudBay Minerals Inc. will sink $85 million into the Lalor project Phase One production ramp from its Chisel North mine to the Lalor deposit, near Snow Lake, Manitoba.

The ramp is expected to provide early production of zinc-rich ore and access to the gold zones for additional underground exploration. Work is expected to begin immediately.

Development of the ramp to the zinc-rich base metals zone is expected to take about 30 months and provide approximately 1,200 tonnes of ore per day once completed. The company will also consider re-starting operations at its Chisel North mine during this period to provide a continuous supply of zinc ore to the Snow Lake concentrator and zinc concentrate to the Flin Flon zinc plant.

As part of Phase One the ramp will be extended to provide an underground diamond drilling platform for advanced exploration of Lalor’s gold zones.

“Moving forward with Lalor is a key strategic milestone for HudBay,” said Peter R. Jones, chief executive officer. “Lalor is expected to accelerate the company’s zinc production in 2012 and once at full production beyond 2014 it should ensure that our zinc plant runs at capacity and should more than double our annual gold production. The Lalor deposit also provides exceptional exploration potential through extension of the gold zones as well as the newly discovered extraordinary copper-gold zone.”

He said the Lalor area is familiar to this in a jurisdiction and presents a positive low risk profile.

“It is in our Snow Lake mining camp in close to existing road and power infrastructure,” he said. “These factors combine to make it an extremely attractive.”

Conceptual plans for Phase Two and Phase Three development of Lalor include site preparation, sinking of a production shaft, refurbishing the 3,500 tonne per day base metals concentrator in Snow Lake and construction of a gold ore concentrator with a minimum capacity of 1,200 tonnes per day. Current capital cost estimates are approximately $450 million, including the $85 million Phase One component.

“We believe we are on track to meet our target of three million contained ounces of gold at Lalor,” said Jones. “The ongoing exploration of the gold zones towards the northeast of the deposit and the underground advanced exploration program should help us reach this target.”