TORONTO, ONTARIO, Jul 6, 2010 (Marketwire via COMTEX News Network) --
HudBay Minerals Inc. ("HudBay", the "company") (TSX:HBM) today
announced it has, through a subsidiary, entered into a joint venture
agreement and four option agreements with VMS Ventures Inc. ("VMS") (TSX
VENTURE:VMS) respecting HudBay's copper-rich Reed Lake property and a
series of adjacent mineral properties held by VMS in Manitoba's Flin
Flon Greenstone Belt. These transactions were contemplated by the
previously-announced letter of intent entered into by the parties on
March 4, 2010.
Pursuant to the joint venture agreement, HudBay
has a 70% interest and VMS has a 30% interest in a joint venture
respecting the Reed Lake property and the two claims immediately to the
south. HudBay will be the operator of the joint venture with authority
and discretion as to the exploration and potential development of the
property and will have exclusive rights to purchase and market the ore
produced from the property. HudBay will also provide full financing for
VMS' proportionate share of the costs to develop the property, which
will be repayable solely from VMS' share of cash flow generated by the
project. Upon VMS making certain filings to confirm the
previously-disputed boundaries of the joint venture claims, HudBay will
make a cash payment to VMS of $2.6 million, as consideration for VMS
transferring the southern claims to the joint venture and in lieu of
HudBay's obligation to earn back into the property under the initial
option agreement between the parties.
"We are very pleased to be
entering into a joint venture with VMS Ventures and we are optimistic
that the Reed Lake property can be developed into a source of copper
feed for our Flin Flon concentrator," said W. Warren Holmes, HudBay's
executive vice chairman and interim chief executive officer. "We intend
to commence drilling on the Reed Lake property as soon as possible and
we are also looking forward to conducting exploration on a number of
promising targets on the option properties."
The option
agreements grant HudBay the right to earn a 70% interest in four
adjacent claim parcels held by VMS, including the Tower Zone and Super
Zone properties. Upon making certain cash payments and meeting work
commitments over two to three years, HudBay will earn a 70% interest in
the applicable property and a new joint venture will be formed between
HudBay and VMS which will have substantially the same terms as the Reed
joint venture. Any failure to make the required cash payments and work
commitments with respect to a particular property will cause that
property to revert to VMS but will not affect HudBay's option over the
other properties.
HudBay Minerals Inc.: Strength to Build the
Future
HudBay Minerals Inc. (TSX:HBM) is a Canadian integrated
mining company with assets in North and Central America principally
focused on the discovery, production and marketing of base metals. The
company's objective is to maximize shareholder value through efficient
operations, organic growth and accretive acquisitions, while maintaining
its financial strength. A member of the S&P/TSX Composite Index and
the S&P/TSX Global Mining Index, HudBay is committed to high
standards of corporate governance and sustainability.
FORWARD-LOOKING INFORMATION
This
news release contains "forward-looking information" within the meaning
of applicable Canadian securities legislation. Forward-looking
information includes, but is not limited to the satisfaction of
conditions precedent, results of exploration and the ability to
successfully exploit any mineral deposits that
are discovered. Generally, forward-looking information can be identified
by the use of forward-looking terminology such as "plans", "expects",
or "does not expect", "is expected", "budget", "scheduled", "estimates",
"forecasts", "intends", "anticipates", or "does not anticipate", or
"believes" or variations of such words and phrases or statements that
certain actions, events or results "may", "could", "would", "might", or
"will be taken", "occur", or "be achieved". Forward-looking information
is based on the opinions and estimates of management at the date the
information is made, and is based on a number of assumptions and subject
to a variety of risks and uncertainties and other factors that could
cause actual events or results to differ materially from those projected
in the forward-looking information. Many of these assumptions are based
on factors and events that are not within the
control of HudBay and there is no assurance they will prove to be
correct.
Factors that could cause actual results to vary
materially from results anticipated by such forward-looking information
include changes in market conditions, variations in ore grade or
recovery rates, risks relating to international operations, fluctuating
metal prices and currency exchange rates, economic factors, government
regulation and approvals, environmental and reclamation risks, costs,
timing and amount of future production, capital expenditures and
requirements for additional capital, changes in project parameters, the
possibility of project cost overruns or unanticipated costs and
expenses, permitting timelines, labour disputes and the availability of
skilled labour, results of exploration and other risks of the mining
industry, failure of plant, equipment or processes to operate as
anticipated,
as well as those risk factors discussed in the Annual Information Form
for the year ended December 31, 2009 for HudBay Minerals Inc. available
at www.sedar.com.
Although HudBay has attempted to identify important factors that could
cause actual actions, events or results to differ materially from those
described in forward-looking information, there may be other factors
that cause actions, events or results not to be anticipated, estimated
or intended. There can be no assurance that forward-looking information
will prove to be accurate, as actual results and future events could
differ materially from those anticipated in such information. HudBay
undertakes no obligation to update forward-looking information if
circumstances or management's estimates or opinions should change except
as required by applicable securities laws. The reader
is cautioned not to place undue reliance on
forward-looking information.
(HBM-G)
SOURCE: HudBay Minerals Inc.
HudBay Minerals Inc.
John Vincic, Vice President
Investor Relations and Corporate Communications
(416) 362 0615
john.vincic@hudbayminerals.com
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