TORONTO, ONTARIO, Mar 4, 2010 (Marketwire via COMTEX News Network) --
HudBay Minerals Inc. ("HudBay", the "company") (TSX:HBM) today
announced it has, through a subsidiary, entered into a non-binding
letter of intent with VMS Ventures Inc. ("VMS") (TSX VENTURE:VMS)
respecting HudBay's copper-rich Reed Lake property in Manitoba's Flin
Flon Greenstone Belt, which is presently under option to VMS, the two
southern claims immediately adjacent to the Reed Lake property as well
as certain other adjacent exploration properties, which are held by VMS.
The letter of intent contemplates that the parties will enter
into a definitive joint venture agreement respecting the Reed Lake
property and the two claims immediately south of the Reed Lake property.
HudBay would obtain a 70% interest in the joint venture and VMS would
obtain a 30% interest. Upon execution of the definitive joint
venture agreement, HudBay will make certain cash payments to VMS in
satisfaction of its obligation to earn back in to the property and as
consideration for VMS transferring the southern claims to the joint
venture. In turn, VMS will abandon all disputes respecting the location
of the boundary between the Reed Lake property and the southern claims.
Upon
establishment of the joint venture, HudBay will act as operator with
authority and discretion as to the exploration and potential development
of the Reed Lake property and will have exclusive rights to purchase
and market the ore produced from the property. HudBay would also provide
full financing for VMS's proportionate share of the costs to develop
the property, which would be repayable solely from VMS's share of cash
flow generated by the project.
The letter of intent also
contemplates that, concurrently with the entering into of the joint
venture agreement, HudBay and VMS will enter into
an option agreement which will grant HudBay options to earn a 70%
interest in four adjacent properties 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 Lake joint venture. Any failure to make the required
cash payments and work commitments with respect to a particular property
would cause that property to revert to VMS but would not affect
HudBay's option over the other properties.
"We are pleased to
enter into this letter of intent with VMS," said W. Warren Holmes,
HudBay's executive vice chairman and interim chief executive officer.
"We look forward to working with VMS to advance the Reed Lake property
towards feasibility and to advance the exploration of several promising
targets on the option properties. Bringing the Reed Lake deposit into
production will provide feed for our Flin Flon concentrator and create
numerous jobs in the area."
The establishment of the joint
venture and option arrangements is contingent on the parties reaching
mutually satisfactory definitive agreements and on receiving all
necessary corporate and third party approvals. HudBay and VMS anticipate
that definitive agreements can be completed by May 31, 2010.
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, terms of joint venture and
option arrangements and the ability to complete and execute definitive
agreements. 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, 2008 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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