Extension of Gold Zone at Lalor and New Copper Mineralization at Reed Lake
Highlights
- Capital investment of approximately $289 million, including $184 million in growth initiatives
-
Investment in exploration of approximately $59 million near existing
mines and projects and grassroots efforts in the Flin Flon Greenstone
Belt, Chile and the Yukon
- New drill hole demonstrates extension of
gold mineralization at Lalor, intersecting 8 meters of 9.28 g/t gold 200
meters down plunge of gold zone 25
- The first step out exploration
hole at the Reed Lake deposit intersected 10.09 meters assaying 2.39%
copper approximately 210 meters from the known deposit
- HudBay
geologists to conduct an exploration update, which will be webcast live
on December 15, 2010 at 12 p.m. ET on HudBay's website at
www.hudbayminerals.com
TORONTO, ONTARIO -- (MARKET WIRE) -- 12/13/10 --
HudBay Minerals Inc. ("HudBay", the "company")
(TSX: HBM)(NYSE: HBM) today released its production guidance as well as
its exploration and capital expenditure budgets for 2011.
"Our exploration budget of approximately $59 million in
2011 demonstrates management's confidence in our strong exploration team
and the potential of our exploration opportunities," said David Garofalo, HudBay's president and chief executive officer. "We will also be investing $289 million in capital expenditures, including approximately $163 million
at Lalor, which we are aggressively developing toward production. We
are also looking forward to another solid year of production from our
operating mines in 2011."
Strong Production from Existing Mines
Contained metal production in concentrate in 2011 is expected to be similar to 2010 because reduced production at Trout Lake is expected to be offset by a full year of production at Chisel North and higher production and copper grades at the 777 mine.
Contained Metal in Domestic Concentrate 2011 Guidance
----------------------------
Zinc tonnes 70,000 - 90,000
Copper tonnes 40,000 - 55,000
Gold Equivalent(1) ounces 95,000 - 120,000
(1) Gold Equivalent production includes gold and silver production. Silver
converted to gold equivalent at 60:1 ratio.
Major Commitment to Growth Opportunities
Capital Expenditures 2011 Budget
C$ millions
Growth
Lalor $163
777 North 8
Fenix 13
------------------------------
Total Growth Capital 184
Sustaining 105
Total Capital Expenditures $289
HudBay expects to invest approximately $289 million in
capital expenditures in 2011, of which approximately two-thirds are
allocated toward growth initiatives. Capital expenditures at Lalor are
expected to total approximately $163 million, which
includes shafts, continuation of the underground ramp from Chisel North,
concentrator refurbishment costs, mine site buildings and utilities.
HudBay has recently awarded the construction contract for the Lalor
ventilation shaft to J.S. Redpath.
A trade-off study is ongoing for the Lalor project to determine whether to refurbish the existing Snow Lake
concentrator, as currently planned, or to construct a new concentrator
at the mine site. The Lalor capital expenditure projections above do not
incorporate any incremental costs that may arise if a new concentrator
is constructed.
HudBay is well positioned to fund these growth investments with strong
cash flow generation from the company's existing operations and a cash
position of $852 million at September 30, 2010. The company also has an undrawn revolving credit facility of $300 million.
Exploration Expenditures Capitalized Expensed Total
-----------------------------
(C$ millions)
Flin Flon Greenstone Belt
----------------------------------------------
Near-Mine Exploration 4 - 4
Reed Lake & Cold/Lost Lake - 2 2
Grassroots Exploration (including Lalor) 1 22 23
Other 1 3 4
---------------------------------------------------------------------------
Total FFGB 6 27 33
Other Opportunities
----------------------------------------------
Fenix 3 2 5
Back Forty 1 15 16
Yukon - 2 2
Chile - 2 2
Other - 1 1
---------------------------------------------------------------------------
Total Other Opportunities 4 22 26
---------------------------------------------------------------------------
Total Exploration Expenditures 10 49 59
---------------------------------------------------------------------------
HudBay is planning another year of aggressive exploration investments in 2011. Total expenditures of approximately $59 million
will support ongoing exploration near HudBay's existing mines and
projects and fund grassroots exploration on properties held by the
company in the Flin Flon Greenstone Belt, Chile and the Yukon.
Expenditures on the Back Forty project will support exploration
initiatives as well as project engineering and environmental permitting
activities. Depending on exploration success, additional funding may be
committed to exploration at Lalor and other opportunities.
Lalor Project Exploration Drill Results
Highlights
-- Four drills currently on site: two drills exploring the copper-gold
zone, one drill exploring copper-gold mineralized horizon down plunge of
base metal zone 10, and one drill testing periphery electromagnetic
anomalies up plunge of zone 10, southwest of the known Lalor deposit
-- Drill hole DUB189W01 intersected 8.00 meters that assayed 9.28 g/t gold
-- Three diamond drills will continue to operate at Lalor throughout the
first quarter of 2011, both in and around the known deposit and along
the periphery via new geophysical platform holes.
The drill results and explanation that follows should be reviewed in
conjunction with corresponding maps available on the Exploration page of
HudBay's website at: http://www.hudbayminerals.com/ourBusiness/exploration.php.
The intercept coordinate location table can be found at the end of this news release.
Length
From To (1,2) Au Ag Cu Zn
HOLE Zone (meters) (meters) (meters) (g/t) (g/t) (%) (%)
---------------------------------------------------------------------------
DUB189W01 Zone 25 1197.00 1205.00 8.00 9.28 46.89 0.10 0.05
---------------------------------------------------------------------------
DUB269 FW to Cu-Au 1504.30 1505.90 1.60 1.28 7.97 0.68 0.14
---------------------------------------------------------------------------
DUB270W01 Cu-Au 1369.71 1375.27 5.56 2.88 9.51 1.62 0.05
---------------------------------------------------------------------------
DUB270W02 Cu-Au 1380.87 1386.50 5.63 13.05 28.03 5.72 0.35
---------------------------------------------------------------------------
1445.75 1447.23 1.48 3.26 84.59 10.91 0.78
---------------------------------------------------------------------------
DUB271 Zone 10 horizon 1150.13 1158.00 7.87 0.47 5.68 0.67 0.07
---------------------------------------------------------------------------
DUB273 Zone 10 horizon 1209.52 1215.76 6.24 1.02 3.49 1.73 0.00
---------------------------------------------------------------------------
DUB273W01 Zone 10 horizon 1172.98 1180.92 7.94 0.27 2.66 0.74 0.03
---------------------------------------------------------------------------
(1) Lengths are core lengths and not true thicknesses.
(2) Intersection assays are a composite of assays calculated from interval
weighted assays over the intersection length.
Lalor Drill Results Summary
Drill hole DUB189W01 intersected 8.00 meters of 9.28 g/t gold and is
located approximately 200 meters down plunge to the north of gold zone
25.
"The results of drill hole DUB189W01 indicate the significant
exploration potential for additional gold mineralization at Lalor and
raise the possibility of discovering new gold zones and extending
existing zones," said Cashel Meagher, HudBay's vice president, exploration. "We will continue to aggressively explore at Lalor into 2011."
HudBay confirmed the continuity of the copper-gold zone with the 5.63
meter intersection of 13.05 g/t gold and 5.72% copper in drill hole
DUB270W02. In addition, DUB270W1 (5.56 meters of 2.88 g/t gold and 1.62%
copper) confirms the copper-gold zone remains open down plunge and
extends the copper-gold zone by 75 meters from the previously-reported
DUB270. Drill hole DUB274 is targeted 75 meters down plunge from
DUB270W1 to determine whether the copper-gold zone continues beyond that
point.
Reed Lake Joint Venture Exploration Results
Two drills are currently operating on site at the Reed Lake
deposit. One drill is conducting in-fill drilling in preparation for a
National Instrument 43-101 ("NI 43-101") mineral resource estimate,
which is expected to be completed in the first quarter of 2011. A second
drill is drilling deeper exploration holes down plunge to the west of
the deposit. Drill hole RLD-015 intersected 10.09 meters of massive
sulphide in the zone 10 horizon, which assayed 0.67 g/t Au, 5.20 g/t Ag,
2.39% Cu and 0.23% Zn. This massive sulphide mineralization indicates
the zone remains open down plunge and up plunge toward the main deposit.
Pursuant to a joint venture agreement with VMS Ventures Inc. (TSX VENTURE: VMS) ("VMS"), HudBay has a 70% interest and VMS has a 30% interest in the Reed Lake deposit, near Snow Lake, Manitoba.
The parties have also entered into four option agreements which grant
HudBay the right to earn a 70% joint venture interest in the properties
held by VMS adjacent to the Reed Lake property.
2011 HudBay Exploration Program Review
In order to develop a better understanding of the company's exploration
program for 2011, Mr. Meagher will lead an exploration update, which
will be webcast live on December 15, 2010 at 12 p.m. ET on HudBay's website at www.hudbayminerals.com. Mr. Meagher will be joined by Kelly Gilmore, chief exploration geologist, and Craig Taylor, manager, exploration. David Bryson,
senior vice president and chief financial officer, will also discuss
HudBay's financial disclosure, guidance and insights to facilitate the
modelling of HudBay's financial results. Sell-side analysts and their
associates, institutional equity salespeople and institutional investors
are invited to RSVP to [email protected]
or (416) 362-8428 to attend this event in person.
Mines
2011 Production Guidance 777 Trout Lake Chisel North
-------------------------------------
Ore Mined Tonnes 1,490,000 450,000 260,000
Grades
Zinc % 4.2 2.8 6.1
Copper % 2.8 1.8 0.5(1)
Gold g/t 1.9 - -
Silver g/t 25.3 - -
Unit Operating Costs(2) C$/tonne $37-41 $70-86 $80-100
(1)The 260,000 tonnes of forecast production from the Chisel North Mine is
anticipated to be comprised of, 206,000 tonnes of zinc ore at 7.5% zinc to
be processed at HudBay's Snow Lake concentrator, and 54,000 tonnes of
copper/gold ore to be processed at the Flin Flon concentrator. The expected
grade for the copper/gold ore is 2.4 g/t Au, 27 g/t Ag, 1.6% Cu and 1.2% Zn.
(2) Forecast unit operating costs are calculated on the same basis as
reported unit operating costs in HudBay's quarterly and annual management's
discussion and analysis. For a reconciliation of the costs that are included
in unit operating costs to total operating costs in accordance with GAAP,
refer to the Non-GAAP Detailed Operating Expenses table in HudBay's MD&A for
the nine months ended September 30, 2010.
Strong production is expected again in 2011 from HudBay's flagship 777
mine. Zinc and gold grades are expected to be somewhat lower than
reserve grades at 777 and copper grades at 777 are expected to be higher
than reserve grades mainly due to the areas planned for mining during
2011. Operating costs are expected to be similar to costs experienced in
the past several years. Costs in the first and fourth quarters are
expected to be higher due to additional heating and other seasonal
costs.
With the Trout Lake and Chisel North mines nearing completion of mined reserves, mining is expected to continue to be challenging. Closure of the Trout Lake
mine is expected in late 2011 once the deposit is exhausted. Some
copper ore is expected to be mined at Chisel North in 2011, which will
be transported to the Flin Flon
concentrator for processing. Unit operating costs are expected to
remain high due to the complex nature of these late-stage mining
operations and reduced cost capitalization given the short remaining
mine life.
Grades in any particular quarter may vary from the annual guidance above
based on the areas mined in that quarter. Costs in any particular
quarter can also vary from the annual guidance above based on a variety
of factors including the scheduling of maintenance events and seasonal
heating requirements.
Flin Flon and Snow Lake Concentrators
2011 Guidance Flin Flon Snow Lake
------------------------------
Ore Milled Tonnes 2,000,000 200,000
Recoveries
Zinc % 83% 95%
Copper % 93% -
Gold % 69% -
Unit Operating Costs(1) C$/tonne $11-13 $25-29
(1)Forecast unit operating costs are calculated on the same basis as
reported unit operating costs in HudBay's quarterly and annual management's
discussion and analysis. For a reconciliation of the costs that are included
in unit operating costs to total operating costs in accordance with GAAP,
refer to the Non-GAAP Detailed Operating Expenses table in HudBay's MD&A for
the nine months ended September 30, 2010.
Ore milled at the Flin Flon concentrator is expected to be somewhat lower than in 2010 due to reduced production from the Trout Lake mine. Recoveries are expected to be consistent with recent experience. Unit operating costs at the Flin Flon
concentrator are expected to be somewhat higher than in 2010 due to a
combination of reduced throughput and higher cost allocations following
closure of the copper smelter in 2010. Operations at the Snow Lake
concentrator reflect a full year of ore feed from the Chisel North
mine. Costs for the Snow Lake Concentrator include the cost to truck
concentrates from Snow Lake to Flin Flon.
Costs in any particular quarter can also vary from the annual guidance
above based on a variety of factors including the scheduling of
maintenance events and seasonal heating requirements.
Flin Flon Zinc Plant
2011 Guidance
Domestic zinc concentrate treated tonnes 155,000
Purchased zinc concentrate treated tonnes 65,000
---------------------------------------------------------------------------
Total zinc concentrate treated tonnes 220,000
Recovery % 97%
Zinc Produced tonnes 115,000
Unit Operating Costs(1) C$/lb $0.31-0.35
(1)Forecast unit operating costs are calculated on the same basis as
reported unit operating costs in HudBay's quarterly and annual management's
discussion and analysis. For a reconciliation of the costs that are included
in unit operating costs to total operating costs in accordance with GAAP,
refer to the Non-GAAP Detailed Operating Expenses table in HudBay's MD&A for
the nine months ended September 30, 2010.
HudBay's domestic zinc concentrate production in 2011 is expected to
supply approximately 70% of the plant's capacity. An additional 65,000
tonnes of zinc concentrate is expected to be purchased from third
parties, of which commitments to purchase 50,000 tonnes are already in
place.
Operating costs at the zinc plant are expected to be similar to 2010
levels, as higher cost allocations in 2011 following the copper smelter
closure offset costs incurred in the second quarter of 2010 during the
biennial maintenance shutdown. Costs in any particular quarter can also
vary from the annual guidance above based on a variety of factors
including the scheduling of maintenance events and seasonal heating
requirements.
Lalor Intercept Coordinate Location Table
---------------------------------------------------------------------------
From To East(1) North(1) Depth(1)
DDH (meters) (meters) (meters) (meters) (meters)
---------------------------------------------------------------------------
DUB189W01 1197.00 1205.00 426660.8 6081676.8 1157.2
---------------------------------------------------------------------------
---------------------------------------------------------------------------
DUB269 1504.30 1505.90 426576.4 6081657.9 1501.1
---------------------------------------------------------------------------
---------------------------------------------------------------------------
DUB270W01 1369.71 1375.27 426700.5 6081886.4 1329.2
---------------------------------------------------------------------------
---------------------------------------------------------------------------
DUB270W02 1380.87 1386.50 426742.9 6081701.8 1325.4
---------------------------------------------------------------------------
1445.75 1447.23 426729.3 6081682.9 1383.7
---------------------------------------------------------------------------
---------------------------------------------------------------------------
DUB271 1150.13 1158.00 427191.6 6081427.0 1143.8
---------------------------------------------------------------------------
---------------------------------------------------------------------------
DUB273 1209.52 1215.76 427164.2 6081569.6 1202.0
---------------------------------------------------------------------------
---------------------------------------------------------------------------
DUB273W01 1172.98 1180.92 427124.0 6081561.8 1162.6
---------------------------------------------------------------------------
(1) Coordinates are stated in UTM NAD 83 Zone 14
For additional detail on the Lalor deposit, see the company's NI 43-101
technical report entitled, "Technical Report, Lalor Deposit, Snow Lake, Manitoba Canada," dated October 8, 2009 and HudBay's August 4, 2010
news release, which contains an updated mineral resource estimate for
the base metal zone and part of the gold zone and conceptual estimates
of the tonnage and grade of the remaining gold zone and copper-gold
zone. These documents are available at www.sedar.com.
Reed Lake Intercept Location
-- Collar coordinates 6048886.7 N 393573.2 E 299.4 EL coordinates are
stated in UTM NAD 83 Zone 14
-- Intercept coordinates 6048884.2 N 393578.9 E -231.4 EL
Quality Assurance and Quality Control
Exploration core drilling was NQ size. The core was logged and
mineralized intersections were marked for sampling and assaying by
geologists and geotechnicians employed by HudBay's Hudson Bay Exploration and Development Company Limited (HBED) subsidiary.
The marked intersections or intervals were sawn in half by a diamond saw
and one half of the core was placed in plastic bags and tagged with
unique sample numbers, while the second half was returned to the core
box and stored. Each bagged core sample was transported to HudBay's Hudson Bay Mining and Smelting Co., Limited (HBMS) subsidiary's assay laboratory in Flin Flon, Manitoba where it was dried, crushed and pulverized and a 250-gram sample was prepared for assaying at Acme Analytical Laboratories Ltd. (Acme), an independent company in Vancouver, B.C.,
or the HBMS assay laboratory. From each 250 gram sample 0.25 grams was
removed and leached in aqua regia and analyzed by ICP-AES for Ag, Cu,
Zn, As, Pb, Ni and Fe. Also from the 250 gram
sample, 30 grams was removed for gold determination by fire assaying
with an ICP-AES or gravimetric finish at the Acme laboratory or an
Atomic Absorption or gravimetric finish at the HBMS laboratory.
Assaying integrity is monitored internally with a quality control
program, which includes the use of assay sample standards, blanks,
duplicates and repeats and externally through national and international
programs. In addition, within each group of 20 core samples, one core
sample has a second 250 gram split collected that was check assayed at a
different laboratory, either the HBMS laboratory in Flin Flon or at the Acme laboratory in Vancouver, B.C. This news release provides core lengths. True widths are not provided.
Where metal assays are provided for intersections they are either a
single assay of a sample of the entire intersection length or a
composite of assays calculated from interval weighted assays over the
intersection length.
Qualified Person
The scientific and technical information contained in this news release
under the headings "Lalor Project Exploration Drill Results" and "Reed
Lake Joint Venture Exploration Results" was prepared by or under the
supervision of Kelly Gilmore, B.Sc. P. Geo., Chief
Exploration Geologist with HBED, who is a Qualified Person within the
meaning of NI 43-101, with the ability and authority to verify the
authenticity and validity of the data.
Forward-Looking Information
This news release contains "forward-looking information" within the
meaning of applicable securities laws. Forward-looking information
includes but is not limited to information concerning the company's
ability to meet its estimates of capital and operating costs, production
guidance, exploration budgets, the ability to achieve continued
exploration success at Lalor and realize growth opportunities and the
company's strategies and future prospects. 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", "understands" or "does not anticipate", or "believes" or
variations of such words and phrases or statements that certain actions,
events or results "will", "may", "could", "would", "might", or "will be
taken", "occur", or "be achieved".
Forward-looking information is based on the views, opinions, intentions
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 anticipated or projected in the
forward-looking information (including the actions of other parties who
have agreed to do certain things and the approval of certain regulatory
bodies).
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 or events to vary
materially from results or events anticipated by such forward-looking
information include the ability to develop and operate the Lalor project
on an economic basis, risks associated with the mining industry such as
economic factors (including costs of construction materials, future
commodity prices, currency fluctuations and energy prices), failure of
plant, equipment, processes and transportation services to operate as
anticipated, including new and upgraded facilities at Lalor, dependence
on key personnel, employee relations and availability of equipment and
skilled personnel, environmental risks, government regulation, actual
results of current exploration activities,
possible variations in ore grade, dilution or recovery rates, permitting
timelines, capital expenditures, reclamation activities, land titles,
and social and political developments and other risks of the mining
industry, as well as those risk factors discussed in the company's
Annual Information Form dated March 31, 2010, which risks may cause actual results to differ materially from any forward-looking statement.
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, or to comment on analyses, expectations or
statements made by third parties in respect of HudBay, its financial or
operating results or its securities. The reader is cautioned not to
place undue reliance on forward-looking information.
HudBay Minerals Inc.
HudBay Minerals Inc. (TSX: HBM)(NYSE: HBM) is a Canadian integrated mining company with assets in North and Central America
principally focused on the discovery, production and marketing of
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.
(HBM-G)
Contacts:
HudBay Minerals Inc.
John Vincic, Vice President, Investor Relations
and Corporate Communications
(416) 362-0615
(416) 362-7844 (FAX)
[email protected]
www.hudbayminerals.com
Source: HudBay Minerals Inc.
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