Highlights
- Lalor tradeoff studies support an enhanced
production plan made possible by the construction of a new concentrator
and paste backfill plant; these improvements are expected to increase
HudBay's overall capital expenditure investment by $144 million for a
total of $704 million, which includes approximately $120 million spent
to date
- Operating costs per tonne expected to decrease by 35% to
$52 per tonne due to economies of scale and other efficiencies as the
new concentrator is expected to enable a 29% increase in ore milling
capacity to 4,500 tonnes per day
TORONTO, ONTARIO -- (MARKET WIRE) -- 07/05/11 --
HudBay Minerals Inc. ("HudBay", the "company")
(TSX: HBM)(NYSE: HBM) today announced the results of its Lalor
optimization study, which supports an incremental capital expenditure
investment of $144 million to build a new concentrator at Lalor instead of refurbishing the company's existing Snow Lake concentrator.
"Because of the high quality of the Lalor deposit, we pursued a fast-track commitment to Lalor in August 2010, which was based on the robust economics that were achievable from refurbishing our existing concentrator," said David Garofalo,
president and chief executive officer. "However, Lalor is a large
enough deposit to support a new, dedicated concentrator, and we are
pleased to commit to a further investment in the future of our Manitoba
operations. The new concentrator, with a higher production rate and
related efficiencies, together with a paste backfill plant, is expected
to allow for an extended mine life and enhance the economics of the
Lalor project."
Lalor Concentrator Expected to Provide Significant Economies of Scale
As originally planned, the company's mine plan for Lalor contemplates an
initial phase of production commencing in the second quarter of 2012
from the base metal zones following completion of the ramp from the
company's Chisel North mine. Up to 1,200 tonnes per day of ore are
expected to be extracted via Lalor's ventilation shaft. This initial
production will replace production from the Chisel North mine, which is
expected to reach the end of its mine life in 2012. Construction of the
new 4,500 tonne per day concentrator, adjacent to the previously planned
985 meter production shaft, is expected to commence in early 2013 and
is scheduled for completion in late 2014 to coincide with the completion
of the production shaft.
Including the new concentrator, the total estimated project cost for Lalor is $704 million, of which approximately $120 million has been spent to date. The capital spending is expected to occur over the 2011-2014 period as follows:
2011 $140 million
2012 $190 million
2013 $185 million
2014 $130 million
As a result of the decision to build a new concentrator and paste
backfill plant, certain assumptions in the company's preliminary
economic assessment respecting Lalor, as disclosed in its August 4, 2010 news release, have changed as follows:
-- Total onsite operating costs are expected to average $52 per tonne ($36
per tonne mining and $16 per tonne milling) over the mine life
-- Approximate annual ore production at Lalor is expected as follows:
2012 100,000 tonnes
2013 320,000 tonnes
2014 540,000 tonnes
2015 1,040,000 tonnes
2016 1,220,000 tonnes
2017 1,440,000 tonnes
2018 onwards 1,625,000 tonnes
-- Average annual sustaining capital expenditures of approximately $22
million, assuming a mine life extending to beyond 2030
HudBay is optimistic that unclassified material from the gold zone and
copper-gold zone will be upgraded into a resource following the
completion of exploration from underground drilling platforms that will
become available following completion of the ramp from Chisel North mine
and that such material will enable the extension of the mine life
beyond 2030.
The preliminary economic assessment prepared by HudBay is preliminary in
nature. It includes inferred mineral resources that are considered too
speculative geologically to have the economic considerations applied
that would enable them to be classified as mineral reserves and there is
no certainty that the preliminary economic assessment will be realized.
Among the risks associated with the decision to commence production at
Lalor is the possibility that the gold zone and copper-gold zone will
not be economically or technically viable and that construction
timetables and cost estimates may not be realized. Mineral resources
that are not mineral reserves do not have demonstrated economic
viability.
Lalor Project
Probable Mineral Reserves - January 1, 2011
----------------------------------------------------------------------------
Category Tonnes Au (g/t) Ag (g/t) Cu (%) Zn (%)
----------------------------------------------------------------------------
Probable 10,525,000 1.55 21.00 0.64 8.31
----------------------------------------------------------------------------
Summary of Mineral Resource - May 1, 2010
----------------------------------------------------------------------------
Zone Category Tonnes Au (g/t) Ag (g/t) Cu (%) Zn (%)
----------------------------------------------------------------------------
Base Metal Indicated 2,552,000 1.04 27.07 0.29 5.72
Base Metal Inferred 4,800,000 1.3 26.2 0.58 9.25
Gold Zone Inferred 5,400,000 4.7 30.6 0.47 0.46
----------------------------------------------------------------------------
Summary of Potential Conceptual Estimate - May 1, 2010
---------------------------------------------------------------------------
Zone Category Tonnes (M) Au (g/t) Ag (g/t) Cu (%) Zn (%)
---------------------------------------------------------------------------
Gold Zone Potential 5.1 - 6.1 4.3 - 5.1 23 - 27 0.2 - 0.4 0.2 - 0.4
Copper-
Gold
Zone Potential 1.8 - 2.2 5.8 - 7.0 18 - 22 3.2 - 4.0 0.2 - 0.3
---------------------------------------------------------------------------
The potential quantity and grade of the gold zone and copper-gold zone
are conceptual in nature. There has been insufficient exploration to
define a mineral resource and it is uncertain if further exploration
will result in the targets being delineated as mineral resources.
Mineral resources and potential conceptual estimates are exclusive of
and additional to stated mineral reserves.
While metallurgical characterization is on-going, concentrator
recoveries are currently expected to be 95% zinc, 86% copper, 66% gold,
and 60% silver. Construction of a gold plant, which could significantly
enhance precious metal recoveries, is still under consideration.
Metallurgical test work is ongoing and a decision is expected well in
advance of the mining of higher grade gold mineralization in the Lalor
mine plan.
Lalor Mine Development Proceeding on Schedule
The Lalor project's development and site construction are proceeding on
schedule. Initial production from the 3,200 meter access ramp is
scheduled in the second quarter of 2012 and full production from the 985
meter production shaft is anticipated in late 2014. The company
continues to make significant progress on the planned access ramp at the
Lalor project, having advanced approximately 2,300 meters from the
Chisel North mine to date. The ramp is planned to intersect the base of
the ventilation shaft that is currently under construction by the first
quarter of 2012. Once completed, the ramp will enable HudBay to
establish an underground drill platform to better define the gold and
copper-gold zones.
For additional detail on the Lalor project please refer to the NI 43-101
compliant technical report for Lalor entitled "Technical Report for
Lalor Deposit, Snow Lake, Manitoba, Canada" dated October 8, 2009, (the "Lalor Technical Report") and the company's Annual Information Form for the year ended December 31, 2010, available at www.sedar.com.
Conference Call and Webcast
Date: Tuesday, July 5, 2011
Time: 4:00 p.m. ET
Webcast: www.hudbayminerals.com
Dial in: 416-644-3415 or 800-814-4860
Replay: 416-640-1917 or 877-289-8525
Replay Passcode: 4452640#
The conference call replay will be available until midnight (Eastern Time) on July 14, 2011. An archived audio webcast of the call also will be available on HudBay's website.
HudBay Minerals Inc.
HudBay Minerals Inc. (TSX: HBM)(NYSE: HBM) is a Canadian integrated mining company with assets in North, Central and South America
principally focused on the discovery, production and marketing of base
and precious 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.
Qualified Person
The technical and scientific information in this news release has been approved by Robert Carter, P.Eng., superintendant, mines technical services for HudBay. Mr. Carter is a "qualified person" for the purposes of National Instrument 43-101 Standards of Disclosure for Mineral Projects.
Quality Assurance and Quality Control
The scientific and technical information contained in this news release
was verified in the manner described in the Lalor Technical Report.
Forward-Looking Information
This news release contains "forward-looking information" within the meaning of applicable Canadian and United States
securities legislation. Forward-looking information includes, but is
not limited to, information with respect to the company's ability to
develop its Lalor project, operating and capital costs, mine life
assumptions, the ability of management to execute on key strategic and
operational objectives and meet production forecasts, exploration
expenditures and activities and the possible success of such exploration
activities, and mineral pricing. Often, but not always, forward-looking
information can be identified by the use of forward-looking words like
"plans", "expects", or "does not expect", "is expected", "budget",
"scheduled", "estimates", "forecasts", "intends", "understands",
"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 as of the date
such information is provided and is subject to known and unknown risks,
uncertainties and other factors that may cause the actual results, level
of activity, performance or achievements of HudBay to be materially
different from those expressed or implied by such forward-looking
information, including the ability to develop and operate the Lalor
project on an economic basis and in accordance with applicable
timelines, geological and technical conditions, risks associated with
the mining industry such as economic factors (including future commodity
prices, currency fluctuations and energy prices), failure of
plant, equipment, processes and transportation services to operate as
anticipated, dependence on key personnel and employee relations,
environmental risks, government regulation, actual results of current
exploration activities, possible variations in ore grade 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 or
referred to in HudBay's Annual Information Form under the heading "Risk
Factors".
Although HudBay has attempted to identify important factors that could
cause actual results to differ materially from those contained in
forward-looking information, there may be other factors that cause
results not to be as anticipated, estimated or intended. In addition,
certain forward-looking information relate to prospective results of
operations, financial position or cash flows based on assumptions about
future economic conditions or courses of action.
Such information is provided in attempt to assist the reader in
identifying trends and anticipated events that may affect HudBay's
business, results of operations and financial position and may not be
appropriate for other purposes. 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. Accordingly, readers should not place undue reliance
on forward-looking information. HudBay does not undertake to update any
forward-looking information, 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.
Note to United States Investors
Information concerning our mineral properties has been prepared in
accordance with the requirements of Canadian securities laws, which
differ in material respects from the requirements of SEC Industry Guide
7. Under Securities and Exchange Commission (the "SEC")
Industry Guide 7, mineralization may not be classified as a "reserve"
unless the determination has been made that the mineralization could be
economically and legally produced or extracted at the time of the
reserve determination, and the SEC does not recognize the
reporting of mineral deposits which do not meet the United States
Industry Guide 7 definition of "Reserve". In accordance with National
Instrument 43-101 - Standards of Disclosure for Mineral Projects ("NI
43-101") of the Canadian Securities Administrators, the terms "mineral
reserve", "proven mineral reserve", "probable mineral reserve", "mineral
resource", "measured mineral resource", "indicated mineral resource" and
"inferred mineral resource" are defined in the Canadian Institute of Mining, Metallurgy and Petroleum (the "CIM") Definition Standards for Mineral Resources and Mineral Reserves adopted by the CIM Council on December 11, 2005.
While the terms "mineral resource", "measured mineral resource",
"indicated mineral resource" and "inferred mineral resource" are
recognized and required by NI 43-101, the SEC does not
recognize them. You are cautioned that, except for that portion of
mineral resources classified as mineral reserves, mineral resources do
not have demonstrated economic value. Inferred mineral resources have a
high degree of uncertainty as to their existence and as to whether they
can be economically or legally mined. Under Canadian securities laws,
estimates of
inferred mineral resources may not form the basis of an economic
analysis. It cannot be assumed that all or any part of an inferred
mineral resource will ever be upgraded to a higher category.
Therefore, you are cautioned not to assume that all or any part of an
inferred mineral resource exists, that it can be economically or legally
mined, or that it will ever be upgraded to a higher category. Likewise,
you are cautioned not to assume that all or any part of measured or
indicated mineral resources will ever be upgraded into mineral reserves.
You are urged to consider closely the disclosure on the technical terms
in Schedule A "Glossary of Mining Terms" of HudBay's annual information
form for the fiscal year ended December 31, 2010, available on SEDAR at www.sedar.com and incorporated by reference as Exhibit 99.1 in the Offeror's Form 40-F filed on March 31, 2011 (File No. 001-34244).
(HBM-G)
Contacts:
HudBay Minerals Inc.
John Vincic, Vice President, Investor Relations
and Corporate Communications
(416) 362 0615
john.vincic@hudbayminerals.com
Source: HudBay Minerals Inc.
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