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TORONTO, ONTARIO--(Marketwire - Dec. 13, 2010) - 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 investor.relations@hudbayminerals.com 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)
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