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TORONTO,
ONTARIO--(Marketwire - March 31, 2011) - HudBay Minerals Inc.
("HudBay") (TSX:HBM)(NYSE:HBM) today announced a 288%
increase to its overall copper equivalent mineral reserves to 3.1
million tonnes. Included in these reserves is 3.0 million ounces of
gold equivalent reserves. In addition, the Company has 0.7 million
tonnes of measured and indicated copper equivalent mineral resources
and 1.6 million tonnes of inferred copper equivalent mineral resources.
Included in those categories are gold equivalent resources of 1.1
million ounces and 1.9 million ounces, respectively.
On a per share basis, HudBay's overall copper equivalent mineral
reserves grew to 39.2 pounds per share compared to 11.3 pounds per
share in 2010. Overall copper equivalent mineral reserves and resources
grew to 68.1 pounds per share compared to 45.8 pounds per share in
2010.
Notes: (1) Overall copper equivalent and gold equivalent are based on estimated proven and probable reserves at Constancia, 777, Lalor, Chisel North and Trout Lake and do not include nickel reserves at the Fenix project. Copper equivalent calculated using a Cu price of US$2.50/lb, Zn price of US$0.95/lb, Au price of US$900/oz, Ag price of US$15.00/oz, Pb price of US$0.70/lb and Mo price of US$12.00/lb. Per share metrics for 2010 are based on 153.9M basic shares outstanding as at Dec. 31, 2009. Per share metrics for 2011 are based on 149.4M basic shares outstanding as at Dec. 31, 2010 plus 23.4M shares issued to complete the Norsemont Mining acquisition. Dates used for comparison of HudBay's reserves and resources in 2010 and 2011 are as at January 1, 2010 and March 31, 2011, respectively. (2) Gold equivalent reserves include silver converted to gold at ratio of 60:1.
"As promised, we have
systematically executed on our objective of growing our mineral
exposure on a per share basis through accretive acquisitions and
exploration, which we believe will lead to a substantial value
re-rating of HudBay over the course of this year," said David
Garofalo, president and CEO. "Much of this growth was driven by
the value-accretive acquisition of the Constancia copper project in
Peru, where we plan to initiate procurement and engineering activities,
update the resource model and conduct a pit optimization study over the
course of the year to enable us to make a formal construction decision
in early 2012. With one of the largest exploration budgets in our
history in 2011, which has now increased to approximately $70 million,
we expect to continue growing our reserves and resources on our
existing properties."
---------------------------------------------------------------------------- Cu Equivalent(2)(000 Project Category(1) tonnes) ---------------------------- Jan. 1, 2011 2010 Variance ---------------------------------------------------------------------------- Constancia Proven & Probable 1,865 - 1,865 Inferred 72 - 72 777 Proven & Probable 669 735 (66) Inferred 62 58 4 Lalor Proven & Probable 505 - 505 Measured & Indicated 83 617 (534) Inferred 423 255 168 Chisel North Proven & Probable 12 17 (5) Inferred 1 2 (1) Trout Lake Proven & Probable 20 39 (19) Inferred - 3 (3) Reed (70%)(3) Measured & Indicated 94 - 94 Inferred 6 - 6 Lost (67.5%)(3) Measured & Indicated 13 - 13 Inferred 2 - 2 Tom & Jason Measured & Indicated 277 277 - Inferred 938 938 - Back Forty (65%)(3) Measured & Indicated 246 227 19 Inferred 46 30 16 ---------------------------------------------------------------------------- Total Proven & Probable 3,071 791 2,280 Measured & Indicated 713 1,121 (408) Inferred 1,550 1,286 264 ----------------------------------------------------------------------------
Notes: (1) Mineral resources are exclusive of and additional to stated mineral reserves (2) Copper equivalent metal calculated using a copper price of US$2.50 per pound, zinc price of US$0.95 per pound, gold price of US$900 per ounce, silver price of US$15.00 per ounce, lead price of US$0.70 per pound and molybdenum price of US$12.00 per pound (3) Values shown represent the proportion of overall metal HudBay is or may be entitled to pursuant to the applicable joint venture/option agreement ---------------------------------------------------------------------------- Project Category(1) Gold Equivalent(2)(000 oz) ---------------------------- Jan. 1, 2011 2010 Variance ---------------------------------------------------------------------------- Constancia(3) Proven & Probable 1,247 - 1,247 Inferred 68 - 68 777 Proven & Probable 1,032 1,112 (80) Inferred 110 105 5 Lalor(4) Proven & Probable 643 - 643 Measured & Indicated 122 792 (670) Inferred 1,173 293 880 Chisel North Proven & Probable 9 - 9 Inferred - - - Trout Lake Proven & Probable 31 41 (10) Inferred - 3 (3) Reed (70%)(5) Measured & Indicated 44 - 44 Inferred 2 - 2 Lost (67.5%)(5) Measured & Indicated 12 - 12 Inferred 2 - 2 Tom & Jason(3) Measured & Indicated 195 195 - Inferred 445 445 - Back Forty (65%)(5) Measured & Indicated 710 470 240 Inferred 121 88 33 ---------------------------------------------------------------------------- Total Proven & Probable 2,962 1,153 1,809 Measured & Indicated 1,083 1,457 (374) Inferred 1,921 934 987 ---------------------------------------------------------------------------- Notes: (1) Mineral resources are exclusive of and additional to stated mineral reserves (2) Gold equivalent reserves include silver converted to gold at ratio of 60:1 (3) Principal credits are from silver (4) Excludes gold zone and copper-gold zone conceptual estimates (5) Values shown represent the proportion of overall metal HudBay is or may be entitled to pursuant to the applicable joint venture/option agreement
Constancia 2011
Pre-Construction Program of US$116 Million Underway
HudBay today announced a 2011 pre-construction program for the
Constancia copper project in Peru of US$116 million. The program
contemplates early equipment procurement for long lead items, a
resource model update, metallurgy review and pit optimization study,
geotechnical and condemnation drilling and a US$9 million exploration
program. Amounts budgeted for key items are set forth in the following
table:
---------------------------------------------------------------------------- Constancia 2011 Program Budget (US$ Millions) ---------------------------------------------------------------------------- Environmental, Permitting, Land 12 General and Administrative 12 Engineering 10 Preliminary Construction Estimate 27 Preliminary Procurement Estimate 46 Exploration 9 ---------------------------------------------------------------------------- Total 116 ----------------------------------------------------------------------------
The pre-construction program
is based on the timeline of Norsemont Mining Inc.'s feasibility study
optimization ("FSO") released on February 21, 2011. The FSO
outlined an increase in reserves using new long-term metal pricing and
increasing and sustaining production throughput in the processing plant
in the later years of the project.
Constancia Project Mineral Reserve February 21, 2011
---------------------------------------------------------------------------- Category Tonnes Au (g/t) Ag (g/t) Cu (%) Mo (%) ---------------------------------------------------------------------------- Proven 195,000,000 0.04 3.49 0.42 0.0117 Probable 177,000,000 0.05 3.66 0.37 0.0092 ---------------------------------------------------------------------------- Total Reserves 372,000,000 0.05 3.57 0.39 0.0105 ----------------------------------------------------------------------------
A technical review of the
FSO is currently being carried out in conjunction with a number of
initiatives from both HudBay's earlier due diligence review and the
requirements of the existing FSO project schedule, which currently
remains the project base case. HudBay expects construction to begin in
early 2012, leading toward the first full year of production by 2016.
This work includes items such as additional resource modelling,
geotechnical and hydrogeological studies along with further
condemnation drilling.
Actions are also underway to move the project forward into the next
phase of engineering and to prepare for project construction. To
maintain the FSO schedule, procurement of long lead items such as the
grinding mills and mining fleet is expected to commence by the end of
2011.
2011 Constancia Exploration Program Provides Opportunities for Mine
Optimization
As part of the US$116 million pre-construction program, HudBay will
also invest US$9 million toward exploration at the Constancia project
in 2011. Exploration will continue to focus on Pampacancha and
Chilloroya South, two satellite skarn deposits outside of the main
resource area. Drilling at Pampacancha and Chilloroya South is intended
to enable the definition of a high grade, near surface mineral deposit,
which may provide mine life optimization opportunities. Results are
being compiled and drill results from Pampacancha are expected to be
released in late April 2011.
It is expected that a preliminary resource for both areas will be
completed in the third quarter of 2011.
HudBay currently has a land position of approximately 22,000 hectares
in Peru. In addition to drilling in the area around Constancia, work
will be carried out to complete geological mapping, geochemical
sampling and geophysical surveys to identify drill-ready targets for
2012. It is expected that between two and four drills will be mobilized
at Constancia during the remainder of 2011 to explore and define the
known mineralization and to step out to test the extensions of the
zones as well as to conduct condemnation and geotechnical drilling.
"The area around Constancia is highly prospective and we believe
much of the area has been underexplored," said Cashel Meagher,
vice president, exploration at HudBay. "Our goal is to identify
areas of mineralization in the region over the course of 2011 to
provide us with potential new mine targets for the 2012 drill
campaign."
In-Mine Mineral Reserves - January 1, 2011
---------------------------------------------------------------------------- Category Tonnes Au (g/t) Ag (g/t) Cu (%) Zn (%) ---------------------------------------------------------------------------- 777 Proven 4,516,000 2.27 29.38 2.87 4.44 Probable 8,307,000 1.79 27.31 1.78 4.24 777 North Proven 81,000 1.61 26.52 0.68 4.89 Probable 449,000 1.44 21.48 1.09 3.31 Trout Lake Proven 409,000 2.06 9.66 2.10 3.53 Probable 36,000 1.17 1.01 2.18 1.43 Chisel North - Zinc Proven 164,000 - - - 8.77 Probable 56,000 - - - 10.60 Chisel North - Copper Probable 92,000 2.41 31.56 1.72 3.67 Total Proven 5,170,000 Total Probable 8,940,000 ---------------------------------------------------------------------------- Total Reserves 14,110,000 ----------------------------------------------------------------------------
In-Mine Inferred Mineral
Resources - January 1, 2011
---------------------------------------------------------------------------- Category Tonnes Au (g/t) Ag (g/t) Cu (%) Zn (%) ---------------------------------------------------------------------------- 777 Inferred 1,326,000 1.91 34.40 1.25 5.21 777 North Inferred 67,000 1.49 20.32 1.02 3.47 Chisel North - Zinc Inferred 28,000 - - - 6.44 Total Inferred 1,421,000 ----------------------------------------------------------------------------
The Chisel North and Trout
Lake mines are mature operations reaching the end of their mine lives
and little prospect exists for reserve or resource expansion. The
addition of the 777 North expansion will provide an incremental growth
opportunity for the 777 mining complex. This year will mark the first
year that a concentrated effort on exploration will be conducted from
underground at the 777 mine. Much of the drilling to date has been
focused on converting resources to reserves. Approximately 20,000
meters of underground exploration drilling will be concentrated on
identifying additional resources in the hanging wall and along strike
of the 777 deposit.
Lalor Project
Lalor 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 ----------------------------------------------------------------------------
The mineral reserves at
Lalor are estimated from the zinc-rich indicated mineral resource. The
reserves are supported by an updated pre-feasibility study completed by
HudBay in February 2011, which provides the basis for an economic
project, without relying on gold and copper-gold mineralization in the
inferred and potential conceptual estimate categories. The reserve
statement supports the robust nature of the project and provides the
economic justification for the development of the project. Further
conversion of resource to reserve at Lalor is unlikely to occur in 2011
with efforts principally focused on construction and exploration.
Construction efforts will focus on the completion of the access and
exploration ramp from Chisel North, excavation of the Lalor ventilation
raise and commencement of production shaft sinking.
Trade-off studies undertaken by the company indicate that the Lalor
orebody will support the construction of a new concentrator adjacent to
the production shaft. HudBay is continuing to evaluate options for the
capacity and flowsheet of a new concentrator, and expects to be in a
position to make a decision on whether to proceed with a new
concentrator and announce the results of its optimization efforts early
in the third quarter of 2011.
The ongoing next phase of project feasibility optimization work at
Lalor has the potential to bring additional mineral resources into the
mine plan, while the incremental investment associated with a new
concentrator adjacent to the production shaft could lead to higher
daily production levels along with other benefits including reduced
operating costs, higher gold recoveries in the plant and further
production rate scalability.
The primary catalyst for future conversion of reserves at Lalor will be
the establishment of underground exploration drill platforms from the
ramp. The ramp is anticipated to reach the ore zones by the first
quarter of 2012 to allow for underground diamond drilling to define the
mining lines for the base metal zones. The exploration platforms are
expected to be ready late 2012 and into 2013 for underground
delineation drilling.
Lalor Project - 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 ----------------------------------------------------------------------------
Lalor Project - Summary of
Potential Conceptual Estimate - May 1, 2010
---------------------------------------------------------------------------- Tonnes Zone Category (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 ----------------------------------------------------------------------------
Exploration efforts at Lalor
in 2011 will be focused on exploring the copper-gold zone down plunge,
establishing geophysical platforms proximate to the deposit, and
following up on existing geophysical anomalies. Three drills are
currently operating in and around the project.
Reed Copper Project
---------------------------------------------------------------------------- Category Tonnes Au (g/t) Ag (g/t) Cu (%) Zn (%) ---------------------------------------------------------------------------- Indicated 2,550,000 0.64 7.86 4.52 0.91 Inferred 170,000 0.38 4.55 4.26 0.52 ----------------------------------------------------------------------------
A NI 43-101 compliant
resource was announced today for the Reed copper project, which will
allow HudBay to complete a prefeasibility study. The project, in which
HudBay has a 70% joint venture interest, is a high-grade near surface
copper deposit that could be accessed via a ramp with the ore trucked
to the Flin Flon concentrator. Permitting and pre-feasibility efforts
will be conducted throughout 2011 with the expectation of a
construction decision by year-end.
Exploration at and around the Reed property will continue with efforts
in the immediate future concentrated on near deposit geophysical
anomalies as well as on completing required exploration on the adjacent
option properties, which HudBay is earning into from its joint venture
partner VMS Ventures Inc.
Back Forty Project - Summary of Mineral Resource - October 15, 2010
---------------------------------------------------------------------------- Category Tonnes Au (g/t) Ag (g/t) Cu (%) Zn (%) ---------------------------------------------------------------------------- Open Pit Measured 14,100,000 1.59 16.97 0.15 2.54 Indicated 2,100,000 1.53 32.80 0.41 1.17 Measured + Indicated 16,200,000 1.58 19.00 0.18 2.36 Inferred 1,400,000 1.40 32.89 0.62 1.00 ---------------------------------------------------------------------------- Underground Measured 800,000 1.67 25.83 0.24 3.45 Indicated 900,000 1.28 24.72 0.34 2.85 Measured + Indicated 1,700,000 1.46 25.23 0.29 3.13 Inferred 2,000,000 1.22 18.34 0.32 2.64 ---------------------------------------------------------------------------- Open Pit + Underground Measured + Indicated 17,900,000 1.57 19.6 0.19 2.44 Inferred 3,400,000 1.29 24.33 0.44 1.96 ----------------------------------------------------------------------------
Exploration work at the Back
Forty project with joint venture partner Aquila Resources Inc. in the
Upper Peninsula of northern Michigan continues with three drills currently
mobilized. The principal exploration targets will focus on the recently
reported high grade gold intercepts located at depth below the known
deposit and on recently identified surface and airborne geophysical
targets located within a kilometre east of the known deposit.
Exploration drilling is currently budgeted for $5 million and includes
the drilling of 25,000 meters. Exploration expenditures of $11 million
are earmarked for continuing with engineering studies supporting the
parallel pre-feasibility and permitting preparation requirements.
A significant increase in measured and indicated resource tonnage of
greater than 100% was realized in 2010. The resource shells were
expanded because of elevated metal prices, new drilling and new
geological interpretation.
"Our initial plans were to complete a pre-feasibility study for
the Back Forty project by the end of the third quarter of 2011,"
said Mr. Garofalo. "However, recent drilling success, which has
led to the discovery of high grade mineralization outside of the known
deposit, and the prospect of similar positive results in our current
drill program have justified a delay in our consideration of project
economics until we are better able to understand the magnitude of the
deposit."
Tom and Jason - Summary of Mineral Resource - May 24, 2007
---------------------------------------------------------------------------- Category Tonnes Zn (%) Pb (%) Ag (g/t) ---------------------------------------------------------------------------- Tom Indicated 4,980,000 6.64 4.36 47.77 Inferred 13,550,000 6.68 3.10 31.77 ---------------------------------------------------------------------------- Jason Indicated 1,450,000 5.25 7.42 86.68 Inferred 11,000,000 6.75 3.96 36.42 ----------------------------------------------------------------------------
HudBay is planning a 5,000
meter diamond drill program at its 100% owned Tom and Jason properties
in the Yukon. The program is intended to enable the upgrading of some
inferred resources to indicated and collecting of metallurgical
samples. HudBay intends to complete a preliminary economic assessment
on the project in early 2012.
"We are encouraged to see more exploration activity along the
Canol North Road in the Selwyn Basin of the Yukon, which supports
needed infrastructure improvements in the region," said Mr.
Meagher. "We have long believed in the quality and potential of
our Tom and Jason deposits and strong metals prices have allowed us to
make long-term price assumptions that we think will result in
attractive economics for this project."
Lost Property
---------------------------------------------------------------------------- Category Tonnes Au (g/t) Ag (g/t) Cu (%) Zn (%) ---------------------------------------------------------------------------- Indicated 411,000 1.0 20.0 1.8 6.1 Inferred 69,000 0.8 16.5 1.5 6.2 ----------------------------------------------------------------------------
An updated NI 43-101
compliant resource was announced today for the Lost property in the
Sherridon District in northern Manitoba, approximately 100 kilometres
from the company's existing Flin Flon operations. HudBay has the right
to earn up to a 67.5% joint venture interest in these properties from
Halo Resources Inc.
Efforts for the balance of the year will be concentrated on conducting
a pre-feasibility study to determine how the project fits with HudBay's
long-term production plans.
"The high grade and near surface deposit confirms our belief that
the Lost property has the potential to be a future source of feed for
our concentrator in Flin Flon," said Mr. Garofalo.
Fenix Project - Mineral Reserve Statement, January 1, 2011
---------------------------------------------------------------------------- Category Tonnes Ni (%) ---------------------------------------------------------------------------- Proven 7,800,000 2.03 Probable 28,400,000 1.81 ---------------------------------------------------------------------------- Total Reserves 36,200,000 1.86 ----------------------------------------------------------------------------
The January 1, 2011 mineral
reserve is based upon a recently completed feasibility study, which
contemplates a 27 year mine plan. The reserve represents a higher grade
than was contained in the previous feasibility study in 2006 that
contemplated 41.4 million tonnes reserve at 1.63% nickel over a 31 year
mine life. HudBay has begun the process to explore financing options
and identify a strategic partner for the project.
Early Stage Opportunities
HudBay holds minority equity positions in 14 junior exploration
companies, representing investments currently valued at approximately
$148 million with an aim to populate a pipeline of projects ready for
development following the construction of Lalor and Constancia.
HudBay's early stage opportunity pipeline consists of projects in
Canada, United States, Chile, Peru and Colombia. We are continuing to
evaluate new projects and potential investments to incorporate in our
portfolio.
Conference Call and Webcast
Date: Friday, April 1, 2011 Time: 12:30 p.m. ET Webcast: www.hudbayminerals.com Dial in: 416-644-3418 or 877-974-0448 Replay: 416-640-1917 or 877-289-8525 Replay Passcode: 4430167#
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
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.
Additional Information Concerning Mineral Reserve and Resource
Estimates
The reserve and resource estimates included in this news release were
prepared in accordance with NI 43-101 and the Canadian Institute on
Mining, Metallurgy and Petroleum CIM Standards on Mineral Resources and
Reserves: Definitions and Guidelines. Mineral reserves are not mineral
reserves and do not have demonstrated economic viability. Unless stated
elsewhere to the contrary, metals prices used for reserve and resource
estimates were: Au - US$900/oz; Ag - US$15.00/oz; Cu - US$2.50/lb; Zn -
US$1.00/lb with an exchange rate of 1.10 C$/US$.
Dates used for the comparison of HudBay's reserves and resources in
2010 and 2011 are as at January 1, 2010 and March 15, 2011,
respectively.
In-Mine Mineral Reserves and Resources
-- To estimate mineral reserves, measured and indicated mineral resources were first estimated in a 12-step process, which includes determination of the integrity and validation of the data collected, including confirmation of specific gravity, assay results and methods of data recording. The process also includes determining the appropriate geological model, selection of data and the application of statistical models including probability plots and restrictive kriging to establish continuity and model validation. The resultant estimates of measured and indicated mineral resources are then converted to proven and probable mineral reserves by the application of mining dilution and recovery, as well as the determination of economic viability using full cost analysis. Other factors such as depletion from production are applied as appropriate. -- Estimated inferred mineral resources within our mines were estimated by a similar 12-step process, used to estimate measured and indicated resources. The inferred mineral resources contained in our mines have had dilution and recovery applied and were economically tested using the same full cost analysis and long term metal prices as those used for the estimation of the mineral reserves.
Lalor
-- The updated prefeasibility study for Lalor includes a re-calculated mineral resource model incorporating the 2009/2010 winter diamond drilling program, detailed calculation of dilutions and recoveries per mining area, completion of trade off studies for mine backfill, mine ore haulage and milling options and paste backfill requirement, detailed capital and operating cost estimates for refurbishing the Snow Lake concentrator. -- The estimates of the tonnes and grade of the gold-zone and copper-gold zone are conceptual in nature and to date there has been insufficient exploration to define a mineral resource compliant with NI 43-101 and it is uncertain if further exploration will result in the target being delineated as a mineral resource. For additional detail relating to the Lalor mineral resource and conceptual estimates, refer to HudBay's press release dated August 4, 2010 entitled "HudBay Minerals Releases Second Quarter 2010 Results; Announces Production Decision at Lalor Project and Semi-Annual Dividend", available at www.sedar.com.
Back Forty
-- The cut-off grades are based on metal price assumptions of US$0.85 per pound zinc, US$2.05 per pound copper, US$0.59 per pound lead, US$866 per troy ounce gold and US$13.95 per troy ounce silver. Metallurgical recoveries were determined and used for each of the metallurgical domains determined for the deposit. For additional detail relating to the Back Forty mineral resource estimate see "Technical Report, Back Forty Deposit, Menominee County, Michigan" as filed on SEDAR by Aquila Resources Inc. on November 29, 2010.
Tom and Jason
-- Metal prices used (US$0.57/lb Zn, US$0.35/lb Pb and US$7.00/oz Ag) and a gross dollar value cut-off of US$50/tonne. Ag values were capped at 550 g/t. For additional detail relating to the Tom/Jason mineral resource estimates see "Technical Report on the Tom and Jason Deposits, Yukon territory, Canada" dated May 24 2007, available at www.sedar.com.
Reed
-- Mineral resources are estimated at a CUEQ cut-off of 1.5% (CUEQ% equals Cu% + Zn% x 0.211 + Au g/t x 0.359 + Ag g/t x 0.006) and a minimum two metre core length. Metal recovery assumptions of 65% gold, 60% silver, 95% copper and 50% zinc were used for the estimation of CUEQ. -- Specific gravity measurements were taken on a portion of the samples, where actual measurements were not available either stoichiometric values were calculated or average SG values were used. -- Drill holes incorporated in this resource as at March 15, 2011.
Lost
-- Mineral resources are estimated at a ZNEQ cut-off of 4% (ZNEQ% equals Zn% + Cu% x 2.771 + Au g/t x 1.028 + Ag g/t x 0.015) and a minimum two metre core length. Metal recovery assumptions of 65% gold, 57% silver, 92% copper and 83% zinc were used for the estimation of ZNEQ. -- Specific gravity measurements were taken on a portion of the samples, where actual measurements were not available average SG values were used. -- Drill holes incorporated in this resource as at December 31, 2010.
Fenix
-- The reserve has been appropriately modified to account for dilution, contamination, ore losses, metallurgical process recovery, and economic evaluation by means of resource optimisation and the scheduling of phased pits in order to meet processing requirements and blending constraints. The reserve also accounts for relevant economic, marketing, legal, environment, socio-economic and government factors. -- Mining dilution, grade cut-offs and minimum thicknesses were pre calculated into the resource estimate. A mining recovery of 95% was incorporated with the average of 4% external dilution principally included from ballast. The reserve methodology utilised the resultant pit shells from Whittle optimisation and considered only nickel being the sole generator of revenue. A price of US$7.25 per pound of nickel was used and process and mining cost criteria was provided for by Hatch and Golder respectively.
Qualified Persons
The mineral reserve and mineral resource estimates contained in this
news release respecting Lalor (along with the estimate of tonnes and
grade of the gold and copper-gold zones) and HBMS' operating mines were
prepared by or under the supervision of Robert Carter, Superintendent,
Mines Technical Services with HBMS. The mineral resource estimates and
mineral reserve estimates for the other mineral properties contained in
this news release were prepared under the supervision of Cashel
Meagher, Vice President, Exploration of HudBay. Both Mr. Carter and Mr.
Meagher are "qualified persons" for the purposes of National
Instrument 43-101.
Forward-Looking Information
Certain of the statements made and information contained herein may
contain forward-looking information within the meaning of applicable
Canadian and United States securities laws. Forward-looking information
includes, but is not limited to, information concerning HudBay's
intentions with respect to the exploration and development of its
mineral properties. 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. 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.
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)
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