HudBay to Re-Start Chisel North Mine and Snow Lake Concentrator

HudBay to Re-Start Chisel North Mine and Snow Lake Concentrator

HudBay Minerals Inc. announced that it will re-start operations at its Chisel North mine and concentrator in Snow Lake, Manitoba effective immediately, with full production expected in the second quarter of 2010. The re-start of operations at Snow Lake is expected to provide approximately 30,000 tonnes of zinc concentrate feed to the company’s Flin Flon zinc plant annually. The capital costs of the re-start are expected to be approximately CDN$7 million and operating costs are expected to be comparable to what they were prior to the suspension of operations earlier this year.

The company also announced today that it has entered into a hedge of approximately 50% of the anticipated zinc production from the Chisel North mine at an average price of approximately US$1.01 per pound of zinc. This forward sale is intended to ensure that Chisel North remains economic at lower zinc prices, while providing unfettered upside for the remaining 50% of its zinc production.

The Chisel North mine and Snow Lake concentrator have been on care and maintenance since the first quarter of 2009, due to depressed zinc prices at the time. Work will begin immediately to prepare both the mine and concentrator for the re-start. To facilitate this work, personnel and equipment will be redeployed from Flin Flon to Snow Lake. The company also expects the re-start of operations to provide additional employment opportunities for some employees impacted by the closure of its copper smelter in 2010.

“The re-start of our Snow Lake operations is exciting news for the company and the local community,” said Peter R. Jones, chief executive officer of HudBay. “Re-starting this supply of domestic zinc concentrate is more economical than purchasing third-party concentrates. Also, the benefit to the community in Snow Lake will be substantial as we expect to employ up to 100 people once full production is achieved over the next several months.”

The re-start of the Snow Lake operations will be carried out at the same time as the commencement of the previously announced Phase 1 exploration and development of the company’s Lalor deposit. HudBay expects the development of the ramp to the zinc-rich base metals zone #10 to take about 30 months and, subject to receiving applicable regulatory approvals, produce approximately 1,200 tonnes of ore per day once completed. Production from Chisel North and the early production from Lalor will help provide a continuous feed of domestic zinc concentrate to the company’s Flin Flon zinc plant until Lalor reaches full production, which is expected in 2014.

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