Hudbay hits more gold and copper at Lalor

Vancouver – The latest drill results from the Copper-Gold and Gold zones at Hudbay Minerals’ (HBM-T) Lalor project in northern Manitoba continue to add to its allure. The wholly-owned property is already home to a zinc-rich base metal zone; now Hudbay is probing its copper and gold potential as the company drives an exploration and early production tunnel in from the nearby Chisel mine.

Hudbay discovered Lalor in 2007, initially delineating a zinc-rich deposit with local copper, gold, silver, and lead mineralization contained within six separate stacked lenses some 570 to 1,170 metres below surface. Mineralization in the main zones at Lalor Lake is described as disseminated to solid sulphides consisting of medium- to coarse-grained sphalerite, pyrite, and chalcopyrite, similar to the nearby Chisel North zinc mine.

In early 2009, Hudbay hit new lenses at Lalor that constitute a gold-rich zone and a zone with both copper and gold. Drilling of late has focused on these new zones, which comprise several lenses that are stratigraphically below and to the north-northwest of the main Lalor deposit lenses. Within the new lenses the copper grade increases moving south to north, which means the Gold zone is to the south and the Copper-Gold zone is farther north.

Hole 264, collared between the zones, hit 3.4 metres grading 5.25 grams gold per tonne, 15.26 grams silver per tonne, 3.58% copper, and 0.15% zinc starting at 1,211 metres. Hole 265, the northern-most hole to date, cut 6.4 metres averaging 11.7 grams gold, 30.63 grams silver, 6.88% copper, and 0.37% zinc starting at 1,364 metres below ground. Collared roughly between hole 264 and 264, hole 263 returned 0.36 metres grading 9.87 grams gold, 28 grams silver, 1.86% copper, and 0.31% zinc starting at 1,237 metres downhole.

“These results are very encouraging and indicate that the Copper-Gold zone remains open down plunge to the north and west,” said W. Warren Holmes, HudBay’s executive vice chairman and interim chief executive officer in a statement. “Our exploration program will continue this year with additional drilling from surface with the intention of further defining the Copper-Gold zone.”

While hole 264 confirms the zone remains open to the north, a crone borehole pulse electromagnetic survey on hole 189 indicates the Copper-Gold zone is also open down plunge to the west, a result consistent with findings from a recent electromagnetic survey.

Meanwhile, drilling in the more southerly Gold zone is returning what Hudbay calls “better than expected” grades. The latest results include 24.4 metres grading 11.07 grams gold, 21.7 grams silver, 0.46% copper, and 0.09% zinc, starting at 878 metres downhole, and 18.4 metres carrying 29.65 grams gold, 42.97 grams silver, 0.43% copper, and 0.05% zinc beginning 884 metres below ground.

The established resource estimate for the zinc body at Lalor stands at 12.3 million indicated tonnes grading 1.6 grams gold, 24.2 grams silver, 0.66% copper, and 8.7% zinc. The inferred resource has 5 million tonnes averaging 1.4 grams gold, 25.5 grams silver, 0.57% copper, and 9.39% zinc.

Hudbay restarted the nearby Chisel Mine in October after shutting it down in early 2009 due to the failing price of zinc. The mine is expected to return to full production in 2010, while also being the conduit for resource extraction at Lalor. The company estimates it will cost $85 million and take 30 months to drive the tunnel from Chisel to Lalor.

The company’s Snow Lake concentrator, which is operating at less that half-capacity, is roughly 15 km from Lalor. The closest significant town is Flin Flon, Manitoba, roughly 215 km drive by paved roads. Hudbay has an ore concentrator, a zinc plant and a copper smelter in Flin Flon, as well as the 777 Mine and the Trout Lake Mine.

Hudbay’s share price closed down 22¢ on the day of the news to close at $13.56. The company’s 52-week share price range is between $5.10 and $17.00, with 154 million shares outstanding.