HudBay hammering out loan to modernize Flin Flon project

But instead, the company is still trying to hammer out a deal with government officials, according to a spokesman for Inspiration Resources Corp., (TSE), HudBay’s U.S. parent.

“Both sides have agreed to sit down, get into the details and see if they can reach a deal,” Hudbay President Lloyd Nilsen says.

Although it is too early to tell just how long the discussions will go on, the process creates a delay in the financing of the $130-million project. Modernization of the Flin Flon smelter could influence the company’s ability to earn profits in the long term. The project has to be completed by 1994 in order for HudBay to continue to process copper and zinc ore at current rates while complying with Manitoba’s guidelines for reducing sulphur dioxide emissions.

In 1985, the federal government set aside $150 million for smelter modernization in the acid-rain- sensitive areas of the country. About $41 million was allocated to Noranda Inc. in the form of a long- term loan to build an acid plant at its Horne smelter in Rouyn-Noranda, Que. and about $85 million has been allocated to Ontario smelters. That leaves about $24 million yet to be allocated.

Ore reserves in the Flin Flon/ Snow Lake belt have been maintained at about 17 million tons. This year the company expects to produce 150 million lb of copper, 185 million lb of zinc, 7.5 million lb of nickel, 70,000 oz gold and 1.4 million oz silver by treating about 2.5 million tons of ore.

The smelter modernization project, which involves installing three autoclaves for pressure leaching zinc concentrates and a bath smelting converter for copper smelting, could take two-and-a-half years to complete. Much of the preliminary engineering has been completed.

Last year HudBay paid out $19.9 million in dividends to Inspiration which holds the bulk of HudBay’s 813,267 common shares. The company also has about 10.8 million special shares outstanding which paid a 1 cents dividend each in 1988.

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