HudBay Hits 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 home to the zinc-rich Base Metal zone; now HudBay is probing its copper and gold potential as the company drives an exploration and early production tunnel 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 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 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. Current drilling 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. Collared between hole 264 and 264, hole 263 returned 0.36 metre grading 9.87 grams gold, 28 grams silver, 1.86% copper, and 0.31% zinc from 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 Warren Holmes, Hud-Bay’s executive vice-chairman and interim chief executive officer in a statement.

HudBay’s exploration program will continue this year with more drilling from surface to further define the Copper-Gold zone.

While hole 264 confirms the zone remains open to the north, a 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 878 metres downhole, and 18.4 metres carrying 29.65 grams gold, 42.97 grams silver, 0.43% copper and 0.05% zinc from 884 metres.

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 Chisel in October after shutting it in early 2009 due to the falling 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 than half-capacity, is 15 km from Lalor. The closest town is Flin Flon, Man., roughly a 215-km drive away. HudBay has an ore concentrator, a zinc plant and a copper smelter in Flin Flon, as well as the 777 and Trout Lake mines.

HudBay’s share price was down 22¢ on the day of the news to close at $13.56. The company has a 52-week trading range of $5.10-$17.00 and 154 million shares outstanding.