Winnipeg Free Press - PRINT EDITION

Mines are gold for province's north

HudBay celebrates three new facilities near Flin Flon, Snow Lake

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One of the province's oldest and largest mining operations celebrated a new chapter in its 85-year history on Tuesday -- a chapter in which it will spend hundreds of millions of dollars on new developments and create hundreds of new jobs in northern Manitoba over the next few years.

"I think that overall for our company, we are entering into a golden era for mine development and production growth," HudBay Minerals Inc. president and CEO David Garofalo said in an interview after a series of public events in Flin Flon and Snow Lake to celebrate the Manitoba developments.

The new developments, all of which had previously been announced, will see HudBay spend more than $2.5 billion over the next few years on new mining developments, including $800 million in northern Manitoba.

The Manitoba projects include a $20-million expansion of its flagship 777 Mine at Flin Flon, the $704-million development of the new Lalor Mine near Snow Lake, and the $71-million development of the new joint-venture Reed Copper Mine, also near Snow Lake.

The company's biggest-ticket project is the US$1.5-billion development of a new mine in Peru, which got the green light last week from its board of directors.

The 777 and Lalor mines replace two older mines, Trout Lake near Flin Flon and Chisel North near Snow Lake. Trout Lake ceased operations in June and Chisel North is expected to close in the third quarter of the year.

Garofalo said the new mining developments are expected to add another 200 to 300 new workers to HudBay's Manitoba workforce by 2015.

He said they're also expected to quadruple HudBay's copper production, double its gold production, and increase its zinc production by half over the next three years.

Garofalo said the last time the company undertook this many new construction projects at the same time was likely the late 1920s when it was launching its mining operations in Flin Flon.

To mark its new chapter, HudBay held three separate ceremonies Tuesday in the Flin Flon-Snow Lake area.

On Tuesday, the company also released its latest quarterly results. It said it narrowed its second-quarter net loss to $30.4 million from a year earlier, when it booked a $213-million impairment charge on the sale of its Fenix project.

It said this year's Q2 loss amounted to 17 cents per share, compared to $171.9 million or 97 cents per share in the second quarter of 2011. It also included a $32.7-million charge related to junior mining investments.

Revenue for the quarter fell to $189.9 million from $246.8 million, mainly due to lower metals prices.

"The results from our operating mines have continued to perform within expectations, which we expect will enable us to meet our 2012 guidance," Garofalo said in a written statement.

The last week has also been busy for the company. In addition to giving the go-ahead to the Peru project, the company said it has signed a deal with Silver Wheaton Corp. that will see Silver Wheaton acquire the silver and gold production from one of its mines and the silver production from another for US$750 million. The money will be used to help fund construction of its Constancia copper mine in Peru.

murray.mcneill@freepress.mb.ca

-- with files from The Canadian Press

Republished from the Winnipeg Free Press print edition August 15, 2012 B5

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