- HudBay Minerals Inc. is accelerating drilling at its Lalor Lake mineral project in northwestern Manitoba after encountering what its CEO said Wednesday "may well be the most significant new zinc discovery in Canada in many years."
HudBay shares gained nine per cent on the news, rising $2.37 to $27.51 in early TSX trading, with a 52-week range between $29.63 and $16.70.
Initial indications from Lalor Lake suggest a resource of 18 million to 20 million tonnes at 7.7 per cent to 8.8 per cent zinc - potentially 3.9 billion pounds of zinc, worth about $5-billion at current prices.
Production might begin as soon as 36 months from now, HudBay CEO Peter Jones told a conference call. Lalor Lake is "right in our own backyard," with an "extremely early" estimated mine development cost in the $150-million range.
The site is in the Flin Flon Greenstone belt, 15 kilometres from HudBay's existing Snow Lake mine and concentrator, and within three kilometres of a road and power line, Jones said.
The Snow Lake concentrator has spare capacity of more than one million tonnes per year, which could deal with the Lalor Lake ore, he said.
In addition to the high-grade zinc concentration 550 to 1,000 metres below the surface, samples show 0.7 to 0.8 per cent copper, along with "significant gold and silver assays," and the deposit is open in two directions, Mr. Jones said.
"It is still very early days," he cautioned, but "we are fast-tracking this project."
Four drills will continue working round the clock for at least six months, he said. HudBay expects to provide a formal resource estimate early in 2008 and begin test work on processing the ore, which is believed to be "very amenable."
A feasibility study is likely within a year, he said.
HudBay's "conceptual estimate of potential tonnes and grade," released late Tuesday, is based on 16 of 25 holes which have been completed or are in progress.
"This is very early days," Mr. Jones said. "That said, with every hole our confidence in this deposit has grown."
HudBay's first drill hole at Lalor Lake encountered 24 metres of over 13 per cent zinc, and the company reported in early August that 10 holes indicated a significant deposit, which the later work has extended.
HudBay has committed $45-million to its 2007 exploration program, and in view of the Lalor Lake success will make a decision by year-end on whether to defer the Bur project in the same region.