The Reminder is making its archives back to 2003 available on our website. Please note that, due to technical limitations, archive articles are presented without the usual formatting.
Lalor's Promise Although their May 5 news release highlighted four affirmative points coming out of 2009's first quarter, sustained and encouraging drill results at HudBay Minerals' Lalor deposit was the one deemed worthy of a warm Snow Lake welcome. Not saying that a positive operating cash flow of $14 million, revenues of $161.8 million; and cash on hand of $609.8 million are anything to sneeze at, but home Ð in this case, Lalor Ð is where the heart is. This seemed to be the tack others were taking as well. In the Q and A session that followed HudBay's quarterly webcast, nearly all queries fell within the realm of organic growth Ð or more specifically, Lalor. Then again, it was hard to tell; it seemed everyone had their own way of pronouncing the simple five-letter name (it's actually pronounced LAW-LER) of this rich and complex ore body. Prior to taking questions, HudBay CEO Peter Jones said he believes the company (of which he recently regained the helm) has two key organic growth opportunities; Lalor and Fenix, a nickel project in Guatemala. To confirm the company's confidence in the Lalor project, he and the board have added $6.1 million to the $6.9 million that was budgeted for exploration in 2009. A total of $13 million will be pumped into the property this year. The money will be used primarily for exploration drilling, but will also fund work that encompasses locating an access point and development method to expedite production for what Jones has described as HudBay's next major mine. Progress With this in the works, the CEO advised the company is making good progress on their strategic plan and he is optimistic of their potential to grow and prosper. That ability was queried right off the mark, when Adam Schatzker of RBC Capital Markets asked if Jones thought it made sense to start pushing underground from Chisel North as soon as possible to get the Lalor project in front of them sooner. "We are looking at various options for Lalor on a priority basis," Jones answered. "Scoping studies are underway. The continued, very successful (drill) results are confounding those studies a little bit Ð because they are so successful. But I think it is fair to say that as we conclude that strategic plan in the coming weeks, our position and our actions will become somewhat clearer." See 'Pushing' on pg. Continued from pg. HudBay President and Chief Operating Officer Michael Winship, added, "Adam, I know you are a fan of pushing ahead with that project and I can assure you that Peter (Jones) is pushing quite hard as well." Winship further noted that exploration and engineering teams were focused on defining the deposit's gold zone, which continues to be open and plunging to the north. "So in order to determine our best access and when we would initiate the access, we have to assess where the centre and gravity of value is on the project," he continued. "We are pushing ahead as fast as we can on exploration. We have six drills turning. Meanwhile, in parallel, we are doing quite a bit of work on engineering studies to see what the best access methodology is, the location and timing of that." Still on the Lalor deposit, Onno Rutten of UBS Securities asked whether, given the base metal and gold zones, it be mined as two separate deposits. Jones responded that they would look to find an access method that would allow them to mine both the base metal and gold zones concurrently. "The processing and handling might be separate and that is subject to some of the studies that we are presently doing," he explained. In reply, Rutten asked when HudBay hoped to have results from their scoping study. Winship answered that they were working to finalize the study, as well as looking at a number of alternatives to access and mine the deposit, so it would be several months before they believed they will have optimized the study and be able to move the project into the pre-feasibility and feasibility stages. Greg Barnes, with TD Newcrest, linked to Rutten's query and asked if the full strategic review would be complete by HudBay's June 19 Annual General Meeting. "We certainly hope so," Jones replied. "We now believe that we are weeks away from completion." He added that the company wouldn't publish the review, but would release key aspects and key directions. Lalor, VMS Ventures' Reed Lake find, and the Flin Flon smelter would be considered among those aspects. Partial to the subject of HudBay's scoping study and reluctant to move off of it, John Hughes of Desjardins Securities asked if the company would wait to have a full feasibility study in place before making a production decision, or whether the decision is already made and it's just a matter of accessing the ore body. "Part of what we are trying to do is figure out exactly what our strategy should be and part of that strategy isÉ should we accelerate Lalor as much as possible, or not," Jones explained. He acknowledged that Lalor's development would be a considerable capital cost and the company wants to be sure it makes good business sense with no chance of a misstep prior to moving forward with it. Winship added that shaft location, hoisting rate, and where best to position a ramp, if one is required, would all be looked at. But he noted that as drill results came in, things were changing all the time and this was making it difficult to plan. Regardless of how long planning around this project goes on, or where it takes the company and Snow Lake, the news on Lalor of late is good, or as Jones says, "Very good!" My Take on Snow Lake runs Fridays.
