101 (National Instrument 43-101 compliant resource estimate) is near completion and we expect to announce the results within a short period of time."

With their 43-101 nearly complete, Hudbay’s Lalor Lake drill program is now focusing on step out drilling, that will define the deposit on the two sides that remain open. Palmiere expressed his optimism that the deposit would grow in size and reflect higher copper and gold grades as it did.

Also during his initial webcast address, Palmiere advised of some of the activities that would carry Hudbay’s exploration team through the balance of 2008. These include continuing to test geophysical targets, as well as those generated from a 2007seismic survey they completed in conjunction with the Geological Survey of Canada. "In addition to our in-house exploration, we also continue to be encouraged by the ongoing positive results our option partner, VMS Ventures, is achieving at the Reed Lake property," said the CEO. "The assay results to date have been very positive, including their announcement earlier this month of 33 meters of 10.36 percent copper at a relatively shallow depth of 330 meters." Palmiere pointed out that Hudbay has back-in rights of up to 70% ownership of the Reed Lake property and noted the potential that their area option agreements represent.

In relation to existing operations, Palmiere stated that the 777, Trout Lake, and Chisel North operations all delivered planned tonnage and that grades had improved from Q1. The company’s New York state, Balmat Mine also came around in grade and production; however, operating costs remain high and as a result that mine continues to operate in the red and is a candidate for closure.

In relation to the smelter, it appears that things haven’t changed there and due to current low market rates for the purchase of copper concentrate (HudBay cannot supply the optimum amount from their own mines, so must purchase concentrate from outside sources), the company has decided not to purchase copper concentrate beyond 2008. They will continue to shop around and process materials that they have purchased forward into 2009, but it looks as if the writing is on the wall.

Palmiere stated the outlook for longer term demand for the company’s products remains strong and they are very well positioned to take advantage of any future improvement in metal prices. Speaking of the recent Skye merger and of Lalor Lake, he stated, "We believe that we are on the right course with our strategy, and our focus as we look forward, will include fast tracking our two major development projects." HudBay is optimistic that Skye’s Guatemalan ‘Fenix’ operation will reach production by 2011, and following Lalor Lake’s 43-101; they see it taking a similar path to production.

After the initial presentation, the webcast evolved into a question and answer session, and in reply to a direct question on Lalor Lake, Palmiere updated the deposit’s current status. "Lalor is moving ahead quite well," he said. "We anticipate a 43-101 in a week to ten days in all likelihood. But we continue to drill. We have six drills on the property. Primarily step-out drilling as well as for metallurgical testing purposes. The timeline for Lalor has not changed. What we are anticipating is a very optimistic and aggressive schedule. But we are hoping to be in a position by the end of this year to make a formal production decision. We have begun to capitalize the drilling and the underlying assumption there is that there is in fact an economic deposit and it will ultimately be turned into a mine. We are very confident in that. The drilling results continue to be encouraging."

When Lalor Lake’s 43-101 is published, it will focus primarily on the discovery lens, which was generally zinc. However, with drilling currently defining additional lens that tend to be higher in gold and copper, the final resource figures will be considerably larger than those in the 43-101. At this stage drill holes are still very widely spaced and because of this, Palmiere says they will be unable to include them in the current resource.

Palmiere acknowledged, some previous market preoccupation with the amount of cash that the company had on hand. But he noted that because of the strength of HudBay’s balance sheet and the continuation of good cash flow, they were in a unique position to be able to take advantage of the opportunities the market is creating. "I just want to point out that between cash on hand, and anticipated cash flow from operations, we can fund Fenix, we can fund Lalor, and we have even made the assumption that we can fund Reed Lake, if and when it turns into a mine… without having to access the debt market," Palmiere said.

He compared Lalor Lake with the company’s flagship operation at 777, stating that it is one of the best poly-metallic discoveries in Canada in the last decade or so. Adding that with VMS’s Reed Lake deposit coming along, HudBay had developed a significant pipeline in terms of future growth for the company. MJ

Page 4 THE Underground PRESS August 21, 2008

~'Lalor' from page 1