TORONTO (miningweekly.com) – Toronto-based HudBay Minerals expects to make an announcement soon on a contract to sell copper concentrate produced at its Manitoba operations for smelting and refining, interim CEO Warren Holmes said on Thursday.

HudBay has historically processed its own concentrate, but announced last year it will close its Flin Flon, Manitoba, copper smelter and the White Pine refinery in Michigan by mid-2010.

The closure plans remain on track, and HudBay has decided on a 'dual track' approach to concentrate sales, Holmes told analysts and investors on a conference call.

The company will sell about 60% of its copper concentrate through a contract based on benchmark terms, and is already in “advanced discussions” with parties on this front, he said.

While the contract sales will provide security, HudBay hopes to maximise margins on the remaining 40%, which will be available for sales “as opportunities arise, including spot-market sales,” Holmes said.

HudBay mines zinc, copper, gold and silver from its 777 and Trout Lake mines, in Flin Flon, and announced in October it would restart the Chisel North mine and concentrator in Snow Lake, Manitoba, to feed its zinc smelter in Flin Flon.

The restarts are going well, with initial production expected before the end of this month, and full production targeted by the end of the second quarter, Holmes said.

He reiterated that HudBay's top priority is developing its Lalor project, where it is currently working on a production ramp linking the Lalor deposit to the Chisel North mine.

The firm also continues to work on studies for the broader project, and will conduct a number of detailed engineering and trade-off studies to refine the design over the next six months, Holmes said.

The shaft being planned for phase two of Lalor will likely duplicate the design of the 777 shaft, he revealed.

REED LAKE

Still in Manitoba, HudBay announced on Thursday that it has signed a letter of intent with junior VMS Ventures, which could lead to the firms forming a joint venture to develop the Reed Lake property in Flin Flon.

HudBay owns the Reed Lake claim but it is currently under option to VMS.

If the companies go on to sign a definitive agreement, they will form a joint venture on the Red Lake claim, in which HudBay will own 70% and will be the operator.

Reed Lake is an “attractive, near-surface project” that could provide feed to the Flin Flon concentrator at the ageing Trout Lake mine nears the end of its life, Holmes said.

“We intend to advance Reed Lake to feasibility with the intent of bringing it into production expeditiously.”

FENIX

At the company's Fenix nickel project in Guatemala, HudBay plans to provide an update “shortly” on its plans, Holmes said.

The firm is examining options for a dedicated electrical power supply and is preparing an updated feasibility study, and plans to start looking at “alternative financing arrangements”.

Edited by: Liezel Hill