TORONTO (miningweekly.com) – Canadian base-metals miner HudBay Minerals intends to put its strong cash position to good use by going shopping, and could look at deals worth as much as C$1-billion "in the right circumstances", CEO Peter Jones said on Friday.

Acquisitions or potential joint ventures will be a “high priority” this year for the company, which has some C$800-million on hand, he told journalists after the firm's annual shareholders meeting in Toronto.

Jones said the focus will remain on copper, zinc and nickel assets, and also indicated that the company may already have identified some potential targets.

“It is fair to say that we have a number of irons in the fire,” he said.

The firm will look at lower risk countries - Jones cited South and central America as "key areas" - but could also be lured to regions like Africa and Asia for attractive enough projects.

"The opportunities are definitely out there, there is no question about it," he said.

"People are talking. They want to talk and this is very different from a year or two ago."

The focus on acquisitive growth is one fork of a new strategic plan presented to shareholders at Friday's meeting.

Jones, who was CEO at HudBay until January last year, returned to the job after HudBay's board of directors and CEO Allen Palmiere were shown the door in March this year following a proxy fight led by dissident shareholder SRM Global Master Fund.

Once the dust had settled, Jones and the new chairperson of the board, Wes Voorheis, promised to sit down with the new directors to come up with a strategic way forward for the company.

At the end of the day, however, anyone holding their breath for a big announcement or change of direction for the company may have been disappointed.

Although there seems to be a greater emphasis on concluding a deal - in fact a "series of deals", according to Jones - HudBay has not exactly been immobile on the corporate activity front over the last year.

Under Palmiere, the company bought Skye Resources in August, for its Fenix nickel project, in Guatemala, and announced in November that it would buy midtier miner Lundin Mining, which has assets in Europe and Africa.

(Unfortunately, the unpopular Lundin transaction would be broken off five months later, and served as the catalyst for the proxy fight that resulted in Palmiere's exit and Jones' return, while the Fenix project was put on ice in November because of market conditions.)

The second aspect of the two-pronged strategy is that – unsurprisingly –  HudBay wants to optimise and grow its Manitoba operations, especially by developing the attractive Lalor zinc/gold discovery.

There are already scoping studies under way on how to access the Lalor deposit - including potentially through the existing Chisel North mine, and the company expects to have a "firm direction" on the way forward at the project by the end of this year, and possibly earlier.

The depth of the zinc deposit at Lalor would make it costly to develop, particularly at curretn zinc prices, but HudBay is hoping that a newly discovered gold zone could improve the economics of the project.

It is still early days, but Jones said on Friday that the current thinking is that the zinc and gold zones will be mined separately. The company would then treat the base metals in one facility, and buy or build a separate plant to treat the gold zone.

For now, the firm estimates capital costs to build the project could be between C$300-million and C$400-million.

OPEN AND SHUT

On Thursday, HudBay confirmed that it plans to close its 80-year old copper smelter in Flin Flon Manitoba, and said the operation will be shuttered by mid-2010. The copper refinery in White Pine, Michigan, will be closed shortly afterwards.

HudBay plans to enter its sales agreements for its copper concentrate by the end of this year, Jones said, in preparation for the smelter's closure.

Besides the copper smelter, HudBay's Flin Flon metallurgical complex includes a zinc/copper concentrator and high-tech zinc plant.

The firm currently mines zinc, copper, gold and silver from its 777 and Trout Lake mines, in Flin Flon, but has halted operations at the Chisel North zinc mine, in Manitoba, the Balmat zinc mine, in New York state, as well as its Snow Lake concentrator, after base-metals prices weakened last year.

Although the Balmat mine does not look likely to get a new lease on life anytime soon, Jones reiterated on Friday that he would only need to see a sustained 10% to 15% increase in the zinc price from current levels to look at reopening the Chisel operation.

At Fenix, HudBay is working on a plan to ensure low-cost power supply for the project, which could end up being either hydropower or coal-fired thermal generation. The increase to capital costs for the project would be more than offset by improved operating costs, thanks to cheaper power, Jones said.

HudBay shares rose 2,55% on Friday, to C$8,04 apiece by 16:29 in Toronto.

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