TORONTO (miningweekly.com) – A planned share buyback should not be seen as an indication that Canadian base-metals miner HudBay has given up merger and acquisition activity, CEO Peter Jones said on Friday.

“We are looking at all fronts...far and wide,” he said.

The company is currently engaged in a number of discussions, “and we expect to continue that process for some time,” Jones added.

The announcement a day earlier that the firm had approved a normal course issuer bid, which, subject to regulatory approval, will enable it to repurchase around 13,7-million of its own shares, is just “good housekeeping”, CFO David Bryson commented on a conference call.

The buyback provides flexibility to take advantage of “mispricing” in the market, he said.

The company has not committed to repurchasing a specific number of shares, and Bryson did not want to comment on what price levels might trigger buybacks.

Jones, who was CEO at HudBay until January last year, returned to the job after HudBay's board of directors and was ousted in proxy fight led by dissident shareholder SRM Global Master Fund.

The company presented a new "strategic plan" at its annual shareholder meeting in June, including plans to close its 80-year old copper smelter in Flin Flon Manitoba, next year, and speed up development of the Lalor zinc/gold discovery, in Manitoba.

Jones said at the time the company was looking for acquisition or joint-venture opportunities and could look at deals worth as much as C$1-billion "in the right circumstances".

HudBay ended the second quarter with cash and cash equivalents of C$846-million.

The firm actually announced a small transaction on Thursday, with the news that it will pay C$2,2-million for a 15% stake in junior Aquila Resources and the right to buy a majority interest in Aquila's Back Forty project, in Michigan.

Jones plans to pursue the Back Forty asset “with vigour” and believes the operation could be producing zinc within two or three years.

“This is a modest first step in our strategic plan, and is one of several opportunities that we continue to evaluate, both large and small,” he said.

The Back Forty project could also end up supplying zinc concentrate to HudBay's Flin Flon metallurgical complex, Jones said.

With its Trout Lake mine scheduled to close in mid-2011 and uncertainty over when the Chisel mine will restart, the company needs to find additional concentrate to feed the Flin Flon plant.

However, besides potential output from Back Forty, there is also the promise of early production from Lalor, which would help fill any gaps in concentrate supply.

HudBay is currently evaluating the best way to access the attractive Lalor gold and zinc deposits, in Manitoba, and expects to make a decision by the end of the year.

Options include accessing Lalor via a ramp system through the existing Chisel North mine or sinking a new shaft.

Once a decision has been made, a prefeasibility study will be completed, likely by the end of this year.

Jones said on Friday the company may consider reopening its Chisel zinc mine, given the recent improvements in the zinc price, but would first need to be confident that the price will be sustained over a longer period of time.

However, he indicated he will need to see significantly higher zinc prices to relook at the shuttered Balmat operation, in New York state.

HudBay shares slid 0,6% on Friday, to C$8,40 apiece by 16:10 in Toronto.

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