VANCOUVER (miningweekly.com) – Shares in Toronto-based HudBay Minerals leapt on Thursday after the company announced it will spend C$85-million to build a production ramp linking the Chisel North mine, in Manitoba, to the new Lalor deposit.

The ramp will allow near-term production of zinc-rich ore, as well as access to the gold zones HudBay has found at Lalor, for underground exploration.

The company first discovered the zinc mineralisation at Lalor about two years ago, and later reported it had found high-grade gold in first one and then a second zone. Most recently, the firm reported it had identified a copper/gold zone at a lower depth.

Work on the ramp will start immediately and mining is expected by as early as 2012, CEO Peter Jones said on Thursday.

Fast-tracking Lalor is the company's top priority at the moment, he said.

After the ramp is completed, which should take about 30 months, Hudbay expects to mine about 1 200 t/d of ore from the zinc-rich base-metals zone at Lalor.

The Chisel mine, which has about two years left in its operating life, was put on care and maintenance last year because of low metals prices, but improving market conditions mean that HudBay is now considering restarting the operations.

This would also mean the company can run ore through the Snow Lake concentrator and supply zinc concentrates to its plant at Flin Flon in the period until production begins from Lalor.

HudBay currently mines zinc, copper, gold and silver from its 777 and Trout Lake mines, in Flin Flon.

At Lalor, beyond the initial ramp and underground drilling of the gold zones, HudBay will complete a prefeasibility study by year end, followed by a full feasibility study next year, on the further plans to develop Lalor.

So far, conceptual plans for second and third development phases include site preparation, sinking of a production shaft and refurbishing the 3 500-t/d base-metals concentrator at Snow Lake.

The company is also looking at building a gold ore concentrator with a minimum capacity of 1 200 t/d.

In total, the entire project could cost about C$450 million, including the C$85-million phase one component, Jones said.

The company is targeting at least three million contained ounces of gold at Lalor, and Jones said he is confident that will be achieved, if not exceeded.

HudBay published an updated mineral resource estimate on Thursday for the zinc-rich base metals zone, which contains indicated resources of 12,3-million tons, grading 8,7% zinc, plus five-million tons in the inferred category, at 9,4% zinc.

Shares in the company rose 6,6% on Thursday, to C$14,60 apiece by 16:34 in Toronto. The stock traded as high as C$15,10 earlier in the day.

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