TORONTO (miningweekly.com) – Toronto-based HudBay Minerals only needs to see a “relatively modest” increase in the price of zinc from its current levels for it to consider reopening its shuttered Chisel North mine, in Manitoba, CEO Peter Jones said on Tuesday.
Chisel, which is a pure zinc producer, is one of the operations halted by HudBay when metals prices plunged late last year.
The price of zinc rose above $2/lb in 2006, but retreated since then, to fall to around $0,50/lb by year end of 2008. However, the metal has since regained some ground, to around $0,70/lb.
“We think a 10% or a 15% increase in that price and we will be looking seriously at the potential of reopening Chisel, which can be done very quickly indeed,” Jones said at a conference in Toronto.
HudBay has also halted operations at the Snow Lake concentrator, which processed ore from Chisel, shut the Balmat zinc mine, in New York state, and paused development of its Fenix nickel project in Guatemala.
Although the firm is exploring its land package around Balmat, it would take a “significant increase” in the zinc price for the company to consider reopening the mine itself, Jones said.
The company is also exploring power-supply options which could significantly lower the cost of production at Fenix, and has approved a budget of $13-million for exploration this year at its large Lalor zinc and gold deposits, in Manitoba.
Meanwhile, HudBay continues to mine zinc, copper, gold and silver from its 777 and Trout Lake mines, in Flin Flon, Manitoba, although the Trout Lake operation is expected to reach the end of its production life in 2011 or 2012.
It also operates a metallurgical complex in Flin Flon, comprising a zinc/copper concentrator, a copper smelter and refinery and a high-tech zinc plant.
TIGHT-LIPPED ON STRATEGY
Jones was CEO of HudBay until January 2007, when he was replaced by Allen Palmiere, but was reappointed to the position in March this year, by a new board of directors appointed at HudBay after a successful proxy battle led by shareholder SRM Global Master Fund.
The directors have been working on a strategic plan for the company, which is now complete, but the firm will not divulge details until its annual shareholders meeting on June 19, Jones said on Tuesday.
Since it was appointed, the new board has also drawn up new corporate governance rules.
These include proposed by-laws that will require shareholder approval before issuing common shares representing more than 25% of those outstanding to make an acquisition, share-ownership guidelines for directors and executive officers, a rule that director nominees who receive more than 50% of votes as withheld must offer to resign from the board and a proposed stock option plan that includes performance-based vesting.
SRM launched a proxy battle to replace the board and Palmiere, after the firm's failed attempt to buy fellow Canadian base-metals miner Lundin Mining.
Jones said on Tuesday that the company may use some of its hefty cash reserves to pursue "prudent" acquisitions.
HudBay had C$610-million in cash at the end of the first quarter, and recently added C$236-million after it sold its interest in Lundin last month.