HudBay Minerals released the results of their second quarter of 2010 on August 4th, and the news couldn't have been better for the community of Snow Lake. Along with a modest
.09 per share earnings, and declaration of a semi-annual dividend of
.10 per share, officials finally announced what many had anticipated - a production decision on the massive Lalor deposit.

"Our mines in northern Manitoba continue to perform well and production of all metals remains on track to meet our 2010 full-year guidance," said HudBay's new president and chief executive officer, David Garofalo, in the news release and webcast that followed. "The confidence in our operating team and the significant progress we have made at our Lalor project has enabled our board of directors to commit fully to its development on a fast track basis."

HudBay's board made their commitment to the development of Lalor by authorizing the $560 million expenditure it will take to put the project into full production. The company affirms that early production from the Chisel North access ramp is scheduled to begin in the second quarter of 2012 and full production from Lalor's proposed 985 meter production shaft is forecast in late 2014. The $560 million expenditure is expected to fund full project development, as well as a extensive upgrade of the company's Stall Lake Mill.

In summarizing the development, Garofalo revealed that the company ultimately envisages full production of 3,500 tonnes of ore per day from Lalor. During a question and answer session later in the webcast, VP of Mining, Brad Lantz stated that the Lalor shaft is being planned to handle 6000 ton per day (TPD), but speculated that they would hoist 3500 - 4700 TPD of blended ore/waste from base metal and gold zones.

He and other HudBay officials explained that the (estimated) $560 million capital cost, includes $21.5 million spent thus far on the Chisel ramp access, site preparation, and equipment purchases. It is also proposed to fully fund further Lalor development, including the extension of power and water facilities to the site, a 300 person camp, surface and underground construction at the mine site; including the completion of the access ramp, a production and a ventilation shaft, an upgrade to the existing tailings facility, and a comprehensive upgrade of the company's Stall Lake concentrator. Construction at the concentrator will include replacing copper and zinc floatation cells and concentrate dewatering equipment, and construction of a new gold leach plant, which is intended

to improve gold recovery. Upon completion of the upgrades, the concentrator will be capable of processing 3,500 tonnes of material per day and will principally produce zinc and copper concentrates and gold dore bars (a mixture of approximately 90% gold and silver in cast bars).

In response to another query during the Q and A session, Lantz further broke down the $560 million of Lalor capital expenditures. He cited $85 million going towards the ramp, about $120 million to the concentrator, with the remaining portion, about $300 million, going for access, power, site infrastructure, two shafts (a ventilation shaft and a production shaft), and underground development. Lantz also stated that it will cost $80 per ton (PT) to mine and mill the ore (includes trucking and gold cyanidation costs) from Lalor. In context 777 is in the $35 - 40 PT range, Trout and Chisel North are in the $55 - 65 PT range.

In addition to the announcement of the production go-ahead, the company also released an updated NI 43-101 (National Instrument 43-101) resource estimate for the deposit's base metal zone. It increases the tonnage in the indicated resource category by 8.1% from their previous 43-101. The revised basemetal estimate now forecasts 13.3 million tonnes under the 'indicated' heading and 4.8 million tonnes in the 'inferred' category.

"We are very pleased with our assessment of the viability of developing the project, particularly when the gold and copper-gold zones are included," said the company's CEO. "HudBay has a proven track record of significantly expanding the size of its mines after production has begun and given its substantial exploration potential, we expect this will continue with the Lalor project."

Discussion during the production decision announcement also touched upon exploration plans and potential. Noting that Lalor's copper-gold zone remains open, it was explained that the company will continue to drill from surface, exploring the border of the deposit for additional orebodies. Included in this program is one drill, which is targeting the copper-gold intersection that was discovered down-plunge from what they refer to as "base metal zone 10".

Also noted was that drilling continues down-plunge of the copper-gold zone identified in the fall of 2009. Additionally, once the ramp access to the deposit has been completed, it is the company's intention to carry out a broad underground exploration program at Lalor. Ramp progress up to the end of July has it close to the 800 meters mark. Once it reaches the deposit, both the ramp and ventilation infrastructure are expected to enable production of up to 1,200 tonnes of ore per day from Lalor's base metal zone.

Closing out the webcast, Mr. Garofalo was asked about acquisitions and possible mergers. In regard to acquisitions he said that he didn't believe in risking the company on any one acquisition, noting that mining was an inherently risky business. "God forbid we made a mistake on acquisition... we don't want to sink the company," said the CEO. "I'm extremely conservative on the acquisition side, I think we can acquire projects at a relatively early stage on a more economic basis, put less risk on board, and develop those assets into productive mines ourselves. The only way in my view to create a mining business is to drill and to build. There is no other way to create value."

Asked about the potential for mergers, the CEO stated, it wasn't in the plan. "We're not interested in buying someone else's mature assets, what we're looking for are opportunities that have a significant geological upside, ones that we can scale up ourselves through drilling and construction," he said. However, he clarified that HudBay will be "ramping up" the volume of transactions that they do with juniors. "Where we take minority stakes, either through private placements or earn ins to fill up the early stage part of our pipeline and leverage off of our very strong grassroots exploration effort," he stated. "So you should expect us to be much more active on the junior side."

In that regard, he mentioned the Reed property, stating that it will provide short term production to replace the loss of Trout Lake copper ore. Garofalo played up the deposit's closeness to #39 highway and the limited footprint that the proposed ramp to this high grade copper orebody will make.

All in all, good news for HudBay... and great news for Snow Lake! MJ

Page 4 THE Underground PRESS August 19, 2010

Written by Marc Jackson- The Underground Press Newspaper - Snow Lake Manitoba