EXPLORATION <strong>HudBay</strong> has a proven ability to create value through exploration. We have earmarked $68 million for exploration in 2011, one of the largest budgets in our company’s history, and plan to drill approximately 190,000 metres. 16 <strong>HudBay</strong> <strong>Minerals</strong> <strong>Inc</strong>. <strong>2010</strong> <strong>Annual</strong> <strong>Report</strong>
Flin Flon Greenstone Belt Of the total exploration budget, $33 million will be spent in the Flin Flon Greenstone Belt, where we have a land package of approximately 400,000 hectares and more than 85 years of experience. Through our innovative application of geophysics, we are now able to see deep below the limestone cover of the FFGB, and have identified several thousand untested geophysical anomalies. Our exploration focus is on systematically evaluating these targets. We plan to spend the majority of the budget on testing anomalies within trucking distance of the Flin Flon operations, with a view to continuing to use the infrastructure in the region. We are also active at Lalor, which remains a highly prospective and underexplored area. Exploration in <strong>2010</strong> indicated significant potential for additional gold mineralization at Lalor and raised the possibility of discovering new gold and copper-gold zones and extending existing zones. It also confirmed the continuity of the copper-gold zone, which remains open down plunge. We will continue to drill from surface in 2011 to evaluate opportunities along strike and the periphery of the deposit. In our search for mineral deposits near the Flin Flon operations, we have partnered with junior mining companies as a means of gaining access to new properties and encouraging the exploration of more land than we can evaluate on our own. For example, we have an option agreement with Halo Resources that allows us to earn up to a 67.5% interest in Halo’s Cold and Lost properties, located about 110 kilometres from Flin Flon. We completed an NI 43-101-compliant resource estimate for the Lost property in March 2011 and are now conducting a pre-feasibility study to determine how the project fits with our long-term production plans. We also have a joint venture with VMS Ventures, pursuant to which we have a 70% interest in the copper-rich Reed deposit near Snow Lake, Manitoba. In early 2011, we completed an infill drilling program, released an NI 43-101-compliant resource estimate and have begun an economic evaluation to confirm the viability of the Reed deposit. A production decision is expected in late 2011. Given the near-surface nature of the Reed deposit, its advantageous location adjacent to a provincial highway and its proximity to the Flin Flon complex, production could commence by late 2012 or early 2013 with a relatively small capital investment. Back Forty Back Forty is an advanced-stage exploration project evaluating a zinc- and gold-rich VMS deposit in Michigan’s Upper Peninsula. With its strong similarities to the FFGB, we have been able to apply our geophysical expertise to Back Forty to extend the known deposit and increase the size of the resource. In <strong>2010</strong>, we announced a resource increase of more than 100%, to 17.9 million tonnes of measured and indicated resources, including approximately one million ounces of contained gold and significant amounts of copper and zinc. We also discovered highgrade mineralization well outside the known resource envelope. The Back Forty project is a prime example of how we diversify our exploration focus by taking a toehold position in a junior company conducting grassroots exploration. Since 2009, we have acquired a 15% ownership position in Aquila Resources and a 51% joint-venture interest in Back Forty, and we have the option of increasing our ownership interest to 65% by completing a feasibility study and submitting a mine permit application to the State of Michigan. We believe Back Forty is a very promising project with potential to expand the size at depth. In 2011, we will invest $16 million on an expanded drilling program, engineering work and environmental assessments to enable us to complete and optimize the mine plan in preparation for permitting. Recognizing Aquila’s exploration expertise, we also formed a strategic exploration alliance with the firm in <strong>2010</strong>. Under this agreement, <strong>HudBay</strong> will provide funding and seed money for Aquila to seek out new deposits in Michigan and other areas to be agreed upon. <strong>HudBay</strong> <strong>Minerals</strong> <strong>Inc</strong>. <strong>2010</strong> <strong>Annual</strong> <strong>Report</strong> 17
Change language