November 4, 2008 / 9:20 PM / 10 years ago

UPDATE 2-HudBay profit plunges on charge, price drop

* EPS 2 Canadian cents, net profit C$2.8 million

* Hit by lower base metal prices

* Takes $27.2 million charge to close Balmat zinc mine (Adds details, In U.S. dollars, unless noted)

TORONTO, Nov 4 (Reuters) - HudBay Minerals (HBM.TO) said on Tuesday its third-quarter profit plunged 96 percent because of lower zinc prices and an impairment loss of $27.2 million to close its Balmat zinc mine in New York state.

The Canadian base metals miner also said it would delay construction of its Fenix nickel project in Guatemala due to falling metals prices and economic uncertainty. HudBay acquired Fenix through its recent takeover of Skye Resources.

HudBay earned C$2.8 million ($2.4 million), or 2 Canadian cents a share, in the quarter ended Sept. 30. This was down from C$66.5 million, or 52 Canadian cents a share, in the year-before period.

Revenue fell to C$247.4 million from C$319.8 million, as HudBay’s realized zinc price plunged to 87 cents a pound from $1.56. while copper prices eased to $3.38 a pound from $3.55.

Zinc output fell 5.1 percent to 30,998 tonnes, while copper production dropped 14.1 percent to 19,167 tonnes, it said.

The reduced copper output was due to lower purchased copper concentrates for HudBay’s smelter in Flin Flon, Manitoba, which has struggled with low industry copper treatment charges and tighter Canadian targets for sulphur dioxide emissions.

HudBay has three mines, a smelter, and concentrators in the Flin Flon greenstone belt. It also has operations in Ontario and Michigan.

The company’s shares, which are down nearly 70 percent this year, rose 74 Canadian cents, or 13.7 percent, to C$6.14 on the Toronto Stock Exchange as metals prices surged. The results were released after markets closed.

$1=$1.15 Canadian Reporting by Cameron French; Editing by Peter Galloway

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