July 5, 2011 / 11:24 PM / 6 years ago

UPDATE 1-HudBay to boost investment in Lalor project

* Increased investment set to boost output, mine life

* HudBay shares close up 3.2 pct on the TSX

TORONTO, July 5 (Reuters) - HudBay Minerals Inc (HBM.TO) said on Tuesday it plans to boost its investment in the Lalor zinc-copper-gold project in Manitoba, in a move to expand output and reduce long-term operating costs.

The project, which is set to begin production in the second quarter of 2012, will be one of HudBay's flagship assets as operations at its Chisel North mine in Manitoba begin to wind down next year.

HudBay said it now plans to spend C$144 million to build a new concentrator at Lalor, instead of refurbishing its existing concentrator at Snow Lake in Manitoba. This, coupled with new plant technology, will boost mine life and reduce operating costs at Lalor, the company said.

"Based on the improved economics, we are very comfortable making an incremental investment in a new concentrator," HudBay Chief Executive David Garofalo told Reuters.

Garofalo said the move boosts its ore processing capacity at the site by nearly 30 percent. The new concentrator will be capable of processing 4,500 tonnes of ore per day, once it is commissioned in 2014.

Including the new concentrator, the total estimated project cost for Lalor is now C$704 million, the company said. HudBay said the increased investment will help cut average operating costs at Lalor to C$52 a tonne from about C$80 a tonne.

Lalor's development and site construction are proceeding on schedule, the company said. While initial production is slated to begin in 2012, full production from the mine will only be achieved in late 2014.

Shares of HudBay closed Tuesday up 3.2 percent at C$15.14 on the Toronto Stock Exchange. (Reporting by Allison Martell; Editing by Phil Berlowitz)

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