Miner HudBay OK's Manitoba project

HudBay Minerals Inc. approved plans to build an $85-million tunnelat a recently discovered zinc and gold deposit in Manitoba on Thursday, a major step toward starting production at the facility.

Phase one of the company's Lalor project will consist of building a production ramp from its Chisel North mine in Snow Lake, Man., to the Lalor deposit nearby.

Construction of the ramp is expected to take about 30 months and work is expected to begin immediately.

There will initially be about 30 people to get the first phase going, rising to 70 as construction advances.

"And when the project [mine] is at full production, we'll have between 350 and 400 people," HudBay CEO Peter R. Jones said.

The site is expected to provide approximately 1,200 tonnes of zinc ore per day once completed. After that, the ramp will be extended to make a drilling platform forexploring the site'sgold zones, the company said.

The company has previously said it believes the site could turn out to be one of the largest mining discoveries in recent Canadian history. That it is located so close to an existing mine and as such, has all the necessary road and power infrastructure in place is one of the reasons HudBay has called the site its "top priority."

"Lalor should ensure that our zinc plant runs at capacity and should more than double our annual gold production," Jones said.

Including the $85 million announced Thursday, capital costs for the entire project are expected to come in at around $450 million.

With the equivalent of about $850 million in its treasury, the company expects to fund the ramp entirely from its own resources.