Newly appointed interim HudBay CEO Colin Benner has scheduled a conference call today to discuss HudBay's strategy and answer questions regarding his recent appointment as chief executive of the embattled Canadian miner.
In a news release issued Sunday, HudBay again objected to former and would-be future CEO Peter R. Jones' suggestion to restart the Balmat and Chisel North mines. Balmat was closed in August 2008 following losses of more than $80 million.
Jones is the CEO candidate recommended by hedge fund SRM Global Master Fund (SRM), which owns an 11% interest in HudBay and is trying to replace the mining company's current board of directors. Jones convened a conference call on March 12 to explain his future plans for HudBay if SRM is successful in its bid to replace current management.
HudBay suspended production at Chisel North in January. In the company's latest news release, HudBay officials asserted, Not only would it be value-destructive to continue to mine Chisel North at current low zinc prices, it would compromise the viability of new opportunities, like Lalor.
Hudbay's strategy is to reopen Chisel North in several years at what are expected to be higher zinc prices, and eventually transition the Chisel North workforce at the time to Lalor to facilitate a smooth ramp-up of Lalor. Similarly, development of Lalor will support the addition of a copper recovery circuit at the Snow Lake concentrator, thereby enhancing the economics of mining at Chisel North.
Noting that Jones suggested that he would like to try to keep the Flin Flon copper smelter open, HudBay admitted, Recent movements in energy prices, foreign exchange rates and market treatment charges have mitigated the adverse economic impact of operating the smelter. HudBay is, however, investing in the needed infrastructure to ensure that the company is able to close the smelter when it is in HudBay's best interests to do so.
HudBay was also critical of Jones' plans to grow the company through acquisitions. A key part of HudBay's strategy during Mr. Jones' previous tenure as CEO was to grow the company by acquisition, and the HudBay Board's opinion is that Mr. Jones was unsuccessful in carrying out the strategy that had been proposed by management and approved by the board. Mr. Jones has no experience in mergers and acquisitions, and there is no reason to believe that he would be any more successful at this now than he was previously.
Benner was appointed March 9 to replace HudBay CEO Allen Palmiere, who was originally appointed as Jones' replacement. SRM had been trying to oust Palmiere from the CEO's job after the collapse of HudBay's proposed merger with Lundin Mining.
Jones is chairman and CEO of Adanac Molybdenum Corp., which is currently under bankruptcy protection.
HudBay director Benner has previously served as CEO of Lundin Mining, EuroZinc Mining and Breakwater Resources.