UPDATE 1-HudBay to sell Lundin stake for C$236 mln

* Selling 16.7 percent stake to GMP Securities

* Expects pre-tax gain of about C$100 million

* Lundin stock down 9.6 percent at C$2.65

TORONTO, May 11 (Reuters) - HudBay Minerals (HBM.TO: Quote, Profile, Research) will sell its 16.7 percent stake in Lundin Mining (LUN.TO: Quote, Profile, Research) for C$236 million ($203 million), it said on Monday, pocketing a tidy gain on shares it bought as part of its ill-fated attempt to acquire Lundin last year.

HudBay will sell the stake to GMP Securities for cash and will pocket a pre-tax gain of about C$100 million due to the recent appreciation of Lundin's shares, HudBay said in a statement.

Those shares weakened nearly 10 percent on Monday, but it was unclear whether that was connected to the sale.

HudBay agreed to buy the stake last November as part of its friendly bid to take over Lundin. The share buy was meant to keep cash-strapped Lundin comfortably afloat while the two sides worked to close the deal.

However, the deal fell apart under pressure from HudBay shareholders, who objected to a 153 million share issue buy HudBay that was to be used to fund the acquisition.

"We believe this brings the HudBay arrangements to a final satisfactory conclusion," Lundin Chief Executive Phil Wright said in a separate statement.