Hudbay Minerals Inc · TSX:HBM
Hudbay Minerals — Shareholder Meeting (June 2009)
34 slides from Hudbay Minerals's shareholder meeting presentation, Jun 19, 2009
Slide 1: Agenda
Agenda Formal business G. Wesley Voorheis, Chairman • Call meeting to order and appoint secretary and scrutineer • Presentation of the financial statements and auditors’ report • Election of directors • Appointment of auditors • Approval of resolution authorizing amendment to by-law • Other business
Slide 2: Forward-looking statements
Forward-looking statements All monetary amounts in Canadian dollars unless otherwise noted. Certain statements made at this meeting and in this presentation contain “forward-looking information”, within the meaning of applicable Canadian securities legislation. Forward-looking information includes,
Slide 3: Strength to Build the Future
Strength to Build the Future Annual and Special Meeting of Shareholders – June 19, 2009 Peter R. Jones, CEO and Michael D. Winship, President and COO
Slide 4: Building on a proud 80-year legacy
Building on a proud 80-year legacy • In continuous production for more than 80 years; profitably developed more than 25 mines • Fully integrated producer of base and precious metals • TSX: HBM • 153 million common shares outstanding • Current share price approximately C$8.00 4 Annual and Special Mee
Slide 5: A vertically integrated company
A vertically integrated company • We explore for new mineral deposits. • We develop mines. • We mine and concentrate ores. • We produce finished metals. • We sell these metals directly to customers. 5 Annual and Special Meeting of Shareholders – June 19, 2009
Slide 6: Key financial results
Key financial results Year ended Year ended 2008 2007 (C$ millions except per share amounts) Revenue 981.9 1,269.8 EBITDA 73.3 227.1 Earnings before tax 169.6 365.4 Net earnings 73.3 227.1 Net earnings per share $0.54 $1.79 EBITDA is included in this investor presentation because this statistic are
Slide 7: Key financial results
Key financial results Quarter ended Quarter ended March 31, 2009 March 31, 2008 (C$ millions except per share amounts) Revenue 161.8 271.6 EBITDA 15.5 71.0 Earnings before tax (5.3) 46.6 Net earnings (4.0) 21.6 Net earnings per share $(0.03) $0.17 EBITDA is included in this investor presentation bec
Slide 8: Strong cash position
Strong cash position • Cash and cash equivalents at March 31, 2009 was $609.8 million. • Cash and cash equivalents does not include proceeds from the recent sale of HudBay’s 16.7 per cent stake in Lundin Mining Corporation. • The sale closed on May 26, 2009 for cash proceeds of approximately $236 mi
Slide 9: HudBay’s flagship mine: 777
HudBay’s flagship mine: 777 • Located in Flin Flon, Manitoba • Estimated life of mine is approximately 2019 • Produces zinc, copper, gold and silver • Produced 1,470,290 tonnes of ore for year ended December 31, 2008 9 Annual and Special Meeting of Shareholders – June 19, 2009
Slide 10: Manitoba mines: Trout Lake, Chisel North
Manitoba mines: Trout Lake, Chisel North • Trout Lake: – Located in Flin Flon, Manitoba – Estimated life of mine ~ 2011 – Produces zinc, copper, gold and silver – Produced 776,205 tonnes of ore for year ended December 31, 2008 • Chisel North: – Zinc producer located in Snow Lake, Manitoba – Estimate
Slide 11: An integrated metallurgical complex
An integrated metallurgical complex Flin Flon Concentrator Flin Flon Copper Smelter, Flin Flon Zinc Plant White Pine Refinery • Zinc and copper concentrate • Modern plant • C38.1¢/lb copper cost at • 2,256,000 tonnes of ore at • Uses leading-edge smelter C$10.16/tonne technology to produce • US7.4¢/
Slide 12: Solid production results
Solid production results Production Year ended 2008 Zinc (000 tonnes) 125.3 Copper (000 tonnes) 74.7 Gold (000 troy ounces) 108.5 Silver (000 troy ounces) 2,293.9 12 Annual and Special Meeting of Shareholders – June 19, 2009
Slide 13: Committed. Sustainable. Responsible.
Committed. Sustainable. Responsible. • Substantial contributions to community initiatives in Manitoba and Guatemala • Lost time accident rate 1.0 per 200,000 hours worked, a favourable comparison to industry averages • HudBay complies with high management standards: – ISO 14001 and 9001 – OHSAS 1800
Slide 14: Difficult decisions in response to low metal prices
Difficult decisions in response to low metal prices • Balmat Mine placed on care and maintenance. • Fenix Project expenditures limited. • Chisel North Mine & Snow Lake Concentrator suspended. 14 Annual and Special Meeting of Shareholders – June 19, 2009
Slide 15: Operational initiatives to improve performance
Operational initiatives to improve performance • Employees from suspended operations replacing contractors wherever possible. • Suppliers challenged to reduce their prices. • Reducing dilution of ore to improve the grade that we deliver to concentrators. • Operating costs are tightly managed in all
Slide 16: Adopting renewed corporate governance
Adopting renewed corporate governance • Refined governance framework in effect that includes updated charters, policies and position descriptions available on HudBay’s website. • Shareholder approval required before issuing common shares in excess of 25% of those outstanding to make an acquisition.
Slide 17: Flin Flon copper smelter to close by July 1, 2010
Flin Flon copper smelter to close by July 1, 2010 • Commercial production at the copper smelter and the White Pine copper refinery in Michigan will cease • Not economical to operate given its design, location and the projected availability of copper concentrate • Emissions from the plant will not be
Slide 18: Smelter closure preparations underway
Smelter closure preparations underway • Installing filtration plant to allow for offshore ocean shipment • Minimal immediate closure costs expected due to integrated nature of the facilities • HudBay to work with our employees, unions, and governments to mitigate the impact of the closures 18 Annual
Slide 19: Growing internationally: The Fenix nickel deposit
Growing internationally: The Fenix nickel deposit • Acquired in August 2008 • Brownfield mine and pyrometallurgical facility • Fenix Nickel Project contains 41.4 million tonnes of saprolite reserves; 30 year mine life • Approximately 50 million pounds of nickel per year 19 Annual and Special Meeting
Slide 20: Fenix: current status
Fenix: current status • Environmental and construction permits for the brownfield expansion project have been received • Detailed engineering well- advanced • Expenditures limited in November 2008 when declining base metal prices impaired ability to fund project • Evaluation underway on low cost pow
Slide 21: Opportunities for growth in Flin Flon Greenstone Belt
Opportunities for growth in Flin Flon Greenstone Belt 21 Annual and Special Meeting of Shareholders – June 19, 2009
Slide 22: Growing domestically: The Lalor deposit
Growing domestically: The Lalor deposit • 100% owned deposit located in Snow Lake, Manitoba. • Recent discovery of new gold mineralization in a separate zone. • Winner of PDAC Bill Dennis award for a major Canadian discovery. • Six drills have completed approximately 154,000 metres of diamond drilli
Slide 23: Proximity to current operations
Proximity to current operations 23 Annual and Special Meeting of Shareholders – June 19, 2009
Slide 24: Potential to grow into a zinc and gold producer
Potential to grow into a zinc and gold producer • Separate zones of gold mineralization could offer Lalor a distinct mining horizon with principal credits derived from gold • Ongoing 2009 program to focus on extensions to separate gold zones, and the continuity of the zones • Scoping studies current
Slide 25: Our strategy
Our strategy • Build on our knowledge base, financial strength and the cash generated from our assets to grow into a dominant Canadian metals producer. This will enhance our ability to acquire and develop significant assets at home and in attractive locations around the world. • Continue to grow our
Slide 26: Strategic context: key strengths
Strategic context: key strengths • Highly experienced management team and workforce: – Proven skills across integrated operations, and – Strong metals marketing and project evaluation capabilities. • Long history of exploration success. • Substantial financial capacity while market valuations of com
Slide 27: Two key strategic initiatives
Two key strategic initiatives • Optimize our Manitoba operations: – Exploration, – Development, and – Acquisition. • Grow beyond our principal operating platform in Manitoba: – Development, and – Acquisition. 27 Annual and Special Meeting of Shareholders – June 19, 2009
Slide 28: Optimize our Manitoba operations
Optimize our Manitoba operations • Emphasize excellent environment, health and safety practices. • Maintain cost containment efforts. • Close copper smelter prior to July 1, 2010. • Run process plants at full capacity. • Monitor opportunities to restart Chisel North mine. • Aggressively pursue Lalor
Slide 29: Grow beyond our Manitoba operating platform
Grow beyond our Manitoba operating platform • Evaluate Fenix economics with power strategy and consider construction restart when metal prices and financing make good business sense. • Aggressively pursue acquisition opportunities, considering: – Disciplined approach, – Targeted criteria, – Focus on
Slide 30: Financial capacity
Financial capacity • Cash in hand favourably positions HudBay. • Additional financing accessible if necessary: – Corporate debt, – Precious metal credit, – Project financing, and – Partnerships. 30 Annual and Special Meeting of Shareholders – June 19, 2009
Slide 31: Acquisition strategy: areas of focus
Acquisition strategy: areas of focus Near-Term Near-Term Long-Term Current Development Development Development/ Producer (Low Capex) (High Capex) Exploration 1st Unlikely Unlikely Yes Yes Operating Cost Position Quartile 2nd Yes Yes Yes Yes Quartile 3rd Maybe Yes Maybe Unlikely Quartile 4th Unlikely
Slide 32: Creating shareholder value
Creating shareholder value • Attractive set of opportunities available that can create long- term value for shareholders. • As a result, we are not currently considering a substantial return of cash to shareholders. • First priority is to identify and act upon investment opportunities in best intere
Slide 33: Likely next steps
Likely next steps • Decision on advancing Lalor – expected in 2009. • Copper concentrate sales arrangements – expected in 2009. • Revised Fenix project plan – expected in early 2010. • Smelter closure – expected prior to July 1, 2010. • Reopening Chisel mine – ongoing review. • Continue to evaluate
Slide 34: HudBay's principal strengths
HudBay's principal strengths • Fully integrated base metal producer. • Portfolio of high quality assets. • Strong management record of operational expertise. • Long history of exploration success. • Solid record in safety, health and environmental protection. • Very strong financial position. 34 Ann