Hudbay Minerals Inc · TSX:HBM
Hudbay Minerals — Macquarie's 5th Annual Metals & Mining Conference 2011
54 slides from Hudbay Minerals's conference presentation, Dec 6, 2011
Slide 1: Macquarie's 5th Annual Metals & Mining Conference
HBM Macquarie’s 5th Annual Metals & Mining Conference December 6 – December 7, 2011
Slide 2: Forward Looking Information
Forward Looking Information This presentation contains "forward-looking information" within the meaning of applicable securities laws. Forward-looking information includes but is not limited to information concerning the company’s ability to develop its Lalor project, capital and operating cost assu
Slide 3: Lalor Project Disclaimer
Lalor Project Disclaimer HudBay's production decision with respect to Lalor was not based on the results of a pre-feasibility study or feasibility study of mineral resources demonstrating economic or technical viability, because significant portions of the deposit are not able to be classified as a
Slide 4: Investment Highlights
Investment Highlights A significant re-rating opportunity 1 Production Growth • Significant copper, gold and zinc production growth of 155%, 105% and 60% respectively, anticipated over five years as Lalor and Constancia are put into production • Further production upside at Reed and Back Forty 2 Dis
Slide 5: Production Growth
Production Growth Further production growth expected from Reed and Back Forty (1) Cu Production Precious Metals Production Zn Production (kt) (koz) (kt) 125 240 150 200 125 100 160 100 75 120 75 50 80 50 25 40 25 0 0 0 2011E 2016E 2011E 2016E 2011E 2016E 155% Growth 105% Growth 60% Growth (2) (3) (4
Slide 6: Metals Reserves Growth
Metals Reserves Growth Near quadrupling of Cu equivalent reserves Copper Eq. Reserves & Resources (000 tonnes) 5334 288% increase in copper equivalent reserves 5,000 (all metals) 1550 4,000 68% increase in precious metals reserves 3198 713 and resources 288% 3,000 1286 Proven & Probable Reserves 3.0
Slide 7: Expansion in Commodity Exposure Per Share
Expansion in Commodity Exposure Per Share 2010 (1)(3) Copper Eq. Reserves & Pb 10% Cu 16% Resources per Share (lb Cu/sh) 68.1 70 Au Eq. 18% 60 19.8 50 45.8 Copper Zn 9.1 Zinc 56% 40 Gold equivalent 18.4 2011 (2)(3) Pb Mo Lead 30 4% Molybdenum 6% Cu 20 16.1 39.2 Au Eq. 39% 16% 10 11.3 Zn 0 33% 2010 2
Slide 8: Strong Financial Performance
Strong Financial Performance Strong cash flows reflect higher metal sales volumes and prices Three Months Ended Nine Months Ended Sept 30 Sept 30 2011 2010 2011 2010 Revenue 212,335 167,778 636,503 596,425 Profit before tax 37,473 22,416 139,212 82,075 Profit (Loss) for the period (41,083) (1,743) (
Slide 9: Production Results
Production Results On track to meet full year guidance Three Months Ended Nine Months Ended Guidance1 Sept 30 Sept 30 2011 2010 2011 2010 2011 Copper 1 tonnes 14,264 14,913 40,490 38,753 40-55,000 Zinc 1 tonnes 18,160 18,091 54,246 58,194 70-90,000 Precious Metals 1,2 troy oz. 30,181 27,163 82,456 7
Slide 10: Solid Financial Position
Solid Financial Position Available liquidity of $1.1 billion with no debt September 30 2011 Available Liquidity 1 $1.1 billion Long Term Debt 0 Shares Outstanding 171.9 million Annualized Dividend Yield 2 2.1% 1 Includes cash, $300 million credit facility 2 As at market close on November 21, 2011 Ad
Slide 11: Americas Based Mining Company
Americas Based Mining Company 1 2 1 777 (MANITOBA) 4 2 Lalor (MANITOBA) 3 Constancia (PERU) 4 Back Forty (MICHIGAN) 3 Exploration Properties Producing/Development Properties 11
Slide 12: Flin Flon Greenstone Belt
Flin Flon Greenstone Belt Prolific and underexplored camp Lost Deposit Snow Lake Ore Concentrator Trout Lake Mine Lalor Snow Project Lake 777 Mine Flin Flon Chisel North Mine Reed Flin Flon Lake Amisk Ore Concentrator Hwy #39 Lake Zinc plant Reed Copper Project Hwy N N #10 25 km
Slide 13: 777 Mine
777 Mine Blue chip long-life operation set to expand • $20 million expansion of 777 North 777 OVERVIEW • Production growth Ownership 100% from expansion Life of Mine 9 years Annual Sustaining CAPEX1 $22 million • Underground Annual Ore Production (tonnes)2 1.49 million exploration access Mining Cost
Slide 14: 777 Mine
777 Mine Underground exploration potential being tested for the first time METALLURGICAL Downcast COMPLEX Downcast 777 SHAFT Raise 777 Shaft 530m level 840m level 0m 100m 200m 300m Mined areas 1412m level Resources to be mined Exploration Target Areas 14
Slide 15: Lalor
Lalor Development and construction on track SHAFT Development Shaft construction Full production via shaft Ownership 100% RAMP Projected Life of Mine 20 years Development Construction CAPEX (2010-2014) $704 million Construction of ramp Initial production Annual Sustaining CAPEX $22 million Estimated
Slide 16: Lalor
Lalor Construction moving indoors and underground Temporary Hoisting Water Treatment Plant Facility at Vent Raise Hoist Assembly Polishing Pond Bin House: Galloway into Production Shaft Hoist House 16
Slide 17: Lalor
Lalor Construction on track with first ore expected mid-2012 500m Looking N70oW 0m 250m Vent Raise Production Shaft Ram p fr o Exploration Platform m Ch isel 750m H1/2012 H2/2012 2013 - 2014 2015 ich Zn R h Ric Au 1000m Au Cu- 1250m Cu- Au z on e Base Metal Resource Gold Inferred Resource Gold Poten
Slide 18: Benefits of Project Optimization
Benefits of Project Optimization1 Optimized Lalor Lalor – Aug. 4, 2010 Construction CAPEX C$ 704M C$ 560M Annual Sustaining C$ 22M C $15M CAPEX Production Rate 4,500 tpd 3,500 tpd Mining Costs $36 per tonne $56 per tonne Milling Costs $16 per tonne $24 per tonne 95% Zn 95% Zn 86% Cu 90% Cu Metallurg
Slide 19: Reed Copper Deposit
Reed Copper Deposit • Advanced exploration permit application submitted Reed Copper Project • Permit could allow for early site development Location 120 km from Flin Flon 1 Ownership 70% • Preliminary economic Life of Mine ~5 years assessment study to be 2011 Resources completed in Q4 2011 Indicated
Slide 20: Reed Copper Deposit
Reed Copper Deposit Advancing pre-feasibility work • HudBay has a 70% interest in the Reed copper deposit pursuant to a joint venture with VMS Ventures • Two exploration drills followed up near previously announced hole RLE006 with the following mineralization: • 3.95 metres of 9.31% Cu from hole RL
Slide 21: Constancia
Constancia US$116 million pre-construction program to enable construction decision in Q1 2012 CONSTANCIA OVERVIEW 1 Location Peru Ownership 100% Constancia Budget (US$M) Life of Mine 15 years Environmental, Permitting, Land 12 Avg. Annual Cu Prod. 85,000 t G&A 12 Concentrator Capacity 70,000 tpd Eng
Slide 22: Constancia
Constancia Engineering, optimization and exploration proceeding well 22
Slide 23: Constancia Exploration Program
Constancia Exploration Program Drilling confirms continuity of copper mineralization • Hole PO-11-086 intersected 1.83% copper and 0.96 g/t gold over 49 metres Constancia Main • Pampacancha resource North estimate expected early-2012 Pampacancha Skarn Target Cu-Au Sulphides • Obtained permits requir
Slide 24: Back Forty Project
Back Forty Project Exploration drilling to continue on near deposit geophysical anomalies in Q4 2011 • Permit application and economic assessment are ongoing • Engineering efforts Oct. 15, 2010 Resource Table: Combined Open Pit & Underground focused on optimal size Ownership 51% (65%1) and scope of
Slide 25: Yukon: Tom & Jason
Yukon: Tom & Jason Preliminary economic assessment in early 2012 • 2011 Exploration program complete • Awaiting assay and metallurgical sampling results Tom & Jason Overview • Deposits are relatively shallow from Ownership 100% surface to 600m depth Life of Mine 7-18 years Production Rate TPD 2000-5
Slide 26: Exploration Program Highlights
Exploration Program Highlights 1 $68 Million Investment in 2011 Exploration • Includes US$9 million exploration spending at Constancia 2 One of the Largest Budgets in HudBay’s History 3 Nearly $33 Million in Flin Flon Greenstone Belt for Grassroots, Near Mine, and Exploration Near Projects 4 Expandi
Slide 27: Growth of Mineral Deposits
Growth of Mineral Deposits Discoveries in the Greenstone Belt Flin Flon Trout Lake ⁄⁄ 62.5 777 Lalor Stall Lake Chisel U/G Callinan Chisel Osborne Anderson Konuto Spruce Schist Lake Centennial Westarm Chisel Pit Initial resource Coronation Added resource White Lake Dickstone The mineral resource est
Slide 28: Clearly Defined Acquisition Strategy
Clearly Defined Acquisition Strategy Helps create sustainable underlying business value Focus on Americas, mining favourable jurisdictions VMS or porphyry deposits with exploration upside Transaction size of no more than 20% of market capitalization Add value through technical expertise and financia
Slide 29: Substantial Near Term News Flow
1 Substantial Near Term News Flow CONSTANCIA LALOR LALOR BACK FORTY Construction Initial production at a Underground Completion of decision expected rate of 1,200 tonnes exploration drill preliminary economic in Q1 2012 per day by Q2-2012 platform established assessment; Engineering efforts focused
Slide 30: Mission Statement
Mission Statement To create sustainable value through increased commodity exposure on a per share basis, in high quality and growing long life deposits in mining friendly jurisdictions 30
Slide 31: Appendix
APPENDIX 31
Slide 32: Appendix Contents
Appendix Contents • Cost Curves • 2011 Operating Guidance, Capital Expenditures and Exploration Spending Breakdown • Lalor Guidance, Mineralization and Plan Views • Constancia Project • Back Forty Deposit • Tom & Jason Deposit • South America Property • Early Stage Investments • Reserves & Resources
Slide 33: Gold Cost Curve
Gold Cost Curve 1,600 1,400 C1 Cash Cost (US$/oz Au) 1,200 1,000 800 777 Mine 1 600 Lalor 1 400 200 0 0 10 20 30 40 50 60 70 80 90 100 Cumulative Percentile Production (%) Source: Brook Hunt (curve) and HudBay estimates (777 Mine and Lalor). 1 Co-product cash costs calculated using Brook Hunt’s co-p
Slide 34: Copper Cost Curve
Copper Cost Curve 300 C1 Cash Cost (100 x US$/lb Cu) 250 200 150 777 Mine 1 100 Lalor 2 50 Constancia (LOM) 3 0 0 10 20 30 40 50 60 70 80 90 100 Cumulative Percentile Production (%) Source: Brook Hunt (777 Mine and curve) and HudBay estimates (Lalor). 1 Brook Hunt co-product cash costs. 2 Co-product
Slide 35: Zinc Cost Curve
Zinc Cost Curve 120 C1 Cash Cost (100 x US$/lb Zn) 100 80 777 Mine 1 Lalor 2 60 40 20 0 0 10 20 30 40 50 60 70 80 90 100 Cumulative Percentile Production (%) Source: Brook Hunt (777 Mine and curve) and HudBay estimates (Lalor). 1 Brook Hunt co-product cash costs. 2 Co-product cash costs calculated u
Slide 36: 2011 Operating Guidance
2011 Operating Guidance Metal in Concentrate1 Zinc tonnes 70,000 – 90,000 Copper tonnes 40,000 – 55,000 Gold Equivalent 2 ounces 95,000 – 120,000 777 Trout Lake Chisel North Ore Mined tonnes 1,490,000 450,000 260,000 Grades Zinc % 4.2% 3.4% 6.1% Copper % 2.8% 1.8% 0.5% Gold g/tonne 2.0 - - Silver g/
Slide 37: 2011 Operating Guidance – Zinc Plant
2011 Operating Guidance – Zinc Plant 2011 Flin Flon Zinc Plant Guidance Zinc concentrate treated Domestic tonnes 155,000 Purchased tonnes 65,000 Total tonnes 220,000 Recovery % 97% Zinc Produced tonnes 115,000 1 Unit Operating Costs C$/lb $0.31 - 0.35 1 Forecast unit operating costs are calculated o
Slide 38: 2011 Capital Expenditures
2011 Capital Expenditures • ~3/4 of Capex allocated to growth initiatives in 2011 • Well positioned to fund growth investments 2010 2011 (figures in C$ millions) Guidance Guidance Growth Lalor $65 $140 Constancia - 107 777 North - 8 Fenix - 13 Back Forty 14 - Total Growth Capital 79 268 Preparation
Slide 39: 2011 Exploration Expenditures
2011 Exploration Expenditures Total Meters (C$ millions) Drilled Constancia 9 25,000 Flin Flon Greenstone Belt Reed Copper Project & Cold/Lost 2 9,000 Grassroots Exploration (including Lalor) 27 80,000 Other 4 20,000 Total FFGB 33 109,000 Other Opportunities Fenix (excluding project development) 5 1
Slide 40: Lalor Project Guidance
Lalor Project Guidance • CAPEX for new concentrator (including paste backfill plant) estimated at $263 million • $120 million estimate in August 2010 for Snow Lake concentrator refurbishment • Incremental investment of $144 million brings total Lalor CAPEX to $704 million • Non-concentrator capital
Slide 41: Lalor Mineralization
Lalor Mineralization Tonnes Au Ag Cu Zn (millions) (g/t) (g/t) (%) (%) Reserves Proven - - - - - Probable 10.5 1.55 21.0 0.64 8.31 Base Metal Zone Mineral Resource Indicated 2.6 1.0 27.1 0.29 5.72 Inferred 4.8 1.3 26.2 0.58 9.25 Gold Zone Inferred Mineral Resource Inferred 5.4 4.7 30.6 0.47 0.46 Pot
Slide 42: Lalor Project
Lalor Project Down plunge exploration potential 42
Slide 43: Constancia - Strategic Location
Constancia - Strategic Location Selected Cu Projects in Peru Established Mining District Cusco Xstrata – Las Bambas Rio Blanco Cerro Corona First Quantum – Haquira Galeno Antamina CUSCO DEPT. Toromocho Pan Pacific – Quechua Lima Las Bambas Marcona AREQUIPA DEPT. Haquira Constancia Xstrata – Antapacc
Slide 44: Constancia NI 43-101 Mineral Reserves
Constancia NI 43-101 Mineral Reserves Grade Contained Mt Cu (%) Mo (g/t) Ag (g/t) Au (g/t) Cu (mlb) Mo (mlb) Ag (koz) Au (koz) Reserves Proven 195 0.42 117 3.49 0.04 1,806 50 21,880 251 Probable 177 0.37 92 3.66 0.05 1,444 36 20,828 285 Total 372 0.39 105 3.57 0.05 3,250 86 42,708 536 Source: NI 43-
Slide 45: Updated Peru Tax and Royalty Scheme
Updated Peru Tax and Royalty Scheme • What has changed? • Old royalty: 1% – 3% sliding scale royalty on sales (NSR) is being eliminated • New royalty: 1% – 12% marginal rate sliding scale applied on operating profit (EBIT) • Equivalent to: 0% – 7.1% effective rate, depending on operating profit marg
Slide 46: The Back Forty Project – Mineral Resources
The Back Forty Project – Mineral Resources October 15, 2010* Classification Tonnes (millions) Au (g/t) Ag (g/t) Cu (%) Zn (%) Open Pit † Measured 14.1 1.59 16.97 0.15 2.54 Indicated 2.1 1.53 32.80 0.41 1.17 Measured and 16.2 1.58 19.00 0.18 2.36 Indicated Inferred 1.4 1.40 32.89 0.62 1.00 Undergroun
Slide 47: Tom and Jason
Tom and Jason 5,000 metre drill program to upgrade resource • 100% owned, located in the Selwyn Basin • Deposits are relatively shallow from surface to 600m depth • Can be accessed via ramp YUKON TERRITORY Tom & Jason Properties MacTung NORTHWEST ~ TERRITORIES ad Faro Ro km nol Selwyn 200 Ca Ross Ri
Slide 48: South America – Property Acquisition
South America – Property Acquisition Pacific Ocean • Focus on Chile, Peru EL SALVADOR Cu and Colombia CHANARAL EL SALVADOR MANTOS VERDES Cu • Compilation of geological data at San COPIAPO Antonio CHILE CANDELARIA Cu • Option Agreement HUASCO VALLENAR signed for greenfield Cu- Antofagasta DOS AMIGOS
Slide 49: Investing in Early Stage Opportunities
Investing in Early Stage Opportunities Enables us to participate in development of new mining camps Project Location Strategic Consideration Equity Joint Ventures Aquila Resources Back Forty Michigan Advanced stage, gold-zinc VMS, Yes exploration upside VMS Ventures Reed Lake Manitoba VMS, near-term
Slide 50: Estimated Mineral Reserves
Estimated Mineral Reserves1 January 1, 2011 Mine Tonnes Au (g/t) Ag (g/t) Cu (%) Zn (%) 777 Proven 4,516,000 2.27 29.38 2.87% 4.44% Probable 8,307,000 1.79 27.31 1.78% 4.24% Total 12,823,000 1.96 28.04 2.16% 4.31% 777 NORTH Proven 81,000 1.61 26.52 0.68% 4.89% Probable 449,000 1.44 21.48 1.09% 3.31%
Slide 51: Other Mineral Resources
Other Mineral Resources Grade Contained t Cu (%) Zn (%) Ag (g/t) Au (g/t) Cu (mlb) Zn (mlb) Ag (koz) Au (koz) REED Measured - - - - - - - - - Indicated 2,550,000 4.52 0.91 7.86 0.64 254.1 51.2 644.4 52.5 M+I 2,550,000 4.52 0.91 7.86 0.64 254.1 51.2 644.4 52.5 Inferred 170,000 4.26 0.52 4.55 0.38 16.
Slide 52: Reserves and Resources
Reserves and Resources • To estimate mineral reserves, measured and indicated mineral resources were first estimated by a 12-step process, which includes determination of the integrity and validation of the data collected, including confirmation of specific gravity, assay results and methods of data
Slide 53: Reserves and Resources
Reserves and Resources • Robert Carter, P.Eng., Manager, Project Evaluation of HudBay Minerals Inc. is the Qualified Person accountable for the supervision of the technical information contained within this presentation as defined by NI 43-101 • Greg Greenough, P.Geo., a Senior Resource Geologist wi
Slide 54: For more information contact: John Vincic
HBM For more information contact: John Vincic, VP of Investor Relations and Corporate Communications Tel: 416.362.0615 Email: john.vincic@hudbayminerals.com 2011.v.37 hudbayminerals.com
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