Hudbay Minerals Inc · TSX:HBM
Hudbay Minerals — Investor Presentation (June 2006)
34 slides from Hudbay Minerals's investor presentation, Jun 8, 2006
Slide 1: HudBay, An "Emerging Major" Zinc Producer
HudBay, HudBay, An An ““Emerging Emerging Major” Zinc Major” Zinc Producer Producer June 8, 2006 Investor Tour at HudBay Minerals Inc. Flin Flon Operations 1 Forward Looking Statements Certain information regarding HudBay set forth in these slides, including management’s assessment of HudBay’s futur
Slide 2: HBMS Acquisition and Assets
HBMS Acquisition w Pr No ior ÎPurchased for C $316M Dec. 21, 2004 ÎC $143.8M equity and US $175M debt 3 Assets Key Explor/Dev Properties Concentrators Î Flin Flon Î ~300,000 ha Flin Flon Greenstone Belt Î Snow Lake Î ~20,000 ha Balmat District Î Balmat Î Tom Zn/Pb Deposit Yukon Metallurgical Plants
Slide 3: Key Locations / Vertically Integrated
Key Locations Toronto/Brampton Canada CMM Marketing Flin Flon Zochem ZnO Snow Lake Balmat Mine Winnipeg Balmat Zinc Mine Concentrator Flin Flon Toronto/Brampton White Pine Refinery 777 Mine Copper Refinery Snow Lake Trout Mine Chisel North Mine White Pine Refinery Concentrator Concentrator Zn Plant
Slide 4: 2005 Production / Reserves & Resources
2005 Production PRODUCT 2005 PRODUCTION Zinc Metal 114,700 tonnes Zinc Oxide (sold) 43,200 tonnes Copper Metal 86,300 tonnes Gold 102,400 oz Silver 1,410,500 oz Balmat Balmat Full Full Production Production to to Add Add 60,000 60,000 Zinc Zinc Tons Tons in in Concentrate Concentrate 7 Reserves & Re
Slide 5: HudBay Minerals Inc. / Environment - Safety - Quality
HudBay Minerals Inc. ÎFully vertically integrated ÎContinuous production since 1930 ÎExperienced management team ÎRecent C $435M capital investment ÎSolid reserves and resources ÎStrong history of adding to reserves ÎExtensive exploration lands Strong Strong Management Management Team Team 9 Environ
Slide 6: Key Features - Manitoba Operations / High Premiums
Key Features - Manitoba Operations ÎStrong performance 2005 and Q1 2006 ÎNo strike/lockout to 2012 ÎStable and skilled labour force ÎLow electrical power cost ÎGood transportation/infrastructure ÎStrong operations team ÎClosure costs confirmed Exploration Exploration Potential Potential 11 HudBay -
Slide 7: Growth Strategy
Growth Strategy Exploration Î Primary Target Flin Flon Greenstone Belt Î C $10M annually - in place Balmat/White Pine Î Balmat re-opened May 2006 Î White Pine Refinery purchase complete M&A Î Evaluations underway Î Building financial strength Î Focus on zinc and (copper, gold and silver) Strategy we
Slide 8: Balmat Zinc Mine Reopening / Feasibility
Balmat Zinc Mine Reopening ÎUS $20M capital and US $0.40/lb operating cost ÎFirst production May 2006 Ramp-up Underway Ramp-up Underway 15 Balmat Feasibility Î15%+ IRR, after tax, at zinc US $0.50/lb ÎProduction started May 2006 ÎZinc ~60,000 tons in concentrate annually - 2008 ÎMine life target 9+
Slide 9: White Pine Copper Refinery / Delivering Results
White Pine Copper Refinery Michigan, USA ÎCapital US $15.1M ÎCompletes copper vertical integration ÎReduces unit cost Purchase Purchase Complete Complete January January 1, 1, 2006 2006 17 Delivering Results 2005 Expectations 2005 Performance ÎEfficient, productive ÎOn Plan operations ÎComplete Balm
Slide 10: Earnings / Operating Cashflow
Earnings $76 $80 $60 s ng rni $44 (millions) Ea $40 $23 $20 $9 $9 $0 Q1/05 Q2/05 Q3/05 Q4/05 Q1/06 Consistently Consistently Stronger Stronger Results Results 2005 2005 & & Q1 Q1 2006 2006 19 Operating Cashflow $90 $78 $80 w $70 hflo g Cas n rati $60 Ope (millions) $50 $33 $33 $35 $40 $25 $30 $20 $1
Slide 11: Unhedged Metals Revenues / Tax Pools
Unhedged Metals $208 $210 $200 $190 (millions) es ve nu $180 Re $173 $169 $170 $158 $160 $151 $150 $140 Q1/05 Q2/05 Q3/05 Q4/05 Q1/06 Full Full Benefit Benefit of of Metal Metal Prices Prices 21 Tax Pools Available in Canada Over $1 billion $1.20 $1.00 $0.80 (billions) $0.60 $0.40 $0.16 $0.20 $0.00
Slide 12: 2005 Sensitivity Analysis / Low Unit Costs
2005 Sensitivity Analysis 35 C $29 Effect on 2005 Annual Net Income 30 25 (millions) 20 C $12 15 10 C $1 C $3 C $1 5 0 Zinc (10 Copper (10 Gold Silver US $1 to cents/lb) cents/lb) ($25/oz.) ($1/oz.) C $1 * Excludes Balmat Most Most Sensitive Sensitive to to Zinc Zinc Price Price 23 Low Unit Costs Ca
Slide 13: A Strengthening Balance Sheet / Debt Reduction
A Strengthening Balance Sheet 40% 35% Ne 30% 27% tD eb t 24% 20% 14% 15% 10% Q1/05 Q2/05 Q3/05 Q4/05 Q1/06 Net Net Debt Debt to to Book Book Capitalization Capitalization 25 9 5/8% US Long Term Notes $200 $175 $156 $150 (millions) $100 $68 $50 $0 21-Dec-04 2005 May 2006 Debt Debt Reduction Reduction
Slide 14: Share Price Performance / HudBay - Today
Share Price Performance $16 HudBay Minerals (HBM -TSX) $12 (C$) $8 $4 12/1/05 2/1/06 4/1/06 6/6/06 Shares Shares ~~ 88 88 million million Warrants Warrants ~~ 35 35 million million share share equivalent equivalent (Conv Conv 30 ((Conv 30 to to 1) 1) 27 HudBay - Today ÎExperienced management & opera
Slide 15: Targeting Growth / Overview: Hudson Bay Mining and Smelting
Targeting Growth ÎFinancially well positioned ÎBecome a major Canadian mining company ÎStrong technical/management teams ÎPersonnel in place to identify opportunities Key Key Focus Focus Going Going Forward Forward 29 Overview Hudson Bay Mining and Smelting Co., Limited
Slide 16: HBMS Leadership Team / Location
HBMS Leadership Team Peter R. Jones President and CEO Russell Rood President, Mining Division Alan Hair VP Metallurgy & SHE Tom Goodman VP HR & Technical Services Brian Gordon VP and General Counsel Jeff Swinoga Chief Financial Officer 31 Location 3 2 1 4 5 •bbb 32
Slide 17: History / HBMS Flowchart
History • Discovery 1915 • Construction 1927 • Production 1930 Current Status • Two sites - Flin Flon/Snow Lake • 4 mines and 2 ore concentrators • 115,000 t/a zinc & 90,000 t/a copper • ZnO Division - Ontario • Marketing by CMM • Purchase White Pine Refinery - 2006 • 777 Project 2004 $435 M Thomas
Slide 18: HudBay Mineral Reserves/Resources as at Jan. 1, 2006
HudBay Mineral Reserves/Resources as at Jan. 1, 2006 Tonnes Au (g/t) Ag (g/t) Cu (%) Zn (%) 777 • 21.4 million tonnes reserves Proven 3,474,000 2.5 28.4 2.4 4.7 Probable 12,261,000 2.1 25.7 2.5 4.4 • Business Plan to 2019 Trout Lake Proven 1,433,000 1.0 11.1 1.4 4.7 Probable 1,058,000 1.7 20.5 2.5 4
Slide 19: Trout Lake Mine / Chisel North Mine
Trout Lake Mine Trout Ore Production Unit Cost Trout Productivity 1100.0 50.00 6000 Tonnes / Employee 5500 1000.0 40.00 5000 000 Tonnes C$ / tonne 900.0 30.00 4500 800.0 4000 20.00 3500 700.0 10.00 3000 600.0 2500 500.0 0.00 2000 95 96 97 98 99 00 01 02 03 04 05 95 96 97 98 99 00 01 02 03 04 05 95 9
Slide 20: Flin Flon Concentrator
Flin Flon Concentrator CALLINAN ORE TROUT LAKE ORE BELLY DUMP TRUCKS REQUIRED BELLY DUMP TRUCKS REQUIRED 200 200 200 200 300 300 300 300 (8) (2) TONS TONS TONS TONS TONS TONS TONS TONS ANNEX BINS TROUT LAKE LOAD-IN #1 #2 #3 #4 #5 #6 #7 #8 COARSE ORE (-6”) CONVEYOR 9 COARSE ORE BINS (-6”) TRANSFER CA
Slide 21: Zinc Plant
Zinc Plant ZI NC C ONCE NT RA TE U NLOADING FER RITE RES IDU E FERRITE LEAC H FEED PREPAR ATION CONC ENTRATE UNLOADING RAIL SPE NT DWG: F-14 -10- 002 AC ID FR OM FILT ER PLANT RAIL HBMS Zn C ONC . C ONV EYORS CONVE YORS THI CKE NER W INTER OPER AT ION (T HA W SHED FOR R AI LCA RS) O/F R ECY CLE SNOW
Slide 22: Zochem - Toronto / White Pine Copper Refinery
Zochem - Toronto P R O C E S S F LO W S H E E T R ail C a r F rom H .B .M . & S . M e l ti n g a t S H G S to r a g e 420 C N a tu r a l G a s B u r n e rs V a p o u r iz in g a t 9 0 7 C Z inc V apour C l e a n A ir E x h au st a t 150 C C a r tr id g e P r o p i o n i c A c id I n T yp e F il te r
Slide 23: CMM Inc. / HBMS Exploration
CMM Inc. CONSIDAR METAL MARKETING INC. A Joint Venture Company with Hudson Bay Mining and Smelting Co., Limited and Considar Inc. 45 HBMS Exploration 0 50 K ilo m e te r s N # Snow Lake # Flin Flon Trout Lake # # # 777 Chisel North # Konuto Lake # # # # Flin Flon Area Exploration Snow Lake Area Expl
Slide 24: Exploration / HBMS VMS Ore Body Growth
Exploration Ko nuto Photo "777" Flin Flon Greenstone Belt Mines Chisel No rth Callinan Namew Discovery Method Tro ut Spruce P oint Westarm Ro d Centennial Ruttan White A nderson Gho st & Lo st Stall Chisel Osborne Coro nation Flexar B irch Discovery Closure No rth Star Geological Do n Jo n Geophysic
Slide 25: HBMS Diamond Drilling / Employees
HBMS Diamond Drilling Flin Flon Metres Drilled vs Mines Discovered 100000 Osborne North Star, Chisel 90000 Birch, Ghost Callinan Flexar, Stall Namew Photo, Coronation 777 Konuto 80000 70000 60000 White, Centennial Metres Drilled Anderson, Westarm Dickstone Lost 50000 2005 40000 30000 20000 10000 0 1
Slide 26: Community Engagement / Safety 10 Year Trends
Community Engagement • Community Engagement Plan • Principal employer at: – Flin Flon – Creighton – Denare Beach – Snow Lake • Annual taxes and royalties $46,713,000(1) • Diversity: – Female 7.9% – First Nations 7.9% – Disabled 5.2% – Visible Minorities 3.1% (1) See HudBay 2005 Sustainability Report
Slide 27: Employee Health Programs / Balmat Zinc Mine Re-opening
Employee Health Programs Industrial Hygiene Occupational Health • Particulate monitoring • Injury treatment and referral • Noise monitoring • Fibrogenic screening and lung • WHMIS information Function testing Management • Hearing surveillance • Legislated reporting • Vision screening • Biological mo
Slide 28: Balmat Zinc Mine - District History
Balmat Zinc Mine 55 Balmat District History z Mined - 43M tons ore at 9.5% Zn 1915 to 2001 z Balmat & Pierrepont fed Balmat conc. 2001 z Balmat mine - care/maintenance May 2001 z Pierrepont mine closed Aug 2001 z St. Lawrence purchased Balmat Sep 2003 z HudBay Minerals Inc. established Dec 2004 z St
Slide 29: Balmat Mine Re-opening Location / Safety, Health & Environment
Balmat Mine Re-opening Flin Flin Flon, Flon, MB MB Valleyfield, Valleyfield, QC QC Antwerp, Antwerp, Belgium Belgium 2,225 2,225km km 158 158kmkm 5,736 5,736km km Aviles, Aviles, Spain Spain 5,409 5,409kmkm St. St. Lawrence Lawrence Zinc Zinc Balmat BalmatMine Mine Clarksville, Clarksville, TN TN 1,
Slide 30: Balmat Reopening Typical Costs / Mobile Equipment
Balmat Reopening Typical Costs Total Property Restart Concentrator Refurbishment Shaft/Hoist Upgrade Budget US $19.8M US $1.0M US $1.03M Mine Vent Upgrade Mine Development Mobile Equipment US $1.2M US $7.04M US $4.7M Note: US $4.8M in General & GME not Included Capital Capital Cost Cost on on Track
Slide 31: Operational Manpower / Summary
Operational Manpower z Key Staff Employed Mick Lawler President and Chief Operating Officer Doug Beachard HR Manager Jim Rice Superintendent of Technical Services Doug Sands Mine Superintendent Ryan Schermerhorn Concentrator Superintendent Curt Serviss Principal Geologist Debra Watson Controller Lee
Slide 32: White Pine Copper Refinery Purchased Jan 1, 2006
Overview White Pine Copper Refinery Purchased Jan 1, 2006 White Pine Copper Refinery Purchased Purchased by by HudBay HudBay Jan Jan 1, 1, 2006 2006 64
Slide 33: Assets Purchased / Refinery
Assets Purchased • ~ 75,000 tonnes/annum cathode copper refinery • Converter aisle • Hazlett anode caster • ASARCO furnace and shape’s plant • Office building • Various storage buildings, etc. • Purchase price US $15.1M • Purchase closed Jan 1, 2006 65 Refinery • Commissioned 1982 • Cost to construc
Slide 34: Advantages of White Pine Refinery
Advantages • WPCR provides – Good shipping location – Guaranteed refinery capacity – Exposure to achieve full premiums – Good cathode sales location – Expansion capability – Reduced operating cost ¢/lb US 6.3 ¢/lb vs. US 8.37 ¢/lb prior to purchase 67