Hudbay Minerals Inc · TSX:HBM
Hudbay Minerals — Q2 2010 Earnings Presentation
32 slides from Hudbay Minerals's earnings presentation, Aug 5, 2010
Slide 1: Strength to Build the Future – Second Quarter 2010 Results
Strength to Build the Future Second Quarter 2010 Results August 5, 2010
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 and 777 North expansion, the abi
Slide 3: Forward Looking Information – Lalor Project and Qualified Person
Forward Looking Information Lalor Project 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
Slide 4: Investment Highlights
Investment Highlights • Operational Excellence • Cash costs of negative US$0.49 per pound of zinc sold in Q2 2010 • 1,400 employees with an average of 23 years of service • ISO14001 and OHSAS 18001 certified for environment, health and safety • 155 million tonnes from 26 mines discovered over 80 yea
Slide 5: Investment Highlights
Investment Highlights • Growth Potential • Lalor go ahead expected to nearly double annual gold production • Emerging "mid-tier level" gold production and undervalued resources • Reed Lake and other prospects provide potential growth in Northern Manitoba • One of the largest exploration budgets in C
Slide 6: Strong Financial Results
Strong Financial Results ($000s except per Three months ended Six months ended share amounts) June 30 June 30 2010 2009 2010 2009 Revenue 191,851 197,657 432,171 359,441 Net earnings 13,273 89,415 36,832 85,457 EBITDA1,2 69,707 28,598 153,151 44,091 Operating Cash Flow1,3 41,027 28,865 100,098 42,83
Slide 7: Operating Highlights - Production
Operating Highlights - Production Three months ended Six months ended 2010 Production June 30 June 30 Guidance (contained metal 2010 2009 2010 2009 in concentrate)1 Zinc tonnes 24,961 16,867 40,103 36,757 75-90,000 Copper tonnes 12,123 11,036 23,840 23,895 45-55,000 Gold troy oz. 21,002 22,610 41,01
Slide 8: Strong Financial Position
Strong Financial Position At June 30, 2010 Cash Position $911.8 million Working Capital $923.6 million Long Term Debt 0 Shares Outstanding 148.9 million Annualized Dividend Yield 1.80% SELF-FUNDING FOR THE LALOR PROJECT 8 Second Quarter 2010 Results AND FLEXIBILITY TO PURSUE OTHER GROWTH OPPORTUNITI
Slide 9: Steady Q2 Results as Expected
Steady Q2 Results as Expected • Production remains on track for all metals to meet 2010 guidance • Very strong zinc and other contained metal production in Q2 2010 • Strong grades reflect areas mined • Zinc plant constraints and rail car shortages in Q2 2010 expected to be made up for in balance of
Slide 10: North and Central America Locations
North and Central America Locations Snow Lake Chisel North Mine Concentrator Lalor Project Flin Flon 777 & Trout Lake Mines Concentrator Zinc Plant Toronto Head Office Zinc Oxide Plant Michigan Back Forty Deposit Guatemala Fenix Project 10 Second Quarter 2010 Results
Slide 11: Flin Flon Greenstone Belt
Flin Flon Greenstone Belt Cold Lake/Lost Lake Deposits Lalor Trout Lake Mine Deposit Snow Lake Snow Ore Concentrator Lake 777 Mine Flin Flon Chisel North Mine Reed Flin Flon Lake Amisk Ore Concentrator Hwy #39 Lake Zinc plant Reed Lake Deposit Hwy N N #10 11 Second Quarter 2010 Results 25 km
Slide 12: Manitoba Mines
Manitoba Mines 777: Flagship Mine Trout Lake Chisel North Life of mine • 2020 • 2012 • 2012 Q2 mining Cost/tonne ore • $33.42 • $61.70 • $56.51 Q2 Production1: • Copper • 9,400 tonnes • 2,900 tonnes • - • Zinc • 16,300 tonnes • 3,800 tonnes • 4,800 tonnes • Gold equivalent • 20,000 ounces • 4,900 ou
Slide 13: Full Commitment to Lalor Development (100% Owned)
Full Commitment to Lalor Development (100% Owned) • Accelerated $560 million construction program with first production in second quarter of 2012 • Growth of over 50% in expected annual zinc production • Expected to nearly double annual gold production • Exploration upside at Lalor remains significa
Slide 14: 3D View of Potential Au, Cu-Au, and Zn Rich Mineral Resource Zones
3D View of Potential Au, Cu-Au, and Zn Rich Mineral Resource Zones One drill completing hole testing down Looking 310°Azimuth plunge extension of Zone 10 0 100 200 metres Zone Wireframe Base Metal Zones 10 10 11 20 30 31 40 Wireframe Gold Zones 21 24 25 26 27 14 Second Quarter 2010 Results
Slide 15: Lalor Mine Development
Lalor Mine Development Shaft Development Shaft construction Full production via shaft Ramp Development Construction of ramp Initial production via ramp Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 2009 2010 2011 2012 2013 2014 2015 15 Second Quarter 2010 Results
Slide 16: Strong Projected Zinc Growth
Strong Projected Zinc Growth1 200,000 180,000 Zinc Payable Mine Production (tonnes) 160,000 140,000 120,000 50% 100,000 80,000 60,000 40,000 20,000 0 2010 2011 2012 2013 2014 2015 2016 1 Includes forecast production from existing mines together with Lalor and the 777 North expansion 16 Second Quarte
Slide 17: Strong Projected Precious Metals Growth
Strong Projected Precious Metals Growth2 Payable Gold Equivalent Production (Ounces) 250,000 200,000 Nearly 100% 150,000 100,000 50,000 0 2010 2011 2012 2013 2014 2015 2016 1 Includes forecast production from existing mines together with Lalor and the 777 North expansion 2 Silver converted to gold e
Slide 18: 2009 Gold Equivalent Production
2009 Gold Equivalent Production Thousand Ounces 500 450 400 350 300 250 200 150 100 50 0 1 d o E d 09 es ng rs s ol af 16 ol ce 20 in de G i m G 20 in ur M Se in os ay on M ay o on ef m B ar es m B in ud iz la am gu rR ud M ur A H Ja G H A a St d en ol G 1 Includes forecast production from existing
Slide 19: HudBay Gold Inventory
HudBay Gold Inventory Tonnes Au Ag Contained (g/t) (g/t) Au Equivalent (oz) Reserves 14,546,900 2.01 27.47 1,153,744 Measured & Indicated Resources 21,800,000 1.81 27.14 1,331,636 Inferred Resources 12,892,100 2.92 29.77 1,368,623 Conceptual Estimates 6,900,000 – 4.69 – 21.7 – 1,120,000 – 8,300,000
Slide 20: Flin Flon Greenstone Belt
Flin Flon Greenstone Belt Cold Lake/Lost Lake Deposits Lalor Trout Lake Mine Deposit Snow Lake Snow Ore Concentrator Lake 777 Mine Flin Flon Chisel North Mine Reed Flin Flon Lake Amisk Ore Concentrator Hwy #39 Lake Zinc plant Reed Lake Deposit Hwy N N #10 20 Second Quarter 2010 Results 25 km
Slide 21: Leveraging Opportunities in the Greenstone Belt
Leveraging Opportunities in the Greenstone Belt • Initiating development of 777 North (100% owned) • $20 million approved by Board • Drilling at Reed Lake to advance to development stage • Ongoing exploration on Halo’s Lost and Cold Properties 21 OPTIMIZING NORTHERN MANITOBA Second Quarter 2010 Resu
Slide 22: The Back Forty Project – Overview
The Back Forty Project – Overview • Acquired right to earn a 65% interest in Aquila Back Forty Deposit Resources' Back Forty (NW of Stephenson, MI) Project in Aug. 2009 • Advanced exploration- stage VMS zinc-gold deposit in Michigan • 8.5 million tonnes measured and indicated NI 43-101 resource • St
Slide 23: Progress at The Back Forty Project (65% owned)
Progress at The Back Forty Project (65% owned) • Updated NI 43-101 mineral resource estimate expected by year end 2010 • Mine permit application to State of Michigan expected in Q4 2011 • New exploration program in project area • Outlining the potential expansion of the known resource at depth • Tes
Slide 24: Growing Internationally: The Fenix Nickel Deposit
Growing Internationally: The Fenix Nickel Deposit • Brownfield mine and pyrometallurgical facility • Proven process technology operated for three years Fenix • 36.2 million tonnes of saprolite resources at 1.92% Ni, up 18% from previous estimate • ~50 million pounds of potential nickel production pe
Slide 25: Advancing the Fenix Project
Advancing the Fenix Project • Low technical risk, good logistics, potential for very long mine life • Seeking to mitigate social, financial and political risks • Pursue strategic partner and JV opportunities • Seek limited recourse project financing • Update feasibility study by year end 2010 result
Slide 26: Focused Acquisition Strategy
Focused Acquisition Strategy • Expanded management capacity to consider development stage opportunities • Focus on the Americas but will consider other mining favourable jurisdictions • Seeking VMS or porphyry deposits • Target transaction size of between 10 – 20% of market cap • Strategic partnersh
Slide 27: Flin Flon Greenstone Belt
Flin Flon Greenstone Belt • Outstanding record of success $20 million • Developed 26 mines over past 83 years • Land package totaling > 400,000 hectares Lalor $8 million • Devoted to further exploration Mines in Manitoba & outside the Province $14 million • • Invested in brownfield exploration Explo
Slide 28: Historical Context
Historical Context 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 Lae Centennial Westarm Chisel Pit Coronation Initial resource White Lake Dickstone Added resource Rod P
Slide 29: Strengthening our management team
Strengthening our management team • Key new hires and appointments announced • Enhancing our ability to go from sourcing to development to operating our projects • Experienced work force of more than 1,400 • Excellent track record for safety across operations • Strong record of environmental complia
Slide 30: Near term milestones
Near term milestones • Ongoing exploration at Lalor and various JV properties • NI 43-101 resource estimate at Reed Lake in early 2011; production decision to follow • Fenix feasibility study by year end 2010 results • New drilling program, updated resource estimate in late 2010 and environmental ap
Slide 31: Investment Highlights
Investment Highlights • Operational Excellence • Financial Strength • Growth Potential • Management Strengthened • NYSE Listing and Inaugural Dividend 31 Second Quarter 2010 Results
Slide 32: Strength to Build the Future
Strength to Build the Future Second Quarter 2010 Results August 5, 2010