Hudbay Minerals Inc · TSX:HBM
Hudbay Minerals — Bank of America – Merrill Lynch 16th Annual Mining Conference 2010
39 slides from Hudbay Minerals's conference presentation, Sep 10, 2010
Slide 1: Strength to Build the Future
Strength to Build the Future Investor Presentation Bank of America – Merrill Lynch 16th Annual Mining Conference 2010 September 9 – 10, 2010 David Garofalo, president and chief executive officer John Vincic, vice president of investor relations and corporate communications
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
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 1.8% SELF-FUNDING FOR THE LALOR PROJECT 8 August 2010 AND FLEXIBILITY TO PURSUE OTHER GROWTH OPPORTUNITIES
Slide 9: 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 9 August 2010
Slide 10: 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 10 August 2010 25 km
Slide 11: Manitoba Mines
Manitoba Mines 777: Flagship Mine Trout Lake Chisel North Ownership • 100% • 100% • 100% 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 equiva
Slide 12: 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 • Exploration upside at Lalor remains significant • Aggressive exploration program is ongoing Shaft Development Shaft construction Full Ramp production De
Slide 13: Lalor long section
500m Vent Raises Production Early Shaft Ram Production p fr o 10 m Ch Gold Exploration isel Platform 750m 11 Ric h Zn 31 30 20 24 h Ric Au 21 1000m 25 26 Au Cu- Proposed Development 27 40 1250m Cu- Base Metal Resource Au z on e Gold Inferred Resource Gold Potential Mineral DUB-270 4.8m 7 g/t Au, 21
Slide 14: Strong Projected Zinc Growth
Strong Projected Zinc Growth1 200,000 Zinc Payable Mine Production (tonnes) 150,000 50% 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 14 August 2010
Slide 15: 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 16: 2009 Gold Equivalent Production
2009 Gold Equivalent Production 500 400 Thousand Ounces 300 200 100 0 1 d E o d 09 es ng rs es ol af ol 16 20 in de G i m G rc 20 in M Se in os ou ay on rM ay on ef m B es m a in B ud iz la am gu rR ud M ur A H Ja G H a A St den ol G 1 Includes forecast production from existing mines together with L
Slide 17: 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 18: 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 18 August 2010 25 km
Slide 19: 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 19 OPTIMIZING NORTHERN MANITOBA August 2010
Slide 20: The Back Forty Project – Overview
The Back Forty Project – Overview • Joint venture with rights to earn Back Forty Deposit up to a 75% interest (NW of Stephenson, MI) • Advanced exploration-stage VMS zinc deposit with gold credits Tonnes Au Ag Cu Zn (millions) (g/t) (g/t) (%) (%) Back Forty Mineral Resources M&I 8.5 2.1 30.6 0.5 5.6
Slide 21: 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 22: Growing Internationally: The Fenix Nickel Deposit
Growing Internationally: The Fenix Nickel Deposit • Brownfield mine and smelting facility • Proven process technology • ~50 million lbs of annual nickel Fenix production • Multi-decade mine life with upside potential Tonnes Ni (millions) (%) Fenix Mineral Resources M&I 36.2 1.92 Inferred 9.7 1.80 22
Slide 23: 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 24: 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 25: Exploration budget: 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 26: 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 27: 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 28: Investment Highlights
Investment Highlights • Operational Excellence • Financial Strength • Growth Potential • Management Strengthened • NYSE Listing and Inaugural Dividend 28 August 2010
Slide 29: Strength to Build the Future
Strength to Build the Future For more information contact: John Vincic, VP of Investor Relations and Corporate Communications Tel: 416.362.0615 Email: john.vincic@hudbayminerals.com
Slide 30: APPENDIX
HUDBAY MINERALS Strength to Build the Future APPENDIX 30 August 2010
Slide 31: Appendix Contents
Appendix Contents • Lalor mineralization and copper-gold drill intersections • Reserves and Resources 31 August 2010
Slide 32: Lalor Mineralization
Lalor Mineralization Tonnes Au Ag Cu Zn (millions) (g/t) (g/t) (%) (%) Base Metal Zone Mineral Resource Indicated 13.3 1.6 24.9 0.66 8.87 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 Potential Gold Zone Conceptual Estimate 5.1 – 6.1 4.3 – 5.1 23
Slide 33: Lalor Copper-Gold Drill Intersections
Lalor Copper-Gold Drill Intersections HOLE From To Core East North Depth Au g/t Ag g/t Cu% Zn% Length meters meters meters meters(1) DUB252W01 1140.00 1149.12 9.12 2110 5604 -1128 12.54 26.67 3.69 0.18 and DUB252W01 1176.00 1189.39 13.39 2102 5607 -1166 8.08 15.33 1.60 0.12 DUB263W02 1253.08 1287.62
Slide 34: Favorable
* DUB265W01 – 6.44m OPEN DOWN PLUNGE 11.70 g/t Au 30.63 g/t Ag N 6.88 % Cu 0.37 % Zn * DUB265 – Assays Pending. No Notable Cu mineralization. Area DUB263W03 – 32.78m Metallurgical wedge – Previously released: Dec. 17, 2009 DUB189 – Previously released March 3, 2008 11.75 g/t Au 35.36 g/t Ag 5.89 % C
Slide 35: Estimated Mineral Reserves – January 1, 2010
Estimated Mineral Reserves – January 1, 2010 Mine Tonnes Au (g/t) Ag (g/t) Cu% Zn (%) 777 Proven 4,492,000 2.12 25.92 3.23 3.76 Probable 9,061,600 2.05 30.18 1.94 4.88 Trout Lake Proven 701,500 1.06 11.97 2.10 3.10 Probable 292,400 1.31 4.57 2.29 2.16 Chisel North Proven 276,500 - - - 8.64 Probable
Slide 36: Estimated Inferred Mineral Resources – January 1, 2010
Estimated Inferred Mineral Resources – January 1, 2010 Mine Tonnes Au (g/t) Ag (g/t) Cu% Zn (%) 777 1,413,400 1.8 30.9 1.1 4.7 Trout Lake 108,700 0.8 3.1 2.4 0.8 Chisel North 62,900 - - - 7.7 Total 1,585,000 Please refer to HudBay’s Annual Information Form and Management’s Discussion and Analysis fo
Slide 37: Reserves and Resources – HudBay Minerals
Reserves and Resources – HudBay Minerals • 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 a
Slide 38: The Back Forty Project – Mineral Resources January 12, 2009
The Back Forty Project – Mineral Resources January 12, 2009 Source: Aquila Resources Inc. (“Aquila”) Mineral Resource Statement(1) for the Back Forty Deposit, Michigan, U.S.A., SRK Consulting, January 12, 2009, as set forth in Aquila’s January 15, 2009 press release entitled “Aquila provides updated
Slide 39: Strength to Build the Future
Strength to Build the Future Investor Presentation Bank of America – Merrill Lynch 16th Annual Mining Conference 2010 September 9 – 10, 2010 David Garofalo, president and chief executive officer John Vincic, vice president of investor relations and corporate communications
HudBay Minerals — Bank of America – Merrill Lynch 16th Annual Mining Conference 2010 on 6ix