Hudbay Minerals Inc · TSX:HBM

Hudbay Minerals — Credit Suisse marketing presentation March 2006

30 slides from Hudbay Minerals's conference presentation, March 2006

  1. Slide 1: HudBay, An Emerging Major Zinc Producer

    HudBay, HudBay, An An ““Emerging Emerging Major Major”” Zinc Zinc Producer Producer Peter R. Jones, President & CEO 1

  2. Slide 2: Forward Looking Statements

    Forward Looking Statements Certain information regarding HudBay set forth in these slides, including management’s assessment of HudBay’s future plans and operations contains forward­looking statements that involve substantial known and unknown risks and uncertainties. These forward looking statement

  3. Slide 3: HBMS Acquisition

    HBMS Acquisition w Pr No ior èPurchased for C $312M Dec. 21, 2004 èC $143.8M equity and US $175M debt 3

  4. Slide 4: Assets

    Assets Key Explor/Dev Properties Concentrators è Flin Flon è ~210,000 ha Flin Flon Greenstone Belt è Snow Lake è ~20,000 ha Balmat District è Balmat è Tom Zn/Pb Deposit Yukon Metallurgical Plants è Zn Plant Mines è Cu Smelter è 777 è Trout Lake Other è Chisel North è Zochem ­ ZnO Plant è Balmat è Wh

  5. Slide 5: Key Locations

    Key Locations Canada Toronto/Brampton 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 Trout Mine Snow Lake White Pine Refinery Concentrator Chisel North Mine Balmat Mine Zn Plant C

  6. Slide 6: Vertically Integrated

    Vertically Integrated TROUT LAKE SMELTER White Pine Mine Production Capacity ~0.9Mt ore FLIN FLON ~90,000 tpa Concentrator Cu Market Capacity 777 ~2.18M tpa ore Mine Purchased Production Concentrate ~1.35Mt ore Zn Market SNOW LAKE Concentrator CHISEL Capacity Zochem NORTH ~1.4M tpa ore ZINC ZINC PLA

  7. Slide 7: Annual Production

    Annual Production PRODUCT ANNUAL PRODUCTION Zinc Metal ~115,000 tonnes Zinc Oxide 45,000 tonnes Copper Metal ~90,000 tonnes Gold ~100,000 oz Silver ~1,000,000 oz Balmat Balmat Full Full Production Production to to Add Add 60,000 60,000 Zinc Zinc Tons Tons 7

  8. Slide 8: Manitoba Reserves & Resources

    Manitoba Reserves & Resources Million Au Ag Cu Zn Tonnes (g/t) (g/t) (%) (%) Reserves 21.4 1.8 21.1 2.0 5.3 Resources 4.9 1.2 19.1 1.0 7.45 As of January 1, 2006 Adequate to 2019 8

  9. Slide 9: HudBay Minerals Inc. Strong Management Team

    HudBay Minerals Inc. èFully vertically integrated èContinuous production since 1930 èExperienced management team èRecent C $435M capital investment èExcellent reserves and resources èStrong history of adding to reserves èHigh potential exploration lands Strong Strong Management Management Team Team

  10. Slide 10: Manitoba Operations Productivity

    Manitoba Operations Productivity Cu + Zn Tonnes per employee 140 140 tonnes tonnes 160 2004 2004 140 120 100 80 60 40 60 60 tonnes tonnes 1991 1991 20 0 ’91 ’92 ’93 ’94 ’95 ’96 ’97 ’98 ’99 ’00 ’01 ’02 ’03 ’04 No No Strike/Lockout Strike/Lockout Agreement Agreement to to 2012 2012 10

  11. Slide 11: Environment - Safety - Quality

    Environment ­ Safety ­ Quality 18 ISO 14001 OHSAS 18001 ISO 9001­2000 16 14 Environmental Safety Product Quality Management Management & Environment 12 10 8 6 Lost Time Accidents per 4 200,000 Hours Worked 2 0 ’94 ’95 ’96 ’97 ’98 ’99 ’00 ’01 ’02 ’03 ’04 ’05 Note:Includes ZOCHEM after 2001 Industry I

  12. Slide 12: Key Features - Manitoba Operations

    Key Features ­ Manitoba Operations èStrong performance since going public èNo strike/lockout to 2012 èStable and skilled labour force èLowest electrical power cost èGood transportation/infrastructure èStrong operations team èClosure costs confirmed High High Exploration Exploration Potential Potenti

  13. Slide 13: HudBay - Premiums

    HudBay ­ Premiums Copper ~90,000 tonnes anode per year White Pine Refinery ­ purchase complete Refining costs reduced to ~US $0.064/lb Premiums US $0.058/lb selling directly in 2006 Zinc 115,000 tonnes/year cast zinc ~ 25% to Zochem, 75% direct to customers Premium ~US $0.055 to 0.060/lb in 2006 ZnO

  14. Slide 14: Growth Strategy

    Growth Strategy Exploration è Primary Target Flin Flon Greenstone Belt è C $10M annually ­ in place Balmat/White Pine è Balmat to re­open ­ Q2 2006 è White Pine Refinery purchase complete M&A è Evaluations started è Building cash è Focus on zinc and (copper, gold and silver) Strategy Well Underway 1

  15. Slide 15: Manitoba - C$10M Exploration

    Manitoba ­ C $10M Exploration èElectromagnetic anomalies èKnown mineral deposits èStructural re­interpretations 15

  16. Slide 16: Balmat Zinc Mine Reopening

    Balmat Zinc Mine Reopening èUS $20M capital and US $0.40/lb operating cost èFirst production Q2 2006 Project Project On On Track Track 16

  17. Slide 17: Balmat Feasibility

    Balmat Feasibility è15%+ IRR, after tax, at zinc US $0.50/lb èFirst production Q2 2006 èZinc ~60,000 tons in concentrate annually èMine life target 9+ years èMajor project capital US $20M èTotal project unit cost ~US $0.48/lb zinc èOperating unit cost ~US $0.40/lb zinc Low Low Capital Capital and an

  18. Slide 18: White Pine Copper Refinery

    White Pine Copper Refinery Michigan, USA èCapital US $13M plus adjustments èCompletes copper vertical integration èReduces unit cost Purchase Complete 18

  19. Slide 19: Financial Sensitivity

    Financial Sensitivity èSignificant credits from Cu/Au/Ag and ZnO èZinc production costs net of by­products 2005 US $0.16/lb èZn price sensitivity ~C $2.9M per US $0.01/lb change èCu price sensitivity ~C $1.2M per US$0.01/lb change èPrecious metals revenue ~C $60M/annum èRevenue 2005 C $652M èTax los

  20. Slide 20: Financial Performance

    Financial Performance 2005 Cumulative Cash Flow C$ 2005 Quarterly Earnings C$ 145 $60 $160 $140 Operating Cash Flow Net Earnings 44 $120 88 $40 $100 66 $80 23 $60 $20 28 9 9 $40 $20 $0 $0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Demonstrated Results 2005 20

  21. Slide 21: Financial Performance: Net Debt and Cash Costs

    Financial Performance 2005 Net Debt to Capitalization C$ 2005 Cash Costs US$ $0.30 50% 43% $0.21 40% 35% 30% $0.20 30% 20% $0.10 $0.11 $0.09 20% $0.10 10% $0.00 (1) 0% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 (1) Excluding contractual change with CMM US $19 M Debt Repurchased $25 M Credit Facility Q1, 2006 21

  22. Slide 22: Comparable Trading Multiples

    Comparable Trading Multiples 2006E Multiples 2007E Multiples 12.0 16.0 10.0 14.0 12.0 8.0 10.0 P/E P/E 6.0 8.0 HudBay 6.0 4.0 HudBay 4.0 2.0 2.0 2.0 3.0 4.0 5.0 6.0 7.0 2.0 4.0 6.0 8.0 10.0 12.0 Price / Cash Flow Price /Cash Flow Low Multiple Compared to Peers 22

  23. Slide 23: Share Structure

    Share Structure $9.70 Oct 05 Nov Dec Jan 06 Feb Mar Shares ~84 Million Warrants ~37 Million Share Equiv. (Conv. 30 to 1) 23

  24. Slide 24: HudBay - Today

    HudBay ­ Today èExperienced management & operating teams èCommitted to safety and environment èFully vertically integrated èBenefiting from C $435M “777” Project Exploration èExcellent growth Balmat/White Pine Acquisitions Safe, Productive & Growing 24

  25. Slide 25: Delivering Results

    Delivering Results 2005 Expectations 2005 Performance èEfficient, productive èGreat performance operations èComplete Balmat èBalmat first production feasibility Q2 2006 èComplete vertical èWhite Pine acquisition integration complete èComplete environmental èProvisions adequate assessment èIncrease e

  26. Slide 26: Growth

    Growth èFinancially well positioned èStrong technical/management teams èProven mining and metallurgical competency èFocus ­ zinc (plus copper and precious metals) èPersonnel in place to identify opportunities Key Key Focus Focus Going Going Forward Forward 26

  27. Slide 27: Copper Industry Overview

    Copper Industry Overview World Production & Consumption M Tonnes 24 Consumption 22 Mine Production Capacity Production from Existing Mines 20 Probable A Projects Probable B Project 18 16 14 12 Increase 4.1% 10 Per Annum Until 2010 8 ‘88 ‘91 ‘94 ‘97 ‘00 ‘03 ‘06 ‘09 ‘12 ‘15 27 Source: Brook Hunt

  28. Slide 28: Copper Industry Overview: World Consumption

    Copper Industry Overview World Consumption 2004 2015 Western Western Europe China Europe China 22.4% 25.3% 19.6% 21.1% Africa Africa 1.1% Eastern 0.9% Bloc North North 6.4% North America America America Eastern 13.6% 13.6% 16.0% Bloc 7.7% Oceania Asia 1.0% (excl Japan) Oceania 19.2% 1.1% Asia Japan

  29. Slide 29: Zinc Industry Overview

    Zinc Industry Overview World Production & Consumption M Tonnes 14 Consumption 13 Mine Production Capacity Production from Existing Mines 12 Probable A Projects Probable B Project 11 10 9 8 7 6 ‘88 ‘91 ‘94 ‘97 ‘00 ‘03 ‘06 ‘09 ‘12 ‘15 29 Source: Brook Hunt

  30. Slide 30: Zinc Industry Overview: World Consumption

    Zinc Industry Overview World Consumption 2004 2015 Western China Europe China Western 22.5% 23.0% 27.1% Europe 20.2% Eastern Bloc 5.5% North North America America 13.9% Eastern 12.7% Bloc Latin 5.6% America 6.0% Japan Japan 5.3% Latin Asia 6.3% America Oceania (excl Japan 5.9% & Ebloc) Africa Oceani

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