Hudbay Minerals Inc · TSX:HBM
Hudbay Minerals — Investor Presentation (November 2009)
45 slides from Hudbay Minerals's investor presentation, November 2009
Slide 1: Strength to Build the Future
Strength to Build the Future Investor Presentation November 2009 Warren Holmes, Executive Vice-Chairman David Bryson, Senior VP and CFO John Vincic, VP of IR and Corporate Communications
Slide 2: Forward-looking statements
Forward-looking statements All monetary amounts in Canadian dollars unless otherwise noted. Certain statements made at this meeting and in this presentation contain “forward-looking information”, within the meaning of applicable Canadian securities legislation. Forward-looking information includes,
Slide 3: Investment Highlights
Investment Highlights • Fully integrated base and precious metals producer. • Portfolio of quality assets. • Long history of exploration success. • Robust pipeline of exciting growth projects. • Solid record in safety, health and environmental protection. • Very strong financial position. • Strong m
Slide 4: Building on a proud 80-year legacy
Building on a proud 80-year legacy • More than 80 years of continuous production; profitably developed more than 25 mines • Fully integrated producer of base and precious metals • TSX: HBM • ~153 million common shares outstanding • Market cap of ~ $2.3B 4 November 2009
Slide 5: HudBay's flagship mine: 777
HudBay’s flagship mine: 777 • Located in Flin Flon, Manitoba • Estimated life of mine is 2019 with substantial opportunity for growth through exploration. • Produces zinc, copper, gold and silver • Produced 1,172,522 tonnes of ore for 9 months ended Sept/2009 • Ore production in first 9 months of 20
Slide 6: Other Manitoba mines: Trout Lake, Chisel North
Other Manitoba mines: Trout Lake, Chisel North • Trout Lake: – Located in Flin Flon, Manitoba – Estimated life of mine ~ 2011 – Produces zinc, copper, gold and silver – Produced 517,286 tonnes of ore for 9 months ended Sept/2009 • Chisel North: – Located in Snow Lake, Manitoba – Estimated life of mi
Slide 7: Integrated metallurgical complex
Integrated metallurgical complex Flin Flon Concentrator Flin Flon Copper Smelter, Flin Flon Zinc Plant White Pine Refinery • Annual capacity for 2.2M • Annual capacity for 115,000 tonnes ore. • Annual capacity for 95,000 tonnes cast zinc production. tonnes anode production. • Operating costs approxi
Slide 8: Financial Strength
Financial Strength Three months ended Nine months ended September 30, 2009 September 30, 2009 (C$000s except cash cost per pound) Total revenue 194,608 554,049 Net earnings 19,975 105,432 EBITDA1 59,065 103,156 Cash cost per pound of Zinc sold1 US $(0.16) US $0.04 Cash and cash equivalents2 880,292
Slide 9: Excellent project growth pipeline – Summary
Excellent project growth pipeline – Summary • Lalor Project – Large zinc/gold project in Flin Flon Greenstone Belt near existing operations. • Fenix Project – Major nickel project in Guatemala. • Back Forty Project – Advanced exploration-stage zinc/gold deposit in Michigan that could supply concentr
Slide 10: Lalor Project Summary
Lalor Project Summary • Near existing infrastructure & mine operations • Initial zinc discovery expanded to include gold zones • Recently discovered a potential new copper/gold zone • Potential for further exploration upside • Project is on “fast track” for development; $85M ramp is underway • Advan
Slide 11: Lalor Deposit Infrastructure
Lalor Deposit Infrastructure pow er line Town of precambrian volcanics Snow Lake Lalor Deposit Snow Hwy Lake 3 km #395 Photo Lake Mine Hwy #393 Chisel ke n North La rso Snow Lake de Mine Concentrator An Ore Chisel Lake Mine volcanics Hwy #392 Chisel Pit Mine N N 9.8 million tonnes mined to date 1 km
Slide 12: Exploration to Date
Exploration to Date Forecast to YE2009: Diamond Drilling 150,000 meters Parent Holes 103 Wedge Holes 72 Drilling $40 M to date Investment Est. $50 M by 2010 12 November 2009
Slide 13: Lalor Mineralization
Lalor Mineralization BASE METAL ZONES RESOURCES Tonnes Au Ag Cu Zn (millions) (g/t) (g/t) (%) (%) Indicated 12.3 1.6 24.2 0.66 8.70 Inferred 5.0 1.4 25.5 0.57 9.39 GOLD ZONES POTENTIAL MINERAL DEPOSITS (REPORTED AS RANGES) Tonnes Au Ag Cu Zn (millions) (g/t) (g/t) (%) (%) Total 10.6 – 12.0 4.3 – 5.2
Slide 14: 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 15: Lalor is demonstrating classic VMS trend
500m Lalor is demonstrating classic VMS trend from zinc to gold to copper-gold 10 Zin Cl 750m 11 c as Ri sic ch VM 31 S 20 Mi 30 ne ra Go liz ati 24 ld on Ri Tr ch en 21 d 1000m 25 Co 40 26 pp er -G Base Metal Resource 27 ol d Gold Potential Mineralization 1250m 0m 250m Looking N70oW 15 November 200
Slide 16: Access Methodology: Ramp + Shaft
Access Methodology: Ramp + Shaft Expected Ramp Benefits • Early production (1,200 tonnes per day starting in 2012) • Early access to underground drilling and bulk sampling (to upgrade gold zone to a resource classification) • Ability to begin underground development prior to shaft completion • More
Slide 17: Staged Access
Staged Access Order of magnitude $450 M, Preliminary Capital Cost including $85 M for Phase I Ramp from Chisel North mine to Lalor Phase I Already committed; construction to begin ASAP Site clearing, collaring the shaft, Phase II order long-lead equipment Sink shaft, construct and complete Phase III
Slide 18: Proposed development: ramp and shaft section
500m Vent Raises Production Shaft 10 Ram Early Production p fr o m Ch isel Gold Exploration Platform 750m 11 Ric h Zn 31 30 20 24 h Ric Au 21 1000m 25 Proposed Development Au Cu- Base Metal Resource 26 40 27 Gold Potential Mineralization Cu-A u zo n e 1250m 0m 250m Looking N70oW 18 November 2009
Slide 19: Ore Production & Processing
Ore Production & Processing Full Shaft Production Base Case • Base metal ore – Production estimate - 3,500 tonnes/day – Snow Lake concentrator capacity - 3,500 tonnes/day • Gold ore – Production estimate - 1,200 tonnes/day – Process through new gold concentrator or new circuit at Snow Lake concentra
Slide 20: Tentative "Fast Track" Project Timeline
Tentative “Fast Track” Project Timeline DEVELOPMENT: Ramp Shaft PRODUCTION: Ramp Shaft Q3 Q3 Q4 Q4 Q1 Q1 Q2 Q2 Q3 Q3 Q4 Q4 Q1 Q1 Q2 Q2 Q3 Q3 Q4 Q4 Q1 Q1 Q2 Q2 Q3 Q3 Q4 Q4 Q1 Q1 Q2 Q2 Q3 Q3 Q4 Q4 Q1 Q1 Q2 Q2 Q3 Q3 Q4 Q1 Q2 Q4 Q1 Q2 Q3 Q3 2009 2010 2011 2012 2013 2014 2015 20 November 2009
Slide 21: Expected Positive Implications of Lalor
Expected Positive Implications of Lalor • Production growth in zinc, gold & silver • More than fill Flin Flon zinc plant with 777 and Lalor zinc concentrate • More than 200,000 ounces of potential annual gold production between 777 and Lalor • Value-maximization alternatives for the gold potential a
Slide 22: Next Steps
Next Steps • Aggressively pursue exploration • Ramp to Lalor deposit • Restart Chisel North for Q2/2010 • Prepare feasibility study in 2010 LALOR IS OUR TOP PRIORITY 22 November 2009
Slide 23: Growing internationally: The Fenix nickel deposit
Growing internationally: The Fenix nickel deposit • Brownfield mine and pyrometallurgical facility • Proven process technology operated for three years • 41.4 million tonnes of saprolite reserves at 1.63% Ni • ~ 50 million pounds of nickel production per year • ~ 30 year mine life 23 November 2009
Slide 24: Fenix: next steps
Fenix: next steps • Environmental and construction permits received for brownfield expansion project • Engineering well-advanced • Evaluating opportunities for enhanced power supply and improved mine planning • JV partners and off-take agreements will be considered • Decision on how to proceed with
Slide 25: The Back Forty Project – overview
The Back Forty Project – overview • Acquired right to earn up to a 75% interest in Aquila Resources' Back Forty Project in Aug. 2009 • Advanced exploration-stage VMS zinc deposit with gold credits, in Michigan • 8.5 M tonnes measured and indicated 43-101 resource • Strategic fit and can provide conc
Slide 26: Two key strategic initiatives
Two key strategic initiatives • Optimize and grow our Manitoba operations: – Exploration, development and potential acquisitions • Grow beyond our principal operating platform in Manitoba: – Project development and potential acquisitions 26 November 2009
Slide 27: Grow beyond our Manitoba operating platform
Grow beyond our Manitoba operating platform • Advance Fenix project with power strategy and mine planning towards a 2010 restart decision • Pursue Back Forty project in Michigan with new mine potentially in 3 to 4 years • Pursue acquisition opportunities in Canada and abroad, considering: – Discipli
Slide 28: Focused next steps
Focused next steps • Advancing Lalor – Phase 1 development underway; update Cu-Au drill results before end of 2009. • Revised Fenix project plan – expected in early 2010. • Smelter closure – prior to July 1, 2010. • Reopening Chisel mine – underway with full production in Q2, 2010. • Continue to eva
Slide 29: HudBay's Investment Highlights
HudBay's Investment Highlights • Fully integrated base metal producer. • Portfolio of high quality assets. • Long history of exploration success. • Robust pipeline of exciting growth projects. • Solid record in safety, health and environmental protection. • Very strong financial position. • Strong m
Slide 30: APPENDIX
HUDBAY MINERALS Strength to Build the Future APPENDIX 30 November 2009
Slide 31: Appendix Contents
Appendix Contents • Production Guidance • Sustainability Overview • Corporate Governance Enhancements • Lalor – Supplemental Materials • Reserves and Resources – Estimated Mineral Reserves – January 1, 2009 – Estimated Inferred Mineral Resources – January 1, 2009 – Pre-development Properties – Janua
Slide 32: 2009 Production Guidance
2009 Production Guidance As a result of suspended operations at the Balmat and Chisel North mines, zinc production will be lower in 2009 than in 2008. In addition to its own concentrates, the company also expects to process less purchased copper concentrates in 2009 than in 2008, resulting in lower
Slide 33: Committed. Sustainable. Responsible.
Committed. Sustainable. Responsible. • Substantial contributions to community initiatives in Manitoba and Guatemala • Lost time accident rate 1.0 per 200,000 hours worked in 2008, a favourable comparison to industry averages • HudBay complies with high management standards: – ISO 14001 and 9001 – OH
Slide 34: Renewed corporate governance
Renewed corporate governance • Refined governance framework with updated charters and policies available on HudBay’s website. • Shareholder approval required before issuing common shares in excess of 25% of those outstanding to make an acquisition. • Directors and officers have meaningful share owne
Slide 35: Lalor Chronology
Lalor Chronology Initial Lalor Base Metal Gold zone Copper-gold drill hole/ resource identified zone announcement estimate identified March September January September 2007 2008 2009 VALUE & TONNAGE INCREASED WITH EACH UPDATE 35 November 2009
Slide 36: Discoveries vs. drilling
Discoveries vs. drilling 000s Meters Won PDAC Bill Dennis Award Drilled 100 North Star, Photo, Osborne, Chisel, Chisel Lalor Birch, Flexar, Konuto 90 Ghost, Stall North Coronation Callinan 777 80 Namew 70 White, Centennial, 60 Anderson, Westarm, Lost Dickstone 50 40 30 20 10 0 1950 1958 1966 1974 19
Slide 37: Historical Context
Historical Context Growth of mineral deposits: Discoveries in the Greenstone Belt Flin Flon Trout Lake ⁄⁄ 62.5 777 Lalor Lake Lalor Lake (base metal zone only) Stall Lake Chisel U/G Callinan Chisel Osborne Anderson Konuto Spruce Schist Lae Centennial Westarm Chisel Pit Coronation Initial resource Wh
Slide 38: Lalor 3D Views: Looking N70oW
Lalor 3D Views: Looking N70oW Base Metal Resource Gold Potential Mineralization 38 November 2009
Slide 39: Lalor 3D Views: Looking Down Plunge N20oE
Lalor 3D Views: Looking Down Plunge N20oE Base Metal Resource Gold Potential Mineralization 39 November 2009
Slide 40: Estimated Mineral Reserves – January 1, 2009
Estimated Mineral Reserves – January 1, 2009 Mine Tonnes Au (g/t) Ag (g/t) Cu% Zn (%) 777 Proven 4,392,700 2.4 27.0 3.2 4.1 Probable 10,039,800 2.3 30.2 2.1 4.8 Trout Lake Proven 1,094,700 1.1 11.8 1.8 3.8 Probable 532,900 2.2 10.5 2.6 3.2 Chisel North Proven 284,300 - - - 8.7 Probable 208,100 - - -
Slide 41: Estimated Inferred Mineral Resources – January 1, 2009
Estimated Inferred Mineral Resources – January 1, 2009 Mine Tonnes Au (g/t) Ag (g/t) Cu% Zn (%) 777 1.551,300 1.7 25.0 1.2 4.0 Trout Lake 178,300 1.2 3.8 2.8 1.4 Chisel North 60,500 - - - 7.8 Total 1,790,100 Please refer to HudBay’s Annual Information Form and Management’s Discussion and Analysis fo
Slide 42: Pre-development properties: Estimated Mineral Resources
Pre-development properties: Estimated Mineral Resources – January 1, 2009 Property Tonnes Au (g/t) Ag (g/t) Cu (%) Zn (%) Pb (%) Tom Indicated 4,980,000 - 47.8 - 6.6 4.4 Inferred 13,550,000 - 31.8 - 6.7 3.1 Jason Indicated 1,460,000 - 86.7 - 5.3 7.4 Inferred 11,000,000 - 36.4 - 6.8 4.0 Watts River I
Slide 43: 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 44: The Back Forty Project – Mineral Resources
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 45: Strength to Build the Future
Strength to Build the Future For more information contact: John Vincic, VP of IR and Corporate Communications Tel: 416.362.0615 Email: john.vincic@hudbayminerals.com
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