Hudbay Minerals Inc · TSX:HBM
Hudbay Minerals — Bank of America / Merrill Lynch 17th Annual Canada Mining Conference 2011
51 slides from Hudbay Minerals's conference presentation, Sep 9, 2011
Slide 1: Bank of America / Merrill Lynch – 17th Annual Canada Mining Conference
HBM Bank of America / Merrill Lynch – 17th Annual Canada Mining Conference September 8 – 9, 2011
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 key development projects, including the Lalor,
Slide 3: Lalor Project Disclaimer
Lalor Project Disclaimer 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 classified as a
Slide 4: Investment Highlights
Investment Highlights A significant re-rating opportunity 1 Production Growth • Significant copper, gold and zinc production growth of 155%, 105% and 60% respectively, anticipated over five years as Lalor and Constancia are put into production • Further production upside at Reed and Back Forty 2 Dis
Slide 5: Production Growth
Production Growth Further production growth expected from Reed and Back Forty (1) Cu Production Precious Metals Production Zn Production (kt) (koz) (kt) 125 240 150 200 125 100 160 100 75 120 75 50 80 50 25 40 25 0 0 0 2011E 2016E 2011E 2016E 2011E 2016E 155% Growth 105% Growth 60% Growth (2) (3) (4
Slide 6: Metals Reserves Growth
Metals Reserves Growth Near quadrupling of Cu equivalent reserves Copper Eq. Reserves & Resources (000 tonnes) 5334 288% increase in copper equivalent reserves 5,000 (all metals) 1550 4,000 68% increase in precious metals reserves 3198 713 and resources 288% 3,000 1286 Proven & Probable Reserves 3.0
Slide 7: Expansion in Commodity Exposure Per Share
Expansion in Commodity Exposure Per Share 2010 (1)(3) Copper Eq. Reserves & Pb 10% Cu 16% Resources per Share (lb Cu/sh) 68.1 70 Au Eq. 18% 60 19.8 50 45.8 Copper Zn 9.1 Zinc 56% 40 Gold equivalent 18.4 2011 (2)(3) Pb Mo Lead 30 4% Molybdenum 6% Cu 20 16.1 39.2 Au Eq. 39% 16% 10 11.3 Zn 0 33% 2010 2
Slide 8: Strong Financial Performance
Strong Financial Performance Strong financial results reflect higher metal sales volumes and prices Three Months Ended Six Months Ended June 30 June 30 2011 2010 2011 2010 Revenue 246,823 187,341 424,168 428,647 Profit before asset impairments1 39,967 4,431 56,764 15,014 EPS before asset impairments
Slide 9: Production Results
Production Results Strong financial results reflect higher metal sales volumes and prices Three Months Ended Six Months Ended Guidance1 June 30 June 30 2011 2010 2011 2010 2011 Copper tonnes 11,840 12,123 26,226 23,840 40-55,000 Zinc tonnes 16,881 24,961 36,086 40,103 70-90,000 Precious Metals2 troy
Slide 10: Solid Financial Position
Solid Financial Position Available liquidity of $1.1 billion with no debt June 30 2011 Available Liquidity (Pro-forma)1 $1.1 billion Long Term Debt 0 Shares Outstanding 171.4 million Annualized Dividend Yield2 1.7% 1 Includes cash, $300 million credit facility and $140 million for sale of Fenix proj
Slide 11: Americas Based Mining Company
Americas Based Mining Company 1 2 1 777 (MANITOBA) 4 2 Lalor (MANITOBA) 3 Constancia (PERU) 4 Back Forty (MICHIGAN) 3 Exploration Properties Producing/Development Properties 11
Slide 12: Flin Flon Greenstone Belt
Flin Flon Greenstone Belt Prolific and underexplored camp Lost Deposit Snow Lake Ore Concentrator Trout Lake Mine Lalor Snow Project Lake 777 Mine Flin Flon Chisel North Mine Reed Flin Flon Lake Amisk Ore Concentrator Hwy #39 Lake Zinc plant Reed Copper Project Hwy N N #10 25 km
Slide 13: 777 Mine
777 Mine Blue chip long-life operation set to expand • $20 million expansion of 777 North 777 OVERVIEW • Production growth Ownership 100% from expansion Life of Mine 9 years Annual Sustaining CAPEX1 $22 million • Underground Annual Ore Production (tonnes)2 1.49 million exploration access Mining Cost
Slide 14: 777 Mine
777 Mine Underground exploration potential being tested for the first time METALLURGICAL Downcast COMPLEX Downcast 777 SHAFT Raise 777 Shaft 530m level 840m level 0m 100m 200m 300m Mined areas 1412m level Resources to be mined Exploration Target Areas 14
Slide 15: Lalor
Lalor Development and construction on track SHAFT Development Shaft construction Full production via shaft Ownership 100% RAMP Projected Life of Mine 20 years Development Construction CAPEX (2010-2014) $704 million Construction of ramp Initial production Annual Sustaining CAPEX $22 million Estimated
Slide 16: Lalor
Lalor Exploration drilling further extends copper-gold zone1 500m Looking N70oW 0m 250m Vent Raise Production Shaft Ram 10 p fr o m Ch isel 11 Exploration Platform h 750m Ric Zn 31 30 20 DUB-189W01 24 8m 9.28 g/t Au, 46.9 g/t Ag h 21 Ric Au 1000m 25 Au Cu- DUB-274W02 26 Three zones of Cu-Au minerali
Slide 17: Benefits of Project Optimization
Benefits of Project Optimization1 Optimized Lalor Lalor – Aug. 4, 2010 Construction CAPEX C$ 704M C$ 560M Annual Sustaining C$ 22M C $15M CAPEX Production Rate 4,500 tpd 3,500 tpd Mining Costs $36 per tonne $56 per tonne Milling Costs $16 per tonne $24 per tonne 95% Zn 95% Zn 86% Cu 90% Cu Metallurg
Slide 18: Reed Copper Project
Reed Copper Project Construction decision expected by the end of 2011 • Application for advanced exploration permit expected to be submitted in Q3 2011 • Hole RLE006 on an adjacent option property tested these anomalies and intersected the Reed Copper Project following zones of mineralization: Locat
Slide 19: Constancia
Constancia US$116 million pre-construction program to enable construction decision in early 2012 Constancia Budget (US$M) Environmental, Permitting, Land 12 G&A 12 CONSTANCIA OVERVIEW 1 Engineering 10 Location Peru Ownership 100% Construction 27 Life of Mine 15 years Procurement 46 Avg. Annual Cu Pr
Slide 20: Constancia Exploration Program
Constancia Exploration Program Drilling confirms continuity of copper mineralization • Hole PO-11-077 intersected 2.48% copper over 52.5 Constancia Main meters and hole PO-11-079 North intersected 1.06% copper Pampacancha Skarn Target Cu-Au Sulphides over 44.7 meters • Obtained permits required to P
Slide 21: Back Forty Project
Back Forty Project Exploration drilling to continue on near deposit geophysical anomalies in Q3 2011 • Permit application and economic assessment are ongoing • Engineering efforts Oct. 15, 2010 Resource Table: Combined Open Pit & Underground focused on optimal size Ownership 51% (65%1) and scope of
Slide 22: Yukon: Tom & Jason
Yukon: Tom & Jason Active exploration to begin in mid-August 2011 • Two drills to test possible extensions to known mineralization • Will enable collection of metallurgical samples required for preparation of Tom & Jason Overview economic assessments Ownership 100% Life of Mine 7-18 years • Explorat
Slide 23: Exploration Program Highlights
Exploration Program Highlights 1 $68 Million Investment in 2011 Exploration • Includes US$9 million exploration spending at Constancia 2 One of the Largest Budgets in HudBay’s History 3 Nearly $33 Million in Flin Flon Greenstone Belt for Grassroots, Near Mine, and Exploration Near Projects 4 Expandi
Slide 24: Growth of Mineral Deposits
Growth of Mineral Deposits Discoveries in the Greenstone Belt Flin Flon Trout Lake ⁄⁄ 62.5 777 Lalor Stall Lake Chisel U/G Callinan Chisel Osborne Anderson Konuto Spruce Schist Lake Centennial Westarm Chisel Pit Initial resource Coronation Added resource White Lake Dickstone The mineral resource est
Slide 25: Clearly Defined Acquisition Strategy
Clearly Defined Acquisition Strategy Helps create sustainable underlying business value Focus on Americas, mining favourable jurisdictions VMS or porphyry deposits with exploration upside Transaction size of no more than 20% of market capitalization Add value through technical expertise and financia
Slide 26: Substantial Near Term News Flow
1 Substantial Near Term News Flow CONSTANCIA LALOR LALOR BACK FORTY Construction Initial production at a Underground drill Preparation for permit decision expected rate of 1,200 tonnes platform established application and in Q1 2012 per day by Q2-2012 economic assessment are ongoing; Engineering eff
Slide 27: Mission Statement
Mission Statement To create sustainable value through increased commodity exposure on a per share basis, in high quality and growing long life deposits in mining friendly jurisdictions 27
Slide 28: APPENDIX
APPENDIX 28
Slide 29: Appendix Contents
Appendix Contents • Cost Curves • 2011 Operating Guidance, Capital Expenditures and Exploration Spending Breakdown • Lalor Guidance, Mineralization and Plan Views • Constancia Project • Back Forty Deposit • Tom & Jason Deposit • South America Property • Early Stage Investments • Reserves & Resources
Slide 30: Gold Cost Curve
Gold Cost Curve 1,600 1,400 C1 Cash Cost (US$/oz Au) 1,200 1,000 800 777 Mine 1 600 Lalor 1 400 200 0 0 10 20 30 40 50 60 70 80 90 100 Cumulative Percentile Production (%) Source: Brook Hunt (curve) and HudBay estimates (777 Mine and Lalor). 1 Co-product cash costs calculated using Brook Hunt’s co-p
Slide 31: Copper Cost Curve
Copper Cost Curve 300 C1 Cash Cost (100 x US$/lb Cu) 250 200 150 777 Mine 1 100 Lalor 2 50 Constancia (LOM) 3 0 0 10 20 30 40 50 60 70 80 90 100 Cumulative Percentile Production (%) Source: Brook Hunt (777 Mine and curve) and HudBay estimates (Lalor). 1 Brook Hunt co-product cash costs. 2 Co-product
Slide 32: Zinc Cost Curve
Zinc Cost Curve 120 C1 Cash Cost (100 x US$/lb Zn) 100 80 777 Mine 1 Lalor 2 60 40 20 0 0 10 20 30 40 50 60 70 80 90 100 Cumulative Percentile Production (%) Source: Brook Hunt (777 Mine and curve) and HudBay estimates (Lalor). 1 Brook Hunt co-product cash costs. 2 Co-product cash costs calculated u
Slide 33: 2011 Operating Guidance
2011 Operating Guidance Metal in Concentrate1 Zinc tonnes 70,000 – 90,000 Copper tonnes 40,000 – 55,000 Gold Equivalent 2 ounces 95,000 – 120,000 777 Trout Lake Chisel North Ore Mined tonnes 1,490,000 450,000 260,000 Grades Zinc % 4.2% 2.8% 6.1% Copper % 2.8% 1.8% 0.5% Gold g/tonne 2.0 - - Silver g/
Slide 34: 2011 Operating Guidance – Zinc Plant
2011 Operating Guidance – Zinc Plant 2011 Flin Flon Zinc Plant Guidance Zinc concentrate treated Domestic tonnes 155,000 Purchased tonnes 65,000 Total tonnes 220,000 Recovery % 97% Zinc Produced tonnes 115,000 1 Unit Operating Costs C$/lb $0.31 - 0.35 1 Forecast unit operating costs are calculated o
Slide 35: 2011 Capital Expenditures
2011 Capital Expenditures • ~3/4 of Capex allocated to growth initiatives in 2011 • Well positioned to fund growth investments 2010 2011 (figures in C$ millions) Guidance Guidance Growth Lalor $65 $140 Constancia - 107 777 North - 8 Fenix - 13 Back Forty 14 - Total Growth Capital 79 268 Preparation
Slide 36: 2011 Exploration Expenditures
2011 Exploration Expenditures Total Meters (C$ millions) Drilled Constancia 9 25,000 Flin Flon Greenstone Belt Reed Copper Project & Cold/Lost 2 9,000 Grassroots Exploration (including Lalor) 27 80,000 Other 4 20,000 Total FFGB 33 109,000 Other Opportunities Fenix (excluding project development) 5 1
Slide 37: Lalor Project Guidance
Lalor Project Guidance • CAPEX for new concentrator (including paste backfill plant) estimated at $264 million • $120 million estimate in August 2010 for Snow Lake concentrator refurbishment • Incremental investment of $144 million brings total Lalor CAPEX to $704 million • Non-concentrator capital
Slide 38: Lalor Mineralization
Lalor Mineralization Tonnes Au Ag Cu Zn (millions) (g/t) (g/t) (%) (%) Reserves Proven - - - - - Probable 10.5 1.55 21.0 0.64 8.31 Base Metal Zone Mineral Resource Indicated 2.6 1.0 27.1 0.29 5.72 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 Pot
Slide 39: Lalor Project
Lalor Project Down plunge exploration potential 39
Slide 40: Constancia - Strategic Location
Constancia - Strategic Location Selected Cu Projects in Peru Established Mining District Cusco Xstrata – Las Bambas Rio Blanco Cerro Corona First Quantum – Haquira Galeno Antamina CUSCO DEPT. Toromocho Pan Pacific – Quechua Lima Las Bambas Marcona AREQUIPA DEPT. Haquira Constancia Xstrata – Antapacc
Slide 41: Constancia NI 43-101 Mineral Reserves
Constancia NI 43-101 Mineral Reserves Grade Contained Mt Cu (%) Mo (g/t) Ag (g/t) Au (g/t) Cu (mlb) Mo (mlb) Ag (koz) Au (koz) Reserves Proven 195 0.42 117 3.49 0.04 1,806 50 21,880 251 Probable 177 0.37 92 3.66 0.05 1,444 36 20,828 285 Total 372 0.39 105 3.57 0.05 3,250 86 42,708 536 Source: NI 43-
Slide 42: Peru Tax and Royalties
Peru Tax and Royalties • Royalties: • Staged Peruvian mining royalty based on NSR • 1% NSR – when NSR < US$60 million per annum • 2% NSR – when US$60 < NSR < US$120 million per annum • 3% NSR – when NSR > US$120 million per annum • 0.5% NSR Minera Livitaca and Katanga (capped at US$10 million) • Lab
Slide 43: The Back Forty Project – Mineral Resources
The Back Forty Project – Mineral Resources October 15, 2010* Classification Tonnes (millions) Au (g/t) Ag (g/t) Cu (%) Zn (%) Open Pit † Measured 14.1 1.59 16.97 0.15 2.54 Indicated 2.1 1.53 32.80 0.41 1.17 Measured and 16.2 1.58 19.00 0.18 2.36 Indicated Inferred 1.4 1.40 32.89 0.62 1.00 Undergroun
Slide 44: Tom and Jason
Tom and Jason 5,000 metre drill program to upgrade resource • 100% owned, located in the Selwyn Basin • Deposits are relatively shallow from surface to 600m depth • Can be accessed via ramp YUKON TERRITORY Tom & Jason In-situ Resource Value Properties Au Ag Zn Pb Cu Class MT $/t MacTung (g/t) (g/t)
Slide 45: South America – Property Acquisition
South America – Property Acquisition Pacific Ocean • Focus on Chile, Peru EL SALVADOR Cu and Columbia CHANARAL EL SALVADOR MANTOS VERDES Cu • Compilation of geological data at San COPIAPO Antonio CHILE CANDELARIA Cu • Option Agreement HUASCO VALLENAR signed for greenfield Cu- Antofagasta DOS AMIGOS
Slide 46: Investing in Early Stage Opportunities
Investing in Early Stage Opportunities Enables us to participate in development of new mining camps Project Location Strategic Consideration Equity Joint Ventures Aquila Resources Back Forty Michigan Advanced stage, gold-zinc VMS, Yes exploration upside VMS Ventures Reed Lake Manitoba VMS, near-term
Slide 47: Estimated Mineral Reserves
Estimated Mineral Reserves1 January 1, 2011 Mine Tonnes Au (g/t) Ag (g/t) Cu (%) Zn (%) 777 Proven 4,516,000 2.27 29.38 2.87% 4.44% Probable 8,307,000 1.79 27.31 1.78% 4.24% Total 12,823,000 1.96 28.04 2.16% 4.31% 777 NORTH Proven 81,000 1.61 26.52 0.68% 4.89% Probable 449,000 1.44 21.48 1.09% 3.31%
Slide 48: Other Mineral Resources
Other Mineral Resources Grade Contained t Cu (%) Zn (%) Ag (g/t) Au (g/t) Cu (mlb) Zn (mlb) Ag (koz) Au (koz) REED LAKE Measured - - - - - - - - - Indicated 2,550,000 4.52 0.91 7.86 0.64 254.1 51.2 644.4 52.5 M+I 2,550,000 4.52 0.91 7.86 0.64 254.1 51.2 644.4 52.5 Inferred 170,000 4.26 0.52 4.55 0.3
Slide 49: Reserves and Resources
Reserves and Resources • 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 and methods of data
Slide 50: Reserves and Resources
Reserves and Resources • Cashel Meagher, P.Geo., Vice President, Exploration, of HudBay Minerals Inc. is the Qualified Person accountable for the supervision of the technical information contained within this presentation as defined by NI 43-101 with respect to the Fenix project. • Greg Greenough, P
Slide 51: For more information contact: John Vincic
HBM For more information contact: John Vincic, VP of Investor Relations and Corporate Communications Tel: 416.362.0615 Email: john.vincic@hudbayminerals.com 2011.v.29 hudbayminerals.com
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