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Proposed Acquisition of Norsemont Mining: Information Session

Proposed Acquisition of Norsemont Mining: Information Session. January 2011. Forward Looking Information.

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Proposed Acquisition of Norsemont Mining: Information Session

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  1. Proposed Acquisition of Norsemont Mining: Information Session January 2011

  2. 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 complete its acquisition of Norsemont Mining Inc., and to develop, construct and operate the Constancia project and the combined company, the ability of management to execute on key strategic and operational objectives, the ability to meet production forecasts, the potential impact of changing economic conditions on HudBay’s financial results and the company’s strategies and future prospects. Generally, forward-looking information can be identified by the use of forward-looking terminology such as "plans", "expects", or "does not expect", "is expected", "budget", "scheduled", "estimates", "forecasts", "intends", "anticipates", “understands” or "does not anticipate", or "believes" or variations of such words and phrases or statements that certain actions, events or results “will”, "may", "could", "would", "might", or "will be taken", "occur", or "be achieved". Forward-looking information is based on the views, opinions, intentions and estimates of management at the date the information is made, and is based on a number of assumptions and subject to a variety of risks and uncertainties and other factors that could cause actual events or results to differ materially from those anticipated or projected in the forward-looking information (including the actions of other parties who have agreed to do certain things and the approval of certain regulatory bodies). Many of these assumptions are based on factors and events that are not within the control of HudBay and there is no assurance they will prove to be correct. Factors that could cause actual results or events to vary materially from results or events anticipated by such forward-looking information include the ability to complete its acquisition of Norsemont and to develop and operate the Constancia project on an economic basis,, risks associated with the mining industry such as economic factors (including costs of construction materials, future commodity prices, currency fluctuations and energy prices), failure of plant, equipment, processes and transportation services to operate as anticipated, including new and upgraded facilities at Lalor, dependence on key personnel, employee relations and availability of equipment and skilled personnel, environmental risks, government regulation, actual results of current exploration activities, possible variations in ore grade, dilution or recovery rates, permitting timelines, capital expenditures, reclamation activities, land titles, and social and political developments and other risks of the mining industry, as well as those risk factors discussed in the company’s Annual Information Form dated March 30, 2010, which risks may cause actual results to differ materially from any forward-looking statement. Although HudBay has attempted to identify important factors that could cause actual actions, events or results to differ materially from those described in forward-looking information, there may be other factors that cause actions, events or results not to be anticipated, estimated or intended. There can be no assurance that forward-looking information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such information. HudBay undertakes no obligation to update forward-looking information if circumstances or management's estimates or opinions should change except as required by applicable securities laws, or to comment on analyses, expectations or statements made by third parties in respect of HudBay, its financial or operating results or its securities. The reader is cautioned not to place undue reliance on forward-looking information. 2 2

  3. Forward Looking Information Qualified Person Technical and scientific information respecting the Constancia project has been taken from Norsemont’s NI 43-101 technical report entitled “Constancia Copper Project – Definitive Feasibility Study Technical Report NI 43-101,” dated September 28, 2009 available at www.sedar.com. Cashel Meagher P.Geo, VP Exploration for HudBay Minerals Inc. is a qualified person within the meaning of NI 43-101, and has reviewed and approved the scientific and technical information referred to in this presentation. Note to U.S. Investors Information concerning the mineral properties of the Company has been prepared in accordance with the requirements of Canadian securities laws, which differ in material respects from the requirements of SEC Industry Guide 7. Under SEC Industry Guide 7, mineralization may not be classified as a “reserve” unless the determination has been made that the mineralization could be economically and legally produced or extracted at the time of the reserve determination, and the SEC does not recognize the reporting of mineral deposits which do not meet the SEC Industry Guide 7 definition of “Reserve”. In accordance with National Instrument 43-101 - Standards of Disclosure for Mineral Projects (“NI 43-101”) of the Canadian Securities Administrators, the terms “mineral reserve”, “proven mineral reserve”, “probable mineral reserve”, “mineral resource”, “measured mineral resource”, “indicated mineral resource” and “inferred mineral resource” are defined in the Canadian Institute of Mining, Metallurgy and Petroleum (the “CIM”) Definition Standards for Mineral Resources and Mineral Reserves adopted by the CIM Council on December 11, 2005. While the terms “mineral resource”, “measured mineral resource”, “indicated mineral resource” and “inferred mineral resource” are recognized and required by NI 43-101, the SEC does not recognize them. You are cautioned that, except for that portion of mineral resources classified as mineral reserves, mineral resources do not have demonstrated economic value. Inferred mineral resources have a high degree of uncertainty as to their existence and as to whether they can be economically or legally mined. Under Canadian securities laws, estimates of inferred mineral resources may not form the basis of an economic analysis. It cannot be assumed that all or any part of an inferred mineral resource will ever be upgraded to a higher category. Therefore, you are cautioned not to assume that all or any part of an inferred mineral resource exists, that it can be economically or legally mined, or that it will ever be upgraded to a higher category. Likewise, you are cautioned not to assume that all or any part of measured or indicated mineral resources will ever be upgraded into mineral reserves. You are urged to consider closely the disclosure on the technical terms in Schedule A “Glossary of Mining Terms” of our AIF for the fiscal year ended December 31, 2009, available on SEDAR at www.sedar.com and incorporated by reference as Exhibit 99.8 in our Form 40-F filed on October 19, 2010 (File No. 001- 34244). All amounts listed are in Canadian dollars. 3 3

  4. Consistent with Acquisition Strategy Key permits in place, low cash costs in a highly prospective region

  5. Transaction Summary Terms • Assuming maximum share election • Based on Norsemont fully diluted shares outstanding of 118.3 million shares, excluding 1.4 million shares already owned by HudBay, using HudBay’s closing price of $16.76 as at January 7, 2011 5 5

  6. Other Transaction Considerations • Transaction Enterprise Value: approximately $430 million • As at September 30, 2010 plus 400,000 options issued to directors subsequent to September 30, 2010 (sourced from SEDI) • As at September 30, 2010 less 6,319,853 warrants exercised on December 14, 2010 (sourced from early warning report filed on SEDAR) Convertible Notes: $9.8 million outstanding, convertible at $1.70/sh Options(1): 13,695,000 outstanding at $2.25/sh weighted-average exercise price Warrants(2): 11,491,148 outstanding at $2.50/sh weighted-average exercise price Estimated Cash Balance: 6

  7. Comparable with Recent Acquisitions Based on the definitive feasibility study, transaction metrics are in-line with recent comparable acquisitions 7 7

  8. Pro Forma Production Growth – 2011 to 2016 Cu Production Au Eq. Production (1) Zn Production (kt) (koz) (kt) 145% Growth 130% Growth 60% Growth HudBay (2) Norsemont (3) • Silver converted to gold at a ratio of 60:1 • Based on midpoint of 2011 forecasted production released on December 13, 2010. Anticipated production for 2016 is based on existing mines together with Constancia, Lalor (including, for gold equivalent production, inferred resources and conceptual gold and copper-gold zones) and the 777 North expansion. • Based on preliminary results of Constancia Feasibility Study Optimization announced by Norsemont on December 30, 2010 8

  9. Pro Forma In-Situ Reserve Value Copper Eq. Reserves(2)(3) • 350% increase in copper reserves • 190% increase in copper equivalent reserves (MM lb) 5065 Current(1)(3) Pro Forma(2)(3) 350% 1743 • HudBay reserves as of January 1, 2010 • HudBay reserves as of January 1, 2010 plus Constancia reserves based on NI 43-101 technical report titled, “Constancia Copper Project – Definitive Feasibility Study”, dated September 28, 2009 • In-situ value calculated using commodity prices of US$900/oz Au, US$0.95/lb Zn, US$2.50/lb Cu and US$12.00/lb Mo; silver converted to gold at ratio of 60:1 9 9

  10. Agenda • Geology, Mineral Reserves and Exploration • Cashel Meagher, VP, Exploration • Infrastructure and Community Relations • Javier Del Rio, Director, Business Development • Peru Tax and Royalties • David Bryson, SVP and CFO • Summary and Conclusions • David Garofalo, President and CEO 10 10

  11. Strategic Location Rio Blanco Cerro Corona Galeno Antamina Toromocho Lima Las Bambas Marcona Constancia Haquira Antapaccay Tintaya Cuajone Cerro Verde Toquepala Operating Mine Development Project Established Mining District Cusco Xstrata – Las Bambas First Quantum – Haquira CUSCO DEPT. Pan Pacific – Quechua AREQUIPA DEPT. Xstrata – Antapaccay Main Powerlines Xstrata - Las Bambas Mineral Pipeline Roads Southern Peru Copper Belt Rail Road to Matarani Close to roads, major power lines, a rail line and port 11

  12. Geology • Constancia is located on the eastern side of the Andahuaylas-Yauri copper belt • ~3km from the old Katanga mine • Operated from early last century to the early 1990s • Cu and Au; narrow skarn bodies • San José prospect (part of Constancia) explored by Mitsui in 1980s Source: Norsemont’s NI 43-101 technical report titled “Constancia Copper Project – Definitive Feasibility Study”, dated September 28, 2009 12 12

  13. Ore Types Source: Norsemont Mining July 2010 Geology Presentation 13

  14. NI 43-101 Mineral Reserves 1.0 % 0.50 % Cu Grade Increases Supergene Hypogene Skarn 0.20 % 0.15 % • Reserve comprised of different ore types • Supergene ore present near surface Source: NI 43-101 technical report titled “Constancia Copper Project – Definitive Feasibility Study”, dated September 28, 2009 14 14

  15. Tonnes and Grade Processed • Higher tonnage and grades achieved in early years due to varying ore types Source: NI 43-101 technical report titled “Constancia Copper Project – Definitive Feasibility Study”, dated September 28, 2009 15 15

  16. Exploration Upside Constancia Main Process Plant Mine Waste Dump Tailings Facility Pampacancha Skarn Target Cu-Au Sulphides Chilloroya Skarn Target #1High Grade Gold Target Chilloroya Porphyry Target #3Cu-Au Sulphides • Excellent exploration targets • Pampacancha • Located 3 km south-east of Constancia • Outcropping copper oxides in skarn bodies • Chilloroya South • Located 5 km south of Constancia • Evidence of porphyry related Cu-Au-Mo mineralization • Untested geophysical anomalies Source: Norsemont Mining 2010 AGM Presentation 16

  17. Current Norsemont Drill Campaign Highlights Source: Norsemont Mining 2010 AGM Presentation 17

  18. Infrastructure • 83km access road from Yauri • 70km from Tintaya 138kV power substation • Rail-head 122km away • Total of ~475km from Matarani Port by road (243km paved, 232km gravel surfacing) Image from Norsemont Mining 2010 AGM Presentation Image taken by HudBay Minerals Source: Norsemont Mining 2010 AGM Presentation; Norsemont’s NI 43-101 technical report titled “Constancia Copper Project – Definitive Feasibility Study”, dated September 28, 2009 18 18

  19. Infrastructure – Port • Matarani Port located 120km from Arequipa by paved highway • The port is a deep sea port managed by a private group Image taken by HudBay Minerals Image taken by HudBay Minerals Source: Norsemont Mining 2010 AGM Presentation 19 19

  20. Infrastructure – Power • Build 70km transmission line to Tintaya substation • Planned upgrade to 220kV by 2012 Source: Norsemont Mining 2010 AGM Presentation, Norsemont’s NI 43-101 technical report titled “Constancia Copper Project – Definitive Feasibility Study”, date September 28, 2009; Constancia Project ESIA dated April 2010 20 20

  21. Infrastructure – Power Supply Sources Source: Ministerio de Energía y Minas website 21

  22. Infrastructure – Water • Sources of water: • Most of the water is sourced from wells in the region • Majority of water supply is re-circulated • Hydrogeological studies were conducted for the open pits, tailings management facilities, and waste rock facility • Studies included springs mapping, inventories, etc. • Water flow balance from: • Cunahuiri reservoir (discharges during dry season) • Re-circulated water • Water treatment plant discharges Source: Norsemont’s NI 43-101 technical report titled “Constancia Copper Project – Definitive Feasibility Study”, dated September 28, 2009; Constancia Project ESIA dated April 2010 22

  23. Community Relations • Norsemont employs members of local villages and conducts activities in a trustworthy and transparent manner • Built and sponsors a local medical clinic • Sponsors local soccer team • Pays for supplies at the local school • There are two local communities in the area: Uchucarco and Chilloroya • Agreements in place for over 4 years • No major relocation required • No NGO opposition • Norsemont purchased all private land in Constancia area Image taken by HudBay Minerals Image taken by HudBay Minerals Source: Norsemont Mining 2010 AGM Presentation and Norsemont Mining website 23 23

  24. 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) • Labour participation = 8% of pre-tax profits • 30% corporate income tax rate • Deductible expenses for corporate income tax: • Peruvian mining royalty • Labour participation = 8% of pre-tax profits • Tax depreciation Source: Norsemont’s NI 43-101 technical report titled “Constancia Copper Project – Definitive Feasibility Study”, dated September 28, 2009 24

  25. Peru Tax and Royalties • Estimated Tax Depreciation on Construction Capex included in Definitive Feasibility Study: Year 1 2 3 4 5 Annual Depreciation 34% 27% 13% 13% 13% • Withholding/Dividend Tax: • 4.1% applies to profits distributed to nonresidents • Legal Stability Agreements • Guaranteed stability of income tax regime for 15 years Source: Norsemont’s NI 43-101 technical report titled “Constancia Copper Project – Definitive Feasibility Study”, dated September 28, 2009 25 25

  26. Acquisition of Norsemont Mining HudBay to acquire all the outstanding shares of Norsemont via a take-over bid for approximately C$520 million in shares and cash Norsemont’s primary asset is the wholly-owned Constancia porphyry copper project located in southern Peru The Constancia project has a long mine life with significant exploration upside Key permits received with the approval of the Environmental Social Impact Assessment Offer has been approved by the Boards of Norsemont and HudBay and is being recommended by the Norsemont Board to Norsemont shareholders Lock-up agreements have been entered into by Norsemont directors, officers and other large shareholders in respect of shares that, together with shares owned by HudBay, represent 35.6% of Norsemont’s fully-diluted shares outstanding 26 26

  27. Proposed Acquisition of Norsemont Mining: Information Session January 2011

  28. APPENDIX

  29. Strategic Location in Investment Grade Country Moody’s Baa3; S&P BBB+ 2009 Copper Production by Country • Major producer of base and precious metals • 2nd largest copper producing country in the world • Largest producer of gold in Latin America • Highly prospective country • 3rd largest exploration budget by country in the world • Stable mining regulatory environment • Most major mining companies active in Peru (BHP Billiton, Rio Tinto, Vale, Xstrata, Barrick, Teck, etc.) (000 tonnes) Source: Brook Hunt 29 29

  30. Constancia DFS September 2009 • Sources: • Norsemont’s news release titled “Norsemont Mining Announces Positive Constancia Feasibility Study”, dated September 28, 2009, and Norsemont’s NI 43-101 technical report titled “Constancia Copper Project – Definitive Feasibility Study”, dated September 28, 2009 • Norsemont’s news release titled “Norsemont Mining Announces Preliminary Results of Constancia Feasibility Study Optimization”, dated December 30, 2010 30 30

  31. Water Flow Chart Source: Constancia Project ESIA dated April 2010 31

  32. Constancia NI 43-101 Mineral Reserves Source: NI 43-101 technical report titled, “Constancia Copper Project – Definitive Feasibility Study”, dated September 28, 2009 32

  33. Constancia NI 43-101 Mineral Resource Source: NI 43-101 technical report titled, “Constancia Copper Project – Definitive Feasibility Study”, dated September 28, 2009 • Mineral resource estimate at 0.20% copper cut-off grade 33

  34. For more information contact: John Vincic, VP of Investor Relations and Corporate Communications Tel: 416.362.0615 Email: john.vincic@hudbayminerals.com

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