I've owned Hudbay Minerals (HBM:NYSE) .. not by design but...

I've owned Hudbay Minerals (HBM:NYSE) .. not by design but because long ago (like ~2010) I owned stock in Augusta Minerals (the owner of the Rosemont project with (mostly Chinese) partners - HBM was also a minority partner joining in 2010). HBM in Feb'14 acquired Augusta in an all stock transaction. Augusta wasn't going to make it and its partners were shall we say "unreliable" and the permitting was a nightmare.

You have to be patient right. HBM's offer was a good offer (big premium to Augusta's share price) roughly valued Augusta at ~CDN$540M, but it was hardly smooth sailing on permitting of Rosemont. Even back then Rosemount was a US$1.2B Capex project - it was big!!

Why am I detailing this ...?
Well the slide that NWC puts up is a little misleading ... but I doubt that's by design. Copper World is NOT Rosemont. HBM acquired land packages around Rosemont. With the shitshow that was permitting in the 2014 - 2022 period. Local Native American tribes, community and environmental groups vehemently objected to the Rosemont mine and in fact even though the USFS approved EIS and RoD (2017) the Army Corp Engineers denied (2019) the water permit under the Clean Water Act. Things were going pear shaped when a US District Court judge overruled the USFS EIS in 2017 and while HBM appealed that decision they lost that in 2022 when the circuit court of appeals upheld the 2019 decision. That prompted HBM to explore (2021) their land package around Rosemont ... what they called Copper World ... and its on mostly PRIVATE LAND (so those federal judges can go do something else). That exploration program yielded the discovery of what they called the "Copper World Complex" and in 2022 they announced a new plan based on Copper World.

CWC consists of seven deposits extending over seven kilometres, including Bolsa, Broad Top Butte, Copper World, Peach, Elgin, South Limb and North Limb. In Dec 2021 HBM put out maiden MRE of Indicated mineral resources of 272 million tonnes at 0.36% copper and inferred mineral resources of 142 million tonnes at 0.36% copper. PEA followed in June 2022. Two-phase mine plan has an AT NPV10 of $1,296 million and 18% IRR at $3.50 per pound copper. Some of the

There are co-products (e.g. Ag) just like at NWC that reduce C1 and AISC.
https://hudbayminerals.com/investors/press-releases/press-release-details/2022/Hudbay-Announces-Robust-Preliminary-Economic-Assessment-for-the-Copper-World-Complex/default.aspx

and then came an Enhanced PFS in Sep'23.... 20Y LoM, reduced initial Capex to $1.3B, raised production to 92Ktpa for 1st 10 years - so this is a very large project (possibly largest new open pit mine being developed in USA?). Copper World is also one of the highest-grade open pit copper projects in the USA with proven and probable mineral reserves of 385 million tonnes at 0.54% copper.






So this is where it starts to also get interesting (as in what I would expect NWC to also be considering) ... this is Sep'23 I'm quoting


Looks familiar - structurally - right. And a DFS is still to come on the Copper World project this year ... you got to have patience.



Now HBM figures in another part of that slide also .... their investment in Arizona Sonoran Copper Company, alongside RioTinto Nuton and RoyalGold.



This another open pit mine so size wise much bigger than NWC ... but that does mean you can't compare relative financials (like P/NAV multiple). I've overlayed NWC into the slide from ASCU. And if that's what you like using as a valuation comparison then NWC screens very well.



What's important in that mix?
I think Capital Intensity is, and we do well (considering its underground) but the MCap and Project NPV are far apart (true for the other juniors ASCU and Faraday). Plenty of other things to consider for the disconnect.

I'll close with this observation from the CEO of a Copper Explorer in Chile (on TSX) that I own: The bolding is mine. There is a reason for the disconnect in the market - and the market is mostly but it does misprice stocks and sometimes whole groups of stocks/sectors - you have to figure out it.

"In conclusion, I feel that the companies that are getting the market attention and will continue to get the market attention - the ones that are loved - have got large scale exploration potential; they've got momentum and news flow; and having a strong balance sheet or access to capital helps. You don't need to have a huge amount of cash, as long as you know that the company can raise money to be in that process. Discovery is “Alpha generating”, it's value through the drill bit, and if you're not discovering stuff but you're heading towards production then to have the possibility or the prognosis for low Capital intensity in your production, that is going to drive value - which means that you can get it financed. It means not having a huge capex relative to your market capitalization because when your NPV or your Capex Value gets completely out of whack then it just basically says that the market isn't backing you or the project or the management team."


Hope that all made sense.