1. Stock Report: SECTOR: Materials SECTOR HEAD: Larry Ip SR. ANALYST: Luiza Santos JR. ANALYSTS:Rafael Grados, Kelly Kaminski, Reeve Porter, Pooja Sahani

2. EM Demand Chile Supply Slowing Copper Mines Expansion Plans Investment Recommendation Key Drivers : © Dyrect Investing, Ltd. - 2 HudBay Minerals, Inc. RecommendationBUY Current Price$16.72 1yr Target Price$19.36 % Upside15.8%

3. Company Overview Market Capitalization (MM)$2,500 Revenue (ttm) (MM)$762 EBITDA (ttm)$251 EPS (ttm)$0.37 Forward P/E16.77 Debt/Equity0.19 Dividend Yield (Estimated)1.20% Beta1.83 © Dyrect Investing, Ltd. - 3 HudBay Minerals, Inc. Integrated mining company with assets in North, Central, & South America, focused on the discovery, production and marketing of base metals. Growth plan to optimize and expand principal operating platform in Manitoba, and seek growth opportunities farther afield, esp. Peru.

4. Big Competitors & Market Cap $284.6B $144.0 B $44.8 B Industry Overview The Small Cap Copper Industry Companies that engage in the exploration and extraction of copper deposits in the United States and Canada, processing the copper into commoditized cathode sheets. © Dyrect Investing, Ltd. - 4 $2.50 B $1.83B $391.86M $879.75 M Small Cap Copper Companies Market Cap

5. Find feasible deposits and properties that could yield resources Build mining infrastructure Lock future revenues via supply contracts Extract & Concentrate Minerals Refine into cathode sheets at Metallurgical Plants Sell refined copper to customers Revenue Generation © Dyrect Investing, Ltd. - 5 4. Operations6. Sales 2. Development1. Exploration3. Supply Contracts 5. Refining

6. TRENDS AND OPPORTUNITIES

7. Trend #1: World Copper Usage © Dyrect Investing, Ltd. - 7

8. Trend #2: Copper Output CAGR = 1.43% ProductionRoC Y/Y FFF © Dyrect Investing, Ltd. - 8

9. HBM vs. Competitors Number of Mines Expansion Plans EV / value of in-situ reserves Current Ratio 8 Norsemont Mining in Peru.02916.13 4 Hold on to Prosperity.03323.24 9 Mt. Milligan in Canada.08279.79 2 Mt. Hope & Liberty molybdenum.03473.76 © Dyrect Investing, Ltd. - 9

10. HBM vs. Competitors HBM: 8 TCP: 9 TKO: 4 GMO: 2 Mine LocationsExpansion into Peru Background: World’s 2 nd largest copper producer Stable mining regulatory environment Competition: Big players: BHP Billiton & Teck Resources hold stake in copper operations Small Players: Not there Outlook: Joy Global anticipate growing investment in Peruvian mine development Southern Copper and Buenaventura continue to operate profitably © Dyrect Investing, Ltd. - 10

11. Norsemont Acquisition © Dyrect Investing, Ltd. - 11 350% increase in copper reserves 190% increase in copper equivalent reserves Copper Equivalent Reserves +350%

12. HBM Financial Projections Revenue CAGR= 20.6% © Dyrect Investing, Ltd. - 12

13. HBM Financial Projections © Dyrect Investing, Ltd. - 13 2011e2012e2013e2014e2015e Revenue$952 $1,225 $1,530 $1,995 $2,586 Revenue Growth24.9%28.7%24.8%30.4%29.6% Gross Margin26.2%28.8%30.6%32.3%33.5% EBITDA Margin23.6%26.8%28.9%31.0%32.6% EPS$0.28$0.64$1.04$1.69$2.52

14. Valuation © Dyrect Investing, Ltd. - 14 Year2011(e)2012(e)2013(e)2014(e)2015(e) FCF ($MM) $75$164 $239 $349$494 DCF: 40% WACC15.94% Growth Rate3.00% DCF Value$2,647 1yr Target Price$15.58 Comps: 30%/30% Price/Earnings16.8x 1yr Target Price$22.39 TEV/EBITDA5.3x 1yr Target Price$21.36 1yr Target Price $19.36 + 15.8%

15. Risks & Sensitivities © Dyrect Investing, Ltd. - 15 45% 25% 15% Weight

16. Q&A

17. Appendices

18. Index Breakdown of Operations Cross-Sectional Analysis Financial Comps Index Performance Industry Revenues Initial Investment Recommendation Investment Thesis Materials Prices Simulator Risks Trends: Increase in Copper Prices US Copper Output

19. Investment Thesis Demand in Asia on the Rise Chinese and Indian copper demand are set to rise 7% and 9%, respectively, in 2011 China’s copper demand to rise from 6.1 million tons in 2009 to 8.5 million tons in 2015 Chilean Copper Mines Slowing Output Chilean copper output growth (top global copper mining country) to slow by 12% in 2011 and by 5% in the three following years Power and transportation infrastructure concerns damaged by natural disasters Peruvian Labor Problems Labor strikes have been disturbing operations in Peruvian Copper mines for the last 5 years Peru is the 3 rd largest copper producer © Dyrect Investing, Ltd. - 19

20. Breakdown of Operations 1.Mines – 777, Trout Lake, Chisel North, Basmalt – Goal: increase mineral grades and production 2.Concentrators – Flin Flon, Snowlake, Balmat – Goal: process minerals by separating them from gravel 3.Metallurgical Plants – Gets minerals from own concentrators or buys concentrates from third parties – Refines minerals – Sells to customers who make wires, tubes, and brass – Goal: increase sales © Dyrect Investing, Ltd. - 20

21. Trends: Increase in Copper Prices Source: Mintel/U.S. Census Bureau, Service Annual Survey © Dyrect Investing, Ltd. - 21

22. U.S. Copper Output Production (thousand tonnes) 200520062007200820092010 E2011 F CAGR = 3.18% Source: Business Monitor © Dyrect Investing, Ltd. - 22

23. Financial Comps Stock Price Market Cap Revenue Profit Margin EBITDA LT Debt EPSP/E EV/ EBITDA TGB$4.67$872M$188.9M5.6%$47.7M$14.9M$0.065.6614.28 TC$13.12$1.8B$373.4M(14.9%)$177M$10.5M($0.44)–6.70 HBM$17.15$2.5B$720.7M15.6%$263M–$0.7315.587.05 GMO$5.40$392M––($8.9M)$10.4M($0.14)-(43.04) Yahoo.com/finance © Dyrect Investing, Ltd. - 23

24. Risks Tariffs and Exchange Rate Fluctuations – U.S. and Canada copper mining is an export-heavy industry – Revenues are sensitive to macro environment – Chinese tariffs are 5% on refined copper exports and 10% on blister and scrap copper Labor – Union strikes may set back copper mining productions Collahuasi copper miners 2010 Environmental Regulations – Expenditure for pollution and abatement and control © Dyrect Investing, Ltd. - 24

25. Industry Revenue © Dyrect Investing, Ltd. - 25

26. Index Performance © Dyrect Investing, Ltd. - 26 2010

27. Cross Sectional Analysis PEG EPS Growth © Dyrect Investing, Ltd. - 27

28. Initial Recommendation Due to the increasing global demand for copper, and slowdown of output of the top copper producer in the world, we believe the small cap US copper industry is an attractive investment opportunity Suggested company for further research and analysis: Hudbay Minerals © Dyrect Investing, Ltd. - 28

29. Material Prices Simulator 1 © Dyrect Investing, Ltd. - 29

30. Material Prices Simulator 2 © Dyrect Investing, Ltd. - 30

31. Material Prices Simulator 3 © Dyrect Investing, Ltd. - 31