EX-99.18 32 a2155477zex-99_18.htm EXHIBIT 99.18
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Exhibit 99.18

Issued to:   BNY Trust Company of Canada
4 King Street West, Suite 1101
Toronto, ON M5N 1K9

By:
 
Hudson Bay Exploration and Development Company Limited
2200-201 Portage Avenue
Winnipeg, MB R3B 3L3


FIXED CHARGE

    $300,000,000.00 USD

 
 
DEMAND DEBENTURE

 
 
(IMMATERIAL PROPERTIES —
SASKATCHEWAN)

HUDSON BAY EXPLORATION AND DEVELOPMENT COMPANY LIMITED

together with its successors and permitted assigns (hereinafter called "the Issuer") for value received hereby promises to pay to or to the order of BNY TRUST COMPANY OF CANADA, who and whose successors and assigns are herein and in the attached conditions hereto called the "Holder", on demand, the sum of Three Hundred Million Dollars ($300,000,000.00) in lawful money of the United States of America, at the office of the Holder specified above, or at such other place or places as the Holder may from time to time designate and will pay on demand at said location to the Holder interest thereon or on so much thereof as is from time to time outstanding at the rate of 30% per annum calculated semi-annually in arrears and payable, both before and after demand and judgment.

        As continuing security for payment of all monies from time to time owing hereunder (including without limitation, interest and all expenses incurred by the Holder in recovering or enforcing payment of monies owing hereunder or realizing upon this Debenture), the Issuer hereby mortgages and charges to and in favour of the Holder, its successors and assigns, as and by way of a fixed and specific mortgage and charge (collectively, the "Charge"), all real and immovable property (including leasehold interests and any other interest or right in real or immovable property) now or hereafter owned or acquired by the Issuer and situate in the Provinces of Manitoba or Saskatchewan, together with any claims, permits, licenses, privileges, benefits, easements, rights of way, mineral and surface rights, minerals and mineral claims, and all other rights, estate, title or interests of any kind or nature whatsoever pertaining thereto, and including without limiting the generality of the foregoing, all of its interest and estate in the claims described in Part 1 of Schedule A hereto and all of its interest and estate in the leases and permits described in Part 2 of Schedule A hereto (the property subject to the Charge, being collectively, the "Collateral").

        THIS DEBENTURE is issued subject to and with the benefit of the Conditions and Schedule attached hereto, all of which are to be deemed part of this Debenture. The Issuer intends that the security interests created by this Debenture will attach property in which it has rights on its execution of this Debenture and will attach property which it acquires thereafter as soon as the Issuer acquires rights therein.


        IN WITNESS WHEREOF the Issuer has caused its corporate seal to be affixed hereto, duly attested by the hands of its proper officers in that regard, and this Debenture is dated the 10th day of December, 2004.

    HUDSON BAY EXPLORATION AND DEVELOPMENT COMPANY LIMITED

 
 
Per:
 
/s/ Brian Gordon
        Name: Brian Gordon
Title: Secretary

2


THE CONDITIONS HEREINBEFORE REFERRED TO

1. The Charge shall not extend to or apply to, and the Collateral shall not include, (i) the last day of the term of any lease or agreement therefor but if the Charge should become enforceable the Issuer shall stand possessed of such last day in trust to assign the same to any person acquiring such term; (ii) any Collateral that is excluded from the Charge by the Holder in writing and (iii) any Excluded Assets (as that term is defined in the Indenture to be entered into between HudBay Mining and Smelting Inc. and The Bank of New York, as the same may be amended, supplemented or otherwise varied from time to time (the "Indenture").

2. The principal monies and interest hereby secured and other monies from time to time owing hereunder will be paid without regard to any equities between the Issuer and the original or any intermediate holder hereof or any right of set-off or cross-claim.

3. The Holder may waive any breach by the Issuer of any of the provisions contained in this Debenture or any default by the Issuer in the observance or performance of any covenant or conditions required to be observed or performed by the Issuer under the terms of this Debenture, provided always that no such waiver of the Holder shall extend to or be taken in any manner whatsoever to affect any subsequent breach or default or the rights resulting therefrom.

4. In the event that the Issuer fails to pay any amount payable hereunder when due or the notes issued under the Indenture have become due and payable, the Charge shall become and be enforceable immediately without the necessity of any further act or formality and the Holder without limiting or restricting any other rights, powers, privileges and remedies which the Holder may at any time have under this Debenture, contract, at law, in equity or howsoever otherwise, shall have the following described rights, powers, privileges and remedies, namely:

    (a)
    to enter upon and to possess all of or any portion or portions of the Collateral with the power to exclude the Issuer and its officers, employees and agents therefrom;

    (b)
    to collect the rents, revenues, profits and incomes of and from the Collateral and any portion or portions thereof;

    (c)
    to seize and distrain upon any of the Collateral which is real and immoveable property or any portion or portions thereof and by distress warrant to recover by way of rent reserved as in the case of a demise of real property the indebtedness hereby secured or any portion or portions thereof together with all of the Holder's costs, charges and expenses attendant upon the levying of such distress as in like manner of distress for rent, provided however that nothing in this subparagraph or anything done pursuant thereto by or on behalf of the Holder shall result in the Holder being or being deemed to be a mortgagee in possession or liable for the performance of any of the obligations of a landlord;

    (d)
    to preserve, to maintain, to operate and to carry on the Collateral or any portion or portions thereof;

    (e)
    to make such replacements of or for and such additions to the Collateral and any portion or portions thereof as the Holder shall deem advisable;

    (f)
    to sell, to lease or to otherwise dispose of from time to time the Collateral and any portion or portions thereof whether by public auction or by private sale or otherwise and either for cash or on credit or partly for cash and partly for credit and on such terms and conditions as the Holder may determine, provided however that it shall not be incumbent on the Holder to sell, lease or otherwise dispose of the Collateral or any portion or portions thereof but the Holder may peaceably use and possess the Collateral or any portion or portions thereof without hindrance or interruption by the Issuer or by any other person or persons whomsoever, and provided further however that wherever any sale or other disposition is made in whole or in part upon credit, the Holder shall not be taken or deemed to have received payment or satisfaction with respect to that portion of any such sale or disposition so made upon credit until the Holder has received actual payment in full;

    (g)
    to convey, to transfer, to lease and to assign to and to vest in the purchaser or purchasers, or as the case may be the lessee or lessees, the title to or ownership of or as the case may be a leasehold interest in the Collateral and any portion or portions thereof; and

3

    (h)
    to commence and pursue such legal action, suit, remedy or proceeding against the Issuer, the Collateral or any portion or portions thereof as may be authorized or permitted hereunder or at law or in equity including proceedings in any court of competent jurisdiction for the appointment of a receiver or for sale of the Collateral or any portion or portions thereof, and to file such proofs of claim and other documents as may be necessary or advisable in order to have its claim lodged in any bankruptcy, winding-up or other judicial proceedings relative to the Issuer;

and the Holder may exercise the foregoing rights, powers, privileges and remedies (and any other rights, powers, privileges and remedies to which the Holder is entitled) or any of them at such time or times following the occurrence of any one or more events of default in such manner as the Holder in its sole discretion deems expedient.

        Provided always that the Holder shall not be bound (whether before or after default hereunder) to collect, dispose of, realize or enforce the Charge against the Collateral or any portion or portions thereof and except for gross negligence, willful misconduct and criminal acts or omissions, the Holder shall not be liable or responsible for any loss or damage which may accrue or be sustained in consequence of the Holder's negligence or the negligence of any officer, servant, agent, solicitor, counsel or other attorney or receiver employed by or appointed by the Holder in the collection, disposition, realization or enforcement of the security hereby constituted, and the Holder shall not be liable or accountable for any failure to exercise any of its rights, powers, privileges and remedies aforesaid or any of them at any time and from time to time.

        Provided further however that notwithstanding the realization of the security hereby constituted, the Issuer shall nevertheless remain fully liable to the Holder for any deficiency or deficiencies owing to the Holder with respect to the indebtedness hereby secured.

5. If the Charge shall become enforceable, the Holder may, by instrument in writing, appoint any person or persons, whether an officer or officers or employee or employees of the Holder or not to be a receiver or receiver-manager of all or any part of the Collateral and may remove any receiver or receiver-manager so appointed and appoint another or others in his or their stead. Any such receiver or receiver-manager so appointed to the extent permitted by law, shall have power:

    (a)
    to take possession of, collect and get in the Collateral and for that purpose to take any proceedings in the name of the Issuer or otherwise;

    (b)
    to carry on or concur in carrying on the business of the Issuer and for that purpose to raise money on the Collateral in priority to this Debenture or otherwise;

    (c)
    to sell or concur in selling any of the Collateral and carry any such sale into effect by conveying in the name or on behalf of the Issuer or otherwise;

    (d)
    to make any arrangement or compromise which he or it shall think expedient in the interest of the Holder.

        Any receiver or receiver-manager so appointed shall be deemed to be the agent of the Issuer and the Issuer shall be solely responsible for his or its or their acts or defaults and for his or its or their remuneration and expenses, and except for gross negligence, willful misconduct and criminal acts and omissions, the Holder shall not be in any way responsible for any misconduct or negligence on the part of any such receiver or receiver-manager.

        All monies received by such receiver or receiver-manager from any realization of all or any part of the Collateral after providing for payment of charges ranking prior to this Debenture and for all costs, charges and expenses of or incidental to the exercise of any of the powers of such receiver or receiver-manager shall be applied in or towards satisfaction of this Debenture. The rights and powers conferred by this section are in supplement of and not in substitution for any rights the Holder may from time to time have.

6. The Issuer agrees to pay to the Holder forthwith upon demand all expenses incurred by the Holder in recovering or enforcing payment of monies owing hereunder or realizing upon this Debenture or any other securities for such monies, including expenses of taking possession, protecting and realizing upon any Collateral together with interest at the rate provided for in this Debenture from the date of payment of such expenditures.

4


7. The principal, interest and other monies payable hereunder shall be paid in lawful money of the United States of America.

8. The Holder may in its discretion:

    (a)
    release any Collateral from the Charge;

    (b)
    agree to any modification, compromise, release or waiver of the rights of the Holder against the Issuer or against any Collateral, whether such rights shall arise under the Debenture or otherwise;

    (c)
    agree to accept any other properties or securities instead of the Debenture;

and the exercise of such discretion shall not diminish the obligation of the Issuer to perform any of the covenants contained in this Debenture.

9. This Debenture and all amendments and supplements thereto are and shall at all times be and be deemed to be in addition to and not in substitution for any other security or securities ("Other Securities") now or hereafter held or acquired by the Holder in connection with or to secure the obligations hereby secured or any part or parts thereof and:

    (a)
    to the maximum extent permitted by applicable law, the taking, realization, foreclosure, alteration or cancellation of or any other dealing or dealings with or actions taken or omissions made under the Debenture shall not release or affect or create any merger or alter or prejudice or derogate from the Other Securities or any of them and the obligations hereby secured;

    (b)
    to the maximum extent permitted by applicable law, the taking, realization, foreclosure, alteration or cancellation of or any other dealing or dealings with or actions taken or omissions made under any of the Other Securities shall not release or affect or create any merger or alter or prejudice or derogate from this Debenture and the obligations hereby secured.

10. This Debenture is issued to the Holder as security to secure the indebtedness, obligations and liabilities of the Issuer existing from time to time as described in the debenture delivery agreement dated the date hereof, executed by the Issuer in favour of the Holder, as such agreement may be amended, supplemented, restated or replaced from time to time.

11. The Issuer hereby covenants and agrees that it will at all times do, execute, acknowledge and deliver or cause to be done, executed, acknowledged and delivered all and singular all such further acts, deeds, mortgages, hypothecs, transfers, assignments and assurances in law as the Holder may require for the better assuring, mortgaging, hypothecating, charging, transferring, assigning and confirming unto the Holder the property and assets hereby mortgaged and charged or intended so to be or which the Issuer may hereafter become bound to mortgage, hypothecate, transfer, assign and charge in favour of the Holder and for the better accomplishing and effectuating of this Debenture.

12. The Issuer hereby declares and covenants that:

    (a)
    The Land Contracts (Actions) Act (Saskatchewan) shall have no application to any actions, as defined in The Land Contracts (Actions) Act, with respect to this Debenture; and

    (b)
    The Limitation of Civil Rights Act (Saskatchewan) shall have no application to:

    (i)
    this Debenture;

    (ii)
    any mortgage, charge or other security for the payment of money made, given or created by this Debenture;

    (iii)
    any agreement or instrument renewing or extending or collateral to this Debenture or renewing or extending or collateral to any mortgage, charge or other security referred to or mentioned in clause (ii) of this subparagraph (b); or

    (iv)
    the rights, powers or remedies of the Holder under this Debenture or under any mortgage, charge or other security, agreement or instrument referred to or mentioned in clauses (ii), (iii) or (iv) of this subparagraph (b)

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13. This Debenture and all its provisions shall be governed by and construed in accordance with the laws of Saskatchewan, shall enure to the benefit of the Holder, and its respective successors and assigns, and shall be binding upon the Issuer, its successors and assigns.

        These conditions are part of the Debenture executed by the Issuer dated the 10th day of December, 2004.

    HUDSON BAY EXPLORATION AND DEVELOPMENT COMPANY LIMITED

 
 
Per:
 
/s/ Brian Gordon
        Name: Brian Gordon
Title: Secretary

6


SCHEDULE A

HUDSON BAY EXPLORATION AND DEVELOPMENT COMPANY LIMITED

NON-MATERIAL PROPERTIES

SASKATCHEWAN

Part 1

Claims
    
    
    
Claim   S-99567   CAB 99567   HBED
Claim   S-99616   CAB 99616   HBED
Claim   S-102621   CAB 102621   HBED
Claim   S-102622   CAB S102622   HBED
Claim   S-102623   CAB S102623   HBED
Claim   S102624   CAB S102624   HBED
Claim   S108774   CAB 108774   HBED
Claim   S-105854   TYR 105854   HBED
Claim   CBS 3856   FON 3856   HBED
Claim   CBS 3857   FON 3857   HBED
Claim   CBS 3859   FON 3859   HBED
Claim   CBS 3860   FON 3860   HBED
Claim   CBS 3865   FON 3865   HBED
Claim   CBS 3866   FON 3866   HBED
Claim   CBS 3867   FON 3867   HBED
Claim   CBS 3868   FON 3868   HBED
Claim   CBS 3869   FON 3869   HBED
Claim   CBS 3870   FON 3870   HBED
Claim   CBS 3871   FON 3871   HBED
Claim   CBS 3872   FON 3872   HBED
Claim   CBS 3873   FON 3873   HBED
Claim   CBS 3874   FON 3874   HBED
Claim   CBS 3876   FON 3876   HBED
Claim   CBS 3877   FON 3877   HBED
Claim   CBS 3878   FON 3878   HBED
Claim   CBS 3880   FON 3880   HBED
Claim   CBS 3881   FON 3881   HBED
Claim   CBS 3882   FON 3882   HBED
Claim   CBS 3883   FON 3883   HBED
Claim   CBS 3886   FON 3886   HBED
Claim   CBS 3887   FON 3887   HBED
Claim   CBS 3888   FON 3888   HBED
Claim   CBS 3890   FON 3890   HBED
Claim   CBS 3892   FON 3892   HBED
Claim   CBS 3893   FON 3893   HBED
Claim   CBS 3895   FON 3895   HBED
Claim   CBS 3896   FON 3896   HBED
Claim   CBS 3897   FON 3897   HBED
Claim   CBS 3898   FON 3898   HBED
Claim   CBS 3899   FON 3899   HBED
Claim   CBS 3900   FON 3900   HBED
Claim   CBS 3901   FON 3901   HBED
Claim   S-98950   FON 98950   HBED
Claim   S-99551   FON 99551   HBED
             

1

Claim   S-99552   FON 99552   HBED
Claim   S-99559   FON 99559   HBED
Claim   S-101045   FON 101045   HBED
Claim   S-105851   FON 105851   HBED
Claim   S-105863   FON 105863   HBED
Claim   S-105866   FON 105866   HBED
Claim   S-105867   FON 105867   HBED
Claim   S-105868   FON 105868   HBED
Claim   S-105869   FON 105869   HBED
Claim   S-105876   FON 105876   HBED
Claim   S-105899   FON S105899   HBED
Claim   S-105901   FON S105901   HBED
Claim   S-105902   FON S105902   HBED
Claim   S-105903   FON S105903   HBED
Claim   S-105904   FON S105904   HBED
Claim   S-105905   FON S10505   HBED
Claim   S-105906   FON S10506   HBED
Claim   S-108794   FON 108794   HBED
Claim   S-108810   FON 108810   HBED
Claim   S-108813   FON 108813   HBED
Claim   S-108814   FON 108814   HBED
Claim   S-108815   FON 108815   HBED
Claim   S-108816   FON 108816   HBED
Claim   S-108819   FON 108819   HBED
Claim   S-108820   FON 108820   HBED
Claim   S-108821   FON 108821   HBED
Claim   S-108822   FON 108822   HBED
Claim   S-108833   FON 108833   HBED
Claim   S-108843   FON 108843   HBED
Claim   S-108844   FON 108844   HBED
Claim   S-108845   FON 108845   HBED
Claim   S-108846   FON 108846   HBED
Claim   S-108847   FON 108847   HBED
Claim   S-98942   WAG 98942   HBED
Claim   S-99571   WAG 99571   HBED
Claim   S-105898   WAG S105898   HBED
Claim   S-105907   WAG S105907   HBED
Claim   S-105908   WAG S105908   HBED
Claim   S-105909   WAG Sl05909   HBED
Claim   S-105910   WAG S105910   HBED
Claim   S-105911   WAG Sl05911   HBED
Claim   S-105912   WAG S105912   HBED
Claim   S-105914   WAG 105914   HBED
Claim   S-108776   WAG   HBED
Claim   S-108785   WAG 108786   HBED
Claim   S-108790   WAG 108790   HBED
Claim   S-105913   NER S105913   HBED
Claim   CBS 3902   NER 3902   HBED
Claim   CBS 3903   NER 3903   HBED
Claim   S-98693   NER 79   HBED
Claim   S-98694   NER 80   HBED
Claim   S-98697   NER 83   HBED
Claim   S-98698   NER 84   HBED
Claim   S-98931   NER 98931   HBED
             

2

Claim   S-98932   NER 98932   HBED
Claim   S-98937   NER 98937   HBED
Claim   S-99555   NER 99555   HBED
Claim   S-99558   NER 99558   HBED
Claim   S-99572   NER 99572   HBED
Claim   S-99573   NER 99573   HBED
Claim   S-99574   NER 99574   HBED
Claim   S-99575   NER 99575   HBED
Claim   S-99576   NER 99576   HBED
Claim   S-99602   NER 99602   HBED
Claim   S-99603   NER 99603   HBED
Claim   S-99604   NER 99604   HBED
Claim   S-99605   NER 99605   HBED
Claim   S-99606   NER 99606   HBED
Claim   S-99609   NER 99609   HBED
Claim   S-99610   NER 99610   HBED
Claim   S-99611   NER 99611   HBED
Claim   S-99617   NER 99617   HBED
Claim   S-99619   NER 99619   HBED
Claim   S-99625   NER 99625   HBED
Claim   S-99629   NER 99629   HBED
Claim   S-99630   NER 99630   HBED
Claim   S-99631   NER 99631   HBED
Claim   S-99632   NER 99632   HBED
Claim   S-101041   NER 101041   HBED
Claim   S-101042   NER 101042   HBED
Claim   S-101043   NER 101043   HBED
Claim   S-101044   NER 101044   HBED
Claim   S-102067   NER 49   HBED
Claim   S-102068   NER 50   HBED
Claim   S-102069   NER 51   HBED
Claim   S-102070   NER 52   HBED
Claim   S-102071   NER 53   HBED
Claim   S-102072   NER 54   HBED
Claim   S-102073   NER 55   HBED
Claim   S-102074   NER 56   HBED
Claim   S-102554   NER 61   HBED
Claim   S-105856   NER 105867   HBED
Claim   S-105857   NER 105857   HBED
Claim   S-105858   NER 105858   HBED
Claim   S-105859   NER 105859   HBED
Claim   S-105860   NER 105860   HBED
Claim   S-105861   NER 105861   HBED
Claim   S-105865   NER 105865   HBED
Claim   S-105870   NER 105870   HBED
Claim   S-105872   NER 105872   HBED
Claim   S-105873   NER 105873   HBED
Claim   S-105874   NER 105874   HBED
Claim   S-105877   NER 105877   HBED
Claim   S-105878   NER 105878   HBED
Claim   S-105879   NER 105879   HBED
Claim   S-105880   NER 105880   HBED
Claim   S-105881   NER 105881   HBED
Claim   S-105882   NER 105882   HBED
             

3

Claim   S-105883   NER 105883   HBED
Claim   S-105884   NER 105884   HBED
Claim   S-105885   NER 105885   HBED
Claim   S-105886   NER 105886   HBED
Claim   S-105887   NER 105887   HBED
Claim   S-105888   NER 105888   HBED
Claim   S-105889   NER 105889   HBED
Claim   S-105890   NER 105890   HBED
Claim   S-105891   NER 105891   HBED
Claim   S-105892   NER 105892   HBED
Claim   S-105893   NER S105893   HBED
Claim   S-105894   NER S105894   HBED
Claim   S-105895   NER Sl05895   HBED
Claim   S-105896   NER S105896   HBED
Claim   S-105897   NER S105897   HBED
Claim   S-105900   NER 105900   HBED
Claim   S-108778   NER 108778   HBED
Claim   S-108783   NER 108783   HBED
Claim   S-108799   NER 108799   HBED
Claim   CBS 3879   FON 3879   HBED
Claim   CBS 3894   FON 3894   HBED
Claim   S-108824   FON 108824   HBED
Claim   CBS 3165   FON   HBED
Claim   CBS 3179   FON 3179   HBED
Claim   CBS 3718   FON 3718   HBED
Claim   CBS 3719   FON 3719   HBED
Claim   S-98670   FON 131   HBED
Claim   S-98671   FON 132   HBED
Claim   S-98672   FON 133   HBED
Claim   S-98673   FON 134   HBED
Claim   S-98674   FON 135   HBED
Claim   S-98675   FON 136   HBED
Claim   S-98676   FON 137   HBED
Claim   S-98677   FON 138   HBED
Claim   S-98678   FON 139   HBED
Claim   S-98679   FON 140   HBED
Claim   S-98680   FON 141   HBED
Claim   S-98681   FON 142   HBED
Claim   S-98682   FON 143   HBED
Claim   S-99594   FON 99594   HBED
Claim   S-102565   FON 125   HBED
Claim   S-102566   FON 126   HBED
Claim   S-102567   FON 127   HBED
Claim   S-102568   FON 128   HBED
Claim   S-102569   FON 129   HBED
Claim   S-102570   FON 130   HBED
Claim   S-99585   RYE 99585   HBED
Claim   S-99614   RY3 99614   HBED

4

Part 2

Leases and Permits

Mineral Surface Leases
    
    
    
Mineral Surface Lease   Q-1109   TURKEY TRACK   HBED

5



QuickLinks

Exhibit 99.18
FIXED CHARGE
THE CONDITIONS HEREINBEFORE REFERRED TO
SCHEDULE A HUDSON BAY EXPLORATION AND DEVELOPMENT COMPANY LIMITED NON-MATERIAL PROPERTIES SASKATCHEWAN