Hudbay Minerals Inc · TSX:HBM
Hudbay Minerals — Copper World Pre-Feasibility Study 2023 Conference Call
37 slides from Hudbay Minerals's conference presentation, Sep 8, 2023
Slide 1: Copper World Phase I Pre-Feasibility Study
COPPER WORLD PHASE I PRE-FEASIBILITY STUDY September 8, 2023
Slide 2: Cautionary Information
CAUTIONARY INFORMATION This presentation contains forward-looking information within the meaning of applicable Canadian and United States securities legislation. All information contained in this presentation, other than statements of current and historical fact, is forward-looking information. Ofte
Slide 3: Agenda
AGENDA Copper World Phase I 2023 PFS Highlights 2023 PFS Comparison vs. 2022 PEA Simplified Project Design Social & Environmental Benefits Updated Mineral Reserves and PETER KUKIELSKI ANDRE LAUZON EUGENE LEI PRESIDENT & CEO COO CFO Resources Project Optimization & Upside Opportunities Prudent Financ
Slide 4: Copper World PFS Highlights
COPPER WORLD PHASE I PFS HIGHLIGHTS $1.1B 19.2% 20 year Phase I after-tax NPV (8%) of $1.1 billion, 19% IRR at $3.75/lb Cu Net present value Internal rate of return1 mine life at 8% discount rate Simplified project design with traditional (after-tax)1 open pit shovel and truck operation Conventional
Slide 5: Copper World Location
COPPER WORLD LOCATION Miami Pinto Valley Phoenix Resolution ARIZONA, US Ray Morenci Florence Safford MINE TOWN RAIL ROAD Silver Bell Phoenix Tucson Tucson Gunnison Mission COPPER WORLD Sierrita COPPER WORLD Taylor 0 25km 50km Maps are not to scale COPPER WORLD PHASE I 2023 PFS 5
Slide 6: Execution of Alternative Strategy
EXECUTION OF ALTERNATIVE STRATEGY SUCCESSFUL PIVOT TO TWO-PHASED PLAN REQUIRING STATE AND LOCAL PERMITS ONLY FOR PHASE I TWO-PHASED MINE PLAN Discovered New Mineralization on Patented Mining Claims Initiated a drill program in 2020 and subsequently expanded throughout 2021 with encouraging results D
Slide 7: 2023 PFS – Simplified Project Design for Phase I
2023 PFS – SIMPLIFIED PROJECT DESIGN FOR PHASE I Simplified mine plan consists of four open pits and is now optimized solely on the flotation of both copper sulfides and oxides Simplified processing flow sheet includes conventional sulfide flotation concentrator with copper concentrate as final prod
Slide 8: 2023 PFS – Enhanced Project Economics for Phase I
2023 PFS – ENHANCED PROJECT ECONOMICS FOR PHASE I SIMPLIFIED FLOW SHEET AND EXTENDED MINE LIFE TO 20 YEARS Advanced metallurgical studies and engineering activities on Phase I for simplified flow sheet 60,000 stpd sulfide concentrator producing concentrate as a final product Concentrate leach facili
Slide 9: Development Strategy – De-risking Copper World
DEVELOPMENT STRATEGY – DE-RISKING COPPER WORLD STATE EXPLORATION ADDITIONAL PRIVATE INITIAL COPPER PEA PFS PERMITTING & DRILLING LAND PURCHASES WORLD RESOURCE FINANCING STRATEGY Identification of Purchased +2400 310 holes used to define Combines initial Enhanced Phase I Released 3-P financing
Slide 10: Designed to Reduce Energy Consumption and GHG Emissions
DESIGNED TO REDUCE ENERGY CONSUMPTION AND GHG EMISSIONS “MADE IN AMERICA” COPPER CATHODE TO SUPPORT DOMESTIC U.S. COPPER CONSUMPTION ↓10% ↓14% lower energy consumption, reduction in total scope including 30% decline 1, 2 & 3 GHG emissions related to downstream processing Copper World copper cathode
Slide 11: Phase I PFS Comparison with Phase I PEA
PHASE I PFS COMPARISON WITH PHASE I PEA 2022 PEA – PHASE I 2023 PFS – PHASE 1 Mine Life 16-year 20-year State and local permitting State and local permitting Total Production 1.4Mt Cu 1.6Mt Cu Avg. Annual Production 86kt 85kt (92kt in first 10 years) Avg. Mill Head Grade 0.47% 0.54% Sulfide Concentr
Slide 12: Leverage to Higher Copper Prices with Project Optionality
LEVERAGE TO HIGHER COPPER PRICES WITH PROJECT OPTIONALITY ROBUST ECONOMICS IN ALL SCENARIOS; FLEXIBILITY TO FURTHER OPTIMIZE THE PROJECT WITH CONCENTRATE LEACH At $4.25/lb Cu, the Phase I NPV8% increases to $1.7B and IRR increases to 25.5% Attractive flotation-only scenario economics: NPV8% of $863M
Slide 13: Phase I Production Profile
Phase I Average Annual Production: 85kt Cu PHASE I PRODUCTION PROFILE Cash Costs: $1.47/lb Cu AISC: $1.81/lb Cu COPPER WORLD PHASE I 2023 PFS 13
Slide 14: Mineral Reserve and Resource Estimates
MINERAL RESERVE AND RESOURCE ESTIMATES Contained copper in measured and indicated mineral resources, inclusive of mineral reserves, has increased by 4% as compared to the mineral resources in the 2022 PEA Contained copper in mill feed increased by 41% due to higher grades and flotation of both coppe
Slide 15: Project Optimization & Upside Opportunities
PROJECT OPTIMIZATION & UPSIDE OPPORTUNITIES MANY OPPORTUNITIES TO FURTHER INCREASE PRODUCTION, EXTEND MINE LIFE AND REDUCE ENVIRONMENTAL IMPACTS Mine Life Extension Potential There remains ~60% of total copper contained in measured and indicated mineral resources excluding PFS reserves, providing si
Slide 16: Highest Grade Copper Mine Versus Comparable Projects
HIGHEST GRADE COPPER MINE VERSUS COMPARABLE PROJECTS 2P RESERVE GRADE (% Cu)1 0.54% 0.44% 0.40% 0.39% 0.39% 0.38% 0.36% 0.30% 0.28% 0.17% Copper Taca Taca NuevaUnion Filo del Sol El Arco Zafranal Vizcachitas Josemaria Yellowhead Casino World (Oxides) Country Rating AA+ CCC- A+ CCC- BBB- BBB+ A+ CCC-
Slide 17: One of the Best Undeveloped Copper Projects
ONE OF THE BEST UNDEVELOPED COPPER PROJECTS CAPITAL LIGHT, LOW COMPLEXITY PROJECT $4.0 El Arco NuevaUnion Higher Risk $3.5 Casino Taca Taca Josemaria $3.0 $2.5 Capex (US$ bn) Vizcachitas $2.0 Filo del Sol (Oxides) $1.5 Lower Financial Risk Yellowhead $1.0 Copper World $0.5 Copper World offers scale,
Slide 18: Prudent Financing Strategy
PRUDENT FINANCING STRATEGY Prudent approach to greenfield project development Two outstanding state permits expected by mid-2024 Plan to complete a minority joint venture partner process after THREE PREREQUISITES PLAN (“3-P”) receipt of permits Opportunity to sanction in 2025 based on current timeli
Slide 19: Copper World Funding Requirement
COPPER WORLD FUNDING REQUIREMENT FUNDING REQUIREMENT ($M) AND CORRESPONDING ILLUSTRATIVE IRR (%) IRR: ~19% Joint venture partner reduces Hudbay’s funding requirement & enhances returns $230 $350 IRR: ~25% $1,323 $743 IRR: +35% $250 - $350 $250 1 Phase I Capex Less: WPM Stream Less: Project Financing
Slide 20: Attractive Capital Intensity
ATTRACTIVE CAPITAL INTENSITY CAPITAL INTENSITY ($/tonne Cu)1,2 Project Recent Mine Build High Capital Efficiency Low Capital Efficiency $39,148 $35,526 $28,790 $27,348 $25,000 $23,595 $19,540 $17,967 $15,943 $15,966 $16,748 $15,590 $13,198 $13,500 Yellowhead Copper Copper Taca Taca Vizcachitas Nueva
Slide 21: Robust Copper Market Outlook
ROBUST COPPER MARKET OUTLOOK GROWING DEMAND FOR “GREEN” COPPER (Mt) Global De-carbonization and Transition to Base Case Production Capability 35 Probable Projects Renewable Energy Primary Demand Electrification of Vehicles 30 ~12Mt p.a. Industrialization and Urban Development 25 Supply Gap 20 GLOBAL
Slide 22: Scarcity of New Copper Projects Globally
SCARCITY OF NEW COPPER PROJECTS GLOBALLY Avg. Annual Production WoodMac probable projects – new supply by region Rank Project Country (Cu) Production start date 2024 – 2028 1 Baimskaya Russia 250 kt North America, 8% Australia, 7% Papua New PNG PNG&&Philippines, Philipines, 18% 2 Wafi-Golpu 177 kt G
Slide 23: Significant Copper Production Optionality
SIGNIFICANT COPPER PRODUCTION OPTIONALITY COPPER WORLD PROVIDES THE NEXT LEG OF COPPER PRODUCTION GROWTH AT HUDBAY +200kt Copper World provides significant medium-term copper growth Near-term fully- 92 kt constructed copper growth + Phase I Copper Mountain ~120 kt 104 kt 2022 Actual 2023-2025E Avg.
Slide 24: Copper World PFS Highlights
COPPER WORLD PFS HIGHLIGHTS Phase I provides attractive economics producing 92kt Cu p.a. over the first ten years at $1.53/lb cash costs and 1.6M tonnes total copper produced over a 20- year mine life requiring state and local permits only De-risked and simplified project flow sheet lowers upfront c
Slide 25: Appendix
APPENDIX H' DBAY
Slide 26: United States Cathode Production
UNITED STATES CATHODE PRODUCTION 2023E COPPER CATHODE PRODUCTION (KT CU)1 230 137 61 40 20 15 15 7 5 5 5 1 Morenci Safford Copper Chino Tyrone Silver Bell Ray Phoenix Copper Pinto Valley Miami Bagdad Sierrita World Copper World is poised to make significant contribution to copper cathode production
Slide 27: Ore Mined by Deposit
ORE MINED BY DEPOSIT COPPER WORLD PHASE I 2023 PFS 27
Slide 28: Copper World Phase I 2023 PFS
SULFIDE CONCENTRATOR FLOW SHEET CONCENTRATE LEACH FACILITY FLOWSHEET COPPER WORLD PHASE I 2023 PFS 28
Slide 29: Robust Project Economics
ROBUST PROJECT ECONOMICS KEY RESULTS SUMMARY Phase I - 20 year mine life (at $3.75/lb Cu) Cu production avg. 85 kt p.a. Valuation Metrics (Unlevered)1 Units Phase 1 Cash costs of $1.47/lb and Net present value @ 8% (after-tax) $ millions $1,100 Net present value @ 10% (after-tax) $ millions $771 sus
Slide 30: Capital Costs
GROWTH CAPITAL DETAILS - EPCM METRIC UNIT Cu Concentrator Cu Leach Total CAPITAL COSTS Sitewide Mining Primary Crushing $M $M $M $22 $34 $31 $0 $0 $0 $22 $34 $31 Sulfide Plant $M $270 $0 $270 Molybdenum plant $M $21 $0 $21 Reagents $M $10 $3 $14 Phase I Growth Capital: $1.3 billion Plant Services $M
Slide 31: Operating Costs
OPERATING COSTS OPERATING COST DETAILS - MINING Mining costs based on a bottom-up approach METRIC UNIT Total and utilizing budget quotes from different Labor $M $773 suppliers, Hudbay operations experience, and Maintenance $M $877 labor costs within the region Fuel $M $781 Power $M $18 Blasting v $M
Slide 32: Phase I Physicals
Phase 1: PHYSICALS Unit TOTAL Y-03 Y-02 Y-01 Y01 Y02 Y03 Y04 Y05 Y06 Y07 Y08 Y09 Y10 Y11 Y12 Y13 Y14 Y15 Y16 Y17 Y18 Y19 Y20 Material Moved Pre-strip Resources mined Mtonne 426.0 - - 18.1 27.4 33.8 42.8 25.3 25.0 20.7 21.1 22.9 23.1 21.4 19.9 19.9 19.9 17.1 15.3 15.3 12.6 14.4 9.8 - PHASE I Waste Mi
Slide 33: Phase I Unit Costs
UNIT COSTS Unit TOTAL Y-03 Y-02 Y-01 Y01 Y02 Y03 Y04 Y05 Y06 Y07 Y08 Y09 Y10 Y11 Y12 Y13 Y14 Y15 Y16 Y17 Y18 Y19 Y20 Mining ($/tonne material moved excluding pre-strip) PHASE I Mining $/tonne 2.48 - - - 1.80 1.74 1.85 2.02 2.23 2.30 2.29 2.29 2.30 2.60 2.93 2.83 3.03 3.57 3.76 4.24 4.20 4.13 3.73 2.
Slide 34: Price Deck and Marketing Assumptions
PRICE DECK AND MARKETING ASSUMPTIONS PRICE DECK MARKETING ASSUMPTIONS PRICE / RATE UNIT LONG TERM PRICE / RATE UNIT LONG TERM Metals Molybdenum Concentrate Copper $/lb 3.75 Realization % (of contained value) % 88.00 Copper Cathode Net Premium* $/lb 0.02 Dore Molybdenum $/lb 12.00 Refining Charge - D
Slide 35: Copper World Mineral Reserve and Resource Estimates
COPPER WORLD MINERAL RESERVE AND RESOURCE ESTIMATES (AS AT JULY 1, 2023) COPPER WORLD MINERAL RESERVE AND RESOURCE ESTIMATES1,2,3,4 Tonnes Cu Grade Soluble Cu Mo Grade Au Grade Ag Grade (millions) (%) Grade (%) (g/t) (g/t) (g/t) Proven reserves 319 0.54 0.11 110 0.03 5.68 Probable reserves 66 0.52 0
Slide 36: Endnotes
ENDNOTES 1. Calculated assuming the following commodity prices: copper price of $3.75/lb, copper cathode premium of $0.02/lb (net of cathode freight charges), gold stream price of $450/oz, silver stream price of $3.90/oz and molybdenum price of $12.00/lb. Reflects the terms of the existing Wheaton P
Slide 37: For more information contact
For more information contact: Candace Brûlé Vice President, Investor Relations 416.814.4387 | investor.relations@hudbay.com
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