Hudbay Minerals Inc · TSX:HBM
Hudbay Minerals — Q1 2019 Earnings Presentation
41 slides from Hudbay Minerals's earnings presentation, May 7, 2019
Slide 1: Q1 2019 Results Presentation
Q1 2019 RESULTS PRESENTATION May 7, 2019
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: Conference Call Agenda
CONFERENCE CALL AGENDA Corporate Review Recent achievements Q1 2019 consolidated results Peru Business Unit Q1 2019 operating performance Regional potential Manitoba Business Unit Q1 2019 operating performance Regional potential Arizona Business Unit Rosemont project developments Strategy Overview N
Slide 4: Recent Achievements
RECENT ACHIEVEMENTS ACHIEVED SEVERAL GROWTH INITIATIVES IN EARLY 2019 ✓ February 2019 – released the new Lalor mine plan, doubling the annual gold LALOR & SNOW LAKE production and increasing reserve and resource estimates ✓ February 2019 – Lalor mine achieved ramp-up to 4,500 tpd achieving record qu
Slide 5: Q1 2019 Consolidated Results
Q1 2019 CONSOLIDATED RESULTS Record copper recoveries at KEY RESULTS SUMMARY Constancia Q1 2019 Q4 2018 Record throughput at Lalor and Production1 Stall Copper kt 38.0 37.2 Zinc kt 28.0 27.4 Consolidated production of copper- equivalent contained metal in Precious Metals2 koz 38.7 42.5 concentrate o
Slide 6: Peru Operations Review
PERU OPERATIONS REVIEW PERU SUMMARY OPERATING STATISTICS Copper production of 32kt, an increase quarter-over-quarter primarily due to Q1 2019 Q4 2018 record recoveries Ore mined (million tonnes)1 8.6 7.3 Copper recoveries reached record levels Ore milled (million tonnes) 8.0 7.7 in Q1 2019 as a resu
Slide 7: Constancia Optimization
CONSTANCIA OPTIMIZATION BENEFITS OF CONTINUOUS IMPROVEMENT INITIATIVES Increasing quarterly trend in copper recoveries Stable copper production with low cash cost and sustaining cash costs Lowest cost sulphide open pit copper mine in South America COPPER RECOVERIES COPPER PRODUCTION AND CASH COSTS1,
Slide 8: Constancia Regional Potential
CONSTANCIA REGIONAL POTENTIAL Since 2012, executed over 90 social agreements with local governments and communities Pleased with progress on Pampacancha negotiations to date with first ore expected in 2020 Exploration work to be conducted on newly acquired properties near Constancia with potential t
Slide 9: Manitoba Operations Review
MANITOBA OPERATIONS REVIEW Manitoba Summary Operating Statistics Total ore mined increased by 19% due to higher production volumes at 777 and achieving Q1 2019 Q4 2018 4,500tpd at Lalor in Q1, resulting in 10% Ore mined (kt) 667 562 decrease in total mining costs per tonne Ore milled (kt) 611 574 To
Slide 10: Lalor Mine Life Extension
LALOR MINE LIFE EXTENSION LALOR RESOURCE CONVERSION POTENTIAL Proven and probable (“2P”) mine plan provides 10 year mine life 2P + inferred inventory provides option to extend mine life while keeping both mills full 10
Slide 11: Snow Lake Regional Potential
SNOW LAKE REGIONAL POTENTIAL EXPANSION POTENTIAL BEYOND CURRENT LALOR RESERVES AND RESOURCES SATELLITE DEPOSITS WITH EXPLORATION OPPORTUNITIES TO DISPLACE CURRENT RESOURCES WITH KNOWN RESOURCE HIGHER VALUE FEED FOR BOTH STALL AND NEW BRITANNIA ESTIMATES Engineering studies on In-Mine Lalor Snow Lake
Slide 12: Snow Lake Regional Potential
SNOW LAKE REGIONAL POTENTIAL HUDBAY HAS A LARGE PROSPECTIVE LAND PACKAGE IN THE SNOW LAKE BELT WITH SIGNIFICANT GOLD EXPLORATION POTENTIAL Proven + Probable Reserves Grade Contained Tonnage Copper Gold Silver Zinc Gold Eq(1) Gold Gold Eq(1) (Mt) (%) (g/t) (g/t) (%) (g/t) (koz) (koz) Lalor - Base Met
Slide 13: Lalor In-Mine Exploration
LALOR IN-MINE EXPLORATION LENS 17 CU-AU RICH LENS NOT IN CURRENT RESOURCE ESTIMATES Lens 17 is Cu-Au rich analog to Lens 27 identified based on 7 surface holes. 2019 drilling: Phase 1 to confirm upper portion in Q2 2019 Phase 2: Potential connection to Lens 10 (Zn rich) in 2H 2019 IN-MINE GOLD EXPLO
Slide 14: Lalor In-Mine Exploration
LALOR IN-MINE EXPLORATION DRILLING AT LALOR CONTINUES TO EXTEND HIGH GRADE LENSES Q1 2019 infill drilling of 25 lens extended lenses 23 and 32 and expanded lens 21 Estimated true width of ~20-25m combined for lenses 23, 32 and 25. Lenses 23 and 32 still have room to extend down plunge Resource model
Slide 15: Deep Exploration Program
LALOR IN-MINE EXPLORATION DEEP EXPLORATION PROGRAM: TEST FOR NEW BASE METAL LENSES AND CU- AU FEEDERS Test the potential a repeated lower limb fold represented by 42 may be a prospective horizon at depth May potentially intersect an additional feeder network associated with other mineralized horizon
Slide 16: Discovery of 1901 Deposit
DISCOVERY OF 1901 DEPOSIT CONTINUING TO ADD VALUE THROUGH EXPLORATION Discovery of a new deposit with high-grade Chisel deep zinc in continuity with high-grade copper EM plates and gold intersections Located between the old Chisel North mine and Lalor at a depth of less than 600m below surface and w
Slide 17: 1901 Deposit Preliminary Geological Model
1901 DEPOSIT PRELIMINARY GEOLOGICAL MODEL Cu-Au stringers = Feeder system Towards heat Chisel to (continues below the Zn rich domain) source Lalor ramp CH0702 CH0703 Assays returned on CH1801 CH1203 CH0701 CH1901, CH1902, CH1903 & CH1904 CH0305 160m at 1.0% Cu Eq confirm the occurrence from surface
Slide 18: Flin Flon Transition Plans
FLIN FLON TRANSITION PLANS 777 mine reserves will be depleted in Q2 2022 The Flin Flon mill and tailings facility will be placed on care and maintenance after 777 mining operations cease The zinc plant shutdown must occur in the summer months as the plant relies on process heat As a result of the 77
Slide 19: Rosemont Project
ROSEMONT PROJECT High-quality development project with well-established Location Tucson, Arizona infrastructure March 2017 43-101 demonstrates robust project economics Ownership 100%2 19 year mine life generating 15.5% after-tax unlevered project IRR at $3.00/lb Cu Type of deposit Copper-molybdenum
Slide 20: Rosemont Initial Capex & Funding
ROSEMONT INITIAL CAPEX & FUNDING HUDBAY IS WELL POSITIONED TO FUND ROSEMONT 3-year construction period; $144 million in year 1, $861 million in year 2, $768 million in year 3, remaining capital in ramp-up period ~5% growth and 15% contingency added per item ROSEMONT INITIAL CAPITAL COST ($M) BREAKDO
Slide 21: Rosemont Relative to Peers
ROSEMONT RELATIVE TO PEERS COPPER PRODUCTION AND EBITDA1 ROSEMONT ECONOMICS1 Hudbay Rosemont $2,000 After-Tax NPV 40% 8% (US$M) Unlevered IRR (%) 400 Copper Production (kt) EBITDA (US$M) 1500 $1,448 $1,500 30% 300 282 $1,000+ $1,115 21.2% 1000 18.5% $1,000 20% $769 15.5% 127 $500+ 200 155 $538 $500
Slide 22: Best in Class Mine Development
BEST IN CLASS MINE DEVELOPMENT Constancia’s capital cost performance was best in-class compared to other greenfield open pit copper mines in the Americas and the same leadership team will develop Rosemont into an operating mine LEADING CAPITAL COST CONTROL VS. COMPARABLE RAMP-UP RECOGNIZED AS BEST I
Slide 23: Project Pipeline
PROJECT PIPELINE Hudbay has built a diversified portfolio of operating mines and an extensive development pipeline through robust exploration and disciplined M&A to perpetuate production growth Production Constancia Lalor 777 Acquired 2011 Discovered 2007 Original Asset Upon Developed 2012 Developed
Slide 24: Near-Term Catalysts
NEAR-TERM CATALYSTS ROSEMONT EARLY WORKS & JV PROCESS Commence early works program to bring power and water to site, key project de- bottlenecking milestones Launch a joint venture process for Rosemont seeking the sale of an approximate 30% minority stake LALOR MINE RAMP-UP AND MINE LIFE EXTENSION A
Slide 25: Near-Term Catalysts (Cont'd)
NEAR-TERM CATALYSTS (CONT’D) ROSEMONT PROJECT DEVELOPMENT Full project sanctioning expected once prudent financing package in place (sourced from cash balance, operating cash flow generation, minority JV partner proceeds, etc.) Approximately 3-year construction timeline ANN MASON EXPLORATION Continu
Slide 26: Hudbay Investment Rationale
HUDBAY INVESTMENT RATIONALE Consistent long-term growth strategy and world-class asset base Proven track record of successful project development Operational excellence and value creation through successful exploration Focused on free cash flow generation and prudent capital allocation Robust projec
Slide 27: Appendix
APPENDIX 27
Slide 28: Maria Reyna Historical Drill Results
MARIA REYNA HISTORICAL DRILL RESULTS A summary of the historical drill results from Maria Reyna is contained in the table below, however a qualified person has not independently verified this historical data or the quality assurance and quality control program that was applied during the execution o
Slide 29: Peru Mineral Reserves
PERU MINERAL RESERVES AS AT JANUARY 1, 2019 CATEGORY TONNES Cu (%) Mo (g/t) Ag (g/t) Au (g/t) CONSTANCIA Proven 421,800,000 0.30 94 2.87 0.035 Probable 72,000,000 0.23 72 3.06 0.035 Total Proven and Probable 493,800,000 0.29 91 2.90 0.035 PAMPACANCHA Proven 32,400,000 0.59 178 4.48 0.368 Probable 7,
Slide 30: Peru Mineral Resources
PERU MINERAL RESOURCES AS AT JANUARY 1, 2019 CATEGORY TONNES Cu (%) Mo (g/t) Ag (g/t) Au (g/t) CONSTANCIA Measured 169,400,000 0.18 50 2.19 0.028 Indicated 180,500,000 0.20 56 2.16 0.034 Inferred 50,800,000 0.24 43 2.41 0.046 PAMPACANCHA Measured 11,400,000 0.41 101 4.95 0.245 Indicated 6,000,000 0.
Slide 31: Snow Lake Reserves & Resources
SNOW LAKE RESERVES & RESOURCES AS AT JANUARY 1, 2019 PROPERTY CATEGORY TONNES Cu (%) Zn (%) Au (g/t) Ag (g/t) Proven 5,137,000 0.76 7.13 2.37 26.31 Base Metal Zone Probable 5,552,000 0.44 4.19 3.52 27.39 Proven 58,000 0.80 2.65 5.46 39.09 Gold Zone Probable 2,928,000 1.09 0.31 6.74 23.08 Total Lalor
Slide 32: Flin Flon Reserves & Resources
FLIN FLON RESERVES & RESOURCES AS AT JANUARY 1, 2019 PROPERTY CATEGORY TONNES Cu (%) Zn (%) Au (g/t) Ag (g/t) Proven 2,169,000 1.80 4.44 1.77 26.45 777 Reserves Probable 1,384,000 0.97 3.75 2.03 21.65 Total 777 Mineral Reserve 3,552,000 1.48 4.17 1.87 24.58 Indicated 375,000 1.13 4.05 1.79 29.57 777
Slide 33: Rosemont Reserves & Resources
ROSEMONT RESERVES & RESOURCES AS AT JANUARY 1, 2019 MINERAL RESERVES1 CATEGORY Tonnes Cu (%) Mo (%) Ag (g/t) Proven 426,100,000 0.48 0.012 4.96 Probable 111,000,000 0.31 0.010 3.09 Total 2P Reserves 537,100,000 0.45 0.012 4.58 MINERAL RESOURCES1 CATEGORY Tonnes Cu (%) Mo (%) Ag (g/t) Measured 161,30
Slide 34: Ann Mason Reserves & Resources
ANN MASON RESERVES & RESOURCES AS AT MARCH 3, 2017 PROJECT RESOURCE ESTIMATES CATEGORY Tonnes Cu (%) Au (g/t) Ag (g/t) Mo (%) Measured & Indicated 1,400,000,000 0.32 0.03 0.65 0.006 Inferred 623,000,000 0.29 0.03 0.66 0.007 34
Slide 35: Additional Information
ADDITIONAL INFORMATION The reserve and resource estimates included in this presentation were prepared in accordance with National Instrument 43-101 – Standards of Disclosure for Mineral Projects (“NI 43-101”) and the Canadian Institute of Mining, Metallurgy and Petroleum Standards on Mineral Resourc
Slide 36: Additional Information – Lens 17
ADDITIONAL INFORMATION – LENS 17 Drill results Hole ID From To Intercept Depth Estimated true Cu Au (m) (m) (m) (m) width(m)1 (%)2 (g/t)2 189W01 1197.0 1205.0 8.0 1154 7.1 0.1 9.3 193W01 1041.2 1046.5 5.4 1028 4.1 1.1 2.8 267W01 1120.8 1127.2 6.3 1098 4.5 2.7 11.3 273 1211.8 1215.8 4 1202 2.9 1.9 1.
Slide 37: Additional Information – Zone 1901
ADDITIONAL INFORMATION – ZONE 1901 Drill results Supplemental information to the Zone 1901 drill results From To Azimuth at Dip at Core Hole ID Easting Northing Elevation Easting Northing Elevation intercept intercept Size CH0305 427622.3 6079054.8 4581.4 427621.0 6079053.7 4574.4 229 -76 NQ CH0701
Slide 38: Additional Information – Lalor In-Mine
ADDITIONAL INFORMATION – LALOR IN-MINE Drill results 950m Level drilling Lens 23 38
Slide 39: Additional Information – Lalor In-Mine
ADDITIONAL INFORMATION – LALOR IN-MINE Drill results 950m Level drilling Lens 25 39
Slide 40: Additional Information – Lalor In-Mine
ADDITIONAL INFORMATION – LALOR IN-MINE Drill results 950m Level drilling Lens 32 40
Slide 41: For More Information Contact
F O R M O R E I N F O R M AT I O N C O N TA C T: Candace Brûlé, Director, Investor Relations 416.814.4387 | candace.brule@hudbay.com