Hudbay Minerals Inc · TSX:HBM
Hudbay Minerals — John Tumazos Very Independent Research Metals & Mining Conference (March 2013)
47 slides from Hudbay Minerals's conference presentation, Mar 21, 2013
Slide 1: Creating Sustainable Value Through High Quality, Long-Life Deposits
Creating Sustainable Value Through High Quality, Long-Life Deposits Investor Presentation March 2013 HBM
Slide 2: Forward-looking Information
Forward-looking Information This presentation contains “forward-looking statements” and “forward-looking information” (collectively, “forward-looking information”) within the meaning of applicable Canadian and United States securities legislation. All information contained in this presentation, othe
Slide 3: Note to U.S. Investors
Note to U.S. Investors Information concerning Hudbay’s mineral properties has been prepared in accordance with the requirements of Canadian securities laws, which differ in material respects from the requirements of SEC Industry Guide 7. Under Securities and Exchange Commission (the “SEC”) Industry
Slide 4: Stringent Criteria for Growth
Stringent Criteria for Growth Disciplined focus on per share metrics 1 1. Focus geographically 3 2 • on mining friendly, investment grade countries in the Americas 2. Focus geologically • on VMS and porphyry deposits 3. Acquire small, think big 1 777 - Manitoba 6 • leverage our core competencies as
Slide 5: Key Metals Growth
Key Metals Growth1 390% GROWTH 115% GROWTH 2 30% GROWTH Cu Production Precious Metals Production Zn Production (kt) (koz) (kt) 200 220 120 200 175 180 150 90 160 125 140 120 100 60 100 75 80 60 50 30 40 25 20 0 0 0 3 4 3 4 3 4 2012 2013E 2014E 2015E 2012 2013E 2014E 2015E 2012 2013E 2014E 2015E 5 6
Slide 6: Steady Production with Consistent Operating Costs
Steady Production with Consistent Operating Costs Production of all metals met guidance for the sixth consecutive year Three Months Ended Year Ended Guidance1 Guidance1 Contained metal in concentrate December 31, 2012 December 31, 2012 2012 2013 Copper1 tonnes 8,162 39,587 35-40,000 33-38,000 Zinc1
Slide 7: Growing Mineral Reserves and Resources Per Share
Growing Mineral Reserves and Resources Per Share Commodity Exposure1,2 Cu Eq/Share (lb Cu/sh) 1 Hudbay reserves and resources as of March 31, 2012. Measured and Indicated Resources are exclusive of Proven and Probable Reserves. 2 Commodity exposure calculated using commodity prices of US$1,100/oz Au
Slide 8: Flagship 777 Mine
Flagship 777 Mine Steady production with low cash costs Mining Cost (C$/tonne) MANITOBA 777 Winnipeg Ownership 100% 1 12013 estimated production and costs are based on guidance as disclosed in Life of Mine1 8 years Hudbay's news release entitled "Hudbay Announces 2013 Production Guidance 1As at Janu
Slide 9: 777 Mine
777 Mine Expansion and underground exploration program underway 530m level 690m level 840m level 1082m level 1262m level 1412m level Applying 360° Expertise > 9
Slide 10: Lalor Mine Portion on Track
Lalor Mine Portion on Track 1st full year of production via production shaft expected in 2015 Snow Lake Ore Concentrator MANITOBA Lalor Project Snow 777 Mine Lake Flin Flon Reed Amisk Flin Flon Lake Lalor Lake Ore Concentrator Hwy #39 Zinc Plant Reed Project N Hwy 25 km #10 Winnipeg Ownership 100% P
Slide 11: Lalor
Lalor Key milestones completed on time and on budget Surface 0m Production shaft Vent raise 500m 525m / shaft depth1 750m 2013 - 2014 2015 Exploration platform 1000m 1500m Base Metal Resource Gold & Copper-Gold Resource Looking 0m 250m High Grade Intercepts N70oW Applying 360° Expertise > 11 1 As of
Slide 12: Reed Progressing Well
Reed Progressing Well Portal trench excavation completed MANITOBA > $26 million invested and additional $21 million in commitments to January 31, 2013 Reed > Underground ramp advanced approx. 224 metres as of February 20, 2013 Winnipeg > Submitted Environmental Act Licence application to provincial
Slide 13: Constancia Project
Constancia Project US$1.5 billion construction program underway PERU > US$351 million spent and entered into Trujillo additional US$631 million in commitments to January 31, 2013 Lima Cusco > Targets for initial and full production Constancia remain unchanged Arequipa > Activity to date includes: 1-
Slide 14: Constancia Construction Progress
Constancia Construction Progress
Slide 15: Constancia Project
Constancia Project Significant infrastructure advantages > 83km access road from Yauri • To be upgraded for concentrate haulage > Tintaya power substation 70km away • Planned upgrade to 220 kV to be commissioned by Q3 2013 • Contract executed for construction of power transmission line from Tintaya
Slide 16: Constancia Exploration
Constancia Exploration Positive Results from Pampacancha West > One drill focused on Pampacancha infill drilling; two drills focused on Pampacancha West • 500 metres west of the main Pampacancha deposit • New drilling has yielded positive results • Resource is expected to enable continued optimizati
Slide 17: Financial Results
Financial Results Three Months Ended Year Ended Dec. 31 Dec. 31 ($000s except per share amounts) 2012 2011 2012 2011 Revenue 180,994 254,314 702,550 890,817 Profit before tax 23,335 69,813 52,149 209,025 Profit (loss) for the period 7,438 34,286 (21,170) (163,588) Operating cash flow per share1 0.03
Slide 18: Strong Balance Sheet
Strong Balance Sheet As at December 31, 2012 Sources Uses (through 2014) > Cash and cash equivalents - $1,337 million > Lalor - $335 million > Remaining stream agreement payments > Reed - $48 million - US$250 million > Constancia - US$1,223 million > Existing Credit facility - US$236 million > Accru
Slide 19: Applying 360° Expertise in Each Stage of Mining Cycle
Applying 360 Expertise in Each Stage of Mining Cycle Exploration Development Production Reclamation > Discovered > Currently > 777 Mine is a > Successfully 26 mines in 3 mines in consistently reclaimed 85 years development low-cost 19 mines producer Applying 360° Expertise > 19
Slide 20: Growth of Mineral Deposits
Growth of Mineral Deposits Discoveries in the Greenstone Belt ∕∕ 62.5 Initial resource Added resource The mineral reserve for Lalor is made up of 14.4 million tonnes of probable reserves 0 5 10 15 20 25 30 Tonnes (millions) Average 1990 – 2012 discovery cost of 6.9 cents/lb Cu equivalent1 1 Expresse
Slide 21: Appendix
H' DBAY APPENDIX
Slide 22: Appendix Contents
Appendix Contents > By-product copper cost curve > 2013 operating guidance, capital expenditures and exploration spending breakdown > Lalor guidance, mineralization and plan views > Constancia project > South America property > Reserves & resources Applying 360° Expertise > 22
Slide 23: 2012 Copper & Zinc By-Product Cost Curves
2012 Copper & Zinc By-Product Cost Curves1 250 Constancia2 C1 Cash Cost (100 x US$/lb) 200 Reed 150 2 100 777 Mine 50 0 0 10 20 30 40 50 60 70 80 90 100 (50) Cumulative Percentile Production (%) (100) Lalor (150) (200) (250) Cu Cash Cost Zn Cash Cost Source: Brook Hunt (2012 cost curve) 1 By-product
Slide 24: 2013 Operating Guidance
2013 Operating Guidance 7771 Lalor2 Reed2 Ore Mined tonnes 1,620,000 418,000 51,000 Copper % 2.18 0.54 3.43 Zinc % 4.41 9.89 1.18 Gold g/tonne 1.94 1.23 0.72 Silver g/tonne 30.89 17.70 8.80 Unit Operating Costs C$/tonne 38 - 42 75- 95 Contained Metal in Concentrate3 Copper tonnes 33,000 – 38,000 Zin
Slide 25: 2013 Operating Guidance
2013 Operating Guidance Flin Flon Snow Lake Ore Milled tonnes 1,719,000 369,000 Recoveries Copper % 92 82 Zinc % 85 95 Gold % 69 65 Unit operating costs1 C$/tonne 12 - 16 25 - 30 Zinc concentrate treated Domestic tonnes 199,000 Purchased tonnes 2,600 Total tonnes 201,600 Recovery % 97 Zinc metal pro
Slide 26: 2013 Capital Expenditures
2013 Capital Expenditures1 Committed to $1.2 billion in capital expenditures to grow production profile (figures in C$ millions) Guidance 20131 Growth Lalor 144 Constancia 961 Reed 44 Capitalized Interest and Other 49 Total growth capital 1,198 Sustaining 78 Total capital expenditures 1,276 1 2013 g
Slide 27: 2013 Exploration Expenditures
2013 Exploration Expenditures Year Ended (C$ millions) 2012 Actual Annual 2013 Guidance Manitoba 15 20 South America 20 18 Other North America 9 2 Total exploration expenditures 44 40 Capitalized spending - (5) Total exploration expenses $44 $35 Total exploration budget will enable approximately: >
Slide 28: Lalor Project Guidance
Lalor Project Guidance > CAPEX for new concentrator (including 2013 $144 million paste backfill plant) estimated at $353 million 2014 $191 million • Scope changes include increase in grinding capacity by 20% to 5,400 2015 $138 million tonnes per day Total estimated future $473 million capital spendi
Slide 29: Reed Copper Project
Reed Copper Project1 Mineral Reserves as at March 30, 2012 Mineral Resources as at March 15, 2011 Category Tonnes Cu (%) Zn (%) Au (g/t) Ag (g/t) Probable 2,157,000 3.83 0.59 0.48 6.02 Inferred 170,000 4.26 0.52 0.38 4.55 1 Hudbay holds a 70% joint venture interest in the Reed property Applying 360°
Slide 30: Constancia Capital Spending
Constancia Capital Spending (US$ millions) 2013 961 2014 262 Total estimated future capital spending 1,223 Total spent in 2012 323 Total 1,546 Applying 360° Expertise > 30
Slide 31: Constancia Key Metrics
Constancia Key Metrics Project Costs Unit Life of Mine Mining Costs / tonne ore1 US$/t 2.97 Milling Cost / tonne ore US$/t 4.47 G&A Costs / tonne ore US$/t 1.11 Average Annual Sustaining CAPEX M US$ 40 Project Economics NPV of C$ FCF (@ 8% discount and LT Cu of $2.75/lbs) M C$ 571 IRR % 14.5 IRR – w
Slide 32: Constancia Project
Constancia Project > Unlevered IRR of 14.5% based on capital cost estimate > Net present value of $571 million, assuming a discount rate of 8.0% and $2.75/lb copper Base Case1 Copper Prices +10%2 Copper Prices -10%2 Long-Term Copper Price US$2.75/lb US$3.03/lb US$2.48/lb IRR – Unlevered 14.5% 17.3%
Slide 33: Constancia Project - Site Plan and Layout
Constancia Project - Site Plan and Layout Applying 360° Expertise > 33
Slide 34: Current Schedule at Constancia
Current Schedule at Constancia 2011 2012 2013 2014 2015 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Permitting Mine Permit Front End Engineering Design Construction Camp Procurement Community Agreements Board Approval Power Line TMF and WRF Plant Pampacancha Feasibility Study Commiss
Slide 35: Constancia Regional Infrastructure – Port
Constancia Regional Infrastructure – Port > Constancia is ~475km from Matarani Port by road, already more than half paved > Matarani Port located 120km from Arequipa by paved highway > The port is a deep sea port managed by a private group > Used by other mining companies > Currently formalizing exp
Slide 36: Constancia Production Profile
Constancia Production Profile High tonnage with low cash costs > 2015 – 2019: annual copper metal in concentrate expected to average 118,000 t > 2020 – 2030: annual copper metal in concentrate expected to average 77,000 t > Cash costs of production expected to average: $0.66/lb of copper for first 5
Slide 37: Precious Metals Stream Overview
Precious Metals Stream Overview > US$750 million in upfront deposit payments from Silver Wheaton for delivery of: • 100% of payable gold and silver from 777 mine until the end of 2016; • and 50% of payable gold and 100% of payable silver thereafter for the remainder of life of mine • 100% of payable
Slide 38: Constancia Reserves Overview
Constancia Reserves Overview Growth in Reserves Constancia Mineral Reserves – August 8, 2012 Category Ore (M tonnes) Cu (%) Mo (g/t) Ag (g/t) Au (g/t) CuEq1 (%) Proven 349 0.37 100 3.29 0.043 0.49 Probable 54 0.24 60 2.98 0.035 0.33 Total 403 0.35 96 3.25 0.042 0.47 Pampacancha Mineral Reserves – Au
Slide 39: Constancia Resources Overview
Constancia Resources Overview Exclusive of Reserves Constancia Mineral Resources1 - November 2, 2011 Category M (tonnes) Cu (%) Mo (g/t) Ag (g/t) Au (g/t) CuEq2 (%) Measured 119 0.23 62 2.3 0.038 0.31 Indicated 344 0.20 58 2.0 0.034 0.27 Total 463 0.21 59 2.0 0.035 0.28 Inferred 219 0.19 49 1.8 0.03
Slide 40: Constancia Project Contingency
Constancia Project Contingency Capital costs Area Base Cost Contingency & Growth Dollars Contingency & Growth % of Base $ US$ millions US$ millions Mining 145 12 8% Mine Equipment 151 2 1% Plant 340 57 17% Heavy Civil Works (TMF & reservoirs) 178 42 24% Other Infrastructure 117 21 18% Site Accommoda
Slide 41: Formalized LOM Agreements with Local Communities
Formalized LOM Agreements with Local Communities Uchuccarco > Life of mine agreement in place > Land rights acquired Chilloroya > Life of mine agreement in place > Land rights acquired > Relocation process is underway Committed to community investments Applying 360° Expertise > 41
Slide 42: Project De-Risking with Experienced Partners
Project De-Risking with Experienced Partners Stracon GyM Relevant Experience > Currently operating in Peru • Toromocho > Experienced in mining and major earth works • El Brocal > Established labour force and operating team • Marcona > Experienced procurement and maintenance • La Arena > Carry over f
Slide 43: In-mine Manitoba Mineral Reserves
In-mine Manitoba Mineral Reserves January 1, 2012 Category Tonnes Cu (%) Zn (%) Au (g/t) Ag (g/t) 7771 Proven 4,921,000 2.36 4.16 1.97 26.78 Probable 7,464,000 1.64 4.44 1.82 27.86 TROUT LAKE Proven 229,000 2.07 1.90 2.06 1.33 CHISEL NORTH-ZINC Proven 48,000 - 7.97 - - Probable - 6.57 - - 60,000 CHI
Slide 44: Manitoba Mineral Resources
Manitoba Mineral Resources January 1, 2012 – Exclusive of mineral reserves Category Tonnes Cu (%) Zn (%) Au (g/t) Ag (g/t) 7771 Inferred 1,183,000 1.43 5.47 1.96 39.17 Lost2 Indicated 411,000 1.80 6.10 1.00 20.00 Inferred 69,000 1.50 6.20 0.80 16.50 Total Indicated 411,000 1.80 6.10 1.00 20.00 Infer
Slide 45: Lalor Project
Lalor Project Reserves & resources Lalor project mineral reserves1 - March 29, 2012 Category Tonnes Cu (%) Zn (%) Au (g/t) Ag (g/t) Base metal Probable reserves 12,591,000 0.63 7.92 1.55 23.81 Gold zone Probable reserves 1,841,000 0.38 0.38 3.99 21.77 Total Reserves 14,432,000 0.60 6.96 1.86 23.55 L
Slide 46: Reserves and Resources
Reserves and Resources > The technical and scientific information in this presentation related to the Constancia project (including Pampacancha) has been approved by Cashel Meagher, P. Geo, Hudbay’s Vice- President, South America. The technical and scientific information related to all other sites a
Slide 47: For more information contact
For more information contact: John Vincic, VP of Investor Relations and Corporate Communications Tel: 416.362.0615 Email: john.vincic@hudbayminerals.com