Hudbay Minerals Inc · TSX:HBM
Hudbay Minerals — Q1 2020 Earnings Presentation
27 slides from Hudbay Minerals's earnings presentation, May 15, 2020
Slide 1: Q1 2020 Results Conference Call Presentation
Q 1 2 0 2 0 R E S U LT S C O N F E R N C E C A L L P R E S E N TAT I O N May 15, 2020
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. Oft
Slide 3: Q1 2020 Manitoba Operations Review
Q1 2020 MANITOBA OPERATIONS REVIEW • Record performance at Lalor and Stall MANITOBA SUMMARY OF OPERATING STATISTICS • Lalor production increased 8% from Q4, Q1 2020 Q4 2019 Q1 2020 Results averaging 4,632 tpd in Q1 Ore mined (kt) 701 660 • Stall ore milled increased 19% from Q4, Ore milled (kt) 702
Slide 4: Q1 2020 Peru Operations Review
Q1 2020 PERU OPERATIONS REVIEW PERU SUMMARY OF OPERATING STATISTICS • Sales continued as planned and targeted Q1 2020 Q4 2019 Q1 2020 Results throughput and cost performance achieved up Ore mined (million tonnes)1 7.0 8.0 until the suspension of operations Ore milled (million tonnes) 6.7 7.5 Busines
Slide 5: Q1 2020 Consolidated Results
Q1 2020 CONSOLIDATED RESULTS • Consolidated copper production of 24,635 KEY RESULTS SUMMARY Q1 2020 Results tonnes, impacted by temporary Q1 2020 Q4 2019 suspension of Constancia Production1 Business • Strong cost performance with lower Copper kt 24.6 32.4 Preparedness consolidated cash cost and sus
Slide 6: COVID-19 Business Response
COVID-19 BUSINESS RESPONSE PROACTIVELY MONITORING, PLANNING AND RESPONDING TO THE RAPIDLY CHANGING ENVIRONMENT Q1 2020 Results • Closely monitoring the pandemic since January; Crisis Management Plans were activated in early March • First tier at the corporate level with a focus on ensuring overall b
Slide 7: Manitoba Guidance Affirmed & Liquidity Increased
MANITOBA GUIDANCE AFFIRMED & LIQUIDITY INCREASED COMPANY-WIDE INITIATIVES RESULT IN $150M IN INCREMENTAL LIQUIDITY THIS YEAR Q1 2020 Results • Affirming 2020 Manitoba production Manitoba Production and Cost Guidance and cost guidance PRODUCTION GUIDANCE1 2020 2021 2022 • Strong Q1 2020 performance C
Slide 8: Overview of Hudbay's Precious Metals Business
OVERVIEW OF HUDBAY’S PRECIOUS METALS BUSINESS SHOWN ON A PRECIOUS METALS GOLD EQUIVALENT BASIS1 Q1 2020 Results CONTAINED M&I3 (AUEQ) PRECIOUS METALS ANNUAL PRODUCTION2 (AUEQ) SNOW LAKE Business 2.4 Moz Preparedness MANITOBA 123 koz in 2020 growing to koz in 2022 170 with New Britannia completion 77
Slide 9: Precious Metals Exposure (Revenue)
PRECIOUS METALS EXPOSURE (REVENUE) COPPER FOCUSED WITH COUNTERCYCLICAL PRECIOUS METALS EXPOSURE HUDBAY COMMODITY EXPOSURE Q1 2020 Results 2% 18% PRECIOUS METALS EXPOSURE VS. PEERS3 Business Cu Preparedness 33% 32% Zn 20191 58% Au + Ag 21% Mo Snow Lake Gold 22% 18% 3% Closing Remarks 14% 11% Cu 10% 3
Slide 10: Snow Lake Gold Strategy Highlights
SNOW LAKE GOLD STRATEGY HIGHLIGHTS MORE ANNUAL AU OUNCES & EXTENDING MINE LIFE WITH FURTHER UPSIDE POTENTIAL • Snow Lake Gold Strategy Phase 1 – February 2019 – Transformed Lalor into a leading gold mine Q1 2020 Results • Snow Lake Gold Strategy Phase 2 – March 2020 – Adding more annual gold ounces
Slide 11: Snow Lake Gold Strategy
SNOW LAKE GOLD STRATEGY PHASE 1: Repositioning PHASE 2: Optimization PHASE 3: Historical Work Q1 2020 Results Lalor as a Gold Mine & Execution Expansion Potential ✓ 2008 & 2009 – Au zone and ✓ 2018 – Completion of ✓ 2020 – Optimized mine • Potential to increase gold Cu-Au zone identified tradeoff st
Slide 12: Snow Lake Gold Growth Over Time
SNOW LAKE GOLD GROWTH OVER TIME OVER 2.7 MM OUNCES OF GOLD HAS BEEN IDENTIFIED AS RESERVES / PRODUCED TO DATE Q1 2020 Results 300% INCREASE IN IDENTIFIED RESERVES / PRODUCED GOLD FROM INITIAL RESERVE ESTIMATE Business Preparedness Inferred Material 1.3 mm oz of gold Snow Lake Gold 2.7 2.1 Closing Re
Slide 13: Snow Lake Processing Logistics
SNOW LAKE PROCESSING LOGISTICS LALOR MINE 2020 10 years 2030 Source Q1 2020 Results Ore SATELLITE GOLD DEPOSITS 2030 8 years 2037 (WIM, 3 ZONE) Business Preparedness Processing STALL BASE METAL MILL Location 2020 10 years 2030 (WITH GOLD BY-PRODUCT) Snow Lake Gold NEW BRITANNIA GOLD MILL 2022 15 yea
Slide 14: Positioning of Snow Lake Gold
POSITIONING OF SNOW LAKE GOLD GROWING GOLD PRODUCTION AT FIRST QUARTILE CASH COST AND AISC1 2020 CASH COST (US$/oz Au) 2020 AISC (US$/oz Au) Q1 2020 Results $3,000 $3,000 $2,500 $2,500 $2,000 $2,000 Business $1,500 $1,500 Preparedness $1,000 $1,000 Snow Lake Gold LOM Snow Lake Gold LOM $500 $500 --
Slide 15: Positioning of Snow Lake Gold (Cont.)
POSITIONING OF SNOW LAKE GOLD (CONT.) FAVORABLY POSITIONED VS. COMPARABLE UNDERGROUND MINES (NPV’S >US$500 MM1) Q1 2020 Results $1,200 Illustrative positioning of Snow Lake Gold Potential for greater production at lower cost with mill expansion $1,000 Lamaque Business Preparedness Cash Flow Margin (
Slide 16: Significant Gold Value to Be Unlocked
SIGNIFICANT GOLD VALUE TO BE UNLOCKED 2022 EV/EBITDA RANGES1 (RATIO) SNOW LAKE GOLD 2022 GROSS MARGIN2 (US$ MM) Q1 2020 Results 18.0x $210 $194 $179 $163 Business 6.5x 4.0x 12.0x Preparedness 3.0x 5.0x Base Metal Gold Streaming Producers Producers Companies US$1400 / oz Au US$1500 / oz Au US$1600 /
Slide 17: Lalor Mine Life Extension
LALOR MINE LIFE EXTENSION HIGH RESOURCE-TO-RESERVE CONVERSION POTENTIAL Q1 2020 Results • Proven and probable reserves mine plan provides 10+ year mine life • Inferred resources estimation methodology expected to lead to higher resource to reserve conversion factor, providing potential additional fe
Slide 18: Lalor In-Mine Gold Exploration Targets
LALOR IN-MINE GOLD EXPLORATION TARGETS LENS 17 COPPER-GOLD RICH LENS NOT CURRENTLY IN MINE PLAN Q1 2020 Results • Both Lens 17 and 27 are open down 3D VIEW OF LENS 17 AND LENS 27 AT LALOR plunge GOLD LENSES Business • Further exploration / delineation could BASE METAL Preparedness add additional cop
Slide 19: Snow Lake Gold Regional Potential
SNOW LAKE GOLD REGIONAL POTENTIAL • Hudbay has a large prospective land MINERAL PROPERTIES IN THE SNOW LAKE REGION Q1 2020 Results package in the Snow Lake belt with significant gold exploration potential • WIM (15km from New Britannia mill) is a MINE Business copper-gold deposit that was acquired i
Slide 20: Snow Lake Gold Regional Potential - 1901
SNOW LAKE GOLD REGIONAL POTENTIAL - 1901 POTENTIAL FOR INCREMENTAL COPPER-GOLD MILL FEED Q1 2020 Results DRILLING IN THE Business Preparedness 1901 DEPOSIT HAS IDENTIFIED SEVERAL HIGH-GRADE GOLD AND COPPER-GOLD ZONES Snow Lake Gold HAS POTENTIAL TO ADD ADDITIONAL Hole ID CH1916 CH1918 CH1931 CH1934
Slide 21: The Hudbay Advantage
THE HUDBAY ADVANTAGE Q1 2020 Results Long life assets located in mining friendly jurisdictions Business Preparedness Proven track record of operational excellence and low cost mines Snow Lake Gold Focused on free cash flow generation and prudent capital allocation World-class management team with pr
Slide 22: Execution of Strategy
EXECUTION OF STRATEGY LEVERAGING HUDBAY’S KEY COMPETITIVE ADVANTAGES FOR VALUE CREATION Q1 2020 Results LOW RISK, HIGH RETURN SHORT-TERM PRIORITIES Business Preparedness ESG ✓ Drill Lalor gold and extend mine life Excellence Successful ✓ Prudently manage balance sheet to provide financial flexibilit
Slide 23: Strong Environmental, Social & Governance (ESG) Performance
STRONG ENVIRONMENTAL, SOCIAL & GOVERNANCE (“ESG”) PERFORMANCE INDUSTRY LEADER IN RESPONSIBLE MINING Q1 2020 Results ENVIRONMENT SOCIAL IMPACT HEALTH & SAFETY GOVERNANCE ✓ 97% of electricity in ✓ Manitoba COVID-19 relief ✓ Constancia has the best ✓ Board refreshed in 2019 with Manitoba is renewable d
Slide 24: Appendix
APPENDIX HBM ™X Bnyse
Slide 25: Snow Lake Reserves & Resources
SNOW LAKE RESERVES & RESOURCES AS AT JANUARY 1, 20201 PROPERTY CATEGORY TONNES Cu (%) Zn (%) Au (g/t) Ag (g/t) Q1 2020 Results Proven 1,748,000 1.37 1.11 6.70 24.0 Lalor Gold Zone Probable 4,251,000 0.83 0.42 6.21 27.0 WIM Probable 2,448,000 1.63 0.25 1.60 6.3 3 Zone Probable 662,000 - - 4.21 - Busi
Slide 26: Additional Information
ADDITIONAL INFORMATION SUPPLEMENTAL INFORMATION TO THE 1901 DEPOSIT DRILL RESULTS Q1 2020 Results From (m) To (m) Azimuth at Dip at Hole ID Easting Northing Elevation Easting Northing Elevation Intercept Intercept CH1916 427067 6078909 -270 427068 6078909 -278 087 -85 CH1918 427094 6078818 -265 4270
Slide 27: For More Information Contact
For More Information Contact: Candace Brûlé, Director, Investor Relations 416.814.4387 | candace.brule@hudbay.com