Hudbay Minerals Inc · TSX:HBM
Hudbay Minerals — Bank of America Merrill Lynch 21st Annual Canada Mining Conference 2015
41 slides from Hudbay Minerals's conference presentation, Sep 10, 2015
Slide 1: Bank of America Merrill Lynch 21st Annual Canada Mining Conference
Bank of America Merrill Lynch 21st Annual Canada Mining Conference September 10-11, 2015 HBM INVESTOR PRESENTATION
Slide 2: Cautionary Information
Cautionary 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, other tha
Slide 3: Cautionary Information (continued)
Cautionary Information (continued) The risks, uncertainties, contingencies and other factors that may cause actual results to differ materially from those expressed or implied by the forward- looking information may include, but are not limited to, risks generally associated with the mining industry
Slide 4: Cautionary Information (continued)
Cautionary Information (continued) The technical and scientific information in this presentation related to the Constancia project has been approved by Cashel Meagher, P. Geo, Hudbay’s Vice President, South America Business Unit. The technical and scientific information related to all other sites an
Slide 5: About Hudbay
About Hudbay Integrated base and precious metals TSX, NYSE, BVL Symbol HBM mining company Market Capitalization1 $1.6 billion Operating mines, development projects and processing Shares Outstanding 235 million facilities located in the Americas Available Liquidity2 $0.4 billion Long track record of
Slide 6: Recent Achievements and Challenges
Recent Achievements and Challenges ACHIEVED OUR GROWTH OBJECTIVES Copper production and operating cost guidance achieved 777 2014 zinc and precious metal production below guidance Production Commercial production achieved ahead of Reed guidance and under budget Achieved commercial production
Slide 7: Near-Term Production Growth
Near-Term Production Growth1 OPPORTUNITY FOR A RE-RATE IS SIGNIFICANT AS WE DELIVER GROWTH 320% 145% 50% INCREASE IN CU PRODUCTION INCREASE IN AU-EQ. PRODUCTION2 INCREASE IN ZN PRODUCTION (kt) (koz) (kt) 200 250 150 200 150 100 150 100 100 50 50 50 - 3 - - 3 3 2014A 2015G 2016E 2014A 2015G 2016E 201
Slide 8: Constancia Project
Constancia Project IN PRODUCTION Approximately 21 million hours Life of Mine1 worked with only one lost time Ownership 100% accident in 2014 Daily ore throughput 80k tpd Reached commercial Avg. annual Cu production2 82k tonnes production on April 30, 2015 Cash cost per Cu lb3 US$1.25/lb Ocean shipme
Slide 9: Constancia Update
Constancia Update IN PRODUCTION Focus on optimization of mine costs and plant performance Improvement in copper recoveries – for most of July, copper recovery ~75%; expected to reach design rate of 88% by Q4 2015 Combined unit operating costs during May and June Constancia mine within guidance range
Slide 10: Recent Constancia Photos
Recent Constancia Photos Constancia pit Flotation cells Tailings management facility Initial Constancia copper concentrate storedEarth mill observing in concentrate shed Hour, March 2015 INVESTOR PRESENTATION 10
Slide 11: 777 Mine
777 Mine STEADY, LOW-COST PRODUCTION Life of Mine1 6 lost-time accidents over past 6 years Ownership 100% Mature mine with steady cost performance Daily ore throughput 4,500 tpd Exploration to focus on recently optioned War Baby claim Avg. Annual Cu production2 25k tonnes Avg. Annual Zn production2
Slide 12: Lalor Mine
Lalor Mine OPERATING AT STEADY STATE Life of Mine1 Over 1,000 days without a lost-time accident Ownership 100% Daily ore throughput 3,300 tpd Main production shaft complete and operating at Avg. annual Zn production2 59k tonnes a steady state; capacity of 6,000 tonnes per day Avg. annual Au-Eq. prod
Slide 13: Lalor Exploration
Lalor Exploration PHASE 2 UNDERGROUND EXPLORATION PROGRAM UNDERWAY Phase 1 - preliminary underground Lalor Cross-Section1 with Exploration Ramp, Looking West drilling supports surface drill results Assay results released for 7 0m remaining drill holes in 14-hole Production 4,500-metre program Shaft
Slide 14: Reed Mine
Reed Mine IN PRODUCTION Life of Mine1 2-year construction program completed with Ownership 70% no lost-time accidents Daily ore throughput 1,300 tpd Avg. annual Cu production2 15k tonnes Achieved commercial production ahead of Cash cost per lb Cu3 $1.64/lb guidance and under budget Mine and mill uni
Slide 15: Rosemont Project
Rosemont Project 80%-OWNED1 COPPER PROJECT IN ARIZONA, USA Hudbay acquired control of Rosemont project in July 2014 Completed 43 hole confirmatory drill program with approximately 30,000 metres drilled Metallurgical test program and basic engineering review underway Permitting and community engageme
Slide 16: Global Positioning on 2019E Copper Production and Costs
Net Cash Costs (US$/lb Cu) Copper Production (bn lbs) 0.0 1.0 2.0 3.0 4.0 $0.00 $2.50 $5.00 ($7.50) ($5.00) ($2.50) Norilsk Codelco Jinchuan Freeport Boliden Glencore Vale BHP Hudbay (2019) Southern Cu Hudbay (2019) PF First Quantum Hudbay (2014) Rio Tinto Newcrest KGHM UGMK Antofagasta FIRST QUARTI
Slide 17: High Quality Copper Growth Story
High Quality Copper Growth Story Sector leading growth in copper, zinc and gold Attractive operating cost structure and improving unit margins with ramp up of new low-cost production Low geopolitical risk given focus on mining-friendly jurisdictions in the Americas Track record as mine developers an
Slide 18: Appendix
Appendix INVESTOR PRESENTATION 18
Slide 19: Appendix Contents
Appendix Contents By-product copper and zinc cost curves Global refined metal market balance Growth of mineral deposits 2015 guidance Lalor copper-gold zone exploration results Precious metals stream Reserves and resources INVESTOR PRESENTATION 19
Slide 20: Copper & Zinc By-Product Cost Curves
Copper & Zinc By-Product Cost Curves1 Source: Wood Mackenzie (2014 cost curves) 1. By-product costs calculated using Wood Mackenzie’s by-product costing methodology, which is materially different from the by-product costs reported by Hudbay in its public disclosure 2 .777 and Constancia by-product c
Slide 21: Global Refined Metal Market Balance
Global Refined Metal Market Balance Source: CRU, Copper Market Outlook and Zinc Market Outlook, July 2015 By 2019, both copper and zinc refined metal markets are expected to be in significant deficit INVESTOR PRESENTATION 21
Slide 22: Growth of Mineral Deposits
Growth of Mineral Deposits DISCOVERIES IN THE GREENSTONE BELT ∕∕ 62.5 Initial resource Added resource Lalor initial reserve 10.5 million tonnes Lalor added reserve 0 5 10 15 20 25 30 Tonnes (millions) INVESTOR PRESENTATION 22
Slide 23: 2015 Production and Unit Cost Guidance
2015 Production and Unit Cost Guidance Contained Metal in Concentrate1 2015 Guidance 2014 Production 2014 Guidance Manitoba2 Copper Tonnes 40,000 – 50,000 37,644 36,000 – 45,000 Zinc Tonnes 95,000 – 120,000 82,542 87,000 – 105,000 Precious Metals3 Ounces 85,000 – 105,000 85,703 99,000 – 120,000 Comb
Slide 24: 2015 Production and Unit Cost Guidance
2015 Production and Unit Cost Guidance Flin Flon Zinc Plant Zinc Concentrate Treated 190,000 – 235,000 tonnes Zinc Metal Produced 95,000 – 120,000 tonnes Unit Operating Costs1 C$0.31 - $0.38/lb 1. Forecast unit operating costs are calculated on the same basis as reported unit operating costs in Hudb
Slide 25: 2015 Capital Expenditure Budget
2015 Capital Expenditure Budget1 C$ Millions Sustaining Capital Manitoba 140 Peru 180 Total Sustaining Capital 320 Growth Capital Arizona 60 Peru 10 Total Growth Capital 70 Capitalized Exploration 35 Total Capital Expenditure 425 1. Excludes pre-production revenue, capitalized interest and capitaliz
Slide 26: 2015 Exploration Budget
2015 Exploration Budget C$ Millions Manitoba 20 Peru 5 Arizona 10 Generative and Other 20 Total Exploration Expenditures 55 Capitalized Spending1 (35) Total Exploration Expense 20 1. Assumes $20 million allocated to “Generative and Other” will be capitalized INVESTOR PRESENTATION 26
Slide 27: Lalor Copper-Gold Zone Exploration Results
Lalor Copper-Gold Zone Exploration Results Cu-Au Core From To Hole Cu (%) Au (g/t) Ag (g/t) Zn (%) Zone Length2 (m) (m) (m) LX0001 Main 52.66 245.42 298.08 2.71 7.22 15.92 0.18 includes Main 6.96 245.42 252.38 6.29 12.16 25.85 0.31 includes Main 11.58 286.50 298.08 8.30 25.43 54.89 0.59 LX0002 Hangi
Slide 28: Lalor Copper-Gold Zone Exploration Results
Lalor Copper-Gold Zone Exploration Results Cu-Au Core From To Hole Cu (%) Au (g/t) Ag (g/t) Zn (%) Zone Length2 (m) (m) (m) LX0010 Hanging wall 8.75 91.75 100.50 0.02 2.34 4.82 0.01 LX0010 Hanging wall 3.08 114.56 117.64 2.57 9.78 45.22 0.15 LX0010 Main 0.37 184.58 184.95 3.09 11.45 36.69 0.06 LX001
Slide 29: Lalor Copper-Gold Zone Exploration Results
Lalor Copper-Gold Zone Exploration Results Collar Location Core Azimuth Dip Length Hole NAD83 Zone NAD83 Zone Distance Below Size (degrees) (degrees) (m) 14 East 14 North Surface (m) LX0001 426785 6081394 1022 NQ 8.9 -63 605.1 LX0002 426785 6081394 1022 NQ 8.9 -68 311.0 LX0003 426784 6081394 1022 NQ
Slide 30: Precious Metals Stream Overview
Precious Metals Stream Overview Payments to Hudbay from Silver Wheaton Production payments 1 Upfront payment plus US$5.90/oz Silver US$885 million US$400/oz Gold . Delivery from Hudbay to Silver Wheaton 2016 Remaining Life of Mine 777 Silver 100% Silver 100% Gold 100% Gold 50% Remaining Life of Mine
Slide 31: Peru Mineral Reserves
Peru Mineral Reserves As at January 1, 2014 Constancia Mineral Reserves Category Ore (M tonnes) Cu (%) Mo (g/t) Au (g/t) Ag (g/t) Proven 483 0.32 93 0.040 3.04 Probable 94 0.22 61 0.036 2.77 Pampacancha Mineral Reserves Category Ore (M tonnes) Cu (%) Mo (g/t) Au (g/t) Ag (g/t) Proven 23 0.52 142 0.2
Slide 32: Peru Mineral Resources
Peru Mineral Resources As at September 30, 2013 Constancia Mineral Resources Category M (tonnes) Cu (%) Mo (g/t) Au (g/t) Ag (g/t) Measured 68 0.22 59 0.036 2.17 Indicated 293 0.20 58 0.033 1.96 Inferred 200 0.19 51 0.031 1.86 Pampacancha Mineral Resources Category M (tonnes) Cu (%) Mo (g/t) Au (g/t
Slide 33: Manitoba Mineral Reserves
Manitoba Mineral Reserves As at January 1, 2015 Category Tonnes Cu (%) Zn (%) Au (g/t) Ag (g/t) 7771 Proven 3,729,000 2.10 4.65 1.86 27.39 Probable 3,943,000 1. 50 4.23 1.80 24.09 Lalor – Base Metal Proven 3,404,000 0.52 8.00 1.27 17.93 Probable 8,452,000 0.71 6.72 2.12 26.62 Lalor – Gold Zone Prove
Slide 34: Manitoba Mineral Resources
Manitoba Mineral Resources As at September 30, 2014 Category Tonnes Cu (%) Zn (%) Au (g/t) Ag (g/t) 7771 Indicated 733,000 0.99 3.52 1.81 26.13 Inferred 717,000 1.03 4.79 1.79 32.93 Lalor – Base Metal2 Inferred 5,332,000 1.56 5.21 2.75 25.32 Lalor – Gold Zone Inferred 3,890,000 0.38 0.24 5.50 31.40
Slide 35: Copper Equivalent Reserves and Resources
Copper Equivalent Reserves and Resources1 All Metals Project Category Cu Equivalent (000 tonnes) Year-over-Year Change Due to 2015 2014 Change Price Deck Constancia2 Proven & Probable 2,552 2,655 (103) (103) Measured & Indicated 1,004 1,045 (41) (41) Inferred 484 503 (19) (19) Lalor Proven & Probabl
Slide 36: Precious Metal Equivalent Reserves and Resources
Precious Metal Equivalent Reserves and Resources1 Project Category Au Equivalent (000 ounces) Year-over-Year Change Due to 2015 2014 Change Price Deck Constancia2 Proven & Probable 2,138 2,341 (203) (203) Measured & Indicated 889 972 (83) (83) Inferred 401 441 (40) (40) Lalor Proven & Probable 1,330
Slide 37: 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 Resou
Slide 38: Additional Information
Additional Information Peru For additional details relating to the estimates of mineral reserves and resources at the Constancia project, including data verification and quality assurance/quality control processes refer to “The Constancia Project, National Instrument 43-101 Technical Report” as fi
Slide 39: Rosemont Historical Reserves and Resources
Rosemont Historical Reserves and Resources1 Historical Mineral Reserves as at July 24, 2012 Category M (tonnes) Cu (%) Mo (%) Ag (g/t) Proven 279,481 0.46 0.015 4.11 Probable 325,798 0.42 0.014 4.11 Historical Mineral Resources as at July 17, 2012 Category M (tonnes) Cu (%) Mo (%) Ag (g/t) Inferred
Slide 40: Rosemont Additional Information
Rosemont Additional Information The key assumptions, parameters and methods used by Augusta to prepare the historical estimate were the following: The Rosemont mineral reserves are effective as of July 24, 2012 and reported on a Net Smelter Return (NSR) cut-off of US$4.90 per ton. NSR values are b
Slide 41: For more information contact
For more information contact: Jacqueline Allison Director, Investor Relations Tel: 416.814.4387 Email: jacqueline.allison@hudbayminerals.com HBM INVESTOR PRESENTATION
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