Slide 1: Teach-In Presentation: Lalor Mine Plan and Rosemont Feasibility Study
TEACH-IN PRESENTATION: LALOR MINE PLAN AND ROSEMONT FEASIBILITY STUDY March 31, 2017
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: Cautionary Information
Cautionary Information 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, such as eco
Slide 4: Agenda
Agenda 1. Introduction 2. Lalor mine plan – Stall base metal mill 3. Lalor mine plan – New Britannia gold mill 4. 777 mine updated reserves and resources 5. Rosemont project feasibility study 6. Closing remarks and Q&A 4
Slide 5: 1. Introduction
H' DBAY 1. INTRODUCTION
Slide 6: Introduction
Introduction • Updated Lalor mine plan incorporates 4,500tpd at the Stall base metal concentrator beginning in 2018 • Currently includes Cu-Au zone which has the potential to be processed at New Britannia • Work ongoing on Au zone and refurbishment of the New Britannia mill with potential to process
Slide 7: 2. Lalor Mine Plan – Stall Base Metal Mill
2. LALOR MINE PLAN – STALL BASE METAL MILL
Slide 8: Lalor Mine Location
Lalor Mine Location New Britannia Mill Snow Lake Stall Mill LALOR MINE LALOR MINE Stall Mill AERIAL VIEW OF LALOR MINE SITE 0 5km SASKATCHEWAN MANITOBA Snow Lake LALOR MINE 777 LALOR 777 MINE REED MINE Flin Flon MILL Flin Flon Mill TOWN RAILROAD Winnipeg REED MINE ROAD 0 50km 8
Slide 9: Lalor Cross-Section
Lalor Cross-Section LALOR CROSS-SECTION, LOOKING WEST 0m Legend Base metal zone Production Shaft (6,000 tpd of ore + waste) Gold zone Copper-gold zone 500m 865mL Exploration Drill Drift 2016 1000m 1025 to 1075mL Exploration Decline 2015 1500m 500 m 9
Slide 10: Stall Base Metal Mine Plan
Stall Base Metal Mine Plan • Mine ramp-up from current 3,000tpd to 4,500tpd by Q1 2018, Stall mill ramp-up to 4,500tpd during Q3 2018 • Commissioning of paste backfill plant in Q1 2018 • Improved mining efficiencies, more bulk mining methods (65% of reserves) • Current reserves support mine life of
Slide 11: Production and Cash Cost Profile
Production and Cash Cost Profile • Zinc production at Stall mill is higher in first few years; Cu-Au ore displaces some zinc ore in 2020-2023 • Potential for higher production starting in 2019 with New Britannia • Increased gold/copper through New Britannia and higher zinc production 2020-23 if Cu-A
Slide 12: Lalor Mine Flow Chart
Lalor Mine Flow Chart CURRENT FLOW CHART IN TECHNICAL REPORT Base Metal Zone Contact Gold 4,5001 tpd Zinc and copper Stall Mill Zone concentrate Copper-Gold Zone No current reserves, only resource Non-Contact estimate, pending completion of feasibility Gold Zone work on New Britannia gold mill 1. Cu
Slide 13: Initial Capex
Initial Capex • Initial capex covers: • Paste backfill plant spending (2017 spending in line with guidance, additional 2018 spending of US$10 million) • Additional Stall mill refurbishment of US$34 million to deliver sustainable throughput rate of 4,500 tpd and ore handling improvements • Capital fo
Slide 14: Operating Costs
Operating Costs • Comparison of 2016 actual mining costs to forecast costs affected by: • Additional cost of operating paste plant and higher throughput • Reduced sustaining capex from underground development leading to reclassification of mine overheads from capex to opex • Total mining costs to be
Slide 15: 3. Lalor Mine Plan – New Britannia Gold Mill
3. LALOR MINE PLAN – NEW BRITANNIA GOLD MILL
Slide 16: New Britannia Gold Mill
New Britannia Gold Mill • New Britannia gold mill is currently on care & maintenance, Hudbay acquired the mill in 2015 • Achieved historical gold recoveries of ~90%, compared to forecast Stall recoveries of 58% • Potential installation of a copper pre-float facility can also maximize copper recoveri
Slide 17: Lalor Mine Flow Chart
Lalor Mine Flow Chart CONCEPTUAL FLOW CHART WITH NEW BRITANNIA GOLD MILL Base Metal Zone 4,500 tpd Zinc and copper Stall Mill concentrate Contact Gold Zone Copper slurry from pre-float Copper-Gold Zone New Britannia Gold dore Mill1 Non-Contact Gold Zone 1. Studies underway on potential refurbishment
Slide 18: Lalor Gold Zone Update
Lalor Gold Zone Update DRILLING AND BULK SAMPLE PROGRAM SUCCESSFUL • In 2016, we completed 15,000m of drilling on the gold zone and constructed a bulk tower sampling system • In Q4 2016, approximately 10,000 tonnes of bulk sample material from the gold zone was mined, hauled to surface and processed
Slide 19: 4. 777 Mine Updated Reserves and Resources
4. 777 MINE UPDATED RESERVES AND RESOURCES
Slide 20: 777 Reserves and Resources
777 Reserves and Resources • Remaining mine life to late 2020; expected mining rate of 3,000 - 3,200tpd • 2016 actual mine + mill unit cost of C$70.59/t mined and average annual sustaining capex of approximately C$16M for remaining LOM • Reed expected to close in late 2018 as scheduled • Base case p
Slide 21: 5. Rosemont Project Feasibility Study
5. ROSEMONT PROJECT FEASIBILITY STUDY
Slide 22: Rosemont Project Location
Rosemont Project Location Tucson Three Points Mission Complex ROSEMONT PROJECT SITE Twin Buttes Mine Sierrita Mine ROSEMONT Green Valley ARIZONA, US PIMA SANTA CRUZ Sonoita MINE Tucson TOWN Patagonia RAILROAD ROSEMONT ROAD 0 25km 22
Slide 23: Rosemont Project Overview
Rosemont Project Overview 80%-OWNED1 COPPER PROJECT • Located 30 miles southeast of Tucson in Pima County, Arizona • Copper-molybdenum-silver-gold skarn deposit, a style of porphyry copper deposit • Open pit, shovel and truck operation • Expected mine life of 19 years • Generates project (100%) 15.5
Slide 24: Rosemont Work Since 2014
Rosemont Work Since 2014 SUBSTANTIAL WORK COMPLETED TO OPTIMIZE AND DE-RISK • 51,000m of drilling completed since 2014, compared to 40,000m under previous owner and 64,000m prior to previous owner • Design changes made to incorporate Constancia experience • e.g. dual grinding lines, plant layout, sm
Slide 25: Rosemont Feasibility Study: Mine Plan Summary
Rosemont Feasibility Study MINE PLAN SUMMARY • 19 year mine life based on current reserves (592M tons) • 90,000 tpd mill capacity • Development of Rosemont is conditional upon receipt of final permits and the approval of Hudbay's Board of Directors ROSEMONT MINE PLAN SUMMARY Units Year 1- 10 Avg. Ye
Slide 26: Rosemont Feasibility Study: Mine Plan Site Layout
Rosemont Feasibility Study MINE PLAN SITE LAYOUT 26
Slide 27: Rosemont Feasibility Study: Initial Capital Cost Estimate
Rosemont Feasibility Study INITIAL CAPITAL COST ESTIMATE • $1.9B development capex over 3- ROSEMONT INITIAL CAPITAL COST BREAKDOWN year construction period US$000 Site Wide 42,433 • Year 1: $144 million Mining 474,070 Process Plant 670,525 • Year 2: $861 million Site Services & Utilities 21,802 Inte
Slide 28: Rosemont Feasibility Study: Operating and Sustaining Costs
Rosemont Feasibility Study OPERATING AND SUSTAINING COSTS • Average C1 cash cost of $1.14/lb in first 10 years • Rosemont’s low-cost production is in the bottom third of the current copper cost curve • LOM average sustaining cash cost of $1.65/lb Cu ROSEMONT COST SUMMARY Units Year 1- 10 Avg. Year 1
Slide 29: Rosemont Feasibility Study: Project Economics
Rosemont Feasibility Study PROJECT ECONOMICS • NPV 8% of $719 million to Hudbay • After-tax IRR to Hudbay of 17.7% at $3 Cu ROSEMONT ECONOMICS1 Units $2.75 Cu $3.00 Cu $3.50 Cu BASE CASE Project basis (100%): NPV 8% $ million $412 $769 $1,448 NPV 10% $ million $192 $496 $1,076 IRR (after-tax) % 12.2
Slide 30: Rosemont Permitting Update
Rosemont Permitting Update FINAL STAGES OF PERMITTING • The feasibility study mine plan and design is within scope of federal permits • Two key federal permits outstanding: Final Record of Decision (“ROD”) from the U.S. Forest Service (“USFS”) and Section 404 Water Permit from U.S. Army Corps of Eng
Slide 31: Rosemont Funding Sources
Rosemont Funding Sources ~$800M OF FUNDING EXPECTED • Existing stream agreement with Silver Wheaton requires $230M upfront cash payment • Existing joint venture agreement requires $106M payment to earn-into 20% then funding their share of shareholder contributions • Expected equipment financing of u
Slide 32: 6. Closing Remarks
H' DBAY 6. CLOSING REMARKS
Slide 33: 2017 Objectives
2017 Objectives Continue to focus on operating efficiencies to generate incremental free cash flow Advance high-return in-house brownfield opportunities • Lalor zinc / base metal throughput • Pampacancha • Lalor gold Advance permitting activities and technical work at Rosemont Use free cash flow to
Slide 34: Thank You
Thank You Questions? H' DBAY 34
Slide 35: Appendix
H' DBAY APPENDIX 35
Slide 36: Peru Mineral Reserves
Peru Mineral Reserves AS AT JANUARY 1, 2017 CATEGORY TONNES Cu (%) Mo (g/t) Ag (g/t) Au (g/t) CONSTANCIA Proven 431,300,000 0.30 95 2.88 0.037 Probable 109,900,000 0.23 62 2.55 0.034 Total Proven and Probable 541,200,000 0.28 88 2.81 0.037 PAMPACANCHA Proven 22,800,000 0.53 149 4.44 0.299 Probable 2
Slide 37: Peru Mineral Resources
Peru Mineral Resources AS AT JANUARY 1, 2017 CATEGORY TONNES Cu (%) Mo (g/t) Ag (g/t) Au (g/t) CONSTANCIA Measured 161,800,000 0.19 55 2.26 0.031 Indicated 287,800,000 0.17 50 1.89 0.026 Measured and Indicated 449,600,000 0.18 52 2.02 0.028 Inferred 138,100,000 0.17 40 1.70 0.018 PAMPACANCHA Measure
Slide 38: Manitoba Mineral Reserves
Manitoba Mineral Reserves AS AT JANUARY 1, 2017 PROPERTY CATEGORY TONNES Cu (%) Zn (%) Au (g/t) Ag (g/t) Proven 3,080,000 1.98 4.93 2.01 31.53 7771 Probable 1,386,000 1.16 5.09 2.04 30.96 Proven 362,000 3.35 0.68 0.39 5.35 Reed2 Probable 337,000 3.95 0.31 0.52 5.26 Total Flin Flon 2P Reserves 5,165,
Slide 39: Manitoba Mineral Resources
Manitoba Mineral Resources AS AT SEPTEMBER 30, 2016 PROPERTY CATEGORY TONNES Cu (%) Zn (%) Au (g/t) Ag (g/t) Indicated 736,000 0.99 3.53 1.82 26.24 7771 Inferred 673,000 1.01 4.26 1.72 30.95 Reed2 Inferred 88,000 3.13 0.42 0.79 6.00 Indicated 736,000 0.99 3.53 1.82 26.24 Total Flin Flon Inferred 761
Slide 40: Arizona Reserves & Resources
Arizona Reserves & Resources AS AT MARCH 30, 2017 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 161,300,
Slide 41: 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 42: Additional Information
Additional Information PERU • The mineral reserve estimates for Constancia are based on a long range mine plan with economic value calculation per block (NSR in $/t), mining, processing and detailed engineering parameters. • The Constancia reserve pits (Constancia and Pampacancha) consist of operati
Slide 43: Additional Cautionary Information
Additional Cautionary Information The technical and scientific information in this presentation related to the Constancia mine has been approved by Cashel Meagher, P. Geo, Hudbay’s Senior Vice President and Chief Operating Officer. The technical and scientific information related to all other sites
Slide 44: For More Information Contact
FOR MORE INFORMATION CONTACT: Candace Brûlé, Director, Investor Relations 416.814.4387 | candace.brule@hudbay.com