Hudbay Minerals Inc · TSX:HBM
Hudbay Minerals — Scotiabank Mining Conference 2014
39 slides from Hudbay Minerals's conference presentation, December 2014
Slide 1: According to Plan: Scotiabank Mining Conference 2014
ACCORDING TO PLAN SCOTIABANK MINING CONFERENCE 2014 December 2014 HBM
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, the development of the Rosemont project not occurrin
Slide 4: Cautionary Information (continued)
Cautionary Information (continued) The scientific and technical information in respect of Hudbay contained in this presentation related to the Constancia project has been prepared by or under the supervision of Cashel Meagher, P.Geo., Hudbay’s Vice President, South America Business Unit. The scienti
Slide 5: About Hudbay
About Hudbay TSX, NYSE, BVL Symbol HBM Integrated base and precious metals mining Market Capitalization1 $2.2 billion company that became publicly traded in 2004 Shares Outstanding 234 million > Operating mines, development projects and processing Available Liquidity $0.6 billion facilities located
Slide 6: Recent Achievements and Challenges
Recent Achievements and Challenges ON TRACK TO ACHIEVE OUR GROWTH OBJECTIVES IN 2014 Stable and steady low-cost production Missed copper guidance in 2013 777 Higher processing costs due to lower throughput in 2013 Production Commercial production achieved ahead of Reed guidance and under bud
Slide 7: Near-Term Production Growth
Near-Term Production Growth1 OPPORTUNITY FOR A RE-RATE IS SIGNIFICANT AS WE DELIVER GROWTH 570% Increase in Cu 137% Increase in 19% Increase in Zn Production Au-Eq. Production2 Production (kt) (koz) (kt) 7774 Lalor5 Constancia6 Reed7 1. Represents production growth from 2013 actual production to 201
Slide 8: Constancia Project
Constancia Project ADVANCED DEVELOPMENT Life of Mine1 Ownership 100% Over 18.5 million man- hours without a lost time Daily ore throughput 80k tpd accident achieved as at Avg. annual Cu production2 82k tonnes Sept. 30, 2014 Cash cost per Cu lb3 US$1.25/lb Mine and mill unit cost4 US$7.48/tonne P
Slide 9: Constancia Construction Progress
Constancia Construction Progress Constancia mine maintenance facilities Constancia mill Commissioning of Constancia crusher INVESTOR PRESENTATION l 9
Slide 10: Constancia Construction Progress (Cont'd)
Constancia Construction Progress (Cont’d) Constancia crusher commissioning Constancia ore dump pocket for the primary crusher Pre-stripping activities at Constancia INVESTOR PRESENTATION l 10
Slide 11: 777 Mine: Steady, Low-Cost Production
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 777 Deeps Avg. Annual Cu production2 25k tonnes 1,620 Avg. Annual Zn produ
Slide 12: Lalor Mine
Lalor Mine Life of Mine2 PRODUCTION; PHASE 2 RAMP-UP Ownership 100% Over 1,000 days without a lost-time Daily ore throughput 3,300 tpd accident Avg. annual Zn production3 59k tonnes Avg. annual Au-Eq. production3 43k ounces $439 million of overall $441 million1 Avg. annual Cu production3 5k tonn
Slide 13: Lalor Exploration
Lalor Exploration DRILLING OF CU-AU ZONE EXPECTED IN Q4 2014 Lalor Cross-Section with 2014 Exploration Platform Underground exploration ramp 0m more than 25% complete Vent Production Raise Shaft Drill program intended to: > Upgrade inferred to a higher resource category 500m > Allow for underground
Slide 14: Reed Mine
Reed Mine COMMERCIAL PRODUCTION ACHIEVED Life of Mine1 > 2-year construction program completed Ownership 70% Daily ore throughput 1,300 tpd with no lost-time accidents Avg. annual Cu production2 15k tonnes > Achieved commercial production ahead Cash cost per lb Cu3 $1.64/lb of guidance and under bud
Slide 15: Rosemont Project
Rosemont Project 80%-OWNED1 COPPER PROJECT IN ARIZONA, USA Hudbay acquired control of the Rosemont project in July 2014 > Ideal fit with Hudbay’s disciplined growth strategy > Drill program underway to better understand the geological setting and mineralization, and to collect additional technical i
Slide 16: Global Positioning on 2018E Cash Costs
Net Cash Costs (US$/lb Cu) Copper Production (bn lbs) $0.00 $1.00 $1.50 $2.50 $0.50 $2.00 0.0 4.0 1.0 2.0 3.0 Southern Cu Freeport Chinalco Codelco Russian Cu Glencore Source: Wood Mackenzie Hudbay (2018) BHP Hudbay (2018) PF First Quantum Private Southern Cu MMG Rio Tinto Jiangxi Cu KGHM OZ Mineral
Slide 17: Strong Financial Capacity
Strong Financial Capacity WELL CAPITALIZED FOR GROWTH SPENDING > Sufficient financial capacity to fund remaining capital spending at Constancia and Lalor > US$150 million Constancia standby credit facility in place Liquidity 1 2014 Project Growth Capital Total Current Liquidity of $0.6 billion Total
Slide 18: Near Term Milestones
Near Term Milestones Reed Rosemont Lalor Lalor Constancia Commercial Successful Commercial Underground Commercial production acquisition production exploration begins production 2014 2015 Q1 Q2 Q3 Q4 Q1 Q2 Lalor Lalor Constancia Completion of Production Initial refurbished shaft production Snow Lake
Slide 19: Appendix
Appendix INVESTOR PRESENTATION l 19
Slide 20: Appendix Contents
Appendix Contents By-product copper and zinc cost curves Additional capital required by 2020 as a % of market value 2014 guidance Constancia additional details Lalor additional details Precious metals stream Reserves and resources INVESTOR PRESENTATION l 20
Slide 21: Copper & Zinc By-Product Cost Curves
Copper & Zinc By-Product Cost Curves1 250 Constancia (LOM) 200 C1 Cash Cost (100 x US$/lb) 150 100 Reed (LOM) 50 777 Mine (LOM) 0 0 10 20 30 40 50 60 70 80 90 100 -50 Cumulative Percentile Production (%) -100 Lalor (LOM) -150 777 Mine (2013) -200 -250 Cu Cash Cost Zn Cash Cost Source: Wood Mackenzie
Slide 22: Additional Capital Required by 2020
Additional Capital Required to Meet Demand 35% 30% $59 billion Additional Capital Required by 2020 $13 billion 25% as a % of Market Value $43 billion $23 billion 20% $9 billion 15% $15 billion 10% $6 billion 5% $3 billion $1 billion 0% Copper Iron ore Coal - Therm Aluminum Zinc Coal - Met Nickel Gol
Slide 23: 2014 Guidance
2014 Guidance Manitoba contained metal in concentrate Guidance Year Ended Guidance 2014 Dec. 31, 2013 2013 Copper1 tonnes 41,000 – 55,000 29,930 33–38,000 Zinc1 tonnes 87,000 – 105,000 86,527 85–100,000 Precious Metals1 troy oz. 101,000 – 123,000 91,258 85–105,000 1 Includes 100% of Reed mine produc
Slide 24: 2014 Growth Project Spending
2014 Growth Project Spending Constancia (in US$ millions) Total estimated future capital spending - Q4 - 2014 90 Total spent in Q1-Q3 2014 588 Total spent in 2012 - 2013 1,038 Total1 1,708 1 The total project budget does not reflect pre-production costs and revenue and life of mine community agreeme
Slide 25: 2014 Exploration Expenditures Budget
2014 Exploration Expenditures Budget C$ Millions Manitoba 15.8 Peru 2.1 Other 2.5 Total Exploration Expenditures 20.4 Manitoba Capitalized Spending (10.6) Total Exploration Expense 9.8 INVESTOR PRESENTATION l 25
Slide 26: 2014 Zinc Plant Guidance
2014 Zinc Plant Guidance Flin Flon Zinc Plant Zinc concentrate treated 195,000 – 225,000 tonnes Recovery 97% Unit Operating Costs1 C$0.30 - $0.37/lb 1 Forecast unit operating costs are calculated on the same basis as reported unit operating costs in Hudbay’s quarterly and annual management’s discuss
Slide 27: Constancia - Access to Existing Infrastructure
Constancia - Access to Existing Infrastructure 83km access road from Yauri > To be upgraded for concentrate haulage post commissioning Tintaya power substation 70km away > Construction of power transmission line from Tintaya complete and was energized in August 2014 > Socabaya to Tintaya 220kV trans
Slide 28: Constancia – Site Plan and Layout
Constancia – Site Plan and Layout INVESTOR PRESENTATION l 28
Slide 29: Constancia - Current Schedule
Constancia - Current Schedule 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 Commercial Commissioning and Ramp Up P
Slide 30: 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 s
Slide 31: Peru Reserves Overview
Peru Reserves Overview 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.
Slide 32: Peru Resources Overview
Peru Resources Overview 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/
Slide 33: Manitoba Mineral Reserves
Manitoba Mineral Reserves As at January 1, 2014 Category Tonnes Cu (%) Zn (%) Au (g/t) Ag (g/t) 7771 Proven 4,893,000 2.27 4.01 1.84 24.71 Probable 5,707,000 1. 34 4.24 1.79 24.69 Lalor – Base Metal2 Proven 1,332,000 0.73 8.99 1.53 17.49 Probable 11,334,000 0.68 7.81 1.56 23.77 Lalor – Gold Zone Pro
Slide 34: Manitoba Mineral Resources
Manitoba Mineral Resources As at September 30, 2013 Category Tonnes Cu (%) Zn (%) Au (g/t) Ag (g/t) 7771 Inferred 784,000 1.05 4.49 1.77 30.61 Lalor – Base Metal2 Inferred 3,832,000 2.04 5.77 3.47 21.24 Lalor – Gold Zone Inferred 6,281,000 0.42 0.49 4.70 31.48 Reed Inferred 233,000 4.31 0.52 0.38 4.
Slide 35: Copper Equivalent Reserves and Resources
Copper Equivalent Reserves and Resources1 All Metals Project Category Cu Equivalent (000 tonnes) 2014 2013 Change Constancia2 Proven & Probable 2,655 2,263 392 Measured & Indicated 1,045 1,329 (284) Inferred 503 593 (90) Lalor Proven & Probable 663 705 (42) Inferred 483 579 (96) 7773 Proven & Probab
Slide 36: Precious Metal Equivalent Reserves and Resources
Precious Metal Equivalent Reserves and Resources1 Project Category Au Equivalent (000 ounces) 2014 2013 Change Constancia2 Proven & Probable 2,341 1,951 390 Measured & Indicated 972 1,132 (160) Inferred 441 520 (79) Lalor Proven & Probable 1,209 1,137 72 Inferred 1,557 1,753 (196) 7773 Proven & Prob
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 on Mining, Metallurgy and Petroleum Standards on Mineral Resou
Slide 38: Peru
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 filed on SEDAR by Hudbay
Slide 39: HBM
Night view of Constancia crusher For more information contact: Candace Brûlé Director, Investor Relations Tel: 416.814.4387 Email: candace.brule@hudbayminerals.com HBM