Hudbay Minerals Inc · TSX:HBM
Hudbay Minerals — Jefferies Virtual Base Metals & Battery Materials Summit (September 2021)
59 slides from Hudbay Minerals's conference presentation, Sep 21, 2021
Slide 1: Investor Presentation September 2021
INVESTOR PRESENTATION September 2021
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: Hudbay
H' DBAY
Slide 4: Diversified Mid-Tier Copper Producer
REVENUE BY METAL 2021E1 2022E1 DIVERSIFIED MID-TIER 2% 9% 2% COPPER PRODUCER 17% Cu Au 4% 5% $1.6B Ag $1.8B 60% Copper represents 55% Zn 25% approximately 60% of Hudbay’s 21% Mo revenues Existing operations offer significant near-term growth in ANNUAL COPPER PRODUCTION2 copper production 000 tonnes
Slide 5: Copper Demand Drivers
COPPER DEMAND DRIVERS GROWING DEMAND FOR “GREEN” COPPER Global De-carbonization Copper is one of the most heavily utilized metals in renewable energy systems and is the least carbon- intensive Electrification of Vehicles EVs require nearly 4x more copper than a conventional gas vehicle EV production
Slide 6: Copper Supply Gap
COPPER SUPPLY GAP GLOBAL COPPER MINES AND PROJECTS UNABLE TO MEET LONG-TERM DEMAND EXPECTATIONS Mt Base Case Production Capability Declining Copper Grades Probable Projects 35 Primary Demand Global copper resources continue to be depleted and the average mined copper 30 grade has declined by more th
Slide 7: Hudbay Copper Growth
HUDBAY COPPER GROWTH INCREASED COPPER RESOURCES & ATTRACTIVE COPPER PRODUCTION GROWTH Increased copper-equivalent resources per share by more than 2.5x over the past 10 years and copper production per share is expected to increase by 36% by 2023 COPPER RESOURCES PER SHARE1 COPPER PRODUCTION PER SHAR
Slide 8: Hudbay
H' DBAY
Slide 9: Copper Quality Assets
Peru Constancia Exploration Properties 100% ownership Maria Reyna Open pit copper/molybdenum mine and concentrator Caballito Kusiorcco Pampacancha Llaguen 100% ownership Open pit copper/gold mine Saskatchewan Canada Exploration Manitoba Lalor Lalor Exploration Properties 777 100% ownership 1901 Expl
Slide 10: South America Business Unit
Cusco SOUTH AMERICA CUSCO BUSINESS UNIT Las Bambas CONSTANCIA Yauri PERU Tintaya Antapaccay MINE Lima TOWN AREQUIPA Imata RAIL ROAD CONSTANCIA Arequipa Cerro Verde MOQUEGUA & Peru Economic Risk Business Political Risk Commercial Risk Financing Risk Matarani Environment Risk BB2 Medium Risk 0 TACNA 1
Slide 11: Constancia Mine
Cu-Mo 86k tpd CONSTANCIA MINE 17 YEARS MINE LIFE PORPHYRY DEPOSIT MILL CAPACITY 102kt 58koz $1.15/lb 8-YEAR AVG. 8-YEAR AVG. 8-YEAR AVG. CU PRODUCTION1 AU PRODUCTION1 CASH COSTS1 PLANT THROUGHPUT 90 86 86 86 Constancia Mill Throughput 79 Rate (ktpd) 75 76ktpd (original design capacity) 60 2017A 2018
Slide 12: Peru Exploration Potential
PERU EXPLORATION POTENTIAL SEVERAL OPPORTUNITIES EXIST ON HUDBAY’S EXTENSIVE LAND PACKAGE IN PERU Geophysics indicate several nearby exploration targets within trucking distance of Constancia’s infrastructure - Maria Reyna and Caballito have large-scale potential Drilling recently commenced on the L
Slide 13: Manitoba Business Unit
New Britannia Gold Mill MANITOBA BUSINESS UNIT 1,500 tpd capacity Snow Lake Stall Base Metal Mill 3,800 tpd capacity MINE LALOR MINE ~4,650 tpd MILL TOWN RAIL ROAD LALOR 777 0 5km SASKATCHEWAN MANITOBA Winnipeg Snow Lake LALOR MINE 777 MINE ~2,800 tpd Flin Flon Canada Economic Risk Business Flin Flo
Slide 14: Manitoba Operations Snow Lake / 777
17 / <1 YEARS Au-Zn-Cu 3.8 / 6.0k tpd MANITOBA OPERATIONS SNOW LAKE/ 777 MINE LIFE1 VMS DEPOSITS STALL MILL / FLIN FLON CONCENTRATOR CAPACITY 20-24kt 150-165koz 96-107kt 2021E CU PRODUCTION 2021E CU PRODUCTION 2021E ZN PRODUCTION LALOR & STALL TONNAGE 5.0 Lalor Stall Throughput (k tpd) 4.0 3.0 2.0 1
Slide 15: Snow Lake Exploration Potential
SNOW LAKE EXPLORATION POTENTIAL LALOR IN-MINE EXTENSION POTENTIAL AND REGIONAL UPSIDE EXPLORATION OPPORTUNITIES Snow Lake deposits contain 1.5 million ounces of gold in inferred resources Lalor and 1901 inferred resources estimated using stringent methodology constraining the resource within a stope
Slide 16: Arizona Business Unit
ARIZONA BUSINESS UNIT Miami Pinto Valley Phoenix Resolution ARIZONA, US Ray Morenci Florence Safford MINE TOWN RAIL ROAD Silver Bell Phoenix Tucson Tucson Gunnison Mission ROSEMONT & COPPER WORLD Sierrita COPPER WORLD ROSEMONT United States Economic Risk Business Political Risk Commercial Risk Finan
Slide 17: Rosemont Project
19 YEARS CU-MO-AG $1.9B ROSEMONT PROJECT MINE LIFE PORPHYRY DEPOSIT CAPEX $769M / 15.5% 127kt $1.14/lb NPV / IRR FIRST 10-YEARS CU FIRST 10-YEARS CU PRODUCTION1 CASH COST1 COPPER PRODUCTION PROFILE Copper Production (kt in con) 180 $4.00 147 148 Copper Production Copper C1 Cash Costs 134 133 137 128
Slide 18: Copper World Project
COPPER WORLD PROJECT SIGNIFICANT NEW DISCOVERY ADJACENT TO ROSEMONT Located on private patented mining claims in a historical mining district; 2020 & 2021 exploration work identified 7 deposits as a potential viable open pit operation separate or additive to Rosemont Potential for economic copper su
Slide 19: Nevada Mason Project
NEVADA MASON PROJECT Power Plant Lyon County NEVADA Douglas County MacArthur Reno MASON PROJECT Yerington Blue Hill Mine (Historic) TOWN MASON Yerington Road HUDBAY MINERAL CLAIMS HUDBAY PRIVATE LAND CLAIMS POWER LINE Mason RAIL Las Vegas MINE / DEPOSIT Pumpkin Hollow Mason Valley Mines United State
Slide 20: Mason Project
2.2Bt $1.76/lb 27 YEARS MASON PROJECT M&I TONNAGE CU SUSTAINING CASH COST MINE LIFE 0.29% 112kt $773M / 15% M&I CU GRADE ANNUAL CU PRODUCTION NPV / IRR 1 MASON ECONOMICS1 $3,000 40% $2,500 After-Tax NPV10% (US$M) Unlevered IRR (%) $2,019 30% 23% $2,000 $1,500 18% 20% $1,191 15% 14% $1,000 $773 $519
Slide 21: ESG
SEE a Pine ESG H' DBAY
Slide 22: Our Approach to Sustainability
OUR APPROACH TO SUSTAINABILITY MUTUAL RESPECT, TRUST AND CONTINUOUS DIALOGUE By living our values, we build strong relationships with our employees, host communities and governments, making us a better partner and a better company Our Values are: Dignity & Respect: Caring: We treat each other in way
Slide 23: Environment
ENVIRONMENT WE AIM TO DEVELOP, OPERATE AND CLOSE MINES IN A MANNER THAT DEMONSTRATES OUR COMMITMENT TO ENVIRONMENTAL STEWARDSHIP TOTAL ENERGY CONSUMPTION Over 50% of our total energy consumption in 2020 was from renewable sources 9000 All electricity at operations supplied by regional grids 8500 ter
Slide 24: Social Impact
SOCIAL IMPACT ONE KEY LESSON WE HAVE LEARNED IN EXPLORING, DEVELOPING AND OPERATING MINES IS THE IMPORTANCE OF EARLY ENGAGEMENT WITH KEY STAKEHOLDERS 2020 community activities: Economic Contributions In Peru, we invested more than $4.6 million to support a wide range of community programs Community
Slide 25: Health & Safety
HEALTH & SAFETY CULTURE COMMITTED TO CONTINUOUSLY IMPROVING SAFETY PERFORMANCE Reduced both total recordable injury frequency and lost time injury severity in 2020 Fatality prevention is a priority after our first fatality in over 13 years occurred in 2021 Constancia first mine in Peru to obtain Saf
Slide 26: Governance
GOVERNANCE WE RECOGNIZE THE TREMENDOUS OPPORTUNITY THAT WE HAVE TO POSITIVELY CONTRIBUTE LOCALLY AND GLOBALLY TO A MORE SUSTAINABLE WORLD Focused on increased disclosure transparency Data mapped to GRI, SASB and TCFD Disclosure provided through CDP Climate, Water and Forests questionnaires In 2020,
Slide 27: Sustainable Value Creation
SUSTAINABLE VALUE CREATION WE ALLOCATE RISK-ADJUSTED CAPITAL TO CREATE VALUE ACROSS EVERY STAGE OF THE MINING LIFECYCLE WHILE ACHIEVING OUR SUSTAINABILITY TARGETS Health & Safety Successful Proven Mine Exploration Development Zero fatalities and a focus on fatality prevention Match or improve on our
Slide 28: Executing Our Plan
EXECUTING OUR PLAN 2021 KEY OBJECTIVES FOCUS on operational efficiencies, maintain low-costs of production to continue to generate positive cash flow and strong returns on invested capital EXECUTE development and commence mining activities at the high-grade Pampacancha satellite deposit DELIVER the
Slide 29: Copper Landscape Positioning
COPPER LANDSCAPE POSITIONING HUDBAY OFFERS LEADING EXPOSURE TO COPPER, ATTRACTIVE COST POSITIONING AND STRONG ESG PERFORMANCE AMONG PEERS COPPER PRODUCTION GROWTH (2021-2023) 2022E COPPER AISC CURVE1 30% 20% 10% – (10%) TRQ CS LUN ERO FM ANTO HBM NAV SENSITIVITY TO +10% CHANGE IN COPPER PRICE PEER O
Slide 30: Appendix
Slide 31: Near-Term Catalysts
NEAR-TERM CATALYSTS NUMEROUS ORGANIC GROWTH OPPORTUNITIES EXIST MANITOBA Advance 3rd phase of Snow Lake gold strategy with updated mine plan ✓ Q1 2021 New Britannia gold plant ramp-up and first production ✓ Q3 2021 New Britannia copper flotation circuit ramp-up and first production Q4 2021 Preparati
Slide 32: Leading Organic Growth Pipeline
LEADING ORGANIC GROWTH PIPELINE HUDBAY HAS BUILT A DIVERSIFIED PORTFOLIO FOCUSED ON GROWTH THROUGH EXPLORATION AND M&A, WHILE DIVESTING NON-CORE ASSETS RESOURCE FEASIBILITY STUDY EXPLORATION PRODUCTION DEFINITION COMPLETE Constancia North Constancia Mine evaluating underground potential Cu-Mo-Au-Ag
Slide 33: World-Class Management Team
WORLD-CLASS PETER KUKIELSKI PRESIDENT & CEO MANAGEMENT TEAM More than 30 years of sector experience in base metals, PROVEN MINING INDUSTRY EXPERIENCE precious metals and bulk materials across the globe CASHEL MEAGHER STEVE DOUGLAS EUGENE LEI SVP & COO SVP & CFO SVP CORP. DEV. & STRATEGY Extensive ba
Slide 34: Board of Directors
BOARD OF STEPHEN A. LANG CHAIR DIRECTORS Stephen has over 40 years of experience in the mining industry, including engineering, development and production at gold, copper, coal and platinum group metals operations CAROL T. BANDUCCI IGOR GONZALES RICHARD HOWES DIRECTOR DIRECTOR DIRECTOR Carol was for
Slide 35: Ample Liquidity & Long-Dated Debt Profile
AMPLE LIQUIDITY & LONG-DATED DEBT PROFILE PRUDENT BALANCE SHEET MANAGEMENT LONG-TERM DEBT STRUCTURE PROVIDES SIGNIFICANT FLEXIBILITY Cash and Equivalents1 $294 million 4.5% Callable starting in 2023 due 2026 $600M $600M Revolver Availability2 $295 million 6.125% Callable starting in 2024 due 2029 Av
Slide 36: 3-Year Production Outlook
3-YEAR PRODUCTION OUTLOOK GROWING COPPER AND GOLD PRODUCTION CONTAINED METAL IN CONCENTRATE1 2021 GUIDANCE 2022 GUIDANCE 2023 GUIDANCE PERU Copper tonnes 72,000 - 88,000 95,000 - 120,000 105,000 - 130,000 Gold ounces 40,000 - 50,000 85,000 - 105,000 85,000 - 105,000 Silver ounces 1,800,000 - 2,170,0
Slide 37: 2021 Cost Guidance
2021 COST GUIDANCE CAPITAL EXPENDITURE GUIDANCE EXPLORATION EXPENDITURES 2021 2021 ($ MILLIONS) ($ MILLIONS) SUSTAINING CAPITAL Peru 20.0 Peru1 135.0 Manitoba 10.0 Manitoba 90.0 Arizona and other4 34.0 Total sustaining capital 225.0 Total exploration expenditures 64.0 GROWTH CAPITAL Capitalized spen
Slide 38: Constancia Production Profile
CONSTANCIA PRODUCTION PROFILE Incorporates higher grades from Pampacancha from 2022 to 2025 and the new Constancia North reserves to extend the medium-term production profile Average annual copper production increases to 102,000 tonnes over the next 8 years at an average cash cost of $1.15/lb Total
Slide 39: Constancia 2021 Mine Plan
CONSTANCIA 2021 MINE PLAN 17-YEAR MINE PLAN BASED ON PROVEN AND PROBABLE RESERVES ONLY Updated mine plan for Constancia operations reflects an increase in copper and gold production from 2022 to 2025 as the higher grades from the Pampacancha deposit enter the mine plan 2021 2022 2023 2024 2025 2026
Slide 40: Constancia North
CONSTANCIA NORTH UNDERGROUND POTENTIAL TO BE FURTHER INVESTIGATED There is an additional opportunity to include more resources and/or improve the life of mine plan by mining some of the steeply dipping/narrower high-grade skarn mineralization as a satellite underground operation to the main Constanc
Slide 41: Maria Reyna Historical Drill Results
MARIA REYNA HISTORICAL DRILL RESULTS A summary of the historical drill results from Maria Reyna is contained in the table below, however a qualified person has not independently verified this historical data or the quality assurance and quality control program that was applied during the execution o
Slide 42: Snow Lake Gold Strategy
SNOW LAKE GOLD STRATEGY PHASE 1: Repositioning PHASE 2: Optimization PHASE 3: Historical Work Lalor as a Gold Mine & Execution Expansion Potential ✓2008 & 2009 – Au zone and Cu- ✓2018 – Completion of tradeoff ✓2020 – Optimized mine plan with ✓2021 – Further optimized mine plan Au zone identified stu
Slide 43: Snow Lake Gold Production Profile
SNOW LAKE GOLD PRODUCTION PROFILE Incorporates early production of gold at New Britannia in 2021 in addition to several near-to-medium term optimization initiatives: Increasing Lalor’s mining rate to 5,300 tpd starting in 2023 after the 777 mine closes Adding 1901 zinc-rich reserves to the mine plan
Slide 44: Snow Lake 2021 Mine Plan
SNOW LAKE 2021 MINE PLAN 17-YEAR MINE PLAN BASED ON PROVEN AND PROBABLE RESERVES ONLY Mine plan enhancements optimize processing capacity of the Snow Lake operations to maximize the NPV of the operations. As a result, the production of gold, copper and silver are expected to increase by 18%, 35% and
Slide 45: Snow Lake Process
SNOW LAKE PROCESS FLOW CHART - 2023 Lalor Crushed Ore Stall Mill New Britannia Mill1 Grinding Grinding Flotation Flotation Tails to Tails Zn Concentrate Cu Concentrate Cyanide Destruction Anderson TIA or Leaching/CIP Dewatering Dewatering Process Lalor Paste Plant Electrowinning Tails to Stall Mill
Slide 46: Snow Lake Processing Logistics
SNOW LAKE PROCESSING LOGISTICS LALOR MINE 2021 11 years 2031 Source Ore 1901 DEPOSIT 2026 6 years 2031 SATELLITE GOLD DEPOSITS 2030 8 years 2037 (WIM, 3 ZONE) Processing STALL BASE METAL MILL Location 2021 11 years 2031 (WITH GOLD BY-PRODUCT) NEW BRITANNIA GOLD MILL 2021 17 years 2037 (WITH COPPER B
Slide 47: Snow Lake Growth Over Time
SNOW LAKE GROWTH OVER TIME OVER 2.9 MM OUNCES OF GOLD HAS BEEN IDENTIFIED AS RESERVES / PRODUCED TO DATE +300% INCREASE IN IDENTIFIED RESERVES / PRODUCED GOLD FROM INITIAL RESERVE ESTIMATE Cumulative Production 9% increase from Reserves 32% increase from resource conversion Inferred inclusion of sat
Slide 48: Snow Lake Exploration Potential
SNOW LAKE EXPLORATION POTENTIAL LARGE PROSPECTIVE LAND PACKAGE IN THE SNOW LAKE BELT WITH SIGNIFICANT UPSIDE POTENTIAL MINE MILL Asset Metal Type Reserves & Resources1 TOWN WIM PROJECT WIM Cu-Au Probable – 2,448kt @ 1.63% Cu; 1.6g/t Au 40kt Cu; 126koz Au RAILROAD Osborne Lake ROAD Indicated – 469kt
Slide 49: Manitoba Regional Mines and Discoveries
MANITOBA REGIONAL MINES AND DISCOVERIES RESERVES IN THE FLIN FLON AND SNOW LAKE CAMP (MILLION TONNES) Flin Flon Lalor Chisel U/G 777 Trout Lake Chisel Initial Reserves WIM Callinan Added Reserves Reed 1901 Centennial Chisel Pit Anderson Additional Deposits (not yet in reserves): Stall Lake Pen II 3
Slide 50: Copper World Project
COPPER WORLD PROJECT EXPANDED PRIVATE LAND PACKAGE TO SUPPORT AN OPERATION ENTIRELY ON PRIVATE LAND Increased private land to the west, which together with patented mining claims, now totals ~4,500 acres to support an operation entirely on private land Review suggests the potential for both copper s
Slide 51: Copper World Project
COPPER WORLD PROJECT MINERALIZATION CLOSER TO SURFACE THAN ROSEMONT & FURTHER EXPLORATION POTENTIAL EXISTS Mineralization occurs at depths much shallower than Rosemont, indicating possibility of lower strip ratios at Copper World Potential for continuity between Bolsa and Rosemont Three new holes on
Slide 52: Peru Mineral Reserves
PERU MINERAL RESERVES (AS AT JANUARY 1, 2021) CATEGORY TONNES Cu (%) Mo (g/t) Au (g/t) Ag (g/t) CONSTANCIA Proven 436,500,000 0.29 83 0.041 2.88 Probable 56,100,000 0.25 69 0.045 3.09 TOTAL PROVEN AND PROBABLE 492,600,000 0.29 82 0.042 2.90 PAMPACANCHA Proven 32,400,000 0.59 178 0.368 4.48 Probable
Slide 53: Peru Mineral Resources
PERU MINERAL RESOURCES (AS AT JANUARY 1, 2021) CATEGORY TONNES Cu (%) Mo (g/t) Au (g/t) Ag (g/t) CONSTANCIA Measured 125,200,000 0.22 65 0.038 2.11 Indicated 118,300,000 0.22 65 0.037 2.05 Inferred 46,600,000 0.30 73 0.054 2.72 PAMPACANCHA Measured 11,400,000 0.41 101 0.245 4.95 Indicated 6,000,000
Slide 54: Snow Lake Reserves & Resources
SNOW LAKE RESERVES & RESOURCES (AS AT JANUARY 1, 2021) PROPERTY CATEGORY TONNES Cu (%) Zn (%) Au (g/t) Ag (g/t) Proven Lalor 6,860,000 0.50 5.79 2.6 29 Base Metal Zone 1901 890,000 0.40 6.61 2.0 28 Probable Lalor 1,190,000 0.64 4.32 3.2 32 1901 690,000 0.25 9.49 1.4 30 Gold Zone Proven Lalor 3,950,0
Slide 55: Snow Lake Reserves & Resources Cont.
SNOW LAKE RESERVES & RESOURCES CONT. (AS AT JANUARY 1, 2021) PROPERTY CATEGORY TONNES Cu (%) Zn (%) Au (g/t) Ag (g/t) PEN II Indicated 470,000 0.49 8.89 0.3 7 Talbot1 Indicated 2,190,000 2.33 1.79 2.1 36 TOTAL INDICATED (BASE METALS) 2,660,000 2.01 3.04 1.8 31 Watts River Inferred 3,150,000 2.34 2.5
Slide 56: Flin Flon Reserves & Resources
FLIN FLON RESERVES & RESOURCES (AS AT JANUARY 1, 2021) PROPERTY CATEGORY TONNES Cu (%) Zn (%) Au (g/t) Ag (g/t) Proven 1,125,000 1.59 5.09 2.23 31 777 Reserves Probable 399,000 1.11 4.46 1.86 30 TOTAL 777 PROVEN AND PROBABLE 1,524,000 1.46 4.93 2.13 31 Measured 120,000 1.21 7.12 2.31 39 777 Resource
Slide 57: Rosemont and Mason Reserves & Resources
ROSEMONT AND MASON RESERVES & RESOURCES (AS AT JANUARY 1, 2021) PROPERTY CATEGORY TONNES Cu (%) Mo (%) Ag (g/t) Proven 426,100,000 0.48 0.012 4.96 Rosemont Reserves Probable 111,000,000 0.31 0.010 3.09 TOTAL ROSEMONT PROVEN AND PROBABLE 537,100,000 0.45 0.012 4.58 Measured 161,300,000 0.38 0.009 2.7
Slide 58: Additional Reserves & Resources Information
ADDITIONAL RESERVES & RESOURCES 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 Standar
Slide 59: For more information contact
For more information contact: Candace Brûlé Director, Investor Relations 416.814.4387 | candace.brule@hudbay.com
Hudbay Minerals — Jefferies Virtual Base Metals & Battery Materials Summit (September 2021) on 6ix