Hudbay Minerals Inc · TSX:HBM
Hudbay Minerals — Shareholder Meeting (May 2014)
31 slides from Hudbay Minerals's shareholder meeting presentation, May 8, 2014
Slide 1: Plan in Action: Annual and Special Meeting of Shareholders
PLAN IN ACTION ANNUAL AND SPECIAL MEETING OF SHAREHOLDERS May 8, 2014 HBM
Slide 2: G. Wesley Voorheis, Chairman
PLAN IN ACTION G. Wesley Voorheis Chairman ANNUAL AND SPECIAL MEETING OF SHAREHOLDERS May 8, 2014 HBM
Slide 3: David Garofalo, President & CEO
PLAN IN ACTION David Garofalo President & CEO ANNUAL AND SPECIAL MEETING OF SHAREHOLDERS May 8, 2014 HBM
Slide 4: Cautionary Information
Cautionary Information Forward Looking 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
Slide 5: Cautionary Information (continued)
Cautionary Information (continued) Forward Looking 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 impact o
Slide 6: Cautionary Information (continued)
Cautionary Information (continued) Information Concerning Augusta Except as otherwise expressly indicated herein, the information concerning Augusta contained in this presentation has been taken from and is based solely upon Augusta’s public disclosure on file with the relevant securities regulatory
Slide 7: 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 8: Agenda
Agenda 1. Market Update 1 2. 2013: Year in Review 3. 2014: Year of Growth 4. Hudbay: The Long-Term Vision 2 3 4 1 MANITOBA 777, LALOR, REED 2 COLOMBIA EXPLORATION 3 PERU CONSTANCIA 4 CHILE EXPLORATION ARIZONA ROSEMONT, PROPOSED ACQUISITION AGM PRESENTATION l 8
Slide 9: Market Update
Market Update AGM PRESENTATION l 9
Slide 10: Metal Price Outlook
Metal Price Outlook Copper Spot Price and Forecast Zinc Spot Price and Forecast Gold Spot Price and Forecast $5.00 $2.50 $2,000 $4.00 $2.00 $1,600 $3.00 $1.50 $1,200 $2.00 $1.00 $800 $1.00 $0.50 $400 $0.00 $0.00 $0 1990 1993 1996 1999 2002 2005 2008 2014 2017 2020 2011 1990 1993 1996 1999 2002 2005
Slide 11: Producer vs. Developer Trading Multiples
Producer vs. Developer Trading Multiples INCREASING DIVERGENCE BETWEEN PRODUCERS AND DEVELOPERS Historical Consensus P / NAV Ratio Developer Range Intermediate Producer Range Intermediate Producer Avg Developer Avg Hudbay 1.00x 0.80x Historical P/NAV (ratio) 0.60x 0.40x 0.20x 0.00x May-13 Jun-13 Jul
Slide 12: 2013: Year in Review
2013: Year in Review AGM PRESENTATION l 12
Slide 13: 2013 Achievements
2013 Achievements SUCCESSFUL IN ACHIEVING IMPORTANT PROJECT MILESTONES… Lalor shaft sinking completed on time and on budget Raised over $500 million of non- dilutive financing Initial Reed mine production started on time and on budget Strong safety performance even with 74% increase in man-hours Con
Slide 14: 2013 Challenges
2013 Challenges …BUT SUCCESS DIDN’T COME WITHOUT ITS CHALLENGES Capital cost increase at Constancia Missed copper production guidance Temporary decline in ore production in Manitoba put upward pressure on processing costs Constancia TMF East, Feb 2014 Jumbo drill at 777, Nov 2013 AGM PRESENTATION l
Slide 15: Share Price Performance
Share Price Performance HUDBAY TRADED IN-LINE WITH SECTOR; BUT ROUGH RIDE FOR EQUITIES Relative Share Price Since 2010 80.0% Copper Spot (4.3%) 60.0% Intermediate Producer Peer Average (27.2%) Hudbay (29.6%) 40.0% S&P/TSX Metals & Mining Index (35.4%) 20.0% 0.0% (20.0%) (40.0%) (60.0%) (80.0%) 1-Jan
Slide 16: 2014: Year of Growth
2014: Year of Growth AGM PRESENTATION l 16
Slide 17: 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) 1. Represents production growth from 2013 actual production to 2015 anticipated production level
Slide 18: 2014: Key Milestones
2014: Key Milestones ON TRACK TO ACHIEVE OUR GROWTH OBJECTIVES IN 2014 Reed Lalor Lalor Constancia Commercial Production shaft Underground Commercial production commissioning exploration begins production 2014 2015 Q1 Q2 Q3 Q4 Q1 Q2 Rosemont Lalor Constancia Expiry of Completion of Initial Augusta O
Slide 19: Our South America Business
Our South America Business 100%-OWNED CONSTANCIA COPPER DEVELOPMENT PROJECT IN PERU 2013 Over 8 million man-hours PERU without lost time accident recently Lima achieved Constancia Project over 71% complete as at Mar. 31, 2014 2014 On track for first production in Q4 2014, commercial production in Q2
Slide 20: Constancia Construction On Schedule
Constancia Construction On Schedule Constancia pre-stripping activities, Apr 2014 Reclaim tunnels to feed Constancia ball mills, Apr 2014 Constancia cyclone banks, Apr 2014 Constancia primary crusher, Apr 2014 AGM PRESENTATION l 20
Slide 21: Our Manitoba Business
Our Manitoba Business STEADY PRODUCTION AND PROVEN BUSINESS MODEL IN MANITOBA MANITOBA 777 Lalor Reed Winnipeg AGM PRESENTATION l 21
Slide 22: 777 Mine
777 Mine 100%-OWNED MINE IN MANITOBA > 6 lost-time accidents over past 6 years > Mature mine with steady cost performance > $4 million underground exploration program looking for mine life extensions 1,620 1,600 1,540 1,529 $50 1,470 1,488 1,492 1,424 $43 $43 $38 $39 $38 $40 View of 777 headframe $3
Slide 23: Lalor Mine
Lalor Mine 100%-OWNED MINE IN MANITOBA > 1,000 days without a lost-time accident > Doubling of production capacity in second half of 2014 on time and on budget Aerial view of Lalor’s main production shaft, Jul 2013 Inside Lalor hoist house, Dec 2013 955m level steel installation, Mar 2014 AGM PRESEN
Slide 24: Reed Mine
Reed Mine 70%-OWNED MINE IN MANITOBA > 2-year construction program completed with no lost-time accidents > Achieved commercial production ahead of guidance and under budget Aerial view of Reed project site, Sep 2013 Ore face at 135m level at Reed, Mar 2014 Loading ore for transportation from Reed to
Slide 25: New Period of Exploration
New Period of Exploration $20 MILLION EXPLORATION BUDGET PLANNED FOR 2014 Lalor Cross-Section with 2014 Exploration Platform Constancia Exploration to Resume in 2014 > Airborne geophysical program 0m completed Vent Production Raise Shaft 500m Exploration Platform 1000m Legend Base metal zone Gold zo
Slide 26: Hudbay: The Long-Term Vision
Hudbay: The Long-Term Vision AGM PRESENTATION l 26
Slide 27: Proposed Acquisition of Augusta
Proposed Acquisition of Augusta IDEAL FIT WITH HUDBAY’S DISCIPLINED GROWTH STRATEGY In February 2014, Hudbay announced intention to acquire Augusta > Enhances Hudbay’s market position as leading intermediate base metals company > Rosemont sequences well with Hudbay’s existing projects View of Rosemo
Slide 28: Production, Reserve and Resource Growth
Production, Reserve and Resource Growth1 SIGNIFICANT PRODUCTION GROWTH SUPPORTED BY LARGE RESERVE BASE Copper Production Growth Copper Reserve and Resource Growth2 350 (mm tonnes Cu) 300 0.9 250 Copper Production (kt Cu) 1.4 200 +92% in P+P Reserves 150 0.5 +570% 0.8 100 4.4 50 2.3 0 2013A 2014E 201
Slide 29: Global Positioning on 2018E Cash Costs
Net Cash Costs (US$/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 30: Why Hudbay?
Why Hudbay? DISCIPLINED GROWTH STRATEGY Focused on growth in net asset value, earnings and cash flow per share > Mining friendly jurisdictions in the Americas > VMS and porphyry deposits > Leverage operating, development and exploration expertise > Seeking development stage assets AGM PRESENTATION l
Slide 31: Plan in Action: Annual and Special Meeting of Shareholders
PLAN IN ACTION ANNUAL AND SPECIAL MEETING OF SHAREHOLDERS May 8, 2014 HBM