Hudbay Minerals Inc · TSX:HBM
Hudbay Minerals — BMO Capital Markets 25th Global Metals & Mining Conference 2016
37 slides from Hudbay Minerals's conference presentation, Feb 29, 2016
Slide 1: BMO Capital Markets 25th Global Metals & Mining Conference
BMO CAPITAL MARKETS 25 TH GLOBAL METALS & MINING CONFERENCE | FEBRUARY 2016 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, 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 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 5: Hudbay Investment Highlights
Hudbay Investment Highlights Delivered 2015 low-cost copper production growth TSX, NYSE, BVL Symbol HBM ! Successful ramp-up of Constancia Market Capitalization1 C$0.9 billion ! Over 300% y/y growth in Cu sales volumes Shares Outstanding 235 million ! Copper cash costs $1.14/lb4 Committed Liquidity2
Slide 6: Long-Life, Low-Cost Asset Base
Long-Life, Low-Cost Asset Base Mine Life (years) Average LOM Annual Production2 (000 tonnes) Cu Cu Zn Cu Zn Production1 LOM By-Product Cash Costs3 250 C1 Cash Cost (100 x $/lb) 200 150 100 50 0 0 10 20 30 40 50 60 70 80 90 100 -50 Cumulative Percentile Production (%) -100 -150 Constancia Lalor 777 R
Slide 7: Track Record of Delivering Growth
Track Record of Delivering Growth1 330% 90% 35% INCREASE IN CU PRODUCTION INCREASE IN AU-EQ. PRODUCTION 2 INCREASE IN ZN PRODUCTION (kt) (koz) (kt) 200 250 150 200 150 100 150 100 100 50 50 50 - - - 3 3 3 2014A 2015A 2016G 2014A 2015A 2016G 2014A 2015A 2016G Manitoba Constancia 2015 Guidance Range 1
Slide 8: South America Business Unit
South America Business Unit Cusco CUSCO APURIMAC Las Bambas CONSTANCIA PUNO Yauri Tintaya Antapaccay AYACUCHO AREQUIPA Imata PERU Arequipa Lima Cerro Verde MINE MOQUEGUA TOWN RAILROAD CONSTANCIA Matarani ROAD 0 TACNA 100km LAS BAMBAS HAUL ROAD INVESTOR PRESENTATION | 8
Slide 9: Constancia Mine
Constancia Mine OPERATING ABOVE DESIGN CAPACITY Life of Mine1 Ownership 100% ! Focus on further enhancement of costs Daily ore throughput 80k tpd and plant performance Avg. annual Cu production2 82k tonnes Cash cost per lb Cu3 $1.25/lb ! Copper sulphide recoveries at target; total Mine and mill unit
Slide 10: Manitoba Business Unit
Manitoba Business Unit NBM Mill Snow Lake LALOR MINE Snow Lake (Stall) Mill 0 5km SASKATCHEWAN MANITOBA MANITOBA CANADA Snow Lake 777 LALOR 777 MINE LALOR MINE REED Flin Flon Flin Flon Mill MINE MILL Winnipeg TOWN REED MINE RAILROAD 0 50km ROAD INVESTOR PRESENTATION | 10
Slide 11: Lalor Mine
Lalor Mine GOLD UPSIDE POTENTIAL Life of Mine1 Ownership 100% Daily ore throughput 3,300 tpd ! Main production shaft operating at a Avg. annual Zn production2 59k tonnes steady state Avg. annual Au-Eq. production2 43k ounces Avg. annual Cu production2 5k tonnes ! Upgraded Snow Lake concentrator with
Slide 12: 777 and Reed Mines
777 and Reed Mines STEADY, LOW-COST PRODUCTION 777 - Life of Mine1 Ownership 100% Daily ore throughput 4,500 tpd ! Resolved labour dispute in 2015 Avg. Annual Cu production2 25k tonnes Avg. Annual Zn production2 51k tonnes ! Optimizing operations to end of mine life Cash cost per lb Cu3 $(0.52)/lb M
Slide 13: Arizona Business Unit
Arizona Business Unit Tucson Three Points Mission Complex Twin Buttes Mine Sierrita Mine ROSEMONT Green Valley ARIZONA, US PIMA SANTA CRUZ Sonoita MINE Tucson Patagonia TOWN RAILROAD ROSEMONT 0 25km ROAD INVESTOR PRESENTATION | 13
Slide 14: Rosemont Project
Rosemont Project 80%-OWNED1 COPPER PROJECT ! Permitting and community engagement progressing ! $30 million expected to be spent during the full year of 2016 to advance permitting and DFS Crusher area of the Rosemont project (looking east) ! Expected to be one of the first new copper projects to be b
Slide 15: Cost Reductions
Cost Reductions ! 2016 planned capital spending and operating expenses reduced by over $100 million; no impact on production guidance ! $55 million in sustainable operating cost savings ORIGINAL REVISED ($ Millions) ($ Millions) Sustaining Capital Expenditures1 Sustaining Capital Manitoba 90 80 Peru
Slide 16: Liquidity
Liquidity ! Maturity of credit facilities extended to 2019 ! Deferred ~$50 million of principal repayments in each of 2016/17/18 December 31, 2015 $ Millions Available Liquidity $288 Amount Maintenance Debt Maturity Drawn Covenants Senior Unsecured Notes $920 Oct. 2020 None 3.25x Secured Debt3/ EBIT
Slide 17: 2016 Objectives
2016 Objectives ü Strengthen liquidity position by identifying cost savings and deferring debt repayments ü Arrange more flexible financial covenants on credit facilities ! Achieve capital and operating cost efficiencies to maximize free cash flow ! Deliver low-cost production growth in copper, zinc
Slide 18: Appendix
Appendix INVESTOR PRESENTATION | 18
Slide 19: Appendix Contents
Appendix Contents ! By-product copper and zinc cost curves ! Global refined metal market balance ! Lalor cross-section ! 2016 production and cost guidance ! Precious metals stream overview ! Reserves and resources information INVESTOR PRESENTATION | 19
Slide 20: Copper & Zinc By-Product Cost Curves
Copper & Zinc By-Product Cost Curves1 250 Constancia (LOM)2 200 C1 Cash Cost (100 x Us$/lb) 150 100 Reed (LOM) 777 Mine (LOM)2 50 10 0 10 20 30 40 50 60 70 80 90 100 -50 Cumulative Percentile Production (%) -100 Lalor (LOM) -150 -200 -250 Cu Cash Cost Zn Cash Cost Source: Wood Mackenzie (2014 cost c
Slide 21: Global Refined Metal Market Balance
Global Refined Metal Market Balance ! Copper market in balance and zinc market in deficit over the next few years ! Risks to supply include delay/deferral of new production (weak expected returns and lack of funding) and impact of reduced sustaining capital expenditures Source: Wood Mackenzie, Globa
Slide 22: Lalor Cross-Section
Lalor Cross-Section LALOR CROSS-SECTION WITH EXPLORATION RAMP, LOOKING WEST 0m Production Shaft 500m Ram p from Chise l Exploration Ramp 2014 2015 1000m Phase 1 Legend Base metal zone Phase 2 Gold zone 1500m Copper-gold zone High-grade intercepts 500 m INVESTOR PRESENTATION | 22
Slide 23: 2016 Production and Unit Cost Guidance
2016 Production and Unit Cost Guidance Contained Metal in Concentrate1 2016 Guidance 2015 Production 2015 Guidance2 Manitoba3 Copper Tonnes 40,000 – 50,000 41,383 40,000 – 50,000 Zinc Tonnes 100,000 – 125,000 102,919 95,000 – 120,000 Precious Metals4 Ounces 95,000 – 115,000 92,793 83,000 – 103,000 C
Slide 24: 2016 Production and Unit Cost Guidance
2016 Production and Unit Cost Guidance Flin Flon Zinc Plant Zinc Concentrate Treated 195,000 – 240,000 tonnes Zinc Metal Produced 100,000 – 120,000 tonnes Unit Operating Costs1 C$0.38 - $0.46/lb 1. Forecast unit operating costs are calculated on the same basis as reported unit operating costs in Hud
Slide 25: 2016 Capital Expenditure Guidance
2016 Capital Expenditure Guidance1 2015 Actual 2015 Guidance 2016 Guidance2 ($ Millions) ($ Millions) ($ Millions) Manitoba sustaining capital 73 127 80 Peru sustaining capital 184 164 140 Total sustaining capital 256 291 220 Arizona other capitalized costs 49 55 30 Peru other capitalized costs 99 M
Slide 26: 2016 Exploration Guidance
2016 Exploration Guidance $ Millions Manitoba 5 Peru 1 Arizona - Generative and Other 5 Total Sustaining Capital 11 Capitalized Spending1 (3) Total Exploration Expense 8 1. Assumes $3 million of Manitoba expenditures will be capitalized. INVESTOR PRESENTATION | 26
Slide 27: Precious Metals Stream Overview
Precious Metals Stream Overview PAYMENTS FROM HUDBAY TO SILVER WHEATON Production payments 1 Upfront payment plus $5.90/oz Silver $885 million $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 Const
Slide 28: Peru Mineral Reserves
Peru Mineral Reserves AS AT JANUARY 1, 2014 Constancia Mineral Reserves Category 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 M tonnes Cu (%) Mo (g/t) Au (g/t) Ag (g/t) Proven 23 0.52 142 0.298 4.28 Prob
Slide 29: 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) Ag
Slide 30: 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 Metal2 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 Prov
Slide 31: 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 32: Copper Equivalent Reserves and Resources
Copper Equivalent Reserves and Resources1 ALL METALS Project Category Cu Equivalent (000 ounces) 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 33: 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 34: 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 35: Rosemont Historical Reserves & Resources
Rosemont Historical Reserves & 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 Reserves as at July 24, 2012 Category M (tonnes) Cu (%) Mo (%) Ag (g/t) Inferred 116
Slide 36: 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 $4.90 per ton. NSR values are bas
Slide 37: For more information contact
For more information contact: Candace Brûlé, Director, Investor Relations 416.814.4387 | candace.brule@hudbayminerals.com
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