Hudbay Minerals Inc · TSX:HBM
Hudbay Minerals — CIBC 25th Annual Western Institutional Investor Conference (January 2022)
62 slides from Hudbay Minerals's conference presentation, January 2022
Slide 1: Investor Presentation January 2022
INVESTOR PRESENTATION January 2022
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: Consolidated Copper Revenue by Metal
REVENUE BY METAL 2021E1 2022E1 DIVERSIFIED MID-TIER 3% 10% 2% COPPER PRODUCER 17% Cu Au 4% 5% $1.7B $1.9B 20% year-over-year copper Ag 59% 54% 25% Zn production growth in 2022 21% Mo Existing operations offer further near-term growth in copper and gold production ANNUAL COPPER PRODUCTION & CASH COST
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 Pipeline
HUDBAY COPPER GROWTH PIPELINE ATTRACTIVE COPPER PRODUCTION GROWTH AND OPTIONALITY Increased copper-equivalent resources per share by more than 2.5x over the past 10 years Recently completed investment program expected to result in 36% growth in copper production per share COPPER RESOURCES PER SHARE1
Slide 8: Hudbay
H' DBAY
Slide 9: Copper
Peru Constancia – 16 year mine life Exploration Properties 100% ownership Maria Reyna Open pit copper/molybdenum mine and concentrator Caballito Annual average Cu and Au production 1 of 102kt and 58koz, respectively Kusiorcco Pampacancha – 4 year mine life Llaguen 100% ownership Open pit copper/gold
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
CONSTANCIA MINE 16 YEARS Cu-Mo 86k tpd 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 EXCEEDING DESIGN CAPACITY 90 Constancia Mill Throughput Rate 86 86 86 LONG LIFE, LOW-COST COPPER MINE IN
Slide 12: Pampacancha in Full Production
PAMPACANCHA IN FULL PRODUCTION HIGH GRADE COPPER AND GOLD SATELLITE DEPOSIT; PRODUCTION COMMENCED IN 2021 CONSTANCIA’S COPPER PRODUCTION AND CASH COST PROFILE1 140 $1.50 128 120 $1.45 117 $1.37 108 $1.25 100 Cash Costs ($/lb) Copper (kt) 80 80 73 $0.97 $1.00 60 $0.80 The Pampacancha pit is located 5
Slide 13: Peru Exploration Potential
PERU EXPLORATION POTENTIAL SEVERAL OPPORTUNITIES EXIST ON HUDBAY’S EXTENSIVE LAND PACKAGE IN PERU CONSTANCIA SATELLITE EXPLORATION TARGETS Geophysics indicate several nearby exploration targets within trucking distance of Constancia’s infrastructure - Maria Reyna and Caballito have Maria Reyna & Kus
Slide 14: 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 15: Manitoba Operations
MANITOBA OPERATIONS 16 / <1 YEARS Au-Zn-Cu 3.8 / 6.0k tpd SNOW LAKE/ 777 VMS DEPOSITS STALL MILL / FLIN FLON MINE LIFE1 CONCENTRATOR CAPACITY 20-24kt 150-165koz 96-107kt 2021E CU PRODUCTION 2021E AU PRODUCTION 2021E ZN PRODUCTION INCREASE IN LALOR MINE & STALL MILL TONNAGE 5.0 Lalor 50% Stall 30% LO
Slide 16: New Britannia Commissioned
NEW BRITANNIA COMMISSIONED FIRST GOLD POUR AND COPPER CONCENTRATE PRODUCTION ACHIEVED IN 2021 Completion of the New Britannia gold mill expected to increase average annual gold production to over 180,000 ounces in Snow Lake at average cash costs of $412/oz over the next six years MANITOBA OPERATIONS
Slide 17: 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 18: 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 19: Rosemont & Copper World Projects
ROSEMONT & COPPER WORLD PROJECTS HIGH-QUALITY COPPER DEVELOPMENT PROJECTS Rosemont is a large porphyry deposit with a 19-year mine life generating 15.5% after-tax unlevered project IRR at $3.00/lb Cu1 Construction work suspended at Rosemont following a 2019 U.S. District Court ruling; Hudbay and the
Slide 20: Copper World Project
COPPER WORLD PROJECT Total private land package Peach North Limb Copper World Elgin South Limb Broad Top Butte Bolsa SIGNIFICANT NEW COPPER DISCOVERY Discovered in early 2021, followed by an aggressive drill program leading to 2017 Rosemont an initial resource estimate in December 2021 Resource Pit
Slide 21: Copper World Project
COPPER WORLD PROJECT NEAR-SURFACE, OXIDES AND HIGH-GRADE PORTION EXPECTED TO BE MINED EARLIER IN MINE LIFE Resources comprise both oxides and sulphides and are potentially amenable to heap leach and flotation processing methods COPPER WORLD 96Mt INDICATED 0.57% CuT Several deposits contain higher gr
Slide 22: 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 23: 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 24: ESG
SE a Pinsc ESG H' DBAY
Slide 25: 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 our stakeholders
Slide 26: Environment
ENVIRONMENT WE AIM TO DEVELOP, OPERATE AND CLOSE MINES IN A MANNER THAT DEMONSTRATES OUR COMMITMENT TO ENVIRONMENTAL STEWARDSHIP TOTAL ENERGY CONSUMPTION Near-term GHG mitigation is focused on energy efficiency 9000 at our operations 8500 terajoules Over 50% of our total energy consumption in 2020 w
Slide 27: Social Impact & Our People
SOCIAL IMPACT & OUR PEOPLE EMBRACING DIVERSITY AND PROVIDING A HEALTHY & SAFE WORKPLACE Constancia first mine in Peru to obtain SafeGuard certification, recognizing full compliance with all COVID-19 safety protocols All operations are required to be certified to ISO 45001, an internationally accepte
Slide 28: 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 MSCI rank
Slide 29: 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 30: Growing Production and EBITDA Outlook
GROWING PRODUCTION AND EBITDA OUTLOOK ENTERING A PERIOD OF SIGNIFICANT PRODUCTION AND EBITDA GROWTH Completed ~$250M brownfield investment program in 2021 and now at an inflection point in terms of meaningful copper and gold production growth, leading to significant year-over-year growth in EBITDA C
Slide 31: Copper Landscape Positioning
COPPER LANDSCAPE POSITIONING HUDBAY OFFERS LEADING EXPOSURE TO COPPER, ATTRACTIVE COST POSITIONING AND STRONG ESG PERFORMANCE AMONG PEERS LEADING NEAR-TERM COPPER PRODUCTION GROWTH LEADING LOW-COST PROFILE 30% (2021E-2023E) (2022E Copper ASIC1) 20% 10% – (10%) HBM ANTO FM ERO LUN CS TRQ LEADING COPP
Slide 32: Near-Term Catalysts
NEAR-TERM CATALYSTS NUMEROUS ORGANIC GROWTH OPPORTUNITIES EXIST New Britannia gold mill construction, ramp-up and first production achieved ✓ 2021 MANITOBA Updated Snow Lake mineral reserves and resources incorporating recent drilling at 1901 and Lalor Q1 2022 Advance 3rd phase of Snow Lake gold str
Slide 33: Slide 33
Slide 34: 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 Norte Constancia Mine evaluating underground potential Cu-Mo-Au-Ag
Slide 35: World-Class Management Team
WORLD-CLASS PETER KUKIELSKI PRESIDENT & CEO More than 30 years of sector MANAGEMENT TEAM experience in base metals, precious metals and bulk materials across the PROVEN MINING INDUSTRY EXPERIENCE globe, including leadership positions at Nevsun, Anemka, ArcelorMittal, Teck and Noranda ANDRE LAUZON ST
Slide 36: 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 37: 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 $297 million 4.5% Callable starting in 2023 due 2026 $600M $600M Revolver Availability2 $347 million (October 2025 Maturity) 6.125% Callable star
Slide 38: Executing Our Plan
EXECUTING OUR PLAN 2021 KEY OBJECTIVES FOCUS on operational efficiencies, maintain low-costs of production to continue to generate positive cash flow and strong returns on invested capital EXECUTE development and commence mining activities at the high-grade Pampacancha satellite deposit DELIVER the
Slide 39: 3-Year Production Outlook
3-YEAR PRODUCTION OUTLOOK GROWING COPPER AND GOLD PRODUCTION CONTAINED METAL IN CONCENTRATE1 2021 GUIDANCE 2022 GUIDANCE 2023 GUIDANCE PERU Copper tonnes 72,000 - 88,000 95,000 - 120,000 105,000 - 130,000 Gold ounces 40,000 - 50,000 85,000 - 105,000 85,000 - 105,000 Silver ounces 1,800,000 - 2,170,0
Slide 40: 2021 Cost Guidance
2021 COST GUIDANCE CAPITAL EXPENDITURE GUIDANCE EXPLORATION EXPENDITURES 2021 2021 ($ 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 41: Constancia Production Profile
CONSTANCIA PRODUCTION PROFILE Incorporates higher grades from Pampacancha from 2022 to 2025 and the new Constancia Norte 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 42: Constancia 2021 Mine Plan
CONSTANCIA 2021 MINE PLAN 16-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 43: Constancia Norte
CONSTANCIA NORTE UNDERGROUND POTENTIAL TO BE FURTHER INVESTIGATED There is an additional opportunity to include more reserves 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 Constanci
Slide 44: 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 45: 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 46: 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 pla
Slide 47: Snow Lake 2021 Mine Plan
SNOW LAKE 2021 MINE PLAN 16-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 48: Snow Lake Process
SNOW LAKE PROCESS FLOW CHART - 2023 Lalor Crushed Ore Stall Mill New Britannia Mill 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 49: 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 50: 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 51: 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 52: Updated Flin Flon Closure Cost Plan
UPDATED FLIN FLON CLOSURE COST PLAN 75% OF CLOSURE AND RECLAMATION COSTS ARE TO BE INCURRED AFTER 2037 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040 2041 2042 2122 $23M in tailings stability $13M in demolition costs between the close of Flin Flon
Slide 53: Flin Flon Tailings Reprocessing
FLIN FLON TAILINGS REPROCESSING OPPORTUNITY TO REPROCESS TAILINGS AND REDUCE ENVIRONMENTAL FOOTPRINT Over 90 years of tailings deposition through several commodity cycles Potential to utilize Flin Flon mill for reprocessing of tailings and increase metal production Could create operating and economi
Slide 54: 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 55: 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 56: 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 57: 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 58: 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 59: 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 60: Copper World Mineral Resource Estimates
COPPER WORLD MINERAL RESOURCE ESTIMATES (AS AT DECEMBER 1, 2021) GLOBAL MINERAL RESOURCE ESTIMATES CATEGORY TONNES CuT (%) CuSS (%) Mo (g/t) Ag (g/t) Indicated 180,000,000 0.37 0.07 136 2.7 Potential Flotation Processing Inferred 91,000,000 0.36 0.05 129 3.8 Indicated 92,000,000 0.34 0.27 74 3.4 Pot
Slide 61: 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 62: For more information contact
For more information contact: Candace Brûlé Vice President, Investor Relations 416.814.4387 | candace.brule@hudbay.com
Hudbay Minerals — CIBC 25th Annual Western Institutional Investor Conference (January 2022) on 6ix