Hudbay Minerals Inc · TSX:HBM
Hudbay Minerals — Shareholder Meeting (May 2018)
21 slides from Hudbay Minerals's shareholder meeting presentation, May 3, 2018
Slide 1: Annual Meeting of Shareholders
ANNU AL MEET I NG OF SH ARE HOL DERS May 3, 2018 1
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: Investment Highlights
INVESTMENT HIGHLIGHTS Constancia & Exploration Peru Lalor, 777, Reed & Exploration Manitoba, Canada TSX, NYSE, BVL Exploration HBM Symbol British Columbia, Canada Exploration Market Capitalization1 C$2.3 billion Chile Rosemont Shares Outstanding 261 million Arizona, USA Available Liquidity2 $0.8 bil
Slide 4: Consistent Strategy Since 2010
CONSISTENT STRATEGY SINCE 2010 VISION STATEMENT Our vision is to become a top-tier operator of long-life, low cost mines in the Americas VALUE DRIVERS STRATEGIC CRITERIA Safety & Long Life Responsibility Meaningful Low Cost Scale Financial Exploration Strength Mining Per Share Friendly Accretion Jur
Slide 5: Track Record of Safe, Responsible Mining
TRACK RECORD OF SAFE, RESPONSIBLE MINING OPERATING IN MANITOBA FOR 90+ YEARS Founded in Flin Flon, Hudbay has discovered and mined 28 mines in Manitoba over the past 90 years SOCIALLY RESPONSIBLE Track record of constructive community relations in Peru and elsewhere FOCUS ON SAFETY Zero lost time ac
Slide 6: Adding Value Through Exploration
ADDING VALUE THROUGH EXPLORATION CONSTANCIA (2009-2017)1 777 (2004-2017)1 LALOR (2010-2017)1 Reserves Reserves Reserves Copper Equivalent (Mt) Copper Equivalent (Mt) 4.0 Production Production Production Copper Equivalent (Mt) 1.5 1.0 +31% Growth 3.0 +98% Growth 0.8 +56% Growth 1.0 2.0 0.5 0.5 1.0 0.
Slide 7: Experienced Mine Developer
EXPERIENCED MINE DEVELOPER Proven track record of successful new mine development and in-depth mining expertise in both open pit and underground mining Hudbay built 30% of the mines constructed by its peer group in the last ten years and invested 37% of the capital spent by its peer group on mine de
Slide 8: Growing Free Cash Flow & Reducing Debt
GROWING FREE CASH FLOW & REDUCING DEBT Continue to grow free cash flow through un-hedged production and stable low-cost operations Reduced net debt position by ~$650 million since 2016 OPERATING AND FREE CASH FLOW1 NET DEBT2 ($M) ($M) Operating Cash Flow Free Cash Flow Net Debt 1,228 582 1,168 531 1
Slide 9: Low Cash Costs
LOW CASH COSTS Hudbay is positioned in the first quartile of the cost curve 2018E COPPER C1 CASH COSTS1 (US $/lb) $3.00 $2.00 First Quantum Oz Minerals Turquoise Hill $1.00 Capstone Lundin $0.00 Hudbay ($1.00) ($2.00) 0% 25% 50% 75% 100% 2018E COPPER C1 + SUSTAINING CAPEX CASH COST1 (US $/lb) $6.00
Slide 10: Long Mine Lives with Exploration Potential
LONG MINE LIVES WITH EXPLORATION POTENTIAL Long life assets provide exposure to multiple commodity price cycles RESERVE AND RESOURCE LIFE Reserve Life M&I Resource Life1 Inferred Resource Life 2 Rosemont 3 19 11 1 Constancia 18 6 1 Lalor 9 2 3 777 3 11 HISTORICAL COPPER PRICE CYCLES4 12 Years +436%
Slide 11: Reserve Growth & Per Share Accretion
RESERVE GROWTH & PER SHARE ACCRETION Focused on NAV per share and reserve per share accretion HUDBAY 2007-2017 RESERVE GROWTH HUDBAY 2007-2017 RESERVE GROWTH PER SHARE Manitoba Peru Arizona Other Manitoba Peru Arizona Other 6.0 60.0 Copper Equiv. Reserves per HBM Share Copper Equiv. Reserves (Mt) 4.
Slide 12: Growth in Mining Friendly Jurisdictions
GROWTH IN MINING FRIENDLY JURISDICTIONS Growth in jurisdictions that support responsible mining in the Americas, with strong rule of law and respect for human rights HUDBAY 2017 PRODUCTION1 HUDBAY 2017 RESERVE BASE1 Canada 13% 44% Canada United 43% 234 kt CuEq States 5,383 kt CuEq Peru 56% 44% Peru
Slide 13: Copper Growth Projects
COPPER GROWTH PROJECTS NEW COPPER PRODUCTION DEPENDENT ON GREENFIELD MINES IN DIFFICULT JURISDICTIONS Approximately 40% of new production is expected to come from the DRC, Mongolia, Zambia Only 38% of new production is expected to come from mining friendly jurisdictions (Chile, Peru, USA) Approximat
Slide 14: Copper Supply/Demand Outlook
COPPER SUPPLY/DEMAND OUTLOOK INSUFFICIENT COPPER PROJECTS TO FILL GAP Probable projects are required to come on by 2019 in order to balance market; structural deficit exists beyond 2024 Near-term surplus projected by Wood Mackenzie amounts to less than 1% of annual production in any given year and i
Slide 15: Growing Exposure to Copper
GROWING EXPOSURE TO COPPER Un-hedged copper and zinc production 2017 PRODUCTION BREAKDOWN1 2017 RESERVE BREAKDOWN2 4% 5% 9% 7% 7% 19% 234 kt CuEq 8% 5,383 kt CuEq 68% 73% Copper Zinc Gold Silver Copper Gold Silver Molybdenum Zinc Note: The following metals price assumptions were applied to reserves
Slide 16: Consolidated Production Profile
CONSOLIDATED PRODUCTION PROFILE GROWING COPPER EQUIVALENT PRODUCTION Production profile is based on a hypothetical scenario assuming first year of Rosemont construction occurs in 2019; Rosemont project development is conditional upon receipt of final permits and Board approval HUDBAY CONSOLIDATED AN
Slide 17: Project Pipeline
PROJECT PIPELINE Hudbay has a diversified portfolio of operating mines and an extensive development pipeline to perpetuate production growth Production Constancia Lalor 777 Reed Shovel-ready Development Rosemont Pampacancha Constancia Peru Manitoba Chile Lalor B.C. Regional Greenfield Regional Green
Slide 18: Exploration Focus
EXPLORATION FOCUS Hudbay more than tripled its owned or optioned mineral properties in the last two years PERU LAND CANADA PROPERTY OWNERSHIP SURFACE (HA) LAND PROPERTY OWNERSHIP SURFACE Pinco Pinco 100% Owned 10,600 (HA) Llaguen Optioned 8,897 BRITISH COLUMBIA Maria Reyna Optioned 5,850 Ike Optione
Slide 19: Relevant Scale & Meaningful Growth
RELEVANT SCALE & MEANINGFUL GROWTH Hudbay is one of the top investible1 pure play2 copper producers, offering investors relevant scale and meaningful production growth 2018E GLOBAL COPPER PRODUCTION (Mt) 1.6Mt 0.6 0.5 0.4 0.3 0.2 0.1 0.0 Freeport First Quantum KAZ Minerals Lundin Hudbay Oz Minerals
Slide 20: 2018 Objectives
2018 OBJECTIVES Continue to focus on generating free cash flow and increasing net asset value Advance in-house brownfield growth opportunities Complete Lalor paste plant and ramp up base metal ore throughput from Lalor to 4,500 tonnes per day Pampacancha Lalor gold Advancing permitting and technical
Slide 21: Annual Meeting of Shareholders
ANNU AL MEET I NG OF SH ARE HOL DERS May 3, 2018 21