Hudbay Minerals Inc · TSX:HBM
Hudbay Minerals — Investor Presentation (December 2013)
51 slides from Hudbay Minerals's investor presentation, December 2013
Slide 1: Creating Sustainable Value Through High Quality, Long-Life Deposits
Creating Sustainable Value Through High Quality, Long-Life Deposits INVESTOR PRESENTATION December 2013 HBM
Slide 2: Forward-looking 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 this presentation, othe
Slide 3: Note to U.S. Investors
Note to U.S. Investors Information concerning Hudbay’s mineral properties has been prepared in accordance with the requirements of Canadian securities laws, which differ in material respects from the requirements of the Securities and Exchange Commission (“SEC”) Industry Guide 7. Under SEC Industry
Slide 4: Stringent Criteria for Growth
Stringent Criteria for Growth Disciplined focus on per share metrics 1. Focus geographically on mining friendly, investment grade countries in the Americas 1 3 2 2. Focus geologically on VMS and porphyry deposits 3. Acquire small, think big leverage our core competencies as explorers and mine develo
Slide 5: Key Metal Growth
Key Metal Growth1 390% GROWTH 115% GROWTH 2 30% GROWTH Cu Production Precious Metals Production Zn Production (kt) (koz) (kt) 200 220 120 200 175 180 150 90 160 125 140 120 100 60 100 75 80 60 50 30 40 25 20 0 0 0 3 4 3 4 3 4 2012 2013E 2014E 2015E 2012 2013E 2014E 2015E 2012 2013E 2014E 2015E 5 6 7
Slide 6: Production Profile
Production Profile Three Months Ended Nine Months Ended Guidance Manitoba contained metal in concentrate Sept. 30, 2013 Sept. 30, 2013 2013 Copper tonnes 7,972 22,596 33–38,000 Zinc tonnes 24,816 66,617 85–100,000 Precious Metals1 troy oz. 26,631 70,784 85–105,000 Unit Operating Costs 777 $/tonne 35
Slide 7: Growing Mineral Reserves and Resources Per Share
Growing Mineral Reserves and Resources Per Share Commodity Exposure1,2,3 Cu Eq/Share (lb Cu/sh) 5% 6% 28.3 21.6 24% 46% 19.8 24.1 11.9 9.1 18.4 46.1 41.3 16.3 39.2 19% Copper Zinc Gold Equivalent Lead Molybdenum 11.3 2010 2011 2012 2013 Proven & Probable Measured & Indicated inferred 1 Hudbay reserv
Slide 8: Flagship Mine
Flagship 777 Mine Steady production with low cash costs MANITOBA 777 Winnipeg Mining Cost (C$/tonne) Ore Mined (kt) 1 12013 estimated production and costs are based on guidance as disclosed in Hudbay's news release entitled "Hudbay Announces 2013 Production Guidance and Capital and Exploration Forec
Slide 9: 777 Mine
777 Mine Underground exploration program underway INVESTOR PRESENTATION l 9
Slide 10: Lalor
Lalor Snow Lake Ore Concentrator MANITOBA Lalor Project 777 Mine Flin Flon Lalor Snow Reed Lake Flin Flon Lake Amisk Lake Ore Concentrator Hwy #39 Zinc Plant Reed Project Winnipeg N Hwy 25 km #10 Ownership 100% Projected Life of Mine 20 years Mine Capex (2010-2015) $441 million Phase 1 of commercial
Slide 11: Lalor
Lalor Production shaft commissioning expected in the second half of 2014 Surface 0m Production shaft Vent raise 500m 750m 2014 Exploration platform 1000m 1500m Base Metal Resource Gold & Copper-Gold Resource Looking 0m 250m High Grade Intercepts N70oW Completed infrastructure and development INVESTO
Slide 12: Reed
Reed MANITOBA > $59 million invested and entered into Reed additional $7 million in commitments to Oct. 31, 2013 Winnipeg > Received Environment Act Licence and began initial production > Project remains on track to reach full production of approximately 1,300 tonnes per day in H1 2014 > Over 570 da
Slide 13: Constancia Project
Constancia Project PERU > US$872 million incurred and entered into additional US$336 million in commitments to Oct. Lima 31, 2013 Constancia > Results from completion of revised definitive capital cost estimate indicate total costs to project completion Tailings thickener (left) installed ball mills
Slide 14: Access to Existing Infrastructure
Access to Existing Infrastructure > 83km access road from Yauri • To be upgraded for concentrate haulage post commissioning > Tintaya power substation 70km away • Planned upgrade to 220 kV to be commissioned by Q4 2013 • Contract executed for construction of power transmission line from Tintaya > Ra
Slide 15: Constancia Regional Exploration Potential
Constancia Regional Exploration Potential > Helicopter Magnetic/Radiometrics Survey • Survey outline with geology, claims(Hudbay in green), and significant deposits • Commodity Focus: Cu, Au, & Mo • Brown and tan areas represent overburden (i.e. underexplored areas) • Survey cost ~$800K, (85km x 40k
Slide 16: Balance Sheet
Balance Sheet Pro-forma as at September 30, 2013 (in millions)1 Sources Uses (through 2014) Cash and cash equivalents $792.5 Lalor $73 Remaining stream agreement payments $260 Reed $16 Canadian income taxes and Peruvian value-added taxes2 $100 Constancia $900 Credit facility and committed Caterpilla
Slide 17: From Harvest to Industry-Leading Growth in Three Years
From Harvest to Industry-Leading Growth in Three Years 20102 20132 Copper Equivalent1 Production -30% 210% 3-Year Growth (projected growth to 2013) (projected growth to 2016) Proven & Probable Reserves + 290% Copper Equivalent pounds per 12 46 share Measured & Indicated3 + 45% Copper Equivalent poun
Slide 18: Highlights
Highlights 1. Growth in Copper, Gold and Zinc Production with Exploration Upside 2. Consistent Performance from Reliable Operations 3. Disciplined and Clear Growth Strategy 4. Strong Balance Sheet 5. Experienced Management and Operating Team INVESTOR PRESENTATION l 18
Slide 19: Appendix
H' DBAY Appendix
Slide 20: Appendix Contents
Appendix Contents By-product copper cost curve Additional Capital Required by 2020 as a % of Market Value Financial results 2013 operating guidance Growth of mineral projects in the Greenstone Belt Lalor project Constancia project Precious metals stream Reserves & resources INVESTOR PRESENTATION l 2
Slide 21: 2013 Copper & Zinc By-product Cost Curves
2013 Copper & Zinc By-product Cost Curves1 250 Reed & Constancia (LOM) C1 Cash Cost (100 x US$/lb) 200 Constancia2 (Yr 1-5) 150 100 777 Mine2 Constancia2 (Yr 6-16) 50 0 0 10 20 30 40 50 60 70 80 90 100 -50 Cumulative Percentile Production (%) -100 Lalor -150 -200 -250 Cu Cash Cost Zn Cash Cost Sourc
Slide 22: Additional Capital Required by 2020 as a % of Market Value
Additional Capital Required by 2020 as a % of Market Value 35% 30% $59 billion $13 billion 25% $43 billion $23 billion 20% $9.4 billion 15% $15 billion 10% $6 billion 5% $3 billion $1 billion 0% Copper Iron ore Coal - Therm Aluminum Zinc Coal - Met Nickel Gold Lead Source: Wood Mackenzie, Metals Mar
Slide 23: Financial Results
Financial Results Three Months Ended Sept. 30 Nine Months Ended Sept. 30 ($000s except per share amounts) 2013 2012 2013 2012 Revenue 130,179 144,659 380,720 521,555 Profit (loss) before tax 9,650 6,254 (22,310) 23,873 Profit (loss) for the period 2,985 (5,354) (47,794) (31,606) Operating cash flow1
Slide 24: 2013 Operating Guidance
2013 Operating Guidance 7771 Lalor2 Reed2 Ore Mined tonnes 1,620,000 418,000 51,000 Copper % 2.18 0.54 3.43 Zinc % 4.41 9.89 1.18 Gold g/tonne 1.94 1.23 0.72 Silver g/tonne 30.89 17.70 8.80 Unit Operating Costs C$/tonne 38 - 42 75- 95 Contained Metal in Concentrate3 Copper tonnes 33,000 – 38,000 Zin
Slide 25: 2013 Operating Guidance
2013 Operating Guidance Flin Flon Snow Lake Ore Milled tonnes 1,719,000 369,000 Recoveries Copper % 92 82 Zinc % 85 95 Gold % 69 65 Unit operating costs1 C$/tonne 12 - 16 25 - 30 Zinc concentrate treated Domestic tonnes 199,000 Purchased tonnes 2,600 Total tonnes 201,600 Recovery % 97 Zinc metal pro
Slide 26: Growth of Mineral Deposits
Growth of Mineral Deposits Discoveries in the Greenstone Belt Flin Flon ∕∕ 62.5 Lalor Trout Lake 777 Stall Lake Chisel U/G Callinan Chisel Osborne Anderson Konuto Spruce Schist Lake Centennial Westarm Chisel Pit Coronation White Lake Dickstone Rod Initial resource Photo Added resource Ghost & Lost C
Slide 27: Lalor Mine Project
Lalor Mine Project Remaining Capital Spending Expected At the Lalor mine as follows: > $371 million of the overall $441 million1 capital Q4 2013 $12 million costs invested to Oct. 31, 2013; entered into additional $40 million in commitments 2014 $61 million > $9 million investment at Snow Lake Total
Slide 28: Lalor Mine Schedule
Lalor Mine Schedule 2009 2010 2011 2012 2013 2014 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Permitting Engineering Procurement Surface Construction Underground Development Underground Construction and Electrical Installations Production Shaft Excavation and Shaft Statio
Slide 29: Constancia Project – Site Plan and Layout
Constancia Project – Site Plan and Layout INVESTOR PRESENTATION l 29
Slide 30: Constancia Capital Spending
Constancia Capital Spending (US$ millions) Q4 2013 210 2014 690 Total estimated future capital spending 900 Total spent in 2012 323 Total spent Q1-Q3 2013 485 Total1 1,708 1 The total project budget does not reflect pre-production revenue and costs, which will continue to be applied to capitalized c
Slide 31: Current Schedule at Constancia
Current Schedule at Constancia 2011 2012 2013 2014 2015 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Permitting Mine Permit Front End Engineering Design Construction Camp Procurement Community Agreements Board Approval Power Line TMF and WRF Plant Commissioning and Ramp Up Commercial
Slide 32: Constancia Production Profile
Constancia Production Profile High tonnage with low cash costs 2015 – 2019: annual copper metal in concentrate expected to average 118,000 t 2020 – 2030: annual copper metal in concentrate expected to average 77,000 t Cash costs of production expected to average: $1.00/lb of copper for first 5 years
Slide 33: Constancia Construction Progress
Constancia Construction Progress Waste rock facility containment pond and grout curtain preparation Constancia bog dam East tailings dam of tailings management facility Setting the ball mill shells INVESTOR PRESENTATION l 33
Slide 34: Constancia Construction Progress
Constancia Construction Progress Primary crusher and retaining wall Mine fleet assembly Hitachi shovels on site Main Constancia sediment pond INVESTOR PRESENTATION l 34
Slide 35: Constancia Regional Infrastructure – Port
Constancia Regional Infrastructure – Port Constancia is ~475km from Matarani Port by road, already more than half paved Matarani Port located 120km from Arequipa by paved highway The port is a deep sea port managed by a private group Used by other mining companies Port access secured under 10-year c
Slide 36: Formalized LOM Agreement with Local Communities
Formalized LOM Agreement with Local Communities Uchuccarco Life of mine agreement in place Land rights acquired Chilloroya Life of mine agreement in place Land rights acquired Relocation process is underway Committed to community investments INVESTOR PRESENTATION l 36
Slide 37: Project De-Risking with Experienced Partners
Project De-Risking with Experienced Partners Stracon GyM Relevant Experience Currently operating in Peru Toromocho Experienced in mining and major earth works El Brocal Established labour force and operating team Marcona Experienced procurement and maintenance La Arena Carry over from design, constr
Slide 38: Precious Metals Stream Overview
Precious Metals Stream Overview US$750 million in upfront deposit payments from Silver Wheaton for delivery of: • Along with upfront payments, Hudbay will receive US$400 per ounce for gold and US$5.90 per ounce of silver1 • 100% of payable gold and silver from 777 mine until the end of 2016; • and 5
Slide 39: Peru Reserves Overview
Peru Reserves Overview As at August 8, 2012 Constancia Mineral Reserves Category Ore (M tonnes) Cu (%) Mo (g/t) Au (g/t) Ag (g/t) Proven 349 0.37 100 0.043 3.29 Probable 54 0.24 60 0.035 2.98 Pampacancha Mineral Reserves Proven 10 0.54 170 0.318 4.20 Probable 37 0.46 140 0.276 4.56 Total Mineral Res
Slide 40: Peru Resources Overview
Peru Resources Overview As at August 8, 2012 Constancia Mineral Resources Category M (tonnes) Cu (%) Mo (g/t) Au (g/t) Ag (g/t) Measured 119 0.23 62 0.038 2.3 Indicated 344 0.20 58 0.034 2.0 Inferred 219 0.19 49 0.032 1.8 Pampacancha Mineral Resources Category M (tonnes) Cu (%) Mo (g/t) Au (g/t) Ag
Slide 41: Manitoba Mineral Reserves
Manitoba Mineral Reserves As at January 1, 2013 Category Tonnes Cu (%) Zn (%) Au (g/t) Ag (g/t) 7771 Proven 4,959,000 2.37 4.05 1.95 27.31 Probable 6,448,000 1. 84 4.40 1.79 28.49 Lalor – Base Metal Proven 57,000 0.48 12.40 0.63 15.52 Probable 13,147,000 0.67 8.15 1.59 23.62 Lalor – Gold Zone Probab
Slide 42: Manitoba Mineral Resources
Manitoba Mineral Resources As at September 30, 2012 Category Tonnes Cu (%) Zn (%) Au (g/t) Ag (g/t) 7771 Inferred 782,000 1.06 4.43 1.75 31.15 Lalor – Base Metal Inferred 3,191,000 0.62 8.83 1.24 23.07 Lalor – Gold Zone Inferred 7,338,000 0.41 0.32 4.63 31.32 Lalor – Copper Gold Zone Inferred 1,461,
Slide 43: Reed Copper Project
Reed Copper Project1 Mineral Reserves as at March 30, 2012 Mineral Resources as at March 15, 2011 Category Tonnes Cu (%) Zn (%) Au (g/t) Ag (g/t) Probable 2,157,000 3.83 0.59 0.48 6.02 Inferred 170,000 4.26 0.52 0.38 4.55 1 Hudbay holds a 70% joint venture interest in the Reed copper project INVESTO
Slide 44: Other Properties
Other Properties Mineral Resources Category Tonnes Cu (%) Zn (%) Au (g/t) Ag (g/t) Pb (%) Back Forty1 Open Pit Measured 4,721,000 0.55 3.49 2.24 26.77 0.13 Indicated 4,927,000 0.14 1.49 1.90 18.30 0.21 Inferred 152,000 0.19 2.86 2.76 34.56 0.39 Back Forty Underground Measured 1,982,000 0.29 5.04 1.9
Slide 45: Copper Equivalent Reserves and Resources
Copper Equivalent Reserves and Resources All Metals Project Category Cu Equivalent (000 tonnes) 2013 2012 Change Constancia Proven & Probable 1,886 1,911 (25) Measured & Indicated 1,329 - 1,329 Inferred 566 75 491 Pampacancha Proven & Probable 377 - 377 Measured & Indicated - 381 (381) Inferred 27 -
Slide 46: Precious Metal Equivalent Reserves and Resources
Precious Metal Equivalent Reserves and Resources1 Project Category Au Equivalent (000 ounces) 2013 2012 Change Constancia2 Proven & Probable 1,385 1,389 (4) Measured & Indicated 1,132 - 1,132 Inferred 477 77 400 Pampacancha Proven & Probable 566 - 566 Measured & Indicated - 635 (635) Inferred 43 - 4
Slide 47: Additional Information
Additional Information The reserve and resource estimates included in this presentation were prepared in accordance with NI 43-101 and the Canadian Institute on Mining, Metallurgy and Petroleum Standards on Mineral Resources and Reserves: Definitions and Guidelines. All mineral resources referred to
Slide 48: Peru
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 filed on SEDAR by Hudbay on
Slide 49: Reed
Reed The weighted average (based on planned production tonnage) used in the Reed pre-feasibility study for mineral reserve estimation for copper was US$2.95 per pound, the gold price was US$1,269.09 per ounce and the silver price was US$24.78 per ounce using an exchange rate of 1.034 C$/US$. Other P
Slide 50: Qualified Person
Qualified Person The technical and scientific information in this presentation related to the Constancia project has been approved by Cashel Meagher, P. Geo, Hudbay’s Vice-President, South America Business Unit. The technical and scientific information related to all other sites and projects contain
Slide 51: For more information contact
Constancia main plant site For more information contact: John Vincic, VP of Investor Relations and Corporate Communications Tel: 416.362.0615 Email: john.vincic@hudbayminerals.com HBM
Hudbay Minerals — Investor Presentation (December 2013) on 6ix