Hudbay Minerals Inc · TSX:HBM
Hudbay Minerals — Scotiabank Mining Conference 2015
37 slides from Hudbay Minerals's conference presentation, December 2015
Slide 1: Investor Presentation
Investor Presentation December 2015 HBM INVESTOR PRESENTATION
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 Vice President, South America Business Unit. The technical and scientific information related to all other sites and p
Slide 5: About Hudbay
About Hudbay Clear growth strategy TSX, NYSE, BVL Symbol HBM Investment-grade countries in the Americas Market Capitalization1 C$1.4 billion VMS and porphyry geological focus Shares Outstanding 235 million Exploration through junior partners; mine construction Committed Liquidity2 $0.3 billion and e
Slide 6: Recent Achievements and Challenges
Recent Achievements and Challenges ACHIEVED OUR GROWTH OBJECTIVES Lalor • On track for 4x increase y/y in copper production to 140,000-175,000 tonnes in 2015 777 • Trucking challenges in Peru slowed metals sales in Q3/15; on track to sell most of surplus metals Production production in Q4/15 Reed •
Slide 7: Near-Term Production Growth
Near-Term Production Growth1 OPPORTUNITY FOR A RE-RATE IS SIGNIFICANT AS WE DELIVER GROWTH 320% 145% 50% INCREASE IN CU PRODUCTION INCREASE IN AU-EQ. PRODUCTION2 INCREASE IN ZN PRODUCTION (kt) (koz) (kt) 200 250 150 200 150 100 150 100 100 50 50 50 - 3 - - 3 3 2014A 2015G 2016E 2014A 2015G 2016E 201
Slide 8: Constancia Project
Constancia Project IN PRODUCTION Reached commercial Life of Mine1 production on April 30, 2015 Ownership 100% Daily ore throughput 80k tpd Avg. annual Cu production2 82k tonnes Ocean shipments of copper concentrate began in April Cash cost per lb Cu3 US$1.25/lb Mine and mill unit cost4 US$7.48/tonne
Slide 9: Constancia Update
Constancia Update IN PRODUCTION Focus on optimization of mine costs and plant performance Copper recoveries plateaued at 80% due to oxide content YTD combined unit operating costs $8.30/tonne, below guidance range of $9.00-$10.90/tonne Constancia pit Significant increase in trucking capacity and dra
Slide 10: Lalor Mine
Lalor Mine OPERATING AT STEADY STATE Life of Mine1 Main production shaft complete and Ownership 100% operating at a steady state; capacity of Daily ore throughput 3,300 tpd 6,000 tonnes per day (ore + waste) Avg. annual Zn production2 59k tonnes Avg. annual Au-Eq. production2 43k ounces Avg. annual
Slide 11: Lalor Exploration
Lalor Exploration UNDERGROUND EXPLORATION PROGRAM UNDERWAY Phase 1 – underground drilling Lalor Cross-Section1 with Exploration Ramp, Looking West supports surface drill results 14-hole 4,500-metre program 0m confirmed high grade Cu-Au Production mineralization Shaft In process of upgrading the reso
Slide 12: 777 Mine
777 Mine STEADY, LOW-COST PRODUCTION Life of Mine1 Mature mine with steady cost performance Ownership 100% Strike action concluded in August 2015 Daily ore throughput 4,500 tpd Avg. Annual Cu production2 25k tonnes Avg. Annual Zn production2 51k tonnes Cash cost per lb Cu3 $(0.52)/lb Mine and mill u
Slide 13: Reed Mine
Reed Mine IN PRODUCTION Life of Mine1 Ownership 70% Achieved commercial production ahead of Daily ore throughput 1,300 tpd guidance and under budget Avg. annual Cu production2 15k tonnes Cash cost per lb Cu3 $1.64/lb Mine and mill unit cost4 $90/tonne Avg. annual sustaining capital $10 million Mine
Slide 14: Rosemont Project
Rosemont Project 80%-OWNED1 COPPER PROJECT IN ARIZONA, USA Hudbay acquired control of Rosemont project in July 2014 Completed 43 hole confirmatory drill program with approximately 30,000 metres drilled Metallurgical test program and detailed engineering underway Permitting and community engagement p
Slide 15: Global Positioning on 2019E Copper Production and Costs
Net Cash Costs (US$/lb Cu) Copper Production (bn lbs) 0.0 1.0 2.0 3.0 4.0 $0.00 $2.50 $5.00 ($7.50) ($5.00) ($2.50) Norilsk Codelco Jinchuan Freeport Boliden Glencore Vale BHP Hudbay (2019) Southern Cu Hudbay (2019) PF First Quantum Hudbay (2014) Rio Tinto Newcrest KGHM UGMK Antofagasta FIRST QUARTI
Slide 16: High Quality Copper Growth Story
High Quality Copper Growth Story Best in class copper production growth, cash costs and political risk profile Clear, consistent criteria for growth Leveraging proven abilities in mine development and operation Generating free cash flow to contribute to funding next phase of growth at Rosemont INVES
Slide 17: Appendix
Appendix INVESTOR PRESENTATION 17
Slide 18: Appendix Contents
Appendix Contents By-product copper and zinc cost curves Global refined metal market balance Growth of mineral deposits 2015 guidance Precious metals stream Reserves and resources INVESTOR PRESENTATION 18
Slide 19: Copper & Zinc By-Product Cost Curves
Copper & Zinc By-Product Cost Curves1 Source: Wood Mackenzie (2014 cost curves) 1. By-product costs calculated using Wood Mackenzie’s by-product costing methodology, which is materially different from the by-product costs reported by Hudbay in its public disclosure 2 .777 and Constancia by-product c
Slide 20: Global Refined Metal Market Balance
Global Refined Metal Market Balance Source: CRU, Copper Market Outlook and Zinc Market Outlook, July 2015 By 2019, both copper and zinc refined metal markets are expected to be in significant deficit INVESTOR PRESENTATION 20
Slide 21: Growth of Mineral Deposits
Growth of Mineral Deposits DISCOVERIES IN THE GREENSTONE BELT ∕∕ 62.5 Initial resource Added resource Lalor initial reserve 10.5 million tonnes Lalor added reserve 0 5 10 15 20 25 30 Tonnes (millions) INVESTOR PRESENTATION 21
Slide 22: 2015 Production and Unit Cost Guidance
2015 Production and Unit Cost Guidance Contained Metal in Concentrate1 2015 Guidance 2014 Production 2014 Guidance Manitoba2 Copper Tonnes 40,000 – 50,000 37,644 36,000 – 45,000 Zinc Tonnes 95,000 – 120,000 82,542 87,000 – 105,000 Precious Metals3 Ounces 85,000 – 105,000 85,703 99,000 – 120,000 Comb
Slide 23: 2015 Production and Unit Cost Guidance
2015 Production and Unit Cost Guidance Flin Flon Zinc Plant Zinc Concentrate Treated 190,000 – 235,000 tonnes Zinc Metal Produced 95,000 – 120,000 tonnes Unit Operating Costs1 C$0.31 - $0.38/lb 1. Forecast unit operating costs are calculated on the same basis as reported unit operating costs in Hudb
Slide 24: 2015 Capital Expenditure Budget
2015 Capital Expenditure Budget1 $ Millions Sustaining Capital Manitoba 127 Peru 164 Total Sustaining Capital 291 Growth Capital Arizona 55 Peru 9 Total Growth Capital 64 Capitalized Exploration 32 Total Capital Expenditure 386 1. Excludes pre-production revenue, capitalized interest and capitalized
Slide 25: 2015 Exploration Budget
2015 Exploration Budget $ Millions Manitoba 18 Peru 5 Arizona 9 Generative and Other 18 Total Exploration Expenditures 50 Capitalized Spending1 (32) Total Exploration Expense 18 1. Assumes $18 million allocated to “Generative and Other” will be capitalized Note: totals may not add up correctly due t
Slide 26: Precious Metals Stream Overview
Precious Metals Stream Overview Payments to Hudbay from Silver Wheaton Production payments 1 Upfront payment plus US$5.90/oz Silver US$885 million US$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
Slide 27: Peru Mineral Reserves
Peru Mineral Reserves As at January 1, 2014 Constancia Mineral Reserves Category Ore (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 Ore (M tonnes) Cu (%) Mo (g/t) Au (g/t) Ag (g/t) Proven 23 0.52 142 0.2
Slide 28: 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
Slide 29: 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 Metal 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 Prove
Slide 30: 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 31: Copper Equivalent Reserves and Resources
Copper Equivalent Reserves and Resources1 All Metals Project Category Cu Equivalent (000 tonnes) 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 32: Precious Metal Equivalent Reserves and Resources
Precious Metal Equivalent Reserves and Resources1 Project Category Au Equivalent (000 ounces) Year-over-Year Change Due to 2015 2014 Change Price Deck Constancia2 Proven & Probable 2,138 2,341 (203) (203) Measured & Indicated 889 972 (83) (83) Inferred 401 441 (40) (40) Lalor Proven & Probable 1,330
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 Resourc
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 file
Slide 35: Rosemont Historical Reserves and Resources
Rosemont Historical Reserves and 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 Resources as at July 17, 2012 Category M (tonnes) Cu (%) Mo (%) Ag (g/t) Inferred
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 US$4.90 per ton. NSR values are bas
Slide 37: For more information contact
For more information contact: Jacqueline Allison Director, Investor Relations Tel: 416.814.4387 Email: jacqueline.allison@hudbayminerals.com HBM INVESTOR PRESENTATION