Hudbay Minerals Inc · TSX:HBM
Hudbay Minerals — Bank of America Merrill Lynch 2016 Global Metals, Mining & Steel Conference
39 slides from Hudbay Minerals's conference presentation, June 2016
Slide 1: Investor Presentation | June 2016
INVESTOR PRESENTATION | JUNE 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$1.2 billion ! Over 300% y/y growth in Cu sales volumes Shares Outstanding 235 million ! Copper cash costs $1.14/lb4 Available Liquidity2
Slide 6: Long-Life, Low-Cost Asset Base
Long-Life, Low-Cost Asset Base Business Unit Asset Location Primary Metal Mine Life South America Constancia Mine Southern Peru Cu 21 years Production Lalor Mine Snow Lake Zn, Au 15 years Manitoba 777 Mine Flin Flon Cu, Zn 5 years Reed Mine Near Flin Flon Cu 3 years Growth Arizona Rosemont Project P
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) 3 3 3 Manitoba Business Unit South America Business Unit 2015 Guidance Range 1. Represents production growth from 2014 actual production to mid-point of
Slide 8: South America Business Unit
South America Business Unit Cusco CUSCO APURIMAC Las Bambas CONSTANCIA PUNO Yauri Tintaya Antapaccay Constancia Pit 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: South America Q1 2016 Results
South America Q1 2016 Results Peru Summary Operating Statistics ! Trunnion replacement completed ahead Q1 2016 Q4 2015 of schedule without incident in March; Ore mined (million tonnes) 6.8 8.2 both lines now at full capacity Ore milled (million tonnes) 6.2 7.4 Copper grade milled 0.57% 0.63% ! Ore m
Slide 10: Constancia Mine
Constancia Mine OPERATING ABOVE DESIGN CAPACITY LTM1 Avg. LOM2 Ownership 100% ! Low-cost, long-life copper mine began Daily ore throughput 75k tpd 80k tpd production at end of 2014 Annual Cu production3 131kt 82kt Cash cost per lb Cu4 $1.16/lb $1.25/lb ! Focus on further enhancement of costs Unit op
Slide 11: Manitoba Business Unit
Manitoba Business Unit Aerial View of Lalor Mine Site New Britannia 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 PRESE
Slide 12: Manitoba Q1 2016 Results
Manitoba Q1 2016 Results Manitoba Summary Operating Statistics ! Ore mined grew by 12% because of Q1 2016 Q1 2015 increased production at Lalor and 777, Ore mined (kt) 731 652 compared to Q1 2015 Ore milled (kt) 686 639 Copper grade milled 1.57% 1.89% ! Grades were generally in-line with Zinc grade
Slide 13: Lalor Mine
Lalor Mine GOLD UPSIDE POTENTIAL LTM1 Avg. LOM2 Ownership 100% ! Main production shaft operating at a Daily ore throughput 2,750 tpd 3,300 tpd steady state Annual Zn production3 71kt 67kt ! Upgraded Snow Lake concentrator with Annual Au-Eq. production3 51koz 50koz production capacity of 3,000 tonnes
Slide 14: 777 and Reed Mines
777 and Reed Mines STEADY, LOW-COST PRODUCTION 777 & Reed Combined LTM1 Avg. LOM1 Ownership 100% / 70%2 ! Optimizing operations to end of mine life Daily ore throughput 4,500 tpd 4,500 tpd ! Plan to keep processing assets on care Annual Cu production3 35kt 31kt and maintenance after mine closures to
Slide 15: Arizona Business Unit
Arizona Business Unit Tucson Three Points Mission Complex Rosemont Project Site 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 | 15
Slide 16: Rosemont Project
Rosemont Project 80%-OWNED1 COPPER PROJECT ! High-quality development project with well-established infrastructure ! Permitting and community engagement progressing ! $30 million expected to be spent during the full year of 2016 to advance permitting and engineering studies ! Expected to be one of t
Slide 17: 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 18: Liquidity
Liquidity ! Liquidity expected to increase with free cash flow from operations, savings from ongoing cost reduction initiatives, and Peruvian sales tax refunds March 31, 2016 $ Millions Available Liquidity $190 Amount Maintenance Debt Maturity Drawn Covenants Senior Unsecured Notes $920 Oct. 2020 No
Slide 19: 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 20: Uniquely Positioned
Uniquely Positioned ! Downside protection with low-cost assets in low-risk jurisdictions ! Strong leverage to eventual copper price recovery ! Best-in-class growth potential § Lalor gold § Pampacancha § Rosemont INVESTOR PRESENTATION | 20
Slide 21: Appendix
Appendix INVESTOR PRESENTATION | 21
Slide 22: 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 | 22
Slide 23: Copper & Zinc By-Product Cost Curves
Copper & Zinc By-Product Cost Curves 2015 COST CURVES1 Source: Wood Mackenzie 1. Wood Mackenzie Cu and Zn normal mine site C1 cost curves for 2015. Constancia, 777, Lalor and Reed costs for 2015 are sourced from Wood Mackenzie with Constancia and 777 costs adjusted for precious metals stream transac
Slide 24: Global Refined Metal Market Balance
Global Refined Metal Market Balance ! Copper market in balance and zinc market in deficit over the next few years ! Copper market into growing supply deficits in 2019 and beyond Source: Wood Mackenzie, Global Copper Long-Term Outlook Q1 2016 dated March 24, 2016, Global Zinc Long-Term Outlook Q1 201
Slide 25: 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 Legend Base metal zone Gold zone 1500m Copper-gold zone High-grade intercepts 500 m INVESTOR PRESENTATION | 25
Slide 26: 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 27: 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 - $0.46/lb 1. Forecast unit operating costs are calculated on the same basis as reported unit operating costs in Hud
Slide 28: 2016 Capital Expenditure Guidance
2016 Capital Expenditure Guidance1 2015 Actual 2015 Guidance 2016 Guidance2 ($ Millions) ($ Millions) ($ Millions) Manitoba sustaining capital 73 127 80 Peru sustaining capital3 184 164 140 Total sustaining capital 256 291 220 Arizona other capitalized costs 49 55 30 Peru other capitalized costs 99
Slide 29: 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 | 29
Slide 30: 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 20162 Remaining Life of Mine 777 Silver 100% Silver 100% Gold 100% Gold 50% Remaining Life of Mine Cons
Slide 31: Peru Mineral Reserves
Peru Mineral Reserves AS AT JANUARY 1, 2015 Constancia Mineral Reserves Category Tonnes Cu (%) Mo (g/t) Au (g/t) Ag (g/t) Proven 477,000,000 0.30 94 0.038 2.91 Probable 94,000,000 0.22 61 0.036 2.77 Pampacancha Mineral Reserves Category Tonnes Cu (%) Mo (g/t) Au (g/t) Ag (g/t) Proven 23,000,000 0.52
Slide 32: Peru Mineral Resources
Peru Mineral Resources AS AT SEPTEMBER 30, 2015 Constancia Mineral Resources Category Tonnes Cu (%) Mo (g/t) Au (g/t) Ag (g/t) Measured 68,000,000 0.22 59 0.036 2.17 Indicated 293,000,000 0.20 58 0.033 1.96 Inferred 200,000,000 0.19 51 0.031 1.86 Pampacancha Mineral Resources Category Tonnes Cu (%)
Slide 33: Manitoba Mineral Reserves
Manitoba Mineral Reserves AS AT JANUARY 1, 2016 Category Tonnes Cu (%) Zn (%) Au (g/t) Ag (g/t) 7771 Proven 3,316,000 1.80 4.85 1.79 26.71 Probable 2,986,000 1.50 4.79 1.97 27.80 Lalor – Base Metal Proven 5,143,000 0.75 7.42 1.94 25.11 Probable 7,828,000 0.82 6.06 2.18 25.33 Lalor – Gold Zone Proven
Slide 34: Manitoba Mineral Resources
Manitoba Mineral Resources AS AT SEPTEMBER 30, 2015 Category Tonnes Cu (%) Zn (%) Au (g/t) Ag (g/t) 7771 Indicated 728,000 0.99 3.51 1.83 26.28 Inferred 683,000 1.02 4.71 1.76 32.63 Lalor – Base Metal Inferred 3,300,000 1.35 6.06 2.87 26.59 Lalor – Gold Zone Measured2 56,000 0.17 0.50 4.52 18.49 Ind
Slide 35: Copper Equivalent Reserves and Resources
Copper Equivalent Reserves and Resources1 ALL METALS Project Category Cu Equivalent (000 tonnes) 2016 2015 YoY Change Constancia2 Proven & Probable 2,405 2,552 (147) Measured & Indicated 989 1,004 (15) Inferred 477 484 (7) Lalor Proven & Probable 644 597 47 Measured & Indicated 38 - 38 Inferred 307
Slide 36: 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 37: Additional Information
Additional Information Peru ! A complete estimate update of the mineral reserves at Constancia was not conducted in 2015. Constancia proven reserves were depleted due to production in 2015 and gains were included based on mining and drilling in the upper portion of the deposit. ! The Constancia and
Slide 38: Rosemont Historical Reserves & Resources
Rosemont Historical Reserves & Resources1 Historical Mineral Reserves as at July 24, 2012 Category Tonnes Cu (%) Mo (%) Ag (g/t) Proven 279,481,000 0.46 0.015 4.11 Probable 325,798,000 0.42 0.014 4.11 Total Historical Reserves 605,279,000 0.44 0.015 4.11 Historical Mineral Resources as at July 17, 2
Slide 39: For more information contact
For more information contact: Candace Brûlé, Director, Investor Relations 416.814.4387 | candace.brule@hudbayminerals.com
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