Hudbay Minerals Inc · TSX:HBM
Hudbay Minerals — Corporate Update (August 2012)
35 slides from Hudbay Minerals's corporate update, Aug 8, 2012
Slide 1: Constancia: The Right Jurisdiction, The Right Project, The Right Strategy
Constancia The Right Jurisdiction, The Right Project, The Right Strategy August 8, 2012
Slide 2: Forward-looking Information
F Forward-looking d l ki Information I f ti 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 pr
Slide 3: Note to U.S. Investors
N t tto U Note U.S. S IInvestors t 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 SEC Industry Guide 7. Under Securities and Exchange Commission (the “SEC
Slide 4: Constancia Highlights
C Constancia t i Highlights Hi hli ht > $1.5 billion investment in new Constancia copper mine > Full production accelerated to the second quarter of 2015 > Proven and probable reserves for Constancia and Pampacancha: • 450 million tonnes / Cu equivalent 0.49% • 16-year mine life / 90,000 t annual co
Slide 5: Constancia Key Metrics
C Constancia t i KKey M Metrics ti Project Costs Unit Life of Mine Mining Costs / tonne ore1 US$/t 2.97 Milling Cost / tonne ore US$/t 4.47 G&A Costs / tonne ore US$/t 1.11 Average Annual Sustaining CAPEX M US$ 40 Project Economics NPV of C$ FCF (@ 8% discount and LT Cu of $2.75/lbs) M C$ 571 IRR %
Slide 6: Financing Strategy
Fi Financing i StStrategy t 1. Financing strategy supports construction of three growth projects: • Constancia • Lalor • Reed 2. Streaming agreement benefits: • Access to non-dilutive capital • Represent small percentage of overall precious metals • Unlock value of precious metal production Constanc
Slide 7: Financing Overview
Fi Financing i O Overview i > US$750 million illi iin upfront f t deposit d it payments t from f Sil Silver Wh t for Wheaton f delivery of: • 100% of payable gold and silver from 777 mine until the end of 2016 • 50% of payable gold and 100% of payable silver thereafter for the remainder of life of m
Slide 8: Key Metals Growth
K M Key Metals t l Growth G th 420% GROWTH 125% GROWTH 1 35% GROWTH Cu Production Precious Metals Production Zn Production (kt) (koz) (kt) 200 220 120 200 175 180 150 160 90 125 140 120 100 60 100 75 80 60 50 30 40 25 20 0 0 0 2012E 2015E 2012E 2015E 2012E 2015E 2 3 4 5 HudBay - Current Ops Lalor Co
Slide 9: Constancia Project
C Constancia t i PProject j t Accelerating production schedule > Nine quarter construction schedule planned > Initial I iti l production d ti expected t d late l t 2014 2014; ffullll production d ti expected t d tto b begin i iin th the second quarter of 2015 > New p production schedule enabled by y
Slide 10: Production Profile
P d ti P Production Profile fil 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 p production expected p to average: g $ $0.66/lb of copper p
Slide 11: Constancia Project
C Constancia t i PProject j t > Unlevered IRR of 14.5% based on capital cost estimate > Net present value of $571 million, assuming a discount rate of 8.0% and $2 75/lb copper $2.75/lb Base Case1 Copper Prices +10%2 Copper Prices -10%2 L Long-Term T Copper C Price Pi US$2 75/lb US$2.75/lb US$3 03/lb
Slide 12: Constancia Project - Site Plan and Layout
C Constancia t i PProject j t - Site Sit Pl Plan and d Layout L t
Slide 13: Regional Infrastructure
R i Regional l IInfrastructure f t t > 83km access road from Yauri • To be upgraded for concentrate haulage > Tintaya power substation 70km away • Planned Pl d upgrade d tto 220 kV to t be b commissioned by Q3 2013 > Rail-head at Imata 150km away > Road upgrades pg for concentrate haulage g within p
Slide 14: Infrastructure - Port
I f t t Infrastructure – Port P t > 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 > Currently formalizing expansion p
Slide 15: Reserves Overview
R Reserves O Overview i Growth in Reserves Constancia Mineral Reserves – August 8, 2012 Category Ore (M tonnes) Cu (%) Mo (g/t) Ag (g/t) Au (g/t) CuEq1 (%) Proven 349 0.37 100 3.29 0.043 0.49 Probable 54 0.24 60 2.98 0.035 0.33 Total 403 0.35 96 3.25 0.042 0.47 Pampacancha Mineral Reserves – August
Slide 16: Resources Overview
R Resources O Overview i Exclusive of Reserves Constancia Mineral Resources1 - November 2, 2011 Category M (tonnes) Cu (%) Mo (g/t) Ag (g/t) Au (g/t) CuEq2 (%) Measured 119 0.23 62 2.3 0.038 0.31 Indicated 344 0.20 58 2.0 0.034 0.27 Total 463 0.21 59 2.0 0.035 0.28 Inferred 219 0.19 49 1.8 0.032 0.2
Slide 17: Project De-Risking with Experienced Partners
P j t De-Risking Project D Ri ki with ith E Experienced i dPPartners t Stracon GyM Relevant Experience > Currently operating in Peru • Toromocho > Experienced in mining and major earth works • El Brocal > Established labour force and operating p g team • Marcona > Experienced procurement and mainten
Slide 18: Project Contingency
P j t Contingency Project C ti Capital costs Area Base Cost Contingency & Growth Contingency & Growth Dollars % of Base $ $ millions $ millions Mining 145 12 8% Mine Equipment 151 2 1% Pl t Plant 340 57 17% Heavy Civil Works (TMF & reservoirs) 178 42 24% Other Infrastructure 117 21 18% Site Accommod
Slide 19: Capital Spending
C it l S Capital Spending di (in $ millions) Q2 – Q4 2012 391 2013 964 2014 100 Total future capital spending 1,455 Total spent p in Q Q1 and Q2 Q 2012 91 Total 1,546 Constancia Project > 19
Slide 20: Constancia Project Operating Progress
C Constancia t i Project P j t Operating Progress > Mine Mi plan: l • ~600 million tonnes of waste • 1.33 to 1 waste to ore stripping ratio Procurement: Mining Equipment • Hydraulic shovels, haul trucks, rotary drills, front end loader, crawlers, tractors and graders. Procurement: Milling Equipment
Slide 21: Simplified Flowsheet
Si lifi d Flowsheet Simplified Fl h t Constancia Project > 21
Slide 22: Constancia Exploration Potential
C Constancia t i EExploration l ti P Potential t ti l Early exploration success leads to expanded program
Slide 23: Constancia Project Milestones
C Constancia t i PProject j t Mil Milestones t 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 Construction Permit FEED Construction Camp Board Approval Power Line TMF and WRF Plant Procurement Commissioning First Ore Ramp Up Commercial Production Cons
Slide 24: Production Profile
P d ti P Production Profile fil > 777, Lalor, Constancia and Reed offer significant growth in copper and zinc > Production at Lalor imminent for summer of 2012 > 777 North to begin production in the Fall > Reed to begin production in Q3 2013 > Significant production upside potential remains at key d
Slide 25: Financing Strategy Consistent with Value Creation Focus
Financing Strategy S Consistent C with Value C Creation Focus Increasing commodity exposure on per share basis > New capital inflows are non-dilutive to Cu Eq/Share1 (lb Cu/sh) shareholders > Financing strategy supports focus on per share metrics 1Includes reserves and resources (all metals) as at A
Slide 26: Conclusion
C Conclusion l i The Right Jurisdiction Peru is an investment-grade, mining-friendly country. The second PERU largest copper and silver producer worldwide in 2011* Trujillo The Right Project Constancia is the optimal size and scale for C f Hudbay and does not Lima Cusco compromise other key corporat
Slide 27: Appendix
APPENDIX Applying 360 Expertise > 26
Slide 28: In-mine Manitoba mineral reserves
I In-mine i M Manitoba it b mineral i l reserves January 1, 2012 Category Tonnes Cu (%) Zn (%) Au (g/t) Ag (g/t) 7771 Proven 4,921,000 2.36 4.16 1.97 26.78 Probable 7,464,000 1.64 4.44 1.82 27.86 TROUT LAKE Proven 229,000 2.07 1.90 2.06 1.33 CHISEL NORTH-ZINC Proven 48,000 - 7.97 - - Probable 60,000
Slide 29: Manitoba mineral resources
M it b mineral Manitoba i l resources January 1, 2012 Category Tonnes Cu (%) Zn (%) Au (g/t) Ag (g/t) 7771 Inferred 1,183,000 1.43 5.47 1.96 39.17 Lost2 Indicated 411,000 1.80 6.10 1.00 20.00 Inferred 69,000 1.50 6.20 0.80 16.50 Total Indicated 411,000 1.80 6.10 1.00 20.00 Inferred 1,252,000 1.43 5.
Slide 30: Lalor project Reserves & resources
L l project Lalor j t Reserves & resources 1 Lalor project mineral reserves - March 29, 2012 Category Tonnes Cu (%) Zn (%) Au (g/t) Ag (g/t) Base metal Probable reserves 12,591,000 0.63 7.92 1.55 23.81 Gold zone Probable reserves 1,841,000 0.38 0.38 3.99 21.77 Total Reserves 14,432,000 0.60 6.96 1.8
Slide 31: Reed copper project
j t1 R d copper project Reed Minerall R Mi Reserves as att M March h 30 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 1Hudbay holds a 70% joint venture interest in the Reed p
Slide 32: Back Forty project
B k Forty Back F t project j t Mineral Resources October 15, 2010* Classification Tonnes (millions) Au (g/t) Ag (g/t) Cu (%) Zn (%) Open Pit † Measured 14.1 1.59 16.97 0.15 2.54 Indicated 2.1 1.53 32.80 0.41 1.17 Measured and Indicated 16.2 1.58 19.00 0.18 2.36 Inferred 1.4 1.40 32.89 0.62 1.00 Unde
Slide 33: Reserves and resources
R Reserves and d resources > To estimate mineral reserves, measured and indicated mineral resources were first f estimated in a 12-step process, which includes determination of the integrity and validation of the data collected, including confirmation of specific gravity, assay results and methods o
Slide 34: Reserves and resources
R Reserves and d resources > The technical and scientific f information f in this news release related to the Constancia C project has been approved by Cashel Meagher, P. Geo, Hudbay’s Vice-President, South America. The technical and scientific information related to all other sites and projects con
Slide 35: Constancia
Constancia The Right Jurisdiction, The Right Project, The Right Strategy For more information contact: J h Vincic, John Vi i VP of Investor Relations and Corporate Communications Tel: 416.362.0615 Email: john.vincic@hudbayminerals.com August 8, 2012