Hudbay Minerals Inc · TSX:HBM
Hudbay Minerals — 21st Annual BMO Capital Markets Global Metals & Mining Conference 2012
52 slides from Hudbay Minerals's conference presentation, February 2012
Slide 1: 21st Annual BMO Capital Markets Global Metals & Mining Conference
HBM 21st Annual BMO Capital Markets Global Metals & Mining Conference February 26 – 29, 2012 Creating Sustainable Value through High Quality Long Life Deposits
Slide 2: Forward Looking Information
Forward Looking Information This presentation contains "forward-looking information" within the meaning of applicable securities laws. Forward-looking information includes but is not limited to information concerning the company’s ability to develop its Lalor project, capital and operating cost assu
Slide 3: Lalor Project Disclaimer
Lalor Project Disclaimer Hudbay's production decision with respect to Lalor was not based on the results of a pre-feasibility study or feasibility study of mineral resources demonstrating economic or technical viability, because significant portions of the deposit are not able to be classified as a
Slide 4: Investment Highlights
Investment Highlights Transformation to mid-tier leader underway with development of long-life, low cost mines Growth in Copper, Gold and Zinc Production 1 with Exploration Upside Consistent Performance from 2 Reliable Operations 3 Executing Disciplined and Clear Growth Strategy 4 Strong Financial P
Slide 5: Focused on the Americas
Focused on the Americas 1 2 1 777 (MANITOBA) 3 2 Lalor (MANITOBA) 3 Reed (MANITOBA) 4 Constancia (PERU) 4 Exploration Properties Producing/Development Properties 5
Slide 6: Steady Production with Low Cash Costs
Steady Production with Low Cash Costs Consistent track record of meeting production targets Nine Months Ended Sept 30 GUIDANCE(1) GUIDANCE(1) 2011 2011 2012 Copper 1 tonnes 40,490 40-55,000 35-40,000 Zinc 1 tonnes 54,246 70-90,000 70-85,000 Precious Metals (1,2) troy oz. 82,456 95-120,000 85-105,000
Slide 7: Leading Production Growth
Leading Production Growth Further copper growth expected from optimized Constancia mine plan 255% GROWTH 135% GROWTH 65% GROWTH (1) Cu Production Precious Metals Production Zn Production (kt) (koz) (kt) HudBay - Current Ops (2) Lalor (3) Constancia (4) Reed (5) (1) Silver converted to gold at a rati
Slide 8: Delivering Leverage Through Reserve Growth
Delivering Leverage Through Reserve Growth Pending 2012 resource update expected to show more growth (000 tonnes Cu equivalent) (Cu equivalent lbs per share) 1550 19.8 713 9.1 18.4 1286 3071 39.2 1121 16.1 791 11.3 (1,3) (2,3) Proven & Probable Measured & Indicated Inferred (1) HudBay reserves and r
Slide 9: Flin Flon Greenstone Belt
Flin Flon Greenstone Belt Infrastructure and exploration still delivering opportunities Snow Lake Ore Concentrator Lalor Snow Project Lake 777 Mine Flin Flon Flin Flon Ore Concentrator Reed Zinc plant Lake Hwy Amisk #39 Lake Reed Copper Project N Hwy 25 km #10 9
Slide 10: 777 Mine
777 Mine Low cost producer with track record of reserve replacement Ownership 100% Life of Mine 9 years Annual Sustaining $22 million CAPEX1 Annual Ore 1.55 million Production (tonnes)2 Mining $38-$42 Costs/tonne ore2 Milling $12-$15 Costs/tonne ore2 2012 Production Forecast3 Cu tonnes 33,200 Zn ton
Slide 11: 777 Shaft
777 Mine Underground exploration potential continues to be tested 777 Shaft 530m level 840m level Metres 0 100 200 300 Mined areas 1412m level Resources to be mined Exploration Target Areas 11
Slide 12: Lalor
Lalor Initial production expected by mid-2012 Ownership 100% Projected Life of Mine 20 years Construction CAPEX $704 million (2010-2014) Annual Sustaining $22 million CAPEX 2012 Ore 86,000 Production (tonnes)(1) Full Daily Ore 4,500 Production Rate (tonnes)(2) LOM Mining Costs/tonne ore $36 LOM Mill
Slide 13: Lalor
Lalor Underground drilling has begun Surface 0m 500m Vent Raise Production Shaft 750m H1/2012 H2/2012 2013 - 2014 2015 Exploration Platform 1000m 1250m Base Metal Resource Gold Inferred Resource Gold Potential Mineral High Grade Intercepts Outside Looking N70oW 250m Known Resource 0m 1500m 13
Slide 14: Reed Copper Project
Reed Copper Project Initial production expected by late 2013; Construction underway Ownership(1) 70% Projected Life of Mine 5 years Annual Sustaining CAPEX $11 million Construction CAPEX $71 million (2012-2013) Approximate daily ore 1,300 production (tonnes)(2) Mining Costs/tonne ore $67 Milling Cos
Slide 15: Constancia Project – Strategic Location
Constancia Project – Strategic Location Creating new mining district within an established region ESTABLISHED MINING DISTRICT Cusco Xstrata – Las Bambas First Quantum – Haquira Trujillo CUSCO DEPT. Pan Pacific – Quechua Lima Cusco AREQUIPA DEPT. Constancia Xstrata – Antapaccay Tintaya Mine Arequipa
Slide 16: Constancia
Constancia(1) Project update expected in late Q1 2012 Ownership 100% Life of Mine 15 years Avg. Annual Cu Prod. 85,000 (tonnes) Concentrator Capacity 70,000 tpd By-Products Mo, Ag, Au (1) Based on NI 43-101 technical report titled, “Constancia Project Technical Report”, dated February 21, 2011 avail
Slide 17: Constancia Exploration Program
Constancia Exploration Program Drilling confirms continuity of copper mineralization North 2012 Drill Targets • Initial Pampacancha resource expected by end of Q1 2012 Constancia Main • 22,000 hectare land position Pampacancha Skarn Target Cu-Au Sulphides • Initial drill targets for Chilloroya Skarn
Slide 18: Continued Aggressive Exploration
Continued Aggressive Exploration Historic Discovery Cost of 6.4 cents per Cu Equivalent Pound(1) TOTAL INVESTMENT IN 2012 EXPLORATION $54 Million Manitoba $31 Million Exploring near active and historical mining areas and grassroots projects South America $13 million Targets in Chile, Colombia and Pe
Slide 19: Solid Financial Position
Solid Financial Position Available liquidity of $1.1 billion with no debt Available Liquidity(1) $1.1 billion Long Term Debt 0 Shares Outstanding 171.9 million Annualized Dividend Yield(2) 1.7% ADDITIONAL DEBT FINANCING CAN MAXIMIZE FINANCIAL FLEXIBILITY (1) Includes cash of $900 million and undrawn
Slide 20: Expertise in 4 Stages of Mining Cycle
Expertise in 4 Stages of Mining Cycle EXPLORATION DEVELOPMENT Discovered Mines in Mines in Years Development PRODUCTION RECLAMATION is a Consistent Low Successfully Mines Cost Producer Reclaimed 20
Slide 21: Pipeline of Early Stage Opportunities
Pipeline of Early Stage Opportunities Best “farm system” amongst mid-tier producers • Minority equity positions in 17 exploration and development opportunities • Current value approximately $100 million OPPORTUNITY LOCATION STRATEGIC CONSIDERATION Augusta Resources Arizona Advanced stage copper porp
Slide 22: Stringent Criteria for Growth
Stringent Criteria for Growth Disciplined focus on per share metrics GEOGRAPHY Focus on Americas, mining favourable jurisdictions GEOLOGY VMS or porphyry deposits with exploration upside FINANCIAL Transaction size of no more than 20% of market capitalization OPERATIONAL Add value through technical e
Slide 23: Investment Highlights
Investment Highlights Transformation to mid-tier leader underway with development of long-life, low cost mines Growth in Copper, Gold and Zinc Production 1 with Exploration Upside Consistent Performance from 2 Reliable Operations 3 Executing Disciplined and Clear Growth Strategy 4 Strong Financial P
Slide 24: Appendix
APPENDIX 24
Slide 25: Appendix Contents
Appendix Contents • Cost Curves • 2012 Operating Guidance, Capital Expenditures and Exploration Spending Breakdown • Lalor Guidance, Mineralization and Plan Views • Constancia Project • Back Forty Deposit • Tom & Jason Deposit • South America Property • Early Stage Investments • Reserves & Resources
Slide 26: Gold Cost Curve
Gold Cost Curve 777 Mine 1 Lalor 1 Source: Brook Hunt (2011 cost curve) and HudBay estimates (777 Mine and Lalor) (1) Co-product cash costs calculated using Brook Hunt’s co-product costing methodology which is materially different from the co-product costs reported by HudBay in its public disclosure
Slide 27: Copper Cost Curve
Copper Cost Curve 777 Mine 1 Reed 4 Lalor 2 Constancia (LOM) 3 Source: Brook Hunt (777 Mine and 2011 cost curve) and HudBay estimates (Lalor, Reed) (1) Brook Hunt co-product cash costs. (2) Co-product cash costs calculated using Brook Hunt’s co-product costing methodology which is materially differe
Slide 28: Zinc Cost Curve
Zinc Cost Curve 777 Mine 1 Lalor 2 Source: Brook Hunt (777 Mine and 2011 cost curve) and HudBay estimates (Lalor, Reed) (1) Brook Hunt co-product cash costs. (2)Co-product cash costs calculated using Brook Hunt’s co-product costing methodology which is materially different from the co-product costs
Slide 29: 2012 Operating Guidance
2012 Operating Guidance Contained Metal in Domestic Concentrate Copper tonnes 35,000 – 40,000 Zinc tonnes 70,000 – 85,000 Precious Metals 2 ounces 95,000 – 120,000 777 Trout Lake Chisel North Lalor1 Ore Mined tonnes 1,553,000 230,000 165,000 86,000 Grades Copper % 2.3 1.8 0.72 0.4 Zinc % 4.3 2.3 5.0
Slide 30: 2012 Operating Guidance – Zinc Plant
2012 Operating Guidance – Zinc Plant GUIDANCE Flin Flon Zinc Plant 2012 Zinc concentrate treated Domestic tonnes 164,000 Purchased tonnes 56,000 TOTAL tonnes 220,000 Recovery % 97 Zinc Produced tonnes 113,000 1 Unit Operating Costs C$/lb $0.32 - 0.37 (1) Forecast unit operating costs are calculated
Slide 31: 2012 Capital Expenditures
2012 Capital Expenditures • Committed to $296 million in capital expenditures to grow production profile GUIDANCE GUIDANCE (figures in C$ millions) 2011 2012 Growth Lalor 140 147 Constancia 45 107(1) Back Forty - 2 Reed - 34 777 North 8 6 Total Growth Capital 193 296 Sustaining 101 95 TOTAL CAPITAL
Slide 32: 2012 Exploration Expenditures
2012 Exploration Expenditures (figures in C$ millions) TOTAL Manitoba 31 South America 13 Other North America 10 Total Exploration Expenditures 54 Manitoba Capitalized Spending (5) TOTAL EXPLORATION EXPENSES $49 32
Slide 33: Lalor Project Guidance
Lalor Project Guidance • CAPEX for new concentrator (including paste backfill plant) estimated at $263 million 2011 – Q4 $40 million • $120 million estimate in August 2010 for Snow Lake concentrator 2012 $153 million refurbishment • Incremental investment of $144 2013 $200 million million brings tot
Slide 34: Lalor Mineralization
Lalor Mineralization Tonnes Au Ag Cu Zn (millions) (g/t) (g/t) (%) (%) Reserves Proven - - - - - Probable 10.5 1.55 21.0 0.64 8.31 Base Metal Zone Mineral Resource Indicated 2.6 1.0 27.1 0.29 5.72 Inferred 4.8 1.3 26.2 0.58 9.25 Gold Zone Inferred Mineral Resource Inferred 5.4 4.7 30.6 0.47 0.46 Pot
Slide 35: Lalor Project
Lalor Project Down plunge exploration potential 35
Slide 36: Benefits of Project Optimization
Benefits of Project Optimization1 Optimized Lalor Lalor – Aug. 4, 2010 Construction CAPEX C$ 704M C$ 560M Annual Sustaining C$ 22M C $15M CAPEX Production Rate 4,500 tpd 3,500 tpd Mining Costs $36 per tonne $56 per tonne Milling Costs $16 per tonne $24 per tonne 95% Zn 95% Zn 86% Cu 90% Cu Metallurg
Slide 37: Constancia NI 43-101 Mineral Reserves
Constancia NI 43-101 Mineral Reserves GRADE CONTAINED Mt Cu (%) Mo (g/t) Ag (g/t) Au (g/t) Cu (mlb) Mo (mlb) Ag (koz) Au (koz) Reserves Proven 195 0.42 117 3.49 0.04 1,806 50 21,880 251 Probable 177 0.37 92 3.66 0.05 1,444 36 20,828 285 Total 372 0.39 105 3.57 0.05 3,250 86 42,708 536 Source: NI 43-
Slide 38: Updated Peru Tax and Royalty Scheme
Updated Peru Tax and Royalty Scheme • What has changed? • Old royalty: 1% – 3% sliding scale royalty on sales (NSR) is being eliminated • New royalty: 1% – 12% marginal rate sliding scale applied on operating profit (EBIT) • Equivalent to: 0% – 7.1% effective rate, depending on operating profit marg
Slide 39: Back Forty Project
Back Forty Project Exploration drilling continuing on near deposit geophysical anomalies • Permit application and economic assessment are ongoing OCT. 15, 2010 RESOURCE TABLE: • Engineering efforts focused on Combined Open Pit & Underground optimal size and scope of project Ownership 51% (65%1) M&I
Slide 40: The Back Forty Project – Mineral Resources October 15, 2010
The Back Forty Project – 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 16.2 1.58 19.00 0.18 2.36 Indicated Inferred 1.4 1.40 32.89 0.62 1.00 Undergroun
Slide 41: Yukon: Tom & Jason
Yukon: Tom & Jason Preliminary economic assessment in early 2012 • 2011 Exploration program TOM & JASON OVERVIEW complete Ownership 100% • Awaiting assay and metallurgical Life of Mine 7-18 years sampling results Production Rate TPD 2000-5000 Environmental Permitting 5-8 years • Deposits are relativ
Slide 42: Tom and Jason
Tom and Jason 5,000 metre drill program to upgrade resource • 100% owned, located in the Selwyn Basin • Deposits are relatively shallow from surface to 600m depth • Can be accessed via ramp YUKON TERRITORY Tom & Jason Properties MacTung NORTHWEST TERRITORIES Faro Selwyn Ross River Wolverine Whitehor
Slide 43: South America – Property Acquisition
South America – Property Acquisition Pacific Ocean • Focus on Chile, EL SALVADOR Cu EL SALVADOR CHANARAL Peru and Colombia MANTOS VERDES Cu • Compilation of COPIAPO geological data at CHILE CANDELARIA Cu San Antonio HUASCO VALLENAR • Regional Antofagasta DOS AMIGOS Cu SAN ANTONIO Exploration office
Slide 44: Estimated Mineral Reserves
Estimated Mineral Reserves1 January 1, 2011 Mine Tonnes Au (g/t) Ag (g/t) Cu (%) Zn (%) 777 Proven 4,516,000 2.27 29.38 2.87% 4.44% Probable 8,307,000 1.79 27.31 1.78% 4.24% TOTAL 12,823,000 1.96 28.04 2.16% 4.31% 777 NORTH Proven 81,000 1.61 26.52 0.68% 4.89% Probable 449,000 1.44 21.48 1.09% 3.31%
Slide 45: Other Mineral Resources
Other Mineral Resources GRADE CONTAINED t Cu (%) Zn (%) Ag (g/t) Au (g/t) Cu (mlb) Zn (mlb) Ag (koz) Au (koz) REED Measured - - - - - - - - - Indicated 2,550,000 4.52 0.91 7.86 0.64 254.1 51.2 644.4 52.5 M+I 2,550,000 4.52 0.91 7.86 0.64 254.1 51.2 644.4 52.5 Inferred 170,000 4.26 0.52 4.55 0.38 16.
Slide 46: 777 Mine
777 Mine Reserves and Resources1 2012 Prod. Forecast Proven Probable Tonnes (M) 4.5 8.3 1.55 Au (g/t) 2.27 1.79 1.9 Ag (g/t) 29.38 27.31 28.0 Cu (%) 2.87 1.78 2.3 Zn (%) 4.44 4.24 4.3 (1) Estimated Mineral Reserves and Resources – January 1, 2011 46
Slide 47: Lalor
Lalor Base Metal Zone Gold Zone Probable2 Indicated3 Inferred3 Inferred3 Tonnes (M) 10.5 2.6 4.8 5.4 Au (g/t) 1.6 1.0 1.3 4.7 Ag (g/t) 21.0 27.1 26.2 30.6 Cu (%) 0.64 0.29 0.58 0.47 Zn (%) 8.31 5.72 9.25 0.46 Conceptual Estimate1,3 Au Zone Cu/Au Zone Tonnes (M) 5.1 – 6.1 1.8 – 2.2 Au (g/t) 4.3 – 5.1
Slide 48: Constancia
Constancia Reserves Proven Probable Tonnes (M) 195.0 177.0 Au (g/t) 0.42 0.37 Ag (g/t) 117 92 Cu (%) 3.49 3.66 Zn (%) 0.04 0.05 (1) Based on NI 43-101 technical report titled, “Constancia Project Technical Report”, dated February 21, 2011 available under Norsemont’s profile at www.sedar.com. 48
Slide 49: Reed Copper Project
Reed Copper Project Resources 2011 Resources Indicated Inferred Tonnes (M) 2.55 0.17 Au (g/t) 4.52 4.26 Ag (g/t) 0.91 0.52 Cu (%) 7.86 4.55 Zn (%) 0.64 0.38 49
Slide 50: Reserves and Resources
Reserves and Resources • To estimate mineral reserves, measured and indicated mineral resources were first estimated by 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 of data
Slide 51: Reserves and Resources
Reserves and Resources • Robert Carter, P.Eng., Manager, Project Evaluation of HudBay Minerals Inc. is the Qualified Person accountable for the supervision of the technical information contained within this presentation as defined by NI 43-101 • Greg Greenough, P.Geo., a Senior Resource Geologist wi
Slide 52: For more information contact
HBM For more information contact: John Vincic, VP of Investor Relations and Corporate Communications Tel: 416.362.0615 Email: john.vincic@hudbayminerals.com
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