Hudbay Minerals Inc · TSX:HBM
Hudbay Minerals — Corporate Update (September 2015)
75 slides from Hudbay Minerals's corporate update, Sep 23, 2015
Slide 1: Constancia Mine Site Visit
Constancia Mine Site Visit September 2015 HBM CONSTANCIA 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 project has been approved by Cashel Meagher, P. Geo, Hudbay’s Vice President, South America Business Unit. Mr. Meagher is a qualified person pursuant to NI 43-101. For a descrip
Slide 5: Table of Contents
Table of Contents 1. Mine Overview 2. Mine Management 3. Mine Operations 4. Human Resources Staffing and Training 5. Corporate Affairs and Social Responsibility 6. Exploration 7. Risks 8. Appendix CONSTANCIA PRESENTATION 5
Slide 6: Mine Overview
Mine Overview 1 CONSTANCIA PRESENTATION 6
Slide 7: Safety Share
Safety Share 12 11 2 5 6 1 3 Ore Stock 4 7 Pile Primary 8 Crusher 9 10 Refuge stations for emergency and lightning events CONSTANCIA PRESENTATION 7
Slide 8: Safety Indicators
Safety Indicators August 2015 INC FREQ FA FREQ MA FREQ RWC FREQ LTA DAYS FREQ SEV MANHRS Hudbay Peru 4 10.2 2 5.1 1 2.5 0 0 0 0 0 0 78,532 Hudbay Peru Contractors 10 2.5 6 1.5 2 0.5 0 0 0 0 0 0 814,825 Total Hudbay Peru and Contractors 14 3.1 8 1.8 3 0.7 0 0 0 0 0 0 893,357 Year to Date INC FREQ FA
Slide 9: Environmental – New Waste Transfer Site
Environmental – New Waste Transfer Site 1. Metal transfer station 3. Storage of volatiles 4. Dangerous goods 3 4 5 1 2 Solid waste storage area 2. Wood storage 6. Office and change room 5. Non-dangerous waste CONSTANCIA PRESENTATION 9
Slide 10: Orientation for Site Visit
Orientation for Site Visit 2 1 3 4 AREA 4 TEMASEK PRESENTATION l 10 CONSTANCIA PRESENTATION 10
Slide 11: Constancia Timeline & History
Constancia Timeline & History Aug 2014 Powerline Jul 2011 Apr 2012 Aug 2013 energized Hudbay acquires Initial resource Aug 2012 Updated capital Constancia announced at Hudbay’s board cost estimate Apr 2014 Apr 2015 Nov 2010 higher grade approves indicates All critical Commercial ESIA permit Pampacan
Slide 12: Location & Infrastructure
Location & Infrastructure • 83 km access road from Yauri Upgraded for concentrate haulage post commissioning • Tintaya power substation 70 km away No material interruptions to power to date • Rail-head at Imata 150 km away Pursuing bi-modal transportation for long term solution • ~470 km from Matara
Slide 13: Mine Management
Mine Management 2 CONSTANCIA PRESENTATION 13
Slide 14: Operations Management
Operations Management Total Operations Head Count: 342 Other Operations Technical Process Logistics & HS Environmental Security Finance IT HR Functional Management Services Plant Administration Support Operations 8 45 158 8 11 3 41 19 4 11 34 Regional 0 0 0 0 0 0 0 2 0 0 7 Management Other 0 0 23 0
Slide 15: Mine Operations
Mine Operations 3 CONSTANCIA PRESENTATION 15
Slide 16: Key Project Metrics
Key Project Metrics • March 2014 reserve update incorporated an expected tailings facility expansion, allowing for conversion of a portion of the mineral resources into reserves, resulting in mine life extension to 22 years (from 16 years) Ownership 100% Mine life 22 years Life of mine daily ore thr
Slide 17: Production Profile
Production Profile • Higher copper production in years 1-5 due to higher grades • Low cash cost profile maintained over mine life Constancia Payable Cu Production and Cash Costs1 Payable Cu Cash Costs / lb Cu (net of by-product credits) Cash Cost/lb (net of by-product credits) (US$/lb) 2 300,000 $1.
Slide 18: Flow Sheet
Flow Sheet To be installed in 2017 Currently under commissioning CONSTANCIA PRESENTATION 18
Slide 19: Concentrate Transport
Concentrate Transport • Route from Constancia to Matarani is ~470 km • Potential for bimodal transportation in long-term Rail head located 150km away at Imata Condorama TEMASEK PRESENTATION l 19 CONSTANCIA PRESENTATION 19
Slide 20: Concentrate Inventory and Trucking Capacity
Concentrate Inventory and Trucking Capacity Concentrate Inventory (Sept. 19, 2015) (000 tonnes) Inventory Designed Storage Capacity Normal Level Mine 65 9 5-7 Port 15 25 15 Trucking Fleet Buildup (~Month-End) Fleet Size Trucks per Day (30 t) Trucking Capacity (tpd) July 130 41 1,230 August 133 41 1,
Slide 21: Logistics – Copper Concentrate Trucking
Logistics – Copper Concentrate Trucking CHALLENGES • Plant performance outpacing transportation of concentrate Current concentrate stockpile at site ~65,000 tonnes • Road closure Imata-Condorama Government is upgrading road from Imata to Condorama with asphalt Current road work causes some of our fl
Slide 22: Mitigation of Concentrate Trucking
Mitigation of Concentrate Trucking • Short term Adding extra trucks each week with different contractors Negotiated longer window of travel with road work contractor to decrease turn around time Coordinating and monitoring training and recruitment programs of trucking contractors for more qualified
Slide 23: Access Road Map
Access Road Map Hudbay access road Las Bambas access road • Process underway to change concentrate haulage route to Las Bambas road; 7 km connecting road required to be built CONSTANCIA PRESENTATION 23
Slide 24: Port Services
Port Services • TISUR – port operator • Under concession from state • Pier C is current location of ship loader • Hudbay current storage capacity Enclosed for concentrate service with capacity of 25,000 wmt • Expansion update Pier F is location of new pier due March 2016 used by Hudbay) TEMASEK PRES
Slide 25: Mine Fleet Maintenance
Mine Fleet Maintenance JAN FEB MAR APR MAY JUN JUL AUG YTD 2015 CAT 793F Utilization 69% 23% 46% 73% 88% 77% 69% 75% 65% Availability 89% 95% 93% 90% 90% 91% 91% 90% 91% EX5600-6 Utilization 73% 21% 47% 57% 90% 84% 86% 85% 67% Availability 90% 98% 96% 92% 92% 90% 90% 91% 92% CAT 994H Utilization 48%
Slide 26: Fleet Productivity
Fleet Productivity Productivities JAN FEB MAR APR MAY JUN JUL AUG YTD 2015 Shovel EX5600-6 (dmt/hr) 2,681 3,375 2,918 3,518 3,711 3,698 3,722 3,777 3,552 Loader CAT 994H (dmt/hr) 1,740 1,660 1,075 1,662 1,493 1,992 1,391 879 1,384 Truck CAT 793F (dmt/hr) 414 471 513 571 682 718 757 809 765 Drill PV
Slide 27: Annual Tonnage Movement
Annual Tonnage Movement 1. NI 43-101 Technical Report on the Constancia Project dated October 15, 2012 and subsequent updates to project estimates in public disclosure. 2014 reflects actual tonnage moved, and 2015 reflects forecast tonnage movement CONSTANCIA PRESENTATION 27
Slide 28: Total Tonnes Mined
Total Tonnes Mined Pre-commercial CONSTANCIA PRESENTATION 28
Slide 29: Haulage Network
Haulage Network Constancia Pit 6.6 Km 7.0 Km 3.3 Km 2.9 Km WRF PAG/NAG 4.4 Km 2.5 Km 2.5 Km 2.5 Km 2.4 Km Process Plant 2.4 Km 2.4 Km 4.5 Km Hi Zn SP HG SP MG SP 5.6Km Copper Concentrate NAG SP 6.7Km PORT 9.3 Km Molybdenum Concentrate 5.0 Km Pampacancha Pit Legend Direct Movement Rehandle Movement A
Slide 30: Mine Equipment
Mine Equipment 1. NI 43-101 Technical Report on the Constancia Project dated October 15, 2012 and subsequent updates to project estimates in public disclosure. 2014 reflects actual tonnage moved, and 2015 reflects forecast tonnage movement CONSTANCIA PRESENTATION 30
Slide 31: Unit Operating Cost and Mill Throughput
Unit Operating Cost and Mill Throughput Pre-commercial 1. Unit mine, mill and G&A costs for each month calculated by dividing total mine, mill and G&A costs by the total tonnage milled. Combined unit mine, mill and G&A cost for year-to-date commercial production refers to the period May-July, 2015,
Slide 32: Projected Ramp-up vs. Mine “X”
Projected Ramp-up vs. Mine “X” • Mine “X” mine recently commenced production before Constancia and has similar size and flowsheet to Constancia (direct comparable) 1. Months 1 to 8 are actual, and month 9 is forecast mill throughput CONSTANCIA PRESENTATION 32
Slide 33: Mill Head Grade
Mill Head Grade 1. Budget numbers are approximately 3 months offset from ramp-up in mine sequencing. September month-to-date numbers are as of September 19, 2015 and are preliminary CONSTANCIA PRESENTATION 33
Slide 34: Copper in Concentrate Production
Copper in Concentrate Production 1. Budget numbers are approximately 3 months offset from ramp-up in mine sequencing. September month-to-date actual as of September 19, 2015 and is preliminary. CONSTANCIA PRESENTATION 34
Slide 35: Copper Recovery
Copper Recovery 1. Budget numbers are approximately 3 months offset from ramp-up in mine sequencing. September month-to-date actual as of September 19, 2015 and is preliminary. CONSTANCIA PRESENTATION 35
Slide 36: Mechanical Availability
Mechanical Availability Pre-commercial 1. Budget numbers are approximately 3 months offset from ramp-up in mine sequencing CONSTANCIA PRESENTATION 36
Slide 37: Plant Objectives
Plant Objectives • Achieve ramp up in the shortest possible time Tonnes processed Metallurgical recovery • Decrease operating costs • Increase tonnes processed, without capital investment in new equipment – pure optimization CONSTANCIA PRESENTATION 37
Slide 38: Grinding Optimization
Grinding Optimization • Increase in SAG mill throughput without capital investment Before After • Grate openings 100% 25 mm • Grate openings 50% 25mm - 80% of free area clogged and 50% 50mm • Time to fix: 3 months Return conveyor belt with pebbles overloaded due to Return conveyor belt with correctl
Slide 39: Grinding Optimization
Grinding Optimization • Increase in SAG mill throughput without capital investment Trend in Daily Throughput Tonnage (tpd) Plant downtime July 23-26 Actual Budget Average throughput July 65,330 TMS. Due to scheduled downtime for plant maintenance August 78,138 TMS. Due to downtime for maintenance to
Slide 40: Grinding
Grinding • Apex size change: Gmax D-15 cyclones on the primary grinding circuit Sample 27/02/2015 Sample 21/01/2015 Apex 6" diametre Apex 8" diametre Pulp density (kg/l) 1.30 1.23 Number of cyclones in operation 8 8 Cyclone pressure (psi) 15 23 Average tonnage (tmh/h) 2,000 1,292 Percentage circulat
Slide 41: Grinding
Grinding • Change from steel liners to rubber-steel liners in ball mill • 60% decrease in weight • Longer life:18-20 months (vs. 8-12 months) • Increase availability of mills • Improved grinding efficiency • Lower price: 30% less • Noise reduction in the area CONSTANCIA PRESENTATION 41
Slide 42: Flotation
Flotation Reagents DFS New Reagents Collector Ester Xantato AP3302-$/kg=8.70 Ditionocarbamato D101-$/kg=3.95 Frother Poliglycoles AF65-$/kg=5.70 Alcohol Glicol Poliglycol RE100-$/kg=3.10 CONSTANCIA PRESENTATION 42
Slide 43: Costs
Costs • Benefitted from: Diesel: ~$0.80/l vs. $1.04/l Tires: $38,000 vs. $55,000 Peruvian Sol: Fx ~3.2 vs 2.8 (10-15% of operating costs) Power consumption: 10% lower than budget at steady state • Energy costs actual YTD US$0.0766/kwh vs. US$0.0755/kwh • Offset by: Construction to raise tailings dam
Slide 44: Future Opportunities
Future Opportunities • Las Bambas Heavy Haul Road (HHR) • Trunnions change out • Bimodal transport • Self-perform mining • Revisit vendor and contractor pricing CONSTANCIA PRESENTATION 44
Slide 45: Permitting Update
Permitting Update • All required permits in hand • Planning negotiations to acquire Pampacancha surface rights • Pursuing necessary permits and classifications to utilize HHR CONSTANCIA PRESENTATION 45
Slide 46: Resettlement: Ichuni
Resettlement: Ichuni Number of Negotiation process families Public deed signed 34 In negotiation 2 Total 36 • Waste dump plan modified to accommodate ongoing status CONSTANCIA PRESENTATION 46
Slide 47: Human Resources Staffing and Training
Human Resources Staffing and Training 4 CONSTANCIA PRESENTATION 47
Slide 48: Local Employment and Procurement
Local Employment and Procurement LABOUR FORCE • 555 workers from direct and indirect area of influence • Food suppliers in operation Uchuccarco: 4 Chilloroya: 3 • Contract for rental equipment with communities Chilloroya: 159 Uchuccarco: 140 CONSTANCIA PRESENTATION 48
Slide 49: Local Procurement – 2015 YTD Aug
Local Procurement – 2015 YTD Aug $18 16.6 $16 $14 $12 11.3 US$ (millions) $10 8.4 $8 7.4 $6 4.7 3.8 4.1 $4 $2 0.8 $0 2012 2013 2014 2015 Uchuccarco Chilloroya CONSTANCIA PRESENTATION 49
Slide 50: Number of Full-Time Employees
Local Employment Local Employment 600 550 513 Number of Full-Time Employees 500 438 413 418 412 400 300 200 181 138 100 0 2012 2013 2014 2015 Uchuccarco Chilloroya CONSTANCIA PRESENTATION 50
Slide 51: Corporate Affairs and Social Responsibility
Corporate Affairs and Social Responsibility 5 CONSTANCIA PRESENTATION 51
Slide 52: Grievance Process – 2015 YTD
Grievance Process – 2015 YTD CONSTANCIA PRESENTATION 52
Slide 53: CSR Approach - Institutional Relations
CSR Approach - Institutional Relations • Facilitating local government access to more national government funds Our Technical Assistance Office helps local authorities to get currently available funds • Engaging other companies to use Works for Taxes mechanism Regional government and municipalities
Slide 54: Challenges for Local Governments in Accessing Funds
Challenges for Local Governments in Accessing Funds • Directly affecting access to Canon or Works for Taxes Bureaucracy that must be navigated in accessing the funds Lack of a stable civil service to manage application and utilization of funds New authorities delaying previous leadership initiatives
Slide 55: Contribution to Business Sustainability
Contribution to Business Sustainability • Ongoing strategy on Institutional Relations and Communications seeks to consolidate the image of Hudbay with our stakeholders within the Peruvian Governmental entities, at Central, Regional, Provincial & District levels, as well as in Congress, and Ombudsman
Slide 56: Exploration
Exploration 6 CONSTANCIA PRESENTATION 56
Slide 57: Active in Staking Claims
Active in Staking Claims • 40,337 Ha in total • 22,566 Ha old claims (Norsemont) • Constancia area: 26 New Claims, 16,571 Ha since 2014 KAVAL • Kaval: 2 Claims 800 Ha • Lucmo: 1 Claim 400 Ha CONSTANCIA LUCMO CONSTANCIA PRESENTATION 57
Slide 58: Constancia New Claims - 16,571 Ha
Constancia New Claims - 16,571 Ha NEW CLAIM-STAKING AS A RESULT OF 2014 AEROMAG SURVEY • Constancia South: 5 Claims 2,900 Ha • Constancia West: 6 Claims 5,371 Ha • Coporaque: 15 Claims 8,300 Ha CONSTANCIA PRESENTATION 58
Slide 59: Lucmo - Expanding Exploration into New Areas
Lucmo - Expanding Exploration into New Areas CRETACEOUS PORPHYRY COPPER BELT IN SOUTHERN PERU • Ore deposits: Zafranal (Teck-AQM JV) LUCMO Pecoy (Trafigura-Pembrook JV) Ocaña (Indico Resources) Lara(Lara Exploration) • Early stage projects (drilled) Huachinga (Vale) Almacen (Milpo) Yanak (Alianza Mi
Slide 60: Kaval - Exploring in New Areas
Kaval - Exploring in New Areas • Location Located ~430 km north of Lima, in Huaylas Province, Ancash Department Two claims, 800 Ha One community - friendly to mining activity, and private property land owners KAVAL • Regional Geology Lower cretaceous sediments of Chimu- Santa-Carhuaz Formations, Goy
Slide 61: Risks
Risks 7 CONSTANCIA PRESENTATION 61
Slide 62: Risks
Risks CURRENT MAJOR RISKS • Concentrate transportation • Pending port congestion at Matarani • Ramp up KPIs • Upcoming elections • Transport safety • El Niño CONSTANCIA PRESENTATION 62
Slide 63: Metallurgical Recovery Discussion
Metallurgical Recovery Discussion ISSUE: PLANT NOT ACHIEVING NI 43-101 RECOVERY Correlation between metallurgical recovery and copper soluble grade established Greater proportion of oxide minerals present in mixed transition zone and supergene at the top of the sequence than anticipated in the NI43-
Slide 64: Feasibility Study Metallurgical Samples – To Mine
Feasibility Study Metallurgical Samples – To Mine A’ A A’ Tipo Nro Mts DDH Intervalos Codigo Mineral Intervalos Por Minar 2,923 68 90 3 Supegene 23 4 Mixed 5 5 Hypogene 40 8 Skarn 22 Total 90 A • Cross section shows vast majority of metallurgical samples evaluated for feasibility study lie below and
Slide 65: Mitigation of Reduced Recovery
Mitigation of Reduced Recovery • To date, reconciliation of the mill head grade is 5% higher than the reserve block model • Throughput (at steady state) achieved during mining of supergene and mixed transition zone is greater than planned by ~5-10% • Actual tonnage mined comparison with block model
Slide 66: Appendix
Appendix 8 CONSTANCIA PRESENTATION 66
Slide 67: Appendix
Appendix CONSTANCIA PRESENTATION 67
Slide 68: Permitting Update
Permitting Update PERMIT APPROVAL Underground Water License Stage 4 September 25th, 2014 Process Plant Operation License (“Concesión de Beneficio”) and December 22nd, 2014 Phases 1 & 2 (crusher and line 2) Surface Water License Stage 4 March 31st, 2015 EIA second amendment April 17th, 2015 Mine Clos
Slide 69: Permitting Update
Permitting Update • Additional permits required to incorporate changes at Constancia and continue operations PERMIT STATUS Requested on July 23rd, 2015 Underground water license amendment Expect approval by September 30th, 2015 Requested on August 31st, 2015 San Antonio temporal grifo additional 6 m
Slide 70: Permitting Update
Permitting Update • Pampacancha 12 permits are required to allow the development and exploitation of the Pampacancha deposit. 2 of these permits have already been obtained (i.e. ESIA second amendment and Mines Closure Plan) and other 2 are under evaluation (ie. 2 CIRAs). Evidence of surface rights o
Slide 71: 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 72: 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 73: 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 74: 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 fi
Slide 75: For more information contact
For more information contact: Jacqueline Allison Director, Investor Relations Tel: 416.814.4387 Email: jacqueline.allison@hudbayminerals.com HBM CONSTANCIA PRESENTATION