Hudbay Minerals Inc · TSX:HBM
Hudbay Minerals — Scotiabank GBM Mining Conference 2012
49 slides from Hudbay Minerals's conference presentation, Nov 29, 2012
Slide 1: Creating Sustainable Value Through High Quality, Long-Life Deposits
Creating Sustainable Value Through High Quality Quality, Long Long-Life Life Deposits Scotiabank GBM Mining Conference 2012 November 27 – 29, 2012 HBM
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: Stringent Criteria for Growth
St i Stringent t Criteria C it i for f Growth G th Disciplined focus on per share metrics 1 1. Focus geographically 3 2 • on mining friendly, investment grade countries in the Americas 2. Focus geologically • on VMS and porphyry deposits 3. Acquire small, think big 1 777 - Manitoba 6 • lleverage our
Slide 5: 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 90 140 125 120 60 100 100 80 75 60 30 50 40 25 20 0 0 0 2012E 2015E 2012E 2015E 2012E 2015E Hudbay - Current Ops 2 Lalor 3 Consta
Slide 6: Growing Mineral Reserves and Resources Per Share
G Growing i MiMinerall R Reserves and dRResources P Per Sh Share Commodity Exposure1,2 Cu Eq/Share (lb Cu/sh) 1 Hudbay y reserves and resources as of March 31,, 2012. Measured and Indicated Resources are exclusive of Proven and Probable Reserves. 2 Commodity exposure calculated using commodity price
Slide 7: Flagship Mine
Fl Flagship hi 777 Mi Mine Steady production with low cash costs Mining Cost MANITOBA (C$/tonne) 777 Wi i Winnipeg PROFILE Ownership 100% Life of Mine 9 years Applying 360° Applying Expertise 360° PAGE Expertise > 78
Slide 8: 777 Mine
777 Mi Mine Expansion and underground exploration program underway 530m level 690m level 840m level 1082m level 1262m level 1412m level Applying 360° Expertise > 8
Slide 9: Lalor on Track
L l on Track Lalor T k 1st full year of production via production shaft expected in 2015 Snow Lake Ore Concentrator MANITOBA Lalor Project Snow 777 Mine Lake Flin Flon Reed Amisk Flin Flon Lake Lalor Lake Ore Concentrator Hwy #39 Zinc Plant Reed Project N Hwyy 25 kkm #10 Winnipeg PROFILE Ownership 1
Slide 10: Lalor
L l Lalor Surface 0m Production shaft Vent raise 325m 3 5 / cu current e t sshaft a t dept depth 500m 750m H1/2012 H2/2012 2013 - 2014 2015 Exploration platform 1000m 1500m Base Metal Resource Gold & Copper-Gold Resource Looking 0m 250m High Grade Intercepts N70oW Applying 360° Expertise > 10
Slide 11: Reed Progressing Well
R dP Reed Progressing i W Wellll Portal trench excavation completed MANITOBA > $16 million spent to Sept. 30, 2012 > Entered into additional $13 million in commitments Reed > Significant project milestones achieved: • Installation of new office and dry complex Winnipeg • Foundations poured for shop
Slide 12: Constancia Project
C Constancia t i Project P j t US$1.5 billion construction program underway PERU > US$154 million spent to T jill Trujillo September 30, 2012 Lima Cusco > Entered into additional US$322 million in commitments Constancia Arequipa > Significant project milestones achieved prior to board approval: 1-5
Slide 13: Constancia Project
C Constancia t i Project P j t Significant infrastructure advantages > 83km access road from Yauri • To be upgraded for concentrate haulage > Tintaya power substation 70km away • Planned upgrade to 220 kV to be commissioned by Q3 2013 • Contract executed for construction of power transmission line f
Slide 14: Constancia Exploration Success
C Constancia t i EExploration l ti S Success Exploration program yields mineralization outside known reserve > Expand Pampacancha resource • Two drills focused on infill and step-out drilling • Mineralization demonstrated to the west of known resource > Chilloroya Chill S th South • One drill tested
Slide 15: Steady Production with Low Operating Costs
S d P Steady Production d i withihL Low O Operating i C Costs On track to meet annual guidance Three Months Ended Nine Months Ended Guidance1 Contained metal in concentrate September 30, 2012 September 30, 2012 2012 Copper1 tonnes 9,920 31,426 35-40,000 Refined Zinc1 tonnes 20,371 62,495 70-85,000 P
Slide 16: Reliable Cash Flow Generation
R li bl C Reliable Cash h Fl Flow G Generation i Driven by steady production and cost control Three Months Ended Nine Months Ended Sept 30 Sept. Sept 30 Sept. ($000s except per share amounts) 2012 2011 2012 2011 Revenue 144,659 212,335 521,555 636,503 Profit before tax 4,960 37,473 28,814 139,212 Op
Slide 17: Strong Balance Sheet
St Strong Balance B l Sheet Sh t As at September 30, 30 2012 Sources Uses > Cash and cash equivalents - $1,499 million > Lalor - $399 million > Remaining stream agreement payments > Reed - $56 million - $250 million > Constancia - $1.39 billion > Existing Credit facility - $235 million Total Sources
Slide 18: Applying 360° Expertise in Each Stage of Mining Cycle
A l i 360° Expertise Applying E ti iin E Each h St Stage off Mi Mining i C Cycle l Exploration Development Production Reclamation > Discovered > Currently > 777 Mine is a > Successfully 26 mines i iin 3 mines i iin consistently i t tl reclaimed l i d 85 years development low-cost 19 mines producer A
Slide 19: Growth of Mineral Deposits
G Growth th off Mineral Mi l Deposits D it Discoveries in the Greenstone Belt Flin Flon Lalor ⁄⁄ 62.5 62 5 Trout Lake 777 Stall Lake Chisel U/G Callinan Chisel Osborne Anderson Konuto Spruce Schist Lake Centennial Westarm Chisel Pit Initial resource Coronation White Lake Added resource Dickstone The
Slide 20: Appendix
APPENDIX Applying 360° Expertise > 20
Slide 21: Appendix Contents
A Appendix di CContents t t > By-product By product copper cost curve > 2012 operating guidance, capital expenditures and exploration spending breakdown > Lalor guidance, mineralization and plan views > Constancia project > South S th America A i property t > Reserves & resources Applying 360° Exper
Slide 22: 2012 Copper & Zinc By-Product Cost Curves
2012 C Copper & Zi Zinc B By-Product P d t Cost C t Curves C 1 250 Constancia2 US$/lb) 200 Reed ash Cost (100 x U 150 2 100 777 Mine 50 0 C1 Ca 0 10 20 30 40 50 60 70 80 90 100 (50) Cumulative Percentile Production (%) (100) Lalor (150) (200) (250) Cu Cash Cost Zn Cash Cost Source: Brook Hunt (2012
Slide 23: 2012 Operating Guidance
2012 O Operating ti G Guidance id Copper: 35,000 – 40,000 tonnes Zinc: 70,000 – 85,000 tonnes Precious Metals2 : 85,000 85 000 – 105,000 105 000 ounces 777 Trout Lake Chisel North Lalor1 Ore Mined tonnes 1,553,000 230,000 165,000 86,000 Copper % 2.3 1.8 0.72 0.4 Zinc % 4.3 2.3 5.0 10.1 Gold g/tonne
Slide 24: 2012 Operating Guidance – Zinc Plant
2012 O Operating ti G Guidance id – Zinc Zi plant l t Flin Flon Guidance 2012 Zinc concentrate treated Domestic tonnes 164,000 Purchased tonnes 56,000 Total tonnes 220,000 Recovery % 97 Zinc produced tonnes 113,000 Unit operating costs1 C$/lb $0.32 - 0.37 1 Forecast unit operating costs are calculat
Slide 25: 2012 Capital Expenditures
2012 C Capital it l E Expenditures dit 1 Committed to $640 million in capital expenditures to grow production profile (figures in C$ millions) Actual 2011 Guidance 2012 Growth Lalor2 157 122 Constancia2 44 384 Back Forty 4 2 Reed2 - 31 777 North 8 6 Fenix3 7 - Total growth capital 219 545 Sustaining
Slide 26: 2012 Exploration Expenditures
2012 E Exploration l ti E Expenditures dit ($ millions)1 Sept. 30, 2012 Actual Annual 2012 Guidance Manitoba 13 31 S th America South A i 13 13 Other North America 8 10 Total exploration expenditures 34 54 M it b capitalized Manitoba it li d spending di (1) (5) Total exploration expenses $33 $49 1 A
Slide 27: Lalor Project Guidance
L l Project Lalor P j tGGuidance id > CAPEX for new concentrator (including Q4 2012 $23 million paste backfill plant) estimated at $263 million 2013 $162 million • $120 million illi estimate ti t iin A Augustt 2010 ffor Snow Lake concentrator refurbishment 2014 $214 million Total estimated future $3
Slide 28: Benefits of Lalor Project Optimization
B Benefits fit off Lalor L l Project O ti i ti 1 P j t Optimization Optimized Lalor Lalor – Aug. 4, 2010 C Construction t ti CAPEX C$ 704M C$ 560M Annual Sustaining CAPEX C$ 22M C $15M Production Rate 4,500 tpd 3,500 tpd Mi i Mining Costs C t $36 per ttonne $56 per ttonne Milling Costs $16 per tonne
Slide 29: Reed Copper Project
R dC Reed Copper P j t1 Project 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 1 Hudbay holds a 70% joint venture interest in the Re
Slide 30: Constancia Project
C Constancia t i PProject j t > Unlevered IRR of 14.5% 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 Base Case1 Copper Prices +10%2 Copper Prices -10%2 Long-Term Copper Price US$2.75/lb US$3.03/lb US$2.48/lb IRR – Unlev
Slide 31: Constancia Capital Spending
C Constancia t i Capital C it l S Spending di ($ millions) Q4 2012 230 2013 900 2014 262 Total future capital spending 1,392 Total spent in Q1 – Q3 2012 154 Total 1,546 Applying 360° Expertise > 31
Slide 32: 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 33: Constancia Project - Site Plan and Layout
C Constancia t i PProject j t - Site Sit Pl Plan and d Layout L t
Slide 34: Constancia Regional Infrastructure – Port
C Constancia t i Regional R i l IInfrastructure f t t – 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 > Cu
Slide 35: Constancia Production Profile
C Constancia t i Production P d ti Profile P 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.
Slide 36: Precious Metals Stream Overview
P i Precious M Metals t l St Stream 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 r
Slide 37: Constancia Reserves Overview
C Constancia t i Reserves R 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 R
Slide 38: Constancia Resources Overview
C Constancia t i Resources R 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
Slide 39: Constancia Project Contingency
C Constancia t i Project P j t Contingency C ti Capital costs Area Base Cost Contingency & Growth Dollars Contingency & Growth % of Base $ $ millions $ millions Mining 145 12 8% Mine Equipment 151 2 1% Plant 340 57 17% H Heavy Ci Civil il Works W k (TMF & reservoirs) i ) 178 42 24% Other Infrastruct
Slide 40: Formalized LOM Agreements with Local Communities
Formalized LOM Agreements with Local Communities Uchuccarco > Life of mine agreement in place > Land rights acquired Chilloroya > Life of mine agreement in place > Land rights acquired > Relocation process is underway Committed to community investments Applying 360° Expertise > 40 40
Slide 41: Updated Peru Tax and Royalty Scheme
U d t dP Updated Peru T Tax and dRRoyalty lt SScheme h 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 opera
Slide 42: 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 43: South America - Property Acquisition
S th America South A i – Property P t Acquisition A i iti Pacific Ocean Antofagasta CHILE EL SALVADOR Cu > Focus on Chile, Peru EL SALVADOR Copiapo and Colombia CHANARAL La Serena SAN ANTONIO MANTOS VERDES Cu > Compilation of geological SANTIAGO data at San Antonio COPIAPO CANDELARIA Cu > Regional e
Slide 44: In-mine Manitoba Mineral Reserves
I In-mine i M Manitoba it b Mi Minerall R 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 - 6.
Slide 45: Manitoba Mineral Resources
M it b Mineral Manitoba Mi lRResources 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 I di Indicated d 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
Slide 46: Lalor Project Reserves & Resources
L l Project Lalor P 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
Slide 47: Reserves and Resources
R Reserves and dRResources > To estimate mineral reserves, measured and indicated mineral resources were first estimated in a 12-step ppprocess, which includes determination of the integrity g y and validation of the data collected, including confirmation of specific gravity, assay results and metho
Slide 48: Reserves and Resources
R Reserves and dRResources > The technical and scientific information in this news release related to the Constancia project has been approved pp byy Cashel Meagher, g P. Geo, Hudbay’sy Vice-President, South America. The technical and scientific information related to all other sites and projects co
Slide 49: For more information contact:
For more information contact: John Vincic, VP of Investor Relations and Corporate Communications Tel: 416.362.0615 Email: john.vincic@hudbayminerals.com @
Hudbay Minerals — Scotiabank GBM Mining Conference 2012 on 6ix