Hudbay Minerals Inc · TSX:HBM
Hudbay Minerals — Barclays Materials ROC Stars Conference 2017
42 slides from Hudbay Minerals's conference presentation, March 2017
Slide 1: Investor Presentation March 2017
INVESTOR PRESENTATION March 2017
Slide 2: Cautionary Information
Cautionary Information This presentation contains forward-looking information within the meaning of applicable Canadian and United States securities legislation. All information contained in this presentation, other than statements of current and historical fact, is forward-looking information. Ofte
Slide 3: Cautionary Information
Cautionary Information 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, such as eco
Slide 4: Hudbay Investment Highlights
Hudbay Investment Highlights STRONG LEVERAGE TO COPPER PRICE AND TSX, NYSE, BVL Symbol HBM GROWING ZINC EXPOSURE Market Capitalization1 C$2.7 billion • Un-hedged copper and zinc production Shares Outstanding 237 million • Augment copper production in Peru with planned 2018 Available Liquidity2 $0.4
Slide 5: Long-Life, Low-Cost Asset Base
Long-Life, Low-Cost Asset Base BUSINESS UNIT ASSET LOCATION PRIMARY METAL MINE LIFE1 South America Constancia Mine Southern Peru Cu 19 years Lalor Mine Snow Lake Zn, Au 14 years Manitoba 777 Mine Flin Flon Cu, Zn 3 – 4 years Reed Mine Near Flin Flon Cu 2 years Arizona Rosemont Project Pima County Cu
Slide 6: 2016 Consolidated Results
2016 Consolidated Results • Achieved or exceeded production and cost CONSOLIDATED FINANCIAL & OPERATING guidance RESULTS Full Year • Copper cash cost of $0.93/lb and all-in Q4 2016 2016 sustaining cash cost of $1.52/lb3 Copper contained in conc. (kt) 43.8 174.5 • Generated positive free cash flow in
Slide 7: South America Business Unit
South America Business Unit Cusco CUSCO Las Bambas CONSTANCIA Yauri Tintaya Antapaccay CONSTANCIA PIT AREQUIPA Imata PERU Arequipa MINE TOWN Lima Cerro Verde RAILROAD MOQUEGUA ROAD CONSTANCIA Matarani LAS BAMBAS HAUL ROAD 0 TACNA 100km 7
Slide 8: Constancia Mine
Constancia Mine 20161 AVG. LOM2 OPERATING AT FULL PRODUCTION Ownership 100% • Low-cost, long-life copper mine began Daily ore throughput 74k tpd 85k tpd production at end of 2014 Annual Cu production3 133kt 81kt Unit operating cost4 $8.09/t $7.39/t • Annual Cu production of 110k tonnes at cash Cash
Slide 9: Pampacancha Update
Pampacancha Update UPDATED CONSTANCIA MINE PLAN HIGHLIGHTS • New mine plan incorporates mining of Pampacancha in 2018-2021 • Higher production and lower costs over 5-year period (2017-2021) than previous 2012 technical report 5-YEAR PRODUCTION1 AND COST3 (2017E-2021E) MINE PLAN SUMMARY (5-YEAR AVERA
Slide 10: Manitoba Business Unit
Manitoba Business Unit New Britannia Mill Snow Lake Stall Mill LALOR MINE LALOR MINE Stall Mill AERIAL VIEW OF LALOR MINE SITE 0 5km SASKATCHEWAN MANITOBA Snow Lake LALOR MINE 777 LALOR 777 MINE REED MINE Flin Flon MILL Flin Flon Mill TOWN RAILROAD Winnipeg REED MINE ROAD 0 50km 10
Slide 11: Lalor Mine
Lalor Mine 20161 AVG. LOM2 PRODUCING LOW COST MINE WITH Ownership 100% ZINC & GOLD UPSIDE POTENTIAL Daily ore throughput 2,985 tpd 3,300 tpd • Production shaft with capacity of 6,000tpd Annual Zn production3 71kt 67kt • Stall mill currently processing ~3,000tpd of Annual Au-Eq. production3 51koz 48k
Slide 12: Lalor Cross-Section
Lalor Cross-Section LALOR CROSS-SECTION, LOOKING WEST 0m Legend Base metal zone Production Shaft (6,000 tpd of ore + waste) Gold zone Copper-gold zone 500m Ramp from Chise l 865mL Exploration Drill Drift 2016 1000m 1025 to 1075mL Exploration Decline 2015 1500m 500 m 12
Slide 13: 777 and Reed Mines
777 and Reed Mines 777 & REED COMBINED 20161 AVG. LOM2 STEADY, LOW-COST PRODUCTION Ownership 100% / 70%3 Daily ore throughput 4,800 tpd 4,200 tpd • Optimizing operations to end of mine life Annual Cu production4 35kt 27kt • Plan to keep processing assets on care and Annual Zn production4 40kt 49kt m
Slide 14: 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 TOWN Patagonia RAILROAD ROSEMONT ROAD 0 25km 14
Slide 15: Rosemont Project
Rosemont Project 80%-OWNED1 COPPER PROJECT • High-quality development project with well- established infrastructure • Permitting and community engagement progressing • $20 million expected to be spent in 2017 to advance project • Expected to be one of the first new copper projects to be built once c
Slide 16: 2017 Objectives
2017 Objectives Continue to focus on operating efficiencies to generate incremental free cash flow Advance high-return in-house brownfield opportunities • Lalor zinc / base metal throughput • Pampacancha • Lalor gold Advance permitting activities and technical work at Rosemont Use free cash flow to
Slide 17: Appendix
H' DBAY APPENDIX 17
Slide 18: Appendix Contents
Appendix Contents • Experienced Management Team • Copper By-Product Cost Curve • Global Refined Metal Market Balance • Liquidity • Q4 2016 Results by Business Unit • Constancia Site Map • Constancia Mine Plan Summary • Peru Inventory Levels • Manitoba Operations Flow Chart • 2017 Guidance • Leverage
Slide 19: Experienced Management Team
Experienced Management Team Alan Hair PRESIDENT AND CHIEF EXECUTIVE OFFICER • Appointed President and Chief Execu?ve Officer and Director in January 2016 • An accomplished leader of people and performance, bringing 20 years knowledge of Hudbay and more than three decades of mining and metals industry
Slide 20: Copper By-Product Cost Curve
Copper By-Product Cost Curve 2016 COST CURVE1 250 200 Constancia Reed 150 C1 Cash Cost (100 x $/lb) 100 50 0 0 10 20 30 40 50 60 70 80 90 100 -50 Cumulative Percentile Production (%) -100 777 -150 -200 Lalor -250 Source: Wood Mackenzie 1. Wood Mackenzie Cu normal mine site C1 cost curve for 2016 (Q4
Slide 21: Global Refined Metal Market Balance
Global Refined Metal Market Balance • Copper market moves into a supply deficit • Zinc market in deficit over the next few years, starting in 2017, signaling a near-term but supply-side response from high prices recovery in copper prices expected to cause surplus in 2018+ COPPER ZINC Refined Surplus
Slide 22: Liquidity
Liquidity December 31, 2016 $ Millions Cash and Cash Equivalents $147 Availability under Credit Facilities1 $244 Total Available Liquidity $391 Amount Interest Maintenance Debt Maturity Drawn Rate Covenants Senior Unsecured $400 7.250% Jan. 2023 None Notes $600 7.625% Jan. 2025 None 3.25x Secured De
Slide 23: South America Q4 2016 Results
South America Q4 2016 Results PERU SUMMARY OPERATING STATISTICS • Plant performance remains the primary Full Year focus Q4 2016 2016 • Total copper recovery was 81.6% in Q4, Ore mined (million tonnes) 6.2 26.5 affected by oxidized mineralization, offset Ore milled (million tonnes) 7.2 27.0 by higher
Slide 24: Manitoba Q4 2016 Results
Manitoba Q4 2016 Results MANITOBA SUMMARY OPERATING STATISTICS • 777’s Q4 ore mined impacted by more Q4 2016 Full Year 2016 conservative stope sequencing needed Ore mined (kt) 675 2,828 as mine ages Ore milled (kt) 723 2,854 • 777 mine plan re-sequencing prioritizes Copper grade milled 1.52% 1.59% Z
Slide 25: Constancia Site Map
Constancia Site Map High-grade Pampacancha satellite deposit located ~7km (by truck) from primary crusher 25
Slide 26: Constancia Mine Plan Summary
Constancia Mine Plan Summary MINE PLAN SUMMARY – NOVEMBER 21, 2016 TECHNICAL REPORT 2017E 2018E 2019E 2020E 2021E 5-Yr Avg. Yr 6-19 Avg.1 LOM Avg.1 Ore mined million tonnes 34.6 34.1 27.7 32.2 31.8 32.1 30.1 30.5 Waste mined million tonnes 38.4 39.1 33.8 36.9 37.0 37.0 33.1 34.0 Strip ratio waste:or
Slide 27: Peru Inventory Levels
Peru Inventory Levels • Copper concentrate inventory remains at normal levels • Extended ocean swells at Matarani port at the end of June caused temporary increase in port inventories, which was drawn-down in early July PERU COPPER CONCENTRATE Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016 Q4 2016 Concentr
Slide 28: Manitoba Operations Flow Chart
Manitoba Operations Flow Chart 777 Mine Copper Flin Flon Mill Market Concentrate Reed Mine Zinc Refined Snow Lake Mill Zinc Plant Concentrate Zinc Lalor Mine Market New Britannia Gold Dore Market Mill1 Legend: Processing Mine Product Facility 1. Studies underway on potential refurbishment of New Bri
Slide 29: 2017 Guidance
2017 Guidance PRODUCTION AND UNIT COST CONTAINED METAL IN CONCENTRATE1 2017 GUIDANCE 2016 PRODUCTION 2016 GUIDANCE MANITOBA2 Copper tonnes 32,500 – 42,500 41,059 40,000 – 50,000 Zinc tonnes 125,000 – 150,000 110,582 100,000 – 125,000 Precious Metals3 ounces 90,000 – 110,000 102,242 95,000 – 115,000
Slide 30: 2017 Guidance
2017 Guidance CAPITAL EXPENDITURE1 • Peru’s 2017 sustaining capital expenditures include approximately $52 million related to tailings management facility costs • Total sustaining capital expenditures expected to decline substantially after 2017 as Peru tailings management facility costs decline $ M
Slide 31: 2017 Guidance
2017 Guidance FLIN FLON ZINC PLANT Zinc Metal Produced 95,000 – 115,000 tonnes Unit Operating Costs1 C$0.40 - 0.50/lb 1. Forecast unit operating costs are calculated on the same basis as reported unit operating costs in Hudbay’s quarterly and annual management’s discussion and analysis. EXPLORATION
Slide 32: Leverage to Commodities
Leverage to Commodities • Highly leveraged to copper, with additional sensitivity to zinc prices • Moderate exposure to changes in C$/US$ exchange rates SENSITIVITY ANALYSIS1 Change of 10% Impact on 2017 Base Represented by: Operating Cash Flow2 METAL PRICES: Copper Price $2.50/lb +/- $0.25/lb +/- $
Slide 33: Precious Metals Stream Overview
Precious Metals Stream Overview PAYMENTS FROM SILVER WHEATON TO HUDBAY Production payments1 Upfront payment $5.90/oz Silver $885 million $400/oz Gold . DELIVERY FROM HUDBAY TO SILVER WHEATON Remaining Life of Mine 777 Silver 100% Gold 50%2 Remaining Life of Mine Constancia Silver 100% Gold 50% 1. Pa
Slide 34: Peru Mineral Reserves
Peru Mineral Reserves AS AT JUNE 30, 2016 CATEGORY TONNES Cu (%) Mo (g/t) Ag (g/t) Au (g/t) CONSTANCIA Proven 442,300,000 0.30 99 2.99 0.037 Probable 109,400,000 0.23 64 2.66 0.035 Total Proven and Probable 551,700,000 0.29 92 2.93 0.037 PAMPACANCHA Proven 22,800,000 0.53 149 4.44 0.299 Probable 20,
Slide 35: Peru Mineral Resources
Peru Mineral Resources AS AT JUNE 30, 2016 CATEGORY TONNES Cu (%) Ag (g/t) Mo % Au (g/t) CONSTANCIA Measured 608,700,000 0.27 2.74 0.009 0.04 Indicated 399,300,000 0.19 2.09 0.005 0.03 Measured and Indicated 1,008,000,000 0.24 2.48 0.007 0.03 Inferred 138,200,000 0.17 1.71 0.004 0.02 PAMPACANCHA Mea
Slide 36: Manitoba Mineral Reserves
Manitoba Mineral Reserves AS AT JANUARY 1, 2016 PROPERTY CATEGORY TONNES Cu (%) Zn (%) Au (g/t) Ag (g/t) Proven 3,316,000 1.80 4.85 1.79 26.71 7771 Probable 2,986,000 1.50 4.79 1.97 27.80 Proven 677,000 3.80 0.46 0.35 4.87 Reed2 Probable 517,000 4.46 0.28 0.52 6.11 Total Flin Flon 2P Reserves 7,496,
Slide 37: Manitoba Mineral Resources
Manitoba Mineral Resources AS AT SEPTEMBER 30, 2015 PROPERTY CATEGORY TONNES Cu (%) Zn (%) Au (g/t) Ag (g/t) Indicated 728,000 0.99 3.51 1.83 26.28 7771 Inferred 683,000 1.02 4.71 1.76 32.63 Reed2 Inferred 203,000 4.63 0.39 0.81 7.71 Indicated 728,000 0.99 3.51 1.83 26.28 Total Flin Flon Inferred 88
Slide 38: 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 Resourc
Slide 39: Additional Information
Additional Information PERU • The mineral reserve estimates for the Constancia operations are based on a long range mine plan (LOM) with economic value calculation per block (NSR in $/t), mining, processing, and detailed engineering parameters. • The Constancia and Pampacancha reserves pits consist
Slide 40: 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 41: Additional Cautionary Information
Additional Cautionary Information 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 42: For More Information Contact
FOR MORE INFORMATION CONTACT: Candace Brûlé, Director, Investor Relations 416.814.4387 | candace.brule@hudbay.com
Hudbay Minerals — Barclays Materials ROC Stars Conference 2017 on 6ix