Hudbay Minerals Inc · TSX:HBM
Hudbay Minerals — Q3 2018 Earnings Presentation
29 slides from Hudbay Minerals's earnings presentation, Nov 1, 2018
Slide 1: Q3 2018 Presentation
Q3 2018 Presentation November 1, 2018
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: Strong Q3 Results
STRONG Q3 RESULTS EXECUTED WELL AGAINST OUR STRATEGIC PRIORITIES CONTINUED TO FOCUS ON DEVELOPING AND OPERATING OUR PORTFOLIO OF HIGH-QUALITY ASSETS IN SAFE JURISDICTIONS: Demonstrated ongoing progress in optimizing Constancia by generating record mill throughput and record copper recoveries Deliver
Slide 4: Q3 2018 Consolidated Results
Q3 2018 CONSOLIDATED RESULTS KEY RESULTS SUMMARY Q3 2018 Q2 2018 Consolidated production of Production2 copper-equivalent contained metal in concentrate of 59.3 kt Copper kt 40.5 37.6 Consolidated cash cost of Zinc kt 26.2 33.2 $0.88/lb Cu and sustaining cash Precious Metals3 koz 42.7 46.1 cost of $
Slide 5: Growing Free Cash Flow & Reducing Debt
GROWING FREE CASH FLOW & REDUCING DEBT Continued to grow free cash flow through un-hedged production and stable low-cost operations Reduced net debt position by more than $700 million since 2016 OPERATING AND FREE CASH FLOW1 NET DEBT2 ($M) ($M) Operating Cash Flow Free Cash Flow Net Debt 582 589 557
Slide 6: Peru Operations Review
PERU OPERATIONS REVIEW PERU SUMMARY OPERATING STATISTICS Q3 2018 Q2 2018 Copper production of 33kt, an increase quarter-over-quarter primarily due to record Ore mined (million tonnes)1 8.8 8.7 mill throughput and record recoveries Ore milled (million tonnes) 8.0 7.7 Copper recoveries reached record
Slide 7: Expedited Timeline From First Production to Full Capacity
EXPEDITED TIMELINE FROM FIRST PRODUCTION TO FULL CAPACITY Constancia’s timeline from feasibility to first production and the subsequent ramp-up to nameplate capacity production was the fastest among recently built projects TIME FROM FIRST PRODUCTION TO FULL CAPACITY OPERATIONS (MONTHS) 52+ 46+ 44 28
Slide 8: Continuous Improvement at Constancia
CONTINUOUS IMPROVEMENT AT CONSTANCIA Constancia throughput and processing plant utilization have improved since first production was achieved at the end of 2014 Quarterly copper production remains robust even as copper head grades decline in accordance with the mine plan CONSTANCIA’S QUARTERLY COPPE
Slide 9: Industry Leading Cost Performance
INDUSTRY LEADING COST PERFORMANCE Constancia is the lowest cost copper mine in South America Continuous operational improvements at Constancia have driven costs down, while increasing efficiencies and productivity LOWEST COST OPEN PIT COPPER MINES IN SOUTH AMERICA (2018E) $20.00 $19.01 $18.00 $17.73
Slide 10: Peru Community Relations
PERU COMMUNITY RELATIONS We work with all levels of government and the communities to develop stable operations and to maximize the impact of our social investment in our area of influence and beyond Since 2012, executed over 90 social agreements with local governments and communities Pleased with p
Slide 11: Manitoba Operations Review
MANITOBA OPERATIONS REVIEW Manitoba Summary Operating Statistics Q3 2018 Q2 2018 Ore mined decreased versus Q2 2018; Ore mined (kt) 593 694 increased production at the 777 mine was offset by decreased production at the Lalor and Reed Ore milled (kt) 626 758 mines Copper grade milled 1.32% 1.56% Comb
Slide 12: Manitoba Community Relations
MANITOBA COMMUNITY RELATIONS LONG HISTORY OF MINING IN MANITOBA Discovered, mined and reclaimed mines in Manitoba over the past 90 years Reed closure activities proceeding ahead of schedule and under budget, with reclamation continuing in 2019 REED PORTAL POLISHING POND DURING PRODUCTION 2 MONTHS AF
Slide 13: Cu-Au and Au Rich Lenses at Lalor
CU-AU AND AU RICH LENSES AT LALOR: FOUNDATION OF HUDBAY’S GOLD STRATEGY IN MANITOBA Test Zone in Lens 25 New model of Lens 27 BASE METAL LENSES COPPER-GOLD LENSES + GOLD LENSES Mineral Reserves Mineral Reserves Base Metal Zones (kt) Au (g/t) Ag (g/t) Cu (%) Zn (%) Gold-Copper Zones (kt) Au (g/t) Ag
Slide 14: Strategy: Maximize NPV
STRATEGY: MAXIMIZE NPV PROCESS ALL CU-AU ORE THROUGH NEW BRITANNIA MILL Trade-off studies have been completed and Hudbay believes the refurbishment of the New Britannia mill is the optimal processing scenario for the Lalor gold and copper-gold zones The New Britannia mill refurbishment would increas
Slide 15: Significant Exploration Potential
SIGNIFICANT EXPLORATION POTENTIAL CU-AU MINERALIZATION BETWEEN CHISEL AND LALOR Photo Area of high conductivity Chisel Lalor South Bulls Eye 600 metres CH1807 (5.15m@2.1%Cu and 1.2g/tAu) Chisel Deep Red dots are %Cu+g/t Au >=3 Between Lalor and the old Chisel mine, several potential copper and gold
Slide 16: Significant Exploration Potential
SIGNIFICANT EXPLORATION POTENTIAL AU AND CU MINERALIZED OCCURRENCES IN THE SNOW LAKE BELT Hudbay has a large prospective land package in the Snow Lake belt with significant gold exploration potential Data compilation and modeling over the past producing areas of the New Britannia mine lead to the de
Slide 17: Rosemont Project
ROSEMONT PROJECT High-quality development project with well-established Location Tucson, Arizona infrastructure March 2017 43-101 demonstrates robust project Ownership 80%2 economics 19 year mine life generating 15.5% after-tax project IRR Copper-molybdenum Type of deposit skarn deposit and 17.7% IR
Slide 18: Rosemont Timeline
ROSEMONT TIMELINE KEY MILESTONES Granted six permits for Rosemont since Huday’s acquisition of the project, including the Final Record of Decision issued by the U.S. Forest Service Successfully defended five lawsuits related to Rosemont permits Issued updated Technical Report with improved resource
Slide 19: Rosemont Initial Capex & Funding
ROSEMONT INITIAL CAPEX & FUNDING INITIAL CAPITAL COST ESTIMATE OF $1.9 BILLION 3-year construction period; $144 million in year 1, $861 million in year 2, $768 million in year 3, remaining capital in ramp-up period ~5% growth and 15% contingency added per item ROSEMONT INITIAL CAPITAL COST ($M) BREA
Slide 20: Consistent Strategy Since 2010
CONSISTENT STRATEGY SINCE 2010 VISION STATEMENT Our vision is to become a top-tier operator of long-life, low cost mines in the Americas VALUE DRIVERS STRATEGIC CRITERIA Safety & Long Life Responsibility Meaningful Low Cost Scale Financial Exploration Strength Mining Per Share Friendly Accretion Jur
Slide 21: Overview of Ann Mason
OVERVIEW OF ANN MASON ANN MASON – NEVADA, USA Ann Mason is located approximately 85km southeast of Reno, Nevada in the prolific Yerington Elko Copper District Reno Close to the former producing Yerrington mine (1.7B lbs Ann Mason of copper produced) Ann Mason hosts a measured and indicated copper La
Slide 22: Strategic Rationale of Ann Mason
STRATEGIC RATIONALE OF ANN MASON The acquisition of Ann Mason is an excellent fit with Hudbay’s strategic criteria Hudbay has been a 14% shareholder of Mason since August 2017 and has followed the project closely for the past several years MEANINGFUL SCALE ✓ Adding one of the largest undeveloped cop
Slide 23: Scarcity Value of Ann Mason
SCARCITY VALUE OF ANN MASON Ann Mason is one of the largest undeveloped copper resources in Hudbay’s preferred jurisdictions The 3rd largest “actionable” resource held within a junior company A high priority exploration project to target near-surface, high-grade mineralization Acquiring a high quali
Slide 24: Adding Value Through Exploration
ADDING VALUE THROUGH EXPLORATION CONSTANCIA (2009-2017)1 777 (2004-2017)1 LALOR (2010-2017)1 Reserves Reserves Reserves Copper Equivalent (Mt) Copper Equivalent (Mt) 4.0 Production Production Production Copper Equivalent (Mt) 1.5 1.0 +31% Growth 3.0 +98% Growth 0.8 +56% Growth 1.0 2.0 0.5 0.5 1.0 0.
Slide 25: Project Pipeline
PROJECT PIPELINE Hudbay has a diversified portfolio of operating mines and an extensive development pipeline to perpetuate production growth Production Constancia Lalor 777 Shovel-ready Development Rosemont Pampacancha Constancia Peru and Ann Manitoba B.C. Chile Lalor Regional Resource Definition /
Slide 26: Investment Highlights
INVESTMENT HIGHLIGHTS Constancia & Exploration Peru Lalor, 777 & Exploration Manitoba, Canada TSX, NYSE, BVL Exploration HBM Symbol British Columbia, Canada Rosemont Market Capitalization1 C$1.3 billion Arizona, USA Ann Mason Shares Outstanding 261 million Nevada, USA Exploration Chile Available Liq
Slide 27: Additional Information
ADDITIONAL INFORMATION The scientific and technical information related to the Lalor mine contained in this presentation has been approved by Olivier Tavchandjian, P.Geo., our VP Exploration and Geology. Mr. Tavchandjian is a qualified person pursuant to NI 43-101. Information on the data verificati
Slide 28: Regional Gold and Copper-Gold Deposits: Historical Resources
REGIONAL GOLD AND COPPER-GOLD DEPOSITS: HISTORICAL RESOURCES New Britannia Mine and Squall Lake deposits Historic Resource Statement (Alexis Minerals) MEASURED AND INDICATED RESOURCES INFERRED RESOURCES Tonnes (000) Grade (g/t) Au (oz 000) Tonnes (000) Grade (g/t) Au (oz 000) Main Mine Lower1 (measu
Slide 29: For More Information Contact
F O R M O R E I N F O R M AT I O N C O N TA C T: Carla Nawrocki, Director, Investor Relations 416.362.7362 | carla.nawrocki@hudbay.com