Hudbay Minerals Inc · TSX:HBM
Hudbay Minerals — CIBC Mining Royalty Sector 2013 Conference
55 slides from Hudbay Minerals's conference presentation, Jul 16, 2013
Slide 1: Creating Sustainable Value Through High Quality, Long-Life Deposits
Creating Sustainable Value Through High Quality, Long-Life Deposits CIBC Mining Royalty Sector 2013 Conference July 16, 2013
Slide 2: Forward-looking Information
Forward-looking 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, othe
Slide 3: Note to U.S. Investors
Note to U.S. Investors 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”) Industry
Slide 4: Stringent Criteria for Growth
Stringent Criteria for Growth Disciplined focus on per share metrics 1. Focus geographically on mining friendly, investment grade countries in the Americas 1 3 2 2. Focus geologically on VMS and porphyry deposits 3. Acquire small, think big leverage our core competencies as explorers and mine develo
Slide 5: Key Metal Growth
Key Metal Growth1 390% GROWTH 115% GROWTH 2 30% GROWTH Cu Production Precious Metals Production Zn Production (kt) (koz) (kt) 200 220 120 200 175 180 150 90 160 125 140 120 100 60 100 75 80 60 50 30 40 25 20 0 0 0 3 4 3 4 3 4 2012 2013E 2014E 2015E 2012 2013E 2014E 2015E 2012 2013E 2014E 2015E 5 6 7
Slide 6: Steady Production
Steady Production Three Months Ended Year Ended Guidance Contained metal in concentrate March 31, 2013 December 31, 2012 2013 Copper1 tonnes 7,643 39,587 33-38,000 Zinc1 tonnes 18,210 80,865 85-100,000 Precious Metals1,2 troy oz. 21,665 101,044 85-105,000 Unit Operating Costs 777 $/tonne 51.27 42.83
Slide 7: Growing Mineral Reserves and Resources Per Share
Growing Mineral Reserves and Resources Per Share Commodity Exposure1,2,3 Cu Eq/Share (lb Cu/sh) 5% 6% 28.3 21.6 24% 46% 19.8 24.1 11.9 9.1 18.4 46.1 41.3 16.3 39.2 19% Copper Zinc Gold Equivalent Lead Molybdenum 11.3 2010 2011 2012 2013 Proven & Probable Measured & Indicated inferred 1 Hudbay reserv
Slide 8: Comparison of Funding Options
Comparison of Funding Options Capital Type Strategic Capital Source Approximate Flexibility After-Tax Cost of Capital Debt Low Bank Debt 5.1%1 Unsecured Bonds 6.9%2 Gold/Silver Stream <8.0%3 Equity High Common Equity >10.0%4 1 Assumes long-term LIBOR rate of 2.5% and LIBOR margin of 4.5%, income tax
Slide 9: Precious Metals Stream Overview
Precious Metals Stream Overview US$750 million in upfront deposit payments from Silver Wheaton for delivery of: • Along with upfront payments, Hudbay will receive US$400 per ounce for gold and US$5.90 per ounce of silver1 • 100% of payable gold and silver from 777 mine until the end of 2016; • and 5
Slide 10: Constancia Project
Constancia Project Unlevered IRR of 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$2.48/lb IRR – Unlevered 14.5% 17.3% 11.5
Slide 11: Constancia Key Metrics
Constancia Key Metrics Project Costs Unit Life of Mine Mining Costs / tonne ore1 US$/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 % 14.5 IRR – w
Slide 12: Flagship Mine
Flagship 777 Mine Steady production with low cash costs MANITOBA 777 Winnipeg Mining Cost (C$/tonne) Ore Mined (kt) 12013 estimated production and costs are based on guidance as disclosed in Hudbay's news release entitled "Hudbay Announces 2013 Production Guidance and Capital and Exploration Forecas
Slide 13: 777 Mine
777 Mine Underground exploration program underway INVESTOR PRESENTATION l 13
Slide 14: Lalor
Lalor Snow Lake Ore Concentrator Lalor Project 777 Mine Flin Flon Snow Reed Lake Lake MANITOBA Amisk Flin Flon Lake Ore Concentrator Hwy Zinc Plant Reed Project #39 lalor N Hwy 25 km #10 Winnipeg Ownership 100% Projected Life of Mine 20 years Construction Capex (2010-2015) $794 million Phase 1 of co
Slide 15: Lalor
Lalor Key milestones completed on time and on budget Surface 0m Production shaft Vent raise 500m 780m / shaft depth1 750m 2013 - 2014 2015 Exploration platform 1000m 1500m Base Metal Resource Gold & Copper-Gold Resource Looking 0m 250m High Grade Intercepts N70oW 1 As at May 21, 2013 INVESTOR PRESEN
Slide 16: Reed Copper Project
Reed Copper Project MANITOBA $37 million invested and entered Reed into additional $13 million in commitments to March 31, 2013 Winnipeg Underground ramp advanced approx. 363 metres as of March 31, 2013 Began hauling waste from underground with trucks in March 2013 Project remains on schedule Owners
Slide 17: Constancia
Constancia US$480 million incurred and entered into PERU additional US$534 million in commitments to March 31, 2013 Lima Targets for initial and full production remain unchanged Constancia Highlights: • Project development approximately 25% complete • Secured mine fleet of 18 haul trucks • Tire proc
Slide 18: Constancia Project
Constancia Project Good access to infrastructure 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 from Tintaya Rail-head at
Slide 19: Constancia has Exploration Potential
Constancia has Exploration Potential Pampacancha • Resource is expected to enable continued optimization of the mine plan Chilloroya South • Encountered presence of gold mineralization • Geological interpretation for future exploration considerations is ongoing INVESTOR PRESENTATION l 19
Slide 20: Strong Balance Sheet
Strong Balance Sheet Pro-forma as at March 31, 2013 Sources (millions)3 Uses (through 2014) (millions)3 Cash and cash equivalents $1,050 Lalor $318 Remaining stream $250 Reed $35 agreement payments Constancia $1,066 Bond add-on1 $150 Accrued Costs $108 Equipment finance facility2 $130 New credit fac
Slide 21: From Harvest to Industry-Leading Growth in Three Years
From Harvest to Industry-Leading Growth in Three Years 20102 20132 Copper Equivalent1 Production -30% 210% 3-Year Growth (projected growth to 2013) (projected growth to 2016) Proven & Probable Reserves + 290% Copper Equivalent pounds per 12 46 share Measured & Indicated3 + 45% Copper Equivalent poun
Slide 22: Highlights
Highlights 1. Growth in Copper, Gold and Zinc Production with Exploration Upside 2. Consistent Performance from Reliable Operations 3. Disciplined and Clear Growth Strategy 4. Strong Balance Sheet 5. Experienced Management and Operating Team INVESTOR PRESENTATION l 22
Slide 23: Appendix
H' DBAY Appendix
Slide 24: Appendix Contents
Appendix Contents By-product copper cost curve Financial results 2013 operating guidance, capital expenditures and exploration spending breakdown Growth of mineral projects in the Greenstone Belt Lalor project Constancia project Precious metals stream Reserves & resources INVESTOR PRESENTATION l 24
Slide 25: 2012 Copper & Zinc By-product Cost Curves
2012 Copper & Zinc By-product Cost Curves1 250 Constancia (LOM) 200 Constancia (Yr1-5) 1 - 5 ) Reed C1 Cash Cost (100 x US$/lb) 150 100 777 Mine Constancia (Yr 6-16) - 16) 50 0 0 10 20 30 40 50 60 70 80 90 100 - 50 Cumulative Percentile Production (%) - 100 Lalor - 150 - 200 - 250 Cu Cash Cost Zn Ca
Slide 26: Financial Results
Financial Results Three Months Ended Mar. 31 Year Ended Dec. 31 ($000s except per share amounts) 2013 2012 2012 Revenue 119,881 187,038 702,550 Profit before tax 7,924 16,969 52,149 Profit (loss) for the period 1,907 3,355 (21,170) Operating cash flow1 12,261 42,247 142,957 2 Operating cash flow per
Slide 27: 2013 Operating Guidance
2013 Operating Guidance 7771 Lalor2 Reed2 Ore Mined tonnes 1,620,000 418,000 51,000 Copper % 2.18 0.54 3.43 Zinc % 4.41 9.89 1.18 Gold g/tonne 1.94 1.23 0.72 Silver g/tonne 30.89 17.70 8.80 Unit Operating Costs C$/tonne 38 - 42 75- 95 Contained Metal in Concentrate3 Copper tonnes 33,000 – 38,000 Zin
Slide 28: 2013 Operating Guidance
2013 Operating Guidance Flin Flon Snow Lake Ore Milled tonnes 1,719,000 369,000 Recoveries Copper % 92 82 Zinc % 85 95 Gold % 69 65 Unit operating costs1 C$/tonne 12 - 16 25 - 30 Zinc concentrate treated Domestic tonnes 199,000 Purchased tonnes 2,600 Total tonnes 201,600 Recovery % 97 Zinc metal pro
Slide 29: 2013 Capital Expenditures
2013 Capital Expenditures1 (figures in C$ millions) Guidance 20131 Growth Lalor2 139 Constancia2 961 Reed2 44 Capitalized Interest and Other 49 Total growth capital 1,193 Sustaining 78 Total capital expenditures 1,271 1 2013 guidance based on figures disclosed in Hudbay’s news release entitled, “Hud
Slide 30: 2013 Exploration Expenditures
2013 Exploration Expenditures Year Ended Annual 2013 (C$ millions) 2012 Actual Guidance Manitoba 15 20 South America 20 18 Other North America 9 2 Total exploration expenditures 44 40 Capitalized spending - (5) Total exploration expenses $44 $35 Total exploration budget will enable approximately: 55
Slide 31: Growth of Mineral Deposits
Growth of Mineral Deposits Discoveries in the Greenstone Belt Flin Flon ∕∕ 62.5 Lalor Trout Lake 777 Stall Lake Chisel U/G Callinan Chisel Osborne Anderson Konuto Spruce Schist Lake Centennial Westarm Chisel Pit Coronation White Lake Dickstone Rod Initial resource Photo Added resource Ghost & Lost C
Slide 32: Lalor Project Guidance
Lalor Project Guidance CAPEX for new concentrator (including paste backfill plant) estimated at $353 million Q2-Q4 2013 $122 million • Scope changes include increase in grinding 2014 $196 million capacity by 20% to 5,400 tonnes per day 2015 $138 million $90 million increase to concentrator budget To
Slide 33: Lalor Mine Schedule
Lalor Mine Schedule As at March 30, 2013 2009 2010 2011 2012 2013 2014 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Permitting Engineering Procurement Surface Construction Underground Development Underground Construction and Electrical Installations Production Shaft Excava
Slide 34: Lalor Concentrator Project Schedule
Lalor Concentrator Project Schedule As at March 30, 2013 2012 2013 2014 2015 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Permitting Engineering Procurement Construction Commissioning Project Completion INVESTOR PRESENTATION l 34
Slide 35: Constancia Capital Spending
Constancia Capital Spending (US$ millions) Q2-Q4 2013 804 2014 262 Total estimated future capital spending 1,066 Total spent in 2012 323 Total spent Q1 2013 157 Total1 1,546 1 The total project budget does not reflect pre-production costs or revenue nor life of mine community agreement obligations,
Slide 36: Constancia Project – Site Plan and Layout
Constancia Project – Site Plan and Layout INVESTOR PRESENTATION l 36
Slide 37: Current Schedule at Constancia
Current Schedule at Constancia 2011 2012 2013 2014 2015 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Permitting Mine Permit Front End Engineering Design Construction Camp Procurement Community Agreements Board Approval Power Line TMF and WRF Plant Pampacancha Feasibility Study Commiss
Slide 38: Constancia Production Profile
Constancia Production Profile 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 production expected to average: $0.84/lb of copper for first 5 years
Slide 39: Constancia Project Contingency
Constancia Project Contingency Capital costs budget Area Base Cost Contingency & Growth Dollars Contingency & Growth % of Base $ US$ millions US$ millions Mining 145 12 8% Mine Equipment 151 2 1% Plant 340 57 17% Heavy Civil Works (TMF & reservoirs) 178 42 24% Other Infrastructure 117 21 18% Site Ac
Slide 40: Constancia Regional Infrastructure – Port
Constancia Regional Infrastructure – Port 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 Currently formalizing expansion pla
Slide 41: Formalized LOM Agreement with Local Communities
Formalized LOM Agreement 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 INVESTOR PRESENTATION l 41
Slide 42: Project De-Risking with Experienced Partners
Project De-Risking with Experienced Partners Stracon GyM Relevant Experience Currently operating in Peru Toromocho Experienced in mining and major earth works El Brocal Established labour force and operating team Marcona Experienced procurement and maintenance La Arena Carry over from design, constr
Slide 43: Peru Reserves Overview
Peru Reserves Overview As at August 8, 2012 Constancia Mineral Reserves Category Ore (M tonnes) Cu (%) Mo (g/t) Au (g/t) Ag (g/t) Proven 349 0.37 100 0.043 3.29 Probable 54 0.24 60 0.035 2.98 Pampacancha Mineral Reserves Proven 10 0.54 170 0.318 4.20 Probable 37 0.46 140 0.276 4.56 Total Mineral Res
Slide 44: Peru Resources Overview
Peru Resources Overview As at August 8, 2012 Constancia Mineral Resources Category M (tonnes) Cu (%) Mo (g/t) Au (g/t) Ag (g/t) Measured 119 0.23 62 0.038 2.3 Indicated 344 0.20 58 0.034 2.0 Inferred 219 0.19 49 0.032 1.8 Pampacancha Mineral Resources Category M (tonnes) Cu (%) Mo (g/t) Au (g/t) Ag
Slide 45: Manitoba Mineral Reserves
Manitoba Mineral Reserves As at January 1, 2013 Category Tonnes Cu (%) Zn (%) Au (g/t) Ag (g/t) 7771 Proven 4,959,000 2.37 4.05 1.95 27.31 Probable 6,448,000 1. 84 4.40 1.79 28.49 Lalor – Base Metal Proven 57,000 0.48 12.40 0.63 15.52 Probable 13,147,000 0.67 8.15 1.59 23.62 Lalor – Gold Zone Probab
Slide 46: Manitoba Mineral Resources
Manitoba Mineral Resources As at September 30, 2012 Category Tonnes Cu (%) Zn (%) Au (g/t) Ag (g/t) 7771 Inferred 782,000 1.06 4.43 1.75 31.15 Lalor – Base Metal Inferred 3,191,000 0.62 8.83 1.24 23.07 Lalor – Gold Zone Inferred 7,338,000 0.41 0.32 4.63 31.32 Lalor – Copper Gold Zone Inferred 1,461,
Slide 47: Reed Copper Project
Reed Copper Project1 Mineral Reserves as at March 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 Reed copper project INVESTO
Slide 48: Other Properties
Other Properties Mineral Resources Category Tonnes Cu (%) Zn (%) Au (g/t) Ag (g/t) Pb (%) Back Forty1 Open Pit Measured 4,721,000 0.55 3.49 2.24 26.77 0.13 Indicated 4,927,000 0.14 1.49 1.90 18.30 0.21 Inferred 152,000 0.19 2.86 2.76 34.56 0.39 Back Forty Underground Measured 1,982,000 0.29 5.04 1.9
Slide 49: Copper Equivalent Reserves and Resources
Copper Equivalent Reserves and Resources All Metals Project Category Cu Equivalent (000 tonnes) 2013 2012 Change Constancia Proven & Probable 1,886 1,911 (25) Measured & Indicated 1,329 - 1,329 Inferred 566 75 491 Pampacancha Proven & Probable 377 - 377 Measured & Indicated - 381 (381) Inferred 27 -
Slide 50: Precious Metal Equivalent Reserves and Resources
Precious Metal Equivalent Reserves and Resources1 Project Category Au Equivalent (000 ounces) 2013 2012 Change Constancia2 Proven & Probable 1,385 1,389 (4) Measured & Indicated 1,132 - 1,132 Inferred 477 77 400 Pampacancha Proven & Probable 566 - 566 Measured & Indicated - 635 (635) Inferred 43 - 4
Slide 51: Additional Information
Additional Information The reserve and resource estimates included in this presentation were prepared in accordance with NI 43-101 and the Canadian Institute on Mining, Metallurgy and Petroleum Standards on Mineral Resources and Reserves: Definitions and Guidelines. All mineral resources referred to
Slide 52: Peru
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 filed on SEDAR by Hudbay on
Slide 53: Reed
Reed The weighted average (based on planned production tonnage) used in the Reed pre-feasibility study for mineral reserve estimation for copper was US$2.95 per pound, the gold price was US$1,269.09 per ounce and the silver price was US$24.78 per ounce using an exchange rate of 1.034 C$/US$. Other P
Slide 54: Qualified Person
Qualified Person 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. The technical and scientific information related to all other sites and projects contain
Slide 55: For more information contact: John Vincic
Constancia project : Flotation and copper concentrate thickener areas 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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