Hudbay Minerals Inc · TSX:HBM
Hudbay Minerals — BofAML 2014 Global Metals, Mining & Steel Conference
42 slides from Hudbay Minerals's conference presentation, May 2014
Slide 1: According to Plan
ACCORDING TO PLAN BofAML 2014 Global Metals, Mining & Steel Conference May 2014 HBM
Slide 2: Cautionary Information
Cautionary 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
Slide 3: Cautionary Information (continued)
Cautionary Information (continued) Forward Looking 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, the impact o
Slide 4: Cautionary Information (continued) - Information Concerning Augusta
Cautionary Information (continued) Information Concerning Augusta Except as otherwise expressly indicated herein, the information concerning Augusta contained in this presentation has been taken from and is based solely upon Augusta’s public disclosure on file with the relevant securities regulatory
Slide 5: Cautionary Information (continued)
Cautionary Information (continued) The scientific and technical information in respect of Hudbay contained in this presentation related to the Constancia project has been prepared by or under the supervision of Cashel Meagher, P.Geo., Hudbay’s Vice President, South America Business Unit. The scienti
Slide 6: About Hudbay
About Hudbay TSX, NYSE, BVL Symbol HBM Market Capitalization1 $1.8 billion Integrated base and precious metals mining Shares Outstanding 193 million company that became publicly traded in 2004 Available Liquidity $1.3 billion Operating mines, development projects and processing facilities located
Slide 7: 2013: Recent Achievements and Challenges
2013: Recent Achievements and Challenges ON TRACK TO ACHIEVE OUR GROWTH OBJECTIVES IN 2014 Stable and steady low-cost production 777 Missed copper guidance Higher processing costs due to lower throughput Commercial production achieved ahead of Production Reed guidance and under budget Prod
Slide 8: Near-Term Production Growth
Near-Term Production Growth1 OPPORTUNITY FOR A RE-RATE IS SIGNIFICANT AS WE DELIVER GROWTH 570% Increase in Cu 137% Increase in 19% Increase in Zn Production Au-Eq. Production2 Production (kt) (koz) (kt) 7774 Lalor5 Constancia6 Reed7 1. Represents production growth from 2013 actual production to 201
Slide 9: Constancia Project
Constancia Project ADVANCED DEVELOPMENT Life of Mine1 Over 8 million man- Ownership 100% hours without lost time Daily ore throughput 80k tpd accident recently Avg. annual Cu production2 82k tonnes achieved Cash cost per Cu lb3 US$1.25/lb Project over 71% Mine and mill unit cost4 US$7.48/tonne c
Slide 10: Constancia Construction Progress
Constancia Construction Progress Constancia pre-stripping activities Constancia tailings management facility Constancia cyclone banks Crushed ore stockpile conveyors INVESTOR PRESENTATION l 10
Slide 11: 777 Mine
777 Mine STEADY, LOW-COST PRODUCTION Life of Mine1 > 6 lost-time accidents over past 6 years Ownership 100% > Mature mine with steady cost performance Daily ore throughput 4,500 tpd > $4 million underground exploration program looking for Avg. Annual Cu production2 25k tonnes mine life extensions 1,
Slide 12: Lalor Mine
Lalor Mine Life of Mine2 PRODUCTION; PHASE 2 RAMP-UP Ownership 100% 1,000 days without a lost-time Daily ore throughput 3,300 tpd accident Avg. annual Zn production3 59k tonnes Avg. annual Au-Eq. production3 43k ounces $432 million of overall $441 million1 Avg. annual Cu production3 5k tonnes ca
Slide 13: Reed Mine
Reed Mine COMMERCIAL PRODUCTION ACHIEVED Life of Mine1 > 2-year construction program Ownership 70% Daily ore throughput 1,300 tpd completed with no lost-time Avg. annual Cu production2 15k tonnes accidents Cash cost per lb Cu3 $1.64/lb > Achieved commercial Mine and mill unit cost3 $90/tonne product
Slide 14: New Period of Exploration
New Period of Exploration $20 MILLION EXPLORATION BUDGET PLANNED FOR 2014 Lalor Cross-Section with 2014 Exploration Platform Constancia Exploration to Resume in 2014 > Airborne geophysical program 0m completed Vent Production Raise Shaft 500m Exploration Platform 1000m Legend Base metal zone Gold zo
Slide 15: Proposed Acquisition of Augusta
Proposed Acquisition of Augusta IDEAL FIT WITH HUDBAY’S DISCIPLINED GROWTH STRATEGY In February 2014, Hudbay announced intention to acquire Augusta > Enhances Hudbay’s market position as leading intermediate base metals company > Rosemont sequences well with Hudbay’s existing projects View of Rosemo
Slide 16: Production, Reserve and Resource Growth
Production, Reserve and Resource Growth1 SIGNIFICANT PRODUCTION GROWTH SUPPORTED BY LARGE RESERVE BASE Copper Production Growth Copper Reserve and Resource Growth2 350 (mm tonnes Cu) 300 0.9 250 Copper Production (kt Cu) 1.4 200 +92% in P+P Reserves 150 0.5 +570% 0.8 100 4.4 50 2.3 0 2013A 2014E 201
Slide 17: Global Producer with Leading Cash Costs
Net Cash Costs (US$/lb Cu) Copper Production (bn lbs) $0.00 $1.00 $1.50 $2.50 $0.50 $2.00 0.0 4.0 1.0 2.0 3.0 Southern Cu Freeport Chinalco Codelco Russian Cu Glencore Source: Wood Mackenzie Hudbay (2018) BHP Hudbay (2018) PF First Quantum Private Southern Cu MMG Rio Tinto Jiangxi Cu KGHM OZ Mineral
Slide 18: Strong Financial Capacity
Strong Financial Capacity WELL CAPITALIZED TO COMPLETE CONSTANCIA CONSTRUCTION AND ADVANCE ROSEMONT Hudbay Liquidity 1 > Sufficient financial capacity to fund remaining capital spending at Total Current Liquidity of $1.3 billion Constancia and Lalor > $150 million Constancia credit facility $150 Con
Slide 19: Near Term Milestones
Near Term Milestones Reed Lalor Constancia Commercial Production shaft Commercial production commissioning production 2014 2015 Q1 Q2 Q3 Q4 Q1 Q2 Rosemont Lalor Constancia Expiry of Completion of Initial Augusta Offer refurbished Snow production Lake Concentrator Note: All timelines are estimates IN
Slide 20: Why Hudbay?
Why Hudbay? DISCIPLINED GROWTH STRATEGY Focused on growth in net asset value, earnings and cash flow per share > Mining friendly jurisdictions in the Americas > VMS and porphyry deposits > Leverage operating, development and exploration expertise > Seeking development stage assets INVESTOR PRESENTAT
Slide 21: Appendix
Appendix INVESTOR PRESENTATION l 21
Slide 22: Appendix Contents
Appendix Contents By-product copper and zinc cost curves Additional capital required by 2020 as a % of market value 2014 guidance Constancia additional details Lalor additional details Precious metals stream Reserves and resources INVESTOR PRESENTATION l 22
Slide 23: 2013 Copper & Zinc By-Product Cost Curves
2013 Copper & Zinc By-Product Cost Curves1 250 Constancia (LOM) 200 C1 Cash Cost (100 x US$/lb) 150 100 Reed (LOM) 50 777 Mine (LOM) 0 0 10 20 30 40 50 60 70 80 90 100 -50 Cumulative Percentile Production (%) -100 Lalor (LOM) -150 777 Mine (2013) -200 -250 Cu Cash Cost Zn Cash Cost Source: Wood Mack
Slide 24: Additional Capital Required by 2020 as a % of Market Value
Additional Capital Required by 2020 as a % of Market Value 35% 30% $59 billion $13 billion 25% $43 billion $23 billion 20% $9.4 billion 15% $15 billion 10% $6 billion 5% $3 billion $1 billion 0% Copper Iron ore Coal - Therm Aluminum Zinc Coal - Met Nickel Gold Lead Source: Wood Mackenzie, Metals Mar
Slide 25: 2014 Guidance
2014 Guidance Manitoba contained metal in concentrate Guidance Year Ended Guidance 2014 Dec. 31, 2013 2013 Copper1 tonnes 41,000 – 55,000 29,930 33–38,000 Zinc1 tonnes 87,000 – 105,000 86,527 85–100,000 Precious Metals1 troy oz. 101,000 – 123,000 91,258 85–105,000 1 Includes 100% of Reed mine produc
Slide 26: 2014 Capital Expenditures Forecast
2014 Capital Expenditures Forecast C$ Millions Growth Lalor 51 Constancia 500 Capitalized Interest and Other 110 Total Growth Capital 661 Sustaining 110 Total Capital Expenditures 771 INVESTOR PRESENTATION l 26
Slide 27: 2014 Exploration Expenditures Budget
2014 Exploration Expenditures Budget C$ Millions Manitoba 15.8 Peru 2.1 Other 2.5 Total Exploration Expenditures 20.4 Manitoba Capitalized Spending (10.6) Total Exploration Expense 9.8 INVESTOR PRESENTATION l 27
Slide 28: 2014 Zinc Plant Guidance
2014 Zinc Plant Guidance Flin Flon Zinc Plant Zinc concentrate treated 195,000 – 225,000 tonnes Recovery 97% Unit Operating Costs1 C$0.30 - $0.37/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 discuss
Slide 29: Constancia - Access to Existing Infrastructure
Constancia - Access to Existing Infrastructure 83km access road from Yauri To be upgraded for concentrate haulage post commissioning Tintaya power substation 70km away Construction of power transmission line from Tintaya approximately 75% complete Completion expected in July 2014; in time for
Slide 30: Constancia – Site Plan and Layout
Constancia – Site Plan and Layout INVESTOR PRESENTATION l 30
Slide 31: Constancia - Current Schedule
Constancia - Current Schedule 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 Commercial Commissioning and Ramp Up P
Slide 32: Lalor Mine - Schedule
Lalor Mine - Schedule 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 Excavation and Shaft Stat
Slide 33: Precious Metals Stream Overview
Precious Metals Stream Overview US$750 million in upfront deposit payments from Silver Wheaton for delivery of: 100% of payable gold and silver from 777 mine until the end of 2016; and 50% of payable gold and 100% of payable silver thereafter for the remainder of life of mine 100% of payable s
Slide 34: Peru Reserves Overview
Peru Reserves Overview 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.
Slide 35: Peru Resources Overview
Peru Resources Overview 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/
Slide 36: Manitoba Mineral Reserves
Manitoba Mineral Reserves As at January 1, 2014 Category Tonnes Cu (%) Zn (%) Au (g/t) Ag (g/t) 7771 Proven 4,893,000 2.27 4.01 1.84 24.71 Probable 5,707,000 1. 34 4.24 1.79 24.69 Lalor – Base Metal2 Proven 1,332,000 0.73 8.99 1.53 17.49 Probable 11,334,000 0.68 7.81 1.56 23.77 Lalor – Gold Zone Pro
Slide 37: Manitoba Mineral Resources
Manitoba Mineral Resources As at September 30, 2013 Category Tonnes Cu (%) Zn (%) Au (g/t) Ag (g/t) 7771 Inferred 784,000 1.05 4.49 1.77 30.61 Lalor – Base Metal2 Inferred 3,832,000 2.04 5.77 3.47 21.24 Lalor – Gold Zone Inferred 6,281,000 0.42 0.49 4.70 31.48 Reed Inferred 233,000 4.31 0.52 0.38 4.
Slide 38: Copper Equivalent Reserves and Resources
Copper Equivalent Reserves and Resources1 All Metals Project Category Cu Equivalent (000 tonnes) 2014 2013 Change Constancia2 Proven & Probable 2,655 2,263 392 Measured & Indicated 1,045 1,329 (284) Inferred 503 593 (90) Lalor Proven & Probable 663 705 (42) Inferred 483 579 (96) 7773 Proven & Probab
Slide 39: Precious Metal Equivalent Reserves and Resources
Precious Metal Equivalent Reserves and Resources1 Project Category Au Equivalent (000 ounces) 2014 2013 Change Constancia2 Proven & Probable 2,341 1,951 390 Measured & Indicated 972 1,132 (160) Inferred 441 520 (79) Lalor Proven & Probable 1,209 1,137 72 Inferred 1,557 1,753 (196) 7773 Proven & Prob
Slide 40: 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 on Mining, Metallurgy and Petroleum Standards on Mineral Resou
Slide 41: 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
Slide 42: For more information contact
Constancia primary crusher For more information contact: Candace Brûlé Director, Investor Relations Tel: 416.814.4387 Email: candace.brule@hudbayminerals.com HBM
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