Hudbay Minerals Inc · TSX:HBM
Hudbay Minerals — BMO Conference: Constancia Virtual Site Visit 2021
62 slides from Hudbay Minerals's conference presentation, March 2021
Slide 1: Constancia Virtual Site Visit Presentation
C O N S TAN C I A V I R T U AL S I T E V I S I T P R E S E N TAT I O N March 2021
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: Constancia Virtual Site Visit Agenda
CONSTANCIA VIRTUAL SITE VISIT AGENDA Introduction 1 Introduction to Hudbay Constancia Overview 2 Overview of Constancia Operations Optimization Opportunities 3 Optimization Opportunities Regional Exploration 4 Regional Exploration ESG Principles 5 Hudbay’s ESG Principles in Peru Appendix 6 Appendix
Slide 4: Introduction to Hudbay
Introduction 1 Introduction to Hudbay Constancia Overview Optimization Opportunities Regional Exploration ESG Principles PETER KUKIELSKI PRESIDENT & CEO Appendix 4
Slide 5: Hudbay Senior Management Team Members
HUDBAY SENIOR MANAGEMENT TEAM MEMBERS PRESENTERS: Introduction PETER KUKIELSKI CASHEL MEAGHER JAVIER DEL RIO PRESIDENT & CEO SVP & COO VP SOUTH AMERICA B.U. • More than 30 years of sector • Extensive background in • Responsible for strategic and experience in base metals, exploration, resource and o
Slide 6: Diversified Mid-Tier Copper Producer
DIVERSIFIED MID-TIER COPPER PRODUCER TSX, NYSE, BVL Symbol HBM Market Capitalization1 C$2.7 billion Shares Outstanding2 261 million Introduction Available Liquidity3 $724 million Debt Outstanding4 $1.2 billion Constancia 20205 20216 Overview MANITOBA 2% 2% 777 REVENUE BY 15% 23% Lalor METAL 6% WIM,
Slide 7: Strong Environmental, Social & Governance Performance
STRONG ENVIRONMENTAL, SOCIAL & GOVERNANCE (“ESG”) PERFORMANCE INDUSTRY LEADER IN RESPONSIBLE MINING ENVIRONMENT SOCIAL IMPACT HEALTH & SAFETY GOVERNANCE Introduction GHG emissions declined Manitoba COVID-19 relief Constancia has the best Board refreshed in 2019 with further in 2019 (1.8%) do
Slide 8: Long Life Assets Located in Mining Friendly Regions
LONG LIFE ASSETS LOCATED IN MINING FRIENDLY REGIONS 2 Past Production Reserve Life1 M&I Resource Life Inferred Resource Life 3 4 Constancia 5 17 5 2 Introduction Snow Lake 8 18 9 5 Constancia Rosemont 19 11 1 Overview 777 17 1.5 Optimization Opportunities LOCATED IN TOP MINING FRIENDLY JURISDICTIONS
Slide 9: Proven Track Record of Operational Excellence & Low Cost Mines
PROVEN TRACK RECORD OF OPERATIONAL EXCELLENCE & LOW COST MINES • Proven track record of achieving or exceeding copper production guidance over the last five years Introduction • Hudbay is well-positioned on the cash cost curve Constancia • Focus on cost control and continuous improvement initiatives
Slide 10: Focused on Free Cash Flow Generation & Prudent Balance Sheet Management
FOCUSED ON FREE CASH FLOW GENERATION & PRUDENT BALANCE SHEET MANAGEMENT • Generated ~$2.2B of EBITDA and ~$650M of free cash flow over the last five years and during the volatile copper price environment due to un-hedged production and stable low-cost profile Introduction • Prudent balance sheet man
Slide 11: Prudent Capital Allocation
PRUDENT CAPITAL ALLOCATION LEVERAGING EXPERTISE THAT WAS DEMONSTRATED THROUGH BEST IN CLASS DELIVERY OF CONSTANCIA • Successfully constructed Constancia (Peru), Lalor (Canada) and Reed (Canada) mines Introduction simultaneously during 2012-2014 PAMPACANCHA NEW BRITANNIA Constancia ~160% CuEq GRADE I
Slide 12: Constancia Production Profile
CONSTANCIA PRODUCTION PROFILE HIGH-GRADE PAMPACANCHA TO GROW COPPER AND GOLD PRODUCTION • Revised Constancia mine plan is expected at the end of March 2021, incorporating the commencement of mining at Pampacancha in 2021 and reserves at Constancia North Introduction Cu Au1 Zn (kt) (koz) (kt) Constan
Slide 13: Proven Mining Industry Experience
PROVEN MINING INDUSTRY EXPERIENCE LEADING MINE DEVELOPMENT & OPERATING COST PERFORMANCE RAMP-UP FROM FIRST PRODUCTION TO COMMERCIAL • Constancia’s project development and PRODUCTION WAS 3X FASTER THAN THE PEER AVERAGE Introduction mine ramp-up was best in class 57 Months • Continuous operational imp
Slide 14: Adding Value Through Exploration
PROVEN MINING INDUSTRY EXPERIENCE ADDING VALUE THROUGH EXPLORATION • Hudbay has been successful in significantly increasing the known reserves at both of its flagship Introduction operations • Constancia mine reserves have more than doubled since the acquisition in 2011, from 277Mt to 670Mt Constanc
Slide 15: Leading Organic Growth Pipeline
LEADING ORGANIC GROWTH PIPELINE HUDBAY HAS BUILT A DIVERSIFIED PORTFOLIO FOCUSED ON COPPER & GOLD GROWTH RESOURCE FEASIBILITY STUDY Introduction EXPLORATION PRODUCTION DEFINITION COMPLETE Constancia North Constancia resource modelling expected Q1 2021 Constancia Mine Overview Cu-Mo-Au-Ag Quehuincha
Slide 16: 2021 Key Objectives
2021 KEY OBJECTIVES About Hudbay • FOCUS on operational efficiencies, maintain low-costs of production to continue to generate Strong ESG positive cash flow and strong returns on invested capital Performance • EXECUTE development and commence mining activities at the high-grade Pampacancha Long Life
Slide 17: Overview of Constancia Operations
Introduction 2 Overview of Constancia Operations Constancia Overview Optimization Opportunities Regional Exploration ESG Principles CASHEL MEAGHER SVP & COO Appendix 17
Slide 18: Constancia Location
CONSTANCIA LOCATION MINE Cusco TOWN RAILROAD CUSCO ROAD Introduction Las Bambas Constancia Overview CONSTANCIA PERU Yauri Optimization Opportunities Tintaya Antapaccay Regional Exploration Lima AREQUIPA Imata CONSTANCIA ESG Principles Arequipa Appendix Cerro Verde MOQUEGUA & Matarani 0 TACNA 100km 1
Slide 19: Constancia History Timeline
CONSTANCIA HISTORY TIMELINE COMMERCIAL PRODUCTION ACHIEVED ONLY 4 YEARS AFTER GREENFIELD ACQUISITION Introduction Aug 2012 updated technical report Aug 2013 Mar 2011 Hudbay’s board Updated capital Hudbay acquires approves cost estimate Aug 2014 Constancia Constancia through construction of indicates
Slide 20: Constancia Mine Overview
CONSTANCIA MINE OVERVIEW CONTINUOUS OPTIMIZATION INITIATIVES • Increasing throughput and quarterly trend in copper recoveries • Continued integration of an automated, advanced process control system • Flotation improvements – optimizing water recovery in the tailings thickener Introduction and the i
Slide 21: Constancia Production Profile
CONSTANCIA PRODUCTION PROFILE HIGH-GRADE PAMPACANCHA TO GROW COPPER AND GOLD PRODUCTION • Revised Constancia mine plan is expected at the end of March 2021, incorporating the commencement of mining at Pampacancha in 2021 and reserves at Constancia North Introduction Cu Au (kt) (koz) Constancia Overv
Slide 22: Global Copper Landscape
GLOBAL COPPER LANDSCAPE • There are few assets in the global copper landscape where investors can get significant exposure to a top-tier copper mine Introduction 50 LARGEST GLOBAL COPPER MINES BASED ON 2020 COPPER PRODUCTION (kt) 2 Hudbay Government Ownership Majors Constancia 1.2Mt 1,000 Overview 8
Slide 23: General Site Overview
GENERAL SITE OVERVIEW Introduction Constancia Pit Constancia Mill Location Overview Optimization Waste Rock Opportunities Facility Pampacancha Regional Deposit Exploration ESG Principles Tailings Management Facility Appendix 23
Slide 24: Mill Flowsheet
MILL FLOWSHEET Introduction Constancia Overview Optimization Opportunities Regional Exploration ESG Principles Appendix 24
Slide 25: Health & Safety Statistics
HEALTH & SAFETY STATISTICS SAFETY INDICATORS • Focused on reducing frequency and severity since production start Introduction • Below both 2020 Severity Index (SI) and Frequency Index (FI) targets Hudbay Peru LTI Frequency and Severity Hudbay Peru 2020 Severity and Frequency Index Constancia (employ
Slide 26: Instrumentation and Monitoring - Pit
INSTRUMENTATION AND MONITORING - PIT FASE Instrumentation V RADAR ZCG Summary 14 Introduction 64 ZCG20 Prisms ZCG19 -04 -04 ZCG21 1 ZCG20 -01 Radar Constancia -01 PHASE IV Overview ZCG 3 PHASE PHASE II 07 Monitoring III base ZCG19 Optimization ZCG19 PHASE RADAR -03 -02 VII LOCATION Opportunities 1 E
Slide 27: Instrumentation and Monitoring - WRF
INSTRUMENTATION AND MONITORING - WRF • There are no significant movements at the WRF (stable condition) • According to the monitoring of piezometers there is no significant variation of the piezometric level in the WRF Introduction • Daily inspections are carried out to coordinate waste dump activit
Slide 28: Instrumentation and Monitoring - TMF
INSTRUMENTATION AND MONITORING - TMF • Instrument monitoring indicates there are no significant movements and the structure presents a stable condition • 26 prisms were relocated to the crest after the 2020 construction ended • Vibrating wire piezometers, inclinometer pipes and oxygen sensors were c
Slide 29: Tailings Dam Raise
TAILINGS DAM RAISE • Construction of the dike to reach elevation 4120 in 2021 from the elevation 4110.2 in 2020 and downstream valley raise to elevation 4107 from 4077 (average of 4068.75W and 4084.5E) in 2020 Introduction • Construction in 2022 moved ahead in the downstream embankment (5.6 Mt in St
Slide 30: Copper Concentrate Transport to Port
COPPER CONCENTRATE TRANSPORT TO PORT MOST OF THE ROUTE SHARED WITH OTHER LARGE COPPER MINES IN THE REGION • We believe we have one of the best logistics team in Peru; proactively manages through social challenges along the transportation route to minimize impact to Constancia Introduction Constancia
Slide 31: Optimization Opportunities
Introduction 3 Optimization Opportunities Constancia Overview Optimization Opportunities Regional Exploration ESG Principles PETER AMELUNXEN VP TECHNICAL SERVICES Appendix 31
Slide 32: Optimization and Continuous Improvement
OPTIMIZATION AND CONTINUOUS IMPROVEMENT Introduction • Bulk Ore Sorting Enterprise Geometallurgy, • 2020-2021 Geometallurgy program ore sorting Constancia Advanced Process Overview • Advanced process control integration Control & Automation • New data historian (OSISOFT™ Pi) Bottleneck mapping, Opti
Slide 33: Geometallurgy
GEOMETALLURGY PRODUCTION FORECASTING AND OPTIMIZATION Pampacancha Copper Recovery [Std Reagents, Roughing] 100 95 Introduction • Geometallurgical studies allow us to 90 Recovery [%] • Improve the confidence of our production forecasts 85 80 Constancia • Make informed decisions about plant configurat
Slide 34: Sensor-Based Ore Sorting
SENSOR-BASED ORE SORTING SUCCESSFUL TRIAL OF CAVEX CYCLONES Introduction • Sensor-based ore sorting (XRF, XRT, PGNAA, etc.) can be done at two Constancia scales: Overview • Bulk –sorting ore at the shovel or loader post- blast Optimization • Particle – refers to sorting crushed material Opportunitie
Slide 35: Recovery Uplift Project
RECOVERY UPLIFT PROJECT PROJECT RECOVERY INCREASE Mill Pump Upgrades 90 1,600 Introduction Rougher Concentrate flow [m3/h] 88.27 88.45 88.53 88.49 1,400 88 87.90 Recovery [%] 87.25 1,200 86 86.19 1,000 Constancia 84 84.46 800 Overview 83.44 600 82 82.08 400 80 200 Optimization 78 0 Opportunities 6 7
Slide 36: Recovery Optimization Project
RECOVERY OPTIMIZATION PROJECT REGRIND AND CLEANER CIRCUIT DEBOTTLENECKING • Rougher concentrate flow Introduction needs to be increased from 800 m3/h to ~1,200 m3/h Constancia • Froth Crowders in Overview Roughers • Increase concentrate pumping Optimization • Increase regrind cyclone Opportunities c
Slide 37: Regional Exploration
Introduction 4 Regional Exploration Constancia Overview Optimization Opportunities Regional Exploration ESG Principles OLIVIER TAVCHANDJIAN VP EXPL. & GEOLOGY Appendix 37
Slide 38: Constancia North
CONSTANCIA NORTH 2019-2020 CONSTANCIA NORTH DRILLING INTERSECTED CU PORPHYRY & SKARN • Test a possible extension of Cu porphyry and Introduction high-grade skarn mineralization within 300m of current northern edge of Constancia pit Constancia Overview • Hole 316 intersected 78.6m @ 1.39% Cu, 305 g/t
Slide 39: Constancia North
CONSTANCIA NORTH CONSTANCIA NORTH DRILLING HAS EXTENDED THE RESERVE PIT TO THE NORTH • Shallow porphyry and skarn mineralization intersected in the 2019-2020 drilling at Constancia Introduction North has contributed to an extension of the Constancia reserve pit by approximately 300m where there are
Slide 40: Constancia North
CONSTANCIA NORTH CONSTANCIA NORTH DRILLING HAS ALSO EXTENDED THE RESOURCE PIT SHELL • In addition to the extension of the reserve pit, high grade mineralization with economic potential Introduction has also been extended to the north, which will contribute to an improvement of the head grade, which
Slide 41: Constancia North
CONSTANCIA NORTH UNDERGROUND POTENTIAL TO BE FURTHER INVESTIGATED • There is an additional opportunity to include more resources and/or improve the life of mine plan Introduction by mining some of the steeply dipping/narrower high-grade skarn mineralization as a satellite underground operation to th
Slide 42: Constancia Regional Potential
CONSTANCIA REGIONAL POTENTIAL MINERAL PROPERTIES WITHIN TRUCKING DISTANCE OF CONSTANCIA INFRASTRUCTURE Distance to Property Process Description Introduction Plant 0 5,000 10,000 Meters • Community surface rights Quehuincha North Target agreement completed Maria Reyna Constancia Pampacancha 5 km • Co
Slide 43: Maria Reyna Historical Drill Results
MARIA REYNA HISTORICAL DRILL RESULTS A summary of the historical drill results from Maria Reyna is contained in the table below, however a qualified person has not independently verified this historical data or the quality assurance and quality control program that was applied during the execution o
Slide 44: Exploration Permitting Timeline
EXPLORATION PERMITTING TIMELINE DRIVEN BY COMMUNITY RELATIONS AND PERMITTING • It can take up to 18 months to obtain drill permits Introduction Constancia Overview Optimization Opportunities Regional Exploration ESG Principles Appendix 44
Slide 45: Quehuincha North: Skarn Target
QUEHUINCHA NORTH: SKARN TARGET • Quehuincha North target is located 3km north of the Kusiorcco area Introduction • Field work was conducted to follow up on coincidence of aeromagnetic and radiometric anomalies • Mapping shows copper mineralization in skarn extending Constancia Overview for almost 2
Slide 46: Llaguen Project
LLAGUEN PROJECT GREENFIELD EXPLORATION • Located near existing Introduction infrastructure • Located near available Constancia workforce; 56km northeast Overview of Trujillo, the third largest city in Peru Optimization Opportunities • Mineralization drilled by Vale in 2006-2008 and is Regional open
Slide 47: Llaguen Project
LLAGUEN PROJECT HISTORICAL VALE DRILL RESULTS INTERSECTED MINERALIZATION • Vale drilled 23 holes totaling 10,834 metres Introduction • Results include 186.6 metres at 0.43% Cu A summary of the historical drill results from Llguen is contained in the table below, however a qualified person has not in
Slide 48: Hudbay's ESG Principles in Peru
Introduction 5 Hudbay’s ESG Principles in Peru Constancia Overview Optimization Opportunities Regional Exploration ESG Principles JAVIER DEL RIO VP SOUTH AMERICA B.U. Appendix 48
Slide 49: Government and Community Institutions
GOVERNMENT AND COMMUNITY INSTITUTIONS • We work with all levels of Government and Communities to develop stable operations and to maximize the impact of our social investment in our area of influence and beyond Introduction Level Applicable Area Election Next Election Candidates - political position
Slide 50: Local Political Context
LOCAL POLITICAL CONTEXT RENEWED AGREEMENTS WITH DISTRICTS AND COMMUNITIES DURING THE COVID-19 PANDEMIC IAI - DISTRICTS Introduction Chamaca: Specific Agreement for PEN 7M (2 years) was executed Livitaca: Specific Agreement for PEN Constancia 14M (4 years) was executed Overview Velille: Specific Agre
Slide 51: Recent Social Highlights
RECENT SOCIAL HIGHLIGHTS IN 2020 & 2021, HUDBAY HAS ADAPTED TO PROVIDE SUPPORT FOR THESE UNPRECEDENTED TIMES ● The "Tikary – Bordando el Futuro" Project, developed in the reactivation Introduction phase of the pandemic plan, was recognized in the “Proactivo Award” ● The Agrarian Development Program
Slide 52: Recent Environmental Highlights
RECENT ENVIRONMENTAL HIGHLIGHTS WE ALWAYS STRIVE TO ACHIEVE ENVIRONMENTAL BEST PRACTICES Introduction ● The ISO 14001:2015 recertification and migration to ISO 45001:2018 was awarded based on the successful audit of our environmental, health and safety management system Constancia Overview ● The Min
Slide 53: Social Investment Breakdown
SOCIAL INVESTMENT BREAKDOWN HUDBAY PERU HAS FIVE SOCIAL DEVELOPMENT AREAS Introduction Constancia Overview Optimization Opportunities Regional Exploration ESG Principles Appendix 53
Slide 54: Recent Social Investment
RECENT SOCIAL INVESTMENT COVID-19 AND COMMUNITY RELIEF Introduction Constancia Overview Optimization Opportunities Regional Exploration ESG Principles Appendix 54
Slide 55: Recent Social Investment (Continued)
RECENT SOCIAL INVESTMENT COVID-19 AND COMMUNITY RELIEF (CONTINUED) Introduction Constancia Overview Optimization Opportunities Regional Exploration ESG Principles Appendix * Estimated investment pending approval of the Work For Taxes program by the regional and health authorities 55
Slide 56: Q&A Session
SESSION HEM TMX Bnyse —
Slide 57: Appendix
PENDIX HEM TMX Bnyse —
Slide 58: Peru Mineral Reserves
PERU MINERAL RESERVES AS AT JANUARY 1, 20201 Introduction CATEGORY TONNES Cu (%) Mo (g/t) Au (g/t) Ag (g/t) CONSTANCIA1 Constancia Overview Proven 408,800,000 0.28 85 0.035 2.76 Probable 77,500,000 0.27 70 0.044 3.58 Optimization Opportunities Total Proven and Probable 486,300,000 0.28 83 0.036 2.89
Slide 59: Peru Mineral Resources
PERU MINERAL RESOURCES AS AT JANUARY 1, 20201 Introduction CATEGORY TONNES Cu (%) Mo (g/t) Au (g/t) Ag (g/t) CONSTANCIA Constancia Measured 122,700,000 0.18 55 0.028 1.77 Overview Indicated 154,300,000 0.20 65 0.033 1,87 Optimization Inferred 83,100,000 0.18 43 0.036 3.45 Opportunities PAMPACANCHA R
Slide 60: Additional Information – Reserves & Resources
ADDITIONAL INFORMATION – RESERVES & RESOURCES 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 Stand
Slide 61: Additional Information – Llaguen
ADDITIONAL INFORMATION – LLAGUEN VALE HISTORICAL DRILL HOLE INFORMATION Introduction From To Azimuth at Dip at Core Hole ID Easting Northing Elevation Easting Northing Elevation intercept intercept Size LL-06-001 748,956.8 9,146,263.8 2,184.8 748,956.8 9,146,296.8 2,127.6 0 -60 HQ Constancia LL-06-0
Slide 62: For More Information Contact
For More Information Contact: Candace Brûlé Director, Investor Relations 416.814.4387 | candace.brule@hudbay.com
Hudbay Minerals — BMO Conference: Constancia Virtual Site Visit 2021 on 6ix