Hudbay Minerals Inc · TSX:HBM
Hudbay Minerals — 2016 TD Securities Mining Conference
38 slides from Hudbay Minerals's conference presentation, Jan 27, 2016
Slide 1: Investor Presentation
Investor Presentation January 2016 HBM INVESTOR PRESENTATION
Slide 2: Cautionary Information
Cautionary 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, other tha
Slide 3: Cautionary Information (continued)
Cautionary 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, risks generally associated with the mining industry
Slide 4: Cautionary Information (continued)
Cautionary Information (continued) 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 5: About Hudbay
About Hudbay Clear proven strategy TSX, NYSE, BVL Symbol HBM Investment-grade countries in the Americas Market Capitalization1 C$0.6 billion VMS and porphyry geological focus Shares Outstanding 235 million Exploration through junior partners; mine construction and Committed Liquidity2 $0.3 billion e
Slide 6: Life of Mine
Life of Mine1 Mine Life (years) Average LOM Annual Production2 (000 tonnes) 82 59 Constancia 22 51 25 15 5 Cu Cu Zn Cu Zn Cu Lalor 15 Constancia Lalor 777 Reed Production LOM By-Product Cash Costs3 250 777 5 C1 Cash Cost (100 x $/lb) 200 150 100 50 0 0 10 20 30 40 50 60 70 80 90 100 Reed 4 -50 Cumul
Slide 7: Track-Record Delivering Growth
Track-Record Delivering Growth1 330% 90% 35% INCREASE IN CU PRODUCTION INCREASE IN AU-EQ. PRODUCTION2 INCREASE IN ZN PRODUCTION (kt) (koz) (kt) 200 250 150 200 150 100 150 100 100 50 50 50 - - - 3 3 3 2014A 2015A 2016G 2014A 2015A 2016G 2014A 2015A 2016G Manitoba Constancia 1. Represents production
Slide 8: 2015 Production in Line with Guidance
2015 Production in Line with Guidance FURTHER GROWTH EXPECTED IN 20161 12% 16% 9% INCREASE IN CU PRODUCTION INCREASE IN AU-EQ. PRODUCTION2,3 INCREASE IN ZN PRODUCTION (kt) (koz) (kt) 200 200 150 150 150 100 100 100 50 50 50 - - - 4 4 4 2015G 4 2015A 2016G 4 2015G 2015A 2016G4 2015G 2015A 2016G Hudba
Slide 9: Constancia Mine
Constancia Mine IN PRODUCTION Reached commercial Life of Mine1 production on April 30, 2015 Ownership 100% Daily ore throughput 80k tpd Avg. annual Cu production2 82k tonnes Ocean shipments of copper concentrate began in April Cash cost per lb Cu3 $1.25/lb Mine and mill unit cost4 $7.48/tonne Avg. a
Slide 10: Constancia Update
Constancia Update IN PRODUCTION Focus on optimization of mine costs and plant performance Copper recoveries plateaued at 80% due to oxide content Combined unit operating costs $8.30/tonne, to end of Q3/15, below guidance range of $9.00-$10.90/tonne Constancia pit Logistics issues resolved with addit
Slide 11: Lalor Mine
Lalor Mine OPERATING AT STEADY STATE Life of Mine1 Main production shaft complete and Ownership 100% operating at a steady state; capacity of Daily ore throughput 3,300 tpd 6,000 tonnes per day (ore + waste) Avg. annual Zn production2 59k tonnes Avg. annual Au-Eq. production2 43k ounces Avg. annual
Slide 12: Lalor Exploration
Lalor Exploration UNDERGROUND EXPLORATION PROGRAM UNDERWAY Phase 1 – underground drilling Lalor Cross-Section1 with Exploration Ramp, Looking West supports surface drill results 14-hole 4,500-metre program 0m confirmed high grade Cu-Au Production mineralization Shaft In process of upgrading the reso
Slide 13: 777 Mine
777 Mine STEADY, LOW-COST PRODUCTION Life of Mine1 Mature mine with steady cost performance Ownership 100% Strike action concluded in August 2015 Daily ore throughput 4,500 tpd Avg. Annual Cu production2 25k tonnes Avg. Annual Zn production2 51k tonnes Cash cost per lb Cu3 $(0.52)/lb Mine and mill u
Slide 14: Reed Mine
Reed Mine IN PRODUCTION Life of Mine1 Ownership 70% Achieved commercial production ahead of Daily ore throughput 1,300 tpd guidance and under budget Avg. annual Cu production2 15k tonnes Cash cost per lb Cu3 $1.64/lb Mine and mill unit cost4 C$90/tonne Avg. annual sustaining capital C$10 million Min
Slide 15: Rosemont Project
Rosemont Project 80%-OWNED1 COPPER PROJECT IN ARIZONA, USA Hudbay acquired control of Rosemont project in July 2014 Completed 43 hole confirmatory drill program with approximately 30,000 metres drilled Metallurgical test program and engineering underway Permitting and community engagement progressin
Slide 16: Global Positioning on 2019E Cash Costs and Production
Net Cash Costs ($/lb Cu) Copper Production (bn lbs) 0.0 1.0 2.0 3.0 4.0 $0.00 $2.50 $5.00 ($7.50) ($5.00) ($2.50) Norilsk Codelco Jinchuan Freeport Boliden Glencore Vale BHP Hudbay (2019) Southern Cu Hudbay (2019) PF First Quantum Hudbay (2014) Rio Tinto Newcrest KGHM UGMK Antofagasta FIRST QUARTILE
Slide 17: Capital Structure
Capital Structure September 30, 2015 Cash and cash equivalents $114 million Debt $1.3 billion Senior unsecured notes due 2020 $920 million Credit facilities1 $360 million Equipment finance facility $70 million Total committed liquidity (cash and undrawn credit facilities)2 $300 million 1. Includes t
Slide 18: High-Quality Copper Growth Story
High-Quality Copper Growth Story Focus on VMS/porphyries in low political risk countries in the Americas Clear, consistent criteria for growth Leveraging proven abilities in sustainable mine development and operation Well-positioned for current commodity price environment, with low cost, long life a
Slide 19: Appendix
Appendix INVESTOR PRESENTATION 19
Slide 20: Appendix Contents
Appendix Contents By-product copper and zinc cost curves Global refined metal market balance Growth of mineral deposits 2016 guidance Precious metals stream Reserves and resources INVESTOR PRESENTATION 20
Slide 21: Copper & Zinc By-Product Cost Curves
Copper & Zinc By-Product Cost Curves1 Source: Wood Mackenzie (2014 cost curves) 1. By-product costs calculated using Wood Mackenzie’s by-product costing methodology, which is materially different from the by-product costs reported by Hudbay in its public disclosure 2 .777 and Constancia by-product c
Slide 22: Global Refined Metal Market Balance
Global Refined Metal Market Balance Source: CRU, Copper Market Outlook and Zinc Market Outlook, July 2015 By 2019, both copper and zinc refined metal markets are expected to be in significant deficit INVESTOR PRESENTATION 22
Slide 23: 2016 Production and Unit Cost Guidance
2016 Production and Unit Cost Guidance Contained Metal in Concentrate1 2016 Guidance 2015 Production 2015 Guidance2 Manitoba3 Copper Tonnes 40,000 – 50,000 41,383 40,000 – 50,000 Zinc Tonnes 100,000 – 125,000 102,919 95,000 – 120,000 Precious Metals4 Ounces 95,000 – 115,000 92,793 83,000 – 103,000 C
Slide 24: 2016 Production and Unit Cost Guidance
2016 Production and Unit Cost Guidance Flin Flon Zinc Plant Zinc Concentrate Treated 195,000 – 240,000 tonnes Zinc Metal Produced 100,000 – 120,000 tonnes Unit Operating Costs1 C$0.38 - $0.46/lb 1.Forecast unit operating costs are calculated on the same basis as reported unit operating costs in Hudb
Slide 25: 2016 Capital Expenditure Guidance
2016 Capital Expenditure Guidance1 $ Millions Sustaining Capital Manitoba 90 Peru 180 Total Sustaining Capital 270 Growth Capital Arizona2 30 Total Growth Capital 30 Capitalized Exploration 3 Total Capital Expenditure 303 1.Excludes capitalized interest. 2.Estimated spending for Rosemont to completi
Slide 26: 2016 Exploration Guidance
2016 Exploration Guidance $ Millions Manitoba 5 Peru 1 Arizona - Generative and Other 5 Total Exploration Expenditures 11 Capitalized Spending1 (3) Total Exploration Expense 8 1.Assumes $3 million of Manitoba expenditures will be capitalized. INVESTOR PRESENTATION 26
Slide 27: Precious Metals Stream Overview
Precious Metals Stream Overview Payments to Hudbay from Silver Wheaton Production payments 1 Upfront payment plus $5.90/oz Silver $885 million $400/oz Gold . Delivery from Hudbay to Silver Wheaton 2016 Remaining Life of Mine 777 Silver 100% Silver 100% Gold 100% Gold 50% Remaining Life of Mine Const
Slide 28: Peru Mineral Reserves
Peru Mineral Reserves 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 0.2
Slide 29: Peru Mineral Resources
Peru Mineral Resources 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/t
Slide 30: Manitoba Mineral Reserves
Manitoba Mineral Reserves As at January 1, 2015 Category Tonnes Cu (%) Zn (%) Au (g/t) Ag (g/t) 7771 Proven 3,729,000 2.10 4.65 1.86 27.39 Probable 3,943,000 1. 50 4.23 1.80 24.09 Lalor – Base Metal Proven 3,404,000 0.52 8.00 1.27 17.93 Probable 8,452,000 0.71 6.72 2.12 26.62 Lalor – Gold Zone Prove
Slide 31: Manitoba Mineral Resources
Manitoba Mineral Resources As at September 30, 2014 Category Tonnes Cu (%) Zn (%) Au (g/t) Ag (g/t) 7771 Indicated 733,000 0.99 3.52 1.81 26.13 Inferred 717,000 1.03 4.79 1.79 32.93 Lalor – Base Metal2 Inferred 5,332,000 1.56 5.21 2.75 25.32 Lalor – Gold Zone Inferred 3,890,000 0.38 0.24 5.50 31.40
Slide 32: Copper Equivalent Reserves and Resources
Copper Equivalent Reserves and Resources1 All Metals Project Category Cu Equivalent (000 tonnes) Year-over-Year Change Due to 2015 2014 Change Price Deck Constancia2 Proven & Probable 2,552 2,655 (103) (103) Measured & Indicated 1,004 1,045 (41) (41) Inferred 484 503 (19) (19) Lalor Proven & Probabl
Slide 33: Precious Metal Equivalent Reserves and Resources
Precious Metal Equivalent Reserves and Resources1 Project Category Au Equivalent (000 ounces) Year-over-Year Change Due to 2015 2014 Change Price Deck Constancia2 Proven & Probable 2,138 2,341 (203) (203) Measured & Indicated 889 972 (83) (83) Inferred 401 441 (40) (40) Lalor Proven & Probable 1,330
Slide 34: 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 35: Additional Information
Additional Information 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 file
Slide 36: Rosemont Historical Reserves and Resources
Rosemont Historical Reserves and Resources1 Historical Mineral Reserves as at July 24, 2012 Category M (tonnes) Cu (%) Mo (%) Ag (g/t) Proven 279,481 0.46 0.015 4.11 Probable 325,798 0.42 0.014 4.11 Historical Mineral Resources as at July 17, 2012 Category M (tonnes) Cu (%) Mo (%) Ag (g/t) Inferred
Slide 37: Rosemont Additional Information
Rosemont Additional Information The key assumptions, parameters and methods used by Augusta to prepare the historical estimate were the following: The Rosemont mineral reserves are effective as of July 24, 2012 and reported on a Net Smelter Return (NSR) cut-off of $4.90 per ton. NSR values are based
Slide 38: For more information contact
For more information contact: Jacqueline Allison Director, Investor Relations Tel: 416.814.4387 Email: jacqueline.allison@hudbayminerals.com HBM INVESTOR PRESENTATION
Hudbay Minerals — 2016 TD Securities Mining Conference on 6ix