Hudbay Minerals Inc · TSX:HBM
Hudbay Minerals — Merger or Acquisition (April 2023)
47 slides from Hudbay Minerals's merger presentation, Apr 13, 2023
Slide 1: Creating a Premier Americas-Focused Copper Producer
CREATING A PREMIER AMERICAS- FOCUSED COPPER PRODUCER April 2023 Extracting Value with Efficient Operations
Slide 2: Cautionary Information
CAUTIONARY INFORMATION Disclaimer This presentation, as supplemented or amended from time to time has been prepared in connection with the proposed acquisition by Hudbay Minerals Inc. (“Hudbay”) of all of the issued and outstanding common shares of Copper Mountain Mining Corporation (“Copper Mountai
Slide 3: Today's Speakers
TODAY’S SPEAKERS PETER KUKIELSKI GIL CLAUSEN PRESIDENT & CEO PRESIDENT & CEO More than 30 years of sector experience in base metals, More than 30 years of experience in management, precious metals and bulk materials across the globe, finance, development and operations at base metals and including l
Slide 4: Transaction Overview
TRANSACTION OVERVIEW Hudbay to acquire 100% of common shares of Copper Mountain Potential to unlock US$30 million in annual operating efficiencies and synergies for the benefit of both sets of shareholders OVERVIEW Expected to be accretive to Hudbay’s NAV per share Pro forma ownership to be 76% Hudb
Slide 5: On-Strategy Combination with Strong Industrial Logic
ON-STRATEGY COMBINATION WITH STRONG INDUSTRIAL LOGIC Commodity Efficiencies Diversification Deleveraging 29 Capital Scale Cu Allocation Copper Enhanced Core exposure to core competencies Accelerates Balanced commodity extract value and deleveraging weighting between Copper optimize costs initiatives
Slide 6: Diversified Portfolio in Tier 1 Jurisdictions
DIVERSIFIED PORTFOLIO IN TIER 1 JURISDICTIONS COPPER MOUNTAIN MASON Operating Mine Development Project +25 year mine life +25 year mine life Open pit Open pit 42kt annual Cu production 112kt annual Cu production British Columbia, Canada Cu Au Ag Nevada, USA Cu Mo Au Ag SNOW LAKE COPPER WORLD Operati
Slide 7: Copper Mountain Mine Overview
COPPER MOUNTAIN MINE OVERVIEW • 75% Copper Mountain Mining Corporation Current Ownership • 25% Mitsubishi Materials Corporation Location • 20km south of Princeton, B.C. (Canada) Property Area • 6,702 hectares (67 square kilometers) Deposit Type • Copper-gold porphyry Mine Type • Conventional open pi
Slide 8: Combination of Strong ESG Cultures
COMBINATION OF STRONG ESG CULTURES REDUCING CARBON FOOTPRINT WATER AND BIODIVERSITY STEWARDSHIP Operations are well-positioned in the lower Restoring ecosystems by progressively rehabilitating half of the global GHG emissions curve for affected areas copper mines Committed to conserving biodiversity
Slide 9: Leading Climate Change Initiatives
LEADING CLIMATE CHANGE INITIATIVES FURTHER IMPROVE CARBON FOOTPRINT WITH COPPER MOUNTAIN’S LEADING GHG INITIATIVES Copper Mountain has the potential to be the lowest-emitting, open-pit COPPER MOUNTAIN IS THE 1ST OPEN PIT COPPER MINE IN NORTH AMERICA TO USE TROLLEY ASSIST copper mine in the world by
Slide 10: Compelling Strategic Rationale
COMPELLING STRATEGIC RATIONALE
Slide 11: Enhanced Size and Scale
ENHANCED SIZE AND SCALE 2023E Production (kt Cu) 2023E Cash Costs (US$/lb Cu) Scale 264 $2.54 $2.37 $2.25 $2.08 185 156 $1.50 $1.59 138 $1.40 $1.05 $1.15 74 60 45 43 42 Lundin Capstone Pro Forma OZ Sandfire Taseko ERO 29Metals Copper Pro Forma Sandfire OZ 29Metals ERO Lundin Copper Taseko Capstone M
Slide 12: Third Largest Copper Producer in Canada
THIRD LARGEST COPPER PRODUCER IN CANADA Scale 2023E Canadian Copper Production (kt Cu) 130 Positioned among the largest copper producers in Canada with a resource base that could support further expansion 72 53 52 45 32 29 20 Teck Vale Pro-Forma Hudbay Taseko Glencore Newcrest Centerra New Gold Pro
Slide 13: Leading Shareholder Liquidity
LEADING SHAREHOLDER LIQUIDITY Scale Pro Forma $5 Increased scale provides stronger liquidity, $4 enhances valuation and improves attractiveness to investors Trading Liquidity (US$ mm) $3 $2 $1 Bubble Size Based on Market Cap – 0 50 100 150 200 250 300 2022A Copper Production (kt) Source: FactSet. Ma
Slide 14: Balanced Geographical NAV Exposure
BALANCED GEOGRAPHICAL NAV EXPOSURE COMBINED COMPANY WILL REMAIN 100% IN TIER 1 JURISDICTIONS Diversification 7% 46% 62% 70% 92% 88% 100% 54% 34% 30% 8% 5% 3% Pro Forma PF Hudbay (Street) OZ Lundin Capstone Sandfire Ero North America South America Africa Europe Australia 13 Source: Analyst research.
Slide 15: Enhanced Copper Exposure
ENHANCED COPPER EXPOSURE 29 Cu Copper PRIMARY COPPER PRODUCER WITH COMPLEMENTARY GOLD EXPOSURE Commodity 11% 7% Reserves by Commodity 2.7 Mt 60% 23% 1.6 Mt 77% 4.3 Mt 67% 28% 26% (Cu Eq.)1 Pro Forma 19% 16% 2022A Revenue by 81% 61% $1.5 bn 57% 19% $0.2 bn $1.7 bn Commodity (%) 24% 23% Copper Preciou
Slide 16: The Hudbay Advantage - Efficient Operations
THE HUDBAY ADVANTAGE - EFFICIENT OPERATIONS Efficiencies CONSTANCIA IS ONE OF THE LOWEST COST COPPER MINES IN SOUTH AMERICA 2022 Mine Site Cost (US$/tonne milled) $39.9 Continuous operational improvements at Constancia have driven costs down, while increasing efficiencies and productivity $23.2 $19.
Slide 17: Hudbay Expects US$30 Million of Annual Efficiencies and Synergies
HUDBAY EXPECTS US$30 MILLION OF ANNUAL EFFICIENCIES AND SYNERGIES Efficiencies US$20M of Annual Operating Efficiencies US$10M of Annual from Copper Mountain Mine 1 Corporate Synergies1 Improve productivity in key areas Shared Services Increase throughput and reduce costs Tax optimization Achieve con
Slide 18: Potential to Unlock US$20 Million of Annual Efficiencies from Copper Mountain
POTENTIAL TO UNLOCK US$20 MILLION OF ANNUAL EFFICIENCIES FROM THE COPPER MOUNTAIN MINE 1 Efficiencies Key Similarities Between Copper Hudbay Can Apply its Constancia Mountain Mine and Constancia Operating Framework to Unlock Efficiencies 2 Large-Scale, Open Pit Operations Crusher Excavators Leading
Slide 19: Copper Mountain Mine Near-Term Focus
COPPER MOUNTAIN MINE NEAR-TERM FOCUS Efficiencies Phase I – Stabilization Phase II – Optimization Operational Integration Improve Beyond Base - Alignment of Standards (KPIs, Reconciliation) - Usage of Hudbay owned equipment – throughput improvement with low capital - Update Resource Modeling - Minin
Slide 20: Decreasing Leverage Profile
DECREASING LEVERAGE PROFILE Deleveraging Pro Forma Hudbay to benefit from accelerated deleveraging 2.0x to enhance credit profile and lower cost of capital 1.3 - 1.5x 2025 Leverage Target for Copper World: 1.2x Net Debt / EBITDA 0.7 - 1.0x Hudbay Pro Forma Hudbay Pro Forma Hudbay 2022A Net Debt / EB
Slide 21: Enhanced Capital Allocation
ENHANCED CAPITAL ALLOCATION Capital Allocation ● Immediately pursue high return and short payback initiatives 1 Operation Enhancements ● Increase EBITDA and strengthen balance sheet to execute brownfield expansions and transformational initiatives ● Low-risk brownfield optimizations with minimal cap
Slide 22: Hudbay Priority Pipeline Opportunities
HUDBAY PRIORITY PIPELINE OPPORTUNITIES Capital Operation Brownfield Greenfield Allocation 1 Enhancements 2 Expansion 3 Development Copper Mountain Recovery Maria Reyna & Copper Mountain Copper World Mason Project Steady State Programs Caballito Expansion Complex High-quality Large, open pit copper p
Slide 23: Premier Copper Producer with Pro Forma Near-Term Positioning
PREMIER COPPER PRODUCER WITH PRO FORMA NEAR-TERM POSITIONING AMERICAS GROWTH
Slide 24: Among Few Base Metal Producers >US$3BN EV
AMONG FEW BASE METAL PRODUCERS >US$3BN EV Enterprise Value (US$ Bn) $29.8 $25.2 $23.3 Previously Acquired / In Progress $13.9 $8.9 Combined company distinguishes $7.8 itself among a select few producers $7.0 $6.2 $6.2 $5.9 $4.0 $3.5 $3.3 $2.5 $2.4 $2.3 $2.2 $1.8 $1.4 $1.1 $0.9 $0.8 Lundin Mining $0.
Slide 25: Premier Positioning Amongst Peers
PREMIER POSITIONING AMONGST PEERS 2023E Production (kt Cu) 2023E Cash Costs (US$/lb Cu) $2.54 264 $2.08 $1.59 185 $1.40 156 $1.15 138 $1.05 74 45 Lundin Capstone Pro Forma OZ Sandfire Ero Pro Forma Sandfire OZ Ero Lundin Capstone P / NAV (x) P / 2023E CFPS (x) 1.2x 14.9x 1.0x 0.9x 9.4x 0.9x 9.1x 8.9
Slide 26: On-Strategy Combination with Strong Industrial Logic
ON-STRATEGY COMBINATION WITH STRONG INDUSTRIAL LOGIC Commodity Efficiencies Diversification Deleveraging 29 Capital Scale Cu Allocation Copper Enhanced Core exposure to core competencies Accelerates Balanced commodity extract value and deleveraging weighting between Copper optimize costs initiatives
Slide 27: Appendix
APPENDIX 26
Slide 28: Copper Mountain Exploration Potential
COPPER MOUNTAIN EXPLORATION POTENTIAL OREBODY REMAINS OPEN BOTH LATERALLY AND AT DEPTH Copper Mountain is similar to Red Chris and the Cadia-Ridgeway deposits with the same style of high-grade, A-type quartz vein-hosted, copper gold mineralization COMPARISON TO OTHER ALKALIC PORPHYRY DEPOSITS IP CHA
Slide 29: Constancia Mine
CONSTANCIA MINE 16 YEARS Cu-Mo 86k tpd MINE LIFE PORPHYRY DEPOSIT MILL CAPACITY 110kt 87koz $1.18/lb 3-YEAR AVG. 3-YEAR AVG. 2023E CU PRODUCTION1 AU PRODUCTION1 CASH COSTS CONSTANCIA COPPER PRODUCTION PROFILE2 $1.75 140 $1.54 $1.58 120 120 $1.50 107 Cash Costs ($/lb) 104 Copper (kt) LONG LIFE, LOW-C
Slide 30: Constancia Exploration Potential
CONSTANCIA EXPLORATION POTENTIAL SEVERAL OPPORTUNITIES EXIST ON HUDBAY’S EXTENSIVE LAND PACKAGE IN PERU CONSTANCIA SATELLITE EXPLORATION TARGETS Maria Reyna Caballito Constancia & Constancia Pampacancha Leviatan 3.3Mt Cu DELINEATED TO-DATE Pampacancha 1.0Mt Cu MINED TO-DATE PERU Paquitas Tintaya Lim
Slide 31: Snow Lake Operations
SNOW LAKE OPERATIONS 16 YEARS Au-Zn-Cu 5.3k tpd MINE LIFE1 VMS DEPOSITS TOTAL MILL CAPACITY 193koz 36kt $650/oz 3-YEAR AVG. 3-YEAR AVG. 2023E. AU PRODUCTION2 ZN PRODUCTION2 CASH COSTS SNOW LAKE GOLD PRODUCTION PROFILE3 250 200 200 190 190 LOW-COST GOLD OPERATION WITH MEANINGFUL BASE METAL PRODUCTION
Slide 32: Snow Lake Exploration Potential
SNOW LAKE EXPLORATION POTENTIAL LALOR IN-MINE EXTENSION POTENTIAL AND REGIONAL UPSIDE EXPLORATION OPPORTUNITIES Snow Lake deposits contain 1.7 million ounces of gold in inferred resources Lalor inferred resources estimated using stringent methodology constraining the resource within a stope optimiza
Slide 33: Copper World Project
1.2Bt $1.15/lb 44 YEARS M&I TONNAGE CU CASH CASH COST1 MINE LIFE COPPER WORLD PROJECT 0.41% 86kt $1,296M / 18% M&I CU GRADE ANNUAL CU PRODUCTION1 NPV10% / IRR2 COPPER WORLD ECONOMICS LOM After-Tax NPV10% (US$M) Phase I After-Tax NPV10% (US$M) $1,903 $1,193 $1,296 $741 $990 $513 $3.25 $3.50 $4.00 $3.
Slide 34: Mason Project
2.2Bt $1.76/lb 27 YEARS MASON PROJECT M&I TONNAGE CU SUSTAINING CASH COST MINE LIFE 0.29% 112kt $1,191M / 18% M&I CU GRADE ANNUAL CU PRODUCTION NPV / IRR 1 MASON ECONOMICS1 After-Tax NPV10% (US$M) Unlevered IRR (%) $2,019 23% 18% $1,191 15% $773 $3.25 $3.50 $4.00 $3.25 $3.50 $4.00 LARGE OPEN PIT COP
Slide 35: Llaguen Project
LLAGUEN PROJECT ADDING A NEW PROJECT TO OUR COPPER GROWTH PIPELINE OVERVIEW MINERAL RESOURCE ESTIMATE AS AT NOVEMBER 1, 2022 Category Metric Tonnes Cu (%) Mo (g/t) Au (g/t) Ag (g/t) CuEq (%) Indicated Global (>= 0.14% Cu) 271,000,000 0.33 218 0.033 2.04 0.42 Including Indicated High-grade 113,000,00
Slide 36: Peru Mineral Reserves (as at January 1, 2023)
PERU MINERAL RESERVES (AS AT JANUARY 1, 2023) CATEGORY TONNES Cu (%) Mo (g/t) Au (g/t) Ag (g/t) CONSTANCIA Proven 411,200,000 0.28 79 0.041 2.85 Probable 46,500,000 0.23 79 0.038 2.84 TOTAL PROVEN AND PROBABLE 457,700,000 0.28 79 0.040 2.85 PAMPACANCHA Proven 34,100,000 0.59 153 0.320 4.98 Probable
Slide 37: Peru Mineral Resources (as at January 1, 2023)
PERU MINERAL RESOURCES (AS AT JANUARY 1, 2023) CATEGORY TONNES Cu (%) Mo (g/t) Au (g/t) Ag (g/t) CONSTANCIA Measured 118,400,000 0.2 62 0.036 1.86 Indicated 140,700,000 0.23 73 0.04 2.2 Inferred – Open Pit 56,700,000 0.27 82 0.044 1.86 Inferred – Underground 6,500,000 1.20 69 0.137 8.62 PAMPACANCHA
Slide 38: Snow Lake Reserves & Resources – Lalor & 1901
SNOW LAKE RESERVES & RESOURCES – LALOR & 1901 (AS AT JANUARY 1, 2023) PROPERTY CATEGORY TONNES Au (g/t) Zn (%) Cu (%) Ag (g/t) Proven Lalor 5,977,000 2.5 5.17 0.42 28.7 Base Metal Zone 1901 1,278,000 2.2 8.14 0.30 27.4 Probable Lalor 522,000 2.6 4.59 0.36 30.3 1901 245,000 0.8 10.7 0.30 25.2 Total B
Slide 39: Snow Lake Reserves & Resources – Other Gold
SNOW LAKE RESERVES & RESOURCES – OTHER GOLD (AS AT JANUARY 1, 2023) PROPERTY CATEGORY TONNES Zn (%) Au (g/t) Cu (%) Ag (g/t) WIM Probable 2,450,000 0.25 1.6 1.63 6.3 Probable 660,000 - 4.2 - - 3 Zone TOTAL WIM + 3 ZONE PROBABLE (GOLD) 3,110,000 2.20 2.2 1.28 5.0 Inferred 570,000 - 4.4 - - Birch New
Slide 40: Snow Lake Reserves & Resources – Other Base Metals
SNOW LAKE RESERVES & RESOURCES – OTHER BASE METALS (AS AT JANUARY 1, 2023) PROPERTY CATEGORY TONNES Zn (%) Au (g/t) Cu (%) Ag (g/t) PEN II Indicated 470,000 8.89 0.3 0.49 6.8 Talbot1 Indicated 2,190,000 1.79 2.1 2.33 36.0 TOTAL INDICATED (BASE METALS) 2,660,000 3.04 1.8 2.01 30.9 Watts River Inferre
Slide 41: Copper World Complex Mineral Resources
COPPER WORLD COMPLEX MINERAL RESOURCES (AS AT JANUARY 1, 2023) Cu Grade Soluble Cu PROPERTY CATEGORY TONNES Mo (g/t) Ag (g/t) (%) Grade (%) Measured 687,000,000 0.45 0.05 138 5.1 Indicated 287,000,000 0.36 0.06 134 3.6 Flotation Total M&I 973,000,000 0.42 0.05 137 4.7 Inferred 210,000,000 0.36 0.05
Slide 42: Mason Mineral Resources
MASON MINERAL RESOURCES (AS AT JANUARY 1, 2023) PROPERTY CATEGORY TONNES Cu (%) Mo (g/t) Au (g/t) Ag (g/t) Measured 1,417,000,000 0.29 59 0.031 0.66 Mason Indicated 801,000,000 0.30 80 0.025 0.57 TOTAL MASON MEASURED AND INDICATED 2,219,000,000 0.29 67 0.029 0.63 Mason Inferred 237,000,000 0.24 78 0
Slide 43: Llaguen Mineral Resources
LLAGUEN MINERAL RESOURCES (AS AT JANUARY 1, 2023) PROPERTY CATEGORY TONNES Cu (%) Mo (g/t) Au (g/t) Ag (g/t) Indicated Global (≥ 0.14% Cu) 271,000,000 0.33 218 0.033 2.04 Llaguen Including Indicated High-grade 113,000,000 0.49 291 0.046 2.73 (≥ 0.30% Cu) Inferred Global (≥ 0.14% Cu) 83,000,000 0.24
Slide 44: Copper Mountain Mineral Reserves
COPPER MOUNTAIN MINERAL RESERVES1 (AS AT DECEMBER 31, 2022) CATEGORY TONNES Cu (%) Au (g/t) Ag (g/t) COPPER MOUNTAIN Proven 227,696,000 0.28 0.08 0.90 Probable 145,493,000 0.22 0.08 0.63 TOTAL PROVEN AND PROBABLE 373,189,000 0.25 0.08 0.79 NEW INGERBELLE Proven 183,003,000 0.23 0.14 0.41 Probable 80
Slide 45: Copper Mountain Mineral Resources
COPPER MOUNTAIN MINERAL RESOURCES1 (AS AT DECEMBER 31, 2022) CATEGORY TONNES Cu (%) Au (g/t) Ag (g/t) COPPER MOUNTAIN Measured 107,072,000 0.15 0.05 0.61 Indicated 207,424,000 0.16 0.06 0.57 Inferred 271,320,000 0.19 0.08 0.61 NEW INGERBELLE Measured 15,238,000 0.29 0.17 0.36 Indicated 85,056,000 0.
Slide 46: NI 43-101 Matters: Additional Reserves & Resources Information; Qualified Persons
NI 43-101 MATTERS: ADDITIONAL RESERVES & RESOURCES INFORMATION; QUALIFIED PERSONS 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 Mi
Slide 47: Endnotes
ENDNOTES 1. 2023E production constitutes forward-looking information and assumes that the risk factors described under “Cautionary Information” do not materialize. For further information, see “Cautionary Information”. 2. 2023E cash costs constitutes forward-looking information and assumes that the