constancia: a reality - pwc.pe of mines... · projects for chumbivilcas the development dilemma:...
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TSX, NYSE, BVL Symbol HBM
Market Capitalization1 $2.2 billion
Shares Outstanding 234 million
Available Liquidity2 $0.6 billion
Debt Outstanding2 $1.1 billion
About Hudbay
1. Based on Hudbay’s TSX closing share price on January 30, 2015
2. As at December 31, 2014
Integrated base and precious metals mining
company
> Operating mines, development projects and processing
facilities located in the Americas
Long track record of operating success in Flin
Flon Greenstone Belt
> Nearly 90 year history of mine development and operation
(28 mines)
Disciplined and clear strategy focused on growth
in net asset value, earnings and cash flow per
share metrics
> Value creation through exploration, mine development
and efficient operation
> Mining friendly jurisdictions
> VMS and porphyry deposits
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1 MANITOBA 777, LALOR, REED
2 ARIZONA ROSEMONT
3 COLOMBIA EXPLORATION
4 PERU CONSTANCIA
5 CHILE EXPLORATION
2WE SEEK OUT PROPERTIES WITHIN
A NARROW GEOGRAPHIC AND
GEOLOGICAL RANGE WHERE
WE CAN ADD VALUE.
Infrastructure & power expected to be available to meet Constancia project schedule
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 complete and energized in August 2014
Socabaya to Tintaya 220kV transmission line
upgrade is complete and energized in April 2014
~475km from Matarani Port by road
Port access and power supply secured
under 10-year contracts
Access to Existing Infrastructure
CONSTANCIA HAS EXCELLENT INFRASTRUCTURE
IN AN ESTABLISHED MINING DISTRICT IN PERU
Drilling per Program
UPDATED AS OF AUGUST, 2014
PROGRAM METERS HOLES
Constancia 149,129 635
Pampacancha 54,925 204
Chilloroya
South18,316 53
Uchucarcco 783 3
Total: 223,153 895
Peru Reserves Overview
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 0.298 4.28
Probable 20 0.44 159 0.252 3.74
As at January 1, 2014
Total Mineral Reserves
Category Ore (M tonnes) Cu (%) Mo (g/t) Au (g/t) Ag (g/t)
Total Proven 506 0.33 95 0.052 3.09
Total Probable 114 0.26 78 0.074 2.94
Total Reserves 620 0.32 92 0.056 3.07
Total Mineral Resources
Category M (tonnes) Cu (%) Mo (g/t) Au (g/t) Ag (g/t)
Measured + Indicated 372 0.20 59 0.039 2.09
Inferred 200 0.19 51 0.031 1.86
* All mineral resources referred to in this slide are exclusive of and additional to stated mineral reserves. Mineral resources that are
not mineral reserves do not have demonstrated economic viability.
Heavy Civil Works & Mining Milestones
> Tailing liner and toe dam completed
> Water capture initiated Dec 2013 in main sediment pond
> Mine pre stripping started in Mar 2014
Main sediment pondPre-stripping activities
Power
TEMASEK PRESENTATION l 13
Power Transmission Line
> Engineering and procurement are
100% complete
• Tie into high voltage side of
substation was completed in April
• Tower construction is 100%
complete
> Successful negotiations with
Glencore Xstrata for ROW
agreement
> System was energized in August
2014
Power Supply
> Signed 10-year power purchase
contract
• 5 year extension right
> Costs are in-line with expectations
Concentrate Transport & Port Services
TEMASEK PRESENTATION l 14
> Route from Constancia
to Matarani is 460 kms
total
> Contract awarded in Q3
2014 and service is
already ongoing with
ramp-up production
> Matarani is a deep sea
water port with
warehouses now used
by Hudbay 32
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Public Warehouse (used by
Glencore Xstrata)
Public warehouse (used by Cerro
Verde)
A5 Warehouse (to be habilitated
for Hudbay concentrate)
Commissioning Stages
Responsibility
• Construction Team
• Commissioning Team
• Client Operation Team
C0
Verification of
Plant and
Equipment
Completion of all commissioning activities
including preparation of a Commissioning
Closeout Report and handover of agreed
commissioning documentation
deliverables to the Client
C1
Dry
Commissioning
C2
Wet
Commissioning
C3
Ore
Commissioning
C4
Performance
Verification
C5
Area
Acceptance
C6
Commissioning
Closeout
Checksheets
+ Punch lists
Checksheets
+ Punch lists
Checksheets +
Practical Completion Certificate
Constancia Progress
Constancia mine maintenance facilities
Constancia mill
Crushed ore to be processed in Constancia mill
Constancia flotation cell
Constancia Progress (Cont’d)
Constancia crusher commissioning
Constancia ore dump pocket for the primary crusher Initial copper concentrate stored in concentrate shed
Tonnage Movement
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40,000,000
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70,000,000
80,000,000
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ANNUAL TOTAL MOVEMENT IN CONSTANCIA
Crusher Waste Dump Rehandle
Tonnage
Production remains on track
CONSTANCIA ACHIEVED COMMERCIAL PRODUCTION ON APRIL 30, 2015
OWNERSHIP 100%
LIFE OF MINE (LOM) 22 years
DAILY ORE THROUGHPUT 80k tpd
MINE AND MILL UNIT COST1,2 US$7.48 /
tonne
YEARS 1-51 YEARS 6-221 LOM1
AVG. ANNUAL CU PRODUCTION3 116k tonnes 71k tonnes 82k tonnes
CASH COST PER CU/LB4 US$0.98 US$1.37 US$1.25
AVG. ANNUAL SUSTAINING CAPITAL US$80 millionUS$38
million
US$47
million
Source: Hudbay company disclosure
1. LOM as per NI 43-101 Technical Report on the Constancia Project dated October 15, 2012 and subsequent updates to project estimates in public disclosure
2. Combined mine and mill unit operating costs per tonne of ore processed
3. Production is contained metal in concentrate
4. Net of by-products. Includes impact of silver and gold streams. Assumed metal prices per the Silver Wheaton stream agreement are as follows: Gold US$400/oz, Silver US$5.90/oz. Other metal price assumptions
include: Molybdenum 2014-US$12/lb, 2015-US$13/lb, 2016-US$13/lb, LT-US$13.50/lb; Gold 2014-US$1,350/oz, 2015-US$1,325/oz, 2016-US$1,300/oz, 2017-US$1,275/oz, LT-US$1,250/oz. Excludes profit sharing
> Constancia is also expected to achieve full capacity in H2 2015
> Ocean shipments began in April 2015
> The focus is currently on increasing copper recovery while maintaining
throughput and concentrate quality
Long-Term Community Agreements
ACCESS TO LAND FOR MINING PURPOSES IN 2012 PLUS SOCIAL INVESTMENT
UCHUCCARCO256 has.
CHILLOROYA750 has
Local Procurement
Local Employment
Local Business
Social Investment in Chumbivilcas
» Specific commitments to invest in health,
education and social development≈ Through Multi-sectoral Committees for Development
(“CMD”) in local communities
≈ Resettlement almost complete
» Signed agreements with:≈ Cusco Regional Government and Provincial and District
Municipalities in Chumbivilcas
» Engagement with National Government≈ Facilitating public-private partnerships with sectoral
Ministries
≈ Improving technical capabilities in municipalities and
communities through Technical Assistance Office
(“TAO”)
» Works for Taxes (“Obras por Impuestos”)
» Agreements with other institutions such as:≈ Asociación Vida Peru
≈ Universidad Nacional San Antonio Abad del Cusco
≈ Universidad Nacional San Agustín de Arequipa
LEADING INITIATIVES TO ACHIEVE SUSTAINABLE DEVELOPMENT
» Innovation in social investment
≈ Prizes for CMD and TAO due to real benefits for Chumbivilcas population
» Facilitating funding from public orprivate sources to execute priorityprojects for Chumbivilcas
The development dilemma: give a man a
fish or teach him to fish?
We do not replace Government’s role
OUR INITIATIVES FACILITATE SUSTAINABLE DEVELOPMENT, ASSISTING
COMMUNITIES AND MUNICIPALITIES
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