Post on 16-Apr-2020
transcript
November 2018
INVESTOR PRESENTATION
CAUTIONARY INFORMATION
2
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. Often, but not always, forward-looking information can be identified by the use of words such as “plans”, “expects”, “budget”, “guidance”, “scheduled”, “estimates”, “forecasts”, “strategy”, “target”, “intends”, “objective”, “goal”, “understands”, “anticipates” and “believes” (and variations of these or similar words) and statements that certain actions, events or results “may”, “could”, “would”, “should”, “might” “occur” or “be achieved” or “will be taken” (and variations of these or similar expressions). All of the forward-looking information in this presentation is qualified by this cautionary note. Forward-looking information includes, but is not limited to, production, cost and capital and exploration expenditure guidance, anticipated production at Hudbay’s mines and processing facilities, the expected benefits of implementing the metallurgical recovery initiatives at the Constancia processing plant, the anticipated timing, cost and benefits of developing the Rosemont project and the Pampacancha deposit, the anticipated impact of any delays to the start of mining the Pampacancha deposit, the anticipated results of litigation challenging the Rosemont permitting process, anticipated exploration and development plans, including the exploration and development strategy for the Lalor gold zones, the possible refurbishment of the New Britannia mill and the possibility of optimizing the value of the company’s gold resources in Manitoba, the possibility of converting inferred and historical mineral resource estimates to higher confidence categories, the potential and Hudbay’s anticipated plans for the Ann Mason project, anticipated mine plans, anticipated metals prices and the anticipated sensitivity of the company’s financial performance to metals prices, events that may affect its operations and development projects, anticipated cash flows from operations and related liquidity requirements, the anticipated effect of external factors on revenue, such as commodity prices, estimation of mineral reserves and resources, mine life projections, reclamation costs, economic outlook, government regulation of mining operations, and business and acquisition strategies. Forward-looking information is not, and cannot be, a guarantee of future results or events. Forward-looking information is based on, among other things, opinions, assumptions, estimates and analyses that, while considered reasonable by the company at the date the forward-looking information is provided, inherently are subject to significant risks, uncertainties, contingencies and other factors that may cause actual results and events to be materially different from those expressed or implied by the forward-looking information. The material factors or assumptions that we identified and were applied by us in drawing conclusions or making forecasts or projections set out in the forward-looking information include, but are not limited to: the anticipated results of the planned technical and economic studies on the Lalor gold zone and New Britannia mill; the successful completion of the Mason transaction; the success of mining, processing, exploration and development activities; the scheduled maintenance and availability of the processing facilities; the accuracy of geological, mining and metallurgical estimates; anticipated metals prices and the costs of production; the supply and demand for metals the company produces; the supply and availability of all forms of energy and fuels at reasonable prices; no significant unanticipated operational or technical difficulties; the execution of Hudbay’s business and growth strategies, including the success of its strategic investments and initiatives; the availability of additional financing, if needed; the ability to complete project targets on time and on budget and other events that may affect the company’s ability to develop its projects; the timing and receipt of various regulatory, governmental and joint venture partner approvals; the availability of personnel for the exploration, development and operational projects and ongoing employee relations; the ability to secure required land rights to develop the Pampacancha deposit; maintaining good relations with the communities in which the company operates, including the communities surrounding the Constancia mine and Rosemont project and First Nations communities surrounding the Lalor mine; no significant unanticipated challenges with stakeholders at the company’s various projects; no significant unanticipated events or changes relating to regulatory, environmental, health and safety matters; no contests over title to the company’s properties, including as a result of rights or claimed rights of aboriginal peoples; the timing and possible outcome of pending litigation and no significant unanticipated litigation; certain tax matters, including, but not limited to current tax laws and regulations and the refund of certain value added taxes from the Canadian and Peruvian governments; and no significant and continuing adverse changes in general economic conditions or conditions in the financial markets (including commodity prices and foreign exchange rates). 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, such as economic factors (including future commodity prices, currency fluctuations, energy prices and general cost escalation), uncertainties related to the development and operation of the company’s projects (including risks associated with the permitting, development and economics of the Rosemont project and related legal challenges), risks related to the exploration and development program at Lalor, including the ability to establish a business case for the refurbishment of the New Britannia mill and convert inferred and historical mineral resource estimates to higher confidence categories, risks related to the maturing nature of the 777 mine and its impact on the related Flin Flon metallurgical complex, dependence on key personnel and employee and union relations, risks related to the schedule for mining the Pampacancha deposit (including the timing and cost of acquiring the required surface rights and the impact of any schedule delays), risks related to political or social unrest or change, risks in respect of aboriginal and community relations, rights and title claims, operational risks and hazards, including unanticipated environmental, industrial and geological events and developments and the inability to insure against all risks, failure of plant, equipment, processes, transportation and other infrastructure to operate as anticipated, compliance with government and environmental regulations, including permitting requirements and anti-bribery legislation, depletion of the company’s reserves, volatile financial markets that may affect the company’s ability to obtain additional financing on acceptable terms, the failure to obtain required approvals or clearances from government authorities on a timely basis, uncertainties related to the geology, continuity, grade and estimates of mineral reserves and resources, and the potential for variations in grade and recovery rates, uncertain costs of reclamation activities, the company’s ability to comply with its pension and other post-retirement obligations, the company’s ability to abide by the covenants in its debt instruments and other material contracts, tax refunds, hedging transactions, as well as the risks discussed under the heading “Risk Factors” in Hudbay’s most recent Annual Information Form. Should one or more risk, uncertainty, contingency or other factor materialize or should any factor or assumption prove incorrect, actual results could vary materially from those expressed or implied in the forward-looking information. Accordingly, you should not place undue reliance on forward-looking information. Hudbay does not assume any obligation to update or revise any forward-looking information after the date of this presentation or to explain any material difference between subsequent actual events and any forward-looking information, except as required by applicable law. This presentation has been prepared in accordance with the requirements of the securities laws in effect in Canada, which may differ materially from the requirements of United States securities laws applicable to U.S. issuers. This presentation contains certain financial measures which are not recognized under IFRS, such as net debt, cash cost and sustaining cash cost, net of by-product credits, per pound of copper produced. For further details on how Hudbay calculates these measures in respect of its operating assets, please refer to page 30 of Hudbay’s management’s discussion and analysis for the three and nine months ended September 30, 2018 available on SEDAR at www.sedar.com and EDGAR at www.sec.gov. All amounts are in U.S. dollars unless otherwise noted.
INVESTMENT HIGHLIGHTS
3
Exploration
British Columbia, Canada
Ann Mason
Nevada, USA
Constancia & Exploration
Peru
Exploration
Chile
1. Based on Hudbay’s TSX closing share price on November 2, 2018.
2. Liquidity including cash balances as of September 30, 2018.
3. Total long-term debt outstanding as at September 30, 2018.
TSX, NYSE, BVL
Symbol HBM
Market Capitalization1 C$1.7 billion
Shares Outstanding 261 million
Available Liquidity2 $0.88 billion
Debt Outstanding3 $1.0 billion DIVERSIFIED COPPER PRODUCER
Strong cash flow generation from un-hedged copper
and zinc production
Portfolio of long-life, low-cost assets in mining friendly
jurisdictions in the Americas
Relevant scale with meaningful growth profile
Proven “drill and build” value creation strategy
Broad range of management experience and technical
skill to deliver on plan
Lalor, 777 & Exploration
Manitoba, Canada
Rosemont
Arizona, USA
CONSISTENT STRATEGY SINCE 2010
4
VISION STATEMENT
Our vision is to become a top-tier operator of long-life, low cost mines in the Americas
STRATEGIC CRITERIA
Long Life
Low Cost
Mining Friendly
Jurisdictions
Copper Focus
Per Share Accretion
Meaningful Scale
Safety &
Responsibility
Exploration
Mine
Development
Financial
Strength
VALUE DRIVERS
TRACK RECORD OF SAFE, RESPONSIBLE MINING
OPERATING IN MANITOBA FOR 90+ YEARS
Founded in Flin Flon, Hudbay has discovered
and mined 28 mines in Manitoba over the
past 90 years
SOCIALLY RESPONSIBLE
Track record of constructive community
relations in Peru and elsewhere
FOCUS ON SAFETY
Zero lost time accidents at the Constancia
mine in 2017
MINIMIZING ENVIRONMENTAL FOOTPRINT
Rosemont designed to world-class standards
for water efficiency
LAYING FOUNDATION FOR GROWTH
Well-defined values that govern culture,
conduct and decision-making
Implementing organizational design to ensure
talent development and effective decision
making as we grow
5
0.0
1.0
2.0
3.0
4.0
Reserve at Bid Date Production to Date + Current Reserve
Co
pp
er
Eq
uiv
ale
nt
(Mt)
Reserves
Production
+98% Growth
103
118
129
95
86
78
54 57 59
55
39 45
53 52
35
135 133
122
108 109 106 105 105 103
85 89
71 68
76 79 80
68 67 63
73 80
14
2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036
Norsemont Bid Reserve (Norsemont 2009 Technical Report)
Actuals and 2018 Technical Report (Hudbay)
CONSTANCIA COPPER PRODUCTION PROFILE3
ADDING VALUE THROUGH EXPLORATION
6
777 (2004-2017)1
1. Source: Company disclosure. Production calculated as tonnes mined multiplied by grades mined (i.e. assumes 100% recovery). The following metals price assumptions were applied to reserves for
purposes of calculating copper equivalent: $3.00/lb Cu, $1.00/lb Zn, $1,260/oz Au and $18.00/oz Ag. Does not include impact of precious metal streams, as applicable.
2. Constancia reserve at bid date from NI 43-101 Definitive Feasibility Study Technical Report on the Constancia mine filed by Norsemont Mining, dated September 28, 2009.
3. Source: Grey bars from NI 43-101 Technical Report on the Constancia mine filed by Norsemont Mining, dated September 28, 2009; assumes first year of production starting in 2015. Yellow bars are
actual Constancia production for years 2015-2017; years 2018-2036 from NI 43-101 Technical Report on the Constancia Mine dated March 29, 2018.
LALOR (2010-2017)1
Contained Copper in Concentrate (kt)
0.0
0.3
0.5
0.8
1.0
Initial Reserve Production to Date + Current Reserve
Co
pp
er
Eq
uiv
ale
nt
(Mt)
Reserves
Production
+56% Growth
0.0
0.5
1.0
1.5
IPO Reserve Production to Date + Current Reserve
Co
pp
er
Eq
uiv
ale
nt
(Mt)
Reserves
Production
+31% Growth
CONSTANCIA (2009-2017)1
2
EXPERIENCED MINE DEVELOPER
Proven track record of successful new mine development and in-depth mining expertise in both open pit and underground mining
Hudbay built 30% of the mines constructed by its peer group in the last ten years and invested 37% of the capital spent by its peer group on mine development
7
% OF MINES CONSTRUCTED1 2007 – 2017
1. Majority ownership in a greenfield development project
2. Capital directed by company on completed mine construction. Excludes Oyu Tolgoi Phase 1 capital directed by Rio Tinto. Eagle capex excludes initial capital directed by Rio Tinto.
List of Mines: Hudbay – Lalor, Reed, Constancia; First Quantum – Kevitsa, Sentinel; Turquoise Hill – Oyu Tolgoi; Lundin – Eagle; OZ Minerals – Prominent Hill; Capstone – Minto; Nevsun – Bisha
30%
20% 10%
10%
10%
10%
10%
Hudbay
First Quantum
Turquoise Hill
Lundin
OZ Minerals
Capstone
Nevsun
DIRECTED CAPEX (US$B)2 2007 – 2017
$2.2
$2.1
$0.9
$0.4 $0.3
$0.1
GROWING FREE CASH FLOW & REDUCING DEBT
Continued to grow free cash flow through un-hedged production and stable low-cost operations
Reduced net debt position by more than $700 million since 2016
8
OPERATING AND FREE CASH FLOW1
Note: LTM = Last Twelve Months.
1. Operating cash flow is operating cash flow before change in non-cash working capital. Free cash flow calculated as operating cash flow less sustaining capital expenditures and less interest paid.
2. Net debt calculated as total long-term debt less cash and cash equivalents. Net debt is a non-IFRS financial performance measure with no standardized definition under IFRS. For further information and a detailed reconciliation, please refer to Hudbay’s management’s discussion and analysis for the three and nine months ended September 30, 2018.
($M)
NET DEBT2
($M)
1,228
1,168
1,105 1,085
1,035
950
650 623
585
536 516
Q1/16 Q2/16 Q3/16 Q4/16 Q1/17 Q2/17 Q3/17 Q4/17 Q1/18 Q2/18 Q3/18
Net Debt
286
338
383 388 397
451 481
531
582 589 557
-87
-26
64 83
143
198 229
295 321
348 333
Q1/16 LTM
Q2/16 LTM
Q3/16 LTM
2016 Q1/17 LTM
Q2/17 LTM
Q3/17 LTM
2017 Q1/18 LTM
Q2/18 LTM
Q3/18 LTM
Operating Cash Flow Free Cash Flow
LOW CASH COSTS
Hudbay is positioned in the first quartile of the cost curve
9
2018E COPPER C1 CASH COSTS1 (US $/lb)
2018E COPPER C1 + SUSTAINING CAPEX CASH COST1 (US $/lb)
1. Source: Wood Mackenzie’s 2018 by-product C1 cash cost curve and C1 + sustaining capex cash cost curve (Q2 2018 dataset dated June 2018). Wood Mackenzie’s costing methodology may be
different than the methodology reported by Hudbay or its peers in their public disclosure. For details regarding Hudbay’s actual cash costs, refer to Hudbay’s management’s discussion and analysis for
the three and six months ended June 30, 2018.
Hudbay First Quantum
Turquoise Hill
Lundin
Oz Minerals
Capstone Ero Copper
($2.00)
($1.00)
$0.00
$1.00
$2.00
$3.00
0% 25% 50% 75% 100%
Hudbay
First Quantum
Turquoise Hill Lundin
Oz Minerals Capstone
Ero Copper
($2.00)
$0.00
$2.00
$4.00
$6.00
0% 25% 50% 75% 100%
$0.00
$1.00
$2.00
$3.00
$4.00
$5.00
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
LONG MINE LIVES WITH EXPLORATION POTENTIAL
Long life assets provide exposure to multiple commodity price cycles
10
1. Contained M&I CuEq metal (exclusive of reserves) divided by 2017 CuEq production rate. Mineral resources that are not mineral reserves do not have demonstrated economic viability.
2. Contained Inferred CuEq metal (exclusive of reserves and M&I) divided by 2017 CuEq production rate. Mineral resources that are not mineral reserves do not have demonstrated economic viability.
3. Rosemont contained CuEq metal reserves and resources divided by annual LOM CuEq production rate as disclosed in NI 43-101 Technical Report on the Rosemont Project dated March 30, 2017.
4. Peak to trough performance and average cycle prices based on average annual nominal copper prices.
RESERVE AND RESOURCE LIFE
HISTORICAL COPPER PRICE CYCLES4
19
18
9
3
11
6
2
1
1
1
3
1
Rosemont
Constancia
Lalor
777
Reserve Life M&I Resource Life Inferred Resource Life
3
1 2
2 Years +43%
$2.72/lb Avg.
2016 - 2018
5 Years -46%
$3.16/lb Avg.
2011 - 2016
12 Years +436%
$2.05/lb Avg.
1999 - 2011
4 Years -45%
$1.02/lb Avg.
1995 - 1999
0.0
20.0
40.0
60.0
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Co
pp
er
Eq
uiv
. R
es
erv
es
pe
r H
BM
Sh
are
(C
uE
q lb
s/s
h)
Manitoba Peru Arizona Other
0.0
2.0
4.0
6.0
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Co
pp
er
Eq
uiv
. R
es
erv
es
(M
t)
Manitoba Peru Arizona Other
RESERVE GROWTH & PER SHARE ACCRETION
11 Source: Company disclosure.
Note: CAGR = Compound Annual Growth Rate. The following metals price assumptions were applied to reserves for purposes of calculating copper equivalent: $3.00/lb Cu, $1.00/lb Zn, $1,260/oz Au and
$18.00/oz Ag. Does not include impact of precious metal streams, as applicable.
HUDBAY 2007-2017 RESERVE GROWTH HUDBAY 2007-2017 RESERVE GROWTH PER SHARE
Focused on NAV per share and reserve per share accretion
First Quantum
Lundin OZ Minerals
Capstone
Nevsun Ero Copper
Hudbay
-100% -80% -60% -40% -20% 0% 20% 40% 60% 80% 100%
GROWTH IN MINING FRIENDLY JURISDICTIONS
Growth in jurisdictions that support responsible mining in the Americas, with strong rule of law and respect for human rights
12
2018-2023 COPPER PRODUCTION GROWTH3
2023 PRODUCTION IN INVESTMENT GRADE JURISDICTIONS2 AND 2018-2023 COPPER PRODUCTION GROWTH3
100%
PE
RC
EN
TA
GE
OF
PR
OD
UC
TIO
N I
N IN
VE
ST
ME
NT
GR
AD
E J
UR
ISD
ICT
ION
S2
1. Hudbay disclosure; actual 2017 production and 2017 CuEq reserves. The following metals price assumptions were applied to reserves for purposes of calculating copper equivalent: $3.00/lb Cu, $1.00/lb
Zn, $1,260/oz Au and $18.00/oz Ag. Does not include impact of precious metal streams, as applicable.
2. Source: 2023 production figures from Wood Mackenzie’s Q2 dataset dated June 2018. Country credit ratings assigned in accordance with Standard & Poor’s Country Credit Score, where country ratings
of BBB- or higher are considered “investment grade” countries valued at 100%; country ratings of BB+ and below are considered “non-investment grade” and valued at 0%; country values weighted on a
production basis.
3. Source: Wood Mackenzie’s Q2 dataset dated June 2018.
Canada
Peru
United States 5,383 kt CuEq
13%
43%
44%
HUDBAY 2017 RESERVE BASE1
Canada
Peru 234 kt CuEq
44%
56%
HUDBAY 2017 PRODUCTION1
220% Turquoise Hill
% OF PROJECTS BY OUTPUT
COPPER GROWTH PROJECTS
Approximately 50% of production is expected to come from China, Panama, the DRC,
Mongolia
Only 34% of production is expected to come from mining friendly jurisdictions (Chile, Peru)
Approximately 32% of new production is from greenfield projects
13 Source: Wood Mackenzie’s list of new projects and expansions (incremental production) from 2019-2035 with over 75ktpa average production (Q2 2018 dataset dated June 2018).
NEW COPPER PRODUCTION DEPENDENT ON GREENFIELD MINES IN DIFFICULT
JURISDICTIONS
Mining
Friendly
Jurisdictions
1.7 Mtpa
34%
Peru
Chile
China
Panama
DRC
Mongolia
Poland
Indonesia
Kazakhstan
0
5
10
15
20
25
2010 2015 2020 2025 2030
Base Case (Existing) Base Case (Growth)
Probable Projects Demand Mt
COPPER SUPPLY/DEMAND OUTLOOK
Probable projects are required to come on by 2019 in order to balance market; structural deficit exists beyond 2024
Near-term surplus projected by Wood Mackenzie amounts to less than 1% of annual production
in any given year and is highly sensitive to supply disruptions
An increasing proportion of demand for power is being met from renewable energy sources;
copper a critical component of the “green economy”
Increase in the demand for electric vehicles will have a significant impact on copper
fundamentals; copper demand in EVs expected to increase from 185,000 tonnes in 2017 to
1.74 million tonnes in 2027
Low susceptibility to demand disruption
14
INSUFFICIENT COPPER PROJECTS TO FILL GAP
0
200
400
600
800
1,000
1,200
1,400
1,600
1,800
2,000
2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027
KtC
u
Car BEV Car HEV Car PHEV Ebus Hybrid Ebus BEV
COPPER SUPPLY/DEMAND OUTLOOK1
ELECTRIC VEHICLE COPPER DEMAND2
1. Source: Wood Mackenzie ‘s Q2 2018 dataset dated June 2018.
2. Source: International Copper Association, “The Electric Vehicle Market and Copper Demand” dated June 2017; research conducted by IDTechEx.
7.5Mt
Deficit
GROWING EXPOSURE TO COPPER
Un-hedged copper and zinc production
15
Note: The following metals price assumptions were applied to reserves for purposes of calculating copper equivalent: $3.00/lb Cu, $1.00/lb Zn, $1,260/oz Au and $18.00/oz Ag. Does not include impact of precious metal streams, as applicable.
1. CuEq production for the full year ended December 31, 2017.
2. 2017 Hudbay CuEq reserves.
2017 PRODUCTION BREAKDOWN1
2017 RESERVE BREAKDOWN2
73%
8%
7%
7% 5%
Copper Gold Silver Molybdenum Zinc
68%
19%
9%
4%
Copper Zinc Gold Silver
234 kt CuEq 5,383 kt CuEq
0
50,000
100,000
150,000
200,000
250,000
300,000
350,000
2018E 2019E 2020E 2021E 2022E 2023E 2024E 2025E 2026E 2027ECu
Eq
Co
nta
ine
d i
n C
on
ce
ntr
ate
(to
nn
es
)
Manitoba Peru Arizona
CONSOLIDATED PRODUCTION PROFILE
Production profile is based on a hypothetical scenario assuming first year of Rosemont construction occurs in 2019; Rosemont project development is conditional upon receipt of final permits and Board approval
16
GROWING COPPER EQUIVALENT PRODUCTION
HUDBAY CONSOLIDATED ANNUAL CUEQ PRODUCTION 1,2
1. Source: Copper equivalent contained in concentrate production sourced from mid-point of 2018 annual guidance, and filed technical reports for 2019 onwards. NI 43-101 Technical Report on the
Constancia Mine dated March 29, 2018; NI 43-101 Technical Report on the Lalor Mine dated March 30, 2017; NI 43-101 Technical Report on the 777 Mine dated October 15, 2012; NI 43-101 Technical
Report on the Rosemont Project dated March 30, 2017. The following metals price assumptions were applied to reserves for purposes of calculating copper equivalent: $3.00/lb Cu, $1.00/lb Zn, $1,260/oz
Au and $18.00/oz Ag.
2. The information shown here assumes a hypothetical scenario where the first year of construction for Rosemont occurs in 2019 (ie. “year -3” in the Rosemont technical report). Production numbers are
shown on an attributable basis (ie. 80% of Rosemont copper production). Development of Rosemont is conditional upon receipt of final permits and the approval of Hudbay’s Board of Directors.
+40% Increase
PROJECT PIPELINE
Hudbay has a diversified portfolio of operating mines and an extensive development pipeline to perpetuate production growth
17
Production
Shovel-ready Development
777 Lalor Constancia
Pampacancha
Constancia
Regional
Targets
Peru and
Chile
Greenfield
Targets
Lalor
Cu-Au
Ann
Mason B.C.
Earn-ins
Rosemont
Resource Definition / Feasibility / Exploration / Initial Resource
Junior Toeholds
Manitoba
Regional
Targets
0.0
0.1
0.2
0.3
0.4
0.5
0.6
Freeport McMoRan
First Quantum KAZ Minerals Lundin Hudbay Oz Minerals Capstone Taseko Turquoise Hill Imperial Metals
-80%
0%
80%
160%
240%
Turquoise Hill Hudbay Imperial Metals
First Quantum KAZ Minerals Oz Minerals Taseko Freeport McMoRan
Lundin Capstone
RELEVANT SCALE & MEANINGFUL GROWTH Hudbay is one of the top investible1 pure play2 copper producers, offering investors relevant scale and meaningful production growth
18
2018E GLOBAL COPPER PRODUCTION (Mt)
2018E-2023E COPPER PRODUCTION GROWTH (%)
Source: Production sourced from Wood Mackenzie’s Q2 2018 dataset dated June 2018.
1. Reporting issuer with over 50% free float.
2. Over 50% of revenue from copper.
3. Based on closing share prices on June 30, 2018.
1.6Mt
Market Cap3
(US$B): $5.7
Primary Jurisdiction
of Growth: USA Mongolia Canada Panama Kazakhstan Australia Canada/USA USA Chile Chile/USA
$25.0 $10.2 $5.0 $4.1 $2.1 $0.3 $0.2 $1.5 $0.2
SOUTH AMERICA BUSINESS UNIT
19
AREQUIPA
Cusco
CUSCO
Matarani
Imata
Arequipa
Cerro Verde
MOQUEGUA
TACNA 100km 0
Las Bambas
Yauri
Tintaya Antapaccay
CONSTANCIA
Lima
PERU
CONSTANCIA
MINE
TOWN
RAILROAD
ROAD
LOW-COST, LONG-LIFE COPPER MINE IN PERU
Began production at end of 2014
Developed and maintain meaningful partnerships
with the local communities
New 2018-2020 collective agreement in place
Location Chumbivilcas, Peru
Ownership 100%
Type of deposit Porphyry copper-
molybdenum deposit
Processing On-site processing plant
End products Copper and molybdenum
concentrates
LTM Daily ore milled 86k tpd
LTM Cu production1 125kt
LTM Unit operating
cost2 $9.41/t
LTM Cash cost per lb
Cu3 $1.38/lb
LTM Sustaining
capital4 $58m
LTM Sustaining cash
cost4 $1.61/lb
Current mine life 18 years
Note: LTM = Last twelve months as of September 30, 2018.
1. Production is contained metal in concentrate.
2. Combined mine, mill and G&A unit operating costs per tonne of ore
processed (after impact of capitalized stripping).
3. Net of by-products. Includes impact of silver and gold streams.
4. Sustaining capital includes capitalized stripping costs, but excludes
Pampacancha project capital.
5. Sustaining cash cost per pound copper produced, includes sustaining
capital costs and royalties.
CONSTANCIA MINE
20
0
65
7580
87
0
20
40
60
80
100
2014 2015 2016 2017 2018
Co
ns
tan
cia
Mill
Th
rou
gh
pu
t R
ate
(k
tpd
)
2011 Projected (76ktpd)
2018 Projected (90ktpd)
2012 Projected (85ktpd)
2009 Projected (55ktpd)
109 106 105 105 103
$1.29
$1.05 $0.94
$1.06 $1.12
$1.66 $1.44
$1.11 $1.22
$1.45
2019E 2020E 2021E 2022E 2023E
Cu Production Cash Cost Sustaining Cash Cost
5-YEAR PRODUCTION AND COST1 (2019E-2023E)
CONSTANCIA OPTIMIZATION
Annual copper production of 105k tonnes at cash costs of $1.09/lb and sustaining cash costs of $1.38/lb over 5 years (2019-2023)
Mining of high-grade Pampacancha satellite deposit intended to enhance Constancia grade starting in 2019; community negotiations ongoing
Increasing throughput to 90,000tpd
21
1. Source: NI43-101 Technical Report on the Constancia mine filed by Hudbay on SEDAR, dated March 29, 2018. Production refers to contained metal in concentrate. Cash cost and sustaining cash cost are
reported net of by-product credits, are calculated at reserve prices ($3.00/lb Cu, $11.00/lb Mo, $18.00/oz Ag, $1,260/oz Au) and include the impact of the precious metals stream and capitalized stripping. Cash
cost includes on-site and off-site costs, and sustaining cash cost includes the addition of royalties and sustaining capital, but excludes Pampacancha project capital.
2. Projected throughput of 55,000tpd in NI43-101 Definitive Feasibility Study Technical Report on the Constancia mine filed on SEDAR by Norsemont Mining, dated September 28, 2009.
3. Projected throughput of 76,000tpd in NI-43101 Technical Report on the Constancia mine filed on SEDAR by Norsemont Mining, dated February 21, 2011.
4. Projected throughput of 85,000tpd in NI43-101 Technical Report on the Constancia mine filed by Hudbay on SEDAR, dated October 15, 2012.
5. Projected throughput of 90,000tpd in NI43-101 Technical Report on the Constancia mine filed by Hudbay on SEDAR, dated March 29, 2018.
6. 2014-2016 actuals. 2018E from March 29, 2018 technical report on Constancia.
THROUGHPUT
($/lb Cu) (Kt) ($/lb Cu)
2
3
4
6
Target throughput
increased ~64%
from bid date
5
5 8 9 9
12
17
28
44 46+
52+
Constancia Las Bambas Ministro Hales Sierra Gorda Antucoya Toromocho Mt. Milligan Red Chris Boleo Caserones
Constancia’s timeline from feasibility to first production and the subsequent
ramp-up to nameplate capacity production was the fastest among recently built
projects
EXPEDITED TIMELINE FROM FIRST PRODUCTION TO FULL CAPACITY
22 Source: SNL, Wood Mackenzie, public filings and BMO Capital Markets report “In 2018, It’s All About Cobre Panama” dated January 11, 2018. Full capacity date as disclosed by the producing
company (when available) Boleo and Caserones have not achieved full capacity.
TIME FROM FIRST PRODUCTION TO FULL CAPACITY OPERATIONS (MONTHS)
23
Constancia throughput and processing plant utilization have improved since first production
was achieved at the end of 2014
Quarterly copper production remains robust even as copper head grades decline in accordance with
the mine plan
CONSTANCIA’S QUARTERLY COPPER PRODUCTION AND COPPER HEAD GRADES
CONSTANCIA’S ANNUAL THROUGHPUT AND PROCESSING PLANT UTILIZATION
57
74 79
87
76%
87% 90% 95%
0%
20%
40%
60%
80%
100%
0
20
40
60
80
100
2015 2016 2017 2018
Pro
ce
ss
ing
Uti
liza
tio
n (
%)
Mil
l T
hro
ug
hp
ut
(ktp
d)
4 26 38 38 29 35 36 34 27 30 31 34 32 27 33
0.44%
0.61%
0.70%
0.63%
0.57% 0.62% 0.62%
0.58% 0.54% 0.53%
0.49% 0.54%
0.50%
0.44% 0.48%
0.00%
0.10%
0.20%
0.30%
0.40%
0.50%
0.60%
0.70%
0.80%
0
10
20
30
40
Q1
2015
Q2
2015
Q3
2015
Q4
2015
Q1
2016
Q2
2016
Q3
2016
Q4
2016
Q1
2017
Q2
2017
Q3
2017
Q4
2017
Q1
2018
Q2
2018
Q3
2018 Co
pp
er
Head
Gra
des (
%)
Co
pp
er
Pro
du
cti
on
(kt)
CONTINUOUS IMPROVEMENT AT CONSTANCIA
Constancia is the lowest cost copper mine in South America
Continuous operational improvements at Constancia have driven costs down,
while increasing efficiencies and productivity
LOWEST COST OPEN PIT COPPER MINES IN SOUTH AMERICA (2018E)
INDUSTRY LEADING COST PERFORMANCE
24 1. 2018 forecasted operating costs include mining, processing and general and administrative expenditures on a per tonne bas is.
Source: Wood Mackenzie (Q3 2018 dataset; primary copper, open pit sulphide mines in South America ). Wood Mackenzie’s costing methodology may be different than the methodology reported by
Hudbay or its peers in their public disclosure. For details regarding Hudbay’s costs, refer to Hudbay’s management discussion and analysis for the three and nine months ended September 30, 2018.
$8.89 $9.22 $9.74
$10.28 $10.43 $11.07
$11.63 $11.98 $12.24 $13.13
$14.35 $14.63 $14.68 $14.71 $15.63
$16.14 $16.67 $17.00
$17.73
$19.01
$0.00
$2.00
$4.00
$6.00
$8.00
$10.00
$12.00
$14.00
$16.00
$18.00
$20.00
Co
nsta
ncia
Casero
nes
To
rom
och
o
Ch
ap
ad
a
Cerr
o V
erd
e
An
tap
acca
y
Cu
ajo
ne
Lo
s B
ron
ces
Alu
mb
rera
Carm
en
de A
nd
aco
llo
Can
dela
ria
Lo
s P
ela
mb
res
Ch
uq
uic
am
ata
An
tam
ina
Rad
om
iro
To
mic
Cen
tin
ela
Min
a M
inis
tro
Hale
s
Las B
am
bas
Sie
rra G
ord
a
Salo
bo
Op
era
tin
g C
osts
1 (
US
$/t
Mille
d)
PERU COMMUNITY RELATIONS
We work with all levels of government and the communities to develop stable operations
and to maximize the impact of our social investment in our area of influence and beyond
Since 2012, executed over 90 social agreements with local governments and communities
Pleased with progress on Pampacancha negotiations to date
Exploration work to be conducted on newly acquired properties near Constancia with
potential to provide higher-grade feed to the Constancia mill post-Pampacancha
Recently entered into agreement with Quehuincha in respect of Kusiorcco target
25
MINERAL PROPERTIES WITHIN TRUCKING DISTANCE OF CONSTANCIA PROCESSING FACILITY
Winnipeg
777 LALOR
777 MINE
Flin Flon
Flin Flon Mill
LALOR MINE
MA
NIT
OB
A
SA
SK
AT
CH
EW
AN
0 50km
Snow Lake
MINE
MILL
TOWN
RAILROAD
ROAD
LALOR MINE
Stall Mill
New Britannia Mill
Snow Lake
0 5km
LALOR MINE Stall Mill
MANITOBA BUSINESS UNIT
26
Discovered, mined and reclaimed numerous mines in Manitoba over the past 90 years
Reed closure activities proceeding ahead of schedule and under budget, with reclamation continuing in 2019
MANITOBA COMMUNITY RELATIONS
27
REED PORTAL POLISHING POND
DURING
PRODUCTION
2 MONTHS AFTER
LAST ORE
LONG HISTORY OF MINING IN MANITOBA
Location Snow Lake, Manitoba
Ownership 100%
Type of deposit VMS deposit
Processing Stall and Flin Flon mills
End products Refined zinc, zinc and
copper concentrates
Current mine life 9 years
PRODUCING LOW-COST MINE WITH ZINC AND
GOLD UPSIDE POTENTIAL
Production shaft with capacity of 6,000tpd
Strong ramp-up of ore production; expanded
4,500tpd mine plan
Trade-off studies have been completed and Hudbay
believes the refurbishment of the New Britannia mill
is the optimal processing scenario for the Lalor gold
and copper-gold zones
LALOR MINE
28
29
Potential
for up-dip
extension
Ramp from
Chisel
Lens 10
Lens 40
base metal zones
gold zones
copper & gold zones
gold zone 25
Lens 31-32
LALOR EXPLORATION
LALOR CROSS-SECTION, LOOKING SOUTHWEST
Legend
Lens 25 Possible extension of gold rich Lens 25
Lens 27
Possible Cu-Au feeder of Lens 10
267W01 193W01
296W01
296
283W02 283 273
189W01
SIGNIFICANT EXPLORATION POTENTIAL
Data compilation and modeling over the past producing areas of the New Britannia mine lead to the development of a genetic model for the emplacement of gold mineralization
Geochemical sampling and geophysical surveys conducted in high priority areas in Q4 2018 will be used to define drill targets to be tested during the winter
30
AU AND CU MINERALIZED OCCURRENCES IN THE SNOW LAKE BELT
Hudbay has a large prospective land package in the Snow Lake belt with significant gold exploration potential
Location Flin Flon, Manitoba
Ownership 100%
Type of deposit VMS deposit
Processing Flin Flon mill
End product Refined zinc, zinc and
copper concentrates
Current mine life 3 years
777 MINE
31
STEADY, LOW-COST PRODUCTION
Maximizing cash flow to end of mine life
Plan to keep processing assets on care and
maintenance after mine closure to maintain
regional optionality
ARIZONA BUSINESS UNIT
32
Tucson
ROSEMONT
MINE
TOWN
RAILROAD
ARIZONA, US
PIMA
ROAD
Twin Buttes Mine
Sierrita Mine
Tucson
Sonoita
Three Points
Mission Complex
Patagonia
SANTA CRUZ
0 25km
Green Val ley
ROSEMONT
Location Tucson, Arizona
Ownership 80%2
Type of deposit Copper-molybdenum
skarn deposit
Processing On-site processing plant
End products Copper and molybdenum
concentrates
Avg. LOM Strip Ratio 2.0
Avg. LOM annual Cu
production3 112kt
Avg. LOM Unit
operating cost4 $7.92/t
Avg. LOM Cash cost
per lb Cu5 $1.29/lb
Avg. LOM Annual
sustaining capital6 $61m
Avg. LOM Sustaining
cash cost7 $1.65/lb
Current mine life 19 years
ROSEMONT PROJECT
Note: “Tons” or “t” on this page refer to short tons, not metric tonnes, unless otherwise noted. LOM = Life of Mine. As per NI 43-101 Technical Report on the Rosemont Project dated March 30, 2017. 1. Economic analysis assumes $3.00/lb Cu, $11.00/lb Mo, and precious metal streaming price of $3.90/oz Ag, subject to 1% annual inflation adjustment after three years. Hudbay basis adjusts for
joint venture partner expected payments to earn into their minority interest and outstanding joint venture loan owed to Hudbay. 2. Hudbay’s ownership in the Rosemont project is subject to an earn-in agreement with United Copper & Moly LLC (“UCM”), a Korean consortium, pursuant to which UCM has earned a 7.95% interest
in the project and may earn up to a 20% interest. 3. Production is contained metal in concentrate. 4. Combined mine, mill and G&A unit operating costs per tonne of ore processed (after impact of capitalized stripping). 5. Net of by-products. Includes impact of precious metal stream. Metal prices per the precious metals stream agreement are as follows: $3.90/oz Ag, $450/oz Au. Other metal price assumptions are
as follows: $3.00/lb Cu, $11.00/lb Mo, $18/oz Ag. 6. Sustaining capital includes capitalized stripping costs. 7. Sustaining cash cost per pound copper produced, includes sustaining capital costs and royalties.
ECONOMICS1
PROJECT HUDBAY
NPV 8% $769m $719m
NPV 10% $496m $499m
IRR (after-tax) 15.5% 17.7%
Payback period 5.2 years 4.9 years
High-quality development project with well-established infrastructure
March 2017 43-101 demonstrates robust project economics
19 year mine life generating 15.5% after-tax project IRR and 17.7% IRR to Hudbay at $3.00/lb Cu
Years 1-10 avg. annual production of 140,000 tons (127,000 metric tonnes) Cu at a cash cost of $1.14/lb
Permitting and community engagement progressing
Positioned to move into construction soon after permitting is complete
33
34
ROSEMONT TIMELINE
2014
Note: ADWR = Arizona Department of Water Resources; ADEQ = Arizona Department of Environmental Quality; SSSR = Save the Scenic Santa Ritas; FICO = Farmers Investment Co.; FOIA = Freedom of Information Act
ADEQ Construction
Stormwater General Permit
issued (July)
Arizona Department of
Transportation
Encroachment Permit
issued (March)
ADEQ 401 Certification
issued (February)
ADEQ 401 Certification
Amendment issued (Nov.) ADEQ Class II Air Permit
renewed (April)
ONLY ONE KEY PERMIT OUTSTANDING: U.S. ARMY CORPS OF ENGINEERS 404 PERMIT
MINE PLAN OF OPERATIONS PENDING U.S. FOREST SERVICE APPROVAL
Arizona State Land
Department Utility Rights of
Way issued (Nov.)
Pima County Department of
Environmental Quality Air
Activity Permit issued (March)
U. S. Forest Service
Final Record of
Decision issued (June)
Pima County Flood
Control District Permit
renewed (June)
Hudbay Acquires the
Rosemont Project
(July)
Arizona Superior Court
determines that County's
Outdoor Lighting Code
does not apply to
Rosemont, enabling
Hudbay to continue to add
appropriate lighting
installations to preserve the
safety of site operations
(May)
Court upholds ADEQ's
issuance of Aquifer
Protection Permit
(Nov.)
ADEQ and Rosemont
successfully defend air
permit through litigation
(July)
Court agrees with ADEQ
and Rosemont in County's
attempted appeal of 401
Certification (January)
Hudbay issues an
updated technical report
with improved resource
and reserve availability
(March)
2015 2016 2017 2018
KEY MILESTONES
Granted six permits for Rosemont since Huday’s acquisition of the project, including the Final Record of Decision issued by the U.S. Forest Service
Successfully defended five lawsuits related to Rosemont permits
Issued updated Technical Report with improved resource and reserve availability; continue to de-risk project in advance of construction
22,910 metres of drilling
completed 28,384 metres of drilling
completed
0
500
1000
1500
2000
2500
Total initial capital
Stream upfront
payment
Proposed equipment financing
Joint venture earn-in
payment
Joint venture share of
remaining capital
Hudbay's share of capital
ROSEMONT INITIAL CAPITAL COST
BREAKDOWN
$ million
Site wide $42
Mining $474
Process plant $671
Site services & utilities $22
Internal infrastructure $127
External infrastructure $114
Common construction facilities $51
EPCM services $107
Owner’s cost $313
Total initial capital $1,921
ROSEMONT INITIAL CAPEX & FUNDING
3-year construction period; $144 million in year 1, $861 million in year 2, $768 million in year 3, remaining capital in ramp-up period
~5% growth and 15% contingency added per item
35
INITIAL CAPITAL COST ESTIMATE OF $1.9 BILLION
HUDBAY’S SHARE OF CAPITAL IS APPROXIMATELY $1.1 BILLION
$1,921
($M)
$230
$200
$106 $277
$1,108
OVERVIEW OF ANN MASON
Ann Mason is located approximately 85km southeast of Reno, Nevada in the prolific Yerington Copper District
Close to the former producing Yerington mine (1.7B lbs
of copper produced)
Ann Mason hosts a measured and indicated copper sulphide resource of 1.4Bt grading 0.32% Cu plus inferred sulphide resource of 0.6Bt grading 0.29% Cu
Additional inferred resources at the Blue Hill target of
72Mt grading 0.17% Cu (oxide) and 50Mt grading 0.23%
Cu (sulphide)
Significant exploration potential
Ann Mason remains open in several directions
High-grade regional skarn targets to increase grades
early in the mine life
Several un-tested IP anomalies
Potential for additional oxide material
Excellent infrastructure in place
Road access to the property with nearby rail and power
Recently secured an option to purchase 8,168 ac·ft of
water
36
BLOCK MODEL
ANN MASON – NEVADA, USA
ANN MASON RESOURCE ESTIMATE
Elko
Las
Vegas
Reno
Ann Mason
See technical report dated March 3, 2017 and filed on Sedar by Mason Resources
CATEGORY ORE Grade Contained Metal
(MT) Cu
(%)
Au
(g/t)
Ag
(g/t)
Mo
(%)
Cu
(Mt)
Au
(Moz)
Ag
(Moz)
Mo
(Mt)
M&I 1,400 0.32 0.03 0.65 0.006 4.5 1.33 29.5 0.08
Inferred 623 0.29 0.03 0.66 0.007 1.8 0.58 13.2 0.04
STRATEGIC RATIONALE OF ANN MASON
37
MEANINGFUL
SCALE ✓ Adding one of the largest undeveloped copper porphyry resources in North America for less than one third of Hudbay’s 2018 exploration budget
COPPER FOCUS ✓ Immediately increases Hudbay’s M&I resources by 4.5Mt of copper and inferred resources by
2.0Mt of copper
PER SHARE
ACCRETION ✓ Highly accretive transaction on a resource per share basis
Paying ~0.2 cents per pound of contained M&I copper equivalent
LONG LIFE AND
LOW COST ✓ Resource size and grade is similar to Constancia and Rosemont with the potential for a long
life and low cost operation
MINING FRIENDLY
JURISDICTION ✓ Nevada ranked 3rd overall on the Fraser Institute’s 2017 Investment Attractiveness Index
DEVELOPMENT
PIPELINE ✓ Adds a significant asset to Hudbay’s development pipeline to follow after Rosemont
Will be one of Hudbay’s high priority exploration projects
MANAGEMENT
CAPABILITIES ✓ Leverages management’s expertise to “drill and build” through exploration and project
development
Early-stage ownership allows us to apply our expertise in exploration, engineering,
permitting, and construction to optimize the project’s value
The acquisition of Ann Mason is an excellent fit with Hudbay’s strategic criteria
Hudbay has been a 14% shareholder of Mason since August 2017 and has followed the project
closely for the past several years
25.8 3.5 1.1 9.8 10.9 6.5 8.0 2.7 4.8 4.5 3.2 3.0 3.9 3.2 2.0 3.9 4.0 3.4 3.0 3.3
2.6
0.40%
2.63%
0.85%
0.39%
0.51% 0.58%
0.38%
0.55% 0.59%
0.32%
0.57%
0.38% 0.37%
0.26% 0.18%
0.48%
0.37% 0.45% 0.42%
0.25% 0.28%
0.00%
0.50%
1.00%
1.50%
2.00%
2.50%
3.00%
0.0
5.0
10.0
15.0
20.0
25.0
30.0
35.0
40.0
Pebble Resolution La Granja NuevaUnion Quellaveco Twin Metals Los Helados West Wall Rio Blanco Ann Mason Haquira Polo Sur Vizcachitas Schaft Creek Casino Galeno Rosemont Canariaco Norte
Trapiche Harper Creek Constancia
Northern Dynasty
Rio Tinto Rio Tinto Teck Anglo American
Antofagasta NGEx Resources
Glencore Zijin Mason Resources
First Quantum
Antofagasta Los Andes Copper
Teck Western Copper and
Gold
China Minmetals
Hudbay Minerals
Candente Copper
Minas Buenaventura
Yellowhead Mining
Hudbay Minerals
Me
as
ure
d +
In
dic
ate
d C
op
pe
r G
rad
e (
%)
Me
as
ure
d +
In
dic
ate
d (
so
lid
) a
nd
In
ferr
ed
(d
ott
ed
) C
on
tain
ed
Co
pp
er
(M
t)
LARGEST UNDEVELOPED GREENFIELD COPPER DEPOSITS IN HUDBAY’S JURISDICTIONS1
SCARCITY VALUE OF ANN MASON Ann Mason is one of the largest undeveloped copper resources in Hudbay’s preferred jurisdictions
The 3rd largest “actionable” resource held within a junior company
A high priority exploration project to target near-surface, high-grade mineralization
Acquiring a high quality resource in a safe jurisdiction that is similar in scale to Constancia and
Rosemont for an enterprise value of approximately $15M compared to our 2018 exploration budget of
$50M
Ann Mason is a PEA-staged project in Nevada with potential to be developed after Rosemont
Hudbay will conduct exploration and advance technical studies without rushing into a development decision
Numerous opportunities to enhance the project’s value under Hudbay’s stewardship
38 1. Hudbay’s jurisdictions of interest are Canada, USA, Chile and Peru.
Source: S&P Global Market Intelligence, company filings and Hudbay’s latest reserve and resource update
Hudbay Major Junior
2018 OBJECTIVES
39
Continue to focus on generating free cash flow and increasing net
asset value
Advance in-house brownfield growth opportunities
Enhance Constancia production through recoveries and
throughput optimization
Advance permitting and technical work at Rosemont
Test promising exploration targets near Constancia and Lalor and
at greenfield sites in Peru, Chile and Canada
Continue to evaluate exploration and acquisition opportunities that
meet our strategic criteria
40
APPENDIX
APPENDIX CONTENTS
41
CONTENTS SLIDE#
2018 Guidance 42-43
Financial Flexibility 44
Constancia Mine Plan Summary 45
Lalor Mine Plan Summary 46
Leverage to Commodities 47
Precious Metals Stream Overview 48
CONTENTS SLIDE#
Peru Mineral Reserves 49
Peru Mineral Resources 50
Manitoba Reserves & Resources 51
Arizona Reserves & Resources 52
Additional Information 53-54
2018 GUIDANCE
42
CONTAINED METAL IN CONCENTRATE1 2018 GUIDANCE 2017 ACTUAL 2017 GUIDANCE
MANITOBA2
Copper tonnes 27,500 – 32,500 37,411 32,500 – 42,500
Zinc tonnes 105,000 – 130,000 135,156 125,000 – 150,000
Precious Metals3 ounces 120,000 – 145,000 106,918 90,000 – 110,000
Combined Unit Operating Costs4 C$/tonne ore
processed C$125 – 1355 C$118 C$88 – 108
PERU
Copper tonnes 95,000 – 115,000 121,781 100,000 – 115,000
Precious Metals3 ounces 50,000 – 70,0006 51,493 55,000 – 65,000
Combined Unit Operating Costs4 $/tonne ore
processed $7.5 – 9.2 $8.83 $7.20 – 8.80
TOTAL CONSOLIDATED
Copper tonnes 122,500 – 147,500 159,192 132,500 – 157,500
Zinc tonnes 105,000 – 130,000 135,156 125,000 – 150,000
Precious Metals3 ounces 170,000 – 215,0006 158,411 145,000 – 175,000
1.Metal reported in concentrate is prior to refining losses or deductions associated with smelter terms.
2. Includes 100% of Reed mine production; Hudbay owns a 70% interest in the Reed mine.
3.Precious metals production includes gold and silver production on a gold-equivalent basis. Silver converted to gold at a ratio of 70:1.
4.Reflects combined mine, mill and G&A costs per tonne of milled ore. Peru costs are presented in USD and reflect the deduction of expected capitalized stripping costs. Manitoba costs are presented in CAD
and include the cost of ore purchased from the joint venture partner at the Reed mine.
5.As updated in Hudbay’s press release dated July 31, 2018.
6.As updated in Hudbay’s press release dated May 2, 2018.
PRODUCTION AND UNIT COST
2018 GUIDANCE
43
EXPLORATION
$ MILLIONS
Peru 20
Manitoba 15
Generative and Other 15
TOTAL EXPLORATION EXPENDITURES 50
Capitalized Spending (10)
TOTAL EXPLORATION EXPENSE 40
$ MILLIONS 2018 GUIDANCE 2017 GUIDANCE
SUSTAINING CAPITAL
Manitoba 85 65
Peru2 50 120
TOTAL SUSTAINING CAPITAL 135 185
GROWTH CAPITAL
Manitoba 20 40
Peru 454 25
Arizona3 35 20
TOTAL GROWTH CAPITAL 100 85
Capitalized Exploration 10 2
TOTAL CAPITAL EXPENDITURE 245 272
CAPITAL EXPENDITURE1
1. Excludes capitalized interest.
2. Includes capitalized stripping costs.
3. Capitalized spending.
4. As disclosed in Hudbay’s press release dated May 2, 2018, the majority of Peru’s growth capital is expected to be incurred in 2019 as a result of the anticipated delay in the mining of the Pampacancha
deposit.
FINANCIAL FLEXIBILITY
44
DEBT OUTSTANDING
SEPTEMBER 30, 2018
AMOUNT
DRAWN
INTEREST
RATE MATURITY
MAINTENANCE
COVENANTS
Senior Unsecured Notes Moody’s B3 rating (stable)
S&P B+ rating (stable)
$400 7.250% January 2023 None
$600 7.625% January 2025 None
Credit Facilities Cash Drawdowns
Letters of Credit
$130
$0
$130
LIBOR
+ 2.50%1 July 2022
4.00x Total Debt/EBITDA2
2.00x Secured
Debt3/EBITDA
3.00x EBITDA/Interest4
$1.4B TNW5
1. Interest rate fluctuates based on net debt leverage ratio. Interest rate is LIBOR + 2.50% based on the financial results for the twelve months ended September 30, 2018.
2. Consolidated; gross total debt to EBITDA of less than 4.00x in 2018, 4.50x in 2019, and 4.00x thereafter.
3. Consolidated; secured debt includes credit facilities and equipment finance borrowings.
4. Consolidated; based on total interest.
5. TNW = tangible net worth.
SEPTEMBER 30, 2018 $ MILLIONS
Cash and Cash Equivalents $460
Availability under Credit Facilities $418
Total Available Liquidity $878
CONSTANCIA MINE PLAN SUMMARY
45
MINE PLAN SUMMARY – MARCH 29, 2018 TECHNICAL REPORT
2019E 2020E 2021E 2022E 2023E LOM Avg.1
Ore mined million tonnes 37.7 34.0 27.6 28.6 33.6 30.8
Waste mined million tonnes 32.5 32.0 38.1 39.5 35.4 33.7
Strip ratio waste:ore 0.9 0.9 1.4 1.4 1.1 1.1
Ore milled million tonnes 31.3 31.2 31.1 31.1 31.2 31.0
Copper grade milled % Cu 0.41% 0.39% 0.39% 0.39% 0.39% 0.32%
Copper recovery % Cu 84.6% 85.9% 86.0% 86.1% 85.7% 86.0%
Copper production2 000 tonnes 109 106 105 105 103 84
Molybdenum production2 000 tonnes 0.7 2.2 2.7 1.4 1.6 1.1
Gold production2 000 oz 39 78 84 91 57 34
Silver production2 000 oz 2,492 2,074 2,483 2,500 2,663 2,102
On-site costs3 $/t milled $8.41 $8.34 $8.11 $8.34 $7.98 $7.96
Cash cost4 $/lb Cu $1.29 $1.05 $0.94 $1.06 $1.12 $1.44
Sustaining cash cost4 $/lb Cu $1.66 $1.44 $1.11 $1.22 $1.45 $1.75
CAPITAL COSTS:
Sustaining capex $ million $80 $75 $15 $25 $52 $41
Capitalized stripping $ million $8 $15 $21 $10 $22 $16
Total sustaining capex $ million $88 $90 $36 $35 $74 $57
Pampacancha capex $ million $42 $1 $1 - - -
Source: The Constancia Mine, National Instrument 43-101 Technical Report as filed on SEDAR by Hudbay on March 29, 2018.
1. Life-of-mine (“LOM”) average calculated from 2018-2036.
2. Production refers to contained metal in concentrate.
3. On-site costs include mining, milling and G&A costs, and include the impact of capitalized stripping.
4. Cash cost and sustaining cash cost are reported net of by-product credits, are calculated at reserve prices ($3.00/lb Cu, $11.00/lb Mo, $18.00/oz Ag, $1,260/oz Au) and include the impact of the precious metals stream and capitalized stripping. Cash cost includes on-site and off-site costs, and sustaining cash cost includes the addition of royalties and sustaining capital, but excludes Pampacancha project capital.
LALOR MINE PLAN SUMMARY
46
MINE PLAN SUMMARY – MARCH 30, 2017 TECHNICAL REPORT
2018E 2019E 2020E 2021E 2022E LOM Total1
Ore milled tonnes 1,616,285 1,620,000 1,603,652 1,620,000 1,473,657 12,953,354
Milled daily throughput tonnes per day 4,500 4,500 4,500 4,500 4,100 -
Zinc grade milled % Zn 5.71% 5.62% 4.61% 4.83% 5.72% 4.63%
Copper grade milled % Cu 0.52% 0.48% 0.79% 0.92% 0.95% 0.70%
Gold grade milled g/t Au 2.13 1.86 2.79 2.86 3.16 2.67
Silver grade milled g/t Ag 24.37 21.43 28.43 26.39 26.72 26.97
Zinc production2 000 tonnes 84,723 83,495 66,596 70,810 77,440 579,446
Copper production2 000 tonnes 6,993 6,481 11,168 13,235 12,370 78,689
Gold production2 000 oz 59,202 54,079 83,265 91,994 93,174 653,662
Silver production2 000 oz 591,589 537,611 842,391 909,201 846,328 6,060,893
Mining unit cost3 C$/t mined C$72 C$77 C$77 C$77 C$77 C$78
Milling unit cost3 C$/t milled C$20 C$20 C$20 C$20 C$21 C$22
CAPITAL COSTS:
Development capital C$ million C$42 - - - -
C$42
Sustaining capital C$ million C$49 C$31 C$29 C$24 C$21 C$184
Source: The Lalor Mine, National Instrument 43-101 Technical Report as filed on SEDAR by Hudbay on March 30, 2017.
1. Life-of-mine (“LOM”) total calculated from 2018-2027.
2. Production refers to contained metal in concentrate.
3. G&A costs related to shared services incurred in Flin Flon and allocated between 777, Reed and Lalor mines are not included in unit costs.
LEVERAGE TO COMMODITIES
Highly leveraged to copper, with additional sensitivity to zinc prices
Moderate exposure to changes in C$/US$ exchange rates
47
SENSITIVITY ANALYSIS1
1. Assumes operational performance is consistent with annual guidance for 2018.
2. Operating cash flow before changes in non-cash working capital.
3. Gold price sensitivity also includes the impact of a +/- 10% change in the silver price (2018 assumption is $18/oz Ag).
2018 BASE CHANGE OF 10%
REPRESENTED BY:
IMPACT ON
OPERATING CASH FLOW2
METAL PRICES:
Copper Price $3.00/lb +/- $0.30/lb +/- $56 million
Zinc Price $1.30/lb +/- $0.13/lb +/- $32 million
Gold Price3 $1,300/oz +/- $130/oz +/- $10 million
EXCHANGE RATES:
C$/US$ 1.25 +/- 0.125 +/- $38 million
PRECIOUS METALS STREAM OVERVIEW
48
PAYMENTS FROM WHEATON PRECIOUS METALS TO HUDBAY
DELIVERY FROM HUDBAY TO WHEATON PRECIOUS METALS
UPFRONT PAYMENTS PRODUCTION PAYMENTS2
777 and Constancia
$5.90/oz Silver
$400/oz Gold
Rosemont
$3.90/oz Silver
$450/oz Gold
777 and Constancia
$885 million
Rosemont
(pending)
$230 million1
Remaining Life of Mine
Silver 100%
Gold 50%3
777
CONSTANCIA
Remaining Life of Mine
Silver 100%
Gold 50%
Life of Mine
Silver 100%
Gold 100%
ROSEMONT
1. The stream upfront deposit of $230 million for Rosemont has not yet been received and will be payable upon the satisfaction o f certain conditions precedent, including the receipt of permits and
the commencement of construction.
2. Payments for production of silver and gold from 777 are subject to 1% annual escalation starting 2015; payments for production of gold and silver from Constancia are subject to 1% annual
escalation starting in 2019; payments for production of gold and silver from Rosemont are subject to 1% annual escalation aft er three years.
3. Percentage of gold streamed at 777 dropped to 50% as of January 1, 2017, from 100%.
PERU MINERAL RESERVES
49
CATEGORY TONNES Cu (%) Mo (g/t) Ag (g/t) Au (g/t)
CONSTANCIA
Proven 455,900,000 0.30 96 2.93 0.035
Probable 72,800,000 0.23 72 3.09 0.035
Total Proven and Probable 528,700,000 0.29 93 2.95 0.035
PAMPACANCHA
Proven 32,400,000 0.59 178 4.48 0.368
Probable 7,500,000 0.62 173 5.75 0.325
Total Proven and Probable 39,900,000 0.60 177 4.72 0.360
Total Mineral Reserves 568,600,000 0.32 99 3.07 0.058
AS AT JANUARY 1, 2018
Note: Totals may not add up correctly due to rounding.
PERU MINERAL RESOURCES
50
AS AT JANUARY 1, 2018
Note: Totals may not add up correctly due to rounding.
CATEGORY TONNES Cu (%) Mo (g/t) Ag (g/t) Au (g/t)
CONSTANCIA
Measured 175,000,000 0.20 51 2.19 0.028
Indicated 180,900,000 0.20 56 2.09 0.033
Inferred 54,100,000 0.24 43 1.71 0.018
PAMPACANCHA
Measured 11,400,000 0.41 101 4.95 0.245
Indicated 6,000,000 0.35 84 5.16 0.285
Inferred 10,100,000 0.14 143 3.86 0.233
Total Measured and Indicated 373,300,000 0.21 56 2.28 0.041
Total Inferred 64,100,000 0.22 59 2.05 0.052
MANITOBA RESERVES & RESOURCES
51
AS AT JANUARY 1, 2018
1. Includes base metal zone, copper-gold zone and gold in contact with base metal zone reserves.
2. Stated at 100%, Hudbay holds a 70% joint venture interest in the Reed mine.
3. Includes gold zone and copper-gold zone resources.
Note: totals may not add up correctly due to rounding.
PROPERTY CATEGORY TONNES Cu (%) Zn (%) Au (g/t) Ag (g/t)
Lalor Reserves1 Proven 3,511,000 0.73 6.21 2.37 27.18
Probable 9,484,000 0.65 4.31 2.72 26.03
Total Lalor Mineral Reserve 12,995,000 0.67 4.83 2.62 26.33
777 Reserves Proven 2,625,000 1.78 4.20 1.70 25.97
Probable 1,251,000 1.11 4.33 1.82 25.41
Total 777 Mineral Reserve 3,876,000 1.56 4.24 1.73 25.79
Reed Reserves2 Proven 67,000 2.91 1.16 0.47 7.78
Probable 209,000 3.31 0.40 0.74 6.72
Total Reed Mineral Reserve 276,000 3.21 0.58 0.67 6.98
777 Resources Indicated 736,000 0.99 3.53 1.82 26.24
Inferred 673,000 1.01 4.26 1.72 30.95
Lalor Resources –
Base Metal Zone
Indicated 2,100,000 0.49 5.34 1.69 28.10
Inferred 545,000 0.32 8.15 1.45 22.28
Lalor Resources –
Gold Zone3
Indicated 1,750,000 0.34 0.40 5.18 30.61
Inferred 4,121,000 0.90 0.31 5.02 27.61
ARIZONA RESERVES & RESOURCES
52
AS AT MARCH 30, 2017
MINERAL RESERVES1
CATEGORY Tonnes Cu (%) Mo (%) Ag (g/t)
Proven 426,100,000 0.48 0.012 4.96
Probable 111,000,000 0.31 0.010 3.09
Total 2P Reserves 537,100,000 0.45 0.012 4.58
MINERAL RESOURCES1
CATEGORY Tonnes Cu (%) Mo (%) Ag (g/t)
Measured 161,300,000 0.38 0.009 2.72
Indicated 374,900,000 0.25 0.011 2.60
Total Measured & Indicated 536,200,000 0.29 0.011 2.64
Inferred 62,300,000 0.30 0.010 1.58
1. Based on 100% ownership of the Rosemont project; Hudbay currently owns a 92.05% interest in the project and its ownership interest is subject to an Earn-In Agreement with UCM, pursuant to which
UCM has earned a 7.95% interest in the project and may earn up to a 20% interest.
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 Resources and Reserves: Definitions and Guidelines.
The mineral resource estimates in this presentation are exclusive of mineral reserves. Mineral resources that are not mineral reserves do not have demonstrated economic viability.
The technical and scientific information in this presentation related to the Constancia mine and the Rosemont project has been approved by Cashel Meagher, P. Geo, Hudbay’s
Senior Vice President and Chief Operating Officer. The technical and scientific information related to the Manitoba sites (other than Lalor) and projects contained in this presentation
has been approved by Robert Carter, P. Eng, Hudbay’s General Manager Mining Operations, Manitoba Business Unit. The scientific and technical information related to the Lalor
mine contained in this presentation has been approved by Olivier Tavchandjian, P.Geo., our VP Exploration and Geology. Messrs. Meagher, Carter and Tavchandjian are qualified
persons pursuant to NI 43-101. For a description of the key assumptions, parameters and methods used to estimate mineral reserves and resources, as well as data verification
procedures and a general discussion of the extent to which the estimates of scientific and technical information may be affected by any known environmental, permitting, legal title,
taxation, sociopolitical, marketing or other relevant factors, please see Hudbay’s annual information form dated March 29, 2018 and the following Technical Reports for each of the
company’s material properties as filed by Hudbay on SEDAR at www.sedar.com: NI 43-101 Technical Report on the Constancia Mine dated March 29, 2018; NI 43-101 Technical
Report on the Lalor Mine dated March 30, 2017; NI 43-101 Technical Report on the 777 Mine dated October 15, 2012; NI 43-101 Technical Report on the Rosemont Project dated
March 30, 2017; and NI 43-101 Technical Report on the Reed Copper Deposit dated April 2, 2012 as filed by VMS Ventures Inc. Quality Assurance/Quality Control procedures for
the Lalor exploration program include the systematic insertion of blanks, standards and duplicates into the core sample strings. The results of the control samples are evaluated on a
regular basis with batches and are re-analysed and/or resubmitted as needed. There are no drilling, sampling, recovery or other factors that could materially affect the accuracy or
reliability of the preliminary results.
This presentation has been prepared in accordance with the requirements of the securities laws in effect in Canada, which may differ materially from the requirements of United
States securities laws applicable to U.S. issuers. Information concerning Hudbay’s mineral properties has been prepared in accordance with the requirements of Canadian securities
laws, which differ in material respects from the requirements of the Securities and Exchange Commission (the “SEC”) set forth in Industry Guide 7. Under the SEC's Industry Guide
7, mineralization may not be classified as a “reserve” unless the determination has been made that the mineralization could be economically and legally produced or extracted at the
time of the reserve determination, and the SEC does not recognize the reporting of mineral deposits which do not meet the SEC Industry Guide 7 definition of “Reserve”. In
accordance with National Instrument 43-101 – Standards of Disclosure for Mineral Projects (“NI 43-101”) of the Canadian Securities Administrators, the terms “mineral reserve”,
“proven mineral reserve”, “probable mineral reserve”, “mineral resource”, “measured mineral resource”, “indicated mineral resource” and “inferred mineral resource” are defined in
the Canadian Institute of Mining, Metallurgy and Petroleum (the “CIM”) Definition Standards for Mineral Resources and Mineral Reserves adopted by the CIM Council on May 10,
2014. While the terms “mineral resource”, “measured mineral resource”, “indicated mineral resource” and “inferred mineral resource” are recognized and required by NI 43-101, the
SEC does not recognize them. You are cautioned that, except for that portion of mineral resources classified as mineral reserves, mineral resources do not have demonstrated
economic value. Inferred mineral resources have a high degree of uncertainty as to their existence and as to whether they can be economically or legally mined. It cannot be
assumed that all or any part of an inferred mineral resource will ever be upgraded to a higher category. Therefore, you are cautioned not to assume that all or any part of an inferred
mineral resource exists, that it can be economically or legally mined, or that it will ever be upgraded to a higher category. Likewise, you are cautioned not to assume that all or any
part of measured or indicated mineral resources will ever be upgraded into mineral reserves.
53
ADDITIONAL INFORMATION
54
Table 1 below provides a summary of the Lalor drill results referenced in this presentation.
Table 1: Lalor drill results
1. True widths are estimated based on drill angle and interpreted geometry of mineralization.
2. All gold and copper values are uncut.
Table 2 below provides the coordinates, azimuth and dip of the mineralized intercepts reported in Table 1.
Table 2: Supplemental information to the Lalor drill results
Hole ID From
(m)
To
(m)
Intercept
(m)
Depth
(m)
Estimated true
width(m)1
Cu
(%)2
Au
(g/t)2
189W01 1197.0 1205.0 8.0 1154 7.1 0.1 9.3
193W01 1041.2 1046.5 5.4 1028 4.1 1.1 2.8
267W01 1120.8 1127.2 6.3 1098 4.5 2.7 11.3
273 1211.8 1215.8 4 1202 2.9 1.9 1.2
283 1242.7 1249.0 6.3 1240 4.2 7.8 5.9
283W02 1270.8 1276.3 5.5 1263 4.1 7.8 2.5
296 1227.5 1233.0 5.5 1184 4.2 5.2 5.6
296W01 1220.5 1228.3 7.8 1175 6.1 3.7 5.4
From To Azimuth at
intercept
Dip at
intercept Core Size
Hole ID Easting Northing Elevation Easting Northing Elevation
189W01 426,663 6,081,675 4,149 426,660 6,081,675 4,142 272 -63 NQ
193W01 427,051 6,081,272 4,273 427,051 6,081,270 4,268 185 -76 NQ
267W01 427,185 6,081,266 4,204 427,183 6,081,266 4,197 242 -79 NQ
273 427,163 6,081,570 4,101 427,162 6,081,570 4,098 206 -79 NQ
283 427,223 6,081,530 4,064 427,222 6,081,530 4,057 248 -83 NQ
283W02 427,263 6,081,461 4,040 427,263 6,081,460 4,035 186 -77 NQ
296 427,251 6,081,311 4,121 427,251 6,081,310 4,115 154 -76 NQ
296W01 427,243 6,081,301 4,130 427,244 6,081,299 4,123 163 -73 NQ
Carla Nawrocki, Director, Investor Relations
416.362.7362 | carla.nawrocki@hudbay.com
FOR MORE INFORMATION CONTACT: