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 Mountain) in exchange for common shares of Hudbay, pursuant to a court approved plan of arrangement (the "Proposed Transaction").
This presentation is not, and under no circumstances is to be construed as, an advertisement or public offering of the securities referred to in this presentation. No securities commission or similar authority in Canada or the United States has reviewed or in any way passed upon this presentation or the merits of the securities described herein and any representation to the contrary is an offence.
The information contained in this presentation is current only as of its date and may have changed. Hudbay and Copper Mountain disclaim any intention or obligation or undertaking to update or revise this information in light of new information, future events or otherwise.
Forward-Looking Information
This presentation contains forward-looking information within the meaning of applicable Canadian and United States securities legislation. All information contained in this presentation, other than statements of current and historical fact, is forward-looking information. 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 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 Hudbay and/or Copper Mountain, as applicable, 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.
Forward-looking statements include, but are not limited to, statements with respect to: the expected consummation and anticipated timing of the Proposed Transaction; shareholder approval of the Proposed Transaction; the satisfaction of the conditions precedent to the Proposed Transaction; the strengths, characteristics and potential of Hudbay following closing of the Proposed Transaction; growth potential and expectations regarding the synergies between Hudbay and Copper Mountain following closing of the Proposed Transaction and the ability to successfully achieve business objectives; timing, receipt and the anticipated effects of court, regulatory and other required consents and approvals; expectations regarding future exploration and development; expectations for economic, business and/or competitive factors; and the impact of the Proposed Transaction on various stakeholders and local communities.
Specifically, estimated guidance production, cash costs, EBITDA, net debt / EBITDA ranges and cash flow per share is, in each case, considered forward-looking information. The foregoing demonstrates Hudbay's objectives, which are not forecasts or estimates of its financial position, but are based on the implementation of its strategic goals, growth prospects, growth initiatives and integration initiatives in respect of the Proposed Transaction. Management's assessments of, and outlook for, the foregoing matters set out herein are generally based on the following assumptions: (a) Hudbay's results of operations will continue as expected, (b) Hudbay will continue to effectively execute against its key strategic growth priorities, (c) Hudbay will realize the expected synergies between Hudbay and Copper Mountain following closing of the Proposed Transaction, (d) Hudbay will be able to take advantage of future prospects and opportunities, (e) there will be no changes in legislative or regulatory matters that negatively impact Hudbay's business, (f) current tax laws will remain in effect and will not be materially changed, (g) economic conditions will remain relatively stable throughout the period, and (h) the industries Hudbay operates in will continue to grow consistent with past experience and in line with expectations.
Hudbay considers these assumptions to be reasonable in the circumstances, given the time period for such projections and targets. These estimates have been prepared by and are the responsibility of management.
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 include, but are not limited to, risks related to: the failure to receive requisite shareholder approval for the Proposed Transaction; the failure to receive requisite court, regulatory and other required consents and approvals; the inability of Hudbay to successfully integrate Copper Mountain's operations; the potential of a third party making a superior proposal; the possibility that the Arrangement Agreement could be terminated, including as a result of a superior proposal; and various other risk factors described in the cautionary information and risk factor disclosure contained in filings made by Hudbay and Copper Mountain, including in Hudbay's and Copper Mountain's respective most recent annual information form for the year ended December 31, 2022 and their respective management's discussion and analysis for the period ended December 31, 2022 each available on SEDAR at www.sedar.com and, for Hudbay, also available on EDGAR at www.sec.gov.
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 and Copper Mountain do 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.
Non-IFRS Financial Performance Measures
2023E cash costs, 2023E EBITDA, 2022A cash costs and 2022A EBITDA are non-IFRS financial measures with no standardized definition under IFRS. 2022A Net Debt / EBITDA, 2023E Net Debt / EBITDA range and 2024E Net Debt / EBITDA range are non-IFRS financial ratios with no standardized definition under IFRS. These measures and ratios are shown because Hudbay and Copper Mountain believe they help investors and management assess the performance of their operations and effectively analyze business activities. EBITDA is shown to provide additional information about the cash generating potential in order to assess Hudbay's capacity to service and repay debt, carry out investments and cover working capital needs. These measures do not have a meaning prescribed by IFRS and are therefore unlikely to be comparable to similar measures presented by other issuers. These measures should not be considered in isolation or as a substitute for measures prepared in accordance with IFRS and are not necessarily indicative of operating profit or cash flow from operations as determined under IFRS. Other companies may calculate these measures differently.
For a detailed description of each of these measures, please refer to "Non-IFRS Financial Performance Measures" of Hudbay's management's discussion and analysis for the period ended December 31, 2022 available on SEDAR at www.sedar.com and EDGAR at www.sec.gov, and "Non-GAAP Performance Measures" of Copper Mountain's management's discussion and analysis for the period ended December 31, 2022 available on SEDAR at www.sedar.com. Such disclosure includes reconciliations of certain of these measures to their most directly comparable IFRS or GAAP measures, as applicable, which information is incorporated by reference herein.
All amounts in this presentation are in U.S. dollars unless otherwise noted.
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 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 totals in the tables may not add up correctly due to rounding.
Unless otherwise indicated, the scientific and technical information contained in this presentation with respect to Hudbay has been prepared by Hudbay and approved by Olivier Tavchandjian, P. Geo, Hudbay's Senior Vice President, Exploration and Technical Services. Mr. Tavchandjian is a qualified person pursuant to NI 43-101.
Unless otherwise indicated, the scientific and technical information contained in this presentation with respect to Copper Mountain has been prepared by Copper Mountain and approved by Alberto Chang, P. Eng., Copper Mountain's Vice President, Mining and Patrick Redmond, Ph.D., P. Geo, Copper Mountain's Senior Vice President, Exploration and Geoscience. Mr. Chang and Dr. Redmond are each a qualified person pursuant to NI 43-101.
Additional details on Hudbay's material mineral projects, including a year-over-year reconciliation of reserves and resources and metal price assumptions, is included in Hudbay's Annual Information Form for the year ended December 31, 2022, which is available on SEDAR at www.sedar.com.
Additional details with respect to the Copper Mountain mine project in British Columbia are available in Copper Mountain's technical report dated September 30, 2022 and in Copper Mountain's Annual Information Form for the year ended December 31, 2022, each filed on Copper Mountain's SEDAR profile at www.sedar.com.
With respect to Hudbay's disclosure herein, the Copper World and Mason preliminary economic assessments are preliminary in nature, includes inferred resources that are considered too speculative to have the economic considerations applied to them that would enable them to be categorized as mineral reserves and there is no certainty the preliminary economic assessments will be realized. Additional details on the Copper World and Mason preliminary economic assessments (including assumptions underlying the mineral resource estimates) are included in Hudbay's news releases dated June 8, 2022 and April 6, 2021, respectively.
This presentation has been prepared in accordance with the requirements of the securities laws in effect in Canada, which differ from the requirements of United States securities laws. Canadian reporting requirements for disclosure of mineral properties are governed by NI 43-101. For this reason, information contained in this presentation
containing descriptions of the Company's mineral deposits may not be comparable to similar information made public by United States companies subject to the reporting
and disclosure requirements under the United States federal securities laws and the rules and regulations thereunder.
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 risk factors described under “Cautionary Information” do not materialize. 2023E cash costs is a non-IFRS financial measure with no standardized definition under IFRS. 2022A cash costs for each of Hudbay and Copper Mountain were disclosed and described, together with appropriate reconciliations to the nearest IFRS or GAAP measure, as applicable, in their respective management's discussion and analysis for the year ended December 31, 2022. For further information, see “Cautionary Information”.
3. 2023E EBITDA constitutes forward-looking information and assumes the risk factors described under “Cautionary Information” do not materialize. 2023E EBITDA is a non-IFRS financial measure with no standardized definition under IFRS. 2022A EBITDA for each of Hudbay and Copper Mountain were disclosed and described, together with appropriate reconciliations to the nearest IFRS or GAAP measure, as applicable, in their respective management's discussion and analysis for the year ended December 31, 2022. For further information, see “Cautionary Information”.
4. 2023E Net Debt / EBITDA range constitutes forward-looking information and assumes that none of the risk factors described under “Cautionary Information” materializes. 2023E Net Debt / EBITDA range is a non-IFRS financial ratio with no standardized definition under IFRS. 2022A EBITDA for each of Hudbay and Copper Mountain were disclosed and described, together with appropriate reconciliations to the nearest IFRS or GAAP measure, as applicable, in their respective management's discussion and analysis for the year ended December 31, 2022. For further information, see “Cautionary Information”.
5. 2023E Net Debt / EBITDA range constitutes forward-looking information and assumes that none of the risk factors described under “Cautionary Information” materializes. 2023E Net Debt / EBITDA range is a non-IFRS financial ratio with no standardized definition under IFRS. 2022A EBITDA for each of Hudbay and Copper Mountain were disclosed and described, together with appropriate reconciliations to the nearest IFRS or GAAP measure, as applicable, in their respective management's discussion and analysis for the year ended December 31, 2022. For further information, see “Cautionary Information”.
6. 2023E cash flow per share constitutes forward-looking information and assumes that none of the risk factors described under "Cautionary Information" materializes. See "Cautionary Information".