Hudbay Minerals

   Solid operating performance was driven by continued high copper and gold grades at the Pampacancha deposit in Peru, continued high gold grades at Lalor and strong performance from the New Britannia mill in Manitoba, and the operational stabilization efforts at the Copper Mountain mine in British Columbia.
   Achieved revenue of $525.0 million and operating cash flow before change in non-cash working capital of $147.5 million in the first quarter of 2024.
   Affirmed full year 2024 consolidated copper production and cash cost guidance of 137,000 to 176,000 tonnes of copper at a cash cost of $1.05 to $1.25 per poundi and sustaining cash cost of $2.00 to $2.45 per poundi.
   Consolidated cash costi and sustaining cash costi per pound of copper produced, net of by-product creditsi, in the first quarter of 2024, were $0.16 and $1.03, respectively, consistent with strong levels achieved in the fourth quarter of 2023.
   Peru operations benefited from continued contributions from the high-grade Pampacancha satellite pit, resulting in 24,576 tonnes of copper and 29,144 ounces of gold produced in the first quarter of 2024. Peru cash cost per pound of copper produced, net of by-product creditsi, in the first quarter improved to $0.43, a 20% decrease compared to the fourth quarter of 2023.
   Manitoba operations produced 56,831 ounces of gold in the first quarter of 2024, exceeding management's quarterly cadence expectations as New Britannia continues to operate well above nameplate capacity and budgeted throughput levels. Manitoba cash cost per ounce of gold produced, net of by-product creditsi, was $736 during the first quarter of 2024 and well within guidance expectations.
   British Columbia operations produced 7,024 tonnes of copper at a cash cost per pound of copper produced, net of by-product creditsi, of $3.49 in the first quarter. Operational stabilization plans continue to be advanced at the Copper Mountain mine.
   First quarter net earnings and earnings per share were $18.5 million and $0.05, respectively. After adjusting for a non-cash gain of $5.3 million related to a quarterly revaluation of the closed site environmental reclamation provision, a $12.8 million mark-to-market adjustment loss related to share-based compensation, gold prepayment liability and strategic gold and copper hedges and a $9.0 million write-down of property, plant and equipment (“PP&E”), among other items, first quarter adjusted earningsi per share were $0.16.
   Cash and cash equivalents increased by $34.6 million to $284.4 million during the first quarter due to strong operating cash flows bolstered by higher copper and gold prices and sales volumes enabling a $43.5 million reduction in net debti during the quarter.

Operating Performance and Financial Discipline Driving Free Cash Flow and Deleveraging

   Unique copper and gold diversification provides exposure to higher copper and gold prices and attractive free cash flow generation.
   Executed on planned higher production levels and achieved continued operating and capital cost efficiencies to generate significant free cash flow in the first quarter.
   Realized strong margins by maintaining low consolidated cash cost of $0.16 per pound of copper in the first quarter while benefiting from higher copper prices, positioning the company for continued significant cash flow generation in a period of high commodity prices.
   Achieved adjusted EBITDAi of $214.2 million in the first quarter and a trailing twelve month adjusted EBITDAi of $760.5 million.
   Reduced net debti to $994.2 million during the first quarter, which, together with higher levels of adjusted EBITDAi, further improved the company’s net debt to adjusted EBITDA ratioi to 1.3x compared to 1.6x at the end of 2023.
   Continued deleveraging efforts with a $10 million repayment of the revolving credit facility balance in January 2024 and an additional $10 million repayment after quarter-end in May 2024.
   Increased cash and total liquidity by $45.2 million to $618.9 million as at March 31, 2024 compared to the end of 2023.

Continued Execution of Growth Initiatives to Further Enhance Copper and Gold Exposure

   Post-acquisition plans to stabilize the Copper Mountain operations remain in progress, with a focus on mining fleet ramp-up activities, accelerated stripping and increasing mill reliability. Achieved better than planned copper recoveries of 83% in the first quarter, and stabilization benefits continued to be realized subsequent to quarter end with 83% copper recoveries and approximately 40,000 tonnes per day average mill throughput in the month of April.
   Constancia’s expected mine life extended by three years to 2041 as a result of mineral reserve conversion with the addition of a further mining phase at the Constancia pit.
   The New Britannia mill achieved record throughput levels, averaging 1,870 tonnes per day in the first quarter, exceeding its original design capacity of 1,500 tonnes per day due to the successful implementation of process improvement initiatives and effective preventative maintenance measures. Received permit to increase New Britannia throughput to 2,500 tonnes per day.
   Achieved copper recoveries of approximately 92% and gold recoveries of approximately 68% at the Stall mill in the first quarter of 2024 as the company continues to benefit from the Stall mill recovery improvement project, which was completed in 2023.
   The development of an access drift to the 1901 deposit in Snow Lake remains on track and on budget. 1901 is located within 1,000 metres of the existing underground ramp access to the Lalor mine. The drift is expected to reach mineralization in late-2024, which is intended to enable confirmation of the optimal mining method and conducting drilling to further evaluate the orebody and upgrade inferred gold resources to reserves.
   Progressing the three prerequisites plan (the “3-P plan”) for sanctioning Copper World with deleveraging advancing towards targeted levels and remaining key state permits expected in 2024.
   Drill permitting for highly prospective Maria Reyna and Caballito properties near Constancia continues to advance through the regulatory process with environmental impact assessment applications submitted for both properties in recent months.
   Largest annual exploration program in Snow Lake underway consisting of geophysical surveys and drill campaigns testing the newly acquired Cook Lake claims, former Rockcliff properties and near-mine exploration at Lalor.
   Advancing Flin Flon tailings reprocessing opportunities through metallurgical test work and early economic evaluation to potentially produce critical minerals and precious metals while reducing the environmental footprint.
   Entered into an option agreement with Marubeni Corporation relating to three exploration projects located near Hudbay's existing Flin Flon processing facilities.

Summary of First Quarter Results

Consolidated copper production of 34,749 tonnes in the first quarter of 2024 declined from the strong levels achieved in the fourth quarter of 2023 but was in line with mine plan expectations. Consolidated gold production of 90,392 ounces in the first quarter exceeded expectations. First quarter production benefitted from the continued mining of high copper and gold grades at the Pampacancha deposit in Peru, continued high gold grades mined at Lalor and strong performance from the New Britannia mill in Manitoba, and the operational stabilization efforts at the Copper Mountain mine in British Columbia. Full year 2024 production guidance for all metals has been affirmed.

Industry-leading consolidated cash cost per pound of copper produced, net of by-product creditsi, was $0.16 in the first quarter of 2024, consistent with the favourable levels achieved in the fourth quarter of 2023. This was primarily the result of continued high by-product credits, partially offset by higher mining costs and lower copper production. Consolidated sustaining cash cost per pound of copper produced, net of by-product creditsi, was $1.03 in the first quarter of 2024 compared to $1.09 in the fourth quarter of 2023. This improvement was primarily due to lower sustaining capital expenditures. Full year 2024 consolidated cash cost, sustaining cash cost and capitalized expenditures guidance has been affirmed.

Cash generated from operating activities in the first quarter of 2024 of $139.7 million was lower than the fourth quarter of 2023 but better than anticipated, primarily because of strong gold sales volumes and higher realized copper prices, partially offset by a $30.1 million increase in cash taxes paid mainly in Peru. Operating cash flow before change in non-cash working capital of $147.5 million also exceeded expectations due to the same reasons.

Similarly, adjusted EBITDAi of $214.2 million in the first quarter of 2024 benefited from the solid operating performance outlined above and remained comparable to the strong levels achieved in recent quarters, including $274.4 million in the fourth quarter and $190.7 million in the third quarter of 2023.

Net earnings and earnings per share in the first quarter of 2024 were $18.5 million and $0.05, respectively, compared to net earnings and earnings per share of $33.5 million and $0.10, respectively in the fourth quarter of 2023. Adjusted net earningsi and adjusted net earnings per sharei in the first quarter of 2024 were $57.6 million and $0.16 per share, after adjusting for a $5.3 million non-cash gain related to the quarterly revaluation of the environmental reclamation provision at the closed sites, a $12.8 million mark-to-market revaluation loss related to share-based compensation expense, a revaluation of the gold prepayment liability and a revaluation of the company’s strategic gold and copper hedges, and a $9.0 million write-down of PP&E, among other items.

As at March 31, 2024, total liquidity increased to $618.9 million, including $284.4 million in cash and cash equivalents as well as undrawn availability of $334.5 million under the company’s revolving credit facilities. Net debt declined by $43.5 million during the quarter to $994.2 million as at March 31, 2024. Based on expected free cash flow generation beyond the first quarter of 2024, the company continues to make progress on the deleveraging targets as outlined in the 3-P plan for sanctioning Copper World.

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www.hudbayminerals.com/news-media/...rst-Quarter-2024-Results

   In 2023, Hudbay made meaningful progress on its roadmap towards the overall goal of a 50% reduction in Scope 1 and Scope 2 greenhouse gas (“GHG”) emissions by 2030i. The roadmap helps identify initiatives across the organization, categorize their potential impacts and plan their annual progression.
   In 2023, the company’s direct energy consumption decreased 11% and indirect energy consumption increased 21% from the prior year primarily as a result of the addition of the Copper Mountain mine in 2023. Total GHG intensity per tonne of copper equivalent production decreased 8% compared to 2022.
   Approximately 55% of the company’s total energy consumption came from renewables, with nearly 100% of electricity at its Manitoba and British Columbia operations sourced from renewable hydropower.
   In 2023, the company reduced the total amount of water withdrawn by 6% and water discharged by approximately 37% compared to 2022. Approximately 77%ii of total water use was recycled or reused.
   Hudbay commits to implementing the Mining Association of Canada’s Towards Sustainable Mining (TSM) program. All business units achieved a level A or higher TSM rating across all protocol indicators, and Manitoba and Peru received level AA ratings for the facility climate change management indicator. Hudbay also achieved a level A rating for the corporate-focus indicator related to setting meaningful targets for emissions reduction and focusing on climate adaptation.
   Constancia signed a 10-year power purchase agreement with ENGIE Energía Perú, providing access to a 100% renewable energy supply for Constancia beginning in 2026.
   Copper Mountain ranks among the lowest quartile for GHG emissions among copper mines and has the only electric trolley-assist system in North America, with seven trolley-capable haul trucks in operation that use hydroelectricity and reduce diesel consumption. In October 2023, Hudbay commissioned the world’s largest electric hydraulic excavator, adding to the two other electric excavators in the British Columbia’s operation electric fleet.
   In Manitoba, Hudbay conducted metallurgical research with technology partners to explore the potential for reprocessing Flin Flon tailings to produce non-acid-generating residual tailings. This has the potential to reduce the on-site waste that contributes to ongoing water treatment requirements, create a new mineral resource and extend the life of the Flin Flon operations.
   In September 2023, Hudbay released the pre-feasibility study (PFS) for Phase I of its Copper World development project in Arizona. The PFS includes the addition of a concentrate leach facility in the fifth year of operations to produce copper cathode, which is estimated to lower energy consumption by more than 10% and decrease GHG and sulfur dioxide emissions by eliminating overseas shipping, smelting and refining activities associated with copper concentrate.

Our People

   In Peru, Constancia received the “Healthy Company Management” certificate from SGS Peru, one of the world’s leading testing, inspection and certification companies, in recognition of its management practices, processes and systems related to health and well-being.
   In Manitoba, the business unit leader spearheaded the launch of the “Home Safe Everyday Initiative.” This program revolves around a roadmap comprising three key work streams – Safety Governance, Supervisory Leadership, and High Potential Prevention and Mitigation – to prevent incidents by thoroughly assessing risks and implementing controls to reduce their frequency.
   In British Columbia, following Hudbay’s acquisition of Copper Mountain, the human resources team adapted to the changing business needs focusing on recruiting for critical positions, such as mill operators, and building a positive organizational culture, which will continue into 2024.
   Launched the “ONETeam” leadership training program in 2023 to focus on coaching and conflict resolution skills in a six-day leadership development program for supervisors and upper-level management. In Manitoba, supervisors completed the program in February 2024, while the British Columbia business unit plans to roll it out in the fall of 2024.
   In Arizona, Hudbay is establishing a strong workplace safety culture with the hiring of a dedicated health and safety manager, who initiated safety programs including a critical risk management program, an all-volunteer emergency response team, and a monthly employee-led safety meeting where a team member selects and presents a relevant and timely safety topic.
   Nine of the ten directors on our Board are independent, non-executive directors. Hudbay’s President and CEO, Peter Kukielski, is the only executive director.
   Among the directors, 40% are women and a further 20% are from other designated groups. The Board remains committed to a company target of having at least 30% women directors on the Board as part of its overall commitment to diversity and inclusion.

Our Communities

   Hudbay navigated through a period of nationwide social unrest in early 2023 and was able to keep the Constancia mill operating due in large measure to the efforts of community members near Constancia.
   In 2023, Hudbay signed new sustainable development agreements with six communities in the area near Constancia and engaged in nearly 7,700 interactions involving more than 3,000 local stakeholders.
   Hudbay’s Manitoba business unit expanded its Indigenous Circle for Everyone (ICE) program in 2023 offering employees a comprehensive exploration of the cultural aspects of the neighbouring First Nations communities.
   In British Columbia, Hudbay held regular meetings with representatives from the Towns of Princeton and Keremeos, RDOS, outfitters, ranchers and trappers. The company also began the process of amending the existing participation agreements with local First Nations to provide a more meaningful and aligned relationship.
   In Arizona, Hudbay continued to meet with leadership and council members of local Native American tribes at the Copper World site to discuss the project and create opportunities for them to express concerns and provide feedback. The company is responding to public comments received on the draft Aquifer Protection Permit for Copper World, which was issued by the Arizona Department of Environmental Quality in January 2024.

Hudbay is pleased with the steps taken in 2023 towards its long-term sustainability goals. In 2024, the company intends to continue on its path to always operate safely and sustainably, aligned with Hudbay’s purpose to ensure that the company’s activities have a positive impact on its people, its communities and its planet. The company is committed to continuing its sustainability efforts by working towards reducing its carbon footprint through pursuing improvements across the business to reduce GHG emissions by 50% by 2030, continuing stewardship of water and biodiversity with progressive rehabilitation efforts, advancing stakeholder engagement through respectful and open dialogue with its local communities, continuing to enhance its diversity and delivering strong governance and transparent disclosure.

Details of the company’s annual and sustainability results can be found on Hudbay’s website at: hudbayminerals.com/disclosure-centre/default.aspx and the full Integrated Annual Report can be downloaded here.

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