Form 6-K - Report of foreign issuer [Rules 13a-16 and 15d-16]

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 6-K

REPORT OF FOREIGN PRIVATE ISSUER
PURSUANT TO RULE 13A-16 OR 15D-16 OF
THE SECURITIES EXCHANGE ACT OF 1934

For the month of August 2023

Commission File Number: 001-34244

HUDBAY MINERALS INC.
(Translation of registrant’s name into English)

25 York Street, Suite 800
Toronto, Ontario
M5J 2V5, Canada
(Address of principal executive offices)

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.

Form 20-F [ ] Form 40-F [X]

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): [ ]

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): [ ]

Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.

Yes [ ] No [X]

If “Yes” is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): 82- _____________________________

EXPLANATORY NOTE

On August 8, 2023, Hudbay Minerals Inc. (“Hudbay”) filed on the Canadian Securities Administrators’ System for Electronic Document Analysis and Retrieval (SEDAR) website at www.sedarplus.ca the following documents: (1) News Release dated August 8, 2023, (2) Unaudited Condensed Consolidated Interim Financial Statements for the period ended June 30, 2023, (3) Management's Discussion and Analysis of Results of Operations and Financial Condition for the period ended June 30, 2023, (4) Form 52-109F2 Certification of Interim Filings Full Certificate - CEO, (5) Form 52-109F2 Certification of Interim Filings Full Certificate - CFO.

Copies of the filings are attached to this Form 6-K and incorporated herein by reference, as follows:

Exhibit 99.1 — News Release dated August 8, 2023
Exhibit 99.2 — Unaudited Condensed Consolidated Interim Financial Statements for the period ended June 30, 2023
Exhibit 99.3 — Management's Discussion and Analysis of Results of Operations and Financial Condition for the period ended June 30, 2023
Exhibit 99.4 — Form 52-109F2 Certification of Interim Filings Full Certificate - CEO
Exhibit 99.5 — Form 52-109F2 Certification of Interim Filings Full Certificate - CFO

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	HUDBAY MINERALS INC.
	(registrant)

	By:	/s/ Eugene Lei
	Name:	Eugene Lei
	Title:	Chief Financial Officer

Date: August 9, 2023

EXHIBIT INDEX

The following exhibits are furnished as part of this Form 6-K:

Exhibit		Description

99.1		News Release dated August 8, 2023
99.2		Unaudited Condensed Consolidated Interim Financial Statements for the period ended June 30, 2023
99.3		Management's Discussion and Analysis of Results of Operations and Financial Condition for the period ended June 30, 2023
99.4		Form 52-109F2 Certification of Interim Filings Full Certificate - CEO
99.5		Form 52-109F2 Certification of Interim Filings Full Certificate - CFO

	TSX, NYSE - HBM 2023 No. 20

25 York Street, Suite 800 Toronto, Ontario Canada M5J 2V5 tel 416 362-8181 fax 416 362-7844 hudbay.com	News Release

Hudbay Announces Second Quarter 2023 Results

Toronto, Ontario, August 8, 2023 - Hudbay Minerals Inc. ("Hudbay" or the "company") (TSX, NYSE:HBM) today released its second quarter 2023 financial results. All amounts are in U.S. dollars, unless otherwise noted.

Positioned for Strong Production Growth and Free Cash Flow Generation in the Second Half of 2023

Reaffirmed full year 2023 consolidated production, cash cost and sustaining cash cost guidance for Hudbay's Peru and Manitoba operations.
On June 20, 2023, Hudbay completed the acquisition of Copper Mountain Mining Corporation ("Copper Mountain"), creating a 150,000-tonnes-per-year copper producer with three long-life mines in tier-one jurisdictions and a world-class pipeline of organic copper growth projects.
- Copper Mountain owns 75% of the Copper Mountain mine in British Columbia (the "Copper Mountain Mine Joint Venture"), with Mitsubishi Materials Corporation ("MMC") holding the remaining non-controlling interest.
- Hudbay expects to release an updated technical report for the Copper Mountain mine in the fourth quarter, which will include updated annual production and cost estimates for the mine.
Achieved higher grades from Pampacancha in July with 1.6 million tonnes of ore mined at 0.63% copper and 0.31 grams per tonne gold, consistent with the mine plan and company expectations for higher production in Peru in the third and fourth quarters of 2023.

Second Quarter Operating and Financial Results

Consolidated production in the second quarter was 21,715 tonnes of copper and 48,996 ounces of gold, which includes production from the Copper Mountain mine during the 10-day stub period following the June 20, 2023 acquisition date.
Consolidated cash cost and sustaining cash cost per pound of copper produced, net of by-product credits^[i], in the second quarter, were $1.60 and $2.73, respectively, excluding Copper Mountain's costs during the 10-day stub period.
Peru operations successfully managed through a transitional quarter with elevated stripping activities at Pampacancha completed in June to enable mining high grade portions of the orebody in the second half of 2023. The Peru operations maintained steady performance, producing 17,682 tonnes of copper in the second quarter, which was in line with mine plan expectations. Peru cash cost per pound of copper produced, net of by-product creditsⁱ, in the second quarter was $2.14, in line with quarterly cadence expectations as Pampacancha is expected to deliver higher copper production and precious metal by-product credits in the second half of 2023.
Manitoba operations produced 35,253 ounces of gold, which was impacted by lower throughput at the Stall mill due to downtime to complete the Stall mill Phase I recovery improvement project tie-ins which resulted in a buildup of surface ore stockpiles at the end of the second quarter. Lalor achieved an 11% increase in ore mined versus the first quarter as the company continues to implement improvements to reduce costs and target higher production levels. Manitoba cash cost per ounce of gold produced, net of by-product creditsⁱ, was $1,097 and is expected to decline to be within the annual guidance range due to higher throughput, gold recoveries and gold grades expected in the second half of 2023.

TSX, NYSE - HBM

2023 No. 20

Second quarter net loss and loss per share were $14.9 million and $0.05, respectively. After adjusting for $6.8 million of transaction costs incurred during the quarter associated with the acquisition of Copper Mountain and a non-cash gain of $4.7 million related to a quarterly revaluation of the company's closed site environmental reclamation provision, among other items, second quarter adjusted lossⁱ per share was $0.07.
Operating cash flow before change in non-cash working capital was $55.9 million and adjusted EBITDAⁱ was $81.2 million in the second quarter.
Cash and cash equivalents declined during the second quarter to $179.7 million and were negatively impacted by lower base metal prices and lower production volumes as a result of scheduled mill maintenance programs, elevated stripping activity in Peru and a buildup of ore stockpiles in Manitoba. Cash and cash equivalents were also impacted by $25.8 million in total transaction costs related to the acquisition of Copper Mountain, $65.9 million of capital investments, primarily related to sustaining capital investments, and a $31.9 million bond interest payment.

Executing on Growth Initiatives and Prudent Financial Planning

• Copper Mountain integration activities are progressing in line with expectations with over 50% of the targeted annualized corporate and tax synergies already achieved to date. The company is focused on advancing its plans to stabilize the operation over the next 12 months, to be further detailed in a technical report, which will include an updated mine plan and mineral reserve and resource estimates, expected to be released in the fourth quarter.

• Copper World pre-feasibility study for Phase I is well-advanced and expected to be released in the third quarter.

• Snow Lake drilling intersected new high-grade copper-gold-silver zone 500 metres northwest of Lalor and indicates the hosting mineralization at Lalor continues down plunge for at least two kilometres.

• Completed the acquisition of the Cook Lake properties in Snow Lake, providing the potential for a new discovery on claims untested by modern geophysics and where historical drilling intersected base metal and gold mineralization at a fraction of Lalor's current known depth.

• Announced the entry into a definitive agreement to acquire all the issued and outstanding common shares of Rockcliff Metals Corp. ("Rockcliff"), which is expected to increase Hudbay's land position within trucking distance of its Snow Lake processing facilities by more than 250%. The transaction is expected to close in the third quarter.

• On July 6, 2023, established framework for a multi-year exploration partnership with Marubeni Corporation focused on the discovery of new deposits within trucking distance of Hudbay's processing facilities in Flin Flon, Manitoba.

• First phase of the Stall recovery improvement project was completed during the second quarter with commissioning completed in May and ramp-up to higher metal recoveries expected in the second half of 2023.

• In connection with the Copper Mountain transaction, Hudbay amended its Revolving Credit Facilities ("RCFs") to (i) exclude the Copper Mountain group from the financial covenant calculations in the RCFs until the Copper Mountain Nordic bonds are repaid in full and (ii) increase the net debt to EBITDA covenant ratio to provide greater financial flexibility during the integration period.

• Subsequent to quarter end, Hudbay drew $90 million from its RCFs to finance the redemption of a portion of Copper Mountain's Nordic bonds, thus improving the company's ability to deleverage and repay debt sooner than the bond maturity.

• On track to deliver annual discretionary spending reduction targets for 2023 with lower growth capital and exploration expenditures compared to 2022. As a result of a continued focus on discretionary spending reductions, total capital expenditures for 2023 are expected to be approximately $15 million lower than guidance levels, representing 5% of total capital expenditure guidance.

TSX, NYSE - HBM

2023 No. 20

"We remain on track to meet our 2023 guidance as we completed many transitional activities in the second quarter that position us for stronger production and improved costs during the second half of 2023," said Peter Kukielski, President and Chief Executive Officer. "The higher grades we are currently mining at Pampacancha, the planned improved throughput and recoveries in Snow Lake and the recent completion of the Copper Mountain acquisition are expected to generate strong free cash flows starting in the third quarter of 2023. With Copper Mountain we have a larger and more resilient operating platform to deliver diversified cash flows to prudently advance our leading organic pipeline of brownfield expansion and greenfield exploration and development opportunities across our portfolio."

Summary of Second Quarter Results

Consolidated copper production in the second quarter of 2023 was 21,715 tonnes, a decrease of 4% compared to the first quarter of 2023 as the company completed the higher volume stripping program at Pampacancha in June and a scheduled mill maintenance program at Constancia, partially offset by a 10-day stub period of production from the newly acquired Copper Mountain mine (the "Copper Mountain Stub Period"). Consolidated gold production in the quarter was 48,996 ounces, a 4% increase over the prior quarter, primarily due to slightly higher gold grades and higher gold recoveries in Peru. Consolidated silver production in the second quarter was 612,310 ounces, a decrease of 13% compared to the first quarter primarily due to lower silver grades in Peru. Consolidated zinc production in the second quarter was 8,758 tonnes, a decline of 11% compared to the first quarter due to lower throughput and zinc head grades at Stall.

Consolidated cash cost per pound of copper produced, net of by-product creditsⁱ, in the second quarter of 2023 was $1.60, compared to $0.85 in the first quarter of 2023. This increase was mainly the result of higher mining, milling and treatment and refining costs and lower copper production. Consolidated cash cost for the first six months of 2023 was above 2023 guidance ranges but remained in line with quarterly cadence expectations, and the company expects consolidated cash cost to decline in the second half of 2023 to be within the full year guidance range. Consolidated sustaining cash cost per pound of copper produced, net of by-product creditsⁱ, was $2.73 in the second quarter of 2023 compared to $1.83 in the first quarter. Consolidated all-in sustaining cash cost per pound of copper produced, net of by-product creditsⁱ, was $2.98 in the second quarter of 2023, higher than $2.07 in the first quarter, primarily due to the same reasons outlined above. Consolidated cash cost and sustaining cash cost for the second quarter and year-to-date exclude Copper Mountain's operations, as no revenues or corresponding cost of sales were recorded during the Copper Mountain Stub Period.

Cash generated from operating activities in the second quarter of 2023 decreased to $24.6 million compared to $71.3 million in the first quarter primarily due to higher operating costs in Peru associated with the scheduled mill maintenance program and higher planned stripping activities at Pampacancha. Operating cash flow before changes in non-cash working capital was $55.9 million during the second quarter of 2023, lower than the first quarter, due to the same reasons noted above.

Net loss and loss per share in the second quarter of 2023 were $14.9 million and $0.05, respectively, compared to net earnings and earnings per share of $5.5 million and $0.02, respectively, in the first quarter. The results were negatively impacted by $6.8 million of transaction costs associated with the acquisition of Copper Mountain and a $1.4 million foreign exchange loss. This was partially offset by a non-cash gain of $4.7 million related to the quarterly revaluation of the environmental reclamation provision at the company's closed sites and a $1.1 million revaluation gain related to the gold prepayment liability.

TSX, NYSE - HBM

2023 No. 20

Adjusted net lossⁱ and adjusted net loss per shareⁱ in the second quarter of 2023 were $18.3 million and $0.07 per share, respectively, after adjusting for $6.8 million of transaction costs associated with the acquisition of Copper Mountain and the non-cash revaluation gain of the environmental reclamation provision, among other items. Second quarter adjusted EBITDAⁱ was $81.2 million, compared to $101.9 million in the first quarter of 2023, as higher operating costs in Peru associated with the scheduled mill maintenance program more than offset higher revenue from an increase in sales volumes.

As at June 30, 2023, liquidity included $179.7 million in cash and cash equivalents as well as undrawn availability of $184.1 million under the company's RCFs. Subsequent to quarter end, Hudbay drew $90 million from its RCFs to finance the redemption of $83.3 million of Copper Mountain's bonds, thereby reducing the aggregate amount of Copper Mountain bonds outstanding to $59.7 million and improving the company's ability to deleverage and repay debt sooner than the 2026 bond maturity. Based on expected free cash flow generation in the second half of 2023, Hudbay continues to expect to make progress on its deleveraging targets as outlined in its "3-P" plan for sanctioning Copper World. Current liquidity combined with cash flow from operations is expected to be sufficient to meet liquidity needs for the foreseeable future.

Consolidated Financial Condition ($000s)³	Jun. 30, 2023	Mar. 31, 2023	Dec. 31, 2022
Cash	179,734	255,563	225,665
Total long-term debt	1,370,682	1,225,023	1,184,162
Net debt¹	1,190,948	969,460	958,497
Working capital²	(61,357)	100,987	76,534
Total assets	5,242,140	4,367,982	4,325,943
Equity	2,001,970	1,574,521	1,571,809

¹ Net debt is a non-IFRS financial performance measure with no standardized definition under IFRS. For further information, please see the "Non-IFRS Financial Performance Measures" section of this news release.

²Working capital is determined as total current assets less total current liabilities as defined under IFRS and disclosed on the consolidated interim financial statements. Working capital reflects the full $145 million balance of Copper Mountain Nordic bonds as current, however, subsequent to quarter end, the company drew $90 million from its revolving credit facilities to finance the redemption of a portion of Copper Mountain's Nordic bonds. As of the date hereof, the remaining Copper Mountain Nordic bonds will be presented as long-term as well as the $90 million revolver draw.

³ Following completion of the Copper Mountain acquisition on June 20, 2023, the company's financial condition has been impacted by the inclusion of Copper Mountain as at June 30, 2023 and accordingly there is no comparable period information.

TSX, NYSE - HBM

2023 No. 20

Consolidated Financial Performance²		Three Months Ended
		Jun. 30, 2023	Mar. 31, 2023	Jun. 30, 2022
Revenue	$000s	312,166	295,219	415,454
Cost of sales	$000s	289,273	228,706	325,940
Earnings (loss) before tax	$000s	(30,731)	17,430	21,504
Earnings (loss)	$000s	(14,932)	5,457	32,143
Basic and diluted earnings (loss) per share	$/share	(0.05)	0.02	0.12
Adjusted earnings (loss) per share¹	$/share	(0.07)	0.00	0.12
Operating cash flow before change in non-cash working capital	$ millions	55.9	85.6	123.9
Adjusted EBITDA¹	$ millions	81.2	101.9	141.4

¹ Adjusted (loss) earnings per share and adjusted EBITDA are non-IFRS financial performance measures with no standardized definition under IFRS. For further information, please see the "Non-IFRS Financial Performance Measures" section.

² Following completion of the Copper Mountain acquisition on June 20, 2023, the company's financial performance has not been materially affected by Copper Mountain's operations with no revenues or corresponding cost of sales recorded during the Copper Mountain Stub Period of 2023.

Consolidated Production and Cost Performance		Three Months Ended
		Jun. 30, 2023	Mar. 31, 2023	Jun. 30, 2022
Contained metal in concentrate and doré produced¹
Copper	tonnes	21,715	22,562	25,668
Gold	ounces	48,996	47,240	58,645
Silver	ounces	612,310	702,809	864,853
Zinc	tonnes	8,758	9,846	17,053
Molybdenum	tonnes	414	289	390
Payable metal sold
Copper	tonnes	23,078	18,541	23,650
Gold²	ounces	47,533	49,720	50,884
Silver²	ounces	805,448	541,884	738,171
Zinc³	tonnes	8,641	5,628	20,793
Molybdenum	tonnes	314	254	208
Consolidated cash cost per pound of copper produced⁴
Cash cost	$/lb	1.60	0.85	0.65
Sustaining cash cost	$/lb	2.73	1.83	1.87
All-in sustaining cash cost	$/lb	2.98	2.07	1.93

¹Metal reported in concentrate is prior to deductions associated with smelter contract terms. Consolidated production includes production results from Copper Mountain for the Copper Mountain Stub Period.

²Includes total payable gold and silver in concentrate and in doré sold.

³For the three months ended June 30, 2023 and the three months ended March 31, 2023 this metric includes payable zinc in concentrate sold. For the three months ended June 30, 2022, this metric also includes payable refined zinc metal sold.

⁴Consolidated cash cost, sustaining cash cost and all-in sustaining cash cost per pound of copper produced, net of by-product credits, does not include Copper Mountain production or costs for the Copper Mountain Stub Period at the end of the second quarter of 2023, nor the comparative periods. Cash cost, sustaining cash cost and all-in sustaining cash cost per pound of copper produced, net of by-product credits, gold cash cost, sustaining cash cost per ounce of gold produced, net of by-product credits, are non-IFRS financial performance measures with no standardized definition under IFRS. For further information, please see the "Non-IFRS Financial Performance Measures" section of this news release.

TSX, NYSE - HBM

2023 No. 20

Peru Operations Review

Peru Operations		Three Months Ended
		Jun. 30, 2023	Mar. 31, 2023	Jun. 30, 2022
Constancia ore mined¹	tonnes	3,647,399	3,403,181	7,017,114
Copper	%	0.31	0.34	0.33
Gold	g/tonne	0.04	0.04	0.04
Silver	g/tonne	2.49	2.52	3.53
Molybdenum	%	0.01	0.01	0.01
Pampacancha ore mined	tonnes	2,408,495	897,295	1,211,387
Copper	%	0.36	0.49	0.29
Gold	g/tonne	0.34	0.52	0.28
Silver	g/tonne	2.81	5.12	4.25
Molybdenum	%	0.02	0.01	0.01
Total ore mined	tonnes	6,055,894	4,300,476	8,228,501
Strip ratio²		1.74	1.84	1.22
Ore milled	tonnes	7,223,048	7,663,728	7,770,706
Copper	%	0.31	0.33	0.32
Gold	g/tonne	0.09	0.08	0.09
Silver	g/tonne	2.78	3.69	3.64
Molybdenum	%	0.01	0.01	0.01
Copper recovery	%	80.0	81.7	85.0
Gold recovery	%	61.1	56.8	60.3
Silver recovery	%	65.1	60.7	64.2
Molybdenum recovery	%	40.5	34.8	38.8
Contained metal in concentrate
Copper	tonnes	17,682	20,517	20,880
Gold	ounces	12,998	11,206	13,858
Silver	ounces	419,642	552,167	584,228
Molybdenum	tonnes	414	289	390
Payable metal sold
Copper	tonnes	21,207	16,316	18,473
Gold	ounces	14,524	11,781	8,430
Silver	ounces	671,532	392,207	484,946
Molybdenum	tonnes	314	254	208
Combined unit operating cost^3,4,5	$/tonne	14.07	11.47	12.02
Cash cost⁵	$/lb	2.14	1.36	1.82
Sustaining cash cost⁵	$/lb	3.06	2.12	2.62

¹Reported tonnes and grade for ore mined are estimates based on mine plan assumptions and may not reconcile fully to ore milled.

²Strip ratio is calculated as waste mined divided by ore mined.

³ Reflects combined mine, mill and general and administrative ("G&A") costs per tonne of ore milled. Reflects the deduction of expected capitalized stripping costs.

⁴ Excludes approximately $1.3 million, or $0.16 per tonne, COVID-related costs during the three months ended June 30, 2022.

⁵ Combined unit operating cost, cash cost and sustaining cash cost per pound of copper produced, net of by-product credits, are non-IFRS financial performance measures with no standardized definition under IFRS. For further information, please see the "Non-IFRS Financial Performance Measures" section of this news release.

During the second quarter of 2023, the Constancia operations produced 17,682 tonnes of copper, 12,998 ounces of gold, 419,642 ounces of silver and 414 tonnes of molybdenum. With the period of higher planned stripping activities in the Pampacancha pit completed in June and ore mined from Pampacancha in July totaling 1.6 million tonnes at 0.63% copper and 0.31 grams per tonne gold, the company is well on track to achieve the higher expected production in the second half of the year, in line with the full year 2023 Peru production guidance.

TSX, NYSE - HBM

2023 No. 20

Total ore mined in the second quarter of 2023 increased by 41% compared to the first quarter as mining activities returned to normal after the company reduced mining activities in the first quarter to conserve fuel during the period of logistical constraints caused by civil unrest earlier this year.

Ore milled during the second quarter of 2023 was 6% lower than the prior quarter primarily due to a schedule plant maintenance shutdown in the second quarter without a corresponding shutdown in the first quarter. Milled copper grades were slightly lower than the first quarter due to the continued processing of lower-grade ore from stockpiles as the company completed a period of higher planned stripping activities in the Pampacancha pit in June. Recoveries of copper during the second quarter of 2023 remained at low levels, as expected, due to higher levels of impurities in stockpiled ore. Recoveries for gold and silver were 8% and 7% higher, respectively, than the first quarter due to higher gold grades and lower zinc content impurities in ore processed.

Combined mine, mill and G&A unit operating costs in the second quarter of 2023 were 23% higher than the first quarter primarily due to higher costs related to the scheduled plant shutdown and lower milled ore throughput during the quarter.

Peru's cash cost per pound of copper produced, net of by-product creditsⁱ, in the second quarter of 2023 was $2.14, higher than the first quarter primarily due to higher mining, milling and treatment and refining charges and lower copper production. This cost measure remains above the upper end of the 2023 guidance range. However, it is expected to decline meaningfully in the second half of 2023 and the full year cash cost is expected to remain within the 2023 guidance range with higher expected copper production and contributions from precious metal by-product credits from Pampacancha later this year.

Peru's sustaining cash cost per pound of copper produced, net of by-product creditsⁱ, in the second quarter of 2023 was $3.06, higher than the first quarter due to the same factors affecting cash cost noted above.

TSX, NYSE - HBM

2023 No. 20

Manitoba Operations Review

Manitoba Operations		Three Months Ended
		Jun. 30, 2023	Mar. 31, 2023	Jun. 30, 2022¹
Lalor
Ore mined	tonnes	413,255	373,599	412,653
Gold	g/tonne	4.07	3.96	3.73
Copper	%	0.81	0.57	0.70
Zinc	%	3.14	3.32	3.06
Silver	g/tonne	23.27	18.24	23.95
New Britannia
Ore milled	tonnes	141,905	143,042	144,589
Gold	g/tonne	5.82	6.05	5.69
Copper	%	0.77	0.61	0.73
Zinc	%	0.85	0.76	0.94
Silver	g/tonne	25.79	22.39	19.77
Gold recovery - concentrate	%	55.0	62.0	62.7
Copper recovery - concentrate	%	91.2	91.7	92.4
Silver recovery - concentrate	%	57.0	61.9	62.9
Stall Concentrator
Ore milled	tonnes	238,633	242,619	261,417
Gold	g/tonne	3.12	2.78	2.95
Copper	%	0.85	0.59	0.73
Zinc	%	4.47	4.81	4.45
Silver	g/tonne	22.15	17.14	26.31
Gold recovery	%	59.9	61.9	54.6
Copper recovery	%	88.5	87.0	88.0
Zinc recovery	%	82.2	84.4	84.3
Silver recovery	%	60.3	56.3	56.1
Total contained metal in concentrate and doré²
Gold	ounces	35,253	36,034	44,787
Copper	tonnes	2,794	2,045	4,788
Zinc	tonnes	8,758	9,846	17,053
Silver	ounces	180,750	150,642	280,625
Total payable metal sold
Gold³	ounces	33,009	37,939	42,454
Copper	tonnes	1,871	2,225	5,177
Zinc	tonnes	8,641	5,628	20,793
Silver³	ounces	133,916	149,677	253,225
Combined unit operating cost^4,5	C$/tonne	220	216	168
Gold cash cost⁵	$/oz	1,097	938	(207)
Gold sustaining cash cost⁵	$/oz	1,521	1,336	519

¹ The 777 mine and Flin Flon concentrator information for June 30, 2022 is not disclosed in the table above. The operations were closed in June 2022. The relevant comparative information can be found in the Summary of Historical Results section in the Management's Discussion and Analysis for the second quarter of 2023. Total contained metal in concentrate and doré, total payable metal sold, unit cost and cash costs for June 30, 2022 include the impact of the Flin Flon operations.

² Doré includes sludge, slag and carbon fines in three months ended June 30, 2023 and March 31, 2023.

³ Includes total payable precious metals in concentrate and doré sold.

⁴ Reflects combined mine, mill and G&A costs per tonne of ore milled.

⁵ Combined unit operating cost, cash cost and sustaining cash cost per ounce of gold produced, net of by-product credits, are non-IFRS financial performance measures with no standardized definition under IFRS. For further information, please see the "Non-IFRS Financial Performance Measures" section of this news release.

TSX, NYSE - HBM

2023 No. 20

During the second quarter of 2023, the Manitoba operations produced 35,253 ounces of gold, 8,758 tonnes of zinc, 2,794 tonnes of copper and 180,750 ounces of silver. Production of copper and silver was higher than the first quarter due to higher grades and recoveries. Production of gold and zinc was lower than the first quarter due to lower recoveries and lower zinc grades, partially offset by higher gold grades. With the completion of a number of key initiatives aimed to continue to support higher production levels at Lalor, improved metal recoveries at the mills and a prioritization of mining higher gold grade zones at Lalor in the second half of 2023, as planned, full year Manitoba production of all metals remains on track to achieve guidance ranges. However, with a slower ramp-up of gold recoveries associated with the Stall Phase I recovery improvement project in the second quarter, gold production is trending towards the lower end of the 2023 guidance range for Manitoba, while copper and zinc production is trending towards the upper end of the guidance ranges.

The Manitoba team continues to advance several key initiatives to support higher production levels and improved metal recoveries at the Snow Lake operations. Significant progress has been made at Lalor in optimizing development drift size, improving shaft availability and implementing changes to achieve better stope muck fragmentation, which enabled the elimination of inefficient trucking of ore to surface via the ramp late in the second quarter. The first phase of the Stall mill recovery improvement project, consisting of new cyclone packs, state-of-the-art Jameson Cells on the copper and zinc circuits and process control improvements, was completed during the second quarter. Commissioning of the circuits quickly achieved targeted copper and zinc concentrate grades, while gold recovery improvements progressed slower than planned. Changes to optimize the circuit are underway and the company expects to achieve higher gold recoveries in the second half of 2023. Hudbay also implemented tailings deposition improvements that are expected to maximize the Anderson facility tailings capacity and defer incremental dam construction activities to future years.

Hudbay successfully completed planned maintenance of the muck circuit, rock breaker boom change out and repairs and electrical installations at Lalor during the second quarter. Despite this planned maintenance program, ore mined from Lalor increased by 11% in the second quarter compared to the first quarter, averaging over 4,500 tonnes per day. Lalor continues to implement improvements to reduce costs and target higher production levels with a focus on equipment fleet availability and building of longhole inventory. Gold, copper and silver grades mined during the second quarter of 2023 were 3%, 42% and 28% higher, respectively, than the first quarter, while zinc grades were 5% lower than the first quarter, consistent with the mine plan.

The Stall mill processed similar levels of ore compared to the first quarter of 2023, in line with expectations, due to completion of the Phase I recovery improvement project during the quarter and the commissioning of new Jameson cells requiring associated tie-ins of piping, pump boxes and electrical instrumentation, as noted above. As a result of the temporary interruptions introduced by the project tie-ins, there was a buildup of approximately 30,000 tonnes of base metal ore stockpiles above normal levels at the end of second quarter that will be milled during the second half of 2023.

The New Britannia mill continued to achieve consistent production in the second quarter of 2023, averaging approximately 1,560 tonnes per day. Hudbay continues to advance improvement initiatives at New Britannia requiring minimal capital outlays with a focus on reducing reagent and grinding media consumption while further improving overall metal recoveries and copper concentrate grades. There was a buildup of approximately 15,000 tonnes of gold ore stockpiles above normal levels at the end of the second quarter, which will be milled during the second half of 2023.

Combined mine, mill and G&A unit operating costs in the second quarter of 2023 slightly increased compared to the first quarter reflecting slightly lower mill throughput due, in part, to the 45,000 tonnes of additional ore stockpiled above normal operating levels at the end of the second quarter.

Manitoba's cash cost per ounce of gold produced, net of by-product creditsⁱ, in the second quarter was $1,097, higher than the first quarter of 2023, primarily due to higher mining costs, higher treatment and refining charges and lower gold production, partially offset by lower G&A. Gold cash cost is expected to decline in the second half of 2023 and the full year cash cost is expected to remain within the 2023 guidance range.

TSX, NYSE - HBM

2023 No. 20

Sustaining cash cost per ounce of gold produced, net of by-product creditsⁱ, in the second quarter was $1,521, higher than the first quarter due to the same factors affecting cash cost noted above.

Completion of the Copper Mountain Acquisition

On June 20, 2023, Hudbay successfully completed its previously announced acquisition of Copper Mountain, pursuant to which Hudbay has acquired all of the issued and outstanding common shares of Copper Mountain. As a result of the completion of the Copper Mountain Transaction, Copper Mountain became a wholly-owned subsidiary of Hudbay and Hudbay became the indirect owner of 75% of the Copper Mountain Mine Joint Venture. In aggregate, Hudbay issued 84,165,617 Hudbay common shares under the Copper Mountain Transaction to former Copper Mountain shareholders as consideration for their Copper Mountain shares. The Copper Mountain shares were de-listed from the TSX on June 21, 2023 and an application has been submitted with the applicable Canadian securities commissions for Copper Mountain to cease to be a reporting issuer under Canadian securities laws. In connection with the closing, Hudbay appointed Jeane Hull and Paula Rogers, former directors of Copper Mountain, to the board of Hudbay.

The Copper Mountain Transaction creates a premier Americas-focused copper mining company that is well-positioned to deliver sustainable cash flows from an operating portfolio of three long-life mines, as well as compelling organic growth from a world-class pipeline of copper mine expansion and development projects. All assets in the combined portfolio are located in the tier-one mining-friendly jurisdictions of Canada, Peru and the United States. The combined company represents the third largest copper producer in Canada based on 2023 estimated copper production.

Integrating the Copper Mountain Mine

Copper Mountain integration activities are progressing in line with expectations and over 50% of the targeted annualized corporate and tax synergies have already been achieved to date. The company is focused on advancing its plans to stabilize the operation over the next 12 months, including opening up the mine by adding additional mining faces and re-mobilizing idle haul trucks, optimizing the ore feed to the plant and implementing plant improvement initiatives. Further details on Hudbay's plans will be provided in a technical report, including an updated mine plan, revised mineral reserve and resource estimates, and updated annual production and cost estimates for the Copper Mountain mine, which is expected to be released in the fourth quarter.

During the Copper Mountain Stub Period, the Copper Mountain mine produced 1,239 tonnes of copper, 745 ounces of gold and 11,918 ounces of silver. The first copper concentrate shipment following the acquisition date was completed on July 23, 2023 after a brief strike at the Port of Vancouver earlier in July.

As an additional prudent measure to ensure free cash flow generation in the second half of 2023 as Hudbay stabilizes the Copper Mountain operations, subsequent to quarter-end, the Copper Mountain Mine Joint Venture entered into forward sales contracts for a total of 2,000 tonnes of copper production over the five-month period from August to December 2023 at an average price of $3.86 per pound.

Copper World Permitting and Pre-Feasibility Study Well-Advanced

In late 2022, Hudbay submitted the state-level applications for an Aquifer Protection Permit and an Air Quality Permit to the Arizona Department of Environmental Quality. The company expects to receive these two outstanding state permits by early 2024.

TSX, NYSE - HBM

2023 No. 20

In May 2023, Hudbay received a favourable ruling from the U.S. Court of Appeals for the Ninth Circuit that reversed the U.S. Fish and Wildlife Service's designation of the area near Copper World and the former Rosemont project as jaguar critical habitat. While this ruling doesn't impact the state permitting process for Phase I of Copper World, it is expected to simplify the federal permitting process for Phase II of the Copper World project.

Pre-feasibility activities for Phase I are well-advanced and a pre-feasibility study is expected to be released in the third quarter of 2023. Hudbay intends to initiate a minority joint venture partner process prior to commencing a definitive feasibility study, which will allow the potential joint venture partner to participate in the funding of definitive feasibility study activities in 2024 as well as in the final project design for Copper World.

Potential for Snow Lake Mine Life Extension with Discovery of New Mineralized Zones Near Lalor and Significant Regional Land Consolidation

In July 2023, the company announced positive results from its 2023 winter drill program near Lalor in Snow Lake, Manitoba, and significant land consolidation in the Snow Lake region through several strategic transactions. The agreements with multiple land holders will increase Hudbay's holdings in the Snow Lake region by more than 250%. Hudbay intends to explore these claims in hopes of finding a new anchor deposit to maximize and extend the life of Hudbay's Snow Lake operations beyond 2038.

Lalor New Mineralized Zones

The 2023 winter drill program in Snow Lake included the testing of a geophysical anomaly located northwest of Lalor, within 500 metres of existing underground infrastructure. All holes intersected an alteration zone that is known to host the Lalor mineralization. Certain holes intersected several sulphide horizons with both zinc and copper-gold-silver mineralization. Hole CH2303 intersected three mineralized zones, including 7.0 metres of 3.06% zinc and 15.1 grams per tonne silver; 3.5 metres of 3.81% copper, 3.75 grams per tonne gold and 104.5 grams per tonne silver; and 7.5 metres of 3.87% zinc and 7.5 grams per tonne silver. For more information on the drill holes, please refer to Hudbay's news release dated July 27, 2023.

The winter drill program also included testing of the down-plunge copper-gold extensions of the Lalor deposit, in the first drilling in the deeper zones at Lalor since the initial discovery of the copper-gold zones in 2009 and 2010. This initial campaign consisted of eight widely spaced drill holes over a distance of two kilometres, and all holes intersected the zone of strong alteration known to host the Lalor mineralization and have shown many occurrences of disseminated copper sulfides indicating the potential close proximity of one or more higher grade copper-gold feeder zones similar to Lens 27 currently in production at Lalor. These initial results from widely spaced drilling are an encouraging indication that the rocks hosting the rich copper-gold mineralization at Lalor continue down-plunge as predicted by Hudbay's geological models. For more information on the drill holes, please refer to Hudbay's news release dated July 27, 2023.

Hudbay expects to refine targets for its 2024 winter drilling campaign to the northwest and down-plunge from Lalor using the results from geophysical borehole surveys.

Acquisition of Cook Lake Properties in Snow Lake

In late June 2023, Hudbay completed the acquisition of the Cook Lake properties from Glencore plc. The Cook Lake properties are located within ten kilometres and along the same regional trend as the Lalor mine, and have the potential to host a new discovery at depth. The properties include the Cook Lake North and South properties, which are within 30 kilometres of Hudbay's Stall and New Britannia processing facilities.

TSX, NYSE - HBM

2023 No. 20

Hudbay has received data regarding approximately 60,000 metres of historical drilling that was competed on the Cook Lake properties between 1971 and 2012, with an average depth of only 275 metres, which is a fraction of the depth of Lalor's current known mineralization of approximately 600 to 1,500 metres. The historical drill holes appear to have intersected base metal and copper-gold mineralization typical to the Snow Lake region. Although the historical data has not been validated by a qualified person (see "Qualified Person and NI 43-101"), the mineralization indicates that there is the potential for new deposits on the same favourable mineralized horizons as many known deposits in the area, including the Lalor, 1901 and Chisel deposits. The Cook Lake properties are untested by modern deep geophysics, which was the discovery method for the Lalor mine.

Acquisition of Rockcliff to Consolidate Significant Land Package in Snow Lake

On June 19, 2023, Hudbay entered into a definitive agreement to acquire 100% of the issued and outstanding common shares of Rockcliff that it does not already own (the "Rockcliff Transaction"). Under the Rockcliff Transaction, Rockcliff shareholders will receive 0.006776 of a Hudbay common share for each Rockcliff common share held. The enterprise value to Hudbay, net of Rockcliff's cash, is approximately $13 million.

Rockcliff is one of the largest landholders in the Snow Lake area with more than 1,800 square kilometres across all of its properties. The completion of the Rockcliff Transaction will consolidate Hudbay's ownership of the Talbot deposit and provide the company with additional exploration properties in the vicinity of its Stall and New Britannia mills, including the land adjacent to Hudbay's Pen II deposit, which is a low tonnage and high-grade zinc deposit that starts from surface and is located approximately six kilometres by road from the Lalor mine.

Completion of the Rockcliff Transaction is contingent upon court approval from the Ontario Superior Court of Justice (Commercial List), shareholder approval of at least two-thirds of the votes cast by Rockcliff shareholders at a special meeting scheduled to be held on August 31, 2023 and other customary conditions and stock exchange approvals. The Rockcliff Transaction is expected to close in the third quarter of 2023.

Advancing Metallurgical Testwork for the Flin Flon Tailings Reprocessing Opportunity

In 2021, Hudbay identified the opportunity to reprocess Flin Flon tailings where in excess of 100 million tonnes of tailings have been deposited for over 90 years. The company completed confirmatory drilling in 2022 which covered about two-thirds of the facility. The results indicated higher zinc, copper and silver grades than predicted from historical mill records while confirming the historical gold grade. Hudbay is completing metallurgical test work and evaluating metallurgical technologies, including the recent signing of a testwork agreement with Cobalt Blue Holdings Limited ("Cobalt Blue") to assess the processing viability of the Flin Flon tailings using Cobalt Blue's proprietary processing technology that recovers copper, zinc, gold and silver while converting sulphides into stable and benign sulphur.

Other Exploration Update

Constancia In-Mine Exploration

Hudbay continues to execute a limited drill program and technical evaluations at the Constancia deposit to confirm the economic viability of adding an additional mining phase to the current mine plan that would convert a portion of the mineral resources to mineral reserves. The results from this drill program and technical and economic evaluations are expected to be incorporated in the next annual mineral reserve and resource update.

TSX, NYSE - HBM

2023 No. 20

Maria Reyna and Caballito Exploration

Hudbay controls a large, contiguous block of mineral rights with the potential to host satellite mineral deposits in close proximity to the Constancia processing facility, including the past producing Caballito property and the highly prospective Maria Reyna property. Hudbay commenced early exploration activities at Maria Reyna and Caballito after completing a surface rights exploration agreement with the community of Uchucarcco in August 2022. Surface investigation activities together with baseline environmental and archaeological activities necessary to support drill permit applications have been completed. Surface mapping and geochemical sampling confirm that both Caballito and Maria Reyna host sulfide and oxide rich copper mineralization in skarns, hydrothermal breccias and large porphyry intrusive bodies.

Lalor In-Mine Exploration

Hudbay continues to compile results from ongoing infill drilling at Lalor, which will be incorporated into the next annual mineral resource and reserve estimate update.

Flin Flon Exploration Partnership with Marubeni

On July 6, 2023, Hudbay announced the signing of a memorandum of understanding ("MOU") with Marubeni Corporation ("Marubeni") that establishes the framework for a multi-year exploration partnership focused on the discovery of new deposits on Hudbay's mineral properties within trucking distance of the company's processing facilities in Flin Flon, Manitoba. In connection with the MOU, Hudbay and Marubeni have agreed to negotiate the terms of a definitive agreement to govern the relationship between the parties and the Flin Flon properties that would form the subject of the exploration partnership (the "Project Properties"). It is currently contemplated that Marubeni would fund approximately $10 to $15 million of exploration expenditures on the Project Properties and that Hudbay will act as operator and carry out the exploration activities.

Dividend Declared

A semi-annual dividend of C$0.01 per share was declared on August 8, 2023. The dividend will be paid out on September 22, 2023 to shareholders of record as of September 1, 2023.

TSX, NYSE - HBM

2023 No. 20

Website Links

Hudbay:

www.hudbay.com

Management's Discussion and Analysis:

http://www.hudbayminerals.com/files/doc_financials/2023/Q2/MDA823.pdf

Financial Statements:

http://www.hudbayminerals.com/files/doc_financials/2023/Q2/FS823.pdf

Conference Call and Webcast

Date:	Wednesday, August 9, 2023

Time:	8:30 a.m. ET

Webcast:	www.hudbay.com

Dial in:	1-416-915-3239 or 1-800-319-4610

TSX, NYSE - HBM

2023 No. 20

Qualified Person and NI 43-101

The technical and scientific information in this news release related to the company's material mineral projects has been approved by Olivier Tavchandjian, P. Geo, Senior Vice President, Exploration and Technical Services. Mr. Tavchandjian is a qualified person pursuant to National Instrument 43-101 - Standards of Disclosure for Mineral Projects ("NI 43-101").

Hudbay cautions that neither the historical information nor the quality assurance and quality control program that was applied during the execution of the Cook Lake drill program has been independently verified by a qualified person and, as such, Hudbay cautions that this information should not be relied upon by investors.

Non-IFRS Financial Performance Measures

Adjusted net earnings (loss), adjusted net earnings (loss) per share, adjusted EBITDA, net debt, cash cost, sustaining and all-in sustaining cash cost per pound of copper produced, cash cost and sustaining cash cost per ounce of gold produced and combined unit cost are non-IFRS performance measures. 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.

Management believes adjusted net earnings (loss) and adjusted net earnings (loss) per share provides an alternate measure of the company's performance for the current period and gives insight into its expected performance in future periods. These measures are used internally by the company to evaluate the performance of its underlying operations and to assist with its planning and forecasting of future operating results. As such, the company believes these measures are useful to investors in assessing the company's underlying performance. Hudbay provides adjusted EBITDA to help users analyze the company's results and to provide additional information about its ongoing cash generating potential in order to assess its capacity to service and repay debt, carry out investments and cover working capital needs. Net debt is shown because it is a performance measure used by the company to assess its financial position. Cash cost, sustaining and all-in sustaining cash cost per pound of copper produced are shown because the company believes they help investors and management assess the performance of its operations, including the margin generated by the operations and the company. Cash cost and sustaining cash cost per ounce of gold produced are shown because the company believes they help investors and management assess the performance of its Manitoba operations. Combined unit cost is shown because Hudbay believes it helps investors and management assess the company's cost structure and margins that are not impacted by variability in by-product commodity prices.

The following tables provide detailed reconciliations to the most comparable IFRS measures.

TSX, NYSE - HBM

2023 No. 20

Adjusted Net Earnings (Loss) Reconciliation

	Three Months Ended
(in $ millions)	Jun. 30, 2023		Mar. 31, 2023		Jun. 30, 2022
(Loss) profit for the period	(14.9	)	5.4		32.1
Tax (recovery) expense	(15.8	)	12.0		(10.6	)
(Loss) profit before tax	(30.7	)	17.4		21.5
Adjusting items
Mark-to-market adjustments ¹	0.6		6.8		(14.0	)
Foreign exchange loss (gain)	1.4		0.3		(2.2	)
Inventory adjustments	0.9		-		1.9
Variable consideration adjustment - stream revenue and accretion	-		(5.0	)	-
Re-evaluation adjustment - environmental provision³	(4.7	)	(8.2	)	(60.7	)
Impairment	-		-		95.0
Acquisition related costs	6.8		-		-
Evaluation expenses	-		-		0.7
Insurance recovery	-		-		(5.7	)
Restructuring charges - Manitoba ²	-		-		3.7
Loss on disposal of investments	-		0.7		3.1
Loss on disposal of plant and equipment and non-current assets - Manitoba & Arizona	0.3		0.1		-
Adjusted (loss) earnings before income taxes	(25.4	)	12.1		43.3
Tax recovery (expense)	15.8		(12.0	)	10.6
Tax impact on adjusting items	(8.7	)	-		(23.4	)
Adjusted net (loss) earnings	(18.3	)	0.1		30.5
Adjusted net (loss) earnings $/share	(0.07	)	0.00		0.12
Basic weighted average number of common shares outstanding (millions)	272.2		262.0		261.9

¹Includes changes in fair value of the gold prepayment liability, Canadian junior mining investments, other financial assets and liabilities at fair value through profit or loss and share-based compensation expenses.

²Includes closure cost for the Flin Flon operations.

³ Changes from movements to environmental reclamation provisions are primarily related to the Flin Flon operations, which were fully depreciated as of June 30, 2022, as well as other Manitoba non-operating sites.

TSX, NYSE - HBM

2023 No. 20

Adjusted EBITDA Reconciliation

	Three Months Ended
(in $ millions)	Jun. 30, 2023		Mar. 31, 2023		Jun. 30, 2022
(Loss) profit for the period	(14.9	)	5.4		32.1
Add back:
Tax (recovery) expense	(15.8	)	12.0		(10.6	)
Net finance expense	30.5		35.0		24.4
Other expenses	13.9		5.0		(1.3	)
Depreciation and amortization	88.7		67.4		87.3
Amortization of deferred revenue and variable consideration adjustment	(18.1	)	(15.9	)	(19.2	)
	84.3		108.9		112.7
Adjusting items (pre-tax):
Re-evaluation adjustment - environmental provision	(4.7	)	(8.2	)	(60.7	)
Impairment losses	-		-		95.0
Inventory adjustments	0.9		-		1.9
Share-based compensation expense (recovery) ¹	0.7		1.2		(7.5	)
Adjusted EBITDA	81.2		101.9		141.4

¹ Share-based compensation expenses reflected in cost of sales and selling and administrative expenses.

Net Debt Reconciliation

(in $ thousands)
	Jun. 30, 2023		Mar. 31, 2023		Dec. 31, 2022
Total long-term debt	1,370,682		1,225,023		1,184,162
Cash	(179,734	)	(255,563	)	(225,665	)
Net debt	1,190,948		969,460		958,497

Copper Cash Cost Reconciliation

Consolidated	Three Months Ended
Net pounds of copper produced¹
(in thousands)	Jun. 30, 2023	Mar. 31, 2023	Jun. 30, 2022
Peru	38,982	45,233	46,032
Manitoba	6,160	4,508	10,556
Net pounds of copper produced	45,142	49,741	56,588

¹Contained copper in concentrate.

TSX, NYSE - HBM

2023 No. 20

Consolidated	Three Months Ended
	Jun. 30, 2023				Mar. 31, 2023				Jun. 30, 2022
Cash cost per pound of copper produced	$000s		$/lb		$000s		$/lb		$000s		$/lb
Mining	73,335		1.62		64,538		1.30		86,800		1.53
Milling	69,869		1.55		61,039		1.23		65,684		1.16
Refining (zinc)	-		-		-		-		14,379		0.26
G&A	20,975		0.47		26,555		0.53		41,930		0.74
Onsite costs	164,179		3.64		152,132		3.06		208,793		3.69
Treatment & refining	26,670		0.59		18,495		0.37		15,033		0.27
Freight & other	17,766		0.39		17,776		0.36		20,076		0.35
Cash cost, before by-product credits	208,615		4.62		188,403		3.79		243,902		4.31
By-product credits	(136,417	)	(3.02	)	(146,111	)	(2.94	)	(207,191	)	(3.66	)
Cash cost, net of by-product credits	72,198		1.60		42,292		0.85		36,711		0.65

Consolidated	Three Months Ended
	Jun. 30, 2023			Mar. 31, 2023			Jun. 30, 2022
Supplementary cash cost information	$000s		$/lb¹	$000s		$/lb¹	$000s		$/lb¹
By-product credits²:
Zinc	21,896		0.48	17,374		0.35	88,548		1.56
Gold³	86,026		1.91	93,479		1.88	91,317		1.61
Silver³	17,281		0.38	11,998		0.24	17,956		0.32
Molybdenum & other	11,214		0.25	23,260		0.47	9,370		0.17
Total by-product credits	136,417		3.02	146,111		2.94	207,191		3.66
Reconciliation to IFRS:
Cash cost, net of by-product credits	72,198			42,292			36,711
By-product credits	136,417			146,111			207,191
Treatment and refining charges	(26,670	)		(18,495	)		(15,033	)
Share-based compensation expense	60			79			(632	)
Inventory adjustments	906			-			1,933
Change in product inventory	15,114			(9,409	)		4,494
Royalties	2,578			706			3,971
Depreciation and amortization⁴	88,670			67,422			87,305
Cost of sales⁵	289,273			228,706			325,940

¹Per pound of copper produced.

²By-product credits are computed as revenue per financial statements, including amortization of deferred revenue and pricing and volume adjustments.

³ Gold and silver by-product credits do not include variable consideration adjustments with respect to stream arrangements. Variable consideration adjustments are cumulative adjustments to gold and silver stream deferred revenue primarily associated with the net change in mineral reserves and resources or amendments to the mine plan that would change the total expected deliverable ounces under the precious metal streaming arrangement. For the three months ended June 30, 2023, the variable consideration adjustments were $nil, for the three months ended March 31, 20233 - $4,885 and for the three months ended June 30, 2022 - $nil.

⁴Depreciation is based on concentrate sold.

⁵ As per IFRS financial statements.

TSX, NYSE - HBM

2023 No. 20

Peru	Three Months Ended
(in thousands)	Jun. 30, 2023	Mar. 31, 2023	Jun. 30, 2022
Net pounds of copper produced¹	38,982	45,233	46,032

¹Contained copper in concentrate.

Peru	Three Months Ended
	Jun. 30, 2023				Mar. 31, 2023				Jun. 30, 2022
Cash cost per pound of copper produced	$000s		$/lb		$000s		$/lb		$000s		$/lb
Mining	31,654		0.81		26,786		0.59		32,300		0.70
Milling	54,676		1.40		46,191		1.03		44,731		0.97
G&A	14,867		0.38		16,466		0.36		18,677		0.41
Onsite costs	101,197		2.59		89,443		1.98		95,708		2.08
Treatment & refining	17,097		0.44		10,603		0.24		9,226		0.20
Freight & other	12,424		0.32		12,427		0.27		12,297		0.26
Cash cost, before by-product credits	130,718		3.35		112,473		2.49		117,231		2.54
By-product credits	(47,193	)	(1.21	)	(50,899	)	(1.13	)	(33,268	)	(0.72	)
Cash cost, net of by-product credits	83,525		2.14		61,574		1.36		83,963		1.82

Peru	Three Months Ended
	Jun. 30, 2023			Mar. 31, 2023			Jun. 30, 2022
Supplementary cash cost information	$000s		$/lb¹	$000s		$/lb¹	$000s		$/lb¹
By-product credits²:
Gold³	21,638		0.55	19,301		0.43	14,191		0.31
Silver³	14,341		0.37	8,577		0.19	11,687		0.25
Molybdenum	11,214		0.29	23,021		0.51	7,390		0.16
Total by-product credits	47,193		1.21	50,899		1.13	33,268		0.72
Reconciliation to IFRS:
Cash cost, net of by-product credits	83,525			61,574			83,963
By-product credits	47,193			50,899			33,268
Treatment and refining charges	(17,097	)		(10,603	)		(9,226	)
Inventory adjustments	-			-			(97	)
Share-based compensation expenses	29			(14	)		(100	)
Change in product inventory	27,078			(11,135	)		(8,394	)
Royalties	2,479			665			1,117
Depreciation and amortization⁴	67,340			41,960			47,811
Cost of sales⁵	210,547			133,346			148,342

¹Per pound of copper produced.

²By-product credits are computed as revenue per financial statements, including amortization of deferred revenue and pricing and volume adjustments.

³Gold and silver by-product credits do not include variable consideration adjustments with respect to stream arrangements.

⁴Depreciation is based on concentrate sold.

⁵As per IFRS financial statements.

TSX, NYSE - HBM

2023 No. 20

Copper Sustaining and All-in Sustaining Cash Cost Reconciliation

Consolidated	Three Months Ended
	Jun. 30, 2023		Mar. 31, 2023		Jun. 30, 2022
All-in sustaining cash cost per pound of copper produced	$000s	$/lb	$000s	$/lb	$000s	$/lb
Cash cost, net of by-product credits	72,198	1.60	42,292	0.85	36,711	0.65
Cash sustaining capital expenditures	48,253	1.07	47,869	0.96	65,173	1.15
Royalties	2,578	0.06	706	0.02	3,971	0.07
Sustaining cash cost, net of by-product credits	123,029	2.73	90,867	1.83	105,855	1.87
Corporate selling and administrative expenses & regional costs	9,603	0.21	10,215	0.20	2,479	0.04
Accretion and amortization of decommissioning and community agreements¹	1,792	0.04	1,958	0.04	874	0.02
All-in sustaining cash cost, net of by-product credits	134,424	2.98	103,040	2.07	109,208	1.93
Reconciliation to property, plant and equipment additions:
Property, plant and equipment additions	47,574		33,554		70,712
Capitalized stripping net additions	21,640		26,984		27,302
Total accrued capital additions	69,214		60,538		98,014
Less other non-sustaining capital costs²	28,006		19,850		45,489
Total sustaining capital costs	41,208		40,688		52,525
Capitalized lease cash payments - operating sites	4,374		4,702		9,313
Community agreement cash payments	1,290		1,189		370
Accretion and amortization of decommissioning and restoration obligations³	1,381		1,290		2,965
Cash sustaining capital expenditures	48,253		47,869		65,173

¹Includes accretion of decommissioning relating to non-productive sites, and accretion and amortization of current community agreements.

²Other non-sustaining capital costs include Arizona capitalized costs, capitalized interest, capitalized exploration and growth capital expenditures.

³Includes amortization of decommissioning and restoration PP&E assets and accretion of decommissioning and restoration liabilities related to producing sites.

TSX, NYSE - HBM

2023 No. 20

Peru	Three Months Ended
	Jun. 30, 2023		Mar. 31, 2023		Jun. 30, 2022
Sustaining cash cost per pound of copper produced	$000s	$/lb	$000s	$/lb	$000s	$/lb
Cash cost, net of by-product credits	83,525	2.14	61,574	1.36	83,963	1.82
Cash sustaining capital expenditures	33,425	0.86	33,564	0.74	35,527	0.78
Royalties	2,479	0.06	665	0.02	1,117	0.02
Sustaining cash cost per pound of copper produced	119,429	3.06	95,803	2.12	120,607	2.62

Gold Cash Cost and Sustaining Cash Cost Reconciliation

Manitoba	Three Months Ended
(in thousands)	Jun. 30, 2023	Mar. 31, 2023	Jun. 30, 2022
Net ounces of gold produced¹	35,253	36,034	44,787

¹Contained gold in concentrate and doré.

Manitoba	Three Months Ended
	Jun. 30, 2023		Mar. 31, 2023		Jun. 30, 2022
Cash cost per ounce of gold produced	$000s	$/oz	$000s	$/oz	$000s	$/oz
Mining	41,681	1,182	37,752	1,048	54,500	1,217
Milling	15,193	431	14,848	412	20,953	468
Refining (zinc)	-	-	-	-	14,379	321
G&A	6,108	173	10,089	280	23,253	519
Onsite costs	62,982	1,786	62,689	1,740	113,085	2,525
Treatment & refining	9,573	271	7,892	219	5,807	130
Freight & other	5,342	152	5,349	148	7,779	173
Cash cost, before by-product credits	77,897	2,209	75,930	2,107	126,671	2,828
By-product credits	(39,218)	(1,112)	(42,131)	(1,169)	(135,924)	(3,035)
Gold cash cost, net of by-product credits	38,679	1,097	33,799	938	(9,253)	(207)

TSX, NYSE - HBM

2023 No. 20

Manitoba	Three Months Ended
	Jun. 30, 2023			Mar. 31, 2023			Jun. 30, 2022
Supplementary cash cost information	$000s		$/oz¹	$000s		$/oz¹	$000s		$/oz¹
By-product credits²:
Zinc	21,896		621	17,374		482	88,548		1,977
Copper	14,382		408	21,097		585	39,127		874
Silver³	2,940		83	3,421		95	6,269		140
Other	-		-	239		7	1,980		44
Total by-product credits	39,218		1,112	42,131		1,169	135,924		3,035
Reconciliation to IFRS:
Cash cost, net of by-product credits	38,679			33,799			(9,253	)
By-product credits	39,218			42,131			135,924
Treatment and refining charges	(9,573	)		(7,892	)		(5,807	)
Inventory adjustments	906			-			-
(Curtailment)/past service cost	-			-			(532	)
Share-based compensation expenses	31			93			2,030
Change in product inventory	(11,964	)		1,726			12,888
Royalties	99			41			2,854
Depreciation and amortization⁴	21,330			25,462			39,494
Cost of sales⁵	78,7265			95,360			177,598

¹Per ounce of gold produced.

²By-product credits are computed as revenue per financial statements, amortization of deferred revenue and pricing and volume adjustments.

³Silver by-product credits do not include variable consideration adjustments with respect to stream arrangements.

⁴Depreciation is based on concentrate sold.

⁵ As per IFRS financial statements, excluding impairment adjustments.

Manitoba	Three Months Ended
	Jun. 30, 2023		Mar. 31, 2023		Jun. 30, 2022
Sustaining cash cost per pound of gold produced	$000s	$/oz	$000s	$/oz	$000s		$/oz
Gold cash cost, net of by-product credits	38,679	1,097	33,799	938	(9,253	)	(207	)
Cash sustaining capital expenditures	14,828	421	14,304	397	29,646		662
Royalties	99	3	41	1	2,854		64
Sustaining cash cost per pound of gold produced	53,606	1,521	48,144	1,336	23,247		519

TSX, NYSE - HBM

2023 No. 20

Combined Unit Cost Reconciliation

Peru	Three Months Ended
(in thousands except ore tonnes milled and unit cost per tonne)
Combined unit cost per tonne processed	Jun. 30, 2023		Mar. 31, 2023		Jun. 30, 2022
Mining	31,654		26,786		32,300
Milling	54,676		46,191		44,731
G&A¹	14,867		16,466		18,677
Other G&A²	458		(1,539	)	(1,050	)
	101,655		87,904		94,658
Less: Covid related costs	-		-		1,275
Unit cost	101,655		87,904		93,383
Tonnes ore milled	7,223		7,664		7,771
Combined unit cost per tonne	14.07		11.47		12.02
Reconciliation to IFRS:
Unit cost	101,655		87,904		93,383
Freight & other	12,424		12,427		12,297
Covid related costs	-		-		1,275
Other G&A	(458	)	1,539		1,050
Share-based compensation expenses	29		(14	)	(100	)
Inventory adjustments	-		-		(97	)
Change in product inventory	27,078		(11,135	)	(8,394	)
Royalties	2,479		665		1,117
Depreciation and amortization	67,340		41,960		47,811
Cost of sales³	210,547		133,346		148,342

¹G&A as per cash cost reconciliation above.

²Other G&A primarily includes profit sharing costs.

³As per IFRS financial statements, excluding impairment adjustments.

TSX, NYSE - HBM

2023 No. 20

Manitoba	Three Months Ended
(in thousands except tonnes ore milled and unit cost per tonne)
Combined unit cost per tonne processed	Jun. 30, 2023		Mar. 31, 2023		Jun. 30, 2022
Mining	41,681		37,752		54,500
Milling	15,193		14,848		20,953
G&A¹	6,108		10,089		23,253
Less: G&A allocated to zinc metal production	-		-		(3,141	)
Less: Other G&A related to profit sharing costs	(682	)	(1,139	)	(10,206	)
Unit cost	62,300		61,550		85,359
USD/CAD implicit exchange rate	1.34		1.35		1.27
Unit cost - C$	83,659		83,193		108,806
Tonnes ore milled	380,538		385,661		649,318
Combined unit cost per tonne - C$	220		216		168
Reconciliation to IFRS:
Unit cost	62,300		61,550		85,359
Freight & other	5,342		5,349		7,779
Refined zinc	-		-		14,379
G&A allocated to zinc metal production	-		-		3,141
Other G&A related to profit sharing	682		1,139		10,206
Share-based compensation expenses	31		93		(532	)
Inventory adjustments	906		-		2,030
Change in product inventory	(11,964	)	1,726		12,888
Royalties	99		41		2,854
Depreciation and amortization	21,330		25,462		39,494
Cost of sales²	78,726		95,360		177,598

¹G&A as per cash cost reconciliation above.

²As per IFRS financial statements, excluding impairment adjustments.

TSX, NYSE - HBM

2023 No. 20

Forward-Looking Information

This news release contains forward-looking information within the meaning of applicable Canadian and United States securities legislation. All information contained in this news release, 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 news release is qualified by this cautionary note.

Forward-looking information includes, but is not limited to, statements with respect to the expected production and cash flow generation during the second half of the year, the expected timing for the release of an updated Copper Mountain mine technical report, the expected timing for the release of the Copper World pre-feasibility study for Phase I, the expected timing and effectiveness of the ongoing integration and optimization of Copper Mountain's operations, the expected consummation, timing and benefits of the Rockcliff Transaction and other Manitoba growth initiatives; approval of the Rockcliff Transaction by Rockcliff's shareholders, the satisfaction of the conditions precedent to the consummation of the Rockcliff Transaction, statements regarding the company's production, cost and capital and exploration expenditure guidance, expectations regarding reductions in discretionary spending, capital expenditures and net debt, expectations regarding the impact of inflationary pressures on the company's cost of operations, financial condition and prospects, the company's ability to deleverage and repay debt as needed, the consummation and timing of a potential partnership with Marubeni, expectations regarding the company's cash balance and liquidity, expectations regarding the Copper World project, the estimated timelines and pre-requisites for sanctioning the project and the pursuit of a potential minority joint venture partner, expectations regarding the permitting requirements for the Copper World project and permitting related litigation (including expected timing for receipt of such applicable permits), the company's ability to increase the mining rate at Lalor, the anticipated timing for completing the Stall recovery improvement program and anticipated benefits therefrom, expectations regarding the ability to conduct exploration work on the Maria Reyna and Caballito properties and to advance related drill plans, the timing of mining higher-grade ore in the Pampacancha pit and the company's expectations resulting therefrom, expectations regarding the ability for the company to reduce greenhouse gas emissions, the company's evaluation of opportunities to reprocess tailings, expectations regarding the prospective nature of the Maria Reyna and Caballito properties, the anticipated impact of brownfield growth projects on the company's performance, anticipated expansion opportunities in Snow Lake and the ability for Hudbay to find a new anchor deposit near the company's Snow Lake operations, anticipated drill programs and exploration activities, 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 Hudbay has identified and were applied in drawing conclusions or making forecasts or projections set out in the forward-looking information include, but are not limited to:

the ability to achieve production and cost guidance;
the ability to achieve discretionary spending reductions without impacting operations;

TSX, NYSE - HBM

2023 No. 20

no significant interruptions to operations due to social or political unrest in the regions Hudbay operates, including the navigation of the complex political and social environment in Peru;
no interruptions to the company's plans for advancing the Copper World project, including with respect to timely receipt of applicable permits;
the ability for the company to successfully integrate and optimize the Copper Mountain operations and develop and maintain good relations with key stakeholders;
the ability to ramp up exploration in respect of the Maria Reyna and Caballito properties and to advance related drill plans;
the ability to satisfy the conditions to closing the Rockcliff Transaction, including the receipt of shareholder, stock exchange and court approvals;
that no third party would make a superior proposal to the Rockcliff Transaction;
that the definitive agreement for the Rockcliff Transaction would not be terminated in certain circumstances;
the success of mining, processing, exploration and development activities;
the scheduled maintenance and availability of the company's 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 the company'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 and governmental approvals;
the availability of personnel for the company's exploration, development and operational projects and ongoing employee relations;
maintaining good relations with the employees at the company's operations, including in British Columbia;
maintaining good relations with the labour unions that represent certain of the company's employees in Manitoba and Peru;
maintaining good relations with the communities in which the company operates, including the neighbouring Indigenous communities and local governments;
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 Indigenous peoples or challenges to the validity of the company's unpatented mining claims;
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, changes in taxation policies 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 related to the failure to effectively integrate and optimize the Copper Mountain operations, the failure to receive approval of the Rockcliff Transaction by Rockcliff's shareholders or the required court, stock exchange and other consents and approvals to effect the Rockcliff Transaction, the potential of a third party making a superior proposal to the Rockcliff Transaction, the possibility that the definitive agreement for the Rockcliff Transaction could be terminated under certain circumstances, political and social risks in the regions Hudbay operates, including the navigation of the complex political and social environment in Peru, risks generally associated with the mining industry and the current geopolitical environment, including future commodity prices, currency and interest rate fluctuations, energy and consumable prices, supply chain constraints and general cost escalation in the current inflationary environment, uncertainties related to the development and operation of the company's projects, risks related to the Copper World project, including in relation to permitting, litigation, project delivery and financing risks, risks related to the Lalor mine plan, including the ability to convert inferred mineral resource estimates to higher confidence categories, dependence on key personnel and employee and union relations, risks related to political or social instability, unrest or change, risks in respect of Indigenous and community relations, rights and title claims, operational risks and hazards, including the cost of maintaining and upgrading the company's tailings management facilities and any 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 and interest rates 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 the company's most recent Annual Information Form and under the heading "Financial Risk Management" in the company's most recent management's discussion and analysis.

TSX, NYSE - HBM

2023 No. 20

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 news release or to explain any material difference between subsequent actual events and any forward-looking information, except as required by applicable law.

Note to United States Investors

This news release 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.

About Hudbay

Hudbay (TSX, NYSE: HBM) is a copper-focused mining company with three long-life operations and a world-class pipeline of copper growth projects in tier-one mining-friendly jurisdictions of Canada, Peru and the United States.

Hudbay's operating portfolio includes the Constancia mine in Cusco (Peru), the Snow Lake operations in Manitoba (Canada) and the Copper Mountain mine in British Columbia (Canada). Copper is the primary metal produced by the company, which is complemented by meaningful gold production. Hudbay's growth pipeline includes the Copper World project in Arizona, the Mason project in Nevada (United States), the Llaguen project in La Libertad (Peru) and several expansion and exploration opportunities near its existing operations.

The value Hudbay creates and the impact it has is embodied in its purpose statement: "We care about our people, our communities and our planet. Hudbay provides the metals the world needs. We work sustainably, transform lives and create better futures for communities." Hudbay's mission is to create sustainable value and strong returns by leveraging its core strengths in community relations, focused exploration, mine development and efficient operations.

TSX, NYSE - HBM

2023 No. 20

For further information, please contact:

Candace Brûlé

Vice President, Investor Relations

(416) 814-4387

investor.relations@hudbay.com

____________________________

^[i] Adjusted net earnings (loss) and adjusted net earnings (loss) per share; adjusted EBITDA; cash cost, sustaining cash cost and all-in sustaining cash cost per pound of copper produced, net of by-product credits; cash cost and sustaining cash cost per ounce of gold produced, net of by-product credits; combined unit costs and net debt are non-IFRS financial performance measures with no standardized definition under IFRS. For further information and a detailed reconciliation, please see the "Non-IFRS Financial Performance Measures" section of this news release.

Unaudited Condensed Consolidated Interim Financial Statements

(In US dollars)

HUDBAY MINERALS INC.

For the three and six months ended June 30, 2023 and 2022

HUDBAY MINERALS INC.

Condensed Consolidated Interim Balance Sheets
(Unaudited and in thousands of US dollars)

			Jun. 30,			Dec. 31,
	Note		2023			2022
Assets
Current assets
Cash and cash equivalents		$	179,734		$	225,665
Trade and other receivables	7		89,544			113,182
Inventories	8		220,481			155,012
Prepaid expenses and other current assets			15,467			20,106
Other financial assets	9		22,408			1,063
Taxes receivable			12,379			9,153
			540,013			524,181
Receivables	7		13,812			13,329
Inventories	8		40,963			50,725
Other financial assets	9		10,154			9,799
Intangibles and other assets	10		47,042			49,841
Property, plant and equipment	11		4,385,051			3,552,430
Goodwill	5		66,569			-
Deferred tax assets			138,536			125,638
		$	5,242,140		$	4,325,943
Liabilities
Current liabilities
Trade and other payables		$	227,980		$	211,467
Taxes payable			11,757			4,051
Other liabilities	12		27,707			46,806
Other financial liabilities	13		12,463			33,301
Gold prepayment liability	14		57,107			71,208
Lease liabilities	15		30,915			16,156
Current portion of long-term debt	16		144,981			-
Deferred revenue	17		88,460			64,658
			601,370			447,647
Other financial liabilities	13		52,930			52,446
Gold prepayment liability	14		12,828			-
Lease liabilities	15		69,329			44,863
Long-term debt	16		1,225,701			1,184,162
Deferred revenue	17		360,143			404,880
Pension obligations			2,913			3,262
Other employee benefits			95,244			86,340
Environmental and other provisions	18		312,131			279,240
Deferred tax liabilities			400,605			251,294
			3,133,194			2,754,134
Equity
Share capital	20b		2,217,438			1,780,774
Reserves			31,418			26,538
Retained earnings			(246,886	)		(235,503	)
Equity attributable to owners of the Company			2,001,970			1,571,809
Non-controlling interest			106,976			-
		$	5,242,140		$	4,325,943
Commitments (note 23)

HUDBAY MINERALS INC.

Condensed Consolidated Interim Income Statements
(Unaudited and in thousands of US dollars, except per share amounts)

	Note		Three months ended June 30,						Six months ended June 30,
	Note		2023			2022			2023			2022
Revenue	6a	$	312,166		$	415,454		$	607,385		$	794,073
Cost of sales
Mine operating costs			200,603			238,635			361,887			450,895
Depreciation and amortization	6b		88,670			87,305			156,092			168,396
			289,273			325,940			517,979			619,291

Gross profit			22,893			89,514			89,406			174,782
Selling and administrative expenses			8,600			1,621			17,746			13,462
Exploration expenses			5,319			8,986			13,561			27,616
Other expenses (income)	6c		13,894			(1,303	)		18,853			7,745
Re-evaluation adjustment - environmental provision	18		(4,692	)		(60,677	)		(12,932	)		(140,533	)
Impairment - Arizona	6e		-			94,956			-			94,956
Results from operating activities			(228	)		45,931			52,178			171,536
Net interest expense on long term debt	6d		17,800			16,911			34,807			33,809
Accretion on streaming arrangements	6d		6,596			7,357			13,097			12,193
Change in fair value of financial instruments	6d		(87	)		(6,418	)		5,510			798
Other net finance costs	6d		6,194			6,577			12,065			14,371
Net finance expense			30,503			24,427			65,479			61,171
(Loss) profit before tax			(30,731	)		21,504			(13,301	)		110,365
Tax (recovery) expense	19		(15,799	)		(10,639	)		(3,826	)		14,407
(Loss) profit for the period		$	(14,932	)	$	32,143		$	(9,475	)	$	95,958

Attributable to:
Owners of the Company			(14,932	)		32,143			(9,475	)		95,958
Non-controlling interest			-			-			-			-
(Loss) profit for the period		$	(14,932	)	$	32,143		$	(9,475	)	$	95,958

(Loss) profit per share
Basic and diluted		$	(0.05	)	$	0.12		$	(0.04	)	$	0.37

Weighted average number of common shares outstanding:
Basic	21		272,228,447			261,887,203			267,157,797			261,788,780
Diluted	21		272,228,447			262,250,995			267,157,797			262,257,603

HUDBAY MINERALS INC.

Condensed Consolidated Interim Statements of Cash Flows
(Unaudited and in thousands of US dollars)

	Note		Three months ended June 30,						Six months ended June 30,
	Note		2023			2022			2023			2022
Cash generated from operating activities:
(Loss) profit for the period		$	(14,932	)	$	32,143		$	(9,475	)	$	95,958
Tax (recovery) expense	19		(15,799	)		(10,639	)		(3,826	)		14,407
Items not affecting cash:
Depreciation and amortization	6b		88,987			87,648			156,739			169,181
Share-based compensation			705			(7,618	)		1,900			(4,315	)
Net finance expense	6d		30,503			24,427			65,479			61,171
Inventory adjustments	8		906			1,933			906			1,472
Amortization of deferred revenue and variable consideration	6a		(18,175	)		(19,191	)		(34,032	)		(47,410	)
Pension and other employee benefit payments, net of accruals			807			244			3,881			(464	)
Re-evaluation adjustment - environmental obligation	18		(4,692	)		(60,677	)		(12,932	)		(140,533	)
Impairment - Arizona	5i		-			94,956			-			94,956
Decommissioning and restoration payments			(215	)		(4,888	)		(1,119	)		(8,229	)
Other	24a		(3,553	)		(4,860	)		(8,413	)		(9,474	)
Taxes paid			(8,664	)		(9,567	)		(17,622	)		(25,756	)
Operating cash flow before changes in non-cash working capital			55,878			123,911			141,486			200,964
Change in non-cash working capital	24b		(31,321	)		41,695			(45,650	)		27,949
			24,557			165,606			95,836			228,913
Cash used in investing activities:
Acquisition of property, plant and equipment	3		(65,862	)		(78,503	)		(130,814	)		(130,625	)
Community agreements	3		(2,733	)		(370	)		(4,645	)		(4,142	)
Cash and cash equivalents acquired in Copper Mountain acquisition, net of cash paid	5		10,689			-			10,689			-
Net (purchase) sale of investments			-			(331	)		53			(331	)
Proceeds from disposition of property, plant and equipment			512			-			650			-
Interest received			1,473			350			3,070			512
			(55,921	)		(78,854	)		(120,997	)		(134,586	)
Cash used in financing activities:
Proceeds from drawdown of revolving credit facility	16b		-			-			40,000			-
Interest paid on long-term debt			(31,875	)		-			(31,875	)		(31,875	)
Financing costs			(3,023	)		(2,955	)		(6,156	)		(6,106	)
Lease payments	15		(5,067	)		(9,955	)		(10,431	)		(19,818	)
Gold prepayment repayments	14		-			(18,566	)		(6,428	)		(37,189	)
Deferred Rosemont acquisition payment			(5,000	)		(10,000	)		(5,000	)		(10,000	)
Net proceeds from exercise of stock options			30			6			108			874
Share issuance cost			(188	)		-			(188	)		-
Dividends paid	20b		-			-			(1,908	)		(2,075	)
			(45,123	)		(41,470	)		(21,878	)		(106,189	)
Effect of movement in exchange rates on cash			658			(85	)		1,108			(571	)
Net (decrease) increase in cash			(75,829	)		45,197			(45,931	)		(12,433	)
Cash, beginning of the period			255,563			213,359			225,665			270,989
Cash, end of the period		$	179,734		$	258,556		$	179,734		$	258,556

HUDBAY MINERALS INC.

Condensed Consolidated Interim Statements of Comprehensive Profit (Loss)
(Unaudited and in thousands of US dollars)

		Three months ended June 30,						Six months ended June 30,
		2023			2022			2023			2022
(Loss) profit for the period	$	(14,932	)	$	32,143		$	(9,475	)	$	95,958

Other comprehensive income:
Item that will be reclassified subsequently to profit or loss:
Recognized directly in equity:
Net gain (loss) on translation of foreign currency balances		6,489			(7,803	)		6,625			(4,495	)
		6,489			(7,803	)		6,625			(4,495	)

Items that will not be reclassified subsequently to profit or loss:
Recognized directly in equity:
Gold prepayment revaluation		(203	)		990			(188	)		1,165
Tax effect		54			(262	)		50			(308	)
Remeasurement - actuarial (loss) gain		(906	)		12,611			(2,151	)		30,628
Tax effect		(77	)		979			(347	)		1,769
		(1,132	)		14,318			(2,636	)		33,254

Other comprehensive income net of tax, for the period		5,357			6,515			3,989			28,759

Attributable to:
Owners of the Company	$	(9,575	)	$	38,658		$	(5,486	)	$	124,717
Non-controlling interests		-			-			-			-
Total comprehensive (loss) income for the period	$	(9,575	)	$	38,658		$	(5,486	)	$	124,717

HUDBAY MINERALS INC.

Condensed Consolidated Interim Statements of Changes in Equity
(Unaudited and in thousands of US dollars)

		Share capital (note 20)		Other capital reserves			Foreign currency translation reserve			Remeasurement reserve			Retained earnings			Total equity
Balance, January 1, 2022	$	1,778,848	$	57,328		$	2,907		$	(60,417	)	$	(301,838	)	$	1,476,828
Profit		-		-			-			-			95,958			95,958
Other comprehensive (loss) income		-		-			(4,495	)		33,254			-			28,759
Total comprehensive (loss) income		-		-			(4,495	)		33,254			95,958			124,717

Transactions with owners:
Dividends (note 20b)		-		-			-			-			(2,075	)		(2,075	)
Stock options		-		779			-			-			-			779
Issuance of shares related to stock options redeemed		1,344		(470	)		-			-			-			874
Total transactions with owners		1,344		309			-			-			(2,075	)		(422	)

Balance, June 30, 2022	$	1,780,192	$	57,637		$	(1,588	)	$	(27,163	)	$	(207,955	)	$	1,601,123
Loss		-		-			-			-			(25,576	)		(25,576	)
Other comprehensive (loss) income		-		-			(13,171	)		9,957			-			(3,214	)
Total comprehensive (loss) income		-		-			(13,171	)		9,957			(25,576	)		(28,790	)

Transactions with owners:
Dividends (note 20b)		-		-			-			-			(1,972	)		(1,972	)
Stock options		-		1,069			-			-			-			1,069
Issuance of shares related to stock options redeemed		582		(203	)		-			-			-			379
Total transactions with owners		582		866			-			-			(1,972	)		(524	)

Balance, December 31, 2022	$	1,780,774	$	58,503		$	(14,759	)	$	(17,206	)	$	(235,503	)	$	1,571,809

HUDBAY MINERALS INC.

Condensed Consolidated Interim Statements of Changes in Equity
(Unaudited and in thousands of US dollars)

		Share capital (note 20)		Other capital reserves			Foreign currency translation reserve			Remeasurement reserve			Retained earnings			Total			Non- controlling interests (note 5)		Total equity
Balance, January 1, 2023	$	1,780,774	$	58,503		$	(14,759	)	$	(17,206	)	$	(235,503	)	$	1,571,809		$	-	$	1,571,809
Loss		-		-			-			-			(9,475	)		(9,475	)		-		(9,475	)
Other comprehensive income (loss)		-		-			6,625			(2,636	)		-			3,989			-		3,989
Total comprehensive income (loss)		-		-			6,625			(2,636	)		(9,475	)		(5,486	)		-		(5,486	)

Transactions with owners:
Dividends (note 20b)		-		-			-			-			(1,908	)		(1,908	)		-		(1,908	)
Shares issued on acquisition of Copper Mountain, net of share issuance costs (note 5)		436,499		-			-			-			-			436,499			106,976		543,475
Stock options		-		948			-			-			-			948			-		948
Issuance of shares related to stock options redeemed		165		(57	)		-			-			-			108			-		108

Total transactions with owners		436,664		891			-			-			(1,908	)		435,647			106,976		542,623

Balance, June 30, 2023	$	2,217,438	$	59,394		$	(8,134	)	$	(19,842	)	$	(246,886	)	$	2,001,970		$	106,976	$	2,108,946

HUDBAY MINERALS INC.

Notes to Unaudited Condensed Consolidated Interim Financial Statements
(in thousands of US dollars, except where otherwise noted)
For the three and six months ended June 30, 2023 and 2022

1. Reporting entity

Hudbay Minerals Inc. ("HMI" or the "Company") is a company existing under the Canada Business Corporations Act. The address of the Company's principal executive office is 25 York Street, Suite 800, Toronto, Ontario. The unaudited condensed consolidated interim financial statements ("interim financial statements") of the Company for the three and six months ended June 30, 2023 and 2022 represent the financial position and the financial performance of the Company and its subsidiaries (together referred to as "Hudbay").

Wholly owned subsidiaries as at June 30, 2023 and 2022 include HudBay Marketing & Sales Inc. ("HMS"), HudBay Peru Inc., HudBay Peru S.A.C. ("Hudbay Peru"), HudBay (BVI) Inc., Hudbay Arizona Inc, Copper World, Inc. ("Copper World") and Mason Resources (US) Inc. ("Mason"). On June 20, 2023, the Company acquired all of the issued and outstanding common shares of Copper Mountain Mining Corporation ("Copper Mountain") as part of a court-approved plan of arrangement. Copper Mountain is currently a wholly owned subsidiary of the Company and owns 75% of Copper Mountain Mine (BC) Ltd. ("CMBC"), the entity that owns the Copper Mountain mine. Mitsubishi Materials Corporation ("MMC"), an arms-length party, owns the remaining 25% interest in CMBC.

Hudbay is a diversified mining company with long-life assets in North and South America. Hudbay's operations in Cusco (Peru) produce copper with gold, silver and molybdenum by-products. Hudbay's operations in Manitoba (Canada) produce gold with copper, zinc and silver by-products. Hudbay's operations in British Columbia (Canada) produce copper with gold and silver by-products. Hudbay has an organic pipeline that includes copper development projects in Arizona and Nevada (United States), and a focused growth strategy on exploration, development, operation, and optimization of properties that Hudbay already controls, as well as other mineral assets that Hudbay may acquire that fit the Company's strategic criteria. The Company is governed by the Canada Business Corporations Act and its shares are listed under the symbol "HBM" on the Toronto Stock Exchange, New York Stock Exchange and Bolsa de Valores de Lima.

2. Basis of preparation

(a) Statement of compliance:

These interim financial statements have been prepared in accordance with IAS 34, Interim Financial Reporting as issued by the International Accounting Standards Board ("IASB") and do not include all of the information required for full annual financial statements by International Financial Reporting Standards ("IFRS").

These interim financial statements should be read in conjunction with the Company's audited consolidated financial statements for the year ended December 31, 2022 which includes information necessary or useful to understanding the Company's business and financial statement presentation. In particular, the Company's accounting policies are presented as note 3 in the Company's audited consolidated financial statements for the year ended December 31, 2022 and have been consistently applied in the preparation of these interim financial statements, except as noted below.

As a result of the acquisition of Copper Mountain, the Company's interim financial statements also reflect the following relevant accounting policies.

HUDBAY MINERALS INC.

Notes to Unaudited Condensed Consolidated Interim Financial Statements
(in thousands of US dollars, except where otherwise noted)
For the three and six months ended June 30, 2023 and 2022

Non-controlling interests

Non-controlling interests in subsidiaries are identified separately from the Company's equity in the subsidiaries. The interests of non-controlling shareholders may be initially measured either at fair value or at the non-controlling interests' proportionate share of the fair value of the acquiree's identifiable net assets. The choice of measurement basis is made on an acquisition-by-acquisition basis. Subsequent to acquisition, the carrying amount of non-controlling interests is the amount of those interests at initial recognition plus the non-controlling interests' share of subsequent changes in equity. Total comprehensive income is attributed to non-controlling interests even if this results in the non-controlling interests having a deficit balance.

Impairment of non-financial assets

Goodwill is tested for impairment annually and whenever there is an indication that the asset may be impaired.

The Company performs goodwill impairment tests on an annual basis as at December 31 each year. If the carrying value of the CGU or group of CGUs to which goodwill is assigned exceeds its recoverable amount, an impairment loss is recognized. Goodwill impairment losses are recorded in the consolidated income statements and they are not subsequently reversed.

The Board of Directors approved these interim financial statements on August 8, 2023.

(b) Use of judgements and estimates:

The preparation of the interim financial statements in conformity with IFRS requires Hudbay to make judgements, estimates and assumptions, in applying accounting policies that affect reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the interim financial statements, as well as reported amounts of revenue and expenses during the reporting period. Actual results may differ from these judgements, estimates and assumptions. The interim financial statements reflect the judgements and estimates outlined by Hudbay in its audited consolidated financial statements for the year ended December 31, 2022, except as noted below.

- Valuation of an acquired business (note 5) - As the Company concluded that the acquisition of Copper Mountain was a business combination, a valuation was required to determine the allocation of the purchase price. The fair values of the net assets acquired were calculated using significant estimates and judgements. In particular, the fair values of the net assets, including mineral properties, other property, plant and equipment have been determined using an independent valuation involving discounted cash flow calculations and other finance models. Such calculations and models were required to estimate, amongst other items, future production, future commodity prices, operating and capital input costs, discount rates and currency rates. If estimates or judgements differed, this could result in a materially different allocation of net assets to the consolidated balance sheets and could result in a change in the amount of goodwill recognized. Changes to the preliminary values of assets acquired and liabilities assumed, deferred income taxes and resulting goodwill, if any, are retrospectively adjusted when the final measurements are determined if related to conditions existing at the date of acquisition (within one year of acquisition).

- Inventory valuation (note 8) - Stockpiled ore and concentrate inventory are valued at the lower of average cost and net realizable value. Net realizable value is calculated as the estimated price at the time of sale based on prevailing and future metal prices less estimated future processing costs to convert the inventory into salable form and the associated selling costs. Where inventory is to be processed more than one year in the future, the estimate of net realizable value is based on a discounted cash flow projection. The determination of future sales price, processing and selling costs requires assumptions that may impact the stated value of inventory. Because the low grade inventory net realizable value measurement involves discounting, any significant changes in the projected timing of processing of the stockpile could result in significant impairment charges or reversals.

HUDBAY MINERALS INC.

Notes to Unaudited Condensed Consolidated Interim Financial Statements
(in thousands of US dollars, except where otherwise noted)
For the three and six months ended June 30, 2023 and 2022

(c) Estimation uncertainty:

The Company has assessed the broad implications of economic uncertainty including but not limited to inflation and higher interest rates, political instability in Peru and broadly as a result of Russia's invasion of Ukraine, as well as the lingering impact of the novel coronavirus pandemic, on its condensed consolidated interim financial statements. As at June 30, 2023, management has determined that the Company's ability to execute its medium and longer term plans and the economic viability of its assets, including the carrying value of its long-lived assets and inventory valuations, are not materially impacted.

In making this judgment, the Company has assessed various criteria including, but not limited to, existing laws, regulations, orders, disruptions and potential disruptions in our supply chain, disruptions in the markets for our products, commodity prices and foreign exchange prices and the actions that the Company has taken at its operations to protect the health and safety of its workforce and local community.

3. Reclassification of comparative amounts

Certain prior period amounts have been reclassified for consistency with the current period presentation. Community agreement payments were previously included within acquisition of property, plant and equipment in the investing activities section of the condensed consolidated interim statements of cash flows and has now been reclassified to its own line within investing activities. This reclassification had no effect on the previously reported cash used in investing activities.

4. New standards

New standards and interpretations adopted

(a) Amendment to IAS 1 - Presentation of Financial Statements and IFRS Practice Statement 2 Making Materiality Judgements

The amendments to IAS 1 amendments help companies provide useful accounting policy disclosures. The adoption of the new standard effective January 1, 2023 did not impact the interim financial statements of the Company.

New standards issued but not yet effective

(b) Amendment to IAS 1 - Presentation of Financial Statements

The amendments to IAS 1 clarify that only covenants with which an entity is required to comply on or before the reporting date affect the classification of a liability as current or non-current. In addition, an entity has to disclose information in the notes that enables users of financial statements to understand the risk that non-current liabilities with covenants could become repayable within twelve months. Classification is unaffected by the expectations that the entity will exercise its right to defer settlement of a liability. Lastly, the amendments clarify that settlement refers to the transfer to the counterparty of cash, equity instruments, other assets. The amendments are effective for annual periods beginning on or after January 1, 2024. Earlier application is permitted. The Company has not yet determined the effect of adoption of this amendment on its consolidated financial statements.

HUDBAY MINERALS INC.

Notes to Unaudited Condensed Consolidated Interim Financial Statements
(in thousands of US dollars, except where otherwise noted)
For the three and six months ended June 30, 2023 and 2022

5. Acquisition of Copper Mountain Mining Corporation

On June 20, 2023, Hudbay acquired all of the issued and outstanding common shares of Copper Mountain, as part of a court-approved plan of arrangement. Copper Mountain is currently a wholly owned subsidiary of the Company and owns 75% of CMBC, the entity that owns the Copper Mountain mine. MMC owns the remaining 25% interest in CMBC as a non-controlling interest.

In doing so, Hudbay obtained control of Copper Mountain on June 20, 2023.

Management determined that the assets and processes comprised a business and therefore accounted for the transaction as a business combination, using the acquisition method of accounting.

Consideration transferred:

The purchase consideration paid by Hudbay was for 100% of the net assets of Copper Mountain and their 100% owned subsidiaries ("100% owned entities") and a 75% ownership in CMBC. The aggregate preliminary purchase consideration for the acquired assets, net of the liabilities assumed is as follows:


Equity instruments (84,165,617 common shares)	$	436,687
Cash		3,794
Consideration transferred - June 20, 2023	$	440,481

The fair value of the common shares issued was based on Hudbay's listed share price of C$6.87 at the June 20, 2023 acquisition date. Immediately prior to the acquisition, Copper Mountain settled its outstanding restricted share units and performance share units through the issuance of shares and settled its stock options for replacement Hudbay options that were immediately settled in cash.

Hudbay incurred acquisition related costs of $6,752 during the second quarter of 2023, mainly relating to external legal and advisory fees and due diligence costs, which were recorded in other expense in the condensed consolidated interim income statements. Transaction costs incurred by Copper Mountain were accrued prior to the acquisition date and were expensed in their pre-acquisition records. In addition, Hudbay incurred share issuance costs of $188 and presented these as a deduction from share capital.

Identifiable assets acquired and liabilities assumed:

The fair value of the net assets was determined using a combination of market, income and cost methods. The fair value of the 75% equity interest in CMBC was determined by first computing the equity value of the 100% owned entities and subtracting this from the consideration paid by Hudbay and then grossing up the remainder to determine the implied consideration for a 100% equity interest in CMBC. The fair value of the non-controlling interest was then computed at a 25% equity interest.

HUDBAY MINERALS INC.

Notes to Unaudited Condensed Consolidated Interim Financial Statements
(in thousands of US dollars, except where otherwise noted)
For the three and six months ended June 30, 2023 and 2022

The following presents the preliminary allocation of the purchase price, resulting in recognized fair value amounts of identifiable assets acquired and liabilities assumed as follows:

Fair value of net assets acquired / (liabilities) assumed		Preliminary
Cash and cash equivalent	$	14,483
Trade and other receivables		19,110
Inventories		47,875
Prepaid expenses		3,096
Other financial assets		8,495
Plant and equipment		434,419
Mineral properties		383,000
Inventories - low grade stockpile		6,000
Trade and other payables		(77,111	)
Advances from Hudbay		(3,421	)
Lease liabilities		(44,167	)
Long-term debt		(144,981	)
Environmental and other provisions		(12,702	)
Deferred tax liabilities		(153,208	)
Total fair value of net identifiable assets acquired	$	480,888

The fair values allocated to assets acquired and liabilities assumed are preliminary, and are subject to adjustment based on further analysis and evaluation over the course of the measurement period, which will not exceed twelve months from the acquisition date. Where preliminary values are used in accounting for a business combination, they may be materially adjusted retrospectively in subsequent periods. In particular, the Company will continue to evaluate new information about the facts and circumstances that existed as of the acquisition date pertaining to the fair value of property, plant and equipment, low grade stockpile, mineral properties, goodwill, reclamation provisions and deferred income and mining tax liabilities.

The fair values of mineral properties, low grade stockpile and other property, plant and equipment have been determined based on an independent valuation, using a combination of market, income and cost methods. In particular, the fair values of the mineral properties and low grade stockpile have been calculated using significant judgements and estimates.

Trade receivables acquired as part of the acquisition have a fair value of $8,764 which is equal to their gross contractual value. Other receivables acquired have a fair value of $10,346 million which is equal to their gross contractual value. Trade and other receivables are expected to be collected during the next 12 months.

Hudbay provided advances to Copper Mountain prior to the acquisition date, which have been recorded as a purchaser loan.

Hudbay recognized goodwill as a result of the acquisition as follows:


Total consideration transferred	$	440,481
Non-controlling interest		106,976
Less: value of net identifiable assets acquired		(480,888	)
Goodwill upon acquisition at June 20, 2023	$	66,569

The goodwill balance arose from the requirement to record deferred income tax liabilities measured at the tax effect of the difference between the fair values of the assets acquired and liabilities assumed and their tax bases. None of the goodwill recognized is expected to be deductible for income tax purposes.

HUDBAY MINERALS INC.

Notes to Unaudited Condensed Consolidated Interim Financial Statements
(in thousands of US dollars, except where otherwise noted)
For the three and six months ended June 30, 2023 and 2022

The results of operations have been consolidated with those of the Company from the date of acquisition and included in the British Columbia operating segment, however, second quarter 2023 loss was not materially affected as Copper Mountain had no revenues or corresponding cost of sales recorded during the 10 day stub period from the date of acquisition to the end of the second quarter. Had the business combination been effected at January 1, 2023, revenue and net loss contributed from the acquisition of Copper Mountain for the six months ended June 30, 2023, would have been $132,227 and a loss of $40,260, respectively.

6. Revenue and expenses

(a) Revenue

Hudbay's revenue by significant product types:

		Three months ended June 30,						Six months ended June 30,
		2023			2022			2023			2022
Copper	$	205,719		$	230,752		$	369,961		$	439,741
Zinc		20,248			88,741			40,090			155,167
Gold		75,889			90,318			150,815			157,870
Silver		7,241			8,906			13,542			15,527
Molybdenum		16,845			8,999			35,807			18,193
Other		-			1,980			239			4,417
Revenue from contracts		325,942			429,696			610,454			790,915
Non-cash streaming arrangement items ¹
Amortization of deferred revenue - gold		7,882			9,960			13,274			23,162
Amortization of deferred revenue - silver		10,293			9,231			15,873			21,003
Amortization of deferred revenue - variable consideration adjustments - prior periods		-			-			4,885			3,245
		18,175			19,191			34,032			47,410
Pricing and volume adjustments ²		(5,281	)		(18,400	)		8,064			(17,136	)
		338,836			430,487			652,550			821,189
Treatment and refining charges		(26,670	)		(15,033	)		(45,165	)		(27,116	)
	$	312,166		$	415,454		$	607,385		$	794,073

¹See note 17.

²Pricing and volume adjustments represent mark-to-market adjustments on initial estimate of provisionally priced sales, realized and unrealized changes to fair value of non-hedge derivative contracts and adjustments to originally invoiced weights and assays.

HUDBAY MINERALS INC.

Notes to Unaudited Condensed Consolidated Interim Financial Statements
(in thousands of US dollars, except where otherwise noted)
For the three and six months ended June 30, 2023 and 2022

Consideration from the Company's stream agreements is considered variable (note 17). Gold and silver stream revenue can be subject to cumulative adjustments when the amount of precious metals to be delivered under the contract changes. As a result of changes in the Company's mineral reserve and resource estimate in the first quarter of 2023, the amortization rate by which deferred revenue is drawn down into income was adjusted and, as required, a variable consideration adjustment was made for all prior year stream revenues since the stream agreement inception date. This variable consideration adjustment resulted in an increase of revenue of $4,885 for the six months ended June 30, 2023 (June 30, 2022 - increase of revenue of $3,245).

(b) Depreciation and amortization

Depreciation of PP&E and amortization of intangible assets are reflected in the condensed consolidated interim income statements as follows:

		Three months ended June 30,				Six months ended June 30,
		2023		2022		2023		2022
Cost of sales	$	88,670	$	87,305	$	156,092	$	168,396
Selling and administrative expenses		317		343		647		785
	$	88,987	$	87,648	$	156,739	$	169,181

(c) Other expenses (income)

		Three months ended June 30,					Six months ended June 30,
		2023		2022			2023			2022
Regional costs	$	1,003	$	858		$	2,072		$	2,077
Loss (gain) on disposal of PP&E		821		(199	)		890			(731	)
Amortization of community costs (other assets)		354		695			694			1,257
Copper Mountain related acquisition costs (note 5)		6,752		-			6,752			-
Restructuring - Manitoba		-		3,662			-			4,410
Care & maintenance - Manitoba		4,612		-			8,607			-
Evaluation costs		16		716			107			7,752
Insurance recovery		-		(5,698	)		-			(5,698	)
Other		336		(1,337	)		(269	)		(1,322	)
	$	13,894	$	(1,303	)	$	18,853		$	7,745

The Flin Flon concentrator and tailings impoundment has been shifted to care and maintenance to provide optionality should another mineral discovery occur in the Flin Flon area. During the three and six months ended June 30, 2023, care & maintenance costs were $4,612 and $8,607, respectively.

During the first half of 2022, there were costs incurred related to the restructuring of the Manitoba operations in preparation for the closure of 777 mine of $4,410. These costs were related to activities performed in advance of the mine's expected closure in June 2022.

In June 2022, a gain of $5,698 was recorded to reflect the insurance recovery claim proceeds following a shaft incident at 777 in October 2020. The proceeds were received during the second half of 2022.

HUDBAY MINERALS INC.

Notes to Unaudited Condensed Consolidated Interim Financial Statements
(in thousands of US dollars, except where otherwise noted)
For the three and six months ended June 30, 2023 and 2022

(d) Net finance expense

		Three months ended June 30,						Six months ended June 30,
		2023			2022			2023			2022
Net interest expense on long-term debt
Net interest expense on long-term debt	$	17,800		$	16,911		$	34,807		$	33,809
Accretion on streaming arrangements (note 17)
Additions		6,596			7,357			13,193			14,720
Variable consideration adjustments - prior periods		-			-			(96	)		(2,527	)
		6,596			7,357			13,097			12,193
Change in fair value of financial assets and liabilities at fair value through profit or loss
Gold prepayment liability (note 14)		(1,130	)		(7,043	)		4,967			2,065
Investments		1,043			625			543			(1,267	)
		(87	)		(6,418	)		5,510			798
Other net finance costs
Net foreign exchange loss (gain)		1,438			(2,227	)		1,744			(721	)
Accretion on community agreements measured at amortized cost		791			562			1,554			1,172
Accretion on environmental provisions		2,214			1,997			4,618			3,889
Accretion on Wheaton refund liability		139			125			278			247
Withholding taxes		1,576			1,457			2,981			3,020
Loss on disposal of investments		-			3,132			652			3,132
Other finance expense		1,635			1,819			3,365			4,022
Interest income		(1,599	)		(288	)		(3,127	)		(390	)
		6,194			6,577			12,065			14,371
Net finance expense	$	30,503		$	24,427		$	65,479		$	61,171

Other finance expense relates primarily to standby fees on Hudbay's revolving credit facilities and leases.

(e) Impairment loss

As a result of the Copper World Complex preliminary economic assessment released in June 2022, which contemplates the mining of the Copper World deposits and the Rosemont deposit in a two-phase mine plan, it was determined that certain capitalized costs and assets associated with the previous stand-alone development plan for the Rosemont deposit are no longer recoverable. As a result, during the second quarter of 2022, the Company recognized a pre-tax impairment loss of $94,956 related to these assets. The impairment loss was determined based on the specific identification of assets that are not expected to be recoverable under the Copper World Complex PEA. The Company presented the impairment losses within the Arizona segment in note 25. The fair value measurements used in the determination of impairment charges are categorized as level 2 based on the degree to which inputs are observable and have a significant effect on the recorded fair value.

HUDBAY MINERALS INC.

Notes to Unaudited Condensed Consolidated Interim Financial Statements
(in thousands of US dollars, except where otherwise noted)
For the three and six months ended June 30, 2023 and 2022

7. Trade and other receivables

		Jun. 30, 2023		Dec. 31, 2022
Current
Trade receivables	$	46,880	$	84,096
Statutory receivables		26,894		25,544
Other receivables		15,770		3,542
		89,544		113,182
Non-current
Taxes receivable		13,812		13,329
	$	103,356	$	126,511

8. Inventories

		Jun. 30, 2023		Dec. 31, 2022
Current
Stockpile	$	54,873	$	26,235
Finished goods		81,659		68,029
Materials and supplies		83,949		60,748
		220,481		155,012
Non-current
Stockpile		25,847		42,785
Low grade stockpile¹		6,000		-
Materials and supplies		9,116		7,940
		40,963		50,725
	$	261,444	$	205,737

¹Stockpile of inventory that is not expected to be processed until the end of the Copper Mountain mine life.

The cost of inventories recognized as an expense, including depreciation, and included in cost of sales amounted to $265,555 and $470,465 for the three and six months ended June 30, 2023 (three and six months ended June 30, 2022 - $287,272 and $549,448).

During the three and six months ended June 30, 2023, Hudbay recognized an expense of $906 in cost of sales related to adjustments of the carrying value of certain long term inventory supplies (three and six months June 30, 2022 - $1,933 and $1,472).

HUDBAY MINERALS INC.

Notes to Unaudited Condensed Consolidated Interim Financial Statements
(in thousands of US dollars, except where otherwise noted)
For the three and six months ended June 30, 2023 and 2022

9. Other financial assets

		Jun. 30, 2023		Dec. 31, 2022
Current
Derivative assets	$	14,618	$	577
Reclamation bonds		644		-
Restricted cash		7,146		486
		22,408		1,063

Non-current
Investments at fair value through profit or loss		8,785		9,799
Reclamation bonds		1,369		-
		10,154		9,799
	$	32,562	$	10,862

The increase in derivative assets is the result of unrealized gains in copper and zinc fixed for floating swaps and costless copper collars following a decline in base metal prices during the second quarter of 2023. See note 22b.

Restricted cash is primarily related to a debt service reserve account used to satisfy the $5.0 million semi-annual principal installment and interest payments under the Bonds (note 16).

The Company has $2,013 in reclamation bonds with the Government of British Columbia in support of reclamation liabilities at the Copper Mountain mine site. The Company receives interest on these bonds.

10. Intangibles and other assets

Intangibles and other assets of $47,042 (December 31, 2022 - $49,841) includes $42,861 of other assets (December 31, 2022 - $45,074) and $4,181 of intangibles (December 31, 2022 - $4,767).

Other assets represent the carrying value of certain future community costs that relate to agreements with communities near the Peru operations which allow Hudbay to extract or explore minerals over the useful life of Peru operations. The liability remaining for these costs is recorded in agreements with communities recorded at amortized cost (note 13). Amortization of the carrying amount is recorded in the condensed consolidated interim income statements within other expenses (note 6c) or exploration expenses, depending on the nature of the agreement.

Intangibles mainly represent computer software costs.

HUDBAY MINERALS INC.

Notes to Unaudited Condensed Consolidated Interim Financial Statements
(in thousands of US dollars, except where otherwise noted)
For the three and six months ended June 30, 2023 and 2022

11. Property, plant and equipment

Jun. 30, 2023		Cost		Accumulated depreciation and amortization			Carrying amount
Exploration and evaluation assets	$	77,338	$	-		$	77,338
Capital works in progress		832,040		-			832,040
Mining properties		2,529,164		(1,065,790	)		1,463,374
Plant and equipment		3,403,395		(1,505,219	)		1,898,176
Plant and equipment-ROU Assets¹		257,494		(143,371	)		114,123
	$	7,099,431	$	(2,714,380	)	$	4,385,051

Dec. 31, 2022		Cost		Accumulated depreciation and amortization			Carrying amount
Exploration and evaluation assets	$	75,981	$	-		$	75,981
Capital works in progress		778,851		-			778,851
Mining properties		1,952,814		(891,803	)		1,061,011
Plant and equipment		2,742,617		(1,181,209	)		1,561,408
Plant and equipment - ROU Assets¹		202,437		(127,258	)		75,179
	$	5,752,700	$	(2,200,270	)	$	3,552,430

¹Includes $5,493 of capital works in progress - ROU assets (cost) that relate to the Arizona segment (December 31, 2022 - $5,413 related to the Arizona segment).

An indicator of impairment was identified in the three months ended March 31, 2023 as a result of an updated life of mine ("LOM") plan for Peru, which included updated costs reflecting recently experienced inflationary pressures. As such, management determined that a detailed impairment evaluation as at March 31, 2023 was required for the Peru CGU.

For the impairment test completed at March 31, 2023, Fair Value Less Cost of Disposal, ("FVLCD") was used to determine the recoverable amount since it is higher than value in use. FVLCD was calculated using discounted after-tax cash flows based on cash flow projections and assumptions in Hudbay's most current LOM. The fair value measurement in its entirety is categorized as Level 3 based on the degree to which fair value inputs are observable and have a significant effect on the recorded fair value.

LOM plans are based on optimized mine and processing plans and the assessment of capital expenditure requirements of a mine site. LOM plans incorporate management's best estimates of key assumptions which are discount rates, future commodity prices, production based on current estimates of recoverable reserves, future operating and capital costs, value of mineral resources not included in the LOM plan and future foreign exchange rates. The cash flows are for periods up to the date that production is expected to cease, which is 16 years for the Peru CGU.

The discount rate was based on the CGU's weighted average cost of capital, of which the two main components are the cost of equity and the after-tax cost of debt. Cost of equity was calculated based on the capital asset pricing model, incorporating the risk-free rate of return based on the US Government's marketable bond yields as at the valuation date, the Company's beta coefficient adjustment to the market equity risk premium based on the volatility of the Company's return in relation to that of a comparable market portfolio, plus a country risk premium, size premium and company-specific risk factor. Cost of debt was determined by applying an appropriate market indication of the Company's borrowing capabilities and the corporate income tax rate applicable to the segment's jurisdiction. A real discount rate of 7.00% for the Peru CGU was used to calculate the estimated after- tax discounted future net cash flows, commensurate with its individual estimated level of risk.

HUDBAY MINERALS INC.

Notes to Unaudited Condensed Consolidated Interim Financial Statements
(in thousands of US dollars, except where otherwise noted)
For the three and six months ended June 30, 2023 and 2022

Commodity prices used in the impairment assessment were determined by reference to external market participant sources. The key commodity price for this assessment is the price of copper. Where applicable to each of the Group's CGUs, the cash flow calculations were based on estimates of future production levels applying forecasts for metal prices, which included forecasts for each year from 2023 to 2027 and long-term forecasts for years beginning in 2028. The cash flow calculations utilized a copper price of $3.75/lb starting in 2023. The cash flow calculations utilized a long-term copper price of $3.75/lb, and capital, operating and reclamation costs based on the most current LOM plans. A value of $210,000 was utilized to estimate the value of mineral resources not included in the LOM plan.

Expected future cash flows used to determine the FVLCD used in the impairment testing are inherently uncertain and could materially change over time. Should management's estimate of the future not reflect actual events, impairments may be identified. This may have a material effect on the Company's financial statements. Although it is reasonably possible for a change in key assumptions to occur, the possible effects of a change in any single assumption may not fairly reflect the impact on a CGU's fair value as the assumptions are inextricably linked. For example, a decrease in the assumed price of long-term copper could result in amendments to the mine plans which would partially offset the effect of lower prices. It is difficult to determine how all of these factors would interrelate; however, in deriving a recoverable amount, management believes all of these factors need to be considered. As of March 31, 2023, a reasonably possible change in one of the key assumptions, all else being equal, may cause the carrying value to exceed the recoverable amount.

Management determined that the fair value less cost to dispose exceeded the carrying value of the Peru CGU, accordingly no impairment was recorded.

12. Other liabilities

		Jun. 30, 2023		Dec. 31, 2022

Advances from customers	$	-	$	15,086
Environmental and other provisions (note 18)		20,126		24,091
Pension liability		4,053		4,146
Other employee benefits		3,528		3,483
	$	27,707	$	46,806

HUDBAY MINERALS INC.

Notes to Unaudited Condensed Consolidated Interim Financial Statements
(in thousands of US dollars, except where otherwise noted)
For the three and six months ended June 30, 2023 and 2022

13. Other financial liabilities

		Jun. 30, 2023		Dec. 31, 2022
Current
Derivative liabilities	$	325	$	17,995
Deferred Rosemont acquisition consideration		5,000		9,713
Agreements with communities recorded at amortized cost		7,138		5,593
		12,463		33,301

Non-current
Deferred Rosemont acquisition consideration		9,434		9,163
Agreements with communities recorded at amortized cost		37,034		36,900
Wheaton refund liability (note 17)		6,462		6,383
		52,930		52,446
	$	65,393	$	85,747

Agreements with communities recorded at amortized cost relate to agreements with communities near the Constancia operation which allow Hudbay to extract minerals over the useful life of the Constancia operation, carry out exploration and evaluation activities in the area and provide Hudbay with community support to operate in the region.

14. Gold prepayment liability

Gold prepayment liabilities are reflected in the condensed consolidated interim balance sheets as follows:

		Jun. 30, 2023		Dec. 31, 2022
Current	$	57,107	$	71,208
Non-current		12,828		-
	$	69,935	$	71,208

The following table summarizes changes in the gold prepayment liability:

Balance, January 1, 2022	$	140,008
Change in fair value recorded in profit or loss		3,426
Change in fair value recorded in other comprehensive income		(512	)
Repayments		(71,714	)
Balance, December 31, 2022	$	71,208
Change in fair value recorded in income statement (note 6d)		4,967
Change in fair value recorded in other comprehensive income		188
Repayments		(6,428	)
Balance, June 30, 2023	$	69,935

During the first quarter of 2023, Hudbay renegotiated its agreements with various financial institutions and deferred eight months of scheduled gold deliveries. Deliveries of the outstanding 37,500 gold ounces under the new agreements will resume in monthly amounts starting in October 2023 until August 2024.

HUDBAY MINERALS INC.

Notes to Unaudited Condensed Consolidated Interim Financial Statements
(in thousands of US dollars, except where otherwise noted)
For the three and six months ended June 30, 2023 and 2022

15. Lease liability

Balance, January 1, 2022	$	78,002
Additional capitalized leases		27,984
Lease payments		(35,770	)
Derecognized leases		(8,918	)
Accretion and other movements		(279	)
Balance, December 31, 2022	$	61,019
Acquired through the acquisition of Copper Mountain (note 5)		44,166
Additional capitalized leases		4,708
Lease payments		(10,431	)
Accretion and other movements		782
Balance, June 30, 2023	$	100,244

Lease liabilities are reflected in the condensed consolidated interim balance sheets as follows:

		Jun. 30, 2023		Dec. 31, 2022
Current	$	30,915	$	16,156
Non-current		69,329		44,863
	$	100,244	$	61,019

Hudbay has entered into leases which expire between 2023 and 2037. The interest rates on leases which were capitalized have interest rates between 2.39% and 8.49%, per annum. The range of interest rates utilized for discounting varies depending mostly on the Hudbay entity acting as lessee and duration of the lease. For certain leases, Hudbay has the option to purchase the equipment and vehicles leased at the end of the terms of the leases. Hudbay's obligations under these leases are secured by the lessor's title to the leased assets. The present value of applicable lease payments has been recognized as an ROU asset, which was included as a non-cash addition to property, plant and equipment, and a corresponding amount as a lease liability.

There are no restrictions placed on Hudbay by entering into these leases.

The following outlines expenses recognized within the Company's condensed consolidated interim income statements, relating to leases for which a recognition exemption was applied.

		Three months ended June 30, 2023				Six months ended June 30, 2023
		2023		2022		2023		2022
Short-term leases	$	1,170	$	9,510	$	2,345	$	21,280
Low value leases		137		244		249		448
Variable leases		4,820		7,619		11,214		18,056
Total	$	6,127	$	17,373	$	13,808	$	39,784

Payments made for short-term, low value and variable leases would mostly be captured as expenses in the condensed consolidated interim income statements, however, certain amounts may be capitalized to PP&E for the Arizona segment during its development phase and certain amounts may be reported in inventories given the timing of sales. Variable payment leases include equipment used for heavy civil works at Constancia.

HUDBAY MINERALS INC.

Notes to Unaudited Condensed Consolidated Interim Financial Statements
(in thousands of US dollars, except where otherwise noted)
For the three and six months ended June 30, 2023 and 2022

16. Long-term debt

Long-term debt is comprised of the following:

		Jun. 30, 2023			Dec. 31, 2022
Senior unsecured notes (a)	$	1,189,342		$	1,188,132
Senior secured revolving credit facilities (b)		36,359			(3,970	)
Copper Mountain Bonds (c)		144,981			-
		1,370,682			1,184,162
Less: current portion		(144,981	)		-
	$	1,225,701		$	1,184,162

(a) Senior unsecured notes

Balance, January 1, 2022	$	1,185,805
Accretion of transaction costs and premiums		2,327
Balance, December 31, 2022	$	1,188,132
Accretion of transaction costs and premiums		1,210
Balance, June 30, 2023	$	1,189,342

As at June 30, 2023, $1,200,000 aggregate principal amount of senior notes were outstanding in two series: (i) a series of 4.50% senior notes due 2026 in an aggregate principal amount of $600,000 and (ii) a series of 6.125% senior notes due 2029 in an aggregate principal amount of $600,000.

The senior notes are guaranteed on a senior unsecured basis by substantially all of the Company's subsidiaries, other than HudBay (BVI) Inc. and certain excluded or unrestricted subsidiaries, which include the Company's subsidiaries that own an interest in the Copper Mountain mine, Copper World and Mason projects and any newly formed or acquired subsidiaries that primarily hold or may develop non-producing mineral assets that are in the pre-construction phase of development. Hudbay's revolving credit facilities are secured against substantially all of the Company's assets, other than those associated with the Copper Mountain mine and the Arizona business unit.

HUDBAY MINERALS INC.

Notes to Unaudited Condensed Consolidated Interim Financial Statements
(in thousands of US dollars, except where otherwise noted)
For the three and six months ended June 30, 2023 and 2022

(b) Senior secured revolving credit facilities

Balance, January 1, 2022	$	(5,531	)
Accretion of transaction costs		1,761
Transaction costs		(200	)
Balance, December 31, 2022 ¹	$	(3,970	)
Proceeds from drawdown		40,000
Accretion of transaction costs		714
Transaction costs		(385	)
Balance, June 30, 2023	$	36,359
¹ Balance, representing deferred transaction costs, is in an asset position.

During the first quarter of 2023, Hudbay drew $40,000 under its Canadian revolving credit facility, which remains outstanding as of June 30, 2023.

The Company may repay any borrowings under the revolving credit facility at any time without premium or penalty.

In connection with the Copper Mountain Transaction, our revolving credit facilities ("RCFs") were amended to allow Hudbay to designate the Copper Mountain Group of companies as Unrestricted Subsidiaries under the RCFs so that the debt, cash, interest and EBITDA are excluded from ratio calculations and the assets excluded from the RCF security package until the Copper Mountain bonds are repaid in full. In addition, the Net Debt to EBITDA covenant ratio was increased from 4:1 to 4.5:1 for the periods ending June 30 and September 30, 2023, to provide greater financial flexibility during the business integration period.

As at June 30, 2023, the Peru segment had nil in letters of credit issued under the Peru revolving credit facility to support its reclamation obligations and the Manitoba segment had $26,116 in letters of credit issued under the Canadian revolving credit facility to support its reclamation and pension obligations.

Surety bonds

The Arizona segment had $12,835 in surety bonds issued to support future reclamation and closure obligations. No cash collateral is required to be posted under these surety bonds.

The British Columbia segment had $15,909 in surety bonds issued to support future reclamation and closure obligations. There is also a financial guarantee bond for $3,875 with BC Hydro in relation to the BC Hydro transmission system at the Copper Mountain Mine. No cash collateral is required to be posted under these surety bonds.

HUDBAY MINERALS INC.

Notes to Unaudited Condensed Consolidated Interim Financial Statements
(in thousands of US dollars, except where otherwise noted)
For the three and six months ended June 30, 2023 and 2022

Other letters of credit

The Peru segment had $118,049 in letters of credit issued with various Peruvian financial institutions to support future reclamation and other operating matters. No cash collateral is required to be posted under these letters of credit.

On August 22, 2022, Hudbay closed a C$130.0 million bilateral letter of credit facility ("LC Facility") with a major Canadian financial institution. As at June 30, 2023, the Manitoba segment had $58,023 in letters of credit issued under the LC Facility to support its reclamation and pension obligations.

(c) Copper Mountain Bonds

On April 9, 2021 Copper Mountain completed an offering of $250,000 of secured bonds ("the Bonds"). The Bonds mature on April 9, 2026 and bear interest at an annual rate of 8.0%, payable semi-annually on April 9 and October 9. Semi-annual principal installments in the amount of $5 million are payable on each interest payment date. As at June 30, 2023, the Company had $3,669 on deposit in a debt service account to satisfy the upcoming semi-annual principal installment and interest payment. The debt service account balance is presented as restricted cash within our condensed consolidated interim balance sheet.

The Bonds are secured by a general security agreement on the assets of Copper Mountain and a pledge of Copper Mountain's equity interest in the Copper Mountain mine, but do not benefit from any credit support from Hudbay or its other subsidiaries. The Company may redeem all or part of the principal amount of the outstanding Bonds at any time from October 2023, at redemption prices ranging from 104% to 100%, plus accrued and unpaid interest to the date of redemption. The prepayment options are not closely related to the host debt instrument and are separately accounted for as embedded derivatives. As at June 30, 2023, the value of the prepayment options was nil.

The Bonds also provide the bondholders with the right to put all or part of the principal amount of the outstanding Bonds to Copper Mountain at a price of 101%, plus accrued interest, following a change of control event. With the acquisition of Copper Mountain on June 20, 2023, the change of control event was triggered and all outstanding Bonds were available to be put to Copper Mountain within a predefined period of time immediately following the acquisition date. The Bonds are presented on the condensed consolidated interim balance sheet as the current portion of long-term debt as at June 30, 2023.

The change in control put option expired on July 17, 2023, at which time, $83,307 of the Bonds were put to Copper Mountain (note 26).

As at June 30, 2023, the Bonds have a principal amount outstanding of $143,000. Upon acquisition, the debt is recorded at its fair value as required as part of the accounting for the business combination with Copper Mountain. This fair value adjustment amortizes down to its historical cost over the duration of the facility (note 5).

The Bonds require the Copper Mountain to maintain: (a) a minimum cash amount of $10 million, on a subsidiary level, subject to the liquidity covenant step-up, as defined below; and (b) a minimum cash amount of CA$10 million at the Copper Mountain mine. The liquidity covenant step-up is defined as: in case that at the end of the quarter, the leverage ratio (defined as net debt to trailing twelve months adjusted EBITDA) exceeds 4.0:1.0, Copper Mountain shall maintain a minimum cash balance of an amount equal to (i) $25 million less (ii) an amount equal to the amount deposited in the debt service account. Cash held by Copper Mountain, in the amount of $28,883, with respect to these covenants can only be utilized for the business activities of Copper Mountain.

As at June 30, 2023, Hudbay is in compliance with our financial covenants under the Bonds.

HUDBAY MINERALS INC.

Notes to Unaudited Condensed Consolidated Interim Financial Statements
(in thousands of US dollars, except where otherwise noted)
For the three and six months ended June 30, 2023 and 2022

17. Deferred revenue

Peru Stream Agreement

For the three and six months ended June 30, 2023, the drawdown rates for the Peru stream agreement for gold and silver were $820 and $15.26 per ounce, respectively (year ended December 31, 2022 - $734 and $14.95 per ounce, respectively).

777 Stream Agreement

As of September 30, 2022 all of 777's precious metals reserves and inventory levels have been depleted and we expect no further drawdown of deferred revenue.

As part of the streaming agreement for the 777 mine, Hudbay must repay, with precious metals credits, the stream deposit by August 1, 2052, the expiry date of the agreement. If the stream deposit is not fully repaid with precious metals credits from 777 production by the expiry date, a payment for the remaining amount will be due at the expiry date of the agreement. As the 777 mine has concluded all mining activities following the depletion of reserves and finalized the sales of produced concentrate, Hudbay concluded that the remaining stream deposit will not be repaid by means of precious metals credits from 777 production. The repayment amount is recorded as a Wheaton refund liability (note 13), which is and will be discounted at the 9.0% rate inherent in the original 777 stream agreement and accreted over the remaining term of the agreement.

The following table summarizes changes in deferred revenue:

Balance, January 1, 2022	$	515,326
Amortization of deferred revenue
Liability drawdown		(72,229	)
Variable consideration adjustments - prior periods		(959	)
Accretion on streaming arrangements
Current year additions		28,718
Variable consideration adjustments - prior periods		(940	)
Effects of changes in foreign exchange		(378	)
Balance, December 31, 2022	$	469,538
Amortization of deferred revenue (note 6a)
Liability drawdown		(29,147	)
Variable consideration adjustments - prior periods		(4,885	)
Accretion on streaming arrangements (note 6d)
Current year-to-date additions		13,193
Variable consideration adjustments - prior periods		(96	)
Balance, June 30, 2023	$	448,603

Consideration from the Company's stream agreement is considered variable. Gold and silver stream revenue can be subject to cumulative adjustments when the number of ounces to be delivered under the contract changes. As a result of changes in the Company's mineral reserve and resource estimate in the first quarter of 2023 the amortization rate by which deferred revenue is drawn down into income was adjusted and, as required, a current period variable adjustment was made for all prior period stream revenues since the stream agreement inception date. This variable consideration adjustment resulted in an increase in revenue of $4,885 and a decrease of finance expense of $96 for the six months ended June 30, 2023 (December 31, 2022 - increase in revenue of $959 and a decrease of finance expense of $940).

HUDBAY MINERALS INC.

Notes to Unaudited Condensed Consolidated Interim Financial Statements
(in thousands of US dollars, except where otherwise noted)
For the three and six months ended June 30, 2023 and 2022

Deferred revenue is reflected in the condensed consolidated interim balance sheets as follows:

		Jun. 30, 2023		Dec. 31, 2022
Current	$	88,460	$	64,658
Non-current		360,143		404,880
	$	448,603	$	469,538

18. Environmental and other provisions

Reflected in the condensed consolidated interim balance sheets as follows:

Jun. 30, 2023		Decommissioning, restoration and similar liabilities		Deferred share units		Restricted share units		Performance share units		Other ¹		Total
Current (note 12)	$	5,236	$	7,016	$	1,471	$	916	$	5,487	$	20,126
Non-current		306,171		-		1,593		923		3,444		312,131
	$	311,407	$	7,016	$	3,064	$	1,839	$	8,931	$	332,257

Dec. 31, 2022		Decommissioning, restoration and similar liabilities		Deferred share units		Restricted share units		Performance share units		Other ¹		Total
Current (note 12)	$	4,162	$	6,872	$	4,836	$	1,736	$	6,485	$	24,091
Non-current		272,240		-		2,019		1,253		3,728		279,240
	$	276,402	$	6,872	$	6,855	$	2,989	$	10,213	$	303,331
¹ Relates primarily to restructuring costs and other non-capital provisions.

DRO are remeasured at each reporting date to reflect changes in discount rates, exchange rates, and timing and extent of cash outflows which can significantly affect the liabilities. This provision has been recorded based on estimates and assumptions that management believes are reasonable; however, actual decommissioning and restoration costs may differ from expectations.

During the six months ended June 30, 2023, the Company recorded a non-cash gain of $12,932 in the condensed consolidated interim income statements mainly related to a revaluation adjustment to the Flin Flon operation's environmental reclamation provision. The first half of 2023 was impacted by a decrease in implied inflation rates, partially offset by decreases in long term, risk-free discount rates based on changes in Canadian bond yields. Typically, an operating location will reflect any revaluation adjustments to the environmental reclamation provision against its reclamation assets. However, as the Flin Flon operations closed in June 2022, the corresponding Flin Flon assets have been fully depreciated and cannot be reduced below residual value resulting in the remaining impact being recorded as a gain in the condensed consolidated interim income statements.

As at June 30, 2023, decommissioning, restoration and similar liabilities have been discounted to their present value at rates ranging from 3.12% to 5.31% per annum (December 31, 2022 - 3.26% to 4.75%), using pre-tax, risk-free interest rates that reflect the estimated maturity of each specific liability.

During the second quarter of 2022, the Company recorded a non-cash gain of $140,533 in the condensed consolidated interim income statements mainly related to a revaluation adjustment to the Flin Flon operation's environmental reclamation provision. The first half of 2022 revaluation was substantially impacted by an increase in long term, risk-free discount rates based on changes in Canadian bond yields.

HUDBAY MINERALS INC.

Notes to Unaudited Condensed Consolidated Interim Financial Statements
(in thousands of US dollars, except where otherwise noted)
For the three and six months ended June 30, 2023 and 2022

19. Income and mining taxes

The tax expense is applicable as follows:

		Three months ended June 30,						Six months ended June 30,
		2023			2022			2023			2022
Current:
Income tax (recoveries) expense	$	(1,089	)	$	7,477		$	9,676		$	12,954
Mining tax expense		425			3,220			6,782			8,198
Adjustments in respect of prior years		69			-			69			-
		(595	)		10,697			16,527			21,152
Deferred:
Income tax recoveries - origination, revaluation and/or reversal of temporary differences		(14,998	)		(21,463	)		(18,720	)		(11,862	)
Mining tax (recoveries) expense - origination, revaluation and/or reversal of temporary difference		(70	)		127			(2,069	)		5,117
Adjustments in respect of prior years		(136	)		-			436			-
		(15,204	)		(21,336	)		(20,353	)		(6,745	)
	$	(15,799	)	$	(10,639	)	$	(3,826	)	$	14,407

Adjustments in respect of prior years refers to amounts changing due to the filing of tax returns and assessments from government authorities as well as any change identified that would result in a difference to our current or deferred tax balances as reported in the prior fiscal year end.

HUDBAY MINERALS INC.

Notes to Unaudited Condensed Consolidated Interim Financial Statements
(in thousands of US dollars, except where otherwise noted)
For the three and six months ended June 30, 2023 and 2022

20. Share capital

(a) Preference shares:

Authorized: Unlimited preference shares without par value.

Issued and fully paid: Nil.

(b) Common shares:

Authorized: Unlimited common shares without par value.

Issued and fully paid:

	Six months ended Jun. 30, 2023			Year ended Dec. 31, 2022
	Common shares		Amount	Common shares		Amount
Balance, beginning of year	262,019,857	$	1,780,774	261,598,312	$	1,778,848
Exercise of options	38,558		165	421,545		1,926
Shares issued on acquisition of Copper Mountain, net of share issuance costs (note 5)	84,165,617		436,499	-		-
Balance, end of period	346,224,032	$	2,217,438	262,019,857	$	1,780,774

During the six months ended June 30, 2023, the Company declared a dividend of C$0.01 per share. The Company paid $1,908 in dividends on March 24, 2023 to shareholders of record as of March 7, 2023.

During the year ended December 31, 2022, the Company declared two semi-annual dividends of C$0.01 per share. The Company paid $2,075 and $1,972 in dividends on March 25, 2022 and September 23, 2022 to shareholders of record as of March 8, 2022 and September 2, 2022.

HUDBAY MINERALS INC.

Notes to Unaudited Condensed Consolidated Interim Financial Statements
(in thousands of US dollars, except where otherwise noted)
For the three and six months ended June 30, 2023 and 2022

(c) Equity-settled share-based compensation - stock options:

The Company's stock option plan was approved in June 2005 and amended in May 2008 (the "Plan"). Under the amended Plan, the Company may grant to employees, officers, directors or consultants of the Company or its affiliates options to purchase up to a maximum of 13 million common shares of Hudbay. The Company has determined that the appropriate accounting treatment is to classify the stock options as equity settled transactions.

The following table outlines the changes in the number of stock options outstanding:

	Jun. 30, 2023				Dec. 31, 2022
	Number of shares subject to option			Weighted- average exercise price C$	Number of shares subject to option			Weighted average exercise price C$
Balance, beginning of year	1,528,760		$	7.38	1,659,288		$	5.71
Number of units granted	801,661		$	6.75	602,614		$	9.77
Exercised	(38,558	)	$	3.76	(421,545	)	$	3.80
Forfeited	(42,564	)	$	8.88	(311,597	)	$	7.94
Balance, end of period	2,249,299		$	7.19	1,528,760		$	7.38

No new options were granted during the second quarter of 2023.

The following table outlines stock options outstanding and exercisable:

Jun. 30, 2023
Range of exercise prices C$	Number of options outstanding	Weighted average remaining contractual life (years)		Weighted average exercise price C$	Number of options exercisable		Weighted average share price at exercise date C$
$3.76 - $4.82	600,113	3.7	$	3.76	600,113	$	3.76
$4.83 - $5.90	3,275	6.1	$	5.89	1,091	$	5.89
$5.91 - $6.75	796,421	6.7	$	6.75	-	$	-
$6.76 - $10.17	497,421	5.7	$	9.77	178,341	$	9.72
$10.18 - $10.42	352,069	4.7	$	10.42	234,926	$	10.42

Dec. 31, 2022
Range of exercise prices C$	Number of options outstanding	Weighted average remaining contractual life (years)		Weighted average exercise price C$	Number of options exercisable		Weighted average share price at exercise date C$
$3.76 - $3.92	644,983	4.2	$	3.76	264,553	$	3.76
$3.93 - $9.00	30,283	5.9	$	6.92	9,194	$	7.04
$9.01 - $9.92	487,005	6.2	$	9.92	-	$	-
$9.93 - $10.42	366,489	5.2	$	10.42	122,628	$	10.42

Hudbay estimates expected life of options and expected volatility based on historical data, which may differ from actual outcomes.

HUDBAY MINERALS INC.

Notes to Unaudited Condensed Consolidated Interim Financial Statements
(in thousands of US dollars, except where otherwise noted)
For the three and six months ended June 30, 2023 and 2022

21. Earnings per share

	Three months ended June 30,		Six months ended June 30,
	2023	2022	2023	2022
Weighted average common shares outstanding
Basic	272,228,447	261,887,203	267,157,797	261,788,780
Plus net incremental shares from:
Assumed conversion: stock options	-	363,792	-	468,823
Diluted weighted average common shares outstanding	272,228,447	262,250,995	267,157,797	262,257,603

For periods where Hudbay records a loss, Hudbay calculates diluted loss per share using the basic weighted average number of shares. If the diluted weighted average number of shares were used, the result would be a reduction in the loss, which would be anti-dilutive. For the three and six months ended June 30, 2023, Hudbay calculated diluted loss per share using 272,228,447 and 267,157,797 respectively (three and six months ended June 30, 2022 - 262,250,995 and 262,257,603).

For the three and six months ended June 30, 2023, the determination of the diluted weighted-average number of common shares excludes the impact of 257,941 and 274,398 weighted-average stock options outstanding that were anti-dilutive as the Company recorded a loss in the financial period.

HUDBAY MINERALS INC.

Notes to Unaudited Condensed Consolidated Interim Financial Statements
(in thousands of US dollars, except where otherwise noted)
For the three and six months ended June 30, 2023 and 2022

22. Financial instruments

(a) Fair value and carrying value of financial instruments:

The following presents the fair value ("FV") and carrying value ("CV") of Hudbay's financial instruments and non-financial derivatives:

		Jun. 30, 2023				Dec. 31, 2022
		FV		CV		FV		CV
Financial assets at amortized cost
Cash and cash equivalents¹	$	179,734	$	179,734	$	225,665	$	225,665
Reclamation bonds¹		2,013		2,013		-		-
Restricted cash¹		7,146		7,146		486		486
Fair value through profit or loss
Trade and other receivables ^1, ^{2, 3}		62,650		62,650		87,638		87,638
Non-hedge derivative assets ⁴		14,618		14,618		577		577
Investments ⁵		8,785		8,785		9,799		9,799
Total financial assets	$	274,946	$	274,946	$	324,165	$	324,165
Financial liabilities at amortized cost
Trade and other payables^1, ²		216,965		216,965		195,872		195,872
Deferred Rosemont acquisition consideration ⁸		14,434		14,434		18,876		18,876
Agreements with communities ⁶		39,557		44,172		35,870		42,493
Wheaton refund liability¹⁰		6,834		6,462		7,744		6,383
Senior unsecured notes ⁷		1,111,422		1,189,342		1,094,988		1,188,132
Senior secured revolving credit facilities¹²		36,359		36,359		-		-
Copper Mountain Bonds¹¹		144,981		144,981		-		-
Fair value through profit or loss
Gold prepayment liability ⁹		69,935		69,935		71,208		71,208
Non-hedge derivative liabilities ⁴		325		325		17,995		17,995
Total financial liabilities	$	1,640,812	$	1,722,975	$	1,442,553	$	1,540,959

¹Cash and cash equivalents, reclamation bonds, restricted cash, trade and other receivables and trade and other payables are recorded at carrying value, which approximates fair value due to their short-term nature and generally negligible credit losses.

²Excludes tax and other statutory amounts.

³ Trade and other receivables contain receivables including provisionally priced receivables classified as FVTPL and various other items at amortized cost. The fair value of provisionally priced receivables is determined using forward metals prices which is a level 2 valuation method.

⁴Derivatives are carried at their fair value, which is determined based on internal valuation models that reflect observable forward market commodity prices, currency exchange rates, and discount factors based on market US dollar interest rates adjusted for credit risk.

⁵All investments are carried at their fair value, which is determined using quoted market bid prices in active markets for listed shares.

⁶These financial liabilities relate to agreements with communities near the Constancia project in Peru (note 13). Fair values have been determined using a discounted cash flow analysis based on expected cash flows and a credit adjusted discount rate.

⁷Fair value of the senior unsecured notes (note 16) has been determined using the quoted market price at period end.

⁸Discounted value based on a risk adjusted discount rate.

⁹The gold prepayment liability (note 14) is designated as fair value through profit or loss under the fair value option. Gains and losses related to the Company's own credit risk have been recorded at fair value through other comprehensive income. The fair value adjustment recorded in other comprehensive income for the six months ended June 30, 2023 was a loss of $188 (year ended December 31, 2022 was a gain of $512).

¹⁰ Discounted value based on a market rate at inception of the applicable Wheaton contract for carrying value (note 17) and current market rate at period end for fair value.

¹¹Fair value of the bonds has been determined using the Hull-White model given the debt has a call feature.

¹²Fair value of the senior secured revolving credit facility is equal to its carrying value as the drawn interest rate under the facility is comparable to current market rates.

HUDBAY MINERALS INC.

Notes to Unaudited Condensed Consolidated Interim Financial Statements
(in thousands of US dollars, except where otherwise noted)
For the three and six months ended June 30, 2023 and 2022

Fair value hierarchy

The table below provides an analysis by valuation method of financial instruments that are measured at fair value subsequent to recognition as well as financial instruments not measured at fair value but for which a fair value is disclosed. Levels 1 to 3 are defined based on the degree to which fair value inputs are observable and have a significant effect on the recorded fair value, as follows:

-	Level 1:	Quoted prices in active markets for identical assets or liabilities;
-	Level 2:	Valuation techniques use significant observable inputs, either directly or indirectly, or valuations are based on quoted prices for similar instruments; and,
-	Level 3:	Valuation techniques use significant inputs that are not based on observable market data.

June 30, 2023		Level 1		Level 2		Level 3		Total
Financial assets measured at fair value
Financial assets at FVTPL:
Non-hedge derivatives	$	-	$	14,618	$	-	$	14,618
Investments		8,785		-		-		8,785
	$	8,785	$	14,618	$	-	$	23,403
Financial liabilities measured at fair value
Financial liabilities at FVTPL:
Non-hedge derivatives	$	-	$	325	$	-	$	325
Gold prepayment liability		-		69,935		-		69,935
Financial liabilities at amortized cost:
Agreements with communities		-		-		39,557		39,557
Wheaton refund liability		-		-		6,834		6,834
Senior secured revolving credit facilities		-		-		36,359		36,359
Senior unsecured notes		1,111,422		-		-		1,111,422
Copper Mountain Bonds		-		-		144,981		144,981
	$	1,111,422	$	70,260	$	227,731	$	1,409,413

December 31, 2022		Level 1		Level 2		Level 3		Total
Financial assets measured at fair value
Financial assets at FVTPL:
Non-hedge derivatives	$	-	$	577	$	-	$	577
Investments		9,799		-		-		9,799
	$	9,799	$	577	$	-	$	10,376
Financial liabilities measured at fair value
Financial liabilities at FVTPL:
Non-hedge derivatives	$	-	$	17,995	$	-	$	17,995
Gold prepayment liability		-		71,208		-		71,208
Financial liabilities at amortized cost:		-				-
Agreements with communities		-		-		35,870		35,870
Wheaton refund liability		-		-		7,744		7,744
Senior unsecured notes		1,094,988		-		-		1,094,988
	$	1,094,988	$	89,203	$	43,614	$	1,227,805

HUDBAY MINERALS INC.

Notes to Unaudited Condensed Consolidated Interim Financial Statements
(in thousands of US dollars, except where otherwise noted)
For the three and six months ended June 30, 2023 and 2022

The Company's policy is to recognize transfers into and transfers out of fair value hierarchy levels as of the date of the event or change in circumstances that caused the transfer. During the six months ended June 30, 2023 and year ended December 31, 2022, Hudbay did not make any such transfers.

Valuation techniques used for instruments categorized in Levels 2 and 3 are consistent with the year ended December 31, 2022, except as noted below.

The following additional valuation techniques are used for instruments categorized in Level 3:

- Copper Mountain Bonds (Level 3) - This liability has been fair valued using the Hull-White model given the debt has a call option feature.

- Senior secured revolving credit facilities (Level 3) - This liability has been fair valued using an applicable credit adjusted discount rate.

(b) Derivatives and hedging:

Copper fixed for floating swaps

Hudbay enters into copper fixed for floating swaps in order to manage the risk associated with provisional pricing terms in copper concentrate sales agreements. As at June 30, 2023, Hudbay had 54.0 million pounds of net copper swaps outstanding at an effective average price of $3.93/lb and settling from July to September 2023. As at December 31, 2022, Hudbay had 89.7 million pounds of net copper swaps outstanding at an effective average price of $3.61/lb and settling from January to May 2023. The aggregate fair value of the transactions at June 30, 2023 was an asset of $8,433 (December 31, 2022 - a liability position of $17,269).

Zinc fixed for floating swaps

Hudbay enters into zinc fixed for floating swaps in order to manage the risk associated with provisional pricing terms in zinc concentrate sales agreements. As at June 30, 2023, Hudbay had 18.0 million pounds of net zinc swaps outstanding at an effective average price of $1.16/lb and settling from July to September 2023. As at December 31, 2022, Hudbay had 17.5 million pounds of net zinc swaps outstanding at an effective average price of $1.32/lb and settling from January to March 2023. The aggregate fair value of the transactions at June 30, 2023 was an asset of $1,383 (December 31, 2022 - a liability position of $149).

Copper costless collars

Hudbay entered into a zero-cost collar program in April 2023 for approximately 10% of copper production expected in the second half of 2023. The program entails a hedge for 15.9 million pounds of copper for six months starting in July 2023 and establishes a floor price of $3.95 per pound and a cap price of $4.28 per pound. Gains and losses resulting from the settlement of these derivatives are recorded directly to revenue, as the forward sales contracts do not qualify for hedge accounting, and the associated cash flows are classified in operating activities. As at June 30, 2023, 15.9 million pounds of copper collars were unsettled (December 31, 2022 - nil). The aggregate fair value of the position at June 30, 2023 was an asset of $4,477 (December 31, 2022 - nil).

Transactions involving derivatives are with large multi-national financial institutions that Hudbay believes to be credit worthy.

HUDBAY MINERALS INC.

Notes to Unaudited Condensed Consolidated Interim Financial Statements
(in thousands of US dollars, except where otherwise noted)
For the three and six months ended June 30, 2023 and 2022

(c) Provisionally priced receivables

Changes in fair value of provisionally priced receivables

Hudbay records changes in fair value of provisionally priced receivables related to provisional pricing in concentrate purchase, concentrate sale and certain other sale contracts. Under the terms of these contracts, prices are subject to final adjustment at the end of a future period after title transfers based on quoted market prices during the quotation period specified in the contract. The period between provisional pricing and final pricing is typically up to three months.

Changes in fair value of provisionally priced receivables are presented in trade and other receivables when they relate to sales contracts and in trade and other payables when they relate to purchase contracts. At each reporting date, provisionally priced metals are marked-to-market based on the forward market price for the quotation period stipulated in the contract, with changes in fair value recognized in revenue for sales contracts and in inventory or cost of sales for purchase concentrate contracts. Cash flows related to changes in fair value of provisionally priced receivables are classified in operating activities.

As at June 30, 2023 and December 31, 2022, Hudbay's net position consisted of contracts awaiting final pricing are as indicated below:

Metal in

Sales awaiting final pricing

Average YTD price ($/unit)

concentrate

Unit

Jun. 30, 2023

Dec. 31, 2022

Jun. 30, 2023

Dec. 31, 2022

Copper

pounds
(in thousands)

81,582

79,833

3.77

3.80

Gold

troy ounces

29,009

22,079

1,925

1,823

Silver

troy ounces

226,352

71,809

22.85

23.91

Zinc

pounds
(in thousands)

18,917

18,145

1.08

1.35

The aggregate fair value of provisionally priced receivables within the copper and zinc concentrate at June 30, 2023, was a liability position of $9,236 (December 31, 2022 - an asset position of $20,285).

(d) Other financial liabilities

Gold prepayment liability

The gold prepayment liability (note 14) requires settlement by physical delivery of gold ounces or equivalent gold credits. The fair value of the financial liability at June 30, 2023 was a liability of $69,935 (December 31, 2022 - a liability of $71,208).

23. Commitments

Capital commitments

As at June 30, 2023, Hudbay had outstanding capital commitments in Manitoba of approximately $6,633 of which $4,213 can be terminated, approximately $28,276 in British Columbia, of which approximately $26,392 can be terminated, approximately $27,565 in Peru, all of which can be terminated, and approximately $42,661 in Arizona, primarily related to the Copper World Complex, of which approximately $7,180 can be terminated.

HUDBAY MINERALS INC.

Notes to Unaudited Condensed Consolidated Interim Financial Statements
(in thousands of US dollars, except where otherwise noted)
For the three and six months ended June 30, 2023 and 2022

24. Supplementary cash flow information

(a) Other cash generated from/(used in) operating activities:

		Three months ended June 30,						Six months ended June 30,
		2023			2022			2023			2022
Amortization of community agreements	$	1,624		$	904		$	3,234		$	1,466
Share based compensation paid		-			-			(5,817	)		(5,111	)
Share based compensation and change of control payments made upon acquisition of Copper Mountain		(6,743	)		-			(6,743	)		-
Insurance recovery (6 c)		-			(5,698	)		-			(5,698	)
Other		1,566			(66	)		913			(131	)
	$	(3,553	)	$	(4,860	)	$	(8,413	)	$	(9,474	)

(b) Change in non-cash working capital:

		Three months ended June 30,						Six months ended June 30,
		2023			2022			2023			2022
Change in:
Trade and other receivables	$	28,262		$	85,431		$	38,042		$	106,146
Other financial assets/liabilities		(21,249	)		(55,261	)		(31,780	)		(50,535	)
Inventories		14,868			(2,672	)		(4,422	)		(21,395	)
Prepaid expenses		7,006			1,198			7,772			885
Trade and other payables		(21,242	)		10,413			(40,176	)		(845	)
Provisions and other liabilities		(38,966	)		2,586			(15,086	)		(6,307	)
	$	(31,321	)	$	41,695		$	(45,650	)	$	27,949

(c) Non-cash transactions:

During the six months ended June 30, 2023 and 2022, Hudbay entered into the following non-cash investing and financing activities which are not reflected in the condensed consolidated interim statements of cash flows:

- Remeasurement of Hudbay's decommissioning and restoration liabilities led to a net increase in related property, plant and equipment assets of $27,151 (June 30, 2022 - a net decrease of $31,799), mainly related to changes to real discount rates associated with remeasurement of the liabilities.

- Property, plant and equipment included $4,708 (June 30, 2022 - $20,273) of capital additions related to the recognition of ROU assets. Property, plant and equipment and other assets include $2,707 of capital additions related to agreements with communities (June 30, 2022 - $1,653).

HUDBAY MINERALS INC.

Notes to Unaudited Condensed Consolidated Interim Financial Statements
(in thousands of US dollars, except where otherwise noted)
For the three and six months ended June 30, 2023 and 2022

25. Segmented information

As at June 30, 2023, Hudbay has five reportable segments identified by the individual mining operations of Manitoba, Copper Mountain (British Columbia), Peru, as well as the Copper World project (Arizona) and Corporate and other activities. The acquisition of Copper Mountain was completed on June 20, 2023. However, Hudbay's second quarter 2023 loss was not materially affected by the acquisition as Copper Mountain had no revenues or corresponding cost of sales recorded during the 10 day stub period from the date of acquisition to the end of the second quarter. No results for the British Columbia segment are reflected in the prior period comparative figures. Corporate and other activities include the Company's exploration activities in Chile, Canada and the State of Nevada. These exploration entities are not individually significant, as they do not meet the minimum quantitative thresholds for standalone segment disclosure. Corporate and other activities are not considered a segment and are included as a reconciliation to total consolidated results.

Three Months Ended June 30, 2023
		Manitoba			British Columbia		Peru		Arizona			Corporate and other activities			Total
Revenue from external customers	$	94,033		$	-	$	218,133	$	-		$	-		$	312,166
Cost of sales
Mine operating costs		57,396			-		143,207		-			-			200,603
Depreciation and amortization		21,330			-		67,340		-			-			88,670
Gross profit		15,307					7,586		-			-			22,893
Selling and administrative expenses		-			-		-		-			8,600			8,600
Exploration expenses		1,946			-		3,362		-			11			5,319
Other expenses		4,957			-		1,510		149			7,278			13,894
Re-evaluation adjustment - environmental provision		(4,692	)		-		-		-			-			(4,692	)
Results from operating activities	$	13,096		$	-	$	2,714	$	(149	)	$	(15,889	)	$	(228	)
Net interest expense on long term debt															17,800
Accretion on streaming arrangements															6,596
Change in fair value of financial instruments															(87	)
Other net finance costs															6,194
Loss before tax															(30,731	)
Tax recovery															(15,799	)
Loss for the period														$	(14,932	)

HUDBAY MINERALS INC.

Notes to Unaudited Condensed Consolidated Interim Financial Statements
(in thousands of US dollars, except where otherwise noted)
For the three and six months ended June 30, 2023 and 2022

Three months ended June 30, 2022
		Manitoba			Peru		Arizona			Corporate and other activities			Total
Revenue from external customers	$	207,242		$	208,212	$	-		$	-		$	415,454
Cost of sales
Mine operating costs		138,104			100,531		-			-			238,635
Depreciation and amortization		39,494			47,811		-			-			87,305
Gross profit		29,644			59,870		-			-			89,514
Selling and administrative expenses		-			-		-			1,621			1,621
Exploration expenses		2,913			3,582		1,424			1,067			8,986
Other (income) expenses		(1,420	)		1,387		(1,288	)		18			(1,303	)
Re-evaluation adjustment - environmental provision		(60,677	)										(60,677	)
Impairment - Arizona		-			-		94,956			-			94,956
Results from operating activities	$	88,828		$	54,901	$	(95,092	)	$	(2,706	)	$	45,931
Net interest expense on long term debt													16,911
Accretion on streaming arrangements													7,357
Change in fair value of financial instruments													(6,418	)
Other net finance costs													6,577
Profit before tax													21,504
Tax recovery													(10,639	)
Profit for the period												$	32,143

HUDBAY MINERALS INC.

Notes to Unaudited Condensed Consolidated Interim Financial Statements
(in thousands of US dollars, except where otherwise noted)
For the three and six months ended June 30, 2023 and 2022

Six Months Ended June 30, 2023

Manitoba

British Columbia

Peru

Arizona

Corporate and other activities

Total

Revenue from external customers

202,450

404,935

607,385

Cost of sales

Mine operating costs

127,294

234,593

361,887

Depreciation and amortization

46,792

109,300

156,092

Gross profit

28,364

61,042

89,406

Selling and administrative expenses

17,746

Exploration expenses

6,524

6,871

166

13,561

Other expenses

8,505

2,731

870

6,747

18,853

Re-evaluation adjustment - environmental provision

(12,932

)

(12,932

)

Results from operating activities

26,267

51,440

(870

)

(24,659

)

52,178

Net interest expense on long term debt

34,807

Accretion on streaming arrangements

13,097

Change in fair value of financial instruments

5,510

Other net finance costs

12,065

Loss before tax

(13,301

)

Tax recovery

(3,826

)

Loss for the period

(9,475

)

HUDBAY MINERALS INC.

Notes to Unaudited Condensed Consolidated Interim Financial Statements
(in thousands of US dollars, except where otherwise noted)
For the three and six months ended June 30, 2023 and 2022

Six months ended June 30, 2022
		Manitoba			Peru		Arizona			Corporate and other activities			Total
Revenue from external customers	$	384,481		$	409,592	$	-		$	-		$	794,073
Cost of sales
Mine operating costs		253,011			197,884		-			-			450,895
Depreciation and amortization		72,223			96,173		-			-			168,396
Gross profit		59,247			115,535		-			-			174,782
Selling and administrative expenses		-			-		-			13,462			13,462
Exploration expenses		8,919			6,185		11,256			1,256			27,616
Other (income) expenses		(658	)		3,038		5,296			69			7,745
Re-evaluation adjustment - environmental provision		(140,533	)										(140,533	)
Impairment - Arizona		-			-		94,956			-			94,956
Results from operating activities	$	191,519		$	106,312	$	(111,508	)	$	(14,787	)	$	171,536
Net interest expense on long term debt													33,809
Accretion on streaming arrangements													12,193
Change in fair value of financial instruments													798
Other net finance costs													14,371
Profit before tax													110,365
Tax expense													14,407
Profit for the period												$	95,958

June 30, 2023

Manitoba

British
Columbia

Peru

Arizona

Corporate
and other
activities

Total

Total assets

692,094

1,021,435

2,436,712

730,080

361,819

5,242,140

Total liabilities

391,044

448,556

920,866

29,477

1,343,251

3,133,194

Property, plant and equipment¹

696,736

840,350

2,090,575

717,299

40,091

4,385,051

¹Included in Corporate and Other activities is $27.4 million of property, plant and equipment that is located in Nevada.

December 31, 2022
		Manitoba		Peru		Arizona		Corporate and other activities		Total
Total assets	$	690,403	$	2,532,750	$	713,567	$	389,223	$	4,325,943
Total liabilities		427,107		974,184		36,131		1,316,712		2,754,134
Property, plant and equipment¹		691,836		2,115,495		704,472		40,627		3,552,430

¹Included in Corporate and Other activities is $27.4 million of property, plant and equipment that is located in Nevada.

HUDBAY MINERALS INC.

Notes to Unaudited Condensed Consolidated Interim Financial Statements
(in thousands of US dollars, except where otherwise noted)
For the three and six months ended June 30, 2023 and 2022

26. Events after the reporting period

Acquisition of Rockcliff Metals Corp.

On June 19, 2023, Hudbay and Rockcliff Metals Corp. ("Rockcliff") entered into a definitive agreement pursuant to which Hudbay has agreed to acquire 100% of the issued and outstanding common shares of Rockcliff (the "Proposed Transaction").

Under the terms of the Proposed Transaction, Rockcliff shareholders will receive 0.006776 of a Hudbay common share for each Rockcliff common share held. The estimated value of the transaction excluding Rockcliff's cash, is approximately $13 million.

The Proposed Transaction will be implemented by way of a court-approved plan of arrangement under the Business Corporations Act (Ontario) and, in addition to court approval, is subject to customary closing conditions, including approval by Rockcliff shareholders and approval under the Competition Act (Canada). The Proposed Transaction is expected to close in the third quarter of 2023.

Copper Mountain Bonds

The Bonds, which were assumed as part of the Copper Mountain acquisition, provided the bondholders with the right to put all or part of the principal amount of the outstanding Bonds to Copper Mountain at a price equal to 101%, plus accrued interest, following a change of control event. With the acquisition of Copper Mountain on June 20, 2023, the change of control event was triggered and $83,307 of the Bonds were put to Copper Mountain on July 17, 2023. On July 19, 2023 Copper Mountain purchased $83,307 at 101% plus accrued interest applicable under these bonds for a total payment of $86,084.

Management's Discussion and Analysis of

Results of Operations and Financial Condition

For the three and six months ended

June 30, 2023

August 8, 2023

TABLE OF CONTENTS	Page

Introduction	1
Our Business	1
Summary	2
Key Financial Results	6
Key Production Results	7
Key Costs Results	8
Recent Developments	9
Peru Operations Review	12
Manitoba Operations Review	17
Financial Review	23
Liquidity and Capital Resources	33
Financial Risk Management	38
Trend Analysis and Quarterly Review	40
Non-IFRS Financial Performance Measures	42
Accounting Changes and Critical Estimates	55
Changes in Internal Control over Financial Reporting	55
Notes to Reader	56
Summary of Historical Results	59

INTRODUCTION

This Management's Discussion and Analysis ("MD&A") dated August 8, 2023 is intended to supplement Hudbay Minerals Inc.'s unaudited condensed consolidated interim financial statements and related notes for the three and six months ended June 30, 2023 and 2022 (the "consolidated interim financial statements"). The consolidated interim financial statements have been prepared in accordance with International Financial Reporting Standards ("IFRS"), including International Accounting Standard 34, Interim Financial Reporting, as issued by the International Accounting Standards Board ("IASB").

References to "Hudbay", the "Company", "we", "us", "our" or similar terms refer to Hudbay Minerals Inc. and its direct and indirect subsidiaries as at June 30, 2023.

Readers should be aware that:

- This MD&A includes certain information with respect to Hudbay's acquisition of Copper Mountain Mining Corporation ("Copper Mountain"), which was completed on June 20, 2023, including the results of the Copper Mountain mine's operations during the 10-day stub period from June 20 to June 30, 2023 (the "10-day stub period") and the acquisition's impact on Hudbay's financial condition as at June 30, 2023. Copper Mountain and its subsidiaries are referred to as the British Columbia Business Unit.

- This MD&A contains certain "forward-looking statements" and "forward-looking information" (collectively, "forward-looking information") that are subject to risk factors set out in a cautionary note contained in our MD&A.

- This MD&A includes an updated discussion of the risks associated with business integration and, in particular, the risks associated with integrating Copper Mountain into our operations and uncertainties related to its potential impact on our financial condition, financial performance and cash flows, and supplements the discussion of these risks in our most recent Annual Information Form ("AIF") and MD&A.

- This MD&A 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 US issuers.

- We use a number of non-IFRS financial performance measures in our MD&A.

- The technical and scientific information in this MD&A has been approved by qualified persons based on a variety of assumptions and estimates.

For a discussion of each of the above matters, readers are urged to review the "Notes to Reader" discussion beginning on page 56 of this MD&A.

Additional information regarding Hudbay, including the risks related to our business and those that are reasonably likely to affect our consolidated interim financial statements in the future, is contained in our continuous disclosure materials, including our most recent AIF, consolidated interim financial statements and Management Information Circular available on SEDAR+ at www.sedarplus.ca and on EDGAR at www.sec.gov.

All amounts are in US dollars unless otherwise noted.

OUR BUSINESS

We are a diversified mining company with long-life assets in North and South America. Our Constancia operations in Cusco (Peru) produce copper with gold, silver and molybdenum by-products. Our Snow Lake operations in Manitoba (Canada) produce gold with copper, zinc and silver by-products. Our Copper Mountain operations in British Columbia (Canada) produce copper with gold and silver by-products. We have an organic pipeline that includes the Copper World project in Arizona and the Mason project in Nevada (United States), and our growth strategy is focused on the exploration, development, operation, and optimization of properties we already control, as well as other mineral assets we may acquire that fit our strategic criteria. We are governed by the Canada Business Corporations Act and our shares are listed under the symbol "HBM" on the Toronto Stock Exchange, New York Stock Exchange and Bolsa de Valores de Lima.

SUMMARY

Positioned for Strong Production Growth and Free Cash Flow Generation in the Second Half of 2023

- Reaffirmed full year 2023 consolidated production, cash cost and sustaining cash cost guidance for our Peru and Manitoba operations.

- On June 20, 2023, Hudbay completed the acquisition of Copper Mountain, creating a 150,000-tonnes-per-year copper producer with three long-life mines in tier-one jurisdictions and a world-class pipeline of organic copper growth projects.

- Copper Mountain owns 75% of the Copper Mountain mine in British Columbia (the "Copper Mountain Mine Joint Venture"), with Mitsubishi Materials Corporation ("MMC") holding the remaining non-controlling interest.

- Hudbay expects to release an updated technical report for the Copper Mountain mine in the fourth quarter, which will include updated annual production and cost estimates for the mine.

- Achieved higher grades from Pampacancha in July with 1.6 million tonnes of ore mined at 0.63% copper and 0.31 grams per tonne gold, consistent with the mine plan and company expectations for higher production in Peru in the third and fourth quarters of 2023.

Second Quarter Operating and Financial Results

- Consolidated production in the second quarter was 21,715 tonnes of copper and 48,996 ounces of gold, which includes production from the Copper Mountain mine during the 10-day stub period following the June 20, 2023 acquisition date.

- Consolidated cash cost and sustaining cash cost per pound of copper produced, net of by-product credits¹, in the second quarter, were $1.60 and $2.73, respectively, excluding Copper Mountain's costs during the 10-day stub period.

- Peru operations successfully managed through a transitional quarter with elevated stripping activities at Pampacancha completed in June to enable mining high grade portions of the orebody in the second half of 2023. The Peru operations maintained steady performance, producing 17,682 tonnes of copper in the second quarter, which was in line with mine plan expectations. Peru cash cost per pound of copper produced, net of by-product credits¹, in the second quarter was $2.14, in line with quarterly cadence expectations as Pampacancha is expected to deliver higher copper production and precious metal by-product credits in the second half of 2023.

- Manitoba operations produced 35,253 ounces of gold, which was impacted by lower throughput at the Stall mill due to downtime to complete the Stall mill Phase I recovery improvement project tie-ins which resulted in a buildup of surface ore stockpiles at the end of the second quarter. Lalor achieved an 11% increase in ore mined versus the first quarter as we continue to implement improvements to reduce costs and target higher production levels. Manitoba cash cost per ounce of gold produced, net of by-product credits¹, was $1,097 and is expected to decline to be within the annual guidance range due to higher throughput, gold recoveries and gold grades expected in the second half of 2023.

- Second quarter net loss and loss per share were $14.9 million and $0.05, respectively. After adjusting for $6.8 million of transaction costs incurred during the quarter associated with the acquisition of Copper Mountain and a non-cash gain of $4.7 million related to a quarterly revaluation of our closed site environmental reclamation provision, among other items, second quarter adjusted loss¹ per share was $0.07.

- Operating cash flow before change in non-cash working capital was $55.9 million and adjusted EBITDA¹was $81.2 million in the second quarter.

- Cash and cash equivalents declined during the second quarter to $179.7 million and were negatively impacted by lower base metal prices and lower production volumes as a result of scheduled mill maintenance programs, elevated stripping activity in Peru and a buildup of ore stockpiles in Manitoba. Cash and cash equivalents were also impacted by $25.8 million in total transaction costs related to the acquisition of Copper Mountain, $65.9 million of capital investments primarily related to sustaining capital investments, and a $31.9 million bond interest payment.

Executing on Growth Initiatives and Prudent Financial Planning

- Copper Mountain integration activities are progressing in line with expectations with over 50% of the targeted annualized corporate and tax synergies already achieved to date. We are focused on advancing our plans to stabilize the operation over the next 12 months, to be further detailed in a technical report, which will include an updated mine plan and mineral reserve and resource estimates, expected to be released in the fourth quarter.

- Copper World pre-feasibility study for Phase I is well-advanced and expected to be released in the third quarter.

- Snow Lake drilling intersected new high-grade copper-gold-silver zone 500 metres northwest of Lalor and indicates the hosting mineralization at Lalor continues down plunge for at least two kilometres.

- Completed the acquisition of the Cook Lake properties in Snow Lake, providing the potential for a new discovery on claims untested by modern geophysics and where historical drilling intersected base metal and gold mineralization at a fraction of Lalor's current known depth.

- Announced the entry into a definitive agreement to acquire all the issued and outstanding common shares of Rockcliff Metals Corp. ("Rockcliff"), which is expected to increase our land position within trucking distance of our Snow Lake processing facilities by more than 250%. The transaction is expected to close in the third quarter.

- On July 6, 2023, established framework for a multi-year exploration partnership with Marubeni Corporation focused on the discovery of new deposits within trucking distance of Hudbay's processing facilities in Flin Flon, Manitoba.

- First phase of the Stall recovery improvement project was completed during the second quarter with commissioning completed in May and ramp-up to higher metal recoveries expected in the second half of 2023.

- In connection with the Copper Mountain transaction, we amended our Revolving Credit Facilities ("RCFs") to (i) exclude the Copper Mountain group from the financial covenant calculations in the RCFs until the Copper Mountain Nordic bonds are repaid in full and (ii) increase the net debt to EBITDA covenant ratio to provide greater financial flexibility during the integration period.

- Subsequent to quarter end, we drew $90 million from our RCFs to finance the redemption of a portion of Copper Mountain's Nordic bonds, thus improving our ability to deleverage and repay debt sooner than the bond maturity.

- On track to deliver annual discretionary spending reduction targets for 2023 with lower growth capital and exploration expenditures compared to 2022. As a result of a continued focus on discretionary spending reductions, total capital expenditures for 2023 are expected to be approximately $15 million lower than guidance levels, representing 5% of total capital expenditure guidance.

Summary of Second Quarter Results

Cash generated from operating activities in the second quarter of 2023 decreased to $24.6 million compared to $165.6 million in the same quarter of 2022 predominantly due to a $73.0 million negative impact from changes in non-cash working capital as we executed a stripping campaign at Pampacancha to access high grade portions of the orebody in the second half of 2023. Operating cash flow before changes in working capital was $55.9 million during the second quarter of 2023, reflecting a decrease of $68.0 million compared to the same period of 2022. The decrease in operating cash flow before changes in non-cash working capital was primarily the result of lower copper and zinc prices, lower copper, zinc and gold sales volumes due to the comparative period including 777 production, the buildup of approximately 45,000 tonnes of surface ore stockpiles in Manitoba as Stall mill Phase I recovery improvement project commissioning was completed as well as a second quarter scheduled plant maintenance shutdown in Peru and higher treatment and refining charges.

On June 20, 2023, Hudbay successfully completed its previously announced acquisition of Copper Mountain (the "Copper Mountain Transaction"). Copper Mountain's first shipment of copper concentrate following the acquisition occurred on July 23, 2023 after a brief strike at the Port of Vancouver earlier in July. As such, Hudbay's second quarter results were not materially affected by Copper Mountain's operations with no revenues or corresponding cost of sales recorded during the 10-day stub period from the date of acquisition to the end of the second quarter. As a result, we do not present revenue, cost of sales, metal sold, cash cost and sustaining cash cost per pound of copper produced net of by-product credits¹ for the Copper Mountain mine in this MD&A. Combined acquisition-related costs incurred were $25.8 million, of which $6.8 million was expensed by Hudbay during the second quarter, mainly related to legal and advisory fees, share-based payments incurred prior to transaction close and change of control payments, while the remaining costs were incurred by Copper Mountain prior to completion of the acquisition.

Production in the second quarter of 2023 did not include any production from the 777 mine, which closed, as planned, in June 2022 and only included limited production from the Copper Mountain mine during the 10-day stub period. The comparison in this paragraph excludes the production from the 777 mine in the second quarter of 2022 to illustrate the comparative performance of our current operations. Consolidated copper production in the second quarter of 2023 decreased by 8% compared to the same period in 2022 primarily due to executing a stripping campaign at Pampacancha as well as a scheduled mill maintenance program at Constancia. Consolidated gold production in the second quarter of 2023 decreased by 5% compared to the second quarter of 2022, mainly due to lower Peru mill throughput and lower New Britannia recoveries offset slightly by 5% higher gold ore grades in Manitoba. Consolidated silver production in the second quarter decreased by 22% compared to the same period in 2022. Consolidated zinc production in the second quarter of 2023 declined by 11% primarily due to lower throughput. For full historical production data (which includes production from the 777 mine), please refer to "Summary of Historical Results" section on page 59 of this MD&A.

Net loss and loss per share in the second quarter of 2023 were $14.9 million and $0.05, respectively, compared to net earnings and earnings per share of $32.1 million and $0.12, respectively, in the second quarter of 2022. The results were negatively impacted by $6.8 million of transaction costs associated with the acquisition of Copper Mountain and a $1.4 million foreign exchange loss. This was partially offset by a non-cash gain of $4.7 million related to the quarterly revaluation of the environmental reclamation provision at our closed sites and a $1.1 million revaluation gain related to the gold prepayment liability.

Adjusted net loss¹and adjusted net loss per share¹ in the second quarter of 2023 were $18.3 million and $0.07 per share, respectively, after adjusting for $6.8 million of transaction costs associated with the acquisition of Copper Mountain and the non-cash revaluation gain of the environmental reclamation provision, among other items. This compares to adjusted net earnings and adjusted net earnings per share of $30.5 million, and $0.12 in the same period of 2022. Second quarter adjusted EBITDA¹was $81.2 million, compared to $141.4 million, compared to the same period in 2022.

In the second quarter of 2023, consolidated cash cost per pound of copper produced, net of by-product credits¹, was $1.60, compared to $0.65 in the same period in 2022. This increase was mainly the result of significantly lower by-product credits and lower copper production. Consolidated cash cost per pound of copper produced, net of by-product credits¹ for the first six months of 2023 was above our 2023 guidance ranges but remained in line with quarterly cadence expectations. Consolidated sustaining cash cost per pound of copper produced, net of by-product credits¹, was $2.73 in the second quarter of 2023 compared to $1.87 in the same period in 2022. This increase was primarily due to the same reasons outlined above partially offset by lower cash sustaining capital expenditures.

Consolidated all-in sustaining cash cost per pound of copper produced, net of by-product credits¹, was $2.98 in the second quarter of 2023, higher than $1.93 in the same period in 2022, due to the same reasons outlined above as well as higher regional costs.

As at June 30, 2023, our liquidity included $179.7 million in cash and cash equivalents as well as undrawn availability of $184.1 million under our RCFs. Subsequent to quarter end, we drew $90 million from our RCFs to finance the redemption of $83.3 million of Copper Mountain's bonds, thereby reducing the aggregate amount of Copper Mountain bonds outstanding to $59.7 million and improving our ability to deleverage and repay debt sooner than the 2026 bond maturity. Based on expected free cash flow generation in the second half of 2023, we continue to expect to make progress on its deleveraging targets as outlined in its "3-P" plan for sanctioning Copper World. Current liquidity combined with cash flow from operations is expected to be sufficient to meet our liquidity needs for the foreseeable future.

* Mining activities at 777 were completed in June 2022

** British Columbia production in Q2 2023 represents a 10-day stub period of production after the June 20, 2023 transaction closing date.

¹Adjusted net earnings (loss) and adjusted net earnings (loss) per share, adjusted EBITDA, cash cost, sustaining cash cost, all-in sustaining cash cost per pound of copper produced, net of by-product credits, cash cost, sustaining cash cost per ounce of gold produced, net of by-product credits, combined unit cost and net debt are non-IFRS financial performance measures with no standardized definition under IFRS. For further information and a detailed reconciliation, please see the discussion under the "Non-IFRS Financial Performance Measures" section of this MD&A.

KEY FINANCIAL RESULTS

Financial Condition³
(in $ thousands)		Jun. 30, 2023			Dec. 31, 2022
Cash	$	179,734		$	225,665
Total long-term debt		1,370,682			1,184,162
Net debt¹		1,190,948			958,497
Working capital²		(61,357	)		76,534
Total assets		5,242,140			4,325,943
Equity attributable of owners of the Company		2,001,970			1,571,809

¹Net debt is a non-IFRS financial performance measure with no standardized definition under IFRS. For further information and a detailed reconciliation, please see discussion under the "Non-IFRS Financial Performance Measures" section of this MD&A.

²Working capital is determined as total current assets less total current liabilities as defined under IFRS and disclosed on the consolidated interim financial statements. Working capital reflects the full balance of Copper Mountain Nordic bonds, $144,981, as current, however, subsequent to quarter end, we drew $90 million from our revolving credit facilities to finance the redemption of a portion of Copper Mountain's Nordic bonds, as described under the "Liquidity and Capital Resources" section of this MD&A. As of the date hereof, the remaining Copper Mountain Nordic bonds are presented as long-term as well as our $90 million revolver draw.

³Following completion of the Copper Mountain acquisition on June 20, 2023, the Company's financial condition has been impacted by the inclusion of Copper Mountain as at June 30, 2023 and accordingly there is no comparable period information.

Financial Performance³		Three months ended					Six months ended
(in $ thousands, except per share amounts or as noted below)		Jun. 30, 2023			Jun. 30, 2022		Jun. 30, 2023			Jun. 30, 2022
Revenue	$	312,166		$	415,454	$	607,385		$	794,073
Cost of sales		289,273			325,940		517,979			619,291
(Loss)/earnings before tax		(30,731	)		21,504		(13,301	)		110,365
Net (loss)/earnings		(14,932	)		32,143		(9,475	)		95,958
Basic and diluted (loss)/earnings per share		(0.05	)		0.12		(0.04	)		0.37
Adjusted (loss)/earnings per share¹		(0.07	)		0.12		(0.07	)		0.14
Operating cash flow before changes in non-cash working capital²		55.9			123.9		141.5			201.0
Adjusted EBITDA^1,2		81.2			141.4		183.1			251.9

¹ Adjusted (loss) earnings per share and adjusted EBITDA are non-IFRS financial performance measures with no standardized definition under IFRS. For further information and a detailed reconciliation, please see discussion under the "Non-IFRS Financial Performance Measures" section of this MD&A.

² In $ millions.

³Following completion of the Copper Mountain acquisition on June 20, 2023, the Company's financial performance has not been materially affected by Copper Mountain's operations with no revenues or corresponding cost of sales recorded during the 10-day stub period from the date of acquisition to the end of the second quarter of 2023.

KEY PRODUCTION RESULTS

Three months ended

Three months ended

Jun. 30, 2023

Jun. 30, 2022

Peru

Manitoba

British
Columbia⁴

Total

Peru

Manitoba

Total

Contained metal in concentrate and doré produced¹

Copper

tonnes

17,682

2,794

1,239

21,715

20,880

4,788

25,668

Gold

12,998

35,253

745

48,996

13,858

44,787

58,645

Silver

419,642

180,750

11,918

612,310

584,228

280,625

864,853

Zinc

tonnes

8,758

17,053

Molybdenum

tonnes

414

390

Payable metal sold

Copper

tonnes

21,207

1,871

23,078

18,473

5,177

23,650

Gold²

14,524

33,009

47,533

8,430

42,454

50,884

Silver²

671,532

133,916

805,448

484,946

253,225

738,171

Zinc³

tonnes

8,641

20,793

Molybdenum

tonnes

314

208

¹Metal reported in concentrate is prior to deductions associated with smelter contract terms.

² Includes total payable gold and silver in concentrate and in doré sold.

³ For the three months ended June 30, 2023, this metric includes payable zinc in concentrate sold. For the three months ended June 30, 2022, this metric also included payable refined zinc metal sold.

⁴ Production results from Copper Mountain operations represents the 10-day stub period following the acquisition through to the end of the second quarter of 2023.

Six months ended

Six months ended

Jun. 30, 2023

Jun. 30, 2022

Peru

Manitoba

British
Columbia⁴

Total

Peru

Manitoba

Total

Contained metal in concentrate produced ¹

Copper

tonnes

38,200

4,839

1,239

44,278

40,046

10,324

50,370

Gold

24,204

71,287

745

96,236

24,647

87,954

112,601

Silver

971,809

331,392

11,918

1,315,119

1,089,796

559,414

1,649,210

Zinc

tonnes

18,604

39,305

Molybdenum

tonnes

703

596

Payable metal sold

Copper

tonnes

37,523

4,096

41,619

35,298

8,961

44,259

Gold²

26,305

70,949

97,254

22,882

76,345

99,227

Silver²

1,063,739

283,595

1,347,334

1,121,079

481,684

1,602,763

Zinc³

tonnes

14,269

38,099

Molybdenum

tonnes

568

421

¹Metal reported in concentrate is prior to deductions associated with smelter contract terms.

² Includes total payable gold and silver in concentrate and in doré sold.

³ For the six months ended June 30, 2023 this metric includes payable zinc in concentrate sold. For the six months ended June 30, 2022, this metric also included payable refined zinc metal sold.

⁴ Production results from Copper Mountain operations represents the 10-day stub period following the acquisition through to the end of the second quarter of 2023.

KEY COST RESULTS

Three months ended

Six months ended

Guidance

Jun. 30,
2023

Jun. 30,
2022

Jun. 30,
2023

Jun. 30,
2022

Annual
2023

Peru cash cost per pound of copper produced

Cash cost ¹

$/lb

2.14

1.82

1.72

1.69

1.05 - 1.30

Sustaining cash cost ¹

$/lb

3.06

2.62

2.56

2.45

Manitoba cash cost per ounce of gold produced

Cash cost ¹

$/oz

1,097

(207

)

1,017

500 - 800

Sustaining cash cost ¹

$/oz

1,521

519

1,427

847

Consolidated cash cost per pound of copper produced²

Cash cost ¹

$/lb

1.60

0.65

1.21

0.87

0.40 - 0.80

Sustaining cash cost ¹

$/lb

2.73

1.87

2.25

2.07

1.35 - 2.05

All-in sustaining cash cost ¹

$/lb

2.98

1.93

2.50

2.23

¹Cash cost, sustaining cash cost, all-in sustaining cash cost per pound of copper produced, net of by-product credits, gold cash cost, sustaining cash cost per ounce of gold produced, net of by-product credits, and unit operating cost are non-IFRS financial performance measures with no standardized definition under IFRS. For further information and a detailed reconciliation, please see the discussion under the "Non-IFRS Financial Performance Measures" section of this MD&A.

² Consolidated cash cost, sustaining cash cost and all-in sustaining cash cost per pound of copper produced, net of by-product credits, does not include Copper Mountain production or costs for the 10-day stub period at the end of the second quarter of 2023, nor the comparative periods.

RECENT DEVELOPMENTS

Completion of the Copper Mountain Acquisition

As a result of the completion of the Copper Mountain Transaction, Copper Mountain became a wholly-owned subsidiary of Hudbay and Hudbay became the indirect owner of 75% of the Copper Mountain Mine Joint Venture.

In aggregate, Hudbay issued 84,165,617 Hudbay common shares under the Copper Mountain Transaction to former Copper Mountain shareholders as consideration for their Copper Mountain shares. The Copper Mountain shares were de-listed from the TSX on June 21, 2023 and an application has been submitted with the applicable Canadian securities commissions for Copper Mountain to cease to be a reporting issuer under Canadian securities laws.

In connection with the closing of the Copper Mountain Transaction, Hudbay appointed Jeane Hull and Paula Rogers, former directors of Copper Mountain, to the board of Hudbay.

Integrating the Copper Mountain Mine

Copper Mountain integration activities are progressing in line with expectations and over 50% of the targeted annualized corporate and tax synergies have already been achieved to date. We are focused on advancing our plans to stabilize the operation over the next 12 months, including opening up the mine by adding additional mining faces and re-mobilizing idle haul trucks, optimizing the ore feed to the plant and implementing plant improvement initiatives. Further details on our plans will be provided in a technical report, including an updated mine plan, revised mineral reserve and resource estimates, and updated annual production and cost estimates for the Copper Mountain mine, which is expected to be released in the fourth quarter.

As an additional prudent measure to ensure free cash flow generation in the second half of 2023 as Hudbay stabilizes the Copper Mountain operations, subsequent to quarter end, the Copper Mountain Mine Joint Venture entered into forward sales contracts for a total of 2,000 tonnes of copper production over the five-month period from August to December 2023 at an average price of $3.86 per pound.

Copper World Permitting and Pre-Feasibility Study Well-Advanced

In late 2022, Hudbay submitted the state-level applications for an Aquifer Protection Permit and an Air Quality Permit to the Arizona Department of Environmental Quality. We expect to receive these two outstanding state permits by early 2024.

In May 2023, we received a favourable ruling from the U.S. Court of Appeals for the Ninth Circuit that reversed the U.S. Fish and Wildlife Service's designation of the area near Copper World and the former Rosemont project as jaguar critical habitat. While this ruling doesn't impact the state permitting process for Phase I of Copper World, it is expected to simplify the federal permitting process for Phase II of the Copper World project.

Pre-feasibility activities for Phase I are well-advanced and a pre-feasibility study is expected to be released in the third quarter of 2023. We intend to initiate a minority joint venture partner process prior to commencing a definitive feasibility study, which will allow the potential joint venture partner to participate in the funding of definitive feasibility study activities in 2024 as well as in the final project design for Copper World.

Potential for Snow Lake Mine Life Extension with Discovery of New Mineralized Zones Near Lalor and Significant Regional Land Consolidation

In July 2023, the we announced positive results from our 2023 winter drill program near Lalor in Snow Lake, Manitoba, and significant land consolidation in the Snow Lake region through several strategic transactions. The agreements with multiple land holders will increase Hudbay's holdings in the Snow Lake region by more than 250%. We intend to explore these claims in hopes of finding a new anchor deposit to maximize and extend the life of our Snow Lake operations beyond 2038.

Lalor New Mineralized Zones

Our 2023 winter drill program in Snow Lake included the testing of a geophysical anomaly located northwest of Lalor, within 500 metres of existing underground infrastructure. All holes intersected an alteration zone that is known to host the Lalor mineralization. Certain holes intersected several sulphide horizons with both zinc and copper-gold-silver mineralization. Hole CH2303 intersected three mineralized zones, including 7.0 metres of 3.06% zinc and 15.1 grams per tonne silver; 3.5 metres of 3.81% copper, 3.75 grams per tonne gold and 104.5 grams per tonne silver; and 7.5 metres of 3.87% zinc and 7.5 grams per tonne silver. For more information on the drill holes, please refer to Hudbay's news release dated July 27, 2023.

We expect to refine targets for our 2024 winter drilling campaign to the northwest and down-plunge from Lalor using the results from geophysical borehole surveys.

Acquisition of Cook Lake Properties in Snow Lake

In late June 2023, Hudbay completed the acquisition of the Cook Lake properties from Glencore plc. The Cook Lake properties are located within ten kilometres and along the same regional trend as our Lalor mine, and have the potential to host a new discovery at depth. The properties include the Cook Lake North and South properties, which are within 30 kilometres of Hudbay's Stall and New Britannia processing facilities.

Hudbay has received data regarding approximately 60,000 metres of historical drilling that was competed on the Cook Lake properties between 1971 and 2012, with an average depth of only 275 metres, which is a fraction of the depth of Lalor's current known mineralization of approximately 600 to 1,500 metres. The historical drill holes appear to have intersected base metal and copper-gold mineralization typical to the Snow Lake region. Although the historical data has not been validated by a qualified person, the mineralization indicates that there is the potential for new deposits on the same favourable mineralized horizons as many known deposits in the area, including the Lalor, 1901 and Chisel deposits. The Cook Lake properties are untested by modern deep geophysics, which was the discovery method for the Lalor mine.

Acquisition of Rockcliff to Consolidate Significant Land Package in Snow Lake

On June 19, 2023, Hudbay entered into a definitive agreement to acquire 100% of the issued and outstanding common shares of Rockcliff that we do not already own (the "Rockcliff Transaction"). Under the Rockcliff Transaction, Rockcliff shareholders will receive 0.006776 of a Hudbay common share for each Rockcliff common share held. The enterprise value to Hudbay, net of Rockcliff's cash, is approximately $13 million.

Rockcliff is one of the largest landholders in the Snow Lake area with more than 1,800 square kilometres across all of its properties. The completion of the Rockcliff Transaction will consolidate Hudbay's ownership of the Talbot deposit and provide us with additional exploration properties in the vicinity of our Stall and New Britannia mills, including the land adjacent to Hudbay's Pen II deposit, which is a low tonnage and high-grade zinc deposit that starts from surface and is located approximately six kilometres by road from the Lalor mine.

Advancing Metallurgical Testwork for the Flin Flon Tailings Reprocessing Opportunity

Other Exploration Update

Constancia In-Mine Exploration

Maria Reyna and Caballito Exploration

Hudbay controls a large, contiguous block of mineral rights with the potential to host satellite mineral deposits in close proximity to the Constancia processing facility, including the past producing Caballito property and the highly prospective Maria Reyna property. We commenced early exploration activities at Maria Reyna and Caballito after completing a surface rights exploration agreement with the community of Uchucarcco in August 2022. Surface investigation activities together with baseline environmental and archaeological activities necessary to support drill permit applications have been completed. Surface mapping and geochemical sampling confirm that both Caballito and Maria Reyna host sulfide and oxide rich copper mineralization in skarns, hydrothermal breccias and large porphyry intrusive bodies.

Lalor In-Mine Exploration

Hudbay continues to compile results from ongoing infill drilling at Lalor, which will be incorporated into the next annual mineral resource and reserve estimate update.

Flin Flon Exploration Partnership with Marubeni

On July 6, 2023 we announced the signing of a memorandum of understanding ("MOU") with Marubeni Corporation ("Marubeni") that establishes the framework for a multi-year exploration partnership focused on the discovery of new deposits on Hudbay's mineral properties within trucking distance of our processing facilities in Flin Flon, Manitoba. In connection with the MOU, Hudbay and Marubeni have agreed to negotiate the terms of a definitive agreement to govern the relationship between the parties and the Flin Flon properties that would form the subject of the exploration partnership (the "Project Properties"). It is currently contemplated that Marubeni would fund approximately $10 to $15 million of exploration expenditures on the Project Properties and that Hudbay will act as operator and carry out the exploration activities.

Dividend Declared

A semi-annual dividend of C$0.01 per share was declared on August 8, 2023. The dividend will be paid out on September 22, 2023 to shareholders of record as of September 1, 2023.

PERU OPERATIONS REVIEW

Three months ended

Six months ended

Jun. 30,
2023

Jun. 30,
2022

Jun. 30,
2023

Jun. 30,
2022

Constancia ore mined¹

tonnes

3,647,399

7,017,114

7,050,580

13,925,265

Copper

0.31

0.33

0.33

0.32

Gold

g/tonne

0.04

0.04

0.04

0.04

Silver

g/tonne

2.49

3.53

2.50

3.37

Molybdenum

0.01

0.01

0.01

0.01

Pampacancha ore mined¹

tonnes

2,408,495

1,211,387

3,305,790

2,058,693

Copper

0.36

0.29

0.39

0.28

Gold

g/tonne

0.34

0.28

0.39

0.35

Silver

g/tonne

2.81

4.25

3.44

4.17

Molybdenum

0.02

0.01

0.01

0.01

Total ore mined

tonnes

6,055,894

8,228,501

10,356,370

15,983,958

Strip ratio²

1.74

1.22

1.78

1.16

Ore milled

tonnes

7,223,048

7,770,706

14,886,776

14,984,539

Copper

0.31

0.32

0.32

0.31

Gold

g/tonne

0.09

0.09

0.09

0.09

Silver

g/tonne

2.78

3.64

3.25

3.46

Molybdenum

0.01

0.01

0.01

0.01

Copper concentrate

tonnes

82,796

93,122

178,244

174,730

Concentrate grade

% Cu

21.36

22.42

21.43

22.92

Copper recovery

80.0

85.0

80.9

85.2

Gold recovery

61.1

60.3

59.0

60.1

Silver recovery

65.1

64.2

62.5

65.4

Molybdenum recovery

40.5

38.8

40.5

30.1

Combined unit operating costs^3,4,5

$/tonne

14.07

12.02

12.73

12.19

¹Reported tonnes and grade for ore mined are estimates based on mine plan assumptions and may not reconcile fully to ore milled.

²Strip ratio is calculated as waste mined divided by ore mined.

³Reflects combined mine, mill and general and administrative ("G&A") costs per tonne of ore milled. Reflects the deduction of expected capitalized stripping costs.

⁴ Combined unit costs is a non-IFRS financial performance measure with no standardized definition under IFRS. For further information and a detailed reconciliation, please see the discussion under the "Non-IFRS Financial Performance Measures" section of this MD&A.

⁵ Excludes approximately $1.3 million or $0.16 per tonne, and $3.6 million or $0.24 per tonne, of COVID-19 related costs during the three and six months ended June 30, 2022.

Total ore mined in the second quarter of 2023 decreased by 26% compared to the same period in 2022 mainly due to the completion of a higher stripping period at the Pampacancha pit in June, in line with our mine plan to access high grade ore phases later in 2023, and the planned processing of a significant amount of ore from stockpiles during the second quarter of 2023.

Ore milled during the second quarter of 2023 was 7% lower than the same period in 2022 mainly due to a scheduled plant maintenance shutdown in the second quarter of 2023 without a corresponding shutdown in the comparative period. Milled copper grades decreased by 3% in the second quarter of 2023 compared to the same period in 2022 due to lower-grade ore from stockpiles partially offset by increased mining of higher-grade copper ore from Pampacancha.

Recoveries of copper during the second quarter of 2023 were 6% lower while the recoveries for gold and silver were both 1% higher than the comparative 2022 period. Recoveries of copper decreased in the second quarter of 2023, as expected, due to higher levels of impurities in stockpile ore.

Year-to-date ore mined was 35% lower than the same period in 2022 due to the same factors as the quarterly variance as well as increased stockpile processing in order to ration fuel during the protests and civil unrest experienced in Peru in early 2023. Recoveries of copper, gold and silver in the first half of 2023 were 5%, 2% and 4% lower than the same period in 2022 due to higher levels of impurities in stockpile ore.

Combined mine, mill and G&A unit operating costs in the second quarter of 2023 were 17% higher primarily due to higher costs related to the scheduled mill maintenance program and lower milled ore throughput during the quarter.

Contained metal in
concentrate produced

Three months ended

Six months ended

Guidance

Jun. 30, 2023

Jun. 30, 2022

Jun. 30, 2023

Jun. 30, 2022

Annual

2023

Copper

tonnes

17,682

20,880

38,200

40,046

91,000 - 116,000

Gold

12,998

13,858

24,204

24,647

83,000 - 108,000

Silver

419,642

584,228

971,809

1,089,796

2,210,000 - 2,650,000

Molybdenum

tonnes

414

390

703

596

1,300 - 1,600

Second quarter 2023 production of copper, gold and silver was 15%, 6% and 28% lower, respectively, than the comparative period in 2022 due to lower throughput and lower copper and silver grades. Production of molybdenum in the second quarter of 2023 was 6% higher than the comparative prior year period due to higher grades and recoveries.

Year-to-date 2023 production of copper, gold and silver was 5%, 2% and 11% lower, respectively, than the comparative period in 2023, while the production of molybdenum was 18% higher over the same timeframe. Year to date 2023 production declines were mainly related to lower recoveries from processing stockpile ore with higher contaminants.

With the period of higher planned stripping activities in the Pampacancha pit completed in June and ore mined from Pampacancha in July totaling 1.6 million tonnes at 0.63% copper and 0.31 grams per tonne gold, we are well on track to achieve the higher expected production in the second half of the year, in line with our full year 2023 Peru production guidance.

Peru Cash Cost and Sustaining Cash Cost

Three months ended

Six months ended

Guidance

Jun. 30, 2023

Jun. 30, 2022

Jun. 30, 2023

Jun. 30, 2022

Annual
2023

Cash cost per pound of copper produced, net of by-product credits¹

$/lb

2.14

1.82

1.72

1.69

1.05 - 1.30

Sustaining cash cost per pound of copper produced, net of by-product credits¹

$/lb

3.06

2.62

2.56

2.45

¹Cash cost and sustaining cash costs per pound of copper produced, net of by-product credits, are not recognized under IFRS. For more detail on these non-IFRS financial performance measures, please see the discussion under the "Non-IFRS Financial Performance Measures" section of this MD&A.

Cash cost per pound of copper produced, net of by-product credits, in the second quarter of 2023 was $2.14, an increase of 18% compared to the same period in 2022 due to fewer pounds of copper produced, higher milling costs related to the scheduled mill maintenance program and higher treatment and refining charges, partially offset by higher by-product credits and higher capitalized stripping. This cost measure remains above the upper end of our 2023 guidance range. However, it is expected to decline meaningfully in the second half of 2023 and the full year cash cost is expected to remain within the 2023 guidance range with higher expected copper production and contributions from precious metal by-product credits from Pampacancha later this year.

Cash cost per pound of copper produced, net of by-product credits, for the first half of 2023 was $1.72, an increase of 2% compared to the same period in 2022 due to fewer pounds of copper produced, as well as higher milling, treatment and refining charges and freight costs, partially offset by higher by-product credits.

Sustaining cash cost per pound of copper produced, net of by-product credits, for the second quarter and for the first half of 2023 were 17% and 4% higher, respectively, than the comparative 2022 periods primarily due to the same factors affecting cash cost noted above, partially offset by lower sustaining capital expenditures.

Metal Sold

Three months ended

Six months ended

Jun. 30, 2023

Jun. 30, 2022

Jun. 30, 2023

Jun. 30, 2022

Payable metal in concentrate

Copper

tonnes

21,207

18,473

37,523

35,298

Gold

14,524

8,430

26,305

22,882

Silver

671,532

484,946

1,063,739

1,121,079

Molybdenum

tonnes

314

208

568

421

Peru's copper, gold and silver sales in the second quarter of 2023 were positively impacted by higher-than-normal unsold copper concentrate inventory levels at the end of the first quarter that were subsequently sold during the second quarter of 2023. Furthermore, payable gold and silver sales during the second quarter of 2023 were 72% and 38% higher, respectively, than the corresponding period in 2022 due to a precious metal stream sale that was recognized in revenue shortly after the first quarter cutoff date. Payable gold and silver included in this sale was approximately 4.5 thousand ounces of gold and 341 thousand ounces of silver.

MANITOBA OPERATIONS REVIEW

Three months ended

Six months ended

Jun. 30, 2023

Jun. 30, 2022¹

Jun. 30, 2023

Jun. 30, 2022¹

Lalor ore mined

tonnes

413,255

412,653

786,854

799,405

Gold

g/tonne

4.07

3.73

4.02

3.74

Copper

0.81

0.70

0.69

0.75

Zinc

3.14

3.06

3.23

3.54

Silver

g/tonne

23.27

23.95

20.88

23.46

New Britannia ore milled

tonnes

141,905

144,589

284,947

268,765

Gold

g/tonne

5.82

5.69

5.94

5.66

Copper

0.77

0.73

0.69

0.79

Zinc

0.85

0.94

0.80

0.90

Silver

g/tonne

25.79

19.77

24.08

20.81

Copper concentrate

tonnes

6,128

7,307

11,684

14,259

Concentrate grade

% Cu

16.20

13.37

15.29

13.53

Copper recovery - concentrate

91.2

92.4

91.4

90.8

Gold recovery - concentrate

55.0

62.7

58.6

62.1

Silver recovery - concentrate

57.0

62.9

59.3

63.1

Contained metal in concentrate produced

Gold

14,614

16,571

31,849

30,391

Copper

tonnes

992

977

1,786

1,930

Silver

67,134

57,772

130,903

113,529

Metal in doré produced²

Gold

6,305

7,441

11,692

13,721

Silver

11,231

15,974

22,809

26,020

Stall ore milled

tonnes

238,633

261,417

481,252

534,542

Gold

g/tonne

3.12

2.95

2.95

3.01

Copper

0.85

0.73

0.72

0.77

Zinc

4.47

4.45

4.64

5.13

Silver

g/tonne

22.15

26.31

19.62

24.96

Copper concentrate

tonnes

8,281

8,077

14,926

17,405

Concentrate grade

% Cu

21.76

20.78

20.46

20.64

Zinc concentrate

tonnes

16,417

19,189

35,615

45,658

Concentrate grade

% Zn

53.35

51.08

52.24

51.07

Copper recovery

88.5

88.0

87.9

87.3

Zinc recovery

82.2

84.3

83.3

85.1

Gold recovery

59.9

54.6

60.9

55.2

Silver recovery

60.3

56.1

58.5

57.3

Contained metal in concentrate produced

Gold

14,334

13,542

27,746

28,604

Copper

tonnes

1,802

1,679

3,053

3,593

Zinc

tonnes

8,758

9,803

18,604

23,319

Silver

102,385

124,014

177,680

245,902

¹The 777 mine and Flin Flon concentrator information is not disclosed in the table above. The relevant comparative information can be found on page 59 in the Summary of Historical Results section in this MD&A.

²Doré includes sludge, slag and carbon fines in three and six months ended June 30, 2023.

Unit Operating Costs¹

Three months ended

Six months ended

Jun. 30,
2023

Jun. 30,
2022⁴

Jun. 30,
2023

Jun. 30,
2022⁴

Lalor

C$/tonne

135.45

129.74

135.99

128.14

New Britannia

C$/tonne

84.18

80.00

83.08

86.37

Stall

C$/tonne

35.44

32.56

34.88

31.36

Combined mine/mill unit operating costs^2,3

Manitoba

C$/tonne

220

168 ⁵

218

172⁵

¹ Reflects costs per tonne of ore mined/milled.

² Reflects combined mine, mill and G&A costs per tonne of milled ore.

³ Combined unit costs is a non-IFRS financial performance measure with no standardized definition under IFRS. For further information and a detailed reconciliation, please see the discussion under the "Non-IFRS Financial Performance Measures" section of this MD&A.

⁴ The Flin Flon concentrator was decommissioned in Q3 2022. The relevant comparative information can be found on page 59 in the Summary of Historical Results in this MD&A.

⁵ Combined mine/mill unit operating costs shown for Q2 2022 included the Flin Flon operations and are not directly comparable to the current costs with only Snow Lake operations.

During the second quarter of 2023, the Manitoba team continued to advance several key initiatives to support higher production levels and improved metal recoveries at our Snow Lake operations. Significant progress has been made at Lalor in optimizing the development drift size, improving shaft availability and implementing changes to achieve better stope muck fragmentation, which enabled the elimination of inefficient trucking of ore to surface via the ramp late in the second quarter. The first phase of the Stall mill recovery improvement project, consisting of new cyclone packs, state-of-the-art Jameson Cells on the copper and zinc circuits and process control improvements, was completed during the second quarter. Commissioning of the circuits quickly achieved targeted copper and zinc concentrate grades, while gold recovery improvements progressed slower than planned. Changes to optimize the circuit are underway and we expect to achieve higher gold recoveries in the second half of 2023. We also implemented tailings deposition improvements that have enabled us to maximize the Anderson facility tailings capacity and defer incremental dam construction activities to future years.

We successfully completed planned maintenance of the muck circuit, rock breaker boom change out and repairs and electrical installations at Lalor during the second quarter. Despite this planned maintenance program, ore mined from Lalor increased by 11% in the second quarter compared to the first quarter, averaging over 4,500 tonnes per day. Lalor continues to implement improvements to reduce costs and target higher production levels with a focus on equipment fleet availability and building of longhole inventory.

Total ore mined at our Manitoba operations during the second quarter of 2023 was 35% lower than the same period in 2022 mainly due to the planned closure of 777 in June 2022 which resulted in a significant decline in ore mined in the second quarter compared to the prior year period, which benefited from the full contribution of 777 mine production. Excluding 777 production, copper, gold and zinc grades mined during the second quarter of 2023 were 16%, 9% and 3% higher than the same period in 2022, respectively, while silver grades were 3% lower, compared to the same period in 2022, consistent with the mine plan.

Total ore mined at our Manitoba operations during the first half of 2023 was 39% lower than the same period in 2022 mainly due to the planned closure of 777 in June 2022 as noted above. Excluding 777 production, Lalor mined ore in the first half of 2023 was 2% lower than the same period in 2022. Gold grades mined during the first half of 2023 were 7% higher than the same period in 2022. Copper, zinc and silver grades mined at Lalor during the first half of 2023 were 8%, 9% and 11% lower, respectively, compared to the same period in 2022, consistent with the mine plan.

Total mine unit operating costs during the second quarter of 2023 increased by 4% compared to the same period in 2022.

Stall mill processed 9% less ore in the second quarter of 2023 compared to the same period in 2022, in line with expectations, due to completion of the Phase I recovery improvement project during the quarter and the commissioning of new Jameson cells requiring associated tie-ins of piping, pump boxes and electrical instrumentation. The project was completed on schedule and within budget and has already yielded expected results with copper and zinc concentrates grades achieving target levels. Improvements in gold recovery is progressing slower than planned and changes are being made to optimize the circuit. As a result of the temporary interruptions introduced by the project tie-ins, there was a buildup of approximately 30,000 tonnes of base metal ore stockpiles above normal levels at the end of second quarter that will be milled during the second half of 2023. Compared to the same period in 2022, unit operating costs at the Stall mill were 9% higher during the second quarter of 2022 due to lower throughput.

New Britannia mill continued to achieve consistent production in the second quarter of 2023, averaging approximately 1,560 tonnes per day. We continue to advance improvement initiatives at New Britannia requiring minimal capital outlays with a focus on reducing reagent and grinding media consumption while further improving overall metal recoveries and copper concentrate grades. There was a buildup of approximately 15,000 tonnes of gold ore stockpiles above normal levels at the end of the second quarter, which will be milled during the second half of 2023. New Britannia unit operating costs increased by 5% during the second quarter of 2023 versus the same period of 2022, primarily due to slightly lower throughput.

Combined mine, mill and G&A unit operating costs in the second quarter of 2023 increased by 31%, compared to the same period in 2022 reflecting inflationary cost pressures on materials and consumables, lower mill throughput due, in part, to the 45,000 tonnes of additional ore stockpiled above normal operating levels at the end of the second quarter, and the standalone cost structure of Lalor compared to the same period in 2022, which included operating costs for both Lalor and the lower cost 777 mine. Combined mine, mill and G&A unit operating costs in the first half of 2023 increased by 27% compared to the same period in 2022 due to the same reasons mentioned above.

The zinc plant in Flin Flon permanently ceased operations in June 2022 with no production in the second quarter of 2023. Closure activities commenced in the third quarter of 2022 and continue to progress safely during 2023.

Three months ended

Six months ended

Guidance

Contained metal in concentrate
and doré produced¹

Jun. 30,
2023

Jun. 30,
2022

Jun. 30,
2023

Jun. 30,
2022

Annual

2023

Gold²

35,253

44,787

71,287

87,954

175,000 - 205,000

Copper

tonnes

2,794

4,788

4,839

10,324

9,000 - 12,000

Zinc

tonnes

8,758

17,053

18,604

39,305

28,000 - 36,000

Silver³

180,750

280,625

331,392

559,414

750,000 - 1,000,000

¹Metal reported in concentrate is prior to deductions associated with smelter terms.

²Gold production guidance includes gold contained in concentrate produced and gold in doré.

³Silver production guidance includes silver contained in concentrate produced and silver in doré.

Metal production during the second quarter of 2023 was lower than the comparative 2022 period due to lower volumes from the closure of 777 mine in June 2022, partially offset by higher copper, gold and zinc grades at Lalor. Manitoba's production of copper, gold, silver and zinc in the second quarter of 2023 was lower by 42%, 21%, 36% and 49%, respectively, than the comparative 2022 period for the reasons outlined above. Production of copper, gold, silver and zinc in the first half of 2023 was lower by 53%, 19%, 41% and 53%, respectively, than the comparative 2022 period mainly due to lower volumes from the closure of 777 mine in June 2022 and lower comparative base metal and silver grades.

With the completion of a number of key initiatives aimed to continue to support higher production levels at Lalor, improved metal recoveries at the mills and a prioritization of mining higher gold grade zones at Lalor in the second half of 2023, as planned, full year Manitoba production of all metals remains on track to achieve guidance ranges. However, with the slower ramp-up of gold recoveries associated with the Stall Phase 1 recovery improvement project in the second quarter, gold production is trending towards the lower end of the 2023 guidance range for Manitoba, while copper and zinc production is trending towards upper end of guidance ranges.

* Mining activities at 777 were completed in June 2022

Manitoba Cash Cost and Sustaining Cash Cost

Three months ended

Six months ended

Guidance

Annual

Jun. 30,
2023

Jun. 30,
2022

Jun. 30,
2023

Jun. 30,
2022

2023

Cost per pound of gold produced

Cash cost per ounce of gold produced, net of by-product credits ¹

$/oz

1,097

(207

)

1,017

500 - 800

Sustaining cash cost per ounce of gold produced, net of by-product credits ¹

$/oz

1,521

519

1,427

847

¹ Cash cost and sustaining cash cost per ounce of gold produced, net of by-product credits, are not recognized under IFRS. For more detail on this non-IFRS financial performance measure, please see the discussion under the "Non-IFRS Financial Performance Measures" section of this MD&A.

Cash cost per ounce of gold produced, net of by-product credits, in the second quarter of 2023 increased to $1,097 from the comparative 2022 period, primarily due to lower gold production given the lower throughput at Stall mill, significantly lower by-product credits and higher treatment and refining charges. This was partially offset by lower mining, milling, G&A, freight costs and the elimination of zinc refining costs due to the closure of 777 mine and the zinc plant in June 2022.

Cash cost per ounce of gold produced, net of by-product credits in the second quarter of 2023 was 37% above the upper end of our 2023 guidance range; however, it was significantly impacted by lower by-product credits, in accordance with the mine plan, and the buildup of surface ore stockpiles in front of the Stall and New Britannia mills. We expect this cost measure to decline meaningfully during the remainder of 2023 with increasing gold production from higher grade stopes, continued throughput increases at Lalor and the full realization of higher recoveries from the Stall mill Phase I recovery improvement project enabling full year cash costs to remain within the 2023 guidance range.

Sustaining cash cost per ounce of gold produced, net of by-product credits, for the second quarter of 2023 was $1,521, an increase of 193% from the comparative 2022 period primarily due to the same factors affecting cash cost noted above, partially offset by lower sustaining capital expenditures.

Cash cost per ounce of gold produced, net of by-product credits, in the first half of 2023 was $1,017. These costs were higher compared to the same period in 2022 primarily due to the same factors affecting second quarter 2023 cash cost noted above. Sustaining cash cost per ounce of gold produced, net of by-product credits, for the first half of 2023 was $1,427, an increase of 69% from the comparative 2022 period primarily due to the same factors affecting cash cost noted above, partially offset by lower sustaining capital expenditures.

Metal Sold

Three months ended

Six months ended

Jun. 30,
2023

Jun. 30,
2022

Jun. 30,
2023

Jun. 30,
2022

Payable metal in concentrate and doré

Gold

33,009

42,454

70,949

76,345

Copper

tonnes

1,871

5,177

4,096

8,961

Zinc ¹

tonnes

8,641

20,793

14,269

38,099

Silver

133,916

253,225

283,595

481,684

¹Includes refined zinc metal and payable zinc in concentrate sold.

Quantities of payable metal sold for the three and six months ended June 30, 2023 were lower than the comparable periods in 2022 primarily due to the same factors impacting contained metal production, as noted above.

FINANCIAL REVIEW

Our financial results presented within this "Financial Review" section have been largely unaffected by Copper Mountain's operations with no revenues or corresponding cost of sales recorded during the 10-day stub period from the date of acquisition to the end of the second quarter.

Financial Results

In the second quarter of 2023, we recorded a net loss of $14.9 million compared to a net profit of $32.1 million in the second quarter of 2022, representing a reduction in profit of $47.1 million. Year-to-date in 2023, we recorded a net loss of $9.5 million compared to a net profit of $95.9 million for the same period in 2022, representing a decrease in profit of $105.4 million

The following table provides further details on these variances:

(in $ millions)	Three months ended June 30, 2023		Six months ended June 30, 2023
Reduction in components of profit or loss:
Revenues	(103.3	)	(186.7	)
Cost of sales
Mine operating costs	38.0		89.0
Depreciation and amortization	(1.4	)	12.3
Selling and administrative expenses	(7.0	)	(4.4	)
Exploration expenses	3.7		14.1
Re-evaluation adjustment - environmental obligation	(56.0	)	(127.6	)
Other expenses	(15.2	)	(11.1	)
Impairment loss	95.0		95.0
Net finance expense	(6.1	)	(4.3	)
Tax expense	5.2		18.3
Reduction in profit for the period	(47.1	)	(105.4	)

Revenue

Revenue for the second quarter of 2023 was $312.2 million, $103.3 million lower than the same period in 2022, primarily as a result of lower copper and zinc metal prices, lower copper, zinc and gold sales volumes and higher treatment and refining charges. Copper and zinc sales volumes were significantly lower than prior year due to the planned closure of the 777 mine in Manitoba in June 2022 contributing to higher production and sales in the comparative period.

Revenue for the first half of 2023 was $607.4 million, $186.7 million lower than the same period in 2022, mainly due to the same factors affecting the quarter-to-date variances described above partially offset by higher molybdenum prices.

The following table provides further details on these variances:

(in $ millions)	Three months ended June 30, 2023		Six months ended June 30, 2023

Metals prices¹
Lower copper prices	(19.9	)	(42.8	)
Lower zinc prices	(15.1	)	(19.2	)
Higher gold prices	0.7		7.5
Lower silver prices	(2.3	)	(1.5	)
Sales volumes
Lower copper sales volumes	(5.4	)	(25.5	)
Lower zinc sales volumes	(52.0	)	(97.7	)
Lower gold sales volumes	(6.0	)	(3.5	)
Higher (lower) silver sales volumes	1.6		(5.8	)
Other
Change in derivative mark-to-market on zinc	0.5		0.4
Change in derivative mark-to-market on copper	4.5		4.5
Molybdenum and other volume and pricing differences	1.8		13.3
Variable consideration adjustments	-		1.7
Effect of higher treatment and refining charges	(11.7	)	(18.1	)
Decrease in revenue in 2023 compared to 2022	(103.3	)	(186.7	)

¹ See discussion below for further information regarding metals prices.

Our revenue by significant product type is summarized below:

	Three months ended				Six months ended
(in $ millions)	Jun. 30, 2023		Jun. 30, 2022		Jun. 30, 2023		Jun. 30, 2022
Copper	205.8		230.8		370.0		439.7
Zinc	20.3		88.7		40.1		155.2
Gold	75.9		90.3		150.8		157.9
Silver	7.2		8.9		13.5		15.5
Molybdenum	16.8		9.0		35.8		18.2
Other metals	-		2.0		0.2		4.4
Revenue from contracts	326.0		429.7		610.4		790.9
Amortization of deferred revenue - gold	7.9		10.0		13.3		23.2
Amortization of deferred revenue - silver	10.3		9.2		15.9		21.0
Amortization of deferred revenue - variable consideration adjustments - prior periods	-		-		4.9		3.2
Pricing and volume adjustments¹	(5.3	)	(18.4	)	8.1		(17.1	)
Treatment and refining charges	(26.7	)	(15.0	)	(45.2	)	(27.1	)
Revenue	312.2		415.5		607.4		794.1

¹Pricing and volume adjustments represents mark-to-market adjustments on provisionally prices sales, realized and unrealized changes to fair value for non-hedge derivative contracts and adjustments to originally invoiced weights and assays.

For further detail on variable consideration adjustments, refer to note 17 of our consolidated interim financial statements.

Realized sales prices

This measure is intended to enable management and investors to understand the average realized price of metals sold to third parties in each reporting period. The average realized price per unit sold does not have any standardized meaning prescribed by IFRS, is unlikely to be comparable to similar measures presented by other issuers and should not be considered in isolation or a substitute for measures of performance prepared in accordance with IFRS.

For sales of copper, zinc, gold and silver we may enter into non-hedge derivatives ("QP hedges") which are intended to manage the provisional pricing risk arising from quotational period terms in concentrate sales agreements. The gains and losses on QP hedges are included in the calculation of realized prices. We expect that gains and losses on QP hedges will offset provisional pricing adjustments on concentrate sales contracts.

Our realized prices for the second quarter of 2023 and 2022, respectively, are summarized below:

Realized prices¹ for the

Three months ended

Six months ended

LME QTD
2023²

Jun. 30,
2023

Jun. 30,
2022

LME YTD
2023²

Jun. 30,
2023

Jun. 30,
2022

Prices

Copper

$/lb

3.84

3.89

4.28

3.94

3.93

4.40

Zinc³

$/lb

1.15

1.94

1.28

1.25

1.86

Gold⁴

$/oz

1,810

1,795

1,846

1,769

Silver⁴

$/oz

21.45

24.32

21.75

22.83

¹Realized prices exclude refining and treatment charges and are on the sale of finished metal or metal in concentrate. Realized prices include the effect of provisional pricing adjustments on prior period sales.

² London Metal Exchange average for copper and zinc prices.

³ Includes sales of zinc concentrate and sales of zinc metal for the three and six months ended June 30, 2022. Zinc realized prices include premiums paid by customers for delivery of refined zinc metal, but exclude unrealized gains and losses related to non-hedge derivative contracts that are included in zinc revenues. Realized prices include the effect of provisional pricing adjustments on zinc concentrate.

⁴Sales of gold and silver from Constancia mine are subject to our precious metals stream agreement with Wheaton, pursuant to which we recognize deferred revenue for precious metals deliveries and also receive cash payments. Stream sales are included within realized prices and their respective deferred revenue and cash payment rates can be found on page 28 of this MD&A.

During the second quarter of 2023, we entered into a zero-cost collar program for approximately 10% of copper production expected in the second half of 2023. The program entails hedging 15.9 million pounds copper from July through to December 2023, inclusive, at an average floor price of $3.95 per pound and an average cap price of $4.28 per pound. The realized prices denoted above exclude the impact of derivative mark-to-market gains and losses on non-QP hedges which, if reflected above, would increase the realized copper price in the second quarter of 2023 by $0.09 per pound.

The following tables provide a reconciliation of average realized price per unit sold, by metal, to revenues as shown in the consolidated interim financial statements.

Three months ended June 30, 2023

(in $ millions) ¹

Copper

Zinc

Gold

Silver

Molybdenum

Other

Total

Revenue from contracts ²

205.8

20.3

75.9

7.2

16.8

326.0

Amortization of deferred revenue

7.9

10.3

18.2

Pricing and volume adjustments ³

(3.3

)

1.6

2.3

(0.3

)

(5.6

)

(5.3

)

By-product credits ⁴

202.5

21.9

86.1

17.2

11.2

338.9

Derivative mark-to-market ⁵

(4.5

)

(4.5

)

Revenue, excluding mark-to-market on non-QP hedges⁴

198.0

21.9

86.1

17.2

11.2

334.4

Payable metal in concentrate and doré sold⁶

23,079

8,641

47,533

805,448

314

Realized price⁷

8,575

2,534

1,810

21.45

Realized price ⁸

3.89

1.15

Six months ended June 30, 2023

(in $ millions) ¹

Copper

Zinc

Gold

Silver

Molybdenum

Other

Total

Revenue from contracts ²

370.0

40.1

150.8

13.5

35.8

0.2

610.4

Amortization of deferred revenue

13.3

15.9

29.2

Pricing and volume adjustments ³

(4.8

)

(0.9

)

15.4

(0.1

)

(1.5

)

8.1

By-product credits ⁴

365.2

39.2

179.5

29.3

34.3

0.2

647.7

Derivative mark-to-market ⁵

(4.5

)

(4.5

)

Revenue, excluding mark-to-market on non-QP hedges

360.7

39.2

179.5

29.3

34.3

0.2

643.2

Payable metal in concentrate and dore sold⁶

41,619

14,269

97,254

1,347,334

568

Realized price⁷

8,667

2,747

1,846

21.75

Realized price ⁸

3.93

1.25

¹Average realized price per unit sold may not calculate based on amounts presented in this table due to rounding.

² As per financial statements.

³Pricing and volume adjustments represents mark-to-market adjustments on provisionally priced sales, realized and unrealized changes to fair value for non-hedge derivative contracts and adjustments to originally invoiced weights and assays.

⁴ By-product credits subtotal is used in the calculated of cash cost per pound of copper and ounce of gold produced, net of by-product credits. Cash cost per pound of copper and per ounce of gold produced, net of by-product credits, are non-IFRS financial performance measures with no standardized definition under IFRS. For further information and a detailed reconciliation, please see the discussion under the "Non-IFRS Financial Performance Measures" section of this MD&A.

⁵Derivative mark-to-market excludes mark-to-market on QP hedges.

⁶Copper, zinc and molybdenum shown in metric tonnes and gold and silver shown in ounces.

⁷ Realized price for copper and zinc in $/metric tonne and realized price for gold and silver in $/oz.

⁸Realized price for copper and zinc in $/lb.

The price, quantity and mix of metals sold, affect our revenue, operating cash flow and profit. Revenue from metals sales can vary from quarter to quarter due to production levels, shipping volumes and transfer of risk and title to customers.

Three months ended June 30, 2022
(in $ millions) ¹	Copper		Zinc		Gold		Silver		Molybdenum		Other	Total
Revenue from contracts ²	230.8		88.7		90.3		8.9		9.0		2.0	429.7
Amortization of deferred revenue	-		-		10.0		9.2		-		-	19.2
Pricing and volume adjustments ³	(7.5	)	(0.2	)	(8.9	)	(0.2	)	(1.6	)	-	(18.4	)
By-product credits ⁴	223.3		88.5		91.4		17.9		7.4		2.0	430.5
Derivative mark-to-market ⁵	-		0.5		-		-		-		-	0.5
Revenue, excluding mark-to-market on non-QP hedges	223.3		89.0		91.4		17.9		7.4		2.0	431.0
Payable metal in concentrate and dore sold⁶	23,650		20,793		50,884		738,171		208		-	-
Realized price⁷	9,442		4,282		1,795		24.32		-		-	-
Realized price ⁸	4.28		1.94		-		-		-		-	-
Six months ended June 30, 2022
(in $ millions) ¹	Copper		Zinc		Gold		Silver		Molybdenum		Other	Total
Revenue from contracts ²	439.7		155.2		157.9		15.5		18.2		4.4	790.9
Amortization of deferred revenue	-		-		23.2		21.0		-		-	44.2
Pricing and volume adjustments ³	(10.7	)	0.5		(5.6	)	0.1		(1.4	)	-	(17.1	)
By-product credits ⁴	429.0		155.7		175.5		36.6		16.8		4.4	818.0
Derivative mark-to-market ⁵	-		0.4		-		-		-		-	0.4
Revenue, excluding mark-to-market on non-QP hedges	429.0		156.1		175.5		36.6		16.8		4.4	818.4
Payable metal in concentrate and dore sold⁶	44,259		38,099		99,227		1,602,763		421		-	-
Realized price⁷	9,695		4,097		1,769		22.83		-		-	-
Realized price ⁸	4.40		1.86		-		-		-		-	-

¹Average realized price per unit sold may not calculate based on amounts presented in this table due to rounding.

² As per consolidated interim financial statements.

⁴ By-product credits subtotal is used in the calculated of cash cost per pound of copper and zinc produced, net of by-product credits. Cash cost per pound of copper and per ounce of gold produced, net of by-product credits, are non-IFRS financial performance measures with no standardized definition under IFRS. For further information and a detailed reconciliation, please see the discussion under the "Non-IFRS Financial Reporting Measures" section of this MD&A.

⁵Derivative mark-to-market excludes mark-to-market on QP hedges.

⁶Copper, zinc and molybdenum shown in metric tonnes and gold and silver shown in ounces.

⁷Realized price for copper, zinc and molybdenum in $/metric tonne and realized price for gold and silver in $/oz.

⁸Realized price for copper and zinc in $/lb.

Stream Sales

The following table shows stream sales included within realized prices and their respective deferred revenue and cash payment rates:

		Three months ended	Six months ended
		Jun. 30, 2023	Jun. 30, 2023
		Peru ¹	Peru ¹
Gold	oz	9,619	16,198
Silver	oz	674,514	1,040,158
Gold deferred revenue drawdown rate^1,2	$/oz	820	820
Gold cash rate³	$/oz	416	416
Total gold stream realized price	$/oz	1,236	1,236
Silver deferred revenue drawdown rate^1,2	$/oz	15.26	15.26
Silver cash rate³	$/oz	6.14	6.14
Total silver stream realized price	$/oz	21.40	21.40

		Three months ended		Six months ended
		Jun. 30, 2022		Jun. 30, 2022
		Manitoba	Peru	Manitoba	Peru
Gold	oz	3,629	7,431	8,017	17,926
Silver	oz	75,367	494,029	162,279	1,137,665
Gold deferred revenue drawdown rate^1,2	$/oz	1,241	734	1,247	734
Gold cash rate³	$/oz	429	412	429	412
Total gold stream realized price	$/oz	1,670	1,146	1,676	1,146
Silver deferred revenue drawdown rate^1,2	$/oz	24.49	14.95	24.62	14.95
Silver cash rate³	$/oz	6.33	6.08	6.33	6.08
Total silver stream realized price	$/oz	30.82	21.03	30.95	21.03

¹Subsequent to the variable consideration adjustment recorded on January 1, 2023, the deferred revenue amortization is recorded in Peru at $820/oz gold and $15.26/oz silver (June 30, 2022 - $734/oz gold and $14.95/oz silver).

²Deferred revenue drawdown rates for gold and silver do not include variable consideration adjustments.

³The gold and silver cash rate for Manitoba increased by 1% from $400/oz and $5.90/oz effective August 1, 2015. Subsequently every year, on August 1, the cash rate will increase by 1% compounded. The weighted average cash rate is disclosed. The gold and silver cash rate for Peru increased by 1% from $400/oz and $5.90/oz effective August 4, 2019. Subsequently every year, on August 4, the cash rate will increase by 1% compounded. The weighted average cash rate is disclosed.

Cost of Sales

Our detailed cost of sales is summarized as follows:

(in $ thousands)	Three months ended				Six months ended
(in $ thousands)	Jun. 30, 2023		Jun. 30, 2022		Jun. 30, 2023		Jun. 30, 2022
Peru
Mining	31,654		32,300		58,440		60,702
Milling	54,676		44,731		100,867		92,386
Changes in product inventory	27,078		(8,394	)	15,943		(13,166	)
Depreciation and amortization	67,340		47,811		109,300		96,173
G&A	14,896		18,577		31,348		34,775
Inventory adjustments	-		(97	)	-		(558	)
Freight, royalties and other charges	14,903		13,414		27,995		23,745
Total Peru cost of sales	210,547		148,342		343,893		294,057
Manitoba
Mining	41,681		54,500		79,433		113,933
Milling	15,193		20,953		30,041		42,462
Zinc plant	-		14,379		-		32,755
Changes in product inventory	(11,964	)	12,888		(10,238	)	(3,260	)
Depreciation and amortization	21,330		39,494		46,792		72,223
Inventory adjustments	906		2,030		906		2,030
G&A	6,139		22,721		16,321		45,964
Freight, royalties and other charges	5,441		10,633		10,831		19,127
Total Manitoba cost of sales	78,726		177,598		174,086		325,234
Cost of sales	289,273		325,940		517,979		619,291

Total cost of sales for the second quarter of 2023 was $289.3 million, reflecting a decrease of $36.6 million from the second quarter of 2022. Peru cost of sales increased by $62.2 million in the second quarter of 2023, compared to the same period of 2022 mainly due to changes in product inventory caused a significant drawdown of copper concentrate that had accumulated during the first quarter of 2023 as nation-wide road blockades prevented shipments for most of the first quarter. Peru cost of sales were also higher in the second quarter of 2023, versus the comparative 2022 period, due to higher milling costs primarily related to a scheduled mill maintenance program with no similar maintenance program in the comparative period as well as higher depreciation.

Manitoba cost of sales decreased by $98.8 million in the second quarter of 2023, compared to the same period of 2022 as a result of the closure of the zinc plant in June 2022, decreases in the mining, milling and depreciation costs due to the planned closure of 777 and the Flin Flon mill, a reduction of general and administrative and freight costs, favourable movements in the foreign exchange rate as Manitoba's costs are primarily denominated in Canadian dollars and a higher relative buildup of copper concentrate inventory.

Total cost of sales for the first half of 2023 was $518.0 million, reflecting a decrease of $101.3 million from the same period in 2022. Peru cost of sales increased by $49.8 million mainly driven by higher depreciation, a higher relative drawdown of product inventory and higher milling costs due to a scheduled mill maintenance program. Manitoba cost of sales decreased by $151.1 million as a result of the same factors affecting the quarter-to-date Manitoba cost of sales variance described above.

For details on unit operating costs, refer to the respective tables in the "Operations Review" section of this MD&A.

For the second quarter of 2023, other significant variances in non-operating expenses, compared to the same period in 2022, include the following:

- A comparative period Impairment - Arizona decreased by $95.0 million. The prior period had an impairment related to certain capitalized costs and assets associated with the previous stand-alone development plan for the Rosemont deposit, which were determined to no longer be recoverable. No impairment was recorded in the comparative 2023 period.

- Re-evaluation adjustment - environmental provision decreased by $56.0 million due to the relative revaluation of the environmental reclamation provision on our Manitoba non-producing sites from changes in long term risk-free discount rates and inflation rates.

Given the long term nature of the reclamation cash flows, the related environmental reclamation provision is highly sensitive to changes in inflation rates and long-term risk-free discount rates and, as such, we may continue to experience significant quarterly closure cost provision revaluations.

- Selling and administrative expenses increased by $7.0 million compared to the same period in 2022, reflecting a higher share based compensation expense as a result of an increase in share price during the current year compared to the prior year.

- Other expenses increased by $15.2 million compared to the same period in 2022. The increase was primarily due to a comparative period insurance recovery of $5.7 million and increases in care & maintenance costs for the Flin Flon concentrator and tailings impoundment area following the planned closure of the Flin Flon operations in the second quarter of 2022 as well as transaction costs incurred to complete the acquisition of Copper Mountain. Partially offsetting these impacts was a non-recurring comparative period expense for the restructuring of the Manitoba operations in preparation for the closure of the Flin Flon operations.

- Exploration expenses decreased by $3.7 million reflecting a reduction in expensed exploration spending compared to the previous period.

For the year-to-date 2023, other significant variances in non-operating expenses, compared to the same period in 2022, include the following:

- Re-evaluation adjustment - environmental provision decreased by $127.6 million, for the same reasons outlined in the quarterly variance analysis.

- A comparative period Impairment - Arizona decreased by $95.0 million, as outlined in the second quarterly variance analysis.

- Exploration expenses decreased by $14.1 million as Copper World drilling and exploration costs, which were mainly expensed in the comparative 2022 period, have since been completed with incremental Copper World exploration now being capitalized.

- Selling and administrative expenses increased by $4.4 million for the same reasons outlined in the quarterly variance analysis.

- Other expenses increased by $11.1 million for the same reasons outlined in the quarterly variance analysis.

Net finance expense

(in $ thousands)

Three months ended

Six months ended

Jun. 30,
2023

Jun. 30,
2022

Jun. 30,
2023

Jun. 30,
2022

Finance costs - accrued or payable:

Interest expense on long-term debt

17,800

16,911

34,807

33,809

Withholding taxes

1,576

1,457

2,981

3,020

Loss on disposal of investments

3,132

652

3,132

Other accrued/payable costs¹

1,531

238

3,632

Total finance costs - accrued or payable

19,412

23,031

38,678

43,593

Finance costs - non-cash:

Accretion on streaming agreements²

6,596

7,357

13,097

12,193

Change in fair value of financial assets and liabilities at fair value through profit or loss

(87

)

(6,418

)

5,510

798

Other non-cash costs³

4,582

457

8,194

4,587

Total finance costs - non-cash

11,091

1,396

26,801

17,578

Net finance expense

30,503

24,427

65,479

61,171

¹Includes interest income and other finance expense.

²Includes variable consideration adjustment (prior periods).

³Includes accretion on community agreements, accretion on Wheaton refund liability, unwinding of discount on provisions, and net foreign exchange losses (gains).

Net finance expense during the second quarter ended June 30, 2023, increased by $6.1 million compared to the second quarter of 2022 primarily due to a $6.3 million decrease in the change in relative revaluation of the gold prepayment liability net of revaluation losses on our equity investments held at period end and a $3.6 million increase in net foreign exchange losses. These increases were partially offset by a $3.1 million decrease in loss on disposal of investments compared to same quarter in 2022 as well as $1.3 million of additional interest income earned.

Net finance expense during the first half of 2023, increased by $4.3 million compared to the same period in 2022 due a $4.7 million increase in the change in relative revaluation of the gold prepayment liability and revaluation losses on our equity investments, and a $2.5 million increase in net foreign exchange losses. This was partially offset by a $2.5 million decrease in losses on disposal of investments and $2.7 million of additional interest income earned.

Tax Expense

For the three months ended June 30, 2023, tax recoveries increased by $5.2 million and for the six months ended June 30, 2023, tax expense decreased by $18.3 million, compared to the same periods in 2022. The following table provides further details:

(in $ thousands)	Three months ended				Six months ended
(in $ thousands)	Jun. 30, 2023		Jun. 30, 2022		Jun. 30, 2023		Jun. 30, 2022
Deferred tax (recovery) expense - income tax¹	(15,134	)	(21,463	)	(18,284	)	(11,862	)
Deferred tax (recovery) expense - mining tax¹	(70	)	127		(2,069	)	5,117
Total deferred tax (recovery) expense	(15,204	)	(21,336	)	(20,353	)	(6,745	)
Current tax (recovery) expense - income tax	(1,020	)	7,477		9,745		12,954
Current tax expense - mining tax	425		3,220		6,782		8,198
Total current tax (recovery) expense	(595	)	10,697		16,527		21,152
Tax (recovery) expense	(15,799	)	(10,639	)	(3,826	)	14,407

¹Deferred tax expense (recovery) represents our draw down/increase of non-cash deferred income and mining tax assets/liabilities.

Income Tax Expense/Recovery

Applying the estimated Canadian statutory income tax rate of 26.3% to our loss before taxes of $13.3 million for the year-to-date of 2023 would have resulted in a tax recovery of approximately $3.5 million; however, we recorded an income tax recovery of $8.5 million. The significant items causing our effective income tax rate to be different than the 26.3% estimated Canadian statutory income tax rate include:

- Deductible temporary differences with respect to Peru and Manitoba, relating to the decommissioning and restoration liabilities, were recognized as we have determined that it is probable that we will realize the recovery of these deferred tax assets based on the timing of the reversals of the deductible temporary differences and the future projected taxable profit of the operations. This resulted in a combined deferred tax recovery of $3.2 million.

- Foreign exchange on the translation of deferred tax balances to group currency resulted in a deferred tax recovery of $7.1 million.

- The tax expense with respect to our foreign operations are recorded using an income tax rate other than the Canadian statutory income tax rate of 26.3%, resulting in a tax expense of $4.7 million.

Mining Tax Expense

Applying the estimated Manitoba mining tax rate of 10.0% to our loss before taxes of $13.3 million for the second quarter of 2023 would have resulted in a tax expense of approximately $1.3 million; however, we recorded a mining tax expense of $4.7 million. Effective mining tax rates can vary significantly based on the composition of our earnings and the expected amount of mining taxable profits. Corporate costs and other costs not related to mining operations are not deductible in computing mining profits. A brief description of how mining taxes are calculated in our various business units is discussed below.

Manitoba

The Province of Manitoba imposes mining tax on profit related to the sale of mineral products mined in the Province of Manitoba (mining taxable profit) at the following rates:

- 10% of total mining taxable profit if mining profit is C$50 million or less;

- Between mining profit of C$50 and $C55 million, mining tax is equal to a minimum of C$5 million plus mining profit less C$50 million multiplied by 65%;

- 15% of total mining taxable profit if mining profits are between C$55 million and C$100 million;

- Between mining profit of C$100 million and C$105 million, mining tax is equal to a minimum of C$15 million plus mining profit less C$100 million multiplied by 57%; and

- 17% of total mining taxable profit if mining profits exceed C$105 million.

We estimate that the tax rate that will be applicable when temporary differences reverse will be approximately 10.0%.

Peru

The Peruvian government imposes two parallel mining tax regimes, the Special Mining Tax and the Modified Royalty, on companies' operating mining income on a sliding scale, with progressive rates ranging from 2.0% to 8.4% and 1.0% to 12.0%, respectively. Based on financial forecasts, we have recorded a deferred tax liability as at June 30, 2023, at the tax rate we expect to apply when temporary differences reverse.

LIQUIDITY AND CAPITAL RESOURCES

As at June 30, 2023, our liquidity includes $179.7 million in cash as well as undrawn total availability of $184.1 million under our revolving credit facilities.

Subsequent to quarter end, we drew $90 million from our revolving credit facilities to finance the redemption of a portion of Copper Mountain's bonds, as described below.

Senior Unsecured Notes

We have $600.0 million aggregate principal amount of 4.5% senior notes due April 2026 and $600.0 million aggregate principal amount of 6.125% senior notes due April 2029.

In connection with the Copper Mountain Transaction, we designated the Copper Mountain group as Unrestricted Subsidiaries, as defined in the indentures governing our senior notes (the "Note Indentures"). As a result, Copper Mountain and its subsidiaries do not guarantee our obligations under the Note Indentures.

Senior Secured Revolving Credit Facilities

We have two senior secured revolving credit facilities with total commitments of $450 million ("the Credit Facilities") for our Canadian and Peruvian businesses and substantially similar terms and conditions.

In connection with the Copper Mountain Transaction, our Revolving Credit Facilities ("RCFs") were amended to allow Hudbay to designate the Copper Mountain Group of companies as Unrestricted Subsidiaries under the RCFs so that the debt, cash, interest and EBITDA are excluded from ratio calculations and the assets excluded from the RCF security package until the Copper Mountain bonds are repaid in full. In addition, the Net Debt to EBITDA covenant ratio was increased from 4:1 to 4.5:1 for the periods ending June 30 and September 30, 2023, to provide greater financial flexibility during the business integration period.

At June 30, 2023, we had $40.0 million outstanding under our Canadian revolving credit facility. As at June 30, 2023, we were in compliance with our covenants under the Credit Facilities and had also drawn $26.1 million in letters of credit under the Credit Facilities. In total, $66.1 million was owing under the Credit Facilities as at June 30, 2023.

C$130 Million Bilateral Letter of Credit Facility

On August 22, 2022, we closed a C$130.0 million bilateral letter of credit facility ("LC Facility") with a major Canadian financial institution. The LC Facility enables the Company to issue up to C$130.0 million of letters of credit to beneficiaries on an unsecured basis at attractive rates, with a further C$30.0 million sub-limit for financial letters of credit. This facility was permitted under the existing terms the Credit Facilities and has no financial covenants. As at June 30, 2023, the Manitoba business unit had drawn $58.0 million in letters of credit under the LC Facility.

Surety Bonds

As at June 30, 2023, the Arizona business unit had $12.8 million in surety bonds issued to support future reclamation and closure obligations. The Peru business unit also had $118.0 million in letters of credit issued with various Peruvian financial institutions to support future reclamation and other operating matters. The British Columbia business unit had $15.9 million in surety bonds issued to support future reclamation and $3.9 million in surety bonds issued to support the hydro used at Copper Mountain Mine. No cash collateral is required to be posted under these letters of credit or surety bonds.

Gold Prepay

During the fourth quarter of 2020, we entered into a gold forward sale and prepay transaction which generated $115.0 million in cash proceeds to pre-fund the expected capital requirements for the New Britannia gold mill refurbishment project. The transaction valued the future gold ounce delivery obligation at 79,954 gold ounces to be delivered in fixed monthly deliveries of 3,331 gold ounces over a 24-month period from January 2022 to December 2023.

During the first quarter of 2023, we amended our gold forward sale and prepay agreements to defer eight months of deliveries starting with February 2023. Deliveries of the outstanding 37,500 ounces of gold will resume in fixed monthly amounts starting in October 2023 until August 2024. The fair value of the financial liability at June 30, 2023 was $69.9 million.

Copper Mountain Bonds

On April 9, 2021, Copper Mountain completed an offering of $250 million of secured bonds ("the Bonds"). The Bonds mature on April 9, 2026 and bear interest at an annual rate of 8.0%, payable semi-annually on April 9 and October 9. Semi-annual principal installments in the amount of $5 million are payable on each interest payment date. As at June 30, 2023, the Company had $3.7 million on deposit in a debt service account to satisfy the upcoming semi-annual principal installment and interest payment. The debt service account balance is presented as restricted cash within other financial assets in our consolidated interim balance sheet.

The Bonds require Copper Mountain to comply with certain covenants, including restrictions on dividends and indebtedness and a requirement to maintain certain minimum cash amounts at Copper Mountain and the Copper Mountain mine. As at June 30, 2023, the Company is in compliance with our financial covenants under the Bonds.

The Bonds also provide the bondholders with the right to put all or part of the principal amount of the outstanding Bonds to Copper Mountain at a price of 101%, plus accrued interest, following a change of control event. With the acquisition of Copper Mountain on June 20, 2023, the change of control event was triggered and $83.3 million of the Bonds were put to Copper Mountain on July 17, 2023. As described above, the Company utilized its Credit Facilities to finance the redemption of the Bonds that were put to Copper Mountain.

Copper Mountain may redeem all or part of the principal amount of the remaining outstanding Bonds at any time from October 2023, at redemption prices ranging from 104% to 100%, plus accrued and unpaid interest to the date of redemption.

As at June 30, 2023, the Bonds had a principal amount outstanding of $143.0 million. As at the date hereof, the Bonds have a principal amount outstanding of $59.7 million.

Financial Condition

Financial Condition as at June 30, 2023 compared to December 31, 2022

Cash decreased by $45.9 million during the first half of the year to $179.7 million as at June 30, 2023. This decrease was mainly the result of investing and financing cash outflows of $135.5 million for capital investments and community agreements primarily at our Peru and Manitoba operations, interest payments of $31.9 million, lease payments of $10.4 million, partial repayment of our gold prepayment liability of $6.4 million, other financing costs mainly related to our revolving credit facilities and withholding taxes of $6.2 million, $5.0 million for a scheduled payment related to the Rosemont acquisition as well as dividends paid of $1.9 million. Offsetting these outflows were cash inflows from operating activities of $95.8 million, $40.0 million draw on our Credit Facilities, $3.1 million of interest received and $10.7 million of net cash acquired on the closing of the Copper Mountain acquisition. We hold the majority of our cash in low-risk, liquid investments with major Canadian and Peruvian financial institutions.

Working capital decreased by $137.9 million to negative $61.4 million from December 31, 2022 to June 30, 2023, primarily due to a $145.0 million increase in the current portion of long term debt related to Copper Mountain Bonds that had a put option outstanding at June 30, 2023, which required the Bonds to be presented as current. Subsequent to June 30, 2023, $83.3 million of the Bonds were put to Copper Mountain on July 17, 2023. We drew $90 million from our revolving credit facilities to finance the redemption of this portion of the Bonds. Working capital also decreased due to a decrease in cash of $45.9 million, an increase in deferred revenue of $23.8 million, a decrease in trade receivables of $23.6 million mainly related to timing of sales receivables and an increase in lease liabilities of $14.8 million. Partially offsetting these items was a $65.5 million increase in inventories due, in part, to the buildup of approximately 45,000 tonnes of surface ore stockpiles in front of Stall and New Britannia mills, a $20.8 million decrease in other financial liabilities and a corresponding $21.3 million increase in other financial assets due to an increase in the value of commodity hedges as commodity prices eased off during the period, an increase in restricted cash from the acquisition of Copper Mountain, a $19.1 million decrease in other liabilities due to a decline in advances from customers and a $14.1 million decrease in current gold prepayment liability due to timing of gold delivery obligations.

Cash Flows

The following table summarizes our cash flows for the three and six months ended June 30, 2023 and June 30, 2022:

(in $ thousands)	Three months ended				Six months ended
(in $ thousands)	Jun. 30, 2023		Jun. 30, 2022		Jun. 30, 2023		Jun. 30, 2022
Operating cash flow before change in non-cash working capital	55,878		123,911		141,486		200,964
Change in non-cash working capital	(31,321	)	41,695		(45,650	)	27,949
Cash generated from operating activities	24,557		165,606		95,836		228,913
Cash used in investing activities	(55,921	)	(78,854	)	(120,997	)	(134,586	)
Cash used in financing activities	(45,123	)	(41,470	)	(21,878	)	(106,189	)
Effect of movement in exchange rates on cash	658		(85	)	1,108		(571	)
(Decrease) increase in cash	(75,829	)	45,197		(45,931	)	(12,433	)

Cash Flow from Operating Activities

Cash generated from operating activities was $24.6 million during the second quarter of 2023, a decrease of $141.0 million compared with the same period in 2022 predominantly due to a $73.0 negative impact from changes in non-cash working capital. Operating cash flow before change in non-cash working capital was $55.9 million during the second quarter of 2023, reflecting a decrease of $68.0 million compared to the second quarter of 2022. The decrease in operating cash flows before changes in working capital was primarily the result of lower copper and zinc prices, lower copper, zinc and gold sales volumes due to the comparative period including 777 production, the buildup of approximately 45,000 tonnes of surface ore stockpiles in Manitoba as the commissioning of the Stall mill Phase I recovery improvement project was completed as well as a second quarter scheduled plant maintenance shutdown in Peru and higher treatment and refining charges.

Year-to-date cash generated from operating activities was $95.8 million in 2023, a decrease of $133.1 million compared to 2022. Operating cash flow before changes in non-cash working capital for the first half of 2023 was $141.5 million, a decrease of $59.5 million compared to 2022. The decrease in operating cash flow before changes in working capital is mostly attributable to the same reasons outlined in the quarterly variance, partially offset by higher molybdenum prices and sales volumes.

Cash Flow from Investing and Financing Activities

During the second quarter of 2023, we spent $101.0 million in investing and financing activities, primarily driven by $65.9 million in capital expenditures, $2.7 million in community agreement payments, $31.9 million in interest payments, $5.1 million in capitalized lease payments, $5.0 million in deferred Rosemont acquisition payment and $3.0 million in other financing costs mainly related to our revolving credit facilities and withholding taxes. These cash outflows were partially offset by $1.5 million of interest received and $10.7 million of net cash acquired on the closing of the Copper Mountain acquisition.

Year-to-date, we used $142.9 million of cash in investing and financing activities, primarily driven by $130.8 million of capital expenditures, $4.6 million in community agreements, $31.9 million of interest payments, $10.4 million in lease payments, $6.4 million in partial settlement of our gold prepayment liability, $6.2 million in other financing costs mainly related to our revolving credit facilities and withholding taxes, $5.0 million for a scheduled payment related to the Rosemont acquisition and $1.9 million in dividend payments. These cash outflows were partially offset by a $40.0 million draw on our Credit Facilities, $3.1 million of interest received and $10.7 million of net cash acquired on the closing of the Copper Mountain acquisition.

Capital Expenditures

The following summarizes accrued and cash additions to capital assets for the periods indicated:

	Three months ended				Six months ended				Guidance
	Jun. 30, 2023		Jun. 30, 2022		Jun. 30, 2023		Jun. 30, 2022		Annual
(in $ millions)	Jun. 30, 2023		Jun. 30, 2022		Jun. 30, 2023		Jun. 30, 2022		2023²
Manitoba sustaining capital expenditures	12.5		33.8		24.1		57.8		75.0
Peru sustaining capital expenditures¹	28.7		28.1		57.8		47.0		160.0
Total sustaining capital expenditures	41.2		61.9		81.9		104.8		235.0
Arizona capitalized costs	5.5		12.4		11.6		15.5		30.0
Peru growth capitalized expenditures	9.9		0.1		11.7		0.2		10.0
Manitoba growth capitalized expenditures	5.1		12.6		13.5		17.5		15.0
Other capitalized costs²	7.3		4.0		10.2		13.4		-
Capitalized exploration	0.3		7.0		0.9		10.1		10.0
Total other capitalized expenditures	28.1		36.1		47.9		56.7
Total capital additions³	69.3		98.0		129.8		161.5

Reconciliation to cash capital additions:
Right-of-use asset additions	(4.1	)	(12.5	)	(4.7	)	(20.3	)
Community agreement additions	(1.8	)	-		(1.7	)	(0.8	)
Change in capital accruals and other	2.5		(7.0	)	7.4		(9.8	)
Acquisition of property, plant & equipment - cash	65.9		78.5		130.8		130.6

¹Peru sustaining capital expenditures include capitalized stripping costs.

² Other capitalized costs primarily include right-of-use lease additions, which are excluded from guidance in 2023.

³ Following completion of the Copper Mountain acquisition on June 20, 2023, the Company's capital additions have not been materially affected by Copper Mountain's operations during the 10-day stub period from the date of acquisition to the end of the second quarter.

For the three and six months ended June 30, 2023, total capital additions declined by 29% and 20%, respectively, compared to the same periods in 2022 as a result of lower sustaining capital expenditures in Manitoba, lower growth spending in Arizona and Manitoba, partially offset by higher sustaining and growth capital expenditures in Peru.

Sustaining capital expenditures in Manitoba for the three and six months ended June 30, 2023 were $12.5 million, and $24.1 million, respectively representing a decline of $21.3 million and $33.7 million compared to the same period in 2022 due to lower spending at Anderson tailings and lower capital development at Lalor in 2023. Sustaining capital expenditures in Peru for the three and six months ended June 30, 2023 were $28.7 million and $57.8 million respectively, representing an increase of $0.6 million and $10.8 million compared to the same period in 2022. The increases mainly relate to increased capitalized stripping at Pampacancha.

Growth capital spending in Manitoba for the three and six months ended June 30, 2023 was $5.1 million and $13.5 million, respectively, which mainly relates to the Stall mill recovery improvement project, which has now been completed. Growth capital expenditures in Peru for the three and six months ended June 30, 2023 were $9.9 million and $11.7 million, respectively, representing an increase of $9.8 million and $11.5 million compared to the same period in 2022 and mainly relate to planned spending on copper and molybdenum recovery improvement projects in 2023.

Arizona's capital expenditures for the three and six months ended June 30, 2023 were $5.5 million and $11.6 million, respectively, and mainly relate to pre-feasibility study costs and Copper World carrying costs.

Other capitalized costs for the three and six months ended June 30, 2023 were $7.3 million and $10.2 million, respectively, which are mostly made up of non-cash capitalized costs.

We expect consolidated sustaining, growth and capitalized exploration in 2023 to be approximately $15 million lower than our full year guidance.

Capital Commitments

As at June 30, 2023, we had outstanding capital commitments in Canada of approximately $34.9 million, of which $30.6 million can be terminated, approximately $27.6 million in Peru primarily related to exploration option agreements, all of which can be terminated, and approximately $42.7 million in Arizona, primarily related to our Copper World project, of which approximately $7.2 million can be terminated.

Contractual Obligations

The following table summarizes our significant contractual obligations as at June 30, 2023:

	Total	Less than 12 months	13 - 36 months	37 - 60 months	More than 60 months
Payment Schedule (in $ millions)	Total	Less than 12 months	13 - 36 months	37 - 60 months	More than 60 months
Long-term debt obligations¹	1,853.3	363.9	738.0	114.6	636.8
Gold prepayment obligation²	70.0	57.2	12.8	-	-
Lease obligations	169.4	57.6	69.6	23.3	18.9
Purchase obligation - capital commitments	105.2	29.0	32.7	42.6	0.9
Purchase obligation - other commitments³	1,718.9	444.1	622.9	181.2	470.7
Pension and other employee future benefits obligations²	97.3	7.8	11.5	28.9	49.1
Community agreement obligations^{4, 5}	69.6	10.1	8.6	7.9	43.0
Decommissioning and restoration obligations⁵	484.4	5.4	10.1	7.4	461.5
Total	4,568.1	975.1	1,506.2	405.9	1,680.9

¹Long-term debt obligations include scheduled interest payments, as well as principal repayments .This balance also includes the Copper Mountain Bonds that were puttable as at June 30, 2023.

²Discounted.

³ Primarily made up of long-term agreements with operational suppliers, obligations for power purchase, concentrate handling, fleet and port services, as well as deferred consideration arising from the acquisition of Rosemont's minority interest.

⁴Represents community agreement obligations and various finalized land user agreements, including Pampacancha.

⁵ Undiscounted before inflation.

In addition to the contractual obligations included in the above payment schedule, we also have the following commitments which impact our financial position:

- A profit-sharing plan with most Manitoba employees;

- A profit-sharing plan with all Peru employees;

- Wheaton precious metals stream agreements for 777 and the Constancia mines; and,

- Government royalty payments related to the Constancia mines.

Outstanding Share Data

As of August 4, 2023, the final trading day prior to the date of this MD&A, there were 346,225,631 common shares of Hudbay issued and outstanding. In addition, there were 2,246,363 stock options outstanding.

FINANCIAL RISK MANAGEMENT

Business Integration Risk with Copper Mountain

Hudbay's expectations with respect to the financial benefits of the Copper Mountain Transaction were based on its internal projections of Copper Mountain's business and operations as well as those prepared by the Copper Mountain management team prior to completion of the transaction (together, the "Projections"). All such Projections were based on assumptions and information available at the time the Projections were prepared to, among other things, assist Hudbay in evaluating the Copper Mountain Transaction. Since acquiring ownership of the Copper Mountain mine, Hudbay's focus has been on engaging with key stakeholders and advancing its plans to stabilize the operation over the next 12 months and sustainably operate it in future years, which will be further detailed in a technical report and updated mine plan and mineral reserve and resource estimates for Copper Mountain to be released in the fourth quarter of 2023. Hudbay does not know whether the results of its technical report will be consistent with the assumptions made in the Projections or whether the Projections (which are subject to a number of known and unknown risks and uncertainties) will be realized. As a result of these contingencies, there can be no assurance that Hudbay's expectations with respect to the financial benefits of the Copper Mountain Transaction will be realized or that actual results will not be significantly higher or lower than expected. Further, the Projections were not prepared with a view toward public disclosure or toward compliance with IFRS, published guidelines of applicable securities regulatory authorities or the guidelines established by the Chartered Professional Accountants for preparation and presentation of prospective financial information. No independent accountants, have compiled, examined, or performed any procedures with respect to the Projections, nor have they expressed any opinion or any other form of assurance on such information or its achievability.

In addition, the ability to realize the benefits of the Copper Mountain Transaction will depend in part on, among other things, building relationships with key stakeholders and successfully consolidating functions and integrating operations, procedures and personnel in a timely and efficient manner, as well as on Hudbay's ability to realize the anticipated growth opportunities and synergies from integrating Copper Mountain's business following completion of the Copper Mountain Transaction. Integration activities have been progressing well to date. Successfully completing the business integration will require the dedication of management effort, time and resources which may divert management's focus and resources from other strategic opportunities available to Hudbay and from operational matters during this process. There can be no assurance that management will be able to integrate the operations of Copper Mountain's business successfully and realize the anticipated financial benefits. It is possible that the integration process could result in the loss of key employees, the disruption of the respective ongoing businesses or inconsistencies in standards, controls, procedures and policies that adversely affect the ability of management to maintain relationships with key stakeholders or to achieve the anticipated benefits of the Proposed Transaction. Any inability of management to successfully build relationships with key stakeholders and integrate the operations could have a material adverse effect on the business, financial condition and results of operations of Hudbay.

Implication of Copper World Pre-feasibility Study on Phase I of Copper World and Copper Mountain Technical Report

As with any change in mine plan, or new technical report or pre-feasibility assessment, there is a risk that the timing and extent of operating and capital expenditures may result in an indicator of impairment or impairment reversal. In the case of the forthcoming Copper World pre-feasibility study, management will assess impairment considerations with respect to changes in timing and expenditures to support the development of Copper World. In the case of the forthcoming Copper Mountain technical report, management will assess impairment considerations with respect to changes in timing and expenditures on Copper Mountain.

TREND ANALYSIS AND QUARTERLY REVIEW

A detailed quarterly and annual summary of financial and operating performance can be found in the "Summary of Results" section at the end of this MD&A. The following table sets forth selected consolidated financial information for each of our eight most recently completed quarters:

(in $ millions, except per share amounts, production on a copper equivalent basis and average realized copper price)	2023			2022						2021
	Q2		Q1	Q4		Q3		Q2	Q1	Q4		Q3
Production on a copper equivalent basis (tonnes)	37,530		38,614	45,454		42,099		46,332	45,085	50,685		42,243
Average realized copper price ($/lb)	3.89		3.98	3.61		3.47		4.28	4.53	4.34		4.26
Revenue	312.2		295.2	321.2		346.2		415.5	378.6	425.2		359.0
Gross profit (loss)³	22.9		66.5	69.7		32.4		89.5	85.3	81.7		(85.4	)
(Loss) profit before tax	(30.7	)	17.4	(14.3	)	(0.3	)	21.5	88.9	(0.2	)	(147.8	)
(Loss) profit	(14.9	)	5.5	(17.4	)	(8.1	)	32.1	63.8	(10.5	)	(170.4	)
Adjusted net (loss) earnings¹	(18.3	)	0.1	2.6		(12.4	)	30.5	5.2	32.7		0.9
(Loss) earnings per share:
Basic and diluted	(0.05	)	0.02	(0.07	)	(0.03	)	0.12	0.24	(0.04	)	(0.65	)
Adjusted net (loss) earnings¹ per share	(0.07	)	0.00	0.01		(0.05	)	0.12	0.02	0.13		0.00
Operating cash flow²	55.9		85.6	109.1		81.6		123.9	77.6	156.9		103.5
Adjusted EBITDA¹	81.2		101.9	124.7		99.3		141.4	110.2	180.8		119.2

¹ Adjusted net earnings (loss), adjusted net earnings (loss) per share, and adjusted EBITDA are non-IFRS financial performance measure with no standardized definition under IFRS. For further information and a detailed reconciliation, please see the discussion under the "Non-IFRS Financial Performance Measures" section of this MD&A.

²Operating cash flow before changes in non-cash working capital.

³Gross profit (loss) includes $147.3 million and $46.2 million, respectively, of impairment losses related to environmental reclamation provision for the now closed Flin Flon operation for the three months ended September 30, 2021 and December 31, 2021.

Commodity prices have generally rebounded and remained elevated in the first half of 2023, but these increases have also been accompanied by inflationary pressures on consumables, labour and supplies, which has put pressure on mine operating costs, sustaining cash costs, gross profit and operating cash flow particularly in the second quarter. The second quarter saw a drawdown of higher-than-normal unsold copper concentrate inventory levels in Peru that had built up due to supply chain disruptions during a short period of social and political unrest in the first quarter. The second quarter results also reflected the impact of the Copper Mountain acquisition which closed on June 20, 2023. There was a minimal impact to net earnings during the 10-day stub period at the end of the second quarter.

Average gold prices during the first quarter reached levels not seen since 2020, which positively impacted first quarter gross profit. Political unrest in Peru resulted in road blockades causing logistics and supply chain disruptions until mid-February 2023, resulting in a buildup of copper concentrate inventory above normal operating levels, affecting overall revenues and profit in the first quarter.

The easing of domestic COVID measures by China during the fourth quarter of 2022 resulted in a rebound of most industrial commodity prices. However, late in the quarter, Peru experienced heightened tensions and social unrest following a change in the country's political leadership. Inflationary pressures on fuel, consumables and energy costs have persisted globally, negatively impacting our production costs and margins.

Fourth quarter revenues were negatively impacted by lower production due to planned maintenance programs at Lalor and Constancia, the planned closure of 777 earlier in the year, short-term changes in the mine plan in Peru and a build up of product inventory in Peru due to the aforementioned social unrest. The revenue impact of lower throughput was partially offset by higher commodity prices. Additionally, the fourth quarter results were impacted by a non-cash loss of $13.5 million related to the quarterly revaluation of our Flin Flon environmental reclamation provision due to changes in real, long-term discount rates.

Commodity prices declined during the third quarter of 2022 while growing inflationary pressures contributed to higher mine operating costs resulting in declines in our key financial metrics during the quarter. Third quarter results were also impacted by lower production due to the closure of 777 in the second quarter of 2022 and the commencement of care and maintenance activities, which will continue for the next several years. Relatively small movements in real, long-term discount rates will continue to impact the revaluation of our environmental reclamation provisions for closed sites in Manitoba and these movements will be reflected through the income statement.

The second quarter results for 2022 were impacted by a revaluation gain of $60.7 million pertaining mostly to the environmental reclamation provision on our Flin Flon site due to increases in long-term risk-free interest rates. A pre-tax impairment loss of $95.0 million was recorded following the release of the Copper World Preliminary Economic Assessment in June 2022 as certain assets associated with the previous, stand-alone development plan for the Rosemont deposit are no longer expected to be recoverable.

Results in the first quarter of 2022 benefited from a trend of higher realized base metal prices, but were also impacted by rising operating costs caused by inflation. While we achieved increased gold production from the higher grade Pampacancha deposit and the higher recovery New Britannia gold mill, we experienced increased levels of COVID-19 related absenteeism in the workforce, impacting production, and also experienced limited availability of rail cars leading to reduced sales and an inventory build-up. The second quarter results were also impacted by a revaluation gain of $78.2 million pertaining mostly to the environmental reclamation provision on our Flin Flon site and $1.7 million for our non-producing sites in Manitoba caused by an increase in long-term risk-free interest rates.

Results for the fourth quarter of 2021 benefited from higher realized metal prices. This strength in commodity prices combined with higher gold production following the commencement of commercial production at New Britannia and improving copper recoveries led to record revenue of $425.2 million during the quarter. Adjusted EBITDA and operating cash flow both reached record highs. Notwithstanding these records, continued inflationary pressures along with lower copper grades caused operating costs to climb and put pressure on gross margins, compared to earlier quarters. A revaluation of our environmental reclamation provision for the Flin Flon closure plan resulted in a $46.2 million non-cash charge, which negatively impacted net income for the quarter.

During the third quarter of 2021, increasing base metal prices contributed to strong revenues and operating cash flow. Mining at Pampacancha continued to ramp-up, contributing significantly to gold production during the quarter. As a result of the planned closure of Flin Flon operations in mid-2022 and an updated Flin Flon closure plan, non-cash charges totaling $156.3 million were incurred, which negatively impacted gross profit for the quarter. In Peru, ongoing COVID-19 costs, along with lower copper grades, put pressure on operating costs.

NON-IFRS FINANCIAL PERFORMANCE MEASURES

Adjusted net earnings (loss), adjusted net earnings (loss) per share, adjusted EBITDA, realized prices, net debt, cash cost, sustaining and all-in sustaining cash cost per pound of copper produced, cash cost and sustaining cash cost per ounce of gold produced and combined unit cost are non-IFRS performance measures. 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.

Management believes adjusted net earnings (loss) and adjusted net earnings (loss) per share provides an alternate measure of the Company's performance for the current period and gives insight into its expected performance in future periods. These measures are used internally by the Company to evaluate the performance of its underlying operations and to assist with its planning and forecasting of future operating results. As such, the Company believes these measures are useful to investors in assessing the Company's underlying performance. We provide adjusted EBITDA to help users analyze our results and to provide additional information about our ongoing cash generating potential in order to assess our capacity to service and repay debt, carry out investments and cover working capital needs. Realized price is shown to understand the average realized price of metals sold to third parties in each reporting period. Net debt is shown because it is a performance measure used by the Company to assess our financial position. Cash cost, sustaining and all-in sustaining cash cost per pound of copper produced are shown because we believe they help investors and management assess the performance of our operations, including the margin generated by the operations and the Company. Cash cost and sustaining cash cost per ounce of gold produced are shown because we believe they help investors and management assess the performance of our Manitoba operations. Combined unit cost is shown because we believe it helps investors and management assess our cost structure and margins that are not impacted by variability in by-product commodity prices.

Adjusted Net Earnings (Loss)

Adjusted net earnings (loss) represents net earnings (loss) excluding certain impacts, net of taxes, such as mark-to-market adjustments, impairment charges and reversal of impairment charges, write-down of assets, revaluation of the environmental reclamation provision for closed sites, and foreign exchange (gain) loss. These measures are not necessarily indicative of net earnings (loss) or cash flows as determined under IFRS.

The following table provides a reconciliation of earnings (loss) per the consolidated interim income statements, to adjusted net earnings (loss) for the three and six months ended June 30, 2023 and 2022.

	Three months ended				Six months ended
(in $ millions)	Jun. 30, 2023		Jun. 30, 2022		Jun. 30, 2023		Jun. 30, 2022
(Loss) profit for the period	(14.9	)	32.1		(9.5	)	95.9
Tax (recovery) expense	(15.8	)	(10.6	)	(3.8	)	14.4
(Loss) profit before tax	(30.7	)	21.5		(13.3	)	110.3
Adjusting items:
Mark-to-market adjustments¹	0.6		(14.0	)	7.4		(3.5	)
Foreign exchange loss (gain)	1.4		(2.2	)	1.7		(0.7	)
Inventory adjustments	0.9		1.9		0.9		1.5
Variable consideration adjustment - stream revenue and accretion	-		-		(5.0	)	(5.8	)
Impairment - Arizona	-		95.0		-		95.0
Re-evaluation adjustment - environmental provision²	(4.7	)	(60.7	)	(12.9	)	(140.5	)
Acquisition related costs	6.8		-		6.8		-
Evaluation expenses	-		0.7		-		7.7
Insurance recovery	-		(5.7	)	-		(5.7	)
Restructuring charges - Manitoba³	-		3.7		-		4.4
Loss on disposal of investments	-		3.1		0.7		3.1
Loss on disposal of plant and equipment and non-current assets - Manitoba	0.3		-		0.4		-
Adjusted earnings before income taxes	(25.4	)	43.3		(13.3	)	65.8
Tax recovery (expense)	15.8		10.6		3.8		(14.4	)
Tax impact of adjusting items	(8.7	)	(23.4	)	(8.7	)	(15.4	)
Adjusted net (loss) earnings	(18.3	)	30.5		(18.2	)	36.0
Adjusted net (loss) earnings ($/share)	(0.07	)	0.12		(0.07	)	0.14
Basic weighted average number of common shares outstanding (millions)	272.2		261.9		267.2		261.8

¹ Includes changes in fair value of the gold prepayment liability, Canadian junior mining investments, other financial assets and liabilities at fair value through profit or loss and share-based compensation (recoveries) expenses.

² Changes from movements to environmental reclamation provisions are primarily related to the Flin Flon operations, which were fully depreciated as of June 30, 2022, as well as other Manitoba non-operating sites.

³ Includes closure costs for Flin Flon operations in 2022.

After adjusting reported net earnings for those items not considered representative of the Company's core business or indicative of future operations, the Company had an adjusted net loss in the second quarter of 2023 of $18.3 million or $0.07 loss per share.

Adjusted EBITDA

Adjusted EBITDA is profit or loss before net finance expense/income, tax expense/recoveries, depreciation and amortization of property, plant and equipment and deferred revenue, as well as certain other adjustments. We calculate adjusted EBITDA by excluding certain adjustments included within our adjusted net earnings measure which we believe reflects the underlying performance of our core operating activities. The measure also removes the impact of non-cash items and financing costs that are not associated with measuring the underlying performance of our operations. However, our adjusted EBITDA is not the measure defined as EBITDA under our senior notes or revolving credit facilities and may not be comparable with performance measures with the same name reported by other companies. Adjusted EBITDA should not be considered as a substitute for profit or loss or as a better measure of liquidity than operating cash flow, which are calculated in accordance with IFRS. We provide adjusted EBITDA to help users analyze our results and to provide additional information about our ongoing cash generating potential in order to assess our capacity to service and repay debt, carry out investments and cover working capital needs.

The following table presents the reconciliation of earnings (loss) per the consolidated interim income statements, to adjusted EBITDA for the three and six months ended June 30, 2023 and 2022:

	Three months ended				Six months ended
(in $ millions)	Jun. 30, 2023		Jun. 30, 2022		Jun. 30, 2023		Jun. 30, 2022
(Loss) profit for the period	(14.9	)	32.1		(9.5	)	95.9
Add back:
Tax (recovery) expense	(15.8	)	(10.6	)	(3.8	)	14.4
Net finance expense	30.5		24.4		65.5		61.2
Other expense	13.9		(1.3	)	18.9		7.7
Depreciation and amortization	88.7		87.3		156.1		168.4
Amortization of deferred revenue and variable consideration adjustment	(18.1	)	(19.2	)	(34.0	)	(47.4	)
Adjusting items (pre-tax):
Impairment losses	-		95.0		-		95.0
Re-evaluation adjustment - environmental provision	(4.7	)	(60.7	)	(12.9	)	(140.5	)
Inventory adjustments	0.9		1.9		0.9		1.5
Share-based compensation expense (recovery) ¹	0.7		(7.5	)	1.9		(4.3	)
Adjusted EBITDA	81.2		141.4		183.1		251.9

¹ Share-based compensation expense reflected in cost of sales and selling and administrative expenses.

Net Debt

The following table presents our calculation of net debt as at June 30, 2023 and December 31, 2022:

(in $ thousands)	Jun. 30, 2023		Dec. 31, 2022
Total long-term debt	1,370,682		1,184,162
Cash	(179,734	)	(225,665	)
Net debt	1,190,948		958,497

Cash Cost, Sustaining and All-in Sustaining Cash Cost (Copper Basis)

Cash cost per pound of copper produced ("cash cost") is a non-IFRS measure that management uses as a key performance indicator to assess the performance of our operations. Our calculation designates copper as our primary metal of production as it has been the largest component of revenues. The calculation is presented in four manners:

- Cash cost, before by-product credits - This measure is gross of by-product revenues and is a function of the efforts and costs incurred to mine and process all ore mined. However, the measure divides this aggregate cost over only pounds of copper produced, our primary metal of production. This measure is generally less volatile from period to period, as it is not affected by changes in the price received for by-product metals. It is, however, significantly affected by the relative mix of copper concentrate and finished zinc production, where the sale of the zinc will occur later, and an increase in production of zinc metal will tend to result in an increase in cash cost under this measure.

- Cash cost, net of by-product credits - In order to calculate the net cost to produce and sell copper, the net of by-product credits measure subtracts the revenues realized from the sale of the metals other than copper. The by-product revenues from zinc, gold, and silver are significant and are integral to the economics of our operations. The economics that support our decision to produce and sell copper would be different if we did not receive revenues from the other significant metals being extracted and processed. This measure provides management and investors with an indication of the minimum copper price consistent with positive operating margins, assuming realized by-product metal prices are consistent with those prevailing during the reporting period. It also serves as an important operating statistic that management and investors utilize to measure our operating performance versus that of our competitors. However, it is important to understand that if by-product metal prices decline alongside copper prices, the cash cost net of by-product credits would increase, requiring a higher copper price than that reported to maintain positive cash flows and operating margins.

- Sustaining cash cost, net of by-product credits - This measure is an extension of cash cost that includes cash sustaining capital expenditures, including payments on capitalized leases, capitalized sustaining exploration, net smelter returns royalties, payments on certain long-term community agreements, as well as accretion and amortization for expected decommissioning activities for producing assets. It does not include corporate selling and administrative expenses. It provides a more fulsome measurement of the cost of sustaining production than cash cost, which is focused on operating costs only.

- All-in sustaining cash cost, net of by-product credits - This measure is an extension of sustaining cash cost that includes corporate G&A, regional costs, accretion and amortization for community agreements relating to current operations, and accretion for expected decommissioning activities for non-producing sites. Due to the inclusion of corporate selling and administrative expenses, all-in sustaining cash cost is presented on a consolidated basis only.

The tables below present a detailed build-up of cash cost and sustaining cash cost, net of by-product credits, by business unit in addition to consolidated all-in sustaining cash cost, net of by-product credits, and reconciliations between cash cost, net of by-product credits, to the most comparable IFRS measures of cost of sales for the three and six months ended June 30, 2023 and 2022. Cash cost, net of by-product credits may not calculate exactly based on amounts presented in the tables below due to rounding.

Consolidated

Three months ended

Six months ended

Net pounds of copper produced^{1, 2}

(in thousands)

Jun. 30, 2023

Jun. 30, 2022

Jun. 30, 2023

Jun. 30, 2022

Peru

38,982

46,032

84,215

88,286

Manitoba

6,160

10,556

10,668

22,761

Net pounds of copper produced

45,142

56,588

94,883

111,047

¹ Contained copper in concentrate.

² Excludes Copper Mountain production for the 10-day stub period to the end of the second quarter of 2023.

Consolidated

Three months ended

Six months ended

Jun. 30, 2023

Jun. 30, 2022

Jun. 30, 2023

Jun. 30, 2022

Cash cost per pound of copper produced

$000s

$/lb

$000s

$/lb

$000s

$/lb

$000s

$/lb

Cash cost, before by-product credits

208,615

4.62

243,902

4.31

397,018

4.18

485,960

4.37

By-product credits

(136,417

)

(3.02

)

(207,191

)

(3.66

)

(282,528

)

(2.97

)

(388,864

)

(3.50

)

Cash cost, net of by-product credits

72,198

1.60

36,711

0.65

114,490

1.21

97,096

0.87

Consolidated

Three months ended

Six months ended

Jun. 30, 2023

Jun. 30, 2022

Jun. 30, 2023

Jun. 30, 2022

Cash cost per pound of copper produced

$000s

$/lb

$000s

$/lb

$000s

$/lb

$000s

$/lb

Mining

73,335

1.62

86,800

1.53

137,873

1.45

174,635

1.57

Milling

69,869

1.55

65,684

1.16

130,908

1.38

134,848

1.21

Refining (zinc)

14,379

0.26

32,755

0.30

G&A

20,975

0.47

41,930

0.74

47,530

0.50

80,923

0.73

Onsite costs

164,179

3.64

208,793

3.69

316,311

3.33

423,161

3.81

Treatment & refining

26,670

0.59

15,033

0.27

45,165

0.48

27,116

0.24

Freight & other

17,766

0.39

20,076

0.35

35,542

0.37

35,683

0.32

Cash cost, before by-product credits

208,615

4.62

243,902

4.31

397,018

4.18

485,960

4.37

Consolidated	Three months ended						Six months ended
	Jun. 30, 2023			Jun. 30, 2022			Jun. 30, 2023			Jun. 30, 2022
Supplementary cash cost information	$000s		$/lb ¹	$000s		$/lb ¹	$000s		$/lb¹	$000s		$/lb¹
By-product credits²:
Zinc	21,896		0.48	88,548		1.56	39,270		0.41	155,677		1.40
Gold³	86,026		1.91	91,317		1.61	179,505		1.89	175,491		1.58
Silver³	17,281		0.38	17,956		0.32	29,279		0.31	36,595		0.33
Molybdenum & other	11,214		0.25	9,370		0.17	34,474		0.36	21,101		0.19
Total by-product credits	136,417		3.02	207,191		3.66	282,528		2.97	388,864		3.50
Reconciliation to IFRS:
Cash cost, net of by-product credits	72,198			36,711			114,490			97,096
By-product credits	136,417			207,191			282,528			388,864
Treatment and refining charges	(26,670	)		(15,033	)		(45,165	)		(27,116	)
Inventory adjustments	906			1,933			906			1,472
Share-based compensation expense	60			(632	)		139			(184	)
Change in product inventory	15,114			4,494			5,705			(16,426	)
Royalties	2,578			3,971			3,284			7,189
Depreciation and amortization⁴	88,670			87,305			156,092			168,396
Cost of sales⁵	289,273			325,940			517,979			619,291

¹Per pound of copper produced.

²By-product credits are computed as revenue per financial statements, including amortization of deferred revenue and pricing and volume adjustments. For more information, please see the realized price reconciliation table on page 26 of this MD&A for these figures.

³ Gold and silver by-product credits do not include variable consideration adjustments with respect to stream arrangements. Variable consideration adjustments are cumulative adjustments to gold and silver stream deferred revenue primarily associated with the net change in mineral reserves and resources or amendments to the mine plan that would change the total expected deliverable ounces under the precious metal streaming arrangement. For the six months ended June 30, 2023 the variable consideration adjustments amounted income of $4,885 (six months ended June 30, 2022 - income of $3,245).

⁴Depreciation is based on concentrate sold.

⁵ As per consolidated interim financial statements.

Peru

Three months ended

Six months ended

(in thousands)

Jun. 30, 2023

Jun. 30, 2022

Jun. 30, 2023

Jun. 30, 2022

Net pounds of copper produced¹

38,982

46,032

84,215

88,286

¹Contained copper in concentrate.

Peru	Three months ended								Six months ended
	Jun. 30, 2023				Jun. 30, 2022				Jun. 30, 2023				Jun. 30, 2022
Cash cost per pound of copper produced	$000s		$/lb		$000s		$/lb		$000s		$/lb		$000s		$/lb
Mining	31,654		0.81		32,300		0.70		58,440		0.69		60,702		0.69
Milling	54,676		1.40		44,731		0.97		100,867		1.20		92,386		1.05
G&A	14,867		0.38		18,677		0.41		31,333		0.37		34,777		0.39
Onsite costs	101,197		2.59		95,708		2.08		190,640		2.26		187,865		2.13
Treatment & refining	17,097		0.44		9,226		0.20		27,700		0.33		16,811		0.19
Freight & other	12,424		0.32		12,297		0.26		24,851		0.30		21,774		0.25
Cash cost, before by-product credits	130,718		3.35		117,231		2.54		243,191		2.89		226,450		2.57
By-product credits	(47,193	)	(1.21	)	(33,268	)	(0.72	)	(98,092	)	(1.17	)	(77,265	)	(0.88	)
Cash cost, net of by-product credits	83,525		2.14		83,963		1.82		145,099		1.72		149,185		1.69

Peru	Three months ended						Six months ended
	Jun. 30, 2023			Jun. 30, 2022			Jun. 30, 2023			Jun. 30, 2022
Supplementary cash cost information	$000s		$/lb ¹	$000s		$/lb ¹	$000s		$/lb ¹	$000s		$/lb ¹
By-product credits²:
Gold³	21,638		0.55	14,191		0.31	40,939		0.49	35,903		0.41
Silver³	14,341		0.37	11,687		0.25	22,918		0.27	24,678		0.28
Molybdenum	11,214		0.29	7,390		0.16	34,235		0.41	16,684		0.19
Total by-product credits	47,193		1.21	33,268		0.72	98,092		1.17	77,265		0.88
Reconciliation to IFRS:
Cash cost, net of by-product credits	83,525			83,963			145,099			149,185
By-product credits	47,193			33,268			98,092			77,265
Treatment and refining charges	(17,097	)		(9,226	)		(27,700	)		(16,811	)
Inventory adjustments	-			(97	)		-			(558	)
Share-based compensation expenses	29			(100	)		15			(2	)
Change in product inventory	27,078			(8,394	)		15,943			(13,166	)
Royalties	2,479			1,117			3,144			1,971
Depreciation and amortization⁴	67,340			47,811			109,300			96,173
Cost of sales⁵	210,547			148,342			343,893			294,057

¹Per pound of copper produced.

³Gold and silver by-product credits do not include variable consideration adjustments with respect to stream arrangements.

⁴Depreciation is based on concentrate sold.

⁵ As per consolidated interim financial statements.

Consolidated

Three months ended

Six months ended

Jun. 30, 2023

Jun. 30, 2022

Jun. 30, 2023

Jun. 30, 2022

All-in sustaining cash cost per pound of
copper produced

$000s

$/lb

$000s

$/lb

$000s

$/lb

$000s

$/lb

Cash cost, net of by-product credits

72,198

1.60

36,711

0.65

114,490

1.21

97,096

0.87

Cash sustaining capital expenditures

48,253

1.07

65,173

1.15

96,121

1.01

126,136

1.14

Royalties

2,578

0.06

3,971

0.07

3,284

0.03

7,189

0.06

Sustaining cash cost, net of by-product credits

123,029

2.73

105,855

1.87

213,895

2.25

230,421

2.07

Corporate selling and administrative expenses & regional costs

9,603

0.21

2,479

0.04

19,818

0.21

15,539

0.15

Accretion and amortization of decommissioning and community agreements¹

1,792

0.04

874

0.02

3,750

0.04

1,595

0.01

All-in sustaining cash cost, net of by-product credits

134,424

2.98

109,208

1.93

237,463

2.50

247,555

2.23

Reconciliation to property, plant and equipment additions:

Property, plant and equipment additions

47,574

70,712

81,128

110,111

Capitalized stripping net additions

21,640

27,302

48,624

51,448

Total accrued capital additions

69,214

98,014

129,752

161,559

Less other non-sustaining capital costs²

28,006

45,489

47,856

66,093

Total sustaining capital costs

41,208

52,525

81,896

95,466

Capitalized lease cash payments - operating sites

4,374

9,313

9,076

18,572

Community agreement cash payments

1,290

370

2,479

4,142

Accretion and amortization of decommissioning and restoration obligations ³

1,381

2,965

2,670

7,956

Cash sustaining capital expenditures

48,253

65,173

96,121

126,136

¹ Includes accretion of decommissioning liability relating to non-producing sites, and accretion and amortization of community agreements capitalized to Other assets.

²Other non-sustaining capital costs include Arizona capitalized costs, capitalized interest, capitalized exploration, right-of-use lease asset additions and growth capital expenditures.

³Includes amortization of decommissioning and restoration PP&E assets and accretion of decommissioning and restoration liabilities related to producing sites.

Peru

Three months ended

Six months ended

Jun. 30, 2023

Jun. 30, 2022

Jun. 30, 2023

Jun. 30, 2022

Sustaining cash cost per pound of
copper produced

$000s

$/lb

$000s

$/lb

$000s

$/lb

$000s

$/lb

Cash cost, net of by-product credits

83,525

2.14

83,963

1.82

145,099

1.72

149,185

1.69

Cash sustaining capital expenditures

33,425

0.86

35,527

0.78

66,989

0.80

65,566

0.74

Royalties

2,479

0.06

1,117

0.02

3,144

0.04

1,971

0.02

Sustaining cash cost per pound of copper produced

119,429

3.06

120,607

2.62

215,232

2.56

216,722

2.45

Gold Cash Cost and Gold Sustaining Cash Cost

Cash cost per ounce of gold produced ("gold cash cost") is a non-IFRS measure that management uses as a key performance indicator to assess the performance of our Manitoba operations. This alternative cash cost calculation designates gold as the primary metal of production as it represents a substantial component of revenues for our Manitoba business unit and should therefore be less volatile over time than Manitoba cash cost per pound of copper. The calculation is presented in three manners:

- Gold cash cost, before by-product credits - This measure is gross of by-product revenues and is a function of the efforts and costs incurred to mine and process all ore mined. However, the measure divides this aggregate cost over only ounces of gold produced, the assumed primary metal of production. This measure is generally less volatile from period to period, as it is not affected by changes in the price received for by-product metals.

- Gold cash cost, net of by-product credits - In order to calculate the net cost to produce and sell gold, the net of by-product credits measure subtracts the revenues realized from the sale of the metals other than gold. The by-product revenues from copper, zinc, and silver are significant and are integral to the economics of our Manitoba operation. The economics that support our decision to produce and sell gold would be different if we did not receive revenues from the other significant metals being extracted and processed. This measure provides management and investors with an indication of the minimum gold price consistent with positive operating margins, assuming realized by-product metal prices are consistent with those prevailing during the reporting period. It also serves as an important operating statistic that management and investors utilize to measure our operating performance at our Manitoba operation versus that of our competitors. However, it is important to understand that if by-product metal prices decline alongside gold prices, the gold cash cost net of by-product credits would increase, requiring a higher gold price than that reported to maintain positive cash flows and operating margins.

- Gold sustaining cash cost, net of by-product credits - This measure is an extension of gold cash cost that includes cash sustaining capital expenditures, capitalized exploration, net smelter returns royalties, as well as accretion and amortization for expected decommissioning activities for producing assets. It does not include corporate selling and administrative expenses. It provides a more fulsome measurement of the cost of sustaining production than gold cash cost, which is focused on operating costs only.

The tables below present a detailed build-up of gold cash cost and gold sustaining cash cost, net of by-product credits, for the Manitoba business unit, and reconciliations between gold cash cost, net of by-product credits, to the most comparable IFRS measures of cost of sales for the three and six months ended June 30, 2023 and 2022. Gold cash cost, net of by-product credits, may not calculate exactly based on amounts presented in the tables below due to rounding.

Manitoba

Three months ended

Six months ended

(in thousands)

Jun. 30, 2023

Jun. 30, 2022

Jun. 30, 2023

Jun. 30, 2022

Net ounces of gold produced¹

35,253

44,787

71,287

87,954

¹ Contained gold in concentrate and doré.

Manitoba	Three months ended								Six months ended
	Jun. 30, 2023				Jun. 30, 2022				Jun. 30, 2023				Jun. 30, 2022
Cash cost per ounce of gold produced	$000s		$/oz¹		$000s		$/oz¹		$000s		$/oz¹		$000s		$/oz¹
Mining	41,681		1,182		54,500		1,217		79,433		1,114		113,933		1,295
Milling	15,193		431		20,953		468		30,041		422		42,462		483
Refining (zinc)	-		-		14,379		321		-		-		32,755		372
G&A	6,108		173		23,253		519		16,197		227		46,146		525
Onsite costs	62,982		1,786		113,085		2,525		125,671		1,763		235,296		2,675
Treatment & refining	9,573		271		5,807		130		17,465		245		10,305		117
Freight & other	5,342		152		7,779		173		10,691		150		13,909		158
Cash cost, before by-product credits	77,897		2,209		126,671		2,828		153,827		2,158		259,510		2,950
By-product credits	(39,218	)	(1,112	)	(135,924	)	(3,035	)	(81,349	)	(1,141	)	(250,797	)	(2,851	)
Gold cash cost, net of by-product credits	38,679		1,097		(9,253	)	(207	)	72,478		1,017		8,713		99

Manitoba	Three months ended						Six months ended
Supplementary cash cost information	Jun. 30, 2023			Jun. 30, 2022			Jun. 30, 2023			Jun. 30, 2022
Supplementary cash cost information	$000s		$/oz ¹	$000s		$/oz¹	$000s		$/oz ¹	$000s		$/oz ¹
By-product credits²:
Copper	14,382		408	39,127		874	35,479		498	78,786		896
Zinc	21,896		621	88,548		1,977	39,270		551	155,677		1,770
Silver³	2,940		83	6,269		140	6,361		89	11,917		135
Other	-		-	1,980		44	239		3	4,417		50
Total by-product credits	39,218		1,112	135,924		3,035	81,349		1,141	250,797		2,851
Reconciliation to IFRS:
Cash cost, net of by-product credits	38,679			(9,253	)		72,478			8,713
By-product credits	39,218			135,924			81,349			250,797
Treatment and refining charges	(9,573	)		(5,807	)		(17,465	)		(10,305	)
Share-based compensation expenses	31			(532	)		124			(182	)
Inventory adjustments	906			2,030			906			2,030
Change in product inventory	(11,964	)		12,888			(10,238	)		(3,260	)
Royalties	99			2,854			140			5,218
Depreciation and amortization⁴	21,330			39,494			46,792			72,223
Cost of sales⁵	78,726			177,598			174,086			325,234

¹ Per ounce of gold produced.

²By-product credits are computed as revenue per financial statements, amortization of deferred revenue and pricing and volume adjustments. For more information, please see the realized price reconciliation table on page 26 of this MD&A.

³ Silver by-product credits do not include variable consideration adjustments with respect to stream arrangements.

⁴Depreciation is based on concentrate sold.

⁵ As per consolidated interim financial statements.

Manitoba

Three months ended

Six months ended

Jun. 30, 2023

Jun. 30, 2022

Jun. 30, 2023

Jun. 30, 2022

Sustaining cash cost per ounce of
gold produced

$000s

$/oz

$000s

$/oz

$000s

$/oz

$000s

$/oz

Gold cash cost, net of by-product credits

38,679

1,097

(9,253

)

(207

)

72,478

1,017

8,713

Cash sustaining capital expenditures

14,828

421

29,646

662

29,132

409

60,570

689

Royalties

2,854

140

5,218

Sustaining cash cost per ounce of gold produced

53,606

1,521

23,247

519

101,750

1,427

74,501

847

Combined Unit Cost

Combined unit cost ("unit cost") and zinc plant unit cost is a non-IFRS measure that management uses as a key performance indicator to assess the performance of our mining and milling operations. Combined unit cost is calculated by dividing the cost of sales by mill throughput. This measure is utilized by management and investors to assess our cost structure and margins and compare it to similar information provided by other companies in our industry. Unlike cash cost, this measure is not impacted by variability in by-product commodity prices since there are no by-product deductions; costs associated with profit-sharing and similar costs are excluded because of their correlation to external metal prices. In addition, the unit costs are reported in the functional currency of the operation which minimizes the impact of foreign currency fluctuations. In all, the unit cost measures provide an alternative perspective on operating cost performance with minimal impact from external market prices.

The tables below present a detailed combined unit cost for the Peru and Manitoba business unit, and reconciliations between these measures to the most comparable IFRS measures of cost of sales for the three and six months ended June 30, 2023 and 2022.

Peru	Three months ended				Six months ended
(in thousands except unit cost per tonne)	Jun. 30, 2023		Jun. 30, 2022		Jun. 30, 2023		Jun. 30, 2022
Combined unit cost per tonne processed	Jun. 30, 2023		Jun. 30, 2022		Jun. 30, 2023		Jun. 30, 2022
Mining	31,654		32,300		58,440		60,702
Milling	54,676		44,731		100,867		92,386
G&A¹	14,867		18,677		31,333		34,777
Less: Other G&A²	458		(1,050	)	(1,081	)	(1,621	)
	101,655		94,658		189,559		186,244
Less: COVID-19 related costs	-		1,275		-		3,596
Unit cost	101,655		93,383		189,559		182,648
Tonnes ore milled	7,223		7,771		14,887		14,985
Combined unit cost per tonne	14.07		12.02		12.73		12.19
Reconciliation to IFRS:
Unit cost	101,655		93,383		189,559		182,648
Freight & other	12,424		12,297		24,851		21,774
COVID-19 related costs	-		1,275		-		3,596
Other G&A	(458	)	1,050		1,081		1,621
Share-based compensation expenses	29		(100	)	15		(2	)
Inventory adjustments	-		(97	)	-		(558	)
Change in product inventory	27,078		(8,394	)	15,943		(13,166	)
Royalties	2,479		1,117		3,144		1,971
Depreciation and amortization	67,340		47,811		109,300		96,173
Cost of sales³	210,547		148,342		343,893		294,057

¹ G&A as per cash cost reconciliation above.

² Other G&A primarily includes profit sharing costs.

³ As per consolidated interim financial statements.

Manitoba	Three months ended				Six months ended
(in thousands except tonnes ore milled and unit cost per tonne)	Jun. 30, 2023		Jun. 30, 2022		Jun. 30, 2023		Jun. 30, 2022
Combined unit cost per tonne processed	Jun. 30, 2023		Jun. 30, 2022		Jun. 30, 2023		Jun. 30, 2022
Mining	41,681		54,500		79,433		113,933
Milling	15,193		20,953		30,041		42,462
G&A¹	6,108		23,253		16,197		46,146
Less: G&A allocated to zinc metal production and other areas	-		(3,141	)	-		(6,523	)
Less: Other G&A related to profit sharing costs	(682	)	(10,206	)	(1,820	)	(20,230	)
Unit cost	62,300		85,359		123,851		175,788
USD/CAD implicit exchange rate	1.34		1.27		1.34		1.27
Unit cost - C$	83,659		108,806		166,853		223,310
Tonnes ore milled	380,538		649,318		766,199		1,300,651
Combined unit cost per tonne - C$	220		168		218		172
Reconciliation to IFRS:
Unit cost	62,300		85,359		123,851		175,788
Freight & other	5,342		7,779		10,691		13,909
Refined (zinc)	-		14,379		-		32,755
G&A allocated to zinc metal production	-		3,141		-		6,523
Other G&A related to profit sharing	682		10,206		1,820		20,230
Share-based compensation expenses	31		(532	)	124		(182	)
Inventory adjustments	906		2,030		906		2,030
Change in product inventory	(11,964	)	12,888		(10,238	)	(3,260	)
Royalties	99		2,854		140		5,218
Depreciation and amortization	21,330		39,494		46,792		72,223
Cost of sales²	78,726		177,598		174,086		325,234

¹ G&A as per cash cost reconciliation above.

² As per IFRS financial statements.

Manitoba	Three months ended		Six months ended
(in thousands except zinc plant unit cost per pound)	June 30, 2022		June 30, 2022
Zinc plant unit cost ¹	June 30, 2022		June 30, 2022
Zinc plant costs	14,379		32,755
G&A ²	23,253		46,146
Less: G&A allocated to other areas	(9,906	)	(19,393	)
Less: Other G&A related to profit sharing	(10,206	)	(20,230	)
Zinc plant unit cost	17,520		39,278

USD/CAD implicit exchange rate	1.28		1.27
Zinc plant unit cost - C$	22,475		50,036
Refined metal produced (in pounds)	39,311		83,542
Zinc plant unit cost per pound - C$	0.57		0.60

Reconciliation to IFRS:
Zinc plant unit cost	17,520		39,278
Freight & other	7,779		13,909
Mining	54,500		113,933
Milling	20,953		42,462
G&A allocated to other areas	9,906		19,393
Other G&A related to profit sharing	10,206		20,230
Share-based payment	(532	)	(182	)
Inventory adjustments	2,030		2,030
Change in product inventory	12,888		(3,260	)
Royalties	2,854		5,218
Depreciation and amortization	39,494		72,223
Cost of sales³	177,598		325,234

¹ The zinc plant ceased operations in June 2022. Prior year comparative information is disclosed above.

² G&A as per cash cost reconciliation above.

³ As per IFRS financial statements.

ACCOUNTING CHANGES AND CRITICAL ESTIMATES

New standards and interpretations adopted and not yet adopted

For information on new standards and interpretations adopted and not yet adopted, refer to note 4 of our June 30, 2023 consolidated interim financial statements.

Estimates and judgements

The preparation of the consolidated interim financial statements in accordance with IFRS requires us to make judgements, estimates and assumptions that affect the application of accounting policies, reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the consolidated interim financial statements, and reported amounts of revenue and expenses during the reporting period. Actual results may differ from these estimates.

We review these estimates and underlying assumptions on an ongoing basis based on our experience and other factors, including expectations of future events that we believe to be reasonable under the circumstances. Revisions to accounting estimates are recognized in the period in which the estimates are revised and in any future periods affected. Certain accounting estimates and judgements have been identified as being "critical" to the presentation of our financial condition and results of operations because they require us to make subjective and/or complex judgments about matters that are inherently uncertain; or there is a reasonable likelihood that materially different amounts could be reported under different conditions or using different assumptions and estimates.

For more information on judgements and estimates, refer to note 2 of our June 30, 2023 consolidated interim financial statements.

CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING

Management is responsible for establishing and maintaining adequate internal control over financial reporting ("ICFR"). ICFR is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of consolidated interim financial statements for external purposes in accordance with IFRS.

Limitation on Scope of Design

Management has determined to limit the scope of design of disclosure controls and procedures ("DC&P") and ICFR to exclude controls, policies and procedures of Copper Mountain, which Hudbay acquired on June 20, 2023. Copper Mountain's total assets, net assets, total revenues and net loss on a combined basis constitute approximately 19%%, 27%%, 0% and 0%, respectively, of the consolidated interim financial statement amounts as of and for the six months ended June 30, 2023. This scope of limitation is in accordance with section 3.3(1)(b) of NI 52-109, which allows for an issuer to limit the design of DC&P or ICFR to exclude a business that the issuer acquired not more than 365 days before the end of the financial period to which the Chief Executive Officer's and Chief Financial Officer's certification of interim filings relate.

Other than related to the aforementioned acquisition of Copper Mountain, we did not make any changes to ICFR during the six months ended June 30, 2023 that materially affected or are reasonably likely to materially affect our ICFR.

NOTES TO READER

Forward-Looking Information

This MD&A contains forward-looking information within the meaning of applicable Canadian and United States securities legislation. All information contained in this MD&A, 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 MD&A is qualified by this cautionary note.

Forward-looking information includes, but is not limited to, statements with respect to the expected production and cash flow generation during the second half of the year, the expected timing for the release of an updated Copper Mountain mine technical report, the expected timing for the release of the Copper World pre-feasibility study for Phase I, the expected timing and effectiveness of the ongoing integration and optimization of Copper Mountain's operations, the expected consummation, timing and benefits of the Rockcliff Transaction and other Manitoba growth initiatives; approval of the Rockcliff Transaction by Rockcliff's shareholders, the satisfaction of the conditions precedent to the consummation of the Rockcliff Transaction, statements regarding our production, cost and capital and exploration expenditure guidance, expectations regarding reductions in discretionary spending, capital expenditures and net debt, expectations regarding the impact of inflationary pressures on our cost of operations, financial condition and prospects, our ability to deleverage and repay debt as needed, the consummation and timing of a potential partnership with Marubeni, expectations regarding our cash balance and liquidity, expectations regarding the Copper World project, the estimated timelines and pre-requisites for sanctioning the project and the pursuit of a potential minority joint venture partner, expectations regarding the permitting requirements for the Copper World project and permitting related litigation (including expected timing for receipt of such applicable permits), our ability to increase the mining rate at Lalor, the anticipated timing for completing the Stall recovery improvement program and anticipated benefits therefrom, expectations regarding the ability to conduct exploration work on the Maria Reyna and Caballito properties and to advance related drill plans, the timing of mining higher-grade ore in the Pampacancha pit and our expectations resulting therefrom, expectations regarding our ability to reduce greenhouse gas emissions, our evaluation of opportunities to reprocess tailings, expectations regarding the prospective nature of the Maria Reyna and Caballito properties, the anticipated impact of brownfield growth projects on our performance, anticipated expansion opportunities in Snow Lake and our ability to find a new anchor deposit near Snow Lake operations, anticipated drill programs and exploration activities, anticipated mine plans, anticipated metals prices and the anticipated sensitivity of our financial performance to metals prices, events that may affect our 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 us 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 ability to achieve production and cost guidance;

- the ability to achieve discretionary spending reductions without impacting operations;

- no significant interruptions to our operations due to social or political unrest in the regions we operate, including the navigation of the complex political and social environment in Peru;

- no interruptions to our plans for advancing the Copper World project, including with respect to timely receipt of applicable permits;

- our ability to successfully integrate and optimize the Copper Mountain operations and develop and maintain good relations with key stakeholders;

- the ability to ramp up exploration in respect of the Maria Reyna and Caballito properties and to advance related drill plans;

- the ability to satisfy the conditions to closing the Rockcliff Transaction, including the receipt of shareholder, stock exchange and court approvals;

- that no third party would make a superior proposal to the Rockcliff Transaction;

- that the definitive agreement for the Rockcliff Transaction would not be terminated in certain circumstances;

- the success of mining, processing, exploration and development activities;

- the scheduled maintenance and availability of our processing facilities;

- the accuracy of geological, mining and metallurgical estimates;

- anticipated metals prices and the costs of production;

- the supply and demand for metals we produce;

- the supply and availability of all forms of energy and fuels at reasonable prices;

- no significant unanticipated operational or technical difficulties;

- the execution of our business and growth strategies, including the success of our 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 our ability to develop our projects;

- the timing and receipt of various regulatory and governmental approvals;

- the availability of personnel for our exploration, development and operational projects and ongoing employee relations;

- maintaining good relations with the employees at our operations, including in British Columbia;

- maintaining good relations with the labour unions that represent certain of our employees in Manitoba and Peru;

- maintaining good relations with the communities in which we operate, including the neighbouring Indigenous communities and local governments;

- no significant unanticipated challenges with stakeholders at our various projects;

- no significant unanticipated events or changes relating to regulatory, environmental, health and safety matters;

- no contests over title to our properties, including as a result of rights or claimed rights of Indigenous peoples or challenges to the validity of our unpatented mining claims;

- 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, changes in taxation policies 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 related to the failure to effectively integrate and optimize the Copper Mountain operations, the failure to receive approval of the Rockcliff Transaction by Rockcliff's shareholders or the required court, stock exchange and other consents and approvals to effect the Rockcliff Transaction, the potential of a third party making a superior proposal to the Rockcliff Transaction, the possibility that the definitive agreement for the Rockcliff Transaction could be terminated under certain circumstances, political and social risks in the regions we operate, including the navigation of the complex political and social environment in Peru, risks generally associated with the mining industry and the current geopolitical environment, including future commodity prices, currency and interest rate fluctuations, energy and consumable prices, supply chain constraints and general cost escalation in the current inflationary environment, uncertainties related to the development and operation of our projects, risks related to the Copper World project, including in relation to permitting, litigation, project delivery and financing risks, risks related to the Lalor mine plan, including the ability to convert inferred mineral resource estimates to higher confidence categories, dependence on key personnel and employee and union relations, risks related to political or social instability, unrest or change, risks in respect of Indigenous and community relations, rights and title claims, operational risks and hazards, including the cost of maintaining and upgrading our tailings management facilities and any 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 our reserves, volatile financial markets and interest rates that may affect our 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, our ability to comply with our pension and other post-retirement obligations, our ability to abide by the covenants in our debt instruments and other material contracts, tax refunds, hedging transactions, as well as the risks discussed under the heading "Risk Factors" in our most recent Annual Information Form and under the heading "Financial Risk Management" in this MD&A .

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. We do not assume any obligation to update or revise any forward-looking information after the date of this MD&A or to explain any material difference between subsequent actual events and any forward-looking information, except as required by applicable law.

Note to United States Investors

This MD&A 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.

Qualified Person and NI 43-101

The technical and scientific information in this MD&A related to our material mineral projects has been approved by Olivier Tavchandjian, P. Geo, our Senior Vice President, Exploration and Technical Services. Mr. Tavchandjian is a qualified person pursuant to National Instrument 43-101 - Standards of Disclosure for Mineral Projects ("NI 43-101").

For a description of the key assumptions, parameters and methods used to estimate mineral reserves and resources at Hudbay's material properties, 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 the technical reports for our material properties as filed by us on SEDAR+ at www.sedarplus.ca.

SUMMARY OF HISTORICAL RESULTS

The following unaudited tables set out a summary of quarterly and annual results for the Company.

			Q2 2023			Q1 2023		2022 ⁴		Q4 2022			Q3 2022			Q2 2022		Q1 2022		2021 ⁴			Q4 2021			Q3 2021			Q2 2021
Consolidated Financial Condition ($000s)
Cash		$	179,734		$	255,563	$	225,665	$	225,665		$	286,117		$	258,556	$	213,359	$	270,989		$	270,989		$	297,451		$	294,287
Total long-term debt			1,370,682			1,225,023		1,184,162		1,184,162			1,183,237			1,182,143		1,181,119		1,180,274			1,180,274			1,182,612			1,181,195
Net debt¹			1,190,948			969,460		958,497		958,497			897,120			923,587		967,760		909,285			909,285			885,161			886,908
Consolidated Financial Performance ($000s except per share amounts)
Revenue		$	312,166		$	295,219	$	1,461,440	$	321,196		$	346,171		$	415,454	$	378,619	$	1,501,998		$	425,170		$	358,961		$	404,242
Cost of sales			289,273			228,706		1,184,552		251,520			313,741			325,940		293,351		1,370,979			343,426			444,379			322,060
Earnings (loss) before tax			(30,731	)		17,430		95,815		(14,287	)		(263	)		21,504		88,861		(202,751	)		(149	)		(147,830	)		14,819
Earnings (loss)			(14,932	)		5,457		70,382		(17,441	)		(8,135	)		32,143		63,815		(244,358	)		(10,453	)		(170,411	)		(3,395	)
Basic and diluted earnings (loss) per share		$	(0.05	)	$	0.02	$	0.27	$	(0.07	)	$	(0.03	)	$	0.12	$	0.24	$	(0.93	)	$	(0.04	)	$	(0.65	)	$	(0.01	)
Adjusted earnings (loss) per share ¹		$	(0.07	)	$	0.00	$	0.10	$	0.01		$	(0.05	)	$	0.12	$	0.02	$	0.09		$	0.13		$	0.00		$	0.02
Operating cash flow before change in non-cash working capital			55,878			85,608		391,729		109,148			81,617			123,911		77,615		483,862			156,917			103,509			132,786
Adjusted EBITDA (in $ millions) ¹			81.2			101.9		475.9		124.7			99.3			141.4		110.2		547.8			180.8			119.2			143.2
Consolidated Operational Performance
Contained metal in concentrate and doré produced ²
Copper	tonnes		21,715			22,562		104,173		29,305			24,498			25,668		24,702		99,470			28,198			23,245			23,474
Gold	ounces		48,996			47,240		219,700		53,920			53,179			58,645		53,956		193,783			64,159			54,276			39,848
Silver	ounces		612,310			702,809		3,161,294		795,015			717,069			864,853		784,357		3,045,481			899,713			763,177			685,916
Zinc	tonnes		8,758			9,846		55,381		6,326			9,750			17,053		22,252		93,529			23,207			20,844			21,538
Molybdenum	tonnes		414			289		1,377		344			437			390		207		1,146			275			282			295
Payable metal in concentrate and doré sold
Copper	tonnes		23,078			18,541		94,473		25,415			24,799			23,650		20,609		92,200			24,959			21,136			25,176
Gold	ounces		47,533			49,720		213,415		47,256			66,932			50,884		48,343		168,358			56,927			47,843			38,205
Silver	ounces		805,448			541,884		2,978,485		559,306			816,416			738,171		864,591		2,427,508			638,640			701,601			577,507
Zinc ³	tonnes		8,641			5,628		59,043		8,230			12,714			20,793		17,306		96,435			21,112			21,619			25,361
Molybdenum	tonnes		314			254		1,352		421			511			208		213		1,098			245			304			265
Cash cost ¹	$/lb	$	1.60		$	0.85	$	0.86	$	1.08		$	0.58		$	0.65	$	1.11	$	0.74		$	0.51		$	0.62		$	0.84
Sustaining cash cost ¹	$/lb	$	2.73		$	1.83	$	2.07	$	2.21		$	1.91		$	1.87	$	2.29	$	2.07		$	1.95		$	1.97		$	2.25
All-in sustaining cash cost ¹	$/lb	$	2.98		$	2.07	$	2.26	$	2.41		$	2.16		$	1.93	$	2.54	$	2.30		$	2.20		$	2.18		$	2.48

¹Net debt, adjusted earnings (loss) per share, adjusted EBITDA, cash cost, sustaining cash cost and all-in sustaining cash cost per pound of copper produced, net of by-product credits, are non-IFRS financial performance measures with no standardized definition under IFRS. For further information and a detailed reconciliation, please see discussion under the "Non-IFRS Financial Performance Measures" section of this MD&A. The above table sets forth selected non-IFRS financial performance measures for each of our nine most recently completed quarters and three most recently completed years; detailed reconciliations for non-comparable prior periods can be found in our MD&A for these prior periods in the "Non-IFRS Financial Performance Measures" section of these documents.

² Metal reported in concentrate is prior to deductions associated with smelter contract terms.

³ Includes refined zinc metal sold.

⁴Annual consolidated results may not calculate based on amounts presented in this table due to rounding.

			Q2 2023		Q1 2023		2022 ⁵		Q4 2022		Q3 2022		Q2 2022		Q1 2022		2021 ⁵		Q4 2021		Q3 2021		Q2 2021
Peru Operations
Constancia ore mined¹	tonnes		3,647,399		3,403,181		25,840,435		5,614,918		6,300,252		7,017,114		6,908,151		29,714,327		7,742,469		6,208,019		8,016,373
Copper	%		0.31		0.34		0.35		0.40		0.36		0.33		0.32		0.31		0.33		0.30		0.30
Gold	g/tonne		0.04		0.04		0.04		0.04		0.05		0.04		0.04		0.04		0.04		0.04		0.04
Silver	g/tonne		2.49		2.52		3.40		3.48		3.38		3.53		3.22		2.88		2.81		2.76		3.02
Molybdenum	%		0.01		0.01		0.01		0.01		0.01		0.01		0.01		0.01		0.01		0.01		0.01
Pampacancha ore mined¹	tonnes		2,408,495		897,295		8,319,250		3,771,629		2,488,928		1,211,387		847,306		5,141,001		2,107,196		2,050,813		982,992
Copper	%		0.36		0.49		0.33		0.37		0.29		0.29		0.27		0.27		0.27		0.27		0.26
Gold	g/tonne		0.34		0.52		0.29		0.29		0.23		0.28		0.43		0.30		0.34		0.27		0.27
Silver	g/tonne		2.81		5.12		4.06		3.84		4.30		4.25		4.06		4.02		4.26		3.58		4.43
Molybdenum	%		0.02		0.01		0.01		0.01		0.01		0.01		0.01		0.01		0.01		0.01		0.01
Ore milled	tonnes		7,223,048		7,663,728		30,522,294		7,795,735		7,742,020		7,770,706		7,213,833		28,809,755		8,048,925		6,985,035		7,413,043
Copper	%		0.31		0.33		0.34		0.41		0.34		0.32		0.31		0.32		0.33		0.30		0.31
Gold	g/tonne		0.09		0.08		0.09		0.12		0.08		0.09		0.08		0.08		0.11		0.11		0.07
Silver	g/tonne		2.78		3.69		3.58		3.93		3.48		3.64		3.26		3.35		3.67		3.93		2.88
Molybdenum	%		0.01		0.01		0.01		0.01		0.01		0.01		0.01		0.01		0.01		0.01		0.01
Copper recovery	%		80.0		81.7		85.0		85.1		84.5		85.0		85.3		84.6		86.0		84.9		83.3
Gold recovery	%		61.1		56.8		63.6		69.6		61.9		60.3		59.8		64.6		63.6		71.9		62.2
Silver recovery	%		65.1		60.7		65.7		66.5		65.2		64.2		66.9		63.7		60.8		59.1		68.2
Molybdenum recovery	%		40.5		34.8		34.8		37.7		41.0		38.8		21.1		31.5		26.7		33.5		33.3
Contained metal in concentrate
Copper	tonnes		17,682		20,517		89,395		27,047		22,302		20,880		19,166		77,813		22,856		18,072		19,058
Gold	ounces		12,998		11,206		58,229		20,860		12,722		13,858		10,789		50,306		17,917		17,531		10,220
Silver	ounces		419,642		552,167		2,309,352		655,257		564,299		584,228		505,568		1,972,949		578,140		521,036		468,057
Molybdenum	tonnes		414		289		1,377		344		437		390		207		1,146		275		282		295
Payable metal sold
Copper	tonnes		21,207		16,316		79,805		23,789		20,718		18,473		16,825		71,398		20,551		16,065		19,946
Gold	ounces		14,524		11,781		49,968		15,116		11,970		8,430		14,452		41,807		16,304		16,902		5,638
Silver	ounces		671,532		392,207		2,045,678		411,129		513,470		484,946		636,133		1,490,651		380,712		457,263		315,064
Molybdenum	tonnes		314		254		1,352		421		511		208		213		1,098		245		304		265
Peru combined unit operating cost ^2,3,4	$/tonne	$	14.07	$	11.47	$	12.78	$	13.64	$	13.06	$	12.02	$	12.37	$	10.70	$	9.96	$	10.93	$	10.40
Peru cash cost³	$/lb	$	2.14	$	1.36	$	1.58	$	1.34	$	1.68	$	1.82	$	1.54	$	1.54	$	1.28	$	1.26	$	1.85
Peru sustaining cash cost³	$/lb	$	3.06	$	2.12	$	2.35	$	2.09	$	2.46	$	2.62	$	2.27	$	2.46	$	2.46	$	2.31	$	2.69

¹ Reported tonnes and grade for ore mined are estimates based on mine plan assumptions and may not fully reconcile to ore milled.

²Reflects combined mine, mill and general and administrative ("G&A") costs per tonne of ore milled. Reflects the deduction of expected capitalized stripping costs.

³Combined unit costs, cash cost, and sustaining cash cost per pound of copper produced, net of by-product credits, are non-IFRS financial performance measures with no standardized definition under IFRS. For further information and a detailed reconciliation, please see the discussion under the "Non-IFRS Financial Performance Measures" section of this MD&A. The above table sets forth selected non-IFRS financial performance measures for each of our nine most recently completed quarters and three most recently completed years; detailed reconciliations for non-comparable prior periods can be found in our MD&A for these prior periods in the "Non-IFRS Financial Performance Measures" section of these documents.

⁴ 2022 and 2021 combined unit costs exclude COVID-19 related costs.

⁵Annual consolidated results may not calculate based on amounts presented in this table due to rounding.

		Q2 2023	Q1 2023	2022 ¹	Q4 2022	Q3 2022	Q2 2022	Q1 2022	2021 ¹	Q4 2021	Q3 2021	Q2 2021
Manitoba Operations
Lalor ore mined	tonnes	413,255	373,599	1,516,203	369,453	347,345	412,653	386,752	1,593,141	422,208	392,380	356,951
Copper	%	0.81	0.57	0.73	0.73	0.71	0.70	0.80	0.71	0.78	0.86	0.64
Zinc	%	3.14	3.32	3.14	2.17	3.27	3.06	4.06	4.23	4.19	3.60	3.81
Gold	g/tonne	4.07	3.96	4.00	4.00	4.57	3.73	3.76	3.41	3.92	3.85	3.19
Silver	g/tonne	23.27	18.24	21.96	19.37	21.27	23.95	22.94	24.66	30.35	22.13	22.98
777 ore mined	tonnes	-	-	484,355	-	-	226,286	258,069	1,053,710	266,744	256,536	255,170
Copper	%	-	-	1.12	-	-	1.03	1.19	1.28	1.13	1.06	0.82
Zinc	%	-	-	3.83	-	-	3.51	4.12	3.91	4.16	3.88	3.57
Gold	g/tonne	-	-	1.66	-	-	1.62	1.69	2.03	1.80	1.96	1.97
Silver	g/tonne	-	-	20.85	-	-	20.63	21.05	25.25	25.02	22.99	23.35
Stall & New Britannia Concentrator Combined:
Ore milled	tonnes	380,538	385,661	1,510,907	345,492	362,108	406,006	397,301	1,506,756	419,727	408,201	317,484
Copper	%	0.82	0.60	0.75	0.73	0.69	0.73	0.82	0.72	0.75	0.82	0.68
Zinc	%	3.12	3.31	3.30	2.31	3.33	3.20	4.24	4.30	4.12	3.58	4.06
Gold	g/tonne	4.13	3.99	4.08	3.98	4.60	3.93	3.87	3.42	3.90	3.84	3.19
Silver	g/tonne	23.51	19.08	22.15	20.40	20.66	23.98	23.16	24.95	30.07	23.32	22.02
Copper recovery	%	89.4	88.8	88.6	89.2	88.3	89.5	87.5	86.8	88.7	84.3	88.8
Zinc recovery	%	73.8	84.4	79.0	79.4	80.9	75.5	85.7	88.9	87.4	88.2	88.1
Gold recovery	%	57.3	62.0	59.2	58.8	60.9	58.8	58.4	54.9	54.6	53.4	55.5
Silver recovery	%	58.9	58.8	58.1	56.1	57.6	58.1	60.0	54.4	53.9	52.7	55.1
Flin Flon Concentrator:
Ore milled	tonnes	-	-	497,344	-	-	243,312	254,032	1,133,516	262,565	258,062	329,503
Copper	%	-	-	1.11	-	-	1.02	1.20	1.23	1.12	1.06	0.89
Zinc	%	-	-	3.87	-	-	3.60	4.13	3.95	4.16	3.86	3.65
Gold	g/tonne	-	-	1.67	-	-	1.64	1.70	2.04	1.78	1.96	2.06
Silver	g/tonne	-	-	21.00	-	-	20.76	21.23	24.90	25.04	22.93	23.65
Copper recovery	%	-	-	86.7	-	-	85.5	87.6	87.7	86.7	85.2	84.8
Zinc recovery	%	-	-	83.0	-	-	82.9	83.2	83.0	83.1	82.2	84.8
Gold recovery	%	-	-	57.1	-	-	56.4	57.7	58.5	59.2	58.1	52.9
Silver recovery	%	-	-	51.8	-	-	51.0	52.5	45.1	45.6	42.4	37.5

¹Annual consolidated results may not calculate based on amounts presented in this table due to rounding.

			Q2 2023		Q1 2023		2022 ⁴		Q4 2022		Q3 2022		Q2 2022			Q1 2022		2021 ⁴		Q4 2021		Q3 2021		Q2 2021
Manitoba Operations (continued)
Total Manitoba contained metal in concentrate produced
Copper	tonnes		2,794		2,045		14,778		2,258		2,196		4,788			5,536		21,657		5,342		5,173		4,416
Zinc	tonnes		8,758		9,846		55,381		6,326		9,750		17,053			22,252		93,529		23,207		20,844		21,538
Gold	ounces		28,948		30,647		132,764		25,961		32,570		37,346			36,887		134,475		37,644		36,341		29,628
Silver	ounces		169,519		139,064		799,108		127,099		138,615		264,651			268,743		1,066,003		315,054		242,131		217,859
Precious metal in doré produced
Gold	ounces		6,305		5,387		28,707		7,099		7,887		7,441			6,280		9,002		8,598		404		—
Silver	ounces		11,231		11,578		52,834		12,659		14,155		15,974			10,046		6,529		6,519		10		—
Total Manitoba payable metal sold in concentrate and doré
Copper	tonnes		1,871		2,225		14,668		1,626		4,081		5,177			3,784		20,802		4,408		5,071		5,230
Zinc¹	tonnes		8,641		5,628		59,043		8,230		12,714		20,793			17,306		96,435		21,112		21,619		25,361
Gold	ounces		33,009		37,939		163,447		32,140		54,962		42,454			33,891		126,551		40,623		30,941		32,567
Silver	ounces		133,916		149,677		932,807		148,177		302,946		253,225			228,458		936,857		257,928		244,338		262,443
Manitoba combined unit operating cost ^2,3	C$/tonne	$	220	$	216	$	195	$	241	$	235	$	168		$	176	$	154	$	168	$	147	$	148
Manitoba gold cash cost ^{3, 5}	$/oz	$	1,097	$	938	$	297	$	922	$	216	$	(207	)	$	416	$	—	$	—	$	—	$	—
Manitoba sustaining gold cash cost ^3,5	$/oz	$	1,521	$	1,336	$	1,091	$	1,795	$	1,045	$	519		$	1,187	$	—	$	—	$	—	$	—

¹ Includes refined zinc metal sold.

² Reflects combined mine, mill and G&A costs per tonne of milled ore.

³ Combined unit costs, cash cost, and sustaining cash cost per pound of copper produced, cash cost, and sustaining cash cost per ounce of gold produced, net of by-product credits, are non-IFRS financial performance measures with no standardized definition under IFRS. For further information and a detailed reconciliation, please see the discussion under the "Non-IFRS Financial Performance Measures" section of this MD&A. The above table sets forth selected non-IFRS financial performance measures for each of our nine most recently completed quarters and three most recently completed years; detailed reconciliations for non-comparable prior periods can be found in our MD&A for these prior periods in the "Non-IFRS Financial Performance Measures" section of these documents.

⁴Annual consolidated results may not calculate based on amounts presented in this table due to rounding.

⁵ Cash cost and sustaining cash cost per ounce of gold produced, net of by-product credits were introduced in 2022 and do not have a published comparative.

FORM 52-109F2
CERTIFICATION OF INTERIM FILINGS
FULL CERTIFICATE

I, Peter Kukielski, President and Chief Executive Officer of Hudbay Minerals Inc., certify the following:

1. Review: I have reviewed the interim financial report and interim MD&A (together, the "interim filings") of Hudbay Minerals Inc. (the "issuer") for the interim period ended June 30, 2023.

2. No misrepresentations: Based on my knowledge, having exercised reasonable diligence, the interim filings do not contain any untrue statement of a material fact or omit to state a material fact required to be stated or that is necessary to make a statement not misleading in light of the circumstances under which it was made, with respect to the period covered by the interim filings.

3. Fair presentation: Based on my knowledge, having exercised reasonable diligence, the interim financial report together with the other financial information included in the interim filings fairly present in all material respects the financial condition, financial performance and cash flows of the issuer, as of the date of and for the periods presented in the interim filings.

4. Responsibility: The issuer's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (DC&P) and internal control over financial reporting (ICFR), as those terms are defined in National Instrument 52-109 Certification of Disclosure in Issuers' Annual and Interim Filings, for the issuer.

5. Design: Subject to the limitations, if any, described in paragraphs 5.2 and 5.3, the issuer's other certifying officer and I have, as at the end of the period covered by the interim filings

(a) designed DC&P, or caused it to be designed under our supervision, to provide reasonable assurance that

(i) material information relating to the issuer is made known to us by others, particularly during the period in which the interim filings are being prepared; and

(ii) information required to be disclosed by the issuer in its annual filings, interim filings or other reports filed or submitted by it under securities legislation is recorded, processed, summarized and reported within the time periods specified in securities legislation; and

(b) designed ICFR, or caused it to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with the issuer's GAAP.

5.1 Control framework: The control framework the issuer's other certifying officer and I used to design the issuer's ICFR is the Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

5.2 N/A

5.3 Limitation on scope of design: The issuer has disclosed in its interim MD&A (a) the fact that the issuer's other certifying officer and I have limited the scope of our design of DC&P and ICFR to exclude controls, policies and procedures of a business that the issuer acquired not more than 365 days before the last day of the period covered by the interim filings and (b) summary financial information about the business that the issuer acquired that has been consolidated in the issuer's financial statements.

6. Reporting changes in ICFR: The issuer has disclosed in its interim MD&A any change in the issuer's ICFR that occurred during the period beginning on April 1, 2023 and ended on June 30, 2023 that has materially affected, or is reasonably likely to materially affect, the issuer's ICFR.

Date: August 8, 2023

(signed) "Peter Kukielski"
Peter Kukielski
President and Chief Executive Officer

FORM 52-109F2
CERTIFICATION OF INTERIM FILINGS
FULL CERTIFICATE

I, Eugene Lei, Chief Financial Officer of Hudbay Minerals Inc., certify the following:

1. Review: I have reviewed the interim financial report and interim MD&A (together, the "interim filings") of Hudbay Minerals Inc. (the "issuer") for the interim period ended June 30, 2023.

5. Design: Subject to the limitations, if any, described in paragraphs 5.2 and 5.3, the issuer's other certifying officer and I have, as at the end of the period covered by the interim filings

(a) designed DC&P, or caused it to be designed under our supervision, to provide reasonable assurance that

(i) material information relating to the issuer is made known to us by others, particularly during the period in which the interim filings are being prepared; and

5.2 N/A

Date: August 8, 2023