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 November 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 November 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 November 8, 2023, (2) Unaudited Condensed Consolidated Interim Financial Statements for the period ended September 30, 2023, (3) Management's Discussion and Analysis of Results of Operations and Financial Condition for the period ended September 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 November 8, 2023
Exhibit 99.2 — Unaudited Condensed Consolidated Interim Financial Statements for the period ended September 30, 2023
Exhibit 99.3 — Management's Discussion and Analysis of Results of Operations and Financial Condition for the period ended September 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: November 9, 2023

EXHIBIT INDEX

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

Exhibit		Description

99.1		News Release dated November 8, 2023
99.2		Unaudited Condensed Consolidated Interim Financial Statements for the period ended September 30, 2023
99.3		Management's Discussion and Analysis of Results of Operations and Financial Condition for the period ended September 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. 24

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

Hudbay Announces Third Quarter 2023 Results

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

Delivering Record Third Quarter Operating and Financial Results

Achieved record quarterly revenue of $480.5 million with strong consolidated copper production of 41,964 tonnes and record quarterly consolidated gold production of 101,417 ounces as higher grades from the Pampacancha deposit in Peru and the Lalor mine in Manitoba were realized together with the first full quarter of Copper Mountain production for Hudbay.
Reaffirmed full year 2023 production, cash cost and sustaining cash cost guidance for Hudbay's Peru and Manitoba operations. Issued Copper Mountain production, cash cost and capital expenditure guidance for the period since completion of the acquisition on June 20, 2023. Hudbay consolidated production, cash cost and capital guidance updated to include Copper Mountain contributions in 2023.
Delivered a significant increase in operating cash flow before change in non-cash working capital of $182.0 million in the third quarter, compared to $55.9 million in the second quarter.
Consolidated cash cost and sustaining cash cost per pound of copper produced, net of by-product creditsⁱ, in the third quarter, were $1.10 and $1.89, respectively, and both metrics improved by 31% compared to the second quarter.
Peru operations benefitted from significantly higher grades at the Pampacancha pit during the third quarter of 2023, resulting in 29,081 tonnes of copper production and 40,596 ounces of gold production in the third quarter. Peru cash cost per pound of copper produced, net of by-product creditsⁱ, in the third quarter declined to $0.83, in line with quarterly cadence expectations. Pampacancha began delivering on anticipated higher copper production and precious metal by-product credits in the third quarter. This strong performance is expected to continue in the fourth quarter, enabling the Peru operations to meet all metal production and cost guidance for 2023.
Manitoba operations produced 56,213 ounces of gold in the third quarter as production focused on mining the higher gold and copper grade zones at Lalor. Mill recoveries also increased meaningfully compared to the prior period as a result of changes to optimize the circuits at the Stall and New Britannia mills. Manitoba cash cost per ounce of gold produced, net of by-product creditsⁱ, was $670 during the third quarter and full year cash costs are expected to be within the annual guidance range.
First full quarter of Copper Mountain operations produced 9,303 tonnes of copper at a cash cost per pound of copper produced, net of by-product creditsⁱ, of $2.67. With integration activities well-advanced, continuous improvement methodologies applied at Hudbay's Constancia operations have started to be implemented in the Copper Mountain mill as the company continues its operational stabilization plans.
Third quarter net earnings and earnings per share were $45.5 million and $0.13, respectively. After adjusting for a non-cash gain of $32.4 million related to a quarterly revaluation of Hudbay's closed site environmental reclamation provision, among other items, third quarter adjusted earningsⁱ per share were $0.07.

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Cash and cash equivalents increased by $65.5 million to $245.2 million during the third quarter due to strong operating cash flows bolstered by higher copper and gold sales volumes from mining the high-grade zones of the Pampacancha deposit and higher gold and copper grade zones at Lalor.
Revenue, earnings and operating cash flow would have further benefitted from the sale of approximately 20,000 ounces of consolidated gold production that remained unsold at the end of the third quarter.

Generating Free Cash Flow with Increased Production and Continued Financial Discipline

Executed on planned higher production levels and achieved continued operating and capital cost efficiencies to generate significant free cash flow in the third quarter.
Achieved adjusted EBITDAⁱ of $190.7 million in the third quarter, the highest quarterly level over the last five years and a 135% increase from the second quarter.
Increased cash and total liquidity by $175.8 million to $539.6 million, including increased availability under the company's credit facilities due to higher EBITDA levels, lower net debt and renegotiated covenants.
Net debt reduced to $1,132 million during the third quarter, which together with higher levels of adjusted EBITDA, has improved the company's net debt to EBITDA ratioⁱ compared to the second quarter.
Deleveraging efforts continued subsequent to quarter-end into October 2023 with a $40 million repayment on the company's credit facilities, a $5 million principal repayment on the Copper Mountain bonds and the recommencement of deliveries under the gold forward sale and prepay agreement to reduce the gold prepayment liability.
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 (excluding Copper Mountain) are expected to be approximately $30 million lower than previous guidance levels, a further decrease from the $15 million reduction announced in the second quarter, representing a 10% reduction in total capital expenditures.

Executing on Growth Initiatives and Prudent Financial Planning

• Post-acquisition plans to stabilize the Copper Mountain operations are underway with a focus on mining fleet ramp-up activities, accelerated stripping and increasing mill reliability. To date, approximately $9 million of the $10 million in targeted annualized corporate synergies have been achieved.

• As previously announced, a new technical report for the Copper Mountain mine is expected to be released in the fourth quarter. The new technical report will include an updated mine plan and updated annual production and cost estimates. The new technical report will also include updated mineral reserve and resource estimates and mill throughput assumptions.

• Successfully completed ramp up of the Stall recovery improvement program with significantly higher copper, gold and silver recoveries realized in the third quarter.

• Released results of the de-risked and enhanced Copper World pre-feasibility study for Phase I in September 2023, which demonstrated a simplified mine plan with an extended 20-year mine life requiring only state and local permits, an after-tax net present value (8%) of $1.1 billion and a 19% internal rate of return at a copper price of $3.75 per pound.

• Completed the acquisition of Rockcliff Metals Corp. ("Rockcliff") on September 14, 2023, which has increased the company's land position within trucking distance of the Snow Lake processing facilities by more than 250%.

• Commenced initial drill program at the company's Mason project in Nevada to test high grade targets on satellite properties with 25% of the program completed and assay results pending.

"We delivered on our plan for significantly higher production, revenue and cash flow in the third quarter, marking an inflection point as we generate strong returns from our recent brownfield and growth investments across the business," said Peter Kukielski, President and Chief Executive Officer. "We are reaffirming our 2023 full year guidance with strong copper and gold grades from Pampacancha in Peru and higher gold grades at Lalor in Manitoba, while remaining disciplined with capital spending. This, together with the contribution from our first full quarter of operating Copper Mountain, led to meaningful cash flow generation and demonstrates Hudbay's resilient operating platform and continued focus on deleveraging."

	TSX, NYSE - HBM 2023 No. 24

Summary of Third Quarter Results

Consolidated copper production in the third quarter of 2023 was 41,964 tonnes, a 93% increase from the second quarter of 2023. Consolidated gold production in the quarter was 101,417 ounces, a 107% increase over the second quarter. Consolidated silver production in the third quarter was 1,063,032 ounces, a 74% increase over the second quarter. The significant increase in production was driven by meaningfully higher recoveries in Peru and Manitoba, mining of the higher copper and gold grade zones at the Pampacancha deposit, higher gold and copper grade zones at Lalor and incremental production from the Copper Mountain mine. Consolidated zinc production in the third quarter increased by 18% compared to the prior quarter primarily due to higher mill throughput and higher zinc grades. Annual production guidance ranges for 2023 have been reaffirmed for both Peru and Manitoba, and consolidated production guidance has been updated to include contributions from Copper Mountain.

Consolidated cash cost per pound of copper produced, net of by-product creditsⁱ, was $1.10 in the third quarter of 2023, compared to $1.60 in the second quarter. This improvement was driven by strong copper and gold production in Peru and Manitoba, which more than offset the higher mining, milling, G&A, freight and treatment and refining charges associated with now having three operations. Consolidated sustaining cash cost per pound of copper produced, net of by-product creditsⁱ, was $1.89 in the third quarter of 2023, compared to $2.73 in the second quarter. This decrease was primarily due to the same factors affecting consolidated cash cost, partially offset by higher cash sustaining capital expenditures. Both cash cost measures are expected to continue to be strong in the fourth quarter with higher expected copper production and continued strong contributions from precious metal by-product credits. Full year cash cost guidance ranges for 2023 are reaffirmed for each of Peru and Manitoba and consolidated cash cost and sustaining cash cost guidance ranges have been updated to include Copper Mountain. Consolidated all-in sustaining cash cost per pound of copper produced, net of by-product creditsⁱ, was $2.04 in the third quarter of 2023, lower than $2.98 in the second quarter, due to the same reasons outlined above as well as slightly higher corporate selling and administrative expenses.

Cash generated from operating activities in the third quarter of 2023 significantly increased to $151.9 million compared to $24.6 million in the second quarter. Operating cash flow before change in non-cash working capital was a record $182.0 million during the third quarter, reflecting an increase of $126.1 million over the prior quarter. The increase in operating cash flow was primarily the result of higher copper sales volumes from mining the high grade zones of the Pampacancha deposit, higher gold and copper grade zones at Lalor and an incremental contribution from the Copper Mountain mine.

Net earnings and earnings per share in the third quarter of 2023 were $45.5 million and $0.13, respectively, compared to net loss and loss per share of $14.9 million and $0.05, respectively, in the second quarter of 2023. The results were positively impacted by a non-cash gain of $32.4 million related to the quarterly revaluation of the environmental reclamation provision at the company's closed sites, partially offset by a $2.3 million one-time charge related to restructuring costs arising from the Copper Mountain acquisition.

	TSX, NYSE - HBM 2023 No. 24

Adjusted net earningsⁱ and adjusted net earnings per shareⁱ in the third quarter of 2023 were $24.4 million and $0.07 per share, respectively, after adjusting for the non-cash gain related to the revaluation of the environmental provision, among other items. This compares to adjusted net loss and adjusted net loss per share of $18.3 million and $0.07 in the second quarter of 2023. Adjusted EBITDAⁱ was $190.7 million, a 135% increase compared to $81.2 million in the second quarter. Revenue, earnings and cash would have further benefitted from the sale of approximately 20,000 ounces of consolidated gold production that was unsold at the end of the third quarter and is expected to be sold in the fourth quarter.

As at September 30, 2023, total liquidity increased to $539.6 million, including $245.2 million in cash and cash equivalents as well as undrawn availability of $294.4 million under the company's revolving credit facilities. Net debt declined during the quarter to $1,132 million as at September 30, 2023. Subsequent to quarter end, Hudbay repaid $40 million on its revolving credit facilities and made a $5 million principal repayment on the Copper Mountain bonds. Based on continued expected free cash flow generation in the fourth quarter of 2023, the company continues to expect to make progress on its deleveraging targets as outlined in the "3-P" plan for sanctioning Copper World. Current liquidity combined with cash flow from operations is expected to be sufficient to meet the company's liquidity needs for the foreseeable future.

Consolidated Financial Condition ($000s)	Sep. 30, 2023	Jun. 30, 2023	Dec. 31, 2022
Cash	245,217	179,734	225,665
Total long-term debt	1,377,443	1,370,682	1,184,162
Net debt¹	1,132,226	1,190,948	958,497
Working capital²	128,463	(61,357)	76,534
Total assets	5,250,596	5,242,140	4,325,943
Equity³	2,044,684	2,001,970	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.

³ Equity attributable to owners of the company.

Consolidated Financial Performance²		Three Months Ended
		Sep. 30, 2023	Jun. 30, 2023	Sep. 30, 2022
Revenue	$000s	480,456	312,166	346,171
Cost of sales	$000s	374,057	289,273	313,741
Earnings (loss) before tax	$000s	84,149	(30,731)	(263)
Earnings (loss)	$000s	45,490	(14,932)	(8,135)
Basic and diluted earnings (loss) per share	$/share	0.13	(0.05)	(0.03)
Adjusted earnings (loss) per share¹	$/share	0.07	(0.07)	(0.05)
Operating cash flow before change in non-cash working capital	$ millions	182.0	55.9	81.6
Adjusted EBITDA¹	$ millions	190.7	81.2	99.3
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.

	TSX, NYSE - HBM 2023 No. 24

Consolidated Production and Cost Performance⁵		Three Months Ended
		Sep. 30, 2023	Jun. 30, 2023	Sep. 30, 2022
Contained metal in concentrate and doré produced¹
Copper	tonnes	41,964	21,715	24,498
Gold	ounces	101,417	48,996	53,179
Silver	ounces	1,063,032	612,310	717,069
Zinc	tonnes	10,291	8,758	9,750
Molybdenum	tonnes	466	414	437
Payable metal sold
Copper	tonnes	39,371	23,078	24,799
Gold²	ounces	74,799	47,533	66,932
Silver²	ounces	748,955	805,448	816,416
Zinc³	tonnes	7,125	8,641	12,714
Molybdenum	tonnes	426	314	511
Consolidated cash cost per pound of copper produced⁴
Cash cost	$/lb	1.10	1.60	0.58
Sustaining cash cost	$/lb	1.89	2.73	1.91
All-in sustaining cash cost	$/lb	2.04	2.98	2.16

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

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

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

⁴Cash 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, please see the "Non-IFRS Financial Performance Measures" section of this news release.

⁵Includes production results from the Copper Mountain mine following the June 20, 2023 acquisition completion date.

	TSX, NYSE - HBM 2023 No. 24

Peru Operations Review

Peru Operations		Three Months Ended
		Sep. 30, 2023	Jun. 30, 2023	Sep. 30, 2022
Constancia ore mined¹	tonnes	1,242,198	3,647,399	6,300,252
Copper	%	0.30	0.31	0.36
Gold	g/tonne	0.04	0.04	0.05
Silver	g/tonne	2.91	2.49	3.38
Molybdenum	%	0.01	0.01	0.01
Pampacancha ore mined	tonnes	5,894,013	2,408,495	2,488,928
Copper	%	0.53	0.36	0.29
Gold	g/tonne	0.30	0.34	0.23
Silver	g/tonne	4.22	2.81	4.30
Molybdenum	%	0.02	0.02	0.01
Total ore mined	tonnes	7,136,211	6,055,894	8,789,180
Strip ratio²		1.36	1.74	1.26
Ore milled	tonnes	7,895,109	7,223,048	7,742,020
Copper	%	0.43	0.31	0.34
Gold	g/tonne	0.21	0.09	0.08
Silver	g/tonne	3.75	2.78	3.48
Molybdenum	%	0.02	0.01	0.01
Copper recovery	%	85.2	80.0	84.5
Gold recovery	%	74.8	61.1	61.9
Silver recovery	%	73.2	65.1	65.2
Molybdenum recovery	%	37.2	40.5	41.0
Contained metal in concentrate
Copper	tonnes	29,081	17,682	22,302
Gold	ounces	40,596	12,998	12,722
Silver	ounces	697,211	419,642	564,299
Molybdenum	tonnes	466	414	437
Payable metal sold
Copper	tonnes	27,490	21,207	20,718
Gold	ounces	32,757	14,524	11,970
Silver	ounces	460,001	671,532	513,470
Molybdenum	tonnes	426	314	511
Combined unit operating cost^3,4,5	$/tonne	12.20	14.07	13.06
Cash cost⁵	$/lb	0.83	2.14	1.68
Sustaining cash cost⁵	$/lb	1.51	3.06	2.46

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

³ Combined 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, please see the "Non-IFRS Financial Performance Measures" section of this news release.

⁴Excludes approximately $0.9 million, or $0.12 per tonne, of COVID-related costs during the three months ended September 30, 2022.

⁵ Strip ratio is calculated as waste mined divided by ore mined.

	TSX, NYSE - HBM 2023 No. 24

During the third quarter of 2023, the Peru operations produced 29,081 tonnes of copper, 40,596 ounces of gold, 697,211 ounces of silver and 466 tonnes of molybdenum. The significant increases in copper and gold production compared to the second quarter were a result of higher copper, gold and silver grades from mining the high grade zones of the Pampacancha deposit, higher recoveries and higher throughput. Full year production in Peru is expected to continue to benefit from higher grades in the fourth quarter of 2023 and, as such, full year production of all metals in Peru remains on track to achieve the guidance ranges for 2023.

Total ore mined in the third quarter of 2023 increased by 18% compared to the second quarter, in line with the mine plan, despite a decline in ore mined from the Constancia pit associated with the commencement of phase five stripping activities. Ore mined from Pampacancha increased to 5.9 million tonnes during the third quarter at average grades of 0.53% copper and 0.30 grams per tonne gold.

Ore milled during the third quarter of 2023 was 9% higher than the second quarter primarily as a result of a scheduled plant maintenance shutdown in the second quarter. Milled copper and gold grades increased to 0.43% and 0.21 g/tonne, respectively, in the third quarter of 2023, representing a 39% and 133% increase, respectively, compared to the second quarter, due to a significant increase in the mining of higher grade copper-gold ore from Pampacancha.

Recoveries of copper, gold and silver during the third quarter of 2023 were 7%, 22% and 12% higher, respectively, than the second quarter and were in line with metallurgical models. Recoveries benefitted from the completion of the recovery uplift program in the second quarter as well as higher head grades and lower contaminants.

Combined mine, mill and G&A unit operating costsⁱ in the third quarter of 2023 were 13% lower than the second quarter primarily as a result of lower milling costs and higher throughput as the second quarter was impacted by a scheduled plant maintenance shutdown.

Peru's cash cost per pound of copper produced, net of by-product creditsⁱ, in the third quarter of 2023 was $0.83 compared to $2.14 in the second quarter of 2023. This 61% improvement was primarily a result of higher by-product credits mainly from gold, higher pounds of copper produced and lower milling costs. This was partly offset by higher profit sharing expenses and higher treatment & refining and freight costs. This cost measure is declining meaningfully, as expected, in the second half of 2023 and the full year cash cost is expected to remain within the 2023 guidance range with continued higher copper production and contributions from precious metal by-product credits from Pampacancha expected in the fourth quarter of 2023.

Peru's sustaining cash cost per pound of copper produced, net of by-product creditsⁱ, in the third quarter of 2023 was $1.51, representing a 51% decline from the second quarter due to the same factors affecting cash cost noted above, partially offset by higher sustaining capital expenditures. However, total annual sustaining capital expenditures in Peru are expected to be $10 million lower than the original 2023 guidance levels primarily a result of lower capitalized stripping costs.

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Manitoba Operations Review

Manitoba Operations		Three Months Ended
		Sep. 30, 2023	Jun. 30, 2023	Sep. 30, 2022
Lalor
Ore mined	tonnes	367,491	413,255	347,345
Gold	g/tonne	5.08	4.07	4.57
Copper	%	1.02	0.81	0.71
Zinc	%	3.31	3.14	3.27
Silver	g/tonne	27.80	23.27	21.27
New Britannia
Ore milled	tonnes	146,927	141,905	132,362
Gold	g/tonne	6.93	5.82	7.70
Copper	%	1.22	0.77	0.72
Zinc	%	0.90	0.85	0.73
Silver	g/tonne	23.88	25.79	20.11
Gold recovery - concentrate	%	64.7	55.0	60.6
Copper recovery - concentrate	%	97.4	91.2	92.3
Silver recovery - concentrate	%	63.2	57.0	61.2
Stall Concentrator
Ore milled	tonnes	255,516	238,633	229,746
Gold	g/tonne	3.70	3.12	2.81
Copper	%	0.77	0.85	0.67
Zinc	%	4.88	4.47	4.82
Silver	g/tonne	28.82	22.15	20.98
Gold recovery	%	67.8	59.9	61.3
Copper recovery	%	93.9	88.5	85.8
Zinc recovery	%	82.6	82.2	88.0
Silver recovery	%	64.9	60.3	55.7
Total contained metal in concentrate and doré¹
Gold	ounces	56,213	35,253	40,457
Copper	tonnes	3,580	2,794	2,196
Zinc	tonnes	10,291	8,758	9,750
Silver	ounces	264,752	180,750	152,770
Total payable metal sold
Gold²	ounces	36,713	33,009	54,962
Copper	tonnes	2,925	1,871	4,081
Zinc³	tonnes	7,125	8,641	12,714
Silver²	ounces	197,952	133,916	302,946
Combined unit operating cost⁴^,5	C$/tonne	217	220	235
Gold cash cost⁵	$/oz	670	1,097	216
Gold sustaining cash cost⁵	$/oz	939	1,521	1,045

¹ Doré includes sludge, slag and carbon fines in three months ended September 30, 2023 and June 30, 2023.

² Includes total payable precious metals in concentrate and doré sold.

³Includes refined zinc metal and payable zinc in concentrate 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. 24

During the third quarter of 2023, the Manitoba operations produced 56,213 ounces of gold, 3,580 tonnes of copper, 10,291 tonnes of zinc and 264,752 ounces of silver. Production of gold, copper, zinc and silver in the third quarter of 2023 was 59%, 28%, 18% and 46% higher, respectively, than the second quarter due to mining higher grade gold zones, generally higher recoveries at the New Britannia and Stall mills, and recovery of secondary gold products at New Britannia due to past processing inefficiencies. The improvements completed late in the quarter have resolved the past processing inefficiencies at New Britannia and gold is reporting to doré as designed. With the recent recovery improvements at the New Britannia and Stall mills and higher grades from Lalor in the third quarter, the company expects to achieve full year production guidance for all metals. Gold production is expected to trend toward the lower end of the guidance ranges while copper and zinc production are expected to trend to the upper end of the guidance ranges, as disclosed last quarter.

The company's Manitoba team continues to advance several key initiatives to support higher production levels, reduce dilution during the mining cycle and improve metal recoveries at the Snow Lake operations. The team at Lalor has placed a strong emphasis on enhancing the quality of ore production and minimizing dilution through improved blast designs, loading procedures, and effective grade control practices. Additionally, Hudbay successfully completed changes to optimize the circuits at the Snow Lake mills, resulting in increased copper, gold, and silver recoveries. Concurrently, the company is making improvements to the tailings deposition process at the Anderson facility and exploring the potential of transitioning the facility from subaqueous to subaerial tailings storage, potentially providing a more efficient use of impoundment space, addressing seasonal operational challenges and deferring capital expenditure for dam raise construction to future years.

At Lalor, the company successfully completed hoist rope replacements, biannual inspections and mine ventilation systems maintenance ahead of the winter season. Maintenance was also performed at the underground muck circuit and mine power centers during the quarter. Lalor production averaged 4,000 tonnes per day during the third quarter, which was lower than the prior quarter due to the mine maintenance activities. Copper, gold, silver and zinc grades mined during the third quarter of 2023 were 26%, 25%, 19% and 5% higher, respectively, than the second quarter.

The Stall mill processed 7% more ore in the third quarter of 2023 than in the second quarter as it drew down base metal ore stockpiles that built up at the end of second quarter. After the commissioning of the first phase of the Stall mill recovery improvement project in the second quarter of 2023, the third quarter was focused on optimizing circuits to achieve targeted recoveries by reducing primary grind size, refining the flotation circuit balance and mass pull, and reagent selection. These adjustments proved highly effective, resulting in notably higher recoveries for copper, gold and silver during the third quarter of 2023. Specifically, the Stall mill achieved its targeted gold recovery levels of approximately 68% in the third quarter, compared to 60% in the second quarter.

During the third quarter, the New Britannia mill consistently achieved elevated production levels averaging approximately 1,600 tonnes per day despite processing significantly higher copper head grades that can impact throughput due to copper flotation limitations. The company continues to advance process debottleneck initiatives at New Britannia that require minimal capital outlays as it pursues higher throughput targets, aligned with increased gold ore production from Lalor.

Combined mine, mill and G&A unit operating costsⁱ decreased slightly in the third quarter compared to the second quarter, reflecting higher throughput.

Manitoba's cash cost per ounce of gold produced, net of by-product creditsⁱ was $670 in the third quarter, 39% lower than the second quarter, primarily as a result of higher gold production driven by higher grades and improved recoveries. Sustaining cash cost per ounce of gold produced, net of by-product creditsⁱ, for the third quarter was $939, a 38% decrease from the prior quarter primarily due to the same factors affecting cash cost. Total annual sustaining capital expenditures in Manitoba are expected to be $15 million lower than the original 2023 guidance levels primarily a result of lower capital development costs realized at Lalor as the team focuses on cost efficiencies.

	TSX, NYSE - HBM 2023 No. 24

Cash cost in the third quarter of 2023 was within the 2023 guidance range and is expected to continue to benefit from 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 in the fourth quarter. As a result, full year cash cost in Manitoba is expected to achieve the 2023 guidance range.

British Columbia Operations Review

British Columbia Operations		Three Months Ended
		Sep. 30, 2023
Ore mined¹	tonnes	3,792,568
Waste mined	tonnes	11,233,917
Strip ratio²		2.96
Ore milled	tonnes	3,158,006
Copper	%	0.36
Gold	g/tonne	0.08
Silver	g/tonne	1.40
Copper recovery	%	80.9
Gold recovery	%	56.1
Silver recovery	%	71.3
Total contained metal in concentrate²
Copper	tonnes	9,303
Gold	ounces	4,608
Silver	ounces	101,069
Total payable metal sold
Copper	tonnes	8,956
Gold	ounces	5,329
Silver	ounces	91,002
Combined unit operating cost^3,4	C$/tonne	24.88
Cash cost⁴	$/lb	2.67
Sustaining cash cost⁴	$/lb	3.39

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 G&A costs per tonne of ore milled. Reflects the deduction of expected capitalized stripping costs.

⁴ 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 third quarter of 2023, the British Columbia operations produced 9,303 tonnes of copper, 4,608 ounces of gold and 101,069 ounces of silver. The third quarter was the first full quarter of production from the Copper Mountain mine after the completion of the acquisition on June 20, 2023.

Total ore mined at Copper Mountain in the third quarter of 2023 was 3.8 million tonnes, in line with Hudbay expectations. Following the closing of the Copper Mountain transaction in late June, mine operations initiated a fleet production ramp up plan to capture the full value of existing idle capital equipment at the Copper Mountain site. This plan entails a fleet capacity/utilization ramp up from 14 trucks to 26 trucks over the third and fourth quarters, which is expected to result in a more than 30% increase in tonnes moved in 2023 compared to 2022. The company also commissioned a new Komatsu PC8000 electric shovel in September, which reduces carbon intensity by displacing existing diesel shovel production.

	TSX, NYSE - HBM 2023 No. 24

The mill processed a total of 3.2 million tonnes of ore during the third quarter, with mill availability averaging 83.5%. A scheduled mill shutdown occurred in September to facilitate liner replacement and a power transmission line upgrade. In coordination with BC Hydro, thermal upgrades to the site transmission line were completed to support 100MW of site supply for current and future site operations. Mill throughput for the quarter was impacted by excessive coarse material bypassing the comminution circuit and restricting flow through the tailings discharge line, causing high levels of unplanned downtime. This issue was rectified in August and the company has since seen continuous improvements in throughput. A key focus area for Hudbay is implementing improved maintenance management systems as part of Hudbay's stabilization plans for increasing mill availability.

Milled copper grades during the third quarter of 2023 were 0.36%, in line with expectations. Copper recoveries were 80.9% in the third quarter, an increase compared to 79.1% that was previously reported by Copper Mountain for the full year 2022. As part of the near-term stabilization plans at Copper Mountain, Hudbay expects to apply mill efficiency initiatives from the Constancia mill to the Copper Mountain mill in an effort to continue to improve concentrate quality and copper recoveries.

Combined mine, mill and G&A unit operating costsⁱ in the third quarter of 2023 were C$24.88 per tonne milled. Combined unit operating costs per tonne milled are expected to decrease over time as the company continues its stabilization and optimization initiatives at Copper Mountain.

British Columbia's cash cost per pound of copper produced, net of by-product creditsⁱ, was $2.67 and sustaining cash cost per pound of copper produced, net of by-product creditsⁱ, was $3.39 in the third quarter. This indicates an improvement in cash costs when compared to the full year 2022 levels previously reported by Copper Mountain of $3.53 per pound and $4.20 per pound, respectively. The cash cost and sustaining cash cost measures are expected to remain within the post-acquisition guidance ranges for the balance of the year, as discussed below.

Copper Mountain Stabilization Plans Underway and Consolidated Guidance Updated to Reflect Copper Mountain

Since completing the acquisition of Copper Mountain on June 20, 2023, Hudbay has been focused on advancing its plans to stabilize the operation, 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. The company is also planning a campaign of accelerated stripping over the next two to three years to enable access to higher grade ore and to mitigate the substantially reduced stripping undertaken by Copper Mountain over the four years prior to completion of the acquisition.

Further details on the company's stabilization plans will be provided in a new technical report for the Copper Mountain mine, which is expected to be released in the fourth quarter of 2023. The new technical report will include an updated mine plan and updated annual production and cost estimates for the Copper Mountain mine, which will reflect Hudbay's stabilization and optimization initiatives, and the costs associated with the planned accelerated stripping. The new technical report will also include updated mineral reserve and resource estimates and mill throughput assumptions consistent with Hudbay's pre-acquisition internal assessments and in line with the mineral reserve and resource estimates and throughput assumptions disclosed in Copper Mountain's historical technical report dated February 25, 2019 (after accounting for mining depletion). Accordingly, Hudbay does not expect its mineral reserve and resource estimates and mill throughput expansion assumptions to be consistent with those disclosed in Copper Mountain's most recent technical report dated September 30, 2022. For further information, see, "Qualified Person and NI 43-101".

Hudbay is issuing inaugural Copper Mountain post-acquisition 2023 guidance for production and costs. The company has incorporated the Copper Mountain guidance into its consolidated production and cash cost guidance for the full year. Hudbay's production and cash cost guidance for Peru and Manitoba has otherwise been reaffirmed and remains unchanged.

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2023 Production and Cost Guidance		Peru Operations (unchanged)	Manitoba Operations (unchanged)	British Columbia Operations²	Consolidated (updated)
Copper production¹	tonnes	91,000 - 116,000	9,000 - 12,000	18,500 - 20,500	118,500 - 148,500
Gold production¹	ounces	83,000 - 108,000	175,000 - 205,000	8,000 - 10,000	266,000 - 323,000
Silver production¹	ounces	2,210,000 - 2,650,000	750,000 - 1,000,000	190,000 - 210,000	3,150,000 - 3,860,000
Zinc production¹	tonnes	-	28,000 - 36,000	-	28,000 - 36,000
Molybdenum production¹	tonnes	1,300 - 1,600	-	-	1,300 - 1,600
Cash cost³		$1.05 - $1.30/lb	$500 - $800/oz	$2.40 - $2.85/lb	$0.80 - $1.10/lb
Sustaining cash cost³		-	-	-	$1.80 - $2.25/lb

¹ Metal reported in concentrate and doré is prior to refining losses or deductions associated with smelter terms.

² British Columbia operations represented on a 100% basis and for the period since the acquisition completion date of June 20, 2023.

³ Cash cost and sustaining cash cost per pound of copper produced, net of by-product credits, and gold 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. Canadian dollar costs are converted into U.S. dollars using an exchange rate of 1.35 C$/US$.

Generating Free Cash Flow with Increased Production and Continued Financial Discipline

Hudbay delivered positive free cash flow during the third quarter of 2023 as the company executed its plan for higher copper and gold grades from Pampacancha and higher gold grades at Lalor. The company continues to expect to see significantly higher production levels in the second half of 2023, compared to the first half of 2023, as a result of these higher grades in Peru and Manitoba, along with the contribution of production from the newly acquired Copper Mountain mine.

During the third quarter, the company drew $90 million from its revolving credit facilities to finance the redemption of $87 million of principal and interest from Copper Mountain's bonds, which improved the company's ability to deleverage and repay debt sooner than waiting for bond maturity in 2026.

The company increased its cash and cash equivalents to $245.2 million and reduced its net debt to $1,132 million as at September 30, 2023, compared to $179.7 million and $1,190 million, respectively, as at June 30, 2023. The $58 million decline in net debt, together with higher levels of adjusted EBITDAⁱ in the third quarter, have improved the company's net debt to EBITDA ratio compared to the second quarter thereby improving its credit facility availability. Subsequent to quarter-end, Hudbay continued its deleveraging efforts with a $40 million repayment on its credit facilities and a $5 million principal repayment on the Copper Mountain bonds in October 2023. The company has also recommenced deliveries under the gold forward sale and prepay agreement in October 2023, further reducing the gold prepayment liability.

As an additional prudent measure to ensure free cash flow generation and continued financial discipline in 2023, during the third quarter, the Copper Mountain joint venture entered into forward sales contracts for a total of 2,000 tonnes of copper production over the five-month period from August through December 2023 at an average price of $3.86 per pound. During the second quarter of 2023, Hudbay entered into a zero-cost collar program for approximately 10% of copper production expected from Peru and Manitoba in the second half of 2023. The program entails hedging 15.9 million pounds of copper from July to December 2023 at an average floor price of $3.95 per pound and an average cap price of $4.28 per pound. As at September 30, 2023, 2.6 million pounds of copper forwards and 7.9 million pounds of copper collars were outstanding.

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The company remains on track to deliver annual discretionary spending reduction targets for 2023. As a result of continued financial discipline and capital cost efficiencies achieved to-date, total capital expenditures for Peru, Manitoba and Arizona in 2023 are expected to be approximately $30 million lower than previous guidance levels, representing a 10% reduction from the original 2023 total capital expenditure guidance. This represents a further decrease from the $15 million targeted reduction announced in the second quarter. With the issuance of Copper Mountain post-acquisition guidance, the company expects capital expenditures at its British Columbia operations to total approximately $35 million in 2023.

2023 Capital Expenditure Guidance¹ (in $ millions)	Original	Updated
Sustaining capital:
Peru	160	150
Manitoba	75	60
Growth capital:
Peru	10	10
Manitoba	15	15
Arizona	30	25
Capitalized exploration	10	10
Total	300	270
2023 British Columbia Guidance¹^,2		New
Sustaining capital	-	33
Growth capital	-	2
Total	-	35

¹ Excludes capitalized costs not considered to be sustaining or growth capital expenditures and right-of-use lease additions. Includes capitalized stripping costs. Converted into U.S. dollars using an exchange rate of 1.35 C$/US$.

² British Columbia operations represented on a 100% basis and for the period since the acquisition completion date of June 20, 2023.

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De-risked Copper World with Enhanced Phase I Pre-Feasibility Study

On September 8, 2023, Hudbay released the results of the enhanced pre-feasibility study ("PFS") for Phase I of the 100%-owned Copper World project in Arizona. Highlights of the PFS include:

Phase I, which is a standalone operation requiring only state and local permits for an extended 20-year mine life, has an after-tax net present value (8%) of $1.1 billion and generates a 19% internal rate of return at a copper price of $3.75 per pound.
Average annual copper production over the first ten years of approximately 92,000 tonnes at cash costs and sustaining cash costs of $1.53 and $1.95 per pound of copperⁱ, respectively.
Extended Phase I mine life to 20 years, with the potential for further expansion, compared to 16 years in the previous study with an 18% increase to total copper production and higher mill head grades.
Lowered initial capital cost estimate to approximately $1.3 billion ($1.1 billion net of existing stream agreement), compared to $1.9 billion in the previous preliminary economic assessment, due to the deferral of the construction of a concentrate leach facility to year 4 with the potential to be fully funded from operating cash flows or benefit from future government incentives for critical minerals processing.
Simplified project flow sheet includes a 60,000 ton per day sulfide concentrator that will produce copper concentrate as a final product until the addition of a concentrate leach facility and a solvent extraction and electrowinning plant in year 5 that will allow the project to produce copper cathodes. The production of copper cathodes will reduce the project's carbon footprint, make Copper World the third largest domestic copper cathode producer in the United Statesⁱⁱ and bolster the country's green energy independence with "Made in America" copper.
Total GHG emissions are expected to be 14% lower compared to an operation that only produces copper concentrate.
Significant benefits for the community and local economy in Arizona through payment of more than $850 million in U.S. federal and state taxes and the creation of an estimated 400 direct and 3,000 indirect jobs.
Copper World is one of the highest-grade open pit copper projects in the Americasⁱⁱⁱ with proven and probable mineral reserves of 385 million tonnes at 0.54% copper.
Together with the pre-feasibility study, Hudbay has updated the mineral resource estimates for the project, which increases the global measured and indicated mineral resources (inclusive of mineral reserves) to 1.2 billion tonnes at 0.42% copper, representing a 4% increase in total in-situ copper. This confirms significant upside at Copper World with an intended Phase II expansion of mining activities onto federal land to further enhance the project economics and extend the mine life well beyond 20 years.

The first key state permit required for Copper World, the Mined Land Reclamation Plan ("MLRP), was initially approved by the Arizona State Mine Inspector in October 2021 and was subsequently amended to reflect a larger private land project footprint. This approval was challenged in state court, but the challenge was dismissed in May 2023 as having no basis. In late 2022, Hudbay submitted the applications for an Aquifer Protection Permit and an Air Quality Permit to the Arizona Department of Environmental Quality ("ADEQ"). Based on ongoing feedback and dialogue with the ADEQ, the company expects to receive these two outstanding state permits in mid-2024.

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 as well as in the final Copper World project design. The opportunity to sanction Copper World is not expected until 2025 based on current estimated timelines. The decision to sanction Copper World will ultimately be evaluated against other competing investment opportunities as part of Hudbay's capital allocation process.

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Completion of Rockcliff Acquisition

On September 14, 2023, Hudbay successfully completed its previously announced acquisition of Rockcliff, pursuant to which Hudbay acquired all of the issued and outstanding common shares of Rockcliff that it did not already own (the "Rockcliff Transaction") by way of a court-approved plan of arrangement. As a result of closing the Rockcliff Transaction, Rockcliff is now a wholly-owned subsidiary of Hudbay.

The enterprise value to Hudbay, net of Rockcliff's cash, was approximately $13 million. Hudbay issued 0.006776 of a Hudbay common share in exchange for each Rockcliff common share previously held and, in aggregate, issued 2,675,324 Hudbay common shares under the Rockcliff Transaction to former Rockcliff shareholders. The Rockcliff shares were delisted from the CSE and Rockcliff has ceased to be a reporting issuer under Canadian securities laws.

Rockcliff was one of the largest landholders in the Snow Lake area, with approximately 1,800 square kilometres across all its properties. The Rockcliff Transaction has the potential to further extend mine life at the Snow Lake operations by consolidating Hudbay's ownership in the Talbot copper-gold deposit and more than tripling the company's prospective land package in the Snow Lake region. Prior to the Rockcliff Transaction, Rockcliff was the 49% joint venture partner of the Talbot deposit. The Talbot deposit and the additional Rockcliff exploration properties provide further optionality and potential future feed sources for the Stall and New Britannia mills.

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 in March 2024.

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. The company commenced early exploration activities at Maria Reyna and Caballito after completing a surface rights exploration agreement with the community of Uchucarcco in August 2022. Hudbay has completed technical activities necessary to support drill permit application, including surface investigation work, baseline environmental and archaeological activities, and the company continues to advance community engagement activities. 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.

Snow Lake 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 in March 2024.

The company is also preparing plans for exploration activities on the newly acquired land in Snow Lake, which is expected to include geophysical and drilling programs on the Cook Lake claims and the former Rockcliff claims located within trucking distance of the existing Snow Lake processing infrastructure. A majority of the Cook Lake and former Rockcliff claims have been untested by modern deep geophysics, which was the discovery method for the Lalor deposit. Hudbay intends to explore these claims in hopes of finding a new anchor deposit to maximize and extend the life of the Snow Lake operations beyond 2038.

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Mason Exploration

The Mason project is a large greenfield copper deposit located in the historic Yerington District of Nevada and is one of the largest undeveloped copper porphyry deposits in North America. Hudbay completed a PEA in 2021 which demonstrated robust project economics from a 27-year mine life operation. There is an opportunity to further enhance the project economics through exploration for higher grade satellite deposits on the prospective land package near Mason, including Mason Valley. The Mason Valley property hosts several historical underground copper mines that were in production in the early 1900s. Much of the Mason Valley property is located on Hudbay's wholly owned private lands within 15 kilometres of the planned processing infrastructure for the Mason project and contains highly prospective skarn mineralization.

For the first time since Hudbay acquired Mason, the company initiated a drill program in September 2023 to test these satellite deposits, including high-grade skarn targets and a large porphyry target below the historical mines. The drill program is approximately 25% complete at the end of October with assay results pending.

Website Links

Hudbay:

www.hudbay.com

Management's Discussion and Analysis:

https://www.hudbayminerals.com/MDA1123

Financial Statements:

https://www.hudbayminerals.com/FS1123

Conference Call and Webcast

Date:	Thursday, November 9, 2023

Time:	9:00 a.m. ET

Webcast:	www.hudbay.com

Dial in:	1-646-307-1591 or 1-800-599-5188

	TSX, NYSE - HBM 2023 No. 24

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").

As disclosed in this news release, Hudbay expects to file a new technical report for the Copper Mountain mine in the fourth quarter of 2023. The new technical report will include an updated mine plan and updated annual production and cost estimates. The new technical report will also include updated mineral reserve and resource estimates and mill throughput assumptions consistent with Hudbay's pre-acquisition internal assessments and in line with the mineral reserve and resource estimates and throughput assumptions disclosed in Copper Mountain's historical technical report dated February 25, 2019 (after accounting for mining depletion). Accordingly, Hudbay does not expect its mineral reserve and resource estimates and mill throughput expansion assumptions to be consistent with those disclosed in Copper Mountain's most recent technical report dated September 30, 2022. Investors are cautioned they should not rely on any of Copper Mountain's previously issued technical reports.

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, combined unit costs and ratios based on these measures 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.

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Adjusted Net Earnings (Loss) Reconciliation

	Three Months Ended
(in $ millions)	Sep. 30, 2023		Jun. 30, 2023		Sep. 30, 2022
Profit (loss) for the period	45.5		(14.9	)	(8.1	)
Tax expense (recovery)	38.7		(15.8	)	7.8
Profit (loss) before tax	84.2		(30.7	)	(0.3	)
Adjusting items
Mark-to-market adjustments ¹	1.3		0.6		(4.2	)
Foreign exchange (gain) loss	(0.6	)	1.4		(4.8	)
Inventory adjustments	-		0.9		2.1
Variable consideration adjustment - stream revenue and accretion	-		-		3.9
Re-evaluation adjustment - environmental provision²	(32.4	)	(4.7	)	(6.4	)
Acquisition related costs	0.1		6.8		-
Evaluation expenses	-		-		0.1
Restructuring charges³	2.3		-		5.1
Loss on disposal of plant and equipment and non-current assets	-		0.3		(6.0	)
Adjusted earnings (loss) before income taxes	54.9		(25.4	)	(10.5	)
Tax (expense) recovery	(38.7	)	15.8		(7.8	)
Tax impact on adjusting items	8.2		(8.7	)	5.9
Adjusted net earnings (loss)	24.4		(18.3	)	(12.4	)
Adjusted net earnings (loss) $/share	0.07		(0.07	)	(0.05	)
Basic weighted average number of common shares outstanding (millions)	346.7		272.2		261.9

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 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 and restructuring charges for British Columbia in 2023.

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Adjusted EBITDA Reconciliation

	Three Months Ended
(in $ millions)	Sep. 30, 2023		Jun. 30, 2023		Sep. 30, 2022
Profit (loss) for the period	45.5		(14.9	)	(8.1	)
Add back:
Tax expense (recovery)	38.7		(15.8	)	7.8
Net finance expense	30.9		30.5		20.6
Other expenses	8.9		13.9		6.3
Depreciation and amortization	113.8		88.7		89.8
Amortization of deferred revenue and variable consideration adjustment	(16.8	)	(18.1	)	(15.3	)
	221.0		84.3		101.1
Adjusting items (pre-tax):
Re-evaluation adjustment - environmental provision	(32.4	)	(4.7	)	(6.4	)
Inventory adjustments	-		0.9		2.1
Share-based compensation expense ¹	2.1		0.7		2.5
Adjusted EBITDA	190.7		81.2		99.3

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

Net Debt Reconciliation

(in $ thousands)
	Sep. 30, 2023		Jun. 30, 2023		Dec. 31, 2022
Total long-term debt	1,377,443		1,370,682		1,184,162
Cash	(245,217	)	(179,734	)	(225,665	)
Net debt	1,132,226		1,190,948		958,497

Copper Cash Cost Reconciliation

Consolidated	Three Months Ended
Net pounds of copper produced¹
(in thousands)	Sep. 30, 2023	Jun. 30, 2023	Sep. 30, 2022
Peru	64,112	38,982	49,167
British Columbia	20,510	-	-
Manitoba	7,893	6,160	4,841
Net pounds of copper produced	92,515	45,142	54,008

¹Contained copper in concentrate.

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Consolidated	Three Months Ended
	Sep. 30, 2023				Jun. 30, 2023				Sep. 30 2022
Cash cost per pound of copper produced	$000s		$/lb		$000s		$/lb		$000s		$/lb
Mining	104,547		1.13		73,335		1.62		75,856		1.40
Milling	88,021		0.95		69,869		1.55		68,616		1.27
G&A	36,107		0.39		20,975		0.47		23,262		0.43
Onsite costs	228,675		2.47		164,179		3.64		167,734		3.11
Treatment & refining	32,882		0.36		26,670		0.59		21,852		0.40
Freight & other	26,853		0.29		17,766		0.39		22,078		0.41
Cash cost, before by-product credits	288,410		3.12		208,615		4.62		211,664		3.92
By-product credits	(187,023	)	(2.02	)	(136,417	)	(3.02	)	(180,464	)	(3.34	)
Cash cost, net of by-product credits	101,387		1.10		72,198		1.60		31,200		0.58

Consolidated	Three Months Ended
	Sep. 30, 2023			Jun. 30, 2023			Sep. 30 2022
Supplementary cash cost information	$000s		$/lb¹	$000s		$/lb¹	$000s		$/lb¹
By-product credits²:
Zinc	17,099		0.18	21,896		0.48	43,606		0.81
Gold³	129,954		1.41	86,026		1.91	101,650		1.88
Silver³	16,724		0.18	17,281		0.38	16,066		0.30
Molybdenum & other	23,246		0.25	11,214		0.25	19,142		0.35
Total by-product credits	187,023		2.02	136,417		3.02	180,464		3.34
Reconciliation to IFRS:
Cash cost, net of by-product credits	101,387			72,198			31,200
By-product credits	187,023			136,417			180,464
Treatment and refining charges	(32,882	)		(26,670	)		(21,852	)
Share-based compensation expense	149			60			114
Inventory adjustments	-			906			2,074
Change in product inventory	3,374			15,114			29,726
Royalties	1,253			2,578			2,204
Depreciation and amortization⁴	113,753			88,670			89,811
Cost of sales⁵	374,057			289,273			313,741

¹Per pound of copper produced.

²By-product credits are computed as revenue per financial statements, 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 September 30, 2023 the variable consideration adjustments amounted to nil, the three months ended June 30, 2023 - $nil, and for the three months ended September 30, 2022 - $2,286.

⁴Depreciation is based on concentrate sold.

⁵As per IFRS financial statements excluding impairment adjustments.

	TSX, NYSE - HBM 2023 No. 24

Peru	Three Months Ended
(in thousands)	Sep. 30, 2023	Jun. 30, 2023	Sep. 30 2022
Net pounds of copper produced¹	64,112	38,982	49,167

¹Contained copper in concentrate.

Peru	Three Months Ended
	Sep. 30, 2023				Jun. 30, 2023				Sep. 30 2022
Cash cost per pound of copper produced	$000s		$/lb		$000s		$/lb		$000s		$/lb
Mining	33,875		0.53		31,654		0.81		35,197		0.72
Milling	46,996		0.73		54,676		1.40		52,043		1.06
G&A	20,912		0.33		14,867		0.38		13,421		0.27
Onsite costs	101,783		1.59		101,197		2.59		100,661		2.05
Treatment & refining	19,143		0.30		17,097		0.44		10,814		0.22
Freight & other	17,040		0.26		12,424		0.32		12,905		0.26
Cash cost, before by-product credits	137,966		2.15		130,718		3.35		124,380		2.53
By-product credits	(84,793	)	(1.32	)	(47,193	)	(1.21	)	(41,659	)	(0.85	)
Cash cost, net of by-product credits	53,173		0.83		83,525		2.14		82,721		1.68

Peru	Three Months Ended
	Sep. 30, 2023			Jun. 30, 2023			Sep. 30 2022
Supplementary cash cost information	$000s		$/lb¹	$000s		$/lb¹	$000s		$/lb¹
By-product credits²:
Gold³	51,459		0.80	21,638		0.55	12,793		0.26
Silver³	10,088		0.16	14,341		0.37	9,967		0.20
Molybdenum	23,246		0.36	11,214		0.29	18,899		0.39
Total by-product credits	84,793		1.32	47,193		1.21	41,659		0.85
Reconciliation to IFRS:
Cash cost, net of by-product credits	53,173			83,525			82,721
By-product credits	84,793			47,193			41,659
Treatment and refining charges	(19,143	)		(17,097	)		(10,814	)
Share-based compensation expenses	45			29			(16	)
Change in product inventory	4,137			27,078			(2,497	)
Royalties	1,015			2,479			1,740
Depreciation and amortization⁴	80,625			67,340			56,614
Cost of sales⁵	204,645		210,547				169,407

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. 24

British Columbia	Three Months Ended
(in thousands)	Sep. 30, 2023
Net pounds of copper produced¹	20,510

¹Contained copper in concentrate.

British Columbia	Three Months Ended
	Sep. 30, 2023
Cash cost per pound of copper produced	$000s		$/lb
Mining	29,251		1.43
Milling	24,102		1.17
G&A	5,050		0.25
Onsite costs	58,403		2.85
Treatment & refining	4,905		0.24
Freight & other	3,693		0.18
Cash cost, before by-product credits	67,001		3.27
By-product credits	(12,234	)	(0.60	)
Cash cost, net of by-product credits	54,767		2.67

British Columbia	Three Months Ended
	Sep. 30, 2023
Supplementary cash cost information	$000s		$/lb¹
By-product credits²:
Gold	10,120		0.50
Silver	2,114		0.10
Total by-product credits	12,234		0.60
Reconciliation to IFRS:
Cash cost, net of by-product credits	54,767
By-product credits	12,234
Treatment and refining charges	(4,905	)
Change in product inventory	3
Royalties	237
Depreciation and amortization⁴	6,255
Cost of sales⁵	68,591

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.

³Depreciation is based on concentrate sold.

⁴ As per consolidated interim financial statements.

	TSX, NYSE - HBM 2023 No. 24

Sustaining and All-in Sustaining Cash Cost Reconciliation

Consolidated	Three Months Ended
	Sep. 30, 2023		Jun. 30, 2023		Sep. 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	101,387	1.10	72,198	1.60	31,201	0.58
Cash sustaining capital expenditures	72,193	0.78	48,253	1.07	69,588	1.29
Royalties	1,253	0.01	2,578	0.06	2,204	0.04
Sustaining cash cost, net of by-product credits	174,833	1.89	123,029	2.73	102,993	1.91
Corporate selling and administrative expenses & regional costs	10,971	0.12	9,603	0.21	11,384	0.21
Accretion and amortization of decommissioning and community agreements¹	3,309	0.03	1,792	0.04	2,099	0.04
All-in sustaining cash cost, net of by-product credits	189,113	2.04	134,424	2.98	116,476	2.16
Reconciliation to property, plant and equipment additions:
Property, plant and equipment additions	77,454		47,574		72,237
Capitalized stripping net additions	21,762		21,640		22,645
Total accrued capital additions	99,216		69,214		94,882
Less other non-sustaining capital costs²	37,968		28,006		39,807
Total sustaining capital costs	61,248		41,208		55,075
Capitalized lease cash payments - operating sites	7,199		4,374		8,852
Community agreement cash payments	1,953		1,290		2,491
Accretion and amortization of decommissioning and restoration obligations³	1,793		1,381		3,170
Cash sustaining capital expenditures	72,193		48,253		69,588

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. 24

Peru	Three Months Ended
	Sep. 30, 2023		Jun. 30, 2023		Sep. 30 2022
Sustaining cash cost per pound of copper produced	$000s	$/lb	$000s	$/lb	$000s	$/lb
Cash cost, net of by-product credits	53,173	0.83	83,525	2.14	82,721	1.68
Cash sustaining capital expenditures	42,607	0.66	33,425	0.86	36,507	0.74
Royalties	1,015	0.02	2,479	0.06	1,740	0.04
Sustaining cash cost per pound of copper produced	96,795	1.51	119,429	3.06	120,968	2.46

British Columbia

Three Months Ended

Sep. 30, 2023

Sustaining cash cost per pound of copper produced

$000s

$/lb

Cash cost, net of by-product credits

54,767

2.67

Royalties

237

0.01

Cash sustaining capital expenditures

14,487

0.71

Sustaining cash cost per pound of copper produced

69,491

3.39

¹Only includes exploration costs incurred for locations near to existing mine operations.

Gold Cash Cost and Sustaining Cash Cost Reconciliation

Manitoba	Three Months Ended
(in thousands)	Sep. 30, 2023	Jun. 30, 2023	Sep. 30 2022
Net ounces of gold produced¹	56,213	35,253	40,457

¹Contained gold in concentrate and doré.

Manitoba	Three Months Ended
	Sep. 30, 2023				Jun. 30, 2023				Sep. 30, 2022
Cash cost per ounce of gold produced	$000s		$/oz		$000s		$/oz		$000s		$/oz
Mining	41,421		737		41,681		1,182		40,659		1,005
Milling	16,923		301		15,193		431		16,573		410
G&A	10,145		180		6,108		173		9,841		243
Onsite costs	68,489		1,218		62,982		1,786		67,073		1,658
Treatment & refining	8,834		157		9,573		271		11,038		273
Freight & other	6,120		109		5,342		152		9,173		226
Cash cost, before by-product credits	83,443		1,484		77,897		2,209		87,284		2,157
By-product credits	(45,779	)	(814	)	(39,218	)	(1,112	)	(78,565	)	(1,941	)
Gold cash cost, net of by-product credits	37,664		670		38,679		1,097		8,719		216

	TSX, NYSE - HBM 2023 No. 24

Manitoba	Three Months Ended
	Sep. 30, 2023			Jun. 30, 2023			Sep. 30 2022
Supplementary cash cost information	$000s		$/oz¹	$000s		$/oz¹	$000s		$/oz¹
By-product credits²:
Copper	24,158		430	14,382		408	28,617		707
Zinc	17,099		304	21,896		621	43,606		1,077
Silver³	4,522		80	2,940		83	6,099		151
Other	-		-	-		-	243		6
Total by-product credits	45,779		814	39,218		1,112	78,565		1,941
Reconciliation to IFRS:
Cash cost, net of by-product credits	37,664			38,679			8,719
By-product credits	45,779			39,218			78,565
Treatment and refining charges	(8,834	)		(9,573	)		(11,038	)
Inventory adjustments	-			906			2,074
Share-based compensation expenses	104			31			130
Change in product inventory	(766	)		(11,964	)		32,223
Royalties	1			99			464
Depreciation and amortization⁴	26,873			21,330			33,197
Cost of sales⁵	100,821			78,726			144,334

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
	Sep. 30, 2023		Jun. 30, 2023		Sep. 30 2022
Sustaining cash cost per pound of gold produced	$000s	$/oz	$000s	$/oz	$000s	$/oz
Gold cash cost, net of by-product credits	37,664	670	38,679	1,097	8,719	216
Cash sustaining capital expenditures	15,100	269	14,828	421	33,081	818
Royalties	1	-	99	3	464	11
Sustaining cash cost per pound of gold produced	52,765	939	53,606	1,521	42,264	1,045

	TSX, NYSE - HBM 2023 No. 24

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	Sep. 30, 2023		Jun. 30, 2023		Sep. 30 2022
Mining	33,875		31,654		35,197
Milling	46,996		54,676		52,043
G&A¹	20,912		14,867		13,421
Other G&A²	(5,440	)	458		1,342
	96,343		101,655		102,003
Less: Covid related costs	-		-		929
Unit cost	96,343		101,655		101,074
Tonnes ore milled	7,895		7,223		7,742
Combined unit cost per tonne	12.20		14.07		13.06
Reconciliation to IFRS:
Unit cost	96,343		101,655		101,074
Freight & other	17,040		12,424		12,905
Covid related costs	-		-		929
Other G&A	5,440		(458	)	(1,342	)
Share-based compensation expenses	45		29		(16	)
Change in product inventory	4,137		27,078		(2,497	)
Royalties	1,015		2,479		1,740
Depreciation and amortization	80,625		67,340		56,614
Cost of sales³	204,645		210,547		169,407

¹G&A as per cash cost reconciliation above.

²Other G&A primarily includes profit sharing costs.

³As per IFRS financial statements, excluding impairment adjustments.

British Columbia	Three Months Ended
(in thousands except unit cost per tonne)
Combined unit cost per tonne processed		Sep. 30, 2023
Mining		29,251
Milling		24,102
G&A¹		5,050
Unit cost		58,403
USD/CAD implicit exchange rate		1.35
Unit cost - C$		78,566
Tonnes ore milled		3,158
Combined unit cost per tonne - C$		24.88
Reconciliation to IFRS:
Unit cost		58,403
Freight & other		3,693
Change in product inventory		3
Royalties		237
Depreciation and amortization		6,255
Cost of sales²		68,591

¹G&A as per cash cost reconciliation above

² Other G&A primarily includes profit sharing costs.

³ As per consolidated interim financial statements.

	TSX, NYSE - HBM 2023 No. 24

Manitoba	Three Months Ended
(in thousands except tonnes ore milled and unit cost per tonne)
Combined unit cost per tonne processed	Sep. 30, 2023		Jun. 30, 2023		Sep. 30 2022
Mining	41,421		41,681		40,659
Milling	16,923		15,193		16,573
G&A¹	10,145		6,108		9,841
Less: Other G&A related to profit sharing costs	(3,308	)	(682	)	(1,784	)
Unit cost	65,181		62,300		65,289
USD/CAD implicit exchange rate	1.34		1.34		1.31
Unit cost - C$	87,363		83,659		85,225
Tonnes ore milled	402,443		380,538		362,108
Combined unit cost per tonne - C$	217		220		235
Reconciliation to IFRS:
Unit cost	65,181		62,300		65,289
Freight & other	6,120		5,342		9,173
Other G&A related to profit sharing	3,308		682		1,784
Share-based compensation expenses	104		31		130
Inventory adjustments	-		906		2,074
Change in product inventory	(766	)	(11,964	)	32,223
Royalties	1		99		464
Depreciation and amortization	26,873		21,330		33,197
Cost of sales²	100,821		78,726		144,334

¹G&A as per cash cost reconciliation above.

²As per IFRS financial statements, excluding impairment adjustments.

	TSX, NYSE - HBM 2023 No. 24

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 fourth quarter and the remainder of the second half of the year, the expected timing and implications of an updated Copper Mountain mine technical report, expectations regarding the updated mine plan, mineral reserve and resource estimates and mill throughput assumptions in the new Copper Mountain mine technical report, expectations regarding how the new Copper Mountain mine technical report will compare to Copper Mountain's historical disclosure, the ability of the company to stabilize and optimize the Copper Mountain mine operation, expectations regarding the results and findings of the Copper World PFS, including the production, operating cost, capital cost and cash cost estimates, the projected valuation metrics and rates of return, the cash flow and EBITDA projections, the estimated timelines and pre-requisites for sanctioning the Copper World 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 expected benefits of the Rockcliff Transaction and other Manitoba growth initiatives; 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 future deleveraging strategies and the company's ability to deleverage and repay debt as needed, expectations regarding the company's cash balance and liquidity, the company's ability to increase the mining rate at Lalor, the anticipated benefits from completing the Stall recovery improvement program, the potential improvements to the tailings deposition process at the Anderson facility and any facility transitions related thereto, expectations regarding the ability to conduct exploration work on the Maria Reyna and Caballito properties and to advance related drill plans, the ability to continue 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 and extension of mine life 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 and any results expected therefrom, 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.

	TSX, NYSE - HBM 2023 No. 24

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 consistency of the new technical report for the Copper Mountain mine with the mineral reserve and resource estimates and throughput assumptions disclosed in Copper Mountain's historical technical report dated February 25, 2019 (after accounting for mining depletion);
the ability to achieve production and cost guidance;
the ability to achieve discretionary spending reductions without impacting operations;
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 complete the integration and optimization of 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 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 company's ability to deleverage and repay debt as 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).

	TSX, NYSE - HBM 2023 No. 24

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 anticipated mine plan and mineral reserve and resource estimates for the Copper Mountain mine and the possibility that they could result in an indicator of impairment, the failure to effectively complete the integration and optimization of the Copper Mountain operations, 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, the risk of an indicator of impairment or impairment reversal relating to a material mineral property, 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.

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.

	TSX, NYSE - HBM 2023 No. 24

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.

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, net debt and any ratios based on these measures 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.

ⁱⁱ Sourced from Wood Mackenzie (Q2 2023 dataset).

ⁱⁱⁱ Sourced from S&P Global, August 2023.

Unaudited Condensed Consolidated Interim Financial Statements

(In US dollars)

HUDBAY MINERALS INC.

For the three and nine months ended, September 30, 2023 and 2022

HUDBAY MINERALS INC.

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

			Sep. 30,			Dec. 31,
	Note		2023			2022
Assets
Current assets
Cash and cash equivalents		$	245,217		$	225,665
Trade and other receivables	7		120,077			113,182
Inventories	8		237,913			155,012
Prepaid expenses and other current assets			9,859			20,106
Other financial assets	9		16,653			1,063
Taxes receivable			1,529			9,153
			631,248			524,181
Taxes receivable			13,380			13,329
Inventories	8		26,098			50,725
Other financial assets	9		7,496			9,799
Intangibles and other assets	10		45,625			49,841
Property, plant and equipment	11		4,318,776			3,552,430
Goodwill	12		65,186			-
Deferred tax assets			142,787			125,638
		$	5,250,596		$	4,325,943
Liabilities
Current liabilities
Trade and other payables		$	233,568		$	211,467
Taxes payable			32,169			4,051
Other liabilities	13		27,958			46,806
Other financial liabilities	14		18,826			33,301
Gold prepayment liability	15		67,094			71,208
Lease liabilities	16		32,893			16,156
Current portion of long-term debt	17		10,000			-
Deferred revenue	18		80,277			64,658
			502,785			447,647
Other financial liabilities	14		41,431			52,446
Lease liabilities	16		73,741			44,863
Long-term debt	17		1,367,443			1,184,162
Deferred revenue	18		358,126			404,880
Pension obligations			7,770			3,262
Other employee benefits			86,060			86,340
Environmental and other provisions	19		263,028			279,240
Deferred tax liabilities			400,474			251,294
			3,100,858			2,754,134
Equity
Share capital	21b		2,229,965			1,780,774
Reserves			19,035			26,538
Retained earnings			(204,316	)		(235,503	)
Equity attributable to owners of the Company			2,044,684			1,571,809
Non-controlling interest			105,054			-
		$	5,250,596		$	4,325,943
Commitments (note 24)

HUDBAY MINERALS INC.

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

	Note		Three months ended September 30,						Nine months ended September 30,
	Note		2023			2022			2023			2022
Revenue	6a	$	480,456		$	346,171		$	1,087,841		$	1,140,244
Cost of sales
Mine operating costs			260,304			223,930			622,191			674,825
Depreciation and amortization	6b		113,753			89,811			269,845			258,207
			374,057			313,741			892,036			933,032

Gross profit			106,399			32,430			195,805			207,212
Selling and administrative expenses			10,128			10,448			27,874			23,910
Exploration expenses			4,746			1,771			18,307			29,387
Other expenses	6c		8,885			6,296			27,738			14,041
Re-evaluation adjustment - environmental provision	19		(32,436	)		(6,417	)		(45,368	)		(146,950	)
Impairment - Arizona	6e		-			-			-			94,956
Results from operating activities			115,076			20,332			167,254			191,868
Net interest expense on long term debt	6d		21,078			16,921			55,885			50,730
Accretion on streaming arrangements	6d		6,597			8,567			19,694			20,760
Change in fair value of financial instruments	6d		(950	)		(6,686	)		4,560			(5,888	)
Other net finance costs	6d		4,202			1,793			16,267			16,164
Net finance expense			30,927			20,595			96,406			81,766
Profit (loss) before tax			84,149			(263	)		70,848			110,102
Tax expense	20		38,659			7,872			34,833			22,279
Profit (loss) for the period		$	45,490		$	(8,135	)	$	36,015		$	87,823

Attributable to:
Owners of the Company			45,125			(8,135	)		35,650			87,823
Non-controlling interest			365			-			365			-
Profit (loss) for the period		$	45,490		$	(8,135	)	$	36,015		$	87,823

Profit (loss) per share
Basic		$	0.13		$	(0.03	)	$	0.12		$	0.34
Diluted		$	0.13		$	(0.03	)	$	0.12		$	0.33

Weighted average number of common shares outstanding:
Basic	22		346,720,425			261,896,143			293,970,111			261,824,961
Diluted	22		346,987,162			261,896,143			294,240,698			262,212,117

HUDBAY MINERALS INC.

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

	Note		Three months ended September 30,						Nine months ended September 30,
	Note		2023			2022			2023			2022
Cash generated from operating activities:
Profit (loss) for the period		$	45,490		$	(8,135	)	$	36,015		$	87,823
Tax expense	20		38,659			7,872			34,833			22,279
Items not affecting cash:
Depreciation and amortization	6b		114,099			90,146			270,838			259,327
Share-based compensation expense (recovery)			2,212			2,489			4,112			(1,826	)
Net finance expense	6d		30,927			20,595			96,406			81,766
Inventory adjustments	8		-			2,074			906			3,546
Amortization of deferred revenue and variable consideration	6a		(16,797	)		(15,339	)		(50,829	)		(62,749	)
Pension and other employee benefit payments, net of accruals			1,840			1,846			5,721			1,382
Re-evaluation adjustment - environmental obligation	19		(32,436	)		(6,417	)		(45,368	)		(146,950	)
Impairment - Arizona	6e		-			-			-			94,956
Decommissioning and restoration payments			(48	)		(4,420	)		(1,167	)		(12,649	)
Other	25a		1,501			(1,544	)		(6,912	)		(11,018	)
Taxes paid			(3,467	)		(7,550	)		(21,089	)		(33,306	)
Operating cash flow before changes in non-cash working capital			181,980			81,617			323,466			282,581
Change in non-cash working capital	25b		(30,032	)		90,891			(75,682	)		118,840
			151,948			172,508			247,784			401,421
Cash used in investing activities:
Acquisition of property, plant and equipment			(69,230	)		(89,518	)		(200,044	)		(220,143	)
Community agreements			(2,801	)		(29,489	)		(7,446	)		(33,631	)
Cash and cash equivalents acquired in acquisitions, net of cash paid	4, 5		270			-			10,959			-
Net sale of investments			-			-			53			(331	)
Proceeds from disposition of property, plant and equipment			5			4,092			655			4,092
Interest received			3,509			945			6,579			1,457
			(68,247	)		(113,970	)		(189,244	)		(248,556	)
Cash used in financing activities:
Proceeds from revolving credit facility	17b		90,000			-			130,000			-
Principal repayments	17c		(83,307	)		-			(83,307	)		-
Premium paid on Bonds	17c		(833	)		-			(833	)		-
Interest paid on long-term debt			(1,944	)		-			(33,819	)		(31,875	)
Financing costs			(4,900	)		(3,046	)		(11,056	)		(9,152	)
Lease payments	16		(7,953	)		(9,407	)		(18,384	)		(29,225	)
Gold prepayment repayments	15		-			(17,146	)		(6,428	)		(54,335	)
Deferred Rosemont acquisition payment			(5,000	)		-			(10,000	)		(10,000	)
Change in restricted cash			(2,221	)		-			(2,221	)		-
Net proceeds from exercise of stock options			15			40			123			914
Share issuance cost			-			-			(188	)		-
Dividends paid	21b		(2,555	)		(1,972	)		(4,463	)		(4,047	)
			(18,698	)		(31,531	)		(40,576	)		(137,720	)
Effect of movement in exchange rates on cash			480			554			1,588			(17	)
Net increase in cash			65,483			27,561			19,552			15,128
Cash, beginning of the period			179,734			258,556			225,665			270,989
Cash, end of the period		$	245,217		$	286,117		$	245,217		$	286,117

HUDBAY MINERALS INC.

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

		Three months ended September 30,						Nine months ended September 30,
		2023			2022			2023			2022
Profit (loss) for the period	$	45,490		$	(8,135	)	$	36,015		$	87,823

Other comprehensive income:
Item that will be reclassified subsequently to profit or loss:
Recognized directly in equity:
Net loss on translation of foreign currency balances		(20,913	)		(15,698	)		(14,288	)		(20,193	)
		(20,913	)		(15,698	)		(14,288	)		(20,193	)

Items that will not be reclassified subsequently to profit or loss:
Recognized directly in equity:
Gold prepayment revaluation		96			(377	)		(92	)		788
Tax effect		(26	)		100			24			(208	)
Remeasurement - actuarial gain (loss)		3,943			(5,292	)		1,792			25,336
Tax effect		1,006			387			659			2,156
		5,019			(5,182	)		2,383			28,072

Other comprehensive (loss) income net of tax, for the period		(15,894	)		(20,880	)		(11,905	)		7,879

Attributable to:
Owners of the Company	$	31,518		$	(29,015	)	$	26,032		$	95,702
Non-controlling interests		(1,922	)		-			(1,922	)		-
Total comprehensive income (loss) for the period	$	29,596		$	(29,015	)	$	24,110		$	95,702

HUDBAY MINERALS INC.

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

		Share capital (note 21)		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		-		-			-			-			87,823			87,823
Other comprehensive (loss) income		-		-			(20,193	)		28,072			-			7,879
Total comprehensive (loss) income		-		-			(20,193	)		28,072			87,823			95,702

Transactions with owners:
Dividends (note 21b)		-		-			-			-			(4,047	)		(4,047	)
Stock options		-		1,492			-			-			-			1,492

Issuance of shares related to stock options redeemed		1,406		(492	)		-			-			-			914
Total transactions with owners		1,406		1,000			-			-			(4,047	)		(1,641	)

Balance, September 30, 2022	$	1,780,254	$	58,328		$	(17,286	)	$	(32,345	)	$	(218,062	)	$	1,570,889
Loss		-		-			-			-			(17,441	)		(17,441	)
Other comprehensive (loss) income		-		-			2,527			15,139			-			17,666
Total comprehensive (loss) income		-		-			2,527			15,139			(17,441	)		225

Transactions with owners:
Dividends (note 21b)		-		-			-			-			-			-
Stock options		-		356			-			-			-			356

Issuance of shares related to stock options redeemed		520		(181	)		-			-			-			339
Total transactions with owners		520		175			-			-			-			695

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 21)		Other capital reserves			Foreign currency translation reserve			Remeasurement reserve			Retained earnings			Total			Non- controlling interests			Total equity
Balance, January 1, 2023	$	1,780,774	$	58,503		$	(14,759	)	$	(17,206	)	$	(235,503	)	$	1,571,809		$	-		$	1,571,809
Profit		-		-			-			-			35,650			35,650			365			36,015

Other comprehensive (loss) income		-		-			(12,001	)		2,383			-			(9,618	)		(2,287	)		(11,905	)

Total comprehensive (loss) income		-		-			(12,001	)		2,383			35,650			26,032			(1,922	)		24,110
Transactions with owners:
Dividends (note 21b)		-		-			-			-			(4,463	)		(4,463	)		-			(4,463	)
Shares issued on acquisition of Copper Mountain, net of share issuance costs (note 4)		436,499		-			-			-			-			436,499			106,976			543,475
Shares and warrants issued on acquisition of Rockcliff (note 5)		12,503		725			-			-			-			13,228			-			13,228
Stock options		-		1,455			-			-			-			1,455			-			1,455
Issuance of shares related to stock options redeemed		189		(65	)		-			-			-			124			-			124

Total transactions with owners		449,191		2,115			-			-			(4,463	)		446,843			106,976			553,819

Balance, September 30, 2023	$	2,229,965	$	60,618		$	(26,760	)	$	(14,823	)	$	(204,316	)	$	2,044,684		$	105,054		$	2,149,738

HUDBAY MINERALS INC.

Notes to Unaudited Condensed Consolidated Interim Financial Statements
(in thousands of US dollars, except where otherwise noted)
For the three and nine months ended September 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 nine months ended September 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 September 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"), Mason Resources (US) Inc. ("Mason") and Rockcliff Metals Corp. ("Rockcliff"). 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. On September 14, 2023, the Company acquired all of the issued and outstanding common shares of Rockcliff as part of a court-approved plan of arrangement.

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 nine months ended September 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 November 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 4) - 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).

- Valuation of assets in an asset acquisition (note 5) - As the Company acquired Rockcliff through the issuance of the Company's common shares and the Company concluded Rockcliff is not a business but an asset acquisition, a valuation was required to the fair value of the net assets acquired. The fair values of the net assets acquired were calculated using significant estimates and judgements. In particular, the fair value of the exploration property has been determined using an independent valuation involving discounted cash flow calculations. 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.

HUDBAY MINERALS INC.

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

- 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.

(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 global geopolitical instability, as well as the lingering impact of the novel coronavirus pandemic, on its condensed consolidated interim financial statements. As at September 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. 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 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 is still assessing the impact 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 nine months ended September 30, 2023 and 2022

(c) Amendment to IAS 12 - International Tax Reform - Pillar Two Model Rules

In May 2023, the IASB issued International Tax Reform-Pillar Two Model Rules, which amended IAS 12, Income Taxes, to introduce a temporary exception to the requirements to recognize and disclose information about deferred tax assets and liabilities related to Pillar Two income taxes, and targeted disclosure requirements for affected entities. The relief is effective immediately upon issuance of the amendments and should be applied retrospectively in accordance with IAS 8, Accounting Policies, Changes in Accounting Estimates and Errors, while the targeted disclosure requirements are effective for annual reporting periods beginning on or after January 1, 2024, but not for any interim periods ending on or before December 31, 2024. The Company has applied the exception and is currently assessing the impact of the disclosure requirements on its consolidated financial statements.

4. 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 $6,932 during the nine months ended September 30, 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.

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:

HUDBAY MINERALS INC.

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

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 inventories, 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 nine months ended September 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. Had the business combination been effected at January 1, 2023, revenue and net loss contributed from the acquisition of Copper Mountain from January 1 to September 30, 2023, would have been $214,008 and a loss of $34,594 respectively.

5. Acquisition of Rockcliff Metals Corporation

On September 14, 2023, Hudbay acquired all of the issued and outstanding common shares of Rockcliff, as part of a court-approved plan of arrangement. In doing so, Hudbay obtained control of Rockcliff on September 14, 2023.

Management determined that substantially all of the fair value of the gross assets acquired is concentrated in the Talbot exploration property and therefore accounted for the transaction as an asset acquisition.

The purchase consideration paid was 2,675,324 Hudbay common shares and 517,460 warrants. For asset acquisitions settled with equity, entities are required to record the net assets acquired based on the fair value of the assets received in exchange for the equity issued, unless that fair value cannot be estimated reliably. Hudbay incurred acquisition related costs of $518 during the third quarter of 2023, mainly relating to external legal and advisory fees and due diligence costs, which were capitalized and included as a cost of acquiring the net assets.

The fair value of the net assets acquired was determined using a combination of income and cost methods. In particular, the fair values of the exploration property have been calculated using significant judgements and estimates. The following presents the fair value amounts of identifiable assets acquired and liabilities assumed:

Fair value of net assets acquired / (liabilities) assumed
Cash and cash equivalents	$	270
Accounts receivable and prepaid expenses		98
Property, plant & equipment		33
Exploration property		14,198
Accounts payable and accrued liabilities		(305	)
Advance from Hudbay		(548	)
Total fair value of net identifiable assets acquired	$	13,746

HUDBAY MINERALS INC.

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

6. Revenue and expenses

(a) Revenue

Hudbay's revenue by significant product types:

		Three months ended September 30,						Nine months ended September 30,
		2023			2022			2023			2022
Copper	$	334,159		$	194,788		$	704,120		$	634,529
Zinc		17,781			44,092			57,871			199,259
Gold		128,430			99,889			279,245			257,759
Silver		10,264			6,588			23,806			22,115
Molybdenum		22,350			18,748			58,157			36,941
Other		-			243			239			4,660
Revenue from contracts		512,984			364,348			1,123,438			1,155,263
Non-cash streaming arrangement items ¹
Amortization of deferred revenue - gold		10,161			8,416			23,435			31,578
Amortization of deferred revenue - silver		6,636			9,209			22,509			30,212
Amortization of deferred revenue - variable consideration adjustments - prior periods		-			(2,286	)		4,885			959
		16,797			15,339			50,829			62,749
Pricing and volume adjustments ²		(16,443	)		(11,664	)		(8,379	)		(28,800	)
		513,338			368,023			1,165,888			1,189,212
Treatment and refining charges		(32,882	)		(21,852	)		(78,047	)		(48,968	)
	$	480,456		$	346,171		$	1,087,841		$	1,140,244

¹See note 18.

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.

Consideration from the Company's stream agreements is considered variable (note 18). 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 for the three and nine months ended September 30, 2023 resulted in an increase of revenue of nil and $4,885, respectively (three and nine months ended September 30, 2022 - a decrease of $2,286 and increase of revenue of $959).

(b) Depreciation and amortization

Depreciation of property, plant and equipment and amortization of intangible assets are reflected in the condensed consolidated interim income statements as follows:

		Three months ended September 30,				Nine months ended September 30,
		2023		2022		2023		2022
Cost of sales	$	113,753	$	89,811	$	269,845	$	258,207
Selling and administrative expenses		346		335		993		1,120
	$	114,099	$	90,146	$	270,838	$	259,327

HUDBAY MINERALS INC.

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

(c) Other expenses

		Three months ended September 30,					Nine months ended September 30,
		2023		2022			2023		2022
Regional costs	$	843	$	936		$	2,915	$	3,013
(Gain) loss on disposal of PP&E		-		(6,046	)		890		(6,777	)
Amortization of community costs (other assets)		362		836			1,056		2,093
Copper Mountain related acquisition costs (note 5)		180		-			6,932		-
Restructuring		2,297		5,050			2,297		9,460
Care & maintenance - Manitoba		4,463		4,336			13,070		4,492
Evaluation costs		55		123			162		7,875
Insurance recovery		-		-			-		(5,698	)
Other		685		1,061			416		(417	)
	$	8,885	$	6,296		$	27,738	$	14,041

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 nine months ended September 30, 2023, care & maintenance costs were $4,463 and $13,070, respectively (three and nine months ended September 30, 2022 - $4,336 and $4,492, respectively).

During the three months ended September 30, 2023, there were costs incurred related to the restructuring of the British Columbia operations of $2,297. During the nine months ended September 30, 2022, there were costs incurred related to the restructuring of the Manitoba operations in preparation for the closure of 777 mine of $9,460. These costs were related to activities performed in advance of the mine's expected closure in June 2022 along with ongoing restructuring, closure and severance costs.

During the three and nine months ended September 30, 2022, gains on the disposition of property, plant and equipment and other non-current assets includes the disposition of Mason's Lordsburg property, along with dispositions of non-current assets as a result of the closure of our Flin Flon operations.

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 nine months ended September 30, 2023 and 2022

(d) Net finance expense

		Three months ended September 30,						Nine months ended September 30,
		2023			2022			2023			2022
Net interest expense on long-term debt
Net interest expense on long-term debt	$	21,078		$	16,921		$	55,885		$	50,730
Accretion on streaming arrangements (note 18)
Additions		6,597			6,980			19,790			21,700
Variable consideration adjustments - prior periods		-			1,587			(96	)		(940	)
		6,597			8,567			19,694			20,760
Change in fair value of financial assets and liabilities at fair value through profit or loss
Gold prepayment liability (note 15)		(2,745	)		(6,684	)		2,222			(4,619	)
Investments		1,795			(2	)		2,338			(1,269	)
		(950	)		(6,686	)		4,560			(5,888	)
Other net finance costs
Net foreign exchange loss (gain)		(614	)		(4,849	)		1,130			(5,570	)
Accretion on community agreements measured at amortized cost		804			1,188			2,358			2,360
Accretion on environmental provisions		2,618			2,434			7,236			6,323
Accretion on Wheaton refund liability		139			492			417			739
Withholding taxes		1,596			1,544			4,577			4,564
Loss on disposal of investments		15			-			667			3,132
Other finance expense		3,071			1,817			6,436			5,839
Interest income		(3,427	)		(833	)		(6,554	)		(1,223	)
		4,202			1,793			16,267			16,164
Net finance expense	$	30,927		$	20,595		$	96,406		$	81,766

Other finance expense relates primarily to interest and 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 26. 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 nine months ended September 30, 2023 and 2022

7. Trade and other receivables

		Sep. 30, 2023		Dec. 31, 2022
Current
Trade receivables	$	90,508	$	84,096
Statutory receivables		18,973		25,544
Other receivables		10,596		3,542
	$	120,077	$	113,182

8. Inventories

		Sep. 30, 2023		Dec. 31, 2022
Current
Stockpile	$	68,006	$	26,235
Finished goods		80,699		68,029
Materials and supplies		89,208		60,748
		237,913		155,012
Non-current
Stockpile		10,903		42,785
Low grade stockpile¹		5,875		-
Materials and supplies		9,320		7,940
		26,098		50,725
	$	264,011	$	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 $333,138 and $803,604 for the three and nine months ended September 30, 2023 (three and nine months ended September 30, 2022 - $283,960 and $833,408).

During the nine months ended September 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 nine months September 30, 2022 - $2,074 and $4,103).

During the three and nine months ended September 30, 2022, Hudbay recognized a recovery of nil and $557 in cost of sales related to adjustments of the carrying value of Peru inventories to net realizable value. Adjustments of the carrying value of inventories to net realizable value were related to changes in commodity prices.

HUDBAY MINERALS INC.

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

9. Other financial assets

		Sep. 30, 2023		Dec. 31, 2022
Current
Derivative assets	$	6,354	$	577
Guaranteed investment certificates		1,272		-
Restricted cash		9,027		486
		16,653		1,063

Non-current
Investments at fair value through profit or loss		6,796		9,799
Guaranteed investment certificates		700		-
		7,496		9,799
	$	24,149	$	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 current year. See note 23b.

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 17c).

10. Intangibles and other assets

Intangibles and other assets of $45,625 (December 31, 2022 - $49,841) includes $41,550 of other assets (December 31, 2022 - $45,074) and $4,075 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 14). 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 nine months ended September 30, 2023 and 2022

11. Property, plant and equipment

Sep. 30, 2023		Cost		Accumulated depreciation and amortization			Carrying amount
Exploration and evaluation assets	$	91,128	$	-		$	91,128
Capital works in progress		803,796		-			803,796
Mining properties		2,519,146		(1,121,775	)		1,397,371
Plant and equipment		3,421,692		(1,519,106	)		1,902,586
Plant and equipment-ROU Assets¹		270,064		(146,169	)		123,895
	$	7,105,826	$	(2,787,050	)	$	4,318,776

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 $5,146 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 nine months ended September 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.

HUDBAY MINERALS INC.

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

12. Goodwill

The following table summarizes changes in goodwill:

Balance, January 1, 2023	$	-
Goodwill recognized on business combination (note 4)		66,569
Effects of changes in foreign exchange		(1,383	)
Balance, September 30, 2023	$	65,186

Goodwill resulted from preliminary purchase price allocation associated with the Copper Mountain acquisition (note 4).

13. Other liabilities

		Sep. 30, 2023		Dec. 31, 2022

Advances from customers	$	-	$	15,086
Environmental and other provisions (note 19)		20,477		24,091
Pension liability		3,864		4,146
Other employee benefits		3,617		3,483
	$	27,958	$	46,806

14. Other financial liabilities

		Sep. 30, 2023		Dec. 31, 2022
Current
Derivative liabilities	$	1,701	$	17,995
Deferred Rosemont acquisition consideration		9,572		9,713
Equipment financing		327		-
Agreements with communities recorded at amortized cost		7,226		5,593
		18,826		33,301

Non-current
Deferred Rosemont acquisition consideration		-		9,163
Agreements with communities recorded at amortized cost		34,829		36,900
Wheaton refund liability (note 18)		6,602		6,383
		41,431		52,446
	$	60,257	$	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.

HUDBAY MINERALS INC.

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

15. Gold prepayment liability

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

		Sep. 30, 2023			Dec. 31, 2022
Current	$	67,094		$	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)		2,222
Change in fair value recorded in other comprehensive income		92
Repayments		(6,428	)
Balance, September 30, 2023	$	67,094

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.

16. Lease liabilities

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 4)		44,167
Additional capitalized leases		20,772
Lease payments		(18,384	)
Accretion and other movements		(940	)
Balance, September 30, 2023	$	106,634

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

		Sep. 30, 2023		Dec. 31, 2022
Current	$	32,893	$	16,156
Non-current		73,741		44,863
	$	106,634	$	61,019

HUDBAY MINERALS INC.

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

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 September 30,				Nine months ended September 30,
		2023		2022		2023		2022
Short-term leases	$	1,745	$	1,609	$	4,090	$	22,890
Low value leases		136		189		385		637
Variable leases		9,112		24,680		20,326		42,736
Total	$	10,993	$	26,478	$	24,801	$	66,263

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.

17. Long-term debt

Long-term debt is comprised of the following:

		Sep. 30, 2023			Dec. 31, 2022
Senior unsecured notes (a)	$	1,189,960		$	1,188,132
Senior secured revolving credit facilities (b)		126,783			(3,970	)
Copper Mountain Bonds (c)		60,700			-
		1,377,443			1,184,162
Less: current portion		(10,000	)		-
	$	1,367,443		$	1,184,162

HUDBAY MINERALS INC.

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

(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		1,828
Balance, September 30, 2023	$	1,189,960

As at September 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.

(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		130,000
Accretion of transaction costs		1,157
Transaction costs		(404	)
Balance, September 30, 2023	$	126,783

¹ Balance, representing deferred transaction costs, is in an asset position.

Hudbay has two senior secured revolving credit facilities with total commitments of $450 million and substantially similar terms and conditions for its Canadian and Peruvian businesses. 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.

During the first and third quarter of 2023, Hudbay drew $40,000 and $90,000, respectively, under its Canadian revolving credit facility, amounts which remain outstanding as of September 30, 2023. The Company may repay any borrowings under the revolving credit facility at any time without premium or penalty.

HUDBAY MINERALS INC.

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

In connection with the closing of the Copper Mountain transaction, our Credit Facilities were amended to allow Hudbay to designate the Copper Mountain group of companies as Unrestricted Subsidiaries under the Credit Facilities. The Net Debt to EBITDA covenant ratio was increased from 4:1 to 4.5:1 for the period ending September 30, 2023, to provide greater financial flexibility during the business integration period. As a result of these changes, the Copper Mountain group is not required to guarantee our obligations under the Credit Facilities and the debt, cash, interest and EBITDA from the Copper Mountain group is excluded from the financial covenant calculations until the Copper Mountain Bonds are repaid in full. Upon full repayment of the Copper Mountain Bonds, the Copper Mountain group of companies will automatically cease to be Unrestricted Subsidiaries and will be required to provide guarantees and security. In addition, the debt, cash, interest and EBITDA of the Copper Mountain group will be included in the financial covenant calculations.

As at September 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 $25,574 in letters of credit issued under the Canadian revolving credit facility to support its reclamation and pension obligations.

Subsequent to September 30, 2023, we repaid $40.0 million on our revolving credit facilities.

Surety bonds

The Arizona segment had $12,926 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 $15,578 in surety bonds issued to support future reclamation and closure obligations and $4,903 in surety bonds 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.

Other letters of credit

The Peru segment had $118,044 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 September 30, 2023, the Manitoba segment had $55,416 in letters of credit issued under the LC Facility to support its reclamation and pension obligations.

(c) Copper Mountain Bonds

Balance, December 31, 2022	$	-
Acquired through the acquisition of Copper Mountain (note 4)		144,981
Principal repayment		(83,307	)
Put option premium		(833	)
Amortization of fair value		(141	)
Balance, September 30, 2023	$	60,700

HUDBAY MINERALS INC.

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

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 September 30, 2023, the Company had $6,896 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 in other financial assets (note 9).

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 September 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 change in control put option expired on July 17, 2023, at which time, $83,307 of the Bonds were put to Copper Mountain. The principal and premium amounted to $84,140, which was repaid on July 24, 2023.

As at September 30, 2023, the Bonds have a principal amount outstanding of $59,693. 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 4).

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 $25,500, with respect to these covenants can only be utilized for the business activities of Copper Mountain.

As at September 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 nine months ended September 30, 2023 and 2022

18. Deferred revenue

Peru Stream Agreement

For the three and nine months ended September 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 14), 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		(45,944	)
Variable consideration adjustments - prior periods		(4,885	)
Accretion on streaming arrangements (note 6d)
Current year-to-date additions		19,790
Variable consideration adjustments - prior periods		(96	)
Balance, September 30, 2023	$	438,403

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 nine months ended September 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 nine months ended September 30, 2023 and 2022

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

		Sep. 30, 2023		Dec. 31, 2022
Current	$	80,277	$	64,658
Non-current		358,126		404,880
	$	438,403	$	469,538

19. Environmental and other provisions

Reflected in the condensed consolidated interim balance sheets as follows:

Sep. 30, 2023		Decommissioning, restoration and similar liabilities		Deferred share units		Restricted share units		Performance share units		Other ¹		Total
Current (note 13)	$	5,169	$	7,397	$	1,561	$	1,024	$	5,326	$	20,477
Non-current		256,544		-		2,132		1,259		3,093		263,028
	$	261,713	$	7,397	$	3,693	$	2,283	$	8,419	$	283,505

Dec. 31, 2022		Decommissioning, restoration and similar liabilities		Deferred share units		Restricted share units		Performance share units		Other ¹		Total
Current (note 13)	$	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 nine months ended September 30, 2023, the Company recorded a non-cash gain of $45,368 in the condensed consolidated interim income statements mainly related to a revaluation adjustment to the Flin Flon operation's environmental reclamation provision. The first nine months of 2023 was impacted by a decrease in implied inflation rates, along with increases 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 September 30, 2023, decommissioning, restoration and similar liabilities have been discounted to their present value at rates ranging from 3.85% to 5.48% 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 nine months ended 2022, the Company recorded a non-cash gain of $146,950 in the condensed consolidated interim income statements mainly related to a revaluation adjustment to the Flin Flon operation's environmental reclamation provision. The first nine months 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 nine months ended September 30, 2023 and 2022

20. Income and mining taxes

The tax expense is applicable as follows:

		Three months ended September 30,						Nine months ended September 30,
		2023			2022			2023			2022
Current:
Income tax expense (recovery)	$	33,465		$	(8,541	)	$	43,141		$	4,413
Mining tax expense (recovery)		7,727			(688	)		14,510			7,510
Adjustments in respect of prior years		(5,299	)		(696	)		(5,230	)		(696	)
		35,893			(9,925	)		52,421			11,227
Deferred:
Income tax (recovery) expense - origination, revaluation and/or reversal of temporary differences		(2,387	)		16,365			(21,107	)		4,503
Mining tax expense (recovery) - origination, revaluation and/or reversal of temporary difference		982			470			(1,087	)		5,587
Adjustments in respect of prior years		4,171			962			4,606			962
		2,766			17,797			(17,588	)		11,052
	$	38,659		$	7,872		$	34,833		$	22,279

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 nine months ended September 30, 2023 and 2022

21. 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:

	Nine months ended Sep. 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	44,209		189	421,545		1,926
Shares issued on acquisition of Copper Mountain, net of share issuance costs (note 4)	84,165,617		436,499	-		-
Shares issued on acquisition of Rockcliff (note 5)	2,675,324		12,503	-		-
Balance, end of period	348,905,007	$	2,229,965	262,019,857	$	1,780,774

During the nine months ended September 30, 2023, the Company declared two semi-annual dividends of C$0.01 per share. The Company paid $1,908 and $2,555 in dividends on March 24, 2023 and September 22, 2023 to shareholders of record as of March 7, 2023 and September 1, 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 nine months ended September 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:

	Sep. 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	(44,209	)	$	3.76	(421,545	)	$	3.80
Forfeited	(62,625	)	$	8.40	(311,597	)	$	7.94
Balance, end of period	2,223,587		$	7.20	1,528,760		$	7.38

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

The following table outlines stock options outstanding and exercisable:

Sep. 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

590,646

3.4

3.76

590,646

3.76

$4.83 - $5.90

3,275

5.8

5.89

1,091

5.89

$5.91 - $6.75

787,913

6.4

6.75

$6.76 - $10.17

492,800

5.4

9.77

177,162

9.72

$10.18 - $10.42

348,953

4.4

10.42

233,172

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 nine months ended September 30, 2023 and 2022

22. Earnings per share

Three months ended
September 30,

Nine months ended
September 30,

2023

2022

2023

2022

Weighted average common shares outstanding

Basic

346,720,425

261,896,143

293,970,111

261,824,961

Plus net incremental shares from:

Assumed conversion: stock options

266,737

270,587

387,156

Diluted weighted average common shares outstanding

346,987,162

261,896,143

294,240,698

262,212,117

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 months ended September 30, 2022, the determination of the diluted weighted-average number of common shares excludes the impact of 181,668 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 nine months ended September 30, 2023 and 2022

23. 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:

		Sep. 30, 2023				Dec. 31, 2022
		FV		CV		FV		CV
Financial assets at amortized cost
Cash and cash equivalents¹	$	245,217	$	245,217	$	225,665	$	225,665
Guaranteed investment certificates¹		1,972		1,972		-		-
Restricted cash¹		9,027		9,027		486		486
Fair value through profit or loss
Trade and other receivables ^1, ^{2, 3}		101,104		101,104		87,638		87,638
Non-hedge derivative assets ⁴		6,354		6,354		577		577
Investments ⁵		6,796		6,796		9,799		9,799
Total financial assets	$	370,470	$	370,470	$	324,165	$	324,165
Financial liabilities at amortized cost
Trade and other payables^1, ²		223,217		223,217		195,872		195,872
Deferred Rosemont acquisition consideration ⁸		9,572		9,572		18,876		18,876
Agreements with communities ⁶		37,296		42,055		35,870		42,493
Wheaton refund liability¹⁰		6,744		6,602		7,744		6,383
Senior unsecured notes ⁷		1,113,954		1,189,960		1,094,988		1,188,132
Senior secured revolving credit facilities¹²		126,783		126,783		-		-
Copper Mountain Bonds¹¹		60,840		60,744		-		-
Fair value through profit or loss
Gold prepayment liability ⁹		67,094		67,094		71,208		71,208
Non-hedge derivative liabilities ⁴		1,701		1,701		17,995		17,995
Total financial liabilities	$	1,647,201	$	1,727,728	$	1,442,553	$	1,540,959

¹Cash and cash equivalents, guaranteed investment certificates, 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 14). 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 17) 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 15) 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 nine months ended September 30, 2023 was a loss of $92 (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 18) 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 nine months ended September 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.

September 30, 2023

Level 1

Level 2

Level 3

Total

Financial assets measured at fair value

Financial assets at FVTPL:

Non-hedge derivatives

6,354

Investments

6,796

6,354

13,150

Financial liabilities measured at fair value

Financial liabilities at FVTPL:

Non-hedge derivatives

1,701

Gold prepayment liability

67,094

Financial liabilities at amortized cost:

Agreements with communities

37,296

Wheaton refund liability

6,744

Senior secured revolving credit facilities

126,783

Senior unsecured notes

1,113,954

Copper Mountain Bonds

60,840

1,113,954

68,795

231,663

1,414,412

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 nine months ended September 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 nine months ended September 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 September 30, 2023, Hudbay had 68.4 million pounds of net copper swaps outstanding at an effective average price of $3.80/lb and settling from October 2023 to January 2024. 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 September 30, 2023 was an asset of $3,686 (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 September 30, 2023, Hudbay had 14.6 million pounds of net zinc swaps outstanding at an effective average price of $1.11/lb and settling from October to December 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 September 30, 2023 was a liability of $1,325 (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 September 30, 2023, 7.9 million pounds of copper collars were unsettled (December 31, 2022 - nil). The aggregate fair value of the position at September 30, 2023 was an asset of $1,990 (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 nine months ended September 30, 2023 and 2022

Copper forward sale

During the third quarter of 2023, Hudbay 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. As at September 30, 2023, Hudbay had 2.6 million pounds of copper forwards outstanding at an effective average price of $3.86/lb and settling from October to December 2023. The aggregate fair value of the transactions at September 30, 2023 was an asset of $302. Hudbay held no forward copper purchase contracts as at September 30, 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 September 30, 2023 and December 31, 2022, Hudbay's net position consisted of contracts awaiting final pricing are as indicated below:

Metal in concentrate

Sales awaiting final pricing

Average YTD price ($/unit)

Unit

Sep. 30, 2023

Dec. 31, 2022

Sep. 30, 2023

Dec. 31, 2022

Copper

pounds
(in thousands)

94,474

79,833

3.75

3.80

Gold

troy ounces

41,348

22,079

1,856

1,823

Silver

troy ounces

189,910

71,809

22.30

23.91

Zinc

pounds
(in thousands)

15,770

18,145

1.20

1.35

The aggregate fair value of provisionally priced receivables within the copper and zinc concentrate at September 30, 2023, was a liability position of $8,707 (December 31, 2022 - an asset position of $20,285).

(d) Other financial liabilities

Gold prepayment liability

The gold prepayment liability (note 15) requires settlement by physical delivery of gold ounces or equivalent gold credits. The fair value of the financial liability at September 30, 2023 was a liability of $67,094 (December 31, 2022 - a liability of $71,208).

HUDBAY MINERALS INC.

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

24. Commitments

Capital commitments

As at September 30, 2023, Hudbay had outstanding capital commitments in Manitoba of approximately $7,319 of which $3,164 can be terminated, approximately $12,303 in British Columbia, of which approximately $9,803 can be terminated, approximately $79,379 in Peru, all of which can be terminated, and approximately $42,335 in Arizona, primarily related to the Copper World Complex, of which approximately $7,180 can be terminated.

25. Supplementary cash flow information

(a) Other operating activities:

		Three months ended September 30,						Nine months ended September 30,
		2023			2022			2023			2022
Amortization of community agreements	$	1,688		$	1,997		$	4,922		$	3,254
Share based compensation paid		-			(267	)		(5,817	)		(5,387	)
Changes in non-current assets		-			(4,851	)		-			(4,402	)
Share based compensation and change of control payments made upon acquisition of Copper Mountain		-			-			(6,743	)		-
Insurance recovery (note 6c)		-			5,698			-			(3,822	)
Restructuring - Manitoba		-			(3,822	)		-			-
Other		(187	)		(299	)		726			(661	)
	$	1,501		$	(1,544	)	$	(6,912	)	$	(11,018	)

(b) Change in non-cash working capital:

		Three months ended September 30,						Nine months ended September 30,
		2023			2022			2023			2022
Change in:
Trade and other receivables	$	(35,350	)	$	31,429		$	2,692		$	137,575
Other financial assets/liabilities		8,276			34,168			(23,504	)		(16,367	)
Inventories		(3,214	)		28,822			(7,636	)		7,427
Prepaid expenses		4,963			1,925			12,735			2,810
Trade and other payables		(4,851	)		(10,111	)		(44,872	)		(10,956	)
Provisions and other liabilities		144			4,658			(15,097	)		(1,649	)
	$	(30,032	)	$	90,891		$	(75,682	)	$	118,840

HUDBAY MINERALS INC.

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

(c) Non-cash transactions:

During the nine months ended September 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 $12,332 (September 30, 2022 - a net decrease of $42,174), mainly related to changes to real discount rates associated with remeasurement of the liabilities.

- Property, plant and equipment included $20,772 (September 30, 2022 - $26,061) of capital additions related to the recognition of ROU assets and $14,198 of capital additions related to exploration and evaluation assets acquired through the acquisition of Rockcliff (note 5) (September 30, 2022 - nil). Property, plant and equipment and other assets include $3,392 of capital additions related to agreements with communities (September 30, 2022 - $36,735).

HUDBAY MINERALS INC.

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

26. Segmented information

Hudbay has the following reportable segments identified by the individual mining operations of Manitoba, British Columbia, Peru, as well as Arizona which holds our Copper World project. Corporate and other activities are not considered an operating segment and are included as a reconciliation to total consolidated results. 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.

Three Months Ended September 30, 2023

Manitoba

British
Columbia

Peru

Arizona

Corporate
and other
activities

Total

Revenue from external customers

105,321

81,781

293,354

480,456

Cost of sales

Mine operating costs

73,948

62,336

124,020

260,304

Depreciation and amortization

26,873

6,255

80,625

113,753

Gross profit

4,500

13,190

88,709

106,399

Selling and administrative expenses

10,128

Exploration expenses

947

2,866

933

4,746

Other expenses

4,429

2,332

1,668

383

8,885

Re-evaluation adjustment - environmental provision

(31,851

)

(585

)

(32,436

)

Results from operating activities

30,975

11,443

84,175

(73

)

(11,444

)

115,076

Net interest expense on long term debt

21,078

Accretion on streaming arrangements

6,597

Change in fair value of financial instruments

(950

)

Other net finance costs

4,202

Profit before tax

84,149

Tax expense

38,659

Profit for the period

45,490

HUDBAY MINERALS INC.

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

Three months ended September 30, 2022
		Manitoba			Peru		Arizona			Corporate and other activities			Total
Revenue from external customers	$	157,613		$	188,558	$	-		$	-		$	346,171
Cost of sales
Mine operating costs		111,137			112,793		-			-			223,930
Depreciation and amortization		33,197			56,614		-			-			89,811
Gross profit		13,279			19,151		-			-			32,430
Selling and administrative expenses		-			-		-			10,448			10,448
Exploration expenses (income)		643			3,536		(2,596	)		188			1,771
Other expenses (income)		5,489			1,861		(2,448	)		1,394			6,296
Re-evaluation adjustment - environmental provision		(6,417	)		-		-			-			(6,417	)
Results from operating activities	$	13,564		$	13,754	$	5,044		$	(12,030	)	$	20,332
Net interest expense on long term debt													16,921
Accretion on streaming arrangements													8,567
Change in fair value of financial instruments													(6,686	)
Other net finance costs													1,793
Loss before tax													(263	)
Tax expense													7,872
Loss for the period												$	(8,135	)

HUDBAY MINERALS INC.

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

Nine Months Ended September 30, 2023

Manitoba

British
Columbia

Peru

Arizona

Corporate
and other
activities

Total

Revenue from external customers

307,770

81,781

698,290

1,087,841

Cost of sales

Mine operating costs

201,242

62,336

358,613

622,191

Depreciation and amortization

73,665

6,255

189,925

269,845

Gross profit

32,863

13,190

149,752

195,805

Selling and administrative expenses

27,874

Exploration expenses

7,471

9,737

1,099

18,307

Other expenses

12,932

2,332

4,400

396

7,678

27,738

Re-evaluation adjustment - environmental provision

(44,783

)

(585

)

(45,368

)

Results from operating activities

57,243

11,443

135,615

(396

)

(36,651

)

167,254

Net interest expense on long term debt

55,885

Accretion on streaming arrangements

19,694

Change in fair value of financial instruments

4,560

Other net finance costs

16,267

Profit before tax

70,848

Tax expense

34,833

Profit for the period

36,015

HUDBAY MINERALS INC.

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

Nine Months Ended September 30, 2022
		Manitoba			Peru		Arizona			Corporate and other activities			Total
Revenue from external customers	$	549,908		$	590,336	$	-		$	-		$	1,140,244
Cost of sales
Mine operating costs		364,148			310,677		-			-			674,825
Depreciation and amortization		105,420			152,787		-			-			258,207
Gross profit		80,340			126,872		-			-			207,212
Selling and administrative expenses		-			-		-			23,910			23,910
Exploration expenses		9,562			9,722		8,659			1,444			29,387
Other expenses		4,832			4,898		2,848			1,463			14,041
Re-evaluation adjustment - environmental provision		(146,950	)		-		-			-			(146,950	)
Impairment - Arizona		-			-		94,956			-			94,956
Results from operating activities	$	212,896		$	112,252	$	(106,463	)	$	(26,817	)	$	191,868
Net interest expense on long term debt													50,730
Accretion on streaming arrangements													20,760
Change in fair value of financial instruments													(5,888	)
Other net finance costs													16,164
Profit before tax													110,102
Tax expense													22,279
Profit for the period												$	87,823

September 30, 2023

Manitoba

British
Columbia

Peru

Arizona

Corporate
and other
activities

Total

Total assets

663,121

1,006,869

2,392,160

728,104

460,342

5,250,596

Total liabilities

355,221

339,026

931,872

24,690

1,450,049

3,100,858

Property, plant and equipment¹

684,959

833,255

2,039,031

721,693

39,838

4,318,776

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.

Management's Discussion and Analysis of

Results of Operations and Financial Condition

For the three and nine months ended

September 30, 2023

November 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	13
Manitoba Operations Review	18
British Columbia Operations Review	23
Financial Review	25
Liquidity and Capital Resources	36
Financial Risk Management	42
Trend Analysis and Quarterly Review	43
Non-IFRS Financial Performance Measures	45
Accounting Changes and Critical Estimates	60
Changes in Internal Control over Financial Reporting	60
Notes to Reader	60
Summary of Historical Results	64

INTRODUCTION

This Management's Discussion and Analysis ("MD&A") dated November 8, 2023 is intended to supplement Hudbay Minerals Inc.'s unaudited condensed consolidated interim financial statements and related notes for the three and nine months ended September 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 September 30, 2023.

Readers should be aware that:

- 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 Mining ULC ("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 annual 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 "Financial Risk Management" and "Notes to Reader" sections beginning on pages 42 and 60 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

Delivering Record Third Quarter Operating and Financial Results

- Achieved record quarterly revenue of $480.5 million with strong consolidated copper production of 41,964 tonnes and record quarterly consolidated gold production of 101,417 ounces as higher grades from the Pampacancha deposit in Peru and the Lalor mine in Manitoba were realized together with the first full quarter of Copper Mountain production for Hudbay.

- Reaffirmed full year 2023 production, cash cost and sustaining cash cost guidance for our Peru and Manitoba operations. Issued Copper Mountain production, cash cost and capital expenditure guidance for the period since completion of the acquisition on June 20, 2023. Hudbay consolidated production, cash cost and capital guidance updated to include Copper Mountain contributions in 2023.

- Delivered a significant increase in operating cash flow before change in non-cash working capital of $182.0 million in the third quarter compared to $55.9 million in the second quarter.

- Consolidated cash cost and sustaining cash cost per pound of copper produced, net of by-product credits¹, in the third quarter, were $1.10 and $1.89, respectively, and both metrics improved by 31% compared to the second quarter.

- Peru operations benefitted from significantly higher grades at the Pampacancha pit during the third quarter of 2023, resulting in 29,081 tonnes of copper production and 40,596 ounces of gold production in the third quarter. Peru cash cost per pound of copper produced, net of by-product credits¹, in the third quarter declined to $0.83, in line with quarterly cadence expectations. Pampacancha began delivering on anticipated higher copper production and precious metal by-product credits in the third quarter. This strong performance is expected to continue in the fourth quarter enabling the Peru operations to meet all metal production and cost guidance for 2023.

- Manitoba operations produced 56,213 ounces of gold in the third quarter as production focused on mining the higher gold and copper grade zones at Lalor. Mill recoveries also increased meaningfully compared to the prior period as a result of changes to optimize the circuits at the Stall and New Britannia mills. Manitoba cash cost per ounce of gold produced, net of by-product credits¹, was $670 during the third quarter and full year cash costs are expected to be within the annual guidance range.

- First full quarter of Copper Mountain operations produced 9,303 tonnes of copper at a cash cost per pound of copper produced, net of by-product credits¹, of $2.67. With integration activities well-advanced, continuous improvement methodologies applied at our Constancia operations have started to be implemented in the Copper Mountain mill as we continue our operational stabilization plans.

- Third quarter net earnings and earnings per share were $45.5 million and $0.13, respectively. After adjusting for a non-cash gain of $32.4 million related to a quarterly revaluation of our closed site environmental reclamation provision, among other items, third quarter adjusted earnings¹ per share were $0.07.

- Cash and cash equivalents increased by $65.5 million to $245.2 million during the third quarter due to strong operating cash flows bolstered by higher copper and gold sales volumes from mining the high-grade zones of the Pampacancha deposit and higher gold and copper grade zones at Lalor.

- Revenue, earnings and operating cash flow would have further benefitted from the sale of approximately 20,000 ounces of consolidated gold production that remained unsold at the end of the third quarter.

Generating Free Cash Flow with Increased Production and Continued Financial Discipline

- Executed on planned higher production levels and achieved continued operating and capital cost efficiencies to generate significant free cash flow in the third quarter.

- Achieved adjusted EBITDA of $190.7 million in the third quarter, the highest quarterly level over the last five years and a 135% increase from the second quarter.

- Increased cash and total liquidity by $175.8 million to $539.6 million, including increased availability under the company's credit facilities due to higher EBITDA levels, lower net debt¹ and renegotiated covenants.

- Net debt¹ reduced to $1,132 million during the third quarter, which together with higher levels of adjusted EBITDA, has improved our net debt to EBITDA ratio¹ compared to the second quarter.

- Deleveraging efforts continued subsequent to quarter-end into October 2023 with a $40 million repayment on our credit facilities, a $5 million principal repayment on the Copper Mountain bonds and the recommencement of deliveries under the gold forward sale and prepay agreement to reduce our gold prepayment liability.

- 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 (excluding Copper Mountain) are expected to be approximately $30 million lower than previous guidance levels, a further decrease from the $15 million reduction announced in the second quarter, representing a 10% reduction in total capital expenditures.

Executing on Growth Initiatives and Prudent Financial Planning

- Post-acquisition plans to stabilize the Copper Mountain operations are underway with a focus on mining fleet ramp-up activities, accelerated stripping and increasing mill reliability. To date, approximately $9 million of the $10 million in targeted annualized corporate synergies have been achieved.

- As previously announced, a new technical report for the Copper Mountain mine is expected to be released in the fourth quarter. The new technical report will include an updated mine plan and updated annual production and cost estimates. The new technical report will also include updated mineral reserve and resource estimates and mill throughput assumptions.

- Successfully completed ramp up of the Stall recovery improvement program with significantly higher copper, gold and silver recoveries realized in the third quarter.

- Released results of the de-risked and enhanced Copper World pre-feasibility study for Phase I in September 2023, which demonstrated a simplified mine plan with an extended 20-year mine life requiring only state and local permits, an after-tax net present value (8%) of $1.1 billion and a 19% internal rate of return at a copper price of $3.75 per pound.

- Completed the acquisition of Rockcliff Metals Corp. ("Rockcliff") on September 14, 2023, which has increased our land position within trucking distance of our Snow Lake processing facilities by more than 250%.

- Commenced initial drill program at our Mason project in Nevada to test high grade targets on satellite properties with 25% of the program completed and assay results pending.

Summary of Third Quarter Results

Cash generated from operating activities in the third quarter of 2023 decreased to $151.9 million compared to $172.5 million in the same quarter of 2022 predominantly due to a $120.9 million negative impact from changes in non-cash working capital. Operating cash flow before change in non-cash working capital during the third quarter of 2023 was a record $182.0 million, reflecting an increase of $100.4 million compared to the same period of 2022. The increase in operating cash flow before changes in non-cash working capital was primarily the result of higher copper sales volumes from mining the high grade zones of the Pampacancha deposit, higher gold and copper grade zones at Lalor, higher copper and gold metal prices, as well as an incremental contribution from our recently acquired Copper Mountain mine. Annual production guidance ranges for 2023 have been reaffirmed for both Peru and Manitoba, and consolidated production guidance has been updated to include contributions from Copper Mountain.

The operating results in the third quarter of 2023 included a full quarter of production from the recently acquired Copper Mountain mine. Consolidated copper, gold and silver production in the third quarter of 2023 increased by 71%, 91% and 48%, respectively, compared to the same period in 2022 primarily due to meaningfully higher recoveries in Peru and Manitoba, mining of the high copper and gold grade zones at the Pampacancha deposit, higher gold and copper grade zones at Lalor and incremental production from our Copper Mountain mine. Consolidated zinc production in the third quarter of 2023 increased by 6% primarily due to higher throughput and higher zinc grades.

Net earnings and earnings per share in the third quarter of 2023 were $45.5 million and $0.13, respectively, compared to net loss and loss per share of $8.1 million and $0.03, respectively, in the third quarter of 2022. The results were positively impacted by a non-cash gain of $32.4 million related to the quarterly revaluation of the environmental reclamation provision at our closed sites, partially offset by a $2.3 million one-time charge related to restructuring costs arising from the Copper Mountain acquisition.

Adjusted net earnings¹and adjusted net earnings per share¹ in the third quarter of 2023 were $24.4 million and $0.07 per share, respectively, after adjusting for the non-cash gain related to the revaluation of our environmental provision, among other items. This compares to adjusted net loss and adjusted net loss per share of $12.4 million, and $0.05 in the same period of 2022. Third quarter adjusted EBITDA¹was $190.7 million, compared to $99.3 million in the same period in 2022. Revenue, earnings and cash would have further benefitted from the sale of approximately 20,000 ounces of consolidated gold production that was unsold at the end of the third quarter and is expected to be sold in the fourth quarter.

In the third quarter of 2023, consolidated cash cost per pound of copper produced, net of by-product credits¹, was $1.10, compared to $0.58 in the same period in 2022. This increase was mainly the result of incorporating Copper Mountain in 2023 and higher mining, milling and G&A costs, partially offset by higher copper production. Consolidated sustaining cash cost per pound of copper produced, net of by-product credits¹, was $1.89 in the third quarter of 2023 compared to $1.91 in the same period in 2022. This decrease was primarily due to higher copper production partially offset by higher mining, milling and G&A costs and slightly higher cash sustaining capital expenditures. Both cash cost measures are expected to further decline in the fourth quarter with higher expected copper production and continued strong contributions from precious metal by-product credits. We are reaffirming our full year 2023 cash cost guidance for each of Peru and Manitoba and have updated our consolidated cash cost and sustaining cash cost guidance to include Copper Mountain.

Consolidated all-in sustaining cash cost per pound of copper produced, net of by-product credits¹, was $2.04 in the third quarter of 2023, lower than $2.16 in the same period in 2022, due to the same reasons outlined above as well as slightly lower regional costs.

As at September 30, 2023, total liquidity increased to $539.6 million, including $245.2 million in cash and cash equivalents as well as undrawn availability of $294.4 million under our revolving credit facilities. Our net debt declined during the quarter to $1,132 million as at September 30, 2023. Subsequent to quarter end, we repaid $40 million on our revolving credit facilities and made a $5 million principal repayment on the Copper Mountain bonds. Based on continued expected free cash flow generation in the fourth quarter of 2023, we continue to expect to make progress on our deleveraging targets as outlined in our "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.

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

*British Columbia production is not included the prior year comparative results.

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, net debt and any ratios based on these measures 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)		Sep. 30, 2023		Dec. 31, 2022
Cash	$	245,217	$	225,665
Total long-term debt		1,377,443		1,184,162
Net debt¹		1,132,226		958,497
Working capital²		128,463		76,534
Total assets		5,250,596		4,325,943
Equity attributable of owners of the Company		2,044,684		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.

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 September 30, 2023 and accordingly there is no comparable period information.

Financial Performance		Three months ended					Nine months ended
(in $ thousands, except per share amounts or as noted below)		Sep. 30, 2023		Sep. 30, 2022			Sep. 30, 2023		Sep. 30, 2022
Revenue	$	480,456	$	346,171		$	1,087,841	$	1,140,244
Cost of sales		374,057		313,741			892,036		933,032
Earnings (loss) before tax		84,149		(263	)		70,848		110,102
Net earnings (loss)		45,490		(8,135	)		36,015		87,823
Basic earnings (loss) per share		0.13		(0.03	)		0.12		0.34
Adjusted earnings (loss) per share¹		0.07		(0.05	)		0.02		0.09
Operating cash flow before changes in non-cash working capital²		182.0		81.6			323.5		282.6
Adjusted EBITDA^1,2		190.7		99.3			373.4		351.1

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.

KEY PRODUCTION RESULTS

Three months ended

Three months ended

Sep. 30, 2023

Sep. 30, 2022

Peru

Manitoba

British
Columbia⁴

Total

Peru

Manitoba

Total

Contained metal in concentrate and doré produced¹

Copper

tonnes

29,081

3,580

9,303

41,964

22,302

2,196

24,498

Gold

40,596

56,213

4,608

101,417

12,722

40,457

53,179

Silver

697,211

264,752

101,069

1,063,032

564,299

152,770

717,069

Zinc

tonnes

10,291

9,750

Molybdenum

tonnes

466

437

Payable metal sold

Copper

tonnes

27,490

2,925

8,956

39,371

20,718

4,081

24,799

Gold²

32,757

36,713

5,329

74,799

11,970

54,962

66,932

Silver²

460,001

197,952

91,002

748,955

513,470

302,946

816,416

Zinc³

tonnes

7,125

12,714

Molybdenum

tonnes

426

511

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

⁴ Includes 100% of Copper Mountain mine production. Hudbay owns 75% of Copper Mountain mine. As Copper Mountain was acquired on June 20, 2023, there were no comparative 2022 figures.

Nine months ended

Nine months ended

Sep. 30, 2023

Sep. 30, 2022

Peru

Manitoba

British
Columbia⁴

Total

Peru

Manitoba

Total

Contained metal in concentrate produced¹

Copper

tonnes

67,280

8,419

10,542

86,241

62,348

12,520

74,868

Gold

64,800

127,500

5,353

197,653

37,369

128,411

165,780

Silver

1,669,021

596,144

112,987

2,378,152

1,654,095

712,184

2,366,279

Zinc

tonnes

28,895

49,055

Molybdenum

tonnes

1,169

1,033

Payable metal sold

Copper

tonnes

65,013

7,021

8,956

80,990

56,016

13,042

69,058

Gold²

59,062

107,662

5,329

172,053

34,852

131,307

166,159

Silver²

1,523,740

481,547

91,002

2,096,289

1,634,549

784,630

2,419,179

Zinc³

tonnes

21,394

50,813

Molybdenum

tonnes

994

931

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

⁴ Production results from Copper Mountain operations represents the period from the June 20^th acquisition date through to the end of the third quarter of 2023. Includes 100% of Copper Mountain mine production. Hudbay owns 75% of Copper Mountain mine.

KEY COST RESULTS

Three months ended

Nine months ended

Guidance

Sep. 30,
2023

Sep. 30,
2022

Sep. 30,
2023

Sep. 30,
2022

Annual
2023³

Peru cash cost per pound of copper produced

Cash cost ¹

$/lb

0.83

1.68

1.34

1.69

1.05 - 1.30

Sustaining cash cost ¹

$/lb

1.51

2.46

2.10

2.46

Manitoba cash cost per ounce of gold produced

Cash cost ¹

$/oz

670

216

864

136

500 - 800

Sustaining cash cost ¹

$/oz

939

1,045

1,212

909

British Columbia cash cost per pound of copper produced²

Cash cost ¹

$/oz

2.67

2.36

2.40 - 2.85

Sustaining cash cost ¹

$/oz

3.39

2.99

Consolidated cash cost per pound of copper produced

Cash cost ^{1, 4}

$/lb

1.10

0.58

1.14

0.78

0.80 - 1.10

Sustaining cash cost ^{1, 4}

$/lb

1.89

1.91

2.04

2.02

1.80 - 2.25

All-in sustaining cash cost ¹

$/lb

2.04

2.16

2.24

2.21

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 Cash cost, sustaining cash cost per pound of copper produced for the British Columbia business unit does not have any comparative information. The year-to-date numbers are from the date of acquisition of June 20, 2023.

³ British Columbia guidance is from acquisition date, June 20, 2023, to the end of the fiscal year

⁴ Consolidated cash cost and sustaining cash cost per per pound of copper produced, net of by-product credits, have been updated to reflect the incorporation of Copper Mountain guidance; our consolidated guidance has otherwise been reaffirmed and remains unchanged.

RECENT DEVELOPMENTS

Copper Mountain Stabilization Plans Underway and Consolidated Guidance Updated to Reflect Copper Mountain

Since completing the acquisition of Copper Mountain on June 20, 2023, we have been focused on advancing our plans to stabilize the operation, 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. We are also planning a campaign of accelerated stripping over the next two to three years to enable access to higher grade ore and to mitigate the substantially reduced stripping undertaken by Copper Mountain over the four years prior to completion of the acquisition.

Further details on our stabilization plans will be provided in a new technical report for the Copper Mountain mine, which is expected to be released in the fourth quarter of 2023. The new technical report will include an updated mine plan and updated annual production and cost estimates for the Copper Mountain mine, which will reflect our stabilization and optimization initiatives, and the costs associated with our planned accelerated stripping. The new technical report will also include updated mineral reserve and resource estimates and mill throughput assumptions consistent with our pre-acquisition internal assessments and in line with the mineral reserve and resource estimates and throughput assumptions disclosed in Copper Mountain's historical technical report dated February 25, 2019 (after accounting for mining depletion). Accordingly, we do not expect our mineral reserve and resource estimates and mill throughput expansion assumptions to be consistent with those disclosed in Copper Mountain's most recent technical report dated September 30, 2022. For further information, see the "Qualified Person and NI 43-101" section of this MD&A.

We are issuing inaugural Copper Mountain post-acquisition 2023 guidance for production and costs. We have incorporated the Copper Mountain guidance into our consolidated production and cash cost guidance for the full year. Our production and cash cost guidance for Peru and Manitoba has otherwise been reaffirmed and remains unchanged.

2023 Production and Cost Guidance		Peru Operations (unchanged)	Manitoba Operations (unchanged)	British Columbia Operations²	Consolidated (updated)
Copper production¹	tonnes	91,000 - 116,000	9,000 - 12,000	18,500 - 20,500	118,500 - 148,500
Gold production¹	ounces	83,000 - 108,000	175,000 - 205,000	8,000 - 10,000	266,000 - 323,000
Silver production¹	ounces	2,210,000 - 2,650,000	750,000 - 1,000,000	190,000 - 210,000	3,150,000 - 3,860,000
Zinc production¹	tonnes	-	28,000 - 36,000	-	28,000 - 36,000
Molybdenum production¹	tonnes	1,300 - 1,600	-	-	1,300 - 1,600

Cash cost³		$1.05 - $1.30/lb	$500 - $800/oz	$2.40 - $2.85/lb	$0.80 - $1.10/lb
Sustaining cash cost³		-	-	-	$1.80 - $2.25/lb
¹ Metal reported in concentrate and doré is prior to refining losses or deductions associated with smelter terms.
² British Columbia operations represented on a 100% basis and for the period since the acquisition completion date of June 20, 2023. Hudbay owns 75% of Copper Mountain mine.
³ Cash cost and sustaining cash cost per pound of copper produced, net of by-product credits, and gold cash cost per ounce of gold produced, net of by-product credits, are non-IFRS financial performance measures with no standardized definition under IFRS. For further information, please see the "Non-IFRS Financial Performance Measures" section of this news release. Canadian dollar costs are converted into U.S. dollars using an exchange rate of 1.35 C$/US$.

Generating Free Cash Flow with Increased Production and Continued Financial Discipline

Hudbay delivered positive free cash flow during the third quarter of 2023 as the company executed its plan for higher copper and gold grades from Pampacancha and higher gold grades at Lalor. We continue to expect to see significantly higher production levels in the second half of 2023, compared to the first half of 2023, as a result of these higher grades in Peru and Manitoba, along with the contribution of production from the newly acquired Copper Mountain mine.

During the third quarter, we drew $90 million from our revolving credit facilities to finance the redemption of $87 million of principal and interest from Copper Mountain's bonds, which improved our ability to deleverage and repay debt sooner than waiting for bond maturity in 2026.

We increased our cash and cash equivalents to $245.2 million and reduced our net debt to $1,132 million as at September 30, 2023, compared to $179.7 million and $1,190 million, respectively, as at June 30, 2023. The $58 million decline in net debt, together with higher levels of adjusted EBITDA¹ in the third quarter, have improved our net debt to EBITDA ratios¹ compared to the second quarter thereby improving our credit facility availability. Subsequent to quarter-end, we continued our deleveraging efforts with a $40 million repayment on our credit facilities and a $5 million principal repayment on the Copper Mountain bonds in October 2023. We have also recommenced deliveries under the gold forward sale and prepay agreement in October 2023, further reducing our gold prepayment liability.

As an additional prudent measure to ensure free cash flow generation and continued financial discipline in 2023, during the third quarter, the Copper Mountain joint venture entered into forward sales contracts for a total of 2,000 tonnes of copper production over the five-month period from August through December 2023 at an average price of $3.86 per pound. During the second quarter of 2023, we entered into a zero-cost collar program for approximately 10% of copper production expected from Peru and Manitoba in the second half of 2023. The program entails hedging 15.9 million pounds of copper from July to December 2023 at an average floor price of $3.95 per pound and an average cap price of $4.28 per pound. As at September 30, 2023, 2.6 million pounds of copper forwards and 7.9 million pounds of copper collars were outstanding.

We remain on track to deliver annual discretionary spending reduction targets for 2023. As a result of continued financial discipline and capital cost efficiencies achieved to date, total capital expenditures for Peru, Manitoba and Arizona in 2023 are expected to be approximately $30 million lower than previous guidance levels, representing a 10% reduction from the original 2023 total capital expenditure guidance. This represents a further decrease from the $15 million targeted reduction announced in the second quarter. With the issuance of Copper Mountain post-acquisition guidance, the company expects capital expenditures at its British Columbia operations to total approximately $35 million in 2023.

2023 Capital Expenditure Guidance¹ (in $ millions)	Original	Updated
Sustaining capital:
Peru	160	150
Manitoba	75	60
Growth capital:
Peru	10	10
Manitoba	15	15
Arizona	30	25
Capitalized exploration	10	10
Total	300	270

2023 British Columbia Guidance^1,2		New
Sustaining capital	-	33
Growth capital	-	2
Total	-	35
¹ Excludes capitalized costs not considered to be sustaining or growth capital expenditures and right-of-use lease additions. Includes capitalized stripping costs. Converted into U.S. dollars using an exchange rate of 1.35 C$/US$.
² British Columbia operations represented on a 100% basis and for the period since the acquisition completion date of June 20, 2023. Hudbay owns 75% of Copper Mountain mine.

De-risked Copper World with Enhanced Phase I Pre-Feasibility Study

On September 8, 2023, we released the results of the enhanced pre-feasibility study ("PFS") for Phase I of our 100%-owned Copper World project in Arizona. Highlights of the PFS include:

- Phase I, which is a standalone operation requiring only state and local permits for an extended 20-year mine life, has an after-tax net present value (8%) of $1.1 billion and generates a 19% internal rate of return at a copper price of $3.75 per pound.

- Average annual copper production over the first ten years of approximately 92,000 tonnes at cash costs and sustaining cash costs of $1.53 and $1.95 per pound of copper¹, respectively.

- Extended Phase I mine life to 20 years, with the potential for further expansion, compared to 16 years in the previous study with an 18% increase to total copper production and higher mill head grades.

- Lowered initial capital cost estimate to approximately $1.3 billion ($1.1 billion net of existing stream agreement), compared to $1.9 billion in the previous preliminary economic assessment, due to the deferral of the construction of a concentrate leach facility to year 4 with the potential to be fully funded from operating cash flows or benefit from future government incentives for critical minerals processing.

- Simplified project flow sheet includes a 60,000 ton per day sulfide concentrator that will produce copper concentrate as a final product until the addition of a concentrate leach facility and a solvent extraction and electrowinning plant in year 5 that will allow the project to produce copper cathodes. The production of copper cathodes will reduce the project's carbon footprint, make Copper World the third largest domestic copper cathode producer in the United States² and bolster the country's green energy independence with "Made in America" copper.

- Total GHG emissions are expected to be 14% lower compared to an operation that only produces copper concentrate.

- Significant benefits for the community and local economy in Arizona through payment of more than $850 million in U.S. federal and state taxes and the creation of an estimated 400 direct and 3,000 indirect jobs.

- Copper World is one of the highest-grade open pit copper projects in the Americas³ with proven and probable mineral reserves of 385 million tonnes at 0.54% copper.

- Together with the pre-feasibility study, we have updated the mineral resource estimates for the project, which increases the global measured and indicated mineral resources (inclusive of mineral reserves) to 1.2 billion tonnes at 0.42% copper, representing a 4% increase in total in-situ copper. This confirms significant upside at Copper World with an intended Phase II expansion of mining activities onto federal land to further enhance the project economics and extend the mine life well beyond 20 years.

For additional details on the Copper World Phase I PFS, please refer to the news release dated September 8, 2023 and the NI 43-101 technical report filed on September 8, 2023.

The first key state permit required for Copper World, the Mined Land Reclamation Plan ("MLRP), was initially approved by the Arizona State Mine Inspector in October 2021 and was subsequently amended to reflect a larger private land project footprint. This approval was challenged in state court, but the challenge was dismissed in May 2023 as having no basis. In late 2022, Hudbay submitted the applications for an Aquifer Protection Permit and an Air Quality Permit to the Arizona Department of Environmental Quality ("ADEQ"). Based on ongoing feedback and dialogue with the ADEQ, we expect to receive these two outstanding state permits in mid-2024.

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 as well as in the final Copper World project design. The opportunity to sanction Copper World is not expected until 2025 based on current estimated timelines. The decision to sanction Copper World will ultimately be evaluated against other competing investment opportunities as part of Hudbay's capital allocation process.

Completion of Rockcliff Acquisition

Rockcliff was one of the largest landholders in the Snow Lake area, with approximately 1,800 square kilometres across all its properties. The Rockcliff Transaction has the potential to further extend mine life at our Snow Lake operations by consolidating our ownership in the Talbot copper-gold deposit and more than tripling our prospective land package in the Snow Lake region. Prior to the Rockcliff Transaction, Rockcliff was the 49% joint venture partner of the Talbot deposit. The Talbot deposit and the additional Rockcliff exploration properties provide further optionality and potential future feed sources for our Stall and New Britannia mills.

Other Exploration Update

Constancia In-Mine Exploration

We continue 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 in March 2024.

Maria Reyna and Caballito Exploration

We control 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. We have completed technical activities necessary to support drill permit application, including surface investigation work, baseline environmental and archaeological activities, and we continue to advance community engagement activities. 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.

Snow Lake Exploration

We continue to compile results from ongoing infill drilling at Lalor, which will be incorporated into the next annual mineral resource and reserve estimate update in March 2024.

We are also preparing our plans for exploration activities on the newly acquired land in Snow Lake, which is expected to include geophysical and drilling programs on the Cook Lake claims and the former Rockcliff claims located within trucking distance of the existing Snow Lake processing infrastructure. A majority of the Cook Lake and former Rockcliff claims have been untested by modern deep geophysics, which was the discovery method for the Lalor deposit.

We intend to explore these claims in hopes of finding a new anchor deposit to maximize and extend the life of the Snow Lake operations beyond 2038.

Mason Exploration

The Mason project is a large greenfield copper deposit located in the historic Yerington District of Nevada and is one of the largest undeveloped copper porphyry deposits in North America. Hudbay completed a PEA in 2021 which demonstrated robust project economics from a 27-year mine life operation. There is an opportunity to further enhance the project economics through exploration for higher grade satellite deposits on our prospective land package near Mason, including Mason Valley. The Mason Valley property hosts several historical underground copper mines that were in production in the early 1900s. Much of the Mason Valley property is located on Hudbay's wholly owned private lands within 15 kilometres of the planned processing infrastructure for the Mason project and contains highly prospective skarn mineralization.

For the first time since Hudbay acquired Mason, we initiated a drill program in September 2023 to test these satellite deposits, including high-grade skarn targets and a large porphyry target below the historical mines. The drill program is approximately 25% complete at the end of October with assay results pending.

_________________________________________

¹ Cash cost, sustaining cash cost per pound of copper produced, net of by-product credits, adjusted EBITDA, net debt and any ratios based on these measures are non-IFRS financial performance measures with no standardized definition under IFRS. For further details on why Hudbay believes cash costs are a useful performance indicator, please refer to the section titled "Non-IFRS Financial Performance Measures".

² Sourced from Wood Mackenzie (Q2 2023 dataset).

³ Sourced from S&P Global, August 2023.

PERU OPERATIONS REVIEW

Three months ended

Nine months ended

Sep. 30,
2023

Sep. 30,
2022

Sep. 30,
2023

Sep. 30,
2022

Constancia ore mined¹

tonnes

1,242,198

6,300,252

8,292,778

20,225,517

Copper

0.30

0.36

0.32

0.33

Gold

g/tonne

0.04

0.05

0.04

0.04

Silver

g/tonne

2.91

3.38

2.56

3.37

Molybdenum

0.01

0.01

0.01

0.01

Pampacancha ore mined¹

tonnes

5,894,013

2,488,928

9,199,803

4,547,621

Copper

0.53

0.29

0.48

0.29

Gold

g/tonne

0.30

0.23

0.33

0.28

Silver

g/tonne

4.22

4.30

3.94

4.24

Molybdenum

0.02

0.01

0.02

0.01

Total ore mined

tonnes

7,136,211

8,789,180

17,492,581

24,773,138

Strip ratio²

1.36

1.26

1.61

1.20

Ore milled

tonnes

7,895,109

7,742,020

22,781,885

22,726,559

Copper

0.43

0.34

0.36

0.32

Gold

g/tonne

0.21

0.08

0.13

0.08

Silver

g/tonne

3.75

3.48

3.42

3.46

Molybdenum

0.02

0.01

0.01

0.01

Copper concentrate

tonnes

132,828

100,545

311,072

275,275

Concentrate grade

% Cu

21.89

22.18

21.63

22.65

Copper recovery

85.2

84.5

82.7

84.9

Gold recovery

74.8

61.9

68.0

60.7

Silver recovery

73.2

65.2

66.6

65.3

Molybdenum recovery

37.2

41.0

39.1

33.9

Combined unit operating costs^3,4,5

$/tonne

12.20

13.06

12.55

12.48

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 $0.9 million or $0.12 per tonne, and $4.5 million or $0.20 per tonne, of COVID-19 related costs during the three and nine months ended September 30, 2022.

Total ore mined in the third quarter of 2023 decreased by 19% compared to the same period in 2022 primarily due to the commencement of Constancia phase five stripping activities and a significant increase in mining from the Pampacancha pit which entails a higher amount of stripping. This decrease was in line with our mine plan and ore mined was supplemented with meaningful draws from our ore stockpiles during the quarter. Ore mined from Pampachancha increased to 5.9 million tonnes during the third quarter at average grades of 0.53% copper and 0.30 grams per tonne gold.

Ore milled during the third quarter of 2023 was 2% higher than the same period in 2022 mainly due to a scheduled plant maintenance shutdown in the comparative 2022 period. Milled copper and gold grades increased by 26% and 163%, respectively in the third quarter of 2023 compared to the same period in 2022 due to a significant increase in the mining of higher grade copper-gold ore from Pampacancha.

Recoveries of copper, gold and silver during the third quarter of 2023 were 1%, 21% and 12% higher, respectively, than the comparative 2022 period and were in line with metallurgical models. Recoveries benefitted from the completion of the recovery uplift program in the second quarter of 2023 as well as higher head grades and lower contaminants.

Year-to-date ore mined was 29% lower than the same period in 2022 due to the same factors as the quarterly variance as well as increased stockpile processing early in 2023 in order to ration fuel during the protests and civil unrest experienced in Peru. Copper recoveries during the nine months ended September 30, 2023 were 3% lower than the same period in 2022 due to higher levels of contaminants in processed stockpile ore. Gold and silver recoveries during the nine months ended September 30, 2023 were 12% and 2% higher, respectively, than the same period in 2022 due to increased processing of higher grade Pampacancha ore.

Combined mine, mill and G&A unit operating costs in the third quarter of 2023 were 7% lower than the same period in 2022 primarily due to higher milling costs from a plant maintenance shutdown in the comparative period and lower mining costs during the third quarter of 2023 due to higher capitalized stripping.

Contained metal in
concentrate produced

Three months ended

Nine months ended

Guidance

Sep. 30, 2023

Sep. 30, 2022

Sep. 30, 2023

Sep. 30, 2022

Annual

2023

Copper

tonnes

29,081

22,302

67,280

62,348

91,000 - 116,000

Gold

40,596

12,722

64,800

37,369

83,000 - 108,000

Silver

697,211

564,299

1,669,021

1,654,095

2,210,000 - 2,650,000

Molybdenum

tonnes

466

437

1,169

1,033

1,300 - 1,600

Production of copper, gold and silver in the third quarter of 2023 was 30%, 219% and 24% higher, respectively, than the comparative period in 2022. The significant increases in copper and gold production were a result of higher copper, gold and silver grades from mining the high grade zones of the Pampacancha deposit, higher recoveries and higher throughput. Production of molybdenum in the third quarter of 2023 was 7% higher than the comparative prior year period due to higher ore grades and higher molybdenum plant throughput.

Year-to-date 2023 production of copper, gold, silver and molybdenum was 8%, 73%, 1% and 13% higher, respectively, than the comparative period in 2023 for the same reasons outlined above in the quarterly variance analysis.

Full year production in Peru is expected to continue to benefit from higher grades in the fourth quarter of 2023 and, as such, full year production of all metals in Peru remains on track to achieve the guidance ranges for 2023.

Peru Cash Cost and Sustaining Cash Cost

Three months ended

Nine months ended

Guidance

Sep. 30,
2023

Sep. 30,
2022

Sep. 30,
2023

Sep. 30,
2022

Annual
2023

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

$/lb

0.83

1.68

1.34

1.69

1.05 - 1.30

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

$/lb

1.51

2.46

2.10

2.46

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 third quarter of 2023 was $0.83, a decrease of 51% compared to the same period in 2022 due to higher byproduct credits mainly from gold, and higher pounds of copper produced. This was partially offset, by higher profit sharing expenses and higher treatment & refining and freight costs. This cost measure is declining meaningfully, as expected, in the second half of 2023 and the full year cash cost is expected to remain within the 2023 guidance range with continued higher copper production and contributions from precious metal by-product credits from Pampacancha expected in the fourth quarter of 2023.

Cash cost per pound of copper produced, net of by-product credits, for the first nine months of 2023 was $1.34, a decrease of 21% compared to the same period in 2022 due to higher by-product credits, additional pounds of copper produced, and higher capitalized stripping. This was offset in part by higher treatment and refining charges, higher profit sharing, and increased freight costs.

Sustaining cash cost per pound of copper produced, net of by-product credits, for the third quarter and for the first nine months of 2023 were 39% and 15% lower, respectively, than the comparative 2022 periods primarily due to the same factors affecting cash cost noted above, partially offset by higher sustaining capital expenditures. However, total annual sustaining capital expenditures in Peru are expected to be $10 million lower than the original 2023 guidance levels primarily a result of lower capitalized stripping costs.

Metal Sold

Three months ended

Nine months ended

Sep. 30, 2023

Sep. 30, 2022

Sep. 30, 2023

Sep. 30, 2022

Payable metal in concentrate

Copper

tonnes

27,490

20,718

65,013

56,016

Gold

32,757

11,970

59,062

34,852

Silver

460,001

513,470

1,523,740

1,634,549

Molybdenum

tonnes

426

511

994

931

Payable copper and gold sales during the third quarter of 2023 were 33% and 174% higher, respectively, than the corresponding period in 2022 primarily due to higher grades from Pampacancha. Gold and silver sales did not increase in line with third quarter production due to a precious metal stream sale that was recognized in revenue shortly after the third quarter cutoff date. Payable gold and silver included in this sale was approximately 15 thousand ounces of gold and 259 thousand ounces of silver.

MANITOBA OPERATIONS REVIEW

Three months ended

Nine months ended

Sep. 30, 2023

Sep. 30, 2022¹

Sep. 30, 2023

Sep. 30, 2022¹

Lalor ore mined

tonnes

367,491

347,345

1,154,345

1,146,750

Gold

g/tonne

5.08

4.57

4.35

3.99

Copper

1.02

0.71

0.80

0.74

Zinc

3.31

3.27

3.25

3.46

Silver

g/tonne

27.80

21.27

23.08

22.80

New Britannia ore milled

tonnes

146,927

132,362

431,874

401,127

Gold

g/tonne

6.93

7.70

6.27

6.34

Copper

1.22

0.72

0.87

0.77

Zinc

0.90

0.73

0.84

0.84

Silver

g/tonne

23.88

20.11

24.01

20.58

Copper concentrate

tonnes

10,313

5,763

21,997

20,022

Concentrate grade

% Cu

16.93

15.35

16.06

14.06

Copper recovery - concentrate

97.4

92.3

94.3

91.2

Gold recovery - concentrate

64.7

60.6

60.9

61.5

Silver recovery - concentrate

63.2

61.2

60.6

62.5

Contained metal in concentrate produced

Gold

21,189

19,863

53,038

50,254

Copper

tonnes

1,745

885

3,531

2,815

Silver

71,290

52,337

202,193

165,866

Metal in doré produced²

Gold

14,403

7,887

26,095

21,608

Silver

39,926

14,155

62,735

40,175

Stall ore milled

tonnes

255,516

229,746

736,768

764,288

Gold

g/tonne

3.70

2.81

3.21

2.95

Copper

0.77

0.67

0.74

0.74

Zinc

4.88

4.82

4.72

5.04

Silver

g/tonne

28.82

20.98

22.81

23.77

Copper concentrate

tonnes

9,036

6,648

23,962

24,053

Concentrate grade

% Cu

20.32

19.73

20.41

20.39

Zinc concentrate

tonnes

19,431

19,442

55,046

65,100

Concentrate grade

% Zn

52.97

50.15

52.50

50.80

Copper recovery

93.9

85.8

89.8

86.9

Zinc recovery

82.6

88.0

83.0

85.9

Gold recovery

67.8

61.3

63.7

57.0

Silver recovery

64.9

55.7

61.3

56.9

Contained metal in concentrate produced

Gold

20,621

12,707

48,367

30,638

Copper

tonnes

1,835

1,311

4,888

3,593

Zinc

tonnes

10,291

9,750

28,895

23,319

Silver

153,536

86,278

331,216

332,180

¹The 777 mine and Flin Flon concentrator information is not disclosed in the table above. The relevant comparative information can be found on page 64 in the Summary of Historical Results section in this MD&A.

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

Unit Operating Costs¹

Three months ended

Nine months ended

Sep. 30, 2023

Sep. 30, 2022⁴

Sep. 30, 2023

Sep. 30, 2022⁴

Lalor

C$/tonne

151.14

152.84

140.81

135.62

New Britannia

C$/tonne

91.07

101.68

85.80

91.42

Stall

C$/tonne

36.56

35.62

35.46

32.64

Combined mine/mill unit operating costs^2,3

Manitoba

C$/tonne

217

235

218

185 ⁵

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 64 in the Summary of Historical Results in this MD&A.

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

Our Manitoba team continues to advance several key initiatives to support higher production levels, reduce dilution during the mining cycle and improve metal recoveries at our Snow Lake operations. The team at Lalor has placed a strong emphasis on enhancing the quality of ore production and minimizing dilution through improved blast designs, loading procedures, and effective grade control practices. Furthermore, by optimizing development drift size, we have shortened the development cycle, resulting in a 14% reduction in waste volume and unit development costs, compared to prior year. Shaft availability has remained high allowing the majority of ore to be hoisted, eliminating the need to truck ore to surface. In October 2023, we reached our targeted 200,000 tonnes of drilled and blasted longhole inventory. While we are experiencing some production challenges as mining advances to lower depths, leading to longer ore haul distances to the muck circuit, smaller stope dimensions, and lower ore bulk density, we are actively pursuing various initiatives to enhance efficiency and improve mucking productivity.

Additionally, we successfully completed changes to optimize the circuits at our Snow Lake mills, resulting in increased copper, gold, and silver recoveries. Concurrently, we are making improvements to our tailings deposition process at our Anderson facility and are exploring the potential of transitioning the facility from subaqueous to subaerial tailings storage, potentially providing a more efficient use of impoundment space, addressing seasonal operational challenges and deferring capital expenditure for dam raise construction to future years.

At Lalor, we successfully completed the hoist rope replacements, biannual inspections and mine ventilation systems maintenance ahead of the winter season. We also performed maintenance of the underground muck circuit and mine power centers during the quarter. Despite these temporary interruptions, Lalor production averaged 4,000 tonnes per day during the third quarter, which was 6% higher than the comparative 2022 period. Copper, gold, silver and zinc grades mined during the third quarter of 2023 were 44%, 11%, 31% and 1% higher than the same period in 2022, respectively.

Total ore mined at our Manitoba operations during the first nine months of 2023 was 29% lower than the same period in 2022 mainly due to the planned closure of 777 in June 2022. Excluding 777 production, Lalor mined ore in the first nine months of 2023 was 1% higher than the same period in 2022. Gold, copper and silver grades mined during the first nine months of 2023 were 9%, 8% and 1% higher than the same period in 2022. Zinc grades mined at Lalor during the first nine months of 2023 were 6% lower, respectively, compared to the same period in 2022, consistent with the mine plan.

Total mine unit operating costs during the third quarter of 2023 decreased by 1% compared to the same period in 2022.

The Stall mill processed 11% more ore in the third quarter of 2023 than the corresponding period of 2022 as it drew down base metal ore stockpiles that built up at the end of second quarter. After the commissioning of the first phase of the Stall mill recovery improvement project in the second quarter of 2023, the third quarter was focused on optimizing circuits to achieve targeted recoveries by reducing primary grind size, refining the flotation circuit balance and mass pull, and reagent selection. These adjustments proved highly effective, resulting in notably higher recoveries for copper, gold and silver during the third quarter of 2023 compared to the same period in 2022. Specifically, the Stall mill achieved its targeted gold recovery levels of approximately 68% in the third quarter, compared to 61% in the third quarter last year. Compared to the same period in 2022, unit operating costs at the Stall mill were 3% higher during the third quarter of 2023 due to increased maintenance costs partially offset by higher throughput.

During the third quarter of 2023, the New Britannia mill consistently achieved elevated production levels averaging approximately 1,600 tonnes per day despite processing significantly higher copper head grades that can impact throughput due to copper flotation limitations. We continue to advance process debottleneck initiatives at New Britannia that require minimal capital outlays as we pursue higher throughput targets, aligned with increased gold ore production from Lalor. New Britannia unit operating costs decreased by 10% during the third quarter of 2023 versus the same period of 2022, primarily due to higher throughput.

Combined mine, mill and G&A unit operating costs in the third quarter of 2023 decreased by 8%, compared to the same period in 2022 reflecting higher throughput and a reduction of contractor usage at Lalor. Combined mine, mill and G&A unit operating costs in the first nine months of 2023 increased by 18% due to the standalone cost structure of the Snow Lake operations compared to the same period in 2022, which included operating costs for both Snow Lake and the lower cost Flin Flon operations.

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

Three months ended

Nine months ended

Guidance

Contained metal in concentrate
and doré produced¹

Sep. 30,
2023

Sep. 30,
2022

Sep. 30,
2023

Sep. 30,
2022

Annual

2023

Gold²

56,213

40,457

127,500

128,411

175,000 - 205,000

Copper

tonnes

3,580

2,196

8,419

12,520

9,000 - 12,000

Zinc

tonnes

10,291

9,750

28,895

49,055

28,000 - 36,000

Silver³

264,752

152,770

596,144

712,184

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.

Manitoba operations produced 56,213 ounces of gold during the third quarter of 2023. Production of copper, gold, silver and zinc in the third quarter of 2023 was higher by 63%, 39%, 73% and 6%, respectively, than the comparative 2022 period due to mining higher grade gold zones, generally higher recoveries at the New Britannia and Stall mills, and recovery of secondary gold products at New Britannia due to past processing inefficiencies. The improvements completed late in the quarter have resolved the past processing inefficiencies at New Britannia and gold is reporting to doré as designed. Despite the significantly higher metal production in the third quarter of 2023, production of copper, gold, silver and zinc in the first nine months of 2023 was lower by 33%, 1%, 16% and 41%, respectively, than the comparative 2022 period mainly due to the loss of production from the closure of the 777 mine in June 2022 and lower comparative zinc grades.

With the recent recovery improvements at the New Britannia and Stall mills and higher grades from Lalor in the third quarter, we expect to achieve full year production guidance for all metals. We continue to expect gold production to trend toward the lower end of the guidance range while copper and zinc production are expected to trend to the upper end of the guidance ranges, as disclosed last quarter.

Manitoba Cash Cost and Sustaining Cash Cost

Three months ended

Nine months ended

Guidance

Sep. 30,
2023

Sep. 30,
2022

Sep. 30,
2023

Sep. 30,
2022

Annual
2023

Cost per pound of gold produced

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

$/oz

670

216

864

136

500 - 800

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

$/oz

939

1,045

1,212

909

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, continues to trend lower in 2023, averaging $670 in the third quarter of 2023. Cash cost continues to be higher than the comparative 2022 period, primarily due to lower by-product credits, in accordance with the mine plan, offset by higher gold production.

Cash cost in the third quarter of 2023 was within our 2023 guidance range and is expected to continue to benefit from 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 in the fourth quarter. As a result, full year cash costs is expected to achieve the 2023 guidance range.

Sustaining cash cost per ounce of gold produced, net of by-product credits, for the third quarter of 2023 was $939, an increase of 10% from the comparative 2022 period primarily due to the same factors affecting cash cost noted above, partially offset by lower sustaining capital expenditures. Total annual sustaining capital expenditures in Manitoba are expected to be $15 million lower than the original 2023 guidance levels primarily a result of lower capital development costs realized at Lalor as the team focuses on cost efficiencies.

Cash cost per ounce of gold produced, net of by-product credits, in the first nine months of 2023 was $864. These costs were higher compared to the same period in 2022 primarily due to the same factors affecting third quarter 2023 cash cost noted above and the standalone cost structure of Lalor without the benefit of the lower cost 777 mine. Sustaining cash cost per ounce of gold produced, net of by-product credits, for the nine months of 2023 was $1,212, an increase of 33% 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

Nine months ended

Sep. 30,
2023

Sep. 30,
2022

Sep. 30,
2023

Sep. 30,
2022

Payable metal in concentrate and doré

Gold

36,713

54,962

107,662

131,307

Copper

tonnes

2,925

4,081

7,021

13,042

Zinc ¹

tonnes

7,125

12,714

21,394

50,813

Silver

197,952

302,946

481,547

784,630

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

Despite the significantly higher metal production during the quarter, as noted above, quantities of payable metal sold for the three months ended September 30, 2023 were lower than the comparable period in 2022 primarily due to a buildup of unsold inventory at the end of the quarter as well as the sale of excess copper concentrate in the comparative period caused by a railcar related inventory buildup earlier in 2022. Payable metal sold for the nine months ended September 30, 2023 was lower than the comparable period in 2022 primarily due to the closure of 777 in June 2022.

BRITISH COLUMBIA OPERATIONS REVIEW

		Three months ended⁶	Since acquisition to^{5, 6}
		Sep. 30, 2023	Sep. 30, 2023
Ore mined¹	tonnes	3,792,568	4,347,991
Waste mined	tonnes	11,233,917	12,602,712
Strip ratio²		2.96	2.90
Ore milled	tonnes	3,158,006	3,600,261
Copper	%	0.36	0.36
Gold	g/tonne	0.08	0.08
Silver	g/tonne	1.40	1.36
Copper concentrate	tonnes	39,068	44,629
Concentrate grade	% Cu	23.8	23.8
Copper recovery	%	80.9	80.5
Gold recovery	%	56.1	57.5
Silver recovery	%	71.3	72.2
Combined unit operating costs^3,4	C$/tonne	24.88	21.82
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 Includes results from the date of acquisition, June 20, 2023.
⁶ Copper Mountain mine results are stated at 100%. Hudbay owns 75% of Copper Mountain mine.

Total ore mined at Copper Mountain in the third quarter of 2023 was 3.8 million tonnes, in line with our expectations. Following the closing of the Copper Mountain transaction in late June, mine operations initiated a fleet production ramp up plan to capture the full value of existing idle capital equipment at the Copper Mountain site. This plan entails a fleet capacity/utilization ramp up from 14 trucks to 26 trucks over the third and fourth quarters. We also commissioned a new Komatsu PC8000 electric shovel in September, which reduces carbon intensity by displacing existing diesel shovel production.

The mill processed a total of 3.2 million tonnes of ore during the third quarter, with mill availability averaging 83.5%. A scheduled mill shutdown occurred in September to facilitate liner replacement and a power transmission line upgrade. In coordination with BC Hydro, thermal upgrades to the site transmission line were completed to support 100MW of site supply for current and future site operations. Mill throughput for the quarter was impacted by excessive coarse material bypassing the comminution circuit and restricting flow through the tailings discharge line, causing high levels of unplanned downtime. This issue was rectified in August and we have since seen continuous improvements in throughput. Our key focus area is implementing improved maintenance management systems as part of our stabilization plans for increasing mill availability.

Milled copper grades during the third quarter of 2023 were 0.36% and copper recoveries were 80.9%, in line with expectations. As part of our near-term stabilization plans at Copper Mountain, we expect to apply mill efficiency initiatives from our Constancia mill to the Copper Mountain mill in an effort to continue to improve concentrate quality and copper recoveries.

Combined mine, mill and G&A unit operating costs in the third quarter of 2023 were C$24.88 per tonne milled. Combined unit operating costs per tonne milled are expected to decrease over time as we continue our stabilization and optimization initiatives at Copper Mountain.

Contained metal in concentrate produced		Three months ended³	Since acquisition to^{1, 3}	Guidance
Contained metal in concentrate produced		Sep. 30, 2023	Sep. 30, 2023	2023²
Copper	tonnes	9,303	10,542	18,500 - 20,500
Gold	oz	4,608	5,353	8,000 - 10,000
Silver	oz	101,069	112,987	190,000 - 210,000
¹ Includes results from the date of acquisition, June 20, 2023.
² British Columbia guidance is from acquisition date, June 20, 2023, to the end of the fiscal year.
³ Copper Mountain mine results are stated at 100%. Hudbay owns 75% of Copper Mountain mine.

We are issuing inaugural Copper Mountain post-acquisition 2023 guidance for production, cash cost and capital expenditures.

Third quarter 2023 production of copper, gold and silver was 9,303 tonnes, 4,608 ounces and 101,069 ounces, respectively. We expect to achieve post-acquisition production guidance for all metals.

British Columbia Cash Cost and Sustaining Cash Cost

		Three months ended	Since acquisition to²	Guidance
		Sep. 30, 2023	Sep. 30, 2023	2023³
Cash cost per pound of copper produced, net of by-product credits¹	$/lb	2.67	2.36	2.40 - 2.85
Sustaining cash cost per pound of copper produced, net of by-product credits¹	$/lb	3.39	2.99
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.
² Includes results from the date of acquisition, June 20, 2023.
³ British Columbia guidance is from acquisition date, June 20, 2023, to the end of the fiscal year.

Cash cost per pound of copper produced, net of by-product credits, in the third quarter of 2023 was $2.67. Sustaining cash cost per pound of copper produced, net of by-product credits, for the third quarter was $3.39. We expect the cash cost and sustaining cash cost measures to remain within the post-acquisition guidance ranges for the balance of the year.

Metal Sold

		Three months ended	Since acquisition to¹
		Sep. 30, 2023	Sep. 30, 2023
Payable metal in concentrate
Copper	tonnes	8,956	8,956
Gold	oz	5,329	5,329
Silver	oz	91,002	91,002
¹ Includes results from the date of acquisition, June 20, 2023. The first concentrate shipment since the acquisition date was in July 2023 with no sales occurring in the 10-day stub period during the second quarter of 2023.

Quantities of payable metal sold for the three months ended September 30, 2023 were generally in line with contained metal production during the quarter.

FINANCIAL REVIEW

Our financial results presented within this "Financial Review" section include results from the British Columbia business unit from the June 20, 2023 acquisition date.

Financial Results

In the third quarter of 2023, we recorded a net profit of $45.5 million compared to a net loss of $8.1 million in the third quarter of 2022, representing an increase in profit of $53.6 million. Year-to-date in 2023, we recorded a net profit of $36.0 million compared to a net profit of $87.8 million for the same period in 2022, representing a decrease in profit of $51.8 million.

The following table provides further details on these variances:

(in $ millions)	Three months ended September 30, 2023		Nine months ended September 30, 2023
Increase (decrease) in components of profit or loss:
Revenues	134.3		(52.4	)
Cost of sales
Mine operating costs	(36.4	)	52.6
Depreciation and amortization	(23.9	)	(11.6	)
Selling and administrative expenses	0.3		(4.0	)
Exploration expenses	(3.0	)	11.1
Re-evaluation adjustment - environmental obligation	26.0		(101.6	)
Other expenses	(2.6	)	(13.7	)
Impairment - Arizona	-		95.0
Net finance expense	(10.3	)	(14.7	)
Tax expense	(30.8	)	(12.5	)
Increase (decrease) in profit for the period	53.6		(51.8	)

Revenue

Revenue for the third quarter of 2023 was a record $480.5 million, $134.3 million higher than the same period in 2022, primarily as a result of $81.8 million of incremental revenue generated by our recently acquired Copper Mountain mine as well as higher copper sales volumes from mining the high-grade zones of the Pampacancha deposit and higher gold and copper grade zones at Lalor, and higher copper and gold metal prices partially offset by lower zinc sales volumes and higher treatment and refining charges.

Revenue for the nine months ended September 30, 2023 was $1,087.8 million, $52.4 million lower than the same period in 2022, mainly due to lower zinc sales volumes, lower copper and zinc metal prices and higher treatment and refining charges. These factors were partially offset by $81.8 million of incremental revenue generated by our recently acquired Copper Mountain mine as well as higher copper sales volumes and higher gold and molybdenum prices. Copper sales volumes for the nine months ended September 30, 2023 were significantly higher than the prior year despite the closure of the 777 mine in Manitoba in June 2022, which contributed to higher production and sales in the comparative period.

The following table provides further details on these variances:

(in $ millions)	Three months ended September 30, 2023		Nine months ended September 30, 2023

Metals prices¹
Higher (lower) copper prices	20.2		(31.9	)
Lower zinc prices	(7.3	)	(27.8	)
Higher gold prices	14.3		21.2
Higher silver prices	1.7		0.4
Sales volumes
Higher copper sales volumes	43.0		26.7
Lower zinc sales volumes	(19.2	)	(115.6	)
Higher gold sales volumes	3.9		0.9
Lower silver sales volumes	(3.2	)	(9.0	)
British Columbia Business Unit
Copper	74.0		74.0
Gold	10.1		10.1
Silver	2.1		2.1
Treatment & Refining	(4.9	)	(4.9	)
Other
Change in derivative mark-to-market on zinc	-		0.4
Change in derivative mark-to-market on copper	(0.8	)	3.7
Molybdenum and other volume and pricing differences	4.2		17.5
Variable consideration adjustments	2.3		3.9
Effect of higher treatment and refining charges	(6.1	)	(24.1	)

Increase (decrease) in revenue in 2023 compared to 2022	134.3		(52.4	)
¹ See discussion below for further information regarding metals prices.

Our revenue by significant product type is summarized below:

	Three months ended				Nine months ended
(in $ millions)	Sep. 30, 2023		Sep. 30, 2022		Sep. 30, 2023		Sep. 30, 2022
Copper	334.1		194.8		704.1		634.5
Zinc	17.8		44.1		57.9		199.3
Gold	128.4		99.9		279.2		257.8
Silver	10.3		6.6		23.8		22.0
Molybdenum	22.4		18.7		58.2		36.9
Other metals	-		0.2		0.2		4.7
Revenue from contracts	513.0		364.3		1,123.4		1,155.2
Amortization of deferred revenue - gold	10.2		8.4		23.4		31.6
Amortization of deferred revenue - silver	6.6		9.2		22.5		30.2
Amortization of deferred revenue - variable consideration adjustments - prior periods	-		(2.3	)	4.9		1.0
Pricing and volume adjustments¹	(16.4	)	(11.6	)	(8.4	)	(28.8	)
Treatment and refining charges	(32.9	)	(21.8	)	(78.0	)	(49.0	)
Revenue	480.5		346.2		1,087.8		1,140.2
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 18 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 three and nine month periods ending September 30, 2023 and 2022, respectively, are summarized below:

Realized prices¹ for the

LME YTD
2023²

Realized prices¹ for the

Three months ended

Nine months ended

LME QTD
2023²

Sep. 30,
2023

Sep. 30,
2022

Sep. 30,
2023

Sep. 30,
2022

Prices

Copper

$/lb

3.79

3.77

3.47

3.89

3.85

4.07

Zinc³

$/lb

1.10

1.09

1.56

1.22

1.19

1.78

Gold⁴

$/oz

1,738

1,519

1,798

1,668

Silver⁴

$/oz

22.34

19.72

21.95

21.70

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 nine months ended September 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 31 of this MD&A.

During the third quarter of 2023, the Copper Mountain 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. As of September 30, 2023, our unsettled zero-cost collars provided hedging for 7.9 million pounds copper from October 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 in the table 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 nine months ended September 30, 2023 by $0.02 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 September 30, 2023

(in $ millions) ¹

Copper

Zinc

Gold

Silver

Molybdenum

Other

Total

Revenue from contracts ²

334.1

17.8

128.4

10.3

22.4

513.0

Amortization of deferred revenue

10.2

6.6

16.8

Pricing and volume adjustments ³

(7.8

)

(0.7

)

(8.6

)

(0.2

)

0.9

(16.4

)

By-product credits ⁴

326.3

17.1

130.0

16.7

23.3

513.4

Derivative mark-to-market ⁵

0.8

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

327.1

17.1

130.0

16.7

23.3

514.2

Payable metal in concentrate and doré sold⁶

39,371

7,124

74,798

748,955

426

Realized price⁷

8,307

2,400

1,738

22.34

Realized price ⁸

3.77

1.09

Nine months ended September 30, 2023

(in $ millions) ¹

Copper

Zinc

Gold

Silver

Molybdenum

Other

Total

Revenue from contracts ²

704.1

57.9

279.2

23.8

58.2

0.2

1,123.4

Amortization of deferred revenue

23.4

22.5

45.9

Pricing and volume adjustments ³

(12.7

)

(1.6

)

6.8

(0.3

)

(0.6

)

(8.4

)

By-product credits ⁴

691.4

56.3

309.4

46.0

57.6

0.2

1,160.9

Derivative mark-to-market ⁵

(3.7

)

(3.7

)

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

687.7

56.3

309.4

46.0

57.6

0.2

1,157.2

Payable metal in concentrate and dore sold⁶

80,990

21,393

172,052

2,096,289

994

Realized price⁷

8,491

2,632

1,798

21.95

Realized price ⁸

3.85

1.19

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 September 30, 2022
(in $ millions) ¹	Copper		Zinc		Gold		Silver	Molybdenum		Other	Total
Revenue from contracts ²	194.8		44.1		99.9		6.6	18.7		0.2	364.3
Amortization of deferred revenue	-		-		8.4		9.2	-		-	17.6
Pricing and volume adjustments ³	(5.0	)	(0.5	)	(6.6	)	0.3	0.2		-	(11.6	)
By-product credits ⁴	189.8		43.6		101.7		16.1	18.9		0.2	370.3
Derivative mark-to-market ⁵	-		-		-		-	-		-	-
Revenue, excluding mark-to-market on non-QP hedges	189.8		43.6		101.7		16.1	18.9		0.2	370.3
Payable metal in concentrate and dore sold⁶	24,799		12,714		66,932		816,416	511		-	-
Realized price⁷	7,654		3,429		1,519		19.72	-		-	-
Realized price ⁸	3.47		1.56		-		-	-		-	-
Nine months ended September 30, 2022
(in $ millions) ¹	Copper		Zinc		Gold		Silver	Molybdenum		Other	Total
Revenue from contracts ²	634.5		199.3		257.8		22.0	36.9		4.7	1,155.2
Amortization of deferred revenue	-		-		31.6		30.2	-		-	61.8
Pricing and volume adjustments ³	(15.6	)	-		(12.2	)	0.3	(1.3	)	-	(28.8	)
By-product credits ⁴	618.9		199.3		277.2		52.5	35.6		4.7	1,188.2
Derivative mark-to-market ⁵	-		0.4		-		-	-		-	0.4
Revenue, excluding mark-to-market on non-QP hedges	618.9		199.7		277.2		52.5	35.6		4.7	1,188.6
Payable metal in concentrate and dore sold⁶	69,058		50,813		166,159		2,419,179	931		-	-
Realized price⁷	8,962		3,930		1,668		21.70	-		-	-
Realized price ⁸	4.07		1.78		-		-	-		-	-
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.
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 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

Nine months ended

Sep. 30, 2023

Peru ¹

Gold

12,399

28,597

Silver

434,894

1,475,052

Gold deferred revenue drawdown rate^1,2

$/oz

820

Gold cash rate³

$/oz

420

418

Total gold stream realized price

$/oz

1,240

1,238

Silver deferred revenue drawdown rate^1,2

$/oz

15.26

Silver cash rate³

$/oz

6.20

6.16

Total silver stream realized price

$/oz

21.46

21.42

Three months ended

Nine months ended

Sep. 30, 2022

Manitoba

Peru

Manitoba

Peru

Gold

3,098

6,336

11,115

24,262

Silver

73,347

498,199

235,626

1,635,865

Gold deferred revenue drawdown rate^1,2

$/oz

1,214

734

1,238

734

Gold cash rate³

$/oz

432

416

430

413

Total gold stream realized price

$/oz

1,646

1,150

1,668

1,147

Silver deferred revenue drawdown rate^1,2

$/oz

24.01

14.95

24.43

14.95

Silver cash rate³

$/oz

6.37

6.14

6.34

6.10

Total silver stream realized price

$/oz

30.38

21.09

30.77

21.05

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 (September 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				Nine months ended
(in $ thousands)	Sep. 30, 2023		Sep. 30, 2022		Sep. 30, 2023		Sep. 30, 2022
Peru
Mining	33,875		35,197		92,315		95,899
Milling	46,996		52,043		147,863		144,429
Changes in product inventory	4,137		(2,497	)	20,080		(15,663	)
Depreciation and amortization	80,625		56,614		189,925		152,787
G&A	20,957		13,405		52,305		48,180
Inventory adjustments	-		-		-		(558	)
Freight, royalties and other charges	18,055		14,645		46,050		38,390
Total Peru cost of sales	204,645		169,407		548,538		463,464
Manitoba
Mining	41,421		40,659		120,854		154,592
Milling	16,923		16,573		46,964		59,035
Zinc plant	-		-		-		32,755
Changes in product inventory	(766	)	32,223		(11,004	)	28,963
Depreciation and amortization	26,873		33,197		73,665		105,420
Inventory adjustments	-		2,074		906		4,104
G&A	10,249		9,971		26,570		55,935
Freight, royalties and other charges	6,121		9,637		16,952		28,764
Total Manitoba cost of sales	100,821		144,334		274,907		469,568
British Columbia
Mining	29,251		-		29,251		-
Milling	24,102		-		24,102		-
Changes in product inventory	3		-		3		-
Depreciation and amortization	6,255		-		6,255		-
G&A	5,050		-		5,050		-
Freight, royalties and other charges	3,930		-		3,930		-
Total British Columbia cost of sales	68,591		-		68,591		-
Cost of sales	374,057		313,741		892,036		933,032

Total cost of sales for the third quarter of 2023 was $374.1 million, reflecting an increase of $60.3 million from the third quarter of 2022 and included a full quarter of operating costs from Copper Mountain, totaling $68.6 million. Peru cost of sales increased by $35.2 million in the third quarter of 2023, compared to the same period of 2022 mainly due to higher depreciation, inline with the higher production during the quarter. Peru cost of sales were also higher in the third quarter of 2023, versus the comparative 2022 period, due to higher G&A, higher freight costs and a drawdown of copper concentrate versus the comparative period.

Manitoba cost of sales decreased by $43.5 million in the third quarter of 2023, compared to the same period of 2022. This was primarily as a result of a relative decrease in the changes in product inventory from the sale of excess copper concentrate in the comparative period due to a railcar shortage and a decrease in depreciation from the closure of the 777 mine in June 2022 which contributed to the comparative period depreciation as final sales were recorded.

Total cost of sales for the first nine months of 2023 was $892.0 million, reflecting a decrease of $41.0 million from the same period in 2022 despite including a full quarter of operating costs from Copper Mountain. Peru cost of sales increased by $85.1 million mainly driven by higher depreciation due to the same reason outlined in the quarterly variance, a higher relative drawdown of product inventory and higher freight costs. Manitoba cost of sales decreased by $194.7 million 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 as well as 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 third quarter of 2023, other significant variances in non-operating expenses, compared to the same period in 2022, include the following:

- Re-evaluation adjustment - environmental provision gain increased by $26.0 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.

- Other expenses increased by $2.6 million compared to the same period in 2022. The increase was primarily due to a relative increase in the losses on disposal of property, plant and equipment versus the comparative period, partially offset by a decrease on non-recurring restructuring charges.

- Exploration expenses increased by $3.0 million reflecting an increase 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 gain decreased by $101.6 million, for the same reasons outlined in the quarterly variance analysis.

- 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.

- Exploration expenses decreased by $11.1 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 $4.0 million reflecting a higher share based compensation expense as a result of an increase in share price during the current year compared to the same period in 2022.

- Other expenses increased by $13.7 million primarily due to a comparative period insurance recovery of $5.7 million and prior period gains on disposition of property, plant and equipment. In addition there were increases in care & maintenance costs for the Flin Flon concentrator and tailings impoundment area as well as transaction costs incurred to complete the acquisition of Copper Mountain. Partially offsetting these impacts was higher comparative period restructuring charges related to the closure of the Flin Flon operations in the second quarter of 2022 and decreases in Copper World evaluation costs which were completed in the prior year.

Net finance expense

(in $ thousands)

Three months ended

Nine months ended

Sep. 30,
2023

Sep. 30,
2022

Sep. 30,
2023

Sep. 30,
2022

Finance costs - accrued or payable:

Interest expense on long-term debt

21,078

16,921

55,885

50,730

Withholding taxes

1,596

1,544

4,577

4,564

Loss on disposal of investments

667

3,132

Other accrued/payable costs¹

(356

)

984

(118

)

4,616

Total finance costs - accrued or payable

22,333

19,449

61,011

63,042

Finance costs - non-cash:

Accretion on streaming agreements²

6,597

8,567

19,694

20,760

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

(950

)

(6,686

)

4,560

(5,888

)

Other non-cash costs³

2,947

(735

)

11,141

3,852

Total finance costs - non-cash

8,594

1,146

35,395

18,724

Net finance expense

30,927

20,595

96,406

81,766

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 third quarter ended September 30, 2023, increased by $10.3 million compared to the third quarter of 2022 primarily due to a $4.2 million increase in interest expense as result of interest on the Copper Mountain Bonds and additional revolver draws, a $3.9 million decrease in the relative revaluation gain of the gold prepayment liability, a $4.2 million decrease in net foreign exchange gains and a $1.8 million increase in the net revaluation loss on our equity investments. These impacts were partially offset by a $2.6 million increase in interest income.

Net finance expense during the first nine months of 2023, increased by $14.7 million compared to the same period in 2022 due to a $6.8 million decrease in the revaluation gain of the gold prepayment liability, a $6.7 million decrease in net foreign exchange gains, a $5.2 million increase in interest expense on long-term debt as result of interest on the Copper Mountain Bonds and additional revolver draws and a $3.6 million increase in the net revaluation loss on our equity investments. This was partially offset by $5.3 million of additional interest income earned, a $2.5 million decrease in losses on disposals of investments and a $1.1 million decrease in accretion on streaming arrangements.

Tax Expense

For the three months ended September 30, 2023, tax expense increased by $30.8 million and for the nine months ended September 30, 2023, tax expense increased by $12.6 million, compared to the same periods in 2022. The following table provides further details:

(in $ thousands)	Three months ended			Nine months ended
(in $ thousands)	Sep. 30, 2023	Sep. 30, 2022		Sep. 30, 2023		Sep. 30, 2022
Deferred tax expense (recovery) - income tax¹	1,913	17,070		(16,371	)	5,208
Deferred tax expense (recovery) - mining tax¹	853	727		(1,217	)	5,844
Total deferred tax expense (recovery)	2,766	17,797		(17,588	)	11,052
Current tax expense (recovery) - income tax	28,131	(8,804	)	37,876		4,150
Current tax expense (recovery) - mining tax	7,762	(1,121	)	14,545		7,077
Total current tax expense (recovery)	35,893	(9,925	)	52,421		11,227
Tax expense	38,659	7,872		34,833		22,279
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 26.2% to our profit before taxes of $70.8 million for the year-to-date of 2023 would have resulted in a tax expense of approximately $18.6 million; however, we recorded an income tax expense of $21.5 million. The significant items causing our effective income tax rate to be different than the 26.2% estimated Canadian statutory income tax rate include:

- Deductible temporary differences with respect to Peru, Manitoba and British Columbia, 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 $9.6 million.

- Foreign exchange on the translation of deferred tax balances to group currency resulted in a deferred tax recovery of $0.5 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 26.2%, resulting in a tax expense of $19.0 million.

- The recognition of previously unrecognized deferred tax assets resulted in a deferred tax recovery of %5.4 million.

Mining Tax Expense

Applying the estimated Manitoba mining tax rate of 10.0% to our net income before taxes of $70.8 million for the year-to-date of 2023 would have resulted in a tax expense of approximately $7.1 million; however, we recorded a mining tax expense of $13.3 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 September 30, 2023, at the tax rate we expect to apply when temporary differences reverse.

British Columbia

The Province of British Columbia imposes a 13% net revenue tax on the sale of mineral products mined in the province of British Columbia after the mine owner has recovered the capital invested in the mine and its "Cumulative Expenditure Account" ("CEA") no longer has a balance. The tax is paid on the profit in excess of the capital that has been invested in the mine. British Columbia mineral tax is deductible for federal and provincial income tax purposes.

While there is a balance in the CEA account, the mine owner must pay a "Net Current Proceeds" ("NCP") tax of 2%. Any amounts paid as NCP can then be claimed in the future against net revenue taxes payable.

We estimate that the effective tax rate that will be applicable when temporary differences reverse will be approximately 9.49%.

LIQUIDITY AND CAPITAL RESOURCES

As at September 30, 2023, our liquidity includes $245.2 million in cash as well as undrawn total availability of $294.4 million under our revolving credit facilities.

Subsequent to September 30, 2023, we repaid $40.0 million on our revolving credit facilities and a $5 million principal repayment on the Copper Mountain bonds in October 2023.

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.

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 closing of the Copper Mountain transaction during the second quarter of 2023, we amended our Credit Facilities to allow Hudbay to designate the Copper Mountain group of companies as Unrestricted Subsidiaries under the Credit Facilities. We also increased the Net Debt to EBITDA covenant ratio from 4:1 to 4.5:1 for the period ending September 30, 2023, to provide greater financial flexibility during the business integration period. As a result of these changes, the Copper Mountain group is not required to guarantee our obligations under the Credit Facilities and the debt, cash, interest and EBITDA from the Copper Mountain group is excluded from the financial covenant calculations until the Copper Mountain Bonds are repaid in full. Upon full repayment of the Copper Mountain Bonds, the Copper Mountain group of companies will automatically cease to be Unrestricted Subsidiaries and will be required to provide guarantees and security. In addition, the debt, cash, interest and EBITDA of the Copper Mountain group will be included in the financial covenant calculations.

At September 30, 2023, we had $130.0 million of debt outstanding under our Canadian revolving credit facility. As at September 30, 2023, we were in compliance with our covenants under the Credit Facilities and had also drawn $25.6 million in letters of credit under the Credit Facilities. In total, $155.6 million was owing under the Credit Facilities as at September 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 has no financial covenants and 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. As at September 30, 2023, the Manitoba business unit had drawn $55.4 million in letters of credit under the LC Facility.

Surety Bonds and Unsecured Letters of Credit

As at September 30, 2023, the Arizona business unit had $12.9 million in surety bonds issued to support future reclamation and closure obligations and the Peru business unit had $118.0 million in letters of credit issued with various Peruvian financial institutions to support future reclamation and other operating matters. In addition, the British Columbia business unit had $15.6 million in surety bonds issued to support future reclamation and $4.9 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 in October 2023 and will continue until August 2024. The fair value of the financial liability at September 30, 2023 was $67.1 million.

Copper Mountain Bonds

On April 9, 2021, Copper Mountain completed an offering of $250 million of secured bonds (the "Copper Mountain Bonds"). The Copper Mountain 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 September 30, 2023, the Company had $6.9 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 Copper Mountain 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 Copper Mountain 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 September 30, 2023, the Company is in compliance with our financial covenants under the Copper Mountain Bonds.

The Copper Mountain 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 Copper Mountain Bonds were put to Copper Mountain on July 17, 2023. During the third quarter of 2023 the Company utilized its Credit Facilities to finance the redemption of the Copper Mountain Bonds that were put to Copper Mountain. The principal and premium amounted to $84.1 million was repaid on July 24, 2023.

Copper Mountain may redeem all or part of the principal amount of the remaining outstanding Copper Mountain 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 September 30, 2023, the Copper Mountain Bonds had a principal amount outstanding of $59.7 million.

Subsequent to September 30, 2023, we made a $5.0 million principal repayment on the Copper Mountain Bonds.

Financial Condition

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

Cash increased by $19.6 million during the first nine months of the year to $245.2 million as at September 30, 2023. This increase was mainly due to cash inflows from operating activities of $247.8 million, $130 million draw on our Credit Facilities, $11.0 million of net cash acquired on the closing of the Copper Mountain and Rockcliff acquisitions and $6.6 million of interest received. Partially offsetting these cash inflows were investing and financing cash outflows of $207.5 million for capital investments and community agreement payments primarily at our Peru, Manitoba and British Columbia operations, Copper Mountain Bond principal repayments of $83.3 million, interest payments of $33.8 million, capitalized lease payments of $18.4 million, other financing costs mainly related to our Credit Facilities, withholding taxes of $11.1 million, $10.0 million for a deferred Rosemont acquisition payment, partial repayment of our gold prepayment liability of $6.4 million as well as dividends paid of $4.5 million. We hold the majority of our cash in low-risk, liquid investments with major Canadian and Peruvian financial institutions.

Working capital increased by $51.9 million to $128.5 million from December 31, 2022 to September 30, 2023, primarily due to an increase in inventories of $82.9 million due, in part, to the acquisition of Copper Mountain during the second quarter, a $30.1 million increase in net financial assets, an increase in cash and cash equivalents of $19.6 million and a $18.8 million decrease in other liabilities due to a reduction in advances from customers. Partially offsetting these items were increases in trade and taxes payable of $50.2 million, increases in lease liabilities of $16.7 million, increases in deferred revenue of $15.6 million, decreases in prepaid expenses and taxes receivable of $17.9 million and an increase in current portion of long-term debt by $10.0 million.

Cash Flows

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

(in $ thousands)	Three months ended				Nine months ended
(in $ thousands)	Sep. 30, 2023		Sep. 30, 2022		Sep. 30, 2023		Sep. 30, 2022
Operating cash flow before change in non-cash working capital	181,980		81,617		323,466		282,581
Change in non-cash working capital	(30,032	)	90,891		(75,682	)	118,840
Cash generated from operating activities	151,948		172,508		247,784		401,421
Cash used in investing activities	(68,247	)	(113,970	)	(189,244	)	(248,556	)
Cash used in financing activities	(18,698	)	(31,531	)	(40,576	)	(137,720	)
Effect of movement in exchange rates on cash	480		554		1,588		(17	)
Increase in cash	65,483		27,561		19,552		15,128

Cash Flow from Operating Activities

Cash generated from operating activities was $151.9 million during the third quarter of 2023, a decrease of $20.6 million compared with the same period in 2022 predominantly due to a $120.9 negative impact from changes in non-cash working capital. Operating cash flow before change in non-cash working capital was $182.0 million during the third quarter of 2023, reflecting an increase of $100.4 million compared to the third quarter of 2022. The increase in operating cash flows before changes in working capital was primarily the result of incremental contribution margin from our recently acquired Copper Mountain mine as well as higher copper sales volumes from mining the high grade zones of the Pampacancha deposit and higher gold and copper grade zones at Lalor, and higher copper and gold metal prices.

Year-to-date cash generated from operating activities was $247.8 million in 2023, a decrease of $153.6 million compared to 2022. Operating cash flow before changes in non-cash working capital for the first nine months of 2023 was $323.5 million, an increase of $40.9 million compared to 2022. The increase in operating cash flow before changes in working capital is mostly attributable to the same reasons outlined in the quarterly variance, as well as higher molybdenum prices and sales volumes, partially offset by lower zinc sales volumes and higher treatment and refining charges.

Cash Flow from Investing and Financing Activities

During the third quarter of 2023, we spent $86.9 million in investing and financing activities, primarily driven by $69.2 million in capital expenditures, $2.8 million in community agreement payments, Copper Mountain Bond principal repayments of $83.3 million, $1.9 million in interest payments, $8.0 million in capitalized lease payments, $5.0 million for a deferred Rosemont acquisition payment and $4.9 million in other financing costs mainly related to our Credit Facilities and withholding taxes. These cash outflows were partially offset by $90 million draw on our Credit Facilities, $3.5 million of interest received, and $2.6 million of dividends paid.

Year-to-date, we spent $229.8 million in investing and financing activities, primarily driven by $200.0 million in capital expenditures, $7.4 million in community agreement payments, Copper Mountain Bond principal repayments of $83.3 million, $33.8 million in interest payments, $18.4 million in capitalized lease payments, $10.0 million for a deferred Rosemont acquisition payment, $6.4 million in partial settlement of our gold prepayment liability, $11.1 million in other financing costs mainly related to our Credit Facilities and withholding taxes and $4.5 million in dividend payments. These cash outflows were partially offset by a $130.0 million draw on our Credit Facilities, $6.6 million of interest received and $11.0 million of net cash acquired on the closing of the Copper Mountain and Rockcliff acquisitions.

Capital Expenditures

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

	Three months ended				Nine months ended				Guidance
	Sep. 30, 2023		Sep. 30, 2022		Sep. 30, 2023		Sep. 30, 2022		Annual
(in $ millions)	Sep. 30, 2023		Sep. 30, 2022		Sep. 30, 2023		Sep. 30, 2022		2023²
Manitoba sustaining capital expenditures	12.6		28.1		36.7		76.5		60.0
Peru sustaining capital expenditures¹	37.5		27.0		95.3		74.0		150.0
British Columbia sustaining capital expenditures³	11.1		-		11.1		-		33.0
Total sustaining capital expenditures	61.2		55.1		143.1		150.5		243.0
Arizona capitalized costs	4.2		12.0		15.8		27.1		25.0
Peru growth capitalized expenditures	0.3		1.3		12.0		1.5		10.0
Manitoba growth capitalized expenditures	-		6.9		13.5		24.4		15.0
British Columbia growth capitalized costs³	-		-		-		-		2.0
Other capitalized costs²	18.5		6.5		28.7		29.3
Capitalized exploration	14.9		13.2		15.8		23.6		10.0
Total other capitalized expenditures	37.9		39.9		85.8		105.9
Total capital additions	99.1		95.0		228.9		256.4

Reconciliation to cash capital additions:
Right-of-use asset additions	(17.5	)	(5.8	)	(22.2	)	(26.1	)
Non-monetary acquisition	(13.7	)	-		(13.7	)	-
Community agreement additions	(0.3	)	2.6		(2.0	)	-
Change in capital accruals and other	1.6		(2.3	)	9.0		(10.2	)
Acquisition of property, plant & equipment - cash	69.2		89.5		200.0		220.1
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 British Columbia operations represented on a 100% basis and for the period since the acquisition completion date of June 20, 2023. Hence, there are no comparatives.

For the three months ended September 30, 2023, total capital additions rose by 4%, compared to the same period in 2022, primarily due to increased sustaining capital expenditures in Peru and new sustaining capital expenditures at the recently acquired Copper Mountain mine in British Columbia. For the nine months ended September 30, 2023, total capital additions declined by 11% versus the comparative period due to lower sustaining capital expenditures in Manitoba despite new sustaining capital expenditures at the recently acquired Copper Mountain mine in British Columbia.

Sustaining capital expenditures in Manitoba for the three and nine months ended September 30, 2023 were $12.6 million, and $36.7 million, respectively, representing a decline of $15.5 million and $39.8 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 nine months ended September 30, 2023 were $37.5 million and $95.3 million, respectively, representing an increase of $10.5 million and $21.3 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 nine months ended September 30, 2023 was nil and $13.5 million, respectively, which mainly relates to the Stall mill recovery improvement project, that has now been completed. Growth capital expenditures in Peru for the three and nine months ended September 30, 2023 were $0.3 million and $12.0 million, respectively, representing an increase of $1.0 million and $10.5 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 nine months ended September 30, 2023 were $4.2 million and $15.8 million, respectively, and mainly relate to pre-feasibility study costs and Copper World carrying costs.

Other capitalized costs for the three and nine months ended September 30, 2023 were $18.5 million and $28.7 million, respectively, which are mostly made up of non-cash capitalized lease additions.

Capitalized exploration for the three and nine months ended September 30, 2023 were $14.9 million and $15.8 million, respectively, and primarily related to the acquisition of the remaining 49% ownership in the Talbot deposit which was acquired through the Rockcliff acquisition. The Rockcliff acquisition was not included in our 2023 capitalized exploration guidance.

As a result of continued financial discipline and capital cost efficiencies achieved to-date, total capital expenditures for Peru, Manitoba and Arizona in 2023 are expected to be approximately $30 million lower than guidance levels, a further decrease from the $15 million reduction announced in the second quarter, representing a 10% reduction in total capital expenditures. With the issuance of Copper Mountain post-acquisition guidance, we expect capital expenditures in British Columbia operations to total approximately $35 million in 2023.

Capital Commitments

As at September 30, 2023, we had outstanding capital commitments in Canada of approximately $19.6 million, of which $13.0 million can be terminated, approximately $79.4 million in Peru primarily related to sustaining capital commitments and exploration option agreements, all of which can be terminated, and approximately $42.3 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 September 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	1,733.0	92.2	930.5	73.5	636.8
Gold prepayment obligation²	67.1	67.1	-	-	-
Lease obligations	154.7	51.6	62.8	22.9	17.4
Purchase obligation - capital commitments	141.4	65.4	45.6	30.1	0.3
Purchase obligation - other commitments³	1,602.1	440.6	550.8	150.2	460.5
Pension and other employee future benefits obligations²	95.3	7.6	11.3	28.3	48.1
Community agreement obligations^{4, 5}	57.3	4.4	6.9	7.9	38.1
Decommissioning and restoration obligations⁵	478.4	6.6	9.9	7.3	454.6
Total	4,329.3	735.5	1,617.8	320.2	1,655.8
¹Long-term debt obligations include scheduled interest payments, as well as principal repayments
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;

- Government royalty payments related to the Constancia mines; and,

- Participation Agreements related to the Copper Mountain mine.

Outstanding Share Data

As of November 7, 2023, the final trading day prior to the date of this MD&A, there were 348,907,843 common shares of Hudbay issued and outstanding. In addition, there were 2,207,990 stock options and 517,460 warrants outstanding.

FINANCIAL RISK MANAGEMENT

Business Integration Risk with Copper Mountain

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 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 Mountain Technical Report

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 and sustainably operate it in future years, which will be further detailed in a new technical report expected to be released in the fourth quarter of 2023. The new technical report will include an updated mine plan and updated annual production and cost estimates for the Copper Mountain mine, which will reflect our optimization and stabilization initiatives, expectations for New Ingerbelle and the costs associated with our planned stripping. The new technical report will also include revised mineral reserve and resource estimates, which are expected to be consistent with the mineral reserve and resource estimates in Copper Mountain's technical report dated February 25, 2019 (after accounting for mining depletion).

As with any change in mine plan or new technical report for a material mineral property, there is a risk that revised mineral reserve or resource estimates, the timing and extent of operating and capital expenditures and the timing and costs of any material expansion opportunities may result in an indicator of impairment or impairment reversal. In the case of the forthcoming Copper Mountain technical report, management will assess impairment considerations with respect to any changes in the mineral reserve and resource estimates, mine life and anticipated expenditures as compared to the valuation that was used for purposes of accounting for the acquisition.

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
	Q3	Q2		Q1	Q4		Q3		Q2	Q1	Q4
Production on a copper equivalent basis (tonnes)	71,335	37,530		38,614	45,454		42,099		46,332	45,085	50,685

Average realized copper price ($/lb)	3.77	3.89		3.98	3.61		3.47		4.28	4.53	4.34
Revenue	480.5	312.2		295.2	321.2		346.2		415.5	378.6	425.2
Gross profit (loss)³	106.4	22.9		66.5	69.7		32.4		89.5	85.3	81.7
Profit (loss) before tax	84.1	(30.7	)	17.4	(14.3	)	(0.3	)	21.5	88.9	(0.2	)
Profit (loss)	45.5	(14.9	)	5.5	(17.4	)	(8.1	)	32.1	63.8	(10.5	)
Adjusted net earnings (loss)¹	24.4	(18.3	)	0.1	2.6		(12.4	)	30.5	5.2	32.7
Earnings (loss) per share:
Basic and diluted	0.13	(0.05	)	0.02	(0.07	)	(0.03	)	0.12	0.24	(0.04	)
Adjusted net earnings (loss)¹ per share	0.07	(0.07	)	0.00	0.01		(0.05	)	0.12	0.02	0.13
Operating cash flow²	182.0	55.9		85.6	109.1		81.6		123.9	77.6	156.9
Adjusted EBITDA¹	190.7	81.2		101.9	124.7		99.3		141.4	110.2	180.8
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 $46.2 million, respectively, of impairment losses related to environmental reclamation provision for the now closed Flin Flon operation for the three months ended December 31, 2021.

Commodity prices have generally declined during 2023 after peaking in the first quarter. Meanwhile, continued inflationary pressures on consumables, labour and supplies has put pressure on mine operating costs, sustaining cash costs, gross profit and operating cash flow. Third quarter results reflected significantly higher copper and gold production and sales volumes from mining the high grade zones of the Pampacancha deposit and higher gold and copper grade zones at Lalor. The third quarter results also reflected the impact of the recently acquired Copper Mountain mine. Combined, this translated into a significant increase in our revenues, gross profits and earnings for the quarter.

The second quarter benefitted from the 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 inclusion of the Copper Mountain acquisition which closed on June 20, 2023, however, there was a minimal impact to net earnings from the acquisition.

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 benefitted 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 first 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 benefitted 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.

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, combined unit cost and ratios based on these measures 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 nine months ended September 30, 2023 and 2022.

	Three months ended				Nine months ended
(in $ millions)	Sep. 30, 2023		Sep. 30, 2022		Sep. 30, 2023		Sep. 30, 2022
Profit (loss) for the period	45.5		(8.1	)	36.0		87.8
Tax expense	38.7		7.8		34.8		22.3
Profit (loss) before tax	84.2		(0.3	)	70.8		110.1
Adjusting items:
Mark-to-market adjustments¹	1.3		(4.2	)	8.7		(7.7	)
Foreign exchange (gain) loss	(0.6	)	(4.8	)	1.1		(5.6	)
Inventory adjustments	-		2.1		0.9		3.5
Variable consideration adjustment - stream revenue and accretion	-		3.9		(5.0	)	(1.9	)
Impairment - Arizona	-		-		-		95.0
Re-evaluation adjustment - environmental provision²	(32.4	)	(6.4	)	(45.4	)	(147.0	)
Acquisition related costs	0.1		-		6.9		-
Evaluation expenses	-		0.1		-		7.8
Insurance recovery	-		-		-		(5.7	)
Restructuring charges ³	2.3		5.1		2.3		9.5
Loss on disposal of investments	-		-		0.7		3.1
(Gain) loss on disposal of plant and equipment and non-current assets	-		(6.0	)	0.4		(6.8	)

Adjusted earnings before income taxes	54.9		(10.5	)	41.4		54.3
Tax expense	(38.7	)	(7.8	)	(34.8	)	(22.3	)
Tax impact of adjusting items	8.2		5.9		(0.5	)	(8.6	)
Adjusted net earnings (loss)	24.4		(12.4	)	6.1		23.4
Adjusted net earnings (loss) ($/share)	0.07		(0.05	)	0.02		0.09
Basic weighted average number of common shares outstanding (millions)	346.7		261.9		294.0		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 September 30, 2022, as well as other Manitoba non-operating sites.
³ Includes closure costs for Flin Flon operations in 2022 and restructuring charges for British Columbia in 2023.

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 adjusted net earnings in the third quarter of 2023 of $24.4 million or $0.07 earnings 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 nine months ended September 30, 2023 and 2022:

	Three months ended				Nine months ended
(in $ millions)	Sep. 30, 2023		Sep. 30, 2022		Sep. 30, 2023		Sep. 30, 2022
Profit (loss) for the period	45.5		(8.1	)	36.0		87.8
Add back:
Tax expense	38.7		7.8		34.8		22.3
Net finance expense	30.9		20.6		96.4		81.8
Other expense	8.9		6.3		27.7		14.0
Depreciation and amortization	113.8		89.8		269.8		258.2
Amortization of deferred revenue and variable consideration adjustment	(16.8	)	(15.3	)	(50.8	)	(62.7	)
Adjusting items (pre-tax):
Impairment losses	-		-		-		95.0
Re-evaluation adjustment - environmental provision	(32.4	)	(6.4	)	(45.4	)	(147.0	)
Inventory adjustments	-		2.1		0.9		3.5
Share-based compensation expense (recovery) ¹	2.1		2.5		4.0		(1.8	)
Adjusted EBITDA	190.7		99.3		373.4		351.1
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 September 30, 2023 and December 31, 2022:

(in $ thousands)	Sep. 30, 2023		Dec. 31, 2022
Total long-term debt	1,377,443		1,184,162
Cash	(245,217	)	(225,665	)
Net debt	1,132,226		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, affected by the relative mix of copper concentrate and zinc concentrate production, where an increase in production of zinc concentrate 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 nine months ended September 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

Nine months ended

Net pounds of copper produced¹

(in thousands)

Sep. 30, 2023

Sep. 30, 2022

Sep. 30, 2023

Sep. 30, 2022

Peru

64,112

49,167

148,327

137,454

Manitoba

7,893

4,841

18,561

27,602

British Columbia²

20,510

23,240

Net pounds of copper produced

92,515

54,008

190,128

165,056

¹ Contained copper in concentrate.

² The numbers for British Columbia are only included from the date of acquisition of June 20, 2023. There are no comparatives.

Consolidated

Three months ended

Nine months ended

Sep. 30, 2023

Sep. 30, 2022

Sep. 30, 2023

Sep. 30, 2022

Cash cost per pound of copper produced

$000s

$/lb

$000s

$/lb

$000s

$/lb

$000s

$/lb

Cash cost, before by-product credits

288,410

3.12

211,664

3.92

685,428

3.61

697,624

4.22

By-product credits

(187,023

)

(2.02

)

(180,464

)

(3.34

)

(469,551

)

(2.47

)

(569,328

)

(3.45

)

Cash cost, net of by-product credits

101,387

1.10

31,200

0.58

215,877

1.14

128,296

0.78

Consolidated	Three months ended				Nine months ended
	Sep. 30, 2023		Sep. 30, 2022		Sep. 30, 2023		Sep. 30, 2022
Cash cost per pound of copper produced	$000s	$/lb	$000s	$/lb	$000s	$/lb	$000s	$/lb
Mining	104,547	1.13	75,856	1.40	242,420	1.28	250,491	1.52
Milling	88,021	0.95	68,616	1.27	218,929	1.15	203,464	1.23
Refining (zinc)	-	-	-	-	-	-	32,755	0.20
G&A	36,107	0.39	23,262	0.43	83,637	0.44	104,185	0.63
Onsite costs	228,675	2.47	167,734	3.11	544,986	2.87	590,895	3.58
Treatment & refining	32,882	0.36	21,852	0.40	78,047	0.41	48,968	0.29
Freight & other	26,853	0.29	22,078	0.41	62,395	0.33	57,761	0.35
Cash cost, before by-product credits	288,410	3.12	211,664	3.92	685,428	3.61	697,624	4.23

Consolidated

Three months ended

Nine months ended

Sep. 30, 2023

Sep. 30, 2022

Sep. 30, 2023

Sep. 30, 2022

Supplementary cash cost information

$000s

$/lb ¹

$000s

$/lb ¹

$000s

$/lb¹

$000s

$/lb¹

By-product credits²:

Zinc

17,099

0.18

43,606

0.81

56,369

0.30

199,283

1.21

Gold³

129,954

1.41

101,650

1.88

309,459

1.63

277,141

1.68

Silver³

16,724

0.18

16,066

0.30

46,003

0.24

52,661

0.32

Molybdenum & other

23,246

0.25

19,142

0.35

57,720

0.30

40,243

0.24

Total by-product credits

187,023

2.02

180,464

3.34

469,551

2.47

569,328

3.45

Reconciliation to IFRS:

Cash cost, net of by-product credits

101,387

31,200

215,877

128,296

By-product credits

187,023

180,464

469,551

569,328

Treatment and refining charges

(32,882

)

(21,852

)

(78,047

)

(48,968

)

Inventory adjustments

2,074

906

3,546

Share-based compensation expense

149

114

288

(70

)

Change in product inventory

3,374

29,726

9,079

13,300

Royalties

1,253

2,204

4,537

9,393

Depreciation and amortization⁴

113,753

89,811

269,845

258,207

Cost of sales⁵

374,057

313,741

892,036

933,032

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 29 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 nine months ended September 30, 2023 the variable consideration adjustments amounted income of $4,885 (three and nine months ended September 30, 2022 - expense of $2,286 and an income of $959).

⁴Depreciation is based on concentrate sold.

⁵ As per consolidated interim financial statements.

Peru

Three months ended

Nine months ended

(in thousands)

Sep. 30, 2023

Sep. 30, 2022

Sep. 30, 2023

Sep. 30, 2022

Net pounds of copper produced¹

64,112

49,167

148,327

137,454

¹Contained copper in concentrate.

Peru	Three months ended								Nine months ended
	Sep. 30, 2023				Sep. 30, 2022				Sep. 30, 2023				Sep. 30, 2022
Cash cost per pound of copper produced	$000s		$/lb		$000s		$/lb		$000s		$/lb		$000s		$/lb
Mining	33,875		0.53		35,197		0.72		92,315		0.62		95,899		0.70
Milling	46,996		0.73		52,043		1.06		147,863		1.00		144,429		1.05
G&A	20,912		0.33		13,421		0.27		52,245		0.35		48,198		0.35
Onsite costs	101,783		1.59		100,661		2.05		292,423		1.97		288,526		2.10
Treatment & refining	19,143		0.30		10,814		0.22		46,843		0.32		27,625		0.20
Freight & other	17,040		0.26		12,905		0.26		41,891		0.28		34,679		0.25
Cash cost, before by-product credits	137,966		2.15		124,380		2.53		381,157		2.57		350,830		2.55
By-product credits	(84,793	)	(1.32	)	(41,659	)	(0.85	)	(182,885	)	(1.23	)	(118,924	)	(0.86	)
Cash cost, net of by-product credits	53,173		0.83		82,721		1.68		198,272		1.34		231,906		1.69

Peru	Three months ended						Nine months ended
	Sep. 30, 2023			Sep. 30, 2022			Sep. 30, 2023			Sep. 30, 2022
Supplementary cash cost information	$000s		$/lb ¹	$000s		$/lb ¹	$000s		$/lb ¹	$000s		$/lb ¹
By-product credits²:
Gold³	51,459		0.80	12,793		0.26	92,398		0.62	48,696		0.35
Silver³	10,088		0.16	9,967		0.20	33,006		0.22	34,645		0.25
Molybdenum	23,246		0.36	18,899		0.39	57,481		0.39	35,583		0.26
Total by-product credits	84,793		1.32	41,659		0.85	182,885		1.23	118,924		0.86
Reconciliation to IFRS:
Cash cost, net of by-product credits	53,173			82,721			198,272			231,906
By-product credits	84,793			41,659			182,885			118,924
Treatment and refining charges	(19,143	)		(10,814	)		(46,843	)		(27,625	)
Inventory adjustments	-			-			-			(558	)
Share-based compensation expenses	45			(16	)		60			(18	)
Change in product inventory	4,137			(2,497	)		20,080			(15,663	)
Royalties	1,015			1,740			4,159			3,711
Depreciation and amortization⁴	80,625			56,614			189,925			152,787
Cost of sales⁵	204,645			169,407			548,538			463,464
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 29 of this MD&A.
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.

British Columbia	Three months ended	Nine months ended
(in thousands)	Sep. 30, 2023	Sep. 30, 2023
Net pounds of copper produced¹	20,510	23,240
¹Contained copper in concentrate.

British Columbia

Three months ended

Nine months ended

Sep. 30, 2023

Cash cost per pound of copper produced

$000s

$/lb

$000s

$/lb

Mining

29,251

1.43

29,251

1.26

Milling

24,102

1.17

24,102

1.04

G&A

5,050

0.25

5,050

0.22

Onsite costs

58,403

2.85

58,403

2.52

Treatment & refining

4,905

0.24

4,905

0.21

Freight & other

3,693

0.18

3,693

0.16

Cash cost, before by-product credits

67,001

3.27

67,001

2.89

By-product credits

(12,234

)

(0.60

)

(12,234

)

(0.53

)

Cash cost, net of by-product credits

54,767

2.67

54,767

2.36

British Columbia

Three months ended

Nine months ended

Sep. 30, 2023

Supplementary cash cost information

$000s

$/lb ¹

$000s

$/lb ¹

By-product credits²:

Gold³

10,120

0.50

10,120

0.45

Silver³

2,114

0.10

2,114

0.09

Total by-product credits

12,234

0.60

12,234

0.54

Reconciliation to IFRS:

Cash cost, net of by-product credits

54,767

By-product credits

12,234

Treatment and refining charges

(4,905

)

(4,905

)

Change in product inventory

Royalties

237

Depreciation and amortization⁴

6,255

Cost of sales⁵

68,591

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

Nine months ended

Sep. 30, 2023

Sep. 30, 2022

Sep. 30, 2023

Sep. 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

101,387

1.10

31,201

0.58

215,877

1.14

128,296

0.78

Cash sustaining capital expenditures

72,193

0.78

69,588

1.29

168,315

0.88

195,724

1.19

Royalties

1,253

0.01

2,204

0.04

4,537

0.02

9,393

0.06

Sustaining cash cost, net of by-product credits

174,833

1.89

102,993

1.91

388,729

2.04

333,413

2.02

Corporate selling and administrative expenses & regional costs

10,971

0.12

11,384

0.21

30,789

0.16

26,923

0.16

Accretion and amortization of decommissioning and community agreements¹

3,309

0.03

2,099

0.04

7,059

0.04

3,694

0.02

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

189,113

2.04

116,476

2.16

426,577

2.24

364,030

2.21

Reconciliation to property, plant and equipment additions:

Property, plant and equipment additions

77,454

72,237

158,582

182,348

Capitalized stripping net additions

21,762

22,645

70,386

74,093

Total accrued capital additions

99,216

94,882

228,968

256,441

Less other non-sustaining capital costs²

37,968

39,807

85,824

105,899

Total sustaining capital costs

61,248

55,075

143,144

150,542

Capitalized lease cash payments - operating sites

7,199

8,852

16,275

27,424

Community agreement cash payments

1,953

2,491

4,432

6,632

Accretion and amortization of decommissioning and restoration obligations ³

1,793

3,170

4,464

11,126

Cash sustaining capital expenditures

72,193

69,588

168,315

195,724

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

Nine months ended

Sep. 30, 2023

Sep. 30, 2022

Sep. 30, 2023

Sep. 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

53,173

0.83

82,721

1.68

198,272

1.34

231,906

1.69

Cash sustaining capital expenditures

42,607

0.66

36,507

0.74

109,596

0.74

102,073

0.74

Royalties

1,015

0.02

1,740

0.04

4,159

0.03

3,711

0.03

Sustaining cash cost per pound of copper produced

96,795

1.51

120,968

2.46

312,027

2.10

337,690

2.46

British Columbia

Three months ended

Nine months ended

Sep. 30, 2023

Sustaining cash cost per pound of copper produced

$000s

$/lb

$000s

$/lb

Cash cost, net of by-product credits

54,767

2.67

54,767

2.36

Cash sustaining capital expenditures

14,487

0.71

14,487

0.62

Royalties

237

0.01

237

0.01

Sustaining cash cost per pound of copper produced

69,491

3.39

69,491

2.99

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 nine months ended September 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

Nine months ended

(in thousands)

Sep. 30, 2023

Sep. 30, 2022

Sep. 30, 2023

Sep. 30, 2022

Net ounces of gold produced¹

56,213

40,457

127,500

128,411

¹ Contained gold in concentrate and doré.

Manitoba	Three months ended								Nine months ended
	Sep. 30, 2023				Sep. 30, 2022				Sep. 30, 2023				Sep. 30, 2022
Cash cost per ounce of gold produced	$000s		$/oz¹		$000s		$/oz¹		$000s		$/oz¹		$000s		$/oz¹
Mining	41,421		737		40,659		1,005		120,854		948		154,592		1,204
Milling	16,923		301		16,573		410		46,964		368		59,035		460
Refining (zinc)	-		-		-		-		-		-		32,755		255
G&A	10,145		180		9,841		243		26,342		207		55,987		436
Onsite costs	68,489		1,218		67,073		1,658		194,160		1,523		302,369		2,355
Treatment & refining	8,834		157		11,038		273		26,299		206		21,343		166
Freight & other	6,120		109		9,173		226		16,811		132		23,082		180
Cash cost, before by-product credits	83,443		1,484		87,284		2,157		237,270		1,861		346,794		2,701
By-product credits	(45,779	)	(814	)	(78,565	)	(1,941	)	(127,128	)	(997	)	(329,362	)	(2,565	)
Gold cash cost, net of by-product credits	37,664		670		8,719		216		110,142		864		17,432		136

Manitoba	Three months ended						Nine months ended
Supplementary cash cost information	Sep. 30, 2023			Sep. 30, 2022			Sep. 30, 2023			Sep. 30, 2022
Supplementary cash cost information	$000s		$/oz ¹	$000s		$/oz¹	$000s		$/oz ¹	$000s		$/oz ¹
By-product credits²:
Copper	24,158		430	28,617		707	59,637		468	107,403		836
Zinc	17,099		304	43,606		1,077	56,369		442	199,283		1,553
Silver³	4,522		80	6,099		151	10,883		85	18,016		140
Other	-		-	243		6	239		2	4,660		36
Total by-product credits	45,779		814	78,565		1,941	127,128		997	329,362		2,565
Reconciliation to IFRS:
Cash cost, net of by-product credits	37,664			8,719			110,142			17,432
By-product credits	45,779			78,565			127,128			329,362
Treatment and refining charges	(8,834	)		(11,038	)		(26,299	)		(21,343	)
Share-based compensation expenses	104			130			228			(52	)
Inventory adjustments	-			2,074			906			4,104
Change in product inventory	(766	)		32,223			(11,004	)		28,963
Royalties	1			464			141			5,682
Depreciation and amortization⁴	26,873			33,197			73,665			105,420
Cost of sales⁵	100,821			144,334			274,907			469,568
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 29 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

Nine months ended

Sep. 30, 2023

Sep. 30, 2022

Sep. 30, 2023

Sep. 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

37,664

670

8,719

216

110,142

864

17,432

136

Cash sustaining capital expenditures

15,100

269

33,081

818

44,232

347

93,651

729

Royalties

464

141

5,682

Sustaining cash cost per ounce of gold produced

52,765

939

42,264

1,045

154,515

1,212

116,765

909

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 nine months ended September 30, 2023 and 2022.

Peru	Three months ended				Nine months ended
(in thousands except unit cost per tonne)	Sep. 30, 2023		Sep. 30, 2022		Sep. 30, 2023		Sep. 30, 2022
Combined unit cost per tonne processed	Sep. 30, 2023		Sep. 30, 2022		Sep. 30, 2023		Sep. 30, 2022
Mining	33,875		35,197		92,315		95,899
Milling	46,996		52,043		147,863		144,429
G&A¹	20,912		13,421		52,245		48,198
Less: Other G&A²	(5,440	)	1,342		(6,521	)	(279	)
	96,343		102,003		285,902		288,247
Less: COVID-19 related costs	-		929		-		4,525
Unit cost	96,343		101,074		285,902		283,722
Tonnes ore milled	7,895		7,742		22,782		22,727
Combined unit cost per tonne	12.20		13.06		12.55		12.48
Reconciliation to IFRS:
Unit cost	96,343		101,074		285,902		283,722
Freight & other	17,040		12,905		41,891		34,679
COVID-19 related costs	-		929		-		4,525
Other G&A	5,440		(1,342	)	6,521		279
Share-based compensation expenses	45		(16	)	60		(18	)
Inventory adjustments	-		-		-		(558	)
Change in product inventory	4,137		(2,497	)	20,080		(15,663	)
Royalties	1,015		1,740		4,159		3,711
Depreciation and amortization	80,625		56,614		189,925		152,787
Cost of sales³	204,645		169,407		548,538		463,464
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				Nine months ended
(in thousands except tonnes ore milled and unit cost per tonne)	Sep. 30, 2023		Sep. 30, 2022		Sep. 30, 2023		Sep. 30, 2022
Combined unit cost per tonne processed	Sep. 30, 2023		Sep. 30, 2022		Sep. 30, 2023		Sep. 30, 2022
Mining	41,421		40,659		120,854		154,592
Milling	16,923		16,573		46,964		59,035
G&A¹	10,145		9,841		26,342		55,987
Less: G&A allocated to zinc metal production and other areas	-		-		-		(6,523	)
Less: Other G&A related to profit sharing costs	(3,308	)	(1,784	)	(5,128	)	(22,014	)
Unit cost	65,181		65,289		189,032		241,077
USD/CAD implicit exchange rate	1.34		1.31		1.34		1.28
Unit cost - C$	87,363		85,225		254,216		308,419
Tonnes ore milled	402,443		362,108		1,168,642		1,662,759
Combined unit cost per tonne - C$	217		235		218		185
Reconciliation to IFRS:
Unit cost	65,181		65,289		189,032		241,077
Freight & other	6,120		9,173		16,811		23,082
Refined (zinc)	-		-		-		32,755
G&A allocated to zinc metal production	-		-		-		6,523
Other G&A related to profit sharing	3,308		1,784		5,128		22,014
Share-based compensation expenses	104		130		228		(52	)
Inventory adjustments	-		2,074		906		4,104
Change in product inventory	(766	)	32,223		(11,004	)	28,963
Royalties	1		464		141		5,682
Depreciation and amortization	26,873		33,197		73,665		105,420
Cost of sales²	100,821		144,334		274,907		469,568
¹ G&A as per cash cost reconciliation above.
² As per IFRS financial statements.

British Columbia	Three months ended	Nine months ended
(in thousands except unit cost per tonne)	Sep. 30, 2023	Sep. 30, 2023
Combined unit cost per tonne processed	Sep. 30, 2023	Sep. 30, 2023
Mining	29,251	29,251
Milling	24,102	24,102
G&A¹	5,050	5,050
Unit cost	58,403	58,403
USD/CAD implicit exchange rate	1.35	1.35
Unit cost - C$	78,566	78,566
Tonnes ore milled	3,158	3,600
Combined unit cost per tonne C$	24.88	21.82
Reconciliation to IFRS:
Unit cost	58,403	58,403
Freight & other	3,693	3,693
Change in product inventory	3	3
Royalties	237	237
Depreciation and amortization	6,255	6,255
Cost of sales³	68,591	68,591
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		Nine months ended
(in thousands except zinc plant unit cost per pound)	September 30, 2022		September 30, 2022
Zinc plant unit cost ¹	September 30, 2022		September 30, 2022

Zinc plant costs	-		32,755
G&A ²	9,841		55,987
Less: G&A allocated to other areas	(8,057	)	(27,450	)
Less: Other G&A related to profit sharing	(1,784	)	(22,014	)
Zinc plant unit cost	-		39,278

USD/CAD implicit exchange rate	-		1.27
Zinc plant unit cost - C$	-		-
Refined metal produced (in pounds)	-		-
Zinc plant unit cost per pound - C$	-		-

Reconciliation to IFRS:
Zinc plant unit cost	-		39,278
Freight & other	9,173		23,082
Mining	40,659		154,592
Milling	16,573		59,035
G&A allocated to other areas	8,057		27,450
Other G&A related to profit sharing	1,784		22,014
Share-based payment	130		(52	)
Inventory adjustments	2,074		4,104
Change in product inventory	32,223		28,963
Royalties	464		5,682
Depreciation and amortization	33,197		105,420
Cost of sales³	144,334		469,568
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 3 of our September 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 September 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. 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 nine months ended September 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 fourth quarter and the remainder of the second half of the year, the expected timing and implications of an updated Copper Mountain mine technical report, expectations regarding the updated mine plan, mineral reserve and resource estimates and mill throughput assumptions in the new Copper Mountain mine technical report, expectations regarding how the new Copper Mountain mine technical report will compare to Copper Mountain's historical disclosure, our ability to stabilize and optimize the Copper Mountain mine operation, expectations regarding the results and findings of the Copper World PFS, including the production, operating cost, capital cost and cash cost estimates, the projected valuation metrics and rates of return, the cash flow and EBITDA projections, the estimated timelines and pre-requisites for sanctioning the Copper World 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 expected benefits of the Rockcliff Transaction and other Manitoba growth initiatives 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 future deleveraging strategies and our ability to deleverage and repay debt as needed, expectations regarding our cash balance and liquidity, our ability to increase the mining rate at Lalor, the anticipated benefits from completing the Stall recovery improvement program, the potential improvements to the tailings deposition process at the Anderson facility and any facility transitions related thereto, expectations regarding the ability to conduct exploration work on the Maria Reyna and Caballito properties and to advance related drill plans, the ability to continue 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 and extension of mine life in Snow Lake and our ability to find a new anchor deposit near our Snow Lake operations, anticipated drill programs and exploration activities and any results expected therefrom, 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 consistency of the new technical report for the Copper Mountain mine with the mineral reserve and resource estimates and throughput assumptions disclosed in Copper Mountain's historical technical report dated February 25, 2019 (after accounting for mining depletion);

- 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 complete the integration and optimization of 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 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 deleverage and repay debt as 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 anticipated mine plan and mineral reserve and resource estimates for the Copper Mountain mine and the possibility that they could result in an indicator of impairment, the failure to effectively complete the integration and optimization of the Copper Mountain operations, 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, the risk of an indicator of impairment or impairment reversal relating to a material mineral property, 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, 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.

As disclosed in this MD&A, we expect to file a new technical report for the Copper Mountain mine in the fourth quarter of 2023. The new technical report will include an updated mine plan and updated annual production and cost estimates. The new technical report will also include updated mineral reserve and resource estimates and mill throughput assumptions consistent with pre-acquisition internal assessments and in line with the mineral reserve and resource estimates and throughput assumptions disclosed in Copper Mountain's historical technical report dated February 25, 2019 (after accounting for mining depletion). Accordingly, we do not expect our mineral reserve and resource estimates and mill throughput expansion assumptions to be consistent with those disclosed in Copper Mountain's most recent technical report dated September 30, 2022. Investors are cautioned they should not rely on any of Copper Mountain's previously issued technical reports.

SUMMARY OF HISTORICAL RESULTS

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

			Q3 2023		Q2 2023			Q1 2023		2022 ⁴		Q4 2022			Q3 2022			Q2 2022		Q1 2022		2021 ⁴			Q4 2021			Q3 2021
Consolidated Financial Condition ($000s)
Cash		$	245,217	$	179,734		$	255,563	$	225,665	$	225,665		$	286,117		$	258,556	$	213,359	$	270,989		$	270,989		$	297,451
Total long-term debt			1,377,443		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
Net debt¹			1,132,226		1,190,948			969,460		958,497		958,497			897,120			923,587		967,760		909,285			909,285			885,161
Consolidated Financial Performance ($000s except per share amounts)
Revenue		$	480,456	$	312,166		$	295,219	$	1,461,440	$	321,196		$	346,171		$	415,454	$	378,619	$	1,501,998		$	425,170		$	358,961
Cost of sales			374,057		289,273			228,706		1,184,552		251,520			313,741			325,940		293,351		1,370,979			343,426			444,379
Earnings (loss) before tax			84,149		(30,731	)		17,430		95,815		(14,287	)		(263	)		21,504		88,861		(202,751	)		(149	)		(147,830	)
Earnings (loss)			45,490		(14,932	)		5,457		70,382		(17,441	)		(8,135	)		32,143		63,815		(244,358	)		(10,453	)		(170,411	)
Basic and diluted earnings (loss) per share		$	0.13	$	(0.05	)	$	0.02	$	0.27	$	(0.07	)	$	(0.03	)	$	0.12	$	0.24	$	(0.93	)	$	(0.04	)	$	(0.65	)
Adjusted earnings (loss) per share ¹		$	0.07	$	(0.07	)	$	0.00	$	0.10	$	0.01		$	(0.05	)	$	0.12	$	0.02	$	0.09		$	0.13		$	0.00
Operating cash flow before change in non-cash working capital			181,980		55,878			85,608		391,729		109,148			81,617			123,911		77,615		483,862			156,917			103,509
Adjusted EBITDA (in $ millions) ¹			190.7		81.2			101.9		475.9		124.7			99.3			141.4		110.2		547.8			180.8			119.2
Consolidated Operational Performance
Contained metal in concentrate and doré produced ²
Copper	tonnes		41,964		21,715			22,562		104,173		29,305			24,498			25,668		24,702		99,470			28,198			23,245
Gold	ounces		101,417		48,996			47,240		219,700		53,920			53,179			58,645		53,956		193,783			64,159			54,276
Silver	ounces		1,063,032		612,310			702,809		3,161,294		795,015			717,069			864,853		784,357		3,045,481			899,713			763,177
Zinc	tonnes		10,291		8,758			9,846		55,381		6,326			9,750			17,053		22,252		93,529			23,207			20,844
Molybdenum	tonnes		466		414			289		1,377		344			437			390		207		1,146			275			282
Payable metal in concentrate and doré sold
Copper	tonnes		39,371		23,078			18,541		94,473		25,415			24,799			23,650		20,609		92,200			24,959			21,136
Gold	ounces		74,799		47,533			49,720		213,415		47,256			66,932			50,884		48,343		168,358			56,927			47,843
Silver	ounces		748,955		805,448			541,884		2,978,485		559,306			816,416			738,171		864,591		2,427,508			638,640			701,601
Zinc ³	tonnes		7,125		8,641			5,628		59,043		8,230			12,714			20,793		17,306		96,435			21,112			21,619
Molybdenum	tonnes		426		314			254		1,352		421			511			208		213		1,098			245			304
Cash cost ¹	$/lb	$	1.10	$	1.60		$	0.85	$	0.86	$	1.08		$	0.58		$	0.65	$	1.11	$	0.74		$	0.51		$	0.62
Sustaining cash cost ¹	$/lb	$	1.89	$	2.73		$	1.83	$	2.07	$	2.21		$	1.91		$	1.87	$	2.29	$	2.07		$	1.95		$	1.97
All-in sustaining cash cost ¹	$/lb	$	2.04	$	2.98		$	2.07	$	2.26	$	2.41		$	2.16		$	1.93	$	2.54	$	2.30		$	2.20		$	2.18

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.

			Q3 2023		Q2 2023		Q1 2023		2022 ⁵		Q4 2022		Q3 2022		Q2 2022		Q1 2022		2021 ⁵		Q4 2021		Q3 2021
Peru Operations
Constancia ore mined¹	tonnes		1,242,198		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
Copper	%		0.30		0.31		0.34		0.35		0.40		0.36		0.33		0.32		0.31		0.33		0.30
Gold	g/tonne		0.04		0.04		0.04		0.04		0.04		0.05		0.04		0.04		0.04		0.04		0.04
Silver	g/tonne		2.91		2.49		2.52		3.40		3.48		3.38		3.53		3.22		2.88		2.81		2.76
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		5,894,013		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
Copper	%		0.53		0.36		0.49		0.33		0.37		0.29		0.29		0.27		0.27		0.27		0.27
Gold	g/tonne		0.30		0.34		0.52		0.29		0.29		0.23		0.28		0.43		0.30		0.34		0.27
Silver	g/tonne		4.22		2.81		5.12		4.06		3.84		4.30		4.25		4.06		4.02		4.26		3.58
Molybdenum	%		0.02		0.02		0.01		0.01		0.01		0.01		0.01		0.01		0.01		0.01		0.01
Strip Ratio			1.36		1.74		1.84		1.13		0.97		1.26		1.22		1.10		1.02		0.95		1.46
Ore milled	tonnes		7,895,109		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
Copper	%		0.43		0.31		0.33		0.34		0.41		0.34		0.32		0.31		0.32		0.33		0.30
Gold	g/tonne		0.21		0.09		0.08		0.09		0.12		0.08		0.09		0.08		0.08		0.11		0.11
Silver	g/tonne		3.75		2.78		3.69		3.58		3.93		3.48		3.64		3.26		3.35		3.67		3.93
Molybdenum	%		0.02		0.01		0.01		0.01		0.01		0.01		0.01		0.01		0.01		0.01		0.01
Copper recovery	%		85.2		80.0		81.7		85.0		85.1		84.5		85.0		85.3		84.6		86.0		84.9
Gold recovery	%		74.8		61.1		56.8		63.6		69.6		61.9		60.3		59.8		64.6		63.6		71.9
Silver recovery	%		73.2		65.1		60.7		65.7		66.5		65.2		64.2		66.9		63.7		60.8		59.1
Molybdenum recovery	%		37.2		40.5		34.8		34.8		37.7		41.0		38.8		21.1		31.5		26.7		33.5
Contained metal in concentrate
Copper	tonnes		29,081		17,682		20,517		89,395		27,047		22,302		20,880		19,166		77,813		22,856		18,072
Gold	ounces		40,596		12,998		11,206		58,229		20,860		12,722		13,858		10,789		50,306		17,917		17,531
Silver	ounces		697,211		419,642		552,167		2,309,352		655,257		564,299		584,228		505,568		1,972,949		578,140		521,036
Molybdenum	tonnes		466		414		289		1,377		344		437		390		207		1,146		275		282
Payable metal sold
Copper	tonnes		27,490		21,207		16,316		79,805		23,789		20,718		18,473		16,825		71,398		20,551		16,065
Gold	ounces		32,757		14,524		11,781		49,968		15,116		11,970		8,430		14,452		41,807		16,304		16,902
Silver	ounces		460,001		671,532		392,207		2,045,678		411,129		513,470		484,946		636,133		1,490,651		380,712		457,263
Molybdenum	tonnes		426		314		254		1,352		421		511		208		213		1,098		245		304
Peru combined unit operating cost ^2,3,4	$/tonne	$	12.20	$	14.07	$	11.47	$	12.78	$	13.64	$	13.06	$	12.02	$	12.37	$	10.70	$	9.96	$	10.93
Peru cash cost³	$/lb	$	0.83	$	2.14	$	1.36	$	1.58	$	1.34	$	1.68	$	1.82	$	1.54	$	1.54	$	1.28	$	1.26
Peru sustaining cash cost³	$/lb	$	1.51	$	3.06	$	2.12	$	2.35	$	2.09	$	2.46	$	2.62	$	2.27	$	2.46	$	2.46	$	2.31
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.

		Q3 2023	Q2 2023	Q1 2023	2022 ¹	Q4 2022	Q3 2022	Q2 2022	Q1 2022	2021 ¹	Q4 2021	Q3 2021
Manitoba Operations
Lalor ore mined	tonnes	367,491	413,255	373,599	1,516,203	369,453	347,345	412,653	386,752	1,593,141	422,208	392,380
Copper	%	1.02	0.81	0.57	0.73	0.73	0.71	0.70	0.80	0.71	0.78	0.86
Zinc	%	3.31	3.14	3.32	3.14	2.17	3.27	3.06	4.06	4.23	4.19	3.60
Gold	g/tonne	5.08	4.07	3.96	4.00	4.00	4.57	3.73	3.76	3.41	3.92	3.85
Silver	g/tonne	27.80	23.27	18.24	21.96	19.37	21.27	23.95	22.94	24.66	30.35	22.13
777 ore mined	tonnes	-	-	-	484,355	-	-	226,286	258,069	1,053,710	266,744	256,536
Copper	%	-	-	-	1.12	-	-	1.03	1.19	1.28	1.13	1.06
Zinc	%	-	-	-	3.83	-	-	3.51	4.12	3.91	4.16	3.88
Gold	g/tonne	-	-	-	1.66	-	-	1.62	1.69	2.03	1.80	1.96
Silver	g/tonne	-	-	-	20.85	-	-	20.63	21.05	25.25	25.02	22.99
Stall & New Britannia Concentrator Combined:
Ore milled	tonnes	402,443	380,538	385,661	1,510,907	345,492	362,108	406,006	397,301	1,506,756	419,727	408,201
Copper	%	0.93	0.82	0.60	0.75	0.73	0.69	0.73	0.82	0.72	0.75	0.82
Zinc	%	3.43	3.12	3.31	3.30	2.31	3.33	3.20	4.24	4.30	4.12	3.58
Gold	g/tonne	4.88	4.13	3.99	4.08	3.98	4.60	3.93	3.87	3.42	3.90	3.84
Silver	g/tonne	27.02	23.51	19.08	22.15	20.40	20.66	23.98	23.16	24.95	30.07	23.32
Copper recovery	%	95.2	89.4	88.8	88.6	89.2	88.3	89.5	87.5	86.8	88.7	84.3
Zinc recovery	%	74.6	73.8	84.4	79.0	79.4	80.9	75.5	85.7	88.9	87.4	88.2
Gold recovery	%	66.2	57.3	62.0	59.2	58.8	60.9	58.8	58.4	54.9	54.6	53.4
Silver recovery	%	64.3	58.9	58.8	58.1	56.1	57.6	58.1	60.0	54.4	53.9	52.7
Flin Flon Concentrator:
Ore milled	tonnes		-	-	497,344	-	-	243,312	254,032	1,133,516	262,565	258,062
Copper	%		-	-	1.11	-	-	1.02	1.20	1.23	1.12	1.06
Zinc	%		-	-	3.87	-	-	3.60	4.13	3.95	4.16	3.86
Gold	g/tonne		-	-	1.67	-	-	1.64	1.70	2.04	1.78	1.96
Silver	g/tonne		-	-	21.00	-	-	20.76	21.23	24.90	25.04	22.93
Copper recovery	%		-	-	86.7	-	-	85.5	87.6	87.7	86.7	85.2
Zinc recovery	%		-	-	83.0	-	-	82.9	83.2	83.0	83.1	82.2
Gold recovery	%		-	-	57.1	-	-	56.4	57.7	58.5	59.2	58.1
Silver recovery	%		-	-	51.8	-	-	51.0	52.5	45.1	45.6	42.4
¹Annual consolidated results may not calculate based on amounts presented in this table due to rounding.

			Q3 2023		Q2 2023		Q1 2023		2022 ⁴		Q4 2022		Q3 2022		Q2 2022			Q1 2022		2021 ⁴		Q4 2021		Q3 2021
Manitoba Operations (continued)
Total Manitoba contained metal in concentrate produced
Copper	tonnes		3,580		2,794		2,045		14,778		2,258		2,196		4,788			5,536		21,657		5,342		5,173
Zinc	tonnes		10,291		8,758		9,846		55,381		6,326		9,750		17,053			22,252		93,529		23,207		20,844
Gold	ounces		41,810		28,948		30,647		132,764		25,961		32,570		37,346			36,887		134,475		37,644		36,341
Silver	ounces		224,826		169,519		139,064		799,108		127,099		138,615		264,651			268,743		1,066,003		315,054		242,131
Precious metal in doré produced
Gold	ounces		14,403		6,305		5,387		28,707		7,099		7,887		7,441			6,280		9,002		8,598		404
Silver	ounces		39,926		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		2,925		1,871		2,225		14,668		1,626		4,081		5,177			3,784		20,802		4,408		5,071
Zinc¹	tonnes		7,125		8,641		5,628		59,043		8,230		12,714		20,793			17,306		96,435		21,112		21,619
Gold	ounces		36,713		33,009		37,939		163,447		32,140		54,962		42,454			33,891		126,551		40,623		30,941
Silver	ounces		197,952		133,916		149,677		932,807		148,177		302,946		253,225			228,458		936,857		257,928		244,338
Manitoba combined unit operating cost ^2,3	C$/tonne	$	217	$	220	$	216	$	195	$	241	$	235	$	168		$	176	$	154	$	168	$	147
Manitoba gold cash cost ^{3, 5}	$/oz	$	670	$	1,097	$	938	$	297	$	922	$	216	$	(207	)	$	416	$	-	$	-	$	-
Manitoba sustaining gold cash cost ^3,5	$/oz	$	939	$	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.

			Q3 2023	Q2 2023 ⁵	Q1 2023	2022	Q4 2022	Q3 2022	Q2 2022	Q1 2022	2021	Q4 2021	Q3 2021
British Columbia Operations ⁴
Ore mined¹	tonnes		3,792,568	555,423	-	-	-	-	-	-	-	-	-
Ore milled	tonnes		3,158,006	442,255	-	-	-	-	-	-	-	-	-
Copper	%		0.36	0.36	-	-	-	-	-	-	-	-	-
Gold	g/tonne		0.08	0.08	-	-	-	-	-	-	-	-	-
Silver	g/tonne		1.40	1.07	-	-	-	-	-	-	-	-	-
Copper recovery	%		80.9	77.69	-	-	-	-	-	-	-	-	-
Gold recovery	%		56.1	67.90	-	-	-	-	-	-	-	-	-
Silver recovery	%		71.3	78.60	-	-	-	-	-	-	-	-	-
Contained metal in concentrate
Copper	tonnes		9,303	1,239	-	-	-	-	-	-	-	-	-
Gold	ounces		4,608	745	-	-	-	-	-	-	-	-	-
Silver	ounces		101,069	11,918	-	-	-	-	-	-	-	-	-
Payable metal sold
Copper	tonnes		8,956	-	-	-	-	-	-	-	-	-	-
Gold	ounces		5,329	-	-	-	-	-	-	-	-	-	-
Silver	ounces		91,002	-	-	-	-	-	-	-	-	-	-
British Columbia combined unit operating cost ^2,3	C$/tonne	$	24.88	-	-	-	-	-	-	-	-	-	-
British Columbia cash cost³	$/lb	$	2.67	-	-	-	-	-	-	-	-	-	-
British Columbia sustaining cash cost³	$/lb	$	3.39	-	-	-	-	-	-	-	-	-	-
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 Includes 100% of Copper Mountain mine production. Hudbay owns 75% of Copper Mountain mine.
⁵ Production results from Copper Mountain operations represents the period from the June 20^th acquisition date through to the end of the second quarter of 2023.

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 September 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 July 1, 2023 and ended on September 30, 2023 that has materially affected, or is reasonably likely to materially affect, the issuer's ICFR.

Date: November 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 September 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: November 8, 2023

(signed) "Eugene Lei"

Eugene Lei
Chief Financial Officer

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