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

2


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

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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

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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."


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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.


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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.

2 Working 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.


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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

1 Metal 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 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.

4 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, 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.


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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 cost3,4,5 $/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

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

2 Reflects 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.

4 Excludes 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.



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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.

3 Includes 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.


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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.


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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 cost3,4 C$/tonne 24.88
Cash cost4 $/lb 2.67
Sustaining cash cost4 $/lb 3.39

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

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

3 Reflects 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.


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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 No. 24
   

2023 Production
and Cost Guidance
  Peru
Operations

(unchanged)
Manitoba
Operations

(unchanged)
British
Columbia
Operations
2
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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2023 No. 24
   

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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2023 No. 24
   

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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2023 No. 24
   

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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2023 No. 24
   

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


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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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2023 No. 24
   

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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2023 No. 24
   

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  

1 Contained copper in concentrate.


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2023 No. 24
   

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        

1 Per pound of copper produced.

2 By-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.

4 Depreciation is based on concentrate sold.

5 As 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  

1 Contained 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        

1 Per pound of copper produced.

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

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

4 Depreciation is based on concentrate sold.

5 As 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

1 Contained 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        

1 Per pound of copper produced.

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

3 Depreciation 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        

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

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

3 Includes 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              

1 Only 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  

1 Contained 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        

1 Per ounce of gold produced.

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

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

4 Depreciation 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  

1 G&A as per cash cost reconciliation above.

2 Other G&A primarily includes profit sharing costs.

3 As 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        

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.



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  

1 G&A as per cash cost reconciliation above.

2 As 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,
 
  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,
 
  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: