Hudbay Announces Fourth Quarter and Full Year 2022 Results and Provides Annual Guidance

Hudbay Minerals Inc.

TORONTO, Feb. 23, 2023 (GLOBE NEWSWIRE) -- Hudbay Minerals Inc. (“Hudbay” or the “company”) (TSX, NYSE:HBM) today released its fourth quarter and full year 2022 financial results and annual production and cost guidance. All amounts are in U.S. dollars, unless otherwise noted.

Fourth Quarter and Full Year Operating and Financial Results

• Achieved 2022 consolidated production guidance for all metals and consolidated cash cost and sustaining cash cost guidance.

• Full year consolidated copper production of 104,173 tonnes, consolidated gold production of 219,700 ounces and consolidated silver production of 3,161,294 increased by 5%, 13% and 4%, respectively, in 2022 compared to 2021.

• The Peru operations delivered strong performance in the fourth quarter with a 21% increase in copper production and a 64% increase in gold production, compared to the third quarter of 2022, as grades and recoveries improved. The fourth quarter of 2022 was a record quarter for gold production in Peru. Peru's cash cost per pound of copper produced, net of by-product creditsⁱ, improved to $1.34 in the fourth quarter, representing a 20% decline compared to the third quarter of 2022.

• The Manitoba operations saw a 6% increase in Lalor’s ore production in the fourth quarter compared to the third quarter of 2022, and the Lalor mine continues to ramp up following the transition of Flin Flon employees to Snow Lake. Manitoba’s full year gold cash cost per ounce of gold produced, net of by-product creditsⁱ, was 1% below the low end of the annual guidance range.

• Full year consolidated cash cost and sustaining cash cost per pound of copper produced, net of by-product creditsⁱ, were $0.86 and $2.07, respectively, and similar to 2021 levels, despite inflationary cost pressures which were offset by higher copper production and higher by-product credits.

• Fourth quarter net loss and loss per share were $17.4 million and $0.07, respectively. After adjusting for a non-cash loss of $13.5 million related to a quarterly revaluation of the Flin Flon environmental reclamation provision due to changes in real, long-term risk-free discount rates, and an $8.0 million revaluation loss related to the gold prepayment liability, among other items, fourth quarter adjusted earningsⁱ per share were $0.01.

• Operating cash flow before change in non-cash working capital was $109.1 million and adjusted EBITDAⁱ was $124.7 million in the fourth quarter, an increase of 34% and 26%, respectively, over the third quarter of 2022, benefiting from higher copper sales volumes and higher molybdenum prices and sales volumes, but negatively impacted by a temporary buildup of unsold inventory in Peru.

• Constancia continued to operate throughout nation-wide road blockades in Peru in December, and while the company was successful in completing two port shipments in December, inventory of approximately 25,000 wet metric tonnes of copper concentrate in Peru was unsold at the end of the quarter.

Executing on Growth Initiatives and Disciplined Capital Allocation

• Successful completion of recent brownfield investment program in 2022 with the Pampacancha satellite deposit contributing higher grade feed to Constancia and the New Britannia mill operating at targeted capacity.

• Invested approximately $80 million in 2022 to successfully execute a new strategy at Copper World focused on project de-risking. The pre-feasibility study for Phase I of Copper World is well-advanced with the main facility engineering completed and metallurgical test work being analyzed as part of the concentrate leaching trade off evaluations.

• Reached a community exploration agreement in 2022 to access the Maria Reyna and Caballito satellite properties located north of Constancia in Peru. Completed the surface investigation work needed to support drill permit applications.

• Initiated deep drilling at Lalor in January 2023 to test the down-dip gold and copper extensions and potentially unlock further value in Snow Lake.

• The Stall recovery improvement program is well-advanced and remains on track for completion in early 2023 with higher gold and copper recoveries expected to commence in the second quarter of 2023.

• Reinvigorated focus on free cash flow and delivered on discretionary spending reduction targets by reducing 2022 growth capital and exploration spending by approximately $30 million in Arizona, Manitoba and Peru.

• Reduced 2023 discretionary spending by more than $50 million primarily related to the deferral of the Copper World definitive feasibility study and the pebble crusher in Peru.

• Repaid approximately 50% of the original gold prepayment liability in 2022 and the company remains focused on reducing net debt throughout 2023.

• Prudent approach to capital allocation demonstrated with the introduction of three prerequisites for sanctioning Copper World, including a prudent financing strategy with multi-faceted financial targets focused on a minimum cash balance, a stated maximum leverage, limited non-recourse project level debt and committed financial partners.

“We delivered on our plan for higher copper production in Peru and higher gold production in Manitoba in 2022, as a result of the successful completion of approximately $250 million in brownfield investments,” said Peter Kukielski, President and Chief Executive Officer. “We are proud to have achieved consolidated production guidance as the team successfully managed the regional logistics and supply chain challenges in Peru at the end of the year and we benefitted from the ongoing optimization efforts at our Snow Lake operations. Our focus for 2023 is to generate free cash flow through continued increases in copper and gold production and remain disciplined with capital allocation as we de-risk the Copper World project in Arizona and unlock value from our exciting pipeline of organic growth opportunities.”

2023 Annual Guidance and Outlook

• Consolidated copper production is forecast to increase by 10%ⁱⁱ to 114,000ⁱⁱ tonnes in 2023, compared to 2022, with higher grades from the Pampacancha deposit in Peru.

• Consolidated gold production is forecast to increase by 30%ⁱⁱ to 285,500ⁱⁱ ounces, compared to 2022, due to significantly higher gold production in Peru and Manitoba.

• Consolidated copper and gold production is expected to further increase in 2024, similar to the previously issued guidance, and 2025 copper and gold production is expected to benefit from an extension of mining activities at Pampacancha into the first half of 2025.

• Consolidated cash cost, net of by-product creditsⁱ, in 2023 is expected to decline by 30%ⁱⁱ and be within a range of $0.40 and $0.80 per pound of copper as a result of higher copper production and gold by-product credits.

• Approximately $65 million reduction in growth capital expenditures and exploration spending is expected in 2023 compared to 2022.

• Total capital expenditures are expected to decline by 13% year-over-year to $300 million in 2023.

• Exploration expenditures are expected to decline by 61% in 2023 as activities are focused on areas with high potential for new discovery and mineral reserve and resource expansion.

Summary of Fourth Quarter Results

Consolidated copper production in the fourth quarter of 2022 was 29,305 tonnes, an increase of 20% compared to the third quarter of 2022, primarily due to higher copper grades in Peru. Consolidated gold production in the fourth quarter of 2022 was 53,920 ounces, a slight increase from the third quarter of 2022 as higher gold grades in Peru partially offset lower Lalor gold grades in Manitoba.

Consolidated cash cost per pound of copper produced, net of by-product creditsⁱ, was $1.08 in the fourth quarter of 2022, compared to $0.58 in the third quarter of 2022. This increase was a result of lower zinc and precious metal sales volumes and continued inflationary cost pressures, partially offset by higher copper production. Consolidated sustaining cash cost per pound of copper produced, net of by-product creditsⁱ, was $2.21 in the fourth quarter of 2022 compared to $1.91 in the third quarter of 2022. This increase was primarily due to the same reasons outlined above and higher capitalized exploration, slightly offset by lower sustaining capital expenditures. Consolidated all-in sustaining cash cost per pound of copper produced, net of by-product creditsⁱ, was $2.41 in the fourth quarter of 2022, higher than $2.16 in the third quarter of 2022, due to the same reasons outlined above.

Cash generated from operating activities in the fourth quarter of 2022 decreased to $86.4 million compared to $172.5 million in the third quarter of 2022, primarily due to a decrease in changes in non-cash working capital. Peru operations were impacted by increasing social unrest following a change in political leadership in December 2022, which resulted in lower-than-planned grades in the fourth quarter. Constancia continued to operate throughout these disruptions with the continued strong support from the local communities and the company’s local workforce. Operating cash flow before change in non-cash working capital was $109.1 million during the fourth quarter of 2022, reflecting an increase from $81.6 million in the third quarter of 2022, primarily as a result of higher copper, gold and molybdenum prices and higher copper sales volumes.

Net loss and loss per share in the fourth quarter of 2022 were $17.4 million and $0.07, respectively, compared to a net loss and loss per share of $8.1 million and $0.03, respectively, in the third quarter of 2022. The 2022 fourth quarter results were negatively impacted by a non-cash loss of $13.5 million related to the quarterly revaluation of the Flin Flon environmental reclamation provision due to changes in real, long-term discount rates, an $8.0 million revaluation loss related to the gold prepayment liability and a $5.8 million loss on changes to other provisions. These costs were offset by a $2.4 million Manitoba post-employment plan curtailment gain.

Adjusted net earningsⁱ and adjusted net earnings per shareⁱ in the fourth quarter of 2022 were $2.6 million and $0.01 per share, respectively, after adjusting for the non-cash revaluation loss of the environmental reclamation provision and the revaluation loss related to the gold prepayment liability, among other items. This compares to adjusted net lossⁱ and adjusted net loss per shareⁱ of $12.4 million, and $0.05 in the third quarter of 2022. Fourth quarter adjusted EBITDAⁱ was $124.7 million, an increase of 26% from $99.3 million in the third quarter of 2022.

As at December 31, 2022, the company’s liquidity includes $225.7 million in cash as well as undrawn availability of $354.3 million under its revolving credit facilities. Hudbay expects that its current liquidity combined with cash flow from operations, will be sufficient to meet the company’s liquidity needs for the foreseeable future.

Summary of Full Year Results

Hudbay achieved its 2022 consolidated production guidance for all metals. However, production of copper and gold was at the lower end of the guidance range primarily due to lower-than-planned grades in the fourth quarter in Peru caused by short-term mine plan changes that were implemented to mitigate the risks associated with logistical and supply chain disruptions in Peru.

Consolidated cash costs per pound of copper produced, net of by-product creditsⁱ, in 2022 was $0.86 compared to $0.74 in 2021 and consolidated sustaining cash cost per pound of copper produced, net of by-product creditsⁱ, in 2022 remained substantially unchanged from 2021 at $2.07. Both measures remained in line with the 2022 guidance ranges.

Cash generated from operating activities increased to $487.8 million in 2022 from $385.1 million in 2021. A portion of the increase is due to changes in non-cash working capital caused primarily by timing and changes in provisionally priced receivables and changes to other financial assets, liabilities and inventories. Operating cash flow before changes in non‑cash working capital decreased to $391.7 million from $483.9 million in 2021. The decrease is the result of lower copper prices, lower zinc sales volumes and inflationary cost pressures on mine operating costs, partially offset by higher zinc prices and higher gold sales volumes. Zinc sales volumes were lower than the prior year due to the planned closure of the company’s 777 mine in June 2022.

Net earnings and earnings per share for 2022 were $70.4 million and $0.27, respectively, compared to a net loss and loss per share of $244.4 million and $0.93, respectively, in 2021. The prior period results were negatively impacted by a $193.5 million revaluation of the Flin Flon environmental reclamation provision resulting in an impairment charge of the same amount as well as a $66.7 million in mark-to-market loss mostly from $49.8 million of write-offs for a non-cash embedded derivative on the early redemption option associated with the company’s extinguished senior unsecured notes. Full year 2022 net earnings benefited from a non-cash gain of $133.5 million related to the revaluation of the Flin Flon environmental reclamation provision. The full year 2022 financial results were negatively impacted by a $95.0 million pre-tax impairment loss related to certain specific capitalized costs and assets associated with the previous stand-alone development plan for the Rosemont deposit, which were determined to no longer be recoverable.

Financial Condition ($000s)	Dec. 31, 2022	Sep. 30, 2022	Dec. 31, 2021
Cash and cash equivalents	225,665	286,117	270,989
Total long-term debt	1,184,162	1,183,237	1,180,274
Net debt1	958,497	897,120	909,285
Working capital2	76,534	99,807	147,512
Total assets	4,325,943	4,287,794	4,616,231
Equity	1,571,809	1,570,889	1,476,828

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 Reporting 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 financial statements.

Financial Performance		Three Months Ended
		Dec. 31, 2022		Sep. 30, 2022			Dec. 31, 2021
Revenue	$000s	321,196		346,171			425,170
Cost of sales	$000s	251,520		313,741			343,426
(Loss) earnings before tax	$000s	(14,287	)	(263		)	(149	)
Net (loss) earnings	$000s	(17,441	)	(8,135		)	(10,453	)
Basic and diluted (loss) earnings per share	$/share	(0.07	)	(0.03		)	(0.04	)
Adjusted earnings (loss) per share1	$/share	0.01		(0.05		)	0.13
Operating cash flow before change in non-cash working capital	$ millions	109.1		81.6			156.9
Adjusted EBITDA1	$ millions	124.7		99.3			180.8
		Year Ended
		Dec. 31, 2022			Dec. 31, 2021
Revenue	$000s	1,461,440			1,501,998
Cost of sales	$000s	1,184,552			1,370,979
Earnings (loss) before tax	$000s	95,815			(202,751			)
Net earnings (loss)	$000s	70,382			(244,358			)
Basic and diluted (loss) earnings per share	$/share	0.27			(0.93			)
Adjusted earnings per share1	$/share	0.10			0.09
Operating cash flow before change in non-cash working capital	$ millions	391.7			483.9
Adjusted EBITDA1	$ millions	475.9			547.8
1 Adjusted earnings (loss) 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 Reporting Measures” section of this news release.

Consolidated Production and Cost Performance		Three Months Ended
		Dec. 31, 2022	Sep. 30, 2022		Dec. 31, 2021
Contained metal in concentrate and doré produced1
Copper	tonnes	29,305	24,498		28,198
Gold	ounces	53,920	53,179		64,159
Silver	ounces	795,015	717,069		899,713
Zinc	tonnes	6,326	9,750		23,207
Molybdenum	tonnes	344	437		275
Payable metal sold
Copper	tonnes	25,415	24,799		24,959
Gold2	ounces	47,256	66,932		56,927
Silver2	ounces	559,306	816,416		638,640
Zinc3	tonnes	8,230	12,714		21,112
Molybdenum	tonnes	421	511		245
Consolidated cash cost per pound of copper produced4
Cash cost	$/lb	1.08	0.58		0.51
Sustaining cash cost	$/lb	2.21	1.91		1.95
All-in sustaining cash cost	$/lb	2.41	2.16		2.20
		Year Ended
		Dec. 31, 2022		Dec. 31, 2021
Contained metal in concentrate and doré produced1
Copper	tonnes	104,173		99,470
Gold	ounces	219,700		193,783
Silver	ounces	3,161,294		3,045,481
Zinc	tonnes	55,381		93,529
Molybdenum	tonnes	1,377		1,146
Payable metal sold
Copper	tonnes	94,473		92,200
Gold2	ounces	213,415		168,358
Silver2	ounces	2,978,485		2,427,508
Zinc3	tonnes	59,043		96,435
Molybdenum	tonnes	1,352		1,098
Consolidated cash cost per pound of copper produced4
Cash cost	$/lb	0.86		0.74
Sustaining cash cost	$/lb	2.07		2.07
All-in sustaining cash cost	$/lb	2.26		2.30

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 Includes refined zinc metal sold and payable zinc in concentrate 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 Reporting Measures” section of this news release.

Peru Operations Review

Peru Operations		Three Months Ended				Year Ended
		Dec. 31, 2022	Sep. 30, 2022	Dec. 31, 2021	Dec. 31, 2022		Dec. 31, 2021
Constancia ore mined1	tonnes	5,614,918	6,300,252	7,742,469	25,840,435		29,714,327
Copper	%	0.40	0.36	0.33	0.35		0.31
Gold	g/tonne	0.04	0.05	0.04	0.04		0.04
Silver	g/tonne	3.48	3.38	2.81	3.40		2.88
Molybdenum	%	0.01	0.01	0.01	0.01		0.01
Pampacancha ore mined1	tonnes	3,771,629	2,488,928	2,107,196	8,319,250		5,141,001
Copper	%	0.37	0.29	0.27	0.33		0.27
Gold	g/tonne	0.29	0.23	0.34	0.29		0.30
Silver	g/tonne	3.84	4.30	4.26	4.06		4.02
Molybdenum	%	0.01	0.01	0.01	0.01		0.01
Total ore mined	tonnes	9,386,547	8,789,180	9,849,665	34,159,685		34,855,328
Strip Ratio2		0.97	1.26	0.95	1.13		1.02
Ore milled	tonnes	7,795,735	7,742,020	8,048,925	30,522,294		28,809,755
Copper	%	0.41	0.34	0.33	0.34		0.32
Gold	g/tonne	0.12	0.08	0.11	0.09		0.08
Silver	g/tonne	3.93	3.48	3.67	3.58		3.35
Molybdenum	%	0.01	0.01	0.01	0.01		0.01
Copper recovery	%	85.1	84.5	86.0	85.0		84.6
Gold recovery	%	69.6	61.9	63.6	63.6		64.6
Silver recovery	%	66.5	65.2	60.8	65.7		63.7
Molybdenum recovery	%	37.7	41.0	26.7	34.8		31.5
Contained metal in concentrate
Copper	tonnes	27,047	22,302	22,856	89,395		77,813
Gold	ounces	20,860	12,722	17,917	58,229		50,306
Silver	ounces	655,257	564,299	578,140	2,309,352		1,972,949
Molybdenum	tonnes	344	437	275	1,377		1,146
Payable metal sold
Copper	tonnes	23,789	20,718	20,551	79,805		71,398
Gold	ounces	15,116	11,970	16,304	49,968		41,807
Silver	ounces	411,129	513,470	380,712	2,045,678		1,490,651
Molybdenum	tonnes	421	511	245	1,352		1,098
Combined unit operating cost3,4,5	$/tonne	13.64	13.06	9.96	12.78		10.70
Cash cost4,5	$/lb	1.34	1.68	1.28	1.58		1.54
Sustaining cash cost4,5	$/lb	2.09	2.46	2.46	2.35		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 Strip ratio is calculated as waste mined divided by ore mined.
³ Reflects combined mine, mill and general and administrative ("G&A") costs per tonne of ore milled. Reflects the deduction of expected capitalized stripping costs.
⁴ Combined unit 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 and a detailed reconciliation, please see the discussion under the "Non-IFRS Financial Reporting Measures" section of this news release.
⁵ Excludes approximately $0.7 million, or $0.09 per tonne, of COVID-19 related costs during the three months ended December 31, 2022, $0.9 million, or $0.12 per tonne, of COVID-19 related costs during the three months ended September 30, 2022 and $4.1 million, or $0.51 per tonne, during the three months ended December 31, 2021.Excludes approximately $5.2 million, or $0.17 per tonne, of COVID-19 related costs during the twelve months ended December 31, 2022 and $19.8 million or $0.69 per tonne, of COVID-19 related costs during the twelve months ended December 31, 2021.

During the fourth quarter of 2022, the Constancia operations produced 27,047 tonnes of copper, 20,860 ounces of gold, 655,257 ounces of silver and 344 tonnes of molybdenum. Production of copper, gold and silver was 21%, 64% and 16% higher than the third quarter of 2022 due to higher grades and recoveries, partially offset by a planned mill maintenance shutdown in November. The fourth quarter of 2022 was a record quarter for gold production in Peru.

Full year 2022 production of copper increased by 15% year-over-year to 89,395 tonnes, within the guidance range. Similarly, full year 2022 production of gold, silver and molybdenum increased by 16%, 17% and 20%, respectively, compared to 2021 due to higher throughput, higher copper and precious metal grades and higher copper, silver and molybdenum recoveries. Molybdenum production was in line with annual guidance range, whereas silver production exceeded the top end of the annual guidance range by 10%. Gold production fell short of the annual guidance range primarily due to lower-than-planned grades from the Pampacancha pit in the fourth quarter of 2022 as a result of short-term changes in the mine plan, as described below.

Total ore mined in the fourth quarter of 2022 increased by 7% compared to the third quarter of 2022, despite a short-term change in the mine plan that prioritized the processing of lower grade stockpiles and shorter haulage distance ore from the Constancia pit. These changes were implemented to ration fuel during a period of nation-wide social unrest and road blockades following a change in Peru's political leadership in early December 2022, and ensured the plant continued to operate uninterrupted. Despite impacts on the ability to steadily receive fuel and transport concentrates, the Constancia mill continued to operate throughout these disruptions as the company implemented plans to mitigate the risk to its operations with strong support from the local communities, the company’s local workforce and the community-owned concentrate transportation companies.

Ore milled during the fourth quarter of 2022 was slightly higher than the third quarter of 2022 despite the impact of the planned mill maintenance program in November. Milled copper grades increased by 21% in the fourth quarter of 2022 compared to the third quarter due to higher head grades from both Pampacancha and Constancia. Copper, gold and silver recoveries in the fourth quarter of 2022 were higher than the third quarter of 2022 due to higher milled grades, and the fourth quarter achieved a record quarterly gold recovery rate of 70%.

Combined mine, mill and G&A unit operating costsⁱ in the fourth quarter of 2022 were 4% higher than the third quarter of 2022, primarily due to higher mining costs from continued inflationary pressures. Full year combined mine, mill and G&A unit operating costs for 2022 were 19% higher than the same period in 2021 due to a higher strip ratio, higher mining costs and inflationary pressures on fuel, consumables and energy costs, partially offset by higher ore milled.

Peru’s cash cost per pound of copper produced, net of by-product creditsⁱ, in the fourth quarter of 2022 declined by 20% to $1.34, compared to $1.68 in the third quarter, primarily due to higher copper production and higher by-product credits resulting from higher grades in the fourth quarter. Peru’s full year cash cost per pound of copper produced, net of by-product creditsⁱ, was $1.58, a slight increase of 3% compared to the same period of 2021. This exceeded the upper end of the 2022 guidance range primarily due to higher mining and milling costs from input cost inflation and lower than expected by-product credits due to lower-than-expected gold grades from Pampacancha in the fourth quarter of 2022, as described above.

Peru’s sustaining cash cost per pound of copper produced, net of by-product creditsⁱ, in the fourth quarter of 2022 declined by 15% to $2.09, compared to $2.46 in the third quarter, primarily due to the same factors affecting cash cost and lower sustaining capital expenditures, partially offset by higher capitalized exploration. Peru’s full year sustaining cash cost per pound of copper produced, net of by-product creditsⁱ, declined by 4% compared to 2021, due to lower sustaining capital expenditures and higher copper and gold production, offset, in part, by higher mining and milling costs from input cost inflation.

While Hudbay was able to complete two copper concentrate shipments from the Matarani port during December, Peru's copper, gold and silver sales in the fourth quarter of 2022 were impacted by higher-than-normal unsold copper concentrate inventory levels of approximately 25,000 wet metric tonnes as at December 31, 2022, due to the nation-wide road blockades in early December. Hudbay has been able to steadily operate the Constancia mill throughout the recent road blockades, and despite completing three copper concentrate shipments from the port in January, Peru’s copper concentrate inventory levels at site reached a peak of approximately 47,000 wet metric tonnes in mid-February when transportation of concentrate resumed with the assistance of the community-based concentrate trucking companies. Hudbay expects concentrate inventory levels to normalize over the next several months.

Manitoba Operations Review

Manitoba Operations		Three Months Ended				Year Ended
		Dec. 31, 2022		Sep. 30, 2022	Dec. 31, 2021	Dec. 31, 2022	Dec. 31, 2021
Lalor ore mined	tonnes	369,453		347,345	422,208	1,516,203	1,593,141
Copper	%	0.73		0.71	0.78	0.73	0.71
Zinc	%	2.17		3.27	4.19	3.14	4.23
Gold	g/tonne	4.00		4.57	3.92	4.00	3.41
Silver	g/tonne	19.37		21.27	30.35	21.96	24.66
777 ore mined	tonnes	—		—	266,744	484,355	1,053,710
Copper	%	—		—	1.13	1.12	1.28
Zinc	%	—		—	4.16	3.83	3.91
Gold	g/tonne	—		—	1.80	1.66	2.03
Silver	g/tonne	—		—	25.02	20.85	25.25
Stall Concentrator & New Britannia Mill:
Ore milled	tonnes	345,492		362,108	419,727	1,510,907	1,506,756
Copper	%	0.73		0.69	0.75	0.75	0.72
Zinc	%	2.31		3.33	4.12	3.30	4.30
Gold	g/tonne	3.98		4.60	3.90	4.08	3.42
Silver	g/tonne	20.40		20.66	30.07	22.15	24.95
Copper recovery - concentrate	%	89.2		88.3	88.7	88.6	86.8
Zinc recovery - concentrate (Stall)	%	90.1		88.0	87.4	86.6	88.9
Gold recovery - concentrate	%	58.8		60.9	54.6	59.2	54.9
Silver recovery - concentrate	%	56.1		57.6	53.9	58.1	54.4
Flin Flon Concentrator:
Ore milled	tonnes	—		—	262,565	497,344	1,133,516
Copper	%	—		—	1.12	1.11	1.23
Zinc	%	—		—	4.16	3.87	3.95
Gold	g/tonne	—		—	1.78	1.67	2.04
Silver	g/tonne	—		—	25.04	21.00	24.90
Copper recovery	%	—		—	86.7	86.7	87.7
Zinc recovery	%	—		—	83.1	83.0	83.0
Gold recovery	%	—		—	59.2	57.1	58.5
Silver recovery	%	—		—	45.6	51.8	45.1
Total contained metal in concentrate and doré
Copper	tonnes	2,258		2,196	5,342	14,778	21,657
Zinc	tonnes	6,326		9,750	23,207	55,381	93,529
Gold	ounces	33,060		40,457	46,242	161,471	143,477
Silver	ounces	139,758		152,770	321,573	851,942	1,072,532
Total payable metal sold
Copper	tonnes	1,626		4,081	4,408	14,668	20,802
Zinc1	tonnes	8,230		12,714	21,112	59,043	96,435
Gold2	ounces	32,140		54,962	40,623	163,447	126,551
Silver2	ounces	148,177		302,946	257,928	932,807	936,857
Combined unit operating cost3,4	C$/tonne	241		235	168	195	154
Gold cash cost4,5	$/oz	922		216	—	297	—
Gold sustaining cash cost4,5	$/oz	1,795		1,045	—	1,091	—

¹ Includes refined zinc metal sold and payable zinc in concentrate sold.
² Includes total payable precious metals in concentrate and in doré sold.
³ Reflects combined mine, mill and G&A costs per tonne of ore milled.
⁴ Combined unit cost, cash cost, sustaining cash cost per ounce of gold produced, net of by-product credits, are non-IFRS financial performance measures with no standardized definition under IFRS. For further information, please see the “Non-IFRS Financial Reporting Measures” section of this news release.
⁵ Cash cost and sustaining cash cost per ounce of gold produced, net of by-product credits, were introduced in 2022 and do not have a published comparative for 2021.

During the fourth quarter of 2022, the Manitoba operations produced 33,060 ounces of gold, 2,258 tonnes of copper, 6,326 tonnes of zinc and 139,758 ounces of silver. Gold, zinc and silver production was lower than the third quarter of 2022 primarily as a result of lower grades at Lalor, in line with the mine plan. Year-over-year metal production was impacted by the planned closure of 777 in June 2022, resulting in a decrease in copper, zinc and silver production, while full year gold production increased by 13%, compared to the prior year, as New Britannia ramped up to full production. Full year production of all metals in Manitoba achieved the 2022 annual guidance ranges.

During the fourth quarter of 2022, the Manitoba team continued to focus on integrating the Flin Flon employees and equipment into the Snow Lake operations and reducing reliance on higher cost contractors. Lalor's ore production during the quarter was impacted by a planned maintenance program to replace surface ore chutes as well as various other pre-winter maintenance activities including the muck circuit, hoist drive and electrical maintenance. The company continues to advance several key initiatives to support higher production levels at Lalor, including building longhole inventory, improving stope muck fragmentation, optimizing the development drift size and focusing on shaft availability improvements to enable more ore to be hoisted to surface while reducing inefficient trucking of ore via the ramp.

Ore mined at Lalor increased by 6% in the fourth quarter of 2022, compared to the third quarter of 2022, mainly due to the higher production initiatives and the integration of the Flin Flon employees and equipment, partially offset by the planned maintenance program mentioned above. Gold, zinc and silver grades mined during the fourth quarter of 2022 were lower than the third quarter and copper grades were higher.

The combined Snow Lake mills processed 5% less ore in the fourth quarter of 2022 compared to the third quarter of 2022, mainly due to the above noted transition and planned maintenance program impacting Lalor and the milling operations. Stall recoveries were consistent with the metallurgical model for the head grades delivered. The New Britannia mill continued to achieve consistent production in the fourth quarter, averaging approximately 1,530 tonnes per day. Metal recoveries have now stabilized near targeted levels for the mill. Additional improvement initiatives will continue to be advanced in the upcoming quarters with a focus on reducing reagent and grinding media consumption, which has contributed to higher operating costs than planned. These initiatives require minimal capital expenditures and will further improve overall metal recoveries and copper concentrate grades.

Combined mine, mill and G&A unit operating costsⁱ in the fourth quarter of 2022 were at similar levels compared to the third quarter of 2022. Full year 2022 combined unit operating costs increased by 27% compared to 2021, reflecting the standalone higher cost structure of Snow Lake after the closure of the 777 mine and the Flin Flon operations in mid-2022. As previously disclosed, combined unit operating costs for 2022 have exceeded the upper end of the guidance range by 5% due to ongoing inflationary cost pressures and the Snow Lake transition.

Manitoba’s cash cost per ounce of gold produced, net of by-product creditsⁱ, in the fourth quarter of 2022 was $922, higher than the third quarter of 2022, primarily due to lower by-product credits and lower gold production. This was partially offset by lower mining, milling and general and administrative costs as well as lower treatment, refining and freight costs. However, full year 2022 cash cost per ounce of gold produced, net of by-product creditsⁱ, was $297, 1% below the low end of the 2022 guidance range.

Manitoba’s sustaining cash cost per ounce of gold produced, net of by-product creditsⁱ, in the fourth quarter was $1,795, higher than the third quarter of 2022, primarily due to the same factors affecting cash cost, partially offset by lower sustaining capital expenditures.

Commitment to Climate Change Initiatives

On December 12, 2022, Hudbay announced its commitment to achieve net zero greenhouse gas ("GHG") emissions by 2050 and the adoption of interim 2030 GHG reduction targets to support this commitment. The company initiated a roadmap to further identify and manage risks associated with climate change, and opportunities to reduce GHG emissions in alignment with global decarbonization goals.

While Hudbay’s operations are well-positioned in the lower half of the global GHG emissions curve for copper operations, the company recognizes its role in mitigating climate change. Hudbay’s GHG emissions reduction plan includes the following initiatives:

• Pursuing a 50% reduction in absolute Scope 1 and Scope 2 emissions from existing operations by 2030 (compared to 2021)

• Achieving net zero total emissions by 2050

• Reporting on material Scope 3 emissions in the near-term

• Assessing acquisitions and new projects against corporate emissions targets

• Continuing to be transparent with GHG performance data disclosure, including reporting total GHG emissions and GHG intensity

Hudbay's efforts have been focused on improving operating efficiencies to reduce the GHG emissions intensity at its mines through initiatives such as ore sorting and recovery improvement programs. The company has identified multiple opportunities to achieve further reductions in emissions, including grid decarbonization in Peru, fleet and heating electrification and fuel switching in mobile equipment. Hudbay will continue to monitor and evaluate existing and new technologies as they become financially viable to implement at the company’s operations. The company will also consider emissions reduction opportunities in the design of its brownfield and greenfield growth projects. All initiatives will balance emissions and economic targets as part of the company’s disciplined capital allocation strategy.

Advancing Activities to Prudently De-risk Copper World

In 2022, Hudbay invested approximately $80 million at Copper World to successfully execute a new strategy focused on a two-phase mine plan with the first phase located on private land claims. This strategy involved significant drilling campaigns to delineate seven newly discovered deposits adjacent to the known East deposit, the expansion of the company’s private land package to over 4,500 acres, and the completion of a robust preliminary economic assessment for Copper World demonstrating a 16-year mine plan for Phase I, requiring only state level permits, and an expansion to a 44-year operation in Phase II with the utilization of federal lands.

Hudbay continues to advance pre-feasibility activities for Phase I of the Copper World project, which is expected to support the conversion of mineral resources to mineral reserves and optimize the layout and sequencing of the mineral processing facilities, in addition to evaluating other upside opportunities. Pre-feasibility level engineering of the main processing facility was completed by year-end together with geotechnical and hydrogeological site investigation activities. Metallurgical test work activities continued into 2023 and the results are being analyzed as part of concentrate leaching trade off evaluations. A pre-feasibility study for Phase I of the Copper World project is expected to be released in the second quarter of 2023.

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"). Hudbay continues to expect to receive these two remaining state permits in 2023. The other key state permit, the Mined Land Reclamation Plan, was received in 2022. In January 2023, Hudbay received an approved right-of-way from the State Land Department that will allow for infrastructure, such as roads, pipelines and powerlines, to connect between the properties in the company’s private land package at Copper World.

Upon receipt of the state level permits, the company expects to conduct a bulk sampling program at Copper World to continue to de-risk the project by testing grade continuity, variable cut-off effectiveness and metallurgical strategies. Hudbay also intends to initiate a minority joint venture partner process following receipt of permits, which will allow the potential joint venture partner to participate in and help fund the definitive feasibility study activities in 2024.

Continued Focus on Cost Reductions and Capital Discipline

With a focus on generating positive cash flow, Hudbay delivered on its discretionary spending reduction targets by reducing 2022 growth capital and exploration spending by approximately $30 million in Arizona, Manitoba and Peru. The company also reduced planned 2023 discretionary spending by more than $50 million primarily related to the deferral of the Copper World definitive feasibility study and the pebble crusher in Peru. Furthermore, planned 2023 growth and exploration expenditures are expected to be approximately $65 million lower than 2022 levels.

As an additional prudent measure intended to ensure positive cash flow generation and continued financial discipline, Hudbay expects to extend its existing quotational period hedging program to cover approximately 13,000 tonnes of contained copper in the unsold concentrate inventory in Peru to lock in current copper prices.

The company expects spending on its Copper World project in 2023 will be limited to de-risking activities, including the completion of the pre-feasibility study and state level permitting. The opportunity to sanction Copper World is not expected until 2025 based on current estimated timelines. This, together with the company’s 2023 discretionary spending reductions, reflects a conservative approach to capital spending at Copper World over the next two years. As part of Hudbay’s disciplined financial planning approach to Copper World, the company identified three specific prerequisites that would need to be achieved prior to making an investment decision in the project:

1. Permits – receipt of all state level permits required for Phase I;

2. Plan – completion of a definitive feasibility study with an internal rate of return of greater than 15%; and

3. Prudent Financing Strategy – multi-faceted financial targets focused on a minimum cash balance, a stated maximum leverage, limited non-recourse project level debt and committed financial partners.

Exploration Update

Peru Regional Exploration

Hudbay controls a large, contiguous block of mineral rights with the potential to host mineral deposits within trucking distance of the Constancia processing facility, including the past producing Caballito property and the highly prospective Maria Reyna property. Following the execution of a surface rights exploration agreement with the community of Uchucarcco in August 2022, the company has commenced early exploration activities at the Maria Reyna and Caballito properties. Surface investigation activities together with baseline environmental and archaeological activities necessary to support drill permit applications for the Maria Reyna and Caballito prospects have been completed. Ground geophysical surveys commenced in the fourth quarter of 2022 and will continue once the Peruvian social situation improves. Field evidence confirms that both Caballito and Maria Reyna host sulfide and oxide rich copper mineralization in skarns, hydrothermal breccias and large porphyry intrusive bodies.

Recent activities at the Llaguen copper-molybdenum porphyry deposit in the Otuzco province in northern Peru have been focused on initiating metallurgical test work.

Manitoba Regional Exploration

Hudbay commenced a winter drill program in January 2023 with four drill rigs testing the down-dip gold and copper extensions of the Lalor deposit, which is the first time the company has completed step-out drilling in the deeper zones at Lalor since the initial discovery of the gold and copper-gold zones in 2009 and 2010. One additional drill rig is testing a target located to the north of Lalor.

Arizona Regional Exploration

Recent drilling activities at Copper World have focused on close spaced infill drilling to support potential future bulk sampling programs. This drilling is now completed, and no additional drilling is planned for 2023.

Nevada Regional Exploration

A conductivity-resistivity IP ground survey commenced in the fourth quarter of 2022 on Hudbay’s private land claims near the Mason project. This work, in combination with a re-interpretation of geological data from past operating mines and previous exploration data, will be used to finalize a future drill plan to test high grade skarn targets.

2023 Key Objectives and Annual Guidance

Hudbay’s key objectives for 2023 are to:

• Deliver copper and gold production growth with low cash costs driven by efficient operations;

• Position Hudbay to unlock its copper development pipeline through generating cash flow, managing discretionary spending, deleveraging and achieving strong returns on invested capital;

• De-risk the Copper World project through the completion of pre-feasibility studies, state permitting activities, evaluating a bulk sampling program and a potential joint venture partnership;

• Progress Constancia's leading efficiency metrics by applying smart technologies to continuously improve operating performance, including sensor-based ore sorting and the mill recovery improvement project;

• Advance plans to drill the prospective Maria Reyna and Caballito properties near Constancia;

• Continue to navigate the complex environment in Peru while maintaining aligned and supportive relationships with local communities;

• Execute expansion opportunities in Snow Lake with the completion of the Stall mill recovery improvement program and the ramp up beyond 4,650 tonnes per day at Lalor;

• Test the down-dip extensions at Lalor where the gold and copper zones remain open at depth and have the potential to expand Snow Lake gold mineralization beyond the current 2.4 million ounces of reserves and 1.7 million ounces of resources;

• Investigate opportunities to utilize the operating infrastructure in Snow Lake for potential future tailings reprocessing;

• Assess opportunities to reduce greenhouse gas emissions in alignment with the company’s climate change commitments and global decarbonization goals;

• Prudently advance the three pre-requisites plan required for Copper World sanctioning; and

• Evaluate and execute growth opportunities that meet the company’s stringent strategic criteria and allocate capital to pursue those opportunities that create sustainable value for the company and its stakeholders.

Hudbay’s annual production and operating cost guidance, along with its annual capital and exploration expenditure forecasts are discussed in detail below.

Production Guidance

Contained Metal in Concentrate and Doré1		2023 Guidance	Year Ended Dec. 31, 2022	2022 Guidance
Peru
Copper	tonnes	91,000 - 116,000	89,395	89,000 - 115,000
Gold	ounces	83,000 - 108,000	58,229	70,000 - 90,000
Silver	ounces	2,210,000 - 2,650,000	2,309,352	1,620,000 - 2,100,000
Molybdenum	tonnes	1,300 - 1,600	1,377	1,100 - 1,400
Manitoba
Gold	ounces	175,000 - 205,000	161,471	150,000 - 185,000
Zinc	tonnes	28,000 - 36,000	55,381	50,000 - 70,000
Copper	tonnes	9,000 - 12,000	14,778	12,000 - 16,000
Silver	ounces	750,000 - 1,000,000	851,942	800,000 - 1,100,000
Total
Copper	tonnes	100,000 - 128,000	104,173	101,000 - 131,000
Gold	ounces	258,000 - 313,000	219,700	220,000 - 275,000
Zinc	tonnes	28,000 - 36,000	55,381	50,000 - 70,000
Silver	ounces	2,960,000 - 3,650,000	3,161,294	2,420,000 - 3,200,000
Molybdenum	tonnes	1,300 - 1,600	1,377	1,100 - 1,400
1 Metal reported in concentrate and doré is prior to refining losses or deductions associated with smelter terms.

On a consolidated basis, Hudbay met 2022 production guidance for all metals. Consolidated copper and gold production was on the lower end of the guidance range primarily due to lower-than-planned grades in the fourth quarter of 2022 in Peru due to short-term mine plan changes that were implemented to mitigate the risks associated with logistical and supply chain disruptions in Peru.

In 2023, consolidated copper production is forecast to increase to 114,000ⁱⁱ tonnes, an increase of approximately 10%ⁱⁱ compared to 2022 levels, primarily as a result of higher expected copper production in Peru, with higher planned copper grades from the Pampacancha pit more than offsetting lower copper production in Manitoba. Consolidated gold production in 2023 is expected to increase by 30%ⁱⁱ to 285,500ⁱⁱ ounces year-over-year, due to significantly higher gold production in both Peru and Manitoba.

In early 2023, the mine plan for Peru was adjusted to prioritize the processing of lower grade stockpiles and shorter haulage distance ore to manage through the regional logistical challenges and ensure steady operation of the plant. This is expected to result in more ore being mined from the Constancia pit and less from the Pampacancha pit in the early part of the year, as well as lower recoveries due to the varying ore types present in the stockpiles. Despite these mine plan changes, 2023 copper and gold production in Peru is expected to be 103,500ⁱⁱ tonnes and 95,500ⁱⁱ ounces, representing year-over-year increases of 16%ⁱⁱ and 64%ⁱⁱ, respectively. The revised mine plan for 2023 reflects a period of higher stripping activities in the Pampacancha pit from March to June with significantly higher copper and gold grades expected to be mined in the second half of 2023. Peru’s production guidance also reflects regularly scheduled semi-annual mill maintenance shutdowns at Constancia during the second and fourth quarters of 2023.

In Manitoba, 2023 gold production is expected to increase by 18%ⁱⁱ to 190,000ⁱⁱ ounces compared to 2022 due to higher gold grades and a 10% increase in ore throughput at the Lalor mine. The 2023 mine plan at Lalor reflects higher production from the gold and copper-gold zones as those zones are expected to be prioritized over the base metal zones. The production guidance reflects a 10% increase in New Britannia mill throughput in 2023 given the mill has been consistently operating above its 1,500 tonnes per day nameplate capacity. The 2023 mine plan achieves gold production levels consistent with the most recent mine plan for Snow Lake but without the full ramp up to 5,300 tonnes per day as it maximizes value per tonne of ore at Lalor by prioritizing the mining of the gold-rich zones over the zinc-rich base metal zones and reflects higher throughput at the New Britannia mill. Year-over-year zinc production is expected to decline by 42%ⁱⁱ primarily as a result of the closure of the 777 mine in June 2022 and prioritizing the mining of the gold-rich zones over the zinc-rich base metal zones at Lalor. Manitoba’s production guidance reflects regularly scheduled maintenance programs at the Lalor mine during the second and fourth quarters of 2023.

Given the short-term mine plan changes implemented at Constancia in early 2023 and the Lalor ramp-up strategy, as mentioned above, the company is examining the potential impact of these changes to 2024 and 2025 production. Hudbay expects its 2024 production guidance to be similar to the previously issued guidance on February 23, 2022, reflecting a further increase in copper production in Peru and gold production in Manitoba from 2023 levels. As a result of the 2023 mine plan changes in Peru, the company now expects mining activities at the Pampacancha deposit to continue into the first half of 2025, which is expected to result in higher copper and gold production from Peru in 2025 beyond the levels shown in the most recent technical report for Constancia, dated March 29, 2021. Hudbay expects to release its new three-year production outlook together with its annual mineral reserve and resource update at the end of March 2023.

Capital Expenditure Guidance

Capital Expenditures1 (in $ millions)	2023 Guidance2	Year Ended Dec. 31, 2022	2022 Guidance
Sustaining capital
Peru3	160	102	105
Manitoba4	75	125	115
Total sustaining capital	235	227	220
Growth capital
Peru	10	4	10
Manitoba4	15	34	50
Arizona5	30	36	40
Total growth capital	55	74	100
Capitalized exploration5	10	42	40
Total capital expenditures	300	343	360
1 Excludes capitalized costs not considered to be sustaining or growth capital expenditures. 2 2023 capital expenditure guidance excludes right-of-use lease additions. 3 Includes capitalized stripping costs. 4 2023 capital expenditures are converted into U.S. dollars using an exchange rate of 1.35 Canadian dollars. 5 2022 guidance reflects revised Arizona spending guidance issued on June 8, 2022, which includes $5 million in additional growth expenditures and $15 million in additional capitalized exploration related to Copper World.

2022 total capital expenditures were 5% below guidance expectations as a result of the discretionary capital reductions across the business, partially offset by higher sustaining capital expenditures in Manitoba primarily due to inflationary cost pressures and lease additions that were not originally contemplated in guidance.

Hudbay expects to continue to reduce discretionary spending with an expected 13% year-over-year decline in total capital expenditures to $300 million in 2023, primarily due to lower discretionary growth spending and capitalized exploration in 2023.

Peru’s sustaining capital expenditures in 2023 are expected to increase from 2022 levels primarily due to higher costs associated with heavy civil works for the completion of a tailings dam raise in 2023 and higher capitalized stripping costs as a result of the mine plan resequencing in 2023. Peru’s growth capital spending of $10 million in 2023 includes costs associated with mill recovery improvement initiatives targeted to increase copper and molybdenum recoveries.

Manitoba’s sustaining capital expenditures in 2023 are expected to be lower than 2022 primarily due to lower equipment spending at Lalor and in the mills after the Snow Lake transition and ramp up period in 2022. Manitoba’s growth capital spending of $15 million in 2023 relates to the costs for the completion of the Stall mill recovery improvement project, which is expected to involve several flow sheet enhancements to increase gold and copper recoveries starting in the second quarter of 2023. These low-capital brownfield growth projects are expected to generate attractive returns and are part of Hudbay’s continuous improvement efforts. The Manitoba spending guidance excludes approximately $20 million of annual care and maintenance costs related to the Flin Flon facilities in 2023, which are expected to be recorded as other operating expenses.

Arizona’s growth capital spending of $30 million includes approximately $20 million in annual carrying and permitting costs for the Copper World and Mason projects and approximately $10 million for economic studies and site works in 2023.

Exploration Guidance

Exploration Expenditures (in $ millions)	2023 Guidance1		Year Ended Dec. 31, 2022		2022 Guidance
Peru	15		25		25
Manitoba	15		14		15
Arizona and other2	0		38		40
Total exploration expenditures	30		77		80
Capitalized spending2	(10	)	(42	)	(40	)
Total exploration expense	20		35		40

¹ 2023 exploration guidance excludes $5 million of non-cash amortization of community agreements for exploration properties.
² 2022 guidance reflects an additional $15 million in capitalized exploration at Copper World announced on June 8, 2022.

Total expected exploration expenditures of $30 million in 2023 are 61% lower than 2022 levels due to Hudbay’s continued focus on discretionary spending reductions. The company’s 2023 exploration activities are focused on areas with high potential for new discovery and mineral reserve and resource expansion.

In Peru, 2023 exploration activities will focus on permitting and drill preparation for the Maria Reyna and Caballito properties near Constancia. The company also expects to complete a limited drill program at Pampacancha in 2023 to test the potential to add an incremental phase at depth to the reserve pit. In Manitoba, the company has initiated a winter drill program focused on testing the deep extensions of the gold and copper zones at Lalor and a target to the north of Lalor.

Cash Cost Guidance

Copper remains the primary revenue contributor on a consolidated basis, and therefore, consolidated cost guidance has been presented as cash cost per pound of copper produced. The company has also provided cash cost guidance for each of its operations based on their respective primary metal contributors. While Hudbay expects combined unit operating costs in both Peru and Manitoba to trend lower in 2023, the company no longer plans to issue combined unit operating cost guidance, as it believes cash cost is a more common metric used to measure operating performance.

Cash cost1		2023 Guidance	Year Ended Dec. 31, 2022	2022 Guidance
Peru cash cost per pound of copper2	$/lb	1.05 - 1.30	1.58	1.10 - 1.40
Manitoba cash cost per ounce of gold3	$/oz	500 - 800	297	300 - 550
Consolidated cash cost per pound of copper2	$/lb	0.40 - 0.80	0.86	0.60 - 1.05
Consolidated sustaining cash cost per pound of copper2	$/lb	1.35 - 2.05	2.07	1.60 – 2.25

¹ Cash cost and sustaining cash cost per pound of copper produced, net of by-product credits, and 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 Reporting Measures” section of this news release.
² Peru cash cost per pound of copper and consolidated copper cash cost per pound of copper contained in concentrate assumes by-product credits are calculated using the gold and silver deferred revenue drawdown rates in effect on December 31, 2022 for the streamed ounces in Peru and the following commodity prices: $1,800 per ounce gold, $21.00 per ounce silver, $25.00 per pound molybdenum, $1.40 per pound zinc and an exchange rate of 1.35 C$/US$.
³ Manitoba gold cash cost per ounce of gold contained in concentrate and doré assumes by-product credits are calculated using the following commodity prices: $1.40 per pound zinc, $21.00 per ounce silver, $3.75 per pound copper and an exchange rate of 1.35 C$/US$.

Copper cash cost in Peru is expected to decline by 26%ⁱⁱ in 2023 versus 2022, primarily due to higher gold by-product credits and higher copper production.

Gold cash cost in Manitoba is expected to increase in 2023 compared to 2022 as a result of the transition to a primary gold operation with lower by-product credits after the closure of the 777 mine in June 2022.

Consolidated copper cash cost in 2023 is expected to decline by 30%ⁱⁱ compared to 2022 levels due to the expected increase in copper production and higher expected gold by-product credits from the increase in annual gold production. Consolidated sustaining cash cost in 2023 is expected to be 18%ⁱⁱ lower than 2022 levels due to the same factors affecting consolidated cash cost, partially offset by slightly higher sustaining capital expenditures.

Metal production in any given quarter may vary from the annual guidance rate based on variations in grades and recoveries due to mine sequencing in the quarter, the timing of planned maintenance, and other factors. Cash cost and sustaining cash cost in any particular quarter can vary from the annual guidance ranges based on a variety of factors, including the scheduling of maintenance events, the prevailing commodity prices affecting by-product credits, the impact of social and political tensions in Peru, and seasonal heating requirements, particularly in Manitoba.

Dividend Declared

A semi-annual dividend of C$0.01 per share was declared on February 23, 2023. The dividend will be paid out on March 24, 2023 to shareholders of record as of March 7, 2023.

Website Links

Hudbay:

www.hudbay.com

Management’s Discussion and Analysis:

https://hudbayminerals.com/MDA224

Financial Statements:

https://hudbayminerals.com/FS224

Conference Call and Webcast

Date:		Friday, February 24, 2023
Time:		8:30 a.m. ET
Webcast:		www.hudbay.com
Dial in:		1-416-915-3239 or 1-800-319-4610

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, Vice President, Exploration and Technical Services. Mr. Tavchandjian is a qualified person pursuant to NI 43‑101 – Standards of Disclosure for Mineral Projects (“NI 43-101”).

For a description of the key assumptions, parameters and methods used to estimate mineral reserves and resources at Hudbay's material properties, as well as data verification procedures and a general discussion of the extent to which the estimates of scientific and technical information may be affected by any known environmental, permitting, legal title, taxation, sociopolitical, marketing or other relevant factors, please see the technical reports for the company’s material properties as filed by Hudbay on SEDAR at www.sedar.com.

Non-IFRS Financial Performance Measures

Adjusted net earnings (loss), adjusted net earnings (loss) per share, adjusted EBITDA, net debt, cash cost, sustaining and all-in sustaining cash cost per pound of copper produced, cash cost and sustaining cash cost per ounce of gold produced and combined unit cost are non-IFRS performance measures. These measures do not have a meaning prescribed by IFRS and are therefore unlikely to be comparable to similar measures presented by other issuers. These measures should not be considered in isolation or as a substitute for measures prepared in accordance with IFRS and are not necessarily indicative of operating profit or cash flow from operations as determined under IFRS. Other companies may calculate these measures differently.

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

During 2021 and 2022, there were non-recurring adjustments for Arizona and Manitoba operations, including severance, past service pension costs, disposals of certain non-current assets, and inventory supplies write-downs as well as non-cash impairment charges related to an updated Flin Flon closure plan and lower long-term discount rates in the fourth quarter of 2021, none of which management believes are indicative of ongoing operating performance and therefore are adjusting items in the calculations of adjusted net earnings (loss) and adjusted EBITDA.

During 2022, Hudbay recorded a non-cash gain of $133.5 million, mostly related to the quarterly revaluation of its Flin Flon environmental reclamation provision, which was impacted by rising long-term risk-free discount rates. With the closure of 777 and Flin Flon operations in the second quarter of 2022 and given the long-term nature of the reclamation cash flows, quarterly revaluation of the corresponding environmental reclamation provision remains highly sensitive to changes in real, long-term risk-free discount rates and, as such, the company expects to continue to experience quarterly environmental reclamation provision revaluations, which is not indicative of the company’s ongoing operating performance. This item has been included prospectively in the calculation of adjusted earnings.

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

Adjusted Net Earnings (Loss) Reconciliation

	Three Months Ended
(in $ millions)	Dec. 31, 2022		Sep. 30, 2022		Dec. 31, 2021
(Loss) profit for the period	(17.4	)	(8.1	)	(10.5	)
Tax expense (recovery)	3.1		7.8		10.3
(Loss) profit before tax	(14.3	)	(0.3	)	(0.2	)
Adjusting items:
Mark-to-market adjustments1	10.7		(4.2	)	13.3
Foreign exchange loss (gain)	0.2		(4.8	)	1.1
Inventory adjustments	—		2.1		—
Variable consideration adjustment - stream revenue and accretion	—		3.9		—
Impairment loss	—		—		46.2
Re-evaluation adjustment - environmental provision2	13.5		(6.4	)	—
Evaluation expenses	0.1		0.1		—
Insurance recovery	—		—		—
Restructuring charges - Manitoba3	1.0		5.1		3.4
Loss on disposal of investments	0.5		—		—
Post-employment plan (curtailment) / past service cost adjustment	(2.4	)	—		0.7
Loss (gain) on disposal of plant and equipment and non-current assets - Manitoba & Arizona	0.4		(6.0	)	2.4
Changes in other provisions (non-capital)4	5.8		—		—
Adjusted earnings (loss) before income taxes	15.5		(10.5	)	66.9
Tax expense	(3.1	)	(7.8	)	(10.3	)
Tax impact on adjusting items	(9.8	)	5.9		(23.9	)
Adjusted net earnings (loss)	2.6		(12.4	)	32.7
Adjusted net earnings (loss) ($/share)	0.01		(0.05	)	0.13
Basic weighted average number of common shares outstanding (millions)	262.0		261.9		261.6

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 cost (severance and site preparation costs) for Flin Flon operations.
⁴ Includes changes in other provisions related to corporate restructuring costs and costs which do not pertain to operations.

	Year Ended
(in $ millions)	Dec. 31, 2022		Dec. 31, 2021
Profit (loss) for the period	70.4		(244.4	)
Tax expense	25.4		41.6
Profit (loss) before tax	95.8		(202.8	)
Adjusting items:
Mark-to-market adjustments1	3.0		66.7
Foreign exchange (gain) loss	(5.4	)	1.5
Inventory adjustments	3.6		4.0
Variable consideration adjustment - stream revenue and accretion	(1.9	)	(1.0	)
Impairment loss	95.0		193.5
Re-evaluation adjustment - environmental provision2	(133.5	)	—
Evaluation expenses	7.9		—
Insurance recovery	(5.7	)	—
Restructuring charges - Manitoba3	10.6		7.0
Loss on disposal of investments	3.6		—
Write-down of unamortized transaction costs	—		2.5
Premium paid on redemption of notes	—		22.9
Post-employment plan (curtailment) / past service cost adjustment	(2.4	)	5.0
(Gain) loss on disposal of plant and equipment and non-current assets - Manitoba & Arizona	(6.3	)	7.8
Changes in other provisions (non-capital)4	5.8		—
Adjusted earnings before income taxes	70.1		107.1
Tax expense	(25.4	)	(41.6	)
Tax impact on adjusting items	(18.3	)	(42.4	)
Adjusted net earnings	26.4		23.1
Adjusted net earnings ($/share)	0.10		0.09
Basic weighted average number of common shares outstanding (millions)	261.9		261.5

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 cost (severance and site preparation costs) for Flin Flon operations.
⁴ Includes changes in other provisions related to corporate restructuring costs and costs which do not pertain to operations.

Adjusted EBITDA Reconciliation

	Three Months Ended
(in $ millions)	Dec. 31, 2022		Sep. 30, 2022		Dec. 31, 2021
(Loss) profit for the period	(17.4	)	(8.1	)	(10.5	)
Add back: Tax expense	3.1		7.8		10.3
Add back: Net finance expense	36.7		20.6		38.6
Add back: Other expense	18.5		6.3		16.3
Add back: Depreciation and amortization	79.4		89.8		89.9
Add back: Amortization of deferred revenue and variable consideration adjustment	(10.4	)	(15.3	)	(17.3	)
	109.9		101.1		127.3
Adjusting items (pre-tax):
Re-evaluation adjustment - environmental provision1	13.5		(6.4	)	0.3
Impairment losses	—		—		46.2
Inventory adjustments	—		2.1		—
Post-employment plan (curtailment) / past service cost adjustment	(2.4	)	—		0.7
Share-based compensation expenses2	3.7		2.5		6.3
Adjusted EBITDA	124.7		99.3		180.8

¹ Environmental reclamation provision adjustments were presented within other expense for 2021 periods.
² Share-based compensation expenses reflected in cost of sales and selling and administrative expenses.

	Year Ended
(in $ millions)	Dec. 31, 2022		Dec. 31, 2021
Profit (loss) for the period	70.4		(244.4	)
Add back: Tax expense	25.4		41.6
Add back: Net finance expense	118.5		221.0
Add back: Other expense	32.6		35.1
Add back: Depreciation and amortization	337.6		357.9
Add back: Amortization of deferred revenue and variable consideration adjustment	(73.2	)	(73.1	)
	511.3		338.1
Adjusting items (pre-tax):
Re-evaluation adjustment - environmental provision1	(133.5	)	(4.6	)
Impairment losses	95.0		193.5
Inventory adjustments	3.6		4.0
Post-employment plan (curtailment) / past service cost adjustment	(2.4	)	5.0
Share-based compensation expenses2	1.9		11.8
Adjusted EBITDA	475.9		547.8

¹ Environmental reclamation provision adjustments were presented within other expense for 2021 periods.
² Share-based compensation expenses reflected in cost of sales and selling and administrative expenses.

Net Debt Reconciliation

(in $ thousands)	Dec. 31, 2022	Sep. 30, 2022	Dec. 31, 2021
Total long-term debt	1,184,162	1,183,237	1,180,274
Less: Cash	225,665	286,117	270,989
Net debt	958,497	897,120	909,285

Copper Cash Cost Reconciliation

Consolidated	Three Months Ended
Net pounds of copper produced1
(in thousands)	Dec. 31, 2022	Sep. 30, 2022	Dec. 31, 2021
Peru	59,628	49,167	50,389
Manitoba	4,978	4,841	11,777
Net pounds of copper produced	64,606	54,008	62,166

¹ Contained copper in concentrate.

Consolidated	Year Ended
Net pounds of copper produced1
(in thousands)	Dec. 31, 2022	Dec. 31, 2021
Peru	197,082	171,548
Manitoba	32,580	47,745
Net pounds of copper produced	229,662	219,293

¹ Contained copper in concentrate.

Consolidated	Three Months Ended
	Dec. 31, 2022					Sep. 30, 2022				Dec. 31, 2021
Cash cost per pound of copper produced	$000s		$/lb		$000s		$/lb		$000s		$/lb
Cash cost, before by-product credits	208,642		3.23		211,664		3.92		232,224		3.73
By-product credits	(138,990	)	(2.15	)	(180,464	)	(3.34	)	(200,306	)	(3.22	)
Cash cost, net of by-product credits	69,652		1.08		31,200		0.58		31,918		0.51

Consolidated	Year Ended
	Dec. 31, 2022				Dec. 31, 2021
Cash cost per pound of copper produced	$000s		$/lb		$000s		$/lb
Cash cost, before by-product credits	906,265		3.94		867,607		3.95
By-product credits	(708,334	)	(3.08	)	(704,345	)	(3.21	)
Cash cost, net of by-product credits	197,931		0.86		163,262		0.74

Consolidated	Three Months Ended
	Dec. 31, 2022			Sep. 30, 2022			Dec. 31, 2021
Supplementary cash cost information	$000s		$/lb1	$000s		$/lb1	$000s		$/lb1
By-product credits2:
Zinc	24,744		0.38	43,606		0.81	74,585		1.20
Gold3	76,336		1.18	101,650		1.88	99,728		1.60
Silver3	9,592		0.15	16,066		0.30	14,853		0.24
Molybdenum & other	28,318		0.44	19,142		0.35	11,140		0.18
Total by-product credits	138,990		2.15	180,464		3.34	200,306		3.22
Reconciliation to IFRS:
Cash cost, net of by-product credits	69,652			31,200			31,918
By-product credits	138,990			180,464			200,306