Mr. Alan Hair reports

HUDBAY ANNOUNCES INCREASED LALOR MINERAL RESERVES AND RESOURCES AND UPDATED MINE PLAN THAT CONFIRMS SUBSTANTIAL INCREASE IN GOLD PRODUCTION

Hudbay Minerals Inc. has increased mineral reserves and resources for its Lalor mine and nearby satellite deposits, and has provided a new mine plan that includes the processing of gold and copper-gold ore at the company's New Britannia mill. An updated National Instrument 43-101 technical report for Lalor will be filed on SEDAR by the end of the first quarter of 2019. All amounts are in U.S. dollars, unless otherwise noted.

Summary:

• Lalor annual gold production is set to more than double from current levels once the New Britannia mill is refurbished with average annual production of approximately 140,000 ounces during the first five years at a sustaining cash cost, net of byproduct credits, of $450 per ounce (1), positioning Lalor as one of the lowest-cost gold mines in Canada.
• Gold recoveries are estimated to increase to 93 per cent at the New Britannia mill compared with 53 per cent at the Stall mill.
• Lalor's reserve update increased in situ contained gold by 65 per cent, copper by 23 per cent, zinc by 11 per cent and silver by 15 per cent (2).
• Drilling defined higher-quality gold zone reserve estimates with increased gold grades.
• The capital cost required to refurbish the New Britannia mill is estimated at $95-million -- a low-capital-intensity, low-risk brownfield expansion.
• Lalor's life-of-mine production increased gold by 91 per cent, copper by 16 per cent, zinc by 13 per cent and silver by 21 per cent (3).
• A current reserve life of 10 years could be extended with successful conversion of additional mineral resources at Lalor and additional resources at Hudbay's satellite deposits in the Snow Lake region within trucking distance of Stall and New Britannia.
• Hudbay's extensive land package in the Chisel basin and around Snow Lake provides significant additional upside for further gold and base metal exploration.

"We are pleased to demonstrate the significant value we have unlocked so far by leveraging our exploration expertise, our existing processing infrastructure and several inexpensive acquisitions to develop a compelling strategy to maximize the value of our gold mineralization at Lalor and nearby deposits," said Alan Hair, Hudbay's president and chief executive officer. "With our extensive experience operating responsibly in Manitoba, we look forward to delivering on this strategy over the next several years by refurbishing the New Britannia mill, substantially increasing our gold production at low cash costs and realizing additional value through continued exploration success."

Overview

Lalor was discovered in 2007 on 100-per-cent-owned land using Hudbay's innovative exploration techniques, and it is the largest VMS (volcanogenic massive sulphide) deposit found in the Snow Lake region to date. In 2009, the company commenced construction of Lalor with initial ramp access from the Chisel North mine. Construction of the main production shaft was approved in 2010 and was completed on time and on budget, achieving commercial production in 2014, a mere seven years from initial discovery. Hudbay acquired the New Britannia gold mill in 2015 for approximately $10-million as a potential long-term processing option for the Lalor gold and copper-gold zones. Since acquiring New Britannia, Hudbay has conducted significant technical work to assess the grade, tonnage, minability and metallurgy of the gold and copper-gold zones at Lalor to support and derisk the investment required to refurbish New Britannia and maximize the net present value of Lalor.

Most recently, Hudbay has focused on drilling and test mining in the gold-rich Lens 25 and has confirmed the existence of a continuous high-grade core of mineralization within the wider lower-grade mineral resource estimates reported in the NI 43-101 technical report for Lalor dated March 31, 2017, and most recently updated in Hudbay's annual information form dated March 29, 2018. In parallel, Hudbay has revised its geological model of the copper-gold-rich Lens 27, which better reflects the steeper orientation of the mineralization observed during core logging. This reinterpretation indicates there is a simpler and more consistent mineralized envelope and, together with additional drilling conducted in 2018, has resulted in an increase in tonnage of this high-grade mineralization.

Refurbishing New Britannia is expected to significantly increase gold production from Lalor and enable new gold and copper-gold exploration opportunities in the Snow Lake region by having an operating processing facility with substantially higher gold and copper recoveries. New Britannia was placed on care and maintenance in 2005 by its previous owner after producing 1.6 million ounces of gold, and it demonstrates the opportunity to create additional value through owning multiple processing facilities in the Flin Flon and Snow Lake regions as Hudbay pursues low-risk brownfield development opportunities.

Based on the detailed work completed in the last 12 months, Hudbay believes that the refurbishment of the New Britannia mill, including the addition of a copper flotation circuit, is the optimal processing solution for Lalor, as it capitalizes on existing infrastructure, significantly increases gold production from a deposit that is unencumbered by any royalties or streams and offers further upside potential from nearby satellite deposits.

The New Britannia development plan contemplates completion of detailed engineering by February, 2020, environmental permitting completion in April, 2020, and construction activities occurring between June, 2020, and August, 2021, with plant commissioning and ramp-up occurring during the fourth quarter of 2021. The estimated capital expenditures and the schedules for completion and plant ramp-up are deemed to be low risk since this project involves industry standard equipment and proven processing technology in a brownfield environment. Permitting activities started in 2018 and are proceeding in line with the development plan.

The revised mine plan for Lalor supports a 10-year mine life, based solely on proven and probable reserves, and utilizes the existing mining capacity of 4,500 tonnes per day at Lalor for the first six years of the mine plan. The technical work completed supports 4,500 tonnes per day as the optimal mining rate to maximize net present value, although the Lalor production shaft has the potential to hoist at higher throughput rates. The production plan has the copper-gold-rich ore feeding a refurbished New Britannia mill starting in 2022 at an average feed rate of 1,100 tonnes per day at 6.7 grams per tonne gold and 1.2 per cent copper for seven years based on the current reserve estimate. The New Britannia mill is expected to achieve gold recoveries of approximately 93 per cent compared with current gold recoveries of approximately 53 per cent at the Stall mill. An estimated investment of $95-million ($124-million (Canadian)) will be required between 2019 and 2021 for the refurbishment of the New Britannia mill, including the addition of a copper flotation and dewatering circuit and a pipeline to direct the tailings to the existing Anderson facility. Of this, approximately $10-million is expected to be incurred in 2019 as part of Hudbay's growth capital expenditure plans.

Between 2019 and 2021, the Stall mill is expected to process approximately 3,500 tonnes per day, and approximately 1,000 tonnes per day of Lalor base metal ore is expected to be transported to the Flin Flon mill for processing. Based on the current reserves, starting in 2022, Stall mill throughput will gradually decrease from approximately 3,200 tonnes per day to approximately 1,800 tonnes per day.

The updated resource model at Lalor includes 5.9 million tonnes of inferred mineral resources, which has the potential to extend the mine life beyond 10 years while feeding both the Stall and New Britannia mills (see the attached Lalor mineral resource estimates table). In addition, the mineral resources at Hudbay's satellite deposits in the Snow Lake region, including the copper-gold WIM deposit acquired last year for $500,000 (Canadian) from Alexandria Minerals Corp., the former gold-producing New Britannia mine and the zinc-rich Pen 2 deposit, could provide feed for the Stall and New Britannia processing facilities and further extend the mine life.

Lalor mineral reserve and resource estimate

The updated estimate of mineral reserves at Lalor has increased in situ contained gold by 65 per cent, copper by 23 per cent, zinc by 11 per cent and silver by 15 per cent, relative to the previous estimate of mineral reserves in Hudbay's 2018 annual information form, adjusted for 2018 production depletion.

                                         LALOR MINERAL RESERVE ESTIMATES 

                                    Tonnes       Zn grade (%)       Au grade (g/t)      Cu grade (%)     Ag grade (g/t)
Base metal zone
Proven                           5,137,000              7.13                 2.37              0.76              26.31
Probable                         5,552,000              4.19                 3.52              0.44              27.39
Gold zone
Proven                              58,000              2.65                 5.46              0.80              39.09
Probable                         2,928,000              0.31                 6.74              1.09              23.08
Total proven and probable       13,675,000              4.46                 3.78              0.70              26.11

Note:
(1) Totals may not add up correctly due to rounding.
(2) Mineral reserves are estimated as of Jan. 1, 2019.
(3) Mineral reserves are estimated at a minimum NSR (net smelter royalty) cut-off of $96.19 (Canadian)
per tonne for waste-filled mining areas and a minimum of $104.58 (Canadian) per tonne for paste-filled 
mining areas.
(4) Estimates are based on the following metal price and foreign exchange rate assumptions: zinc price 
of $1.17 per pound (includes premium), copper price of $3.10 per pound, gold price of $1,260 per ounce 
and silver price of $18 per ounce, and an exchange rate of $1.25 (Canadian) per $1 (U.S.). 
(5) For further information regarding data verification, quality assurance/quality control and risks 
associated with the estimate of the mineral reserves at the Lalor mine, please refer to the 2018 
annual information form.

Hudbay is implementing a more stringent approach to resource reporting for underground deposits. With this approach, the potential for economic extraction of the mineral resource estimates at Lalor is reported within the constraint of a stope optimization envelope process similar in concept to a Lerchs-Grossman pit shell for an open-pit deposit. This excludes from the resource estimate small individual resource blocks that may meet an economic cut-off criteria on an individual basis but could not be aggregated into minable shapes.

There are no measured or indicated resources reported for Lalor in 2019. The measured and indicated resources reported in the 2018 AIF have all been converted to mineral reserve estimates or deemed uneconomic.

The updated estimate of inferred mineral resources at Lalor has increased the in situ contained gold by 21 per cent, copper by 51 per cent and silver by 21 per cent while zinc has decreased by 17 per cent, relative to the 2018 AIF.

                   LALOR MINERAL RESOURCE ESTIMATES (EXCLUSIVE OF MINERAL RESERVES)

                           Tonnes      Zn grade (%)    Au grade (g/t)     Cu grade (%)     Ag grade (g/t)
Base metal zone
Inferred                1,385,000             2.30              4.49             0.70              43.58
Gold zone
Inferred                4,516,000             0.35              4.38             1.08              20.42
Total inferred          5,901,000             0.81              4.41             0.99              25.85

Note: 
(1) Totals may not add up correctly due to rounding.
(2) Mineral resources are estimated as of Jan. 1, 2019.
(3) Mineral resources are estimated at a minimum net smelter royalty cut-off of 
$96.19 (Canadian) per tonne.
(4) Estimates are based on the following metal price and foreign exchange rate 
assumptions: zinc price of $1.17 per pound (includes premium), copper price of 
$3.10 per pound, gold price of $1,260 per ounce and silver price of $18 per 
ounce, and an exchange rate of $1.25 (Canadian) per $1 (U.S.).
(5) Mineral resources do not include mining dilution or recovery factors.
(6) Mineral resources that are not mineral reserves do not have demonstrated 
economic viability.
(7) For further information regarding data verification, quality assurance/
quality control and risks associated with the estimate of the mineral resources 
at the Lalor mine, please refer to the 2018 annual information form.

Regional exploration potential

Hudbay has identified several satellite deposits in the Snow Lake region that could provide additional feed for both New Britannia and Stall.

                                REGIONAL DEPOSITS MINERAL RESOURCE ESTIMATES

                                    Tonnes       Zn grade (%)    Au grade (g/t)      Cu grade (%)    Ag grade (g/t)
Indicated resources               (million)
(exclusive of mineral reserves)
WIM                                    3.9              0.26              1.57              1.71              6.68
Pen 2                                  0.5              8.89              0.35              0.49              6.81
Total indicated                        4.4              1.19              1.44              1.58              6.69
Inferred resources
Lalor base metal zone                  1.4              2.30              4.49              0.70             43.58
Lalor copper-gold zone                 4.5              0.35              4.38              1.08             20.42
WIM                                    0.7              0.37              1.76              1.03              4.65
Pen 2                                  0.1              9.81              0.30              0.37              6.85
Birch and 3 zone                       1.7                 -              5.34                 -                 -
New Britannia                          2.8                 -              4.51                 -                 -
Total New Britannia zones              4.4                 -              4.82                 -                 -
Total inferred                        11.2              0.57              4.35              0.59             14.01

Note:
(1) Totals may not add up correctly due to rounding.
(2) Mineral resources that are not mineral reserves do not have demonstrated economic viability.
(3) Mineral resources in the attached tables do not include mining dilution or recovery factors.
(4) For further information regarding the mineral resource estimate for the Lalor mine, please 
refer to the attached Lalor mineral resource estimates table.
(5) WIM mineral resources reported were based on a 1.3-per-cent-copper-equivalent cut-off for 
the underground portion and a 0.5-per-cent cut-off for the open-pit portion, assuming processing 
recoveries of 90 per cent for copper and zinc and 70 per cent for gold and silver, and using 
long-term prices of $3 per pound copper, $1,200 per ounce gold, $1 per pound zinc and $15 per 
ounce silver. A 20-metre crown pillar below the open-pit bottom is excluded from resources.
(6) Pen 2 mineral resources are estimated at a minimum NSR cut-off of $65 (Canadian) per tonne 
and assume that the Pen 2 mineral resources would be amenable to processing at the Stall mill.
(7) New Britannia mineral resource estimates have been reported at a minimum true width of 1.5 
metres and with a cut-off grade varying from two grams per tonne (at 3 zone and the lower part 
of New Britannia) to 3.3 grams per tonne (at Birch and for the upper part of New Britannia).

The WIM deposit was acquired by Hudbay in the third quarter of 2018 for approximately $500,000 (Canadian). WIM is a copper-gold deposit that starts from surface and is located approximately 15 kilometres by road from New Britannia. Golder Associates was engaged by Hudbay following the acquisition to independently validate the previous mineral resource estimates. Golder has confirmed that WIM hosts an indicated resource of 3.9 million tonnes grading 1.7 per cent copper, 1.6 grams per tonne gold, 6.7 g/t silver and 0.26 per cent zinc plus an inferred resource of 700,000 tonnes grading 1.0 per cent copper, 1.8 g/t gold, 4.7 g/t silver and 0.37 per cent zinc. Hudbay is developing a mine plan and conducting metallurgical testing on the WIM deposit with the objective to upgrade the measured and indicated resource to a mineral reserve. WIM has the potential to be developed through an underground ramp and could feed the New Britannia mill after the richest portions of the Lalor reserves and resources have been depleted.

New Britannia is a former producing gold mine that produced approximately 600,000 ounces between 1949 and 1958 and an additional 800,000 ounces between 1995 and 2005. Significant mineral resources remain accessible at New Britannia, as well as in the nearby Birch and 3 zone with some investment in the existing mining infrastructure. WSP was engaged in 2018 to audit and restate the historical resource estimates previously reported for these deposits. Based on this recent work, WSP has re-estimated a combined inferred resource of 4.4 million tonnes grading 4.8 g/t gold. Hudbay plans to initiate technical studies in the second half of 2019 to determine the technical and economic viability of the existing mineral resources and the potential to process this material at the New Britannia mill.

Pen 2 is a low-tonnage and high-grade zinc deposit that starts from surface and is located approximately six kilometres by road from the Stall mill. Based on recent infill drilling, Hudbay has updated the resource model in 2018 to reflect 500,000 tonnes of indicated resources at 8.9 per cent Zn, 0.5 per cent Cu, 0.4 g/t Au and 6.8 g/t Ag and 100,000 tonnes of inferred resources at 9.8 per cent Zn, 0.4 per cent Cu, 0.3 g/t Au and 6.9 g/t Ag. Pen 2 could constitute a supplemental source of feed for the Stall mill. In 2019, Hudbay will continue metallurgical testing, infill drilling on the inferred resource estimates and technical studies in an attempt to confirm the technical and economic viability of the mineral resource estimates.

Next steps

In 2018, Hudbay spent $14-million (Canadian) on major airborne and ground geophysical surveys, as well as on surface exploration drilling in the Flin Flon and Snow Lake areas. This work was instrumental in identifying several base metal and gold targets that are to be tested in 2019 with a comparable exploration budget. In parallel, the company plans to spend approximately $4-million (Canadian) on in-mine exploration at Lalor with the intent to convert inferred resources to indicated mineral resources and add additional inferred mineral resources in base metal and gold-rich mineralization. Hudbay will continue to advance engineering studies on Lalor and its satellite deposits in an attempt to continue to increase the tonnage of the mineral reserve estimates and the estimated operating life of the Snow Lake processing facilities at or near full capacity.

Qualified person

The technical and scientific information contained in this news release that is related to the estimate of mineral reserves and resources at Lalor and the Lalor life-of-mine plan has been approved by Olivier Tavchandjian, PGeo, Hudbay's vice-president, exploration and geology. Mr. Tavchandjian is a qualified person pursuant to National Instrument 43-101.

A detailed description of the key assumptions and methods used to estimate the mineral reserves and resources disclosed in this news release, 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, socio-political, marketing or other relevant factors, will be provided by the end of the first quarter of 2019 in an NI 43-101 technical report to be filed by Hudbay on SEDAR.

The inferred mineral resources referenced in this news release are considered too speculative geologically to have the economic considerations applied to them to enable them to be categorized as mineral reserves and are therefore not included in the mine plan. It cannot be assumed that the inferred mineral resources will be converted to mineral reserves through further drilling.

About Hudbay Minerals Inc.

Hudbay is an integrated mining company primarily producing copper concentrate (containing copper, gold and silver), molybdenum concentrate and zinc metal. With assets in North and South America, the company is focused on the discovery, production and marketing of base and precious metals. Directly and through its subsidiaries, Hudbay owns three polymetallic mines, four ore concentrators and a zinc production facility in Northern Manitoba and Saskatchewan (Canada) and Cusco (Peru), and copper projects in Arizona and Nevada (United States). The company's growth strategy is focused on the exploration and development of properties it already controls, as well as other mineral assets it may acquire that fit its strategic criteria.

(1) Sustaining cash cost per ounce of gold produced, net of byproduct credits, is a non-international financial reporting standard performance measure with no standardized definition under IFRS. All-in sustaining cash cost includes all operating and sustaining capital costs, including mining, milling, and general and administrative, associated with Lalor gold production, and is reported net of byproduct credits. Byproduct credits are based on the following assumptions: zinc price of $1.28 per pound in 2019, $1.27 per pound in 2020, $1.17 per pound 2021 and long-term (includes premium); copper price of $3 per pound in 2019, $3.10 per pound in 2020, $3.20 per pound in 2021 and 2022, and $3.10 per pound long term; silver price of $16.50 per ounce in 2019, $18 per ounce in 2020 and long-term; and Canadian-dollar/U.S.-dollar exchange rate of 1.30 in 2019 and 1.25 in 2020 and long term.

(2) Increase in in situ contained metal in estimated reserves compared with the previous estimate of mineral reserves in Hudbay's annual information form dated March 28, 2018, adjusted for 2018 production depletion.

(3) Increase in life-of-mine contained metal in concentrate and gold dore produced compared with the 2017 technical report for the period starting Jan. 1, 2019.

We seek Safe Harbor.