Mr. Peter Kukielski reports

HUDBAY ANNOUNCES FIRST QUARTER 2023 RESULTS

Hudbay Minerals Inc. has released its first quarter 2023 financial results. All amounts are in U.S. dollars unless otherwise noted.

First quarter operating and financial results; production and cost guidance reaffirmed:

• Consolidated production in the first quarter included 22,562 tonnes of copper and 47,240 ounces of gold. Consolidated cash cost and sustaining cash cost per pound of copper produced, net of byproduct credits, were 85 cents and $1.83, respectively, representing an improvement of 21 per cent and 17 per cent, respectively, compared with the fourth quarter of 2022.
• The company reaffirmed full-year 2023 consolidated production guidance of 100,000 to 128,000 tonnes of copper at a cash cost of 40 cents to 80 cents per pound and sustaining cash cost of $1.35 to $2.05 per pound as first quarter production was in line with quarterly cadence expectations.
• Peru operations managed through a complex environment to maintain steady performance and produce 20,517 tonnes of copper in the first quarter. The Peru team remained focused on maintaining strong margins and achieved a cash cost per pound of copper produced, net of byproduct credits, of $1.36, which was over all in line with the strong cost performance in the fourth quarter of 2022. Transportation and supply chains in Peru have normalized since mid-February, and Constancia's concentrate inventory is now at normal levels, well ahead of schedule:
  • Full mining activities resumed at the Pampacancha pit in February, and the period of higher stripping from March to June is progressing well with mining of higher-grade ore expected to commence late in the second quarter of 2023, slightly ahead of schedule.
• Manitoba operations produced 36,034 ounces of gold at a cash cost per ounce of gold produced, net of byproduct credits, of $938, which was affected by temporary challenges at the Lalor mine in the quarter that were partly offset by strong throughput and gold recoveries at the New Britannia mill:
  • Lalor ore production reached 4,800 tonnes per day late in the first quarter and throughout April after implementing changes to improve stope fragmentation and load-haul-dump equipment availability, together with many production optimization initiatives under way at the mine.
• First quarter net earnings and earnings per share were $5.5-million and two cents, respectively. After adjusting for a non-cash gain of $8.2-million related to a quarterly revaluation of the closed site environmental reclamation provision and a $6.1-million revaluation loss related to the gold prepayment liability, among other items, first quarter adjusted earnings per share were nil.
• Operating cash flow before change in non-cash working capital was $85.6-million, and adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) was $101.9-million in the first quarter.
• Cash and cash equivalents increased during the first quarter to $255.6-million, and were positively impacted by the steady operation of the Constancia mill throughout the transportation and supply chain interruptions earlier in the quarter and the successful conversion of concentrate inventory into cash during the quarter, ahead of schedule.
• The company signed a new 10-year agreement for 100-per-cent renewable energy supply to Constancia, resulting in an expected 40-per-cent reduction in total Scope 1 and Scope 2 greenhouse gas emissions company-wide, in line with Hudbay's climate change target of a 50-per-cent reduction by 2030.

Executing on growth initiatives and prudent financial planning:

• On April 13, 2023, Hudbay announced a definitive agreement to acquire all issued and outstanding common shares of Copper Mountain Mining Corp. to create a 150,000-tonne-per-year copper producer with three long-life mines in Tier 1 jurisdictions and a world-class pipeline of organic copper growth projects. The combined company will be the third-largest Canadian copper producer, and its complementary asset base and technical expertise are expected to unlock $30-million in annual operating efficiencies and corporate synergies over the course of three years.
• Three-year production guidance includes average annual copper production of 110,000 tonnes from Constancia and average annual gold production of more than 190,000 ounces from Snow Lake, a 23-per-cent and 30-per-cent increase, respectively, from 2022 levels.
• The company received positive permitting update at Copper World from the Army Corps of Engineers (ACOE), and the required state-level permits continue to be expected in 2023. Prefeasibility study for phase 1 of the Copper World project is well advanced and on track for mid-2023.
• Peru exploration activities resumed with a focus on drill permitting for highly prospective satellite properties while evaluating the potential for reserve expansion at Constancia and Pampacancha through future mining phases.
• Snow Lake exploration activities are prioritizing stepout drilling for new discoveries to support future growth in annual production and mine life extension.
• Lalor 2023 winter exploration program intersected numerous occurrences of disseminated copper sulphides over two kilometres down plunge, indicating the potential close proximity of copper-gold feeder zones similar to the deeper lenses at Lalor.
• The Stall recovery improvement program is on track for commissioning in May with ramp-up to higher metal recoveries by mid-2023.
• Nevada drill program is planned for late 2023 to test high-grade skarn and large porphyry targets identified through recent geophysical surveys on private land claims near Mason.
• To benefit from strong current gold prices, Hudbay deferred eight months of prepaid gold deliveries from 2023 into 2024, which is expected to increase the company's cash position by approximately $53-million in 2023 at prevailing gold prices.
• As an additional prudent measure to ensure free cash flow generation in 2023, Hudbay entered into a zero-cost collar program in April for approximately 10 per cent of copper production expected in the second half of 2023 at a floor price of $3.95 per pound while providing upside to copper price increases up to $4.28 per pound.
• The company is on track to deliver the discretionary spending reduction targets for 2023 with lower growth capital and exploration expenditures compared with 2022.

"We continue to be on track to achieve higher production and cash flows in 2023 as we successfully managed the recent Peru logistical interruptions to ensure steady operations at Constancia, and are executing initiatives to increase the output from our Lalor mine in Snow Lake," said Peter Kukielski, president and chief executive officer. "We took several prudent measures this quarter to improve our free cash flow for 2023, and we remain focused on being disciplined with capital allocation as we continue to derisk Copper World. We are also pleased to be expanding our copper production profile with the recently announced combination with Copper Mountain, which creates a larger, more resilient and more diversified cash flow platform to prudently advance our leading organic copper growth pipeline."

Senior management team appointments

In March, 2023, Hudbay promoted Javier Del Rio to senior vice-president, South America and United States, and Olivier Tavchandjian to senior vice-president, exploration and technical services. In March, 2023, Hudbay appointed Warren Flannery as vice-president, business planning and reclamation.

Mr. Del Rio joined Hudbay in 2010, and has been instrumental in establishing and expanding the company's Peruvian business, and in early 2022, he assumed responsibility for Hudbay's Arizona business unit. He has over 30 years of mining experience, and prior to joining Hudbay, he held management positions in business planning, optimization processes and business analysis with Newmont Mining Corp. in the United States and Peru.

Mr. Tavchandjian has been a key member of Hudbay's senior management team since 2017, leading Hudbay's exploration strategy and adding significant value through increasing the mineral resources and reserves at all the company's key assets. He assumed responsibility for Hudbay's technical service function in April, 2022, has more than 30 years of experience in strategic and life-of-mine planning, and has provided invaluable support to the operations and corporate development teams.

Mr. Flannery is responsible for capital planning and operations strategy, as well as reclamation and non-producing facilities. He is an experienced mining professional with nearly 30 years of extensive experience in mine operations, planning and project development at global mining companies, including Vale Inco, Barrick, PotashCorp and Falconbridge. Prior to joining Hudbay, he was head of the mining technical group at CIBC's global mining corporate and investment banking arm for 10 years, working on a broad range of capital market financing and advisory mandates.

Conference call and webcast

Date:  Tuesday, May 9, 2023

Time:  8:30 a.m. ET

Webcast:  at the Hudbay website

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

Qualified person and National Instrument 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, PGeo, senior vice-president, exploration and technical services. Mr. Tavchandjian is a qualified person pursuant to National Instrument 43-101 (Standards of Disclosure for Mineral Projects).

For a description of the key assumptions 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, socio-political, marketing or other relevant factors, please see the technical reports for the company's material properties as filed by Hudbay on SEDAR.

We seek Safe Harbor.