Mr. Peter Kukielski reports

HUDBAY DELIVERS RECORD FOURTH QUARTER AND FULL YEAR 2023 RESULTS AND PROVIDES ANNUAL GUIDANCE

Hudbay Minerals Inc. has released its fourth quarter and full year 2023 financial results, and provided its 2024 annual production and cost guidance. All amounts are in United States dollars, unless otherwise noted. All production and cost amounts reflect the Copper Mountain mine on a 100 per cent basis, with Hudbay owning a 75-per-cent interest in the mine.

Delivering record fourth quarter and full year operating and financial results:

• Achieved record quarterly and annual revenue of $602.2-million and $1.69-billion, respectively, with strong consolidated copper production of 45,450 tonnes and record consolidated gold production of 112,776 ounces in the fourth quarter, from continued higher grades at the Pampacancha deposit in Peru and the Lalor mine in Manitoba, and the contributions of the newly acquired Copper Mountain mine in British Columbia.
• Delivered a significant increase in operating cash flow before change in non-cash working capital to $246.5-million in the fourth quarter, a 35-per-cent increase compared with $182-million in the third quarter, which was meaningfully higher than prior quarters.
• Achieved 2023 consolidated production guidance for all metals. Full-year 2023 copper production of 131,691 tonnes, gold production of 310,429 ounces and silver production of 3,575,234 ounces increased by 26 per cent, 41 per cent and 13 per cent, respectively, compared with 2022.
• Consolidated 2023 cash cost and sustaining cash cost were better than expected, and significantly outperformed the 2023 guidance range. Full-year 2023 consolidated cash cost and sustaining cash cost per pound of copper produced, net of byproduct credits, were 80 cents and $1.72, respectively, increasing by 7 per cent and 17 per cent, respectively, compared with 2022.
• Consolidated cash cost and sustaining cash cost per pound of copper produced, net of byproduct credits, in the fourth quarter, were 16 cents and $1.09, respectively, improving by 85 per cent and 42 per cent, respectively, compared with the third quarter of 2023.
• Peru operations benefited from continued higher grades at the Pampacancha satellite pit, resulting in 33,207 tonnes of copper production and 49,418 ounces of gold production in the fourth quarter. Full-year copper production was within 2023 guidance ranges while gold production exceeded the top end of guidance. Peru cash cost per pound of copper produced, net of byproduct credits, in the fourth quarter improved to 54 cents, and full-year cash costs significantly improved over 2022 levels and achieved the low end of the 2023 annual cost guidance range.
• Manitoba operations produced 59,863 ounces of gold in the fourth quarter, a quarterly record, as higher gold and copper grade zones were mined at Lalor, and the New Britannia mill processed significantly higher amounts of gold ore. Full-year gold production was well within the 2023 guidance range and exceeded recent expectations of being positioned at the lower end of the range. Manitoba cash cost per ounce of gold produced, net of byproduct credits, was $434 during the fourth quarter, and full-year cash costs were within the 2023 annual guidance range.
• British Columbia operations produced 8,508 tonnes of copper at a cash cost per pound of copper produced, net of byproduct credits, of $2.67 in the fourth quarter. Full-year production and cash costs were within Hudbay's postacquisition guidance ranges. Operational stabilization plans continue to be implemented at the Copper Mountain mine, with a focus on opening additional mining faces, optimizing ore feed to the plant and improving plant reliability.
• Fourth quarter net earnings and earnings per share were $33.5-million and 10 cents, respectively. After adjusting for a non-cash loss of $34-million related to a quarterly revaluation of a closed site environmental reclamation provision and a non-cash revaluation loss of $9-million related to the gold prepayment liability, among other items, fourth quarter adjusted earnings per share were 20 cents.
• Cash and cash equivalents increased by $4.6-million to $249.8-million during the fourth quarter due to strong operating cash flows, bolstered by higher copper and gold prices, and sales volumes, enabling a $94.5-million reduction in net debt during the quarter.

Strong operating performance driving free cash flow generation with continued financial discipline:

• Executed on planned higher production levels, and achieved continued operating and capital cost-efficiencies to generate significant free cash flow in the fourth quarter.
• Achieved adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) of $274.4-million in the fourth quarter, the highest quarterly level over the last five years and a 44-per-cent increase from the previous recent high in the third quarter of 2023.
• Completed $90-million in debt repayments during the fourth quarter, with a $30-million net reduction in the company's revolving credit facility balance and a $59.7-million redemption of the remaining Copper Mountain bonds, well ahead of the 2026 maturity, to increase financial flexibility and lower financing costs. Deleveraging efforts continued into the first quarter of 2024, with an additional $10-million repayment of the company's revolving credit facility balance in January, 2024.
• Increased cash and total liquidity by $34.1-million to $573.7-million compared with the end of the third quarter. Net debt reduced to approximately $1,038-million during the fourth quarter, which, together with higher levels of adjusted EBITDA, improved the net debt to adjusted EBITDA ratio to 1.6 times compared with 2.0 times at the end of 2022.
• Delivered annual discretionary spending reduction targets for 2023 with lower growth capital and exploration expenditures compared with 2022. As a result of a continued focus on discretionary spending reductions, total capital expenditures for 2023 (excluding Copper Mountain) of approximately $243-million were $57-million lower than original guidance levels, a further decrease from the $30-million in reductions announced in the third quarter.

Executing on growth initiatives:

• Postacquisition plans to stabilize the Copper Mountain operations are under way, with a focus on mining fleet ramp-up activities, accelerated stripping and increasing mill reliability. Achieved the targeted $10-million in annualized corporate synergies as of January, 2024.
• Released a National Instrument 43-101 technical report for the Copper Mountain mine in December, 2023, which contemplates average annual copper production of 46,500 tonnes in the first five years, 45,000 tonnes in the first 10 years and 37,000 tonnes over the 21-year mine life. Average cash costs and sustaining cash costs over the mine life are expected to be $1.84 and $2.53 per pound of copper, respectively. Several opportunities to further increase production, improve costs and extend mine life are being evaluated for future mine plans.
• Achieved record copper recoveries of 87.4 per cent at the Constancia mill in the fourth quarter of 2023, as a result of the successful completion of the recovery improvement program in the second quarter, on time and on budget.
• Achieved higher copper recoveries above 90 per cent and gold recoveries above 65 per cent at the Stall mill in the second half of 2023, because of the successful ramp-up of the Stall mill recovery improvement project in the second quarter, on time and on budget.
• The New Britannia mill achieved record throughput levels averaging 1,650 tonnes per day in 2023 and 1,800 tonnes per day in the fourth quarter, exceeding its original design capacity of 1,500 tonnes per day, due to the successful implementation of process improvement initiatives.
• Commenced largest annual exploration program in Snow Lake, consisting of geophysical surveys and drill campaigns testing the newly acquired Cook Lake claims, former Rockcliff properties and near-mine exploration at Lalor.
• Advancing a development and exploration drift at the 1901 deposit in Snow Lake, located within 1,000 metres from the underground ramp access to the Lalor mine, with a focus on confirming the optimal mining method for the base metal and gold lenses, and converting the inferred mineral resources in the gold lenses to mineral reserves.
• Continuing to evaluate the Flin Flon tailings reprocessing opportunity through advancing metallurgical test work studies and analyzing metallurgical technologies.

"We had a strong end to the year, with increased copper production, record gold production and record financial performance in the fourth quarter, resulting in the successful achievement of our annual guidance metrics," said Peter Kukielski, president and chief executive officer. "Two thousand twenty-three was a year of execution and delivery as we realized the higher grades in Peru, achieved record gold production in Manitoba and enhanced our operating base with the addition of the Copper Mountain mine. We continued to demonstrate financial discipline in 2023 through reduced discretionary spending to drive free cash flow generation and debt reduction. These 2023 achievements are a testament to our outstanding team, which continues to deliver the plan while always operating safely and efficiently. Our commitment to continued financial discipline, together with our resilient operating platform, will allow us to prudently advance and unlock value from our leading organic pipeline of brownfield expansion and greenfield exploration and development opportunities."

Two thousand twenty-four annual guidance and outlook

Consolidated copper production is forecast to increase by 19 per cent to 156,500 tonnes in 2024, compared with 2023, with continued higher grades in Peru and a full year of British Columbia production.

Consolidated gold production is forecast to decrease slightly, to 291,000 ounces in 2024, compared with 2023, due to higher than planned gold grades being mined in Peru in the fourth quarter of 2023 and a deferral of high-grade gold zones in Peru to 2025. Total gold production in Peru over the 2023 to 2025 period is expected to be higher than previous guidance levels.

Consolidated cash cost, net of byproduct credits, in 2024 is expected to be within a range of $1.05 and $1.25 per pound of copper, higher than 2023 as a result of lower gold byproduct credits and a full year of contributions from British Columbia.

Total capital expenditures are expected to be $335-million in 2024, reflecting lower expenditures in Peru, Manitoba and Arizona, offset by higher expenditures in British Columbia associated with accelerated stripping to access higher grades, and a reclassification of costs from operating to capitalized stripping versus the recent technical report.

Exploration expenditures are expected to increase in 2024 as the company executes its largest-ever exploration program in the Snow Lake region, which is being partially financed by a critical minerals premium flow-through financing that was completed in the fourth quarter.

Continued focus on reducing discretionary spending in 2024, with total growth capital expenditures 23 per cent lower than 2023.

Summary of fourth quarter results

Consolidated copper production in the fourth quarter of 2023 was 45,450 tonnes, an 8-per-cent increase from the third quarter of 2023, while consolidated gold production was 112,776 ounces, an 11-per-cent increase, and consolidated silver production was 1,197,082 ounces, a 13-per-cent increase. The increases in production were primarily due to continued high recoveries in Peru and Manitoba, mining of the high-grade copper and gold zones at the Pampacancha deposit, and higher-grade gold and copper zones at Lalor, record throughput at the New Britannia gold mill, and incremental production from the Copper Mountain mine. Consolidated zinc production in the fourth quarter of 2023 decreased compared with the prior quarter, primarily due to lower base metals throughput and lower zinc grades at Lalor, as planned.

Cash generated from operating activities in the fourth quarter of 2023 increased by 50 per cent to $228.5-million, compared with $151.9-million in the third quarter of 2023. Operating cash flow before change in non-cash working capital was a record $246.5-million, reflecting an increase of $64.5-million compared with the third quarter. The increase in operating cash flow before change in non-cash working capital was primarily the result of higher copper and gold sales volumes from mining the high-grade copper and gold zones of the Pampacancha deposit, and higher-grade gold and copper zones at Lalor, and higher copper and gold metal prices.

Net earnings and earnings per share in the fourth quarter of 2023 were $33.5-million and 10 cents, respectively, compared with net earnings and earnings per share of $45.5-million and 13 cents, respectively, in the third quarter. The results were positively impacted by higher copper, gold and silver sales volumes, as well as higher copper, gold and silver realized prices. This was partially offset by a non-cash loss of $34-million related to the quarterly revaluation of the environmental reclamation provision at closed sites and a non-cash revaluation loss of $9-million related to the gold prepayment liability.

Adjusted net earnings and adjusted net earnings per share in the fourth quarter of 2023 were $71.3-million and 20 cents per share, respectively, after adjusting for the non-cash loss related to the revaluation of the company's environmental provision and the revaluation loss on the gold prepayment liability, among other items. This compares with adjusted net earnings and adjusted net earnings per share of $24.4-million and seven cents in the prior quarter. Fourth-quarter adjusted EBITDA was $274.4-million, an increase of 44 per cent compared with $190.7-million in the third quarter of 2023.

In the fourth quarter of 2023, consolidated cash cost per pound of copper produced, net of byproduct credits, was 16 cents, compared with $1.10 in the third quarter. Consolidated sustaining cash cost per pound of copper produced, net of byproduct credits, was $1.09 in the fourth quarter of 2023, compared with $1.89 in the third quarter. The significant decrease in both was the result of higher copper production and higher byproduct credits, partially offset by higher mining, milling and G&A (general and administrative) costs from incorporating Copper Mountain.

Consolidated all-in sustaining cash cost per pound of copper produced, net of byproduct credits, was $1.31 in the fourth quarter of 2023, lower than $2.04 in the third quarter, due to the same reasons outlined above, as well as lower corporate selling and administrative expenses.

As at Dec. 31, 2023, total liquidity increased to $573.7-million, including $249.8-million in cash and cash equivalents, as well as undrawn availability of $323.9-million under the company's revolving credit facilities. Net debt declined by $94.5-million to $1,037.7-million as at Dec. 31, 2023. During the quarter, Hudbay redeemed, in full, the remaining $59.7-million of outstanding Copper Mountain bonds and reduced the net balance drawn under the revolving credit facilities by $30-million. Based on continued free cash flow generation in the fourth quarter of 2023, the company continues to make progress on the deleveraging targets set out in the 3-P plan for sanctioning Copper World. Current liquidity, combined with cash flow from operations, is expected to be sufficient to meet liquidity needs for the foreseeable future.

Summary of full year results

Hudbay achieved its 2023 consolidated production guidance for all metals. On a business unit stand-alone basis, Peru exceeded the top end of the gold production guidance range, Manitoba exceeded the top end of the copper production guidance range and Copper Mountain exceeded the top end of the silver production guidance range for the portion of 2023 since acquisition. Consolidated copper, gold and silver production for the full year 2023 increased by 26 per cent, 41 per cent and 13 per cent, respectively, compared with 2022, with the acquisition of Copper Mountain, as well as higher throughput and recoveries in Peru and Manitoba, and higher overall copper, gold and silver grades.

Consolidated cash cost per pound of copper produced, net of byproduct credits, in 2023 was 80 cents, compared with 86 cents in 2022, and achieved the low end of the 2023 annual cost guidance range. This decrease was mainly the result of higher copper production and higher byproduct credits, partially offset by higher mining and milling costs from incorporating Copper Mountain. Consolidated sustaining cash cost per pound of copper produced, net of byproduct credits, was $1.72 in 2023, compared with $2.07 in 2022, outperforming 2023 guidance expectations. This decrease was driven by the above reasons, as well as the lower cash sustaining capital expenditures. Consolidated all-in sustaining cash cost per pound of copper produced, net of byproduct credits, was $1.92 in 2023, lower than $2.26 in 2022, due to the same reasons outlined above, partially offset by higher corporate selling and administrative expenses.

Cash generated from operating activities decreased to $476.9-million in 2023 from $487.8-million in 2022, primarily due to a $189.2-million decrease in non-cash working capital caused by timing and changes in provisionally priced receivables and an increase in inventory. Operating cash flow before change in non-cash working capital increased to $570-million from $391.7-million in 2022. The increase in operating cash flow before change in non-cash working capital was primarily the result of higher copper and gold sales volumes, and higher gold prices, partially offset by lower zinc sales volumes, lower copper and zinc metal prices, and higher treatment and refining charges. Zinc sales volumes were lower than the prior year due to the planned closure of the 777 mine in June, 2022.

Net earnings and earnings per share for 2023 were $69.5-million and 22 cents, respectively, compared with 2022 net earnings and earnings per share of $70.4-million and 27 cents, respectively. Full-year 2023 net earnings were impacted by $21.4-million in non-cash mark-to-market losses arising from the revaluation of the gold prepayment liability, investments and share-based compensation, partially offset by a non-cash gain of $11.4-million related to the revaluation of the Flin Flon environmental reclamation provision. The prior-period results benefited from a non-cash $133.5-million revaluation gain for the Flin Flon environmental reclamation provision, partially offset by a $95-million pretax impairment loss related to the previous stand-alone development plan for the Rosemont deposit. Full-year 2023 adjusted EBITDA was $647.8-million, an increase of 36 per cent compared with $475.9-million in 2022.

Peru operations review

During the fourth quarter of 2023, the Peru operations produced 33,207 tonnes of copper, 49,418 ounces of gold, 836,208 ounces of silver and 397 tonnes of molybdenum. Fourth quarter 2023 production of copper, gold and silver increased 14 per cent, 22 per cent and 20 per cent, respectively, over the third quarter, with continued higher copper and precious metal grades, higher recoveries, and higher throughput. Peru's full-year 2023 production of copper, gold, silver and molybdenum was 12 per cent, 96 per cent, 8 per cent and 14 per cent higher, respectively, than 2022, for the same reasons outlined above. Copper production was in line with the company's annual guidance range, whereas silver and molybdenum production were near the upper end, and gold production exceeded the top end of the annual guidance range by 6 per cent.

Total ore mined in the fourth quarter of 2023 decreased by 9 per cent compared with the third quarter, due to continued phase 5 stripping activities at Constancia and a significant increase in Pampacancha mining activity, which entails a higher amount of stripping. The decrease in total mined ore was in line with the mine plan, with ore stockpiles supplementing mill feed during the quarter. Ore mined from Pampacancha during the fourth quarter was 5.6 million tonnes, at average grades of 0.56 per cent copper and 0.32 gram per tonne gold.

Ore milled during the fourth quarter of 2023 was consistent with the prior quarter. Milled copper and gold grades increased by 12 per cent and 19 per cent, respectively, in the fourth quarter compared with the third quarter, due to continued contribution of higher-grade copper and gold ore from Pampacancha.

Recoveries of copper, gold and silver during the fourth quarter of 2023 were 87.4 per cent, 77.6 per cent and 78 per cent, respectively, with recoveries of all metals improving quarter-over-quarter, in line with metallurgical models. The Constancia mill achieved record copper recoveries as a result of the successful completion of the recovery improvement program in the second quarter of 2023, as planned, ahead of the start of the period of significantly higher grades from the Pampacancha pit. The program scope was to increase copper recoveries by 2 per cent by increasing the rougher mass, and the mill continues to achieve the targeted higher copper recoveries. Copper recoveries in the fourth quarter also benefited from higher overall head grades and lower contaminants.

Ore mined during 2023 was 30 per cent lower than 2022 due to the same factors as the quarterly variance, as well as increased stockpile processing early in 2023 to ration fuel during the protests and civil unrest experienced in Peru. Copper recoveries in 2023 were 1 per cent lower than 2022, due to higher levels of contaminants in processed stockpile ore during the first half of 2023. Gold and silver recoveries in 2023 were 13 per cent and 7 per cent higher, respectively, than 2022 due to increased processing of higher-grade Pampacancha ore.

Combined mine, mill and G&A unit operating costs in the fourth quarter were slightly higher than the third quarter, primarily due to the costs associated with the scheduled semi-annual plant maintenance shutdown. Combined mine, mill and G&A unit operating costs for the full year 2023 were 2 per cent lower than 2022, primarily due to lower mining costs as a result of lower ore mined and higher capitalized stripping.

Peru's cash cost per pound of copper produced, net of byproduct credits, in the fourth quarter of 2023 was 54 cents, a decrease of 35 per cent compared with the third quarter, due to higher byproduct credits, mainly from gold, higher capitalized stripping and higher copper production. This was partially offset by higher profit-sharing expenses, and higher treatment, refining and freight costs. Cash cost per pound of copper produced, net of byproduct credits, in 2023 was $1.07, a 32-per-cent reduction from 2022, and achieved the lower end of the cost guidance range due to the same factors noted above.

Sustaining cash cost per pound of copper produced, net of byproduct credits, for the fourth quarter and for the year ended 2023, were 20 per cent and 23 per cent lower, respectively, than the third quarter and the prior year, primarily due to the same factors affecting cash cost noted above and lower sustaining capital expenditures. Total annual sustaining capital expenditures in Peru were $27.9-million lower than the original guidance, exceeding the $10-million previously reduced target, primarily a result of lower capitalized stripping costs.

Manitoba operations review

The Manitoba operations produced a record 59,863 ounces of gold during the fourth quarter of 2023, along with 3,735 tonnes of copper, 5,747 tonnes of zinc and 255,579 ounces of silver. Production of gold and copper increased by 6 per cent and 4 per cent, respectively, in the fourth quarter compared with the third quarter, while production of silver and zinc decreased by 3 per cent and 44 per cent, respectively. This was due to mining of higher-grade gold zones, with a focus on higher-quality ore production and higher recoveries at the New Britannia and Stall mills. Despite significantly higher metal production in the fourth quarter, 2023 production of copper and zinc was lower by 18 per cent and 37 per cent, respectively, than in 2022, mainly due to the loss of production from the closure of the 777 mine in June, 2022, and lower comparative zinc grades. Production of gold in 2023 was 16 per cent higher than in 2022, while silver production was unchanged year-over-year. The production of all metals achieved 2023 production guidance, while copper exceeded the top end of 2023 annual guidance range.

In Manitoba, the company continues to focus on improvement initiatives aimed at supporting higher production levels, minimizing dilution and enhancing metal recoveries at the Snow Lake operations. A significant focus continues to be placed on improving the quality of ore production at Lalor mine, employing techniques such as stope redesigns, grade control practices prior to blasting, assaying blasthole cuttings and implementing mine design adjustments to mitigate dilution. These pro-active measures have successfully reduced the inclusion of waste rock in the mining cycle, and increased gold, copper and silver grades during the fourth quarter.

Optimization of development drift size has led to a 15-per-cent reduction in waste volume and an 18-per-cent decrease in unit development costs in 2023 compared with 2022. Higher shaft availability has led to efficient ore hoisting and has eliminated the need for trucking ore to surface, resulting in a 5-per-cent increase in tonnes hoisted in 2023 compared with 2022. Despite encountering some production challenges in deeper mining areas due to longer haul distances, smaller stope dimensions and lower ore bulk density, the team is actively pursuing initiatives to continue to bolster efficiency and further enhance mucking productivity.

Additionally, the company advanced optimization initiatives at New Britannia mill to achieve higher throughput rates by prioritizing process improvements and seamlessly integrating additional gold ore feed from the Lalor mine. This reallocation of ore has led to reduced feed to Stall mill, prompting a careful evaluation of lower tonnage set points to optimize plant operations. The team has also started exploring opportunities to share maintenance services with New Britannia during shutdown periods which, if successful, would reduce overall contractor requirements.

At Lalor, Hudbay achieved higher development advance rates during the fourth quarter compared with prior quarters of 2023. A comprehensive review of the long-range mine plan for zone 40 has led to significantly reduced future capital development needs by transitioning to a more selective mining method, thereby enhancing the reserve grade for this mining front. Lalor ore mined during the fourth quarter increased by 1 per cent compared with the third quarter. Notably, gold grades were 5.92 grams per tonne in the quarter, a 17-per-cent increase from the third quarter.

Total ore mined at the Manitoba operations in 2023 was 24 per cent lower than in 2022, mainly due to the planned closure of the 777 mine in June, 2022. However, total ore mined at Lalor in 2023 was 1 per cent higher than in 2022. Gold, copper and silver grades mined at Lalor during 2023 were 19 per cent, 18 per cent and 12 per cent higher than in 2022, reflecting the successful execution of the strategic mine plan. Zinc grades mined at Lalor for the full year 2023 were 4 per cent lower compared with the same period in 2022, consistent with the mine plan.

The Stall mill processed slightly less ore in the fourth quarter of 2023 compared with the third quarter, due to more ore being sent to New Britannia as the mill exceeded design throughput. After the commissioning of the Stall mill recovery improvement project in the second quarter of 2023, the operations continue to focus on optimizing circuits to achieve targeted recoveries by reducing primary grind size, refining the flotation circuit balance, and mass pull and reagent selection. These adjustments have proven highly effective, resulting in notably higher recoveries for copper -- above 90 per cent in the second half of 2023. In addition, the Stall mill achieved its targeted gold recovery levels of 67.5 per cent in the fourth quarter, bringing the 2023 annual recovery to 64.8 per cent, compared with 58 per cent in 2022.

Process improvement initiatives at New Britannia have been successfully implemented with minimal capital outlays, enabling the company to reach progressively higher production targets during the fourth quarter. The New Britannia mill averaged approximately 1,800 tonnes per day in the fourth quarter, approximately 12 per cent above average levels in the third quarter of 2023.

Combined mine, mill and G&A unit operating costs in the fourth quarter of 2023 slightly decreased compared with the third quarter, reflecting lower overall costs, partially offset by lower total ore milled. Combined mine, mill and G&A unit operating costs for the full year 2023 were $217 (Canadian) per tonne, reflecting the stand-alone cost structure of the Snow Lake operations in 2023 after the closure of the Flin Flon operations in June, 2022.

Manitoba's cash cost per ounce of gold produced, net of byproduct credits, has trended lower throughout 2023, averaging $434 in the fourth quarter. Cash costs were significantly lower in the fourth quarter, with higher byproduct credits and higher gold production, in accordance with the mine plan. Full-year 2023 cash cost per ounce of gold produced, net of byproduct credits, was $727, which was higher than 2022 costs primarily due to significantly lower byproduct credits, partially offset by lower overall costs due to the closure of the 777 mine in June, 2022, and higher gold production. Full-year 2023 cash cost per ounce of gold produced, net of byproduct credits, was within annual guidance range.

Sustaining cash cost per ounce of gold produced, net of byproduct credits, for the fourth quarter of 2023 was $788, a decrease of 16 per cent compared with the third quarter, due to the same factors affecting cash cost combined with lower sustaining capital expenditures. Total annual sustaining capital expenditures in Manitoba are $19-million lower than the original 2023 guidance levels of $75-million, primarily a result of lower capital development costs realized at Lalor as the team focuses on cost-efficiencies. Sustaining cash cost per ounce of gold produced, net of byproduct credits, in 2023 was $1,077, a decrease of 1 per cent from 2022, primarily due to the same factors affecting fourth-quarter sustaining cash cost noted above.

British Columbia operations review

During the fourth quarter of 2023, the British Columbia operations produced 9,119 tonnes of copper, 3,091 ounces of gold and 98,441 ounces of silver. Hudbay achieved the postacquisition 2023 production guidance for copper and gold, and exceeded the postacquisition guidance for silver.

Total ore mined at Copper Mountain in the fourth quarter of 2023 was 2.6 million tonnes, less than initially planned, but production was supplemented with stockpile rehandle of 1.5 million tonnes. The mine operations team has initiated a fleet production ramp-up plan to capture the full value of idle capital equipment at the Copper Mountain site. This plan entailed remobilization of the mining fleet from 14 trucks to 28 trucks by the end of 2023, allowing for increased waste removal during the fourth quarter. The company continues to focus on hiring additional haul truck drivers, and a fully trained complement of truck drivers are expected to be in place in the first half of 2024. The utilization of the full truck fleet enabled additional 2023 prestripping to access higher head grades.

Benefiting from stabilization initiatives within the comminution circuit, the mill processed 3.3 million tonnes of ore during the fourth quarter, reflecting average mill availability of 86.7 per cent, a 3-per-cent increase versus the third quarter of 2023. The initiatives included, but were not limited to, changes in screen sizes, a reduction in grinding media loading rates and a change in semi-autogenous grinding (SAG) mill operational strategy. The SAG mill throughput in the fourth quarter has been impacted by lower freshwater availability for processing, higher coarse feed from stockpiled ore and reduced reliability of the crushing circuit, driven principally by significant interruptions caused by the removal of scrap metal from the material handling system as the mining progresses through areas of historical underground workings.

Maintenance practices to improve mill availability continue to be a key pillar of the company's stabilization initiatives. These include the implementation of improved maintenance management processes planned for the first half of 2024, and a change in the maintenance organizational structure which was completed in the fourth quarter of 2023. Beyond maintenance practices, material handling and transportation in the comminution circuit, particularly in the winter months, have a significant impact on mill performance. Work has begun to analyze the trade-off among the various alternatives to further enhance mill performance.

Milled copper grades during the fourth quarter of 2023 averaged 0.33 per cent, an 8-per-cent reduction from the third quarter, but were significantly higher than the reserve grade of 0.25 per cent. Copper recoveries of 78.8 per cent were lower than the third quarter of 2023 due to volumetric restriction in the regrind circuit limiting the rougher circuit performance. Following a period of investigation, changes to the flotation operational strategy that mirror the company's successful processes at Constancia were implemented, including reagent selection and dose modification, reactivation and reprogramming of expert controls, and circuit configuration changes. The benefits of these operational strategy improvements are expected to start to be realized in the second half of 2024.

Combined mine, mill and G&A unit operating costs in the fourth quarter of 2023 were $20.90 (Canadian) per tonne milled, 3 per cent below the third quarter. Combined unit operating costs are expected to decrease over time as the company continues to implement stabilization and optimization initiatives at Copper Mountain.

British Columbia's cash cost and sustaining cash cost per pound of copper produced, net of byproduct credits, in the fourth quarter of 2023 were $2.67 and $3.93, respectively. Cash costs were within the postacquisition guidance range.

Advancing Copper Mountain mine stabilization plans

Since completing the acquisition of Copper Mountain on June 20, 2023, Hudbay has been focused on advancing stabilization plans, including opening up the mine by adding additional mining faces and remobilizing idle haul trucks, optimizing the ore feed to the plant, and implementing plant improvement initiatives.

On Dec. 5, 2023, the company released its first National Instrument 43-101 technical report in respect of the 75-per-cent-owned Copper Mountain mine. As detailed in the technical report, the mine plan contemplates average annual copper production of 46,500 tonnes in the first five years, 45,000 tonnes in the first 10 years and 37,000 tonnes over the 21-year mine life. Average cash costs and sustaining cash costs per pound of copper produced, net of byproduct credits, over the mine life are expected to be $1.84 and $2.53, respectively. The updated mine plan represents an approximate 90-per-cent increase in average annual copper production and an approximate 50-per-cent decrease in cash costs over the first 10 years compared with 2022.

Hudbay's stabilization plans are focused on improving reliability and driving sustainable long-term value:

• Increased mining activities -- commenced a fleet ramp-up plan to remobilize idle haul trucks. The plan entails remobilization of the mining fleet from 14 trucks to 28 trucks by the end of 2023. A fully trained complement of truck drivers is expected to be in place in the first half of 2024. Once the fleet ramp-up plan is complete, the company expects to have improved flexibility in the Copper Mountain mine with additional mining faces.
• Accelerated stripping to access higher grades -- Hudbay has commenced a campaign of accelerated stripping over the next three years to enable access to higher-grade ore and to mitigate the substantially reduced stripping undertaken by Copper Mountain over the four years prior to completion of the acquisition. The accelerated stripping program is expected to improve operating efficiencies and lower unit operating costs.
• Improved mill throughput and recoveries -- Hudbay's mine plan assumes a mill ramp-up to its nominal capacity of 45,000 tonnes per day in 2025. An expansion to the permitted capacity of 50,000 tonnes per day is planned in 2027. The mine plan assumes approximately $23-million in growth capital spending over 2025 and 2026 in connection with the mill expansion. Hudbay intends to improve mill recoveries with a more consistent ore feed grade, changes to the flotation reagents and replacement of key pumps.
• Operating efficiencies and corporate synergies -- Hudbay's stabilization plans are expected to generate more than $20-million in annual operating efficiencies over the next three years, compared with Copper Mountain's performance in 2022, through improvements in copper recovery, higher throughput rates and lower combined unit operating costs. In addition, Hudbay has realized the targeted $10-million in annual corporate synergies and is on schedule to exceed the target.
• Ensure stabilization of near-term cash flows -- recently entered into copper hedging contracts representing approximately 25 per cent of expected Copper Mountain production in 2024, as a prudent measure to secure cash flows during the stabilization period.

The mine plan is based on a revised resource model and was constructed using consistent methods applied at the Constancia, Copper World and Mason deposits. The mineral reserve estimates total 367 million tonnes at a copper grade of 0.25 per cent and a gold grade of 0.12 gram per tonne, supporting a 21-year mine life. An additional 140 million tonnes of measured and indicated resources at 0.21 per cent copper and 0.10 gram per tonne gold, and 370 million tonnes of inferred resources at 0.25 per cent copper and 0.13 gram per tonne gold, exclusive of mineral reserves, provide significant upside potential for reserve conversion and extending mine life. Infill drilling is planned for 2024 to target reserve conversion.

There are several opportunities to further increase production, improve costs and extend mine life for Copper Mountain. While these opportunities have not been considered in the technical report, as they are not yet at the level of required engineering, the company is advancing studies to evaluate the potential for these to be reflected in future mine plans.

Delivered brownfield capital projects on time and on budget

The Constancia mill achieved record copper recoveries of 87.4 per cent in the fourth quarter, primarily as a result of the successful completion of the recovery improvement program in the second quarter of 2023, as planned, ahead of the start of significantly higher grades being mined from the Pampacancha pit in the second half of 2023. The program scope was to increase copper recoveries by 2 per cent by increasing the rougher mass, and the mill continues to achieve the targeted higher copper recoveries.

After the commissioning of the Stall mill recovery improvement project in the second quarter of 2023, subsequent optimization activities proved highly effective, resulting in notably higher recoveries for copper above 90 per cent and gold above 65 per cent in the second half of 2023. Specifically, the Stall mill achieved its targeted gold recovery levels of 67.5 per cent in the third and fourth quarters, compared with 60 per cent in the second quarter.

The total growth capital expenditures in 2023 associated with the completion of these recovery improvement projects were in line with the company's guidance of $25-million.

The New Britannia mill has consistently achieved higher throughput levels, averaging 1,650 tonnes per day in 2023 and approximately 1,800 tonnes per day in the fourth quarter, significantly exceeding its original design capacity of 1,500 tonnes per day. The company has successfully implemented process improvement initiatives that required minimal capital outlays in pursuit of higher output that aligns with increased gold production from the Lalor mine.

Generating free cash flow with increased production and continued financial discipline

Hudbay delivered a second successive quarter of positive free cash flow during the fourth quarter of 2023 as it executed the plan for higher copper and gold production from Pampacancha, and higher gold production at Lalor, both driven by higher grades. The company continues to expect to see strong production levels throughout 2024 from sustained higher grades in Peru and Manitoba, along with additional production from the recently acquired Copper Mountain mine.

During the fourth quarter, Hudbay completed $30-million in net repayments on its revolving credit facilities and redeemed, in full, the remaining $59.7-million of Copper Mountain's bonds from treasury. The company also recommenced deliveries under the gold forward sale and prepay agreement in October, 2023, further reducing the outstanding gold prepayment liability, and the company is on schedule to fully repay the gold prepay facility by August, 2024. Despite these debt repayments, the company increased cash and cash equivalents to $249.8-million, and reduced overall net debt to $1,037.7-million as at Dec. 31, 2023, compared with $245.2-million and $1,132.2-million, respectively, as at Sept. 30, 2023. The $94.5-million decline in net debt, together with higher levels of adjusted EBITDA in the fourth quarter, have improved the net debt to adjusted EBITDA ratio to 1.6 times compared with 2.0 times at the end of 2022. Subsequent to quarter-end, the company continued its deleveraging efforts with an additional $10-million repayment on its revolving credit facilities.

During the fourth quarter, Hudbay continued to take steps to ensure free cash flow generation and continued financial discipline into 2024 and 2025. To this end, the company entered into forward sales contracts at Copper Mountain for a total of 3,600 tonnes of 2024 copper production over the 12-month period from May, 2024, to April, 2025, at an average price of $3.93 per pound, as well as zero-cost collars for 6,000 tonnes of copper production over the 12-month period from May, 2024, to April, 2025, at an average floor price of $3.83 per pound and an average cap price of $4.03 per pound. As at Dec. 31, 2023, 7.9 million pounds of copper forwards and 13.2 million pounds of copper collars were outstanding.

Hudbay successfully delivered on its annual discretionary spending reduction targets for 2023. As a result of continued financial discipline and capital cost-efficiencies achieved, total capital expenditures of approximately $243-million for Peru, Manitoba and Arizona in 2023 were approximately $57-million lower than the original guidance levels, a further decrease from the $30-million reduction announced in the third quarter, representing a 19-per-cent reduction from the original 2023 total capital expenditure guidance of $300-million.

Senior management team appointments

In November, 2023, Hudbay promoted Luis Santivanez to vice-president, South America. Mr. Santivanez joined Hudbay in Peru in 2018 and was promoted to general manager of the South America operations in 2022. Mr. Santivanez has over 20 years of experience at global mining companies working across Peru, Central America and Australia. Under his leadership, the Constancia operations have delivered a successful ramp-up at Pampacancha, navigated through a period of politically driven social unrest in Peru and further enhanced the company's partnerships with the local communities.

In January, 2024, Hudbay appointed John Ritter as vice-president, British Columbia business unit. Mr. Ritter brings a diverse background with over 30 years of experience in technical, operational and senior leadership roles at global mining companies. He was most recently the general manager of the New Afton mine in British Columbia and has strong ties with the local community near the Copper Mountain mine. His focus on operational excellence and value-creating improvements will be instrumental as he leads the stabilization and optimization plans at the Copper Mountain mine.

Advancing permitting at Copper World

The first key state permit required for Copper World, the mined land reclamation plan, was initially approved by the Arizona State Mine Inspector in October, 2021, and was subsequently amended to reflect a larger private land project footprint. This approval was challenged in state court, but the challenge was dismissed in May, 2023, as having no basis. In late 2022, Hudbay submitted the applications for an aquifer protection permit and an air quality permit to the Arizona Department of Environmental Quality. The company expects to receive these two outstanding state permits in 2024.

Hudbay intends to initiate a minority joint venture process prior to commencing a definitive feasibility study, which will allow the joint venture partner to participate in the final Copper World project design and the financing of definitive feasibility study activities. The opportunity to sanction Copper World is not expected until late 2025, based on current estimated timelines. The decision to sanction Copper World will ultimately be evaluated against other competing investment opportunities as part of Hudbay's capital allocation process.

Hudbay released results of the derisked and enhanced Copper World prefeasibility study for phase 1 in September, 2023, which demonstrated a simplified mine plan with an extended 20-year mine life requiring only state and local permits, an after-tax net present value (8-per-cent discount) of $1.1-billion and a 19-per-cent internal rate of return at a copper price of $3.75 per pound. Average annual copper production over the first 10 years is expected to be approximately 92,000 tonnes at cash costs and sustaining cash costs per pound of copper of $1.53 and $1.95, respectively. Copper World is one of the highest-grade open-pit copper projects in the Americas, with proven and probable mineral reserves of 385 million tonnes at 0.54 per cent copper.

Snow Lake exploration

Hudbay continues to compile results from continuing infill drilling at Lalor, which will be incorporated into the next annual mineral reserve and resource estimate update expected to be announced in March, 2024.

The planned 2024 exploration program is Hudbay's largest Snow Lake program in the company's history and it is currently under way, with plans to continue testing the deep extensions of the gold and copper zones at Lalor and complete follow-up drilling at the Lalor Northwest target. The 2024 program will also explore the newly acquired Cook Lake claims and the former Rockcliff claims located within trucking distance of the existing Snow Lake processing infrastructure. As previously disclosed, both the Cook Lake and former Rockcliff claims were acquired by the company as part of transactions completed in 2023. A majority of the Cook Lake and former Rockcliff claims have been untested by modern deep geophysics, which was the discovery method for the Lalor deposit. Hudbay's 2024 exploration program includes a large geophysics program consisting of surface electromagnetic surveys using cutting-edge techniques that enable the team to detect targets at depths of almost 1,000 metres below surface. The company is exploring its newly expanded land package in hopes of finding a new anchor deposit to maximize and extend the life of the Snow Lake operations beyond 2038.

The company also expects to advance a development and exploration drift at the 1901 deposit located within 1,000 metres of the haulage ramp to Lalor. The program is expected to take place over 2024 and 2025, with the development of an access drift, drill platforms and diamond drilling to further confirm the optimal mining method to extract the base metal and gold lenses, and to convert the inferred mineral resources in the gold lenses to mineral reserves.

Advancing metallurgical test work for the Flin Flon tailings reprocessing opportunity

Hudbay identified the opportunity to reprocess Flin Flon tailings, with initial confirmatory drilling completed in 2022 indicating higher zinc, copper and silver grades than predicted from historical mill records, while confirming the historical gold grade. In 2023, Hudbay advanced metallurgical test work and evaluated metallurgical technologies, including the signing of a test work co-operation agreement with Cobalt Blue Holdings (COB) examining the use of COB technology to treat Flin Flon tailings. Initial results from preliminary roasting test work were encouraging in converting more than 90 per cent of pyrite into pyrrhotite and elemental sulphur. Final test work results will support the development of an overall flowsheet. Hudbay expects to continue these metallurgical activities throughout 2024 as it assesses the economic viability of the various metallurgical technologies.

Peru exploration update

The company continues to execute a limited drill program and technical evaluations at the Constancia deposit to confirm the economic viability of adding an additional mining phase to the current mine plan that would convert a portion of the mineral resources to mineral reserves. The results from this drill program, and technical and economic evaluations, are expected to be incorporated in the annual mineral reserve and resource estimate update in March, 2024.

Hudbay controls a large, contiguous block of mineral rights with the potential to host satellite mineral deposits in close proximity to the Constancia processing facility, including the past-producing Caballito property and the highly prospective Maria Reyna property. The company commenced early exploration activities at Maria Reyna and Caballito after completing a surface rights exploration agreement with the community of Uchucarcco in August, 2022. A drill permit application was submitted for the Maria Reyna property in November, 2023, and a similar application for the Caballito property is planned for the first half of 2024. In parallel, Hudbay continues to advance community engagement activities. Surface mapping and geochemical sampling confirm that both Caballito and Maria Reyna host sulphide- and oxide-rich copper mineralization in skarns, hydrothermal breccias and large porphyry intrusive bodies.

Progressing toward climate change commitments

In December, 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. While the company's operations are well positioned in the lower half of the global GHG emissions curve for copper operations, Hudbay recognizes its role in mitigating climate change, and that copper and the metals Hudbay produces play an important role in the world's transition to a greener future. Hudbay's GHG emissions reduction plan includes pursuing a 50-per-cent reduction in absolute Scope 1 and Scope 2 emissions from existing operations by 2030, and achieving net-zero total emissions by 2050.

In 2023, the company made significant progress toward its climate change goals, including:

• Peru renewable power supply agreement -- during the first quarter of 2023, Hudbay signed a new 10-year power purchase agreement with ENGIE Energia Peru for access to a 100 per cent renewable energy supply to Constancia. The agreement will come into effect in January, 2026, following the conclusion of Constancia's existing power supply agreement. Total Scope 1 and Scope 2 GHG emissions company-wide at Hudbay's current operations are expected to decline by 40 per cent during the life of the contract, positioning the company well to achieve its 50-per-cent reduction target by 2030.
• Electric shovel at Copper Mountain -- in September, 2023, Hudbay commissioned a new Komatsu PC8000 electric shovel at the Copper Mountain mine, which reduces carbon intensity by displacing existing diesel shovel production.
• Renewable diesel at Copper Mountain -- in 2023, Hudbay tested the use of renewable diesel in two of its non-trolley assist haul trucks at Copper Mountain in an effort to further reduce GHG emissions. The test results were promising and the company subsequently entered into renewable diesel contracts for approximately 80 per cent of the expected fuel to be purchased in 2024.
• Electric scooptram at Lalor -- in the first quarter of 2023, Hudbay initiated the trial of an electric Epiroc scooptram ST14 SG at the Lalor mine, which reduces carbon intensity by lowering emissions and reduces the temperature in the lower areas of the mine to improve ventilation. The trial was successful and, in the third quarter, a second electric scooptram was added to the fleet.

Two thousand twenty-four key objectives and annual guidance

Hudbay's key objectives for 2024 are to:

• Enhance Hudbay's position to deliver its leading copper growth pipeline;
• Deliver copper production growth and maintain strong gold production from its diversified operating platform to generate strong cash flow;
• Execute stabilization plan at Copper Mountain to drive improved operating performance and achieve operating synergies;
• Maintain continued focus on financial discipline as the company progresses toward achieving deleveraging targets by managing discretionary spending and generating strong returns on invested capital;
• Evaluate the viability of an additional mining phase at Constancia that could convert a portion of mineral resources to mineral reserves;
• Evaluate opportunities to utilize excess capacity at the Stall mill in Snow Lake to enhance production and achieve greater economies of scale;
• Progress derisking of the Copper World project through final state permitting activities and a potential joint venture partnership, to prudently advance the three prerequisites plan required for sanctioning;
• Execute the large exploration program on the expanded land package in Snow Lake to target new discoveries;
• Advance plans to drill the prospective Maria Reyna and Caballito properties near Constancia;
• Assess economic viability of various metallurgical technologies for the reprocessing of Flin Flon tailings;
• Advance exploration partnership with Marubeni to explore for new discoveries within trucking distance of the Flin Flon processing facilities;
• Continue to identify and evaluate opportunities to further reduce greenhouse gas emissions in alignment with the company's climate change commitments and global decarbonization goals;
• Assess growth opportunities that meet Hudbay's stringent strategic criteria and allocate capital to pursue those opportunities that create sustainable value for the company and its stakeholders;
• As always, continue to operate safely and sustainably, aligned with Hudbay's purpose to ensure that the company's activities have a positive impact on its people, its communities and its planet.

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

On a consolidated basis, Hudbay successfully achieved 2023 production guidance for all metals. On a business unit stand-alone basis, Peru exceeded the top end of the gold production guidance range and Manitoba exceeded the top end of the copper production guidance range, while British Columbia exceeded the top end of the silver production guidance range for the portion of 2023 since the acquisition of the Copper Mountain mine.

In 2024, consolidated copper production is forecast to increase to 156,500 tonnes, an increase of approximately 19 per cent compared with 2023 actual production levels. This growth is a result of continued higher-grade ore from Pampacancha in Peru, and continued higher recoveries in both Peru and Manitoba, as well as the contribution from a full year of production at the Copper Mountain mine. Consolidated gold production in 2024 is expected to slightly decline to 291,000 ounces, due to a smoothing of Pampacancha high-grade gold zones over the 2023 to 2025 period, as described further below.

Two thousand twenty-four copper production in Peru is expected to increase by 8 per cent from 2023 levels to 109,000 tonnes. Mill ore feed throughout 2024 is expected to revert back to the typical one-third from Pampacancha and two-thirds from Constancia, unlike 2023 when a majority of the ore feed was from Pampacancha in the second half of the year. Gold production is expected to be 84,500 ounces, lower than 2023 levels due to a smoothing of Pampacancha high-grade gold zones over the 2023 to 2025 period as additional high-grade areas were mined in 2023 ahead of schedule, resulting in gold production exceeding 2023 guidance levels, and other high-grade areas were deferred to 2025. Total gold production in Peru over the 2023 to 2025 period is expected to be higher than previous guidance levels. The Pampacancha deposit is now expected to be depleted in the third quarter of 2025, as opposed to mid-2025 previously. Peru's 2024 production guidance reflects periods of higher stripping activities in the Pampacancha pit in the second and third quarters, as well as regularly scheduled semi-annual mill maintenance shutdowns at Constancia during the second and fourth quarters of 2024.

In Manitoba, 2024 gold production is anticipated to be 185,000 ounces, consistent with 2023 production as the company expects the high gold grades and recoveries to continue into 2024. The production guidance anticipates Lalor operating at 4,500 tonnes per day and an increase in New Britannia mill throughput to 1,800 tonnes per day given the mill has been consistently operating above its 1,500-tonne-per-day nameplate capacity. Zinc production for 2024 is expected to be 31,000 tonnes, a 10-per-cent year-over-year decline as certain high-grade zinc areas were shifted to 2023, and the Lalor mine continues to prioritize higher-grade gold and copper zones in 2024. Manitoba's production guidance reflects a scheduled maintenance period at the Lalor mine during the third quarter of 2024.

In British Columbia, 2024 copper production is expected to be 37,000 tonnes, in line with the technical report for Copper Mountain issued in December, 2023.

Hudbay will release its updated three-year production outlook together with its annual mineral reserve and resource update in March, 2024.

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.

Copper cash cost in Peru is expected to increase to $1.25 to $1.60 per pound in 2024 versus 2023, primarily due to lower byproduct credits and higher mining costs associated with lower capitalized stripping, partially offset by higher copper production.

Gold cash cost in Manitoba is expected to increase by 10 per cent in 2024 compared with 2023, as a result of lower zinc and copper byproduct credits, and higher mining costs associated with less capitalized development costs.

Copper cash cost in British Columbia is expected to decrease by 10 per cent in 2024 compared with 2023, and is expected to be significantly lower than the $2.69 per pound cash cost contemplated in the December, 2023, technical report due to a reclassification of a portion of mining costs from operating expenses to capitalized costs. This is a result of a change from contractor mining to owner-operator mining as a more cost-effective approach for the additional required stripping, and the elimination of mining low-grade ore to stockpile in 2024, which increases the strip ratio and allocation of mining costs to capitalized stripping. In addition, the 2024 costs reflect a decrease in the discretionary tonnes moved, with total material moved in 2024 now expected to be 97 million tonnes compared with 104 million tonnes in the technical report.

Consolidated copper cash cost and consolidated sustaining cash cost in 2024 are both expected to be higher than 2023 results due to lower byproduct credits and a full year of contributions from British Columbia.

Capital expenditure guidance

Two thousand twenty-three total capital expenditures, excluding British Columbia, were $57-million, lower than original guidance expectations as a result of the discretionary capital reductions across the business. British Columbia capital expenditures were in line with Hudbay's 2023 guidance levels.

Total capital expenditures are expected to be $335-million for 2024. Hudbay expects to continue to reduce discretionary spending with year-over-year capital reductions in Peru and Manitoba, while spending in British Columbia will be focused on stabilization initiatives and accelerated stripping activities. Discretionary growth spending and capitalized exploration are expected to remain at low levels in 2024, and reflect a 20-per-cent decrease from 2023.

Peru's sustaining capital expenditures in 2024 are expected to decrease to $130-million primarily as a result of lower capitalized stripping. Peru's growth capital spending of $2-million in 2024 relates to continued mill recovery improvements in the molybdenum and copper circuits.

Manitoba's sustaining capital expenditures in 2024 are expected to be consistent with the lower 2023 spending, primarily due to a continued focus on streamlining costs and less mine capital development with increased post pillar mining. Manitoba's growth capital spending of $10-million in 2024 relates to the advancement of a development and exploration drift at the 1901 deposit to confirm the optimal mining method for the base metal and gold lenses and converting the inferred mineral resources in the gold lenses to mineral reserves. The 1901 growth expenditures will be partially financed by $3-million in proceeds from a Canadian development expense flow-through financing in December, 2023.

Manitoba spending guidance excludes approximately $15-million of annual care and maintenance costs related to the Flin Flon facilities in 2024, which are expected to be recorded as other operating expenses. The 2024 Flin Flon care and maintenance costs are 25 per cent lower than prior annual costs as a result of several cost-efficiencies achieved and identified to date.

In British Columbia, sustaining capital expenditures in 2024 are expected to be $35-million for equipment and building capital. In addition, the company expects to spend approximately $70-million for capitalized stripping costs in 2024 as it executes an accelerated stripping campaign as part of Hudbay's stabilization plan. The 2024 sustaining capital costs include a reclassification of mining costs from operating expenses to capitalized costs when compared with the December, 2023, Copper Mountain technical report. This is a result of a change from contractor mining to owner-operator mining as a more cost-effective approach for the additional required stripping, as well as the elimination of mining low-grade ore to stockpile in 2024, which increases the strip ratio and allocation of mining costs to capitalized stripping despite lowering the overall tonnes moved. This change lowers the cost per tonne moved and, in turn, the expected cash costs for British Columbia in 2024, as noted above, but the total aggregate operating and capital costs for 2024 are expected to be in line with the December, 2023, technical report.

Arizona growth capital spending of $20-million includes annual carrying and permitting costs for the Copper World and Mason projects for 2024.

Exploration guidance

Total expected exploration expenditures of $43-million in 2024 are 35 per cent higher than 2023 spending, primarily due to an extensive drilling program under way in Snow Lake, Man. The company's 2024 exploration activities are focused on areas with high potential for new discovery, and mineral reserve and resource expansion.

In Peru, 2024 exploration activities will continue to focus on permitting and drill preparation for the Maria Reyna and Caballito properties near Constancia. In Manitoba, the company has initiated the largest exploration program in its history in Snow Lake, focused on testing the deep extensions of the gold and copper zones at Lalor, the Lalor Northwest target, the newly acquired Cook Lake claims, and the former Rockcliff properties. The company intends to complete geophysical surveys on the new land package in the Snow Lake area to generate additional targets with plans to start drilling those targets later in 2024. A portion of the 2024 Manitoba exploration program will be financed by $11-million in proceeds from a critical minerals premium flow-through financing completed in December, 2023. Hudbay issued 1.31 million Canadian exploration expense (CEE) flow-through common shares of the company, at a price of $11.50 per CEE flow-through common share, representing a premium of approximately 85 per cent.

Dividend declared

A semi-annual dividend of one cent per share was declared on Feb. 22, 2024. The dividend will be paid out on March 22, 2024, to shareholders of record as of March 5, 2024.

Conference call and webcast

Date:  Friday, Feb. 23, 2024

Time:  11 a.m. ET

Webcast:  access at the company's website

Dial-in:  1-416-764-8650 or 1-888-664-6383

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, 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 (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, socio-political, marketing or other relevant factors, please see the technical reports for the company's material properties as filed by Hudbay on SEDAR+ and EDGAR.

About Hudbay Minerals Inc.

Hudbay is a copper-focused mining company with three long-life operations and a world-class pipeline of copper growth projects in Tier 1 mining-friendly jurisdictions of Canada, Peru and the United States.

Hudbay's operating portfolio includes the Constancia mine in Cusco (Peru), the Snow Lake operations in Manitoba (Canada) and the Copper Mountain mine in British Columbia (Canada). Copper is the primary metal produced by the company, which is complemented by meaningful gold production. Hudbay's growth pipeline includes the Copper World project in Arizona, the Mason project in Nevada (United States), the Llaguen project in La Libertad (Peru), and several expansion and exploration opportunities near its existing operations.

We seek Safe Harbor.