6-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 6-K

REPORT OF FOREIGN PRIVATE ISSUER
PURSUANT TO RULE 13A-16 OR 15D-16 OF
THE SECURITIES EXCHANGE ACT OF 1934

For the month of April 2016

Commission File Number: 001-34244

HUDBAY MINERALS INC.
(Translation of registrant’s name into English)

25 York Street, Suite 800
Toronto, Ontario
M5J 2V5, Canada
(Address of principal executive offices)

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.

Form 20-F [   ]                    Form 40-F [X]

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): [   ]

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): [   ]

Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.

Yes [   ]                     No [X]

If “Yes” is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): 82-

EXPLANATORY NOTE

On April 28, 2016, HudBay Minerals Inc. (“Hudbay”) filed on the Canadian Securities Administrators’ System for Electronic Document Analysis and Retrieval (SEDAR) website at www.sedar.com the following documents: (1) Management’s Discussion and Analysis of Results of Operations and Financial Condition for the three months ended March 31, 2016; (2) Unaudited Condensed Consolidated Interim Financial Statements for the three months ended March 31, 2016 and 2015; (3) a Credit Supporters Disclosure; (4) CEO Certification of Interim Filings; (5) CFO Certification of Interim Filings; and (6) a press release announcing the quarterly results for the first quarter of 2016.

Copies of the filings are attached to this Form 6-K and incorporated herein by reference, as follows:

• Exhibit 99.1 — Management’s Discussion and Analysis of Results of Operations and Financial Condition for the three months ended March 31, 2016;

• Exhibit 99.2 — Unaudited Condensed Consolidated Interim Financial Statements for the three months ended March 31, 2016 and 2015;

• Exhibit 99.3 — Credit Supporters Disclosure;

• Exhibit 99.4 — CEO Certification of Interim Filings;

• Exhibit 99.5 — CFO Certification of Interim Filings; and

• Exhibit 99.6 — Press release announcing the quarterly results for the first quarter of 2016.

2

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

HUDBAY MINERALS INC.
(registrant)
By:	/s/ Patrick Donnelly
Name:	Patrick Donnelly
Title:	Vice President and General Counsel

Date: April 29, 2016

3

EXHIBIT INDEX

The following exhibits are furnished as part of this Form 6-K:

Exhibit Description

99.1	Management’s Discussion and Analysis of Results of Operations and Financial Condition for the three months ended March 31, 2016
99.2	Unaudited Condensed Consolidated Interim Financial Statements for the three months ended March 31, 2016 and 2015
99.3	Credit Supporters Disclosure
99.4	CEO Certification of Interim Filings
99.5	CFO Certification of Interim Filings
99.6	Press release announcing the quarterly results for the first quarter of 2016

4

EX-99.1

HUDBAY MINERALS INC.

Management's Discussion and Analysis of

Results of Operations and Financial Condition

For the three months ended

March 31, 2016

April 28, 2016

TABLE OF CONTENTS	Page
Notes to Reader	1
Our Business	4
Summary	5
Key Financial and Production Results	6
Recent Developments	7
Constancia Operations Review	8
Manitoba Operations Review	10
Financial Review	16
Liquidity and Capital Resources	24
Trend Analysis and Quarterly Review	27
Non-IFRS Financial Performance Measures	29
Accounting Changes and Critical Estimates	35
Changes in Internal Control Over Financial Reporting	35

NOTES TO READER

This Management's Discussion and Analysis ("MD&A") dated April 28, 2016 is intended to supplement HudBay Minerals Inc.'s unaudited condensed consolidated interim financial statements and related notes for the three months ended March 31, 2016 and 2015 (the "consolidated interim financial statements"). The consolidated interim financial statements have been prepared in accordance with International Financial Reporting Standards (“IFRS"), including International Accounting Standard 34 Interim Financial Reporting, as issued by the International Accounting Standards Board.

Additional information regarding HudBay Minerals Inc., including the risks related to our business and those that are reasonably likely to affect our financial statements in the future, is contained in our continuous disclosure materials, including our most recent Annual Information Form (“AIF”), audited consolidated financial statements and Management Information Circular available on SEDAR at www.sedar.com and on EDGAR at www.sec.gov.

References to “Hudbay”, the “Company”, “we”, “us”, “our” or similar terms refer to HudBay Minerals Inc. and its direct and indirect subsidiaries as at March 31, 2016. "Hudbay Peru" refers to HudBay Peru S.A.C., our wholly-owned subsidiary which owns a 100% interest in the Constancia mine, and “Augusta” and “Hudbay Arizona” refer to HudBay Arizona Corporation (formerly named Augusta Resource Corporation), our wholly-owned subsidiary, which indirectly owns a 92.05% interest in the Rosemont project.

Change in Functional and Presentation Currency

The functional currency of each of our subsidiaries is the currency of the primary economic environment in which the entity operates. We reconsider the functional currency of our entities if there is a change in events and conditions which determined the primary economic environment. Prior to July 1, 2015, our consolidated financial statements were presented in Canadian dollars, which was our and all our material subsidiaries' functional currency, except for Hudbay Peru, HudBay (BVI) Inc. and the Hudbay Arizona entities, which have a functional currency of US dollars.

The ability of Hudbay Peru to repatriate funds in US dollars, as a result of reaching commercial production in the first half of 2015, and the purchase of Hudbay Arizona have significantly increased our exposure to the US dollar as cash inflows are now predominantly in US dollars and revenue and costs related to Constancia operations and Rosemont development are denominated in US dollars. Consequently, effective July 1, 2015, the US dollar was adopted as our corporate entity’s functional currency on a prospective basis. All our subsidiaries continue to measure the items in their financial statements using their functional currencies.

Effective July 1, 2015, we changed our presentation currency to US dollars from Canadian dollars. This change in presentation currency was made to better reflect our business activities, comprised primarily of US dollar revenues as well as associated US dollar denominated financings, and is consistent with our peers. The consolidated financial statements for all years presented have been translated into the new presentation currency in accordance with International Accounting Standard 21, The Effects of Changes in Foreign Exchange Rates.

All amounts are in US dollars unless otherwise noted.

1

Forward-Looking Information

This MD&A contains "forward-looking statements" and "forward-looking information" (collectively, "forward-looking information") within the meaning of applicable Canadian and United States securities legislation. All information contained in this MD&A, other than statements of current and historical fact, is forward-looking information. Often, but not always, forward-looking information can be identified by the use of words such as “plans”, “expects”, “budget”, “guidance”, “scheduled”, “estimates”, “forecasts”, “strategy”, “target”, “intends”, “objective”, “goal”, “understands”, “anticipates” and “believes” (and variations of these or similar words) and statements that certain actions, events or results “may”, “could”, “would”, “should”, “might” “occur” or “be achieved” or “will be taken” (and variations of these or similar expressions). All of the forward-looking information in this MD&A is qualified by this cautionary note.

Forward-looking information includes, but is not limited to, production, cost and capital and exploration expenditure guidance, including anticipated capital and operating cost savings, anticipated production at our mines and processing facilities, events that may affect our operations and development projects, the permitting, development and financing of the Rosemont project, the potential to refurbish the New Britannia mill and utilize it to process ore from the Lalor mine, anticipated cash flows from operations and related liquidity requirements, the anticipated effect of external factors on revenue, such as commodity prices, estimation of mineral reserves and resources, mine life projections, reclamation costs, economic outlook, government regulation of mining operations, and business and acquisition strategies. Forward-looking information is not, and cannot be, a guarantee of future results or events. Forward-looking information is based on, among other things, opinions, assumptions, estimates and analyses that, while considered reasonable by us at the date the forward-looking information is provided, inherently are subject to significant risks, uncertainties, contingencies and other factors that may cause actual results and events to be materially different from those expressed or implied by the forward-looking information.

The material factors or assumptions that we identified and were applied by us in drawing conclusions or making forecasts or projections set out in the forward-looking information include, but are not limited to:

- the success of mining, processing, exploration and development activities;

- the success of Hudbay’s cost reduction initiatives;

- the accuracy of geological, mining and metallurgical estimates;

- anticipated metals prices and the costs of production;

- the supply and demand for metals we produce;

- the supply and availability of concentrate for our processing facilities;

- the supply and availability of third party processing facilities for our concentrate;

- the supply and availability of all forms of energy and fuels at reasonable prices;

- the availability of transportation services at reasonable prices;

- no significant unanticipated operational or technical difficulties;

- the execution of our business and growth strategies, including the success of our strategic investments and initiatives;

- the availability of additional financing, if needed;

- the ability to complete project targets on time and on budget and other events that may affect our ability to develop our projects;

- the timing and receipt of various regulatory and governmental approvals;

- the availability of personnel for our exploration, development and operational projects and ongoing employee relations;

- the ability to secure required land rights to develop the Pampacancha deposit;

- maintaining good relations with the communities in which we operate, including the communities surrounding our Constancia mine and Rosemont project and First Nations communities surrounding our Lalor and Reed mines;

- no significant unanticipated challenges with stakeholders at our various projects;

- no significant unanticipated events or changes relating to regulatory, environmental, health and safety matters;

- no contests over title to our properties, including as a result of rights or claimed rights of aboriginal peoples;

2

- the timing and possible outcome of pending litigation and no significant unanticipated litigation;

- certain tax matters, including, but not limited to current tax laws and regulations and the refund of certain value added taxes from the Canadian and Peruvian governments; and

- no significant and continuing adverse changes in general economic conditions or conditions in the financial markets (including commodity prices and foreign exchange rates).

The risks, uncertainties, contingencies and other factors that may cause actual results to differ materially from those expressed or implied by the forward-looking information may include, but are not limited to, risks generally associated with the mining industry, such as economic factors (including future commodity prices, currency fluctuations, energy prices and general cost escalation), uncertainties related to the development and operation of our projects (including risks associated with the economics and permitting of the Rosemont project and related legal challenges), risks related to the maturing nature of our 777 mine and its impact on the related Flin Flon metallurgical complex, dependence on key personnel and employee and union relations, risks related to political or social unrest or change (including in relation to the Peruvian national elections), risks in respect of aboriginal and community relations, rights and title claims, operational risks and hazards, including unanticipated environmental, industrial and geological events and developments and the inability to insure against all risks, failure of plant, equipment, processes, transportation and other infrastructure to operate as anticipated, planned infrastructure improvements in Peru (including the expansion of the port in Matarani) not being completed on schedule or as planned, compliance with government and environmental regulations, including permitting requirements and anti-bribery legislation, depletion of our reserves, volatile financial markets that may affect our ability to obtain additional financing on acceptable terms, the permitting and development of the Rosemont project not occurring as planned, the failure to obtain required approvals or clearances from government authorities on a timely basis, uncertainties related to the geology, continuity, grade and estimates of mineral reserves and resources, and the potential for variations in grade and recovery rates, uncertain costs of reclamation activities, our ability to comply with our pension and other post-retirement obligations, our ability to abide by the covenants in our debt instruments and other material contracts, tax refunds, hedging transactions, as well as the risks discussed under the heading “Risk Factors” in our most recent Annual Information Form.

Should one or more risk, uncertainty, contingency or other factor materialize or should any factor or assumption prove incorrect, actual results could vary materially from those expressed or implied in the forward-looking information. Accordingly, you should not place undue reliance on forward-looking information. We do not assume any obligation to update or revise any forward-looking information after the date of this MD&A or to explain any material difference between subsequent actual events and any forward-looking information, except as required by applicable law.

Note to United States Investors

This MD&A has been prepared in accordance with the requirements of the securities laws in effect in Canada, which may differ materially from the requirements of United States securities laws applicable to US issuers.

Information concerning our mineral properties has been prepared in accordance with the requirements of Canadian securities laws, which differ in material respects from the requirements of the Securities and Exchange Commission (the “SEC”) set forth in Industry Guide 7. Under the SEC's Industry Guide 7, mineralization may not be classified as a “reserve” unless the determination has been made that the mineralization could be economically and legally produced or extracted at the time of the reserve determination, and the SEC does not recognize the reporting of mineral deposits which do not meet the SEC Industry Guide 7 definition of “Reserve”. In accordance with National Instrument 43-101 – Standards of Disclosure for Mineral Projects (“NI 43-101”) of the Canadian Securities Administrators, the terms “mineral reserve”, “proven mineral reserve”, “probable mineral reserve”, “mineral resource”, “measured mineral resource”, “indicated mineral resource” and “inferred mineral resource” are defined in the Canadian Institute of Mining, Metallurgy and Petroleum (the “CIM”) Definition Standards for Mineral Resources and Mineral Reserves adopted by the CIM Council on May 10, 2014. While the terms “mineral resource”, “measured mineral resource”, “indicated mineral resource” and “inferred mineral resource” are recognized and required by NI 43-101, the SEC does not recognize them. You are cautioned that, except for that portion of mineral resources classified as mineral reserves, mineral resources do not have demonstrated economic value. Inferred mineral resources have a high degree of uncertainty as to their existence and as to whether they can be economically or legally mined. It cannot be assumed that all or any part of an inferred mineral resource will ever be upgraded to a higher category. Therefore, you are cautioned not to assume that all or any part of an inferred mineral resource exists, that it can be economically or legally mined, or that it will ever be upgraded to a higher category. Likewise, you are cautioned not to assume that all or any part of measured or indicated mineral resources will ever be upgraded into mineral reserves.

3

Presentation of Non-IFRS Financial Performance Measures

We use realized prices as a non-IFRS financial performance measure in our MD&A. For a detailed description, please see the discussion under “Financial Review” beginning on page 16 of this MD&A. In addition, we use operating cash flow per share, sustaining and all-in sustaining cash costs per pound of copper produced, and cash cost per pound of copper produced as non-IFRS financial performance measures in our MD&A. For a detailed description of each of the non-IFRS financial performance measures used in this MD&A, please see the discussion under “Non-IFRS Financial Performance Measures” beginning on page 29 of this MD&A.

Qualified Person

The technical and scientific information in this MD&A related to the Constancia mine has been approved by Cashel Meagher, P. Geo, our Senior Vice President and Chief Operating Officer. The technical and scientific information related to all other sites and projects contained in this MD&A has been approved by Robert Carter, P. Eng, our Director, Business Development and Technical Services at our Manitoba Business Unit. Messrs. Meagher and Carter are qualified persons pursuant to NI 43-101. For a description of the key assumptions, parameters and methods used to estimate mineral reserves and resources, as well as data verification procedures and a general discussion of the extent to which the estimates of scientific and technical information may be affected by any known environmental, permitting, legal title, taxation, sociopolitical, marketing or other relevant factors, please see the Technical Reports for our material properties as filed by us on SEDAR at www.sedar.com.

OUR BUSINESS

We are an integrated mining company producing copper concentrate (containing copper, gold and silver) and zinc metal. With assets in North and South America, we are focused on the discovery, production and marketing of base and precious metals. Through our subsidiaries, we own four polymetallic mines, four ore concentrators and a zinc production facility in northern Manitoba and Saskatchewan (Canada) and Cusco (Peru), and a copper project in Arizona (United States). Our growth strategy is focused on the exploration and development of properties we already control, as well as other mineral assets we may acquire that fit our strategic criteria. Our vision is to become a top-tier operator of long-life, low cost mines in the Americas. Our mission is to create sustainable value through the acquisition, development and operation of high-quality and growing long-life deposits in mining-friendly jurisdictions. We are governed by the Canada Business Corporations Act and our shares are listed under the symbol "HBM" on the Toronto Stock Exchange, New York Stock Exchange and Bolsa de Valores de Lima. We also have warrants listed under the symbol “HBM.WT” on the Toronto Stock Exchange and “HBM/WS” on the New York Stock Exchange.

4

SUMMARY

In the first quarter of 2016, operating cash flow before change in non-cash working capital increased to $71.9 million from $16.9 million in the first quarter of 2015. Operating cash flow in the first quarter of 2016 benefited from substantially higher copper and precious metal sales volumes due to the Constancia project reaching commercial production in the second quarter of 2015. The increase in sales volumes and associated economies of scale more than offset the sharp decline in realized sales prices of copper and zinc metals compared to the same quarter last year.

The net loss and loss per share in the first quarter of 2016 were $15.8 million and $0.07, respectively, compared to a net loss and loss per share of $19.8 million and $0.08, respectively, in the first quarter of 2015. The current period’s loss reflects $23.0 million in interest expense that is no longer capitalized following the achievement of commercial production at Constancia on April 30, 2015.

Notwithstanding lower metals prices, revenues nearly doubled and gross profit increased by 115% compared to the same quarter last year as a result of higher sales volumes and cost optimization at our operations.

As a result of the ramp-up of production at Constancia and ongoing cost reduction initiatives, consolidated cash cost, net of by-product credits, declined to $1.15 per pound in the first quarter of 2016 from $1.44 per pound in the first quarter of 2015. Similarly, incorporating sustaining capital, royalties and corporate general and administrative (“G&A”) costs, consolidated all-in sustaining cash cost, net of by-product credits, declined to $1.80 per pound in the first quarter of 2016 from $2.67 per pound in the first quarter of 2015.¹

The planned replacement of the trunnions on one of the two grinding circuits at the Constancia mill was completed without incident and ahead of schedule in late March 2016. The downtime was approximately five weeks, compared to the six to eight weeks originally planned, during which time the other grinding circuit continued to operate at full capacity with good throughput and recoveries. Both circuits have since ramped up to full capacity.

The cost reduction initiatives announced on February 24, 2016 are on track to meet our targets for 2016. Based on these efforts and operating results to date, we expect to meet all of our production, operating and capital cost guidance.

As at March 31, 2016, we had total liquidity of approximately $190.1 million, including $85.7 million in cash and cash equivalents, as well as $104.4 million in availability under our secured credit facilities. Liquidity at March 31, 2016 is net of the semi-annual interest payment of $43.7 million on our senior unsecured notes. Liquidity is expected to increase over the balance of 2016 at current metals prices as we generate free cash flow from our operations at full production, benefit from ongoing cost reduction initiatives, and collect refundable Peruvian sales tax receivables.

^{________________________________________
1} Cash cost and all-in sustaining cash cost, net of by-product credits, per pound of copper produced, operating cash flow before change in non-cash working capital, and operating cash flow per share are not recognized under IFRS. For a detailed description of each of these non-IFRS financial performance measures used in this MD&A, please see the discussion under “Non-IFRS Financial Performance Measures” beginning on page 29 of this MD&A.

5

KEY FINANCIAL AND PRODUCTION RESULTS

Financial Condition
(in $ thousands)	Mar. 31, 2016	Dec. 31, 2015
Cash and cash equivalents	85,717	53,852
Working capital	117,323	57,613
Total assets	4,566,736	4,479,585
Total long-term debt	1,313,222	1,274,880
Equity	1,770,830	1,787,290

Financial Performance		Three months ended
		Mar. 31,		Mar. 31,
(in $ thousands except per share and cash cost amounts)		2016		2015
Revenue		253,625		128,713
Loss before tax		(16,888	)	(11,480	)
Basic and diluted loss per share		(0.07	)	(0.08	)
Loss for the period		(15,788	)	(19,837	)
Operating cash flow before change in non-cash working capital 1		71,889		16,900
Operating cash flow per share 1		0.31		0.07
Cash cost per pound of copper produced, net of by-product credits 1		1.15		1.44
All-in sustaining cash cost per pound of copper produced, net of by-product credits 1		1.80		2.67
Production
Contained metal in concentrate2
Copper	tonnes	38,879		15,008
Gold	oz	27,245		23,676
Silver	oz	722,916		310,867
Zinc	tonnes	23,376		22,906
Metal Sold
Payable metal in concentrate
Copper	tonnes	41,919		10,995
Gold	oz	17,717		12,350
Silver	oz	774,309		100,317
Refined zinc	tonnes	25,420		23,779

1	Operating cash flow before change in non-cash working capital, operating cash flow per share, cash cost and all-in sustaining cash cost, net of by-product credits, per pound of copper produced are non-IFRS financial performance measures with no standardized definition under IFRS. For further information and a detailed reconciliation, please see page 29 of this MD&A.
2	Includes pre-commercial production volumes.

6

RECENT DEVELOPMENTS

Credit Facility Amendments

On March 30, 2016, we amended our two secured credit facilities to consolidate the lender groups and restructure the two facilities to provide, among other things, more flexible financial covenants. The $300 million corporate revolving credit facility (the “Canada Facility”) is secured by our Manitoba assets and the $200 million Peru revolving credit facility (together with the Canada Facility, the “Facilities”) is secured by our Peru assets. We have the option to seek additional lender commitments to increase the maximum available amount under the Canada Facility to $350 million. The Facilities, which are not cross-collateralized, mature on March 30, 2019.

7

CONSTANCIA OPERATIONS REVIEW

		Three Months Ended		Guidance
		Mar. 31	Mar. 31	Annual
		2016	2015	2016
Ore mined 1	tonnes	6,832,680	1,152,469
Ore milled	tonnes	6,249,833	2,433,482
Copper	%	0.57	0.44
Gold	g/tonne	0.06	0.09
Silver	g/tonne	4.76	5.31
Copper concentrate	tonnes	114,538	15,849
Concentrate grade	% Cu	25.44	25.49
Copper recovery	%	81.8	38.1
Gold recovery	%	46.1	23.3
Silver recovery	%	53.2	23.7
Combined unit operating costs 2,3	$/tonne	7.76	-	7.30 - 8.20
Cash cost per pound of copper produced, net of by-product credits 3,4	$/lb	1.15	-
Sustaining cash cost per pound of copper produced, net of by-product credits 4	$/lb	1.49	-

1	Ore mined for the three months ended March 31, 2015 reflects the correction of a reconciliation error affecting previously reported
2	production.
	Reflects combined mine, mill and G&A costs per tonne of ore milled. Unit costs reflect the deduction of expected deferred stripping costs.
3	Combined unit operating costs and cash costs, net of by-product credits, exclude costs and tonnes associated with pre-commercial production output.
4	Cash cost and sustaining cash costs per pound of copper produced, net of by-product credits are not recognized under IFRS. For more detail on this non-IFRS financial performance measure, please see the discussion under "Non-IFRS Financial Performance Measures" beginning on page 29 of this MD&A. These cost statistics reflect results subsequent to the declaration of commercial production on May 1, 2015, while production volumes include production before and after the declaration of commercial production.

During the first quarter of 2016, Constancia mining operations continued as planned and cost optimization is underway. Ore milled increased to 6.2 million tonnes from 2.4 million tonnes, compared to the same period in 2015, due to the ramp-up to full production. The average milled copper grade was 0.57% in the first quarter of 2016, compared to 0.44% in the same period in 2015.

The planned replacement of the damaged trunnions at the Constancia mill was completed without incident and ahead of schedule in late March 2016. The downtime was approximately five weeks, compared to the six to eight weeks originally planned, during which time the other grinding circuit continued to operate at full capacity with good throughput and recoveries. Both circuits have since ramped up to full capacity.

Optimization of plant performance remains the primary focus for Constancia. Recoveries have improved as the metallurgy associated with the varying ore types is better understood. The total copper recovery in the first quarter of 2016 was 81.8%, compared to 38.1% in the same period in 2015.

Combined unit operating costs of $7.76 per tonne were within guidance expectations for 2016, notwithstanding the reduced throughput associated with the replacement of the trunnions. Cash cost and sustaining cash cost, net of by-product credits, was $1.15 per pound and $1.49 per pound, respectively, in the first quarter of 2016. Sustaining cash cost reflected seasonally low spending on capitalized civil earthworks offset by reduced mill throughput during the grinding circuit repairs. See the discussion under “Non-IFRS Financial Performance Measures” beginning on page 29 of this MD&A for a detailed description of each of these non-IFRS financial performance measures used in this MD&A.

8

Concentrate inventory levels in Peru were maintained at normal working levels during the first quarter of 2016 as a result of improved trucking capacity implemented in 2015 and reduced port congestion. The ongoing port expansion at Matarani is expected to be completed by June 2016, which will improve access to our designated pier.

		Three months ended		Guidance
Contained metal in		Mar. 31,	Mar. 31,	Annual
concentrate produced		2016	2015	2016
Copper	tonnes	29,143	4,041	110,000 - 130,000
Gold	oz	5,752	1,627
Silver	oz	508,994	98,320
Precious metals1	oz	13,023	3,032	50,000 - 65,000

¹ Precious metals production includes gold and silver production on a gold equivalent basis. Silver converted to gold at a ratio of 70:1. For 2015, precious metals production has been restated to reflect a 70:1 ratio for consistency.

Metal Sold

		Three months ended
		Mar. 31,	Mar. 31,
		2016	2015
Payable metal in concentrate
Copper	tonnes	31,273	-
Gold	oz	7,380	-
Silver	oz	666,083	-

9

MANITOBA OPERATIONS REVIEW

Mines

		Three Months Ended
		Mar. 31	Mar. 31
		2016	2015
777
Ore	tonnes	357,540	339,927
Copper	%	1.56	2.14
Zinc	%	2.99	3.17
Gold	g/tonne	1.34	1.79
Silver	g/tonne	17.61	20.41
Lalor
Ore	tonnes	261,898	193,784
Copper	%	0.59	0.79
Zinc	%	6.24	8.07
Gold	g/tonne	2.55	2.58
Silver	g/tonne	19.76	21.93
Reed
Ore	tonnes	111,461	118,645
Copper	%	4.38	2.81
Zinc	%	0.82	0.68
Gold	g/tonne	0.54	0.60
Silver	g/tonne	7.21	6.68
Total Mines
Ore	tonnes	730,899	652,356
Copper	%	1.64	1.86
Zinc	%	3.82	4.17
Gold	g/tonne	1.65	1.81
Silver	g/tonne	16.79	18.36

		Three Months Ended
		Mar. 31	Mar. 31
Unit Operating Costs		2016	2015
Mines
777	C$/tonne	50.96	53.69
Lalor	C$/tonne	69.13	69.86
Reed	C$/tonne	45.77	63.92
Total Mines	C$/tonne	57.20	60.15

10

Ore mined at our Manitoba mines for the first quarter of 2016 increased by 12% compared to the same period in 2015 as a result of increased production at our Lalor and 777 mines. Copper, zinc, gold and silver grades in the first quarter of 2016 were lower than the first quarter of 2015 by 12%, 8%, 9% and 9%, respectively. 777 grades were in line with mine plan expectations, and Lalor zinc grades were lower due to stope sequencing. Unit operating costs for all mines for the first quarter of 2016 declined by 5% compared to the same period in 2015, reflecting ongoing cost reduction efforts. Reed mine unit operating costs decreased by 28% compared to the same period in 2015, mainly as a result of a higher proportion of capitalized development compared to expensed development relative to the first quarter of 2015.

11

Processing Facilities

		Three months ended
		Mar. 31,	Mar. 31,
		2016	2015
Flin Flon Concentrator
Ore	tonnes	428,630	463,487
Copper	%	2.15	2.30
Zinc	%	2.53	2.48
Gold	g/tonne	1.17	1.47
Silver	g/tonne	15.38	16.70
Copper concentrate	tonnes	35,108	40,421
Concentrate grade	% Cu	24.16	24.24
Zinc concentrate	tonnes	16,804	18,765
Concentrate grade	% Zn	51.58	50.56
Copper recovery	%	91.9	91.8
Zinc recovery	%	80.0	82.5
Gold recovery	%	58.0	62.1
Silver recovery	%	56.7	55.2
Contained metal in concentrate produced
Copper	tonnes	8,483	9,797
Zinc	tonnes	8,668	9,488
Precious metals 1	oz	11,053	15,588
Snow Lake Concentrator
Ore	tonnes	257,100	175,096
Copper	%	0.59	0.79
Zinc	%	6.22	8.37
Gold	g/tonne	2.60	2.46
Silver	g/tonne	20.36	21.74
Copper concentrate	tonnes	5,911	5,640
Concentrate grade	% Cu	21.19	20.74
Zinc concentrate	tonnes	29,128	26,187
Concentrate grade	% Zn	50.49	51.24
Copper recovery	%	81.9	84.5
Zinc recovery	%	92.0	91.5
Gold recovery	%	56.7	60.8
Silver recovery	%	55.7	61.5
Contained metal in concentrate produced
Copper	tonnes	1,253	1,170
Zinc	tonnes	14,708	13,418
Precious metals 1	oz	13,496	9,497

¹ Precious metals production includes gold and silver production on a gold-equivalent basis. Silver is converted to gold at a 70:1 ratio.

12

		Three months ended		Guidance
		Mar. 31,	Mar. 31,	Annual
Unit Operating Costs		2016	2015	2016
Concentrators
Flin Flon	C$/tonne	15.81	14.60
Snow Lake	C$/tonne	21.70	31.81
Combined mine/mill unit operating costs 1
Manitoba	C$/tonne	94.74	98.52	80 -100

¹ Reflects combined mine, mill and G&A costs per tonne of milled ore. Includes the cost of ore purchased from our joint venture partner at Reed mine. For 2015, combined mine and mill unit operating costs have been restated to include G&A costs and cost of ore purchased from our joint venture partner at Reed mine for consistency.

Ore processed in Flin Flon in the first quarter of 2016 was 8% lower than the same period in 2015 as a result of unscheduled maintenance, with the shortfall expected to be made up over the balance of 2016. Copper, zinc and silver recoveries at the Flin Flon concentrator were generally consistent in the first quarter of 2016 compared to the same period in 2015. Gold recovery at the Flin Flon concentrator was 7% lower in the first quarter of 2016 compared to the first quarter of 2015 due to lower gold head grades. Unit operating costs at the Flin Flon concentrator were 8% higher in the first quarter of 2016 compared to the same period in 2015 as a result of lower production. Ore processed in Snow Lake in the first quarter of 2016 was 47% higher than the same period in 2015 as a result of higher production at the Lalor mine. Copper, gold and silver recoveries at the Snow Lake concentrator were lower in the first quarter of 2016 compared to the same period in 2015 by 3%, 7% and 9%, respectively, as a result of lower copper grades. Unit operating costs at the Snow Lake concentrator were 32% lower in the first quarter of 2016 compared to the first quarter of 2015 as a result of increased throughput.

Manitoba combined mine, mill and G&A unit operating costs in the first quarter of 2016 were 4% lower than in the same period in 2015 as a result of higher overall production and cost containment measures.

		Three Months Ended		Guidance1
Manitoba contained metal in		Mar. 31	Mar. 31	Annual
concentrate produced 1,2		2016	2015	2016
Copper	tonnes	9,736	10,967	40,000 - 50,000
Zinc	tonnes	23,376	22,906	100,000 - 125,000
Gold	oz	21,493	22,049
Silver	oz	213,922	212,547
Precious metals 3	oz	24,549	25,085	95,000 - 115,000

1	Includes 100% of Reed mine production.
2	Metal reported in concentrate is prior to deductions associated with smelter terms.
3	Precious metals production includes gold and silver production on a gold-equivalent basis. Silver is converted to gold at a 70:1 ratio.

For the first quarter of 2016, overall Manitoba production of zinc, gold and silver remained fairly consistent compared to the same period in 2015, as higher ore throughput was offset by lower mine grades. Copper production decreased by 11% as a result of lower production from Flin Flon concentrator and lower copper head grades from 777 and Lalor.

13

Zinc Plant

		Three Months Ended		Guidance
		Mar. 31	Mar. 31	Annual
Zinc Production		2016	2015	2016
Zinc Concentrate Treated
Domestic	tonnes	51,815	40,913
Purchased	tonnes	-	9,399
Total	tonnes	51,815	50,312	195,000-240,000
Refined Metal Produced
Domestic	tonnes	24,277	20,032
Purchased	tonnes	-	4,749
Total	tonnes	24,277	24,781	100,000-120,000

		Three Months Ended		Guidance
		Mar. 31	Mar. 31	Annual
Unit Operating Costs		2016	2015	2016
Zinc Plant 1	C$/lb	0.48	0.48	0.38 - 0.46

¹ Zinc unit operating costs include G&A costs. For 2015, zinc unit operating costs have been restated to include G&A costs for consistency.

Refined zinc metal production and operating costs per pound of zinc metal produced in the first quarter of 2016 were fairly consistent compared to the same period in 2015. Unit costs were higher in the first quarter of 2016 than guidance range as a result of lower production. As production increases, unit costs will decline. Refined zinc metal production and operating costs are both expected to be within guidance ranges for 2016.

Manitoba Cash Costs and Sustaining Cash Costs per Pound of Copper Produced

		Three Months Ended
		Mar. 31	Mar. 31
		2016	2015
Cash costs per pound of copper produced, net of by-product credits 1	$/lb	1.14	1.44
Sustaining cash costs per pound of copper produced, net of by-product credits 1	$/lb	2.32	2.27

¹ Cash cost and sustaining cash costs per pound of copper produced, net of by-product credits are not recognized under IFRS. For more detail on this non-IFRS financial performance measure, please see the discussion under "Non-IFRS Financial Performance Measures" beginning on page 29 of this MD&A. These cost statistics reflect results subsequent to the declaration of commercial production on May 1, 2015, while production volumes include production before and after the declaration of commercial production.

In Manitoba, cash cost, net of by-product credits, in the first quarter of 2016 was $1.14 per pound, a decrease of $0.30 per pound compared to the same period of 2015. The decrease is largely the effect of foreign exchange on Canadian dollar denominated costs. This was partially offset by increased costs as a result of increased production at our Lalor mine and decreased zinc by-product credits as a result of declining zinc prices compared to the same period in 2015. The Manitoba sustaining cash cost, net of by-product credits, of $2.32 per pound was affected by higher sustaining capital costs in the first quarter of 2016 due to exploration drilling and development at Lalor, and mine equipment rebuilds and purchases. Sustaining capital is expected to be lower in future quarters in 2016.

14

Metal Sold

		Three Months Ended
		Mar. 31	Mar. 31
		2016	2015
Payable metal in concentrate
Copper	tonnes	10,646	10,995
Gold	oz	10,337	12,350
Silver	oz	108,226	100,317
Refined zinc	tonnes	25,420	23,779

15

FINANCIAL REVIEW

Financial Results

We recorded a loss of $15.8 million in the first quarter of 2016 compared to a loss of $19.8 million in the first quarter of 2015. The following table provides further details on this variance:

	Three Months Ended
(in $ millions)	Mar. 31, 2016
Increase (decrease) in net earnings resulting from these components:
Revenues	124.9
Cost of sales
Mine operating costs	(61.1	)
Depreciation and amortization	(48.8	)
Selling and administration expenses	1.2
Exploration and evaluation	1.2
Other operating expenses	(0.9	)
Finance income	0.2
Finance expense	(26.4	)
Other finance losses	4.3
Tax	9.4
Decrease in loss for the period	4.0

16

Revenue

Total revenue for the first quarter of 2016 was $253.6 million, $124.9 million higher than the same period in 2015. This increase was primarily due to higher sales volumes compared to the first quarter of 2015 as a result of commercial production being achieved at Constancia. Higher sales volumes were partially offset by lower prices for copper and zinc and the effect of higher treatment and refining charges.

The following table provides further details of this variance:

	Three Months Ended
(in $ millions)	Mar. 31, 2016
Metals prices1
Lower copper prices	(10.4	)
Lower zinc prices	(11.9	)
Higher gold prices	1.8
Higher silver prices	0.3
Sales volumes
Higher copper sales volumes	144.1
Higher zinc sales volumes	3.8
Higher gold sales volumes	3.9
Higher silver sales volumes	8.2
Other
Derivative mark-to-market increase	4.3
Other volume and pricing differences	0.3
Effect of higher treatment and refining charges	(19.5	)
Increase in revenue in 2016 compared to 2015	124.9

¹ See discussion below for further information regarding metals prices.

Our revenue by significant product type is summarized below:

	Three months ended
	Mar. 31,		Mar. 31,
(in $ millions)	2016		2015
Copper	198.7		64.5
Zinc	50.5		53.8
Gold	20.9		15.2
Silver	10.4		2.0
Other	0.7		1.3
Gross revenue1	281.2		136.8
Treatment and refining charges	(27.6	)	(8.1	)
Revenue	253.6		128.7

¹ Copper, zinc, gold and silver revenues include unrealized gains and losses related to non-hedge derivative contracts including fixed for floating swaps, which are included realized prices. Zinc revenues include unrealized gains and losses related to non-hedge derivative contracts that are not included in realized prices.

17

Realized sales prices

This measure is intended to enable management and investors to understand the average realized price of metals sold to third parties in each reporting period. The average realized price per unit sold does not have any standardized meaning prescribed by IFRS, is unlikely to be comparable to similar measures presented by other issuers, and should not be considered in isolation or a substitute for measures of performance prepared in accordance with IFRS.

Beginning with reporting for the three months and years ended December 31, 2015 and 2014, we have amended the methodology for determining realized prices. For sales of copper, gold and silver where there are outstanding non-hedge derivatives (“QP hedges”) which are intended to manage the provisional pricing risk arising from quotational period terms in concentrate sales agreements, we will no longer remove the impact of derivative mark-to-market adjustments on QP hedges included in revenues reported in the consolidated financial statements. We expect that gains and losses on QP hedges will offset provisional pricing adjustments on concentrate sales contracts, such that this change is expected to result in a realized price that is better reflective of the proceeds we expect to receive. There has been no change in the realized price calculation methodology for zinc or where copper, gold and silver are being hedged using derivatives other than QP hedges.

Our realized prices for the first quarter of 2016 and 2015 are summarized below:

				Realized prices1 for the
				three months ended
			LME Q1	Mar. 31	Mar. 31
			20162	2016	2015
Prices
Copper	$	/lb.	2.12	2.15	2.68
Zinc 3	$	/lb.	0.76	0.83	1.04
Gold 4	$	/oz		1,180	1,234
Silver 4	$	/oz		13.50	19.46

1	Realized prices exclude refining and treatment charges and are on the sale of finished metal or metal in concentrate. Realized prices include the effect of provisional pricing adjustments on prior period sales.
2	London Metal Exchange average for copper and zinc prices.
3	Zinc realized prices include premiums paid by customers for delivery of refined zinc metal, but exclude unrealized gains and losses related to non-hedge derivative contracts that are included in zinc revenues. For the three months ended March 31, 2016, the unrealized components of the zinc derivatives resulted in a gain of US$0.07/lb. For the three months ended March 31, 2015, the unrealized components of the zinc derivatives resulted in a loss of US$0.01/lb.
4	Sales of gold and silver from our 777 and Constancia mines are subject to our precious metals stream agreement with Silver Wheaton, pursuant to which we recognize deferred revenue for precious metals deliveries and also receive cash payments. Stream sales are included within realized prices and their respective deferred revenue and cash payments can be found on page 20.

Realized prices for copper during the first quarter of 2016 were slightly higher than the LME average for the quarter mainly due to the timing of sales, which occurred in the latter part of the quarter when copper prices increased.

18

The following table provides a reconciliation of average realized price per unit sold, by metal, to revenues as shown in the consolidated financial statements:

		Three months ended March 31, 2016
(in $ millions, except for realized price
and payable metal in concentrate sold)		Copper	Zinc		Gold	Silver	Other	Total
Revenue per financial statements 1		198.7	50.5		20.9	10.4	0.7	281.2
Derivative mark-to-market and other 6		-	(3.8	)	-	-	-	(3.8	)
Revenue excluding mark-to-market on non-QP hedges		198.7	46.7		20.9	10.4	0.7	277.4
Payable metal in concentrate sold 2		41,919	25,420		17,717	774,309	-	-
Realized Price 3,5	$	4,740	1,836		1,180	13.50	-	-
Realized Price 4,5	$	2.15	0.83		-	-	-	-

		Three months ended March 31, 2015
(in $ millions, except for realized price
and payable metal in concentrate sold)		Copper	Zinc	Gold	Silver	Other	Total
Revenue per financial statements 1		64.5	53.8	15.2	2.0	1.3	136.8
Derivative mark-to-market and other 6		-	0.5	-	-	-	0.5
Difference in average versus realized exchange rate		0.6	0.4	-	-	-	1.0
Revenue excluding mark-to-market on non-QP hedges		65.1	54.7	15.2	2.0	1.3	138.3
Payable metal in concentrate sold 2		10,995	23,779	12,350	100,317	-	-
Realized Price 3,5	$	5,916	2,302	1,234	19.46	-	-
Realized Price 4,5	$	2.68	1.04	-	-	-	-

1	Revenue, before treatment and refining charges.
2	Copper and zinc shown in metric tonnes and gold and silver shown in ounces.
3	Realized price for copper and zinc in $/metric tonne and realized price for gold and silver in $/oz.
4	Realized price for copper and zinc in $/lb.
5	Average realized price per unit sold may not calculate based on amounts presented in this table due to rounding.
6	Derivative mark-to-market excludes mark-to-market on QP hedges.

The price, quantity and mix of metals sold, along with movements in the Canadian dollar, affect our revenue, operating cash flow and profit. Revenue from metals sales can vary from quarter to quarter due to production levels, shipping volumes and transfer of risk and title with customers.

19

Stream Sales

The following table shows stream sales included within realized prices and their respective deferred revenue and cash payment rates:

			Three months ended
			Mar. 31, 2016
			Manitoba	Peru
Gold		oz	7,137	4,932
Silver		oz	85,423	666,083
Gold deferred revenue drawdown rate1	$	/oz	1,013	436
Gold cash rate 2	$	/oz	404	400
Silver deferred revenue drawdown rate1	$	/oz	18.42	7.39
Silver cash rate 2	$	/oz	5.96	5.90

			Three months ended
			Mar. 31, 2015
			Manitoba	Peru
Gold		oz	6,629	-
Silver		oz	49,261	-
Gold deferred revenue drawdown rate1	$	/oz	1,005	-
Gold cash rate 2	$	/oz	400	-
Silver deferred revenue drawdown rate1	$	/oz	20.36	-
Silver cash rate 2	$	/oz	5.90	-

1	Deferred revenue amortization is recorded in Manitoba at C$1,382/oz and C$25.23/oz for gold and silver, respectively, (2015 - C$1,242.78/oz and C$25.18/oz) and converted to US dollars at the exchange rate in effect at the time of revenue recognition.
2	The gold and silver cash rate for Manitoba increased by 1% from $400/oz and $5.90/oz effective August 1, 2015.

20

Cost of sales

Our detailed cost of sales is summarized as follows:

	Three Months Ended
	Mar. 31	Mar. 31
(in $ thousands)	2016	2015
Manitoba
Manitoba mines	29,055	29,915
Manitoba concentrators	8,991	9,934
Zinc plant	15,797	16,970
Purchased ore and concentrate (before inventory changes)	3,223	12,901
Changes in domestic inventory	1,494	(2,820	)
Depreciation and amortization	28,911	25,582
Freight, royalties and profit sharing	8,476	9,161
G&A and other charges	12,594	14,084
Total Manitoba cost of sales	108,541	115,727
Peru
Mine	12,532	-
Concentrator	26,629	-
Changes in domestic inventory	7,081	-
Depreciation and amortization	45,502	-
Freight, royalties and profit sharing	16,057	-
G&A and other charges	9,360	-
Total Peru cost of sales	117,161	-
Cost of sales	225,702	115,727

Total cost of sales for the first quarter of 2016 was $225.7 million, an increase of $110.0 million from the first quarter of 2015, primarily due to the commencement of commercial production at Constancia. For Manitoba, costs incurred in Canadian dollars were lower in US dollar terms in the current period as a result of the weakening of the Canadian dollar versus the US dollar compared to the first quarter of 2015. In addition, reduced purchased zinc concentrate also reduced cost of sales.

For details on unit operating costs refer to the respective tables in the Operations Review section beginning on page 8 of this MD&A.

For the first quarter of 2016, other significant variances in expenses, compared to the same period in 2015, include the following:

- Decreased selling and administrative expenses of $1.2 million is mainly the result of a lower common share price in the first quarter of 2016 and the resulting impact on share based compensation expense.

- Increased finance expense of $26.4 million in the first quarter of 2016 compared to the same period in 2015, reflected $23.0 million in interest expense that, due to accounting requirements, can no longer be capitalized after the achievement of commercial production at Constancia on April 30, 2015. In addition, we incurred higher interest costs and amortization of finance fees of $3.5 million, which were mainly a function of drawdowns on the Facilities.

21

- Other finance losses decreased by $4.3 million mainly as a result of:

- Foreign exchange losses were $1.2 million in the first quarter of 2016, $7.2 million lower than in the same period of 2015. The reduced losses were mainly a function of a weakening Canadian dollar versus the US dollar in the prior year period which resulted in losses on US denominated long-term debt balances in the Canadian functional currency of the parent entity at that time. Since the parent entity was changed to US functional currency on July 1, 2015, this currency fluctuation no longer has an impact on foreign exchange in the income statements for 2016. The loss incurred in the first quarter of 2016 is mostly related to the stronger Canadian dollar versus the US dollar during the period which negatively impacted US dollar denominated receivables in the Manitoba business unit, partly offset by a stronger Peruvian Sol which increases the value of Sol denominated statutory receivables in the Peru business unit.

- Mark-to-market on warrants resulted in gains of $0.3 million during the first quarter of 2016 compared to losses of $2.7 million during the same period last year.

- Impairment, disposals and mark-to-market on held for trading investments resulted in a loss of $0.1 million during the first quarter of 2016 compared to a loss of $1.3 million during the same period last year.

- A fair value adjustment on the embedded derivative related to the senior unsecured notes and our gold option liability related to the New Britannia acquisition resulted in a loss of $0.7 million during the first quarter of 2016 compared to a gain of $6.4 million during the same period last year.

Tax Expense

For the three months ended March 31, 2016 tax expense decreased by $9.5 million compared to the same period in 2015.

	Three Months Ended
	Mar. 31		Mar. 31
(in $ thousands)	2016		2015
Non cash - income tax (recovery) / expense 1	(4,821	)	6,925
Non cash - mining tax expense 1	1,145		51
Total non cash tax (recovery) / expense	(3,676	)	6,976
Current tax expense - income tax	1,787		1,366
Current tax expense - mining tax	789		15
Total current tax expense	2,576		1,381
Tax (recovery) expense	(1,100	)	8,357

¹ Non cash tax (recovery) / expenses represent our draw down/increase of non cash deferred income and mining tax assets/liabilities.

22

Income Tax Expense

Our effective income tax rate on the loss before tax for the first quarter of 2016 was approximately 18.0% (first quarter of 2015 - negative 72.2%). Applying the estimated Canadian statutory income tax rate of 27.0% to our loss before taxes of $16.9 million would have resulted in a tax recovery of approximately $4.6 million; however, we recorded an income tax recovery of $3.0 million (first quarter of 2015 - $8.3 million). The significant items causing our effective income tax rate to be different than the 27.0% estimated Manitoba statutory income tax rate include:

- Certain deductible temporary differences with respect to Manitoba relating to decommissioning and restoration and other employee benefit liabilities were not recognized as we have determined that it is not probable that we will realize the recovery based on the timing of the reversals of the deductible temporary differences and the future projected taxable profit of the Manitoba operations, adjusted for the average annual effective rate methodology, resulting in an increase in deferred tax expense of approximately $2.9 million (first quarter of 2015 - $0.4 million);

- Certain deductible temporary differences with respect to Peru relating to decommissioning and restoration liabilities were not recognized as we have determined that it is not probable that we will realize the recovery based on the timing of the reversals of the deductible temporary differences and the future projected taxable profit of the Peru operations, resulting in an increase in deferred tax expense of approximately $1.3 million (first quarter of 2015 - $0.8 million);

- A decrease in the deferred tax expense of $3.0 million (first quarter of 2015 – nil) due to the fact that certain Canadian non-monetary assets are recognized at historical cost while the tax base of the assets change as exchange rates fluctuate, which gives rise to taxable temporary differences; and

- Increases to our decommissioning and restoration liabilities resulting from a significant decrease in discount rates required us to record a corresponding non-cash increase to property, plant, and equipment. We recognized a deferred tax expense of $1.2 million related to the increase in property, plant and equipment; however, we did not recognize a deferred tax recovery related to the increase in the decommissioning and restoration liabilities because we determined it is not probable that we will realize the benefit of the recovery.

Mining Tax Expense

Applying the Manitoba statutory mining tax rate of 10.0% to our loss before taxes for the period of $16.9 million would have resulted in a tax recovery of approximately $1.7 million and we recorded a mining tax expense of $1.9 million (first quarter of 2015 - $0.1 million). For the first quarter of 2016, our effective rate for mining taxes was approximately negative 11.5% (first quarter of 2015 - negative 0.6%) . Effective mining tax rates can vary significantly based on the composition of our earnings and the expected amount of mining taxable profits. Corporate costs and other costs not related to mining operations are not deductible in computing mining profits. A brief description on how mining taxes are calculated in our various business units is discussed below.

Manitoba

The Province of Manitoba imposes mining tax on profit related to the sale of mineral products mined in the Province of Manitoba (mining taxable profit) at the following rates:

- 10% of total mining taxable profit if mining profit is $50 million or less;

- 15% of total mining taxable profit if mining profits are between $55 million and $100 million; and

- 17% of total mining taxable profit if mining profits exceed $105 million.

We have accumulated mining tax pools over the years and recorded the related benefits as deferred mining tax assets. We estimate that the tax rate that will be applicable when temporary differences reverse will be approximately 10.0% .

23

Peru

The Peruvian government imposes two parallel mining tax regimes, the Special Mining Tax and Modified Royalty, on companies' operating mining income on a sliding scale, with progressive rates ranging from 2.0% to 8.4% and 1.0% to 12.0%, respectively. Based on financial forecasts, we have recorded a deferred tax liability as at March 31, 2016 at the tax rate we expect to apply when temporary differences reverse.

LIQUIDITY AND CAPITAL RESOURCES

Senior Secured Revolving Credit Facilities

On March 30, 2016, we amended and restated our two Facilities to consolidate the lender groups and restructure the two Facilities to provide, among other things, more flexible financial covenants. For a discussion of the amendments, refer to the “Recent Developments” section beginning on page 7 of this MD&A.

At March 31, 2016, $53.5 million of letters of credit had been advanced under the Canada Facility to support our reclamation obligations in Manitoba. Including borrowings and letters of credit, a total of $260.5 million was drawn down under the Canada Facility as at March 31, 2016. As at March 31, 2016, we had $135.1 million owing under the Peru Facility, and $104.4 million in undrawn availability under both Facilities.

As at March 31, 2016, we were in compliance with our covenants under the Facilities.

Equipment Finance Facility

In October 2013, we entered into an equipment financing facility to finance the purchase of components of the mobile fleet at our Constancia operation. Loans pursuant to the equipment financing facility have a term of six years, amortized on a quarterly basis, and are secured by the financed equipment. As at March 31, 2016, we had approximately $66.7 million owing under the facility.

Financial Condition

Financial Condition as at March 31, 2016 compared to December 31, 2015

Cash and cash equivalents increased by $31.9 million from December 31, 2015 to $85.7 million as at March 31, 2016. This increase was mainly a result of operating cash flow of $101.6 million, and net borrowings of $39.8 million. These amounts were partly offset by $46.4 million of capital investments primarily at our Peru and Manitoba operations, interest payments of $48.5 million, principal debt repayments of $4.1 million and deposits of restricted cash in Peru of $5.1 million. We hold the majority of our cash and cash equivalents in low-risk, liquid investments with major Canadian and Peruvian financial institutions.

Working capital increased by $59.7 million to $117.3 million from December 31, 2015 to March 31, 2016. In addition to the increased cash and cash equivalents position:

- Prepaid expenses increased by $39.6 million mainly as a result of timing related to the payments of interest on long-term debt;

- Current portion of long-term debt decreased by $53.4 million mainly as a result of amendments to the Peru Facility;

- Trade and other payables decreased by $8.3 million primarily as a result of the timing of capital spending resulting in higher trade payables at December 31, 2015;

- Receivables decreased by $19.7 million, primarily due to the timing of sales resulting in higher receivables at December 31, 2015; and

- Inventories decreased by $8.2 million as a result of timing of concentrate shipments.

24

Cash Flows

The following table summarizes our cash flows for the three months ended March 31, 2016 and March 31, 2015:

	Three Months Ended
	Mar. 31		Mar. 31
(in $ thousands)	2016		2015
Loss for the period	(15,788	)	(19,837	)
Tax (recovery) expense	(1,100	)	8,357
Items not affecting cash	95,098		28,897
Taxes paid	(6,321	)	(517	)
Operating cash flows before change in non-cash working capital	71,889		16,900
Change in non-cash working capital	29,665		(16,586	)
Cash used in operating activities	101,554		314
Cash used in investing activities	(51,343	)	(155,503	)
Cash used in financing activities	(19,499	)	72,635
Effect of movement in exchange rates on cash and cash equivalents	1,153		491
Increase (decrease) in cash and cash equivalents	31,865		(82,063	)

Cash Flow from Operating Activities

Operating cash flows before change in non-cash working capital were $71.9 million during the first quarter of 2016, reflecting an increase of $55.0 million compared to the first quarter of 2015, mainly as a result of higher sales volumes and an improving gross margin.

Cash Flow from Investing and Financing Activities

During the first quarter of 2016 we used $70.8 million in investing and financing activities primarily driven by capital expenditures of $46.4 million, interest payments of $48.5 million, and principal payments of $4.1 million on the equipment finance facility. This was partially offset by proceeds of $39.8 million related to a drawdown of the Canada Facility. In addition, we reclassified $5.1 million from cash and cash equivalents to restricted cash as Hudbay Peru was required to increase a letter of credit as a deposit of security with respect to its decommissioning and restoration obligations.

25

The following summarizes accrued additions to capital assets and a reconciliation to cash additions to capital assets for the periods indicated:

	Three months ended				Guidance
	Mar. 31,		Mar. 31,		Annual
(in $ millions)	2016		2015		2016 1
Manitoba sustaining capital expenditures	23.6		17.3		80.0
Peru sustaining capital expenditures	20.4		22.9		140.0
Total sustaining capital expenditures	44.0		40.2		220.0
Rosemont capitalized costs	11.5		4.9		30.0
Peru other capitalized costs	7.2		81.8
Manitoba other capitalized costs	4.3		12.4
Capitalized exploration	0.4		-		3.0
Capitalized interest	3.7		25.2
Total other capitalized costs	27.1		124.3
Total accrued capital additions	71.1		164.5
Reconciliation to cash capital additions:
Decommissioning and restoration obligation	(8.7	)	(16.0	)
Capitalized interest	(3.7	)	(25.2	)
Changes in capital accruals and other	(12.3	)	9.5
Total cash capital additions	46.4		132.8

¹ Sustaining capital expenditure guidance excludes capitalized interest.

Sustaining capital expenditures in Manitoba were higher during the first quarter of 2016 as a result of major mobile equipment arriving in the first quarter. Manitoba capital expenditures are expected to decline substantially over the balance of 2016 and are expected to remain within guidance ranges.

Sustaining capital expenditures in Peru are expected to be highest during the second and third quarters of 2016, as heavy civil earthworks activity on the Constancia tailings dam ramps up during the dry season. Capital expenditures in Arizona on the Rosemont project are expected to decline substantially over the balance of 2016. Capital expenditures for 2016 are expected to remain within guidance expectations.

Other Peru capitalized costs include Constancia project costs as well as decommissioning and restoration adjustments. Other Manitoba capitalized costs include decommissioning and restoration adjustments.

Capital Commitments

As at March 31, 2016, we had outstanding capital commitments in Canada of approximately $1.1 million primarily related to a committed mobile equipment purchase, of which approximately $1.0 million cannot be terminated by Hudbay, approximately $86.0 million in Peru related to sustaining capital costs, of which all can be terminated by Hudbay and approximately $163.6 million in Arizona, primarily related to the Rosemont project and expected to be paid after the commencement of Rosemont construction, of which approximately $78.4 million cannot be terminated by Hudbay.

26

Liquidity

As at March 31, 2016, we had total liquidity of approximately $190.1 million, including $85.7 million in cash and cash equivalents, as well as $104.4 million in availability under our Facilities. Liquidity at March 31, 2016 is net of the first semi-annual interest payment of $43.7 million on our senior unsecured notes. Based on current metals prices, the March 31, 2016 Peruvian current sales tax receivable balance of $96.2 million is expected to decline significantly over the next 12 to 18 months as backlogs of claims on sales taxes paid during Constancia’s construction and commercial operations are cleared. Liquidity is expected to increase over the balance of 2016 at current metals prices as we generate free cash flow from our operations at full production and benefit from ongoing cost reduction initiatives. We expect that our current liquidity and expected cash flows will be sufficient to meet our obligations in the coming year.

Outstanding Share Data

As of April 27, 2016, there were 235,231,688 common shares of Hudbay issued and outstanding. In addition, Hudbay warrants to acquire an aggregate of 21,830,490 common shares of Hudbay were outstanding and Augusta warrants to acquire an aggregate of 1,039,500 common shares of Hudbay and 561,000 warrants of Hudbay were outstanding; there were also options for an aggregate of 1,570,384 common shares outstanding.

TREND ANALYSIS AND QUARTERLY REVIEW

The following table sets forth selected consolidated financial information for each of our eight most recently completed quarters.

	2016		2015								2014
(in $ thousands)	Q1		Q4		Q3		Q2		Q1		Q4		Q3	Q2
Revenue	253,625		336,641		269,808		150,889		128,713		112,696		170,233	127,863
(Loss) profit before tax	(16,888	)	(325,610	)	(16,132	)	(45,819	)	(11,480	)	(24,392	)	53,934	6,291
(Loss) profit	(15,788	)	(255,468	)	(11,833	)	(44,290	)	(19,837	)	43,594		46,153	230
(Loss) earnings per share:
Basic	(0.07	)	(1.09	)	(0.05	)	(0.19	)	(0.08	)	0.19		0.21	-
Diluted	(0.07	)	(1.09	)	(0.05	)	(0.19	)	(0.08	)	0.19		0.21	-
Operating cash flow per share1, 2	0.31		0.51		0.34		0.07		0.07		(0.01	)	0.06	0.02

1	Operating cash flow per share is before precious metals stream deposit and change in non-cash working capital. It is a non IFRS financial performance measure with no standardized definition under IFRS. For further information and a detailed reconciliation, refer to the discussion under "Non-IFRS Financial Reporting Measures" beginning on page 29 of this MD&A.
2	Operating cash flow per share has been restated to reflect the presentation changes with respect to receivable and payable balances associated with copper fixed for floating swaps. For more information on this change, refer to note 4b of our March 31, 2016 condensed consolidated interim financial statements.

With both the Lalor and Reed mines achieving commercial production in 2014, copper production volumes have increased compared to the beginning of 2014. This effect, coupled with the ramp-up of Constancia since reaching commercial production in the second quarter of 2015, has driven revenues and gross profit higher in the third and fourth quarters of 2015, notwithstanding lower realized metals prices. Following from Constancia reaching commercial production, we no longer capitalize interest costs associated with financing Constancia development and therefore those charges are recognized in finance expenses. In addition, mining costs have been favourably impacted in the Manitoba business unit with the weakening of the Canadian dollar versus the US dollar, which lowers costs denominated in Canadian dollars.

In the first quarter of 2016, we continued to benefit from increased sales volumes following from commercial production being attained at Constancia. Lower average realized prices of copper compared to the quarters in 2015 partially offset the continued strong production volumes from the Peru operations and caused both gross profit and operating cash flow per share to be lower than in the fourth quarter of 2015.

27

In the fourth quarter of 2015, we recognized a gain of $37.0 million on the disposal of the Balmat mine and took goodwill and asset impairments for the Peru and Arizona CGUs of $378.9 million, mainly as a result of lower expected copper prices and an expected delay in construction at Rosemont.

In general, over the past eight quarters, revenues have varied as a result of volatile commodity prices and the timing of shipments, however, in most recent quarters we have benefited significantly from increased production from Constancia, Lalor and Reed.

In addition, in the third quarter of 2015 we incurred impairment charges of $34.5 million related to the equipment impairment in the Arizona business unit. Beginning July 1, 2015, Hudbay’s parent entity changed its functional currency to the US dollar to reflect the achievement of commercial production at Constancia, which conducts most business in US dollars. The result is limited exposure for Hudbay on its consolidated income statements to fluctuations in the Canadian to US dollar exchange rate. During the second quarter of 2015, Constancia achieved commercial production with associated net proceeds from sales related to pre-production being credited to property, plant and equipment. This also resulted in the interest costs on our senior unsecured notes beginning to be treated as a finance expense. Constancia reported sales revenue from shipments in late June 2015, which resulted in an increase in sales compared to previous quarters.

There were a number of non-cash accounting adjustments in the second quarter of 2015 including the negative impact to cost of sales of the $17.1 million charge related to pension enhancements, which arose as a result of new collective agreements with all seven unions in Manitoba. In addition, during the second quarter of 2015, we recognized an impairment on our Lalor concentrator assets of $19.9 million as a result of the decision not to proceed with construction of a new concentrator at Lalor following the New Britannia acquisition in May 2015. Lastly, with the completion of the Constancia project we recorded $13.3 million of interest expense in our consolidated income statements, which would have previously been capitalized interest costs.

In the first quarter of 2015, sales revenue and operating cash flow per share increased primarily as a result of higher copper and zinc sales volumes offset partially by lower realized copper prices. The continued strengthening of the US dollar against the Canadian dollar positively impacted revenues while negatively impacting net profit as a result of unrealized losses on the revaluation of US dollar denominated net liability monetary items while the parent entity’s functional currency was Canadian dollars.

The fourth quarter of 2014 benefited from higher zinc metal production volumes and higher zinc realized prices causing zinc revenues to increase. The fourth quarter of 2014 also benefited from favourable movements in foreign exchange rates and favourable mark-to-market adjustments on certain financial instruments. However, this was offset by lower copper sales volumes due to the timing of shipments and lower realized copper prices causing a net decrease in revenues and pre-tax profit for the fourth quarter 2014. Profit, after tax, was higher in the fourth quarter of 2014 as a result of deferred tax recoveries of $68.0 million resulting from the recognition of previously unrecognized deductible temporary differences in both Peru and Manitoba.

The third quarter of 2014 benefited from increases in copper output and also from the one-time gain on disposition of previously owned shares in Augusta of $45.7 million. In addition, the first quarterly mark-to-market adjustment related to the Hudbay warrant consideration paid to Augusta shareholders and the Augusta warrants that we assumed in connection with the acquisition resulted in a gain of $20.0 million. However, these gains were partially offset by $9.4 million of costs in connection with the acquisition of Augusta during the third quarter of 2014. The volatile currency markets continued in the third quarter of 2014 resulting in a loss on foreign exchange of $9.6 million.

The second quarter of 2014 benefited from the aforementioned increase in copper output and also from foreign exchange gains of $8.3 million as a result of a stronger Canadian dollar against the US dollar, which favourably impacted translation of our unsecured notes.

28

NON-IFRS FINANCIAL PERFORMANCE MEASURES

Operating cash flow before change in non-cash working capital and operating cash flow per share are included in this MD&A because we believe that they help investors and management to evaluate changes in cash flow generated from the various operations while, in the case of operating cash flow per share, taking into account changes in shares outstanding. Cash cost, sustaining cash cost and all-in sustaining cash cost per pound of copper produced are shown because we believe they help investors and management assess the performance of our operations, including the margin generated by the operations and the company. These measures do not have a meaning prescribed by IFRS and are therefore unlikely to be comparable to similar measures presented by other issuers. These measures should not be considered in isolation or as a substitute for measures prepared in accordance with IFRS and are not necessarily indicative of operating profit or cash flow from operations as determined under IFRS. Other companies may calculate these measures differently.

Operating Cash Flow Per Share

The following table presents our calculation of operating cash flow per share for the three months ended

March 31, 2016 and March 31, 2015:

		Three Months Ended
		Mar. 31		Mar. 31
(in $ thousands, except shares and per share amounts)		2016		2015
Cash generated from operating activities		101,554		314
Less: Change in non-cash working capital		29,665		(16,586	)
Operating cash flow before change in non-cash working capital		71,889		16,900
Weighted average shares outstanding - basic		235,231,688		233,624,783
Operating cash flow per share	$	0.31	$	0.07

Cash Cost, Sustaining and All-in Sustaining Cash Cost

Cash cost per pound of copper produced (“cash cost”) is a non-IFRS measure that management uses as a key performance indicator to assess the performance of our operations. Our calculation designates copper as our primary metal of production as it has been, and is expected to be, the largest component of revenues. The calculation is presented in four manners:

- Cash cost, before by-product credits - This measure is gross of by-product revenues and is a function of the efforts and costs incurred to mine and process all ore mined. However, the measure divides this aggregate cost over only pounds of copper produced, our primary metal of production. This measure is generally less volatile from period to period, as it is not affected by changes in the price received for by-product metals. It is, however, significantly affected by the relative mix of copper concentrate and finished zinc production, and an increase in production of zinc metal will tend to result in an increase in cash cost under this measure.

- Cash cost, net of by-product credits - In order to calculate the net cost to produce and sell copper, the net of by-product credits measure subtracts the revenues realized from the sale of the metals other than copper. The by-product revenues from zinc, gold and silver are significant and are integral to the economics of our operations. The economics that support our decision to produce and sell copper would be different if we did not receive revenues from the other significant metals being extracted and processed. This measure provides management and investors with an indication of the minimum copper price consistent with positive operating cash flows and operating margins, assuming realized by-product metal prices are consistent with those prevailing during the reporting period. It also serves as an important operating statistic that management and investors utilize to measure our operating performance versus that of our competitors. However, it is important to understand that if by-product metal prices decline alongside copper prices, the cash cost net of by- product credits would increase, requiring a higher copper price than that reported to maintain positive cash flows and operating margins.

29

- Sustaining cash cost, net of by-product credits - This measure is an extension of cash cost that includes sustaining capital expenditures and net smelter returns royalties. It provides a more fulsome measurement of the cost of sustaining production than cash cost, which is focused on operating costs only and does not include corporate G&A.

- All-in sustaining cash cost, net of by-product credits - This measure is an extension of sustaining cash cost that includes corporate G&A. Due to the inclusion of corporate G&A, all-in sustaining cash cost is presented on a consolidated basis only.

The tables below present a detailed build-up of cash cost and sustaining cash cost, net of by-product credits, by business unit in addition to consolidated all-in sustaining cash cost, net of by-product credits, and reconciliations between cash cost, net of by-product credits, to the most comparable IFRS measures of cost of sales for the three months ended March 31, 2016 and 2015. Cash cost, net of by-product credits may not calculate exactly based on amounts presented in the tables below due to rounding.

Consolidated Cash Cost

Consolidated	Three months ended
Net pounds of copper produced1
(in thousands)	Mar. 31, 2016	Mar. 31, 2015
Manitoba	21,464	24,178
Peru	64,249	-
Net pounds of copper produced1	85,713	24,178

Consolidated	Three months ended
Cash cost per pound of	Mar. 31, 2016				Mar. 31, 2015
copper produced	$000s		$/lb		$000s		$/lb
Cash cost, before by-product credits	165,130		1.93		99,540		4.12
By-product credits	(66,717	)	(0.78	)	(64,689	)	(2.68	)
Cash cost, net of by-product credits	98,413		1.15		34,851		1.44

¹ Contained copper in concentrate, exclusive of Constancia copper produced prior to the achievement of commercial production on May 1, 2015.

30

Consolidated	Three months ended
Supplementary cash cost	Mar. 31, 2016				Mar. 31, 2015
information	$000s		$/lb 1		$000s		$/lb 1
By-product credits:
Zinc	50,498		0.59		53,821		2.23
Gold	20,911		0.24		15,210		0.63
Silver	10,452		0.12		1,952		0.08
Other	730		0.01		1,374		0.06
Total by-product credits	82,591		0.96		72,357		3.00
Less: deferred revenue	(15,874	)	(0.19	)	(7,668	)	(0.32	)
Total by-product credits	66,717		0.78		64,689		2.68
Reconciliation to IFRS:
Cash cost, net of by-product credits	98,413				34,851
By-product credits	82,591				72,357
Change in deferred revenues	(15,874	)			(7,668	)
Treatment and refining charges	(27,640	)			(8,114	)
Share-based payment	(67	)			244
Adjustments related to zinc inventory write-off (reversals)	2,269				-
Change in product inventory	8,575				(2,820	)
Royalties	3,022				1,295
Depreciation and amortization	74,413				25,582
Cost of sales	225,702				115,727

¹ Per pound of copper produced.

Peru Cash Cost

Peru	Three months ended
(in thousands)	Mar. 31, 2016	Mar. 31, 2015
Net pounds of copper produced1	64,249	-

Peru	Three months ended
Cash cost per pound of copper	Mar. 31, 2016					Mar. 31, 2015
produced	$000s			$/lb		$000s	$/lb
Mining	12,532			0.20		-	-
Milling	26,629			0.41		-	-
G&A	7,633			0.12		-	-
Onsite costs	46,794			0.73		-	-
Treatment & refining	18,548			0.29			-
Freight & other	16,057			0.25			-
Cash cost, before by-product credits	81,399			1.27		-	-
By-product credits	(7,514	)	(0.12		)	-	-
						-
Cash cost, net of by-product credits	73,885			1.15			-

¹ Contained copper in concentrate.

31

Peru	Three months ended
Supplementary cash cost	Mar. 31, 2016				Mar. 31, 2015
information	$000s		$/lb 1		$000s	$/lb 1
By-product credits:
Gold	6,367		0.10		-	-
Silver	8,088		0.13		-	-
Other	129		-		-	-
Total by-product credits	14,584		0.23		-	-
Less: deferred revenue	(7,070	)	(0.11	)	-	-
Total by-product credits	7,514		0.12		-	-
Reconciliation to IFRS:
Cash cost, net of by-product credits	73,885				-
By-product credits	14,584				-
Change in deferred revenues	(7,070	)			-
Treatment and refining charges	(18,548	)			-
Change in product inventory	7,081				-
Royalties	1,727				-
Depreciation and amortization	45,502				-
Cost of sales	117,161				-

¹ Per pound of copper produced.

Manitoba Cash Cost

Manitoba	Three months ended
(in thousands)	Mar. 31, 2016	Mar. 31, 2015
Net pounds of copper produced1	21,464	24,178

Manitoba	Three months ended
Cash cost per pound of	Mar. 31, 2016				Mar. 31, 2015
copper produced	$000s		$/lb		$000s		$/lb
Mining	29,055		1.35		29,915		1.24
Milling	8,991		0.42		9,934		0.41
Refining (zinc)	15,797		0.74		16,970		0.70
G&A	9,097		0.42		12,545		0.52
Purchased ore and zinc concentrates	3,223		0.15		12,901		0.53
Onsite costs	66,163		3.08		82,265		3.40
Treatment & refining	9,092		0.42		8,114		0.34
Freight & other	8,476		0.39		9,161		0.38
Cash cost, before by-product credits	83,731		3.90		99,540		4.12
By-product credits	(59,203	)	(2.76	)	(64,689	)	(2.68	)
Cash cost, net of by-product credits	24,528		1.14		34,851		1.44

¹ Contained copper in concentrate.

32

Manitoba	Three months ended
Supplementary cash cost	Mar. 31, 2016				Mar. 31, 2015
information	$000s		$/lb 1		$000s		$/lb 1
By-product credits:
Zinc	50,498		2.35		53,821		2.23
Gold	14,544		0.68		15,210		0.63
Silver	2,364		0.11		1,952		0.08
Other	601		0.03		1,374		0.06
Total by-product credits	68,007		3.17		72,357		2.99
Less: deferred revenue	(8,804	)	(0.41	)	(7,668	)	(0.32	)
Total by-product credits	59,203		2.76		64,689		2.68
Reconciliation to IFRS:
Cash cost, net of by-product credits	24,528				34,851
By-product credits	68,007				72,357
Change in deferred revenues	(8,804	)			(7,668	)
Treatment and refining charges	(9,092	)			(8,114	)
Share-based payment	(67	)			244
Adjustments related to zinc inventory write-off (reversals)	2,269				-
Change in product inventory	1,494				(2,820	)
Royalties	1,295				1,295
Depreciation and amortization	28,911				25,582
Cost of sales	108,541				115,727

¹ Per pound of copper produced.

All-in and Sustaining Cash Cost

Consolidated	Three months ended
All-in sustaining cash cost per pound of	Mar. 31, 2016		Mar. 31, 2015
copper produced	$000s	$/lb	$000s	$/lb
Cash cost, net by-product credits	98,413	1.15	34,851	1.44
Sustaining capital expenditures	44,367	0.52	18,856	0.78
Royalties	3,022	0.04	1,295	0.05
Sustaining cash cost, net of by-product credits	145,802	1.70	55,002	2.27
Corporate G&A	8,343	0.10	9,532	0.39
All-in sustaining cash cost, net of by-product credits	154,145	1.80	64,534	2.67

33

Peru	Three months ended
Sustaining cash cost per pound of	Mar. 31, 2016		Mar. 31, 2015
copper produced	$000s	$/lb	$000s	$/lb
Cash cost, net by-product credits	73,885	1.15	-	-
Sustaining capital expenditures	20,348	0.32	-	-
Royalties	1,727	0.03	-	-
Sustaining cash cost, net of by-product credits	95,960	1.49	-	-

Manitoba	Three months ended
Sustaining cash cost per pound of	Mar. 31, 2016		Mar. 31, 2015
copper produced	$000s	$/lb	$000s	$/lb
Cash cost, net by-product credits	24,528	1.14	34,851	1.44
Sustaining capital expenditures	24,019	1.12	18,856	0.78
Royalties	1,295	0.06	1,295	0.05
Sustaining cash cost, net of by-product credits	49,842	2.32	55,002	2.27

34

ACCOUNTING CHANGES AND CRITICAL ESTIMATES

New standards and interpretations not yet adopted

For information on new standards and interpretations not yet adopted, refer to note 5 of our March 31, 2016 consolidated interim financial statements.

Estimates and judgements

For information on significant areas requiring us to make estimates and judgements, refer to note 2 of our March 31, 2016 consolidated interim financial statements.

CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING

Management is responsible for establishing and maintaining adequate internal control over financial reporting (“ICFR”). ICFR is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with IFRS.

We did not make any changes to ICFR during the quarter ended March 31, 2016 that materially affected or are reasonably likely to materially affect our ICFR.

35

EX-99.2

Unaudited Condensed Consolidated Interim Financial Statements
(In US dollars)

HUDBAY MINERALS INC.

For the three months ended March 31, 2016 and 2015

HUDBAY MINERALS INC.

Condensed Consolidated Interim Balance Sheets

(Unaudited and in thousands of US dollars)

			Mar. 31,			Dec. 31,
	Note		2016			2015
Assets
Current assets
Cash and cash equivalents		$	85,717		$	53,852
Trade and other receivables	8		208,976			228,678
Inventories	9		111,949			120,186
Prepaid expenses	10		48,586			8,979
Other financial assets	11		2,327			16,512
Taxes receivable			6,147			6,971
			463,702			435,178
Receivables	8		32,402			26,223
Inventories	9		6,075			5,649
Other financial assets	11		78,408			72,730
Intangible assets - computer software			8,579			8,859
Property, plant and equipment	12		3,927,013			3,890,276
Deferred tax assets	18b		50,557			40,670
		$	4,566,736		$	4,479,585
Liabilities
Current liabilities
Trade and other payables		$	178,882		$	187,185
Taxes payable			1,454			4,393
Other liabilities	13		50,581			37,667
Other financial liabilities	14		19,296			10,195
Long-term debt	15		16,490			69,875
Deferred revenue	16		79,676			68,250
			346,379			377,565
Other financial liabilities	14		36,895			27,635
Long-term debt	15		1,296,732			1,205,005
Deferred revenue	16		513,380			529,010
Provisions	17		161,503			143,596
Pension obligations			51,330			34,260
Other employee benefits			92,284			80,695
Deferred tax liabilities	18b		297,403			294,529
			2,795,906			2,692,295
Equity
Share capital	19b		1,576,600			1,576,600
Reserves			(43,902	)		(45,003	)
Retained earnings			238,132			255,693
			1,770,830			1,787,290
		$	4,566,736		$	4,479,585

Capital commitments (note 22).

2

HUDBAY MINERALS INC.

Condensed Consolidated Interim Statements of Cash Flow

(Unaudited and in thousands of US dollars)

			Three months ended
			March 31,
			2016			2015
						Restated
						(notes 2b,
	Note					4a, 4b	)
Cash generated from (used in) operating activities:
Loss for the period		$	(15,788	)	$	(19,837	)
Tax (recovery) expense	18a		(1,100	)		8,357
Items not affecting cash:
Depreciation and amortization	7b		74,565			25,740
Share-based payment expense	7c		627			1,736
Net finance expense	7e		29,355			3,185
Change in fair value of prepayment option embedded derivative/gold option			659			(6,380	)
Change in deferred revenue related to stream	16		(15,874	)		(7,668	)
Change in taxes receivable/payable, net			3,745			(864	)
Unrealized (gain) loss on warrants	7e		(337	)		2,683
Loss on writedown of assets and impairment losses			3,683			-
Impairment and mark-to-market losses on investments	7e		99			1,282
Foreign exchange and other			(1,424	)		9,183
Taxes paid			(6,321	)		(517	)
Operating cash flows before change in non-cash working capital			71,889			16,900
Change in non-cash working capital	23a		29,665			(16,586	)
			101,554			314
Cash generated from (used in) investing activities:
Acquisition of property, plant and equipment			(46,365	)		(132,804	)
Addition to restricted cash - Peru			(5,116	)		(22,358	)
Net Peruvian sales tax refunded on capital expenditures			-			1,721
Net interest received (paid)			138			(2,062	)
			(51,343	)		(155,503	)
Cash generated from (used in) financing activities:
Long-term debt borrowing, net of transaction costs paid			39,797			123,831
Principal repayments	15		(4,123	)		(3,693	)
Interest paid			(48,497	)		(44,549	)
Proceeds from exercise of stock options			-			91
Financing costs			(4,424	)		(1,203	)
Finance lease			(479	)		-
Dividends paid	19b		(1,773	)		(1,842	)
			(19,499	)		72,635
Effect of movement in exchange rates on cash and cash equivalents			1,153			491
Net increase (decrease) in cash and cash equivalents			31,865			(82,063	)
Cash and cash equivalents, beginning of period			53,852			178,668
Cash and cash equivalents, end of period		$	85,717		$	96,605

For supplemental information, see note 23.

3

HUDBAY MINERALS INC.

Condensed Consolidated Interim Income Statements

(Unaudited and in thousands of US dollars, except share and per share amounts)

			Three months ended
			March 31,
			2016			2015
						Restated
	Note					(notes 2b, 4a	)
Revenue	7a	$	253,625		$	128,713
Cost of sales
Mine operating costs			151,289			90,145
Depreciation and amortization	7b		74,413			25,582
			225,702			115,727
Gross profit			27,923			12,986
Selling and administrative expenses			8,343			9,532
Exploration and evaluation expenses			1,153			2,330
Other operating expenses	7d		4,268			3,392
Results from operating activities			14,159			(2,268	)
Finance income	7e		(554	)		(306	)
Finance expenses	7e		29,909			3,491
Other finance loss	7e		1,692			6,027
Net finance expense			31,047			9,212
Loss before tax			(16,888	)		(11,480	)
Tax (recovery) expense	18a		(1,100	)		8,357
Loss for the period		$	(15,788	)	$	(19,837	)
Loss per share - basic and diluted		$	(0.07	)	$	(0.08	)
Weighted average number of common shares outstanding:	20
Basic			235,231,688			233,624,783
Diluted			235,231,688			233,624,783

4

HUDBAY MINERALS INC.

Condensed Consolidated Interim Statements of Comprehensive Income

(Unaudited and in thousands of US dollars)

		Three months ended
		March 31,
		2016			2015
					Restated
					(notes 2b, 4a	)
Loss for the period	$	(15,788	)	$	(19,837	)
Other comprehensive (loss) income:
Items that may be reclassified subsequently to profit or loss
Recognized directly in equity:
Net exchange gain (loss) on translation of foreign operations		17,123			(10,963	)
Change in fair value of available-for-sale financial investments		(73	)		(426	)
Effect of foreign exchange on available-for-sale financial investments		587			-
		17,637			(11,389	)
Items that will not be reclassified subsequently to profit or loss:
Recognized directly in equity:
Remeasurement - actuarial loss		(21,118	)		(6,733	)
Tax effect		4,483			(183	)
		(16,635	)		(6,916	)
Transferred to income statements:
Impairment of available-for-sale financial assets		99			1,303
Sale of investments		-			(21	)
Tax effect		-			7
		99			1,289
Other comprehensive income (loss), net of tax, for the period		1,101			(17,016	)
Total comprehensive loss for the period	$	(14,687	)	$	(36,853	)

5

HUDBAY MINERALS INC.

Condensed Consolidated Interim Statements of Changes in Equity

(Unaudited and in thousands of US dollars)

								Foreign
								currency
		Share Capital			Other capital			translation			Available-for-			Remeasure-		Retained
		(note 19	)		reserves			reserve			sale reserve			ment reserve		earnings			Total equity
Balance, January 1, 2015	$	1,562,249		$	25,900		$	46,751		$	2,898		$	(119,465	) $	590,725		$	2,109,058
Loss		-			-			-			-			-		(19,837	)		(19,837	)
Other comprehensive (loss) income		-			-			(10,963	)		863			(6,916	)	-			(17,016	)
Total comprehensive (loss) income		-			-			(10,963	)		863			(6,916	)	(19,837	)		(36,853	)
Contributions by and distributions to owners:
Stock options exercised		130			(39	)		-			-			-		-			91
Dividends (note 19b)		-			-			-			-			-		(1,842	)		(1,842	)
Total contributions by and distributions to owners		130			(39	)		-			-			-		(1,842	)		(1,751	)
Balance, March 31, 2015	$	1,562,379		$	25,861		$	35,788		$	3,761		$	(126,381	) $	569,046		$	2,070,454
Loss		-			-			-			-			-		(311,591	)		(311,591	)
Other comprehensive (loss) income		-			-			(49,685	)		(2,452	)		65,129		-			12,992
Total comprehensive (loss) income		-			-			(49,685	)		(2,452	)		65,129		(311,591	)		(298,599	)
Contributions by and distributions to owners:
Stock options exercised		1,022			(304	)		-			-			-		-			718
Equity issuance (note 19b)		13,199			-			-			-			-		-			13,199
Reclassification of Augusta warrants		-			3,280			-			-			-		-			3,280
Dividends		-			-			-			-			-		(1,762	)		(1,762	)
Total contributions by and distributions to owners		14,221			2,976			-			-			-		(1,762	)		15,435
Balance, December 31, 2015	$	1,576,600		$	28,837		$	(13,897	)	$	1,309		$	(61,252	) $	255,693		$	1,787,290

6

HUDBAY MINERALS INC.

Condensed Consolidated Interim Statements of Changes in Equity

(Unaudited and in thousands of US dollars)

							Foreign currency
		Share capital			Other capital		translation			Available-for-		Remeasure-			Retained
		(note 19	)		reserves		reserve			sale reserve		ment reserve			earnings			Total equity
Balance, January 1, 2016	$	1,576,600		$	28,837	$	(13,897	)	$	1,309	$	(61,252	)	$	255,693		$	1,787,290
Loss		-			-		-			-		-			(15,788	)		(15,788	)
Other comprehensive income (loss)		-			-		17,123			613		(16,635	)		-			1,101
Total comprehensive income (loss)		-			-		17,123			613		(16,635	)		(15,788	)		(14,687	)
Contributions by and distributions to owners:
Dividends (note 19b)		-			-		-			-		-			(1,773	)		(1,773	)
Balance, March 31, 2016	$	1,576,600		$	28,837	$	3,226			$1,922	$	(77,887	)	$	238,132		$	1,770,830

7

HUDBAY MINERALS INC.

Notes to Unaudited Condensed Consolidated Interim Financial Statements

(in thousands of US dollars, except where otherwise noted)

For the three months ended March 31, 2016 and 2015

1. Reporting entity

HudBay Minerals Inc. ("HMI", “Hudbay” or the "Company") was amalgamated under the Canada Business Corporations Act on August 15, 2011. The address of the Company's principal executive office is 25 York Street, Suite 800, Toronto, Ontario. The unaudited condensed consolidated interim financial statements (“interim financial statements”) of the Company for the three months ended March 31, 2016 and 2015 represent the financial position and the financial performance of the Company and its subsidiaries (together referred to as the “Group” or “Hudbay” and individually as “Group entities”).

Significant subsidiaries, as at March 31, 2016, include Hudson Bay Mining and Smelting Co., Limited (“HBMS”), Hudson Bay Exploration and Development Company Limited (“HBED”), HudBay Marketing & Sales Inc. (“HMS”), HudBay Peru Inc., HudBay Peru S.A.C. ("Hudbay Peru"), HudBay (BVI) Inc., HudBay Arizona Corporation (formerly Augusta Resource Corporation, “Augusta” or “Hudbay Arizona”) and Rosemont Copper Company (“Rosemont”).

Hudbay is an integrated mining company producing copper concentrate (containing copper, gold and silver) and zinc metal. With assets in North and South America, the Group is focused on the discovery, production and marketing of base and precious metals. Through its subsidiaries, Hudbay owns four polymetallic mines, four ore concentrators and a zinc production facility in northern Manitoba and Saskatchewan (Canada) and Cusco (Peru) and a copper project in Arizona (United States). The Company is governed by the Canada Business Corporations Act and its shares are listed under the symbol "HBM" on the Toronto Stock Exchange, New York Stock Exchange and Bolsa de Valores de Lima. Hudbay also has warrants listed under the symbol “HBM.WT” on the Toronto Stock Exchange and “HBM/WS” on the New York Stock Exchange.

Management does not consider the impact of seasonality on operations to be significant on the interim financial statements.

2. Basis of preparation

(a) Statement of compliance:

These interim financial statements have been prepared in accordance with IAS 34 Interim Financial Reporting and do not include all of the information required for full annual financial statements by International Financial Reporting Standards ("IFRS") as issued by the International Accounting Standards Board ("IASB").

These interim financial statements should be read in conjunction with the Company’s audited consolidated financial statements for the year ended December 31, 2015 which includes information necessary or useful to understanding the Company’s business and financial statement presentation. In particular, the Company’s significant accounting policies are presented as note 2 in the audited consolidated financial statements for the year ended December 31, 2015, and have been consistently applied in the preparation of these interim financial statements.

The Board of Directors approved these interim financial statements on April 28, 2016.

8

HUDBAY MINERALS INC.

Notes to Unaudited Condensed Consolidated Interim Financial Statements

(in thousands of US dollars, except where otherwise noted)

For the three months ended March 31, 2016 and 2015

(b) Functional and presentation currency:

The Group's interim financial statements are presented in US dollars, which is the Company’s and all material subsidiaries' functional currency, except for HBMS, HBED and HMS, which have a functional currency of Canadian dollars. All values are rounded to the nearest thousand ($000) except where otherwise indicated. The Company changed its functional and presentation currency effective July 1, 2015, the details of which are described in note 4a.

(c) Use of judgement:

The preparation of the interim financial statements in conformity with IFRS requires the Group to make judgements, apart from those involving estimations, in applying accounting policies that affect reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the interim financial statements, as well as reported amounts of revenue and expenses during the reporting period.

The interim financial statements reflect the judgements outlined by the Group in its audited consolidated financial statements for the year ended December 31, 2015.

(d) Use of estimates:

The preparation of the interim financial statements in conformity with IFRS requires the Group to make estimates and assumptions that affect the application of accounting policies, reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the interim financial statements, as well as reported amounts of revenue and expenses during the reporting period. Actual results may differ from these estimates.

The interim financial statements reflect the estimates outlined by the Group in its audited consolidated financial statements for the year ended December 31, 2015.

3. Significant accounting policies

These interim financial statements reflect the accounting policies applied by the Group in its audited consolidated financial statements for the year ended December 31, 2015 and comparative periods.

4. Restatements

(a) Change in functional and presentation currency

The functional currency of each of the Group’s subsidiaries is the currency of the primary economic environment in which the entity operates. The Group reconsiders the functional currency of its entities if there is a change in events and conditions which determined the primary economic environment. Prior to July 1, 2015, the Group's consolidated financial statements were presented in Canadian dollars, which was the Company’s and all material subsidiaries' functional currency, except for Hudbay Peru, HudBay (BVI) Inc. and the Hudbay Arizona entities, which had a functional currency of US dollars.

9

HUDBAY MINERALS INC.

Notes to Unaudited Condensed Consolidated Interim Financial Statements

(in thousands of US dollars, except where otherwise noted)

For the three months ended March 31, 2016 and 2015

The ability for Hudbay Peru to repatriate funds in US dollars, as a result of reaching commercial production in the first half of 2015, and the purchase of Hudbay Arizona have significantly increased the Company’s exposure to the US dollar as cash inflows are now predominantly in US dollars and revenue and costs related to Constancia operations and Rosemont development are denominated in US dollars. Consequently, effective July 1, 2015, the US dollar was adopted as the Company’s functional currency on a prospective basis. All the Group’s subsidiaries continue to measure the items in their financial statements using their functional currencies.

Effective July 1, 2015, the Group changed its presentation currency to US dollars from Canadian dollars. This change in presentation currency was made to better reflect the Group’s business activities, comprised primarily of US dollar revenues as well as associated US dollar denominated financings, and is consistent with the Group’s peers. The interim financial statements for all years presented have been translated into the new presentation currency in accordance with IAS 21, The Effects of Changes in Foreign Exchange Rates. The condensed consolidated statements of income and consolidated statements of comprehensive income have been translated into the presentation currency using the average exchange rates prevailing during each monthly reporting period. In addition, shareholders’ equity balances have been translated using historical rates based on rates in effect on the date of material transactions.

Consolidated Income Statements and Statements of Comprehensive Income

		Three months ended
		March 31,2015
		As reported,			Restated,
		C$000			US$000
Revenue	$	160,652		$	128,713
Cost of sales		144,297			115,727
Gross profit		16,355			12,986
Results from operating activities		(2,121	)		(2,268	)
Loss before tax	$	(13,076	)	$	(11,480	)
Loss for the period	$	(23,708	)	$	(19,837	)
Total comprehensive income (loss) for the period	$	181,458		$	(36,853	)
Loss per share - Basic and diluted	$	(0.10	)	$	(0.08	)

10

HUDBAY MINERALS INC.

Notes to Unaudited Condensed Consolidated Interim Financial Statements

(in thousands of US dollars, except where otherwise noted)

For the three months ended March 31, 2016 and 2015

(b) Restatement of amounts within cash generated from operating activities

Since the fourth quarter of 2015, the Group has significantly increased the number of copper fixed for floating swaps in order to manage the risk associated with provisional pricing terms in copper concentrate sales agreements. As a result, the Group has restated the presentation of the cash generated from operating activities section of the statements of cash flow to present the changes in the respective receivable and payable balances associated with these items all within changes in non-cash working capital. In the past, the gains or losses for the swaps were presented as a change in fair value of derivatives and the associated mark-to-market adjustments were presented as a change in non-cash working capital. The impact of this restatement for the three months ended March 31, 2015 is a decrease in 'operating cash flows before change in non-cash working capital' of $1,439, with an associated increase in 'change in non-cash working capital'.

5. New standards

New standards and interpretations adopted

As required by the IASB, effective January 1, 2016 the Group adopted the following amendment to IFRS:

- Amendments to IAS 16, Property, Plant and Equipment (“IAS 16”) and IAS 38, Intangible Assets (“IAS 38”) - the amendments to clarify that the use of revenue-based methods to calculate the depreciation of a tangible asset is not appropriate because revenue generated by an activity that includes the use of a tangible asset generally reflects factors other than the consumption of the economic benefits embodied in the asset. The IASB has also clarified that revenue is generally presumed to be an inappropriate basis for measuring the consumption of the economic benefits embodied in an intangible asset. This presumption for an intangible asset, however, can be rebutted in certain limited circumstances. The Group’s adoption of this amendment did not have any impact on its current method of calculating depreciation or amortization.

New standards and interpretations not yet adopted

- IFRS 9, Financial Instruments - issued on July 24, 2014 is the IASB’s replacement of IAS 39 Financial Instruments: Recognition and Measurement. The Standard includes requirements for recognition and measurement, impairment, derecognition and general hedge accounting. The IASB completed its project to replace IAS 39 in phases, adding to the standard as it completed each phase. The version of IFRS 9 issued in 2014 supersedes all previous versions and is mandatorily effective for periods beginning on or after January 1, 2018 with early adoption permitted (subject to local endorsement requirements). For a limited period, previous version of IFRS 9 may be adopted early if not already done so provided the relevant date of initial application is before February 1, 2015. IFRS 9 does not replace the requirements for portfolio fair value hedge accounting for interest rate risk (often referred to as the “macro hedge accounting” requirements) since this phase of the project was separated from the IFRS 9 project due to the longer term nature of the macro hedging project which is currently at the discussion paper phase of the due process. In April 2014, the IASB published a Discussion Paper Accounting for Dynamic Risk management: a Portfolio Revaluation Approach to Macro Hedging. Consequently, the exception in IAS 39 for a fair value hedge of an interest rate exposure of a portfolio of financial assets or financial liabilities continues to apply. The Group has not yet determined the effect of adoption of IFRS 9 on its consolidated financial statements.

11

HUDBAY MINERALS INC.

Notes to Unaudited Condensed Consolidated Interim Financial Statements

(in thousands of US dollars, except where otherwise noted)

For the three months ended March 31, 2016 and 2015

- IFRS 15, Revenue from Contracts with Customers - in May 2014, the IASB issued this standard which is effective for periods beginning on or after January 1, 2017 and is to be applied retrospectively. IFRS 15 clarifies the principles for recognizing revenue from contracts with customers. IFRS 15 will also result in enhanced disclosures about revenue, provide guidance for transactions that were not previously addressed comprehensively (i.e. service revenue and contract modifications) and improve guidance for multiple-element arrangements. The Company intends to adopt IFRS 15 in its financial statements for the annual period beginning January 1, 2017. The IASB has affirmed its proposal to defer the effective date of this standard to January 1, 2018. The Group has not yet determined the effect of adoption of IFRS 15 on its consolidated financial statements.

- IFRS 16, Leases - in January 2016, the IASB issued this standard which is effective for periods beginning on or after January 1, 2019, which replaces the current guidance in IAS 17, Leases, and is to be applied either retrospectively or a modified retrospective approach. Early adoption is permitted, but only in conjunction with IFRS 15, Revenue from Contracts with Customers. Under IAS 17, lessees were required to make a distinction between a finance lease (on balance sheet) and an operating lease (off balance sheet). IFRS 16 now requires lessees to recognize a lease liability reflective of future lease payments and a “right-of-use asset” for virtually all lease contracts. The Group has not yet determined the effect of adoption of IFRS 16 on its consolidated financial statements.

6. Acquisition of New Britannia Mine and Mill

On May 4, 2015, the Group acquired a 100% interest in the New Britannia Mine and Mill, located in Snow Lake, Manitoba, for $12,302 in cash consideration, plus a contingent payment of $5,000. In connection with the New Britannia acquisition, the Group entered into a private placement agreement with a Canadian bank to sell 1,357,000 Hudbay common shares for net proceeds of $13,040.

In accordance with IFRS 3, Business Combinations, this transaction does not meet the definition of a business combination as the assets acquired are not an integrated set of activities with inputs, processes and outputs. New Britannia Mine and Mill is not an operation.

The purchase price of $14,462 was finalized and allocated to the assets acquired and the liabilities assumed based on the fair value of the total consideration at the closing date of the acquisition. All financial assets acquired and financial liabilities assumed were recorded at their relative fair values. In addition, an option liability was recorded for the fair value amount of $1,164 in connection with the contingent consideration since it is an integral component of the consideration paid and represents a financial instrument. The fair values were allocated to the net assets on a relative fair value basis and the option liability was valued using the Black-Scholes model.

12

HUDBAY MINERALS INC.

Notes to Unaudited Condensed Consolidated Interim Financial Statements

(in thousands of US dollars, except where otherwise noted)

For the three months ended March 31, 2016 and 2015

Assets acquired and liabilities assumed

The following summarizes the acquisition date allocation of the relative fair values of the major classes of assets and liabilities acquired:

Restricted cash	$	1,542
Machinery & equipment		10,410
Mineral property		2,890
Net decommissioning liability		(380	)
Total net assets acquired	$	14,462

The following summarizes consideration for the purchase:

Cash	$	12,302
Contingent payment - gold price option		1,164
Transaction costs		996
Total consideration	$	14,462

7. Revenue and expenses

(a) Revenue

The Group’s revenue by significant product types:

		Three months ended
		March 31,
		2016			2015
Copper	$	198,674		$	64,470
Zinc		50,498			53,821
Gold		20,911			15,210
Silver		10,452			1,952
Other		730			1,374
		281,265			136,827
Treatment and refining charges		(27,640	)		(8,114	)
	$	253,625		$	128,713

Included in revenue for the three months ended March 31, 2016 are losses related to unrealized non-hedge derivative contracts of $20,062 (three months ended March 31, 2015 - losses of $1,439).

13

HUDBAY MINERALS INC.

Notes to Unaudited Condensed Consolidated Interim Financial Statements

(in thousands of US dollars, except where otherwise noted)

For the three months ended March 31, 2016 and 2015

(b) Depreciation and amortization

Depreciation of property, plant and equipment and amortization of intangible assets are reflected in the condensed consolidated interim income statements as follows:

		Three months ended March 31,
		2016		2015
Cost of sales	$	74,413	$	25,582
Selling and administrative expenses		152		158
	$	74,565	$	$ 25,740

(c) Share-based payment expense

Share-based payment expenses are reflected in the condensed consolidated interim income statements as follows:

		Cash-settled						Total share-based
		RSUs			DSUs			payment expense
Three months ended March 31, 2016
Cost of sales	$	(67	)	$	-		$	(67	)
Selling and administrative expenses, net		504			(58	)		446
Other operating expenses		248			-			248
	$	685		$	(58	)	$	627
Three months ended March 31, 2015
Cost of sales	$	244		$	-		$	244
Selling and administrative expenses		1,267			401			1,668
Other operating expenses		(176	)		-			(176	)
	$	1,335		$	401		$	1,736

(d) Other operating (income) expenses

		Three months ended
		March 31,
		2016			2015
Loss on writedown of assets	$	2,151		$	(415	)
Joint venture operator fee income		(71	)		(93	)
Regional costs		1,115			1,221
Cost of non-producing properties		1,073			2,679
	$	4,268		$	3,392

14

HUDBAY MINERALS INC.

Notes to Unaudited Condensed Consolidated Interim Financial Statements

(in thousands of US dollars, except where otherwise noted)

For the three months ended March 31, 2016 and 2015

(e) Finance income and expenses

		Three months ended
		March 31,
		2016			2015
Finance income	$	(554	)	$	(306	)
Finance expense
Interest expense on long-term debt		26,618			23,562
Accretion on financial liabilities at amortized cost		327			352
Unwinding of discounts on provisions		667			737
Other finance expense		5,979			2,485
		33,591			27,136
Interest capitalized		(3,682	)		(23,645	)
		29,909			3,491
Other finance (gains) losses
Net foreign exchange loss		1,248			8,463
Change in fair value of financial assets and liabilities at fair value through profit loss:
Hudbay and Augusta warrants		(337	)		2,683
Prepayment option embedded derivative/gold option		659			(6,380	)
Investments classified as held-for-trading		23			(21	)
Reclassified from equity on disposal of available- for-sale investments		-			(21	)
Reclassified from equity on impairment of available-for-sale investments		99			1,303
		1,692			6,027
Net finance expense	$	31,047		$	9,212

Interest expense related to long-term debt and accretion of financial liabilities at amortized cost has been capitalized to the Constancia project until May 1, 2015 and to the Rosemont project (notes 14, 15).

Other finance expense relates primarily to withholding taxes and non-interest facility fees on financing instruments.

During the three months ended March 31, 2016, the Group recognized impairment losses on investments in listed shares and transferred pre-tax losses of $99 (2015 - $1,303) from the available-for-sale reserve within equity to the condensed consolidated interim income statements.

15

HUDBAY MINERALS INC.

Notes to Unaudited Condensed Consolidated Interim Financial Statements

(in thousands of US dollars, except where otherwise noted)

For the three months ended March 31, 2016 and 2015

8. Trade and other receivables

		Mar. 31, 2016		Dec. 31, 2015
Current
Trade receivables	$	57,384	$	85,373
Embedded derivatives - provisional pricing (note 21c)		13,499		(13,653	)
Statutory receivables		108,764		122,288
Receivable from joint venture partners		6,153		6,772
Other receivables		23,176		27,898
		208,976		228,678
Non-current
Statutory receivables - Peruvian sales tax		5,214		1,112
Receivable from joint venture partners		25,028		23,067
Other receivables		2,160		2,044
		32,402		26,223
	$	241,378	$	254,901

Other receivables primarily relates to amounts due from vendors for operating supplies in the Peru operation.

As commercial production commenced at the Reed mine on April 1, 2014, the Group has a receivable for 30% of the applicable development costs as well as other amounts due from the joint venture partner, VMS Ventures Inc., pursuant to the Reed Lake Project Joint Venture Agreement. The receivable will be repaid by offsetting amounts owed to VMS Ventures Inc. for the purchase of their proportionate share of the Reed mine ore. The receivable has been discounted and has been classified based on the expected timing of ore purchases. As at March 31, 2016, this receivable from VMS Ventures Inc. was $11,910 (December 31, 2015 - $11,775).

The remaining balance in the receivable from joint venture partners primarily relates to the Group’s joint venture partner for the Rosemont project in Arizona, which has been classified as non-current.

As at March 31, 2016, $96,230 (December 31, 2015 - $111,991) of the current statutory receivables relates to refundable sales taxes in Peru that Hudbay Peru has paid on capital expenditures and operating expenses. Management expects to receive the amount within one year. Significant judgements are required on measurement and classification of Peruvian sales taxes paid on capital expenditures and operating expenses (note 2c).

16

HUDBAY MINERALS INC.

Notes to Unaudited Condensed Consolidated Interim Financial Statements

(in thousands of US dollars, except where otherwise noted)

For the three months ended March 31, 2016 and 2015

9. Inventories

		Mar. 31, 2016		Dec. 31, 2015
Current
Stockpile	$	13,169	$	13,241
Work in progress		5,216		6,200
Finished goods		59,429		69,082
Materials and supplies		34,135		31,663
		111,949		120,186
Non-current
Materials and supplies		6,075		5,649
	$	118,024	$	125,835

The cost of inventories recognized as an expense, including depreciation, and included in cost of sales amounted to $196,572 for the three months ended March 31, 2016 (three months ended March 31, 2015 - $102,653).

10. Prepaid expenses

Mar. 31, 2016				Dec. 31, 2015
Prepayments to suppliers related to operations		4,430		8,177
Prepaid interest related to long-term debt		43,700		-
Prepaid insurance and other		456		802
	$	48,586	$	8,979

11. Other financial assets

		Mar. 31, 2016		Dec. 31, 2015
Current
Derivative assets (note 21a)	$	2,327	$	16,512
Non-current
Available-for-sale investments		9,729		9,206
Investments at fair value through profit or loss		40		59
Derivative assets		58		-
Restricted cash		68,581		63,465
		78,408		72,730
	$	80,735	$	89,242

17

HUDBAY MINERALS INC.

Notes to Unaudited Condensed Consolidated Interim Financial Statements

(in thousands of US dollars, except where otherwise noted)

For the three months ended March 31, 2016 and 2015

Available-for-sale investments

Available-for-sale investments consist of investments in Canadian metals and mining companies, most of which are publicly traded. During the three months ended March 31, 2016 and three months ended March 31, 2015, the Group recognized impairment losses on investments in listed shares and transferred pre-tax losses of $99 and $1,303, respectively, from the available-for-sale reserve within equity to the condensed consolidated interim statements (note 7e).

Restricted cash

As required by Peruvian law, Hudbay Peru provides security with respect to its decommissioning and restoration obligations. Hudbay Peru has provided a letter of credit in the amount of $68,581 as at March 31, 2016, and classified cash on deposit with a Peruvian bank to support the letter of credit as restricted cash (December 31, 2015 - $63,465).

12. Property, plant and equipment

				Accumulated
				depreciation
				and			Carrying
Mar. 31, 2016		Cost		amortization			amount
Exploration and evaluation assets	$	15,572	$	-		$	15,572
Capital works in progress		776,258		-			776,258
Mining properties		1,730,916		(447,353	)		1,283,563
Plant and equipment		2,348,620		(497,000	)		1,851,620
	$	4,871,366	$	(944,353	)	$	3,927,013

				Accumulated
				depreciation
				and			Carrying
Dec. 31, 2015		Cost		amortization			amount
Exploration and evaluation assets	$	14,650	$	-		$	14,650
Capital works in progress		812,618		-			812,618
Mining properties		1,603,952		(394,098	)		1,209,854
Plant and equipment		2,289,556		(436,402	)		1,853,154
	$	4,720,776	$	(830,500	)	$	3,890,276

18

HUDBAY MINERALS INC.

Notes to Unaudited Condensed Consolidated Interim Financial Statements

(in thousands of US dollars, except where otherwise noted)

For the three months ended March 31, 2016 and 2015

13. Other liabilities

		Mar. 31, 2016		Dec. 31, 2015
Current portion of
Provisions (note 17)	$	10,884	$	10,630
Pension liability		24,391		23,221
Other employee benefits		2,291		2,107
Unearned revenue		13,015		1,709
	$	50,581	$	37,667

14. Other financial liabilities

		Mar. 31, 2016		Dec. 31, 2015
Current
Derivative liabilities	$	10,447	$	4,426
Finance leases		2,871		618
Other financial liabilities at amortized cost		5,978		5,151
		19,296		10,195
Non-current
Finance leases		11,701		2,607
Contingent consideration - gold price option		1,369		653
Warrants at fair value through profit and loss		5,048		5,047
Other financial liabilities at amortized cost		18,777		19,328
		36,895		27,635
	$	56,191	$	37,830

Other financial liabilities at amortized cost relate to agreements with communities near the Constancia operation which allow Hudbay to extract minerals over the useful life of the Constancia operation, carry out exploration and evaluation activities in the area and provide Hudbay with community support to operate in the region. During the three months ended March 31, 2016, the liability, net of accretion, associated with several of the community agreements increased by $588 and payments of $312 were made. Changes in estimates related to these liabilities are recorded to the liability with a corresponding change in property, plant and equipment or exploration expense.

The derivative liabilities include derivative and hedging transactions as well as warrants issued as consideration for the acquisition of Augusta and warrants assumed on the acquisition of Augusta. Derivative liabilities are carried at their fair value with changes in fair value recorded to the condensed consolidated interim income statements in other finance (gain) loss. The fair value of derivative and hedging transactions are determined based on internal valuation models and the fair value of warrants issued are determined based on the quoted market prices for the listed warrants. The fair value of these warrants at March 31, 2016 is $5,048. A total of 21,830,490 warrants were issued which entitle the holder to acquire a common share of the Company at a price of C$15.00 per share on, but not prior to, July 20, 2018. The Company, may, at its option, upon written notice to the warrant holders, settle the exercise of warrants for the in-the-money value, in cash, shares or a combination thereof.

19

HUDBAY MINERALS INC.

Notes to Unaudited Condensed Consolidated Interim Financial Statements

(in thousands of US dollars, except where otherwise noted)

For the three months ended March 31, 2016 and 2015

The purchase price of the acquisition of New Britannia Mine and Mill (note 6) contained an option (European) that pays the seller $5,000 if the price of gold is equal to or above $1,400/oz on May 4, 2018. The option represents a financial liability and was recorded at fair value at the acquisition date of New Britannia and will be remeasured at each reporting date with the change in the fair value being recognized as unrealized gains or losses in finance income and expense.

15. Long-term debt

Long-term debt is comprised of the following:

		Mar. 31, 2016			Dec. 31, 2015
Senior unsecured notes (a)	$	917,447		$	917,329
Equipment finance facility (b)		61,703			66,521
Senior secured revolving credit facilities (c)		334,072			291,030
		1,313,222			1,274,880
Less: current portion		(16,490	)		(69,875	)
	$	1,296,732		$	1,205,005

(a) Senior unsecured notes

Balance, January 1, 2015	$	915,846
Change in fair value of embedded derivative (prepayment option)		1,049
Accretion of transaction costs		434
Balance, December 31, 2015	$	917,329
Accretion of transaction costs and premiums		118
Balance, March 31, 2016	$	917,447

On August 6, 2014, the Group issued $170,000 aggregate principal amount of its 9.50% senior unsecured notes due October 1, 2020 (the “Additional Notes”). The Additional Notes are incremental to the $750,000 aggregate principal amount of 9.50% senior unsecured notes issued between September 2012 and December 2013 (the "Initial Notes", and together with the Additional Notes, the “Notes”). The Notes have been classified as long-term debt and accounted for initially at fair value and subsequently at amortized cost using the effective interest rate method. Interest is payable on the Notes semi-annually on April 1 and October 1 of each year, beginning on April 1, 2013. Interest costs on the Initial Notes had been capitalized to Constancia project assets until May 1, 2015 (the date on which Constancia commenced commercial production), and interest costs on the Additional Notes have been capitalized to Rosemont project assets. The Notes are fully and unconditionally guaranteed, jointly and severally, on a senior unsecured basis, by substantially all of the Company’s existing and future subsidiaries other than the Company’s subsidiaries associated with the Constancia operation and the Rosemont project.

20

HUDBAY MINERALS INC.

Notes to Unaudited Condensed Consolidated Interim Financial Statements

(in thousands of US dollars, except where otherwise noted)

For the three months ended March 31, 2016 and 2015

(b) Equipment finance facility

Balance, January 1, 2015	$	71,221
Addition to Principal, net of transaction costs		10,092
Payments made		(15,902	)
Accretion of transaction costs		1,110
Balance, December 31, 2015	$	66,521
Transaction costs		(1,009	)
Payments made		(4,123	)
Accretion of transaction costs		314
Balance, March 31, 2016	$	61,703

The equipment finance facility is reflected in the condensed consolidated balance sheets as follows:

		Mar. 31, 2016		Dec. 31, 2015
Current	$	16,490	$	16,490
Non-current		45,213		50,031
	$	61,703	$	66,521

In October 2013, the Group entered into an equipment financing facility with Caterpillar Financial Services Corporation to finance the purchase of components of the mobile fleet at the Group's Constancia operation. Loans pursuant to the equipment financing facility have a term of six years, amortized on a quarterly basis and are secured by the Constancia mobile fleet. The loan has been classified as long-term debt and accounted for initially at fair value and subsequently at amortized cost using the effective interest rate method. All payments due within twelve months of the period end date are classified as a current liability. The payments are based on a floating annual interest rate of 3-months LIBOR plus 4.25% .

21

HUDBAY MINERALS INC.

Notes to Unaudited Condensed Consolidated Interim Financial Statements

(in thousands of US dollars, except where otherwise noted)

For the three months ended March 31, 2016 and 2015

(c) Senior secured revolving credit facilities

Balance, January 1, 2015	$	-
Addition to Principal, net of transaction costs		304,374
Payments made		(14,925	)
Accretion of transaction costs		1,581
Balance, December 31, 2015	$	291,030
Addition to Principal, net of transaction costs		40,806
Accretion of transaction costs		2,236
Balance, March 31, 2016	$	334,072

The senior secured credit facilities are reflected in the condensed consolidated balance sheets as follows:

		Mar. 31, 2016		Dec. 31, 2015
Current	$	-	$	53,385
Non-current		334,072		237,645
Balance, March 31, 2016	$	334,072	$	291,030

On March 30, 2016 the Group completed a restructuring of its two senior credit facilities. The two facilities now share substantially similar terms and conditions, except that the $300 million Canada facility is secured by the Group’s Manitoba assets and the $200 million Peru facility is secured by the Group’s Peru assets. The facilities mature on March 31, 2019, and bear interest at LIBOR plus 4.50% .

16. Deferred revenue

On August 8, 2012, the Group entered into a precious metals stream transaction with Silver Wheaton whereby the Group has received aggregate deposit payments of $750,000 against delivery of (i) 100% of payable gold and silver from the 777 mine until the later of the end of 2016 and satisfaction of a completion test at the Constancia mine related to silver recoveries, and delivery of 50% of payable gold and 100% of payable silver for the remainder of the 777 mine life; and (ii) 100% of payable silver from the Constancia mine. On November 4, 2013, the Group entered into an amended and restated precious metals stream agreement with Silver Wheaton pursuant to which the Group received an additional $135,000 deposit in September 2014, in the form of Silver Wheaton shares, against delivery of 50% of payable gold from the Constancia mine. The Group sold the Silver Wheaton shares for net proceeds of $134,978 and has now received all the up-front deposit payments related to the precious metal stream transaction with Silver Wheaton in respect of 777 and Constancia.

In addition to the deposit payments, as gold and silver is delivered to Silver Wheaton, the Group receives cash payments equal to the lesser of (i) the market price and (ii) $400 per ounce (for gold) and $5.90 per ounce (for silver), subject to 1% annual escalation after three years. As at March 31, 2016, the cash payments for the 777 mine equal $404 per ounce (for gold) and $5.96 per ounce (for silver). As at March 31, 2016, the cash payments for the Constancia mine equal $400 per ounce (for gold) and $5.90 per ounce (for silver).

22

HUDBAY MINERALS INC.

Notes to Unaudited Condensed Consolidated Interim Financial Statements

(in thousands of US dollars, except where otherwise noted)

For the three months ended March 31, 2016 and 2015

The Group recorded the deposits received as deferred revenue and recognizes amounts in revenue as gold and silver are delivered to Silver Wheaton. The Group determines the amortization of deferred revenue to the condensed consolidated income statements on a per unit basis using the estimated total number of gold and silver ounces expected to be delivered to Silver Wheaton over the life of the 777 and Constancia operations. The Group estimates the current portion of deferred revenue based on deliveries anticipated over the next twelve months.

In February 2010, Hudbay Arizona entered into a precious metals stream transaction with Silver Wheaton whereby the Group will receive deposit payments of $230,000 against delivery of 100% of the payable silver and gold from the Rosemont project. The deposit will be payable upon the satisfaction of certain conditions precedent, including the receipt of permits for the Rosemont project and the commencement of construction. In addition to the deposit payments, as gold and silver is delivered to Silver Wheaton, the Group receives cash payments equal to the lesser of (i) the market price and (ii) $450 per ounce (for gold) and $3.90 per ounce (for silver), subject to 1% annual escalation after three years. To date, no such deposit has been received under the terms of this contract.

The following table summarizes changes in deferred revenue:

Balance, January 1, 2015	$	688,125
Recognition of revenue		(51,860	)
Effects of changes in foreign exchange		(39,005	)
Balance, December 31, 2015	$	597,260
Recognition of revenue		(15,874	)
Effects of changes in foreign exchange		11,670
Balance, March 31, 2016	$	593,056

Deferred revenue is reflected in the condensed consolidated interim balance sheets as follows:

		Mar. 31, 2016		Dec. 31, 2015
Current	$	79,676	$	68,250
Non-current		513,380		529,010
	$	593,056	$	597,260

23

HUDBAY MINERALS INC.

Notes to Unaudited Condensed Consolidated Interim Financial Statements

(in thousands of US dollars, except where otherwise noted)

For the three months ended March 31, 2016 and 2015

17. Provisions

Reflected in the condensed consolidated interim balance sheets as follows:

		Decommis-
		sioning,
		restoration
		and similar		Deferred		Restricted
Mar. 31, 2016		liabilities		share units		share units		Other		Total
Current (note 13)	$	3,713	$	2,950	$	3,712	$	509 $		10,884
Non-current		159,605		-		1,141		757		161,503
	$	163,318	$	2,950	$	4,853	$	1,266	$	172,387

		Decommis-
		sioning,
		restoration
		and similar		Deferred		Restricted
Dec. 31, 2015		liabilities		share units		share units		Other	Total
Current (note 13)	$	4,270	$	2,803	$	3,557	$	- $	10,630
Non-current		142,765		-		831		-	143,596
	$	147,035	$	2,803	$	4,388	$	- $	154,226

18. Income and mining taxes

(a) Tax expense (recovery):

The tax expense (recovery) is applicable as follows:

		Three months ended
		March 31,
		2016			2015
Current:
Income taxes	$	1,787		$	1,366
Mining taxes		789			15
		2,576			1,381
Deferred:
Income taxes - origination and reversal of temporary differences		(5,065	)		6,572
Canadian mining taxes - origination and reversal of temporary differences		1,163			814
Peruvian mining tax - origination and reversal of temporary difference		(18	)		264
Adjustments in respect of prior years		244			(674	)
		(3,676	)		6,976
	$	(1,100	)	$	8,357

24

HUDBAY MINERALS INC.

Notes to Unaudited Condensed Consolidated Interim Financial Statements

(in thousands of US dollars, except where otherwise noted)

For the three months ended March 31, 2016 and 2015

(b) Deferred tax assets and liabilities:

		Mar. 31, 2016			Dec. 31, 2015
Deferred income tax asset	$	50,557		$	40,670
Deferred income tax liability		(282,063	)		(280,432	)
Deferred mining tax liability - Canada		(2,037	)		(775	)
Deferred mining tax liability - Peru		(13,303	)		(13,322	)
		(297,403	)		(294,529	)
Net deferred tax liability balance	$	(246,846	)	$	(253,859	)

(c) Changes in deferred tax assets and liabilities:

		Three months ended			Year ended
		Mar. 31, 2016			Dec. 31, 2015
Net deferred tax liability balance, beginning of period	$	(253,859	)	$	(339,290	)
Deferred tax recovery		3,676			83,513
OCI transactions		4,483			(1,053	)
Foreign currency translation on the deferred tax liability		(1,146	)		2,971
Net deferred tax liability balance, end of period	$	(246,846	)	$	(253,859	)

(d) Taxes receivable/payable:

The timing of payments results in significant variances in period-to-period comparisons of the tax receivable and tax payable balances.

(e) Other disclosure:

The tax rules and regulations applicable to mining companies are highly complex and subject to interpretation. The Group may be subject in the future to a review of its historic income and other tax filings and, in connection with such reviews, disputes can arise with the taxing authorities over the interpretation or application of certain tax rules and regulations in respect of the Group’s business. These reviews may alter the timing or amount of taxable income or deductions. The amount ultimately reassessed upon resolution of issues raised may differ from the amount accrued.

19. Share capital

(a) Preference shares:

Authorized: Unlimited preference shares without par value

(b) Common shares:

Authorized: Unlimited common shares without par value

25

HUDBAY MINERALS INC.

Notes to Unaudited Condensed Consolidated Interim Financial Statements

(in thousands of US dollars, except where otherwise noted)

For the three months ended March 31, 2016 and 2015

Issued and fully paid:

	Three months ended			Year ended
	Mar. 31, 2016			Dec. 31, 2015
	Common			Common
	shares		Amount	shares		Amount
Balance, beginning of period	235,231,688	$	1,576,600	233,615,857	$	1,562,249
Exercise of stock options	-		-	258,831		1,152
Equity issuance (note 6)	-		-	1,357,000		13,199
Balance, end of period	235,231,688	$	1,576,600	235,231,688	$	1,576,600

In connection with the New Britannia acquisition (note 6), the Company entered into a private placement agreement with a Canadian bank to sell approximately 1,357,000 Hudbay common shares for proceeds of $13,199.

During the three months ended March 31, 2016, the Company paid $1,773 in dividends on March 31, 2016 to shareholders of record as of March 11, 2016. The Company paid $1,842 in dividends on March 31, 2015 to shareholders of record as of March 13, 2015.

20. Loss per share data

	Three months ended
	March 31,
	2016	2015
Weighted average common shares outstanding	235,231,688	233,624,783
Plus net incremental shares from assumed conversions:
Warrants	-	1,039,500
Stock options	-	149,597
Diluted weighted average common shares outstanding	235,231,688	234,813,880

For periods where Hudbay records a loss, the Group calculates diluted loss per share using the basic weighted average number of shares. If the diluted weighted average number of shares was used, the result would be a reduction in the loss, which would be anti-dilutive. Consequently, for the three months ended March 31, 2016, the Group calculated diluted loss per share using 235,231,688 common shares. For the three months ended March 31, 2015, the Group calculated diluted loss per share using 233,624,783 common shares.

26

HUDBAY MINERALS INC.

Notes to Unaudited Condensed Consolidated Interim Financial Statements

(in thousands of US dollars, except where otherwise noted)

For the three months ended March 31, 2016 and 2015

21. Financial instruments

(a) Fair value and carrying value of financial instruments:

The following presents the fair value and carrying value of the Group's financial instruments and non-financial derivatives:

		Mar. 31, 2016						Dec. 31, 2015
		Fair			Carrying			Fair			Carrying
Recurring measurements		Value			value			Value			value
Loans and receivables
Cash and cash equivalents 1	$	85,717		$	85,717		$	53,852		$	53,852
Restricted cash1		68,581			68,581			63,465			63,465
Trade and other receivables1, 2		113,901			113,901			145,154			145,154
Fair value through profit or loss
Trade and other receivables - embedded derivatives3		13,499			13,499			(13,653	)		(13,653	)
Non-hedge derivative assets3		2,385			2,385			16,512			16,512
Investments at FVTPL4		40			40			59			59
Available-for-sale investments4		9,729			9,729			9,206			9,206
Total financial assets		293,852			293,852			274,595			274,595
Financial liabilities at amortized cost
Trade and other payables1, 2		172,565			172,565			179,576			179,576
Finance leases		14,572			14,572			3,225			3,225
Other financial liabilities5		12,059			24,755			12,045			24,479
Senior unsecured notes6		646,300			917,447			639,400			917,329
Equipment finance facility8		61,703			61,703			66,521			66,521
Senior secured revolving credit facilities8		334,072			334,072			291,030			291,030
Fair value through profit or loss
Trade and other payables - embedded derivatives3		141			141			(118	)		(118	)
Warrant liabilities3		5,048			5,048			5,047			5,047
Option liabilities3		1,369			1,369			653			653
Non-hedge derivative liabilities3		10,447			10,447			4,426			4,426
Total financial liabilities		1,258,276			1,542,119			1,201,805			1,492,168
Net financial liability	$	(964,424	)	$	(1,248,267	)	$	(927,210	)	$	(1,217,573	)

1	Cash and cash equivalents, restricted cash, trade and other receivables and trade and other payables are recorded at carrying value, which approximates fair value due to their short-term nature and generally negligible credit losses.
2	Excludes embedded provisional pricing derivatives, as well as tax and other statutory amounts.
3	Derivatives and embedded provisional pricing derivatives are carried at their fair value, which is determined based on internal valuation models that reflect observable forward market commodity prices, currency exchange rates, and discount factors based on market US dollar interest rates adjusted for credit risk. For the warrant and option liabilities, fair value is determined based on quoted market closing price or the Black-Scholes model.
4	Available-for-sale investments are carried at their fair value, which is determined using quoted market bid prices in active markets for listed shares and determined using valuation models for shares of private companies. Investments at FVTPL consist of warrants to purchase listed shares, which are carried at fair value as determined using a Black-Scholes model.
5	These financial liabilities relate to agreements with communities near the Constancia project in Peru (note 14). Fair values have been determined using a discounted cash flow analysis based on expected cash flows and a credit adjusted discount rate.
6	Fair value of the senior unsecured notes (note 15) has been determined using the quoted market price at the period end.
7	Fair value of the prepayment option embedded derivative related to the long-term debt (note 15) has been determined using a binomial tree/lattice approach based on the Hull-White single factor interest rate term structure model.
8	The carrying value of the facilities approximates the fair value as the facilities are based on floating interest rates.

27

HUDBAY MINERALS INC.

Notes to Unaudited Condensed Consolidated Interim Financial Statements

(in thousands of US dollars, except where otherwise noted)

For the three months ended March 31, 2016 and 2015

Fair value hierarchy

The table below provides an analysis by valuation method of financial instruments that are measured at fair value subsequent to recognition. Levels 1 to 3 are defined based on the degree to which fair value inputs are observable and have a significant effect on the recorded fair value, as follows:

-	Level 1:	Quoted prices in active markets for identical assets or liabilities;
-	Level 2:	Valuation techniques use significant observable inputs, either directly or indirectly, or valuations are based on quoted prices for similar instruments; and
-	Level 3:	Valuation techniques use significant inputs that are not based on observable market data.

March 31, 2016		Level 1		Level 2		Level 3		Total
Financial assets measured at fair value
Financial assets at FVTPL:
Embedded derivatives	$	-	$	13,499	$	-	$	13,499
Non-hedge derivatives		-		2,385		-		2,385
Investments at FVTPL		40		-		-		40
Available-for-sale investments		8,187		-		1,542		9,729
	$	8,227	$	15,884	$	1,542	$	25,653
Financial liabilities measured at fair value
Financial assets at FVTPL:
Embedded derivatives	$	-	$	141	$	-	$	141
Non-hedge derivatives		-		10,447		-		10,447
Option liability		-		1,369		-		1,369
Warrant liabilities		5,048		-		-		5,048
	$	5,048	$	11,957	$	-	$	17,005

December 31, 2015		Level 1		Level 2			Level 3		Total
Financial assets measured at fair value
Financial assets at FVTPL:
Embedded derivatives	$	-	$	(13,653	)	$	-	$	(13,653	)
Non-hedge derivatives		-		16,512			-		16,512
Investments at FVTPL		-		59			-		59
Available-for-sale investments		7,761		-			1,445		9,206
	$	7,761	$	2,918		$	1,445	$	12,124
Financial liabilities measured at fair value
Financial assets at FVTPL:
Embedded derivatives	$	-	$	(118	)	$	-	$	(118	)
Non-hedge derivatives		-		4,426			-		4,426
Option liability		-		653			-		653
Warrant liabilities		5,047		-			-		5,047
	$	5,047	$	4,961		$	-	$	10,008

28

HUDBAY MINERALS INC.

Notes to Unaudited Condensed Consolidated Interim Financial Statements

(in thousands of US dollars, except where otherwise noted)

For the three months ended March 31, 2016 and 2015

The Group's Level 3 investment relates to a minority investment in an unlisted junior mining company. As no observable inputs exist, the Group measures the Level 3 investment at the cost of the investment. The Group monitors business developments and the financial position of the investee to evaluate whether the fair value of the investment has changed significantly. Factors that could result in a significantly lower fair value measurement include poor exploration results or inadequate liquidity to continue as a going concern, among other factors. Factors that would result in a significantly higher fair value measurement include positive exploration results, among other factors.

The Group’s policy is to recognize transfers into and transfers out of fair value hierarchy levels as of the date of the event or change in circumstances that caused the transfer. During the three months ended March 31, 2016, the Group did not make any transfers.

(b) Derivatives and hedging:

Copper fixed for floating swaps

Hudbay enters into copper fixed for floating swaps in order to manage the risk associated with provisional pricing terms in copper concentrate sales agreements. As at March 31, 2016, the Group had 122 million pounds of net copper swaps at an average net fixed receivable price of $2.14/lb and settling across April to August 2016. At December 31, 2015, the Group had 170 million pounds of copper fixed for floating swaps outstanding at an average fixed receivable price $2.37/lb, setting across January 2016 through March 2016. The aggregate fair value of the transactions at March 31, 2016 was a liability position of $7,442 (December 31, 2015 - an asset position of $16,436).

Non-hedge derivative gold and silver contracts

From time to time, the Group enters into gold and silver forward sales contracts to hedge the commodity price risk associated with the future settlement of provisionally priced deliveries. At March 31, 2016, the Group held 14,601 ounces of gold forward sales contracts and prices were $1,244. At December 31, 2015, the Group held no gold forward sales contracts. At March 31, 2016 the Group held 394,330 ounces (December 31, 2015 - 151,327 ounces) of silver forward sales contracts and prices ranged from $14.00 to $15.76 (December 31, 2015 - $14.17 to $15.21), and settlement dates extended out up to July 2016. The aggregate fair value of the transactions at March 31, 2016 was a liability position of $2 (December 31, 2015 - an asset position of $86).

Non-hedge derivative zinc contracts

Hudbay enters into fixed price sales contracts with zinc customers and, to ensure that the Group continues to receive a floating or unhedged realized zinc price, Hudbay enters into forward zinc purchase contracts that effectively offset the fixed price sales contracts. At March 31, 2016, the Group held contracts for forward zinc purchased of 14,180 tonnes (December 31, 2015 – 16,438 tonnes) that related to forward customer sales of zinc. Prices range from $1,514 to $2,343 per tonne (December 31, 2015 –$1,497 to $2,343) and settlement dates extended to December 2016. The aggregate fair value of the transactions at March 31, 2016 was a net liability position of $618 (December 31, 2015 – a net liability position of $4,386).

29

HUDBAY MINERALS INC.

Notes to Unaudited Condensed Consolidated Interim Financial Statements

(in thousands of US dollars, except where otherwise noted)

For the three months ended March 31, 2016 and 2015

Non-hedge derivative - warrants

Warrants issued by Hudbay as consideration for the purchase of the acquisition of Augusta are derivative liabilities that are carried at their fair value, with changes in fair value recorded to the condensed consolidated interim income statements in other finance (gain)/loss. The fair value of warrants issued is determined based on the quoted market prices for the listed warrants. The fair value of the Hudbay warrants at March 31, 2016 was a liability of $5,048 (December 31, 2015 - a liability of $5,047).

Non-hedge derivative - options

The purchase price of the acquisition of New Britannia (note 6) contained an option (European) that pays the seller $5,000 if the price of gold is at or above $1,400/oz on the third anniversary from the closing date, or nil if the price of gold is below that level on that date. The fair value of the embedded derivative at March 31, 2016 was a liability of $1,369 (December 31, 2015 - a liability of $653).

(c) Embedded derivatives

Provisional pricing embedded derivatives

The Group records embedded derivatives related to provisional pricing in concentrate purchase, concentrate sale and certain other sale contracts. Under the terms of these contracts, prices are subject to final adjustment at the end of a future period after title transfers based on quoted market prices during the quotation period specified in the contract. The period between provisional pricing and final pricing is typically up to three months.

Provisional pricing embedded derivatives are presented in trade and other receivables when they relate to sales contracts and in trade and other payables when they relate to purchase contracts. At each reporting date, provisionally priced metals are marked to market based on the forward market price for the quotation period stipulated in the contract, with changes in fair value recognized in revenues for sales contracts and in cost of sales for purchase concentrate contracts. Cash flows related to provisional pricing embedded derivatives are classified in operating activities.

At March 31, 2016, the Group’s net position consisted of contracts awaiting final pricing for sales of 84,847 tonnes of copper (December 31, 2015 – 79,033 tonnes). In addition, at March 31, 2016, the Group’s, net position consisted of contracts awaiting final pricing for sales of 8,628 ounces of gold and 51,333 ounces of silver (December 31, 2015 – 10,506 ounces of gold and 66,131 ounces of silver).

As at March 31, 2016, the Group’s provisionally priced copper, gold and silver sales subject to final settlement were recorded at average prices of $2.20/lb (December 31, 2015 – $2.14/lb), $1,235/oz (December 31, 2015 – $1,060/oz) and $15.47/oz (December 31, 2015 – $13.78/oz), respectively.

The aggregate fair value of the embedded derivatives within the copper concentrate sales contracts at March 31, 2016, was an asset position of $13,499 (December 31, 2015 – a liability of $13,653). The aggregate fair value of other embedded derivatives at March 31, 2016, was a liability position of $141 (December 31, 2015 – an asset position of $118).

30

HUDBAY MINERALS INC.

Notes to Unaudited Condensed Consolidated Interim Financial Statements

(in thousands of US dollars, except where otherwise noted)

For the three months ended March 31, 2016 and 2015

Prepayment option embedded derivative

The Notes (note 15) contain prepayment options, which represent embedded derivatives that require bifurcation from the host contract. The prepayment options are measured at fair value, with changes in the fair value being recognized as unrealized gains or losses in finance income and expense (note 7e). The fair value of the embedded derivative at March 31, 2016 was $nil (December 31, 2015 - $nil).

22. Capital commitments

As at March 31, 2016, the Group had outstanding capital commitments in Canada of approximately $1,095 primarily related to a committed mobile equipment purchase, of which approximately $1,005 cannot be terminated by the Group, approximately $85,959 in Peru related to sustaining capital costs, all of which can be terminated by the Group and approximately $163,646 in Arizona, primarily related to its Rosemont project, of which approximately $78,413 cannot be terminated by the Group.

23. Supplementary cash flow information

(a) Change in non-cash working capital:

		Three months ended
		March 31,
		2016			2015
Change in:
Trade and other receivables	$	8,430		$	(11,624	)
Other financial assets/liabilities		20,062			1,439
Inventories		6,840			(2,931	)
Prepaid expenses and other current assets		4,146			167
Trade and other payables		(22,166	)		(1,156	)
Other		16,098			(2,434	)
Changes in taxes payable/receivable		(3,745	)		864
Taxes - ITC		-			(911	)
	$	29,665		$	(16,586	)

(b) Non-cash transactions:

During the three months ended March 31, 2016, the Group entered into the following non-cash investing and financing activities which are not reflected in the condensed consolidated interim statements of cash flows:

- Remeasurements of the Group's decommissioning and restoration liabilities as at March 31, 2016 led to a net increase in related property, plant and equipment assets of $8,696 mainly as a result of the decline in the discount rate. For the three months ended March 31, 2015, such remeasurements led to increases in property, plant and equipment assets of $16,043.

- Property, plant and equipment included $107 of additions which were not yet paid for as at March 31, 2016 (March 31, 2015 - $125,108). These purchases will be reflected in the condensed consolidated interim statements of cash flows in the periods payments are made. Property, plant and equipment also included $11,826 of additions related to capital additions under finance lease (March 31, 2015 - nil).

31

HUDBAY MINERALS INC.

Notes to Unaudited Condensed Consolidated Interim Financial Statements

(in thousands of US dollars, except where otherwise noted)

For the three months ended March 31, 2016 and 2015

24. Segmented information

The Group is an integrated metals producer. When making decisions on expansions, opening or closing mines, as well as day to day operations, management evaluates the profitability of the overall operation of the Group. The Group's main mining operations are located in Manitoba and Saskatchewan (Canada) and Cusco (Peru) and are included in the Manitoba segment and Peru segment, respectively. The Manitoba and Peru segments generate the Group's revenues. The Manitoba segment sells copper concentrate (containing copper, gold and silver), zinc metal and other products. The Peru segment, formerly a part of the South America segment, consists of the Group's Constancia operation and sells copper concentrate. The Group’s Arizona segment consists of the Group’s Rosemont project in Arizona, which Hudbay acquired on July 16, 2014. Corporate and other activities include the Group’s exploration activities in Chile as well as the Balmat segment, which consisted of a zinc mine and concentrator that was on care and maintenance and was sold on November 2, 2015. The exploration entities are not individually significant, as they do not meet the minimum quantitative thresholds. Corporate activities are not considered a segment and are included as a reconciliation to total consolidated results. Accounting policies for each reported segment are the same. Segment profit or loss represents the profit earned by each segment without allocation of corporate costs. This is the measure reported to the chief operating decision-maker, the Group's President and Chief Executive Officer, for the purposes of resource allocation and the assessment of segment performance. Total assets and liabilities do not reflect intercompany balances, which have been eliminated on consolidation.

Three months ended March 31, 2016
										Corporate
										and other
		Manitoba			Peru		Arizona			activities			Total
Revenue from external customers	$	111,452		$	142,173	$	-		$	-		$	253,625
Cost of sales
Mine operating costs		79,630			71,659		-			-			151,289
Depreciation and amortization		28,911			45,502		-			-			74,413
Gross profit		2,911			25,012		-			-			27,923
Selling and administrative expenses		-			-		-			8,343			8,343
Exploration and evaluation		333			227		-			593			1,153
Other operating (income) and expenses		2,853			1,337		156			(78	)		4,268
Results from operating activities	$	(275	)	$	23,448	$	(156	)	$	(8,858	)	$	14,159
Finance income													(554	)
Finance expenses													29,909
Other finance losses													1,692
Loss before tax													(16,888	)
Tax recovery													(1,100	)
Loss for the period												$	(15,788	)

32

HUDBAY MINERALS INC.

Notes to Unaudited Condensed Consolidated Interim Financial Statements

(in thousands of US dollars, except where otherwise noted)

For the three months ended March 31, 2016 and 2015

Three months ended March 31, 2015
										Corporate
										and other
		Manitoba		Peru			Arizona			activities			Total
Revenue from external customers	$	128,713	$	-		$	-		$	-		$	128,713
Cost of sales
Mine operating costs		90,145		-			-			-			90,145
Depreciation and amortization		25,582		-			-			-			25,582
Gross profit		12,986		-			-			-			12,986
Selling and administrative expenses		437		-			-			9,095			9,532
Exploration and evaluation		1,697		408			-			225			2,330
Other operating income and expenses		319		1,377			1,996		$	(300	)		3,392
Results from operating activities	$	10,533	$	(1,785	)	$	(1,996	)	$	(9,020	)	$	(2,268	)
Finance income													(306	)
Finance expenses													3,491
Other finance losses													6,027
Loss before tax													(11,480	)
Tax expense													8,357
Loss for the period												$	(19,837	)

March 31, 2016
								Corporate
								and other
		Manitoba		Peru		Arizona		activities		Total
Total assets	$	820,180	$	2,813,079	$	7$ 96,154	$	137,323	$	4,566,736
Total liabilities		553,235		886,463		154,509		1,201,699		2,795,906
Property, plant and equipment		663,911		2,481,885		775,865		5,352		3,927,013

Three months ended March 31, 2016
								Corporate
								and other
		Manitoba		Peru		Arizona		activities		Total
Additions to property, plant and equipment	$	24,019	$	23,262	$	11,490	$	18	$	58,789

33

HUDBAY MINERALS INC.

Notes to Unaudited Condensed Consolidated Interim Financial Statements

(in thousands of US dollars, except where otherwise noted)

For the three months ended March 31, 2016 and 2015

Three months ended March 31, 2015
								Corporate
								and other
		Manitoba		Peru		Arizona		activities		Total
Additions to property, plant and equipment	$	18,750	$	100,848	$	4,851	$	-	$	124,449

December 31, 2015
							Corporate
							and other
		Manitoba		Peru	Arizona		activities	Total
Total assets	$	765,159	$	2,832,384 $	783,487	$	98,555 $	4,479,585
Total liabilities		509,875		919,950	154,277		1,108,193	2,692,295
Property, plant and equipment		623,980		2,498,350	762,193		5,753	3,890,276

34

EX-99.3

The following table sets forth certain summary consolidated financial information for the three months ended March 31, 2016 and 2015 in respect of HudBay Minerals Inc. (“Hudbay”) and its subsidiaries, certain of which are guarantors in respect of Hudbay’s $920,000,000 aggregate principal amount of 9.5% senior unsecured notes (the “Notes”) due October 1, 2020. The Notes are fully and unconditionally guaranteed, jointly and severally, on a senior unsecured basis, by Hudbay’s existing and future subsidiaries, other than unrestricted subsidiaries and certain excluded subsidiaries that include subsidiaries that own the Constancia and Rosemont projects; the Notes are guaranteed by: Hudson Bay Mining and Smelting Co., Limited, Hudson Bay Exploration and Development Company Limited and HudBay Marketing & Sales Inc.

This disclosure is being provided pursuant to Part 13.4 of National Instrument 51-102. Additional continuous disclosure relating to Hudbay can be found on the System for Electronic Document Analysis and Retrieval (“SEDAR”) at www.sedar.com and on the Electronic Data Gathering, Analysis, and Retrieval system (“EDGAR”) at www.sec.gov.

For the three months ending March 31:
(000's)	Guarantor - Issuer				Guarantor - Credit Supporters				Non Guarantor - Others			Consolidating adjustments 1				Consolidated Hudbay total
	2016		2015		2016		2015		2016	2015		2016		2015		2016		2015
Total revenue	-		-		178,973		173,375		142,173	-		(67,521	)	(44,662	)	253,625		128,713
Profit (loss) continuing operations - attributable to owners	(9,514	)	(23,871	)	(17,637	)	(3,746	)	8,179	(6,728	)	3,184		14,508		(15,788	)	(19,837	)
Profit (loss) - attributable to owners	(9,514	)	(23,871	)	(17,637	)	(3,746	)	8,179	(6,728	)	3,184		14,508		(15,788	)	(19,837	)

As at March 31, 2016 and December 31, 2015:
(000's)	Guarantor - Issuer		Guarantor - Credit Supporters		Non Guarantor - Others		Consolidating adjustments 1				Consolidated Hudbay total
	2016	2015	2016	2015	2016	2015	2016		2015		2016	2015
Current assets	73,196	60,041	131,635	116,856	258,699	256,915	172		1,366		463,702	435,178
Non-current assets	2,970,624	2,908,574	1,006,723	945,412	4,289,839	4,240,551	(4,164,152	)	(4,050,130	)	4,103,034	4,044,407
Current liabilities	73,203	34,143	132,414	128,433	140,590	213,626	172		1,363		346,379	377,565
Non-current liabilities	1,127,823	1,085,780	839,577	744,346	1,430,276	1,388,675	(948,149	)	(904,071	)	2,449,527	2,314,730

¹ This column includes all necessary amounts to eliminate all intercompany balances between the Guarantor credit supporters and the non-guarantor others, and other adjustments to arrive at the information for Hudbay on a consolidated basis.

EX-99.4

FORM 52-109F2
CERTIFICATION OF INTERIM FILINGS
FULL CERTIFICATE

I, Alan Hair, President and Chief Executive Officer of HudBay Minerals Inc., certify the following:

1.	Review: I have reviewed the interim financial report and interim MD&A (together, the “interim filings”) of HudBay Minerals Inc. (the “issuer”) for the interim period ended March 31, 2016.
2.	No misrepresentations: Based on my knowledge, having exercised reasonable diligence, the interim filings do not contain any untrue statement of a material fact or omit to state a material fact required to be stated or that is necessary to make a statement not misleading in light of the circumstances under which it was made, with respect to the period covered by the interim filings.
3.	Fair presentation: Based on my knowledge, having exercised reasonable diligence, the interim financial report together with the other financial information included in the interim filings fairly present in all material respects the financial condition, financial performance and cash flows of the issuer, as of the date of and for the periods presented in the interim filings.
4.	Responsibility: The issuer’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (DC&P) and internal control over financial reporting (ICFR), as those terms are defined in National Instrument 52-109
	Certification of Disclosure in Issuers’ Annual and Interim Filings, for the issuer.
5.	Design: Subject to the limitations, if any, described in paragraphs 5.2 and 5.3, the issuer’s other certifying officer(s) and I have, as at the end of the period covered by the interim filings
	(a)	designed DC&P, or caused it to be designed under our supervision, to provide reasonable assurance that
		(i)	material information relating to the issuer is made known to us by others, particularly during the period in which the interim filings are being prepared; and
		(ii)	information required to be disclosed by the issuer in its annual filings, interim filings or other reports filed or submitted by it under securities legislation is recorded, processed, summarized and reported within the time periods specified in securities legislation; and
	(b)	designed ICFR, or caused it to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with the issuer’s GAAP.
5.1	Control framework: The control framework the issuer’s other certifying officer(s) and I used to design the issuer’s ICFR is the Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.
5.2	N/A

5.3	N/A
6.	Reporting changes in ICFR: The issuer has disclosed in its interim MD&A any change in the issuer’s ICFR that occurred during the period beginning on January 1, 2016 and ended on March 31, 2016 that has materially affected, or is reasonably likely to materially affect, the issuer’s ICFR.

Date: April 28, 2016

(signed) Alan Hair

Alan Hair
President and Chief Executive Officer

EX-99.5

FORM 52-109F2
CERTIFICATION OF INTERIM FILINGS
FULL CERTIFICATE

I, David S. Bryson, Senior Vice President and Chief Financial Officer of HudBay Minerals Inc., certify the following:

1.	Review: I have reviewed the interim financial report and interim MD&A (together, the “interim filings”) of HudBay Minerals Inc. (the “issuer”) for the interim period ended March 31, 2016.
2.	No misrepresentations: Based on my knowledge, having exercised reasonable diligence, the interim filings do not contain any untrue statement of a material fact or omit to state a material fact required to be stated or that is necessary to make a statement not misleading in light of the circumstances under which it was made, with respect to the period covered by the interim filings.
3.	Fair presentation: Based on my knowledge, having exercised reasonable diligence, the interim financial report together with the other financial information included in the interim filings fairly present in all material respects the financial condition, financial performance and cash flows of the issuer, as of the date of and for the periods presented in the interim filings.
4.	Responsibility: The issuer’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (DC&P) and internal control over financial reporting (ICFR), as those terms are defined in National Instrument 52-109
	Certification of Disclosure in Issuers’ Annual and Interim Filings, for the issuer.
5.	Design: Subject to the limitations, if any, described in paragraphs 5.2 and 5.3, the issuer’s other certifying officer(s) and I have, as at the end of the period covered by the interim filings
	(a)	designed DC&P, or caused it to be designed under our supervision, to provide reasonable assurance that
		(i)	material information relating to the issuer is made known to us by others, particularly during the period in which the interim filings are being prepared; and
		(ii)	information required to be disclosed by the issuer in its annual filings, interim filings or other reports filed or submitted by it under securities legislation is recorded, processed, summarized and reported within the time periods specified in securities legislation; and
	(b)	designed ICFR, or caused it to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with the issuer’s GAAP.
5.1	Control framework: The control framework the issuer’s other certifying officer(s) and I used to design the issuer’s ICFR is the Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

5.2	N/A
5.3	N/A
6.	Reporting changes in ICFR: The issuer has disclosed in its interim MD&A any change in the issuer’s ICFR that occurred during the period beginning on January 1, 2016 and ended on March 31, 2016 that has materially affected, or is reasonably likely to materially affect, the issuer’s ICFR.

Date: April 28, 2016

(signed) David S. Bryson

David S. Bryson
Senior Vice President and Chief Financial Officer

EX-99.6

 

	TSX, NYSE – HBM
	2016 No. 8

Hudbay Announces First Quarter 2016 Results

Toronto, Ontario, April 28, 2016 – HudBay Minerals Inc. (“Hudbay” or the “company”) (TSX, NYSE:HBM) today released its first quarter 2016 financial results. All amounts are in US dollars, unless otherwise noted.

Summary:

•   Over 150% growth in copper production compared to the first quarter of 2015

• Continued ongoing cost reduction efforts and economies of scale resulting in consolidated cash cost, net of by-product credits, of $1.15 per pound and all-in sustaining cash cost, net of by-product credits, of $1.80 per pound¹

• Operating cash flow before changes in non-cash working capital increased to $71.9 million, or $0.31 per share, from $16.9 million, or $0.07 per share, in the first quarter of 2015¹

• Planned replacement of trunnions on one of the two Constancia grinding circuits completed ahead of schedule during March 2016 and both circuits now operating at full capacity

The net loss and loss per share in the first quarter of 2016 were $15.8 million and $0.07, respectively, compared to a net loss and loss per share of $19.8 million and $0.08, respectively, in the first quarter of 2015. The current period’s loss reflects $23.0 million in interest expense that is no longer capitalized following the achievement of commercial production at Constancia on April 30, 2015.

“Since achieving commercial production last year, Constancia’s operating performance, coupled with our stable Manitoba operations, have enabled us to generate increasing cash flows, despite the sharp declines in metals prices,” said Alan Hair, president and chief executive officer. “Based on our operating and cost performance to date, we are on track to meet the cost reduction targets of over $100 million we announced last quarter, as well as our production, operating and capital cost guidance.”

Notwithstanding lower metals prices, revenues nearly doubled in the first quarter of 2016 to $253.6 million, $124.9 million higher than the same period in 2015. This increase was primarily due to higher sales volumes compared to the first quarter of 2015 as a result of commercial production being achieved at Constancia. Higher sales volumes were partially offset by lower prices for copper and zinc.

As a result of the ramp-up of production at Constancia and ongoing cost reduction initiatives, consolidated cash cost, net of by-product credits, declined to $1.15 per pound in the first quarter of 2016 from $1.44 per pound in the first

^{_______________________________________
1} Cash cost and all-in sustaining cash cost, net of by-product credits, per pound of copper produced, operating cash flow before changes in non-cash working capital, and operating cash flow per share are not recognized under IFRS. For a detailed description of each of these non-IFRS financial performance measures used in this news release, please see the discussion under “Non-IFRS Financial Performance Measures” beginning on page 5 of this news release.

	TSX, NYSE – HBM
	2016 No. 8

quarter of 2015. Similarly, incorporating sustaining capital, royalties and corporate general and administrative (“G&A”) costs, consolidated all-in sustaining cash cost, net of by-product credits, declined to $1.80 per pound in the first quarter of 2016 from $2.67 per pound in the first quarter of 2015.

In the first quarter of 2016, operating cash flow before change in non-cash working capital increased to $71.9 million from $16.9 million in the first quarter of 2015. The increase in sales volumes and associated economies of scale more than offset the sharp decline in realized sales prices of copper and zinc metals compared to the same quarter last year.

The cost reduction initiatives announced on February 24, 2016 are on track to meet Hudbay’s targets for 2016. Based on these efforts and operating results to date, the company expects to meet all of its production, operating and capital cost guidance.

As at March 31, 2016, Hudbay had total liquidity of approximately $190.1 million, including $85.7 million in cash and cash equivalents, as well as availability under the company’s secured credit facilities. Liquidity at March 31, 2016 is net of the semi-annual interest payment of $43.7 million on Hudbay’s senior unsecured notes. Liquidity is expected to increase over the balance of 2016 at current metals prices as the company generates free cash flow from its operations at full production, benefits from ongoing cost reduction initiatives, and collects refundable Peruvian sales tax receivables.

Financial Condition ($000s)	Mar. 31, 2016	Dec. 31, 2015
Cash and cash equivalents	85,717	53,852
Working capital	117,323	57,613
Total assets	4,566,736	4,479,585
Total long-term debt	1,313,222	1,274,880
Equity	1,770,830	1,787,290

2

	TSX, NYSE – HBM
	2016 No. 8

		Three Months Ended March 31
		2016	2015
Financial Performance
($000s except per share and cash cost amounts)
Revenue		253,625	128,713
Loss before tax		(16,888)	(11,480)
Basic and diluted loss per share		(0.07)	(0.08)
Loss for the period		(15,788)	(19,837)
Operating cash flow before change in non-cash working capital1		71,889	16,900
Operating cash flow per share1		0.31	0.07
Cash cost per pound of copper produced, net of by-product credits1		1.15	1.44
All-in sustaining cash cost per pound of copper produced, net of by-product credits1		1.80	2.67
Production
Contained metal in concentrate2
Copper	tonnes	38,879	15,008
Gold	oz	27,245	23,676
Silver	oz	722,916	310,867
Zinc	tonnes	23,376	22,906
Metal Sold
Payable metal in concentrate
Copper	tonnes	41,919	10,995
Gold	oz	17,717	12,350
Silver	oz	774,309	100,317
Refined zinc	tonnes	25,420	23,779

¹Operating cash flow before change in non-cash working capital, operating cash flow per share, cash cost and all-in sustaining cash cost, net of by-product credits, per pound of copper produced are non-IFRS financial performance measures with no standardized definition under IFRS. For further information, please see page 5 of this news release.
²Includes pre-commercial production volumes.

Peru Operations Review

During the first quarter of 2016, Constancia mining operations continued as planned and cost optimization is underway. Ore milled decreased to 6.2 million tonnes from 7.4 million tonnes in the fourth quarter of 2015 due to lower mill capacity during the replacement of the trunnions on one of the grinding circuits. The average milled copper grade was 0.57% in the first quarter of 2016, compared to 0.63% in the fourth quarter of 2015.

The planned replacement of the damaged trunnions at the Constancia mill was completed without incident and ahead of schedule in late March 2016. The downtime was approximately five weeks, compared to the six to eight weeks originally planned, during which time the other grinding circuit continued to operate at full capacity with good throughput and recoveries. Both circuits have since ramped up to full capacity.

Optimization of plant performance remains the primary focus for Constancia. Recoveries have improved as the metallurgy associated with the varying ore types is better understood. The total copper recovery in the first quarter of 2016 was 81.8%, compared to 79.8% in the fourth quarter of 2015.

Combined mine, mill and G&A unit operating costs of $7.76 per tonne were within guidance expectations for 2016, notwithstanding the reduced throughput associated with the replacement of the trunnions. Cash cost and sustaining cash cost, net of by-product credits², for Constancia was $1.15 per pound and $1.49 per pound, respectively, in the first quarter of 2016. Sustaining cash costs reflected seasonally low spending on capitalized civil earthworks offset by reduced mill throughput during the grinding circuit repairs.

3

	TSX, NYSE – HBM
	2016 No. 8

Concentrate inventory levels in Peru were maintained at normal working levels during the first quarter of 2016 as a result of the improved trucking capacity implemented in 2015 and reduced port congestion. The ongoing port expansion at Matarani is expected to be completed by June 2016, which will improve access to Hudbay’s designated pier.

Manitoba Operations Review

Ore mined at Hudbay’s Manitoba mines for the first quarter of 2016 increased by 12% compared to the same period in 2015 as a result of increased production at the company’s Lalor and 777 mines. Copper, zinc, gold and silver grades in the first quarter of 2016 were lower than the first quarter of 2015. 777 grades were in line with mine plan expectations, and Lalor zinc grades were lower due to stope sequencing.

Ore processed in Flin Flon in the first quarter of 2016 was 8% lower than the same period in 2015 as a result of unscheduled maintenance, with the shortfall expected to be made up over the balance of 2016. Copper, zinc and silver recoveries at the Flin Flon concentrator were generally consistent in the first quarter of 2016 compared to the same period in 2015. Gold recovery at the Flin Flon concentrator was 7% lower in the first quarter of 2016 compared to the first quarter of 2015 due to lower gold head grades. Ore processed in Snow Lake in the first quarter of 2016 was 47% higher than the same period in 2015 as a result of higher production at the Lalor mine. Copper, gold and silver recoveries at the Snow Lake concentrator were lower in the first quarter of 2016 compared to the same period in 2015 by 3%, 7% and 9%, respectively, as a result of lower grades.

Manitoba combined mine, mill and G&A unit operating costs in the first quarter of 2016 were 4% lower than in the same period in 2015 as a result of higher overall production and cost containment measures.

For the first quarter of 2016, overall Manitoba production of zinc, gold and silver remained fairly consistent compared to the same period in 2015, as higher ore throughput was offset by lower mine grades. Copper production decreased by 11% as a result of lower production from the Flin Flon concentrator and lower copper head grades from 777 and Lalor.

In Manitoba, cash cost, net of by-product credits, in the first quarter of 2016 was $1.14 per pound, a decrease of $0.30 per pound compared to the same period of 2015. The decrease is largely the effect of foreign exchange on Canadian dollar denominated costs. This was partially offset by increased costs as a result of increased production at the Lalor mine and decreased zinc by-product credits as a result of declining zinc prices compared to the same period in 2015. The Manitoba sustaining cash cost, net of by-product credits, of $2.32 per pound was affected by higher sustaining capital costs in the first quarter of 2016, due to exploration drilling and development at Lalor, and mine equipment rebuilds and purchases. Manitoba sustaining capital is expected to be lower in future quarters in 2016.

^{______________________________________
2} Cash cost and sustaining cash cost, net of by-product credits, per pound of copper produced are not recognized under IFRS. For a detailed description of each of these non-IFRS financial performance measures used in this news release, please see the discussion under “Non-IFRS Financial Performance Measures” beginning on page 5 of this news release.

4

	TSX, NYSE – HBM
	2016 No. 8

Credit Facility Amendments

On March 30, 2016, Hudbay amended its two secured credit facilities to consolidate the lender groups and restructure the two facilities to provide, among other things, more flexible financial covenants. The $300 million corporate revolving credit facility (the “Canada Facility”) is secured by the Manitoba assets and the $200 million Peru revolving credit facility (together with the Canada Facility, the “Facilities”) is secured by the Peru assets. Hudbay has the option to seek additional lender commitments to increase the maximum available amount under the Canada Facility to $350 million. The Facilities, which are not cross-collateralized, mature on March 30, 2019.

Non-IFRS Financial Performance Measures

Operating cash flow before change in non-cash working capital and operating cash flow per share are included in this news release because the company believes that they help investors and management to evaluate changes in cash flow generated from the various operations while, in the case of operating cash flow per share, taking into account changes in shares outstanding. Cash cost, sustaining cash cost and all-in sustaining cash cost per pound of copper produced are shown because the company believes they help investors and management assess the performance of the company’s operations, including the margin generated by the operations and the company. These measures do not have a meaning prescribed by IFRS and are therefore unlikely to be comparable to similar measures presented by other issuers. These measures should not be considered in isolation or as a substitute for measures prepared in accordance with IFRS and are not necessarily indicative of operating profit or cash flow from operations as determined under IFRS. Other companies may calculate these measures differently. For further details on these measures, including reconciliations to the most comparable IFRS measures, please refer to page 29 of Hudbay's management’s discussion and analysis for the three months ended March 31, 2016 available on SEDAR at www.sedar.com and EDGAR at www.sec.gov.

Hudbay’s calculation of cash cost per pound of copper produced (“cash cost”) designates copper as its primary metal of production as it has been, and is expected to be, the largest component of revenues. The calculation is presented in four manners:

• Cash cost, before by-product credits – This measure is gross of by-product revenues and is a function of the efforts and costs incurred to mine and process all ore mined. However, the measure divides this aggregate cost over only pounds of copper produced, Hudbay’s primary metal of production. This measure is generally less volatile from period to period, as it is not affected by changes in the price received for by- product metals. It is, however, significantly affected by the relative mix of copper concentrate and finished zinc production, and an increase in production of zinc metal will tend to result in an increase in cash cost under this measure.

• Cash cost, net of by-product credits – In order to calculate the net cost to produce and sell copper, the net of by-product credits measure subtracts the revenues realized from the sale of the metals other than copper. The by-product revenues from zinc, gold and silver are significant and are integral to the economics of Hudbay’s operations. The economics that support Hudbay’s decision to produce and sell copper would be different if the company did not receive revenues from the other significant metals being extracted and processed. This measure provides management and investors with an indication of the minimum copper price consistent with positive operating cash flows and operating margins, assuming realized by-product metal prices are consistent with those prevailing during the reporting period. It also serves as an important operating statistic that management and investors utilize to measure Hudbay’s operating performance versus that of its competitors. However, it is important to understand that if by- product metal prices decline alongside copper prices, the cash cost net of by-product credits would increase, requiring a higher copper price than that reported to maintain positive cash flows and operating margins.

5

	TSX, NYSE – HBM
	2016 No. 8

• Sustaining cash cost, net of by-product credits – This measure is an extension of cash cost that includes sustaining capital expenditures and net smelter returns royalties. It provides a more fulsome measurement of the cost of sustaining production than cash cost, which is focused on operating costs only and does not include corporate G&A.

• All-in sustaining cash cost, net of by-product credits – This measure is an extension of sustaining cash cost that includes corporate G&A. Due to the inclusion of corporate G&A, all-in sustaining cash cost is presented on a consolidated basis only.

The table below presents a summary of cash cost and sustaining cash cost, net of by-products credits, by business unit in addition to consolidated all-in sustaining cash cost, net of by-product credits, for the three months ended March 31, 2016 and 2015. Totals may not add up correctly due to rounding.

	Peru		Manitoba		Consolidated
(In $ per pound of copper produced1 )		Three Months Ended March 31
	2016	2015	2016	2015	2016	2015
Cash cost, before by-product credits	1.27	-	3.90	4.12	1.93	4.12
By-product credits	(0.12)	-	(2.76)	(2.68)	(0.78)	(2.68)
Cash cost, net of by-product credits	1.15	-	1.14	1.44	1.15	1.44
Sustaining capital expenditures	0.32	-	1.12	0.78	0.52	0.78
Royalties	0.03	-	0.06	0.05	0.04	0.05
Sustaining cash cost, net of by-product credits	1.49	-	2.32	2.27	1.70	2.27
Corporate G&A	-	-	-	-	0.10	0.39
All-in sustaining cash cost, net of by-product credits	-	-	-	-	1.80	2.67

¹ Contained copper in concentrate.

6

	TSX, NYSE – HBM
	2016 No. 8

Website Links

Hudbay:

www.hudbayminerals.com

Management’s Discussion and Analysis:

http://www.hudbayminerals.com/files/doc_financials/2016/Q1/Q1MDA16.pdf

Financial Statements:

http://www.hudbayminerals.com/files/doc_financials/2016/Q1/Q1FS16.pdf

Conference Call and Webcast

Date:	Friday, April 29, 2016
Time:	10 a.m. ET
Webcast:	www.hudbayminerals.com
Dial in:	416-849-1847 or 1-866-530-1554
Replay:	647-436-0148 or 1-888-203-1112
Replay Passcode:	5000396#

The conference call replay will be available until 1 p.m. (Eastern Time) on May 6, 2016. An archived audio webcast of the call also will be available on Hudbay's website.

Qualified Person

The technical and scientific information in this news release related to the Constancia mine has been approved by Cashel Meagher, P. Geo, Hudbay’s Senior Vice President and Chief Operating Officer. The technical and scientific information related to all other sites and projects contained in this news release has been approved by Robert Carter, P. Eng, Hudbay’s Director, Business Development and Technical Services at the Manitoba Business Unit. Messrs. Meagher and Carter are qualified persons pursuant to NI 43-101. For a description of the key assumptions, parameters and methods used to estimate mineral reserves and resources, as well as data verification procedures and a general discussion of the extent to which the estimates of scientific and technical information may be affected by any known environmental, permitting, legal title, taxation, sociopolitical, marketing or other relevant factors, please see the Technical Reports for the company’s material properties as filed by Hudbay on SEDAR at www.sedar.com.

7

	TSX, NYSE – HBM
	2016 No. 8

Forward-Looking Information

This news release contains "forward-looking statements" and "forward-looking information" (collectively, "forward-looking information") within the meaning of applicable Canadian and United States securities legislation. All information contained in this news release, other than statements of current and historical fact, is forward-looking information. Often, but not always, forward-looking information can be identified by the use of words such as “plans”, “expects”, “budget”, “guidance”, “scheduled”, “estimates”, “forecasts”, “strategy”, “target”, “intends”, “objective”, “goal”, “understands”, “anticipates” and “believes” (and variations of these or similar words) and statements that certain actions, events or results “may”, “could”, “would”, “should”, “might” “occur” or “be achieved” or “will be taken” (and variations of these or similar expressions). All of the forward-looking information in this news release is qualified by this cautionary note.

Forward-looking information includes, but is not limited to, production, cost and capital and exploration expenditure guidance, including anticipated capital and operating cost savings, anticipated production at Hudbay’s mines and processing facilities, events that may affect its operations and development projects, anticipated cash flows from operations and related liquidity requirements, the anticipated effect of external factors on revenue, such as commodity prices, estimation of mineral reserves and resources, mine life projections, reclamation costs, economic outlook, government regulation of mining operations, and business and acquisition strategies. Forward-looking information is not, and cannot be, a guarantee of future results or events. Forward-looking information is based on, among other things, opinions, assumptions, estimates and analyses that, while considered reasonable by Hudbay at the date the forward-looking information is provided, inherently are subject to significant risks, uncertainties, contingencies and other factors that may cause actual results and events to be materially different from those expressed or implied by the forward-looking information.

The material factors or assumptions that Hudbay identified and were applied by the company in drawing conclusions or making forecasts or projections set out in the forward-looking information include, but are not limited to:

•   the success of mining, processing, exploration and development activities;

•   the success of Hudbay’s cost reduction initiatives;

•   the accuracy of geological, mining and metallurgical estimates;

•   anticipated metals prices and the costs of production;

•   the supply and demand for metals that Hudbay produces;

•   the supply and availability of concentrate for Hudbay’s processing facilities;

•   the supply and availability of third party processing facilities for Hudbay’s concentrate;

•   the supply and availability of all forms of energy and fuels at reasonable prices;

•   the availability of transportation services at reasonable prices;

•   no significant unanticipated operational or technical difficulties;

• the execution of Hudbay’s business and growth strategies, including the success of its strategic investments and initiatives;

•   the availability of additional financing, if needed;

• the ability to complete project targets on time and on budget and other events that may affect Hudbay’s ability to develop its projects;

•   the timing and receipt of various regulatory and governmental approvals;

• the availability of personnel for Hudbay’s exploration, development and operational projects and ongoing employee relations;

•   the ability to secure required land rights to develop the Pampacancha deposit;

8

	TSX, NYSE – HBM
	2016 No. 8

• maintaining good relations with the communities in which Hudbay operates, including the communities surrounding its Constancia mine and Rosemont project and First Nations communities surrounding its Lalor and Reed mines;

•   no significant unanticipated challenges with stakeholders at Hudbay’s various projects;

• no significant unanticipated events or changes relating to regulatory, environmental, health and safety matters;

• no contests over title to Hudbay’s properties, including as a result of rights or claimed rights of aboriginal peoples;

•   the timing and possible outcome of pending litigation and no significant unanticipated litigation;

• certain tax matters, including, but not limited to current tax laws and regulations and the refund of certain value added taxes from the Canadian and Peruvian governments; and

• no significant and continuing adverse changes in general economic conditions or conditions in the financial markets (including commodity prices and foreign exchange rates).

The risks, uncertainties, contingencies and other factors that may cause actual results to differ materially from those expressed or implied by the forward-looking information may include, but are not limited to, risks generally associated with the mining industry, such as economic factors (including future commodity prices, currency fluctuations, energy prices and general cost escalation), uncertainties related to the development and operation of Hudbay’s projects (including risks associated with the economics and permitting of the Rosemont project and related legal challenges), risks related to the maturing nature of Hudbay’s 777 mine and its impact on the related Flin Flon metallurgical complex, dependence on key personnel and employee and union relations, risks related to political or social unrest or change (including in relation to the Peruvian national elections), risks in respect of aboriginal and community relations, rights and title claims, operational risks and hazards, including unanticipated environmental, industrial and geological events and developments and the inability to insure against all risks, failure of plant, equipment, processes, transportation and other infrastructure to operate as anticipated, planned infrastructure improvements in Peru (including the expansion of the port in Matarani) not being completed on schedule or as planned, compliance with government and environmental regulations, including permitting requirements and anti-bribery legislation, depletion of the company’s reserves, volatile financial markets that may affect Hudbay’s ability to obtain additional financing on acceptable terms, the permitting and development of the Rosemont project not occurring as planned, the failure to obtain required approvals or clearances from government authorities on a timely basis, uncertainties related to the geology, continuity, grade and estimates of mineral reserves and resources, and the potential for variations in grade and recovery rates, uncertain costs of reclamation activities, the company’s ability to comply with its pension and other post-retirement obligations, Hudbay’s ability to abide by the covenants in its debt instruments and other material contracts, tax refunds, hedging transactions, as well as the risks discussed under the heading “Risk Factors” in the company’s most recent Annual Information Form.

Should one or more risk, uncertainty, contingency or other factor materialize or should any factor or assumption prove incorrect, actual results could vary materially from those expressed or implied in the forward-looking information. Accordingly, you should not place undue reliance on forward-looking information. Hudbay does not assume any obligation to update or revise any forward-looking information after the date of this news release or to explain any material difference between subsequent actual events and any forward-looking information, except as required by applicable law.

9

	TSX, NYSE – HBM
	2016 No. 8

Note to United States Investors

This news release has been prepared in accordance with the requirements of the securities laws in effect in Canada, which may differ materially from the requirements of United States securities laws applicable to U.S. issuers.

Information concerning Hudbay’s mineral properties has been prepared in accordance with the requirements of Canadian securities laws, which differ in material respects from the requirements of the Securities and Exchange Commission (the “SEC”) set forth in Industry Guide 7. Under the SEC's Industry Guide 7, mineralization may not be classified as a “reserve” unless the determination has been made that the mineralization could be economically and legally produced or extracted at the time of the reserve determination, and the SEC does not recognize the reporting of mineral deposits which do not meet the SEC Industry Guide 7 definition of “Reserve”. In accordance with National Instrument 43-101 – Standards of Disclosure for Mineral Projects (“NI 43-101”) of the Canadian Securities Administrators, the terms “mineral reserve”, “proven mineral reserve”, “probable mineral reserve”, “mineral resource”, “measured mineral resource”, “indicated mineral resource” and “inferred mineral resource” are defined in the Canadian Institute of Mining, Metallurgy and Petroleum (the “CIM”) Definition Standards for Mineral Resources and Mineral Reserves adopted by the CIM Council on May 10, 2014. While the terms “mineral resource”, “measured mineral resource”, “indicated mineral resource” and “inferred mineral resource” are recognized and required by NI 43-101, the SEC does not recognize them. You are cautioned that, except for that portion of mineral resources classified as mineral reserves, mineral resources do not have demonstrated economic value. Inferred mineral resources have a high degree of uncertainty as to their existence and as to whether they can be economically or legally mined. It cannot be assumed that all or any part of an inferred mineral resource will ever be upgraded to a higher category. Therefore, you are cautioned not to assume that all or any part of an inferred mineral resource exists, that it can be economically or legally mined, or that it will ever be upgraded to a higher category. Likewise, you are cautioned not to assume that all or any part of measured or indicated mineral resources will ever be upgraded into mineral reserves.

About Hudbay

Hudbay (TSX, NYSE: HBM) is an integrated mining company producing copper concentrate (containing copper, gold and silver) 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. Through its subsidiaries, Hudbay owns four polymetallic mines, four ore concentrators and a zinc production facility in northern Manitoba and Saskatchewan (Canada) and Cusco (Peru) and a copper project in Arizona (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. Hudbay’s vision is to become a top-tier operator of long-life, low cost mines in the Americas. Hudbay’s mission is to create sustainable value through the acquisition, development and operation of high-quality and growing long-life deposits in mining-friendly jurisdictions. The company is governed by the Canada Business Corporations Act and its shares are listed under the symbol "HBM" on the Toronto Stock Exchange, New York Stock Exchange and Bolsa de Valores de Lima. Hudbay also has warrants listed under the symbol “HBM.WT” on the Toronto Stock Exchange and “HBM/WS” on the New York Stock Exchange.

For further information, please contact:

Candace Brûlé
Director, Investor Relations
(416) 814-4387
candace.brule@hudbayminerals.com

10