Hudbay Minerals Inc.: Exhibit 99.1 - Filed by newsfilecorp.com

EX-99.1 2 exhibit99-1.htm EXHIBIT 99.1 Hudbay Minerals Inc.: Exhibit 99.1 - Filed by newsfilecorp.com

Unaudited Condensed Consolidated Interim Financial Statements

(In US dollars)

HUDBAY MINERALS INC.

For the three months ended March 31, 2020 and 2019

HUDBAY MINERALS INC.
Condensed Consolidated Interim Balance Sheets
(Unaudited and in thousands of US dollars)

			Mar. 31,			Dec. 31,
	Note		2020			2019
Assets
Current assets
Cash and cash equivalents		$	305,997		$	396,146
Trade and other receivables	6		86,179			105,994
Inventories	7		137,289			138,820
Prepaid expenses and other current assets			11,221			12,737
Other financial assets	8		18,248			2,049
Taxes receivable			8,015			7,289
			566,949			663,035
Receivables	6		18,156			19,264
Inventories	7		17,125			19,455
Other financial assets	8		6,974			11,287
Intangibles and other assets	9		22,877			10,411
Property, plant and equipment	10		3,666,655			3,662,559
Deferred tax assets	18b		67,490			69,950
		$	4,366,226		$	4,455,961
Liabilities
Current liabilities
Trade and other payables		$	143,441		$	192,404
Taxes payable			1,304			2,146
Other liabilities	11		42,474			49,411
Other financial liabilities	12		70,123			28,076
Lease liabilities	13		31,521			32,781
Deferred revenue	15		85,041			86,933
			373,904			391,751
Other financial liabilities	12		71,709			39,784
Lease liabilities	13		41,945			49,166
Long-term debt	14		988,074			985,255
Deferred revenue	15		478,338			476,823
Provisions	16		303,827			280,850
Pension obligations	17		13,661			29,599
Other employee benefits	17		90,202			116,778
Deferred tax liabilities	18b		226,289			237,832
			2,587,949			2,607,838
Equity
Share capital	19b		1,777,340			1,777,340
Reserves			(16,158	)		(24,250	)
Retained earnings			17,095			95,033
			1,778,277			1,848,123
		$	4,366,226		$	4,455,961
Commitments (note 21)

HUDBAY MINERALS INC.
Condensed Consolidated Interim Statements of Cash Flows
(Unaudited and in thousands of US dollars)

			Three months ended March 31,
	Note		2020			2019 (Note 22a)
Cash generated from operating activities:
Loss for the period		$	(76,134	)	$	(13,412	)
Tax recovery	18a		(5,318	)		(4,696	)
Items not affecting cash:
Depreciation and amortization	5b		86,857			77,681
Share-based payment (recoveries) expenses	5c		(2,713	)		5,342
Finance expense, net	5e		41,695			42,450
Change in fair value of derivatives	5e		2,871			(4,602	)
Inventory writedowns	7		10,375			-
Amortization of deferred revenue	15		(9,760	)		(9,510	)
Loss (gain) on investments	5e		3,373			(790	)
Pension and other employee benefit payments, net of accruals			2,184			843
Decommissioning and restoration payments			(2,936	)		-
Other and foreign exchange			(5,875	)		963
Taxes paid			(2,668	)		(8,585	)
Operating cash flow before change in non-cash working capital			41,951			85,684
Change in non-cash working capital	22a		(32,865	)		(23,984	)
			9,086			61,700
Cash used in investing activities:
Acquisition of property, plant and equipment			(51,085	)		(42,283	)
Change in restricted cash			-			737
Net interest received			1,138			2,283
			(49,947	)		(39,263	)
Cash used in financing activities:
Interest paid on long-term debt			(37,375	)		(37,375	)
Financing costs			(3,736	)		(5,474	)
Lease payments			(9,017	)		(7,449	)
Dividends paid	19b		(1,804	)		(1,955	)
			(51,932	)		(52,253	)
Effect of movement in exchange rates on cash and cash equivalents			2,644			186
Net decrease in cash and cash equivalents			(90,149	)		(29,630	)
Cash and cash equivalents, beginning of the period			396,146			515,497
Cash and cash equivalents, end of the period		$	305,997		$	485,867
For supplemental information, see note 22.

HUDBAY MINERALS INC.
Condensed Consolidated Interim Income Statements
(Unaudited and in thousands of US dollars)

			Three Months Ended March 31,
	Note		2020			2019
Revenue	5a	$	245,105		$	292,258
Cost of sales
Mine operating costs			180,657			163,316
Depreciation and amortization	5b		86,439			77,130
			267,096			240,446
Gross (loss) profit			(21,991	)		51,812
Selling and administrative expenses			5,103			14,900
Exploration and evaluation expenses			5,773			5,407
Other operating expenses	5d		5,492			11,696
Results from operating activities			(38,359	)		19,809
Finance income	5e		(1,106	)		(2,578	)
Finance expenses	5e		42,801			45,028
Other finance losses (gains)	5e		1,398			(4,533	)
Net finance expense			43,093			37,917

Loss before tax			(81,452	)		(18,108	)
Tax recovery	18a		(5,318	)		(4,696	)
Loss for the period		$	(76,134	)	$	(13,412	)

Loss per share
Basic and diluted		$	(0.29	)	$	(0.05	)

Weighted average number of common shares outstanding:
Basic and diluted			261,272,151			261,272,151

HUDBAY MINERALS INC.
Condensed Consolidated Interim Statements of Comprehensive Loss
(Unaudited and in thousands of US dollars)

		Three months ended March 31,
		2020			2019
Loss for the period	$	(76,134	)	$	(13,412	)

Other comprehensive income (loss):
Item that will be reclassified subsequently to profit or loss:
Recognized directly in equity:
Net (loss) gain on translation of foreign currency balances		(20,120	)		3,768
		(20,120	)		3,768

Items that will not be reclassified subsequently to profit or loss:
Recognized directly in equity:
Remeasurement - actuarial gain (loss)		31,496			(5,719	)
Tax effect		(3,284	)		(640	)
		28,212			(6,359	)

Other comprehensive income (loss) net of tax, for the period		8,092			(2,591	)

Total comprehensive loss for the period	$	(68,042	)	$	(16,003	)

HUDBAY MINERALS INC.
Condensed Consolidated Interim Statements of Changes in Equity
(Unaudited and in thousands of US dollars)

		Share capital (note 19)		Other capital reserves		Foreign currency translation reserve			Remeasurement reserve			Retained earnings			Total equity
Balance, January 1, 2019	$	1,777,340	$	28,837	$	(11,819	)	$	(58,272	)	$	442,770		$	2,178,856
Loss		-		-		-			-			(13,412	)		(13,412	)
Other comprehensive income (loss)		-		-		3,768			(6,359	)		-			(2,591	)
Total comprehensive income (loss)		-		-		3,768			(6,359	)		(13,412	)		(16,003	)
Contributions by and distributions to owners:
Dividends (note 19b)		-		-		-			-			(1,955	)		(1,955	)
Total contributions by and distributions to owners		-		-		-			-			(1,955	)		(1,955	)
Balance, March 31,2019	$	1,777,340	$	28,837	$	(8,051	)	$	(64,631	)	$	427,403		$	2,160,898
Loss		-		-		-			-			(330,398	)		(330,398	)
Other comprehensive income (loss)		-		-		5,452			(11,835	)		-			(6,383	)
Total comprehensive income (loss)		-		-		5,452			(11,835	)		(330,398	)		(336,781	)
Dilution of Partner's investor in Rosemont		-		25,978		-			-			-			25,978
Contributions by and distributions to owners:
Dividends (note 19b)		-		-		-			-			(1,972	)		(1,972	)
Total contributions by and distributions to owners		-		-		-			-			(1,972	)		(1,972	)
Balance, December 31, 2019	$	1,777,340	$	54,815	$	(2,599	)	$	(76,466	)	$	95,033		$	1,848,123

HUDBAY MINERALS INC.
Condensed Consolidated Interim Statements of Changes in Equity
(Unaudited and in thousands of US dollars)

		Share capital (note 19)		Other capital reserves		Foreign currency translation reserve			Remeasurement reserve			Retained earnings			Total equity
Balance, January 1, 2020	$	1,777,340	$	54,815	$	(2,599	)	$	(76,466	)	$	95,033		$	1,848,123
Loss		-		-		-			-			(76,134	)		(76,134
Other comprehensive (loss) income		-		-		(20,120	)		28,212			-			8,092
Total comprehensive (loss) income		-		-		(20,120	)		28,212			(76,134	)		(68,042	)
Contributions by and distributions to owners:
Dividends (note 19b)		-		-		-			-			(1,804	)		(1,804	)
Total contributions by and distributions to owners		-		-		-			-			(1,804	)		(1,804	)

Balance, March 31, 2020	$	1,777,340	$	54,815	$	(22,719	)	$	(48,254	)	$	17,095		$	1,778,277

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, 2020 and 2019

1. Reporting entity

On January 1, 2017, Hudbay Minerals Inc. amalgamated under the Canada Business Corporations Act with its subsidiaries Hudson Bay Mining and Smelting Co., Limited and Hudson Bay Exploration and Development Company Limited to form Hudbay Minerals Inc. ("HMI" or the "Company"). 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, 2020 and 2019 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").

Wholly owned subsidiaries as at March 31, 2020 include HudBay Marketing & Sales Inc. ("HMS"), HudBay Peru Inc., HudBay Peru S.A.C. ("Hudbay Peru"), HudBay (BVI) Inc., Hudbay Arizona Inc, Rosemont Copper Company ("Rosemont") and Mason Resources (US) Inc ("Mason").

Hudbay is an integrated mining company primarily producing copper concentrate (containing copper, gold and silver), molybdenum concentrate and zinc metal. With assets in North and South America, the Group is focused on the discovery, production and marketing of base and precious metals. Directly and through its subsidiaries, Hudbay owns three polymetallic mines, four ore concentrators and a zinc production facility in northern Manitoba and Saskatchewan (Canada) and Cusco (Peru) and copper projects in Arizona and Nevada (United States). The Group also has equity investments in a number of junior exploration companies. 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.

These interim financial statements have been prepared on the basis that the Company will be able to realize its assets and discharge its liabilities, including any current portions of liabilities in the normal course of business into the foreseeable future.

2. Basis of preparation

(a) Statement of compliance:

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

These interim financial statements should be read in conjunction with the Company's audited consolidated financial statements for the year ended December 31, 2019 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 3 in the audited consolidated financial statements for the year ended December 31, 2019 and have been consistently applied in the preparation of these interim financial statements.

The Board of Directors approved these interim financial statements on May 14, 2020.

(b) COVID-19 estimation uncertainty:

At the end of 2019, a novel strain of coronavirus ("COVID-19") was reported in China. The COVID-19 outbreak has developed rapidly in 2020, with a significant number of infections around the world, including regions the Group operates in. On March 11, 2020, the World Health Organization declared the COVID-19 outbreak a global pandemic. During the first quarter of 2020 containment measures have resulted in decreased economic activity, which has adversely affected the broader global economy.

The current and expected impacts on global commerce are anticipated to be far-reaching. To date there has been significant volatility in stock markets, commodities and foreign exchange markets, restrictions on the conduct of business in many jurisdictions and the global movement of people and some goods have become restricted. There is significant ongoing short to medium-term uncertainty surrounding COVID-19 and the extent and duration of the impacts that it may have on demand and prices for the commodities the Group produces, on its suppliers, on its employees and on global financial markets. As a result, the Group may experience production below estimated levels, increased costs and significantly reduced revenue.

The Company is evaluating the potential impacts arising from COVID-19 on all aspects of its business and, in particular, those that may pertain to subsequent financial statements. Such impacts on the financial statements include possible indicators of impairment of non-financial assets from sustained low base metal prices. In addition, the valuation of inventories and receivables may be impacted by lower realizable base metal prices. Lastly, the Company will continue to evaluate the impact of changes in short-term cashflow forecasts on its liquidity position and monitor its ability to comply with its debt covenants and meet its financial obligations.

The Company acted in compliance with government-ordered shut down of non-essential businesses, resulting in operations at its Constancia mine being temporarily suspended commencing March 19, 2020. The Company has taken steps to safeguard the health of its employees while implementing measures to minimize the overall impact on its operations.

(c) Use of judgements and estimates:

The preparation of the interim financial statements in conformity with IFRS requires the Group to make judgements, estimates and assumptions, 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. Actual results may differ from these judgements, estimates and assumptions. The interim financial statements reflect the judgements and estimates outlined by the Group in its audited consolidated financial statements for the year ended December 31, 2019.

The following are critical and significant judgements and estimates impacting these interim financial statements that were not previously outlined by the Group in its audited consolidated financial statements for the year ended December 31, 2019.

- Indicators and testing of impairment (reversal of impairment) of non-financial assets (note 10) - There are a number of potential indicators that could lead to non-financial asset impairment or reversal of impairment. These indicators may require critical judgements to determine the extent that external and/or internal environmental business changes may impact the Group's overall assessment of the recoverability of non-financial assets. The business changes as a result of COVID-19 have resulted in changes to short-term mine plans from the suspension of operations at the Constancia mine which include possible deferrals of growth capital projects, changes to short term budgets, and changes to short-term commodity prices. While it was determined that the changes to the short term mine plan are insignificant and are not an indicator of impairment, there is significant judgement required in making this determination. If an impairment indicator is noted, then there are also critical estimates involved in the determination of the recoverable amount of cash generating units ("CGU"). Recoverable amounts are calculated using discounted after-tax cash flows based on cash flow projections and assumptions in the Group's most recent Life-of-Mine ("LOM") plans. LOM plans are based on optimized mine and processing plans and the assessment of capital expenditure requirements of a mine site. LOM plans incorporate management's best estimates of key assumptions which include future commodity prices, the value of mineral resources not included in the Constancia, Manitoba and Arizona LOM plans, production based on current estimates of recoverable reserves, discount rates, future operating and capital costs and future foreign exchange rates. Most critical to the value of the recoverable amount are the assumptions of future commodity prices and the value of mineral resources not included in the Constancia, Manitoba and Arizona LOM plans. Expected future cash flows used to determine the recoverable amount during impairment testing are inherently uncertain and could materially change over time. Should management's estimate of the future not reflect actual events, impairments may be identified, which could have a material effect on the Group's consolidated financial statements. Although it is reasonably possible for a change in key assumptions to occur, the possible effects of a change in any single assumption may not fairly reflect the impact of CGU's fair value as the assumptions are inextricably linked.

- Tax provisions (note 18)- Management makes estimates in determining the measurement and recognition of deferred tax assets and liabilities recorded on the consolidated balance sheets. The measurement of deferred tax assets and deferred tax liabilities is based on the tax rates that are expected to apply in the period that the asset is realized or liability is settled based on tax rates that have been enacted or substantively enacted by the end of the reporting period. Deferred tax assets, including those arising from unutilized tax losses, require management to assess the likelihood of taxable income in the future periods in order to utilize recognized deferred tax assets. Estimates of future taxable income are based on forecasted cash flows from operations and the application of existing tax laws in each jurisdiction. As a result of COVID-19, operations at Constancia have been suspended and, following from an expected economic slowdown, short-term commodity price forecasts have declined which reduces cash flows from operations. The estimated cash flow and taxable income impacts require significant judgement. To the extent that future cash flows and taxable income differ significantly from estimates, the ability to realize the net deferred tax assets recorded at the balance sheet date could be affected. At the end of each reporting period, management reassesses the period that the assets are expected to be realized or liabilities are settled and the likelihood of taxable income in future periods in order to support and adjust the deferred tax assets and deferred tax liabilities recognized on the consolidated balance sheets.

- Pensions and other employee benefits (note 17) -The Group's post retirement obligations relate mainly to ongoing health care benefits plans. The Group estimates obligations related to the pension and other employee benefits plans using actuarial determinations that incorporate assumptions using management's best estimates of factors including plan performance, salary escalation, retirement dates of employees and drug cost escalation rates. Due to the complexity of the valuation, the underlying assumptions and its long-term nature, a defined benefit obligation is highly sensitive to changes in these assumptions. Management reviews all assumptions at each reporting date. In determining the appropriate discount rate, the Group considers the interest rates on corporate bonds in the respective currency with at least a AA rating, with extrapolated maturities corresponding to the expected duration of the defined benefit obligation. The mortality rate is based on publicly available mortality tables for the specific country, and the Group bases future salary increases and pension increases on expected future inflation rates for the respective country. As a result of COVID-19, there were significant declines in interest rates on corporate bonds and high levels of volatility in equity and fixed income markets which rapidly changed the assumptions since the December 31, 2019 actual valuation. There is a significant level of estimation risk in these assumptions which created material changes in the valuation of the pension and other employee benefit obligations as at March 31, 2020.

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, 2019 and comparative periods.

4. New standards

New standards and interpretations adopted

Amendment to IFRS 3 - Business Combinations

The amendment to IFRS 3 clarifies the definition of a business and includes an optional concentration test to determine whether an acquired set of activities and assets is a business. This amendment is in effect January 1, 2020 and will be treated prospectively. The Group will apply these amendments to future acquisition transactions.

5. Revenue and expenses

(a) Revenue

The Group's revenue by significant product types:

		Three months ended March 31,
		2020			2019
Copper	$	139,178		$	202,293
Zinc		63,554			67,206
Gold		48,498			28,484
Silver		12,050			26,618
Molybdenum		9,164			6,333
Other		902			1,065
		273,346			331,999
Variable consideration adjustments ¹		(2,813	)		(16,295	)
Pricing and volume adjustments ²		(9,733	)		(3,303	)
		260,800			312,401
Treatment and refining charges		(15,695	)		(20,143	)
	$	245,105		$	292,258
¹See note 15.

²Pricing and volume adjustments represent mark-to-market adjustments on initial estimate of provisionally priced sales, realized and unrealized changes to fair value for non-hedge derivative contracts and adjustments to originally invoiced weights and assays.

(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,
		2020		2019
Cost of sales	$	86,439	$	77,130
Selling and administrative expenses		418		551
	$	86,857	$	77,681

(c) Share-based payment (recoveries) expenses

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

		Cash-settled						Total share-based payment expense
		RSUs			DSUs			Total share-based payment expense
Three months ended March 31, 2020
Cost of sales	$	(215	)	$	-		$	(215	)
Selling and administrative		(879	)		(1,534	)		(2,413	)
Other operating		(85	)		-			(85	)
	$	(1,179	)	$	(1,534	)	$	(2,713	)
Three months ended March 31, 2019
Cost of sales	$	426		$	-		$	426
Selling and administrative		2,192			2,473			4,665
Other operating		251			-			251
	$	2,869		$	2,473		$	5,342

(d) Other operating expenses

		Three months ended March 31,
		2020		2019
Regional costs	$	885	$	1,216
Pampacancha delivery obligation		-		7,499
Loss on disposal		2,400		962
Allocation of community costs		728		-
Other		1,479		2,019
	$	5,492	$	11,696

During the first quarter of 2019, the Group recognized an obligation to deliver additional precious metal credits to Wheaton Precious Metals ("Wheaton") as a result of the Group's expectation that mining at the Pampacancha deposit will not begin until 2020. The obligation is to be paid in four quarterly installments, with the first payment having been paid in March 2020.

(e) Finance income and expenses

		Three months ended March 31,
		2020			2019
Finance income	$	(1,106	)	$	(2,578	)
Finance expenses
Interest expense on long-term debt		19,635			19,530
Accretion on community agreements measured at amortized cost		1,121			300
Finance costs on deferred revenue (note 15)		16,299			21,968
Unwinding of discounts on provisions		1,350			1,184
Withholding taxes		1,893			2,190
Other finance expense		2,503			3,152
		42,801			48,324
Interest capitalized		-			(3,296	)
		42,801			45,028
Other finance losses (gains)
Net foreign exchange (gains) losses		(4,846	)		859
Change in fair value of financial assets and liabilities at fair value through profit or loss:
Embedded derivatives		2,871			(4,602	)
Investments		3,373			(790	)
		1,398			(4,533	)
Net finance expense	$	43,093		$	37,917

Until October 1, 2019, interest expense related to certain long-term debt had been capitalized to the Rosemont project. Following the Court ruling to vacate and remand the U.S. Forest Service's issuance of the Final Record of Decision for the Rosemont project during the third quarter of 2019, the Group ceased capitalization effective October 1, 2019. The capitalization of this interest expense will resume upon the reinstatement of permits and will continue from that point until commercial production is reached.

Other finance expense relates primarily to fees on the Group's revolving credit facilities and capitalized leases.

6. Trade and other receivables

		Mar. 31, 2020		Dec. 31, 2019
Current
Trade receivables	$	57,438	$	87,332
Statutory receivables		23,995		16,543
Other receivables		4,746		2,119
		86,179		105,994
Non-current
Taxes receivable		16,696		17,669
Other receivables		1,460		1,595
		18,156		19,264
	$	104,335	$	125,258

7. Inventories

		Mar. 31, 2020		Dec. 31, 2019
Current
Stockpile	$	14,005	$	10,396
Work in progress		8,241		14,420
Finished goods		60,655		62,230
Materials and supplies		54,388		51,774
		137,289		138,820
Non-current
Stockpile		12,582		14,626
Materials and supplies		4,543		4,829
		17,125		19,455
	$	154,414	$	158,275

The cost of inventories recognized as an expense, including depreciation, and included in cost of sales amounted to $229,193 for the three months ended March 31, 2020 (three months ended March 31, 2019 - $214,514).

As a result of the state of emergency declared by the Peruvian government in response to the COVID-19 pandemic during the first quarter of 2020, Constancia underwent a temporary and orderly suspension of operations. Fixed overhead costs incurred during the temporary suspension of operations commencing March 19, 2020 through to March 31, 2020 amounted to $6,310 and were recognized directly to cost of sales.

During the three months ended March 31, 2020, the Group recognized an expense of $10,375 in cost of sales related to write-downs of the carrying value of copper concentrate inventories to net realizable value. There were no write-downs in the three months ended March 31, 2019.

8. Other financial assets

		Mar. 31, 2020		Dec. 31, 2019
Current
Derivative assets	$	17,911	$	1,712
Restricted cash		337		337
		18,248		2,049

Non-current
Investments at fair value through profit or loss		6,974		11,287
	$	25,222	$	13,336

The change in the Group's non-hedge derivative assets (Note 20b) is attributed to sharp declines in copper prices in the first quarter of 2020.

Investments at fair value through profit or loss consist of securities in Canadian metals and mining companies, all of which are publicly traded. The change in investments at fair value through profit or loss is mostly attributed to fluctuations in market price and foreign exchange impact.

9. Intangibles and other assets

Intangibles and other assets of $22,877 includes $18,122 of other assets (December 31, 2019 - $5,384) and $4,755 of intangibles (December 31, 2019 - $5,027).

Other assets represent the carrying value of certain future community costs. The liability remaining for these agreements is recorded in Other financial liabilities at amortized cost (note 12). Amortization of the carrying amount is recorded in the consolidated income statements within other operating expenses (note 5d). The increase in other assets during the three months ended March 31, 2020 primarily relate to amendments to the original agreements with communities for the Constancia operation which allow Hudbay to extract minerals over the useful life of the Constancia operation.

Intangibles mainly represent computer software costs.

10. Property, plant and equipment

Mar. 31, 2020		Cost		Accumulated depreciation and amortization			Carrying amount
Exploration and evaluation assets	$	68,702	$	-		$	68,702
Capital works in progress		709,491		-			709,491
Mining properties		2,169,723		(948,051	)		1,221,672
Plant and equipment		2,652,467		(1,071,456	)		1,581,011
Plant and equipment-ROU Assets¹		199,821		(114,042	)		85,779
	$	5,800,204	$	(2,133,549		$	3,666,655

Dec. 31, 2019		Cost		Accumulated depreciation and amortization			Carrying amount
Exploration and evaluation assets	$	69,903	$	-		$	69,903
Capital works in progress		733,874		-			733,874
Mining properties		2,146,583		(963,530	)		1,183,053
Plant and equipment		2,653,752		(1,069,687	)		1,584,065
Plant and equipment-ROU Assets¹		201,972		(110,308	)		91,664
	$	5,806,084	$	(2,143,525	)	$	3,662,559
¹Includes $4,316 of Capital works in progress - ROU assets related to the Arizona Business unit (December 31, 2019 - $4,481)

For the three months ended March 31, 2020, the movement in property, plant and equipment was negatively impacted by effects of movements in exchange rates in the amount of $159,927, which was offset by fixed asset and construction in progress asset additions of $115,986 and increases in decommissioning and restoration assets of $41,759 (producing assets) as a result of lower discount rates.

As a result of the temporary suspension of mining and production activities at Constancia, the Group has reviewed its depreciation methods and remaining useful lives. No changes in depreciation or useful lives were noted.

11. Other liabilities

		Mar. 31, 2020		Dec. 31, 2019
Current
Provisions (note 16)	$	25,661	$	33,575
Pension liability		12,020		12,015
Other employee benefits		2,858		2,806
Unearned revenue		1,935		1,015
	$	42,474	$	49,411

12. Other financial liabilities

		Mar. 31, 2020		Dec. 31, 2019
Current
Derivative liabilities	$	3,512	$	10,295
Other financial liabilities at amortized cost		59,452		8,707
Embedded derivatives (note 20c)		7,159		9,074
		70,123		28,076

Non-current
Deferred Rosemont acquisition consideration		24,850		24,491
Other financial liabilities at amortized cost		46,859		15,293
		71,709		39,784
	$	141,832	$	67,860

The derivative liabilities include derivative and hedging transactions. Derivative liabilities are carried at their fair value with changes in fair value recorded to the consolidated income statements. The fair value adjustments for hedging type derivatives are recorded in revenue. Fair value adjustments for embedded derivatives are recorded in other finance (gain) loss.

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. The increase in other financial liabilities at amortized cost during the three months ended March 31, 2020 primarily relates to changes in estimated community payments arising from the execution of the Pampacancha surface rights agreement.


Balance, January 1, 2019	$	21,361
Net additions		7,369
Disbursements		(6,351	)
Accretion		1,222
Effects of changes in foreign exchange		399
Balance, December 31, 2019		24,000
Net additions		83,214
Disbursements		(1,430	)
Accretion		1,121
Effects of changes in foreign exchange		(594	)
Balance, March 31, 2020	$	106,311

13. Lease Liability

		Mar. 31, 2020			Dec. 31, 2019
Total minimum lease payments - lease liabilities	$	77,949		$	88,096
Effect of discounting		(4,483	)		(6,149	)
Present value of minimum lease payments		73,466			81,947
Less: current portion		(31,521	)		(32,781	)
	$	41,945		$	49,166

Minimum payments under leases:
Less than 12 months	$	33,761		$	27,557
13 - 36 months		38,579			48,503
37 - 60 months		2,623			7,798
More than 60 months		2,986			4,238
	$	77,949		$	88,096

The Group has entered into leases for its Peru, Manitoba and Arizona business units which expire between 2020 and 2043. The interest rates on leases which were capitalized have implicit interest rates between 1.95% to 5.13%, per annum. The range of interest rates utilized for discounting varies depending mostly on the Hudbay Group entity acting as lessee and duration of the lease. For certain leases, the Group has the option to purchase the equipment and vehicles leased at the end of the terms of the leases. The Group's obligations under these leases are secured by the lessor's title to the leased assets. The present value of applicable lease payments has been recognized as a ROU asset, which was included as a non-cash addition to property, plant and equipment, and a corresponding amount as a lease liability.

There are no restrictions placed on the Group by entering into these leases.

The following outlines expenses recognized within the Company's consolidated income statement for the periods ended March 31, 2020, relating to leases for which a recognition exemption was applied.

		Three months ended March 31,
		2020		2019
Short-term leases	$	12,697	$	11,742
Low value leases		80		39
Variable leases		10,531		12,019
Total	$	23,308	$	23,800

Payments made for short term, low value and variable leases would mostly be captured as expenses in the consolidated income statements, however, certain amounts may be capitalized to PP&E for the Arizona business unit during its development phase and certain amounts may be reported in inventories given the timing of sales. Variable consideration leases include equipment used for heavy civil works at Constancia.

For the Company, the incremental borrowing rate utilized for new leases effective January 1, 2020 was re-considered given the lower interest rates associated with COVID-19 and the impact of the new lower rates was deemed insignificant given the small number of new leases. In addition, there were no lease modifications as a result of the COVID-19 pandemic and adjustments to expected lease terms to both significant short term and capitalized leases were considered and no material changes were noted.

14. Long-term debt

Long-term debt is comprised of the following:

		Mar. 31, 2020			Dec. 31, 2019
Senior unsecured notes (a)	$	994,451		$	991,558
Less: Unamortized transaction costs - revolving credit facilities (b)		(6,377	)		(6,303	)
		988,074			985,255

(a) Senior unsecured notes

Balance, January 1, 2019	$	989,306
Change in fair value of embedded derivative (prepayment option)		1,079
Accretion of transaction costs and premiums		1,173
Balance, December 31, 2019	$	991,558
Change in fair value of embedded derivative (prepayment option)		2,585
Accretion of transaction costs and premiums		308
Balance, March 31, 2020	$	994,451

The $1,000,000 aggregate principal amount of senior notes are comprised of two series: (i) a series of 7.25% senior notes due 2023 in an aggregate principal amount of $400,000 and (ii) a series of 7.625% senior notes due 2025 in an aggregate principal amount of $600,000.

The senior notes are guaranteed on a senior unsecured basis by substantially all of the Company's subsidiaries, other than HudBay (BVI) Inc. and certain excluded subsidiaries, which include the Company's subsidiaries that own an interest in the Rosemont project and any newly formed or acquired subsidiaries that primarily hold or may develop non-producing mineral assets that are in the pre-construction phase of development. The Group's revolving credit facilities are secured against substantially all of the Group's assets, other than those associated with the Arizona business unit.

(b) Unamortized transaction costs - revolving credit facilities

Balance, January 1, 2019	$	8,276
Accretion of transaction costs		(2,342	)
Transaction costs		369
Balance, December 31, 2019	$	6,303
Accretion of transaction costs		(639	)
Transaction costs		713
Balance, March 31, 2020	$	6,377

As at March 31, 2020, the Arizona business unit had $8,591 in surety bonds and the Peru business unit had $20,000 in surety bonds, issued to support future reclamation and closure obligations. In addition, the Peru business unit had $24,795 in letters of credit issued under the Peru revolving credit facility to support its reclamation obligations and the Manitoba business unit had $79,353 in letters of credit issued under the Canada revolving credit facility to support its reclamation and pension obligations. The Peru business unit also had $45,000 in letters of credit issued with various Peruvian financial institutions.

No cash collateral is required to be posted under these letters of credit or surety bonds.

15. Deferred revenue

On August 8, 2012 and November 4, 2013, the Group entered into precious metals stream transactions with Wheaton whereby the Group has received aggregate deposit payments of $885,000 against delivery of (i) 100% of payable gold and silver from the 777 mine until the end of 2016, 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 and 50% of payable gold from the Constancia mine.

In addition to the deposit payments, as gold and silver is delivered to 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, from the inception of the agreement.

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

The Group has determined that precious metals stream contracts are subject to variable consideration and contain a significant financing component. As such, the Company recognizes a financing charge at each reporting period and will gross up the deferred revenue balance to recognize the significant financing element that is part of these contracts. The Group's streaming arrangements are secured against the mining properties and other business unit assets associated with the applicable stream.

The Group expects that the remaining performance obligations for the 777 and Constancia streams will be settled by the expiry of their respective stream agreements, which is no earlier than 2036.

As part of the streaming agreement with Wheaton for the 777 mine, the Group must repay, with precious metals credits, the legal deposit provided by Wheaton by August 1, 2052, the expiry date of the agreement. If the legal deposit is not fully repaid with precious metals credits from 777 production by the expiry date, a cash payment for the remaining amount will be due at the expiry date of the agreement. As a result of changes in the remaining 777 mine reserves and lower precious metals prices, there is a possibility that an amount of Wheaton's legal deposit may not be repaid by means of 777 mine's precious metals credits over its expected remaining mine life. As at March 31, 2020, this prepayment amount does not meet the definition of a financial liability. The Group incorporates the possibility of repayment as part of its assessment of variable consideration in recognizing the amount of deferred revenue to recognize in income.

The following table summarizes changes in deferred revenue:

Balance, January 1, 2019	$	566,078
Amortization of deferred revenue
Liability drawdown		(92,398	)
Variable consideration adjustment		16,295
Finance costs
Current year additions		63,725
Variable consideration adjustment		6,047
Effects of changes in foreign exchange		4,009
Balance, December 31, 2019	$	563,756
Amortization of deferred revenue
Liability drawdown		(12,573	)
Variable consideration adjustment		2,813
Finance costs (note 5e)
Current year additions		15,339
Variable consideration adjustment		960
Effects of changes in foreign exchange		(6,916	)
Balance, March 31, 2020	$	563,379

Consideration from the Company's stream agreement is considered variable. Gold and silver revenue can be

subject to cumulative adjustments when the number of ounces to be delivered under the contract changes. As a result of changes in the Company's reserve and resource estimate in the first quarter of 2020, the amortization rate by which deferred revenue is drawn down into income is adjusted and, as required, a current period catch up adjustment is made for all prior period stream revenues since the stream agreement inception date. This variable consideration adjustment resulted in a revenue reversal of $2,813 and finance expense of $960.

During the year ended December 31, 2019, and first quarter of 2020, the Company recognized an adjustment to gold and silver revenue and finance costs due to a net increase in the Company's reserve and resource estimates.

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

		Mar. 31, 2020		Dec. 31, 2019
Current	$	85,041	$	86,933
Non-current		478,338		476,823
	$	563,379	$	563,756

16. Provisions

Reflected in the condensed consolidated interim balance sheets as follows:

Mar. 31, 2020		Decommissioning, restoration and similar liabilities		Deferred share units		Restricted share units		Other		Total
Current (note 11)	$	22,162	$	1,800	$	870	$	829	$	25,661
Non-current		302,085		-		398		1,344		303,827
	$	324,247	$	1,800	$	1,268	$	2,173	$	329,488

Dec. 31, 2019		Decommissioning, restoration and similar liabilities		Deferred share units		Restricted share units		Other		Total
Current (note 11)	$	23,621	$	3,876	$	4,468	$	1,610	$	33,575
Non-current		278,495		-		1,009		1,346		280,850
	$	302,116	$	3,876	$	5,477	$	2,956	$	314,425

Decommissioning, restoration and similar liabilities are remeasured at each reporting date to reflect changes in discount rates, exchange rates, and timing and extent of cash outflows which can significantly affect the liabilities. During the first quarter of 2020, the liabilities increased by $22,131. This was mainly the result of lower discount rates associated with discounting the provisions increasing the liabilities by $42,171, which was partially offset by a weaker Canadian dollar impacting the liabilities of the Manitoba segment by $18,535.

During the first quarter of 2020, the carrying amount of the outstanding liability related to the restricted share unit and deferred share unit plans decreased by $4,209 and $2,076, respectively, primarily as a result of the revaluation of previously issued shares to lower share prices during the first quarter of 2020. The restricted share unit liabilities were also impacted by payments made on vested shares.

17. Pension and other employee benefits

Pension obligations

The Group uses a December 31 measurement date for all of its plans. As at March 31, 2020, the discount rate applied to most recent actuarial valuation increased to 4.04% compared to the December 31, 2019 discount rate of 3.08%, reflecting higher corporate bond yields utilized for discounting pension liabilities. The significant increase in the discount rate has resulted in a significant decline in the defined benefit pension obligation offset partially by decreases in plan assets.

Other employee benefits

The Group sponsors both other long-term employee benefit plans and non-pension post-employment benefits plans and uses a December 31 measurement date. As at March 31, 2020, the discount rate applied to the most recent actuarial valuation increased to 4.26% compared to the December 31, 2019 discount rate of 3.17%, reflecting higher corporate bond yields utilized for discounting other employee benefit liabilities. The significant increase in the discount rate has resulted in a significant decline in the long-term employee benefit plans and non-pension post-employment benefit plans obligation.

18. Income and mining taxes

(a) Tax recoveries:

The tax expense (recoveries) is applicable as follows:

		Three months ended March 31,
		2020			2019
Current:
Income taxes	$	13		$	7,074
Mining taxes		(17	)		(1,335	)
Adjustments in respect of prior years		(349	)		(1,065	)
		(353	)		4,674
Deferred:
Income tax recoveries - origination, revaluation and/or reversal of temporary differences		(4,190	)		(12,172	)
Mining tax (recoveries) expenses - origination, revaluation and/or reversal of temporary difference		(1,161	)		3,009
Adjustments in respect of prior years		386			(207	)
		(4,965	)		(9,370	)
	$	(5,318	)	$	(4,696	)

Adjustments in respect of prior years refers to amounts changing due to the filing of tax returns and assessments from government authorities.

(b) Deferred tax assets and liabilities as represented on the consolidated balance sheets:

		Mar. 31, 2020			Dec. 31, 2019
Deferred income tax asset	$	67,490		$	69,950	)

Deferred income tax liability		(216,932	)		(233,218	)
Deferred mining tax liability		(9,357	)		(4,614	)
		(226,289	)		(237,832	)
Net deferred tax liability balance, end of period	$	(158,799	)	$	(167,882	)

(c) Changes in deferred tax assets and liabilities:

		Three months ended March 31, 2020			Year ended Dec. 31, 2019
Net deferred tax liability balance, beginning of year	$	(167,882	)	$	(308,577	)
Deferred tax recovery		4,965			144,865
OCI transactions		(3,284	)		1,878
Foreign currency translation on the deferred tax liability		7,402			(6,048	)
Net deferred tax liability balance, end of period	$	(158,799	)	$	(167,882	)

19. Share capital

(a) Preference shares:

Authorized: Unlimited preference shares without par value

(b) Common shares:

Authorized: Unlimited common shares without par value

Issued and fully paid:

	Three Months Ended March 31, 2020			Year ended Dec. 31, 2019
	Common shares		Amount	Common shares		Amount
Balance, beginning of year	261,272,151	$	1,777,340	261,272,151	$	1,777,340

Balance, end of period	261,272,151	$	1,777,340	261,272,151	$	1,777,340

During the three months ended March 31, 2020, the Company paid $1,804 in dividends on March 27, 2020 to shareholders of record as of March 10, 2020. During the three months ended March 31, 2019, the Company paid $1,955 in dividends on March 29, 2019 to shareholders of record as of March 8, 2019.

20. Financial instruments

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

The following presents the fair value ("FV") and carrying value ("CV") of the Group's financial instruments and non-financial derivatives:

		Mar. 31, 2020						Dec. 31, 2019
		FV			CV			FV			CV
Financial assets at amortized cost
Cash and cash equivalents ¹	$	305,997		$	305,997		$	396,146		$	396,146
Restricted cash¹		337			337			337			337
Fair value through profit or loss
Trade and other receivables^1, ²		63,644			63,644			91,046			91,046
Non-hedge derivative assets³		17,911			17,911			1,712			1,712
Prepayment option - embedded derivatives⁷		-			-			2,585			2,585
Investments at FVTPL⁴		6,974			6,974			11,287			11,287
Total financial assets		394,863			394,863			503,113			503,113
Financial liabilities at amortized cost
Trade and other payables^1, ²		133,196			133,196			184,604			184,604
Deferred Rosemont acquisition consideration⁸		24,850			24,850			24,491			24,491
Other financial liabilities⁵		81,843			106,311			21,338			24,000
Senior unsecured notes⁶		829,014			994,451			1,050,126			994,143
Fair value through profit or loss
Embedded derivatives³		7,159			7,159			9,074			9,074
Non-hedge derivative liabilities³		3,512			3,512			10,295			10,295
Total financial liabilities		1,079,574			1,269,479			1,299,928			1,246,607
Net financial liability	$	(684,711	)	$	(874,616	)	$	(796,815	)	$	(743,494	)
¹Cash 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.
²Excludes tax and other statutory amounts.
³Derivatives 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.
⁴All investments are carried at their fair value, which is determined using quoted market bid prices in active markets for listed shares.
⁵These financial liabilities relate to agreements with communities near the Constancia project in Peru (note 12). Fair values have been determined using a discounted cash flow analysis based on expected cash flows and a credit adjusted discount rate.
⁶Fair value of the senior unsecured notes (note 14) has been determined using the quoted market price at the period end.
⁷Fair value of the prepayment option embedded derivative related to the long-term debt (note 14) has been determined using a binomial tree/lattice approach based on the Hull-White single factor interest rate term structure model.
⁸Discounted value based on a risk adjusted discount rate.

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, 2020

Level 1

Level 2

Level 3

Total

Financial assets measured at fair value

Financial assets at FVTPL:

Non-hedge derivatives

17,911

Investments at FVTPL

6,974

17,911

24,885

Financial liabilities measured at fair value

Financial liabilities at FVTPL:

Embedded derivatives

7,159

Non-hedge derivatives

3,512

10,671

December 31, 2019		Level 1		Level 2		Level 3		Total
Financial assets measured at fair value
Financial assets at FVTPL:
Non-hedge derivatives	$	-	$	1,712	$	-	$	1,712
Investments at FVTPL		11,287		-		-		11,287
Prepayment option embedded derivative		-		2,585		-		2,585
	$	11,287	$	4,297	$	-	$	15,584
Financial liabilities measured at fair value
Financial liabilities at FVTPL:
Embedded derivatives	$	-	$	9,074	$	-	$	9,074
Non-hedge derivatives		-		10,295		-		10,295
	$	-	$	19,369	$	-	$	19,369

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, 2020 and 2019 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, 2020, the Group had 24,500 tonnes of net copper swaps outstanding at an effective average price of $2.55/lb and settling across April to August 2020. As at December 31, 2019, the Group had 30,000 tonnes of net copper swaps outstanding at an effective average price of $2.67/lb and settling across January to April 2020. The aggregate fair value of the transactions at March 31, 2020 was an asset position of $16,730 (December 31, 2019 was a liability position of $8,362).

Transactions involving derivatives are with large multi-national financial institutions that the Group believes to be credit worthy.

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, 2020, the Group held contracts for forward zinc purchased of 9,254 tonnes (December 31, 2019 - 5,755 tonnes) that related to forward customer sales of zinc. Prices range from $0.84/lb to $1.09/lb (December 31, 2019 - $1.00/lb to $1.15/lb) and settlement dates extend to January 2021. The aggregate fair value of the transactions at March 31, 2020 was a net liability position of $2,331 (December 31, 2019 - a net liability position of $221).

(c) Embedded derivatives

Changes in fair value of provisionally priced receivables

The Group records changes in fair value of provisionally priced receivables 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.

Changes in fair value of provisionally priced receivables 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 revenue for sales contracts and in cost of sales for purchase concentrate contracts. Cash flows related to changes in fair value of provisionally priced receivables are classified in operating activities.

As at March 31, 2020 and 2019, the Group's net position consisted of contracts awaiting final pricing which are as indicated below:

Sales awaiting final pricing

Average YTD price ($/unit)

Metal in concentrate

Unit

Mar. 31, 2020

Dec. 31, 2019

Mar. 31, 2020

Dec. 31, 2019

Copper

tonnes

25,097

33,102

2.24

2.80

Zinc

tonnes

Gold

18,167

16,152

1,582

1,522

Silver

122,542

124,371

14.13

17.86

The aggregate changes in fair value of provisionally priced receivables within the copper and zinc concentrate sales contracts at March 31, 2020, was a liability position of $21,197 (December 31, 2019 - an asset position of $10,165).

Prepayment option embedded derivative

The senior unsecured notes (note 14) 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 5e). The fair value of the embedded derivative at March 31, 2020 was nil (December 31, 2019 - an asset of $2,585).

Pampacancha delivery obligation-embedded derivative

The Group has recognized an obligation to deliver additional precious metal credits to Wheaton as a result of the Pampacancha deposit not being mined until 2020 (note 12). The fair value of the embedded derivative at March 31, 2020 was a liability of $7,159 (December 31, 2019 - a liability of $9,074).

21. Commitments and contingencies

Capital commitments

As at March 31, 2020, the Group had outstanding capital commitments in Canada of approximately $18,319 of which $12,982 can be terminated, approximately $34,422 in Peru, all of which can be terminated, and approximately $178,870 in Arizona, primarily related to the Rosemont project, of which approximately $87,888 can be terminated by the Group.

22. Supplementary cash flow information

(a) Change in non-cash working capital:

		Three months ended March 31, 2020
		2020			2019
Change in:
Trade and other receivables	$	13,086		$	(7,526	)
Other financial assets/liabilities		(22,858	)		10,654
Inventories		(7,284	)		(20,041	)
Prepaid expenses		962			(1,507	)
Trade and other payables		(16,835	)		(5,811	)
Provisions and other liabilities		64			247
	$	(32,865		$	(23,984	)

The Group has retroactively changed its presentation of changes in taxes payable/receivable in the statements of cash flows to report all changes in taxes payable/receivable within the operating cash flow before changes in non-cash working capital. There is no net impact to cash flows from operating activities. All comparative periods have been revised.

(b) Non-cash transactions:

During the three months ended March 31, 2020, the Group entered into the following non-cash investing and financing activities which are not reflected in the consolidated statements of cash flows:

- Remeasurement of the Group's decommissioning and restoration liabilities for the three months ended March 31, 2020 led to a net increase in related property, plant and equipment assets of $41,759 (three months ended March 31, 2019 - increase of $13,705) related to lower discount rates associated with remeasurement of the liabilities.

- Property, plant and equipment included $2,421 (three months ended March 31, 2019 - $2,543) of net additions related to capital additions due to the recognition of ROU assets.

23. Segmented information

Corporate and other activities include the Group's exploration activities in Chile, Canada and the State of Nevada. The exploration entities are not individually significant, as they do not meet the minimum quantitative thresholds. Corporate and other activities are not considered a segment and are included as a reconciliation to total consolidated results.

Three months ended March 31, 2020

Manitoba

Peru

Arizona

Corporate and other activities

Total

Revenue from external customers

123,833

121,272

245,105

Cost of sales

Mine operating costs

93,844

86,813

180,657

Depreciation and amortization

39,197

47,242

86,439

Gross profit

(9,208

)

(12,783

)

(21,991

)

Selling and administrative expenses

5,103

Exploration and evaluation

3,846

1,744

183

5,773

Other operating expense

3,378

1,464

110

540

5,492

Results from operating activities

(16,432

)

(15,991

)

(110

)

(5,826

)

(38,359

)

Finance income

(1,106

)

Finance expenses

42,801

Other finance loss

1,398

Loss before tax

(81,452

)

Tax recovery

(5,318

)

Loss for the period

(76,134

)

Three months ended March 31, 2019
		Manitoba			Peru		Arizona			Corporate and other activities			Total
Revenue from external customers	$	107,132		$	185,126	$	-		$	-		$	292,258
Cost of sales
Mine operating costs		85,121			78,195		-			-			163,316
Depreciation and amortization		27,814			49,316		-			-			77,130
Gross profit		(5,803	)		57,615		-			-			51,812
Selling and administrative expenses		-			-		-			14,900			14,900
Exploration and evaluation		3,822			893		-			692			5,407
Other operating expenses		2,182			8,715		162			637			11,696
Results from operating activities	$	(11,807	)	$	48,007	$	(162	)	$	(16,229	)	$	19,809
Finance income													(2,578	)
Finance expenses													45,028
Other finance gain													(4,533	)
Loss before tax													(18,108	)
Tax recovery													(4,696	)
Loss for the period												$	(13,412	)

March 31, 2020

Manitoba

Peru

Arizona

Corporate and other activities

Total

Total assets

750,880

2,573,252

704,005

338,089

4,366,226

Total liabilities

506,422

983,574

76,979

1,020,974

2,587,949

Property, plant and equipment¹

629,530

2,309,561

695,055

32,509

3,666,655

¹ Included in Corporate and other activities are $27,273 of property, plant and equipment that is located in Nevada.

December 31, 2019
		Manitoba		Peru		Arizona		Corporate and other activities		Total
Total assets	$	774,800	$	2,556,895	$	700,799	$	423,467	$	4,455,961
Total liabilities		551,171		926,642		78,988		1,051,037		2,607,838
Property, plant and equipment¹		684,679		2,253,404		691,538		32,938		3,662,559

¹ Included in Corporate and other activities are $27,273 of property, plant and equipment that is located in Nevada.

24. Events after the reporting period

Amendment to Pampacancha target date with Wheaton

On April 20, 2020, the Company executed an amendment to the Constancia precious metals streaming agreement with Wheaton whereby both parties have agreed to extend the target date for mining four million tonnes of ore from the Pampacancha deposit, and the associated trigger for the delivery of additional gold ounces, by six months to June 30, 2021. This Pampacancha target date extension was agreed to by Wheaton in light of the current state of emergency in Peru and the potential for development timelines to be delayed.

Execution of Gold Forward Sale Transaction

On May 7, 2020, the Company announced a gold forward sale transaction with a syndicate of its existing lenders whereby the Company received an upfront payment of $115 million in exchange for an agreement to deliver 79,954 ounces of gold in 2022 and 2023 based on gold forward curve prices averaging approximately $1,682 per ounce.

Constancia Shutdown and COVID-19 Impacts

In response to COVID-19, the Peruvian government declared a state of emergency on March 15, 2020 requiring the suspension of non-essential businesses. This resulted in a temporary shutdown of the Constancia mining operations through to the date of this report. The state of emergency has since been extended to May 24, 2020, however, the government of Peru has permitted a number of activities to resume operations in four phases, with certain mining operations commencing mid-May as part of the first phase.

The Company has submitted a reopening plan as part of phase one with Peru's Ministry of Energy and Mines for a safe and orderly restart of operations at Constancia. Included in the reopening plan are measures the Company intends to undertake to minimize the risk of COVID-19 infections at site. On May 14, Constancia received recognition and approval from Peru's Ministry of Energy and Mines for its restart protocols and is planning to ramp up operations over the next week. The Constancia mill is currently performing testing of major equipment as part of its restart and ramp-up procedures.