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 February 2024

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 February 23, 2024, Hudbay Minerals Inc. (“Hudbay”) filed on the Canadian Securities Administrators’ System for Electronic Document Analysis and Retrieval (SEDAR) website at www.sedarplus.ca the following documents: (1) Audited Consolidated Financial Statements for the years ended December 31, 2023 and 2022, (2) Management's Discussion and Analysis for the year ended December 31, 2023, (3) News Release dated February 23, 2024.

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

• Exhibit 99.1 — Audited Consolidated Financial Statements for the years ended December 31, 2023 and 2022

• Exhibit 99.2 — Management's Discussion and Analysis for the year ended December 31, 2023

• Exhibit 99.3 — News Release dated February 23, 2024

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/ Eugene Lei
Name:	Eugene Lei
Title:	Chief Financial Officer

Date: February 26, 2024

3

EXHIBIT INDEX

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

Exhibit	Description
99.1	Audited Consolidated Financial Statements for the years ended December 31, 2023 and 2022
99.2	Management's Discussion and Analysis for the year ended December 31, 2023
99.3	News Release dated February 23, 2024

4

EX-99.1

Audited Consolidated Financial Statements

(In US dollars)

HUDBAY MINERALS INC.

Years ended December 31, 2023 and 2022

MANAGEMENT'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING

Management of Hudbay Minerals Inc. ("Hudbay" or the "Company") is responsible for establishing and maintaining internal control over financial reporting ("ICFR").

Under the supervision of and with the participation of the Chief Executive Officer and the Chief Financial Officer, Hudbay's management assessed the effectiveness of the Company's ICFR as of December 31, 2023 based upon the Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on this evaluation, management concluded that Hudbay's ICFR was effective as of December 31, 2023.

On June 20, 2023 the Company acquired Copper Mountain Mining Corporation ("Copper Mountain"). As permitted by SEC staff interpretive guidance for newly acquired businesses, management has excluded Copper Mountain from its assessment of the effectiveness of the Company's internal control over financial reporting. Copper Mountain's financial statements constitute 34% and 19% of net and total assets, respectively, 10% of revenues, and 19% of net income of the consolidated financial statement amounts as of and for the year ended December 31, 2023.

The effectiveness of the Company's ICFR as of December 31, 2023 has been audited by Deloitte LLP, Independent Registered Public Accounting Firm, as stated in their report immediately preceding the Company's audited consolidated financial statements for the year ended December 31, 2023.
 

Peter Kukielski	Eugene Lei
President and Chief Executive Officer	Chief Financial Officer

Toronto, Canada

February 22, 2024

Report of Independent Registered Public Accounting Firm

To the shareholders and the Board of Directors of Hudbay Minerals Inc.

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Hudbay Minerals Inc. and subsidiaries (the "Company") as of December 31, 2023 and 2022, the related consolidated income statements, consolidated statements of comprehensive income, changes in equity, and cash flows, for each of the two years in the period ended December 31, 2023, and the related notes (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2023 and 2022, and its financial performance and its cash flows for each of the two years in the period ended December 31, 2023, in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated February 22, 2024, expressed an unqualified opinion on the Company's internal control over financial reporting.

Basis for Opinion

These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current-period audit of the financial statements that were communicated or required to be communicated to the audit committee and that (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Impairment - Assessment of Whether Indicators of Impairment or Impairment Reversal Exist in Non-financial Assets - Refer to Notes 2d and 3i to the financial statements

Critical Audit Matter Description

The Company's determination of whether an indicator of impairment or impairment reversal exists in non-financial assets at the cash generating unit ("CGU") level requires significant management judgment. 

While there are several inputs that are required to determine whether or not an indicator of impairment or impairment reversal exists, the judgments with the highest degree of subjectivity are the future long-term copper price, inputs to the market capitalization deficiency assessment (specifically control premiums, industry specific factors and company performance), and the discount rate.  Auditing these estimates and inputs required a high degree of subjectivity in applying audit procedures and in evaluating the results of those procedures.  This resulted in an increased extent of audit effort, including the involvement of fair value specialists.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to the future long-term copper price, inputs to the market capitalization deficiency assessment (specifically control premiums, industry specific factors and company performance), and the discount rate in the assessment of indicators of impairment or impairment reversal included the following, among others:

•Evaluated the effectiveness of controls over management's assessment of the indicators of impairment or impairment reversal.

•With the assistance of fair value specialists:

-Evaluated the future long-term copper price by comparing management forecasts to third party forecasts,

-Performed an assessment of the market capitalization deficiency to the carrying value of the CGUs which included: assessing control premiums, industry specific factors, company performance, and

-Evaluated the reasonableness of the discount rate by comparing the key inputs to independent market data.

Impairment - Identification of Impairment Indicator within Peru CGU - Refer to Notes 2d, 3i, and 14 to the financial statements

Critical Audit Matter Description

The Company's determination of whether an indicator of impairment or impairment reversal exists in non-financial assets at the CGU level requires significant management judgment. An impairment loss is recognized if the carrying amount of the CGU exceeds its recoverable amount.  The recoverable amount of the CGU is estimated based on the higher of its fair value less cost of disposal and its value in use.  An impairment indicator was identified at the Peru CGU as a result of a new life of mine plan for Peru, which included updated costs reflecting recently experienced inflationary pressures.  The Company used a discounted cashflow model to determine the recoverable amount of the Peru CGU which required management to make significant estimates and assumptions related to the future commodity prices, production based on current estimates of recoverable resources, value beyond proven and probable ("VBPP"), discount rate, and future operating and capital costs. The Company determined that there was no impairment of the Peru CGU.

While there are several inputs that are required to determine the recoverable amount of the Peru CGU, the estimates and assumptions with the highest degree of subjectivity and judgment uncertainty are the future short-term and long-term copper price, VBPP, and the discount rate. Auditing these estimates and assumptions required a high degree of auditor judgment in applying audit procedures and in evaluating the results of those procedures. This resulted in an increased extent of audit effort, including the involvement of fair value specialists.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to the future short-term and long-term copper price, VBPP, and discount rate used to determine the recoverable amount of the Peru CGU included the following procedures, among others:

•Evaluated the effectiveness of relevant controls over management's determination of the future short-term and long-term copper price, VBPP, and discount rate.

•With the assistance of fair value specialists:

-Evaluated the future short-term and long-term copper price by comparing management forecasts to third party forecasts, and

-Evaluate the reasonableness of the VBPP by developing a range of independent VBPP valuation estimates from market transactions and comparing to the VBPP valuation selected by management, and

-Evaluate the reasonableness of the discount rate by testing the source information underlying the determination of the discount rate and developed a range of independent estimates for the discount rate and compared to the discount rate selected by management.

Copper Mountain Mining Corporation ("Copper Mountain") Acquisition - Valuation of Mineral Properties Acquired and Annual Goodwill Impairment Test - Refer to Notes 2d, 5 and 13 of the financial statements

Critical Audit Matter Description

On June 20, 2023, the Company acquired 100% of the issued and outstanding shares of Copper Mountain. The purchase price was allocated to the fair value of assets acquired and liabilities assumed, which included mineral properties that were valued using a discounted cash flow model. The excess of the purchase price was allocated to goodwill. As required by accounting standards, the Company tested the goodwill of the Copper Mountain CGU at December 31, 2023 for impairment by determining the recoverable amount using a discounted cash flow model. The discounted cash flow models required management to make significant estimates and assumptions related to future short-term and long-term copper price, production based on current estimates of recoverable resources, VBPP, discount rate, future foreign exchange rate, and future operating and capital costs. The Company determined that there was no impairment of the Copper Mountain CGU's goodwill based on its annual goodwill impairment test.

While there are several estimates and assumptions that are required to determine the fair value of the mineral properties acquired, the estimates and assumptions with the highest degree of subjectivity are future short-term and long-term copper price and discount rate. While there are several estimates and assumptions that are required to determine the recoverable amount of the Copper Mountain CGU at December 31, 2023, the estimates and assumptions with the highest degree of subjectivity are future short-term and long-term copper price, VBPP, discount rate, and future foreign exchange rate. Auditing these estimates and assumptions required a high degree of auditor judgment in applying audit procedures and in evaluating the results of those procedures. This resulted in an increased extent of audit effort, including the involvement of fair value specialists.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to the future short-term and long-term copper price, VBPP, discount rate, and future foreign exchange rate used to determine the fair value of the mineral properties acquired and the recoverable amount of the Copper Mountain CGU included the following, among others: 

•Evaluated the effectiveness of relevant controls over management's determination of the future short-term and long-term copper price, VBPP, discount rate, and future foreign exchange rate.

•With the assistance of fair value specialists:

-Evaluate the future short-term and long-term copper price by comparing management's forecasts to third party forecasts,

-Evaluate the reasonableness of the VBPP by developing a range of independent VBPP valuation estimates from market transactions and comparing to the VBPP valuation selected by management,

-Evaluate the reasonableness of the discount rate by testing the source information underlying the determination of the discount rate and developed a range of independent estimates for the discount rate and compared to the discount rate selected by management, and

-Evaluate the reasonableness of the future foreign exchange rate by comparing our independent research of the forecasted rate to management's assumed rates.

/s/ Deloitte LLP

Chartered Professional Accountants

Licensed Public Accountants

Toronto, Canada

February 22, 2024

We have served as the Company's auditor since 2005.

Report of Independent Registered Public Accounting Firm

To the shareholders and the Board of Directors of Hudbay Minerals Inc.

Opinion on Internal Control over Financial Reporting

We have audited the internal control over financial reporting of Hudbay Minerals Inc. and subsidiaries (the "Company") as of December 31, 2023, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control - Integrated Framework (2013) issued by COSO.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated financial statements as of and for the year ended December 31, 2023, of the Company and our report dated February 22, 2024, expressed an unqualified opinion on those financial statements.

As described in Management's Report on Internal Control over Financial Reporting, management excluded from its assessment the internal control over financial reporting at Copper Mountain Mining Corporation ("Copper Mountain"), which was acquired on June 20, 2023, and whose financial statements constitute 34% and 19% of net and total assets, respectively, 10% of revenues, and 19% of net income of the consolidated financial statement amounts as of and for the year ended December 31, 2023. Accordingly, our audit did not include the internal control over financial reporting at Copper Mountain.

Basis for Opinion

The Company's management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management's Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company's internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

Definition and Limitations of Internal Control over Financial Reporting

A company's internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company's internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company's assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

/s/ Deloitte LLP

Chartered Professional Accountants

Licensed Public Accountants

Toronto, Canada

February 22, 2024

HUDBAY MINERALS INC.
Consolidated Balance Sheets
(In thousands of US dollars)

			Dec. 31,			Dec. 31,
	Note		2023			2022
Assets
Current assets
Cash and cash equivalents	8	$	249,794		$	225,665
Trade and other receivables	9		203,429			113,182
Inventories	10		207,334			155,012
Prepaid expenses and other current assets			6,289			20,106
Other financial assets	11		4,102			1,063
Taxes receivable			2,300			9,153
			673,248			524,181
Receivable	9		12,157			13,329
Inventories	10		24,450			50,725
Other financial assets	11		7,089			9,799
Intangibles and other assets	12		52,453			49,841
Property, plant and equipment	14		4,316,006			3,552,430
Deferred tax assets	25b		151,946			125,638
Goodwill	13		75,285			-
		$	5,312,634		$	4,325,943
Liabilities
Current liabilities
Trade and other payables	15	$	239,149		$	211,467
Taxes payable			53,441			4,051
Other liabilities	16		30,035			46,806
Other financial liabilities	17		42,235			33,301
Gold prepayment liability	18		55,901			71,208
Lease liabilities	19		28,902			16,156
Deferred revenue	21		87,672			64,658
			537,335			447,647
Other financial liabilities	17		51,720			52,446
Lease liabilities	19		61,433			44,863
Long-term debt	20		1,287,536			1,184,162
Deferred revenue	21		330,848			404,880
Pension obligations	23		6,010			3,262
Other employee benefits	24		101,849			86,340
Environmental and other provisions	22		321,912			279,240
Deferred tax liabilities	25b		407,152			251,294
			3,105,795			2,754,134
Equity
Share capital	26		2,240,233			1,780,774
Reserves			30,177			26,538
Retained earnings			(173,599	)		(235,503	)
Equity attributable to owners of the Company			2,096,811			1,571,809
Non-controlling interest	34		110,028			-
		$	5,312,634		$	4,325,943
Commitments (note 31)

1

HUDBAY MINERALS INC.
Consolidated Income Statements
(In thousands of US dollars, except per share amounts)

	Note		Year ended December 31,
			2023			2022
Revenue	7a	$	1,690,030		$	1,461,440
Cost of sales
Mine operating costs			905,812			846,937
Depreciation and amortization	7b		391,657			337,615
			1,297,469			1,184,552
Gross profit			392,561			276,888
Selling and administrative expenses			39,228			33,986
Exploration expenses			29,276			34,511
Other expenses	7e		38,308			32,586
Re-evaluation adjustment - environmental provision	22		(11,416	)		(133,460	)
Impairment - Arizona	7g		-			94,956
Results from operating activities			297,165			214,309
Net interest expense on long term debt	7f		76,202			67,663
Accretion on streaming arrangements	7f		26,291			27,778
Change in fair value of financial instruments	7f		14,053			942
Other net finance costs	7f		28,789			22,111
Net finance expense			145,335			118,494
Profit before tax			151,830			95,815
Tax expense	25a		82,287			25,433
Profit for the year		$	69,543		$	70,382
Attributable to:
Owners of the Company		$	66,367		$	70,382
Non-controlling interest			3,176			-
Profit for the year		$	69,543		$	70,382
Profit per share
Basic and diluted		$	0.22		$	0.27
Weighted average number of common shares outstanding:
Basic	28		310,845,281			261,858,531
Diluted	28		310,953,110			262,217,528

2

HUDBAY MINERALS INC.
Consolidated Statements of Cash Flows
(In thousands of US dollars)

			Year ended December 31,
			2023			2022
Cash generated from operating activities:
Profit for the year		$	69,543		$	70,382
Tax expense	25a		82,287			25,433
Items not affecting cash:
Depreciation and amortization	7b		393,068			339,063
Share-based compensation expense	7c		7,357			2,064
Net finance expense	7f		145,335			118,494
Inventory adjustments	10		2,308			3,553
Amortization of deferred revenue and variable consideration	21		(77,309	)		(73,188	)
Pension and other employee benefit payments, net of accruals			6,962			1,545
Re-evaluation adjustment - environmental obligation	22		(11,416	)		(133,460	)
Impairment - Arizona	7g		-			94,956
Decommissioning and restoration payments	22		(2,069	)		(15,460	)
Other	33a		8,683			(2,043	)
Taxes paid			(54,755	)		(39,610	)
Operating cash flow before changes in non-cash working capital			569,994			391,729
Change in non-cash working capital	33b		(93,144	)		96,074
			476,850			487,803
Cash used in investing activities:
Acquisition of property, plant and equipment			(281,099	)		(308,960	)
Community agreements			(10,705	)		(37,491	)
Cash and cash equivalents acquired in acquisitions, net of cash paid	5,6		10,959			-
Net sale of investments			53			1,919
Proceeds from disposition of property, plant and equipment			874			4,101
Change in restricted cash			126			(49	)
Interest received			8,010			2,810
			(271,782	)		(337,670	)
Cash used in financing activities:
Proceeds from revolving credit facility, net of repayments	20b		100,000			-
Principal repayments on Copper Mountain bonds	20c		(143,000	)		-
Premium paid on Copper Mountain bonds	20c		(3,021	)		-
Proceeds on flow-through shares, net of share issuance cost	26b		14,424			-
Change in restricted cash debt service account			3,669			-
Interest paid on long-term debt			(73,988	)		(63,750	)
Financing costs			(12,212	)		(12,272	)
Lease payments	19		(25,216	)		(35,770	)
Equipment financing payments			(1,861	)		-
Gold prepayment repayments	18		(26,722	)		(71,714	)
Deferred Rosemont acquisition payment			(10,000	)		(10,000	)
Net proceeds from exercise of stock options			190			1,253
Share issuance cost	5		(188	)		-
Dividends paid	26b		(4,463	)		(4,047	)
			(182,388	)		(196,300	)
Effect of movement in exchange rates on cash			1,449			843
Net increase (decrease) in cash and cash equivalents			24,129			(45,324	)
Cash and cash equivalents, beginning of the year			225,665			270,989
Cash and cash equivalents, end of the year		$	249,794		$	225,665

3

HUDBAY MINERALS INC.
Consolidated Statements of Comprehensive Income
(In thousands of US dollars)

			Year ended December 31,
			2023			2022
Profit for the year		$	69,543		$	70,382
Other comprehensive income:
Item that will be reclassified subsequently to profit or loss:
Recognized directly in equity:
Net gain (loss) on translation of foreign currency balances			9,227			(17,666	)
			9,227			(17,666	)
Items that will not be reclassified subsequently to profit or loss:
Recognized directly in equity:
Gold prepayment revaluation	18		(192	)		512
Tax effect			51			(135	)
Remeasurement - actuarial (loss) gain			(8,056	)		45,083
Tax effect			(276	)		(2,249	)
			(8,473	)		43,211
Other comprehensive income net of tax, for the year			754			25,545
Attributable to:
Owners of the Company		$	67,245		$	95,927
Non-controlling interest			3,052			-
Total comprehensive income for the year		$	70,297		$	95,927

4

HUDBAY MINERALS INC.
Consolidated Statements of Changes in Equity
(In thousands of US dollars)

		Share capital (note 26)		Other capital reserves			Foreign currency translation reserve			Remeasurement reserve			Retained earnings			Total equity
Balance, January 1, 2022	$	1,778,848	$	57,328		$	2,907		$	(60,417	)	$	(301,838	)	$	1,476,828
Profit		-		-			-			-			70,382			70,382
Other comprehensive (loss) income		-		-			(17,666	)		43,211			-			25,545
Total comprehensive (loss) income		-		-			(17,666	)		43,211			70,382			95,927
Contributions by and distributions to owners:
Dividends (note 26b)		-		-			-			-			(4,047	)		(4,047	)
Stock options (note 7c)		-		1,848			-			-			-			1,848
Issuance of shares related to stock options exercised		1,926		(673	)		-			-			-			1,253
Total contributions by and distributions to owners		1,926		1,175			-			-			(4,047	)		(946	)
Balance, December 31, 2022	$	1,780,774	$	58,503		$	(14,759	)	$	(17,206	)	$	(235,503	)	$	1,571,809

5

HUDBAY MINERALS INC.
Consolidated Statements of Changes in Equity
(In thousands of US dollars)

		Share capital (note 26)		Other capital reserves			Foreign currency translation reserve			Remeasurement reserve			Retained earnings			Total			Non- controlling interest			Total equity
Balance, January 1, 2023	$	1,780,774	$	58,503		$	(14,759	)	$	(17,206	)	$	(235,503	)	$	1,571,809		$	-		$	1,571,809
Profit		-		-			-			-			66,367			66,367			3,176			69,543
Other comprehensive income (loss)		-		-			9,351			(8,473	)		-			878			(124	)		754
Total comprehensive income (loss)		-		-			9,351			(8,473	)		66,367			67,245			3,052			70,297
Contributions by and distributions to owners:
Dividends (note 26b)		-		-			-			-			(4,463	)		(4,463	)		-			(4,463	)
Shares issued on acquisition of Copper Mountain, net of share issuance costs (note 5)		436,499		-			-			-			-			436,499			106,976			543,475
Shares and warrants issued on acquisition of Rockcliff (note 6)		12,503		725			-			-			-			13,228			-			13,228
Flow-through shares issued, net of share issuance costs (note 26b)		10,166		-			-			-			-			10,166			-			10,166
Stock options (note 7c)		-		2,137			-			-			-			2,137			-			2,137
Issuance of shares related to stock options exercised		291		(101	)		-			-			-			190			-			190
Total contributions by and distributions to owners		459,459		2,761			-			-			(4,463	)		457,757			106,976			564,733
Balance, December 31, 2023	$	2,240,233	$	61,264		$	(5,408	)	$	(25,679	)	$	(173,599	)	$	2,096,811		$	110,028		$	2,206,839

6

HUDBAY MINERALS INC.
Notes to Audited Consolidated Financial Statements
(in thousands of US dollars, except where otherwise noted)
Years ended December 31, 2023 and 2022

1.Reporting entity

Hudbay Minerals Inc. ("HMI" or the "Company") is a company existing under the Canada Business Corporations Act. The address of the Company's principal executive office is 25 York Street, Suite 800, Toronto, Ontario. The audited consolidated financial statements ("financial statements") of the Company for the year ended December 31, 2023 and 2022 represent the financial position and the financial performance of the Company and its subsidiaries (together referred to as "Hudbay").

Wholly owned subsidiaries as at December 31, 2023 and 2022 include HudBay Marketing & Sales Inc. ("HMS"), HudBay Peru Inc., HudBay Peru S.A.C. ("Hudbay Peru"), HudBay (BVI) Inc., Hudbay Arizona Inc., Copper World, Inc. ("Copper World") and Mason Resources (US) Inc. ("Mason"). On June 20, 2023, the Company acquired all of the issued and outstanding common shares of Copper Mountain Mining Corporation ("Copper Mountain") as part of a court-approved plan of arrangement. At the time, Copper Mountain held a 75% interest in Copper Mountain Mine (BC) Ltd. ("CMBC"), the entity that owns the Copper Mountain mine. Mitsubishi Materials Corporation ("MMC"), an arms-length party, owns the remaining 25% interest in CMBC. On September 14, 2023, the Company acquired all of the issued and outstanding common shares of Rockcliff Metals Corp. ("Rockcliff") as part of a court-approved plan of arrangement. Subsequent to year end, on January 1, 2024, the Company amalgamated with Copper Mountain and Rockcliff and continued as Hudbay Minerals Inc. Following the amalgamation, the Company directly holds a 75% interest in CMBC and is the direct holder of all of Rockcliff's mineral properties.

Hudbay is a diversified mining company with long-life assets in North and South America. Hudbay's operations in Cusco (Peru) produce copper with gold, silver and molybdenum by-products. Hudbay's operations in Manitoba (Canada) produce gold with copper, zinc and silver by-products. Hudbay's operations in British Columbia (Canada) produce copper with gold and silver by-products. Hudbay has a development pipeline that includes copper development projects in Arizona and Nevada (United States), and a focused growth strategy on exploration, development, operation, and optimization of properties that Hudbay already controls, as well as other mineral assets that Hudbay may acquire that fit the Company's strategic criteria. 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.

2.Basis of preparation

(a)Statement of compliance:

These consolidated financial statements have been prepared in accordance with International Financial Reporting Standards ("IFRS") as issued by the International Accounting Standards Board ("IASB") effective for the year ended December 31, 2023.

The Board of Directors approved these consolidated financial statements on February 22, 2024.

(b)Functional and presentation currency:

Hudbay's consolidated financial statements are presented in US dollars, which is the Company's and all material subsidiaries' functional currency, except the Company's Manitoba and British Columbia business unit, which have a functional currency of Canadian dollars. All values are rounded to the nearest thousand ($000) except where otherwise indicated.

7

HUDBAY MINERALS INC.
Notes to Audited Consolidated Financial Statements
(in thousands of US dollars, except where otherwise noted)
Years ended December 31, 2023 and 2022

(c)Basis of measurement:

The consolidated financial statements have been prepared on the historical cost basis except for the following items in the consolidated balance sheets:

-Derivatives, embedded derivatives, other financial instruments, and financial assets measured at fair value through profit or loss ("FVTPL");

-Liabilities for cash-settled share-based compensation arrangements are measured at fair value; and,

-A defined benefit liability is recognized as the net total of the plan assets, unrecognized past service costs and unrecognized actuarial losses, less unrecognized actuarial gains and the present value of the defined benefit obligation.

(d)Use of judgements and estimates:

The preparation of the consolidated financial statements in conformity with IFRS requires Hudbay to make judgements, 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 consolidated financial statements, and reported amounts of revenue and expenses during the reporting period. Actual results may differ from these estimates.

Hudbay reviews these estimates and underlying assumptions on an ongoing basis, based on experience and other factors, including expectations of future events that the Company believes to be reasonable under the circumstances. Revisions to accounting estimates are recognized prospectively in the period in which the estimates are revised and in any future periods affected.

The following are critical and significant judgements and estimates impacting the consolidated financial statements:

-Indicators and testing of impairment (reversal of impairment) of non-financial assets (notes 3h, 3i, 13 and 14) - There are a number of potential indicators that could trigger 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 Hudbay's overall assessment of the recoverability of non-financial assets. Such business changes include changes to the life of mine ("LOM") plan, changes to budget, changes to closure plans, changes to discount rates and changes to long-term commodity prices. If an impairment or impairment reversal indicator is identified then there are also critical estimates involved in the determination of the recoverable amount of cash generating units ("CGU"). A CGU to which goodwill has been allocated is tested for impairment at least annually or when events or circumstances indicate that an assessment for impairment is required. Recoverable amounts are calculated using discounted after-tax cash flows based on cash flow projections and assumptions in Hudbay's most recent 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 applicable 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 applicable 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 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.

8

HUDBAY MINERALS INC.
Notes to Audited Consolidated Financial Statements
(in thousands of US dollars, except where otherwise noted)
Years ended December 31, 2023 and 2022

-Mineral reserves and resources (notes 3g, 3k and 3i) - Hudbay estimates mineral reserves and resources to determine future recoverable mine production based on assessment of geological, engineering and metallurgical analyses, estimates of future production costs, capital costs and reclamation costs, as well as long term commodity prices and foreign exchange rates. There are numerous uncertainties inherent in estimating mineral reserves and resources, including many factors beyond Hudbay's control. The estimates are based on information compiled by appropriately qualified persons relating to the geological data on the size, depth and shape of the ore body and interpreting this data requires complex geological judgements. Changes in assumptions, including economic assumptions such as metals prices and market conditions, could have a material effect on the financial position and results of operations.

Changes in the mineral reserve or resource estimates may affect:

-the carrying value of exploration and evaluation assets, capital works in progress, mining properties and plant and equipment, goodwill;

-depreciation expense for assets depreciated either on a unit-of-production basis or on a straight line basis where useful lives are restricted by the life of the related mine plan;

-the provision for decommissioning, restoration and similar liabilities;

-the carrying value of deferred tax assets, and

-amortization of deferred revenue.

-Property plant and equipment (notes 3h and 14) - The carrying amounts of property, plant and equipment and exploration and evaluation assets on Hudbay's consolidated balance sheets are significant and reflect multiple estimates and applications of judgement. Management exercises judgement in determining whether the costs related to exploration and evaluation are eligible for capitalization and whether they are likely to be recoverable by future exploration, which may be based on assumptions about future events and circumstances. Judgement and estimates are used when determining whether exploration and evaluation assets should be transferred to capital works in progress within property, plant and equipment. For mines in the production stage, management applies judgement to determine development costs to be capitalized based on the extent they are incurred in order to access reserves mineable over more than one year. For depreciable property, plant and equipment assets, management makes estimates to determine depreciation. For assets depreciated using the straight line method, residual value and useful lives of the assets or components are estimated. A significant estimate is required to determine the total production basis for units-of-production depreciation. The most currently available reserve and resource report is utilized in determining the basis which has material impacts on the amount of depreciation recorded through inventories and the consolidated income statements. There are numerous uncertainties inherent in estimating mineral reserves, and assumptions that were valid at the reporting date may change when new information becomes available. The actual volume of ore extracted and any changes in these assumptions could affect prospective depreciation rates and carrying values. In determining whether stripping costs incurred during the production phase of a mining property relate to mineral reserves and mineral resources that will be mined in a future period and therefore should be capitalized, Hudbay makes estimates of the proportion of stripping activity which relates to extracting current ore and the proportion which relates to obtaining access to ore reserves which will be mined in the future.

9

HUDBAY MINERALS INC.
Notes to Audited Consolidated Financial Statements
(in thousands of US dollars, except where otherwise noted)
Years ended December 31, 2023 and 2022

-Tax provisions (notes 3m and 25) - 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 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. 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.

-Assaying utilized to determine revenue and recoverability of inventories (notes 3c and 3f) - Assaying of contained metal is a key estimate in determining the amount of revenues recorded in the consolidated income statements. The estimate is finalized after final surveying is completed, which may extend to six months in certain transactions. Since assays are utilized to determine the value of recorded revenues, significant differences in given assays may result in a material misstatement of revenues on the consolidated income statements. Assay survey results are also a factor utilized to determine if inventories on hand have a net realizable value that exceeds cost. Material differences in assay results may lead to misstatements of inventory balances in the consolidated balance sheets.

-Decommissioning and restoration obligations (notes 3k and 22) - Significant judgement and estimates are utilized in the determination of the decommissioning and restoration provisions in the consolidated balance sheets. Judgement is involved in determining the timing and extent of cash outflows required to satisfy constructive obligations based on the timing of site closures in the LOM plans, expected unit costs to determine cash obligations to remediate disturbances and regulatory and constructive requirements, as well as technological changes to determine the extent and timing of the remediation required. The timing of cash outflows and discount rates associated with discounting the provision are also key estimates. Changes in these estimates may result in a change in classification of the provision between non-current and current as well as material differences in the total provision recorded in the consolidated balance sheets.

-Pension and other employee benefit (notes 3j, 23 and 24) - Hudbay's post retirement obligations relate mainly to ongoing health care benefits plans. Hudbay 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, the 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, Hudbay considers the interest rates on corporate bonds in the respective currency with at least an 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 Hudbay bases future salary increases and pension increases on expected future inflation rates for the respective country.

10

HUDBAY MINERALS INC.
Notes to Audited Consolidated Financial Statements
(in thousands of US dollars, except where otherwise noted)
Years ended December 31, 2023 and 2022

-Valuation of an acquired business (note 5) - As the Company concluded that the acquisition of Copper Mountain was a business combination, a valuation was required to determine the allocation of the purchase price. The fair values of the net assets acquired were calculated using significant estimates and judgements. In particular, the fair values of the net assets, including mineral properties, other property, plant and equipment have been determined using an independent valuation involving discounted cash flow calculations and other finance models. Such calculations and models were required to estimate, amongst other items, future production, future commodity prices, operating and capital input costs, discount rates and currency rates. If estimates or judgements differed, this could result in a materially different allocation of net assets to the consolidated balance sheets and could result in a change in the amount of goodwill recognized. Changes to the preliminary values of assets acquired and liabilities assumed,  deferred  income  taxes  and  resulting  goodwill, if any, are retrospectively adjusted when the final measurements are determined if related to conditions existing at the date of acquisition (within one year of acquisition).

-Valuation of assets in an asset acquisition (note 6) - As the Company acquired Rockcliff through the issuance of the Company's common shares and the Company concluded Rockcliff is not a business but an asset acquisition, a valuation was required to the fair value of the net assets acquired. The fair values of the net assets acquired were calculated using significant estimates and judgements. In particular, the fair value of the exploration property has been determined using an independent valuation involving discounted cash flow calculations. Such calculations and models were required to estimate, amongst other items, future production, future commodity prices, operating and capital input costs, discount rates and currency rates.

(e)Estimation uncertainty:

The Company has assessed the broad implications of economic uncertainty including but not limited to inflation and higher interest rates, political instability in Peru and broadly as a result of global geopolitical instability, as well as the lingering impact of the novel coronavirus pandemic, on its consolidated financial statements. As at December 31, 2023, management has determined that the Company's ability to execute its medium and longer term plans and the economic viability of its assets, including the carrying value of its long-lived assets and inventory valuations, are not materially impacted.

In making this judgement, the Company has assessed various criteria including, but not limited to, existing laws, regulations, orders, disruptions and potential disruptions in our supply chain, disruptions in the markets for our products, commodity prices and foreign exchange prices and the actions that the Company has taken at its operations to protect the health and safety of its workforce and local community.

3.Material accounting policies

The accounting policies set out below have been applied consistently to all periods presented in these consolidated financial statements and by all Hudbay's entities.

(a)Basis of consolidation:

Intercompany balances and transactions are eliminated upon consolidation. When a Hudbay entity transacts with an associate or jointly controlled entity of the Company, unrealized profits and losses are eliminated to the extent of Hudbay's interest in the relevant associate or joint venture. The accounting policies of Hudbay's entities are changed when necessary to align them with the policies adopted by the Company.

11

HUDBAY MINERALS INC.
Notes to Audited Consolidated Financial Statements
(in thousands of US dollars, except where otherwise noted)
Years ended December 31, 2023 and 2022

Subsidiaries

A subsidiary is an entity controlled by Hudbay. The financial statements of subsidiaries are included in the consolidated financial statements from the date that control commences until the date that control ceases.

Non-controlling interest

Non-controlling interest in subsidiaries are identified separately from the Company's equity in the subsidiaries. The interest of non-controlling shareholders may be initially measured either at fair value or at the non-controlling interest proportionate share of the fair value of the acquiree's identifiable net assets. The choice of measurement basis is made on an acquisition-by-acquisition basis. Subsequent to acquisition, the carrying amount of non-controlling interest is the amount of that interest at initial recognition plus the non-controlling interest share of subsequent changes in equity. Total comprehensive income is attributed to non-controlling interest even if this results in the non-controlling interest having a deficit balance.

Business combinations and goodwill

Should Hudbay make an acquisition, it first determines whether the assets acquired and liabilities assumed constitute a business, in which case the acquisition requires accounting as a business combination. Management applies judgement in determining whether the acquiree is capable of being conducted and managed for the purpose of providing a return, considering the inputs of the acquiree and processes applied to those inputs that have the ability to create outputs.

Hudbay applies the acquisition method of accounting to business combinations, whereby the goodwill is measured at the acquisition date as the fair value of the consideration transferred including the recognized amount of any non-controlling interest in the acquiree. When the excess is negative, a bargain purchase gain is recognized immediately in the consolidated income statements. The assessment of fair values on acquisition includes those mineral reserves and resources that are able to be reliably measured. In determining these fair values, management must also apply judgement in areas including future cash flows, metal prices, exchange rates and appropriate discount rates. Changes in such estimates and assumptions could result in significant differences in the amount of goodwill recognized.

The consideration transferred is the aggregate of the fair values, at the date of the acquisition, of the sum of the assets transferred, the liabilities incurred or assumed, and the equity instruments issued by the acquirer in exchange for control of the acquiree. Acquisition-related costs are recognized in the consolidated income statements as incurred, unless they relate to issuance of debt or equity securities.

Where applicable, the consideration transferred includes any asset or liability resulting from a contingent consideration arrangement and measured at its acquisition date fair value. Subsequent changes in such fair values are adjusted against the cost of acquisition where they qualify as measurement period adjustments. All other subsequent changes in the fair value of contingent consideration classified as an asset or liability are accounted for in accordance with relevant IFRS. Changes in the fair value of contingent consideration classified as equity are not recognized.

Where a business combination is achieved in stages, the Company's previously held interest in the acquired entity are remeasured to fair value at the acquisition date, which is the date Hudbay attains control, and any resulting gain or loss is recognized in the consolidated income statements. Amounts previously recognized in other comprehensive income ("OCI") related to interest in the acquiree prior to the acquisition date are reclassified to the consolidated income statements, where such treatment would be appropriate if that interest were disposed of.

After initial recognition, goodwill is measured at cost less any accumulated impairment losses. For the purpose of impairment testing, goodwill acquired in a business combination is, from the acquisition date, allocated to each of Hudbay's CGUs that are expected to benefit from the synergies of the combination, irrespective of whether other assets or liabilities of the acquiree are assigned to those units. Goodwill is allocated to the lowest level at which it is monitored for internal management purposes and is not larger than an operating segment before aggregation. Where goodwill forms part of a CGU and part of the operation within that unit is disposed of, the goodwill associated with the disposed operation is included in the determination of any gain or loss on disposal.

12

HUDBAY MINERALS INC.
Notes to Audited Consolidated Financial Statements
(in thousands of US dollars, except where otherwise noted)
Years ended December 31, 2023 and 2022

Goodwill is not amortized and is tested for impairment annually and whenever there is an indication of impairment. If any such indication exists, the recoverable amount of the CGU is estimated in order to determine the extent of the impairment, if any. The recoverable amount is determined as the higher of fair value less direct costs to sell and the CGU's value in use. When the recoverable amount of the CGU is less than the carrying amount of that CGU, the impairment loss is allocated to reduce the carrying amount of any goodwill allocated to that CGU first, and then to the other assets of that CGU on a pro-rata basis of the carrying amount of each asset in the CGU. An impairment loss in respect of goodwill is not reversed.

Fair value for mineral interest and related goodwill is generally determined as the present value of the estimated future cash flows expected to arise from the continued use of the asset, including any expansion prospects, and its eventual disposal, using assumptions that an independent market participant may take into account.

Value in use is determined as the present value of the estimated future cash flows expected to arise from the continued use of the asset in its present form and its eventual disposal. Value in use is determined by applying assumptions specific to Hudbay's continued use and cannot take into account future development.

The weighted average cost of capital of Hudbay or comparable market participants is used as a starting point for determining the discount rates, with appropriate adjustments for the risk profile of the countries in which the individual CGUs operate and the specific risks related to the development of the project.

Where the asset does not generate cash flows that are independent of other assets, Hudbay estimates the recoverable amount of the CGU to which the asset belongs. If the carrying amount of an asset or CGU exceeds its recoverable amount, the carrying amount of the asset or CGU is reduced to its recoverable amount. An impairment loss is recognized as an expense in the consolidated income statements.

(b) Translation of foreign currencies:

Management determines the functional currency of each Hudbay entity as the currency of the primary economic environment in which the entity operates.

Foreign currency transactions

Transactions in foreign currencies are translated to the respective functional currencies of Hudbay's entities at exchange rates in effect at the transaction dates.

At the end of each reporting period, monetary assets and liabilities denominated in foreign currencies are translated to the functional currency using the closing exchange rate. Non-monetary assets and liabilities measured at fair value are translated using the exchange rates at the date when fair value was determined. Non-monetary assets and liabilities measured at historical cost in a foreign currency are translated using exchange rates that were in effect at the transaction dates. The same translations are applied when an entity prepares its financial statements from books and records maintained in a currency other than its functional currency, except revenue and expenses may be translated at monthly average exchange rates that approximate those in effect at the transaction dates.

Foreign currency gains and losses arising on period-end revaluations are recognized in the consolidated income statements, except for a financial liability designated as a hedge of a net investment in a foreign operation, or qualifying cash flow hedges, which are recognized in OCI.

13

HUDBAY MINERALS INC.
Notes to Audited Consolidated Financial Statements
(in thousands of US dollars, except where otherwise noted)
Years ended December 31, 2023 and 2022

Foreign operations

For the purpose of the consolidated financial statements, assets and liabilities of Hudbay's entities that have functional currencies other than the US dollar are translated to US dollars at the reporting date using the closing exchange rate. Revenue and expenses are translated at monthly average exchange rates that approximate those in effect at the transaction dates. Differences arising from these foreign currency translations are recognized in OCI and presented within equity in the foreign currency translation reserve. When a foreign operation is disposed, the relevant exchange differences accumulated in the foreign currency translation reserve are transferred to the consolidated income statements as part of the profit or loss on disposal. On the partial disposal of a subsidiary that includes a foreign operation, the relevant proportion of such amount is reattributed to non-controlling interest. On disposal of a partial investment in an associate or joint venture that includes a foreign operation while retaining significant influence or joint control, the relevant proportion is reclassified to profit or loss.

Net investment in a foreign operation

Foreign currency gains and losses arising on translation of a monetary item receivable from or payable to a foreign operation for which settlement is neither planned nor likely to occur in the foreseeable future are considered to form part of a net investment in the foreign operation. Such gains and losses are recognized in OCI and presented within equity in the foreign currency translation reserve.

(c) Revenue recognition:

Revenue from the sale of goods is measured at the fair value of the consideration received or receivable, net of treatment and refining charges. Revenue from the sale of by-products is included within revenue.

Revenue is recognized when control of the goods sold has been transferred to the customer. Control is deemed to have passed to the customer when significant risk and reward of the product has passed to the customer, Hudbay has a present right to payment, and physical possession of the product has been transferred to the customer. Sales of doré are recorded when a trade confirmation is duly signed and executed between Hudbay and the end purchaser. Sale of concentrate and finished zinc frequently occur under the following terms, and management has assessed these terms in order to determine timing of transfer of control and revenue recognition as generally outlined in the following table.

Incoterms used by Hudbay	Revenue recognized when goods:
Cost, Insurance and Freight (CIF)	Are loaded on board the vessel
Free on Board (FOB)	Are loaded on board the vessel
Delivered at place (DAP)	Arrive at the named place of destination
Delivered at terminal (DAT)	Arrive at the named place of destination
Free Carrier (FCA)	Arrive at the named place of delivery

Sales of copper and zinc concentrate and certain other products are provisionally priced. For these contracts, sales prices are subject to final adjustment at the end of a future period after shipment, based on quoted market prices during the quotational period specified in the contract. Revenue is recognized when the above criteria are achieved, using weight and assay results and forward market prices to estimate the fair value of the total consideration receivable. Therefore, revenue is initially recorded based on an initial provisional invoice. Subsequently, at each reporting date, until the provisionally priced sale is finalized, sales receivables are marked to market, with adjustments (both gains and losses) recorded within revenue separately as "Pricing and volume adjustments" in the notes to the consolidated financial statements and in trade and other receivables on the consolidated balance sheets. As per IFRS 15 Revenue from contracts with customers, variability in price is deemed to be fair value movements on provisionally priced receivables under the scope of IFRS 9 Financial Instruments; variability in quantities is deemed to be variable consideration. The variable consideration from weights and assay changes to quantities has been assessed to be insignificant to warrant precluding revenue being recorded as a result of possible future sales reversals. An annual analysis of the accuracy of our weights and assays is completed, and if the accuracy rate falls below a certain threshold, management then evaluates whether revenue from future sales should be constrained as a result of it being highly probable that there would be a significant revenue reversal in the future.

14

HUDBAY MINERALS INC.
Notes to Audited Consolidated Financial Statements
(in thousands of US dollars, except where otherwise noted)
Years ended December 31, 2023 and 2022

Hudbay only includes in the transaction price an amount which is not highly likely to be subject to significant subsequent revenue reversal. Within sales contracts with customers, separate performance obligations may arise pertaining to the shipping of goods sold. If applicable, costs and the transaction price are allocated on a relative standalone selling basis to any separate performance obligations and are recognized over the period of time the goods sold are shipped, on a gross basis.

Hudbay recognizes deferred revenue in the event it receives payments from customers before a sale meets criteria for revenue recognition.

Precious metals stream contracts, which at inception of the contract are determined that they can be satisfied through the delivery of Hudbay's own production of non-financial items (i.e. gold and silver credits) rather than cash or other financial assets, are accounted for as deferred revenue. If settlement with Hudbay's own production of gold and silver is not possible, the stream transaction is recognized as a financial liability since settlement may require a cash payment. This would cause a change to the accounting treatment, resulting in the revaluation of the agreement to the fair value through the consolidated income statements on a recurring basis.

Deferred revenue associated with precious metals stream contracts are subject to variable consideration and contain a significant financing component since funds were received in advance of the delivery of concentrate. When a significant financing component is recognized, finance expense will be higher and revenues will be higher as the larger deferred revenue balance is amortized to revenues. A market-based discount rate is utilized at the inception of each of the respective stream agreements to determine a discount rate for computing the interest charges for the significant financing component of the deferred revenue balance. As product is delivered, the deferred revenue amount including accreted interest will be drawn down. The draw down rate requires the use of proven and probable reserves and certain resources in the calculation that are beyond proven and probable reserves which management is reasonably confident will be transferable to reserves. Key estimates used in determining the significant financing component include the discount rate and the reserve and resources assumed for conversion.

(d) Cost of sales:

Cost of sales consists of those costs previously included in the measurement of inventory sold during the period, as well as certain costs not included in the measurement of inventory, such as the cost of warehousing and distribution to customers, provisional pricing adjustments related to purchased concentrates, profit sharing, royalty payments, share-based compensation expense and other indirect expenses related to producing operations.

Cost of sales also include non-cash net realizable value adjustments to inventory, one-time adjustments related to overheads incurred when not operating at normal capacity and one-time labour charges related to facilitating the production of inventories for past service pension costs, curtailment gains and severance.

(e) Cash and cash equivalents:

Cash and cash equivalents include cash, demand deposits and short-term, highly liquid investments that are readily convertible to known amounts of cash and are subject to an insignificant risk of changes in value. Cash equivalents have maturities of three months or less at the date of acquisition. Interest earned is included in finance income on the consolidated income statements and in investing activities on the consolidated statements of cash flows.

Amounts that are restricted from being used for at least twelve months after the reporting date or are not available for general disbursement, like a debt service account are classified as non-current assets and presented in other financial assets on the consolidated balance sheets. Changes in restricted cash balances are classified as investing or financing activities on the consolidated statements of cash flows.

15

HUDBAY MINERALS INC.
Notes to Audited Consolidated Financial Statements
(in thousands of US dollars, except where otherwise noted)
Years ended December 31, 2023 and 2022

(f) Inventories:

Inventories consist of stockpiles, finished goods inventory (concentrates and metals), materials and supplies. Concentrates, doré, metals and all other saleable products are valued at the lower of cost and estimated net realizable value. Net realizable value represents the estimated selling price for inventories less all estimated direct and indirect costs of completion and costs necessary to make the sale. Where the net realizable value is less than cost, the difference is charged to the consolidated income statements as an impairment charge in cost of sales. Costs associated with stripping activities in an open pit mine are capitalized to inventory and recorded through cost of sales unless the stripping activity can be shown to improve access to further quantities of ore that will be mined in future periods, in which case, the stripping costs are capitalized to property, plant and equipment.

Cost of production of concentrate inventory is determined on a weighted average cost basis and the cost of production of finished metal inventory is determined using the first in first out basis. The cost of production includes direct costs associated with conversion of production inventory based on normal production capacity: material, labour, contractor expenses, purchased concentrates, and an attributable portion of production overheads and depreciation of all property, plant and equipment involved with the mining and production process. Hudbay measures in-process inventories based on assays of material received at metallurgical plants and estimates of recoveries in the production processes. Due to significant uncertainty associated with volume and metal content, immaterial costs are not allocated to routine operating levels of stockpiled ore. Estimates and judgements are required to assess the nature of any significant changes to levels of ore stockpiles and determining whether allocation of costs is required.

Supplies are valued at the lower of average cost and net realizable value.

(g) Exploration and evaluation expenditures:

Exploration and evaluation activity begins when Hudbay obtains legal rights to explore a specific area and involves the search for mineral reserves, the determination of technical feasibility, and the assessment of commercial viability of an identified resource. Expenditures incurred in the exploration and evaluation phase include the cost of acquiring interest in mineral rights, licenses and properties and the costs of Hudbay's exploration activities, such as researching and analyzing existing exploration data, gathering data through geological studies, exploratory drilling, trenching, sampling, and certain feasibility studies.

Hudbay expenses the cost of its exploration and evaluation activities and capitalizes the cost of acquiring interest in mineral rights, licenses and properties in business combinations, asset acquisitions or option agreements. Amounts capitalized are recognized as exploration and evaluation assets and presented in property, plant and equipment. Exploration and evaluation assets acquired as a result of an asset acquisition or option agreement are initially recognized at cost, and those acquired in a business combination are recognized at fair value on the acquisition date. They are subsequently carried at cost less accumulated impairment. No depreciation is charged during the exploration and evaluation phase. Hudbay expenses the cost of subsequent exploration and evaluation activity related to acquired exploration and evaluation assets. Cash flows associated with acquiring exploration and evaluation assets are classified as investing activities in the consolidated statements of cash flows; those associated with exploration and evaluation expenses are classified as operating activities.

Judgement is required in determining whether the respective costs are eligible for capitalization where applicable, and whether they are likely to be recoverable, which may be based on assumptions about future events and circumstances. Estimates and assumptions made may change if new information becomes available.

Hudbay monitors exploration and evaluation assets for factors that may indicate their carrying amounts are not recoverable. If such indicators are identified, the Company tests the exploration and evaluation assets or their CGUs, as applicable, for impairment. Hudbay also tests for impairment when assets reach the end of the exploration and evaluation phase.

Exploration and evaluation assets are transferred to capital works in progress within property, plant and equipment once the Company determines that probable future economic benefits will be generated as a result of the expenditures. Hudbay's determination of probable future economic benefit is based on management's evaluation of the technical feasibility and commercial viability of the geological properties of a given ore body based on information obtained through evaluation activities, including metallurgical testing, resource and reserve estimates and the economic assessment of whether the ore body can be mined economically. Tools that may be used to determine this include a preliminary feasibility study, confidence in converting resources into reserves and the probability that the property could be developed into a mine site. At that time, the property is considered to enter the development phase, and subsequent evaluation costs are capitalized.

16

HUDBAY MINERALS INC.
Notes to Audited Consolidated Financial Statements
(in thousands of US dollars, except where otherwise noted)
Years ended December 31, 2023 and 2022

(h) Property, plant and equipment:

Hudbay measures items of property, plant and equipment at cost less accumulated depreciation and any accumulated impairment losses.

The initial cost of an item of property, plant and equipment includes its purchase price or construction costs, including import duties and non-refundable purchase taxes, any costs directly attributable to bringing the asset into operation, and for qualifying assets, borrowing costs. The initial cost of property, plant and equipment also includes the initial estimate of the cost of dismantling and removing the item and restoring the site on which it is located, the obligation which Hudbay incurs either when the item is acquired or as a consequence of having used the item during a particular period for purposes other than to produce inventories during that period.

Capitalization of costs ceases once an asset is in the location and condition necessary for it to be capable of operating in the manner intended by management. At this time, depreciation commences. For a new mine, this occurs upon commencement of commercial production. Any revenues less cost to produce, earned prior to commencement of commercial production, are included in the consolidated income statements.

Carrying amounts of property, plant and equipment, including right-of-use ("ROU") assets, are depreciated to their estimated residual value over the estimated useful lives of the assets or the estimated life of the related mine or plant, if shorter. Where components of an asset have different useful lives, depreciation is calculated on each separate component. Components may be physical or non-physical, including the cost of regular major inspections and overhauls required in order to continue operating an item of property, plant and equipment.

Certain items of property, plant and equipment are depreciated on a unit-of-production basis. The unit-of-production method is based on proven and probable tonnes of ore reserves. There are numerous uncertainties inherent in estimating ore reserves, and assumptions that were valid at the reporting date may change when new information becomes available. The actual volume of ore extracted and any changes in these assumptions could affect prospective depreciation rates and carrying values.

The carrying amount of an item of property, plant and equipment is derecognized on disposal or when no future economic benefits are expected from its use or disposal. Upon derecognition of an item of property, plant and equipment, the difference between its carrying value and net sales proceeds, if any, is presented as a gain or loss in other operating income or expense in the consolidated income statements.

i.Capital works in progress:

Capital works in progress consist of items of property, plant and equipment in the course of construction or mineral properties in the course of development, including those transferred upon completion of the exploration and evaluation phase. On completion of construction or development, costs are transferred to plant and equipment and/or mining properties as appropriate. Capital works in progress are not depreciated.

17

HUDBAY MINERALS INC.
Notes to Audited Consolidated Financial Statements
(in thousands of US dollars, except where otherwise noted)
Years ended December 31, 2023 and 2022

ii.Mining properties:

Mining properties consist of costs transferred from capital works in progress when a mining property reaches commercial production, costs of subsequent mine and exploration development, and acquired mining properties in the production stage.

Mining properties include costs directly attributable to bringing a mineral asset into the state where it is capable of operating in the manner intended by management and includes such costs as the cost of shafts, ramps, track haulage drifts, ancillary drifts, pumps, electrical substations, refuge stations, ventilation raises, permanent manways, and ore and waste pass raises. The determination of development costs to be capitalized during the production stage of a mine operation requires the use of judgements and estimates such as estimates of tonnes of waste to be removed over the life of the mining area and economically recoverable reserves extracted as a result.

A mining property is considered to be capable of operating in a manner intended by management when it commences commercial production based on pre-established criteria. Upon commencement of commercial production, a mining property is depreciated on a unit-of-production method. Unit-of-production depreciation rates are determined based on the related proven and probable mineral reserves and associated future development costs.

Subsequent mine development costs are capitalized to the extent they are incurred in order to access reserves mineable over more than one year. Ongoing maintenance and development expenditures are expensed as incurred and included in cost of sales in profit or loss. These include ore stope access drifts, footwall and hangingwall drifts in stopes, drawpoints, drill drifts, sublevels, slots, drill raises, stope manway access raises and definition diamond drilling.

iii.Plant and equipment:

Plant and equipment consists of buildings and fixtures, surface and underground fixed and mobile equipment and assets under lease.

Plant and equipment are depreciated on either unit-of-production or straight-line basis based on factors including the production life of assets and mineable reserves. In general, mining assets are depreciated using a unit-of-production method; equipment is depreciated using the straight-line method, based on the shorter of its useful life and that of the related mine or facility; and plants are depreciated using the straight-line method, with useful lives limited by those of related mining assets.

iv.Right-of-use lease assets:

At inception of a contract, Hudbay assesses whether a contract is, or contains, a lease. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. The Company assesses the following criteria in the determination of whether a contract conveys the right to control the use of an identified asset:

•The contract involves the use of an identified asset - this may be specified explicitly or implicitly, and should be physically distinct or represent substantially all of the capacity of a physically distinct asset. If the supplier has substantive substitution rights, then the asset is not identified;

•Hudbay has the right to obtain substantially all of the economic benefits from use of the asset throughout the period of use; and

•Hudbay has the right to direct the use of the asset by means of decision making rights that are most relevant to changing how and for what purpose the asset is used. In the case where decisions about the asset's purpose is predetermined, Hudbay is deemed to have the right to direct the use of the asset if either:

▪Hudbay has the right to operate the asset; or,

▪Hudbay designed the asset in a way that predetermines how and for what purpose it will be used.

18

HUDBAY MINERALS INC.
Notes to Audited Consolidated Financial Statements
(in thousands of US dollars, except where otherwise noted)
Years ended December 31, 2023 and 2022

The Company recognizes a ROU asset and lease liability at the lease commencement date. The initial measurement of the ROU asset is on a present value basis. This is based on the calculated lease liability plus any initial direct costs incurred, an estimate of removal or restoration costs, and any payments made prior to commencement of the lease less any lease incentives received.

The right of use asset is subsequently depreciated using the straight-line method from the commencement date to the earlier of the end of the useful life of the right-of-use asset or the end of the lease term. The estimated useful lives of the right-of-use assets are determined on the same basis as those of property and equipment. In addition, the right-of-use asset is periodically reduced by impairment losses, if any, and adjusted for certain remeasurements of the lease liability.

The lease liability is measured at the present value of the lease payments that are yet to be paid at the commencement date, discounted using the interest rate implicit in the lease or, if that rate cannot be easily determined, Hudbay's incremental borrowing rate. Generally, the Company uses its incremental borrowing rate as the discount rate for applicable leases.

Lease payments included in the measurement of the lease liability comprise fixed payments including in substance fixed payments and variable payments that depend on an index or rate, amounts expected to be payable under a residual value guarantee and the additional costs Hudbay reasonably expects to incur due to purchase options, extension options and termination options reasonably expected to be exercised.

The lease liability is measured at amortized cost using the effective interest method. It is remeasured when there is a change in the expected future cash flows of a leasing contract either due to a change in index or rate, or due to a change in terms of the contract. When the lease liability is remeasured in this way, a corresponding adjustment is made to the carrying amount of the right-of-use asset, or is recorded in profit or loss if the carrying amount of the right-of-use asset is zero.

Hudbay has elected not to separate non-lease components and account for the lease and non-lease components as a single lease component for lease contracts of all asset classes.

The Company has elected not to recognize ROU assets and lease liabilities for short-term leases of machinery that have a lease term of 12 months or less and leases of low-value assets. Hudbay recognizes the lease payments associated with these leases as an expense on a straight-line basis over the lease term.

Hudbay does not enter into transactions where the Company acts as a lessor.

The incremental borrowing rate used for new ROU leases is a key management judgement.

v.Depreciation rates of major categories of assets:

•Capital works in progress- not depreciated

•Mining properties- unit-of-production

•Mining asset- unit-of-production

•Plant and Equipment                     

◦Equipment- straight-line over 1 to 20 years

◦Other plant assets- straight-line over 1 to 20 years/unit-of-production

•ROU Assets- straight-line over 1 to 20 years

Hudbay reviews its depreciation methods, remaining useful lives and residual values at least annually and accounts for changes in estimates prospectively.

vi.Commercial production:

Commercial production is the level of activities intended by management for a mine, or a mine and mill complex, to be capable of operating in the manner intended by management. Hudbay considers a range of factors when determining the level of activity that represents commercial production for a particular project, including a predetermined percentage of design capacity for the mine and mill; achievement of continuous production, ramp-ups, or other output; or specific factors such as recoveries, grades, or inventory build-ups. In a phased mining approach, management may consider achievement of specific milestones at each phase of completion. In a non-phased mining approach, management considers average actual metrics that are at least 60% of average design capacity or plan over a continuous period. Management assesses the operation's ability to sustain production over a period of approximately one to three months, depending on the complexity related to the stability of continuous operation. Commercial production is considered to have commenced, and depreciation expense is recognized, at the beginning of the month after criteria have been met.

19

HUDBAY MINERALS INC.
Notes to Audited Consolidated Financial Statements
(in thousands of US dollars, except where otherwise noted)
Years ended December 31, 2023 and 2022

vii.Capitalized borrowing costs:

The Company capitalizes borrowing costs that are directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily take a substantial period of time, generally one year or more, to get ready for their intended use or sale. Capitalization of borrowing costs ceases once the qualifying assets commence commercial production or are otherwise ready for their intended use or sale.

Where funds are borrowed specifically to finance a project, the amount capitalized represents the actual borrowing costs incurred. Where the funds used to finance a project form part of general borrowings, the amount capitalized is calculated using a weighted average of interest rates applicable to relevant general borrowings of Hudbay during the period, to a maximum of actual borrowing costs incurred. Investment income earned by temporarily investing specific borrowings pending their expenditure on qualifying assets is deducted from the borrowing costs eligible for capitalization. Capitalization of interest is suspended during extended periods in which active development is interrupted.

All other borrowing costs are recognized in the consolidated income statements in the period in which they are incurred.

viii.Capitalized stripping costs:

Costs associated with stripping activities in an open pit mine are capitalized to inventory and recorded through cost of sales unless the stripping activity can be shown to improve access to further quantities of ore that will be mined in future periods, in which case, the stripping costs are capitalized to property, plant and equipment. Capitalized stripping costs are included in "mining properties" within property, plant and equipment.

Capitalized stripping costs are depreciated using a units-of-production method over the expected reserves within a given phase of mine development.

(i)Impairment of non-financial assets:

At the end of each reporting period, Hudbay reviews the carrying amounts of property, plant and equipment, exploration and evaluation assets and intangible assets - computer software to determine whether there is any indication of impairment. If any such indication exists, the Company estimates the recoverable amount of the asset in order to determine the extent of the impairment loss, if any. Hudbay generally assesses impairment at the level of CGUs, which are the smallest identifiable groups of assets that generate cash inflows that are largely independent of cash inflows from other assets.

Hudbay's CGUs consist of Manitoba, British Columbia, Peru, Arizona and greenfield exploration assets.

The Company allocates near mine exploration and evaluation assets to CGUs based on their operating segment, geographic location and management's intended use for the property. Near mine exploration and evaluation assets are allocated to CGUs separate from those containing producing or development-phase assets, except where such exploration and evaluation assets have the potential to significantly affect the future production of producing or development-phase assets.

20

HUDBAY MINERALS INC.
Notes to Audited Consolidated Financial Statements
(in thousands of US dollars, except where otherwise noted)
Years ended December 31, 2023 and 2022

Goodwill is tested for impairment annually and whenever there is an indication that the asset may be impaired. The Company performs goodwill impairment tests on an annual basis as at December 31 each year. If the carrying value of the CGU or group of CGUs to which goodwill is assigned exceeds its recoverable amount, an impairment loss is recognized. Goodwill impairment losses are recorded in the consolidated income statements and they are not subsequently reversed.

Where an indicator of impairment exists, a formal estimate of the recoverable amount of the asset or CGU is made. The recoverable amount is the higher of the fair value less costs of disposal and value in use:

-Fair value less costs of disposal is the amount obtainable from the sale of the asset or CGU in an arm's length transaction between knowledgeable, willing parties, less costs of disposal. Fair value for mineral assets is often determined as the present value of the estimated future cash flows expected to arise from the continued use of the asset, including any expansion prospects, and its eventual disposal, using assumptions that an independent market participant may take into account. These cash flows are discounted by an appropriate discount rate that reflects current market assessments of the time value of money and the risks specific to the asset to arrive at a net present value of the asset.

-Value in use is determined as the present value of the estimated future cash flows expected to arise from the continued use of the asset or CGU in its present form and its eventual disposal, discounted using a pre-tax rate that reflects current market assessments of the time value of money and risks specific to the asset for which estimates of future cash flows have not been adjusted. Value in use calculations apply assumptions specific to the Company's continued use and cannot take into account future development. These assumptions are different to those used in calculating fair value, and consequently the value in use calculation is likely to give a different result to a fair value calculation.

Hudbay estimates future cash flows based on estimated future recoverable mine production, expected sales prices (considering current and historical commodity prices, price trends and related factors), production levels and cash costs of production, all based on detailed engineering LOM plans. Future recoverable mine production is determined from reserves and resources after taking into account estimated dilution and recoveries during mining, and estimated losses during ore processing and treatment. Estimates of recoverable production from measured, indicated and inferred mineral resources not included in the LOM plan are assessed for economic recoverability and may also be included in the valuation of fair value less costs of disposal. Gains from the expected disposal of assets are not included in estimated future cash flows. Assumptions underlying future cash flow estimates are subject to risks and uncertainties. Changes in estimates may affect the expected recoverability of the Company's investments in mining properties.

If the carrying amount of an asset or CGU exceeds its recoverable amount, the carrying amount is reduced to the recoverable amount, and an impairment loss is recognized in the consolidated income statements in the expense category consistent with the function of the impaired asset or CGU. Hudbay presents impairment losses on the consolidated income statements as part of results from operating activities. Impairment losses recognized in respect of a CGU are allocated first to reduce the carrying amount of any goodwill allocated to the CGU and then to reduce the carrying amounts of other assets in the CGU on a pro-rata basis for depreciable assets.

The Company assesses previously recognized impairment losses each reporting date for any indications that the losses have decreased or no longer exist. Such an impairment loss is reversed, in full or in part, if there have been significant changes with a positive effect on the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the asset's carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortization, if no impairment loss had been recognized for the asset in prior years. Such reversals of impairment losses are recognized in the consolidated income statements. An impairment loss recognized in relation to goodwill is not reversed for subsequent increases in the recoverable amount.

21

HUDBAY MINERALS INC.
Notes to Audited Consolidated Financial Statements
(in thousands of US dollars, except where otherwise noted)
Years ended December 31, 2023 and 2022

(j)Pension and other employee benefits:

Hudbay has non-contributory and contributory defined benefit programs for the majority of its Canadian employees. The defined benefit pension benefits are based on years of service and final average salary for the salaried plans and are based on a flat dollar amount combined with years of service for the hourly plans. The Company provides non pension health and other post-employment benefits to certain active employees and pensioners (post-employment benefits) and also provides disability income, health benefits and other post-employment benefits to hourly and salaried disabled employees (other long-term employee benefits).

Hudbay accrues its obligations under the defined benefit plans as the employees render the services necessary to earn the pension and post-employment benefits. The actuarial determination of the accrued benefit obligations for pensions and post-employment benefits uses the projected benefit method pro-rated on service (which incorporates management's best estimate of future salary levels, other cost escalation, retirement ages of employees and other actuarial factors). For other long-term employee benefits, the Company recognizes the full cost of the benefit obligation at the time the employee becomes disabled. Actuarial advice is provided by external consultants.

For the funded defined benefit plans, Hudbay recognizes the deficit or excess of the fair value of plan assets over the present value of the defined benefit obligation as a liability or an asset in the consolidated balance sheets. However, the Company recognizes an excess of assets only to the extent that it represents a future economic benefit which is available in the form of refunds from the plan or reductions in future contributions to the plan. When these criteria are not met, it is not recognized but is disclosed in the notes to the consolidated financial statements. Impacts of minimum funding requirements in relation to past service are considered when determining the balance sheet position.

Defined benefit costs are categorized as follows:

-Service costs (including current service cost, past service cost, as well as gains and losses on curtailments and settlements and administration costs);

-Net interest expense or income; and,

-Remeasurement.

The first two components of defined benefit costs shown above are recognized in the consolidated income statements. Past service cost as well as curtailment gains are recognized in the consolidated income statements in the period of a plan amendment. Net interest is calculated by applying the discount rate at the beginning of the period to the net defined benefit liability or asset.

Purchases and sales of plan assets are recorded on settlement date.

Remeasurement, comprising actuarial gains and losses, the effect of changes to the asset ceiling (if applicable) and the return on plan assets (excluding interest), is reflected immediately in the consolidated balance sheets with a gain or loss recognized in OCI in the period in which they occur. Remeasurement recognized in OCI is reflected in the remeasurement reserve and will not be reclassified to the consolidated income statements. For the other long-term employee benefits plan, remeasurements are recognized immediately in the consolidated income statements.

Actuarial determinations used in estimating obligations relating to these plans incorporate assumptions using management's best estimates of factors including plan performance, salary escalation, retirement dates of employees and healthcare 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. All assumptions are reviewed at each reporting date. In determining the appropriate discount rate, management considers the interest rates on corporate bonds in the respective currency with at least an 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. Future salary increases and pension increases are based on expected future inflation rates for the respective country.

22

HUDBAY MINERALS INC.
Notes to Audited Consolidated Financial Statements
(in thousands of US dollars, except where otherwise noted)
Years ended December 31, 2023 and 2022

Hudbay also has defined contribution plans providing pension benefits for certain of its salaried employees and certain of its US employees utilizing 401K plans. The Company recognizes the cost of the defined contribution plans based on the contributions required to be made during each period.

Termination benefits are recognized as an expense when Hudbay is committed demonstrably, without realistic possibility of withdrawal, to a formal detailed plan to either terminate employment before the normal retirement date, or to provide termination benefits as a result of an offer made to encourage voluntary redundancy. Termination benefits for voluntary redundancies are recognized as an expense if the Company has made an offer of voluntary redundancy, it is probable that the offer will be accepted, and the number of acceptances can be estimated reliably. Benefits that are payable more than one year after the reporting period are discounted to their present value.

(k)Environmental and other provisions:

Provisions are recognized when Hudbay has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources will be required to settle the obligation, and a reliable estimate can be made. The provisions are recorded as management's best estimate of the amount required to settle an obligation.

Provisions are stated at their present value, which is determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability.

Decommissioning, restoration and similar liabilities

Provisions are recorded for legal and constructive obligations associated with the future costs of rehabilitating the Company's current and previous operating and development sites. Such costs are associated with decommissioning and restoration activities such as dismantling and removing structures, rehabilitating mines and tailings, and reclamation and re-vegetation of affected areas.

The present value of estimated costs is recorded in the period in which the asset is installed or the environment is disturbed and a reasonable estimate of future costs and discount rates can be made. The provision is discounted using a risk-free rate, and estimates of future cash flows are adjusted to reflect risk.

Subsequent to the initial measurement, the obligation is adjusted to reflect the passage of time and changes in the estimated future cash flows underlying the obligation. The increase in the provision due to the passage of time is recognized as finance expense, whereas increases and decreases due to changes in the estimated future cash flows, which are not the result of current inventory production, are capitalized and depreciated over the life of the related operating asset. Actual costs incurred upon settlement of the site restoration obligation are charged against the provision to the extent the provision was established for those costs. Upon settlement of the liability, a gain or loss may be recorded. For closed sites, changes to estimated costs are recognized immediately in the consolidated income statements within other expenses.

Hudbay assesses the reasonableness of its estimates and assumptions each year and when conditions change, the estimates are revised accordingly. Judgement is required to determine the scope and timing of future decommissioning and restoration activities, as well as best available estimates and assumptions including discount rates, expected timing of decommissioning and restoration costs, inflationary factors and market risks. Changes in cost estimates, which may arise from changes in technology and pricing of the individual components of the cost may result in offsetting changes to the asset and liability and corresponding changes to the associated depreciation and finance costs. In view of the uncertainties concerning these future obligations, the ultimate timing and cost of reclamation and mine closure may differ materially from these estimates.

If the change in estimate results in a significant increase in the decommissioning liability and therefore an addition to the carrying value of the asset, the Company considers whether this is an indication of impairment of the asset as a whole and, if so, tests for impairment in accordance with IAS 36, Impairment of non-financial assets. If, for mature mines, the revised mine assets net of decommissioning and restoration liabilities exceeds the recoverable value, that portion of the increase is charged directly to expense as an impairment loss, within the gross profit / (loss) line.

23

HUDBAY MINERALS INC.
Notes to Audited Consolidated Financial Statements
(in thousands of US dollars, except where otherwise noted)
Years ended December 31, 2023 and 2022

In view of the uncertainties concerning environmental remediation, the ultimate cost of decommissioning and restoration liabilities could differ materially from the estimated amounts provided. The estimate of the total liability is subject to change based on amendments to laws and regulations and as new information concerning Hudbay's operations becomes available. Future changes, if any, to the estimated total liability as a result of amended requirements, laws, regulations and operating assumptions, as well as discount rates, may be significant and would be recognized prospectively as a change in accounting estimate, when applicable. Environmental laws, regulations and technology are continually evolving in all regions in which the Company operates. Hudbay is not able to determine the impact, if any, of environmental laws, regulations and technology that may be enacted in the future on its results of operations or financial position due to the uncertainty surrounding the ultimate form that such future laws and regulations may take.

Onerous contracts

A contract is considered to be onerous when the unavoidable costs of meeting obligations under the contract exceed the economic benefits expected to be received under it. Hudbay records a provision for any onerous contracts at the lesser of costs to comply with a contract and costs to terminate it.

Restructuring provisions

A provision for restructuring is recognized when management, with appropriate authority within Hudbay, has approved a detailed and formal restructuring plan, and the restructuring has either commenced or has been announced publicly. Future operating costs are not provided for.

(l)Financial instruments:

Non-derivative financial instruments are initially recognized at fair value plus, in the case of a financial asset or financial liability not measured at fair value through profit or loss, directly attributable transaction costs. Measurement in subsequent periods depends on the financial instrument's classification. Hudbay uses trade date accounting for regular way purchases or sales of financial assets. The Company determines the classification of its financial instruments and non-financial derivatives at initial recognition.

Financial assets and liabilities are offset and the net amount presented in the consolidated balance sheets when, and only when, Hudbay has a legal right to offset the amounts and intends either to settle on a net basis or to realize the asset and settle the liability simultaneously.

The classification of financial assets is based on the results of the contractual characteristics test and the business model assessment which will result in the financial asset being classified as either: amortized cost, fair value through profit or loss ("FVTPL") or fair value through other comprehensive income ("FVTOCI").

i.Non-derivative financial instruments - classification:

Financial assets at fair value through profit or loss

Provisionally priced copper and zinc concentrate sales receivables, warrants and investments in securities of junior mining companies are classified as financial assets at fair value through profit or loss and are measured at fair value. The gains or losses related to changes in fair value are reported in the consolidated income statements.

Amortized cost

Cash, certain receivables, other assets related to agreements with communities near the Peru operations, trade and other payables, long-term debt and restricted cash are classified as and measured at amortized cost and are carried at amortized cost using the effective interest rate method, less impairment losses, if any.

24

HUDBAY MINERALS INC.
Notes to Audited Consolidated Financial Statements
(in thousands of US dollars, except where otherwise noted)
Years ended December 31, 2023 and 2022

Non-derivative financial liabilities

Accounts payable and senior unsecured notes are initially recognized at fair value and subsequently accounted for at amortized cost, using the effective interest method. The amortization of senior unsecured notes issue costs is calculated using the effective interest rate method.

ii.Derivatives:

Derivatives are initially recognized at fair value when Hudbay becomes a party to the derivative contract and are subsequently re-measured to fair value at the end of each reporting period. The resulting gain or loss is recognized in the consolidated income statements immediately unless the derivative is designated and effective as a hedging instrument. Derivatives with positive fair value are recognized as assets; derivatives with negative fair value are recognized as liabilities.

Derivatives contracts that are entered to economically hedge a risk exposure but are not designated as a hedging instrument for hedge accounting purposes, and are physically settled, are initially and subsequently measured at fair value. Subsequent movements in fair value are recognized within the revenue line item in the consolidated income statements.

iii.Embedded derivatives:

Hudbay considers whether a contract contains an embedded derivative when it becomes a party to the contract. Derivatives embedded in other financial liabilities or other non-financial host contracts are treated as separate derivatives when their risks and characteristics are not closely related to those of the host contracts and the host contracts are not measured at FVTPL.

iv.Fair value of financial instruments:

The fair value of a financial instrument is the amount for which an asset could be exchanged, or a liability settled, between knowledgeable, willing parties in an arm's length transaction.

Fair values of financial instruments traded in active markets are determined based on quoted market prices, where available. Bid prices are generally used for assets held or liabilities to be issued; asking prices are generally used for assets to be acquired or liabilities held.

For financial instruments not traded in an active market, fair values are determined based on appropriate valuation techniques. Such techniques may include discounted cash flow analysis, using recent arm's length market transactions, reference to the current fair value of another instrument that is substantially the same, and other valuation models.

The Company applies a hierarchy to classify valuation methods used to measure financial instruments carried at fair value. 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 (unadjusted) in active markets for identical assets or liabilities;

-Level 2: Valuation techniques use significant observable inputs, either directly (i.e. as prices) or indirectly (i.e. derived from prices), 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 (unobservable inputs).

An analysis of fair values of financial instruments is provided in note 30.

25

HUDBAY MINERALS INC.
Notes to Audited Consolidated Financial Statements
(in thousands of US dollars, except where otherwise noted)
Years ended December 31, 2023 and 2022

v.Impairment of financial instruments:

Hudbay recognizes loss allowances for Expected Credit Losses ("ECL") for trade receivables not measured at FVTPL.

Loss allowances for trade receivables are measured at an amount equal to lifetime ECL. ECL is a probability-weighted estimate measured at the present value of all cash shortfalls including the impact of forward-looking information.

Hudbay has established a provision based on the Company's historical credit loss experience, adjusted for forward-looking factors specific to the debtors and the economic environment.

vi.Derecognition of financial instruments:

Hudbay derecognizes financial assets when the contractual rights to the cash flows from the assets expire, or when the Company transfers the rights to receive the contractual cash flows on the financial assets in a transaction in which substantially all the risks and rewards of ownership of the financial asset are transferred. Any interest in the transferred financial assets that is created or retained by Hudbay is recognized as a separate asset or liability.

Hudbay derecognizes financial liabilities when its contractual obligations are discharged, cancelled or expire or when its terms are modified and the cash flows of the modified liability are substantially different.

(m) Taxation:

Current Tax

Current income tax assets and liabilities for the current and prior periods are measured at the amount expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted by the balance sheet date.

Hudbay is subject to income taxes in numerous jurisdictions. Significant judgement is required in determining the worldwide provision for income taxes due to the complexity of legislation. There are many transactions and calculations for which the ultimate tax determination is uncertain during the ordinary course of business. The Company recognizes liabilities for anticipated tax issues based on estimates of whether additional taxes will be due. Where the final tax outcome of these matters is different from the amounts that were initially recorded, such differences will affect the income tax and deferred tax provisions in the period in which such determination is made.

Additionally, future changes in tax laws in the jurisdictions in which Hudbay operates could limit the ability of the Company to obtain tax deductions in future periods.

Deferred Tax

Deferred tax is recognized using the balance sheet method in respect of temporary differences at the balance sheet date between the tax basis of assets and liabilities, and their carrying amounts for financial reporting purposes.

Deferred income tax liabilities are recognized for all taxable temporary differences, except:

-where the deferred income tax liability arises from the initial recognition of goodwill, or the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; and

26

HUDBAY MINERALS INC.
Notes to Audited Consolidated Financial Statements
(in thousands of US dollars, except where otherwise noted)
Years ended December 31, 2023 and 2022

-in respect of taxable temporary differences associated with investments in subsidiaries, associates and interest in joint ventures, where the timing of the reversal of the temporary differences can be controlled and it is probable that the temporary differences will not reverse in the foreseeable future.

Deferred income tax assets are recognized for all deductible temporary differences, carry-forward of unused tax assets and unused tax losses, to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, and the carry-forward of unused tax assets and unused tax losses can be utilized, except:

-where the deferred income tax asset relating to the deductible temporary difference arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; and

-in respect of deductible temporary differences associated with investments in subsidiaries, associates and interest in joint ventures, deferred tax assets are recognized only to the extent that it is probable that the temporary differences will reverse in the foreseeable future and taxable profit will be available against which the temporary differences can be utilized.

To the extent that it is probable that taxable profit will be available to offset the deductible temporary differences, Hudbay recognizes the deferred tax asset regarding the temporary difference on decommissioning, restoration and similar liabilities and recognizes the corresponding deferred tax liability regarding the temporary difference on the related assets.

The carrying amount of deferred income tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred income tax asset to be utilized. Unrecognized deferred income tax assets are reassessed at each balance sheet date and are recognized to the extent that it has become probable that future taxable profit will be available to allow the deferred tax asset to be recovered. 

Judgement is required in determining whether deferred tax assets are recognized on the consolidated balance sheets. Deferred tax assets, including those arising from unutilized tax losses, require management to assess the likelihood of taxable profit in future periods in order to utilize recognized deferred tax assets. Estimates of future taxable income are based on forecast cash flows from operations and the application of existing tax laws in each jurisdiction. 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.

Deferred tax is measured on an undiscounted basis at the tax rates that are expected to apply in the periods in which the asset is realized or the liability is settled, based on tax rates and tax laws enacted or substantively enacted at the balance sheet date.

Deferred income tax assets and deferred income tax liabilities are offset if a legally enforceable right exists to offset current tax assets against current tax liabilities and the deferred income taxes relate to the same taxable entity and the same taxation authority.

Current and deferred taxes relating to items recognized outside profit or loss (whether in other comprehensive income or directly in equity) are recognized outside profit or loss and not in the consolidated income statements. Mining taxes and royalties are treated and disclosed as current and deferred taxes if they have the characteristics of an income tax.

(n) Share capital and reserves:

Transaction costs

Transaction costs directly attributable to equity transactions are recognized as a deduction from equity.

27

HUDBAY MINERALS INC.
Notes to Audited Consolidated Financial Statements
(in thousands of US dollars, except where otherwise noted)
Years ended December 31, 2023 and 2022

Other capital reserve

The other capital reserve is used for equity-settled share-based compensation and includes amounts for stocks options granted and not exercised.

Foreign currency translation reserve

The foreign currency translation reserve is used to record exchange differences arising from the translation of the financial statements of foreign operations. Exchange differences arising from the translation of the financial statements of foreign operations form part of the net investment in the foreign operation. Translation gains and losses remain in the reserve until disposal of all or a portion of the foreign operation.

(o)Flow-through shares

Resource expenditure deductions for income tax purposes related to exploration activities funded by flow-through share arrangements are renounced to investors under Canadian income tax legislation. On issuance, the Corporation separates the flow-through share into i) a flow-through share premium, equal to the difference between the current market price of the Corporation's common shares and the issue price of the flow-through share and ii) share capital. Upon qualifying exploration and/or development expenditures being incurred, the sale of tax deductions is recognized as other income in the income statement and the related liability is reduced. The Company may also be subject to a Part XII.6 tax on flow-through proceeds renounced, in accordance with the Canadian Income Tax Act flow-through regulations. When applicable, the estimated tax payable is accrued until paid.

(p)Share-based compensation:

Hudbay compensates its employees in part through the use of a Deferred Share Unit ("DSU") plan for non-employee members of the Board of Directors, a Restricted Share Unit ("RSU") plan for employees, a Performance Share Unit ("PSU") plan for employees and a stock option plan for employees. These plans are included in provisions on the consolidated balance sheets and further described in note 27. Changes in the fair value of the liabilities are recorded in the consolidated income statements.

Cash-settled transactions, consisting of DSUs, RSUs and PSUs, are initially measured at fair value and recognized as an obligation at the grant date. The liabilities are remeasured to fair value at each reporting date up to and including the settlement date, with changes in fair value recognized in the consolidated income statements. Hudbay values the liabilities based on the change in the Company's share price. Additional DSUs, RSUs and PSUs are credited to reflect dividends paid on Hudbay common shares over the vesting period. The current portion of the liability reflects those grants that have vested or that are expected to vest within twelve months.

DSUs vest on the grant date and are redeemable when a participant is no longer a member of the Board of Directors. Issue and redemption prices of DSUs are based on the average closing price of the Company's common shares for the five trading days prior to issuance or redemption.

RSUs and PSUs are issued under Hudbay's Long Term Equity Plan ("LTEP Plan") and vest on or before the third anniversary of the grant. RSUs and PSUs granted under the LTEP Plan may be settled in the form of the Company's common shares or, at the option of Hudbay, the cash equivalent based on the market price of the common shares as of the vesting date. Hudbay has historically settled RSUs in cash. Except in specified circumstances, RSUs and PSUs terminate when an employee ceases to be employed by the Company. Valuations of RSUs and PSUs reflect estimated forfeitures.

Equity-settled transactions with employees relate to stock options and are measured by reference to the fair value at the earlier of the grant date and the date that the employee unconditionally became entitled to the award. Fair value is determined using a Black-Scholes option pricing model, which relies on estimates of the future risk-free interest rate, future dividend payments, future share price volatility and the expected average life of the options. Hudbay believes this model adequately captures the substantive features of the option awards and is appropriate to calculate their fair values. The fair value determined at the grant date is recognized over the vesting period in accordance with vesting terms and conditions, with a corresponding increase to other capital reserves. The amount recognized as an expense is adjusted to reflect the number of awards for which the related service and non-market vesting conditions are expected to be met.

28

HUDBAY MINERALS INC.
Notes to Audited Consolidated Financial Statements
(in thousands of US dollars, except where otherwise noted)
Years ended December 31, 2023 and 2022

(q) Earnings per share:

The Company presents basic and diluted earnings (loss) per share ("EPS") data for its common shares. Basic EPS is calculated by dividing the profit or loss attributable to common shareholders of the Company by the weighted average number of common shares outstanding during the period. Diluted EPS is determined by adjusting the profit or loss attributable to common shareholders and the weighted average number of common shares outstanding for the effects of all dilutive potential common shares, which previously consisted of stock options granted to employees and warrants.

When calculating earnings per share for periods where the Company has a loss, Hudbay's calculation of diluted earnings per share excludes any incremental shares from the assumed conversion of stock options as they would be anti-dilutive.

(r) Leases:

Leases, under which substantially all the risks and rewards incidental to ownership of the leased item are transferred to Hudbay, are capitalized as assets at the inception of the lease at the lower of fair value or the present value of the minimum lease payments. Lease payments are apportioned between finance charges and the reduction of the liability so as to achieve a constant periodic rate of interest on the remaining balance of the liability. Finance charges are reflected in the consolidated income statements as finance costs.

Non-ROU lease payments are recognized as an expense in the consolidated income statements on a straight-line basis over the lease term.

(s) Segment reporting:

An operating segment is a component of the Company that engages in business activities from which it may earn revenue and incur expenses and for which discrete financial information is available. Hudbay's chief executive officer regularly reviews the operating results of each operating segment to make decisions about resources to be allocated to the segment and assess its performance. In determining operating segments, Hudbay considers location and decision-making authorities. Refer to note 35.

29

HUDBAY MINERALS INC.
Notes to Audited Consolidated Financial Statements
(in thousands of US dollars, except where otherwise noted)
Years ended December 31, 2023 and 2022

4.New standards

New standards and interpretations adopted

(a)Amendment to IAS 1 - Presentation of Financial Statements and IFRS Practice Statement 2 Making Materiality Judgements

The amendments to IAS 1 help companies provide useful accounting policy disclosures. The adoption of the new standard effective January 1, 2023 did not impact the consolidated financial statements of the Company.

(b)Amendment to IAS 12 - International Tax Reform - Pillar Two Model Rules

In May 2023, the IASB issued International Tax Reform-Pillar Two Model Rules, which amended IAS 12, Income Taxes, to introduce a temporary exception to the requirements to recognize and disclose information about deferred tax assets and liabilities related to Pillar Two income taxes, and targeted disclosure requirements for affected entities. The relief is effective immediately upon issuance of the amendments while the targeted disclosure requirements are effective for annual reporting periods beginning on or after January 1, 2023. The Company has applied the exception and is currently assessing the impact of the disclosure requirements on its consolidated financial statements.

Based on the existing revenue thresholds applicable under the Pillar Two Model Rules, the Company is within the scope of the rules as gross revenues exceed 750,000 Euros. As the legislation has not been enacted or substantively enacted in Canada, the Company continues to evaluate the impact of the legislation on its consolidated financing statements.

New standards issued but not yet effective

(c) Amendment to IAS 1 - Presentation of Financial Statements

The amendments to IAS 1 clarify that only covenants with which an entity is required to comply on or before the reporting date affect the classification of a liability as current or non-current. In addition, an entity has to disclose information in the notes that enables users of financial statements to understand the risk that non-current liabilities with covenants could become repayable within twelve months. Classification is unaffected by the expectations that the entity will exercise its right to defer settlement of a liability. Lastly, the amendments clarify that settlement refers to the transfer to the counterparty of cash, equity instruments, other assets. The amendments are effective for annual periods beginning on or after January 1, 2024. Earlier application is permitted. The Company is still assessing the impact of adoption of this amendment on its consolidated financial statements.

5.Acquisition of Copper Mountain Mining Corporation

On June 20, 2023, Hudbay acquired all of the issued and outstanding common shares of Copper Mountain, as part of a court-approved plan of arrangement. At the time, Copper Mountain held 75% of CMBC, the entity that owns 100% of the Copper Mountain mine. MMC owns the remaining 25% interest in CMBC as a non-controlling interest. As described in Note 1 above, on January 1, 2024, Hudbay amalgamated with Copper Mountain and continued as Hudbay Minerals Inc. Following the amalgamation, the Company directly holds a 75% interest in CMBC.

As a result of the acquisition, Hudbay obtained control of Copper Mountain on June 20, 2023.

Management determined that the assets and processes comprised a business and therefore accounted for the transaction as a business combination, using the acquisition method of accounting.

30

HUDBAY MINERALS INC.
Notes to Audited Consolidated Financial Statements
(in thousands of US dollars, except where otherwise noted)
Years ended December 31, 2023 and 2022

Consideration transferred:

The purchase consideration paid by Hudbay was for 100% of the net assets of Copper Mountain and their 100% owned subsidiaries ("100% owned entities") and a 75% ownership in CMBC. The aggregate purchase consideration for the acquired assets, net of the liabilities assumed is as follows:

Equity instruments (84,165,617 common shares of Hudbay)	$	436,687
Cash		3,794
Consideration transferred - June 20, 2023	$	440,481

The fair value of the common shares issued was based on Hudbay's listed share price of C$6.87 at the June 20, 2023 acquisition date. Immediately prior to the acquisition, Copper Mountain settled its outstanding restricted share units and performance share units through the issuance of shares and settled its stock options for replacement Hudbay options that were immediately settled in cash.

Hudbay incurred acquisition related costs of $6,932 during the year ended December 31, 2023, mainly relating to external legal and advisory fees and due diligence costs, which were recorded in other expense in the consolidated income statements. In addition, Hudbay incurred share issuance costs of $188 and presented these as a deduction from share capital.

Identifiable assets acquired and liabilities assumed:

The fair value of the net assets was determined using a combination of market, income and cost methods. The fair value of the non-controlling interest was then computed at a 25% of the equity interest in CMBC.

The following presents the allocation of the purchase price, resulting in recognized fair value amounts of identifiable assets acquired and liabilities assumed as follows: 

Fair value of net assets acquired / (liabilities) assumed		Preliminary			Adjustment			Final
Cash and cash equivalent	$	14,483		$	-		$	14,483
Trade and other receivables		19,110			-			19,110
Inventories		47,875			-			47,875
Prepaid expenses		3,096			-			3,096
Other financial assets		8,495			-			8,495
Property, plant and equipment		434,419			402			434,821
Mineral properties		383,000			(14,000	)		369,000
Inventories - low grade stockpile		6,000			-			6,000
Trade and other payables		(77,111	)		-			(77,111	)
Advances from Hudbay		(3,421	)		-			(3,421	)
Lease liabilities		(44,167	)		9,550			(34,617	)
Other financial liabilities		-			(9,550	)		(9,550	)
Long-term debt		(144,981	)		-			(144,981	)
Environmental and other provisions		(12,702	)		-			(12,702	)
Deferred tax liabilities		(153,208	)		4,962			(148,246	)
Total fair value of net identifiable assets acquired	$	480,888		$	(8,636	)	$	472,252

The fair values allocated to assets acquired and liabilities assumed previously reported as at June 30, 2023 was based on the preliminary estimates at the acquisition date and subject to change for up to one year from the acquisition date. As of  the  date  of  the  audited  annual  consolidated  financial  statements,  the  allocation  of  purchase  price  with respect  to  the  fair  value  increment  of  assets  acquired  and  liabilities  assumed  has  been  updated  to  reflect  new information obtained that existed at the acquisition date. The Company has finalized its full assessment of the fair value of net assets acquired.

31

HUDBAY MINERALS INC.
Notes to Audited Consolidated Financial Statements
(in thousands of US dollars, except where otherwise noted)
Years ended December 31, 2023 and 2022

The fair values of mineral properties, low grade stockpile and other property, plant and equipment have been determined based on an independent valuation, using a combination of market, income and cost methods. In particular, the fair values of the mineral properties and low grade stockpile have been calculated using significant judgements and estimates.

Trade receivables acquired as part of the acquisition have a fair value of $8,764 which is equal to their gross contractual value. Other receivables acquired have a fair value of $10,346 which is equal to their gross contractual value. Trade and other receivables are expected to be collected during the next 12 months.

Hudbay provided advances to Copper Mountain prior to the acquisition date, which have been recorded as a purchaser loan.

Hudbay recognized goodwill as a result of the acquisition as follows:

		Preliminary			Adjustment		Final
Total consideration transferred	$	440,481		$	-	$	440,481
Non-controlling interest		106,976			-		106,976
Less: value of net identifiable assets acquired		(480,888	)		8,636		(472,252	)
Goodwill upon acquisition at June 20, 2023	$	66,569		$	8,636	$	75,205

The goodwill balance arose from the requirement to record deferred income tax liabilities measured at the tax effect of the difference between the fair values of the assets acquired and liabilities assumed and their tax bases. None of the goodwill recognized is expected to be deductible for income tax purposes.

The results of operations have been consolidated with those of the Company from the date of acquisition and included in the British Columbia operating segment. Had the business combination been affected at January 1, 2023, revenue and profit of the combined entity would have been $1,824,713 and $27,406 respectively. The revenue and net profit contributed from the acquisition of Copper Mountain has been $165,438 and $13,376 respectively.

6.Acquisition of Rockcliff Metals Corporation

On September 14, 2023, Hudbay acquired all of the issued and outstanding common shares of Rockcliff, as part of a court-approved plan of arrangement. In doing so, Hudbay obtained control of Rockcliff on September 14, 2023. As described in Note 1 above, on January 1, 2024, Hudbay amalgamated with Rockcliff and continued as Hudbay Minerals Inc. Following the amalgamation, the Company directly holds all of Rockcliff's mineral properties and other assets.

Management determined that substantially all of the fair value of the gross assets acquired is concentrated in the Talbot exploration property and therefore accounted for the transaction as an asset acquisition.

The purchase consideration paid was 2,675,324 Hudbay common shares and 517,460 Hudbay warrants. For asset acquisitions settled with equity, entities are required to record the net assets acquired based on the fair value of the assets received in exchange for the equity issued, unless that fair value cannot be estimated reliably. Hudbay incurred acquisition related costs of $518 during the third quarter of 2023, mainly relating to external legal and advisory fees and due diligence costs, which were capitalized and included as a cost of acquiring the net assets.

32

HUDBAY MINERALS INC.
Notes to Audited Consolidated Financial Statements
(in thousands of US dollars, except where otherwise noted)
Years ended December 31, 2023 and 2022

The fair value of the net assets acquired was determined using a combination of income and cost methods. In particular, the fair values of the exploration property have been calculated using significant judgements and estimates. The following presents the fair value amounts of identifiable assets acquired and liabilities assumed: 

Fair value of net assets acquired / (liabilities) assumed
Cash and cash equivalents	$	270
Accounts receivable and prepaid expenses		98
Property, plant & equipment		33
Exploration property		14,198
Accounts payable and accrued liabilities		(305	)
Advance from Hudbay		(548	)
Total fair value of net identifiable assets acquired	$	13,746

33

HUDBAY MINERALS INC.
Notes to Audited Consolidated Financial Statements
(in thousands of US dollars, except where otherwise noted)
Years ended December 31, 2023 and 2022

7.Revenue and expenses

(a)Revenue

Hudbay's revenue by significant product types:

		Year ended December 31,
		2023			2022
Copper	$	1,065,830		$	838,126
Zinc		76,611			223,400
Gold		463,009			325,133
Silver		35,594			24,959
Molybdenum		79,370			54,531
Other		239			5,374
Revenue from contracts		1,720,653			1,471,523
Non-cash streaming arrangement items 1
Amortization of deferred revenue - gold		39,764			35,994
Amortization of deferred revenue - silver		32,660			36,235
Amortization of deferred revenue - variable consideration adjustments - prior periods		4,885			959
		77,309			73,188
Pricing and volume adjustments 2		5,780			(14,335	)
		1,803,742			1,530,376
Treatment and refining charges		(113,712	)		(68,936	)
	$	1,690,030		$	1,461,440

¹ See note 21.

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

Consideration from the Company's stream agreements is considered variable (note 21). Gold and silver stream revenue can be subject to cumulative adjustments when the amount of precious metals to be delivered under the contract changes. As a result of changes in the Company's mineral reserve and resource estimate in the first quarter of 2023, the amortization rate by which deferred revenue is drawn down into income was adjusted and, as required, a variable consideration adjustment was made for all prior year stream revenues since the stream agreement inception date. This variable consideration adjustment for the year ended December 31, 2023 resulted in an increase of revenue of $4,885 (December 31, 2022 - increase of revenue of $959).

      (b)Depreciation and amortization

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

		Year ended December 31,
		2023		2022
Cost of sales	$	391,657	$	337,615
Selling and administrative expenses		1,411		1,448
	$	393,068	$	339,063

34

HUDBAY MINERALS INC.
Notes to Audited Consolidated Financial Statements
(in thousands of US dollars, except where otherwise noted)
Years ended December 31, 2023 and 2022

      (c)Share-based compensation expenses

Share-based compensation expenses are reflected in the consolidated income statements as follows:

		Cash-settled										Total share- based compensation expense
		RSUs		DSUs			PSUs			Stock options
Year ended December 31, 2023
Cost of sales	$	589	$	-		$	-		$	-	$	589
Selling and administrative		2,076		1,717			621			2,137		6,551
Other expenses		217		-			-			-		217
	$	2,882	$	1,717		$	621		$	2,137	$	7,357
Year ended December 31, 2022
Cost of sales	$	420	$	-		$	-		$	-	$	420
Selling and administrative		1,541		(849	)		(1,011	)	$	1,848		1,529
Other expenses		115		-			-			-		115
	$	2,076	$	(849	)	$	(1,011	)	$	1,848	$	2,064

During the year ended December 31, 2023, the Company granted 801,661 stock options (year ended December 31, 2022 - 602,614). For further details on stock options, see note 27b. 

35

HUDBAY MINERALS INC.
Notes to Audited Consolidated Financial Statements
(in thousands of US dollars, except where otherwise noted)
Years ended December 31, 2023 and 2022

(d)Employee benefits expense

This table presents employee benefit expense recognized in the consolidated income statements,  including amounts transferred from inventory upon sale of goods:

		Year ended December 31,
		2023		2022
Current employee benefits	$	193,534	$	184,100
Profit-sharing plan expense		28,671		22,002
Share-based compensation (notes 7c, 22, 27)
Equity settled stock options		2,137		1,848
Cash-settled restricted share units		2,882		2,076
Cash-settled deferred share units		1,717		(849	)
Cash-settled performance share units		621		(1,011	)
Employee share purchase plan		1,822		1,941
Post-employee pension benefits
Defined benefit plans		774		9,737
Defined contribution plans		701		2,097
Post-employment plan curtailment (note 23, 24)		50		(2,384	)
Post-employment plan attribution changes (note 24)		-		(3,179	)
Other post-retirement employee benefits		12		8,894
Termination benefits		4,588		5,092
	$	237,509	$	230,364

Manitoba has a profit sharing plan required by the collective bargaining agreement whereby 10% of Manitoba's after tax profit (excluding provisions or recoveries for deferred income tax and deferred mining tax) for any given fiscal year will be distributed to all eligible employees in the Flin Flon/Snow Lake operations, with the exception of executive officers and key management personnel.

Peru has a profit sharing plan required by Peruvian law whereby 8% of Peru's taxable income will be distributed to all employees within Peru's operations.

The Company has an employee share purchase plan for executives and other eligible employees where participants may contribute between 1% and 10% of their pre-tax base salary to acquire Hudbay shares. The Company makes a matching contribution of 75% of the participant's contribution.

See note 23 for a description of Hudbay's pension plans and note 24 for Hudbay's other employee benefit plans.

36

HUDBAY MINERALS INC.
Notes to Audited Consolidated Financial Statements
(in thousands of US dollars, except where otherwise noted)
Years ended December 31, 2023 and 2022

      (e)Other expenses

		Year ended December 31,
		2023			2022
Regional costs	$	4,288		$	4,813
Loss (gain) on disposal of PP&E		7,449			(3,312	)
Amortization of community costs (other assets)		6,985			2,720
Copper Mountain related acquisition costs (note 5)		6,932			708
Restructuring		2,909			10,609
Care & maintenance - Manitoba		17,081			9,040
Evaluation costs		774			7,964
Insurance recovery		(4,226	)		(5,698	)
Change in other provisions (non-capital)		-			5,798
Value-added-tax recovery		(3,859	)		-
Other		(25	)		(56	)
	$	38,308		$	32,586

The Flin Flon concentrator and tailings impoundment has been shifted to care and maintenance to provide optionality should another mineral discovery occur in the Flin Flon area. During the year ended December 31, 2023, care & maintenance costs were $17,081 (year ended December 30, 2022 - $9,040).

During 2023, there were costs incurred related to the restructuring of the British Columbia operations of $2,909. During the year ended December 31, 2022, there were costs incurred related to the restructuring of the Manitoba operations in preparation for the closure of 777 mine, zinc plant and Flin Flon mill of $10,609. These costs were related to activities performed in advance of the mine's expected closure in June 2022 along with ongoing restructuring, closure and severance costs.

During 2023, loss on disposition of property, plant and equipment includes the disposition of non-current assets in Peru, Copper Mountain and Manitoba.

During 2022, gains on the disposition of property, plant and equipment and other non-current assets includes the disposition of Mason's Lordsburg property, along with dispositions of non-current assets as a result of the closure of our Flin Flon operations.

During 2023, a gain of $4,226 was recorded to reflect the insurance recovery claim proceeds following a barge at Copper Mountain that sank in March 2023. As of December 31, 2023, all of the proceeds have been received.

During 2022, a gain of $5,698 was recorded to reflect the insurance recovery claim proceeds following a shaft incident at 777 in October 2020. As of December 31, 2022, all of the proceeds have been received.

During 2023, a gain of $3,859 was recorded to reflect the recovery of a value-added tax receivable that had previously been written off in Peru.

37

HUDBAY MINERALS INC.
Notes to Audited Consolidated Financial Statements
(in thousands of US dollars, except where otherwise noted)
Years ended December 31, 2023 and 2022

      (f)Net finance expense

		Year ended December 31,
		2023			2022
Net interest expense on long-term debt
Net interest expense on long-term debt	$	76,202		$	67,663
Accretion on streaming arrangements (note 21)
Additions		26,387			28,718
Variable consideration adjustments - prior periods		(96	)		(940	)
		26,291			27,778
Change in fair value of financial assets and liabilities at fair value through profit or loss
Gold prepayment liability (note 18)		11,223			3,426
Investments		2,830			(2,484	)
		14,053			942
Other net finance costs
Net foreign exchange loss (gain)		5,342			(5,384	)
Accretion on community agreements measured at amortized cost		4,178			3,099
Accretion on environmental provisions		9,948			8,498
Accretion on Wheaton refund liability		487			879
Withholding taxes		6,035			6,092
Loss on disposal of investments		667			3,648
Other finance expense		10,278			7,885
Interest income		(8,146	)		(2,606	)
		28,789			22,111
Net finance expense	$	145,335		$	118,494

Other finance expense relates primarily to standby fees on Hudbay's revolving credit facilities and leases.

      (g)Impairment loss

As a result of the Copper World Complex preliminary economic assessment released in June 2022, which contemplates the mining of the Copper World deposits and the Rosemont deposit in a two-phase mine plan, it was determined that certain capitalized costs and assets associated with the previous stand-alone development plan for the Rosemont deposit are no longer recoverable. As a result, during the second quarter of 2022, the Company recognized a pre-tax impairment loss of $94,956 related to these assets. The impairment loss was determined based on the specific identification of assets that are not expected to be recoverable under the Copper World Complex PEA. The Company presented the impairment losses within the Arizona segment in note 35. The fair value measurements used in the determination of impairment charges are categorized as level 2 based on the degree to which inputs are observable and have a significant effect on the recorded fair value.

8.Cash and cash equivalents

Cash and cash equivalents balances represent demand deposits and deposits with an original maturity date of less than 3 months.

38

HUDBAY MINERALS INC.
Notes to Audited Consolidated Financial Statements
(in thousands of US dollars, except where otherwise noted)
Years ended December 31, 2023 and 2022

9.Trade and other receivables

		Dec. 31, 2023		Dec. 31, 2022
Current
Trade receivables	$	169,806	$	84,096
Statutory receivables		27,215		25,544
Other receivables		6,408		3,542
		203,429		113,182
Non-current
Taxes receivable		12,157		13,329
	$	215,586	$	126,511

The increase in trade receivables during the year ended December 31, 2023, primarily relates to three shipments, representing approximately 30,000 tonnes of copper, which occurred late in the fiscal year and received revenue recognition but for which timing of cash receipts occur in 2024 along with the additional receivables related to Copper Mountain.

10.Inventories

		Dec. 31, 2023		Dec. 31, 2022
Current
Stockpile	$	52,454	$	26,235
Finished goods		61,266		68,029
Materials and supplies		93,614		60,748
		207,334		155,012
Non-current
Stockpile		9,591		42,785
Low grade stockpile1		5,875		-
Materials and supplies		8,984		7,940
		24,450		50,725
	$	231,784	$	205,737

¹Stockpile of inventory that is not expected to be processed until the end of the Copper Mountain mine life.

The cost of inventories recognized as an expense, including depreciation, and included in cost of sales amounted to $1,159,727 for the year ended December 31, 2023 (year ended December 31, 2022 - $1,062,228).

During the year ended December 31, 2023, Hudbay recognized an expense of $2,308 in cost of sales related to adjustments of the carrying value of certain long term inventory supplies (year ended December 31, 2022 - expense of $4,110).

During the year ended December 31, 2022, Hudbay recognized a recovery of $557 in cost of sales related to adjustments of the carrying value of Peru inventories to net realizable value. Adjustments of the carrying value of inventories to net realizable value were related to changes in commodity prices.

39

HUDBAY MINERALS INC.
Notes to Audited Consolidated Financial Statements
(in thousands of US dollars, except where otherwise noted)
Years ended December 31, 2023 and 2022

11.Other financial assets

		Dec. 31, 2023		Dec. 31, 2022
Current
Derivative assets	$	1,416	$	577
Guaranteed investment certificates		722		-
Restricted cash		1,964		486
		4,102		1,063
Non-current
Investments at fair value through profit or loss		6,452		9,799
Guaranteed investment certificates		637		-
		7,089		9,799
	$	11,191	$	10,862

12.Intangibles and other assets

Intangibles and other assets of $52,453 (December 31, 2022 - $49,841) includes $48,428 of other assets (December 31, 2022 - $45,074) and $4,025 of intangibles (December 31, 2022 - $4,767).

Other assets represent the carrying value of certain future community costs that relate to agreements with communities near the Peru operations which allow Hudbay to extract or explore minerals over the useful life of Peru operations. The liability remaining for these costs is recorded in agreements with communities recorded at amortized cost (note 17). Amortization of the carrying amount is recorded in the consolidated income statements within other expenses (note 7e) or exploration expenses, depending on the nature of the agreement.

Intangibles mainly represent computer software costs. The following table summarizes changes in intangibles:

		Dec. 31, 2023			Dec. 31, 2022
Cost
Balance, beginning of year	$	23,773		$	24,768
Additions		514			169
Disposals		(3,432	)		(1,553	)
Effects of movement in exchange rates		351			389
Balance, end of year		21,206			23,773
Accumulated amortization
Balance, beginning of year		19,006			18,870
Depreciation for the year		636			1,057
Disposals		(2,750	)		(1,274	)
Effects of movement in exchange rates		289			353
Balance, end of year		17,181			19,006
Intangibles, net book value	$	4,025		$	4,767

40

HUDBAY MINERALS INC.
Notes to Audited Consolidated Financial Statements
(in thousands of US dollars, except where otherwise noted)
Years ended December 31, 2023 and 2022

13.Goodwill

The following table summarizes changes in goodwill:

Balance, January 1, 2023	$	-
Goodwill recognized on business combination (note 5)		75,205
Effects of changes in foreign exchange		80
Balance, December 31, 2023	$	75,285

Goodwill resulted from purchase price allocation associated with the Copper Mountain acquisition (note 5).

As of December 31, 2023 all goodwill relates to the British Columbia CGU. Goodwill is tested for impairment annually on December 31 or when circumstances indicate that the carrying value may not be recoverable. Goodwill impairment is determined by assessing the recoverable amount of the CGU.

For the impairment test completed at December 31, 2023, Fair Value Less Cost of Disposal, ("FVLCD") was used to determine the recoverable amount since it is higher than value in use. FVLCD was calculated using discounted after-tax cash flows based on cash flow projections and assumptions in Hudbay's most current LOM. The fair value measurement in its entirety is categorized as Level 3 based on the degree to which fair value inputs are observable and have a significant effect on the recorded fair value. LOM plans are based on optimized mine and processing plans and the assessment of capital expenditure requirements of a mine site.

Management used judgement in determining estimates and assumptions with respect to discount rates, future production levels including amounts of recoverable reserves, resources and exploration potential, operating and capital costs, long-term metal prices, value of mineral resources not included in the LOM plan and future foreign exchange rates. Metal pricing assumptions were based on consensus forecast pricing, and the discount rates were based on a weighted average cost of capital, adjusted for country risk and other risks specific to the CGU. Cash flows were projected through to 2043. Changes in any of the assumptions or estimates used in determining the fair values could impact the impairment analysis.

The discount rate was based on the CGU's weighted average cost of capital, of which the two main components are the cost of equity and the after-tax cost of debt. Cost of equity was calculated based on the capital asset pricing model, incorporating the risk-free rate of return based on the Canadian Government's marketable bond yields as at the valuation date, the Company's beta coefficient adjustment to the market equity risk premium based on the volatility of the Company's return in relation to that of a comparable market portfolio, plus a country risk premium, size premium and company-specific risk factor. Cost of debt was determined by applying an appropriate market indication of the Company's borrowing capabilities and the corporate income tax rate applicable to the segment's jurisdiction. A real discount rate of 7.25% for the British Columbia CGU was used to calculate the estimated after- tax discounted future net cash flows, commensurate with its individual estimated level of risk.

Commodity prices used in the impairment assessment were determined by reference to external market participant sources. The key commodity price for this assessment is the price of copper. The cash flow calculations were based on estimates of future production levels applying forecasts for metal prices, which included forecasts for each year from 2024 to 2028 and long-term forecasts for years beginning in 2029. The cash flow calculations utilized a copper price of $3.75/lb starting in 2024. The cash flow calculations utilized a long-term copper price of $4.00/lb, and capital, operating and reclamation costs based on the most current LOM plans. A value of $311,000 was utilized to estimate the value of mineral resources not included in the LOM plan.

Expected future cash flows used to determine the FVLCD in the impairment test are inherently uncertain and could materially change over time. The Company has conducted an analysis of the sensitivity of the impairment test to changes in the key assumptions used to determine the recoverable amount for the CGUs to which goodwill is allocated. Management believes that any reasonably possible change in the key assumptions on which the recoverable amount is based would not cause the aggregate carrying amount to exceed the aggregate recoverable amount of the related CGU. 

41

HUDBAY MINERALS INC.
Notes to Audited Consolidated Financial Statements
(in thousands of US dollars, except where otherwise noted)
Years ended December 31, 2023 and 2022

The estimated recoverable amount of the British Columbia CGU including goodwill exceeded its carrying amount as at December 31, 2023, accordingly no impairment was recorded.

14.Property, plant and equipment

Dec. 31, 2023		Exploration and evaluation assets			Capital works in progress			Mining properties			Plant and equipment			Plant and equipment- ROU assets1			Total
Balance, Jan. 1, 2023	$	75,981		$	778,851		$	1,952,814		$	2,742,617		$	202,437		$	5,752,700
Additions		20,638			125,564			3,171			41,848			21,401			212,622
Acquisition of PP&E from Copper Mountain		-			27,471			369,000			372,733			34,617			803,821
Capitalized stripping and development		-			-			111,247			-			-			111,247
Decommissioning and restoration		-			-			19,780			815			-			20,595
Capitalized accretion and depreciation		-			2,841			-			(201	)		(1,251	)		1,389
Transfers and other movements		-			(131,126	)		11,882			119,244			-			-
Disposals		(74	)		(583	)		-			(30,925	)		(4,271	)		(35,853	)
Effects of movements in exchange rates		356			1,002			13,224			16,723			411			31,716
Balance, Dec. 31, 2023		96,901			804,020			2,481,118			3,262,854			253,344			6,898,237
Accumulated depreciation
Balance, Jan. 1, 2023		-			-			891,803			1,181,209			127,258			2,200,270
Depreciation for the year		-			-			193,199			180,858			18,954			393,011
Transfers and other movements		-			-			(6	)		6			-			-
Disposals		-			-			-			(24,458	)		(3,586	)		(28,044	)
Effects of movement in exchange rates		-			-			8,843			7,989			162			16,994
Balance, Dec. 31, 2023		-			-			1,093,839			1,345,604			142,788			2,582,231
Net book value	$	96,901		$	804,020		$	1,387,279		$	1,917,250		$	110,556		$	4,316,006

¹ Includes $4,800 of capital works in progress - ROU assets (costs) that relate to the Arizona business unit (December 31, 2022 - $5,413, related to the Arizona business unit).

42

HUDBAY MINERALS INC.
Notes to Audited Consolidated Financial Statements
(in thousands of US dollars, except where otherwise noted)
Years ended December 31, 2023 and 2022

Dec. 31, 2022		Exploration and evaluation assets			Capital works in progress			Mining properties			Plant and equipment			Plant and equipment- ROU assets1			Total
Balance, Jan. 1, 2022	$	88,207		$	858,230		$	2,434,000		$	2,983,919		$	259,726		$	6,624,082
Additions		18,386			173,810			3,148			35,953			27,984			259,281
Capitalized stripping and development		-			-			89,262			-			-			89,262
Decommissioning and restoration		-			723			(12,583	)		(25,248	)		-			(37,108	)
Derecognition of assets - cost		-			-			(547,923	)		(422,524	)		(2,950	)		(973,397	)
Capitalized accretion and depreciation		-			1,607			-			(2	)		-			1,605
Transfers and other movements		(29,395	)		(154,554	)		3,825			231,444			(51,320	)		-
Disposals		(215	)		(1,091	)		-			(7,691	)		(28,434	)		(37,431	)
Impairment (Note 7g)		-			(94,956	)		-			-			-			(94,956	)
Effects of movements in exchange rates		(1,002	)		(4,918	)		(16,915	)		(53,234	)		(2,569	)		(78,638	)
Balance, Dec. 31, 2022		75,981			778,851			1,952,814			2,742,617			202,437			5,752,700
Accumulated depreciation
Balance, Jan. 1, 2022		-			-			1,284,369			1,445,122			153,625			2,883,116
Depreciation for the year		-			-			155,503			169,096			22,786			347,385
Derecognition of assets - accumulated depreciation		-			-			(547,923	)		(422,524	)		(2,950	)		(973,397	)
Transfers and other movements		-			-			5			25,055			(25,060	)		-
Disposals		-			-			-			(4,094	)		(19,516	)		(23,610	)
Effects of movement in exchange rates		-			-			(151	)		(31,446	)		(1,627	)		(33,224	)
Balance, Dec. 31, 2022		-			-			891,803			1,181,209			127,258			2,200,270
Net book value	$	75,981		$	778,851		$	1,061,011		$	1,561,408		$	75,179		$	3,552,430

¹ Includes $5,413 of capital works in progress - ROU assets (costs) that relate to the Arizona business unit.

An indicator of impairment was identified in the first quarter of 2023 as a result of an updated life of mine ("LOM") plan for Peru which included updated costs reflecting recently experienced inflationary pressures. As such, management determined that a detailed impairment evaluation as at March 31, 2023 was required for the Peru CGU.

For the impairment test completed at March 31, 2023, FVLCD was used to determine the recoverable amount since it is higher than value in use. FVLCD was calculated using discounted after-tax cash flows based on cash flow projections and assumptions in Hudbay's most current LOM. The fair value measurement in its entirety is categorized as Level 3 based on the degree to which fair value inputs are observable and have a significant effect on the recorded fair value. 

43

HUDBAY MINERALS INC.
Notes to Audited Consolidated Financial Statements
(in thousands of US dollars, except where otherwise noted)
Years ended December 31, 2023 and 2022

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 are discount rates, future commodity prices, production based on current estimates of recoverable reserves, future operating and capital costs, value of mineral resources not included in the LOM plan and future foreign exchange rates. The cash flows are for periods up to the date that production is expected to cease, which is 16 years for the Peru CGU.

The discount rate was based on the CGU's weighted average cost of capital, of which the two main components are the cost of equity and the after-tax cost of debt. Cost of equity was calculated based on the capital asset pricing model, incorporating the risk-free rate of return based on the US Government's marketable bond yields as at the valuation date, the Company's beta coefficient adjustment to the market equity risk premium based on the volatility of the Company's return in relation to that of a comparable market portfolio, plus a country risk premium, size premium and company-specific risk factor. Cost of debt was determined by applying an appropriate market indication of the Company's borrowing capabilities and the  corporate income tax rate applicable to the segment's jurisdiction. A real discount rate of 7.00% for the Peru CGU was used to calculate the estimated after- tax discounted future net cash flows, commensurate with its individual estimated level of risk.

Commodity prices used in the impairment assessment were determined by reference to external market participant sources. The key commodity price for this assessment is the price of copper. Where applicable to each of the Group's CGUs, the cash flow calculations were based on estimates of future production levels applying forecasts for metal prices, which included forecasts for each year from 2023 to 2027 and long-term forecasts for years beginning in 2028. The cash flow calculations utilized a copper price of $3.75/lb starting in 2023. The cash flow calculations utilized a long-term copper price of $3.75/lb, and capital, operating and reclamation costs based on the most current LOM plans. A value of $210,000 was utilized to estimate the value of mineral resources not included in the LOM plan.

Expected future cash flows used to determine the FVLCD used in the 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. This may have a material effect on the Company's 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 on a CGU's fair value as the assumptions are inextricably linked. For example, a decrease in the assumed price of long-term copper could result in amendments to the mine plans which would partially offset the effect of lower prices. It is difficult to determine how all of these factors would interrelate; however, in deriving a recoverable amount, management believes all of these factors need to be considered. As of March 31, 2023, a reasonably possible change in one of the key assumptions, all else being equal, may cause the carrying value to exceed the recoverable amount.

Management determined that the fair value less cost to dispose exceeded the carrying value of the Peru CGU, accordingly no impairment was recorded.

At December 31, 2022, capital works in progress decreased compared to December 31, 2021 as a result of a pre-tax impairment charge of $94,956 related to certain capitalized costs and assets associated with the previous stand-alone development plan for the East deposit that are no longer recoverable (see note 7g).

The closure of the Flin Flon operations in the second quarter of 2022 has led to the derecognition of fully depreciated assets. This resulted in a decrease in both the cost and accumulated depreciation of the Mining Properties and Plant and Equipment categories.

An indicator of impairment was identified in the second quarter of 2022 as a result of the recently released PEA and new mine plan for the Copper World Complex in Arizona. As such, management determined that a detailed impairment evaluation as at June 30, 2022 was required for the Arizona CGU. Management determined that the fair value less cost to dispose exceeded the carrying value of the Arizona CGU, accordingly no impairment was recorded.

44

HUDBAY MINERALS INC.
Notes to Audited Consolidated Financial Statements
(in thousands of US dollars, except where otherwise noted)
Years ended December 31, 2023 and 2022

15.Trade and other payables

		Dec. 31, 2023		Dec. 31, 2022
Trade payables	$	69,257	$	83,824
Accruals and payables		133,024		95,540
Accrued interest		16,891		16,279
Exploration and evaluation payables		132		229
Statutory payables		19,845		15,595
	$	239,149	$	211,467

  Accruals and payables include operational and capital costs and employee benefit amounts owing.

16.Other liabilities

		Dec. 31, 2023		Dec. 31, 2022
Unearned revenue	$	616	$	15,086
Environmental and other provisions (note 22)		22,292		24,091
Pension liability (note 23)		3,284		4,146
Other employee benefits (note 24)		3,843		3,483
	$	30,035	$	46,806

45

HUDBAY MINERALS INC.
Notes to Audited Consolidated Financial Statements
(in thousands of US dollars, except where otherwise noted)
Years ended December 31, 2023 and 2022

17.Other financial liabilities

		Dec. 31, 2023		Dec. 31, 2022
Current
Derivative liabilities	$	11,811	$	17,995
Equipment financing		3,300		-
Deferred Rosemont acquisition consideration		9,713		9,713
Agreements with communities recorded at amortized cost		17,411		5,593
		42,235		33,301
Non-current
Deferred Rosemont acquisition consideration		-		9,163
Equipment financing		7,499		-
Agreements with communities recorded at amortized cost		37,568		36,900
Wheaton refund liability (note 21)		6,653		6,383
		51,720		52,446
	$	93,955	$	85,747

Agreements with communities recorded 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 changes in agreements with communities recorded at amortized cost during the year ended December 31, 2023 primarily relates to updates to existing land user agreements with certain community members, changes in estimates, the accretion of the liability net of disbursements.  The changes in agreements with communities recorded at amortized cost during the year ended December 31, 2022 primarily relates to the execution of the exploration agreement with the community of Uchucarcco which provides surface rights to the Maria Reyna and Caballito satellite properties located near the Constancia operation, partially offset by disbursements, which were primarily all paid in 2022.

The following table summarizes changes in agreements with communities recorded at amortized cost:

Balance, January 1, 2022	$	36,273
Net additions		39,240
Disbursements		(37,491	)
Accretion (note 7f)		3,099
Effects of changes in foreign exchange		1,372
Balance, December 31, 2022	$	42,493
Net additions		17,335
Disbursements		(10,705	)
Accretion (note 7f)		4,178
Effects of changes in foreign exchange		1,678
Balance, December 31, 2023	$	54,979

46

HUDBAY MINERALS INC.
Notes to Audited Consolidated Financial Statements
(in thousands of US dollars, except where otherwise noted)
Years ended December 31, 2023 and 2022

18.Gold prepayment liability

        Gold prepayment liabilities are reflected in the consolidated balance sheets as follows:

		Dec. 31, 2023		Dec. 31, 2022
Current	$	55,901	$	71,208

The following table summarizes changes in the gold prepayment liability:

Balance, January 1, 2022	$	140,008
Change in fair value recorded in income statement (note 7f)		3,426
Change in fair value recorded in other comprehensive income		(512	)
Repayments		(71,714	)
Balance, December 31, 2022	$	71,208
Change in fair value recorded in income statement (note 7f)		11,223
Change in fair value recorded in other comprehensive income		192
Repayments		(26,722	)
Balance, December 31, 2023	$	55,901

During the first quarter of 2023, Hudbay renegotiated its agreements with various financial institutions and deferred eight months of scheduled gold deliveries. Monthly deliveries of the outstanding gold ounces under the new agreements have resumed in October 2023 and will continue until August 2024.

19.Lease liabilities

Balance, January 1, 2022	$	78,002
Additional capitalized leases		27,984
Lease payments		(35,770	)
Derecognized leases		(8,918	)
Accretion and other movements		(279	)
Balance, December 31, 2022	$	61,019
Acquired through the acquisition of Copper Mountain (note 5)		34,617
Additional capitalized leases		21,401
Lease payments		(25,216	)
Derecognized leases		(685	)
Accretion and other movements		(801	)
Balance, December 31, 2023	$	90,335

Lease liabilities are reflected in the consolidated balance sheets as follows:

		Dec. 31, 2023		Dec. 31, 2022
Current	$	28,902	$	16,156
Non-current		61,433		44,863
	$	90,335	$	61,019

47

HUDBAY MINERALS INC.
Notes to Audited Consolidated Financial Statements
(in thousands of US dollars, except where otherwise noted)
Years ended December 31, 2023 and 2022

Hudbay has entered into leases which expire between 2024 and 2037. The interest rates on leases which were capitalized have interest rates between 2.39% and 8.49%, per annum. The range of interest rates utilized for discounting varies depending mostly on the Hudbay entity acting as lessee and duration of the lease. For certain leases, Hudbay has the option to purchase the equipment and vehicles leased at the end of the terms of the leases. Hudbay'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 an 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 Hudbay by entering into these leases.

The following outlines expenses recognized within the Company's consolidated income statements, relating to leases for which a recognition exemption was applied.

		Year ended December 31,
		2023		2022
Short-term leases	$	9,167	$	25,781
Low value leases		617		652
Variable leases		27,519		55,673
Total	$	37,303	$	82,106

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 segment during its development phase and certain amounts may be reported in inventories given the timing of sales. Variable payment leases include equipment used for heavy civil works at Constancia.

20.Long-term debt

Long-term debt is comprised of the following:

		Dec. 31, 2023		Dec. 31, 2022
Senior unsecured notes (a)	$	1,190,586	$	1,188,132
Senior secured revolving credit facilities (b)		96,950		(3,970	)
	$	1,287,536	$	1,184,162

(a)Senior unsecured notes

Balance, January 1, 2022	$	1,185,805
Accretion of transaction costs and premiums		2,327
Balance, December 31, 2022	$	1,188,132
Accretion of transaction costs and premiums		2,454
Balance, December 31, 2023	$	1,190,586

As at December 31, 2023, $1,200,000 aggregate principal amount of senior notes were outstanding in two series: (i) a series of 4.50% senior notes due 2026 in an aggregate principal amount of $600,000 and (ii) a series of 6.125% senior notes due 2029 in an aggregate principal amount of $600,000.

48

HUDBAY MINERALS INC.
Notes to Audited Consolidated Financial Statements
(in thousands of US dollars, except where otherwise noted)
Years ended December 31, 2023 and 2022

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 or unrestricted subsidiaries, which includes CMBC (the Company's 75% owned subsidiary that owns the Copper Mountain mine), and subsidiaries that hold the Copper World and Mason projects as well as 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.

(b)Senior secured revolving credit facilities

Balance, January 1, 2022	$	(5,531	)
Accretion of transaction costs		1,761
Transaction costs		(200	)
Balance, December 31, 2022 1	$	(3,970	)
Proceeds from drawdown, net of repayments		100,000
Accretion of transaction costs		1,627
Transaction costs		(707	)
Balance, December 31, 2023	$	96,950

¹ Balance, representing deferred transaction costs, is in an asset position.

Hudbay has two senior secured revolving credit facilities with total commitments of $450 million and substantially similar terms and conditions for its Canadian and Peruvian businesses. Hudbay's revolving credit facilities are secured against substantially all of the Company's assets, other than those associated with the Copper Mountain mine and the Arizona business unit.

During the year ended December 31, 2023, Hudbay drew an aggregate of $220,000 and repaid an aggregate of $120,000 under its Canadian revolving credit facility.

At December 31, 2023, we had $10,000 and $90,000 of debt outstanding under our Canadian and Peruvian revolving credit facilities, respectively. The Company may repay any borrowings under the revolving credit facility at any time without premium or penalty.

As at December 31, 2023, the Peru segment had nil in letters of credit issued under the Peru revolving credit facility to support its reclamation obligations and the Manitoba segment had $26,144 in letters of credit issued under the Canadian revolving credit facility to support its reclamation and pension obligations. As at December 31, 2023, we were in compliance with our covenants under the revolving credit facilities.

Surety bonds

The Arizona segment had $12,966 in surety bonds issued to support future reclamation and closure obligations. No cash collateral is required to be posted under these surety bonds.

The British Columbia segment had $15,925 in surety bonds issued to support future reclamation and closure obligations and $5,013 in surety bonds with BC Hydro in relation to the BC Hydro transmission system at the Copper Mountain Mine. No cash collateral is required to be posted under these surety bonds.

49

HUDBAY MINERALS INC.
Notes to Audited Consolidated Financial Statements
(in thousands of US dollars, except where otherwise noted)
Years ended December 31, 2023 and 2022

Other letters of credit

The Peru segment had $118,048 in letters of credit issued with various Peruvian financial institutions to support future reclamation and other operating matters. No cash collateral is required to be posted under these letters of credit.

On August 22, 2022, Hudbay closed a C$130.0 million bilateral letter of credit facility ("LC Facility") with a major Canadian financial institution. As at December 31, 2023, the Manitoba segment had $56,652 in letters of credit issued under the LC Facility to support its reclamation and pension obligations.

(c)Copper Mountain Bonds

Balance, December 31, 2022	$	-
Acquired through the acquisition of Copper Mountain (note 5)		144,981
Principal repayment		(143,000	)
Put option premium		(833	)
Amortization and write-off of fair value		(1,148	)
Balance, December 31, 2023	$	-

On April 9, 2021, Copper Mountain completed an offering of $250,000 million of secured bonds ("the Bonds") bearing an annual interest rate of 8.0% with a maturity date of April 9, 2026.

With the acquisition of Copper Mountain on June 20, 2023, a change of control event was triggered and $83,307 of the Bonds were put to Copper Mountain on July 17, 2023 at a price of 101%, plus accrued interest. The principal and premium amounted to $84,140, which was repaid on July 24, 2023.

During the fourth quarter of 2023, Hudbay made a scheduled principal repayment of $5,000 and exercised the early redemption option and redeemed the remaining $54,696 principal amount outstanding of Copper Mountain Bonds on November 30, 2023 at a call price of 104%, plus accrued and unpaid interest to the date of redemption.

21.Deferred revenue

Peru Stream Agreement

For the year ended December 31, 2023, the drawdown rates for the Peru stream agreement for gold and silver were $820 and $15.26 per ounce, respectively (year ended December 31, 2022 - $734 and $14.95 per ounce, respectively).

777 Stream Agreement

As of September 30, 2022 all of 777's precious metals reserves and inventory levels have been depleted and we expect no further drawdown of deferred revenue. 

As part of the streaming agreement for the 777 mine, Hudbay must repay, with precious metals credits, the stream deposit by August 1, 2052, the expiry date of the agreement. If the stream deposit is not fully repaid with precious metals credits from 777 production by the expiry date, a payment for the remaining amount will be due at the expiry date of the agreement. As the 777 mine has concluded all mining activities following the depletion of reserves and finalized the sales of produced concentrate, Hudbay concluded that the remaining stream deposit will not be repaid by means of precious metals credits from 777 production. The repayment amount is recorded as a Wheaton refund liability (note 17), which is and will be discounted at the 9.0% rate inherent in the original 777 stream agreement and accreted over the remaining term of the agreement.

50

HUDBAY MINERALS INC.
Notes to Audited Consolidated Financial Statements
(in thousands of US dollars, except where otherwise noted)
Years ended December 31, 2023 and 2022

The following table summarizes changes in deferred revenue:

Balance, January 1, 2022	$	515,326
Amortization of deferred revenue (note 7a)
Liability drawdown		(72,229	)
Variable consideration adjustments - prior periods		(959	)
Accretion on streaming arrangements (note 7f)
Current year additions		28,718
Variable consideration adjustments - prior periods		(940	)
Effects of changes in foreign exchange		(378	)
Balance, December 31, 2022	$	469,538
Amortization of deferred revenue (note 7a)
Liability drawdown		(72,424	)
Variable consideration adjustments - prior periods		(4,885	)
Accretion on streaming arrangements (note 7f)
Current year-to-date additions		26,387
Variable consideration adjustments - prior periods		(96	)
Balance, December 31, 2023	$	418,520

Consideration from the Company's stream agreement is considered variable. Gold and silver stream 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 mineral reserve and resource estimate in the first quarter of 2023, the amortization rate by which deferred revenue is drawn down into income was adjusted and, as required, a current period variable adjustment was made for all prior period stream revenues since the stream agreement inception date. This variable consideration adjustment resulted in an increase in revenue of $4,885 and a decrease of finance expense of $96 for the year ended December 31, 2023 (December 31, 2022 - increase in revenue of $959 and a decrease of finance expense of $940).

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

		Dec. 31, 2023		Dec. 31, 2022
Current	$	87,672	$	64,658
Non-current		330,848		404,880
	$	418,520	$	469,538

51

HUDBAY MINERALS INC.
Notes to Audited Consolidated Financial Statements
(in thousands of US dollars, except where otherwise noted)
Years ended December 31, 2023 and 2022

22.Environmental and other provisions

		Decommis- sioning, restoration and similar liabilities			Deferred share units3		Restricted share units1, 3			Performance share units3			Other2			Total
Balance, January 1, 2023	$	276,402		$	6,872	$	6,855		$	2,989		$	10,213		$	303,331
Net change in provision		(4,017	)		1,094		2,959			382			4,689			5,107
Copper Mountain, acquired provision		12,702			-		-			-			-			12,702
Disbursements		(2,069	)		-		(5,138	)		(1,075	)		(2,402	)		(10,684	)
Unwinding of discount (note 7f)		9,948			-		-			-			-			9,948
Effect of change in discount rate		18,520			-		-			-			-			18,520
Effect of foreign exchange		3,855			71		39			45			35			4,045
Effect of change in share price		-			623		373			239			-			1,235
Balance, December 31, 2023	$	315,341		$	8,660	$	5,088		$	2,580		$	12,535		$	344,204

¹ Certain amounts relating to the Arizona segment are capitalized.

² Relates primarily to flow-through share premiums, restructuring costs and other non-capital provisions.

³ Please refer to note 27a for further information.

Provisions are reflected in the consolidated balance sheets as follows:

December 31, 2023		Decommis- sioning, restoration and similar liabilities		Deferred share units		Restricted share units		Performance share units		Other		Total
Current (note 16)	$	1,370	$	8,660	$	2,147	$	727	$	9,388	$	22,292
Non-current		313,971		-		2,941		1,853		3,147		321,912
	$	315,341	$	8,660	$	5,088	$	2,580	$	12,535	$	344,204

		Decommis- sioning, restoration and similar liabilities			Deferred share units3			Restricted share units1,3			Performance share units3			Other2			Total
Balance, January 1, 2022	$	467,800		$	8,107		$	10,889		$	5,402		$	10,320		$	502,518
Net additional provisions made		13,440			1,184			3,866			239			3,918			22,647
Disbursements		(15,460	)		-			(6,232	)		(1,115	)		(3,633	)		(26,440	)
Unwinding of discount (note 7f)		8,498			-			-			-			-			8,498
Effect of change in discount rate		(184,508	)		-			-			-			-			(184,508	)
Effect of foreign exchange		(13,368	)		(386	)		(352	)		(287	)		(392	)		(14,785	)
Effect of change in share price		-			(2,033	)		(1,316	)		(1,250	)		-			(4,599	)
Balance, December 31, 2022	$	276,402		$	6,872		$	6,855		$	2,989		$	10,213		$	303,331

¹ Certain amounts relating to the Arizona segment are capitalized.

² Relates primarily to restructuring costs and other non-capital provisions.

³ Please refer to note 27a for further information.

52

HUDBAY MINERALS INC.
Notes to Audited Consolidated Financial Statements
(in thousands of US dollars, except where otherwise noted)
Years ended December 31, 2023 and 2022

December 31, 2022		Decommis- sioning, restoration and similar liabilities		Deferred share units		Restricted share units		Performance share units		Other		Total
Current (note 16)	$	4,162	$	6,872	$	4,836	$	1,736	$	6,485	$	24,091
Non-current		272,240		-		2,019		1,253		3,728		279,240
	$	276,402	$	6,872	$	6,855	$	2,989	$	10,213	$	303,331

Decommissioning, restoration and similar liabilities are remeasured at each reporting date to reflect changes in discount rates, which can significantly affect the liabilities.

Decommissioning, restoration and similar liabilities ("DRO")

Hudbay's decommissioning, restoration and similar liabilities relate to the rehabilitation and closure of currently operating mines and metallurgical plants, development-phase properties and closed properties. The amount of the provision has been recorded based on estimates and assumptions that management believes are reasonable; however, actual decommissioning and restoration costs may differ from expectations.

DRO are remeasured at each reporting date to reflect changes in discount rates, inflation, exchange rates, and timing and extent of cash outflows which can significantly affect the liabilities. The amount of this provision has been recorded based on estimates and assumptions that management believes are reasonable; however, actual decommissioning and restoration costs may differ from expectations.

During the year ended December 31, 2023, the Company recorded a non-cash gain of $11,416 in the consolidated income statements mainly related to a revaluation adjustment of Flin Flon's environmental reclamation provision (December 31, 2022 - $133,460). This was primarily caused by a general increase in long term, risk-free discount rates during 2023 based on movements in Canadian bond yields. Typically, an operating site will reflect any revaluation adjustments of its environmental reclamation provision against its reclamation assets. However, since the Flin Flon operations closed in June 2022, the corresponding Flin Flon assets have been fully depreciated and cannot be reduced below their residual value, resulting in the remaining impact being recorded as a non-cash gain in re-evaluation adjustment - environmental provision in the consolidated income statements.

Hudbay's decommissioning and restoration liabilities relate mainly to its Manitoba, Peru and British Columbia operations. Management has placed the remaining Flin Flon assets on care and maintenance. The majority of closure activities will occur once all mining activities in Manitoba are completed. These provisions also reflect estimated post-closure cash flows that extend to the year 2123 for ongoing monitoring and water treatment requirements. Management anticipates most decommissioning and restoration activities for the Peru operation will occur from 2035 to 2103, which include ongoing monitoring and water treatment requirements. Management anticipates most decommissioning and restoration activities for the British Columbia operation will occur from 2041 to 2142, which include ongoing monitoring and water treatment requirements.

As at December 31, 2023, decommissioning, restoration and similar liabilities have been discounted to their present value at rates ranging from 3.01% to 4.86% per annum (December 31, 2022 - 3.26% to 4.75%), using pre-tax, risk-free interest rates that reflect the estimated maturity of each specific liability.

53

HUDBAY MINERALS INC.
Notes to Audited Consolidated Financial Statements
(in thousands of US dollars, except where otherwise noted)
Years ended December 31, 2023 and 2022

23.Pension obligations

Hudbay maintains non-contributory and contributory defined benefit pension plans for certain of its employees.

The Company uses a December 31 measurement date for all of its plans. For Hudbay's significant plans, the most recent actuarial valuations filed for funding purposes were performed during 2023 using the latest data available as at December 31, 2022. For these plans, the next actuarial valuation required for funding purposes will be performed during 2024 using the data as of December 31, 2023.

During 2023, an annuity purchase transaction was entered into in which the defined benefit obligations associated with certain defined benefit plan members were assumed by a third-party insurer in exchange for a lump sum payment of $34,857 from plan assets.

Movements in the present value of the defined benefit obligation in the current and previous years were as follows:

		Year ended
		Dec. 31, 2023			Dec. 31, 2022
Opening defined benefit obligation:	$	145,129		$	216,369
Current service costs		5,172			9,392
Past service cost/(curtailment) (note 7d)		50			(583	)
Loss on settlements		149			-
Interest cost		6,274			5,938
Benefits paid from plan		(13,721	)		(18,637	)
Benefits paid from employer		(1,091	)		(1,787	)
Participant contributions		16			25
Effects of movements in exchange rates		3,043			(16,883	)
Remeasurement actuarial losses/(gains):
Arising from changes in demographic assumptions		-			-
Arising from changes in financial assumptions		7,045			(48,960	)
Arising from experience adjustments		(1,876	)		255
Settlement payments from plan assets		(34,857	)		-
Closing defined benefit obligation	$	115,333		$	145,129

The defined benefit obligation closing balance, by member group, is as follows:

		Dec. 31, 2023		Dec. 31, 2022
Active members	$	103,523	$	112,951
Deferred members		2,318		2,439
Retired members		9,492		29,739
Closing defined benefit obligation	$	115,333	$	145,129

54

HUDBAY MINERALS INC.
Notes to Audited Consolidated Financial Statements
(in thousands of US dollars, except where otherwise noted)
Years ended December 31, 2023 and 2022

Movements in the fair value of the pension plan assets in the current and previous years were as follows:

		Year ended
		Dec. 31, 2023			Dec. 31, 2022
Opening fair value of plan assets:	$	137,721		$	199,645
Interest income		5,973			5,667
Remeasurement adjustment:
Return (loss) on plan assets (excluding amounts included in net interest expense)		6,228			(40,196	)
Contributions from the employer		2,265			6,063
Employer direct benefit payments		1,091			1,787
Contributions from plan participants		16			25
Benefit payment from employer		(1,091	)		(1,787	)
Administrative expenses paid from plan assets		(81	)		(80	)
Benefits paid		(13,721	)		(18,637	)
Settlement payments from plan assets		(34,857	)		-
Effects of changes in foreign exchange rates		2,495			(14,766	)
Closing fair value of plan assets	$	106,039		$	137,721

The amount included in the consolidated balance sheets arising from the entity's obligation in respect of its defined benefit plans is as follows:

		Dec. 31, 2023			Dec. 31, 2022
Present value of funded defined benefit obligation	$	100,024		$	131,503
Fair value of plan assets		(106,039	)		(137,721	)
Present value of unfunded defined benefit obligation		15,309			13,626
Net liability arising from defined benefit obligation	$	9,294		$	7,408

Reflected in the consolidated balance sheets as follows:

		Dec. 31, 2023		Dec. 31, 2022
Pension obligation - current (note 16)	$	3,284	$	4,146
Pension obligation - non-current		6,010		3,262
Total pension obligation	$	9,294	$	7,408

55

HUDBAY MINERALS INC.
Notes to Audited Consolidated Financial Statements
(in thousands of US dollars, except where otherwise noted)
Years ended December 31, 2023 and 2022

Pension expense is as follows:

		Dec. 31, 2023		Dec. 31, 2022
Service costs:
Current service cost	$	5,172	$	9,392
Curtailment		-		(583	)
Loss on settlement		149		-
Total service cost		5,321		8,809
Net interest expense		301		271
Administration cost		81		80
Defined benefit pension expense	$	5,703	$	9,160
Defined contribution pension expense	$	701	$	2,097

Remeasurement on the net defined benefit liability:

		Dec. 31, 2023			Dec. 31, 2022
(Return) loss on plan assets (excluding amounts included in net interest expense)	$	(6,228	)	$	40,196
Actuarial losses (gains) arising from changes in financial assumptions		7,045			(48,960	)
Actuarial (gains) losses arising from experience adjustments		(1,876	)		255
Defined benefit gain related to remeasurement	$	(1,059	)	$	(8,509	)
Total pension cost	$	5,345		$	2,748

Pension amounts recognized include those directly related to production of inventory; such amounts are recognized initially as costs of inventory and are expensed in the consolidated income statements within cost of sales upon sale of the inventory.

The current service cost, the interest cost and administration cost for the year are included in the employee benefits expense. The remeasurement of the net defined benefit liability is included in OCI.

56

HUDBAY MINERALS INC.
Notes to Audited Consolidated Financial Statements
(in thousands of US dollars, except where otherwise noted)
Years ended December 31, 2023 and 2022

The defined benefit pension plans typically expose Hudbay to actuarial risks such as: investment risk, interest rate risk, longevity risk and salary risk.

Investment risk	The present value of the liabilities for the defined benefit plans is calculated using a discount rate determined by reference to high quality corporate bond yields; if the return on plan assets is below this rate, it will create a plan deficit. Hudbay's primary quantitative investment objectives are maximization of the long term real rate of return, subject to an acceptable degree of investment risk and preservation of principal. Risk tolerance is established through consideration of several factors including past performance, current market condition and the funded status of the plan.
Interest risk	A decrease in the bond interest rate will increase the pension plan liabilities; however, this will be partially offset by an increase in the return on the plan's debt investments.
Longevity risk	The present value of the defined benefit plans liabilities is calculated by reference to the best estimate of the mortality of plan participants both during and after their employment. An increase in the life expectancy of the plan participants will increase the pension plans liabilities.
Salary risk	The present value of the defined benefit plans liabilities for some of the pension plans is calculated by reference to the future salaries of plan participants. As such, an increase in the salary of the plan participants will increase the plans' liabilities.

The principal assumptions used for the purposes of the actuarial valuations were as follows:

	2023	2022
Defined benefit cost:
Discount rate - benefit obligations	5.22%	3.09%
Discount rate - service cost	5.27%	3.21%
Expected rate of salary increase1	3.50%	2.75%
Average longevity at retirement age for current pensioners (years)2 :
Males	20.4	20.4
Females	23.8	23.7
Defined benefit obligation:
Discount rate	4.64%	5.22%
Expected rate of salary increase1	3.00%	3.50%
Average longevity at retirement age for current pensioners (years)2 :
Males	20.5	20.4
Females	23.9	23.8
Average longevity at retirement age for current employees (future pensioners) (years)2 :
Males	22.4	22.3
Females	25.6	25.5

¹ Plus merit and promotional scale based on member's age

² Revised retirement pension plan only - CPM2014 Priv with MI-2017 projection scale with loading of 1.25 and 1.15 for males and females

57

HUDBAY MINERALS INC.
Notes to Audited Consolidated Financial Statements
(in thousands of US dollars, except where otherwise noted)
Years ended December 31, 2023 and 2022

Hudbay reviews the assumptions used to measure pension costs (including the discount rate) on an annual basis. Economic and market conditions at the measurement date affect these assumptions from year to year. In determining the discount rate, Hudbay considers the duration of the pension plan liabilities.

Significant actuarial assumptions for the determination of the defined benefit obligation are discount rate, expected salary increase and mortality. The sensitivity analysis below has been determined based on reasonably possible changes of the respective assumptions occurring at the end of the reporting periods, while holding other assumptions constant:

-If the discount rate is 50 basis points higher (lower), the defined benefit obligation would decrease by $9,363 (increase by $10,650).

-If the expected salary growth increases (decreases) by 1%, the defined benefit obligation would increase by $1,536 (decrease $1,264).

-If the life expectancy increases (decreases) by one year for both men and women, the defined benefit obligation would increase by $726 (decrease by $769).

The sensitivity analysis presented above may not be representative of the actual change in the defined benefit obligation as it is unlikely that the change in assumptions would occur in isolation of one another as some of the assumptions may be correlated.

Furthermore, in presenting the above sensitivity analysis, the present value of the defined benefit obligation has been calculated using the projected unit credit method at the end of the reporting period, which is the same as that applied in calculating the defined benefit obligation liability recognized in the consolidated balance sheets.

The Company's main pension plans are registered federally with the Office of the Superintendent of Financial Institution and with the Canada Revenue Agency. The registered pension plans are governed in accordance with the Pension Benefits Standards Act and the Income Tax Act. The sponsor contributes the amount needed to maintain adequate funding as dictated by the prevailing regulations.

Expected employer contribution to the pension plans for the fiscal year ending December 31, 2023 is $3,284.

The average duration of the pension obligation at December 31, 2023 is 18.0 years (2022 - 16.2 years). This number can be broken down as follows:

-Active members: 18.8 years (2022: 18.3 years)

-Deferred members: 19.2 years (2022: 17.5 years)

-Retired members: 9.0 years (2022: 8.2 years)

Asset-Liability-Matching studies are performed periodically to analyze the investment policies in terms of risk and-return profiles.

The pension plans do not invest directly in either securities or property/real estate of the Company.

With the exception of fixed income investments and certain equity instruments, the plan assets are actively managed by investment managers, with the goal of attaining returns that potentially outperform passively managed investments. Within appropriate limits, the actual composition of the invested funds may vary from the prescribed investment mix.

58

HUDBAY MINERALS INC.
Notes to Audited Consolidated Financial Statements
(in thousands of US dollars, except where otherwise noted)
Years ended December 31, 2023 and 2022

The following is a summary of the fair value classification levels for investment:

December 31, 2023		Level 1		Level 2		Level 3		Total
Investments:
Money market instruments	$	1,166	$	-	$	-	$	1,166
Pooled equity funds		33,930		-		-		33,930
Pooled fixed income funds		-		69,968		-		69,968
Alternative investment funds		-		908		-		908
Balanced funds		-		67		-		67
	$	35,096	$	70,943	$	-	$	106,039

December 31, 2022		Level 1		Level 2		Level 3		Total
Investments:
Money market instruments	$	2,270	$	-	$	-	$	2,270
Pooled equity funds		50,107		-		-		50,107
Pooled fixed income funds		-		64,230		-		64,230
Alternative investment funds		-		20,908		-		20,908
Balanced funds		-		206		-		206
	$	52,377	$	85,344	$	-	$	137,721

59

HUDBAY MINERALS INC.
Notes to Audited Consolidated Financial Statements
(in thousands of US dollars, except where otherwise noted)
Years ended December 31, 2023 and 2022

24.Other employee benefits

Hudbay sponsors both other long-term employee benefit plans and non-pension post-employment benefits plans and uses a December 31 measurement date. These obligations relate mainly to commitments for post-retirement health benefits. Information about Hudbay's post-employment and other long-term employee benefits is as follows:

Movements in the present value of the defined benefit obligation in the current and previous years were:

		Year ended
		Dec. 31, 2023			Dec. 31, 2022
Opening defined benefit obligation	$	87,216		$	128,843
Current service cost1		2,815			4,656
Curtailment (note 7d)		-			(1,801	)
Interest cost		4,456			3,940
Attribution period changes (note 7d)		-			(3,179	)
Effects of movements in exchange rates		2,299			(6,074	)
Remeasurement actuarial losses/(gains):
Arising from changes in demographic assumptions		502			-
Arising from changes in financial assumptions		9,250			(36,058	)
Arising from experience adjustments		(637	)		(516	)
Benefits paid		(2,741	)		(2,595	)
Closing defined benefit obligation	$	103,160		$	87,216

¹ Includes remeasurement of other long term employee benefits

The defined benefit obligation closing balance, by group member, is as follows:

		Dec. 31, 2023		Dec. 31, 2022
Active members	$	36,871	$	28,734
Inactive members		66,289		58,482
Closing defined benefit obligation	$	103,160	$	87,216

Movements in the fair value of defined benefit amounts in the current and previous years were as follows:

		Dec. 31, 2023			Dec. 31, 2022
Employer contributions	$	2,741		$	2,594
Benefits paid		(2,741	)		(2,594	)
Closing fair value of assets	$	-		$	-

The non-pension employee benefit plan obligations are unfunded.

60

HUDBAY MINERALS INC.
Notes to Audited Consolidated Financial Statements
(in thousands of US dollars, except where otherwise noted)
Years ended December 31, 2023 and 2022

Reconciliation of assets and liabilities recognized in the consolidated balance sheets:

		Dec. 31, 2023		Dec. 31, 2022
Unfunded benefit obligation	$	103,160	$	87,216
Vacation accrual and other - non-current		2,532		2,607
Net liability	$	105,692	$	89,823

Reflected in the consolidated balance sheets as follows:

		Dec. 31, 2023		Dec. 31, 2022
Other employee benefits liability - current (note 16)	$	3,843	$	3,483
Other employee benefits liability - non-current		101,849		86,340
Net liability	$	105,692	$	89,823

Other employee future benefit expense includes the following:

		Dec. 31, 2023		Dec. 31, 2022
Current service cost 1	$	2,815	$	2,855
Net interest cost		4,456		3,940
Components recognized in consolidated income statements	$	7,271	$	6,795

¹ Includes remeasurement of other long term employee benefit and curtailment

		Dec. 31, 2023			Dec. 31, 2022
Remeasurement on the net defined benefit liability:
Actuarial losses arising from changes in demographic assumptions	$	502		$	-
Actuarial losses (gains) arising from changes in financial assumptions		9,250			(36,058	)
Actuarial gains arising from changes experience adjustments		(637	)		(516	)
Components recognized in statements of comprehensive income	$	9,115		$	(36,574	)
Total other employee future benefit cost	$	(16,386	)	$	29,779

Other employee benefit amounts recognized include those directly related to production of inventory; such amounts are recognized initially as costs of inventory and are expensed in the consolidated income statements within cost of sales upon sale of the inventory.

61

HUDBAY MINERALS INC.
Notes to Audited Consolidated Financial Statements
(in thousands of US dollars, except where otherwise noted)
Years ended December 31, 2023 and 2022

	Dec. 31, 2023	Dec. 31, 2022
Defined benefit cost:
Discount rate	5.27%	3.30%
Initial weighted average health care trend rate	5.92%	6.00%
Ultimate weighted average health care trend rate	4.00%	4.00%
Average longevity at retirement age for current pensioners (years)1 :
Males	20.4	20.4
Females	23.8	23.7

	Dec. 31, 2023	Dec. 31, 2022
Defined benefit obligation:
Discount rate	4.64%	5.27%
Initial weighted average health care trend rate	5.82%	5.92%
Ultimate weighted average health care trend rate	4.00%	4.00%
Average longevity at retirement age for current pensioners (years)1 :
Males	20.5	20.4
Females	23.9	23.8
Average longevity at retirement age for current employees (future pensioners) (years)1 :
Males	22.4	22.3
Females	25.6	25.5

¹ CPM2014 Priv with MI-2017 projection scale with loading of 1.25 and 1.15 for males and females.

Hudbay reviews the assumptions used to measure other employee benefit costs (including the discount rate) on an annual basis.

The other employee benefit costs typically expose Hudbay to actuarial risks such as: interest rate risk, health care cost inflation risk and longevity risk.

Interest risk	A decrease in the bond interest rate will increase the plan liabilities.
Health care cost inflation risk	The majority of the plan's benefit obligations are linked to health care cost inflation and higher inflation will lead to higher liabilities.
Longevity risk	The majority of the plans' benefit liability is calculated by reference to the best estimate of the mortality of plan participants both during and after their employment. An increase in the life expectancy of the plan participants will increase the plans' liabilities. This is particularly significant for benefits subject to health care cost inflation where increases in inflation result in higher sensitivity to changes in life expectancy.

62

HUDBAY MINERALS INC.
Notes to Audited Consolidated Financial Statements
(in thousands of US dollars, except where otherwise noted)
Years ended December 31, 2023 and 2022

The sensitivity analyses below have been determined based on reasonably possible changes of the respective assumptions occurring at the end of the reporting period, while holding other assumptions constant:

-If the discount rate is 50 basis points higher (lower), the defined benefit obligation would decrease by $7,544 (increase by $8,548).

-If the health care cost assumption increases (decreases) by 1%, the defined benefit obligation would increase by $17,429 (decrease by $13,869).

-If the life expectancy increases (decreases) by one year for both men and women, the defined benefit obligations would increase by $3,614 (decrease by $3,604).

The average duration of the non-pension post-employment obligation at December 31, 2023 is 15.8 years (2022: 15.0 years).

This number can be broken down as follows:

-Active members: 22.9 years (2022: 21.9 years)

-Inactive members: 12.0 years (2022: 11.6 years)

25.Income and mining taxes

(a)Tax recoveries:

The tax expense (recoveries) is applicable as follows:

		Year ended December 31,
		2023			2022
Current:
Income taxes	$	87,490		$	10,940
Mining taxes		21,974			10,673
Adjustments in respect of prior years		(4,383	)		(704	)
		105,081			20,909
Deferred:
Income tax (recoveries) expense - origination, revaluation and/or reversal of temporary differences		(25,854	)		218
Mining tax (recoveries) expense - origination, revaluation and/or reversal of temporary difference		(2,431	)		5,464
Adjustments in respect of prior years		5,491			(1,158	)
		(22,794	)		4,524
	$	82,287		$	25,433

Adjustments in respect of prior years refers to amounts changing due to the filing of tax returns and assessments from government authorities as well as any change identified that would result in a difference to our current or deferred tax balances as reported in the prior fiscal year end.

63

HUDBAY MINERALS INC.
Notes to Audited Consolidated Financial Statements
(in thousands of US dollars, except where otherwise noted)
Years ended December 31, 2023 and 2022

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

		Dec. 31, 2023			Dec. 31, 2022
Deferred income tax asset	$	151,946		$	125,638
Deferred income tax liability		(362,767	)		(233,730	)
Deferred mining tax liability		(44,385	)		(17,564	)
		(407,152	)		(251,294	)
Net deferred tax liability balance, end of year	$	(255,206	)	$	(125,656	)

(c)Changes in deferred tax assets and liabilities:

		Year ended December 31,
		2023			2022
Net deferred tax liability balance, beginning of year	$	(125,656	)	$	(128,180	)
Deferred tax recovery (expense)  (note 25a)		22,794			(4,524	)
OCI transactions		(225	)		(2,384	)
Foreign currency translation on the deferred tax liability		(3,873	)		9,432
Acquisition of Copper Mountain mining (note 5)		(148,246	)		-
Net deferred tax liability balance, end of year	$	(255,206	)	$	(125,656	)

64

HUDBAY MINERALS INC.
Notes to Audited Consolidated Financial Statements
(in thousands of US dollars, except where otherwise noted)
Years ended December 31, 2023 and 2022

(d) Reconciliation to statutory tax rate:

As a result of its mining operations, the Company is subject to both income and mining taxes. Generally, most expenditures incurred are deductible in computing income tax, whereas mining tax legislation, although based on a measure of profitability from carrying on mining operations, is more restrictive in respect of the deductions permitted in computing income subject to mining tax. These restrictions include costs unrelated to mining operations as well as deductions for financing expenses, such as interest and royalties. In addition, income unrelated to carrying on mining operations is not subject to mining tax.

A reconciliation between tax expense and the product of accounting profit multiplied by the Company's statutory income tax rate for the years ended December 31, 2023 and 2022 is as follows:

		Year ended December 31,
		2023			2022
Profit before tax	$	151,830		$	95,815
Statutory tax rate		26.2%			26.3%
Tax expense at statutory rate		39,779			25,199
Effect of:
Deductions related to mining taxes		(6,937	)		(3,249	)
Adjusted income taxes		32,842			21,950
Mining tax expense		18,827			15,959
		51,669			37,909
Permanent differences related to:
Capital items		371			(321	)
Other income tax permanent differences		870			3,839
Withholding tax on dividends		11,750			-
Impact of remeasurement on decommissioning liability		(6,363	)		(38,950	)
Temporary income tax differences not recognized		5,448			(509	)
Recognition of previously unrecognized deferred tax assets		(5,335	)		(3,943	)
Impact related to differences in tax rates in foreign operations		27,931			15,339
Impact of changes to statutory tax rates		878			958
Foreign exchange on non-monetary items		(7,384	)		13,094
Impact related to tax assessments and tax return amendments		1,906			(1,983	)
Other		546			-
Tax expense	$	82,287		$	25,433

65

HUDBAY MINERALS INC.
Notes to Audited Consolidated Financial Statements
(in thousands of US dollars, except where otherwise noted)
Years ended December 31, 2023 and 2022

(e) Income tax effect of temporary differences - recognized:

The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities at December 31, 2023 and 2022 are as follows:

		Balance sheet
		Dec. 31, 2023			Dec. 31, 2022
Deferred income tax (liability) asset
Property, plant and equipment	$	(50,367	)	$	(44,029	)
Pension obligation		2,531			2,121
Other employee benefits		26,928			25,395
Decommissioning and restoration provision		20,031			20,454
Non-capital losses		135,284			104,481
Share issuance and debt cost		6,646			6,283
Deferred revenue		1,532			1,195
Other		9,361			9,738
Deferred income tax asset		151,946			125,638
Deferred income tax liability (asset)
Property, plant and equipment		478,657			311,499
Other employee benefits		(1,193	)		(1,024	)
Decommissioning and restoration provision		(19,231	)		(8,376	)
Non-capital losses		(91,951	)		(71,532	)
Other		(3,515	)		3,163
Deferred income tax liability		362,767			233,730
Deferred income tax liability	$	(210,821	)	$	(108,092	)

The above reconciling items are disclosed at the tax rates that apply in the jurisdiction where they have arisen.

(f) Income tax temporary differences - not recognized:

The Company has not recognized a deferred tax asset on $43,134 of non-capital losses (December 31, 2022 - $44,451), $183,228 of capital losses (December 31, 2022 - $154,560) and $482,944 (December 31, 2022 - $255,938) of other deductible temporary differences since the realization of any related tax benefit through future taxable profits is not probable. The capital losses have no expiry dates and the other deductible temporary differences do not expire under current tax legislation.             

The Canadian non-capital losses were incurred between 2013 and 2023 and have a twenty-year carry forward period. The United States net operating losses incurred between 2004 and 2017 have a twenty-year carry forward period. United States net operating losses incurred between 2018 and 2023 may be carried forward indefinitely but are restricted to being applied against a maximum of 80% of taxable income.   

66

HUDBAY MINERALS INC.
Notes to Audited Consolidated Financial Statements
(in thousands of US dollars, except where otherwise noted)
Years ended December 31, 2023 and 2022

(g)  Mining tax effect of temporary differences:

The tax effects of temporary differences that give rise to significant portions of the deferred mining tax assets and liabilities at December 31, 2023 and 2022 are as follows:

Canada		Dec. 31, 2023			Dec. 31, 2022
Property, plant and equipment	$	(52,633	)	$	(4,996	)
Other		17,621			-
	$	(35,012	)	$	(4,996	)
Peru		Dec. 31, 2023			Dec. 31, 2022
Property, plant and equipment	$	(9,373	)	$	(12,568	)

For the year ended December 31, 2023, Hudbay had unrecognized deferred mining tax assets of approximately $9,695 (December 31, 2022 - $10,198).

  (h) Unrecognized taxable temporary differences associated with investments:

There are no taxable temporary differences associated with investments in subsidiaries, associates and joint ventures, for which a deferred tax liability has not been recognized.

  (i)  Taxes receivable/payable:

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

  (j)  Other disclosure:

The tax rules and regulations applicable to mining companies are highly complex and subject to interpretation. The Company 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 tax authorities over the interpretation or application of certain tax rules and regulations in respect of the Company'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.

67

HUDBAY MINERALS INC.
Notes to Audited Consolidated Financial Statements
(in thousands of US dollars, except where otherwise noted)
Years ended December 31, 2023 and 2022

26.Share capital

(a)Preference shares:

Authorized: Unlimited preference shares without par value.

Issued and fully paid: Nil.

(b)Common shares:

Authorized: Unlimited common shares without par value.

Issued and fully paid:

	Year ended Dec. 31, 2023				Year ended Dec. 31, 2022
	Common shares			Amount	Common shares		Amount
Balance, beginning of year	262,019,857		$	1,780,774	261,598,312	$	1,778,848
Shares issued on acquisition of Copper Mountain, net of share issuance costs (note 5)	84,165,617			436,499	-		-
Shares issued on acquisition of Rockcliff (note 6)	2,675,324			12,503	-		-
Flow through shares, net of share issuance costs	1,960,000			10,166
Exercise of options	67,145			291	421,545		1,926
Cancelled shares	(159,407	)		-
Balance, end of year	350,728,536		$	2,240,233	262,019,857	$	1,780,774

During the year ended December 31, 2023, the Company declared two semi-annual dividends of C$0.01 per share. The Company paid $1,908 and $2,555 in dividends on March 24, 2023 and September 22, 2023 to shareholders of record as of March 7, 2023 and September 1, 2023.

During the year ended December 31, 2022, the Company declared two semi-annual dividends of C$0.01 per share. The Company paid $2,075 and $1,972 in dividends on March 25, 2022 and September 23, 2022 to shareholders of record as of March 8, 2022 and September 2, 2022.

During the year ended December 31, 2023, the Company completed a Canadian Development Expense and Canadian Exploration Expense flow-through financing. The Company issued 1,960,000 common shares for proceeds, net of transaction costs, of $14,424. The implied premium on the flow-through shares of $4,258 was recorded as a flow-through share liability. At December 31, 2023, the Company has not incurred any qualifying expenditures related to this flow-through financing. The flow-through share liability will be recognized in earnings as eligible expenditures are made.

68

HUDBAY MINERALS INC.
Notes to Audited Consolidated Financial Statements
(in thousands of US dollars, except where otherwise noted)
Years ended December 31, 2023 and 2022

27.Share-based compensation

(a) Cash-settled share-based compensation:

Hudbay has three cash-settled share-based compensation plans, as described below.

Deferred Share Units (DSU)

At December 31, 2023, the carrying amount and the intrinsic value of the outstanding liability related to the DSU plan was $8,660 (December 31, 2022 - $6,872) (note 22). The following table outlines information related to DSUs granted, expenses recognized and payments made during the year.

		Year ended
		Dec. 31, 2023		Dec. 31, 2022
Granted during the year:
Number of units		210,472		238,627
Weighted average price (C$/unit)	$	7.02	$	6.45
Expenses (gain) recognized during the year1 (notes 7d)	$	1,717	$	(849	)

¹ This expense relates to the grant of DSUs, as well as mark-to-market adjustments, and is presented within selling and administrative expenses on the consolidated income statements.

Restricted Share Units (RSU)

RSUs granted under the LTEP Plan may be settled in the form of Hudbay common shares or, at the option of the Company, the cash equivalent based on the market price of the common shares as of the vesting date. RSUs may also be granted under Hudbay's Share Unit Plan, however; the RSUs granted under the Share Unit Plan may only be settled in cash. Hudbay has historically settled all RSUs in cash. The Company has determined that the appropriate accounting treatment is to classify the RSUs as cash settled transactions.

At December 31, 2023, the carrying amount of the outstanding liability related to the RSU plan was $5,088 (December 31, 2022 - $6,855) (note 22). The following table outlines information related to RSUs granted, expenses recognized and payments made in the year.             

		Year ended
		Dec. 31, 2023			Dec. 31, 2022
Number of units, beginning of year		2,082,990			2,484,860
Number of units granted during the year		873,371			701,050
Credits for dividends		5,594			6,203
Number of units forfeited during the year		(122,992	)		(180,324	)
Number of units vested		(1,051,235	)		(928,799	)
Number of units, end of year		1,787,728			2,082,990
Weighted average price - granted (C$/unit)	$	6.59		$	9.64
Expenses recognized during the year1 (note 7c)	$	2,882		$	2,076
Payments made during the year (note 22)	$	5,138		$	6,232

¹ This net expense reflects recognition of RSU expense over the service period, as well as mark-to-market adjustments, and is presented mainly within cost of sales and selling and administrative expenses. Certain amounts related to the Arizona segment are capitalized.

69

HUDBAY MINERALS INC.
Notes to Audited Consolidated Financial Statements
(in thousands of US dollars, except where otherwise noted)
Years ended December 31, 2023 and 2022

Performance Share Units (PSU)

PSUs granted under the LTEP Plan may be settled in the form of Hudbay common shares or, at the option of the Company, the cash equivalent based on the market price of the common shares as of the vesting date. Hudbay has historically settled similar share-based compensation units in cash. The Company has determined that the appropriate accounting treatment is to classify the PSUs as cash settled transactions. The PSUs contain a performance based multiplier element which will be computed upon vesting.

At December 31, 2023, the carrying amount of the outstanding liability related to PSU plan was $2,580 (December 31, 2022 - $2,989) (note 22). The following table outlines information related to PSUs granted, expenses recognized and payments made in the year.             

		Year ended
		Dec. 31, 2023			Dec. 31, 2022
Number of units, beginning of year		1,373,063			1,506,231
Number of units granted during the year		580,275			423,322
Credits for dividends		3,559			4,598
Number of units forfeited during the year		(577,900	)		(285,782	)
Number of units vested		(206,194	)		(275,306	)
Number of units, end of year		1,172,803			1,373,063
Weighted average price - granted (C$/unit)	$	6.59		$	9.82
Expense (recovery) recognized during the year (note 7c)	$	621		$	(1,011	)
Payments made during the year (note 22)	$	1,075		$	1,115

(b) Equity-settled share-based compensation - stock options:

The Company's stock option plan was approved in June 2005 and amended in May 2008 (the "Plan"). Under the amended Plan, the Company may grant to employees, officers, directors or consultants of the Company or its affiliates options to purchase up to a maximum of 13 million common shares of Hudbay. The Company has determined that the appropriate accounting treatment is to classify the stock options as equity settled transactions.

During the year ended December 31, 2023, the Company granted 801,661 stock options (year ended December 31, 2022 - 602,614).

The following table outlines the changes in the number of stock options outstanding:

	Year ended				Year ended
	Dec. 31, 2023				Dec. 31, 2022
	Number of shares subject to option			Weighted- average exercise price C$	Number of shares subject to option			Weighted average exercise price C$
Balance, beginning of year	1,528,760		$	7.38	1,659,288		$	5.71
Number of units granted during the year	801,661		$	6.75	602,614		$	9.77
Exercised	(67,145	)	$	3.79	(421,545	)	$	3.80
Forfeited	(80,306	)	$	8.33	(311,597	)	$	7.94
Balance, end of year	2,182,970		$	7.23	1,528,760		$	7.38

70

HUDBAY MINERALS INC.
Notes to Audited Consolidated Financial Statements
(in thousands of US dollars, except where otherwise noted)
Years ended December 31, 2023 and 2022

The following table presents the weighted average fair value assumptions used in the Black-Scholes valuation of these options:

For options granted during the year ended		Dec. 31, 2023		Dec. 31, 2022
Weighted average share price at grant date (CAD)	$	6.75	$	9.77
Risk-free rate		3.40%		1.81%
Expected dividend yield		0.3%		0.2%
Expected stock price volatility (based on historical volatility)		56.0%		55.9%
Expected life of option (months)		84		84
Weighted average per share fair value of stock options granted (CAD)	$	3.90	$	5.45

The following table outlines stock options outstanding and exercisable:

Dec. 31, 2023
Range of exercise prices C$	Number of options outstanding	Weighted average remaining contractual life (years)		Weighted average exercise price C$	Number of options exercisable		Weighted average share price at exercise date C$
$3.76 - $4.82	568,801	3.15	$	3.76	568,801	$	3.76
$5.91 - $6.75	779,959	6.17	$	6.75	-	$	-
$6.76 - $10.17	488,340	5.17	$	9.76	174,989	$	9.57
$10.18 - $10.42	345,870	4.15	$	10.42	230,514	$	10.42

Dec. 31, 2022
Range of exercise prices C$	Number of options outstanding	Weighted average remaining contractual life (years)		Weighted average exercise price C$	Number of options exercisable		Weighted average share price at exercise date C$
$3.76 - $3.92	644,983	4.15	$	3.76	264,553	$	3.76
$3.93 - $9.00	30,283	5.85	$	6.92	9,194	$	7.04
$9.01 - $9.92	487,005	6.16	$	9.92	-	$	-
$9.92 - $10.42	366,489	5.15	$	10.42	122,628	$	10.42

Hudbay estimates expected life of options and expected volatility based on historical data, which may differ from actual outcomes.

71

HUDBAY MINERALS INC.
Notes to Audited Consolidated Financial Statements
(in thousands of US dollars, except where otherwise noted)
Years ended December 31, 2023 and 2022

28.Earnings per share

	Year ended December 31,
	2023	2022
Weighted average common shares outstanding
Basic	310,845,281	261,858,531
Plus net incremental shares from:
Assumed conversion: stock options	107,829	358,997
Diluted weighted average common shares outstanding	310,953,110	262,217,528

For periods where Hudbay records a loss, Hudbay calculates diluted loss per share using the basic weighted average number of shares. If the diluted weighted average number of shares were used, the result would be a reduction in the loss, which would be anti-dilutive.

29.Capital management

The Company's definition of capital includes total equity and long-term debt. Hudbay's long-term debt balance as at December 31, 2023 was $1,287,536 (December 31, 2022 - $1,184,162).

The Company's objectives when managing capital are to maintain a strong capital base in order to:

-Advance Hudbay's corporate strategies to create long-term value for its stakeholders; and,

-Sustain Hudbay's operations and growth throughout metals and materials cycles.

Hudbay monitors its capital and capital structure on an ongoing basis to ensure they are sufficient to achieve the Company's short-term and long-term strategic objectives in a capital intensive industry. Hudbay faces several risks, including volatile metals prices, inflationary pressures on costs, access to capital, and risk of delays and cost escalation associated with major capital projects. The Company continually assesses the adequacy of its capital structure to ensure its objectives are met. Hudbay monitors its cash, which was $249,794 as at December 31, 2023 (2022 - $225,665), together with availability under its committed credit facilities. Hudbay invests its cash primarily in Canadian bankers' acceptances, deposits at major Canadian and Peruvian banks, or treasury bills issued by the federal or provincial governments. In addition to the requirement to maintain sufficient cash balances to fund continuing operations, Hudbay must maintain sufficient cash to fund the interest expense on the long-term debt outstanding (note 20). As part of the Company's capital management activities, Hudbay monitors interest coverage ratios and leverage ratios.

72

HUDBAY MINERALS INC.
Notes to Audited Consolidated Financial Statements
(in thousands of US dollars, except where otherwise noted)
Years ended December 31, 2023 and 2022

30.Financial instruments

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

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

		Dec. 31, 2023				Dec. 31, 2022
		FV		CV		FV		CV
Financial assets at amortized cost
Cash and cash equivalents1	$	249,794	$	249,794	$	225,665	$	225,665
Guaranteed investment certificates1		1,359		1,359		-		-
Restricted cash1		1,964		1,964		486		486
Fair value through profit or loss
Trade and other receivables2,3		176,214		176,214		87,638		87,638
Non-hedge derivative assets 4		1,416		1,416		577		577
Investments 5		6,452		6,452		9,799		9,799
Total financial assets	$	437,199	$	437,199	$	324,165	$	324,165
Financial liabilities at amortized cost
Trade and other payables1, 2		219,304		219,304		195,872		195,872
Deferred Rosemont acquisition consideration 8		9,713		9,713		18,876		18,876
Agreements with communities 6		53,459		54,979		35,870		42,493
Wheaton refund liability10		10,346		6,653		7,744		6,383
Senior unsecured notes 7		1,176,312		1,190,586		1,094,988		1,188,132
Senior secured revolving credit facilities11		96,950		96,950		-		-
Fair value through profit or loss
Gold prepayment liability 9		55,901		55,901		71,208		71,208
Non-hedge derivative liabilities 4		11,811		11,811		17,995		17,995
Total financial liabilities	$	1,633,796	$	1,645,897	$	1,442,553	$	1,540,959

¹ Cash and cash equivalents, guaranteed investment certificates, restricted cash, 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 tax and other statutory amounts.

³ Trade and other receivables contain receivables including provisionally priced receivables classified as FVTPL and various other items at amortized cost. The fair value of provisionally priced receivables is determined using forward metals prices (level 2).

⁴ Derivatives are carried at their fair value, which is determined based on observable forward market commodity prices corresponding to the maturity of the contract (level 2),

⁵ All investments are carried at their fair value, which is determined using quoted market bid prices in active markets for listed shares.

⁶ These financial liabilities relate to agreements with communities near the Constancia project in Peru (note 17). Fair values have been determined using an applicable credit-risk adjusted discounted rate and foreign exchange rates (level 3).

⁷ Fair value of the senior unsecured notes (note 20) has been determined using an applicable credit-risk adjusted discount rate (level 3).

⁸ Discounted value based on a risk adjusted discount rate.

⁹ The gold prepayment liability (note 18) is designated as fair value through profit or loss under the fair value option. Fair value is determined using observable gold forward prices corresponding to the delivery of gold ounces in the contract along with an estimate of credit-risk for similar instruments (level 3). Gains and losses related to the Company's own credit-risk have been recorded at fair value through other comprehensive income. The fair value adjustment recorded in other comprehensive income for the year ended December, 2023 was a loss of  $192 (year ended December 31, 2022 was a gain of $512).

¹⁰ Discounted value based on a market rate at inception of the applicable Wheaton contract for carrying value (note 17) and fair value using an applicable credit-risk adjusted discount rate (level 3).

¹¹ Fair value of the senior secured revolving credit facility is equal to its carrying value as the drawn interest rate under the facility is comparable to current market rates.

73

HUDBAY MINERALS INC.
Notes to Audited Consolidated Financial Statements
(in thousands of US dollars, except where otherwise noted)
Years ended December 31, 2023 and 2022

Fair value hierarchy

The table below provides an analysis by valuation method of financial instruments that are measured at fair value subsequent to recognition as well as financial instruments not measured at fair value but for which a fair value is disclosed. 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.

December 31, 2023		Level 1		Level 2		Level 3		Total
Financial assets measured at fair value
Financial assets at FVTPL:
Non-hedge derivatives	$	-	$	1,416	$	-	$	1,416
Investments		6,452		-		-		6,452
	$	6,452	$	1,416	$	-	$	7,868
Financial liabilities measured at fair value
Financial liabilities at FVTPL:
Non-hedge derivatives	$	-	$	11,811	$	-	$	11,811
Gold prepayment liability		-		55,901		-		55,901
Financial liabilities at amortized cost:
Agreements with communities		-		-		53,459		53,459
Wheaton refund liability		-		-		10,346		10,346
Senior secured revolving credit facilities		-		-		96,950		96,950
Senior unsecured notes		1,176,312		-		-		1,176,312
	$	1,176,312	$	67,712	$	160,755	$	1,404,779

December 31, 2022		Level 1		Level 2		Level 3		Total
Financial assets measured at fair value
Financial assets at FVTPL:
Non-hedge derivatives	$	-	$	577	$	-	$	577
Investments		9,799		-		-		9,799
	$	9,799	$	577	$	-	$	10,376
Financial liabilities measured at fair value
Financial liabilities at FVTPL:
Non-hedge derivatives	$	-	$	17,995	$	-	$	17,995
Gold prepayment liability		-		71,208		-		71,208
Financial liabilities at amortized cost:
Agreements with communities		-		-		35,870		35,870
Wheaton refund liability		-		-		7,744		7,744
Senior unsecured notes		1,094,988		-		-		1,094,988
	$	1,094,988	$	89,203	$	43,614	$	1,227,805

74

HUDBAY MINERALS INC.
Notes to Audited Consolidated Financial Statements
(in thousands of US dollars, except where otherwise noted)
Years ended December 31, 2023 and 2022

The Company'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 year ended December 31, 2023 and year ended December 31, 2022, Hudbay did not make any such transfers.

Changes to inputs of financial instruments categorized as Level 3 were insignificant.

(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 December 31, 2023, Hudbay had 90.6 million pounds of net copper swaps outstanding at an effective average price of $3.74/lb and settling from January to May 2024. As at December 31, 2022, Hudbay had 89.7 million pounds of net copper swaps outstanding at an effective average price of $3.61/lb and settling from January to May 2023. The aggregate fair value of the transactions at December 31, 2023 was a liability of $9,515 (December 31, 2022 - a liability position of $17,269).

Zinc fixed for floating swaps

Hudbay enters into zinc fixed for floating swaps in order to manage the risk associated with provisional pricing terms in zinc concentrate sales agreements. As at December 31, 2023, Hudbay had 13.9 million pounds of net zinc swaps outstanding at an effective average price of $1.14/lb and settling from January to March 2024. As at December 31, 2022, Hudbay had 17.5 million pounds of net zinc swaps outstanding at an effective average price of $1.32/lb and settling from January to March 2023. The aggregate fair value of the transactions at December 31, 2023 was a liability of $945 (December 31, 2022 - a liability position of $149).

Copper forward sale

During the second half of 2023, Hudbay entered into forward sales contracts for a total of 5,600 tonnes of copper production. As of December 31, 2023, Hudbay had 7.9 million pounds of copper forwards outstanding at an effective average price of $3.93/lb and settling from May 2024 to April 2025. The aggregate fair value of the transactions at December 31, 2023 was an asset of $65. Hudbay held no forward copper purchase contracts as at December 31, 2022.

Copper costless collars

During the fourth quarter of 2023, Hudbay entered into zero-cost collar program for 6,000 tonnes of copper production over the twelve-month period from May 2024 to April 2025 at an average floor price of $3.83/lb and an average cap price of $4.03/lb. Gains and losses resulting from the settlement of these derivatives are recorded directly to revenue, as the forward sales contracts do not qualify for hedge accounting, and the associated cash flows are classified in operating activities. As at December 31, 2023, 13.2 million pounds of copper collars were unsettled (December 31, 2022 - nil). The aggregate fair value of the position at December 31, 2023 was nil (December 31, 2022 - nil).

(c)Provisionally priced receivables

Changes in fair value of provisionally priced receivables

Hudbay 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.

75

HUDBAY MINERALS INC.
Notes to Audited Consolidated Financial Statements
(in thousands of US dollars, except where otherwise noted)
Years ended December 31, 2023 and 2022

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 inventory or 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 December 31, 2023 and December 31, 2022, Hudbay's net position consisted of contracts awaiting final pricing are as indicated below:

Metal in concentrate		Sales awaiting final pricing		Average YTD price ($/unit)
	Unit	Dec. 31, 2023	Dec. 31, 2022	Dec. 31, 2023	Dec. 31, 2022
Copper	pounds (in thousands)	111,069	79,833	3.87	3.80
Gold	troy ounces	50,563	22,079	2,072	1,823
Silver	troy ounces	205,579	71,809	23.94	23.91
Zinc	pounds (in thousands)	16,416	18,145	1.20	1.35

The aggregate fair value of provisionally priced receivables within the copper and zinc concentrate at December 31, 2023, was an asset position of $22,635(December 31, 2022 - an asset position of $20,285).

(d)Other financial liabilities

Gold prepayment liability

The gold prepayment liability (note 18) requires settlement by physical delivery of gold ounces or equivalent gold credits. The fair value of the financial liability at December 31, 2023 was $55,901 (December 31, 2022 - a liability of $71,208).

(e) Financial risk management

Hudbay's financial risk management activities are governed by Board-approved policies addressing risk identification, hedging authorization procedures and limits and reporting. The Company's policy objective, when hedging activities are undertaken, is to reduce the volatility of future profit and cash flow within the strategic and economic goals of Hudbay. From time to time, the Company employs derivative financial instruments, including forward and option contracts, to manage risk originating from exposures to commodity price risk, foreign exchange risk and interest rate risk. Significant derivative transactions are approved by the Board of Directors, and hedge accounting is applied when certain criteria have been met. Hudbay does not use derivative financial instruments for trading or speculation purposes. The following is a discussion of the Company's risk exposures.

76

HUDBAY MINERALS INC.
Notes to Audited Consolidated Financial Statements
(in thousands of US dollars, except where otherwise noted)
Years ended December 31, 2023 and 2022

(i) Market risk

Market risk is the risk that changes in market prices, including foreign exchange rates, commodity prices, share prices, and interest rates will cause fluctuations in the fair value or future cash flows of a financial instrument.

Foreign currency risk

Hudbay's primary exposure to foreign currency risk arises from:

-Translation of Canadian dollar denominated costs and, to a lesser extent, Peruvian soles cost into US dollars. Substantially all of the Company's revenue are denominated in US dollars, while the majority of its operating costs are denominated in either the Canadian dollar or Peruvian sol. Generally, with gross profit, appreciation of the US dollar relative to the Canadian dollar will increase Hudbay's profit.

-Translation of foreign currency denominated cash, trade and other receivables, trade and other payables, as well as other financial liabilities. Appreciation of the US dollar relative to a foreign currency will decrease the net asset value of these balances once they have been translated to US dollars, resulting in foreign currency translation losses on foreign currency denominated assets and gains on foreign currency denominated liabilities.

The Manitoba and British Columbia segment's primary financial instrument foreign currency exposure is on US denominated cash, trade and other receivables and other financial liabilities. The Peru segment's primary financial instrument foreign currency exposure is on Peruvian soles cash, trade and other payables and other financial liabilities.

The Company's exposure to foreign currency risk was as follows based on notional financial instrument amounts stated in US equivalent dollars:

		Dec. 31, 2023								Dec. 31, 2022
		CAD1			USD2		PEN3			CAD1			USD2			PEN3
Cash	$	19,039		$	16,737	$	1,956		$	9,833		$	26,749		$	11,067
Trade and other receivables		34			76,251		333			58			20,520			634
Other financial assets		6,452			-		-			9,799			-			-
Trade and other payables		(6,090	)		-		(20,988	)		(5,626	)		(113	)		(29,587	)
Other financial liabilities		-			-		(54,979	)		-			-			(42,493	)
	$	19,435		$	92,988	$	(73,678	)	$	14,064		$	47,156		$	(60,379	)

¹ HMI is exposed to foreign currency risk on CAD.

² The Manitoba and British Columbia segments are exposed to foreign currency risk on USD.

³ The Peru segment is exposed to foreign currency risk on PEN.

The following sensitivity analysis for foreign currency risk relates solely to financial instruments and non-financial derivatives that were outstanding as at the year-end date; each sensitivity calculation assumes all other variables are held constant. This analysis is based on values as at December 31, 2023 and does not reflect the overall effect that changes in market variables would have on the Company's operating results.

77

HUDBAY MINERALS INC.
Notes to Audited Consolidated Financial Statements
(in thousands of US dollars, except where otherwise noted)
Years ended December 31, 2023 and 2022

December 31, 2023	Change of:		Would have changed 2023 after-tax profit by:
USD/CAD exchange rate1	+ 10%	$	3.7		million
USD/CAD exchange rate1	- 10%		(4.5	)	million
USD/PEN exchange rate2	+ 10%		4.4		million
USD/PEN exchange rate2	- 10%		(5.3	)	million
December 31, 2022	Change of:		Would have changed 2022 after-tax profit by:
USD/CAD exchange rate1	+ 10%	$	1.5		million
USD/CAD exchange rate1	- 10%		(1.8	)	million
USD/PEN exchange rate2	+ 10%		3.5		million
USD/PEN exchange rate2	- 10%		(4.3	)	million

¹ Effect on profit due to foreign currency remeasurements of balances denominated in a currency different from a Hudbay subsidiary's functional currency.

² Effect on profit due to foreign currency remeasurement of balances denominated in Peruvian Sol.

Commodity price risk

Hudbay is exposed to market risk from prices for the commodities the Company produces and sells, such as copper, zinc, gold and silver. From time to time, Hudbay maintains price protection programs and conducts commodity price risk management through the use of derivative contracts. The following sensitivity analysis for commodity price risk relates solely to financial instruments and non-financial derivatives that were outstanding as at the year-end date; each sensitivity calculation assumes all other variables are held constant. This analysis is based on values as at December 31, 2023 and does not reflect the overall effect that changes in market variables would have on the Company's operating results.

December 31, 2023	Change of:		Would have changed 2023 after-tax profit by:
Copper prices ($/lb)1	+ $0.30	$	2.6		million
Copper prices ($/lb)1	- $0.30		(2.0	)	million
Zinc prices ($/lb)2	+ $0.10		0.1		million
Zinc prices ($/lb)2	- $0.10		(0.1	)	million
December 31, 2022	Change of:		Would have changed 2022 after-tax profit by:
Copper prices ($/lb)1	+ $0.30	$	(1.8	)	million
Copper prices ($/lb)1	- $0.30		1.8		million
Zinc prices ($/lb)2	+ $0.10		-		million
Zinc prices ($/lb)2	- $0.10		-		million

¹ Effect on profit due to provisional pricing derivatives (note 30c) and copper fixed for floating swaps (note 30b).

² Effect on profit due to provisional pricing derivatives (note 30c), non-hedge zinc derivatives and zinc fixed for floating swaps (note 30b).

78

HUDBAY MINERALS INC.
Notes to Audited Consolidated Financial Statements
(in thousands of US dollars, except where otherwise noted)
Years ended December 31, 2023 and 2022

Share price risk

Hudbay is exposed to market risk from share prices of the Company's investments in listed Canadian metals and mining entities. These investments are made to foster strategic relationships, in connection with joint venture agreements and for investment purposes. Management monitors the value of these investments for the purposes of determining whether to add or reduce Hudbay's positions. The following sensitivity analysis of share price risk relates solely to financial instruments that were outstanding as at the year-end date. This analysis is based on values as at December 31, 2023 and does not reflect the overall effect that changes in market variables would have on the Company's finance expenses.

December 31, 2023	Change of:		Would have changed 2023 after-tax profit by:
Share prices	+ 25%	$	1.6		million
Share prices	- 25%		(1.6	)	million
December 31, 2022	Change of:		Would have changed 2022 after-tax profit by:
Share prices	+ 25%	$	2.4		million
Share prices	- 25%		(2.4	)	million

Interest rate risk

Hudbay is exposed to the following interest rate risks:

-cash flow interest rate risk on its cash and cash equivalents; and,

-interest rate risk on its senior secured revolving credit facilities.

As at December 31, 2023, the interest rate risk relates to cash on hand and the drawn balance our revolving credit facilities. Neither the 2026 Notes nor the 2029 Notes contain embedded derivatives that require bifurcation from the host contract.

This analysis only quantifies the impact of the interest rate risk on cash based on balances held and on our revolving credit facilities based on amounts drawn as at December 31, 2023 and 2022 and does not reflect the overall effect that changes in market variables would have on the Company's finance expenses.

December 31, 2023	Change of:		Would have changed 2023 after-tax profit by:
Interest rates	+ 2.00%	$	3.0		million
Interest rates	- 2.00%		(3.0	)	million
December 31, 2022	Change of:		Would have changed 2022 after-tax profit by:
Interest rates	+ 2.00%	$	4.5		million
Interest rates	- 2.00%		(4.5	)	million

79

HUDBAY MINERALS INC.
Notes to Audited Consolidated Financial Statements
(in thousands of US dollars, except where otherwise noted)
Years ended December 31, 2023 and 2022

(ii) Credit risk

Credit risk is the risk of financial loss to Hudbay if a customer or counterparty to a financial instrument fails to meet its obligations. The Company's maximum exposure to credit risk at the reporting date is represented by the carrying amount, net of any impairment losses recognized, of financial assets and non-financial derivative assets recorded on the consolidated balance sheets.

A large portion of Hudbay's cash are on deposits with major Schedule 1 Canadian banks. Deposits with Schedule 1 Canadian banks represented 62% of total cash as at December 31, 2023 (2022 - 64%). Hudbay's investment policy requires it to comply with a list of approved investments, concentration and maturity limits, as well as credit quality. Credit concentrations in the Company's short-term investments are monitored on an ongoing basis.

Transactions involving derivatives are with counterparties Hudbay believes to be creditworthy.

At December 31, 2023, approximately 76% of Hudbay's trade receivables were secured by letters of credit (2022 - 86% were insured or payable by letters of credit). Any additional exposure to credit risk is monitored and approved on an ongoing basis. Expected credit losses on trade and other receivables at December 31, 2023 and December 31, 2022, are insignificant.

Two customers accounted for approximately 24% and 17% of total trade receivables as at December 31, 2023 (2022 - two customers accounted for approximately 18% and 14% of total trade receivables). Credit risk for these customers is assessed as medium to low. As at December 31, 2023, none of the Company's trade receivables were aged more than 30 days (2022 - nil).

(iii) Liquidity risk

Liquidity risk is the risk that the Company will not be able to meet its obligations associated with financial liabilities. Hudbay's objective is to maintain sufficient liquid resources to meet operational and investing requirements.

The following summarizes the contractual undiscounted cash flows of the Company's non-derivative and derivative financial liabilities, including any interest payments, by remaining contractual maturity and financial assets used to manage liquidity risk. The table includes all instruments held at the reporting date for which payments had been contractually agreed at the reporting date. The undiscounted amounts shown are gross amounts, unless the liabilities will be settled net. Amounts in foreign currency are translated at the closing rate at the reporting date. When a counterparty has a choice of when an amount is paid, the liability is allocated to the earliest possible time period.

80

HUDBAY MINERALS INC.
Notes to Audited Consolidated Financial Statements
(in thousands of US dollars, except where otherwise noted)
Years ended December 31, 2023 and 2022

Dec. 31, 2023		Carrying amount			Contractual cash flows			12 months or less			13 - 36 months			37 - 60 months			More than 60 months
Assets used to manage liquidity risk
Cash	$	249,794		$	249,794		$	249,794		$	-		$	-		$	-
Restricted cash		1,964			1,964			1,964			-			-			-
Trade and other receivables		176,214			176,214			176,214			-			-			-
Non-hedge derivative assets		1,416			1,416			1,416			-			-			-
	$	429,388		$	429,388		$	429,388		$	-		$	-		$	-
Non-derivative financial liabilities
Trade and other payables, including embedded derivatives	$	(219,304	)	$	(219,304	)	$	(219,304	)	$	-		$	-		$	-
Agreements with communities 1		(54,979	)		(79,454	)		(20,428	)		(10,593	)		(8,084	)		(40,349	)
Deferred Rosemont acquisition consideration		(9,713	)		(10,000	)		(10,000	)		-			-			-
Senior unsecured notes		(1,190,586	)		(1,469,625	)		(63,750	)		(714,000	)		(73,500	)		(618,375	)
Senior secured revolving credit facilities		(96,950	)		(120,737	)		(11,416	)		(109,321	)		-			-
Gold prepayment obligation 2		(55,901	)		(55,901	)		(55,901	)		-			-			-
Wheaton refund liability		(6,653	)		(79,232	)		-			-			-			(79,232	)
	$	(1,634,086	)	$	(2,034,253	)	$	(380,799	)	$	(833,914	)	$	(81,584	)	$	(737,956	)
Derivative financial liabilities
Non hedge derivative contracts	$	(11,811	)	$	(11,811	)	$	(11,811	)	$	-		$	-		$	-
	$	(11,811	)	$	(11,811	)	$	(11,811	)	$	-		$	-		$	-

¹ Represents the Peru community agreement obligation, excluding interest.

² Discounted.

81

HUDBAY MINERALS INC.
Notes to Audited Consolidated Financial Statements
(in thousands of US dollars, except where otherwise noted)
Years ended December 31, 2023 and 2022

Dec. 31, 2022		Carrying amount			Contractual cash flows			12 months or less			13 - 36 months			37 - 60 months			More than 60 months
Assets used to manage liquidity risk
Cash	$	225,665		$	225,665		$	225,665		$	-		$	-		$	-
Restricted cash		486			486			486			-			-			-
Trade and other receivables		87,638			87,638			87,638			-			-			-
Non-hedge derivative assets		577			577			577			-			-			-
	$	314,366		$	314,366		$	314,366		$	-		$	-		$	-
Non-derivative financial liabilities
Trade and other payables, including embedded derivatives	$	(195,872	)	$	(195,872	)	$	(195,872	)	$	-		$	-		$	-
Agreements with communities 1		(42,493	)		(67,662	)		(8,421	)		(8,591	)		(7,688	)		(42,962	)
Deferred Rosemont acquisition consideration		(18,876	)		(20,000	)		(10,000	)		(10,000	)		-			-
Long-term debt, including embedded derivatives		(1,188,132	)		(1,541,669	)		(66,692	)		(132,852	)		(687,000	)		(655,125	)
Gold prepayment obligation 2		(71,208	)		(71,208	)		(71,208	)		-			-			-
Wheaton refund liability		(6,383	)		(79,232	)		-			-			-			(79,232	)
	$	(1,522,964	)	$	(1,975,643	)	$	(352,193	)	$	(151,443	)	$	(694,688	)	$	(777,319	)
Derivative financial liabilities
Non-hedge derivative contracts	$	(17,995	)	$	(17,995	)	$	(17,995	)	$	-		$	-		$	-
	$	(17,995	)	$	(17,995	)	$	(17,995	)	$	-		$	-		$	-

¹ Represents the Peru community agreement obligation, excluding interest.

² Discounted.

31.Commitments

(a) Capital commitments

As at December 31, 2023, Hudbay had outstanding capital commitments in Manitoba of approximately $10,066 of which $7,322 can be terminated, approximately $13,847 in British Columbia, of which approximately $11,209 can be terminated, approximately $73,398 in Peru, all of which can be terminated, and approximately $41,913 in Arizona, primarily related to the Copper World Complex, of which approximately $7,180 can be terminated.

(b) Non capitalized lease commitments

Hudbay has entered into various non-capitalized lease commitments for facilities and equipment. The leases expire in periods ranging from one to two years. There are no restrictions placed on the Company by entering into these leases. Future minimum lease payments under such cancellable leases recognized within results from operating activities at December 31 are:

		2023		2022
Within one year	$	20,726	$	21,016
After one year but not more than five years		9,544		25,574
More than five years		4,144		4,962
	$	34,414	$	51,552

82

HUDBAY MINERALS INC.
Notes to Audited Consolidated Financial Statements
(in thousands of US dollars, except where otherwise noted)
Years ended December 31, 2023 and 2022

(c) Contingent liabilities

Hudbay is involved in various claims, litigation and other matters arising in the ordinary course and conduct of business. While it is not possible to determine the ultimate outcome of such actions at this time, and inherent uncertainties exist in predicting such outcomes, it is Hudbay's belief that the ultimate resolution of such actions is not reasonably likely to have a material adverse effect on its consolidated financial position or results of operations. The assessment of contingencies inherently involves the exercise of significant judgement and estimates of the outcome of future events. As a result of the assessment, management believes that no significant contingent liabilities exist.

32.Related parties

(a) Group companies

The financial statements include the financial statements of the Company and the following significant subsidiaries:

				Beneficial ownership of ultimate controlling party (Hudbay Minerals Inc.)
Name	Jurisdiction	Business	Entity's Parent	2023	2022
HudBay Peru Inc.	British Columbia	Holding company	HMI	100%	100%
HudBay Peru S.A.C.	Peru	Exploration/development	HudBay Peru Inc.	100%	100%
HudBay (BVI) Inc.	British Virgin Islands	Precious metals sales	HudBay Peru Inc.	100%	100%
Hudbay Arizona Inc.	British Columbia	Holding company	HMI	100%	100%
Copper World, Inc.	Arizona	Exploration/development	HudBay Arizona (US) Holding Corporation	100%	100%
Hudbay British Columbia Inc.	British Columbia	Holding company	HMI	100%	-%
Copper Mountain Mine (BC) Ltd.	British Columbia	Exploration/development	Copper Mountain Mining ULC	75%	-%
Copper Mountain Mining Inc.	Canada	Exploration/development	Hudbay British Columbia Inc.	100%	-%

Transactions between the Company and its subsidiaries, which are related parties of the Company, have been eliminated on consolidation and are not disclosed in this note.

83

HUDBAY MINERALS INC.
Notes to Audited Consolidated Financial Statements
(in thousands of US dollars, except where otherwise noted)
Years ended December 31, 2023 and 2022

(b) Compensation of key management personnel

The Company's key management includes members of the Board of Directors, Hudbay's Chief Executive Officer, Hudbay's senior vice presidents and vice presidents. Total compensation to key management personnel was as follows:

		Year ended December 31,
		2023		2022
Short-term employee benefits1	$	10,715	$	9,915
Post-employment benefits		811		959
Termination benefits		-		2,287
Long-term share-based awards		2,921		6,646
	$	14,447	$	19,807

¹ Such as salaries and social security contributions, paid annual leave and paid sick leave, profit-sharing, termination benefits, bonuses and non-monetary benefits (such as medical care, housing, cars and free or subsidized goods or services) for current employees.

(c) Transaction with related parties

All transactions with related parties have occurred in the normal course of the Company's operations.

i.During the year ended December 31, 2023, the Company sold copper concentrate under the provision of a long-term contract with MMC for revenues totaling $165,438 including pricing adjustments. As at December 31, 2023, the Company had $23,088 of trade receivables due from MMC outstanding.

ii.During the year ended December 31, 2023, the Company obtained cash advances on certain concentrate shipments from MMC. Interest charged on these advances amounted to $922.

33.Supplementary cash flow information

(a)Other operating activities:

		Year ended December 31,
		2023			2022
Amortization of community agreements	$	12,160		$	5,129
Share based compensation paid		(5,817	)		(6,647	)
Changes in non-current assets		-			(1,577	)
Share based compensation and change of control payments made upon acquisition of Copper Mountain		(6,743	)		-
Loss on disposal of property, plant & equipment		7,521			-
Restructuring - Manitoba		-			(4,524	)
Other		1,562			5,576
	$	8,683		$	(2,043	)

84

HUDBAY MINERALS INC.
Notes to Audited Consolidated Financial Statements
(in thousands of US dollars, except where otherwise noted)
Years ended December 31, 2023 and 2022

(b)Change in non-cash working capital:

		Year ended December 31,
		2023			2022
Change in:
Trade and other receivables	$	(70,343	)	$	88,482
Other financial assets/liabilities		(7,027	)		11,977
Inventories		18,150			(13,032	)
Prepaid expenses		16,392			(5,377	)
Trade and other payables		(31,450	)		2,449
Provisions and other liabilities		(18,866	)		11,575
	$	(93,144	)	$	96,074

(c)Non-cash transactions:

During the year ended December 31, 2023 and 2022, Hudbay entered into the following non-cash investing and financing activities which are not reflected in the consolidated statements of cash flows:

-Remeasurement of Hudbay's decommissioning and restoration liabilities led to a net increase in related property, plant and equipment assets of $20,595 (December 31, 2023 - a net decrease of $37,108), mainly related to changes to real discount rates associated with remeasurement of the liabilities.

-Property, plant and equipment included $21,401 (December 31, 2022 - $27,984) of capital additions related to the recognition of ROU assets and $14,198 of capital additions related to exploration and evaluation assets acquired through the acquisition of Rockcliff (note 6) (December 31, 2022 - nil). Property, plant and equipment and other assets include $17,335 of capital additions related to agreements with communities (December 31, 2022 - $39,240).

85

HUDBAY MINERALS INC.
Notes to Audited Consolidated Financial Statements
(in thousands of US dollars, except where otherwise noted)
Years ended December 31, 2023 and 2022

34.Non-Controlling Interest

As part of the British Columbia operating segment, The Company owns 75% of the Copper Mountain mine in British Columbia. The remaining 25% ownership stake is held by Mitsubishi Materials Corporation. The continuity of non-controlling interest balance is disclosed in the consolidated statements of changes in equity.

Summarized financial information for the Copper Mountain mine on an 100% basis is as follows:

Summarized Balance Sheets

		December 31, 2023
Assets
Cash and cash equivalents	$	10,047
Trade and other receivables		31,178
Inventories - current		42,124
Property, plant and equipment		857,760
Other assets		9,185
Goodwill		75,285
		1,025,579
Liabilities
Trade and other payables		38,030
Amounts due to related parties		301,601
Environmental provisions		37,835
Lease liabilities		48,878
Deferred tax liabilities		147,262
Other liabilities		755
		574,361
Equity
Equity attributable to owners of the Company		341,190
Non-controlling interest		110,028
	$	1,025,579

86

HUDBAY MINERALS INC.
Notes to Audited Consolidated Financial Statements
(in thousands of US dollars, except where otherwise noted)
Years ended December 31, 2023 and 2022

Summarized Income Statement and Comprehensive Income

		Year ended December 31, 2023
Total revenue	$	165,438
Mine operating costs		124,911
Depreciation and amortization		11,744
Gross profit		28,783
Other expenses		2,314
Finance expense - related parties		9,080
Other net finance costs		2,828
Tax expense		1,856
Profit for the period	$	12,705
Total comprehensive income	$	12,209

The above information is presented before inter-company eliminations.

87

HUDBAY MINERALS INC.
Notes to Audited Consolidated Financial Statements
(in thousands of US dollars, except where otherwise noted)
Years ended December 31, 2023 and 2022

35.Segmented information

Hudbay is an integrated metals producer. When making decisions on expansions, opening or closing mines, as well as day to day operations, management evaluates the results from operating activities of the Company. Hudbay has the following reportable segments identified by the individual mining operations of Manitoba, British Columbia, Peru, as well as Arizona which holds our Copper World project. The Manitoba, British Columbia and Peru segments generate Hudbay's revenue. The Manitoba segment sells copper concentrate (containing copper, gold and silver), silver/gold doré, zinc concentrate (containing zinc and gold) and other products. The Peru segment consists of Hudbay's Constancia operation and sells copper concentrate and molybdenum concentrate. The British Columbia segment consists of the Copper Mountain operation and sells copper concentrate. No results for the British Columbia segment are reflected in the prior year comparative figures. Hudbay's Arizona segment consists of the Copper World project located in Arizona. Corporate and other activities include the Company'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 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 as those of the Company. Results from operating activities represents the profit earned by each segment without allocation of corporate costs. This is the measure reported to the chief operating decision-maker, Hudbay'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.

Year ended December 31, 2023
		Peru		Manitoba			British Columbia			Arizona			Corporate and other activities			Total
Revenue from external customers	$	1,040,298	$	484,294		$	165,438		$	-		$	-		$	1,690,030
Cost of sales
Mine operating costs		494,500		286,401			124,911			-			-			905,812
Depreciation and amortization		275,647		104,266			11,744			-			-			391,657
Gross profit		270,151		93,627			28,783			-			-			392,561
Selling and administrative expenses		-		-			-			-			39,228			39,228
Exploration expenses		15,215		8,161			3,432			-			2,468			29,276
Other expenses		17,444		17,985			(54	)		382			2,551			38,308
Re-evaluation adjustment - environmental provision		-		(13,737	)		2,321			-			-			(11,416	)
Results from operating activities	$	237,492	$	81,218		$	23,084		$	(382	)	$	(44,247	)	$	297,165
Net interest expense on long term debt																76,202
Accretion on streaming arrangements																26,291
Change in fair value of financial instruments																14,053
Other net finance costs																28,789
Profit before tax																151,830
Tax expense																82,287
Profit for the year															$	69,543

88

HUDBAY MINERALS INC.
Notes to Audited Consolidated Financial Statements
(in thousands of US dollars, except where otherwise noted)
Years ended December 31, 2023 and 2022

Year ended December 31, 2022
		Peru		Manitoba			Arizona			Corporate and other activities			Total
Revenue from external customers	$	828,150	$	633,290		$	-		$	-		$	1,461,440
Cost of sales
Mine operating costs		419,535		427,402			-			-			846,937
Depreciation and amortization		211,043		126,572			-			-			337,615
Gross profit		197,572		79,316			-			-			276,888
Selling and administrative expenses		-		-			-			33,986			33,986
Exploration expenses		13,359		10,644			8,657			1,851			34,511
Other expenses (income)		16,016		10,981			6,047			(458	)		32,586
Re-evaluation adjustment - environmental provision		-		(133,460	)		-			-			(133,460	)
Impairment - Arizona		-		-			94,956			-			94,956
Results from operating activities	$	168,197	$	191,151		$	(109,660	)	$	(35,379	)	$	214,309
Net interest expense on long term debt													67,663
Accretion on streaming arrangements													27,778
Change in fair value of financial instruments													942
Other net finance costs													22,111
Profit before tax													95,815
Tax expense													25,433
Profit for the year												$	70,382

December 31, 2023
		Peru		Manitoba		British Columbia		Arizona		Corporate and other activities		Total
Total assets	$	2,406,260	$	672,915	$	1,027,976	$	736,680	$	468,803	$	5,312,634
Total liabilities		1,086,229		413,331		276,723		23,446		1,306,066		3,105,795
Property, plant and equipment1		2,001,716		693,941		853,075		727,903		39,371		4,316,006

¹Included in Corporate and Other activities is $27.6 million of property, plant and equipment that is located in Nevada.

December 31, 2023
		Peru		Manitoba		British Columbia		Arizona		Corporate and other activities		Total
Additions to property, plant and equipment	$	160,878	$	90,628	$	50,082	$	22,281	$	-	$	323,869

89

HUDBAY MINERALS INC.
Notes to Audited Consolidated Financial Statements
(in thousands of US dollars, except where otherwise noted)
Years ended December 31, 2023 and 2022

December 31, 2022
		Peru		Manitoba		Arizona		Corporate and other activities		Total
Total assets	$	2,532,750	$	690,403	$	713,567	$	389,223	$	4,325,943
Total liabilities		974,184		427,107		36,131		1,316,712		2,754,134
Property, plant and equipment1		2,115,495		691,836		704,472		40,627		3,552,430

¹Included in Corporate and Other activities is $27.4 million of property, plant and equipment that is located in Nevada.

December 31, 2022
		Peru		Manitoba		Arizona		Corporate and other activities		Total
Additions to property, plant and equipment	$	123,288	$	161,849	$	63,238	$	168	$	348,543

90

HUDBAY MINERALS INC.
Notes to Audited Consolidated Financial Statements
(in thousands of US dollars, except where otherwise noted)
Years ended December 31, 2023 and 2022

Geographical Segments

The following tables represent revenue information regarding Hudbay's geographical segments for the years ended December 31, 2023 and 2022:

		2023		2022
Revenue by customer location 1
Canada	$	501,193	$	593,397
China		282,175		247,880
Switzerland		268,164		251,963
Hong Kong		176,698		62,608
Japan		165,438		66
United States		108,400		168,470
Singapore		91,499		65,750
Peru		44,414		-
South Korea		27,618		4
Philippines		20,686		34,389
Chile		2,940		33,557
Belgium		805		-
United Kingdom		-		3,356
	$	1,690,030	$	1,461,440

¹ Presented based on the ultimate destination of the product if known. If the eventual destination of the product sold through traders is not known then revenue is allocated to the location of the customer's business office and not the ultimate destination of the product.

During the year ended December 31, 2023, five customers accounted for approximately 20%, 11%, 10%, 9%, and 7% respectively, of total revenue during the year. Revenue from these customers has been presented in the Manitoba, British Columbia and Peru operating segments.

During the year ended December 31, 2022, five customers accounted for approximately 26%, 11%, 8%, 5% and 5% respectively, of total revenue during the year. Revenue from these customers has been presented in the Manitoba and Peru operating segments.s

91

EX-99.2

Management's Discussion and Analysis of

Results of Operations and Financial Condition

For the year ended

December 31, 2023

February 22, 2024

TABLE OF CONTENTS	Page
Introduction	1
Our Business	1
Our Purpose	1
Our Strategy	2
Summary	4
Key Financial Results	9
Key Production Results	10
Key Costs Results	11
Recent Developments	12
Climate Change Initiatives	16
Peru Operations Review	17
Manitoba Operations Review	22
British Columbia Operations Review	27
Outlook	29
Financial Review	37
Liquidity and Capital Resources	48
Financial Risk Management	55
Trend Analysis and Quarterly Review	58
Non-IFRS Financial Performance Measures	61
Accounting Changes	76
Critical Accounting Judgements and Estimates	76
Disclosure Controls and Procedures and Internal Control over Financial Reporting	78
Notes to Reader	79
Summary of Historical Results	82

INTRODUCTION

This Management's Discussion and Analysis ("MD&A") dated February 22, 2024 is intended to supplement Hudbay Minerals Inc.'s audited consolidated financial statements and related notes for the year ended December 31, 2023 and 2022 (the "consolidated financial statements"). The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards ("IFRS"), as issued by the International Accounting Standards Board ("IASB").

References to "Hudbay", the "Company", "we", "us", "our" or similar terms refer to Hudbay Minerals Inc. and its direct and indirect subsidiaries as at December 31, 2023.

Readers should be aware that:

-This MD&A contains certain "forward-looking statements" and "forward-looking information" (collectively, "forward-looking information") that are subject to risk factors set out in a cautionary note contained in our MD&A.

-This MD&A includes an updated discussion of the risks associated with business integration and, in particular, the risks associated with integrating our 75% owned Copper Mountain mine into our operations and uncertainties related to its potential impact on our financial condition, financial performance and cash flows, and supplements the discussion of these risks in our most recent Annual Information Form ("AIF").

-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.

-We use a number of non-IFRS financial performance measures in our MD&A. Please see the discussion under the "Non-IFRS Financial Performance Measures" section herein.

-The technical and scientific information in this MD&A has been approved by qualified persons based on a variety of assumptions and estimates.

For a discussion of each of the above matters, readers are urged to review the "Financial Risk Management" and "Notes to Reader" sections beginning on page 79 of this MD&A.

Additional information regarding Hudbay, including the risks related to our business and those that are reasonably likely to affect our consolidated financial statements in the future, is contained in our continuous disclosure materials, including our most recent AIF, consolidated financial statements and Management Information Circular available on SEDAR+ at www.sedarplus.ca and on EDGAR at www.sec.gov.

All amounts are in US dollars unless otherwise noted.

OUR BUSINESS

We are a diversified mining company with long-life assets in North and South America. Our Constancia operations in Cusco (Peru) produce copper with gold, silver and molybdenum by-products. Our Snow Lake operations in Manitoba (Canada) produce gold with copper, zinc and silver by-products. Our Copper Mountain operations in British Columbia (Canada) produce copper with gold and silver by-products. We have a development pipeline that includes the Copper World project in Arizona and the Mason project in Nevada (United States), and our growth strategy is focused on the exploration, development, operation, and optimization of properties we already control, as well as other mineral assets we may acquire that fit our strategic criteria. 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.

OUR PURPOSE

We care about our people, our communities and our planet. Hudbay provides the metals the world needs. We work sustainably, transform lives and create better futures for communities.

We transform lives: We invest in our employees, their families and local communities through long-term employment, local procurement and economic development to improve their quality of life and ensure the communities benefit from our presence.

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We operate responsibly: From exploration to closure, we operate safely and responsibly, we welcome innovation and we strive to minimize our environmental footprint while following leading operating practices in all facets of mining.

We provide critical metals: We produce copper and other metals needed for everyday products and essential for applications to support the energy transition toward a more sustainable future.

OUR STRATEGY

Our mission is to create sustainable value and strong returns by leveraging our core strengths in community relations, focused exploration, mine development and efficient operations.

We believe that copper is the commodity with the best long-term supply/demand fundamentals and offers shareholders the greatest opportunity for sustained risk-adjusted returns. Copper is essential for achieving global climate change goals - it is one of the most heavily utilized metals in renewable energy systems and is the least carbon intensive. Through the discovery and successful development of economic mineral deposits, and through highly efficient low-cost operations to extract the metals, we believe sustainable value will be created for all stakeholders.

Hudbay's successful development, ramp-up and operation of the Constancia open-pit mine in Peru, our long history of underground mining and full life-cycle experience in northern Manitoba, and our track record of reserve expansion through effective exploration, and our organic pipeline of copper development projects including Copper World, Mason and Llaguen, provide us with a competitive advantage to deliver sustainable value relative to other mining companies of similar scale.

Over the past decade, we have built a world-class asset portfolio by executing a consistent long-term growth strategy focused on copper. We continuously work to generate strong free cash flow and optimize the value of our producing assets through exploration, brownfield expansion projects and efficient and safe operations. Furthermore, we intend to sustainably grow Hudbay through the exploration and development of our robust project pipeline, as well as through the acquisition of other properties that fit our stringent strategic criteria.

To ensure that any investment in our existing assets or acquisition of other mineral assets is consistent with our purpose and mission, we have established a number of criteria for evaluating these opportunities. The criteria include the following:

-Sustainability: We are focused on jurisdictions that support responsible mining activity. Our current geographic focus is on select investment grade countries in the Americas, with strong rule of law and respect for human rights consistent with our long-standing focus on environmental, social and governance ("ESG") principles;

-Copper Focus: We believe copper is the commodity with the best long-term supply/demand fundamentals. Global copper mine supply is challenged due to declining industry grades, limited exploration success and an insufficient pipeline of development-ready projects while demand will continue to increase through global decarbonization initiatives. We believe this long-term supply/demand gap will create opportunities for increased risk-adjusted returns. While our primary focus is on copper, we recognize and value the polymetallic nature of copper deposits and, in particular, the counter-cyclical nature of gold in our portfolio;

-Quality: We are focused on investing in long-life, low-cost, expandable, high-quality assets that can capture peak pricing of multiple commodity price cycles and can generate free cash flow through the troughs of price cycles;

-Potential: We consider the full spectrum of acquisition and investment opportunities, from early-stage exploration to producing assets, that offer significant incremental potential for exploration, development, expansion and optimization beyond the stated resources and mine plan;

-Process: We develop a clear understanding of how an investment or acquisition can create value through our robust due diligence and capital allocation process that applies our technical, social, operational and project execution expertise;

-Operatorship: We believe value is created through leveraging Hudbay's competitive advantages in safe and efficient operations and effective exploration and project development and community relations. While operatorship is a key criterion, we are open to joint ventures and partnerships that de-risk our portfolio and increase risk-adjusted returns; and

2

-Capital Allocation: We pursue investments and acquisitions that are accretive to Hudbay on a per share basis. Given that our strategic focus includes allocating capital to assets at various stages of development, when evaluating accretion, we will consider measures such as internal rate of return ("IRR"), return on invested capital ("ROIC"), net asset value per share and the contained value of reserves and resources per share.

Our key objectives for 2024 are to:

-Enhance Hudbay's position to deliver its leading copper growth pipeline;

-Deliver copper production growth and maintain strong gold production from diversified operating platform to generate strong cash flow;

-Execute stabilization plan at Copper Mountain to drive improved operating performance and achieve operating synergies;

-Maintain continued focus on financial discipline as we progress towards achieving deleveraging targets by managing discretionary spending and generating strong returns on invested capital;

-Evaluate the viability of an additional mining phase at Constancia that could convert a portion of mineral resources to mineral reserves;

-Evaluate opportunities to utilize excess capacity at the Stall mill in Snow Lake to enhance production and achieve greater economies of scale;

-Progress de-risking of the Copper World project through final state permitting activities and a potential joint venture partnership to prudently advance the three pre-requisites plan required for sanctioning;

-Execute the large exploration program on the expanded land package in Snow Lake to target new discoveries;

-Advance plans to drill the prospective Maria Reyna and Caballito properties near Constancia;

-Assess economic viability of various metallurgical technologies for the reprocessing of Flin Flon tailings;

-Advance exploration partnership with Marubeni to explore for new discoveries within trucking distance of the Flin Flon processing facilities;

-Continue to identify and evaluate opportunities to further reduce greenhouse gas emissions in alignment with our climate change commitments and global decarbonization goals;

-Assess growth opportunities that meet our stringent strategic criteria and allocate capital to pursue those opportunities that create sustainable value for the company and our stakeholders; and

-As always, continue to operate safely and sustainably, aligned with our company purpose to ensure that our activities have a positive impact on our people, our communities and our planet.

3

SUMMARY

Delivering Record Fourth Quarter and Full Year Operating and Financial Results

-Achieved record quarterly and annual revenue of $602.2 million and $1,690.0 million, respectively, with strong consolidated copper production of 45,450 tonnes and record consolidated gold production of 112,776 ounces in the fourth quarter from continued higher grades at the Pampacancha deposit in Peru and the Lalor mine in Manitoba and the contributions of the newly acquired Copper Mountain mine in British Columbia.

-Delivered a significant increase in operating cash flow before change in non-cash working capital of $246.5 million in the fourth quarter, a 35% increase compared to $182.0 million in the third quarter, which was meaningfully higher than prior quarters.

-Achieved 2023 consolidated production guidance for all metals. Full year 2023 copper production of 131,691 tonnes, gold production of 310,429 ounces and silver production of 3,575,234 ounces increased by 26%, 41% and 13%, respectively, compared to 2022.

-Consolidated 2023 cash cost and sustaining cash cost per pound of copper produced, net of by-product credits¹ were better than expected and significantly outperformed the 2023 guidance range. Full year 2023 consolidated cash cost and sustaining cash cost per pound of copper produced, net of by-product credits¹, were $0.80 and $1.72, respectively, increasing by 7% and 17%, respectively, compared to 2022.

-Consolidated cash cost¹ and sustaining cash cost¹ per pound of copper produced, net of by-product credits¹, in the fourth quarter, were $0.16 and $1.09, respectively, improving by 85% and 42%, respectively, compared to the third quarter of 2023.

-Peru operations benefited from continued higher grades at the Pampacancha satellite pit, resulting in 33,207 tonnes of copper production and 49,418 ounces of gold production in the fourth quarter. Full year copper production was within 2023 guidance ranges while gold production exceeded the top end of guidance. Peru cash cost per pound of copper produced, net of by-product credits¹, in the fourth quarter improved to $0.54, and full year cash costs significantly improved over 2022 levels and achieved the low end of the 2023 annual cost guidance range.

-Manitoba operations produced 59,863 ounces of gold in the fourth quarter, a quarterly record as higher gold and copper grade zones were mined at Lalor and the New Britannia mill processed significantly higher amounts of gold ore. Full year gold production was well within the 2023 guidance range and exceeded recent expectations of being positioned at the lower end of the range. Manitoba cash cost per ounce of gold produced, net of by-product credits¹, was $434 during the fourth quarter and full year cash costs were within the 2023 annual guidance range.

-British Columbia operations produced 8,508 tonnes of copper at a cash cost per pound of copper produced, net of by-product credits¹, of $2.67 in the fourth quarter. Full year production and cash costs were within Hudbay's post-acquisition guidance ranges. Operational stabilization plans continue to be implemented at the Copper Mountain mine with a focus on opening additional mining faces, optimizing ore feed to the plant and improving plant reliability.

-Fourth quarter net earnings and earnings per share were $33.5 million and $0.10, respectively. After adjusting for a non-cash loss of $34.0 million related to a quarterly revaluation of our closed site environmental reclamation provision and a non-cash revaluation loss of $9.0 million related to the gold prepayment liability, among other items, fourth quarter adjusted earnings¹ per share were $0.20.

-Cash and cash equivalents increased by $4.6 million to $249.8 million during the fourth quarter due to strong operating cash flows bolstered by higher copper and gold prices and sales volumes enabling a $94.5 million reduction in net debt¹ during the quarter.

Strong Operating Performance Driving Free Cash Flow Generation with Continued Financial Discipline

-Executed on planned higher production levels and achieved continued operating and capital cost efficiencies to generate significant free cash flow in the fourth quarter.

-Achieved record quarterly revenue of $602.2 million. Achieved adjusted EBITDA¹ of $274.4 million in the fourth quarter, the highest quarterly level over the last five years and a 44% increase from the previous recent high in the third quarter of 2023.

-Completed $90 million in debt repayments during the fourth quarter with a $30 million net reduction of our revolving credit facility balance and a $59.7 million redemption of the remaining Copper Mountain bonds, well ahead of the 2026 maturity to increase financial flexibility and lower financing costs. Deleveraging efforts continued into the first quarter of 2024 with an additional $10 million repayment of our revolving credit facility balance in January 2024.

-Increased cash and total liquidity by $34.1 million to $573.7 million compared to the end of the third quarter of 2023. Net debt¹ reduced to $1,037.7 million during the fourth quarter, which together with higher levels of adjusted EBITDA improved our net debt to adjusted EBITDA ratio¹ to 1.6x compared to 2.0x at the end of 2022.

4

-Delivered annual discretionary spending reduction targets for 2023 with lower growth capital and exploration expenditures compared to 2022. As a result of a continued focus on discretionary spending reductions, total capital expenditures for 2023 (excluding Copper Mountain) of approximately $243 million were $57 million lower than original guidance levels, a further decrease from the $30 million in reductions announced in the third quarter.

Executing on Growth Initiatives

-Post-acquisition plans to stabilize the Copper Mountain operations are underway with a focus on mining fleet ramp-up activities, accelerated stripping and increasing mill reliability. Achieved the targeted $10 million in annualized corporate synergies as of January 2024.

-Released a NI 43-101 technical report for the Copper Mountain mine in December 2023, which contemplates average annual copper production of 46,500 tonnes in the first five years, 45,000 tonnes in the first ten years and 37,000 tonnes over the 21-year mine life. Average cash costs and sustaining cash costs per pound of copper produced, net of by-product credits¹ over the mine life are expected to be $1.84 and $2.53, respectively. Several opportunities to further increase production, improve costs and extend mine life are being evaluated for future mine plans.

-Achieved record copper recoveries of 87.4% at the Constancia mill in the fourth quarter of 2023 as a result of the successful completion of the recovery improvement program in the second quarter, on time and on budget.

-Achieved higher copper recoveries above 90% and gold recoveries above 65% at the Stall mill in the second half of 2023 because of the successful ramp up of the Stall mill recovery improvement project in the second quarter, on time and on budget.

-The New Britannia mill achieved record throughput levels averaging 1,650 tonnes per day in 2023 and 1,800 tonnes per day in the fourth quarter, exceeding its original design capacity of 1,500 tonnes per day due to the successful implementation of process improvement initiatives.

-Commenced largest annual exploration program in Snow Lake consisting of geophysical surveys and drill campaigns testing the newly acquired Cook Lake claims, former Rockcliff properties and near-mine exploration at Lalor.

-Advancing a development and exploration drift at the 1901 deposit in Snow Lake, located within 1,000 metres from the underground ramp access to the Lalor mine, with a focus on confirming the optimal mining method for the base metal and gold lenses and converting the inferred mineral resources in the gold lenses to mineral reserves.

-Continuing to evaluate the Flin Flon tailings reprocessing opportunity through advancing metallurgical test work studies and analyzing metallurgical technologies.

2024 Annual Guidance and Outlook

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

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

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

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

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

-Continued focus on reducing discretionary spending in 2024 with total growth capital expenditures 23% lower than 2023.

5

Summary of Fourth Quarter Results

Cash generated from operating activities in the fourth quarter of 2023 increased to $229.1 million compared to $86.4 million in the same quarter of 2022. Operating cash flow before change in non-cash working capital during the fourth quarter of 2023 was a record $246.5 million, reflecting an increase of $137.4 million compared to the same period of 2022. The increase in operating cash flow before change in non-cash working capital was primarily the result of higher copper and gold sales volumes from mining the high copper and gold grade zones of the Pampacancha deposit and higher gold and copper grade zones at Lalor, higher copper and gold prices, as well as an incremental contribution from our recently acquired Copper Mountain mine.

The operating results in the fourth quarter of 2023 included a full quarter of production from the recently acquired Copper Mountain mine. Consolidated copper, gold and silver production in the fourth quarter of 2023 increased by 55%, 109% and 51%, respectively, compared to the same period in 2022 primarily due to meaningfully higher recoveries in Peru and Manitoba, mining of the high copper and gold grade zones at the Pampacancha deposit, higher gold and copper grade zones at Lalor and incremental production from our Copper Mountain mine. Consolidated zinc production in the fourth quarter of 2023 decreased by 9% primarily due to lower throughput and lower planned zinc grades.

Net earnings and earnings per share in the fourth quarter of 2023 were $33.5 million and $0.10, respectively, compared to net loss and loss per share of $17.4 million and $0.07, respectively, in the fourth quarter of 2022. The results were positively impacted by higher copper, gold and silver sales volumes as well as higher copper, gold and silver realized prices. This was partially offset by a non-cash loss of $34.0 million related to the quarterly revaluation of the environmental reclamation provision at our closed sites and a non-cash revaluation loss of $9.0 million related to the gold prepayment liability.

Adjusted net earnings¹ and adjusted net earnings per share¹ in the fourth quarter of 2023 were $71.3 million and $0.20 per share, respectively, after adjusting for the non-cash loss related to the revaluation of our environmental provision and the revaluation loss on the gold prepayment liability, among other items. This compares to adjusted net earnings and adjusted net earnings per share of $2.6 million, and $0.01 in the same period of 2022. Fourth quarter adjusted EBITDA¹ was $274.4 million, compared to $124.7 million in the same period in 2022.

In the fourth quarter of 2023, consolidated cash cost per pound of copper produced, net of by-product credits¹, was $0.16, compared to $1.08 in the same period in 2022. This decrease was mainly the result of higher copper production and significantly higher by-product credits, partially offset by higher mining, milling and G&A costs from incorporating Copper Mountain. Consolidated sustaining cash cost per pound of copper produced, net of by-product credits¹, was $1.09 in the fourth quarter of 2023 compared to $2.21 in the same period in 2022. This decrease was primarily due to the same reasons outlined above partially offset by higher cash sustaining capital expenditures.

Consolidated all-in sustaining cash cost per pound of copper produced, net of by-product credits¹, was $1.31 in the fourth quarter of 2023, lower than $2.41 in the same period in 2022, due to the same reasons outlined above as well as lower corporate selling and administrative expenses.

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

Summary of Full Year Results

We have achieved our 2023 consolidated production guidance for all metals. On a business unit stand-alone basis, Peru exceeded the top end of the gold production guidance range, Manitoba exceeded the top end of the copper production guidance range, while Copper Mountain exceeded the top end of the silver production guidance range for the portion of 2023 since acquisition.

6

Cash generated from operating activities decreased to $476.9 million in 2023 from $487.8 million. Operating cash flow before change in non-cash working capital increased to $570.0 million from $391.7 million in 2022. The increase in operating cash flow before change in non-cash working capital was primarily the result of higher copper and gold sales volumes and higher gold prices, partially offset by lower zinc sales volumes, lower copper and zinc metal prices and higher treatment and refining charges. Zinc sales volumes were lower than the prior year due to the planned closure of the 777 mine in June 2022.

Consolidated copper, gold and silver production for the full year 2023 increased by 26%, 41% and 13%, respectively, compared to the same period in 2022 primarily due to the acquisition of Copper Mountain in June 2023 as well as higher throughput in Peru and Manitoba, higher overall copper, gold and silver grades and higher gold and silver recoveries.

Net earnings and earnings per share for 2023 were $69.5 million and $0.22, respectively, compared to net earnings and earnings per share of $70.4 million and $0.27, respectively, in 2022. The prior period results were positively impacted by a non-cash $133.5 million revaluation gain of our Flin Flon environmental reclamation provision, partially offset by a $95.0 million pre-tax impairment loss related to the previous stand-alone development plan for the Rosemont deposit. Full year 2023 net earnings were negatively impacted by $21.4 million in non-cash mark-to-market losses arising from the revaluation of the gold prepayment liability, investments and share-based compensation, partially offset a by non-cash gain of $11.4 million primarily related to the revaluation of our Flin Flon environmental reclamation provision. Full year 2023 adjusted EBITDAⁱ was $647.8 million, an increase of 36% compared to $475.9 million in 2022.

Consolidated cash cost per pound of copper produced, net of by-product credits¹, was $0.80 in 2023, compared to $0.86 in 2022 and achieved the low end of our 2023 annual cost guidance range. This decrease was mainly the result of higher copper production and higher by-product credits, partially offset by higher mining and milling costs from incorporating Copper Mountain. Consolidated sustaining cash cost per pound of copper produced, net of by-product credits¹, was $1.72 in 2023, compared to $2.07 in 2022, outperforming 2023 guidance expectations. This decrease was primarily due to the same reasons outlined above and lower cash sustaining capital expenditures.

Consolidated all-in sustaining cash cost per pound of copper produced, net of by-product credits¹, was $1.92 in 2023, lower than $2.26 in 2022, due to the same reasons outlined above partially offset by higher corporate selling and administrative expenses.

* British Columbia production in Q2 2023 represents a 10-day stub period of production following the June 20, 2023 transaction closing date.

7

*British Columbia production is not included in the prior year comparative results.

¹ Adjusted net earnings (loss) and adjusted net earnings (loss) per share, adjusted EBITDA, cash cost, sustaining cash cost, all-in sustaining cash cost per pound of copper produced, net of by-product credits, cash cost, sustaining cash cost per ounce of gold produced, net of by-product credits, combined unit cost, net debt and net debt to adjusted EBITDA ratio are non-IFRS financial performance measures with no standardized definition under IFRS. For further information and a detailed reconciliation, please see the discussion under the "Non-IFRS Financial Performance Measures" section of this MD&A.

8

KEY FINANCIAL RESULTS

Financial Condition3
(in $ thousands, except net debt to adjusted EBITDA ratio)		Dec. 31, 2023		Dec. 31, 2022
Cash and cash equivalents	$	249,794	$	225,665
Total long-term debt		1,287,536		1,184,162
Net debt1		1,037,742		958,497
Working capital2		135,913		76,534
Total assets		5,312,634		4,325,943
Equity attributable of owners of the Company		2,096,811		1,571,809
Net debt to adjusted EBITDA 1		1.6		2.0

¹ Net debt and net debt to adjusted EBITDA are a non-IFRS financial performance measure with no standardized definition under IFRS. For further information and a detailed reconciliation, please see discussion under the "Non-IFRS Financial Performance Measures" section of this MD&A.

² Working capital is determined as total current assets less total current liabilities as defined under IFRS and disclosed on the consolidated financial statements.

³ Following completion of the Copper Mountain acquisition on June 20, 2023, the Company's financial condition as at December 31, 2023 includes Copper Mountain and accordingly there is no comparable period information.

Financial Performance		Three months ended					Year ended
(in $ thousands, except per share amounts or as noted below)		Dec. 31, 2023		Dec. 31, 2022			Dec. 31, 2023		Dec. 31, 2022
Revenue	$	602,189	$	321,196		$	1,690,030	$	1,461,440
Cost of sales		405,433		251,520			1,297,469		1,184,552
Earnings (loss) before tax		80,982		(14,287	)		151,830		95,815
Net earnings (loss)		33,528		(17,441	)		69,543		70,382
Basic earnings (loss) per share		0.10		(0.07	)		0.22		0.27
Adjusted earnings per share1		0.20		0.01			0.23		0.10
Operating cash flow before change in non-cash working capital2		246.5		109.1			570.0		391.7
Adjusted EBITDA1,2		274.4		124.7			647.8		475.9

¹ Adjusted earnings (loss) per share and adjusted EBITDA are non-IFRS financial performance measures with no standardized definition under IFRS. For further information and a detailed reconciliation, please see discussion under the "Non-IFRS Financial Performance Measures" section of this MD&A.

² In $ millions.

9

KEY PRODUCTION RESULTS

		Three months ended				Three months ended
		Dec. 31, 2023				Dec. 31, 2022
		Peru	Manitoba	British Columbia4	Total	Peru	Manitoba	Total
Contained metal in concentrate and doré produced1
Copper	tonnes	33,207	3,735	8,508	45,450	27,047	2,258	29,305
Gold	oz	49,418	59,863	3,495	112,776	20,860	33,060	53,920
Silver	oz	836,208	255,579	105,295	1,197,082	655,257	139,758	795,015
Zinc	tonnes	-	5,747	-	5,747	-	6,326	6,326
Molybdenum	tonnes	397	-	-	397	344	-	344
Payable metal sold
Copper	tonnes	31,200	3,687	9,119	44,006	23,789	1,626	25,415
Gold2	oz	38,114	63,635	3,091	104,840	15,116	32,140	47,256
Silver2	oz	703,679	246,757	98,441	1,048,877	411,129	148,177	559,306
Zinc3	tonnes	-	7,385	-	7,385	-	8,230	8,230
Molybdenum	tonnes	468	-	-	468	421	-	421

¹ Metal reported in concentrate is prior to deductions associated with smelter contract terms.

² Includes total payable gold and silver in concentrate and in doré sold.

³ For the three months ended December 31, 2023, this metric includes payable zinc in concentrate sold. For the three months ended December 31, 2022, this metric also included refined zinc metal and payable zinc in concentrate sold.

⁴ Includes 100% of Copper Mountain mine production. Hudbay owns 75% of Copper Mountain mine. As Copper Mountain was acquired on June 20, 2023, there were no comparative 2022 figures.

		Year ended				Year ended
		Dec. 31, 2023				Dec. 31, 2022
		Peru	Manitoba	British Columbia4	Total	Peru	Manitoba	Total
Contained metal in concentrate and doré produced1
Copper	tonnes	100,487	12,154	19,050	131,691	89,395	14,778	104,173
Gold	oz	114,218	187,363	8,848	310,429	58,229	161,471	219,700
Silver	oz	2,505,229	851,723	218,282	3,575,234	2,309,352	851,942	3,161,294
Zinc	tonnes	-	34,642	-	34,642	-	55,381	55,381
Molybdenum	tonnes	1,566	-	-	1,566	1,377	-	1,377
Payable metal sold
Copper	tonnes	96,213	10,708	18,075	124,996	79,805	14,668	94,473
Gold2	oz	97,176	171,297	8,420	276,893	49,968	163,447	213,415
Silver2	oz	2,227,419	728,304	189,443	3,145,166	2,045,678	932,807	2,978,485
Zinc3	tonnes	-	28,779	-	28,779	-	59,043	59,043
Molybdenum	tonnes	1,462	-	-	1,462	1,352	-	1,352

¹ Metal reported in concentrate is prior to deductions associated with smelter contract terms.

² Includes total payable gold and silver in concentrate and in doré sold.

³ For the year ended December 31, 2023 this metric includes payable zinc in concentrate sold. For the year ended December 31, 2022, this metric also included payable refined zinc metal sold.

⁴ Production results from the Copper Mountain mine represents the period from the June 20^th acquisition date through to the end of the fourth quarter of 2023. Includes 100% of Copper Mountain mine production. Hudbay owns 75% of Copper Mountain mine. As Copper Mountain was acquired on June 20, 2023, there were no comparative 2022 figures.

10

KEY COST RESULTS

		Three months ended		Year ended		Guidance
		Dec. 31, 2023	Dec. 31, 2022	Dec. 31, 2023	Dec. 31, 2022	Annual 20233,4
Peru cash cost per pound of copper produced
Cash cost1	$/lb	0.54	1.34	1.07	1.58	1.05 - 1.30
Sustaining cash cost1	$/lb	1.21	2.09	1.81	2.35
Manitoba cash cost per ounce of gold produced
Cash cost1	$/oz	434	922	727	297	500 - 800
Sustaining cash cost1	$/oz	788	1,795	1,077	1,091
British Columbia cash cost per pound of copper produced2
Cash cost1	$/lb	2.67	-	2.50	-	2.40 - 2.85
Sustaining cash cost1	$/lb	3.93	-	3.41	-
Consolidated cash cost per pound of copper produced
Cash cost1	$/lb	0.16	1.08	0.80	0.86	0.80 - 1.10
Sustaining cash cost1	$/lb	1.09	2.21	1.72	2.07	1.80 - 2.25
All-in sustaining cash cost1	$/lb	1.31	2.41	1.92	2.26

¹ Cash cost, sustaining cash cost, all-in sustaining cash cost per pound of copper produced, net of by-product credits, gold cash cost, sustaining cash cost per ounce of gold produced, net of by-product credits, and unit operating cost are non-IFRS financial performance measures with no standardized definition under IFRS. For further information and a detailed reconciliation, please see the discussion under the "Non-IFRS Financial Performance Measures" section of this MD&A.

² Cash cost, sustaining cash cost per pound of copper produced for the British Columbia business unit does not have any comparative information. The year-to-date numbers are from the date of acquisition of June 20, 2023.

³ British Columbia guidance is from acquisition date, June 20, 2023, to the end of the fiscal year.

⁴ Consolidated cash cost and sustaining cash cost per pound of copper produced, net of by-product credits, guidance was updated on November 8, 2023 to reflect the incorporation of Copper Mountain guidance; our consolidated guidance was otherwise reaffirmed and remained unchanged.

11

RECENT DEVELOPMENTS

Advancing Copper Mountain Mine Stabilization Plans

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

On December 5, 2023, we released our first NI 43-101 technical report in respect of our 75%-owned Copper Mountain mine. As detailed in the technical report, the mine plan contemplates average annual copper production of 46,500 tonnes in the first five years, 45,000 tonnes in the first ten years and 37,000 tonnes over the 21-year mine life. Average cash costs and sustaining cash costs per pound of copper produced, net of by-product credits,¹ over the mine life are expect to be $1.84 and $2.53, respectively. The updated mine plan represents an approximate 90% increase in average annual copper production and an approximate 50% decrease in cash costs over the first 10 years compared to 2022.

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

•Increased mining activities - Commenced a fleet ramp-up plan to remobilize idle haul trucks. The plan entails remobilization of the mining fleet from 14 trucks to 28 trucks, by the end of 2023. A fully trained complement of truck drivers is expected to be in place in the first half of 2024. Once the fleet ramp up plan is complete, we expect to have improved flexibility in the Copper Mountain mine with additional mining faces.

•Accelerated stripping to access higher grades - We have commenced a campaign of accelerated stripping over the next three years to enable access to higher grade ore and to mitigate the substantially reduced stripping undertaken by Copper Mountain over the four years prior to completion of the acquisition. The accelerated stripping program is expected to improve operating efficiencies and lower unit operating costs.

•Improved mill throughput and recoveries - Our mine plan assumes a mill ramp up to its nominal capacity of 45,000 tonnes per day in 2025. An expansion to the permitted capacity of 50,000 tonnes per day is planned in 2027. The mine plan assumes approximately $23 million in growth capital spending over 2025 and 2026 in connection with the mill expansion. We intend to improve mill recoveries with a more consistent ore feed grade, changes to the flotation reagents and replacement of key pumps.

•Operating efficiencies and corporate synergies - Our stabilization plans are expected to generate more than $20 million in annual operating efficiencies over the next three years, compared to Copper Mountain's performance in 2022, through improvements in copper recovery, higher throughput rates and lower combined unit operating costs. In addition, we have realized the targeted $10 million in annual corporate synergies and is on track to exceed the target.

•Ensure stabilization of near-term cash flows - Recently entered into copper hedging contracts representing approximately 25% of expected Copper Mountain production in 2024 as a prudent measure to secure cash flows during the stabilization period.

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

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

Please see "Qualified Person and NI 43-101" for further details regarding the technical and scientific information included in the technical report.

_____________________________________

¹ Cash cost and sustaining cash cost per pound of copper produced, net of by-product credits, are non-IFRS financial performance measures with no standardized definition under IFRS. For further information and a detailed reconciliation, please see the discussion under the "Non-IFRS Financial Performance Measures" section of this MD&A.

12

Delivered Brownfield Capital Projects On Time and On Budget

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

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

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

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

Generating Free Cash Flow with Increased Production and Continued Financial Discipline

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

During the fourth quarter, we completed $30 million in net repayments on our revolving credit facilities and redeemed, in full, the remaining $59.7 million of Copper Mountain's bonds from our treasury. We also recommenced deliveries under the gold forward sale and prepay agreement in October 2023, further reducing our outstanding gold prepayment liability, and are scheduled to fully repay the gold prepay facility by August 2024. Despite these debt repayments, we increased our cash and cash equivalents to $249.8 million and reduced our overall net debt to $1,037.7 million as at December 31, 2023, compared to $245.2 million and $1,132.2 million, respectively, as at September 30, 2023. The $94.5 million decline in net debt, together with higher levels of adjusted EBITDA¹ in the fourth quarter, have improved our net debt to adjusted EBITDA ratio² to 1.6x compared to 2.0x at the end of 2022. Subsequent to quarter-end, we continued our deleveraging efforts with an additional $10 million repayment on our revolving credit facilities.

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

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

^{_____________________________________}

² Net Debt to EBITDA ratio is a non-IFRS financial performance measures with no standardized definition under IFRS. For further information and a detailed reconciliation, please see the discussion under the "Non-IFRS Financial Performance Measures" section of this MD&A. "

13

Senior Management Team Appointments

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

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

Advancing Permitting at Copper World

The first key state permit required for Copper World, the Mined Land Reclamation Plan, was initially approved by the Arizona State Mine Inspector in October 2021 and was subsequently amended to reflect a larger private land project footprint. This approval was challenged in state court, but the challenge was dismissed in May 2023 as having no basis. In late 2022, Hudbay submitted the applications for an Aquifer Protection Permit and an Air Quality Permit to the Arizona Department of Environmental Quality. We expect to receive these two outstanding state permits in 2024.

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

We released results of the de-risked and enhanced Copper World pre-feasibility study for Phase I in September 2023, which demonstrated a simplified mine plan with an extended 20-year mine life requiring only state and local permits, an after-tax net present value (8%) of $1.1 billion and a 19% internal rate of return at a copper price of $3.75 per pound. Average annual copper production over the first ten years is expected to be approximately 92,000 tonnes at cash costs and sustaining cash costs per pound of copper¹ of $1.53 and $1.95, respectively. Copper World is one of the highest-grade open pit copper projects in the Americas with proven and probable mineral reserves of 385 million tonnes at 0.54% copper.

14

Snow Lake Exploration

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

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

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

Advancing Metallurgical Test Work for the Flin Flon Tailings Reprocessing Opportunity

We identified the opportunity to reprocess Flin Flon tailings, with initial confirmatory drilling completed in 2022 indicating higher zinc, copper and silver grades than predicted from historical mill records while confirming the historical gold grade.

In 2023, we advanced metallurgical test work and evaluated metallurgical technologies, including the signing of a test work co-operation agreement with Cobalt Blue Holdings ("COB") examining the use of COB technology to treat Flin Flon tailings. Initial results from preliminary roasting test work were encouraging in converting more than 90% of pyrite into pyrrhotite and elemental sulphur. Final test work results will support the development of an overall flowsheet. We expect to continue these metallurgical activities throughout 2024 as we assess the economic viability of the various metallurgical technologies.

Peru Exploration Update

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

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

Dividend Declared

A semi-annual dividend of C$0.01 per share was declared on February 22, 2024. The dividend will be paid out on March 22, 2024 to shareholders of record as of March 5, 2024.

15

CLIMATE CHANGE INITIATIVES

Progressing Towards Climate Change Commitments

In December 2022, we announced our commitment to achieve net zero greenhouse gas ("GHG") emissions by 2050 and the adoption of interim 2030 GHG reduction targets to support this commitment. While our operations are well-positioned in the lower half of the global GHG emissions curve for copper operations, we recognize our role in mitigating climate change. We also recognize that copper and the metals Hudbay produces play an important role in the world's transition to a greener future. Hudbay's GHG emissions reduction plan includes pursuing a 50% reduction in absolute Scope 1 and Scope 2 emissions from existing operations by 2030 and achieving net zero total emissions by 2050.

In 2023, we made significant progress towards its climate change goals, including:

•Peru Renewable Power Supply Agreement - During the first quarter of 2023, Hudbay signed a new 10-year power purchase agreement with ENGIE Energía Perú for access to a 100% renewable energy supply to Constancia. The agreement will come into effect in January 2026 following the conclusion of Constancia's existing power supply agreement. Total Scope 1 and Scope 2 GHG emissions company-wide at our current operations are expected to decline by 40% during the life of the contract, positioning us well to achieve our 50% reduction target by 2030.

•Electric Shovel at Copper Mountain - In September 2023, Hudbay commissioned a new Komatsu PC8000 electric shovel at the Copper Mountain mine, which reduces carbon intensity by displacing existing diesel shovel production.

•Renewable Diesel at Copper Mountain - In 2023, Hudbay tested the use of renewable diesel in two of our non-trolley assist haul trucks at Copper Mountain in an effort to further reduce GHG emissions. The test results were promising and we subsequently entered into renewable diesel contracts for approximately 80% of the expected fuel to be purchased in 2024.

•Electric Scooptram at Lalor - In the first quarter of 2023, Hudbay initiated the trial of an electric Epiroc scooptram ST14 SG at the Lalor mine, which reduces carbon intensity by lowering emissions and reduces the temperature in the lower areas of the mine to improve ventilation. The trial was successful and, in the third quarter, a second electric scooptram was added to the fleet.

16

PERU OPERATIONS REVIEW

		Three months ended		Year ended
		Dec. 31, 2023	Dec. 31, 2022	Dec. 31, 2023	Dec. 31, 2022
Constancia ore mined1	tonnes	973,176	5,614,918	9,265,954	25,840,435
Copper	%	0.30	0.40	0.32	0.35
Gold	g/tonne	0.04	0.04	0.04	0.04
Silver	g/tonne	2.26	3.48	2.53	3.40
Molybdenum	%	0.01	0.01	0.01	0.01
Pampacancha ore mined1	tonnes	5,556,613	3,771,629	14,756,416	8,319,250
Copper	%	0.56	0.37	0.51	0.33
Gold	g/tonne	0.32	0.29	0.33	0.29
Silver	g/tonne	4.84	3.84	4.28	4.06
Molybdenum	%	0.01	0.01	0.01	0.01
Total ore mined	tonnes	6,529,789	9,386,547	24,022,370	34,159,685
Strip ratio2		1.26	0.97	1.51	1.13
Ore milled	tonnes	7,939,044	7,795,735	30,720,929	30,522,294
Copper	%	0.48	0.41	0.39	0.34
Gold	g/tonne	0.25	0.12	0.16	0.09
Silver	g/tonne	4.20	3.93	3.62	3.58
Molybdenum	%	0.01	0.01	0.01	0.01
Copper concentrate	tonnes	146,065	117,980	457,137	393,255
Concentrate grade	% Cu	22.73	22.93	21.98	22.73
Copper recovery	%	87.4	85.1	84.2	85.0
Gold recovery	%	77.6	69.6	71.8	63.6
Silver recovery	%	78.0	66.5	70.0	65.7
Molybdenum recovery	%	33.6	37.7	35.8	34.8
Combined unit operating costs3,4,5	$/tonne	12.24	13.64	12.47	12.78

¹ Reported tonnes and grade for ore mined are estimates based on mine plan assumptions and may not reconcile fully to ore milled.

² Strip ratio is calculated as waste mined divided by ore mined.

³ Reflects combined mine, mill and general and administrative ("G&A") costs per tonne of ore milled. Reflects the deduction of expected capitalized stripping costs.

⁴ Combined unit costs is a non-IFRS financial performance measure with no standardized definition under IFRS. For further information and a detailed reconciliation, please see the discussion under the "Non-IFRS Financial Performance Measures" section of this MD&A.

⁵ Excludes approximately $0.7 million or $0.09 per tonne, and $5.2 million or $0.17 per tonne, of COVID-19 related costs during the three and twelve months ended December 31, 2022.

Ore mined from Pampacancha during the fourth quarter increased 47% to 5.6 million tonnes compared to the same period in 2022 at average grades of 0.56% copper and 0.32 grams per tonne gold. Total ore mined in the fourth quarter of 2023 decreased by 30% compared to the same period in 2022 primarily due to phase 5 stripping activities at Constancia and a significant increase in Pampacancha mining activity which entails a higher amount of stripping. The decrease in total mined ore was in line with our mine plan and similar to the third quarter and, as such, mill feed continued to be supplemented with ore from stockpiles during the quarter.

Ore milled during the fourth quarter of 2023 was 2% higher than the same period in 2022 mainly due to treatment of softer ore from stockpiles. Milled copper and gold grades increased by 17% and 108%, respectively, in the fourth quarter of 2023 compared to the same period in 2022 due to a significant increase in the mining of higher copper and gold grade ore from Pampacancha. 

Recoveries of copper, gold and silver during the fourth quarter of 2023 were 3%, 11% and 17% higher, respectively, than the comparative 2022 period and were in line with our metallurgical models. The Constancia mill achieved record copper recoveries of 87.4% in the fourth quarter, primarily as a result of the successful completion of the recovery improvement program in the second quarter of 2023, as planned ahead of the start of significantly higher grades being mined from the Pampacancha pit in the second half of 2023.

17

Ore mined during 2023 was 30% lower than 2022 due to the same factors as the quarterly variance as well as increased stockpile processing early in 2023 to ration fuel during the protests and civil unrest experienced in Peru. Copper recoveries during the year ended December 31, 2023 were 1% lower than the same period in 2022 due to higher levels of contaminants in processed stockpile ore during in the first half of 2023. Gold and silver recoveries during the year ended December 31, 2023 were 13% and 7% higher, respectively, than in 2022 due to increased processing of higher grade Pampacancha ore. 

Combined mine, mill and G&A unit operating costs in the fourth quarter and full year 2023 were 10% and 2% lower, respectively, than the same periods in 2022 primarily due to higher capitalized stripping, partially offset by higher mining and G&A costs and the costs associated with the scheduled semi-annual plant maintenance shutdown in the fourth quarter.

Contained metal in concentrate produced		Three months ended		Year ended		Guidance
		Dec. 31, 2023	Dec. 31, 2022	Dec. 31, 2023	Dec. 31, 2022	Annual
						2023	2024
Copper	tonnes	33,207	27,047	100,487	89,395	91,000 - 116,000	98,000 - 120,000
Gold	oz	49,418	20,860	114,218	58,229	83,000 - 108,000	76,000 - 93,000
Silver	oz	836,208	655,257	2,505,229	2,309,352	2,210,000 - 2,650,000	2,500,000 - 3,000,000
Molybdenum	tonnes	397	344	1,566	1,377	1,300 - 1,600	1,250 - 1,500

Fourth quarter 2023 production of copper, gold and silver was 23%, 137% and 28% higher, respectively, than the comparative period in 2022 due to higher copper and precious metal grades, higher recoveries and higher throughput. Production of molybdenum in the fourth quarter of 2023 was 15% higher than the comparative prior year period due to higher ore grades and higher molybdenum plant throughput.

Full year 2023 production of copper, gold, silver and molybdenum was 12%, 96%, 8% and 14% higher, respectively, than 2022 for the same reasons outlined above in the quarterly variance analysis. Copper production was in line with our annual guidance range, whereas silver and molybdenum production were near the upper end of our annual guidance range and gold production exceeded the top end of our annual guidance range by 6%.

18

       

         

19

Peru Cash Cost and Sustaining Cash Cost

		Three months ended		Year ended		Guidance
		Dec. 31, 2023	Dec. 31, 2022	Dec. 31, 2023	Dec. 31, 2022	Annual 2023	Annual 2024
Cash cost per pound of copper produced, net of by-product credits1	$/lb	0.54	1.34	1.07	1.58	1.05 - 1.30	1.25 - 1.60
Sustaining cash cost per pound of copper produced, net of by-product credits1	$/lb	1.21	2.09	1.81	2.35

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 these non-IFRS financial performance measures, please see the discussion under the "Non-IFRS Financial Performance Measures" section of this MD&A.

Cash cost per pound of copper produced, net of by-product credits, in the fourth quarter of 2023 was $0.54, a decrease of 60% compared to the same period in 2022 due to higher by-product credits mainly from gold, higher capitalized stripping, and increased copper produced. This was partially offset by higher profit sharing expenses and higher treatment, refining and freight costs. Cash cost per pound of copper produced, net of by-product credits, in 2023 was $1.07, and achieved the lower end of our 2023 cost guidance range due to the same factors noted above for the quarter.

Sustaining cash cost per pound of copper produced, net of by-product credits, for the fourth quarter and for the year ended 2023 were 42% and 23% lower, respectively, than the comparative 2022 periods primarily due to the same factors affecting cash cost noted above and lower sustaining capital expenditures. Total annual sustaining capital expenditures in Peru were $27.9 million lower than the original guidance levels of $160 million, exceeding the $10 million previously reduced target, primarily a result of lower capitalized stripping costs.

20

Metal Sold

		Three months ended		Year ended
		Dec. 31, 2023	Dec. 31, 2022	Dec. 31, 2023	Dec. 31, 2022
Payable metal in concentrate
Copper	tonnes	31,200	23,789	96,213	79,805
Gold	oz	38,114	15,116	97,176	49,968
Silver	oz	703,679	411,129	2,227,419	2,045,678
Molybdenum	tonnes	468	421	1,462	1,352

Payable copper, gold and silver sales during the fourth quarter of 2023 were 31%, 152% and 71% higher, respectively, than the corresponding period in 2022 primarily due to higher grades from Pampacancha. Gold and silver sales did not increase in line with fourth quarter production due to a precious metal stream sale that was recognized in revenue shortly after the fourth quarter cutoff date. Payable gold and silver included in this sale was approximately 16 thousand ounces of gold and 309 thousand ounces of silver.

21

MANITOBA OPERATIONS REVIEW

		Three months ended		Year ended
		Dec. 31, 2023	Dec. 31, 2022	Dec. 31, 2023	Dec. 31, 2022
Lalor ore mined	tonnes	372,384	369,453	1,526,729	1,516,203
Gold	g/tonne	5.92	4.00	4.74	4.00
Copper	%	1.04	0.73	0.86	0.73
Zinc	%	2.20	2.17	3.00	3.14
Silver	g/tonne	28.92	19.37	24.51	21.96
New Britannia ore milled	tonnes	165,038	141,142	596,912	542,269
Gold	g/tonne	8.03	6.11	6.76	6.28
Copper	%	1.46	0.91	1.03	0.81
Zinc	%	0.85	0.67	0.84	0.80
Silver	g/tonne	27.97	22.09	25.11	20.97
Copper concentrate	tonnes	15,179	7,895	37,176	27,917
Concentrate grade	% Cu	14.55	14.5	15.44	14.18
Copper recovery - concentrate	%	91.6	89.3	93.3	90.7
Gold recovery - concentrate	%	58.1	56.6	60.0	60.3
Silver recovery - concentrate	%	61.0	55.4	60.7	60.6
Contained metal in concentrate produced
Gold	oz	24,760	15,691	77,798	65,945
Copper	tonnes	2,208	1,145	5,739	3,960
Silver	oz	90,501	55,572	292,694	221,438
Metal in doré produced2
Gold	oz	14,144	7,099	40,239	28,707
Silver	oz	34,895	12,659	97,630	52,834
Stall ore milled	tonnes	228,799	204,350	965,567	968,638
Gold	g/tonne	4.22	2.50	3.45	2.86
Copper	%	0.73	0.61	0.74	0.71
Zinc	%	3.20	3.43	4.36	4.70
Silver	g/tonne	28.63	19.24	24.19	22.81
Copper concentrate	tonnes	7,938	6,306	31,900	30,359
Concentrate grade	% Cu	19.23	17.64	20.11	19.82
Zinc concentrate	tonnes	11,778	12,706	66,824	77,806
Concentrate grade	% Zn	48.79	49.79	51.84	50.63
Copper recovery	%	92.0	89.0	90.4	87.2
Zinc recovery	%	78.5	90.1	82.2	86.6
Gold recovery	%	67.5	62.4	64.8	58.0
Silver recovery	%	61.8	56.6	61.4	56.8
Contained metal in concentrate produced
Gold	oz	20,959	10,270	69,326	51,581
Copper	tonnes	1,527	1,113	6,415	6,017
Zinc	tonnes	5,747	6,326	34,642	39,395
Silver	oz	130,183	71,527	461,399	403,707

¹ The 777 mine and Flin Flon concentrator information is not disclosed in the table above. The relevant comparative information can be found on page 84 in the Summary of Historical Results section in this MD&A.

² Doré includes sludge, slag and carbon fines in three and twelve months ended December 31, 2023.

22

Unit Operating Costs1		Three months ended		Year ended
		Dec. 31, 2023	Dec. 31, 2022	Dec. 31, 2023	Dec. 31, 20224
Lalor	C$/tonne	147.10	140.10	142.35	136.71
New Britannia	C$/tonne	75.36	88.10	82.91	90.55
Stall	C$/tonne	36.97	38.04	35.82	33.78
Combined mine/mill unit operating costs2,3
Manitoba	C$/tonne	216	241	217	195 5

¹ Reflects costs per tonne of ore mined/milled.

² Reflects combined mine, mill and G&A costs per tonne of milled ore.

³ Combined unit costs is a non-IFRS financial performance measure with no standardized definition under IFRS. For further information and a detailed reconciliation, please see the discussion under the "Non-IFRS Financial Performance Measures" section of this MD&A.

⁴ The Flin Flon concentrator was decommissioned in Q3 2022. The relevant comparative information can be found on page 84 in the Summary of Historical Results in this MD&A.

⁵ Combined mine/mill unit operating costs shown for year-to-date 2022 included the Flin Flon operations and are not directly comparable to the current costs with only Snow Lake operations.

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

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

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

At Lalor, we achieved higher development advance rates during the fourth quarter compared to prior quarters of 2023. A comprehensive review of the long-range mine plan for zone 40 has led to significantly reduced future capital development needs by transitioning to a more selective mining method, thereby enhancing the reserve grade for this mining front.

Lalor ore mined during the fourth quarter, increased by 1% from the comparative 2022 period. Notably, copper, gold, silver and zinc grades mined during the fourth quarter of 2023 were 42%, 48%, 49% and 1% higher than the same period in 2022.

Total ore mined at our Manitoba operations in 2023 was 24% lower than in 2022 mainly due to the planned closure of the 777 mine in June 2022. However, total ore mined at Lalor in 2023 was 1% higher than in 2022. Gold, copper and silver grades mined at Lalor during 2023 were 19%, 18% and 12% higher than in 2022, reflecting the successful execution of our strategic mine plan. Zinc grades mined at Lalor for the full year 2023 were 4% lower compared to the same period in 2022, consistent with the mine plan. Total mine unit operating costs during the fourth quarter of 2023 increased by 5% compared to the same period in 2022, primarily attributed to a lower capital development allocation.

The Stall mill processed 12% more ore in the fourth quarter of 2023 than the corresponding period of 2022 as it drew down base metal ore stockpiles. After the commissioning of the Stall mill recovery improvement project in the second quarter of 2023, we have continued to focus on optimizing circuits to achieve targeted recoveries by reducing primary grind size, refining the flotation circuit balance and mass pull, and reagent selection. These adjustments have proven highly effective, resulting in notably higher recoveries for copper, gold and silver during the fourth quarter of 2023 compared to the same period in 2022. Specifically, the Stall mill achieved its targeted gold recovery levels of approximately 67.5% in the fourth quarter, compared to 62.4% in the fourth quarter of 2022. Compared to the same period in 2022, unit operating costs at the Stall mill were 3% lower during the fourth quarter of 2023 primarily due to higher throughput.

23

Process improvement initiatives at New Britannia have successfully been implemented with minimal capital outlays, enabling us to reach progressively higher production targets during the fourth quarter. The New Britannia mill averaged approximately 1,800 tonnes per day in the fourth quarter, approximately 13% above average levels in the third quarter of 2023. New Britannia unit operating costs decreased by 14% during the fourth quarter of 2023 versus the same period of 2022, primarily due to higher throughput.

Combined mine, mill and G&A unit operating costs in the fourth quarter of 2023 decreased by 11%, compared to the same period in 2022 reflecting higher throughput and a reduction of contractor usage at Lalor. Combined mine, mill and G&A unit operating costs for the full year 2023 were C$217 per tonne reflecting the standalone cost structure of the Snow Lake operations in 2023 after the closure of the Flin Flon operations in June 2022.

		Three months ended		Year ended		Guidance
Contained metal in concentrate and doré produced1		Dec. 31, 2023	Dec. 31, 2022	Dec. 31, 2023	Dec. 31, 2022	Annual
						2023	2024
Gold2	oz	59,863	33,060	187,363	161,471	175,000 - 205,000	170,000 - 200,000
Copper	tonnes	3,735	2,258	12,154	14,778	9,000 - 12,000	9,000 - 12,000
Zinc	tonnes	5,747	6,326	34,642	55,381	28,000 - 36,000	27,000 - 35,000
Silver3	oz	255,579	139,758	851,723	851,942	750,000 - 1,000,000	750,000 - 1,000,000

¹ Metal reported in concentrate is prior to deductions associated with smelter terms.

² Gold production guidance includes gold contained in concentrate produced and gold in doré.

³ Silver production guidance includes silver contained in concentrate produced and silver in doré.

Manitoba operations produced a record 59,863 ounces of gold during the fourth quarter of 2023. Production of gold, copper, and silver in the fourth quarter of 2023 was higher by 81%, 65%, and 83%, respectively, while production of zinc was 9% lower than the comparative 2022 period due to mining of higher grade gold zones with a focus on higher quality ore production and generally higher recoveries at the New Britannia and Stall mills. Despite significantly higher metal production in the fourth quarter, 2023 production of copper and zinc was lower by 18% and 37%, respectively, than in 2022, mainly due to the loss of production from the closure of the 777 mine in June 2022 and lower comparative zinc grades. Production of gold in 2023 was 16% higher than in 2022 while silver production was unchanged year-over-year. The production of all metals achieved our 2023 production guidance, while copper exceeded the top end of our 2023 annual guidance range.

24

   

           

25

Manitoba Cash Cost and Sustaining Cash Cost

		Three months ended		Year ended		Guidance
						Annual
		Dec. 31, 2023	Dec. 31, 2022	Dec. 31, 2023	Dec. 31, 2022	2023	2024
Cost per pound of gold produced
Cash cost per ounce of gold produced, net of by-product credits 1	$/oz	434	922	727	297	500 - 800	700 - 900
Sustaining cash cost per ounce of gold produced, net of by-product credits 1	$/oz	788	1,795	1,077	1,091

¹ Cash cost and sustaining cash cost per ounce of gold 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 the "Non-IFRS Financial Performance Measures" section of this MD&A.

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

Sustaining cash cost per ounce of gold produced, net of by-product credits, for the fourth quarter of 2023 was $788, a decrease of 56% from the comparative 2022 period primarily due to the same factors affecting cash cost noted above, and lower sustaining capital expenditures. Sustaining cash cost per ounce of gold produced, net of by-product credits, in 2023 was $1,077, a decrease of 1% from 2022, primarily due to the same factors affecting fourth quarter sustaining cash cost noted above.

Metal Sold

		Three months ended		Year ended
		Dec. 31, 2023	Dec. 31, 2022	Dec. 31, 2023	Dec. 31, 2022
Payable metal in concentrate and doré
Gold	oz	63,635	32,140	171,297	163,447
Copper	tonnes	3,687	1,626	10,708	14,668
Zinc 1	tonnes	7,385	8,230	28,779	59,043
Silver	oz	246,757	148,177	728,304	932,807

¹ Includes refined zinc metal and payable zinc in concentrate sold.

Due to significantly higher metal production during the quarter, as noted above, quantities of payable metal sold in the fourth quarter of 2023 were significantly higher than the comparable period in 2022. Payable metal sold in 2023 was generally lower than the comparable period in 2022 primarily due to the closure of the 777 mine in June 2022.

26

BRITISH COLUMBIA OPERATIONS REVIEW

		Three months ended6	Since acquisition to5, 6
		Dec. 31, 2023	Dec. 31, 2023
Ore mined1	tonnes	2,627,398	6,975,389
Waste mined	tonnes	14,032,093	26,634,805
Strip ratio2		5.34	3.82
Ore milled	tonnes	3,261,891	6,862,152
Copper	%	0.33	0.35
Gold	g/tonne	0.06	0.07
Silver	g/tonne	1.36	1.36
Copper concentrate	tonnes	38,056	82,685
Concentrate grade	% Cu	22.4	23.1
Copper recovery	%	78.8	79.7
Gold recovery	%	54.1	55.9
Silver recovery	%	73.8	73.0
Combined unit operating costs3,4	C$/tonne	20.90	21.38

¹ Reported tonnes and grade for ore mined are estimates based on mine plan assumptions and may not reconcile fully to ore milled.

² Strip ratio is calculated as waste mined divided by ore mined.

³ Reflects combined mine, mill and general and administrative ("G&A") costs per tonne of ore milled. Reflects the deduction of expected capitalized stripping costs.

⁴ Combined unit costs is a non-IFRS financial performance measure with no standardized definition under IFRS. For further information and a detailed reconciliation, please see the discussion under the "Non-IFRS Financial Performance Measures" section of this MD&A.

⁵ Includes results from the date of acquisition, June 20, 2023.

⁶ Copper Mountain mine results are stated at 100%. Hudbay owns 75% of Copper Mountain mine.

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

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

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

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

27

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

Combined mine, mill and G&A unit operating costs in the fourth quarter of 2023 were C$20.90 per tonne milled, 16% below the third quarter. Combined unit operating costs are expected to decrease over time as we continue to implement our stabilization and optimization initiatives at Copper Mountain.

Contained metal in concentrate produced		Three months ended3	Since acquisition to1, 3	Guidance
		Dec. 31, 2023	Dec. 31, 2023	20232	2024
Copper	tonnes	8,508	19,050	18,500 - 20,500	30,000 - 44,000
Gold	oz	3,495	8,848	8,000 - 10,000	17,000 - 26,000
Silver	oz	105,295	218,282	190,000 - 210,000	300,000 - 455,000

¹ Includes results from the date of acquisition, June 20, 2023.

² British Columbia guidance is from acquisition date, June 20, 2023, to the end of the fiscal year.

³ Copper Mountain mine results are stated at 100%. Hudbay owns 75% of Copper Mountain mine.

Fourth quarter 2023 production of copper, gold and silver was 8,508 tonnes, 3,495 ounces and 105,295 ounces, respectively. We have achieved our post-acquisition 2023 production guidance for copper and gold and exceeded our post-acquisition guidance for silver.

British Columbia Cash Cost and Sustaining Cash Cost

		Three months ended	Since acquisition to2	Guidance
		Dec. 31, 2023	Dec. 31, 2023	20233	2024
Cash cost per pound of copper produced, net of by-product credits1	$/lb	2.67	2.50	2.40 - 2.85	2.00 - 2.50
Sustaining cash cost per pound of copper produced, net of by-product credits1	$/lb	3.93	3.41

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 these non-IFRS financial performance measures, please see the discussion under the "Non-IFRS Financial Performance Measures" section of this MD&A.

² Includes results from the date of acquisition, June 20, 2023.

³ British Columbia guidance is from acquisition date, June 20, 2023, to the end of the fiscal year.

Cash cost and sustaining cash cost per pound of copper produced, net of by-product credits, in the fourth quarter of 2023 were $2.67 and $3.93, respectively. Cash costs were within the post-acquisition guidance range.

Metal Sold

		Three months ended	Since acquisition to1
		Dec. 31, 2023	Dec. 31, 2023
Payable metal in concentrate
Copper	tonnes	9,119	18,075
Gold	oz	3,091	8,420
Silver	oz	98,441	189,443

¹ Includes results from the date of acquisition, June 20, 2023. The first concentrate shipment since the acquisition date was in July 2023 with no sales occurring in the 10-day stub period during the second quarter of 2023.

Quantities of payable metal sold for the three months and the period since acquisition ending December 31, 2023 were generally in line with contained metal production during the quarter.

28

OUTLOOK

This outlook includes forward-looking information about our operations and financial expectations based on our expectations and outlook as of February 22, 2024.

This outlook, including expected results and targets, is subject to various risks, uncertainties and assumptions, which may impact future performance and our achievement of the results and targets discussed in this section. For additional information on forward-looking information, refer to the "Forward-Looking Information" section of this MD&A. We may update our outlook depending on changes in metals prices and other factors, as per our "Commodity Markets" and "Sensitivity Analysis" discussions below. In addition to this section, refer to the "Operations Review", "Financial Review" and "Liquidity and Capital Resources" sections for additional details on our outlook for 2024.

Material Assumptions

Our annual production and operating cost guidance, along with our annual capital and exploration expenditure forecasts are discussed in detail below.

Production Guidance

Contained Metal in Concentrate and Doré1		2024 Guidance	Year ended Dec. 31, 2023	2023 Guidance
Peru
Copper	tonnes	98,000 - 120,000	100,487	91,000 - 116,000
Gold	oz	76,000 - 93,000	114,218	83,000 - 108,000
Silver	oz	2,500,000 - 3,000,000	2,505,229	2,210,000 - 2,650,000
Molybdenum	tonnes	1,250 - 1,500	1,566	1,300 - 1,600
Manitoba
Gold	oz	170,000 - 200,000	187,363	175,000 - 205,000
Zinc	tonnes	27,000 - 35,000	34,642	28,000 - 36,000
Copper	tonnes	9,000 - 12,000	12,154	9,000 - 12,000
Silver	oz	750,000 - 1,000,000	851,723	750,000 - 1,000,000
British Columbia
Copper	tonnes	30,000 - 44,000	19,050	18,500 - 20,500
Gold	oz	17,000 - 26,000	8,848	8,000 - 10,000
Silver	oz	300,000 - 455,000	218,282	190,000 - 210,000
Total
Copper	tonnes	137,000 - 176,000	131,691	118,500 - 148,500
Gold	oz	263,000 - 319,000	310,429	266,000 - 323,000
Zinc	tonnes	27,000 - 35,000	34,642	28,000 - 36,000
Silver	oz	3,550,000 - 4,455,000	3,575,234	3,150,000 - 3,860,000
Molybdenum	tonnes	1,250 - 1,500	1,566	1,300 - 1,600

¹ Metal reported in concentrate and doré is prior to refining losses or deductions associated with smelter terms.

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

29

In 2024, consolidated copper production is forecast to increase to 156,500 tonnes¹, an increase of approximately 19% compared to 2023 actual production levels. This growth is a result of continued higher grade ore from Pampacancha in Peru and continued higher recoveries in both Peru and Manitoba, as well as the contribution from a full year of production at the Copper Mountain mine. Consolidated gold production in 2024 is expected to slightly decline to 291,000 ounces¹, due to a smoothing of Pampacancha high grade gold zones over the 2023 to 2025 period, as described further below.

2024 copper production in Peru is expected to increase by 8% from 2023 levels to 109,000 tonnes¹. Mill ore feed throughout 2024 is expected to revert back to the typical one-third from Pampacancha and two-thirds from Constancia, unlike 2023 when a majority of the ore feed was from Pampacancha in the second half of the year Gold production is expected to be 84,500 ounces¹, lower than 2023 levels due to smoothing of Pampacancha high grade gold zones over the 2023 to 2025 period as additional high grade areas were being mined in 2023 ahead of schedule than were planned, resulting in gold production exceeding 2023 guidance levels, and other high grade areas were deferred to 2025. The gold production in Peru over the 2023 to 2025 period is expected to be higher than previous guidance levels.The Pampacancha deposit is now expected to be depleted in the third quarter of 2025, as opposed to mid-2025 previously. Peru's 2024 production guidance reflects periods of higher stripping activities in the Pampacancha pit in the second and third quarters, as well as regularly scheduled semi-annual mill maintenance shutdowns at Constancia during the second and fourth quarters of 2024.

In Manitoba, 2024 gold production is anticipated to be 185,000 ounces¹, consistent with 2023 production, as we expect the high gold grades and recoveries to continue into 2024. The production guidance anticipates Lalor operating at 4,500 tonnes per day and an increase in New Britannia mill throughput to 1,800 tonnes per day given the mill has been consistently operating above its 1,500 tonnes per day nameplate capacity. Zinc production for 2024 is expected to be 31,000 tonnes¹, a 10% year-over-year decline, as certain high grade zinc areas were shifted to 2023 and the Lalor mine continues to prioritize higher gold and copper grade zones in 2024. Manitoba's production guidance reflects a scheduled maintenance period at the Lalor mine during the third quarter of 2024.

In British Columbia, 2024 copper production is expected to be 37,000 tonnes¹, in line with the technical report for Copper Mountain issued in December 2023. 

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

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Cash Cost Guidance

Copper remains the primary revenue contributor on a consolidated basis, and therefore, consolidated cost guidance has been presented as cash cost per pound of copper produced. We have also provided cash cost guidance for each of our operations based on their respective primary metal contributors.

Cash cost 1		2024 Guidance	Year ended Dec. 31, 2023	2023 Guidance
Peru cash cost per pound of copper2	$/lb	1.25 - 1.60	1.07	1.05 - 1.30
Manitoba cash cost per ounce of gold3	$/oz	700 - 900	727	500 - 800
British Columbia cash cost per pound of copper4	$/lb	2.00 - 2.50	2.50	2.40 - 2.85
Consolidated cash cost per pound of copper2	$/lb	1.05 - 1.25	0.80	0.80 - 1.10
Consolidated sustaining cash cost per pound of copper2	$/lb	2.00 - 2.45	1.72	1.80 - 2.25

¹ Cash cost and sustaining cash cost, net of by-product credits, per pound of copper produced and cash costs, net of by-product credits, per ounce of gold produced is a non-IFRS financial performance measure with no standardized definition under IFRS. For further information and a detailed reconciliation, please see the discussion under the "Non-IFRS Financial Performance Measures" section of this MD&A.

² Peru cash cost, net of by-product credits, per pound of copper contained in concentrate and by-product credits are calculated using the gold and silver deferred revenue drawdown rates for the streamed ounces in Peru in effect on December 31, 2023 and the following commodity prices: $1,900 per ounce gold, $23.00 per ounce silver and $18.00 per pound molybdenum, and $1.15 per pound zinc.

³ Manitoba cash cost, net of by-product credits, per ounce of gold contained in concentrate and doré and by-product credits are calculated using the following commodity prices: $3.75 per pound copper, $23.00 per ounce silver, $1.15 per pound zinc and an exchange rate of 1.35 C$/US$.

⁴ British Columbia cash cost, net of by-product credits, per pound of copper contained in concentrate and by-product credits are calculated using the following commodity prices: $1,900 per ounce gold, $23.00 per ounce silver and an exchange rate of 1.35 C$/US$. 

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

Gold cash cost in Manitoba is expected to increase by 10%² in 2024 compared to 2023 as a result of lower zinc and copper by-product credits and higher mining costs associated with less capitalized development costs.

Copper cash cost in British Columbia is expected to decrease by 10% in 2024² compared to 2023 and is expected to be significantly lower than the $2.69 per pound cash cost contemplated in the December 2023 technical report due to a reclassification of a portion of mining costs from operating expenses to capitalized costs. This is a result of a change from contractor mining to owner-operating mining as a more cost-effective approach for the additional required stripping, and the elimination of mining low-grade ore to stockpile in 2024 which increases the strip ratio and allocation of mining costs to capitalized stripping. In addition, the 2024 costs reflect a decrease in the discretionary tonnes moved with total material moved in 2024 now expected to be 97 million tonnes compared to 104 million tonnes in the technical report.

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

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Capital Expenditure Guidance

Capital Expenditures1 (in $ millions)	2024 Guidance5,6	Year ended Dec. 31, 2023	2023 Revised Guidance7	2023 Guidance5
Sustaining capital 2
Peru 3	130.0	132.1	150.0	160.0
Manitoba	55.0	55.8	60.0	75.0
British Columbia - sustaining capital	35.0	30.2	33.0	-
British Columbia - capitalized stripping 3	70.0
Total sustaining capital	290.0	218.1	243.0	235.0
Growth capital
Peru	2.0	12.1	10.0	10.0
Manitoba4	10.0	13.5	15.0	15.0
British Columbia	5.0	1.2	2.0
Arizona	20.0	21.3	25.0	30.0
Total growth capital	37.0	48.1	52.0	55.0
Capitalized exploration5	8.0	7.8	10.0	10.0
Total	335.0	274.0	305.0	300.0

¹ Excludes capitalized costs not considered to be sustaining or growth capital expenditures.

² Sustaining capital guidance excludes right-of-use lease additions and additions as a result of equipment financing arrangements.

³ Includes capitalized stripping and development costs.

⁴ Partially funded by approximately $3 million in Canadian Development Expense flow-through financing proceeds.

⁵ 2023 and 2024 capital expenditure guidance excludes right-of-use lease additions and additions as a result of equipment financing arrangements.

⁶ Capital expenditures are converted into U.S. dollars using an exchange rate of 1.35 C$/US$. 

⁷ Capital expenditure guidance reflects revised guidance issued with third quarter results, including lower anticipated capital spend in Manitoba and Peru, and new British Columbia guidance.

2023 total capital expenditures, excluding British Columbia, were $57 million, lower than original guidance expectations as a result of the discretionary capital reductions across the business. British Columbia capital expenditures were in line with 2023 guidance levels.

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

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

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

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

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

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

Exploration Guidance

(in $ millions)		Year ended
	2024 Guidance	Dec. 31, 20232	2023 Guidance
Peru1	17.0	15.2	15.0
Manitoba3	23.0	10.4	15.0
British Columbia	2.0	3.9	-
Arizona and other	1.0	2.4	-
Total exploration expenditures	43.0	31.9	30.0
Capitalized spending	(8.0)	(7.8)	(10.0)
Total exploration expense	35.0	24.1	20.0

¹ Exploration guidance excludes $5 million of non-cash amortization of community agreements for exploration properties.

² 2023 exploration actuals exclude $5.2 million of non-cash amortization of community agreements for exploration properties.

³ Partially funded by approximately $11 million in Canadian Exploration Expense flow-through financing proceeds.

Total expected exploration expenditures of $43 million in 2024 are 35% higher than 2023 spending primarily due to an extensive drilling program underway in Snow Lake, Manitoba. Our 2024 exploration activities are focused on areas with high potential for new discovery and mineral reserve and resource expansion.

In Peru, 2024 exploration activities will continue to focus on permitting and drill preparation for the Maria Reyna and Caballito properties near Constancia. In Manitoba, we have initiated the largest exploration program in its history in Snow Lake focused on testing the deep extensions of the gold and copper zones at Lalor, the Lalor Northwest target, the newly acquired Cook Lake claims, and the former Rockcliff properties. We intend to complete geophysical surveys on the new land package in the Snow Lake area to generate additional targets with plans to start drilling those targets later in 2024. A portion of the 2024 Manitoba exploration program will be funded by $11 million in proceeds from a critical minerals premium flow-through financing completed in December 2023. We issued 1,310,000 Canadian Exploration Expense ("CEE") flow-through common shares ("Flow-Through Common Shares") of the company, at a price of C$11.50 per CEE Flow-Through Common Share, representing a premium of approximately 85%.

² Year-over-year forecast changes assume the mid-point of the respective guidance range is achieved.

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Commodity Markets

Our 2024 operational and financial performance will be influenced by a variety of factors including our production volumes, metal prices and input costs. The general performance of the Chinese, North American and global economies will influence the demand for copper and zinc and the prices we receive, while interest rates, inflation, the performance of financial markets, the amount of central bank gold purchases and the level of geopolitical uncertainty will drive the price we receive for our gold.

In the early months of 2024, central banks, led by the US Federal Reserve, have maintained policies to fight inflation by keeping short term interest rates high. Current consensus is that central banks will begin to drop rates in the second half of 2024 to try and engineer a soft economic landing whist avoiding a recession. This trajectory is even more probable as over half the global population will head to the polls during 2024 which will pressure incumbent administrations, hoping to remain in power to generate a prosperous economic outcome in 2024. In addition, the Chinese government appears committed to undertaking a significant amount of economic stimulus to ensure that they maintain their goal of 5% GDP growth and improved employment for their younger citizens. While these factors are collectively positive for economic growth and base metal demand, there remains a very high level of geopolitical uncertainty in the world with wars and political instability in the Ukraine and the Middle East which could adversely affect the world economy and demand for base metals. These same geopolitical forces could also have an adverse impact on oil prices and trade flows which could increase our production costs.

The realized prices we achieve in the commodity markets significantly affect our financial performance. Our general expectations regarding metals prices and foreign exchange rates are included below and in the "Sensitivity Analysis" section of this MD&A.

We have developed the following market analysis from various information sources including analyst and industry experts and our own market intelligence.

Copper

In 2023, the London Metal Exchange ("LME") copper price began the year strongly averaging $4.04 per pound during the first 4 months of the year buoyed by expectations of a strong economic rebound in China. In the second quarter of the year, when it became apparent that the Chinese economic recovery was more tepid, market sentiment quickly soured and the price averaged only $3.75 per pound for the last 8 months of the year bringing the annual average price in at $3.85 per pound. During the last quarter of 2023 and into early 2024 copper prices have been rangebound between $3.54 and $3.87 per pound as market sentiment has shifted back and forth between concerns about declining near term copper demand and concerns about lower supply due to the sudden closure of the Cobre de Panama mine and lower production estimates from established mines in Chile and other parts of the world.

2024 is expected to be an uncertain year for the copper price due to significant volatility on both supply and demand sides of the market as well as economic uncertainty related to the timing of interest rate reductions and geopolitical turmoil. However, growing future demand for copper driven by the Green Revolution will necessitate the development of intrinsically higher capital cost greenfield mines from the world's existing inventory of undeveloped deposits, which, in combination with the significant operating cost inflation that has occurred over the past several years, will almost certainly result in significantly higher copper prices in 2025 and beyond.

Zinc

In 2023, the LME zinc price started the year strongly, reaching a high of $1.58 per pound towards the end of January before dropping precipitously to a low of $1.02 per pound in May, after succumbing to the double hit of falling metal demand and increasing zinc metal supply which produced the first zinc metal market surplus in many years.  The dramatically lower prices have already had an effect on mine production with several higher cost zinc mines (Tara, Nystar's Tennesse mines, Aljustrel and Myra Falls) being placed on care and maintenance in the second half of 2023. Despite these mine supply curtailments and others that are likely to follow, continued weak demand from China's housing sector and large metal inventories within China are likely to weigh on the zinc market for the remainder of 2024 causing LME zinc prices to remain between $1.00 and $1.10 per pound.

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Gold

In 2023, the London Gold Bullion Market price for gold averaged $1,943 per ounce, which, for the first time in several years, was up substantially from the prior year average of $1,803 per ounce. Gold prices began the year at $1,843 per ounce and rose to close the year at an all-time high of $2,078 per ounce on December 28, 2023. The price increase during the year was largely driven by exceptional demand from emerging market central banks and geopolitical instability in many areas of the world.

The physical supply and demand for gold is not an arbitrator of future prices as it is with base metals because most of the gold ever mined is stored in bank vaults. Gold is an investment that has traditionally provided a safe haven for investors during uncertain economic times, as well as a hedge against inflation, future currency devaluation and declining values of other riskier asset classes. The consensus economic outlook for a soft economic landing in the US and Europe, softer growth in China, easing inflation and a decline in central bank rates in the second half of the year would normally bode poorly for gold prices. However, continued geopolitical instability combined with the continued central bank buying trend that has pushed central bank holdings to their highest level since 1974 may support gold prices and allow them to stay above $2,000 per ounce for the balance of 2024. 

Treatment Charges, Refining Charges, and Freight Costs

Hudbay's operating margins are affected by a variety of marketing related costs related to the products that we produce. For the copper, zinc and molybdenum concentrates that we produce, we pay freight costs to deliver these products from our facilities to our customers, which include, depending on the destination, various combinations of truck, rail or ocean freight costs along with warehousing and loading fees. We also pay treatment and refining charges ("TC/RCs") to our customers who process our concentrates. For precious metal doré we produce, we incur transportation costs to ship to a third party refinery.

A portion of our copper concentrate sales are made under multiyear contracts with an annual benchmark reference for TC/RCs. The annual benchmark for 2024 was recently established at $80/8¢, compared to $88/8.8¢ in 2023. However, since the benchmark was established, the global concentrate market has tightened significantly, reflecting the closure of the Cobre Panama mine and spot treatment and refining charges have responded by dropping as low as $25/2.5¢.

Hudbay is also exposed to zinc concentrate treatment charges as a seller of zinc concentrate. The 2024 zinc concentrate benchmark has not yet been established, but is expected to be well below 2023's level of US$274/dmt. The zinc concentrate market is currently tight with spot treatment charges at approximately $100/dmt.

Bulk ocean freight rates were volatile in 2023. Spot rates generally declined during the first half of 2023, before rebounding strongly in the second half, in part due to drought induced restrictions at the Panama Canal.

Conversely, container rates were largely weak throughout 2023, as new container vessel construction added to global supply. However, the recent instability in the middle east has the potential to send container rates higher again as vessels are forced to use longer routes rather than sailing through the Suez Canal.

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Sensitivity Analysis

The following table displays the estimated impact of changes in metals prices and foreign exchange rates on our 2024 net profit, earnings per share and operating cash flow, assuming that our operational performance is consistent with the mid-point of our guidance for 2024. The effects of a given change in an assumption are calculated in isolation.

	2024	Change of 10%	Impact on	Impact on	Impact on Operating CF
	Base	represented by:	Profit	EPS1	before WC changes
Metals Prices
Copper price2	$3.75/lb	' +/-  $0.38/lb	' +/-  $78M	' +/-  $0.22	' +/-  $107M
Zinc price	$1.15/lb	' +/-  $0.12/lb	' +/-  $4M	' +/-  $0.01	' +/-  $6M
Gold price3	$1,900/oz	' +/-  $190/oz	' +/-  $30M	' +/-  $0.09	' +/-  $43M
Exchange Rates 4
C$/US$	1.35	'+/-0.14	' +/-  $59M	' +/-  $0.17	' +/-  $53M

¹ Based on 350.7 million common shares outstanding as at December 31, 2023.

² Quotational period hedging program neutralizes provisional pricing adjustments.

³ Gold price sensitivity also includes an impact of a +/- 10% change in the silver price (2024 assumption: $23.00/oz of silver).

⁴ Change in profit from operational performance only, does not include change in profit arising from translation of balance sheet accounts.

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FINANCIAL REVIEW

Our financial results presented within this "Financial Review" section include results from the British Columbia business unit from the June 20, 2023 acquisition date.

Financial Results

In the fourth quarter of 2023, we recorded a net profit of $33.5 million compared to a net loss of $17.5 million in the fourth quarter of 2022, representing an increase in profit of $51.0 million. For the full year of 2023, we recorded a net profit of $69.5 million compared to a net profit of $70.4 million in 2022, representing a decrease in profit of $0.9 million.

The following table provides further details on these variances:

(in $ millions)	Three months ended December 31, 2023		Year ended December 31, 2023
Increase (decrease) in components of profit or loss:
Revenues	281.0		228.6
Cost of sales
Mine operating costs	(111.5	)	(58.9	)
Depreciation and amortization	(42.4	)	(54.0	)
Selling and administrative expenses	(1.3	)	(5.2	)
Exploration expenses	(5.8	)	5.1
Re-evaluation adjustment - environmental obligation	(20.5	)	(122.1	)
Other expenses	8.0		(5.7	)
Impairment - Arizona	-		95.0
Net finance expense	(12.2	)	(26.8	)
Tax expense	(44.3	)	(56.9	)
Increase (decrease) in profit for the period	51.0		(0.9	)

Revenue

Revenue for the fourth quarter of 2023 was a record $602.2 million, $281.0 million higher than the same period in 2022, primarily as a result of $83.7 million of incremental revenue generated by our recently acquired Copper Mountain mine as well as higher copper and gold sales volumes from mining the high-grade zones of the Pampacancha deposit and higher gold and copper grade zones at Lalor, and higher copper and gold metal prices partially offset by higher molybdenum prices and sales volumes and higher treatment and refining charges.

Revenue for the year ended December 31, 2023 was $1,690.0 million, $228.6 million higher than in 2022, mainly due to $165.4 million of incremental revenue generated by our recently acquired Copper Mountain mine as well as higher copper and gold sales volumes and higher gold prices. These factors were partially offset by lower zinc sales volumes, lower copper and zinc metal prices and higher treatment and refining charges. Copper sales volumes for the year ended December 31, 2023 were significantly higher than the prior year despite the closure of the 777 mine in Manitoba in June 2022, which contributed to higher production and sales in the comparative period.

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The following table provides further details on these variances:

(in $ millions)	Three months ended December 31, 2023		Year ended December 31, 2023
Metals prices1
Higher (lower) copper prices	9.4		(28.6	)
Lower zinc prices	(3.6	)	(34.6	)
Higher gold prices	44.9		64.0
Higher silver prices	4.0		2.4
Sales volumes
Higher copper sales volumes	75.0		108.2
Lower zinc sales volumes	(2.5	)	(114.9	)
Higher gold sales volumes	88.1		91.1
Higher (lower) silver sales volumes	6.8		(0.4	)
British Columbia Business Unit
Copper	79.4		153.0
Gold	6.9		17.0
Silver	2.4		4.5
Treatment & Refining	(4.8	)	(9.8	)
Other
Change in derivative mark-to-market on zinc	-		0.4
Change in derivative mark-to-market on copper	0.1		3.8
Molybdenum and other volume and pricing differences	(14.1	)	3.6
Variable consideration adjustments	-		3.9
Effect of higher treatment and refining charges	(11.0	)	(35.0	)
Increase in revenue in 2023 compared to 2022	281.0		228.6

¹ See discussion below for further information regarding metals prices.

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Our revenue by significant product type is summarized below:

	Three months ended				Year ended
(in $ millions)	Dec. 31, 2023		Dec. 31, 2022		Dec. 31, 2023		Dec. 31, 2022
Copper	361.7		203.6		1,065.8		838.1
Zinc	18.7		24.1		76.6		223.4
Gold	183.8		67.4		463.0		325.1
Silver	11.8		2.8		35.6		24.9
Molybdenum	21.2		17.6		79.4		54.5
Other metals	-		0.7		0.2		5.4
Revenue from contracts	597.2		316.2		1,720.6		1,471.4
Amortization of deferred revenue - gold	16.3		4.4		39.7		36.0
Amortization of deferred revenue - silver	10.2		6.0		32.7		36.2
Amortization of deferred revenue - variable consideration adjustments - prior periods	-		-		4.9		1.0
Pricing and volume adjustments1	14.2		14.5		5.8		(14.3	)
Treatment and refining charges	(35.7	)	(19.9	)	(113.7	)	(68.9	)
Revenue	602.2		321.2		1,690.0		1,461.4

¹ Pricing and volume adjustments represents mark-to-market adjustments on provisionally prices sales, realized and unrealized changes to fair value for non-hedge derivative contracts and adjustments to originally invoiced weights and assays.

For further detail on variable consideration adjustments, refer to note 21 of our consolidated financial statements.

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.

For sales of copper, zinc, gold and silver we may enter into non-hedge derivatives ("QP hedges") which are intended to manage the provisional pricing risk arising from quotational period terms in concentrate sales agreements. The gains and losses on QP hedges are included in the calculation of realized prices. We expect that gains and losses on QP hedges will offset provisional pricing adjustments on concentrate sales contracts.

Our realized prices for the fourth quarter and full year 2023 and 2022, respectively, are summarized below:

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			Realized prices1 for the		LME YTD 20232	Realized prices1 for the
			Three months ended			Year ended
		LME QTD 20232	Dec. 31, 2023	Dec. 31, 2022		Dec. 31, 2023	Dec. 31, 2022
Prices
Copper	$/lb	3.70	3.77	3.61	3.85	3.82	3.94
Zinc3	$/lb	1.13	1.14	1.36	1.20	1.18	1.72
Gold4	$/oz		2,062	1,615		1,898	1,656
Silver4	$/oz		21.67	16.99		21.85	20.88

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 Includes sales of zinc concentrate and sales of zinc metal. 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. Realized prices include the effect of provisional pricing adjustments on zinc concentrate.

⁴ Sales of gold and silver from Constancia mine are subject to our precious metals stream agreement with 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 payment rates can be found on page 43 of this MD&A.

The realized prices denoted in the table above exclude the impact of derivative mark-to-market gains and losses on non-QP hedges.

During the fourth quarter of 2023, the Copper Mountain mine entered into forward sales contracts for a total of 3,600 tonnes of 2024 copper production over the twelve-month period from May 2024 to April 2025 at an average price of $3.93 per pound, as well as a zero-cost collar program for 6,000 tonnes of 2024 copper production over the twelve-month period from May 2024 to April 2025 at an average floor price of $3.83 per pound and an average cap price of $4.03 per pound. Together, the forward sales and zero cost collar hedges entered into during the fourth quarter represent approximately 25% of Copper Mountain's expected 2024 production.

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The following tables provide a reconciliation of average realized price per unit sold, by metal, to revenues as shown in the consolidated financial statements.

Three months ended December 31, 2023
(in $ millions) 1	Copper		Zinc		Gold	Silver	Molybdenum		Other	Total
Revenue from contracts 2	361.7		18.7		183.8	11.8	21.2		-	597.2
Amortization of deferred revenue	-		-		16.3	10.2	-		-	26.5
Pricing and volume adjustments 3	4.4		(0.1	)	16.1	0.7	(6.9	)	-	14.2
By-product credits 4	366.1		18.6		216.2	22.7	14.3		-	637.9
Derivative mark-to-market 5	0.1		-		-	-	-		-	0.1
Revenue, excluding mark-to-market on non-QP hedges4	366.2		18.6		216.2	22.7	14.3		-	638.0
Payable metal in concentrate and doré sold 6	44,006		7,385		104,841	1,048,879	468		-	-
Realized price 7	8,321		2,519		2,062	21.67	-		-	-
Realized price 8	3.77		1.14		-	-	-		-	-
Year ended December 31, 2023
(in $ millions) 1	Copper		Zinc		Gold	Silver	Molybdenum		Other	Total
Revenue from contracts 2	1,065.8		76.6		463.0	35.6	79.4		0.2	1,720.6
Amortization of deferred revenue	-		-		39.7	32.7	-		-	72.4
Pricing and volume adjustments 3	(8.3	)	(1.7	)	22.9	0.4	(7.5	)	-	5.8
By-product credits 4	1,057.5		74.9		525.6	68.7	71.9		0.2	1,798.8
Derivative mark-to-market 5	(3.8	)	-		-	-	-		-	(3.8	)
Revenue, excluding mark-to-market on non-QP hedges	1,053.7		74.9		525.6	68.7	71.9		0.2	1,795.0
Payable metal in concentrate and dore sold 6	124,996		28,779		276,893	3,145,166	1,462		-	-
Realized price 7	8,430		2,603		1,898	21.85	-		-	-
Realized price 8	3.82		1.18		-	-	-		-	-

¹ Average realized price per unit sold may not calculate based on amounts presented in this table due to rounding.

² As per financial statements.

³ Pricing and volume adjustments represents mark-to-market adjustments on provisionally priced sales, realized and unrealized changes to fair value for non-hedge derivative contracts and adjustments to originally invoiced weights and assays.

⁴ By-product credits subtotal is used in the calculated of cash cost per pound of copper and ounce of gold produced, net of by-product credits. Cash cost per pound of copper and per ounce of gold produced, net of by-product credits, are non-IFRS financial performance measures with no standardized definition under IFRS. For further information and a detailed reconciliation, please see the discussion under the "Non-IFRS Financial Performance Measures" section of this MD&A.

⁵ Derivative mark-to-market excludes mark-to-market on QP hedges.

⁶ Copper, zinc and molybdenum shown in metric tonnes and gold and silver shown in ounces.

⁷ Realized price for copper and zinc in $/metric tonne and realized price for gold and silver in $/oz.

⁸ Realized price for copper and zinc in $/lb.

The price, quantity and mix of metals sold, 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 to customers.

41

Three months ended December 31, 2022
(in $ millions) 1	Copper		Zinc	Gold		Silver	Molybdenum	Other	Total
Revenue from contracts 2	203.6		24.1	67.4		2.8	17.6	0.7	316.2
Amortization of deferred revenue	-		-	4.4		6.0	-	-	10.4
Pricing and volume adjustments 3	(1.4	)	0.6	4.5		0.7	10.1	-	14.5
By-product credits 4	202.2		24.7	76.3		9.5	27.7	0.7	341.1
Derivative mark-to-market 5	-		-	-		-	-	-	-
Revenue, excluding mark-to-market on non-QP hedges	202.2		24.7	76.3		9.5	27.7	0.7	341.1
Payable metal in concentrate and dore sold 6	25,415		8,230	47,256		559,306	421	-	-
Realized price 7	7,956		3,001	1,615		16.99	-	-	-
Realized price 8	3.61		1.36	-		-	-	-	-
Year ended December 31, 2022
(in $ millions) 1	Copper		Zinc	Gold		Silver	Molybdenum	Other	Total
Revenue from contracts 2	838.1		223.4	325.1		24.9	54.5	5.4	1,471.4
Amortization of deferred revenue	-		-	36.0		36.2	-	-	72.2
Pricing and volume adjustments 3	(17.0	)	0.6	(7.6	)	1.1	8.6	-	(14.3	)
By-product credits 4	821.1		224.0	353.5		62.2	63.1	5.4	1,529.3
Derivative mark-to-market 5	-		0.4	-		-	-	-	0.4
Revenue, excluding mark-to-market on non-QP hedges	821.1		224.4	353.5		62.2	63.1	5.4	1,529.7
Payable metal in concentrate and dore sold 6	94,473		59,043	213,415		2,978,485	1,352	-	-
Realized price 7	8,691		3,801	1,656		20.88	-	-	-
Realized price 8	3.94		1.72	-		-	-	-	-

¹ Average realized price per unit sold may not calculate based on amounts presented in this table due to rounding.

² As per consolidated financial statements.

³ Pricing and volume adjustments represents mark-to-market adjustments on provisionally priced sales, realized and unrealized changes to fair value for non-hedge derivative contracts and adjustments to originally invoiced weights and assays.

⁴ By-product credits subtotal is used in the calculated of cash cost per pound of copper and zinc produced, net of by-product credits. Cash cost per pound of copper and per ounce of gold produced, net of by-product credits, are non-IFRS financial performance measures with no standardized definition under IFRS. For further information and a detailed reconciliation, please see the discussion under the "Non-IFRS Financial Performance Measures" section of this MD&A.

⁵ Derivative mark-to-market excludes mark-to-market on QP hedges.

⁶ Copper, zinc and molybdenum shown in metric tonnes and gold and silver shown in ounces.

⁷ Realized price for copper, zinc and molybdenum in $/metric tonne and realized price for gold and silver in $/oz.

⁸ Realized price for copper and zinc in $/lb.

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Stream Sales

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

		Three months ended	Year ended
		Dec. 31, 2023	Dec. 31, 2023
		Peru1	Peru1
Gold	oz	19,925	48,522
Silver	oz	665,191	2,140,243
Gold deferred revenue drawdown rate1,2	$/oz	820	820
Gold cash rate3	$/oz	420	418
Total gold stream realized price	$/oz	1,240	1,238
Silver deferred revenue drawdown rate1,2	$/oz	15.26	15.26
Silver cash rate3	$/oz	6.20	6.17
Total silver stream realized price	$/oz	21.46	21.43

		Three months ended		Year ended
		Dec. 31, 2022		Dec. 31, 2022
		Manitoba	Peru1	Manitoba	Peru1
Gold	oz	-	6,013	11,115	30,275
Silver	oz	-	402,883	235,626	2,038,748
Gold deferred revenue drawdown rate1,2	$/oz	-	734	1,238	734
Gold cash rate3	$/oz	-	416	430	414
Total gold stream realized price	$/oz	-	1,150	1,668	1,148
Silver deferred revenue drawdown rate1,2	$/oz	-	14.95	24.43	14.95
Silver cash rate3	$/oz	-	6.14	6.34	6.11
Total silver stream realized price	$/oz	-	21.09	30.77	21.06

¹ Subsequent to the variable consideration adjustment recorded on January 1, 2023, the deferred revenue amortization is recorded in Peru at $820/oz gold and $15.26/oz silver (December 31, 2022 - $734/oz gold and $14.95/oz silver).

² Deferred revenue drawdown rates for gold and silver do not include variable consideration adjustments.

³ The gold and silver cash rate for Peru increased by 1% from $400/oz and $5.90/oz effective August 4, 2019. Subsequently every year, on August 4, the cash rate will increase by 1% compounded. The gold and silver cash rate for Manitoba increased by 1% from $400/oz and $5.90/oz effective August 1, 2015. Subsequently every year, on August 1, the cash rate will increase by 1% compounded. The weighted average cash rate is disclosed.

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Cost of Sales

Our detailed cost of sales is summarized as follows:

(in $ thousands)	Three months ended			Year ended
	Dec. 31, 2023	Dec. 31, 2022		Dec. 31, 2023	Dec. 31, 2022
Peru
Mining	30,336	41,647		122,651	137,546
Milling	50,199	50,723		198,062	195,152
Changes in product inventory	8,048	(15,685	)	28,128	(31,348	)
Depreciation and amortization	85,722	58,256		275,647	211,043
G&A	24,994	14,912		77,299	63,092
Inventory adjustments	-	-		-	(558	)
Freight, royalties and other charges	22,310	17,263		68,360	55,651
Total Peru cost of sales	221,609	167,116		770,147	630,578
Manitoba
Mining	40,236	38,112		161,090	192,704
Milling	15,346	14,868		62,310	73,903
Zinc plant	-	-		-	32,755
Changes in product inventory	12,809	(740	)	1,805	28,223
Depreciation and amortization	30,601	21,152		104,266	126,572
Inventory adjustments	1,402	7		2,308	4,111
G&A	8,601	6,847		35,171	62,782
Curtailment	-	(2,384	)	-	(2,384	)
Freight, royalties and other charges	6,765	6,542		23,717	35,308
Total Manitoba cost of sales	115,760	84,404		390,667	553,974
British Columbia
Mining	19,015	-		48,266	-
Milling	25,218	-		49,320	-
Changes in product inventory	8,469	-		8,472	-
Depreciation and amortization	5,489	-		11,744	-
G&A	5,643	-		10,693	-
Freight, royalties and other charges	4,230	-		8,160	-
Total British Columbia cost of sales	68,064	-		136,655	-
Cost of sales	405,433	251,520		1,297,469	1,184,552

Total cost of sales for the fourth quarter of 2023 was $405.4 million, reflecting an increase of $153.9 million from the fourth quarter of 2022 and included a full quarter of operating costs from Copper Mountain, totaling $68.1 million. Peru cost of sales increased by $54.5 million in the fourth quarter of 2023, compared to the same period of 2022 mainly due to higher depreciation, inline with the higher production during the quarter. Peru cost of sales was also higher in the fourth quarter of 2023, versus the comparative 2022 period, due to higher G&A and a drawdown of copper concentrate versus the comparative period. These increases were partially offset by lower mining costs.

Manitoba cost of sales increased by $31.4 million in the fourth quarter of 2023, compared to the same period of 2022. This was primarily as a result of a drawdown of copper concentrate inventory that had built up during the third quarter of 2023 versus the comparative period and an increase in depreciation from the increase in production compared to the prior period.

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Total cost of sales for the full year 2023 was $1,297.5 million, reflecting an increase of $112.9 million from the same period in 2022 in part due to $136.7 million of operating costs from Copper Mountain with no similar costs in the comparative period. In addition, Peru cost of sales increased by $139.6 million mainly driven by higher depreciation due to the same reason outlined in the quarterly variance, a higher relative drawdown of product inventory, higher G&A and higher freight costs, partially offset by lower mining costs. These increases were partially offset by a decrease in Manitoba cost of sales by $163.3 million as a result of the closure of the zinc plant in June 2022, decreases in the mining, milling and depreciation costs due to the planned closure of 777 and the Flin Flon mill and a reduction of G&A and freight costs.

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

For the fourth quarter of 2023, other significant variances in non-operating expenses, compared to the same period in 2022, include the following:

-Re-evaluation adjustment - environmental provision loss increased by $20.5 million due to the relative revaluation of the environmental reclamation provision primarily on our Manitoba non-producing sites from changes in long term risk-free discount rates and inflation rates.

Given the long term nature of the reclamation cash flows, the related environmental reclamation provision is highly sensitive to changes in inflation rates and long-term risk-free discount rates and, as such, we may continue to experience significant quarterly closure cost provision revaluations.

-Other expenses decreased by $8.0 million compared to 2022. The decrease was primarily due to a $4.2 million insurance recovery in the current period, a $3.9 million VAT gain in Peru in the current period and a $5.8 million comparative period corporate restructuring charge which did not recur in 2023. These impacts were partially offset by a comparative increase in losses on disposition of property, plant and equipment and increased amortization of community costs.

-Exploration expenses increased by $5.8 million primarily due to expensed exploration spending at our British Columbia business unit with no comparative period expense incurred.

For the year 2023, other significant variances in non-operating expenses, compared to the same period in 2022, include the following:

-Re-evaluation adjustment - environmental provision gain decreased by $122.1 million, for the same reasons outlined in the quarterly variance analysis.

-Impairment - Arizona - The prior period had a $95.0 million impairment related to certain capitalized costs and assets associated with the previous stand-alone development plan for the Rosemont deposit, which were determined to no longer be recoverable. No impairment was recorded in the comparative 2023 period.

-Exploration expenses decreased by $5.1 million as Copper World drilling and exploration costs, which were mainly expensed in the comparative 2022 period, have since been completed with incremental Copper World exploration now being capitalized.

-Selling and administrative expenses increased by $5.2 million reflecting a higher share based compensation expense as a result of an increase in share price during the current year compared to the same period in 2022.

-Other expenses increased by $5.7 million primarily due to a comparative increase in losses on disposition of property, plant and equipment and increased amortization of community costs. In addition there were increases in care & maintenance costs for the Flin Flon zinc refinery-concentrator and tailings impoundment area as well as transaction costs incurred to complete the acquisition of Copper Mountain. Partially offsetting these impacts was higher comparative period restructuring charges related to the closure of the Flin Flon operations in the second quarter of 2022, decreases in Copper World evaluation costs which were completed in the prior year and a comparative period corporate restructuring charge which did not recur in 2023.

45

Net finance expense

(in $ thousands)	Three months ended		Year ended
	Dec. 31, 2023	Dec. 31, 2022	Dec. 31, 2023	Dec. 31, 2022
Finance costs - accrued or payable:
Interest expense on long-term debt	20,317	16,933	76,202	67,663
Withholding taxes	1,458	1,528	6,035	6,092
Loss on disposal of investments	-	516	667	3,648
Other accrued/payable costs1	2,250	663	2,132	5,279
Total finance costs - accrued or payable	24,025	19,640	85,036	82,682
Finance costs - non-cash:
Accretion on streaming agreements2	6,597	7,018	26,291	27,778
Change in fair value of financial assets and liabilities at fair value through profit or loss	9,493	6,830	14,053	942
Other non-cash costs3	8,814	3,240	19,955	7,092
Total finance costs - non-cash	24,904	17,088	60,299	35,812
Net finance expense	48,929	36,728	145,335	118,494

¹ Includes interest income and other finance expense.

² Includes variable consideration adjustment (prior periods).

³ Includes accretion on community agreements, accretion on Wheaton refund liability, unwinding of discount on provisions, and net foreign exchange losses (gains).

Net finance expense during the fourth quarter ended December 31, 2023, increased by $12.2 million compared to the fourth quarter of 2022 primarily due to a $4.0 million increase net foreign exchange losses, a $3.4 million increase in interest expense as result of interest on the Copper Mountain Bonds and our revolving credit facility balance, a $1.8 million increase in other finance expense as a result of additional finance lease expenses, a $1.7 million increase in the net revaluation loss on our equity investments, a $1.6 million increase in accretion on community agreements and environmental provisions and a $1.0 million increase in the relative revaluation loss of the gold prepayment liability.

Net finance expense during the year ended 2023, increased by $26.8 million compared to the year ended in 2022 due to an $8.5 million increase in interest expense as result of interest on the Copper Mountain Bonds and our revolver balance, a $7.8 million increase in the revaluation loss of the gold prepayment liability, a $10.7 million decrease in net foreign exchange gains, and a $5.3 million increase in the net revaluation loss on our equity investments. This was partially offset by $5.5 million of additional interest income earned.

46

Tax Expense

For the three months ended December 31, 2023, tax expense increased by $44.3 million and for the year ended December 31, 2023, tax expense increased by $56.9 million, compared to the same periods in 2022. The following table provides further details:

(in $ thousands)	Three months ended				Year ended
	Dec. 31, 2023		Dec. 31, 2022		Dec. 31, 2023		Dec. 31, 2022
Deferred tax recovery - income tax1	(3,222	)	(6,401	)	(19,594	)	(1,193	)
Deferred tax expense (recovery) - mining tax1	(1,984	)	(127	)	(3,200	)	5,717
Total deferred tax (recovery) expense	(5,206	)	(6,528	)	(22,794	)	4,524
Current tax expense - income tax	45,197		6,517		83,073		10,667
Current tax expense - mining tax	7,463		3,165		22,008		10,242
Total current tax expense	52,660		9,682		105,081		20,909
Tax expense	47,454		3,154		82,287		25,433

¹ Deferred tax expense (recovery) represents our draw down/increase of non-cash deferred income and mining tax assets/liabilities.

Income Tax Expense/Recovery

Applying the estimated Canadian statutory income tax rate of 26.2% to our profit before taxes of $151.8 million for the year-to-date of 2023 would have resulted in a tax expense of approximately $39.8 million; however, we recorded an income tax expense of $63.5 million. The significant items causing our effective income tax rate to be different than the 26.2% estimated Canadian statutory income tax rate include:

-Deductible temporary differences with respect to Peru, Manitoba and British Columbia, relating to the decommissioning and restoration liabilities, were recognized as we have determined that it is probable that we will realize the recovery of these deferred tax assets based on the timing of the reversals of the deductible temporary differences and the future projected taxable profit of the operations. This resulted in a combined deferred tax recovery of $6.4 million.

-Foreign exchange on the translation of deferred tax balances to group currency resulted in a deferred tax recovery of $7.4 million.

-Withholding taxes on intercompany dividends received in Canada from Hudbay's Peruvian Business Units results in a tax expense of $11.8 million.

-Adjustments with respect to prior years resulted in a tax expense of $1.9 million.

-The tax expense with respect to our foreign operations are recorded using an income tax rate other than the Canadian statutory income tax rate of 26.2%, resulting in a tax expense of $27.9 million.

-The recognition of previously unrecognized deferred tax assets resulted in a deferred tax recovery of $5.3 million.

-Temporary Income tax differences not recognized as we have determined that it is not probable that we will realize the recovery of these deferred tax assets, resulting in a deferred tax expense of $5.4 million.

Mining Tax Expense

Applying the estimated Manitoba mining tax rate of 10.0% to our net income before taxes of $151.8 million for the year-to-date of 2023 would have resulted in a tax expense of approximately $15.2 million; however, we recorded a mining tax expense of $18.8 million. 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 of 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 C$50 million or less;

47

-Between mining profit of C$50 and $C55 million, mining tax is equal to a minimum of C$5 million plus mining profit less C$50 million multiplied by 65%;

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

-Between mining profit of C$100 million and C$105 million, mining tax is equal to a minimum of C$15 million plus mining profit less C$100 million multiplied by 57%; and

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

We estimate that the tax rate that will be applicable when temporary differences reverse will be approximately 10.0%.

Peru

The Peruvian government imposes two parallel mining tax regimes, the Special Mining Tax and the 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 December 31, 2023, at the tax rate we expect to apply when temporary differences reverse.

British Columbia

The Province of British Columbia imposes a 13% net revenue tax on the sale of mineral products mined in the province of British Columbia after the mine owner has recovered the capital invested in the mine and its "Cumulative Expenditure Account" ("CEA") no longer has a balance. The tax is paid on the profit in excess of the capital that has been invested in the mine. British Columbia mineral tax is deductible for federal and provincial income tax purposes.

While there is a balance in the CEA account, the mine owner must pay a "Net Current Proceeds" ("NCP") tax of 2%. Any amounts paid as NCP can then be claimed in the future against net revenue taxes payable.

We estimate that the effective tax rate that will be applicable when temporary differences reverse will be approximately 9.49%.

LIQUIDITY AND CAPITAL RESOURCES

As at December 31, 2023, our liquidity includes $249.8 million in cash as well as undrawn total availability of $323.9 million under our revolving credit facilities.

Subsequent to December 31, 2023, we repaid $10.0 million on our Canadian revolving credit facility.

Senior Unsecured Notes

We have $600.0 million aggregate principal amount of 4.5% senior notes due April 2026 and $600.0 million aggregate principal amount of 6.125% senior notes due April 2029.

Senior Secured Revolving Credit Facilities

We have two senior secured revolving credit facilities with total commitments of $450 million ("the Credit Facilities") for our Canadian and Peruvian businesses and substantially similar terms and conditions.

In connection with the closing of the Copper Mountain transaction during the second quarter of 2023, we amended our Credit Facilities to allow Hudbay to designate the Copper Mountain group of companies as Unrestricted Subsidiaries under the Credit Facilities until the full repayment of the Copper Mountain Bonds. Following the full repayment of the Copper Mountain Bonds in November 2023 and a subsequent reorganization that involved the amalgamation of Copper Mountain Mining Inc. with Hudbay, the remaining members of the Copper Mountain group became restricted subsidiaries under our Credit Facilities and we pledged our shares in the entity that owns the Copper Mountain mine ("CMM") to our lenders. Although CMM does not provide any guarantees or security, the debt, cash, interest and EBITDA of CMM are included in the financial covenant calculations under our Credit Facilities.

At December 31, 2023, we had $10.0 million and $90.0 million of debt outstanding under our Canadian and Peruvian revolving credit facilities, respectively. As at December 31, 2023, we were in compliance with our covenants under the Credit Facilities and had also drawn $26.1 million in letters of credit under the Credit Facilities. In total, $126.1 million was owing under the Credit Facilities as at December 31, 2023.

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C$130 Million Bilateral Letter of Credit Facility

On August 22, 2022, we closed a C$130.0 million bilateral letter of credit facility ("LC Facility") with a major Canadian financial institution. The LC Facility has no financial covenants and enables us to issue up to C$130.0 million of letters of credit to beneficiaries on an unsecured basis at attractive rates, with a further C$30.0 million sub-limit for financial letters of credit. As at December 31, 2023, the Manitoba business unit had drawn $56.7 million in letters of credit under the LC Facility.

Surety Bonds and Unsecured Letters of Credit

As at December 31, 2023, the Arizona business unit had $13.0 million in surety bonds issued to support future reclamation and closure obligations and the Peru business unit had $118.0 million in letters of credit issued with various Peruvian financial institutions to support future reclamation and other operating matters. In addition, the British Columbia business unit had $15.9 million in surety bonds issued to support future reclamation and $5.0 million in surety bonds issued to support the hydro used at Copper Mountain mine. No cash collateral is required to be posted under these letters of credit or surety bonds.

Gold Prepayment Liability

During the fourth quarter of 2020, we entered into a gold forward sale and prepay transaction which generated $115.0 million in cash proceeds to pre-fund the expected capital requirements for the New Britannia gold mill refurbishment project. The transaction valued the future gold ounce delivery obligation at 79,954 gold ounces to be delivered in fixed monthly deliveries of 3,331 gold ounces over a 24-month period from January 2022 to December 2023.

During the first quarter of 2023, we amended our gold forward sale and prepay agreements to defer eight months of deliveries starting with February 2023. Deliveries of the outstanding 37,500 ounces of gold resumed in fixed monthly amounts starting October 2023 and will continue until August 2024. The fair value of the financial liability at December 31, 2023 was $55.9 million.

Copper Mountain Bonds

On April 9, 2021, Copper Mountain completed an offering of $250 million of secured bonds (the "Copper Mountain Bonds") bearing an annual interest rate of 8.0% with a maturity date of April 9, 2026. The Copper Mountain Bonds provided the bondholders with the right to put all or part of the principal amount of the outstanding Bonds to Copper Mountain at a price of 101%, plus accrued interest, following a change of control event. With the acquisition of Copper Mountain on June 20, 2023, the change of control event was triggered and $83.3 million of the Copper Mountain Bonds were put to Copper Mountain on July 17, 2023. During the third quarter of 2023, we utilized its Credit Facilities to finance the redemption of the Copper Mountain Bonds that were put to Copper Mountain. The principal and premium amounting to $84.1 million was repaid on July 24, 2023.

During the fourth quarter of 2023, Hudbay exercised the redemption option and redeemed the remaining $54.7 million principal amount outstanding of Copper Mountain Bonds on November 30, 2023 at a call price equal to 104% of the principal amount, plus accrued and unpaid interest to the date of redemption. We utilized its Credit Facilities to fund the redemption of the Copper Mountain Bonds.

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Financial Condition

Financial Condition as at December 31, 2023 compared to December 31, 2022

Cash increased by $24.1 million during the year to $249.8 million as at December 31, 2023. This increase was mainly due to cash inflows from operating activities of $476.9 million, $100.0 million draw on our Credit Facilities, $14.4 million of net proceeds from a flow-through financing, $11.0 million of net cash acquired on the closing of the Copper Mountain and Rockcliff acquisitions and $8.0 million of interest received. Partially offsetting these cash inflows were investing and financing cash outflows of $291.8 million for capital investments and community agreement payments primarily at our operations, Copper Mountain Bond principal repayments of $143.0 million, interest payments of $74.0 million, capitalized lease and equipment financing payments of $27.1 million, partial repayment of our gold prepayment liability of $26.7 million, other financing costs mainly related to our Credit Facilities and withholding taxes of $12.2 million, $10.0 million for a deferred Rosemont acquisition payment, dividends paid of $4.5 million as well as $3.0 million of premium paid on retirement of Copper Mountain bonds. We hold the majority of our cash in low-risk, liquid investments with major Canadian and Peruvian financial institutions.

Working capital increased by $59.4 million to $135.9 million from December 31, 2022 to December 31, 2023, primarily due to an increase in trade and other receivables of $90.2 million, an increase in inventories of $52.3 million both due, in part, to the acquisition of Copper Mountain during the second quarter, an increase in cash and cash equivalents of $24.1 million, a decrease in gold prepayment liability of $15.3 million and a $16.8 million decrease in other liabilities due to a reduction in advances from customers. Partially offsetting these items were increases in trade and taxes payable of $77.1 million, increases in deferred revenue of $23.0 million, decreases in prepaid and other current assets along with taxes receivable of $20.7 million and an increase in lease liabilities of $12.7 million.

Cash Flows

The following table summarizes our cash flows for the three months and year ended December 31, 2023 and December 31, 2022:

(in $ thousands)	Three months ended				Year ended
	Dec. 31, 2023		Dec. 31, 2022		Dec. 31, 2023		Dec. 31, 2022
Operating cash flow before change in non-cash working capital	246,528		109,148		569,994		391,729
Change in non-cash working capital	(17,462	)	(22,766	)	(93,144	)	96,074
Cash generated from operating activities	229,066		86,382		476,850		487,803
Cash used in investing activities	(82,538	)	(89,114	)	(271,782	)	(337,670	)
Cash used in financing activities	(141,812	)	(58,580	)	(182,388	)	(196,300	)
Effect of movement in exchange rates on cash	(139	)	860		1,449		843
Increase (decrease) in cash	4,577		(60,452	)	24,129		(45,324	)

Cash Flow from Operating Activities

Cash generated from operating activities was $229.1 million during the fourth quarter of 2023, an increase of $142.7 million compared with the same period in 2022. Operating cash flow before change in non-cash working capital was $246.5 million during the fourth quarter of 2023, reflecting an increase of $137.4 million compared to the fourth quarter of 2022. The increase in operating cash flows before change in working capital was primarily the result of incremental contribution margin from our recently acquired Copper Mountain mine as well as higher copper and gold sales volumes from mining the high grade zones of the Pampacancha deposit and higher gold and copper grade zones at Lalor, and higher realized gold metal prices.

Year-to-date cash generated from operating activities was $476.9 million in 2023, a decrease of $11.0 million compared to 2022. Operating cash flow before change in non-cash working capital for the year ended December 31, 2023 was $570.0 million, an increase of $178.3 million compared to 2022 predominantly due to the same reasons outlined above.

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Cash Flow from Investing and Financing Activities

During the fourth quarter of 2023, we spent $224.4 million in investing and financing activities, primarily driven by $81.1 million in capital expenditures, $3.3 million in community agreement payments, Copper Mountain Bond principal repayments of $59.7 million, $37.8 million in interest payments, $30 million in net repayments on our revolving credit facilities, a $20.3 million partial repayment of our gold prepayment liability, $8.7 million in capitalized lease and equipment financing payments, $3.5 million in other financing costs mainly related to our Credit Facilities and withholding taxes and a $2.2 million premium paid on the redemption of Copper Mountain Bonds. These cash outflows were partially offset by $14.4 million of net proceeds from a flow-through financing, $5.9 million change in our restricted cash balance and a $1.4 million of interest received.

Year-to-date, we spent $454.2 million in investing and financing activities, primarily driven by $281.1 million in capital expenditures, $10.7 million in community agreement payments, Copper Mountain Bond principal repayments of $143.0 million, $74.0 million in interest payments, $27.1 million in capitalized lease and equipment financing payments, $26.7 million in partial settlement of our gold prepayment liability, $12.2 million in other financing costs mainly related to our Credit Facilities and withholding taxes, $10.0 million for a deferred Rosemont acquisition payment, $4.5 million in dividend payments and a $3.7 million change in our restricted cash balance. These cash outflows were partially offset by a $100.0 million draw on our Credit Facilities, $14.4 million of net proceeds from a flow-through financing, $11.0 million of net cash acquired on the closing of the Copper Mountain and Rockcliff acquisitions and $8.0 million of interest received.

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Capital Expenditures

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

	Three months ended				Year ended				Guidance
	Dec. 31, 2023		Dec. 31, 2022		Dec. 31, 2023		Dec. 31, 2022		Annual
(in $ millions)									2023	20242
Peru sustaining capital expenditures1	36.8		24.4		132.1		98.3		150.0	130.0
Manitoba sustaining capital expenditures	19.1		26.1		55.8		102.5		60.0	55.0
British Columbia sustaining capital expenditures3	19.1		-		30.2		-		33.0	105.0
Total sustaining capital expenditures	75.0		50.5		218.1		200.8		243.0	290.0
Arizona capitalized costs	5.5		9.1		21.3		36.2		25.0	20.0
Peru growth capitalized expenditures	0.1		2.8		12.1		4.3		10.0	2.0
Manitoba growth capitalized expenditures	-		9.0		13.5		33.4		15.0	10.0
British Columbia growth capitalized costs3	1.2		-		1.2		-		2.0	5.0
Other capitalized costs2	6.9		2.0		35.6		31.5
Rockcliff acquisition	-		-		14.2		-
Capitalized exploration	6.2		18.7		7.8		42.3		10.0	8.0
Total other capitalized expenditures	19.9		41.6		105.7		147.7
Total capital additions	94.9		92.1		323.8		348.5
Reconciliation to cash capital additions:
Right-of-use asset additions	0.8		(1.9	)	(21.4	)	(28.0	)
Non-monetary acquisition4	-		-		(13.7	)	-
Community agreement additions	0.2		-		(1.8	)	(3.5	)
Change in capital accruals and other	(14.8	)	(1.4	)	(5.8	)	(8.0	)
Acquisition of property, plant & equipment - cash	81.1		88.8		281.1		309.0

¹ Peru sustaining capital expenditures include capitalized stripping costs.

² Other capitalized costs primarily include right-of-use lease additions, which are excluded from guidance in 2024.

³ British Columbia operations represented on a 100% basis and for the period since the acquisition completion date of June 20, 2023. Hence, there are no comparatives.

⁴ Rockcliff acquisition was paid for with $13.7 million in Hudbay common shares and warrants.

For the three months ended December 31, 2023, total capital additions increased by $2.8 million, compared to the same period in 2022, primarily due to an increase in sustaining capital expenditures in Peru as well as new sustaining capital expenditures at the recently acquired Copper Mountain mine, partially offset by reduced sustaining and growth capital expenditures in Manitoba and lower capitalized exploration spending. For the year ended December 31, 2023, total capital additions declined by $24.7 million versus the comparative period due to continued financial discipline and capital cost efficiencies achieved to-date at our Peru, Manitoba and Arizona operations despite additional sustaining capital expenditures at the recently acquired Copper Mountain mine.

Sustaining capital expenditures in Manitoba for the three months and year ended December 31, 2023 were $19.1 million, and $55.8 million, respectively, representing a decline of $7.0 million and $46.7 million compared to the same periods in 2022 due to lower spending at Anderson tailings and lower capital development at Lalor in 2023. Sustaining capital expenditures in Peru for the three months and year ended December 31, 2023 were $36.8 million and $132.1 million, respectively, representing an increase of $12.4 million and $33.8 million compared to the same periods in 2022. The increases mainly relate to increased capitalized stripping at Pampacancha.

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Growth capital spending in Manitoba for the three months and year ended December 31, 2023 was nil and $13.5 million, respectively, representing a decrease of $9.0 million and $19.9 million compared to the same periods in 2022 and mainly relates to the Stall mill recovery improvement project that has now been completed. Growth capital expenditures in Peru for the three months and year ended December 31, 2023 were $0.1 million and $12.1 million, respectively, representing a decrease of $2.7 million and an increase of $7.8 million compared to the same periods in 2022 and mainly relate to planned spending on copper and molybdenum recovery improvement projects in 2023.

Arizona's capital expenditures for the three months and year ended December 31, 2023 were $5.5 million and $21.3 million, respectively, and mainly relate to pre-feasibility study costs for Phase 1 of Copper World as well as ongoing carrying costs.

Other capitalized costs for the three months and year ended December 31, 2023 were $6.9 million and $35.6 million, respectively, which are mostly made up of non-cash capitalized lease additions.

Capitalized exploration for the three months and year ended December 31, 2023 were $6.2 million and $7.8 million, respectively.

Rockcliff acquisition related to the acquisition of the remaining 49% ownership in the Talbot deposit which was acquired through the acquisition of Rockcliff Metals Corp. The Rockcliff acquisition was not included in our 2023  guidance.

As a result of continued financial discipline and capital cost efficiencies achieved to-date, total capital expenditures for Peru, Manitoba and Arizona in 2023 were approximately $57 million lower than original guidance levels, a further decrease from the $30 million reduction announced in the third quarter, representing a 19% reduction in total capital expenditures. Copper Mountain sustaining and growth capital expenditures were slightly below our post-acquisition 2023 guidance of $35 million in 2023.

Capital Commitments

As at December 31, 2023, we had outstanding capital commitments in Canada of approximately $23.9 million, of which $18.5 million can be terminated, approximately $73.4 million in Peru primarily related to sustaining capital commitments and exploration option agreements, all of which can be terminated, and approximately $41.9 million in Arizona, primarily related to our Copper World project, of which approximately $7.2 million can be terminated.

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Contractual Obligations

The following table summarizes our significant contractual obligations as at December 31, 2023:

	Total	Less than 12 months	13 - 36 months	37 - 60 months	More than 60 months
Payment Schedule (in $ millions)
Long-term debt obligations1	1,590.4	75.2	823.3	73.5	618.4
Gold prepayment obligation2	55.9	55.9	-	-	-
Lease obligations	155.5	56.8	61.1	23.0	14.6
Purchase obligation - capital commitments	139.3	68.2	39.0	32.1	-
Purchase obligation - other commitments3	1,569.4	478.1	497.3	127.8	466.2
Pension and other employee future benefits obligations2	112.5	3.8	17.6	9.0	82.1
Community agreement obligations4, 5	79.4	20.4	10.6	8.1	40.3
Decommissioning and restoration obligations5	486.9	1.4	13.4	7.6	464.5
Total	4,189.3	759.8	1,462.3	281.1	1,686.1

¹ Long-term debt obligations include scheduled interest payments, as well as principal repayments

² Discounted.

³ Primarily made up of long-term agreements with operational suppliers, obligations for power purchase, concentrate handling, fleet and port services, as well as deferred consideration arising from the acquisition of Rosemont's minority interest.

⁴ Represents community agreement obligations and various finalized land user agreements, including Pampacancha.

⁵ Undiscounted before inflation.

In addition to the contractual obligations included in the above payment schedule, we also have the following commitments which impact our financial position:

-A profit-sharing plan with most Manitoba employees;

-A profit-sharing plan with all Peru employees;

-Wheaton precious metals stream agreements for 777 and the Constancia mines;

-Government royalty payments related to the Constancia mines; and,

-Participation Agreements related to the Copper Mountain mine.

Outstanding Share Data

As of February 21, 2024, the final trading day prior to the date of this MD&A, there were 350,729,018 common shares of Hudbay issued and outstanding. In addition, there were 2,146,464 stock options and 457,617 warrants outstanding.

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FINANCIAL RISK MANAGEMENT

The Financial Risk Management risks in this MD&A are not exhaustive. Please also refer to the heading "Risk Factors" in our most recent Annual Information Form, for a discussion of the additional risk factors that may affect Hudbay's business, operations and financial condition. In addition to those risks, we have identified the following other risks which may affect our consolidated financial statements in the future.

Metals Price Strategic Risk Management

Commodity prices are a key driver of our financial and operational results. Our strategic objective is to provide our investors with exposure to base metals prices, unless a reason exists to implement a hedging arrangement. From time to time, we maintain price protection programs and conduct commodity price risk management in line with Board-approved policies to reduce risk through the use of financial instruments.

In the normal course, we typically consider metal price hedging to manage the risk associated with provisional pricing terms in concentrate sales agreements and in connection with stream delivery obligations. We may also occasionally consider metal price hedging in accordance with Board approved policies to achieve strategic objectives, including: locking in favourable metal prices to ensure a minimum cash flow during or after the construction of a mine or during a period of reduced liquidity, to maintain profitable production of shorter life/higher cost operations or as part of a financing arrangement.

During 2023, we entered into copper and zinc hedging transactions intended to manage the risk associated with provisional pricing terms in concentrate sales agreements.

As at December 31, 2023, we had 90.6 million pounds of net copper fixed for floating swaps outstanding at an average fixed receivable price of $3.74/lb associated with provisional pricing risk in concentrate sales agreements. These swaps settle across January to May 2024.

As at December 31, 2023, we had 13.9 million pounds of net zinc fixed for floating swaps outstanding at an average fixed receivable price of $1.14/lb associated with provisional pricing risk in concentrate sales agreements. These swaps settle across January to March 2024.

During the fourth quarter of 2023, we entered into copper forward sales contracts at Copper Mountain for a total of 3,600 tonnes of copper production over the twelve-month period from May 2024 to April 2025 at an average price of $3.93 per pound, as well as a zero-cost collar program for 6,000 tonnes of copper production over the twelve-month period from May 2024 to April 2025 at an average floor price of $3.83 per pound and an average cap price of $4.03 per pound. Together, the forward sales and zero cost collar hedges entered into during the fourth quarter represent approximately 25% of Copper Mountain's 2024 expected production.

From time to time, we enter into gold and silver forward sales contracts to hedge the commodity price risk associated with the future settlement of provisionally priced deliveries. We are generally obligated to deliver gold and silver to Wheaton prior to the determination of final settlement prices. These forward sales contracts are entered into at the time we deliver gold and silver to Wheaton, and are intended to mitigate the risk of subsequent adverse gold and silver price changes. Gains and losses resulting from the settlement of these derivatives are recorded directly to revenue, as the forward sales contracts do not achieve hedge accounting, and the associated cash flows are classified in operating activities. Our swap agreements are with counterparties we believe to be creditworthy and do not require us to provide collateral.

During the fourth quarter of 2020, we entered into a gold forward sale and prepay transaction which generated $115.0 million in cash proceeds to pre-fund the expected capital requirements for the New Britannia gold mill refurbishment project. The transaction valued the future gold ounce delivery obligation at 79,954 gold ounces to be delivered in fixed monthly deliveries of 3,331 gold ounces over a 24-month period from January 2022 to December 2023.

During the first quarter of 2023, we amended our gold forward sale and prepay agreements to defer eight months of deliveries starting with February 2023. Deliveries of the outstanding 37,500 ounces of gold resumed in fixed monthly amounts starting October 2023 and will continue until August 2024. The fair value of the financial liability at December 31, 2023 was $55,901.

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Carrying Values and Mine Plan Updates

At the end of each reporting period, Hudbay reviews its groups of non-financial assets to determine whether there are any indicators of impairment or impairment reversal. If any such indicator exists, the Company estimates the recoverable amount of the non-financial asset group in order to determine the extent of the impairment loss or reversal, if any. At December 31, 2023, the Company assessed whether there were impairment or impairment reversal indicators associated with the general business environment and known changes to business planning and found that there were no impairment or impairment reversal indicators.

There are a number of potential indicators that could trigger non-financial asset impairment or reversal of impairment in the future. One such potential indicator is a change to the life of mine ("LOM") plan for an asset, which we generally publish in the first quarter of every year. LOM plans incorporate management's best estimates of key assumptions which include future commodity prices, the value of mineral resources not included in the LOM plan, production based on current estimates of recoverable reserves, discount rates, future operating and capital costs and future foreign exchange rates.

There is a risk that certain assumptions in the updated LOM plans could give rise to an indicator of impairment or impairment reversal and cause an adjustment to the carrying value of the relevant assets and/or impact our financial statements.

Interest Rate and Foreign Exchange Risk Management

To the extent that we incur indebtedness at variable interest rates to fund our growth objectives, we may enter into interest rate hedging arrangements to manage our exposure to short-term interest rates. To the extent that we make commitments to capital expenditures denominated in foreign currencies, we may enter into foreign exchange forwards or acquire foreign currency outright, which may result in foreign exchange gains or losses in our consolidated income statements.

At December 31, 2023, approximately $211.2 million of our cash was held in US dollars, approximately $36.0 million of our cash was held in Canadian dollars, and approximately $2.6 million of our cash was held in Peruvian soles.

Business Integration Risk with Copper Mountain

The ability to realize the benefits of the Copper Mountain transaction will depend in part on, building relationships with key stakeholders and successfully consolidating functions and integrating operations, procedures and personnel in a timely and efficient manner. It will also depend on Hudbay's ability to realize its updated mine plan and the anticipated synergies from integrating Copper Mountain's business, as well as its ability to ensure Copper Mountain's disclosure controls and procedures and internal controls over financial reporting are as thorough and effective as those required by securities laws currently applicable to Hudbay.

The process of designing and implementing and maintaining effective internal controls for Copper Mountain has required and is expected to continue to require significant resources of the Company. If the Company is unable to establish or maintain appropriate internal financial controls and procedures, it could cause the Company to fail to meet its reporting obligations on a timely basis, result in material misstatements in its consolidated financial statements, and harm its operating results.

In connection with the implementation of the necessary procedures and practices related to internal control over financial reporting, the Company may identify deficiencies and may encounter problems or delays in completing the remediation of any deficiencies. The existence of deficiencies in internal control over financial reporting may require management to devote significant time and incur significant expense to remediate any such deficiencies.

If the Company fails to design and implement and maintain effective internal controls over financial reporting for Copper Mountain in the required timeframe, it may be subject to sanctions or investigations by regulatory authorities, including the SEC and the NYSE and could also restrict the Company's future access to the capital markets.

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Successfully completing the business integration will require the dedication of management effort, time and resources which may divert management's focus and resources from other strategic opportunities available to Hudbay and from operational matters during this process.

There can be no assurance that management will be able to implement the required processes, procedures and controls, complete the integration of the operations of Copper Mountain's business successfully and realize the anticipated operational and financial benefits.

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TREND ANALYSIS AND QUARTERLY REVIEW

A detailed quarterly and annual summary of financial and operating performance can be found in the "Summary of Results" section at the end of this MD&A. The following table sets forth selected consolidated financial information for each of our eight most recently completed quarters:

(in $ millions, except per share amounts, production on a copper equivalent basis and average realized copper price)	2023					2022
	Q4	Q3	Q2		Q1	Q4		Q3		Q2	Q1
Production on a copper equivalent basis (tonnes)	77,951	71,335	37,530		38,614	45,454		42,099		46,332	45,085
Average realized copper price ($/lb)	3.77	3.77	3.89		3.98	3.61		3.47		4.28	4.53
Revenue	602.2	480.5	312.2		295.2	321.2		346.2		415.5	378.6
Gross profit2	196.8	106.4	22.9		66.5	69.7		32.4		89.5	85.3
Profit (loss) before tax	81.0	84.1	(30.7	)	17.4	(14.3	)	(0.3	)	21.5	88.9
Profit (loss)	33.5	45.5	(14.9	)	5.5	(17.4	)	(8.1	)	32.1	63.8
Adjusted net earning (loss)1	71.3	24.4	(18.3	)	0.1	2.6		(12.4	)	30.5	5.2
Earnings (loss) per share:
Basic and diluted	0.10	0.13	(0.05	)	0.02	(0.07	)	(0.03	)	0.12	0.24
Adjusted net earnings (loss)1 per share	0.20	0.07	(0.07	)	0.00	0.01		(0.05	)	0.12	0.02
Operating cash flow before change in non-cash working capital	246.5	182.0	55.9		85.6	109.1		81.6		123.9	77.1
Adjusted EBITDA1	274.4	190.7	81.2		101.9	124.7		99.3		141.4	110.2

¹ Adjusted net earnings (loss), adjusted net earnings (loss) per share, and adjusted EBITDA are non-IFRS financial performance measure with no standardized definition under IFRS. For further information and a detailed reconciliation, please see the discussion under the "Non-IFRS Financial Performance Measures" section of this MD&A.

² Gross profit includes $46.2 million, respectively, of impairment losses related to environmental reclamation provision for the now closed Flin Flon operation for the three months ended December 31, 2022.

Although commodity prices have generally declined during 2023 after peaking in the first quarter, the fourth quarter results reflect a continuation of the strong copper, gold and silver production that commenced in the previous quarter from mining the high grade zones of the Pampacancha deposit and higher gold and copper grade zones at Lalor. The fourth quarter results also reflected the impact of the recently acquired Copper Mountain mine. Combined, this translated into a significant increase in our revenues, gross profits, operating cash flow and adjusted net earnings¹ for the quarter.

Third quarter results reflected the first quarter of significantly higher copper and gold production and sales volumes from the high grade zones of the Pampacancha deposit and higher gold and copper grade zones at Lalor. The third quarter results also reflected the first full quarter impact from the recently acquired Copper Mountain mine. Given these factors, the third quarter translated into a significant increase in our revenues, gross profits and earnings.

The second quarter benefited from the drawdown of higher-than-normal unsold copper concentrate inventory levels in Peru that had built up due to supply chain disruptions during a short period of social and political unrest in the first quarter. The second quarter results also reflected the inclusion of the Copper Mountain acquisition which closed on June 20, 2023, however, there was a minimal impact to net earnings from the acquisition.

Average gold prices during the first quarter reached levels not seen since 2020, which positively impacted first quarter gross profit. Political unrest in Peru resulted in road blockades causing logistics and supply chain disruptions until mid-February 2023, resulting in a buildup of copper concentrate inventory above normal operating levels, affecting overall revenues and profit in the first quarter.

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The easing of domestic COVID measures by China during the fourth quarter of 2022 resulted in a rebound of most industrial commodity prices. However, late in the quarter, Peru experienced heightened tensions and social unrest following a change in the country's political leadership. Inflationary pressures on fuel, consumables and energy costs have persisted globally, negatively impacting our production costs and margins.

Revenues for the fourth quarter of 2022 were negatively impacted by lower production due to planned maintenance programs at Lalor and Constancia, the planned closure of 777 earlier in the year, short-term changes in the mine plan in Peru and a build up of product inventory in Peru due to the aforementioned social unrest. The revenue impact of lower throughput was partially offset by higher commodity prices.

Commodity prices declined during the third quarter of 2022 while growing inflationary pressures contributed to higher mine operating costs resulting in declines in our key financial metrics during the quarter. Third quarter results were also impacted by lower production due to the closure of 777 in the second quarter of 2022 and the commencement of care and maintenance activities, which will continue for the next several years.

The second quarter results for 2022 were impacted by a revaluation gain of $60.7 million pertaining mostly to the environmental reclamation provision on our Flin Flon site due to increases in long-term risk-free interest rates. A pre-tax impairment loss of $95.0 million was recorded following the release of the Copper World Preliminary Economic Assessment in June 2022 as certain assets associated with the previous, stand-alone development plan for the Rosemont deposit are no longer expected to be recoverable.

Results in the first quarter of 2022 benefited from a trend of higher realized base metal prices, but were also impacted by rising operating costs caused by inflation. While we achieved increased gold production from the higher grade Pampacancha deposit and the higher recovery New Britannia gold mill, we experienced increased levels of COVID-19 related absenteeism in the workforce, impacting production, and also experienced limited availability of rail cars leading to reduced sales and an inventory build-up. The first quarter results were also impacted by a revaluation gain of $79.9 million pertaining mostly to the environmental reclamation provision on our Flin Flon site caused by an increase in long-term risk-free interest rates.

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The following table sets forth selected consolidated financial information for each of the three most recently completed years:

(in $ millions, except for earnings (loss) per share, dividends declared per share, production on a copper equivalent basis and average realized copper price)	2023	2022	2021
Production on a copper equivalent basis (tonnes)	225,430	178,970	175,463
Average realized copper price ($/lb)	3.82	3.94	4.19
Revenue	1,690.0	1,461.4	1,502.0
Gross profit 4	392.6	276.9	131.0
Profit (loss) before tax	151.8	95.8	(202.8	)
Profit (loss)	69.5	70.4	(244.4	)
Adjusted net earnings 1	72.5	26.4	23.1
Earnings (loss) per share:
Basic and diluted	0.22	0.27	(0.93	)
Adjusted net earnings1 per share	0.23	0.10	0.09
Total assets	5,312.6	4,325.9	4,616.2
Operating cash flow before precious metals stream deposit and changes in non-cash working capital	570.0	391.7	483.9
Adjusted EBITDA1	647.8	475.9	547.8
Total non-current financial liabilities2	1,400.7	1,281.5	1,345.7
Dividends declared per share - C$3	0.02	0.02	0.02

¹ Adjusted net earnings, adjusted net earnings (loss) per share, and adjusted EBITDA are non-IFRS financial performance measure with no standardized definition under IFRS. For further information and a detailed reconciliation, please see the discussion under the "Non-IFRS Financial Performance Measures" section of this MD&A.

² Total non-current financial liabilities consists of non-current other financial liabilities, lease liabilities and long-term debt.

³ Dividend paid during March and September of each year.

⁴ Gross profit includes $193.5 million of impairment losses related to environmental reclamation provision for the now closed Flin Flon operation for the year ended December 31, 2021.

Despite the planned closure of the 777 mine in June 2022, we achieved record production on a copper equivalent basis during 2023 due to additional production from our recently acquired Copper Mountain mine as well a significantly higher copper and gold production from mining the high grade zones of the Pampacancha deposit and higher gold and copper grade zones at Lalor. Operating cash flows before change in non-cash working capital increased by $178.3 million to $570.0 million in 2023 mainly driven by record metal production during the year.

Copper equivalent 2022 production was generally inline with the previous two years while sales volumes of copper and gold increased 2% and 27%, respectively, from 2021 as the ramp up of the New Britannia mill and mining operations at Pampacancha contributed to higher gold production during the year. Zinc sales volumes fell 39% in 2022 following the planned closure of 777 and the zinc plant in the second quarter of 2022.  As a result, gold has overtaken zinc as the second largest source of Hudbay's revenue. Realized copper and gold prices have fallen in 2022 resulting in a decline in full year revenues compared to 2021. Our 2022 earnings benefited from a $133.5 million pre-tax revaluation gain of our Flin Flon environmental reclamation provision, partially offset by a $95.0 million pre-tax impairment loss related to the previous stand-alone development plan for the Rosemont deposit.

Gold production in 2021 climbed 55% compared to 2020 following the start of operations at our high-grade Pampacancha deposit and our New Britannia gold mill in the third and fourth quarter of 2021, respectively. The increased production of gold allowed us to capitalize on continued strength in gold prices. In addition, consistent throughput from Peru with improved copper recoveries and a nearly 50% increase in realized copper prices compared to 2020 was a significant factor in revenues climbing 37% to a record-high $1,502.0 million for the full year. From a cost perspective, global inflationary pressures increased substantially, contributing to a 20% and a 17% increase in 2021 combined unit costs in Peru and Manitoba, respectively, compared to 2020. Despite these cost pressures, the increases in copper and gold production and realized base metal prices resulted in the 2021 operating cash flow increasing by 100% from 2020. Net losses in 2021 were $244.4 million and reflect a pre-tax, non-cash impairment charge of $193.5 million related to an updated Flin Flon closure plan, among other items.

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NON-IFRS FINANCIAL PERFORMANCE MEASURES

Adjusted net earnings (loss), adjusted net earnings (loss) per share, adjusted EBITDA, realized prices, net debt, net debt to adjusted EBITDA, cash cost, sustaining and all-in sustaining cash cost per pound of copper produced, cash cost and sustaining cash cost per ounce of gold produced, combined unit cost and ratios based on these measures are non-IFRS performance measures. 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.

Management believes adjusted net earnings (loss) and adjusted net earnings (loss) per share provides an alternate measure of the Company's performance for the current period and gives insight into its expected performance in future periods. These measures are used internally by the Company to evaluate the performance of its underlying operations and to assist with its planning and forecasting of future operating results. As such, the Company believes these measures are useful to investors in assessing the Company's underlying performance. We provide adjusted EBITDA to help users analyze our results and to provide additional information about our ongoing cash generating potential in order to assess our capacity to service and repay debt, carry out investments and cover working capital needs. Net debt is shown because it is a performance measure used by the Company to assess our financial position. Net debt to adjusted EBITDA is shown because it is a performance measure used by the Company to assess our financial leverage and debt capacity. Realized price is shown to understand the average realized price of metals sold to third parties in each reporting period. Cash cost, sustaining 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. Cash cost and sustaining cash cost per ounce of gold produced are shown because we believe they help investors and management assess the performance of our Manitoba operations. Combined unit cost is shown because we believe it helps investors and management assess our cost structure and margins that are not impacted by variability in by-product commodity prices.

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Adjusted Net Earnings

Adjusted net earnings represents net earnings (loss) excluding certain impacts, net of taxes, such as mark-to-market adjustments, impairment charges and reversal of impairment charges, write-down of assets, revaluation of the environmental reclamation provision for closed sites, and foreign exchange (gain) loss. These measures are not necessarily indicative of net earnings (loss) or cash flows as determined under IFRS. The following table provides a reconciliation of profit (loss) per the consolidated income statements, to adjusted net earnings for the three months and year ended months ended December 31, 2023 and 2022.

	Three months ended				Year ended
(in $ millions)	Dec.31, 2023		Dec. 31, 2022		Dec.31, 2023		Dec. 31, 2022
Profit (loss) for the period	33.5		(17.4	)	69.5		70.4
Tax expense	47.5		3.1		82.3		25.4
Profit (loss) before tax	81.0		(14.3	)	151.8		95.8
Adjusting items:
Mark-to-market adjustments1	12.7		10.7		21.4		3.0
Foreign exchange (gain) loss	4.2		0.2		5.3		(5.4	)
Inventory adjustments	1.4		-		2.3		3.6
Variable consideration adjustment - stream revenue and accretion	-		-		(5.0	)	(1.9	)
Premium paid on redemption of notes	2.2		-		2.2		-
Impairment - Arizona	-		-		-		95.0
Re-evaluation adjustment - environmental provision2	34.0		13.5		(11.4	)	(133.5	)
Acquisition related costs	-		-		6.9		-
Evaluation expenses	-		0.1		-		7.9
Insurance recovery	(4.2	)	-		(4.2	)	(5.7	)
Value-added-tax recovery	(3.9	)	-		(3.9	)	-
Write off fair value of the Copper Mountain Bonds	(1.0	)	-		(1.0	)	-
Restructuring charges 3	0.6		1.0		2.9		10.6
Loss on disposal of investments	-		0.5		0.7		3.6
Post-employment plan curtailment	-		(2.4	)	-		(2.4	)
Loss (gain) on disposal of plant and equipment and non-current assets	6.6		0.4		7.4		(6.3	)
Changes in other provisions (non-capital) 4	-		5.8		-		5.8
Adjusted earnings before income taxes	133.6		15.5		175.4		70.1
Tax expense	(47.5	)	(3.1	)	(82.3	)	(25.4	)
Tax impact of adjusting items	(14.8	)	(9.8	)	(20.6	)	(18.3	)
Adjusted net earnings	71.3		2.6		72.5		26.4
Adjusted net earnings ($/share)	0.20		0.01		0.23		0.10
Basic weighted average number of common shares outstanding (millions)	349.1		262.0		310.8		261.9

¹ Includes changes in fair value of the gold prepayment liability, Canadian junior mining investments, other financial assets and liabilities at fair value through profit or loss and share-based compensation (recoveries) expenses.

² Changes from movements to environmental reclamation provisions are primarily related to the Flin Flon operations, which were fully depreciated as of December 31, 2023, as well as other Manitoba non-operating sites.

³ Includes closure costs for Flin Flon operations in 2022 and restructuring charges for British Columbia in 2023.

⁴ Includes changes in other provisions related to corporate restructuring costs and costs which do not pertain to operations.

After adjusting reported net earnings for those items not considered representative of the Company's core business or indicative of future operations, the Company had adjusted net earnings in the fourth quarter of 2023 of $71.3 million or $0.20 earnings per share.

62

Adjusted EBITDA

Adjusted EBITDA is profit or loss before net finance expense/income, tax expense/recoveries, depreciation and amortization of property, plant and equipment and deferred revenue, as well as certain other adjustments. We calculate adjusted EBITDA by excluding certain adjustments included within our adjusted net earnings measure which we believe reflects the underlying performance of our core operating activities. The measure also removes the impact of non-cash items and financing costs that are not associated with measuring the underlying performance of our operations. However, our adjusted EBITDA is not the measure defined as EBITDA under our senior notes or revolving credit facilities and may not be comparable with performance measures with the same name reported by other companies. Adjusted EBITDA should not be considered as a substitute for profit or loss or as a better measure of liquidity than operating cash flow, which are calculated in accordance with IFRS. We provide adjusted EBITDA to help users analyze our results and to provide additional information about our ongoing cash generating potential in order to assess our capacity to service and repay debt, carry out investments and cover working capital needs.

The following table presents the reconciliation of profit (loss) per the consolidated income statements, to adjusted EBITDA for the three months and year ended December 31, 2023 and 2022:

	Three months ended				Year ended
(in $ millions)	Dec.31, 2023		Dec. 31, 2022		Dec.31, 2023		Dec. 31, 2022
Profit (loss) for the period	33.5		(17.4	)	69.5		70.4
Add back:
Tax expense	47.5		3.1		82.3		25.4
Net finance expense	48.9		36.7		145.3		118.5
Other expense	10.6		18.5		38.3		32.6
Depreciation and amortization	121.9		79.4		391.7		337.6
Amortization of deferred revenue and variable consideration adjustment	(26.5	)	(10.4	)	(77.3	)	(73.2	)
Adjusting items (pre-tax):
Impairment losses	-		-		-		95.0
Re-evaluation adjustment - environmental provision	34.0		13.5		(11.4	)	(133.5	)
Inventory adjustments	1.4		-		2.3		3.6
Post-employment plan curtailment	-		(2.4	)	-		(2.4	)
Share-based compensation expense 1	3.1		3.7		7.1		1.9
Adjusted EBITDA	274.4		124.7		647.8		475.9

¹ Share-based compensation expense reflected in cost of sales and selling and administrative expenses.

Net Debt

The following table presents our calculation of net debt as at December 31, 2023 and December 31, 2022:

(in $ thousands)	Dec.31, 2023		Dec. 31, 2022
Total long-term debt	1,287,536		1,184,162
Cash and cash equivalents	(249,794	)	(225,665	)
Net debt	1,037,742		958,497

63

Net Debt to Adjusted EBITDA Ratio

The following table presents our calculation of net debt to adjusted EBITDA, both metrics have been reconciled above to the most comparable IFRS measure, as at December 31, 2023 and December 31, 2022:

(in $ millions, except net debt to adjusted EBITDA ratio)	Dec.31, 2023	Dec. 31, 2022
Net debt	1,037.7	958.5
Adjusted EBITDA	647.8	475.9
Net debt to adjusted EBITDA	1.6	2.0

Cash Cost, Sustaining and All-in Sustaining Cash Cost (Copper Basis)

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 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, affected by the relative mix of copper concentrate and zinc concentrate production, where an increase in production of zinc concentrate 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 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.

-Sustaining cash cost, net of by-product credits - This measure is an extension of cash cost that includes cash sustaining capital expenditures, including payments on capitalized leases, capitalized sustaining exploration, net smelter returns royalties, payments on certain long-term community agreements, as well as accretion and amortization for expected decommissioning activities for producing assets. It does not include corporate selling and administrative expenses. It provides a more fulsome measurement of the cost of sustaining production than cash cost, which is focused on operating costs only.

-All-in sustaining cash cost, net of by-product credits - This measure is an extension of sustaining cash cost that includes corporate G&A, regional costs, accretion and amortization for community agreements relating to current operations, and accretion for expected decommissioning activities for non-producing sites. Due to the inclusion of corporate selling and administrative expenses, all-in sustaining cash cost is presented on a consolidated basis only.

64

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 and year ended December 31, 2023 and 2022. Cash cost, net of by-product credits may not calculate exactly based on amounts presented in the tables below due to rounding.

Consolidated	Three months ended		Year ended
Net pounds of copper produced1
(in thousands)	Dec. 31, 2023	Dec. 31, 2022	Dec. 31, 2023	Dec. 31, 2022
Peru	73,209	59,628	221,536	197,082
Manitoba	8,234	4,978	26,795	32,580
British Columbia2	18,755	-	41,995	-
Net pounds of copper produced	100,198	64,606	290,326	229,662

¹ Contained copper in concentrate.

² The numbers for British Columbia are only included from the date of acquisition of June 20, 2023. There are no comparatives.

Consolidated	Three months ended								Year ended
	Dec. 31, 2023				Dec. 31, 2022				Dec. 31, 2023				Dec. 31, 2022
Cash cost per pound of copper produced	$000s		$/lb		$000s		$/lb		$000s		$/lb		$000s		$/lb
Cash cost, before by-product credits	287,225		2.87		208,642		3.23		972,653		3.35		906,265		3.94
By-product credits	(271,738	)	(2.71	)	(138,990	)	(2.15	)	(741,288	)	(2.55	)	(708,334	)	(3.08	)
Cash cost, net of by-product credits	15,487		0.16		69,652		1.08		231,365		0.80		197,931		0.86

Consolidated	Three months ended				Year ended
	Dec. 31, 2023		Dec. 31, 2022		Dec. 31, 2023		Dec. 31, 2022
Cash cost per pound of copper produced	$000s	$/lb	$000s	$/lb	$000s	$/lb	$000s	$/lb
Mining	89,587	0.89	79,759	1.23	332,007	1.14	330,250	1.44
Milling	90,763	0.91	65,591	1.02	309,692	1.07	269,055	1.17
Refining (zinc)	-	-	-	-	-	-	32,755	0.14
G&A	38,937	0.39	21,269	0.33	122,574	0.42	125,454	0.55
Onsite costs	219,287	2.19	166,619	2.58	764,273	2.63	757,514	3.30
Treatment & refining	35,665	0.36	19,968	0.31	113,712	0.39	68,936	0.29
Freight & other	32,273	0.32	22,055	0.34	94,668	0.33	79,815	0.35
Cash cost, before by-product credits	287,225	2.87	208,642	3.23	972,653	3.35	906,265	3.94

65

Consolidated	Three months ended						Year ended
	Dec. 31, 2023			Dec. 31, 2022			Dec. 31, 2023			Dec. 31, 2022
Supplementary cash cost information	$000s		$/lb 1	$000s		$/lb 1	$000s		$/lb1	$000s		$/lb1
By-product credits2:
Zinc	18,474		0.18	24,744		0.38	74,842		0.26	224,043		0.98
Gold3	216,178		2.16	76,336		1.18	525,637		1.80	353,478		1.53
Silver3	22,698		0.23	9,592		0.15	68,701		0.24	62,252		0.27
Molybdenum & other	14,388		0.14	28,318		0.44	72,108		0.25	68,561		0.30
Total by-product credits	271,738		2.71	138,990		2.15	741,288		2.55	708,334		3.08
Reconciliation to IFRS:
Cash cost, net of by-product credits	15,487			69,652			231,365			197,931
By-product credits	271,738			138,990			741,288			708,334
Treatment and refining charges	(35,665	)		(19,968	)		(113,712	)		(68,936	)
Inventory adjustments	1,402			7			2,308			3,553
Share-based compensation expense	301			490			589			420
Post employment plan curtailment	-			(2,384	)		-			(2,384	)
Change in product inventory	29,326			(16,425	)		38,405			(3,125	)
Royalties	1,032			1,750			5,569			11,144
Depreciation and amortization4	121,812			79,408			391,657			337,615
Cost of sales5	405,433			251,520			1,297,469			1,184,552

¹ Per pound of copper produced.

² By-product credits are computed as revenue per financial statements, including amortization of deferred revenue and pricing and volume adjustments. For more information, please see the realized price reconciliation table on page 41 of this MD&A for these figures.

³ Gold and silver by-product credits do not include variable consideration adjustments with respect to stream arrangements. Variable consideration adjustments are cumulative adjustments to gold and silver stream deferred revenue primarily associated with the net change in mineral reserves and resources or amendments to the mine plan that would change the total expected deliverable ounces under the precious metal streaming arrangement. For the three months and year ended December 31, 2023 the variable consideration adjustments amounted income of $4,885 (three months and year ended December 31, 2022 - income of nil and an income of $959).

⁴ Depreciation is based on concentrate sold.

⁵ As per consolidated financial statements.

66

Peru	Three months ended		Year ended
(in thousands)	Dec. 31, 2023	Dec. 31, 2022	Dec. 31, 2023	Dec. 31, 2022
Net pounds of copper produced1	73,209	59,628	221,536	197,082

¹ Contained copper in concentrate.

Peru	Three months ended								Year ended
	Dec. 31, 2023				Dec. 31, 2022				Dec. 31, 2023				Dec. 31, 2022
Cash cost per pound of copper produced	$000s		$/lb		$000s		$/lb		$000s		$/lb		$000s		$/lb
Mining	30,336		0.41		41,647		0.70		122,651		0.55		137,546		0.70
Milling	50,199		0.69		50,723		0.85		198,062		0.90		195,152		0.99
G&A	24,909		0.34		14,817		0.25		77,154		0.35		63,015		0.32
Onsite costs	105,444		1.44		107,187		1.80		397,867		1.80		395,713		2.01
Treatment & refining	19,626		0.27		11,962		0.20		66,469		0.30		39,587		0.20
Freight & other	20,854		0.28		15,607		0.26		62,745		0.28		50,284		0.25
Cash cost, before by-product credits	145,924		1.99		134,756		2.26		527,081		2.38		485,584		2.46
By-product credits	(106,227	)	(1.45	)	(54,563	)	(0.92	)	(289,112	)	(1.31	)	(173,488	)	(0.88	)
Cash cost, net of by-product credits	39,697		0.54		80,193		1.34		237,969		1.07		312,096		1.58

Peru	Three months ended						Year ended
	Dec. 31, 2023			Dec. 31, 2022			Dec. 31, 2023			Dec. 31, 2022
Supplementary cash cost information	$000s		$/lb 1	$000s		$/lb 1	$000s		$/lb 1	$000s		$/lb 1
By-product credits2:
Gold3	77,517		1.05	19,934		0.33	169,915		0.77	68,630		0.35
Silver3	14,322		0.20	7,025		0.12	47,328		0.21	41,671		0.21
Molybdenum	14,388		0.20	27,604		0.47	71,869		0.33	63,187		0.32
Total by-product credits	106,227		1.45	54,563		0.92	289,112		1.31	173,488		0.88
Reconciliation to IFRS:
Cash cost, net of by-product credits	39,697			80,193			237,969			312,096
By-product credits	106,227			54,563			289,112			173,488
Treatment and refining charges	(19,626	)		(11,962	)		(66,469	)		(39,587	)
Inventory adjustments	-			-			-			(558	)
Share-based compensation expenses	85			95			145			77
Change in product inventory	8,048			(15,685	)		28,128			(31,348	)
Royalties	1,456			1,656			5,615			5,367
Depreciation and amortization4	85,722			58,256			275,647			211,043
Cost of sales5	221,609			167,116			770,147			630,578

¹ Per pound of copper produced.

² By-product credits are computed as revenue per financial statements, including amortization of deferred revenue and pricing and volume adjustments. For more information, please see the realized price reconciliation table on page 41 of this MD&A.

³ Gold and silver by-product credits do not include variable consideration adjustments with respect to stream arrangements.

⁴ Depreciation is based on concentrate sold.

⁵ As per consolidated financial statements.

67

British Columbia	Three months ended	Year ended
(in thousands)	Dec. 31, 2023	Dec. 31, 2023
Net pounds of copper produced1	18,755	41,995

¹ Contained copper in concentrate.

British Columbia	Three months ended				Year ended
	Dec. 31, 2023				Dec. 31, 2023
Cash cost per pound of copper produced	$000s		$/lb		$000s		$/lb
Mining	19,015		1.01		48,266		1.15
Milling	25,218		1.35		49,320		1.17
G&A	5,643		0.30		10,693		0.25
Onsite costs	49,876		2.66		108,279		2.57
Treatment & refining	4,850		0.26		9,755		0.23
Freight & other	4,654		0.25		8,347		0.20
Cash cost, before by-product credits	59,380		3.17		126,381		3.00
By-product credits	(9,286	)	(0.50	)	(21,520	)	(0.51	)
Cash cost, net of by-product credits	50,094		2.67		104,861		2.49

British Columbia	Three months ended			Year ended
	Dec. 31, 2023			Dec. 31, 2023
Supplementary cash cost information	$000s		$/lb 1	$000s		$/lb 1
By-product credits2:
Gold	6,876		0.37	16,996		0.40
Silver	2,410		0.13	4,524		0.11
Total by-product credits	9,286		0.50	21,520		0.51
Reconciliation to IFRS:
Cash cost, net of by-product credits	50,094			104,861
By-product credits	9,286			21,520
Treatment and refining charges	(4,850	)		(9,755	)
Change in product inventory	8,469			8,472
Royalties	(424	)		(187	)
Depreciation and amortization3	5,489			11,744
Cost of sales4	68,064			136,655

¹ Per pound of copper produced.

² By-product credits are computed as revenue per financial statements, including amortization of deferred revenue and pricing and volume adjustments. For more information, please see the realized price reconciliation table on page 41 of this MD&A.

³ Depreciation is based on concentrate sold.

⁴ As per consolidated financial statements

68

Consolidated	Three months ended				Year ended
	Dec. 31, 2023		Dec. 31, 2022		Dec. 31, 2023		Dec. 31, 2022
All-in sustaining cash cost per pound of copper produced	$000s	$/lb	$000s	$/lb	$000s	$/lb	$000s	$/lb
Cash cost, net of by-product credits	15,487	0.16	69,652	1.08	231,365	0.80	197,931	0.86
Cash sustaining capital expenditures	87,609	0.87	60,002	0.92	255,924	0.88	255,725	1.11
Capitalized exploration	5,150	0.05	11,500	0.18	5,150	0.02	11,500	0.05
Royalties	1,032	0.01	1,750	0.03	5,569	0.02	11,144	0.05
Sustaining cash cost, net of by-product credits	109,278	1.09	142,904	2.21	498,008	1.72	476,300	2.07
Corporate selling and administrative expenses & regional costs	12,727	0.13	11,876	0.19	43,516	0.14	38,799	0.17
Accretion and amortization of decommissioning and community agreements1	8,967	0.09	722	0.01	16,036	0.06	4,416	0.02
All-in sustaining cash cost, net of by-product credits	130,972	1.31	155,502	2.41	557,560	1.92	519,515	2.26
Reconciliation to property, plant and equipment additions:
Property, plant and equipment additions	54,040		76,933		212,622		259,281
Capitalized stripping net additions	40,861		15,169		111,247		89,262
Total accrued capital additions	94,901		92,102		323,869		348,543
Less other non-sustaining capital costs2	19,945		41,850		105,769		147,749
Total sustaining capital costs	74,956		50,252		218,100		200,794
Capitalized lease cash payments - operating sites	8,708		5,848		24,983		33,271
Community agreement cash payments	2,274		2,854		6,706		9,486
Accretion and amortization of decommissioning and restoration obligations 3	1,671		1,048		6,135		12,174
Cash sustaining capital expenditures	87,609		60,002		255,924		255,725

¹ Includes accretion of decommissioning liability relating to non-producing sites, and accretion and amortization of community agreements capitalized to Other assets.

² Other non-sustaining capital costs include Arizona capitalized costs, capitalized interest, capitalized exploration, right-of-use lease asset additions and growth capital expenditures.

³ Includes amortization of decommissioning and restoration PP&E assets and accretion of decommissioning and restoration liabilities related to producing sites.

Peru	Three months ended				Year ended
	Dec. 31, 2023		Dec. 31, 2022		Dec. 31, 2023		Dec. 31, 2022
Sustaining cash cost per pound of copper produced	$000s	$/lb	$000s	$/lb	$000s	$/lb	$000s	$/lb
Cash cost, net of by-product credits	39,697	0.54	80,193	1.34	237,969	1.07	312,096	1.58
Cash sustaining capital expenditures	42,351	0.58	31,240	0.53	151,947	0.69	133,313	0.68
Capitalized exploration1	5,150	0.07	11,500	0.19	5,150	0.02	11,500	0.06
Royalties	1,456	0.02	1,656	0.03	5,615	0.03	5,367	0.03
Sustaining cash cost per pound of copper produced	88,654	1.21	124,589	2.09	400,681	1.81	462,276	2.35

¹ Only includes exploration costs incurred for locations near to existing mine operations.

British Columbia	Three months ended				Year ended
	Dec. 31, 2023				Dec. 31, 2023
Sustaining cash cost per pound of copper produced	$000s		$/lb		$000s		$/lb
Cash cost, net of by-product credits	50,094		2.67		104,861		2.49
Cash sustaining capital expenditures	24,063		1.28		38,550		0.92
Royalties	(424	)	(0.02	)	(187	)	-
Sustaining cash cost per pound of copper produced	73,733		3.93		143,224		3.41

69

Gold Cash Cost and Gold Sustaining Cash Cost

Cash cost per ounce of gold produced ("gold cash cost") is a non-IFRS measure that management uses as a key performance indicator to assess the performance of our Manitoba operations. This alternative cash cost calculation designates gold as the primary metal of production as it represents a substantial component of revenues for our Manitoba business unit and should therefore be less volatile over time than Manitoba cash cost per pound of copper. The calculation is presented in three manners:

-Gold 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 ounces of gold produced, the assumed 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.

-Gold cash cost, net of by-product credits - In order to calculate the net cost to produce and sell gold, the net of by-product credits measure subtracts the revenues realized from the sale of the metals other than gold. The by-product revenues from copper, zinc, and silver are significant and are integral to the economics of our Manitoba operation. The economics that support our decision to produce and sell gold 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 gold price consistent with positive 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 at our Manitoba operation versus that of our competitors. However, it is important to understand that if by-product metal prices decline alongside gold prices, the gold cash cost net of by-product credits would increase, requiring a higher gold price than that reported to maintain positive cash flows and operating margins.

-Gold sustaining cash cost, net of by-product credits - This measure is an extension of gold cash cost that includes cash sustaining capital expenditures, capitalized exploration, net smelter returns royalties, as well as accretion and amortization for expected decommissioning activities for producing assets. It does not include corporate selling and administrative expenses. It provides a more fulsome measurement of the cost of sustaining production than gold cash cost, which is focused on operating costs only.

The tables below present a detailed build-up of gold cash cost and gold sustaining cash cost, net of by-product credits, for the Manitoba business unit, and reconciliations between gold cash cost, net of by-product credits, to the most comparable IFRS measures of cost of sales for the three months and year ended December 31, 2023 and 2022. Gold cash cost, net of by-product credits, may not calculate exactly based on amounts presented in the tables below due to rounding.

Manitoba	Three months ended		Year ended
(in thousands)	Dec. 31, 2023	Dec. 31, 2022	Dec. 31, 2023	Dec. 31, 2022
Net ounces of gold produced1	59,863	33,060	187,363	161,471

¹ Contained gold in concentrate and doré.

70

Manitoba	Three months ended								Year ended
	Dec. 31, 2023				Dec. 31, 2022				Dec. 31, 2023				Dec. 31, 2022
Cash cost per ounce of gold produced	$000s		$/oz1		$000s		$/oz1		$000s		$/oz1		$000s		$/oz1
Mining	40,236		673		38,112		1,153		161,090		860		192,704		1,193
Milling	15,346		256		14,868		450		62,310		333		73,903		458
Refining (zinc)	-		-		-		-		-		-		32,755		203
G&A	8,385		140		6,452		195		34,727		185		62,439		387
Onsite costs	63,967		1,069		59,432		1,798		258,127		1,378		361,801		2,241
Treatment & refining	11,189		186		8,006		242		37,488		200		29,349		181
Freight & other	6,765		113		6,448		195		23,576		126		29,531		183
Cash cost, before by-product credits	81,921		1,368		73,886		2,235		319,191		1,704		420,681		2,605
By-product credits	(55,928	)	(934	)	(43,407	)	(1,313	)	(183,056	)	(977	)	(372,783	)	(2,308	)
Gold cash cost, net of by-product credits	25,993		434		30,479		922		136,135		727		47,898		297

Manitoba	Three months ended						Year ended
Supplementary cash cost information	Dec. 31, 2023			Dec. 31, 2022			Dec. 31, 2023			Dec. 31, 2022
	$000s		$/oz 1	$000s		$/oz1	$000s		$/oz 1	$000s		$/oz 1
By-product credits2:
Copper	31,489		526	15,382		465	91,126		487	122,785		760
Zinc	18,473		308	24,744		748	74,842		399	224,043		1,388
Silver3	5,966		100	2,567		78	16,849		90	20,581		127
Other	-		-	714		22	239		1	5,374		33
Total by-product credits	55,928		934	43,407		1,313	183,056		977	372,783		2,308
Reconciliation to IFRS:
Cash cost, net of by-product credits	25,993			30,479			136,135			47,898
By-product credits	55,928			43,407			183,056			372,783
Treatment and refining charges	(11,189	)		(8,006	)		(37,488	)		(29,349	)
Past service curtailment	-			(2,384	)		-			(2,384	)
Share-based compensation expenses	216			395			444			343
Inventory adjustments	1,402			7			2,308			4,111
Change in product inventory	12,809			(740	)		1,805			28,223
Royalties	-			94			141			5,777
Depreciation and amortization4	30,601			21,152			104,266			126,572
Cost of sales5	115,760			84,404			390,667			553,974

¹ Per ounce of gold produced.

² By-product credits are computed as revenue per financial statements, amortization of deferred revenue and pricing and volume adjustments. For more information, please see the realized price reconciliation table on page 41of this MD&A.

³ Silver by-product credits do not include variable consideration adjustments with respect to stream arrangements.

⁴ Depreciation is based on concentrate sold.

⁵ As per consolidated financial statements.

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Manitoba	Three months ended				Year ended
	Dec. 31, 2023		Dec. 31, 2022		Dec. 31, 2023		Dec. 31, 2022
Sustaining cash cost per ounce of gold produced	$000s	$/oz	$000s	$/oz	$000s	$/oz	$000s	$/oz
Gold cash cost, net of by-product credits	25,993	434	30,479	922	136,135	727	47,898	297
Cash sustaining capital expenditures	21,195	354	28,762	870	65,427	349	122,412	758
Royalties	-	-	94	3	141	1	5,777	36
Sustaining cash cost per ounce of gold produced	47,188	788	59,335	1,795	201,703	1,077	176,087	1,091

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Combined Unit Cost

Combined unit cost ("unit cost") and zinc plant unit cost is a non-IFRS measure that management uses as a key performance indicator to assess the performance of our mining and milling operations. Combined unit cost is calculated by dividing the cost of sales by mill throughput. This measure is utilized by management and investors to assess our cost structure and margins and compare it to similar information provided by other companies in our industry. Unlike cash cost, this measure is not impacted by variability in by-product commodity prices since there are no by-product deductions; costs associated with profit-sharing and similar costs are excluded because of their correlation to external metal prices. In addition, the unit costs are reported in the functional currency of the operation which minimizes the impact of foreign currency fluctuations. In all, the unit cost measures provide an alternative perspective on operating cost performance with minimal impact from external market prices.

The tables below present a detailed combined unit cost for the Peru and Manitoba business unit, and reconciliations between these measures to the most comparable IFRS measures of cost of sales for the year ended months ended December 31, 2023 and 2022.

Peru	Three months ended				Year ended
(in thousands except unit cost per tonne)	Dec. 31, 2023		Dec. 31, 2022		Dec. 31, 2023		Dec. 31, 2022
Combined unit cost per tonne processed
Mining	30,336		41,647		122,651		137,546
Milling	50,199		50,723		198,062		195,152
G&A1	24,909		14,817		77,154		63,015
Less: Other G&A2	(8,303	)	(152	)	(14,824	)	(414	)
	97,141		107,035		383,043		395,299
Less: COVID-19 related costs	-		689		-		5,214
Unit cost	97,141		106,346		383,043		390,085
Tonnes ore milled	7,939		7,796		30,721		30,522
Combined unit cost per tonne	12.24		13.64		12.47		12.78
Reconciliation to IFRS:
Unit cost	97,141		106,346		383,043		390,085
Freight & other	20,854		15,607		62,745		50,284
COVID-19 related costs	-		689		-		5,214
Other G&A	8,303		152		14,824		414
Share-based compensation expenses	85		95		145		77
Inventory adjustments	-		-		-		(558	)
Change in product inventory	8,048		(15,685	)	28,128		(31,348	)
Royalties	1,456		1,656		5,615		5,367
Depreciation and amortization	85,722		58,256		275,647		211,043
Cost of sales3	221,609		167,116		770,147		630,578

¹ G&A as per cash cost reconciliation above.

² Other G&A primarily includes profit sharing costs.

³ As per consolidated financial statements.

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Manitoba	Three months ended				Year ended
(in thousands except tonnes ore milled and unit cost per tonne)	Dec. 31, 2023		Dec. 31, 2023		Dec. 31, 2023		Dec. 31, 2022
Combined unit cost per tonne processed
Mining	40,236		38,112		161,090		192,704
Milling	15,346		14,868		62,310		73,903
G&A1	8,385		6,452		34,727		62,439
Less: G&A allocated to zinc metal production and other areas	-		-		-		(6,523	)
Less: Other G&A related to profit sharing costs	(1,522	)	1,939		(6,650	)	(20,075	)
Unit cost	62,445		61,371		251,477		302,448
USD/CAD implicit exchange rate	1.36		1.36		1.35		1.30
Unit cost - C$	85,013		83,363		339,229		391,782
Tonnes ore milled	393,837		345,492		1,562,479		2,008,251
Combined unit cost per tonne - C$	216		241		217		195
Reconciliation to IFRS:
Unit cost	62,445		61,371		251,477		302,448
Freight & other	6,765		6,448		23,576		29,531
Refined (zinc)	-		-		-		32,755
G&A allocated to zinc metal production	-		-		-		6,523
Other G&A related to profit sharing	1,522		(1,939	)	6,650		20,075
Share-based compensation expenses	216		395		444		343
Inventory adjustments	1,402		7		2,308		4,111
Past service pension/Curtailment	-		(2,384	)	-		(2,384	)
Change in product inventory	12,809		(740	)	1,805		28,223
Royalties	-		94		141		5,777
Depreciation and amortization	30,601		21,152		104,266		126,572
Cost of sales2	115,760		84,404		390,667		553,974

¹ G&A as per cash cost reconciliation above.

² As per IFRS financial statements.

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British Columbia	Three months ended		Year ended
(in thousands except unit cost per tonne)	Dec. 31, 2023		Dec. 31, 2023
Combined unit cost per tonne processed
Mining	19,015		48,266
Milling	25,218		49,320
G&A1	5,643		10,693
Unit cost	49,876		108,279
USD/CAD implicit exchange rate	1.37		1.36
Unit cost - C$	68,168		146,734
Tonnes ore milled	3,262		6,862
Combined unit cost per tonne C$	20.90		21.38
Reconciliation to IFRS:
Unit cost	49,876		108,279
Freight & other	4,654		8,347
Change in product inventory	8,469		8,472
Royalties	(424	)	(187	)
Depreciation and amortization	5,489		11,744
Cost of sales3	68,064		136,655

¹ G&A as per cash cost reconciliation above.

² Other G&A primarily includes profit sharing costs.

³ As per consolidated financial statements.

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Manitoba	Three months ended		Year ended
(in thousands except zinc plant unit cost per pound)	December 31, 2022		December 31, 2022
Zinc plant unit cost 1
Zinc plant costs	-		32,755
G&A 2	6,452		62,439
Less: G&A allocated to other areas	(8,391	)	(35,841	)
Less: Other G&A related to profit sharing	1,939		(20,075	)
Zinc plant unit cost	-		39,278
USD/CAD implicit exchange rate	-		1.27
Zinc plant unit cost - C$	-		50,036
Refined metal produced (in pounds)	-		83,542
Zinc plant unit cost per pound - C$	-		0.60
Reconciliation to IFRS:
Zinc plant unit cost	-		39,278
Freight & other	6,448		29,531
Mining	38,112		192,704
Milling	14,868		73,903
G&A allocated to other areas	8,391		35,841
Other G&A related to profit sharing	(1,939	)	20,075
Share-based payment	395		343
Inventory adjustments	7		4,111
Past service pension/Curtailment	(2,384	)	(2,384	)
Change in product inventory	(740	)	28,223
Royalties	94		5,777
Depreciation and amortization	21,152		126,572
Cost of sales3	84,404		553,974

¹ The zinc plant ceased operations in June 2022. Prior year comparative information is disclosed above.

² G&A as per cash cost reconciliation above.

³ As per IFRS financial statements.

ACCOUNTING CHANGES

New standards and interpretations adopted and not yet adopted

For information on new standards and interpretations adopted and not yet adopted, refer to note 4 of our consolidated financial statements for the year ended December 31, 2023.

CRITICAL ACCOUNTING JUDGEMENTS AND ESTIMATES

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

We review these estimates and underlying assumptions on an ongoing basis based on our experience and other factors, including expectations of future events that we believe to be reasonable under the circumstances. Revisions to accounting estimates are recognized in the period in which the estimates are revised and in any future periods affected. Certain accounting estimates and judgements have been identified as being "critical" to the presentation of our financial condition and results of operations because they require us to make subjective and/or complex judgements about matters that are inherently uncertain; or there is a reasonable likelihood that materially different amounts could be reported under different conditions or using different assumptions and estimates.

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The following are significant judgements and estimates impacting the consolidated financial statements:

-Judgements and estimates that affect multiple areas of the consolidated financial statements:

-Mineral reserves and resources which form the basis of life of mine plans which are utilized in impairment testing, timing of payments related to decommissioning obligations and depreciation of capital assets. We estimate our mineral reserves and resources based on information compiled by qualified persons as defined in accordance with NI 43-101;

-Income and mining taxes, including estimates of future taxable profit which impacts the ability to realize deferred tax assets on our balance sheet; and

-In respect of the outcome of uncertain future events as it concerns recognizing contingent liabilities.

-Judgements and estimates that relate mainly to assets (these judgements may also affect other areas of the consolidated financial statements):

-Property, plant and equipment:

-Cost allocations for mine development;

-Mining properties expenditures capitalized;

-Classification of supply costs as related to capital development or inventory acquisition;

-Determining when exploration and evaluation assets should be transferred to capital works in progress within property, plant and equipment;

-Determination of when an asset or group of assets is in the condition and location to be ready for use as intended by management for the purposes of commencing depreciation;

-Componentization;

-Assessment of impairment, including determination of cash generating units and assessing for indicators of impairment;

-Recoverability of exploration and evaluation assets, including determination of cash generating units and assessing for indications of impairment;

-Units of production depreciation;

-Plant and equipment estimated useful lives and residual values;

-Capitalized stripping costs; and

-Finite life intangible assets.

-Impairment (and reversal of impairment) of non-financial assets:

-Future production levels and timing;

-Operating and capital costs;

-Future commodity prices;

-Foreign exchange rates; and

-Risk adjusted discount rates; and

-In process inventory quantities, inventory cost allocations and inventory valuation.

-Judgements and estimates that relate mainly to liabilities (these judgements may also affect other areas of the consolidated financial statements):

-Determination of deferred revenue per unit related to the precious metals stream transactions and determination of current portion of deferred revenue, which is based on timing of future sales, and adjustments of the expected conversion of resource to reserves;

-Pensions and other employee benefits; and

-Decommissioning, restoration and similar liabilities including estimated future costs and timing of spending.

-Estimates that relate mainly to the consolidated income statements:

-Assaying used to determine revenues and recoverability of inventories.

For more information on judgements and estimates, refer to note 2 of our consolidated financial statements for the year ended December 31, 2023.

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DISCLOSURE CONTROLS AND PROCEDURES AND INTERNAL CONTROL OVER FINANCIAL REPORTING

Disclosure controls and procedures ("DC&P")

Management is responsible for establishing and maintaining adequate DC&P. As of December 31, 2023, we have evaluated the effectiveness of the design and operation of our DC&P in accordance with requirements of National Instrument 52-109 of the Canadian Securities Commission ("NI 52-109") and the Sarbanes Oxley Act of 2002 (as adopted by the US Securities and Exchange Commission). Our Chief Executive Officer ("CEO") and Chief Financial Officer ("CFO") supervised and participated in this evaluation.

As of December 31, 2023, based on management's evaluation, our CEO and CFO concluded that our DC&P were effective to ensure that information required to be disclosed by us in reports we file or submit is recorded, processed, summarized and reported within the time periods specified in securities legislation and is accumulated and communicated to our management, including our CEO and CFO, to allow timely decisions regarding required disclosure.

Internal control over financial reporting ("ICFR")

Management of Hudbay is responsible for establishing and maintaining adequate ICFR. Under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, we evaluated the effectiveness of our ICFR as of December 31, 2023 based upon the Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on management's evaluation, our CEO and CFO concluded that our ICFR was effective as of December 31, 2023.

The effectiveness of the Company's ICFR as of December 31, 2023 has been audited by Deloitte LLP, Independent Registered Public Accounting Firm as stated in their report immediately preceding the Company's consolidated financial statements for the year ended December 31, 2023.

Limitation on Scope of Design

Management has determined to limit the scope of design of disclosure controls and procedures ("DC&P") and ICFR to exclude controls, policies and procedures of Copper Mountain, which Hudbay acquired on June 20, 2023. This scope of limitation is in accordance with section 3.3(1)(b) of NI 52-109 and SEC staff guidance, which allows for an issuer to limit the design of DC&P or ICFR to exclude a business that the issuer acquired not more than 365 days before the end of the financial period to which the Chief Executive Officer's and Chief Financial Officer's certification of annual filings relate. Copper Mountain's financial statements constitute 34% and 19% of net and total assets, respectively, 10% of revenues, and 19% of net income of the consolidated financial statement amounts as of and for the year ended December 31, 2023.

Changes in ICFR

Notwithstanding the limitation on scope of design discussed above, we did not make any changes to ICFR during the year ended December 31, 2023 that materially affected, or are reasonably likely to materially affect, our ICFR.

Inherent limitations of controls and procedures

All internal control systems, no matter how well designed, have inherent limitations. As a result, even systems determined to be effective may not prevent or detect misstatements on a timely basis, as systems can provide only reasonable assurance that the objectives of the control system are met. In addition, projections of any evaluation of the effectiveness of ICFR to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may change.

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NOTES TO READER

Forward-Looking Information

This MD&A contains 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, statements with respect to our production, cost and capital and exploration expenditure guidance, expectations regarding reductions in discretionary spending and capital expenditures, our ability to stabilize and optimize the Copper Mountain mine operation, and achieve operating synergies, the fleet production ramp up plan and the accelerated stripping strategies at the Copper Mountain site, our ability to complete business integration activities at the Copper Mountain mine, the estimated timelines and pre-requisites for sanctioning the Copper World project and the pursuit of a potential minority joint venture partner, expectations regarding the permitting requirements for the Copper World project (including expected timing for receipt of such applicable permits), the expected benefits of Manitoba growth initiatives, including the advancement of the development and exploration drift at the 1901 deposit; the anticipated use of proceeds from the flow-through financing completed during the fourth quarter of 2023, our future deleveraging strategies and our ability to deleverage and repay debt as needed, expectations regarding our cash balance and liquidity, our ability to increase the mining rate at Lalor, the anticipated benefits from completing the Stall recovery improvement program, expectations regarding the ability to conduct exploration work and execute on exploration programs on its properties and to advance related drill plans, including the advancement of the exploration program at Maria Reyna and Caballito, the ability to continue mining higher-grade ore in the Pampacancha pit and our expectations resulting therefrom, expectations regarding our ability to further reduce greenhouse gas emissions, our evaluation and assessment of opportunities to reprocess tailings using various metallurgical technologies, expectations regarding the prospective nature of the Maria Reyna and Caballito properties, the anticipated impact of brownfield and greenfield growth projects on our performance, anticipated expansion opportunities and extension of mine life in Snow Lake and our ability to find a new anchor deposit near our Snow Lake operations, anticipated future drill programs and exploration activities and any results expected therefrom, anticipated mine plans, anticipated metals prices and the anticipated sensitivity of our financial performance to metals prices, events that may affect our 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 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 ability to achieve production, cost and capital and exploration expenditure guidance;

-the ability to achieve discretionary spending reductions without impacting operations;

-no significant interruptions to our operations due to social or political unrest in the regions we operate, including the navigation of the complex political and social environment in Peru;

-no interruptions to our plans for advancing the Copper World project, including with respect to timely receipt of applicable permits;

-our ability to successfully complete the integration and optimization of the Copper Mountain operations, achieve operating synergies and develop and maintain good relations with key stakeholders;

-the ability to execute on its exploration plans, including the potential ramp up of exploration in respect of the Maria Reyna and Caballito properties and to advance related drill plans;

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

79

-the scheduled maintenance and availability of our processing facilities;

-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 all forms of energy and fuels 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 deleverage and repay debt as 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;

-maintaining good relations with the employees at our operations;

-maintaining good relations with the labour unions that represent certain of our employees in Manitoba and Peru;

-maintaining good relations with the communities in which we operate, including the neighbouring Indigenous communities and local governments;

-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 Indigenous peoples or challenges to the validity of our unpatented mining claims;

-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, changes in taxation policies 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 related to the ongoing business integration of Copper Mountain and the process for designing, implementing and maintaining effective internal controls for Copper Mountain the failure to effectively complete the integration and optimization of the Copper Mountain operations, or to achieve anticipated operating synergies, political and social risks in the regions we operate, including the navigation of the complex political and social environment in Peru, risks generally associated with the mining industry and the current geopolitical environment, including future commodity prices, currency and interest rate fluctuations, energy and consumable prices, supply chain constraints and general cost escalation in the current inflationary environment, risks related to the renegotiation of collective bargaining agreements with the labour unions representing certain of our employees in Manitoba and Peru uncertainties related to the development and operation of our projects, the risk of an indicator of impairment or impairment reversal relating to a material mineral property, risks related to the Copper World project, including in relation to permitting, project delivery and financing risks, risks related to the Lalor mine plan, including the ability to convert inferred mineral resource estimates to higher confidence categories, dependence on key personnel and employee and union relations, risks related to political or social instability, unrest or change, risks in respect of Indigenous and community relations, rights and title claims, operational risks and hazards, including the cost of maintaining and upgrading our tailings management facilities and any 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, compliance with government and environmental regulations, including permitting requirements and anti-bribery legislation, depletion of our reserves, volatile financial markets and interest rates that may affect our ability to obtain additional financing on acceptable terms, 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 and under the heading "Financial Risk Management" in this MD&A, each of which is available on the company's SEDAR+ profile at www.sedarplus.ca and the company's EDGAR profile at www.sec.gov.

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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 U.S. issuers.

Qualified Person and NI 43-101

The technical and scientific information in this MD&A related to our material mineral projects has been approved by Olivier Tavchandjian, P. Geo, Senior Vice President, Exploration and Technical Services. Mr. Tavchandjian is a qualified person pursuant to National Instrument 43-101 - Standards of Disclosure for Mineral Projects ("NI 43-101").

For a description of the key assumptions, parameters and methods used to estimate mineral reserves and resources at Hudbay's material properties, as well as data verification procedures and a general discussion of the extent to which the estimates of scientific and technical information may be affected by any known environmental, permitting, legal title, taxation, sociopolitical, marketing or other relevant factors, please see the technical reports for our material properties as filed by us on SEDAR+ at www.sedarplus.ca and EDGAR at www.sec.gov..

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SUMMARY OF HISTORICAL RESULTS

The following unaudited tables set out a summary of quarterly and annual results for the Company.

			2023 4		Q4 2023		Q3 2023		Q2 2023			Q1 2023		2022 4		Q4 2022			Q3 2022			Q2 2022		Q1 2022		2021 4			Q4 2021
Consolidated Financial Condition ($000s)
Cash		$	249,794	$	249,794	$	245,217	$	179,734		$	255,563	$	225,665	$	225,665		$	286,117		$	258,556	$	213,359	$	270,989		$	270,989
Total long-term debt			1,287,536		1,287,536		1,377,443		1,370,682			1,225,023		1,184,162		1,184,162			1,183,237			1,182,143		1,181,119		1,180,274			1,180,274
Net debt1			1,037,742		1,037,742		1,132,226		1,190,948			969,460		958,497		958,497			897,120			923,587		967,760		909,285			909,285
Consolidated Financial Performance ($000s except per share amounts)
Revenue		$	1,690,030	$	602,189	$	480,456	$	312,166		$	295,219	$	1,461,440	$	321,196		$	346,171		$	415,454	$	378,619	$	1,501,998		$	425,170
Cost of sales			1,297,469		405,433		374,057		289,273			228,706		1,184,552		251,520			313,741			325,940		293,351		1,370,979			343,426
Earnings (loss) before			151,830		80,982		84,149		(30,731	)		17,430		95,815		(14,287	)		(263	)		21,504		88,861		(202,751	)		(149	)
Earnings (loss)			69,543		33,528		45,490		(14,932	)		5,457		70,382		(17,441	)		(8,135	)		32,143		63,815		(244,358	)		(10,453	)
Basic and diluted earnings (loss) per share		$	0.22	$	0.10	$	0.13	$	(0.05	)	$	0.02	$	0.27	$	(0.07	)	$	(0.03	)	$	0.12	$	0.24	$	(0.93	)	$	(0.04	)
Adjusted earnings (loss) per share 1		$	0.23	$	0.20	$	0.07	$	(0.07	)	$	0.00	$	0.10	$	0.01		$	(0.05	)	$	0.12	$	0.02	$	0.09		$	0.13
Operating cash flow before change in non-cash working capital			569,994		246,528		181,980		55,878			85,608		391,729		109,148			81,617			123,911		77,053		483,862			156,917
Adjusted EBITDA (in $ millions) 1			647.8		274.4		190.7		81.2			101.9		475.9		124.7			99.3			141.4		110.2		547.8			180.8
Consolidated Operational Performance
Contained metal in concentrate and doré produced 2
Copper	tonne		131,691		45,450		41,964		21,715			22,562		104,173		29,305			24,498			25,668		24,702		99,470			28,198
Gold	ounc		310,429		112,776		101,417		48,996			47,240		219,700		53,920			53,179			58,645		53,956		193,783			64,159
Silver	ounc		3,575,234		1,197,082		1,063,032		612,310			702,809		3,161,294		795,015			717,069			864,853		784,357		3,045,481			899,713
Zinc	tonne		34,642		5,747		10,291		8,758			9,846		55,381		6,326			9,750			17,053		22,252		93,529			23,207
Molybdenum	tonne		1,566		397		466		414			289		1,377		344			437			390		207		1,146			275
Payable metal in concentrate and doré sold
Copper	tonne		124,996		44,006		39,371		23,078			18,541		94,473		25,415			24,799			23,650		20,609		92,200			24,959
Gold	ounc		276,893		104,840		74,799		47,533			49,720		213,415		47,256			66,932			50,884		48,343		168,358			56,927
Silver	ounc		3,145,166		1,048,877		748,955		805,448			541,884		2,978,485		559,306			816,416			738,171		864,591		2,427,508			638,640
Zinc 3	tonne		28,779		7,385		7,125		8,641			5,628		59,043		8,230			12,714			20,793		17,306		96,435			21,112
Molybdenum	tonne		1,462		468		426		314			254		1,352		421			511			208		213		1,098			245
Cash cost 1	$/lb	$	0.80	$	0.16	$	1.10	$	1.60		$	0.85	$	0.86	$	1.08		$	0.58		$	0.65	$	1.11	$	0.74		$	0.51
Sustaining cash cost 1	$/lb	$	1.72	$	1.09	$	1.89	$	2.73		$	1.83	$	2.07	$	2.21		$	1.91		$	1.87	$	2.29	$	2.07		$	1.95
All-in sustaining cash cost 1	$/lb	$	1.92	$	1.31	$	2.04	$	2.98		$	2.07	$	2.26	$	2.41		$	2.16		$	1.93	$	2.54	$	2.30		$	2.20

¹Net debt, adjusted earnings (loss) per share, adjusted EBITDA, cash cost, sustaining cash cost and all-in sustaining cash cost per pound of copper produced, net of by-product credits, are non-IFRS financial performance measures with no standardized definition under IFRS. For further information and a detailed reconciliation, please see discussion under the "Non-IFRS Financial Performance Measures" section of this MD&A. The above table sets forth selected non-IFRS financial performance measures for each of our nine most recently completed quarters and three most recently completed years; detailed reconciliations for non-comparable prior periods can be found in our MD&A for these prior periods in the "Non-IFRS Financial Performance Measures" section of these documents.

² Metal reported in concentrate is prior to deductions associated with smelter contract terms.

³ Includes refined zinc metal sold.

⁴ Annual consolidated results may not calculate based on amounts presented in this table due to rounding.

82

			2023 5		Q4 2023		Q3 2023		Q2 2023		Q1 2023		2022 5		Q4 2022		Q3 2022		Q2 2022		Q1 2022		2021 5		Q4 2021
Peru Operations
Constancia ore mined1	tonnes		9,265,954		973,176		1,242,198		3,647,399		3,403,181		25,840,435		5,614,918		6,300,252		7,017,114		6,908,151		29,714,327		7,742,469
Copper	%		0.32		0.30		0.30		0.31		0.34		0.35		0.40		0.36		0.33		0.32		0.31		0.33
Gold	g/tonne		0.04		0.04		0.04		0.04		0.04		0.04		0.04		0.05		0.04		0.04		0.04		0.04
Silver	g/tonne		2.53		2.26		2.91		2.49		2.52		3.40		3.48		3.38		3.53		3.22		2.88		2.81
Molybdenum	%		0.01		0.01		0.01		0.01		0.01		0.01		0.01		0.01		0.01		0.01		0.01		0.01
Pampacancha ore mined1	tonnes		14,756,416		5,556,613		5,894,013		2,408,495		897,295		8,319,250		3,771,629		2,488,928		1,211,387		847,306		5,141,001		2,107,196
Copper	%		0.51		0.56		0.53		0.36		0.49		0.33		0.37		0.29		0.29		0.27		0.27		0.27
Gold	g/tonne		0.33		0.32		0.30		0.34		0.52		0.29		0.29		0.23		0.28		0.43		0.30		0.34
Silver	g/tonne		4.28		4.84		4.22		2.81		5.12		4.06		3.84		4.30		4.25		4.06		4.02		4.26
Molybdenum	%		0.01		0.01		0.02		0.02		0.01		0.01		0.01		0.01		0.01		0.01		0.01		0.01
Strip Ratio			1.51		1.26		1.36		1.74		1.84		1.13		0.97		1.26		1.22		1.10		1.02		0.95
Ore milled	tonnes		30,720,929		7,939,044		7,895,109		7,223,048		7,663,728		30,522,294		7,795,735		7,742,020		7,770,706		7,213,833		28,809,755		8,048,925
Copper	%		0.39		0.48		0.43		0.31		0.33		0.34		0.41		0.34		0.32		0.31		0.32		0.33
Gold	g/tonne		0.16		0.25		0.21		0.09		0.08		0.09		0.12		0.08		0.09		0.08		0.08		0.11
Silver	g/tonne		3.62		4.20		3.75		2.78		3.69		3.58		3.93		3.48		3.64		3.26		3.35		3.67
Molybdenum	%		0.01		0.01		0.02		0.01		0.01		0.01		0.01		0.01		0.01		0.01		0.01		0.01
Copper recovery	%		84.2		87.4		85.2		80.0		81.7		85.0		85.1		84.5		85.0		85.3		84.6		86.0
Gold recovery	%		71.8		77.6		74.8		61.1		56.8		63.6		69.6		61.9		60.3		59.8		64.6		63.6
Silver recovery	%		70.0		78.0		73.2		65.1		60.7		65.7		66.5		65.2		64.2		66.9		63.7		60.8
Molybdenum recovery	%		35.8		33.6		37.2		40.5		34.8		34.8		37.7		41.0		38.8		21.1		31.5		26.7
Contained metal in concentrate
Copper	tonnes		100,487		33,207		29,081		17,682		20,517		89,395		27,047		22,302		20,880		19,166		77,813		22,856
Gold	ounces		114,218		49,418		40,596		12,998		11,206		58,229		20,860		12,722		13,858		10,789		50,306		17,917
Silver	ounces		2,505,229		836,208		697,211		419,642		552,167		2,309,352		655,257		564,299		584,228		505,568		1,972,949		578,140
Molybdenum	tonnes		1,566		397		466		414		289		1,377		344		437		390		207		1,146		275
Payable metal sold
Copper	tonnes		96,213		31,200		27,490		21,207		16,316		79,805		23,789		20,718		18,473		16,825		71,398		20,551
Gold	ounces		97,176		38,114		32,757		14,524		11,781		49,968		15,116		11,970		8,430		14,452		41,807		16,304
Silver	ounces		2,227,419		703,679		460,001		671,532		392,207		2,045,678		411,129		513,470		484,946		636,133		1,490,651		380,712
Molybdenum	tonnes		1,462		468		426		314		254		1,352		421		511		208		213		1,098		245
Unit cost 2,3,4	$/tonne	$	12.47	$	12.24	$	12.20	$	14.07	$	11.47	$	12.78	$	13.64	$	13.06	$	12.02	$	12.37	$	10.70	$	9.96
Peru cash cost3	$/lb	$	1.07	$	0.54	$	0.83	$	2.14	$	1.36	$	1.58	$	1.34	$	1.68	$	1.82	$	1.54	$	1.54	$	1.28
Peru sustaining cash cost3	$/lb	$	1.81	$	1.21	$	1.51	$	3.06	$	2.12	$	2.35	$	2.09	$	2.46	$	2.62	$	2.27	$	2.46	$	2.46

¹ Reported tonnes and grade for ore mined are estimates based on mine plan assumptions and may not fully reconcile to ore milled.

² Reflects combined mine, mill and general and administrative ("G&A") costs per tonne of ore milled. Reflects the deduction of expected capitalized stripping costs.

³ Combined unit costs, cash cost, and sustaining cash cost per pound of copper produced, net of by-product credits, are non-IFRS financial performance measures with no standardized definition under IFRS. For further information and a detailed reconciliation, please see the discussion under the "Non-IFRS Financial Performance Measures" section of this MD&A. The above table sets forth selected non-IFRS financial performance measures for each of our nine most recently completed quarters and three most recently completed years; detailed reconciliations for non-comparable prior periods can be found in our MD&A for these prior periods in the "Non-IFRS Financial Performance Measures" section of these documents.

⁴ 2022 and 2021 combined unit costs exclude COVID-19 related costs.

⁵ Annual consolidated results may not calculate based on amounts presented in this table due to rounding.

83

		2023 1	Q4 2023	Q3 2023	Q2 2023	Q1 2023	2022 1	Q4 2022	Q3 2022	Q2 2022	Q1 2022	2021 1	Q4 2021
Manitoba Operations
Lalor ore mined	tonnes	1,526,729	372,384	367,491	413,255	373,599	1,516,203	369,453	347,345	412,653	386,752	1,593,141	422,208
Copper	%	0.86	1.04	1.02	0.81	0.57	0.73	0.73	0.71	0.70	0.80	0.71	0.78
Zinc	%	3.00	2.20	3.31	3.14	3.32	3.14	2.17	3.27	3.06	4.06	4.23	4.19
Gold	g/tonne	4.74	5.92	5.08	4.07	3.96	4.00	4.00	4.57	3.73	3.76	3.41	3.92
Silver	g/tonne	24.51	28.92	27.80	23.27	18.24	21.96	19.37	21.27	23.95	22.94	24.66	30.35
777 ore mined	tonnes	-	-	-	-	-	484,355	-	-	226,286	258,069	1,053,710	266,744
Copper	%	-	-	-	-	-	1.12	-	-	1.03	1.19	1.28	1.13
Zinc	%	-	-	-	-	-	3.83	-	-	3.51	4.12	3.91	4.16
Gold	g/tonne	-	-	-	-	-	1.66	-	-	1.62	1.69	2.03	1.80
Silver	g/tonne	-	-	-	-	-	20.85	-	-	20.63	21.05	25.25	25.02
Stall & New Britannia Concentrator Combined:
Ore milled	tonnes	1,562,479	393,837	402,443	380,538	385,661	1,510,907	345,492	362,108	406,006	397,301	1,506,756	419,727
Copper	%	0.85	1.03	0.93	0.82	0.60	0.75	0.73	0.69	0.73	0.82	0.72	0.75
Zinc	%	3.02	2.22	3.43	3.12	3.31	3.30	2.31	3.33	3.20	4.24	4.30	4.12
Gold	g/tonne	4.71	5.82	4.88	4.13	3.99	4.08	3.98	4.60	3.93	3.87	3.42	3.90
Silver	g/tonne	24.49	28.35	27.02	23.51	19.08	22.15	20.40	20.66	23.98	23.16	24.95	30.07
Copper recovery	%	91.30	91.8	95.2	89.4	88.8	88.6	89.2	88.3	89.5	87.5	86.8	88.7
Zinc recovery	%	74.68	65.9	74.6	73.8	84.4	79.0	79.4	80.9	75.5	85.7	88.9	87.4
Gold recovery	%	61.90	62.1	66.2	57.3	62.0	59.2	58.8	60.9	58.8	58.4	54.9	54.6
Silver recovery	%	60.88	61.5	64.3	58.9	58.8	58.1	56.1	57.6	58.1	60.0	54.4	53.9
Flin Flon Concentrator:
Ore milled	tonnes	-	-	-	-	-	497,344	-	-	243,312	254,032	1,133,516	262,565
Copper	%	-	-	-	-	-	1.11	-	-	1.02	1.20	1.23	1.12
Zinc	%	-	-	-	-	-	3.87	-	-	3.60	4.13	3.95	4.16
Gold	g/tonne	-	-	-	-	-	1.67	-	-	1.64	1.70	2.04	1.78
Silver	g/tonne	-	-	-	-	-	21.00	-	-	20.76	21.23	24.90	25.04
Copper recovery	%	-	-	-	-	-	86.7	-	-	85.5	87.6	87.7	86.7
Zinc recovery	%	-	-	-	-	-	83.0	-	-	82.9	83.2	83.0	83.1
Gold recovery	%	-	-	-	-	-	57.1	-	-	56.4	57.7	58.5	59.2
Silver recovery	%	-	-	-	-	-	51.8	-	-	51.0	52.5	45.1	45.6

¹ Annual consolidated results may not calculate based on amounts presented in this table due to rounding.

84

			2023 4		Q4 2023		Q3 2023		Q2 2023		Q1 2023		2022 4		Q4 2022		Q3 2022		Q2 2022			Q1 2022		2021 4		Q4 2021
Manitoba Operations (continued)
Total Manitoba contained metal in concentrate produced
Copper	tonnes		12,154		3,735		3,580		2,794		2,045		14,778		2,258		2,196		4,788			5,536		21,657		5,342
Zinc	tonnes		34,642		5,747		10,291		8,758		9,846		55,381		6,326		9,750		17,053			22,252		93,529		23,207
Gold	ounces		147,124		45,719		41,810		28,948		30,647		132,764		25,961		32,570		37,346			36,887		134,475		37,644
Silver	ounces		754,093		220,684		224,826		169,519		139,064		799,108		127,099		138,615		264,651			268,743		1,066,003		315,054
Precious metal in doré produced
Gold	ounces		40,239		14,144		14,403		6,305		5,387		28,707		7,099		7,887		7,441			6,280		9,002		8,598
Silver	ounces		97,630		34,895		39,926		11,231		11,578		52,834		12,659		14,155		15,974			10,046		6,529		6,519
Total Manitoba payable metal sold in concentrate and doré
Copper	tonnes		10,708		3,687		2,925		1,871		2,225		14,668		1,626		4,081		5,177			3,784		20,802		4,408
Zinc1	tonnes		28,779		7,385		7,125		8,641		5,628		59,043		8,230		12,714		20,793			17,306		96,435		21,112
Gold	ounces		171,297		63,635		36,713		33,009		37,939		163,447		32,140		54,962		42,454			33,891		126,551		40,623
Silver	ounces		728,304		246,757		197,952		133,916		149,677		932,807		148,177		302,946		253,225			228,458		936,857		257,928
Combined unit  cost 2,3	C$/tonne	$	217	$	216	$	217	$	220	$	216	$	195	$	241	$	235	$	168		$	176	$	154	$	168
Gold cash cost 3, 5	$/oz	$	727	$	434	$	670	$	1,097	$	938	$	297	$	922	$	216	$	(207	)	$	416	$	-	$	-
Sustaining gold cash cost 3,5	$/oz	$	1,077	$	788	$	939	$	1,521	$	1,336	$	1,091	$	1,795	$	1,045	$	519		$	1,187	$	-	$	-

¹ Includes refined zinc metal sold.

² Reflects combined mine, mill and G&A costs per tonne of milled ore.

³ Combined unit costs, cash cost, and sustaining cash cost per pound of copper produced, cash cost, and sustaining cash cost per ounce of gold produced, net of by-product credits, are non-IFRS financial performance measures with no standardized definition under IFRS. For further information and a detailed reconciliation, please see the discussion under the "Non-IFRS Financial Performance Measures" section of this MD&A. The above table sets forth selected non-IFRS financial performance measures for each of our nine most recently completed quarters and three most recently completed years; detailed reconciliations for non-comparable prior periods can be found in our MD&A for these prior periods in the "Non-IFRS Financial Performance Measures" section of these documents.

⁴ Annual consolidated results may not calculate based on amounts presented in this table due to rounding.

⁵ Cash cost and sustaining cash cost per ounce of gold produced, net of by-product credits were introduced in 2022 and do not have a published comparative.

85

			2023 6		Q4 2023	Q3 2023	Q2 2023 5	Q1 2023	2022	Q4 2022	Q3 2022	Q2 2022	Q1 2022	2021	Q4 2021
British Columbia Operations 4
Ore mined1	tonnes		6,975,389		2,627,398	3,792,568	555,423	-	-	-	-	-	-	-	-
Strip Ratio			3.82		5.34	2.96	-	-	-	-	-	-	-	-	-
Ore milled	tonnes		6,862,152		3,261,891	3,158,006	442,255	-	-	-	-	-	-	-	-
Copper	%		0.35		0.33	0.36	0.36	-	-	-	-	-	-	-	-
Gold	g/tonne		0.07		0.06	0.08	0.08	-	-	-	-	-	-	-	-
Silver	g/tonne		1.36		1.36	1.40	1.07	-	-	-	-	-	-	-	-
Copper recovery	%		79.7		78.8	80.90	77.69	-	-	-	-	-	-	-	-
Gold recovery	%		55.9		54.1	56.10	67.90	-	-	-	-	-	-	-	-
Silver recovery	%		73.0		73.8	71.30	78.60	-	-	-	-	-	-	-	-
Contained metal in concentrate produced
Copper	tonnes		19,050		8,508	9,303	1,239	-	-	-	-	-	-	-	-
Gold	ounces		8,848		3,495	4,608	745	-	-	-	-	-	-	-	-
Silver	ounces		218,282		105,295	101,069	11,918	-	-	-	-	-	-	-	-
Payable metal
Copper	tonnes		18,075		9,119	8,956	-	-	-	-	-	-	-	-	-
Gold	ounces		8,420		3,091	5,329	-	-	-	-	-	-	-	-	-
Silver	ounces		189,443		98,441	91,002	-	-	-	-	-	-	-	-	-
Combined unit  cost 2,3	C$/tonne	$	21.38	$	20.90	24.88	-	-	-	-	-	-	-	-	-
Cash cost3	$/lb	$	2.50	$	2.67	2.67	-	-	-	-	-	-	-	-	-
Sustaining cash cost3	$/lb	$	3.41	$	3.93	3.39	-	-	-	-	-	-	-	-	-

¹ Reported tonnes and grade for ore mined are estimates based on mine plan assumptions and may not fully reconcile to ore milled.

² Reflects combined mine, mill and general and administrative ("G&A") costs per tonne of ore milled. Reflects the deduction of expected capitalized stripping costs.

³ Combined unit costs, cash cost, and sustaining cash cost per pound of copper produced, net of by-product credits, are non-IFRS financial performance measures with no standardized definition under IFRS. For further information and a detailed reconciliation, please see the discussion under the "Non-IFRS Financial Performance Measures" section of this MD&A. The above table sets forth selected non-IFRS financial performance measures for each of our nine most recently completed quarters and three most recently completed years; detailed reconciliations for non-comparable prior periods can be found in our MD&A for these prior periods in the "Non-IFRS Financial Performance Measures" section of these documents.

⁴ Includes 100% of Copper Mountain mine production. Hudbay owns 75% of Copper Mountain mine.

⁵ Production results from Copper Mountain operations represents the period from the June 20^th acquisition date through to the end of the second quarter of 2023.

⁶ Annual consolidated results may not calculate based on amounts presented in this table due to rounding.

86

EX-99.3

TSX, NYSE - HBM 2024 No. 2

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hudbay.com News Release

Hudbay Delivers Record Fourth Quarter and Full Year 2023 Results and Provides Annual Guidance

Toronto, Ontario, February 23, 2024 - Hudbay Minerals Inc. ("Hudbay" or the "company") (TSX, NYSE: HBM) today released its fourth quarter and full year 2023 financial results, and announced 2024 annual production and cost guidance. All amounts are in U.S. dollars, unless otherwise noted. All production and cost amounts reflect the Copper Mountain mine on a 100% basis, with Hudbay owning a 75% interest in the mine.

Delivering Record Fourth Quarter and Full Year Operating and Financial Results

• Achieved record quarterly and annual revenue of $602.2 million and $1,690.0 million, respectively, with strong consolidated copper production of 45,450 tonnes and record consolidated gold production of 112,776 ounces in the fourth quarter from continued higher grades at the Pampacancha deposit in Peru and the Lalor mine in Manitoba and the contributions of the newly acquired Copper Mountain mine in British Columbia.
• Delivered a significant increase in operating cash flow before change in non-cash working capital to $246.5 million in the fourth quarter, a 35% increase compared to $182.0 million in the third quarter, which was meaningfully higher than prior quarters.
• Achieved 2023 consolidated production guidance for all metals. Full year 2023 copper production of 131,691 tonnes, gold production of 310,429 ounces and silver production of 3,575,234 ounces increased by 26%, 41% and 13%, respectively, compared to 2022.
• Consolidated 2023 cash costⁱ and sustaining cash costⁱ were better than expected and significantly outperformed the 2023 guidance range. Full year 2023 consolidated cash cost and sustaining cash cost per pound of copper produced, net of by-product creditsⁱ, were $0.80 and $1.72, respectively, increasing by 7% and 17%, respectively, compared to 2022.
• Consolidated cash cost and sustaining cash cost per pound of copper produced, net of by-product creditsⁱ, in the fourth quarter, were $0.16 and $1.09, respectively, improving by 85% and 42%, respectively, compared to the third quarter of 2023.
• Peru operations benefited from continued higher grades at the Pampacancha satellite pit, resulting in 33,207 tonnes of copper production and 49,418 ounces of gold production in the fourth quarter. Full year copper production was within 2023 guidance ranges while gold production exceeded the top end of guidance. Peru cash cost per pound of copper produced, net of by-product creditsⁱ, in the fourth quarter improved to $0.54, and full year cash costs significantly improved over 2022 levels and achieved the low end of the 2023 annual cost guidance range.
• Manitoba operations produced 59,863 ounces of gold in the fourth quarter, a quarterly record as higher gold and copper grade zones were mined at Lalor and the New Britannia mill processed significantly higher amounts of gold ore. Full year gold production was well within the 2023 guidance range and exceeded recent expectations of being positioned at the lower end of the range. Manitoba cash cost per ounce of gold produced, net of by-product creditsⁱ, was $434 during the fourth quarter and full year cash costs were within the 2023 annual guidance range.

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• British Columbia operations produced 8,508 tonnes of copper at a cash cost per pound of copper produced, net of by-product creditsⁱ, of $2.67 in the fourth quarter. Full year production and cash costs were within Hudbay's post-acquisition guidance ranges. Operational stabilization plans continue to be implemented at the Copper Mountain mine with a focus on opening additional mining faces, optimizing ore feed to the plant and improving plant reliability.
• Fourth quarter net earnings and earnings per share were $33.5 million and $0.10, respectively. After adjusting for a non-cash loss of $34.0 million related to a quarterly revaluation of a closed site environmental reclamation provision and a non-cash revaluation loss of $9.0 million related to the gold prepayment liability, among other items, fourth quarter adjusted earningsⁱ per share were $0.20.
• Cash and cash equivalents increased by $4.6 million to $249.8 million during the fourth quarter due to strong operating cash flows bolstered by higher copper and gold prices and sales volumes enabling a $94.5 million reduction in net debtⁱ during the quarter.

Strong Operating Performance Driving Free Cash Flow Generation with Continued Financial Discipline

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

Executing on Growth Initiatives

• Post-acquisition plans to stabilize the Copper Mountain operations are underway with a focus on mining fleet ramp-up activities, accelerated stripping and increasing mill reliability. Achieved the targeted $10 million in annualized corporate synergies as of January 2024.
• Released a NI 43-101 technical report for the Copper Mountain mine in December 2023, which contemplates average annual copper production of 46,500 tonnes in the first five years, 45,000 tonnes in the first ten years and 37,000 tonnes over the 21-year mine life. Average cash costs and sustaining cash costs over the mine life are expected to be $1.84 and $2.53 per pound of copperⁱ, respectively. Several opportunities to further increase production, improve costs and extend mine life are being evaluated for future mine plans.
• Achieved record copper recoveries of 87.4% at the Constancia mill in the fourth quarter of 2023 as a result of the successful completion of the recovery improvement program in the second quarter, on time and on budget.
• Achieved higher copper recoveries above 90% and gold recoveries above 65% at the Stall mill in the second half of 2023 because of the successful ramp up of the Stall mill recovery improvement project in the second quarter, on time and on budget.

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• The New Britannia mill achieved record throughput levels averaging 1,650 tonnes per day in 2023 and 1,800 tonnes per day in the fourth quarter, exceeding its original design capacity of 1,500 tonnes per day due to the successful implementation of process improvement initiatives.
• Commenced largest annual exploration program in Snow Lake consisting of geophysical surveys and drill campaigns testing the newly acquired Cook Lake claims, former Rockcliff properties and near-mine exploration at Lalor.
• Advancing a development and exploration drift at the 1901 deposit in Snow Lake, located within 1,000 metres from the underground ramp access to the Lalor mine, with a focus on confirming the optimal mining method for the base metal and gold lenses and converting the inferred mineral resources in the gold lenses to mineral reserves.
• Continuing to evaluate the Flin Flon tailings reprocessing opportunity through advancing metallurgical test work studies and analyzing metallurgical technologies.

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

2024 Annual Guidance and Outlook

• Consolidated copper production is forecast to increase by 19% to 156,500 tonnesⁱⁱ in 2024, compared to 2023, with continued higher grades in Peru and a full year of British Columbia production.
• Consolidated gold production is forecast to decrease slightly to 291,000 ouncesⁱⁱ in 2024, compared to 2023, due to higher than planned gold grades being mined in Peru in the fourth quarter of 2023 and a deferral of high grade gold zones in Peru to 2025. Total gold production in Peru over the 2023 to 2025 period is expected to be higher than previous guidance levelsⁱⁱ.
• Consolidated cash cost, net of by-product creditsⁱ, in 2024 is expected to be within a range of $1.05 and $1.25 per pound of copper, higher than 2023 as a result of lower gold by-product credits and a full year of contributions from British Columbia.
• Total capital expenditures are expected to be $335 million in 2024, reflecting lower expenditures in Peru, Manitoba and Arizona, offset by higher expenditures in British Columbia associated with accelerated stripping to access higher grades and a reclassification of costs from operating to capitalized stripping versus the recent technical report.
• Exploration expenditures are expected to increase in 2024 as the company executes its largest-ever exploration program in the Snow Lake region, which is being partially funded by a critical minerals premium flow-through financing that was completed in the fourth quarter.
• Continued focus on reducing discretionary spending in 2024 with total growth capital expenditures 23% lower than 2023.

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Summary of Fourth Quarter Results

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

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

Net earnings and earnings per share in the fourth quarter of 2023 were $33.5 million and $0.10, respectively, compared to net earnings and earnings per share of $45.5 million and $0.13, respectively in the third quarter. The results were positively impacted by higher copper, gold and silver sales volumes as well as higher copper, gold and silver realized prices. This was partially offset by a non-cash loss of $34.0 million related to the quarterly revaluation of the environmental reclamation provision at closed sites and a non-cash revaluation loss of $9.0 million related to the gold prepayment liability.

Adjusted net earningsⁱ and adjusted net earnings per shareⁱ in the fourth quarter of 2023 were $71.3 million and $0.20 per share, respectively, after adjusting for the non-cash loss related to the revaluation of the company's environmental provision and the revaluation loss on the gold prepayment liability, among other items. This compares to adjusted net earnings and adjusted net earnings per share of $24.4 million, and $0.07 in the prior quarter. Fourth quarter adjusted EBITDAⁱ was $274.4 million, an increase of 44% compared to $190.7 million in the third quarter of 2023.

In the fourth quarter of 2023, consolidated cash cost per pound of copper produced, net of by-product creditsⁱ, was $0.16, compared to $1.10 in the third quarter. Consolidated sustaining cash cost per pound of copper produced, net of by-product creditsⁱ, was $1.09 in the fourth quarter of 2023 compared to $1.89 in the third quarter. The significant decrease in both was the result of higher copper production and higher by-product credits, partially offset by higher mining, milling and G&A costs from incorporating Copper Mountain.

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

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

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Summary of Full Year Results

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

Consolidated cash cost per pound of copper produced, net of by-product creditsⁱ, in 2023 was $0.80, compared to $0.86 in 2022, and achieved the low end of the 2023 annual cost guidance range. This decrease was mainly the result of higher copper production and higher by-product credits, partially offset by higher mining and milling costs from incorporating Copper Mountain. Consolidated sustaining cash cost per pound of copper produced, net of by-product creditsⁱ, was $1.72 in 2023, compared to $2.07 in 2022, outperforming 2023 guidance expectations. This decrease was driven by the above reasons as well as the lower cash sustaining capital expenditures. Consolidated all-in sustaining cash cost per pound of copper produced, net of by-product creditsⁱ, was $1.92 in 2023, lower than $2.26 in 2022, due to the same reasons outlined above partially offset by higher corporate selling and administrative expenses.

Cash generated from operating activities decreased to $476.9 million in 2023 from $487.8 million in 2022 primarily due to a $189.2 million decrease in non-cash working capital caused by timing and changes in provisionally priced receivables and an increase in inventory. Operating cash flow before change in non-cash working capital increased to $570.0 million from $391.7 million in 2022. The increase in operating cash flow before change in non-cash working capital was primarily the result of higher copper and gold sales volumes and higher gold prices, partially offset by lower zinc sales volumes, lower copper and zinc metal prices and higher treatment and refining charges. Zinc sales volumes were lower than the prior year due to the planned closure of the 777 mine in June 2022.

Net earnings and earnings per share for 2023 were $69.5 million and $0.22, respectively, compared to 2022 net earnings and earnings per share of $70.4 million and $0.27, respectively. Full year 2023 net earnings were impacted by $21.4 million in non-cash mark-to-market losses arising from the revaluation of the gold prepayment liability, investments and share-based compensation, partially offset by a non-cash gain of $11.4 million related to the revaluation of the Flin Flon environmental reclamation provision. The prior period results benefited from a non-cash $133.5 million revaluation gain for the Flin Flon environmental reclamation provision, partially offset by a $95.0 million pre-tax impairment loss related to the previous stand-alone development plan for the Rosemont deposit. Full year 2023 adjusted EBITDAⁱ was $647.8 million, an increase of 36% compared to $475.9 million in 2022.

Consolidated Financial Condition ($000s)	Dec. 31, 2023	Sep. 30, 2023	Dec. 31, 2022
Cash and cash equivalents	249,794	245,217	225,665
Total long-term debt	1,287,536	1,377,443	1,184,162
Net debt1	1,037,742	1,132,226	958,497
Working capital2	135,913	128,463	76,534
Total assets	5,312,634	5,250,596	4,325,943
Equity3	2,096,811	2,044,684	1,571,809
Net debt to adjusted EBITDA1,4	1.6	2.3	2.0

¹ Net debt and net debit to adjusted EBITDA are non-IFRS financial performance measures with no standardized definition under IFRS. For further information, please see the "Non-IFRS Financial Performance Measures" section of this news release.

² Working capital is determined as total current assets less total current liabilities as defined under IFRS and disclosed on the consolidated financial statements.

³ Equity attributable to owners of the company.

⁴ Net debt to adjusted EBITDA for the 12 month period.

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Consolidated Financial Performance		Three Months Ended
		Dec. 31, 2023	Sep. 30, 2023	Dec. 31, 2022
Revenue	$000s	602,189	480,456	321,196
Cost of sales	$000s	405,433	374,057	251,520
Earnings (loss) before tax	$000s	80,982	84,149	(14,287)
Earnings (loss)	$000s	33,528	45,490	(17,441)
Basic and diluted earnings (loss) per share	$/share	0.10	0.13	(0.07)
Adjusted earnings per share1	$/share	0.20	0.07	0.01
Operating cash flow before change in non-cash working capital	$ millions	246.5	182.0	109.1
Adjusted EBITDA1	$ millions	274.4	190.7	124.7
			Year Ended
			Dec. 31, 2023	Dec. 31, 2022
Revenue	$000s		1,690,030	1,461,440
Cost of sales	$000s		1,297,469	1,184,552
Earnings before tax	$000s		151,830	95,815
Earnings	$000s		69,543	70,382
Basic and diluted earnings per share	$/share		0.22	0.27
Adjusted earnings per share1	$/share		0.23	0.10
Operating cash flow before change in non-cash working capital	$ millions		570.0	391.7
Adjusted EBITDA1	$ millions		647.8	475.9

¹ Adjusted (loss) earnings per share and adjusted EBITDA are non-IFRS financial performance measures with no standardized definition under IFRS. For further information, please see the "Non-IFRS Financial Performance Measures" section.

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Consolidated Production and Cost Performance5		Three Months Ended
		Dec. 31, 2023	Sep. 30, 2023	Dec. 31, 2022
Contained metal in concentrate and doré produced1
Copper	tonnes	45,450	41,964	29,305
Gold	ounces	112,776	101,417	53,920
Silver	ounces	1,197,082	1,063,032	795,015
Zinc	tonnes	5,747	10,291	6,326
Molybdenum	tonnes	397	466	344
Payable metal sold
Copper	tonnes	44,006	39,371	25,415
Gold2	ounces	104,840	74,799	47,256
Silver2	ounces	1,048,877	748,955	559,306
Zinc3	tonnes	7,385	7,125	8,230
Molybdenum	tonnes	468	426	421
Consolidated cash cost per pound of copper produced4
Cash cost	$/lb	0.16	1.10	1.08
Sustaining cash cost	$/lb	1.09	1.89	2.21
All-in sustaining cash cost	$/lb	1.31	2.04	2.41
			Year Ended
			Dec. 31, 2023	Dec. 31, 2022
Contained metal in concentrate and doré produced1
Copper	tonnes		131,691	104,173
Gold	ounces		310,429	219,700
Silver	ounces		3,575,234	3,161,294
Zinc	tonnes		34,642	55,381
Molybdenum	tonnes		1,566	1,377
Payable metal sold
Copper	tonnes		124,996	94,473
Gold2	ounces		276,893	213,415
Silver2	ounces		3,145,166	2,978,485
Zinc3	tonnes		28,779	59,043
Molybdenum	tonnes		1,462	1,352
Consolidated cash cost per pound of copper produced4
Cash cost	$/lb		0.80	0.86
Sustaining cash cost	$/lb		1.72	2.07
All-in sustaining cash cost	$/lb		1.92	2.26

¹ Includes production results from the Copper Mountain mine following the June 20, 2023 acquisition completion date. Production results from the Copper Mountain mine represents the period from June 20, 2023 acquisition completion date through to the end of the fourth quarter of 2023. Includes 100% of Copper Mountain mine production. Hudbay owns 75% of the Copper Mountain mine. As Copper Mountain was acquired on June 20, 2023, there were no comparative 2022 figures.

² Includes total payable gold and silver in concentrate and in doré sold.

³ Metal reported in concentrate is prior to deductions associated with smelter contract terms.

⁴ For the three months ended December 31, 2023 and September 30, 2023, this metric includes payable zinc in concentrate sold. For the three months ended December 31, 2022, this metric also included refined zinc metal and payable zinc in concentrate sold. For the year ended December 31, 2023, this metric includes payable zinc in concentrate sold. For the year ended December 31, 2022, this metric also included payable refined zinc metal sold.

⁵ Cash cost, sustaining cash cost and all-in sustaining cash cost per pound of copper produced, net of by-product credits, are non-IFRS financial performance measures with no standardized definition under IFRS. For further information, please see the "Non-IFRS Financial Performance Measures" section of this news release.

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Peru Operations Review

Peru Operations		Three Months Ended			Year Ended
		Dec. 31, 2023	Sep. 30, 2023	Dec. 31, 2022	Dec. 31, 2023	Dec. 31, 2022
Constancia ore mined1	tonnes	973,176	1,242,198	5,614,918	9,265,954	25,840,435
Copper	%	0.30	0.30	0.40	0.32	0.35
Gold	g/tonne	0.04	0.04	0.04	0.04	0.04
Silver	g/tonne	2.26	2.91	3.48	2.53	3.40
Molybdenum	%	0.01	0.01	0.01	0.01	0.01
Pampacancha ore mined	tonnes	5,556,613	5,894,013	3,771,629	14,756,416	8,319,250
Copper	%	0.56	0.53	0.37	0.51	0.33
Gold	g/tonne	0.32	0.30	0.29	0.33	0.29
Silver	g/tonne	4.84	4.22	3.84	4.28	4.06
Molybdenum	%	0.01	0.02	0.01	0.01	0.01
Total ore mined	tonnes	6,529,789	7,136,211	9,386,547	24,022,370	34,159,685
Strip ratio2		1.26	1.36	0.97	1.51	1.13
Ore milled	tonnes	7,939,044	7,895,109	7,795,735	30,720,929	30,522,294
Copper	%	0.48	0.43	0.41	0.39	0.34
Gold	g/tonne	0.25	0.21	0.12	0.16	0.09
Silver	g/tonne	4.20	3.75	3.93	3.62	3.58
Molybdenum	%	0.01	0.02	0.01	0.01	0.01
Copper recovery	%	87.4	85.2	85.1	84.2	85.0
Gold recovery	%	77.6	74.8	69.6	71.8	63.6
Silver recovery	%	78.0	73.2	66.5	70.0	65.7
Molybdenum recovery	%	33.6	37.2	37.7	35.8	34.8
Contained metal in concentrate
Copper	tonnes	33,207	29,081	27,047	100,487	89,395
Gold	ounces	49,418	40,596	20,860	114,218	58,229
Silver	ounces	836,208	697,211	655,257	2,505,229	2,309,352
Molybdenum	tonnes	397	466	344	1,566	1,377
Payable metal sold
Copper	tonnes	31,200	27,490	23,789	96,213	79,805
Gold	ounces	38,114	32,757	15,116	97,176	49,968
Silver	ounces	703,679	460,001	411,129	2,227,419	2,045,678
Molybdenum	tonnes	468	426	421	1,462	1,352
Combined unit operating cost3,4,5	$/tonne	12.24	12.20	13.64	12.47	12.78
Cash cost5	$/lb	0.54	0.83	1.34	1.07	1.58
Sustaining cash cost5	$/lb	1.21	1.51	2.09	1.81	2.35

¹ Reported tonnes and grade for ore mined are estimates based on mine plan assumptions and may not reconcile fully to ore milled.

² Strip ratio is calculated as waste mined divided by ore mined.

³ Reflects combined mine, mill and general and administrative ("G&A") costs per tonne of ore milled. Reflects the deduction of expected capitalized stripping costs.

⁴ Excludes approximately $0.7 million, or $0.09 per tonne, of COVID-related costs during the three months ended December 31, 2022 and $5.2 million or $0.17 per tonne, during the twelve months ended December 31, 2022.

⁵ Combined unit costs, cash cost and sustaining cash cost per pound of copper produced, net of by-product credits, are non-IFRS financial performance measures with no standardized definition under IFRS. For further information, please see the "Non-IFRS Financial Performance Measures" section of this news release.

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

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

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

Recoveries of copper, gold and silver during the fourth quarter of 2023 were 87.4%, 77.6% and 78.0%, respectively, with recoveries of all metals improving quarter over quarter, in line with metallurgical models. The Constancia mill achieved record copper recoveries as a result of the successful completion of the recovery improvement program in the second quarter of 2023, as planned, ahead of the start of the period of significantly higher grades from the Pampacancha pit. The program scope was to increase copper recoveries by 2% by increasing the rougher mass, and the mill continues to achieve the targeted higher copper recoveries. Copper recoveries in the fourth quarter also benefited from higher overall head grades and lower contaminants.

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

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

Peru's cash cost per pound of copper produced, net of by-product creditsⁱ, in the fourth quarter of 2023 was $0.54, a decrease of 35% compared to the third quarter due to higher by-product credits mainly from gold, higher capitalized stripping and higher copper production. This was partially offset by higher profit-sharing expenses and higher treatment, refining and freight costs. Cash cost per pound of copper produced, net of by-product creditsⁱ, in 2023 was $1.07, a 32% reduction from 2022, and achieved the lower end of the cost guidance range due to the same factors noted above.

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

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Manitoba Operations Review

Manitoba Operations		Three Months Ended			Year Ended
		Dec. 31, 2023	Sep. 30, 2023	Dec. 31, 2022	Dec. 31, 2023	Dec. 31, 2022
Lalor
Ore mined	tonnes	372,384	367,491	369,453	1,526,729	1,516,203
Gold	g/tonne	5.92	5.08	4.00	4.74	4.00
Copper	%	1.04	1.02	0.73	0.86	0.73
Zinc	%	2.20	3.31	2.17	3.00	3.14
Silver	g/tonne	28.92	27.80	19.37	24.51	21.96
New Britannia
Ore milled	tonnes	165,038	146,927	141,142	596,912	542,269
Gold	g/tonne	8.03	6.93	6.11	6.76	6.28
Copper	%	1.46	1.22	0.91	1.03	0.81
Zinc	%	0.85	0.90	0.67	0.84	0.80
Silver	g/tonne	27.97	23.88	22.09	25.11	20.97
Gold recovery - concentrate	%	58.1	64.7	56.6	60.0	60.3
Copper recovery - concentrate	%	91.6	97.4	89.3	93.3	90.7
Silver recovery - concentrate	%	61.0	63.2	55.4	60.7	60.6
Stall Concentrator
Ore milled	tonnes	228,799	255,516	204,350	965,567	968,638
Gold	g/tonne	4.22	3.70	2.50	3.45	2.86
Copper	%	0.73	0.77	0.61	0.74	0.71
Zinc	%	3.20	4.88	3.43	4.36	4.70
Silver	g/tonne	28.63	28.82	19.24	24.19	22.81
Gold recovery	%	67.5	67.8	62.4	64.8	58.0
Copper recovery	%	92.0	93.9	89.0	90.4	87.2
Zinc recovery	%	78.5	82.6	90.1	82.2	86.6
Silver recovery	%	61.8	64.9	56.6	61.4	56.8
Total contained metal in concentrate and doré1
Gold	ounces	59,863	56,213	33,060	187,363	161,471
Copper	tonnes	3,735	3,580	2,258	12,154	14,778
Zinc	tonnes	5,747	10,291	6,326	34,642	55,381
Silver	ounces	255,579	264,752	139,758	851,723	851,942
Total payable metal sold
Gold2	ounces	63,635	36,713	32,140	171,297	163,447
Copper	tonnes	3,687	2,925	1,626	10,708	14,668
Zinc3	tonnes	7,385	7,125	9,230	28,779	59,043
Silver2	ounces	246,757	197,952	148,177	728,304	932,807
Combined unit operating cost4,5	C$/tonne	216	217	241	217	195
Gold cash cost5	$/oz	434	670	922	727	297
Gold sustaining cash cost5	$/oz	788	939	1,795	1,077	1,091

¹Doré includes sludge, slag and carbon fines in three months ended December 31, 2023 and September 30, 2023.

² Includes total payable precious metals in concentrate and doré sold.

³ Includes refined zinc metal and payable zinc in concentrate sold.

⁴ Reflects combined mine, mill and G&A costs per tonne of ore milled.

⁵ Combined unit operating cost, cash cost and sustaining cash cost per ounce of gold produced, net of by-product credits, are non-IFRS financial performance measures with no standardized definition under IFRS. For further information, please see the "Non-IFRS Financial Performance Measures" section of this news release.

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

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

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

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

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

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

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The Stall mill processed slightly less ore in the fourth quarter of 2023 compared to the third quarter, due to more ore being sent to New Britannia as the mill exceeded design throughput. After the commissioning of the Stall mill recovery improvement project in the second quarter of 2023, the operations continue to focus on optimizing circuits to achieve targeted recoveries by reducing primary grind size, refining the flotation circuit balance and mass pull and reagent selection. These adjustments have proven highly effective, resulting in notably higher recoveries for copper above 90% in the second half of 2023. In addition, the Stall mill achieved its targeted gold recovery levels of 67.5% in the fourth quarter, bringing the 2023 annual recovery to 64.8%, compared to 58.0% in 2022.

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

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

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

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

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British Columbia Operations Review

British Columbia Operations5		Three Months Ended		Year Ended5
		Dec. 31, 2023	Sep. 30, 2023	Dec. 31, 2023
Ore mined1	tonnes	2,627,398	3,792,568	6,975,389
Waste mined	tonnes	14,032,093	11,233,917	26,634,805
Strip ratio2		5.34	2.96	3.82
Ore milled	tonnes	3,261,891	3,158,006	6,862,152
Copper	%	0.33	0.36	0.35
Gold	g/tonne	0.06	0.08	0.07
Silver	g/tonne	1.36	1.40	1.36
Copper recovery	%	78.8	80.9	79.69
Gold recovery	%	54.1	56.1	55.88
Silver recovery	%	73.8	71.3	72.96
Total contained metal in concentrate
Copper	tonnes	8,508	9,303	19,050
Gold	ounces	3,495	4,608	8,848
Silver	ounces	105,295	101,069	218,282
Total payable metal sold
Copper	tonnes	9,119	8,956	18,075
Gold	ounces	3,091	5,329	8,420
Silver	ounces	98,441	91,002	189,443
Combined unit operating cost3,4	C$/tonne	20.90	24.88	21.38
Cash cost4	$/lb	2.67	2.67	2.50
Sustaining cash cost4	$/lb	3.93	3.39	3.41

¹ Reported tonnes and grade for ore mined are estimates based on mine plan assumptions and may not reconcile fully to ore milled.

² Strip ratio is calculated as waste mined divided by ore mined.

³ Reflects combined mine, mill and G&A costs per tonne of ore milled. Reflects the deduction of expected capitalized stripping costs.

⁴ Combined unit operating cost, cash cost and sustaining cash cost per pound of copper produced, net of by-product credits, are non-IFRS financial performance measures with no standardized definition under IFRS. For further information, please see the "Non-IFRS Financial Performance Measures" section of this news release.

⁵ Includes 100% of Copper Mountain mine production, Hudbay owns 75% of Copper Mountain mine. As Copper Mountain was acquired on June 20, 2023, there were no comparative 2022 figures. Year ended December 31, 2023 results from the date of acquisition, June 20, 2023, through to the end of the fourth quarter of 2023.

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

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

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

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

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

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

British Columbia's cash cost and sustaining cash cost per pound of copper produced, net of by-product creditsⁱ, in the fourth quarter of 2023 were $2.67 and $3.93, respectively. Cash costs were within the post-acquisition guidance range.

Advancing Copper Mountain Mine Stabilization Plans

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

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

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

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

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

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

Please see "Qualified Person and NI 43-101" for further details regarding the technical and scientific information included in the technical report.

Delivered Brownfield Capital Projects On Time and On Budget

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

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

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

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

Generating Free Cash Flow with Increased Production and Continued Financial Discipline

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

During the fourth quarter, Hudbay completed $30 million in net repayments on its revolving credit facilities and redeemed, in full, the remaining $59.7 million of Copper Mountain's bonds from treasury. The company also recommenced deliveries under the gold forward sale and prepay agreement in October 2023, further reducing the outstanding gold prepayment liability, and the company is on schedule to fully repay the gold prepay facility by August 2024. Despite these debt repayments, the company increased cash and cash equivalents to $249.8 million and reduced overall net debt to $1,037.7 million as at December 31, 2023, compared to $245.2 million and $1,132.2 million, respectively, as at September 30, 2023. The $94.5 million decline in net debt, together with higher levels of adjusted EBITDA¹ in the fourth quarter, have improved the net debt to adjusted EBITDA ratioⁱ to 1.6x compared to 2.0x at the end of 2022. Subsequent to quarter-end, the company continued its deleveraging efforts with an additional $10 million repayment on its revolving credit facilities.

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

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

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Senior Management Team Appointments

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

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

Advancing Permitting at Copper World

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

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

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

Snow Lake Exploration

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

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

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

Advancing Metallurgical Test Work for the Flin Flon Tailings Reprocessing Opportunity

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

Peru Exploration Update

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

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

Progressing Towards Climate Change Commitments

In December 2022, Hudbay announced its commitment to achieve net zero greenhouse gas ("GHG") emissions by 2050 and the adoption of interim 2030 GHG reduction targets to support this commitment. While the company's operations are well-positioned in the lower half of the global GHG emissions curve for copper operations, Hudbay recognizes its role in mitigating climate change and that copper and the metals Hudbay produces play an important role in the world's transition to a greener future. Hudbay's GHG emissions reduction plan includes pursuing a 50% reduction in absolute Scope 1 and Scope 2 emissions from existing operations by 2030 and achieving net zero total emissions by 2050.

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

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

2024 Key Objectives and Annual Guidance

Hudbay's key objectives for 2024 are to:

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

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

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TSX, NYSE - HBM 2024 No. 2

Production Guidance

Contained Metal in Concentrate and Doré1		2024 Guidance	Year Ended Dec. 31, 2023	2023 Guidance
Peru
Copper	tonnes	98,000 - 120,000	100,487	91,000 - 116,000
Gold	ounces	76,000 - 93,000	114,218	83,000 - 108,000
Silver	ounces	2,500,000 - 3,000,000	2,505,229	2,210,000 - 2,650,000
Molybdenum	tonnes	1,250 - 1,500	1,566	1,300 - 1,600
Manitoba
Gold	ounces	170,000 - 200,000	187,363	175,000 - 205,000
Zinc	tonnes	27,000 - 35,000	34,642	28,000 - 36,000
Copper	tonnes	9,000 - 12,000	12,154	9,000 - 12,000
Silver	ounces	750,000 - 1,000,000	851,723	750,000 - 1,000,000
British Columbia
Copper	tonnes	30,000 - 44,000	19,050	18,500 - 20,500
Gold	ounces	17,000 - 26,000	8,848	8,000 - 10,000
Silver	ounces	300,000 - 455,000	218,282	190,000 - 210,000
Total
Copper	tonnes	137,000 - 176,000	131,691	118,500 - 148,500
Gold	ounces	263,000 - 319,000	310,429	266,000 - 323,000
Zinc	tonnes	27,000 - 35,000	34,642	28,000 - 36,000
Silver	ounces	3,550,000 - 4,455,000	3,575,234	3,150,000 - 3,860,000
Molybdenum	tonnes	1,250 - 1,500	1,566	1,300 - 1,600

¹ Metal reported in concentrate and doré is prior to refining losses or deductions associated with smelter terms.

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

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

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

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

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

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

Cash Cost Guidance

Copper remains the primary revenue contributor on a consolidated basis, and therefore, consolidated cost guidance has been presented as cash cost per pound of copper produced. The company has also provided cash cost guidance for each of its operations based on their respective primary metal contributors.

Cash cost1		2024 Guidance	Year Ended Dec. 31, 2023	2023 Guidance
Peru cash cost per pound of copper2	$/lb	1.25 - 1.60	1.07	1.05 - 1.30
Manitoba cash cost per ounce of gold3	$/oz	700 - 900	727	500 - 800
British Columbia cash cost per pound of copper2	$/lb	2.00 - 2.50	2.50	2.40 - 2.85
Consolidated cash cost per pound of copper	$/lb	1.05 - 1.25	0.80	0.80 - 1.10
Consolidated sustaining cash cost per pound of copper	$/lb	2.00 - 2.45	1.72	1.80 - 2.25

¹ Cash cost and sustaining cash cost per pound of copper produced, net of by-product credits, and cash cost per ounce of gold produced, net of by-product credits, are non-IFRS financial performance measures with no standardized definition under IFRS. For further information, please see the "Non-IFRS Financial Performance Measures" section of this news release.

² Peru and British Columbia cash cost per pound of copper contained in concentrate assumes by-product credits are calculated using the gold and silver deferred revenue drawdown rates in effect on December 31, 2023 for the streamed ounces in Peru and the following commodity prices: $1,900 per ounce gold, $23.00 per ounce silver, $18.00 per pound molybdenum, $1.15 per pound zinc and an exchange rate of 1.35 C$/US$.

³ Manitoba cash cost per ounce of gold produced, net of by-product credits, contained in concentrate and doré assumes by-product credits are calculated using the following commodity prices: $1.15 per pound zinc, $23.00 per ounce silver, $3.75 per pound copper and an exchange rate of 1.35 C$/US$.

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

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

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

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TSX, NYSE - HBM 2024 No. 2

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

Capital Expenditure Guidance

Capital Expenditures (in $ millions)	2024 Guidance4	Year Ended Dec. 31, 2023	2023 Revised Guidance5	2023 Original Guidance
Sustaining capital1
Peru2	130.0	132.1	150.0	160.0
Manitoba	55.0	55.8	60.0	75.0
British Columbia - sustaining capital	35.0	30.22	33.02	-
British Columbia - capitalized stripping2	70.0
Total sustaining capital	290.0	218.1	243.0	235.0
Growth capital
Peru	2.0	12.1	10.0	10.0
Manitoba3	10.0	13.5	15.0	15.0
British Columbia	5.0	1.2	2.0	-
Arizona	20.0	21.3	25.0	30.0
Total growth capital	37.0	48.1	52.0	55.0
Capitalized exploration	8.0	7.8	10.0	10.0
Total capital expenditures	335.0	274.0	305.0	300.0

Note: Excludes capitalized costs not considered to be sustaining or growth capital expenditures.

¹ Sustaining capital guidance excludes right-of-use lease additions and additions as a result of equipment financing arrangements.

² Includes capitalized stripping costs.

³ Partially funded by approximately $3 million in Canadian Development Expense flow-through financing proceeds.

⁴ Capital expenditures are converted into U.S. dollars using an exchange rate of 1.35 C$/US$.

⁵ Capital expenditure guidance reflects revised guidance issued with third quarter results, including lower anticipated capital spend in Manitoba and Peru, and new British Columbia guidance.

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

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

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

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TSX, NYSE - HBM 2024 No. 2

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

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

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

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

Exploration Guidance

Exploration Expenditures (in $ millions)	2024 Guidance	Year Ended Dec. 31, 2023	2023 Guidance
Peru1	17.0	15.2	15.0
Manitoba2	23.0	10.4	15.0
British Columbia	2.0	3.9	-
Arizona and other	1.0	2.4	-
Total exploration expenditures	43.0	31.9	30.0
Capitalized spending	(8.0)	(7.8)	(10.0)
Total exploration expense	35.0	24.1	20.0

¹ 2023 exploration guidance excludes $5 million of non-cash amortization of community agreements for exploration properties.

² Partially funded by approximately $11 million in Canadian Exploration Expense flow-through financing proceeds.

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

In Peru, 2024 exploration activities will continue to focus on permitting and drill preparation for the Maria Reyna and Caballito properties near Constancia. In Manitoba, the company has initiated the largest exploration program in its history in Snow Lake focused on testing the deep extensions of the gold and copper zones at Lalor, the Lalor Northwest target, the newly acquired Cook Lake claims and the former Rockcliff properties. The company intends to complete geophysical surveys on the new land package in the Snow Lake area to generate additional targets with plans to start drilling those targets later in 2024. A portion of the 2024 Manitoba exploration program will be funded by $11 million in proceeds from a critical minerals premium flow-through financing completed in December 2023. Hudbay issued 1,310,000 Canadian Exploration Expense ("CEE") flow-through common shares ("Flow-Through Common Shares") of the company, at a price of C$11.50 per CEE Flow-Through Common Share, representing a premium of approximately 85%.

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TSX, NYSE - HBM 2024 No. 2

Dividend Declared

A semi-annual dividend of C$0.01 per share was declared on February 22, 2024. The dividend will be paid out on March 22, 2024 to shareholders of record as of March 5, 2024.

Website Links

Hudbay:

www.hudbay.com

Management's Discussion and Analysis:

https://www.hudbayminerals.com/MDA0224

Financial Statements:

https://www.hudbayminerals.com/FS0224

Conference Call and Webcast

Date:	Friday, February 23, 2024
Time:	11:00 a.m. ET
Webcast:	www.hudbay.com
Dial in:	1-416-764-8650 or 1-888-664-6383 RapidConnect

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TSX, NYSE - HBM 2024 No. 2

Qualified Person and NI 43-101

The technical and scientific information in this news release related to the company's material mineral projects has been approved by Olivier Tavchandjian, P. Geo, Senior Vice President, Exploration and Technical Services. Mr. Tavchandjian is a qualified person pursuant to National Instrument 43-101 - Standards of Disclosure for Mineral Projects ("NI 43-101").

For a description of the key assumptions, parameters and methods used to estimate mineral reserves and resources at Hudbay's material properties, as well as data verification procedures and a general discussion of the extent to which the estimates of scientific and technical information may be affected by any known environmental, permitting, legal title, taxation, 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.sedarplus.ca and EDGAR at www.sec.gov.

Non-IFRS Financial Performance Measures

Adjusted net earnings (loss), adjusted net earnings (loss) per share, adjusted EBITDA, net debt, cash cost, sustaining and all-in sustaining cash cost per pound of copper produced, cash cost and sustaining cash cost per ounce of gold produced, combined unit costs and ratios based on these measures are non-IFRS performance measures. 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.

Management believes adjusted net earnings (loss) and adjusted net earnings (loss) per share provides an alternate measure of the company's performance for the current period and gives insight into its expected performance in future periods. These measures are used internally by the company to evaluate the performance of its underlying operations and to assist with its planning and forecasting of future operating results. As such, the company believes these measures are useful to investors in assessing the company's underlying performance. Hudbay provides adjusted EBITDA to help users analyze the company's results and to provide additional information about its ongoing cash generating potential in order to assess its capacity to service and repay debt, carry out investments and cover working capital needs. Net debt is shown because it is a performance measure used by the company to assess its financial position. Net debt to adjusted EBITDA is shown because it is a performance measure used by the company to assess its financial leverage and debt capacity. Cash cost, sustaining 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 its operations, including the margin generated by the operations and the company. Cash cost and sustaining cash cost per ounce of gold produced are shown because the company believes they help investors and management assess the performance of its Manitoba operations. Combined unit cost is shown because Hudbay believes it helps investors and management assess the company's cost structure and margins that are not impacted by variability in by-product commodity prices.

The following tables provide detailed reconciliations to the most comparable IFRS measures.

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TSX, NYSE - HBM 2024 No. 2

Adjusted Net Earnings (Loss) Reconciliation

	Three Months Ended
(in $ millions)	Dec. 31, 2023		Sep. 30, 2023		Dec. 31, 2022
Profit (loss) for the period	33.5		45.5		(17.4	)
Tax expense	47.5		38.7		3.1
Profit (loss) before tax	81.0		84.2		(14.3	)
Adjusting items:
Mark-to-market adjustments 1	12.7		1.3		10.7
Foreign exchange (gain) loss	4.2		(0.6	)	0.2
Inventory adjustments	1.4		-		-
Premium paid on redemption of notes	2.2		-		-
Re-evaluation adjustment - environmental provision3	34.0		(32.4	)	13.5
Acquisition related costs	-		0.1		-
Evaluation expenses	-		-		0.1
Insurance recovery	(4.2	)	-		-
Value-added-tax recovery	(3.9	)	-		-
Write off fair value of the Copper Mountain Bonds	(1.0	)	-		-
Restructuring charges 2	0.6		2.3		1.0
Loss on disposal of investments	-		-		0.5
Post-employment plan curtailment	-		-		(2.4	)
Loss on disposal of plant and equipment and non-current assets	6.6		-		0.4
Changes in other provisions (non-capital) 4	-		-		5.8
Adjusted earnings (loss) before income taxes	134.1		54.9		15.5
Tax expense	(47.5	)	(38.7	)	(3.1	)
Tax impact on adjusting items	(14.8	)	8.2		(9.8	)
Adjusted net earnings	71.3		24.4		2.6
Adjusted net earnings ($/share)	0.20		0.07		0.01
Basic weighted average number of common shares outstanding (millions)	349.1		346.7		262.0

¹ Includes changes in fair value of the gold prepayment liability, Canadian junior mining investments, other financial assets and liabilities at fair value through profit or loss and share-based compensation expenses.

² Includes closure cost for the Flin Flon operations in 2022 and restructuring charges for British Columbia in 2023.

³ Changes from movements to environmental reclamation provisions are primarily related to the Flin Flon operations, which were fully depreciated as of June 30, 2022, as well as other Manitoba and British Columbia non-operating sites.

⁴ Includes changes in other provisions related to corporate restructuring costs and costs which do not pertain to operations.

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TSX, NYSE - HBM 2024 No. 2

	Year Ended
(in $ millions)	Dec. 31, 2023		Dec. 31, 2022
Profit for the period	69.5		70.4
Tax expense	82.3		25.4
Profit before tax	151.8		95.8
Adjusting items:
Mark-to-market adjustments 1	21.4		3.0
Foreign exchange loss (gain)	5.3		(5.4	)
Inventory adjustments	2.3		3.6
Variable consideration adjustment - stream revenue and accretion	(5.0	)	(1.9	)
Premium paid on redemption of notes	2.2		-
Impairment - Arizona	-		95.0
Re-evaluation adjustment - environmental provision3	(11.4	)	(133.5	)
Acquisition related costs	6.9		-
Evaluation expenses	-		7.9
Insurance recovery	(4.2	)	(5.7	)
Value-added-tax recovery	(3.9	)	-
Write off fair value of the Copper Mountain Bonds	(1.0	)	-
Restructuring charges 2	2.9		10.6
Loss on disposal of investments	0.7		3.6
Post-employment plan curtailment	-		(2.4	)
Loss (gain) on disposal of plant and equipment and non-current assets	7.4		(6.3	)
Changes in other provisions (non-capital) 4	-		5.8
Adjusted earnings before income taxes	175.4		70.1
Tax expense	(82.3	)	(25.4	)
Tax impact on adjusting items	(20.6	)	(18.3	)
Adjusted net earnings	72.5		26.4
Adjusted net earnings ($/share)	0.23		0.10
Basic weighted average number of common shares outstanding (millions)	310.8		261.9

¹ Includes changes in fair value of the gold prepayment liability, Canadian junior mining investments, other financial assets and liabilities at fair value through profit or loss and share-based compensation expenses.                           

² Includes closure cost for the Flin Flon operations and restructuring charges for British Columbia in 2023.

³ Changes from movements to environmental reclamation provisions are primarily related to the Flin Flon operations, which were fully depreciated as of June 30, 2023, as well as other Manitoba and British Columbia non-operating sites.                           

⁴ Includes changes in other provisions related to corporate restructuring costs and costs which do not pertain to operations.                           

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TSX, NYSE - HBM 2024 No. 2

Adjusted EBITDA Reconciliation

	Three Months Ended
(in $ millions)	Dec. 31, 2023		Sep. 30, 2023		Dec. 31, 2022
Profit (loss) for the period	33.5		45.5		(17.4	)
Add back:
Tax expense (recovery)	47.5		38.7		3.1
Net finance expense	48.9		30.9		36.7
Other expenses	10.6		8.9		18.5
Depreciation and amortization	121.9		113.8		79.4
Amortization of deferred revenue and variable consideration adjustment	(26.5	)	(16.8	)	(10.4	)
	235.9		221.0		109.9
Adjusting items (pre-tax):
Re-evaluation adjustment - environmental provision	34.0		(32.4	)	13.5
Inventory adjustments	1.4		-		-
Post-employment plan curtailment	-		-		(2.4	)
Share-based compensation expense 1	3.1		2.1		3.7
Adjusted EBITDA	274.4		190.7		124.7

¹ Share-based compensation expenses reflected in cost of sales and selling and administrative expenses.

	Year Ended
(in $ millions)	Dec. 31, 2023		Dec. 31, 2022
Profit (loss) for the period	69.5		70.4
Add back:
Tax expense	82.3		25.4
Net finance expense	145.3		118.5
Other expenses	38.2		32.6
Depreciation and amortization	391.7		337.6
Amortization of deferred revenue and variable consideration adjustment	(77.3	)	(73.2	)
	649.8		511.3
Adjusting items (pre-tax):
Impairment losses	-		95.0
Re-evaluation adjustment - environmental provision	(11.4	)	(133.5	)
Inventory adjustments	2.3		3.6
Post-employment plan curtailment	-		(2.4	)
Share-based compensation expenses 1	7.1		1.9
Adjusted EBITDA	647.8		475.9

¹ Share-based compensation expenses reflected in cost of sales and selling and administrative expenses.

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Net Debt Reconciliation

(in $ thousands)
	Dec. 31, 2023	Sep. 30, 2023	Dec. 31, 2022
Total long-term debt	1,287,536	1,377,443	1,184,162
Less: Cash and cash equivalents	249,794	245,217	225,665
Net debt	1,037,742	1,132,226	958,497
(in $ millions, except net debt to adjusted EBITDA ratio)
Net debt	1,037.7	1,132.2	958.5
Adjusted EBITDA (12 month period)	647.8	498.5	475.9
Net debt to adjusted EBITDA	1.6	2.3	2.0

Trailing Adjusted EBITDA	Three Months Ended								LTM1
(in $ millions)	Sep. 30, 2023		Jun. 30, 2023		Mar. 31, 2023		Sep. 30, 2023
Profit (loss) for the period	45.5		(14.9	)	5.4		(17.4	)	18.6
Add back:
Tax expense (recovery)	38.7		(15.8	)	12.0		3.1		38.0
Net finance expense	30.9		30.5		35.0		36.7		133.1
Other expenses	8.9		13.9		5.0		18.5		46.3
Depreciation and amortization	113.8		88.7		67.4		79.4		349.3
Amortization of deferred revenue and variable consideration adjustment	(16.8	)	(18.1	)	(15.9	)	(10.4	)	(61.2	)
Adjusting items (pre-tax):
Re-evaluation adjustment - environmental provision	(32.4	)	(4.7	)	(8.2	)	13.5		(31.8	)
Inventory adjustments	-		0.9		-		-		0.9
Post-employment plan curtailment	-		-		-		(2.4	)	(2.4	)
Share-based compensation expenses2	2.1		0.7		1.2		3.7		7.7
Adjusted EBITDA	190.7		81.2		101.9		124.7		498.5

¹ LTM (last twelve months) as of September 30, 2023.

² Share-based compensation expense reflected in cost of sales and administrative expenses.

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Copper Cash Cost Reconciliation

Consolidated	Three Months Ended
Net pounds of copper produced1
(in thousands)	Dec. 31, 2023	Sep. 30, 2023	Dec. 31, 2022
Peru	73,209	64,112	59,628
British Columbia2	18,755	20,510	-
Manitoba	8,234	7,893	4,978
Net pounds of copper produced	100,198	92,515	64,606

Consolidated	Year Ended
Net pounds of copper produced1
(in thousands)	Dec. 31, 2023	Dec. 31, 2022
Peru	221,536	197,082
British Columbia2	41,995	-
Manitoba	26,795	32,580
Net pounds of copper produced	290,326	229,662

¹ Contained copper in concentrate.

² Includes 100% of Copper Mountain mine production, Hudbay owns 75% of Copper Mountain mine. As Copper Mountain was acquired on June 20, 2023, there were no comparative 2022 figures.

Consolidated	Three Months Ended
	Dec. 31, 2023				Sep. 30, 2023				Dec. 31, 2022
Cash cost per pound of copper produced	$000s		$/lb		$000s		$/lb		$000s		$/lb
Mining	89,587		0.89		104,547		1.13		79,759		1.23
Milling	90,763		0.91		88,021		0.95		65,591		1.02
G&A	38,937		0.39		36,107		0.39		21,269		0.33
Onsite costs	219,287		2.19		228,675		2.47		166,619		2.58
Treatment & refining	35,665		0.36		32,882		0.36		19,968		0.31
Freight & other	32,273		0.32		26,853		0.29		22,055		0.34
Cash cost, before by-product credits	287,225		2.87		288,410		3.12		208,642		3.23
By-product credits	(271,738	)	(2.71	)	(187,023	)	(2.02	)	(138,990	)	(2.15	)
Cash cost, net of by-product credits	15,487		0.16		101,387		1.10		69,652		1.08

Consolidated	Year Ended
	Dec. 31, 2023				Dec. 31, 2022
Cash cost per pound of copper produced	$000s		$/lb		$000s		$/lb
Mining	332,007		1.14		330,250		1.44
Milling	309,692		1.07		269,055		1.17
Refining (zinc)	-		-		32,755		0.14
G&A	122,574		0.42		125,454		0.55
Onsite costs	764,273		2.63		757,514		3.30
Treatment & refining	113,712		0.39		68,936		0.29
Freight & other	94,668		0.33		79,815		0.35
Cash cost, before by-product credits	972,653		3.35		906,265		3.94
By-product credits	(741,288	)	(2.55	)	(708,334	)	(3.08	)
Cash cost, net of by-product credits	231,365		0.80		197,931		0.86

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TSX, NYSE - HBM 2024 No. 2

Consolidated	Three Months Ended
	Dec. 31, 2023			Sep. 30, 2023			Dec. 31, 2022
Supplementary cash cost information	$000s		$/lb1	$000s		$/lb1	$000s		$/lb1
By-product credits2:
Zinc	18,474		0.18	17,099		0.18	24,744		0.38
Gold3	216,178		2.16	129,954		1.41	76,336		1.18
Silver3	22,698		0.23	16,724		0.18	9,592		0.15
Molybdenum & other	14,388		0.14	23,246		0.25	28,318		0.44
Total by-product credits	271,738		2.71	187,023		2.02	138,990		2.15
Reconciliation to IFRS:
Cash cost, net of by-product credits	15,487			101,387			69,652
By-product credits	271,738			187,023			138,990
Treatment and refining charges	(35,665	)		(32,882	)		(19,968	)
Share-based compensation expense	301			149			490
Inventory adjustments	1,402			-			7
Post employment plan curtailment	-			-			(2,384	)
Change in product inventory	29,326			3,374			(16,425	)
Royalties	1,032			1,253			1,750
Depreciation and amortization4	121,812			113,753			79,408
Cost of sales5	405,433			374,057			251,520

¹ Per pound of copper produced.

² By-product credits are computed as revenue per consolidated financial statements, amortization of deferred revenue and pricing and volume adjustments.

³ Gold and silver by-product credits do not include variable consideration adjustments with respect to stream arrangements. Variable consideration adjustments are cumulative adjustments to gold and silver stream deferred revenue primarily associated with the net change in mineral reserves and resources or amendments to the mine plan that would change the total expected deliverable ounces under the precious metal streaming arrangement. For the three months ended December 31, 2023, September 30, 2023 and December 31, 2022 the variable consideration adjustments amounted to nil.

⁴ Depreciation is based on concentrate sold.

⁵ As per IFRS consolidated financial statements excluding impairment adjustments.

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TSX, NYSE - HBM 2024 No. 2

Consolidated	Year Ended
	Dec. 31, 2023			Dec. 31, 2022
Supplementary cash cost information	$000s		$/lb1	$000s		$/lb1
By-product credits2:
Zinc	74,842		0.26	224,043		0.98
Gold3	525,637		1.80	353,478		1.53
Silver3	68,701		0.24	62,252		0.27
Molybdenum & other	72,108		0.25	68,561		0.30
Total by-product credits	741,288		2.55	708,334		3.08
Reconciliation to IFRS:
Cash cost, net of by-product credits	231,365			197,931
By-product credits	741,288			708,334
Treatment and refining charges	(113,712	)		(68,936	)
Share-based compensation expense	589			420
Inventory adjustments	2,308			3,553
Post employment plan curtailment	-			(2,384	)
Change in product inventory	38,405			(3,125	)
Royalties	5,569			11,144
Depreciation and amortization4	391,657			337,615
Cost of sales5	1,297,469			1,184,552

¹ Per pound of copper produced.

² By-product credits are computed as revenue per consolidated financial statements, including amortization of deferred revenue and pricing and volume adjustments.

³ Gold and silver by-product credits do not include variable consideration adjustments with respect to stream arrangements. Variable consideration adjustments are cumulative adjustments to gold and silver stream deferred revenue primarily associated with the net change in mineral reserves and resources or amendments to the mine plan that would change the total expected deliverable ounces under the precious metal streaming arrangement. For the year ended December 31, 2023 the variable consideration adjustments amounted income of $4,885 (year ended December 31, 2022 - income of $959)

⁴ Depreciation is based on concentrate sold.

⁵ As per IFRS consolidated financial statements, excluding impairment adjustments.

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TSX, NYSE - HBM 2024 No. 2

Peru	Three Months Ended
(in thousands)	Dec. 31, 2023	Sep. 30, 2023	Dec. 31, 2022
Net pounds of copper produced1	73,209	64,112	59,628

¹ Contained copper in concentrate.

Peru	Year Ended
(in thousands)	Dec. 31, 2023	Dec. 31, 2022
Net pounds of copper produced1	221,536	197,082

¹ Contained copper in concentrate.

Peru	Three Months Ended
	Dec. 31, 2023				Sep. 30, 2023				Dec. 31, 2022
Cash cost per pound of copper produced	$000s		$/lb		$000s		$/lb		$000s		$/lb
Mining	30,336		0.41		33,875		0.53		41,647		0.70
Milling	50,199		0.69		46,996		0.73		50,723		0.85
G&A	24,909		0.34		20,912		0.33		14,817		0.25
Onsite costs	105,444		1.44		101,783		1.59		107,187		1.80
Treatment & refining	19,626		0.27		19,143		0.30		11,962		0.20
Freight & other	20,854		0.28		17,040		0.26		15,607		0.26
Cash cost, before by-product credits	145,924		1.99		137,966		2.15		134,756		2.26
By-product credits	(106,227	)	(1.45	)	(84,793	)	(1.32	)	(54,563	)	(0.92	)
Cash cost, net of by-product credits	39,697		0.54		53,173		0.83		80,193		1.34

Peru	Year Ended
	Dec. 31, 2023				Dec. 31, 2022
Cash cost per pound of copper produced	$000s		$/lb		$000s		$/lb
Mining	122,651		0.55		137,546		0.70
Milling	198,062		0.90		195,152		0.99
G&A	77,154		0.35		63,015		0.32
Onsite costs	397,867		1.80		395,713		2.01
Treatment & refining	66,469		0.30		39,587		0.20
Freight & other	62,745		0.28		50,284		0.25
Cash cost, before by-product credits	527,081		2.38		485,584		2.46
By-product credits	(289,112	)	(1.31	)	(173,488	)	(0.88	)
Cash cost, net of by-product credits	237,969		1.07		312,096		1.58

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TSX, NYSE - HBM 2024 No. 2

Peru	Three Months Ended
	Dec. 31, 2023			Sep. 30, 2023			Dec. 31, 2022
Supplementary cash cost information	$000s		$/lb1	$000s		$/lb1	$000s		$/lb1
By-product credits2:
Gold3	77,517		1.05	51,459		0.80	19,934		0.33
Silver3	14,322		0.20	10,088		0.16	7,025		0.12
Molybdenum	14,388		0.20	23,246		0.36	27,604		0.47
Total by-product credits	106,227		1.45	84,793		1.32	54,563		0.92
Reconciliation to IFRS:
Cash cost, net of by-product credits	39,697			53,173			80,193
By-product credits	106,227			84,793			54,563
Treatment and refining charges	(19,626	)		(19,143	)		(11,962	)
Share-based compensation expenses	85			45			95
Change in product inventory	8,048			4,137			(15,685	)
Royalties	1,456			1,015			1,656
Depreciation and amortization4	85,722			80,625			58,256
Cost of sales5	221,609			204,645			167,116

¹ Per pound of copper produced.

² By-product credits are computed as revenue per consolidated financial statements, including amortization of deferred revenue and pricing and volume adjustments.

³ Gold and silver by-product credits do not include variable consideration adjustments with respect to stream arrangements.

⁴ Depreciation is based on concentrate sold.

⁵ As per IFRS consolidated financial statements.

Peru	Year Ended
	Dec. 31, 2023			Dec. 31, 2022
Supplementary cash cost information	$000s		$/lb1	$000s		$/lb1
By-product credits2:
Gold3	169,915		0.77	68,630		0.35
Silver3	47,328		0.21	41,671		0.21
Molybdenum	71,869		0.33	63,187		0.32
Total by-product credits	289,112		1.31	173,488		0.88
Reconciliation to IFRS:
Cash cost, net of by-product credits	237,969			312,096
By-product credits	289,112			173,488
Treatment and refining charges	(66,469	)		(39,587	)
Inventory adjustments	-			(558	)
Share-based compensation expenses	145			77
Change in product inventory	28,128			(31,348	)
Royalties	5,615			5,367
Depreciation and amortization4	275,647			211,043
Cost of sales5	770,147			630,578

¹ Per pound of copper produced.

² By-product credits are computed as revenue per consolidated financial statements, including amortization of deferred revenue and pricing and volume adjustments.

³ Gold and silver by-product credits do not include variable consideration adjustments with respect to stream arrangements.

⁴ Depreciation is based on concentrate sold.

⁵ As per IFRS consolidated financial statements, excluding impairment adjustments.

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TSX, NYSE - HBM 2024 No. 2

British Columbia	Three Months Ended		Year Ended
(in thousands)	Dec. 31, 2023	Sep. 30, 2023	Dec. 31, 2023
Net pounds of copper produced1	18,755	20,510	41,995

¹ Contained copper in concentrate.

British Columbia	Three Months Ended								Year Ended
	Dec. 31, 2023				Sep. 30, 2023				Dec. 31, 2023
Cash cost per pound of copper produced	$000s		$/lb		$000s		$/lb		$000s		$/lb
Mining	19,015		1.01		29,251		1.43		48,266		1.15
Milling	25,218		1.35		24,102		1.17		49,320		1.17
G&A	5,643		0.30		5,050		0.25		10,693		0.25
Onsite costs	49,876		2.66		58,403		2.85		108,279		2.57
Treatment & refining	4,850		0.26		4,905		0.24		9,755		0.23
Freight & other	4,654		0.25		3,693		0.18		8,347		0.20
Cash cost, before by-product credits	59,380		3.17		67,001		3.27		126,381		3.00
By-product credits	(9,286	)	(0.50	)	(12,234	)	(0.60	)	(21,520	)	(0.51	)
Cash cost, net of by-product credits	50,094		2.67		54,767		2.67		104,861		2.49

British Columbia	Three Months Ended						Year Ended
	Dec. 31, 2023			Sep. 30, 2023			Dec. 31, 2023
Supplementary cash cost information	$000s		$/lb	$000s		$/lb	$000s		$/lb
By-product credits2:
Gold	6,876		0.37	10,120		0.50	16,996		0.40
Silver	2,410		0.13	2,114		0.10	4,524		0.11
Total by-product credits	9,286		0.50	12,234		0.60	21,520		0.51
Reconciliation to IFRS:
Cash cost, net of by-product credits	50,094			54,767			104,861
By-product credits	9,286			12,234			21,520
Treatment and refining charges	(4,850	)		(4,905	)		(9,755	)
Change in product inventory	8,469			3			8,472
Royalties	(424	)		237			(187	)
Depreciation and amortization3	5,489			6,255			11,744
Cost of sales4	68,064			68,591			136,655

¹ Per pound of copper produced.

² By-product credits are computed as revenue per consolidated financial statements, including amortization of deferred revenue and pricing and volume adjustments.

³ Depreciation is based on concentrate sold.

⁴ As per consolidated financial statements.

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TSX, NYSE - HBM 2024 No. 2

Sustaining and All-in Sustaining Cash Cost Reconciliation

Consolidated	Three Months Ended
	Dec. 31, 2023		Sep. 30, 2023		Dec. 31, 2022
All-in sustaining cash cost per pound of copper produced	$000s	$/lb	$000s	$/lb	$000s	$/lb
Cash cost, net of by-product credits	15,487	0.15	101,387	1.10	69,652	1.08
Cash sustaining capital expenditures	87,609	0.88	72,193	0.78	60,002	0.92
Capitalized exploration	5,150	0.05	-	-	11,500	0.18
Royalties	1,032	0.01	1,253	0.01	1,750	0.03
Sustaining cash cost, net of by-product credits	109,278	1.09	174,833	1.89	142,904	2.21
Corporate selling and administrative expenses & regional costs	12,727	0.13	10,971	0.12	11,876	0.19
Accretion and amortization of decommissioning and community agreements1	8,967	0.09	3,309	0.03	722	0.01
All-in sustaining cash cost, net of by-product credits	130,972	1.31	189,113	2.04	155,502	2.41
Reconciliation to property, plant and equipment additions:
Property, plant and equipment additions	53,680		77,454		76,933
Capitalized stripping net additions	41,221		21,762		15,169
Total accrued capital additions	94,901		99,216		92,102
Less other non-sustaining capital costs2	19,945		37,968		41,850
Total sustaining capital costs	74,956		61,248		50,252
Capitalized lease cash payments - operating sites	8,708		7,199		5,848
Community agreement cash payments	2,274		1,953		2,854
Accretion and amortization of decommissioning and restoration obligations3	1,671		1,793		1,048
Cash sustaining capital expenditures	87,679		72,193		60,002

¹ Includes accretion of decommissioning relating to non-productive sites, and accretion and amortization of current community agreements.

² Other non-sustaining capital costs include Arizona capitalized costs, capitalized interest, capitalized exploration and growth capital expenditures.

³ Includes amortization of decommissioning and restoration PP&E assets and accretion of decommissioning and restoration liabilities related to producing sites.

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TSX, NYSE - HBM 2024 No. 2

Consolidated	Year Ended
	Dec. 31, 2023		Dec. 31, 2022
All-in sustaining cash cost per pound of copper produced	$000s	$/lb	$000s	$/lb
Cash cost, net of by-product credits	231,365	0.80	197,931	0.86
Cash sustaining capital expenditures	255,924	0.88	255,725	1.11
Capitalized exploration	5,150	0.02	11,500	0.05
Royalties	5,569	0.02	11,144	0.05
Sustaining cash cost, net of by-product credits	498,008	1.72	476,300	2.07
Corporate selling and administrative expenses & regional costs	43,516	0.14	38,799	0.17
Accretion and amortization of decommissioning and community agreements1	16,036	0.06	4,416	0.02
All-in sustaining cash cost, net of by-product credits	557,560	1.92	519,515	2.26
Reconciliation to property, plant and equipment additions:
Property, plant and equipment additions	212,261		259,281
Capitalized stripping net additions	111,607		89,262
Total accrued capital additions	323,868		348,543
Less other non-sustaining capital costs2	105,767		147,749
Total sustaining capital costs	218,101		200,794
Capitalized lease cash payments - operating sites	24,983		33,271
Community agreement cash payments	6,706		9,486
Accretion and amortization of decommissioning and restoration obligations3	6,165		12,174
Cash sustaining capital expenditures	255,994		255,725

¹ Includes accretion of decommissioning relating to non-productive sites, and accretion and amortization of current community agreements.

² Other non-sustaining capital costs include Arizona capitalized costs, capitalized interest, capitalized exploration and growth capital expenditures.

³ Includes amortization of decommissioning and restoration PP&E assets and accretion of decommissioning and restoration liabilities related to producing sites.

Peru	Three Months Ended
	Dec. 31, 2023		Sep. 30, 2023			Dec. 31, 2022
Sustaining cash cost per pound of copper produced	$000s	$/lb		$000s	$/lb		$000s	$/lb
Cash cost, net of by-product credits	39,697	0.54		53,173	0.83		80,193	1.34
Cash sustaining capital expenditures	42,351	0.58		42,607	0.66		31,240	0.53
Capitalized exploration1	5,150	0.07		-	-		11,500	0.19
Royalties	1,456	0.02		1,015	0.02		1,656	0.03
Sustaining cash cost per pound of copper produced	88,654	1.21		96,795	1.51		124,589	2.09

¹ Only includes exploration costs incurred for locations near to existing mine operations.

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TSX, NYSE - HBM 2024 No. 2

Peru	Year Ended
	Dec. 31, 2023		Dec. 31, 2022
Sustaining cash cost per pound of copper produced	$000s	$/lb	$000s	$/lb
Cash cost, net of by-product credits	237,969	1.07	312,096	1.58
Cash sustaining capital expenditures	151,947	0.69	133,313	0.68
Capitalized exploration1	5,150	0.02	11,500	0.06
Royalties	5,615	0.03	5,367	0.03
Sustaining cash cost per pound of copper produced	400,681	1.81	462,276	2.35

¹ Only includes exploration costs incurred for locations near to existing mine operations.

British Columbia	Three Months Ended						Year Ended
	Dec. 31, 2023				Sep. 30, 2023		Dec. 31, 2023
Sustaining cash cost per pound of copper produced	$000s		$/lb		$000s	$/lb	$000s		$/lb
Cash cost, net of by-product credits	50,094		2.67		54,767	2.67	104,861		2.49
Royalties	(424	)	(0.02	)	237	0.01	(187	)	-
Cash sustaining capital expenditures	24,063		1.28		14,487	0.71	38,550		0.92
Sustaining cash cost per pound of copper produced	73,733		3.93		69,491	3.39	143,224		3.41

Gold Cash Cost and Sustaining Cash Cost Reconciliation

Manitoba	Three Months Ended
(in thousands)	Dec. 31, 2023	Sep. 30, 2023	Dec. 31, 2022
Net ounces of gold produced1	59,863	56,213	33,060

¹ Contained gold in concentrate and doré.

Manitoba	Year Ended
(in thousands)	Dec. 31, 2023	Dec. 31, 2022
Net ounces of gold produced1	187,363	161,471

¹ Contained gold in concentrate and doré.

Manitoba	Three Months Ended
	Dec. 31, 2023				Sep. 30, 2023				Dec. 31, 2022
Cash cost per ounce of gold produced	$000s		$/oz		$000s		$/oz		$000s		$/oz
Mining	40,236		673		41,421		737		38,112		1,153
Milling	15,346		256		16,923		301		14,868		450
Refining (Zinc)	-		-		-		-		-		-
G&A	8,385		140		10,145		180		6,452		195
Onsite costs	63,967		1,069		68,489		1,218		59,432		1,798
Treatment & refining	11,189		186		8,834		157		8,006		242
Freight & other	6,765		113		6,120		109		6,448		195
Cash cost, before by-product credits	81,921		1,368		83,443		1,484		73,886		2,235
By-product credits	(55,928	)	(934	)	(45,779	)	(814	)	(43,407	)	(1,313	)
Gold cash cost, net of by-product credits	25,993		434		37,664		670		30,479		922

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TSX, NYSE - HBM 2024 No. 2

Manitoba	Year Ended
	Dec. 31, 2023				Dec. 31, 2022
Cash cost per ounce of gold produced	$000s		$/oz		$000s		$/oz
Mining	161,090		860		192,704		1,193
Milling	62,310		333		73,903		458
Refining (zinc)	-		-		32,755		203
G&A	34,727		185		62,439		387
Onsite costs	258,127		1,378		361,801		2,241
Treatment & refining	37,488		200		29,349		181
Freight & other	23,576		126		29,531		183
Cash cost, before by-product credits	319,191		1,704		420,681		2,605
By-product credits	(183,056	)	(977	)	(372,783	)	(2,308	)
Gold cash cost, net of by-product credits	136,135		727		47,898		297

Manitoba	Three Months Ended
	Dec. 31, 2023			Sep. 30, 2023			Dec. 31, 2022
Supplementary cash cost information	$000s		$/oz1	$000s		$/oz1	$000s		$/oz1
By-product credits2:
Copper	31,489		526	24,158		430	15,382		465
Zinc	18,473		308	17,099		304	24,744		748
Silver3	5,966		100	4,522		80	2,567		78
Other	-		-	-		-	714		22
Total by-product credits	55,928		934	45,779		814	43,407		1,313
Reconciliation to IFRS:
Cash cost, net of by-product credits	25,993			37,664			30,479
By-product credits	55,928			45,779			43,407
Treatment and refining charges	(11,189	)		(8,834	)		(8,006	)
Inventory adjustments	1,402			-			7
Share-based compensation expenses	216			104			395
Past service curtailment	-			-			(2,384	)
Change in product inventory	12,809			(766	)		(740	)
Royalties	-			1			94
Depreciation and amortization4	30,601			26,873			21,152
Cost of sales5	115,760			100,821			84,404

¹ Per ounce of gold produced.

² By-product credits are computed as revenue per consolidated financial statements, amortization of deferred revenue and pricing and volume adjustments.

³ Silver by-product credits do not include variable consideration adjustments with respect to stream arrangements.

⁴ Depreciation is based on concentrate sold.

⁵ As per IFRS consolidated financial statements, excluding impairment adjustments.

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TSX, NYSE - HBM 2024 No. 2

Manitoba	Year Ended
	Dec. 31, 2023			Dec. 31, 2022
Supplementary cash cost information	$000s		$/oz1	$000s		$/oz1
By-product credits2:
Copper	91,126		487	122,785		760
Zinc	74,842		399	224,043		1,388
Silver3	16,849		90	20,581		127
Other	239		1	5,374		33
Total by-product credits	183,056		977	372,783		2,308
Reconciliation to IFRS:
Cash cost, net of by-product credits	136,135			47,898
By-product credits	183,056			372,783
Treatment and refining charges	(37,488	)		(29,349	)
Inventory adjustments	2,308			4,111
Share-based compensation expenses	444			343
Past service curtailment	-			(2,384	)
Change in product inventory	1,805			28,223
Royalties	141			5,777
Depreciation and amortization4	104,266			126,572
Cost of sales5	390,667			553,974

¹ Per ounce of gold produced.

² By-product credits are computed as revenue per consolidated financial statements, amortization of deferred revenue and pricing and volume adjustments.

³ Silver by-product credits do not include variable consideration adjustments with respect to stream arrangements.

⁴ Depreciation is based on concentrate sold.

⁵ As per IFRS consolidated financial statements, excluding impairment adjustments.

Manitoba	Three Months Ended
	Dec. 31, 2023		Sep. 30, 2023		Dec. 31, 2022
Sustaining cash cost per pound of gold produced	$000s	$/oz	$000s	$/oz	$000s	$/oz
Gold cash cost, net of by-product credits	25,993	434	37,664	670	30,479	922
Cash sustaining capital expenditures	21,195	354	15,100	269	28,762	870
Royalties	-	-	1	-	94	3
Sustaining cash cost per pound of gold produced	47,188	788	52,765	939	59,335	1,795

Manitoba		Year Ended
		Dec. 31, 2023	Dec. 31, 2022
Sustaining cash cost per pound of gold produced	$000s	$/oz	$000s	$/oz
Gold cash cost, net of by-product credits	136,135	727	47,898	297
Cash sustaining capital expenditures	65,427	349	122,412	758
Royalties	141	1	5,777	36
Sustaining cash cost per pound of gold produced	201,703	1,077	176,087	1,091

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Combined Unit Cost Reconciliation

Peru	Three Months Ended
(in thousands except ore tonnes milled and unit cost per tonne)
Combined unit cost per tonne processed	Dec. 31, 2023		Sep. 30, 2023		Dec. 31, 2022
Mining	30,336		33,875		41,647
Milling	50,199		46,996		50,723
G&A1	24,909		20,912		14,817
Other G&A2	(8,303	)	(5,440	)	(152	)
	97,141		96,343		107,035
Less: Covid related costs	-		-		689
Unit cost	97,141		96,343		106,346
Tonnes ore milled	7,939		7,895		7,796
Combined unit cost per tonne	12.24		12.20		13.64
Reconciliation to IFRS:
Unit cost	97,141		96,343		106,346
Freight & other	20,854		17,040		15,607
Covid related costs	-		-		689
Other G&A	8,303		5,440		152
Share-based compensation expenses	85		45		95
Change in product inventory	8,048		4,137		(15,685	)
Royalties	1,456		1,015		1,656
Depreciation and amortization	85,722		80,625		58,256
Cost of sales3	221,609		204,645		167,116

¹ G&A as per cash cost reconciliation above.

² Other G&A primarily includes profit sharing costs.

³ As per IFRS consolidated financial statements, excluding impairment adjustments.

Peru	Year Ended
(in thousands except ore tonnes milled and unit cost per tonne)
Combined unit cost per tonne processed	Dec. 31, 2023		Dec. 31, 2022
Mining	122,651		137,546
Milling	198,062		195,152
G&A1	77,154		63,015
Other G&A2	(14,824	)	(414	)
	383,043		395,299
Less: Covid related costs	-		5,214
Unit cost	383,043		390,085
Tonnes ore milled	30,721		30,522
Combined unit cost per tonne	12.47		12.78
Reconciliation to IFRS:
Unit cost	383,043		390,085
Freight & other	62,745		50,284
Covid related costs	-		5,214
Other G&A	14,824		414
Share-based compensation expenses	145		77
Inventory adjustments	-		(558	)
Change in product inventory	28,128		(31,348	)
Royalties	5,615		5,367
Depreciation and amortization	275,647		211,043
Cost of sales3	770,147		630,578

¹ G&A as per cash cost reconciliation above.

² Other G&A primarily includes profit sharing costs.

³ As per IFRS consolidated financial statements, excluding impairment adjustments.

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British Columbia	Three Months Ended			Year Ended
(in thousands except unit cost per tonne)
Combined unit cost per tonne processed	Dec. 31, 2023		Sep. 30, 2023	Dec. 31, 2023
Mining	19,015		29,251	48,266
Milling	25,218		24,102	49,320
G&A1	5,643		5,050	10,693
Unit cost	49,876		58,403	108,279
USD/CAD implicit exchange rate	1.37		1.35	1.36
Unit cost - C$	68,168		78,566	146,734
Tonnes ore milled	3,262		3,158	6,862
Combined unit cost per tonne - C$	20.90		24.88	21.38
Reconciliation to IFRS:
Unit cost	49,876		58,403	108,279
Freight & other	4,654		3,693	8,347
Change in product inventory	8,469		3	8,472
Royalties	(424	)	237	(187	)
Depreciation and amortization	5,489		6,255	11,744
Cost of sales2	68,064		68,591	136,655

¹ G&A as per cash cost reconciliation above

² Other G&A primarily includes profit sharing costs.

³ As per consolidated financial statements.

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Manitoba	Three Months Ended
(in thousands except tonnes ore milled and unit cost per tonne)
Combined unit cost per tonne processed	Dec. 31, 2023		Sep. 30, 2023		Dec. 31, 2022
Mining	40,236		41,421		38,112
Milling	15,346		16,923		14,868
G&A1	8,385		10,145		6,452
Less: Other G&A related to profit sharing costs	(1,522	)	(3,308	)	1,939
Unit cost	62,445		65,181		61,371
USD/CAD implicit exchange rate	1.36		1.34		1.36
Unit cost - C$	85,013		87,363		83,363
Tonnes ore milled	393,837		402,443		345,492
Combined unit cost per tonne - C$	216		217		241
Reconciliation to IFRS:
Unit cost	62,445		65,181		61,371
Freight & other	6,765		6,120		6,448
Other G&A related to profit sharing	1,522		3,308		(1,939	)
Share-based compensation expenses	216		104		395
Inventory adjustments	1,402		-		7
Past service pension/Curtailment	-		-		(2,384	)
Change in product inventory	12,809		(766	)	(740	)
Royalties	-		1		94
Depreciation and amortization	30,601		26,873		21,152
Cost of sales2	115,760		100,821		84,404

¹ G&A as per cash cost reconciliation above.

² As per IFRS consolidated financial statements, excluding impairment adjustments.

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Manitoba	Year Ended
(in thousands except tonnes ore milled and unit cost per tonne)
Combined unit cost per tonne processed	Dec. 31, 2023		Dec. 31, 2022
Mining	161,090		192,704
Milling	62,310		73,903
G&A1	34,727		62,439
Less: G&A allocated to zinc metal production and other areas	-		(6,523	)
Less: Other G&A related to profit sharing costs	(6,650	)	(20,075	)
Unit cost	251,477		302,448
USD/CAD implicit exchange rate	1.35		1.30
Unit cost - C$	339,229		391,782
Tonnes ore milled	1,562,479		2,008,251
Combined unit cost per tonne - C$	217		195
Reconciliation to IFRS:
Unit cost	251,477		302,448
Freight & other	23,576		29,531
Refined zinc	-		32,755
G&A allocated to zinc metal production	-		6,523
Other G&A related to profit sharing	6,650		20,075
Share-based compensation expenses	444		343
Inventory adjustments	2,308		4,111
Past service pension/Curtailment	-		(2,384	)
Change in product inventory	1,805		28,223
Royalties	141		5,777
Depreciation and amortization	104,266		126,572
Cost of sales2	390,667		553,974

¹ G&A as per cash cost reconciliation above.

² As per IFRS consolidated financial statements, excluding impairment adjustments.

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Forward-Looking Information

This news release contains 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, statements with respect to the company's production, cost and capital and exploration expenditure guidance, expectations regarding reductions in discretionary spending and capital expenditures, the ability of the company to stabilize and optimize the Copper Mountain mine operation and achieve operating synergies, the fleet production ramp up plan and the accelerated stripping strategies at the Copper Mountain site, the ability of the company to complete business integration activities at the Copper Mountain mine, the estimated timelines and pre-requisites for sanctioning the Copper World project and the pursuit of a potential minority joint venture partner, expectations regarding the permitting requirements for the Copper World project (including expected timing for receipt of such applicable permits), the expected benefits of Manitoba growth initiatives, including the advancement of the development and exploration drift at the 1901 deposit; the anticipated use of proceeds from the flow-through financing completed during the fourth quarter of 2023, the company's future deleveraging strategies and the company's ability to deleverage and repay debt as needed, expectations regarding the company's cash balance and liquidity, the company's ability to increase the mining rate at Lalor, the anticipated benefits from completing the Stall recovery improvement program, expectations regarding the ability to conduct exploration work and execute on exploration programs on its properties and to advance related drill plans, including the advancement of the exploration program at Maria Reyna and Caballito, the ability to continue mining higher-grade ore in the Pampacancha pit and the company's expectations resulting therefrom, expectations regarding the ability for the company to further reduce greenhouse gas emissions, the company's evaluation and assessment of opportunities to reprocess tailings using various metallurgical technologies, expectations regarding the prospective nature of the Maria Reyna and Caballito properties, the anticipated impact of brownfield and greenfield growth projects on the company's performance, anticipated expansion opportunities and extension of mine life in Snow Lake and the ability for Hudbay to find a new anchor deposit near the company's Snow Lake operations, anticipated future drill programs and exploration activities and any results expected therefrom, anticipated mine plans, anticipated metals prices and the anticipated sensitivity of the company's financial performance to metals prices, 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 the company 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 has identified and were applied in drawing conclusions or making forecasts or projections set out in the forward-looking information include, but are not limited to:

• the ability to achieve production, cost and capital and exploration expenditure guidance;
• the ability to achieve discretionary spending reductions without impacting operations;
• no significant interruptions to operations due to social or political unrest in the regions Hudbay operates, including the navigation of the complex political and social environment in Peru;

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• no interruptions to the company's plans for advancing the Copper World project, including with respect to timely receipt of applicable permits;
• the ability for the company to successfully complete the integration and optimization of the Copper Mountain operations, achieve operating synergies and develop and maintain good relations with key stakeholders;
• the ability to execute on its exploration plans, including the potential ramp up of exploration in respect of the Maria Reyna and Caballito properties;
• the ability to advance related drill plans;
• the success of mining, processing, exploration and development activities;
• the scheduled maintenance and availability of the company's processing facilities;
• the accuracy of geological, mining and metallurgical estimates;
• anticipated metals prices and the costs of production;
• the supply and demand for metals the company produces;
• the supply and availability of all forms of energy and fuels at reasonable prices;
• no significant unanticipated operational or technical difficulties;
• the execution of the company's business and growth strategies, including the success of its strategic investments and initiatives;
• the availability of additional financing, if needed;
• the company's ability to deleverage and repay debt as needed;
• the ability to complete project targets on time and on budget and other events that may affect the company's ability to develop its projects;
• the timing and receipt of various regulatory and governmental approvals;
• the availability of personnel for the company's exploration, development and operational projects and ongoing employee relations;
• maintaining good relations with the employees at the company's operations;
• maintaining good relations with the labour unions that represent certain of the company's employees in Manitoba and Peru;
• maintaining good relations with the communities in which the company operates, including the neighbouring Indigenous communities and local governments;
• no significant unanticipated challenges with stakeholders at the company's various projects;
• no significant unanticipated events or changes relating to regulatory, environmental, health and safety matters;
• no contests over title to the company's properties, including as a result of rights or claimed rights of Indigenous peoples or challenges to the validity of the company's unpatented mining claims;
• 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, changes in taxation policies 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 related to the ongoing business integration of Copper Mountain and the process for designing, implementing and maintaining effective internal controls for Copper Mountain, the failure to effectively complete the integration and optimization of the Copper Mountain operations or to achieve anticipated operating synergies, political and social risks in the regions Hudbay operates, including the navigation of the complex political and social environment in Peru, risks generally associated with the mining industry and the current geopolitical environment, including future commodity prices, currency and interest rate fluctuations, energy and consumable prices, supply chain constraints and general cost escalation in the current inflationary environment, risks related to the renegotiation of collective bargaining agreements with the labour unions representing certain of our employees in Manitoba and Peru, uncertainties related to the development and operation of the company's projects, the risk of an indicator of impairment or impairment reversal relating to a material mineral property, risks related to the Copper World project, including in relation to permitting, project delivery and financing risks, risks related to the Lalor mine plan, including the ability to convert inferred mineral resource estimates to higher confidence categories, dependence on key personnel and employee and union relations, risks related to political or social instability, unrest or change, risks in respect of Indigenous and community relations, rights and title claims, operational risks and hazards, including the cost of maintaining and upgrading the company's tailings management facilities and any 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, compliance with government and environmental regulations, including permitting requirements and anti-bribery legislation, depletion of the company's reserves, volatile financial markets and interest rates that may affect the company's ability to obtain additional financing on acceptable terms, 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, the company'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 and under the heading "Financial Risk Management" in the company's most recent management's discussion and analysis, each of which is available on the company's SEDAR+ profile at www.sedarplus.ca and the company's EDGAR profile at www.sec.gov.

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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.

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.

About Hudbay

Hudbay (TSX, NYSE: HBM) is a copper-focused mining company with three long-life operations and a world-class pipeline of copper growth projects in tier-one mining-friendly jurisdictions of Canada, Peru and the United States.

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

The value Hudbay creates and the impact it has is embodied in its purpose statement: "We care about our people, our communities and our planet. Hudbay provides the metals the world needs. We work sustainably, transform lives and create better futures for communities." Hudbay's mission is to create sustainable value and strong returns by leveraging its core strengths in community relations, focused exploration, mine development and efficient operations.

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For further information, please contact:

Candace Brûlé

Vice President, Investor Relations

(416) 814-4387

investor.relations@hudbay.com

____________________

ⁱ Adjusted net earnings (loss) and adjusted net earnings (loss) per share; adjusted EBITDA; cash cost, sustaining cash cost and all-in sustaining cash cost per pound of copper produced, net of by-product credits; cash cost and sustaining cash cost per ounce of gold produced, net of by-product credits; combined unit costs, net debt and any ratios based on these measures are non-IFRS financial performance measures with no standardized definition under IFRS. For further information and a detailed reconciliation, please see the "Non-IFRS Financial Performance Measures" section of this news release.

ⁱⁱ Calculated using the mid-point of the guidance range.

ⁱⁱⁱ Sourced from S&P Global, August 2023.

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