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 November 2012

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 o 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): o

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): o

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 o 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 November 1, 2012, HudBay Minerals Inc. (“Hudbay”) filed on the Canadian Securities Administrators’ System for Electronic Document Analysis and Retrieval (SEDAR) website at www.sedar.com the following documents: (i) Management’s Discussion and Analysis of Results of Operations and Financial Condition for the three and nine months ended September 30, 2012, (ii) Unaudited Condensed Consolidated Interim Financial Statements for the three and nine months ended September 30, 2012, (iii) CEO Certification of Interim Filings, (iv) CFO Certification of Interim Filings, and (v) a press release announcing the quarterly results for the third quarter of 2012.

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

· Exhibit 99.1 — Management’s Discussion and Analysis of Results of Operations and Financial Condition for the three and nine months ended September 30, 2012;

· Exhibit 99.2 — Unaudited Condensed Consolidated Interim Financial Statements for the three and nine months ended September 30, 2012;

· Exhibit 99.3 — CEO Certification of Interim Filings;

· Exhibit 99.4 — CFO Certification of Interim Filings; and

· Exhibit 99.5 — Press release announcing the quarterly results for the third quarter of 2012.

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SIGNATURE

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

HUDBAY MINERALS INC.
(registrant)
By:	/s/ Patrick Donnelly
Name:	Patrick Donnelly
Title:	Vice President, Legal and Corporate Secretary

Date: November 2, 2012

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EXHIBIT INDEX

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

Exhibit	Description
99.1	Management’s Discussion and Analysis of Results of Operations and Financial Condition for the three and nine months ended September 30, 2012
99.2	Unaudited Condensed Consolidated Interim Financial Statements for the three and nine months ended September 30, 2012
99.3	CEO Certification of Interim Filings
99.4	CFO Certification of Interim Filings
99.5	Press release announcing the quarterly results for the third quarter of 2012

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EX-99.1

Exhibit 99.1

HUDBAY MINERALS INC.

Management’s Discussion and Analysis of

Results of Operations and Financial Condition

For the Three and Nine Months Ended

September 30, 2012

November 1, 2012

TABLE OF CONTENTS	Page
Notes to Reader	1
Our Business	4
Highlights	5
Key Financial and Production Results	6
Development and Exploration Update	7
Operations Review	13
Health and Safety	13
Mines	13
Concentrators	15
Metallurgical Facilities	17
Financial Review	19
Liquidity and Capital Resources	27
Trend Analysis and Quarterly Review	32
Non-IFRS Financial Performance Measures	33
Accounting Changes and Critical Estimates	35
Changes in Internal Control over Financial Reporting	35

NOTES TO READER

This Management’s Discussion and Analysis (“MD&A”) dated November 1, 2012 is intended to supplement HudBay Minerals Inc.’s unaudited condensed consolidated interim financial statements and related notes for the three and nine months ended September 30, 2012 (the “consolidated interim financial statements”). The consolidated interim financial statements have been prepared in accordance with International Financial Reporting Standards (“IFRS”), including International Accounting Standard 34 Interim Financial Reporting, as issued by the International Accounting Standards Board.

Additional information regarding HudBay Minerals Inc. is contained in our continuous disclosure materials, including our most recent Annual Information Form (“AIF”), annual MD&A, audited consolidated financial statements, and Management Information Circular, available on SEDAR at www.sedar.com and on EDGAR at www.sec.gov.

All amounts are in Canadian dollars unless otherwise noted.

References to “Hudbay”, the “Company”, “we”, “us”, “our” or similar terms refer to HudBay Minerals Inc. and its direct and indirect subsidiaries. “HBMS” refers to Hudson Bay Mining and Smelting Co., Limited and “Hudbay Peru” refers to HudBay Peru Inc., both wholly-owned subsidiaries of Hudbay. “WPCR” refers to the White Pine Copper Refinery Inc., which was sold during the second quarter of 2011. “Zochem” refers to Zochem Inc., which was sold during the fourth quarter of 2011.

Forward-Looking Information

This MD&A contains “forward-looking statements” and “forward-looking information” (collectively, “forward-looking information”) within the meaning of applicable Canadian and United States securities legislation. All information contained in this MD&A, other than statements of current and historical fact, is forward-looking information. Forward-looking information includes information that relates to, among other things, our objectives, strategies, and intentions and future financial and operating performance and prospects. 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 statement.

Forward-looking information includes, but is not limited to, continued production at our 777 and Lalor mines, continued processing at our Flin Flon concentrator, Snow Lake concentrator and Flin Flon zinc plant, our ability to develop our Lalor, Constancia and Reed projects and the anticipated scope of, cost of and development plans for, these projects, anticipated timing of our projects and events that may affect our projects, our expectation that we will receive the remaining US$250 million deposit payment under the precious metals stream transaction with Silver Wheaton Corp., the anticipated effect of external factors on revenue, such as commodity prices, anticipated exploration and development expenditures and activities and the possible success of such activities, estimation of mineral reserves and resources, mine life projections, timing and amount of estimated future production, reclamation costs, economic outlook, government regulation of mining operations, and business and acquisition strategies.

Forward-looking information is not, and cannot be, a guarantee of future results or events. Forward-looking information is based on, among other things, opinions, assumptions, estimates and analyses that, while considered reasonable by us at the date the forward-looking information is provided, inherently are subject to significant risks, uncertainties, contingencies and other factors that may cause actual results and events to be materially different from those expressed or implied by the forward-looking information. The material factors or assumptions that we identified and were applied by us in drawing conclusions or making forecasts or projections set out in the forward looking information include, but are not limited to:

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

·the accuracy of geological, mining and metallurgical estimates;

·the costs of production;

·the supply and demand for metals we produce;

·the volatility of commodity prices;

·the volatility in foreign exchange rates;

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

·the supply and availability of reagents for our concentrators;

·the availability of third party processing facilities for our concentrate;

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

·the availability of transportation services at reasonable prices;

·no significant unanticipated operational or technical difficulties;

·the availability of financing for our exploration and development projects and activities;

·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 communities in which we operate, including the communities surrounding our Constancia project;

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

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·no significant unanticipated events relating to regulatory, environmental, health and safety matters;

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

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

·any assumptions related to taxes, including, but not limited to current tax laws and regulations; and

·no significant and continuing adverse changes in general economic conditions or conditions in the financial markets.

The risks, uncertainties, contingencies and other factors that may cause actual results to differ materially from those expressed or implied by the forward-looking information may include, but are not limited to, risks generally associated with the mining industry, such as economic factors (including future commodity prices, currency fluctuations and energy prices), uncertainties related to the development and operation of our projects, depletion of our reserves, risks related to political or social unrest or change and those in respect of aboriginal and community relations and title claims, operational risks and hazards, including unanticipated environmental, industrial and geological events and developments and the inability to insure against all risks, failure of plant, equipment, processes, transportation and other infrastructure to operate as anticipated, compliance with government and environmental regulations, including permitting requirements and anti-bribery legislation, dependence on key personnel and employee relations, volatile financial markets that may affect our ability to obtain financing on acceptable terms, 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, as well as the risks discussed under the heading “Liquidity and Capital Resources” in this MD&A and the risks discussed under the heading “Risk Factors” in our most recent Annual Information Form, Form 40-F and MD&A dated August 14, 2012.

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.

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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 differ from the requirements of United States securities laws applicable to U.S. companies.

Information concerning our mineral properties has been prepared in accordance with the requirements of Canadian securities laws, which differ in material respects from the requirements of the SEC Industry Guide 7. Under SEC Industry Guide 7, mineralization may not be classified as a “reserve” unless the determination has been made that the mineralization could be economically and legally produced or extracted at the time of the reserve determination, and the SEC does not recognize the reporting of mineral deposits which do not meet the SEC Industry Guide 7 definition of “Reserve”. In accordance with National Instrument 43-101 - Standards of Disclosure for Mineral Projects (“NI 43-101”) of the Canadian Securities Administrators, the terms “mineral reserve”, “proven mineral reserve”, “probable mineral reserve”, “mineral resource”, “measured mineral resource”, “indicated mineral resource” and “inferred mineral resource” are defined in the Canadian Institute of Mining, Metallurgy and Petroleum (the “CIM”) Definition Standards for Mineral Resources and Mineral Reserves adopted by the CIM Council on December 11, 2005. While the terms “mineral resource”, “measured mineral resource”, “indicated mineral resource” and “inferred mineral resource” are recognized and required by NI 43-101, the SEC does not recognize them. You are cautioned that, except for that portion of mineral resources classified as mineral reserves, mineral resources do not have demonstrated economic value. Inferred mineral resources have a high degree of uncertainty as to their existence and as to whether they can be economically or legally mined. It cannot be assumed that all or any part of an inferred mineral resource will ever be upgraded to a higher category. Therefore, you are cautioned not to assume that all or any part of an inferred mineral resource exists, that it can be economically or legally mined, or that it will ever be upgraded to a higher category. Likewise, you are cautioned not to assume that all or any part of measured or indicated mineral resources will ever be upgraded into mineral reserves. You are urged to consider closely the disclosure on the mining industry technical terms in Schedule A “Glossary of Mining Terms” of our AIF for the fiscal year ended December 31, 2011, available on SEDAR at www.sedar.com and incorporated by reference as Exhibit 99.1 in our Form 40-F filed on EDGAR on April 2, 2012 (File No. 001-34244).

Presentation of Non-IFRS Financial Performance Measures

We use operating cash flow per share and cash costs per pound of copper sold as non-IFRS financial performance measures in our MD&A. For a detailed description of each of the non-IFRS financial performance measures used in this MD&A, please see the discussion under “Non-IFRS Financial Performance Measures” beginning on page 33 of our MD&A.

Qualified Person

The technical and scientific information in this MD&A related to the Constancia project has been approved by Cashel Meagher, P. Geo, our Vice President, South America. The technical and scientific information related to all other sites and projects contained in this MD&A has been approved by Robert Carter, P. Eng, our Director, Technical Services. Messrs. Meagher and Carter are qualified persons pursuant to NI 43-101.

OUR BUSINESS

We are an integrated mining company producing copper concentrate (containing copper, gold and silver) and zinc metal. With assets in North and South America, we are focused on the discovery, production and marketing of base and precious metals. Through our subsidiaries, we own copper/zinc/gold mines, ore concentrators and a zinc production facility in northern Manitoba and Saskatchewan and a copper project in Peru. We also have equity investments in a number of junior exploration companies. Our mission is to create sustainable value through increased commodity exposure on a per share basis for our shareholders. We are governed by the Canada Business Corporations Act and our shares are listed under the symbol “HBM” on the Toronto Stock Exchange and the New York Stock Exchange.

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HIGHLIGHTS

·Production of all metals in concentrate and unit operating costs remain in line with full year guidance.

·Third quarter operating cash flow before stream deposit and change in non-cash working capital decreased to $21.5 million, mainly due to the planned permanent closure of Trout Lake in June 2012 and unusually high sales volumes in the same period of 2011 when excess inventory was drawn down.

·First ore produced at Lalor in the quarter; commercial production from the ventilation shaft expected in the second quarter of 2013.

·US$1.5 billion Constancia copper project commenced full construction with board approval granted in August 2012.

·US$1.25 billion of capital secured through long-term bond financing and precious metals stream to fund development projects.

·Three drills targeting resource expansion at Pampacancha and exploration at Chilloroya.

In the third quarter of 2012, we recorded a loss and loss per share of $6.1 million and $0.03, respectively, compared to a loss of $41.1 million and $0.23, respectively, in the third quarter of 2011.

The loss in the third quarter of 2011 included a loss on disposal of $22.5 million associated with the sale of the Fenix project and an impairment of $5.9 million as a result of the disposal of our Zochem operation. In addition, a significant decline in long-term Canadian risk-free interest rates during the third quarter of 2011 resulted in an increase in the present value of our decommissioning and restoration liabilities and required the recognition of a corresponding deferred tax expense of $7.9 million. We also recorded $19.0 million in deferred tax expense as a result of changes to Peruvian mining tax laws.

The third quarter of 2012 loss was affected by the following significant items, which we do not view as part of our core operations:

	Pre-tax gain (loss)($ millions)		After-tax gain (loss)($ millions)		Per Share($/share)
Impairments and mark-to-market adjustment related to junior mining investments	(3.5	)	(3.5	)	(0.02	)
Transaction costs related to precious metals stream transaction and senior unsecured notes	(3.4	)	(2.5	)	(0.01	)
Foreign exchange losses	(13.5	)	(12.1	)	(0.07	)

Also affecting earnings in the third quarter of 2012 were provisional pricing adjustments which resulted in an increase to our revenue of $5.4 million ($3.3 million after-tax, or $0.02 per share) as a result of the increase in copper, gold and silver prices during the quarter, together with gains of $4.2 million ($3.1 million after-tax, or $0.02 per share) on forward zinc purchase contracts related to fixed price customer sales due to an increase in zinc prices during the quarter.

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Key Financial and Production Results

Financial Condition ($000s)	Sep. 30, 2012	Dec. 31, 2011
Cash and cash equivalents	1,498,981	899,077
Working capital	1,420,646	841,705
Total assets	3,448,967	2,448,820
Equity(1)	1,751,060	1,813,163

		Three Months Ended						Nine Months Ended
Financial Performance ($000s except per share and cash cost amounts)		Sep. 302012			Sep. 302011			Sep. 30,2012			Sep. 30, 2011
Revenue		144,659			212,335			521,555			636,503
Profit before tax		4,960			37,473			28,814			139,212
(Loss) profit from continuing operations		(6,138		)	(16,052		)	(28,608		)	40,910
Basic and diluted loss per share(1)		(0.03		)	(0.23		)	(0.15		)	(1.14		)
Loss for the period		(6,138		)	(41,083		)	(28,608		)	(197,874		)
Operating cash flow before stream deposit and change in non-cash working capital		21,487			64,430			133,187			168,119
Operating cash flow per share (2)		0.12			0.37			0.77			1.01
Cash cost per pound of copper sold (2)		$	0.75		$	0.74		$	0.75		$	0.41
Production (contained metal in concentrate)(3)
Copper	(tonnes)	9,920			14,264			31,426			40,490
Zinc	(tonnes)	20,371			18,160			62,495			54,246
Gold	(troy oz.)	18,496			24,749			65,644			67,551
Silver	(troy oz.)	217,047			233,868			625,563			630,601
Metal Sold
Contained metal in concentrate(4)
Copper	(tonnes)	8,976			15,222			32,781			39,025
Gold	(troy oz.)	9,242			21,784			57,736			62,245
Silver	(troy oz.)	78,920			147,825			476,395			517,197
Refined zinc	(tonnes)	24,247			23,587			73,050			73,946

(1)	Attributable to owners of the Company.
(2)	Operating cash flow per share and cash cost per pound of copper sold are non-IFRS financial performance measures with no standardized definition under IFRS. For further information and a detailed reconciliation, please see page 33 of this MD&A.
(3)	Metal reported in concentrate is prior to refining losses or deductions associated with smelter terms.
(4)	Amounts in 2011 also include minimal amounts of copper cathode and anode, which were sold during the first quarter only.

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DEVELOPMENT AND EXPLORATION UPDATE

Construction Commences at Constancia

On August 8, 2012, our Board of Directors approved a US$1.5 billion investment in our 100% owned Constancia copper project in Peru. The Constancia development schedule contemplates nine quarters of construction, with initial production in late 2014 and full production commencing in the second quarter of 2015.

Of our US$1.5 billion capital construction budget, we have invested approximately US$154 million on the project to September 30, 2012 and have entered into an additional US$321.5 million in commitments for the project.

Front-end engineering and design work at Constancia is complete. The principal beneficiation concession (construction permit) was granted in June 2012 and other required permits are expected in the ordinary course. Site activity to date includes the completion of a 2,100 bed camp, which is scheduled to expand to 3,000 beds by the end of 2012 to accommodate peak construction needs. Mobilization of the EPCM contractor is complete and the plant site earthworks are underway. Our major earthworks contractor has mobilized and is currently constructing the tailings management facility, haul roads and water diversion infrastructure. We have also awarded a contract for the concrete installation for the plant construction. Geotechnical drilling and sampling is complete. Modeling of updated hydrogeological testing is continuing and an updated model is expected in November 2012. Permits have been received for the final 10 monitoring wells on the north side of the open pit site and drilling will continue through the balance of 2012.

Major long lead items are secured and include mills, crushers, flotation cells, pumps, regrind mills and mine equipment, including trucks, shovels and drills. Bids have been received from multiple electrical power providers and the costs and availability are expected to fall within operating cost budget assumptions. In addition, a contract was executed for the construction of the 70 kilometre power transmission line from Tintaya. The principal port operator has provided assurances that the concentrate shipments can be accommodated and discussions are currently focused on optimizing the storage and loading methodologies.

In accordance with agreements entered into with local communities, relocation of affected families is underway with the construction of new housing in progress. Construction of homes for the 14 families that are scheduled to be moved from the project site later this year is advancing. The remaining 22 families are scheduled to be relocated during 2013.

The project is on schedule, which currently contemplates that the remaining capital spending on the project will occur over the 2012 - 2014 period as follows:

	(in US$ millions)
Q4 2012	230
2013	900
2014	262
Total estimated future capital spending	1,392
Total spent in Q1 - Q3 2012	154
Total	1,546

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On August 8, 2012, we also announced updated estimates of reserves and resources for Constancia and Pampacancha, as follows:

Constancia Mineral Reserves - August 8, 2012

Category	M (Tonnes)	Cu (%)	Mo (g/t)	Ag (g/t)	Au (g/t)	Cu Eq(1) (%)
Proven	349	0.37	100	3.29	0.043	0.49
Probable	54	0.24	60	2.98	0.035	0.33
Total	403	0.35	96	3.25	0.042	0.47

Pampacancha Mineral Reserves - August 8, 2012

Proven	10	0.54	170	4.20	0.318	0.87
Probable	37	0.46	140	4.56	0.276	0.76
Total	47	0.48	149	4.49	0.285	0.78

(1) Not accounting for recovery

The remaining mineral resources shown in the table below are exclusive of the mineral reserves above:

Constancia Mineral Resources(1),(2) - November 2, 2011

Category	M (Tonnes)	Cu (%)	Mo (g/t)	Ag (g/t)	Au (g/t)	Cu Eq(3) (%)
Measured	119	0.23	62	2.3	0.038	0.31
Indicated	344	0.20	58	2.0	0.034	0.27
Total - Measured and Indicated	463	0.21	59	2.0	0.035	0.28
Inferred	219	0.19	49	1.8	0.032	0.25

Pampacancha Mineral Resources (2),(4) - April 2, 2012

Inferred 4 0.41 103 6.2 0.207 0.67

(1)The Constancia mineral resources reported at a 0.12% copper cut-off

(2) Mineral resources are not mineral reserves, as they have not demonstrated economic viability

(3) Not accounting for recovery

(4) The Pampacancha mineral resources are reported at a 0.20% copper cut-off

For additional information on our Constancia project reserves and resources, please refer to our press release dated August 8, 2012 entitled “Hudbay Begins Construction of Constancia Copper Mine in Peru and Announces Precious Metals Stream Transaction”, available on SEDAR at www.sedar.com and EDGAR at www.sec.gov/edgar.shtml.

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Lalor Starts Production

We have invested approximately $305 million of the $704 million capital construction budget for our wholly owned Lalor project near Snow Lake, Manitoba to September 30, 2012 and have entered into an additional $75.7 million in commitments for the project.

The project is on schedule, which currently contemplates that the remaining capital spending on the project will occur over the 2012 - 2014 period as follows:

	(in $ millions)
Q4 2012	23
2013	162
2014	214
Total estimated future capital spending	399
Total spent in 2010/2011	206
Total spent in Q1 - Q3 2012	99
Total(1)	704

(1) The total project budget does not reflect income tax credits associated with new mine status for income tax purposes, which will be netted against capitalized assets.

During the third quarter of 2012, we commissioned the hoisting system in the main ventilation shaft which is now capable of hoisting 1,400 tonnes of combined ore and waste per day. First ore production from the base metal lens #10 began in August, and to the end of September we had hoisted over 14,000 tonnes of ore. Underground mobile equipment was delivered during the quarter and we are now in the process of commissioning the fleet. The Chisel North workforce has been transitioned to Lalor and has established ore faces on the 810 and 825 metre levels. The contractor is continuing to ramp from the 840 metre level to the 910 metre level and will develop to the 910 metre production shaft station.

The main production shaft is now sunk to approximately 325 metres and is 33% completed. Water bearing seams slowed advance in September; however, the shaft has progressed beyond the level where water seepage occurred and the advance is continuing.

Lalor ore will be processed at the nearby Snow Lake concentrator until completion of the production shaft and new concentrator, which is expected in late 2014. A new copper flotation circuit was installed in the Snow Lake concentrator to maximize copper recoveries from Lalor ore until processing shifts to the new concentrator. The first full year of production from the main production shaft is expected in 2015.

Basic engineering for the new concentrator is ongoing with value engineering reviews and design optimization underway. We have placed orders for the surface crusher and the SAG and ball mills and delivery of these items remains on schedule.

We have submitted an application for an Environmental Act licence for the Lalor mine, which will allow for production from the main production shaft. We expect to submit applications for Environmental Act licences for the new concentrator and tailings facility expansion in the fourth quarter of 2012 and the fourth quarter of 2013, respectively.

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Given the nature of the Lalor project, we expect to refer to two phases of the Lalor project when determining commercial production for accounting purposes. The first phase of the project is expected to include the main ventilation shaft and associated surface and underground workings that will contribute to the production of ore between 2012 and 2014. We expect to achieve commercial production for accounting purposes for the first phase in the second quarter of 2013. The second phase of the project is expected to include the main production shaft and the new Lalor concentrator, and we expect to achieve commercial production for accounting purposes for the second phase in the first half of 2015.

Reed Copper Project Development Progressing on Schedule

During the third quarter, our focus for our 70% owned Reed copper project near Flin Flon, Manitoba was the completion of the portal trench excavation. Of our $72 million capital construction budget for our Reed project, we have invested approximately $16 million on the project to September 30, 2012 and have entered into an additional $13.3 million in commitments for the project.

We have completed the installation of the new office and dry complex, installed power to the ramp and site via onsite diesel generators, poured the foundations for the shop and warehouse, and installed a ventilation fan, silencers and heater at the portal in preparation for ramp development and onset of winter conditions.

Our workforce of development miners, electricians and mechanics are staying at an onsite camp. Necessary materials and mobile equipment for initial ramp development is onsite, and the first portal development round was taken in October. We are in the process of preparing the Environmental Act licence application for the Reed copper project and plan to submit it to the provincial government in the fourth quarter of 2012.

The project is on schedule, which currently contemplates that the remaining capital spending on the project will occur over the 2012 - 2014 period as follows:

	(in $ millions)
Q4 2012	15
2013	32
2014	9
Total estimated future capital spending	56
Total spent in Q1 - Q3 2012	16
Total	72

We expect initial production at the Reed copper project by the fourth quarter of 2013 and full production of approximately 1,300 tonnes per day by the first quarter of 2014.

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Exploration Update

	Nine Months Ended			Annual
	Sep. 30, 2012		Sep 30, 2011	2012
($ millions)(1)	Actual		Actual	Guidance
Manitoba	13		21	31
South America	13		6	13
Other North America	8		10	10
Total exploration expenditures	34		37	54
Capitalized spending	(1	)	—	(5	)
Total exploration expense	33		37	49

(1)Amounts are net of investment tax credits where applicable.

We have scaled back overall generative exploration activities in favour of brownfields targets near the proven reserves at 777, Lalor, and Constancia. At Manitoba, additional investment tax credits were received based on the Lalor new mine tax status. As a result, exploration expenses in Manitoba are expected to decrease by $7.5 million for the full year.

Constancia Exploration Update

Exploration is ongoing at the Constancia project with three diamond drills. Two drills are concentrated on infill drilling and step out drilling at Pampacancha.

The objective of this drilling campaign is to expand the current resource outside the known reserve pit shell. To date, this strategy has yielded positive results including step out drill hole PO-12-120, which intersected 2.03% copper and 0.88 g/t gold over 60.4 metres at a location approximately 50 metres (horizontal distance) to the west of the established resource. Step out drill hole PO-12-110, grading 0.59% copper and 0.33 g/t gold to the east, demonstrates the deposit can also be better defined to the east. Expansion of the known reserves at Pampacancha will provide us with an opportunity to further optimize the mine plan with enhanced grades in the early years of production. Some infill drilling is also being conducted to provide necessary information for mine optimization opportunities.

A third drill has been testing the Chilloroya South skarn target and geophysical anomaly. Favourable geology has been intersected in several drill holes, showing various thicknesses of mineralized skarn. Compilation of this data from exploration program is underway and assays are pending.

A total of 7,372 metres were drilled in the third quarter of 2012 and drilling with three drills is scheduled to continue for the remainder of the year, concentrating on resource expansion and exploration targets.

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Highlights from the drill program at Pampacancha are as follows:

Area	Hole	Length (m)	From (m)	To (m)	Cu (%)	Mo (%)	Au (g/t)	Ag (g/t)	Cu Eq (1) (%)
Pampacancha	PO-12-110	13.90	25.50	39.40	0.59	0.01	0.33	9.17	0.95
	PO-12-111	19.40	124.30	143.70	1.42		0.94	10.25	2.09
	PO-12-112	34.50	4.25	38.75	0.29		0.45	2.31	0.60
		16.90	46.00	62.90	0.37	0.03	0.50	1.35	0.81
		23.30	160.40	183.70	0.38		0.15	6.15	0.57
		18.35	263.30	281.65	0.32		0.06	6.25	0.45
	PO-12-113	17.10	10.00	27.10	0.52	0.03	0.13	4.81	0.77
	PO-12-114	No significant mineralization
	PO-12-115	55.00	55.00	110.00	0.63	0.03	0.25	4.24	0.96
		19.20	271.80	291.00	0.53		0.23	12.59	0.81
	PO-12-116	No significant mineralization
	PO-12-118	No significant mineralization
	PO-12-120	60.40	153.05	213.45	2.03		0.88	13.61	2.70
	Included	48.85	155.00	203.85	2.39		0.90	14.10	3.08

(1) Calculated using commodity prices of US$1,100/oz Au, US$22.00/oz Ag, US$2.75/lb Cu and US$13.00/lb Mo. Copper cut-off reported as 0.2%. Composited intersections are reported as core length and do not represent true width.

For further details, please refer to our November 1, 2012 press release titled “Hudbay Releases Third Quarter 2012 Results”.

12

OPERATIONS REVIEW

Health and Safety

For the three months ended September 30, 2012, we did not experience any lost time accidents (including contractors) compared to 0.3 per 200,000 hours worked in the same period in 2011. Year-to-date, we have recorded a lost time accident frequency of 0.3 compared to 0.2 in 2011.

Mines

		Three Months Ended		Nine Months Ended		Guidance
		Sep. 30	Sep. 30	Sep. 30	Sep. 30
		2012	2011	2012	2011	Annual 2012
777
Ore	tonnes	351,685	366,566	1,125,820	1,109,393	1,553,000
Copper	%	2.31	3.23	2.41	3.18	2.30
Zinc	%	4.29	3.66	4.33	3.60	4.30
Gold	g/tonne	1.89	2.50	2.16	2.30	1.90
Silver	g/tonne	27.10	28.48	26.37	25.68	28.00
Trout Lake
Ore	tonnes	—	123,089	247,867	380,206	230,000
Copper	%	—	1.91	2.03	2.12	1.80
Zinc	%	—	3.00	3.65	3.40	2.30
Gold	g/tonne	—	1.23	2.23	1.13	1.50
Silver	g/tonne	—	13.51	13.65	12.41	7.10
Chisel North Zinc Ore
Ore	tonnes	39,431	40,669	135,810	148,316	108,000
Zinc	%	9.53	10.64	8.78	7.82	7.10
Chisel North Copper Ore
Ore	tonnes	14,454	22,516	50,970	51,083	57,000
Copper	%	1.66	1.40	1.61	1.50	1.60
Zinc	%	2.02	1.98	2.50	2.31	0.90
Gold	g/tonne	2.09	1.70	2.43	2.19	2.10
Silver	g/tonne	20.43	17.57	24.38	22.05	20.60
Lalor
Ore	tonnes	14,367	—	14,367	—	86,000
Copper	%	0.97	—	0.97	—	0.40
Zinc	%	10.76	—	10.76	—	10.10
Gold	g/tonne	2.61	—	2.61	—	1.10
Silver	g/tonne	27.19	—	27.19	—	16.90
Total Mines
Ore	tonnes	419,937	552,840	1,574,834	1,688,998	—
Copper	%	2.05	2.64	2.13	2.63	—
Zinc	%	4.92	3.96	4.61	3.88	—
Gold	g/tonne	1.80	2.06	2.06	1.89	—
Silver	g/tonne	27.10	25.94	25.13	23.14	—

13

			Three Months Ended		Nine Months Ended		Guidance
			Sep. 30	Sep. 30	Sep. 30	Sep. 30
Unit Operating Costs			2012	2011	2012	2011	Annual 2012
Mines
777	$	/tonne	41.63	36.58	40.51	36.20	38-42
Trout Lake	$	/tonne	—	84.53	56.15	90.28	60-74
Chisel North	$	/tonne	64.83	83.95	92.36	85.25	93-114
Total Mines	$	/tonne	44.71	52.67	49.20	54.16

777 Mine

Ore production at our 777 mine for the third quarter of 2012 remained fairly consistent compared to the same period in 2011. Copper, gold and silver grades in the third quarter of 2012 were lower compared with the grades in the third quarter of 2011 by 28%, 24% and 5%, respectively, while zinc grades were higher in the third quarter of 2012 by 17% due to the sequencing of stopes. Operating costs per tonne of ore in the third quarter of 2012 were 14% higher, compared to the same period in 2011, primarily due to reduced volume in 2012 and lower costs experienced in the third quarter of 2011 as a result of eliminating contractor work that was budgeted in 2011.

2012 year-to-date ore production remained fairly consistent compared to the same period in 2011. The copper and gold grades recovered year-to-date were lower by 24% and 6%, respectively, compared to the same period in 2011, while zinc and silver grades were higher by 20% and 3%, respectively, due to sequencing of stopes. Year-to-date operating costs were 12% higher, compared to the same period in 2011, primarily due to scheduled annual increases in labour costs, additional ground support requirements in the first half of 2012 and the timing of maintenance. Full year copper and gold grades are expected to be moderately higher than previous guidance, based on production to date in 2012.

Trout Lake Mine

We closed our Trout Lake mine on June 29, 2012 after more than 30 years of operation and there was no activity in the third quarter. In the first half of the year, ore production at Trout Lake decreased by 35% compared to the same period in 2011 due to the closing of the mine. In addition, copper grades were 4% lower, zinc grades 7% higher, gold grades 97% higher and silver grades 10% higher year-to-date in 2012, compared to the same period in 2011. Operating costs per tonne of ore mined were 38% lower in the first half of 2012, compared to the same period in 2011 as development costs were lower, less ground control work was conducted, fewer consumables were used and fixed cost labour resources were transitioned to the 777 North Project and 777 Mine.

14

Chisel North Mine

Total ore production at Chisel North mine for the third quarter of 2012 was 15% lower than the third quarter in 2011 due to timing and loss of flexibility of available stopes toward the end of the mine life. Operating costs per tonne of ore for the third quarter of 2012 were 23% lower, compared to the third quarter of 2011. The remaining tonnage in this mine was located in pillars in areas that are well developed and the method used to extract the ore was low cost.

Ore production at Chisel North for year-to-date 2012 was 6% lower, compared to the same period in 2011 due to timing of the extraction of the pillars. Year-to-date 2012 zinc ore grades have been 12% higher than the same period in 2011 due to excellent recoveries from the pillars mined in 2012. Operating cost per tonne year-to-date 2012 were 8% higher than the same period in 2011 as development costs are no longer being capitalized.

Production at the Chisel North mine ended on September 30, 2012.

Concentrators

		Three Months Ended		Nine Months Ended		Guidance
		Sep. 30	Sep. 30	Sep. 30	Sep. 30
		2012	2011	2012	2011	Annual 2012
Flin Flon Concentrator
Ore	tonnes	458,959	534,222	1,457,723	1,515,032	1,840,000
Copper	%	2.33	2.82	2.33	2.84	—
Zinc	%	4.26	3.36	4.15	3.47	—
Gold	g/tonne	2.03	2.10	2.19	1.99	—
Silver	g/tonne	26.95	23.81	24.07	22.08	—
Copper concentrate	tonnes	40,070	58,779	130,881	164,294	—
Concentrate grade	% Cu	24.76	24.27	24.01	24.65	—
Zinc concentrate	tonnes	31,180	28,582	97,873	85,319	—
Concentrate grade	% Zn	52.61	52.05	51.64	51.38	—
Copper recovery	%	92.7	94.7	92.7	94.1	93
Zinc recovery	%	83.9	82.9	83.6	83.4	85
Gold recovery	%	61.9	68.9	64.0	70.1	70
Silver recovery	%	54.6	57.2	55.4	58.7	—
Snow Lake Concentrator
Ore	tonnes	43,498	38,506	139,849	147,173	190,000
Zinc	%	9.31	8.73	8.78	7.35	—
Zinc concentrate	tonnes	7,514	6,327	23,099	20,392	—
Concentrate grade	% Zn	52.80	51.89	51.75	51.05	—
Zinc recovery	%	98.0	97.6	97.4	96.3	95

15

		Three Months Ended		Nine Months Ended		Guidance
		Sep. 30	Sep. 30	Sep. 30	Sep. 30
Unit Operating Costs		2012	2011	2012	2011	Annual 2012
Concentrators
Flin Flon	$ /tonne	13.89	11.23	13.13	12.92	12-15
Snow Lake	$ /tonne	42.19	31.00	36.04	26.78	32-37

		Three Months Ended		Nine Months Ended		Guidance
		Sep. 30	Sep. 30	Sep. 30	Sep. 30
		2012	2011	2012	2011	Annual 2012
Manitoba contained metal in concentrate
Copper	tonnes	9,920	14,264	31,426	40,490	35,000-40,000
Zinc	tonnes	20,371	18,160	62,495	54,246	70,000-85,000
Gold	troy oz.	18,496	24,749	65,644	67,551	—
Silver	troy oz.	217,047	233,868	625,563	630,601	—
Precious metals(1)	troy oz.	22,832	30,180	77,322	82,451	85,000-105,000

(1)Precious metals include gold and silver production. For precious metals production, silver is converted to gold using the average gold and silver realized sales prices during the period. For precious metals guidance, silver is converted to gold at a ratio of 50:1.

Flin Flon Concentrator

For the third quarter of 2012, ore processed decreased 14% compared to the same period in 2011 as a result of the Trout Lake mine closure and reduced ore from Chisel North. Compared to the third quarter of 2011, copper and gold head grades were 17% and 3% lower, respectively, while zinc and silver head grades were 27% and 13% higher, respectively, as a result of normal mine sequencing. Recoveries of copper and zinc to concentrate in the third quarter of 2012 remained fairly consistent compared to the same period in 2011. Recoveries of gold and silver were 10% and 5% lower, respectively, compared to the third quarter of 2011 as a result of supply constraints for reagents. Operating cost per tonne of ore processed in the third quarter of 2012 increased by 24%, largely due to reduced ore tonnage treated in Flin Flon.

Year-to-date 2012, ore processed was 4% lower than the same period in 2011. Copper head grade was 18% lower, while zinc, gold and silver head grades were 20%, 10% and 9% higher, respectively, than the same period in 2011. This was a result of normal mine sequencing. Recoveries of copper and zinc to concentrate year-to-date 2012 remained fairly consistent compared to the same period in 2011. Recoveries of gold and silver were 9% and 5% lower, respectively, compared to the same period in 2011 as a result of supply constraints on collection reagents. Operating costs per tonne of ore processed year-to-date 2012 were 2% higher than the same period in 2011, primarily related to ore throughput reductions as a result of the Trout Lake mine closure.

Full year gold recoveries are expected to be moderately lower than guidance due to reagent supply constraints. However, due to higher expected gold grades and ore volume, full year precious metals production is expected to be in-line with guidance.

16

Snow Lake Concentrator

During the third quarter of 2012, the concentrator treated 13% more tonnes of zinc than in the third quarter of 2011, at a grade 7% higher and a recovery similar to the third quarter of 2011. Operating costs for the third quarter increased 36% from the same period in 2011, consistent with our expectations due to transitional work to process Lalor ore in the future. We are incurring additional manpower and costs related to training in 2012 to prepare for increased concentrator throughput in 2013.

Year-to-date 2012 ore processed was 5% lower in 2012 than the same period in 2011 mainly as a result of the depletion of the Chisel North ore body. The year-to-date 2012 zinc ore head grades were higher by 19%, and zinc recovery to concentrate remained consistent with the same period in 2011. The 2012 year-to-date operating costs of ore processed were 35% higher than the same period in 2011 due to reduced ore throughput, the timing of maintenance work and transitional costs in preparation for processing Lalor ore production. Full year ore milled is expected to be moderately higher than previous guidance based on year-to-date production in 2012.

The rate of overall contained metal in concentrate production in the second half of 2012 is expected to be lower than in the first half of 2012, due to the closure of the Chisel North mine.

Metallurgical Facilities

		Three Months Ended		Nine Months Ended		Guidance
		Sep. 30	Sep. 30	Sep. 30	Sep. 30
Zinc Production		2012	2011	2012	2011	Annual 2012
Zinc Concentrate Treated
Domestic	tonnes	33,903	33,688	102,555	113,449	164,000
Purchased	tonnes	20,172	16,572	39,471	45,909	56,000
Total	tonnes	54,075	50,260	142,026	159,358	220,000
Refined Metal Produced
Domestic	tonnes	17,456	17,282	50,262	54,431	—
Purchased	tonnes	10,920	8,740	20,496	23,364	—
Total	tonnes	28,376	26,022	70,758	77,795	—

		Three Months Ended		Nine Months Ended		Guidance
		Sep. 30	Sep. 30	Sep. 30	Sep. 30
Unit Operating Costs		2012	2011	2012	2011	Annual 2012
Zinc Plant	$/lb. Zn	0.31	0.33	0.37	0.35	0.32-0.37

Zinc Plant

Production of cast zinc in the third quarter of 2012 was 9% higher than the same quarter in 2011, primarily as a result of increased availability of purchased concentrate. Operating costs per pound of zinc metal produced were 6% lower during the third quarter of 2012, compared to the same period in 2011, as a result of the increased unit volume.

For year-to-date 2012, production was 9% lower than in the same period in 2011, resulting from reduced concentrate availability in the first half of 2012. Year-to-date 2012 operating costs per pound were 6% higher than the same period in 2011 as a result of the lower refined metal production in 2012.

Due to the timing of purchased concentrate deliveries, volumes of zinc concentrate treated at the zinc

17

plant are expected to be approximately 5% lower than initial 2012 guidance, although the difference is expected to be available at the end of 2012 as concentrate inventory available for processing in 2013. This change, which also impacts finished zinc production, is not expected to materially affect net earnings or operating cash flow.

Metal Sold

		Three Months Ended		Nine Months Ended
		Sep. 30	Sep. 30	Sep. 30	Sep. 30
		2012	2011	2012	2011(1)
Contained metal in concentrate
Copper	tonnes	8,976	15,222	32,781	39,025
Gold	troy oz.	9,242	21,784	57,736	62,245
Silver	troy oz.	78,920	147,825	476,395	517,197
Refined zinc	tonnes	24,247	23,587	73,050	73,946

(1)Amounts in 2011 also include minimal amounts of copper cathode and anode which were sold during the first quarter only.

18

FINANCIAL REVIEW

Financial Results

In the third quarter of 2012, we recorded a loss of $6.1 million compared to a loss of $41.1 million for the third quarter of 2011. Year-to-date 2012, we recorded a loss of $28.6 million compared to a loss of $197.9 million in the same period in 2011.

Significant variances affecting our results, compared to the same periods in 2011, are as follows:

	Three Months Ended		Nine Months Ended
(in $ millions)	Sep. 30, 2012		Sep. 30, 2012
Increase (decrease) in components of profit or loss:
Revenues	(67.7	)	(114.9	)
Cost of sales
Mine operating costs	39.1		31.4
Depreciation and amortization	12.1		23.5
Impairment loss	5.9		5.9
Selling and administrative expenses	(2.3	)	1.9
Exploration and evaluation	4.9		4.0
Other operating income	0.1		(2.2	)
Other operating expenses	(0.3	)	—
Finance income	(0.8	)	(1.1	)
Finance expenses	(2.7	)	(7.4	)
Other finance losses	(20.7	)	(51.5	)
Tax	42.4		40.9
Increase (decrease) in loss from continuing operations compared to the same period in 2011	10.0		(69.5	)
Change in loss from discontinued operations	25.0		238.8
Decrease in loss for the period	35.0		169.3

The amount of the loss in the third quarter of 2012 decreased by $35.0 million compared to the same period in 2011 primarily as a result of the loss from discontinued operations of $22.5 million that was recorded in the third quarter of 2011 and an impairment of $5.9 million on our Zochem operation, which was subsequently sold in the fourth quarter of 2011. Gross profit was lower in the third quarter of 2012 compared to the same period in 2011 as a result of lower revenues mainly due to lower copper and gold volumes, partially offset by lower cost of sales. For additional details on revenue and cost of sales variances see below. As a result of the lower gross profit, the tax expense was lower in the third quarter of 2012, resulting in a lower loss for the period compared to the third quarter of 2011. In the third quarter of 2012, there was a foreign currency loss of $13.5 million for the quarter as a result of strengthening of the Canadian dollar against the US dollar. Contributing to the higher loss in 2011 was a significant decline in long-term Canadian risk-free interest rates during the third quarter of 2011 which resulted in an increase in the present value of our decommissioning and restoration liabilities and required the recognition of a corresponding deferred tax expense of $7.9 million. During the same quarter we recorded a $19.0 million deferred tax expense as a result of changes to Peruvian mining tax laws.

19

The amount of the 2012 year-to-date loss decreased by $169.3 million, compared to the same period in 2011, primarily as a result of the loss from discontinued operations of $238.8 million recorded in 2011. The gross profit was lower in 2012 as a result of lower revenues partially offset by lower cost of sales. In addition to the lower profit margin, there was an increase in other finance losses of $51.5 million mainly related to impairment losses on available-for-sale investments and foreign exchange losses.

Revenue decreased in the third quarter of 2012

Total revenue for the third quarter of 2012 was $144.6 million; $67.7 million lower than the same quarter in 2011 mainly due to lower sales volumes compared to the third quarter of 2011, when we drew down on unusually high copper concentrate inventory, as well as reduced gold sales volumes in the third quarter of 2012 compared to production volumes.

Year-to-date 2012 revenue was $521.6 million, $114.9 million lower than the same period in 2011 mainly as a result of lower sales volumes, similar to the description above and lower metals prices. The following table provides further details of this variance:

(in $ millions)	Three Months EndedSep. 30,2012		Nine Months EndedSep. 302012
Metal prices(1)
Higher (lower) copper prices	0.8		(32.5	)
Lower zinc prices	(6.4	)	(19.5	)
Higher gold prices	0.1		4.5
Sales volumes
Lower copper sales volumes	(51.4	)	(50.2	)
Higher (lower) zinc sales volumes	1.4		(1.9	)
Lower gold sales volumes	(21.9	)	(7.5	)
Other
Favourable movement in foreign exchange rates	3.3		15.8
Derivative mark-to-market	7.4		8.8
Sales in 2011 of copper bearing material recovered from copper smelter and WPCR after closure	(0.4	)	(16.9	)
Other volume and pricing differences, including loss of premiums on zinc oxide sales after sale of Zochem in November 2011	(6.2	)	(23.7	)
Effect of lower treatment and refining charges	5.6		8.2
Decrease in revenue in 2012 compared to 2011	(67.7	)	(114.9	)

(1) See discussion below for further information regarding metal prices.

20

Our revenue by significant product type is summarized below:

	Three Months Ended				Nine Months Ended
	Sep. 30		Sep. 30		Sep. 30		Sep. 30
(in $ millions)	2012		2011		2012		2011
Copper	73.9		122.7		263.6		337.8
Zinc	54.0		35.1		159.9		117.2
Gold	16.3		37.5		95.7		96.2
Silver	2.7		5.9		14.7		18.9
Zinc Oxide(1)	—		18.4		—		68.9
Other	1.7		2.2		4.9		22.7
Gross revenue	148.6		221.8		538.8		661.7
Less: treatment and refining charges	(4.0	)	(9.5	)	(17.2	)	(25.2	)
Revenue	144.6		212.3		521.6		636.5

(1) As a result of our sale of Zochem during the fourth quarter of 2011, we do not have zinc oxide sales in 2012.

Our realized prices for the third quarter of 2012 and 2011 are summarized below:

			Realized prices(1) for quarter ended			Realized prices(1) for nine months ended
		LME Q3	Sep. 30	Sep. 30	LME YTD	Sep. 30	Sep. 30
		2012(2)	2012	2011	2012 (2)	2012	2011
Prices in US$
Copper	US$/lb.	3.50	3.76	3.75	3.61	3.64	4.02
Zinc(3)	US$/lb.	0.86	0.94	1.06	0.88	0.97	1.08
Gold(4)	US$/troy oz.	1,656	1,757	1,776	1,653	1,645	1,584
Silver(4)	US$/troy oz.	29.91	34.64	41.25	30.65	30.63	37.44
Prices in C$
Copper	C$/lb.	3.48	3.73	3.66	3.62	3.65	3.93
Zinc(3)	C$/lb.	0.85	0.93	1.04	0.88	0.97	1.06
Gold(4)	C$/troy oz.	1,647	1,764	1,732	1,655	1,658	1,546
Silver(4)	C$/troy oz.	29.72	34.69	40.22	30.69	30.79	36.53
Exchange rate	US$1 to C$		0.99	0.98		1.00	0.98

(1)	Realized prices exclude refining and treatment charges and are on the sale of finished metal or metal in concentrate. Realized prices for copper in 2011 reflect an average of prices realized for copper cathode and spent anode sales and sales of contained copper in concentrate. Realized prices for gold and silver in 2011 reflect an average of prices realized for precious metals slimes and spent anode sales and sales of contained gold and silver in concentrate.
(2)	LME average for copper and zinc prices.
(3)	Zinc revenues include unrealized gains and losses related to forward zinc purchase contracts that are not included in the above realized prices. For the quarter, the unrealized components of these derivatives resulted in a gain of US$0.002/lb. for zinc.
(4)	Since August 1, 2012, gold and silver sales have been subject to the precious metals stream transaction with Silver Wheaton, pursuant to which we recognize deferred revenue for precious metals deliveries and also receive cash payments of US$400/oz for gold deliveries and US$5.90/oz for silver deliveries, whereas previously we sold gold and silver from our 777 mine as contained metal within our copper concentrate. No sales pursuant to the stream were completed in the third quarter of 2012.

21

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

Outlook (Refer above to the Forward-Looking Information section on page 2 of this MD&A)

Revenues will continue to be affected by the volume of domestic contained metal production, purchased zinc concentrates and the market prices of copper, zinc, gold and silver, together with fluctuation of the US dollar exchange rate compared to the Canadian dollar. We expect domestic metal production and purchased zinc concentrates to be moderately lower in 2012 than 2011, and average market prices for copper and zinc in 2012 to date have been somewhat lower than average prices in 2011. Revenues in 2012 are also not expected to benefit from a significant drawdown of excess copper concentrate inventory, which contributed to 2011 revenues.

Cost of sales decreased in the third quarter of 2012

	Three Months Ended			Nine Months Ended
	Sep. 30		Sep. 30	Sep. 30		Sep. 30
($000s)	2012		2011	2012		2011
Detailed cost of sales
Mines
777	14,640		13,409	45,605		40,159
Trout Lake	—		10,404	13,918		34,323
Chisel North	3,493		5,304	17,251		16,998
Concentrators
Flin Flon	6,378		6,000	19,142		19,581
Snow Lake	1,835		1,194	5,039		3,942
Metallurgical plants
Zinc plant	19,072		19,205	57,908		59,488
Zochem	—		2,952	—		14,242
Other
Services and site administration	18,741		14,183	56,114		41,243
Purchased concentrate (beforeinventory changes)	19,723		14,578	43,560		41,863
Manitoba employee profit sharing	3,325		4,933	13,663		13,669
Net profits interest	5,255		6,034	13,849		16,467
Distribution	7,266		15,238	30,233		34,303
Other	1,237		1,112	2,781		1,859
Changes in domestic inventory	(14,673	)	893	(5,643	)	(1,763	)
Depreciation and amortization	15,032		27,166	55,145		78,624
Adjustments related to zinc Inventory write-downs	(4,635	)	5,351	(3,130	)	5,351
Asset impairment	—		5,878	—		5,878
Cost of sales, per financial statements	96,689		153,834	365,435		426,227

Total cost of sales for the third quarter of 2012 was $96.7 million, reflecting a decrease of $57.1 million from the third quarter of 2011, mainly due to reduced copper concentrate sales volumes. Costs decreased by $10.4 million as a result of our Trout Lake mine closing on June 30, 2012 and were lower at our Chisel

22

North mine as a result of its planned closure on September 30, 2012. As a result of our sale of Zochem in the fourth quarter of 2011, we no longer incur costs to convert zinc to zinc oxide. In addition, depreciation and amortization expenses were $12.1 million lower than the same period in 2011 as a result of lower sales volumes and lower amortization costs primarily for Trout Lake and Chisel North. This was partially offset by an increase in purchase concentrate expenses of $5.1 million as a result of increased volume purchased as well as an increase of $4.6 million in service and site administration costs, the majority of which resulted from higher past service pension costs associated with the new collective bargaining agreements.

The cost of sales for the year-to-date 2012 was $365.4 million, reflecting a decrease of $60.8 million from the same period in 2011. This was mainly a result of a decrease in costs of $20.4 million at our Trout Lake mine as a result of the mine’s closure on June 30, 2012 and the sale of Zochem which reduced our year-to-date costs by $14.2 million. In addition we recognized lower depreciation and amortization expense in the period as operations at our Trout Lake and Chisel mines have been extended past their original planned closure dates, therefore reducing per tonne amortization. This was partially offset by a $10.3 million increase in service and administration costs, including approximately $10.5 million of past service pension costs associated with new collective agreements.

For details on unit operating costs refer to the respective tables in the Operations Review section beginning on page 13.

For the third quarter of 2012, other significant variances in expenses, compared to the same period in 2011, include the following:

·Selling and administrative expenses increased by $2.3 million compared to the same period in 2011. The increase was primarily due to increased expenses for share units resulting from a higher share price and a greater number of outstanding units compared to the same period in 2011, partially offset by a reduction in share-based payment expense in 2012 resulting from fewer unvested stock options and lower stock option expense.

·Exploration and evaluation expenses decreased by $4.9 million, compared to the same period in 2011, due to a reduction of exploration expenses in Manitoba compared to the same period in prior year. In addition, since we have suspended operations at our Back Forty project in Michigan, there is less exploration activity compared to the same period in prior year. This is partially offset by higher exploration in our South American business unit.

·Finance expenses increased by $2.7 million to $4.5 million in the third quarter of 2012, compared to the same period in 2011, due to financing fees associated with efforts to arrange financing for the Constancia project.

·Other finance losses increased by $20.7 million, compared to the same period in 2011, primarily as a result of:

·impairment losses of $3.7 million recognized on available-for-sale investments in junior mining companies primarily due to poor market conditions, compared to impairment losses of $2.5 million in the third quarter of 2011;

·foreign exchange losses of $13.5 million compared to foreign exchange gains of $7.9 million in the third quarter of 2011. The Canadian dollar strengthened against the US dollar in the third quarter of 2012.

23

For year-to-date 2012, other significant variances in expenses from operations, compared to the same period 2011 include the following:

·Selling and administrative expenses decreased by $1.9 million, totaling $27.9 million year-to-date 2012. The decrease was mainly due to lower stock option expense as no new stock options were being issued. This was partially offset by increased expenses for restricted share units, resulting from a greater number of outstanding units.

·Exploration and evaluation expenses decreased by $4.0 million to $32.6 million year-to-date in 2012 mainly due to a $4.3 million offset from additional investment tax credits recognized as a result of the “New Mine” status for income tax purposes received in the second quarter of 2012 for the Lalor project, in addition to lower costs being incurred at our Back Forty project in Michigan. This is partially offset by higher exploration activities in our South America business unit.

·Other operating income decreased by $2.2 million mainly as a result of a gain recognized on our sale of WPCR during the second quarter of 2011.

·Finance expenses increased by $7.4 million which related mainly to financing fees associated with efforts to arrange financing for the Constancia project.

·Other finance losses increased by $51.5 million mainly as a result of:

·impairment losses of $37.2 million recognized on available-for-sale investments in junior mining companies primarily due to poor market conditions, compared to impairment losses of $3.9 million in the same period of 2011;

·mark-to-market losses of $1.6 million on our portfolio of warrants to purchase shares in junior mining companies, compared to mark-to-market gains of $0.9 million in the same period of 2011;

·recognition of an impairment on non-trade receivables of $2.7 million during the first quarter of 2012; and

·foreign exchange losses of $10.1 million compared to foreign exchange gains of $4.2 million in the same period of 2011. The Canadian dollar strengthened against the US dollar year-to-date in 2012.

24

Tax Expense

Year-to-date 2012, tax expense decreased by $40.9 million compared to the same period in 2011.

	Three Months Ended			Nine Months Ended
	Sep. 30	Sep. 30		Sep. 30		Sep. 30
($000s)	2012	2011		2012		2011
Non-cash - income tax expense (1)	3,471	13,638		42,690		13,879
Non-cash - mining tax expense (1)	899	31,047		8,926		31,750
Total non-cash tax expense	4,370	44,685		51,616		45,629
Estimated current taxes payable - income tax	54	12,333		(16,041	)	35,903
Estimated current taxes payable - mining tax	6,674	(3,493	)	21,847		16,770
Total estimated current taxes payable	6,728	8,840		5,806		52,673
Tax expense	11,098	53,525		57,422		98,302

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

Income Tax Expense

Our effective income tax rate on profit before tax for year-to-date 2012 was approximately 92.5% (year-to-date 2011 - 35.8%). Applying the statutory income tax rate of 26.5% to our profit before taxes of $28.8 million would have resulted in a tax expense of approximately $7.6 million; however we recorded an income tax expense of $26.6 million (year-to-date 2011 - $49.8 million). The significant items causing our effective income tax rate to be different than the 26.5% statutory income tax rate include:

·Losses cause deferred tax assets and a related benefit. Certain of our foreign operations recorded losses of $14.9 million (year-to-date 2011 - $5.8 million) where we have determined that we are not more likely than not to realize the benefit related to the losses; accordingly we have not recorded a deferred tax asset.

·Impairment loss of $37.2 million that was recorded to recognize impairments on available-for-sale investments in junior mining companies primarily due to poor market conditions. These losses cause deductible temporary differences which can result in a deferred tax asset being recognized to the extent of any Canadian accrued gains based on the projected applicable capital gains tax rate of 12.5%. We have not recorded a related deferred tax asset for these deductible temporary differences as there are no Canadian accrued gains on account of capital.

·Increase to our valuation allowance with respect to increases in our temporary differences realized in 2012 year-to-date of $10.0 million (year-to-date 2011 - $8.7 million) that relate to obligations associated with mine closure.

·Increases to our decommissioning and restoration liabilities resulting from a significant decrease in discount rates required us to record a corresponding non-cash increase to property, plant and equipment. We recognized a deferred tax expense of $2.3 million (year-to-date 2011 - $7.9) related to the increase in the property, plant and equipment; however, we did not recognize a deferred tax recovery related to the increase in the decommissioning and restoration liabilities because we determined we are not more likely than not to realize the benefit of the recovery.

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Mining Tax Expense

Applying the Manitoba statutory income tax rate of 17.0% to our profit before taxes for the year-to-date period of $28.8 million would have resulted in a tax expense of approximately $4.9 million; however, we recorded a mining tax expense of $30.8 million (year-to-date 2011 - $48.5 million). Year-to-date, our effective rate for mining taxes was approximately 106.9% (year-to-date 2011 - 34.8%). Effective mining tax rates can vary significantly based on the composition of our earnings and the expected amount of mining taxable profits. Corporate costs and other costs not related to mining operations are not deductible in computing mining profits. A brief description on how mining taxes are calculated in our various business units is discussed below.

Manitoba

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

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

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

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

We have accumulated mining tax pools over the years and recorded the related benefits as future mining tax assets. We estimate that the tax rate that will be applicable when temporary differences reverse will be 17.0%.

Peru

In 2011, the Peruvian government enacted a new mining tax (the “Special Mining Tax”) that is imposed on the mining sector in parallel with the existing royalty regime, which in turn was amended in order to be applied on companies’ operating mining income, rather than sales (the “Modified Royalty”). Both the Special Mining Tax and the Modified Royalty are applied on operating mining income based 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 September 30, 2012 at the tax rate we expect to apply when temporary differences reverse.

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LIQUIDITY AND CAPITAL RESOURCES

Precious Metals Stream Transaction with Silver Wheaton

On September 28, 2012 we closed a precious metals stream transaction with Silver Wheaton and received an upfront deposit payment of US$500 million. We will receive a further US$250 million in deposit payments in two equal installments once US$500 million and US$1 billion, respectively, in capital expenditures have been incurred at our Constancia project. The US$750 million of deposit payments are in respect of (i) 100% of payable gold and silver from our 777 mine until the later of December 31, 2016 and satisfaction of a completion test at Constancia, and thereafter 50% of payable gold and 100% of payable silver, and (ii) 100% of payable silver from the Constancia project. In addition to the deposit payments, for gold and silver delivered, we will receive cash payments equal to the lesser of (i) the market price and (ii) US$400 per ounce (for gold) and US$5.90 per ounce (for silver), subject to 1% annual escalation after three years.

The precious metals stream transaction does not include gold production at Constancia, precious metals production from our Lalor project or our land package in Peru outside of the Constancia and Pampacancha deposits or any other metals or minerals, including copper or zinc, from any of our properties.

For further information on the precious metals stream transaction, refer to note 16 of our September 30, 2012 consolidated interim financial statements.

9.50% Senior Unsecured Notes

On September 13, 2012, we issued US$500 million aggregate principal amount of 9.50% senior unsecured notes (the “Notes”) due October 1, 2020. The Notes were priced at 100 percent of their face value, and yielded proceeds of US$484 million net of directly attributable transaction costs. The Notes have been designated as long-term debt and accounted for initially at fair value and subsequently at amortized cost using the effective interest rate method. Interest is payable on the Notes semi-annually on April 1 and October 1 of each year, beginning on April 1, 2013. As the proceeds will be used to fund the development of Constancia, interest costs will be capitalized to project assets during the construction period of this project. The Notes are fully and unconditionally guaranteed, jointly and severally, on a senior unsecured basis, by substantially all of our existing and future subsidiaries other than our subsidiaries associated with the Constancia project.

The Notes contain certain customary covenants and restrictions for a financing instrument of this type. Although there are no maintenance covenants with respect to our financial performance, there are transaction-based restrictive covenants that limit our ability to incur additional indebtedness in certain circumstances. These restrictions could limit our ability to obtain future debt financing, grow in accordance with our strategy or secure the needed working capital to withstand future downturns in the economy or metals prices. In addition, our ability to make restricted payments, including dividend payments, is subject to our compliance with certain covenants which require either the generation of sufficient net earnings or, in the case of semi-annual dividend payments in an amount not exceeding US$20 million, the maintenance of a ratio of consolidated debt to earnings before interest, tax, depreciation and amortization (“EBITDA”) of 2.50 to 1.00 or less. These restrictions may impair our ability to maintain our semi-annual dividend at its current level or at all.

For further information on the terms of the Notes, refer to note 15 of our September 30, 2012 consolidated interim financial statements.

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Senior Secured Revolving Credit Facility

As a result of completing the precious metals stream transaction with Silver Wheaton, we entered into an amendment to our US$300 million credit facility with a syndicate of lenders. The amendment provides the lenders with security over our assets in Manitoba and Saskatchewan and eliminates the requirement to provide guarantees from our Peruvian business. The credit facility, which matures on November 3, 2014, contains customary covenants for a facility of this type, including the requirement to maintain a ratio of consolidated debt to earnings before EBITDA of 3.0 to 1.0 or less on a trailing 12 month basis, and the maintenance of minimum liquidity of 120% of remaining capital spending on the Lalor project.

As at September 30, 2012, we were in compliance with our covenants under the facility. Also as at September 30, 2012, we had $64.5 million in outstanding letters of credit collateralized by cash and cash equivalents that would have been classified as restricted cash in the absence of the credit facility.

Financial Condition

Financial Condition as at September 30, 2012 compared to December 31, 2011

Cash and cash equivalents increased by $599.9 million from December 31, 2011 to $1,499.0 million as at September 30, 2012. This increase was mainly driven by receiving net proceeds of $475.6 million for the issuance of the Notes and an initial payment of $491.6 million related to the US$750 million precious metals stream transaction. This was partially offset by $329.7 million in capital expenditures primarily relating to our Lalor and Constancia projects, $62.5 million of cash taxes paid and $34.4 million of dividend payments, offset by operating cash flow. We hold our cash and cash equivalents in low-risk, liquid investments with major Canadian financial institutions.

Working capital increased by $578.9 million to $1,420.6 million from December 31, 2011 to September 30, 2012. In addition to the higher cash and cash equivalents position:

·Receivables increased by $21.1 million, due to timing of shipments;

·Taxes receivable, net of taxes payable, increased by $41.6 million as a result of timing of payments and as a result of the “New Mine” status granted for Lalor for income tax purposes which resulted in the recognition of additional ITCs in the tax receivable balance and reduced taxes owing from prior years as a result of accelerated depreciation of prior year tax pools.

·The current portion of other financial liabilities increased by $21.3 million primarily as a result of the Peru community agreements described below;

·Current portion of deferred revenue increased by $81.4 million in relation to the precious metals stream transaction; and

·Assets and associated liabilities held for sale increased by $5.4 million and $21.1 million respectively, as a result of our classification of Balmat as assets held for sale. See note 5 of the consolidated interim financial statements for more information.

In March 2012, we entered into two agreements with communities near the Constancia project in Peru pursuant to which we acquired rights to extract minerals over the useful life of the Constancia project, defined to be a minimum of 15 years. We recognized a liability and a corresponding asset, which have been presented in capital works in progress within property, plant and equipment, together with capitalized costs of the Constancia project. In June 2012, we entered into an additional agreement with one of the communities near the Constancia project, pursuant to we acquired rights to carry out exploration and evaluation activities in the area for a minimum period of three years. We recognized the liability and a corresponding exploration and evaluation expense.

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Cash Flows

The following table summarizes our cash flows for the three and nine months ended September 30, 2012 and September 30, 2011.

	Three Months Ended				Nine Months Ended
	Sep. 30		Sep. 30		Sep. 30		Sep. 30
($000s)	2012		2011		2012		2011
Loss for the period	(6,138	)	(41,083	)	(28,608	)	(197,874	)
Loss from discontinued operations	—		(25,031	)	—		(238,784	)
(Loss) profit from continuing operations	(6,138	)	(16,052	)	(28,608	)	40,910
Tax expense	11,098		53,525		57,422		98,302
Items not affecting cash	24,887		46,901		166,862		119,410
Operating cash flows of discontinued operations	—		(2,058	)	—		(2,126	)
Taxes paid	(8,360	)	(17,886	)	(62,489	)	(88,377	)
Operating cash flows before stream deposit and change in non-cash working capital	21,487		64,430		133,187		168,119
Precious metals stream deposit	491,600		—		491,600		—
Change in non-cash working capital	(12,243	)	14,030		(107,704	)	(15,003	)
Cash (used in) generated by operating activities	500,844		78,460		517,083		153,116
Cash used in investing activities	(162,040	)	56,511		(348,766	)	(152,323	)
Cash generated by (used in) financing activities	454,899		(17,111	)	434,506		(34,438	)
Effect of movement in exchange rates on cash and cash equivalents	(4,783	)	5,519		(2,919	)	3,041
Increase (decrease) in cash and cash equivalents	788,920		123,379		599,904		(30,604	)

Cash Flow from Operating Activities

Operating cash flow before stream deposit and change in non-cash working capital was $21.5 million for the third quarter of 2012, a $42.9 million decrease compared with the same period in 2011 mainly as a result of the lower sales volumes.

Year-to-date 2012 operating cash flows before stream deposit and change in non-cash working capital were $133.2 million, reflecting a decrease of $34.9 million from the same period in 2011 mainly as a result of lower realized prices and the lower sales volumes. Partly offsetting this decrease was a current tax recovery of $18.2 million to reflect the reduction of prior year taxes owing as a result of accelerated depreciation of prior year tax pools related to the New Mine status ruling at our Lalor mine in the second quarter of 2012.

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Cash Flow from Investing and Financing Activities

During the third quarter of 2012, our investing and financing activities generated cash of $292.9 million, driven primarily by proceeds from the issuance of the Notes. Partially offsetting this was capital expenditures of $153.9 million at our various projects, Peruvian sales tax payments of $9.2 million related to capital expenditures and dividend payments of $17.2 million.

Year-to-date 2012, we generated $85.7 million in investing and financing activities primarily driven by the proceeds from the issuance of the Notes. Partially offsetting this was capital expenditures of $329.7 million, dividend payments of $34.4 million, acquisition of investments in junior mining companies of $5.1 million and Peruvian sales tax payments of $18.5 million.

Capital Expenditures

The following summarizes cash additions(1) to capital assets for the periods indicated:

	Three Months Ended			Nine Months Ended
	Sep. 30	Sep. 30		Sep. 30		Sep. 30
(in $ millions)	2012	2011		2012		2011
Plant and Equipment	9.5	7.4		30.2		24.7
Capital Development	4.1	3.3		12.0		12.9
Capitalized Exploration	1.1	5.5		2.8		12.2
Capitalized Fenix Project	—	—		—		7.2
Capitalized Lalor Project	33.2	46.7		93.8		113.6
Capitalized 777 North Expansion	1.6	—		5.3		—
Capitalized Reed Project	9.3	—		15.9		—
Capitalized Peru	64.7	20.0		221.3		24.9
	123.5	82.9		381.3		195.5
Less: capital accruals for the period	30.4	(13.7	)	(51.6	)	(25.4	)
Total	153.9	69.2		329.7		170.1

(1) Excludes non-cash additions such as changes resulting from estimates relating to decommissioning and restoration liabilities and capitalized depreciation.

Our capital expenditures for the three months ended September 30, 2012 were $153.9 million, an increase of $84.7 million, compared to the same period in 2011. The increase is primarily due to increased expenditures at our Constancia and Reed projects, partially offset by lower capitalized costs at our Lalor project.

Our capital expenditures for the nine months ended September 30, 2012 were $159.6 million higher than the same period in 2011, primarily due to increased capitalized expenditures at our Constancia project. In addition capitalized expenditures increased as a result of our Reed project, partially offset by decreased capitalized expenditures at our Lalor project, reduced sustaining capital expenditures and the sale of our Fenix project in the third quarter of 2011.

For the full year, sustaining capital expenditures in Manitoba are expected to be moderately lower than previous guidance due to the deferral of several discretionary projects.

Of the $51.6 million year-to-date capital accruals, $43.8 million related to the Peru Community agreements that will be paid over the life of the mine. The second quarter 2012 accrual was reduced by a payment of $15.9 million related to these agreements.

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	Three Months Ended			Nine Months Ended
	Sep. 30	Sep. 30		Sep. 30		Sep. 30
(in $ millions)	2012	2011		2012		2011
777 Mine	6.7	3.7		20.8		16.2
Trout Lake Mine	—	—		1.2		—
Chisel North Mine	—	0.1		—		0.5
Flin Flon and Snow Lake Concentrators	1.0	0.1		3.2		0.4
Flin Flon and Snow Lake Other	4.3	4.9		10.2		14.2
Zinc Plant	0.9	2.2		7.8		3.3
Other	2.0	—		1.6		5.2
Sustaining capital expenditures	14.9	11.0		44.8		39.8
Lalor Project	33.2	46.7		93.8		113.6
Fenix Project	—	—		—		7.2
Capitalized Peru	64.7	20.0		221.3		24.9
777 North Expansion	1.4	1.8		5.3		6.4
Back Forty Project	—	3.4		0.2		3.6
Reed	9.3	—		15.9		—
Growth capital expenditures	108.6	71.9		336.5		155.7
Less: capital accruals for the period	30.4	(13.7	)	(51.6	)	(25.4	)
Total	153.9	69.2		329.7		170.1

Contractual Obligations and Commitments

As at September 30, 2012, we had outstanding capital commitments of approximately $90.5 million primarily related to our Lalor and Reed projects, of which approximately $26.7 million cannot be terminated by Hudbay; and approximately $318.7 million in Peru, primarily related to our Constancia project, of which approximately $111.9 million cannot be terminated by Hudbay.

Liquidity

As at September 30, 2012, we have $1,847 million in remaining estimated capital costs associated with the Constancia, Lalor and Reed projects and we have total available liquidity of $1,984.5 million, comprising our cash and cash equivalents, US$250 million in deposits to be received from Silver Wheaton and availability under our credit facility of $235.5 million net of outstanding letters of credit. These amounts do not include anticipated cash flow from operations. While we believe that we have sufficient liquidity to satisfy spending requirements to complete our key capital projects and meet our debt service obligations (including obligations under the Notes), to the extent that capital costs are higher than currently forecast, metals prices decline materially from current levels or we have other unanticipated demands on our liquidity, we may need to raise additional financing to complete our capital projects or seek other sources of liquidity such as additional streaming transactions, dispositions of our investments in junior mining companies or reductions in or suspensions of our semi-annual dividend.

Outstanding Share Data

As of October 31, 2012, there were 171,973,287 common shares of Hudbay issued and outstanding. In addition, options for a maximum aggregate of 3,695,665 common shares were outstanding.

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TREND ANALYSIS AND QUARTERLY REVIEW

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

	2012					2011							2010
	Q3		Q2		Q1	Q4	Q3		Q2		Q1		Q4
	($000s)
Revenue	144,659		189,858		187,038	254,314	212,335		246,823		177,345		184,607
(Loss) profit before tax	4,960		(726	)	24,579	69,813	37,474		67,368		34,371		26,594
(Loss) profit from continuing operations	(6,138	)	(30,441	)	7,970	34,286	(16,052	)	41,092		15,870		13,694
Loss from discontinued operations	—		—		—	—	(25,031	)	(212,970	)	(783	)	(5,826	)
(Loss) profit	(6,138	)	(30,441	)	7,970	34,286	(41,080	)	(171,878	)	15,087		7,868
(Loss) earnings per share:
Basic	(0.03	)	(0.17	)	0.05	0.21	(0.23	)	(0.97	)	0.11		0.07
Diluted	(0.03	)	(0.17	)	0.05	0.21	(0.23	)	(0.97	)	0.11		0.07
Operating cash flow per share(1)	0.12		0.38		0.25	0.46	0.37		0.36		0.27		0.23

(1) Operating cash flow per share is a non-IFRS financial performance measure with no standardized definition under IFRS. For further information and a detailed reconciliation, please see page 33 of this MD&A.

In the second and third quarters of 2012 we recorded a loss compared to profits in the first quarter of 2012 and the first and fourth quarters in 2011. The loss in the third quarter was mainly a result of a significant foreign exchange loss and lower gross profit. The loss in the second quarter of 2012 was mainly a result of a $31.0 million impairment on our available-for-sale investments in junior mining companies. The loss in the third quarter of 2011 was mainly a result of higher deferred tax expense of $26.9 million arising from changes in Peruvian mining tax rates and an increase in the present value of decommissioning and restoration obligations as well as a loss of $22.5 million on disposal of the Fenix project. The loss in the second quarter of 2011 was a result of a $212.7 million impairment on the Fenix project which was sold in the third quarter of 2011.

In 2010 our profit was affected by expenditures relating to the Lalor project, as it was in the exploration and evaluation phase; however, effective January 1, 2011, Lalor was considered a development phase project and therefore, the Lalor project costs were capitalized.

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Sales in the last three quarters of 2011 benefited from the drawdown of copper concentrate inventory that had accumulated in late 2010 and early 2011 due to a shortage of available railcars that was subsequently resolved. 2011 revenues also benefited from higher copper and zinc prices and significant drawdown of excess copper concentrate inventory.

Operating cash flow per share was lower in the third quarter of 2012 compared to previous quarters. The second quarter operating cash flows per share benefited from a current tax recovery of $18.2 million to reflect the reduction of prior year taxes owing as a result of accelerated depreciation of prior year tax pools related to the New Mine status ruling at our Lalor mine. Results in 2011 reflected strong metal prices in the first half and the drawdown of excess copper concentrate inventory in the second half.

NON-IFRS FINANCIAL PERFORMANCE MEASURES

Operating cash flow per share and cash costs per pound of copper sold are included in this MD&A because we believe that, in the case of operating cash flow per share, it helps investors to evaluate changes in cash flow while taking into account changes in shares outstanding, and in the case of by-product cash costs, they help investors assess our overall costs of metal production and compare those costs to those of other base metal producers. These measures do not have a meaning prescribed by IFRS and are therefore unlikely to be comparable to similar measures presented by other issuers. These measures should not be considered in isolation or as a substitute for measures prepared in accordance with IFRS and are not necessarily indicative of operating profit or cash flow from operations as determined under IFRS. Other companies may calculate these measures differently.

Operating cash flow per share

The following table presents our calculation of operating cash flow per share for the three and nine months ended September 30, 2012 and September 30, 2011.

	Three Months Ended				Nine Months Ended
($000s except share and per share amounts)	Sep. 30 2012		Sep. 30 2011		Sep. 30 2012		Sep. 30 2011
Operating cash flow before stream deposit and change in non-cash working capital	21,487		64,430		133,187		168,119
Weighted average shares outstanding	171,965,924		171,905,912		171,955,741		166,490,423
Operating cash flow per share	$	0.12	$	0.37	$	0.77	$	1.01

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Cash cost per pound of copper sold

In the current quarter, we have introduced cash costs per pound of copper sold, calculated using the by-product method, as a new non-IFRS measure (see “Non-IFRS Financial Performance Measures” above). This measure replaces our previous disclosure of co-product costs of copper, zinc and gold as the 777 precious metal stream transaction would have significantly changed the allocation of costs among the three metals in a way that would have made the resulting co-product cost calculations less meaningful for investors compared to by-product cash costs, which do not require the allocation of costs.

	Three Months Ended				Nine Months Ended
	Sep. 30		Sep. 30		Sep. 30		Sep. 30
	2012		2011		2012		2011
Cash cost per unit sold
$/lb
Mining, milling, concentrating	1.05		1.15		1.04		1.12
On-site administration and general expenses	0.34		0.24		0.31		0.27
Cost to concentrate	1.39		1.39		1.35		1.39
Treatment and refining	0.13		0.20		0.16		0.20
Freight and distribution	0.29		0.31		0.27		0.28
Other	(0.04	)	0.02		0.01		0.01
Downstream costs	0.38		0.53		0.44		0.49
Net by-product credits	(1.02	)	(1.18	)	(1.04	)	(1.47	)
Cash cost per pound of copper sold	0.75		0.74		0.75		0.41
Reconciliation to Income Statement
($000’s)
Cost of sales - mine operating costs	81,657		120,790		310,290		341,725
Treatment and refining charges	3,973		9,587		17,180		25,242
By-product revenues	(74,724	)	(99,180	)	(275,097	)	(323,940	)
	10,906		31,197		52,373		43,027
Indirect costs(1)
Share based payment	(621	)	91		(872	)	(247	)
Adjustments related to zinc inventory write-downs	4,635		(5,351	)	3,130		(5,351	)
Demolition and rehabilitation	(47	)	(1,130	)	(129	)	(1,779	)
Subtotal - cash costs	14,873		24,807		54,502		35,650
Copper sales (000s lbs)	19,788		33,556		72,269		86,036
Cash cost per pound of copper sold ($/lb)	0.75		0.74		0.75		0.41

(1) Indirect costs in cost of sales - mine operating costs

Our cash cost per pound of copper sold in the third quarter of 2012, was $0.75, compared to $0.74 in the same period in 2011. Mining, milling and concentrating costs per pound of copper sold were lower in the third quarter of 2012 compared to the same period in 2011 as a result of lower mine costs at our Chisel North mine. The remaining tonnage in this mine was located in pillars in areas that were well developed and the method used to extract the ore was low cost. On site administration and general expenses were higher on a per unit basis primarily as a result of decreased units sold. Net by-product credits are lower primarily as a result of timing of the recognition of gold and silver revenue as a result of the precious metals stream transaction with Silver Wheaton.

34

Our cash cost per pound of copper sold year-to-date 2012 was $0.75, compared to $0.41 for the same period in 2011. Mining, milling and concentrating costs per pound of copper sold were lower year-to-date 2012 compared to year-to-date 2011 as a result of lower mine costs at our Chisel North and our Trout Lake mines. At our Trout Lake mine, development costs were lower, and we needed less ground control work, used fewer consumables and transitioned fixed cost labour resources to the 777 North expansion and 777 mine. At our Chisel North mine, the mining method used to extract the ore was lower cost compared to 2011. On site administration and general expenses were higher on a per unit basis primarily as a result of decreased units sold. Net by-product credits were lower primarily due to realized lower zinc prices, the sale of scrap copper-bearing material in the first quarter of 2011, as well as a result of timing of the recognition of gold and silver revenue as a result of the precious metals stream transaction with Silver Wheaton.

ACCOUNTING CHANGES AND CRITICAL ESTIMATES

New standards adopted in 2012

For information on our adoption of new accounting standards, refer to note 3 of our September 30, 2012 condensed consolidated interim financial statements.

New standards and interpretations not yet adopted

For information on new standards and interpretations not yet adopted, refer to note 4 of our September 30, 2012 condensed consolidated interim financial statements.

Estimates and judgments

For information on significant areas requiring us to make estimates and judgments, refer to note 2 of our September 30, 2012 condensed consolidated interim financial statements.

CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING

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

During the first quarter of 2012, our Corporate office began using a new enterprise resource planning (“ERP”) information system that we previously implemented at our Manitoba business unit during the second quarter of 2011. The implementation of the new ERP system followed our project plans, which included a number of typical project controls, such as the testing of data conversion and system reports, user training and user acceptance testing, in order to support ICFR during and after the implementation.

We did not make any other changes to ICFR during the quarter ended September 30, 2012 that materially affected or are reasonably likely to materially affect our ICFR.

35

EX-99.2

Exhibit 99.2

Unaudited Condensed Consolidated Interim Financial Statements

(In Canadian dollars)

HUDBAY MINERALS INC.

For the three and nine months ended September 30, 2012

HUDBAY MINERALS INC.

Condensed Consolidated Interim Balance Sheets

(Unaudited and in thousands of Canadian dollars)

		Sep. 30,			Dec. 31,
	Note	2012			2011
Assets
Current assets
Cash and cash equivalents		$	1,498,981		$	899,077
Trade and other receivables	8	61,366			40,309
Inventories	9	85,771			77,150
Prepaid expenses and other current assets		10,581			13,964
Other financial assets	10	2,453			3,112
Taxes receivable	18d	63,360			4,352
Assets held for sale	5	5,397			—
		1,727,909			1,037,964
Prepaid expenses		1,225			1,227
Inventories	9	5,429			5,721
Receivables	8	23,595			5,212
Other financial assets	10	87,075			102,193
Intangible assets		12,554			11,872
Property, plant and equipment	12	1,510,307			1,203,045
Goodwill		65,978			68,246
Deferred tax assets	18b	14,895			13,340
		$	3,448,967		$	2,448,820
Liabilities
Current liabilities
Trade and other payables		$	153,545		$	163,187
Taxes payable	18d	—			17,413
Other liabilities	13	28,730			14,500
Other financial liabilities	14	22,424			1,159
Deferred revenue	16	81,425			—
Liabilities associated with assets held for sale	5	21,139			—
		307,263			196,259
Long-term debt	15	475,562			—
Other financial liabilities	14	21,953			—
Deferred revenue	16	410,175			—
Provisions	17	137,924			147,304
Other employee benefits		107,918			100,236
Deferred tax liabilities	18b	237,549			189,663
		1,698,344			633,462
Equity
Share capital	19b	1,020,375			1,020,126
Reserves		53,272			55,097
Retained earnings		677,413			737,940
Equity attributable to owners of the Company		1,751,060			1,813,163
Non-controlling interests	22	(437		)	2,195
		1,750,623			1,815,358
		$	3,448,967		$	2,448,820

Commitments and contingencies (note 24)

1

HUDBAY MINERALS INC.

Condensed Consolidated Interim Statements of Cash Flows

(Unaudited and in thousands of Canadian dollars)

		Three months ended						Nine months ended
		September 30						September 30
	Note	2012			2011			2012			2011
Cash generated from (used in) operating activities:
Loss for the period		$	(6,138	)	$	(41,083	)	$	(28,608	)	$	(197,874	)
Loss from discontinued operations (net of taxes)		—			(25,031		)	—			(238,784		)
(Loss) profit from continuing operations		(6,138		)	(16,052		)	(28,608		)	40,910
Tax expense		11,098			53,525			57,422			98,302
Items not affecting cash:
Depreciation and amortization	7b	15,240			27,271			55,749			79,030
Share-based payment expense	7c	2,626			(697		)	3,666			1,871
Net finance costs		3,388			(116		)	7,763			(688		)
Change in fair value of derivatives		(3,228		)	5,626			(1,352		)	5,864
Change in taxes receivable/payable		2,553			9,046			56,683			35,704
Items reclassified from other comprehensive income	21	3,017			2,376			35,290			2,485
Impairment and mark-to-market losses	7e	(146		)	2,067			4,274			2,967
Gain on dispositions		590			(36		)	514			(2,463		)
Other		847			1,364			4,275			(5,360		)
Operating cash flows of discontinued operations		—			(2,058		)	—			(2,126		)
Taxes paid		(8,360		)	(17,886		)	(62,489		)	(88,377		)
Operating cash flows before stream deposit and change in non-cash working capital		21,487			64,430			133,187			168,119
Precious metals stream deposit	16	491,600			—			491,600			—
Change in non-cash working capital	25	(12,243		)	14,030			(107,704		)	(15,003		)
		500,844			78,460			517,083			153,116
Cash generated from (used in) investing activities:
Interest received		1,071			—			4,548			4,464
Proceeds on disposition of assets		—			136,896			—			139,802
Acquisition of property, plant and equipment		(153,650		)	(68,385		)	(328,283		)	(158,106		)
Acquisition of intangible assets		(251		)	(860		)	(1,446		)	(4,781		)
Acquisition of investments		—			(8,650		)	(5,096		)	(40,455		)
Acquisition of subsidiary, net of cash acquired		—			—			—			(94,855		)
Release of (additions to) restricted cash		—			(170		)	—			135
Sale of short-term investments		—			—			—			20,112
Acquisition of non-controlling interests		—			(2,320		)	—			(11,476		)
Investing cash flows of discontinued operations		—			—			—			(7,163		)
Peruvian sales tax paid on capital expenditures		(9,210		)	—			(18,489		)	—
		(162,040		)	56,511			(348,766		)	(152,323		)
Cash generated from (used in) financing activities:
Long-term debt borrowing net of transaction costs	15	475,562			—			475,562			—
Share issue costs		—			—			—			(237		)
Proceeds from exercise of stock options		52			83			170			145
Financing costs		(3,518		)	—			(6,834		)	—
Dividends paid	19b	(17,197		)	(17,194		)	(34,392		)	(34,346		)
		454,899			(17,111		)	434,506			(34,438		)
Effect of movement in exchange rates on cash and cash equivalents		(4,783		)	5,519			(2,919		)	3,041
Net increase (decrease) in cash and cash equivalents		788,920			123,379			599,904			(30,604		)
Cash and cash equivalents, beginning of period		710,061			747,710			899,077			901,693
Cash and cash equivalents, end of period		$	1,498,981		$	871,089		$	1,498,981		$	871,089

For supplemental information, see note 25.

2

HUDBAY MINERALS INC.

Condensed Consolidated Interim Income Statements

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

		Three months ended						Nine months ended
		September 30						September 30
	Note	2012			2011			2012			2011
Revenue	7a	$	144,659		$	212,335		$	521,555		$	636,503
Cost of sales
Mine operating costs		81,657			120,790			310,290			341,725
Depreciation and amortization	7b	15,032			27,166			55,145			78,624
Impairment loss		—			5,878			—			5,878
		96,689			153,834			365,435			426,227
Gross profit		47,970			58,501			156,120			210,276
Selling and administrative expenses		9,847			7,597			27,904			29,776
Exploration and evaluation		9,180			14,054			32,618			36,580
Other operating income	7d	(302		)	(463		)	(823		)	(3,014		)
Other operating expenses	7d	3,849			3,490			8,290			8,333
Results from operating activities		25,396			33,823			88,131			138,601
Finance income	7e	(1,111		)	(1,866		)	(4,977		)	(5,990		)
Finance expenses	7e	4,499			1,836			12,740			5,302
Other finance losses (gains)	7e	17,048			(3,620		)	51,554			77
Net finance expense (income)		20,436			(3,650		)	59,317			(611		)
Profit before tax		4,960			37,473			28,814			139,212
Tax expense	18a	11,098			53,525			57,422			98,302
(Loss) profit from continuing operations		(6,138		)	(16,052		)	(28,608		)	40,910
Loss from discontinued operations (net of taxes)	6	—			(25,031		)	—			(238,784		)
Loss for the period		(6,138		)	(41,083		)	(28,608		)	(197,874		)
Attributable to:
Owners of the Company		(5,655		)	(39,505		)	(26,135		)	(189,628		)
Non-controlling interests		(483		)	(1,578		)	(2,473		)	(8,246		)
Loss for the period		$	(6,138	)	$	(41,083	)	$	(28,608	)	$	(197,874	)
(Loss) earnings per share - basic and diluted (note 20)
Continuing operations		$	(0.03	)	$	(0.08	)	$	(0.15	)	$	0.27
Discontinued operations		—			(0.15		)	—			(1.41		)
Basic and diluted		$	(0.03	)	$	(0.23	)	$	(0.15	)	$	(1.14	)
Weighted average number of common shares outstanding (note 20):
Basic		171,965,924			171,905,912			171,955,741			166,490,423
Diluted		171,965,924			171,905,912			171,955,741			166,490,423

3

HUDBAY MINERALS INC.

Condensed Consolidated Interim Statements of Comprehensive Income

(Unaudited and in thousands of Canadian dollars)

	Three months ended						Nine months ended
	September 30						September 30
	2012			2011			2012			2011
Loss for the period	$	(6,138	)	$	(41,083	)	$	(28,608	)	$	(197,874	)
Other comprehensive income (loss): (note 21)
Recognized directly in equity:
Net exchange (loss) gain on translation of foreign operations	(21,651		)	45,728			(20,364		)	31,349
Effective portion of change in fair value of cash flow hedges	52			3,601			(544		)	6,041
Change in fair value of available-for-sale financial assets	20,397			(34,126		)	(17,513		)	(46,205		)
Tax effect	(14		)	3,232			146			4,054
	(1,216		)	18,435			(38,275		)	(4,761		)
Transferred to income statement:
Net exchange loss on translation of foreign operations	—			20,416			—			20,416
Change in fair value of cash flow hedges	(664		)	(170		)	(1,947		)	(231		)
Impairment of available-for-sale financial assets	3,681			2,546			37,237			2,716
Tax effect	207			(301		)	528			(336		)
	3,224			22,491			35,818			22,565
Other comprehensive income (loss) net of tax, for the period	2,008			40,926			(2,457		)	17,804
Total comprehensive loss for the period	$	(4,130	)	$	(157	)	$	(31,065	)	$	(180,070	)
Attributable to:
Owners of the Company	(3,483		)	1,213			(28,433		)	(172,076		)
Non-controlling interests	(647		)	(1,370		)	(2,632		)	(7,994		)
Total comprehensive loss for the period	$	(4,130	)	$	(157	)	$	(31,065	)	$	(180,070	)

4

HUDBAY MINERALS INC.

Condensed Consolidated Interim Statements of Changes in Equity

(Unaudited and in thousands of Canadian dollars)

	Attributable to owners of the Company
	Share capital			Other capital reserves			Foreign currency translation reserve			Available- for-sale reserve			Hedging reserve			Retainedearnings			Total			Non-controlling  interests			Total equity
Balance, January 1, 2011	$	642,161		$	23,855		$	(14,744	)	$	43,565		$	(1,904	)	$	931,464		$	1,624,397		$	9,422		$	1,633,819
Total comprehensive (loss) income for the period:
Loss	—			—			—			—			—			(189,629		)	(189,629		)	(8,245		)	(197,874		)
Other comprehensive income (loss) (note 21)	—			—			51,513			(38,034		)	4,073			—			17,552			252			17,804
Total comprehensive income (loss)	—			—			51,513			(38,034		)	4,073			(189,629		)	(172,077		)	(7,993		)	(180,070		)
Contributions by and distributions to owners
Shares issued on acquisition	345,119			—			—			—			—			—			345,119			—			345,119
Share issue costs	(239		)	—			—			—			—			—			(239		)	—			(239		)
Share-based payment expense	—			1,700			—			—			—			—			1,700			—			1,700
Stock options exercised	216			(63		)	—			—			—			—			153			—			153
Dividends	—			—			—			—			—			(34,346		)	(34,346		)	—			(34,346		)
Total contributions by and distributions to owners	345,096			1,637			—			—			—			(34,346		)	312,387			—			312,387
Change in ownership interests in subsidiaries that do not result in a loss of control	32,869			—			—			—			—			(5,283		)	27,586			2,362			29,948
Balance, September 30, 2011	1,020,126			25,492			36,769			5,531			2,169			702,206			1,792,293			3,791			1,796,084
Total comprehensive income (loss) for the period:
Income (loss)	—			—			—			—			—			35,734			35,734			(1,448		)	34,286
Other comprehensive (loss) income	—			—			(15,408		)	630			(351		)	—			(15,129		)	(148		)	(15,277		)
Total comprehensive income (loss)	—			—			(15,408		)	630			(351		)	35,734			20,605			(1,596		)	19,009
Contributions by and distributions to owners
Share-based payment expense	—			265			—			—			—			—			265			—			265
Total contributions by and distributions to owners	—			265			—			—			—			—			265			—			265
Balance, December 31, 2011	$	1,020,126		$	25,757		$	21,361		$	6,161		$	1,818		$	737,940		$	1,813,163		$	2,195		$	1,815,358

5

HUDBAY MINERALS INC.

Condensed Consolidated Interim Statements of Changes in Equity

(Unaudited and in thousands of Canadian dollars)

	Attributable to owners of the Company
	Share capital		Other  capital  reserves			Foreign  currency  translation  reserve			Available-for-sale  reserve		Hedging  reserve			Retainedearnings			Total			Non-controlling  interests			Total equity
Balance, January 1, 2012	$	1,020,126	$	25,757		$	21,361		$	6,161	$	1,818		$	737,940		$	1,813,163		$	2,195		$	1,815,358
Total comprehensive income (loss) for the period:
Loss	—		—			—			—		—			(26,135		)	(26,135		)	(2,473		)	(28,608		)
Other comprehensive income (loss) (note 21)	—		—			(20,205		)	19,724		(1,817		)	—			(2,298		)	(159		)	(2,457		)
Total comprehensive income (loss)	—		—			(20,205		)	19,724		(1,817		)	(26,135		)	(28,433		)	(2,632		)	(31,065		)
Contributions by and distributions to owners
Share-based payment expense	—		552			—			—		—			—			552			—			552
Stock options exercised	249		(79		)	—			—		—			—			170			—			170
Dividends	—		—			—			—		—			(34,392		)	(34,392		)	—			(34,392		)
Total contributions by and distributions to owners	249		473			—			—		—			(34,392		)	(33,670		)	—			(33,670		)
Balance, September 30, 2012	$	1,020,375	$	26,230		$	1,156		$	25,885	$	1		$	677,413		$	1,751,060		$	(437	)	$	1,750,623

6

HUDBAY MINERALS INC.

Notes to Unaudited Condensed Consolidated Interim Financial Statements

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

For the three and nine months ended September 30, 2012

1.Reporting entity

HudBay Minerals Inc. (the “Company”) was amalgamated under the Canada Business Corporations Act on August 15, 2011. The address of the Company’s principal executive office is 25 York Street, Suite 800, Toronto, Ontario. The condensed consolidated interim financial statements of the Company for the three and nine months ended September 30, 2012 represent the financial position and results of operations of the Company and its subsidiaries (together referred to as the “Group” or “Hudbay” and individually as “Group entities”).

Significant subsidiaries include Hudson Bay Mining and Smelting Co., Limited (“HBMS”), Hudson Bay Exploration and Development Company Limited (“HBED”), HudBay Marketing and Sales Inc. (“HMS”), HudBay Peru Inc. (“Hudbay Peru”), HudBay Peru S.A.C. and HudBay (BVI) Inc.

Hudbay is an integrated mining company with shares listed under the symbol “HBM” on the Toronto and New York stock exchanges. With assets in North and South America, Hudbay produces copper concentrate (containing copper, gold and silver) and zinc metal, and is focused on the discovery, production and marketing of base and precious metals. Through its subsidiaries, Hudbay owns copper/zinc/gold mines, ore concentrators and a zinc production facility in northern Manitoba and Saskatchewan and a copper mine under construction in Peru. The Group also has investments in a number of exploration companies. Hudbay’s mission is to create sustainable value through increased commodity exposure on a per share basis for its shareholders.

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

2.Basis of preparation

(a)Statement of compliance:

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

The Board of Directors approved these condensed consolidated interim financial statements on November 1, 2012.

(b)Functional and presentation currency:

The Group’s condensed consolidated interim financial statements are presented in Canadian dollars, which is the Company’s functional currency. All values are rounded to the nearest thousand ($000) except where otherwise indicated.

7

HUDBAY MINERALS INC.

Notes to Unaudited Condensed Consolidated Interim Financial Statements

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

For the three and nine months ended September 30, 2012

(c)Use of judgment:

The preparation of the condensed consolidated interim financial statements in conformity with IAS 34 requires the Group to make judgments, apart from those involving estimations, in applying accounting policies that affect reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the condensed consolidated interim financial statements, and reported amounts of revenue and expenses during the reporting period.

Significant areas requiring management judgment include acquisition method accounting; taxes; in-process inventory quantities, inventory cost allocations and inventory valuation; property, plant and equipment, including cost allocations for mine development, mining properties expenditures capitalized, determining when exploration and evaluation assets should be transferred to capital works in progress within property, plant and equipment, and componentization; assessment of impairment, including determination of cash-generating units and assessing for indications of impairment; determining whether assets meet criteria for classification as held for sale; determining the accounting classification of the precious metals stream deposit; recoverability of exploration and evaluation assets, including determination of cash-generating units and assessing for indications of impairment; and determination of functional currency.

(d)Use of estimates:

The preparation of the condensed consolidated interim financial statements in conformity with IAS 34 requires the Group to make 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 condensed consolidated interim financial statements, and reported amounts of revenue and expenses during the reporting period. Actual results may differ from these estimates.

Significant areas requiring management to make estimates and assumptions include estimating mineral reserves and resources; acquisition method accounting; estimates of fair value of financial instruments; taxes; in-process inventory quantities, inventory cost allocations and inventory valuation; property, plant and equipment, including units-of-production depreciation, estimated useful lives and residual values of property, plant and equipment and finite life intangible assets; assessment of impairment, including the determination of recoverable amount; determination of deferred revenue per unit related to the precious metals stream transaction and determination of current portion of deferred revenue; pensions and other employee benefits; decommissioning, restoration and similar liabilities; contingent liabilities; capital commitments; and assaying used to determine revenue.

(e)Correction of immaterial error:

In the course of preparing these consolidated interim financial statements, the Group identified an immaterial error in the consolidated interim statements of comprehensive income for the three and nine months ended September 30, 2011. The comprehensive income attributable to non-controlling interests was previously disclosed as income of $7,994 rather than as a loss of $7,994. As a result, the comprehensive loss attributable to the owners of the Company was overstated by $15,988. The figures were correct as presented in the statements of changes in equity, and the total comprehensive income was correctly disclosed as $180,070. The Group has corrected the error in the current period consolidated interim statements of comprehensive income.

8

HUDBAY MINERALS INC.

Notes to Unaudited Condensed Consolidated Interim Financial Statements

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

For the three and nine months ended September 30, 2012

3.Significant accounting policies

Except as described below, these condensed consolidated interim financial statements reflect the accounting policies applied by the Group in its consolidated financial statements for the year ended December 31, 2011.

As required by the IASB, effective January 1, 2012 the Group adopted the following amendments to IFRS:

Amendments to IAS 12 Deferred Tax: Recovery of Underlying Assets

This amendment introduces an exception to the current measurement principles of deferred tax assets and liabilities arising from investment property measured using the fair value model in accordance with IAS 40 Investment Property. The exception also applies to investment properties acquired in a business combination accounted for in accordance with IFRS 3, Business Combinations assuming the acquirer subsequently measures these assets applying the fair value model. The Group’s adoption of these amendments had no material effect on its consolidated financial statements.

Amendments to IFRS 7 Disclosures — Transfers of Financial Assets

This amendment requires disclosure of information that enables users of financial statements to understand the relationship between transferred financial assets that are not derecognized in their entirety and the associated liabilities and to evaluate the nature of, and risks associated with, the entity’s continuing involvement in derecognized financial assets. The Group’s adoption of this amendment had no material effect on its consolidated financial statements.

4.New standards and interpretations not yet adopted

·IFRS 9 Financial Instruments - this standard replaces the guidance in IAS 39 Financial Instruments: Recognition and Measurement on the classification and measurement of financial assets and financial liabilities. The Group intends to adopt IFRS 9 (2010) in its financial statements for the annual period beginning on January 1, 2015. The Group has not yet determined the effect of adoption of IFRS 9 (2010) on its consolidated financial statements.

·IFRS 10 Consolidated Financial Statements - this standard replaces the guidance in IAS 27 Consolidated and Separate Financial Statements and SIC-12 Consolidation - Special Purpose Entities. IAS 27 (2011) Separate Financial Statements carries forward the existing accounting requirements for separate financial statements and provides a single model to be applied in the control analysis for all investees. The Group intends to adopt IFRS 10 in its financial statements for the annual period beginning on January 1, 2013. The Group does not expect the adoption of IFRS 10 to have a material effect on its consolidated financial statements based on its current facts and circumstances.

9

HUDBAY MINERALS INC.

Notes to Unaudited Condensed Consolidated Interim Financial Statements

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

For the three and nine months ended September 30, 2012

·IFRS 11 Joint Arrangements - this standard replaces the guidance in IAS 31 Interests in Joint Ventures and classifies joint arrangements as either joint operations or joint ventures based on an entity’s rights and obligations. The Group intends to adopt IFRS 11 in its financial statements for the annual period beginning on January 1, 2013. The Group does not expect the adoption of IFRS 11 to have a material effect on its consolidated financial statements based on its current facts and circumstances.

·IFRS 12 Disclosure of Interests in Other Entities - this standard contains disclosure requirements for entities that have interests in subsidiaries, joint arrangements (i.e., joint operations or joint ventures), associates and/or unconsolidated structured entities. The Group intends to adopt IFRS 12 in its financial statements for the annual period beginning on January 1, 2013. The Group will provide additional disclosures as required and does not otherwise expect the adoption of IFRS 12 to have a material effect on its consolidated financial statements.

·IFRS 13 Fair Value Measurement - this standard replaces the fair value measurement guidance contained in individual IFRS with a single source of fair value measurement guidance. The Group intends to adopt IFRS 13 in its financial statements for the annual period beginning on January 1, 2013. The Group has not yet determined the effect of adoption of IFRS 13 on its consolidated financial statements.

·Amendments to IAS 28 Investments in Associates and Joint Ventures - these amendments carry forward the requirements of IAS 28 (2008), with limited amendments related to associates and joint ventures held for sale, as well as to changes in interests held in associates and joint ventures when an entity retains an interest in the investment. The Group intends to adopt IAS 28 in its financial statements for the annual period beginning on January 1, 2013. The Group does not expect the amendments to have a material effect on its consolidated financial statements based on the current facts and circumstances.

·Amendments to IAS 32 Offsetting Financial Assets and Liabilities - this amendment clarifies certain aspects of offsetting and net and gross settlement. The Group intends to adopt the amendments to IAS 32 in its financial statements for the annual period beginning on January 1, 2014. The Group has not yet determined the effect of adoption of IAS 32 on its consolidated financial statements.

·Amendments to IFRS 7 Financial Instruments: Disclosures - this amendment contains new disclosure requirements related to offsetting of financial assets and liabilities. The Group intends to adopt the amendments to IFRS 7 in its financial statements for the annual period beginning on January 1, 2013. The Group has not yet determined the effect of adoption of IFRS 7 on its consolidated financial statements.

10

HUDBAY MINERALS INC.

Notes to Unaudited Condensed Consolidated Interim Financial Statements

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

For the three and nine months ended September 30, 2012

·Amendments to IAS 1 Presentation of Financial Statements: Presentation of Items of Other Comprehensive Income - these amendments require separate presentation of the items of OCI that may be reclassified to profit or loss in the future from those that will never be reclassified to profit or loss. The Group intends to adopt IAS 1 in its financial statements for the annual period beginning on January 1, 2013. The Group has not yet determined the effect of adoption of the amendments on its consolidated financial statements.

·IAS 19 Employee Benefits - this amended version of the standard revises certain aspects of the accounting for pension plans and other benefits. The Group intends to adopt IAS 19 in its financial statements for the annual period beginning on January 1, 2013. The Group has not yet determined the effect of adoption of the amendments on its consolidated financial statements.

·IFRIC 20 Stripping Costs in the Production Phase of a Surface Mine - this interpretation provides guidance on the accounting for waste removal costs that are incurred in surface mining activity during the production phase of a mine. The Group intends to adopt IFRIC 20 in its financial statements for the annual period beginning on January 1, 2013. IFRIC 20 does not currently impact the consolidated financial statements as the Group does not have any surface mines in the production phase.

5.Assets held for sale

Balmat

At June 30, 2012, the Group was in advanced discussions with a third party regarding a sale of Balmat, its mine and metallurgical complex in New York, and concluded it met criteria for classification as an asset held for sale at that time. There has been no change in the classification as at September 30, 2012. As at September 30, 2012, the fair value less costs to sell exceeded Hudbay’s carrying value of the Balmat net assets prior to classification as an asset held for sale. The Group determined the fair value less costs to sell based on an offer received from a third party. Balmat is reported within the Other operating segment.

As at September 30, 2012, the major classes of assets and liabilities of Balmat were as follows:

Assets
Current assets	$	394
Non-current inventory	777
Restricted cash	1,636
Property, plant and equipment	2,590
Assets held for sale	$	5,397
Liabilities
Trade and other payables	$	(148	)
Provisions - decommissioning and restoration liabilities	(20,991		)
Liabilities associated with assets held for sale	$	(21,139	)
Net assets (liabilities) held for sale	$	(15,742	)

11

HUDBAY MINERALS INC.

Notes to Unaudited Condensed Consolidated Interim Financial Statements

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

For the three and nine months ended September 30, 2012

6.Discontinued operations

On September 9, 2011, Hudbay sold its interest in the Fenix ferro-nickel project in Guatemala to the Solway Group. Hudbay acquired the Fenix project in August 2008, through an acquisition of all of the issued and outstanding common shares of HMI Nickel Inc. (formerly Skye Resources Inc.). Pursuant to the terms of the agreement with the Solway Group, Hudbay received US$140 million in cash at. The Group has presented the results of the Fenix project as discontinued operations for the comparative period. At September 30, 2012, none of the additional consideration had been received.

The following summarizes results from discontinued operations:

	Three months ended			Nine months ended
	September 30			September 30
	2011			2011
Expenses	$	(2,554	)	$	(3,636	)
Tax benefit	—			68
	(2,554		)	(3,568		)
Loss on remeasurement to fair value less costs to sell	(2,061		)	(214,800		)
Foreign exchange losses transferred from the foreign currency reserve (note 21)	(20,416		)	(20,416		)
Loss from discontinued operations	$	(25,031	)	$	(238,784	)

12

HUDBAY MINERALS INC.

Notes to Unaudited Condensed Consolidated Interim Financial Statements

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

For the three and nine months ended September 30, 2012

7.Revenue and expenses

(a)Revenue

The Group’s revenue by significant product types:

	Three months ended						Nine months ended
	September 30						September 30
	2012			2011			2012			2011
Copper	$	73,908		$	122,742		$	263,638		$	337,805
Zinc	54,022			35,114			159,881			117,216
Gold	16,303			37,511			95,700			96,241
Silver	2,738			5,937			14,669			18,893
Zinc oxide	—			18,428			—			68,893
Other	1,661			2,190			4,847			22,697
	148,632			221,922			538,735			661,745
Less: treatment and refining charges	(3,973		)	(9,587		)	(17,180		)	(25,242		)
	$	144,659		$	212,335		$	521,555		$	636,503

A portion of the Group’s revenue from sales of zinc is hedged and designated as cash flow hedges related to foreign exchange and zinc price risk. For the three and nine months ended September 30, 2012, revenues from zinc sales included gains from the hedging reserve of $664 and $1,947, respectively (three and nine months ended September 30, 2011 — gains of $170 and $231, respectively) (notes 21 and 23b).

(b)Depreciation and amortization

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

	Three months ended				Nine months ended
	September 30				September 30
	2012		2011		2012		2011
Total depreciation and amortization presented in:
Cost of sales	$	15,032	$	27,166	$	55,145	$	78,624
Selling and administrative expenses	208		105		604		406
	$	15,240	$	27,271	$	55,749	$	79,030

13

HUDBAY MINERALS INC.

Notes to Unaudited Condensed Consolidated Interim Financial Statements

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

For the three and nine months ended September 30, 2012

(c)Share-based payment expense

									Total
	Equity-settled								share-based
	Stock		Cash-settled						payment
	Options		RSUs			DSUs			expense
Three months ended September 30, 2012
Share-based payment expense presented in:
Cost of sales	$	—	$	621		$	—		$	621
Selling and administrative expenses	30		1,055			876			1,961
Other operating expenses	—		44			—			44
	$	30	$	1,720		$	876		$	2,626
Nine months ended September 30, 2012
Share-based payment expense presented in:
Cost of sales	$	—	$	872		$	—		$	872
Selling and administrative expenses	552		1,448			703			2,703
Other operating expenses	—		91			—			91
	$	552	$	2,411		$	703		$	3,666
Three months ended September 30, 2011
Share-based payment expense presented in:
Cost of sales	$	7	$	(98	)	$	—		$	(91	)
Selling and administrative expenses	313		(119		)	(791		)	(597		)
Other operating expenses	—		(3		)	—			(3		)
Exploration and evaluation	—		(6		)	—			(6		)
	$	320	$	(226	)	$	(791	)	$	(697	)
Nine months ended September 30, 2011
Share-based payment expense presented in:
Cost of sales	$	32	$	215		$	—		$	247
Selling and administrative expenses	1,668		970			(1,022		)	1,616
Other operating expenses	—		2			—			2
Exploration and evaluation	—		6			—			6
	$	1,700	$	1,193		$	(1,022	)	$	1,871

14

HUDBAY MINERALS INC.

Notes to Unaudited Condensed Consolidated Interim Financial Statements

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

For the three and nine months ended September 30, 2012

(d)Other operating income and expenses

	Three months ended						Nine months ended
	September 30						September 30
	2012			2011			2012			2011
Other operating income
Net gain on sale of property, plant and equipment	$	(1	)	$	(36	)	$	(158	)	$	(464	)
Gain on sale of White Pine Copper Refinery	—			—			—			(1,999		)
Other income	(301		)	(427		)	(665		)	(551		)
	(302		)	(463		)	(823		)	(3,014		)
Other operating expenses
Cost of non-producing properties	3,849			3,490			8,290			8,333
	$	3,849		$	3,490		$	8,290		$	8,333

In June 2011, the Group disposed of its shares in the White Pine Copper Refinery for proceeds of $2,906 and recognized a gain on sale of $1,999.

15

HUDBAY MINERALS INC.

Notes to Unaudited Condensed Consolidated Interim Financial Statements

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

For the three and nine months ended September 30, 2012

(e)Finance income and expenses

	Three months ended						Nine months ended
	September 30						September 30
	2012			2011			2012			2011
Finance income
Interest income	$	(1,111	)	$	(1,813	)	$	(4,977	)	$	(5,926	)
Other finance income	—			(53		)	—			(64		)
	(1,111		)	(1,866		)	(4,977		)	(5,990		)
Finance expenses
Interest expense (note 15)	2,175			—			2,175			—
Unwinding of accretion on financial liabilities (note 14)	786			—			1,702			—
Unwinding of discounts on provisions	737			842			2,293			2,563
Other finance expenses	3,762			994			10,447			2,739
	7,460			1,836			16,617			5,302
Less: interest capitalized (notes 14, 15)	(2,961		)	—			(3,877		)	—
	4,499			1,836			12,740			5,302
Other finance losses (gains)
Net foreign exchange losses (gains)	13,513			(7,934		)	10,057			(4,216		)
Ineffective gains on cash flow hedges	—			(299		)	(14		)	(509		)
Change in fair value of financial assets and liabilities at fair value through profit or loss:
Classified as held-for-trading	(146		)	2,067			1,578			2,967
Remeasurement to fair value of existing interest in Hudbay Peru Recognized in the income statement	—			—			—			(881		)
Reclassified from equity	—			—			—			(1,220		)
Impairment of receivables	—			—			2,696			—
Reclassified from equity on impairment of available-for-sale investments (note 21)	3,681			2,546			37,237			3,936
	17,048			(3,620		)	51,554			77
Net finance expense (income)	$	20,436		$	(3,650	)	$	59,317		$	(611	)

Other finance expenses for the three and nine months ended September 30, 2012 relates mainly to amounts associated with efforts to arrange financing for the development projects. Interest expense includes capitalized interest related to the senior unsecured notes and other financial liabilities (notes 14, 15)

During the three and nine months ended September 30, 2012, the Group recognized impairment losses on investments in listed shares and transferred pre-tax losses of $3,681 and $37,237, respectively, from the available-for-sale reserve within equity to the income statement.

During the nine months ended September 30, 2012, the Group recognized an impairment loss of $2,696 related to a non-trade receivable.

16

HUDBAY MINERALS INC.

Notes to Unaudited Condensed Consolidated Interim Financial Statements

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

For the three and nine months ended September 30, 2012

8.Trade and other receivables

	Sep. 30, 2012		Dec. 31, 2011
Current
Trade receivables	$	46,036	$	27,405
Embedded derivatives - provisional pricing	6,541		(1,407		)
Statutory receivables	6,562		8,325
Other receivables	2,227		6,063
	61,366		40,386
Less: allowance for bad debts	—		(77		)
	61,366		40,309
Non-current
Statutory receivables - Peruvian sales tax	23,595		5,212
Total	$	84,961	$	45,521

9.Inventories

	Sep. 30, 2012		Dec. 31, 2011
Current
Work in progress	$	17,317	$	4,362
Finished goods	53,000		58,730
Materials and supplies	15,454		14,058
	85,771		77,150
Non-current
Materials and supplies	5,429		5,721
Total	$	91,200	$	82,871

During the nine months ended September 30, 2012, the Group recognized an expense of $16,805 in cost of sales related to write-downs of the carrying value of zinc inventories to net realizable value (three months ended September 30, 2012 - $1,482). For zinc inventories sold during the period, the related cost of sales were $19,935 less than they would have been had write-downs not been recognized (three months ended September 30, 2012 - $6,117). As a result, for the nine months ended September 30, 2012, the net impact on cost of sales, related to zinc inventory write-downs, was a decrease of $3,130 (three months ended September 30, 2012 — decrease of $4,635).

In addition, the cost of inventories recognized as an expense and included in cost of sales amounted to $69,967 and $257,025 for the three and nine months ended September 30, 2012, respectively (three and nine months ended September 30, 2011 - $94,072 and $272,953, respectively).

17

HUDBAY MINERALS INC.

Notes to Unaudited Condensed Consolidated Interim Financial Statements

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

For the three and nine months ended September 30, 2012

10.Other financial assets

	Sep. 30, 2012		Dec. 31, 2011
Current
Derivative assets	$	2,453	$	3,112
Non-current
Available-for-sale investments	84,831		98,279
Investments at fair value through profit or loss	1,543		2,090
Derivative assets	701		132
Restricted cash	—		1,692
	87,075		102,193
	$	89,528	$	105,305

Derivative assets

Derivative assets consist of cash flow hedges and non-hedge derivatives. See note 23b for further descriptions of the Group’s cash flow hedges, which expired in July 2012, and non-hedge derivatives.

Available-for-sale investments

Available for sale investments consist of investments in Canadian metals and mining companies, most of which are publicly traded. During the quarter, the Group recognized impairment losses on available-for-sale investments (note 7e).

18

HUDBAY MINERALS INC.

Notes to Unaudited Condensed Consolidated Interim Financial Statements

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

For the three and nine months ended September 30, 2012

The following table summarizes the change in available-for-sale investments:

Balance, January 1, 2011	$	104,990
Additions	34,422
Increase from remeasurement to fair value	9,287
Reclassification upon acquisition of control of Hudbay Peru	(5,164		)
Balance, March 31, 2011	143,535
Additions	8,383
Decrease from remeasurement to fair value	(21,366		)
Balance, June 30, 2011	130,552
Additions	955
Decrease from remeasurement to fair value (note 21)	(34,126		)
Balance, September 30, 2011	97,381
Additions	3,811
Decrease from remeasurement to fair value	(2,913		)
Balance, December 31, 2011	98,279
Additions	4,065
Decrease from remeasurement to fair value	(6,213		)
Balance, March 31, 2012	96,131
Decrease from remeasurement to fair value (note 21)	(31,697		)
Balance, June 30, 2012	64,434
Increase from remeasurement to fair value (note 21)	20,397
Balance, September 30, 2012	$	84,831

Credit facility, letters of credit and restricted cash

On November 3, 2010, Hudbay arranged a US$300 million revolving credit facility with a syndicate of lenders. The facility has an initial term of four years, is secured by a pledge of assets of the Company, and is unconditionally guaranteed by Hudbay’s non-Peruvian material subsidiaries. Upon closing, restricted cash on deposit to support letters of credit was reclassified to cash and cash equivalents. As at September 30, 2012, the Group had outstanding letters of credit in the amount of $64,470 (December 31, 2011 - $61,954). Restricted cash of $1,636 has been reclassified to assets held for sale (note 5).

19

HUDBAY MINERALS INC.

Notes to Unaudited Condensed Consolidated Interim Financial Statements

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

For the three and nine months ended September 30, 2012

11.    Property, plant and equipment

			Accumulated
			depreciation and			Carrying
Sep. 30, 2012	Cost		amortization			amount
Exploration and evaluation assets	$	33,826	$	—		$	33,826
Capital works in progress	1,103,850		—			1,103,850
Mine development	393,392		(327,544		)	65,848
Plant and equipment	591,741		(284,958		)	306,783
	$	2,122,809	$	(612,502	)	$	1,510,307

			Accumulated
			depreciation and			Carrying
Dec. 31, 2011	Cost		amortization			amount
Exploration and evaluation assets	$	36,994	$	—		$	36,994
Capital works in progress	786,844		(312		)	786,532
Mine development	378,335		(308,235		)	70,100
Plant and equipment	576,898		(267,479		)	309,419
	$	1,779,071	$	(576,026	)	$	1,203,045

As at March 31, 2012, the Group determined that the Reed copper project reached the end of the exploration and evaluation phase. At that time, the Group had completed a pre-feasibility study, some of the resources had been converted to reserves, and management had determined it was probable the project will be developed into a mine. Effective April 1, 2012, the carrying value of exploration and evaluation assets related to the Reed project was reclassified to capital works in progress, and the Group is capitalizing subsequent costs to develop the project.

12.    Goodwill

As at September 30, 2012, the Group conducted its annual goodwill impairment test on the South America business unit to which goodwill has been assigned. The recoverable amount (fair value less cost to sell) of the cash-generating unit exceeded its carrying value, and therefore the Group concluded the goodwill was not impaired.

13.    Other liabilities

	Sep. 30, 2012		Dec. 31, 2011
Current portion of
Pension obligations	$	—	$	6,553
Other employee benefits	3,521		3,513
Provisions (note 17)	7,212		4,434
Other	17,997		—
	$	28,730	$	14,500

20

HUDBAY MINERALS INC.

Notes to Unaudited Condensed Consolidated Interim Financial Statements

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

For the three and nine months ended September 30, 2012

14.    Other financial liabilities

	Sep. 30, 2012		Dec. 31, 2011
Current
Derivative liabilities	$	160	$	1,159
Other financial liabilities at amortized cost	22,264		—
	22,424		1,159
Non-current
Other financial liabilities at amortized cost	21,953		—
	$	44,377	$	1,159

In March 2012, Hudbay entered into two agreements with communities near the Constancia project in Peru pursuant to which Hudbay acquired rights to extract minerals over the useful life of the Constancia project, defined to be a minimum of fifteen years. The Group recognized a liability and a corresponding asset, which has been presented in capital works in progress within property, plant and equipment, together with capitalized costs of the Constancia project. As a result of negotiations, one of the community agreements increased by $2,350 in the three months ended September 30, 2012.

In June 2012, Hudbay entered into an additional agreement with one of the communities near the Constancia project, which allows the Group to carry out exploration and evaluation activities in the area for a minimum period of three years. The Group recognized the related liability and a corresponding exploration and evaluation expense.

These liabilities were recorded at fair value upon initial recognition, which the Group determined using a discounted cash flow analysis based on expected cash flows and a credit-adjusted discount rate. In making this determination, the Group applied estimates in determining the appropriate discount rate, as well as the timing and amount of future cash flows under the agreements. Subsequent to initial recognition, the Group measures such liabilities at amortized cost using the effective interest method.

21

HUDBAY MINERALS INC.

Notes to Unaudited Condensed Consolidated Interim Financial Statements

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

For the three and nine months ended September 30, 2012

15.    Long term debt

	Sep. 30, 2012			Dec. 31, 2011
Principal	$	491,600		$	—
Transaction costs	(16,038		)	$	—
	475,562			—

On September 13 2012, Hudbay issued US$500,000 aggregate principal amount of 9.50% senior unsecured notes (the “Notes”) due October 1, 2020 pursuant to a private placement offering.

The Notes were priced at 100% of their face value, yielding proceeds of US$484,000 ($475,000) net of directly attributable transaction costs. The Notes have been classified as financial liabilities at amortized cost and accounted for initially at fair value net of transaction costs and subsequently at amortized cost using the effective interest rate method. Interest is payable on the Notes semi-annually on April 1 and October 1 of each year, beginning on April 1, 2013. As the proceeds of the offering will be used to fund the development of the Constancia project, interest costs will be capitalized to project assets during the development phase of this project.

The Notes are fully and unconditionally guaranteed, jointly and severally, on a senior unsecured basis, by Hudbay’s existing and future subsidiaries, other than certain excluded subsidiaries, which include subsidiaries that own the Constancia project. The Notes also contain certain customary covenants and restrictions for a financing instrument of this type. Although there are no maintenance covenants with respect to the Group’s financial performance, there are transaction-based restrictive covenants that limit the Group’s ability to incur additional indebtedness in certain circumstances. In addition, the Group’s ability to make restricted payments, including dividend payments, is subject to the compliance with certain covenants which require either the generation of sufficient net earnings or, in the case of semi-annual dividend payments in an amount not exceeding US$20 million, the maintenance of a ratio of consolidated debt to earnings before income tax and depreciation and amortization of 2.50 to 1.00 or less.

At any time prior to October 1, 2016, Hudbay may redeem the Notes, in whole but not in part, at a redemption price equal to 100.000% of the aggregate principal amount of the Notes plus an amount equal to the greater of (i) 1% of the principal amount of the Notes to be redeemed and (ii) the excess, if any, of (a) the present value as of the date of redemption of the October 1, 2016 redemption price of the Notes (as described below) plus required interest payments through October 1, 2016 over (b) the then outstanding principal amount of such Notes, plus, in either case, accrued and unpaid interest.

On or after October 1, 2016, Hudbay may redeem the Notes, at its option in whole or in part, at the redemption prices (expressed as percentages of the principal amount of the Notes to be redeemed) set forth below, plus accrued and unpaid interest, if redeemed during the twelve-month period beginning on October 1 of each of the years indicated below:

Year	Percentage
2016	104.750	%
2017	102.375	%
2018 and thereafter	100.000	%

22

HUDBAY MINERALS INC.

Notes to Unaudited Condensed Consolidated Interim Financial Statements

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

For the three and nine months ended September 30, 2012

In addition, Hudbay may redeem up to 35% of the Notes prior to October 1, 2015 with the net cash proceeds from certain equity offerings at a redemption price equal to 109.500% of the aggregate principal amount thereof, plus accrued and unpaid interest.

16.    Deferred revenue

On September 28, 2012, the Group entered into a precious metals stream transaction with Silver Wheaton Corp. (“Silver Wheaton”) whereby the Group will receive aggregate deposit payments of US$750,000 against delivery of 100% of payable gold and silver from Hudbay’s 777 mine until the later of the end of 2016 and satisfaction of a completion test at the Constancia project, and delivery of 50% of payable gold and 100% of payable silver for the remainder of the 777 mine life. The stream transaction also includes delivery of 100% of payable silver from the Constancia project.

In addition to the deposit payments, as gold and silver is delivered to Silver Wheaton, the Group will receive cash payments equal to the lesser of (i) the market price and (ii) US$400 per ounce (for gold) and US$5.90 per ounce (for silver), subject to 1% annual escalation after three years.

The Group received an upfront payment of US$500,000 ($491,600) in September 2012 and will receive the remaining US$250,000 in two equal installments once the Constancia project incurs capital expenditures of US$500,000 and US$1,000,000, respectively.

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

The following table summarized changes in deferred revenue:

Balance, January 1, 2012	$	—
Upfront deposit received	491,600
Less: estimated current portion	81,425
Balance, September, 30 2012	410,175

23

HUDBAY MINERALS INC.

Notes to Unaudited Condensed Consolidated Interim Financial Statements

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

For the three and nine months ended September 30, 2012

17.    Provisions

	Decommiss-ioning, restoration and similar liabilities		Deferred share units		Restricted share units		Other		Total
Reflected in the balance sheets as follows:
Sep. 30, 2012
Current (note 13)	$	910	$	3,117	$	2,807	$	378	$	7,212
Non-current	135,604		—		2,320		—		137,924
	$	136,514	$	3,117	$	5,127	$	378	$	145,136
Dec. 31, 2011
Current (note 13)	$	1,524	$	2,415	$	—	$	495	$	4,434
Non-current	144,558		—		2,746		—		147,304
	$	146,082	$	2,415	$	2,746	$	495	$	151,738

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

18.    Income and mining taxes

(a)     Tax expense:

	Three months ended					Nine months ended
	September 30					September 30
	2012		2011			2012			2011
Tax expense based on:
Current:
Taxable income	$	54	$	12,333		$	171		$	35,903
Taxable mining profits	6,674		(3,493		)	21,847			16,770
Adjustments in respect of prior years	—		—			(16,212		)	—
	6,728		8,840			5,806			52,673
Deferred:
Income taxes - origination and reversal of temporary difference	3,471		13,617			24,893			15,575
Mining taxes - origination and reversal of temporary difference	899		12,038			3,166			12,741
Peruvian mining tax - origination and reversal of temporary difference	—		19,009			5,760			19,009
Benefit arising from previously unrecognized tax loss, or temporary difference	—		21			—			(1,696		)
Adjustments in respect of prior years	—		—			17,797			—
	4,370		44,685			51,616			45,629
	$	11,098	$	53,525		$	57,422		$	98,302

24

HUDBAY MINERALS INC.

Notes to Unaudited Condensed Consolidated Interim Financial Statements

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

For the three and nine months ended September 30, 2012

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

	Sep. 30, 2012			Dec. 31, 2011
Deferred income tax asset	$	14,895		$	12,277
Deferred mining tax asset - Canada	—			1,063
	14,895			13,340
Deferred income tax liability	(211,297		)	(170,381		)
Deferred mining tax liability - Canada	(2,102		)	—
Deferred mining tax liability - Peru	(24,150		)	(19,282		)
	(237,549		)	(189,663		)
Net deferred tax liability balance, end of period	$	(222,654	)	$	(176,323	)

(c)     Changes in deferred tax assets and liabilities:

	Nine months ended
	September 30
	2012			2011
Net deferred tax (liability) asset balance, beginning of period	$	(176,323	)	$	8,104
Deferred tax expense	(51,616		)	(45,629		)
OCI transactions (note 21)	—			5,455
Purchase price adjustment	—			(128,836		)
Foreign currency translation on Hudbay Peru deferred tax liability	5,285			(10,521		)
Other	—			11
Net deferred tax liability balance, end of period	$	(222,654	)	$	(171,416	)

(d)     Taxes receivable/payable:

The timing of payments results in significant variances in period-to-period comparisons of the tax receivable and tax payable balances. In addition, as a result of the positive tax ruling in the second quarter of 2012 from the Canada Revenue Agency with respect to the “New Mine” status for the Lalor project for income tax purposes, the Group recognized an increase in taxes receivable due to income tax credits (“ITCs”) recorded of $14,415 and a reduction of prior year taxes owing of $18,196 as a result of accelerated depreciation of prior year tax pools.

(e)     Other disclosure:

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

25

HUDBAY MINERALS INC.

Notes to Unaudited Condensed Consolidated Interim Financial Statements

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

For the three and nine months ended September 30, 2012

19.Share capital

(a)Preference shares:

Authorized:Unlimited preference shares without par value

(b)Common shares:

Authorized:Unlimited common shares without par value

Issued and fully paid:

	Nine months ended			Year ended
	Sep. 30, 2012			Dec. 31, 2011
	Common			Common
	shares	Amount		shares	Amount
Balance, beginning of period	171,937,665	$	1,020,126	149,431,339	$	642,161
Exercise of stock options	33,622	249		30,622	216
Share issue costs, net of tax	—	—		—	(239		)
Issued - acquisition of Hudbay Peru	—	—		20,372,986	345,119
Issued - acquisition of non-controlling interest	—	—		2,102,718	32,869
Balance, end of period	171,971,287	$	1,020,375	171,937,665	$	1,020,126

In the period, the Company declared semi-annual dividends of $0.10 per share. The Company paid $17,195 and $17,197 on March 7, 2012 and September 28, 2012 to shareholders of record as of March 20, 2012 and September 14, 2012, respectively.

In 2011, the Company paid $17,152 and $17,194 on March 31, 2011 and September 30, 2012 to shareholders of record as of March 31, 2011 and September 15, 2011, respectively.

26

HUDBAY MINERALS INC.

Notes to Unaudited Condensed Consolidated Interim Financial Statements

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

For the three and nine months ended September 30, 2012

20.Earnings per share data

	Three months ended		Nine months ended
	September 30		September 30
	2012	2011	2012	2011
Weighted average common shares outstanding Basic	171,965,924	171,905,912	171,955,741	166,490,423
Plus net incremental shares from assumed conversion: stock options	245,446	442,299	278,656	597,738
Diluted weighted average common shares outstanding	172,211,370	172,348,211	172,234,397	167,088,161

The determination of the diluted weighted-average number of common shares excludes 2,470,157 and 1,972,569 shares related to stock options that were anti-dilutive for the three and nine months ended September 30, 2012, respectively (three and nine months ended September 30, 2011 - 51,957 and 669,495 shares, respectively).

For periods where Hudbay records a loss, the Group calculates diluted loss per share using the basic weighted average number of shares, as if the diluted weighted average number of share was used; the result would be a reduction in the loss, which would be anti-dilutive. Consequently, for the three and nine months ended September 30, 2012, the Group calculated diluted loss per share using 171,965,924 common shares and 171,955,741 common shares, respectively. For the three and nine months ended September 30, 2011, the Group calculated diluted loss per share using 171,905,912 common shares and 166,490,423 common shares, respectively, except for profit from continuing operations per share.

	Three months ended						Nine months ended
	September 30						September 30
	2012			2011			2012			2011
(Loss) profit from continuing operations attributable to:
Owners of the Company	$	(5,655	)	$	(14,474	)	$	(26,135	)	$	45,642
Non-controlling interests	(483		)	(1,578		)	(2,473		)	(4,732		)
	$	(6,138	)	$	(16,052	)	$	(28,608	)	$	40,910
Loss from discontinued operations attributable to:
Owners of the Company	$	—		$	(25,031	)	$	—		$	(235,270	)
Non-controlling interests	—			—			—			(3,514		)
	$	—		$	(25,031	)	$	—		$	(238,784	)

27

HUDBAY MINERALS INC.

Notes to Unaudited Condensed Consolidated Interim Financial Statements

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

For the three and nine months ended September 30, 2012

21.Other comprehensive income (loss) (“OCI”)

	Three months endedSep. 30, 2012									Three months endedSep. 30, 2011
	Pre-tax			Tax			Net oftax			Pre-tax			Tax			Net oftax
Foreign currency translation
Net exchange gain (loss) on translation of foreign operations	$	(21,651	)	$	—		$	(21,651	)	$	45,728		$	—		$	45,728
Transfer to income statement on disposal of foreign operations (note 6)	—			—			—			20,416			—			20,416
	(21,651		)	—			(21,651		)	66,144			—			66,144
Available-for-sale
Change in fair value of available-for-sale investments (note 10)	20,397			—			20,397			(34,126		)	4,279			(29,847		)
Transfer to income statement on impairment of investments (note 7e)	3,681			—			3,681			2,546			(320		)	2,226
	24,078			—			24,078			(31,580		)	3,959			(27,621		)
Cash flow hedge
Effective portion of change in fair value of cash flow hedges	52			(14		)	38			3,601			(1,047		)	2,554
Transfer to income statement as hedged transactions occurred (note 7a)	(664		)	207			(457		)	(170		)	19			(151		)
	(612		)	193			(419		)	3,431			(1,028		)	2,403
Total OCI (loss)	$	1,815		$	193		$	2,008		$	37,995		$	2,931		$	40,926

28

HUDBAY MINERALS INC.

Notes to Unaudited Condensed Consolidated Interim Financial Statements

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

For the three and nine months ended September 30, 2012

	Nine months endedSep. 30, 2012								Nine months endedSep. 30, 2011
	Pre-tax			Tax		Net oftax			Pre-tax			Tax			Net oftax
Foreign currency translation
Net exchange gain (loss) on translation of foreign operations	$	(20,364	)	$	—	$	(20,364	)	$	31,349		$	—		$	31,349
Transfer to income statement on disposal of foreign operations (note 6)	—			—		—			20,416			—			20,416
	(20,364		)	—		(20,364		)	51,765			—			51,765
Available-for-sale
Change in fair value of available-for-sale investments	(17,513		)	—		(17,513		)	(46,205		)	5,795			(40,410		)
Transfer to income statement on impairment of investments (note 7e)	37,237			—		37,237			3,936			(492		)	3,444
Transfer to income statements on sale of investments (note 7e)	—			—		—			(1,220		)	152			(1,068		)
	19,724			—		19,724			(43,489		)	5,455			(38,034		)
Cash flow hedges
Effective portion of change in fair value of cash flow hedges	(544		)	146		(398		)	6,041			(1,741		)	4,300
Transfer to income statements as hedged transactions occurred (note 7a)	(1,947		)	528		(1,419		)	(231		)	4			(227		)
	(2,491		)	674		(1,817		)	5,810			(1,737		)	4,073
Total OCI (loss)	$	(3,131	)	$	674	$	(2,457	)	$	14,086		$	3,718		$	17,804

Gains and losses transferred from equity into profit or loss during the period are included in the following line items in the income statements:

	Three months ended						Nine months ended
	September 30						September 30
	2012			2011			2012			2011
Revenue (note 7a)	$	664		$	170		$	1,947		$	231
Other finance losses (note 7e)	(3,681		)	(2,546		)	(37,237		)	(2,716		)
Discontinued operations (note 6)	—			(20,416		)	—			(20,416		)
Tax expense	(207		)	301			(528		)	336
	$	(3,224	)	$	(22,491	)	$	(35,818	)	$	(22,565	)

29

HUDBAY MINERALS INC.

Notes to Unaudited Condensed Consolidated Interim Financial Statements

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

For the three and nine months ended September 30, 2012

22.Non-controlling interests

Prior to the disposition of the Fenix project on September 9, 2011, the Group owned 98.2% of Compañía Guatemalteca de Níquel (“CGN”). As a result of the disposition, the Group is no longer required to account for the related non-controlling interest.

Hudbay owns 51% of the Back Forty project in accordance with a subscription, option and joint venture agreement with Aquila Resources Inc. (“Aquila”). Hudbay has control over the Back Forty project and accordingly consolidates the Back Forty project in its consolidated financial statements. Hudbay suspended its exploration and evaluation activities at the Back Forty project effective July 3, 2012.

In accordance with a joint venture agreement with VMS Ventures Inc. (“VMS”), Hudbay owns 70% of the Reed copper project and the two claims immediately to the south. Hudbay has control over the project and accordingly consolidates the Reed copper project in its consolidated financial statements. The Reed copper project entered the development phase effective April 1, 2012.

The Group acquired 90.5% of Hudbay Peru on March 1, 2011 and increased its ownership throughout 2011, resulting in a 100% ownership interest as at September 30, 2011.

				Back Forty			Reed
	CGN			Project			Project			Hudbay Peru			Total
Balance, January 1, 2011	$	1,129		$	8,030		$	263		$	—		$	9,422
Share of assets acquired	—			—			—			9,446			9,446
Acquisition of non-controlling interest	—			—			—			(9,469		)	(9,469		)
Share of OCI	—			252			—			—			252
Share of net (loss) profit	(3,514		)	(3,702		)	(1,052		)	23			(8,245		)
Disposition of subsidiary	2,385			—			—			—			2,385
Balance, September 30, 2011	—			4,580			(789		)	—			3,791
Acquisition of non-controlling
Share of OCI	—			(148		)	—			—			(148		)
Share of net loss	—			(1,339		)	(109		)	—			(1,448		)
Balance, December 31, 2011	—			3,093			(898		)	—			2,195
Share of OCI	—			(159		)	—			—			(159		)
Share of net loss	—			(2,035		)	(438		)	—			(2,473		)
Balance, September 30, 2012	$	—		$	899		$	(1,336	)	$	—		$	(437	)

30

HUDBAY MINERALS INC.

Notes to Unaudited Condensed Consolidated Interim Financial Statements

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

For the three and nine months ended September 30, 2012

23.Financial instruments

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

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

	Sep. 30, 2012				Dec. 31, 2011
	Fair Value		Carrying  value		Fair Value			Carrying  value
Financial assets
Loans and receivables
Cash and cash equivalents (1)	$	1,498,981	$	1,498,981	$	899,077		$	899,077
Restricted cash(1)	—		—		1,692			1,692
Trade and other receivables(1) (2)	48,263		48,263		33,391			33,391
Fair value through profit or loss
Trade and other receivables - embedded derivatives(3)	6,541		6,541		(1,407		)	(1,407		)
Non-hedge derivative assets(3)	3,154		3,154		36			36
Investments at FVTPL(4)	1,543		1,543		2,090			2,090
Designated in cash flow hedges
Hedging derivative assets(3)	—		—		3,076			3,076
Available-for-sale
Available-for-sale investments(4)	84,831		84,831		98,279			98,279
	1,643,313		1,643,313		1,036,234			1,036,234
Financial liabilities
Financial liabilities at amortized cost
Trade and other payables(1) (2)	145,714		145,714		158,708			158,708
Other financial liabilities(5)	41,503		44,217		—			—
Long term debt(6)	514,951		475,562		—			—
Fair value through profit or loss
Trade and other payables - embedded derivatives(3)	1,466		1,466		35			35
Non-hedge derivative liabilities(3)	160		160		1,159			1,159
	703,794		667,119		159,902			159,902
Net financial assets	$	939,519	$	976,194	$	876,332		$	876,332

(1)Cash and cash equivalents, restricted cash, trade and other receivables and trade and other payables are recorded at carrying value, which approximates fair value due to their short-term nature and generally negligible credit losses.

(2)Excludes embedded provisional pricing derivatives, as well as tax and other statutory amounts.

(3)Derivatives and embedded provisional pricing derivatives are carried at their fair value, which is determined based on internal valuation models that reflect observable forward market commodity prices, currency exchange rates, and discount factors based on market US dollar interest rates adjusted for credit risk.

(4)Available-for-sale investments are carried at their fair value, which is determined using quoted market bid prices in active markets for listed shares and determined using valuation models for shares of private companies. Investments at FVTPL consist of warrants to purchase listed shares, which are carried at fair value as determined using a Black-Scholes model.

(5)These financial liabilities relate to agreements with communities near the Constancia project in Peru (note 14).  Fair values have been determined using a discounted cash flow analysis based on expected cash flows and a credit adjusted discount rate.

(6)Fair value of the long-term debt (note 15) has been determined using the quoted market price at the period end. The fair value is calculated on the full value of the debt, while the carrying value is net of transaction costs.

31

HUDBAY MINERALS INC.

Notes to Unaudited Condensed Consolidated Interim Financial Statements

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

For the three and nine months ended September 30, 2012

Fair value hierarchy

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

·Level 1:Quoted prices in active markets for identical assets or liabilities;

·Level 2:Valuation techniques use significant observable inputs, either directly or indirectly, or valuations are based on quoted prices for similar instruments; and

·Level 3: Valuation techniques use significant inputs that are not based on observable market data.

September 30, 2012	Level 1		Level 2		Level 3		Total
Financial assets measured at fair value
Financial assets at FVTPL:
Embedded derivatives	$	—	$	6,541	$	—	$	6,541
Non-hedge derivatives	—		3,154		—		3,154
Investments at FVTPL	—		1,543		—		1,543
Available-for-sale investments	82,831		—		2,000		84,831
	82,831		11,238		2,000		96,069
Financial liabilities measured at fair value
Financial liabilities at FVTPL:
Embedded derivatives	—		1,466		—		1,466
Non-hedge derivatives	—		160		—		160
	$	—	$	1,626	$	—	$	1,626

December 31, 2011	Level 1		Level 2			Level 3		Total
Financial assets measured at fair value
Financial assets at FVTPL:
Embedded derivatives	$	—	$	(1,407	)	$	—	$	(1,407	)
Non-hedge derivatives	—		36			—		36
Investments at FVTPL	—		2,090			—		2,090
Hedging derivatives	—		3,076			—		3,076
Available for sale investments	94,279		—			4,000		98,279
	94,279		3,795			4,000		102,074
Financial liabilities measured at fair value
Financial liabilities at FVTPL:
Embedded derivatives	—		35			—		35
Non-hedge derivatives	—		1,159			—		1,159
	$	—	$	1,194		$	—	$	1,194

There were no transfers between levels during the period.

32

HUDBAY MINERALS INC.

Notes to Unaudited Condensed Consolidated Interim Financial Statements

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

For the three and nine months ended September 30, 2012

(b)Derivatives and hedging:

Non-hedge derivative zinc contracts

Hudbay enters into fixed price sales contracts with zinc customers and, to ensure that the Group continues to receive a floating or unhedged realized zinc price, enters into forward zinc purchase contracts that effectively offset the fixed price sales contracts. The fixed price sales contracts with customers are not recognized as derivatives, as they are executory contracts entered into and held for the purpose of the Group’s expected sale requirements. However, the zinc forward purchase contracts are recorded as derivatives. Gains and losses on these contracts are recorded in revenues, and cash flows are classified in operating activities.

At September 30, 2012, the Group held contracts for forward zinc purchases of 15,466 tonnes (December 31, 2011 - 8,011 tonnes) that related to forward customer sales of zinc. Prices ranged from US$2,064 to US$2,180 per tonne (December 31, 2011 - US$1,757 to US$2,209), and settlement dates extended out up to January 2014.

Cash flow hedging derivatives

In 2009, the Group entered into a foreign exchange swap contract to hedge foreign exchange risk for future receipts of US dollars and commodity swap contracts to hedge prices for a portion of future sales of zinc. The risk management objective for these hedging relationships was to mitigate the impact on the Group of fluctuating zinc prices and exchange rates. Cash flow hedge accounting was applied to the hedging relationships. Gains and losses reclassified from the cash flow hedge reserve to revenue are presented in note 21. These contracts expired in July 2012. No further amounts remain in the Group’s hedging reserve.

(c)Embedded derivatives

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

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

33

HUDBAY MINERALS INC.

Notes to Unaudited Condensed Consolidated Interim Financial Statements

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

For the three and nine months ended September 30, 2012

At September 30, 2012, the Group’s net position consisted of contracts awaiting final pricing for sales of 11,308 tonnes of copper (nine months ended September 30, 2011 - 2,557 tonnes), purchases of 8,037 tonnes of zinc (nine months ended September 30, 2011 - 7,074 tonnes), sales of 9,659 ounces of gold (nine months ended September 30, 2011 - 1,507 ounces) and sales of 73,523 ounces of silver (nine months ended September 30, 2011 - 20,862 ounces).

As at September 30, 2012, the Group’s provisionally priced copper, gold and silver sales subject to final settlement were recorded at average prices of US$3.72/lb (2011 - US$3.18/lb), US$1,772/oz (2011 - US$1,621/oz) and US$34.53/oz (2011 - US$30.06/oz), respectively.

24.Commitments and contingencies

As at September 30, 2012, the Group had outstanding capital commitments of approximately $90,479 primarily related to its Lalor and Reed projects, of which approximately $26,731 cannot be terminated by the Group; and approximately $318,651 in Peru, primarily related to its Constancia project, of which approximately $111,873 cannot be terminated by the Group.

25.Supplementary cash flow information

As at September 30, 2012 and December 31, 2011 the Group had no cash equivalents.

(a)Change in non-cash working capital:

	Three months ended						Nine months ended
	September 30						September 30
	2012			2011			2012			2011
Change in:
Trade and other receivables	$	(11,070	)	$	(20,414	)	$	(23,606	)	$	36,187
Inventories	(19,001		)	6,333			(10,654		)	6,004
Prepaid expenses and other current assets	349			43			5,415			(854		)
Trade and other payables	7,979			35,522			(17,365		)	7,501
Change in taxes payable/receivable	(2,553		)	(9,046		)	(56,683		)	(32,653		)
Taxes - ITC	(2,159		)	(580		)	(19,011		)	(3,051		)
Provisions and other liabilities	14,212			2,172			14,200			(28,137		)
	$	(12,243)		$	14,030		$	(107,704	)	$	(15,003	)

34

HUDBAY MINERALS INC.

Notes to Unaudited Condensed Consolidated Interim Financial Statements

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

For the three and nine months ended September 30, 2012

(b)Non-cash transactions:

During the nine months ended September 30, 2012, the Group entered into the following non-cash investing and financing activities which are not reflected in the statements of cash flows:

·The Group recognized property, plant and equipment of $66,245 and recognized financial liabilities of $69,368 related to agreements with communities near the Constancia project relating to the acquisition of rights to extract minerals and the ability to explore the land. During the period payments of $26,883 were made, which are included in acquisition of property, plant and equipment in the statement of cash flows.

·Remeasurements of the Group’s decommissioning and restoration liabilities as at September 30, 2012, led to increases in related property, plant and equipment assets of $8,527 primarily as a result of discount rate changes. For the nine months ended September 30, 2011, such remeasurements led to increases in property, plant and equipment assets of $20,117.

·Property, plant and equipment included $65,889 of additions which were not yet paid for as at September 30, 2012 (December 31, 2011 - $23,964). These purchases will be reflected in the statements of cash flows in the periods payment is made.

35

HUDBAY MINERALS INC.

Notes to Unaudited Condensed Consolidated Interim Financial Statements

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

For the three and nine months ended September 30, 2012

26.Segmented information

The Group is an integrated metals producer. When making decisions on expansions, opening or closing mines, as well as day to day operations, management evaluates the profitability of the overall operation of the Group. The Group’s main mining operations are located in Manitoba and Saskatchewan and are included in the Manitoba segment. The Manitoba segment generates the Group’s revenues as it sells copper concentrate (containing copper, gold and silver), gold, silver, zinc and other metals. The South America segment consists of the Group’s Constancia project in Peru, which Hudbay acquired on March 1, 2011, Hudbay Chile, Hudbay Colombia and Hudbay Panama. The “Other” segment includes operating segments that are not individually significant, as they do not meet the quantitative thresholds, and include the Balmat segment which consists of a zinc mine and concentrator and the Michigan segment which includes the Back Forty property and other exploration properties. The Balmat mine suspended operations in August 2008, and Hudbay reclassified the assets and liabilities of the segment to assets held for sale effective June 30, 2012 (note 5). The Michigan segment suspended exploration and evaluation activities in July 2012. The Group previously disclosed HMI Nickel as a segment; however, upon selling the Fenix project in September 2011 (note 6), Hudbay reclassified these activities to loss from discontinued operations. Corporate activities are not considered a segment and are included as a reconciliation to total consolidated results. Accounting policies for each reported segment are the same. Segment profit or loss represents the profit earned by each segment without allocation of corporate costs. This is the measure reported to the chief operating decision-maker for the purposes of resource allocation and the assessment of segment performance. Total assets and liabilities do not reflect intercompany balances, which have been eliminated on consolidation.

Three months ended September 30, 2012
	Manitoba			South  America			Other			Corporate  activities and unallocated  costs			Total
Revenue from external customers	$	144,659		$	—		$	—		$	—		$	144,659
Cost of sales
- mine operating costs	81,657			—			—			—			81,657
- depreciation and amortization	15,032			—			—			—			15,032
Gross profit	47,970			—			—			—			47,970
Selling and administrative expenses	338			—			—			9,509			9,847
Exploration and evaluation	3,220			4,550			1,056			354			9,180
Other operating income	(203		)	—			—			(99		)	(302		)
Other operating expenses	1,706			1,188			955			—			3,849
Results from operating activities	$	42,909		$	(5,738	)	$	(2,011	)	$	(9,764	)	$	25,396
Finance income													(1,111		)
Finance expenses													4,499
Other finance losses													17,048
Profit before tax													4,960
Tax expense													11,098
Loss from continuing operations													(6,138		)
Loss from discontinued operations													—
Loss for the period													$	(6,138	)

36

HUDBAY MINERALS INC.

Notes to Unaudited Condensed Consolidated Interim Financial Statements

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

For the three and nine months ended September 30, 2012

Three months ended September 30, 2011
	Manitoba			South  America			Other			Corporate  activities and unallocated  costs			Total
Revenue from external customers	$	212,335		$	—		$	—		$	—		$	212,335
Cost of sales
- mine operating costs	120,790			—			—			—			120,790
- depreciation and amortization	27,166			—			—			—			27,166
- impairment loss	5,878			—			—			—			5,878
Gross profit	58,501			—			—			—			58,501
Selling and administrative expenses	601			—			—			6,996			7,597
Exploration and evaluation	7,940			2,697			3,026			391			14,054
Other operating income	(226		)	—			—			(237		)	(463		)
Other operating expenses	677			(314		)	3,098			29			3,490
Results from operating activities	$	49,509		$	(2,383	)	$	(6,124	)	$	(7,179	)	$	33,823
Finance income													(1,866		)
Finance expenses													1,836
Other finance gain													(3,620		)
Profit before tax													37,473
Tax expense													53,525
Loss from continuing operations													(16,052		)
Loss from discontinued operations													(25,031		)
Loss for the period													$	(41,083	)

Nine months ended September 30, 2012
	Manitoba			South  America			Other			Corporate  activities and  unallocated  costs			Total
Revenue from external customers	$	521,555		$	—		$	—		$	—		$	521,555
Cost of sales
- mine operating costs	310,290			—			—			—			310,290
- depreciation and amortization	55,145			—			—			—			55,145
Gross profit	156,120			—			—			—			156,120
Selling and administrative expenses	1,114			—			—			26,790			27,904
Exploration and evaluation	12,869			12,227			6,412			1,110			32,618
Other operating income	(498		)	(24		)	(4		)	(297		)	(823		)
Other operating expenses	1,887			3,112			2,882			409			8,290
Results from operating activities	$	140,748		$	(15,315	)	$	(9,290	)	$	(28,012	)	$	88,131
Finance income													(4,977		)
Finance expenses													12,740
Other finance losses													51,554
Profit before tax													28,814
Tax expense													57,422
Loss from continuing operations													(28,608		)
Loss from discontinued operations													—
Loss for the period													$	(28,608	)

37

HUDBAY MINERALS INC.

Notes to Unaudited Condensed Consolidated Interim Financial Statements

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

For the three and nine months ended September 30, 2012

September 30, 2012
	Manitoba		South  America		Other		Corporate  activities and  unallocated  costs		Total
Total assets	$	1,559,489	$	943,066	$	23,787	$	922,625	$	3,448,967
Total liabilities	913,838		269,748		21,152		493,606		1,698,344
Property, plant and equipment	699,297		786,003		20,826		4,181		1,510,307
Nine months ended September 30, 2012
Additions to property, plant and equipment(1):	$	166,871	$	159,636	$	1,664	$	112	$	328,283
Additions to other non-current assets (intangibles)	1,446		—		—		—		1,446

(1) Additions to property, plant and equipment represent cash additions only. For non-cash additions, see note 25.

38

HUDBAY MINERALS INC.

Notes to Unaudited Condensed Consolidated Interim Financial Statements

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

For the three and nine months ended September 30, 2012

Nine months ended September 30, 2011
	Manitoba			South  America			Other			Corporate  activities and  unallocated  costs			Total
Revenue from external customers	$	636,503		$	—		$	—		$	—		$	636,503
Cost of sales
- mine operating costs	341,725			—			—			—			341,725
- depreciation and amortization	78,624			—			—			—			78,624
- impairment	5,878			—			—			—			5,878
Gross profit	210,276			—			—			—			210,276
Selling and administrative expenses	1,882			—			—			27,894			29,776
Exploration and evaluation	20,698			6,148			9,089			645			36,580
Other operating income	(2,777		)	—			—			(237		)	(3,014		)
Other operating expenses	2,435			78			5,083			737			8,333
	$	188,038		$	(6,226	)	$	(14,172	)	$	(29,039	)	$	138,601
Finance income													(5,990		)
Finance expenses													5,302
Other finance losses													77
Profit before tax													139,212
Tax expense													98,302
Profit from continuing operations													40,910
Loss from discontinued operations													(238,784		)
Loss for the period													$	(197,874	)
December 31, 2011
Total assets(1)	$	1,011,146		$	675,744		$	23,040		$	738,890		$	2,448,820
Total liabilities(1)	436,659			154,903			20,864			21,036			633,462
Property, plant and equipment(1)	588,775			588,532			19,773			5,965			1,203,045
Nine months ended September 30, 2011
Additions to property, plant and equipment(2):
- continuing operations	$	130,916		$	18,768		$	3,607		$	4,815		$	158,106
- discontinued operations	—			—			7,163			—			7,163
Additions to other non-current assets (intangibles)	4,781			—			—			—			4,781

(1) Other includes amounts related to discontinued operations.

(2) Additions to property, plant and equipment represent cash additions only. For non-cash additions, see note 25.

39

EX-99.3

Exhibit 99.3

FORM 52-109F2
CERTIFICATION OF INTERIM FILINGS
FULL CERTIFICATE

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

1.Review: I have reviewed the interim financial report and interim MD&A (together, the “interim filings”) of HudBay Minerals Inc. (the “issuer”) for the interim period ended September 30, 2012.

2.No misrepresentations: Based on my knowledge, having exercised reasonable diligence, the interim filings do not contain any untrue statement of a material fact or omit to state a material fact required to be stated or that is necessary to make a statement not misleading in light of the circumstances under which it was made, with respect to the period covered by the interim filings.

3.Fair presentation: Based on my knowledge, having exercised reasonable diligence, the interim financial report together with the other financial information included in the interim filings fairly present in all material respects the financial condition, financial performance and cash flows of the issuer, as of the date of and for the periods presented in the interim filings.

4.Responsibility: The issuer’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (DC&P) and internal control over financial reporting (ICFR), as those terms are defined in National Instrument 52-109 Certification of Disclosure in Issuers’ Annual and Interim Filings, for the issuer.

5.Design: Subject to the limitations, if any, described in paragraphs 5.2 and 5.3, the issuer’s other certifying officer(s) and I have, as at the end of the period covered by the interim filings

(a)designed DC&P, or caused it to be designed under our supervision, to provide reasonable assurance that

(i)material information relating to the issuer is made known to us by others, particularly during the period in which the interim filings are being prepared; and

(ii)information required to be disclosed by the issuer in its annual filings, interim filings or other reports filed or submitted by it under securities legislation is recorded, processed, summarized and reported within the time periods specified in securities legislation; and

(b)designed ICFR, or caused it to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with the issuer’s GAAP.

5.1Control framework: The control framework the issuer’s other certifying officer(s) and I used to design the issuer’s ICFR is the Integrated Framework (COSO Framework) published by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

5.2N/A

5.3N/A

6.Reporting changes in ICFR: The issuer has disclosed in its interim MD&A any change in the issuer’s ICFR that occurred during the period beginning on July 1, 2012 and ended on September 30, 2012 that has materially affected, or is reasonably likely to materially affect, the issuer’s ICFR.

Date: November 1, 2012

(signed) David Garofalo

David Garofalo
President and Chief Executive Officer

EX-99.4

Exhibit 99.4

FORM 52-109F2
CERTIFICATION OF INTERIM FILINGS
FULL CERTIFICATE

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

1.Review: I have reviewed the interim financial report and interim MD&A (together, the “interim filings”) of HudBay Minerals Inc. (the “issuer”) for the interim period ended September 30, 2012.

2.No misrepresentations: Based on my knowledge, having exercised reasonable diligence, the interim filings do not contain any untrue statement of a material fact or omit to state a material fact required to be stated or that is necessary to make a statement not misleading in light of the circumstances under which it was made, with respect to the period covered by the interim filings.

3.Fair presentation: Based on my knowledge, having exercised reasonable diligence, the interim financial report together with the other financial information included in the interim filings fairly present in all material respects the financial condition, financial performance and cash flows of the issuer, as of the date of and for the periods presented in the interim filings.

4.Responsibility: The issuer’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (DC&P) and internal control over financial reporting (ICFR), as those terms are defined in National Instrument 52-109 Certification of Disclosure in Issuers’ Annual and Interim Filings, for the issuer.

5.Design: Subject to the limitations, if any, described in paragraphs 5.2 and 5.3, the issuer’s other certifying officer(s) and I have, as at the end of the period covered by the interim filings

(a)designed DC&P, or caused it to be designed under our supervision, to provide reasonable assurance that

(i)material information relating to the issuer is made known to us by others, particularly during the period in which the interim filings are being prepared; and

(ii)information required to be disclosed by the issuer in its annual filings, interim filings or other reports filed or submitted by it under securities legislation is recorded, processed, summarized and reported within the time periods specified in securities legislation; and

(b)designed ICFR, or caused it to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with the issuer’s GAAP.

5.1Control framework: The control framework the issuer’s other certifying officer(s) and I used to design the issuer’s ICFR is the Integrated Framework (COSO Framework) published by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

5.2N/A

5.3N/A

6.Reporting changes in ICFR: The issuer has disclosed in its interim MD&A any change in the issuer’s ICFR that occurred during the period beginning on July 1, 2012 and ended on September 30, 2012 that has materially affected, or is reasonably likely to materially affect, the issuer’s ICFR.

Date: November 1, 2012

(signed) David S. Bryson

David S. Bryson
Senior Vice President and Chief Financial Officer

EX-99.5

Exhibit 99.5

TMX, NYSE – HBM

2012 No. 24

Hudbay Releases Third Quarter 2012 Results

Highlights

·Production of all metals in concentrate and unit operating costs remain in line with full year guidance.

·Third quarter operating cash flow before stream deposit and change in non-cash working capital decreased to $21.5 million, mainly due to the planned permanent closure of Trout Lake in June 2012 and unusually high sales volumes in the same period of 2011 when excess inventory was drawn down.

·First ore produced at Lalor in the quarter; commercial production from the ventilation shaft expected in the second quarter of 2013.

·US$1.5 billion Constancia copper project commenced full construction, with board approval granted in August 2012.

·US$1.25 billion of capital secured through long-term bond financing and precious metals stream to fund development projects.

·Three drills targeting resource expansion at Pampacancha and exploration at Chilloroya.

Toronto, Ontario, November 1, 2012 — HudBay Minerals Inc. (“Hudbay” or the “company”) (TSX, NYSE:HBM) today released its third quarter 2012 financial results. In the third quarter of 2012, Hudbay recorded a loss and loss per share of $6.1 million and $0.03, respectively, compared to a loss of $41.1 million and $0.23, respectively, in the third quarter of 2011.

The third quarter of 2012 loss was affected by the following significant items, which Hudbay does not view as part of its core operations:

	Pre-taxgain (loss)($ millions)		After-tax gain (loss)($ millions)		Per Share($/share)
Impairments and mark-to-market adjustment related to junior mining investments	(3.5	)	(3.5	)	(0.02	)
Transaction costs related to precious metals stream transaction and senior unsecured notes	(3.4	)	(2.5	)	(0.01	)
Foreign exchange losses	(13.5	)	(12.1	)	(0.07	)

Also affecting earnings in the third quarter of 2012 were provisional pricing adjustments, which resulted in an increase to Hudbay’s revenue of $5.4 million ($3.3 million after-tax, or $0.02 per share) as a result of the increase in copper, gold and silver prices during the quarter, together with gains of $4.2 million ($3.1 million after-tax, or $0.02 per share) on forward zinc purchase contracts related to fixed price customer sales due to an increase in zinc prices during the quarter.

The loss in the third quarter of 2011 included a loss on non-core asset disposals of $28.4 million and non-recurring deferred tax expenses of $26.9 million.

“Our year-to-date production and performance remains within expectations,” said David Garofalo, Hudbay’s president and chief executive officer. “The consistency of our underlying business in northern Manitoba coupled with the US$1.25 billion of capital secured in the third quarter, has allowed Hudbay to advance its plans for significant growth in copper, gold and zinc production over the next three years from three new mines now under construction.”

Financial and Operating Results

Total revenue for the third quarter of 2012 was $144.6 million, $67.7 million lower than the same quarter in 2011, mainly due to lower sales volumes compared to the third quarter of 2011, when we drew down on unusually high copper concentrate inventory, as well as reduced gold sales volumes in the third quarter of 2012 compared to production volumes. Year-to-date 2012 revenue was $521.6 million, $114.9 million lower than the same period in 2011, mainly as a result of lower sales volumes and lower metals prices.

Third quarter 2012 ore production at our Manitoba business was 20% lower than the prior year’s third quarter due to the planned permanent closure of the Trout Lake mine in June 2012, offset partly by the start of production at Lalor. Overall mine operating costs per tonne were 15% lower than the prior year’s quarter as reduced development at the Chisel North mine, which permanently ceased operations as planned in September 2012, was only partly offset by higher costs at 777.  In addition, as expected, the operating cost per tonne of ore processed at the Flin Flon and Snow Lake concentrators increased in the third quarter of 2012 as a result of the decrease in tonnage processed from the now closed Trout Lake and Chisel North mines. Contained metal in concentrate production and unit operating costs for our mines and concentrators remain in line with full year guidance.

Cash Flows

Operating cash flow before stream deposit and change in non-cash working capital was $21.5 million for the third quarter of 2012, a $42.9 million decrease compared with the same period in 2011 mainly as a result of lower sales volumes. Year-to-date 2012 operating cash flows before stream deposit and change in non-cash working capital were $133.2 million, reflecting a decrease of $34.9 million from the same period in 2011 mainly as a result of lower realized prices and lower sales volumes.

Cash and cash equivalents increased by $788.9 million during the quarter to $1,499.0 million as at September 30, 2012. This increase was mainly driven by receiving net proceeds of $475.6 million for the issuance of senior unsecured notes and an initial payment of $491.6 million related to the US$750 million precious metals stream transaction. The company also invested over $150 million in its growth initiatives during the period.

2

Lalor Starts Production

The company has invested approximately $305 million of the $704 million capital construction budget for its wholly owned Lalor project near Snow Lake, Manitoba, to September 30, 2012 and has entered into an additional $76 million in commitments for the project.

During the third quarter of 2012, Hudbay commissioned the hoisting system in the main ventilation shaft, which is now capable of hoisting 1,400 tonnes of combined ore and waste per day.  First ore production from the base metal lens #10 began in August, and to the end of September Hudbay had hoisted over 14,000 tonnes of ore. Underground mobile equipment was delivered during the quarter and Hudbay is now in the process of commissioning the fleet. The Chisel North workforce has been transitioned to Lalor and has established ore faces on the 810 and 825 metre levels. The contractor is continuing to ramp from the 840 metre level to the 910 metre level and will develop to the 910 metre production shaft station.

The main production shaft is now sunk to approximately 325 metres and is 33% completed. Water bearing seams slowed its advance in September; however, the shaft has progressed beyond the level where water seepage occurred and the advance is continuing.

Lalor ore will be processed at the nearby Snow Lake concentrator until completion of the production shaft and new concentrator, which is expected in late 2014. A new copper flotation circuit was installed in the Snow Lake concentrator to maximize copper recoveries from Lalor ore until processing shifts to the new concentrator. The first full year of production from the main production shaft is expected in 2015.

Basic engineering for the new concentrator is ongoing with value engineering reviews and design optimization underway. Hudbay has placed orders for the surface crusher and the SAG and ball mills and delivery of these items remains on schedule.

Hudbay has submitted an application for an Environmental Act licence for the Lalor mine, which will allow for production from the main production shaft. The company expects to submit applications for Environmental Act licences for the new concentrator and tailings facility expansion in the fourth quarter of 2012 and the fourth quarter of 2013, respectively.

Given the nature of the Lalor project, Hudbay expects to refer to two phases of the Lalor project when determining commercial production for accounting purposes. The first phase of the project is expected to include the main ventilation shaft and associated surface and underground workings that will contribute to the production of ore between 2012 and 2014. Hudbay expects to achieve commercial production for accounting purposes for the first phase in the second quarter of 2013. The second phase of the project is expected to include the main production shaft and the new Lalor concentrator, and the company expects to achieve commercial production for accounting purposes for the second phase in the first half of 2015.

Reed Copper Project Development Progressing on Schedule

During the third quarter, Hudbay’s focus for its 70% owned Reed copper project near Flin Flon, Manitoba was the completion of the portal trench excavation.  Of the company’s $72 million capital construction budget for Reed, the company has invested approximately $16 million on the project to September 30, 2012 and has entered into an additional $13 million in commitments for the project.

3

Hudbay has completed the installation of the new office and dry complex, installed power to the ramp and site via onsite diesel generators, poured the foundations for the shop and warehouse, and installed a ventilation fan, silencers and heater at the portal in preparation for ramp development and onset of winter conditions.

The company’s workforce of development miners, electricians and mechanics are staying at an onsite camp. Necessary materials and mobile equipment for initial ramp development is onsite, and the first portal development round was taken in October. Hudbay is in the process of preparing the Environmental Act licence application for the Reed copper project and plans to submit it to the provincial government in the fourth quarter of 2012.

The project is on schedule and Hudbay expects initial production at the Reed copper project by the fourth quarter of 2013 and full production of approximately 1,300 tonnes per day by the first quarter of 2014.

Construction Commences at Constancia

On August 8, 2012, Hudbay’s board of directors approved a US$1.5 billion investment in Hudbay’s 100% owned Constancia copper project in Peru. The Constancia development schedule contemplates nine quarters of construction, with initial production in late 2014 and full production commencing in the second quarter of 2015.

Of the company’s US$1.5 billion capital construction budget, the company has invested approximately US$154 million on the project to September 30, 2012 and has entered into an additional US$322 million in commitments for the project.

Front-end engineering and design work at Constancia is complete. The principal beneficiation concession (construction permit) was granted in June 2012 and other required permits are expected in the ordinary course. Site activity to date includes completion of a 2,100 bed camp, which is scheduled to expand to 3,000 beds by the end of 2012 to accommodate peak construction needs. Mobilization of the EPCM contractor is complete and the plant site earthworks are underway.  Hudbay’s major earthworks contractor has mobilized and is currently constructing the tailings management facility, haul roads and water diversion infrastructure.  Hudbay has also awarded a contract for the concrete installation for the plant construction.  Geotechnical drilling and sampling is complete. Modeling of updated hydrogeological testing is continuing and an updated model is expected in November 2012.

Major long lead items are secured and include mills, crushers, flotation cells, pumps, regrind mills and mine equipment, including trucks, shovels and drills. Bids have been received from multiple electrical power providers and costs and availability are expected to fall within operating cost budget assumptions.  In addition, a contract was executed for the construction of the 70 kilometre power transmission line from Tintaya.  The principal port operator has provided assurances that the concentrate shipments can be accommodated and discussions are currently focused on optimizing the storage and loading methodologies.

In accordance with agreements entered into with local communities, relocation of affected families is underway with the construction of new housing in progress. Construction of homes for the 14 families that are scheduled to be moved from the project site later this year is advancing. The remaining 22 families are scheduled to be relocated during 2013.

4

Constancia Exploration Update

Exploration is ongoing at the Constancia project with three diamond drills. Two drills are concentrated on infill drilling and step out drilling at Pampacancha.

The objective of this drilling campaign is to expand the current resource outside the known reserve pit shell. To date, this strategy has yielded positive results including step out drill hole PO-12-120, which intersected 2.03% copper and 0.88 g/t gold over 60.4 metres at a location approximately 50 metres (horizontal distance) to the west of the established resource. Step out drill hole PO-12-110, grading 0.59% copper and 0.33 g/t gold to the east, demonstrates the deposit can also be better defined to the east. Expansion of the known reserves at Pampacancha will provide Hudbay with an opportunity to further optimize the mine plan with enhanced grades in the early years of production. Some infill drilling is also being conducted to provide necessary information for mine optimization opportunities.

A third drill has been testing the Chilloroya South skarn target and geophysical anomaly. Favourable geology has been intersected in several drill holes, showing various thicknesses of mineralized skarn. Compilation of data from this exploration program is underway and assays are pending.

A total of 7,372 metres were drilled in the third quarter of 2012 and drilling with three drills is scheduled to continue for the remainder of the year, concentrating on resource expansion and exploration targets.

Highlights from the drill program at Pampacancha are as follows:

Area	Hole	Core Length (m)	From (m)	To (m)	Cu (%)	Mo (%)	Au (g/t)	Ag (g/t)	Cu Eq(1)(%)
Pampacancha	PO-12-110	13.90	25.50	39.40	0.59	0.01	0.33	9.17	0.95
	PO-12-111	19.40	124.30	143.70	1.42		0.94	10.25	2.09
	PO-12-112	34.50	4.25	38.75	0.29		0.45	2.31	0.60
		16.90	46.00	62.90	0.37	0.03	0.50	1.35	0.81
		23.30	160.40	183.70	0.38		0.15	6.15	0.57
		18.35	263.30	281.65	0.32		0.06	6.25	0.45
	PO-12-113	17.10	10.00	27.10	0.52	0.03	0.13	4.81	0.77
	PO-12-114	No significant mineralization
	PO-12-115	55.00	55.00	110.00	0.63	0.03	0.25	4.24	0.96
		19.20	271.80	291.00	0.53		0.23	12.59	0.81
	PO-12-116	No significant mineralization
	PO-12-118	No significant mineralization
	PO-12-120	60.40	153.05	213.45	2.03		0.88	13.61	2.70
	Included	48.85	155.00	203.85	2.39		0.90	14.10	3.08

(1) Calculated using commodity prices of US$1,100/oz Au, US$22.00/oz Ag, US$2.75/lb Cu and US$13.00/lb Mo. Copper cut-off reported as 0.2%. Composited intersections are reported as core length and do not represent true width.

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Hole	East	North	Elevation	Azimuth	Dip	Total Depth
PO-12-110	204,842	8,397,448	4272.00	270	-80	216.70
PO-12-111	204,429	8,397,578	4256.80	80	-75	172.90
PO-12-112	204,696	8,397,501	4321.80	90	-85	407.25
PO-12-113	204,791	8,397,505	4303.20	90	-85	167.05
PO-12-114	204,799	8,397,602	4327.70	90	-85	127.25
PO-12-115	204,691	8,397,455	4313.70	90	-85	341.85
PO-12-116	204,722	8,397,550	4332.50	90	-80	348.10
PO-12-118	204,552	8,397,448	4293.20	100	-85	300.50
PO-12-120	204,534	8,397,485	4288.80	95	-75	291.85

Note: Collar coordinates, National Grid UTM coordinates based on the Provisional South America 1956 (PSAD56) datum 19S

Key Financial Results

	Three Months Ended September 30				Nine Months Ended September 30
($000s except per share and cash cost amounts)	2012		2011		2012		2011
Revenue	144,659		212,335		521,555		636,503
Profit before tax	4,960		37,473		28,814		139,212
(Loss) profit from continuing operations	(6,138	)	(16,052	)	(28,608	)	40,910
Basic and diluted loss per share(1)	(0.03	)	(0.23	)	(0.15	)	(1.14	)
Loss for the period	(6,138	)	(41,083	)	(28,608	)	(197,874	)
Operating cash flow(2)	21,487		64,430		133,187		168,119
Operating cash flow per share(3)	0.12		0.37		0.77		1.01
Cash cost per pound of copper sold(3)	0.75		0.74		0.75		0.41
Cash and cash equivalents	1,498,981		899,077	(4)	1,498,981		899,077	(4)
Total assets	3,448,967		2,448,820	(4)	3,448,967		2,448,820	(4)

(1)Attributable to owners of the company

(2)Before stream deposit and change in non-cash working capital.

(3)Refer to “Non-IFRS Financial Performance Measures” at the conclusion of this news release.

(4)As at December 31, 2011

Non-IFRS Financial Performance Measures

Operating cash flow per share and cash costs per pound of copper sold are included in this news release because the company believes that, in the case of operating cash flow per share, it helps investors to evaluate changes in cash flow while taking into account changes in shares outstanding, and in the case of by-product cash costs, they help investors assess the company’s overall costs of metal production and compare those costs to those of other base metal producers. These measures do not have a meaning prescribed by IFRS and are therefore unlikely to be comparable to similar measures presented by other issuers.

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These measures should not be considered in isolation or as a substitute for measures prepared in accordance with IFRS and are not necessarily indicative of operating profit or cash flow from operations as determined under IFRS. Other companies may calculate these measures differently.

Operating cash flow per share

The following table presents Hudbay’s calculation of operating cash flow per share for the three and nine months ended September 30, 2012 and September 30, 2011.

	Three Months Ended		Nine Months Ended
	Sept. 30	Sept. 30	Sept. 30	Sept. 30
($000s except share and per share amounts)	2012	2011	2012	2011
Operating cash flow before stream deposit and change in non-cash working capital	21,487	64,430	133,187	168,119
Weighted average shares outstanding	171,965,924	171,905,912	171,955,741	166,490,423
Operating cash flow per share	0.12	0.37	0.77	1.01

Cash cost per pound of copper sold

In the current quarter, Hudbay has introduced cash costs per pound of copper sold, calculated using the by-product method, as a new non-IFRS measure. This measure replaces Hudbay’s previous disclosure of co-product costs of copper, zinc and gold as the 777 precious metal stream transaction would have significantly changed the allocation of costs among the three metals in a way that would have made the resulting co-product cost calculations less meaningful for investors compared to by-product cash costs, which do not require the allocation of costs.

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	Three Months Ended				Nine Months Ended
	Sep. 30		Sep. 30		Sep. 30		Sep. 30
	2012		2011		2012		2011
Cash cost per unit sold
$/lb
Mining, milling, concentrating	1.05		1.15		1.04		1.12
On-site admin and general expenses	0.34		0.24		0.31		0.27
Cost to concentrate	1.39		1.39		1.35		1.39
Treatment and refining	0.13		0.20		0.16		0.20
Freight and distribution	0.29		0.31		0.27		0.28
Other	(0.04	)	0.02		0.01		0.01
Downstream costs	0.38		0.53		0.44		0.49
Net by-product credits	(1.02	)	(1.18	)	(1.04	)	(1.47	)
Cash cost per pound of copper sold	0.75		0.74		0.75		0.41
Reconciliation to Income Statement
(000’s)
Cost of sales - mine operating costs	81,657		120,790		310,290		341,725
Treatment and refining	3,973		9,587		17,180		25,242
Byproduct revenues	(74,724	)	(99,180	)	(275,097	)	(323,940	)
	10,906		31,197		52,373		43,027
Indirect costs(1)
Share based payment	(621	)	91		(872	)	(247	)
Impairments	4,635		(5,351	)	3,130		(5,351	)
Demolition and rehabilitation	(47	)	(1,130	)	(129	)	(1,779	)
Subtotal - cash costs	14,873		24,807		54,502		35,650
Copper sales (000s lbs)	19,788		33,556		72,269		86,036
Cash cost per unit sold	0.75		0.74		0.75		0.41

(1)Indirect costs in cost of sales - mine operating costs

Hudbay’s cash cost per pound of copper sold in the third quarter of 2012, was $0.75, compared to $0.74 in the same period in 2011. Mining, milling and concentrating costs per pound sold were lower in the third quarter of 2012 compared to the same period in 2011 as a result of lower mine costs at Hudbay’s Chisel North mine.  The remaining tonnage in this mine was located in pillars in areas that were well developed and the method used to extract the ore was low cost.  On site administration and general expenses were higher on a per unit basis primarily as a result of decreased units sold. Net by-product credits are lower primarily as a result of timing of the recognition of gold and silver revenue as a result of the precious metals stream transaction with Silver Wheaton.

Hudbay’s cash cost per pound of copper sold year-to-date 2012 was $0.75, compared to $0.41 for the same period in 2011. Mining, milling and concentrating costs per pound sold were lower year-to-date 2012 compared to year-to-date 2011 as a result of lower mine costs at Hudbay’s Chisel North and Trout Lake mines.  At Hudbay’s Trout Lake mine, development costs were lower, the company needed less ground control work, used fewer consumables and transitioned fixed cost labour resources to the 777 North expansion and 777 mine.  At Hudbay’s Chisel North mine, the mining method used to extract the ore was lower cost compared to 2011.  On site administration and general expenses were higher on a per unit basis primarily as a result of decreased units sold.

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Net by-product credits were lower primarily due to realized lower zinc realized prices, the sale of scrap copper-bearing material in the first quarter of 2011, as well as a result of timing of the recognition of gold and silver revenue as a result of the precious metals stream transaction with Silver Wheaton.

Website Links

Hudbay:

www.hudbayminerals.com

Management’s Discussion and Analysis:

http://media3.marketwire.com/docs/HUDBQ3MDA2012.pdf

Financial Statements:

http://media3.marketwire.com/docs/HUDBQ3FS2012.pdf

Conference Call and Webcast

Date:	Friday, November 2, 2012
Time:	10 a.m. ET
Webcast:	www.hudbayminerals.com
Dial in:	416-644-3415 or 877-974-0445
Replay:	416-640-1917 or 877-289-8525
Replay Passcode:	4570601#

The conference call replay will be available until midnight (Eastern Time) on November 16, 2012. An archived audio webcast of the call also will be available on Hudbay’s website.

Qualified Person

The technical and scientific information in this news release has been approved by Cashel Meagher, P. Geo., Hudbay’s Vice-President, South America Business Unit, a qualified person pursuant to National Instrument 43-101, Standards of Disclosure for Mineral Projects.

Quality Control and Data Verification

Details regarding verification of data, including sampling, analytical and test data underlying the information herein, is based on the same process contained in the technical report titled “Constancia Project Technical Report”, dated February 21, 2011, available under Norsemont Mining Inc.’s profile at www.sedar.com.

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Forward-Looking Information

This news release contains “forward-looking statements” and “forward-looking information” (collectively, “forward-looking information”) within the meaning of applicable Canadian and United States securities legislation. All information contained in this news release, other than statements of current and historical fact, is forward-looking information. Forward-looking information includes information that relates to, among other things, our objectives, strategies, and intentions and future financial and operating performance and prospects. 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 statement.

Forward-looking information includes, but is not limited to, continued production at Hudbay’s 777 and Lalor mines, continued processing at Hudbay’s Flin Flon concentrator, Snow Lake concentrator and Flin Flon zinc plant, Hudbay’s ability to develop its Lalor, Constancia and Reed projects and the anticipated scope of, cost of and development plans for, these projects, anticipated timing of Hudbay’s projects and events that may affect our projects, Hudbay’s expectation that it will receive the remaining US$250 million deposit payment under the precious metals stream transaction with Silver Wheaton Corp., the anticipated effect of external factors on revenue, such as commodity prices, anticipated exploration and development expenditures and activities and the possible success of such activities, estimation of mineral reserves and resources, mine life projections, timing and amount of estimated future production, 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 Hudbay identified and were applied by it in drawing conclusions or making forecasts or projections set out in the forward looking information include, but are not limited to:

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

·the accuracy of geological, mining and metallurgical estimates;

·the costs of production;

·the supply and demand for metals Hudbay produces;

·the volatility of commodity prices;

·the volatility in foreign exchange rates;

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

·the supply and availability of reagents for Hudbay’s concentrators;

·the availability of third party processing facilities for Hudbay’s concentrate;

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

·the availability of transportation services at reasonable prices;

·no significant unanticipated operational or technical difficulties;

·the availability of financing for Hudbay’s exploration and development projects and activities;

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

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

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

·maintaining good relations with the communities in which Hudbay operates, including the communities surrounding its Constancia project;

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

·no significant unanticipated events relating to regulatory, environmental, health and safety matters;

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

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

·any assumptions related to taxes, including, but not limited to current tax laws and regulations; and

·no significant and continuing adverse changes in general economic conditions or conditions in the financial markets.

The risks, uncertainties, contingencies and other factors that may cause actual results to differ materially from those expressed or implied by the forward-looking information may include, but are not limited to, risks generally associated with the mining industry, such as economic factors (including future commodity prices, currency fluctuations and energy prices), uncertainties related to the development and operation of Hudbay’s projects, depletion of Hudbay’s reserves, risks related to political or social unrest or change and those in respect of aboriginal and community relations and title claims, operational risks and hazards, including unanticipated environmental, industrial and geological events and developments and the inability to insure against all risks, failure of plant, equipment, processes, transportation and other infrastructure to operate as anticipated, compliance with government and environmental regulations, including permitting requirements and anti-bribery legislation, dependence on key personnel and employee relations, volatile financial markets that may affect Hudbay’s ability to obtain financing on acceptable terms, 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, Hudbay’s ability to comply with its pension and other post-retirement obligations, Hudbay’s ability to abide by the covenants in its debt instruments, as well as the risks discussed under the heading “Liquidity and Capital Resources” in Hudbay’s MD&A dated November 1, 2012 and the risks discussed under the heading “Risk Factors” in Hudbay’s most recent Annual Information Form, Form 40-F and MD&A dated August 14, 2012.

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

Information concerning Hudbay’s mineral properties has been prepared in accordance with the requirements of Canadian securities laws, which differ in material respects from the requirements of SEC Industry Guide 7.

Under Securities and Exchange Commission (the “SEC”) Industry Guide 7, mineralization may not be classified as a “reserve” unless the determination has been made that the mineralization could be economically and legally produced or extracted at the time of the reserve determination, and the SEC does not recognize the reporting of mineral deposits which do not meet the United States Industry Guide 7 definition of “Reserve”.

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In accordance with National Instrument 43-101 - Standards of Disclosure for Mineral Projects (“NI 43-101”) of the Canadian Securities Administrators, the terms “mineral reserve”, “proven mineral reserve”, “probable mineral reserve”, “mineral resource”, “measured mineral resource”, “indicated mineral resource” and “inferred mineral resource” are defined in the Canadian Institute of Mining, Metallurgy and Petroleum (the “CIM”) Definition Standards for Mineral Resources and Mineral Reserves adopted by the CIM Council on December 11, 2005.

While the terms “mineral resource”, “measured mineral resource”, “indicated mineral resource” and “inferred mineral resource” are recognized and required by NI 43-101, the SEC does not recognize them. You are cautioned that, except for that portion of mineral resources classified as mineral reserves, mineral resources do not have demonstrated economic value. Inferred mineral resources have a high degree of uncertainty as to their existence and as to whether they can be economically or legally mined.

It cannot be assumed that all or any part of an inferred mineral resource will ever be upgraded to a higher category. Therefore, you are cautioned not to assume that all or any part of an inferred mineral resource exists, that it can be economically or legally mined, or that it will ever be upgraded to a higher category. Likewise, you are cautioned not to assume that all or any part of measured or indicated mineral resources will ever be upgraded into mineral reserves. You are urged to consider closely the disclosure on the technical terms in Schedule A “Glossary of Mining Terms” of Hudbay’s annual information form for the fiscal year ended December 31, 2011, available on SEDAR at www.sedar.com and incorporated by reference as Exhibit 99.1 in Hudbay’s Form 40-F filed on April 2, 2012 (File No. 001-34244).

About Hudbay

Hudbay (TSX, NYSE: HBM) is a Canadian integrated mining company with assets in North and South America principally focused on the discovery, production and marketing of base and precious metals. Hudbay’s objective is to maximize shareholder value through efficient operations, organic growth and accretive acquisitions, while maintaining its financial strength. A member of the S&P/TSX Composite Index and the S&P/TSX Global Mining Index, Hudbay is committed to high standards of corporate governance and sustainability. Further information about Hudbay can be found onwww.hudbayminerals.com.

For further information, please contact:

John Vincic

Vice President, Investor Relations and Corporate Communications

(416) 362-0615

john.vincic@hudbayminerals.com

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