Hudbay Minerals Q1 2025 Earnings Report

Hudbay Minerals EPS Results

• Actual EPS: $0.24
• Consensus EPS: $0.10
• Beat/Miss: Beat by +$0.14
• One Year Ago EPS: $0.22

Hudbay Minerals Revenue Results

• Actual Revenue: $594.90 million
• Expected Revenue: $537.36 million
• Beat/Miss: Beat by +$57.54 million
• YoY Revenue Growth: +13.30%

Hudbay Minerals Announcement Details

• Quarter: Q1 2025
• Date: 5/12/2025
• Time: Before Market Opens
• Conference Call Date: Monday, May 12, 2025
• Conference Call Time: 11:00AM ET

Hudbay Minerals (NYSE:HBM), a diversified mining company, focuses on the exploration, development, operation, and optimization of properties in North and South America. It produces copper concentrates containing gold, silver, and molybdenum; gold concentrates containing zinc; zinc concentrates; molybdenum concentrates; and silver/gold doré. The company's flagship project is the 100% owned Constancia mine located in the Province of Chumbivilcas in southern Peru. Hudbay Minerals Inc. was founded in 1927 and is based in Toronto, Canada.

Hudbay Minerals Q1 2025 Earnings Call Transcript

Key Takeaways

• Hudbay delivered 31,000 tonnes of copper and 74,000 ounces of gold in Q1 2025, achieving a record low consolidated cash cost of negative $0.45 per pound and a new quarterly adjusted EBITDA high of $287 million.
• All three operations—Peru (Constancia), Manitoba (Lalor/Lake operations) and British Columbia (Copper Mountain)—reported strong throughput, higher grades and disciplined cost control, keeping the company on track for full-year production and cost guidance.
• Hudbay’s balance sheet remains robust with $583 million in cash, net debt of $526 million (0.6× leverage) and seven consecutive quarters of free cash flow generation, totaling over $350 million in the last 12 months.
• The company consolidated 100% ownership of Copper Mountain and secured all permits for Copper World, a project that will boost long-term copper output by over 50% once in production, with a JV partnership process underway.
• Hudbay is advancing a multi-faceted growth pipeline, including brownfield expansions like the Constancia pebble crusher, extensive Snow Lake exploration (Lalor, 1901 and regional targets), and strategic greenfields such as the Mason copper project in Nevada.

Presentation

[Operator]

Good morning, ladies and gentlemen. Thank you for standing by. Welcome to the Hudbay Minerals Incorporated First Quarter twenty twenty five Results Conference Call. At this time, all participants are in listen only mode. Following the presentation, we will conduct a question and answer session.

[Operator]

M. Eastern Time. I will now turn the call over to Candace Brule, Vice President, Investor Relations. Please go ahead.

[Candace Brule, VP - IR, Financial Analysis and External Communications at Hudbay Minerals]

Thank you, operator. Good morning, and welcome to Hudbay's twenty twenty five first quarter results conference call. Hudbay's financial results were issued this morning and are available on our website at www.hudbay.com. A corresponding PowerPoint presentation is available in the Investor Events section of our website, and we encourage you to refer to it during this call. Our presenter today is Peter Kukielski, Hudbay's President and Chief Executive Officer.

[Candace Brule, VP - IR, Financial Analysis and External Communications at Hudbay Minerals]

Accompanying Peter for the Q and A portion of the call will be Eugene Lee, our Chief Financial Officer and Andre Lozon, our Chief Operating Officer. Please note that comments made on today's call may contain forward looking information, and this information, by its nature, is subject to risks and uncertainties, and as such, actual results may differ materially from the views expressed today. For further information on these risks and uncertainties, please consult the company's relevant filings on SEDAR plus EDGAR. These documents are also available on our website. As a reminder, all amounts discussed on today's call are in U.

[Candace Brule, VP - IR, Financial Analysis and External Communications at Hudbay Minerals]

S. Dollars unless otherwise noted. And now I'll pass the call over to Peter Kukielski.

[Peter Kukielski, President & Chief Executive Officer at Hudbay Minerals]

Thank you, Candace. Good morning, everyone, and thank you for joining us for today's call. Our strong performance in the first quarter of twenty twenty five demonstrated the benefits of Hudbay's unique diversification from our enhanced operating platform in North And South America and our resilience through effective cost control. This has allowed us to continue to generate substantial free cash flow and achieve industry leading margins. Consistent execution across all three of our operations has delivered in line consolidated copper production and better than expected gold production this quarter.

[Peter Kukielski, President & Chief Executive Officer at Hudbay Minerals]

We continue to benefit from strong and consistent mill throughput in Peru, higher grades and higher mill throughput in Manitoba and ongoing optimization efforts in British Columbia. We are extremely well positioned to deliver our full year 2025 consolidated production and cost guidance. We also made significant progress in advancing our growth strategy during the quarter. We consolidated ownership at Copper Mountain to increase our exposure to a high quality asset in the Tier one jurisdiction. And we are now fully permitted at Copper World, which once in production will increase our long term copper production by more than 50%.

[Peter Kukielski, President & Chief Executive Officer at Hudbay Minerals]

We are executing our plan to continue to increase exposure to copper and gold and unlock significant value for all our stakeholders. Turning to Slide three, the results in the first quarter reflect stable copper production, complementary gold production and exceptional cost performance across the business. Consolidated copper production was 31,000 tons, in line with quarterly cadence expectations. Consolidated gold production was 74,000 ounces, exceeding our expectations for the quarter, primarily due to continued outperformance in Manitoba, which I'll touch on in a moment. We had another quarter of industry leading cost performance with record low consolidated cash costs of negative $0.45 per pound and sustaining cash costs of $0.72 per pound.

[Peter Kukielski, President & Chief Executive Officer at Hudbay Minerals]

These costs significantly improved compared to last quarter as a result of higher byproduct credits and strong operating cost performance across all business units, partially offset by planned lower production levels in Peru during the quarter. First quarter adjusted EBITDA achieved a new quarterly record of $287,000,000 and represented a further 12 increase compared to the strong adjusted EBITDA generated in the fourth quarter. Adjusted net earnings per share was $0.24 in the first quarter, representing a sharp increase from the fourth quarter as a result of higher gross margins from strong revenue growth on the back of higher realized copper and gold prices and strong unit cost control. We ended the quarter with $583,000,000 in cash and cash equivalents, including short term investments. Our net debt was $526,000,000 maintaining our leverage ratio of 0.6 times at the end of the first quarter, in line with the last quarter.

[Peter Kukielski, President & Chief Executive Officer at Hudbay Minerals]

Hudbay has successfully delivered seven consecutive quarters of meaningful free cash flow generation as shown on Slide four. This is a result of the benefits from recent Brownfields investments, continuous operational improvement efforts and steady cost control across the business. Over the last twelve months, we have generated more than $350,000,000 in free cash flow and nearly $900,000,000 in adjusted EBITDA. While the majority of revenues continue to be derived from copper, gold represented a higher portion of total revenues at 38 percent in the first quarter compared to 35% in the fourth quarter of twenty twenty four. Our unique copper and gold diversification provides significant leverage to higher copper and gold prices.

[Peter Kukielski, President & Chief Executive Officer at Hudbay Minerals]

For every 10% increase in annual copper price, operating cash flows are expected to increase by an additional $100,000,000 and a similar 10% increase in annual gold price adds $56,000,000 to operating cash flows. The unique copper and gold diversification, together with strong operating cost performance at all operations, continues to position Hudbay as the lowest cost copper producer among our peers. Our fortified balance sheet and robust free cash flow generation will allow us to continue to prudently reinvest in our portfolio of attractive high return brownfield and greenfield opportunities to drive near term and long term production growth. Now turning to our operating assets, starting on Slide five. Peru's first quarter production was in line with quarterly cadence expectations as we are completing the final stripping phase at Pampacancha.

[Peter Kukielski, President & Chief Executive Officer at Hudbay Minerals]

Constancia produced 20,000 tons of copper, 8,000 ounces of gold, 550,000 ounces of silver and approximately 400 tons of molybdenum. We are on track to achieve our 2025 production guidance for all metals in Peru. The Constancia mill achieved an average of approximately 90,000 tons per day in the first quarter, consistent with recent quarters and far exceeding original design capacity. Mill recoveries for all metals remained in line with our metallurgical models for the ore type that was being processed. The operations delivered better than expected cost performance in the first quarter.

[Peter Kukielski, President & Chief Executive Officer at Hudbay Minerals]

Combined unit operating costs were $11.09 per ton, a 27% improvement over the fourth quarter as we experienced lower overall on-site costs and the previous quarter was impacted by a planned plant shutdown. Our unit operating cost performance continues to position Constancia as one of the lowest cost open pit copper mines in South America. Cash costs in the first quarter were $1.11 per pound, which outperformed our quarterly cadence expectations as a result of strong operating cost performance and higher byproduct prices. Cash costs outperformed the low end of the 2025 guidance range, positioning us well to achieve the full year cash cost guidance in Peru. Looking forward, we are advancing engineering studies for the construction of a pebble crusher at Constancia commencing in late twenty twenty five.

[Peter Kukielski, President & Chief Executive Officer at Hudbay Minerals]

This is expected to further increase throughput levels starting in the second half of twenty twenty six. In Manitoba, we achieved impressive metal production and cost performance in the quarter as shown on Slide six. This resulted in gold production and cash costs significantly exceeding our budgeted targets for the quarter. The operations produced 60,000 ounces of gold, a meaningful 17% increase compared to the fourth quarter due to higher grades. The operations also produced 3,500 tons of copper, 6,300 tons of zinc and 286,000 ounces of silver in the first quarter.

[Peter Kukielski, President & Chief Executive Officer at Hudbay Minerals]

We saw significant improvements in ore quality at Lalor, which aligns with the improvements in mining techniques we have been implementing, including long hole muck fragmentation and anticipated higher grade precious metal sequences. Recent enhancements at both the New Britannia and Stall mills Stall have been contributing to the strong performance in Snow Lake. New Britannia achieved an average throughput of 2,100 tons per day in the first quarter with the installation of new elongated cyclones. This upgrade mirrors successful upgrades previously completed at

[Peter Kukielski, President & Chief Executive Officer at Hudbay Minerals]

Stall as we continue to look for low capital projects to boost throughput while maintaining strong gold recoveries. New Britannia gold recoveries of 90% were consistent with the fourth quarter. At the Stall mill, a slight quarter over quarter reduction in throughput occurred as we were able to divert more ore to New Britannia. The mill achieved gold recoveries of 70% in the quarter, realizing the efforts of our recent recovery improvement programs. The Manitoba operations continued to drive operating efficiencies, resulting in improved cost performance on both the unit operating basis and on a cash cost basis.

[Peter Kukielski, President & Chief Executive Officer at Hudbay Minerals]

Gold cash costs were $376 per ounce, a 38% decrease compared to the fourth quarter as a result of higher gold production, lower mining and milling costs and favorable exchange rates. We are well on track to achieve our production guidance for all metals and cash cost guidance in Manitoba in 2025. Moving to our third operating business unit on Slide 7, our British Columbia operations benefited from ongoing optimization efforts in the first quarter. We continue to focus on advancing our optimization plans for Copper Mountain, including opening up the mine and optimizing the mine ore feed for the plant as well as implementing plant improvement initiatives. This has resulted in increased total tons moved and improved mill reliability.

[Peter Kukielski, President & Chief Executive Officer at Hudbay Minerals]

The operations produced 7,000 tons of copper, 5,600 ounces of gold and approximately 80,000 ounces of silver. Production of all metals increased compared to the fourth quarter largely due to higher grades. We are on track to achieve our 2025 production guidance for all metals in British Columbia, and we continue to expect higher production levels in the second half of the year associated with the completion of mill improvement projects. On the mining side, we continue to execute the three year accelerated stripping program to bring higher grade ore into the mine plan. The focus in the quarter was on mining efficiencies and operator recruitment to effectively utilize the available haul truck fleet.

[Peter Kukielski, President & Chief Executive Officer at Hudbay Minerals]

As a result, total material moved is expected to continue to increase quarter over quarter in 2025 as per the mine plan. Mill throughput in the first quarter was similar to the fourth quarter and a number of initiatives were implemented to increase throughput later this year. Additionally, with the planned conversion of the third ball mill to a second SAG mill in the second half of twenty twenty five, mill throughput is anticipated to ramp up towards 50,000 tonnes per day in 2026. The accelerated stripping efforts unlocked a higher grade mining sequence during the first quarter, which reduced the use of stockpiles for ore feed and enabled higher milled copper and gold grades in the quarter compared to last quarter. Copper recoveries were 78% and gold recoveries were 63% in the quarter.

[Peter Kukielski, President & Chief Executive Officer at Hudbay Minerals]

Similar to our other operations, British Columbia achieved strong cost performance. Cash costs were $2.44 per pound in the quarter, an improvement over the fourth quarter as a result of higher by product credits and the realized benefits from ongoing optimization efforts. We are on track to achieve our 2025 cash cost guidance range in British Columbia. At the March, we announced the acquisition of Mitsubishi Materials' twenty five percent minority interest in Copper Mountain. The transaction closed at the April and resulted in Hudbay consolidating 100% interest in the Copper Mountain mine.

[Peter Kukielski, President & Chief Executive Officer at Hudbay Minerals]

This highly accretive transaction increases our exposure to a long life, high quality copper asset in a Tier one minuteing jurisdiction and demonstrates our conviction in the long term benefits from our optimization efforts. It also reinforces Hudbay's position as the second largest copper producer in Canada. At the March, we released our three year production outlook with our annual reserve and resource update as summarized on Slide eight. In Peru, annual production is expected to average approximately 88,000 tons of copper and 31,000 ounces of gold over the next three years. This reflects steady copper production levels as higher mill throughput is expected to offset lower grades starting in 2026 after the depletion of Pampacancha in late twenty twenty five.

[Peter Kukielski, President & Chief Executive Officer at Hudbay Minerals]

In Manitoba, the life of mine production schedule has been optimized for higher mill throughput rates at New Britannia, maximizing gold production and cash flows. Snow Lake annual gold production is expected to average more than 193,000 ounces over the next three years. We increased the gold production guidance in all three years compared to prior guidance and the most recent technical report as a result of the continued impressive operating performance. In British Columbia, annual production is expected to average approximately 44,000 tons of copper and 28,600 ounces of gold over the next three years. Upon completion of Hudbay's optimization activities, twenty twenty seven copper production is expected to be 60,000 tons, representing a 127% increase from 2024.

[Peter Kukielski, President & Chief Executive Officer at Hudbay Minerals]

The 2027 copper production guidance is 20% higher than the contemplated production in the most recent technical report as a result of the deferral of higher grades from 2026 to 2027 with the current accelerated stripping schedule. Consolidated copper production over the next three years is expected to average 144,000 tonnes, representing a 4% increase from 2024. This increase is driven by higher copper production in British Columbia, which more than offsets the depletion of the Pampacancha deposit in Peru at the end of twenty twenty five. Consolidated gold production over the next three years is expected to average 253,000 ounces with higher gold production levels in Manitoba compared to prior guidance. These steady copper and gold production levels over the next three years will allow us to continue to generate meaningful cash flow to reinvest in our high return brownfield opportunities and our Copper World growth project.

[Peter Kukielski, President & Chief Executive Officer at Hudbay Minerals]

Turning to Slide nine. Copper World is the most advanced greenfield project in our portfolio and offers significant copper exposure and highly attractive project economics. Copper World is a fully permitted project on private land and is expected to produce 85,000 tons of copper per year over the initial twenty year mine life in the first phase. The project generates an NPV of $1,100,000,000 and an after tax IRR of 19% at a copper price of $3.75 per pound. Copper World is one of the highest grade open pit copper projects in The Americas with mineral reserves of three eighty five million tons at 0.54% copper.

[Peter Kukielski, President & Chief Executive Officer at Hudbay Minerals]

Once in production, Copper World is expected to be the fourth largest copper producer in The United States and will increase our consolidated copper production by more than 50% from current levels as mentioned earlier. Copper World will be a meaningful copper producer in The U. S. Domestic supply chain, producing made in America copper cathode to be sold to domestic U. S.

[Peter Kukielski, President & Chief Executive Officer at Hudbay Minerals]

Customers. In January of twenty twenty five, we received the final major permit required for the development and operation of Copper World. Since then, we have commenced the minority joint venture partnership process and have been focused on advancing feasibility studies to progress the project towards a potential sanction decision in 2026. We have several exploration opportunities as part of our long term growth pipeline, including many promising targets in Snow Lake. Slide 10 summarizes the threefold strategy we are executing with the largest exploration program currently underway in Snow Lake.

[Peter Kukielski, President & Chief Executive Officer at Hudbay Minerals]

The first goal is to focus on near mine exploration at Lalor in 1901 to enhance near term production and extend mine life. At Lalor Northwest, follow-up drilling continued to intersect copper gold mineralization, including 16.4 grams per ton gold over 3.7 meters as well as 2.6% copper over 3.5 meters. Our plans for 2025 include continued surface drilling at both Laurel Northwest and Laurel Down Plunge to test the extent of the mineralization. Additionally, we released positive step out drilling results at 1901 in March that intersected significant copper gold mineralization, including 14.3% copper over 2.5 meters and 8.3 grams per tonne gold over 3.2 meters. Further exploration at 1901 is planned for 2025, targeting additional step out drill holes to potentially extend the ore body and infill drilling to convert inferred mineral resources in the gold lenses to mineral reserves.

[Peter Kukielski, President & Chief Executive Officer at Hudbay Minerals]

The second strategic goal is to test regional satellite deposits for potential ore feed to utilize the available processing capacity at our Stall mill and further increase production. With our significant Snow Lake land package, we have an attractive portfolio of regional deposits, including the Talbot, Rail, PENN2, Watts, three Zone and WIM deposits. And finally, the third and probably the most exciting goal is to explore our large land package for a new anchor deposit to significantly extend the mine life of our Snow Lake operations. We are conducting the largest geophysics program in our history in Snow Lake consisting of 800 kilometers of ground electromagnetic surveys and an extensive airborne geophysical survey. Turning to Slide 11.

[Peter Kukielski, President & Chief Executive Officer at Hudbay Minerals]

An important part of how we operate is in our commitment to earning trust and building transparency with communities near our operations. In Manitoba, our indigenous relations strategy has been effective in guiding positive relationships with First Nations communities and advancing shared opportunities. As part of this strategy, we are very pleased to have signed two exploration agreements over the first quarter. Our first ever exploration agreement in Manitoba was signed with the Kitchiwapa Cree Nation in February, reflecting our commitment to meaningful collaboration as we explore for new mineral resources in Stow Lake and Flin Flon. In April, we signed an exploration agreement with the Musakahegan Cree Nation, marking a significant step towards building on our projects in the Moose Lake region, including the Talbot copper zinc gold deposit.

[Peter Kukielski, President & Chief Executive Officer at Hudbay Minerals]

We expect to commence a summer drill program at Talbot to potentially upgrade the existing mineral resource estimate. Additionally, in Flin Flon, we continue to advance tailings reprocessing studies to recover critical minerals and precious metals while creating environmental and social benefits for the region. An early economic study on the zinc plant tailings opportunity has confirmed the potential for a technically viable reprocessing alternative and we are progressing with further engineering work. In Peru, the drill permits for the highly prospective Maria Reyna and Caballito properties near Constancia continue to proceed through the regulatory process. The drill permit environmental impact assessments were approved by the government last year.

[Peter Kukielski, President & Chief Executive Officer at Hudbay Minerals]

The government is carrying out the remaining steps in the regulatory process and is targeting completion in 2025. Once we receive the drill permits, we plan to initiate an extensive eighteen month drill program to test the potential of these properties that are located within tracking distance of the Constancia processing facility and provide significant growth potential for our Peru business. As part of our long term pipeline of high quality growth opportunities, we also have the Mason copper project in Nevada. Mason is one of the largest undeveloped copper porphyry deposits in North America and has the potential to be the third largest copper mine in The United States once in operation. The mine plan contemplates a twenty seven year mine life with an average annual copper production of roughly 140,000 tons over the first ten years.

[Peter Kukielski, President & Chief Executive Officer at Hudbay Minerals]

We continue to advance our local stakeholder engagement While Mason is not as advanced as Copper World, Mason represents a significant opportunity to unlock value in a high quality copper asset located in The United States. Concluding on Slide 12, Hudbay's leading copper development and exploration pipeline of low cost, stable operating platform in Tier one jurisdictions offers investors meaningful copper exposure, complementary gold exposure and strong near term cash flow generation. We currently produce more than 130,000 tonnes of copper per year, which is further augmented by more than 250,000 ounces of gold per year, offering commodity diversification and cash flow resiliency in volatile pricing environments. We believe that copper has the best long term supply and demand fundamentals in the sector as global copper mine supply will be unable to meet demand from the global energy transition and AI technology needs. Hudbay's strong operating platform and resilient balance sheet offers significant upside potential for further value creation at higher copper and gold prices and as we prudently advance our many high return copper growth opportunities.

[Peter Kukielski, President & Chief Executive Officer at Hudbay Minerals]

And with that, we are pleased to take your questions.

[Operator]

Thank you. Ladies and gentlemen, we will now begin the question and answer session. Our first question is from Orest Wowkodaw with Scotiabank. Please go ahead.

[Orest Wowkodaw, Managing Director, Senior Research Analyst, Metals and Mining at Scotiobank]

Hi, good morning. Question around Peru and Constancia. The throughput that you've been operating at has been pretty impressive, close to 90,000 tons a day. Do you I'm just curious if you think that's sustainable moving forward? Or at what point do you see the ore hardness perhaps starting to bring that down?

[Peter Kukielski, President & Chief Executive Officer at Hudbay Minerals]

Orest, thanks for the question. I mean, we've been super pleased with the performance in Peru. It's actually been pleased with performance throughout the business in this past quarter. We are fairly confident in operating in Peru at the moment. We think that the results that we have are repeatable.

[Peter Kukielski, President & Chief Executive Officer at Hudbay Minerals]

But why don't I turn it over to Andre to give you a little bit more color about hardness?

[André Lauzon, Senior Vice President & Chief Operating Officer at Hudbay Minerals]

Orest, it's Andre. Yes, thanks for the question. So in the quarter, we did actually go through some harder materials. Well, there's some softer and harder material. What our strategy has been is we've been using pebble rejection since about mid December when we get through the harder feeds.

[André Lauzon, Senior Vice President & Chief Operating Officer at Hudbay Minerals]

And even with some of those harder feeds, we're seeing I know you quote the 90,000 on average with those are with maintenance days, Matt. We're seeing in excess of some days over 100,000 tonnes per day. And we're very pleased with that. And so what that does for us is where it allows us to push to test the limits of our flow sheet downstream, our flotation, our thickeners, our pumps, all of those in anticipation for the higher throughput when our pebble crushers come in. And so to your question is, the pebble rejection has been quite successful.

[André Lauzon, Senior Vice President & Chief Operating Officer at Hudbay Minerals]

We have the ability to reject probably about one point million tons of pebbles a year. And it has two benefits. The first one, as you mentioned, like you're seeing in throughput, but the other is on grade because the pebbles that we reject tend to be much lower grade around 0.13 copper. And the remaining feed is bumped up and we've replenished the feed through the SAG mills with much higher grade materials. I guess in short, we're pretty comfortable in terms of what we've done to date, and we're going to continue doing that through the course of the year.

[André Lauzon, Senior Vice President & Chief Operating Officer at Hudbay Minerals]

And then as we Peter mentioned in the conference call notes that we're planning on putting pellet crushers in later this year, that will further enhance our production going in 2026 and beyond.

[Orest Wowkodaw, Managing Director, Senior Research Analyst, Metals and Mining at Scotiobank]

Okay. And as a follow-up, the changes to the Peru regulations that you can flex up throughput by up to 10%, is that what's the baseline for that in terms of what that's being measured against?

[Peter Kukielski, President & Chief Executive Officer at Hudbay Minerals]

Go ahead, Andre.

[André Lauzon, Senior Vice President & Chief Operating Officer at Hudbay Minerals]

I believe the final number, and I don't have it in front of me, it gets up to is it 20 can you help me, Ken, don't have it in front of me, is it $24,000,000 a year? We can we'll get it to you offline, the actual number, but it's I believe it's $2,424,000,000 dollars We'll have get back to you on that order. I don't have it in front of me here.

[Orest Wowkodaw, Managing Director, Senior Research Analyst, Metals and Mining at Scotiobank]

Okay. Thank you very much. Yes.

[Peter Kukielski, President & Chief Executive Officer at Hudbay Minerals]

Thanks, Orest.

[Operator]

The next question is from Matthew Murphy with BMO Capital Markets. Please go ahead.

[Matthew Murphy, MD - Equity Research at BMO Capital Markets]

Hi. Just looking at the cost performance, strong costs in Q1 and maybe just starting on Manitoba. So the Stall mill costs were down $10 a ton quarter over quarter. Anything funny in those numbers? Or can you talk about some of the optimization you're putting in

[Matthew Murphy, MD - Equity Research at BMO Capital Markets]

place to achieve these costs?

[Peter Kukielski, President & Chief Executive Officer at Hudbay Minerals]

Morning, Metro. I think we've been just really, really pleased with the level of performance of the Manitoba team. So they've been super disciplined in making sure that they continue to perform. They've done an incredible job at reducing mine dilution and maximizing ore recovery through continuous improvements in the mining process. And I think that these operational improvements, when you combine them with the identification of additional high

[Operator]

Ladies and gentlemen, this is the conference operator. We've lost our connection with the main speakers' location and we'll rejoin it shortly. Please standby. Ladies and gentlemen, the main speakers have connected with us. Please go ahead.

[Peter Kukielski, President & Chief Executive Officer at Hudbay Minerals]

Sorry about that, Matt. I was saying that the operating team at Lalor has done a really, really good job at reducing mining dilution and maximizing ore recovery to the continuous improvement processes in the mining at the mining side. And these operational improvements, when you combine them with the identification of additional high grade gold resources have resulted in pretty positive reconciliation of the order of 10% in contained gold that's been extracted compared to our reserve model in 2024. So I think we're in pretty good shape to be able to replicate that. But Andre, would you add anything to that?

[André Lauzon, Senior Vice President & Chief Operating Officer at Hudbay Minerals]

No, no. I had nothing to add there, Peter.

[Peter Kukielski, President & Chief Executive Officer at Hudbay Minerals]

Okay. Thank you.

[Matthew Murphy, MD - Equity Research at BMO Capital Markets]

Okay, great. And then as another question, just interested in Pampacancha. As you're stripping, are you seeing anything that's going to inform how far it goes this year? Or is it more or less as you expected in terms of what you're seeing in the pit?

[Peter Kukielski, President & Chief Executive Officer at Hudbay Minerals]

Is, Matt. It is more or less what you expected. It's going to be depleted by the end by December of twenty twenty five. And there really is limited ability to extend it beyond Q4 of twenty twenty five because the deposits are already well defined. But that said, Constancia is a super strong copper producer even after the depletion of Pampacancha.

[Peter Kukielski, President & Chief Executive Officer at Hudbay Minerals]

And it will maintain the 85,000 to 90,000 tons of copper production levels in 2026 and beyond. And as you know, the next satellite opportunity that we have is to explore Marirena and Caballito. And those are highly prospective and located within tracking distance of Constancia. And they've got the potential to significantly increase production beyond the 85,000 tons to 90,000 tonnes per annum. So yes, short answer to your question is Pampacancha will be depleted in 2025, but we've got line of sight to something much better.

[Peter Kukielski, President & Chief Executive Officer at Hudbay Minerals]

And with the improvements that Andre talked about with throughput at the mine, we're very confident of our ability to sort of maintain production at the level that we're talking about.

[Matthew Murphy, MD - Equity Research at BMO Capital Markets]

Okay. Thank you.

[Peter Kukielski, President & Chief Executive Officer at Hudbay Minerals]

Welcome.

[Operator]

The next question is from Ralph Profiti with Stifel. Please go ahead.

[Ralph Profiti, Managing Director & Senior Equity Research Analyst at Stifel Financial Corp]

Thanks, operator. Good day, everyone. Peter and maybe Eugene, have you begun the process of prioritizing certain partnerships at Copper World narrowing down that list or are you still in the process of sort of widening and it's more of a fulsome analysis still? And specifically, I'm looking at notwithstanding today's interest in the gold price, interest from gold mining partners. Has that come in proportion to the gold price?

[Ralph Profiti, Managing Director & Senior Equity Research Analyst at Stifel Financial Corp]

Or has that level of interest from that particular party been consistent?

[Peter Kukielski, President & Chief Executive Officer at Hudbay Minerals]

Thanks, Rob. I would say that the JV process is progressing very well. We've received lots and lots of interest as you'd expect given the quality of the asset. And I think the fact is that permitted copper development projects in The U. S.

[Peter Kukielski, President & Chief Executive Officer at Hudbay Minerals]

Are scarce and permitted conversion facilities that will produce cathode copper from concentrate are non existent outside of copper world. So that layered on with the effect of gold prices resulted in an extremely robust process. We've had tons of interest. And yes, certainly the gold parties have shown interest. I would proportionately, it's nothing beyond what we would expect, but interest has been very, very strong and we're motoring along with the process as you'd expect.

[Ralph Profiti, Managing Director & Senior Equity Research Analyst at Stifel Financial Corp]

Okay.

[Ralph Profiti, Managing Director & Senior Equity Research Analyst at Stifel Financial Corp]

And then you have mentioned Maria Reyna and Colbaito both in the Q and A and your prepared remarks. And I'm wondering if we can be a little bit more definitive on expected completion within 2025 of getting those permits and whether or not it's a stretch to expect certain results or some results within 2025 on drilling?

[Peter Kukielski, President & Chief Executive Officer at Hudbay Minerals]

Yes, it's a good question. So if I back up a little bit, I think that you're aware that we had the environmental impact assessments for Maria Reyna and Caballito were approved last year. We then agreed with the Peruvian government to combine the permitting processes for both satellites so that the government could continue with the remaining regulatory steps both properties simultaneously, which streamlines the approach. May take a little longer, but it will be more efficient and better for all parties. So what I'd say is the process that remains right now is a government run process.

[Peter Kukielski, President & Chief Executive Officer at Hudbay Minerals]

And we're being disciplined. We're not rushing it. I know that we know from our Pampacancha experience that sometimes it takes longer than you might expect. But the key right now is to let the government complete its process. We have been told that it will be completed this year.

[Peter Kukielski, President & Chief Executive Officer at Hudbay Minerals]

We do know that these will be mines one day. And I think that we have the right approach in being patient. I believe that it's certainly worth the wait. With that said, I can't really define specifically when we would start drilling. It will be literally as soon as we get the permits in hand and we expect that that will be concluded this year, but we can't rush the process.

[Ralph Profiti, Managing Director & Senior Equity Research Analyst at Stifel Financial Corp]

Thank you, Peter for those important answers.

[Peter Kukielski, President & Chief Executive Officer at Hudbay Minerals]

You're welcome.

[Operator]

The next question is from Dalton Baretto with Canaccord Genuity. Please go ahead.

[Dalton Baretto, Managing Director, Equity Research at Canaccord Genuity - Global Capital Markets]

Thanks, operator. Good morning, Peter and team and congratulations on a great quarter. Peter, I'm trying to understand Copper World Phase 2 in the context of sort of today's world, if you will. And I guess my first question is around permitting for Phase two. Based on recent executive actions from President Trump, what can you do on Phase two permitting to bring it forward, if anything?

[Dalton Baretto, Managing Director, Equity Research at Canaccord Genuity - Global Capital Markets]

And what would it take to get Phase two on the FAST-forty one track? Thanks.

[Peter Kukielski, President & Chief Executive Officer at Hudbay Minerals]

Sure. And thank you, Dalton, for those kind comments. I think the first comment that I'd make is that the permitting backdrop in The U. S. Is very positive and constructive at the moment.

[Peter Kukielski, President & Chief Executive Officer at Hudbay Minerals]

So that said, your comment relates to Phase two. I'll say that for Phase one, it kind of doesn't make a difference because there's only state permits that are required and it's fully permitted. It does certainly help with respect to the idea of advancing Phase two a little bit earlier. It also adds to sentiment around Phase two, which helps in the joint venture partnering process and it helps all around. I'd also add that it makes it creates a lot more interest potentially in our Mason project.

[Peter Kukielski, President & Chief Executive Officer at Hudbay Minerals]

With respect specifically to Phase two, the focus right now has very much to be on Phase one and getting that going. And one wouldn't really want to confuse the process of Phase one with Phase two. So the time for advancing Phase two is not really now. The time is once we get going with Phase one. The FAST 41 thing has been around for a long, long time because to previous administrations.

[Peter Kukielski, President & Chief Executive Officer at Hudbay Minerals]

And I think it creates a really good constructive sentiment in the space, but it's not really applicable to the Copper World project. Andre, is there anything you would add to what I've said?

[André Lauzon, Senior Vice President & Chief Operating Officer at Hudbay Minerals]

No, I think you're quite clear. Right now, the plan is the plan and we're happy with what the government's promoting, but there's no change in our what we want to do right now.

[Dalton Baretto, Managing Director, Equity Research at Canaccord Genuity - Global Capital Markets]

Great. Thanks guys. And then maybe just as a follow-up on the sort of financing side of Copper World. As you're going through the JV process as well as maybe looking at renegotiating the stream, are you putting in mechanisms to build in value for Phase two? And if so, like how are you thinking about that?

[Eugene Lei, CFO at Hudbay Minerals]

Dalton, it's Eugene here. Thank you for your question. I think as Peter outlined, there's lots of robust interest in Copper World as a project, and that includes Phase two. We're not going to negotiate with the JV over the conference call. So I think we're not at liberty to talk about what value we expect and what people are attributing to it.

[Eugene Lei, CFO at Hudbay Minerals]

I think holistically as Peter outlined, this is a multi phase project with 1,000,000,000 tons of copper, the highest rate undeveloped copper deposit in The Americas with the lowest capital intensity and that can go on for twenty years on private land and much more if we get into Phase two. So I think there's value in this asset and we expect that parties will see that in the JV process.

[Dalton Baretto, Managing Director, Equity Research at Canaccord Genuity - Global Capital Markets]

Great. Thanks, Eugene. I'll jump back in queue.

[Operator]

The next question is from Bryce Adams with Desjardins Securities. Please go ahead.

[Bryce Adams, Equity Research, Metals & Mining at Desjardins Capital Markets]

Hi, all. Sorry if this was asked already. My call dropped and I had to rejoin. But regarding the buyback program that was Board approved, if that's TSX approved, given your growth options, how does it fit into the capital allocation framework? How active do you expect to be?

[Bryce Adams, Equity Research, Metals & Mining at Desjardins Capital Markets]

And are there any guideposts for how that program could be used?

[Eugene Lei, CFO at Hudbay Minerals]

Hi. Thank you for your question, Bryce. Eugene Lee again here. Regarding the NCIB, I think it really reflects, the company maturing and we believe it's good practice for companies of our size to have NCIB in place. Kind of like how we filed the base shelf prospectus last year.

[Eugene Lei, CFO at Hudbay Minerals]

In the context of the transformed balance sheet as you highlight and on the positive end and fairly volatile markets on the negative end that's about that kind of result in some value dislocations, we're going to consider share buybacks as well as bond repurchases as part of our balanced capital allocation strategy to maximize risk adjusted returns. We are in a very strong financial position to prudently advance our many high return growth initiatives and like the Copper Mountain optimization that Peter and Andre talked about, like brownfield projects both in expansion in Peru and Manitoba and obviously the Copper World development project. We have a long term goal of providing meaningful shareholder returns in the form of sustainable dividends and or share repurchases. And I think this NCIB filing is something that we would intend to file kind of for many years to follow and will give us a facility to consider that holistically as we allocate capital across the platform and grow the company sustainably.

[Bryce Adams, Equity Research, Metals & Mining at Desjardins Capital Markets]

Thank you, Eugene. So it's good housekeeping, but not a priority. Is that the quick summary?

[Eugene Lei, CFO at Hudbay Minerals]

I think if we hadn't filed the NCIB, we don't have the ability to buy back shares. Today we do and we'll evaluate that in the context of the opportunities that are available to us, understanding there are many high growth high return growth projects. And so I would say, we now can answer the question, we can buy back shares versus a month ago, we would not be in a position to. And a year ago, our balance sheet was in no position to. So I think it, again, reflects us maturing as a company and it's something that we would consider in the context of valuations as well as the opportunities for risk adjusted returns in portfolio.

[Bryce Adams, Equity Research, Metals & Mining at Desjardins Capital Markets]

Okay. Thanks, Eugene. Thanks, Adbe.

[Operator]

And the final question today is a follow-up from Dalton Baretto with Canaccord Genuity. Please go ahead.

[Dalton Baretto, Managing Director, Equity Research at Canaccord Genuity - Global Capital Markets]

Thanks for taking my follow-up guys. Just a quick question on Copper Mountain. Just around New Anger Bell, can you just give us an update on sort of where that permitting stands and remind us when that deposit comes into the mine plan? Thanks.

[Peter Kukielski, President & Chief Executive Officer at Hudbay Minerals]

Sure. Andre, would you like to take that?

[André Lauzon, Senior Vice President & Chief Operating Officer at Hudbay Minerals]

Sure. Sure. So the permitting process has been going very well. We've been working very closely with the regulators and the local First Nations, the upper and lower smoking bans. The process went through initial screening.

[André Lauzon, Senior Vice President & Chief Operating Officer at Hudbay Minerals]

We just finished the, what they call, is a concordance review, which is a process where the government has gone through and agreed that we provided all of the studies and it meets the criteria for what was required. And so now they're going into a, in simple terms, a regulatory review process. And so we hope to be at a positive result by the end of this year or early into next. And it's probably within a couple of years that you'd expect to see that production and that's reflected in our guidance.

[Dalton Baretto, Managing Director, Equity Research at Canaccord Genuity - Global Capital Markets]

Great. Thanks for that, Andre. That's all I have.

[Operator]

This concludes the question and answer session. I would like to turn the conference back over to Candace Bouley for any closing remarks.

[Candace Brule, VP - IR, Financial Analysis and External Communications at Hudbay Minerals]

Thank you, operator. Thank you everyone for joining us today and thanks for your patience as we work through that little technical issue. If you have any further questions, please feel free to reach out to our Investor Relations team. Thanks and have a great day.

[Operator]

You may disconnect your lines. Thank you for participating and have a pleasant day.

Participants

Executives

• Candace Brule, VP - IR, Financial Analysis and External Communications
• Peter Kukielski, President & Chief Executive Officer
• André Lauzon, Senior Vice President & Chief Operating Officer
• Eugene Lei, CFO

Analysts

• Orest Wowkodaw, Managing Director, Senior Research Analyst, Metals and Mining at Scotiobank
• Matthew Murphy, MD - Equity Research at BMO Capital Markets
• Ralph Profiti, Managing Director & Senior Equity Research Analyst at Stifel Financial Corp
• Dalton Baretto, Managing Director, Equity Research at Canaccord Genuity - Global Capital Markets
• Bryce Adams, Equity Research, Metals & Mining at Desjardins Capital Markets