Good morning, ladies and gentlemen. Thank you for standing by. Welcome to the Hudbay Minerals, Inc. Second Quarter 2021 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 Instructions]. I would like to remind everyone that this conference call is being recorded today, August 10, 2021, at 8:30 A.M. Eastern Time. I would now turn the conference over to Candace Brûlé, Director of Investor Relations. Please go ahead. Candace Brûlé: Thank you, Operator. Good morning and welcome to Hudbay's 2021 second quarter results conference call. Hudbay's financial results were issued yesterday and are available on our website at www.hudbay.com. A corresponding PowerPoint Presentation is available and we encourage you to refer to it during this call. Our presenter today is Peter Kukielski, Hudbay's President and Chief Executive Officer. Accompanying Peter for the Q&A portion of the call will be Steve Douglas, our Senior Vice President and Chief Financial Officer; Cashel Meagher, our Senior Vice President and Chief Operating Officer; and Eugene Lei, our Senior Vice President, Corporate Development and Strategy. 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 and EDGAR. These documents are also available on our website. As a reminder, all amounts discussed on today's call are in U.S. dollars unless otherwise noted. And now, I'll pass the call over to Peter Kukielski. Peter?

Thank you, Candace, and good morning, everyone. Thanks for joining us. As we're halfway through the year and starting to see a bit of light at the end of this long 18 months tunnel, we're still facing COVID-related impacts in the business. We will continue to be vigilant and adapt to the changing environment with our focus remaining on safe and efficient operations. This quarter marks the beginning of our transition to higher production and cash flows as we complete the investment programs at our growth projects. After the successful ramp up of the high grade copper gold Pampacancha deposit, our Peru operations achieved record gold production in the second quarter and are on track for higher copper and gold production in 2022. The New Britannia gold mill remains ahead of the original schedule as the first gold pour is expected this month and the copper flotation circuit remains on track for commissioning and ramp up by the end of the year. We expect to see increased cash flows from these high return investments beginning in the second half of 2021. In this presentation today, I'll touch on our second quarter results, discuss the progress we've made in our growth and ESG initiatives in more detail, and recap the many near-term catalysts we have ahead. Second quarter consolidated copper production was 23.5000 tonnes, a 4% decrease from the first quarter of 2021. This was primarily as a result of lower copper grades at the 777 mine in Manitoba, partially offset by a higher throughput at the Constancia operation in Peru. Consolidated gold production was approximately 40,000 ounces an increase of 12% compared to the previous quarter due to record gold production achieved in Peru from Pampacancha. Consolidated zinc production in the quarter decreased by 23% while silver production decreased by…

Thank you. We'll now begin the question-and-answer session. [Operator Instructions]. Our first question comes from Orest Wowkodaw of Scotiabank. Please go ahead.

Hi, good morning. Peter, I was wondering if you could give us a little bit of a refresher on Peru with respect to your stability agreement in terms of the longevity of it. And with the political changes there recently, has there been any engagement to-date or any color you can provide on whether the new administration plans could honor your existing stability agreement?

Good morning, Orest, and thanks very much for the question. Yes, so absolutely we have a tax stability agreement in place in Peru that stabilize administrative tax, free remittance of profits and access to foreign currency rules through 2021 -- 2020 -- I'm sorry, 2031 or 2032 for both Constancia and Pampacancha. Ultimately it provides a corporate tax rate of 32% for this period, and it allows us to keep our accounting records in U.S. dollars for tax eliminating foreign exchange risk. And in addition, it allows us to claim accelerated depreciation on renewable assets. There's other administrative stability that includes mining royalty rates in Peru. Now, your question, whether we think that that the government might renege on that? I would say that the government would have to change the constitution in order to change or terminate legal stability agreements. In this case, the new constitution would have to allow for these changes or terminations and state that these changes could be retroactively applied to legal agreements under the previous constitution. We think this is pretty unlikely as it would violate several constitutional principles and any changes to the constitution would require a majority vote in a much divided Congress. Remember that, Mr. Castillo's -- President Castillo government does not have majority in Congress and the process to change the constitution would take once, two years, because it would require either a majority approval in Congress or in other words over 50% or a referendum requiring two-thirds approval in Congress in two consecutive legislative sessions. So in the unlikely event that our stability agreement is ultimately changed or terminated, we of course have international arbitration rights available to us. And we don't think it will get to that point. Now to your second question, with respect to engagement with the current government, absolutely, we started our engagement with Mr. Castillo's government before he was named as President just out of because that's the right thing to do. We are engaged with the government at various levels and we'll continue to be engaged with the government. We understand fairly well what he is trying to achieve in Peru. And we do think that what he's trying to achieve in Peru is fairly well aligned with our practices at Constancia in any case. He is looking for what he calls social investment. And what we do at Constancia is precisely that we have over $10 million targeted towards social investment this year, as well as being, having -- being in a position to assist our communities with getting access to substantial additional funding that is available under the kind of mineral. So a long answer to your question or suggest, we do certainly have engagement to the government.

And just as a follow-up, I mean given the current uncertainty or maybe perceived uncertainty this has changed at all, some of your growth plans in Peru with respect to call it exploration on some of those other deposits or is this -- you think this has no impact.

Orest, it doesn't change those times whatsoever, because we believe very, very strongly in the potential of those satellites North of Constancia. And regardless of what the fiscal environment turns out to be we think that a discovery that is something of a like of a Las Bambas or Antapaccay or something like that carries enormous value regardless of that fiscal regime and we will continue to pursue our efforts in metropolitan.

Our next question comes from Jackie Przybylowski of BMO Capital Markets. Please go ahead.

Thanks very much. Maybe I just follow-up on Orest last question I know you noted in the release that you are working on Llaguen right now in Peru, but I think you had previously said you were expecting to be drilling at some of the other properties in Peru closer to Constancia like Maria Reyna, Caballito and Uchucarcco this year. Can you maybe talk a little bit about what your exploration plans are for those properties that are closer to Constancia?

Sure, Jackie, and thanks for the question. So we have already done, as I mentioned in my prepared remarks some sort of pilot training at Quehuincha, but our focus is very much on Maria Reyna and Caballito right now. These are two properties that are owned by Uchucarcco community. Our brilliant team is engaged with the community in order to reach an agreement in order to access those properties. We are hopeful that we will conclude that agreement to close of this year. But remember what I've said previously, that once we conclude that agreement, there's still a way to go because we have to do this. We have to go through a consult behavior process. We need to go through environmental baselining and ultimately obtain the drilling permit needed to commence. And so it's unlikely, I think that we would start actual drilling much before very late next year, if next year, although we would be -- should be able to commence with a surface investigation as soon as we have a community agreement. And perhaps I'll just ask Cashel to comment if there's any other events that I haven't mentioned.

No, yes. I think that's right. Everything you said is correct. And as we know, what's happening in Peru, these negotiations take some time. And Jackie, you mentioned again, our drill program is on underway there. We're drilling; we're confirming the previous 20 or several holes that were drilled by Valley that's going well with community participation. We've had no interruptions and we hope maybe in the next quarter or two to be able to get some results out from that drilling. So it shows that drilling can be accomplished in Peru, in difficult areas, and we're still working towards our agreements with Uchucarcco.

Thanks very much. And maybe that's a good segway, speaking of difficult areas. You didn't really talk a lot about Rosemont in your release this time and certainly, there's a lot more commentary on Copper World. Can you maybe give us a bit of an update? I know it's difficult given that you don't have the court ruling at Rosemont yet, but is Copper World looking like relatively more attractive at this point, would you say versus Rosemont or can you give us any commentary on how those two projects are stack up against each other?

Jack, that's a super interesting question. And I would say that our top priority remains to get Rosemont through the Ninth Circuit Court of Appeals that is priority number one. But copper -- the Copper World discovery certainly does provide us with a very, very interesting either alternative or add-on. And so we've done as you know a lot of work on Copper World. We've identified four separate deposits with potential for several more in a strike length of some five kilometers. Some of those drill results that I mentioned are pretty outstanding and the most interesting feature is that mineralization starts from surface. So clearly, it's something that you can get into right away. But we have to complete the assay program that's currently underway so that we can develop that inferred resource by the end of the year, so that we can in turn complete a PEA early next year. And that really will inform us with respect to sort of how the one stacks up against the other. But in any case, I'd like to come back to my initial comment that Rosemont does remain a priority for us, but Copper World presents a super exciting potential alternative or addition.

Our next question comes from Greg Barnes of TD Securities. Please go ahead.

Hi Peter, I'm just going to follow-up on Jackie's question on Copper World. Just assuming you'd go ahead with that alone for argument sake. We're looking at, I'm assuming separate -- four separate deposits as you noted four separate rigs with centralized milling facility. Obviously, you need tailings. Do you have the space? What is the concept that that you're working on for the PEA?

Yes, Greg, good morning, and thank you for that. So remember that there's a combination of oxide mineralization and sulphide mineralization. So there's potential obviously for an oxide operation, as well as a sulphide operation. We have adequate land on which to deposit tailings as well as on which to deposit waste rock. So we feel fairly comfortable about that. Now the key will depend on the mineral processing technical studies that we undertake as to what the processing routes for the oxide might be. So -- so before we compete that work, we don't know whether it's going to be an SOPW plant or what, but for sure there would be a combination of two plants in order to treat on the one hand oxide mineralization or the oxide or on the other hand, the sulphide. Cashel, you want to elaborate on that at all?

Yes, sure. It presents a great, a good problem for engineers, geologists and our metallurgists. And what we're discovering is that exactly what Peter said, oxide mixed transition and also sulfide ore so there's a combination of flow sheets that might be optimal. There might be a starter mine on an oxide. There might be a sulfide degradation plan certainly building the future of sulfide location. So what we're doing is we're doing the proper leaching tests to understand exactly what that is, and that takes time that's some six or eight months. So that's something we expect, maybe by the end of this year or very optimistically, more likely early next year or into next year. And so we're doing all that work that's the metallurgical work. We continue with four drills right now. We're turning; we're following-up on our drill intersections on the private land. And then one of the things our engineers are looking at is optimizing that drill program to understand where this mineralization is on private lands in the future, if it extends onto government land, how do we optimize those pits and the placement of waste, the placements of tailings, et cetera, et cetera. And so we're working towards it. It's going to take again, the better part of the rest of this year to figure out our mine plans. But we think with the lower strip ratio, when in comparison to Rosemont, it'll present a very positive set of economics and a very compelling case to move forward.

And I don't understand what the permitting approvals process is on private land versus government land. So what do you need to do to move forward with this from that perspective and how long would it take?

Greg, there's only two primary state permits that are required. One is an Air Quality Permit and the other is an Aquifer Protection Permit. As I said, those are both effectible permits and the -- much simpler than the federal permits. The duration required for each of those permits is I would venture to guess of a year, once two years.

Yes. I think that's right. And those, if you remember those are the two types of permits we successfully defended in the past at Rosemont.

And most of the permit with whatsoever required?

That is the goal.

That's the goal with the current mine plan we're trying to obviously construct.

Our next question comes from Lawson Winder of Bank of America Securities. Please go ahead.

Hey guys, good morning. Congratulations on getting concluding those the majority of those union agreements. Maybe just some of those good collective bargaining agreements, is there potentially add any cost pressures, for example, were there any signing bonuses, maybe it's the ones in Peru, some of those production rates is built into those contracts?

Lawson, I'd say in general that the agreements that we concluded in Peru are consistent with everything else that's being done elsewhere in Peru. And I don't think that there's any material effect on our overall costs.

Great. And then just on the COVID costs in Peru, so they stepped up a bit in Q2 versus Q1 now still early in Q3, but where are you seeing those costs trending so far? Are they continuing to march up? Are they starting to dissipate at this point?

Lawson, what I would say is that we expect them to be flat for the remainder of the year. So I had mentioned that we had like $6.3 million of COVID-related costs in the second quarter. And these costs arise out of an abundance of caution with how we operate online. So for example, we have extended the duration of the quarantining in Cusco and Arequipa. We have in several cases demobilized on a progressive basis operators from the mine, when we've had events that have suggested that we should be exercise caution. So we sort of expect that to continue at that level for the remainder of the year. So roughly, I would say probably $35 million or so for the year in COVID-related costs that's flat from now on.

Okay, great. That's very helpful. And then also on the freight and related costs in Peru, they also seem to tick up quite a bit in Q2 versus Q1 at least on a per tonne of con basis. Is the Q2 level sort of persisting in Q3 is that, that what we should expect to the remainder of the year as well?

We have more sales, so on a relative basis; we shouldn't expect any significant change.

For us in Q2, okay. Great. Yes. And then just finally on the exploration agreements for access to Maria Reyna and Caballito will those -- once a settlement is reached, will there be any sort of community cash payments that that will be made or is this just an agreement in principle that sort of sets the stage for future exploitation, consultation, where there will be a cash payment?

There -- Lawson, would no doubt be some cash payments to the community, because that's the only incentive that they really have other than of course the potential for a mine on the road, but they would be looking for some interim cash payments, of course not at the same level as exploitation agreement levels.

Our next question comes from Stefan Ioannou of Cormark Securities. Please go ahead.

Hey, thanks very much guys. I'm just I guess on the question about the COVID costs in Peru, just to be clear, you mentioned, your guidance still stays in effect for 2021. Just wondering is that based on cost to-date and then cost going forward, including or excluding that sort of give or take $6 million quarter run rate?

Just so that I understand your question fully, you're asking me if the costs the $6.3 million are costs just in the quarter. And if we expect that run rate that is around --

Well, I guess if you have another sort of $12 million through the remainder of this year, will you still be in line with your cash cost guidance for the year, or will that put you over?

We would obviously have to adjust the guidance. But we -- so what I've been saying is that we all within guidance, excluding those COVID-related.

Excluding.

Yes.

Okay. Okay. Okay. Got it. Thanks. And it looks like my other questions have been asked, but just can you maybe just give us a bit of an update on sort of the Flin Flon strategy here going forward, obviously 777 is still scheduled for closure I guess in June or so of next year. Is the plan -- is there still to put the concentrator and tailings on care and maintenance and then shut everything else down? Or where are we at with that?

Yes, we will put the -- obviously 777 mine itself would be closed and then we would put the process facilities on care and maintenance.

Okay. And is the refinery going to be closed or put on care and maintenance?

Sorry, the zinc plant will be closed.

It will be closed. Okay. Okay, great. Thanks very much guys.

You’re welcome.

[Operator Instructions]. Our next question comes from Dalton Baretto with Canaccord. Please go ahead.

Thanks. Good morning, Peter and team. Peter, I'm trying to understand the go-forward plan for Rosemont here post the decision. So if you win, I mean, no doubt, it's going to be appealed and that's likely going to take a couple of years. So kind of a two-part question. Number one, are you willing to move forward with major investments, given the uncertainty around that; and number two, how has that appeal going to impact your search for a partner on the project?

Good morning, Dalton. Thanks for the question. Look, I think that there's no point for us. There's no point in us searching for a partner until we have -- until the field is behind us. So that's one thing for certain. And the other piece is that if we win that appeal, I'd like to say when we will win that appeal, but if we win that appeal, as you have suggested, it's just not smooth sailing, because there's a number of things we have to do. We have post have to revalidate the estimate, because some time has passed. But number two that the case under review by the Ninth Circuit Court of Appeals is effectively the keystone case that would stop all activities with a singular decision, which is why we think Judge Federal landed on that ruling in the first place. But there are several other decisions that remain to be made, which in fact could impact how this project is moved forward. The other thing to note of course is that the biological opinion is still being addressed by the forestry service and needs to come back to the court. So there are a number of things that could extend the period of time required in order to implement construction at Rosemont. So what I'm trying to say to you is that you are exactly right, and that is at least a couple of years that would be required probably in order to start moving into the field.

So -- so given that scenario, does it make sense to also consider Rosemont in the context of Copper World and on private land only?

Sorry, could you repeat the question?

No, I just said, so given what you just said and potential ongoing delays in noise, does it make sense for you guys to also consider Rosemont as part of kind of the Copper World series of deposits and look at the project and private land only, does that's an area become more preferable I guess I should say?

100%, and in fact, what I should have said as part of my response to the first part of your question was that, although we see that there's some time required in order to resolve Rosemont, regardless of whether we get the decision now or not. Copper World is a very, very, very compelling alternative, if we need an alternative or a very, very compelling add-on. But for sure, we are going to push Copper World forward very hard. And I think the timeline that we have offline specifically, that we're going to complete an inferred resource by the end of the year and publish a PEA early next year should give you a sense of the value that we place on this deposit and the potential alternative or incremental effect that it could have with respect to Rosemont.

Okay. So then maybe just one last -- one final question from me, permitting and legal issues aside on the activity at Copper World right now, are you seeing -- are you attracting any NGOs to those projects?

No. We have very, very little attention on the project. We've actually had a fair amount of positive media coverage on them. But I think as general recognition at this -- the project is on our private land. And so it was much less attention.

Our next question comes from Pierre Vaillancourt of Haywood. Please go ahead.

Hi, Peter. I was wondering if you could be a little more specific on Constancia with regards to how we should look at that going forward. I mean, I think we recognize that despite the stability agreements, you're going to have to make compromises with the Constancia government. So how do we model that in terms of looking at taxes, looking at community, payments, that, that kind of thing, I mean, things are going to change. There's no question there. Maybe be a little more specific on that.

Good morning, Pierre. Look, it's very difficult to be specific in an environment where we don't have any of the specifics yet. But what I would say is that the team in Peru is determined to work with the current administration. And that apply -- would apply to any administration. And the relationship that we have built in Chilloroya with the communities in our area of interest, with direct influence and indirect influence, I think sort of sets the tone for how we will work with the government. We have targeted, as I said, one of the earlier question some $10 million of social investments into those communities, but that is -- that's direct investment into the community. And that is aside from the expenditures we have within those communities and the services that they provide. So obviously, we're going to have to work harder at this and we're going to have to work together with the government in order to better understand its objectives of social investments. But I still do think an area that we will target hard is how to liberate funds that are available to those communities from proceeds of the kind of mineral. But to provide you with any sort of a discrete or definitive information on how that -- how the environment may turn out is very, very difficult to do other than to remind you that we do have stability agreements.

Okay, thanks. And just with respect to the whole Copper World discussion, I mean based on what I'm hearing, on the call here, even if you do get a favorable decision for Rosemont, I'm getting the sense that maybe Copper World may still yet become the priority given potential appeals. And so, post the PEA maybe that really becomes the focus is that a potential outcome.

I mean, if you look at the range of potential outcomes, absolutely, it is a potential outcome. We are driving Copper World forward hard and we hope that it could compete with Rosemont. So never say never, I think that if Rosemont timing does drift in a couple of certainly has the potential to become a key area of focus or a priority.

This concludes the question-and-answer session. I would like to turn the conference back over to Candace Brûlé for any closing remarks. Candace Brûlé: Thank you, operator, and thank you, everyone, for taking the time to join us today. Please feel free to reach out to our Investor Relations team if you have any further questions. You may disconnect your lines at this time.