Good morning, ladies and gentlemen. Thank you for standing by. Welcome to the Hudbay Minerals Inc. Fourth Quarter 2022 Results Conference Call. At this time, all participants are in a listen-only mode. Following the presentation, we will conduct the question-and-answer session. [Operator Instructions] I would like to remind everyone that, this conference call is being recorded today, February 24, 2023, at 8:30 A.M. Eastern Time. I will now turn the conference over to Candace Brule, Vice President, Investor Relations. Please go ahead.

Thank you, operator. Good morning, and welcome to Hudbay's 2022 Fourth 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 Eugene Lee, our Senior Vice President and Chief Financial Officer; and André Lauzon, our Senior Vice President and 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 and EDGAR. These documents are also available on our website. As a reminder, all amounts discussed on today's call are in US dollars unless otherwise noted. And now, I'll pass the call over to Peter Kukielski.

Thanks very much, Candace. Good morning, everyone, and thank you for joining us. 2022 was a year of dedication, discipline and delivery for Hudbay as we completed our first full year of New Britannia and Pampacancha operations transitioned our Manitoba operation with a new focus on Snow Lake managed through political uncertainty and logistical constraints in Peru and committed to further improving our already low carbon footprint. We were faced with a period of higher input prices and volatile copper prices, but we took measures to reduce our discretionary spending as part of our commitment to disciplined capital allocation and generating free cash flows. More than ever, we are focused on maintaining a strong safety culture in our workplace and continued alignment with our local communities. In this presentation today, I will go into more detail about our achievements and challenges in 2022, touch on the operating and financial performance of the business and provide an overview of our production and cost outlook as we execute on our key strategic objectives for 2023. Starting on slide 3, we're proud to have achieved our 2022 consolidated production guidance for all metals and consolidated cash costs and sustaining cash cost guidance in a difficult environment. This was due to the strong ramp-up of the New Britannia mill which successfully increased annual Snow Lake gold production by 46% in its first full year of operations. Similarly, in Peru, a full year of production at Pampacancha helped to bring copper and gold production each by approximately 15% year-over-year. In Manitoba, 2022 has been a transition year as we closed our 777 mine and Flin Flon metallurgical complex after decades of steady operations. The Manitoba team continued to focus on integrating the Flin Flon employees and equipment into the Snow Lake operations in order to…

Thank you. Ladies and gentlemen, we will now begin the question-and-answer session. [Operator Instructions] Our first question comes from Fahad Tariq of Credit Suisse. Please go ahead.

Hi, good morning. Thanks for taking my question. Peter, maybe just on the Peru protest situation. Can you talk a little bit more about, like, has the transportation of concentrate? Is it just completely normal now? And what about supplies getting to the mine? It sounds like it's getting better? I'm just trying to understand, is it at normal levels now. Thanks.

Good morning, and thanks very much for the question, Fahad. I think, look, the political situation in Peru is an interesting one, but it is one that our team has been able to respond to, I feel in a manner that are entirely consistent with my expectations of their performance so far. So to your point, yeah, concentrate transportation has certainly opened up in the last week or two, and we expect that it will continue along those lines. We think that the situation is starting to normalize, but it's a little bit difficult to predict exactly how it will go. What I can say, though, is that we are closer to our communities than ever. And so we will experience ups and downs in the weeks and months ahead of us. But we have extremely strong support from our communities who have actually come out several times in order to moderate the activities of protesters who come in from the outside. So that said, that's a long answer to your question, but I do expect we'll have ups and downs, but we will continue to be able to reduce the inventory that we have at site and progress shipments out of [indiscernible].

Okay. That's helpful. And then maybe just as a follow-up. So if you see over the next several weeks it's kind of very back to normal in terms of getting supplies to the mine. Is it possible to re-check the mine plan to go back to what it was previously, i.e., more Pampacancha ore?

It will take time. I'm sorry that I didn't really address your question about getting supplied to the mines, but we have been able to consistently get supplies for the mine. The biggest issue has been fueled typically. And so we've adjusted the mine plan accordingly to be able to address any of the fuel bottlenecks. But to get back to the mine plan as planned in the short-term will be a little difficult, but perhaps I can ask André to elaborate on that a little bit? André Lauzon: Sure, sure. So the amount of fuel that we're getting into site as well as other consumables has been improving. So that's been a positive trend. We were naturally in the previous mine plan going through a phase of stripping at Pampacancha in the first quarter. And with -- in terms of managing fuel from the late December, early January and into February, we prioritized our fuel to keep the mill running and Pampacancha is significantly further than Constancia mill and the other one. So with things started, we started getting back to Pampacancha just this past week. So as we were seeing our fuel levels go up. But it's probably a few mines, it is a few mines of stripping before we get back into the good grades again, so probably into the next quarter at this point. So there's no magic scenario to get back and have it like the original plan is definitely going to -- you see the grades coming up in Q2.

And you just shift forward the plan that you would otherwise expect us to be operating against? André Lauzon: Exactly, yeah.

That’s helpful. Thank you.

You're welcome.

Our next question comes from Orest Wowkodaw with Scotiabank. Please go ahead.

Hi. Good morning. More questions are around the same lines, in terms of Peru and Constantia. Can you give us an idea on your updated guidance for 2023, what does that assume with respect to the amount of Pampacancha ore that's going into the plant?

I think, as André said, - I'm sorry morning Orest and thanks for the question. As André said, that the next quarter is going to be focused on, we're doing a lot of pre-stripping there and we'll be preferentially mining at Constantia. So I would say that we would push out in March, we would start to see the higher grades coming from Pampacancha again.

And in terms of a volume number?

I'm sorry, could you repeat that Orest?

Sure. Yeah. In terms of a volume number, like, should we be anticipating that to the tons Milled from Pampacancha is sort of similar to 2022, or could it even be less than 2022?

In terms of total metal, it's -- the year is back loaded, it's about 60% of the metal coming off at the back end of the year. We're not going to see much Pampacancha ore until. It's offset by about three months. And with where we're at now. So we're just resuming it right now, so as we're getting going. I don't have an absolute number in front of me Orest, but it is a reduction of what we forecasted last year, but it's comparable in terms of -- I think we're close to last year at this point.

Yeah. Hi Orest its Eugene here for just to add some clarity around the guidance range. Our guidance contemplates -- the midpoint of our guidance range contemplates getting back into Pampacancha in March. And so if you think about the range of the possibilities from there, that's probably the outcome that if you want to model that appropriately. That's probably best way to do it.

Okay. Thank you very much.

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

Yes. Thank you. Perhaps an easier way to think about it is you've shifted 15,000 tonnes of copper production from 2023 to 2025. Is that effectively what's happened?

I would say, in general, that's correct, Greg.

Okay. Around, Snow Lake and Lalor and the 5,300 tonnes a day, I'm not trying to understand quite what the goal there is now? I know you're shifting towards more higher grade ore and putting more through new butane, but are you still planning to ramp up to 5,300 tonnes a day or not?

Yeah. I will let André provide a little bit more detail on that. But in essence, the 5,300 tonnes per day that we envisaged previously included utilizing the ramp to get a bunch of the ore up. We find that the costs associated with utilizing the ramp, actually squeeze the margins very significantly are a non-efficient use of our time and money. And so it is more cost effective to increase production through the shaft. The specific gravity of the gold ore is lower. So it means that you have to ship more volume up the shaft. Our efforts at the moment are really focused on enhancing production through the shaft, but we will still move towards 5,300 tonnes per day. André, do you care to explain on that? André Lauzon: Sure. So Greg, we are committed to increasing production. So the plan for next year is about an 8% increase over last year's production. The differential that Peter was speaking to is the gold ores are a little bit lighter. And so maintaining what we're at right now at the plan, which is around 47% is already an 8% increase in volume movement. And so as we move forward into next year, like Peter said, it's inefficient to halt the ramp. I think in January, we halt 18,000 tonnes, and it's a two-hour round trip, and our scoops are waiting for the trucks to come back. And so we put a real heavy focus on getting more up the shaft. There's a current bottleneck that we’re -- it's a short-term bottleneck that we're working through right now. While we don't have a pressure underground at Lalor and we ran our month through grizzlies. And gold ore is harder, and so we're working through a process to improve the grizzly design to have better flows through there. So if you can imagine, we're shipping 18,000 tonnes up the hill, like two hours a trip going at one-hour and return ship from the stopes, we could easily double that production from 18 to 36 without increasing our fleet in the lake, which is aligned with increasing to that end goal of 5,300 tonnes per day. We're hitting it on days right now. So we're hitting it on multiple days for months, but working through some of those little nuances will help us get to that goal.

So how does this change, or does it change the production profile from Lalor? I'm still not entirely clear. André Lauzon : So the production profile is continuing to ramp up through the course of this year. So by the end of the year, it's probably in the range of 4,700 tonnes per day. At the same time, what we're working on -- and they're complementary. So we're also -- we're focused on cash, right? And so we're working on improving our dilution at the same time and sending less waste to surface. And so obviously, that counters production, but improves cash. And so it's -- we're trying to get better grades up from the mine and moving less waste, which is aligned with our greenhouse goals, while increasing throughput. We have all the people in place to produce more and right now, we're working through -- there's about five different process improvement things that are complementing -- to complement each other in terms of improving our development, getting the right drill inventory in place, as we're increasing up to about 200,000 tonnes of broken or blastable material and removing that bottleneck at the grizzlies, which allows us to use our trucks and improve the productivity of the set. So we're working on all those. We're -- as we resolve those, we'll have a better view on what is our final state. What will it be in the 53s or 52s? Is it 54? We're working through that right now.

Okay. Okay. Thank you.

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

Okay. Thanks guys. Just obviously great to see that you're doing to start the exploration at Caballito and Maria Reyna. Can you just remind us what the -- in terms of actually getting drills into the ground there, obviously, some permitting to be done there from an exploration point of view? Is that something that we could anticipate in 2024, or is it even longer winded than that?

Hi, Stefan, thanks for that. Yes, I certainly do think that you could expect it in 2024. So where we are right now is we've sort of done the surface work that -- or the environmental baseline work that's require to submit applications for those permits. We are now -- we've submitted those applications, we're on the point of submitting those applications. The next thing that follows is the review of the applications by the government as well as the constancia premier process. So we expect to -- I mean it takes time, but we expect to get those permits in roughly year. So certainly, we would expect that around about this time next year, we would be -- we would have those permits. But in the meanwhile, other additional surface investigations continue.

Okay. Great. I'm assuming there's still a fair bit of just sort of drill target definition to be done to really fine-tune that anyways?

Yeah. We've done a fair amount of that already. We have -- I mean, really, the focus on our side has really been to see do we do sort of a much bigger drill program focused on the entire property, or do we look for sort of focus on the smaller area that would act as a sort of a high-grade substitute or supplement to Pampacancha down the road. So those are the kind of things that we are reflecting on. But as far as definition is concerned, we're pretty advanced.

Okay. Great. Great. And then maybe just a very question, I'm not sure how much you can actually say, but just in terms of one of the last slides you continue to evaluate and execute on growth opportunities. Looking outside the current portfolio, are you seeing a lot of opportunities that may compete with some of the internal organic growth that you're doing right now, or is the focus really on sort of what you laid out in the presentation with the existing projects?

Yeah. Look, I mean -- so I think one of the things that I've been fairly consistent about is that I believe that we have an extremely skilled team when it comes to highly efficient operations and world-class development of projects. And we do feel that we can create value from both operating and development stage assets. We have this Tier 1 development portfolio and I've always said that we'd like to find a cash flowing operating assets that adds to our portfolio to diversify our business. But as I've also said, those opportunities are extremely scarce, but we all continue to look for them, and we'll see what happens.

Yeah, yeah. Okay. Great. Well, thanks very much guys.

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

Thank you, operator. Good morning, Peter, Andre and Eugene, nice to hear from you all. On the Pampacancha mine plan change, could it possibly be taken as a positive in the sense that it smooths out the copper production profile longer term? And then there's also the Constancia underground under consideration. What can you tell us about potential 2026 copper production from Peru? Could it now be similar in magnitude to 2025 as opposed to the drop-off in production that was contemplated in the last life of mine study?

Good morning, Lawson. So first, thanks for the question. The first part of it is, yes, I think you can take that as a positive. The second part is that once Pampacancha is depleted, then you move into Constancia Norte. And I think that -- so it maintains grades a bit, at least it maintains production. But it is -- over time, it does start to decline. But to your point, is 2026, you should sort of see it continuing at a rate of about 100,000 tonnes per year.

So if I was to add to that, we're also working on a number of other process improvement projects. So in our capital, you would have seen that we were deferring the pebble pressure -- and one of them we been planning a trial early this quarter around rejecting pebbles from the mills, which are typically around 0.15 copper. And so we're looking at a trial of using it like a variable cutoff where you increase the mine throughput, reject the pebbles and get a much higher grade through the plant. And so we're looking at that test in the near future and that is an opportunity for us to try to maintain up in the 100,000 tonnes per year of copper – post-copper culture. As well, we've been seeing some successes with their ShovelSense, so in terms of selectively removing waste from the ore at the face. And we're -- the results today have been looking promising. It's still in the testing phase, and we're looking to -- we've put aside probably 50,000, 60,000 tonnes of material that we want to run through the mill and just to verify that degrade that we're sorting are in line. But the combination of those two projects bode well for us to send better grade to the mill than what the current life of mine plan shows.

Okay. Thanks for that both of you. And then with the cash cost guidance. Would you be able to help us by providing what the cost per tonne assumptions are underlying those for both Peru and Manitoba, as you've provided in the past?

Hi, Lawson, it's Eugene here. Yes, we've evolved in our cost guidance. And in prior years, you would notice that we provided operating unit cost guidance. And then last year, we added cash cost guidance in an effort to streamline the multitude of metrics that we guide to, we've reverted to kind of one metric per mine in terms of cost guidance. So cash cost per pound in Peru and cash cost per ounce of gold in Manitoba. The unit cost, we will continue to report in our financials on a quarterly basis. And they are roughly in line for 2023 as projected from where we're trending. So approximately $12 a tonne in Peru and approximately CAD200 per tonne in Manitoba would be kind of a rough guide to where you get to. So similar levels, but we're going to kind of stop in providing specific guidance for that while continuing to report.

Okay. Well, that right there is very helpful. Oh, sorry, go ahead.

We'll note that the cash cost guidance for 2023 is lower than that in 2022. So I think the story would be that we're producing more copper in Peru, more gold in Manitoba and at a lower cash cost, and that's a testament to the team's focus on cost efficiencies and despite the inflationary environment.

Yes. That's fantastic. Thanks very much, Eugene and thank you, Peter and André.

Welcome.

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

Thanks. Good morning, Peter and team. I want to start with just clarifying a couple of things that I heard on the -- earlier on the Q&A here. Andre, so is it your intention to get the 5,300 tonnes per day at Lalor at some point in time? And if so, when?

Okay. Thanks for the question, Dalton. So the intention is to get to the right number. So we're optimizing a variety of scenarios, and the goal is to make more cash out of Manitoba and so guided in terms of the capital for Manitoba. I think we're spending about $75 million on capital development. A key focus that we're working on in the next year is trying to reduce our development costs by almost 20%, which will go way to the bottom line and improve the economics for future projects. The mine itself, we have the labor in place to move the material. So that's why we're running at a little bit higher cost. And where we're at right now is there are some bottlenecks that creeped up on us that we weren't anticipating, particularly the fragmentation of the gold or the fragmentation isn't bad by mining standards. But because the ore is so hard when we're putting it through the breakers, it's causing delays on our trucks and the delays on the trucks are translating to delays in the stopes because we siloed our trucks. And so what ends up happening is right now, due to hauling it to surface to keep production going. And so we think probably within the next quarter or two, we're going to be at a stage where we saw that bottleneck at the shaft and we'll start to see improvements in terms of our overall throughput going up to mine at a lower cost. At the same time, we're balancing off the development place to have the drill rooms and drill inventory. We had quite a turnover of people, if you will, over the last six months with the transition of people from Flin Flon to Snow Lake -- and -- as well within our management almost 50%. So it's quite a significant training exercise. And so they're very skilled miners, the ones that are development miners for sure. And so all of those processes are going on. And so it will be towards the end of the year that you start seeing it. Firstly, I said on the previous call, we're definitely hitting them on days -- we've seen days over 6,000 tonnes per day. And the key is we have to get that reliably and balanced their process. It will be towards the end of this year and probably into the next to get to that peak level, if you will. But it's a combination of -- it's not just chasing times as we're chasing value and cash. And so at the same time, while we're asking for more, we're asking them to blast last to just mine the good stuff, the higher grade gold and avoid dilution and save on our tailings cost and milling costs in the lake. So it's a balanced conversation. We'll have a better view on that as we go into the next quarters.

Dalton, you understood that

Yes A – Peter Kukielski: Little bit to that. You'll notice that our plan for this year results in an increase in the gold production guidance versus last year or this was planned last year, and that's due to some of these efficiencies that Andre talks about we're going to be running New Britannia now above 1,600 tonnes per day, which is above nameplate. And so optimizing the infrastructure we have to maximize – the both production at the lowest cost -- maybe to reference a question that Orest asked earlier today, I wanted to clarify that we will be -- a plan is to mine Pampacancha and increased tonnage to Pampacancha this year even in this base case. It'll be about somewhere around 50% to 60% more ore mined at Pampacancha in 2023 than in 2022, even with the delays that we've noted due to logistics.

Thanks. That's helpful. But just to -- kind of put a pin in lower then. So it sounds like you're focusing on the goal at the expense of copper, zinc and overall tonnes. At what point in time do you -- is that sustainable, first of all, at what point in time do you think you'll come up with the right answer. A – Peter Kukielski: So the answer is – sustainable. The current resource base is more gold than base metals. So in terms of the balance -- and right now, that's why we're doing the all grade recovery improvement program around getting better gold recoveries and copper recoveries because today, we're producing more gold ore than what New Brit can handle even though I think in January, we peak close to 1,800 tonnes per day in terms of throughput at New Britannia. So we're trying to push the limit there, but the challenge that we're facing now is we have a surplus of gold ore relative to base metals. So it's not a sustainability question. But in terms of the overall, as we drive and increase our unit rates, and bring our development costs down, it makes it easier to develop some of those base metal orders, because we have less margin than the gold.

Okay. Thanks. And then, one more clarification on the mine Constancia. Peter, I thought I heard you say that kind of post 2025 postpone Concho [ph], you're going to move into Constancia Norte and keep the production level reasonably stagnant at 100,000 tonnes. But I thought Constancia Norte wasn't going to come online until 2029, just wondering, if you could square that away from you.

So the 2029 one would be underground, but we would be going into Constancia Norte into '23 -- open pit part of even 2026.

Thank you. And then maybe just one last one for me. I just want to switch gears to top the world. And the PFS that you're going to publish by the end of Q2. I'm just wondering, have you guys decided on what your base case flow sheet is going to be? Is it going to be the same as the PEA? We talked in the past about maybe a modular approach. Just wondering, what you're going to present as your base case.

Yes. So right now, we've completed all the engineering for all the cost estimates for a variety of different treatment scenarios, whether it's shipping Skarn, whether it's the Albian [ph] or some different pressure leaches. And so with all the costs in place and the engineering completed, right now, we're going through the optimization of what makes the most sense. So, we're holding in on what is the right number for us from a capital for the financials and the like. So we don't have that answer right yet, and that's the optimization process that we're going through feeding into getting it by the end of Q2.

And Dalton, to be sure that we are highly focused on minimizing the CapEx and maximizing simplicity, I think that we mentioned to you previously that there is the ability to modularize some of this stuff. So the question really is, I think your question is probably aimed more at the sulfide leaching process and whether we're likely to implement that. So we're taking a hard look at that because there's a lot of value potentially in it. And then the question remains is, if we do it, to what extent do we do it, and we're working out, we're working with all of those things at the moment.

Thanks, Peter. And then maybe just one more on Copper World. On the site visit, we talked about the opportunity to maybe bring phase to you forward, given your understanding of what the permitting requires. Are you devoting any resources or any capital right now towards fast tracking that side of things?

No, we are not. We just believe that there is massive optionality there because, like I said, I think, in my remarks that there's $2.8 billion of NPV available to us upon a decision or upon sanction. But we are dedicating absolutely zero time and effort and expense on that right now, we're so focused solely on Phase 1.

Great. That’s all from me guys. Thank you

Thank you.

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

Thank you, operator, and thank you, everyone, for participating today. If you have any further questions, feel free to reach out to our Investor Relations team. Thank you, and have a great day.

This concludes today's conference call. You may disconnect your lines. Thank you for participating, and have a pleasant day.