Good morning, ladies and gentlemen. Thank you for standing by. Welcome to Hudbay Minerals' Fourth Quarter 2023 Results Conference Call. At this time, all participants are in a listen-only mode. Following the presentation, we will conduct a question-and-answer session. [Operator Instructions] As a reminder, this conference call is being broadcast live on the webcast and is being recorded. 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 2023 fourth quarter results conference call. Hudbay's financial results were issued today 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. Accompanying Peter for the Q&A portion of the call will be Eugene Lei, our Chief Financial Officer, and Andre Lauzon, 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 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 thanks for joining us. I'm going to start a little bit informally by saying that we knocked it out of the park in 2023. It was a year of execution and delivery as we realized the higher grades in Peru, achieved record gold production in Manitoba and enhanced our operating base with the addition of the Copper Mountain mine. The fourth quarter saw increased copper production, record gold production, and record financial performance, resulting in the successful achievement of our annual guidance metrics. These strong results were because of many successful capital allocation initiatives at Hudbay. 2023 was the first year we saw the significant benefits from our recent brownfield capital investments in Peru and Manitoba. Through recovery improvement programs that were both on time and on budget, we increased recoveries at both the Constancia and Stall Mills. With continuous improvement initiatives, we increased throughput levels at the new Britannia Mill, well beyond its nameplate capacity. We continued to demonstrate financial discipline in 2023 through reduced discretionary spending, free cash flow generation, and debt reduction. We successfully acquired and integrated the Copper Mountain mine to further enhance our strong diversified operating platform and production profile, and throughout the year we looked for other opportunities to drive long-term growth, including the consolidation of a significant land package in Snow Lake with the acquisition of the Rockcliff and Cook Lake properties near Lalor. As a company, we know our success is driven by the examples we set and the culture that drives our decision-making. In 2023, we launched our purpose statement that describes the positive impact we have on our people, our communities, and our planet. As part of our climate change commitments, we took action in 2023 to progress towards our 2030 targets,…

[Operator Instructions] There will be a brief pause while we compile the Q&A roster. Your first question is from Orest Wowkodaw from Scotiabank. Please ask your question.

Hi, good morning. Nice to see the deleveraging continue here. I assume that's the focus for the next two years or so, but I did notice in your slide deck, you didn't include the previous three pre-requisites for Copper World, and I'm just -- can you just remind us if those criteria still exist in terms of where you want to see the balance sheet before you consider moving ahead with Copper World?

Good morning, Orest. Thank you very much for your comments. Absolutely, the 3-P program that Eugene outlined back in October of 2022 absolutely remains in place. One was permits in hand, which we expect to obtain this year. The other was, obviously, was a prudent financing plan, and the other one was, Eugene, remind me, a partner, so that's part of the prudent financing plan. So all of those initiatives remain in place. But Eugene, any further comments from you?

Yeah. Thanks, Orest. And we're really pleased with the progress we made in 2023 to reduce our net debt to EBITDA ratio from 2.0 times to 1.6 times as Peter mentioned, and that's ahead of the plan, and the plan is to get this to 1.2 times, and we'll continue to make progress on that plan in 2024 with prudent capital management and a focus on discretionary spending. But in 2024, looking ahead, we really improved our exposure to both copper and gold. And so for every $0.25 increase in copper, that's $75 million of additional net free cash flow and $100 of gold is another $25 million of net free cash flow. So we're really going to see the -- start to see the benefits of this enhanced diversified production platform that will allow us for accelerated deleveraging and that continues to be a focus for us.

Thanks. Just as a follow-up, I think I noticed your languaging in the release talked about permits now as a '24 event rather than a mid-year '24 event. Are you expecting some, I guess, delays there? And I'm just wondering if the JV partner process is waiting for permits before it gets going or is that in the background happening independently?

No. Orest, there are no delays in the permits. The [act for protection] (ph) plan has been drafted and it's now in the statutory public comment period and we expect to receive permits during the year. I think it's likely in the third quarter, but no, there's no delay in anything at all. Your question with respect to the JV partnering process, we want to have the permits in hand before we initiate that, but it's safe to say that we have a lot of interest expressed by various parties and we'll bring them along in due course.

Perfect. Thank you very much.

Thank you. Your next question is from Ralph Profiti from Eight Capital. Please ask your question.

Thanks, operator. Good morning, everyone. The accelerated stripping at Copper World -- excuse me, Copper Mountain over the next three years, there doesn't seem to be a significant increase versus the technical report. There was a lot of this captured in some of the discretionary stripping decisions. So I'm just wondering, is it safe to say that this $70 million number in 2024 is a good carryover number into '25 and '26?

Yeah. Thanks, Ralph. This is Andre. So, what you see for 2024 is the ramp-up, so the teams have done an excellent job of ramping up to the 28 trucks and we're ramping up the truck drivers as we speak. We continue ramping up into '25. So we'll be hitting levels very close to the technical report. We mentioned that some of it was discretionary when we rolled out the technical report, so the technical report was then -- it was a snapshot in time and when we had six months to get it out and so we put together a really sound conservative tech report, and there's lots of opportunities the teams are working on blast practices and looking at ways to go with the more traditional stripping slope angles. We put in a very conservative slope angle into our technical report. So there are some reductions based on permanent elimination of waste with new mine designs and the like. So there'll be some subtleties as we improve and optimize the technical report, but those are positives.

Great, yes, it's good to see. My follow-up question is -- and I don't want to jump the gun on the three-year guidance that's coming, but the original guidance had 2025 as a down year at Constancia, but given some of the numbers that we're seeing in the new guidance and it looks to be Pampacancha, you may have for another full quarter in 2025, would it be safe to say that Constancia may actually look like on copper production a flat year-over-year in '25 versus '24?

Thanks again. So, we're working on opportunities. I know the teams have been looking at steeper -- again, similar theme to what's in Copper Mountain, steeper slope angles, geotechnical, hydrology, and they're looking to try and get a little deeper in Pampacancha, but the overall for '25 is still coming down, so -- but the teams are continuing to look at it, but it's not going to be the exact same, but there will be a tail in '25 similar to what it was previously.

Got you. Okay. Yeah. Thanks, Andre. Well done. Thank you.

Thank you. Your next question is from Lawson Winder from Bank of America. Please ask your questions.

Hey, thanks, operator, and good morning, Peter and team. Thank you for the update today. I wanted to ask about Copper World, similar question to what Orest asked, but just in a slightly different way. So, as you discuss with potential partners, is the feedback you're getting that any sort of agreement is dependent on receipt of permits or are there any other sort of conditions that are coming up that might be limiting an announcement?

Good morning, Lawson. No, and thanks for your kind words. Look, I -- absolutely not. I think that the feedback that we're getting is all is value-driven. Nobody is focused on what's happening with the permits. I think there's a high degree of confidence in the state permitting process and I think the focus from everybody that we've spoken to is completely value driven.

Okay, fantastic. And then, just in terms of the social license situation around Copper World, what is your sort of sense of whether there might be any degree of legal challenges once the state permits arise? And has there been any community engagement that might help you gauge that potential reaction?

So, the first comment that I would make is that we are extremely open to working with anybody and everybody. Now, the state permitting process has a process that involves public comment, but the comment has to be associated with the specifics associated with the technical aspects of the permit. So it's not like the NEPA process, which sort of allows for broader type of comment period. We -- you will recall during the Rosemont project that the state permits were issued and that they were, in fact, challenged by opponents, it's not unlikely that that won't happen again, but remember that we overcame those or the state overcame those challenges and the permits were upheld. Now, in this case, the work that has been done by both ourselves and the Arizona Department of Environmental Quality has been huge, because we are ensuring -- they are ensuring that they can withstand any challenge. So, our feeling is that there may be a challenge, but they will be fairly easily overcome, because of the technical merits associated with the permits. Now, also remember that once we have the permits in hand, the next step is definitive feasibility. So it allows us time in which to resolve any of those outstanding issues in any case. From a PR perspective, we are making sure that we engage with a broader population as well as with the tribes in order to ensure that there's much better understanding of what it is that we are trying to do and we have very, very significant engagement with the tribes currently being experienced.

Okay. Fantastic. And it's nice to see that deleveraging accelerate, nice one.

Thank you.

Thank you. [Operator Instructions] You next question is from Jackie Przybylowski from BMO Capital Markets. Please ask your question.

Thanks very much. And congratulations on the quarter. It's really terrific. I guess -- my first question will be on Manitoba. You mentioned that you're planning to start the exploration drift to 1901 and you've got some other properties that you're working to get started on drilling, can you just maybe give us a quick overview as things stand now on where you see the next production coming from and how that fits into your existing mills in your existing infrastructure? Thanks.

Sure. Jackie, and thanks for the kind comments. I think Andre and I were actually on site in Manitoba last week and we spent some time with the exploration team and it is, I have to tell you, there's a lot of excitement there. But I think to answer your questions a little bit more specifically let me get Andre to do that.

Sure. So, specifically to your question, Jackie, around what are the next lines of production and so, obviously, the very, very nearest stuff is the 1901, right? We do -- we have identified some mineral resources and some reserves in that deposit. We started the drift. It's on track and the teams are fully focused on that. And that drift itself, what it does, it also opens up some exploration targets for copper-gold zones that we previously couldn't drill from surface along the way. So, later on this year, we'll come into some new drill horizons that we haven't been able to test for the down plunge, if you will, of the copper-gold zones of 1901. Our hope through this program is better grade and higher value material and potentially we'll see on the [tonnes] (ph). And so that's the nearest term one that we see. We have a number of other satellite deposits that we have in our portfolio. There's probably, if you add them all up, there's over 15 million tonnes of these satellite deposits and we have teams looking at them as we speak. Our successes at New Britannia, the teams that just continue to please us, the mill in the quarter, we ramped up to over 1,800 tonnes per day in the last months of December and we're running very close to 2,000 as we speak. And so, there -- in fact, if I comment on New Brit as we just recently got the permit, yesterday, to go to 2,500 tonnes per day. And so our goals will be to put more gold through there, which frees up more capacity for base metal at Stall. And so 1901 is the start. Talbot, we just with the Rockcliff acquisition. We -- now we own the whole thing back again. Teams are looking at it and we have exploration plans to test some geophysical anomalies nearby, and we're also looking at Bur. Bur, if you recall, was a high zinc-based metal line. It was a high focus at the time prior to the discovery of Lalor. And then when Lalor happened, it sort of got shelved, but now with the mill capacity, teams are looking at all of these at the same time. So there's a lot of ones that we already know about and we're looking at them in very different ways and the exploration we hope to extend further the copper-gold as well at Lalor to extend the life and that's just a natural progression for us. There's more I could talk for a long time on it, maybe offline, but it's very existing.

Thanks. Maybe just a follow-up quickly on that. I guess, is it fair to say that with the satellite deposits not using the shaft at Lalor, your overall production from the Snow Lake camp could go up with extra capacity in the mills and not being shaft-constrained, is that the right way to think about it?

Yeah, absolutely, and we're not shaft-constrained yet, so there's still room in the shaft, and our intention is the 1901 someday, once we get it coming in the near future, that'll go up the shaft as well. But yes, those additional fees, it's just like Reed mine. There's a number of all these smaller, one million to three million to four million tonne deposits. They're not the big anchor like Lalor, but we're looking at them. If they run like some of them need roads and the like, if they run like a logging operation and only run through in the winter time if need be, but others might be a steady, small, high margin producer. So, yeah, there's lots of opportunities.

I'm going to -- sorry, carry on, Jackie?

No, sorry, I was just kind of -- I just wanted to ask Andre to repeat that, the 1901 would go up the shaft, you said.

1901 will go up the shaft, and so one of the things we're trialing this year with the 1901 is some battery electric vehicles, and it's a downhill run with the battery electric trucks. and we see that as a positive from the greenhouse gas perspective. But going downhill, recharging is our plan, the trucks, and coming back up on battery. So it's a -- and we do have the capacity. The teams have done a great job in terms of increasing the skip capacity and optimizing the uptime in the shaft, but only also increasing the amount of material and volume that we can put into the measuring flask and the skips.

Thank you.

I was just going to add, Jackie, to what Andre was saying. So go back to my comment that Andre and I were in Manitoba last week, and I have to tell you that the atmosphere there is electric. So there's all of this exploration stuff going on, but the collaboration amongst the team towards performance improvement is just amazing. So a lot of you and a lot of our investors visited Constancia in September last year, and you saw the sort of interaction and the pride that exists amongst the team there and how they're doing, exactly the same thing exists in Manitoba right now, and we just can't wait to show that. And now we're busy sort of sowing those seeds at Copper Mountain, and it's going to be fun.

That's fantastic. Yeah, it was a great atmosphere in Peru. Thanks very much and congrats again.

Thank you.

Thank you. Your next question is from Stefan Ioannou from Cormark Securities. Please ask your question.

Yeah, thanks very much, guys, and again, great to see the quarter. Just curious, in Peru, obviously, you mentioned, obviously, permits or applications to drill at Caballito and Maria Reyna are either in or going in and planning to drill those projects as you can, any sort of timeline and when you think you might actually have those permits? I know it's kind of been vague and a bit of a vague sort of timeline, but any guidance on that?

Yeah. Hi, Stefan, thanks. So, we submitted the Maria Reyna permit application in November. We're in the process of putting the Caballito 1 together. We expected to submit it in the first half of the year, so in the next several months. The rough guess of the time that it takes to get one of these approved is roughly a year. So, I assume that by -- during 2025, we'll be able to start drilling. But I think that one of the things that I would observe is that we have -- once again, a very large contingent of Peruvian government officials coming to PDAC. And I'm sure that there'll be lots of discussions with PDAC about the process and how to streamline it, and I'm pretty sure we'll get a lot of support from the Peruvian government to start -- to streamline the process. But I think, from a planning perspective, we imagine it's going to take roughly a year to get those permits.

Okay, great. That's helpful. And then great, shifting gears over to Manitoba, it's great to see New Brit running so well, and the fact that you're closer to 2,000 tonne a day now and then you just mentioned that you've got a permit now to go to 2,500, just sort of curiosity, is there -- is that could you get to the 2,500 by just continuing to push hard on that thing or at some point do you have to invest some more capital into it to actually get it there?

So, this is all very, very low capital improvements that the teams are looking at, and so right now -- in the month of January, they've been trialing to send more Stall, call it, base metal light feed, not really heavy base metal feed that wasn't traditionally thought or envisioned for New Britannia, and they've been successful at getting it with just slight decreases in recovery, but significantly better gold recoveries than we would get at Stall. So we're able to send more of the feed that we're currently producing and generate more gold ounces out the door. So there's a real drive and focus on it. And so right now, our current process, we send copper concentrate over to be processed at New Brit through a pipeline, and right now, with the base metal feeds that we're putting over to New Britannia, we're producing so much copper there now that our filter presses can't keep up. So what they're contemplating is repurposing that pipeline, where we were sending the copper concentrate over to New Brit to be filtered, to use that pipeline as a tailings line to go the other way and put a filter in to manage copper at Stall, which is low CapEx. We just put in two there, two new ceramic filters. So very low CapEx and it's -- we're looking at dialing up the gold recovery and we'll see, especially as 1901 comes online in the future, there'll be a lot more to come.

Okay, great to see. And maybe just one last one for me real quick, following on Jackie's question, obviously a lot of excitement in Manitoba, in Snow Lake, should we be thinking at all about Flin Flon right now or is all this excitement actually focused in Snow Lake proper?

Hi, look, Flin Flon is -- I'm going to let Andre comment further, Flin Flon is -- we're very focused on Flin Flon as well, and a separate team is looking after Flin Flon and tailings, addressing those tailings recovery potential. There's two obviously -- there's two initiatives. One is on the traditional tailings, and the other is the [ZPL] (ph) tailings from the zinc plant. And we're making a fair amount of progress there. I think the goal initially is to reduce our environmental performance and turn it into a cash-neutral camp, and if not, turn it into a mine that actually produces cash flows. But it's progressing well. Andre, any comments on from your side?

I think you hit it. So, yes, the Marubeni exploration, we're expecting to get an agreement with them shortly there on a plan. We have all the targets laid out and drills are ready to go, just waiting for us to sign that agreement. And it was really exciting, like Peter said, there's two different tailings. The Zinc plant tails, like the zinc plant tails is something that is very low risk, right? It's very low risk from the perspective. We had a flow sheet designed metallurgically. It was there. It's been sitting on the shelf for years and so it's something that's relatively, I'd say, for an open pit, it's very high NSR. I won't say what it is. They think that it's very early. We're hoping to see some studies on it in the near future. And the cobalt blue process around the bigger Flin Flon tails, that's progressing very well. And they've been successful at converting pyrite to pyrrhotite, which Peter described as what that does is we're working at eliminating the acid generation of the tails, and basically wiping out any water treatment out for the next 100 years is our goal, and so we see that as a huge upside. It almost becomes, like Peter said, another mine, and we own it, and so the teams are working very hard at that.

Okay. So, bottom line, don't forget about Flin Flon. All right, great. Thanks very much for the time, guys. Appreciate it.

Thank you. There are no further questions at this time. I will now hand a call back to Candace Brule for the closing remark.

Great. Thank you, operator, and thank you, everyone, for joining us today. If you have any further questions, feel free to reach out to our investor relations team. Thank you.

Thank you. Ladies and gentlemen, the conference has now ended. Thank you all for joining. You may all disconnect.