Good morning, ladies and gentlemen, and thank you for standing by. Welcome to the Hudbay Minerals Inc. Third Quarter 2024 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, November 13, 2024, at 11 a.m. Eastern Time. I would now like to turn the conference over to Candace Brule, Vice President, Investor Relations. Please go ahead.

Thank you, operator. Good morning, and welcome to Hudbay's 2024 third 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 on 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+ 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.

Thank you, Candace. Good morning, everyone, and thank you for joining us for today's call. In the third quarter, we delivered another quarter of strong operational and financial performance with steady free cash flow generation and continued debt reduction. This was largely a result of our unique copper and gold production diversification with strong operating cost control that provides attractive free cash flow generation, expanding margins, and strong leverage to higher metal prices. We saw record gold production in Manitoba, driven by new quarterly record throughput levels at the New Britannia mill. The Constancia mill performance was also very strong with higher levels of throughput achieved this quarter, and Copper Mountain achieved the highest copper recovery levels at the operation since inception. Our enhanced operating platform continued to deliver solid production and better-than-expected cost performance, enabling us to reaffirm our 2024 consolidated production guidance and announced yet another improvement in our consolidated cash cost guidance for the second quarter in a row. I'll go into more detail on our quarterly achievements throughout today's presentation, along with updates on our exciting growth initiatives that are underway. Slide 3 summarizes the impressive operating performance in the third quarter. Consolidated copper production was 31,000 tons in the quarter, in line with our mine plan expectations. Consolidated gold production was 89,000 ounces, well exceeding management expectations and representing a 52% increase from the second quarter. Stronger gold production was driven by higher gold grades and mill throughput in all operations, but most notably at the New Britannia mill in Manitoba. Consolidated cash costs were $0.18 per pound of copper in the third quarter, which significantly improved from $1.14 in the second quarter. Consolidated sustaining cash costs were $1.71 per pound, and all-in sustaining cash costs were $1.95 per pound, representing a similar meaningful improvement…

Thank you. We will now begin the question-and-answer session. [Operator Instructions] The first question is from Orest Wowkodaw with Scotiabank.

My question is around the gold in Manitoba. Obviously, a very strong Q3. I'm just curious, is this -- are you -- with the gold price environment the way it is, are you reprioritizing the mining plan here to focus on the gold zone versus the base metal zone? And I guess I'm trying to figure out if you're seeing better-than-expected grades or if you're just focusing on the gold zone versus base to drive the better grades?

Orest, this is Peter. Thanks very much for the question. And the answer to your question is no, not at all. We don't focus on those as gold zones. New Britannia is performing extremely well at the moment. So, we said what we can there, but Stall store is performing really well as well. You would have seen that we -- that recoveries at Stall have reached 70% of gold, whereas a long time ago, it was about 50%. But Andre, do you have any further comment for Orest?

Sure. Sure. Orest, we -- like Peter said, we're not prioritizing. We're just following the mine sequence just naturally becoming more gold ridge over time as it transitions, the upper part of the mine was more base metal rich. Within the -- and I think we mentioned on the last quarterly calls, the teams have really put in place significant effort on dilution. And we sample all of our blasts. It's something that was new for us in the last year or so and really seeing a lot better benefits on our dilution control, and we're seeing better grades than that we are projecting in some of our block models.

And what -- can you give us any kind of insight in terms of what gold grade you're anticipating for Dexter in Manitoba?

We're still reiterated in the middle of wrapping up the final stages of our budgets for next year. But it's in -- it's very, very similar to the course of this year. And it's -- we're expecting that same sort of range. It's -- but we'll give some clarity on that as we get forward in the future.

Okay. And just separately, if I could. You're languaging around the potential throughput expansion at Constancia. I feel like it's changed a bit from last quarter, where it sounded -- last quarter, it sounded like it was more imminent, potentially as early as '26. Your languaging in the release today talks more about medium- to long-term opportunity. Am I reading anything into that? Or has something changed?

I'm not sure what you're reading to it. But what I would say is with the increased throughput that the governments have allowed us to do is immediately, actually, this month, we're doing trials on pebble rejection at Constancia looking for additional throughput and enhancing the grades with the capital raise that we did last year, right in the middle of engineering right now, pebble crushers for Constancia to, again, increase throughput, balancing off some higher ores post Pampacancha. So, the teams are actively looking at ways to hit that targeted throughput. It used to be a barrier for us. It's no longer a barrier, and we're working on it as we speak. So, it's not something that's as long dated as said.

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

I just want to piggyback off the last question and ask you, Peter, given the performance of Constancia, both from a throughput perspective and a cost perspective, if scaling up the operation beyond the 10% regulatory allowance is kind of something that's entering your mind on sort of the planning stage or the preplanning stage?

Ralph, I think -- I mean I'll let Andre answer most of that, but I think that we've always looked at the idea of being ready with Constancia for such time as we bring some of the satellites into operation down the road. So having Constancia ready to operate at higher levels is a key component of that. Andre, any more details you want to provide?

Sure. So, in addition to what I just mentioned to Orest was like the teams are in the middle of a permit application renewal. It's just normal course of business for us to do that. We're looking at things like expansion of our floatation to match the increased throughput that we're looking at, potential increases in grinding capacity. And then longer term, we have the modification for that's coming up that we're contemplating that permitting potentially for a third line. But we wouldn't sanction that until we are at a stage where success with Maria Reyna and Caballito. But we're definitely looking at how to -- have all of the permits in play and time at right when metal prices right or we have those potential great discoveries at Maria Reyna and Caballito.

Okay. Okay. And just to follow up on what you mentioned. When is the team going to be in a position to kind of give us a picture on what an expanded drill program for Maria Reyna and Caballito look like? It sounds like something like towards the end of 2025, once those drill programs or permits are in place. Is that kind of how we were thinking about sort of how many meters and potentially that -- the cost of that expanded drill program?

Well, we do expect to be drilling it in 2025 like you mentioned. There's a range of -- depending it could be upwards of up to 300 drill platforms at its peak. And so, it will be quite an exciting drill program for us. We're -- it's something we've been talking about for a little bit and really looking forward to. We see that as the future. The cost in terms of that program, I think we'll give guidance on that into the new year on our forecast for exploration as we're just finalizing the budget. And we'll have some better clarity by that time as we expect the government to go through the consultant previa process early in the new year.

Ralph, to add to that, the -- we are in the final stages of permitting at this point, and we're permitting both the Maria Reyna and Caballito at the same time. So, in parallel right now to make it more efficient and to provide us with a little bit more optionality.

The next question is from John Tumazos with John Tumazos Very Independent Research. Please go ahead.

Congratulations on the $0.5 billion debt repayment and all the great progress, including cutting the project finance debt target for Copper World of $350. If you just had half of the free cash flow in the future quarters, as you just had $86 million in the third quarter, you generate another almost $400 million of free cash by the time Copper World construction might start at the beginning of '27. Why sell 30% of it? Why not sell only 20% of it or keep it all? It might be better than the next project at Mason in Nevada? Or it's hard to find a substantially better projects?

John, it's Peter. First, thank you for your kind words. And yes, Copper World is certainly a high-quality project. And yes, we don't need a partner. But for a variety of reasons, we likely will want one. Now we're not wedded to a number of 30%, for example. But there are several reasons why we might want one. I think it all comes down to value and maximizing returns and creating optionality around our broader pipeline of opportunities across the portfolio. But perhaps to give you a little bit more granular detail, I'll ask Eugene to address some of your questions.

Thanks, Peter, and thanks for your question, John. As Peter mentioned, I think what we're looking to do is maximize the risk-adjusted value creation for shareholders. And given the current market for minority pieces of scarce copper mines, we've already seen robust interest in Copper World, and we expect to receive a strong valuation for that minority piece, given its grade and capital intensity. This bringing in a partner provides us the opportunity to prudently build Copper World with lower leverage and with much lower leverage than we had to do with Constancia over a decade ago. Furthermore, the recent preemptive extension of our revolver allows us increased financial flexibility through the end of 2025 to determine the most attractive debt equity mix as we go forward. And that will be -- part of that consideration in 2025 will be some of the other projects within the pipeline is high-return brownfield projects in Peru and in Manitoba to allocate capital to, again, create value for shareholders on a balanced basis. But as Peter mentioned, this -- the extension of the revolver gives us that optionality to make those decisions on what is exactly the right mix and in terms of the partner and the value proposal that will be on the table for us to consider.

So, there's more good news. It's going to come from Peru and Manitoba that's going to take some capital.

We hope so.

Great targets.

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

Congratulations on a great quarter. A couple of questions from me on Copper World, just given the incoming Trump administration. And I guess, first, I want to ask, do you think that you can accelerate any of the permitting process for Phase 2 over the next couple of years or the next four years, I guess?

For Phase 2 -- first of all, thanks for the kind words, Dalton. I think that it's premature to say what might be possible with Phase 2. I think the first thing we'd look at to see whether the Mining Clarity Act actually passes through the Senate. If it does, then that probably makes Phase 2. It simplifies Phase 2 and it also simplifies Mason. I think you know that the NPV of Phase 2 is such that it's so enormous that the extent whereby we can bring it forward creates massive value for the Company and our shareholders, and we'll do everything that we can to do that. But also remember that we're going to -- we've got the concentrate leaching facility to put in place. But I have no doubt that once we're in operation, once we stabilize, once we ramped up, we'll turn our mines to getting Phase 2 underway or getting Phase 2 permitted as quickly as possible.

Got it. And then my second question was, does Copper World qualify for the Section 45 Act advanced manufacturing credit? And is that baked into your estimates right now?

No, it doesn't qualify for it. There's a possibility that the concentrate leaching facility would apply for it. And in fact, we did make a provisional sort of application to the government. It was favorably received, but it's too early to actually get it in the queue.

Got it. And maybe I can squeeze one last one in. If President-elect Trump should cut the corporate tax rate to 15%, is there anything you can do to sort of lock in anywhere around that rate over the life of the mine?

I don't think so, Dalton. We'd certainly take a look at it.

The next question is from Craig Hutchison with TD Cowen. Please go ahead.

I was wondering if you could just provide any updates with regards to how the air permits going Copper World.

It is Copper World?

Yes.

The air quality -- sorry, sorry. So, it is going well. I would say we have confidence in the state permitting process because, as we've told you several times, I believe that it's a scientific-based process. And we're working very closely with the Arizona Department of Environmental Quality to ensure that they've got all the data they need. It follows a similar process to that of the Aquifer Protection Permit and it's been progressing very well. As you know, the Aquifer Protection Permit was received in August, in line with our timing expectations. Now the public comment period for the air quality permit was completed in September. And we were very, very pleased with the level of local support that was received during that comment period. So, the permits on track to be received in late 2024. The ADEQ assures us that it's on track. So, we expect it to be delivered in late 2024. But honestly, with Thanksgiving and Christmas coming up, it would not surprise us if it slipped into early 2025, which will be no big deal, but we are assured by the ADEQ that it's on track.

Okay. Great. And just on the joint venture partnering. Is there an expectation that you guys would be looking for some kind of upfront payment relative to the sunk cost to date? Or is the expectation just sort of a go-forward basis? You mentioned the feasibility study and obviously, anything going forward.

Yes, I think that we would expect to receive an equity contribution for the value that the project represents. So, for sure, there will be an equity contribution, and then we would look -- and then plus whatever the required capital contribution for the project is.

[Operator Instructions] The next question is from Pierre Vaillancourt with Haywood Securities. Please go ahead.

Peter or Andre, wondering if you can give me a little more insight on Copper Mountain and specifically the time line to steady state. I mean, I recognize that mill availabilities improved. The throughput is rising, but it still seems to me like a long-time line to get to that point. And so maybe walk me through what the key issues going forward? And is there any kind of ability to accelerate that given your success here?

So, I'll start off by saying that the team and I are sitting here at Copper Mountain right now. So, we're actually doing this conference call from the Copper Mountain office, and we're really, really pleased with what we're seeing over here. So, John Ritter and the team are doing an extraordinary job of bringing things along. We always said this wasn't going to be easy, but they're hitting it out of the park. Things are going pretty well. But for a little bit of granular detail on where things are and what's required, I'll let Andre respond to that.

Sure. I'll give you the granular. So, thanks for the question, and it's an interesting one. And what I'd say as an echo what Peter says is we're quite pleased with the progress. So, it's on a number of fronts, whether it's increasing the mine throughput, whether it's record mill recoveries, the mill availability, like we said on other questions, we're really pleased with New Brit mill availability here as much. It's even higher than New Brit, 95%. The stabilization is almost complete. So, we're -- there's some puts and takes. There's a little bit although the stripping is definitely increasing, and we're very pleased with it. We still would like a little bit more, and the teams are working on with some additional trucks, and ramping up of people is a little bit slower, but overall, I'd say it's going as planned. It's a three-year project. So, when you say that is it going slow, it's something -- what it is, is we're in the middle of a construction project. The technical report showed us getting to 50,000 tons per day by 2027. And with the capital raise that we just did last year, the Board just approved as to some early works in preparing for what we call SAG 2, which is the conversion of ball mill three. And that is the next sort of stage of mill throughput to get to that 50,000 tons a day. So, we're in the process right now of ordering long lead items. Commissioning of that, we hope to have it done by the end of next year and commissioned into the mid-'26, which is ahead of the schedule that -- in the technical report of into 2027. So, I'd say when you look at it at a three-year window, we're on track. In fact, we're probably a little bit ahead. And there's just like any, call it, construction project, which is the way that we look at this. It's -- there's ups and downs, and the team is working really hard, and there's initiatives everywhere that you look in terms of the operation. And I would say the real focus right now is getting that mine throughput up over the next year because that unlocks the high-grade material in Pit 3. And the optimization and increase of throughput in the mill, which is that capital project. One thing I didn't mention is like we just recently put in place as well a new set of liners. It was engineered and designed. We expect higher throughput. Those are just installed, I think about a week ago, and we're in the middle of ramping up that as well, too. So, we're expecting some subtle ramp-ups in mill throughput towards the end of this year. But the big jump will be into next year and towards the end of the year with the commissioning of and conversion of ball mill three to a SAG mill.

Okay. And so, this year, are you going to reach 40,000 tons per day? Are you going to the exit [indiscernible] you’ll get there?

I think we expect by the end of the year to be finishing out the year averaging about 40,000 tons per day, yes.

And Peter, in terms of -- I mean, I realize it's a bit of a moving target. But when you talk about securing a partner for Copper World, what's your target? Is that kind of second half of '25?

I would say, Pierre, as soon as we have the air quality permit in hand, we'll launch a formal process, and I expect that process would take over the order of four months or so. So, we would have the partner on board, I expect in the first half of the year.

The next question is from a follow-up from Orest Wowkodaw with Scotiabank. Please go ahead.

More of a housekeeping question on my end. Can you remind me, on Slide 7, your Manitoba operations review, where you show the combined statistics here. Can you just remind me why the gold recovery is at 63.6%? Why is it so much lower than the two mills reporting at 90% at New Brit and 70% at Stall?

Orest, it's Eugene here. The -- on Slide 7, that gold recovery is only the gold recovery from concentrate. So that's the 60-odd percent. At New Brit, it's the combined gold, copper and concentrate and doré is 90%. You'll see that in the MD&A that we actually -- there's a more specific line up. This is only the recovery from concentrate.

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

Thank you, operator, and thank you, everyone, for joining us today. If you have any further questions, feel -- please feel free to reach out to our Investor Relations team. Thank you.

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