TMX, NYSE – HBM 2022 No. 11 Hudbay Announces Robust Preliminary Economic Assessment for the Copper World Complex
TMX, NYSE – HBM
2022 No. 11
Hudbay Announces Robust Preliminary Economic Assessment for the Copper
World Complex
• Two-phase mine plan has an after -tax net present value (10%) of $1,296 million and generates an
18% internal rate of return at $3.50 per pound copper1
• Phase I reflects a standalone operation on private land and patented mining claims over a 16-year
mine life with average annual copper production of approximately 86,000 tonnesi at cash costs and
sustaining cash costs of $1.15 and $1.44 per pound of copperii, respectively, generating an after-tax
net present value (10%) of $741 million and an internal rate of return of 17%1
• Phase I of t he Copper World Complex includes a 60,000 ton per day sulfide concentrator, a 20,000
ton per day oxide heap leach, an SX/EW facility and a concentrate leach facility with an initial capital
cost estimate of approximately $1.9 billion. T he concentrator is intended to expand to 90,000 tons
per day in Phase II
• The processing facilities are planned to have annual production capacity of 100,000 tonnes of
copper cathode during Phase I and 125,000 tonnes of copper cathode during Phase II , and have
been designed to reduce the project’s carbon footprint to produce “Made in America” copper
• Supports U.S. copper supply through onshore production of copper cathode expected to be sold
entirely to domestic customers and eliminates GHG and sulfur emissions associated with overseas
shipping and processing
• Phase II expands mining activities onto federal land and extends the mine life to 44 years with
average annual copper production of approximately 101,000 tonnes i at cash costs and sustaining
cash costs of $1.11 and $1.42 per pound of copper ii, respectively. Phase II provides additional
optionality with an after -tax net present value (10%) of $555 million and an internal rate of return of
49% (and a projected after-tax net present value (10%) of $ 2,806 million at the time of Phase II
sanctioning)1
• Significant increase in copper contained in all mineral resource categories
• Hudbay is evaluating several opportunities to optimize the project, including the potential to expand
Phase I beyond 16 years with additions to the company’s private land package for tailings and waste
rock storage and the potential to accelerate Phase II if federal permits are received earlier than as
outlined in the PEA
Toronto, Ontario, June 8, 2022 – Hudbay Minerals Inc. (“Hudbay” or the “company”) (TSX, NYSE: HBM) today
announced the results of the preliminary economic assessment (“PEA”) of its 100%-owned Copper World Complex in
Arizona, which includes the recently discovered Copper World deposits along with the Rosemont deposit . All dollar
amounts are in US dollars, unless otherwise noted.
1 The valuation metrics presented in this news release are based on a preliminary economic assessment that includes an economic
analysis of the potential viability of mineral resources. Mineral resources that are not mineral reserves do not have demonstrated
economic viability. This preliminary economic assessment is preliminary in nature, includes inferred resources that are considered
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2022 No. 11
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too speculative geologically to have the economic considerations applied to them that would enable them to be categorized as
mineral reserves and there is no certainty the prelimina ry economic assessment will be realized . See “Qualified Person and NI 43 -
101” below.
“The Copper World Complex PEA represents the next leg of copper growth at Hudbay , generating significant value
for all of our stakeholders with robust project economics and many benefits for the community and local economy in
Arizona,” said Peter Kukielski, Hudbay’s President and Chief Executive Officer. “ We have been successfully
executing an alternative Arizona strategy since 2019 to deliv er this attractive project , which is significantly de -risked
and has the potential to nearly double our annual copper production while maintaining Hudbay’s first quartile cash
cost positioning . Phase I represents an attractive standalone operation on our private land and Phase II provid es
significant long-term growth potential in this prolific district. Through applying our core competencies of exploration,
mine planning and project development, the Copper World Complex is expected to be the next major copper
operation in the United States , delivering the copper needed to meet domestic electrification and decarbonization
supply chain needs.”
Successfully Executing an Alternative Strategy
Hudbay has been evaluating alternative options to unlock value from its Arizona mineral assets since the July 2019
ruling from the U.S. District Court to vacate the final record of decision (“FROD”) issued by the U.S. Forest Service
relating to its Rosemont copper deposit . The FROD was based upon a standalone development plan for the
Rosemont deposit utilizing federal land as set forth in Hudbay’s 2017 feasibility study and technical report (the “2017
Feasibility Study”).
Discovering New Mineralization on Patented Mining Claims
In the fall of 2019, the company began pursuing a private land development plan, including exploring nearby patented
mining claims in the historic Helvetia mining district. The company initiated a drill program in 2020 to confirm historical
drilling in this past -producing region, and the drill program was further expanded throughout 2021 after continuing to
receive encouraging results. Four deposits were discovered in early 2021 with oxide and sul fide mineralization
occurring at shallow depths on Hudbay’s wholly -owned patented mining claims. By September 2021, the exploration
program had identified seven mineral deposits (referred to at the time as the “Copper World deposits”) over a seven-
kilometre strike area, as sh own in Figure 1 . An initial mineral resource estimate was declared at the Copper World
deposits in December 2021, which was larger and at a higher level of geological confidence than expected.
Expanding Private Land Package
Hudbay has been acquiring additional private land in the area to support an operation entirely on private land. The
company now holds approximately 4,500 acres of private land and patented mining claims , which are enough to
support the first 16 years of productio n at the Copper World Complex. Please refer to Figure 2 for a map of the
company’s private land package.
Unlocking District Potential
Following the recent exploration success on patented mining claims and ongoing litigation uncertainty regarding the
project design set forth in the 2017 Feasibility Study , Hudbay began to evaluate alternative design options to unlock
value within this prospective district . This included remodeling the 2017 mineral resources , incorporating the new
mineral resources from successful exploration results and completing new metallurgical testing work , which led to a
comprehensive review of the mine plan, process plant design, tailings deposition strategies and permitting
requirements for the new project.
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2022 No. 11
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Advancing State-Level Permitting
In June 2021, Hudbay initiated the state -level permitting process for the project with an application for its Mined Land
Reclamation Plan (“MLRP”), which was subsequently approved by the Arizona State Mine Inspector in October 2021.
The MLRP approval include d a requirement for reclamation cost bonding prior to initiating work on the company’s
private lands and represented the first step in the permitting process for a private land operation.
An aquifer protection permit and air quality permit are the remaining key state-level permits required for a private land
operation, which, along with other minor permits, are expected to be advanced in the second half of 2022. Hudbay
previously received aquifer protection and air quality permits for the 2017 design of the Rosemont project and these
permits have been successfully upheld through litigation.
Hudbay does not believe any federal permits are required for Phase I of the mine plan for the Copper World Complex
(see “Simplified Permitting Process” below).
2022 PEA Summary
The Copper World Complex PEA contemplates a two-phased mine plan with the first phase reflecting a standalone
operation with processing infrastructure on Hudbay’s private land and mining occurring on patented mining claims.
Phase I is expected to require only state and local permits and reflects a 16-year mine life. Phase II extends the mine
life to 44 years through an expansion onto federal land to mine the entire deposits. Phase II would be subject t o the
federal permitting process.
Phase I contemplates average annual copper production of up to 100,000 tonnesi over a 16-year mine life, including
approximately 86,000 tonnes i of copper from mined resources at average cash cost s and sustaining cash costs of
$1.15 and $1.44 per pound of copper ii, respectively. At a copper price of $3. 50 per pound, the after-tax net present
value of Phase I using a 10% discount rate is $ 741 million and the internal rate of return is 1 7%. Phase I I
contemplates an expansion of the processing facilities which would increase average annual copper production up to
approximately 125,000 tonnesi over the remaining mine life, including approximately 101,000 tonnes i of copper from
mined resources at average cash cost s and sustaining cash costs of $1.1 1 and $1.42 per pound of copper ii,
respectively. With the inclusion of Phase II and assuming a copper price of $3.50 per pound, the after -tax net present
value of the total project using a 10% discount ra te increases to $1,296 million and the internal rate of return is 1 8%.
The valuation metrics are highly sensitive to the copper price and at a price of $4.00 per pound, the after -tax net
present value of Phase I and LOM, using a 10% discount rate , increases to $1,193 million and $1,903 million,
respectively, and the internal rate of return in Phase I and LOM increases to 21% and 22%, respectively.
A summary of key valuation, production and cost details from the PEA can be found below. For further details,
including operating and cash flow metrics provided on an annual basis, please refer to Exhibit 1 at the end of this
news release. For further details regarding the preliminary nature of the PEA and its limitations, please refer to
“Qualified Person and NI 43-101” below.
Summary of Key Metrics (at $3.50/lb Cu) Unit Phase I Phase II LOM
Valuation Metrics (Unlevered)1
Net present value @ 8% (after-tax) $ millions $1,097 $947 $2,044
Net present value @ 10% (after-tax) $ millions $741 $555 $1,296
Internal rate of return (after-tax) % 17% 49% 18%
Payback period # years 5.3 1.7 -
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EBITDA (annual avg.)2 $ millions $438 $530 $497
Project Metrics
Growth capital $ millions $1,917 $885 $2,802
Construction length # years 3.0 2.0 -
Operating Metrics
Mine life # years 16.0 28.0 44.0
Copper cathode production – mined
resources3 000 tonnes 86.4 101.3 95.9
Copper cathode production – total3 000 tonnes 98.7 123.3 114.3
Copper recovery – mill to cathode % 77.3 80.1 79.2
Copper recovery – leach to cathode % 59.0 58.7 58.9
Sustaining capital (annual avg.) $ millions $33 $35 $34
Cash cost4 $/lb Cu $1.15 $1.11 $1.12
Sustaining cash cost4 $/lb Cu $1.44 $1.42 $1.43
Note: “LOM” refers to life-of-mine total or average.
1 Calculated assuming the following commodity prices: copper price of $3.50 per pound, copper cathode premium of $0.01 per
pound (net of cathode transport charges), silver stream price of $3.90 per ounce and molybdenum price of $11.00 per pound.
Reflects the terms of the existing Wheaton Precious Metals stream, including an upfront deposit of $230 million in the first year of
Phase I construction in exchange for the delivery of 100% of silver produced.
2 EBITDA is a non-IFRS financial performance measure with no standardized definition under IFRS. For further information, please
refer to the company's most recent Management's Discussion and Analysis for the three months ended March 31, 2022.
3 The mine plan assumes external concentrate is sourced in years when spare capacity exists at the SX/EW facility in order to
maximize the full utilization of the facility. Copper cathode production from mined resources excludes the production from external
concentrate. Average annual copper cathode production from external concentrates is approximately 12,000 tonnes in Phase I and
22,000 tonnes in Phase II. There remains the potential to replace external copper concentrate with additional internal feed.
4 Cash cost and sustaining cash cost, net of by-product credits, per pound of copper produced from internally sourced feed and
excludes the cost of purchasing external copper concentrate, which may vary in price or potentially be replaced with additional
internal feed. By-product credits calculated using the following commodity prices: molybdenum price of $11.00 per pound, silver
stream price of $3.90 per ounce and amortization of deferred revenue as per the company’s approach in its quarterly financial
reporting. By-product credits also include the revenue from the sale of excess acid produced at a price of $145 per tonne.
Sustaining cash cost includes sustaining capital expenditures and royalties. Cash cost and sustaining cash cost are non-IFRS
financial performance measures with no standardized definition under IFRS. For further details on why Hudbay believes cash costs
are a useful performance indicator, please refer to the company's most recent Management's Discussion and Analysis for the three
months ended March 31, 2022.
Cu Price Sensitivity Unit $3.25/lb $3.50/lb $3.75/lb $4.00/lb $4.25/lb
Phase I Valuation Metrics
Net present value1 @ 8% $ millions $827 $1,097 $1,366 $1,633 $1,903
Net present value1 @ 10% $ millions $513 $741 $968 $1,193 $1,420
Internal rate of return1 % 15% 17% 19% 21% 23%
Payback period # years 6.0 5.3 4.7 4.3 3.9
EBITDA (annual avg.)2 $ millions $392 $438 $484 $530 $576
LOM Valuation Metrics
Net present value1 @ 8% $ millions $1,647 $2,044 $2,439 $2,833 $3,228
Net present value1 @ 10% $ millions $990 $1,296 $1,600 $1,903 $2,206
Internal rate of return1 % 16% 18% 20% 22% 23%
EBITDA (annual avg.) 2 $ millions $446 $497 $547 $598 $649
1 Net present value and internal rate of return are shown on an after-tax basis.
2 EBITDA is a non-IFRS financial performance measure with no standardized definition under IFRS. For further information, please
refer to the company's most recent Management's Discussion and Analysis for the three months ended March 31, 2022.
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Overview of Proposed Operation
The Copper World Complex is planned to be a traditional open pit shovel and truck operation with a copper sul fide
mineral processing plant and an oxide leach processing facility producing copper cathode, molybdenum concentrate
and silver doré.
The overall mining operation is expected to consist of four open pits in Phase I with two of the pits expanding onto
federal land in Phase II , as shown in Figure 3 . Phase I contemplates exploitation of the pits and use of associated
infrastructure within a footprint that requires only state and local permits for its 16 years of operation, plus one year of
pre-stripping. During this period, all waste and tailings will be disposed on, and leach pads will be located on ,
Hudbay’s private land. In Phase II, it is assumed that all necessary federal permits will be obtained in order to mine
and deposit tailings and waste on unpatented mining claims.
A majority of the newly discovered deposits are intended to be mined in Phase I and these deposits have a lower
strip ratio and would contribute approximately 50% of the resources mined, as shown in Figure 4 . In the first five
years, including the year of pre -stripping, 90% of the mineral resources are intended to be extracted from the Peach-
Elgin, Copper World (now referred to as “ West”) and Broadtop Butte pits. The Rosemont (now referred to as “ East”)
pit would become a major contributor in year five and the primary source of feed in Phase II.
The processing facilities and saleable mineral product s are fundamentally different from what was contemplated in
the 2017 Feasibility Study. The processing facilities for the Copper World Complex include an oxide leach and
solvent extraction and electro -winning (“SX/EW”) facility, a sulfide concentrator, a concentrate leach facility and an
acid plant. The capacity of the sulfide concentrator during Phase I is 60,000 tons per day while the tonnage of the
run-of-mine leached material is 20,000 tons per day. In year 17, the sulfide throughput will increase to 90,000 tons
per day for the duration of Phase II. The pregnant leach solution from the concentrate leach facility will be combined
with the solu tion from the oxide leaching circuit and treated in the SX/EW facility to produce copper cathode. The
concentrate leach facility will also produce sulfur which will be processed into sulfuric acid at the acid plant and then
used on the oxide leach pads. When the sulfur production from the concentrate leach process is insufficient to
support the sulfuric acid requirements of the project, sulfur will be purchased at local market price; conversely, when
sulfuric acid production exceeds the operation’s leaching requirements, it will be sold.
The capacity of the contemplated processing facilities allows for the opportunity to process third party feed in certain
years when the copper from resources mined may be lower due to grade variability . The PEA assumes third-party
concentrate will be sourced in certain years to maximize the utilization of the SX/EW facility, which will have annual
production capacity for 100,000 tonnes of copper cath ode during Phase I and 125,000 tonnes of copper cathode
during Phase II.
The PEA contemplates the construction of three tailings storage facilities for Phase I and an additional larger tailings
facility for Phase II. Conventional tailings deposition is planned for Phase I. Dry stack tailings deposition is intended to
occur in Phase II, as per the original design set forth in the 2017 Feasibility Study.
Total project capital cost s are estimated to be $1.9 billion for Phase I, including all costs associated with the
construction of the onsite facilities as managed by the EPCM contractor , such as the sulfide concentrator, the
concentrate leach facility, the oxide leach and SX/EW plant . Phase I project capital costs include $572 million of
owner’s costs associated with mining equipment, pre-stripping activities as well as all operating costs capitalized prior
to the start of production. Phase II project capital costs of $885 million include costs associated with the expansion of
the crushing facility and flotation plant to accommodate the higher sulfide throughput, as well as $264 million of
owner’s costs related to the construction of a new tailings facility. Contingency cost s have been applied to direct
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capital costs at 20% for Phase I due to many components being at an advanced level of engineering, and at 40% for
Phase II due to the long lead time of 15 years before the start of construction, reflecting a higher uncertainty on these
cost estimates. For further details on the capital cost estimates, please refer to Exhibit 1.
Reducing GHG Emissions, Supporting Domestic Copper Supply and Generating Significant Local Benefits
Global copper market fundamentals are expected to be strong with a structural deficit emerging in the medium term.
Global mine production, and available smelter capacity, are expected to struggle to keep pace with metal demand
boosted by the green energy r evolution. The U.S. is expected to remain a net copper importer during this period and
domestic supply will be required to help secure growing U .S. metal demand related to increased manufacturing
capacity, infrastructure development, bolstering the country ’s energy independence and domestic EV battery supply
chain and production needs.
The “Made in America” copper cathode produced at the Copper World Complex is expected to be sold entirely to
domestic U.S. customers, thereby reducing the operation’s total energy requirements, greenhouse gas (“GHG”) and
sulfur (SO2) emissions by eliminating overseas shipping, smelting and refining activities relating to copper
concentrate (please refer to Figure 5 ). The company estimates that the project will reduce total energy consumption
by more than 10%, including a more than 30% decline in energy consumption relating to downstream processing
when compared to a project design that produces copper concentrates for overseas smelting and refining. The lower
energy consumption would result in an approximate 10% to 15% reduction in scope 1, 2 and 3 greenhouse gas
(“GHG") emissions. In addition, t he copper cathode production from oxides will also result in lower GHG emissions.
Hudbay is targeting further reductions in the project’s GHG emissions as part of the company’s specific emissions
reduction targets to align with the global 50% by 2030 climate change goal . Hudbay has integrated GHG reduction
initiatives as part of its project design for the Copper World Complex and the company expects to further reduce GHG
emissions through advancing many green opportunities which are discussed in the section titled “Project Optimization
and Upside Opportunities” below.
The Copper World Complex is expected to generate significant benefits for the community and local economy in
Arizona. Over the anticipated 44-year life of the operation, the company expects to contribute more than $3.3 billion
in U.S. taxes, including approximately $660 million in taxes to the state of Arizona and $590 million in property taxes
that directly benefit local communities . Hudbay also expects the Copper World Complex to create more than 500
direct jobs and up to 3,000 indirect jobs in Arizona.
Simplified Permitting Process
The permitting process for the Copper World Complex is expected to require state and local permits for Phase I and
federal permits for Phase II. On May 23, 2022, the U.S. District Court for the District of Arizona issued a favourable
ruling effectively stating that there is no obligation for the Army Corps of Engineers (“ACOE”) to include Phase I of the
project as part of the NEPA federal review of the standalone Rosemont project design . Furthermore, o n May 12,
2022, a decision from the 9 th Circuit Court of Appeals clarified the permitting path for Phase II, and the company
expects it will be able to pursue and obtain federal permits within the constraints imposed by the Court’s decision.
In April, two groups of project opponents provided separate notices of their intent to bring citizen suits against Copper
World under the Clean Water Act. In each case, project opponents have alleged that the site contains jurisdictional
waters of the U.S. and that a Section 404 Clean Water Act permit is needed to advance the project. The ACOE has
never determined that there are jurisdictional waters of the U.S. at the Copper World Complex and Hudbay has
independently concluded through its own scientific analysis that there are no such waters in the area.
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Mineral Resource Estimate
The PEA and mine plan are based on a new resource model for the Copper World Complex, which incorporates a
revised resource model for the East deposit (formerly known as Rosemont) with the addition of the Copper World
deposits discovered in 2021. The resource model was constructed using the same methods Hudbay applied at
Constancia and Mason . Based on this new model, including resource classification cr iteria calibrated on historical
performance at Constancia and the control of grade over-smoothing in the previous 2017 resource model , contained
copper in measured and indicated resources increased by 17% and contained copper in inferred resources increased
by 328%, as compared to the mineral resources included in the 2017 Feasibility Study.
The current mineral resource estimates for the Copper World Complex (effective as of May 1, 2022) are summarized
below and replace the prior estimates of mineral reserves and resources at the Rosemont and Copper World
deposits set forth in the 2017 Feasibility Study and the December 2021 mineral resource statement, respectively.
Copper World Complex
Mineral Resource Estimates1,2,3
Tonnes
(millions)
Cu Grade
(%)
Soluble Cu
Grade (%)
Mo Grade
(g/t)
Ag Grade
(g/t)
Flotation
Measured 687 0.45 0.05 138 5.1
Indicated 287 0.36 0.06 134 3.6
Total Measured and Indicated 973 0.42 0.05 137 4.6
Inferred 210 0.36 0.05 119 3.9
Leach
Measured 105 0.37 0.26 - -
Indicated 94 0.35 0.26 - -
Total Measured and Indicated 200 0.36 0.26 - -
Inferred 52 0.40 0.29 - -
Note: totals may not add up correctly due to rounding.
1 Mineral resource estimates that are not mineral reserves do not have demonstrated economic viability. Mineral resource estimates
do not include factors for mining recovery or dilution.
2 Mineral resource estimates constrained to a Lerch Grossman pit shell with a revenue factor of 1.0 using a copper price of $3.45
per pound.
3 Using a 0.1% copper cut-off grade and an oxidation ratio lower than 50% for flotation material, and a 0.1% soluble copper cut-off
grade and an oxidation ratio higher than 50% for leach material.
Copper World Complex Comparison of Mineral Resource Estimates1,2
2017 2022 % Change
Tonnes
(millions)
Cu
(%)
Cu (000
tonnes)
Tonnes
(millions)
Cu
(%)
Cu (000
tonnes)
Tonnes
(millions)
Cu
(%)
Cu (000
tonnes)
Measured and
Indicated 1,147 0.36 4,129 1,173 0.41 4,829 2% 14% 17%
Inferred 75 0.30 224 262 0.37 957 252% 22% 328%
Note: totals may not add up correctly due to rounding.
1 2017 mineral resource estimates are inclusive of mineral reserve estimates.
2 2022 mineral resource estimates include both flotation and leach material.
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Project Optimization and Upside Opportunities
Recent technical and exploration work has identified many opportunities that may further enhance project economics,
reduce environmental impacts, increase annual production and extend mine life.
• Expanding Private Land Phase I - Hudbay may acquire additional private land to increase the tailings and
waste capacity and extend the Phase I mine life beyond 16 years.
• Earlier Receipt of Federal Permits for Phase II - Hudbay is optimistic that the company will be able to secure
federal permits sooner than the conservative timelines assumed in the PEA, which will allow the mining of
more tonnage at a higher grade earlier in the mine life.
• Green Opportunities – There are several emission redu ction opportunities the company will evaluate with
future feasibility studies, including the potential to source renewable energy from local providers at a nominal
cost, the use of autonomous or electric haul trucks at the operation and various post -reclamation land uses
such as domestic renewable energy production. Also, if Hudbay is able to secure additional private land to
improve the tailings configuration, there is the potential to accelerate dry stack tailings deposition into Phase
I, which would reduce water consumption.
• Additional Exploration Upside Potential – Continued exploration activities may result in further extension of
economic mineralization, including bridging the gap to the north and south of the Bolsa deposit. In addition,
2021 geophysical surveys identified several new targets north and south of the West deposit (formerly
known as the Copper World deposit). A large portion of Hudbay’s property in this prolific region has yet to be
explored and provides the potential for further discoveries.
Next Steps – Advancing to Pre-feasibility Study
Hudbay continues early site works at the project, which commenced in April 2022 with initial grading and clearing
activities. The company also continues to have seven drill rigs turning at site conducting infill drilling in support of
additional feasibility studies.
Hudbay expects to advance a pre -feasibility study for Phase I of the Copper World Complex in the second half of
2022, which will focus on converting the remaining inferred mineral resources to measured and indicated and
evaluating many of the project optimization and upside opportunities . The company has increased its 2022 spending
guidance for Arizona by $ 30 million, which includes an additional $15 million in capitalized exploration, $10 million in
evaluation expenses and $5 million in growth capital expenditures.
During 2023, the company expects to complete a de finitive feasibility study on Phase I of the Copper World Complex
and receive all required state and local permits for Phase I . Hudbay expects to generate significant free cash flow
over the next several years following the recent completion of its brownfi eld investment projects in Peru and
Manitoba. In addition, Hudbay expects to evaluate a variety of financing options, including a potential minority joint
venture partner, as part of a prudent financing strategy prior to a project sanction decision, which could be made as
early as 2024.
Non-IFRS Financial Performance Measures
Cash cost and sustaining cash cost per pound of copper produced are shown because the company believes they
help investors and management assess the performance of its operations, including the margin generated by the
operations and the company. Unit operating costs are shown because these measures are used by the company as
a key performance indicator to assess the performance of its mining and processing operations. EBITDA is shown to
provide additional information about the cash generating potential in order to assess the company’s capacity to
service and re pay debt, carry out investments and cover working capital needs. These measures do not have a