TSX, NYSE – HBM 2022 No. 2 Hudbay Announces Fourth Quarter and Full Year 2021 Results and Provides Annual Guidance
TSX, NYSE – HBM
2022 No. 2
Hudbay Announces Fourth Quarter and Full Year 2021 Results and Provides
Annual Guidance
Toronto, Ontario, February 23, 2022 – Hudbay Minerals Inc. (“Hudbay” or the “ company”) (TSX, NYSE:HBM)
today released its fourth quarter and full year 2021 financial results and annual production and cost guidance. All
amounts are in U.S. dollars, unless otherwise noted.
Fourth Quarter and Full Year Operating and Financial Results
• Consolidated copper production of 99,470 tonnes and consolidated gold production of 193,783 ounces
increased by 4% and 55%, respectively, in 2021 as compared to 2020.
• Achieved 2021 consolidated copper, gold and silver production guidance while zinc produc tion fell short of
the 2021 guidance range.
• Peru copper production met 2021 guidance with strong operating performance in the fourth quarter, aided by
the continued ramp up of Pampacancha. Manitoba zinc production wa s below 2021 guidance primarily due
to higher dilution and mine plan limitations at the 777 mine as it approaches closure.
• Record quarterly consolidated gold production of 64,159 ounces in the fourth quarter, an increase of 18%
compared to the third quarter of 2021, due to higher grades at Pampacancha and the commissioning of the
New Britannia mill.
• Generated record quarterly revenue of $425.2 million. Operating cash flow before change in non -cash
working capital was $156.9 million and adjusted EBITDA i was $180.3 million in the fourth quarter of 2021,
due to higher realized base metals prices and higher gold and coppe r sales volumes, partially offset by
lower zinc sales volumes.
• Full year, consolidated cash cost and sustaining cash cost per pound of copper produced, net of by -product
creditsi, of $0.74 and $2.07, respectively, achieved 2021 guidance as inflationary cos t pressures were offset
by strong by-product credits.
• Consolidated cash cost and sustaining cash cost per pound of copper produced, net of by -product creditsi,
for the fourth quarter of 2021 were $0.51 and $1.95, respectively, a decrease of 18% and an increase of 1%,
respectively, compared to the third quarter of 2021.
• Fourth quarter net loss and loss per share were $10.5 million and $0.04, respectively. After adjusting for an
impairment charge related to a revaluation of our Flin Flon environmental obligat ion due to declining long
term discount rates, amongst other items, fourth quarter adjusted net earningsi per share was $0.13.
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Executing on Growth Initiatives
• New Britannia achieved commercial production on November 30, 2021. December mill throughput averaged
1,200 tonnes per day with gold and silver recoveries in line with metallurgical models . Throughput and
recoveries are expected to achieve design rates in the second quarter of 2022.
• Published an initial mineral resource estimate for Copper World on December 15, 2021, which contained a
higher grade, near-surface zone that has the potential to be mined earlier in the mine life and is composed
of both sulphide and oxide mineralogy. The company remains on track to complete a preliminary economic
assessment of Copper World in the first half of 2022.
• Results from the Constancia Norte underground scoping study are expected to be incorporated into the
annual mineral reserve and resource update for Constancia in March 2022.
• Commenced a winter drilling program in Manitoba in January 2022 to test high -priority targets near Lalor
and 1901 for potential reserve and resource expansion and support the completion of a preliminary
economic assessment of the Flin Flon tailings reprocessing opportunity.
“2021 was a year of execution for Hudbay as we invested approximately $250 million in our brownfield growth
projects at Pampacancha and New Britannia,” said Peter Kukielski, President and Chief Executive Officer. “We began
to see increased cash flows from these short -payback, high-return investments in the fourth quarter and we are now
at an inflection point where we anticipate meaningful copper and gold production growth along with significant
EBITDA and cash flow growth. 2022 will be a year in which we start to reap the rewards from our disciplined growth
strategy while we advance our high-quality pipeline of copper growth assets, including our newly discovered Copper
World project in Arizona, which we believe will generate significant value.”
2022 Annual Guidance and Outlook
• Consolidated copper production is forecast to increase by 17% to 116,000 ii tonnes in 2022 and by 34% to
133,500ii tonnes in 2024, compared to 2021, with higher copper grades expected from the Pampacancha
deposit in Peru.
• Consolidated gold production is forecast to increase by 2 8% to 24 7,500ii ounces in 2022 and by 59% to
307,500ii ounces in 2024, compared to 2021 , due to higher production from the New Britannia mill and
Pampacancha.
• Introduced 2022 cash cost guidance by business unit with Peru cash cost of $ 1.10 to $1.40 per pound of
copper produced, net of by -product credits i, and Manitoba cash cost of $ 300 to $550 per ounce of gold
produced, net of by-product creditsi.
• 2022 unit operating costs are expected to increase by approximately 7%ii in Peru and 15% ii in Manitoba,
compared to 2021, as a result of expected higher input costs due to industry wide inflation in each region
and the transition of operations in Manitoba.
• Consolidated cash cost guidance of $0.60 to $1.05 and consolidated sustaining cash cost guidance of $1.60
to $2.25, in each case, per pound of copper produced, net of by-product credits, is expected in 2022.
• Total capital expenditures are expected to decline by 17% year -over-year as major growth investment
programs in Peru and Manitoba were completed in 2021 and lower sustaining capital spending is expected
in Peru, offset by higher growth spending on technical and economic studies for Copper World.
• Exploration spending of approximately $65.0 million in 2022 reflects plans to continue drilling activities at
Copper World and test promising targets in Peru, Manitoba, Nevada and Chile.
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Summary of Fourth Quarter Results
Consolidated copper production in the fourth quarter of 2021 was 2 8,198 tonnes, a 21% increase compared to the
third quarter of 2021, primarily due to higher throughput and copper grades in Peru . Consolidated gold product ion
was 64,159 ounces in the fourth quarter of 2021, another quarterly record for Hudbay and an increase of 18% versus
the third quarter , primarily due to higher gold production in Snow Lake with the commissioning of the New Britannia
mill in the fourth quarter. Consolidated zinc production in the quarter increased by 11% versus the third quarter of
2021, primarily due to higher zinc grades at 777 and Lalor . Consolidated silver production in the fourth quarter
increased by 18% compared to the third quarter as higher grades and recoveries in Manitoba offset lower grades in
Peru.
In the fourth quarter of 2021, consolidated cash cost per pound of copper produced, net of by -product creditsi, was
$0.51, compared to $0.62 in the third quarter of 2021. This 18% decrease was mainly a result of higher copper
production and higher gold by -product revenue. Sustaining cash cost per pound of copper produced, net of by -
product creditsi, slightly decreased to $1.95 in the fourth quarter of 2021, from $1.97 in the third quarter, primarily due
to the same factors affecting cash cost offset by higher sustaining capital expenditures and royalties.
Operating cash flow before change in non -cash working capital was $156.9 million during the fourth quarter of 2021,
reflecting an increase of $53.4 million compared to the third quarter of 2021 , primarily the result of higher realized
base metal prices and higher gold and copper sales volumes.
Net loss and net loss per share in the fourth quarter of 2021 were $10.5 million and $0.04, respectively, compared to
a net loss and net loss per share of $170.4 million and $0.65, respectively, in the third quarter of 2021. Fourth quarter
results were negatively impacted by a revaluation of the environmental obligation due to lower long term discount
rates since the middle of the year and a corresponding increase to Flin Flon’s property plant and equipment
("PP&E"). As the closure of the 777 mine and Flin Flon operations is expected to commence within several months,
an impairment charge was made to PP&E resulting in a loss of $46.2 million. The quarterly financial results were also
negatively impacted by $13.3 million in mark-to-market net losses arising from the revaluation of the gold prepayment
liability, revaluation of certain ot her financial instruments, share -based compensation, and a $3. 4 million Flin Flon
restructuring charge.
Adjusted net earningsi and adjusted net earnings per sharei in the fourth quarter of 2021 were $32.7 million and $0.13
per share , respectively, after adjusting for the impairment charge related to the revaluation of the environmental
obligation in Flin Flon, among other items. This compares to adjusted net earnings and adjusted net earnings per
share of $0.9 million and $0.00 per share in the third quarter of 202 1, which were recalculated as a result of the
company’s year-end 2021 tax provision calculation review (see “Non-IFRS Financial Performance Measures”). Fourth
quarter adjusted EBITDA i increased to $180.3 million, compared to $ 119.3 million in the third quarter of 202 1,
primarily due to higher copper and gold sales volumes and higher realized prices, partially offset by higher exploration
and selling and administrative expenses.
As at December 31, 2021, Hudbay’s liquidity includes $271.0 million in cash and cash equivalents as well as undrawn
availability of $346.9 million under its revolving credit facilities. The company’s liquidity position was further enhanced
in October 2021 through the renegotiation of its credit facilities to increase available borrowings to $450 .0 million and
extend the maturity to 2025.
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Summary of Full Year Results
On a consolidated basis, Hudbay’s copper, gold and silver production met 2021 guidance; however, production of
zinc and molybdenum fell short of the 2021 guidance ranges. Production of gold in Peru exceeded the top end of the
guidance range due to strong gold grades from Pampacancha. Prod uction of gold and silver in Manitoba fell below
the 2021 guidance range primarily due to higher than expected grade dilution at the 777 mine during the fourth
quarter and prioritizing base metal rich zones in the fourth quarter at Lalor while deferring some gold-rich ore for
future processing at New Britannia to achieve higher gold recoveries. Zinc production was impacted by higher dilution
and mine plan limitations as the 777 mine approaches the end of life.
Consolidated cash costs per pound of copper produced, net of by -product creditsi, for 2021 was $0.74, and
consolidated sustaining cash cost per pound of copper produced, net of by -product credits i, for 2021 was $2.07, in
line with the company’s 2021 guidance range.
Operating cash flow before change in non ‑cash working capital increased to $483.9 million from $241.9 million in
2020. The increase is the result of higher realized base metal and molybdenum prices and higher sales volumes of
gold and copper, partially offset by lower zinc sales volumes.
Net loss and loss per share for 2021 were $244.4 million and $0.93, respectively, compared to a net loss and loss per
share of $144.6 million and $0.55, respectively, in 2020. Contributing to the 2021 net loss was an impairment charge
of $193.5 million related to an updated closure plan reflecting higher estimates for closure activities in Flin Flon. Full
year results were also negatively impacted by charges related to the refinancing of the 2025 senior notes, including a
write off of the non -cash embedded derivative of $49.8 million connected with the exercise of the redemption option
and a call premium payment of $22.9 million, as well as a $12.4 million Flin Flon restructuring charge.
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1 Net debt is a non-IFRS financial performance measure with no standardized definition under IFRS. For further information, please
see the “Non-IFRS Financial Reporting Measures” section of this news release.
2 Working capital is determined as total current assets less total current liabilities as defined under IFRS and disclosed on the
consolidated financial statements.
Financial Performance Three Months Ended
Dec. 31, 2021 Sep. 30, 2021 Dec. 31, 2020
Revenue $000s 425,170 358,961 322,290
Cost of sales $000s 343,426 444,379 287,923
(Loss) earnings before tax $000s (149) (147,830) 911
(Loss) earnings $000s (10,453) (170,411) 7,406
Basic and diluted earnings (loss) per share $/share (0.04) (0.65) 0.03
Adjusted earnings (loss) per share1 $/share 0.13 0.002 (0.06)
Operating cash flow before change in non-
cash working capital
$ millions 156.9 103.5 86.1
Adjusted EBITDA1 $ millions 180.3 119.3 106.9
Year Ended
Dec. 31, 2021 Dec. 31, 2020
Revenue $000s 1,501,998 1,092,418
Cost of sales $000s 1,370,979 1,053,418
Loss before tax $000s (202,751) (179,089)
Loss $000s (244,358) (144,584)
Basic and diluted loss per share $/share (0.93) (0.55)
Adjusted earnings (loss) per share1 $/share 0.09 (0.46)
Operating cash flow before change in non-
cash working capital3
$ millions 483.9 241.9
Adjusted EBITDA1 $ millions 547.1 306.7
1 Adjusted loss per share and adjusted EBITDA are non-IFRS financial performance measures with no standardized definition under
IFRS. For further information, please see the “Non-IFRS Financial Reporting Measures” section of this news release.
2 The adjusted net earnings (loss) and adjusted net earnings (loss) per share in the third quarter of 2021 have been adjusted by
$37.3 million from what was previously reported due to a change in the computed tax effect on certain adjustments. The adjusted net
earnings changed from $38.2 million to an adjusted net earnings of $0.9 million and the adjusted net earnings per share changed
from $0.15/share to an adjusted net earnings per share of $0.00/share.
3 Operating cash flow before precious metals stream deposit and changes in non-cash working capital.
Financial Condition ($000s) Dec. 31, 2021 Sep. 30, 2021 Dec. 31, 2020
Cash and cash equivalents 270,989 297,451 439,135
Total long-term debt 1,180,274 1,182,612 1,135,675
Net debt1 909,285 885,161 696,540
Working capital2 147,512 159,917 306,888
Total assets 4,616,231 4,504,661 4,666,645
Equity 1,476,828 1,490,180 1,699,806
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Consolidated Production and Cost Performance Three Months Ended
Dec. 31, 2021 Sep. 30, 2021 Dec. 31, 2020
Contained metal in concentrate and
doré produced1
Copper tonnes 28,198 23,245 27,278
Gold ounces 64,159 54,276 32,376
Silver ounces 899,713 763,177 730,679
Zinc tonnes 23,207 20,844 25,843
Molybdenum tonnes 275 282 333
Payable metal sold
Copper tonnes 24,959 21,136 22,963
Gold2 ounces 56,927 47,843 35,179
Silver2 ounces 638,640 701,601 762,384
Zinc3 tonnes 21,112 21,619 28,431
Molybdenum tonnes 245 304 457
Consolidated cash cost per pound of
copper produced4
Cash cost $/lb 0.51 0.62 0.43
Sustaining cash cost $/lb 1.95 1.97 1.97
All-in sustaining cash cost $/lb 2.20 2.18 2.24
Year Ended
Dec. 31, 2021 Dec. 31, 2020
Contained metal in concentrate and
doré produced1
Copper tonnes 99,470 95,333
Gold ounces 193,783 124,622
Silver ounces 3,045,481 2,750,873
Zinc tonnes 93,529 118,130
Molybdenum tonnes 1,146 1,204
Payable metal sold
Copper tonnes 92,200 88,888
Gold2 ounces 168,358 122,949
Silver2 ounces 2,427,508 2,585,586
Zinc3 tonnes 96,435 109,347
Molybdenum tonnes 1,098 1,321
Consolidated cash cost per pound of
copper produced4
Cash cost $/lb 0.74 0.60
Sustaining cash cost $/lb 2.07 1.93
All-in sustaining cash cost $/lb 2.30 2.16
1 Metal reported in concentrate is prior to deductions associated with smelter contract terms.
2 Includes total payable gold and silver in concentrate and in doré sold.
3 Includes refined zinc metal sold and payable zinc in concentrate sold.
4 Cash cost, sustaining cash cost and all-in sustaining cash cost per pound of copper produced, net of by -product credits, are non-
IFRS financial performance measures with no standardized definition under IFRS. For further information, please see the “Non-IFRS
Financial Reporting Measures” section of this news release.
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Peru Operations Review
Peru Operations Three Months Ended Year Ended
Dec. 31,
2021
Sep. 30,
2021
Dec. 31,
2020
Dec. 31,
2021
Dec. 31,
2020
Constancia ore mined1 tonnes 7,742,469 6,208,019 9,313,784 29,714,327 27,529,950
Copper % 0.33 0.30 0.31 0.31 0.32
Gold g/tonne 0.04 0.04 0.03 0.04 0.03
Silver g/tonne 2.81 2.76 2.61 2.88 2.75
Molybdenum 0.01 0.01 0.01 0.01 0.02
Pampacancha ore mined tonnes 2,107,196 2,050,813 — 5,141,001 —
Copper % 0.27 0.27 — 0.27 —
Gold g/tonne 0.34 0.27 — 0.30 —
Silver g/tonne 4.26 3.58 — 4.02 —
Molybdenum 0.01 0.01 — 0.01 —
Ore milled tonnes 8,048,925 6,985,035 7,741,714 28,809,755 26,297,318
Copper % 0.33 0.30 0.33 0.32 0.34
Gold g/tonne 0.11 0.11 0.03 0.08 0.03
Silver g/tonne 3.67 3.93 2.74 3.35 2.87
Molybdenum 0.01 0.01 0.02 0.01 0.02
Copper recovery % 86.0 84.9 85.3 84.6 83.0
Gold recovery % 63.6 71.9 52.7 64.6 49.8
Silver recovery % 60.8 59.1 70.1 63.7 66.9
Molybdenum recovery 26.7 33.5 28.4 31.5 29.4
Contained metal in concentrate
Copper tonnes 22,856 18,072 21,554 77,813 73,150
Gold ounces 17,917 17,531 3,689 50,306 12,395
Silver ounces 578,140 521,036 477,775 1,972,949 1,622,972
Molybdenum tonnes 275 282 333 1,146 1,204
Payable metal sold
Copper tonnes 20,551 16,065 18,583 71,398 68,506
Gold ounces 16,304 16,902 3,297 41,807 10,986
Silver ounces 380,712 457,263 480,843 1,490,651 1,518,548
Molybdenum tonnes 245 304 457 1,098 1,321
Combined unit operating
cost2,3,4
$/tonne 10.47 11.62 10.17 11.39 9.46
Cash cost3,4 $/lb 1.28 1.26 1.47 1.28 1.45
Sustaining cash cost3,4 $/lb 2.46 2.31 2.58 2.46 2.20
1 Reported tonnes and grade for ore mined are estimates based on mine plan assumptions and may not reconcile fully to ore milled.
2 Reflects combined mine, mill and general and administrative ("G&A") costs per tonne of ore milled. Reflects the deduction of
expected capitalized stripping costs.
3 Combined unit cost, cash cost and sustaining cash cost per pound of copper produced, net of by-product credits, are non-IFRS
financial performance measures with no standardized definition under IFRS. For further information and a detailed reconciliation,
please see the discussion under the "Non-IFRS Financial Reporting Measures" section of this news release.
4 Includes approximately $4.1 million, or $0.51 per tonne, of COVID-related costs during the three months ended December 31,
2021, $4.8 million, or $0.69 per tonne during the three months ended September 30, 2021, and $19.8 million, or $0.69 per tonne
during the year ended December 31, 2021.
Peru has experienced notable improvements in COVID -19 health statistics throughout 2021. Peru operations did not
encounter any major COVID -19 interruptions during the year; however, with the recent emergence of the Omicron
variant in Peru, the company has continued to maintain stringent COVID -19 measures and controls to ensure the
safety of Hudbay’s workforce and this has contributed to elevated unit operating costs.
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During the fourth quarter of 2021, the Constancia operations produced 22,856 tonnes of copper, 17,917 ounces of
gold, 578,140 ounces of silver and 275 tonnes of molybdenum. Copper production was 26% higher than the third
quarter due to an increase in throughput and recovery at both Constancia and Pampacancha. Gold and silver
production increased by 2% and 11%, respectively, due to the increased throughput and higher grades . This was
another record quarter for gold production in Peru.
Full year 2021 copper production increased by 6% year -over-year to 77,813 tonnes, within the annual guidance
range. Full year 2021 gold production increased by 306% year -over-year to 50,306 ounces and exceeded the 2021
guidance range due to increased throughput, higher grades from Pampacancha and higher gold recoveries. Full year
2021 production guidance was met for all metals except molybdenum, which was in line with the mine plan published
in March 2021.
Total ore mined during the fourth quarter of 2021 increased by 19% from the third quarter of 202 1 as mining levels
were optimized for mill throughput . Ore mined at Pampacancha in 2021 was 5.1 million tonnes, exceeding the four
million tonne threshold required to receive an additional $4 m illion deposit from Wheaton Precious Metals under the
amended Constancia streaming agreement. The proceeds of this deposit were received in December 2021 and were
accounted for as an increase in the deferred revenue balance.
Ore milled during the fourth quarter of 2021 was 15% higher than the previous quarter due to a scheduled semi -
annual mill maintenance program affecting third quarter ore milled . Milled grades for copper were higher than the
third quarter due to higher grades from the Constancia pit. Milled grades for gold were consistent with the most recent
quarter, while milled silver grades were lower but consistent with the mine plan.
Copper recoveries in the fourth quarter increased over the third quarter of 2021 due to lower oxide levels in the
Constancia ore. Recoveries of gold in the fourth quarter of 2021 were lower than the third quarter due to variability of
the Pampacancha volume being treated and the increased presence of zinc, while silver recoveries slightly increased
compared to the third quarter due to variable metallurgical characteristics of the earlier ores from Pampacancha and
slightly lower silver head grades.
Combined mine, mill and G&A unit operating costs in the fourth quarter of 202 1 were $10.47 per tonne , a 10%
improvement versus the third quarter of 2021. COVID-related costs in Peru were $4.1 million in the fourth quarter of
2021. Combined unit operating costs in the fourth quarter were $9.96 per tonne excluding these COVID-related costs.
Full year combined unit operating costs were 20% higher than the same period in 2020 due to inflationary pressures
on consumables and energy costs and higher COVID-19 expenditures, offset in part by additional tonnes milled.
Peru’s cash cost per pound of copper produced, net of by -product credits, in the fourth quarter of 202 1 was $1.28,
relatively in line with the prior quarter. Peru’s sustaining cash cost per pound of copper produced, net of by -product
credits, in the fourth quarter of 2021 increased to $2.46, compared to $2.31 in the third quarter of 2021, due to higher
capitalized expenditures, partially offset by higher copper production.