TSX, NYSE – HBM 2023 No. 2 Hudbay Announces Fourth Quarter and Full Year 2022 Results and Provides Annual Guidance
TSX, NYSE – HBM
2023 No. 2
Hudbay Announces Fourth Quarter and Full Year 2022 Results and Provides
Annual Guidance
Toronto, Ontario, February 23, 2023 – Hudbay Minerals Inc. (“Hudbay” or the “ company”) (TSX, NYSE:HBM)
today released its fourth quarter and full year 2022 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
• Achieved 2022 consolidated production guidance for all metals and consolidated cash cost and sustaining
cash cost guidance.
• Full year consolidated copper production of 104,173 tonnes, consolidated gold production of 219,700
ounces and consolidated silver production of 3,161,294 increased by 5%, 13% and 4%, respectively, in
2022 compared to 2021.
• The Peru operations delivered strong performance in the fourth quarter with a 21% increase in copper
production and a 64% increase in gold production, compared to the third quarter of 202 2, as grades and
recoveries improved. The fourth quarter of 2022 was a record quarter for gold production in Peru. Peru's
cash cost per pound of copper produced, net of by -product creditsi, improved to $1.34 in the fourth quarter,
representing a 20% decline compared to the third quarter of 2022.
• The Manitoba operations saw a 6% increase in Lalor’s ore production in the fourth quarter compared to the
third quarter of 2022, and the Lalor mine continues to ramp up following the transition of Flin Flon employees
to Snow Lake. Manitoba’s full year gold cash cost per ounce of gold produced, net of b y-product credits i,
was 1% below the low end of the annual guidance range.
• Full year consolidated cash cost and sustaining cash cost per pound of copper produced, net of by -product
creditsi, were $0.86 and $2.07 , respectively, and similar to 2021 levels, despite inflationary cost pressures
which were offset by higher copper production and higher by-product credits.
• Fourth quarter net loss and loss per sha re were $17.4 million and $0.07, respectively. After adjusting for a
non-cash loss of $13.5 million related to a quarterly revaluation of the Flin Flon environmental reclamation
provision due to changes in real, long -term risk -free discount rates, and an $ 8.0 million revaluation loss
related to the gold prepayment liability, among other items, fourth quarter adjusted earnings i per share were
$0.01.
• Operating cash flow before change in non -cash working capital was $109.1 million and adjusted EBITDA i
was $124.7 million in the fourth quarter, an increase of 34% and 26%, respectively, over the third quarter of
2022, benefiting from higher copper sales volumes and higher molybdenum prices and sales volumes, but
negatively impacted by a temporary buildup of unsold inventory in Peru.
• Constancia continued to operate throughout nation-wide road blockades in Peru in December, and while the
company was successful in completing two port shipments in December, inventory of approximately 25,000
wet metric tonnes of copper concentrate in Peru was unsold at the end of the quarter.
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Executing on Growth Initiatives and Disciplined Capital Allocation
• Successful completion of recent brownfield investment program in 2022 with the Pampacancha satellite
deposit contributing higher grade feed to Constancia and the New Britannia mill operating at targeted
capacity.
• Invested approximately $80 million in 2022 to successfully execute a new strategy at Copper World focused
on project de -risking. The pre-feasibility study for Phase I of Copper World is well -advanced with the main
facility engineering completed and metallurgical test work being analyzed as part of the concentrate leaching
trade off evaluations.
• Reached a community exploration agreement in 2022 to access the Maria Reyna and Caballito satellite
properties located north of Constancia in Peru. Completed the surface investigation work needed to support
drill permit applications.
• Initiated deep drilling at Lalor in January 2023 to test the dow n-dip gold and copper extensions and
potentially unlock further value in Snow Lake.
• The Stall recovery improvement program is well-advanced and remains on track for completion in early 2023
with higher gold and copper recoveries expected to commence in the second quarter of 2023.
• Reinvigorated focus on free cash flow and delivered on discretionary spending reduction targets by reducing
2022 growth capital and exploration spending by approximately $30 million in Arizona, Manitoba and Peru.
• Reduced 2023 discretionary spending by more than $50 million primarily related to the deferral of the
Copper World definitive feasibility study and the pebble crusher in Peru.
• Repaid approximately 50% of the original gold prepayment liability in 2022 and the company remains
focused on reducing net debt throughout 2023.
• Prudent approach to capital allocation demonstrated with the introduction of three prerequisites for
sanctioning Copper World, including a prudent financing strategy with multi-faceted financial targets focused
on a minimum cash balance, a stated maximum leverage, limited non -recourse project level debt and
committed financial partners.
“We delivered on our plan for higher copper production in P eru and higher gold production in Manitoba in 2022, as a
result of the successful completion of approximately $250 million in brownfield investments ,” said Peter Kukielski,
President and Chief Executive Officer. “We are proud to have achieved consolidated production guidance as the
team successfully managed the regional logistics and supply chain challenges in Peru at the end of the year and we
benefitted from the ongoing optimization efforts at our Snow Lake operations. Our focus for 2023 is to generate free
cash flow through continued increases in copper and gold production and remain disciplined with capital allocation as
we de -risk the Copper World project in Arizona and unlock value from our exciting pipeline of organ ic growth
opportunities.”
2023 Annual Guidance and Outlook
• Consolidated copper production is forecast to increase by 10%ii to 114,000 ii tonnes in 2023, compared to
2022, with higher grades from the Pampacancha deposit in Peru.
• Consolidated gold production is forecast to increase by 30%ii to 285,500ii ounces, compared to 2022, due to
significantly higher gold production in Peru and Manitoba.
• Consolidated copper and gold production is expected to further increase in 2024, similar to the previously
issued guidance, and 2025 copper and gold production is expected to benefit from an extension of mining
activities at Pampacancha into the first half of 2025.
• Consolidated cash cost , net of by -product credits i, in 2023 is expected to decline by 30% ii and be within a
range of $0.40 and $0.80 per pound of copper as a result of higher copper production and gold by -product
credits.
• Approximately $65 million reduction in growth capital expenditures and exploration spending is expected in
2023 compared to 2022.
• Total capital expenditures are expected to decline by 13% year-over-year to $300 million in 2023.
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• Exploration expenditures are expected to decline by 61% in 2023 as activities are focused on areas with
high potential for new discovery and mineral reserve and resource expansion.
Summary of Fourth Quarter Results
Consolidated copper production in the fourth quarter of 2022 was 29,305 tonnes, an increase of 20% compared to
the third quarter of 2022, primarily due to higher copper grades in Peru. Consolidated gold production in the fourth
quarter of 2022 was 53,920 o unces, a slight increase from the third quarter of 2022 as higher gold grades in Peru
partially offset lower Lalor gold grades in Manitoba.
Consolidated cash cost per pound of copper produced, net of by -product creditsi, was $1.08 in the fourth quarter of
2022, compared to $0.5 8 in the third quarter of 2022 . This increase was a result of lower zinc and precious metal
sales volumes and continued inflationary cost pressures, partially offset by higher copper production. Consolidated
sustaining cash cost per pound of copper produced, net of by-product creditsi, was $2.21 in the fourth quarter of 2022
compared to $1.91 in the third quarter of 2022. This increase was primarily due to the same reasons outlined above
and higher capitalized exploration, slightly offset by lower sustaining capital expenditures. Consolidated all -in
sustaining cash cost per pound of copper produced, net of by -product credits i, was $2.41 in the fourth quarter of
2022, higher than $2.16 in the third quarter of 2022, due to the same reasons outlined above.
Cash generated from operating activities in the fourth quarter of 2022 decreased to $86.4 million compared to $172.5
million in the third quarter of 2022, primarily due to a decrease in changes in non-cash working capital . Peru
operations were impacted by increasing social unrest following a change in political leadership in December 2022 ,
which resulted in lower-than-planned grades in the fourth quarter . Constancia continued to operate throughout th ese
disruptions with the continued strong support from the local communities and the company’s local workforce .
Operating cash flow before change in non -cash working capital was $109.1 million during the fourth quarter of 2022 ,
reflecting an increase from $81.6 million in the third quarter of 2022 , primarily as a result of higher copper, gold and
molybdenum prices and higher copper sales volumes.
Net loss and loss per share in the fourth quarter of 2022 were $17.4 million and $0.07, respectively, compared to a
net loss and loss per share of $ 8.1 million and $0.0 3, respectively, in the third quarter of 2022 . The 2022 fourth
quarter results were negatively impacted by a non-cash loss of $13.5 million related to the quarterly revaluation of the
Flin Flon environmental reclamation provision due to changes in real, long -term discount rates, an $8.0 million
revaluation loss related to the gold prepayment liability and a $5.8 million loss on changes to other provisions. These
costs were offset by a $2.4 million Manitoba post-employment plan curtailment gain.
Adjusted net earningsi and adjusted net earnings per share i in the fourth quarter of 2022 were $2.6 million and $0.01
per share, respectively, after adjusting for the non -cash revaluation loss of the environmental reclamation provision
and the revaluation loss related to the gold prepayment liability, among other it ems. This compares to adjusted net
lossi and adjusted net loss per sharei of $12.4 million, and $0.05 in the third quarter of 2022. Fourth quarter adjusted
EBITDAi was $124.7 million, an increase of 26% from $99.3 million in the third quarter of 2022.
As at December 31, 2022, the company’s liquidity includes $225.7 million in cash as well as undrawn availability of
$354.3 million under its revolving credit facilities. Hudbay expects that its current liquidity combined with cash flow
from operations, will be sufficient to meet the company’s liquidity needs for the foreseeable future.
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Summary of Full Year Results
Hudbay achieved its 2022 consolidated production guidance for all metals. However, production of copper and gold
was at the lower end of the guidance range primarily due to lower -than-planned grades in the fourth quarter in Peru
caused by short-term mine plan changes that were implemented to mitigate the risks associated with logistical and
supply chain disruptions in Peru.
Consolidated cash costs per pound of copper produced, net of by -product credits i, in 2022 was $0.86 compared to
$0.74 in 2021 and consolidated sustaining cash cost per pound of copper produced, net of by -product credits i, in
2022 remained substantially unchanged from 2021 at $2.07. Both measures remained in line with the 2022 guidance
ranges.
Cash generated from operating activities increased to $487.8 million in 2022 from $385.1 million in 2021. A portion of
the increase is due to changes in non -cash working capital caused primarily by timing and changes in provisionally
priced receivables and changes to other financial assets, liabilities and inventories. Operating cash flow before
changes in non ‑cash working capital decreased to $391.7 million from $483.9 million in 2021. The decrease is the
result of lower copper prices, lower zinc sales volumes and inflationary cost pressures on mine operating costs,
partially offset by higher zinc prices and higher gold sales volumes. Zinc sales volumes were lower than the prior year
due to the planned closure of the company’s 777 mine in June 2022.
Net earnings and earnings per share for 2022 were $70.4 million and $0.27, respectively, compared to a net loss a nd
loss per share of $244.4 million and $0.93, respectively, in 2021. The prior period results were negatively impacted by
a $193.5 million revaluation of the Flin Flon environmental reclamation provision resulting in an impairment charge of
the same amoun t as well as a $66.7 million in mark -to-market loss mostly from $49.8 million of write-offs for a non-
cash embedded derivative on the early redemption option associated with the company’s extinguished senior
unsecured notes. Full year 2022 net earnings ben efited from a non -cash gain of $133.5 million related to the
revaluation of the Flin Flon environmental reclamation provision. The full year 2022 financial results were negatively
impacted by a $95.0 million pre-tax impairment loss related to certain specific capitalized costs and assets associated
with the previous stand -alone development plan for the Rosemont deposit, which were determined to no longer be
recoverable.
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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 t he
consolidated financial statements.
Financial Performance Three Months Ended
Dec. 31, 2022 Sep. 30, 2022 Dec. 31, 2021
Revenue $000s 321,196 346,171 425,170
Cost of sales $000s 251,520 313,741 343,426
(Loss) earnings before tax $000s (14,287) (263) (149)
Net (loss) earnings $000s (17,441) (8,135) (10,453)
Basic and diluted (loss) earnings per share $/share (0.07) (0.03) (0.04)
Adjusted earnings (loss) per share1 $/share 0.01 (0.05) 0.13
Operating cash flow before change in non-
cash working capital
$ millions 109.1 81.6 156.9
Adjusted EBITDA1 $ millions 124.7 99.3 180.8
Year Ended
Dec. 31, 2022 Dec. 31, 2021
Revenue $000s 1,461,440 1,501,998
Cost of sales $000s 1,184,552 1,370,979
Earnings (loss) before tax $000s 95,815 (202,751)
Net earnings (loss) $000s 70,382 (244,358)
Basic and diluted (loss) earnings per share $/share 0.27 (0.93)
Adjusted earnings per share1 $/share 0.10 0.09
Operating cash flow before change in non-
cash working capital
$ millions 391.7 483.9
Adjusted EBITDA1 $ millions 475.9 547.8
1 Adjusted earnings ( 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.
Financial Condition ($000s) Dec. 31, 2022 Sep. 30, 2022 Dec. 31, 2021
Cash and cash equivalents 225,665 286,117 270,989
Total long-term debt 1,184,162 1,183,237 1,180,274
Net debt1 958,497 897,120 909,285
Working capital2 76,534 99,807 147,512
Total assets 4,325,943 4,287,794 4,616,231
Equity 1,571,809 1,570,889 1,476,828
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Consolidated Production and Cost Performance Three Months Ended
Dec. 31, 2022 Sep. 30, 2022 Dec. 31, 2021
Contained metal in concentrate and doré produced1
Copper tonnes 29,305 24,498 28,198
Gold ounces 53,920 53,179 64,159
Silver ounces 795,015 717,069 899,713
Zinc tonnes 6,326 9,750 23,207
Molybdenum tonnes 344 437 275
Payable metal sold
Copper tonnes 25,415 24,799 24,959
Gold2 ounces 47,256 66,932 56,927
Silver2 ounces 559,306 816,416 638,640
Zinc3 tonnes 8,230 12,714 21,112
Molybdenum tonnes 421 511 245
Consolidated cash cost per pound of copper produced4
Cash cost $/lb 1.08 0.58 0.51
Sustaining cash cost $/lb 2.21 1.91 1.95
All-in sustaining cash cost $/lb 2.41 2.16 2.20
Year Ended
Dec. 31, 2022 Dec. 31, 2021
Contained metal in concentrate and doré produced1
Copper tonnes 104,173 99,470
Gold ounces 219,700 193,783
Silver ounces 3,161,294 3,045,481
Zinc tonnes 55,381 93,529
Molybdenum tonnes 1,377 1,146
Payable metal sold
Copper tonnes 94,473 92,200
Gold2 ounces 213,415 168,358
Silver2 ounces 2,978,485 2,427,508
Zinc3 tonnes 59,043 96,435
Molybdenum tonnes 1,352 1,098
Consolidated cash cost per pound of copper produced4
Cash cost $/lb 0.86 0.74
Sustaining cash cost $/lb 2.07 2.07
All-in sustaining cash cost $/lb 2.26 2.30
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,
2022
Sep. 30,
2022
Dec. 31,
2021
Dec. 31,
2022
Dec. 31,
2021
Constancia ore mined1 tonnes 5,614,918 6,300,252 7,742,469 25,840,435 29,714,327
Copper % 0.40 0.36 0.33 0.35 0.31
Gold g/tonne 0.04 0.05 0.04 0.04 0.04
Silver g/tonne 3.48 3.38 2.81 3.40 2.88
Molybdenum % 0.01 0.01 0.01 0.01 0.01
Pampacancha ore mined1 tonnes 3,771,629 2,488,928 2,107,196 8,319,250 5,141,001
Copper % 0.37 0.29 0.27 0.33 0.27
Gold g/tonne 0.29 0.23 0.34 0.29 0.30
Silver g/tonne 3.84 4.30 4.26 4.06 4.02
Molybdenum % 0.01 0.01 0.01 0.01 0.01
Total ore mined tonnes 9,386,547 8,789,180 9,849,665 34,159,685 34,855,328
Strip Ratio2 0.97 1.26 0.95 1.13 1.02
Ore milled tonnes 7,795,735 7,742,020 8,048,925 30,522,294 28,809,755
Copper % 0.41 0.34 0.33 0.34 0.32
Gold g/tonne 0.12 0.08 0.11 0.09 0.08
Silver g/tonne 3.93 3.48 3.67 3.58 3.35
Molybdenum % 0.01 0.01 0.01 0.01 0.01
Copper recovery % 85.1 84.5 86.0 85.0 84.6
Gold recovery % 69.6 61.9 63.6 63.6 64.6
Silver recovery % 66.5 65.2 60.8 65.7 63.7
Molybdenum recovery % 37.7 41.0 26.7 34.8 31.5
Contained metal in concentrate
Copper tonnes 27,047 22,302 22,856 89,395 77,813
Gold ounces 20,860 12,722 17,917 58,229 50,306
Silver ounces 655,257 564,299 578,140 2,309,352 1,972,949
Molybdenum tonnes 344 437 275 1,377 1,146
Payable metal sold
Copper tonnes 23,789 20,718 20,551 79,805 71,398
Gold ounces 15,116 11,970 16,304 49,968 41,807
Silver ounces 411,129 513,470 380,712 2,045,678 1,490,651
Molybdenum tonnes 421 511 245 1,352 1,098
Combined unit operating
cost3,4,5
$/tonne 13.64 13.06 9.96 12.78 10.70
Cash cost4,5 $/lb 1.34 1.68 1.28 1.58 1.54
Sustaining cash cost4,5 $/lb 2.09 2.46 2.46 2.35 2.46
1 Reported tonnes and grade for ore mined are estimates based on mine plan assumptions and may not reconcile fully to ore milled.
2 Strip ratio is calculated as waste mined divided by ore mined.
3 Reflects combined mine, mill and general and administrative ("G&A") costs per tonne of ore milled. Reflects the deduction of
expected capitalized stripping costs.
4 Combined unit cost , cash cost and sustaining cash cost per pound of copper produced, net of by -product credits, are non-IFRS
financial performance measure s with no standardized definition under IFRS. For further information a nd a detailed reconciliation,
please see the discussion under the "Non-IFRS Financial Reporting Measures" section of this news release.
5 Excludes approximately $0.7 million, or $0.09 per tonne, of COVID -19 related costs during the three months ended December 31,
2022, $0.9 million, or $0.12 per tonne, of COVID -19 related costs during the three months ended September 30, 2022 and $4.1
million, or $0.51 per tonne, during the three months ended December 31, 2021.Excludes approximately $5.2 million, or $0 .17 per
tonne, of COVID -19 related costs during the twelve months ended December 31, 2022 and $19.8 million or $0.69 per tonne, of
COVID-19 related costs during the twelve months ended December 31, 2021.
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During the f ourth quarter of 2022, the Constanci a operations produced 27,047 tonnes of copper, 20,860 ounces of
gold, 655,257 ounces of silver and 344 tonnes of molybdenum. Production of copper, gold and silver was 21%, 64%
and 16% higher than the third quarter of 2022 due to higher grades and recoverie s, partially offset by a planned mill
maintenance shutdown in November. The fourth quarter of 2022 was a record quarter for gold production in Peru.
Full year 2022 production of copper increased by 15% year -over-year to 89,395 tonnes, within the guidance range.
Similarly, full year 2022 production of gold, silver and molybdenum increased by 16%, 17% and 20%, respectively,
compared to 2021 due to higher throughput, higher copper an d precious metal grades and higher copper, silver and
molybdenum recoveries. Molybdenum production was in line with annual guidance range, whereas silver production
exceeded the top end of the annual guidance range by 10%. Gold production fell short of the annual guidance range
primarily due to lower -than-planned grades from the Pampacancha pit in the fourth quarter of 2022 as a result of
short-term changes in the mine plan, as described below.
Total ore mined in the fourth quarter of 2022 increased by 7% compared to the third quarter of 2022, despite a short-
term change in the mine plan that prioritized the processing of lower grade stockpiles and shorter haulage distance
ore from the Constancia pit . These changes were implemented to ration fuel during a period of nation -wide social
unrest and road blockades following a change in Peru's political leadership in early December 2022 , and ensured the
plant continued to operate uninterrupted. Despite impacts on the ability to steadily receive fuel and transport
concentrates, the Constancia mill continued to operate throughout these disruptions as the company implemented
plans to mitigate the risk to its operations with strong support from the local communities, the company’s local
workforce and the community-owned concentrate transportation companies.
Ore milled during the fourth quarter of 2022 was slightly higher than the third quarter of 2022 despite the impact of the
planned mill maintenance program in November. Milled copper grades increased by 21% in the fourth quarter of 2022
compared to the third quarter due to higher head grades from both Pam pacancha and Constancia. Copper, gold and
silver recoveries in the fourth quarter of 2022 were higher than the third quarter of 2022 due to higher milled grades ,
and the fourth quarter achieved a record quarterly gold recovery rate of 70%.
Combined mine, mill and G&A unit operating costsi in the fourth quarter of 2022 were 4% higher than the third quarter
of 2022, primarily due to higher mining costs from continued inflationary pressures. Full year combined mine, mill and
G&A unit operating costs for 2022 were 19% higher than the same period in 2021 due to a higher strip ratio, higher
mining costs and inflationary pressures on fuel, consumables and energy costs, partially offset by higher ore milled.
Peru’s cash cost per pound of copper produced, net of by -product creditsi, in the fourth quarter of 2022 declined by
20% to $1.34, compared to $1.68 in the third quarter, primarily due to higher copper production and higher by-product
credits resulting from higher grades in the fourth quarter. Peru’s full year cash cost per pound of copper produced, net
of by-product creditsi, was $1.58, a slight increase of 3% compared to the same period of 2021. This exceed ed the
upper end of the 2022 guidance range primarily due to higher mining and milling costs from input cost inflation and
lower than expected by -product credits due to lower -than-expected gold grades from Pampacancha in the fourth
quarter of 2022, as described above.
Peru’s sustaining cash cost per pound of copper produced, net of by -product credits i, in the fourth quarter of 2022
declined by 15% to $2.09, compared to $2.46 in the third quarter, primarily due to the same factors affecting cash
cost and lower sustaining capital expenditures, partially offset by higher capitalized exploration. Peru’s full year
sustaining cash cost per pound of copper produced, net of by -product credits i, declined by 4% compared to 2021,
due to lower sustaining capital expenditures and higher copper and gold production, offset, in part, by higher mining
and milling costs from input cost inflation.