TSX, NYSE – HBM 2019 No. 4 Hudbay Announces Increased Lalor Mineral Reserves and Resources and Updated Mine Plan that Confirms Substantial Increase in Gold Production
TSX, NYSE – HBM
2019 No. 4
Hudbay Announces Increased Lalor Mineral Reserves and Resources and
Updated Mine Plan that Confirms Substantial Increase in Gold Production
Toronto, Ontario, February 19, 2019 – Hudbay Minerals Inc. (“Hudbay” or the “company”) (TSX, NYSE:HBM)
is pleased to announce increased mineral reserves and resources for its Lalor mine and nearby satellite deposits ,
and a new mine plan that includes the processing of gold and copper-gold ore at the company’s New Britannia mill.
An updated National Instrument (“NI”) 43-101 Technical Report for Lalor will be filed on SEDAR by the end of the first
quarter of 2019. All amounts are in U.S. dollars, unless otherwise noted.
Summary
• Lalor annual gold production set to more than double from current levels once the New Britannia mill is
refurbished with average annual production of approximately 140,000 ounces during the first five years at a
sustaining cash cost, net of by-product credits, of $450 per ounce1, positioning Lalor as one of the lowest-
cost gold mines in Canada
• Gold recoveries are estimated to increase to 93% at the New Britannia mill compared to 53% at the Stall mill
• Lalor’s reserve update increased in-situ contained gold by 65%, copper by 23%, zinc by 11% and silver by
15%2
• Drilling defined higher quality gold zone reserve estimates with increased gold grades
• The capital cost required to refurbish the New Brit annia mill is estimated at $95 million – a low capital-
intensity, low-risk brownfield expansion
• Lalor’s life-of-mine production increased gold by 91%, copper by 16%, zinc by 13% and silver by 21%3
• Current reserve life of 10 years could be extended with successful conversion of additional mineral
resources at Lalor and additional resources at Hudbay’s satellite deposits in the Snow Lake region within
trucking distance of Stall and New Britannia
• Hudbay’s extensive land package in the Chisel Basin and around Snow Lake provides significant additional
upside for further gold and base metals exploration
“We are pleased to demonstrate the significant value we have unlocked so far by leveraging our exploration
expertise, our existing processing infrastructure an d several inexpensive acquisitions to develop a compelling
strategy to maximize the value of our gold mineralization at Lalor and nearby deposits,” said Alan Hair, Hudbay’s
president and chief executive officer. “With our extensive experience operating responsibly in Manitoba, we look
forward to delivering on this strategy over the next several years by refurbishing the New Britannia mill, substantially
increasing our gold production at low cash costs and realizing additional value through continued expl oration
success.”
TSX, NYSE – HBM
2019 No. 4
2
Overview
Lalor was discovered in 2007 on 100% owned land using Hudbay’s innovative exploration techniques and it is the
largest VMS deposit found in the Snow Lake region to-date. In 2009, the company commenced construction of Lalor
with initial ramp access from the Chisel North mine. Construction of the main production shaft was approved in 2010
and was completed on time and on budget, achieving commercial production in 2014, a mere seven years from initial
discovery. Hudbay acquired the New Britannia gold mill in 2015 for approximately $10 million as a potential long-term
processing option for the Lalor gold and copper-gold zones. Since acquiring New Britannia, Hudbay has conducted
significant technical work to assess the grade, tonnage, mineability and metallurgy of the gold and copper-gold zones
at Lalor to support and de-risk the investment required to refurbish New Britannia and maximize the net present value
of Lalor.
Most recently, Hudbay has focused on drilling and test mining in the gold-rich Lens 25, and has confirmed the
existence of a continuous high grade core of mineralization within the wider lower grade mineral resource estimates
reported in the NI 43-101 technical report for Lalor dated March 31, 2017 (the “2017 Technical Report”) and most
recently updated in Hudbay’s annual information form dated March 29, 2018 (the “2018 AIF”). In parallel, Hudbay has
revised its geological model of the copper-gold rich Lens 27, which better reflects the steeper orientation of the
mineralization observed during core logging. This re-interpretation indicates there is a simpler and more consistent
mineralized envelope and, together with additional drilling conducted in 2018, has resulted in an increase in tonnage
of this high grade mineralization.
Refurbishing New Britannia is expected to significantly increase gold production from Lalor and enable new gold and
copper-gold exploration opportunities in the Snow Lake region by having an operating processing facility with
substantially higher gold and copper recoveries. New Britannia was placed on care and maintenance in 2005 by its
previous owner after producing 1.6 million ounces of gold and it demonstrates the opportunity to create additional
value through owning multiple processing facilities in the Flin Flon and Snow Lake regions as Hudbay pursues low-
risk brownfield development opportunities.
Based on the detailed work completed in the last 12 months, Hudbay believes that the refurbishment of the New
Britannia mill, including the addition of a copper flotation circuit, is the optimal processing solution for Lalor, as it
capitalizes on existing infrastructure, significantly grows gold production from a deposit that is unencumbered by any
royalties or streams and offers further upside potential from nearby satellite deposits.
The New Britannia development plan contemplates completion of detailed engineering by February 2020,
environmental permitting completion in April 2020 and construction activities occurring between June 2020 and
August 2021, with plant commissioning and ramp-up occurring during the fourth quarter of 2021. The estimated
capital expenditures and the schedules for completion and plant ramp-up are deemed to be low risk since this project
involves industry standard equipment and proven processing technology in a brownfield environment. Permitting
activities started in 2018 and are proceeding in line with the development plan.
The revised mine plan for Lalor supports a 10 year mine life, based solely on proven and probable reserves, and
utilizes the existing mining capacity of 4,500 tonnes per day at Lalor for the first six years of the mine plan. The
technical work completed supports 4,500 tonnes per day as the optimal mining rate to maximize net present value,
although the Lalor production shaft has the potential to hoist at higher throughput rates. The production plan has the
copper-gold rich ore feeding a refurbished New Britannia mill starting in 2022 at an average feed rate of 1,100 tonnes
per day at 6.7 g/t gold and 1.2% copper for seven years based on the current reserve estimate. The New Britannia
mill is expected to achieve gold recoveries of approximately 93% compared to current gold recoveries of
approximately 53% at the Stall mill. An estimated investment of $95 million (C$124 million) will be required between
2019 and 2021 for the refurbishment of the New Britannia mill , including the addition of a copper flotation and
dewatering circuit and a pipeline to direct the tailings to the existing Anderson facility. Of this, approximately $10
million is expected to be incurred in 2019 as part of Hudbay’s growth capital expenditure plans.
TSX, NYSE – HBM
2019 No. 4
3
Between 2019 and 2021, the Stall mill is expected to process approximately 3,500 tonnes per day and approximately
1,000 tonnes per day of Lalor base metal ore is expected to be transported to the Flin Flon mill for processing. Based
on the current reserves, starting in 2022, Stall mill throughput will gradually decrease from approximately 3,200
tonnes per day to approximately 1,800 tonnes per day.
The updated resource model at Lalor includes 5.9 million tonnes of inferred mineral resources, which has the
potential to extend the mine life beyond 10 years while feeding both the Stall and New Britannia mills (see Lalor
Mineral Resource Estimates table below). In addition, the mineral resources at Hudbay’s satellite deposits in the
Snow Lake region, including the copper-gold WIM deposit acquired last year for C$0.5 million from Alexandria
Minerals Corporation, the former gold producing New Britannia mine and the zinc-rich Pen II deposit could provide
feed for the Stall and New Britannia processing facilities and further extend the mine life (see “Regional Exploration
Potential” section below).
Lalor Mineral Reserve and Resource Estimate
The updated estimate of mineral reserves at Lalor has increased in-situ contained gold by 65%, copper by 23%, zinc
by 11% and silver by 15%, relative to the previous estimate of mineral reserves in Hudbay’s 2018 AIF, adjusted for
2018 production depletion.
Lalor Mineral Reserve Estimates Tonnes Zn Grade
(%)
Au Grade
(g/t)
Cu Grade
(%)
Ag Grade
(g/t)
Base Metal Zone
Proven
5,137,000 7.13 2.37 0.76 26.31
Probable
5,552,000 4.19 3.52 0.44 27.39
Gold Zone
Proven 58,000 2.65 5.46 0.80 39.09
Probable 2,928,000 0.31 6.74 1.09 23.08
Total proven and probable
13,675,000 4.46 3.78 0.70 26.11
Note:
1. Totals may not add up correctly due to rounding.
2. Mineral reserves are estimated as of January 1, 2019.
3. Mineral reserves are estimated at a minimum NSR cut-off of C$96.19 per tonne for waste filled mining areas and a minimum of
C$104.58 per tonne for paste filled mining areas.
4. Estimates are based on the following metals price and foreign exchange rate assumptions: zinc price of $1.17 per pound
(includes premium), copper price of $3.10 per pound, gold price of $1,260 per ounce and silver price of $18.00 per ounce, and
an exchange rate of 1.25 C$/US$.
5. For further information regarding data verification, quality assurance / quality control and risks associated with the estimate of
the mineral reserves at the Lalor mine, please refer to the 2018 AIF.
Hudbay is implementing a more stringent approach to resource reporting for underground deposits. With this
approach, the potential for economic extraction of the mineral resource estimates at Lalor are reported within the
constraint of a ‘stope optimization envelope’ process similar in concept to a Lerchs-Grossman pit shell for an open pit
deposit. This excludes from the resource estimate small individual resource blocks that may meet an economic cut-
off criteria on an individual basis but could not be aggregated into mineable shapes.
There are no measured or indicated resources reported for Lalor in 2019. The measured and indicated resources
reported in the 2018 AIF have all been converted to mineral reserve estimates or deemed uneconomic.
The updated estimate of inferred mineral resources at Lalor has increased the in-situ contained gold by 21%, copper
by 51%, and silver by 21% while zinc has decreased by 17%, relative to the 2018 AIF.
TSX, NYSE – HBM
2019 No. 4
4
Lalor Mineral Resource Estimates
(Exclusive of Mineral Reserves) Tonnes Zn Grade
(%)
Au Grade
(g/t)
Cu Grade
(%)
Ag Grade
(g/t)
Base Metal Zone
Inferred
1,385,000 2.30 4.49 0.70 43.58
Gold Zone
Inferred 4,516,000 0.35 4.38 1.08 20.42
Total inferred
5,901,000 0.81 4.41 0.99 25.85
Note:
1. Totals may not add up correctly due to rounding.
2. Mineral resources are estimated as of January 1, 2019.
3. Mineral resources are estimated at a minimum NSR cut-off of C$96.19 per tonne.
4. Estimates are based on the following metals price and foreign exchange rate assumptions: zinc price of $1.17 per pound
(includes premium), copper price of $3.10 per pound, gold price of $1,260 per ounce and silver price of $18.00 per ounce, and
an exchange rate of 1.25 C$/US$.
5. Mineral resources do not include mining dilution or recovery factors.
6. Mineral resources that are not mineral reserves do not have demonstrated economic viability.
7. For further information regarding data verification, quality assurance / quality control and risks associated with the estimate of
the mineral resources at the Lalor mine, please refer to the 2018 AIF.
Mine Plan
The revised mine plan for Lalor mineral reserves optimizes net present value by preserving gold-rich ore for
processing at the New Britannia mill and zinc-rich ore for the Stall mill, which is expected to result in significantly
higher gold and copper recoveries. Life-of-mine production of gold, copper, zinc, and silver has increased by 91%,
16%, 13% and 21%, respectively, compared to the 2017 Technical Report for the period starting January 1, 2019.
2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 LOM
Base Metal Ore
Ore Mined tonnes
(000s) 1,589 1,481 1,559 1,135 1,251 1,144 894 612 667 512 10,844
Ore Mined tpd 4,353 4,057 4,271 3,110 3,428 3,134 2,449 1,677 1,827 1,403 -
Cu Grade % Cu 0.63% 0.62% 0.64% 0.58% 0.51% 0.46% 0.51% 0.53% 0.56% 0.72% 0.58%
Zn Grade % Zn 5.43% 6.37% 6.18% 5.92% 5.94% 5.93% 3.98% 3.40% 4.28% 4.82% 5.49%
Au Grade g/t Au 2.41 2.12 2.75 2.35 2.78 2.50 4.7 4.69 4.52 4.66 3.02
Ag Grade g/t Ag 22.96 28.57 28.23 26.04 24.48 24.66 28.35 26.15 28.15 37.57 26.80
Gold Ore
Ore Mined tonnes
(000s) - - - 473 380 500 547 330 285 319 2,832
Ore Mined tpd - - - 1,295 1,041 1,370 1,499 904 781 874 -
Cu Grade % Cu - - - 0.94% 1.43% 2.21% 1.29% 0.31% 0.39% 0.92% 1.17%
Zn Grade % Zn - - - 0.35% 0.41% 0.33% 0.20% 0.30% 0.30% 1.86% 0.48%
Au Grade g/t Au - - - 6.99 6.64 5.97 6.22 6.74 8.10 7.14 6.72
Ag Grade g/t Ag - - - 25.04 22.40 22.81 19.23 19.90 29.86 28.82 23.48
Total Ore
Ore Mined tonnes
(000s) 1,589 1,481 1,559 1,607 1,631 1,644 1,441 941 952 830 13,676
Ore Mined tpd 4,353 4,057 4,271 4,403 4,468 4,504 3,948 2,579 2608 2,274 -
Cu Grade % Cu 0.63% 0.62% 0.64% 0.68% 0.72% 0.99% 0.81% 0.45% 0.51% 0.79% 0.70%
Zn Grade % Zn 5.43% 6.37% 6.18% 4.28% 4.65% 4.23% 2.54% 2.31% 3.09% 3.69% 4.46%
Au Grade g/t Au 2.41 2.12 2.75 3.71 3.68 3.56 5.28 5.41 5.59 5.61 3.78
Ag Grade g/t Ag 22.96 28.57 28.23 25.75 24.00 24.10 24.89 23.96 28.66 34.21 26.11
TSX, NYSE – HBM
2019 No. 4
5
Note: Tonnes per day (“tpd”) assumes 365 operating days a year.
Metallurgical Recoveries
LOM Average
Base Metal Ore Through Stall
Recovery to Copper Concentrate
Cu 83.6%
Au 52.9%
Ag 53.3%
Recovery to Zinc Concentrate
Zn 93.2%
Base Metal Ore Through Flin Flon
Recovery to Copper Concentrate
Cu 84.4%
Au 63.2%
Ag 53.7%
Recovery to Zinc Concentrate
Zn 87.0%
Gold Ore Through New Britannia
Recovery to Copper Concentrate
Cu 93.9%
Au 63.1%
Ag 55.1%
Recovery to Doré
Au 30.2%
Ag 22.8%
Overall Precious Metals Recovery
Au 93.3%
Ag 77.8%
Production Profile
Compared with the 2017 Technical Report life-of-mine plan, with the inclusion of the New Britannia mill, net revenue
at Lalor has shifted from primarily zinc to primarily gold in the updated production profile, positioning Lalor as a
primary gold mine with significant zinc, copper and silver by -products. The life-of-mine net revenue from Lalor is
approximately 50% precious metals, 33% zinc and 17% copper4. Once the New Britannia mill is operational in 2022,
revenue from precious metals through the remaining life-of-mine is expected to be approximately 60 % of total
revenue. Significant zinc and copper revenue provides diversified commodity exposure.
Contained Metal 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 LOM
Cu tonnes (000s) 8 8 9 10 10 15 11 4 4 6 83
Zn tonnes (000s) 79 88 89 63 70 64 32 18 26 23 552
Au ounces (000s) 69 58 75 143 137 138 172 114 119 108 1,134
Ag ounces (000s) 651 692 725 781 742 764 749 478 547 513 6,644
Note: Production includes metal contained in concentrate and doré.
TSX, NYSE – HBM
2019 No. 4
6
Unit Operating Costs and Cash Costs
Unit Operating Costs
LOM Average
Mining C$/tonne $92.04
Milling – Stall C$/tonne $25.72
Milling – New Britannia C$/tonne $41.63
Note:
1. Unit operating costs exclude general and administrative costs related to shared services incurred in Flin Flon and allocated
between 777 and Lalor mines.
2. Mining costs include costs to truck approximately 1,000 tonnes per day from Lalor to Flin Flon until New Britannia is operating
in 2022.
Lalor’s significant by-product credits reduce its cash operating costs and sustaining cash costs on both a zinc and
gold basis. During the first five years of operation with New Britannia (2022 to 2026), Lalor is estimated to produce
approximately 140,000 ounces of gold annually at a sustaining cash cost, net of by-product credits, of $450/oz. This
positions Lalor to be one of the lowest cost gold mines in Canada.
Cash Costs 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 LOM
Zinc Basis
Contained zinc tonnes
(000s) 79 88 89 63 70 64 32 18 26 23 552
Cash costs US$/lb $0.61 $0.73 $0.55 ($0.05) $0.03 ($0.18) ($1.21) ($0.87) ($0.68) ($1.08) $0.09
Sustaining cash
costs US$/lb $1.04 $1.14 $0.78 $0.26 $0.22 ($0.04) ($0.95) ($0.77) ($0.67) ($1.07) $0.35
Gold Basis
Contained gold ounces
(000s) 69 58 75 143 137 138 172 114 119 108 1,134
Cash costs US$/oz ($672) ($308) $35 $268 $211 $85 $333 $581 $448 $278 $198
Sustaining cash
costs US$/oz $400 $1,051 $616 $571 $416 $229 $442 $618 $456 $279 $473
Note:
1. ”LOM” refers to life-of-mine.
2. Cash costs include all onsite (mining, milling and general and administrative) and offsite costs associated with Lalor and are
reported net of by-product credits. By-product credits calculated using the following assumptions: zinc price of $1.28 per pound
in 2019, $1.27 per pound in 2020, $1.17 per pound 2021 and long-term (includes premium); gold price of $1,250 per ounce in
2019, $1,300 per ounce in 2020 and 2021, $1,250 per ounce in 2022 and long-term; copper price of $3.00 per pound in 2019,
$3.10 per pound in 2020, $3.20 per pound in 2021 and 2022, and $3.10 per pound long-term; silver price of $16.50 per ounce
in 2019, $18.00 per ounce in 2020 and long-term; C$/US$ exchange rate of 1.30 in 2019 and 1.25 in 2020 and long-term.
3. Sustaining cash costs incorporate all costs included in cash costs calculation plus sustaining capital expenditures.
TSX, NYSE – HBM
2019 No. 4
7
Capital Expenditures
The growth capital estimate at New Britannia was engineered to a pre-feasibility level by Aecom and includes a 20%
contingency. The scope of the project includes the addition of a new flotation building, new crushers, screen deck,
flotation circuit, thickener for the copper concentrate, filter press, acid wash vessel, reagent packages, lime silo,
instrumentation systems, transformers and an emergency generator. In addition, two new pipelines will flow thickened
tailings from New Britannia to Stall while reclaim water and copper concentrate will flow from Stall to New Britannia.
This arrangement will facilitate environmental monitoring, make use of the paste plant efficiently and reduce the
moisture content of the copper concentrate produced at Hudbay’s Snow Lake operations.
The development plan contemplates detailed engineering being completed by February 2020 and environmental
permitting being completed in April 2020 with construction activities occurring between June 2020 and August 2021
and plant commissioning and ramp-up occurring during the fourth quarter of 2021.
The estimated capital expenditures and the schedules for completion and plant ramp-up are deemed to be low risk
since this project involves industry standard equipment and proven processing technology in a brownfield
environment. Permitting activities started in 2018 and are proceeding in line with the development plan.
Of the $95 million growth capital estimate, approximately $10 million is expected to be incurred in 2019 as part of
Hudbay’s growth capital expenditures budget.
The total sustaining capital and growth capital expenditures are shown below.
Capital Expenditures 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 LOM
Sustaining Capital
Capitalized development C$ millions $64 $57 $44 $33 $20 $12 $9 $5 $1 - $246
Mine equipment and
buildings C$ millions $9 $35 $10 $11 $14 $8 $14 - - - $102
Stall equipment and
buildings C$ millions $4 $3 $1 $1 $1 $1 - - - - $11
Shared general plant C$ millions $11 $3 - - - - - - - - $14
Environmental C$ millions $8 - - $8 - $4 - - - - $21
Total sustaining capital C$ millions $97 $98 $55 $54 $35 $25 $23 $5 $1 - $394
Total sustaining capital US$
millions $74 $76 $42 $42 $27 $19 $18 $4 $1 - $303
Growth Capital
New Britannia capital C$ millions $13 $69 $42 - - - - - - - $124
New Britannia capital US$
millions $10 $53 $32 - - - - - - - $95
Note: Totals may not add up correctly due to rounding. ”LOM” refers to life-of-mine. Canadian dollar capital expenditures converted
to U.S. dollar capital expenditures at an exchange rate of 1.30 C$/US$.
TSX, NYSE – HBM
2019 No. 4
8
Regional Exploration Potential
Hudbay has identified several satellite deposits in the Snow Lake region that could provide additional feed for both
New Britannia and Stall.
Regional Deposits Mineral Resource
Estimates
Tonnes
(million)
Zn Grade
(%)
Au Grade
(g/t)
Cu Grade
(%)
Ag Grade
(g/t)
Indicated Resources (Exclusive of
Mineral Reserves)
WIM 3.9 0.26 1.57 1.71 6.68
Pen II 0.5 8.89 0.35 0.49 6.81
Total indicated 4.4 1.19 1.44 1.58 6.69
Inferred Resources
Lalor base metal zone 1.4 2.30 4.49 0.70 43.58
Lalor copper-gold zone 4.5 0.35 4.38 1.08 20.42
WIM 0.7 0.37 1.76 1.03 4.65
Pen II 0.1 9.81 0.30 0.37 6.85
Birch & 3 Zone 1.7 - 5.34 - -
New Britannia 2.8 - 4.51 - -
Total New Britannia zones 4.4 - 4.82 - -
Total inferred 11.2 0.57 4.35 0.59 14.01
Note:
1. Totals may not add up correctly due to rounding.
2. Mineral resources that are not mineral reserves do not have demonstrated economic viability.
3. Mineral resources in the above tables do not include mining dilution or recovery factors.
4. For further information regarding the mineral resource estimate for the Lalor mine, please refer to the Lalor Mineral Resource
Estimates table above.
5. WIM mineral resources reported based on a 1.3 CuEq% cut-off for the underground portion, and a 0.5% cut-off for the open pit
portion, assuming processing recoveries of 90% for copper and zinc and 70% for gold and silver, and using long-term prices of
$3.00 per pound copper, $1,200 per ounce gold, $1.00 per pound zinc and $15.00 per ounce silver. A 20m crown pillar below
the open pit bottom is excluded from resources.
6. Pen II mineral resources are estimated at a minimum NSR cut-off of C$65 per tonne and assume that the Pen II mineral
resources would be amenable to processing at the Stall mill.
7. New Britannia mineral resource estimates have been reported at a minimum true width of 1.5 metres and with a cut-off grade
varying from 2 grams per tonne (at 3 Zone and the lower part of New Britannia) to 3.3 grams per tonne (at Birch and for the
upper part of New Britannia).