TSX, NYSE – HBM 2023 No. 26 Hudbay Releases Copper Mountain Technical Report and Advances Mine Stabilization Plans
TSX, NYSE – HBM
2023 No. 26
Hudbay Releases Copper Mountain Technical Report and Advances Mine
Stabilization Plans
• Average annual copper production of 46,500 tonnes over the first five years with cash costs of $1.89i
per pound, and 45,000 tonnes over the first 10 years with cash costs of $1.72i per pound.
o Represents an approximate 90% increase over 2022 production levels and 50% decrease from
2022 cash costs as a result of the implementation of Hudbay’s operational efficiencies as part of
its stabilization and optimization plans.
• Mine plan reflects Hudbay’s plans to stabilize the operation by remobilizing idle haul trucks, opening
additional mining faces and accelerating stripping over the next three years, optimizing ore feed to
the plant and implementing plant improvement initiatives.
• On track to deliver more than $20 million in targeted annual operating efficiencies and $10 million in
corporate synergies over the next three years.
• Efficient capital utilization with minimal capital investment required to expand the mill throughput to
the permitted limit of 50,000 tonnes per day.
• Copper Mountain is expected to increase Hudbay’s annual copper production by approximately 50%
after 2025ii.
• Copper Mountain provides additional leverage to gold with approximately 49,500 ounces of annual
gold production on average over the next 10 years.
• Mineral reserve estimates of 367 million tonnes at a copper grade of 0.25% and gold grade of 0.12
grams per tonne support a 21 -year mine life and position Copper Mountain as the longest life
producing asset in Hudbay’s portfolio.
• Additional 140 million tonnes of measured and indicated resources at 0.21% copper and 0.10 grams
per tonne gold and 370 million tonnes of inferred resources at 0.25% copper and 0.13 grams per tonne
gold, exclusive of mineral reserve s, provide significant upside potential for reserve conversion and
extending mine life, with infill drilling planned for 2024.
• The technical report represents Hudbay’s base case mine plan after acquisition and there are
numerous technical studies underway to further enhance the production profile, reduce mining costs
and continue process optimization.
Toronto, Ontario, December 5, 2023 – Hudbay Minerals Inc. (“Hudbay” or the “company”) ( TSX, NYSE: HBM)
today announced that it has completed a National Instrument 43- 101 technical report in respect of its 75% -owned
Copper Mountain mine in British Columbia, Canada. This is Hudbay’s first technical report for the Copper Mountain
mine since acquiring Copper Mountain Mining Corporation (“CMMC”) in June 2023. All dollar amounts are in US dollars,
unless otherwise noted.
“We are pleased to release our first mine plan for Copper Mountain which demonstrates the meaningful copper
production this long-life asset brings to our operating platform and the unique opportunity we have to leverage our
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efficient operating capabilities to drive value,” said Peter Kukielski, Hudbay’s President and Chief Executive Officer.
“We have applied our proven reserve and resource estimation methodology to develop a prudent and reliable mine
plan and are now positioned to implement several operating enhancements to transform Copper Mountain into a stable
cash flow generator for our business. With the addition of Copper Mountain, we expect to maintain annual consolidated
copper production above 150,000 tonnes through to the end of the decade and are better positioned to achieve our
deleveraging objectives and deliver on future copper growth. This increased scale and diversification enhances the
company’s ability to prudently advance our organic growth pipeline of brownfield expansion and greenfield development
opportunities in tier-one mining jurisdictions.”
Mine Plan Summary
The Copper Mountain mine is located 21 kilometres south of the town of Princeton and 304 kilometres east of
Vancouver, as shown in Figure 1. The operations include a series of open pits, an ore processing plant, a waste rock
facility, a tailings management facility and other ancillary facilities that support the operations. Please refer to Figure 2
for a site layout map. All claims are controlled by Copper Mountain Mine (BC) Ltd., a joint venture held 75% by Hudbay
and 25% by Mitsubishi Materials Corp.
The mine plan contemplates average annual copper production of 46,500 tonnes in the first five years , 45,000 in the
first ten years and 37,000 tonnes over the 21 -year mine life. A verage cash costs and sustaining cash costs over the
mine life are expected to be $1.84 and $2.53 per pound of copperi, respectively. The updated mine plan represents an
approximate 90% increase in average annual copper production and a 50% decrease in cash costs over the first 10
years compared to 2022.
As shown in Figure 3, Copper Mountain increases Hudbay’s expected consolidated annual copper production by
approximately 50% and maintains the 150,000 tonne per year level beyond 2025.
A summary of key production and cost details can be found below. For further details, please refer to the detailed mine
plan table in Exhibit 1.
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2024 2025 2026 2027 2028
2024-
2028
Avg.
2029-
2033
Avg.
2034-
2038
Avg.
2039-
2043
Avg.
LOM
Total
Contained Metal in Concentrate
Cu production tonnes
(000s) 37 40 49 50 56 47 43 39 26 783
Au production ounces
(000s) 21 36 26 44 47 35 64 60 26 935
Ag production ounces
(000s) 378 334 500 434 477 425 235 213 226 5,590
Capital Expenditures
Sustaining capital (after
capitalized stripping)1 US$ millions $63 $122 $91 $59 $94 $86 $67 $55 $13 $1,106
Discretionary capitalized
stripping2 US$ millions $22 $42 $21 - - $17 - - - $85
Growth capital US$ millions $3 $41 $69 $6 $7 $25 - - - $126
Cash Costs
Cash costs, net of by-
product credits3 US$/lb Cu $2.69 $1.89 $1.89 $1.90 $1.36 $1.89 $1.53 $1.75 $2.31 $1.84
Sustaining cash costs,
net of by-product credits
(excl. discretionary
stripping)3,4
US$/lb Cu $3.49 $3.40 $2.74 $2.45 $2.13 $2.76 $2.26 $2.46 $2.58 $2.53
Note: Totals may not add up correctly due to rounding. “LOM” refers to life-of-mine total.
1 Sustaining capital includes capitalized stripping.
2 Discretionary capitalized stripping relates to a portion of accelerated stripping activities over 2024-2026 to access higher grade ore
but could be reduced or deferred to a later date based on further geotechnical evaluation and other considerations.
3 By-product credits calculated using the following commodity prices and foreign exchange assumptions : gold price of $1, 940 per
ounce for 2024, $1,900 per ounce for 2025, $1,800 per ounce for 2026, $1,764 per ounce for 2027, $1,725 per ounce for 2028 and
$1,700 per ounce long-term; silver price of $24.00 per ounce for 2024, 2025 and 2026, $23.75 per ounce for 2027, $23.38 per ounce
for 2028 and $23.00 per ounce long-term; C$/US$ exchange rate of 1.35 in 2024 and 1.33 in 2025 onwards.
4 Sustaining cash cost s incorporate all costs included in cash cost s plus sustaining capital expenditures, capitalized stripping,
payments on capital leases, royalties and accretion and amortization of decommissioning obligations , and excludes discretionary
capitalized stripping. Cash costs and sustaining cash cost s 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 period ended September 30, 2023.
Hudbay’s Stabilization Plans
Since completing the acquisition of CMMC in June 2023, Hudbay has been focused on advancing its plans to stabilize
the Copper Mountain mine over the next few years to improve reliability and drive sustainable long-term value. The
technical report reflects Hudbay’s base case stabilization plan including many elements as described further below.
Increased Mining Activities
The company has commenced a fleet ramp-up plan which remobilizes idle haul trucks. The fleet ramp up plan entails
a ramp-up from 14 trucks to 26 trucks by the end of 2023, with 23 trucks ramped up to-date . Once the fleet ramp up
plan is complete, Copper Mountain is expected to have improved flexibility in the mine with additional mining faces.
Accelerated Stripping to Access Higher Grades
As reflected in the technical report, t he company is planning a campaign of accelerated stripping over the next three
years to enable access to higher grade ore and to mitigate the substantially reduced stripping undertaken by Copper
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Mountain over the four years prior to completion of the acquisition (please refer to Figure 4). The accelerated stripping
program is also expected to improve operating efficiencies and lower unit operating costs. A portion of the accelerated
capitalized stripping costs is considered discretionary and could be reduced or deferred to a later date based on further
geotechnical evaluation and other considerations.
Improved Mill Throughput and Recoveries
Hudbay’s mine plan for Copper Mountain assumes a mill ramp up to its nominal capacity of 45,000 tonnes per day in
2025. An expansion to the permitted capacity of 50,000 tonnes per day is planned in 2027. The mine plan assumes
approximately $23 million in growth capital spending over 2025 and 2026 in connection with the mill expansion. The
company also plans to improve mill recoveries with a more consistent ore feed grade, changes to the flotation reagents
and replacement of key pumps.
Operating Efficiencies and Corporate Synergies
Hudbay’s stabilization plans as reflected in the technical report are expected to generate more than $20 million in
annual operating efficiencies over the next three years, compared to Copper Mountain’s performance in 2022, through
improvements in copper recovery, higher throughput rates and lower combined unit operating costs. In addition, Hudbay
has realized approximately $9 million of the targeted $10 million in annual corporate synergies and is on track to exceed
the target. A full comparison of Hudbay’s plan versus Copper Mountain’s 2022 performance is presented in the following
table.
Copper Mountain
2022A1
2024-2028
Avg. Change
Mill throughput tonnes per day 34,814 46,851 +12,037
Copper recovery % 79.1% 84.5% +5.4%
Corporate G&A C$ millions $17 $4 -$13
Total unit operating costs (after
capitalized stripping)2 C$/tonne milled $23.95 $17.06 -$6.89
Cash costs, net of by-product credits2 US$/lb Cu $3.53 $1.89 -$1.64
Sustaining cash costs, net of by-product
credits (excl. discretionary stripping)2,3 US$/lb Cu $4.78 $2.76 -$2.02
1 2022 actuals as disclosed by CMMC on March 27, 2023. CMMC Financial Statements and Management’s Discussion & Analysis for
the applicable periods are available under CMMC’s SEDAR+ profile at www.sedarplus.ca. 2022 total unit operating costs includes
direct mining and milling costs, employee compensation and benefits, transportation costs and corporate and mine site administration
expenses.
2 Cash costs, sustaining cash cost s and unit operating costs are non-IFRS financial performance measures with no standardized
definition under IFRS. For further details on why Hudbay believes cash costs and unit operating costs are useful performance
indicators, please refer to the company's most recent Management's Discussion and Analysis for the period ended September 30,
2023.
3 By-product credits calculated using the following commodity prices and foreign exchange assumptions : gold price of $1, 940 per
ounce for 2024, $1,900 per ounce for 2025, $1,800 per ounce for 2026, $1,764 per ounce for 2027, $1,725 per ounce for 2028 and
$1,700 per ounce long-term; silver price of $24.00 per ounce for 2024, 2025 and 2026, $23.75 per ounce for 2027, $23.38 per ounce
for 2028 and $23.00 per ounce long-term; C$/US$ exchange rate of 1.35 in 2024 and 1.33 in 2025 onwards . Sustaining cash costs
incorporates all costs included in cash cost s plus sustaining capital expenditures, capitalized stripping, payments on capital leases,
royalties and accretion and amortization of decommissioning obligations, and excludes discretionary capitalized stripping.
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Mineral Reserve and Resource Estimates
The mine plan is based on a revised resource model and was constructed using the same methods applied at the
Constancia, Copper World and Mason deposits. The mineral reserve estimates total 367 million tonnes at a copper
grade of 0.25% and a gold grade of 0.12 grams per tonne, supporting a 21-year mine life. An additional 140 million
tonnes of measured and indicated resources at 0.21% copper and 0.10 grams per tonne gold and 370 million tonnes
of inferred resources at 0.25% copper and 0.13 grams per tonne gold, exclusive of mineral reserves, provide significant
upside potential for reserve conversion and extend ing mine life . Infill drilling is planned for 2024 to target reserve
conversion.
The c urrent mineral reserve and resource estimates for Copper Mountain (effective as of December 1, 202 3) are
summarized below.
Copper Mountain Mine
Mineral Reserve and Resource
Estimates1,2,3,4
Tonnes Cu Grade
(%)
Au Grade
(g/t)
Ag Grade
(g/t)
CuEq Grade
(%)
Reserves
Proven 195,037,000 0.27 0.12 0.78 0.35
Probable 171,943,000 0.22 0.11 0.59 0.30
Total proven and probable 366,980,000 0.25 0.12 0.69 0.33
Resources
Measured 41,198,000 0.21 0.09 0.73 0.27
Indicated 96,615,000 0.21 0.11 0.68 0.29
Total measured and indicated 137,814,000 0.21 0.10 0.69 0.28
Inferred 371,319,000 0.25 0.13 0.61 0.34
Note: totals may not add up correctly due to rounding.
1 Mineral resource estimates are exclusive of mineral reserves. Mineral resources are not mineral reserves as they do not have
demonstrated economic viability.
2 Mineral reserve estimates have been calculated using assumed long-term metal prices of $3.75 per pound copper, $1,650 per
ounce gold and $22.00 per ounce silver. Mineral resource estimates have been calculated using assumed long-term metal prices of
$4.00 per pound copper, $1,650 per ounce gold and $22.00 per ounce silver.
3 Mineral resource estimates tonnes and grades constrained to a Lerch Grossman revenue factor 1 pit shell.
4 Mineral reserves have an effective date of December 1, 2023, but were generated excluding the measured and indicated mineral
resource estimates planned to be mined and milled in the month of December 2023. Mineral reserves are reported using an NSR
cut-off value of $5.67 that meet a minimum 0.10% Cu grade.
Consistent with the expectations disclosed in the company’s news release on November 7, 2023, t he 2023 mineral
reserve and mineral resource estimates are consistent with historical estimates published by CMMC until 2019, after
adjusting for mining depletion and a re-classification of some of the indicated mineral resources to the inferred category,
as well as incorporating high grade resources added through exploration since 2019. Hudbay’s new 2023 resource
estimates are closely aligned with production with both tonnage and grade reconciling positively within 3% to 4% of the
credited mine production by the mill over the past three years.
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Project Optimization and Upside Opportunities
There are several opportunities to further increase production, improve costs and extend mine life for Copper Mountain.
While these opportunities have not been considered in the technical report as they are not yet at the level of required
engineering, the company is advancing studies to evaluate the potential for these to be reflected in future mine plans.
• Conversion of Inferred Resources to Reserves – there is a significant amount of high-grade mineralization in
the inferred category that has the potential to be converted to reserves, which would increase production,
improve head grades over the next 10 years and extend mine life beyond 21 years. The company has plans
for infill drilling in 2024 to target reserve conversion.
• Lower Stripping Costs – the company will carry out additional geotechnical investigations and pit slope stability
tests in the area of Pit 3 to identify opportunities to maximize the use of double benching and reduce waste
stripping that is currently classified as discretionary.
• Evaluation of Mining Technologies – Hudbay will pursue technology trade-offs between trolley assist haul
trucks and conveying systems for ore and waste movement in an effort to reduce mining costs, improve mining
productivity, and reduce greenhouse gas emissions.
• Continued Process Optimization – Hudbay continues to conduct metallurgical testing and simulations to
optimize mill throughput and recoveries.
• Renewable Diesel – Hudbay is evaluating the application of renewable diesel at Copper Mountain, which has
the potential to reduce costs, lower greenhouse gas emissions and be eligible for additional federal tax credits
under Canada’s Clean Fuel Regulations.
• Green Opportunities – the company plans to install a mast to collect wind data to be able to evaluate the
potential for site renewable energy generation. This initiative is in addition to the existing net -zero initiatives
already underway, including trolley assist haulage and a new electric shovel, which favourably position Copper
Mountain in the lowest quartile of the greenhouse gas emissions curve for copper mines.
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 cost s are shown because the se measures are used by the company as a key
performance indicator to assess the performance of its mining and processing operations. These measures do not
have a meaning prescribed by IFRS and are therefore unlikely to be comparable to similar measures presented by
other issuer s. These measures should not be considered in isolation or as a substitute for measures prepared in
accordance with IFRS and are not necessarily indicative of operating profit or cash flow from operations as determined
under IFRS. Other companies may calculate these measures differently. For further details on these measures, please
refer to page 45 of Hudbay’s management’s discussion and analysis for the period ended September 30, 2023 available
on SEDAR+ at www.sedarplus.ca and EDGAR at www.sec.gov.
Cautionary Note Regarding NI 43-101
The scientific and technical information contained in this news release has been approved by Olivier Tavchandjian, P.
Geo, Hudbay’s Senior Vice-President, Exploration and Technical Services. Mr. Tavchandjian is a qualified person
pursuant to Canadian Securities Administrators’ National Instrument 43- 101 - Standards of Disclosure for Mineral
Projects (“NI 43-101”).
A copy of the NI 43-101 technical report will be made available on Hudbay’s SEDAR+ profile at www.sedarplus.ca and
on Hudbay’s EDGAR profile at www.sec.gov. This technical report is the current technical report in respect of the
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Copper Mountain mine and shall supersede and replace all prior technical reports relating to the Copper Mountain
mine.
Cautionary Note to United States Investors
This news release has been prepared in accordance with the requirements of the securities laws in effect in Canada,
which differ from the requirements of United States securities laws. Canadian reporting requirements for disclosure of
mineral properties are governed NI 43-101.
For this reason, information contained in this news release in respect of the Copper Mountain mine may not be
comparable to similar information made public by United States companies subject to the reporting and disclosure
requirements under the United States federal securities laws and the rules and regulations thereunder. For further
information on the differences between the disclosure requirements for mineral properties under the United States
federal securities laws and NI 43-101, please refer to the company’s annual information form, a copy of which has been
filed under Hudbay’s profile on SEDAR+ at www.sedarplus.ca and the company’s Form 40-F, a copy of which has been
filed under Hudbay’s profile on EDGAR at www.sec.gov.
Cautionary Note Regarding Forward-Looking Information
This news release contains forward-looking information within the meaning of applicable Canadian and United States
securities legislation. All information contained in this news release, other than statements of current and historical fact,
is forward-looking information. Often, but not always, forward-looking information can be identified by the use of words
such as “plans”, “expects”, “budget”, “guidance”, “scheduled”, “estimates”, “forecasts”, “strategy”, “target”, “intends”,
“objective”, “goal”, “understands”, “anticipates” and “believes” (and variations of these or similar words) and statements
that certain actions, events or results “may”, “could”, “would”, “should”, “might” “occur” or “be achieved” or “will be taken”
(and variations of these or similar expressions). All of the forward-looking information in this news release is qualified
by this cautionary note.
Forward-looking information includes, but is not limited to, production, operating cost, capital cost and cash cost
estimates, project design, including processing and tailings facilities, metal recoveries, mine life and production rates
for the Copper Mountain mine, the potential to further enhance the economics of the project and optimize the design,
the impact and effects of Hudbay’s optimization and stabilization initiatives, statements regarding permitting matters,
the relationships with the First Nati ons groups , local communities of interest, regulatory agencies and other key
stakeholders, the expectations and plans for New Ingerbelle, the renegotiation of the participation agreements with the
Upper Similkameen Indian Band and Lower Similkameen Indian Band, the costs associated with planned stripping,
and the conceptual mine closure and reclamation plan. Forward-looking information is not, and cannot be, a guarantee
of future results or events. Forward-looking information is based on, among other things , opinions, assumptions,
estimates and analyses that, while considered reasonable by the company at the date the forward-looking information
is provided, inherently are subject to significant risks, uncertainties, contingencies and other factors that may cause
actual results and events to be materially different from those expressed or implied by the forward-looking information.
The material factors or assumptions that Hudbay identified and were applied by the company in drawing conclusions
or making forecasts or projections set out in the forward-looking information include, but are not limited to:
• the company’s ability to stabilize and optimize the Copper Mountain mine operations;
• the success of exploration and development activities at the Copper Mountain m ine, including New
Ingerbelle;
• the accuracy of geological, mining and metallurgical estimates;
• anticipated metals prices and the costs of production;
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• the supply and demand for metals Hudbay produces;
• the supply and availability of all forms of energy and fuels at reasonable prices;
• no significant unanticipated operational or technical difficulties;
• the availability of additional financing, if needed;
• the availability of personnel for the company's exploration, development and operational projects and
ongoing employee relations;
• maintaining applicable and necessary permits;
• maintaining good relations with the First Nations groups , local communities of interest, regulatory
agencies and other key stakeholders, including the neighbouring communities and local governments in
British Columbia;
• no significant unanticipated challenges with stakeholders at the Copper Mountain mine;
• no significant unanticipated events or changes relating to regulatory, environmental, health and safety
matters;
• no contests over title to Hudbay’s properties, including as a result of rights or claimed rights of Indigenous
peoples or challenges to the validity of its unpatented mining claims;
• no offtake commitments in respect of production from the Copper Mountain mine, other than those
contemplated herein;
• certain tax matters, including, but not limited to the mining tax regime in British Columbia; and
• no significant and continuing adverse changes in general economic conditions or conditions in the
financial markets (including commodity prices and foreign exchange rates).
The risks, uncertainties, contingencies and other factors that may cause actual results to differ materially from those
expressed or implied by the forward-looking information may include, but are not limited to, risks generally associated
with the mining industry and the current geopolitical environment, such as economic factors (including future commodity
prices, currency and interest rate fluctuations, energy and consumable prices, supply chain constraints and general
cost escalation in the current inflationary environment), risks related to product delivery and financing, risks related to
the ability for the company to successfully maintain all applicable and necessary permits, risks related to changes in
government and government policy, risks related to changes in law, risks in respect of community relations, including
but not limited to the relationships with First Nations groups, local communities of interest, regulatory agencies and
other key stakeholders, risks related to contracts that were entered into in respect of the Copper Mountain m ine,
including but not limited to the renegotiation of the participation agreements with the Upper Similkameen Indian Band
and Lower Similkameen Indian Band, risks related to the conceptual mine closure and reclamation plan, uncertainties
related to the geology, continuity, grade and estimates of mineral reserves and resources, and the potential for
variations in grade and recovery rates, as well as the risks discussed under the heading “Risk Factors” in the company’s
most recent annual information form and under the heading “Financial Risk Management” in the company’s most recent
management’s discussion and analysis.
Should one or more risk, uncertainty, contingency or other factor materialize or should any factor or assumption prove
incorrect, actual results could vary materially from those expressed or implied in the forward-looking information.
Accordingly, you should not place undue reliance on forward-looking information. The company does not assume any
obligation to update or revise any forward- looking information after the date of this news release or to explain any
material difference between subsequent actual e vents and any forward-looking information, except as required by
applicable law.