Hudbay Minerals Inc. Q3 FY2025 earnings call

Management Statement and Operational Highlights

• Resilience: Demonstrated strong operating capabilities in face of mandatory wildfire evacuations in Manitoba and temporary operational interruptions in Peru. Teams minimized impacts to operations.
• Copper World Project: Secured Mitsubishi as a long-term partner, unlocking value in copper growth pipeline. This solidifies financial strength and reduces equity contributions. Anticipates sanction decision in 2026 and first production in 2029.
• Cost Improvements: Significantly improved consolidated cost guidance for the second time in 2025. Consolidated cash costs at $0.42 per pound and sustaining cash costs at $2.90. Further improved full-year consolidated cash cost guidance to $0.15 - $0.35 per pound of copper and sustaining cash cost guidance to $1.85 - $2.25 per pound of copper.
• Operational Progress: Peru team navigated social unrest and temporary interruptions. Manitoba team restarted operations after wildfires. British Columbia made progress on SAG mill conversion project.

Segment Performance

• Peru Operations: Produced 18,000 tonnes of copper, 26,000 ounces of gold, 577,000 ounces of silver, and 195 tonnes of molybdenum in the third quarter. Faced temporary interruptions due to social unrest but navigated through, with gold production exceeding expectations. Quarterly copper production was lower due to temporary shutdown, while gold production was higher. Cash costs were $1.30 per pound, decreasing from prior quarter.
• Manitoba Operations: Showed resilience against wildfires. Produced 22,000 ounces of gold, 800 tonnes of copper, 500 tons of zinc, and 102,000 ounces of silver in the third quarter. Lower than second quarter due to wildfire evacuation. Gold grades increased, but overall production was impacted. Gold cash costs were $379 per ounce, decreasing. Expected to be slightly below low end of gold production guidance due to power outage.
• British Columbia Operations: Produced 5,200 tonnes of copper, 4,800 ounces of gold, and 51,000 ounces of silver in the third quarter. Production decreased due to restricted mining efficiencies and lower grades. Made progress on SAG mill conversion project but faced unplanned maintenance on SAG one mill. Fourth-quarter production expected to be impacted. Cash costs were $3.21 per pound, higher than prior quarter.

Guidance

• Production: Maintained consolidated full-year production guidance for all primary metals, with fourth quarter expected to be strong. Consolidated full-year copper and gold near low end of guidance ranges.
• Cost: Improved full-year consolidated cash cost guidance to $0.15 - $0.35 per pound of copper and sustaining cash cost guidance to $1.85 - $2.25 per pound of copper.
• Capital Expenditures: Total capital expenditures expected to be $35 million lower than original guidance, with $15 million in reduced sustaining capital expenditures and $20 million in lower growth capital expenditures deferred to 2026.
• Free Cash Flow: Peru and Manitoba operations generated positive free cash flow despite temporary interruptions, offset by investment in British Columbia operations.

Risks

• Operational Interruptions: Mandatory wildfire evacuations in Manitoba and temporary operational interruptions in Peru impacted production.
• Social Unrest: Regional social unrest in Peru affected operations.
• Port Issues: Ocean swells at port deferred copper concentrate shipment, impacting sales volumes.
• Debt Risks: Actual results may differ from forward-looking information due to risks and uncertainties related to debt and growth initiatives.

Q: About Copper Mountain, can we expect construction decision in mid-2026 and pre-construction spending?

A: Yes, expect feasibility study completion in mid-2026 and construction decision in 2026. Will spend on project development in conjunction with feasibility study, taking integrated project development approach.

Q: Clarification on $20 million for Copper World, when is it spent?

A: Original budget for Copper World was $90 million, increased to $110 million. Total spending from 2025 to sanction decision expected in mid-2026 is $150 million, with about $100 million spent in 2025 and $50 million in 2026.

Q: Deferred $35 million sustaining CapEx into 2026, what about 2026 sustaining CapEx?

A: Some carryover and deferrals related to wildfires and blockades, not an increase, just sliding of CapEx.

Q: Informal mining practices in Peru and Consulta Previa process?

A: Informal miners not an impediment to Consulta Previa process. Social environment in Peru with stable instability and bureaucracy affecting timelines.

Q: SAG mill issue in Copper Mountain and impact on 2026?

A: SAG one mill incident caught by surprise, repaired and ramping up. Little impact on 2026, unknown on ramp-up of SAG two and combined capacity.

Q: Pampacancha mining rates in fourth quarter and Constancia pit feed?

A: Mining rates similar to third quarter. Remaining feed is mixture of Constancia pit and stockpiles.

Q: Manitoba gold grades and mine plan?

A: In high-grade cycle, confident in maintaining strong gold grades. Mine plan average is 4.5 - 4.6 grams per tonne.

Q: BC Q4 production compared to Q3?

A: Likely lower than Q3 due to SAG one mill incident and ramp-up, but grade compensates somewhat, telegraphed to low end of copper guidance consolidated.