Good morning, ladies and gentlemen. Thank you for standing by. Welcome to Hudbay Minerals' First Quarter 2024 Results Conference Call. At this time, all participants are in a listen-only mode. Following the presentation, we will conduct a question-and-answer session. As a reminder, this conference call is being broadcast live on the webcast and is being recorded today, May 14 at 11:00 AM Eastern Time. I will now turn the conference over to Ms. Candace Brule, Vice President, Investor Relations. Thank you. Please go ahead.

Thank you, operator. Good morning and welcome to Hudbay's 2024 first quarter results conference call. Hudbay's financial results were issued this morning and are available on our website at www.hudbay.com. A corresponding PowerPoint presentation is available in the Investor Events section of our website, and we encourage you to refer to it during this call. Our presenter today is Peter Kukielski, Hudbay's President and Chief Executive Officer. Accompanying Peter for the Q&A portion of the call will be Eugene Lei, our Chief Financial Officer, and Andre Lauzon, our Chief Operating Officer. Please note that comments made on today's call may contain forward-looking information, and this information by its nature is subject to risks and uncertainties, and as such actual results may differ materially from the views expressed today. For further information on these risks and uncertainties, please consult the company's relevant filings on SEDAR Plus and EDGAR. These documents are also available on our website. As a reminder, all amounts discussed on today's call are in US dollars unless otherwise noted. And now, I'll pass the call over to Peter Kukielski.

Thank you, Candace. Good morning, everyone, and thanks very much for joining us. In the first quarter, we delivered another consecutive quarter of strong operational and financial performance with steady free cash flow generation and continued debt reduction. This was largely a result of our unique copper and gold production diversification that provides meaningful exposure to higher copper and gold prices and attractive free cash flow generation. I'll go into more detail on our first quarter operating and financial achievements throughout today's presentation, along with providing an update on many of the exciting growth initiatives underway to further enhance our copper and gold exposure. Slide 3 summarizes the strong financial performance that we delivered in the first quarter. Consolidated copper production was 35,000 tonnes, and consolidated gold production was 90,000 ounces in the first quarter. First quarter production demonstrated the strength of our diversified operating base with benefits from the continued mining of high copper and gold grades at the Pampacancha deposit in Peru, continued high gold grades at Lalor, and strong performance from the New Britannia mill in Manitoba, as well as the operational stabilization efforts at the Copper Mountain Mine in British Columbia. We are well on track to achieve the production guidance metrics for all the remarkable $0.16 per pound of copper for the second quarter in a row. This was primarily the result of continued high by-product credits, partially offset by higher mining costs and lower copper production. Consolidated sustaining cash costs were equally impressive and decreased to $1.03 per pound in the quarter. Given this strong cost performance, we have affirmed our full-year 2024 consolidated cost guidance, and we are pleased to see continued cost efficiencies being realized throughout the business, which is a testament to the outstanding team we have at Hudbay. Revenue in the quarter was $525 million, driven by gold production and sales volumes that exceeded our expectations. This, together with impressive cost performance, led to adjusted EBITDA of $214 million and adjusted net earnings of $0.16 per share. Operating cash flow before change in non-cash working capital of $148 million also exceeded expectations. After deducting sustaining capital expenditures and cash lease and community payments, we generated $87 million in free cash flow this quarter. This continues our quarterly trend of generating positive free cash flow. Over the last 12 months, we have generated more than $350 million in free cash flow. Our strong free cash flow generation enabled us to make additional progress against our deleveraging targets by completing a $10 million repayment on our revolving credit facilities and reducing net debt by $44 million during the quarter. As of March 31, our total liquidity increased to $619 million, including $284 million in cash, as well as undrawn availability of $335 million on our revolving credit facilities. The decline in net debt, together with the strong EBITDA generation has improved our net debt-to-EBITDA ratio to 1.3x compared to 1.6x at the end of 2023, and we are well on track to achieve our 3P plan leverage target of 1.2x. Moving to Slide 4. Our Peru operations produced 25,000 tonnes of copper, 29,000 ounces of gold, 640,000 ounces of silver, and approximately 400 tonnes of molybdenum in the quarter. While high-grade copper and gold are continued to be mined from Pampacancha in the quarter, the mill processed less Pampacancha ore than in the fourth quarter of 2023. This was in line with the mine plan and the typical ore feed blend of approximately 1/3 from Pampacancha and 2/3 from Constancia. As a result, we are on track to achieve our 2024 production guidance for all metals in Peru. Total ore mined in the first quarter decreased by 27% compared to the prior quarter, in line with the mine plan, which included supplemental ore feed from stockpiles during the quarter as the operations advanced pit stripping activities. The Constancia mill performed well during the quarter with throughput averaging 89,000 tonnes per day. Ore milled was 2% higher than the fourth quarter of 2023, mainly due to the treatment of softer ore from stockpiles. Recoveries continue to be strong and in line with our metallurgical models with 84.9% copper recovery and 73.4% gold recovery. The operations benefited from strong cost performance, achieving lower cash costs and sustaining cash costs compared to the fourth quarter. Peru's cash costs were at a record low of $0.43, a 20% improvement over the favorable levels achieved in the fourth quarter and benefited from higher gold by-product credits and lower operating costs. Sustaining cash costs were $1.06 or 12% lower than the fourth quarter, primarily due to the same factors. We are positioned well to achieve our 2024 cash cost guidance in Peru. Our Manitoba business also saw another quarter of strong operating performance as summarized on Slide 5. First quarter production included 57,000 ounces of gold, 310,000 tonnes of copper, 880,000 tonnes of zinc, and 220,000 ounces of silver. Production of gold in the first quarter was better than expected as a result of many operational improvement initiatives and record performance from the New Britannia mill. We are well on track to achieve our 2024 production guidance for all metals in Manitoba. The strong gold production was partly attributed to the successful implementation of improvement initiatives at Lalor that were completed in 2023 and early 2024, including higher shaft availability, efficient ore hoisting, stope fragmentation reduction, and mucking productivity enhancements. The New Britannia mill achieved record quarterly throughput of 1,870 tonnes per day in the first quarter due to ongoing improvement initiatives and effective preventive maintenance measures. The New Britannia mill recoveries of gold and copper were 89% and 96%, respectively, in the quarter. During the first quarter, we received a permit approval from the environment and climate change Manitoba to increase the New Britannia mill production rates to 2,500 tonnes per day. This approval aligns well with our long-term objective to further increase gold production at the Snow Lake operations by directing more gold ore from Lalor to the New Britannia mill to achieve higher gold recoveries. The Stall mill processed 4% less ore in the first quarter than the prior quarter, aligned with our strategy of allocating more Lalor ore feed to New Britannia. With the Stall mill recovery improvement project completed last year, we saw consistent strong recoveries of gold, copper, and silver in the first quarter and achieved our targeted gold recovery levels of 68%. Manitoba's gold cash cost was $736 per ounce, which is well positioned at the lower end of our 2024 cash cost guidance range. Gold sustaining cash costs were $950 per ounce in the quarter. Now moving to Slide 6. We continue to focus on advancing our operational stabilization plans at our British Columbia business unit. In the first quarter, Copper Mountain produced 7,000 tons of copper, 440,000 ounces of gold, and 88,000 ounces of silver. Production of copper and silver was lower than the prior quarter, while gold production was higher as a result of higher gold grades and overall higher recoveries. We are on track to achieve 2024 production guidance for all metals in British Columbia. Total ore mined in the first quarter was 3.7 million tonnes, which increased 42% from the fourth quarter, in line with our fleet production ramp-up plan. The mill processed a total of 3.2 million tonnes of ore during the quarter, with mill availability averaging 90.4%, while maintaining a stable throughput rate. Mill throughput was impacted by reduced reliability of the crushing circuit, which was caused primarily by elevated levels of magnetite and scrap metal as the mining progresses through areas of historical underground workings. First quarter milled copper grades averaged 0.27%, which was lower than the fourth quarter of 2023 but higher than the reserve grade of 0.25%. Copper recoveries of 83.4% were higher than the prior quarter and higher than expected due to relieving the regrind circuit constraint and implementing the flotation operational strategy improvements, including reagent selection and dose modification. Cash costs were $3.49 above the upper end of 2024 guidance range, but we expect these to decline during the remainder of the year as we continue to implement the stabilization initiatives. We have affirmed our full-year cash cost guidance range for BC. Slide 7 highlights the improvements we have seen at Copper Mountain through the early stages of our stabilization initiatives. Since the acquisition in June of last year, we have achieved and exceeded the targeted $10 million in annualized corporate synergies, and we are on track to realize the three-year annual operating efficiencies targets. On the mining side, we have remobilized idle haul trucks and accelerated the purchase of five new haul trucks to increase mining activities and improve flexibility in the mine with additional mining phases. To open up the mine, we have begun a campaign of accelerated stripping over the next three years to enable access to higher-grade ore and to mitigate the reduced stripping undertaken by Copper Mountain over the four years prior to our acquisition. As a result of the remobilization initiatives, total material moved will continue to increase quarter-over-quarter in line with the mine plan. We continue to hire and train additional haul truck drivers and expect to have a fully trained complement of truck drivers this summer to support the expanded mining fleet, which is expected to increase material move, improve operating efficiencies, and reduce unit operating costs. Additionally, we are implementing plant improvement initiatives that mirror the successful processes at our other operations, specifically, Constancia. We have seen stronger mill performance as demonstrated by higher mill availability and above target copper recoveries of 83.4% in the first quarter of 2024. The first quarter saw the highest quarterly copper recoveries achieved in the last decade at Copper Mountain. Stabilization benefits continue to be realized into April with 83% copper recoveries and approximately 40,000 tonnes per day average mill throughput, an increase of approximately 9% over the first quarter. We are also accelerating engineering studies to de-bottleneck and increase the nominal plant capacity to 50,000 tonnes per day earlier than was contemplated in the technical report. Maintenance practices to improve mill availability continue to be a key pillar of the stabilization initiatives. The average mill availability during the first quarter increased to 90.4% from 85.1% last quarter. As I mentioned earlier, maintenance programs completed during the quarter were fully executed according to plan. Additional maintenance practice enhancements are planned for rollout over the second and third quarter to implement improved maintenance management processes and change the maintenance organizational structure. Several new initiatives to target higher mill throughput were advanced during the quarter, including reprogramming the mill expert system, installation of advanced SAG control instrumentation, redesign of the SAG lineup package, and updated operational procedures to remove magnetite from the pebble stream. The mill throughput in April increased to close to 40,000 tonnes per day as the mills began realizing benefits from the recalibration expert system. The benefits of the operational stabilization improvements are expected to be realized through the remainder of 2024. In March, we released our Annual Mineral Reserve and Resource Update and provided our updated three-year production outlook which is shown on Slide 8. We expanded the mine life at Constancia by three years to 2041, as a result of the successful conversion of Mineral Resources to Mineral Reserves by adding an additional mining phase at the Constancia pit. Manitoba reserves continue to support a mine life to 2038, with significant extension potential through conversion of the remaining 1.4 million ounces of gold in inferred resources in Snow Lake British. British Columbia reserves support the 21-year mine life, disclosed in our Technical Report released in December of 2023, with additional optionality and upside potential for reserve conversion through 370 million tonnes of inferred resources. Our three-year production outlook highlighted that Constancia operations are expected to produce 101,000 tonnes of copper and 62,000 ounces of gold over the next three years. British Columbia's annual copper production is expected to average 41,000 tonnes of copper over the next three years. Manitoba's annual gold production guidance continues to average 185,000 ounces over the next three years. Hudbay offers investors meaningful copper exposure, complementary gold exposure, and strong near-term cash flow generation. We are well positioned to benefit from strong copper and gold prices with our low-cost stable operating platform in Tier 1 jurisdictions and our leading corporate development and exploration pipeline. As shown on Slide 9, today Hudbay produces more than 150,000 tonnes of copper per year, which is further augmented by our complementary gold exposure that offers cash flow resiliency in volatile pricing environments. For each $0.25 annual change in copper prices, Hudbay will gain an additional $75 million in cash flow and EBITDA. Similarly, for gold, for a $100 per ounce annual increase in price, Hudbay will see $25 million in increased cash flow and EBITDA. Our portfolio also generates the highest increase in net asset value with rising copper prices amongst our peers. Now turning to Slide 10, Copper World is the next promising greenfield copper development project in our growth pipeline. As we progress towards making the sanctioning decision, we will continue to be prudent with our financing plans for Copper World by remaining focused on meeting all of the prerequisites outlined in our 3-P Plan that we introduced in late 2022. Copper World is one of the highest grade open pit copper projects in the Americas with proven and probable reserves of 385 million tonnes at 0.54% copper in Phase 1. There is roughly 60% of the total contained copper remaining in the measured and indicated resources excluding reserves, which provides significant upside potential for Phase 2 expansion and mine life extension beyond 20 years. The phase 1 PFS released in 2023 showed enhanced project economics and optimized flow sheet and a simplified permitting process with extended mine life to 20 years and an internal rate of return of 19%, at a copper price of $3.75 per pound. The first key state permit required for Copper World, the Mined Land Reclamation Plan, was initially approved by the Arizona State Mine Inspector in October 2021 and was subsequently amended to reflect a larger private land project footprint in June 2022. In late 2022, we submitted the applications for an Aquifer Protection Permit and an Air Quality Permit to the Arizona Department of Environmental Quality. We continue to expect to receive these two outstanding state permits in 2024. We also received the floodplain use permit approval from Pima County in April 2024. We expect to launch the formal Joint Venture process later this year, after we secure our permits and prior to commencing a definitive feasibility study, which would allow the potential Joint Venture Partner to participate in the funding of definitive feasibility study activities as well as in the final project design for Copper World. We have seen strong initial interest from potential Joint Venture Partners, as many industry participants are focused on increasing copper exposure. Securing copper supply becomes a growing global concern, as evidenced by BHP's recent bid by Anglo American in an effort to increase their copper exposure. Copper World will be a key contributor to the domestic US supply chain, with our intention to produce made-in-America copper cathode by building a concentrate leach processing facility in the fourth year of operations. Local production of copper cathode would reduce the operation's total energy requirements and lower greenhouse gas and sulfur emissions by eliminating overseas shipping, smelting, and refining activities relating to processing copper concentrate. The project is expected to contribute more than $850 million in US taxes, including $170 million in Arizona state taxes. The mine will also create more than 400 direct jobs and up to 3,000 indirect jobs in Arizona. Copper World is an attractive copper growth project for Hudbay and our stakeholders, which will generate strong project returns and bring many benefits to the community and local economy in Arizona. We are also encouraged by the progress that the United States Mining Regulatory Clarity Act of 2024 is making through legislative approvals, as the government recognizes the importance of supporting the domestic critical mineral supply chain. Consequently, this bill aims to clarify the use of federal lands for mining critical minerals and also effectively overturns the prior Rosemont decision. While it doesn't change our path forward on Phase 1 of our Copper World Plan, if passed by the Senate, the bill would be a positive development for the second phase of Copper World when we expand onto federal lands and significantly increase the annual production and mine life at Copper World. It would also simplify this future permitting process for our Mason copper project in Nevada. Turning to Slide 11, in Peru, our exploration activities surrounding the Maria Reyna and Caballito properties near Constancia continue to focus on permitting and drill preparation. We commenced early exploration activities after completing a surface rights exploration agreement with the community of Uchucarcco in August 2022. As part of the drill permitting process, environmental impact assessment applications were submitted for the Maria Reyna property in November 2023 and for the Caballito property in April 2024. And in Manitoba, we initiated the largest exploration program in the company's history in Snow Lake, as highlighted on Slide 12. Much of the newly acquired land from the Cook Lake and Rockcliff transactions last year has been untested by modern deep geophysics. During the first quarter, a surface geophysical survey was conducted over a portion of our Cook Lake tenements using cutting-edge techniques that enabled the team to detect targets at depths of almost 1,000 meters below the surface. The multi-phase 2024 drilling program with up to eight drill rigs during the winter focused on testing potential for deep extensions of the gold and copper-gold zones at Lalor and will continue throughout the year testing other targets identified from current and past geophysical surveys. The goal of the 2024 exploration program is to test mineralized extensions of the Lalor deposit and to find a new anchor deposit within tracking distance of the Snow Lake processing infrastructure, which has the potential to extend the life of the Snow Lake operations beyond 2038. Additionally, we are advancing an access drift at the nearby 1901 deposit to enable infill drilling aimed at converting the inferred mineral resources in the gold lenses to mineral reserves. In the first quarter, we commenced the development of the smaller profile drift from the existing Lalor ramp. The 1901 development and exploration drift is proceeding on schedule and on budget and is expected to reach the mineralization in late 2024. Definition drilling is planned for 2025 to further confirm the optimal mining method, evaluate the ore body geometry and continuity, and convert gold inferred resources to reserves. Additionally, in March 2024, Hudbay signed a five-year option agreement with Marubeni focused on three exploration projects within tracking distance of Flin Flon. The agreement grants Marubeni an option to acquire a 20% interest in the project following the completion of funding CAD 12 million in exploration activities over a period of five years. All three properties host past producing mines with attractive copper and gold grades and remain highly prospective for further mineral discoveries. Concluding on Slide 13, we believe that copper has the best long-term supply and demand fundamentals in the sector as global copper mine supply will be unable to meet demand from global de-carbonization initiatives and growing demand from the use in AI data centers. Hudbay is uniquely positioned to benefit from the strong outlook for copper with a steady copper production profile of over 150,000 tons per year through to the end of the decade. Hudbay's resilient operating platform offers leading exposure to copper and unique complementary exposure to gold which together with our quality pipeline of growth assets provides significant upside potential for further value creation at higher copper and gold prices. And with that, we are pleased to take your questions.

Thank you. Ladies and gentlemen, we will now begin the question-and-answer session. Your first question comes from the line of Jackie Przybylowski from BMO. Please go ahead.

Hi. Good morning. Thanks for taking my question and congratulations on a really tremendous quarter. It's really great to see. I guess my question is just on Peru. You mentioned in the MD&A that the Peruvian government is considering expanding permits, including potentially allowing you to extend your permits by 10%. Is that something that would be within the mill's capacity to achieve that higher throughput? Or what would you guys need to do to get there? Thanks.

Thanks very much, Jackie. So the way that I would characterize it is that there is a potential that this could increase future copper production at Constancia after the Pampacancha deposit is depleted in 2025 by achieving further economies of scale to offset lower grades. But I think what you got to remember is the regulation is currently a proposal, and we'll continue to monitor its progress and the potential impacts on Constancia. Now that said, the team and I were in Peru a couple of weeks ago, and we met with the Minister of Energy and Mines, the Minister of Economy and Finance, and the first Minister, etc. They intimated that the proposal is in highly advanced stages and is likely to be implemented very soon. That remains anecdotal. Specifically, what it will allow us to do is uncertain at this point, but we certainly would be looking at options to actually increase production by supplementing the processing facilities that we have in place if needed. Andre, anything you would add?

Yes, sure. So that covers, I guess, what I'd say the permitting process and what you're looking at. In simple terms, what they're proposing is to increase copper production in Peru is to authorize within your existing permitted facilities opportunities for process improvement, so existing crushers and infrastructure that you currently have. What we do have, which is a benefit for us, is we do have permitted pebble crushers that haven't been implemented, and the reason why we haven't implemented in the past is because we are throttled on the throughput capacity. The teams are looking actively at what are the levers, if you will, around what we can do within that framework to take advantage of that 10% reduction. It's still early days yet, but we are running at days up to 94,000 tonnes per day. They're making continuous improvements in the process, so we're quite optimistic that if this happens, that will be an upside for us.

Thanks very much, Andre and Peter. And maybe just as a follow-up question, I attended the presentation by the Peruvian Minister at PDAC in March, and there was some talk there about streamlining permitting in general. I know your exploration projects in Peru have been very thoroughly going through the permitting process. Do you have any color or any optimism on whether streamlining of the permitting process for your exploration projects might be forthcoming as well?

I think, Jackie, so yes, I'm optimistic that that is the case. All of the ministers whom we met in Peru were keen to confirm that they're working hard to do that. That said, it remains to be seen what the bureaucracy can actually achieve. The key elements really are the middle of the EIA, and after that, there are a couple of other permits that need to be granted, like archeological permits and water use permits, but the primary permit required subsequent to EIA approval is Consulta Previa, and Consulta Previa kind of dwarfs the others. We suspect that we'll be able to conduct things like archeological permits and the water use permits in parallel, potentially with Consulta Previa, but the total duration we estimate right now is 12 to 18 months. We're hopeful that the 18 gets reduced to 12 or so.

That's great. Thank you very much for taking my questions, and congrats again.

Thank you.

Thank you. And your next question comes from the line of Orest Wowkodaw. Please go ahead.

Hi. Good morning. It's nice to see the free cash flow generation continue here in the quarter. My question has to do with costs. We saw very low costs per ton in Peru this quarter of just below $11 a ton. I mean, that's probably the lowest number we've seen in quite some time. Is that sustainable, and can you talk about some of the drivers there? And then, conversely, the cost per ton in Manitoba, Canadian $2.35, were among the highest we've seen in quite some time. Just wondering if we should, or can we anticipate costs to ease there for the rest of the year? Thanks.

Sure. Sure. So, I'll take yours. So, I'll start with the cost in Peru. The team has done an excellent job on cost conservation and looking for opportunities to reduce. The forecast to the end of the year is pretty much in line with what you're seeing and within our budget ranges, maybe even towards the lower end, like you're seeing this quarter. So, there's nothing unusual about this quarter; it's just good operating practice, good cost control, and they did overcome challenges with flooding and water, and while they did that. So, we're really proud of the efforts of the team there. In terms of Manitoba, if you look at it at face value, there are some increases at Stall and overall a little bit in the mine, but it's part of the strategy. What we trialed in the quarter was with increased opportunity to put more ore through; our productivity improvements are really taking hold. We trialed putting some higher base metal feed, if you will, from Stall that would normally go through Stall through New Britannia at better recoveries, and we were successful at that. So we're putting stuff from the lower cost mill or ore feeds through the higher cost mill, but we're generating a lot more cash by producing more gold ounces. So, at face value, the costs look a little bit higher than what they were, but it's all part of the strategy to make more cash, and you saw the results in the gold for the quarter.

Okay. Just to clarify. In Peru, we should then, I think what I'm hearing you say, we should expect cost of production to increase for the rest of the year in order to get closer to your guidance range?

It will be within the bottom to mid-range of the guidance, yes.

Thank you. And your next question comes from the line of Ralph Profiti from Eight Capital. Please go ahead.

Thanks, operator. Good morning, everyone. Peter, do you have a handle on the issue related to these elevated magnetite levels at Copper Mountain? It seems to be impacting the front end of the plant as opposed to the back end of the plant when we look at the success you've seen on copper recovery. Just wondering, what's the mitigation plan look like and just trying to get a sense of how important this issue is?

Sure. I'll take that one as well; it's Andre. So I was up at the site last week and I actually saw the site. The challenge is the pebble pressure as the pebbles get rejected from the SAG mill; there's a magnet on there to identify tramp or balls of metal that came out of the SAG mill. When you put high magnetite through, the magnet can't discern between the steel balls and the magnetite. By default, so you don't damage the pebble crusher, they were surging the pebbles back into the segment, which reduced throughput. Over the course of April, where you saw the increased throughput, we did a trial where we just rejected the pebbles. We're storing them in a safe spot for the future longer term. So we're seeing the benefit of it through increased throughput capacity by doing that. In the short-term, some capital projects that we're looking at will increase our throughput through the mills will allow us to just recirculate those pebbles back into the pilot have come run as mine feed and not as a surge into the mill pebbles. We believe we have it under control right now, and we're looking at technologies to separate or differentiate between magnetite and steel, but those problems will be ultimately solved early next year with some improvements that we're planning in the mill.

Got it. And Peter, I wanted to come back to the issue of the 10% potential permitted capacity increase at Constancia. Just wondering what special considerations outside of the plant that you may need to consider; things like power purchase agreements, trucking, logistics, and tailings? Outside of the plant, are there anything that you're going to be paying closer attention to when you think about the cost-benefit analysis?

Hey, Ralph. That's a great question. I think that we also have the need to be a resilient operation in Peru; we plan for these types of things in advance in any case. We have surge requirements for various aspects of our operation activities there. I think there will be nothing exceptional for us. I don't think there will be any additional logistics requirements. We have ample trucking capacity. We've increased our concentrate storage capacity. Frankly, I don't see any particular requirements arising out of this.

Understood. Thanks.

You're welcome.

Thank you. And your next question comes from the line of Greg Barnes from TD Securities. Please go ahead.

Yes. Thank you. Andre, question on Copper Mountain; you saw a step change in April both on mill throughput and mill availability. What happened in April? And is this sustainable?

Thank you for the question, Greg. There's a comparison our metallurgists make; it’s similar to boiling water where you put in a lot of energy and eventually see the bubbles. We've been investing significant energy and effort into the mill, and now we are beginning to see the advantages. We've been tracking mill reliability, which measures downtime due to unexpected events. For the quarter, our reliability was around 96.4%. In January, we recorded 94%, February was 96.4%, and March reached 98.4% reliability. We're observing this month-to-month improvement. The notable increase in throughput was due to the implementation of our expert system optimization. This system manages the SAG mill feed and throughput, consisting of three components: speed control, density monitoring, and tonnage measurement. In the past, we relied on just the tonnage, but in April we activated all three, allowing operators to focus more on monitoring rather than adjusting each individual part. We are benefiting from this change, alongside our strategy to reject pebbles, especially in current high magnetite scenarios, until we can introduce capital projects early next year that will enhance overall throughput.

Fantastic progress. And a question for you, Eugene, on gold hedging. Obviously, you've done a little bit; I think it's about 15% hedged on calls for the balance of the year. Do you intend to do more of that?

Thanks, Greg. No, not at this time. I think we do some modest hedging to Copper Mountain to protect some cash flows as prudent financial management during this stabilization period. Given the volatility we've seen in prices, in prior years, it was sort of as a prudent measure to keep ourselves free cash flow positive. In general, our strategy is to provide investors with increasing exposure to both copper and gold while prudently managing our cash flow. Given the strong copper and gold prices today, we don't feel the need to add additional hedges at this time; I'm sorry but let it ride.

Thanks, Eugene.

Your next question comes from Dalton Baretto from Canaccord. Please go ahead.

Thanks, operator. Good morning, Peter and team. I've got a couple of questions as it relates to the 3P plan, given what's happening in the current copper market currently? I guess my first question is how are you guys thinking about a hurdle rate for Copper World, given the movement in the copper price?

Hi, Dalton. The 3P plan is a thoughtful plan that looks throughout the cycle, and the basis of the potential sanction decision on rate of return part was a 15% IRR, a minimum of that at base prices. When we put out that study, that was $3.50 copper, and certainly, that PFS that we released last year achieves that. Obviously, at today's higher prices, IRRs are expected to be north of 20%. That is one element of the plan that is clear and on track. The current prices have allowed us to achieve deleveraging faster than originally planned, and we're very pleased with that result. Over $200 million of net debt reduction in the last three quarters since the acquisition of Copper Mountain. We are now at 1.3 times net debt to EBITDA. From a financial standpoint, we're getting towards that. I don't think we need to relax on the hurdle rate for investment in Copper World; we think it's still prudent to have those strong IRRs.

Thanks, Eugene. So then given everything you just said, I guess my second question is do you still want or need to do a deal on the project, and then part B, would you consider doing a deal ahead of the permits just to take advantage of current market conditions?

Again, we're sticking with the plan here, and the plan is to get the permits and get a partner, given the attractiveness of the project. There’s certainly lots of interest. I don’t think front-running the permits with a partner today in today’s hot environment is the right thing to do from a prudent planning basis. We're going to evaluate once we have the permits how we move the project forward to create the most value for shareholders. We’re not looking to get a quick win here. We want to look at this over the long term in terms of what's best for the company in terms of the percentage we sell and the valuation of the project.

I would add, Dalton, that there is occasional debate amongst the management team about the options, but we typically land back at where Eugene describes. We'll continue to debate this going forward.

And so then maybe one last one, if I can squeeze it in. As you look at Copper World, and you think about buy versus build in the current environment, can you talk a little bit about how Copper World compares to market valuations on a per ton of copper basis?

I'll kick off by saying that if you look at capital intensity, Copper World has a capital intensity of sub $16,000 per annual tonne. In comparison, Copper Mountain cost us about $12,000 per annual tonne. Projects that others are building may cost $20,000 to $30,000 to $40,000 per annual tonne. If we could acquire something like Copper Mountain at $10,000 or $12,000 per annual tonne, we'd be happy to do it, but it’s a bit of a unicorn. The ease of implementation of Copper World is extremely attractive, and the capital intensity stacks up very well against our peer projects. So in the absence of good acquisitions to buy, this is the way to go. We've demonstrated in the past that we're good at this, and so we're excited to do it.

Thanks very much, guys. That's all for me. Congratulations.

Thank you. This concludes the question-and-answer session. I would like to turn the conference back over to Ms. Candace Brule for any closing remarks.

Thank you, operator, and thank you, everyone, for joining us today. If you have any further questions, please feel free to reach out to our Investor Relations team. Thank you. Have a good day.

Ladies and gentlemen, this concludes the conference call for today. You can now disconnect your lines.