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6-K

Hudbay Minerals Inc. (HBM)

6-K 2022-11-03 For: 2022-09-30
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Added on April 08, 2026

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549

FORM 6-K

REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13A-16 OR 15D-16 OF THE SECURITIES EXCHANGE ACT OF 1934

For the month of November 2022

Commission File Number: 001-34244

HUDBAY MINERALS INC. (Translation of registrant’s name into English)

25 York Street, Suite 800 Toronto, Ontario M5J 2V5, Canada (Address of principal executive offices)

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.

Form 20-F [   ]                    Form 40-F [X]

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): [   ]

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): [   ]

Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.

Yes [   ]                     No [X]

If “Yes” is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): 82- _____________________________

EXPLANATORY NOTE

On November 2, 2022, Hudbay Minerals Inc. (“Hudbay”) filed on the Canadian Securities Administrators’ System for Electronic Document Analysis and Retrieval (SEDAR) website at www.sedar.com the following documents: (1) Unaudited Condensed Consolidated Interim Financial Statements for the period ended September 30, 2022, (2) Management's Discussion and Analysis for the period ended September 30, 2022, (3) Form 52-109F2 Certification of Interim Filings Full Certificate - CEO, (4) Form 52-109F2 Certification of Interim Filings Full Certificate - CFO, (5) News Release Dated November 2, 2022.

Copies of the filings are attached to this Form 6-K and incorporated herein by reference, as follows:

  • Exhibit 99.1 — Unaudited Condensed Consolidated Interim Financial Statements for the period ended September 30, 2022
  • Exhibit 99.2 — Management's Discussion and Analysis for the period ended September 30, 2022
  • Exhibit 99.3 — Form 52-109F2 Certification of Interim Filings Full Certificate - CEO
  • Exhibit 99.4 — Form 52-109F2 Certification of Interim Filings Full Certificate - CFO
  • Exhibit 99.5 — News Release Dated November 2, 2022

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

HUDBAY MINERALS INC.
(registrant)
By: /s/ Eugene Lei
Name: Eugene Lei
Title: Senior Vice President and Chief Financial Officer

Date: November 3, 2022

EXHIBIT INDEX

The following exhibits are furnished as part of this Form 6-K:

Exhibit Description
99.1 Unaudited Condensed Consolidated Interim Financial Statements for the period ended September 30, 2022
99.2 Management's Discussion and Analysis for the period ended September 30, 2022
99.3 Form 52-109F2 Certification of Interim Filings Full Certificate - CEO
99.4 Form 52-109F2 Certification of Interim Filings Full Certificate - CFO
99.5 News Release Dated November 2, 2022 
Hudbay Minerals Inc.: Exhibit 99.1 - Filed by newsfilecorp.com

Unaudited Condensed Consolidated Interim Financial Statements

(In US dollars)

HUDBAY MINERALS INC.

For the three and nine months ended, September 30, 2022 and 2021

**HUDBAY MINERALS INC.**Condensed Consolidated Interim Balance Sheets (Unaudited and in thousands of US dollars)

Sep. 30, Dec. 31,
Note 2022 2021
Assets
Current assets
Cash $ 286,117 $ 270,989
Trade and other receivables 6 60,229 204,081
Inventories 7 134,059 158,453
Prepaid expenses and other current assets 11,800 15,338
Other financial assets 8 17,354 7,867
Taxes receivable 9,826 -
519,385 656,728
Receivables 6 15,573 16,084
Inventories 7 41,076 37,573
Other financial assets 8 10,638 11,158
Intangibles and other assets 9 51,867 20,138
Property, plant and equipment 10 3,541,356 3,740,966
Deferred tax assets 18b 107,899 133,584
$ 4,287,794 $ 4,616,231
Liabilities
Current liabilities
Trade and other payables $ 211,481 $ 207,777
Taxes payable 1,449 15,243
Other liabilities 11 33,683 63,002
Other financial liabilities 12 20,236 29,308
Gold prepayment liability 3, 13 64,339 71,394
Lease liabilities 14 20,665 33,529
Deferred revenue 16 67,725 88,963
419,578 509,216
Other financial liabilities 12 52,188 52,358
Gold prepayment liability 3, 13 15,927 68,614
Lease liabilities 14 45,122 44,473
Long-term debt 15 1,183,237 1,180,274
Deferred revenue 16 405,236 426,363
Pension obligations 16,054 6,252
Other employee benefits 88,875 128,588
Environmental and other provisions 17 256,601 461,501
Deferred tax liabilities 18b 234,087 261,764
2,716,905 3,139,403
Equity
Share capital 19b 1,780,254 1,778,848
Reserves 8,697 (182 )
Retained earnings (218,062 ) (301,838 )
1,570,889 1,476,828
$ 4,287,794 $ 4,616,231
Commitments (note 22)

**HUDBAY MINERALS INC.**Condensed Consolidated Interim Income Statements (Unaudited and in thousands of US dollars, except per share amounts)

Note Three months ended<br>September 30, Nine months ended<br>September 30,
2022 2021 2022 2021
Revenue 5a $ 346,171 $ 358,961 $ 1,140,244 $ 1,076,828
Cost of sales
Mine operating costs 223,930 211,064 674,825 612,251
Depreciation and amortization 5b 89,811 86,010 258,207 267,997
Impairment - environmental obligation 5f - 147,305 - 147,305
313,741 444,379 933,032 1,027,553
Gross profit (loss) 32,430 (85,418 ) 207,212 49,275
Selling and administrative expenses 10,448 9,298 23,910 29,295
Exploration expenses 3 1,771 6,932 29,387 26,285
Other expenses 3, 5c 6,296 15,838 14,041 18,815
Re-evaluation adjustment - environmental obligation 3, 17 (6,417 ) 134 (146,950 ) (4,890 )
Impairment - Arizona 5e - - 94,956 -
Results from operating activities 20,332 (117,620 ) 191,868 (20,230 )
Net interest expense on long term debt 5d 16,921 19,300 50,730 57,837
Accretion on streaming arrangements 5d 8,567 8,295 20,760 34,359
Change in fair value of financial instruments 5d (6,686 ) 162 (5,888 ) 47,735
Other net finance costs 5d 1,793 2,453 16,164 42,441
Net finance expense 20,595 30,210 81,766 182,372
(Loss) profit before tax (263 ) (147,830 ) 110,102 (202,602 )
Tax expense 18a 7,872 22,581 22,279 31,303
(Loss) profit for the period $ (8,135 ) $ (170,411 ) $ 87,823 $ (233,905 )
(Loss) profit per share
Basic $ (0.03 ) $ (0.65 ) $ 0.34 $ (0.89 )
Diluted $ (0.03 ) $ (0.65 ) $ 0.33 $ (0.89 )
Weighted average number of common shares outstanding:
Basic 20 261,896,143 261,517,461 261,824,961 261,430,996
Diluted 20 261,896,143 261,517,461 262,212,117 261,430,996

**HUDBAY MINERALS INC.**Condensed Consolidated Interim Statements of Cash Flows (Unaudited and in thousands of US dollars)

Note Three months ended<br>September 30, Nine months ended <br>September 30,
2022 2021 2022 2021
Cash generated from operating activities:
(Loss) profit for the period $ (8,135 ) $ (170,411 ) $ 87,823 $ (233,905 )
Tax expense 18a 7,872 22,581 22,279 31,303
Items not affecting cash:
Depreciation and amortization 5b 90,146 86,451 259,327 269,400
Share-based compensation 2,489 1,549 (1,826 ) 5,636
Net interest expense on long-term debt 5d 16,921 19,300 50,730 57,837
Accretion on streaming arrangements 5d 8,567 8,295 20,760 34,359
Change in fair value of financial instruments 5d (6,686 ) 162 (5,888 ) 47,735
Other net finance costs 5d 1,793 2,453 16,164 42,441
Inventory adjustments 2,074 5,445 3,546 3,999
Amortization of deferred revenue and variable consideration 5a (15,339 ) (23,538 ) (62,749 ) (55,870 )
Pension and other employee benefit payments, net of accruals 1,846 4,688 1,382 9,099
Re-evaluation adjustment - environmental obligation 3, 17 (6,417 ) 134 (146,950 ) (4,890 )
Impairment - environmental adjustment 5f - 147,305 - 147,305
Impairment - Arizona 5e - - 94,956 -
Decommissioning and restoration payments 17 (4,420 ) (6,538 ) (12,649 ) (16,479 )
Other 23a (1,544 ) 8,224 (11,018 ) 1,579
Taxes paid (7,550 ) (2,591 ) (33,306 ) (12,604 )
Operating cash flow before change in non-cash working capital 81,617 103,509 282,581 326,945
Change in non-cash working capital 23b 90,891 36,289 118,840 (38,978 )
172,508 139,798 401,421 287,967
Cash used in investing activities:
Acquisition of property, plant and equipment 3 (89,518 ) (87,368 ) (220,143 ) (249,495 )
Community agreements 3 (29,489 ) (1,724 ) (33,631 ) (23,102 )
Net (purchase) sale of investments - - (331 ) 1,081
Proceeds from disposition of property, plant and equipment 4,092 - 4,092 -
Change in restricted cash 51 - 51 -
Interest received 894 199 1,406 862
(113,970 ) (88,893 ) (248,556 ) (270,654 )
Cash used in financing activities:
Issuance of senior unsecured notes, net of transaction costs 15a - - - 591,922
Principal repayments 15a - - - (600,000 )
Premium paid on redemption of notes - - - (22,878 )
Interest paid on long-term debt - (33,600 ) (31,875 ) (84,435 )
Financing costs (3,046 ) (2,501 ) (9,152 ) (10,231 )
Lease payments 14 (9,407 ) (9,622 ) (29,225 ) (28,368 )
Gold prepayment repayments 13 (17,146 ) - (54,335 ) -
Deferred Rosemont acquisition payment - - (10,000 ) -
Net proceeds from exercise of stock options 40 10 914 750
Dividends paid 19b (1,972 ) (2,056 ) (4,047 ) (4,146 )
(31,531 ) (47,769 ) (137,720 ) (157,386 )
Effect of movement in exchange rates on cash 554 28 (17 ) (1,611 )
Net increase (decrease) in cash 27,561 3,164 15,128 (141,684 )
Cash, beginning of the period 258,556 294,287 270,989 439,135
Cash, end of the period $ 286,117 $ 297,451 $ 286,117 $ 297,451

**HUDBAY MINERALS INC.**Condensed Consolidated Interim Statements of Comprehensive Profit (Loss) (Unaudited and in thousands of US dollars)

Three months ended <br>September 30, Nine months ended <br>September 30,
2022 2021 2022 2021
(Loss) profit for the period $ (8,135 ) $ (170,411 ) $ 87,823 $ (233,905 )
Other comprehensive (loss) income:
Item that will be reclassified subsequently to profit or loss:
Recognized directly in equity:
Net (loss) gain on translation of foreign currency balances (15,698 ) (7,348 ) (20,193 ) 504
(15,698 ) (7,348 ) (20,193 ) 504
Items that will not be reclassified subsequently to profit or loss:
Recognized directly in equity:
Gold prepayment revaluation (note 13) (377 ) (127 ) 788 (2,311 )
Tax effect 100 34 (208 ) 621
Remeasurement - actuarial (loss) gain (5,292 ) 12,997 25,336 31,065
Tax effect 387 (2,359 ) 2,156 (3,631 )
(5,182 ) 10,545 28,072 25,744
Other comprehensive (loss) income net of tax, for the period (20,880 ) 3,197 7,879 26,248
Total comprehensive (loss) profit for the period $ (29,015 ) $ (167,214 ) $ 95,702 $ (207,657 )

**HUDBAY MINERALS INC.**Condensed Consolidated Interim Statements of Changes in Equity (Unaudited and in thousands of US dollars)

Share capital<br>(note 19) Other capital<br>reserves Foreign currency<br>translation reserve Remeasurement<br>reserve Retained earnings Total equity
Balance, January 1, 2021 $ 1,777,340 $ 55,937 $ 1,571 $ (81,708 ) $ (53,334 ) $ 1,699,806
Loss - - - - (233,905 ) (233,905 )
Other comprehensive income - - 504 25,744 - 26,248
Total comprehensive income (loss) - - 504 25,744 (233,905 ) (207,657 )
Contributions by and distributions to owners:
Dividends (note 19b) - - - - (4,146 ) (4,146 )
Stock options - 1,427 - - - 1,427
Issuance of shares related to stock options redeemed 1,154 (404 ) - - - 750
Total contributions by and distributions to owners 1,154 1,023 - - (4,146 ) (1,969 )
Balance, September 30, 2021 $ 1,778,494 $ 56,960 $ 2,075 $ (55,964 ) $ (291,385 ) $ 1,490,180
Loss - - - - (10,453 ) (10,453 )
Other comprehensive (loss) income - - 832 (4,453 ) - (3,621 )
Total comprehensive (loss) income - - 832 (4,453 ) (10,453 ) (14,074 )
Contributions by and distributions to owners:
Dividends (note 19b) - - - - - -
Stock options - 492 - - - 492
Issuance of shares related to stock options redeemed 354 (124 ) - - - 230
Total contributions by and distributions to owners 354 368 - - - 722
Balance, December 31, 2021 $ 1,778,848 $ 57,328 $ 2,907 $ (60,417 ) $ (301,838 ) $ 1,476,828

**HUDBAY MINERALS INC.**Condensed Consolidated Interim Statements of Changes in Equity (Unaudited and in thousands of US dollars)

Share capital<br>(note 19) Other capital<br>reserves Foreign currency<br>translation reserve Remeasurement<br>reserve Retained earnings Total equity
Balance, January 1, 2022 $ 1,778,848 $ 57,328 $ 2,907 $ (60,417 ) $ (301,838 ) $ 1,476,828
Profit - - - - 87,823 87,823
Other comprehensive (loss) income - - (20,193 ) 28,072 - 7,879
Total comprehensive (loss) income - - (20,193 ) 28,072 87,823 95,702
Contributions by and distributions to owners:
Dividends (note 19b) - - - - (4,047 ) (4,047 )
Stock options - 1,492 - - - 1,492
Issuance of shares related to stock options redeemed 1,406 (492 ) - - - 914
Total contributions by and distributions<br>to owners 1,406 1,000 - - (4,047 ) (1,641 )
Balance, September 30, 2022 $ 1,780,254 $ 58,328 $ (17,286 ) $ (32,345 ) $ (218,062 ) $ 1,570,889
**HUDBAY MINERALS INC.**Notes to Unaudited Condensed Consolidated Interim Financial Statements<br>(in thousands of US dollars, except where otherwise noted)<br>For the three and nine months ended September 30, 2022 and 2021
---

1. Reporting entity

On January 1, 2017, Hudbay Minerals Inc. amalgamated under the Canada Business Corporations Act with its subsidiaries Hudson Bay Mining and Smelting Co., Limited and Hudson Bay Exploration and Development Company Limited to form Hudbay Minerals Inc. ("HMI" or the "Company"). The address of the Company's principal executive office is 25 York Street, Suite 800, Toronto, Ontario. The unaudited condensed consolidated interim financial statements ("interim financial statements") of the Company for the three and nine months ended September 30, 2022 and 2021 represent the financial position and the financial performance of the Company and its subsidiaries (together referred to as "Hudbay").

Wholly owned subsidiaries as at September 30, 2022 and 2021 include HudBay Marketing & Sales Inc. ("HMS"), HudBay Peru Inc., HudBay Peru S.A.C. ("Hudbay Peru"), HudBay (BVI) Inc., Hudbay Arizona Inc, Rosemont Copper Company ("Rosemont") and Mason Resources (US) Inc. ("Mason").

Hudbay is an integrated mining company primarily producing copper concentrate (containing copper, gold and silver), silver/gold doré, molybdenum concentrate, zinc concentrate and zinc metal. With assets in North and South America, Hudbay is focused on the discovery, production and marketing of base and precious metals. Directly and through its subsidiaries, Hudbay owns three polymetallic mines, four ore concentrators and a zinc production facility in northern Manitoba and Saskatchewan (Canada) and Cusco (Peru) and copper projects in Arizona and Nevada (United States). Hudbay also has equity investments in a number of junior exploration companies. The Company is governed by the Canada Business Corporations Act and its shares are listed under the symbol "HBM" on the Toronto Stock Exchange, New York Stock Exchange and Bolsa de Valores de Lima.

2. Basis of preparation

(a) Statement of compliance:

These interim financial statements have been prepared in accordance with IAS 34, Interim Financial Reporting as issued by the International Accounting Standards Board ("IASB") and do not include all of the information required for full annual financial statements by International Financial Reporting Standards ("IFRS").

These interim financial statements should be read in conjunction with the Company's audited consolidated financial statements for the year ended December 31, 2021 which includes information necessary or useful to understanding the Company's business and financial statement presentation. In particular, the Company's significant accounting policies are presented as note 3 in the Company's audited consolidated financial statements for the year ended December 31, 2021 and have been consistently applied in the preparation of these interim financial statements.

The Board of Directors approved these interim financial statements on November 2, 2022.

**HUDBAY MINERALS INC.**Notes to Unaudited Condensed Consolidated Interim Financial Statements<br>(in thousands of US dollars, except where otherwise noted)<br>For the three and nine months ended September 30, 2022 and 2021

(b) Use of judgements and estimates:

The preparation of the interim financial statements in conformity with IFRS requires Hudbay to make judgements, estimates and assumptions, in applying accounting policies that affect reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the interim financial statements, as well as reported amounts of revenue and expenses during the reporting period. Actual results may differ from these judgements, estimates and assumptions. The interim financial statements reflect the judgements and estimates outlined by Hudbay in its audited consolidated financial statements for the year ended December 31, 2021, except as noted below.

As a result of the recently released preliminary economic assessment ("PEA") of the Copper World Complex in Arizona, which includes the recently discovered Copper World deposits and the Rosemont deposit, management has assessed which property, plant and equipment assets associated with the previous, stand-alone development plan for the Rosemont deposit, may not be recoverable in the revised two-phase mine plan. In conducting this assessment, significant judgement was required to determine the extent and nature of usefulness of various fixed assets and previously capitalized development costs under the revised mine plan.

(c) Estimation uncertainty:

The Company has assessed the economic impacts of the novel coronavirus pandemic and Russia's invasion of Ukraine on its interim financial statements. As at September 30, 2022, management has determined that the Company's ability to execute its medium and longer term plans and the economic viability of its assets (including the carrying value of its long-lived assets and inventory valuations) are not materially  impacted.

In making this judgement, the Company has assessed various criteria including, but not limited to, existing laws, regulations, orders, disruptions and potential disruptions in our supply chain, disruptions in the markets for our products, commodity prices and foreign exchange prices and the actions that the Company has taken at its operations to protect the health and safety of its workforce and local community.

3. Reclassification of comparative amounts

Certain prior period amounts have been reclassified for consistency with the current period presentation. The Gold prepayment liability (note 13) has been reclassified to its own financial statement line item within the condensed consolidated interim balance sheet due to the size of the balance. The balance was previously included in other financial liabilities. Environmental obligation adjustment (note 17) has been reclassified to its own financial statement line item within the condensed consolidated interim income statements due to the significant increases in these balances. This balance was previously included in other expenses. Evaluation expense has been reclassified and presented within other expenses on the condensed consolidated interim income statement. This balance was previously included within exploration and evaluation expenses as well as other expenses (note 5c). Environmental obligation adjustment was previously included within Other in the operating activities section of the condensed consolidated interim statements of cash flows and has now been reclassified to its own line within operating activities. Community agreement payments were previously included within acquisition of property, plant and equipment in the investing activities section of the condensed consolidated interim statements of cash flows and has now been reclassified to its own line within investing activities. These reclassifications had no effect on the previous reported net loss, cash generated from operating activities and net equity.

**HUDBAY MINERALS INC.**Notes to Unaudited Condensed Consolidated Interim Financial Statements<br>(in thousands of US dollars, except where otherwise noted)<br>For the three and nine months ended September 30, 2022 and 2021

4. New standards

New standards and interpretations not yet adopted

Amendment to IAS 1 - Presentation of Financial Statements

The amendments to IAS 1 promote consistency in applying the requirements by helping companies determine whether, in the statement of financial position, debt and other liabilities with an uncertain settlement date should be classified as current or non-current (based on a substantive right to defer settlement). This amendment is in effect January 1, 2024 with early adoption permitted.  The Company has not yet determined the effect of adoption of this amendment on its consolidated financial statements.

5. Revenue and expenses

(a) Revenue

Hudbay's revenue by significant product types:

Three months ended<br>September 30, Nine months ended <br>September 30,
2022 2021 2022 2021
Copper $ 194,788 $ 201,564 $ 634,529 $ 625,503
Zinc 44,092 67,673 199,259 227,150
Gold 99,889 61,965 257,759 162,043
Silver 6,588 6,052 22,115 19,676
Molybdenum 18,748 12,780 36,941 26,925
Other 243 1,933 4,660 6,096
Revenue from contracts 364,348 351,967 1,155,263 1,067,393
Non-cash streaming arrangement items ^1^
Amortization of deferred revenue - gold 8,416 13,589 31,578 27,686
Amortization of deferred revenue - silver 9,209 9,949 30,212 26,567
Amortization of deferred revenue - variable<br>consideration adjustments - prior periods (2,286 ) - 959 1,617
15,339 23,538 62,749 55,870
Pricing and volume adjustments ^2^ (11,664 ) (2,013 ) (28,800 ) (4,725 )
368,023 373,492 1,189,212 1,118,538
Treatment and refining charges (21,852 ) (14,531 ) (48,968 ) (41,710 )
$ 346,171 $ 358,961 $ 1,140,244 $ 1,076,828
^1^See note 16.
^2^Pricing and volume adjustments represent mark-to-market adjustments on initial estimate of provisionally priced sales, realized and unrealized changes to fair value for non-hedge derivative contracts and adjustments to originally invoiced weights and assays.
**HUDBAY MINERALS INC.**Notes to Unaudited Condensed Consolidated Interim Financial Statements<br>(in thousands of US dollars, except where otherwise noted)<br>For the three and nine months ended September 30, 2022 and 2021
---

Consideration from the Company's stream agreements is considered variable (note 16). Gold and silver stream revenue can be subject to cumulative adjustments when the amount of precious metals to be delivered under the contract changes. As a result of changes in the Company's mineral reserve and resource estimate in the first quarter of 2022, the amortization rate by which deferred revenue is drawn down into income was adjusted and, as required, a variable consideration adjustment was made for all prior year stream revenues since the stream agreement inception date. A variable consideration adjustment was also recorded on September 30, 2022 in Manitoba following a revised forecast for 777 in the third quarter of 2022, which indicated that substantially all of 777's precious metals reserves and inventory levels have been depleted. These variable consideration adjustments resulted in an increase of revenue of $959 for the nine months ended September 30, 2022 (September 30, 2021 - increase of revenue of $1,617).

(b) Depreciation and amortization

Depreciation of PP&E and amortization of intangible assets are reflected in the condensed consolidated interim income statements as follows:

Three months ended<br>September 30, Nine months ended <br>September 30,
2022 2021 2022 2021
Cost of sales $ 89,811 $ 86,010 $ 258,207 $ 267,997
Selling and administrative expenses 335 441 1,120 1,403
$ 90,146 $ 86,451 $ 259,327 $ 269,400

(c) Other expenses

Three months ended<br>September 30, Nine months ended <br>September 30,
2022 2021 2022 2021
Regional costs $ 936 $ 879 $ 3,013 $ 2,639
(Gain) loss on disposal of PP&E and non-current assets (6,046 ) 5,082 (6,777 ) 4,785
Amortization of community costs (other assets) 836 158 2,093 1,019
Restructuring - Manitoba 5,050 3,639 9,460 3,639
Care & maintenance - Manitoba 4,336 - 4,492 -
Evaluation costs 123 4,994 7,875 5,572
Insurance recovery - - (5,698 ) -
Other 1,061 1,086 (417 ) 1,161
$ 6,296 $ 15,838 $ 14,041 $ 18,815

During the nine months ended September 30, 2022, there were costs incurred related to the restructuring of the Manitoba operations in preparation for the closure of 777 mine, zinc plant and Flin Flon mill of $9,460. These costs were related to activities performed in advance of these closures along with ongoing restructuring, closure and severance costs.

During the nine months ended September 30, 2022, gains on the disposition of property, plant and equipment and other non-current assets includes the disposition of Mason's Lordsburg property, along with dispositions of non-current assets as a result of the closure of our Flin Flon operations.

**HUDBAY MINERALS INC.**Notes to Unaudited Condensed Consolidated Interim Financial Statements<br>(in thousands of US dollars, except where otherwise noted)<br>For the three and nine months ended September 30, 2022 and 2021

In June 2022, a gain was recorded to reflect the insurance recovery claim proceeds following a shaft incident at 777 in October 2020. As of September 30, 2022, all of the proceeds have been received.

The Flin Flon concentrator and tailings impoundment has been shifted to care and maintenance to provide optionality should another mineral discovery occur in the Flin Flon area. During the three and nine months ended September 30, 2022, care & maintenance costs were $4,336 and $4,492 respectively.

Evaluation expenses incurred during the first half of 2022 primarily relate to PEA study costs of Arizona's Copper World Complex.

(d) Net finance expense ****

Three months ended<br>September 30, Nine months ended <br>September 30,
2022 2021 2022 2021
Net interest expense on long-term debt
Interest expense on long-term debt $ 16,921 $ 19,300 $ 50,730 $ 57,837
Accretion on streaming arrangements (note 16)
Additions 6,980 8,295 21,700 33,765
Variable consideration adjustments - prior periods 1,587 - (940 ) 594
8,567 8,295 20,760 34,359
Change in fair value of financial assets and liabilities at fair value through profit or loss
Embedded derivatives (note 15) - - - 49,754
Gold prepayment liability (note 13) (6,684 ) 308 (4,619 ) (6,285 )
Investments (2 ) (146 ) (1,269 ) 4,266
(6,686 ) 162 (5,888 ) 47,735
Other net finance costs
Net foreign exchange (gain) loss (4,849 ) (3,053 ) (5,570 ) 352
Accretion on community agreements measured at amortized cost 1,188 487 2,360 2,182
Accretion on environmental provisions  (note 17) 2,434 1,096 6,323 3,123
Accretion on Wheaton refund liability 492 - 739 -
Withholding taxes 1,544 1,914 4,564 5,881
Premium paid on redemption of notes - - - 22,878
Write-down of unamortized transaction costs - - - 2,480
Loss (gain) on disposal of investments - - 3,132 (515 )
Other finance expense 1,817 2,133 5,839 6,699
Interest income (833 ) (124 ) (1,223 ) (639 )
1,793 2,453 16,164 42,441
Net finance expense $ 20,595 $ 30,210 $ 81,766 $ 182,372

Other finance expense relates primarily to fees on Hudbay's revolving credit facilities and leases.

**HUDBAY MINERALS INC.**Notes to Unaudited Condensed Consolidated Interim Financial Statements<br>(in thousands of US dollars, except where otherwise noted)<br>For the three and nine months ended September 30, 2022 and 2021

(e) Impairment - Arizona

As a result of the released PEA of the Copper World Complex during the second quarter of 2022, which contemplates the mining of the recently discovered Copper World deposits and the Rosemont deposit in a two-phase mine plan, it was determined that certain capitalized costs and assets associated with the previous stand-alone development plan for the Rosemont deposit are no longer recoverable. As a result, during the second quarter of 2022, the Company recognized a pre-tax impairment loss of $94,956 related to these assets. The impairment loss was determined based on the specific identification of assets that are not expected to be recoverable under the Copper World Complex PEA. The Company presented the impairment losses within the Arizona segment in note 24. The fair value measurements used in the determination of impairment charges are categorized as level 2 based on the degree to which inputs are observable and have a significant effect on the recorded fair value.

(f) Impairment - Environmental Obligation

During the third quarter of 2021, an impairment indicator was identified in relation to a revised Flin Flon closure plan. The revised closure plan, reflecting higher cost estimates, led to a large increase in the environmental obligation and a corresponding increase to Flin Flon PP&E. The increase in Flin Flon PP&E prompted an impairment test of these assets since the Flin Flon operation was expected to close mid-2022. Hudbay recorded an impairment to PP&E by comparing the carrying value of the Flin Flon operation to its recoverable amount using the value-in-use method for future cash flows associated with the operation until closure. The value-in-use recoverable amount is considered a level 3 valuation method. This resulted in an impairment loss of $147,305.

6. Trade and other receivables

Sep. 30, 2022 Dec. 31, 2021
Current
Trade receivables $ 14,463 $ 166,524
Statutory receivables 24,136 31,191
Other receivables 21,630 6,366
60,229 204,081
Non-current
Taxes receivable 15,573 16,084
$ 75,802 $ 220,165

The decrease in trade receivables during the nine months ended September 30, 2022 primarily relates to a decrease in provisionally priced receivables, as well as the receipt of payment for three shipments in early 2022 which were sold in 2021, representing 30,000 tonnes of copper concentrate.

The increase in other receivables during the nine months ended September 30, 2022 is primarily the result of realized gains in fixed for floating swaps following a decline in copper prices.

**HUDBAY MINERALS INC.**Notes to Unaudited Condensed Consolidated Interim Financial Statements<br>(in thousands of US dollars, except where otherwise noted)<br>For the three and nine months ended September 30, 2022 and 2021

7. Inventories

Sep. 30, 2022 Dec. 31, 2021
Current
Stockpile $ 22,827 $ 12,768
Work in progress 9,140 5,647
Finished goods 43,718 78,958
Materials and supplies 58,374 61,080
134,059 158,453
Non-current
Stockpile 34,928 34,156
Materials and supplies 6,148 3,417
41,076 37,573
$ 175,135 $ 196,026

The cost of inventories recognized as an expense, including depreciation, and included in cost of sales amounted to $283,960 and $833,408 for the three and nine months ended September 30, 2022 (three and nine months ended September 30, 2021 - $267,886 and $800,727).

During the three and nine months ended September 30, 2022, Hudbay recognized a recovery of nil and $557 in cost of sales related to adjustments of the carrying value of Peru inventories to net realizable value (three and nine months ended September 30, 2021 - recovery of nil and recovery of $1,446). Adjustments of the carrying value of inventories to net realizable value were related to changes in commodity prices.

During the three and nine months ended September 30, 2022, Hudbay recognized an expense of $2,074 and $4,103 in cost of sales related to adjustments to the carrying value of Manitoba materials and supplies inventories to net realizable value (three and nine months ended September 30, 2021 - expense of $5,445).

8. Other financial assets

Sep. 30, 2022 Dec. 31, 2021
Current
Derivative assets $ 16,968 $ 7,430
Restricted cash 386 437
17,354 7,867
Non-current
Investments at fair value through profit or loss 10,638 11,158
$ 27,992 $ 19,025

The increase in derivative assets is the result of unrealized gains in fixed for floating swaps following a decline in copper prices. See note 21b.

**HUDBAY MINERALS INC.**Notes to Unaudited Condensed Consolidated Interim Financial Statements<br>(in thousands of US dollars, except where otherwise noted)<br>For the three and nine months ended September 30, 2022 and 2021

9. Intangibles and other assets

Intangibles and other assets of $51,867 (December 31, 2021 - $20,138) includes $46,573 of other assets (December 31, 2021 - $14,240) and $5,294 of intangibles (December 31, 2021 - $5,898).

Other assets represent the carrying value of certain future community costs that relate to agreements with communities near the Peru operations which allow Hudbay to extract or explore minerals over the useful life of Peru operations. The liability remaining for these costs is recorded in agreements with communities recorded at amortized cost (note 12). Amortization of the carrying amount is recorded in the condensed consolidated interim income statements within other expenses (note 5c) or exploration expenses, depending on the nature of the agreement. Intangibles mainly represent computer software costs.

The increase in agreements with communities recorded at amortized cost during the nine months ended September 30, 2022 primarily relates to the execution of the Uchucarcco community agreement which provides surface rights to the Maria Reyna and Caballito satellite properties located near the Constancia operation, partially offset by amortization of the carrying amount.

**HUDBAY MINERALS INC.**Notes to Unaudited Condensed Consolidated Interim Financial Statements<br>(in thousands of US dollars, except where otherwise noted)<br>For the three and nine months ended September 30, 2022 and 2021

10. Property, plant and equipment

Sep. 30, 2022 Explorationandevaluationassets Capitalworks inprogress Miningproperties Plant andequipment Plant andequipment- ROUassets^1^ Total
Balance, Jan. 1, 2022 88,207 $ 858,230 $ 2,434,000 $ 2,983,919 $ 259,726 $ 6,624,082
Additions 8,161 122,979 820 24,327 26,061 182,348
Capitalized stripping and development - - 74,093 - - 74,093
Decommissioning and restoration - - (14,663 ) (27,511 ) - (42,174 )
Derecognition of assets - cost - - (986,802 ) (384,333 ) (2,950 ) (1,374,085 )
Capitalized accretion and depreciation - 1,327 - (135 ) (20 ) 1,172
Transfers and other movements (28,304 ) (87,670 ) 776 115,789 (591 ) -
Disposals - - - (1,162 ) (10,127 ) (11,289 )
Impairment (Note 5e) - (94,956 ) - - - (94,956 )
Effects of movements in exchange rates (1,175 ) (5,162 ) (18,267 ) (57,658 ) (6,852 ) (89,114 )
Balance, Sep. 30, 2022 66,889 794,748 1,489,957 2,653,236 265,247 5,270,077
Accumulated depreciation
Balance, Jan. 1, 2022 - - 1,284,369 1,445,122 153,625 2,883,116
Depreciation for the period - - 111,078 126,233 19,170 256,481
Derecognition of assets - accumulated depreciation - - (986,802 ) (384,333 ) (2,950 ) (1,374,085 )
Disposals - - - (806 ) (1,902 ) (2,708 )
Effects of movement in exchange rates - - 1,555 (31,725 ) (3,913 ) (34,083 )
Balance, Sep. 30, 2022 - - 410,200 1,154,491 164,030 1,728,721
Net book value 66,889 $ 794,748 $ 1,079,757 $ 1,498,745 $ 101,217 $ 3,541,356
1 Includes 5,034 of capital works in progress - ROU assets (costs) that relate to the Arizona business unit (December 31, 2021 - 5,112, related to the Arizona and Manitoba business unit).

All values are in US Dollars.

**HUDBAY MINERALS INC.**Notes to Unaudited Condensed Consolidated Interim Financial Statements<br>(in thousands of US dollars, except where otherwise noted)<br>For the three and nine months ended September 30, 2022 and 2021
Dec. 31, 2021 Exploration<br>and<br>evaluation<br>assets Capital<br>works in<br>progress Mining<br>properties Plant and<br>equipment Plant and<br>equipment-<br>ROU<br>assets^1^ Total
--- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- ---
Balance, Jan. 1, 2021 $ 79,059 $ 957,162 $ 2,217,461 $ 2,793,719 $ 214,303 $ 6,261,704
Additions 9,084 268,090 1,731 17,735 49,695 346,335
Capitalized stripping and development - - 79,426 - - 79,426
Decommissioning and restoration - (525 ) 4,630 139,911 - 144,016
Transfers and other movements - (357,381 ) 128,320 229,981 (920 ) -
Impairment - - (1,054 ) (192,419 ) - (193,473 )
Disposals - (5,941 ) - (10,803 ) (3,544 ) (20,288 )
Effects of movements in exchange rates 64 (3,175 ) 3,486 5,795 192 6,362
Balance, Dec. 31, 2021 88,207 858,230 2,434,000 2,983,919 259,726 6,624,082
Accumulated depreciation
Balance, Jan. 1, 2021 - - 1,126,274 1,271,581 132,194 2,530,049
Depreciation for the year - - 155,878 181,565 24,536 361,979
Disposals - - - (8,525 ) (3,158 ) (11,683 )
Effects of movement in exchange rates - - 2,217 501 53 2,771
Balance, Dec. 31, 2021 - - 1,284,369 1,445,122 153,625 2,883,116
Net book value $ 88,207 $ 858,230 $ 1,149,631 $ 1,538,797 $ 106,101 $ 3,740,966

At September 30, 2022, capital works in progress decreased compared to December 31, 2021 as a result of a pre-tax impairment charge of $94,956 related to certain capitalized costs and assets associated with the previous stand-alone development plan for the Rosemont deposit that are no longer recoverable (see note 5e).

The closure of the Flin Flon operations in the second quarter of 2022 has led to the derecognition of fully depreciated assets. This resulted in a decrease in both the cost and accumulated depreciation of the Mining Properties and Plant and Equipment categories.

**HUDBAY MINERALS INC.**Notes to Unaudited Condensed Consolidated Interim Financial Statements<br>(in thousands of US dollars, except where otherwise noted)<br>For the three and nine months ended September 30, 2022 and 2021

11. Other liabilities

Sep. 30, 2022 Dec. 31, 2021
Unearned revenue $ 3,069 $ 7,983
Environmental and other provisions (note 17) 19,941 41,017
Pension liability 7,272 10,472
Other employee benefits 3,401 3,530
$ 33,683 $ 63,002
**HUDBAY MINERALS INC.**Notes to Unaudited Condensed Consolidated Interim Financial Statements<br>(in thousands of US dollars, except where otherwise noted)<br>For the three and nine months ended September 30, 2022 and 2021
---

12. Other financial liabilities

Sep. 30, 2022 Dec. 31, 2021
Current
Derivative liabilities $ 6,041 $ 12,451
Deferred Rosemont acquisition consideration 9,572 9,713
Agreements with communities recorded at amortized cost 4,623 7,144
20,236 29,308
Non-current
Deferred Rosemont acquisition consideration 9,030 17,805
Agreements with communities recorded at amortized cost 36,995 29,129
Wheaton refund liability (note 16) 6,163 5,424
52,188 52,358
$ 72,424 $ 81,666

Agreements with communities recorded at amortized cost relate to agreements with communities near the Constancia operation which allow Hudbay to extract minerals over the useful life of the Constancia operation, carry out exploration and evaluation activities in the area and provide Hudbay with community support to operate in the region. The changes in agreements with communities recorded at amortized cost during the nine months ended September 30, 2022 primarily relates to the execution of the Uchucarcco community agreement which provides surface rights to the Maria Reyna and Caballito satellite properties located near the Constancia operation, partially offset by disbursements, which was primarily all paid during the period. The increase in the balance of agreements with communities was related to changes in estimates and the accretion of the liability.

The following table summarizes changes in agreements with communities recorded at amortized cost:

Balance, January 1, 2021 $ 40,787
Net additions 22,796
Disbursements (26,511 )
Accretion 2,811
Effects of changes in foreign exchange (3,610 )
Balance, December 31, 2021 $ 36,273
Net additions 36,735
Disbursements (33,631 )
Accretion 2,360
Effects of changes in foreign exchange (119 )
Balance, September 30, 2022 $ 41,618
**HUDBAY MINERALS INC.**Notes to Unaudited Condensed Consolidated Interim Financial Statements<br>(in thousands of US dollars, except where otherwise noted)<br>For the three and nine months ended September 30, 2022 and 2021
---

13. Gold prepayment liability

Gold prepayment liabilities are reflected in the condensed consolidated interim balance sheets as follows:

Sep. 30, 2022 Dec. 31, 2021
Current $ 64,339 $ 71,394
Non-current 15,927 68,614
$ 80,266 $ 140,008

The following table summarizes changes in the gold prepayment liability:

Balance, January 1, 2021 $ 137,031
Change in fair value recorded in profit or loss 293
Change in fair value recorded in other comprehensive income 2,684
Balance, December 31, 2021 $ 140,008
Change in fair value recorded in profit or loss (note 5d) (4,619 )
Change in fair value recorded in other comprehensive income (788 )
Repayments (54,335 )
Balance, September 30, 2022 $ 80,266

14. Lease liability

Balance, January 1, 2021 63,514
Additional capitalized leases 49,695
Lease payments (37,719 )
Accretion and other movements 1 2,512
Balance, December 31, 2021 78,002
Additional capitalized leases 26,061
Lease payments (29,225 )
Derecognized leases (7,999 )
Accretion and other movements (1,052 )
Balance, September 30, 2022 65,787
1 Includes 1,844 of sale lease back additions to ROU leases.

All values are in US Dollars.

Lease liabilities are reflected in the condensed consolidated interim balance sheets as follows:

Sep. 30, 2022 Dec. 31, 2021
Current $ 20,665 $ 33,529
Non-current 45,122 44,473
$ 65,787 $ 78,002
**HUDBAY MINERALS INC.**Notes to Unaudited Condensed Consolidated Interim Financial Statements<br>(in thousands of US dollars, except where otherwise noted)<br>For the three and nine months ended September 30, 2022 and 2021
---

Hudbay has entered into leases which expire between 2022 and 2043. The interest rates on leases which were capitalized have interest rates between 2.50% and 7.43%, per annum. The range of interest rates utilized for discounting varies depending mostly on the Hudbay entity acting as lessee and duration of the lease. For certain leases, Hudbay has the option to purchase the equipment and vehicles leased at the end of the terms of the leases. Hudbay's obligations under these leases are secured by the lessor's title to the leased assets. The present value of applicable lease payments has been recognized as an ROU asset, which was included as a non-cash addition to property, plant and equipment, and a corresponding amount as a lease liability.

There are no restrictions placed on Hudbay by entering into these leases.

The following outlines expenses recognized within the Company's condensed consolidated interim income statements, relating to leases for which a recognition exemption was applied.

Three months ended <br>September 30, Nine months ended <br>September 30,
2022 2021 2022 2021
Short-term leases $ 1,609 $ 10,872 $ 22,890 $ 27,109
Low value leases 189 74 637 228
Variable leases 24,680 14,504 42,736 29,735
Total $ 26,478 $ 25,450 $ 66,263 $ 57,072

Payments made for short-term, low value and variable leases would mostly be captured as expenses in the condensed consolidated interim income statements, however, certain amounts may be capitalized to PP&E for the Arizona segment during its development phase and certain amounts may be reported in inventories given the timing of sales. Variable payment leases include equipment used for heavy civil works at Constancia.

15. Long-term debt

Long-term debt is comprised of the following:

Sep. 30, 2022 Dec. 31, 2021
Senior unsecured notes (a) $ 1,187,538 $ 1,185,805
Less: Unamortized transaction costs - revolving credit facilities (b) (4,301 ) (5,531 )
$ 1,183,237 $ 1,180,274
**HUDBAY MINERALS INC.**Notes to Unaudited Condensed Consolidated Interim Financial Statements<br>(in thousands of US dollars, except where otherwise noted)<br>For the three and nine months ended September 30, 2022 and 2021
---

(a) Senior unsecured notes

Balance, January 1, 2021 1,139,695
Addition to Principal, net of 8,078 transaction costs 591,922
Principal repayments (600,000 )
Write-down of fair value of embedded derivative (prepayment option) 49,754
Write-down of unamortized transaction costs 2,480
Accretion of transaction costs and premiums 1,954
Balance, December 31, 2021 1,185,805
Accretion of transaction costs and premiums 1,733
Balance, September 30, 2022 1,187,538

All values are in US Dollars.

As at September 30, 2022, $1,200,000 aggregate principal amount of senior notes were outstanding in two series: (i) a series of 4.50% senior notes due 2026 in an aggregate principal amount of $600,000 and (ii) a series of 6.125% senior notes due 2029 in an aggregate principal amount of $600,000.

(b) Unamortized transaction costs - revolving credit facilities

Balance, January 1, 2021 $ 4,020
Accretion of transaction costs (2,816 )
Transaction costs 4,327
Balance, December 31, 2021 $ 5,531
Accretion of transaction costs (1,389 )
Transaction costs 159
Balance, September 30, 2022 ^1^ $ 4,301
^1^ Balance, representing deferred transaction costs, is in an asset position.

As at September 30, 2022, the Peru segment had nil in letters of credit issued under the Peru revolving credit facility to support its reclamation obligations and the Manitoba segment had $81,271 in letters of credit issued under the Canada revolving credit facility to support its reclamation and pension obligations. As at September 30, 2022, there were no cash advances under the credit facilities.

Surety bonds

The Arizona segment had $12,827 in surety bonds issued to support future reclamation and closure obligations. No cash collateral is required to be posted under these surety bonds.

Other letters of credit

The Peru segment had $107,378 in letters of credit issued with various Peruvian financial institutions to support future reclamation and other operating matters. No cash collateral is required to be posted under these letters of credit.

On August 22, 2022, Hudbay closed a C$130.0 million bilateral letter of credit facility ("LC Facility") with a major Canadian financial institution. As at September 30, 2022, there have been no letters of credit drawn under this LC Facility.

**HUDBAY MINERALS INC.**Notes to Unaudited Condensed Consolidated Interim Financial Statements<br>(in thousands of US dollars, except where otherwise noted)<br>For the three and nine months ended September 30, 2022 and 2021

16. Deferred revenue

777 Stream Agreement

For the three and nine months ended September 30, 2022, the drawdown rates for the 777 stream agreement for gold and silver were C$1,584 and C$31.28 per ounce, respectively (year ended December 31, 2021 - C$1,578 and C$30.38 per ounce, respectively).

As part of the streaming agreement for the 777 mine, Hudbay must repay, with precious metals credits, the stream deposit by August 1, 2052, the expiry date of the agreement. If the stream deposit is not fully repaid with precious metals credits from 777 production by the expiry date, a payment for the remaining amount will be due at the expiry date of the agreement. As the 777 mine has concluded all mining activities following the depletion of reserves and finalized the sales of produced concentrate, Hudbay concluded that a portion of the stream deposit will not be repaid by means of precious metals credits from 777 production. The repayment amount is recorded as a refund liability (note 12), which is and will be discounted at the 9.0% rate inherent in the original 777 stream agreement and accreted over the remaining term of the agreement.

Peru Stream Agreement

For the three and nine months ended September 30, 2022, the drawdown rates for the Peru stream agreement for gold and silver were $734 and $14.95 per ounce, respectively (year ended December 31, 2021 - $791 and $17.47 per ounce, respectively).

The following table summarizes changes in deferred revenue:

Balance, January 1, 2021 $ 546,684
Amortization of deferred revenue
Liability drawdown (71,519 )
Variable consideration adjustments - prior periods (1,617 )
Accretion on streaming arrangements
Current year additions 42,060
Variable consideration adjustments - prior periods 594
Reclass of refund liability (note 12) (5,424 )
Stream deposit 4,000
Effects of changes in foreign exchange 548
Balance, December 31, 2021 $ 515,326
Amortization of deferred revenue (note 5a)
Liability drawdown (61,790 )
Variable consideration adjustments - prior periods (959 )
Accretion on streaming arrangements (note 5d)
Current year-to-date additions 21,700
Variable consideration adjustments - prior periods (940 )
Effects of changes in foreign exchange (376 )
Balance, September 30, 2022 $ 472,961
**HUDBAY MINERALS INC.**Notes to Unaudited Condensed Consolidated Interim Financial Statements<br>(in thousands of US dollars, except where otherwise noted)<br>For the three and nine months ended September 30, 2022 and 2021
---

Consideration from the Company's stream agreement is considered variable. Gold and silver stream revenue can be subject to cumulative adjustments when the number of ounces to be delivered under the contract changes. As a result of changes in the Company's mineral reserve and resource estimate in the first quarter of 2022 the amortization rate by which deferred revenue is drawn down into income was adjusted and, as required, a current period catch up adjustment was made for all prior period stream revenues since the stream agreement inception date. A variable consideration adjustment was also recorded on September 30, 2022 in Manitoba following a revised forecast for 777 in the third quarter of 2022, which indicated that substantially all of 777's precious metals reserves and inventory levels have been depleted. These variable consideration adjustments resulted in an increase in revenue of $959 and a decrease of finance expense of $940 for the nine months ended September 30, 2022 (December 31, 2021 - increase in revenue of $1,617 and an increase of finance expense of $594).

Deferred revenue is reflected in the condensed consolidated interim balance sheets as follows:

Sep. 30, 2022 Dec. 31, 2021
Current $ 67,725 $ 88,963
Non-current 405,236 426,363
$ 472,961 $ 515,326

17. Environmental and other provisions

Reflected in the condensed consolidated interim balance sheets as follows:

Sep. 30, 2022 Decommissioning,restoration andsimilar liabilities Deferredshare units Restrictedshare units Performanceshare units Other Total
Current (note 11) $ 5,929 $ 5,231 $ 3,655 $ 2,892 $ 2,234 $ 19,941
Non-current 250,275 - 1,361 930 4,035 256,601
$ 256,204 $ 5,231 $ 5,016 $ 3,822 $ 6,269 $ 276,542
Dec. 31, 2021 Decommissioning,<br>restoration and<br>similar liabilities Deferred<br>share units Restricted<br>share units Performance<br>share units Other Total
Current (note 11) $ 16,759 $ 8,107 $ 5,061 $ 4,622 $ 6,468 $ 41,017
Non-current 451,041 - 5,828 780 3,852 461,501
$ 467,800 $ 8,107 $ 10,889 $ 5,402 $ 10,320 $ 502,518

The other category mainly consists of restructuring provisions related to the closure of the Flin Flon operations and other miscellaneous obligations primarily in the Arizona segment.

**HUDBAY MINERALS INC.**Notes to Unaudited Condensed Consolidated Interim Financial Statements<br>(in thousands of US dollars, except where otherwise noted)<br>For the three and nine months ended September 30, 2022 and 2021

The following table summarizes changes in decommissioning, restoration and similar liabilities ("DRO"):

Balance, December 31, 2021 $ 467,800
Changes in estimates to the provision (13,742 )
Disbursements (12,649 )
Unwinding of discount (note 5d) 6,323
Effect of change in discount rate (175,880 )
Effect of foreign exchange (15,648 )
Balance, September 30, 2022 $ 256,204

DRO are remeasured at each reporting date to reflect changes in discount rates, exchange rates, and timing and extent of cash outflows which can significantly affect the liabilities. This provision has been recorded based on estimates and assumptions that management believes are reasonable; however, actual decommissioning and restoration costs may differ from expectations.

During the nine months ended September 30, 2022, the Company recorded a non-cash gain of $146,950 in the condensed consolidated income statements mainly related to a revaluation adjustment to the Flin Flon operation's environmental reclamation provision. All quarterly periods in 2022 were substantially impacted by an increase in long term, risk-free discount rates based on changes in Canadian bond yields. Typically, an operating location will reflect any revaluation adjustments to the environmental reclamation provision against its reclamation assets. However, as the Flin Flon operations closed in June 2022, the corresponding Flin Flon assets have been fully depreciated and cannot be reduced below residual value resulting in the remaining impact being recorded as a gain in the condensed consolidated income statements.

As at September 30, 2022, decommissioning, restoration and similar liabilities have been discounted to their present value at rates ranging from 3.10% to 4.33% per annum (June 30, 2022: 2.45% to 3.45%, March 31, 2022: 1.36% to 2.46% and December 31, 2021: 0.39% to 1.94% per annum), using pre-tax, risk-free interest rates that reflect the estimated maturity of each specific liability.

**HUDBAY MINERALS INC.**Notes to Unaudited Condensed Consolidated Interim Financial Statements<br>(in thousands of US dollars, except where otherwise noted)<br>For the three and nine months ended September 30, 2022 and 2021

18. Income and mining taxes

(a) Tax expense:

The tax expense is applicable as follows:

Three months ended<br>September 30, Nine months ended<br>September 30,
2022 2021 2022 2021
Current:
Income taxes (recovery) expense $ (8,541 ) $ 11,182 $ 4,413 $ 14,064
Mining taxes (recovery) expense (688 ) 3,375 7,510 17,048
Adjustments in respect of prior years (696 ) - (696 ) 3
(9,925 ) 14,557 11,227 31,115
Deferred:
Income tax expense (recoveries) - origination, revaluation and/or reversal of temporary differences 16,365 10,864 4,503 (8,835 )
Mining tax expense (recoveries) - origination, revaluation and/or reversal of temporary difference 470 (2,840 ) 5,587 1,984
Adjustments in respect of prior years 962 - 962 7,039
17,797 8,024 11,052 188
$ 7,872 $ 22,581 $ 22,279 $ 31,303

Adjustments in respect of prior years refers to amounts changing due to the filing of tax returns and assessments from government authorities as well as any change identified that would result in a difference to our current or deferred tax balances as reported in the prior fiscal year end.

(b) Changes in deferred tax assets and liabilities:

Nine monthsended <br>Sep. 30, 2022 Year ended<br>Dec. 31, 2021
Net deferred tax liability balance, beginning of year $ (128,180 ) $ (127,534 )
Deferred tax (expense) recovery (11,052 ) 4,793
OCI transactions 1,948 (5,474 )
Foreign currency translation on the deferred tax liability 11,096 35
Net deferred tax liability balance, end of period $ (126,188 ) $ (128,180 )
**HUDBAY MINERALS INC.**Notes to Unaudited Condensed Consolidated Interim Financial Statements<br>(in thousands of US dollars, except where otherwise noted)<br>For the three and nine months ended September 30, 2022 and 2021
---

19. Share capital

(a) Preference shares:

Authorized: Unlimited preference shares without par value.

Issued and fully paid: Nil.

(b) Common shares:

Authorized: Unlimited common shares without par value.

Issued and fully paid:

Nine months ended <br>Sep. 30, 2022 Year ended<br>Dec. 31, 2021
Commonshares Amount Common<br>shares Amount
Balance, beginning of year 261,598,312 $ 1,778,848 261,272,151 $ 1,777,340
Exercise of options 304,839 1,406 326,161 1,508
Balance, end of period 261,903,151 $ 1,780,254 261,598,312 $ 1,778,848

During the nine months ended September 30, 2022, the Company declared two semi-annual dividends of C$0.01 per share. The Company paid $2,075 and $1,972 in dividends on March 25, 2022 and September 23, 2022 to shareholders of record as of March 8, 2022 and September 2, 2022.

During the year ended December 31, 2021, the Company declared two semi-annual dividends of C$0.01 per share each. The Company paid $2,090 and $2,056 in dividends on March 26, 2021 and September 24, 2021 to shareholders of record as of March 9, 2021 and September 3, 2021.

**HUDBAY MINERALS INC.**Notes to Unaudited Condensed Consolidated Interim Financial Statements<br>(in thousands of US dollars, except where otherwise noted)<br>For the three and nine months ended September 30, 2022 and 2021

20. Earnings per share

Three months ended<br>September 30, Nine months ended<br>September 30,
2022 2021 2022 2021
Weighted average common shares outstanding
Basic 261,896,143 261,517,461 261,824,961 261,430,996
Plus net incremental shares from:
Assumed conversion: stock options - - 387,156 -
Diluted weighted average common shares outstanding 261,896,143 261,517,461 262,212,117 261,430,996

For periods where Hudbay records a loss, Hudbay calculates diluted loss per share using the basic weighted average number of shares. If the diluted weighted average number of shares were used, the result would be a reduction in the loss, which would be anti-dilutive. For the three and nine months ended September 30, 2022, Hudbay calculated diluted loss per share using 261,896,143 and 262,212,117 respectively (three and nine months ended September 30, 2021 - 261,517,461 and 261,430,996).

For the three months ended September 30, 2022, the determination of the diluted weighted-average number of common shares excludes the impact of 181,668 weighted-average stock options outstanding that were anti-dilutive as the Company recorded a loss in the financial period (three and nine months ended September 30, 2021 - 568,243 and 643,926 respectively).

**HUDBAY MINERALS INC.**Notes to Unaudited Condensed Consolidated Interim Financial Statements<br>(in thousands of US dollars, except where otherwise noted)<br>For the three and nine months ended September 30, 2022 and 2021

21. Financial instruments

(a) Fair value and carrying value of financial instruments:

The following presents the fair value ("FV") and carrying value ("CV") of Hudbay's financial instruments and non-financial derivatives:

Sep. 30, 2022 Dec. 31, 2021
FV CV FV CV
Financial assets at amortized cost
Cash1 286,117 $ 286,117 $ 270,989 $ 270,989
Restricted cash1 386 386 437 437
Fair value through profit or loss
Trade and other receivables 1, 2, 3 36,093 36,093 172,890 172,890
Non-hedge derivative assets 4 16,968 16,968 7,430 7,430
Investments 5 10,638 10,638 11,158 11,158
Total financial assets 350,202 $ 350,202 $ 462,904 $ 462,904
Financial liabilities at amortized cost
Trade and other payables1, 2 198,078 198,078 189,179 189,179
Deferred Rosemont acquisition consideration 8 18,602 18,602 27,518 27,518
Agreements with communities 6 31,472 41,618 33,947 36,273
Wheaton refund liability10 6,308 6,163 5,424 5,424
Senior unsecured notes 7 982,860 1,187,538 1,239,018 1,185,805
Fair value through profit or loss
Gold prepayment liability 9 80,266 80,266 140,008 140,008
Non-hedge derivative liabilities 4 6,041 6,041 12,451 12,451
Total financial liabilities 1,323,627 $ 1,538,306 $ 1,647,545 $ 1,596,658
1 Cash, restricted cash, trade and other receivables and trade and other payables are recorded at carrying value, which approximates fair value due to their short-term nature and generally negligible credit losses.
2 Excludes tax and other statutory amounts.
3 Trade and other receivables contain receivables including provisionally priced receivables classified as FVTPL and various other items at amortized cost. The fair value of provisionally priced receivables is determined using forward metals prices which is a level 2 valuation method.
4 Derivatives are carried at their fair value, which is determined based on internal valuation models that reflect observable forward market commodity prices, currency exchange rates, and discount factors based on market US dollar interest rates adjusted for credit risk.
5 All investments are carried at their fair value, which is determined using quoted market bid prices in active markets for listed shares.
6 These financial liabilities relate to agreements with communities near the Constancia project in Peru (note 12). Fair values have been determined using a discounted cash flow analysis based on expected cash flows and a credit adjusted discount rate.
7 Fair value of the senior unsecured notes (note 15) has been determined using the quoted market price at period end.
8 Discounted value based on a risk adjusted discount rate.
9 The gold prepayment liability (note 13) is designated as fair value through profit or loss under the fair value option. Gains and losses related to the Company's own credit risk have been recorded at fair value through other comprehensive income. The fair value adjustment recorded in other comprehensive income for the nine months ended September 30, 2022 was a gain of 788 (year ended December 31, 2021 was a loss of 2,684).
10 Discounted value based on a market rate at inception of the applicable Wheaton contract for carrying value (note 16) and current market rate at period end for fair value.

All values are in US Dollars.

**HUDBAY MINERALS INC.**Notes to Unaudited Condensed Consolidated Interim Financial Statements<br>(in thousands of US dollars, except where otherwise noted)<br>For the three and nine months ended September 30, 2022 and 2021

Fair value hierarchy

The table below provides an analysis by valuation method of financial instruments that are measured at fair value subsequent to recognition. Levels 1 to 3 are defined based on the degree to which fair value inputs are observable and have a significant effect on the recorded fair value, as follows:

  • Level 1: Quoted prices in active markets for identical assets or liabilities;

  • Level 2: Valuation techniques use significant observable inputs, either directly or indirectly, or valuations are based on quoted prices for similar instruments; and,

  • Level 3: Valuation techniques use significant inputs that are not based on observable market data.

September 30, 2022 Level 1 Level 2 Level 3 Total
Financial assets measured at fair value
Financial assets at FVTPL:
Non-hedge derivatives $ - $ 16,968 $ - $ 16,968
Investments 10,638 - - 10,638
$ 10,638 $ 16,968 $ - $ 27,606
Financial liabilities measured at fair value
Financial liabilities at FVTPL:
Non-hedge derivatives $ - $ 6,041 $ - $ 6,041
Gold prepayment liability - 80,266 - 80,266
Financial liabilities at amortized cost:
Agreements with communities - - 31,472 31,472
Wheaton refund liability - - 6,308 6,308
Senior unsecured notes 982,860 - - 982,860
$ 982,860 $ 86,307 $ 37,780 $ 1,106,947
December 31, 2021 Level 1 Level 2 Level 3 Total
--- --- --- --- --- --- --- --- ---
Financial assets measured at fair value
Financial assets at FVTPL:
Non-hedge derivatives $ - $ 7,430 $ - $ 7,430
Investments 11,158 - - 11,158
$ 11,158 $ 7,430 $ - $ 18,588
Financial liabilities measured at fair value
Financial liabilities at FVTPL:
Non-hedge derivatives $ - $ 12,451 $ - $ 12,451
Gold prepayment liability - 140,008 - 140,008
Financial liabilities at amortized cost:
Agreements with communities - - 33,947 33,947
Wheaton refund liability - - 5,424 5,424
Senior unsecured notes 1,239,018 - - 1,239,018
$ 1,239,018 $ 152,459 $ 39,371 $ 1,430,848
**HUDBAY MINERALS INC.**Notes to Unaudited Condensed Consolidated Interim Financial Statements<br>(in thousands of US dollars, except where otherwise noted)<br>For the three and nine months ended September 30, 2022 and 2021
---

The Company's policy is to recognize transfers into and transfers out of fair value hierarchy levels as of the date of the event or change in circumstances that caused the transfer. During the three months  ended September 30, 2022 and year ended December 31, 2021, Hudbay did not make any such transfers.

Valuation techniques used for instruments categorized in Levels 2 and 3 are consistent with the year ended December 31, 2021.

(b) Derivatives and hedging:

Copper fixed for floating swaps

Hudbay enters into copper fixed for floating swaps in order to manage the risk associated with provisional pricing terms in copper concentrate sales agreements. As at September 30, 2022, Hudbay had 68.3 million pounds of net copper swaps outstanding at an effective average price of $3.61/lb and settling across October 2022 to February 2023. As at December 31, 2021, Hudbay had 72.8 million pounds of net copper swaps outstanding at an effective average price of $4.34/lb and settling across January to April 2022. The aggregate fair value of the transactions at September 30, 2022 was an asset of $10,927 (December 31, 2021 - a liability position of $5,440).

Transactions involving derivatives are with large multi-national financial institutions that Hudbay believes to be credit worthy.

Non-hedge derivative zinc contracts

Hudbay enters into future dated fixed price sales contracts with zinc customers and, to ensure that the Company continues to receive a floating or unhedged realized zinc price, Hudbay enters into forward zinc purchase contracts that effectively offset the fixed price sales contracts. Hudbay held no forward zinc purchase contracts as at September 30, 2022. As at December 31, 2021, Hudbay held 3.1 million pounds of forward zinc purchase contracts with a price range of $1.44/lb to $1.52/lb. The aggregate fair value of the transactions at September 30, 2022 was nil. The aggregate fair value position at December 31, 2021 was an asset position of $419.

(c) Provisionally priced receivables

Changes in fair value of provisionally priced receivables

Hudbay records changes in fair value of provisionally priced receivables related to provisional pricing in concentrate purchase, concentrate sale and certain other sale contracts. Under the terms of these contracts, prices are subject to final adjustment at the end of a future period after title transfers based on quoted market prices during the quotation period specified in the contract. The period between provisional pricing and final pricing is typically up to three months.

Changes in fair value of provisionally priced receivables are presented in trade and other receivables when they relate to sales contracts and in trade and other payables when they relate to purchase contracts. At each reporting date, provisionally priced metals are marked-to-market based on the forward market price for the quotation period stipulated in the contract, with changes in fair value recognized in revenue for sales contracts and in inventory or cost of sales for purchase concentrate contracts. Cash flows related to changes in fair value of provisionally priced receivables are classified in operating activities.

**HUDBAY MINERALS INC.**Notes to Unaudited Condensed Consolidated Interim Financial Statements<br>(in thousands of US dollars, except where otherwise noted)<br>For the three and nine months ended September 30, 2022 and 2021

As at September 30, 2022 and December 31, 2021, Hudbay's net position consisted of contracts awaiting final pricing which are as indicated below:

Metal in concentrate Sales awaiting final pricing Average YTD price (/unit)
Unit Sep. 30, 2022 Dec. 31, 2021 Sep. 30, 2022
Copper pounds<br>(in thousands) 70,415 75,681 3.45
Gold oz 31,095 27,304 1,665
Silver oz 129,958 125,800 18.98
Zinc Concentrate pounds<br>(in thousands) 11,796 - 1.36

All values are in US Dollars.

The aggregate fair value of provisionally priced receivables within the copper, zinc concentrate and refined zinc sales contracts at September 30, 2022, was a liability position of $17,126 (December 31, 2021 - an asset position of $6,500).

(d) Other financial liabilities

Gold prepayment liability

The gold prepayment liability (note 13) requires settlement by physical delivery of gold ounces or equivalent gold credits. The fair value of the financial liability at September 30, 2022 was a liability of $80,266 (December 31, 2021 - a liability of $140,008).

22. Commitments

Capital commitments

As at September 30, 2022, Hudbay had outstanding capital commitments in Canada of approximately $18,904 of which $18,145 can be terminated, approximately $33,858 in Peru, all of which can be terminated, and approximately $44,579 in Arizona, primarily related to the Copper World Complex, of which approximately $8,334 can be terminated by Hudbay.

23. Supplementary cash flow information

(a) Other cash (used in) / generated from operating activities:

Three months ended<br>September 30, Nine months ended<br>September 30,
2022 2021 2022 2021
Changes in non-current assets $ (4,851 ) $ 5,082 $ (4,402 ) $ 4,785
Amortization of community agreement 1,997 - 3,254 -
Share based compensation paid (267 ) (20 ) (5,387 ) (6,646 )
Insurance recovery (note 5c) 5,698 - - -
Restructuring - Manitoba (3,822 ) 3,639 (3,822 ) 3,639
Other (299 ) (477 ) (661 ) (199 )
$ (1,544 ) $ 8,224 $ (11,018 ) $ 1,579
**HUDBAY MINERALS INC.**Notes to Unaudited Condensed Consolidated Interim Financial Statements<br>(in thousands of US dollars, except where otherwise noted)<br>For the three and nine months ended September 30, 2022 and 2021
---

(b) Change in non-cash working capital:

Three months ended<br>September 30, Nine months ended<br>September 30,
2022 2021 2022 2021
Change in:
Trade and other receivables $ 31,429 $ 37,412 $ 137,575 $ 14,798
Other financial assets/liabilities 34,168 (5,791 ) (16,367 ) (25,210 )
Inventories 28,822 5,335 7,427 (8,927 )
Prepaid expenses 1,925 2,697 2,810 9,004
Trade and other payables (10,111 ) (8,918 ) (10,956 ) (31,685 )
Provisions and other liabilities 4,658 5,554 (1,649 ) 3,042
$ 90,891 $ 36,289 $ 118,840 $ (38,978 )

(c) Non-cash transactions:

During the nine months ended September 30, 2022 and 2021, Hudbay entered into the following non-cash investing and financing activities which are not reflected in the condensed consolidated interim statements of cash flows:

  • Remeasurement of Hudbay's decommissioning and restoration liabilities led to a net decrease in related property, plant and equipment assets of $42,174 (September 30, 2021 - a net decrease of $48,902), mainly related to changes to real discount rates associated with remeasurement of the liabilities.

  • Property, plant and equipment included $26,061 (September 30, 2021 - $32,528) of capital additions related to the recognition of ROU assets. Property, plant and equipment and other assets include $36,735 of capital additions related to agreements with communities (September 30, 2021 - $22,192).

**HUDBAY MINERALS INC.**Notes to Unaudited Condensed Consolidated Interim Financial Statements<br>(in thousands of US dollars, except where otherwise noted)<br>For the three and nine months ended September 30, 2022 and 2021

24. Segmented information

Corporate and other activities include the Company's exploration activities in Chile, Canada and the State of Nevada. These exploration entities are not individually significant, as they do not meet the minimum quantitative thresholds for standalone segment disclosure. Corporate and other activities are not considered a segment and are included as a reconciliation to total consolidated results.

Three months ended September 30, 2022
Manitoba Peru Arizona Corporateand otheractivities Total
Revenue from external customers $ 157,613 $ 188,558 $ - $ - $ 346,171
Cost of sales
Mine operating costs 111,137 112,793 - - 223,930
Depreciation and amortization 33,197 56,614 - - 89,811
Gross profit 13,279 19,151 - - 32,430
Selling and administrative expenses - - - 10,448 10,448
Exploration expenses 643 3,536 (2,596 ) 188 1,771
Other expense (income) 5,489 1,861 (2,448 ) 1,394 6,296
Re-evaluation adjustment - environmental obligation (6,417 ) - - - (6,417 )
Results from operating activities $ 13,564 $ 13,754 $ 5,044 $ (12,030 ) $ 20,332
Net interest expense on long term debt 16,921
Accretion on streaming arrangements 8,567
Change in fair value of financial instruments (6,686 )
Other net finance costs 1,793
Loss before tax (263 )
Tax expense 7,872
Loss for the period $ (8,135 )
**HUDBAY MINERALS INC.**Notes to Unaudited Condensed Consolidated Interim Financial Statements<br>(in thousands of US dollars, except where otherwise noted)<br>For the three and nine months ended September 30, 2022 and 2021
---
Three months ended September 30, 2021
--- --- --- --- --- --- --- --- --- --- --- --- --- --- ---
Manitoba Peru Arizona Corporate<br>and other<br>activities Total
Revenue from external customers $ 166,523 $ 192,438 $ - $ - $ 358,961
Cost of sales
Mine operating costs 122,227 88,837 - - 211,064
Depreciation and amortization 38,825 47,185 - - 86,010
Impairment - environmental obligation 147,305 - - - 147,305
Gross (loss) profit (141,834 ) 56,416 - - (85,418 )
Selling and administrative expenses - - - 9,298 9,298
Exploration expenses 1,075 1,438 4,375 44 6,932
Other expenses 8,900 1,302 5,158 478 15,838
Re-evaluation adjustment - environmental obligation 134 - - - 134
Results from operating activities $ (151,943 ) $ 53,676 $ (9,533 ) $ (9,820 ) $ (117,620 )
Net interest expense on long term debt 19,300
Accretion on streaming arrangements 8,295
Change in fair value of financial instruments 162
Other net finance costs 2,453
Loss before tax (147,830 )
Tax expense 22,581
Loss for the period $ (170,411 )
**HUDBAY MINERALS INC.**Notes to Unaudited Condensed Consolidated Interim Financial Statements<br>(in thousands of US dollars, except where otherwise noted)<br>For the three and nine months ended September 30, 2022 and 2021
---
Nine months ended September 30, 2022
--- --- --- --- --- --- --- --- --- --- --- --- --- --- ---
Manitoba Peru Arizona Corporate<br>and other<br>ctivities Total
Revenue from external customers $ 549,908 $ 590,336 $ - $ - $ 1,140,244
Cost of sales
Mine operating costs 364,148 310,677 - - 674,825
Depreciation and amortization 105,420 152,787 - - 258,207
Gross profit 80,340 126,872 - - 207,212
Selling and administrative expenses - - - 23,910 23,910
Exploration expenses 9,562 9,722 8,659 1,444 29,387
Other expense 4,832 4,898 2,848 1,463 14,041
Re-evaluation adjustment - environmental obligation (146,950 ) - - - (146,950 )
Impairment loss - - 94,956 - 94,956
Results from operating activities $ 212,896 $ 112,252 $ (106,463 ) $ (26,817 ) $ 191,868
Net interest expense on long term debt 50,730
Accretion on streaming arrangements 20,760
Change in fair value of financial instruments (5,888 )
Other net finance costs 16,164
Profit before tax 110,102
Tax expense 22,279
Profit for the period $ 87,823
**HUDBAY MINERALS INC.**Notes to Unaudited Condensed Consolidated Interim Financial Statements<br>(in thousands of US dollars, except where otherwise noted)<br>For the three and nine months ended September 30, 2022 and 2021
---
Nine months ended September 30, 2021
--- --- --- --- --- --- --- --- --- --- --- --- --- --- ---
Manitoba Peru Arizona Corporate<br>and other<br>activities Total
Revenue from external customers $ 541,791 $ 535,037 $ - $ - $ 1,076,828
Cost of sales
Mine operating costs 346,305 265,946 - - 612,251
Depreciation and amortization 127,667 140,330 - - 267,997
Impairment - environmental obligation 147,305 - - - 147,305
Gross (loss) profit (79,486 ) 128,761 - - 49,275
Selling and administrative expenses - - - 29,295 29,295
Exploration expenses 4,189 5,459 16,647 (10 ) 26,285
Other expenses 9,647 3,659 4,932 577 18,815
Re-evaluation adjustment - environmental obligation (4,890 ) - - - (4,890 )
Results from operating activities $ (88,432 ) $ 119,643 $ (21,579 ) $ (29,862 ) $ (20,230 )
Net interest expense on long term debt 57,837
Accretion on streaming arrangements 34,359
Change in fair value of financial instruments 47,735
Other net finance costs 42,441
Loss before tax (202,602 )
Tax expense 31,303
Loss for the period $ (233,905 )
September 30, 2022
--- --- --- --- --- --- --- --- --- ---
Manitoba Peru Arizona Corporateand otheractivities Total
Total assets 691,209 $ 2,478,255 $ 697,390 $ 420,940 $ 4,287,794
Total liabilities 432,194 917,894 37,223 1,329,594 2,716,905
Property, plant and equipment1 670,845 2,141,240 687,625 41,646 3,541,356
1 Included in Corporate and other activities are 28.3 million of property, plant and equipment that is located in Nevada.

All values are in US Dollars.

December 31, 2021
Manitoba Peru Arizona Corporate<br>and other<br>activities Total
Total assets 812,137 $ 2,624,251 $ 745,371 $ 434,472 $ 4,616,231
Total liabilities 655,095 1,023,186 75,782 1,385,340 3,139,403
Property, plant and equipment1 706,330 2,256,687 735,127 42,822 3,740,966
1 Included in Corporate and other activities are 28.3 million of property, plant and equipment that is located in Nevada.

All values are in US Dollars.

Hudbay Minerals Inc.: Exhibit 99.2 - Filed by newsfilecorp.com

Management's Discussion and Analysis of

Results of Operations and Financial Condition

For the three and nine months ended

September 30, 2022

November 2, 2022

TABLE OF CONTENTS Page
Introduction 1
Our Business 1
Summary of Results 2
Key Financial Results 5
Key Production Results 6
Key Costs Results 7
Recent Developments 8
Peru Operations Review 12
Manitoba Operations Review 17
Financial Review 25
Liquidity and Capital Resources 36
Trend Analysis and Quarterly Review 41
Non-IFRS Financial Performance Measures 43
Accounting Changes and Critical Estimates 58
Changes in Internal Control Over Financial Reporting 58
Notes to Reader 58
Summary of Historical Results 61

INTRODUCTION

This Management's Discussion and Analysis ("MD&A") dated November 2, 2022 is intended to supplement Hudbay Minerals Inc.'s unaudited condensed consolidated interim financial statements and related notes for the three and nine months ended September 30, 2022 and 2021(the "consolidated interim financial statements"). The consolidated interim financial statements have been prepared in accordance with International Financial Reporting Standards ("IFRS"), including International Accounting Standard 34, Interim Financial Reporting, as issued by the International Accounting Standards Board ("IASB").

References to "Hudbay", the "Company", "we", "us", "our" or similar terms refer to Hudbay Minerals Inc. and its direct and indirect subsidiaries as at September 30, 2022.

Readers should be aware that:

  • This MD&A contains certain "forward-looking statements" and "forward-looking information" (collectively, "forward-looking information") that are subject to risk factors set out in a cautionary note contained in this MD&A.

  • This MD&A has been prepared in accordance with the requirements of the securities laws in effect in Canada, which may differ materially from the requirements of United States securities laws applicable to US issuers.

  • We use a number of non-IFRS financial performance measures in this MD&A. Please see the discussion under the "Non-IFRS Financial Performance Measures" section herein.

  • The technical and scientific information in this MD&A has been approved by qualified persons based on a variety of assumptions and estimates.

For a discussion of each of the above matters, readers are urged to review the "Notes to Reader" discussion beginning on page 58 of this MD&A.

Additional information regarding Hudbay, including the risks related to our business and those that are reasonably likely to affect our consolidated financial statements in the future, is contained in our continuous disclosure materials, including our most recent Annual Information Form ("AIF"), consolidated interim financial statements and Management Information Circular available on SEDAR at www.sedar.com and on EDGAR at www.sec.gov.

All amounts are in US dollars unless otherwise noted.

OUR BUSINESS

We are a diversified mining company with long-life assets in North and South America. Our operations in Cusco (Peru) produce copper with gold, silver and molybdenum by-products. Our operations in Manitoba (Canada) produce gold with copper, zinc and silver by-products. We have an organic pipeline that includes copper development projects in Arizona and Nevada (United States), and our growth strategy is focused on the exploration, development, operation, and optimization of properties we already control, as well as other mineral assets we may acquire that fit our strategic criteria. We are governed by the Canada Business Corporations Act and our shares are listed under the symbol "HBM" on the Toronto Stock Exchange, New York Stock Exchange and Bolsa de Valores de Lima.

SUMMARY

Third Quarter Operating and Financial Results; Production Guidance Reaffirmed

  • Full year 2022 consolidated production, cash cost and sustaining cash cost guidance is reaffirmed.

  • Third quarter net loss and loss per share were $8.1 million and $0.03, respectively. After adjusting for a non-cash gain of $6.4 million related to a quarterly revaluation of the Flin Flon environmental provision due to changes in real, long-term risk-free discount rates, and a $6.0 million gain on disposal of plant and equipment and non-current assets, among other items, third quarter adjusted net loss^1^ per share was $0.05.

  • Operating cash flow before change in non-cash working capital was $81.6 million and adjusted EBITDA^1^was $99.3 million in the third quarter of 2022, benefiting from higher copper and gold sales volumes, compared to the same period in 2021.

  • Consolidated production in the third quarter included 24,498 tonnes of copper and 53,179 ounces of gold.

  • Consolidated cash cost per pound of copper produced, net of by-product credits^1^, was $0.58 in the third quarter, an 11% improvement from the second quarter of 2022. Consolidated sustaining cash cost per pound of copper produced, net of by-product credits^1^, was $1.91 in the third quarter, a 2% increase from the second quarter of 2022, but within the guidance range.

  • Peru delivered strong operating performance in the third quarter with 7% higher copper production of 22,302 tonnes and 8% lower cash cost per pound of copper produced, net of by-product credits^1^, of $1.68 as copper grades improved over the second quarter of 2022.

  • Despite being focused on transition activities and overcoming one-off production interruptions, Manitoba achieved third quarter gold production of 40,457 ounces at a cash cost per ounce of gold produced, net of by-product credits^1^, of $216 as New Britannia continued to deliver strong throughput and gold recoveries.

  • Closure activities to safely decommission the 777 mine ("777"), the Flin Flon concentrator and the zinc plant were substantially completed in the third quarter, ahead of schedule. A majority of Flin Flon employees and equipment of value have transitioned to Snow Lake to support Lalor's ramp-up strategy of 5,300 tonnes per day in early 2023.

  • Cash increased by $27.6 million during the third quarter to $286.1 million, as at September 30, 2022, mainly as a result of $172.5 million of cash generated from operations, partially offset by $119.0 million of capital investments and a $17.1 million payment toward the gold prepayment liability.

Executing on Growth Initiatives

- The company is realizing benefits from recent brownfield growth investments including the successful ramp-up of the high grade Pampacancha satellite deposit and the achievement of higher throughput and gold recoveries at the New Britannia mill as evidenced by the successive quarterly increases in copper production in Peru and higher gold production in Snow Lake.

  • Pre-feasibility study for Phase I of the Copper World Complex ("Copper World") is well-advanced with the process plant pre-feasibility level engineering at 85% completion and geotechnical and hydrogeological site investigation activities completed. The focus remains on converting remaining inferred mineral resources to measured and indicated and evaluating many of the project optimization and upside opportunities.

  • Submitted remaining state permit applications for Phase I of Copper World in September and October 2022.

  • Executed an exploration agreement on the Maria Reyna and Caballito satellite properties in Peru in August 2022 and early exploration activities on the prospective properties are underway.

  • Announced an initial mineral resource estimate for the Llaguen copper-molybdenum porphyry deposit in northern Peru, including 271 million tonnes of indicated resources at 0.42% copper-equivalent^2^ and 83 million tonnes of inferred resources at 0.30% copper-equivalent^2^.

  • Assays from the confirmatory drill program at the Flin Flon tailings facility indicate higher grades than predicted from historical mill records.

Focus on Deleveraging and Disciplined Capital Allocation

- Reduced net debt^1^ to $897.1 million, a reduction of $70.7 million since the completion of the brownfield investment program in the first quarter ended March 31, 2022.

  • Repaid 38% of the gold prepayment liability to date in 2022 with the balance to be repaid by the end of 2023.

  • Reduced 2022 discretionary spending by $30 million, reflecting lower expenditures in Arizona, Manitoba and Peru, and the company is targeting 2023 discretionary spending reductions of more than $50 million.

  • Divested non-core assets with the sale of our Lordsburg property during the third quarter of 2022 and the sale of our equity interest in Fireweed Metals Corp. in November 2022.

  • Prioritized Copper World activities to focus on completion of the pre-feasibility study, receipt of state level permits and conducting a bulk sample program to de-risk the project in 2023, while deferring the definitive feasibility study to 2024.

  • Announced disciplined capital allocation approach with the introduction of three prerequisites for sanctioning Copper World, including a prudent financing strategy with multi-faceted financial targets focused on a minimum cash balance, a stated maximum leverage, limited non-recourse project level debt and committed financial partners.

Summary of Third Quarter Results

Cash generated from operating activities in the third quarter of 2022 increased to $172.5 million compared to $139.8 million in the same quarter of 2021. The increase is primarily the result of an increase in our non-cash working capital. Operating cash flow before change in non-cash working capital was $81.6 million during the third quarter of 2022, reflecting a decrease of $21.9 million compared to the same period of 2021. The decrease in operating cash flow before changes in non-cash working capital was primarily the result of lower zinc sales volumes, lower realized copper prices and inflationary cost pressures on mine operating costs, offset by higher copper and gold sales volumes.

Consolidated copper production in the third quarter of 2022 increased by 5% compared to the same period in 2021 primarily due to increased throughput and higher copper grades in Peru, partially offset by lower production in Manitoba due to the planned closure of 777. Consolidated gold production in the third quarter of 2022 decreased by 2% compared to the third quarter of 2021, due to lower throughput in Manitoba, lower gold grades at Pampacancha and lower recoveries in Peru, partially offset by higher Lalor gold grades and higher recoveries at New Britannia. Consolidated zinc production in the quarter decreased by 53%, versus the comparative quarter in 2021, primarily due to lower milled throughput as a result of the closure of 777 and one-off production interruptions in Snow Lake during the quarter. Hudbay anticipates stronger production in fourth quarter and has reaffirmed its 2022 production guidance for all metals.

Net loss and loss per share in the third quarter of 2022 were $8.1 million and $0.03, respectively, compared to a net loss and loss per share of $170.4 million and $0.65, respectively, in the third quarter of 2021. The prior period loss was mainly caused by an updated Flin Flon closure plan and a corresponding impairment charge of $147.3 million. During the third quarter of 2022, we recorded a non-cash gain of $6.4 million related to the quarterly revaluation of our Flin Flon environmental provision in response to changes in real, long-term discount rates, a $6.7 million revaluation gain of the gold prepayment liability and a $6.0 million gain on the disposal of plant and equipment and non-current assets. These costs were offset by a $5.1 million charge related to the restructuring of the Manitoba operations due to the closure of the Flin Flon operations.

Adjusted net loss^1^and adjusted net loss per share^1^ in the third quarter of 2022 were $12.4 million and $0.05 per share, respectively, after adjusting for the non-cash gain related to the revaluation of our environmental provision and the revaluation gain on the gold prepayment liability, among other items. This compares to adjusted net earnings and adjusted net earnings per share of $0.9 million, and $0.00 in the same period of 2021. Third quarter adjusted EBITDA^1^was $99.3 million, compared to $119.2 million in the same period of 2021.

In the third quarter of 2022, consolidated cash cost per pound of copper produced, net of by-product credits^1^, was $0.58, compared to $0.62 in the same period in 2021. This decrease was a result of higher precious metal by-product credits and higher copper production, partially offset by higher milling costs, treatment and refining charges and freight costs. Consolidated sustaining cash cost per pound of copper produced, net of by-product credits^1^, was $1.91 in the third quarter of 2022 compared to $1.97 in the same period in 2021. This decrease was primarily due to the same reasons outlined above, slightly offset by higher cash sustaining capital expenditures in Manitoba. Both measures are tracking well with respect to our 2022 guidance ranges and we are reaffirming our full year consolidated cash cost guidance.

Consolidated all-in sustaining cash cost per pound of copper produced, net of by-product credits^1^, was $2.16 in the third quarter of 2022, lower than $2.18 in the same period in 2021, due to the same reasons outlined above partially offset with higher corporate selling and administrative expenses and accretion and amortization of decommissioning and community agreements.

As at September 30, 2022, our liquidity includes $286.1 million in cash as well as undrawn availability of $368.7 million under our revolving credit facilities. We expect that our current liquidity combined with cash flow from operations, will be sufficient to meet our liquidity needs for the foreseeable future.

* Mining activities at 777 were completed in June 2022

^1^Adjusted net earnings (loss) and adjusted net earnings (loss) per share, adjusted EBITDA, cash cost, sustaining cash cost, all-in sustaining cash cost per pound of copper produced, net of by-product credits, cash cost, sustaining cash cost per ounce of gold produced, net of by-product credits, combined unit cost and net debt are non-IFRS financial performance measures with no standardized definition under IFRS. For further information and a detailed reconciliation, please see the discussion under the "Non-IFRS Financial Performance Measures" section of this MD&A.

^2^ For further information on the mineral resource estimate and assumptions underlying the copper-equivalent grades, please refer to the table on page 10 of this MD&A.

KEY FINANCIAL RESULTS

Financial Condition Sep. 30, 2022 Dec. 31, 2021
(in thousands)
Cash 286,117 $ 270,989
Total long-term debt 1,183,237 1,180,274
Net debt1 897,120 909,285
Working capital2 99,807 147,512
Total assets 4,287,794 4,616,231
Equity 1,570,889 1,476,828
1 Net debt is a non-IFRS financial performance measure with no standardized definition under IFRS. For further information and a detailed reconciliation, please see discussion under the "Non-IFRS Financial Performance Measures" section of this MD&A.
2 Working capital is determined as total current assets less total current liabilities as defined under IFRS and disclosed on the consolidated financial statements.

All values are in US Dollars.

Financial Performance Three months ended Nine months ended
(in thousands, except per share amounts or as noted below) Sep. 30, 2022 Sep. 30, 2021 Sep. 30, 2022 Sep. 30, 2021
Revenue 346,171 $ 358,961 $ 1,140,244 $ 1,076,828
Cost of sales 313,741 444,379 933,032 1,027,553
(Loss) earnings before tax (263 ) (147,830 ) 110,102 (202,602 )
Net (loss) earnings (8,135 ) (170,411 ) 87,823 (233,905 )
Basic and diluted (loss) earnings per share (0.03 ) (0.65 ) 0.34 (0.89 )
Adjusted (loss) earnings per share1 (0.05 ) - 0.09 (0.04 )
Operating cash flow before changes in non-cash working capital2 81.6 103.5 282.6 326.9
Adjusted EBITDA1,2 99.3 119.2 351.1 366.8
1 Adjusted earnings (loss) per share and adjusted EBITDA are non-IFRS financial performance measures with no standardized definition under IFRS. For further information and a detailed reconciliation, please see discussion under the "Non-IFRS Financial Performance Measures" section of this MD&A.
2 In millions.

All values are in US Dollars.

KEY PRODUCTION RESULTS

Three months ended Three months ended
Sep. 30, 2022 Sep. 30, 2021
Peru Manitoba Total Peru Manitoba Total
Contained metal in concentrate and doré produced ^1^
Copper tonnes 22,302 2,196 24,498 18,072 5,173 23,245
Gold oz 12,722 40,457 53,179 17,531 36,745 54,276
Silver oz 564,299 152,770 717,069 521,036 242,141 763,177
Zinc tonnes - 9,750 9,750 - 20,844 20,844
Molybdenum tonnes 437 - 437 282 - 282
Payable metal sold
Copper tonnes 20,718 4,081 24,799 16,065 5,071 21,136
Gold^2^ oz 11,970 54,962 66,932 16,902 30,941 47,843
Silver^2^ oz 513,470 302,946 816,416 457,263 244,338 701,601
Zinc^3^ tonnes - 12,714 12,714 - 21,619 21,619
Molybdenum tonnes 511 - 511 304 - 304
^1^Metal reported in concentrate is prior to deductions associated with smelter contract terms.
^2^ Includes total payable gold and silver in concentrate and in doré sold.
^3^ Includes refined zinc metal and payable zinc in concentrate sold.
Nine months ended Nine months ended
--- --- --- --- --- --- --- ---
Sep. 30, 2022 Sep. 30, 2021
Peru Manitoba Total Peru Manitoba Total
Contained metal in concentrate produced ^1^
Copper tonnes 62,348 12,520 74,868 54,957 16,315 71,272
Gold oz 37,369 128,411 165,780 32,389 97,235 129,624
Silver oz 1,654,095 712,184 2,366,279 1,394,809 750,959 2,145,768
Zinc tonnes - 49,055 49,055 - 70,322 70,322
Molybdenum tonnes 1,033 - 1,033 871 - 871
Payable metal sold
Copper tonnes 56,016 13,042 69,058 50,847 16,394 67,241
Gold oz 34,852 131,307 166,159 25,503 85,928 111,431
Silver oz 1,634,549 784,630 2,419,179 1,109,939 678,929 1,788,868
Zinc ^2^ tonnes - 50,813 50,813 - 75,323 75,323
Molybdenum tonnes 931 - 931 853 - 853
^1^Metal reported in concentrate is prior to deductions associated with smelter contract terms.
^2^ Includes refined zinc metal sold and payable zinc in concentrate sold.

KEY COST RESULTS

Three months ended Nine months ended Guidance
Sep. 30,2022 Sep. 30,<br>2021 Sep. 30,2022 Sep. 30,<br>2021 Annual<br>2022
Consolidated copper cash cost per pound of copper produced
Cash cost 1 0.58 0.62 0.78 0.84 0.60 - 1.05
Peru 1.68 1.26 1.69 1.65 1.10 - 1.40
Manitoba (10.64 ) (1.64 ) (3.75 ) (1.90 ) -
Sustaining cash cost 1 1.91 1.97 2.02 2.12 1.60 - 2.25
Peru 2.46 2.31 2.46 2.46
Manitoba (3.71 ) 0.75 (0.15 ) 0.99
All-in sustaining cash cost1 2.16 2.18 2.21 2.33
Manitoba gold cash cost per ounce of gold produced
Cash cost 1,4 216 - 136 - 300 - 550
Sustaining cash cost 1,4 1,045 - 909 -
Combined mine/mill unit operating cost per tonne of copper processed 1,2
Peru 3 13.06 10.93 12.48 10.99 10.10 - 12.90 ^5^
Manitoba 235 147 185 149 170 - 185
1 Cash cost, sustaining cash cost, all-in sustaining cash cost per pound of copper produced, net of by-product credits, gold cash cost, sustaining cash cost per ounce of gold produced, net of by-product credits, and unit operating cost are non-IFRS financial performance measures with no standardized definition under IFRS. For further information and a detailed reconciliation, please see the discussion under the "Non-IFRS Financial Performance Measures" section of this MD&A.
2 Reflects combined mine, mill and G&A costs per tonne of milled ore. Peru costs reflect the deduction of expected capitalized stripping costs.
3 Excludes approximately 0.9 million, or 0.12 per tonne and 4.5 million, or 0.20 per tonne, of COVID-19 related costs during the three and nine months ended September 30, 2022, respectively and 4.8 million, or 0.69 and 15.7 million or 0.76 per tonne during the three and nine months ended September 30, 2021.
4 Cash cost and sustaining cash cost per ounce of gold produced, net of by-product credits were introduced in 2022 and do not have a published comparative.
5 Combined unit cost guidance for 2022 excludes COVID-19 related costs.

All values are in US Dollars.

RECENT DEVELOPMENTS

Focused on Operating Efficiencies and Cost Reductions

We continue to believe that long-term supply and demand fundamentals for copper remain strong as global mine supply will be unable to meet demand from global decarbonization initiatives. However, in 2022, we have faced higher input prices in a period of declining copper prices, significantly squeezing margins. While we benefit from our consolidated cash costs being positioned in the first quartile of the global cash cost curve, we continue to focus on maximizing operating efficiencies and discretionary cost reductions in this challenging environment.

In light of this environment, Hudbay has taken several steps to reduce discretionary spending by $30 million for the remainder of 2022 and is targeting more than $50 million in discretionary spending cuts as part of the 2023 budget process, including:

  • Reducing 2022 Arizona spending by $10 million with lower exploration, evaluation and growth expenditures.

  • Deferring plans for early development of the 1901 deposit, resulting in savings of $5 million of Manitoba growth spending in 2022 and additional amounts that were previously planned to be accelerated into 2023 without impacting the ability to achieve the 2026 production start as laid out in the current mine plan.

  • Deferring $15 million of 2022 growth spending in Peru and Manitoba relating to mill recovery improvement programs and other capital projects.

  • Evaluating low capital alternatives to installing a pebble crusher in Peru, saving approximately $22 million of growth capital in 2023.

  • Delaying the expected completion of the Copper World definitive feasibility study to 2024 in order to reduce expected Arizona growth expenditures in 2023 and prioritize the completion of the pre-feasibility study and state permits in 2023, as mentioned in more detail below.

  • Rationalizing our non-core asset portfolio with the divestment of our 100% interest in the Lordsburg property in New Mexico, which was acquired through the Mason acquisition in 2018, to American Copper Development Corporation, and the sale of our equity investment in Fireweed Metals Corp., which was received in 2018 in exchange for the sale of our Tom and Jason project in the Yukon Territory.

Committed to Deleveraging and Disciplined Capital Allocation

With a focus on generating positive cash flow and strong returns on invested capital, Hudbay is committed to deleveraging and disciplined capital allocation. We have improved our net debt position by $70.7 million over the past two quarters to $897.1 million at the end of September 30, 2022. We have repaid 38% of the gold prepayment liability during 2022 and the remaining $80.3 million, valued at gold forward prices as at quarter end, will be repaid before the end of 2023.

As part of our disciplined financial planning approach to Copper World, we have introduced a three prerequisites plan ("3-P"), including specific leverage targets that we would need to achieve prior to making an investment decision in the project:

  1. Permits - receipt of all state level permits required for Phase I

  2. Plan - completion of a definitive feasibility study with an internal rate of return of greater than 15%

  3. Prudent Financing Strategy - multi-faceted financing strategy including

  • a committed minority joint venture partner;

  • a renegotiated precious metals stream agreement optimized for the current project;

  • net debt to EBITDA ratio of less than 1.2 times;

  • a minimum cash balance of $600 million; and,

  • limited non-recourse project level debt of up to $500 million.

The opportunity to sanction Copper World is not expected until late 2024 based on current estimated timelines. The decision to sanction Copper World will ultimately be evaluated against other competing investment opportunities as part of Hudbay's capital allocation process.

Advancing Several Initiatives to De-risk Copper World

Hudbay continues to advance pre-feasibility activities for Phase I of the Copper World project, which is expected to include conversion of the remaining inferred mineral resources to measured and indicated and optimization of the layout and sequencing of the processing facilities, in addition to evaluating other upside opportunities. The process plant pre-feasibility level engineering is at 85% completion and geotechnical and hydrogeological site investigation activities have been completed. Pre-feasibility engineering design and metallurgical test work activities are on track to be completed before the end of 2022 with the results expected to be published in a study in the first half of 2023.

Copper World requires state and local permits for Phase I, which consists of a 16-year operation on private land claims. On September 21, 2022, we submitted the application for an Aquifer Protection Permit to the Arizona Department of Environmental Quality ("ADEQ") and on October 21, 2022, we submitted the application for an Air Quality Permit to the ADEQ. We expect to receive these two remaining state permits by mid-2023. The other key state permit, the Mined Land Reclamation Plan, was received in July 2022.

Upon receipt of the state permits for Phase I, we expect to conduct a bulk sampling program at Copper World in the second half of 2023 to continue to de-risk the project by testing grade continuity, variable cut-off effectiveness and metallurgical strategies in high-grade, near-surface areas of the Peach-Elgin and West pits.

We have re-evaluated the timing of the definitive feasibility study for Copper World and intend to prioritize the completion of the pre-feasibility study, state level permits, bulk sampling program and a minority joint venture partner process in 2023 to significantly de-risk the project and defer the definitive feasibility study activities and expenditures to 2024.

Exploration Update

Initial Mineral Resource Estimate for Llaguen

On November 2, 2022, Hudbay announced an NI 43-101 initial mineral resource estimate for the Llaguen copper-molybdenum porphyry deposit in the Otuzco province in northern Peru. The Llaguen project is 100% owned by Hudbay and is near the highly populated city of Trujillo, in close proximity to existing infrastructure, water and power supply. The company optioned the property from Vale in 2017 and has since completed an exploration agreement with the local community, conducted additional geological mapping and geochemical sampling, and completed a 28-hole confirmatory drill program during 2021 and 2022. The initial resource estimate was developed based on Hudbay's confirmatory drill program and a 23-hole historical drill program completed by Vale from 2006 to 2008.

The initial mineral resource estimate at Llaguen includes 271 million tonnes of indicated resources at 0.42% copper-equivalent^1^ and 83 million tonnes of inferred resources at 0.30% copper-equivalent^1^. The global mineral resource estimate contains a higher-grade portion of 113 million tonnes of indicated resources at 0.60% copper-equivalent^1^ and 16 million tonnes of inferred resources at 0.52% copper-equivalent^1^. The methodology followed to estimate the mineral resources at Llaguen is identical to the approach used by Hudbay to estimate mineral resources at its Constancia mine in Peru.

^1^ For further information on the mineral resource estimate and assumptions underlying the copper-equivalent grades, please refer to table on page 10 of this MD&A.

Llaguen Project Mineral Resource Estimate as at November 1, 2022

Category Cu (%) Mo (g/t) Au (g/t) Ag (g/t) CuEq (%)
Indicated Global 0.33 218 0.033 2.04 0.42
(>= 0.14% Cu)
Including Indicated High-grade 0.49 261 0.046 2.73 0.60
(>= 0.30% Cu)
Inferred Global 0.24 127 0.024 1.47 0.30
(>= 0.14% Cu)
Including Inferred High-grade 0.45 141 0.038 2.60 0.52
(>= 0.30% Cu)
Notes:
- CIM definitions were followed for the estimation of mineral resources. Mineral resources that are not mineral reserves do not have demonstrated economic viability.
- Mineral resources are reported within an economic envelope defined by a pit shell optimization algorithm. This pit shell is defined by a revenue factor of 0.33 assuming operating costs adjusted from Hudbay's Constancia open pit operation.
- Long-term metal prices of 3.60 per pound copper, 11.00 per pound molybdenum, 1,650 per ounce gold and 22.00 per ounce silver were used for the estimation of mineral resources.
- Metal recovery estimates assume that this mineralization would be processed at a combination of facilities, including copper and molybdenum flotation.
- Copper-equivalent ("CuEq") grade is calculated assuming 85% copper recovery, 80% molybdenum recovery, 60% gold recovery and 60% silver recovery.
- Specific gravity measurements were estimated by industry standard laboratory measurements.

All values are in US Dollars.

Hudbay has initiated preliminary technical studies at Llaguen, including metallurgical test work as well as geotechnical and hydrogeological studies, which are expected to be incorporated into a future preliminary economic assessment for the Llaguen project. The mineralization at Llaguen remains open to the northeast, northwest and at depth and several untested geophysical targets exist in the region, which could add to the mineral resource estimate in the future.

Peru Regional Exploration

Hudbay controls a large, contiguous block of mineral rights with the potential to host mineral deposits within trucking distance of the Constancia processing facility, including the past producing Caballito property and the highly prospective Maria Reyna property. In August 2022, we executed a surface rights exploration agreement with the community of Uchucarcco that allows for exploration of the Maria Reyna and Caballito properties. Shortly after the agreement was completed, the Company commenced baseline environmental and archaeological activities and our geological team commenced surface investigation activities. Field evidence confirms that both Caballito and Maria Reyna host sulfide and oxide rich copper mineralization in skarns, hydrothermal breccias and large porphyry intrusive bodies.

Manitoba Regional Exploration

We continue to conduct drilling activities in the Snow Lake area and compile results from ongoing infill drilling at Lalor and 1901, which will be incorporated into the annual mineral resource and reserve estimate update in the first quarter of 2023. Assay results from recent confirmatory drilling at the tailings facility in Flin Flon indicate higher zinc, copper and silver grades than predicted from historical mill records while confirming the historical gold grade. We plan to complete metallurgical test work on the Flin Flon tailings to assess the processing viability. We also intend to evaluate the opportunity to reprocess the tailings at the Anderson facility in Snow Lake given significant amounts of gold have been deposited over many decades.

We are in the process of planning a winter drill program to test the down-dip gold and copper extensions of the Lalor deposit in 2023, which will be the first time Hudbay has completed step-out drilling in the deeper zones at Lalor since 2009.

Arizona Regional Exploration

Following the substantial completion of the infill drilling to support the pre-feasibility study for the Copper World Complex in July, we reduced the number of drill rigs at site to three. Recent drilling has confirmed the continuity of the mineralization between the Bolsa and East deposits and extended the size of the mineralized envelope, which remains open in several directions and at depth.

Nevada Regional Exploration

A conductivity-resistivity IP ground survey commenced in October 2022 at the Mason Valley properties located on our private land claims near the Mason project. This work, in combination with a re-interpretation of geological data from past operating mines and previous exploration data, will be used to finalize a drill plan to test high grade skarn targets in 2023.

Appointment of Chief Financial Officer

On October 13, 2022, Eugene Lei was appointed as Hudbay's Senior Vice President and Chief Financial Officer. Mr. Lei is highly regarded within the industry and has over 20 years of global mining investment banking, finance and corporate development experience. Since joining Hudbay in 2012, he has progressed through several senior management roles and executive responsibilities, including leading the corporate development, strategy and investor relations functions. He was interim CFO at Hudbay in 2020 and led the gold prepayment transaction in May 2020 to finance the capital reinvestment program in the New Britannia mill.

PERU OPERATIONS REVIEW

Three months ended Nine months ended Guidance
Sep. 30, 2021 Sep. 30, 2022 Sep. 30, 2021 Annual
2022
Constancia ore mined 1 6,300,252 6,208,019 20,225,517 21,971,858
Copper 0.36 0.30 0.33 0.30
Gold 0.05 0.04 0.04 0.04
Silver 3.38 2.76 3.37 2.90
Molybdenum 0.01 0.01 0.01 0.01
Pampacancha ore mined 1 2,488,928 2,050,813 4,547,621 3,033,805
Copper 0.29 0.27 0.29 0.27
Gold 0.23 0.27 0.28 0.27
Silver 4.30 3.58 4.24 3.86
Molybdenum 0.01 0.01 0.01 0.01
Total ore mined 8,789,180 8,258,832 24,773,138 25,005,663
Strip ratio 2 1.26 1.46 1.20 1.04
Ore milled 7,742,020 6,985,035 22,726,559 20,760,830
Copper 0.34 0.30 0.32 0.31
Gold 0.08 0.11 0.08 0.07
Silver 3.48 3.93 3.46 3.22
Molybdenum 0.01 0.01 0.01 0.01
Copper concentrate 100,545 78,711 275,275 239,367
Concentrate grade 22.18 22.96 22.65 22.96
Copper recovery 84.5 84.9 84.9 84.1
Gold recovery 61.9 71.9 60.7 65.1
Silver recovery 65.2 59.1 65.3 64.9
Molybdenum recovery 41.0 33.5 33.9 33.4
Combined unit operating costs 3,4,5 13.06 10.93 12.48 10.99 10.10 - 12.90 ^6^
1 Reported tonnes and grade for ore mined are estimates based on mine plan assumptions and may not reconcile fully to ore milled.
2 Strip ratio is calculated as waste mined divided by ore mined.
3 Reflects combined mine, mill and general and administrative ("G&A") costs per tonne of ore milled. Reflects the deduction of expected capitalized stripping costs.
4 Combined unit costs is a non-IFRS financial performance measure with no standardized definition under IFRS. For further information and a detailed reconciliation, please see the discussion under the "Non-IFRS Financial Performance Measures" section of this MD&A.
5 Excludes approximately 0.9 million, or 0.12 per tonne and 4.5 million, or 0.20 per tonne, of COVID-19 related costs during the three and nine months ended September 30, 2022 respectively and 5.5 million, or 0.78 per tonne and 15.7 million or 0.76 per tonne, of COVID-19 related costs during the three and nine months ended September 30, 2021.
6 Combined unit cost guidance for 2022 excludes COVID-19 related costs.

All values are in US Dollars.

Total ore mined in the third quarter of 2022 increased by 6% compared to the same period in 2021 due to lower amounts of waste being mined. Ore milled during the third quarter of 2022 was 11% higher than the same period in 2021 due to softer ore from Pampacancha. Milled copper grades increased in the third quarter of 2022 in comparison to the same period in 2021 due to higher head grades from both Constancia and Pampacancha. Milled gold grades decreased in the third quarter of 2022 mainly due to temporarily lower gold grades from Pampacancha.

Copper recoveries in the third quarter were in line with the comparative 2021 period. Gold recoveries in the third quarter of 2022 were 14% lower than the comparative 2021 period due to varying ore types and lower gold grades in the quarter. Silver recoveries in the third quarter of 2022 were 10% higher than the comparative 2021 period due to higher contaminants impacting the recoveries in the comparative period.

Year-to-date ore mined was consistent with the same period in 2021. Year-to-date recoveries of copper and silver were marginally higher than the same period in 2021 while recoveries of gold decreased over the period primarily due to the same factors as described above for the quarter-over-quarter variance.

Combined mine, mill and G&A unit operating costs in the third quarter of 2022 were 19% higher than the same period in 2021 primarily due to inflationary pressures on fuel, consumables and energy costs, partially offset by higher volume of tonnes milled. Combined mine, mill and G&A unit operating costs in the first three quarters of 2022 were 14% higher than the same period in 2021 due to the same factors as the quarterly variance. We expect to complete a four-day mill shutdown at Constancia in November 2022 to advance maintenance activities that were originally planned for the first quarter of 2023. As a result of ongoing inflationary cost pressures and the additional mill maintenance program expected in the fourth quarter, full year unit operating costs in Peru are expected to be near the top end of the 2022 guidance range.

Contained metal in concentrate produced Three months ended Nine months ended Guidance
Sep. 30, 2022 Sep. 30, 2021 Sep. 30, 2022 Sep. 30, 2021 Annual
2022
Copper tonnes 22,302 18,072 62,348 54,957 89,000 - 115,000
Gold oz 12,722 17,531 37,369 32,389 70,000 - 90,000
Silver oz 564,299 521,036 1,654,095 1,394,809 1,620,000 - 2,100,000
Molybdenum tonnes 437 282 1,033 871 1,100 - 1,400

Production of copper, silver and molybdenum, was higher in the third quarter of 2022 and year-to-date compared to the same periods in 2021 due to an increase in throughput, higher copper grades and higher silver and molybdenum recoveries. Production of gold, was 27% lower in the third quarter of 2022 compared to the same period in 2021 due to lower gold grades from Pampacancha and lower associated recoveries as mentioned above. Year-to-date 2022 gold production was 15% higher than the comparative prior year period due to higher mill throughput and higher gold grades, partially offset by lower gold recoveries. Full year production in Peru is expected to benefit from higher grades in the fourth quarter of 2022 and, as such, full year production of all metals in Peru remains on track to achieve the guidance ranges for 2022.

Peru Cash Cost and Sustaining Cash Cost

Three months ended Nine months ended Guidance
Sep. 30,2022 Sep. 30,<br>2021 Sep. 30,2022 Sep. 30,<br>2021 Annual<br><br> <br>2022
Cash cost per pound of copper produced, net of by-product credits^1^ $/lb 1.68 1.26 1.69 1.65 1.10 - 1.40
Sustaining cash cost per pound of copper produced, net of by-product credits^1^ $/lb 2.46 2.31 2.46 2.46
^1^Cash cost and sustaining cash costs per pound of copper produced, net of by-product credits, are not recognized under IFRS. For more detail on these non-IFRS financial performance measures, please see the discussion under the "Non-IFRS Financial Performance Measures" section of this MD&A.

Cash cost per pound of copper produced, net of by-product credits, in the third quarter of 2022 was $1.68, an increase of 33% compared to the same period in 2021 due to inflationary pressures driving higher mining and milling costs and lower precious metal by-product credits, partially offset by higher copper production. However, cash cost per pound of copper produced, net of by-product credits, in the third quarter was 8% lower than the second quarter of 2022, primarily due to higher by-product credits and higher copper production. Although copper cash cost is expected to continue to decline in the fourth quarter with higher anticipated copper production and contributions from precious metal by-product credits, full year cash cost is expected to exceed the upper end of the 2022 guidance range by approximately 5%, primarily due to the inflationary cost environment. Cash cost per pound of copper produced, net of by-product credits for the first nine months of 2022 was $1.69, a 2% increase compared to the same period in 2021 due to the same reasons provided above offset by higher by-product credits.

Sustaining cash cost per pound of copper produced, net of by-product credits, for the third quarter of 2022 was 6% above the comparative 2021 period and was impacted by the same factors affecting cash costs noted above partially offset by lower sustaining capital expenditures. However, year-to-date sustaining cash cost per pound of copper produced, net of by-product credits, was unchanged from 2022 compared to the same period in 2021 despite increased inflationary cost pressures.

Metal Sold

Three months ended Nine months ended
Sep. 30, 2022 Sep. 30, 2021 Sep. 30, 2022 Sep. 30, 2021
Payable metal in concentrate
Copper tonnes 20,718 16,065 56,016 50,847
Gold oz 11,970 16,902 34,852 25,503
Silver oz 513,470 457,263 1,634,549 1,109,939
Molybdenum tonnes 511 304 931 853

Quantities of payable metal sold for the three and nine months ended September 30, 2022 were primarily affected by the same factors as contained metal production.

MANITOBA OPERATIONS REVIEW

Mines

Three months ended Nine months ended
Sep. 30, 2022 Sep. 30, 2021 Sep. 30, 2022 Sep. 30, 2021
Lalor
Ore tonnes 347,345 392,380 1,146,750 1,170,933
Copper % 0.71 0.86 0.74 0.69
Zinc % 3.27 3.60 3.46 4.24
Gold g/tonne 4.57 3.85 3.99 3.23
Silver g/tonne 21.27 22.13 22.80 22.61
777
Ore tonnes - 256,536 484,355 786,966
Copper % - 1.06 1.12 1.33
Zinc % - 3.88 3.83 3.82
Gold g/tonne - 1.96 1.66 2.11
Silver g/tonne - 22.99 20.85 25.32
Total Mines
Ore tonnes 347,345 648,916 1,631,105 1,957,899
Copper % 0.71 0.94 0.85 0.95
Zinc % 3.27 3.71 3.57 4.07
Gold g/tonne 4.57 3.10 3.30 2.78
Silver g/tonne 21.27 22.47 22.22 23.70
Unit Operating Costs ^1,2^ Three months ended Nine months ended
--- --- --- --- --- ---
Sep. 30, 2022 Sep. 30, 2021 Sep. 30, 2022 Sep. 30, 2021
Mines
Lalor C$/tonne 152.84 115.84 135.62 115.89
777 C$/tonne - 91.17 87.50 87.99
Total Mines C$/tonne 152.84 106.09 121.33 104.68
^1^ Reflects costs per tonne of ore mined.
^2^ Unit costs is a non-IFRS financial performance measure with no standardized definition under IFRS. For further information and a detailed reconciliation, please see the discussion under the "Non-IFRS Financial Performance Measures" section of this MD&A.

After 18 years of steady production at 777 in Flin Flon, the final reserves were depleted in June 2022. Closure activities in Flin Flon, including the zinc plant, were substantially completed in the third quarter with most of our employees and equipment of value transitioned to our Snow Lake operations to support Lalor's ramp-up strategy of 5,300 tonnes per day in early 2023. 777 was decommissioned in early August with the removal of shaft conveyances and hoist ropes, and securing of the shaft and all other openings to underground. The Flin Flon mill was safely placed on long-term care and maintenance during the third quarter.

A key focus area for the Snow Lake operations during the third quarter was integrating the Flin Flon employees and equipment to be able to transition away from the use of contractors in the future. Lalor's ore production during the quarter was impacted by an underground scoop tram fire as well as an unplanned Manitoba Hydro power outage due to the failure of a remote transmission line supplying power to the town of Snow Lake and our property, both of which occurred in September. The two-day power outage affected our operations at Lalor, the New Britannia and Stall mills and the Snow Lake camp and required several days to fully restore power, ventilation, and water services to the underground operations at Lalor. Once production activities resumed, priority was placed on mining the higher value gold and copper-gold zone ore to maintain throughput at New Britannia mill. Lalor completed a scheduled maintenance program at the end of the third quarter and into the beginning of the fourth quarter to replace surface ore chutes and complete other pre-winter maintenance activities. Lalor's ore production is expected to return to 4,650 tonnes per day in the fourth quarter and is on track to ramp up to 5,300 tonnes per day in early 2023.

Ore mined at our Manitoba operations during the third quarter of 2022 was 46% lower than the same period in 2021 mainly due to the closure of 777 in June 2022 which resulted in a significant decline in ore mined in the third quarter compared to the prior year period which benefited from the full contribution of 777 mine production. Excluding 777 production, Lalor mined ore in the third quarter was 11% lower than the same period in 2021 due to the above noted transition and production interruptions impacting operations. Gold grades mined during the third quarter of 2022 were 19% higher than the same period in 2021. Copper, zinc and silver grades mined at Lalor during the third quarter of 2022 were 17%, 9% and 4% lower, respectively, compared to the same period in 2021.

Year-to-date ore mined at our Manitoba operations in 2022 was 17% lower than the same period in 2021 mainly due to the closure of 777 in June 2022 as mentioned above. Year-to-date ore mined at Lalor in 2022 remained consistent with the same period in 2021. Copper, gold and silver grades mined at Lalor during the first nine months of 2022 were 7%, 24% and 1% higher, respectively, compared to the same period in 2021, mainly due to an increased focus on mining of gold and copper-gold stopes and a corresponding decrease of production from the base metal zones. As such, year-to-date zinc grades mined at Lalor in 2022 were 18% lower than the same period in 2021, in line with the mine plan.

Total mine unit operating costs during the third quarter of 2022 increased by 44%, reflecting the standalone cost structure of Lalor compared to the same period in 2021 which included operating costs for both Lalor and the lower cost 777 mine. Operating costs were also impacted by higher inflationary cost pressures for bulk commodities, fuel, and contractor costs compared to the same period in 2021, in addition to lower ore production volumes as mentioned above.

Total mine unit operating costs during the first nine months of 2022 increased by 16% compared to the same period in 2021 due to the factors mentioned above and higher propane usage early in the year caused by a colder winter.

Processing Facilities

Three months ended Nine months ended
Sep. 30, 2022 Sep. 30, 2021 Sep. 30, 2022 Sep. 30, 2021
Stall & New Britannia Concentrator Combined
Ore tonnes 362,108 408,201 1,165,415 1,087,029
Copper % 0.69 0.82 0.75 0.71
Zinc % 3.33 3.58 3.59 4.37
Gold g/tonne 4.60 3.84 4.12 3.23
Silver g/tonne 20.66 23.32 22.67 22.97
Copper concentrate tonnes 12,411 18,422 44,075 39,797
Concentrate grade % Cu 17.69 15.41 17.51 16.66
Zinc concentrate tonnes 19,442 25,429 65,100 83,698
Concentrate grade % Zn 50.15 49.72 50.80 50.41
Copper recovery - concentrate % 88.3 84.3 88.5 86.0
Zinc recovery - concentrate (Stall) % 88.0 88.2 85.9 89.4
Gold recovery - concentrate % 60.9 53.4 59.4 55.1
Silver recovery - concentrate % 57.6 52.7 58.6 54.6
Contained metal in concentrate produced
Copper tonnes 2,196 2,839 7,719 6,630
Zinc tonnes 9,750 12,643 33,069 42,191
Gold oz 32,570 26,906 91,565 62,191
Silver oz 138,615 161,418 498,046 438,168
Metal in doré produced
Gold oz 7,887 404 21,608 404
Silver oz 14,155 10 40,175 10
Flin Flon Concentrator
Ore tonnes - 258,062 497,344 870,951
Copper % - 1.06 1.11 1.26
Zinc % - 3.86 3.87 3.89
Gold g/tonne - 1.96 1.67 2.12
Silver g/tonne - 22.93 21.00 24.86
Copper concentrate tonnes - 10,276 22,602 44,092
Concentrate grade % Cu - 22.70 21.24 21.96
Zinc concentrate tonnes - 16,412 31,602 55,621
Concentrate grade % Zn - 49.97 50.59 50.58
Copper recovery % - 85.2 86.7 88.0
Zinc recovery % - 82.2 83.0 83.0
Gold recovery % - 58.1 57.1 58.3
Silver recovery % - 42.4 51.8 44.9
Contained metal in concentrate produced
Copper tonnes - 2,334 4,801 9,685
Zinc tonnes - 8,201 15,986 28,131
Gold oz - 9,435 15,238 34,640
Silver oz - 80,713 173,963 312,781
Unit Operating Costs ^1^ **** Three months ended Nine months ended Guidance
--- --- --- --- --- --- --- --- ---
Sep. 30, 2022 Sep. 30, <br>2021 Sep. 30, 2022 Sep. 30, <br>2021 Annual
2022
Concentrators
Stall & New Britannia C$/tonne 59.77 26.30 52.87 24.80
Flin Flon C$/tonne - 29.15 28.14 27.65
Combined mine/mill unit operating costs ^2,3^
Manitoba C$/tonne 235 147 185 149 170 - 185
^1^ Reflects costs per tonne of milled ore.
^2^Reflects combined mine, mill and G&A costs per tonne of milled ore.
^3^Combined unit costs is a non-IFRS financial performance measure with no standardized definition under IFRS. For further information and a detailed reconciliation, please see the discussion under the "Non-IFRS Financial Performance Measures" section of this MD&A.

The combined Stall and New Britannia mills processed 11% less ore in the third quarter of 2022 compared to the same period in 2021, mainly due to the above noted production interruptions impacting Lalor and the milling operations. Stall recoveries were consistent with the metallurgical model for the head grades delivered. Compared to the same period in 2021, unit operating costs at the Stall and New Britannia mills were higher in the third quarter of 2022 as a result of higher costs at New Britannia and inflationary cost pressures.

The combined Stall and New Britannia mills processed 7% more ore in the first nine months of 2022 compared to the same period in 2021 due to lower production from New Britannia in the comparative period as commissioning activities at the New Britannia gold circuit were completed in July 2021. Stall recoveries were consistent with the metallurgical model for the head grades delivered. Compared to the same period in 2021, unit operating costs at the Stall and New Britannia mills were higher in first nine months of 2022 for the same reasons outlined in the third quarter variance as well as scheduled mill maintenance at New Britannia early in the year and baseline effects as New Britannia was not yet fully operational in the comparative period.

The New Britannia mill achieved consistent production in the third quarter, averaging approximately 1,440 tonnes per day. Metal recoveries have now stabilized near our targeted levels for the mill. Additional improvement initiatives will continue to be advanced in the upcoming quarters with a focus on reducing reagent and grinding media consumption that has contributed to higher operating costs than planned. These initiatives require minimal capital expenditures and will further improve overall metal recoveries and copper concentrate grades.

Combined unit operating costs in the third quarter of 2022 and year-to-date increased by 60% and 24%, respectively, compared to the same periods in 2021 for the same reasons as outlined above. Looking ahead to the fourth quarter of 2022, we expect combined unit operating costs to remain elevated due to ongoing inflationary cost pressures and the removal of the lower-cost Flin Flon operations. As such, full year combined unit costs in Manitoba are expected to exceed the upper end of the 2022 guidance range by approximately 5%.

Three months ended Nine months ended Guidance
Contained metal in concentrate produced ^1^ Sep. 30,2022 Sep. 30,<br>2021 Sep. 30,2022 Sep. 30,<br>2021 Annual
2022
Copper tonnes 2,196 5,173 12,520 16,315 12,000 - 16,000
Gold ^2^ oz 32,570 36,341 106,803 96,831 -
Silver ^3^ oz 138,615 242,131 672,009 750,949 -
Zinc tonnes 9,750 20,844 49,055 70,322 50,000 - 70,000
Metal in doré produced ^1^
Gold ^2^ oz 7,887 404 21,608 404 -
Silver ^3^ oz 14,155 10 40,175 10 -
Contained metal in concentrate and doré produced
Gold ^2^ oz 40,457 36,745 128,411 97,235 150,000 - 185,000
Silver ^3^ oz 152,770 242,141 712,184 750,959 800,000 - 1,100,000
^1^Metal reported in concentrate is prior to deductions associated with smelter terms.
^2^Gold production guidance includes gold contained in concentrate produced and gold in doré.
^3^Silver production guidance includes silver contained in concentrate produced and silver in doré.

Metal production in the third quarter was lower following the closure of 777 in June 2022 and the above noted production interruptions, partially offset by higher Lalor gold grades and improved gold recoveries at New Britannia. Compared to the same period in 2021, gold production in the third quarter of 2022 increased by 10% due to increased production from Snow Lake, while copper, zinc and silver production decreased by 58%, 53% and 37%, respectively, over the same period.

Year-to-date metal production was impacted by the same reasons noted above. Compared to the same period in 2021, gold production in the first nine months of 2022 increased by 32%, while copper, zinc and silver production decreased by 23%, 30% and 5%, respectively, over the same time period.

Full year production of all metals is on track to achieve guidance ranges for 2022.

* Mining activities at 777 were completed in June 2022

Zinc Plant

Zinc Production Three months ended Nine months ended
Sep. 30, 2022 Sep. 30, 2021 Sep. 30, 2022 Sep. 30, 2021
Zinc Concentrate Treated
Domestic tonnes - 44,275 76,223 146,140
Refined Metal Produced
Domestic tonnes - 19,858 37,894 68,785
Unit Operating Costs Three months ended Nine months ended
--- --- --- --- --- --- ---
Sep. 30, 2022 Sep. 30, 2021 Sep. 30, 2022 Sep. 30, 2021
Zinc Plant ^1,2^ C$/lb - 0.55 0.60 0.53
^1^ Zinc unit operating costs include G&A costs.<br><br> <br>^2^ Zinc unit costs is a non-IFRS financial performance measure with no standardized definition under IFRS. For further information and a detailed reconciliation, please see the discussion under the "Non-IFRS Financial Performance Measures" section of this MD&A.

The zinc plant ceased operations on June 30, 2022 and, as such, had no production during the third quarter. Closure activities commenced and are progressing safely during the third quarter of 2022.

Manitoba Cash Cost and Sustaining Cash Cost

Three months ended Nine months ended Guidance
Sep. 30, 2021 Sep. 30, 2022 Sep. 30, 2021 Annual 2022
Cost per pound of gold produced
Cash cost per ounce of gold produced, net of by-product credits ^1, 2^ /oz 216 - 136 - 300 - 550
Sustaining cash cost per ounce of gold produced, net of by-product credits ^1, 2^ /oz 1,045 - 909 -
Cost per pound of copper produced
Cash cost per pound of copper produced, net of by-product credits ^1^ /lb (10.64 ) (1.64 ) (3.75 ) (1.90 )
Sustaining cash cost per pound of copper produced, net of by-product credits ^1^ /lb (3.71 ) 0.75 (0.15 ) 0.99

All values are in US Dollars.

^1^ Cash cost and sustaining cash cost per pound of copper and per ounce of gold produced, net of by-product credits, are not recognized under IFRS. For more detail on this non-IFRS financial performance measure, please see the discussion under the "Non-IFRS Financial Performance Measures" section of this MD&A.

^2^ Cash cost and sustaining cash cost per ounce of gold produced, net of by-product credits were introduced in 2022 and do not have a published comparative.

Cash cost per ounce of gold produced, net of by-product credits, in the third quarter was $216, higher than the second quarter of 2022 primarily due to lower by-product credits as gold revenue continues to increase and become the largest contributor to total Manitoba revenue. Gold cash costs were also impacted by higher treatment and refining charges, partially offset by lower mining, milling, G&A and zinc refining costs due to the closure of 777 and the zinc plant. Year-to-date cash cost per ounce of gold produced, net of by-product credits, continues to track below our 2022 guidance range and, as such, we reiterate the guidance range for the full year.

Sustaining cash cost per ounce of gold produced, net of by-product credits, in the third quarter was higher than the second quarter of 2022 primarily due to the same factors affecting cash cost and higher cash sustaining capital expenditures, partially offset by lower royalties.

Cash cost per pound of copper produced, net of by-product credits, in the third quarter of 2022 was lower compared to the same period in 2021, as a result of higher zinc and gold by-product revenues, lower mining and zinc refining costs, due to the closure of 777 mine and the zinc plant, partially offset by higher milling, profit sharing, treatment and refining costs and significantly lower copper production due to the closure of 777.

Cash cost per pound of copper produced, net of by-product credits, for the first nine months of 2022 was lower compared to the same period in 2021, as a result of higher gold by-product revenues, lower mining and zinc refining costs offset by higher milling, treatment and refining charges and profit sharing costs with significantly lower production due to the closure of 777.

Sustaining cash cost per pound of copper produced, net of by-product credits, in the third quarter of 2022 was lower compared to the same period in 2021, primarily due to the reasons listed above offset by higher cash sustaining capital expenditures compared to the same period in 2021.

Sustaining cash cost per pound of copper produced, net of by-product credits, for the first nine months of 2022 was lower compared to the same period in 2021, due to the same reasons provided above and slightly lower cash sustaining capital expenditures compared to the same period in 2021.

Metal Sold

Three months ended Nine months ended
Sep. 30, 2022 Sep. 30, 2021 Sep. 30, 2022 Sep. 30, 2021
Payable metal in concentrate and doré
Copper tonnes 4,081 5,071 13,042 16,394
Gold oz 54,962 30,941 131,307 85,928
Silver oz 302,946 244,338 784,630 678,929
Zinc ^1^ tonnes 12,714 21,619 50,813 75,323
^1^Includes refined zinc metal and payable zinc in concentrate sold.

All excess copper concentrate built up during the first half of 2022 due to limited railcar availability caused by winter transportation bottlenecks was sold during the third quarter. Sales of copper and zinc during the three and nine months ended September 30, 2022 were lower than the comparable periods in 2021 due to the closure of 777 in June 2022 as well as the above noted production interruptions. Final refined zinc metal sales were completed in August 2022 and the first zinc concentrate sale occurred in July 2022. Gold sales during the three and nine months ended September 30, 2022 were higher than the comparable period in 2021 as New Britannia only reached commercial production in September 2021.

FINANCIAL REVIEW

Financial Results

In the third quarter of 2022, we recorded a net loss of $8.1 million compared to a net loss of $170.4 million in the third quarter of 2021, representing a decrease in loss of $162.3 million. Year-to-date in 2022, we recorded a net profit of $87.8 million compared to a net loss of $233.9 million for the same period in 2021, representing an increase in profit of $321.7 million.

The following table provides further details on these variances:

(in $ millions) Three months ended <br>September 30, 2022 Nine months ended <br>September 30, 2022
Increase (decrease) in components of profit or loss:
Revenues (12.8 ) 63.4
Cost of sales
Mine operating costs (12.9 ) (62.6 )
Depreciation and amortization (3.8 ) 9.8
Impairment - environmental obligation 147.3 147.3
Selling and administrative expenses (1.1 ) 5.4
Exploration expenses 5.2 (3.1 )
Environmental obligation adjustment 6.6 142.1
Other expenses 9.5 4.8
Impairment loss - (95.0 )
Net finance expense 9.6 100.6
Tax expense 14.7 9.0
Decrease in loss/increase in profit for the period 162.3 321.7

Revenue

Revenue for the third quarter of 2022 was $346.2 million, $12.8 million lower than the same period in 2021, primarily as a result of lower copper prices and lower zinc sales volumes, partially offset by higher copper and gold sales volumes. We continue to see higher sales volumes of gold following the 2021 commencement of operations at the high-grade Pampacancha deposit in Peru and the copper-gold circuit at the New Britannia mill in Manitoba. Copper sales volumes increased in the third quarter of 2022, relative to the prior year primarily due to higher throughput and copper grades in Peru. Lower zinc sales volumes are a result of a reduction in overall zinc production due to the closure of 777 in Manitoba during June 2022, as well as lower zinc grades from Lalor as we continue to transition to mining of the gold lenses and away from base metal zones.

Revenue for the first nine months of 2022 was $1,140.2 million, $63.4 million higher than the same period in 2021, mainly due to higher realized zinc prices as well as higher copper and precious metal sales volumes. Offsetting these increases were lower zinc sales, due to the same reasons as the quarter-to-date variances described above.

The following table provides further details on these variances:

(in $ millions) Three months ended <br>September 30, 2022 Nine months ended <br>September 30, 2022
Metals prices^1^ ****
Lower copper prices (43.0 ) (10.5 )
Higher zinc prices 3.7 45.8
Lower gold prices (5.0 ) (6.5 )
Lower silver prices (2.5 ) (10.3 )
Sales volumes
Higher copper sales volumes 34.3 16.6
Lower zinc sales volumes (28.1 ) (74.3 )
Higher gold sales volumes 30.4 93.5
Higher silver sales volumes 2.7 16.2
Other
Change in derivative mark-to-market on zinc 0.3 -
Molybdenum and other volume and pricing differences 4.0 0.8
Variable consideration adjustments (2.3 ) (0.6 )
Effect of higher treatment and refining charges (7.3 ) (7.3 )
(Decrease) increase in revenue in 2022 compared to 2021 (12.8 ) 63.4
^1^ See discussion below for further information regarding metals prices.

Our revenue by significant product type is summarized below:

Three months ended Nine months ended
(in $ millions) Sep. 30, 2022 Sep. 30, 2021 Sep. 30, 2022 Sep. 30, 2021
Copper 194.8 201.6 634.5 625.5
Zinc 44.1 67.7 199.3 227.2
Gold 99.9 62.0 257.8 162.0
Silver 6.6 6.0 22.0 19.7
Molybdenum 18.7 12.8 36.9 26.9
Other metals 0.2 1.9 4.7 6.1
Revenue from contracts 364.3 352.0 1,155.2 1,067.4
Amortization of deferred revenue - gold 8.4 13.6 31.6 27.7
Amortization of deferred revenue - silver 9.2 9.9 30.2 26.6
Amortization of deferred revenue - variable consideration adjustments - prior periods (2.3 ) - 1.0 1.6
Pricing and volume adjustments^1^ (11.6 ) (2.0 ) (28.8 ) (4.8 )
Treatment and refining charges (21.8 ) (14.5 ) (49.0 ) (41.7 )
Revenue 346.2 359.0 1,140.2 1,076.8
^1^Pricing and volume adjustments represents mark-to-market adjustments on provisionally prices sales, realized and unrealized changes to fair value for non-hedge derivative contracts and adjustments to originally invoiced weights and assays.

For further detail on variable consideration adjustments, refer to note 16 of our consolidated interim financial statements.

Realized sales prices

This measure is intended to enable management and investors to understand the average realized price of metals sold to third parties in each reporting period. The average realized price per unit sold does not have any standardized meaning prescribed by IFRS, is unlikely to be comparable to similar measures presented by other issuers and should not be considered in isolation or a substitute for measures of performance prepared in accordance with IFRS.

For sales of copper, zinc, gold and silver we may enter into non-hedge derivatives ("QP hedges") which are intended to manage the provisional pricing risk arising from quotational period terms in concentrate sales agreements. The QP hedges are not removed from the calculation of realized prices. We expect that gains and losses on QP hedges will offset provisional pricing adjustments on concentrate sales contracts.

Our realized prices for the third quarter of 2022 and 2021, respectively, are summarized below:

Realized prices^1^ for the LME YTD<br><br> <br>2022^2^ Realized prices^1^ for the
Three months ended Nine months ended
Sep. 30, 2022 Sep. 30, 2021 Sep. 30, 2022 Sep. 30, 2021
Prices
Copper /lb 3.47 4.26 4.12 4.07 4.14
Zinc^3^ /lb 1.56 1.43 1.63 1.78 1.37
Gold^4^ /oz 1,519 1,594 1,668 1,707
Silver^4^ /oz 19.72 22.74 21.70 26.01
^1^Realized prices exclude refining and treatment charges and are on the sale of finished metal or metal in concentrate. Realized prices include the effect of provisional pricing adjustments on prior period sales.
^2^ London Metal Exchange average for copper and zinc prices.
^3^ Includes sales of cast zinc metal and zinc concentrate. Zinc realized prices include premiums paid by customers for delivery of refined zinc metal, but exclude unrealized gains and losses related to non-hedge derivative contracts that are included in zinc revenues. Realized prices include the effect of provisional pricing adjustments on zinc concentrate.
^4^Sales of gold and silver from our 777 and Constancia mines are subject to our precious metals stream agreement with Wheaton, pursuant to which we recognize deferred revenue for precious metals deliveries and also receive cash payments. Stream sales are included within realized prices and their respective deferred revenue and cash payment rates can be found on page 31 of this MD&A.

All values are in US Dollars.

The following tables provide a reconciliation of average realized price per unit sold, by metal, to revenues as shown in the consolidated financial statements.

Three months ended September 30, 2022
(in $ millions) ^1^ Copper Zinc Gold Silver Molybdenum Other Total
Revenue from contracts ^2^ 194.8 44.1 99.9 6.6 18.7 0.2 364.3
Amortization of deferred revenue - - 8.4 9.2 - - 17.6
Pricing and volume adjustments ^3^ (5.0 ) (0.5 ) (6.6 ) 0.3 0.2 - (11.6 )
By-product credits ^4^ 189.8 43.6 101.7 16.1 18.9 0.2 370.3
Derivative mark-to-market ^5^ - - - - - - -
Revenue, excluding mark-to-market on non-QP hedges 189.8 43.6 101.7 16.1 18.9 0.2 370.3
Payable metal in concentrate sold^6^ 24,799 12,714 66,932 816,416 511 - -
Realized price^7^ 7,654 3,429 1,519 19.72 - - -
Realized price ^8^ 3.47 1.56 - - - - -
Nine months ended September 30, 2022
(in $ millions) ^1^ Copper Zinc Gold Silver Molybdenum Other Total
Revenue from contracts ^2^ 634.5 199.3 257.8 22.0 36.9 4.7 1,155.2
Amortization of deferred revenue - - 31.6 30.2 - - 61.8
Pricing and volume adjustments ^3^ (15.6 ) - (12.2 ) 0.3 (1.3 ) - (28.8 )
By-product credits ^4^ 618.9 199.3 277.2 52.5 35.6 4.7 1,188.2
Derivative mark-to-market ^5^ - 0.4 - - - - 0.4
Revenue, excluding mark-to-market on non-QP hedges 618.9 199.7 277.2 52.5 35.6 4.7 1,188.6
Payable metal in concentrate sold^6^ 69,058 50,813 166,159 2,419,179 931 - -
Realized price^7^ 8,962 3,930 1,668 21.70 - - -
Realized price ^8^ 4.07 1.78 - - - - -

^1^Average realized price per unit sold may not calculate based on amounts presented in this table due to rounding.

^2^ As per financial statements.

^3^Pricing and volume adjustments represents mark-to-market adjustments on provisionally priced sales, realized and unrealized changes to fair value for non-hedge derivative contracts and adjustments to originally invoiced weights and assays.

^4^ By-product credits subtotal is used in the calculated of cash cost per pound of copper and zinc produced, net of by-product credits. Cash cost per pound of copper and per ounce of gold produced, net of by-product credits, are non-IFRS financial performance measures with no standardized definition under IFRS. For further information and a detailed reconciliation, please see the discussion under the "Non-IFRS Financial Performance Measures" section of this MD&A.

^5^Derivative mark-to-market excludes mark-to-market on QP hedges.

^6^Copper, zinc and molybdenum shown in metric tonnes and gold and silver shown in ounces.

^7^Realized price for copper, zinc and molybdenum in $/metric tonne and realized price for gold and silver in $/oz.

^8^Realized price for copper and zinc in $/lb.

The price, quantity and mix of metals sold, affect our revenue, operating cash flow and profit. Revenue from metals sales can vary from quarter to quarter due to production levels, shipping volumes and transfer of risk and title to customers.

Three months ended September 30, 2021
(in $ millions) ^1^ Copper Zinc Gold Silver Molybdenum Other Total
Revenue from contracts ^2^ 201.6 67.7 62.0 6.0 12.8 1.9 352.0
Amortization of deferred revenue - - 13.6 9.9 - - 23.5
Pricing and volume adjustments ^3^ (3.1 ) - 0.7 - 0.4 - (2.0 )
By-product credits ^4^ 198.5 67.7 76.3 15.9 13.2 1.9 373.5
Derivative mark-to-market ^5^ - 0.3 - - - - 0.3
Revenue, excluding mark-to-market on non-QP hedges 198.5 68.0 76.3 15.9 13.2 1.9 373.8
Payable metal in concentrate sold^6^ 21,136 21,619 47,843 701,601 304 - -
Realized price^7^ 9,389 3,145 1,594 22.74 - - -
Realized price ^8^ 4.26 1.43 - - - - -
Nine months ended September 30, 2021
(in $ millions)^1^ Copper Zinc Gold Silver Molybdenum Other Total
Revenue from contracts^2^ 625.5 227.2 162.0 19.7 26.9 6.1 1,067.4
Amortization of deferred revenue - - 27.7 26.6 - - 54.3
Pricing and volume adjustments ^3^ (12.7 ) 0.6 0.5 0.3 6.5 - (4.8 )
By-product credits ^4^ 612.8 227.8 190.2 46.6 33.4 6.1 1,116.9
Derivative mark-to-market^5^ - 0.4 - - - - 0.4
Revenue, excluding mark-to-market on non-QP hedges 612.8 228.2 190.2 46.6 33.4 6.1 1,117.3
Payable metal in concentrate sold ^6^ 67,241 75,323 111,431 1,788,868 853 - -
Realized price ^7^ 9,115 3,029 1,707 26.01 - - -
Realized price ^8^ 4.14 1.37 - - - - -

^1^Average realized price per unit sold may not calculate based on amounts presented in this table due to rounding.

^2^ As per financial statements.

^3^Pricing and volume adjustments represents mark-to-market adjustments on provisionally priced sales, realized and unrealized changes to fair value for non-hedge derivative contracts and adjustments to originally invoiced weights and assays.

^4^ By-product credits subtotal is used in the calculated of cash cost per pound of copper and zinc produced, net of by-product credits. Cash cost per pound of copper and per ounce of gold produced, net of by-product credits, are non-IFRS financial performance measures with no standardized definition under IFRS. For further information and a detailed reconciliation, please see the discussion under the "Non-IFRS Financial Performance Measures" section of this MD&A.

^5^Derivative mark-to-market excludes mark-to-market on QP hedges.

^6^Copper, zinc and molybdenum shown in metric tonnes and gold and silver shown in ounces.

^7^Realized price for copper, zinc and molybdenum in $/metric tonne and realized price for gold and silver in $/oz.

^8^Realized price for copper and zinc in $/lb.

Stream Sales

The following table shows stream sales included within realized prices and their respective deferred revenue and cash payment rates:

Three months ended Nine months ended
Sep. 30, 2022 Sep. 30, 2022
Manitoba Peru ^4^ Manitoba Peru ^4^
Gold oz 3,098 6,336 11,115 24,262
Silver oz 73,347 498,199 235,626 1,635,865
Gold deferred revenue drawdown rate^1,2^ $/oz 1,214 734 1,238 734
Gold cash rate^3^ $/oz 432 416 430 413
Total gold stream realized price $/oz 1,646 1,150 1,668 1,147
Silver deferred revenue drawdown rate^1,2^ $/oz 24.01 14.95 24.43 14.95
Silver cash rate^3^ $/oz 6.37 6.14 6.34 6.10
Total silver stream realized price $/oz 30.38 21.09 30.77 21.05
Three months ended Nine months ended
Sep. 30, 2021 Sep. 30, 2021
Manitoba Peru Manitoba Peru
Gold oz 5,880 8,159 14,151 12,156
Silver oz 98,442 484,279 256,585 1,125,533
Gold deferred revenue drawdown rate^1,2^ $/oz 1,253 762 1,264 806
Gold cash rate ^3^ $/oz 427 412 426 409
Total gold stream realized price $/oz 1,680 1,174 1,690 1,215
Silver deferred revenue drawdown rate^1,2^ $/oz 24.15 15.64 24.37 18.05
Silver cash rate ^3^ $/oz 6.30 6.08 6.28 6.04
Total silver stream realized price $/oz 30.45 21.72 30.65 24.09

^1^Subsequent to the variable consideration adjustment recorded on January 1, 2022, the deferred revenue amortization is recorded in Manitoba at C$1,584/oz gold and C$31.28/oz silver (September 30, 2021 - C$1,578/oz gold and C$30.38/oz silver) and converted to US dollars at the exchange rate in effect at the time of revenue recognition. A variable consideration adjustment was recorded on September 30, 2022 in Manitoba following a revised forecast for 777 in the third quarter of 2022, which indicated that substantially all of 777's precious metals reserves and inventory levels have been depleted.

^2^Deferred revenue drawdown rates for gold and silver do not include variable consideration adjustments.

^3^The gold and silver cash rate for Manitoba increased by 1% from $400/oz and $5.90/oz effective August 1, 2015. Subsequently every year, on August 1, the cash rate will increase by 1% compounded. The weighted average cash rate is disclosed. The gold and silver cash rate for Peru increased by 1% from $400/oz and $5.90/oz effective August 4, 2019. Subsequently every year, on August 4, the cash rate will increase by 1% compounded. The weighted average cash rate is disclosed.

^4^Subsequent to the variable consideration adjustment recorded on January 1, 2022, the deferred revenue amortization is recorded in Peru at $734/oz gold and $14.95/oz silver. Effective May 1, 2021, the drawdown rate for the Peru stream agreement for gold was $762/oz and prior to May 1, 2021, the drawdown rate for Peru gold was $990/oz. Effective May 1, 2021, the drawdown rate for the Peru stream agreement for silver was $15.64/oz and prior to May 1, 2021 the drawdown rate for Peru silver was $21.86/oz.

Cost of Sales

Our detailed cost of sales is summarized as follows:

(in $ thousands) Three months ended Nine months ended
Sep. 30,2022 Sep. 30,<br>2021 Sep. 30,2022 Sep. 30,<br>2021
Peru
Mining 35,197 22,772 95,899 70,444
Milling 52,043 44,750 144,429 128,356
Changes in product inventory (2,497 ) (3,126 ) (15,663 ) (9,236 )
Depreciation and amortization 56,614 47,185 152,787 140,330
G&A 13,405 13,979 48,180 45,380
Inventory adjustments - - (558 ) (1,446 )
Freight, royalties and other charges 14,645 10,462 38,390 32,448
Total Peru cost of sales 169,407 136,022 463,464 406,276
Manitoba
Mining 40,659 54,634 154,592 163,769
Milling 16,573 14,484 59,035 40,801
Zinc plant - 15,868 32,755 53,383
Changes in product inventory 32,223 8,798 28,963 7,303
Depreciation and amortization 33,197 38,825 105,420 127,667
Inventory adjustments 2,074 5,445 4,104 5,445
G&A 9,971 8,794 55,935 39,719
Past service pension cost - 4,229 - 4,229
Freight, royalties and other charges 9,637 9,975 28,764 31,656
Total Manitoba cost of sales 144,334 161,052 469,568 473,972
Cost of sales 313,741 297,074 933,032 880,248

Total cost of sales for the third quarter of 2022 was $313.7 million, reflecting an increase of $16.7 million from the third quarter of 2021. Peru cost of sales increased by $33.4 million in the third quarter of 2022, compared to the same period of 2021 as a result of increases in mining, milling, depreciation and freight costs. The increases in mining and milling costs were mainly driven by higher throughput as well as higher consumable costs. The increase to depreciation was mainly driven by the increase in tonnes mined and milled as well as higher contained metal in 2022 compared to the same quarter in 2021. Manitoba cost of sales decreased by $16.7 million in the third quarter of 2022, compared to the same period of 2021 as a result of the closure of the zinc plant in June 2022, decreases in depreciation and mining costs due to the closure of 777 and a reduction of past service costs. These decreases were partially offset by a significant drawdown of copper concentrate product inventory and higher milling costs at New Britannia.

Total cost of sales for the first three quarters of 2022 was $933.0 million, reflecting an increase of $52.8 million from the same period in 2021. Peru cost of sales increased by $57.2 million mainly driven by higher mining, milling, depreciation and freight costs, partially offset by a buildup of finished goods inventory. The increases in mining costs were primarily due to a higher strip ratio and higher diesel prices. The increases in milling costs were due to higher power prices as well as higher throughput. The increase to depreciation was mainly driven by mining of higher grade ore. Manitoba cost of sales decreased by $4.4 million as a result of a decrease in depreciation resulting from lower production following the closure of 777, as increasing real, long-term discount rates have reduced the overall provision and corresponding asset, along with decreases in zinc plant costs and 777 mining costs following their closure in June 2022. Partially offsetting these decreases was a significant drawdown of copper concentrate product inventory and increase in milling and G&A costs, mostly related to inflationary pressures on consumables and higher volumes of ore milled at New Britannia as well as increases in accrued employee profit sharing.

For details on unit operating costs refer to the respective tables in the "Operations Review" section of this MD&A.

For the third quarter of 2022, other significant variances in expenses from operations, compared to the same period in 2021, include the following:

  • Environmental obligation adjustments increased by $6.6 million, largely as a result of gains on the revaluation of the environmental obligation on our non-producing sites in Manitoba due to changes in long-term real discount rates.

Given the long term nature of the reclamation cash flows, the related environmental provision is highly sensitive to changes in long-term risk-free discount rates and, as such, we may continue to experience significant quarterly closure cost provision revaluations.

  • Other expenses decreased by $9.5 million compared to the same period in 2021. The decrease was primarily related to $11.1 million of decreased losses on disposal of property, plant and equipment and non-current assets and $4.9 million decrease in evaluation costs as costs related to Copper World have been capitalized since May 2022. Partially offsetting these impacts were increases of $4.3 million related care & maintenance costs for the Flin Flon concentrator and tailings impoundment area and $1.4 million in restructuring and closure activities for the Flin Flon complex.

For the year-to-date 2022, other significant variances in expenses from operations, compared to 2021, include the following:

- Environmental obligation adjustments increased by $142.1 million, largely as a result of gains on the revaluation of the environmental obligation on our non-producing sites in Manitoba. Specifically, an increase in long term risk-free discount rates resulted in a large decline in the closure cost provision.

  • Impairment loss of $95.0 million, related to certain capitalized costs and assets associated with the previous stand-alone development plan for the Rosemont deposit, which were determined to no longer be recoverable.

- Exploration expenses increased by $3.1 million compared to the same period in 2021, reflecting new drilling programs in Peru and in the Flin Flon tailings area.

- Selling and administrative expenses decreased by $5.4 million compared to the same period in 2021. The decrease was primarily due to lower share based compensation expense as a result of the revaluation of previously issued share units to lower share prices during the current year compared to the prior year.

Net finance expense

(in $ thousands) Three months ended Nine months ended
Sep. 30,2022 Sep. 30,<br>2021 Sep. 30,2022 Sep. 30,<br>2021
Finance costs - accrued or payable:
Interest expense on long-term debt 16,921 19,300 50,730 57,837
Withholding taxes 1,544 1,914 4,564 5,881
Tender premium on senior unsecured notes - - - 22,878
Loss (gain) on disposal of investments - - 3,132 (515 )
Other accrued/payable costs (income)^1^ 984 2,009 4,616 6,060
Total finance costs - accrued or payable 19,449 23,223 63,042 92,141
Finance costs - non-cash:
Accretion on streaming agreements^2^ 8,567 8,295 20,760 34,359
Change in fair value of financial assets and liabilities at fair value through profit or loss (6,686 ) 162 (5,888 ) 47,735
Write off unamortized transaction costs - - - 2,480
Other non-cash costs^3^ (735 ) (1,470 ) 3,852 5,657
Total finance costs - non-cash 1,146 6,987 18,724 90,231
Net finance expense 20,595 30,210 81,766 182,372

^1^Includes interest income and other finance expense.

^2^Includes variable consideration adjustment (prior periods).

^3^Includes accretion on community agreements, accretion on Wheaton refund liability, unwinding of discount on provisions, and net foreign exchange losses (gains).

Net finance expense during the third quarter ended September 30, 2022, decreased by $9.6 million compared to the third quarter of 2021 due to a $3.8 million decrease in accrued finance costs and a $5.8 million decrease in non-cash finance costs.

This overall decrease was primarily driven by a $7.0 million increase in non-cash gains on the revaluation of the gold prepayment liability due to lower gold forward prices, a reduction in interest expense of $2.4 million mainly due to lower interest rates on our long term debt, a $1.8 million relative gain on foreign exchange, and a $1.3 million reduction in the accretion on streaming arrangements due to the closure of 777 in June 2022. This decrease was partially offset by a $1.3 million increase in accretion on environmental provisions.

Net finance expense during the first three quarters of 2022, decreased by $100.6 million compared to the same period in 2021 due to a $29.1 million decrease in accrued finance costs and a $71.5 million decrease in non-cash finance costs.

The reduction in net finance expense was primarily driven by the refinancing of senior unsecured notes in the third quarter of 2021. The prior year refinancing included a $49.8 million write-off of a non-cash embedded derivative on the early redemption option associated with our extinguished senior unsecured notes as well as a call premium of $22.9 million, with no corresponding charges recorded in 2022. In addition, we also incurred a $13.6 million reduction in the accretion on streaming arrangements due to a lower interest rate following the amended Peru streaming arrangement in the second quarter of 2021, a reduction in interest expense of $7.1 million mainly due to lower interest rates on our long term debt, a $5.9 million relative gain on foreign exchange, and a decrease of $5.5 million in revaluation losses on our equity investments. Offsetting these increases was a $3.6 million increase in losses on the disposal of certain public investments and $3.2 million increase in accretion on environmental provisions.

Tax Expense (Recovery)

For the three and nine months ended September 30, 2022, tax expense decreased by $14.7 million and increased by $9.0 million, respectively, compared to the same periods in 2021. The following table provides further details:

(in $ thousands) Three months ended Nine months ended
Sep. 30,2022 Sep. 30,<br>2021 Sep. 30,2022 Sep. 30,<br>2021
Deferred tax expense (recovery) - income tax^1^ 17,070 10,864 5,208 (8,835 )
Deferred tax expense (recovery) - mining tax ^1^ 727 (2,840 ) 5,844 9,023
Total deferred tax expense 17,797 8,024 11,052 188
Current tax (recovery) expense - income tax (8,804 ) 11,182 4,150 14,064
Current tax (recovery) expense - mining tax (1,121 ) 3,375 7,077 17,051
Total current tax (recovery) expense (9,925 ) 14,557 11,227 31,115
Tax expense 7,872 22,581 22,279 31,303

^1^Deferred tax expense (recovery) represents our draw down/increase of non-cash deferred income and mining tax assets/liabilities.

Income Tax Expense/Recovery

Applying the estimated Canadian statutory income tax rate of 26.3% to our profit before taxes of $110.1 million for the year-to-date of 2022 would have resulted in a tax expense of approximately $29.0 million; however, we recorded an income tax expense of $9.4 million. The significant items causing our effective income tax rate to be different than the 26.3% estimated Canadian statutory income tax rate include:

  • Deductible temporary differences with respect to Peru and Manitoba, relating to the decommissioning and restoration liabilities, were recognized as we have determined that it is probable that we will realize the recovery of these deferred tax assets based on the timing of the reversals of the deductible temporary differences and the future projected taxable profit of the Manitoba and Peru operations. This resulted in a combined deferred tax recovery of $43.4 million.

  • Temporary income tax differences not recognized as we have determined that it is not probable that we will realize the recovery of these deferred tax assets. This resulted in a deferred tax expense of $3.4 million.

  • Foreign exchange on the translation of deferred tax balances to group currency resulted in a deferred tax expense of $16.6 million.

  • The tax expense with respect to our foreign operations are recorded using an income tax rate other than the Canadian statutory income tax rate of 26.3%, resulting in a tax expense of $6.6 million.

  • The recognition of previously unrecognized deferred tax assets resulted in a deferred tax recovery of $4.0 million.

Mining Tax Expense

Applying the estimated Manitoba mining tax rate of 10.0% to our profit before taxes of $110.1 million for the third quarter of 2022 would have resulted in a tax expense of approximately $11.0 million; however, we recorded a mining tax expense of $12.9 million. Effective mining tax rates can vary significantly based on the composition of our earnings and the expected amount of mining taxable profits. Corporate costs and other costs not related to mining operations are not deductible in computing mining profits. A brief description of how mining taxes are calculated in our various business units is discussed below.

Manitoba

The Province of Manitoba imposes mining tax on profit related to the sale of mineral products mined in the Province of Manitoba (mining taxable profit) at the following rates:

  • 10% of total mining taxable profit if mining profit is C$50 million or less;

  • Between mining profit of C$50 and $C55 million, mining tax is equal to a minimum of C$5 million plus mining profit less C$50 million multiplied by 65%;

  • 15% of total mining taxable profit if mining profits are between C$55 million and C$100 million;

  • Between mining profit of C$100 million and C$105 million, mining tax is equal to a minimum of C$15 million plus mining profit less C$100 million multiplied by 57%; and

  • 17% of total mining taxable profit if mining profits exceed C$105 million.

We estimate that the tax rate that will be applicable when temporary differences reverse will be approximately 10.0%.

Peru

The Peruvian government imposes two parallel mining tax regimes, the Special Mining Tax and the Modified Royalty, on companies' operating mining income on a sliding scale, with progressive rates ranging from 2.0% to 8.4% and 1.0% to 12.0%, respectively. Based on financial forecasts, we have recorded a deferred tax liability as at September 30, 2022, at the tax rate we expect to apply when temporary differences reverse.

LIQUIDITY AND CAPITAL RESOURCES

Senior Unsecured Notes

We have $600.0 million aggregate principal amount of 4.5% senior notes due April 2026 and $600.0 million aggregate principal amount of 6.125% senior notes due April 2029.

Senior Secured Revolving Credit Facilities and Surety Bonds

We have two senior secured revolving credit facilities ("the Credit Facilities") for our Canadian and Peruvian businesses, with combined total availability of $450.0 million and substantially similar terms and conditions. As at September 30, 2022, our liquidity includes $286.1 million in cash as well as undrawn availability of $368.7 million under our Credit Facilities. As at September 30, 2022, we were in compliance with our covenants under the Credit Facilities and had drawn $81.3 million in letters of credit under the Credit Facilities.

As at September 30, 2022, the Arizona business unit had $12.8 million in surety bonds issued to support future reclamation and closure obligations. The Peru business unit also had $107.4 million in letters of credit issued with various Peruvian financial institutions to support future reclamation and other operating matters. No cash collateral is required to be posted under these letters of credit or surety bonds.

C$130 Million Bilateral Letter of Credit Facility

On August 22, 2022, we closed a C$130.0 million bilateral letter of credit facility ("LC Facility") with a major Canadian financial institution. The LC Facility enhances our liquidity position by enabling the Company to issue up to C$130.0 million of letters of credit to beneficiaries on an unsecured basis at attractive rates, with a further C$30.0 million sub-limit for financial letters of credit. This new facility was permitted under the existing terms the Credit Facilities and has no financial covenants. There have been no letters of credit drawn under this LC Facility.

Financial Condition

Financial Condition as at September 30, 2022 compared to December 31, 2021

Cash increased by $15.1 million during the first nine months of the year to $286.1 million as at September 30, 2022. This increase was mainly the result of cash flow from operating activities of $401.4 million. Offsetting these cash inflows were cash outflows from investing and financing of $253.8 million from capital investments and community agreements primarily at our Peru and Manitoba operations, partial repayment of our gold prepayment liability of $54.3 million, interest payments of $31.9 million, lease payments of $29.2 million, $10.0 million for a scheduled payment related to the Rosemont acquisition, other finance payments of $9.2 million as well as dividends of $4.0 million. We hold the majority of our cash in low-risk, liquid investments with major Canadian and Peruvian financial institutions.

Working capital decreased by $47.7 million to $99.8 million from December 31, 2021 to September 30, 2022, primarily due to a decrease in trade and other receivables of $143.9 million mainly due to timing and changes in provisionally priced receivables and a decrease in inventory of $24.4 million due to a drawdown of finished goods inventory at our Manitoba operations. Offsetting these items was an decrease in other liabilities of $29.3 million mainly due to changes in decommissioning and restoration liabilities, a decrease in deferred revenue liabilities of $21.2 million due to the closure of 777 in June 2022, changes to other financial assets and liabilities as a result of the revaluation of non-hedge derivatives that resulted in an increase in working capital of $18.6 million, an increase in cash of $15.1 million, a decrease in lease liabilities of $12.9 million and an increase in taxes receivable of $9.8 million.

Cash Flows

The following table summarizes our cash flows for the three and nine months ended September 30, 2022 and September 30, 2021:

(in $ thousands) Three months ended Nine months ended
Sep. 30,2022 Sep. 30,<br>2021 Sep. 30,2022 Sep. 30,<br>2021
Operating cash flow before change in non-cash working capital 81,617 103,509 282,581 326,945
Change in non-cash working capital 90,891 36,289 118,840 (38,978 )
Cash generated from operating activities 172,508 139,798 401,421 287,967
Cash used in investing activities (113,970 ) (88,893 ) (248,556 ) (270,654 )
Cash used in financing activities (31,531 ) (47,769 ) (137,720 ) (157,386 )
Effect of movement in exchange rates on cash 554 28 (17 ) (1,611 )
Increase (decrease) in cash 27,561 3,164 15,128 (141,684 )

Cash Flow from Operating Activities

Cash generated from operating activities was $172.5 million during the third quarter of 2022, an increase of $32.7 million compared with the same period in 2021. Operating cash flow before change in non-cash working capital was $81.6 million during the third quarter of 2022, reflecting a decrease of $21.9 million compared to the third quarter of 2021. The decrease in operating cash flows before changes in working capital is mostly attributable to lower copper prices, higher mine operating costs due to inflationary pressures on input costs and lower zinc sales volumes given the closure of 777 in June 2022, partially offset by higher copper and gold sales volumes.

Year-to-date cash generated from operating activities was $401.4 million in 2022, an increase of $113.5 million compared to 2021. Operating cash flow before changes in non-cash working capital for the third quarter of 2022 was $282.6 million, a decrease of $44.4 million compared to 2021. The decrease in operating cash flow before changes in working capital is mostly attributable to the timing of current tax payments, which increased by $20.7 million compared to the first three quarters of 2021, higher mine operating costs due to inflationary pressures on input costs and higher profit sharing and lower zinc sales volumes partially offset by higher gold sales volumes.

The increase in cash generated from changes in non-cash working capital is mostly the result of decreases in other net financial assets, receivables and inventories as at September 30, 2022 compared to previous periods.

Cash Flow from Investing and Financing Activities

During the third quarter of 2022, we spent $145.5 million in investing and financing activities, primarily driven by $89.5 million in capital expenditures, $29.5 million in community agreements, $17.1 million in partial settlement of our gold prepayment liability, $9.4 million in capitalized lease payments and $3.0 million in other finance payments.

Year-to-date, we used $386.3 million of cash in investing and financing activities, primarily driven by $220.1 million of capital expenditures, $33.6 million in community agreements, $54.3 million in partial settlement of our gold prepayment liability, $31.9 million of interest payments, $29.2 million in capitalized lease payments, $10.0 million for a scheduled payment related to the Rosemont acquisition, $9.2 million of financing costs mainly related to withholding taxes on our debt obligations and our revolving credit facilities and $4.0 million in dividend payments.

Capital Expenditures

The following summarizes accrued and cash additions to capital assets for the periods indicated:

Nine months ended Guidance
Sep. 30,<br>2021 Sep. 30,2022 Sep. 30,<br>2021 Annual
(in millions) 2022
Manitoba sustaining capital expenditures 23.5 99.0 77.9 115.0
Peru sustaining capital expenditures 1 38.9 77.0 83.9 105.0
Total sustaining capital expenditures 62.4 176.0 161.8 220.0
Arizona capitalized costs 2 6.1 27.1 12.6 40.0
Peru growth capitalized expenditures 2.0 1.5 23.1 10.0
Manitoba growth capitalized expenditures 21.0 24.4 97.2 50.0
Other capitalized costs 2.7 3.8 17.0 -
Capitalized exploration 2 1.4 23.6 3.4 40.0
Total other capitalized expenditures 33.2 80.4 153.3
Total capital additions 95.6 256.4 315.1
Reconciliation to cash capital additions:
Right-of-use asset additions ) (9.8 ) (26.1 ) (32.5 )
Community agreement additions, net (3.2 ) - (23.3 )
Change in capital accruals and other ) 4.8 (10.2 ) (9.8 )
Acquisition of property, plant & equipment - cash 87.4 220.1 249.5

All values are in US Dollars.

^1^Peru sustaining capital expenditures includes capitalized stripping costs.

^2^In August 2022 Arizona capital expenditure guidance has increased by $20 million, which includes an additional $15 million in capitalized exploration and $5 million in capitalized costs.

For the three and nine months ended September 30, 2022, total capital additions declined by 1% and 19%, respectively, compared to the same periods in 2021 as a result of lower growth spending in Manitoba and lower Peru sustaining capital expenditures partially offset by higher sustaining capital expenditures in Manitoba.

Sustaining capital expenditures in Manitoba for the three and nine months ended September 30, 2022 were $31.6 million and $99.0 million, respectively, representing increases of $8.1 million and $21.1 million compared to the same period in 2021. The increase in year-to-date sustaining capital expenditures were mainly due to higher planned capital development and lease additions at Stall & New Britannia, partially offset by the cessation of capitalizing development costs at 777 given its closure.

Sustaining capital expenditures in Peru for the three and nine months ended September 30, 2022 were $28.8 million and $77.0 million, respectively, representing a decrease of $10.1 million and $6.9 million compared to the same period in 2021. The decreased expenditures mainly relate to lower spending on the tailings management facility expansion partially offset by increased capitalized stripping at Pampacancha.

Growth capital spending in Manitoba for the three and nine months ended September 30, 2022 were $6.9 million and $24.4 million, respectively, reflecting expenditures for the Lalor expansion and recovery improvement projects at both New Britannia and Stall. Compared to the same quarter of 2021, growth capital expenditures decreased by $14.1 million and $72.8 million, respectively, as the comparative period included significant costs related to the New Britannia refurbishment project, which was completed in the fourth quarter of 2021.

Growth capital expenditures in Peru for the three and nine months ended September 30, 2022 were $1.3 million and $1.5 million, respectively, representing decreases of $0.7 million and $21.6 million compared to the same periods in 2021. The decrease in year-to-date growth capital expenditures was caused by costs incurred in the comparative period to bring Pampacancha to commercial production in the second quarter of 2021.

Arizona's growth capital expenditures for the three and nine months ended September 30, 2022 were $12.0 million and $27.1 million, respectively, and relate primarily to pre-feasibility study costs associated with Copper World.

Other capitalized costs for the three and nine months ended September 30, 2022 were $1.2 million and $3.8 million, respectively, which are mostly made up of non-cash capitalized costs.

We expect consolidated sustaining and growth capital expenditures in 2022 to be approximately $20 million lower than our full year guidance, reflecting $30 million of discretionary spending reductions across the business, as mentioned earlier, partially offset by approximately $10 million in higher expected sustaining capital expenditures in Manitoba due to continued inflationary cost pressures.

Capital Commitments

As at September 30, 2022, we had outstanding capital commitments in Canada of approximately $18.9 million, of which $18.1 million can be terminated, approximately $33.9 million in Peru primarily related to exploration option agreements, all of which can be terminated, and approximately $44.6 million in Arizona, primarily related to our Copper World project, of which approximately $8.3 million can be terminated.

We expect that our financing costs will increase as we anticipate increasing the letters of credit and/or surety bonds required to support Manitoba's recently updated closure plans.

Contractual Obligations

The following table summarizes our significant contractual obligations as at September 30, 2022:

Less than<br><br> <br>12 months 13 - 36<br><br> <br>months 37 - 60<br><br> <br>months More than<br><br> <br>60 months
Payment Schedule (in $ millions) Total
Long-term debt obligations^1^ 1,579.6 67.5 135.0 703.6 673.5
Gold prepayment obligation^2^ 80.3 64.5 15.8 - -
Lease obligations 127.5 43.8 51.3 15.7 16.7
Purchase obligation - capital commitments 97.4 38.2 16.5 35.2 7.5
Purchase obligation - other commitments^3^ 1,033.2 347.0 380.1 142.1 164.0
Pension and other employee future benefits obligations^2^ 125.7 10.7 9.0 4.9 101.1
Community agreement obligations^4, 5^ 52.3 7.4 6.8 5.6 32.5
Decommissioning and restoration obligations^5^ 406.8 8.2 7.0 7.3 384.3
Total 3,502.8 587.3 621.5 914.4 1,379.6

^1^Long-term debt obligations include scheduled interest payments, as well as principal repayments.

^2^Discounted.

^3^ Primarily made up of long-term agreements with operational suppliers, obligations for power purchase, concentrate handling, fleet and port services, as well as deferred consideration arising from the acquisition of Rosemont's minority interest.

^4^Represents community agreement obligations and various finalized land user agreements, including Pampacancha.

^5^ Undiscounted before inflation.

In addition to the contractual obligations included in the above payment schedule, we also have the following commitments which impact our financial position:

  • A profit-sharing plan with most Manitoba employees;

  • A profit-sharing plan with all Peru employees;

  • Wheaton precious metals stream agreements for 777 and the Constancia mines;

  • A net smelter returns royalty agreement related to 777; and,

  • Government royalty payments related to the Constancia mines.

Outstanding Share Data

As of November 1, 2022, the final trading day prior to the date of this MD&A, there were 261,903,151 common shares of Hudbay issued and outstanding. In addition, there were 1,667,343 stock options outstanding.

TREND ANALYSIS AND QUARTERLY REVIEW

A detailed quarterly and annual summary of financial and operating performance can be found in the "Summary of Results" section at the end of this MD&A. The following table sets forth selected consolidated financial information for each of our eight most recently completed quarters:

(in millions, except per share amounts, production on a copper equivalent basis and average realized copper price) 2021 2020
Q2 Q1 Q4 Q3^3^ Q2 Q1 Q4
Production on a copper equivalent basis (tonnes) 46,332 45,085 50,685 42,243 39,289 43,246 47,343
Average realized copper price (/lb) 4.28 4.53 4.34 4.26 4.40 3.69 3.29
Revenue 415.5 378.6 425.2 359.0 404.2 313.6 322.3
Gross profit (loss) 89.5 85.3 81.7 (85.4 ) 82.2 52.5 34.4
Profit (loss) before tax ) 21.5 88.9 (0.2 ) (147.8 ) 14.8 (69.6 ) 0.9
Profit (loss) ) 32.1 63.8 (10.5 ) (170.4 ) (3.4 ) (60.1 ) 7.4
Adjusted net earnings (loss)1,3 ) 30.5 5.2 32.7 0.9 5.4 (16.1 ) (16.4 )
Earnings (loss) per share:
Basic and diluted ) 0.12 0.24 (0.04 ) (0.65 ) (0.01 ) (0.23 ) 0.03
Adjusted net earnings (loss)1,3per share ) 0.12 0.02 0.13 0.00 0.02 (0.06 ) (0.06 )
Operating cash flow2 123.9 77.1 156.9 103.5 132.8 90.7 86.1
Adjusted EBITDA1 141.4 110.2 180.3 119.3 143.2 104.2 106.9

All values are in US Dollars.

^1^ Adjusted net earnings (loss), adjusted net earnings (loss) per share, and adjusted EBITDA are non-IFRS financial performance measure with no standardized definition under IFRS. For further information and a detailed reconciliation, please see the discussion under the "Non-IFRS Financial Performance Measures" section of this MD&A.

^2^Operating cash flow before changes in non-cash working capita

^3^The adjusted net earnings (loss) and adjusted net earnings (loss) per share in respect of the third quarter of 2021 were adjusted in our management's discussion and analysis of financial results for the year ended December 31, 2021 due to a change in the computed tax effect on certain adjustments. The adjusted net earnings changed from $38.2 million to an adjusted net earnings of $0.9 million and the adjusted net earnings per share changed from $0.15/share to an adjusted net earnings per share of $0.00/share.

Commodity prices have continued to experience declines during the third quarter of 2022 while growing inflationary pressures have contributed to higher mine operating costs resulting in declines in our key financial metrics during the quarter. Third quarter results were also impacted by lower production due to the closure of 777 in June 2022 and the commencement of care and maintenance activities, which will continue for the next several years. Relatively small movements in real, long-term discount rates will continue to impact the revaluation of our environmental provisions for closed sites in Manitoba and these movements will be reflected through the income statement.

The second quarter results for 2022 were impacted by a revaluation gain of $60.7 million pertaining mostly to the environmental obligation on our Flin Flon site due to increases in long-term risk-free interest rates. A pre-tax impairment loss of $95.0 million was recorded following the release of the Copper World Preliminary Economic Assessment in June 2022 as certain assets associated with the previous, stand-alone development plan for the Rosemont deposit are no longer expected to be recoverable.

Results in the first quarter of 2022 benefited from a trend of higher realized base metal prices, but were also impacted by rising operating costs caused by inflation. While we achieved increased gold production from the higher grade Pampacancha deposit and the higher recovery New Britannia gold mill, we experienced increased levels of COVID-19 related absenteeism in the workforce, impacting production, and also experienced limited availability of rail cars leading to reduced sales and an inventory build-up. The first quarter results were also impacted by a revaluation gain of $78.2 million pertaining mostly to the environmental obligation on our Flin Flon site and $1.7 million for our non-producing sites in Manitoba caused by an increase in long-term risk-free interest rates.

Results for the fourth quarter of 2021 benefited from higher realized metal prices. This strength in commodity prices combined with higher gold production following the commencement of commercial production at New Britannia and improving copper recoveries led to record revenue of $425.2 million during the quarter. Adjusted EBITDA and operating cash flow both reached record highs. Notwithstanding these records, continued inflationary pressures along with lower copper grades caused operating costs to climb and put pressure on gross margins, compared to earlier quarters. A revaluation of our environmental obligation for the Flin Flon closure plan resulted in a $46.2 million non-cash charge, which negatively impacted net income for the quarter.

During the third quarter of 2021, increasing base metal prices contributed to strong revenues and operating cash flow. Mining at Pampacancha continued to ramp-up, contributing significantly to gold production during the quarter. As a result of the planned closure of Flin Flon operations in mid-2022 and an updated Flin Flon closure plan, non-cash charges totaling $156.3 million were incurred, which negatively impacted gross profit for the quarter. In Peru, ongoing COVID-19 costs, along with lower copper grades, put pressure on operating costs.

Financial results in the second quarter of 2021 benefited from initial production at the Pampacancha pit but were negatively impacted by higher operating costs in Peru and lower Manitoba metal production caused by COVID-19 related impacts as well as lower copper and zinc grades and lower precious metal recoveries.

The first quarter of 2021 saw lower revenues compared to the fourth quarter of 2020 due to a delayed Peru shipment for which revenue could not be recognized, and lower sales volumes from Manitoba related to a buildup of finished goods inventory during the quarter as a result of a lack of rail car availability. third quarter results were negatively impacted by $75.2 million of various finance expenses related to the refinancing of our senior notes.

Following the sharp correction in commodity prices after the initial outbreak of the COVID-19 pandemic in early 2020, commodity prices rose steadily into 2021 providing a tailwind to our operating results. Earnings in the fourth quarter of 2020 were negatively impacted by the 777 production interruption which resulted in $11.7 million in certain overhead costs being expensed through cost of sales.

For information on previous trends and quarterly reviews, refer to our MD&A for the year ended December 31, 2021, dated February 23, 2022 and available on SEDAR at www.sedar.com.

NON-IFRS FINANCIAL PERFORMANCE MEASURES

Adjusted net earnings (loss), adjusted net earnings (loss) per share, adjusted EBITDA, net debt, cash cost, sustaining and all-in sustaining cash cost per pound of copper produced, cash cost and sustaining cash cost per ounce of gold produced and combined unit cost are non-IFRS performance measures. These measures do not have a meaning prescribed by IFRS and are therefore unlikely to be comparable to similar measures presented by other issuers. 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.

Management believes adjusted net earnings (loss) and adjusted net earnings (loss) per share provides an alternate measure of the Company's performance for the current period and gives insight into its expected performance in future periods. These measures are used internally by the Company to evaluate the performance of its underlying operations and to assist with its planning and forecasting of future operating results. As such, the Company believes these measures are useful to investors in assessing the Company's underlying performance. We provide adjusted EBITDA to help users analyze our results and to provide additional information about our ongoing cash generating potential in order to assess our capacity to service and repay debt, carry out investments and cover working capital needs. Net debt is shown because it is a performance measure used by the Company to assess our financial position. Cash cost, sustaining and all-in sustaining cash cost per pound of copper produced are shown because we believe they help investors and management assess the performance of our operations, including the margin generated by the operations and the Company. Cash cost and sustaining cash cost per ounce of gold produced are shown because we believe they help investors and management assess the performance of our Manitoba operations. Combined unit cost is shown because we believe it helps investors and management assess our cost structure and margins that are not impacted by variability in by-product commodity prices.

During 2021 and 2022, there were non-recurring adjustments for Arizona and Manitoba operations, including severance, past service pension costs, disposals of certain non-current assets, and inventory supplies write-downs as well as non-cash impairment charges related to an updated Flin Flon closure plan and lower long-term discount rates in the fourth quarter of 2021, none of which management believes are indicative of ongoing operating performance and therefore are adjusting items in the calculations of adjusted net earnings (loss) and adjusted EBITDA.

Cash cost and sustaining cash cost per pound of zinc produced was a previously disclosed non-IFRS measure, most recently published in our MD&A for the year ended December 31, 2021, dated February 23, 2022. With the closure of 777 and Flin Flon operations, including the zinc plant, in the second quarter of 2022, the production profile of Manitoba has shifted from zinc to gold and therefore we have ceased providing this measure on a go forward basis.

In the first and second quarter of 2022, we recorded a non-cash gain of $79.9 million and $60.7 million, respectively, mostly related to the quarterly revaluation of our Flin Flon environmental provision, which was impacted by rising long-term risk-free discount rates. With the closure of 777 and Flin Flon operations in the second quarter of 2022 and given the long-term nature of the reclamation cash flows, quarterly revaluation of the corresponding environmental provision remains highly sensitive to changes in real, long-term risk-free discount rates and, as such, we expect to continue to experience quarterly environmental provision revaluations, which is not indicative of our ongoing operating performance. This item has been included prospectively in our calculation of adjusted earnings.

Adjusted Net Earnings (Loss)

Adjusted net earnings (loss) represents net earnings (loss) excluding certain impacts, net of taxes, such as mark-to-market adjustments, impairment charges and reversal of impairment charges, write-down of assets, and foreign exchange (gain) loss. These measures are not necessarily indicative of net earnings (loss) or cash flows as determined under IFRS.

The following table provides a reconciliation of earnings (loss) per the consolidated interim income statements, to adjusted net earnings (loss) for the three and nine months ended September 30, 2022 and 2021.

Three months ended Nine months ended
(in $ millions) Sep. 30,2022 Sep. 30,2021 Sep. 30, 2022 Sep. 30, 2021
(Loss) profit for the period (8.1 ) (170.4 ) 87.8 (233.9 )
Tax expense 7.8 22.6 22.3 31.3
(Loss) profit before tax (0.3 ) (147.8 ) 110.1 (202.6 )
Adjusting items:
Mark-to-market adjustments ^1^ (4.2 ) 1.7 (7.7 ) 53.4
Foreign exchange (gain) loss (4.8 ) (3.1 ) (5.6 ) 0.4
Inventory adjustments 2.1 5.4 3.5 4.0
Variable consideration adjustment - stream revenue and accretion 3.9 - (1.9 ) (1.0 )
Impairment losses - 147.3 95.0 147.3
Environmental obligation adjustments ^2^ (6.4 ) - (147.0 ) -
Evaluation expenses 0.1 - 7.8 -
Insurance recovery - - (5.7 ) -
Write-down of unamortized transaction costs - - - 2.5
Premium paid on redemption of notes - - - 22.9
Restructuring charges - Manitoba ^3^ 5.1 3.6 9.5 3.6
Loss on disposal of investments - - 3.1 -
Past service pension cost - 4.2 - 4.2
(Gain) loss on disposal of plant and equipment and non-current assets - Manitoba & Arizona (6.0 ) 5.4 (6.8 ) 5.4
Adjusted (loss) earnings before income taxes (10.5 ) 16.7 54.3 40.1
Tax expense (7.8 ) (22.6 ) (22.3 ) (31.3 )
Tax impact of adjusting items 5.9 6.8 (8.6 ) (18.5 )
Adjusted net (loss) earnings (12.4 ) 0.9 23.4 (9.7 )
Adjusted net (loss) earnings ($/share) (0.05 ) - 0.09 (0.04 )
Basic weighted average number of common shares outstanding (millions) 261.9 261.5 261.8 261.4

^1^ Includes changes in fair value of the gold prepayment liability, Canadian junior mining investments, other financial assets and liabilities at fair value through profit or loss and share-based compensation (recoveries) expenses.

^2^ Changes from movements to environmental obligation closure estimates are primarily related to the Flin Flon operations, which were fully depreciated as of June 30, 2022, as well as other Manitoba non-operating sites.

^3^ Includes closure costs for Flin Flon operations.

After adjusting reported net earnings for those items not considered representative of the Company's core business or indicative of future operations, the Company had an adjusted net loss in the third quarter of 2022 of $12.4 million or $0.05 earnings per share.

Adjusted EBITDA

Adjusted EBITDA is profit or loss before net finance expense/income, tax expense/recoveries, depreciation and amortization of property, plant and equipment and deferred revenue, as well as certain other adjustments. We calculate adjusted EBITDA by excluding certain adjustments included within our adjusted net earnings measure which we believe reflects the underlying performance of our core operating activities. The measure also removes the impact of non-cash items and financing costs that are not associated with measuring the underlying performance of our operations. However, our adjusted EBITDA is not the measure defined as EBITDA under our senior notes or revolving credit facilities and may not be comparable with performance measures with the same name reported by other companies. Adjusted EBITDA should not be considered as a substitute for profit or loss or as a better measure of liquidity than operating cash flow, which are calculated in accordance with IFRS. We provide adjusted EBITDA to help users analyze our results and to provide additional information about our ongoing cash generating potential in order to assess our capacity to service and repay debt, carry out investments and cover working capital needs.

The following table presents the reconciliation of earnings (loss) per the consolidated interim income statements, to adjusted EBITDA for the three and nine months ended September 30, 2022 and 2021:

Three months ended Nine months ended
(in $ millions) Sep. 30,2022 Sep. 30,<br>2021 Sep. 30,2022 Sep. 30,<br>2021
(Loss) profit for the period (8.1 ) (170.4 ) 87.8 (233.9 )
Add back:
Tax expense 7.8 22.6 22.3 31.3
Net finance expense 20.6 30.2 81.8 182.4
Other expense 6.3 15.8 14.0 18.8
Depreciation and amortization 89.8 86.0 258.2 268.0
Amortization of deferred revenue and variable consideration adjustment (15.3 ) (23.5 ) (62.7 ) (55.9 )
101.1 (39.3 ) 401.4 210.7
Adjusting items (pre-tax):
Impairment losses - 147.3 95.0 147.3
Environmental obligation adjustment ^1^ (6.4 ) 0.1 (147.0 ) (4.9 )
Inventory adjustments 2.1 5.4 3.5 4.0
Past service pension cost - 4.2 - 4.2
Share-based compensation recovery (expense) ^2^ 2.5 1.5 (1.8 ) 5.5
Adjusted EBITDA 99.3 119.2 351.1 366.8

^1^Environmental obligation adjustments were presented within other expense for 2021 periods.

^2^ Share-based compensation expenses reflected in cost of sales and selling and administrative expenses.

Net Debt

The following table presents our calculation of net debt as at September 30, 2022 and December 31, 2021:

(in $ thousands) Sep. 30,2022 Dec. 31, <br>2021
Total long-term debt 1,183,237 1,180,274
Cash (286,117 ) (270,989 )
Net debt 897,120 909,285

Cash Cost, Sustaining and All-in Sustaining Cash Cost (Copper Basis)

Cash cost per pound of copper produced ("cash cost") is a non-IFRS measure that management uses as a key performance indicator to assess the performance of our operations. Our calculation designates copper as our primary metal of production as it has been the largest component of revenues. The calculation is presented in four manners:

  • Cash cost, before by-product credits - This measure is gross of by-product revenues and is a function of the efforts and costs incurred to mine and process all ore mined. However, the measure divides this aggregate cost over only pounds of copper produced, our primary metal of production. This measure is generally less volatile from period to period, as it is not affected by changes in the price received for by-product metals. It is, however, significantly affected by the relative mix of copper concentrate and finished zinc production, where the sale of the zinc will occur later, and an increase in production of zinc metal will tend to result in an increase in cash cost under this measure.

  • Cash cost, net of by-product credits - In order to calculate the net cost to produce and sell copper, the net of by-product credits measure subtracts the revenues realized from the sale of the metals other than copper. The by-product revenues from zinc, gold, and silver are significant and are integral to the economics of our operations. The economics that support our decision to produce and sell copper would be different if we did not receive revenues from the other significant metals being extracted and processed. This measure provides management and investors with an indication of the minimum copper price consistent with positive operating margins, assuming realized by-product metal prices are consistent with those prevailing during the reporting period. It also serves as an important operating statistic that management and investors utilize to measure our operating performance versus that of our competitors. However, it is important to understand that if by-product metal prices decline alongside copper prices, the cash cost net of by-product credits would increase, requiring a higher copper price than that reported to maintain positive cash flows and operating margins.

  • Sustaining cash cost, net of by-product credits - This measure is an extension of cash cost that includes cash sustaining capital expenditures, including payments on capitalized leases, capitalized sustaining exploration, net smelter returns royalties, payments on certain long-term community agreements, as well as accretion and amortization for expected decommissioning activities for producing assets. It does not include corporate selling and administrative expenses. It provides a more fulsome measurement of the cost of sustaining production than cash cost, which is focused on operating costs only.

- All-in sustaining cash cost, net of by-product credits - This measure is an extension of sustaining cash cost that includes corporate G&A, regional costs, accretion and amortization for community agreements relating to current operations, and accretion for expected decommissioning activities for non-producing assets. Due to the inclusion of corporate selling and administrative expenses, all-in sustaining cash cost is presented on a consolidated basis only.

The tables below present a detailed build-up of cash cost and sustaining cash cost, net of by-product credits, by business unit in addition to consolidated all-in sustaining cash cost, net of by-product credits, and reconciliations between cash cost, net of by-product credits, to the most comparable IFRS measures of cost of sales for the three and nine months ended September 30, 2022 and 2021. Cash cost, net of by-product credits may not calculate exactly based on amounts presented in the tables below due to rounding.

Consolidated Three months ended Nine months ended
Net pounds of copper produced
(in thousands) Sep. 30, 2022 Sep. 30, 2021 Sep. 30, 2022 Sep. 30, 2021
Peru 49,167 39,842 137,454 121,159
Manitoba 4,841 11,404 27,602 35,968
Net pounds of copper produced 54,008 51,246 165,056 157,127
Consolidated Three months ended Nine months ended
--- --- --- --- --- --- --- --- ---
Sep. 30, 2022 Sep. 30, 2021 Sep. 30, 2022 Sep. 30, 2021
Cash cost per pound of copper produced 000s /lb 000s /lb 000s /lb 000s /lb
Cash cost, before by-product credits 211,664 3.92 206,615 4.04 697,624 4.23 635,383 4.05
By-product credits (180,464 (3.34 (175,057 (3.42 (569,328 (3.45 (504,039 (3.21
Cash cost, net of by-product credits 31,200 0.58 31,558 0.62 128,296 0.78 131,344 0.84

All values are in US Dollars.

Consolidated Three months ended Nine months ended
Sep. 30, 2022 Sep. 30, 2021 Sep. 30, 2022 Sep. 30, 2021
Supplementary cash cost information 000s $/lb ^1^ 000s $/lb ^1^ 000s $/lb ^1^ 000s $/lb ^1^
By-product credits^2^:
Zinc 43,606 0.81 67,695 1.32 199,283 1.21 227,716 1.45
Gold ^3^ 101,650 1.88 76,241 1.49 277,141 1.68 190,253 1.21
Silver ^3^ 16,066 0.30 15,957 0.31 52,661 0.32 46,535 0.30
Molybdenum & other 19,142 0.35 15,164 0.30 40,243 0.24 39,535 0.25
Total by-product credits 180,464 3.34 175,057 3.42 569,328 3.45 504,039 3.21
Reconciliation to IFRS:
Cash cost, net of by-product credits 31,200 31,558 128,296 131,344
By-product credits 180,464 175,057 569,328 504,039
Treatment and refining charges (21,852 (14,531 (48,968 (41,710
Inventory adjustments 2,074 5,445 3,546 3,999
Share-based compensation expense 114 145 (70 603
Past service pension cost - 4,229 - 4,229
Change in product inventory 29,726 5,672 13,300 (1,933
Royalties 2,204 3,489 9,393 11,680
Depreciation and amortization^4^ 89,811 86,010 258,207 267,997
Cost of sales^5^ 313,741 297,074 933,032 880,248

All values are in US Dollars.

^1^Per pound of copper produced.

^2^By-product credits are computed as revenue per financial statements, including amortization of deferred revenue and pricing and volume adjustments. For more information, please see the realized price reconciliation table on page 29 of this MD&A for these figures.

^3^ Gold and silver by-product credits do not include variable consideration adjustments with respect to stream arrangements. Variable consideration adjustments are cumulative adjustments to gold and silver stream deferred revenue primarily associated with the net change in mineral reserves and resources or amendments to the mine plan that would change the total expected deliverable ounces under the precious metal streaming arrangement. For the three and nine months ended September 30, 2022 the variable consideration adjustments amounted to an expense of $2,286 and income of $959, respectively (nine months ended September 30, 2021 - income of $1,617).

^4^Depreciation is based on concentrate sold.

^5^ As per IFRS financial statements.

Peru Three months ended Nine months ended
(in thousands) Sep. 30, 2022 Sep. 30, 2021 Sep. 30, 2022 Sep. 30, 2021
Net pounds of copper produced^1^ 49,167 39,842 137,454 121,159
^1^Contained copper in concentrate.
Peru Three months ended Nine months ended
--- --- --- --- --- --- --- --- ---
Sep. 30, 2022 Sep. 30, 2021 Sep. 30, 2022 Sep. 30, 2021
Cash cost per pound of copper produced 000s /lb 000s /lb 000s /lb 000s /lb
Mining 35,197 0.72 22,772 0.57 95,899 0.70 70,444 0.58
Milling 52,043 1.06 44,750 1.12 144,429 1.05 128,356 1.06
G&A 13,421 0.27 13,948 0.35 48,198 0.35 45,278 0.37
Onsite costs 100,661 2.05 81,470 2.04 288,526 2.10 244,078 2.01
Treatment & refining 10,814 0.22 7,292 0.18 27,625 0.20 23,730 0.20
Freight & other 12,905 0.26 9,464 0.24 34,679 0.25 29,707 0.25
Cash cost, before by-product credits 124,380 2.53 98,226 2.46 350,830 2.55 297,515 2.46
By-product credits (41,659 (0.85 (47,984 (1.20 (118,924 (0.86 (97,984 (0.81
Cash cost, net of by-product credits 82,721 1.68 50,242 1.26 231,906 1.69 199,531 1.65

All values are in US Dollars.

Peru Three months ended Nine months ended
Sep. 30, 2022 Sep. 30, 2021 Sep. 30, 2022 Sep. 30, 2021
Supplementary cash cost information 000s $/lb ^1^ 000s $/lb ^1^ 000s $/lb ^1^ 000s $/lb ^1^
By-product credits^2^:
Gold^3^ 12,793 0.26 24,196 0.61 48,696 0.35 37,185 0.31
Silver^3^ 9,967 0.20 10,557 0.26 34,645 0.25 27,360 0.23
Molybdenum 18,899 0.39 13,231 0.33 35,583 0.26 33,439 0.27
Total by-product credits 41,659 0.85 47,984 1.20 118,924 0.86 97,984 0.81
Reconciliation to IFRS:
Cash cost, net of by-product credits 82,721 50,242 231,906 199,531
By-product credits 41,659 47,984 118,924 97,984
Treatment and refining charges (10,814 (7,292 (27,625 (23,730
Inventory adjustments - - (558 (1,446
Share-based compensation expenses (16 31 (18 102
Change in product inventory (2,497 (3,126 (15,663 (9,236
Royalties 1,740 998 3,711 2,741
Depreciation and amortization^4^ 56,614 47,185 152,787 140,330
Cost of sales^5^ 169,407 136,022 463,464 406,276

All values are in US Dollars.

^1^Per pound of copper produced.

^2^By-product credits are computed as revenue per financial statements, including amortization of deferred revenue and pricing and volume adjustments. For more information, please see the realized price reconciliation table on page 29 of this MD&A.

^3^Gold and silver by-product credits do not include variable consideration adjustments with respect to stream arrangements.

^4^Depreciation is based on concentrate sold.

^5^ As per IFRS financial statements.

Manitoba Three months ended Nine months ended
(in thousands) Sep. 30, 2022 Sep. 30, 2021 Sep. 30, 2022 Sep. 30, 2021
Net pounds of copper produced^1^ 4,841 11,404 27,602 35,968
^1^Contained copper in concentrate.
Manitoba Three months ended Nine months ended
--- --- --- --- --- --- --- --- ---
Sep. 30, 2022 Sep. 30, 2021 Sep. 30, 2022 Sep. 30, 2021
Cash cost per pound of copper produced 000s /lb 000s /lb 000s /lb 000s /lb
Mining 40,659 8.40 54,634 4.79 154,592 5.60 163,769 4.55
Milling 16,573 3.42 14,484 1.27 59,035 2.14 40,801 1.13
Refining (zinc) - 0.00 15,868 1.39 32,755 1.19 53,383 1.48
G&A 9,841 2.03 8,680 0.76 55,987 2.03 39,218 1.09
Onsite costs 67,073 13.85 93,666 8.21 302,369 10.96 297,171 8.26
Treatment & refining 11,038 2.29 7,239 0.63 21,343 0.77 17,980 0.50
Freight & other 9,173 1.89 7,484 0.66 23,082 0.84 22,717 0.63
Cash cost, before by-product credits 87,284 18.03 108,389 9.50 346,794 12.57 337,868 9.39
By-product credits (138,805 (28.67 (127,073 (11.14 (450,404 (16.32 (406,055 (11.29
Cash cost, net of by-product credits (51,521 (10.64 (18,684 (1.64 (103,610 (3.75 (68,187 (1.90

All values are in US Dollars.

Manitoba Three months ended Nine months ended
Sep. 30, 2022 Sep. 30, 2021 Sep. 30, 2022 Sep. 30, 2021
Supplementary cash cost information 000s $/lb ^1^ 000s $/lb ^1^ 000s $/lb ^1^ 000s $/lb ^1^
By-product credits^2^:
Zinc 43,606 9.01 67,695 5.94 199,283 7.22 227,716 6.33
Gold^3^ 88,857 18.35 52,045 4.56 228,445 8.28 153,068 4.26
Silver^3^ 6,099 1.26 5,400 0.47 18,016 0.65 19,175 0.53
Other 243 0.05 1,933 0.17 4,660 0.17 6,096 0.17
Total by-product credits 138,805 28.67 127,073 11.14 450,404 16.32 406,055 11.29
Reconciliation to IFRS:
Cash cost, net of by-product credits (51,521 (18,684 (103,610 (68,187
By-product credits 138,805 127,073 450,404 406,055
Treatment and refining charges (11,038 (7,239 (21,343 (17,980
Inventory adjustments 2,074 5,445 4,104 5,445
Past service pension cost - 4,229 - 4,229
Share-based compensation expenses 130 114 (52 501
Change in product inventory 32,223 8,798 28,963 7,303
Royalties 464 2,491 5,682 8,939
Depreciation and amortization^4^ 33,197 38,825 105,420 127,667
Cost of sales^5^ 144,334 161,052 469,568 473,972

All values are in US Dollars.

^1^ Per pound of copper produced.

^2^By-product credits are computed as revenue per financial statements, including amortization of deferred revenue and pricing and volume adjustments. For more information, please see the realized price reconciliation table on page 29 of this MD&A.

^3^Gold and silver by-product credits do not include variable consideration adjustments with respect to stream arrangements.

^4^Depreciation is based on concentrate sold.

^5^ As per IFRS financial statements.

Consolidated Three months ended Nine months ended
Sep. 30, 2022 Sep. 30, 2021 Sep. 30, 2022 Sep. 30, 2021
All-in sustaining cash cost per pound of copper produced 000s $/lb 000s $/lb 000s $/lb 000s $/lb
Cash cost, net of by-product credits 31,200 0.58 31,558 0.62 128,296 0.78 131,344 0.84
Cash sustaining capital expenditures 69,588 1.29 65,694 1.28 195,724 1.18 190,649 1.21
Royalties 2,204 0.04 3,489 0.07 9,393 0.06 11,680 0.07
Sustaining cash cost, net of by-product credits 102,992 1.91 100,741 1.97 333,413 2.02 333,673 2.12
Corporate selling and administrative expenses & regional costs 11,384 0.21 10,177 0.21 26,923 0.17 31,934 0.20
Accretion and amortization of decommissioning and community agreements^1^ 2,099 0.04 652 0.01 3,694 0.02 1,936 0.01
All-in sustaining cash cost, net of by-product credits 116,475 2.16 111,570 2.18 364,030 2.21 367,543 2.33
Reconciliation to property, plant and equipment additions:
Property, plant and equipment additions 72,237 76,435 182,348 254,903
Capitalized stripping net additions 22,645 19,094 74,093 60,225
Total accrued capital additions 94,882 95,529 256,441 315,128
Less other non-sustaining capital costs^2^ 34,649 33,099 80,469 153,312
Total sustaining capital costs 60,233 62,430 175,972 161,816
Right of use leased assets (5,158 (9,549 (25,430 (19,971
Capitalized lease cash payments - operating sites 8,852 8,453 27,424 25,972
Community agreement cash payments 2,491 82 6,632 425
Accretion and amortization of decommissioning and restoration obligations 3,170 4,278 11,126 22,407
Cash sustaining capital expenditures 69,588 65,694 195,724 190,649

All values are in US Dollars.

^1^ Includes accretion of decommissioning relating to non-productive sites, and accretion and amortization of current community agreements.

^2^ Other non-sustaining capital costs include Arizona capitalized costs, capitalized interest, capitalized exploration, and growth capital expenditures.

Peru Three months ended Nine months ended
Sep. 30, 2022 Sep. 30, 2021 Sep. 30, 2022 Sep. 30, 2021
Sustaining cash cost per pound of copper produced $000s $/lb $000s $/lb $000s $/lb $000s $/lb
Cash cost, net of by-product credits 82,721 1.68 50,242 1.26 231,906 1.69 199,531 1.65
Cash sustaining capital expenditures 36,507 0.74 40,921 1.03 102,073 0.74 95,619 0.79
Royalties 1,740 0.04 998 0.03 3,711 0.03 2,741 0.02
Sustaining cash cost per pound of copper produced 120,968 2.46 92,161 2.31 337,690 2.46 297,891 2.46
^1^Only includes exploration costs incurred for locations near to existing mine operations.
Manitoba Three months ended Nine months ended
--- --- --- --- --- --- --- --- ---
Sep. 30, 2022 Sep. 30, 2021 Sep. 30, 2022 Sep. 30, 2021
Sustaining cash cost per pound of copper produced 000s /lb 000s /lb 000s /lb 000s /lb
Cash cost, net of by-product credits (51,521 (10.64 (18,684 (1.64 (103,610 (3.75 (68,187 (1.90
Cash sustaining capital expenditures 33,081 6.83 24,773 2.17 93,651 3.39 95,030 2.64
Royalties 464 0.10 2,491 0.22 5,682 0.21 8,939 0.25
Sustaining cash cost per pound of copper produced (17,976 (3.71 8,580 0.75 (4,277 (0.15 35,782 0.99

All values are in US Dollars.

Gold Cash Cost and Gold Sustaining Cash Cost

Cash cost per ounce of gold produced ("gold cash cost") is a non-IFRS measure that management uses as a key performance indicator to assess the performance of our Manitoba operations. This alternative cash cost calculation designates gold as the primary metal of production as it represents a substantial component of revenues for our Manitoba business unit and should therefore be less volatile over time than Manitoba cash cost per pound of copper. The calculation is presented in three manners:

  • Gold cash cost, before by-product credits - This measure is gross of by-product revenues and is a function of the efforts and costs incurred to mine and process all ore mined. However, the measure divides this aggregate cost over only ounces of gold produced, the assumed primary metal of production. This measure is generally less volatile from period to period, as it is not affected by changes in the price received for by-product metals.

  • Gold cash cost, net of by-product credits - In order to calculate the net cost to produce and sell gold, the net of by-product credits measure subtracts the revenues realized from the sale of the metals other than gold. The by-product revenues from copper, zinc, and silver are significant and are integral to the economics of our Manitoba operation. The economics that support our decision to produce and sell gold would be different if we did not receive revenues from the other significant metals being extracted and processed. This measure provides management and investors with an indication of the minimum gold price consistent with positive operating margins, assuming realized by-product metal prices are consistent with those prevailing during the reporting period. It also serves as an important operating statistic that management and investors utilize to measure our operating performance at our Manitoba operation versus that of our competitors. However, it is important to understand that if by-product metal prices decline alongside gold prices, the gold cash cost net of by-product credits would increase, requiring a higher gold price than that reported to maintain positive cash flows and operating margins.

  • Gold sustaining cash cost, net of by-product credits - This measure is an extension of gold cash cost that includes cash sustaining capital expenditures, capitalized exploration, net smelter returns royalties, as well as accretion and amortization for expected decommissioning activities for producing assets. It does not include corporate selling and administrative expenses. It provides a more fulsome measurement of the cost of sustaining production than gold cash cost, which is focused on operating costs only.

The tables below present a detailed build-up of gold cash cost and gold sustaining cash cost, net of by-product credits, for the Manitoba business unit, and reconciliations between gold cash cost, net of by-product credits, to the most comparable IFRS measures of cost of sales for the three and nine months ended September 30, 2022. The introduction of gold cash cost was made in 2022, as gold replaced zinc as the major output within Manitoba's production profile. No comparatives have been disclosed for this metric as Manitoba gold production in 2021 was not considered meaningful. Gold cash cost, net of by-product credits, may not calculate exactly based on amounts presented in the tables below due to rounding.

Manitoba Three months ended Nine months ended
(in thousands) Sep. 30, 2022 Sep. 30, 2022
Net ounces of gold produced 40,457 128,411
Manitoba Three months ended Nine months ended
--- --- --- --- ---
Sep. 30, 2022 Sep. 30, 2022
Cash cost per ounce of gold produced 000s /oz 000s /oz
Cash cost, before by-product credits^1^ 87,284 2,157 346,794 2,701
By-product credits (78,565 (1,941 (329,362 (2,565
Gold cash cost, net of by-product credits 8,719 216 17,432 136
^1^For additional detail on cash cost, before by-product credits please see page 50 of this MD&A.

All values are in US Dollars.

Manitoba Three months ended Nine months ended
Sep. 30, 2022 Sep. 30, 2022
Supplementary cash cost information 000s $/oz ^1^ 000s $/oz^1^
By-product credits^2^:
Copper 28,617 707 107,403 836
Zinc 43,606 1,077 199,283 1,553
Silver^3^ 6,099 151 18,016 140
Other 243 6 4,660 36
Total by-product credits 78,565 1,941 329,362 2,565
Reconciliation to IFRS:
Cash cost, net of by-product credits 8,719 17,432
By-product credits 78,565 329,362
Treatment and refining charges (11,038 (21,343
Share-based compensation expenses 130 (52
Inventory adjustments 2,074 4,104
Change in product inventory 32,223 28,963
Royalties 464 5,682
Depreciation and amortization^4^ 33,197 105,420
Cost of sales^5^ 144,334 469,568

All values are in US Dollars.

^1^ Per ounce of gold produced.

^2^By-product credits are computed as revenue per financial statements, amortization of deferred revenue and pricing and volume adjustments. For more information, please see the realized price reconciliation table on page 29 of this MD&A.

^3^ Silver by-product credits do not include variable consideration adjustments with respect to stream arrangements.

^4^Depreciation is based on concentrate sold.

^5^ As per IFRS financial statements.

Manitoba Three months ended Nine months ended
Sep. 30, 2022 Sep. 30, 2022
Sustaining cash cost per ounce of gold produced $000s $/oz $000s $/oz
Gold cash cost, net of by-product credits 8,719 216 17,432 136
Cash sustaining capital expenditures 33,081 818 93,651 729
Royalties 464 11 5,682 44
Sustaining cash cost per ounce of gold produced 42,264 1,045 116,765 909

Combined Unit Cost and Zinc Plant Unit Cost Reconciliation

Combined unit cost ("unit cost") and zinc plant unit cost is a non-IFRS measure that management uses as a key performance indicator to assess the performance of our mining and milling operations. Combined unit cost and zinc plant unit cost are calculated by dividing the cost of sales by mill throughput and refined zinc metal produced, respectively. This measure is utilized by management and investors to assess our cost structure and margins and compare it to similar information provided by other companies in our industry. Unlike cash cost, this measure is not impacted by variability in by-product commodity prices since there are no by-product deductions; costs associated with profit-sharing and similar costs are excluded because of their correlation to external metal prices. In addition, the unit costs are reported in the functional currency of the operation which minimizes the impact of foreign currency fluctuations. In all, the unit cost measures provide an alternative perspective on operating cost performance with minimal impact from external market prices.

The tables below present a detailed combined unit cost and zinc plant unit costs for the Manitoba business unit and combined unit cost for the Peru business unit, and reconciliations between these measures to the most comparable IFRS measures of cost of sales for the three and nine months ended September 30, 2022 and 2021.

Peru Three months ended Nine months ended
(in thousands except unit cost per tonne) Sep. 30,2022 Sep. 30,<br>2021 Sep. 30,2022 Sep. 30,<br>2021
Combined unit cost per tonne processed
Mining 35,197 22,772 95,899 70,444
Milling 52,043 44,750 144,429 128,356
G&A ^1^ 13,421 13,948 48,198 45,278
Other G&A ^2^ 1,342 (286 ) (279 ) (215 )
102,003 81,184 288,247 243,863
Less: COVID-19 related costs 929 4,825 4,525 15,719
Unit cost 101,074 76,359 283,722 228,144
Tonnes ore milled 7,742 6,985 22,727 20,761
Combined unit cost per tonne 13.06 10.93 12.48 10.99
Reconciliation to IFRS:
Unit cost 101,074 76,359 283,722 228,144
Freight & other 12,905 9,464 34,679 29,707
COVID-19 related costs 929 4,825 4,525 15,719
Other G&A (1,342 ) 286 279 215
Share-based compensation expenses (16 ) 31 (18 ) 102
Inventory adjustments - - (558 ) (1,446 )
Change in product inventory (2,497 ) (3,126 ) (15,663 ) (9,236 )
Royalties 1,740 998 3,711 2,741
Depreciation and amortization 56,614 47,185 152,787 140,330
Cost of sales^3^ 169,407 136,022 463,464 406,276

^1^ G&A as per cash cost reconciliation above.

^2^ Other G&A primarily includes profit sharing costs.

^3^ As per IFRS financial statements.

Manitoba Three months ended Nine months ended
(in thousands except tonnes ore milled and unit cost per tonne) Sep. 30,2022 Sep. 30,<br>2021 Sep. 30,2022 Sep. 30,<br>2021
Combined unit cost per tonne processed
Mining 40,659 54,634 154,592 163,769
Milling 16,573 14,484 59,035 40,801
G&A ^1^ 9,841 8,680 55,987 39,218
Less: G&A allocated to zinc metal production and other areas - (3,280 ) (6,523 ) (10,822 )
Less: Other G&A related to profit sharing costs (1,784 ) 3,381 (22,014 ) (72 )
Unit cost 65,289 77,899 241,077 232,894
USD/CAD implicit exchange rate 1.31 1.26 1.28 1.25
Unit cost - C$ 85,225 98,151 308,419 291,419
Tonnes ore milled 362,108 666,263 1,662,759 1,957,980
Combined unit cost per tonne - C$ 235 147 185 149
Reconciliation to IFRS:
Unit cost 65,289 77,899 241,077 232,894
Freight & other 9,173 7,484 23,082 22,717
Refined (zinc) - 15,868 32,755 53,383
G&A allocated to zinc metal production - 3,280 6,523 10,822
Other G&A related to profit sharing 1,784 (3,381 ) 22,014 72
Share-based compensation expenses 130 114 (52 ) 501
Inventory adjustments 2,074 5,445 4,104 5,445
Past service pension cost - 4,229 - 4,229
Change in product inventory 32,223 8,798 28,963 7,303
Royalties 464 2,491 5,682 8,939
Depreciation and amortization 33,197 38,825 105,420 127,667
Cost of sales^2^ 144,334 161,052 469,568 473,972

^1^ G&A as per cash cost reconciliation above.

^2^ As per IFRS financial statements.

Manitoba Three months ended Three months ended
(in thousands except zinc plant unit cost per pound) September 30,2022 September 30, <br>2021 September 30,2022 September 30,<br>2021
Zinc plant unit cost
Zinc plant costs - 15,868 32,755 53,383
G&A ^1^ 9,841 8,680 55,987 39,218
Less: G&A allocated to other areas (8,057 ) (8,781 ) (27,450 ) (28,324 )
Less: Other G&A related to profit sharing (1,784 ) 3,381 (22,014 ) (72 )
Zinc plant unit cost - 19,148 39,278 64,205
USD/CAD implicit exchange rate - 1.26 1.27 1.25
Zinc plant unit cost - C$ - 24,119 50,036 80,367
Refined metal produced (in pounds) - 43,779 83,542 151,645
Zinc plant unit cost per pound - C$ - 0.55 0.60 0.53
Reconciliation to IFRS:
Zinc plant unit cost - 19,148 39,278 64,205
Freight & other 9,173 7,484 23,082 22,717
Mining 40,659 54,634 154,592 163,769
Milling 16,573 14,484 59,035 40,801
G&A allocated to other areas 8,057 8,781 27,450 28,324
Other G&A related to profit sharing 1,784 (3,381 ) 22,014 72
Share-based payment 130 114 (52 ) 501
Inventory adjustments 2,074 5,445 4,104 5,445
Past service pension costs - 4,229 - 4,229
Change in product inventory 32,223 8,798 28,963 7,303
Royalties 464 2,491 5,682 8,939
Depreciation and amortization 33,197 38,825 105,420 127,667
Cost of sales^2^ 144,334 161,052 469,568 473,972

^1^ G&A as per cash cost reconciliation above.

^2^ As per IFRS financial statements.

ACCOUNTING CHANGES AND CRITICAL ESTIMATES

New standards and interpretations not yet adopted

For information on new standards and interpretations not yet adopted, refer to note 4 of our September 30, 2022 consolidated interim financial statements.

Estimates and judgements

The preparation of the consolidated financial statements in accordance with IFRS requires us to make judgements, estimates and assumptions that affect the application of accounting policies, reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the consolidated financial statements, and reported amounts of revenue and expenses during the reporting period. Actual results may differ from these estimates.

We review these estimates and underlying assumptions on an ongoing basis based on our experience and other factors, including expectations of future events that we believe to be reasonable under the circumstances. Revisions to accounting estimates are recognized in the period in which the estimates are revised and in any future periods affected. Certain accounting estimates and judgements have been identified as being "critical" to the presentation of our financial condition and results of operations because they require us to make subjective and/or complex judgments about matters that are inherently uncertain; or there is a reasonable likelihood that materially different amounts could be reported under different conditions or using different assumptions and estimates.

For more information on judgements and estimates, refer to note 2 of our September 30, 2022 consolidated interim financial statements.

CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING

Management is responsible for establishing and maintaining adequate internal control over financial reporting ("ICFR"). ICFR is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with IFRS.

We did not make any changes to ICFR during the three months ended September 30, 2022 that materially affected or are reasonably likely to materially affect our ICFR.

NOTES TO READER

Forward-Looking Information

This MD&A contains forward-looking information within the meaning of applicable Canadian and United States securities legislation. All information contained in this MD&A, 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 MD&A is qualified by this cautionary note.

Forward-looking information includes, but is not limited to, production, cost and capital and exploration expenditure guidance, expectations regarding reductions in discretionary spending in 2022 and 2023, expectations regarding the impact of inflationary pressures on the cost of operations, financial condition and prospects, expectations regarding our cash balance and liquidity for the remainder of the year, expectations regarding the Copper World project, including our plans for a pre-feasibility study and the estimated timelines and pre-requisites for sanctioning the project, expectations regarding the permitting requirements for the Copper World project and permitting related litigation, expectations regarding the anticipated timelines for achieving target throughput and recoveries at the New Britannia mill, increasing the mining rate at Lalor to 5,300 tonnes per day, expectations regarding the ability to conduct exploration work on the Maria Reyna and Caballito properties, expectations resulting from the Flin Flon tailings drill program and the evaluation of the opportunity to reprocess tailings, plans to implement a winter drill program and other scoping studies in Manitoba, the expectations regarding the prospective nature of the Maria Reyna and Caballito properties, anticipated mine plans, anticipated metals prices and the anticipated sensitivity of our financial performance to metals prices, events that may affect our operations and development projects, anticipated cash flows from operations and related liquidity requirements, the anticipated effect of external factors on revenue, such as commodity prices, estimation of mineral reserves and resources, mine life projections, reclamation costs, economic outlook, government regulation of mining operations, and business and acquisition strategies. 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 us 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 we identified and were applied by us in drawing conclusions or making forecasts or projections set out in the forward-looking information include, but are not limited to:

  • our ability to continue to operate safely and at full capacity despite COVID-19 related challenges;

  • the availability, global supply and effectiveness of COVID-19 vaccines, the effective distribution of such vaccines in the countries in which we operate, the lessening of restrictions related to COVID-19, and the anticipated rate and timing for each of the foregoing;

  • the ability to achieve production and cost guidance;

  • the ability to achieve discretionary spending reductions without impacting operations;

  • no significant interruptions to our operations due to COVID-19 or social or political unrest in the regions Hudbay operates;

  • no interruptions to our plans for advancing the Copper World project;

  • the ability to ramp up exploration in respect of the Maria Reyna and Caballito properties;

  • the ability to ramp up the New Britannia mill to target throughput and recoveries and achieve the anticipated production;

  • the ability to ramp up the Lalor mine to 5,300 tonnes per day;

  • the success of mining, processing, exploration and development activities;

  • the scheduled maintenance and availability of our processing facilities;

  • the accuracy of geological, mining and metallurgical estimates;

  • anticipated metals prices and the costs of production;

  • the supply and demand for metals we produce;

  • the supply and availability of all forms of energy and fuels at reasonable prices;

  • no significant unanticipated operational or technical difficulties;

  • the execution of our business and growth strategies, including the success of our strategic investments and initiatives;

  • the availability of additional financing, if needed;

  • the ability to complete project targets on time and on budget and other events that may affect our ability to develop our projects;

  • the timing and receipt of various regulatory and governmental approvals;

  • the availability of personnel for our exploration, development and operational projects and ongoing employee relations;

  • maintaining good relations with the labour unions that represent certain of our employees in Manitoba and Peru;

  • maintaining good relations with the communities in which we operate, including the neighbouring Indigenous communities and local governments;

  • no significant unanticipated challenges with stakeholders at our various projects;

  • no significant unanticipated events or changes relating to regulatory, environmental, health and safety matters;

  • no contests over title to our properties, including as a result of rights or claimed rights of Indigenous peoples or challenges to the validity of our unpatented mining claims;

  • the timing and possible outcome of pending litigation and no significant unanticipated litigation;

  • certain tax matters, including, but not limited to current tax laws and regulations, changes in taxation policies and the refund of certain value added taxes from the Canadian and Peruvian governments; 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 associated with COVID-19 and its effect on our operations, financial condition, projects and prospects, uncertainty with respect to the political and social environment in Peru and its potential impact on our mining operations, risks generally associated with the mining industry and the current geopolitical environment, 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, uncertainties related to the development and operation of our projects, risks related to the Copper World project, including in relation to permitting, litigation, project delivery and financing risks, risks related to the new Lalor mine plan, including the continuing ramp-up of the New Britannia mill and the ability to convert inferred mineral resource estimates to higher confidence categories, the potential that additional financial assurance will be required to support the updated Flin Flon closure plan, dependence on key personnel and employee and union relations, risks related to political or social instability, unrest or change, risks in respect of Indigenous and community relations, rights and title claims, operational risks and hazards, including the cost of maintaining and upgrading the Company's tailings management facilities and any unanticipated environmental, industrial and geological events and developments and the inability to insure against all risks, failure of plant, equipment, processes, transportation and other infrastructure to operate as anticipated, compliance with government and environmental regulations, including permitting requirements and anti-bribery legislation, depletion of our reserves, volatile financial markets and interest rates that may affect our ability to obtain additional financing on acceptable terms, the failure to obtain required approvals or clearances from government authorities on a timely basis, uncertainties related to the geology, continuity, grade and estimates of mineral reserves and resources, and the potential for variations in grade and recovery rates, uncertain costs of reclamation activities, our ability to comply with our pension and other post-retirement obligations, our ability to abide by the covenants in our debt instruments and other material contracts, tax refunds, hedging transactions, as well as the risks discussed under the heading "Risk Factors" in our most recent Annual Information Form.

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. We do not assume any obligation to update or revise any forward-looking information after the date of this MD&A or to explain any material difference between subsequent actual events and any forward-looking information, except as required by applicable law.

Note to United States Investors

This MD&A has been prepared in accordance with the requirements of the securities laws in effect in Canada, which may differ materially from the requirements of United States securities laws applicable to U.S. issuers.

Qualified Person and NI 43-101

The technical and scientific information in this MD&A related to our material mineral projects has been approved by Olivier Tavchandjian, P. Geo, our Vice President, Exploration and Technical Services. Mr. Tavchandjian is a qualified person pursuant to National Instrument 43-101 - Standards of Disclosure for Mineral Projects ("NI 43-101").

For a description of the key assumptions, parameters and methods used to estimate mineral reserves and resources at Hudbay's material properties, as well as data verification procedures and a general discussion of the extent to which the estimates of scientific and technical information may be affected by any known environmental, permitting, legal title, taxation, sociopolitical, marketing or other relevant factors, please see the technical reports for our material properties as filed by us on SEDAR at www.sedar.com.

SUMMARY OF RESULTS

The following unaudited tables set out a summary of quarterly and annual results for the Company.

Q3 2022 Q2 2022 Q1 2022 2021 ^4^ Q4 2021 Q3 2021^5^ Q2 2021 Q1 2021 2020 ^4^ Q4 2020 Q3 2020
Consolidated Financial Condition (000s)
Cash $ 286,117 $ 258,556 $ 213,359 $ 270,989 $ 270,989 $ 297,451 $ 294,287 $ 310,564 $ 439,135 $ 439,135 $ 449,014
Total long-term debt 1,183,237 1,182,143 1,181,119 1,180,274 1,180,274 1,182,612 1,181,195 1,180,798 1,135,675 1,135,675 1,175,104
Net debt1 897,120 923,587 967,760 909,285 909,285 885,161 886,908 870,234 696,540 696,540 726,090
Consolidated Financial Performance (000s except per share amounts)
Revenue $ 346,171 $ 415,454 $ 378,619 $ 1,501,998 $ 425,170 $ 358,961 $ 404,242 $ 313,624 $ 1,092,418 $ 322,290 $ 316,108
Cost of sales 313,741 325,940 293,351 1,370,979 343,426 444,379 322,060 261,112 1,053,418 287,923 276,830
Earnings (loss) before tax (263 ) 21,504 88,861 (202,751 ) (149 ) (147,830 ) 14,819 (69,592 ) (179,089 ) 911 (23,944 )
Earnings (loss) (8,135 ) 32,143 63,815 (244,358 ) (10,453 ) (170,411 ) (3,395 ) (60,102 ) (144,584 ) 7,406 (23,955 )
Basic and diluted earnings (loss) per share $ (0.03 ) $ 0.12 $ 0.24 $ (0.93 ) $ (0.04 ) $ (0.65 ) $ (0.01 ) $ (0.23 ) $ (0.55 ) $ 0.03 $ (0.09 )
Adjusted earnings (loss) per share 1 $ (0.05 ) $ 0.12 $ 0.02 $ 0.09 $ 0.13 $ - $ 0.02 $ (0.06 ) $ (0.46 ) $ (0.06 ) $ (0.10 )
Operating cash flow before change in non-cash working capital 1 81,617 123,911 77,053 483,862 156,917 103,509 132,786 90,656 241,863 86,071 84,383
Adjusted EBITDA (in millions) 1 99.3 141.4 110.2 547.1 180.3 119.3 143.2 104.2 306.7 106.9 96.1
Consolidated Operational Performance
Contained metal in concentrate and doré produced 2
Copper 24,498 25,668 24,702 99,470 28,198 23,245 23,474 24,553 95,333 27,278 25,395
Gold 53,179 58,645 53,956 193,783 64,159 54,276 39,848 35,500 124,622 32,376 29,277
Silver 717,069 864,853 784,357 3,045,481 899,713 763,177 685,916 696,673 2,750,873 730,679 671,685
Zinc 9,750 17,053 22,252 93,529 23,207 20,844 21,538 27,940 118,130 25,843 30,570
Molybdenum 437 390 207 1,146 275 282 295 294 1,204 333 392
Payable metal in concentrate and doré sold
Copper 24,799 23,650 20,609 92,200 24,959 21,136 25,176 20,929 88,888 22,963 25,903
Gold 66,932 50,884 48,343 168,358 56,927 47,843 38,205 25,383 122,949 35,179 30,605
Silver 816,416 738,171 864,591 2,427,508 638,640 701,601 577,507 509,760 2,585,586 762,384 705,495
Zinc 3 12,714 20,793 17,306 96,435 21,112 21,619 25,361 28,343 109,347 28,431 26,520
Molybdenum 511 208 213 1,098 245 304 265 284 1,321 457 313
Cash cost 1 $ 0.58 $ 0.65 $ 1.11 $ 0.74 $ 0.51 $ 0.62 $ 0.84 $ 1.04 $ 0.60 $ 0.43 $ 0.65
Sustaining cash cost $ 1.91 $ 1.87 $ 2.29 $ 2.07 $ 1.95 $ 1.97 $ 2.25 $ 2.16 $ 1.93 $ 1.97 $ 2.02
All-in sustaining cash cost 1 $ 2.16 $ 1.93 $ 2.54 $ 2.30 $ 2.20 $ 2.18 $ 2.48 $ 2.37 $ 2.16 $ 2.24 $ 2.25

All values are in US Dollars.

^1^Net debt, adjusted earnings (loss) per share, adjusted EBITDA, cash cost, sustaining cash cost and all-in sustaining cash cost per pound of copper produced, net of by-product credits, are non-IFRS financial performance measures with no standardized definition under IFRS. For further information and a detailed reconciliation, please see discussion under the "Non-IFRS Financial Performance Measures" section of this MD&A.

^2^ Metal reported in concentrate is prior to deductions associated with smelter contract terms.

^3^ Includes refined zinc metal sold.

^4^Annual consolidated results may not calculate based on amounts presented in this table due to rounding.

^5^The Q3 2021 adjusted net earnings (loss) and adjusted net earnings (loss) per share have been adjusted for changes made in the computation of tax impacts on certain adjusting items. The adjusted net earnings per share changed from $ 0.15/share to adjusted net earnings of $0.00/share. See the "Trend Analysis and Quarterly Review" section of this MD&A for further details.

Q3 2022 Q2 2022 Q1 2022 2021 ^5^ Q4 2021 Q3 2021 Q2 2021 Q1 2021 2020 ^5^ Q4 2020 Q3 2020
Peru Operations
Constancia ore mined^1^ tonnes 6,300,252 7,017,114 6,908,151 29,714,327 7,742,469 6,208,019 8,016,373 7,747,466 27,529,950 9,313,784 8,455,668
Copper % 0.36 0.33 0.32 0.31 0.33 0.30 0.30 0.30 0.32 0.31 0.31
Gold g/tonne 0.05 0.04 0.04 0.04 0.04 0.04 0.04 0.04 0.03 0.03 0.03
Silver g/tonne 3.38 3.53 3.22 2.88 2.81 2.76 3.02 2.90 2.75 2.61 2.55
Molybdenum % 0.01 0.01 0.01 0.01 0.01 0.01 0.01 0.01 0.02 0.01 0.02
Pampacancha ore mined^1^ tonnes 2,488,928 1,211,387 847,306 5,141,001 2,107,196 2,050,813 982,992 - - - -
Copper % 0.29 0.29 0.27 0.27 0.27 0.27 0.26 - - - -
Gold g/tonne 0.23 0.28 0.43 0.30 0.34 0.27 0.27 - - - -
Silver g/tonne 4.30 4.25 4.06 4.02 4.26 3.58 4.43 - - - -
Molybdenum % 0.01 0.01 0.01 0.01 0.01 0.01 0.01 - - - -
Ore milled tonnes 7,742,020 7,770,706 7,213,833 28,809,755 8,048,925 6,985,035 7,413,043 6,362,752 26,297,318 7,741,714 7,480,655
Copper % 0.34 0.32 0.31 0.32 0.33 0.30 0.31 0.33 0.34 0.33 0.33
Gold g/tonne 0.08 0.09 0.08 0.08 0.11 0.11 0.07 0.04 0.03 0.03 0.03
Silver g/tonne 3.48 3.64 3.26 3.35 3.67 3.93 2.88 2.84 2.87 2.74 2.68
Molybdenum % 0.01 0.01 0.01 0.01 0.01 0.01 0.01 0.01 0.02 0.02 0.02
Copper recovery % 84.5 85.0 85.3 84.6 86.0 84.9 83.3 84.1 83.0 85.3 83.3
Gold recovery % 61.9 60.3 59.8 64.6 63.6 71.9 62.2 52.0 49.8 52.7 51.6
Silver recovery % 65.2 64.2 66.9 63.7 60.8 59.1 68.2 69.9 66.9 70.1 66.7
Molybdenum recovery % 41.0 38.8 21.1 31.5 26.7 33.5 33.3 33.4 29.4 28.4 30.4
Contained metal in concentrate
Copper tonnes 22,302 20,880 19,166 77,813 22,856 18,072 19,058 17,827 73,150 21,554 20,803
Gold ounces 12,722 13,858 10,789 50,306 17,917 17,531 10,220 4,638 12,395 3,689 3,333
Silver ounces 564,299 584,228 505,568 1,972,949 578,140 521,036 468,057 405,714 1,622,972 477,775 430,208
Molybdenum tonnes 437 390 207 1,146 275 282 295 294 1,204 333 392
Payable metal sold
Copper tonnes 20,718 18,473 16,825 71,398 20,551 16,065 19,946 14,836 68,506 18,583 21,654
Gold ounces 11,970 8,430 14,452 41,807 16,304 16,902 5,638 2,963 10,986 3,297 3,753
Silver ounces 513,470 484,946 636,133 1,490,651 380,712 457,263 315,064 337,612 1,518,548 480,843 433,595
Molybdenum tonnes 511 208 213 1,098 245 304 265 284 1,321 457 313
Peru combined unit operating cost ^2,3,4^ $/tonne $ 13.06 $ 12.02 $ 12.37 $ 10.70 $ 9.96 $ 10.93 $ 10.40 $ 11.74 $ 9.46 $ 10.17 $ 9.85
Peru cash cost^3^ $/lb $ 1.68 $ 1.82 $ 1.54 $ 1.54 $ 1.28 $ 1.26 $ 1.85 $ 1.82 $ 1.45 $ 1.47 $ 1.54
Peru sustaining cash cost^3^ $/lb $ 2.46 $ 2.62 $ 2.27 $ 2.46 $ 2.46 $ 2.31 $ 2.69 $ 2.36 $ 2.20 $ 2.58 $ 2.29

^1^ Reported tonnes and grade for ore mined are estimates based on mine plan assumptions and may not fully reconcile to ore milled.

^2^Reflects combined mine, mill and general and administrative ("G&A") costs per tonne of ore milled. Reflects the deduction of expected capitalized stripping costs.

^3^Combined unit costs, cash cost, and sustaining cash cost per pound of copper produced, net of by-product credits, are non-IFRS financial performance measures with no standardized definition under IFRS. For further information and a detailed reconciliation, please see the discussion under the "Non-IFRS Financial Performance Measures" section of this MD&A

^4^ 2022 and 2021 combined unit costs exclude COVID-19 related costs.

^5^Annual consolidated results may not calculate based on amounts presented in this table due to rounding.

Q3 2022 Q2 2022 Q1 2022 2021 ^1^ Q4 2021 Q3 2021 Q2 2021 Q1 2021 2020 ^1^ Q4 2020 Q3 2020
Manitoba Operations
Lalor ore mined tonnes 347,345 412,653 386,752 1,593,141 422,208 392,380 356,951 421,602 1,654,240 468,101 357,213
Copper % 0.71 0.70 0.80 0.71 0.78 0.86 0.64 0.57 0.74 0.80 0.66
Zinc % 3.27 3.06 4.06 4.23 4.19 3.60 3.81 5.20 5.73 5.54 5.98
Gold g/tonne 4.57 3.73 3.76 3.41 3.92 3.85 3.19 2.67 2.51 2.79 2.28
Silver g/tonne 21.27 23.95 22.94 24.66 30.35 22.13 22.98 22.75 25.31 24.96 21.23
777 ore mined tonnes - 226,286 258,069 1,053,710 266,744 256,536 255,170 275,260 991,576 164,856 264,905
Copper % 0.00 1.03 1.19 1.28 1.13 1.06 0.82 2.06 1.40 1.89 0.98
Zinc % 0.00 3.51 4.12 3.91 4.16 3.88 3.57 4.00 3.88 2.98 3.95
Gold g/tonne 0.00 1.62 1.69 2.03 1.80 1.96 1.97 2.39 1.90 1.85 2.01
Silver g/tonne 0.00 20.63 21.05 25.25 25.02 22.99 23.35 29.32 24.13 21.64 24.25
Stall & New Britannia Concentrator Combined:
Ore milled tonnes 362,108 406,006 397,301 1,506,756 419,727 408,201 317,484 361,344 1,412,751 372,624 335,739
Copper % 0.69 0.73 0.82 0.72 0.75 0.82 0.68 0.60 0.73 0.79 0.68
Zinc % 3.33 3.20 4.24 4.30 4.12 3.58 4.06 5.53 5.76 5.47 6.11
Gold g/tonne 4.60 3.93 3.87 3.42 3.90 3.84 3.19 2.57 2.55 2.88 2.35
Silver g/tonne 20.66 23.98 23.16 24.95 30.07 23.32 22.02 23.40 25.37 24.43 22.08
Copper recovery % 88.3 89.5 87.5 86.8 88.7 84.3 88.8 85.7 86.2 87.1 84.0
Zinc recovery % 80.9 75.5 85.7 88.9 87.4 88.2 88.1 91.1 91.9 90.9 92.7
Gold recovery % 60.9 58.8 58.4 54.9 54.6 53.4 55.5 57.5 60.0 59.5 57.4
Silver recovery % 57.6 58.1 60.0 54.4 53.9 52.7 55.1 56.2 60.4 60.3 57.5
Flin Flon Concentrator:
Ore milled tonnes - 243,312 254,032 1,133,516 262,565 258,062 329,503 283,386 1,205,314 225,663 322,156
Copper % - 1.02 1.20 1.23 1.12 1.06 0.89 1.88 1.28 1.59 0.99
Zinc % - 3.60 4.13 3.95 4.16 3.86 3.65 4.20 4.21 3.87 4.07
Gold g/tonne - 1.64 1.70 2.04 1.78 1.96 2.06 2.34 1.96 1.99 1.99
Silver g/tonne - 20.76 21.23 24.90 25.04 22.93 23.65 28.01 24.26 22.65 24.01
Copper recovery % - 85.5 87.6 87.7 86.7 85.2 84.8 91.3 86.0 88.1 83.9
Zinc recovery % - 82.9 83.2 83.0 83.1 82.2 84.8 81.8 85.5 83.9 87.9
Gold recovery % - 56.4 57.7 58.5 59.2 58.1 52.9 64.0 56.0 56.6 55.3
Silver recovery % - 51.0 52.5 45.1 45.6 42.4 37.5 54.1 45.9 46.5 42.0

^1^Annual consolidated results may not calculate based on amounts presented in this table due to rounding.

Q3 2022 Q2 2022 Q1 2022 2021 ^4^ Q4 2021 Q3 2021 Q2 2021 Q1 2021 2020 ^4^ Q4 2020 Q3 2020
Manitoba Operations (continued)
Total Manitoba contained metal in concentrate produced
Copper tonnes 2,196 4,788 5,536 21,657 5,342 5,173 4,416 6,726 22,183 5,724 4,592
Zinc tonnes 9,750 17,053 22,252 93,529 23,207 20,844 21,538 27,940 118,130 25,843 30,570
Gold ounces 32,570 37,346 36,887 134,475 37,644 36,341 29,628 30,862 112,227 28,687 25,944
Silver ounces 138,615 264,651 268,743 1,066,003 315,054 242,131 217,859 290,959 1,127,901 252,904 241,477
Precious metal in doré produced
Gold ounces 7,887 7,441 6,280 9,002 8,598 404 - - - - -
Silver ounces 14,155 15,974 10,046 6,529 6,519 10 - - - - -
Total Manitoba payable metal sold and doré
Copper tonnes 4,081 5,177 3,784 20,802 4,408 5,071 5,230 6,093 20,382 4,380 4,249
Zinc^1^ tonnes 7,363 20,793 17,306 96,435 21,112 21,619 25,361 28,343 109,347 28,431 26,520
Gold ounces 54,962 42,454 33,891 126,551 40,623 30,941 32,567 22,420 111,963 31,882 26,852
Silver ounces 302,946 253,225 228,458 936,857 257,928 244,338 262,443 172,148 1,067,038 281,541 271,900
Manitoba combined unit operating cost^2,3^ C$/tonne $ 235 168 176 $ 154 $ 168 $ 147 $ 148 $ 151 $ 132 $ 140 $ 126
Manitoba copper cash cost^3^ $/lb $ (10.64 ) (4.48 ) (0.40 ) $ (2.11 ) $ (2.77 ) $ (1.64 ) $ (3.51 ) $ (1.04 ) $ (2.20 ) $ (3.48 ) $ (3.41 )
Manitoba sustaining copper cash cost^3^ $/lb $ (3.71 ) (1.40 ) 2.33 $ 0.69 $ (0.23 ) $ 0.75 $ 0.36 $ 1.62 $ 1.02 $ (0.36 ) $ 0.83
Manitoba gold cash cost ^3, 5^ $/oz $ 216 (207 ) 416 $ - $ - $ - $ - $ - $ - $ - $ -
Manitoba sustaining gold cash cost ^3,5^ $/oz $ 1,045 519 1,187 $ - $ - $ - $ - $ - $ - $ - $ -

^1^ Includes refined zinc metal sold.

^2^ Reflects combined mine, mill and G&A costs per tonne of milled ore.

^3^ Combined unit costs, cash cost, and sustaining cash cost per pound of copper produced, cash cost, and sustaining cash cost per ounce of gold produced, net of by-product credits, are non-IFRS financial performance measures with no standardized definition under IFRS. For further information and a detailed reconciliation, please see the discussion under the "Non-IFRS Financial Performance Measures" section of this MD&A.

^4^Annual consolidated results may not calculate based on amounts presented in this table due to rounding.

^5^ Cash cost and sustaining cash cost per ounce of gold produced, net of by-product credits were introduced in 2022 and do not have a published comparative.

Hudbay Minerals Inc.: Exhibit 99.3 - Filed by newsfilecorp.com

FORM 52-109F2 CERTIFICATION OF INTERIM FILINGS FULL CERTIFICATE

I, Peter Kukielski, President and Chief Executive Officer of Hudbay Minerals Inc., certify the following:

  1. Review: I have reviewed the interim financial report and interim MD&A (together, the "interim filings") of Hudbay Minerals Inc. ****** (the "issuer") for the interim period ended September 30, 2022.

  2. No misrepresentations: Based on my knowledge, having exercised reasonable diligence, the interim filings do not contain any untrue statement of a material fact or omit to state a material fact required to be stated or that is necessary to make a statement not misleading in light of the circumstances under which it was made, with respect to the period covered by the interim filings.

  3. Fair presentation: Based on my knowledge, having exercised reasonable diligence, the interim financial report together with the other financial information included in the interim filings fairly present in all material respects the financial condition, financial performance and cash flows of the issuer, as of the date of and for the periods presented in the interim filings.

  4. Responsibility: The issuer's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (DC&P) and internal control over financial reporting (ICFR), as those terms are defined in National Instrument 52-109 Certification of Disclosure in Issuers' Annual and Interim Filings, for the issuer.

  5. Design: Subject to the limitations, if any, described in paragraphs 5.2 and 5.3, the issuer's other certifying officer(s) and I have, as at the end of the period covered by the interim filings

(a) designed DC&P, or caused it to be designed under our supervision, to provide reasonable assurance that

(i) material information relating to the issuer is made known to us by others, particularly during the period in which the interim filings are being prepared; and

(ii) information required to be disclosed by the issuer in its annual filings, interim filings or other reports filed or submitted by it under securities legislation is recorded, processed, summarized and reported within the time periods specified in securities legislation; and

(b) designed ICFR, or caused it to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with the issuer's GAAP.

5.1 Control framework: The control framework the issuer's other certifying officer(s) and I used to design the issuer's ICFR is the Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

5.2 N/A

5.3 N/A

  1. Reporting changes in ICFR: The issuer has disclosed in its interim MD&A any change in the issuer's ICFR that occurred during the period beginning on July 1, 2022 ****** and ended on September 30, 2022 that has materially affected, or is reasonably likely to materially affect, the issuer's ICFR.

Date: November 2, 2022

(signed) Peter Kukielski____________________________________ Peter Kukielski President and Chief Executive Officer

Hudbay Minerals Inc.: Exhibit 99.4 - Filed by newsfilecorp.com

FORM 52-109F2 CERTIFICATION OF INTERIM FILINGS FULL CERTIFICATE

I, Eugene Lei, Senior Vice President and Chief Financial Officer of Hudbay Minerals Inc., certify the following:

  1. Review: I have reviewed the interim financial report and interim MD&A (together, the "interim filings") of Hudbay Minerals Inc. ****** (the "issuer") for the interim period ended September 30, 2022.

  2. No misrepresentations: Based on my knowledge, having exercised reasonable diligence, the interim filings do not contain any untrue statement of a material fact or omit to state a material fact required to be stated or that is necessary to make a statement not misleading in light of the circumstances under which it was made, with respect to the period covered by the interim filings.

  3. Fair presentation: Based on my knowledge, having exercised reasonable diligence, the interim financial report together with the other financial information included in the interim filings fairly present in all material respects the financial condition, financial performance and cash flows of the issuer, as of the date of and for the periods presented in the interim filings.

  4. Responsibility: The issuer's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (DC&P) and internal control over financial reporting (ICFR), as those terms are defined in National Instrument 52-109 Certification of Disclosure in Issuers' Annual and Interim Filings, for the issuer.

  5. Design: Subject to the limitations, if any, described in paragraphs 5.2 and 5.3, the issuer's other certifying officer(s) and I have, as at the end of the period covered by the interim filings

(a) designed DC&P, or caused it to be designed under our supervision, to provide reasonable assurance that

(i) material information relating to the issuer is made known to us by others, particularly during the period in which the interim filings are being prepared; and

(ii) information required to be disclosed by the issuer in its annual filings, interim filings or other reports filed or submitted by it under securities legislation is recorded, processed, summarized and reported within the time periods specified in securities legislation; and

(b) designed ICFR, or caused it to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with the issuer's GAAP.

5.1 Control framework: The control framework the issuer's other certifying officer(s) and I used to design the issuer's ICFR is the Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

5.2 N/A

5.3 N/A

  1. Reporting changes in ICFR: The issuer has disclosed in its interim MD&A any change in the issuer's ICFR that occurred during the period beginning on July 1, 2022 ****** and ended on September 30, 2022 that has materially affected, or is reasonably likely to materially affect, the issuer's ICFR.

Date: November 2, 2022

(signed) *Eugene Lei_________________________________________*Eugene Lei Senior Vice President and Chief Financial Officer

Hudbay Minerals Inc.: Exhibit 99.5 - Filed by newsfilecorp.com
TSX, NYSE – HBM
2022 No. 20
25 York Street, Suite 800<br>Toronto, Ontario<br>Canada M5J 2V5<br>tel  416 362-8181fax 416 362-7844<br>hudbay.com News Release

Hudbay Announces Third Quarter 2022 Results

Toronto, Ontario, November 2, 2022 - Hudbay Minerals Inc. ("Hudbay" or the "company") (TSX, NYSE:HBM) today released its third quarter 2022 financial results. All amounts are in U.S. dollars, unless otherwise noted.

Third Quarter Operating and Financial Results; Production Guidance Reaffirmed

  • Full year 2022 consolidated production, cash cost and sustaining cash cost guidance is reaffirmed.
  • Third quarter net loss and loss per share were $8.1 million and $0.03, respectively. After adjusting for a non-cash gain of $6.4 million related to a quarterly revaluation of the Flin Flon environmental provision due to changes in real, long-term risk-free discount rates, and a $6.0 million gain on disposal of plant and equipment and non-current assets, among other items, third quarter adjusted net loss^[i]^ per share was $0.05.
  • Operating cash flow before change in non-cash working capital was $81.6 million and adjusted EBITDA^i^ was $99.3 million in the third quarter of 2022, benefiting from higher copper, gold and silver sales volumes compared to the second quarter of 2022.
  • Consolidated production in the third quarter included 24,498 tonnes of copper and 53,179 ounces of gold.
  • Consolidated cash cost per pound of copper produced, net of by-product credits^i^, was $0.58 in the third quarter, an 11% improvement from the second quarter of 2022. Consolidated sustaining cash cost per pound of copper produced, net of by-product credits^i^, was $1.91 in the third quarter, a 2% increase from the second quarter of 2022, but within the guidance range.
  • Peru delivered strong operating performance in the third quarter with 7% higher copper production of 22,302 tonnes and 8% lower cash cost per pound of copper produced, net of by-product credits^i^, of $1.68 as copper grades improved over the second quarter of 2022.
  • Despite being focused on transition activities and overcoming one-off production interruptions, Manitoba achieved third quarter gold production of 40,457 ounces at a cash cost per ounce of gold produced, net of by-product credits^i^, of $216 as New Britannia continued to deliver strong throughput and gold recoveries.
  • Closure activities to safely decommission the 777 mine ("777"), the Flin Flon concentrator and the zinc plant were substantially completed in the third quarter, ahead of schedule. A majority of Flin Flon employees and equipment of value have transitioned to Snow Lake to support Lalor's ramp-up strategy of 5,300 tonnes per day in early 2023.
  • Cash increased by $27.6 million during the third quarter to $286.1 million, as at September 30, 2022, mainly as a result of $172.5 million of cash generated from operations, partially offset by $119.0 million of capital investments and a $17.1 million payment toward the gold prepayment liability.
TSX, NYSE – HBM
2022 No. 20

Executing on Growth Initiatives

• The company is realizing benefits from recent brownfield growth investments including the successful ramp-up of the high grade Pampacancha satellite deposit and the achievement of higher throughput and gold recoveries at the New Britannia mill, as evidenced by the successive quarterly increases in copper production in Peru and higher gold production in Snow Lake.

• Pre-feasibility study for Phase I of the Copper World Complex ("Copper World") is well-advanced with the process plant pre-feasibility level engineering at 85% completion and geotechnical and hydrogeological site investigation activities completed. The focus remains on converting remaining inferred mineral resources to measured and indicated and evaluating many of the project optimization and upside opportunities.

• Submitted remaining state permit applications for Phase I of Copper World in September and October 2022.

• Executed an exploration agreement on the Maria Reyna and Caballito satellite properties in Peru in August 2022 and early exploration activities on the prospective properties are underway.

• Announced an initial mineral resource estimate for the Llaguen copper-molybdenum porphyry deposit in northern Peru, including 271 million tonnes of indicated resources at 0.42% copper-equivalent^[ii]^ and 83 million tonnes of inferred resources at 0.30% copper-equivalent^ii^.

• Assays from the confirmatory drill program at the Flin Flon tailings facility indicate higher grades than predicted from historical mill records.

Focus on Deleveraging and Disciplined Capital Allocation

• Reduced net debt to $897.1 million, a reduction of $70.7 million since the completion of the brownfield investment program in the quarter ended March 31, 2022.

• Repaid 38% of the gold prepayment liability to date in 2022 with the balance to be repaid by the end of 2023.

• Reduced 2022 discretionary spending by $30 million, reflecting lower expenditures in Arizona, Manitoba and Peru, and the company is targeting 2023 discretionary spending reductions of more than $50 million.

• Divested non-core assets with the sale of Hudbay's Lordsburg property during the third quarter of 2022 and the sale of its equity interest in Fireweed Metals Corp. in November 2022.

• Prioritized Copper World activities to focus on completion of the pre-feasibility study, receipt of state level permits and conducting a bulk sample program to de-risk the project in 2023, while deferring the definitive feasibility study to 2024.

• Announced disciplined capital allocation approach with the introduction of three prerequisites for sanctioning Copper World, including a prudent financing strategy with multi-faceted financial targets focused on a minimum cash balance, a stated maximum leverage, limited non-recourse project level debt and committed financial partners.

"We are realizing the benefits from our recent brownfield investment program with steady quarterly copper production increases in Peru, growing quarterly gold production in Snow Lake and two consecutive quarters of positive cash flow generation this year," said Peter Kukielski, President and Chief Executive Officer. "We have reaffirmed consolidated production and cash cost guidance, and in light of continued inflationary cost pressures at our operations, we have taken many steps to reduce our discretionary spending this year as we focus on deleveraging and disciplined capital allocation. This will allow us to be able to continue to deliver copper and gold production growth over the next several years while prudently advancing our leading organic copper growth pipeline."

TSX, NYSE – HBM
2022 No. 20

Summary of Third Quarter Results

Consolidated copper production in the third quarter of 2022 was 24,498 tonnes, a 5% decrease compared to the second quarter of 2022 due to the planned closure of 777 in June 2022, partially offset by higher copper grades in Peru. Consolidated gold production was 53,179 ounces, a decrease of 9% compared to the second quarter due the closure of 777 in June and slightly lower gold grades in Peru, partially offset by significantly higher Lalor gold grades and higher gold recoveries in Snow Lake and Peru. Consolidated zinc production in the second quarter was 9,750 tonnes, lower than the second quarter primarily due to the closure of 777 and one-off production interruptions in Snow Lake during the quarter. Hudbay anticipates stronger production in fourth quarter and has reaffirmed its 2022 production guidance for all metals.

Consolidated cash cost per pound of copper produced, net of by-product credits^i^, in the third quarter of 2022 declined to $0.58, compared to $0.65 in second quarter of 2022. This significant improvement was primarily a result of lower onsite costs in Manitoba, partially offset by higher onsite costs in Peru, higher treatment and refining charges and freight costs in Peru and Manitoba and lower consolidated copper production with the closure of 777. Consolidated sustaining cash cost per pound of copper produced, net of by-product credits^i^, was $1.91 in the third quarter of 2022 compared to $1.87 in the second quarter. This slight increase was primarily due to higher sustaining capital expenditures, partially offset by lower cash costs described above and lower royalties. Both measures are tracking well with respect to the 2022 guidance ranges and the company is reaffirming its full year consolidated cash cost and sustaining cash cost guidance. Consolidated all-in sustaining cash cost per pound of copper produced, net of by-product credits^i^, was $2.16 in the third quarter of 2022, 12% higher than $1.93 in the second quarter of 2022, primarily due to higher corporate selling and administrative expenses and accretion and amortization of decommissioning and community agreements.

Cash generated from operating activities in the third quarter of 2022 increased to $172.5 million compared to $165.6 million in the second quarter of 2022. The increase is primarily the result of an increase in non-cash working capital. Operating cash flow before change in non-cash working capital was $81.6 million during the third quarter of 2022, compared to $123.9 million in the second quarter of 2022. This decrease was primarily the result of lower zinc sales volumes, lower realized prices for all metals and inflationary cost pressures on mine operating costs.

Net loss and loss per share in the third quarter of 2022 were $8.1 million and $0.03, respectively, compared to net earnings and earnings per share of $32.1 million and $0.12, respectively, in the previous quarter. During the third quarter of 2022, Hudbay recorded a non-cash gain of $6.4 million related to the quarterly revaluation of the Flin Flon environmental provision in response to changes in real, long-term discount rates, a $6.7 million revaluation gain of the gold prepayment liability and a $6.0 million gain on the disposal of plant and equipment and non-current assets. These costs were offset by a $5.1 million charge related to the restructuring of the Manitoba operations due to the closure of the Flin Flon operations.

Adjusted net loss^i^ and adjusted net loss per share^i^ in the third quarter of 2022 were $12.4 million and $0.05 per share, respectively, after adjusting for the non-cash gain related to the revaluation of the environmental provision and the revaluation gain on the gold prepayment liability, among other items. This compares to adjusted net earnings and adjusted net earnings per share of $30.5 million and $0.12 per share in second quarter of 2022. Third quarter adjusted EBITDA^i^ was $99.3 million, compared to $141.4 million in the second quarter of 2022, primarily as a result of the same factors affecting operating cash flow noted above.

As at September 30, 2022, the company's liquidity includes $286.1 million in cash as well as undrawn availability of $368.7 million under its revolving credit facilities.

TSX, NYSE – HBM
2022 No. 20
Consolidated Financial Condition ($000s) Sep. 30, 2022 Jun. 30, 2022 Dec. 31, 2021
--- --- --- ---
Cash 286,117 258,556 270,989
Total long-term debt 1,183,237 1,182,143 1,180,274
Net debt^1^ 897,120 923,587 909,285
Working capital^2^ 99,807 180,371 147,512
Total assets 4,287,794 4,382,727 4,616,231
Equity 1,570,889 1,601,123 1,476,828

^1^ Net debt is a non-IFRS financial performance measure with no standardized definition under IFRS. For further information, please see the "Non-IFRS Financial Performance Measures" section of this news release.

^2^Working capital is determined as total current assets less total current liabilities as defined under IFRS and disclosed on the consolidated financial statements

Consolidated Financial Performance **** Three Months Ended
**** Sep. 30, 2022 Jun. 30, 2022 Sep. 30, 2021
Revenue $000s 346,171 415,454 358,961
Cost of sales $000s 313,741 325,940 444,379
Earnings (loss) before tax $000s (263) 21,504 (147,830)
Earnings (loss) $000s (8,135) 32,143 (170,411)
Basic and diluted earnings (loss) per share $/share (0.03) 0.12 (0.65)
Adjusted earnings (loss) per share^1^ $/share (0.05) 0.12 -
Operating cash flow before change in non-cash working capital $ millions 81.6 123.9 103.5
Adjusted EBITDA^1^ $ millions 99.3 141.4 119.2
^1^ Adjusted earnings (loss) per share and adjusted EBITDA are non-IFRS financial performance measures with no standardized definition under IFRS. For further information, please see the "Non-IFRS Financial Performance Measures" section of this news release.
TSX, NYSE – HBM
---
2022 No. 20
Consolidated Production and Cost Performance Three Months Ended
--- --- --- --- ---
****** Sep. 30, 2022 Jun. 30, 2022 Sep. 30, 2021
Contained metal in concentrate and doré produced^1^ ****
Copper tonnes 24,498 25,668 23,245
Gold ounces 53,179 58,645 54,276
Silver ounces 717,069 864,853 763,177
Zinc tonnes 9,750 17,053 20,844
Molybdenum tonnes 437 390 282
Payable metal sold ****
Copper tonnes 24,799 23,650 21,136
Gold^2^ ounces 66,932 50,884 47,843
Silver^2^ ounces 816,416 738,171 701,601
Zinc^3^ tonnes 12,714 20,793 21,619
Molybdenum tonnes 511 208 304
Consolidated cash cost per pound of copper produced^4^ ****
Cash cost $/lb 0.58 0.65 0.62
Peru $/lb 1.68 1.82 1.26
Manitoba $/lb (10.64) (4.48) (1.64)
Sustaining cash cost $/lb 1.91 1.87 1.97
Peru $/lb 2.46 2.62 2.31
Manitoba $/lb (3.71) (1.40) 0.75
All-in sustaining cash cost $/lb 2.16 1.93 2.18
Manitoba gold cash cost per ounce of gold produced^4,5^ ****
Cash cost $/oz 216 (207) -
Sustaining cash cost $/oz 1,045 519 -

^1^ Metal reported in concentrate is prior to deductions associated with smelter contract terms.

^2^ Includes total payable gold and silver in concentrate and in doré sold.

^3^ Includes refined zinc metal sold and payable zinc in concentrate sold.

^4^ Cash cost, sustaining cash cost and all-in sustaining cash cost per pound of copper produced, net of by-product credits, are non-IFRS financial performance measures with no standardized definition under IFRS. For further information, please see the "Non-IFRS Financial Performance Measures" section of this news release.

^5^Cash cost and sustaining cash cost per ounce of gold produced, net of by-product credits, were introduced in 2022 and do not have a published comparative for 2021.

TSX, NYSE – HBM
2022 No. 20

Peru Operations Review

Peru Operations Three Months Ended
****** Sep. 30, 2022 Jun. 30, 2022 Sep. 30, 2021
Constancia ore mined^1^ tonnes 6,300,252 7,017,114 6,208,019
Copper % 0.36 0.33 0.30
Gold g/tonne 0.05 0.04 0.04
Silver g/tonne 3.38 3.53 2.76
Molybdenum % 0.01 0.01 0.01
Pampacancha ore mined^1^ tonnes 2,488,928 1,211,387 2,050,813
Copper % 0.29 0.29 0.27
Gold g/tonne 0.23 0.28 0.27
Silver g/tonne 4.30 4.25 3.58
Molybdenum % 0.01 0.01 0.01
Total ore mined tonnes 8,789,180 8,228,501 8,258,832
Strip ratio^2^ 1.26 1.22 1.46
Ore milled tonnes 7,742,020 7,770,706 6,985,035
Copper % 0.34 0.32 0.30
Gold g/tonne 0.08 0.09 0.11
Silver g/tonne 3.48 3.64 3.93
Molybdenum % 0.01 0.01 0.01
Copper recovery % 84.5 85.0 84.9
Gold recovery % 61.9 60.3 71.9
Silver recovery % 65.2 64.2 59.1
Molybdenum recovery % 41.0 38.8 33.5
Contained metal in concentrate ****
Copper tonnes 22,302 20,880 18,072
Gold ounces 12,722 13,858 17,531
Silver ounces 564,299 584,228 521,036
Molybdenum tonnes 437 390 282
Payable metal sold ****
Copper tonnes 20,718 18,473 16,065
Gold ounces 11,970 8,430 16,902
Silver ounces 513,470 484,946 457,263
Molybdenum tonnes 511 208 304
Combined unit operating cost^3,4,5^ $/tonne 13.06 12.02 10.93
Cash cost^5^ $/lb 1.68 1.82 1.26
Sustaining cash cost^5^ $/lb 2.46 2.62 2.31

^1^ Reported tonnes and grade for ore mined are estimates based on mine plan assumptions and may not reconcile fully to ore milled.

^2^ Strip ratio is calculated as waste mined divided by ore mined.

^3^ Reflects combined mine, mill and general and administrative ("G&A") costs per tonne of ore milled. Reflects the deduction of expected capitalized stripping costs.

^4^ Excludes approximately $0.9 million, or $0.12 per tonne, of COVID-19 related costs during the three months ended September 30, 2022, $1.3 million, or $0.16 per tonne, of COVID-related costs during the three months ended June 30, 2022 and $5.5 million, or $0.78 per tonne, during the three months ended September 30, 2021.

^5^ Combined unit operating cost, cash cost and sustaining cash cost per pound of copper produced, net of by-product credits, are non-IFRS financial performance measures with no standardized definition under IFRS. For further information, please see the "Non-IFRS Financial Performance Measures" section of this news release.

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2022 No. 20

During the third quarter of 2022, the Constancia operations produced 22,302 tonnes of copper, 12,722 ounces of gold, 564,299 ounces of silver and 437 tonnes of molybdenum. Production of copper and molybdenum was higher than the second quarter of 2022 due to higher copper grades and higher molybdenum recoveries, partially offset by lower throughput due to a planned semi-annual mill maintenance program during the third quarter. Production of gold and silver was lower in the third quarter compared to the second quarter of 2022 due to lower grades, partially offset by higher recoveries. As previously disclosed, full year production in Peru is expected to benefit from higher grades in the fourth quarter of 2022. As such, full year production of all metals remains on track to achieve guidance ranges for 2022.

Total ore mined in the third quarter of 2022 increased compared to the second quarter of 2022 due to higher amounts of ore mined from Pampacancha. The Constancia mill performed well during the third quarter with ore milled only 0.3% lower than the second quarter despite the planned maintenance shutdown described above. Milled copper grades increased in the third quarter in comparison to the second quarter of 2022 due to higher than planned grades from Constancia. Milled gold grades decreased in the third quarter of 2022 mainly due to temporarily lower gold grades from Pampacancha.

Combined mine, mill and G&A unit operating costs^i^ in the third quarter of 2022 were $13.06 per tonne, 9% higher than the second quarter of 2022 primarily due to continued inflationary pressures on fuel, consumables and energy costs. Hudbay expects to complete a four-day mill shutdown at Constancia in November 2022 to advance maintenance activities that were originally planned for the first quarter of 2023. As a result of ongoing inflationary cost pressures and the additional mill maintenance in the fourth quarter, full year unit operating costs in Peru are expected to be near the top end of the 2022 guidance range.

Peru's cash cost per pound of copper produced, net of by-product credits^i^, in the third quarter of 2022 declined by 8% to $1.68, compared to $1.82 in the second quarter, primarily due to higher by-product credits and higher copper production. Although copper cash cost is expected to continue to decline in the fourth quarter with higher anticipated copper production and contributions from precious metals by-product credits, full year cash cost in Peru is expected to exceed the upper end of the 2022 guidance range by approximately 5%, primarily due to the inflationary cost environment.

Peru's sustaining cash cost per pound of copper produced, net of by-product credits^i^, in the third quarter of 2022 declined by 6% to $2.46, compared to $2.62 in the second quarter, mainly due to the same factors affecting cash cost, offset by slightly higher sustaining capital expenditures and royalties. Year-to-date sustaining cash cost per pound of copper produced, net of by-product credits^i^, of $2.46 was unchanged from 2022 compared to the same period in 2021 despite inflationary cost pressures.

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Manitoba Operations Review

Manitoba Operations Three Months Ended
****** Sep. 30, 2022 Jun. 30, 2022 Sep. 30, 2021
Lalor ore mined tonnes 347,345 412,653 392,380
Copper % 0.71 0.70 0.86
Zinc % 3.27 3.06 3.60
Gold g/tonne 4.57 3.73 3.85
Silver g/tonne 21.27 23.95 22.13
777 ore mined tonnes - 226,286 256,536
Copper % - 1.03 1.06
Zinc % - 3.51 3.88
Gold g/tonne - 1.62 1.96
Silver g/tonne - 20.63 22.99
Stall Concentrator & New Britannia Mill:
Ore milled tonnes 362,108 406,006 408,201
Copper % 0.69 0.73 0.82
Zinc % 3.33 3.20 3.58
Gold g/tonne 4.60 3.93 3.84
Silver g/tonne 20.66 23.98 23.32
Copper recovery - concentrate % 88.3 89.5 84.3
Zinc recovery - concentrate (Stall) % 88.0 84.3 88.2
Gold recovery - concentrate % 60.9 58.8 53.4
Silver recovery - concentrate % 57.6 58.1 52.7
Flin Flon Concentrator: ****
Ore milled tonnes - 243,312 258,062
Copper % - 1.02 1.06
Zinc % - 3.60 3.86
Gold g/tonne - 1.64 1.96
Silver g/tonne - 20.76 22.93
Copper recovery % - 85.5 85.2
Zinc recovery % - 82.9 82.2
Gold recovery % - 56.4 58.1
Silver recovery % - 51.0 42.4
Total contained metal in concentrate and doré
Copper tonnes 2,196 4,788 5,173
Zinc tonnes 9,750 17,053 20,844
Gold ounces 40,457 44,787 36,745
Silver ounces 152,770 280,625 242,141
Total payable metal sold ****
Copper tonnes 4,081 5,177 5,071
Zinc^1^ tonnes 12,714 20,793 21,619
Gold^2^ ounces 54,962 42,454 30,941
Silver^2^ ounces 302,946 253,225 244,338
Combined unit operating cost^3,4^ C$/tonne 235 168 147
Gold cash cost^4,5^ $/oz 216 (207) -
Gold sustaining cash cost^4,5^ $/oz 1,045 519 -

^1^ Includes refined zinc metal sold and payable zinc in concentrate sold.

^2^ Includes total payable precious metals in concentrate and in doré sold.

^3^ Reflects combined mine, mill and G&A costs per tonne of ore milled.

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^4^ Combined unit operating cost, cash cost and sustaining cash cost per ounce of gold produced, net of by-product credits, are non-IFRS financial performance measures with no standardized definition under IFRS. For further information, please see the "Non-IFRS Financial Performance Measures" section of this news release.

^5^Cash cost and sustaining cash cost per ounce of gold produced, net of by-product credits, were introduced in 2022 and do not have a published comparative for 2021.

During the third quarter of 2022, the Manitoba operations produced 40,457 ounces of gold, 9,750 tonnes of zinc, 2,196 tonnes of copper and 152,770 ounces of silver. Production of all metals was lower than the second quarter of 2022 primarily due to the planned closure of 777 in June 2022. However, gold production from Snow Lake increased by 8% compared to the second quarter of 2022 due to higher Lalor gold grades and increased gold recoveries at both Stall and New Britannia. Full year production of all metals in Manitoba is on track to achieve guidance ranges for 2022.

After 18 years of steady production at 777 in Flin Flon, the final reserves were depleted in June 2022. Closure activities in Flin Flon, including the zinc plant, were substantially completed in the third quarter with most of Hudbay's employees and equipment of value transitioned to the Snow Lake operations to support Lalor's ramp-up strategy of 5,300 tonnes per day in early 2023. 777 was decommissioned in early August with the removal of shaft conveyances and hoist ropes and securing of the shaft and all other openings to underground. The Flin Flon mill was safely placed on long-term care and maintenance during the third quarter.

A key focus area for the Snow Lake operations during the third quarter was integrating the Flin Flon employees and equipment to be able to transition away from the use of contractors in the future. Lalor's ore production during the quarter was impacted by an underground scoop tram fire as well as an unplanned Manitoba Hydro power outage due to the failure of a remote transmission line supplying power to the town of Snow Lake and the company's property, both of which occurred in September. The two-day power outage affected operations at Lalor, the New Britannia and Stall mills, and the Snow Lake camp required several days to fully restore power, ventilation, and water services to the underground operations at Lalor. Once production activities resumed, priority was placed on mining the higher value gold and copper-gold zone ore to maintain throughput at New Britannia mill. Lalor completed a scheduled maintenance program at the end of the third quarter and into the beginning of the fourth quarter to replace surface ore chutes and complete other pre-winter maintenance activities. Lalor's ore production is expected to return to 4,650 tonnes per day in the fourth quarter and is on track to ramp up to 5,300 tonnes per day in early 2023.

Ore mined at Lalor decreased by 16% in the third quarter of 2022 compared to the second quarter of 2022 due to the above noted transition and production interruptions impacting operations. Mined gold, zinc and copper grades were 23%, 7% and 1% higher, respectively, compared to the second quarter.

The combined Snow Lake mills processed 11% less ore in the third quarter compared to the second quarter of 2022, mainly due to the above noted production interruptions impacting Lalor and the milling operations. Stall recoveries were consistent with the metallurgical model for the head grades delivered. The New Britannia mill achieved consistent production in the third quarter, averaging approximately 1,440 tonnes per day. Metal recoveries have now stabilized near targeted levels for the mill. Additional improvement initiatives will continue to be advanced in the upcoming quarters with a focus on reducing reagent and grinding media consumption that has contributed to higher operating costs than planned. These initiatives require minimal capital expenditures and will further improve overall metal recoveries and copper concentrate grades.

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Combined mine, mill and G&A unit operating costs^i^ in the third quarter significantly increased compared to the second quarter of 2022, reflecting the standalone cost structure of Lalor compared to the second quarter, which included operating costs for both Lalor and the lower cost 777 mine. Unit operating costs were also impacted by higher contractor costs during the transition period, higher costs at New Britannia and continued inflationary cost pressures. Looking ahead to the fourth quarter of 2022, Hudbay expects combined unit operating costs to remain elevated due to ongoing inflationary cost pressures and the removal of the lower-cost Flin Flon operations. As such, Hudbay expects the full year combined unit costs in Manitoba to exceed the upper end of the 2022 guidance range by approximately 5%.

Cash cost per ounce of gold produced, net of by-product credits, in the third quarter was $216, higher than the second quarter of 2022 primarily due to lower by-product credits as gold revenue continues to increase and become the largest contributor to total Manitoba revenue. Gold cash costs were also impacted by higher treatment and refining charges, partially offset by lower mining, milling, G&A and zinc refining costs due to the closure of 777 and the zinc plant. Year-to-date cash cost per ounce of gold produced, net of by-product credits, of $136 continues to track below the 2022 guidance range and, as such, we reiterate the guidance range for the full year.

Sustaining cash cost per ounce of gold produced, net of by-product credits, in the third quarter was higher than the second quarter of 2022 primarily due to the same factors affecting cash cost and higher cash sustaining capital expenditures, partially offset by lower royalties.

Focused on Operating Efficiencies and Cost Reductions

Hudbay continues to believe that long-term supply and demand fundamentals for copper remain strong as global mine supply will be unable to meet demand from global decarbonization initiatives. However, in 2022, the company has faced higher input prices in a period of declining copper prices, significantly squeezing margins. While Hudbay benefits from its consolidated cash costs being positioned in the first quartile of the global cash cost curve, the focus continues to be on maximizing operating efficiencies and discretionary cost reductions in this challenging environment.

In light of this environment, Hudbay has taken several steps to reduce discretionary spending by $30 million for the remainder of 2022 and is targeting more than $50 million in discretionary spending cuts as part of the 2023 budget process, including:

  • Reducing 2022 Arizona spending by $10 million with lower exploration, evaluation and growth expenditures.
  • Deferring plans for early development of the 1901 deposit, resulting in savings of $5 million of Manitoba growth spending in 2022 and additional amounts that were previously planned to be accelerated into 2023 without impacting the ability to achieve the 2026 production start as laid out in the current mine plan.
  • Deferring $15 million of 2022 growth spending in Peru and Manitoba relating to mill recovery improvement programs and other capital projects.
  • Evaluating low capital alternatives to installing a pebble crusher in Peru, saving approximately $22 million of growth capital in 2023.
  • Delaying the expected completion of the Copper World definitive feasibility study to 2024 in order to reduce expected Arizona growth expenditures in 2023 and prioritize the completion of the pre-feasibility study and state permits in 2023, as mentioned in more detail below.
  • Rationalizing the company's non-core asset portfolio with the divestment of its 100% interest in the Lordsburg property in New Mexico, which was acquired through the Mason acquisition in 2018, to American Copper Development Corporation, and the sale of its equity interest in Fireweed Metals Corp., which was received in 2018 in exchange for the sale of Hudbay's Tom and Jason project in Yukon.
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Committed to Deleveraging and Disciplined Capital Allocation

With a focus on generating positive cash flow and strong returns on invested capital, Hudbay is committed to deleveraging and disciplined capital allocation. The company improved its net debt position by $70.7 million over the past two quarters to $897.1 million at the end of September 30, 2022. Hudbay has repaid 38% of the gold prepayment liability during 2022 and the remaining $80.3 million, valued at gold forward prices as at quarter end, will be repaid before the end of 2023.

As part of Hudbay's disciplined financial planning approach to Copper World, the company has introduced a three prerequisites plan ("3-P"), including specific leverage targets that it would need to achieve prior to making an investment decision in the project:

  1. Permits - receipt of all state level permits required for Phase I

  2. Plan - completion of a definitive feasibility study with an internal rate of return of greater than 15%

  3. Prudent Financing Strategy - multi-faceted financing strategy including

  • a committed minority joint venture partner;
  • a renegotiated precious metals stream agreement optimized for the current project;
  • net debt to EBITDA ratio of less than 1.2 times;
  • a minimum cash balance of $600 million; and,
  • limited non-recourse project level debt of up to $500 million.

The opportunity to sanction Copper World is not expected until late 2024 based on current estimated timelines. The decision to sanction Copper World will ultimately be evaluated against other competing investment opportunities as part of Hudbay's capital allocation process.

Advancing Several Initiatives to De-risk Copper World

Hudbay continues to advance pre-feasibility activities for Phase I of the Copper World project, which is expected to include conversion of the remaining inferred mineral resources to measured and indicated and optimization of the layout and sequencing of the processing facilities, in addition to evaluating other upside opportunities. The process plant pre-feasibility level engineering is at 85% completion and geotechnical and hydrogeological site investigation activities have been completed. Pre-feasibility engineering design and metallurgical test work activities are on track to be completed before the end of 2022 with the results expected to be published in a study in the first half of 2023.

Copper World requires state and local permits for Phase I, which consists of a 16-year operation on private land claims. On September 21, 2022, Hudbay submitted the application for an Aquifer Protection Permit to the Arizona Department of Environmental Quality ("ADEQ") and on October 21, 2022, the company submitted the application for an Air Quality Permit to the ADEQ. Hudbay expects to receive these two remaining state permits by mid-2023. The other key state permit, the Mined Land Reclamation Plan, was received in July 2022.

Upon receipt of the state permits for Phase I, the company expects to conduct a bulk sampling program at Copper World in the second half of 2023 to continue to de-risk the project by testing grade continuity, variable cut-off effectiveness and metallurgical strategies in high-grade, near-surface areas of the Peach-Elgin and West pits.

Hudbay has re-evaluated the timing of the definitive feasibility study for Copper World and intends to prioritize the completion of the pre-feasibility study, state level permits, bulk sampling program and a minority joint venture partner process in 2023 to significantly de-risk the project and defer the definitive feasibility study activities and expenditures to 2024.

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2022 No. 20

Exploration Update

Initial Mineral Resource Estimate for Llaguen

On November 2, 2022, the company announced an NI 43-101 initial mineral resource estimate for the Llaguen copper-molybdenum porphyry deposit in the Otuzco province in northern Peru. The Llaguen project is 100% owned by Hudbay and is near the highly populated city of Trujillo, in close proximity to existing infrastructure, water and power supply. The company optioned the property from Vale in 2017 and has since completed an exploration agreement with the local community, conducted additional geological mapping and geochemical sampling, and completed a 28-hole confirmatory drill program during 2021 and 2022. The initial resource estimate was developed based on Hudbay's confirmatory drill program and a 23-hole historical drill program completed by Vale from 2006 to 2008.

The initial mineral resource estimate at Llaguen includes 271 million tonnes of indicated resources at 0.42% copper-equivalent^ii^ and 83 million tonnes of inferred resources at 0.30% copper-equivalent^ii^. The global mineral resource estimate contains a higher-grade portion of 113 million tonnes of indicated resources at 0.60% copper-equivalent^ii^ and 16 million tonnes of inferred resources at 0.52% copper-equivalent^ii^. The methodology followed to estimate the mineral resources at Llaguen is identical to the approach used by Hudbay to estimate mineral resources at its Constancia mine in Peru.

Llaguen Project Mineral Resource Estimate as at November 1, 2022

Category Metric Tonnes Cu (%) Mo (g/t) Au (g/t) Ag (g/t) CuEq (%)
Indicated Global <br>(>= 0.14% Cu) 271,000,000 0.33 218 0.033 2.04 0.42
Including Indicated High-grade (>= 0.30% Cu) 113,000,000 0.49 261 0.046 2.73 0.60
Inferred Global<br>(>= 0.14% Cu) 83,000,000 0.24 127 0.024 1.47 0.30
Including Inferred High-grade(>= 0.30% Cu) 16,000,000 0.45 141 0.038 2.60 0.52

Notes:

^1^ CIM definitions were followed for the estimation of mineral resources. Mineral resources that are not mineral reserves do not have demonstrated economic viability.

^2^ Mineral resources are reported within an economic envelope defined by a pit shell optimization algorithm. This pit shell is defined by a revenue factor of 0.33 assuming operating costs adjusted from Hudbay's Constancia open pit operation.

^3^ Long-term metal prices of $3.60 per pound copper, $11.00 per pound molybdenum, $1,650 per ounce gold and $22.00 per ounce silver were used for the estimation of mineral resources.

^4^ Metal recovery estimates assume that this mineralization would be processed at a combination of facilities, including copper and molybdenum flotation.

^5^ Copper-equivalent ("CuEq") grade is calculated assuming 85% copper recovery, 80% molybdenum recovery, 60% gold recovery and 60% silver recovery.

^6^ Specific gravity measurements were estimated by industry standard laboratory measurements.

Hudbay has initiated preliminary technical studies at Llaguen, including metallurgical test work as well as geotechnical and hydrogeological studies, which are expected to be incorporated into a future preliminary economic assessment for the Llaguen project. The mineralization at Llaguen remains open to the northeast, northwest and at depth and several untested geophysical targets exist in the region, which could add to the mineral resource estimate in the future.

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2022 No. 20

Peru Regional Exploration

Hudbay controls a large, contiguous block of mineral rights with the potential to host mineral deposits within trucking distance of the Constancia processing facility, including the past producing Caballito property and the highly prospective Maria Reyna property. In August 2022, the company executed a surface rights exploration agreement with the community of Uchucarcco that allows for exploration of the Maria Reyna and Caballito properties. Shortly after the agreement was completed, Hudbay commenced baseline environmental and archaeological activities and its geological team commenced surface investigation activities. Field evidence confirms that both Caballito and Maria Reyna host sulfide and oxide rich copper mineralization in skarns, hydrothermal breccias and large porphyry intrusive bodies.

Manitoba Regional Exploration

Hudbay continues to conduct drilling activities in the Snow Lake area and compile results from ongoing infill drilling at Lalor and 1901, which will be incorporated into the annual mineral resource and reserve estimate update in the first quarter of 2023. Assay results from recent confirmatory drilling at the tailings facility in Flin Flon indicate higher zinc, copper and silver grades than predicted from historical mill records while confirming the historical gold grade. The company plans to complete metallurgical test work on the Flin Flon tailings to assess the processing viability. Hudbay also intends to evaluate the opportunity to reprocess the tailings at the Anderson facility in Snow Lake given significant amounts of gold have been deposited over many decades.

The company is in the process of planning a winter drill program to test the down-dip gold and copper extensions of the Lalor deposit in 2023, which will be the first time the company has completed step-out drilling in the deeper zones at Lalor since 2009.

Arizona Regional Exploration

Following the substantial completion of the infill drilling to support the pre-feasibility study for the Copper World Complex in July, the company reduced the number of drill rigs at site to three. Recent drilling has confirmed the continuity of the mineralization between the Bolsa and East deposits and extended the size of the mineralized envelope, which remains open in several directions and at depth.

Nevada Regional Exploration

A conductivity-resistivity IP ground survey commenced in October 2022 at the Mason Valley properties located on Hudbay's private land claims near the Mason project. This work, in combination with a re-interpretation of geological data from past operating mines and previous exploration data, will be used to finalize a drill plan to test high grade skarn targets in 2023.

Appointment of Chief Financial Officer

On October 13, 2022, Eugene Lei was appointed as Hudbay's Senior Vice President and Chief Financial Officer. Mr. Lei is highly regarded within the industry and has over 20 years of global mining investment banking, finance and corporate development experience. Since joining Hudbay in 2012, he has progressed through several senior management roles and executive responsibilities, including leading the corporate development, strategy and investor relations functions. He was interim CFO at Hudbay in 2020 and led the gold prepayment transaction in May 2020 to finance the capital reinvestment program in the New Britannia mill.

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2022 No. 20

Website Links

Hudbay:

www.hudbay.com

Management's Discussion and Analysis:

http://www.hudbayminerals.com/files/doc_financials/2022/Q3/MDA322.pdf

Financial Statements:

http://www.hudbayminerals.com/files/doc_financials/2022/Q3/FS322.pdf

Conference Call and Webcast

Date: Thursday, November 3, 2022
Time: 8:30 a.m. ET
Webcast: www.hudbay.com
Dial in: 1-416-915-3239 or 1-800-319-4610

Qualified Person and NI 43-101

The technical and scientific information in this news release related to the company's material mineral projects has been approved by Olivier Tavchandjian, P. Geo, Vice President, Exploration and Technical Services. Mr. Tavchandjian is a qualified person pursuant to National Instrument 43-101 - Standards of Disclosure for Mineral Projects ("NI 43-101").

For a description of the key assumptions, parameters and methods used to estimate mineral reserves and resources at Hudbay's material properties, as well as data verification procedures and a general discussion of the extent to which the estimates of scientific and technical information may be affected by any known environmental, permitting, legal title, taxation, sociopolitical, marketing or other relevant factors, please see the technical reports for the company's material properties as filed by Hudbay on SEDAR at www.sedar.com.

Non-IFRS Financial Performance Measures

Adjusted net earnings (loss), adjusted net earnings (loss) per share, adjusted EBITDA, net debt, cash cost, sustaining and all-in sustaining cash cost per pound of copper produced, cash cost and sustaining cash cost per ounce of gold produced and combined unit cost are non-IFRS performance measures. These measures do not have a meaning prescribed by IFRS and are therefore unlikely to be comparable to similar measures presented by other issuers. 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.

Management believes adjusted net earnings (loss) and adjusted net earnings (loss) per share provides an alternate measure of the company's performance for the current period and gives insight into its expected performance in future periods. These measures are used internally by the company to evaluate the performance of its underlying operations and to assist with its planning and forecasting of future operating results. As such, the company believes these measures are useful to investors in assessing the company's underlying performance. Hudbay provides adjusted EBITDA to help users analyze the company's results and to provide additional information about its ongoing cash generating potential in order to assess its capacity to service and repay debt, carry out investments and cover working capital needs. Net debt is shown because it is a performance measure used by the company to assess its financial position. Cash cost, sustaining and all-in 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. Cash cost and sustaining cash cost per ounce of gold produced are shown because the company believes they help investors and management assess the performance of its Manitoba operations. Combined unit cost is shown because Hudbay believes it helps investors and management assess the company's cost structure and margins that are not impacted by variability in by-product commodity prices.

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2022 No. 20

During 2021 and 2022, there were non-recurring adjustments for Arizona and Manitoba operations, including severance, past service pension costs, disposals of certain non-current assets, and inventory supplies write-downs as well as non-cash impairment charges related to an updated Flin Flon closure plan and lower long-term discount rates in the fourth quarter of 2021, none of which management believes are indicative of ongoing operating performance and therefore are adjusting items in the calculations of adjusted net earnings (loss) and adjusted EBITDA.

In the first and second quarter of 2022, Hudbay recorded a non-cash gain of $79.9 million and $60.7 million, respectively, mostly related to the quarterly revaluation of its Flin Flon environmental provision, which was impacted by rising long-term risk-free discount rates. With the closure of 777 mine and Flin Flon operations in the second quarter of 2022, and given the long-term nature of the reclamation cash flows, quarterly revaluation of the corresponding environmental provision remains highly sensitive to changes in real, long-term risk-free discount rates and, as such, the company expects to continue to experience quarterly environmental provision revaluations, which is not indicative of its ongoing operating performance. This item has been included prospectively in the calculation of adjusted earnings.

The following tables provide detailed reconciliations to the most comparable IFRS measures.

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2022 No. 20

Adjusted Net Earnings (Loss) Reconciliation

Three Months Ended
(in $ millions) Sep. 30, 2022 Jun. 30, 2022 Sep. 30, 2021
(Loss) profit for the period (8.1) 32.1 (170.4)
Tax expense (recovery) 7.8 (10.6) 22.6
(Loss) profit before tax (0.3) 21.5 (147.8)
Adjusting items: ****
Mark-to-market adjustments^1^ (4.2) (14.0) 1.7
Foreign exchange (gain) loss (4.8) (2.2) (3.1)
Inventory adjustments 2.1 1.9 5.4
Variable consideration adjustment - stream revenue and accretion 3.9 - -
Impairment loss - 95.0 147.3
Environmental obligation adjustments^2^ (6.4) (60.7) -
Evaluation expenses 0.1 0.7 -
Insurance recovery - (5.7) -
Restructuring charges - Manitoba^3^ 5.1 3.7 3.6
Loss on disposal of plant and equipment - Manitoba - 3.1 -
Past service pension cost - - 4.2
(Gain) loss on disposal of plant and equipment and non-current assets - Manitoba & Arizona (6.0) - 5.4
Adjusted earnings before income taxes (10.5) 43.3 16.7
Tax (expense) recovery (7.8) 10.6 (22.6)
Tax impact of adjusting items 5.9 (23.4) 6.8
Adjusted net (loss) earnings (12.4) 30.5 0.9
Adjusted net (loss) earnings ($/share) (0.05) 0.12 0.00
Basic weighted average number of common shares outstanding (millions) 261.9 261.9 261.5

^1^ Includes changes in fair value of the gold prepayment liability, Canadian junior mining investments, other financial assets and liabilities at fair value through profit or loss and share-based compensation expenses.

^2^ Changes from movements to environmental obligation closure estimates are primarily related to the Flin Flon operations, which were fully depreciated as of June 30, 2022, as well as other Manitoba non-operating sites.

^3^ Includes closure costs (severance and site preparation costs) for Flin Flon operations.

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Adjusted EBITDA Reconciliation

Three Months Ended
(in $ millions) Sep. 30, 2022 Jun. 30, 2022 Sep. 30, 2021
(Loss) profit for the period (8.1) 32.1 (170.4)
Add back: Tax expense (recovery) 7.8 (10.6) 22.6
Add back: Net finance expense 20.6 24.4 30.2
Add back: Other expenses (income) 6.3 (1.3) 15.8
Add back: Depreciation and amortization 89.8 87.3 86.0
Add back: Amortization of deferred revenue and variable consideration adjustment (15.3) (19.2) (23.5)
101.1 112.7 (39.3)
Adjusting items (pre-tax):
Environmental obligation adjustments^1^ (6.4) (60.7) 0.1
Impairment loss - 95.0 147.3
Inventory adjustments 2.1 1.9 5.4
Past service pension cost - - 4.2
Share-based compensation recovery (expense)^2^ 2.5 (7.5) 1.5
Adjusted EBITDA 99.3 141.4 119.2

^1^ Environmental obligation adjustments were presented within other (income) expense for 2021 periods.

^2^ Share-based compensation expenses reflected in cost of sales and selling and administrative expenses.

Net Debt Reconciliation

(in thousands)
Jun. 30, 2022 Dec. 31, 2021
Total long-term debt 1,182,143 1,180,274
Cash 258,556 270,989
Net debt 923,587 909,285

All values are in US Dollars.

Cash Cost Reconciliation

Consolidated Three Months Ended
Net pounds of copper produced
(in thousands) Sep. 30, 2022 Jun. 30, 2022 Sep. 30, 2021
Peru 49,167 46,032 39,842
Manitoba 4,841 10,556 11,404
Net pounds of copper produced 54,008 56,588 51,246
Consolidated Three Months Ended
--- --- --- --- --- --- ---
Sep. 30, 2022 Jun. 30, 2022 Sep. 30, 2021
Cash cost per pound of copper produced $000s $/lb^1^ $000s $/lb^1^ $000s $/lb^1^
Cash cost, before by-product credits 211,664 3.92 243,902 4.31 206,615 4.04
By-product credits (180,464) (3.34) (207,191) (3.66) (175,057) (3.42)
Cash cost, net of by-product credits 31,200 0.58 36,711 0.65 31,558 0.62

^1^Per pound of copper produced.

TSX, NYSE – HBM
2022 No. 20
Consolidated Three Months Ended
--- --- --- --- --- --- ---
****** Sep. 30, 2022 Jun. 30, 2022 Sep. 30, 2021
Supplementary cash cost information $000s $/lb ^1^ $000s $/lb ^1^ $000s $/lb ^1^
By-product credits^2^: ****** ****** ****** ****** ****** ******
Zinc 43,606 0.81 88,548 1.56 67,695 1.32
Gold ^3^ 101,650 1.88 91,317 1.61 76,241 1.49
Silver ^3^ 16,066 0.30 17,956 0.32 15,957 0.31
Molybdenum & other 19,142 0.35 9,370 0.17 15,164 0.30
Total by-product credits 180,464 3.34 207,191 3.66 175,057 3.42
Reconciliation to IFRS: ****** ****** ****** ******
Cash cost, net of by-product credits 31,200 ****** 36,711 31,558 ******
By-product credits 180,464 ****** 207,191 175,057 ******
Treatment and refining charges (21,852) ****** (15,033) (14,531) ******
Share-based compensation        expense 114 ****** (632) 145 ******
Inventory adjustments 2,074 ****** 1,933 5,445 ******
Past service pension cost - ****** - 4,229 ******
Change in product inventory 29,726 ****** 4,494 5,672 ******
Royalties 2,204 ****** 3,971 3,489 ******
Depreciation and amortization^4^ 89,811 ****** 87,305 86,010 ******
Cost of sales^5^ 313,741 ****** 325,940 297,074 ******

^1^Per pound of copper produced.

^2^ By-product credits are computed as revenue per financial statements, including amortization of deferred revenue and pricing and volume adjustments.

^3^ Gold and silver by-product credits do not include variable consideration adjustments with respect to stream arrangements. Variable consideration adjustments are cumulative adjustments to gold and silver stream deferred revenue primarily associated with the net change in mineral reserves and resources or amendments to the mine plan that would change the total expected deliverable ounces under the precious metal streaming arrangement. For the three months ended September 30, 2022 the variable consideration adjustments amounted to expense of $2,286, the three months ended June 30, 2022 - $nil, and for the three months ended September 30, 2021 - income of $1,617.

^4^Depreciation is based on concentrate sold.

^5^ As per IFRS financial statements.

TSX, NYSE – HBM
2022 No. 20
Peru Three Months Ended
--- --- --- ---
(in thousands) Sep. 30, 2022 Jun. 30, 2022 Sep. 30, 2021
Net pounds of copper produced^1^ 49,167 46,032 39,842

^1^Contained copper in concentrate.

Peru Three Months Ended
Sep. 30, 2022 Jun. 30, 2022 Sep. 30, 2021
Cash cost per pound of copper produced $000s $/lb $000s $/lb $000s $/lb
Mining 35,197 0.72 32,300 0.70 22,772 0.57
Milling 52,043 1.06 44,731 0.97 44,750 1.12
G&A 13,421 0.27 18,677 0.41 13,948 0.35
Onsite costs 100,661 2.05 95,708 2.08 81,470 2.04
Treatment & refining 10,814 0.22 9,226 0.20 7,292 0.18
Freight & other 12,905 0.26 12,297 0.26 9,464 0.24
Cash cost, before by-product credits 124,380 2.53 117,231 2.54 98,226 2.46
By-product credits (41,659) (0.85) (33,268) (0.72) (47,984) (1.20)
Cash cost, net of by-product credits 82,721 1.68 83,963 1.82 50,242 1.26
Peru Three Months Ended
--- --- --- --- --- --- ---
Sep. 30, 2022 Jun. 30, 2022 Sep. 30, 2021
Supplementary cash cost information $000s $/lb^1^ $000s $/lb^1^ $000s $/lb^1^
By-product credits^2^:
Gold^3^ 12,793 0.26 14,191 0.31 24,196 0.61
Silver^3^ 9,967 0.20 11,687 0.25 10,557 0.26
Molybdenum 18,899 0.39 7,390 0.16 13,231 0.33
Total by-product credits 41,659 0.85 33,268 0.72 47,984 1.20
Reconciliation to IFRS:
Cash cost, net of by-product credits 82,721 83,963 50,242
By-product credits 41,659 33,268 47,984
Treatment and refining charges (10,814) (9,226) (7,292)
Inventory adjustments - (97) -
Share-based compensation expenses (16) (100) 31
Change in product inventory (2,497) (8,394) (3,126)
Royalties 1,740 1,117 998
Depreciation and amortization^4^ 56,614 47,811 47,185
Cost of sales^5^ 169,407 148,342 136,022

^1^Per pound of copper produced.

^2^By-product credits are computed as revenue per financial statements, including amortization of deferred revenue and pricing and volume adjustments.

^3^Gold and silver by-product credits do not include variable consideration adjustments with respect to stream arrangements.

^4^Depreciation is based on concentrate sold.

^5^As per IFRS financial statements.

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2022 No. 20
Manitoba Three Months Ended
--- --- --- ---
(in thousands) Sep. 30, 2022 Jun. 30, 2022 Sep. 30, 2021
Net pounds of copper produced^1^ 4,841 10,556 11,404

^1^Contained copper in concentrate.

Manitoba Three Months Ended
Sep. 30, 2022 Jun. 30, 2022 Sep. 30, 2021
Cash cost per pound of copper produced $000s $/lb $000s $/lb $000s $/lb
Mining 40,659 8.40 54,500 5.16 54,634 4.79
Milling 16,573 3.42 20,953 1.98 14,484 1.27
Refining (Zinc) - 0.00 14,379 1.36 15,868 1.39
G&A 9,841 2.03 23,253 2.21 8,680 0.76
Onsite costs 67,073 13.85 113,085 10.71 93,666 8.21
Treatment & refining 11,038 2.29 5,807 0.55 7,239 0.63
Freight & other 9,173 1.89 7,779 0.74 7,484 0.66
Cash cost, before by-product credits 87,284 18.03 126,671 12.00 108,389 9.50
By-product credits (138,805) (28.67) (173,923) (16.48) (127,073) (11.14)
Cash cost, net of by-product credits (51,521) (10.64) (47,252) (4.48) (18,684) (1.64)
Manitoba Three Months Ended
--- --- --- --- --- --- ---
****** Sep. 30, 2022 Jun. 30, 2022 Sep. 30, 2021
Supplementary cash cost information $000s $/lb $000s $/lb $000s $/lb
By-product credits^2^: ****** ****** ****** ****** ****** ******
Zinc 43,606 9.01 88,548 8.39 67,695 5.94
Gold^3^ 88,857 18.35 77,126 7.31 52,045 4.56
Silver^3^ 6,099 1.26 6,269 0.59 5,400 0.47
Other 243 0.05 1,980 0.19 1,933 0.17
Total by-product credits 138,805 28.67 173,923 16.48 127,073 11.14
Reconciliation to IFRS: ****** ****** ****** ******
Cash cost, net of by-product credits (51,521) ****** (47,252) (18,684) ******
By-product credits 138,805 ****** 173,923 127,073 ******
Treatment and refining charges (11,038) ****** (5,807) (7,239) ******
Inventory adjustments 2,074 ****** 2,030 5,445 ******
Past service pension cost - ****** - 4,229 ******
Share-based compensation expenses 130 ****** (532) 114 ******
Change in product inventory 32,223 ****** 12,888 8,798 ******
Royalties 464 ****** 2,854 2,491 ******
Depreciation and amortization^4^ 33,197 ****** 39,494 38,825 ******
Cost of sales^5^ 144,334 ****** 177,598 161,052 ******

^1^Per pound of copper produced.

^2^By-product credits are computed as revenue per financial statements, including amortization of deferred revenue and pricing and volume adjustments.

^3^Gold and silver by-product credits do not include variable consideration adjustments with respect to stream arrangements.

^4^Depreciation is based on concentrate sold.

^5^ As per IFRS financial statements.

TSX, NYSE – HBM
2022 No. 20

Sustaining and All-in Sustaining Cash Cost Reconciliation

Consolidated Three Months Ended
Sep. 30, 2022 Jun. 30, 2022 Sep. 30, 2021
All-in sustaining cash cost per pound of copper produced $000s $/lb $000s $/lb $000s $/lb
Cash cost, net of by-product credits 31,200 0.58 36,711 0.65 31,558 0.62
Cash sustaining capital expenditures 69,588 1.29 65,173 1.15 65,694 1.28
Royalties 2,204 0.04 3,971 0.07 3,489 0.07
Sustaining cash cost, net of by-product credits 102,992 1.91 105,855 1.87 100,741 1.97
Corporate selling and administrative expenses & regional costs 11,384 0.21 2,479 0.04 10,177 0.21
Accretion and amortization of decommissioning and community agreements^1^ 2,099 0.04 874 0.02 652 0.01
All-in sustaining cash cost, net of by-product credits 116,475 2.16 109,208 1.93 111,570 2.18
Reconciliation to property, plant and equipment additions:
Property, plant and equipment additions 72,237 70,712 76,435
Capitalized stripping net additions 22,645 27,302 19,094
Total accrued capital additions 94,882 98,014 95,529
Less other non-sustaining capital costs^2^ 34,649 32,988 33,099
Total sustaining capital costs 60,233 65,026 62,430
Right of use leased assets (5,158) (12,501) (9,549)
Capitalized lease cash payments - operating sites 8,852 9,313 8,453
Community agreement cash payments 2,491 370 82
Accretion and amortization of decommissioning and restoration obligations 3,170 2,965 4,278
Cash sustaining capital expenditures 69,588 65,173 65,694

^1^Includes accretion of decommissioning relating to non-productive sites, and accretion and amortization of current community agreements.

^2^Other non-sustaining capital costs include Arizona capitalized costs, capitalized interest, capitalized exploration, growth capital expenditures.

Peru Three Months Ended
Sep. 30, 2022 Jun. 30, 2022 Sep. 30, 2021
Sustaining cash cost per pound of copper produced $000s $/lb $000s $/lb $000s $/lb
Cash cost, net of by-product credits 82,721 1.68 83,963 1.82 50,242 1.26
Cash sustaining capital expenditures 36,507 0.74 35,527 0.78 40,921 1.03
Royalties 1,740 0.04 1,117 0.02 998 0.03
Sustaining cash cost per pound of copper produced 120,968 2.46 120,607 2.62 92,161 2.31

^1^Only includes exploration costs incurred for locations near to existing mine operations.

TSX, NYSE – HBM
2022 No. 20
Manitoba Three Months Ended
--- --- --- --- --- --- ---
Sep. 30, 2022 Jun. 30, 2022 Sep. 30, 2021
Sustaining cash cost per pound of copper produced $000s $/lb $000s $/lb $000s $/lb
Cash cost, net of by-product credits (51,521) (10.64) (47,252) (4.48) (18,684) (1.64)
Cash sustaining capital expenditures 33,081 6.83 29,646 2.81 24,773 2.17
Royalties 464 0.10 2,854 0.27 2,491 0.22
Sustaining cash cost per pound of copper produced (17,976) (3.71) (14,752) (1.40) 8,580 0.75

Gold Cash Cost and Sustaining Cash Cost Reconciliation

Manitoba Three Months Ended
Sep. 30, 2022 Jun. 30, 2022
Net ounces of gold produced 40,457 44,787
Manitoba Three Months Ended
--- --- --- --- ---
Sep. 30, 2022 Jun. 30, 2022
Cash cost per ounce of gold produced $000s $/loz $000s $/oz
Cash cost, before by-product credits 87,284 2,157 126,671 2,828
By-product credits (78,565) (1,941) (135,924) (3,035)
Gold cash cost, net of by-product credits 8,719 216 (9,253) (207)
Manitoba Three Months Ended
--- --- --- --- ---
Sep. 30, 2022 Jun. 30, 2022
Supplementary cash cost information $000s $/oz $000s $/oz
By-product credits^2^:
Copper 28,617 707 39,127 874
Zinc 43,606 1,077 88,548 1,977
Silver^3^ 6,099 151 6,269 140
Other 243 6 1,980 44
Total by-product credits 78,565 1,941 135,924 3,035
Reconciliation to IFRS: **** ****
Cash cost, net of by-product credits 8,719 **** (9,253)
By-product credits 78,565 **** 135,924
Treatment and refining charges (11,038) **** (5,807)
Share-based compensation expenses 130 **** (532)
Inventory adjustments 2,074 **** 2,030
Change in product inventory 32,223 **** 12,888
Royalties 464 **** 2,854
Depreciation and amortization^4^ 33,197 **** 39,494
Cost of sales^5^ 144,334 **** 177,598

^1^Per ounce of gold produced.

^2^By-product credits are computed as revenue per financial statements, amortization of deferred revenue and pricing and volume adjustments. For more information, please see the realized price reconciliation table in the Q3 2022 Management Discussion and Analysis posted on hudbayminerals.com

^3^ Silver by-product credits do not include variable consideration adjustments with respect to stream arrangements.

^4^ Depreciation is based on concentrate sold.

^5^ As per IFRS financial statements.

TSX, NYSE – HBM
2022 No. 20
Manitoba Three Months Ended
--- --- --- --- ---
Sep. 30, 2022 Jun. 30, 2022
Sustaining cash cost per ounce of gold produced $000s $/loz $000s $/oz
Gold cash cost, net of by-product credits 8,719 216 (9,253) (207)
Cash sustaining capital expenditures 33,081 818 29,646 662
Royalties 464 11 2,854 64
Sustaining cash cost per ounce of gold produced 42,264 1,045 23,247 519

Combined Unit Cost Reconciliation

Peru Three Months Ended
(in thousands except unit cost per tonne) ****** ****** ******
Combined unit cost per tonne processed Sep. 30, 2022 Jun. 30, 2022 Sep. 30, 2021
Mining 35,197 32,300 22,772
Milling 52,043 44,731 44,750
G&A ^1^ 13,421 18,677 13,948
Other G&A^2^ 1,342 (1,050) (286)
102,003 94,658 81,184
Less: Covid related costs 929 1,275 4,825
Unit Cost 101,074 93,383 76,359
Tonnes ore milled 7,742 7,771 6,985
Combined unit cost per tonne 13.06 12.02 10.93
Reconciliation to IFRS: ****
Unit cost 101,074 93,383 76,359
Freight & other 12,905 12,297 9,464
Covid related costs 929 1,275 4,825
Other G&A (1,342) 1,050 286
Share-based compensation expenses (16) (100) 31
Inventory adjustments - (97) -
Change in product inventory (2,497) (8,394) (3,126)
Royalties 1,740 1,117 998
Depreciation and amortization 56,614 47,811 47,185
Cost of sales^3^ 169,407 148,342 136,022

^1^G&A as per cash cost reconciliation above.

^2^Other G&A primarily includes profit sharing costs.

^3^As per IFRS financial statements.

Manitoba Three Months Ended
(in thousands except tonnes ore milled and unit cost per tonne) ****** ****** ******
Combined unit cost per tonne processed Sep. 30, 2022 Jun. 30, 2022 Sep. 30, 2021
Mining 40,659 54,500 54,634
Milling 16,573 20,953 14,484
G&A ^1^ 9,841 23,253 8,680
Less: G&A allocated to zinc metal production - (3,141) (3,280)
Less: Other G&A related to profit sharing (1,784) (10,206) 3,381
TSX, NYSE – HBM
---
2022 No. 20
Unit cost 65,289 85,359 77,899
--- --- --- ---
USD/CAD implicit exchange rate 1.31 1.27 1.26
Unit cost - C$ 85,225 108,806 98,151
Tonnes ore milled 362,108 649,318 666,263
Combined unit cost per tonne - C$ 235 168 147
Reconciliation to IFRS: ****
Unit cost 65,289 85,359 77,899
Freight & other 9,173 7,779 7,484
Refined (zinc) - 14,379 15,868
G&A allocated to zinc metal production - 3,141 3,280
Other G&A related to profit sharing 1,784 10,206 (3,381)
Share-based compensation expenses 130 (532) 114
Inventory adjustments 2,074 2,030 5,445
Past service pension cost - - 4,229
Change in product inventory 32,223 12,888 8,798
Royalties 464 2,854 2,491
Depreciation and amortization 33,197 39,494 38,825
Cost of sales^2^ 144,334 177,598 161,052

^1^G&A as per cash cost reconciliation above.

^2^As per IFRS financial statements.

TSX, NYSE – HBM
2022 No. 20

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, cost and capital and exploration expenditure guidance, expectations regarding reductions in discretionary spending in 2022 and 2023, expectations regarding the impact of inflationary pressures on the cost of operations, financial condition and prospects, expectations regarding the company's cash balance and liquidity for the remainder of the year, expectations regarding the Copper World project, including the company's plans for a pre-feasibility study and the estimated timelines and pre-requisites for sanctioning the project, expectations regarding the permitting requirements for the Copper World project and permitting related litigation, expectations regarding the anticipated timelines for achieving target throughput and recoveries at the New Britannia mill, increasing the mining rate at Lalor to 5,300 tonnes per day, expectations regarding the ability to conduct exploration work on the Maria Reyna and Caballito properties, expectations resulting from the Flin Flon tailings drill program and the evaluation of the opportunity to reprocess tailings, plans to implement a winter drill program and other scoping studies in Manitoba, the expectations regarding the prospective nature of the Maria Reyna and Caballito properties, anticipated mine plans, anticipated metals prices and the anticipated sensitivity of the company's financial performance to metals prices, events that may affect the company's operations and development projects, anticipated cash flows from operations and related liquidity requirements, the anticipated effect of external factors on revenue, such as commodity prices, estimation of mineral reserves and resources, mine life projections, reclamation costs, economic outlook, government regulation of mining operations, and business and acquisition strategies. 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 Hudbay 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 has identified and applied in drawing conclusions or making forecasts or projections set out in the forward-looking information include, but are not limited to:

  • Hudbay's ability to continue to operate safely and at full capacity despite COVID-19 related challenges;
  • the availability, global supply and effectiveness of COVID-19 vaccines, the effective distribution of such vaccines in the countries in which the company operates, the lessening of restrictions related to COVID-19, and the anticipated rate and timing for each of the foregoing;
  • the ability to achieve production and cost guidance;
  • the ability to achieve discretionary spending reductions without impacting operations;
  • no significant interruptions to operations due to COVID-19 or social or political unrest in the regions Hudbay operates;
  • no interruptions to the company's plans for advancing the Copper World project;
  • the ability to ramp up exploration in respect of the Maria Reyna and Caballito properties;
  • the ability to ramp up the New Britannia mill to target throughput and recoveries and achieve the anticipated production;
  • the ability to ramp up the Lalor mine to 5,300 tonnes per day;
  • the success of mining, processing, exploration and development activities;
TSX, NYSE – HBM
2022 No. 20
  • the scheduled maintenance and availability of Hudbay's processing facilities;
  • the accuracy of geological, mining and metallurgical estimates;
  • anticipated metals prices and the costs of production;
  • the supply and demand for metals the company produces;
  • the supply and availability of all forms of energy and fuels at reasonable prices;
  • no significant unanticipated operational or technical difficulties;
  • the execution of business and growth strategies, including the success of the company's strategic investments and initiatives;
  • the availability of additional financing, if needed;
  • the ability to complete project targets on time and on budget and other events that may affect Hudbay's ability to develop its projects;
  • the timing and receipt of various regulatory and governmental approvals;
  • the availability of personnel for exploration, development and operational projects and ongoing employee relations;
  • maintaining good relations with the labour unions that represent certain of Hudbay's employees in Manitoba and Peru;
  • maintaining good relations with the communities in which Hudbay operates, including the neighbouring Indigenous communities and local governments;
  • no significant unanticipated challenges with stakeholders at various projects;
  • no significant unanticipated events or changes relating to regulatory, environmental, health and safety matters;
  • no contests over title to the company's properties, including as a result of rights or claimed rights of Indigenous peoples or challenges to the validity of Hudbay's unpatented mining claims;
  • the timing and possible outcome of pending litigation and no significant unanticipated litigation;
  • certain tax matters, including, but not limited to current tax laws and regulations, changes in taxation policies and the refund of certain value added taxes from the Canadian and Peruvian governments; 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 associated with COVID-19 and its effect on Hudbay's operations, financial condition, projects and prospects, uncertainty with respect to the political and social environment in Peru and its potential impact on the company's mining operations, risks generally associated with the mining industry and the current geopolitical environment, 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, uncertainties related to the development and operation of the company's projects, risks related to the Copper World project, including in relation to permitting, litigation, project delivery and financing risks, risks related to the new Lalor mine plan, including the continuing ramp-up of the New Britannia mill and the ability to convert inferred mineral resource estimates to higher confidence categories, the potential that additional financial assurance will be required to support the updated Flin Flon closure plan, dependence on key personnel and employee and union relations, risks related to political or social instability, unrest or change, risks in respect of Indigenous and community relations, rights and title claims, operational risks and hazards, including the cost of maintaining and upgrading the company's tailings management facilities and any unanticipated environmental, industrial and geological events and developments and the inability to insure against all risks, failure of plant, equipment, processes, transportation and other infrastructure to operate as anticipated, compliance with government and environmental regulations, including permitting requirements and anti-bribery legislation, depletion of reserves, volatile financial markets and interest rates that may affect its ability to obtain additional financing on acceptable terms, the failure to obtain required approvals or clearances from government authorities on a timely basis, uncertainties related to the geology, continuity, grade and estimates of mineral reserves and resources, and the potential for variations in grade and recovery rates, uncertain costs of reclamation activities, the company's ability to comply with its pension and other post-retirement obligations, the ability to abide by the covenants in its debt instruments and other material contracts, tax refunds, hedging transactions, as well as the risks discussed under the heading "Risk Factors" in Hudbay's most recent Annual Information Form.

TSX, NYSE – HBM
2022 No. 20

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. Hudbay 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 events and any forward-looking information, except as required by applicable law.

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 may differ materially from the requirements of United States securities laws applicable to U.S. issuers.

About Hudbay

Hudbay (TSX, NYSE: HBM) is a diversified mining company with long-life assets in North and South America. The company's operations in Cusco (Peru) produce copper with gold, silver and molybdenum by-products. Its operations in Manitoba (Canada) produce gold with copper, zinc and silver by-products. Hudbay's organic pipeline includes copper development projects in Arizona and Nevada (United States), and its growth strategy is focused on the exploration, development, operation, and optimization of properties it already controls, as well as other mineral assets it may acquire that fit its strategic criteria. Hudbay's mission is to create sustainable value through the acquisition, development and operation of high-quality, long-life deposits with exploration potential in jurisdictions that support responsible mining, and to see the regions and communities in which the company operates benefit from its presence. Further information about Hudbay can be found on www.hudbay.com.

For further information, please contact:

Candace Brûlé

Vice President, Investor Relations

(416) 814-4387

[email protected]

^__________________________________________i^ Adjusted net earnings and adjusted net earnings per share; adjusted EBITDA; cash cost, sustaining cash cost and all-in sustaining cash cost per pound of copper produced, net of by-product credits; cash cost and sustaining cash cost per ounce of gold produced, net of by-product credits; and net debt are non-IFRS financial performance measures with no standardized definition under IFRS. For further information, please see the "Non-IFRS Financial Performance Measures" section of this news release.

^ii^ For further information on the mineral resource estimate and assumptions underlying the copper-equivalent grades, please refer to the table on page 12 of this news release.

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