Hudbay Minerals Inc.: Exhibit 99.1 - Filed by newsfilecorp.com

EX-99.1 2 exhibit99-1.htm EXHIBIT 99.1 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 six months ended June 30, 2024 and 2023

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

			Jun. 30,			Dec. 31,
	Note		2024			2023
Assets
Current assets
Cash and cash equivalents		$	483,767		$	249,794
Short-term investments	7		40,000			-
Trade and other receivables	8		183,001			203,429
Inventories	9		185,869			207,334
Prepaid expenses and other current assets			12,724			6,289
Other financial assets	10		8,013			4,102
Taxes receivable			561			2,300
			913,935			673,248
Receivable	8		11,757			12,157
Inventories	9		19,310			24,450
Other financial assets	10		5,973			7,089
Intangibles and other assets	11		50,375			52,453
Property, plant and equipment	12		4,230,140			4,316,006
Deferred tax assets			138,183			151,946
Goodwill			72,749			75,285
		$	5,442,422		$	5,312,634
Liabilities
Current liabilities
Trade and other payables		$	226,035		$	239,149
Taxes payable			50,765			53,441
Other liabilities	13		36,141			30,035
Other financial liabilities	14		50,273			42,235
Gold prepayment liability	15		15,896			55,901
Lease liabilities	16		29,629			28,902
Deferred revenue	18		81,403			87,672
			490,142			537,335
Other financial liabilities	14		73,864			51,720
Lease liabilities	16		56,492			61,433
Long-term debt	17		1,155,575			1,287,536
Deferred revenue	18		314,556			330,848
Pension obligations			-			6,010
Other employee benefits			95,665			101,849
Environmental and other provisions	19		297,802			321,912
Deferred tax liabilities			376,122			407,152
			2,860,218			3,105,795
Equity
Share capital	21b		2,629,914			2,240,233
Reserves			23,046			30,177
Retained earnings			(170,415	)		(173,599	)
Equity attributable to owners of the Company			2,482,545			2,096,811
Non-controlling interest			99,659			110,028
		$	5,442,422		$	5,312,634

Commitments (note 24)

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

	Note		Three months ended June 30,						Six months ended June 30,
	Note		2024			2023			2024			2023
Revenue	6a	$	425,520		$	312,166		$	950,509		$	607,385
Cost of sales
Mine operating costs			250,247			200,603			514,009			361,887
Depreciation and amortization	6b		97,646			88,670			206,919			156,092
			347,893			289,273			720,928			517,979
Gross profit			77,627			22,893			229,581			89,406
Selling and administrative expenses			18,417			8,600			35,024			17,746
Exploration expenses			5,950			5,319			18,543			13,561
Other expenses	6c		11,213			13,894			27,473			18,853
Re-evaluation adjustment - environmental provision	19		(2,685	)		(4,692	)		(7,954	)		(12,932	)
Results from operating activities			44,732			(228	)		156,495			52,178
Net interest expense on long term debt	6d		18,460			17,800			37,668			34,807
Accretion on streaming arrangements	6d		6,000			6,596			12,176			13,097
Change in fair value of financial instruments	6d		13,218			(87	)		20,172			5,510
Other net finance costs	6d		6,613			6,194			18,288			12,065
Net finance expense			44,291			30,503			88,304			65,479
Earnings (loss) before tax			441			(30,731	)		68,191			(13,301	)
Tax expense (recovery)	20		20,818			(15,799	)		70,033			(3,826	)
Net loss for the period		$	(20,377	)	$	(14,932	)	$	(1,842	)	$	(9,475	)

Attributable to:
Owners of the Company		$	(16,583	)	$	(14,932	)	$	5,775		$	(9,475	)
Non-controlling interest			(3,794	)		-			(7,617	)		-
Net loss for the period		$	(20,377	)	$	(14,932	)	$	(1,842	)	$	(9,475	)

Net (loss) earnings per share attributable to owners
Basic and diluted		$	(0.05	)	$	(0.05	)	$	0.02		$	(0.04	)

Weighted average number of common shares outstanding:
Basic	22		368,344,407			272,228,447			359,562,824			267,157,797
Diluted	22		368,344,407			272,228,447			360,052,424			267,157,797

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

		Three months ended June 30,						Six months ended June 30,
		2024			2023			2024			2023
Net loss for the period	$	(20,377	)	$	(14,932	)	$	(1,842	)	$	(9,475	)

Other comprehensive (loss) income:
Item that will be reclassified subsequently to net earnings:
Recognized directly in equity:
Net (loss) gain on translation of foreign currency balances		(6,217	)		6,489			(23,038	)		6,625
		(6,217	)		6,489			(23,038	)		6,625

Items that will not be reclassified subsequently to net earnings:
Recognized directly in equity:
Gold prepayment revaluation		(1	)		(203	)		(16	)		(188	)
Tax effect		-			54			4			50
Remeasurement - actuarial gain (loss)		12,312			(906	)		15,887			(2,151	)
Tax effect		(2,599	)		(77	)		(2,580	)		(347	)
		9,712			(1,132	)		13,295			(2,636	)

Other comprehensive gain (loss) income net of tax, for the period		3,495			5,357			(9,743	)		3,989
Total comprehensive loss for the period	$	(16,882	)	$	(9,575	)	$	(11,585	)	$	(5,486	)

Attributable to:
Owners of the Company		(13,040	)		(9,575	)		(1,216	)		(5,486	)
Non-controlling interest		(3,842	)		-			(10,369	)		-
Total comprehensive loss for the period	$	(16,882	)	$	(9,575	)	$	(11,585	)	$	(5,486	)

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

	Note	Three months ended June 30,							Six months ended June 30,
	Note		2024			2023			2024			2023
Cash generated from operating activities:
Net loss for the period		$	(20,377	)	$	(14,932	)	$	(1,842	)	$	(9,475	)
Tax expense (recovery)	20		20,818			(15,799	)		70,033			(3,826	)
Items not affecting cash:
Depreciation and amortization	6b		98,028			88,987			207,787			156,739
Share-based compensation expense			8,730			705			14,588			1,900
Net finance expense	6d		44,291			30,503			88,304			65,479
Inventory adjustments			-			906			-			906
Amortization of deferred revenue and variable consideration	6a		(11,566	)		(18,175	)		(34,737	)		(34,032	)
Pension and other employee benefit payments, net of accruals			2,007			807			5,234			3,881
Amortization of community agreements			5,062			1,624			8,083			3,234
Re-evaluation adjustment - environmental obligation	19		(2,685	)		(4,692	)		(7,954	)		(12,932	)
Decommissioning and restoration payments			(202	)		(215	)		(350	)		(1,119	)
Net payments on settlement of non-QP hedges			(1,603	)		-			(1,603	)		-
Other	25a		1,129			(5,177	)		7,448			(11,647	)
Taxes paid			(21,604	)		(8,664	)		(85,424	)		(17,622	)
Operating cash flow before change in non-cash working capital			122,028			55,878			269,567			141,486
Change in non-cash working capital	25b		16,454			(31,321	)		8,591			(45,650	)
			138,482			24,557			278,158			95,836
Cash used in investing activities:
Acquisition of property, plant and equipment			(89,495	)		(65,862	)		(151,866	)		(130,814	)
Community agreements			(2,590	)		(2,733	)		(3,969	)		(4,645	)
Grants received	12		-			-			2,400			-
Cash and cash equivalents acquired in Copper Mountain acquisition, net of cash paid	4		-			10,689			-			10,689
Net sale of investments			-			-			-			53
Proceeds from disposition of property, plant and equipment			-			512			-			650
Short-term investments	7		(40,000	)		-			(40,000	)		-
Interest received			2,910			1,473			5,340			3,070
			(129,175	)		(55,921	)		(188,095	)		(120,997	)
Cash generated from (used in) financing activities:
Repayment of revolving credit facility	17b		(90,000	)		-			(100,000	)		40,000
Repurchase of senior unsecured notes, net of discount	17a		(33,771	)		-			(33,771	)		-
Equity issuance, net of transaction and share issuance costs	4, 21b		386,195			(188	)		386,195			(188	)
Interest paid on long-term debt			(32,435	)		(31,875	)		(33,339	)		(31,875	)
Financing costs			(5,270	)		(3,023	)		(10,600	)		(6,156	)
Lease payments	16		(8,140	)		(5,067	)		(15,889	)		(10,431	)
Equipment financing payments			(2,315	)		-			(3,164	)		-
Gold prepayment repayments	15		(23,999	)		-			(45,432	)		(6,428	)
Deferred Rosemont acquisition payment			-			(5,000	)		-			(5,000	)
Net proceeds from exercise of stock options and warrants			1,097			30			2,353			108
Dividends paid	21b		-			-			(2,591	)		(1,908	)
			191,362			(45,123	)		143,762			(21,878	)
Effect of movement in exchange rates on cash			(1,287	)		658			148			1,108
Net increase (decrease) in cash and cash equivalents			199,382			(75,829	)		233,973			(45,931	)
Cash and cash equivalents, beginning of the period			284,385			255,563			249,794			225,665
Cash and cash equivalents, end of the period		$	483,767		$	179,734		$	483,767		$	179,734

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

		Share capital (note 21)		Other capital reserves			Foreign currency translation reserve			Remeasurement reserve			Retained earnings			Total			Non- controlling interest			Total equity
Balance, January 1, 2023	$	1,780,774	$	58,503		$	(14,759	)	$	(17,206	)	$	(235,503	)	$	1,571,809		$	-		$	1,571,809
Net loss		-		-			-			-			(9,475	)		(9,475	)		-			(9,475	)
Other comprehensive income (loss)		-		-			6,625			(2,636	)		-			3,989			-			3,989
Total comprehensive income (loss)		-		-			6,625			(2,636	)		(9,475	)		(5,486	)		-			(5,486	)
Contributions by and distributions to owners:
Dividends (note 21b)		-		-			-			-			(1,908	)		(1,908	)		-			(1,908	)
Shares issued on acquisition of Copper Mountain, net of share issuance costs (note 4)		436,499		-												436,499			106,976			543,475
Stock options		-		948			-			-			-			948			-			948
Issuance of shares related to stock options exercised		165		(57	)		-			-			-			108			-			108
Total contributions by and distributions to owners		436,664		891			-			-			(1,908	)		435,647			106,976			542,623

Balance, June 30, 2023	$	2,217,438	$	59,394		$	(8,134	)	$	(19,842	)	$	(246,886	)	$	2,001,970		$	106,976		$	2,108,946
Net earnings		-		-			-			-			75,842			75,842			3,176			79,018
Other comprehensive income (loss)		-		-			2,726			(5,837	)		-			(3,111	)		(124	)		(3,235	)
Total comprehensive income (loss)		-		-			2,726			(5,837	)		75,842			72,731			3,052			75,783
Contributions by and distributions to owners:
Dividends (note 21b)		-		-			-			-			(2,555	)		(2,555	)		-			(2,555	)
Shares and warrants issued on acquisition of Rockcliff (note 5)		12,503		725			-			-			-			13,228			-			13,228
Flow-through shares issued, net of share issuance costs (note 21b)		10,166		-			-			-			-			10,166			-			10,166
Stock options		-		1,189			-			-			-			1,189			-			1,189
Issuance of shares related to stock options exercised		126		(44	)		-			-			-			82			-			82
Total contributions by and distributions to owners		22,795		1,870			-			-			(2,555	)		22,110			-			22,110

Balance, December 31, 2023	$	2,240,233	$	61,264		$	(5,408	)	$	(25,679	)	$	(173,599	)	$	2,096,811		$	110,028		$	2,206,839

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

		Share capital (note 21)		Other capital reserves			Foreign currency translation reserve			Remeasurement reserve			Retained earnings			Total			Non- controlling interest			Total equity
Balance, January 1, 2024	$	2,240,233	$	61,264		$	(5,408	)	$	(25,679	)	$	(173,599	)	$	2,096,811		$	110,028		$	2,206,839
Net loss		-		-			-			-			5,775			5,775			(7,617	)		(1,842	)
Other comprehensive (loss) income		-		-			(20,286	)		13,295			-			(6,991	)		(2,752	)		(9,743	)
Total comprehensive (loss) income		-		-			(20,286	)		13,295			5,775			(1,216	)		(10,369	)		(11,585	)
Contributions by and distributions to owners:
Dividends (note 21b)		-		-			-			-			(2,591	)		(2,591	)		-			(2,591	)
Shares issued on equity raise, net of share issuance costs		386,195		-			-			-			-			386,195			-			386,195
Stock options		-		993			-			-			-			993			-			993
Issuance of shares related to stock options and warrants exercised		3,486		(1,133	)		-			-			-			2,353			-			2,353
Total contributions by and distributions to owners		389,681		(140	)		-			-			(2,591	)		386,950			-			386,950

Balance, June 30, 2024	$	2,629,914	$	61,124		$	(25,694	)	$	(12,384	)	$	(170,415	)	$	2,482,545		$	99,659		$	2,582,204

HUDBAY MINERALS INC.
Notes to Unaudited Condensed Consolidated Interim Financial Statements
(in thousands of US dollars, except where otherwise noted)
For the three and six months ended June 30, 2024 and 2023

1. Reporting entity

Hudbay Minerals Inc. ("HMI" or the "Company") is a company existing under the Canada Business Corporations Act. The address of the Company's principal executive office is 25 York Street, Suite 800, Toronto, Ontario. The unaudited condensed consolidated interim financial statements ("financial statements") of the Company for the three and six months ended June 30, 2024 and 2023 represent the financial position and the financial performance of the Company and its subsidiaries (together referred to as "Hudbay").

Wholly owned subsidiaries as at June 30, 2024 included HudBay Peru Inc., HudBay Peru S.A.C. ("Hudbay Peru"), HudBay (BVI) Inc., Hudbay Arizona Inc., Copper World, Inc. ("Copper World") and Mason Resources (US) Inc. ("Mason"). On January 1, 2024, the Company amalgamated with Copper Mountain Mining Inc., Hudbay British Columbia Inc. and Rockcliff Metals Corp. ("Rockcliff") and continued carrying on business as Hudbay Minerals Inc. Following the amalgamation, the Company directly holds a 75% interest in Copper Mountain Mine (BC) Ltd. ("CMBC") and is the direct holder of all of Rockcliff's mineral properties. Mitsubishi Materials Corporation ("MMC"), an arms-length party, owns the remaining 25% interest in CMBC.

Hudbay is a diversified mining company with long-life assets in North and South America. Hudbay's operations in Cusco (Peru) produce copper with gold, silver and molybdenum by-products. Hudbay's operations in Manitoba (Canada) produce gold with copper, zinc and silver by-products. Hudbay's operations in British Columbia (Canada) produce copper with gold and silver by-products. Hudbay has a development pipeline that includes copper development projects in Arizona and Nevada (United States), and a focused growth strategy on exploration, development, operation, and optimization of properties that Hudbay already controls, as well as other mineral assets that Hudbay may acquire that fit the Company's strategic criteria. 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") as issued by the IASB.

These interim financial statements should be read in conjunction with the Company's audited consolidated financial statements for the year ended December 31, 2023 which includes information necessary or useful to understanding the Company's business and financial statement presentation. In particular, the Company's material accounting policies are presented as note 3 in the Company's audited consolidated financial statements for the year ended December 31, 2023 and have been consistently applied in the preparation of these interim financial statements, in addition to the new standard noted below.

The Board of Directors approved these interim financial statements on August 12, 2024.

(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, 2023.

3. New standards

New standards and interpretations adopted

Amendment to IAS 1 - Presentation of Financial Statements

The amendments to IAS 1 clarify that only covenants with which an entity is required to comply on or before the reporting date affect the classification of a liability as current or non-current. In addition, an entity has to disclose information in the notes that enables users of financial statements to understand the risk that non-current liabilities with covenants could become repayable within twelve months. Classification is unaffected by the expectations that the entity will exercise its right to defer settlement of a liability. Lastly, the amendments clarify that settlement refers to the transfer to the counterparty of cash, equity instruments, other assets. The amendments are effective for annual periods beginning on or after January 1, 2024. The amendments have been adopted by the Company and the amendments did not result in any changes to the interim financial statements.

4. Acquisition of Copper Mountain Mining Corporation

On June 20, 2023, Hudbay acquired all of the issued and outstanding common shares of Copper Mountain Mining Inc. (formerly, Copper Mountain Mining Corp., and referred to herein as "Copper Mountain"), as part of a court-approved plan of arrangement. At the time, Copper Mountain held 75% of CMBC, the entity that owns 100% of the Copper Mountain mine. MMC owns the remaining 25% interest in CMBC as a non-controlling interest.

As a result of the acquisition, Hudbay obtained control of Copper Mountain on June 20, 2023.

Management determined that the assets and processes comprised a business and therefore accounted for the transaction as a business combination, using the acquisition method of accounting.

Consideration transferred:
The purchase consideration paid by Hudbay was for 100% of the net assets of Copper Mountain and their 100% owned subsidiaries ("100% owned entities") and a 75% ownership in CMBC. The aggregate purchase consideration for the acquired assets, net of the liabilities assumed is as follows:


Equity instruments (84,165,617 common shares of Hudbay)	$	436,687
Cash		3,794
Consideration transferred - June 20, 2023	$	440,481

The fair value of the common shares issued was based on Hudbay's listed share price of C$6.87 at the June 20, 2023 acquisition date. Immediately prior to the acquisition, Copper Mountain settled its outstanding restricted share units and performance share units through the issuance of shares and settled its stock options for replacement Hudbay options that were immediately settled in cash.

Hudbay incurred acquisition related costs of $6,752 during the six months ended June 30, 2023, mainly relating to external legal and advisory fees and due diligence costs, which were recorded in other expense in the consolidated income statements. In addition, Hudbay incurred share issuance costs of $188 and presented these as a deduction from share capital.

Identifiable assets acquired and liabilities assumed:

The fair value of the net assets was determined using a combination of market, income and cost methods. The fair value of the non-controlling interest was then computed at a 25% of the equity interest in CMBC.

The following presents the allocation of the final purchase price, resulting in recognized fair value amounts of identifiable assets acquired and liabilities assumed as follows:

Fair value of net assets acquired / (liabilities) assumed		Final
Cash and cash equivalent	$	14,483
Trade and other receivables		19,110
Inventories		47,875
Prepaid expenses		3,096
Other financial assets		8,495
Property, plant and equipment		434,821
Mineral properties		369,000
Inventories - low grade stockpile		6,000
Trade and other payables		(77,111	)
Advances from Hudbay		(3,421	)
Lease liabilities		(34,617	)
Other financial liabilities		(9,550	)
Long-term debt		(144,981	)
Environmental and other provisions		(12,702	)
Deferred tax liabilities		(148,246	)
Total fair value of net identifiable assets acquired	$	472,252

The fair values of mineral properties, low grade stockpile and other property, plant and equipment have been determined based on an independent valuation, using a combination of market, income and cost methods. In particular, the fair values of the mineral properties and low grade stockpile have been calculated using significant judgements and estimates.

Trade receivables acquired as part of the acquisition have a fair value of $8,764 which is equal to their gross contractual value. Other receivables acquired have a fair value of $10,346 which is equal to their gross contractual value. Trade and other receivables are expected to be collected during the next 12 months.

Hudbay provided advances to Copper Mountain prior to the acquisition date, which have been recorded as a purchaser loan.

Hudbay recognized goodwill as a result of the acquisition as follows:

		Final
Total consideration transferred	$	440,481
Non-controlling interest		106,976
Less: value of net identifiable assets acquired		(472,252	)
Goodwill upon acquisition at June 20, 2023	$	75,205

The goodwill balance arose from the requirement to record deferred income tax liabilities measured at the tax effect of the difference between the fair values of the assets acquired and liabilities assumed and their tax bases. None of the goodwill recognized is expected to be deductible for income tax purposes.

The results of operations have been consolidated with those of the Company from the date of acquisition and included in the British Columbia operating segment.

5. Acquisition of Rockcliff Metals Corporation

On September 14, 2023, Hudbay acquired all of the issued and outstanding common shares of Rockcliff, as part of a court-approved plan of arrangement. In doing so, Hudbay obtained control of Rockcliff on September 14, 2023.

Management determined that substantially all of the fair value of the gross assets acquired is concentrated in the Talbot exploration property and therefore accounted for the transaction as an asset acquisition.

The purchase consideration paid was 2,675,324 Hudbay common shares and 517,460 Hudbay warrants. For asset acquisitions settled with equity, entities are required to record the net assets acquired based on the fair value of the assets received in exchange for the equity issued, unless that fair value cannot be estimated reliably. Hudbay incurred acquisition related costs of $518 during the third quarter of 2023, mainly relating to external legal and advisory fees and due diligence costs, which were capitalized and included as a cost of acquiring the net assets.

The fair value of the net assets acquired was determined using a combination of income and cost methods. In particular, the fair values of the exploration property have been calculated using significant judgements and estimates. The following presents the fair value amounts of identifiable assets acquired and liabilities assumed:

Fair value of net assets acquired / (liabilities) assumed
Cash and cash equivalents	$	270
Accounts receivable and prepaid expenses		98
Property, plant & equipment		33
Exploration property		14,198
Accounts payable and accrued liabilities		(305	)
Advance from Hudbay		(548	)
Total fair value of net identifiable assets acquired	$	13,746

6. Revenue and expenses

(a) Revenue

Hudbay's revenue by significant product types:

		Three months ended June 30,						Six months ended June 30,
		2024			2023			2024			2023
Copper	$	259,358		$	205,719		$	544,514		$	369,961
Gold		119,526			75,889			297,656			150,815
Zinc		15,502			20,248			30,433			40,090
Silver		10,908			7,241			23,076			13,542
Molybdenum		16,007			16,845			34,202			35,807
Other		473			-			473			239
Revenue from contracts		421,774			325,942			930,354			610,454
Non-cash streaming arrangement items ¹
Amortization of deferred revenue - gold		5,427			7,882			21,875			13,274
Amortization of deferred revenue - silver		6,139			10,293			16,711			15,873
Amortization of deferred revenue - variable consideration adjustments - prior periods		-			-			(3,849	)		4,885
		11,566			18,175			34,737			34,032
Pricing and volume adjustments ²		14,742			(5,281	)		35,644			8,064
		448,082			338,836			1,000,735			652,550
Treatment and refining charges		(22,562	)		(26,670	)		(50,226	)		(45,165	)
	$	425,520		$	312,166		$	950,509		$	607,385

¹See note 18.

²Pricing and volume adjustments represent mark-to-market adjustments on initial estimate of provisionally priced sales, realized and unrealized changes to fair value of quotational pricing hedge derivative contracts and adjustments to originally invoiced weights and assays.

Consideration from the Company's stream agreements is considered variable (note 18). 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 2024, 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. This variable consideration adjustment for the six months ended June 30, 2024 resulted in a decrease in revenue of $3,849 (June 30, 2023 - increase in revenue of $4,885).

(b) Depreciation and amortization

Depreciation of property, plant and equipment and amortization of intangible assets are reflected in the condensed consolidated interim statements of loss as follows:

		Three months ended June 30,				Six months ended June 30,
		2024		2023		2024		2023
Cost of sales	$	97,646	$	88,670	$	206,919	$	156,092
Selling and administrative expenses		382		317		868		647
	$	98,028	$	88,987	$	207,787	$	156,739

(c) Other expenses

		Three months ended June 30,					Six months ended June 30,
		2024			2023		2024			2023
Regional costs	$	1,354		$	1,003	$	2,841		$	2,072
Write-down/loss on disposal of PP&E		2,057			821		11,102			890
Amortization of community costs (other assets)		3,757			354		5,514			694
Copper Mountain related acquisition costs (note 4)		-			6,752		-			6,752
Restructuring		250			-		1,193			-
Care & maintenance - Manitoba		3,688			4,612		6,817			8,607
Evaluation costs		136			16		724			107
Reduction of obligation to renounce flow-through share expenditures (note 21b)		(317	)		-		(992	)		-
Option agreement proceeds (Marubeni)		-			-		(363	)		-
Other		288			336		637			(269	)
	$	11,213		$	13,894	$	27,473		$	18,853

The Arizona business unit held an option to acquire water rights and land, which expired during the first quarter of 2024 without being extended or exercised. The previously capitalized cost to maintain the option, net of accrued interest, of $8,133 is presented as part of write-down of PP&E.

On March 7, 2024, Hudbay and Marubeni Corporation executed an option agreement whereby Marubeni will fund certain minimum annual exploration expenditures for agreed upon properties. During the six months ended June 30, 2024, proceeds of $363 were received and recorded as other income.

(d) Net finance expense

		Three months ended June 30,						Six months ended June 30,
		2024			2023			2024			2023
Net interest expense on long-term debt
Net interest expense on long-term debt	$	18,460		$	17,800		$	37,668		$	34,807
Accretion on streaming arrangements (note 18)
Additions		6,000			6,596			12,000			13,193
Variable consideration adjustments - prior periods		-			-			176			(96	)
		6,000			6,596			12,176			13,097
Change in fair value of financial instruments
Gold prepayment liability (note 15)		1,949			(1,130	)		5,411			4,967
Unrealized loss on non-quotational pricing hedges		8,455			-			11,783			-
Realized loss on non-quotational pricing hedges		2,550			-			2,550			-
Investments		264			1,043			428			543
		13,218			(87	)		20,172			5,510
Other net finance costs
Net foreign exchange loss		2,094			1,438			6,921			1,744
Accretion on community agreements measured at amortized cost		1,627			791			2,586			1,554
Accretion on environmental provisions		2,590			2,214			5,266			4,618
Accretion on Wheaton refund liability		150			139			300			278
Withholding taxes		794			1,576			1,717			2,981
Loss on disposal of investments		-			-			-			652
Other finance expense		2,805			1,635			7,395			3,365
Interest income		(3,447	)		(1,599	)		(5,897	)		(3,127	)
		6,613			6,194			18,288			12,065
Net finance expense	$	44,291		$	30,503		$	88,304		$	65,479

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

Commencing in the first quarter of 2024, Hudbay has entered into copper forward sales, copper costless collars and gold costless collars which are non-quotational pricing ("QP") contracts (note 23b). Subsequent movements in the fair value of non-QP contracts are recognized in change in fair value of financial instruments in the condensed consolidated interim statements of loss.

7. Short-term investments

Short-term investments include guaranteed investment certificates held with Canadian financial institutions. We currently hold two $20,000 guaranteed investment certificates that mature in March 2025 and June 2025, respectively.

8. Trade and other receivables

		Jun. 30, 2024		Dec. 31, 2023
Current
Trade receivables	$	151,233	$	169,806
Statutory receivables		26,584		27,215
Other receivables		5,184		6,408
		183,001		203,429
Non-current
Taxes receivable		11,757		12,157
	$	194,758	$	215,586

9. Inventories

		Jun. 30, 2024		Dec. 31, 2023
Current
Stockpile	$	32,086	$	52,454
Finished goods		56,753		61,266
Materials and supplies		97,030		93,614
		185,869		207,334
Non-current
Stockpile		4,714		9,591
Low grade stockpile¹		5,808		5,875
Materials and supplies		8,788		8,984
		19,310		24,450
	$	205,179	$	231,784

¹Stockpile of inventory that is not expected to be processed until the end of the Copper Mountain mine life.

The cost of inventories recognized as an expense, including depreciation, and included in cost of sales amounted to $311,689 and $640,191 for the three and six months ended June 30, 2024 (three and six months ended June 30, 2023 - $265,555 and $470,465).

10. Other financial assets

		Jun. 30, 2024		Dec. 31, 2023
Current
Derivative assets	$	5,222	$	1,416
Collateral deposit (note 17b)		2,260		722
Restricted cash		531		1,964
		8,013		4,102

Non-current
Investments at fair value through profit or loss		5,973		6,452
Collateral deposit (note 17b)		-		637
		5,973		7,089
	$	13,986	$	11,191

11. Intangibles and other assets

Intangibles and other assets of $50,375 (December 31, 2023 - $52,453) includes $46,836 of other assets (December 31, 2023 - $48,428) and $3,539 of intangibles (December 31, 2023 - $4,025).

Other assets represent the carrying value of certain future community costs that relate to original agreements with communities for the Constancia operation which allow Hudbay to extract minerals over the useful life of the Peru operation. The liability remaining for these costs is recorded in agreements with communities recorded at amortized cost (note 14). Amortization of the carrying amount is recorded in the condensed consolidated interim statements of loss within other expenses (note 6c) or exploration expenses, depending on the nature of the agreement.

Intangibles mainly represent computer software costs.

12. Property, plant and equipment

Jun. 30, 2024		Cost		Accumulated depreciation and amortization			Carrying amount
Exploration and evaluation assets	$	98,643	$	-		$	98,643
Capital works in progress		820,160		-			820,160
Mining properties		2,527,936		(1,177,588	)		1,350,348
Plant and equipment		3,271,424		(1,422,979	)		1,848,445
Plant and equipment-ROU assets¹		263,731		(151,187	)		112,544
	$	6,981,894	$	(2,751,754	)	$	4,230,140

Dec. 31, 2023		Cost		Accumulated depreciation and amortization			Carrying amount
Exploration and evaluation assets	$	96,901	$	-		$	96,901
Capital works in progress		804,020		-			804,020
Mining properties		2,481,118		(1,093,839	)		1,387,279
Plant and equipment		3,262,854		(1,345,604	)		1,917,250
Plant and equipment - ROU assets¹		253,344		(142,788	)		110,556
	$	6,898,237	$	(2,582,231	)	$	4,316,006

¹Includes $5,074 of capital works in progress - ROU assets (cost) that relate to the Arizona segment (December 31, 2023 - $4,800 related to the Arizona segment).

During the first quarter of 2024, Hudbay received a grant of $2,400 from the Environment and Climate Change Canada related to the purchase of an electric mining shovel in the third quarter of 2023. The carrying amount of the shovel has been deducted by the amount of the grant received. The grant will be recognized in profit or loss over the life of the shovel as a reduced depreciation expense. There were no significant unfulfilled conditions attached to the grant.

13. Other liabilities

		Jun. 30, 2024		Dec. 31, 2023
Unearned revenue	$	10	$	616
Environmental and other provisions (note 19)		31,603		22,292
Pension liability		734		3,284
Other employee benefits		3,794		3,843
	$	36,141	$	30,035

14. Other financial liabilities

		Jun. 30, 2024		Dec. 31, 2023
Current
Derivative liabilities	$	14,052	$	11,811
Equipment financing		7,574		3,300
Deferred Rosemont acquisition consideration		10,000		9,713
Agreements with communities recorded at amortized cost		18,647		17,411
		50,273		42,235

Non-current
Equipment financing		25,500		7,499
Agreements with communities recorded at amortized cost		41,402		37,568
Wheaton refund liability		6,962		6,653
		73,864		51,720
	$	124,137	$	93,955

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.

Equipment financing represents agreements that Hudbay has entered into to purchase mining equipment. Hudbay owns the assets and finances the payment of these assets over the specified term. These agreements expire between 2024 and 2029 with interest rates between 3.25% and 7.20% per annum.

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 the remaining stream deposit will not be repaid by means of precious metals credits from 777 production. The repayment amount is recorded as a Wheaton refund liability, 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.

15. Gold prepayment liability

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

		Jun. 30, 2024			Dec. 31, 2023
Current	$	15,896		$	55,901

The following table summarizes changes in the gold prepayment liability:

Balance, January 1, 2023	$	71,208
Change in fair value recorded in statement of earnings		11,223
Change in fair value recorded in other comprehensive income		192
Repayments		(26,722	)
Balance, December 31, 2023	$	55,901
Change in fair value recorded in statements of loss (note 6d)		5,411
Change in fair value recorded in other comprehensive income		16
Repayments		(45,432	)
Balance, June 30, 2024	$	15,896

During the first quarter of 2023, Hudbay renegotiated its agreements with various financial institutions and deferred eight months of scheduled gold deliveries. Monthly deliveries of the outstanding gold ounces under the new agreements have resumed in October 2023 and will continue until August 2024.

16. Lease liabilities

Balance, January 1, 2023	$	61,019
Acquired through the acquisition of Copper Mountain		34,617
Additional capitalized leases		21,401
Lease payments		(25,216	)
Derecognized leases		(685	)
Accretion and other movements		(801	)
Balance, December 31, 2023	$	90,335
Additional capitalized leases		11,053
Lease payments		(15,889	)
Derecognized leases		(159	)
Accretion and other movements		781
Balance, June 30, 2024	$	86,121

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

		Jun. 30, 2024		Dec. 31, 2023
Current	$	29,629	$	28,902
Non-current		56,492		61,433
	$	86,121	$	90,335

Hudbay has entered into leases which expire between 2024 and 2037. The interest rates on leases which were capitalized have interest rates between 2.50% and 8.49%, per annum. The range of interest rates utilized for discounting depends mostly on Hudbay acting as a 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 statements of loss, relating to leases for which a recognition exemption was applied.

		Three months ended June 30,				Six months ended June 30,
		2024		2023		2024		2023
Short-term leases	$	1,729	$	1,170	$	2,619	$	2,345
Low value leases		73		137		171		249
Variable leases		7,459		4,820		13,950		11,214
Total	$	9,261	$	6,127	$	16,740	$	13,808

Payments made for short-term, low value and variable leases would mostly be captured as expenses in the condensed consolidated interim statements of loss, 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.

17. Long-term debt

Long-term debt is comprised of the following:

		Jun. 30, 2024			Dec. 31, 2023
Senior unsecured notes (a)	$	1,157,725		$	1,190,586
Senior secured revolving credit facilities (b)		(2,150	)		96,950
	$	1,155,575		$	1,287,536

(a) Senior unsecured notes

Balance, January 1, 2023	$	1,188,132
Accretion of transaction costs and premiums		2,454
Balance, December 31, 2023	$	1,190,586
Repurchases		(34,137	)
Accretion of transaction costs and premiums		1,276
Balance, June 30, 2024	$	1,157,725

As at June 30, 2024, $1,165,863 aggregate principal amount of senior notes were outstanding in two series: (i) a series of 4.50% senior notes due 2026 ("2026 Notes") in an aggregate principal amount of $588,381 and (ii) a series of 6.125% senior notes due 2029 ("2029 Notes") in an aggregate principal amount of $577,482. During the quarter, the Company repurchased and retired $34,137 of senior unsecured notes at a discount. The discount of $366 recorded under Other expenses in the condensed consolidated interim statements of loss.

The senior notes are guaranteed on a senior unsecured basis by substantially all of the Company's subsidiaries, other than HudBay (BVI) Inc. and certain excluded or unrestricted subsidiaries, which includes CMBC (the Company's 75% owned subsidiary that owns the Copper Mountain mine), and subsidiaries that hold the Copper World and Mason projects as well as any newly formed or acquired subsidiaries that primarily hold or may develop non-producing mineral assets that are in the pre-construction phase of development.

(b) Senior secured revolving credit facilities

Balance, January 1, 2023 ¹	$	(3,970	)
Proceeds from drawdown, net of repayments		100,000
Accretion of transaction costs		1,627
Transaction costs		(707	)
Balance, December 31, 2023	$	96,950
Repayments		(100,000	)
Accretion of transaction costs		979
Transaction costs		(79	)
Balance, June 30, 2024 ¹	$	(2,150	)

¹ Balance, representing deferred transaction costs, is in an asset position.

Hudbay has two senior secured revolving credit facilities with total commitments of $450 million and substantially similar terms and conditions for its Canadian and Peruvian businesses. Hudbay's revolving credit facilities are secured against substantially all of the Company's assets, other than those associated with the Copper World and Mason projects.

During the six months ended June 30, 2024, Hudbay repaid $10,000 under its Canadian revolving credit facility and $90,000 under the Peruvian revolving credit facility.

As at June 30, 2024, there were nil draws under the Canadian and Peruvian revolving credit facilities.

As at June 30, 2024, 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 $25,263 in letters of credit issued under the Canadian revolving credit facility to support its reclamation and pension obligations. As at June 30, 2024, we were in compliance with our covenants under the revolving credit facilities.

Surety bonds

The Arizona segment had $8,673 in surety bonds issued to support future reclamation and closure obligations. No cash collateral is required to be posted under these surety bonds.

The British Columbia segment had $47,976 in surety bonds issued to support future reclamation and closure obligations and $4,844 in surety bonds with BC Hydro in relation to the BC Hydro transmission system at the Copper Mountain Mine. No cash collateral is required to be posted under these surety bonds.

Other letters of credit

The Peru segment had $126,289 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.

The British Columbia segment had $2,260 in letters of credit issued with various Canadian financial institutions related to other operating matters. Cash collateral deposit has been posted under these letters of credit (note 10).

Hudbay has a C$130.0 million bilateral letter of credit facility ("LC Facility") with a major Canadian financial institution. As at June 30, 2024, the Manitoba segment had $55,360 in letters of credit issued under the LC Facility to support its reclamation and pension obligations.

18. Deferred revenue

Peru Stream Agreement

For the three and six months ended June 30, 2024, the drawdown rates for the Peru stream agreement for gold and silver were $817 and $14.56 per ounce, respectively (year ended December 31, 2023 - $820 and $15.26 per ounce, respectively).

The following table summarizes changes in deferred revenue:

Balance, January 1, 2023	$	469,538
Amortization of deferred revenue
Liability drawdown		(72,424	)
Variable consideration adjustments - prior periods		(4,885	)
Accretion on streaming arrangements
Current year additions		26,387
Variable consideration adjustments - prior periods		(96	)
Balance, December 31, 2023	$	418,520
Amortization of deferred revenue (note 6a)
Liability drawdown		(38,586	)
Variable consideration adjustments - prior periods		3,849
Accretion on streaming arrangements (note 6d)
Current year-to-date additions		12,000
Variable consideration adjustments - prior periods		176
Balance, June 30, 2024	$	395,959

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 2024, the amortization rate by which deferred revenue is drawn down into income was adjusted and, as required, a current period variable adjustment was made for all prior period stream revenues since the stream agreement inception date. This variable consideration adjustment resulted in a decrease in revenue of $3,849 and an increase of finance expense of $176 for the six months ended June 30, 2024 (December 31, 2023 - increase in revenue of $4,885 and a decrease of finance expense of $96).

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

		Jun. 30, 2024		Dec. 31, 2023
Current	$	81,403	$	87,672
Non-current		314,556		330,848
	$	395,959	$	418,520

19. Environmental and other provisions

Reflected in the condensed consolidated interim balance sheets as follows:

Jun. 30, 2024

Decommissioning,
restoration and
similar liabilities

Deferred
share units

Restricted
share units

Performance
share units

Other ¹

Total

Current (note 13)

3,569

14,048

4,479

2,058

7,449

31,603

Non-current

292,608

2,669

2,525

297,802

296,177

14,048

7,148

4,583

7,449

329,405

Dec. 31, 2023		Decommissioning, restoration and similar liabilities		Deferred share units		Restricted share units		Performance share units		Other ¹		Total
Current (note 13)	$	1,370	$	8,660	$	2,147	$	727	$	9,388	$	22,292
Non-current		313,971		-		2,941		1,853		3,147		321,912
	$	315,341	$	8,660	$	5,088	$	2,580	$	12,535	$	344,204

¹ Relates primarily to flow-through share premiums, restructuring costs and other non-capital provisions.

Decommissioning and restoration obligations ("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 six months ended June 30, 2024, the Company recorded a non-cash gain of $7,954 in the condensed consolidated interim statements of loss mainly related to a revaluation adjustment to the Flin Flon environmental reclamation provision. The first half of 2024 was impacted by an increase in long term, risk-free real 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 interim statements of loss.

As at June 30, 2024, decommissioning, restoration and similar liabilities have been discounted to their present value at rates ranging from 3.39% to 5.31% per annum (December 31, 2023 - 3.01% to 4.86%), using pre-tax, risk-free interest rates that reflect the estimated maturity of each specific liability.

During the six months ended June 30, 2023, the Company recorded a non-cash gain of $12,932 in the condensed consolidated interim statements of loss mainly related to a revaluation adjustment to the Flin Flon environmental reclamation provision.

20. Income and mining taxes

The tax expense is applicable as follows:

		Three months ended June 30,						Six months ended June 30,
		2024			2023			2024			2023
Current:
Income tax expense (recovery)	$	20,569		$	(1,089	)	$	55,966		$	9,676
Mining tax expense		10,770			425			23,523			6,782
Adjustments in respect of prior years		-			69			(112	)		69
		31,339			(595	)		79,377			16,527
Deferred:
Income tax recovery - origination, revaluation and/or reversal of temporary differences		(8,677	)		(14,998	)		(5,423	)		(18,720	)
Mining tax recovery - origination, revaluation and/or reversal of temporary difference		(1,844	)		(70	)		(4,108	)		(2,069	)
Adjustments in respect of prior years		-			(136	)		187			436
		(10,521	)		(15,204	)		(9,344	)		(20,353	)
	$	20,818		$	(15,799	)	$	70,033		$	(3,826	)

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.

21. 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:

	Six months ended Jun. 30, 2024			Year ended Dec. 31, 2023
	Common shares		Amount	Common shares			Amount
Balance, beginning of year	350,728,536	$	2,240,233	262,019,857		$	1,780,774
Exercise of options	387,711		2,735	67,145			291
Exercise of warrants	105,705		751	-			-
Shares issued on acquisition of Copper Mountain, net of share issuance costs	-		-	84,165,617			436,499
Shares issued on acquisition of Rockcliff	-		-	2,675,324			12,503
Flow through shares, net of share issuance costs	-		-	1,960,000			10,166
Cancelled shares	-		-	(159,407	)		-
Shares issued on equity raise, net of share issuance costs	42,366,000		386,195	-			-
Balance, end of period	393,587,952	$	2,629,914	350,728,536		$	2,240,233

During the six months ended June 30, 2024, the Company declared a dividend of C$0.01 per share. The Company paid $2,591 in dividends on March 22, 2024 to shareholders of record as of March 5, 2024.

On May 24, 2024, the Company closed a bought deal financing with a syndicate of underwriters ("the Offering"). Pursuant to the Offering, the Underwriters purchased on a bought deal basis from the Company a total of 42,366,000 common shares at a price of $9.50 per Common Shares for aggregate gross proceeds of $402,477. Transaction costs related to the Offering were $16,099 resulting in net proceeds to the Company of $386,378. Associated with the Offering were $183 of share issuance costs resulting in net equity raised of $386,195.

During the year ended December 31, 2023, the Company declared two semi-annual dividends of C$0.01 per share. The Company paid $1,908 and $2,555 in dividends on March 24, 2023 and September 22, 2023 to shareholders of record as of March 7, 2023 and September 1, 2023.

During the year ended December 31, 2023, the Company completed a Canadian Development Expense and Canadian Exploration Expense flow-through financing. The Company issued 1,960,000 common shares for proceeds, net of transaction costs, of $14,424. The implied premium on the flow-through shares of $4,258 was recorded as a flow-through share liability. The flow-through share liability will be recognized in earnings as eligible expenditures are made. For three and six months ended June 30, 2024, $317 and $992 of flow-through share liability was renounced and recognized in other expenses (note 6c) on the condensed consolidated interim statements of loss.

(c) Equity-settled share-based compensation - stock options:

The Company's stock option plan was approved in June 2005 and amended in May 2008 (the "Plan"). Under the amended Plan, the Company may grant to employees, officers, directors or consultants of the Company or its affiliates options to purchase up to a maximum of 13 million common shares of Hudbay. The Company has determined that the appropriate accounting treatment is to classify the stock options as equity settled transactions.

The following table outlines the changes in the number of stock options outstanding:

	Jun. 30, 2024				Dec. 31, 2023
	Number of shares subject to option			Weighted- average exercise price C$	Number of shares subject to option			Weighted average exercise price C$
Balance, beginning of year	2,182,970		$	7.23	1,528,760		$	7.38
Number of units granted	902,874		$	7.50	801,661		$	6.75
Exercised	(387,711	)	$	6.25	(67,145	)	$	3.79
Forfeited	(88,654	)	$	7.66	(80,306	)	$	8.33
Expired	(12,087	)	$	10.24	-		$	-
Balance, end of period	2,597,392		$	7.44	2,182,970		$	7.23

The following table outlines stock options outstanding and exercisable:

Jun. 30, 2024

Range of
exercise
prices C$

Number of
options
outstanding

Weighted average
remaining
contractual life
(years)

Weighted
average
exercise price
C$

Number of
options
exercisable

Weighted
average share
price at exercise
date C$

$3.76 - $5.90

382,582

2.7

3.76

382,582

3.76

$5.91 - $6.75

664,806

5.6

6.75

178,623

6.75

$6.76 - $8.76

876,701

6.6

7.50

$8.77 - $10.17

390,549

4.7

9.92

246,417

9.92

$10.18 - $10.42

282,754

3.7

10.42

282,754

10.42

Dec. 31, 2023
Range of exercise prices C$	Number of options outstanding	Weighted average remaining contractual life (years)		Weighted average exercise price C$	Number of options exercisable		Weighted average share price at exercise date C$
$3.76 - $4.82	568,801	3.2	$	3.76	568,801	$	3.76
$5.91 - $6.75	779,959	6.2	$	6.75	-	$	-
$6.76 - $10.17	488,340	5.2	$	9.76	174,989	$	9.57
$10.18 - $10.42	345,870	4.2	$	10.42	230,514	$	10.42

Hudbay estimates expected life of options and expected volatility based on historical data, which may differ from actual outcomes.

22. Earnings per share

	Three months ended June 30,		Six months ended June 30,
	2024	2023	2024	2023
Weighted average common shares outstanding
Basic	368,344,407	272,228,447	359,562,824	267,157,797
Plus net incremental shares from:
Assumed conversion: stock options	-	-	400,401	-
Assumed conversion: warrants	-	-	89,199	-
Diluted weighted average common shares outstanding	368,344,407	272,228,447	360,052,424	267,157,797

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 months ended June 30, 2024, the determination of the diluted weighted-average number of common shares excludes the impact of 433,927 weighted-average stock options and 133,088 warrants outstanding that were anti-dilutive as the Company recorded a loss in the financial period.

For the three and six months ended June 30, 2023, the determination of the diluted weighted-average number

of common shares excludes the impact of 257,941 and 274,398, respectively, weighted-average stock options outstanding that were anti-dilutive as the Company recorded a loss in the financial period.

23. 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:

		Jun. 30, 2024						Dec. 31, 2023
		FV			CV			FV		CV
Financial assets at amortized cost
Cash and cash equivalents¹	$	483,767		$	483,767		$	249,794	$	249,794
Short-term investments¹		40,000			40,000			-		-
Collateral deposits¹		2,260			2,260			1,359		1,359
Restricted cash¹		531			531			1,964		1,964
Fair value through profit or loss
Trade and other receivables^2,3		156,417			156,417			176,214		176,214
Non-hedge derivative assets ⁴		5,222			5,222			1,416		1,416
Investments ⁵		5,973			5,973			6,452		6,452
Total financial assets	$	694,170		$	694,170		$	437,199	$	437,199
Financial liabilities at amortized cost
Trade and other payables^1, ²	$	218,342		$	218,342		$	219,304	$	219,304
Deferred Rosemont acquisition consideration ⁸		10,000			10,000			9,713		9,713
Agreements with communities ⁶		58,605			60,049			53,459		54,979
Wheaton refund liability¹⁰		10,731			6,962			10,346		6,653
Senior unsecured notes ⁷		1,149,084			1,157,725			1,176,312		1,190,586
Senior secured revolving credit facilities¹¹		(2,150	)		(2,150	)		96,950		96,950
Fair value through profit or loss
Gold prepayment liability⁹		15,896			15,896			55,901		55,901
Non-hedge derivative liabilities ⁴		14,052			14,052			11,811		11,811
Total financial liabilities	$	1,474,560		$	1,480,876		$	1,633,796	$	1,645,897

¹Cash and cash equivalents, short-term investments, collateral deposits, restricted cash, trade and other payables are recorded at carrying value, which approximates fair value due to their short-term nature and generally negligible credit losses.

²Excludes 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 (level 2).

⁴Derivatives are carried at their fair value, which is determined based on observable forward market commodity prices corresponding to the maturity of the contract (level 2),

⁵All investments are carried at their fair value, which is determined using quoted market bid prices in active markets for listed shares.

⁶These financial liabilities relate to agreements with communities near the Constancia project in Peru (note 14). Fair values have been determined using an applicable credit-risk adjusted discounted rate and foreign exchange rates (level 3).

⁷Fair value of the senior unsecured notes (note 17a) has been determined using an applicable credit-risk adjusted discount rate (level 3).

⁸Discounted value based on a risk adjusted discount rate.

⁹The gold prepayment liability (note 15) is designated as fair value through profit or loss under the fair value option. Fair value is determined using observable gold forward prices corresponding to the delivery of gold ounces in the contract along with an estimate of credit-risk for similar instruments (level 3). 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 six months ended June 30, 2024 was a loss of $16 (year ended December 31, 2023 was a loss of $192).

¹⁰ Discounted value based on a market rate at inception of the applicable Wheaton contract for carrying value (note 14) and fair value using an applicable credit-risk adjusted discount rate (level 3).

¹¹Fair value of the senior secured revolving credit facility is valued using an applicable credit adjusted discount rate (level 3).

Fair value hierarchy

The table below provides an analysis by valuation method of financial instruments that are measured at fair value subsequent to recognition as well as financial instruments not measured at fair value but for which a fair value is disclosed. 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.

June 30, 2024

Level 1

Level 2

Level 3

Total

Financial assets at FVTPL:

Non-hedge derivatives

5,222

Investments

5,973

5,222

11,195

Financial liabilities at FVTPL:

Non-hedge derivatives

14,052

Gold prepayment liability

15,896

Financial liabilities at amortized cost:

Agreements with communities

60,049

Wheaton refund liability

10,731

Senior unsecured notes

1,149,084

29,948

68,630

1,247,662

December 31, 2023		Level 1		Level 2		Level 3		Total
Financial assets at FVTPL:
Non-hedge derivatives	$	-	$	1,416	$	-	$	1,416
Investments		6,452		-		-		6,452
	$	6,452	$	1,416	$	-	$	7,868
Financial liabilities at FVTPL:
Non-hedge derivatives	$	-	$	11,811	$	-	$	11,811
Gold prepayment liability		-		55,901		-		55,901
Financial liabilities at amortized cost:
Agreements with communities		-		-		53,459		53,459
Wheaton refund liability		-		-		10,346		10,346
Senior secured revolving credit facilities		-		-		96,950		96,950
Senior unsecured notes		1,176,312		-		-		1,176,312
	$	1,176,312	$	67,712	$	160,755	$	1,404,779

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 and six months ended June 30, 2024 and year ended December 31, 2023, 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, 2023.

(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 June 30, 2024, Hudbay had 45.6 million pounds of net copper swaps outstanding at an effective average price of $4.41/lb and settling from July to October 2024. As at December 31, 2023, Hudbay had 90.6 million pounds of net copper swaps outstanding at an effective average price of $3.74/lb and settling from January to May 2024. The aggregate fair value of the transactions at June 30, 2024 was an asset of $2,896 (December 31, 2023 - a liability position of $9,515).

Zinc fixed for floating swaps

Hudbay enters into zinc fixed for floating swaps in order to manage the risk associated with provisional pricing terms in zinc concentrate sales agreements. As at June 30, 2024, Hudbay had nil net zinc swaps outstanding. As at December 31, 2023, Hudbay had 13.9 million pounds of net zinc swaps outstanding at an effective average price of $1.14/lb and settling from January to March 2024. The aggregate fair value of the transactions at June 30, 2024 was nil (December 31, 2023 - a liability position of $945).

Copper forward sales

As at June 30, 2024, Hudbay had 13.2 million pounds of copper forwards outstanding at an effective average price of $3.95/lb and settling from July 2024 to May 2025. As at December 31, 2023, Hudbay had 7.9 million pounds of copper forwards outstanding at an effective average price of $3.93/lb and settling from May 2024 to April 2025. The aggregate fair value of the transactions at June 30, 2024 was a liability of $5,759 (December 31, 2023 - an asset position of $65).

Copper costless collars

As at June 30, 2024, Hudbay had 16.5 million pounds of copper collars outstanding settling from July 2024 to April 2025 at an average floor price of $3.88/lb and an average cap price of $4.14/lb. As at December 31, 2023, Hudbay had 13.2 million pounds of copper collars outstanding settling from May 2024 to April 2025 at an average floor price of $3.83/lb and an average cap price of $4.03/lb. The aggregate fair value of the position at June 30, 2024 was a liability of $5,082 (December 31, 2023 - nil).

Gold costless collars

During the first half of 2024, Hudbay entered into zero-cost collar program. As at June 30, 2024, 30,000 ounces of gold collars were unsettled (December 31, 2023 - nil) at an average floor price of $2,110/oz and average cap price of $2,467/oz and settling from July 2024 to December 2024. The aggregate fair value of the position at June 30, 2024 was a liability of $885 (December 31, 2023 - nil).

(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.

As at June 30, 2024 and December 31, 2023, Hudbay's net position consisted of contracts awaiting final pricing are as indicated below:

Metal in
concentrate

Sales awaiting final pricing

Average YTD price ($/unit)

Unit

Jun. 30, 2024

Dec. 31, 2023

Jun. 30, 2024

Dec. 31, 2023

Copper

pounds
(in thousands)

52,628

111,069

4.34

3.87

Gold

troy ounces

27,539

50,563

2,335

2,072

Silver

troy ounces

147,945

205,579

29.32

23.94

Zinc

pounds
(in thousands)

16,416

1.20

The aggregate fair value of provisionally priced receivables within the copper and zinc concentrate at June 30, 2024, was an asset position of $3,373 (December 31, 2023 - an asset position of $22,635).

(d) Other financial liabilities

Gold prepayment liability

The gold prepayment liability (note 15) requires settlement by physical delivery of gold ounces or equivalent gold credits. The fair value of the financial liability at June 30, 2024 was $15,896 (December 31, 2023 - a liability of $55,901).

24. Commitments

Capital commitments

As at June 30, 2024, Hudbay had outstanding capital commitments in Manitoba of approximately $8,677 of which $3,171 can be terminated, approximately $10,658 in British Columbia of which $3,979 can be terminated, approximately $63,099 in Peru, all of which can be terminated, and approximately $34,471 in Arizona, primarily related to the Copper World Complex, of which none can be terminated.

25. Supplementary cash flow information

(a) Other operating activities:

		Three months ended June 30,						Six months ended June 30,
		2024			2023			2024			2023
Share-based compensation paid	$	(1,618	)	$	-		$	(4,142	)	$	(5,817	)
Write-down/loss on disposal of PP&E		2,057			-			11,102			-
Share based compensation and change of control payments made upon acquisition of Copper Mountain		-			(6,743	)		-			(6,743	)
Other		690			1,566			488			913
	$	1,129		$	(5,177	)	$	7,448		$	(11,647	)

(b) Change in non-cash working capital:

		Three months ended June 30,						Six months ended June 30,
		2024			2023			2024			2023
Change in:
Trade and other receivables	$	12,781		$	28,262		$	16,709		$	38,042
Other financial assets/liabilities		(11,688	)		(21,249	)		(11,929	)		(31,780	)
Inventories		9,645			14,868			15,314			(4,422	)
Prepaid expenses		1,431			7,006			(6,548	)		7,772
Trade and other payables		8,079			(21,242	)		(4,259	)		(40,176	)
Provisions and other liabilities		(3,794	)		(38,966	)		(696	)		(15,086	)
	$	16,454		$	(31,321	)	$	8,591		$	(45,650	)

(c) Non-cash transactions:

During the six months ended June 30, 2024 and 2023, 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 $8,215 (June 30, 2023 - a net increase of $27,151), mainly related to changes to real discount rates associated with remeasurement of the liabilities.

- Property, plant and equipment included $11,053 (June 30, 2023 - $4,708) of capital additions related to the recognition of ROU assets and $26,752 (June 30, 2023 - nil) of capital additions related to the recognition of property, plant and equipment that has been financed. Property, plant and equipment and other assets include $1,845 of capital additions related to agreements with communities (June 30, 2023 - $2,707).

26. Segmented information

Hudbay has the following reportable segments identified by the individual mining operations of Manitoba, British Columbia, Peru, as well as Arizona which holds our Copper World project. Corporate and other activities are not considered an operating segment and are included as a reconciliation to total consolidated results. No results for the British Columbia segment are reflected in the prior period comparative figures as Copper Mountain acquisition closed on June 20, 2023. Hudbay's second quarter 2023 loss was not materially affected by the acquisition as Copper Mountain had no revenues or corresponding cost of sales recorded during the 10 day stub period from the date of acquisition to the end of the second quarter 2023. 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.

Three months ended June 30, 2024

Peru

Manitoba

British
Columbia

Arizona

Corporate
and other
activities

Total

Revenue from external customers

204,828

142,548

78,144

425,520

Cost of sales

Mine operating costs

116,812

71,630

61,805

250,247

Depreciation and amortization

58,860

24,744

14,042

97,646

Gross profit

29,156

46,174

2,297

77,627

Selling and administrative expenses

18,417

Exploration expenses

4,121

2,211

(348

)

(34

)

5,950

Other expenses (income)

5,043

3,648

2,425

(35

)

132

11,213

Re-evaluation adjustment - environmental provision

(2,685

)

(2,685

)

Results from operating activities

19,992

43,000

220

(18,515

)

44,732

Net interest expense on long term debt

18,460

Accretion on streaming arrangements

6,000

Change in fair value of financial instruments

13,218

Other net finance costs

6,613

Earnings before tax

441

Tax expense

20,818

Net loss for the period

(20,377

)

Three months ended June 30, 2023
		Peru		Manitoba			Arizona			Corporate and other activities			Total
Revenue from external customers	$	218,133	$	94,033		$	-		$	-		$	312,166
Cost of sales
Mine operating costs		143,207		57,396			-			-			200,603
Depreciation and amortization		67,340		21,330			-			-			88,670
Gross profit		7,586		15,307			-			-			22,893
Selling and administrative expenses		-		-			-			8,600			8,600
Exploration expenses		3,362		1,946			-			11			5,319
Other expenses		1,510		4,957			149			7,278			13,894
Re-evaluation adjustment - environmental provision		-		(4,692	)		-			-			(4,692	)
Results from operating activities	$	2,714	$	13,096		$	(149	)	$	(15,889	)	$	(228	)
Net interest expense on long term debt													17,800
Accretion on streaming arrangements													6,596
Change in fair value of financial instruments													(87	)
Other net finance costs													6,194
Loss before tax													(30,731	)
Tax recovery													(15,799	)
Net loss for the period												$	(14,932	)

Six months ended June 30, 2024

Peru

Manitoba

British
Columbia

Arizona

Corporate
and other
activities

Total

Revenue from external customers

492,734

311,784

145,991

950,509

Cost of sales

Mine operating costs

245,639

149,653

118,717

514,009

Depreciation and amortization

129,890

51,338

25,691

206,919

Gross profit

117,205

110,793

1,583

229,581

Selling and administrative expenses

35,024

Exploration expenses

6,313

10,667

1,558

18,543

Other expenses

8,249

6,853

3,567

8,216

588

27,473

Re-evaluation adjustment - environmental provision

(7,954

)

(7,954

)

Results from operating activities

102,643

101,227

(1,989

)

(8,216

)

(37,170

)

156,495

Net interest expense on long term debt

37,668

Accretion on streaming arrangements

12,176

Change in fair value of financial instruments

20,172

Other net finance costs

18,288

Earnings before tax

68,191

Tax expense

70,033

Net loss for the period

(1,842

)

Six months ended June 30, 2023
		Peru		Manitoba			Arizona			Corporate and other activities			Total
Revenue from external customers	$	404,935	$	202,450		$	-		$	-		$	607,385
Cost of sales
Mine operating costs		234,593		127,294			-			-			361,887
Depreciation and amortization		109,300		46,792			-			-			156,092
Gross profit		61,042		28,364			-			-			89,406
Selling and administrative expenses		-		-			-			17,746			17,746
Exploration expenses		6,871		6,524			-			166			13,561
Other expenses		2,731		8,505			870			6,747			18,853
Re-evaluation adjustment - environmental provision		-		(12,932	)		-			-			(12,932	)
Results from operating activities	$	51,440	$	26,267		$	(870	)	$	(24,659	)	$	52,178
Net interest expense on long term debt													34,807
Accretion on streaming arrangements													13,097
Change in fair value of financial instruments													5,510
Other net finance costs													12,065
Loss before tax													(13,301	)
Tax recovery													(3,826	)
Net loss for the period												$	(9,475	)

June 30, 2024

Peru

Manitoba

British
Columbia

Arizona

Corporate and
other
activities

Total

Total assets

2,359,957

613,005

1,050,654

744,338

674,468

5,442,422

Total liabilities

919,493

384,592

298,498

22,682

1,234,953

2,860,218

Property, plant and equipment¹

1,941,600

648,603

870,453

727,769

41,715

4,230,140

¹ Included in Corporate and other activities are $27.6 million of property, plant and equipment that is located in Nevada.

December 31, 2023
		Peru		Manitoba²		British Columbia²		Arizona		Corporate and other activities²		Total
Total assets	$	2,406,260	$	673,437	$	1,018,602	$	736,680	$	477,655	$	5,312,634
Total liabilities		1,086,229		413,355		274,510		23,446		1,308,255		3,105,795
Property, plant and equipment¹		2,001,716		693,972		850,477		727,903		41,938		4,316,006

¹ Included in Corporate and other activities are $27.6 million of property, plant and equipment that is located in Nevada.

² On January 1, 2024, the Company amalgamated with Copper Mountain Mining Inc., Hudbay British Columbia Inc. and Rockcliff Metals Corp. and continued carrying on business as Hudbay Minerals Inc. Following the amalgamation Copper Mountain Mining Inc. and Hudbay British Columbia Inc, which do not contain operating assets and have liabilities primarily related to head office finance leases, have moved from British Columbia to Corporate and other activities. Rockcliff Metals Corp. has move from Corporate and other activities to the Manitoba segment

27. Events after reporting period

Senior unsecured notes repurchase

From July 1 to August 12, 2024, Hudbay repurchased and retired an additional $13,364 and $35,097 of 2026 and 2029 notes, respectively, at a discount.