Continued Growth Of Reserves And Resources From Hudbay’s Exploration In Peru, Snow Lake Arizona

TORONTO - Hudbay Minerals Inc., President and CEO, Peter Kukielski, said, “We have continued to grow our copper and gold mineral reserves and resources through successful exploration in Peru, Snow Lake and Arizona. While we already have a solid production growth profile for many years to come, our exploration efforts over the past year have been successful in replacing what we have mined, adding reserves to our life of mine plans and expanding our resource base to position us for additional long-term reserves growth. This is another example of our proven track record of delivering value through exploration, and we look forward to continuing to advance our leading organic pipeline of copper exploration and development assets for the next stage of growth at Hudbay.”

Mine planning gains and economic re-evaluations have resulted in additional mineral reserves at Constancia which have largely offset 2021 mining depletion. Current mineral reserve estimates at Constancia total 521 million tonnes at 0.31% copper with over 1.6 million tonnes in contained copper. As a result, Constancia’s expected mine life has been extended one year to 2038. The copper contained in inferred mineral resources has also increased in 2022 due to the inclusion of the Constancia Norte underground mineral resource estimates.

In 2021, Hudbay completed a positive scoping study which resulted in an inferred mineral resource estimate of 6.5 million tonnes at 1.2% copper in two high grade skarn lenses located below the open pit in the Constancia Norte area. The study concluded these two lenses could be mined by underground methods starting in 2029 to supplement the open pit production. Please refer to Figure 1 for a cross-section of the conceptual underground mine design at Constancia Norte. The company intends to conduct infill drilling and an internal pre-feasibility study in hopes of converting the underground mineral resources to mineral reserves for inclusion in the mine plan for the Constancia operations.

Hudbay released an updated mine plan for Constancia in 2021 that reflected an increase in copper and gold production from 2022 to 2025 as the higher grades from the Pampacancha deposit enter the mine plan. The updated mine plan incorporates higher-grade reserves including the Constancia Norte pit extension. With the incorporation of Pampacancha and the Constancia Norte pit extension, annual production at Constancia is expected to average approximately 105,000 tonnes of copper and 60,000 ounces of gold over the next seven years, an increase of approximately 35% and 20%, respectively, from 2021 levels.

Hudbay controls a large, contiguous block of mineral rights with the potential to hold mineable deposits within trucking distance of the Constancia processing facility, including the past producing Caballito property and the highly prospective Maria Reyna and Kusiorcco properties. Exploration agreement discussions with the communities of Uchucarcco and Anahuichi on the Maria Reyna, Kusiorcco and Caballito properties are in progress.

Drilling continues at the Llaguen copper porphyry target in northern Peru with a total of 9,250 meters in 21 holes completed to-date. Assays have been received for eight holes and all holes have intersected mineralization. Based on the positive results from the initial drilling, a second phase of drilling has been initiated aimed at defining an initial inferred mineral resource estimate for Llaguen in the third quarter of 2022.

Hudbay has obtained approval from Peru’s National Environmental Certification Service for Sustainable Investments (SENACE) of a third amendment to the Environmental and Social Impact Assessment (ESIA MOD III) for Constancia. The ESIA MOD III will allow for the optimization of the water balance and management plan, an alternate road for concentrate transportation, improvements to the tailings management facility dam design criteria and other operational benefits. This approval was obtained with technical input from the National Water Authority, the Ministry of Agrarian Development and Irrigation, and the Ministry of Culture.

The company also signed an addendum to its framework agreement with the province of Chumbivilcas. Under the agreement, Hudbay will contribute to the district municipalities, assist with the return to classes in the education sector and continue to provide employment opportunities within the province.

As a result of exploration success in 2021, additional mineral reserves were identified at Lalor and the 1901 deposit, which are expected to extend the mine life of the Snow Lake operations by one year until 2038, maintaining the 17-year mine life. Resource to reserve conversion has more than offset 2021 mining depletion with a net gain for all metals, including an additional 218,000 ounces of gold contained in reserves after adjusting for 2021 mining depletion.

Refurbishment and commissioning activities at the New Britannia gold mill were completed in July 2021 and the construction of the new copper flotation facility at New Britannia was completed in October 2021, ahead of the original schedule. The copper facility consists of an innovative and first-of-its-kind flotation circuit based entirely on Jameson cells, a modern pneumatic flotation design that offers a compact layout, low-cost process and flexible flowsheet. Following a brief commissioning period, the New Britannia mill achieved commercial production on November 30, 2021. Full design throughput rates and recoveries are expected to be achieved in the second quarter of 2022, a mere six months after commissioning.

Hudbay released an updated mine plan for the Snow Lake operations in 2021 that reflected an increase in annual gold production to over 180,000 ounces on average during the next six years due to the incorporation of the New Britannia mill, which represents an increase of more than 55% from 2021 levels. The updated mine plan reflects the third phase of the company’s Snow Lake gold strategy focused on expanding and further optimizing operations. These expansion and optimization initiatives include increasing the production rate at Lalor to 5,300 tonnes per day by the end of 2022 following the closure of the 777 mine, increasing the throughput rate at the Stall mill to 3,800 tonnes per day, incorporating mineral reserves from the 1901 deposit into the mine plan, and implementing a recovery improvement project at the Stall mill to increase copper and precious metal recoveries. There also remains potential to further enhance the Snow Lake operations through exploration opportunities and additional mill processing projects.