Q1 2024 Hudbay Minerals Inc Earnings Call

Operator: Good morning, ladies and gentlemen. Thank you for standing by. Welcome to the HudBay Minerals' first quarter 2024 results conference call.

Good morning, ladies and gentlemen, thank you for standing by walks into the heartbeat.

Speaker Change: First quarter 2024 results conference call at this time, all participants are in listen only mode.

Andrew: During the presentation, we will conduct a question and answer session joined the question. Andrew You May Press Star then one on your telephone keypad should you need assistance during the conference call you may signal, an operator by pressing star zero.

Speaker Change: This conference call is being broadcast live on the webcast and is being recorded today may 14th at 11 o'clock a M. Eastern time I will now turn the conference over to MS. Candace <unk>, Vice President Investor Relations.

Operator: At this time, all participants are in listen-only mode. Following the presentation, we will conduct a question and answer session. To join the question queue, you may press star, then 1 on your telephone keypad. Should you need assistance during the conference call, you may signal an operator by pressing star and 0. As a reminder, this conference call is being broadcast live on the webcast and is being recorded today, May 14th, at 11 a.m. Eastern Time. I will now turn the conference over to Ms. Candace Brule, Vice President, Investor Relations. Thank you. Please go ahead.

Speaker Change: Please go ahead.

Candace Brule: Thank you, Operator. Good morning, and welcome to HudBay's 2024 First Quarter Results Conference Call. HudBay's financial results were issued this morning and are available on our website at www.hudbay.com. A corresponding PowerPoint presentation is available in the Investor Events section of our website, and we encourage you to refer to it during this call. Our presenter today is Peter Kukielski, HudBay's President and Chief Executive Officer. Accompanying Peter for the Q&A portion of the call will be Eugene Lee, our Chief Financial Officer, and Andre Lauzon, our Chief Operating Officer.

Speaker Change: Thank you operator, good morning, and welcome to <unk> 2024 first quarter results Conference call I based financial results were issued this morning and are available on our website at Www Dot High Bay Dot com.

Speaker Change: Corresponding Powerpoint presentation is available on the Investor events section of our website and we encourage you to refer to it during this call. Our presenter today is Peter can Koski Heartbeat, President and Chief Executive Officer accompanying Peter for the Q&A portion of the call will be Eugene Lee, our CFO, our chief financial Officer, and Andre low Voc Archie.

Speaker Change: Operating officer please.

Candace Brule: Please note that comments made on today's call may contain forward-looking information, and this information, by its nature, is subject to risks and uncertainties, and as such, actual results may differ materially from the views expressed today. For further information on these risks and uncertainties, please consult the company's relevant filings on CDAR Plus and EDGAR. These documents are also available on our website. As a reminder, all amounts discussed on today's call are in U.S. dollars unless otherwise noted. And now, I'll pass the call over to Peter Kukielski.

Speaker Change: Please note that comments made on today's call may contain forward looking information and this information by its nature is subject to risks and uncertainties and as such actual results may differ materially from the views expressed today.

Eugene Lee: For further information on these risks and uncertainties. Please consult the company's relevant filings on SEDAR and Edgar. These documents are also available on our website. As a reminder, all amounts discussed on today's call are in U S dollars, unless otherwise noted and now I'll pass the call over to <unk>.

Peter Gerald Jan Kukielski: Thank you, Candace. Good morning, everyone, and thanks very much for joining us. In the first quarter, we delivered another consecutive quarter of strong operational and financial performance with steady free cash flow generation and continued debt reduction. This was largely a result of our unique copper and gold production diversification that provides meaningful exposure to higher copper and gold prices and attractive free cash flow generation. I'll go into more detail on our first quarter operating and financial achievements throughout today's presentation, along with providing an update on many of the exciting growth initiatives underway to further enhance our copper and gold exposure. Slide 3 summarizes the strong financial performance that we delivered in the first quarter.

Speaker Change: Thank you Candice and good morning, everyone and thanks very much for joining us.

Speaker Change: In the first quarter, we delivered another consecutive quarter of strong operational and financial performance with steady free cash flow generation and continued debt reduction.

Speaker Change: This was largely a result of our unique copper and gold production diversification that provides meaningful exposure to higher copper and gold prices and attractive free cash flow generation.

Speaker Change: Go into more detail on our first quarter operating and financial achievements throughout today's presentation, along with providing an update on many of the exciting growth initiatives underway to further enhance our copper and gold exposure.

Speaker Change: Slide three summarizes the strong financial performance that you delivered in the first quarter.

Peter Gerald Jan Kukielski: Consolidated copper production was 35,000 tons, and consolidated gold production was 90,000 ounces in the first quarter. First quarter production demonstrated the strength of our diversified operating base with benefits from the continued mining of high copper and gold grades at the Pampacancha deposit in Peru, continued high gold grades at Lalor, and strong performance from the New Britannia mill in Manitoba, as well as the operational stabilization efforts at the Copper Mountain mine in British Columbia. We are well on track to achieve the production guidance metrics for all metals. Consolidated cash costs were a remarkable $0.16 per pound of copper for the second quarter in a row.

Speaker Change: Consolidated copper production was 35000 tons in consolidated gold production was 90000 ounces in the first quarter.

Speaker Change: Third quarter production demonstrated the strength of our diversified operating base with benefits from the continued mining of high copper and gold grades at the top of conscious deposit in Peru continued high gold grades at Lalor and strong performance from the new Britannia mill in Manitoba as well as the operational stabilization efforts at the copper Mountain mine.

Speaker Change: In British Columbia, we are well on track to achieve the production guidance metrics for all metals.

Speaker Change: Consolidated cash costs were a remarkable 16 cents per pound of copper for the second quarter in a row. This was primarily the result of continued high byproduct credits, partially offset by higher mining costs, the lower copper production.

Peter Gerald Jan Kukielski: This was primarily the result of continued high by-product credits, partially offset by higher mining costs and lower copper production. However, consolidated sustaining cash costs were equally impressive and decreased to $1.03 per pound in the quarter. Given this strong cost performance, we have affirmed our full year 2024 consolidated cost guidance. And we are pleased to see continued cost efficiencies being realized throughout the business, which is a testament to the outstanding team we have at HudBay.

Speaker Change: Consolidated sustaining cash costs were equally impressive hence decreased to $1 <unk> per pound in the quarter.

Speaker Change: Given the strong cost performance, we have affirmed our full year 2024 consolidated cost guidance and we are pleased to see continued cost efficiencies being realized throughout the business, which is a testament to the outstanding team we haven't Hebei.

Peter Gerald Jan Kukielski: Revenue in the quarter was $525 million, driven by gold production and sales volumes that exceeded our expectations. This, together with impressive cost performance, led to adjusted EBITDA of $214 million and adjusted net earnings of $0.16 per share. Operating cash flow before change in non-cash working capital of $148 billion also exceeded expectations. After deducting sustaining capital expenditures and cash lease and community payments, we generated $87 million in free cash flow this quarter.

Speaker Change: Revenue in the quarter was $525 million driven by gold production and sales volumes that exceeded our expectations.

Speaker Change: Together with impressive cost performance led to adjusted EBITDA of $214 million and adjusted net earnings of <unk> 16 per share.

Speaker Change: Operating cash flow before change in noncash working capital of $148 billion also exceeded expectations.

Speaker Change: After deducting sustaining capital expenditures and cash lease and community payments, we generated $87 million in free cash flow this quarter.

Peter Gerald Jan Kukielski: This continues our quarterly trend of generating positive free cash flow, and over the last 12 months, we have generated more than $350 million in free cash flow. Our strong free cash flow generation enabled us to make additional progress against our deleveraging targets by completing a $10 million repayment on our revolving credit facilities and reducing net debt by $44 million during the quarter. As of March 31st, our total liquidity increased to $619 million, including $284 million in cash, as well as undrawn availability of $335 million on our revolving credit facility.

Speaker Change: It continues our quarterly trend of generating positive free cash flow and over the last 12 months, we have generated more than $350 million in free cash flow.

Speaker Change: Our strong free cash flow generation enabled us to make additional progress against our deleveraging targets by completing a $10 million repayments on our revolving credit facilities and reducing net debt by $44 million during the quarter.

Speaker Change: As at March 31, our total liquidity increased to $619 million, including $284 million in cash as well as undrawn availability of $335 million on our revolving credit facilities.

Peter Gerald Jan Kukielski: The decline in net debt, together with the strong EBITDA generation, has improved our net debt to EBITDA ratio to 1.3 times, compared to 1.6 times at the end of 2023, and we are well on track to achieve our 3P plan leverage target of 1.2 times. Moving to slide four, our Peruvian operations produced 25,000 tons of copper, 29,000 ounces of gold, 640,000 ounces of silver, and approximately 400 tons of molybdenum in a quarter.

Speaker Change: The decline in net debt together with the strong EBITDA generation has improved our net debt to EBITDA ratio to one three times compared to one six times at the end of 2023, and we are well on track to achieve our three P plan leverage target of one two times.

Speaker Change: Okay.

Speaker Change: Moving to slide four our Peru operations produced 25000 tons of copper 29000 ounces of gold 640000 ounces of silver and approximately 400 tons of molybdenum in the quarter.

Peter Gerald Jan Kukielski: While high-grade copper and gold ore continued to be mined from pumper concha in the quarter, the mill processed less pumper concha ore than in the fourth quarter of 2023. This was in line with the mine plan and the typical oil feed blend of approximately one-third from Pampacancha and two-thirds from Constancia. As a result, we are on track to achieve our 2024 production guidance for all metals in Peru. Total ore mined in the first quarter decreased by 27 percent compared to the prior quarter in line with the mine plan, which included supplemental ore feed from stockpiles during the quarter as the operations advanced pit stripping activities.

Speaker Change: While high grade copper and gold all continued to be mined from pump a country in the quarter. The mill processed less pump a country ordered in the fourth quarter of 2023.

Speaker Change: This was in line with the mine plan and the typical ore feed blend of approximately one third from pipe a contra and two thirds from Constancia.

Speaker Change: As a result, we are on track to achieve our 2024 production guidance for all metals in Peru.

Speaker Change: Total ore mined in the first quarter decreased by 27% compared to the prior quarter in line with the mine plan, which included supplemental ore feed from the stockpile during the quarter as the operations advanced pit stripping activities.

Peter Gerald Jan Kukielski: The Constantia mill performed well during the quarter, with throughput averaging 89,000 tons per day. Ore milled was 2% higher than the fourth quarter of 2023, mainly due to the treatment of soft ore from stockpiles. Recoveries continue to be strong and in line with our metallurgical models, with 84.9% copper recovery and 73.4% gold recovery. The operations benefited from strong cost performance, achieving lower cash costs and sustaining cash costs compared to the fourth quarter.

Speaker Change: The Constancia mill performed well during the quarter with throughput averaging 89000 tonnes per day, all mills was 2% higher than the fourth quarter of 2023, mainly due to the treatment of softer ore from stockpiles.

Speaker Change: Recoveries continued to be strong and in line with our metallurgical models with 84, 9% copper recovery and 73, 4% gold recovery.

Speaker Change: The operations benefited from strong cost performance, achieving lower cash cost and sustaining cash costs compared to the fourth quarter.

Peter Gerald Jan Kukielski: Peru's cash costs were at a record low of $0.43, a 20% improvement over the favorable levels achieved in the fourth quarter, and benefited from higher gold by-product credits and lower operating costs. Sustaining cash costs were $1.06, or 12% lower than the fourth quarter, primarily due to the same factors.

Speaker Change: Peru's cash cost, whereas a record low of 43 cents, a 20% improvement over the favorable levels achieved in the fourth quarter and benefited from higher gold byproduct credits and lower operating costs.

Speaker Change: Sustaining cash costs were $1 six or.

Speaker Change: Were 12% lower than the fourth quarter, primarily due to the same factors, we are positioned well to achieve our 2020 for cash cost guidance in Peru.

Peter Gerald Jan Kukielski: We are positioned well to achieve our 2024 cash cost guidance in Peru. Our Manitoba business also saw another quarter of strong operating performance, as summarized on slide 5. First quarter production included 57,000 ounces of gold, 3,100 tons of copper, 8,800 tons of zinc, and 220,000 ounces of silver. Gold production in the first quarter was better than expected as a result of many operational improvement initiatives and record performance from the New Britannia mills.

Speaker Change: Our Manitoba business also saw another quarter of strong operating performance as summarized on slide five.

Speaker Change: First quarter production included 57000 ounces of gold three 1000 tonnes of copper eight 8000 tons of zinc and 220000 ounces of silver.

Speaker Change: Production of gold in the first quarter was better than expected as a result of many operational improvement initiatives and record performance from the new Britannia mill.

Peter Gerald Jan Kukielski: We are well on track to achieve our 2024 production guidance for all metals in Manitoba. The strong gold production was partly attributed to the successful implementation of improvement initiatives at Lalor that were completed in 2023 and early 2024, including higher shaft availability, efficient ore hoisting, stope fragmentation reduction, and mucking productivity enhancement. The New Britannia Mill achieved record quarterly throughput of 1,870 tonnes per day in the first quarter due to ongoing improvement initiatives and effective preventative maintenance measures. The New Britannia Mill recoveries of gold and copper were 89% and 96%, respectively, in the quarter.

Speaker Change: We are well on track to achieve our 2024 production guidance for all metals in Manitoba.

Speaker Change: The strong gold production was partly attributed to the successful implementation of improvement initiatives at Lalor that were completed in 2023 in early 2024, including higher shaft availability efficient ore hoisting stope fragmentation reduction and marketing productivity enhancements.

Speaker Change: The new Britannia mill achieved record quarterly throughput of 1870 tons per day in the first quarter due to ongoing improvement initiatives and effective preventative maintenance measures.

Speaker Change: The new Britannia mill recoveries of gold and copper were 89% and 96% respectively in the quarter.

Speaker Change: During the first quarter, we received a permit approval from the environment and climate change Manitoba to increase the new Britannia mill production rates to 2500 tonnes per day.

Peter Gerald Jan Kukielski: During the first quarter, we received a permit approval from the Environment and Climate Change Department of Manitoba to increase the new Britannia mill production rate to 2,500 tonnes per day. This approval aligns well with our long-term objective to further increase gold production at the Snow Lake operations by directing more gold ore from Lalor to the New Britannia Mill to achieve higher gold recovery. The stall mill processed 4% less ore in the first quarter than the prior quarter, aligned with our strategy of allocating more lar or ore feed to New Britannia.

Speaker Change: This approval aligns well with our long term objective to further increased gold production at the snow Lake operations by directing more gold ore from Lalor to the new Britannia mill to achieve higher gold recoveries.

Speaker Change: The stall mill processed 4% less or in the first quarter than the prior quarter aligned with our strategy of allocating more lalor will feature new Britannia.

Peter Gerald Jan Kukielski: With the Stormwell Recovery Improvement Project completed last year, we saw consistent strong recoveries of gold, copper, and silver in the first quarter and achieved our targeted gold recovery levels of 68%. Manitoba's gold cash cost was $736 per ounce, which is well positioned at the lower end of our 2024 cash cost guidance range. Gold sustaining cash costs were $950 per ounce in the quarter.

Speaker Change: With the stall mill recovery improvement project completed last year, we saw consistent strong recoveries of gold copper and silver in the first quarter and achieved our targeted gold recovery levels of 68%.

Speaker Change: Manitoba gold cash cost was $736 per ounce, which is well positioned at the low end of our 2020 full cash cost guidance range goal sustaining cash costs were $950 per ounce in the quarter.

Peter Gerald Jan Kukielski: Now moving to slide six, we continue to focus on advancing our operational stabilization plans at our British Columbia business unit. In the first quarter, Copper Mountain produced 7,000 tons of copper, 4,400 ounces of gold, and 88,000 ounces of silver. Copper and silver production was lower than the prior quarter, while gold production was higher as a result of higher gold grades and overall higher recoveries.

Speaker Change: Now moving to slide six we continue to focus on advancing our operational stabilization plans at all British Columbia business units in the first quarter cough Mountain produced 7000 tons of copper for 4000 ounces of gold and 88000 ounces of silver.

Speaker Change: Yes.

Speaker Change: Production of copper and silver was lower than the prior quarter, while gold production was higher as a result of higher gold grades and overall higher recoveries.

Peter Gerald Jan Kukielski: We are on track to achieve 2024 production guidance for all metals in British Columbia. Total ore mined in the first quarter was 3.7 million tons, which increased 42% from the fourth quarter, in line with our fleet production ramp-up plan. The mill processed a total of 3.2 million tons of ore during the quarter, with mill availability averaging 90.4% while maintaining a stable throughput rate. Mill throughput was impacted by reduced reliability of the crushing circuit, which was caused primarily by elevated levels of magnetite and scrap metal as the mining progressed through areas of historical underground working.

Speaker Change: We are on track to achieve 2024 production guidance for all metals in British Columbia.

Speaker Change: Total ore mined in the first quarter was $3 7 million tonnes, which increased 42% from the fourth quarter in line with our fleet production ramp up plan.

Speaker Change: The mill processed a total of $3 2 million tonnes of ore during the quarter with mill availability, averaging 94%, while maintaining a stable throughput rate.

Speaker Change: Mill throughput was impacted by reduced reliability of the crushing circuit, which was caused primarily by elevated levels of magnetite and scrap metal as the mining progressive through areas of historical underground workings.

Peter Gerald Jan Kukielski: First quarter milled copper grades averaged 0.27%, which was lower than the fourth quarter of 2023 but higher than the reserve grade of 0.25%. Copper recoveries of 83.4% were higher than the prior quarter and higher than expected due to relieving the regrind circuit constraint and implementing the flotation operational strategy improvements, including reagent selection and dose modifications. Cash costs were $3.49, above the upper end of the 2024 guidance range, but we expect these to decline during the remainder of the year as we continue to implement the stabilization initiative.

Speaker Change: First quarter milled copper grades averaged two 7%, which was lower than the fourth quarter of 2023, but higher than the reserve grade of <unk>, two 5% copper recoveries of 83, 4% to a higher than the prior quarter and higher than expected due to relieving the re grind circuit constraints.

Speaker Change: And implementing the flotation operational strategy improvements, including reagents selection and dose modification.

Speaker Change: Cash costs were $3.49 above the upper end of 2024 guidance range, but we expect these to decline during the remainder of the year as we continue to implement the stabilization initiatives. We have affirmed our full year cash cost guidance range for BC.

Peter Gerald Jan Kukielski: We have affirmed our full-year cash cost guidance range for B.C. Slide 7 highlights the improvements we have seen at Copper Mountain through the early stages of our stabilization initiative. Since the acquisition in June of last year, we have achieved and exceeded the targeted $10 million in annualized corporate synergies, and we are on track to realize the three-year annual operating efficiencies target.

Speaker Change: Slide seven highlights the improvements we have seen it copper mountain through the early stages of our stabilization initiatives.

Corporate representative: Since the acquisition in June of last year, we have achieved and exceeded the targeted $10 million in annualized corporate synergies and we are on track to realize the three year annual operating efficiencies targets.

Peter Gerald Jan Kukielski: On the mining side, we have re-mobilized idle haul trucks and accelerated the purchase of five new haul trucks to increase mining activities and improve flexibility in the mine with additional mining phases. To open up the mine, we have begun a campaign of accelerated stripping over the next three years to enable access to higher-grade ore and to mitigate the reduced stripping undertaken by Copper Mountain over the four years prior to our acquisition.

Speaker Change: On the mining side, we have re mobilized idled haul trucks and accelerated the purchase of five new haul trucks to increase mining activities and improved flexibility in the mine with additional mining faces.

Speaker Change: To open up the mine, we have begun a campaign of accelerated stripping over the next three years to enable access to higher grade ore and to mitigate the reduced stripping undertaken by copper mountain over the four years prior to our acquisition.

Peter Gerald Jan Kukielski: As a result of the remobilization initiatives, total material moved will continue to increase quarter over quarter in line with the mine plan. We continue to hire and train additional haul truck drivers and expect to have a fully trained complement of truck drivers this summer to support the expanded mining fleet, which is expected to increase material moves, improve operating efficiencies, and reduce unit operating costs. Additionally, we are implementing plant improvement initiatives that mirror the successful processes at our other operations, specifically Constantia.

Speaker Change: As a result of the re mobilization of initiatives total material moved will continue to increase quarter over quarter in line with the mine plan.

Speaker Change: We continue to hire and train additional haul truck drivers and expect to have a fully trained complement of truck drivers. This summer to support the expanded mining fleet, which is expected to increase materially moved improve operating efficiencies and reduce unit operating costs.

Speaker Change: Additionally, we are implementing plant improvement initiatives that mirror the successful processes at our other operations, specifically constancia, we've seen stronger mill performance as demonstrated by higher mill availability and above target copper recoveries of 83, 4% in the first quarter of 2024.

Peter Gerald Jan Kukielski: We have seen stronger mill performance as demonstrated by higher mill availability and above target copper recoveries of 83.4% in the first quarter of 2024. This was the highest quarterly copper recovery achieved in the last decade at Copper Mountain. Stabilization benefits continue to be realized into April, with 83% copper recoveries and approximately 40,000 times per day average mill throughput, an increase of approximately 9% over the first quarter. We are also accelerating engineering studies to de-bottleneck and increase the nominal plant capacity to 50,000 times per day earlier than was contemplated in the technical report.

Speaker Change: The first quarter saw the highest quarterly copper recoveries achieved in the last decade copper mountain.

Copper Mountain: Stabilization benefits continue to be realized into April with 83% copper recoveries at approximately 40000 tons per day average mill throughput and increase of approximately 9% over the first quarter.

Speaker Change: We are also accelerating engineering studies to Debottleneck and increase the nominal capacity to 50000 tons per day earlier than was contemplated in the technical report.

Peter Gerald Jan Kukielski: Maintenance practices to improve mill availability continue to be a key pillar of the stabilization initiatives. The average mill availability during the first quarter increased to 90.4% from 85.1% last quarter, as I mentioned earlier. The maintenance programs completed during the quarter were fully executed according to plan. Additional maintenance practice enhancements are planned for rollout over the second and third quarters to implement the improved maintenance management processes and change the maintenance organizational structure.

Maintenance Manager: Maintenance practices to improve mill availability continued to be a key pillar of the stabilization initiatives. The average mill availability during the first quarter increased to 94% from 85, 1% last quarter as I mentioned earlier.

I: The maintenance programs completed during the quarter with fully executed. According to plan additional maintenance practice enhancements are planned for rollout over the second and third quarter to implement improved maintenance management processes and changed the maintenance organizational structure.

Peter Gerald Jan Kukielski: Several mill initiatives to target higher mill throughput were advanced during the quarter, including reprogramming the MillExpert system, installation of advanced SAG control instrumentation, redesign of the SAG liner package, and updated operational procedures to remove magnetite from the pebble stream. Mill throughput in April increased to close to 40,000 times per day as the mill began realizing benefits from the recalibrated expert system.

Maintenance Manager: Several mill initiatives to target higher mill throughput, where advanced during the quarter, including reprogramming. The mill expert system installation of advanced Sag control instrumentation redesign of the Sag lineup package and updated operational procedures to remove magnetite from the pebble stream the.

Speaker Change: The mill throughput in April increased to close to 40000 tons per day as the mill began realizing benefits from the recalibrate sticks, but system.

Peter Gerald Jan Kukielski: The benefits of the operational stabilization improvements are expected to be realized through the remainder of 2024. In March, we released our annual mineral reserve and resource update and provided our updated three-year production outlook, which is shown on slide 8. We expanded the mine life at Constantia by three years to 2041 as a result of the successful conversion of mineral resources to mineral reserves by adding an additional mining phase at the Constantia pit.

Speaker Change: The benefits of the operational stabilization improvements are expected to be realized through the remainder of 2024.

Maintenance Manager: In March we released our annual mineral reserve and resource update and provided our updated three year production outlook, which is shown on slide eight.

Maintenance Manager: We expanded the mine life at Constancia by three years to 2041 as a result of the successful conversion of mineral resources to mineral reserves by adding an additional mining face at the Constancia pit.

Peter Gerald Jan Kukielski: Manitoba reserves continue to support a mine life to 2038, with significant extension potential through a conversion of the remaining 1.4 million ounces of gold in inferred resources in Snow Lake. British Columbia reserves support the 21-year mine life disclosed in our technical report released in December of 2023, with additional optionality and upside potential for reserve conversion through 370 million tons of inferred resources. Our three-year production outlook highlighted that Constancia operations are expected to produce 101,000 tons of copper and 62,000 ounces of gold over the next three years. British Columbia's annual copper production is expected to average 41,000 tons of copper over the next three years. Manitoba's annual gold production guidance continues to average 185,000 ounces over the next three years.

Maintenance Manager: Manitoba reserves continue to support a mine life to 2038 with significant extension potential through a conversion of the remaining one 4 million ounces of gold in inferred resources in snow Lake.

Speaker Change: British Columbia Reserve support the 21 year mine life disclosed in our technical report released in December of 2023, with additional Optionality and upside potential for reserve conversion through 317 million tonnes of inferred resources.

Speaker Change: Our three year production outlook highlighted that Constancia operations are expected to produce 101000 tonnes of copper and 62000 ounces of gold over the next three years.

Maintenance Manager: British Columbia has annual copper production is expected to average 41000 tons of copper over the next three years.

Maintenance Manager: Manitoba annual gold production guidance continues to average 185000 ounces over the next three years.

Peter Gerald Jan Kukielski: HudBay offers investors meaningful copper exposure, complementary gold exposure, and strong near-term cash flow generation. We are well positioned to benefit from strong copper and gold prices with our low-cost, stable operating platform in Tier 1 jurisdictions and our leading copper development and exploration pipeline. As shown on slide 9, today HudBay produces more than 150,000 tons of copper per year, which is further augmented by our complementary gold exposure that offers cash flow resiliency in volatile pricing environments.

Speaker Change: Hebei office investors meaningful copper exposure complementary gold exposure and strong near term cash flow generation, we are well positioned to benefit from strong copper and gold prices with our low cost stable operating platform and tier one jurisdictions, and our leading copper development and exploration pipeline.

Peter Gerald Jan Kukielski: For each $0.25 annual change in copper prices, HudBay will gain an additional $75 million in cash flow and EBITDA. Similarly, for gold, for a $100 per ounce annual increase in price, HudBay will see $25 million in increased cash flow and EBITDA. Additionally, our portfolio also generates the highest increase in net asset value with rising coffer prices amongst our peers.

Peter Gerald Jan Kukielski: Now turning to slide 10, Copper World is the next promising greenfield copper development project in our growth pipeline. As we progress towards making a sanctioning decision, we will continue to be prudent with our financing plans for Copper World by remaining focused on meeting all of the prerequisites outlined in our 3P plan that we introduced in late 2022. Copper World is one of the highest-grade open-pit copper projects in the Americas, with proven and probable reserves of 385 million tons at 0.54% copper in Phase I.

Speaker Change: As shown on slide nine today, Hebei produces more than 150000 tons of copper per year, which is further augmented by our complementary gold exposure that office cash flow resiliency in volatile pricing environments.

Speaker Change: For each 25 annual change in copper prices HUD, they will gain an additional $75 million in cash flow and EBITDA. Similarly for gold for $100 per ounce annual increase in price <unk> will see $25 million and increased cash flow and EBITDA.

Speaker Change: Our portfolio also generates the highest increase in net asset value with rising copper prices amongst our peers.

Speaker Change: Now turning to slide 10, Copperweld is the next promising Greenfield copper development project in our growth pipeline.

Speaker Change: As we progress towards making a sanctioning decision we will continue to be prudent with our financing plans for copperweld by remaining focused on meeting all of the prerequisite outlined in our three P plan that we introduced in late 2022.

Speaker Change: Copperweld is one of the highest grade open pit copper projects in the Americas with proven and probable reserves of 385 million tonnes at <unk> five 4% copper in phase one.

Peter Gerald Jan Kukielski: There is roughly 60% of the total contained copper remaining in the measures and indicators sources, excluding reserves, which provides significant upside potential for Phase II expansion and mine life extension beyond 20 years. The Phase 1 PFS released in 2023 showed enhanced project economics, an optimized flow sheet, and a simplified permitting process with an extended mine life to 20 years and an internal rate of return of 19% at a copper price of $3.75 per pound.

Speaker Change: Roughly 60% of the total contained copper remaining in the measured and indicated resources, excluding reserves, which provides significant upside potential for phase two expansion and mine life extension beyond 'twenty, yes.

Speaker Change: The phase one PFS released in 2023 showed enhanced project economics, and optimized flow sheet and a simplified permitting process with extended mine life to 20 years and an internal rate of return of 19% at a copper price of $3 75 per pound.

Peter Gerald Jan Kukielski: The first key state permit required for copper weld, the Mined Land Reclamation Plan, was initially approved by the Arizona State Mine Inspector in October 2021 and was subsequently amended to reflect a larger private land project footprint in June 2022. In late 2022, we submitted the applications for an aquifer protection permit and an air quality permit to the Arizona Department of Environmental Quality. We continue to expect to receive these two outstanding permits in 2024. We also received the flight plan use permit approval from Pima County in April 2024.

Speaker Change: The first key states permits required for copperweld the mines land Reclamation plan was initially approved by the Arizona State mining Spectre in October 2021, and subsequently amended to reflect the largest private land project footprint in June 2022.

Speaker Change: In late 2022, we submitted the applications for an aquifer protection permit and an air quality permit to the Arizona Department of environmental quality.

Speaker Change: We continue to expect to receive these two outstanding permits in 2024.

Speaker Change: We also received the floodplain use permit approval from Pima County in April 2024.

Peter Gerald Jan Kukielski: We expect to launch the formal joint venture process later this year after we secure our permits and prior to commencing a Definitive Feasibility Study, which would allow the potential joint venture partner to participate in the funding of the Definitive Feasibility Study activities as well as in the final project designed for Copper World. We have seen strong initial interest from potential joint venture partners, as many industry participants are focused on increasing copper exposure.

Pima County: We expect to launch the formal joint venture process. Later this year after we secure our permits and prior to commencing a definitive feasibility study, which would allow the potential joint venture partners to participate in the funding of definitive feasibility study activities as well as in the final project designed for Copperweld.

Speaker Change: We are seeing strong initial interest from potential joint venture partners as many industry participants are focused on increasing copper exposure.

Peter Gerald Jan Kukielski: Securing copper supply is a growing global concern, as evidenced by BHP's recent bid for Anglo-American in an effort to increase their copper exposure. Copper World will be a key contributor to the domestic U.S. supply chain with our intention to produce made-in-America copper cathodes by building a concentrate leach processing facility in the fourth year of operation. Local production of copper cathode would reduce the operation's total energy requirements and lower greenhouse gas and sulfur emissions by eliminating overseas shipping, smelting, and refining activities relating to processing copper concentrates. The project is expected to contribute more than $850 million in U.S. taxes, including $170 million in Arizona state taxes.

Speaker Change: Securing copper supply becomes a growing global concern as evidenced by Bhp's recent bid for Anglo American in an effort to increase their copper exposure.

Speaker Change: Copperweld will be a key contributor to the domestic U S supply chain with our intention to produce made in America copper cathode by building a concentrate leach processing facility in the fourth year of operations.

Copperweld: Local production of copper cathode would reduce the operations total energy requirements and lower greenhouse gas and sulfur emissions by eliminating overseas shipping smelting and refining activities relating to processing copper concentrates.

Copperweld: The project is expected to contribute more than $850 million and U S taxes, including $170 million in Arizona State taxes. The mine will also create more than 400 direct jobs and up to 3000 indirect jobs in Arizona.

Peter Gerald Jan Kukielski: The mine will also create more than 400 direct jobs and up to 3,000 indirect jobs in Arizona. Copper World is an attractive copper growth project for HudBay and our stakeholders, which will generate strong project returns and bring many benefits to the community and local economy in Arizona. We are also encouraged by the progress that the United States Mining Regulatory Clarity Act of 2024 is making through legislative approvals as the government recognizes the importance of supporting the domestic critical mineral supply chain. Consequently, this bill aims to clarify the use of federal lands for mining critical minerals and also effectively overturns the prior Rosemont decision.

Hebei: Couple of World isn't attractive copper growth project for Hebei, and all stakeholders, which will generate strong project returns and bring many benefits to the community and local economy in Arizona.

Hebei: We're also encouraged by the progress that the United States mining regulatory clarity Act of 2024 was making through legislative approvals as the government recognizes the importance of subordinate supporting the domestic critical minerals supply chain.

Speaker Change: Consequently, this build aims to clarify the use of federal lands for mining critical minerals and also effectively overturns the prior Rosemont decision.

Peter Gerald Jan Kukielski: While it doesn't change our path forward on Phase 1 of our Copper World Plan, if passed by the Senate, the bill would be a positive development for the second phase of Copper World when we expand onto federal lands and significantly increase the annual production and mine life at Copper World. It would also simplify the future permitting process for our mason copper project in Nevada.

Hebei: While it doesn't change our path forward on phase one of our Copperweld plan if passed by the Senate Bill would be a positive development for the second phase of copper world when we expand onto federal lands and significantly increase the annual production and mine life at Copperweld It.

Speaker Change: It will also supply a simplified this future permitting process for our Mason copper project in Nevada.

Peter Gerald Jan Kukielski: Turning to slide 11, in Peru, our exploration activities surrounding the Maria Reina and Caballito properties near Constantia continue to focus on permitting and drill preparation. We commenced early exploration activities after completing a surface rights exploration agreement with the community of Wachikako in August 2022. As part of the drill permitting process, environmental impact assessment applications were submitted for the Maria Reina property in November 2023 and for the Caballito property in April 2024

Hebei: Turning to slide 11 in Peru, our exploration activities surrounding the Maria Reyna and cover Utah properties near Constancia continue to focus on permitting and drill preparation.

Hebei: We commenced the early exploration activities after completing a surface rights exploration agreement with community have with Chicago in August 2022.

Chicago: As part of the drill pivoting process environmental impact assessment applications were submitted for the Maria Reyna property in November 2023, and for the <unk> property in April 2024.

Peter Gerald Jan Kukielski: And in Manitoba, we initiated the largest exploration program in the company's history at Snow Lake, as highlighted on slide 12. Much of the newly acquired land from the Cook Lake and Rockcliffe transactions last year has been untested by modern deep geophysics. During the first quarter, a surface geophysical survey was conducted over a portion of our Cook Lake tenements using cutting-edge techniques that enabled the team to detect targets at depths of almost 1,000 meters below surface.

Hebei: And in Manitoba, we initiated the largest exploration program in the company's history in Snow Lake as highlighted on slide 12.

Speaker Change: Much of the newly acquired land from the <unk> Lake in Rockville transactions last year has been untested by modern deep geophysics.

Speaker Change: During the first quarter of surface Geophysical survey was conducted over a portion of our quick lake tenements using cutting edge techniques that enabled the team to detect targets at depths of almost 1000 meters below surface.

Peter Gerald Jan Kukielski: The Multi-Phase 2024 Drilling Program, with up to eight drill rigs during the winter, focused on testing the potential for deep extensions of the gold and copper-gold zones at Lalor and will continue throughout the year testing other targets identified from current and past geophysical surveys. The goal of the 2024 Exploration Program is to test mineralized extensions of the Laurore deposit and to find a new anchor deposit within tracking distance of the Snow Lake processing infrastructure, which has the potential to extend the life of the Snow Lake operations beyond 2038.

Lalor Team: The multi phase 2024 drilling program with up to eight drill rigs during the winter focused on testing <unk> potential for deep extensions of the gold and copper gold zones at Lalor and will continue throughout the year testing other targets identified from current and past geophysical surveys.

Speaker Change: The goal of the 2024, where exploration program is to test mineralized extensions of the loan or deposit and to find a new anchor deposits within trucking distance of the snow Lake processing infrastructure, which has the potential to extend the life of the snow Lake operations beyond 2038.

Peter Gerald Jan Kukielski: Additionally, we are advancing an access drift at the nearby 1901 deposit to enable infill drilling aimed at converting the inferred mineral resources in the gold lenses to mineral reserves. In the first quarter, we commenced the development of the smaller profile drift from the existing Lalo ramp.

Speaker Change: Additionally, we are advancing an access drift at the nearby 19, one deposit to enable the infill drilling aimed at converting the inferred mineral resources in the gold lenses to mineral reserves.

Speaker Change: In the first quarter, we commenced the development of the smaller profile drift from the existing law ramp.

Peter Gerald Jan Kukielski: The 1901 Development and Exploration Drift is proceeding on schedule and on budget and is expected to reach the mineralization in late 2024. Definition drilling is planned for 2025 to further confirm the optimal mining method, evaluate the ore body geometry and continuity, and convert gold inferred resources to reserves. Additionally, in March 2024, HudBay signed a five-year option agreement with Marabeni focused on three exploration projects within tracking distance of Flin Flon. The agreement grants Maribany an option to acquire a 20% interest in the projects following the completion of funding 12 million Canadian dollars in exploration activities over a period of five years.

Lalor Team: The 19th of mine development and exploration drift is proceeding on schedule and on budget and is expected to reach the mineralization in late 2024.

Lalor Team: Initial drilling is planned for 2025 to further confirm the optimal mining method evaluate the orebody geometry, and continuity and convert gold inferred resources to reserves.

HUD: Additionally, in March 2020 for HUD based signed a five year option agreement with Marubeni focused on three exploration projects within trucking distance of flintlock B.

HUD: The agreement Cross Marubeni, an option to acquire a 20% interest in the project. Following the completion of funding 12 million Canadian dollars in exploration activities over a period of five years all.

Peter Gerald Jan Kukielski: All three properties host past-producing mines with attractive copper and gold grades and remain highly prospective for further mineral discovery. Concluding on slide 13, we believe that copper has the best long-term supply and demand fundamentals in the sector as global copper mine supply will be unable to meet demand from global decarbonization initiatives and growing demand from the use in AI data centers. HudBay is uniquely positioned to benefit from the strong outlook for copper with a steady copper production profile of over 150,000 tons per year through to the end of the decade.

HUD: All three properties host past producing mines with attractive copper and gold grades and remain highly prospective for further a mineral discoveries.

HUD: Concluding on slide 13, we believe that copper has the best long term supply and demand fundamentals in the sector has global copper mine supply will be unable to meet demand from global decarbonization initiatives and growing demand from the use in AI data centers.

Speaker Change: <unk> is uniquely positioned to benefit from the strong outlook for copper with a steady production profile of over 150000 tons per year through to the end of the decade.

Peter Gerald Jan Kukielski: HudBay's resilient operating platform offers leading exposure to copper and unique complementary exposure to gold, which, together with our quality pipeline of growth assets, provides significant upside potential for further value creation at higher copper and gold prices. And with that, we are pleased to take your questions. Thank you.

Speaker Change: <unk> resilient operating platform offers leading exposure to copper and unique complementary exposure to gold, which together with our quality pipeline of growth assets provide significant upside potential for further value creation at higher copper and gold prices.

HUD: And with that we are pleased to take your questions.

HUD: Yeah.

HUD: Thank you.

Operator: Thank you. Ladies and gentlemen, we will now begin the question and answer session. To join the question queue, you may press star then the number 1 on your telephone keypad. You will hear a tone acknowledging your request. If you are using a speakerphone, please pick up your handset before pressing any keys. To withdraw your question, please press the star, then the number 2. We will pause for a moment as Cloris joins the queue. Your first question comes from the line of Jackie Przybylowski from BMO. Please go ahead.

Operator: Ladies and gentlemen, we will now begin the question and answer session to join the question queue. You May Press Star then the number one on your telephone keypad.

Donna: Donna <unk> request.

Donna: Using a speakerphone please pick up your handset before pressing Andy keys.

Donna: Your question. Please press Star then the number two we will pass.

Donna: S callers join the queue.

Jackie Przybylowski: Your first question comes from the line of Jackie <unk> from BMO. Please go ahead.

Jackie Przybylowski: Hi, good morning. Thanks for taking my question, and congratulations on a really tremendous quarter. It's really great to see you.

Jackie Przybylowski: Hi, good morning. Thanks.

Jackie Przybylowski: For taking my question and congratulations on a really tremendous quarter, it's really great to see.

Jackie Przybylowski: My question is just on Toru. You mentioned in the MD&A that the Peruvian government is considering expanding or an option, I guess, to expand permits, including potentially, I guess, at Constantia. Can you tell me, like, is that something that, practically, if you were able to extend your permit by 10% or so, is that something that would be within the mill's capacity to achieve that higher throughput? Or what would you guys need to do to get there? Thanks.

Jackie: I guess my question is just on auto.

Jackie: <unk> you mentioned in the MD&A.

Speaker Change: The Peruvian government is considering.

Speaker Change: Expanding adoption I guess to expand.

Peruvian government: The permit.

Speaker Change: Including potentially I guess at Constancia can you tell me why.

Peruvian government: Is that is that something that practically.

Constancia: If you were able to extend extend your permit.

Constancia: By 10% or so is that something that would be within the mill capacity.

Speaker Change: To achieve that higher throughput or what would you guys need to do to get there. Thanks.

Peter Gerald Jan Kukielski: Thanks very much, Jackie. The way that I would characterize it is that there is a potential that this could increase future copper production at Constancia after the public funds deposit is depleted in 2025 by achieving further economies of scale to offset lower grades. But I think what you've got to remember is the regulation is currently a proposal, and we will continue to monitor its progress and the potential impacts on Constancia. Now, that said, the team and I were in Peru a couple of weeks ago, and we met with the Minister of Energy and Mines, the Minister of Economy and Finance, the First Minister, etc., and they said that the proposal is in highly advanced stages and is likely to be implemented very soon

Jackie Przybylowski: Thanks, very much Jackie so the way that I would characterize it is as a potential that this could increase future copper production at Constancia after that.

Jackie Przybylowski: The positive depleted in 2025 by achieving further economies of scale to offset lower grades, but I think what he could remember as the regulation is currently a proposal and we will continue to monitor its credit monitor its progress and the potential impacts on Constancia now that said.

Speaker Change: The team and I were in Peru couple of weeks ago, and we met with the Ministry of energy and mines Ministry of economy, and finance, the fifth minister et cetera, and they intimated that the.

Speaker Change: The proposal is in highly advanced stages and is likely to be implemented very soon.

Peter Gerald Jan Kukielski: That remains anecdotal, and specifically what it will allow us to do is uncertain at this point, but we certainly would be looking at options to actually increase production by supplementing the process facilities that we have in place if needed. Andre, anything you want to add? Yeah, sure.

The team: That remains anecdotal and specifically what it will allow us to do is uncertain at this point, but we certainly would be looking at options to actually increase production by supplementing the process facilities that we have in place if needed.

The team: Andrea Thank you.

Andrea: Yes sure.

Andre Taylor Lauzon: That covers, I guess, what I'd say the... Permanent Process and what they're looking at. In simple terms, what they're proposing is... to increase copper production in Peru by authorizing within your existing permitted facilities opportunities for process improvement, so existing crushers and infrastructure that you currently have. And so what we do have, which is a benefit for us, is we do have permitted pebble crushers that haven't been implemented. And the reason why we haven't implemented them in the past is because we were throttled on the throughput capacity.

Andrea: That covers I guess, what I would say the the permitting process and what theyre looking at and so on.

The team: In simple terms, what they're proposing is.

The team: The increased copper production in Peru is.

Us: Authorizing within your existing permit permitted facilities opportunities for process improvement so existing crushers and infrastructure that you currently have in and so what we do have which is a benefit for US is we do have permitted pebble crushers.

Speaker Change: That haven't been implemented and the reason why we have and implemented in the past is is because we're throttled on the throughput capacity.

Andre Taylor Lauzon: So the teams are looking actively at what are the levers, if you will, around what we can do within that framework to take advantage of that 10% reduction. It's still early days, but we are running on days up to 94,000 tons per day. And so they're making continuous improvements in the process. We're quite optimistic that if this happens, that it'll be enough.

Speaker Change: So the teams are looking actively at what are the levers if you will around.

Speaker Change: Around what we can do within that framework.

Speaker Change: To take advantage of that 10% reduction.

The team: Early days, it's still early days, yet, but we are running.

Speaker Change: On days up to 94000 tons per day, and so so theyre, making continuous improvements in the process and so.

Speaker Change: We're quite optimistic that if this happens that'll be an upside for us.

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

The team: Thanks, very much Andre Peter and maybe just as a follow up question.

The team: We ended the presentation by the Peruvian Minister at PDC in March end.

Peruvian Minister: And there was some talk there about streamlining permitting in general.

Andre Taylor Lauzon: I know, you're you're exploration projects in Peru has been.

Andre Taylor Lauzon: I've been very thoroughly going through the permitting process do you have any color or any optimism on weather.

Peruvian Minister: Whether streamlining of the permitting process for your exploration projects might be kind of what's coming as well.

Peter Gerald Jan Kukielski: I think, Jackie, so yes, I'm optimistic that that is the case. All of the ministers with whom we met in Peru were keen to confirm that they're working hard to do that. That said, it remains to be seen what the bureaucracy can actually achieve. So the key elements really are the submission of the EIA, and after that, there are a couple of other permits that need to be granted, like archeological permits and water use permits, but the primary permit required subsequent to EIA approval is Consulta Previa.

Jackie: I think Jackie so, yes, I'm optimistic that that is the case.

Jackie Przybylowski: All of the ministers, with whom we Miss in Peru.

Jackie: Keen to confirm that they are working hard to do that.

Speaker Change: That said it remains to be seen what the bureaucracy can actually achieve.

Speaker Change: The key elements really are submitted.

Speaker Change: The EIA.

Speaker Change: And after that there are couple of other permits that need to be granted dike archaeological permits and water use permits but the primary permit required subsequent to EIA approval is consulta previa.

Peter Gerald Jan Kukielski: And Consulta Previa kind of dwarfs the others. So we suspect that we'll be able to conduct the things like the archeological permit and the water use permit in parallel, potentially with Consulta Previa, but the total duration we estimate right now is 12 to 18 months. We're hopeful that the 18 gets reduced to 12 or so.

Speaker Change: And consulted previous kind of dwarfs the others. So we suspect that we will be able to conduct the things like archaeological.

Speaker Change: Permit and the water use pivot in parallel potentially with Consulta previa.

Speaker Change: But the total duration, we estimate right now is 12 to 18 months, we are hopeful that that the 18 gets reduced to 12 or so.

Jackie Przybylowski: That's great. Thank you very much for taking my questions and congratulations again.

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

Speaker Change: Thank you.

Operator: Thank you, and your next question comes from the line of Orest Wowkodaw. Please go ahead.

Speaker Change: Thank you and your next question comes from the line of Forest.

Forest: Please go ahead.

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

Forest: Hi, good morning, nice to see the free cash flow generation.

Forest: Here in the quarter My question has to do with costs.

Forest: We saw very low cost per ton in Peru, this quarter of just below $11 a ton.

Forest: I mean, that's probably the lowest number we've seen in quite some time is that sustainable and can you talk about some of the drivers there and then Conversely, the cost per ton in Manitoba.

Speaker Change: Ladies and $2 35 were among the highest we've seen.

Speaker Change: Quite some time just wondering if we should or can we anticipate cost to he's there for the rest of the year. Thanks.

Andre Taylor Lauzon: I'll start with the cost in Peru. The team has done an excellent job on cost conservation and looking for opportunities to reduce it. The forecast to the end of the year is pretty much in line with what you're seeing within our budget ranges, maybe even towards the lower end like you're seeing this quarter, so there's nothing unusual about this quarter, it's just good operating practice, good cost control, and they did overcome challenges with flooding and water while they did that, so we're really proud of the efforts of the team there. In terms of Manitoba, so the Manitoba one, But it's part of the strategy.

Speaker Change: Sure sure so I'll take yours.

Speaker Change: So the.

The team: I'll start with the cost in Peru. So the team has done an excellent job on cost conservation and looking for.

Speaker Change: For opportunities to reduce in the forecast to the end of year is is pretty much in line with what youre seeing in within our budget ranges.

Speaker Change: Maybe even towards the.

Speaker Change: The lower lower than like Youre seeing this this quarter.

Speaker Change: So theres nothing.

Team: Unusual about this quarter. It's just good operating practice could cost control them and then they did overcome challenges with flooding and water and that while they did that so really proud of the efforts of the team there.

Team: In terms of Manitoba, the Manitoba, one if you look at it at face value. There's some increases that at stall and overall, a little a little bit in the mine.

Andre Taylor Lauzon: And so what we trialed in the quarter was with increased opportunity to put more through. Our productivity improvements are really taking hold. We've trialed putting some higher base metal feed, if you will, from Stahl that would normally go through Stahl through New Britannia at better recovery, and we were successful at that. So we're putting stuff from the lower cost mill or ore feeds through the higher cost mill, but we're generating a lot more cash by producing more gold ounces.

Team: But it's part of the strategy and so what we trialed in the quarter was.

Team: With increased <unk>.

Speaker Change: <unk> to put more or through our our productivity improvements are really.

Speaker Change: Taking hold we've trialed, putting somewhat higher base metal feed if you will from from stall that would normally go through stall through new Britannia at better recoveries and we were successful at that so.

Speaker Change: Putting stuff from the lower cost mill or lower feeds through the higher cost mill, but we're generating a lot more cash by producing more gold ounces and so so at face value of the cost look a little bit higher than what they were but it's all part of the strategy to make more cash and and so you saw the results.

Andre Taylor Lauzon: And so at face value, the costs look a little bit higher than what they were, but it's all part of the strategy to make more cash. And so you saw the results in the gold for the quarter.

Speaker Change: Nicole for the quarter.

Orest Wowkodaw: Okay, just to clarify, so in Peru, we should then, I think what I'm hearing you say, we should expect the cost per ton to increase.

Speaker Change: Okay just to clarify so in Peru, We should then I think what I'm hearing you say is you should expect cost per ton to increase for the rest of the year in order to get closer to your guidance range.

Speaker Change: Okay.

Andre Taylor Lauzon: It'll be within the bar,

Speaker Change: It's it's.

Nicole: It'll be within the the bottom to mid range of the guidance, yes, okay.

Speaker Change: Thank you.

Operator: Thank you, and your next question comes from the line of Ralph Profiti from 8 Capital. Please go ahead.

Speaker Change: Thank you and your next question comes from the line of follow up.

Speaker Change: From <unk> capital. Please go ahead.

Ralph M. Profiti: Thanks, Operator. Good morning, everyone.

Operator: Thanks, operator, good morning, everyone.

Peter: Peter do you have a handle on the issue related to these elevated magnetite levels at copper mountain seems to be impacting the front end of the plant as opposed to the back in the plant when we look at the success you've seen on copper recoveries. Just wondering what's the mitigation plan look like and just trying to get a sense of how important this issue is.

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

Andre Taylor Lauzon: Sure, I'll take that one as well. It's Andre. So, I was up at the site last week, and I actually saw the site. So, what the challenge is, is... The pebble crusher, as the pebbles get rejected from the sag mill, there's a magnet on there to identify the trapped or balls of metal that came out of the sag mill, and when you put high-magnetite through, the magnets can't discern between the steel balls and the magnetite.

Peter: Sure.

Andre Taylor Lauzon: I'll take that one as well it's Andre.

Andre Taylor Lauzon: So it was up let's say last week and actually saw the let's say so with the challenges.

Andre Taylor Lauzon: Is.

Andre Taylor Lauzon: The pebble crusher as it.

Andre Taylor Lauzon: As you know is the pebbles get rejected from the Sag mill Theres, a magnet on there to identify trap or all the metal that came out of the Sag mill and when you put high magnitude through the maintenance can't discern between the still balls and the magnitude and so by default.

Andre Taylor Lauzon: So by default, so you don't damage the pebble crusher, we were surging the pebbles back into the sag mill, which reduced throughput. And so over the course of April, where you saw the increased throughput, what we did as a trial was we just rejected the pebbles. So while we worked with technologies to try to separate out what's magnetite versus the steel balls that are coming out, we just discarded the pebbles; we're storing them in a safe spot for the future.

Maintenance Manager: So you don't damage the pebble crusher they were they were.

Maintenance Manager: We are surging the pebbles back into the Sag mill, which reduced throughput.

Speaker Change #104: So over the course of April where you saw the increased throughput while we did as a trial as we just rejected the pebbles. So so.

Speaker Change: So while we work for technologies to try to separate out what's magnetite versus the steel balls that are coming out we just discarded the pebbles restoring them in the same spot for the future longer term. So we're seeing the benefit of in through increased throughput capacity by doing that in the short term longer term some capital.

Andre Taylor Lauzon: Longer term, so we're seeing the benefit of increased throughput capacity by doing that in the short term. Longer term, some capital projects that we're looking at that will increase our throughput through the mills will allow us to just recirculate those pebbles back into the pile, and it'll come out run of mine feet and not a surge into the mill of pebbles. And so we believe we've got it under control right We're looking at technologies, like I said, to separate or differentiate between magnetite and steel, but those problems will ultimately be solved early next year with some improvements that we're planning.

Speaker Change: Projects that were looking at that will increase our throughput through the through the mills will allow us to just re circulate those pebbles back into the pilot of come runners might run of mine feed and not a surge into the mill if pebbles and so we believe we've got it under control right now we're looking at technologies.

Speaker Change: We can say to.

Speaker Change: Separate or differentiate between magnetite in steel, but those problems will ultimately be salt Lake early next year with some some improvements that we're planning in the mill.

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

Speaker Change: Got it got it.

Speaker Change: And Peter I want to come back to the issue of the 10% potential permitted capacity increase at Constancia and just wondering what special considerations outside of the plants that you may need to consider things like power purchase agreement things like trucking and logistics things like tailings outside of the plant are there anything that.

Peter Smith: You're going to be paying closer attention to when you. When you think about sort of the cost benefit analysis.

Peter Gerald Jan Kukielski: That's a great question. I think that we are so used to the need to be a resilient operation in Peru that we plan for these types of things in advance, in any case. So, you know, we have sort of surge requirements for various aspects of our operational activities there. I think this will be nothing exceptional for us. I don't think there will be any additional logistics requirements. We have ample trucking capacity. We've increased our concentrate storage capacity.

Speaker Change: Okay.

Peter Smith: That's a great question I think that we are so used to.

Speaker Change: They need to be a resilient operation in Peru that we plan.

Speaker Change: For these types of things and advanced in any case, so we have sort of surge requirements tool for various aspects of our operational activities. There I think there will be nothing exceptional for us I don't think there'll be any additional logistics requirements. We have ample trucking capacity, we've increased our concentrate storage.

Peter Gerald Jan Kukielski: Frankly, I don't see any particular requirements arising from this.

Speaker Change: <unk>.

Speaker Change: Frankly, I don't see any particular requirements arising out of this.

Ralph M. Profiti: Thanks again. You're welcome. Thank you.

Speaker Change: Yes.

Speaker Change: Understood.

Speaker Change: Yes.

Speaker Change: Okay.

Speaker Change: Thanks again.

Speaker Change: Youre welcome. Thank you.

Operator: And your next question comes from Greg Barnes from TD Securities. Please go ahead. Yes, thank you. Andre, a question on Copper Mountain. You saw a step change in April, both on mill throughput and mill availability.

Speaker Change: And your next question comes from the line of Greg Barnes from TD Securities. Please go ahead.

Speaker Change: Yes. Thank you Andre question on copper Mountain you saw a step change in April both on mill throughput and mill availability.

Greg Barnes: What happened in April and is this sustainable.

Greg Barnes: Yeah, a great question. Thanks for that, Greg. So, one of the analogies one of our head metallurgists uses is like boiling water; you put a lot of energy into it, and then eventually, the bubbles start coming up. We've been putting a lot of energy and effort into the mill, and all of a sudden, you start to see the benefits coming through. The mill reliability in terms of, so it's a measure that we've been tracking, it's a new measure we've been tracking, and it measures the percent downtime due to unplanned events.

Greg Barnes: Yeah.

Gregg: Great question, Thanks for that Gregg.

Gregg: So.

Gregg: One of the.

Speaker Change #106: There is an analogy whatever alright our.

head metallurgy: Our head metallurgy said users, it's like boiling water you put a lot of energy into it and then eventually the bubble start coming up we've been putting a lot of energy and effort into the mill and all of a sudden you start to see the benefits coming through in the mill reliability in terms of so it's a measure that we've been to new <unk>.

head metallurgy: We've been tracking and it measures the percent downtime due to unplanned events for the quarter. We were about 96, 4% and month to month from January were at 94 February we're at $96. Four in March we are at 98, 4% reliability and so month to month, we're seeing that reliability.

Greg Barnes: For the quarter, we were about 96.4%, and month to month, from January, we were at 94. February, we were at 96.4, and March, we were at 98.4% reliability. And so month to month, we're seeing that reliability.

Andre Taylor Lauzon: The big step change that happened in terms of throughput was the implementation of, or the optimization of, the expert system. The expert system is what controls the sag mill feed and throughput, and so we have a three-part system. One controls the speed of the mill, one monitors the density, and one is for the tonnage. In previous days, only one of them was used, which was the tonnage input. In the month of April, we turned on all three.

Speaker Change #110: <unk> the big step change that happened in terms of throughput.

Speaker Change #111: With the.

expert system: Implementation of or the optimization of the expert system. So the expert system is what controls the Sag mill feed.

expert system: And throughput and so we have a three part system one controls the speed of the mill one monitors the density and one is the tonnage and in prior priorities only one of them was used which was the tonnage input.

operators: In the month of April we turned on all three so we were running the expert system with all three parameters and so there were the operators we're more in a monitoring mode rather than dialing up the individual components and so we're seeing the benefits of that of that going through in addition to like the prior question about the rejection.

Andre Taylor Lauzon: So we were running the expert system with all three parameters, and so the operators were more in a monitoring mode rather than dialing up the individual components. And so we're seeing the benefits of that going through, in addition to the prior question about the rejection of pebbles. So our intention is to continue, as we're in high magnetite scenarios right now, to reject them until we have some capital projects come in early next year that will solve the overall throughput.

Speaker Change #113: Pebbles so we're.

Speaker Change #107: Our intention is to continue as we are in high Mega take scenarios right now to reject them until we have some capital projects come in early next year that will solve the overall throughput.

Greg Barnes: This was fantastic!

Speaker Change #107: Fantastic progress.

Speaker Change #107: And a question for you Eugene on gold hedging.

Speaker Change #107: Done a little bit I think is about 15% hedged.

Eugene Lee: Call is for the balance of the year do you do you intend to do more of that.

Greg Barnes: Thanks Greg. No, not at this time.

Eugene Lee: Thanks, Greg and no not at this time I think we did some modest hedging to our copper mountain to protect.

Eugene Lee: I think we did some modest hedging at Copper Mountain to protect some cash flows as prudent financial management during this stabilization period. Given the volatility we've seen in prices in prior years, it was sort of a prudent measure to keep ourselves free cash flow positive. In general, our strategy is to provide investors with increasing exposure to both copper and gold, and by prudently managing our cash flow to, one, acquire Copper Mountain and stabilize it, we think we're giving investors more exposure to that.

Greg Barnes: Some cash flows as prudent financial management during this.

Eugene Lee: Stabilization period.

Greg Barnes: Given the volatility we've seen in prices in prior years, it was sort of a prudent measure to to keep ourselves free cash flow positive.

Not specified: In general our strategy is to provide our investors with the increasing exposure to both copper and gold and by prudently managing our cash flow to one acquire copper mountain and stabilize it we think we're giving investors kind.

Eugene Lee: At this time, given where prices are, I think we're comfortable to let it ride with the callers we have. If we see a decline, we may want to ensure that we underwrite some of that, but given the strong copper and gold prices today, I don't feel the need to add additional hedges at this time. We'll let her ride.

Speaker Change #109: Kind of more exposure to that so at this time, given where prices are I think we're comfortable to let it.

Speaker Change #116: With colors, we have.

Speaker Change #105: If we see sort of.

Speaker Change #105: A decline and we May we may want to ensure that we underwrite some of that but given the strong.

Speaker Change #105: Copper and gold prices today.

Speaker Change #105: I don't feel the need to add additional hedges at this time.

Speaker Change #105: Let it ride.

Gene: Great. Thanks gene.

Speaker Change #105: Thank you once again that start in one geography question. Your next question comes from the line of Dalton Barreto from Canaccord. Please go ahead.

Operator: Thank you. Once again, that is a star and one to ask a question. Your next question comes from the line of Dalton Barretto from Canacorta. Please go ahead.

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

Speaker Change #105: Okay.

Speaker Change #105: Thanks, operator, and good morning, Peter.

Peter Smith: Peter and team.

Dalton Baretto: I've got a couple of questions as it relates to the <unk>.

Dalton Baretto: <unk> P plan, given what's happening in the corn and the copper market currently.

Peter Smith: Yes. My first question is how are you guys thinking about a hurdle rate for copper world.

Speaker Change #120: Given the movement in the copper price.

Eugene Lee: Hi Dalton. You know, the 3P plan is a thoughtful plan that kind of looks throughout the cycle, and the basis of that potential sanctions vision on the rate of return part was 15% IRR, a minimum of that, at base prices. And when we put out that study, that was 350 copper, and certainly, the PFS that we released last year achieved that. Obviously, at today's higher prices that we're going to see in the IRRs, if they were to hold during the period of build and through first production at those levels, IRRs north of 20.

Don: Hi, Don.

Don: The plan is a thoughtful plan that kind of looks throughout the cycle.

Don: On the basis of that.

Don: Potential sanctions vision on the on the rate of return part was 15% IRR and a minimum of that.

Don: At these prices and when we put out that study that was $3 50, copper and certainly that the PFS that we released last year achieved that obviously at today's higher prices.

Don: We're going to see.

Speaker Change #122: Irr's if they were to hold during the period of a build in through first production at those levels IRR north of 20%. So certainly.

Eugene Lee: And so certainly that's one element of the plan that I think is clearly on track. I mean, the current prices have allowed us to achieve deleveraging faster than originally planned. And we're very pleased with that result, and, as I think Peter mentioned, over $200 million of net debt reduction in the last three quarters since the acquisition of Copper Mountain. And now we're at 1.3 times net debt EBITDA. So from a financial standpoint, we're getting closer to that.

Don: One element of the plan that I think is as clear on track.

Don: At current prices have allowed us to achieve deleveraging faster than than originally planned and we're very pleased with that resulted in this I think Peter mentioned over $200 million of net debt reduction in the last three quarters since the acquisition of copper Mountain and now we're at one three times net debt to EBITDA.

Don: So from a financial standpoint, we're getting towards that I don't think we.

Eugene Lee: I don't think we have anything to relax on the hurdle rate for investment in the copper world. We think it's still prudent to have those strong IRRs, that there's significant work still to be done on planning and feasibility studies. So the production, we know the project's a great project. As Peter mentioned, it's the highest grade undeveloped copper deposit in the Americas at the reserve stage. And consequently, it has very high returns, and that's the type of projects that Hy-Bay wants to invest in.

Don: There's nothing to relax on the hurdle rate for investment.

Don: And copper World, we think it's still prudent to have.

Don: Strong irr's that there is significant.

Don: Significant work needs to be done on planning and.

Don: The feasibility study is still so.

Speaker Change #125: The production.

Peter Smith: We know the products Great project as Peter mentioned, it's our highest grade undeveloped.

Peter Smith: <unk> deposit in the Americas the reserve stage.

Peter Smith: Consequently, it has a very high returns and.

Speaker Change #115: That's a project that type of projects that they want to invest it.

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

Gene: Thank you gene. So then given everything you just said.

Gene: I guess my second question is do you still want or need to do a deal on the project and then part B I guess is would you consider doing a deal ahead of the permits just to kind of take advantage of current market conditions.

Eugene Lee: Again, we're going to stick with the plan here. The plan is to get the permits and get a partner. Given the attractiveness of the project, we expect that there will certainly be lots of interest. However, I don't think front-running the permits with a partner today in today's sort of hot environment is the right thing to do from a prudent planning basis. We're going to evaluate once we have the permits and how we move the project forward to create the most value for shareholders and potentially that partnership.

Speaker Change #115: Again, we're going to stick with the plan here and the plan is to get the permits and get a partner given the attractiveness of the project, we expect that to.

Speaker Change #124: Theres lots of there's certainly lots of interest.

Speaker Change #128: Think front running.

Speaker Change #119: Running the permits with the partner today in today's.

Speaker Change #132: Sort of hot environment.

Speaker Change #121: It is the right thing to yield from a prudent planning basis, we are going to evaluate once we have the permits in how we move the project forward to create the most value for shareholders and potentially <unk>.

Eugene Lee: But I don't think you get the stained highest value by doing this in front of the permits to try to get a quick win here. We want to look at this over the long term in terms of what's best for the company in terms of the percentage we sell, the valuation of the project, and also, as I think Peter highlighted in his remarks, the optionality of Phase 2 given the improved permitting environment. There's a lot of value in just sticking with the plan here and executing it.

Speaker Change #117: Partnership, but we're not.

Speaker Change #131: I don't think you get the sustained highest valued by doing this in front of the permits.

Speaker Change #131: To try to get a quick win here, we want we want to look at this over a long term in terms of what's best for the company in terms of the percentage we sell the evaluation of the project and also as Peter highlighted in his remarks, the the optionality of phase III given that.

Peter Smith: Improved permanent environmental.

Speaker Change #135: There is a lot of value there by just sticking with the plan here in and executing.

Peter Gerald Jan Kukielski: I think I'd add to Dalton that there is occasional fierce debate amongst the management team about the options, but we typically land back at where Eugene is, with the scenario Eugene has described. We'll continue to debate this going forward.

Speaker Change #117: I think I'd add Dalton.

Dalton: There is occasional fierce debate amongst the management team.

Speaker Change #117: About the options.

Speaker Change #117: But we typically land back at where Eugene.

Speaker Change #117: Scenarios Eugene as described it will continue to debate this going forward.

Dalton Baretto: And so that may be one last one if I can squeeze it in. You know, as you look at copper world and you think about buy versus build in the current environment, yeah, can you talk a little bit about how copper world compares to, you know, market valuations on a per ton of copper basis?

Speaker Change #133: And so then maybe one last one if I can squeeze it in.

Eugene Lee: You look at the top of the World and you'd think about buy versus build in the current environment can you talk a little bit about how our comp overall comparison.

Eugene Lee: Market valuations on a per ton of copper basis.

Peter Gerald Jan Kukielski: I'll kick off by saying that if you look at capital intensity, copper world has a capital intensity of under $16,000 an annual ton. So, in comparison, Copper Mountain cost us about $12,000 an annual ton, but when you look at projects that others are building, they cost... $20,000 to $30,000 to $40,000 per annual ton. So, you know, if you could acquire, if we could acquire something like Cotton Mountain at $10,000 or $12,000 an annual time, of course, we'd be happy to do it, but, you know, it's a bit of a unicorn.

Dalton Baretto: I mean, I'll kick off by saying that if you look at capital intensity copper copper world is kind of has the capital intensity of $16000 in annual ton.

Speaker Change #127: So in comparison copper mountain cost us about 12 hours and annual dollar at the time, but when you look at projects that others are building the cost.

Speaker Change #136: 20 to 30 to $40000 per annual ton.

Speaker Change #126: So if you could acquire it we could acquire something like the cotton mountain at 10000 $12000, an annual kind of course, we would be happy to do it.

Speaker Change #127: It's a bit of a unicorn. So we continue to try to find but.

Peter Gerald Jan Kukielski: So we continue to try to find, but the ease of implementation of Copper World is extremely attractive, I believe, and it makes that capital intensity, which stacks up very well against peer projects, highly, highly attractive. So in the absence of good acquisitions to buy, this is the way to go, and we've demonstrated in the past that we're good at this, and so, you know, we're excited to do it.

Speaker Change #130: The ease of implementation of copper world is extremely attractive I believe and it makes that the capital intensity.

Speaker Change #129: Which stacks up very well against peer projects highly highly attractive so in the absence of <unk>.

Speaker Change: Good acquisitions to buy this is the way to go and we've demonstrated in the past it would be good at this and so we're excited to do it.

Peter Gerald Jan Kukielski: I have nothing further to add, Peter. Alright, well, thanks very much guys, that's all.

Peter Gerald Jan Kukielski: I have nothing further.

Speaker Change #129: Peter.

Dalton Baretto: Alright, well, thanks very much guys, that's all from me. Congratulations.

Peter Smith: Alright, well, thanks very much guys. That's all from me congratulations.

Dalton: Thanks Dalton.

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

Dalton: Thank you. This concludes our question and answer session I would like to turn the conference back over to Ms. Candace.

Dalton: Any closing remarks.

Candace Brule: Thank you, Operator, and thank you, everyone, for joining us today. If you have any further questions, please feel free to reach out to our Investor Relations team. Thank you. Have a good day! Ladies and gentlemen, this concludes the conference call for today. You can now disconnect your lines.

Candace Brule: Thank you operator, and thank you everyone for joining US today do you have any further questions. Please feel free to reach out to our Investor Relations team. Thank you have a good day.

Operator: Ladies and gentlemen, this concludes the conference call for today you may now disconnect your lines.

Operator: Go to Beadaholique.com for all of your beading supplies needs!

Dalton: [music].