Q2 2024 Hudbay Minerals Inc Earnings Call

Orest Wowkodaw: Orest Wowkodaw said, Good morning, ladies and gentlemen. Thank you for standing by. Welcome to the HudBay Minerals Inc. second quarter 2024 results conference call. 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 one on your telephone keypad. Children need assistance during the conference call. You may signal an operator by pressing star then zero.

Speaker Change: Good morning, ladies and gentlemen. Thank you for standing by.

Speaker Change: Welcome to the Hood Bay Minerals, Inc. 2nd Quarter 2024 Results Conference Call. At this time, all participants are in listen-only mode.

Speaker Change: Following the presentation, we will conduct a question and answer session.

Speaker Change: To join the question queue you may press star then 1 on your telephone keypad

Speaker Change: Should you need assistance during the conference call, you may signal an operator by pressing star then zero. I would like to remind everyone that the conference call is being recorded today, August 13, 2024 at 11 a.m. Eastern Time.

Operator: I would like to remind everyone that the conference call is being recorded today, August 13, 2024, at 11 a.m. Eastern Time. I will now turn the conference over to Candace Brule, Vice President, Investment Relations. Please, go ahead.

Speaker Change: I will now turn the conference over to Candace Brule, Vice President, Investor Relations.

Candace Brule: Thank you, operator. Good morning, and welcome to HudBay's 2024 second 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 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.

Candace Brule: Please, go ahead.

Candace Brule: Thank you, Operator. Good morning and welcome to HUD Bay's 2024 Second Quarter Results Conference Call.

Speaker Change: 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 section of our website and we encourage you to refer to it during this call.

Speaker Change: Our presenter today is Peter Kukielski, HUD Bay'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.

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.

Speaker Change: 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.

Speaker Change: 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.

Peter Kukielski: Thank you, Candace. Good morning, everyone, and thank you for joining us. In the second quarter, our operations continued to execute on plan, which has positioned us well to achieve our 2024 annual production guidance. The operations also demonstrated strong cost control, which, together with our exposure to higher gold by-product credits, has allowed us to improve our 2024 consolidated cash cost guidance. Our strong and diversified operating base continues to generate free cash flow from efficient performance in Peru and Manitoba.

Peter Kukielski: Thank You Candice, good morning everyone and thank you for joining us

Peter Kukielski: In the second quarter, our operations continue to execute on plan, which has positioned us well to achieve our 2024 annual production guidance.

Speaker Change: The operations also demonstrated strong cost control, which together with our exposure to higher gold by-product credits, has allowed us to improve our 2024 Consolidated Cash Cost Guidance.

Speaker Change: Our strong and diversified operating base continues to generate free cash flow from efficient performance in Peru and Manitoba. And in British Columbia, we continue to execute on our stabilization initiatives and plan stripping programs to unlock higher copper grades.

Peter Kukielski: And in British Columbia, we continue to execute on our stabilization initiatives and plan stripping programs to unlock higher copper grades. We have transformed our balance sheet and are now in the best position we have ever been in to advance our many growth initiatives, which will unlock significant upside potential in our pipeline and further enhance our copper and gold exposure. We will go into more detail on our second quarter operating and financial performance throughout today's presentation, along with providing an update on many of the exciting growth initiatives underway. Slide 3 summarizes our financial performance in the second quarter.

Speaker Change: We have transformed our balance sheet and are now in the best position we have ever been in to advance our many growth initiatives, which will unlock significant upside potential in our pipeline and further enhance our copper and gold exposure.

Speaker Change: We will go into more detail on our second quarter operating and financial performance throughout today's presentation, along with providing an update on many of the exciting growth initiatives underway.

Speaker Change: Slide 3 summarizes the financial performance in the second quarter. We achieved consolidated copper production of 29,000 tons and consolidated gold production of 59,000 ounces in the quarter.

Peter Kukielski: We achieved consolidated copper production of 29,000 tons and consolidated gold production of 59,000 ounces in the quarter. This was in line with our quarterly production cadence expectations for 2024 as we executed the plant stripping programs in both Peru and British Columbia this quarter. We are well positioned to achieve stronger production in the second half of 2024 in accordance with the mine production profile and have reaffirmed 2024 consolidated production guidance for all metals. As you are now halfway through the year, we can give a bit more color on where we expect to be within the ranges.

Speaker Change: This was in line with our quarterly production cadence expectations for 2024 as we executed the plant stripping programs in both Peru and British Columbia this quarter.

Speaker Change: We are well positioned to achieve stronger production in the second half of 2024 in accordance with the mine production profile and have reaffirmed 2024 consolidated production guidance for all metals.

Speaker Change: As we are now halfway through the year, we can give a bit more color on where we expect to be within the ranges.

Peter Kukielski: Consolidated copper production is likely to be below the mid-point of the guidance range, while consolidated gold production is expected to be above the mid-point of the guidance range. This is primarily a result of lower-than-expected grades and timing impacts from heavy rains in Peru earlier this year, as well as the transition period at Copper Mountain as we execute the stabilization plan. Manitoba's robust operating performance, primarily driven by continued outperformance at the New Britannia Mill and higher than expected grades, has led us to expect stronger gold production for 2024. Consolidated cash costs were $1.14 per pound of copper in the second quarter.

Speaker Change: Consolidated copper production is likely to be below the midpoint of the guidance range, while consolidated gold production is expected to be above the midpoint of the guidance range.

Speaker Change: This is primarily a result of lower-than-expected grades and timing impacts from heavy rains in Peru earlier this year, as well as the transition period at Copper Mountain as we execute the stabilization plans.

Speaker Change: Manitoba's robust operating performance primarily driven by continued out performance at the new Britannia mill and higher than expected grades has led us to expect stronger gold production for 2024.

Speaker Change: Consolidated cash costs were $1.14 per pound of copper in the second quarter.

Peter Kukielski: This continued strong cost performance has allowed us to improve our 2024 consolidated cash cost guidance to a range of 90 cents to $1.10 per pound. This compares to our previous guidance range of $1.05 to $1.25 per pound. The improved guidance reflects the stronger outlook expected in the second half of 2024 and the benefits of complementary gold exposure, and we have reaffirmed all other 2024 guidance metrics. Operating cash flow before change in non-cash working capital of $122 million was lower than the first quarter as a result of the planned lower production levels, partially offset by higher realized metal prices and continued strong cost performance.

Speaker Change: This continued strong cost performance has allowed us to improve our 2024 consolidated cash cost guidance to a range of $0.90 to $1.10 per pound. This compares to our previous guidance range of $1.05 to $1.25 per pound.

Speaker Change: The improved guidance reflects the stronger outlook expected in the second half of 2024 and the benefits of complementary gold exposure, and we have reaffirmed all other 2024 guidance metrics.

Speaker Change: Operating cash flow before change in non-cash working capital of $122 million was lower than the first quarter as a result of the planned lower production levels partially offset by higher realized metal prices and continued strong cost performance.

Peter Kukielski: This quarter was also impacted by copper sales volumes in Peru and zinc sales volumes in Manitoba due to timing of shipment. We also saw elevated taxes from mining taxes that are calculated based on taxable mining profits in each jurisdiction. Cash flows benefited from effective working capital management, which resulted in cash generated from operating activities of $139 million remaining unchanged from the first quarter. However, adjusted EBITDA of $145 million in the quarter was lower than the first quarter due to the same reasons affecting operating cash flow. However, trailing 12-month adjusted EBITDA was $824 million, a substantial increase from $407 million a year ago. However, adjusted earnings per share attributable to owners was nil in the second quarter.

Speaker Change: This quarter was also impacted by copper sales volumes in Peru and zinc sales volumes in Manitoba due to timing of shipments.

Speaker Change: We also saw elevated taxes from mining taxes that are calculated based on taxable mining profits in each jurisdiction.

Speaker Change: Cash flows benefited from effective working capital management, which resulted in cash generated from operating activities of $139 million remaining unchanged from the first quarter.

Speaker Change: Adjusted EBITDA of 145 million dollars in the quarter was lower than the first quarter due to the same reasons affecting operating cash flow.

Speaker Change: However, trailing 12-month adjusted EBITDA was $824 million, a substantial increase from $407 million a year ago.

Speaker Change: Adjusted earnings per share attributable to owners was nil in the second quarter.

Peter Kukielski: After deducting sustaining capital expenditures and cash lease and community payments, we generated approximately $30 million in free cash flow this quarter. This continues our quarterly trend of generating positive free cash flow, and over the last 12 months, we have generated nearly $400 million in free cash flow. Turning to slide 4, our strong free cash flow generation, combined with the proceeds of the successful equity offering we completed in May, have enabled us to further improve our balance sheet.

Speaker Change: After deducting sustaining capital expenditures and cash lease and community payments, we generated approximately $30 million in free cash flow this quarter.

Speaker Change: This continues our quarterly trend of generating positive free cash flow, and over the last 12 months we have generated nearly $400 million in free cash flow.

Speaker Change: Turning to slide 4, our strong free cash flow generation combined with the proceeds of the successful equity offering we completed in May have enabled us to further improve our balance sheet.

Peter Kukielski: During the quarter, we took several prudent measures to further progress against our deleveraging targets by paying down more than $150 million in debt and gold prepay liabilities. The oversubscribed and upsized $400 million equity offering added $386 million of net proceeds to our cash balance, in addition to broadening our investor base and bringing many cross-border long-term investors to our shareholder register. We used some of these funds to repay the full outstanding balance of $90 million on our senior secured credit facility.

Speaker Change: During the quarter, we took several prudent measures to further progress against our deleveraging targets by paying down more than $150 million in debt and gold prepay liabilities.

Speaker Change: The oversubscribed and upsized $400 million equity offering added $386 million of net proceeds to our cash balance, in addition to broadening our investor base and bringing many cross-border long-term investors to our shareholder register.

Speaker Change: We used some of these funds to repay the full outstanding balance of $90 million on our senior secured credit facilities.

Peter Kukielski: We also repurchased and retired $34 million with a senior unsecured note during the quarter. Additionally, we completed an additional three months of gold deliveries under the gold prepay agreement, reducing the liability by $24 million and progressing us towards fully repaying the gold prepay facility by the end of August. As a result of continued cash flow generation and these deleveraging efforts, we have reduced net debt by more than $550 million over the past 12 months.

Speaker Change: We also repurchased and retired $34 million with a senior unsecured note during the quarter.

Speaker Change: And we completed an additional three months of gold deliveries under the gold prepay agreement, reducing the liability by $24 million and progressing us towards fully repaying the gold prepay facility by the end of August.

Speaker Change: As a result of continued cash flow generation and these deleveraging efforts, we have reduced net debt by more than $550 million over the past 12 months, and as of June 30th, our net debt is $632 million.

Peter Kukielski: And as of June 30th, our net debt is $632 million. This brings our net debt to adjusted EBITDA ratio to 0.8 times compared to 1.6 times at the end of 2023 and 2.9 times a year ago. The improved balance sheet flexibility and accelerated debt reduction significantly advances our progress as part of our 3P plan for sanctioning the copper world and results in the successful achievement of the targeted 1.2 times net leverage ratio well ahead of schedule. Subsequent to the quarter, deleveraging efforts continued in July and August with an additional $48 million of open market purchases of our senior unsecured notes at a discount.

Speaker Change: This brings our net debt to adjusted EBITDA ratio to 0.8 times compared to 1.6 times at the end of 2023 and 2.9 times a year ago.

Speaker Change: The improved balance sheet flexibility and accelerated debt reduction significantly advances our progress as part of our 3P plan for sanctioning Copper World and results in the successful achievement of the targeted 1.2 times net leverage ratio well ahead of schedule.

Speaker Change: Subsequent to the quarter, deleveraging efforts continued in July and August with an additional $48 million of open market purchases of our senior unsecured notes at a discount.

Peter Kukielski: Moving to slide five, our Peru operations produced 19,000 tons of copper, 11,000 ounces of gold, 450,000 ounces of silver, and approximately 400 tons of molybdenum in the quarter. We continue to be on track to achieve our 2024 production guidance for all metals in Peru. Total ore mines in the second quarter increased by 38% compared to the prior quarter and was in line with the mine plan.

Speaker Change: Moving to slide 5, our Peru operations produced 19,000 tons of copper, 11,000 ounces of gold, 450,000 ounces of silver, and approximately 400 tons of molybdenum in the quarter.

Speaker Change: We continue to be on track to achieve our 2024 production guidance for all metals in Peru.

Speaker Change: Total ore mined in the second quarter increased by 38% compared to the prior quarter and was in line with the mine plan.

Peter Kukielski: As part of the mine plan to unlock the next mining phase in the Pampacancha Pit, the team is well advanced in executing the stripping program that will continue until September. It is intended to unlock higher copper and gold grades at the Pru operations in the fourth quarter of 2024. The Constantia Mill continues to perform well, averaging throughput of 87,000 tons per day in the first half of the year. However, all milled in the second quarter was slightly lower than the prior quarter due to the semi-annual mill maintenance shutdown.

Speaker Change: As part of the mine plan to unlock the next mining phase in the Pampacancha Pit, the team is well advanced in executing the stripping program that will continue until September. It is intended to unlock higher copper and gold grades at the crew operations in the fourth quarter of 2024.

Speaker Change: The Constancia mill continues to perform well, averaging throughput of 87,000 tons per day in the first half of the year. All mills in the second quarter were slightly lower than the prior quarter due to the semi-annual mill maintenance shutdown.

Peter Kukielski: All milled copper and gold grades decreased in the second quarter due to lower amounts of high-grade ore from Pampa Concha, in addition to lower grades from processing stockpiled ore. However, recoveries continue to be in line with our metallurgical model. Peru's cash costs were $1.78, up from the exceptionally low first quarter, primarily due to lower planned production, planned mill maintenance, and by-product credit.

Speaker Change: All milled included supplemental ore feed from stockpiles during the quarter as the team advances pit stripping activities.

Speaker Change: Milled copper and gold grades decreased in the second quarter due to lower amounts of high-grade ore from Pampa Concha, in addition to lower grades from processing stockpiled ore. Recoveries continue to be in line with our metallurgical models.

Speaker Change: Peru's cash costs were $1.78, up from the exceptionally low first quarter, primarily due to the lower planned production, planned mill maintenance, and by-product credits.

Peter Kukielski: Full-year cash costs are expected to be within the 2024 guidance range, reflecting a stronger production profile in the second half of the year. During the quarter, the Peruvian Ministry of Energy and Mines approved a regulatory change to allow mining companies in Peru to increase throughput by up to 10% above permitted levels. Based on this flexibility, we are evaluating the potential for increasing future production at Constanzia as early as 2026, which could partially offset the grade declines after the completion of mining at Pampacancha in late 2025.

Speaker Change: Full year cash costs are expected to be within the 2024 guidance range, reflecting a stronger production profile in the second half of the year.

Speaker Change: During the quarter, the Peruvian Ministry of Energy and Mines approved a regulatory change to allow mining companies in Peru to increase throughput by up to 10% above permitted levels.

Speaker Change: Based on this flexibility, we are evaluating the potential for increasing future production at Constancia as early as 2026, which could partially offset the grade declines after the completion of mining at Pampacancha in late 2025.

Peter Kukielski: Our exploration activities surrounding the Maria Reina and Caballito properties near Constantia continue to focus on permitting and drill preparation. As part of the drill permit process, Environmental Impact Assessment Applications, or EIAs, were submitted for the Maria Arena property in November 2023 and for the Caballito property in April 2024. The EIA for Maria Reina was approved by the government in June 2024, and the Caballito application continues to make progress through the permitting process.

Speaker Change: Our exploration activities surrounding the Maria Reina and Caballito properties near Constantia continue to focus on permitting and drill preparation.

Speaker Change: As part of the drill permitting process, Environmental Impact Assessment Applications, or EIAs, were submitted for the Maria Arena property in November 2023 and for the Caballito property in April 2024.

Speaker Change: The EIA for Maria Reina was approved by the government in June 2024, and the Caballito application continues to make progress through the permitting process.

Peter Kukielski: This represents one of several steps in the drill permitting process, which is expected to take approximately 12 months to complete after the EIAs are approved. Moving on to our Manitoba business, as summarized on slide 6, we saw another quarter of strong operating performance. The Snow Lake operations maintained steady production results while overcoming some challenges in the quarter, including forest fires and temporary production interruptions at the Laulau mine.

Speaker Change: This represents one of several steps in the drill permitting process which is expected to take approximately 12 months to complete after the EIAs are approved.

Speaker Change: Moving on to our Manitoba business, as summarized on slide six, we saw another quarter of strong operating performance.

Speaker Change: The Snow Lake operations maintained steady production results while overcoming some challenges in the quarter, including forest fires and temporary production interruptions at the Laulau mine.

Peter Kukielski: The Manitoba team's resilience and dedication ensured that the operations continued to function effectively and efficiently while achieving our quarterly production target. Second quarter production included 43,000 ounces of gold, 2,600 tons of copper, 8,000 tons of zinc, and 210,000 ounces of silver. As anticipated, quarterly production decreased compared to the exceptional results achieved in the first quarter, primarily due to a planned lower grade mining sequence in the quarter. However, we remain well on track to achieve our 2024 production guidance for all metals in Manitoba. Total ore mined in the second quarter was 5% lower than the first quarter, reflecting issues with the production hoist gearbox and electrical faults on the hoist drives, which caused a 10-day stoppage in hoisting ore.

Speaker Change: The Manitoba team's resilience and dedication ensured that the operations continued to function effectively and efficiently while achieving our quarterly production targets.

Speaker Change: Second quarter production included 43,000 ounces of gold, 2,600 tons of copper, 8,000 tons of zinc, and 210,000 ounces of silver.

Speaker Change: As anticipated, quarterly production decreased compared to the exceptional results achieved in the first quarter, primarily due to a planned lower-grade mining sequence in the quarter. We remain well on track to achieve our 2024 production guidance for all metals in Manitoba.

Speaker Change: Total ore mined in the second quarter was 5% lower than the first quarter, reflecting issues with the production hoist gearbox and electrical faults on the hoist drives which caused a 10-day stoppage in hoisting ore.

Peter Kukielski: The hoisting downtime was offset by value-added activities, including underground ore build-up close to the shaft, waste filling, increased maintenance, building long-haul inventory, and trucking ore to surface. Additionally, the team implemented stope design modifications that yielded positive results by improving mucking efficiency throughout the life cycle of the stope. The New Britannia Mill has been consistently exceeding performance expectations, achieving 1,650 tonnes per day in 2023, more than 1,850 tonnes per day in the first half of 2024, and a new monthly record of nearly 2,100 tonnes per day in June 2024.

Speaker Change: The hoisting downtime was offset by value-added activities, including underground ore build-up close to the shaft, waste filling, increased maintenance, building long-haul inventory, and trucking ore to surface.

Speaker Change: Additionally, the team implemented stope design modifications that yielded positive results by improving mucking efficiency throughout the life cycle of the stopes.

Speaker Change: The New Britannia Mill has been consistently exceeding performance expectations, achieving 1,650 tons per day in 2023.

Speaker Change: more than 1,850 tonnes per day in the first half of 2024 and a new monthly record of nearly 2,100 tonnes per day in June 2024.

Peter Kukielski: The ongoing efforts to increase throughput are aligned with our strategy to maximize gold production by directing more gold ore from Lalo to the New Britannia Mill for higher recovery. Recoveries of gold and copper were 90% and 94%, respectively, in the second quarter.

Speaker Change: The ongoing efforts to increase throughput are aligned with our strategy to maximize gold production by directing more gold ore from Lalo to the New Britannia Mill for higher recoveries.

Speaker Change: Recoveries of gold and copper were 90% and 94% respectively in the second quarter.

Peter Kukielski: The final payment under the gold prepay facility that financed the refurbishment of New Britannia is in August 2024, which will allow us to further enhance our exposure to higher gold production in Snow Lake. With approximately 2 million ounces of contained gold in current mineral reserve estimates and another 1.4 million ounces of contained gold in inferred resources, the New Britannia investment has unlocked significant value at Snow Lake. This could be further enhanced by the upside from regional exploration and the current strong gold price environment.

Speaker Change: The final payment under the gold prepay facility that financed the refurbishment of New Britannia is in August 2024, which will allow us to further enhance our exposure to higher gold production in Snow Lake.

Speaker Change: With approximately 2 million ounces of contained gold in current mineral reserve estimates and another 1.4 million ounces of contained gold in inferred resources, the New Britannia investment has unlocked significant value in Snow Lake.

Speaker Change: This could be further enhanced by regional exploration upside and the current strong gold price environment.

Peter Kukielski: In the first quarter of 2024, we received a permit to increase the production rate at New Britannia to 2,500 tonnes per day, which will provide the opportunity to process more lalo ore at the New Britannia mill and create additional processing capacity for potential new regional discoveries in Snow Lake. And to close the Manitoba slide, gold cash costs were $771 per ounce in the second quarter, and full year gold cash costs are expected to remain within the 2024 guidance range.

Speaker Change: In the first quarter of 2024, we received a permit to increase the production rate at New Britannia to 2,500 tons per day, which will provide the opportunity to process more lalo ore at the New Britannia mill and create additional processing capacity for potential new regional discoveries in Snow Lake.

Speaker Change: And to close off the Manitoba slide, gold cash costs were $771 per ounce in the second quarter and full-year gold cash costs are expected to remain within the 2024 guidance range.

Peter Kukielski: In British Columbia, we continue to focus on advancing our operational stabilization plans at our copper mountain mines. As seen on slide 7, BC produced 6.7 thousand tons of copper, 4.5 thousand ounces of gold, and 77 thousand ounces of silver. Copper production was slightly lower than in the first quarter, primarily a result of lower head grades from the processing of stockpiled ore to feed the mill, while mining activities are focused on executing the planned stripping program.

Speaker Change: In British Columbia, we continue to focus on advancing our operational stabilization plans at our Copper Mountain mine.

Speaker Change: As seen on slide 7, BC produced 6.7 thousand tons of copper, 4.5 thousand ounces of gold, and 77 thousand ounces of silver.

Speaker Change: Copper production was slightly lower than the first quarter, primarily a result of lower head grades from the processing of stockpiled ore to feed the mill, while mining activities are focused on executing the planned stripping program.

Peter Kukielski: Gold production was consistent with the first quarter. We have reaffirmed our 2024 production guidance ranges for all metals in British Columbia. The mill processed a total of 3.2 million tons of ore during the quarter, with mill availability averaging 94% while maintaining a stable throughput rate. Copper recoveries in the quarter were 82.3%, consistent with the strong levels achieved in the first quarter, despite lower grades, as the operations improved the regrind circuit constraint and implemented the flotation operational strategy improvement. Cash costs were $2.67 per pound of copper, 23% lower than the prior quarter, primarily due to lower mining costs as the prior quarter had high ore re-handling costs.

Speaker Change: Gold production was consistent with the first quarter. We have reaffirmed our 2024 production guidance ranges for all metals in British Columbia.

Speaker Change: The mill processed a total of 3.2 million tons of ore during the quarter, with mill availability averaging 94% while maintaining a stable throughput rate.

Speaker Change: Copper recoveries in the quarter were 82.3%, consistent with the strong levels achieved in the first quarter, despite lower grades, as the operations improved the regrind circuit constraint and implemented the flotation operational strategy improvements.

Speaker Change: Cash costs were $2.67 per pound of copper, 23% lower than the prior quarter, primarily due to lower mining costs as the prior quarter had high ore rehandling costs.

Peter Kukielski: We anticipate costs to continue to decrease over time as we continue to implement our stabilization and optimization initiatives. Foliar cash costs are expected to be within the guidance range. Slide 8 highlights the improvements we have seen at Cochrane Mountain through the continuation of our stabilization efforts since acquisition. The key elements of our stabilization plans include executing a campaign of accelerated stripping to access higher grades and implementing several plant improvement initiatives to increase mill throughput and recoveries.

Speaker Change: We anticipate costs to continue to decrease over time as we continue to implement our stabilization and optimization initiatives.

Speaker Change: Foliar cash costs are expected to be within the guidance range.

Speaker Change: Slide 8 highlights the improvements we have seen at Copper Mountain through the continuation of our stabilization efforts since acquisition.

Operator: Good morning, ladies and gentlemen. Thank you for standing by. Welcome to the HudBay Minerals Inc, quarter, 2024 results conference call. At this time, all participants are in lesson only mode. Following the presentation, we'll conduct a question and answer session. To join the question queue, you may start then one on your telephone keypad. Shooter need assistance during the conference call. You may signal an operator by press and start then zero. I would like to remind everyone that the conference call is being recorded to date of the 13th, 2024 at 11 a.m. Eastern time.

Speaker Change: The key elements of our stabilization plans include executing a campaign of accelerated stripping to access higher grades and implementing several plant improvement initiatives to increase mill throughput and recoveries.

Peter Kukielski: Year-to-date performance has achieved the highest mill availability and highest copper recoveries in the last decade. As a result, we are on track to realize the three-year annual operating efficiencies target of $20 million. And we have already achieved and exceeded the targeted $10 million in annualized corporate synergies earlier this year.

Speaker Change: Year-to-date performance has achieved the highest mill availability and highest copper recoveries in the last decade.

Speaker Change: As a result, we are on track to realize the three-year annual operating efficiencies target of $20 million, and we already achieved and exceeded the targeted $10 million in annualized corporate synergies earlier this year.

Peter Kukielski: HudBay's three-year accelerated stripping campaign commenced in early 2024 to mitigate the substantially reduced stripping that occurred over the four years prior to our acquisition. Total material move continued to ramp up in the quarter as a result of effective usage of the mining fleet as part of the fleet production ramp-up plan. We have successfully re-mobilized all 28 haul trucks and added five additional haul trucks this year to execute the accelerated stripping campaign at a lower cost than the contractor mining costs assumed in the technical report.

Speaker Change: Tide Bay's three-year accelerated stripping campaign commenced in early 2024 to mitigate the substantially reduced stripping that occurred over the four years prior to our acquisition.

Candace Brule: I will now turn the conference over to Candace Brule, Vice President, Investor Relations. Please go ahead. Thank you operator.

Speaker Change: Total material move continued to ramp up in the quarter as a result of effective usage of the mining fleet as part of the fleet production ramp-up plan.

Candace Brule: Good morning and welcome to HudBay's 2024 second 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 section of our website and we encourage you to refer to it during this call.

Speaker Change: We have successfully remobilized all 28 haul trucks and added 5 additional haul trucks this year to execute the accelerated stripping campaign at a lower cost than the contractor mining costs assumed in the technical report.

Candace Brule: Our presenter today is Peter Kukielski, HudBay's president and chief executive officer. A company in Peter for the Q&A portion of the call will be Eugene Lee, our chief financial officer and Andre Loseon, our chief operating officer.

Peter Kukielski: We have also deployed an additional shovel and drill. With these in place, total material moved is expected to continue to increase quarter over quarter as per the mine plan, which will further enhance operating efficiencies and lower unit operating costs. Additionally, we are implementing plant improvement initiatives that mirror the successful processes at our other operations, specifically Constancio. Initiatives that began earlier in the year are progressing on target, including reprogramming the mill expert system, installation of advanced semi-autogenous grinding control instrumentation, redesign of the SAG liner package, and updated operational procedures intended to remove magnetite from the pebble stream. The mill throughput performance has been limited by reduced reliability of the secondary crushing circuit reaching average daily mill throughput of 35.5 thousand tons per day in the second quarter.

Speaker Change: We have also deployed an additional shovel and drill. With these in place, total material moved is expected to continue to increase quarter over quarter as per the mine plan, which will further enhance operating efficiencies and lower unit operating costs.

Peter Kukielski: 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 Cedar Plus and Edgar. These documents are also available on our website. As a reminder all amounts discussed on today's call are in US dollars unless otherwise noted and now I'll pass the call over to Peter Kukielski.

Speaker Change: Additionally, we are implementing plant improvement initiatives that mirror the successful processes at our other operations, specifically Constancia.

Speaker Change: Initiatives that began earlier in the year are progressing on target, including reprogramming the Mill Expert System, installation of advanced semi-autogenous grinding control instrumentation,

Speaker Change: redesign of the SAG liner package, and updated operational procedures intended to remove magnetite from the pebble stream.

Speaker Change: The mill throughput performance has been limited by reduced reliability of the secondary crushing circuit, reaching average daily mill throughput of 35.5 thousand tons per day in the second quarter.

Peter Kukielski: Thank you Candace. Good morning everyone and thank you for joining us. In the second quarter, our operations continued to execute on plan which has positioned us well to achieve our 2024 annual production guidance. The operations also demonstrated strong cost control which together with our exposure to higher gold byproduct credits has allowed us to improve our 2024 consolidated cash cost guidance. Our strong and diversified operating base continues to generate free cash flow from efficient performance in Peru and Manitoba.

Peter Kukielski: During the quarter, several initiatives were advanced to address these issues and other identified constraints and improve throughput to targeted levels. The benefits of the operational stabilization improvements are expected to continue to be realized throughout 2024 and result in stronger performance at Copper Mountain in the second half of the year. We are also accelerating engineering studies to de-bottleneck and increase the nominal plant capacity to 50,000 tons per day earlier than was originally contemplated in the technical report.

Speaker Change: During the quarter, several initiatives were advanced to address these issues and other identified constraints and improve throughput to targeted levels.

Speaker Change: The benefits of the operational stabilization improvements are expected to continue to be realized throughout 2024 and result in stronger performance at Copper Mountain in the second half of the year.

Peter Kukielski: And in British Columbia, we continue to execute on our stabilization initiatives and plan stripping program to unlock higher copper grades. We have transformed our balance sheet and are now in the best position we have ever been into advance our many growth initiatives which will unlock significant upside potentially in our pipeline and further enhance our copper and gold exposure. We will go into more detail on our second quarter operating and financial performance throughout today's presentation along with providing an update on many of the exciting growth initiatives underway.

Speaker Change: We are also accelerating engineering studies to de-bottleneck and increase the nominal plant capacity to 50,000 tons per day earlier than was originally contemplated in the technical report.

Peter Kukielski: Turning to slide 9, Copper World is the next greenfield copper development project in our growth pipeline, offering significant copper exposure and highly attractive project economics. 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 one.

Speaker Change: Turning to slide 9, Copper World is the next greenfield copper development project in our growth pipeline, offering significant copper exposure and highly attractive project economics.

Speaker Change: 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 one.

Peter Kukielski: There is roughly 60% of total contained copper remaining in the measured and indicated resources, excluding reserves, which provides significant upside potential for Phase II expansion and mine life extension beyond the initial 20 years. The Phase 1 Prefeasibility Study released in September of 2023 demonstrated enhanced project economics, an optimized flowsheet, and a simplified permitting process with an extended mine life to 20 years. The project generates an NPV of $1.1 billion and an after-tax internal rate of return of 19% at a copper price of $3.75 per pound.

Peter Kukielski: Slide three summarizes the financial performance in the second quarter. We achieved consolidated copper production of 29,000 tons and consolidated gold production of 59,000 ounces in the quarter. This was in line with our quarterly production cadence expectations for 2024 as we executed the planned stripping programs in both Peru and British Columbia We are well positioned to achieve stronger production in the second half of 2024, in accordance with the Mind Production Profile, and have reaffirmed 2024 Consolidated Production Guidance for All Metals.

Speaker Change: There is roughly 60% of total contained copper remaining in the measured and indicated resources excluding reserves, which provides significant upside potential for Phase II expansion and mine life extension beyond the initial 20 years.

Speaker Change: The Phase 1 Prefeasibility Study released in September of 2023 demonstrated enhanced project economics, an optimized flow sheet and a simplified permitting process with an extended mine life to 20 years.

Speaker Change: The project generates an NPV of $1.1 billion and an after-tax internal rate of return of 19% at a profit price of $3.75 per pound.

Peter Kukielski: As you are now halfway through the year, we can give a bit more colour on where we expect to be within the ranges. Consolidated copper production is likely to be below the midpoint of the guidance range, while Consolidated Gold Production is expected to be above the midpoint of the guidance range. This is primarily a result of lower than expected grades and timing impacts from heavy rains in Peru earlier this year, as well as the transition period at Coffin Mountain as we execute the stabilization plans.

Peter Kukielski: 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 released in late 2022, as summarized on slide 10. The first key state permit required for Copper World, the Mined Land Reclamation Plan, was initially approved by the Arizona State Mine Inspector in October 2021 and was subsequently amended and approved to reflect a larger private land project footprint in June 2022.

Speaker Change: 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 released in late 2022 as summarized on slide 10.

Speaker Change: The first key state permit required for Copper World, the Mined Land Reclamation Plan, was initially approved by the Arizona State Mine Inspector in October 2021, and was subsequently amended and approved to reflect a larger private land project footprint in June 2022.

Peter Kukielski: Anitoba's robust operating performance, primarily driven by continued out performance at the new Britannia mill and higher than expected grades, has led us to expect stronger gold production for 2024. Consolidated cash costs were a dollar and 14 cents per pound of copper in the second quarter. This continued strong cost performance has allowed us to improve our 2024 Consolidated Cash Cost Guidance to a range of 90 cents to $1.10 per pound. This compares to our previous guidance range of $1.5 to $1.25 per pound.

Peter Kukielski: In late 2022, we submitted applications for an aquifer protection permit and an air quality permit to the Arizona Department of Environmental Quality. The public comment period for the Aquifer Protection Permit was completed in the second quarter of 2024, while the public comment period for the Air Quality Permit commenced in July. HudBay continues to expect to receive these two outstanding state permits in the second half of 2024.

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: The public comment period for the Aquifer Protection Permit was completed in the second quarter of 2024, while the public comment period for the Air Quality Permit commenced in July.

Speaker Change: Hudbay continues to expect to receive these two outstanding state permits in the second half of 2024.

Peter Kukielski: We anticipate launching the formal joint venture process after we secure our permits. We continue to see strong initial interest from potential joint venture partners as many industry participants are focused on increasing copper exposure. As securing copper supply becomes a growing global concern, Copper World will be a key contributor to the domestic U.S. supply chain with our intention to produce made-in-America copper cathodes.

Peter Kukielski: The improved guidance reflects the stronger outlook expected in the second half of 2024 and the benefits of complementary gold exposure, and we have reaffirmed all other 2024 guidance metrics. Operating cash load before change in non-cash working capital of $122 million was lower than the first quarter, as a result of the planned lower production levels partially offset by a higher realized metal prices and continued strong cost performance. This quarter was also impacted by copper sales volumes in Peru and zinc sales volumes in Manitoba due to timing of shipments.

Speaker Change: We anticipate launching the formal joint venture process after we secure our permits. We continue to see strong initial interest from potential joint venture partners as many industry participants are focused on increasing copper exposure.

Speaker Change: As securing copper supply becomes a growing global concern, Copper World will be a key contributor to the domestic US supply chain with our intention to produce Made in America copper cathode.

Peter Kukielski: Slide 11 highlights some of the recent exploration results in Manitoba. In 2024, we embarked on the largest annual snow lake exploration program in the company's history in the region with the goal of extending known mineralization near the Lalor deposit to further extend mine life, as well as to find a new anchor deposit within trucking distance of the snow lake processing infrastructure. The winter portion of the program included the largest ground electromagnetic survey in HudBay's history.

Speaker Change: Slide 11 highlights some of the recent exploration results in Manitoba.

Speaker Change: In 2024, we embarked on the largest annual snow lake exploration program in the company's history in the region, with the goal of extending known mineralization near the Lalor deposit to further extend mine life, as well as to find a new anchor deposit within tracking distance of the snow lake processing infrastructure.

Peter Kukielski: We also saw elevated taxes from mining taxes that are calculated based on taxable mining profits in each jurisdiction. Cash flow benefited from effective working capital management, which resulted in cash generated from operating activities of $139 million remaining unchanged from the first quarter. Adjusted EBITDA of $145 million in the quarter was lower than the first quarter due to the same reasons affecting operating cash flow. However, trailing 12 months adjusted EBITDA was $824 million, a substantial increase from $407 million a year ago.

Speaker Change: The winter portion of the program included the largest ground electromagnetic survey in HUD Bay's history.

Peter Kukielski: Last year, we acquired an expanded land package, including the Cook Lake claims and Rockcliff properties, and most of the newly acquired claims had been untested by modern deep geophysics. During the second quarter, we completed a surface EM survey covering 25 square kilometers in the Cook Lake area north of Lalor. These surface EM surveys use cutting-edge techniques that enable our team to detect conductive bodies at depths of over 1,000 meters below the surface.

Speaker Change: Last year we acquired an expanded land package including the Cook Lake claims and Rockcliffe properties and most of the newly acquired claims had been untested by modern deep geophysics.

Speaker Change: During the second quarter we completed a surface EM survey covering 25 square kilometers in the Cook Lake area to the north of Lalor. These surface EM surveys use cutting-edge techniques that enable our team to detect conductive bodies at depths of over 1,000 meters below surface.

Peter Kukielski: Adjusted earnings per share attributable to owners was no in the second quarter. After deducting sustaining capital expenditures and cash lease and community payments, we generated approximately $30 million in free cash flow this quarter. This continues our quarterly trend of generating positive free cash flow, and over the last 12 months, we have generated nearly $400 million in free cash flow. Turning to slide 4, our strong free cash flow generation, combined with the proceeds of the successful equity offering we completed in May, have enabled us to further improve our balance sheet.

Peter Kukielski: The new EM methodology is unique to HudBay and will lead to an advanced understanding of the mineralization at depths previously undetectable. This geophysics program resulted in the identification of a number of anomalies and prospective targets across the Snow Lake tenements, which are currently being tested. They are located near the former Reed and Anderson mines and in the vicinity of the Burr and Rail deposits that were acquired as part of the Rockcliffe transaction.

Speaker Change: The new EM methodology is unique to HudBay and will lead to an advanced understanding of the mineralization at depths previously undetectable.

Speaker Change: This geophysics program resulted in the identification of a number of anomalies and prospective targets across the Snow Lake Tenements which are currently being tested.

Speaker Change: They are located near the former Reed and Anderson mines and in the vicinity of the burr and rail deposits that were acquired as part of the Rockcliffe transaction.

Peter Kukielski: In 2025, we plan to conduct a similar-sized geophysical program to continue our mapping of the consolidated land package in the region. With the 2024 Summer Drill Program well underway, the team currently has six drill rigs turning in Snow Lake, ramping up to eight drill rigs in August. This summer program is testing the new geophysical targets and completing follow-up drilling at potential regional satellite deposits and at the new Lalor Northwest Discovery, which I will discuss on the next slide.

Peter Kukielski: During the quarter, we took several prudent measures to further progress against our deleveraging targets by paying down more than $150 million in debt and gold prepay liabilities. The oversubscribed and upsized $400 million equity offering added $386 million of net proceeds to our cash balance in addition to broadening our investor base and bringing many cross-border long-term investors to our shareholder register. We used some of these funds to repay the full outstanding balance of $90 million on our senior secured credit facilities.

Speaker Change: In 2025, we plan to conduct a similar-sized geophysical program to continue our mapping of the consolidated land package in the region.

Speaker Change: With the 2024 Summer Drill Program well underway, the team currently has six drill rigs turning in Snow Lake, ramping up to eight drill rigs in August.

Speaker Change: The summer program is testing the new geophysical targets and completing follow-up drilling at potential regional satellite deposits and at the new Lalaur Northwest Discovery, which I will discuss on the next slide. Results from the summer drill program are expected in late 2024.

Peter Kukielski: Results from the summer drill program are expected in late 2024. Additionally, drilling of a very strong deep anomaly at Cook Lake North will be tested in the coming weeks as part of the next phase of our 2024 exploration program. Moving to slide 12, the 2024 Winter Drill Program also included follow-up drilling at the Laurel Northwest Target. In the second quarter, we received positive assay results confirming the discovery of two mineralized zones located within 400 meters of the existing Laloor underground infrastructure.

Speaker Change: Additionally, drilling of a very strong deep anomaly at Cook Lake North will be tested in the coming weeks as part of the next phase of our 2024 exploration program.

Peter Kukielski: We also repurchased and retired $34 million with a senior unsecured note during the quarter and we completed an additional three months of gold deliveries under the gold prepay agreement reducing the liability by $24 million and progressing us towards fully repaying the gold prepay facility by the end of August. As a result of continued cash flow generation and these deleveraging efforts, we have reduced net debt by more than $550 million over the past 12 months and as of June 30th, our net debt is $632 million.

Speaker Change: Moving to slide 12, the 2024 Winter Drill Program also included follow-up drilling at the Laurel Northwest Target.

Speaker Change: In the second quarter, we received positive assay results confirming the discovery of two mineralized zones located within 400 meters of the existing Lalor underground infrastructure.

Peter Kukielski: The discovery hole in 2023 intersected two mineralized zones, including 4.8 meters at 2.97% copper, 2.92 grams per tonne gold, and 80.3 grams per tonne of silver. In 2024, a follow-up drill intersected the same two mineralized zones, including 9.0 meters of 2.88% copper, 6.27 grams per ton of gold, and 88.9 grams per ton of silver. These promising results justify additional follow-up drilling that is being completed as part of the Summer 2024 Exploration Program.

Speaker Change: The discovery hole in 2023 intersected two mineralized zones, including 4.8 meters at 2.97% copper, 2.92 grams per tonne gold, and 80.3 grams per tonne of silver.

Peter Kukielski: This brings our net debt to adjusted ever-duration to 0.8 times compared to 1.6 times at the end of 2023 and 2.9 times a year ago. The improved balance sheet flexibility and accelerated debt reduction significantly advances our progress as part of our 3P plan for sanctioning copper world and results in the successful achievement of the targeted 1.2 times net leverage ratio well ahead of schedule. Subsequent to the quarter, deleveraging efforts continued in July and August with an additional $48 million of open market purchases of our senior unsecured notes at a discount.

Speaker Change: In 2024, a follow-up hole intersected the same two mineralized zones, including 9.0 meters of 2.88% copper, 6.27 grams per ton of gold, and 88.9 grams per ton of silver.

Speaker Change: These promising results justify additional follow-up drilling that is being completed as part of the Summer 2024 Exploration Program. We have two drill rigs turning at Lalor Northwest and assays are expected to be received by the end of the year.

Peter Kukielski: We have two drill rigs turning at Lalo Northwest, and assays are expected to be received by the end of the year. We will use the results to determine the potential size of Larlor NW and the potential for future underground exploration drift development from Larlor.

Speaker Change: We will use the result to determine the potential size of Lalor NW and the potential for future underground exploration drift development from Lalor.

Peter Kukielski: Moving to side 5, our Peru operations produced 19,000 tons of copper, 11,000 ounces of gold, 450,000 ounces of silver and approximately 400 tons of libs in them in the quarter. We continue to be on track to achieve our 2024 production guidance for all metals in Peru. Total oil mines in the second quarter increased by 38% compared to the prior quarter and was in line with the mine plan. As part of the mine plan to unlock the next mining phase in the Pumpercansha pit, the team is well advanced in executing the stripping program that will continue until September.

Peter Kukielski: Laurel Northwest has the potential to add near-term production growth at Laurel, extend mine life, and create additional value from the Snow Lake operation. In Manitoba, we are also continuing to advance the access drift at the 1901 deposit to enable infill drilling aimed at converting the inferred mineral resources in the gold lenses to mineral reserves, as shown on slide 13. In the first quarter, we commenced the development of the smaller profile, lower cost drift from the existing Lalo ramp.

Speaker Change: Laror Northwest has the potential to add near-term production growth at Laror, extend mine life and create additional value from the Snow Lake operations.

Speaker Change: In Manitoba we are also continuing to advance the access drift at the 1901 deposit to enable infill drilling aimed at converting the inferred mineral resources in the gold lenses to mineral reserves, which is shown on slide 13.

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

Peter Kukielski: The 1901 drift is proceeding on plan and is expected to reach the mineralization in early 2025. We then expect to conduct definition drilling intended to confirm the optimal mining method, evaluate the ore body geometry and continuity, and convert inferred mineral resources in the gold lenses to mineral reserves. Pending positive results from the drilling programs, the plan is to initiate a haulage drift and other related mining infrastructure in 2025 and 2026 in anticipation of full production from the 1901 deposit in 2027. Additionally, at FlinFlon, we continue to advance tailings reprocessing studies to evaluate the potential to repurpose the existing FlinFlon concentrator to reprocess tailings.

Peter Kukielski: It is intended to unlock higher copper and gold grades at the Peru operations in the fourth quarter of 2024. The constancy of mill continues to perform well, averaging through put of 87,000 times per day in the first half of the year. All milled in the second quarter was slightly lower than the prior quarter due to the semi-annual mill maintenance shutdown. All milled included supplemental ore feed from stockpiles during the quarter as the team advances pit stripping activities.

Speaker Change: The 1901 drift is proceeding on plan and is expected to reach the mineralization in early 2025.

Speaker Change: We then expect to conduct definition drilling intended to confirm the optimal mining method, evaluate the ore body geometry and continuity, and convert inferred mineral resources in the gold lenses to mineral reserves.

Speaker Change: Pending positive results from the drilling programs, the plan is to initiate a haulage drift and other related mining infrastructure in 2025 and 2026 in anticipation of full production from the 1901 deposit in 2027.

Peter Kukielski: Milled copper and gold grades decreased in the second quarter due to lower amounts of high grade ore from Pumpercansha in addition to lower grades from processing stockpiled ore. Recovery is continued to be in line with our metallurgical model. Peru's cash costs were $1.78 up from the exceptionally low first quarter, primarily due to the lower planned production, planned mill maintenance and by-product credits. Fulia cash costs are expected to be within the 2024 guidance range, reflecting a stronger production profile in the second half of the year.

Speaker Change: Additionally, in flinflon, we continue to advance tailings reprocessing studies to evaluate the potential to repurpose the existing flinflon concentrator to reprocess tailings.

Peter Kukielski: The tailings reprocessing opportunity is expected to recover critical minerals and precious metals while creating environmental and social benefits for the region. During the second quarter, we received results from the initial confirmatory drill program in the section of the tailings facility that was utilized by the zinc plant. The results confirm grades of precious metals and critical minerals previously estimated from historical zinc plant records.

Speaker Change: The tailings reprocessing opportunity is expected to recover critical minerals and precious metals while creating environmental and social benefits for the region.

Speaker Change: During the second quarter, we received results from the initial confirmatory drill program in the section of the tailings facility that was utilized by the zinc plant.

Peter Kukielski: During the quarter, the Peruvian Ministry of Energy and Minds approved a regulatory change to allow mining companies in Peru to increase throughput by up to 10% above permitted levels. Based on this flexibility, we are evaluating the potential for increasing future production at Constantia as early as 2026, which could partially offset the great declines after the completion of mining at Pampa Country in late 2025. Our exploration activities surrounding the Maria Reina and Cabellito properties near Constantia continue to focus on permitting and drill preparation.

Speaker Change: The results confirm grades of precious metals and critical minerals previously estimated from historical zinc plant records.

Peter Kukielski: Our early economic study evaluating zinc plant tailings reprocessing has shown promising results that warrant further engineering work in the second half of 2024. We are also planning a similar study with respect to mill tailings. Concluding on slide 14, HudBay's leading copper development and exploration pipeline and low-cost stable operating platform in Tier 1 jurisdictions offers investors meaningful copper exposure, complementary gold exposure, and strong near-term free cash flow generation. We produce 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. 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 demands from global decarbonization initiatives and growing copper demand.

Speaker Change: Our early economic study evaluating zinc plant tailings reprocessing has shown promising results that warrant further engineering work in the second half of 2024. We are also planning a similar study with respect to the mill tailings.

Speaker Change: Concluding on slide 14, HUD Bay's leading copper development and exploration pipeline and low-cost stable operating platform in Tier 1 jurisdictions offers investors meaningful copper exposure, complementary gold exposure, and strong near-term free cash flow generation.

Peter Kukielski: As part of the drill permitting process, environmental impact assessment applications or EIAs were submitted for the Maria Reina property in November 2023 and for the Cabellito property in April 2024. The EIA for Maria Reina was approved by the government in June 2024 and the Cabellito application continues to make progress through the permitting process. This represents one of several steps in the drill permitting process, which is expected to take approximately 12 months to complete after the EIAs are approved.

Speaker Change: We produce 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: 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 demands from global decarbonization initiatives and growing copper demands.

Speaker Change: HudBay's resilient operating platform offers significant upside potential for further value creation at higher copper and gold prices.

Peter Kukielski: Moving on to our Manitoba business, as summarized on slide 6, we saw another quarter of strong operating performance. The snow lake operations maintain steady production results, while overcoming some challenges in the quarter, including forest fires and temporary production interruptions at the law will remain. The Manitoba team's resilience and dedication ensured that the operations continued to function effectively and efficiently while achieving our quarterly production targets. Second quarter production included 43,000 ounces of gold, 2.6,000 tons of copper, 8,000 tons of zinc, and 210,000 ounces of silver.

Operator: HudBay's resilient operating platform offers significant upside potential for further value creation at higher copper and gold prices. And with that, we are pleased to take your questions. Thank you. Ladies and gentlemen, we will now begin the question and answer session. To join the question queue, you may press star then one on your telephone keypad.

Speaker Change: [inaudible]

Speaker Change: Thank you.

Speaker Change: Ladies and gentlemen, we will now begin the question and answer session. To join the question queue, you may press star then 1 on your telephone keypad. You'll hear a tone acknowledging your request.

Operator: You'll hear a tone acknowledging your request. If you're using a speakerphone, please pick up your handset before pressing any keys. Should we ask your questions, please press star then two. We'll pause for a moment as callers join the queue. The first question comes from Orest Wowkodaw with Scotiabank. Please go ahead. Hi, good morning.

Speaker Change: If you're using a speakerphone, please pick up your handset before pressing any keys.

Speaker Change: Should we draw your questions, please press star then 2. We will pause for a moment as callers join the queue.

Peter Kukielski: As anticipated, quarterly production decreased compared to the exceptional results achieved in the first quarter, primarily due to a planned lower grade mining sequence in the quarter. We remain well on track to achieve our 2024 production guidance for all metals in Manitoba. Total all-mind in the second quarter was 5% lower than the first quarter, reflecting issues with the production hoist gearbox and electrical faults on the hoist drives which caused the 10-day stoppage in hoisting all.

Orest Wowkodaw: A couple of questions if I could. Firstly, your copper production for the year is obviously tracking below the midpoint of the guidance, just based on the first half production. What kind of grade are you expecting in Peru in the second half of the year to make that up? Morning, Orest. It's Peter.

Speaker Change: The first question comes from Oris Walkadau with Scotiabank. Please go ahead.

Oris Walkadau: Hi, good morning. A couple of questions, if I could. Firstly, your copper production for the year is obviously tracking below the midpoint of the guidance, just based on the first half production. What kind of grade are you expecting in Peru in the second half of the year to make that up?

Peter Kukielski: Thanks very much for the question. I think, as we've previously said, the production cadence is such that it will be lower in the first half, especially in Q2, given the stripping that we're doing at Pampa Concha, and we're doing some continued stripping at Pampa Concha in the second quarter. So overall, we expect the contribution of Pampa Concha to be roughly one third to two thirds of Constantia pit production over the course of the year, and the grades would match that.

Oris Walkadau: Good morning Horace, it's Peter. Thanks very much for the question.

Peter Kukielski: The hoisting downtime was offset by value-added activities, including underground or build-up close to the shaft, waste filling, increased maintenance, building long-haul inventory, and trucking all to surface. Additionally, the team implemented stope design modifications that yielded positive results by improving mucking efficiency throughout the life cycle of the stopes. The new Botanium mill has been consistently exceeding performance expectations, achieving 1,650 tons per day in 2023, more than 1,850 tons per day in the first half of 2024, and the new monthly record of nearly 2,100 tons per day in June 2024.

Speaker Change: I think, as we've previously said, the production cadence is such that it will be lower in the first half.

Oris Walkadau: especially in Q2, given the stripping that we're doing at Pampacancha and we're doing some continued stripping at Pampacancha in the second quarter.

Oris Walkadau: So, overall, we expect the year to the contribution of Pampacancha to be roughly one-third to two-thirds of Constantia pit production over the course of the year, and the grades would match that. Andre, do you have any...

André Lauzon: more detailed view with respect to what the average grade would be.

André Lauzon: It varies, it varies by quarter in terms of, you know, towards the end of Q3 we're really going to start to see it increase and then into into Q4, but in that

André Lauzon: Andre, do you have any more detailed view with respect to what the average grade would be? It varies, it varies by quarter in terms of, You know, towards the end of Q3, we're really going to start to see it increase, and then into Q4, but in that... 0.4-ish to 0.55, 0.57 range or something in that over the two, but increasing definitely towards the end of Q4. Orest, what we've done this quarter and last is we've really opened up Papa Concha to be able to have exposure Sorry, just to clarify, are you saying that the Q3 average grade could be sort of similar to Q2 within, I guess, sets up a pretty monster Q4? Is that what you said?

Peter Kukielski: Beyond going efforts to increase throughput are aligned with our strategy to maximize gold production by directing more gold or from Lalo to the new Britannia mill for higher recoveries. Recovery of gold and copper were 90% and 94% respectively in a second quarter. The final payment under the gold prepay facility that finance the refurbishment of new Britannia is in August 2024, which will allow us to further enhance our exposure to higher gold production in Snow Lake, with approximately 2 million ounces of contained gold in current mineral reserve estimates and another 1.4 million ounces of contained gold in inferred resources.

André Lauzon: 0.4-ish to 0.55, 0.57 range or something in that over the 2, but increasing definitely towards into Q4.

Speaker Change: What we've done over this quarter and last is we've really opened up Papacantia to be able to have exposure to some other benches that maybe might have been into 2025 and we're looking at those as potential.

Speaker Change: has possibilities to bring in in Q4 to really finish off the year nice.

Speaker Change: Sorry, just to clarify, are you saying that the Q3 average grade could be sort of similar to Q2 within, I guess, sets up a pretty monster Q4? Is that what you said?

André Lauzon: It's a little bit higher, it's a little bit higher in Q3, closer to..., closer to 0.35 to 0.4-ish or something in that range, right? But it's definitely Q4 is where it really comes in. So we're in a real strip mode right now, Orest.

Peter Kukielski: The new Britannia investment has unlocked significant value in Snow Lake. This could be further enhanced by regional exploration upside and the current strong gold price environment. In the first quarter of 2024, we received a permit to increase the production rate at New Britannia to 2,500 tons per day, which will provide the opportunity to process more Lalo or at the new Britannia mill and create additional processing capacity for potential new regional discoveries in Snow Lake.

Speaker Change: It's a little bit higher. It's a little bit higher in Q3, closer to...

Speaker Change: [inaudible]

André Lauzon: In the latter part of Q3 is when we'll start seeing the grades really start to come up. Okay, perfect. And just on Maria Reina, you, If I understand you got the EIS permit to drill, does that mean you can now begin drilling immediately, or are there other steps required before you can start drilling? Orest, there are other steps that are required before we can start drilling, so you know, I think the EIA is certainly the first step, but typically, it would take about another 12 months after the award of the EIA to be able to actually start drilling.

Speaker Change: In the latter part of Q3 is when we'll start seeing the grades really starting to come in.

Speaker Change: Okay perfect and just on Maria Reyna, if I understand you got the EIS permit to do drilling, does that mean you can now begin drilling immediately or are there other steps required before you can start drilling?

Peter Kukielski: And to close off the Manitoba slide, gold cash costs were $771 per ounce in the second quarter and full year gold cash costs are expected to remain within the 2024 guidance range. In British Columbia, we continued to focus on advancing our operational stabilization plans at our copper mountain mine. As seen on slide 7, BC produced 6.7 thousand tons of copper, 4.5 thousand ounces of gold, and 77 thousand ounces of silver. Copper production was slightly lower than the first quarter, primarily a result of lower head grades from the processing of stockpile ore to feed the mill while mining activities are focused on executing the plan stripping program.

Speaker Change: There are other steps that are required before we can start drilling. I think the EIA is certainly the first step, but typically what it would take is about another 12 months after award of the EIA to be able to actually start drilling.

Speaker Change: Thank you.

Speaker Change: You're welcome.

Peter Kukielski: Thank you. The next question comes from Ralph Profiti with H Capital. Please go ahead. Thanks, operator. Good morning.

Speaker Change: Dr. Kukielski, Dr. Kukielski

Speaker Change: The next question comes from Rob Buffetti with H-Capital. Please go ahead.

Ralph Profiti: It sounds like the next big capital allocation decision in Manitoba is going to be... New Britt Expansion to 2,500. Talk a little bit about what that looks like in terms of timing and how much of that is dependent on things like exploration success, finding that anchor deposit, perhaps bringing 1901 into it. What's that short-term allocation on the decision? Thanks, Ralph.

Speaker Change: It sounds like the next big capital allocation decision in Manitoba is going to be the new BRIT expansion to 2,500 tons a day. Can you talk a little bit about that?

Peter Kukielski: Gold production was consistent with the first quarter. We have reaffirmed our 2024 production guidance ranges for all metals in British Columbia. The mill processed a total of 3.2 million tons of ore during the quarter with mill availability averaging 94 percent while maintaining a stable throughput rate. Copper recoveries in the quarter were 82.3 percent consistent with the strong levels achieved in the first quarter despite lower grades as the operations improved the reground circuit constraint and implemented the flotation operational strategy improvements.

Rob Buffetti: Sort of what that looks like in terms of timing and and how much of that is dependent on things like exploration success finding that anchor deposit perhaps bringing 1901 into it and what What's what's that short-term outlook on the decision-making process there, please?

Peter Kukielski: Thanks for the question. Look, I, you know, I don't, and I wouldn't characterize the new BRIT expansion as a major capital allocation decision. We continue to investigate and implement high-return throughput enhancements that require low capital outlay. And I think that this is the continuation of our efforts to achieve operational excellence that we've seen over the last couple of years. So, you know, progressively, we'll ratchet up the production. I think we, you know, in the last month, we exceeded 2000 tons a day.

Rob Buffetti: Thanks Ralph, thanks for the question. Look I you know I don't I wouldn't characterize

Speaker Change: New BRIT expansion is a major capital allocation decision.

Peter Kukielski: Cash costs were $2.67 per pound of copper, 23 percent lower than the prior quarter, primarily due to lower mining costs as the prior quarter had high ore rehandling costs. We anticipate costs to continue to decrease over time as we continue to implement our stabilization and optimization initiatives. Folier cash costs are expected to be within the guidance range. By date highlights the improvements we have seen at Copper Mountain through the continuation of our stabilization efforts since acquisition.

Speaker Change: We continue to investigate and implement high return throughput enhancements that require low capital outlay.

Speaker Change: And I think that the continuation of our efforts to achieve operational excellence that we've seen over the last couple of years. So, you know, progressively, we'll ratchet up the production. I think we, you know, in the last month, we exceeded 2,000 tons a day.

Peter Kukielski: But Andre, maybe you could provide a little bit of light on exactly what the capital, the nature of the capital decisions is, but I don't think that there's it's not a it's not substantial at all. Yeah, that's correct.

Speaker Change: But Andre, maybe you could provide a little bit of light on exactly what the capital, the nature of the capital decisions is. But I don't think that there is, it's not a, it's.

André Lauzon: They're all very, very small capital projects for subtle improvements, you know, give you some examples of, you know, we've been seeing some, some wear on our side eye destruction tanks that similar to what we were doing, you [inaudible] What we see are these, we're running at very high rates through the mill, and then you have some of these outages, and so subtle things like changing the liners on those tanks are very minor, some minor pump upgrades, some closures around thickeners where we see delays and that they're all very very subtle improvements because on a daily basis we are running, Quite... Quite.., at quite high levels, you know, above, you know, you can see peak rates up to 2400 tons per day, as it is right now. And so, as Peter says, it's, it's mostly through process improvement, and they're all sub, sub like 10 million. It's not in total league.

Peter Kukielski: The key elements of our stabilization plans include executing the campaign of accelerated stripping to access higher grades and implementing several plant improvement initiatives to increase mill throughput and recoveries. Yesterday's performance has achieved the highest mill availability and highest copper recoveries in the last decade. As a result, we are on track to realize the three-year annual operating efficiencies target of $20 million and we already achieved and exceeded the targeted $10 million in annualized corporate synergies earlier this year.

André Lauzon: Not substantial at all. Yeah, that's correct. They're all very very small capital projects for

Speaker Change: For subtle improvements, I'll give you some examples. We've been seeing some wear on our cyanide destruction tanks. Similar to what we were doing, you put that tailings product through our paste plant.

Speaker Change: We were running at very high rates through the mill. Then you have some of these outages. So subtle things like changing the liners on those tanks, some minor pump upgrades.

Peter Kukielski: HudBay's three-year accelerated stripping campaign commenced in early 2024 to mitigate the substantially reduced stripping that occurred over the four years prior to our acquisition. Total material move continued to ramp up in the quarter as a result of effective usage of the mining fleet as part of the fleet production ramp up plan. We have successfully remobilized all 28 hole trucks and added five additional hole trucks this year to execute the accelerated stripping campaign at a lower cost than the contractor mining costs assumed in a technical report.

Speaker Change: and some enclosures around thickeners where we see delays. They're all very subtle improvements because on a daily basis we are running...

Speaker Change: Quite, quite

Speaker Change: at quite high levels, you know, both. You know, both.

Speaker Change: You know, you can see peak rates up to 2,400 tons per day as it is right now, and so, as Peter says, it's mostly through process improvement, and they're all sub, like, $10 million. It's not, in total, like, they're not very big expenditures.

Peter Kukielski: We have also deployed an additional shovel and drill. With these in place, total material moved is expected to continue to increase quarter over quarter as per the mine plan, which will further enhance operating efficiencies and reduce the cost. Additionally, we are implementing plant improvement initiatives that mirror the successful processes at our other operations, specifically Constantia. Initiatives that began earlier in the year are progressing on target, including reprogramming the mill expert system, installation of advanced semiotogeness grinding control instrumentation, redesign of the SAG line a package and updated operational procedures intended to remove magnetism.

André Lauzon: They're not, they're not very big. It's been a, Thanks for that. That's helpful. In British Columbia, just wondering if you guys have set... Targets or KPIs on where you want to be at year-end with regard to throughput and recovery. Just kind of looking to benchmark some of the stripping work that and how the cadence looks going into 2020. Sure. So, I think that there are two parts to the question. It's a good question.

Speaker Change: Okay, okay. Thanks for that. That's helpful in British Columbia. Just wondering if you guys have set

Speaker Change: targets or KPIs on where you want to be at year-end with regards to throughput and recoveries. Just kind of looking to benchmark some of the stripping work that you're doing and how the cadence looks going into 2025.

André Lauzon: So, on the stripping, we're running pretty much right now at a, call it a flat cost. We finally, we've ramped up our workforce. We've done the purchase and lease of the equipment, and the refurbishment of drills and shovels. And so, in the month of August right now, we're basically at our full complement with fleet and people. And so over the past few months, we have seen some of the incurring of those costs, although the movement hasn't been quite there.

Speaker Change: Sure, so I think that there's two parts to the question. It's a good question. So on the stripping, we're running pretty much right now at a

Speaker Change: Call it a flat cost. We finally, we've ramped up our workforce. We've done the purchase and lease of the equipment, the refurbishment of drills and shovels, and so we're just, in the month of August right now, we're

Peter Kukielski: The mill throughput performance has been limited by reduced reliability of the secondary crushing circuit, reaching average daily mill throughput of 35.5 thousand times per day in the second quarter. During the quarter several initiatives were advanced to address these issues and other identified constraints and improve throughput to targeted levels. The benefits of the operational stabilization improvements are expected to continue to be realized throughout 2024 and result in stronger performance at Copper Mountain in the second half of the year.

Speaker Change: basically at our full complement with fleet and people and so over the past few months

Speaker Change: We are seeing some of the incurring of those costs.

André Lauzon: And so like what we're looking at from where we were coming out of Q2 to where we are now is in the Q2 range, we're probably 200,000 tons per day. We're ramping up in August up to somewhere around 250,000 tons per day and continuing out through the rest of the year. So the cost of material movement is increasing, but other than consumables like fuel and some explosives, most of that cost is fixed.

Speaker Change: Although the movement hasn't been quite there. So what we're looking at from where we were coming out of Q2 to where we are there now is in the Q2 range we were about probably 200,000 tons per day. We're ramping up in August up to somewhere around 250,000 tons per day and continuing out through the rest of the year.

Peter Kukielski: We are also accelerating engineering studies to debattleneck and increase the nominal plant capacity to 50,000 times per day earlier than was originally contemplated in the technical report. Turning to slide 9, Copperworld is the next greenfield copper development project in our growth pipeline, offering significant copper exposure and highly attractive project economics. Copperworld 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 1.

Speaker Change: So the material movement is increasing, but other than consumables like fuel and some explosives...

André Lauzon: So our unit cost per material move will be going down as we go forward. So not a major increase in capital per se, it's just using the equipment and the investments we had with the truck drivers and seats, and up, and trained.

Speaker Change: Most of that cost is fixed, so our unit cost per material move will be going down as we go forward. So, not a major increase in capital per se, it's just...

Peter Kukielski: There is roughly 60% of total contained copper remaining in the measured and indicated resources excluding reserves, which provides significant upside potential for phase 2 expansion and mine life extension beyond the initial 20 years. The phase 1 pre-feasibility study released in September of 2023 demonstrated enhanced project economics, an optimized flow sheet and a simplified permitting process with an extended mine life to 20 years. The project generates an NPV of $1.1 billion and an after-tax internal rate of return of 19% at a cost price of $3.75 per pound.

André Lauzon: In terms of the mill throughput, we're really proud of the work of the team. They've done an excellent job. Mill availability is really high. I think it's in the 94 or so percent range at the moment, which is getting very close to Costantia, which is world class.

Speaker Change: using the equipment and the investments we had with the truck drivers and seats and up and trained.

Speaker Change: in terms of the mill throughput.

Speaker Change: So really proud of the work of the team. They've done an excellent job. Mill availability is really high.

Speaker Change: It is in the 94% didn't range for technology . And this is world class, so the mill is running really well. You are American and can do this for family and for the economy. For the

André Lauzon: And so the mill is running really, really well. And what we're dealing with is the feed side. So it's really stabilizing. We're averaging 35,000 to 40,000 tons per day, and that's heavily driven by the feed size that goes to the mill, which goes through a secondary crusher.

Speaker Change: What we're dealing with is the feed size, so it's really stabilizing

Speaker Change: We're averaging 35,000 to 40,000 tons per day, and that's heavily driven by the

André Lauzon: And so by the end of the year, with the projects that we have in place, I think there's one or two more tweaks. I think that the team is planning around new liners coming in in November, some ball sizing changes, and some improvements to call it the AIA. They call it a mill slicer to optimize how the sags work in the grinding circuit.

Speaker Change: the feed size that goes to the mill, which goes through a secondary crusher.

Speaker Change: By the end of the year, with the projects that we have in place, I think there's one or two more tweaks I think that the team is planning around new liners coming in in November, some ball sizing changes, and some improvements to the

Peter Kukielski: As we progress towards making a sanctioning decision, we will continue to be prudent with our financing plans for Copperworld by remaining focused on meeting all of the prerequisites outlined in our 3P plan that we released in late 2022 as summarized on slide 10. The first key state permit required for Copperworld, the Mind Land Reclamation Plan, was initially approved by the Arizona State Mind Inspector in October 2021 and was subsequently amended and approved to reflect a large private land project footprint in June 2022.

Speaker Change: called it the AIA, they call it a mill slicer and to optimize how the sags work in the grinding circuit and so the combination of those we think will probably be around 41,000 tons per day and something in that range you know with all those going in towards the end of the year

André Lauzon: And so the combination of those we think will probably be around 41,000 tons per day and something in that range with all those going in towards the end of the year. And then what we're working on right now is a series of capital projects. So to get us to that next level, I think in the NDNA, we talk about going to 50,000 tons a day much sooner than we were anticipating as the teams are proceeding right now at the feasibility level on capital projects that we hope to bring to the board later this year for approval to really make that step change.

Speaker Change: And then what we're working on right now is a series of capital projects. So to get us to that next level, I think in the MD&A, we talk about going to 50,000 tons a day much sooner than we were anticipating as the teams are proceeding right now at feasibility level.

Peter Kukielski: In late 2022, we submitted the applications for an aquifer protection permit and an air quality permit to the Arizona Department of Environmental Quality. The public comment period for the aquifer protection permit was completed in the second quarter of 2024, while the public comment period for the air quality permit commenced in July. Had they continued to expect to receive these two outstanding state permits in the second half of 2024? We anticipate launching the formal joint venture process after we secure our permits.

Speaker Change: Two capital projects that we hope to bring towards the board later this year for for approval to to really make that step change and that'll that'll be the

André Lauzon: And that'll be the, call it the milestone change for Copper Mountain Mine. The costs have really been reducing, recoveries are doing really well, it's running really well, and we just need that little uptick to, that'll bring it to, it'll really drive profitability. Great. Good progress.

Speaker Change: call it the milestone change for Copper Mountain Mine. The costs have really been reducing recoveries are doing really well. It's it's it's running really well, and we just need that little uptick to that that'll bring it to it'll really drive the profitability.

Peter Kukielski: We continue to see strong initial interest from potential joint venture partners as many industry participants are focused on increasing copper exposure. As securing copper supply becomes a growing global concern, Copperworld will be a key contributor to the domestic U.S, supply chain with our intention to produce made-in-America copper cathode. By the 11 highlights, some of the recent exploration results in Manitoba. In 2024, we embarked on the largest annual snow lake exploration program in the company's history in the region with the goal of extending known mineralization near the law law deposit to further extend mine life as well as to find the new anchor deposit within trucking distance of the snow lake processing infrastructure.

Speaker Change: That's great. Good progress. Thanks, Andre and Peter.

André Lauzon: Thanks, Andre and Peter. The next question comes from Lawson Winder with BOA Security. Please go ahead.

Speaker Change: The next question comes from Lawson Linder with BOA Security. Please go ahead.

Lawson Winder: Hi, thanks very much, operator. Thank you for the call today, gentlemen, and for the update. Could I ask about M&A and ask you to describe how you might view your current posture on potential acquisitions and whether HudBay is currently actively evaluating opportunities? Thanks, Lawson.

Speaker Change: Hi, thanks very much, Operator. Thank you for the call today, gentlemen, and for the update.

Lawson Linder: Could I ask on M&A and ask you to describe how you might view your current posture on potential acquisitions and whether HUD Bay is currently actively evaluating opportunities?

Peter Kukielski: Look, I, you know, I think that, as I've previously said, I think that HudBay has an extremely skilled team when it comes to highly efficient operations and world-class development projects, and we feel we can create value from both operating and development staged assets. So our strategy hasn't changed, and we'll continue to be disciplined as we evaluate assets that fit our stringent strategic and financial criteria. And as you know, copper assets are scarce, and we would only pursue opportunities that are accretive and that create value for our shareholders. But that said, I think that, again, you're aware that those assets are extremely scarce.

Speaker Change: Thanks, Lawson. Look, I think that, as I've previously said, I think that Hudbay has an extremely skilled team when it comes to highly efficient operations and world-class development projects.

Peter Kukielski: The winter portion of the program included the largest ground electromagnetic survey in HUD Bay's history. Last year, we acquired an expanded land package including the Cook Lake claims and rock cliff properties, and most of the newly acquired claims had been untested by modern deep geophysics. During the second quarter, we completed a surface EM survey covering 25 square kilometers in the Cook Lake area to the north of law law. These surface EM surveys use cutting-edge techniques that enable our team to detect conductive bodies at depths of over 1,000 meters below surface.

Speaker Change: and we feel we can create value from both operating and development stage assets. So, our strategy hasn't changed and we'll continue to be disciplined as we evaluate assets that fit our stringent and strategic and financial criteria.

Speaker Change: And as you know, copper assets are scarce and we would only pursue opportunities that are accretive and that create value for our shareholders. But that said, I think that, again, you're aware that those assets are extremely scarce.

Peter Kukielski: And it took us a long time to sort of land on Copper Mountain. We continue to scour the marketplace for assets, and we haven't landed on anything right now that meets our criteria, but we continue to seek those opportunities. And is it the case that your criteria remains Western countries, and has there been any change to the criteria at this point, particularly in light of how much more substantial HudBay is in terms of a copper producer?

Speaker Change: and it took us a long time to sort of land on Copper Mountain. We continue to scour the marketplace for assets and we haven't landed on anything right now that meets our criteria but we continue to seek those opportunities.

Peter Kukielski: The new EM methodology is unique to HUD Bay and will lead to an advanced understanding of the mineralization at depths previously undetectable. This geophysics program resulted in the identification of a number of anomalies and prospective targets across the snow lake tenements which are currently being tested. They are located near the former Reed and Anderson mines and in the vicinity of the Burr and Rail deposits that were required as part of the rock cliff transact.

Speaker Change: Is it the case that your criteria remains Western countries and has there been any change to the criteria at this point, particularly in light of how much more substantial HUD Bay is in terms of a copper producer?

Peter Kukielski: Yeah, we still sort of, we focused on tier one mining jurisdictions very much, you know, so the Americas in the majority, but in the past, we have actually looked, looked to Europe and other other, Investment Creators Okay, thanks. Thanks for that. And then could I also ask, just in follow-up to the public comment period for the air quality, or sorry, the aquifer permit, I think, is the one that was completed in Q2. Was there anything in those public comments that?

Speaker Change: Yeah we still sort of we focused on tier one mining jurisdictions very much you know so so the Americas in majority but you know in the past we have actually looked looked to Europe and others other investment grade jurisdictions

Peter Kukielski: In 2025, we plan to conduct a similar-sized geophysical program to continue our mapping of the consolidated land package in the region With a 2024 summer drill program well underway, the team currently has six drill rigs turning in snow lake, ramping up to eight drill rigs in August. This is a discovery which I will discuss in the next slide. Results from the summer drill program are expected in late 2024. Additionally, drilling of a very strong, deep anomaly at Cook Lake North will be tested in the coming weeks as part of the next phase of our 2024 exploration program.

Speaker Change: Okay, thanks for that. And then could I also ask, just in follow-up to the public comment period for the air quality, or sorry, the aquifer permit I think is the one that completed in Q2, was there anything in those public comments that...

Lawson Winder: of the Social License Outlook for Copper World. Were there any sort of strong arguments against the project, or would you describe the comments as fairly supportive? In general, it's fair to say that the comments were fairly supportive.

Speaker Change: might have updated your view on kind of the social license outlook for Copperworld. Were there any sort of strong arguments against the project, or would you describe the comments as fairly supportive?

Peter Kukielski: Moving to slide 12, the 2024 winter drill program also included follow-up drilling at the LARO Northwest target. In the second quarter, we received positive assay results confirming the discovery of two mineralized zones located within 400 meters of the existing LARO underground infrastructure. The discovery hole in 2023 intersected two mineralized zones including 4.8 meters at 2.9% copper, 2.92 grams for ton gold and 80.3 grams per ton of silver. In 2024, a follow-up hole intersected the same two mineralized zones including 9.0 meters of 2.88% copper, 6.27 grams per ton gold, and 88.9 grams per ton of silver.

Peter Kukielski: In fact, there were a massive number of comments that were received in support of the project, which, of course, were received by... The Arizona Department of Environmental Quality. As always, they'll be positive and negative, but our view is that the process is moving inexorably towards approval of that permit during the course of the remainder of the year. Okay, great. Thank you so much for the update today.

Speaker Change: Hello everyone, welcome to Candace Brule, Peter Kukielski.

Peter Kukielski: In general, it's fair to say that the comments were fairly supportive. In fact, there were a massive number of comments that were received in support of the project, which of course were received by...

Speaker Change: the Arizona Department of Environmental Quality.

Speaker Change: As always, they'll be positive and negative, but our view is that the process, we're sort of moving inexorably towards approval of that permit during the course of the remainder of the year.

Speaker Change: Okay, great. Thank you so much for the update today.

Operator: Once again, if you have a question, please press star, then 1. The next question comes from Dalton Baretto with Kennecott. Please, go ahead.

Speaker Change: Thank you.

Speaker Change: Once again, if you have a question please press star then 1. The next question comes from Dalton Barreto with Kennecott. Please go ahead.

Dalton Baretto: Good morning, Peter and team. Maybe I'll start by staying on the COPPA rules permits here. Peter, you know, with the election coming up in November, I realized these permits are state level permits. But do you see any sort of delays in the process at all?

Dalton Barreto: Thanks. Good morning, Peter and team. Maybe I'll start by staying on the COPPA rule permits here. Peter, you know with the election coming up in November I realize these permits are state-level permits, but do you see any sort of delays to the process at all?

Peter Kukielski: These promising results justify additional follow-up drilling that is being completed as part of the summer 2024 exploration program. We have two drill rigs turning at LARO Northwest and assays are expected to be received by the end of the year. We will use the result to determine the potential size of LARO Northwest and the potential for future underground exploration drift development from LARO. LARO Northwest has the potential to add near-term production growth at LARO, extend mine life and create additional value from the snow-length operations.

Peter Kukielski: I'm not at this point Dalton, the reason why I say that, I mean, we are very, very confident that we will secure the permits by the end of the year, subject to, you know, Perhaps. What I want to say is that if the Arizona Department of Environmental Quality has questions that need to be resolved and they require a little bit of time in which to do that, of course, we would cooperate with them.

Peter Kukielski: Not at this point, Dalton. The reason why I say that, I mean, we are very, very confident that we will secure the permits by the end of the year, subject to, you know,

Dalton Barreto: Perhaps.

Dalton Barreto: [inaudible]

Speaker Change: What I want to say is that if the Arizona Department of Environmental Quality has questions that need to be resolved and they require a little bit of time in which to do that, of course we would cooperate with them.

Peter Kukielski: In Manitoba, we are also continuing to advance the access drift at the 1901 deposit to enable the infill drilling aimed at converting the inferred mineral resources in the gold lenses to mineral reserves, which is shown on slide 13. In the first quarter, we commenced the development of the smaller profile, lower cost drift from the existing LARO ramp. The 1901 drift is proceeding on plan and is expected to reach the mineralization in early 2025.

Peter Kukielski: But we have a strong commitment by the ADEQ to complete their work by the end of the year. I don't think that this permitting process relies one bit on the political landscape in the United States at the moment.

Speaker Change: But we have a strong commitment by the ADEQ to complete their work by the end of the year. I don't think...

Speaker Change: that

Speaker Change: This permitting process relies one bit on the political landscape in the United States at the moment.

Peter Kukielski: It is very, very much a state-driven process. We are deeply engaged with the ADEQ, and it's a very, very constructive relationship. So we expect that those permits will be granted by the end of the year. That said, if there was a request by the state that would bolster the robustness of those permits, then of course, we would collaborate with them. But there are no signs that that will be the case. We're pretty confident we'll get them.

Speaker Change: It is very, very much a state-driven process.

Peter Kukielski: We then expect to conduct definition drilling intended to confirm the optimal mining method, evaluate the all-body geometry and continuity, and convert inferred mineral resources in the gold lenses to mineral reserves. Pending positive results in the drilling programs, the plan is to initiate a haulage drift and other related mining infrastructure in 2025 and 2026 in anticipation of full production from the 1901 deposit in 2027. Additionally, in flimflon, we continue to advance tailings reprocessing studies to evaluate the potential to repurpose the existing flimflon concentrator to reprocess tailings.

Speaker Change: We are deeply engaged with the ADEQ.

Speaker Change: and Peter Kukielski.

Dalton Baretto: Thanks, Peter. And then as a related question, and I think I asked you this in the last call in a very different copper price environment and copper sentiment environment, but are you still planning on waiting for the permits to execute on the kick-off of the JV process? Or have you loosened on that stance?

Speaker Change: As a related question, I think I asked you this in the last call in a very different copper price environment and a copper sentiment environment, but are you still planning on waiting for the permits to kick off the JV process or have you loosened on that stance?

Peter Kukielski: The tailings reprocessing opportunity is expected to recover critical minerals and precious metals while creating environmental and social benefits for the region During the second quarter we received results from the initial confirmatory drill program in the section of the tailings facility that was utilized by the zinc plant The results confirmed grades of precious metals and critical minerals previously estimated from historical zinc plant records Our early economic study evaluating zinc plant tailings The energy processing has shown promising results that warrant further engineering work in the second half of 2024 We are also planning a similar study with respect to the mill tailings Concluding on site 14, HudBay's leading copper developments in exploration pipeline and low-cost stable operating platform in tier 1 jurisdictions offers investors meaningful copper exposure, complementary gold exposure and strong near term free cash flow generation We produce 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 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 demands from global decarbonization initiatives and growing copper demands HudBay's resilient operating platform offers significant upside potential for further value creation at higher copper and gold prices And with that we are pleased to take your questions Thank you Ladies and gentlemen, we will now begin the question and answer session Should you join the question queue you may press start in one on your telephone keypad You'll hear tone and knowledge in your request If you're using a speaker phone, please pick up your hands and people present any keys Should we draw your questions, please press start in two We'll pause for a moment as colors join the queue The first question comes from our welcome out with Scotia Banks, please go ahead Hi, good morning. A couple of questions if I could.

Peter Kukielski: You know, it's actually a really interesting question, Dalton. I think that we are in a much better financial condition. In the context of Eugene's 3P plan, we have met the prerequisites for that 3P plan from a financial perspective. We still do expect to initiate a minority JV partner process after we receive the state-level permits, and we expect that process to be robust based on the track record that we have and based on the initial indications that we have from potential partners with whom we're engaging.

Speaker Change: You know, it's actually a really interesting question, Dalton. I think that we are in a much better financial condition. You know, in the context of Eugene's 3P plan, we have met the prerequisites for that 3P plan from a financial perspective.

Speaker Change: We still do expect to initiate a minority JV partner process after we receive the state-level permits.

Speaker Change: and we expect that process to be robust based on the track record that we have and based on the initial indications that we have from potential partners with whom we're engaging.

Peter Kukielski: So, very much, there's no change in plan. We think that it's the right thing to do, and we continue to look for a long-term partner who's bullish on the copper price and looking to grow their copper exposure, and all signs point to that being very robust.

Speaker Change: So, very much, there's no change in plan. We think that it's the right thing to do and, you know, we continue to look for a long-term partner who's bullish on the copper price and looking to grow their copper exposure and all signs point towards that being very robust.

Peter Kukielski: Great, thanks, Peter. And then maybe I can ask you one sort of big picture question, if I may. You know, you're mining Pampa Concha now, you're generating free cash flow, the Peruvian political issues are well behind you, you've cleaned up the balance sheet. And yet, on my numbers, you still trade at a fairly substantial discount to peers.

Speaker Change: Great, thanks Peter. And then maybe I can ask you one sort of big picture question, if I may. You know, you're mining Papa Concha now, you're generating free cash flow, the Peru sort of political issues are well behind you, you've cleaned up the balance sheet, and yet on my numbers you still trade at a fairly substantial discount to peers. And I'm just wondering if I could ask, you know, a

Dalton Baretto: And I'm just wondering if I could ask, you know, A, why do you guys think that is? And, number two, how does that play into your strategic thinking going forward? Thanks. Thanks, Dalton. Look, I think that a big piece of that is investors in the market are waiting for the outcomes of the copper world permitting process. I think that's number one. I think there's a little bit of, you know, let's wait and see with respect to Maria Reina and Caballito, and we're moving sort of inexorably towards receipt of those permits as well. But as you know, as was the case with Pampacancha, permitting takes time in Peru.

Speaker Change: Why do you guys think that is? And number two, how does that play into your strategic thinking going forward? Thanks.

Speaker Change: Thanks Dalton. Look I think that a big piece of that is investors in the market are waiting for the outcomes of the copper world permitting process.

Speaker Change: I think that's number one. I think there's a little bit of a, you know, let's wait and see with respect to Maria Reyna and Caballito. And we're moving sort of inexorably towards receipt of those permits as well. But as you know, as was the case with Pampacancha, permitting takes time in Peru.

Peter Kukielski: And so, I think those things build into some of the valuation delta. But from a financial or balance sheet perspective, from a jurisdictional risk perspective, I think all of that has gone away. Perhaps, Eugene, you might comment further if you have other questions. Well, I think we are encouraged by the investor interest that has been in HudBay through this, particularly this year, and our oversubscribed equity offering. You know, valuations have improved, and they see the opportunity to get exposure to our increasing cash flows and the catalyst that Peter has outlined, and we look forward to making them a lot of money.

Speaker Change: And so I think those things build into some of the valuation delta, but from a financial or balance sheet perspective, from a jurisdictional risk perspective, I think all of that has gone away.

Speaker Change: Thank you.

Peter Kukielski: Firstly, your copper production for the years obviously tracking up below the mid-point of the guidance just based on the first half production. What kind of greater you expecting in Peru in the second half of the year in terms to make that up? Morning, Horus. Peter, thanks very much for the question. I think as we've previously said, the production cadence is such that it will be lower in the first half, especially in queue two, given the stripping that we're doing at pump a concha And we're doing some continuous stripping at pump a concha in the second quarter So overall, we expect the year to the contribution of pump a concha to be roughly one third to two thirds of constancy of production over the course of a year.

Speaker Change: Perhaps, Eugene, you might comment further if you have other thoughts.

Eugene Lee: I think we are encouraged by the investor interest that has been in Hud Bay particularly through this year and our over-subscribed equity offering and valuations improved and they see the opportunity to get exposure to our increasing cash flows and the catalyst that Peter has outlined and we look forward to making them a lot of money.

Operator: Great, thanks for your thoughts, guys. This concludes the question and answer session. I would like to turn the conference back over to Candace Brule for any closing remarks. Thank you, Operator, and thank you, everyone. This concludes today's conference call. You may disconnect your line. Thank you for participating and have a pleasant day.

Speaker Change: Great. Thanks for your thoughts, guys.

Speaker Change: Welcome

Speaker Change: This concludes the question and answer session. I would like to turn the conference back over to Kenneth Brule for any closing remarks.

Speaker Change: Thank you operator and thank you everyone for joining us today if you have any further questions feel free to reach out to our investor relations team thanks and have a great day

Peter Kukielski: And the grades would match that. Andre, do you have any more detailed view with respect to what the average grade would be? It varies by quarter. In terms of, you know, towards the end of queue three, we're really going to start to see the increase and then into queue four. But in that... 0.4ish to 0.55, 0.57 range or something and that over the two. But increasing definitely towards into Q4. Orest, what we've done is over this quarter and last is we've really opened up Papa Kahncha to be able to have exposure to some other benches that maybe might have been into 2025 when we're looking at those as as possibilities to bring in and in Q4 to really finish off to your nice.

Speaker Change: This concludes today's conference call. You may disconnect your line. Thank you for participating and have a pleasant day.

Peter Kukielski: Sorry, just to clarify, are you saying that the Q3 average grade could be sort of similar to Q2 with then I guess sets up a pretty monster Q4? Is that, is that what you said? It's a little bit higher, it's a little bit higher in Q3 closer to 0.35 to 0.4ish or something in that range, right? In that range. But it's definitely Q4's where it really comes in. So we're in a real strip mode right now, Orest, and the latter part of Q3 is almost starting to seem the grades really starting to come in.

Peter Kukielski: Okay, perfect. And just on Maria Reina, if I understand you got the EIS permit to do drilling, does that mean you can now begin drilling immediately or are there other steps required before you can start drilling? Orest, there are other steps that are required before we can start drilling. So, you know, I think the EIA is certainly the first step, but typically what it would take is about another 12 months after it would be EIA to be able to actually start drilling. Thank you.

Speaker Change: Thank you for watching, and I'll see you in the next video!

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Orest Wowkodaw: The next question comes from Ross, the PD with H-Capital. Please go ahead. Thanks operator, good morning, Peter. It sounds like the next big capital allocation decision in Manitoba is going to be the new breadth expansion to 2,500 tons a day. Can you talk a little bit about sort of what that looks like in terms of timing and how much of that is dependent on things like exploration success, finding that anchor deposit, perhaps bringing 1901 into it. And what's that short-term outlook on the decision making process there, please? Thanks, Ross. Thanks for the question.

Speaker Change: 1711. 1712. 1713. 1181. 1714. 1718. 1790 1790 1791 1792 1793 1793 1794 1795

Peter Kukielski: Look, you know, I wouldn't characterize new breadth expansion as a major capital allocation decision. We continue to investigate and implement higher return throughput enhancements that require low capital outlay. And I think that the continuation of our efforts to achieve operational excellence that we've seen over the last couple of years. So, you know, progressively we'll ratchet up the production. I think we, you know, in the last month we exceeded 2,000 tons a day.

Speaker Change: [music]

Peter Kukielski: But, Andre, maybe you could provide a little bit of light on exactly what the capital, the nature of the capital decisions is, but I don't think that it's not substantial at all. Yeah, no, that's correct. They're all very, very small capital projects for subtle improvements. You know, give you some examples of, you know, we've been seeing some wear on our Sinai destruction tanks that, similar to what we were doing, you know, as we put that tailings product through our paste plate and, you know, We're running at very high rates through the mill and then you have some of these outages.

Peter Kukielski: So subtle things like changing the liners on those tanks, some minor pump upgrades, some closures on thickness or seed delays. And they're all very, very subtle improvements because on a daily basis, we are running quite, quite high levels above, you can see P grades up to 24 hundred tons per day as it is right now. And so as Peter says, it's mostly through process improvement and they're all sub like $10 million. It's not in total, they're not very big expenditures. Okay, okay, thanks for that. That's helpful.

Speaker Change: [music]

André Lauzon: In British Columbia, just wondering if you guys have set targets or KPIs on where you want to be at your end with regards to throughput and recoveries. Just kind of looking to benchmark some of the stripping work that you're doing and how the cadence looks going into 2025. Sure, so I think that there's two parts to the question, it's a good question. So on the stripping, we're running pretty much right now at a flat cost.

André Lauzon: We finally, we've ramped up our workforce. We've done the purchase of the refurbishment of drills and shovels. And so we're just in the month of August right now, we're basically at our full complement with fleet and people. And so over the past few months, we were seeing some of the incurring of those costs, although the movement hasn't been quite there. And so like what we're looking at from where we were coming out of Q2 to where we are there.

André Lauzon: Now is in the Q2 range, we were both probably 200,000 times per day. We're ramping up in August up to somewhere around 250,000 times per day and continuing out through through the rest of the year. So the material movement is increasing, but other than consumables like fuel and and some explosives, most of that cost is fixed. So so our unit cost for material move will be going down as we go forward.

André Lauzon: So not a major increase in capital per se is just using the equipment and the investments we have with the seats, the truck drivers and seats and up and trained in terms of the milk throughput. So you know, we're really proud of the work of the team. They've done an excellent job like mill availability is really high. You know, it's I think it's in the 94% range at the moment, which is getting very close to 35 to 40,000 tons per day.

André Lauzon: And that's heavily driven by the the feed size that goes to the milk, which goes through a secondary pressure. And and so by the end of the year with the projects that we have in place, I think there's there's one or two more tweaks. I think that the team is planning around new liners coming in in November. Some ball sizing changes and and some improvements to the call it the AI. It's a they call it a mill slicer and to optimize the how the sags work with the and the grinding circuit.

André Lauzon: And so the combination of those we think will probably be around 41,000 tons per day and something in that range, you know, with all those going in towards the end of the year. And then what we're working on right now is a series of capital projects.

André Lauzon: So to get us to that next level, I think in the end DNA, we talk about going to 50,000 tons a day much sooner than we are anticipating is the teams that are proceeding right now at feasibility level to capital projects that we hope to bring towards the board later this year for approval to really make that step change. And that'll that'll be the Call it the milestone change for copper mountain mine. The costs are really been reducing recoveries or are doing really well. It's running really well and we just need that little uptick to that'll bring it to it'll really drive the profitability. That's great. Good progress.

Unknown Executive: Thanks Andre, Peter.

Lawson Winder: The next question comes from Lawson Winder. There would be a security please go ahead. Hi, thanks very much operator. Thank you for the call today gentlemen and for the update. Could I ask on M&A and ask you to describe how you might view your current posture on potential acquisitions and whether the whether had based currently actively evaluating opportunities. Thanks, Lawson. Look, I think that as I previously said, I think that HudBay has an extremely skilled team when it comes to highly efficient operations in world pass development projects and we feel we can create value from both operating and development stage assets.

Lawson Winder: Our strategy hasn't changed and will continue to be disciplined as we evaluate assets that fit our stringent strategic and financial criteria. And as you know, copper assets are scarce and we would only pursue opportunities are creative and that create value for our shareholders. But that said, I think that again you're aware that those assets are extremely scarce and it took us a long time to sort of land on copper mountain. We continue to scout the marketplace for assets and we haven't landed on anything right now that meets our criteria but we continue to seek those opportunities.

Lawson Winder: And is it the case that your criteria remains Western countries and is there been any change to the criteria at this point, particularly in light of how much more substantial HUD Bay is in terms of copper producer. Yeah, we still sort of we focused on to one mining jurisdictions very much, you know, so so the Americas in majority, but you know in the past we have actually looked looked to Europe and other other investment grade jurisdictions.

Lawson Winder: Okay, thanks, thanks for that and then could I also ask just in follow up to the public comment period for the air quality or sorry the aquifer permit, I think is the one that completed in Q2. Was there anything in those public comments that might have updated your view on kind of the social license outlook for a copper world, were there any sort of strong arguments against the project or would you describe the comments as fairly supportive.

Lawson Winder: In general, it's fair to say that the comments are fairly supportive. In fact, there are a massive number of comments that were received in support of the project, which of course were received by the Arizona Department of Environmental Quality. As always, they'll be positive and negative, but our view is that the process we're sort of moving inexorably towards approval of that permit during the course of the remainder of the year. Okay, great. Thank you so much for the update today. Once again, if you have a question, please press start then one.

Dalton Baretto: The next question comes from Dalton Baretto, which can occur. Please go ahead. Thanks.

Peter Kukielski: Good morning, Peter and team. Maybe I'll start by staying on the Copperworld permits here. Peter, you know, with the election coming up in November, I realize these permits are state level permits. But do you see any sort of delays to the process at all? Not at this point, Dalton. The reason why I say that, I mean, we are very, very confident that we will secure the permits by the end of the year.

Peter Kukielski: Perhaps what I want to say is that if the Arizona Department of Environmental Quality has questions that need to be resolved and they require a little bit of time in which to do that, of course we would cooperate with them. But we have a strong commitment by the ADEQ to complete their work by the end of the year. I don't think that this permitting process relies one bit on the political landscape in the United States at the moment.

Peter Kukielski: It is very, very much a state-driven process. We are deeply engaged with the ADEQ and it's a very, very constructive relationship. So we expect that those permits will be granted by the end of the year. That said, if there was a request by the state that would bolster the robustness of those permits, then of course we would collaborate with them. But there are no signs that that will be the case. We're pretty confident we get in this year.

Peter Kukielski: Thanks, Peter. And then as a related question, and I think I asked you this in the last call in a very different copper price environment and a copper sentiment environment. But are you still planning on waiting for the permits to execute on the kick off the JV process or have you loosened on that stance? It's actually a really interesting question, Dalton. I think that we are in a much better financial condition.

Peter Kukielski: In the context of Eugene 3P plan, we have met the prerequisites for that 3P plan from a financial perspective. We still do expect to initiate a minority JV partner process after we receive the state level permits. And we expect that process to be robust based on the track record that we have and based on the initial indications that we have from potential partners with whom we are engaging. So there's no change in plan.

Peter Kukielski: We think that it's the right thing to do. And we continue to look for a long-term partner who is bullish on the copper price and looking to grow their copper exposure and all signs point towards that being very robust. Great. Thanks, Peter.

Dalton Baretto: And then maybe I can ask you one sort of big picture question if I may. You're mining pumpkin. Now you're generating free cash flow. The peruse sort of political issues are well behind you. You've cleaned up the balance sheet. And yet on my numbers, you still trade a fairly substantial discount to peers. And I'm just wondering if I could ask, you know, why do youth that you guys think that is? And number two, how does that play into your strategic thinking going forward?

Dalton Baretto: Thanks. Thanks, Dalton. Look, I think that a big piece of that is investors in the market are waiting for the outcomes of the copper-wield permitting process. I think that's number one. I think there's a little bit of, let's wait and see with respect to Maria Reina and Kavirito. And we're moving sort of inexorably towards receipt of those permits as well. But as you know, as was the case of pump-a-canture, permitting takes time in Peru.

Dalton Baretto: And so I think those things build into some of the valuation delta. But from a financial or balance sheet perspective, from a jurisdictional risk perspective, I think all of that has gone away. Perhaps Eugene, you might comment further if you have other thoughts. Well, I think we are encouraged by the investor interest that has been in HudBay particularly through this year and our over-subscribed equity offering and valuations improved. And they see the opportunity to get exposure to our increasing cash flows and the catalyst at Peter's outline.

Dalton Baretto: And we look forward to making them a lot of money. Great. Thanks for your thoughts, guys. Welcome. Days go close to question and intercession. I would like to turn the conference back over to Kevin. Lay for any closing remarks. Thank you, operator. And thank you, everyone, for joining us today. If you have any further questions, feel free to reach out to our investor relations team. Thanks and have a great day. This concludes today's conference call. You may disconnect your line. Thank you for participating and have a pleasant day. Orest Wowkodaw, Orest Wowkodaw, Orest Wowkodaw, Orest Wowkodaw, Orest Wowkodaw,