Hudbay Minerals : Management's Discussion & Analysis Q1 2024

Management's Discussion and Analysis of

Results of Operations and Financial Condition

For the three months ended

March 31, 2024

May 13, 2024

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TABLE OF CONTENTS	Page
Introduction	1
Our Business	1
Our Purpose	2
Summary	2
Key Financial Results	6
Key Production Results	7
Key Costs Results	7
Recent Developments	8
Peru Operations Review	12
Manitoba Operations Review	17
British Columbia Operations Review	21
Financial Review	24
Liquidity and Capital Resources	33
Financial Risk Management	37
Trend Analysis and Quarterly Review	38
Non-IFRSFinancial Performance Measures	40
Accounting Changes and Critical Estimates	54
Changes in Internal Control over Financial Reporting	54
Notes to Reader	54
Summary of Historical Results	58

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INTRODUCTION

This Management's Discussion and Analysis ("MD&A") dated May 13, 2024 is intended to supplement Hudbay Minerals Inc.'s unaudited condensed consolidated interim financial statements and related notes for the three months ended March 31, 2024 and 2023 (the "consolidated interim financial statements"). The consolidated interim financial statements have been prepared in accordance with International Financial Reporting Standards ("IFRS"), including International Accounting Standard 34, Interim Financial Reporting, as issued by the International Accounting Standards Board ("IASB").

References to "Hudbay", the "Company", "we", "us", "our" or similar terms refer to Hudbay Minerals Inc. and its direct and indirect subsidiaries as at March 31, 2024.

Readers should be aware that:

• This MD&A contains certain "forward-looking statements" and "forward-looking information" (collectively, "forward-looking information") that are subject to risk factors set out in a cautionary note contained in our MD&A.
• This MD&A excludes first quarter 2023 comparable figures for Copper Mountain, as we completed the Copper Mountain acquisition at the end of the second quarter of 2023.
• This MD&A has been prepared in accordance with the requirements of the securities laws in effect in Canada, which may differ materially from the requirements of United States securities laws applicable to US issuers.
• We use a number of non-IFRS financial performance measures in our MD&A, which do not have standardized meaning under IFRS. For further information and detailed reconciliations of such measures, please see the discussion under the "Non-IFRS Financial Performance Measures" section herein.
• The technical and scientific information in this MD&A has been approved by qualified persons based on a variety of assumptions and estimates. Please see the discussion under the "Qualified Person and NI 43-101" section herein.

Readers are also urged to review the "Financial Risk Management" and "Notes to Reader" sections beginning on pages 37 and 54 of this MD&A.

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

All amounts are in US dollars unless otherwise noted.

OUR BUSINESS

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

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OUR PURPOSE

We care about our people, our communities and our planet. Hudbay provides the metals the world needs. We work sustainably, transform lives and create better futures for communities.

We transform lives: We invest in our employees, their families and local communities through long-term employment, local procurement and economic development to improve their quality of life and ensure the communities benefit from our presence.

We operate responsibly: From exploration to closure, we operate safely and responsibly, we welcome innovation and we strive to minimize our environmental footprint while following leading operating practices in all facets of mining.

We provide critical metals: We produce copper and other metals needed for everyday products and essential for applications to support the energy transition toward a more sustainable future.

SUMMARY

Delivered Strong First Quarter Operating and Financial Results; Production and Cost Guidance Affirmed

• Enhanced operating platform delivered consolidated copper production of 34,749 tonnes and stronger- than-expected gold production of 90,392 ounces in the first quarter.
• Solid operating performance was driven by continued high copper and gold grades at the Pampacancha deposit in Peru, continued high gold grades at Lalor and strong performance from the New Britannia mill in Manitoba and the operational stabilization efforts at the Copper Mountain mine in British Columbia.
• Achieved revenue of $525.0 million and operating cash flow before change in non-cash working capital of $147.5 million in the first quarter of 2024.
• Affirmed full year 2024 consolidated copper production and cash cost guidance of 137,000 to 176,000 tonnes of copper at a cash cost of $1.05 to $1.25 per pound1 and sustaining cash cost of $2.00 to $2.45 per pound1.
• Consolidated cash cost1 and sustaining cash cost1 per pound of copper produced, net of by-product credits1, in the first quarter of 2024, were $0.16 and $1.03, respectively, consistent with strong levels achieved in the fourth quarter of 2023.
• Peru operations benefited from continued contributions from the high-grade Pampacancha satellite pit, resulting in 24,576 tonnes of copper and 29,144 ounces of gold produced in the first quarter of 2024. Peru cash cost per pound of copper produced, net of by-product credits1, in the first quarter improved to $0.43, a 20% decrease compared to the fourth quarter of 2023.
• Manitoba operations produced 56,831 ounces of gold in the first quarter of 2024, exceeding management's quarterly cadence expectations as New Britannia continues to operate well above nameplate capacity and budgeted throughput levels. Manitoba cash cost per ounce of gold produced, net of by-product credits1, was $736 during the first quarter of 2024 and well within guidance expectations.
• British Columbia operations produced 7,024 tonnes of copper at a cash cost per pound of copper produced, net of by-product credits1, of $3.49 in the first quarter. Operational stabilization plans continue to be advanced at the Copper Mountain mine.
• First quarter net earnings and earnings per share were $18.5 million and $0.05, respectively. After adjusting for a non-cash gain of $5.3 million related to a quarterly revaluation of our closed site environmental reclamation provision, a $12.8 million mark-to-market adjustment loss related to share- based compensation, gold prepayment liability and strategic gold and copper hedges and a $9.0 million write-down of property, plant and equipment ("PP&E"), among other items, first quarter adjusted earnings1 per share were $0.16.
• Cash and cash equivalents increased by $34.6 million to $284.4 million during the first quarter due to strong operating cash flows bolstered by higher copper and gold prices and sales volumes enabling a $43.5 million reduction in net debt1 during the quarter.

Operating Performance and Financial Discipline Driving Free Cash Flow and Deleveraging

• Unique copper and gold diversification provides exposure to higher copper and gold prices and attractive free cash flow generation.
• Executed on planned higher production levels and achieved continued operating and capital cost efficiencies to generate significant free cash flow in the first quarter.

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• Realized strong margins by maintaining low consolidated cash cost of $0.16 per pound of copper in the first quarter while benefiting from higher copper prices, positioning the company for continued significant cash flow generation in a period of high commodity prices.
• Achieved adjusted EBITDA1 of $214.2 million in the first quarter and a trailing twelve month adjusted EBITDA1 of $760.5 million.
• Reduced net debt1 to $994.2 million during the first quarter, which, together with higher levels of adjusted EBITDA1, further improved our net debt to adjusted EBITDA ratio1 to 1.3x compared to 1.6x at the end of 2023.
• Continued deleveraging efforts with a $10 million repayment of our revolving credit facility balance in January 2024 and an additional $10 million repayment after quarter-end in May 2024.
• Increased cash and total liquidity by $45.2 million to $618.9 million as at March 31, 2024 compared to the end of 2023.

Continued Execution of Growth Initiatives to Further Enhance Copper and Gold Exposure

• Post-acquisitionplans to stabilize the Copper Mountain operations remain in progress, with a focus on mining fleet ramp-up activities, accelerated stripping and increasing mill reliability. Achieved better than planned copper recoveries of 83% in the first quarter, and stabilization benefits continued to be realized subsequent to quarter end with 83% copper recoveries and approximately 40,000 tonnes per day average mill throughput in the month of April.
• Constancia's expected mine life extended by three years to 2041 as a result of mineral reserve conversion with the addition of a further mining phase at the Constancia pit.
• The New Britannia mill achieved record throughput levels averaging 1,870 tonnes per day in the first quarter, exceeding its original design capacity of 1,500 tonnes per day due to the successful implementation of process improvement initiatives and effective preventative maintenance measures. Received permit to increase New Britannia throughput to 2,500 tonnes per day.
• Achieved copper recoveries of approximately 92% and gold recoveries of approximately 68% at the Stall mill in the first quarter of 2024 as we continue to benefit from the Stall mill recovery improvement project, which was completed in 2023.
• The development of an access drift to the 1901 deposit in Snow Lake remains on track and on budget. 1901 is located within 1,000 metres of the existing underground ramp access to the Lalor mine. The drift is expected to reach mineralization in late-2024, which is intended to enable confirmation of the optimal mining method and conducting drilling to further evaluate the orebody and upgrade inferred gold resources to reserves.
• Progressing the three prerequisites plan (the "3-P plan") for sanctioning Copper World with deleveraging advancing towards targeted levels and remaining key state permits expected in 2024.
• Drill permitting for highly prospective Maria Reyna and Caballito properties near Constancia continues to advance through the regulatory process with environmental impact assessment applications submitted for both properties in recent months.
• Largest annual exploration program in Snow Lake underway consisting of geophysical surveys and drill campaigns testing the newly acquired Cook Lake claims, former Rockcliff properties and near-mine exploration at Lalor.
• Advancing Flin Flon tailings reprocessing opportunities through metallurgical test work and early economic evaluation to potentially produce critical minerals and precious metals while reducing the environmental footprint.
• Entered into an option agreement with Marubeni Corporation relating to three exploration projects located near Hudbay's existing Flin Flon processing facilities.

Summary of First Quarter Results

Cash generated from operating activities in the first quarter of 2024 increased to $139.7 million compared to $71.3 million in the same quarter of 2023. Operating cash flow before change in non-cash working capital during the first quarter of 2024 was $147.5 million, reflecting an increase of $61.9 million compared to the same period of 2023. The increase in operating cash flow before change in non-cash working capital was primarily the result of higher copper and gold sales volumes from mining the high copper and gold grade zones of the Pampacancha deposit and higher gold and copper grade zones at Lalor, higher gold prices, as well as an incremental contribution from the Copper Mountain mine. This was partially offset by a significant increase in cash taxes paid of $54.9 million mainly at our Peru operations, compared to the same period in 2023.

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Incorporating the first quarter operating results of the Copper Mountain mine, consolidated copper, gold and silver production in the first quarter of 2024 increased by 54%, 91% and 35%, respectively, compared to the same period in 2023 primarily due to meaningfully higher recoveries in Peru and Manitoba, mining of the high copper and gold grade zones at the Pampacancha deposit, higher gold and copper grade zones at Lalor and incremental production from the Copper Mountain mine. Consolidated zinc production in the first quarter of 2024 decreased by 11% compared to the same period in 2023 primarily due to lower mill throughput and lower planned zinc grades as we continue to prioritize the higher gold and copper grade areas at Lalor.

Net earnings and earnings per share in the first quarter of 2024 were $18.5 million and $0.05, respectively, compared to net earnings and earnings per share of $5.5 million and $0.02, respectively, in the first quarter of 2023. The results were positively impacted by higher copper, gold and silver sales volumes as well as higher realized gold prices and a non-cash gain of $5.3 million related to the quarterly revaluation of the environmental reclamation provision at our closed sites. This was partially offset by a $12.8 million mark-to-market adjustment loss related to share-based compensation expense, a revaluation of the gold prepayment liability and a revaluation of our strategic gold and copper hedges and a $9.0 million write-down of PP&E.

Adjusted net earnings1 and adjusted net earnings per share1 in the first quarter of 2024 were $57.6 million and $0.16 per share, respectively, after adjusting for the non-cash gain related to the revaluation of our environmental provision, the non-cashmark-to-market revaluation loss and the PP&E write-down, among other items. This compares to adjusted net earnings and adjusted net earnings per share of $0.1 million, and $0.00 in the same period of 2023.

First quarter adjusted EBITDA1 was $214.2 million, compared to $101.9 million in the same period in 2023.

In the first quarter of 2024, consolidated cash cost per pound of copper produced, net of by-product credits1, was $0.16, compared to $0.85 in the same period in 2023. This decrease was mainly the result of higher copper production and significantly higher by-product credits, partially offset by higher mining, milling and G&A costs from incorporating Copper Mountain. Consolidated sustaining cash cost per pound of copper produced, net of byproduct credits1, was $1.03 in the first quarter of 2024 compared to $1.83 in the same period in 2023. This decrease was primarily due to the same reasons outlined above partially offset by higher cash sustaining capital expenditures.

Consolidated all-in sustaining cash cost per pound of copper produced, net of by-product credits1, was $1.32 in the first quarter of 2024, lower than $2.07 in the same period in 2023, due to the same reasons outlined above partially offset by higher corporate selling and administrative expenses.

As at March 31, 2024, total liquidity increased to $618.9 million, including $284.4 million in cash and cash equivalents as well as undrawn availability of $334.5 million under our revolving credit facilities. Net debt declined by $43.5 million during the quarter to $994.2 million as at March 31, 2024. Based on expected free cash flow generation beyond the first quarter of 2024, we continue to make progress on our deleveraging targets as outlined in our "3-P" plan for sanctioning Copper World. We expect that our current liquidity together with cash flows from operations will be sufficient to meet our liquidity needs for 2024.

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Production on a copper equivalent basis

(tonnes)

100,000

50,000

0

71,335

38,614 37,530

77,951

62,120

Q1 2023	Q2 2023 *	Q3 2023	Q4 2023	Q1 2024
		Peru		Manitoba			British Columbia

• British Columbia production in Q2 2023 represents a 10-day stub period of production following the June 20, 2023 transaction closing date. British Columbia production is not included in three months ended March 31, 2023 figures as the acquisition of Copper Mountain had not yet closed.
  ** Copper equivalent production is calculated using the quarter average LME prices for each metal.

Consolidated copper in concentrate production

(tonnes)

50,000

40,000

30,000

20,000

10,000

-

3,100 932 34,749

7,024 1,131

22,562

Q1 2023	British	Throughput	Milled	Physical	Q1 2024
production	Columbia *		grade	recoveries	production

*British Columbia production is not included in the three months ended March 31, 2023 figures as the acquisition of Copper Mountain had not yet closed.

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

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KEY FINANCIAL RESULTS

Financial Condition	Mar. 31, 2024		Dec. 31 2023
(in $ thousands, except net debt to adjusted EBITDA ratio)
Cash and cash equivalents	$	284,385	$	249,794
Total long-term debt		1,278,587		1,287,536
Net debt1		994,202		1,037,742
Working capital2		200,850		135,913
Total assets		5,231,283		5,312,634
Equity attributable of owners of the Company		2,107,532		2,096,811
Net debt to adjusted EBITDA 1		1.3		1.6

• Net debt and net debt to adjusted EBITDA are a non-IFRS financial performance measure with no standardized definition under IFRS. For further information and a detailed reconciliation, please see discussion under the "Non-IFRS Financial Performance Measures" section of this MD&A.

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

Financial Performance		Three months ended
(in $ thousands, except per share amounts or as noted below)	Mar. 31, 2024	Mar. 31, 2023
Revenue	$	524,989	$	295,219
Cost of sales		373,035		228,706
Earnings before tax		67,750		17,430
Net earnings		18,535		5,457
Basic earnings per share		0.05		0.02
Adjusted earnings per share1		0.16		0.00
Operating cash flow before change in non-cash working capital2		147.5		85.6
Adjusted EBITDA1,2		214.2		101.9

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

• In $ millions.

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KEY PRODUCTION RESULTS

			Three months ended		Three months ended
			Mar. 31, 2024			Mar. 31, 2023
		Peru	Manitoba	British	Total	Peru	Manitoba	Total
		Columbia3
Contained metal in concentrate and doré produced1
Copper	tonnes	24,576	3,149	7,024	34,749	20,517	2,045	22,562
Gold	oz	29,144	56,831	4,417	90,392	11,206	36,034	47,240
Silver	oz	639,718	219,823	88,376	947,917	552,167	150,642	702,809
Zinc	tonnes	-	8,798	-	8,798	-	9,846	9,846
Molybdenum	tonnes	397	-	-	397	289	-	289
Payable metal sold
Copper	tonnes	23,754	2,921	6,933	33,608	16,316	2,225	18,541
Gold2	oz	42,677	62,003	3,401	108,081	11,781	37,939	49,720
Silver2	oz	753,707	231,841	83,300	1,068,848	392,207	149,677	541,884
Zinc	tonnes	-	6,119	-	6,119	-	5,628	5,628
Molybdenum	tonnes	415	-	-	415	254	-	254

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

• Includes total payable gold and silver in concentrate and in doré sold.

• Includes 100% of Copper Mountain mine production. Hudbay owns 75% of Copper Mountain mine. As Copper Mountain was acquired on June 20, 2023, there were no comparative figures for the three months ended March 31, 2023.

KEY COST RESULTS

		Three months ended	Guidance
		Mar. 31,	Mar. 31,	Annual
		2024	2023	2024
Peru cash cost per pound of copper produced
Cash cost1	$/lb	0.43	1.36	1.25	- 1.60
Sustaining cash cost1	$/lb	1.06	2.12
Manitoba cash cost per ounce of gold produced
Cash cost1	$/oz	736	938	700	- 900
Sustaining cash cost1	$/oz	950	1,336
British Columbia cash cost per pound of copper produced2
Cash cost1	$/lb	3.49	-	2.00	- 2.50
Sustaining cash cost1	$/lb	4.85	-
Consolidated cash cost per pound of copper produced
Cash cost1	$/lb	0.16	0.85	1.05	- 1.25
Sustaining cash cost1	$/lb	1.03	1.83	2.00	- 2.45
All-in sustaining cash cost1	$/lb	1.32	2.07

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

• Cash cost, sustaining cash cost per pound of copper produced for British Columbia does not have any comparative information for the three months ended March 31, 2023 as Copper Mountain was acquired by Hudbay on June 20, 2023.

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RECENT DEVELOPMENTS

Generating Free Cash Flow with Increased Production and Continued Financial Discipline

We delivered a third successive quarter of positive free cash flow during the first quarter of 2024 as we executed our plan for higher copper and gold production from Pampacancha and higher gold production at Lalor, both driven by higher grades, throughput and recoveries. We continue to expect to see strong production levels throughout 2024 from sustained higher grades in Peru and Manitoba, along with additional production from Copper Mountain.

During the first quarter, we completed $10 million in net repayments on our revolving credit facilities. We also completed three additional months of deliveries under the gold forward sale and prepay agreement, further reducing our outstanding gold prepayment liability, and are scheduled to fully repay the gold prepay facility by August 2024. Despite these debt repayments and gold deliveries, we increased our cash and cash equivalents to $284.4 million and reduced our overall net debt to $994.2 million as at March 31, 2024, compared to $249.8 million and $1,037.7 million, respectively, as at December 31, 2023. The $43.5 million decline in net debt, together with higher levels of adjusted EBITDA1 in the first quarter, have improved our net debt to adjusted EBITDA ratio2 to 1.3x compared to 1.6x at the end of 2023. Subsequent to quarter-end, we continued our deleveraging efforts with an additional $10 million repayment on our revolving credit facilities in May 2024.

During the first quarter, we continued to exercise financial discipline and take steps to support free cash flow generation during the stabilization period at Copper Mountain. To this end, we entered into new forward sales contracts at Copper Mountain for a total of 3,600 tonnes of copper production over the twelve-month period from May 2024 to April 2025 at an average price of $3.97 per pound, as well as zero-cost collars for 3,000 tonnes of copper production over the twelve-month period from May 2024 to April 2025 at an average floor price of $4.00 per pound and an average cap price of $4.36 per pound. As at March 31, 2024, 15.9 million pounds of copper forwards and 19.8 million pounds of copper collars were outstanding, representing approximately 44% of 2024 production guidance levels for Copper Mountain. We also entered into zero-cost collars for 36,000 ounces of gold production over the period from April to December 2024 at an average floor price of $2,088 per ounce and an average cap price of $2,458 per ounce.

Annual Reserve and Resource Update

We provided our annual mineral reserve and resource update on March 28, 2024. Current mineral reserve estimates at Constancia and Pampacancha total an aggregate of approximately 548 million tonnes at 0.27% copper with approximately 1.5 million tonnes of contained copper. The expected mine life of Constancia has been extended by three years to 2041 as a result of the successful conversion of mineral resources to mineral reserves with the addition of a further mining phase at the Constancia pit following positive geotechnical drilling studies in 2023. There remains potential for further reserve conversion and future mine life extensions at Constancia through an additional 172 million tonnes of measured and indicated resources at 0.22% copper and 37 million tonnes of inferred resources at 0.40% copper, in each case, exclusive of mineral reserves.

Current mineral reserve estimates in Snow Lake total 17 million tonnes with approximately 2 million ounces in contained gold, and the expected mine life of the Snow Lake operations has been maintained until 2038. The Snow Lake operations continue to achieve higher gold production levels due to the New Britannia mill operating well above design capacity, the recent completion of the Stall mill recovery improvement project in 2023 and the implementation of several optimization initiatives at the Lalor mine to improve the quality of ore production and minimize waste dilution. There remains another 1.4 million ounces of gold in inferred resources in Snow Lake that have the potential to maintain strong annual gold production levels beyond 2030 and further extend the mine life in Snow Lake. The company is advancing an access drift at the nearby 1901 deposit to enable infill drilling aimed at converting the inferred mineral resources in the gold lenses to mineral reserves.

Current mineral reserve estimates at the Copper Mountain mine total 367 million tonnes at 0.25% copper and 0.12 grams per tonne gold with approximately 900,000 tonnes of contained copper and 1.4 million ounces of contained gold. We acquired the Copper Mountain mine as part of the acquisition of Copper Mountain Mining Corporation in June 2023. We hold a 75% interest in the Copper Mountain mine, while Mitsubishi Materials Corp. holds the remaining 25% interest. The current mineral reserve estimates support a 21-year mine life, as previously disclosed in our first National Instrument 43-101 technical report in respect of the Copper Mountain mine filed in December 2023 (the "Copper Mountain Technical Report"). There exists significant upside potential for reserve conversion

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