Summary of Hudbay and Arizona Sonoran Conference Call Company and Industry Overview - **Companies Involved**: Hudbay Minerals Inc. and Arizona Sonoran Copper Company - **Industry**: Copper mining and production - **Key Development**: Hudbay's acquisition of Arizona Sonoran, creating the third largest copper district in North America Core Points and Arguments 1. **Acquisition Details**: Hudbay will acquire all outstanding shares of Arizona Sonoran not already owned, with a share exchange ratio of 0.242 Hudbay shares for each Arizona Sonoran share, representing a 30% premium based on closing prices and a 36% premium based on the 20-day VWAP [5][11][12] 2. **Transaction Value**: The equity value of the transaction is approximately $1,480 million, with an enterprise value of $1,278 million net of Hudbay's existing equity ownership [5][6] 3. **Ownership Structure Post-Transaction**: After the acquisition, Hudbay shareholders will own 89% and Arizona Sonoran shareholders will own 11% of the combined entity [6] 4. **Strategic Positioning**: The acquisition positions Hudbay as a leading supplier of domestic US refined copper, enhancing its competitive advantage and establishing a major copper hub in southern Arizona [4][9][19] 5. **Cactus Project Overview**: The Cactus project is a large-scale copper development asset with reserves of 465 million tonnes at a grade of 0.52% copper, supporting a 22-year mine life [13][14] 6. **Financial Metrics**: The Cactus project has a net present value after tax of $2.3 billion and an after-tax internal rate of return of just under 23% based on a copper price of $4.25 per pound [14] 7. **Operational Synergies**: The acquisition is expected to unlock significant operating efficiencies and regional synergies, creating an Arizona operating hub [9][24] 8. **Production Growth Potential**: With the addition of Cactus, Hudbay's copper production could grow to nearly 500,000 tons per year [16][30] 9. **Financial Position**: Hudbay has a strong financial position with over $990 million in cash and cash equivalents and a net leverage ratio of 0 times, allowing for continued investment in growth opportunities [25][26] 10. **Market Presence**: The combined entity will have a strong presence across tier one jurisdictions in the Americas, with operating and development assets in Canada, the United States, and Peru [16][19] Additional Important Content 1. **Community Relations**: The Cactus project has developed a strong social license with an 87% favorable rating from local stakeholders, which is crucial for advancing the project [15] 2. **Permitting Process**: The Cactus project is fully permitted under the 2021 preliminary economic assessment, with amendments underway for the latest pre-feasibility study [13][58] 3. **Future Development Plans**: Hudbay plans to advance the Cactus project after Copper World, with a focus on leveraging its technical expertise and regional knowledge [21][30] 4. **Potential for Cost Savings**: The integration of the Albion plant for sulfuric acid production is expected to provide stable reagent costs for the Cactus project, enhancing its economic viability [64] 5. **Long-term Value Creation**: The acquisition is seen as a way to unlock long-term value for shareholders by leveraging Hudbay's mine development and operational expertise [10][29] This summary encapsulates the key points discussed during the conference call, highlighting the strategic rationale behind the acquisition and the anticipated benefits for both companies and their shareholders.

HBM / ASCU NYSE & TSX TSX This presentation contains certain financial measures which are not recognized under IFRS, such as adjusted net earnings (loss), adjusted net earnings (loss) per share, adjusted EBITDA, net debt, free cash flow, cash cost, sustaining and all-in sustaining cash cost per pound of copper produced, cash cost and sustaining cash cost per ounce of gold produced, combined unit operating costs and any ratios based on these measures. For a detailed description of each of the non-GAAP financ ...

Core Viewpoint - Hudbay Minerals is set to acquire Arizona Sonoran Copper Company in an all-share deal valued at approximately C$1.48 billion ($1 billion), aiming to create the third-largest copper district in North America [1] Acquisition Details - The acquisition involves issuing 0.242 of a common share for each Arizona Sonoran share not already owned by Hudbay, valuing ASCU at C$9.35 per share, which represents a 30% premium to ASCU's closing price on February 27, 2026, and a 36% premium to its 20-day volume-weighted average price [2] - Hudbay already owns about 9.99% of ASCU's outstanding shares, making the net enterprise value of the transaction approximately $1.28 billion [2] Strategic Benefits - The acquisition will provide Hudbay full ownership of the Cactus copper project and enhance its growth pipeline alongside the Copper World project, with existing Hudbay shareholders retaining about 89% of the combined company [3] - The deal is expected to strengthen Hudbay's position as a US-focused copper growth platform, with the combined projects forming a significant copper hub in Arizona while maintaining financial flexibility [4] Production Potential - Advancing both Copper World and Cactus is projected to establish the third-largest copper district in North America, with Copper World expected to produce 92,000 tonnes of copper annually by 2030, and Cactus potentially adding another 103,000 tonnes per year once developed [6][7] Synergies and Savings - The companies plan to achieve regional synergies, including redeploying the Copper World construction team to Cactus and utilizing sulphuric acid produced at Copper World for leaching oxide ore at Cactus, which could result in annual corporate savings of between $5 million and $10 million [7] Transaction Approval Process - The transaction will be completed through a court-approved plan of arrangement under British Columbia law, requiring approval from 66⅔% of ASCU shareholders and a simple majority of minority shareholders under Canadian securities rules [8] - A special meeting is planned for May 2026 to facilitate the transaction, which also requires regulatory approvals from both US and Canadian authorities [9]

Core Viewpoint - Hudbay Minerals Inc. has entered into a definitive agreement to acquire Arizona Sonoran Copper Company Inc. for 0.242 of a Hudbay common share per ASCU share, valuing ASCU at C$9.35 per share, representing a 30% premium to ASCU's closing price on February 27, 2026 [1][2][7]. Group 1: Transaction Details - The acquisition implies a total equity value of approximately US$1,480 million based on Hudbay's closing share price [8]. - Hudbay currently owns 20.8 million common shares of ASCU, representing about 9.99% of ASCU's outstanding shares [8]. - Following the transaction, existing Hudbay and ASCU shareholders will own approximately 89% and 11% of Hudbay, respectively [8]. Group 2: Strategic Rationale - The transaction combines two complementary copper growth assets in Arizona, enhancing Hudbay's position as a leading Americas-focused copper company [2][4]. - The acquisition is expected to increase Hudbay's annual copper production from approximately 125,000 tonnes to over 250,000 tonnes by 2030, with potential growth to more than 350,000 tonnes with the Cactus project [4][7]. - The deal is anticipated to create significant operational efficiencies and regional synergies between the Copper World and Cactus projects [4][7]. Group 3: Benefits to Shareholders - ASCU shareholders will receive an immediate premium while maintaining exposure to the long-term value of the Cactus project through their ownership in Hudbay [7]. - The acquisition provides ASCU shareholders access to Hudbay's well-capitalized balance sheet and cash flow generation, reducing financing risks [7]. - The addition of Cactus is expected to be accretive to Hudbay's per-share metrics, enhancing net asset value and bolstering copper reserves and resources per share [7]. Group 4: Project Development and Market Position - The Cactus project is positioned to become a significant producer of copper cathode, supporting the U.S. critical minerals supply chain [4][7]. - The acquisition is expected to establish a major copper hub in southern Arizona, positioning Hudbay as a leading supplier of domestic U.S. refined copper [4][7]. - Hudbay's advancement of the Copper World and Cactus projects will form the third largest copper district in North America [7]. Group 5: Approval and Regulatory Process - The transaction requires approval from ASCU shareholders and is subject to customary closing conditions, including regulatory approvals [11][12]. - A special meeting of ASCU securityholders is expected to be held in May 2026 to vote on the transaction [11]. - The transaction is anticipated to be completed in the second quarter of 2026, following the receipt of necessary approvals [13].

Core Viewpoint - Hudbay Minerals has received approval for a significant expansion of its Copper Mountain mine, extending operations until 2040 and enhancing copper production by 90% through the New Ingerbelle project [2][3][4]. Company Overview - Hudbay Minerals is one of Canada's largest copper producers, with the Copper Mountain mine located approximately 20 kilometers south of Princeton, British Columbia [2][10]. - The company has a market capitalization of C$14.5 billion (approximately $10.6 billion) [5]. Expansion Project Details - The New Ingerbelle expansion project includes a series of nested pit designs aimed at accessing higher-grade mineralization [3]. - The project is expected to add 10 years to the mine's operational life, extending it from 2027 to 2037, and is projected to yield approximately 750,000 tonnes of copper, 900,000 ounces of gold, and 5.5 million ounces of silver [4]. - From 2036 to 2040, the mine will begin re-handling low-grade ore stockpiles and enter the reclamation and closure phase [4]. Economic Impact - The expansion is anticipated to generate over C$11.5 billion in provincial GDP and preserve 800 direct jobs, benefiting the local community and the province [6]. - The project is seen as a significant economic driver for British Columbia, ensuring job retention and economic benefits for years to come [6]. Community Engagement - Hudbay has engaged proactively with local communities during the permitting process and has signed participation agreements with two First Nations groups [7]. Government Support - The approval of the New Ingerbelle expansion aligns with British Columbia's strategy to enhance its supply of minerals essential for the energy transition [8]. - The province has also expedited permitting for three early-stage developments, including two copper projects [8]. Historical Context - The Copper Mountain mine has a rich history dating back to 1884, transitioning from underground operations to a major open-pit producer in the 1920s, and was restarted in 2011 after being idle for nearly three decades [10][11].

Financial Reporting and Audit - Hudbay Minerals Inc. reported effective internal control over financial reporting as of December 31, 2025, as confirmed by Deloitte LLP[3]. - The financial statements for the years ended December 31, 2025, and 2024, were audited and presented fairly in accordance with IFRS Accounting Standards[7]. - The company maintained effective internal control over financial reporting based on criteria established in the Internal Control - Integrated Framework (2013)[20]. - The audit included evaluating the effectiveness of controls over management's assessment of impairment indicators and the reasonableness of key estimates[17]. - The company has been audited by Deloitte LLP since 2005, ensuring ongoing compliance and oversight[16]. - The company’s management is responsible for maintaining effective internal control over financial reporting and assessing its effectiveness[22]. - The audit procedures involved comparing management's forecasts of future copper prices to third-party forecasts[17]. Goodwill and Impairment - The company conducted an annual goodwill impairment test for the British Columbia cash generating unit (CGU) as of July 1, 2025, determining no impairment based on a discounted cash flow model[14]. - The acquisition of Copper Mountain Mining Corporation on June 20, 2023, resulted in goodwill allocated to the British Columbia CGU[14]. - Significant management judgment was required to assess indicators of impairment in non-financial assets, particularly regarding future long-term copper prices and discount rates[12]. - The company assesses impairment of non-financial assets at each reporting period, with cash-generating units (CGUs) including Manitoba, British Columbia, Peru, and Arizona[110][111]. - Hudbay's impairment losses are recorded in the consolidated statements of income as part of results from operating activities[115]. - The company assesses previously recognized impairment losses for any indications of recovery at each reporting date[117]. Financial Performance - Revenue for 2025 increased to $2,211.0 million, up from $2,021.2 million in 2024, representing a growth of 9.4%[27]. - Gross profit rose to $743.2 million in 2025, compared to $553.8 million in 2024, marking an increase of 34.3%[27]. - Net income for the year surged to $564.3 million in 2025, a significant increase from $67.8 million in 2024, reflecting a growth of 731.5%[29]. - Earnings per share attributable to owners increased to $1.44 in 2025, compared to $0.20 in 2024, representing a growth of 620%[27]. - Total comprehensive income for the year was $597.2 million in 2025, compared to $44.8 million in 2024, indicating a growth of 1233.9%[29]. - Cash generated from operating activities reached $707.3 million in 2025, up from $666.2 million in 2024, an increase of 6.7%[30]. Assets and Liabilities - Cash and cash equivalents increased to $568.9 million from $541.8 million, representing a growth of 5.0% year-over-year[26]. - Trade and other receivables rose to $937.7 million, up 5.5% compared to the previous year[26]. - Inventory levels reached $1,019.9 million, reflecting a 7.4% increase year-over-year[26]. - Total assets amounted to $2,992.3 million, indicating a growth of 3.2% from the previous year[26]. - Current liabilities decreased to $1,534.8 million, down 1.0% year-over-year[26]. - Long-term debt stood at $1,953.6 million, a slight increase of 0.5% compared to the previous year[26]. - Share capital increased to $2,552.6 million, reflecting a growth of 1.3% year-over-year[26]. - Retained earnings were reported at $460.5 million, showing a decrease of 2.4% from the previous year[26]. - The company reported goodwill of $1,372.6 million, which is a 9.2% increase year-over-year[26]. - Total equity attributable to owners of the company was $3,231.0 million, representing a growth of 5.5% compared to the previous year[26]. Exploration and Development - The company has a development pipeline that includes copper projects in Arizona and Nevada, focusing on exploration and optimization of existing properties[35]. - The company incurred exploration expenses of $46.3 million in 2025, up from $42.6 million in 2024, an increase of 8.7%[27]. Shareholder Returns and Dividends - The company declared dividends totaling $5.6 million in 2025, maintaining shareholder returns[32]. - Hudbay raised $386.2 million through equity issuance in 2024, reflecting strong capital market support[31]. Employee Benefits and Provisions - Hudbay has non-contributory and contributory defined benefit programs for certain Canadian employees, with benefits based on years of service and final average salary[118]. - The actuarial determination of accrued benefit obligations uses the projected benefit method, incorporating management's estimates of future salary levels and retirement ages[119]. - Defined benefit costs include service costs, net interest expense, and remeasurement, with past service costs recognized in the period of a plan amendment[121]. - Hudbay recognizes termination benefits as an expense when a formal plan to terminate employment is committed, with benefits payable more than one year discounted to present value[126]. - Provisions for decommissioning and restoration liabilities are recorded for future rehabilitation costs, with present value estimates adjusted for risk[129]. - The Company assesses the reasonableness of estimates for decommissioning and restoration activities annually, with potential significant changes recognized prospectively[132]. Revenue Recognition and Costs - Hudbay's revenue recognition is based on the fair value of goods sold, net of treatment and refining charges, with control passing to the customer upon significant risk transfer[66]. - The cost of sales includes warehousing, distribution, profit sharing, and share-based compensation, along with non-cash adjustments related to inventory[74]. - Hudbay recognizes deferred revenue when payments are received from customers before revenue recognition criteria are met, particularly for precious metals stream contracts[71][72]. - Exploration and evaluation expenditures are expensed, while costs for acquiring mineral rights are capitalized as exploration and evaluation assets[82]. Financial Instruments and Tax Provisions - Financial instruments are initially recognized at fair value plus transaction costs, with subsequent measurement based on classification[137]. - Current income tax assets and liabilities are measured at the expected amounts to be recovered from or paid to taxation authorities, with significant judgment required in tax provisions[152]. Other Financial Metrics - The company recorded a recovery of $25.0 million from business interruption insurance related to wildfire evacuation and temporary suspension of operations in Manitoba[196]. - The total write-down/loss on disposal of property, plant, and equipment for the year ended December 31, 2025, was $3.5 million, significantly lower than $27.4 million in 2024[195]. - Treatment and refining charges decreased significantly to $(28.4) million in 2025 from $(97.3) million in 2024, indicating improved operational efficiency[184].

Group 1 - Hudbay Minerals (HBM) was previously trading at $17.15, indicating a deep value territory, but is now perceived as a growth at a reasonable price story [1] - The investment strategy focuses on identifying high-upside opportunities in overlooked sectors, particularly small-caps, energy, commodities, and special situations [1] - The analysis incorporates fundamental momentum indicators such as EPS, ROE, and revenue, along with price-volume confirmation and macroeconomic filters [1] Group 2 - The analyst has been managing personal capital since 2020 and has been advising under MiFID II after obtaining a license [1] - The educational background includes a bachelor's degree in Business Administration and Economics, with a master's thesis focused on the impact of financial results announcements on stock returns and trading volumes of micro-cap gold mining companies [1]

INVESTOR PRESENTATION FEBRUARY 2026 Cautionary Information This presentation contains forward-looking information within the meaning of applicable Canadian and United States securities legislation. All information contained in this presentation, other than statements of current and historical fact, is forward-looking information. Often, but not always, forward-looking information can be identified by the use of words such as "plans", "expects", "budget", "guidance", "scheduled", "estimates", "forecasts", "s ...

Financial Data and Key Metrics Changes - Hudbay achieved record annual revenues exceeding $2 billion, record adjusted EBITDA over $1 billion, and record free cash flow generation of more than $380 million in 2025 [5][6] - Fourth quarter revenues reached $733 million with adjusted EBITDA of $386 million, reflecting strong gross margins due to higher metal prices and business interruption insurance proceeds [7][8] - Net earnings for the fourth quarter were $128 million, or 32 cents per share, with adjusted earnings of 22 cents per share after accounting for insurance proceeds [8][10] Business Line Data and Key Metrics Changes - Copper production guidance was met for the eleventh consecutive year, with 33,000 tons produced in the fourth quarter, while gold production guidance was achieved for the fifth consecutive year with 84,000 ounces produced [5][31] - In Peru, operations produced 25,000 tons of copper and 33,000 ounces of gold in the fourth quarter, with significant increases in production compared to the third quarter [12][13] - Manitoba operations produced 47,000 ounces of gold, 3,000 tons of copper, and 6,000 tons of zinc in the fourth quarter, despite challenges from wildfires and power outages [17][19] Market Data and Key Metrics Changes - The company reported a significant increase in cash flow before changes in non-cash working capital to $337 million in the fourth quarter, reflecting higher sales volumes and metal prices [9] - Total liquidity at the end of the quarter was $994 million, including $569 million in cash and cash equivalents, with a net debt to EBITDA ratio improving to 0.4 times [10][11] Company Strategy and Development Direction - Hudbay secured a joint venture with Mitsubishi for the Copper World project, enhancing financial strength and reducing future equity contributions [6][28] - The company plans to sanction the Copper World project in 2026 and invest in high-return brownfield and greenfield opportunities to drive production growth [30][45] - A new quarterly dividend of $0.01 per share was introduced, marking a 100% increase over the previous semi-annual dividend [28][29] Management's Comments on Operating Environment and Future Outlook - Management highlighted the resilience of the diversified operating platform, achieving production guidance despite challenges such as wildfires and social unrest [5][6] - The outlook for 2026 includes a projected 5% increase in consolidated copper production and a 9% decrease in gold production due to the depletion of Pampacancha [31][32] - The company expects to maintain strong financial discipline and continue reducing total debt while exploring capital redeployment opportunities [30][34] Other Important Information - The company is advancing the installation of pebble crushers in Peru to enhance mill throughput starting in the second half of 2026 [16] - Hudbay's operations in British Columbia are focused on ramping up mining activities and implementing standardized practices to improve efficiency [19][20] Q&A Session Summary Question: Capital allocation framework in volatile markets - Management emphasized the importance of the new capital allocation framework to balance growth opportunities and returns, especially in the current volatile market [51][52] Question: SAG rehabilitation work in British Columbia - Management provided details on the planned replacement of the SAG mill feed head, indicating a project period of several weeks with expected stabilization of operations [55][56] Question: Production guidance and technical report for Manitoba - Management clarified that the updated three-year production guidance would not include new drilling and that a technical report for Manitoba is not yet determined [62][63]

Financial Data and Key Metrics Changes - Hudbay achieved record annual revenues exceeding $2 billion, record Adjusted EBITDA over $1 billion, and record free cash flow generation of more than $380 million in 2025 [5][6] - Fourth quarter revenues reached $733 million, with Adjusted EBITDA of $386 million, and net earnings of $128 million, or 32 cents per share [7][8] - Consolidated cash costs were -63 cents per pound, with sustaining cash costs at 94 cents per pound, showing significant improvement compared to the previous quarter [8][10] Business Line Data and Key Metrics Changes - Copper production for the fourth quarter was 33,000 tons, while gold production was 84,000 ounces, despite operational challenges [7][12] - In Peru, copper production increased by 38% and gold production by 25% compared to the third quarter, driven by high-grade Pampacancha ore [12][13] - Manitoba operations produced 47,000 ounces of gold and 3,000 tons of copper in the fourth quarter, with a focus on stabilizing production post-wildfires [17][19] Market Data and Key Metrics Changes - Revenue from gold represented 41% of total revenues in the fourth quarter, indicating a growing contribution from gold sales [9] - The company reported total liquidity of $994 million, including $569 million in cash and cash equivalents, and a net debt to EBITDA ratio improved to 0.4 times [10][11] Company Strategy and Development Direction - Hudbay secured a joint venture with Mitsubishi for the Copper World project, enhancing financial strength and reducing future equity contributions [6][25] - The company plans to sanction the Copper World project in 2026 and invest in high-return brownfield and greenfield opportunities [29][30] - A new quarterly dividend of $0.01 per share was introduced, marking a 100% increase over the previous semi-annual dividend [28] Management's Comments on Operating Environment and Future Outlook - Management highlighted the resilience of the diversified operating platform, achieving production guidance despite challenges like wildfires and social unrest [5][6] - The outlook for 2026 includes a 5% increase in consolidated copper production and a 9% decrease in gold production due to the depletion of Pampacancha [31][32] - The company expects to maintain historically low cash costs and strong margins, benefiting from higher gold production as a by-product [34][35] Other Important Information - The company is advancing the installation of pebble crushers in Peru to enhance mill throughput starting in the second half of 2026 [16] - Hudbay's exploration strategy includes a significant focus on the Snow Lake region, with plans for extensive drilling and resource estimation [40][41] Q&A Session Summary Question: Capital allocation framework in volatile markets - Management emphasized the importance of a holistic capital allocation framework to balance growth opportunities and shareholder returns, especially in volatile markets [51][52] Question: SAG rehabilitation work in British Columbia - Management provided details on the planned replacement of the SAG mill feed head, expecting minimal disruption to operations during the process [55][56] Question: Production guidance for Manitoba - Management clarified that the upcoming three-year production guidance will not include new drilling results, but updates will be provided as exploration progresses [62][63] Question: Pre-feasibility study for Mason - Management indicated that a pre-feasibility study for Mason is underway, with completion expected later next year, and no current plans for partnership [71][72]