Hudbay Consolidates 100% Ownership in its Copper Mountain Mine

Hudbay Minerals Inc. has made a strategic move to consolidate its ownership in the Copper Mountain mine, acquiring the remaining 25% stake from Mitsubishi Materials Corporation (MMC). This acquisition aligns with Hudbay's broader strategy to expand its copper production in North America, positioning the company as a leading player in the region's mining industry. The deal, valued at US$4.5 million in upfront cash and up to US$39.75 million in deferred and contingent payments, simplifies the ownership structure and enhances Hudbay's operational efficiency and financial performance.



The acquisition of the remaining stake in the Copper Mountain mine is a significant step for Hudbay Minerals. The mine, located in southern British Columbia, is a key asset for the company, producing not only copper but also gold and silver as by-product metals. Hudbay's President and Chief Executive Officer, Peter Kukielski, highlighted the strategic importance of this move, stating that it aligns with the company's goal of growing copper production in mining-friendly jurisdictions. The acquisition provides Hudbay with greater exposure to the mine without adversely impacting its balance sheet, enhancing its position as a North American copper champion.

One of the key benefits of this consolidation is the simplification of the ownership structure. Hudbay will now be solely responsible for settling any outstanding obligations of Copper Mountain Mine (BC) Ltd. (CMBC), including an intercompany loan owing to Hudbay, which represents approximately US$104 million. This financial responsibility will allow Hudbay to streamline its operations and potentially reduce administrative costs associated with shared ownership.

Additionally, the acquisition will enhance Hudbay's credit base, as CMBC will become a wholly-owned subsidiary and guarantor. This financial strengthening will provide Hudbay with greater flexibility in managing its debt and investments, potentially leading to improved financial performance. Hudbay also intends to review the corporate structure of its Canadian entities, which may result in tax synergies through the sharing of tax pools between its various Canadian entities. This could lead to significant cost savings and improved financial performance.

Operationally, Hudbay has been focused on advancing stabilization and optimization plans at the Copper Mountain mine since its acquisition in June 2023. These plans include re-activating the full mining fleet, adding additional haul trucks, opening additional mining faces, optimizing the ore feed to the plant, and implementing plant improvement initiatives. These investments have successfully increased the total tonnes moved and resulted in stronger mill performance, as demonstrated by high mill availability of 92% and copper recoveries of 82% in 2024, compared to 85% and 80%, respectively, in 2023. The planned conversion of the third ball mill to a second SAG mill in 2025 is anticipated to result in the ramp-up of mill throughput in the second half of the year, with mill throughput expected to move towards 50,000 tonnes per day in 2026. This operational efficiency will likely lead to increased production and improved financial performance.



The updated mine plan represents an approximate 90% increase in average annual copper production and a 50% decrease in cash costs over the first 10 years compared to 2022 production levels. Annual production from Copper Mountain is expected to average approximately 44,000 tonnes of copper and 28,600 ounces of gold over the next three years. Upon completion of Hudbay’s optimization activities, 2027 copper production is expected to be 60,000 tonnes, representing a more than 200% increase from attributable production levels in 2024.

In summary, Hudbay Minerals' acquisition of the remaining 25% stake in the Copper Mountain mine aligns with its strategic goals of expanding copper production in North America and brings potential benefits to its operational efficiency and financial performance through simplified ownership, enhanced credit base, tax synergies, and improved operational efficiency. This move positions Hudbay as a leading player in the North American copper mining industry, poised for long-term success and growth.