Hudbay (HBM) Q4 2025 Earnings Call Transcript

Image source: The Motley Fool.

DATE

Feb. 20, 2026 at 11 a.m. ET

CALL PARTICIPANTS

• President and Chief Executive Officer — Peter Kukielski
• Senior Vice President and Chief Financial Officer — Eugene Lei
• Executive Vice President and Chief Operating Officer — Andre Lauzon
• Vice President, Investor Relations and Corporate Communications — Candace Brule

Need a quote from a Motley Fool analyst? Email pr@fool.com

TAKEAWAYS

• Annual Revenue -- Exceeded $2 billion, marking a new company record.
• Annual adjusted EBITDA -- Surpassed $1 billion for the year, setting a record.
• Annual Free Cash Flow -- Generated a record $388 million, up from the reported $380 million figure after final quarter adjustments.
• Q4 Revenue -- Achieved $733 million, a new quarterly high.
• Q4 Adjusted EBITDA -- Reached $386 million, topping previous quarters.
• Q4 Net Earnings -- Reported at $128 million or $0.32 per share, including $25 million in insurance proceeds from wildfire interruptions.
• Q4 Adjusted Earnings -- $0.22 per share after adjustments for insurance and non-cash items.
• Q4 Copper Production -- Delivered 33,000 tonnes companywide.
• Q4 Gold Production -- Produced 84,000 ounces across all operations.
• Consolidated Cash Cost -- Reported at negative $0.63 per pound in Q4, supported by higher by-product credits.
• Consolidated Sustaining Cash Cost -- $0.94 per pound in Q4, significantly improved sequentially from Q3.
• Q4 Operating Cash Flow -- Generated $337 million before changes in non-cash working capital, reflecting a substantial sequential increase.
• Q4 Free Cash Flow -- $228 million after capital investments for sustaining production.
• Revenue Composition -- Gold represented 41% of total revenue in Q4, indicating a shift in revenue composition.
• Long-Term Debt Reduction -- Reduced by $185 million since 2024; total debt at $1 billion at year-end.
• Total Liquidity -- Reached $994 million (including $569 million in cash and $425 million undrawn credit).
• Net Debt to EBITDA Ratio -- Improved to 0.4x as of December, further reduced to 0.0x with post-year-end inflow.
• Mitsubishi Copper World JV Transaction -- Closed in January with a $420 million cash inflow, increasing total liquidity to over $1.4 billion and reducing leverage.
• Peru Q4 Copper Production -- 25,000 tonnes, up 38% sequentially from Q3 due to Pampacancha ore.
• Peru Q4 Gold Production -- 33,000 ounces, increasing 25% compared to the prior quarter.
• Peru Q4 Silver Production -- 731,000 ounces, up 27% sequentially.
• Peru Q4 Molybdenum Production -- 325 tonnes.
• Peru Q4 Cash Cost -- $0.57 per pound of copper, a 56% decrease from Q3, driven by higher by-product credits.
• Manitoba Q4 Gold Production -- 47,000 ounces.
• Manitoba Q4 Copper Production -- 3,000 tonnes.
• Manitoba Q4 Zinc Production -- 6,000 tonnes.
• Manitoba Q4 Silver Production -- 214,000 ounces.
• Manitoba Q4 Gold Cash Cost -- $705 per ounce, increased from Q3 due to higher operating cost during post-outage normalization.
• Full-Year Manitoba Gold Cash Cost -- $549 per ounce, reflecting a 9% improvement over 2024.
• Manitoba Safety Improvement -- Achieved a 15% reduction in total recordable injury frequency in 2025.
• British Columbia Q4 Copper Production -- 4,700 tonnes, down due to unplanned SAG mill maintenance.
• British Columbia Q4 Gold Production -- 4,000 ounces.
• British Columbia Q4 Silver Production -- 57,000 ounces.
• British Columbia Mining Rate -- Mining increased to 2.4 million tonnes in Q4, a 32% rise from Q3; December mining rate hit 300,000 tonnes per day.
• British Columbia Q4 Milled Copper Grade -- 18% higher versus Q3.
• British Columbia Copper Recovery -- Improved to 78% in Q4; gold recovery up 7% sequentially.
• British Columbia Second SAG Mill -- Permanent feeder completed in Q4; mill expansion on track for 50,000 tonnes per day capacity in 2026.
• Dividend Announcement -- Initiated a new quarterly dividend of $0.01 per share, representing a 100% annual increase to $0.04 per share.
• 2026 Consolidated Copper Production Guidance -- Expected to increase by 5% to 124,000 tonnes, driven by British Columbia ramp-up, partly offset by Pampacancha depletion.
• 2026 Consolidated Gold Production Guidance -- Anticipated to decrease by 9% to 244,500 ounces with Pampacancha depletion, though Manitoba's unstreamed gold production is expected to rise.
• 2026 Consolidated Cash Cost Guidance -- Forecast to remain within negative $0.30 to negative $0.10 per pound of copper.
• 2026 Sustaining Cash Cost Guidance -- Projected at $1.70 to $2.10 per pound, reflecting higher copper output and credits offset by higher sustaining capital.
• 2026 Capital Expenditures -- Total sustaining capital expenditures planned at $435 million; growth capital at operations at $140 million (excluding Copper World); Copper World JV growth capital at $135 million.
• Peru 2026 Copper Cash Cost Guidance -- $1.70 to $2.10 per pound, benefiting from reduced treatment/refining charges and new renewable power contract.
• Manitoba 2026 Gold Cash Cost Guidance -- $500 to $800 per ounce.
• British Columbia 2026 Copper Cash Cost Guidance -- $1.50 to $2.50 per pound, supported by increased stripping and production.
• Exploration Budget 2026 -- Increased to $60 million for drilling and resource conversion at key sites.
• Talbot Drilling Results -- Six holes drilled; "four of them returning mineralized intercepts of economic potential," effectively doubling Talbot's mineralized footprint.
• Copper World JV Structure -- Mitsubishi's $420 million initial funding with a further $180 million due in 18 months for a 30% stake; Hudbay portion of growth capital fully funded from the JV proceeds.
• New Ingerbelle Permits -- Amended mining and environmental permits received, allowing expansion and long-term growth at Copper Mountain in British Columbia.

SUMMARY

Hudbay Minerals (NYSE:HBM) reported consecutive quarterly and annual records for revenue, adjusted EBITDA, and free cash flow, fueled by strong production performance and cost improvements across core operations. The company executed its balance sheet deleveraging plan ahead of schedule, secured a transformative $420 million joint venture with Mitsubishi for Copper World, and announced the first dividend increase in its history. Segment detail included higher sequential production and falling cash costs in Peru, recovery and record throughput in Manitoba, and operational progress towards higher mining rates and mill expansion in British Columbia despite maintenance setbacks. Management announced 2026 production guidance increases for copper and a planned decrease in gold production, highlighted major capital projects and permitting milestones, and allocated substantial capital and exploration budgets to position the portfolio for future growth. All guidance and outlook statements referenced stepwise project execution, normalized operations, redeployment of capital toward risk-adjusted returns, and continued portfolio diversification across copper and gold in the Americas.

• Mitsubishi's JV funding "further lowers our net leverage ratio to 0.0x" and provides complete project funding for initial Copper World development.
• Company highlighted that gold comprised 41% of Q4 revenue, evidencing a shift to greater precious metals exposure within total output.
• British Columbia mining rate reached December target of 300,000 tonnes per day, with enhanced reliability initiatives underway to sustain performance and enable mill ramp-up.
• Company received critical British Columbia expansion permits for New Ingerbelle, enabling production profile enhancements and long-term job preservation at Copper Mountain.
• Talbot deposit drilling program doubled the known mineralized footprint, establishing the potential for expanded gold-copper-zinc feed to Manitoba's mills; assays for significant intercepts are pending.
• Management confirmed "185,000 ounce per year profile" target for Manitoba gold output in the coming five to ten years, with further multi-year expansion plans in development.
• Feasibility activities for Copper World are on schedule, with a definitive study due mid-2026 and project sanctioning targeted in 2026.
• Dividend policy shift expands shareholder returns, moving from a semiannual $0.01 dividend to a quarterly $0.01 distribution, totaling $0.04 annually.
• Exploration spending will increase to $60 million, with flagship programs focused on Manitoba's Snow Lake and British Columbia's Ingerbelle resource conversion.

INDUSTRY GLOSSARY

• Pampacancha: A high-grade satellite copper-gold deposit operated by Hudbay at the Constancia site in Peru, central to 2025/2026 production profiles.
• SAG Mill: Semi-autogenous grinding mill utilized at Hudbay's British Columbia and Manitoba operations to grind ore prior to concentration.
• Copper World JV: Hudbay's joint venture partnership with Mitsubishi Materials Corporation, structured as a staged investment for a 30% stake in the Arizona-based Copper World project.
• New Britannia: Gold mill and mine in Manitoba, subject to recent refurbishment and the focal point of Hudbay's gold production growth strategy.
• 1901 Deposit: Manitoba-based deposit undergoing development and exploration with planned full production by 2027.
• Ingerbelle (New Ingerbelle): British Columbia-based copper-gold resource, recently permitted for expansion to extend the mine life and broaden production at Copper Mountain.
• SART Plant: Sulfidization, Acidification, Recycling, and Thickening facility to be implemented at New Britannia, aimed at reducing cyanide use and boosting gold recovery.
• NCIB: Normal Course Issuer Bid—a Canadian term for a share buyback program, referenced as part of Hudbay's capital allocation options.
• TCRC: Treatment and refining charges, which are costs paid by miners to smelters and refiners for processing concentrate; low or negative TCRC benefits realized in current offtake contracts.

Full Conference Call Transcript

Peter Kukielski: Thank you, Candace. Good morning, everyone, and thank you for joining us for today’s call. 2025 was a transformative year for Hudbay as we achieved the third consecutive year of record financial performance. We delivered record annual revenues of more than $2,000,000,000, record annual adjusted EBITDA of over $1,000,000,000, and record annual free cash flow generation of more than $380,000,000. Our diversified operating platform demonstrated resilience and enabled us to deliver our eleventh consecutive year of achieving copper production guidance and fifth consecutive year of achieving gold production guidance. We also outperformed our twice-improved consolidated cash cost guidance, demonstrating industry-leading cost performance.

These achievements are even more remarkable considering the significant challenges we had to overcome with wildfire evacuations in Manitoba and social unrest in Peru last year. We are delighted to have secured Mitsubishi as a premier long-term partner for our Copper World project in a precedent-setting joint venture transaction. This transaction enables us to unlock significant value in our copper growth pipeline, further solidifies our financial strength, and significantly reduces our share of future equity contributions for the development of Copper World. Our prudent strategic financial planning and execution has enabled us to achieve our balance sheet deleveraging goals ahead of schedule and lowered our cost of capital.

We now have the financial flexibility to sanction Copper World in 2026, embark on generational investments in our operating portfolio, and commence increases in shareholder returns with our first-ever dividend increase as part of our holistic capital allocation framework. This will allow us to continue to deliver attractive growth and maximize long-term risk-adjusted returns for our stakeholders. Slide four provides an overview of our fourth quarter operational and financial performance. The fourth quarter underscored our commitment to operational excellence with standout performance in Peru driven by high-grade Pampacancha ore, record monthly throughput achieved at the New Britannia mill in Manitoba, and a successful completion of the SAG mill feed system in British Columbia.

We achieved $733,000,000 in record revenues and $386,000,000 in record adjusted EBITDA during the fourth quarter. We produced 33,000 tonnes of copper and 84,000 ounces of gold in the quarter. Despite an eight-day power outage in Manitoba and lower throughput levels in British Columbia, our operations in Peru had a strong finish to the year with a final quarter of Pampacancha mining activities. Fourth quarter net earnings were $128,000,000 or $0.32 per share, reflecting strong gross margins as a result of higher metal prices and $25,000,000 received for business interruption insurance from the mandatory wildfire evacuations in Manitoba. After adjusting for the insurance proceeds and other non-cash items, fourth quarter adjusted earnings were $0.22 per share.

We continue to demonstrate industry-leading cost performance in the fourth quarter with consolidated cash cost of negative $0.63 per pound and consolidated sustaining cash costs of $0.94 per pound. These costs significantly improved compared to the third quarter, primarily as a result of higher copper production and higher gold by-product credits. Turning to slide five. Hudbay’s unique diversification in copper and gold, coupled with our relentless commitment to cost control, enables us to maintain industry-leading margins and deliver strong and reliable cash flows.

Operating cash flow before change in non-cash working capital was $337,000,000 in the quarter, a meaningful increase compared to the third quarter, reflecting higher copper and gold sales volumes from normalized operations after the temporary interruptions and higher metal prices. After accounting for the capital investments to sustain production, we generated $228,000,000 in free cash flow during the quarter, bringing annual free cash flow to $388,000,000 in 2025 and achieving new quarterly and annual record levels. While the majority of revenues continue to be derived from copper, revenue from gold continues to represent a growing portion of total revenues, with 41% of revenues from gold in the fourth quarter.

Our deleveraging efforts continued in the fourth quarter as we repurchased and retired an additional $39,000,000 of senior unsecured notes through open market purchases at a discount to par. We are proud to say that since 2024, we have reduced our long-term debt by $185,000,000, bringing our total debt levels to $1,000,000,000 today. We ended the quarter with total liquidity of $994,000,000, including $569,000,000 in cash and cash equivalents and undrawn availability of $425,000,000 under our revolving credit facilities. Our net debt to EBITDA ratio further improved to 0.4x at December. After year-end, our cash and cash equivalents balance increased to $992,000,000 with the closing of the Copper World joint venture transaction in early January.

This increases our adjusted total liquidity to over $1,400,000,000 and further lowers our net leverage ratio to 0.0x. This financial transformation demonstrates the benefits of our diversified operating platform, industry-leading costs, and prudent balance sheet management. We are extremely well positioned to prudently reinvest in our portfolio of attractive high-return brownfield and greenfield opportunities to drive production growth and long-term value creation. In Peru, we exceeded the top end of the annual gold production guidance range and achieved the copper production guidance range despite the impact of a temporary operational interruption due to social unrest. As shown on slide six.

Our Peru operations had the strongest quarter of the year in the fourth quarter as we continued to see strong copper and gold grades from Pampacancha and we processed less ore from low-grade stockpiles compared to the prior quarter. We continue to optimize the mine plan with more ore mined from Pampacancha during the quarter than previously expected, resulting in the accelerated depletion of Pampacancha in late December as opposed to early 2026. The operations produced 25,000 tonnes of copper, 33,000 ounces of gold, 731,000 ounces of silver, and 325 tonnes of molybdenum during the quarter.

Production of copper, gold, and silver increased by 38%, 25%, and 27%, respectively, compared to the third quarter due to higher ore milled as the third quarter was impacted by the temporary operational interruption. Mill throughput increased to 7,600,000 tonnes due to higher mill availability than the third quarter, partially offset by the scheduled semi-annual mill maintenance shutdown in the fourth quarter. Milled copper grades increased by 26% compared to the third quarter with higher grades from Pampacancha and less ore processed from stockpiles. Milled gold grades also increased with a strong gold contribution from Pampacancha. Mill recoveries were in line with our metallurgical models based on the ore being processed.

Fourth quarter cash costs in Peru were $0.57 per pound of copper, decreasing by 56% compared to the third quarter with the benefit of higher gold by-product credits, partially offsetting higher profit sharing. Full-year cash costs in Peru outperformed the low end of the guidance range and improved by 8% from 2020 due to lower treatment and refining charges and higher by-product credits. Fourth quarter metal sold was higher than the prior quarter as some copper concentrate sales in the third quarter were impacted by ocean swells and were deferred to the fourth quarter.

While copper concentrate inventory levels normalized at the end of last year, there were elevated levels of precious metals contained in the inventory concentrate due to a higher portion of Pampacancha production in the second half of the year, resulting in a shift of some precious metal sales from December 2025 to 2026. We continue to advance the installation of pebble crushers in Peru to increase mill throughput rates starting in 2026, which will allow Constancia to deliver steady annual copper production despite lower grades from the depletion of Pampacancha. These efforts align with the Peru Ministry of Energy and Mines’ regulatory change to allow mining companies to operate up to 10% above permitted levels. Turning to slide seven.

Our Manitoba operations were previously tracking within the 2025 guidance ranges despite the wildfire impacts. However, as a result of the weather-related power outage in October and the subsequent ramp-up period required to restore full operations, gold and zinc production fell below the low end of the respective ranges. That said, we successfully achieved guidance for copper and silver despite these interruptions. Performance in the fourth quarter demonstrates that our Manitoba operations have normalized following the significant wildfire disruptions. Our Manitoba operations produced 47,000 ounces of gold, 3,000 tonnes of copper, 6,000 tonnes of zinc, and 214,000 ounces of silver in the quarter.

Full-year production in Manitoba was lower than the prior year as a result of production deferrals from the wildfires, the weather-related power outage, and associated ramp-up to restore full operations. However, we continue to focus on safety and achieved a 15% reduction in total recordable injury frequency in 2025. At the Lalor mine, the focus was on stabilizing production after resuming our operations. Lalor averaged over 4,200 tonnes per operating day in the quarter, strategically prioritizing mining from the gold zones to ensure feed for the New Britannia mill. Gold grades slightly increased compared to the third quarter as we continue to improve ore quality and focus on prioritizing gold zones at Lalor.

Consistent with our strategy of allocating more Lalor ore feed to New Britannia to maximize gold recoveries, the New Britannia mill achieved average throughput of approximately 2,300 tonnes per day in December, reaching a new monthly throughput record. Stall mill continued to focus on process optimization and enhancing gold recovery initiatives, which resulted in achieving over 70% gold recovery from our base metal ore stream. The Stall mill processed significantly less ore in 2025 compared to 2024 in alignment with our strategy to allocate more Lalor ore feed to New Britannia. The 1901 deposit delivered 6,600 tonnes of development ore in 2025 as the project progresses towards full production in 2027.

During the year, the team focused on establishing 1901 underground infrastructure and haulage and exploration drifts. Manitoba sales volumes in the fourth quarter reflect a rebuild of inventory levels as operations normalized. Manitoba gold cash costs in the fourth quarter were $705 per ounce, increasing compared to the third quarter, primarily due to higher overall cost in the quarter as operations normalized. Despite the production headwinds in 2025, full-year gold cash costs were $549 per ounce, a 9% improvement from 2024 and outperforming the lower end of the cash cost guidance range. The strong cost performance was supported by the prioritization of high-margin gold production over by-product zinc production.

In British Columbia, we continue to focus on advancing our multiyear optimization plan centered on ramping mining activities and implementing standardized operating practices as shown on slide eight. We produced 4,700 tonnes of copper, 4,000 ounces of gold, and 57,000 ounces of silver in British Columbia in the fourth quarter. Production was lower compared to the prior quarter, primarily reflecting reduced mill throughput caused by unplanned maintenance on the primary SAG mill. Full-year production achieved the guidance range for gold and silver, while copper production fell below the low end of the guidance range because of the impact of the primary SAG mill unplanned maintenance and a higher amount of low-grade stockpiled ore processed throughout the year.

Mining activities continue to focus on executing a three-year accelerated stripping program to unlock higher grade ore starting in 2027. Total ore mined in the fourth quarter was 2,400,000 tonnes, a 32% increase from the third quarter as we optimized the mining sequence and enhanced maintenance practices, which increased mining rates to a targeted 300,000 tonnes per day in December. To sustain this momentum, a new production loader was commissioned in January 2026, and the new shovel is currently scheduled for deployment in March. Mill enhancement initiatives continued in the fourth quarter with a successful completion of the permanent feeder for the second SAG mill in December.

The second SAG mill continued to demonstrate positive contributions to overall throughput in the fourth quarter. The mill processed 27% less ore in the fourth quarter compared to the third as a result of unplanned maintenance on the primary SAG mill to address localized damage to the feed end head. Operations were further constrained by elevated clay content in the ore and the planned decrease in feed pile to accommodate the construction and tie-ins for the second SAG expansion project. The team implemented several additional initiatives in 2025 to mitigate further challenges and build long-term mill reliability, including completing crushing circuit chute modifications, installing advanced grinding control instrumentation, and a redesigned SAG liner package.

Despite throughput constraints, fourth quarter milled copper grades were 18% higher than the third quarter, driven by higher grades in ore mined. Copper recoveries improved to 78% and gold recoveries saw a 7% increase over the third quarter. While the primary SAG mill continues to operate under a reduced load, it is being rigorously monitored ahead of a feed end head replacement in mid-2026. The mill remains on track to achieve its permitted capacity of 50,000 tonnes per day in 2026.

British Columbia cash costs and sustaining cash costs were higher than the prior quarter, largely driven by the ramp-up of mining activities advancing the accelerated stripping program combined with the impact of lower production and by-product credits due to the lower mill availability. Despite the headwinds in 2025, the business unit demonstrated strong cost discipline enabling the operations to achieve the full-year cash cost guidance range. I will now turn the call over to Eugene Lei to introduce our capital allocation framework. Eugene?

Eugene Lei: Thank you, Peter. Turning to slide nine, Hudbay has a proven track record prudently allocating capital to high-return brownfield investments, such as the New Britannia gold mill refurbishment project and the development of the high-grade Pampacancha satellite deposit. Both these investments have delivered significant free cash flows and contributed to our recent deleveraging efforts. These deleveraging achievements have been part of our financial transformation over the past three years. Hudbay has moved from being overleveraged and capital constrained to a preferred position where we can strategically allocate capital across the portfolio to maximize value and generate the highest risk-adjusted returns, creating long-term sustainable value for all our stakeholders.

Three years ago, when I became CFO, we put in place our three prerequisites plan, known as the 3P plan, outlining financial criteria needed to be achieved prior to sanctioning Copper World. We have successfully executed all of the financial elements of the 3P plan, and with prudent strategic financial planning over the last few years, we have completed the deleveraging of our balance sheet. We are proud to have the strongest balance sheet in more than a decade and are one of the lowest debt leverage companies in our peer group.

Together with the strategic investment by Mitsubishi, Hudbay is very well positioned to both sanction the Copper World project and embark on generational investments in our operating portfolio in 2026. These investments include allocating capital to high-return brownfields projects at our three operating mines and advancing our world-class development and exploration pipeline. To provide transparency and continued financial discipline, we have implemented an enhanced capital allocation framework to provide a holistic approach around capital allocation decisions. This includes growth capital reinvestments in the business through near-term brownfields projects, long-term greenfield projects, strategic investments, and exploration, while also considering debt repurchases, share buybacks, and dividends. Our capital allocation framework is embedded in our annual financial planning cycle.

The framework assesses capital allocation opportunities against key elements such as preserving a strong balance sheet, strategic fit for growth and diversification, accretion across key financial metrics, performing a rigorous risk assessment, and applying accountable investment governance practices. Consistent with our capital allocation framework and our recent financial transformation, we are now in a position to commence increases to shareholder returns in the form of a quarterly dividend. We are pleased to introduce a new quarterly dividend of $0.01 per share, which represents an annual increase of 100% over our former semiannual $0.01 dividend. This increases our total annual dividend amount to $0.04 per share. Thanks, and I will hand it back to Peter for 2026 strategic objectives.

Peter Kukielski: Thank you, Eugene. Our key company objectives for 2026 are summarized on slide 10. We continue to focus on operational excellence, advancing organic growth opportunities, and prudently allocating capital to deliver attractive high-return growth. At the core, we intend to demonstrate continued operational excellence to enable substantial free cash flow generation while maintaining industry-leading cost performance. We plan to achieve this by investing in high-return brownfield growth opportunities across our operating platform, such as the mill throughput enhancement projects. We plan to prudently invest in our attractive organic growth to deliver long-term production increases.

This includes completing the Copper World Definitive Feasibility Study, progressing the New Ingerbelle permitting and development, advancing studies on our regional satellite properties in Snow Lake, executing our large Snow Lake exploration program to look for new anchor deposits, initiating a pre-feasibility study at Mason, advancing Flin Flon tailings reprocessing project analysis, and preparing for Maria Reyna and Caballito exploration to provide significant long upside potential in Peru. With a strengthened balance sheet and our first-ever dividend increase, we enter the year with unmatched financial flexibility. In 2026, we intend to maintain strong financial discipline by implementing our capital allocation framework to maximize returns.

This will be achieved by continuing to reduce total debt, sourcing efficient project-level financing for Copper World, and evaluating all types of capital redeployment opportunities to generate the highest risk-adjusted returns. Turning to slide 11, as I mentioned earlier, 2025 represents the eleventh consecutive year in which Hudbay achieved its annual consolidated copper production guidance, which includes every year since Constancia declared commercial production. 2025 also represents the fifth consecutive year achieving our annual consolidated gold production guidance since establishing standalone gold production guidance after Snow Lake became a primary gold producing operation. In 2026, consolidated copper production is expected to increase by 5% to 124,000 tonnes using the midpoint of the guidance range.

This is driven by higher expected production in British Columbia as a result of mill throughput ramping up to the target 50,000 tonnes per day in the second half of the year, partially offset by the depletion of Pampacancha in December 2025. Consolidated gold production in 2026 is expected to decrease by 9% to 244,500 ounces as a result of the depletion of Pampacancha. However, unstreamed gold production is expected to increase in 2026 with higher gold production in Manitoba as operations normalize following the wildfires and we continue to achieve strong performance at the New Britannia mill.

In Peru, 2026 copper production is expected to be relatively consistent year over year at 82,500 tonnes as higher mill throughput is expected to largely offset the grade decline with the depletion of Pampacancha. Peru gold production is expected to decline to 17,500 ounces with the depletion of Pampacancha. The short-term mine plan changes in 2025 to optimize the mine plan during the period of social unrest resulted in reduced stripping activities in 2025, which has caused some grade resequencing in 2026, but we expect higher copper production in Peru in 2027 and 2028. In Manitoba, 2026 gold production is expected to be 200,000 ounces, reflecting a 15% year-over-year increase as the operations normalize after the unprecedented wildfires.

We expect to see continued strong mill throughput at New Britannia, continuing to operate above 2,000 tonnes per day in 2026, far exceeding its original design capacity of 1,500 tonnes per day. In British Columbia, 2026 copper production is expected to be 30,000 tonnes, representing a 26% increase from 2025 production levels. This increase will be driven by the throughput improvements in the second half of the year. We expect to release an updated three-year production outlook with our annual mineral reserve and resource update in late March. Slide 12 summarizes our cost guidance. In 2026, consolidated cash costs are expected to remain at historically low levels within a range of negative $0.30 to negative $0.10 per pound of copper.

Cash costs this year will continue to benefit from higher gold production as a by-product and our continued focus on maintaining strong operating cost control across the business. Sustaining cash cost guidance for 2026 is expected to be within $1.70 to $2.10 per pound of copper, benefiting from higher copper production and higher by-product credits, offset by higher expected sustaining capital expenditures. In Peru, 2026 copper cash costs are expected to be between $1.70 and $2.10 per pound, reflecting steady unit operating cost performance offset by lower by-product credits with the depletion of Pampacancha. Peru cash costs will benefit positively from lower treatment and refining charges and lower electricity rates with a new renewable power contract in effect.

In Manitoba, gold cash costs are expected to be between $500 and $800 per ounce in 2026, remaining at industry-low levels, driving strong margins at current gold prices. In British Columbia, copper cash costs are expected to decrease in 2026 to a range of $1.50 to $2.50 per pound. The decrease will be driven by higher copper production, higher by-product credits, and higher capitalized stripping related to the accelerated stripping activities. Capital expenditures in 2026 include approximately $96,000,000 of capital deferrals from 2025, higher growth capital spending as we reinvest in several high-return growth projects, and one-time sustaining capital expenditures.

Total sustaining capital expenditures are expected to be $435,000,000, and total growth capital expenditures at the operations are expected to be $140,000,000, excluding Copper World joint venture spending. The growth capital for Copper World is expected to be $135,000,000. In Peru, 2026 sustaining capital is expected to be maintained at $140,000,000, which includes about $20,000,000 of deferrals from last year and $18,000,000 in one-time heavy civil work projects, offset by lower spending on tailings dam raises. Growth capital in Peru of $40,000,000 relates to the installation of two pebble crushers to increase mill throughput starting in 2026 and includes $13,000,000 of capital deferrals from 2025.

In Manitoba, sustaining capital expenditures are expected to temporarily increase to $105,000,000 in 2026, including $5,000,000 of deferred capital, $20,000,000 in one-time expenditures related to a project at New Britannia to lower nitrogen levels, and $12,000,000 for an accelerated one-year construction project for a dam raise at our Anderson tailings facility. Underground capitalized development at Lalor is expected to return to normal levels after reduced levels in 2025 from the wildfires. Manitoba growth capital is expected to be $15,000,000 this year related primarily to the development of exploration platforms and haulage drifts at the 1901 deposit.

In British Columbia, 2026 sustaining capital expenditures are expected to be $60,000,000, an increase compared to 2025, including a $5,000,000 one-time expenditure for the replacement of the feed end head of the primary SAG mill as well as $13,000,000 in capital deferrals from 2025. We expect to incur $130,000,000 of capitalized stripping costs in 2026 related to the continued accelerated stripping program. British Columbia growth capital expenditures are expected to increase to $85,000,000, including $10,000,000 in capital deferrals, with the remaining capital related to early works and infrastructure development for New Ingerbelle. As we continue to advance Copper World towards a sanction decision, we expect capital expenditures to be $135,000,000, excluding post-sanctioning construction costs.

This growth capital has been largely funded by the proceeds from the Mitsubishi joint venture received in January 2026, and relates to feasibility study costs and continued derisking until the sanction decision. It includes $35,000,000 of capital deferrals from 2025 and approximately $60,000,000 for accelerated long-lead items and derisking activities. Post-sanction construction costs will be updated at the time of project sanction. Looking at exploration expenditures in 2026, we expect an increase in spending to $60,000,000 as we continue to execute the multiyear extensive geophysics and drilling program in Snow Lake, as well as spending allocated to New Ingerbelle inferred resource conversion efforts.

As part of our long-term growth pipeline, slide 13 summarizes the threefold strategy we are executing in Snow Lake as part of the largest exploration program in the company’s history in Manitoba. The first objective is to execute near-mine exploration, including underground and surface drilling at Lalor. This past year’s significant progress was made with the completion of the initial exploration drift at the 1901 deposit, which saw positive step-out drilling and delivered some zinc development ore to the Stall mill. Underground drilling is planned for 1901 from the new exploration drift to upgrade and expand the mineral reserve and resource estimates.

Activities at 1901 over the next two years will focus on exploration, definition drilling, orebody access, and establishing critical infrastructure for full production in 2027. We also plan to complete underground and surface drilling at Lalor to continue expanding mineral resource and reserve estimates. The second strategic focus area is on testing regional satellite deposits within trucking distance of the Snow Lake processing infrastructure to identify potential additional ore feed to fully utilize the available processing capacity. In 2026, we plan to advance activities at many of our satellite deposits, including Talbot, New Britannia, and Rail, testing for both base metal and gold potential. We will touch more on Talbot, a highly prospective target, on the next slide.

Peter Kukielski: And the third strategic focus area is on exploring our large land package for a new potential anchor deposit to significantly extend the mine life of our Snow Lake operations. In 2026, we will continue the ground electromagnetic survey and extensive airborne geophysics survey. In early January, we announced the signing of an amended option agreement with JOGMEC and Marubeni to expand the Flin Flon exploration partnership for three projects in the Flin Flon region, including Cupriss, White Lake, West Arm, and North Star. Turning to slide 14, in July, we commenced an extensive summer drill program at the copper-gold-zinc Talbot deposit focused on expanding the known mineralization at depth.

Talbot is located within trucking distance of the Snow Lake processing facilities, making it an ideal deposit to potentially provide supplemental feed to our mills. As part of the initial drilling program in 2025, Hudbay drilled six holes to test the continuity of the Talbot deposit at depth, with all the holes yielding positive results and four of them returning mineralized intercepts of economic potential. The image shows a 3D view of the deep holes drilled at Talbot, confirming continuation of the mineralization at depth. As shown in the image on the slide, the drill results indicate that the mineralized footprint of Talbot has doubled.

We have commenced the 2026 drilling program in January with six drill rigs turning, including one rig focused on continuing to expand the footprint of the deposit at depth. An additional hole provided a significant intercept of visible copper mineralization over approximately 20 meters, and assays are pending. This year, we plan to progress a PFS and prepare an updated mineral resource estimate utilizing our standard method that has a high reserve conversion rate. Turning to slide 15. Our Copper World project in Arizona continues to achieve key milestones as we progress towards sanctioning later this year.

The closing of the strategic joint venture partnership with Mitsubishi validates the attractive long-term value of Copper World as a top-tier copper asset and endorses the strong technical capabilities of Hudbay. Together, we will continue to advance this high-quality copper project and unlock significant value for all of our stakeholders. With the closing of the transaction, Mitsubishi’s initial cash inflow of $420,000,000 will be used to fund the remaining feasibility study and pre-sanction spending, in addition to initial project development costs for Copper World once we sanction. Mitsubishi will also contribute the remaining $180,000,000 within eighteen months to complete its initial 30% stake and will continue to fund its pro rata 30% share of future capital contributions.

Copper World feasibility activities are underway, and we are on track for the completion of a definitive feasibility study in mid-2026. We have allocated growth capital expenditures in 2026 for accelerated detailed engineering, certain long-lead items, and other derisking activities, and we continue to expect to make a sanction decision in 2026. We are very well positioned to build one of the next major copper mines in the United States, continuing to maintain a strong balance sheet and reinvesting in other growth opportunities across our portfolio. Before we conclude, I want to take a moment to highlight the New Ingerbelle expansion permits that our Copper Mountain mine just received and announced.

This is a very exciting milestone for the British Columbia team as we expand growth optionality for Copper Mountain. The receipt of these permits is an important step to enhance the copper and gold production profile at Copper Mountain. It secures a longer mine life, preserves more than 800 jobs, and ensures continued economic benefits and long-term financial stability for the region. We received the amended Mines Act and Environmental Management Act permits through the coordinated authorizations process managed by the British Columbia Major Mines Office. Throughout the permitting process, we proactively engaged with the local communities and the Upper and Lower Similkameen Indian Bands to ensure transparency.

We recently finalized refreshed participation agreements with the bands, reinforcing our commitment to strong indigenous partnerships. The new Ingerbelle permit ensures that we will be able to advance this B.C. major project and extend our partnership with the local communities to facilitate additional growth investment at Copper Mountain and further add to our 99 years of successful operations in Canada. Concluding on slide 16, 2025 demonstrated the benefits of Hudbay’s diversified operating base, our unique copper and gold exposure, and our operating resilience. I am extremely proud of the performance we were able to achieve despite the many operational interruptions. Our continued focus on cost control enables us to maintain industry-leading margins and deliver strong and stable cash flows.

Once Copper World is in production, we expect our annual copper production to grow by more than 50% from current levels. This will reinforce our position as one of the largest Americas-focused copper producers with a well-balanced and geographically diversified portfolio of assets. Our expected production will be weighted approximately one third each in Canada, the United States, and Peru, and further enhance Hudbay’s exposure to copper, representing more than 70% of consolidated production and revenue. I have no doubt that we will continue to see more transformations as we execute on our growth strategy and prudently invest in our world-class pipeline to deliver the highest risk-adjusted returns for our stakeholders. We will now open for questions.

Operator: The first question is from Ralph Profiti with Stifel Financial. Please go ahead.

Ralph Profiti: Thank you, operator, and thanks for taking my questions. Peter and Eugene, this capital allocation framework is coming at a time when we are seeing the biggest spread between actual metal prices and spot metal prices and consensus metal prices. And when you talk a little bit about some of the commodity price scenarios, I am just wondering would you characterize your approach versus the past on some of the scenario analysis that you do? And how are you going to balance crowding out versus opportunities versus metal prices being used versus buy versus build context? I would like a little bit on that, please.

Eugene Lei: Hi Ralph, thanks for your question. And I think this is an ideal time to unveil this capital allocation framework because of the volatile markets that you described. As you know, we have a proven track record of allocating capital to high-return opportunities. That is what netted us the New Britannia gold mill and then the Pampacancha investment, and that has achieved 25% IRRs over the past few years and helped us deleverage our balance sheet. Now with Mitsubishi on board, that really essentially helps us fully fund the Copper World project.

And so we are going to be able to go into the end of this decade having delevered the company, funded and built Copper World, and now have the opportunity to fund greenfield projects and brownfield high-return projects at each of our operating sites. When we run and to best determine how to allocate that capital, running this process allows us to run various scenarios, use varying prices and even opportunities to finance some of this growth. And so when we use this holistic approach, we are able to balance the growth aspects and prudently fund them, while also keeping an eye to capital returns. We are ramping into the first dividend increase in our company’s history.

It is nominal, but it is a start. And as you saw last year, when we implemented the NCIB, these options or opportunities are on the board to be compared with reinvestment in our portfolio. We are going to test these opportunities as they come. As you know, we have a very skilled technical services team, and our operations are always looking for ways to enhance production and enhance mine life. We will weigh those opportunities at varying prices to the balance sheet and have an opportunity to increase returns to shareholders once we have determined the optimal structure.

Ralph Profiti: Helpful. I appreciate the descriptive answer. And if I can just switch more to a technical question. Peter, what is Q3 going to look like in British Columbia on the SAG work, what does downtime look like? What does tie-in time require? And just wondering what happens to throughput in that scenario in that quarter?

Peter Kukielski: Thanks, Ralph. I think that, as I mentioned in the comments, the planned replacement of the feed end head will be early in the third quarter. We continue to operate carefully in the interim, but we still expect the operations to stabilize and improve progressively through that period. There will be a project period of, I imagine, several weeks during which we replace that head. I do not expect there to be anything abnormal that is not provided for in our guidance. Andre, would you perhaps elaborate on it a little bit? Sure. So the team is doing an excellent job

Andre Lauzon: The parts are procured. We have cast four sections; two have passed QA/QC, and we have a team over there inspecting as we speak. Tentatively, as Peter mentioned, it is about a month of work. We will be able to continue to run our SAG 2 at the same time, and the teams are working through the details of that.

Ralph Profiti: It is—

Andre Lauzon: Scheduled, like you said, at the beginning of Q3, which is probably straddling around July–August. We are looking for opportunities to pull that forward. We do not know exactly what that is right now. They are still inspecting, looking at shipping, and all of the details of getting that in place. As we report next quarter, we will definitely have a lot more clarity on the timing of that. The opportunity of pulling it forward, if we are able to do that, is obviously ramping up to the higher throughput sooner, which will improve what we are forecasting for the year. But right now, it is scheduled on that end.

But right now, as it stands, the back end of the year is probably about, call it, 20% higher than what the front half is for the year on total metal. If you want to use that sort of cadence, the improvement would be a positive if we can pull it forward a bit, and we will update as we know.

Ralph Profiti: Okay. Got it. Thank you for those helpful answers.

Eugene Lei: Thanks, Ralph.

Operator: The next question is from George Ebey with UBS. Please go ahead.

Lawson Winder: Yes. Hi, thanks for the call today. Can I ask at Manitoba, just clarifying the updated three-year production guide, that will not include any new drilling, will it? And secondly, just when exactly in the year will we get the next tech report for Manitoba, potentially bringing in Talbot and some other satellites?

Peter Kukielski: George, thanks for the question. We have not decided that we are producing a tech report for Manitoba this year. The current technical report is still valid in terms of production at Lalor. With respect to another revised technical report, at some point that would be in order to bring in some of the results of other drilling that we are performing in the region, but it is not determined yet when that would be. Andre, perhaps you could elaborate.

Andre Lauzon: Yes, sure. It is a great question. I would say there is so much going on in Manitoba right now, and it is on all fronts. We have seen some positive success with drilling 17 zone, the high-grade gold down plunge of Lalor. We now know the plunge direction, and so we will be targeting an exploration drift to do this year to get to that area. The Talbot area is very exciting. There are six drills going at site right now. About five of them are doing definition drilling to prepare to have that, call it, maiden Hudbay reserve for that.

The teams are working actively on pre-feasibility studies to understand how we are going to mine it, ramp versus shaft, and optimizing. To date, the drilling has indicated, as Peter mentioned, doubling the footprint of what we know, and it is open in many directions still. That is also very exciting. There is a ton of optimization going on right now around New Britannia. We are looking at improving our flash flotation. Although we have a permit at 2,500 tonnes per day, we are seeing some really high copper grades, which is great. We have to slow down the mill a little bit when we are seeing those really high grades.

The teams are looking at optimization there at New Britannia. We have a SART plant coming in at the end of the year. That is going to reduce our cost with reduction in cyanide and also improve recoveries. We have some additional things we are looking at Stall. To complicate it even more, as you know, the New Britannia mill is sitting on top of the New Britannia mine. That mine ran for close to twenty years at about a million and a half ounces. With the run-up in gold prices, it probably was not on our radar for a number of years.

Now we have teams actively looking at putting together a plan for what we actually have and what is the potential. There will be a lot more to come on the 185,000 ounce per year profile at a really good all-in sustaining, probably less than $1,200 an ounce, long into the future. I did not mention as well that we are looking at optimization cutoff within the mine. That also has the potential to bring low-cost capital, good-grade ounces that were on the cusp before at $2,000 or so an ounce, now at much higher prices. We are looking at a lot of things, so hold tight, I guess, is what I would say.

There is going to be some really good stuff coming.

Eugene Lei: If I could add with some comments in terms of catalysts, the three-year guidance will be released along with our reserve and resource update in March. That will show this extension of this higher gold production at Lalor and Snow Lake that Andre speaks of, about 185,000 ounces, well beyond what was contemplated in the technical report. As Peter highlighted, we are looking at ways to daylight what would be the longer-term profile. With all the opportunities that Andre highlighted, we hope by end of the year that we will be able to catalyze many of those projects and be able to provide the market with this five to ten year outlook at these new levels.

We think that will be very value creating for Manitoba and Hudbay.

Lawson Winder: Yep. That is super detailed and helpful, guys. Thanks very much. Maybe just one more if I can sneak in, kind of similar, Mason, like the comments about that in the release. PFS, when could that be completed? And will we see the outcomes, I guess? Any updates on a potential partner even there? Thank you.

Peter Kukielski: Sure, George. We are currently starting to work on Mason. We are building the team. We are kicking into some pre-feasibility study work. I would expect that we would complete a pre-feasibility study at Mason later on next year. We would not contemplate partnering at this early stage. As we progress through the pre-feasibility study, we would look at opportunities to do that based on the work that we do, but partnering is not something that we are contemplating there right now.

Andre Lauzon: It is the right time right now. Eugene mentioned our capital allocation framework and investing in different opportunities. It was somewhat parked for two reasons: our availability of capital to spend on doing that, because we have to do geotechnical drilling, hydrology, getting all of the key things that really put a robust pre-feasibility together; and we were waiting for some clarity with the federal government around placing waste rock and tails on federal land. That has now been resolved. With both of those in our favor right now, we are ramping up, as Peter said, and building the team to accelerate that project because next to Copper World, it is the next largest undeveloped copper deposit in the U.S.

It is a great project.

Lawson Winder: Yes. Super helpful. Thanks, guys.

Eugene Lei: Thanks, George.

Operator: The next question is from Fahad Tariq with Jefferies. Please go ahead.

Fahad Tariq: Hi, thanks for taking my question. Maybe just on Peru, can you let us know what the latest is on the Maria Reyna and Caballito permits? And what is happening there?

Peter Kukielski: Absolutely. For sure, Fahad. There has been no change to the remaining steps for the drill programs, which includes the government’s prior consultation process with the local community. Given the environment in Peru right now, I think this process is likely delayed. This is an election year coming up. We have had a change in president. The timelines are quite difficult to predict as we learned from Pampacancha several years ago. Although we cannot predict the permitting timelines, let us get through the elections. We are confident we will get the permit. I just cannot tell you when it will be.

I am extremely confident that Maria Reyna and Caballito play a big part in value creation in Peru in the future. At the moment, I cannot provide you with an accurate timeline.

Fahad Tariq: Okay. I understand. And then maybe just switching gears to Copper World. I know we are still waiting for the feasibility study, but just thoughts around the copper price assumption that you might be using, or how we should be thinking about CapEx relative to the $1,300,000,000 which is the current estimate? Thanks.

Eugene Lei: I can address the copper price assumption. As you saw in the PFS, this is a very robust project. It generated close to 20% IRR at $3.75 copper. It is the highest-grade undeveloped copper deposit in the Americas. As we update the pricing for the feasibility study, we will be moving toward consensus prices, which today are in the area of $4.50 to $4.75 per pound of copper. We will obviously do various pricing scenario analysis around those prices, but I would expect that it would be in that range at this moment.

Peter Kukielski: And Fahad, on the CapEx side, recall that the PFS was issued in October 2023. So 2.5 years have passed. There is going to be a little bit of escalation. There have been some tariffs introduced on key equipment that might be procured from outside the country. We expect there to be some escalation, but we do not expect it to be material.

Andre Lauzon: Yes. Different than the response for Maria Reyna with the government, Copper World is fully in our control to deliver the feasibility, and the team is doing an excellent job. We are within one and a half percent of our schedule. We are tracking right now at about 67% out of about 68%. The team is doing an excellent job building a world-class feasibility, and we expect it to come to FID at the times that we had forecast.

Eugene Lei: The collaboration with our JV partner, Mitsubishi, has been excellent. We have had our first JV Board meeting. They are on-site with all of the decisions and have contributed. For those that were worried that this would slip, as Andre said, we are right on schedule.

Peter Kukielski: And then, sorry, Fahad. I will go back to the Maria Reyna and Caballito question. I was saying I cannot predict when it is going to happen. It is going to happen, for sure. It may not be this year, but it is coming. Our communities and our partners are incredibly eager to get going on it. It is just a process that has to be followed, and we know how Peru goes, especially during an election year. It is still a great copper destination and will continue to be. Let us hold tight. It is going to happen.

Andre Lauzon: Yes. We have refreshed the team too. We have a newly minted vice president in South America, very familiar with the area. Coming out of some of the challenges that we had through the summer with some of the communities, we refreshed the team for Uchuccarco and Chilloroya. Those are the people that will carry this through to the finish line.

Fahad Tariq: Great. Thank you. Thank you so much.

Operator: The next question is from Orest Wowkodaw with Scotiabank. Please go ahead.

Orest Wowkodaw: Hi, good morning. A couple of follow-ups. Your CapEx guidance for this year at Copper World, $135,000,000, should we anticipate that could increase if you FID the project in the second half of the year? Or will that just start in 2027?

Eugene Lei: The CapEx guidance that we provided of $135,000,000 is basically the feasibility study plus the early works we need to continue to keep schedule for potential first production in early 2029. With the FID, we will provide the rest of spend for the year. I do not expect that to exceed the $420,000,000 that we have already received from Mitsubishi. If you think about the funding, I would say that we would expect Copper World to be cash flow positive from a Hudbay perspective this year. The $420,000,000 contribution obviously came in January. We are going to spend about $135,000,000 leading into the FID decision. On FID, the Wheaton payment becomes due with the first $180,000,000.

We expect to be in a very good position from a funding perspective. That is one of the reasons we carved out Copper World JV spending from the growth CapEx of the company, because it is more than fully funded.

Orest Wowkodaw: That $135,000,000, that is basically all pre-FID?

Eugene Lei: It will be all pre-FID, but some of the spend would have been post-FID. It is basically ensuring that we move the project along as soon as possible, and we have the endorsement with Mitsubishi to proceed in this manner.

Orest Wowkodaw: Okay. And then just shifting gears, I just wanted to clarify something you said earlier. Did I hear correctly that you are suggesting that you can maintain 185,000 ounces of gold in Manitoba for the next five to ten years?

Andre Lauzon: That is the goal.

Eugene Lei: And we will be able to tell you that number for the next three years with our three-year guidance. The opportunity this year is to pull all of the projects that Andre speaks of and put them in buckets so that we can talk about the long-term production horizon of Snow Lake, which is targeted to be at that level for the next five to ten years.

Orest Wowkodaw: Okay. And the March update will just be the three-year guide, and then we will have to wait for the rest after. Is that right?

Eugene Lei: More to come.

Orest Wowkodaw: Okay. Thank you very much. That is great.

Peter Kukielski: Thanks, Orest.

Operator: The next question is from Emerson Sousa with Goldman Sachs. Please go ahead.

Emerson Sousa: Good morning, everyone. Thanks for the opportunity. I have two questions here. First one, just trying to understand the pecking of the projects that the company has right now. There are a lot of things going on. Copper World is obviously a priority, but then you have Ingerbelle expansion, 1901 development, Mason project, and also, so just trying to understand the priorities apart from Copper World. And also on Copper World, could you bring forward the concentrator leach facility that was expected by 2032? You have been seeing U.S. administration putting copper as a critical mineral, so I think it could make sense to bring that product forward so you can sell copper cathode domestically.

And just a final question on Manitoba. How could the asset’s economics profile change with this ramp up in production coming from 1901, Talbot, etc.? Do we still see the same level of all-in cash costs for the asset, or could that change in light of this new ore coming from those deposits? Thank you.

Peter Kukielski: Great questions, Emerson. In terms of priorities, you are absolutely right. Copper World is such a transformational project for our company that it is a clear priority in terms of the activities that are underway by the U.S. business unit, and of course it occupies a lot of attention from corporate management and our board. That said, as Eugene described in his words about capital allocation, given the company’s balance sheet strength going into this year, we do have capital available for the lowest risk-adjusted return projects at each business unit, and we want each business unit to push projects forward for consideration in that pecking order. You spoke about New Ingerbelle.

We are super excited to have received the new Ingerbelle permit yesterday. That will be a priority in British Columbia once the SAG mill two and second SAG mill project has been completed fully and ramped up. It will become a priority there. In Peru, the priority is getting the pebble crushing circuit done, and then looking forward towards getting permits whereby we could further expand production. In Manitoba, you have heard our priorities there; we are growing that whole asset up into something pretty amazing.

In terms of your question with respect to the economic profile, we would target and expect that the economic profile or all-in sustaining costs would remain roughly of the same order of, let us say, $1,200 or so an ounce. We do not have to develop any new infrastructure. Everything is close to infrastructure. With your question with respect to Copper World and concentrate leaching, we certainly would consider bringing it forward. We do not want to start construction of that facility while we are still building the Copper World mine itself because we do not want to divert the attention of the project team.

It may make sense as we progress through construction that we look at bringing it forward so we can continue to utilize the same team that is building the mine itself. I would say more to come on that. Andre, anything you would add?

Andre Lauzon: I think you characterized it really well. It just feels like a $15,000,000,000 company. There are a lot of things going on in all areas and lots of growth going on in each different business unit. It is not that they are all competing for capital, but as Eugene set it up earlier on, we set ourselves up so that we can invest in all of the different areas. We have great projects in each of the different areas, and it is a really exciting time. There is a lot going on.

Eugene Lei: Maybe just to summarize, the budget for 2026 and the guidance for 2026 for growth capital includes funding for all these projects already. They have gone through the process. These are the best projects in each of the business units and they are accounted for. For example, there is $85,000,000 of growth capital for British Columbia allocated to advance New Ingerbelle. There is $40,000,000 of growth capital allocated to Peru for the pebble crusher and $50,000,000 to $60,000,000 of exploration and development work in Manitoba for 1901 and exploration.

We are going to be able to build Copper World and fund advancements and increases in throughput and high-return projects at each of our business units to come out of the decade with not only a new mine, but also refreshed and improved mines at three of our existing sites.

Emerson Sousa: All right, super clear. Thank you very much, guys.

Eugene Lei: Thank you.

Operator: The next question is from Craig Hutchison with TD Cowen. Please go ahead.

Bryce Adams: Hi, thanks for taking the question. I want to follow up on Eugene’s comments and Orest’s question on Manitoba. The extension of the production and grade profile for gold for the next five to ten years, is that being driven by resource conversion? Is it more exploration step-out? Or do you also include some mill throughput expansions there?

Andre Lauzon: All of those. We have been drilling and exploring around Lalor mine for the last couple of years, and we have been pretty silent on what we have been finding, but we have been getting success. Part of that is conversion of resource to reserve. Some of it is new discovery. We talked about the satellites. At Stall, we are achieving 70% recovery. We are looking at the SART process at New Britannia, which is in our project for the end of the year. Hot tails in, as we look at the opportunity to get even more from Stall and even precious metal reprocessing from the tailings there.

The Flin Flon project that someone mentioned earlier, we are into the depths of our pre-feas. We are in the final stages of solving how to get the precious metals out of the zinc plant residue. That is the solution for the back end of the Flin Flon tails, and the teams are working on a really unique process to convert pyrite to pyrrhotite and run it through our autoclaves, then use the solution that we have for the zinc plant deal. That is moving along quite well too. We have a lot of gold to add to our portfolio from new discovery through to getting better at recovering it and bringing new deposits online.

It is an exciting few years ahead of us for sure.

Bryce Adams: Great, guys. Just maybe on New Ingerbelle now that you have the permit in hand, is that something that could positively impact your production in, say, 2028? Is there much capital to bring that project into play?

Andre Lauzon: You are talking the Ingerbelle mine or the mill? So it is New Ingerbelle. Sorry, I am still on gold. You are still in Manitoba. For New Ingerbelle, absolutely. We have about two years of construction we have to do. It is very straightforward: haul roads, East haul road, West haul road, build the bridge, some pump ponds to build, then we will be into it. What is really neat about it, as alluded to in the press releases, is that if you look at the long term, the copper grade is a little bit lower, but very close, and the gold grade is 60% to 100% higher.

It is a really big improvement in grade, and the stripping is about three times less than current. From a profitability standpoint, not only are we increasing the gold through increased throughput, but we will be spending a lot less on stripping. New Ingerbelle will be transformational for Copper Mountain in the 2028 range.

Peter Kukielski: There is also exploration upside too. There is $20,000,000 of drilling going on. We are exploring at Ingerbelle for upside potential to expand that high-grade gold-copper resource, as well as targets on the Copper Mountain side as well.

Bryce Adams: It sounds like that could come in around the 2028 timeframe based on the two-year build. That would be the plan.

Andre Lauzon: That is where we would be, yes.

Bryce Adams: One last question from me. On costs, it looks like you are using pretty conservative metal prices for your C1 calculations. Can you tell us what you are using for your TCRC costs to get a sense of whether there is some potential upside there from a C1 cost perspective?

Eugene Lei: They did not seem that conservative at the beginning of the year. They are today, so we are definitely enjoying the benefits of the higher prices. On the TCRC front, our assumption is zero. We are entering into deals that are below zero. There could still be a little bit of upside there.

Bryce Adams: Great. Thanks, guys.

Operator: The next question is from Anita Soni with CIBC World Markets. Please go ahead.

Anita Soni: Hi, thanks for taking my question. Most of them have been asked, but I just want to clarify on B.C., with the tie-in the second half of the year, do you expect there will be any impact into 2027 from the delay in that tie-in?

Andre Lauzon: No. Not at all. It is scheduled to ramp up. Right now, with the reduced mill capacity, we are seeing upwards of above 40,000 tonnes per day at the current settings with the current restrictions that we placed on it. All of our processes are being prepared right now for that ramp-up once we have that new feed end shell in place. We do not anticipate anything problematic. There are no new feeders or anything. It is just changing the component and running at a heavier loading rate in the mill. Right now, we are being conservative on our bearing pressure in terms of the amount that we feed into the mill, but it is literally turning up a dial.

The mine itself has made some really great strides to increase its production rate. We are seeing averages around 280,000 tonnes per day, which is unlocking high-grade copper coming in the mid part of the year as well.

Anita Soni: Okay. So then on January 1, 2027, what is the throughput rate we should be using?

Andre Lauzon: It should be 50,000 tonnes a day. That is where we anticipate being.

Anita Soni: Okay. Cool. Thanks.

Candace Brule: Thank you very much for taking my question.

Operator: And our last question is from Martin Poirier with Veritas Research. Please go ahead. I am sorry, Martin. We are unable to hear you. It is a very corrupted line. Are you speaking directly into your microphone? Okay. Unfortunately, I think we are going to have to move on. I would like to hand the conference back over to Candace Brule for closing remarks.

Candace Brule: Thank you, operator. Martin, please feel free to email us your questions given the technical difficulties there. Thank you, everyone, for joining us today. If you have any further questions, please feel free to contact our Investor Relations team. Thank you and have a great day.

Operator: This concludes the conference call for today. You may now disconnect your lines. Thank you for participating and have a pleasant day.

This article is a transcript of this conference call produced for The Motley Fool. While we strive for our Foolish Best, there may be errors, omissions, or inaccuracies in this transcript. Parts of this article were created using Large Language Models (LLMs) based on The Motley Fool's insights and investing approach. It has been reviewed by our AI quality control systems. Since LLMs cannot (currently) own stocks, it has no positions in any of the stocks mentioned. As with all our articles, The Motley Fool does not assume any responsibility for your use of this content, and we strongly encourage you to do your own research, including listening to the call yourself and reading the company's SEC filings. Please see our Terms and Conditions for additional details, including our Obligatory Capitalized Disclaimers of Liability.

The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.