Business and Financial Review Strategy

At Hudbay, our mission is to create sustainable value for our stakeholders by acquiring, developing and operating high-quality, long-life deposits with exploration potential in mining-friendly jurisdictions. Over the last five years, we have worked toward this objective, and in 2014 and 2015 our efforts culminated with the successful ramp-up of three new mines: Lalor, Reed and Constancia. This achievement was tempered somewhat in that it occurred during a volatile price environment for commodities.

However, this environment highlighted another defining strength of Hudbay. We have been mining for close to 90 years, and have a remarkable number of highly experienced people in all our jurisdictions and at every level of our operations. We know what it takes to deliver sustainable, sector-leading growth at a low cost.

Our strong asset base, solid financial position and experienced team provide Hudbay with a platform for pursuing and implementing our strategy for growth. We believe that the best way to create stakeholder value in mining is to discover new mineral deposits and to develop facilities to profitably extract ore from those deposits. In 2016 and beyond, we plan to grow Hudbay through exploration and development of properties we already control, such as our Rosemont project in Arizona, and through the acquisition of other properties that meet our strategic criteria. We will also continue to optimize the value of our producing assets through efficient and safe operations.

To help ensure that acquisitions we undertake always create sustainable value, we have a number of criteria for evaluating opportunities:

• Is the acquisition in a politically stable, mining-friendly jurisdiction in the Americas?
• Can we leverage our expertise in the exploration and development of volcanogenic massive sulphide and porphyry mineral deposits?
• Does the asset offer significant potential for exploration, development and optimization?
• At what stage of development is the asset? Because large mergers and acquisitions carry significant risks, we focus on early-stage projects, unless exceptional opportunities present themselves.
• Do we have a clear understanding of how Hudbay can add value to a potential acquisition, through our technical, operational and project execution expertise, or by providing needed financial capital or finding other optimization opportunities?
• Is the acquisition accretive to Hudbay on a per share basis?
• Can we deliver environmental performance and achieve broad social acceptance?

Financial and Business Objectives for 2016

• Focus on optimizing production and cost performance at our Constancia and Manitoba operations to ensure they remain cash flow positive.
• Work to advance the permitting process, technical development, and community and government relations at the Rosemont project.
• Complete the planned 11,000-metre underground exploration of gold zones at Lalor, as well as the related trade-off studies for mining and processing this gold mineralization. Phase 1 of a drilling program, which included 14 holes, was completed in 2015, and assay results confirmed a high-grade thick core down the middle of the main zone.
• Maintain sufficient liquidity to ensure Hudbay remains well capitalized in an uncertain price environment.
• Continue to evaluate acquisition opportunities that meet our criteria and pursue those that are in the best interest of Hudbay and our stakeholders.