Contained copper production in concentrate in 2013 is expected to decrease slightly over 2012 because of the closures of the Trout Lake and Chisel North mines in 2012 following the end of their mine lives. Contained zinc production in concentrate in 2013 is expected to increase over 2012 levels, due to the full year of production expected from the main ventilation shaft at Lalor. Precious metal production is expected to remain essentially unchanged from 2012 levels.

Contained Metal in Domestic Concentrate1		2013 Guidance
Copper	tonnes	33,000 - 38,000
Zinc	tonnes	85,000 - 100,000
Precious Metals Production2	ounces	85,000 – 105,000

¹ Metal reported in concentrate is prior to refining losses or deductions associated with smelter terms      
² Precious metals production includes gold and silver production. Silver converted to gold at a ratio of 50:1 for 2012 and 2013 guidance. For 2012 production, silver converted to gold at 57:1, based on estimated 2012 realized sales prices. 

Growth Opportunities

Capital Expenditures	2013 Forecast1 C$ millions
Growth
Lalor2	139
Constancia2	961
Reed2	44
Capitalized Interest and Other	49
Total Growth Capital	1,193
Sustaining	78
Total Capital Expenditures	$1,271

¹2013 guidance based on figures disclosed in Hudbay’s news release entitled, “HudBay Minerals Announces 2013 Production Guidance and Capital and Exploration Expenditure Forecasts”, together with updates to Lalor  and Constancia expected spending in 2013 based on figures in Hudbay’s Management’s Discussion and Analysis for the quarter ending December 31, 2012

Hudbay has budgeted exploration expenditures of $40 million, more than half of which is focused on brownfield opportunities near the company’s existing deposits.

 

The company’s total exploration budget will enable approximately 55,000 metres of drilling in the Flin Flon Greenstone Belt, approximately 10,000 metres in Peru and approximately 10,000 metres in greenfield projects in North and South American areas, including Chile and Colombia. Within the Flin Flon Greenstone Belt, Hudbay intends to explore near its active and historical mining areas.

In Peru, Hudbay expects to continue exploration activities at Constancia, where its focus is to expand the current resource outside the Constancia reserve pit shell. The company also expects to continue drilling the Chilloroya South skarn target and geophysical anomaly, where favourable geology has been intersected in several drill holes, showing various thicknesses of mineralized skarn. 

Total Exploration Expenditures	2013 Budget C$ millions
Manitoba	20
South America	18
Other North America	2
Total Exploration Expenditures	40
Capitalized Spending	(5)
Total Exploration Expense	35

Mines

2013 Production Guidance		7771	Lalor2	Reed2
Ore mined	tonnes	1,620,000	418,000	51,000
Grades
Copper	%	2.18	0.54	3.43
Zinc	%	4.41	9.89	1.18
Gold	g/t	1.94	1.23	0.72
Silver	g/t	30.89	17.70	8.80
Unit Operating Costs	C$/tonne	38 – 42	75 - 95

¹ 777 production guidance includes 777 and 777 North.
² Revenues and costs from Lalor and Reed operations prior to commencement of commercial production will be capitalized. Lalor unit operating cost guidance is for periods following commercial production. 

Steady production is expected in 2013 from Hudbay’s flagship 777 mine, including contributions from the 777 North expansion beginning in the first quarter of 2013. Operating costs are expected to be similar to costs experienced in the past several years as a result of ongoing productivity efforts. As in past years, costs in the first and fourth quarters are expected to be higher due to additional heating and other seasonal costs.

Hudbay expects its first full year of production at Lalor from the main ventilation shaft, with commercial production expected to be declared in the second quarter of 2013. Production will continue from the zinc-rich base metal lens #10.

Initial production at the Reed copper project is expected by the third quarter of 2013, subject to receipt of required permits, with 51,000 tonnes of ore expected to be mined in 2013.

Grades and recoveries in any particular quarter may vary from the annual guidance based on the areas mined in that quarter and other factors. Mining and processing costs in any particular quarter can also vary from the annual guidance above based on a variety of factors including the scheduling of maintenance events and seasonal heating requirements.

Flin Flon and Snow Lake Concentrators

2013 Guidance		Flin Flon	Snow Lake
Ore milled	tonnes	1,719,000	369,000
Recoveries
Copper	%	92	82
Zinc	%	85	95
Gold	%	69	65
Unit Operating Costs1	C$/tonne	12–16	25 - 30

¹ Forecast unit operating costs are calculated on the same basis as reported unit operating costs in Hudbay's quarterly and annual management's discussion and analysis. 

Ore milled at the Flin Flon concentrator is expected to be somewhat lower than in 2012 due to the planned closure of the Trout Lake mine during 2012. Unit operating costs are expected to be in line or slightly higher than 2012 due to reduced throughput. Recoveries are expected to be consistent with the prior year. Estimated concentrate production at the Snow Lake concentrator includes a full year of Lalor ore from the zinc-rich base metal lens #10. Unit operating costs for the Snow Lake concentrator, which include the cost to truck concentrates from Snow Lake to Flin Flon, are expected to be lower than 2012 due to higher throughput levels.

Flin Flon Zinc Plant

2013 Guidance
Domestic zinc concentrate treated	tonnes	199,000
Purchased zinc concentrate treated	tonnes	2,600
Total zinc concentrate treated	tonnes	201,600
Recovery	%	97
Zinc produced	tonnes	101,000
Unit Operating Costs1	C$/lb	0.33 - 0.39

¹ Forecast unit operating costs are calculated on the same basis as reported unit operating costs in Hudbay's quarterly and annual management's discussion and analysis. 

Hudbay’s domestic zinc concentrate production in 2013, together with total expected year-end zinc concentrate inventory of approximately 18,300 tonnes is expected to result in zinc plant production at levels consistent with 2012 results. The company does not expect to require new third party purchased concentrate to achieve these production levels. Operating costs at the zinc plant in 2013 are expected to be comparable to 2012 levels. 

Note to United States Investors

While the terms “mineral resource”, “measured mineral resource”, “indicated mineral resource” and “inferred mineral resource” are recognized and required by NI 43-101, the SEC does not recognize them. You are cautioned that, except for that portion of mineral resources classified as mineral reserves, mineral resources do not have demonstrated economic value. Inferred mineral resources have a high degree of uncertainty as to their existence and as to whether they can be economically or legally mined.

It cannot be assumed that all or any part of an inferred mineral resource will ever be upgraded to a higher category. Therefore, you are cautioned not to assume that all or any part of an inferred mineral resource exists, that it can be economically or legally mined, or that it will ever be upgraded to a higher category. Likewise, you are cautioned not to assume that all or any part of measured or indicated mineral resources will ever be upgraded into mineral reserves. You are urged to consider closely the disclosure on the technical terms in Schedule A “Glossary of Mining Terms” of Hudbay’s annual information form for the fiscal year ended December 31, 2011, available on SEDAR at www.sedar.com and incorporated by reference as Exhibit 99.1 in Hudbay’s Form 40-F filed on April 2, 2012 (File No. 001-34244).