Management's Discussion and Analysis of

Results of Operations and Financial Condition

For the three and six months ended

June 30, 2026

July 28, 2026

INTRODUCTION

This Management's Discussion and Analysis ("MD&A") dated July 28, 2026 is intended to supplement Hudbay Minerals Inc.'s unaudited condensed consolidated interim financial statements and related notes for the three and six months ended June 30, 2026 and 2025 (the "consolidated interim financial statements"). The consolidated interim financial statements have been prepared in accordance with IFRS^® Accounting Standards ("IFRS" or "GAAP") as issued by the International Accounting Standards Board ("IASB").

References to "Hudbay" or the "Company" refer to Hudbay Minerals Inc. and its direct and indirect subsidiaries as at June 30, 2026.

Readers should be aware that:

^- This MD&A contains certain "forward-looking statements" and "forward-looking information" (collectively, "forward-looking information") that are subject to risk factors set out in a cautionary note contained in Hudbay's MD&A.

- This MD&A has been prepared in accordance with the requirements of the securities laws in effect in Canada, which may differ materially from the requirements of United States securities laws applicable to US issuers.

- Hudbay uses a number of non-GAAP financial performance measures in Hudbay's MD&A, which do not have standardized meaning under IFRS. For further information and detailed reconciliations of such measures, please see the discussion under the "Non-GAAP Financial Performance Measures" section herein.

- The technical and scientific information in this MD&A has been approved by qualified persons based on a variety of assumptions and estimates. Please see the discussion under the "Qualified Persons and NI 43-101" section herein.

Readers are also urged to review the "Notes to Reader" section beginning on page 68 of this MD&A.

Additional information regarding Hudbay, including the risks related to its business and those that are reasonably likely to affect its consolidated interim financial statements in the future, is contained in Hudbay's continuous disclosure materials, including its most recent Annual Information Form, consolidated interim financial statements and Management Information Circular available on SEDAR+ at www.sedarplus.ca and on EDGAR at www.sec.gov.

All amounts are in US dollars unless otherwise noted.

HUDBAY'S BUSINESS

Hudbay is a copper-focused critical minerals company with three long-life operations and a world-class pipeline of copper growth projects in tier-one mining jurisdictions of Canada, Peru and the United States. Hudbay's operating portfolio includes the Constancia mine in Cusco (Peru), the Snow Lake operations in Manitoba (Canada) and the Copper Mountain mine in British Columbia (Canada). Copper is the primary metal produced by the Company, which is complemented by meaningful gold production and by-product zinc, silver and molybdenum. The Company's growth pipeline includes the Copper World project in Arizona (United States), the Cactus project in Arizona (United States), the Mason project in Nevada (United States), the Llaguen project in La Libertad (Peru) and several expansion and exploration opportunities near its existing operations. Hudbay is governed by the Canada Business Corporations Act and its shares are listed under the symbol "HBM" on the Toronto Stock Exchange, New York Stock Exchange and Bolsa de Valores de Lima.

HUDBAY'S PURPOSE

The value Hudbay creates and the impact it has is embodied in its purpose statement: "We care about our people, our communities and our planet. Hudbay provides the metals the world needs. We work sustainably, transform lives and create better futures for communities."

Hudbay transforms lives: Hudbay invests in its employees, their families and local communities through long-term employment, local procurement and economic development to improve their quality of life and ensure the communities benefit from the Company's presence.

Hudbay operates responsibly: From exploration to closure, Hudbay operates safely and responsibly, welcomes innovation and strives to minimize its environmental footprint while following leading operating practices in all facets of mining.

Hudbay provides critical metals: Hudbay produces copper and other metals needed for everyday products and essential for applications to support the energy transition toward a more sustainable future.

SUMMARY

Delivered Strong Second Quarter Financial Results; Production Guidance Reaffirmed and Cost Guidance Improved

• Achieved quarterly revenue of $631.3 million, net earnings attributable to owners¹ of $137.4 million, quarterly adjusted EBITDA¹ of $321.2 million and adjusted net earnings attributable to owners¹ of $113.5 million in the second quarter, driven by steady operating performance, attractive operating margins and strong exposure to copper and gold across Hudbay's diversified operating portfolio.

• Steady production continued in the second quarter with consolidated copper and gold production of 28,267 tonnes and 51,234 ounces, respectively, with higher copper production in line with quarterly cadence expectations while gold production was slightly lower than quarterly cadence expectations.

• Industry-leading margins continue to be achieved with consolidated cash cost¹ and sustaining cash cost¹, net of by-product credits, of $(0.40) and $1.39, per pound of copper respectively, in the second quarter of 2026.

• Reaffirmed full year 2026 consolidated production guidance including 110,000 to 138,000 tonnes of copper and 217,000 to 272,000 ounces of gold.

• Improved full year 2026 consolidated cash cost¹ guidance to $(0.45) to $(0.25) per pound of copper from $(0.30) to $(0.10) per pound as costs are tracking well below the low end of the guidance range given strong exposure to gold by-product credits and continued operating efficiencies are more than offsetting higher input costs for fuel and consumables.

• Peru operations produced 19,446 tonnes of copper and 5,282 ounces of gold in the second quarter of 2026, in line with quarterly cadence expectations with a planned semi-annual plant maintenance shutdown during the quarter. Peru cash cost¹, net of by-product credits, of $1.66 per pound outperformed the low end of the 2026 annual guidance range of $1.70 to $2.10 per pound despite the lower planned production and higher fuel costs.

• Manitoba operations produced 40,344 ounces of gold, 2,366 tonnes of copper, 4,760 tonnes of zinc and 209,478 ounces of silver in the second quarter of 2026, slightly lower than quarterly cadence expectations. Manitoba cash cost¹ of $776 per ounce of gold was within the annual guidance range of $500 to $800 per ounce.

• British Columbia operations produced 6,455 tonnes of copper, 5,608 ounces of gold and 71,178 ounces of silver in the second quarter of 2026, in line with quarterly cadence expectations. British Columbia cash cost¹ of $3.22 per pound of copper was higher than the annual cost guidance range of $1.50 to $2.50 per pound primarily due to elevated fuel prices and timing of equipment maintenance. British Columbia cash cost is expected to improve in the second half of the year, in line with the annual guidance range.

• Second quarter earnings per share attributable to owners was $0.34, reflecting strong gross profit margins as a result of the continued focus on strong cost control and higher metal prices more than offsetting higher input costs. After adjusting for various non-cash items on a pre-tax basis, second quarter adjusted earnings¹ per share attributable to owners was $0.28.

• Cash and cash equivalents were $890.9 million and total liquidity² was $1,044.6 million at the end of the second quarter of 2026, despite using cash to retire over $200 million in long term debt and benefitting from the approximate $420 million initial cash contribution from Mitsubishi Corporation ("Mitsubishi") received on closing of the Copper World joint venture transaction in January 2026.

Continued Strong Cash Flow Generation and Prudent Balance Sheet Management

• Hudbay's unique copper and gold diversification across its operations provides exposure to higher copper and gold prices, which together with a focus on cost control across the business, continues to realize strong margins and generate significant free cash flow.

• While the majority of Hudbay's revenue continues to be derived from copper production, revenue from gold production represents a meaningful portion of total revenues. Gold revenues were 38% of total revenue in the second quarter of 2026.

• Cash generated from operating activities was $297.0 million during the second quarter of 2026, reflecting an increase of $85.7 million compared to the first quarter partially as a result of favourable changes in non-cash working capital.

• Operating cash flow before changes in non-cash working capital was $210.1 million during the second quarter of 2026, relatively consistent with the first quarter.

• Delivered free cash flow¹ generation of $101.8 million during the second quarter of 2026, representing a similar level of free cash flow generation to the first quarter through continued strong operating margins and cost controls, resulting in more than $200 million of free cash flow generated in the first half of 2026 despite investing over $200 million of sustaining capital in the business over this period.

• Achieved quarterly adjusted EBITDA¹ of $321.2 million in the second quarter of 2026, resulting in record trailing twelve month adjusted EBITDA¹ of $1,271.6 million.

• Achieved net debt¹ of negative $80.5 million as at June 30, 2026, representing an $86.1 million improvement from the first quarter of 2026 and positioning the Company well to reinvest in high-return growth capital projects across the business.

• Net debt to adjusted EBITDA ratio¹ was negative 0.1x in the second quarter of 2026, significantly improved from 0.4x in the fourth quarter of 2025 as a result of the initial proceeds received from Mitsubishi on closing of the Copper World joint venture transaction along with strong cash flows from operations.

• Consistent with Hudbay's prudent balance sheet management and focus on cost of capital, Hudbay repaid $472.5 million of its outstanding 2026 senior unsecured notes on maturity on April 1, 2026, using a combination of cash on hand and a $272 million draw on its low-cost revolving credit facilities, providing the Company with enhanced financial flexibility in advance of a Copper World sanctioning decision later this year. 

• Received proceeds of an offering of $52 million in aggregate principal amount of solid waste disposal revenue bonds with an initial mandatory tender date in 2036. These long-term, low-cost, non-amortizing U.S. municipal bonds, may be used for certain eligible costs associated with the development of Copper World.

• Hudbay's enhanced Capital Allocation Framework is embedded into its annual financial planning cycle to provide a holistic approach to capital allocation decisions to maximize long-term risk-adjusted returns, including capital deployment into brownfield projects, greenfield projects, strategic investments and exploration, while considering debt repurchases, share buybacks and dividends.

Advancing Generational Growth Investments to Further Enhance Copper and Gold Exposure

• The Copper World definitive feasibility study ("DFS") is progressing well, and a project sanctioning decision continues to be on track for late 2026. The DFS is expected to include scope for future mill expansion optionality.

• Completed the acquisition of Arizona Sonoran Copper Company Inc. ("ASCU") to bring together two highly complementary copper growth assets in Arizona and strengthen Hudbay's position as a premier Americas-focused copper company with a pipeline of long-life, low-cost assets located in tier-one jurisdictions. The acquisition of ASCU enhances Hudbay's long-term copper production profile and expands its U.S. growth pipeline through the staged development of Copper World and Cactus. Hudbay expects to spend approximately $30 million at Cactus in the second half of 2026 to advance an updated pre-feasibility study, perform site de-risking activities, conduct exploration activities and for other ongoing site costs.

• Continued to advance a large Snow Lake exploration program to further increase near-term production and mineral reserves, test regional satellite deposits for additional mill feed to utilize available capacity at Stall and explore the large land package for a new anchor deposit to meaningfully extend mine life.

• Celebrated the official groundbreaking of the New Ingerbelle expansion project at Copper Mountain, marking a significant milestone for the operation and its long-term future in British Columbia, enhancing the copper and gold production profile and securing a longer mine life. Growth capital expenditures in British Columbia in 2026 are expected to increase by approximately $30 million to $115 million due to additional costs associated with the development of infrastructure for New Ingerbelle.

• Received approval from the government in Peru to further increase annual mill processing capacity at Constancia to 34 million tonnes of ore per annum from the previously permitted 31 million tonnes, enabling additional capacity to further optimize Constancia's operations and deliver strong copper production.

• Advanced initial pre-feasibility study activities at the Mason copper project in Nevada.

Summary of Second Quarter Results

Hudbay's diversified asset portfolio delivered consolidated copper production of 28,267 tonnes and consolidated gold production of 51,234 ounces in the second quarter of 2026. Consolidated copper production was higher than the first quarter of 2026 as higher mill throughput in British Columbia more than offset lower planned mill throughput in Peru. Consolidated gold production was lower than the first quarter of 2026 primarily due to lower milled gold grades. Consolidated silver production of 845,161 ounces was higher than the first quarter of 2026 due to higher grades and recoveries in British Columbia. Zinc production of 4,760 tonnes in the second quarter of 2026 also increased compared to the previous quarter, primarily reflecting higher ore grades at the Manitoba operations.

Cash generated from operating activities was $297.0 million during the second quarter of 2026, reflecting an increase of $85.7 million compared to the first quarter of 2026 and an increase of $37.1 million compared to the same period in 2025. The increases are partially as a result of favourable changes in non-cash working capital. Operating cash flow before changes in non-cash working capital was $210.1 million during the second quarter of 2026 and remained relatively consistent with the first quarter of 2026 and second quarter of 2025.

Adjusted EBITDA¹ was $321.2 million in the second quarter of 2026, a decrease compared to the record $421.9 million achieved in the first quarter of 2026, primarily due to lower sales volumes, partially offset by higher copper prices. Second quarter adjusted EBITDA¹ increased by 31% compared to $245.2 million in the second quarter of 2025 as a result of higher metal prices partially offset by lower sales volumes of all metals. The lower sales volumes in the second quarter of 2026 was impacted by a temporary build-up of concentrate inventory at the port in Peru. This accumulation was caused by ocean swells that resulted in temporary port closures and delayed scheduled shipments of approximately 10,000 dry metric tonnes of copper concentrate which were delivered in the first half of July 2026.

Net earnings attributable to owners was $137.4 million, or $0.34 per share, in the second quarter of 2026 compared to $190.4 million, or $0.48 per share, in the first quarter of 2026. The decrease is primarily the result of lower revenue due to lower sales volumes of all metals.

Adjusted net earnings attributable to owners¹ and adjusted net earnings per share attributable to owners¹ in the second quarter of 2026 were $113.5 million and $0.28 per share, respectively, after adjusting for various non-cash items on a pre-tax basis including a $38.2 million mark-to-market revaluation net gain on various financial instruments such as investments and share-based compensation, a non-cash $12.0 million foreign exchange loss, an $11.5 million business interruption insurance recovery related to the Manitoba mandatory wildfire evacuations shutdowns in 2025, among other items. This compares to adjusted net earnings attributable to owners¹ and net earnings per share attributable to owners¹ of $161.0 million and $0.40 per share, respectively, in the first quarter of 2026. The decrease is a result of lower realized metal prices for gold and the aforementioned lower sales volumes.

Consolidated cash cost¹, net of by-product credits, in the second quarter of 2026 was $(0.40) per pound of copper, compared to record low cash cost of $(1.80) per pound in the first quarter of 2026. The increase from the first quarter of 2026 was a result of lower by-product credits from lower gold volumes. When compared to the second quarter of 2025, consolidated cash cost¹, net of by-product credits¹ decreased by $0.38 per pound as a result of higher by-product credits, partially offset by lower production.

Consolidated sustaining cash cost¹, net of by-product credits, in the second quarter of 2026 was $1.39 per pound of copper, compared to $0.00 per pound in the first quarter of 2026. This increase was primarily due to the same factors impacting consolidated cash cost noted above. When compared to the second quarter of 2025, consolidated sustaining cash cost¹, net of by-production credits decreased by $0.26 per pound due to the same factors impacting consolidated cash cost noted above.

Consolidated all-in sustaining cash cost¹, net of by-product credits, in the second quarter of 2026 was $1.80 per pound of copper, higher than the first quarter of 2026 due to the same reasons noted above, partially offset by lower corporate general and administrative ("G&A") costs from the impact of the revaluation of Hudbay's share-based compensation.

As at June 30, 2026, total liquidity² was $1,044.6 million, including $890.9 million in cash and cash equivalents, which excludes $49.8 million in U.S. municipal bond proceeds that is classified as restricted cash, and undrawn availability of $153.7 million under Hudbay's revolving credit facilities. Net debt¹ at the end of the second quarter was negative $80.5 million, marking an $86.1 million improvement from first quarter of 2026, primarily as a result of positive cash flows from operations. Hudbay expects that the current liquidity, together with cash flows from operations, will be sufficient to meet the Company's liquidity needs for the next 12 months.

KEY FINANCIAL RESULTS

¹ As at June 30, 2026 cash and cash equivalents include $334.5 million in cash held by Copper World LLC. These funds are contractually restricted solely for the advancement of the Copper World project and are not available to the general Hudbay group.

² Net debt and net debt to adjusted EBITDA are non-GAAP financial performance measures with no standardized definition under IFRS. For further information, please see discussion under the "Non-GAAP Financial Performance Measures" section of this MD&A.

³ Hudbay calculates net debt as total long-term debt less cash and cash equivalents and restricted cash related to unspent proceeds of its senior unsecured municipal bond financing.

⁴ Working capital is determined as total current assets less total current liabilities as defined under IFRS and disclosed on the consolidated interim financial statements.

¹ Adjusted earnings per share - attributable to owners, adjusted EBITDA and free cash flow are non-GAAP financial performance measures with no standardized definition under IFRS. For further information and a detailed reconciliation, please see discussion under the "Non-GAAP Financial Performance Measures" section of this MD&A.

KEY PRODUCTION RESULTS

¹ Metal reported in concentrate is prior to deductions associated with smelter contract terms and includes other secondary products.
² Includes total payable gold and silver in concentrate and in doré sold and other secondary products.

KEY COST RESULTS

¹ Cash cost, sustaining cash cost, all-in sustaining cash cost per pound of copper produced, net of by-product credits, gold cash cost, sustaining cash cost per ounce of gold produced, and net of by-product credits are non-GAAP financial performance measures with no standardized definition under IFRS. For further information and a detailed reconciliation, please see the discussion under the "Non-GAAP Financial Performance Measures" section of this MD&A.

² Improved full year 2026 consolidated copper cash cost guidance range to $(0.45) to $(0.25) per pound from the original guidance range of $(0.30) to $(0.10) per pound.

RECENT DEVELOPMENTS

Key Leadership Appointments

Hudbay is pleased to announce senior management team appointments as the Company positions itself for the next phase of transformational growth. Eugene Lei has been appointed President and Chief Financial Officer, with Peter Kukielski continuing as Chief Executive Officer. Robert Carter has been appointed Chief Operating Officer, transitioning from Andre Lauzon who will retire at the end of September.

Mr. Lei has been Chief Financial Officer since 2022 and has been responsible for providing strategic financial and capital markets leadership at Hudbay. He has been instrumental in the Company's significant transformation, and under his leadership, Hudbay successfully executed the strategic plan to unlock Copper World, which included achieving stated balance sheet targets ahead of schedule and prudently allocating capital to maximize shareholder value. He currently serves as the Chair of the Copper World Joint Venture board. Mr. Lei joined Hudbay in 2012 and progressed through several senior management roles with increasing executive responsibilities. He has over 25 years of global mining finance, investment banking and corporate development experience. Prior to joining Hudbay, Mr. Lei was Managing Director, Mining at Macquarie Capital Markets, working as an advisor on transformative mining mergers and acquisitions and leading equity capital markets offerings. He holds a Bachelor of Commerce (Honours) degree from Queen's University. In 2025, Mr. Lei was the recipient of the Globe and Mail's Report on Business 2025 Canada's Best Executive Award in the Finance category. In 2015, Mr. Lei received the Canadian Institute of Mining, Metallurgy and Petroleum's CIM-Bedford Canadian Young (under 40) Mining Leaders Award.

Mr. Carter was appointed Senior Vice President, Canada in June 2025, and as leader of the Canadian operations, he has been responsible for the strategic oversight of Hudbay's business activities in Manitoba and British Columbia. His leadership in Manitoba revitalized the operations into a sustainable cash flow contributor and he has strategically positioned the British Columbia operations for long-term success. Mr. Carter's extensive experience with a deep focus on safety and continuous improvement has been invaluable at the operations and is seen through consistent operational execution. Previously, he held the role of Vice President, Manitoba Business Unit since April 2022 and prior to that was the General Manager of the Company's Manitoba mines since 2018. He has held various other positions at Hudbay, including Manager of the Lalor Mine in Manitoba and Director of Business Development and Technical Services in Hudbay's corporate group. He has nearly 30 years of mining industry experience in technical, operational and senior leadership roles, with the majority of those years at Hudbay. Mr. Carter holds a Bachelor of Science, Geological Engineering from the University of Manitoba and is a Professional Engineer registered with Professional Engineers Ontario and Engineers Geoscientists of Manitoba.

The Company is grateful for Mr. Lauzon's significant contributions since joining Hudbay in 2016. Mr. Lauzon was the architect of the Copper World project, and his valued expertise as Chief Operating Officer has positioned the Company's operating and growth platform for long-term success. Mr. Lauzon has worked closely with Mr. Lei over the past several years on operational finance and growth, focusing the business on delivering strong free cash flow. He has also worked closely with Mr. Carter in optimizing the Company's Canadian operations and de-risking many growth projects across the business, and Mr. Carter's appointment ensures a seamless transition in accordance with Hudbay's succession planning. In his retirement, Mr. Lauzon will also provide on-going consulting and advisory services to Hudbay.

Hudbay has appointed Sebastien Fortin as Vice President and Head of the British Columbia Business Unit ("BCBU"). Mr. Fortin has been serving as Acting Head of the BCBU since October 2025 after first joining Copper Mountain as General Manager of Operations in 2024. Under his leadership, the operations have achieved many productivity and safety objectives, and he continues to drive significant improvements across the business to position Copper Mountain for long-term success. Mr. Fortin is a Professional Mining Engineer and he previously worked at Teck Resources for 16 years in several senior technical roles before joining Hudbay. He holds a bachelor's degree in Geological Engineering and a master's degree in Mining Engineering, both from Laval University, and is a graduate of the MBA Program at Simon Fraser University.

Hudbay also announced that Warren Flannery is taking on an expanded role as Vice President and Head of the Arizona Business Unit, and he will continue to support Javier Del Rio, Senior Vice President and Head of Hudbay USA. Under this enhanced role, Mr. Flannery is responsible for leading the business development and operational readiness of Copper World and the advancement of the Cactus project through feasibility studies and key de-risking initiatives. He previously held the role of Vice President of Copper World since August 2024 and he first joined Hudbay in 2023 as Vice President, Business Planning and Reclamation. Mr. Flannery is an experienced mining professional with over 30 years of extensive experience in mine operations, planning and project development at global companies. Prior to joining Hudbay, Mr. Flannery was the head of the mining technical group at CIBC's global mining corporate and investment banking arm for ten years. He is a Professional Engineer and holds a master's degree in Mineral Economics from the Colorado School of Mines and a bachelor's degree in Mining Engineering from Queen's University.

Continued Free Cash Flow Generation Driven by Strong Operating Margins; External Cost Pressures Insulated by Diversified Copper and Gold Exposure

Hudbay's unique copper and gold diversification across its operations provides exposure to strong commodity prices, which together with a focus on cost control across the business, continues to realize strong margins and generate attractive free cash flow. While the majority of Hudbay's revenue continues to be derived from copper production, revenue from gold production represents a meaningful portion of total revenues, with gold accounting for 38% of total revenue in the second quarter of 2026.

Hudbay's cost control efforts are focused on navigating external cost pressures, such as higher fuel and consumable costs. The Company continues to manage costs and deliver strong margins through initiatives to further improve throughput and enhance operating efficiencies. Despite such external cost pressures in the second quarter, Hudbay achieved consolidated cash cost¹ of negative $0.40 per pound of copper and generated operating cash flow of over $200 million and free cash flow of over $100 million, similar to the first quarter of 2026. Hudbay continues to benefit from its diversified platform with significant by-product credits from gold production.

The Company had $890.9 million in cash and cash equivalents and net debt¹ of negative $80.5 million at the end of the second quarter of 2026. Hudbay's strong cash position and continued prudent balance sheet management position the Company well to advance its generational growth investments across the portfolio and allocate capital to the highest risk-adjusted return opportunities to deliver significant value for stakeholders.

Copper World DFS Progressing Well and Project Sanctioning on Track for Late 2026

In January 2026, Hudbay announced the closing of the joint venture transaction with Mitsubishi, securing a premier, long-term strategic partner for the development of Copper World. The $420 million of initial proceeds received at closing from Mitsubishi will be used to directly fund the remaining DFS costs and pre-sanctioning costs in addition to the initial project development costs for Copper World. Mitsubishi will contribute an additional $180 million within 18 months of closing to complete its 30% minority investment and will also fund its pro-rata 30% share of future equity capital contributions.

Feasibility activities for the Copper World DFS are progressing well, with 95% of the engineering work completed and a sanctioning decision remains on track for later in 2026. The DFS is expected to reflect higher capital expenditures as compared to the 2023 pre-feasibility study primarily due to typical cost inflation along with new capital related to project scope changes that would allow for future mill expansion optionality, while continuing to generate robust economics.

On June 24, 2026, Copper World LLC received proceeds of an offering of $52.0 million aggregate principal amount of solid waste disposal revenue bonds due July 2, 2036 (the "Municipal Bonds"). The Municipal Bonds were issued by the Arizona Industrial Development Authority at par and carry a fixed interest rate of 4.5% per annum, with interest payable by Copper World LLC semi-annually. The Municipal Bond proceeds may be used for certain eligible costs associated with the development of the Copper World project and are treated as restricted cash on Hudbay's balance sheet.

Completion of the Arizona Sonoran Acquisition to Create the Third Largest Copper District in North America

On June 24, 2026, Hudbay successfully completed its previously announced acquisition of ASCU, pursuant to which Hudbay acquired all of the issued and outstanding common shares of ASCU not already owned by Hudbay (the "ASCU Transaction").

As a result of the completion of the ASCU Transaction, ASCU became a wholly-owned subsidiary of Hudbay and Hudbay acquired 100% ownership of Arizona Sonoran's Cactus project. In aggregate, Hudbay issued 46,794,082 Hudbay common shares under the ASCU Transaction to former ASCU shareholders as consideration for their Arizona Sonoran shares. Following the closing of the ASCU Transaction, the Arizona Sonoran shares were de-listed from the Toronto Stock Exchange ("TSX") and Arizona Sonoran ceased to be a reporting issuer pursuant to applicable Canadian securities laws.

The ASCU Transaction brings together two highly complementary copper growth assets in Arizona and strengthens Hudbay's position as a premier Americas-focused copper company with a pipeline of long-life, low-cost assets located in tier-one jurisdictions. The ASCU Transaction is expected to enhance Hudbay's long-term copper production profile, expand its U.S. growth pipeline, and generate significant operational efficiencies and regional synergies with Hudbay's staged development of Copper World and Cactus.

Hudbay expects to spend approximately $30 million at Cactus in the second half of 2026 to advance an updated pre-feasibility study ("PFS"), perform site de-risking activities, conduct exploration activities and for other ongoing site costs. The updated Cactus PFS is expected to be completed in the second half of 2027.

New Ingerbelle Expansion Project Underway to Enhance Copper and Gold Production Profile at Copper Mountain

In June 2026, Hudbay celebrated the official groundbreaking of the New Ingerbelle expansion project at Copper Mountain, marking a significant milestone for the operation and its long-term future in British Columbia. The event was attended by Hudbay's executive team, employees, B.C.'s Minister of Mining and Critical Minerals, the B.C. Mining Association, the Chief of the Upper Similkameen Indian Band, regional representatives, and leaders from the local community. The event was also recognized by Canada's Minister of Energy and Natural Resources.

New Ingerbelle enhances the copper and gold production profile and secures a longer mine life at Copper Mountain. Based on current mineral reserves, New Ingerbelle is projected to produce approximately 750,000 tonnes of copper, 900,000 ounces of gold and 5.5 million ounces of silver over the life of mine. Designed to access higher-grade mineralization, the expansion also features a stripping ratio approximately three times lower than current mining areas. 

The groundbreaking comes shortly after the Government of British Columbia added New Ingerbelle to its list of priority resource projects, recognizing initiatives that support economic growth, responsible resource development and long-term value creation across the province. The New Ingerbelle expansion received key mining permits on February 19, 2026 from the British Columbia Major Mines Office ("MMO") following a robust review and consultation process. Throughout the permitting process, Hudbay proactively engaged with the MMO, local communities, the Upper Similkameen Indian Band ("USIB") and the Lower Similkameen Indian Band ("LSIB") to ensure transparency and collaborative oversight and to seek consensus, although, as previously disclosed, the LSIB subsequently submitted an application for judicial review of the regulatory decision to grant the New Ingerbelle permit amendment.

With key permits in place, Hudbay is advancing important infrastructure required for the expansion, including an access road, a bridge across the Similkameen river and an east haul road connecting New Ingerbelle to existing operations. Growth capital expenditures in British Columbia in 2026 are expected to increase by approximately $30 million to $115 million related to additional costs associated with infrastructure development at New Ingerbelle. Hudbay expects similar levels of growth capital investments in British Columbia in 2027 related to the continued infrastructure development at New Ingerbelle, which is expected to achieve first production in late 2028. The Company has also initiated a targeted drilling program at New Ingerbelle, focusing on upgrading existing inferred resources to reserves to further optimize and extend the mine life at Copper Mountain.

Peru Regulatory Approval Received to Further Increase Mill Throughput at Constancia

Hudbay received approval from the National Environmental Certification Service for Sustainable Investments in Peru to amend its environmental permit and further increase annual mill processing capacity at Constancia. The approval was received in late June and represented the fifth environmental permit amendment at Constancia. The amended permit increases the processing capacity of the Constancia mill to 34 million tonnes of ore per annum from the previously permitted 31 million tonnes. In March 2026, Hudbay received permit approval to increase mill throughput capacity to 31 million tonnes from 29.9 million tonnes per annum.

As part of the Company's continuous improvement efforts, the updated permit enables additional capacity to further optimize Constancia's operations and deliver strong copper production. Hudbay's efforts to increase mill throughput align with the Peru Ministry of Energy and Mines' regulatory framework, which permits operational flexibility to operate up to 10% above nominal daily capacity. Hudbay achieved total ore processed of 30.3 million tonnes and 31.9 million tonnes in 2025 and 2024, respectively. With this permit amendment, Hudbay is aligning its operational capacity to support the new level of 34 million tonnes per annum, while maintaining the standard operational flexibility to handle daily increases of up to 10% above permitted levels.

Large Exploration Drill Program Continues in Snow Lake

Hudbay continues to execute the largest exploration program in Snow Lake in the Company's history through extensive geophysical surveying and drilling campaigns as part of Hudbay's multi-pronged exploration strategy:

• Near-mine Exploration at Lalor and 1901 to Further Increase Near-term Production and Extend Mine Life - Near-mine exploration at the Lalor mine and the adjacent 1901 deposit continued to support near-term production growth and mine life extension. The exploration program will continue during the remainder of 2026 to potentially increase mineral reserves and resources and enable additional resource conversion. At the 1901 deposit, activities are focused on exploration and definition drilling, orebody access and establishing the critical infrastructure required to support full production beginning in late 2027. Exploration activities at 1901 will include step-out drilling to potentially extend the orebody, as well as infill drilling aimed at converting inferred mineral resources within the gold lenses to mineral reserves.

• Evaluating Significant Gold Production Potential from Past-Producing New Britannia mine - Acquired through the New Britannia mill acquisition in 2015, the past-producing New Britannia mine provides potential for significant incremental gold production in Snow Lake. The Company is developing an exploration plan to test down plunge extensions and underexplored areas between known deposits at the mine. Hudbay plans to conduct infill and expansion drilling at the 3 Zone, a satellite deposit to New Britannia, with three drills scheduled for later in 2026.

• Testing Regional Satellite Deposits to Utilize Available Processing Capacity and Increase Production - Hudbay's extensive regional land package includes an attractive portfolio of deposits in Snow Lake within trucking distance of the Snow Lake processing infrastructure, including the Talbot, Rail, Pen II, Watts, and WIM deposits. With available mill processing capacity at the Stall mill, the Company continues to progress exploration work across the region to define satellite deposits to potentially increase production and extend the life of the Snow Lake operations beyond 2041. During the second quarter of 2026, the infill drilling program at Talbot was completed as well as the geotechnical drilling required for PFS activities. The Company is also testing additional targets to expand the footprint of the deposit at depth. Hudbay intends to update Rockcliff's prior mineral resource estimate for Talbot using Hudbay's standard methods.

• Exploring Large Land Package for New Anchor Deposit to Significantly Extend Mine Life - A majority of the land claims acquired as part of the Rockcliff acquisition in 2023 have been untested by modern deep geophysics, which was the discovery method for the Lalor deposit. The large geophysics program underway consisting of surface electromagnetic surveys using cutting edge techniques that enable the team to detect targets at depths of almost 1,000 metres below surface. The planned 2026 geophysics program includes 600 kilometres of ground electromagnetic surveys and an extensive airborne geophysics survey.

Mason Project Commences Pre-feasibility Study Activities

The Mason project is a 100% owned greenfield copper deposit located in the historic Yerington District of Nevada and is one of the largest undeveloped copper porphyry deposits in North America. Hudbay views the Mason project as a long-term future development asset as part of the Company's pipeline of high-quality copper growth opportunities.

Hudbay completed a preliminary economic assessment on Mason in 2021 which contemplated a 27-year mine life with average annual copper production of approximately 140,000 tonnes over the first ten years of full production. The Company recently initiated PFS activities at Mason and expects to spend approximately $20 million in evaluation expenses at Mason for the remainder of 2026. The Mason PFS is expected to be completed in the second half of 2027.

Dividend Declared

A quarterly dividend of C$0.01 per share was declared on July 28, 2026. The dividend will be paid out on September 8, 2026 to shareholders of record as of close of business on September 25, 2026.

¹ Net debt and net debt to adjusted EBITDA are non-GAAP financial performance measures with no standardized definition under IFRS. For further information, please see discussion under the "Non-GAAP Financial Performance Measures" section of this MD&A.

PERU OPERATIONS REVIEW

¹ Reported tonnes and grade for ore mined are estimates based on mine plan assumptions and may not reconcile fully to ore milled.

² Pampacancha has been depleted as of December 31, 2025.

³ Strip ratio is calculated as waste mined divided by ore mined.

⁴ Reflects combined mine, mill and general and administrative ("G&A") costs per tonne of ore milled. Reflects the deduction of expected capitalized stripping costs.

⁵ Combined unit costs is a non-GAAP financial performance measure with no standardized definition under IFRS. For further information and a detailed reconciliation, please see the discussion under the "Non-GAAP Financial Performance Measures" section of this MD&A.

¹ Cash cost and sustaining cash costs, net of by-product credits, per pound of copper produced are not recognized under IFRS. For more detail on these non-GAAP financial performance measures, please see the discussion under the "Non-GAAP Financial Performance Measures" section of this MD&A.

Overview

The Peru operations continued to demonstrate steady operating performance during the second quarter of 2026, with production and costs in line with full-year expectations following the depletion of Pampacancha at the end of 2025.

The Company continues to advance the installation of pebble crushers at Constancia to increase mill throughput rates starting in the third quarter of 2026, which will allow the mine to deliver steady annual copper production despite lower grades following the depletion of Pampacancha.

In June 2026, the Company received approval from the National Environmental Certification Service for Sustainable Investments in Perú ("SENACE") to amend its environmental permit and further increase annual mill processing capacity at Constancia. This represented the fifth environmental permit amendment at Constancia. The amended permit increases the processing capacity of the Constancia mill to 34 million tonnes of ore per annum from the previously permitted 31 million tonnes per annum. Previously, in March 2026, Hudbay received permit approval to increase mill throughput capacity to 31 million tonnes from 29.9 million tonnes per annum.

As part of the Company's continuous improvement efforts, the updated permit enables additional capacity to further optimize Constancia's operations and deliver strong copper production. Hudbay's efforts to increase mill throughput align with the Peru Ministry of Energy and Mines' regulatory framework, which provides operational flexibility to operate up to 10% above nominal daily capacity. Hudbay achieved total ore processed of 30.3 million tonnes and 31.9 million tonnes in 2025 and 2024, respectively. With this permit amendment, Hudbay is in the process of aligning its operational capacity to support the new level of 34 million tonnes per annum, while maintaining the standard operational flexibility to handle daily increases of up to 10% above permitted levels.

The environmental permit amendment also approves further optimization of the mine plan, extends the operational life of Constancia, and incorporates the implementation of additional infrastructure to improve tailings transport infrastructure and water management systems.

In April 2026, Constancia was recognized as the safest open pit operation in Peru during the local National Mining Safety Contest for its performance in 2025. This award reflects the Company's unwavering commitment to safety and validates Constancia's compliance with the highest operational safety and regulatory standards.

Mining Activities

Total material moved during the second quarter of 2026 was 23.9 million tonnes, 15% higher than the same period in 2025, primarily as a result of shorter hauling distances from mining exclusively within the Constancia pit compared with mining two pits in 2025. A new monthly record total volume of material moved was achieved in May 2026. In addition, Peru realized improved productivity from enhanced fleet efficiency and the implementation of haulage optimization strategies. Total ore mined during the quarter remained consistent with ore mined in the first quarter of 2026.

Year-to-date total material moved was 16% higher than the same period in 2025, while year-to-date ore mined increased by 31% compared to the prior year period, driven by the same structural and fleet efficiency improvements noted in the quarterly variance, as well as positive reconciliation obtaining ore instead of waste.

Milling Activities

Mill throughput levels averaged approximately 86,000 tonnes per day during the second quarter of 2026, a marginal decrease compared to the first quarter of 2026, primarily due to the scheduled semi-annual plant maintenance shutdown and the processing of more metallurgically complex ore during the second quarter of 2026. Milled copper grades decreased slightly compared to the first quarter of 2026 due to blending targets implemented to control contaminants in the concentrate. As expected, overall gold grades declined primarily due to the transition away from the higher-grade gold contributions from the Pampacancha stockpile. Compared to the second quarter of 2025, milled copper and gold grades decreased primarily due to mining exclusively within the Constancia pit, compared to a two-pit operation in the prior year period. Metal recoveries remained in line with expectations.

Ore milled during the first half of 2026 was higher than the comparable period in 2025, largely driven by plant mechanical availability at the plant. Milled copper and gold grades in the first half of 2026 were slightly lower than the same period in 2025 due to processing ore from the Constancia pit. Copper recoveries during the first half of 2026 averaged 82%, a 3% decline compared to the same year-to-date period, driven by a lower grades and a higher proportion of stockpile ore feed. Gold and silver recoveries during the first half of 2026 were 55% and 62%, respectively, representing a decrease compared to the same year-to-date period of 2% and 4%, respectively, but remained in line with Hudbay's metallurgical models.

Production and Sales Performance

During the second quarter of 2026, the Peru operations produced 19,446 tonnes of copper, 5,282 ounces of gold, 564,505 ounces of silver and 277 tonnes of molybdenum. Production of copper, gold and molybdenum was slightly lower compared to the first quarter of 2026, reflecting the planned semi-annual plant maintenance shutdown during the second quarter of 2026. Compared to the same period in 2025, production of copper and gold declined slightly, primarily as a result of lower mill recoveries associated with the processing of lower grade ore feed.

Year-to-date production of copper and gold during the first half of 2026 was 40,019 tonnes and 14,052 ounces, respectively, representing a decrease of 5% and 8%, respectively, compared to the same period in 2025, primarily due to lower recoveries that resulted from processing slightly lower head grades as more material was mined from the Constancia pit and reclaimed from stockpiles compared with the same period last year, which included material mined from Pampacancha.

Quantities of metal sold during the three and six months ended June 30, 2026 were in line with the variances noted above, but were further affected by higher finished goods concentrate inventory levels at the end of the second quarter of 2026, resulting in lower sales volumes. Sales volumes were impacted by a temporary build-up of concentrate inventory at the port caused by ocean swells that resulted in temporary port closures and delayed scheduled shipments. As a result, approximately 10,000 dry metric tonnes of copper concentrate sales were deferred to the first half of July.

*Copper equivalent production is calculated using the quarter average LME prices for each metal excluding molybdenum.

Cost Performance

Combined mine, mill and G&A unit operating cost in the second quarter of 2026 was $14.06 per tonne, which was 3% higher than the same period in 2025, primarily driven by higher fuel prices, partially offset by lower power costs related to a new power purchase agreement that came into effect on January 1, 2026, and additional tonnes of ore milled.

Combined mine, mill and G&A unit operating cost in the second quarter of 2026 increased by 21% compared to the first quarter of 2026, primarily due to higher fuel prices and a scheduled semi-annual plant shutdown in May 2026.

Combined mine, mill and G&A unit operating costs for the six months ended June 30, 2026 was $12.82 per tonne, a 4% increase compared to the same period in 2025, primarily due to higher diesel prices. This increase was partially offset by lower power prices and additional tonnes of ore milled.

Cash cost¹, net of by-product credits, in the second quarter of 2026 was $1.66 per pound of copper, a 14% increase compared to the same period in 2025. This variance was mainly due to lower net pounds of copper produced and higher fuel prices, which were partially offset by higher by-product credits and lower power costs given the new power purchase agreement. Cash cost¹, net of by-product credits increased by 137% compared to the first quarter of 2026, primarily due to lower gold by-product credits resulting from lower gold volumes given the completion of mining of the high gold content Pampacancha stockpile in the first quarter, higher fuel prices and the planned semi-annual plant maintenance shutdown in May 2026. This increase was partially offset by lower profit sharing. Despite the increase, cash cost for the quarter continued to outperform the low-end of the 2026 guidance range.

Year-to-date 2026 cash cost¹, net of by-product credits² were $1.17 per pound of copper, a decrease from $1.29 in the prior year period. This decrease was driven by higher gold and silver by-product credits, and the lower power price noted above, and was partially offset by a higher fuel price and higher profit sharing.

Sustaining cash cost¹, net of by-product credits, in the second quarter of 2026 was $2.71 per pound of copper, an increase of 3% compared to the same period in 2025 as a result of lower net pounds of copper produced and the cash costs variance explained above. This increase was partially offset by lower tailings management facility construction costs in 2026 and the timing of mine maintenance. During the second quarter of 2026, sustaining cash cost¹, net of by-product credits, per pound of copper increased by 90% compared to the first quarter of 2026, primarily due to the same reasons affecting cash costs above, as well as higher community agreement payments.

On a year-to-date basis, sustaining cash cost¹, net of by-products credits, was $2.05 per pound of copper, a 10% decrease when compared to the first half of 2025. This was primarily a result of lower cash cost as described above as well as the timing of mine equipment maintenance and lower tailing management facility construction costs in 2026 and was partially offset by lower pounds of copper produced and a higher cash payment for community agreements.

Peru Guidance Outlook

¹ Cash cost, net of by-product credits, per pound of copper produced are not recognized under IFRS. For more detail on these non-GAAP financial performance measures, please see the discussion under the "Non-GAAP Financial Performance Measures" section of this MD&A.

² Refer to the "Outlook" section of this MD&A for more information.

Hudbay is on track to achieve its 2026 production guidance for all metals in Peru. Cash cost for the quarter outperformed the low-end of the 2026 guidance range as a result of strong operating cost performance and higher by-product prices, despite external cost pressures. Hudbay is well positioned to achieve the full year 2026 cash cost guidance range in Peru.

MANITOBA OPERATIONS REVIEW

¹ Reported tonnes and grade for ore mined are estimates based on mine plan assumptions and may not reconcile fully to ore milled. Total ore mined includes tonnes from Lalor and 1901.

² Gold and silver recovery includes total recovery from concentrate and doré.

³ Doré includes sludge, slag and carbon fines.

¹ Total metal reported in concentrate is prior to deductions associated with smelter terms and includes other secondary products.

² Includes other secondary products.

³ Reflects costs per tonne of ore mined/milled.

⁴ Reflects combined mine, mill and G&A costs per tonne of milled ore.

⁵ Excludes $3.2 million or C$14 per tonne of overhead costs incurred during temporary suspension during the three months ended June 30, 2025 and $3.2 million or C$6 per tonne during the six months ended June 30, 2025.

⁶ Combined unit costs, cash cost and sustaining cash cost, net of by-product credits, per ounce of gold produced are non-GAAP financial performance measures with no standardized definition under IFRS. For further information and a detailed reconciliation, please see the discussion under the "Non-GAAP Financial Performance Measures" section of this MD&A.

⁷ Excludes $3.2 million or $74 per ounce of overhead costs incurred during temporary suspension during the three months ended June 30, 2025 and $3.2 million or $31 per ounce during the six months ended June 30, 2025.

Overview

The Manitoba operations continued to execute its strategic initiatives during the second quarter of 2026, navigating short-term operational hurdles while positioning the business for an expected strong second half of the year. To address labour availability constraints, Hudbay engaged an experienced mining contractor to advance the 1901 deposit. This strategic decision has enabled the team to redeploy its skilled internal workforce to other critical development areas at Lalor. Hudbay has simultaneously increased internal capacity, onboarding over 100 new employees in 2026, who are currently undergoing upskilling to enhance long-term operational self-sufficiency in Manitoba.

While the Manitoba operations experienced minor production impacts from an unplanned hoist gearbox failure at Lalor in June, the hoist is now repaired and fully operational, and the team strategically prioritized high-value gold zones to maintain consistent feed for the New Britannia mill. These initiatives position the business to support higher production volumes and grades in the second half of 2026, which remains aligned with annual production guidance in Manitoba.

Hudbay's Mining Fundamentals Training program, in partnership with the Northern Manitoba Sector Council, achieved a 100% conversion rate in the second quarter, with all nine cohort graduates accepting full-time roles at Hudbay. Building on this success, the team have engaged the University College of the North to further refine the curriculum. A fifth cohort, which will include participants from local Indigenous communities, is scheduled to launch in the third quarter of 2026.

The Snow Lake operations advanced key sustaining capital environmental projects during the second quarter, including construction of a cyanide recycling initiative at the New Britannia mill and construction of a dam lift at the Anderson Tailings Impoundment Area. Both projects remain on schedule for completion by the end of 2026.

Mining Activities

Total ore mined in Manitoba in the second quarter of 2026 was higher compared to the same period in 2025, reflecting an improvement over the prior year period which was impacted by a temporary suspension in operations related to wildfire evacuation orders in 2025. Conversely, total ore mined was lower than the first quarter of 2026, primarily driven by reduced workforce availability, which limited effective utilization of equipment and workplaces. In the second quarter of 2026, gold grades decreased by 11% and 7% when compared to the same period in 2025 and to the first quarter of 2026, respectively, driven by planned mine sequencing.

The Lalor mine hoisted an average of approximately 3,500 tonnes of ore per day, strategically prioritizing gold zones to secure optimal feed for the New Britannia mill.

The 1901 deposit delivered approximately 7,600 tonnes of development ore in the quarter. Looking ahead, the plan is to continue to prioritize exploration and infill drilling, orebody access and critical infrastructure development as 1901 progresses toward full production in late 2027.

Total ore mined at Manitoba operations during the first half of 2026 was 2% lower than the same period in 2025, primarily driven by reduced worker hours, which was partially offset by the impact of wildfire related shutdowns in June 2025. Gold, zinc, and silver grades mined at Lalor during the first half of 2026 were 13%, 11%, and 11% lower, respectively, compared with the same period in 2025. Copper grades mined during the first half of 2026 were 2% higher than the same period in 2025.

Milling Activities

The New Britannia mill processed approximately 1,900 tonnes per day in the second quarter of 2026, matching the gold ore output from Lalor during the quarter. New Britannia continued to achieve steady gold recoveries of approximately 90%, reflecting ongoing optimization efforts.

The Stall mill processed more ore in the second quarter of 2026 compared to the second quarter of 2025, and less ore than the first quarter of 2026. Ore processed in the current quarter was consistent with Lalor base metal production. The Stall mill achieved gold recoveries of 71% during the second quarter of 2026, higher than the comparable period in 2025, reflecting recovery focused initiatives.

Hudbay also initiated early works on installing new tailings lines between the two mills, which is expected to increase the pipeline capacity to enable higher throughput and leaching of gold-bearing material at New Britannia from base metal ore originally processed at Stall mill.

Production and Sales Performance

The Manitoba operations produced 40,344 ounces of gold, 2,366 tonnes of copper, 4,760 tonnes of zinc and 209,478 ounces of silver in the second quarter of 2026. Production of gold and zinc decreased compared to the second quarter of 2025 primarily due to lower gold and zinc grades partially offset by higher recoveries for gold. Production of copper and silver increased compared to the second quarter of 2025, driven by the higher mill throughput and higher copper recoveries. Compared to the first quarter of 2026, production of gold, copper and silver was lower, primarily due to lower tonnes milled, while zinc production was slightly higher.

Year-to-date production of gold and zinc in 2026 was lower than the comparative 2025 period as a result of lower mined grades, partially offset by higher mill throughputs. Conversely, year-to-date production of copper and silver were higher than the comparative 2025 period due to higher copper grades, while zinc was lower due to lower grades.

Manitoba sales volumes in the second quarter of 2026 reflect typical levels of inventory and the lower production across most metals. During the six months ended June 30, 2026, quantities sold for all metals were relatively in line with variances in production with the exception of copper sales, which were slightly higher compared to the same period in 2025.

Cost Performance

Combined mine, mill and G&A unit operating costs in the second quarter of 2026 were C$300 per tonne, an increase compared to the second quarter of 2025, primarily due to higher onsite costs partially offset by higher ore milled in the period. Combined unit cost increased when compared to the first quarter of 2026 as a result of marginally higher onsite costs and lower ore milled due to reduced workforce availability, limiting the effective utilization of equipment and workplaces, as well as the failure of a critical hoist gearbox motor at Lalor.

Cash cost⁴, net of by-product credits, in the second quarter of 2026 was $776 per ounce of gold. This represents an increase compared to the same period in 2025, primarily attributed to the impact of lower grades on gold production volumes and higher unit operating costs across mining, milling activities and G&A cost including profit sharing. These costs were partially offset by higher by-product credits resulting from higher metal prices. Cash cost¹, net of by-product credits increased by 90% compared to the first quarter of 2026, primarily due to lower gold production and the same factors impacting combined mine, mill and G&A unit operating costs. Despite the increase, cash cost was within the guidance range for 2026.

Sustaining cash cost⁴, net of by-product credits, in the second quarter of 2026 was $1,358 per ounce of gold, higher than the same period in 2025 and higher than the first quarter of 2026, primarily due to the same factors affecting cash costs along with higher sustaining capital. As reflected in the Company's annual guidance, sustaining capital expenditures are expected to be higher than 2025, in part due to 2026 investments to raise the dam at the Anderson Tailings Impoundment Area and the New Britannia mill cyanide recycling project.

Cash cost, net of by-product credits, during the six months ended June 30, 2026 was $577 per ounce of gold. These costs were 12% higher compared to the same period in 2025 primarily due to lower gold production and higher mining, milling and G&A costs, partially offset by higher by-product credits. Sustaining cash cost, net of by-product credits, for the six months ended June 30, 2026 was $1,074 per ounce of gold, an increase of 35% from the same period in 2025 primarily due to the same factors affecting cash cost noted above, together with higher sustaining capital expenditures compared to the prior year.

Manitoba Guidance Outlook

¹ Metal reported in concentrate is prior to deductions associated with smelter terms and includes other secondary products.

² Gold production guidance includes gold contained in concentrate produced and gold in doré and includes other secondary products.

³ Silver production guidance includes silver contained in concentrate produced and silver in doré and includes other secondary products.

⁴ Combined unit costs, cash cost per ounce of gold produced, net of by-product credits, are non-GAAP financial performance measures with no standardized definition under IFRS. For further information and a detailed reconciliation, please see the discussion under the "Non-GAAP Financial Performance Measures" section of this MD&A.

⁵ Excludes $3.2 million or $74 per ounce of overhead costs incurred during temporary suspension during the three months ended June 30, 2025 and $3.2 million or $31 per ounce during the six months ended June 30, 2025.

Production in the second half of 2026 is expected to be higher than the first half of 2026 due to grade sequencing and higher ore output from Lalor, as previously disclosed. Hudbay is on track to achieve its 2026 production guidance for all metals in Manitoba and is well positioned to achieve the 2026 cash cost guidance range in Manitoba.

BRITISH COLUMBIA OPERATIONS REVIEW

¹ Reported tonnes and grade for ore mined are estimates based on mine plan assumptions and may not reconcile fully to ore milled.

² Strip ratio is calculated as waste mined divided by ore mined.

³ Reflects combined mine, mill and general and administrative ("G&A") costs per tonne of ore milled. Reflects the deduction of expected capitalized stripping costs.

⁴ Combined unit costs is a non-GAAP financial performance measure with no standardized definition under IFRS. For further information and a detailed reconciliation, please see the discussion under the "Non-GAAP Financial Performance Measures" section of this MD&A.

⁵ Copper Mountain mine results are stated at 100%. On April 30, 2025 Hudbay completed the acquisition of the remaining 25% interest in the Copper Mountain mine and now owns 100%.

¹ Cash cost and sustaining cash cost, net of by-product credits, per pound of copper produced are non-GAAP financial performance measures with no standardized definition under IFRS. For further information and a detailed reconciliation, please see the discussion under the "Non-GAAP Financial Performance Measures" section of this MD&A.

² Copper Mountain mine results are stated at 100%. On April 30, 2025 Hudbay completed the acquisition of the remaining 25% interest in the Copper Mountain mine and now owns 100%.

Overview

Hudbay continued to advance its multi-year optimization plan at Copper Mountain, achieving significant milestones in mining productivity, operational improvements and project execution in the second quarter of 2026. The British Columbia operations produced 6,455 tonnes of copper, 5,608 ounces of gold, and 71,178 ounces of silver in the second quarter of 2026, which is aligned with guidance and the planned mining sequence. The sustained focus on safe production was highlighted with the receipt of the 2025 John Ash Safety Award from the BC Ministry of Mining and Critical Minerals, recognizing Copper Mountain as the safest open pit mine in British Columbia in 2025.

The New Ingerbelle project achieved another major milestone in the second quarter of 2026 with its official groundbreaking ceremony on June 16, following its designation as a priority resource project by the British Columbia government. This expansion significantly enhances the long-term copper and gold production profile at Copper Mountain, supporting continuous operations and securing the asset's substantial economic benefits and employment baseline beyond 2040. The project is designed to access higher-grade mineralization while maximizing operational efficiency with a stripping ratio approximately three times lower than current mining areas. With key permits and refreshed First Nations participation agreements firmly in place, Hudbay is actively advancing critical infrastructure required to connect the New Ingerbelle pit expansion on the west side of the Similkameen River to existing operations on the east side. Key infrastructure within the project scope includes the construction of the west access road, a clear-span bridge across the Similkameen River, and the development of the east haul road. The project is currently on schedule with significant progress achieved on all project components. Concurrently, a targeted drilling program is underway at New Ingerbelle to upgrade inferred resources to higher confidence levels, expand resources, and further optimize the future mine plan. This program is 71% complete and is scheduled for completion in the fourth quarter of 2026.

Following the execution of refreshed participation agreements with the USIB and the LSIB earlier in the year, the Joint Implementation Committee and the Joint Technical Committee for the New Ingerbelle project were established in the second quarter of 2026. These committees are instrumental in safeguarding the environment and building transparency and constructive relationships with the Bands. 

On March 23, 2026, the LSIB submitted an application for judicial review of the regulatory decision by the Province of British Columbia to grant the New Ingerbelle permit amendment. Hudbay remains confident in the integrity and robustness of the regulatory process that led to the issuance of the permit amendment and Hudbay believes the court will uphold the decision. Hudbay is collaborating with the Province of British Columbia to prepare for a court hearing expected later in 2026.  While this review process is underway, Hudbay remains committed to working with the LSIB in a respectful and constructive manner to try to resolve the LSIB's concerns through the mechanisms that were agreed to by the parties in the Participation Agreement.

Mining Activities

Mining activities reached a record total material movement of approximately 30.1 million tonnes in the second quarter of 2026, driven by an optimized mining sequence and improved operational performance, while self-performing the construction of the east haul road for the New Ingerbelle project. As part of the accelerated stripping program, these production efficiencies resulted in a record daily average mining rate of 331,000 tonnes per day, ahead of budget. This ramp-up was supported by the successful commissioning of a new production shovel in April 2026.

Total ore mined at Copper Mountain in the second quarter of 2026 was 3.3 million tonnes, an increase of 31% and 12% compared to the second quarter of 2025 and first quarter of 2026, respectively. During the second quarter of 2026, blending initiatives from the main pit maintained stable ore feed to the mill, allowing the operation to prioritize waste stripping activities to expose higher-value mining fronts in the future. The mine is now positioned favourably to unlock high-grade copper from the main pit in late 2026, and more specifically in 2027 and 2028.

Total ore mined at Copper Mountain during the six months ended June 30, 2026 was 20% higher than the same period in 2025, driven by an optimized mining sequence, improved operational performance, and the accelerated stripping program as described above. In comparison, ore mined during the first half of 2026 had lower copper grades than the same period in 2025, primarily due to mine plan sequencing and mining activities during the first half of 2025 were deeper in the deposit where copper grades were higher.

Milling Activities

Mill performance continues to demonstrate improvement following the optimization efforts initiated in 2025. The second semi-autogenous grinding (SAG) mill delivered increased throughput in the quarter, reaching commercial production in May and averaging 12,000 tonnes per day thereafter. Throughput continues to ramp up, with individual days exceeding 20,000 tonnes per day in late June and into July.

The primary SAG mill was temporarily shut down on June 26, 2026 and will be offline until the end of July to complete the feed end head maintenance program. The replacement is tracking on schedule and will remove the constraints previously in place due to the localized damage to the feed end head that occurred in September 2025. While repairs are underway on the primary SAG mill, the second SAG continues to operate. Total mill throughput is expected to ramp up to 50,000 tonnes per day in the second half of 2026, once the primary SAG mill resumes operation.

Despite the operating constraints on the primary SAG, the mill processed 3.6 million tonnes of ore during the second quarter of 2026, an increase of 25% and 17% compared to the same period in 2025 and the first quarter of 2026, respectively. Milling throughput benefitted from improved operating parameters from the second SAG mill and the temporary conveyor system trial in place to divert crushed pebbles from the primary SAG to the second SAG. Based on the successful trial, a more permanent system is being constructed and is scheduled to be commissioned by the fourth quarter.

Milled copper grades during the second quarter of 2026 were 18% lower than the same period in 2025, as the prior year period benefited from higher grade ore mined from grade sequencing. Compared to the first quarter of 2026, copper grades were higher, driven by a greater proportion of ore feed mined from a higher-grade phase in the second quarter of 2026. Copper and gold recoveries during the quarter declined to 77% and 63%, respectively. This decline resulted from the ramp-up of mill throughput during the second quarter which revealed a grinding constraint in the ball mills, resulting in increased grind size and lower overall recoveries, compared to the first quarter of 2026. Several grinding initiatives are underway, alongside flotation advanced process controls to improve recoveries.

Milled copper grades during the first half of 2026 were lower than the same period in 2025 as the prior year period benefited from higher-grade ore contributions from the main pit, resulting in stronger metallurgical performance. Year-to-date 2026 copper and gold recoveries were 78% and 64%, respectively, representing a decline from the comparable period in 2025. This decline was a result of lower average head grades combined with a coarser grind size, which resulted from higher SAG mill throughput and the ball mill circuit operating under constraints.

The mill remains on track to achieve its permitted capacity of 50,000 tonnes per day in the second half of 2026, supported by improved throughput performance from the second SAG mill and the removal of the constraints previously in place on the primary SAG by replacing the feed end head.

Production and Sales Performance

During the second quarter of 2026, the British Columbia operations produced 6,455 tonnes of copper, 5,608 ounces of gold and 71,178 ounces of silver. Copper and gold production were lower than the second quarter of 2025, primarily due to lower mined grades, partially offset by higher throughput. Compared to the first quarter of 2026, production of all metals increased as a result of higher ore mined, improved grades and higher throughput.

During the first half of 2026, production of copper, gold and silver was 11,276 tonnes, 10,795 ounces and 114,220 ounces, respectively. Year-to-date production of all metals was lower than the same period in 2025 as a result of lower mined grades and recoveries, partially offset by higher mill throughput.

Sales volumes for all metals in the second quarter of 2026 were lower than the corresponding period in 2025, primarily driven by same factors impacting production during this period. Compared to the first quarter of 2026, copper sales volumes were consistent during the second quarter of 2026.

Year-to-date sales quantity changes compared to the same period in 2025 reflect the changes in production during the periods.

*Copper equivalent production is calculated using the quarter average LME prices for each metal. Copper Mountain mine production is stated at 100%. On April 30, 2025 Hudbay completed the acquisition of the remaining 25% interest in the Copper Mountain mine and now owns 100%.

Cost Performance

Combined mine, mill and G&A unit operating costs in the second quarter of 2026 were C$25.52 per tonne milled, higher than the second quarter of 2025. This increase was primarily due to higher mining, milling and G&A costs, driven by higher energy and consumable costs, partially offset by higher milled throughput. Combined unit operating costs increased marginally compared to the first quarter of 2026, primarily driven by higher mining and G&A, partially offset by lower milling costs and higher milled throughput.

Combined mine, mill and G&A unit operating costs during the six months ended June 30, 2026 were C$25.39 per tonne milled versus C$25.12 per tonne milled in the first half of 2025 primarily due to the same factors affecting the quarterly variance.

Cash cost¹ and sustaining cash cost¹, net of by-product credits, were $3.22 and $6.23, respectively, per pound of copper in the second quarter of 2026. Cash cost¹ was higher than the first quarter of 2026 primarily as a result of higher mining costs, less deferred stripping and lower by-product credits, partially offset by higher copper production. The increase in mill availability in the second quarter of 2026 allowed for higher mill throughput and enhanced operational efficiencies. Compared to the second quarter of 2025, cash cost was higher primarily due to higher mining, milling and G&A costs. Sustaining cash cost¹ was higher than the second quarter of 2025 primarily due to the same factors affecting cash cost, together with increased sustaining capital and higher royalties.

Cash cost and sustaining cash cost per pound of copper produced, net of by-product credits, during the six months ended June 30, 2026 were $2.87 and $6.91, respectively. Variances with the same period last year were for largely the same factors affecting the quarterly variances.

British Columbia Guidance Outlook

¹ Cash cost and sustaining cash cost, net of by-product credits, per pound of copper produced is a non-GAAP financial performance measures with no standardized definition under IFRS. For further information and a detailed reconciliation, please see the discussion under the "Non-GAAP Financial Performance Measures" section of this MD&A.

² Copper Mountain mine results are stated at 100%. On April 30, 2025 Hudbay completed the acquisition of the remaining 25% interest in the Copper Mountain mine and now owns 100%.

Hudbay is on track to achieve its 2026 production guidance for all metals in British Columbia and continues to expect higher production in the second half of the year as the mill improvement projects take effect. Although second quarter cash cost was above the 2026 guidance range due to external cost pressures, Hudbay expects to achieve the full year 2026 cash cost guidance range in British Columbia.

FINANCIAL REVIEW

Financial Results

In the second quarter of 2026, Hudbay recorded net earnings attributable to owners of $137.4 million compared to the net earnings on the same basis of $117.7 million in the second quarter of 2025, representing an increase in net earnings attributable to owners of $19.7 million. Year-to-date in 2026, Hudbay recorded net earnings attributable to owners of $327.8 million compared to net earnings on the same basis of $218.1 million for the same period in 2025, representing an increase in earnings attributable to owners of $109.7 million.

The following table provides further details on the makeup of this variance:

Revenue

Revenue for the second quarter of 2026 was $631.3 million, $94.9 million higher than the same period in 2025, primarily due to stronger metal prices, lower treatment and refining charges, partially offset by lower sales volume of all metals.

Revenue during the six months ended June 30, 2026 was $1,388.6 million, $257.3 million higher than in 2025, as a result of the same factors impacting the second quarter of 2026.

While a majority of revenues continue to be from copper, gold represented a significant portion of total revenues at 38% and 39% for the three months and six months ended June 30, 2026, respectively. This is as a result of exposure to higher gold prices.

The following table provides further details on these variances:

¹ See discussion below for further information regarding metals prices.

² Copper Mountain mine results are stated at 100%

Hudbay's revenue by significant product type is summarized below:

¹ Pricing and volume adjustments represents mark-to-market adjustments on provisionally prices sales, realized and unrealized changes to fair value for non-hedge derivative contracts (QP hedges) and adjustments to originally invoiced weights and assays.

For further detail on variable consideration adjustments, refer to note 18 of Hudbay's consolidated interim financial statements.

Realized sales prices

This measure is intended to enable management and investors to understand the average realized price of metals sold to third parties in each reporting period. The average realized price per unit sold does not have any standardized meaning prescribed by IFRS, is unlikely to be comparable to similar measures presented by other issuers and should not be considered in isolation or a substitute for measures of performance prepared in accordance with IFRS.

For sales of copper, zinc, gold and silver, Hudbay may enter into non-hedge derivatives ("QP hedges") which are intended to manage the provisional pricing risk arising from quotational period terms in concentrate sales agreements. The gains and losses on QP hedges are included in the calculation of realized prices. Hudbay expects that gains and losses on QP hedges will offset provisional pricing adjustments on concentrate sales contracts.

Hudbay's realized prices for the three months ended June 30, 2026 and 2025 and March 31, 2026 and six months ended June 30, 2026 and 2025, respectively, are summarized below:

¹ Realized prices exclude refining and treatment charges and are on the sale of finished metal or metal in concentrate. Realized prices include the effect of provisional pricing adjustments on prior period sales.

² London Metal Exchange average for Cash copper and zinc prices.

³ Sales of gold and silver from Constancia mine are subject to Hudbay's precious metals stream agreement with Wheaton, pursuant to which Hudbay recognizes deferred revenue for precious metals deliveries and also receive cash payments. Stream sales are included within realized prices and their respective deferred revenue and cash payment rates can be found on page 33 of this MD&A.

In addition to QP hedges, the Company may periodically undertake metal price hedging in accordance with Board approved policies to achieve strategic objectives, including locking in favourable metal prices to ensure minimum cash flows during or after the construction of a mine or during a period of reduced liquidity due to large capital investments, to manage cash flows at shorter life or higher cost operations or as part of a financing arrangement. The realized prices, denoted in the table above, exclude the impact of derivative mark-to-market gains and losses on these non-QP hedges, which are included in change in fair value of financial instruments in Hudbay's condensed consolidated interim statements of income.

Hudbay entered into forward copper sales and zero copper cost collar hedges during the first quarter of 2026 that cover approximately 35% of Copper Mountain's expected 2026 production.

As of June 30, 2026, Hudbay had the following non-QP hedges outstanding:

• Forward sales contracts for a total of 6.6 million pounds of copper production over the period of July 2026 to April 2027 at an average price of $6.03 per pound; and

• Zero-cost collar program for 13.2 million pounds of copper production over the period of July 2026 to April 2027 at an average floor price of $5.76 per pound and an average cap price of $6.36 per pound.

The following tables provide a reconciliation of average realized price per unit sold, by metal, to revenues as shown in the consolidated interim financial statements.

¹ Average realized price per unit sold may not calculate based on amounts presented in this table due to rounding.

² As per IFRS Accounting Standards.

³ Pricing and volume adjustments represents mark-to-market adjustments on provisionally priced sales, realized and unrealized changes to fair value for QP hedge derivative contracts and adjustments to originally invoiced weights and assays.

⁴ Revenue, including mark-to-market on QP hedges is used in the calculation of realized price.

⁵ By-product credits subtotal is used in the calculated of cash cost per pound of copper and ounce of gold produced, net of by-product credits. Cash cost per pound of copper and per ounce of gold produced, net of by-product credits, are non-GAAP financial performance measures with no standardized definition under IFRS. For further information and a detailed reconciliation, please see the discussion under the "Non-GAAP Financial Performance Measures" section of this MD&A.

⁶ Copper and zinc shown in metric tonnes and gold and silver shown in ounces.

⁷ Realized price for copper and zinc in $/lb and realized price for gold and silver in $/oz.

¹ Average realized price per unit sold may not calculate based on amounts presented in this table due to rounding.

² As per consolidated interim financial statements.

³ Pricing and volume adjustments represents mark-to-market adjustments on provisionally priced sales, realized and unrealized changes to fair value for QP hedge derivative contracts and adjustments to originally invoiced weights and assays.

⁴ Revenue, including mark-to-market on QP hedges is used in the calculation of realized price.

⁵ By-product credits subtotal is used in the calculated of cash cost per pound of copper and ounce of gold produced, net of by-product credits. Cash cost per pound of copper and per ounce of gold produced, net of by-product credits, are non-GAAP financial performance measures with no standardized definition under IFRS. For further information and a detailed reconciliation, please see the discussion under the "Non-GAAP Financial Performance Measures" section of this MD&A.

⁶ Copper and zinc shown in metric tonnes and gold and silver shown in ounces.

⁷ Realized price for copper and zinc in $/lb and realized price for gold and silver in $/oz.

The price, quantity and mix of metals sold affect Hudbay's revenue, operating cash flow and gross profit. Revenue from metals sales can vary from quarter to quarter due to production levels, shipping volumes and transfer of risk and title to customers.

Precious metals - stream sales and realized price breakdown

The following table shows a breakdown of realized prices for precious metals inclusive of stream and offtaker revenue. It further identifies the components of the realized price for stream revenues between the amortized drawdown rate and cash payment rate.

¹ Deferred revenue drawdown rates for gold and silver do not include variable consideration adjustments.

² The gold and silver cash rate for Peru increased by 1% from $400/oz and $5.90/oz effective August 4, 2019. Subsequently every year, on August 4, the cash rate will increase by 1% compounded.

³ Revenue, including mark-to-market on QP hedges is used in the calculation of realized price.

Subsequent to the variable consideration adjustment recorded on January 1, 2026, the deferred revenue amortization is recorded in Peru at $833 per ounce gold and $15.56 per ounce silver (June 30, 2025 - $860 per ounce gold and $15.06 per ounce silver).

Cost of Sales

Hudbay's detailed cost of sales is summarized as follows: