Hudbay Minerals Inc.

Good morning, ladies and gentlemen. Thank you for standing by. Welcome to the HUD-Bay Minerals Inc. First Quarter 2026 Results Conference Call. At this time, all participants are in listen-only mode. Following the presentation, we will conduct a question and answer session. To join the question queue, you may press star then 1 on your telephone keypad. You'll hear a tone acknowledging your request. Should you need assistance during the conference call, You may reach an operator by pressing star then zero. I would like to remind everyone that this conference call is being recorded on May 1st, 2026 at 11 a.m. Eastern time. I would now like to turn the conference over to Candice Brule, Senior Vice President, Capital Markets and Corporate Affairs. Please go ahead.

Thank you, operator. Good morning and welcome to HUD-Base first quarter 2026 results conference call. HUD-based financial results were issued this morning and are available on our website at www.hudbay.com. A corresponding PowerPoint presentation is available in the Investor Events section of our website, and we encourage you to refer to it during this call. Our presenter today is Peter Kokilski, HUD-based President and Chief Executive Officer. Accompanying Peter for the Q&A portion of the call will be Eugene Lee, our Chief Financial Officer, and Andre Lauzon, our Chief Operating Officer. Please note that comments made on today's call may contain forward-looking information, and this information by its nature is subject to risks and uncertainties, and as such, actual results may differ materially from the views expressed today. For further information on these risks and uncertainties, please consult the company's relevant filings on CDAR Plus and EDGAR. These documents are also available on our website. As a reminder, all amounts discussed on today's call are in U.S. dollars unless otherwise noted. And now I'll pass the call over to Peter Kutelski.

Thank you, Candice. Good morning, everyone, and thank you for joining us on today's call. We've had a great start to the year, achieving several key operational, financial, and growth milestones. HUD-BAY delivered another quarter of record revenue, record adjusted EBITDA, and record adjusted earnings in the first quarter. This was driven by steady operating performance, our focus on cost control, and the continued benefit from margin expansion with our unique mix of copper and gold exposure. Our leading operating cost performance resulted in record low consolidated cash costs in the first quarter, which contributed to continued strong free cash flow generation. With the strong performance in the quarter, all our operations are on track to achieve 2026 production and cost guidance. Building on our commitment to prudent balance sheet management, we entered the quarter with over $1 billion in cash and cash equivalents. benefiting from $420 million received from Mitsubishi for their initial cash contribution on closing of the Copper World joint venture transaction in January. Our enhanced financial flexibility has positioned us well to continue advancing the development of Copper World, reinvest in high return opportunities at each of our operations, and de-risk the Cactus project upon completion of the acquisition of Arizona Sonoran to deliver attractive growth and maximize long-term risk adjusted returns at each of our operations for stakeholders. Slide three provides an overview of our first quarter operational and financial performance. The first quarter demonstrated strong operating performance with higher mill throughput across the three operations compared to the previous quarter, delivering consolidated copper production of 28,000 tons and consolidated gold production of 62,000 ounces. We achieved record quarterly revenues of $757 million and record adjusted EBITDA of $422 million in the first quarter. Cash generated from operating activities was $211 million, remaining relatively consistent with the fourth quarter as a result of favorable changes in non-cash working capital. First quarter adjusted net earnings was a record of $159 million, or 40 cents per share, reflecting higher realized metal prices and strong cost control across the operations, resulting in higher gross profit margins. During the first quarter, we continued to demonstrate industry-leading cost performance, delivering record low consolidated cash costs of negative $1.80 per pound of copper and sustaining cash costs of $0. This incredible cost performance was partially driven by higher gold byproduct credits reflecting the benefits of HUD-Bay's unique commodity diversification. Turning to slide four, HUD-Bay has delivered several quarters of significant free cash flow generation as a result of steady operating performance, expanding margins from strong copper and gold exposure, and our cost control efforts. With our enhanced balance sheet and diversified free cash flow generation, we are well positioned to fund our attractive growth pipeline. Our cost control efforts are focused on navigating emerging external cost pressures, such as higher fuel prices and short term labor challenges. We have not experienced any disruption to fuel availability and have been able to mitigate the cost pressures through initiatives to further improve throughput and enhance operating efficiencies. We are well insulated from external cost pressures due to our diversified platform with significant byproduct credits from gold production and the polymetallic nature of our ore deposits. While most of our revenues continue to be derived from copper, revenue from gold represents a meaningful portion of total revenues with 39% of gross revenues from gold in the first quarter. After accounting for our sustaining capital investments but before growth investments, we generated $102 million in free cash flow during the quarter, bringing our trailing 12-month free cash flow generation to approximately $400 million. As mentioned earlier, we ended the first quarter with over a billion dollars in cash and cash equivalents, and as of March 31st, our total liquidity was $1.4 billion. Our net debt at the end of the quarter was nearly zero, bringing our net debt to EBITDA ratio to its lowest point in more than a decade. Consistent with our prudent balance sheet management and focus on cost of capital, following the quarter, we repaid our outstanding 2026 senior unsecured notes on maturity on April 1st. We used a combination of cash on hand and a $272 million draw on our low-cost revolving credit facilities. After giving effect to this repayment, HUD-based total liquidity decreased by $473 million to $957 million. This continues to provide us with significant financial flexibility as we advance Copperworld towards a sanctioning decision later this year. Turning to slide five, the Peru operations continue to demonstrate steady operating performance with production and costs in line with expectations. The operations produced 21,000 tons of copper, 9,000 ounces of gold, 530,000 ounces of silver, and 380 tons of molybdenum during the first quarter. Production of copper and gold were lower than the fourth quarter due to the depletion of the higher grade pump acacia ore in late 2025. Mill throughput levels averaged approximately 90,700 tons per day in the first quarter of 2026. achieving a new quarterly record. The team's efforts to increase mill throughput align with the Peru Ministry of Energy and Mines regulatory change to allow mining companies to operate up to 10% above permitted levels. On March 6, HUD-BEI received a permit approval to increase annual mill throughput capacity to 31.1 million tons from 29.9 million tons, setting a new base for the 10% permitted allowance. We continue to advance the installation of pebble crushers later this year to further increase mill throughput rates in the second half of 2026, and we are on track to achieve 2026 production guidance for all metals in Peru. First quarter cash costs in Peru were 70 cents per pound of copper, a 23% increase compared to the fourth quarter due to lower byproduct credits offset by lower profit sharing, lower power costs, and lower treatment and refining charges. Cash costs in the quarter outperformed the low end of the annual guidance range as a result of strong operating cost performance and temporarily higher gold byproduct sales from Pampa Concha, despite emerging external cost pressures. We are well positioned to achieve the full year cost guidance range in Peru. During the quarter, Constantia was recognized as the safest open pit operation in Peru during the National Mining Safety Contest for our performance in 2025. This reflects our company's unwavering commitment to safety and validates Constantia's compliance with the highest operational safety and regulatory standards. Moving to our Manitoba operations on slide six, the first course demonstrated strong operational agility in mitigating lower equipment utilization and labor availability at the Lalor mine while continuing to prioritize gold ore feed for the new Britannia mill. This strategy successfully maintained strong gold production in the first quarter, supported by higher mill recoveries compared to the fourth quarter of 2025. Our Manitoba operations produced 48,000 ounces of gold, 2,500 tons of copper, 5,000 tons of zinc, and 213,000 ounces of silver in the quarter. Production of gold was higher than in the fourth quarter due to higher gold recoveries and higher mill throughput. while all other metals were lower, primarily due to lower grades. 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. With solid operating results in the first quarter, we are on track to achieve 2026 production guidance for all metals in Manitoba. The Lalor mine hoisted an average of 3,900 tons of ore per day in the first quarter, strategically prioritizing gold zones to secure optimal feed for the New Britannia Mill. Total ore mined was lowered in the prior quarter because of lower effective utilization of equipment due to reduced workforce availability. This was offset by successfully onboarding nearly 80 new employees as recruitment and upskilling of employees are underway to increase proficiency of frontline employees. The New Britannia Mill averaged approximately 2,000 tons per day in the first quarter, and benefited from continuous improvement initiatives to unlock future throughput capacity. Gold recoveries of 90% at the New Britannia Mill reflect ongoing optimization efforts. Similarly, the Stoll Mill achieved improved gold recoveries of 73% in the first quarter, reflecting process optimization and enhanced gold recovery initiatives. The 1901 deposit delivered 11,000 tons of development ore in the first quarter. the team continues to advance haulage and exploration drifts to further delineate the ore body and support ongoing infrastructure projects. Looking ahead, we plan to prioritize exploration, definition drilling, ore body access, and establish critical infrastructure at 1901 in preparation for full production in 2027. Manitoba gold cash costs in the first quarter were $408 per ounce, outperforming the low end of the guidance range. we are well positioned to achieve our 2026 cash cost guidance range. In British Columbia, we continue to focus on advancing our multi-year optimization plans, achieving significant milestones in both mining productivity and project permitting in the first quarter, and remain on track to deliver the benefits of the stripping program and unlock higher grade ore later this year. As shown on slide seven, Copper Mountain produced 4.8 thousand tons of copper 5.2,000 ounces of gold and 43,000 ounces of silver in the first quarter, in line with our guidance and planned mine sequencing. Production was supported by a higher mill throughput, offset by lower grades compared to the fourth quarter. We remain on track to achieve our 2026 production guidance expectations for all metals in British Columbia, with higher production expected in the second half of the year as mill improvements take effect. Mining activities reached a record total material movement of over 25 million tons in the first quarter, driven by an optimized mining sequence in the main pit and increased contributions from the north pit. This ramp up was supported by the successful commissioning of a new production loader in January. To further bolster the equipment fleet and add to this momentum, a new shovel has been recently commissioned. Welling throughput benefited from the completion of the second sag mill and the mill optimization initiatives implemented in late 2025, resulting in increased mill throughput in the first quarter of 2026. The second sag mill achieved increased throughput in the quarter and averaged 10,000 tons per day in March. The primary sag mill continues to operate under a reduced load and is being rigorously monitored prior to the head replacement scheduled for late June and into July. The mill remains on track to achieve its permitted capacity of 50,000 tons per day in the second half of 2026. British Columbia cash costs were lower than the prior quarter, delivering cash costs of $2.41 per pound of copper as a result of higher gold byproduct credits and resolving the unplanned maintenance downtime issues experienced in the prior quarter. First quarter cash costs were within the guidance range, And despite emerging external cost pressures, we remain on track to achieve 2026 cash cost guidance in British Columbia. During the quarter, the New Ingabel project reached a major milestone in February with the receipt of the Mines Act and the Environmental Management Act amended permits from provincial regulators. The New Ingabel project supports continued copper production, increased gold production, and further mine life extensions. The project is designed to access higher-grade mineralization while improving operational efficiency with a stripping ratio approximately three times lower than current mining areas. With these permit approvals, we are advancing critical infrastructure required for the expansion. This includes the construction of an access road, a bridge across the Similkameen River, and the development of an East Hall road link to New Ingebel with existing operations. A large drill program was initiated during the first quarter at New Ingabel to improve resource definition and expansion. We are pleased to receive the news this week that the BC government has added the New Ingabel project to the province's list of priority resource projects. This list highlights the acceleration of major projects that strengthens economic growth, support resource development, and create jobs and long-term value. Turning to slide eight, We announced our annual mineral reserve and resource update along with an improved three-year production outlook during the quarter. We extended Snow Lake's mine life by four years to 2041, maintained Constanza's mine life to 2040, and extended Copper Mountain's mine life by two years to 2045. Consolidated copper production is expected to average 147,000 tons per year over the next three years, representing a 24% increase from 2025. This growth is driven by higher expected copper production in British Columbia from the mill throughput ramp up in the second half of 2026, higher grades in British Columbia in 2027 from the completion of the accelerated stripping program, and higher expected mill throughput in Peru starting in the second half of 2026. Consolidated gold production is expected to average 243,000 ounces per year over the next three years, reflecting continued strong production in Manitoba and the expected contribution from New Ingabel in British Columbia starting in 2028. We have already made significant progress in advancing many of our corporate and strategic objectives so far this year, and we anticipate many more key catalysts to come from our portfolio of long-life assets in Tier 1 jurisdictions, as shown in Slide 9. Our prudent balance sheet management, strong financial flexibility, significant free cash flow generation from strong exposure to higher copper and gold prices and continued margin expansion has positioned us to be able to advance generational growth investments across the portfolio. In Peru, we deliver higher mill throughput in the second half of the year as we complete the installation of two pebble crushers, which will grow copper production in 2027 and 2028. We also continue to progress exploration plans in Peru including at the Maria Reina and Caballito properties, to provide long-term growth potential at Constantia. In Manitoba, we continue to advance optimization initiatives and exploration efforts to demonstrate an enhanced production profile and expanded mine life. Exploration activities are underway at the 1901 deposit as we advance towards production in 2027, and an expanded exploration program at Talbot is focused on upgrading mineral resources to reserves, and expanding the deposit footprint at depth. In British Columbia, we expect to continue to see operational improvements in the second half of the year as we complete our optimization initiatives and advance this operation towards its free cash flow inflection point later this year. Following the receipt of the new Ingabelt permits earlier this year, we have commenced construction of critical infrastructure for the development of the deposit to access the higher-grade mineralization and drive further cash flow growth starting in 2028. We have also launched the largest exploration program at New Ingabel to further increase mine life extension potential. On slide 10, during the first quarter, we made significant steps towards enhancing our United States copper growth pipeline. At Copper World, as I mentioned earlier, we announced the closing of the Mitsubishi joint venture transaction, establishing a long-term strategic relationship with a premier partner. The initial $420 million in cash proceeds will be used to directly fund the remaining pre-sanctioning costs and the initial project development costs following a sanctioning decision later this year. The feasibility activities at Copper World are well underway with the DFS progressing above 85% completion at the end of March and remaining on track for completion in mid-2026. In March, we announced the acquisition of Arizona Sonoran, establishing a major copper hub in southern Arizona with the addition of the Cactus project to our existing Arizona business. This transaction further strengthens our position as a premier Americas-focused copper company, enhances our U.S. growth pipeline, and creates significant operational efficiencies and regional synergies with the stage development of Copperworld and Cactus. The transaction has received strong shareholder support and is expected to close in the second quarter of 2026. We have also commenced pre-feasibility study activities at our Mason copper project in Nevada. We expect the study to be completed in 2027. While Mason isn't expected to come into production until after Copper World and Cactus, its larger production base will position it as the third largest copper mine in the US. As we continue to advance all of these attractive growth initiatives across the portfolio, we remain committed to prudently allocating capital to the highest risk-adjusted return opportunities to deliver significant value for stakeholders. Concluding on slide 11, our focus on demonstrating continued operational excellence while prudently advancing our many organic growth opportunities will deliver significant copper production growth. Over the next three years, we expect to increase production by 24% through attractive brownfield investments while continuing to advance our attractive US pipeline to meaningfully expand annual copper production levels. By the end of the decade, we expect to increase our annual copper production by more than 70% to approximately 250,000 tons with Copper World. And with the stage development of Cactus and Mason to follow, We have a pathway to 500,000 tons of copper by the middle of the next decade. The most compelling part of this industry-leading copper growth profile is that our growth assets are low risk, low capital intensity projects located in some of the best mining jurisdictions in the world, and we have the team, the balance sheet, and strong financial plan to deliver this pipeline. This is largely driven by a diversified operating platform with significant exposure to complementary gold and our expanding margins. I have no doubt that our continued focus on delivery and execution will continue to drive significant value for all our stakeholders. And with that, we are pleased to take your questions.

Thank you. Ladies and gentlemen, we will now begin the question and answer session. To join the question queue, you may press star then one on your telephone keypad. You'll hear a tone acknowledging your request. If you're using a speakerphone, please pick up your handset before pressing any keys. To withdraw your question, please press star then two. Our first question is from Ralph Profiti with Stifel Financial. Please go ahead.

Thanks, operator, and good morning. Thanks for taking my question. Peter and Eugene, there's been a lot of work being done at Copper World on long lead items ahead of the definitive feasibility study. Just wondering, have you set a goal for how much of the revised budget by the time sanctioning does come will, say, be locked in, contracted, and committed? I'm just trying to get a sense of how much work can be done ahead of time to manage inflationary pressures.

Thanks, Ralph. Great question. Look, we certainly will... lock in a significant amount of their key equipment. So, for example, we already have pricing on fleet, for example, with the opportunity to lock in fleet pricing right now. We have pricing from vendors for primary equipment that we are going to procure, and we're ensuring that we have space in the production facilities right now. I would say between the issue of the DFS And FID, we will lock in pricing on all of that equipment. But Andre, any comments you might have in addition?

I agree on the long lead. And there are some also critical path items that we've been moving along. We started construction of our water line. We've taken some initial blasts. We're pioneering our haul roads as we speak. And so those are already in our budget for the year. But like Peter said, the big ones are are already in place. Ball mills, sag mills, all those costing things are coming forth.

Ralph, if I could just add one more. You will recall that when we announced the joint venture transaction last August, that we increased the budget in 2020 five for long lead items. So we didn't just react to this today. We've been thinking about this for well over a year. So we've been placing orders. We've been thinking about getting ourselves ready for the FID decision well over a year in advance.

Great. Thank you. That's very helpful. And maybe as a follow-up, a point of clarification, Peter, on the LSIB judicial review. that this is a process that is actually, you know, sort of attracted to the regulatory government process itself that sits outside of sort of HUD-B. And, you know, are you needing to have a legal strategy around this to preserve the 2028 timeline for New Inger Bell?

That's a great question, Rafiq. So in March this year, LSIB submitted an application for judicial review of the regulatory decisions to grant the permit amendment. We remain very confident in the integrity and the robustness of that regulatory process that led to the issuance of the permit amendment, and we believe that the court will uphold the decision on that award. At the same time, we remain committed to working with the LSIB in a respectful and constructive manner to try to resolve their concerns through the mechanisms that were agreed to by the parties in the participation agreement. So, yeah, their issue is not with us. It's with the government, and we have a constructive relationship with them, and we'll ensure that we continue to drive that relationship.

Great. Thank you for that clarity and for your answers.

The next question is from George Edie with UBS. Please go ahead.

Yeah, hi, Tim. Thanks for the call today. Can I just ask a bit more following up on that question from Ralph? Just on the CapEx at Copperwell, like, Eugene, how much can you lock up in the next sort of 12 months or so in terms of dollars? Like, are we talking 20% to 30% of the CapEx spend you can fix in the next sort of period? Is that a reasonable estimate? And I guess my question is, we've seen a zinc project nearby this week, materially lift CapEx, and while part of that is scope change, like, How can we get meaningful conviction that in 12 months that you guys can avoid that risk, I guess?

Lots of careful planning. And I think we've had a lot of time to think about this project over the years. And the feasibility study for this project was completed, or a similar project was completed a decade ago. And so we have a certain amount of equipment already in storage and obviously not subject to cost inflation. In terms of the actual percentage in dollars, I think we're still working on the final estimate and the DFS. We don't know that number yet. We have been very clear that we expect there to be some cost inflation and escalation related to the final CapEx number from the pre-feasibility number that was released three years ago. As you know, there has been inflation, but that three years ago number was postal, called the biggest wave of inflation post-COVID. So we are not expecting a blow in terms of capital. We are 85% done with the feasibility study. We'll release that likely in the third quarter, just mid-year as expected, with an FID to follow. We don't have any further clarity or any guidance on the actual guidance of the CapEx number at this moment.

I would add, George, it's Peter. that we're following an integrated project delivery system which incorporates a bunch of the contractors and engineers in the overall project management structure. So the development of the estimates that we have will in no small measure include their estimates of their own contributions. So the constructors and engineers we're using have actually participated in several of the projects that have been developed in the U.S. recently. And so they will have a window or deep insight into the evolution of costs over the last couple of years in any case, and that will be reflected in the definitive feasibility study.

And to the original question around percentages, it's tough, like Eugene said, but we do have insights in terms of the fleet. And if you recall from the pre-feasibility study, the fleet's 10% to 15% of the overall cost. And those numbers that we're receiving are in line with our estimates. So that's a good sign to start.

You will recall this project is one of the lowest capital intensity projects in the copper space. And so it's not subject to some of the larger cost flows we've seen in the sector. It's not at altitude. It's actually about 26 miles. from Tucson, and so some of the inherent infrastructure challenges that have plagued some of the other builds do not apply to this project as much, and so we're confident that there will be a very robust economic case for this project, as evidenced by Mitsubishi joining up at the PFS level a few months ago.

Okay. Yeah, no, that's helpful. Thanks. And then, Dave, pivoting slightly, and my line dropped for two minutes earlier, so I might have missed this, but at Cactus, when will we get an updated PFS with HUD-based sort of overlaid view and respective post-transaction closing? Could that be by year-end, or is it still going to be sometime next year? And also, what's the latest on the permit amendments, too, please?

Sure, I'll take that. So the vote's still to come in a couple of weeks. We are quite excited about the project. We've met the teams. We're very, very pleased with the quality of the level of the teams that are currently working for Cactus and excited for them to be part of the team. And I think that the next step, once the vote goes through, is to sit with the teams and really regroup around. There's lots of synergies with Copper World and our view of what what we were thinking when we looked at the acquisition and getting their understanding as well. So that's going to go into next year. It's not a year-end thing. I think realistically it's into 2027 for sure. And in terms of the permitting, the teams are progressing with the permitting as site and they're having discussions locally with the county. So the permitting and the revisiting of that is on track and moving forward. and we're supportive of them in doing that. The synergies around looking at, you know, what does it look like? Obviously, they are looking at fleet. We just come off of negotiating a large fleet for Copper World. You know, they're not privy to that information. Once we go through that, I think there's lots of opportunities for Cactus when we look at it all together. But by the end of the year, I think it would be really rushed. I think it's definitely... into next year for sure.

Okay. Thanks, guys. All the best. Thanks.

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

Hi. Thanks for taking my question. Maybe just any color on input cost pressures or supply constraints that you're seeing. I don't think I saw anything in the presentation or in the press release. If you could just comment on that, that would be helpful. Thanks.

I can take that. I assume, Fahad, you're referring to the current fuel and fuel prices and the like. I think I just wanted to say that from HUD-based standpoint, we're fairly well insulated by these emerging cost pressures. As you saw, we held costs very well in the first quarter. And while the prices for oil were not yet elevated, our operations are relatively minimally affected. In Peru, about $10 increase in the price of oil per barrel is about a 4% cash cost increase per pound of copper. In BC, given the heavy stripping that we're doing, that's a little higher, it's about 10 cents per pound produced. So if you think about oil today and if, for example, current prices were to hold, Oil is about 50% higher than our original budgeted amount for the year, and that would result in about a $45 million hit to cash flow if oil prices were to persist at this level for the rest of the year, for the whole year. But we have a natural hedge of gold in our portfolio that more than insulates that cost. Gold is about 20% higher than what we budgeted for the year. And so the impact, if these gold prices were to hold for the rest of the year, the impact of that would be close to $200 million. So in terms of a net effect of what we have with the gold that we produce for oil as a natural hedge against, let's call it larger cost inputs like oil. So we feel very well positioned.

And Fahad, I would also add that you know, one of our primary cash flowing assets, which is Manitoba, is largely insulated from the effects of oil price since we use very, very little oil in Manitoba at all. We use, you know, most of our underground equipment is driven by, is electrically driven or battery driven in any case.

Okay, great. That's really clear. And then maybe just switching gears to kind of the growth profile, Can you remind us in terms of the sequencing between Cactus and potentially Copper World Phase 2, how you're thinking about that, assuming that those permits happen at some point and you're in a kind of beneficial situation of being able to select between the two?

Yeah, for sure. I think that what makes absolute sense is that we progress Cactus in sequence with Copper World because there's a lot of synergies between the two projects. So as Andre mentioned, you know, we would continue with the updating the pre-feasibility study of CACTUS, move from that into definitive feasibility, get all the permits in place so that once Copperworld is in production, phase one, we would be able to move into the construction or phase the construction of CACTUS and bring that online subsequent to Copperworld. Now, phase two, we would not want to apply for permits. until such time as phase one is in operation, because we don't want to get things mixed up. So if you imagine it's going to take several years in order to get the permit for phase two, it makes absolute sense to progress phase cactus, and then phase two would come in after cactus came in.

And cactus is a little different than copper world. Copper world, the majority, a lot of capex is around building a facility and infrastructure, but a cactus, it's It's very much the inverse of that. It's more of a stripping exercise leading in to building an SXEW plant. And so very, very low risk in terms of the execution of moving material. You know, it's just about the purchasing of the fleet and execution of the plant. So there is, like Peter said, there's a timing element. But I think it almost naturally fits. It almost naturally fits.

Okay, great. Thank you very much.

The next question is from Dalton Barreto with Canaccord Genuity. Please go ahead.

Thanks. Good morning, guys. Just staying on that whole sequencing theme between Cobble World Phase I and Cactus, just given what's been going on with sulfur and sulfuric acid pricing, demand for U.S.-made cathode, and then just the timing of the sequencing, has anything changed And your thinking as it relates to the feasibility study around the Albion facility?

So, great question. I think, no, nothing has really changed except that so we continue, the DFS is a continuation of, it's exactly the same as the PFS pretty well. So, what we could do is during the update of the PFS for cactus, we could take a look at the sequencing or the timing for the development of the Albion facility. But it would be something that we'd look at as part of the Cactus pre-fees rather than the work that we're doing on Copper World right now.

Yeah. And to build on that is the other project in Manitoba where we're looking at getting the gold out of the flint-flon tails. We're progressing quite well with the studies on that. There's still more to go, but one of the byproducts there is also sulfur. So molten sulfur and sulfur products. And so there's lots of optionality in our portfolio to produce sulfur that would benefit the cactus project, where ultimately what you're trying to get is the acid for the heat bleach. So whether it's advancing albion, it's what you suggested, it could be about producing a lot more gold in Manitoba and doing the other, but we'll evaluate all those at the right time.

Understood. And then once the feasibility study drops mid-year, outside of the financing package, what are some of the other gating items to get you to FID?

Well, obviously getting our partner on board, so the partner would have to, but the partner is already on board in many respects, but they have their own internal approval process that we need to respect, and so there will be some time between the completion of definitive feasibility study and the final investment decision in respect of what our partner needs.

But they're actively working with us. We're meeting with them. They absolutely don't want to be a barrier. We're all aligned on rock in the box. and and meeting that first production so they've been really great to work with and uh yeah we don't see any any we're already spending the money yeah we're 420 million that they deposited in january in terms of that close uh we're using that capital to advance the feasibility study and that'll be the first capital spent when we fid this uh this project yeah we don't we don't see the fid being a barrier to the rock in the box and first production is all of the allowances that we've made and the critical path items that we're focusing on are keeping us on track

Great, thanks. And maybe just finally, Peter, can you possibly comment on some of the political going-ons in Peru right now, whether that's translating at all into any form of social unrest?

No. I think the social landscape has been complicated since the unrest that we saw last year. And so I think with the federal elections that are underway right now, there may continue to be periods of heightened social unrest. I think most people are aware of that the general election was held on April the 12th, and that from the initial voting, there's not yet a clear result of who the second candidate is. The first candidate, as everybody knows, is Keiko Fujimori. We think that by mid-month, it probably becomes evident or becomes clear who the second candidate is. But frankly, you know, in a way, federal elections don't really impact Hubei, as we've seen many, many different presidents since we started operations 10 years ago. And what's really been constant in those years has been the stable fiscal regime, which we don't expect to change. So we've seen left-wing presidents, right-wing presidents, and everyone in between. But what we've always got to anchor our thinking to is that Peru is a leading copper production nation globally, and I think the new president will recognize the importance of mining to the country, and I think it will be business as usual for us. So we have no concerns with respect to the upcoming election. We don't think it will result in heightened unrest. I'm sure there will be spats of it, but we're well-positioned to deal with it.

Great. Thanks, Peter. That's all for me.

The next question is from Stefan Ioannou with Cormark Securities. Please go ahead.

Hi. Sorry.

Can you hear me? Okay. Sorry. Maybe just following on the Peru theme. In the slide, you do mention sort of preparing for Maria Reyna and Caballito exploration. sort of assume that that's sort of more local sort of social considerations. Is there any update on when we might be able to put a drill rig in the ground there?

So there have definitely been no changes to the remaining steps in the permitting process, which includes the government's consult previa process with the local community. And with the election underway, that process is delayed. There are community elections which will be held later on in the year. And we think that once those elections have been held, then we'll move forward towards getting the permits. So for sure, you know, the permits are delayed. They continue to be delayed. But we think we're sort of coming to the end of that period of delay as we move past the general election and the community elections. And we probably see a little bit of movement towards the end of the year.

Okay, great. Thanks very much.

The next question is from Matthew Murphy with BMO. Please go ahead.

Hi. Just wanted to ask one about the labor balance at Lawler. You mentioned a few times some challenges in Q1, and maybe you can elaborate a bit on what you're seeing and how you're addressing it.

Sure, sure. Hi, it's Andre. Yeah, there has been some challenges. They're not new, like we've gone through this before. So the team's actively working on it, but we've seen a little bit of a peak towards the end of Q1 and we're working through it right now. But some of the things the teams are working on is, so obviously we're bringing in more people into the organization and that takes a little bit of time to train them. That's more of a medium-term sort of fix. But in the very, very short term, the team is looking at, with the 1901, which I'm sure you're familiar with, is the 1901 ore body we've been developing ourselves. And we have a lot of skilled employees there. And so the team is working on contracts with a mining contractor. So in an isolated area, it's a nice fit. And then we'll redeploy our resources into our shortfalls area. within the mine. And so there's a variety of things the teams are working on. There's more than that. There's several of them. But those would be the main ones. And, you know, we've got this in hand. It's something we've done before. It's just a blip and we're working through it. So it's not something that we're really worried about. It's in hand.

And I think, Matt, what we were pretty – straightforward in the results releases that we remain on track to achieve the annual production guidance in ranges in Manitoba, regardless of any labor issues and ups and downs that we might see. The team has it well in hand.

And we'll still be within guidance with our cost guidance with those extra costs as well.

Got it. Okay. Thank you.

The next question is from Lawson Winder with Bank of America Securities. Please go ahead.

Thank you, operator. And good morning, Peter, Eugene, and Andre. Thank you for today's update. Could I ask about capital return and just in light of the recently revamped capital return framework and the stronger balance sheet, but also considering the growth capital needs and then considering the buyback renewal approval, Can we consider the probability that HUD-BAE might be more active in the buyback in 26 as a higher probability than that in 25 when the buyback wasn't acted upon at all?

Ty Lawson, I can take that question. I think we look at this holistically, and the capital allocation framework was meant to provide us, you know, beyond that 3P plan, the way to sort of advance the company. And so, you know, we're – With the capital allocation framework, we're able to do three things. We're able to fund the development of Copper World. We're able to reduce debt, and we have a goal of sort of less than one times net to EBITDA through the lifecycle, through the build. We are able to fund generational investments in sort of brownfield projects at each of our operating sites. And given the progress we've made on the balance sheet, we're able to consider for the first time shareholder returns well ahead of what our goal was, was to be ready to be a meaningful dividend payer with the development of Copper World. We started thinking about that earlier this year with that capital allocation framework and the first step to that was increasing our dividend and it was a normal increase, but it was the first dividend increase we've had in our history. We think that that is something that we'd like to ramp into if we have the opportunity and if these prices were to hold, and while we're able to make these generational investments in the company and also provide shareholder returns. The NCIB was put in place as good housekeeping, as a tool for us to ensure to smooth out any volatility there is in the market, as there is, and it's something that we want to be able to access at the right time. But we're not committing to do any share buybacks in terms of a set dollar amount at this time. We don't think that that is the right way to set our capital allocation priorities, particularly during this year of sanctioning at Copperworld. I think if we have the opportunity to have excess capital at the end of the year, we can re-look at the dividend and see if we can enhance that in any form. as part of the whole capital allocation framework.

I think, Wilson, I would also add to what Eugene says, is that we want to have all options available to us. But right now, the most important thing for us is delivery. And I'm confident that the culture of consistent operational and financial delivery that we're building will absolutely ensure that we really are the gold standard in the copper space as we referred to in our release.

I noticed that phrase. That was great. Thank you. The one other follow-up I would like then on capital return is I'm not entirely clear on the potential spending at Mason. So you're advancing plans to initiate a pre-feasibility study. Can you remind us what you think you're going to spend in 26 on, on Mason? And then like, could that change? Is there a range within which, you know, we could have a much higher or a much smaller number depending on when you actually start that process in 2026?

We're starting that process and approximately $20 million is allocated to the advancing Mason this year. And that will be expensed as it's not a debt in reserve. And that's a fixed number. There's not much we can increase that by in terms of moving ahead. We're starting the pre-fees, and that'll take the better part of a year or two.

It's mostly studies, some drilling, some geotech, hydrology. Okay.

Fantastic. Thank you all very much.

The next question is from Pierre Valencourt with Haywood. Please go ahead.

Thanks. Peter or Andre, you know, just following on the discussion with respect to sequencing in Arizona, do you feel comfortable giving like a date in terms of production start? for CopperWorld, for Cactus, for Phase 2, just to give us a broad sense of what this is going to look like going out into the long term?

Sure, Pierre. Look, CopperWorld, the actual targeted dates will be released with the DFS, but it's pretty well mid-year, 2029. So that would be, as Andre refers to, a rock in the box. And then Cactus would be sometime after that. As Andre said, Cactus really is more an earth-moving effort than anything else. So we've got to move rock, we've got to do some stripping, we've got to develop the heap leach piles, and then there's a little bit of, there's a SXEW plant to build. There could be concurrent activity on mining between the one and the other, but really it remains to be seen during the PFS update what that will look like and what the actual sequencing will be.

Yeah, and we're not slowing down cactus studies or anything like that. So we're going to move those forward as fast as we can. And depending on where we are with Copper World and metal prices and all that, if it makes sense, then we could, like Peter said, we could start the stripping and like stuff that we know that is very easy while we're doing some of the detailed engineering, but we want to keep that optionality open.

Yeah, that's why I was asking that, just how much of an overlap. So if you start in mid-29, do we maybe consider a startup at Cactus within 18 months, 24 months of that startup, or do you need longer lead time? That's reasonable.

Like there's pre-feasibility is like a year generally and feasibility is another year, right? If you add those on and there's concurrent permitting updates that are going on. And so you layer all those on. But the one thing that we do know is you have to strip rock. And so at the right time, that costs money, is just how is Copper World going? Where are we at? Are the metal prices? If all those things are all lining up and we know we have the permits in hand, then then stripping is something that might make sense. But we're not slowing down anything with cactus. We want to make sure everything's as fast as possible. And then it's just, it's optionality for us. I think in the other day, we have a unique portfolio. Like in the next five years, we could triple copper production. And that's a key part of it. And so I think having all that ready to go is something that we're all over.

Yeah. And I guess in terms of phase two, that's, pretty much open-ended, I guess, for comparable, just to, you know.

Yeah, I wouldn't say it's open-ended. I think that we will apply for permits pretty quickly once Phase 1 is up and running. And then the question is, what's the duration of the permitting? But then it certainly will take longer to permit Phase 2 than it will take to bring cactus into production. But Phase 2 is not a massive effort.

And there's nice surprises in phase one when it comes out.

Yes.

Okay. And then finally on the Angerbell, what are the implications of bringing Angerbell on in 28, again, from a production perspective?

More gold. Yeah. Basically, it's more gold than mine life.

Yeah, double the gold grade than what we're currently producing. So there is some stripping that goes along with it as well, but it's very... It's a great cash flow generator for us, particularly at these metal prices.

And there's a third of the stripping, right?

Yeah. The average gold production with Neuengar Bell essentially doubles from 20,000 ounces of gold per annum to about $40,000 per annum. So it would be a very nice complement to the consistent copper production. And the mine life of Neuengar Bell is on a reserve basis today, 10 years. But as Peter highlighted in some of his remarks, we started drilling – We expect to convert a lot of the inferred, and so we're likely to see a close to double that mine life as we continue to explore and convert that resource.

Okay, thanks. This concludes the question and answer session. I'd like to turn the conference back over to Candice Brulé for any closing remarks.

Thank you, operator, and thank you, everyone, for participating today. If you have any further questions, please feel free to reach out to our investor relations team. Thank you, and have a great day.

This brings to a close today's conference call. You may disconnect your lines. Thank you for participating, and have a pleasant day.