Hudbay Announces $600 Million Strategic Investment from Mitsubishi Corporation for 30% Joint Venture Interest in Copper World

Executive Summary

• Hudbay Minerals has entered into a joint venture agreement with Mitsubishi Corporation to acquire a 30% interest in Copper World LLC, Hudbay’s wholly-owned subsidiary holding the fully-permitted Copper World project in Arizona.
• The transaction involves an initial $600 million investment from Mitsubishi ($420 million at closing and $180 million within 18 months), which significantly de-risks the project for Hudbay by reducing its estimated remaining capital contribution to approximately $200 million and deferring its first capital contribution to 2028.
• Concurrently, Hudbay has agreed to amend its precious metals streaming agreement with Wheaton Precious Metals Corp., adding up to $70 million in contingent payments and switching ongoing payments from fixed pricing to 15% of spot prices, completing the key elements of Hudbay’s "3-P" prudent financing framework.

Key Details

• JV Transaction Structure: Mitsubishi acquires a 30% equity interest in Copper World LLC.
• Investment Amount: Total initial investment of $600 million, structured as:
  • $420 million paid at closing.
  • $180 million matching contribution payable no later than 18 months following closing.
• Financial Impact on Hudbay:
  • Reduces Hudbay’s estimated share of remaining capital contributions to approximately $200 million (based on PFS estimates).
  • Defers Hudbay’s first capital contribution to 2028 at the earliest.
  • Increases levered project IRR to Hudbay to approximately 90% based on PFS estimates.
  • Hudbay retains 100% of its existing U.S. federal net operating losses (~$275 million) and Arizona state losses (~$210 million).
• Wheaton Stream Amendment:
  • Up to $70 million contingent payment upon achieving future mill expansion milestones.
  • Ongoing payments for gold and silver amended from fixed pricing to 15% of spot prices.
  • Initial $230 million stream deposit remains unchanged.
  • Hudbay maintains existing fixed recoveries in the Constancia stream and provides a corporate guarantee for the Constancia stream in connection with the Wheaton enhancement.
• Project Economics & Production (Based on PFS):
  • Production: 85,000 tonnes of copper per year over a 20-year mine life (Phase I).
  • Capital Costs: Estimated initial capital investment of ~$1.3 billion (net of equipment financing), reduced to ~$1.1 billion after incorporating the Wheaton Stream proceeds.
  • Cash Costs: Average cash costs of $1.47/lb and sustaining cash costs of $1.81/lb (base case); variable cut-off strategy yields ~92,000 tpa at $1.53/lb cash cost and $1.95/lb sustaining cost.
  • Returns: After-tax NPV of $1.1 billion and IRR of 19% (using $3.75/lb copper price and 8% discount rate).
  • Reserves: Proven and probable reserves of 385 million tonnes at 0.54% copper.
• Operational Updates:
  • DFS expected to be completed by mid-2026.
  • Hudbay is accelerating detailed engineering and long-lead items, advancing $20 million in growth capex to 2025.
  • Updated 2025 Arizona growth spending guidance increased to $110 million (from $90 million) on a 100% basis.
• Job Creation & Economic Impact:
  • Expected to create >1,000 jobs during the 3-year construction period.
  • 400 direct jobs and up to 3,000 indirect jobs once in full production.
  • Projected to contribute over $850 million in U.S. taxes over the initial 20-year life.
• Closing Conditions: Subject to customary closing conditions, including regulatory approvals. Expected to close in late 2025 or early 2026.

Notable Quotes

• Peter Kukielski, President and CEO of Hudbay: “Securing Mitsubishi as a 30% partner in Copper World is an important milestone for Hudbay as we establish a long-term strategic partnership to advance this high-quality copper project towards sanctioning and to unlock significant value in our copper growth portfolio... Through this partnership we will leverage our complementary strengths to deliver our world-class Copper World project, produce domestic copper in the U.S. for the U.S. critical minerals supply chain and create value for all our stakeholders.”
• Taro Abe, COO of Mitsubishi’s Critical Minerals Division: “Participation in Copper World is of significant strategic importance for Mitsubishi towards the realization of its growth strategy within the copper sector. We are pleased to collaborate with Hudbay, whose operational and development expertise is well-recognized and proven, to advance a definitive feasibility study.”