Hudbay Minerals Inc. (HBM) Earnings Call Transcript & Summary

Good afternoon, and welcome to the 2023 Annual and Special Meeting of Shareholders of Hudbay Minerals Inc. My name is Stephen Lang, and I'm Chair of the Board of Directors of Hudbay. I would like to welcome all of the shareholders, employees and other stakeholders that are attending our virtual shareholders' meeting today via live webcast. This virtual shareholders' meeting will follow the same form as past years. Please note there may be slight delays when different speakers begin or as we respond to questions. Before we begin the formal part of the meeting, I would like to briefly reflect on some of Hudbay's achievements in 2022, which was another pivotal year for the company. Despite a challenging operating environment and global inflationary pressures, we met our production guidance for all metals in 2022. In Manitoba, we ramped production at the New Britannia mill to 1,500 tonnes per day and safely closed our 777 mine in Flin Flon after 18 years of steady production. In Peru, we were able to fully integrate Pampacancha into Constancia's operations. And our community relations and logistics team did an admirable job of mitigating the risks associated with certain disruptions in the fourth quarter. In Arizona, we published our promising preliminary economic assessment for the Copper World project. And while we remain focused on a prudent approach to capital allocation, we are very excited about the value it can deliver in the future. These are only a few examples of our accomplishments in 2022. And none of these would have been possible without the dedicated effort of our employees. I thank all of our employees for their effort, and specifically, thank the Flin Flon community for its strong support for Hudbay over the years. On behalf of the rest of the Board, I would also like to thank Richard Howes for his dedicated service and contributions to Hudbay. Rick has served as a valued member of the Board since 2019 and has decided not to stand for re-election at this meeting due in large part to his recent appointment as President and CEO of Reunion Gold Corporation. We wish Rick the very best. Before we get started, Hudbay entered recently into an arrangement agreement with Copper Mountain Mining Corporation on April 13, whereby Hudbay has agreed to acquire all of the issued and outstanding shares of Copper Mountain pursuant to a court-approved plan of arrangement. This proposed transaction is subject to certain approvals, including the approval of the simple majority of the votes cast by Hudbay shareholders at our upcoming special meeting, which is scheduled to be held virtually on Tuesday, June 13. The approval of this proposed transaction will not be dealt with at this meeting. We are very excited about this opportunity to grow our business and encourage you to read the joint management information circular of Hudbay and Copper Mountain in connection with our special meeting for the proposed transaction once it is available in the coming days. Let me now introduce the current members of the Hudbay Board who, in addition to myself, are with us on the webcast today. Peter Kukielski, who is also our President and Chief Executive Officer; Carol Banducci, Igor Gonzales, Sarah Kavanagh, Carin Knickel, George Lafond, Daniel Muniz Quintanilla, Colin Osborne and David Smith. Also with us is Mark Haber, our Executive Director, Legal and Corporate Secretary, who will act as secretary of the meeting. We will now start with the formal part of the meeting, which we will try to complete as quickly as possible. I have asked certain shareholders to move and second the proposals we have on the agenda. After all of the motions have been tabled, we will open the floor to discussion and questions on the motion. If a registered shareholder or proxy holder with a control number has a question related to one of the matters to be considered, I ask they type the question into the interface on Lumi. Mark will then raise these questions during the discussion period, and we will respond. The only questions that will be permitted prior to the discussion period will be those related to procedural matters. If you are not a registered shareholder or a proxy holder with a control number and would like to ask the Board of Directors a question, applicable e-mail and mailing details are included in our circular. As we mentioned in our management information circular, only shareholders and proxy holders who have registered for a control number are able to vote at this meeting. Voting will be opened on all resolutions at the same time. This will allow you to choose to vote on each resolution immediately or wait until the discussion concludes on each resolution prior to casting your vote. Should you choose to do so, you will be able to change your vote on any resolution until voting is closed at the end of the formal portion of the meeting. Once voting has closed, we will take a few minutes to tabulate the preliminary report. During this time, Peter will make a brief presentation discussing Hudbay's operation and strategic outlook. Peter will then address any questions on the presentation after conclusion of the formal portion of the meeting. I will now call the meeting to order. I will act as Chair of the meeting, and will ask Mark to act as secretary of the meeting and Christopher de Lima of TSX Trust Company to act as scrutineer. This year, Hudbay has continued to use notice and access to provide shareholders with access to the materials for our annual and special meeting. Mark has advised me that the notice and access notice and the form of proxy have been forwarded to each registered shareholder and intermediary of record on the record date for the meeting. Notice and access is an environmentally friendly and cost-effective way to provide shareholders with electronic access to the management information circular and other proxy-related materials instead of mailing paper copies. All of the proxy-related materials are available on our corporate website, on the website of our transfer agent, TSX Trust Company, and under our profile on SEDAR and EDGAR. Links to these material are also available on Lumi's homepage for this meeting. In addition, shareholders may gain paper copies of the proxy-related materials by contacting our transfer agent, TSX Trust Company, according to the instructions in the notice and access notice. Mark has advised me that he has been provided with the scrutineer's report, which shows that there are 394 shareholders represented by the meeting or by proxy, holding in an aggregate 185,759,303 common shares, representing 70.88% of the outstanding common shares. Accordingly, this meeting is duly called and properly constituted. I would ask Mark to attach the affidavit of mailing, copies of the meeting materials and the scrutineer's report to the minutes of the meeting. I do not plan to read the minutes of last year's meeting. Any shareholders who would like to review those minutes should contact Mark after the meeting. He can be reached by e-mail at legal@hudbayminerals.com. The first item of business on our agenda is the presentation of the financial statements of Hudbay for the year ended December 31, 2022, with the related auditor's report. These were made available to shareholders through notice and access. Links to these materials are also available on Lumi's homepage for this meeting. These documents have been tabled and no further action is required. We will now proceed with our next item of business, the election of directors. Voting through the Lumi web portal is now open on all resolutions. I would like to remind you that you are able to change your vote until the voting closes. We will give you notice before this occurs. In addition to myself, the proposed nominees for election as directors of Hudbay are Peter Kukielski, Carol Banducci, Igor Gonzales, Sarah Kavanagh, Carin Knickel, George Lafond, Daniel Muniz Quintanilla, Colin Osborne and David Smith. If elected, we expect these nominees will hold office until the next Annual Meeting of Shareholders or until their successors are elected or appointed. In light of our advanced notice bylaw, I hereby declare the nominations closed. As further described in our information circular, in 2023, we amended our corporate governance guideline to remove the majority voting policy regarding the election of directors. We made this decision following the change in the Canada Business Corporations Act that introduced a statutory majority voting requirement. As a result, we began to apply the CBCA rule regarding majority voting on an individual basis with respect to each proposed nominee in today's election of directors. However, I'm advised, based on the proxies received to date, each proposed nominee would receive a greater number of votes for his or her election and would be against his or her election. And none of the proposed nominees would be required to tender their resignation under the CBCA majority voting requirements. So unless a shareholder or proxy holder requests separate motions to elect the individual nominees, I proceed -- I propose that we proceed with a single motion. May I have a motion for the election of 10 individuals nominated as directors?

I move to elect each of the 10 nominees as directors of Hudbay on the basis proposed.

I second the motion.

Thank you. Voting on this resolution is open via Lumi for all shareholders and proxy holders registered to vote. The third item of business is the appointment of the auditor and authorization of the Board of Directors under the recommendation of the Audit Committee to fix the auditor's remuneration. It is proposed that Deloitte LLP be reappointed as the auditor of Hudbay until the next annual shareholder -- meeting of shareholders or until its successor is duly appointed and the Board of Directors upon the recommendation of the Audit Committee be authorized to fix their remuneration. May I have a motion on this matter, please?

I move that Deloitte LLP be reappointed as the auditor of Hudbay on the basis proposed.

I second the motion.

Thank you. In order to be approved, the motion must be passed by a majority of the votes cast. As mentioned before, voting on this resolution is open via Lumi for all shareholders and proxy holders registered to vote. The final item of business is to consider, and if thought advisable to pass, a nonbinding advisory resolution on executive compensation. The text of the resolution is set out in the management information circular. May I have a motion on this matter, please?

I move that the nonbinding advisory resolution accepting Hudbay's approach to executive compensation be approved.

I second the motion.

Thank you. In order to be approved, the motion must be passed by a majority of the votes cast. As mentioned before, voting on this resolution is open via Lumi for all shareholders and proxy holders registered to vote. Is there any other formal business that may be properly brought before the meeting?

I confirm there is none, Steve.