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HudbayMinerals Inc. Announces 2004 Financial Results

March 31, 2005
TORONTO, ONTARIO--(CCNMatthews - March 31, 2005) - HudBay Minerals Inc. 


- Acquisition of Hudson Bay Mining and Smelting Co., Limited (HBMS).

- Strong cash position with $65 million at year end.

- Cash operating costs of US$0.16 per pound of zinc, net of by-product 

- First full year of HBMS operations after completion of the $435 
million 777 capital expenditure program.

HudBay Minerals Inc. (TSX: HBM) (HudBay) incurred a net loss for 2004 of 
$9.92 million compared to a loss of $5.46 million in 2003. Operating 
costs increased in 2004 largely in connection with the acquisition of 
the Balmat mine which was purchased in September 2003 and is currently 
on care and maintenance but under evaluation for re-activation. As well, 
additional costs were incurred in conjunction with the acquisition of 
HBMS on December 21, 2004. Financing of the acquisition was completed 
favourably, enabling HudBay to close the year with $65 million available 

The consolidated financial statements of HudBay for the year ended 
December 31, 2004 are available on SEDAR at and on our 
website at

HBMS Results:

HudBay completed the purchase of HBMS from Anglo American International 
S.A. on December 21, 2004 and HBMS is now a wholly owned subsidiary of 
HudBay, contributing all of HudBay's production. HudBay's 2004 audited 
results incorporate HBMS results for only the ten-day period ended 
December 31, 2004. The following information is provided for HBMS, 
covering the twelve-month periods ending December 31, 2004 (unaudited) 
and 2003 (audited):


                                               For the years ended
                                          Dec 31/04           Dec 31/03 
                                              C$000               C$000
                                         (Unaudited)           (Audited)
Revenue                                     527,354             417,914
Operating Costs                            (479,302)           (511,626)
Asset Impairment                                ---            (269,000)
Operating Earnings                           48,052         (362,712)(1)

Net Earnings                                 50,132            (330,103)
Cash Flow from Operations                    93,836              (3,739)
Investing Activities                        (85,081)           (118,366)
Financing Activities                         35,666             121,629
Net Cash Flow                                44,421                (476)

1) Includes asset impairment of $269,000 in 2003.


In 2004 HBMS achieved operating cash costs of US$0.16 per pound of zinc, 
net of by-product credits. The US$0.28 per pound improvement over 2003 
was primarily related to an impairment in 2003 in realized metal prices 
as well as completion of the $435 million capital expenditure on the 777 
group of projects, which were all in full production during 2004.


Non GAAP Reconciliation

Non GAAP Reconciliation of Cash Cost per pound of Zinc, Net of
By-Product credits.

Non GAAP Reconciliation(1)(2) 
                                                     2004          2003 
                                                    C$000         C$000
                                               (Unaudited)     (Audited)
Operating Costs per financial statements          479,302     511,626(1)
Non-cash operating costs 
 Depreciation and amortization                    (52,100)      (70,700)
 Accretion and other non-cash                      (4,578)       (2,078)
                                                  422,624       438,848
Less: By-product credits                         (372,514)     (277,260)
Cash cost net of by-products                     C$50,110     C$161,589
Exchange rate (C$/US$)                               1.30          1.40
Cash cost net of by-products                    US$38,546    US$115,419
Zinc sales                                        245,347       261,444
Cash cost per pound of zinc,
 net of by-product credits                        US$0.16       US$0.44

(1) Excluding asset impairment.
(2) By-product credits include the Company's proportionate share of
    by-product sales by CMM (2004: $21.6 million, 2003: $19.6 million)
    and the premium on zinc oxide sales (2004: $17.8 million, 2003:
    $10.24 million).


Cash cost per pound of zinc, net of by-product credits is furnished to 
provide additional information and is a non-GAAP measure. This measure 
should not be considered in isolation as a substitute for measures of 
performance prepared in accordance with generally accepted accounting 
principles and is not necessarily indicative of operating expenses as 
determined under generally accepted accounting principles. This measure 
is intended to provide investors with information about the cash 
generating capabilities of HBMS's operations. HBMS uses this information 
for the same purpose. Mining operations are capital intensive. This 
measure excludes capital expenditures. Capital expenditures are 
discussed throughout the MD&A and the consolidated financial statements.


HBMS earned revenues of approximately $527.4 million for the year ended 
December 31, 2004 from sales of approximately 73,900 tonnes of copper, 
111,300 tonnes of zinc (including sales to Zochem), 38,700 tonnes of 
zinc oxide, 75,600 ounces of gold, and 1,055,000 ounces of silver. For 
the year, realized metal prices averaged US$1.35/lb copper, US$0.49/lb 
zinc, US$387/troy oz gold, and US$6.66/troy oz silver. The Canadian to 
US dollar exchange rate averaged 1.30 for the year.

Compared to 2003, total sales revenue in 2004 increased by 26%, largely 
related to improved realized metal prices for copper and zinc, in US$, 
which improved by approximately 57% and 26% respectively over 2003. 
Average realized gold and silver prices also improved by 14% and 38% 
respectively. The impact of improved metal prices was partly offset as 
the Canadian to US exchange rate strengthened from an average of 1.40 in 
2003 to 1.30 in 2004.

Copper and zinc sales quantities in 2004 were approximately 92% and 94%, 
respectively, compared to sales quantities in 2003 reflecting the 
metallurgical treatment of greater quantities of concentrates from HBMS 
owned mines and a planned maintenance summer shutdown of the copper 

Operating Earnings

Operating earnings for the year ended December 31, 2004 was 
approximately $48.1 million. Compared to 2003, operating earnings in 
2004 increased by $411 million, of which $269 million relates to an 
asset impairment charge in 2003.

HBMS mined a total of 2.55 million tonnes of ore in 2004 and tonnage 
mined increased at all mines compared to 2003, with the largest increase 
at the new 777 Mine which reached commercial production as of January 1, 
2004. In total, tonnage mined was up by 15% in 2004 and both copper and 
zinc grade improved by 16% and 4% respectively compared to 2003.

During 2004, the Copper Smelter processed a total of 284,100 tonnes of 
copper concentrates, producing 76,900 tonnes of copper metal. For the 
same period, the Zinc Plant processed a total of 223,000 tonnes of zinc 
concentrates, producing 110,200 tonnes of zinc metal. In addition to the 
concentrates produced from HBMS owned mines, the Flin Flon metallurgical 
plants processed some 98,700 tonnes of copper concentrate and 3,500 
tonnes of zinc concentrate purchased from third parties.

Improved production from our mines in 2004 reduced our requirement for 
purchased concentrate, and, as a result, processing of copper and zinc 
concentrate purchased from third parties decreased by some 10,100 and 
42,800 tonnes respectively compared to 2003. Production of copper metal 
in 2004 was approximately 92% of 2003 largely from processing greater 
volumes of concentrate from HBMS mines and a planned summer maintenance 
shut down. Cast zinc metal production in 2004 was approximately 94% 
compared to 2003 primarily due to a drawdown of cathode inventory in 
2003 which boosted cast metal by some 3,400 tonnes, and by the deferral 
of the bi-annual maintenance shutdown from 2003 into 2004.

Depreciation and amortization totalled $52.1 million in 2004 compared to 
$70.7 million in 2003, with the decrease relating primarily to the 
impairment charge taken at the end of 2003.

Net Earnings

Net earnings for the year ended December 31, 2004 was approximately 
$50.1 million compared to a loss of $330.1 million for 2003. Excluding 
the impact of the asset impairment in 2003, net earnings for 2004 
increased by $111.3 million over 2003. The increase is comprised of 
$141.8 million in operating profit net of $30.5 million additional 
expense, which is essentially the absence of a foreign exchange gain 
that was realized in 2003.

Cash Flow from Operations

Cash flow from operations in 2004 increased by approximately $97.5 
million compared to 2003, primarily as a result of improved metal prices 
and the commencement of commercial production at the 777 Mine.

Investing Activities

HBMS capital expenditure for 2004 totalled $69.5 million, with $15.7 
million of the total required to complete the 777 group of projects, 
$40.7 million for mine development, and the balance required for various 
stay-in-business projects. This represents a decrease of 41% compared to 
2003, which included $65.5 million for the 777 projects, $28.4 million 
mine development, and the balance for stay-in-business.

In December 2004, $13 million was placed in trust for the governments of 
Manitoba and Saskatchewan as financial assurance for our asset 
retirement obligations. The requirement to maintain this trust value 
will be determined from the outcome of a study to be completed during 

Financing Activities

In 2004, HBMS entered into capital leasing (sales and leaseback) 
arrangements that contributed $14.4 million to financing cash flow. On 
December 21, 2004, HBMS issued US $175 million Senior Secured Notes 
bearing interest at 9.625% per annum with interest payable semi-annually 
in arrears on January 15 and July 15 of each year, commencing on July 
15, 2005. The Notes will mature on January 15, 2012.

As of March 24, 2005, HudBay agreed to guarantee HBMS' Notes. The HudBay 
guarantee is unsecured and ranks subordinate in right of payment to all 
senior indebtedness of HudBay. The guarantee will terminate on the date 
upon which HudBay owns less than a majority of the voting shares of HBMS.

The net inflow from financing activities is the net result of the above, 
offset by amounts advanced to HudBay in connection with the acquisition.

A conference call will be held on Friday, April 1, 2005 at 10:00 a.m. 
(Toronto time) to discuss these results. You may join the call by 
dialing 416-640-4127 or toll free 1-800-814-4890. The conference call 
will be recorded and you can listen to a playback of the call after the 
event by dialing 416-640-1917 or toll free 1-877-289-8525 and entering 
the passcode 21119163#, at any time until midnight on Thursday, April 7, 
2005. A webcast will be available at

HudBay Minerals Inc. is an integrated mining and metal producing company 
that operates mines and concentrators in northern Manitoba and 
Saskatchewan and a metal processing complex in Flin Flon, Manitoba. The 
company also operates a zinc oxide production facility in Brampton, 
Ontario and the former producing mines of Balmat in New York State and 
Gays River in Nova Scotia that are being evaluated for re-opening.

Safe Harbour Statement under the United States Private Securities 
Litigation Reform Act of 1995: Except for the statements of historical 
fact contained herein, the information presented constitutes 
"forward-looking statements" within the meaning of the Private 
Securities Litigation Reform Act of 1995. Forward-looking statements are 
based upon the opinions and estimates of management at the date the 
statements are made, and are subject to a variety of risks and 
uncertainties and other factors that could cause actual events or 
results to differ materially from those projected in the forward-looking 
statements. These factors include the inherent risks involved in the 
operation, development and exploration of mines and mineral projects, 
future prices of zinc and copper, future foreign currency exchange rates 
and the impact of environmental and other governmental regulation, as 
well as those factors discussed in the section entitled "Risk Factors" 
in the Company's annual information form for the year ended December 31, 
2004 that is available at There may be additional factors 
that could cause results not to be as anticipated, estimated or 
intended. There can be no assurance that such statements will prove to 
be accurate as actual results and future events could differ materially 
from those anticipated in such statements. Accordingly, readers should 
not place undue reliance on forward-looking statements.


Hudson Bay Mining and Smelting Co., Limited 
Full Year Results 
                                                     2004          2003
Trout Lake:                          tonnes       916,097       872,654
 Copper                                   %          1.46          1.17
 Zinc                                     %          5.32          4.82
 Gold                               g/tonne          1.47          1.78
 Silver                             g/tonne         13.58         20.40

Konuto:                              tonnes       327,231       321,473
 Copper                                   %          4.07          3.73
 Zinc                                     %          2.08          1.82
 Gold                               g/tonne          1.92          1.99
 Silver                             g/tonne          9.60          9.50

7 7 7:                               tonnes       975,895       709,172
 Copper                                   %          2.89          2.80
 Zinc                                     %          4.50          3.96
 Gold                               g/tonne          2.26          1.92
 Silver                             g/tonne         23.14         21.81

Chisel North:                        tonnes       327,853       303,169
 Copper                                   %          0.16          0.20
 Zinc                                     %          9.99         11.32
 Gold                               g/tonne          0.48          0.62
 Silver                             g/tonne         25.47         20.26

Total Mines                          tonnes     2,547,076     2,206,468
 Copper                                   %          2.18          1.93
 Zinc                                     %          5.19          5.00
 Gold                               g/tonne          1.71          1.70
 Silver                             g/tonne         18.26         19.24

Flin Flon Concentrator               tonnes     2,156,051     1,902,743
 Copper                                   %          2.46          2.22
 Zinc                                     %          4.50          3.99
 Gold                               g/tonne          1.89          1.89
 Silver                             g/tonne         17.31         19.03

 Copper Concentrate Produced         tonnes       208,961       166,346
 Grade                                 % Cu         23.60         23.20
 Zinc Concentrate Produced           tonnes       152,453       121,160
 Grade                                 % Zn         50.42         49.60

 Copper recovery to Cu conc               %          93.0          91.5
 Gold recovery to Cu conc                 %          69.7          46.7
 Silver recovery to Cu conc               %          68.1          47.9
 Zinc recovery to Zn conc                 %          79.2          79.1

Snow Lake Concentrator               tonnes       327,853       304,016
 Copper                                   %          0.16          0.20
 Zinc                                     %          9.99         11.32
 Gold                               g/tonne          0.48          0.62
 Silver                             g/tonne         25.47         20.26

 Zinc Concentrate Produced           tonnes        61,825        65,103
 Grade                                 % Zn         51.52         51.41
 Zinc recovery to Zn conc                 %          97.3          97.3

Copper Conc Treated: 
 HBMS Mines                          tonnes       185,352       164,288
 Purchased                           tonnes        98,748       108,762
 Total                               tonnes       284,100       273,049

Zinc Plant: 
Zinc Conc Treated: 
 HBMS Mines                          tonnes       219,561       182,190
 Purchased                           tonnes         3,488        46,286
 Total                               tonnes       223,049       228,476

Metal Produced: 
From HBMS Mines: 
 Copper                              tonnes        43,653        42,055
 Zinc                                tonnes       108,403        93,055
 Gold                                    oz        77,612        56,999
 Silver                                  oz       696,454       630,303
From Purchased Concentrates: 
 Copper                              tonnes        33,241        41,300
 Zinc                                tonnes         1,815        24,790
 Gold                                    oz         1,408         3,624
 Silver                                  oz       418,115       460,482
Total Metal Produced: 
 Copper                              tonnes        76,894        83,355
 Zinc                                tonnes       110,218       117,845
 Gold                                    oz        79,020        60,623
 Silver                                  oz     1,114,569     1,090,785



FOR FURTHER INFORMATION PLEASE CONTACT: HudBay Minerals Inc. Tom Goodman Vice-President, Human Resources and Technical Services (204) 687-2380 Email:
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