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HUDBAY MINERALS INC.ANNUAL INFORMATION FORMFOR THEYEAR ENDED DECEMBER 31, 2016

March 30, 2017

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|TABLE OF CONTENTS
|-----------------
|                 

|FORWARD-LOOKING
      INFORMATION                                | 3 
|---------------------------------------------------------------- | --
|NOTE
      TO UNITED STATES INVESTORS                            | 4 
|CURRENCY
      AND EXCHANGE RATES                                | 5 
|OTHER
      IMPORTANT INFORMATION                                | 5 
|CORPORATE
      STRUCTURE                                        | 5 
|INCORPORATION
      AND REGISTERED OFFICE                        | 5 
|INTERCORPORATE
      RELATIONSHIPS                               | 6 
|DEVELOPMENT
      OF OUR BUSINESS                                | 7 
|STRATEGY                                                         | 7 
|THREE
      YEAR HISTORY                                         | 7 
|DESCRIPTION
      OF OUR BUSINESS                                | 9 
|GENERAL                                                          | 9 
|MATERIAL
      MINERAL PROJECTS                                  | 11
|OTHER
      ASSETS                                               | 18
|OTHER
      INFORMATION                                          | 22
|CORPORATE
      SOCIAL RESPONSIBILITY                            | 23
|RISK
      FACTORS                                               | 25
|DESCRIPTION
      OF CAPITAL STRUCTURE                           | 35
|DIVIDENDS                                                        | 38
|MARKET
      FOR SECURITIES                                      | 38
|DIRECTORS
      AND OFFICERS                                     | 40
|CONFLICTS
      OF INTEREST                                      | 44
|AUDIT
      COMMITTEE DISCLOSURE                                 | 44
|COMPOSITION                                                      | 44
|POLICY
      REGARDING NON-AUDIT SERVICES RENDERED BY AUDITORS   | 45
|REMUNERATION
      OF AUDITOR                                    | 45
|LEGAL
      PROCEEDINGS AND REGULATORY ACTIONS                   | 46
|LEGAL
      PROCEEDINGS                                          | 46
|REGULATORY
      ACTIONS                                         | 46
|INTEREST
      OF MANAGEMENT AND OTHERS IN MATERIAL TRANSACTIONS | 46
|TRANSFER
      AGENT AND REGISTRAR                               | 47
|MATERIAL
      CONTRACTS                                         | 48
|QUALIFIED
      PERSONS                                          | 49
|INTERESTS
      OF EXPERTS                                       | 49
|ADDITIONAL
      INFORMATION                                     | 49
|SCHEDULE
      A: GLOSSARY OF MINING TERMS                       | A1
|SCHEDULE
      B: MATERIAL MINERAL PROJECTS                      | B1
|SCHEDULE
      C: AUDIT COMMITTEE CHARTER                        | C1

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|FORWARD-LOOKING INFORMATION
|---------------------------
|                           

This annual information form (AIF) contains
forward-looking information within the meaning of applicable Canadian and United
States securities legislation. All information contained in this AIF, other than
statements of current and historical fact, is forward-looking information.
Often, but not always, forward-looking information can be identified by the use
of words such as plans, expects, budget, guidance, scheduled,
estimates, forecasts, strategy, target, intends, objective, goal,
understands, anticipates and believes (and variations of these or similar
words) and statements that certain actions, events or results may, could,
would, should, might occur or be achieved or will be taken (and
variations of these or similar expressions). All of the forward-looking
information in this AIF is qualified by this cautionary note.

Forward-looking information includes, but is not limited to,
production, cost and capital and exploration expenditure guidance, including
anticipated capital and operating cost savings and anticipated production at our
mines and processing facilities, the anticipated timing, cost and benefits of
developing the Rosemont project, Pampacancha deposit and Lalor growth projects,
anticipated mine plans, anticipated metals prices and the anticipated
sensitivity of our financial performance to metals prices, events that may
affect our operations and development projects, the permitting, development and
financing of the Rosemont project, the potential to increase throughput at the
Stall mill and to refurbish the New Britannia mill and utilize it to process ore
from the Lalor mine, anticipated cash flows from operations and related
liquidity requirements, the anticipated effect of external factors on revenue,
such as commodity prices, estimation of mineral reserves and resources, mine
life projections, reclamation costs, economic outlook, government regulation of
mining operations, and business and acquisition strategies. Forward-looking
information is not, and cannot be, a guarantee of future results or events.
Forward-looking information is based on, among other things, opinions,
assumptions, estimates and analyses that, while considered reasonable by us at
the date the forward-looking information is provided, inherently are subject to
significant risks, uncertainties, contingencies and other factors that may cause
actual results and events to be materially different from those expressed or
implied by the forward-looking information.

The material factors or assumptions that we identified and were
applied by us in drawing conclusions or making forecasts or projections set out
in the forward looking information include, but are not limited to:

| | the success of mining, processing, exploration and
      development activities;                                                                                                                                                         
|- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | the scheduled maintenance and availability of our
      processing facilities;                                                                                                                                                           
| | the sustainability and success of our cost reduction
      initiatives;                                                                                                                                                                  
| | the accuracy of geological, mining and metallurgical
      estimates;                                                                                                                                                                    
| | anticipated metals prices and the costs of production;                                                                                                                                                                                   
| | the supply and demand for metals we produce;                                                                                                                                                                                             
| | the supply and availability of all forms of energy and
      fuels at reasonable prices;                                                                                                                                                 
| | no significant unanticipated operational or technical
      difficulties;                                                                                                                                                                
| | the execution of our business and growth strategies,
      including the success of our strategic investments and initiatives;                                                                                                           
| | the availability of additional financing, if needed;                                                                                                                                                                                     
| | the ability to complete project targets on time and on
      budget and other events that may affect our ability to develop our
      projects;                                                                                          
| | the timing and receipt of various regulatory,
      governmental and joint venture partner approvals;                                                                                                                                    
| | the availability of personnel for our exploration,
      development and operational projects and ongoing employee and union
      relations;                                                                                            
| | the ability to secure required land rights to develop the
      Pampacancha deposit;                                                                                                                                                     
| | maintaining good relations with the communities in which
      we operate, including the communities surrounding our Constancia mine and
      Rosemont project and First Nations communities surrounding our Lalor and
      Reed mines;
| | no significant unanticipated challenges with stakeholders
      at our various projects;                                                                                                                                                 
| | no significant unanticipated events or changes relating
      to regulatory, environmental, health and safety matters;                                                                                                                   

ANNUAL INFORMATION FORM |3

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| | no contests over title to our properties, including as a
      result of rights or claimed rights of aboriginal peoples;                                                                   
|- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | the timing and possible outcome of pending litigation and
      no significant unanticipated litigation;                                                                                   
| | certain tax matters, including, but not limited to
      current tax laws and regulations and the refund of certain value added
      taxes from the Canadian and Peruvian governments; and
| | no significant and continuing adverse changes in general
      economic conditions or conditions in the financial markets (including
      commodity prices and foreign exchange rates).   

The risks, uncertainties, contingencies and other factors that
may cause actual results to differ materially from those expressed or implied by
the forward-looking information may include, but are not limited to, risks
generally associated with the mining industry, such as economic factors
(including future commodity prices, currency fluctuations, energy prices and
general cost escalation), uncertainties related to the development and operation
of our projects (including risks associated with the permitting, development and
economics of the Rosemont project and related legal challenges), risks related
to the maturing nature of our 777 and Reed mines and their impact on the related
Flin Flon metallurgical complex, dependence on key personnel and employee and
union relations, risks related to the schedule for mining the Pampacancha
deposit (including the timing and cost of acquiring the required surface
rights), risks related to the cost, schedule and economics of the capital
projects intended to increase processing capacity for Lalor ore, risks related
to political or social unrest or change, risks in respect of aboriginal and
community relations, rights and title claims, operational risks and hazards,
including unanticipated environmental, industrial and geological events and
developments and the inability to insure against all risks, failure of plant,
equipment, processes, transportation and other infrastructure to operate as
anticipated, compliance with government and environmental regulations, including
permitting requirements and anti-bribery legislation, depletion of our reserves,
volatile financial markets that may affect our ability to obtain additional
financing on acceptable terms, the failure to obtain required approvals or
clearances from government authorities on a timely basis, uncertainties related
to the geology, continuity, grade and estimates of mineral reserves and
resources, and the potential for variations in grade and recovery rates,
uncertain costs of reclamation activities, our ability to comply with our
pension and other post-retirement obligations, our ability to abide by the
covenants in our debt instruments and other material contracts, tax refunds,
hedging transactions, as well as the risks discussed under the heading Risk
Factors.

Should one or more risk, uncertainty, contingency or other
factor materialize or should any factor or assumption prove incorrect, actual
results could vary materially from those expressed or implied in the
forward-looking information. Accordingly, you should not place undue reliance on
forward-looking information. We do not assume any obligation to update or revise
any forward-looking information after the date of this AIF or to explain any
material difference between subsequent actual events and any forward-looking
information, except as required by applicable law.

|NOTE TO UNITED STATES INVESTORS
|-------------------------------
|                               

This AIF 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 U.S. issuers.

Information concerning our mineral properties has been prepared
in accordance with the requirements of Canadian securities laws, which differ in
material respects from the requirements of the Securities and Exchange
Commission (the SEC) set forth in Industry Guide 7. Under the SECs
Industry Guide 7, mineralization may not be classified as a reserve unless the
determination has been made that the mineralization could be economically and
legally produced or extracted at the time of the reserve determination, and the
SEC does not recognize the reporting of mineral deposits which do not meet the
SEC Industry Guide 7 definition of Reserve. In accordance with National
Instrument 43-101  Standards of Disclosure for Mineral Projects (NI
43-101) of the Canadian Securities Administrators, the terms mineral
reserve, proven mineral reserve, probable mineral reserve, mineral
resource, measured mineral resource, indicated mineral resource and
inferred mineral resource are defined in the Canadian Institute of Mining,
Metallurgy and Petroleum (the CIM) Definition Standards for Mineral
Resources and

ANNUAL INFORMATION FORM |4

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Mineral Reserves adopted by the CIM Council on May 10, 2014.
While the terms mineral resource, measured mineral resource, indicated
mineral resource and inferred mineral resource are recognized and required by
NI 43-101, the SEC does not recognize them. You are cautioned that, except for
that portion of mineral resources classified as mineral reserves, mineral
resources do not have demonstrated economic value. Inferred mineral resources
have a high degree of uncertainty as to their existence and as to whether they
can be economically or legally mined. It cannot be assumed that all or any part
of an inferred mineral resource will ever be upgraded to a higher category.
Therefore, you are cautioned not to assume that all or any part of an inferred
mineral resource exists, that it can be economically or legally mined, or that
it will ever be upgraded to a higher category. Likewise, you are cautioned not
to assume that all or any part of measured or indicated mineral resources will
ever be upgraded into mineral reserves. You should consider closely the
disclosure on the mining industry technical terms in Schedule A Glossary of
Mining Terms of this AIF.

|CURRENCY AND EXCHANGE RATES
|---------------------------
|                           

This AIF contains references to both United States dollars and
Canadian dollars. All dollar amounts referenced, unless otherwise indicated, are
expressed in United States dollars, and Canadian dollars are referred to as
Canadian dollars or C$. For United States dollars to Canadian dollars, the
average exchange rate for 2016 and the closing exchange rate at December 31,
2016, as reported by the Bank of Canada, were one United States dollar per
1.3248 and 1.3427 Canadian dollars, respectively. On March 29, 2017, the Bank of
Canada noon rate of exchange was one United States dollar per 1.3372 Canadian
dollars.

|OTHER IMPORTANT INFORMATION
|---------------------------
|                           

Certain scientific and technical terms and abbreviations used
in this AIF are defined in the Glossary of Mining Terms attached as Schedule
A.

Unless the context suggests otherwise, references to we,
us, our and similar terms, as well as references to Hudbay and Company,
refer to Hudbay Minerals Inc. and its direct and indirect subsidiaries.

|CORPORATE STRUCTURE
|-------------------
|                   

INCORPORATION AND REGISTERED OFFICE

We were formed by the amalgamation of Pan American Resources
Inc. and Marvas Developments Ltd. on January 16, 1996, pursuant to the Business
Corporations Act (Ontario) and changed our name to Pan American Resources Inc.
On March 12, 2002, we acquired ONTZINC Corporation, a private Ontario
corporation, through a reverse takeover and changed our name to ONTZINC
Corporation. On December 21, 2004, we acquired Hudson Bay Mining and Smelting
Co., Limited (HBMS) and changed our name to HudBay Minerals Inc. In
connection with the acquisition of HBMS, on December 21, 2004, we amended our
articles to consolidate our common shares on a 30 to 1 basis. On October 25,
2005, we were continued under the Canada Business Corporations Act
(CBCA). On August 15, 2011, we completed a vertical short-form
amalgamation under the CBCA with our subsidiary, HMI Nickel Inc. On January 1,
2017, we completed a vertical short-form amalgamation under the CBCA with two of
our subsidiaries, HBMS and Hudson Bay Exploration and Development Company
Limited, and changed our name from HudBay Minerals Inc. to Hudbay Minerals
Inc.

Our registered office is located at 2200-201 Portage Avenue,
Winnipeg, Manitoba R3B 3L3 and our principal executive office is located at 25
York Street, Suite 800, Toronto, Ontario M5J 2V5.

ANNUAL INFORMATION FORM |5

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Our common shares are listed on the Toronto Stock Exchange
(TSX), New York Stock Exchange (NYSE) and Bolsa de Valores de
Lima under the symbol HBM. Our warrants are listed under the symbol HBM. WT
on the TSX and HBM/WS on the NYSE.

INTERCORPORATE RELATIONSHIPS

The following chart shows our principal subsidiaries, their
jurisdiction of incorporation and the percentage of voting securities we
beneficially own or over which we have control or direction.



Notes:

|1. | Hudbay owns our 777 and Lalor mines and our 70% owned
      Reed mine, holds exploration properties in Canada and is a borrower under
      our Canada Facility and is the issuer of our Senior Unsecured
  Notes.                                          
|-- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|2. | HudBay Marketing & Sales Inc. markets and sells our
      copper concentrate and zinc metal produced in Manitoba and is a guarantor
      of our Canada Facility and our Senior Unsecured Notes.                                                            
|3. | HudBay Peru Inc. owns 99.98% of HudBay Peru S.A.C.
      (Hudbay Peru). The remaining 0.02% is owned by 6502873 Canada
      Inc., our wholly-owned subsidiary. HudBay Peru Inc. is a guarantor of our
      Peru Facility and our Senior Unsecured Notes.
|4. | Hudbay Peru owns the Constancia mine, is the borrower
      under our Peru Facility and is a guarantor of our Senior Unsecured
      Notes.                                                                                                                 
|5. | HudBay (BVI) Inc. (Hudbay BVI) was incorporated
      for the sole purpose of entering into and fulfilling our obligations under
      the precious metals stream agreement in respect of the Constancia
    mine.                                        
|6. | HudBay Arizona Corporation, through its subsidiaries,
      indirectly owns 100% of Rosemont Copper Company.                                                                                                                                                
|7. | Rosemont Copper Company currently owns a 92.05% interest
      in the Rosemont project.                                                                                                                                                                     

ANNUAL INFORMATION FORM |6

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|DEVELOPMENT OF OUR BUSINESS
|---------------------------
|                           

STRATEGY

Our mission is to create sustainable value through acquisition,
development and operation of high quality, long life deposits with exploration
potential in mining friendly jurisdictions. We believe that the greatest
opportunities for shareholder value creation in the mining industry are in the
discovery of new mineral deposits and the development of new facilities to
profitably extract ore from those deposits. We also believe that our successful
development and ramp-up of the Constancia mine in Peru, along with our long
history of mining and experience in northern Manitoba, provide us with a
competitive advantage in these respects relative to other mining companies of
similar scale.

We intend to grow Hudbay through exploration and development of
properties we already control, such as our Rosemont project in Arizona, as well
as through the acquisition of other properties that fit our strategic criteria.
We also intend to optimize the value of our producing assets through efficient
and safe operations.

In an attempt to ensure that any acquisitions we undertake
create sustainable value for stakeholders, we have established a number of
criteria for evaluating mineral property acquisition opportunities, which
include the following:

| | Potential acquisitions should be located in jurisdictions
      that are supportive of mining activity and have acceptable levels of
      political risk. Given our current scale and geographic footprint, our
      current geographic focus is on select investment grade countries in the
      Americas;                                                                                                                                                                                                                                                                                                                                                                                    
|- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | We believe we have particular expertise in the
      exploration and development of volcanogenic massive sulphide and porphyry
      mineral deposits. While these types of deposits typically contain copper,
      zinc and precious metals in varying quantities, we are not targeting any
      one type of metal; rather, we focus on properties where we see the
      greatest opportunities for risk adjusted returns;                                                                                                                                                                                                                                                                    
| | We typically look for mineral assets that we believe
      offer significant potential for exploration, development and optimization.
      We believe that the market for mineral assets is sophisticated and fully
      values delineated resources and reserves, especially at properties that
      are already in production, which makes it difficult to acquire properties
      for substantially less than their fair value. However, markets may
      undervalue the potential of prospective properties, and more rarely
      producing properties, providing us with an opportunity to create value
      through exploration, development and optimization of acquired properties;
| | We believe that large, transformational mergers or
      acquisitions are risky and potentially value destructive in the mining
      industry, so we typically focus on specific high quality (low cost, long
      life) mines, development projects and earlier stage projects unless
      exceptional opportunities present themselves;                                                                                                                                                                                                                                                                                                                                                      
| | Before we make an acquisition, we develop a clear
      understanding of how we can add value to the acquired property through the
      application of our social, technical, operational and project execution
      expertise, the provision of necessary financial capacity and other
      optimization opportunities; and                                                                                                                                                                                                                                                                                                                                                                   
| | Acquisitions should be accretive to Hudbay on a per share
      basis. Given that our strategic focus includes the acquisition of
      non-producing assets at various stages of development, when evaluating
      accretion we will consider measures such as net asset value per share and
      the contained value of reserves and resources per share.                                                                                                                                                                                                                                                                                                                                     

THREE YEAR HISTORY

Amalgamation

On January 1, 2017, the Company amalgamated with two of its
wholly-owned subsidiaries, being Hudson Bay Mining and Smelting Co., Limited and
Hudson Bay Exploration and Development Company Limited, and changed its name
from HudBay Minerals Inc. to Hudbay Minerals Inc..

ANNUAL INFORMATION FORM |7

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Senior Unsecured Notes Refinancing

On December 12, 2016, we completed an offering of $1.0 billion
aggregate principal amount of senior notes in two series: (i) a series of 7.250%
senior notes due 2023 in an aggregate principal amount of $400 million (the
2023 Notes) and (ii) a series of 7.625% senior notes due 2025 in an
aggregate principal amount of $600 million (the 2025 Notes and, together
with the 2023 Notes, the Senior Unsecured Notes).

The proceeds from this offering were used to redeem all $920
million of our outstanding 9.50% senior unsecured notes due 2020 (the
Redeemed Notes) and to pay a call premium, pre-paid interest and other
transaction costs associated with the refinancing. The Senior Unsecured Notes
have extended maturity dates, significantly reduced interest costs and a more
flexible covenant structure as compared to the Redeemed Notes.

The $1.0 billion aggregate principal amount of Senior Unsecured
Notes are fully and unconditionally guaranteed, jointly and severally, on a
senior unsecured basis, by substantially all of our existing and future
subsidiaries other than our subsidiaries associated with the Rosemont project.
For additional information, see Description of Capital Structure  Senior
Unsecured Notes.

Credit Facility Amendments

On March 30, 2016, we amended and restated our two secured
credit facilities to consolidate the lender groups and restructure the two
facilities to provide, among other things, more flexible financial covenants.
The $300 million corporate revolving credit facility (the Canada
Facility) is secured by our Manitoba assets and the $200 million Peru
revolving credit facility (the Peru Facility and, together with the
Canada Facility, the Facilities) is secured by our Peru assets. In the
second quarter of 2016, a Canadian chartered bank joined the syndicate for the
Facilities with $30 million in new commitments and, in connection with the
refinancing of our Redeemed Notes, subsequently increased its commitment by $20
million, bringing the total maximum available amount under the Canada Facility
to $350 million and the total maximum available amount under both Facilities to
$550 million. The Facilities, which currently are not cross-collateralized,
mature on March 30, 2019.

CEO Transition

Effective January 1, 2016, Alan Hair became our President and
Chief Executive Officer, replacing David Garofalo, who announced his resignation
in early December 2015. Mr. Hair has twenty years of experience with Hudbay and
has worked in the mining industry for more than three decades. He previously
served as Hudbays Chief Operating Officer from 2012 to 2015, a role that is now
held by Cashel Meagher. Mr. Meagher was previously Vice President, South America
Business Unit from 2011 to 2015, where he led the successful construction and
ramp-up of the Constancia operation.

Constancia Mine

We substantially completed construction of the Constancia mine
in Peru in the fourth quarter of 2014 at a capital cost of construction of
approximately $1.7 billion and the mine reached commercial production in the
second quarter of 2015. The mine reached full and steady state production in the
second half of 2015. In November 2016, we filed an updated National Instrument
43-101 technical report in respect of Constancia, which includes updates of the
mine plan, including the high-grade Pampacancha satellite deposit, reserves and
resources, throughput and capital and operating costs for the remaining life of
mine at Constancia. For additional information, see Description of our Business
 Material Mineral Projects  Constancia Mine.

ANNUAL INFORMATION FORM |8

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Manitoba Operations

Our Lalor and Reed mines achieved commercial production in
2014, and in May 2015 we acquired the New Britannia mill, which is located in
Snow Lake, Manitoba and has the potential to increase our capacity to process
Lalor ore. In March 2017, we announced an updated mine plan for Lalor, which
includes a 4,500 tonne per day throughput rate at the Stall mill for the base
metal zone (see Description of Our Business  Material Mineral Projects,
below). Engineering work is underway on a potential restart of the New Britannia
mill.

Acquisition of the Rosemont Project

We acquired all of the issued and outstanding common shares
(the Augusta Shares) of Augusta Resource Corporation (Augusta)
(now HudBay Arizona Corporation, Hudbay Arizona) pursuant to a take-over bid,
which ultimately was supported by Augusta and its largest shareholders and
expired July 29, 2014, and a subsequent acquisition transaction, which closed on
September 23, 2014 (the Augusta Acquisition). The consideration per
Augusta Share in the transaction was 0.315 of a Hudbay common share and 0.17 of
a warrant to acquire a Hudbay common share. Through our acquisition of Augusta,
we acquired our 92.05% ownership interest in the Rosemont project, a copper
development project located in Pima County, Arizona, approximately 50 kilometres
southeast of Tucson. Our ownership in the Rosemont project is subject to an
Earn-In Agreement and a Joint Venture Agreement with United Copper & Moly
LLC (UCM). Pursuant to the Earn-In Agreement, UCM has earned a 7.95%
interest in the project and may earn up to a 20% interest (the Earn-In
Right). The Earn-In Right is conditional on UCM contributing an additional
$106 million to the joint venture (the Earn-In Investment), which
amount UCM is not obliged to contribute until all material permits in respect of
the Rosemont project have been granted. After such permits have been obtained
and a decision is made to commence construction at Rosemont, UCM is required to
advance the Earn-In Investment pro rata with the $230 million upfront deposit
payment under the precious metals stream agreement with Silver Wheaton Corp.
(Silver Wheaton) in respect of the Rosemont project. In March 2017, we
filed a National Instrument 43-101 technical report for Rosemont (see
Description of Our Business  Material Mineral Projects, below).

Equity Financing

On January 9, 2014, we announced that we had entered into an
agreement with a syndicate of underwriters who agreed to purchase, on a bought
deal basis, 18,200,000 of our common shares at a price of C$8.25 per common
share. The underwriters were also granted an over allotment option, which they
exercised in full, for an additional 2,730,000 common shares. The transaction
closed on January 30, 2014, and the aggregate gross proceeds from the offering
were C$172.7 million. The net proceeds of the equity financing were used for
general corporate purposes.

|DESCRIPTION OF OUR BUSINESS
|---------------------------
|                           

GENERAL

We are an integrated mining company producing copper
concentrate (containing copper, gold and silver) and zinc metal. With assets in
North and South America, we are focused on the discovery, production and
marketing of base and precious metals. Directly and through our subsidiaries, we
own four polymetallic mines, four ore concentrators and a zinc production
facility in northern Manitoba and Saskatchewan (Canada) and Cusco (Peru), and a
copper project in Arizona (United States). Our growth strategy is focused on the
exploration and development of properties we already control, as well as other
mineral assets we may acquire that fit our strategic criteria. Our vision is to
become a top-tier operator of long-life, low cost mines in the Americas. Our
mission is to create sustainable value through the acquisition, development and
operation of high-quality and growing long-life deposits in mining-friendly
jurisdictions.

ANNUAL INFORMATION FORM |9

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We have four material mineral projects:

|1. | our 100% owned Constancia mine, an open pit copper mine
      in Peru, which achieved commercial production in the second quarter of
      2015;                                                                                                                                                   
|-- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                    
|2. | our 100% owned Lalor mine, an underground zinc, copper
      and gold mine near Snow Lake, Manitoba, which achieved commercial
      production in the third quarter of 2014;                                                                                                                      
|   |                                                                                                                                                                                                                                                                                                    
|3. | our 100% owned 777 mine, an underground copper, zinc,
      gold and silver mine in Flin Flon, Manitoba, which has been producing
      since 2004; and                                                                                                                                            
|   |                                                                                                                                                                                                                                                                                                    
|4. | our 92.05% owned Rosemont project, a copper development
      project in Pima County, Arizona; our ownership in the Rosemont project is
      subject to an Earn-In Agreement with UCM, pursuant to which UCM has earned
      a 7.95% interest in the project and may earn up to a 20%
  interest.

We also own a 70% interest in the Reed mine near Snow Lake,
Manitoba, which commenced commercial production in April 2014, exploration
properties in North and South America and minority equity investments in several
junior exploration companies as part of our strategy to build a pipeline of
projects with the potential for development.

In addition, we own and operate a portfolio of processing
facilities in northern Manitoba, including our primary Flin Flon ore
concentrator, which produces zinc and copper concentrates, our Stall
concentrator, which produces zinc and copper concentrates and our Flin Flon zinc
plant, which produces high-grade zinc metal. In 2015, we acquired the New
Britannia mill, located in Snow Lake, which, if refurbished, has the potential
to increase our capacity to process gold ore from Lalor. In Peru, we own and
operate a processing facility at Constancia, which produces copper and
molybdenum concentrates.

The following map shows where our primary assets and certain
exploration properties are located.



ANNUAL INFORMATION FORM |10

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MATERIAL MINERAL PROJECTS

Constancia

Constancia is our 100% owned copper mine in Peru. It is located
in the Province of Chumbivilcas in southern Peru and consists of the Constancia
and Pampacancha deposits.

We completed construction of the Constancia mine in the fourth
quarter of 2014 at a capital cost of construction of approximately $1.7 billion
and the mine reached commercial production in the second quarter of 2015. The
mine reached full and steady state production in the second half of 2015.

Mining of the high-grade Pampacancha satellite deposit is
planned to begin in 2018 with total project costs (excluding the costs
associated with acquiring surface rights) of $54 million.

Pursuant to a precious metals stream agreement we entered into
with Silver Wheaton in respect of the Constancia mine, we received $430 million
in upfront deposit payments against delivery of 100% of the payable silver and
50% of the payable gold at Constancia. In addition to the upfront payments, for
gold and silver delivered in accordance with the stream agreement, we receive
cash payments equal to the lesser of (i) the market price and (ii) $400 per
ounce (for gold) and $5.90 per ounce (for silver), subject to one percent annual
escalation starting in 2019. Gold recovery for purposes of calculating payable
gold is fixed at 55% for gold mined from Constancia and 70% for gold mined from
Pampacancha.

On November 21, 2016, we filed a technical report titled NI
43-101, Technical Report, Constancia Mine Cuzco, Peru, effective as of June 30,
2016, prepared by Cashel Meagher, P. Geo (our Chief Operating Officer) (the
Constancia Technical Report), a copy of which is available under our
profile on SEDAR at www.sedar.com and on EDGAR at www.sec.gov. For additional
details on our Constancia mine, refer to Schedule B of this AIF.

Mineral Reserves and Resources

The following table sets forth our estimates of the mineral
reserves at the Constancia mine as at January 1, 2017.(1)(2)

|Constancia Mineral Reserves  January 1, 2017(1)(2)
|---------------------------------------------------
|                                                   
|Constancia                                         
|Proven                                             
|Probable                                           
|Total Proven
      and Probable                    
|Pampacancha                                        
|Proven                                             
|Probable                                           
|Total Proven
      and Probable                    
|Total Mineral
      Reserve                        

Notes:

|1. | The mineral reserve estimates for Constancia are based on
      a long range mine plan with economic value calculation per block (NSR in
      $/t), mining, processing and detailed engineering parameters.                                                                                                                                                                                                                                                                                                                                                                   
|-- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|2. | The Constancia reserve pits (Constancia and Pampacancha)
      consist of operational pits of proven and probable reserves and are based
      on the following long-term metals prices: $3.00 per pound of copper;
      $11.00 per pound of molybdenum; $18.00 per ounce of silver; and $1,260 per
      ounce of gold; metallurgical recoveries applied by ore type (between 84.4%
      to 90.5%); and processing cost of $4.44 per tonne, general and administrative
costs of $1.60 per tonne and mining costs of $1.30 and $1.35 per tonne (waste
and ore, respectively).

ANNUAL INFORMATION FORM |11

---



The following table sets forth our estimates of the mineral
resources at the Constancia mine as at January 1, 2017.(1)(2)

|Category                                               | M (tonnes)  | Cu (%) | Mo (g/t) | Au (g/t) | Ag (g/t)
|------------------------------------------------------ | ----------- | ------ | -------- | -------- | --------
|Constancia                                             |             |        |          |          |         
|Measured                                               | 161,800,000 | 0.19   | 55       | 0.031    | 2.26    
|Indicated                                              | 287,800,000 | 0.17   | 50       | 0.026    | 1.89    
|Total Measured
      & Indicated                       | 449,600,000 | 0.18   | 52       | 0.028    | 2.02    
|Total Inferred                                         | 138,100,000 | 0.17   | 40       | 0.018    | 1.70    
|Pampacancha                                            |             |        |          |          |         
|Measured                                               | 7,500,000   | 0.35   | 57       | 0.235    | 4.13    
|Indicated                                              | 15,200,000  | 0.18   | 90       | 0.180    | 2.85    
|Total Measured & Indicated                             | 22,700,000  | 0.23   | 79       | 0.198    | 3.27    
|Total Mineral
      Resources (Measured and Indicated) | 472,300,000 | 0.18   | 53       | 0.036    | 2.08    

Notes:

|1. | Mineral resources that are not mineral reserves do not
      have demonstrated economic viability. The above mineral resources are
      exclusive of mineral reserves.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|2. | Mineral resources are constrained within a computer
      generated pit using the Lerchs-Grossman algorithm. Estimates of mineral
      resources are based on the following long-term metals prices: $3.00 per
      pound of copper; $11.00 per pound of molybdenum; $18.00 per ounce of
      silver; and $1,260 per ounce of gold. Metallurgical recoveries of 90.5%
      copper, 55% molybdenum, 72% silver and 60% gold were applied to sulfide
      material. Metallurgical recoveries of 88.4% copper, 55% molybdenum, 90%
      silver and 60% gold were applied to mixed and supergene material. A
      metallurgical recovery of 84% copper, 52% silver and 60% gold for copper
      was applied to skarn and high zinc material. NSR was calculated for every
      model block and is an estimate of recovered economic value of copper,
      molybdenum, silver and gold combined.

The following chart shows Constancia production (tonnes and
grade) for the last two years:



ANNUAL INFORMATION FORM |12

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Lalor

Our 100% owned Lalor mine is a zinc, copper and gold mine near
the Town of Snow Lake in the province of Manitoba. Lalor is located
approximately 208 kilometres by road east of Flin Flon, Manitoba.

In the first quarter of 2014, we received the Environment Act
licence for Lalor, which allowed the mine to move into full production via the
main shaft. Lalor commenced initial ore production from the ventilation shaft in
August 2012 and achieved commercial production from the main shaft in the third
quarter of 2014. In the third quarter of 2014, we completed a refurbishment of
the equipment and facilities at the Stall concentrator, which now has the
capacity to treat 3,000 tonnes per day. Lalor base metal ore and gold ore in
contact with base metals is being transported for processing at the Stall
concentrator.

The Lalor mine is currently operating at 3,000 to 3,500 tonnes
per day and is ramping up production to 4,500 tonnes per day by 2018. The
increase in production to 4,500 tpd at Lalor is complemented by the Stall
concentrator expansion to 4,500 tpd, which is currently underway and is expected
to be commissioned in the third quarter of 2018.

In the fourth quarter of 2016, Hudbay developed 37 drift rounds
at Lalor to assess the continuity and variability of non-contact gold
mineralization within discrete areas of zones 21 and 25. Approximately 10,000
tonnes of bulk sample material was mined and hauled to surface. The material was
primary crushed and processed through a sample tower to collect a representative
subsample of each development round. The integrity of the material was
maintained at all times through a rigorous chain of custody process. The mined
material, stored on surface, is available for milling pending the potential
economic viability of refurbishing the New Britannia gold mill in Snow Lake by
Hudbay.

On March 30, 2017, we filed a NI 43-101 technical report titled
NI 43-101 Technical Report, Lalor Mine, Snow Lake, Manitoba, Canada, prepared
by Robert Carter, P. Eng. (our Lalor Mine Manager), dated effective March 30,
2017 (the Lalor Technical Report), a copy of which is available under our
profile on SEDAR at www.sedar.com and will be filed on EDGAR at www.sec.gov.For additional details on our Lalor mine, refer to Schedule B of this
AIF.

Mineral Reserves and Resources

The following tables set forth our estimates of the mineral
reserves and resources at the Lalor mine.

|Lalor
      Mineral Reserves  January 1, 2017 (1)(2)(3)
|--------------------------------------------------------
|                                                        
|Lalor Mine                                              
|Proven                                                  
|Probable                                                
|Total Mineral
      Reserve                             

Notes:

|1. | Mineral reserves are estimated at an NSR cut-off of $88
      per tonne for longhole open stope mining method and $111 per tonne for cut
      and fill mining method.                                                                               
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|2. | A zinc price of $1.07 per pound (includes premium),
      copper price of $3.00 per pound, gold price of $1,260 per ounce and silver
      price of $18.00 per ounce and an exchange rate of 1.10 C$/US$ was used to
      estimate mineral reserves.
|3. | For additional details relating to the estimates of
      mineral reserves at our Lalor mine, including data verification and
      quality assurance / quality control processes, refer to Schedule B and the
      Lalor Technical Report.         

ANNUAL INFORMATION FORM |13

---



|Lalor Base
      Metal Mineral Resources, Exclusive of Mineral Reserves  September 30,
  2016 (1)(2)
|-----------------------------------------------------------------------------------------------------
|                                                                                                     
|                                                                                                     
|Lalor 
      Indicated Base Metal                                                                   
|Indicated                                                                                            
|Lalor 
      Inferred Base Metal                                                                    
|Inferred                                                                                             

Notes:

|1. | A zinc metal price of $1.19 per pound, a copper price of
      $2.67 per pound, gold price of $1,300 per ounce and a siliver price of
      $18.00 per ounce were used to calculate a zinc equivalence (Zn Eq) cut-off
      of 4.1%, where Zn Eq = Zn% + (1.98 x Cu%) + (1.11 x Au g/t) + (0.01 x Ag
      g/t)  (0.01 x Pb%). An exchange rate of 1.25 C$/US$ was used to estimate
      mineral resources. The Zn Eq considers the ratio of milling recovery,
      payability and value of metals after application of downstream processing
      costs. The Zn Eq cut-off of 4.1% covers administration overhead, mining
      removal, milling and general and administration costs.
|-- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|2. | Mineral resources that are not mineral reserves do not
      have demonstrated economic viability.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          

|Lalor Gold
      Mineral Resources, Exclusive of Mineral Reserves  September 30, 2016
  (1)(2)
|-----------------------------------------------------------------------------------------------
|                                                                                               
|                                                                                               
|Lalor 
      Indicated Gold Zone                                                              
|Indicated                                                                                      
|Lalor 
      Inferred Gold Zone                                                               
|Inferred                                                                                       

Notes:

|1. | A gold metal price of $1.300 per ounce, a copper price of
      $2.67 per pound and a silver price of $18.00 per ounce were used to
      calculate a gold equivalence (Au Eq) cut-off of 2.4 g/t Au Eq, where Au Eq
      = Au g/t + (1.34 x Cu %) + (0.01 x Ag g/t). An exchange rate of 1.25
      C$/US$ was used to estimate mineral resources. The Au Eq considers the
      ratio of milling recovery, payability and value of metals after
      application of downstream processing costs. Au Eq cut-off of 2.4 g/t
      covers administration overhead, mining removal, milling and general and
      administration costs.
|-- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|2. | Mineral resources that are not mineral reserves do not
      have demonstrated economic viability.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     

Production

The following charts show Lalor production (tonnes and grade)
for the last five years:

ANNUAL INFORMATION FORM |14

---







777

Our 100% owned 777 mine is an underground copper, zinc, gold
and silver mine located within the Flin Flon Greenstone Belt, immediately
adjacent to our principal concentrator and zinc pressure leach plant in Flin
Flon, Manitoba. Development of the 777 mine commenced in 1999 and commercial
production began in 2004. The mine life is expected to be until 2020.

Ore produced at the 777 mine is transported to our Flin Flon
concentrator for processing into copper and zinc concentrates. Copper
concentrate is sold to third party purchasers and zinc concentrate is sent to
our Flin Flon zinc plant where it is further processed into special high grade
zinc before being sold to third party purchasers. For additional information,
see Description of our Business  Other Information  Processing Facilities
and Description of our Business  Other Information  Products and Marketing.

Pursuant to the precious metals stream agreement we entered
into with Silver Wheaton in respect of the 777 mine, we received a $455 million
upfront deposit payment for a portion of the precious metals stream at 777. We
are currently required to deliver 50% of the payable gold and 100% of the
payable silver from the 777 mine and receive fixed payments equal to the lesser
of (i) the market price and (ii) $400 per ounce (for gold) and $5.90 per ounce
(for silver), subject to one percent annual escalation that started in 2015.

ANNUAL INFORMATION FORM |15

---



On November 6, 2012, we filed a NI 43-101 technical report
titled Technical Report, 777 mine, Flin Flon, Manitoba, Canada, prepared by
Brett Pearson, P. Geo., Darren Lyhkun, P. Eng., Cassandra Spence, P. Eng.,
Stephen West, P. Eng. and Robert Carter, P. Eng. and dated effective October 15,
2012 (the 777 Technical Report), a copy of which is available under our
profile on SEDAR at www.sedar.com and on EDGAR at www.sec.gov. For additional
details on our 777 mine refer to Schedule B of this AIF.

Mineral Reserves and Resources

The following tables set forth our estimates of the mineral
reserves and resources at the 777 mine.

|777 Mineral
  Reserves  January 1, 2017(1)(2)                             
|---------------------------------------------------------------------------
|777 Mine                                                                   
|Proven                                                                     
|Probable                                                                   
|Total Mineral
      Reserve                                                
|777 Indicated Mineral
  Resources  September 30, 2016(1)(2)(3)            
|                                                                           
|777 Mine                                                                   
|777 In-Mine Inferred
      Mineral Resources  September 30, 2016 (1)(2)(3)
|                                                                           
|777 Mine                                                                   

Notes:

|1. | A zinc price of $1.24 per pound (includes premium),
      copper price of $2.67 per pound, a gold price of $1,300 per ounce and
      silver price of $18.00 per ounce using an exchange rate of 1.25 C$/US$ was
      used to estimate mineral reserves and mineral resources.
|-- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|2. | For additional details relating to the estimates of
      mineral reserves and resources at our 777 mine, including data
      verification and quality assurance / quality control processes, refer to
      Schedule B and the 777 Technical Report.                         
|3. | Mineral resources that are not mineral reserves do not
      have demonstrated economic viability. The above mineral resources are
      exclusive of mineral reserves.                                                                                                        

Production

The following charts show 777 production (tonnes and grade) for
the last five years:



ANNUAL INFORMATION FORM |16

---





Rosemont

Rosemont is a copper development project, located in Pima
County, Arizona, approximately 50 kilometres southeast of Tucson. We acquired
Rosemont through our acquisition of Augusta in 2014. Our ownership in the
Rosemont project is subject to an Earn-In Agreement with UCM, pursuant to which
UCM has earned a 7.95% interest in the project and may earn up to a 20%
interest.

Since the acquisition of the Rosemont project, we have
completed an extensive work program, including in-fill drilling, detailed
metallurgical test work, and a bottom-up approach to cost estimation, along with
other feasibility-level work. The Rosemont project will be a traditional open
pit, shovel and truck operation and has an expected 19-year mine life. Rosemont
is expected to generate an after-tax, unlevered internal rate of return of
15.5%, using a long-term copper price of $3.00 per pound of copper, and has a
capital cost estimate of $1,921 million (on a 100% basis).

The permitting process for Rosemont is well advanced and
continues to progress. The key federal permits outstanding are the Final Record
of Decision from the U.S. Forest Service and the Section 404 Water Permit from
the U.S. Army Corps of Engineers. These federal permits are currently in the
final stages of the review process. All State of Arizona permits and approvals
have been issued for Rosemont and remain in force and are current. The project
design included in the Rosemont Technical Report (as defined below) is
specifically intended to meet the impacts analyzed and commitments outlined in
the federal and state permits.

Pursuant to our precious metals stream agreement with Silver
Wheaton in respect of the Rosemont project, we will receive deposit payments of
$230 million against delivery of 100% of the payable silver and gold from the
Rosemont project. The deposit will be payable upon the satisfaction of certain
conditions precedent, including the receipt of permits for the Rosemont project
and the commencement of construction. In addition to the deposit payments, as
gold and silver is delivered to Silver Wheaton, we will receive cash payments
equal to lesser of (i) the market price and (ii) $450 per ounce (for gold) and
$3.90 per ounce (for silver), subject to one percent annual escalation after
three years.

On March 30, 2017, we filed a technical report titled NI
43-101, Feasibility Study, Updated Mineral Resource, Mineral Reserve and
Financial Estimates, Rosemont Project, Pima County, Arizona, USA, effective as
of March 30, 2017, prepared by Cashel Meagher, P. Geo (our Chief Operating
Officer) (the Rosemont Technical Report), a copy of which is available
under our profile on SEDAR at www.sedar. com and will be filed on EDGAR at
www.sec.gov. For additional details on our Rosemont project, refer to

ANNUAL INFORMATION FORM |17

---



Schedule B of this AIF.

Mineral Reserves and Resources

The following table sets forth our estimates of the mineral
reserves at the Rosemont project as at March 30, 2017.(1)(2)(3)

|Rosemont Mineral Reserves       | Tonnes      | Cu (%) | Mo (%) | Ag (g/t)
|------------------------------- | ----------- | ------ | ------ | --------
|Proven                          | 426,100,000 | 0.48   | 0.012  | 4.96    
|Probable                        | 111,000,000 | 0.31   | 0.010  | 3.09    
|Total Proven
      and Probable | 537,100,000 | 0.45   | 0.012  | 4.58    

Notes:

|1. | Blocks were classified as Proven or Probable in
      accordance with CIM Definition Standards 2014.                                                                                                                                                                                                                                                                                                       
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|2. | Mineral resources are constrained within a computer
      generated pit using the Lerchs-Grossman algorithm. Metal prices of
      US$3.15/lb copper, US$11.00/lb molybdenum and US$18.00/troy oz silver were
      used. Metallurgical recoveries of 90% copper, 63% molybdenum and 75.5%
      silver were applied. No metallurgical recovery of molybdenum and silver
      from oxide ore is projected.
|3. | Based on 100% ownership of the Rosemont
  project.                                                                                                                                                                                                                                                                                                                                                         

The following table sets forth our estimates of the mineral
resources at the Rosemont project as at March30, 2017.(1)(2)(3)

|Rosemont Mineral Resources | Tonnes      | Cu (%) | Mo (%) | Ag (g/t)
|-------------------------- | ----------- | ------ | ------ | --------
|Measured                   | 161,300,000 | 0.38   | 0.009  | 2.72    
|Indicated                  | 374,900,000 | 0.25   | 0.011  | 2.60    
|Total Measured & Indicated | 536,200,000 | 0.29   | 0.011  | 2.64    
|                           |             |        |        |         
|Total Inferred             | 62,300,000  | 0.30   | 0.010  | 1.58    

Notes:

|1. | Mineral resources that are not mineral reserves do not
      have demonstrated economic viability. The above mineral resources are
      exclusive of mineral reserves.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|-- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|2. | Mineral resources are constrained within a computer
      generated pit using the Lerchs-Grossman algorithm. Estimates of mineral
      resources are based on the following long-term metals prices: $3.15 per
      pound of copper; $11.00 per pound of molybdenum; and $18.00 per ounce of
      silver. Metallurgical recoveries of 85% copper, 60% molybdenum and 75%
      silver were applied to sulfide material. Metallurgical recoveries of 40%
      copper, 30% molybdenum and 40% silver were applied to mixed material. A
      metallurgical recovery of 65% for copper was applied to oxide material.
      NSR was calculated for every model block and is an estimate of recovered
      economic value of copper, molybdenum, and silver combined. Cut-off grades
      were set in terms of NSR based on current estimates of process recoveries,
      total process and general and administrative operating costs of $5.70 per
      ton for oxide, mixed and sulfide material.
|3. | Based on 100% ownership of the Rosemont project; Hudbay
      currently owns a 92.05% interest in the project and its ownership interest
      is subject to an Earn-In Agreement with UCM, pursuant to which UCM has
      earned a 7.95% interest in the project and may earn up to a 20%
      interest.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            

OTHER ASSETS

Reed

Our 70% owned Reed mine near Flin Flon, Manitoba began
commercial production on April 1, 2014. Reed ore is transported by truck for
processing at the Flin Flon concentrator.

ANNUAL INFORMATION FORM |18

---



Our estimates of mineral reserves and resources for Reed are
set out below.

|Reed
      Mineral Reserves  January 1, 2017 (1)(2)
|----------------------------------------------------
|Reed
      Mine                                     
|Proven                                              
|Probable                                            
|Total Mineral
      Reserve                         

|Reed Inferred
      Mineral Resources  September 30, 2016 (1)(3)
|-----------------------------------------------------------------
|Tonnes                                                           
|88,000                                                           

Notes:

|1. | A zinc price of $1.22 per pound (includes premium),
      copper price of $2.50 per pound, gold price of $1,300 per ounce and silver
      price of $18.00 per ounce using an exchange rate of 1.28 C$/US$ was used
      to estimate mineral reserves. A zinc price of $1.24 per pound (includes
      premium), copper price of $2.67 per pound, gold price of $1,300 per ounce
      and silver price of $18.00 per ounce using an exchange rate of 1.25 C$/US$
      was used to estimate mineral resources.                                                           
|-- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|2. | For additional details relating to the estimates of
      mineral reserves and resources at the Reed mine, including data
      verification and quality assurance/quality control processes refer to the
      pre-feasibility study filed on SEDAR on May 14, 2012 by VMS Ventures Inc.
      titled Pre-Feasibility Study Technical Report on the Reed Copper Deposit,
      Central Manitoba, Canada prepared by Trevor Allen, P. Geo., Cassandra
      Spence, P. Eng., Mark Hatton, P. Eng. and Brent Christensen, P. Eng. and
      dated effective April 2, 2012.
|3. | Mineral resources that are not mineral reserves do not
      have demonstrated economic viability. The above mineral resources are
      exclusive of reserves and were estimated using the same metals prices as
      were used for the estimate of mineral reserves at
Reed.                                                                                                                                                                                                                                                                                            

Processing Facilities

Concentrators

Our primary ore concentrator in Manitoba is located in Flin
Flon. The concentrator, which is directly adjacent to our metallurgical zinc
plant, produces zinc and copper concentrates primarily from ore mined at our 777
mine. Its capacity is approximately 6,000 tonnes of ore per day. The
concentrator can handle ore from more than one mine separately, and blending is
done at the grinding stage. As a result, ore mined from our Reed mine is
transported to the Flin Flon concentrator for processing. The Flin Flon
concentrator facility includes a paste backfill plant and associated
infrastructure such as maintenance shops and laboratories. Tailings from the
concentrator are pumped to the Flin Flon tailings impoundment immediately
adjacent to the concentrator.

Our Stall concentrator in Snow Lake, Manitoba was re-started in
late 2009 and a new copper recovery circuit was installed in the third quarter
of 2012 to facilitate processing of Lalor ore. In 2014, we refurbished equipment
and facilities at the Stall concentrator, which has exceeded performance
expectations and, with a modest capital investment, will have capacity to treat
4,500 tonnes per day on a sustainable basis starting in the third quarter of
2018. The concentrator processes ore from Lalor and produces zinc and copper
concentrates. The zinc concentrate is shipped by truck for further processing at
our zinc plant in Flin Flon. Tailings generated by the Stall concentrator are
deposited in our Anderson Lake tailings facility, which we believe mitigates
environmental impacts, as the tailings are deposited in a subaqueous manner,
minimizing the potential for generation of acid rock drainage.

On May 4, 2015, Hudbay acquired a 100% interest in the New
Britannia mine and mill, located in Snow Lake, Manitoba. The New Britannia mill
is currently on care and maintenance. If refurbished, it has the potential to
process up to 1,500 tonnes per day of gold zone and copper-gold zone ore from
the Lalor mine, with the potential to augment the base metal production from the
Stall mill and utilize the full 6,000 tonnes per day capacity of the Lalor mine
shaft. The New Britannia mill includes an existing Carbon-in-Pulp circuit that
has historically produced gold doré on site.

ANNUAL INFORMATION FORM |19

---



Our processing plant at Constancia processes a nominal
throughput of 90,000 tonnes per day of ore and average annual throughput of
30.9million tonnes per year from the Constancia open pit and Pampacancha
satellite deposit. The principal product of the concentrator is copper
concentrate. The primary crusher, belt conveyors, thickeners, tanks, flotation
cells, mills and various other types of equipment are designed and constructed
to be open to the environment. The concentrate filtration and storage building
is enclosed. The tailings are pumped to the tailings management facility for
storage and water is returned via parallel piping to the process plant for
reuse.

Zinc Plant

Our zinc plant in Flin Flon, Manitoba produces special
high-grade zinc metal in three cast shapes from zinc concentrate. Our plant is a
primary zinc producer in North America. We produced 102,594 tonnes of cast zinc
in 2016 and the capacity of the zinc plant is approximately 115,000 tonnes of
cast zinc per year. Included in the zinc plant are an oxygen plant, a
concentrate handling, storage and regrinding facility, a zinc pressure leach
plant, a solution purification plant, a modern electro-winning cellhouse, a
casting plant and a zinc storage area with the ability to load trucks or rail
cars. The zinc plant has a dedicated leach residue disposal facility. The bulk
of the waste material is gypsum, iron and elemental sulphur. Wastewater is
treated and recycled through the zinc plant.

With Lalor and 777 in full production, domestic zinc
concentrate currently provides sufficient feed for our zinc plant and we do not
plan to purchase any zinc concentrate in 2017.

Production

The following charts show concentrator production
(tonnes/ounces) for our Constancia, Flin Flon and Stall concentrators for the
last five years:



ANNUAL INFORMATION FORM |20

---







Exploration

Exploration in Manitoba during 2016 focused on underground
drilling at Lalor and has been incorporated into the updated resource estimate
in this AIF. Our total land package in the Flin Flon greenstone belt of Manitoba
and Saskatchewan as at December 31, 2016 was 256,000hectares. Given that
much of this property is within 100 kilometres of our processing facilities in
the region, we are better positioned for the economic exploitation of mineral
deposits on these lands than a mining company that is without such facilities.
In 2017, we plan to continue early stage exploration on our best prospects in
the region.

Activities in Peru include brownfield exploration in the
vicinity of Constancia, greenfield exploration within the Constancia belt and
other areas, acquiring option properties and land consolidation. Our Peru land
package increased in 2016 from approximately 40,000 hectares to approximately
50,000 hectares as we continue to benefit from opportunities to inexpensively
acquire exploration rights arising from the difficult market environment for
exploration-stage mining companies.

Exploration activities in Chile focus on an optioned property.
Work includes mapping, geochemical sampling, geophysics and drilling. Activities
on this property and other areas that meet our geological criteria will continue
in 2017.

ANNUAL INFORMATION FORM |21

---



In addition, we will continue to consider greenfield
exploration opportunities in North and South America that fit our strategic
criteria as they present themselves.

Strategic Investments

As at December 31, 2016, we held minority equity positions in
15 junior exploration companies, representing investments with a fair market
value of approximately C$20 million, as part of our strategy to populate a
pipeline of projects with the potential for exploration and development. Our
early stage opportunity pipeline consists of minority interests in junior
exploration companies with projects in Canada, the United States, Chile and
Peru. We are continuing to evaluate new projects and potential investments to
add to our portfolio and will seek to dispose of investments when the underlying
projects are no longer consistent with our strategy.

Cash and Cash Equivalents

Our cash and cash equivalents as of December 31, 2016 were $147
million, and are held in low risk liquid investments and deposit accounts
pursuant to our investment policy.

OTHER INFORMATION

Products and Marketing

Our principal products are copper concentrate, which contains
payable copper, gold and silver, and refined zinc metal. In 2016, with
Constancia having its first full year of commercial production, we experienced
significant growth and produced 703,299 tonnes of copper concentrate (527,296
tonnes at Constancia and 176,003 tonnes in Manitoba) and 102,594 tonnes of cast
zinc. In 2016, copper concentrate sales represented approximately 81% (79% in
2015) and zinc metal sales represented approximately 19% (21% in 2015) of our
total gross consolidated revenue (which includes the unrealized gains and losses
on derivatives associated with sales of copper and zinc).

In 2016, we sold approximately 69% (90% in 2015) of our copper
concentrate production to third party purchasers on benchmark terms, and in 2017
we expect to sell approximately 83% to third parties on benchmark terms. We sell
the remainder of our copper concentrate production pursuant to shorter-term
contracts as opportunities arise. Manitoba copper concentrate production is
primarily sold for delivery to smelters in Canada and Europe, while Peru
concentrate is primarily sold for delivery to smelters in Asia, with some
volumes delivered to Europe and India.

We sell gold and silver from our 777 and Constancia mines and
contained in our copper concentrate to Silver Wheaton pursuant to the terms of
the precious metals stream agreements in respect of our 777 and Constancia
mines.

We ship cast zinc metal produced at our Flin Flon zinc plant by
rail and truck to third party customers in North America. One customer in Canada
represented approximately 30% of our zinc metal sales in 2016.

Commodity Markets

Our financial performance is directly affected by a number of
factors, including metal prices, foreign exchange rates, and input costs,
including energy prices. Average prices for zinc and precious metals were higher
in 2016 than in 2015, while average copper prices were lower. For additional
information refer to our market analysis of copper, zinc, gold and silver prices
during this period on pages 18 and 19 of our managements discussion and
analysis for the year ended December 31, 2016, a copy of which has been filed on
SEDAR at www.sedar.com and EDGAR at www.sec.gov.

ANNUAL INFORMATION FORM |22

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Specialized Skill and Knowledge

The success of our operations depends in part on our ability to
attract and retain geologists, engineers, metallurgists and other personnel with
specialized skill and knowledge about the mining and mineral processing
industries in the geographic areas in which we operate. For additional
information, see Risk Factors  Human Resources.

Competitive Conditions

The mining industry is intensely competitive and we compete
with many companies in the search for and the acquisition of attractive mineral
properties. In addition, we also compete for the technical expertise to find,
develop, and operate such properties, the labour to operate the properties, and
the capital for the purpose of funding such properties. For additional
information, see Risk Factors  Competition.

Economic Dependence

We do not have any contracts upon which our business is
substantially dependent, as our principal products, copper concentrate and zinc,
are widely traded commodities and we may enter into contracts for the sale of
such products with a variety of potential purchasers.

Environmental Protection

Our activities are subject to environmental laws and
regulations. Environmental laws and regulations are evolving in a manner that
will require stricter standards and enforcement, increased fines and penalties
for non-compliance, more stringent environmental assessments of proposed
projects and a heightened degree of responsibility for companies and their
officers, directors and employees. For additional information, see Risk Factors
 Governmental and Environmental Regulation.

Our goal is to continue to improve our environmental
performance. We have established an environmental management program directed at
environmental protection and compliance to achieve our goal and address these
regulatory changes. For additional information, see Corporate Social
Responsibility.

Employees

As at December 31, 2016, we had 65 employees at our Toronto
head office, 1,342 employees in Manitoba, 593 employees in Peru and 40 employees
in Arizona.

Of our 1,342 employees in Manitoba, 1,031 were unionized as at
December 31, 2016. Our collective bargaining agreements with the seven unions
representing the unionized employees in Manitoba expire on December 31, 2017.

Hudbay maintains a profit sharing plan pursuant to which 10% of
the after-tax profit of the Manitoba Business Unit (excluding provisions or
recoveries for deferred income and mining tax) for any given year is distributed
among eligible employees in the Flin Flon/Snow Lake operations, with the
exception of executive officers and key management personnel.

As is typical with large Peruvian mining operations following
startup, some of the employees at Constancia have formed a labour union and we
recently entered into a collective agreement with these employees to cover a one
year period from November 2016 to November 2017.

|CORPORATE SOCIAL RESPONSIBILITY
|-------------------------------
|                               

At Hudbay, we view our responsible corporate behaviour as
integral to the successful execution of our business strategy, particularly in
maintaining a good reputation with our regulators and communities and being able to bring that good reputation to new communities and
jurisdictions when we embark on new projects. We therefore commit to our
stakeholders to work to create benefits and opportunities that contribute to
their economic and social sustainability, and to protect our natural
environment. We also commit to our employees to maintain a safe and healthy work
environment. As described below, we have adopted a number of voluntary codes and
other external instruments that we consider particularly relevant to our
business, including Environmental Management System Standard ISO 14001,
Occupational Health and Safety Assessment Series (OHSAS) 18001, the
Voluntary Principles on Security and Human Rights, and our commitment to follow
the Toward Sustainable Mining (TSM) program of the Mining Association
of Canada at all of our operating locations.

ANNUAL INFORMATION FORM |23

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HEALTH, SAFETY AND ENVIRONMENTAL POLICIES

Among our core values are protecting the health and welfare of
our employees and contractors and reducing the impact of our operations on the
environment. All of our producing operations have management systems certified
to OHSAS 18001 and Environmental Management System Standard ISO 14001 or are, in
the case of Constancia, on track to have certified systems by mid-2017. In
addition, the production and supply of our cast zinc products are registered to
the ISO 9001 quality standard.

We believe that ongoing improvement in the safety of our
workplace assists in maintaining healthy labour relations and that our ability
to minimize lost-time injuries and environmental regulatory violations is a
significant factor in maintaining and realizing opportunities to improve overall
operational efficiency. Our safety management systems include the Positive
Attitude Safety System (PASS), which is in use at our Manitoba
operations. The PASS system is based on facilitated discussions at all levels of
the organization to increase each persons involvement in recognizing and
managing workplace risks. In 2016, our consolidated lost time accident frequency
per 200,000 hours worked was 0.3. This is the same as our frequency in 2015, as
the number of lost time accidents and the number of hours worked both decreased
in 2016. We continue to focus our safety efforts on maintaining a high level of
safety performance at all ourlocations.

Our environmental management program consists of a corporate
environmental policy, and at each site codes of practice, regular audits, the
integration of environmental procedures with operating procedures, employee
training and emergency prevention and response procedures. We have dedicated
teams which are charged with managing our environmental activities and our
compliance with all applicable environmental standards and regulations.
Appropriate water stewardship plays an important role in the development and
operation of our projects, particularly the Rosemont project. We did not have
any material environmental non-compliances in 2016.

In 2016 we continued to refine our company wide information
system for recording, managing and tracking environmental, health, safety and
community incidents.

HUMAN RIGHTS POLICY

Our Human Rights Policy articulates our commitments to human
rights and addresses topics such as business and labour practices, community
participation and security measures. Our Corporate Standards for Community
Giving and Investment and Local Procurement and Employment provide our business
units with additional corporate direction on minimum standards with respect to
meeting the commitments we set out in our Human Rights Policy.

The Voluntary Principles on Security and Human Rights provide
important guidance for our security and community relations practices in
locations with higher potential for social conflict and, in Peru, we regularly
audit security policies and practices and conduct gap analyses against the
Voluntary Principles.

SUSTAINABILITY REPORTING

We publish an annual corporate social responsibility report
that further presents and discusses our environmental, social, health and safety
performance. This report is prepared pursuant to the Global Reporting Initiative guidelines, which is the worlds most
widely used sustainability framework. Our 2015 Annual / Corporate Social
Responsibility Combined Report has been prepared largely in accordance with the
Core option of the G4 guidelines and is available on our website at
http://www.hudbayminerals.com/English/Responsibility/Reports. Our 2016 report is
expected to be released in the second quarter of 2017.

ANNUAL INFORMATION FORM |24

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|RISK FACTORS
|------------
|            

An investment in our securities is speculative and involves
significant risks that should be carefully considered by investors and
prospective investors. In addition to the risk factors described elsewhere in
this AIF, the risk factors that impact us and our business include, but are not
limited to, those set out below. Any one or more of these risks could have a
material adverse effect on our business, results of operations, financial
condition and the value of our securities.

METALS PRICES AND FOREIGN EXCHANGE

Our profit or loss and financial condition depend upon the
market prices of the metals we produce, which are cyclical and which can
fluctuate widely with demand. The profitability of our current operations is
directly related and sensitive to changes in the market price of copper and zinc
and, to a lesser extent, that of gold and silver. Market prices of metals can be
affected by numerous factors beyond our control, including the overall state of
the economy, general levels of supply and demand for a broad range of industrial
products, substitution of new or different products in critical applications for
existing products, level of industrial production, expectations with respect to
the rate of inflation, foreign exchange rates and investment demand for
commodities, interest rates and speculative activities. Such external economic
factors are in turn influenced by changes in international investment patterns,
monetary systems and political developments. The Chinese market has become a
significant source of global demand for commodities, including copper and zinc.
Chinese demand has been a major driver in global commodities markets for a
number of years. A further slowing in Chinas economic growth could result in
lower prices and demand for our products and negatively impact our results. We
could also experience these negative effects if demand in China slowed for other
reasons, such as increased self-sufficiency or increased reliance on other
suppliers to meet demand. Prices are also affected by the overall supply of the
metals we produce, which can be affected by the start-up of major new mines,
production disruptions and closures of existing mines. Future price declines
may, depending on hedging practices, materially reduce our profitability and
could cause us to reduce output at our operations (including, possibly, closing
one or more of our mines or plants). If such price declines were significant,
there could be a material and adverse effect on our cash flow from operations
and our ability to satisfy our debt service obligations (see Access to Capital
and Indebtedness below).

In addition to adversely affecting the reserve estimates and
the financial condition of the Company, declining metals prices can impact
operations by requiring an assessment or reassessment of the feasibility of a
particular project. If metals prices should decline below our cash costs of
production and remain at such levels for any sustained period, we could
determine that it is not economically feasible to continue production at any or
all of our mines. We may also curtail or suspend some or all of our exploration
and development activities, with the result that our depleted reserves are not
replaced.

In addition, since our core operations are located in Canada
and Peru, many of our costs are incurred in Canadian dollars and Peruvian soles.
However, our revenue is tied to market prices for copper, zinc and other metals
we produce, which are typically denominated in United States dollars. If the
Canadian dollar or Peruvian sol appreciate in value against the United States
dollar, our results of operations and financial condition could be materially
adversely affected. Although we may use hedging strategies to limit exposure to
currency fluctuations, there can be no assurance that such hedging strategies
will be successful or that they will mitigate the risk of such fluctuations.

ANNUAL INFORMATION FORM |25

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DEVELOPMENT OF NEW PROJECTS

Our ability to successfully develop the Rosemont project (and,
to a lesser extent, our current brownfield growth projects in Manitoba and Peru)
is subject to many risks and uncertainties, including: the ability to generate
sufficient free cash flows and secure adequate financing to fund the projects;
obtaining and maintaining key permits and approvals from governmental
authorities; successful resolution of administrative and legal challenges
against permits that have been issued to us and those permits that may be issued
in the future; construction, commissioning and ramp-up risks; scheduling and
cost-overrun risks; developing and maintaining good relationships with the
community, local government and other stakeholders and interested parties; and
political and social risk.

Significant amounts of capital will be required to construct
and operate Rosemont. Our capital and operating costs may be affected by a
variety of factors, including project scope changes, local currency appreciation
and general cost escalation common to mining projects globally. Factors such as
changes to technical specifications, failure to enter into agreements with
contractors or suppliers in a timely manner, including contracts in respect of
project infrastructure, and shortages of capital, may also delay or prevent the
completion of construction or commencement of production or require the
expenditure of additional funds. Many major mining projects constructed in the
last five to ten years have experienced cost overruns that substantially
exceeded the capital cost estimated during the basic engineering phase of those
projects, sometimes by as much as 50% or more. There can be no certainty that
after Rosemont is fully permitted there will be sufficient financing or other
transactions available on acceptable terms to fund the construction of Rosemont.

The development of the Rosemont project may not occur as
planned. While we expect that the Rosemont projects successful completion will
result in increased copper and precious metals production and enhanced growth
opportunities for us, these anticipated benefits will primarily depend on
whether and when the Rosemont project receives the permits required to commence
construction and operate the mine. While we believe the permits will be granted,
there can be no assurance that this will be the case and that any administrative
and legal challenges to Rosemonts permits will be successfully resolved.
Moreover, there may be a delay in their issuance and further delay caused by
administrative and legal challenges. The Rosemont project is also subject to a
joint venture agreement under the Earn-In Agreement with UCM, which requires
UCMs consent for a number of important project decisions (including approval to
commence construction of the project). Any failure to agree with UCM on one of
these decisions or any other disagreement or dispute with UCM could hinder our
ability to successfully develop the project.

The capital expenditures, timeline and other risks involved
with developing a new mine, such as Rosemont, or mining a new deposit such as
Pampacancha at our Constancia mine in Peru, are considerable. We also may not be
able to secure the surface rights required to develop the Pampacancha deposit.
Any inability to secure required surface rights or take possession of areas for
which we hold surface rights could render us unable to carry out planned
exploration, development and mining activities. Such capital expenditure,
timeline and other risks also (though to a lesser extent) apply to our
brownfield growth projects in Manitoba and Peru. There can be no assurance that
our current development projects or other projects we intend to develop will be
able to be developed successfully or economically or that they will not be
subject to the other risks described in this section.

ACCESS TO CAPITAL AND INDEBTEDNESS

To fund growth, and in difficult economic times, to ensure
continued operations, we may need to secure necessary capital through loans or
other forms of permanent capital. The availability of this capital is subject to
general economic conditions and lender and investor interest in the Company and
our projects. Financing may not be available when needed or, if available, may
not be available on terms acceptable to us. Failure to obtain any financing
necessary for our capital expenditure plans may result in a delay or indefinite
postponement of exploration, development or production on any or all of our
properties, including our potential plans to develop the Rosemont project.

ANNUAL INFORMATION FORM |26

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We have a significant amount of indebtedness. As of December
31, 2016, our total debt was approximately $1.23 billion, consisting primarily
of the Senior Unsecured Notes. As a result, we have a substantial annual
interest expense, including approximately $75million in respect of our
Senior Unsecured Notes.

Specifically, our substantial level of indebtedness could have
important consequences, including:

| | limiting our ability to access capital to fund future
      working capital, capital expenditures, acquisitions or other general
      corporate requirements;                                                                                                                           
|- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | requiring a substantial portion of our cash flows to be
      dedicated to debt service payments instead of other purposes, thereby
      reducing the amount of cash flows available for working capital, capital
      expenditures, acquisitions and other general corporate purposes;
| | increasing our vulnerability to general adverse economic
      and industry conditions;                                                                                                                                                                                                  
| | exposing the Company to the risk of increased interest
      rates as certain of our borrowings are at variable rates of interest;                                                                                                                                                       
| | limiting our flexibility in planning for and reacting to
      changes in the industry in which we compete;                                                                                                                                                                              
| | placing the Company at a disadvantage compared to other
      less leveraged competitors; and                                                                                                                                                                                            
| | increasing our cost of borrowing.                                                                                                                                                                                                                                                        

Subject to the limits contained in the indenture governing the
Senior Unsecured Notes and any limits under our other debt instruments existing
from time to time, we may incur additional debt (including under our Facilities)
to finance working capital, capital expenditures, investments or acquisitions or
for other purposes. If we do so, the risks related to our high level of
indebtedness could intensify.

Our ability to make scheduled payments on, repay in full or
refinance our debt obligations, including the Senior Unsecured Notes, depends on
our financial condition and operating performance, which are subject to
prevailing economic and competitive conditions and to certain financial,
business, legislative, regulatory and other factors beyond our control, most
importantly, metals prices. We may be unable to maintain a level of cash flows
from operating activities sufficient to permit us to pay the principal, premium,
if any, and interest on our indebtedness, including the Senior Unsecured Notes.

If our cash flows and capital resources are insufficient to
fund our debt service obligations, we could face substantial liquidity problems
and could be forced to reduce or delay investments and capital expenditures or
to dispose of material assets or operations, seek additional debt or equity
capital or restructure or refinance our indebtedness, including the Senior
Unsecured Notes. We may not be able to effect any such alternative measures on
commercially reasonable terms or at all and, even if successful, those
alternatives may not allow us to meet our scheduled debt service obligations.
The indenture governing the Senior Unsecured Notes restricts our ability to
dispose of assets and use the proceeds from those dispositions and may also
restrict our ability to raise debt or equity capital to be used to repay other
indebtedness when it becomes due. We may not be able to consummate those
dispositions or to obtain proceeds in an amount sufficient to meet any debt
service obligations then due.

In addition, the indenture governing the Senior Unsecured Notes
contains a number of restrictive covenants that impose significant operating and
financial restrictions on us and may limit our ability to engage in acts that
may be in our long-term best interest, including restrictions on our ability to:

| | incur additional indebtedness;                                                         
|- | ---------------------------------------------------------------------------------------
| | pay dividends or make other distributions or repurchase
      or redeem capital stock; 
| | prepay, redeem or repurchase certain debt;                                             
| | make loans and investments;                                                            
| | sell assets;                                                                           
| | incur liens;                                                                           
| | enter into transactions with affiliates;                                               
| | alter the businesses we conduct;                                                       
| | enter into agreements restricting our subsidiaries
      ability to pay dividends; and
| | consolidate, amalgamate, merge or sell all or
      substantially all of our assets.   

If we cannot make scheduled payments on our debt, or we breach
any of the covenants under the indenture governing the Senior Unsecured Notes or our other
debt instruments, we will be in default and holders of our debt could declare
all outstanding principal and interest to be due and payable, causing a
cross-acceleration or cross-default under certain of our other debt agreements
(including our secured Facilities) and our other creditors could foreclose
against the collateral securing our obligations and we could be forced into
bankruptcy or liquidation.

ANNUAL INFORMATION FORM |27

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DEPLETION OF RESERVES

Subject to any future expansion or other development,
production from existing operations at our mines will typically decline over the
life of the mine and, in the case of a maturing mine nearing the end of its life
such as our 777 mine, the risk of the extraction of mineral reserves becoming
uneconomic increases. As a result, our ability to maintain our current
production or increase our annual production of base and precious metals and
generate revenues therefrom will depend significantly upon our ability to
discover or acquire new deposits, to successfully bring new mines into
production and to expand mineral reserves at existing mines. Exploration and
development of mineral properties involve significant financial risk. Very few
properties that are explored are later developed into operating mines. Whether a
mineral deposit will be commercially viable depends on a number of factors,
including: the particular attributes of the deposit, such as size, grade and
proximity to infrastructure; metal prices, which are highly cyclical; political
and social stability; and government regulation, including regulations relating
to prices, taxes, royalties, land tenure, land use, importing and exporting of
minerals and environmental protection. Even if we identify and acquire an
economically viable ore body, several years may elapse from the initial stages
of development. We may incur significant expenses to locate and establish
mineral reserves, to develop metallurgical processes and to construct mining and
processing facilities. As a result, we cannot provide assurance that our
exploration or development efforts will result in any new commercial mining
operations or yield new mineral reserves to replace or expand current mineral
reserves.

POLITICAL AND SOCIAL RISKS

The implementation of new, or the modification of existing,
laws and regulations affecting our operations and other mineral properties could
have a material adverse impact on us and our projects. Such laws or events could
involve the expropriation of property, implementation of exchange controls and
price controls, increases in production royalties and income and mining taxes,
refusal to grant or renew required permits, licenses, leases or other approvals
or requiring unfavourable amendments to or revoking current permits and
licenses, and enacting environmental or other laws that would make contemplated
operations uneconomic or impractical. The risk exists that further government
limitations, restrictions or requirements, not presently foreseen, will be
implemented. In addition, changes in policy that alter laws regulating the
mining industry could have a material adverse effect on us.

Although we only operate in historically mining friendly
jurisdictions in the Americas, there can be no assurance that our assets in
these countries will not be subject to nationalization, requisition or
confiscation, whether legitimate or not, by a government authority or other
body.

In situations where we have acquired mineral rights, we may not
be able to secure required surface rights. In addition, in situations where we
possess surface rights, our land may be illegally occupied or access could
otherwise be denied. Any inability to secure required surface rights or take
possession of areas for which we hold surface rights could render us unable to
carry out planned exploration, development and mining activities. We are at the
highest risk of this occurring at our Constancia mine in Peru, where we need to
acquire surface rights in order to develop the Pampacancha deposit and possess
certain other surface rights that could be illegally occupied or challenged by
the surrounding community.

Political or social unrest in Peru or instability could
adversely affect our ability to operate the Constancia mine. Such adverse
effects could result from positions or actions that may be taken by the national
government or at the regional, community or local levels including encroaching
on our land, challenging the boundaries of such land or our rights to possess
and operate on such land, protesting against our project (including the
environmental or social impacts of our project), impeding project activities
through roadblocks or other public manifestations and attacking project assets
or personnel. During the last several years, certain mining projects in Peru have been the
target of political and community protests. While there have been some
initiatives in respect of the Constancia mine, including attempts to restrict
access and trespassing by workers and members of the surrounding communities,
those initiatives have been limited and have not significantly disrupted the
projects development or operations. There is the risk that more significant
opposition may be mounted that may affect our ability to operate the Constancia
mine.

ANNUAL INFORMATION FORM |28

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COMMUNITY RELATIONS

Our relationships and reputation, particularly with the
communities in which we operate in Manitoba, Peru and Arizona, are critical to
the future success of our existing operations and the construction and
development of future projects. There is an increasing level of public concern
relating to the perceived effect of mining activities on the environment and on
communities impacted by those activities. Publicity adverse to us, our
operations, or extractive industries generally, including as a result of
anti-mining protests or publications, could have an adverse effect on us and may
impact our reputation and relationship with the communities in which we operate,
including the communities surrounding our key projects and other stakeholders.
In addition, although we have entered into life of mine agreements with the two
local communities directly affected by the Constancia mine, there can be no
assurance that disputes will not arise with these communities or with other
communities in the area. There is also a risk we will be unable to secure the
community agreements required to ensure we have the necessary surface rights to
successfully develop the Pampacancha deposit that forms a part of our plans for
the Constancia mine. Relations with local communities may be strained by real or
perceived detrimental effects associated with our activities or those of other
mining companies and that those strains may impact our ability to enforce our
existing community agreements or obtain necessary permits and approvals to
operate the Constancia mine. While we are committed to operating in accordance
with applicable laws and in a socially responsible manner, there can be no
assurance that our efforts in this respect will mitigate this potential risk.

ABORIGINAL RIGHTS AND TITLE TO MINERAL PROPERTIES

Claimed rights of aboriginal peoples may affect our ability to
operate our Lalor and Reed mines and other mineral properties. In the past this
has given rise to temporary disruptions of our operations. There can be no
assurance that other disruptions will not be initiated in the future, which
initiatives may affect our ability to explore and develop our properties and
conduct our operations.

Although we believe we have taken reasonable measures to ensure
valid title to our properties, there can be no assurance that title to any of
our properties will not be challenged or impaired. Third parties may have valid
claims underlying portions of our interests, including prior unregistered liens,
agreements, transfers or claims, and aboriginal land claims, and title may be
affected by, among other things, undetected defects or unforeseen changes to the
boundaries of our properties by governmental authorities.

In addition, a portion of the Rosemont property is located on
unpatented mine and millsite claims located on U.S. federal public lands. The
right to use such claims is granted under the United States General Mining Law
of 1872. Unpatented mining claims are unique property interests in the United
States, and are generally considered to be subject to greater title risk than
other real property interests because the validity of unpatented mining claims
is often uncertain. While we believe there are no material defects in title of
the Rosemont project lands, any such defects could materially impact our ability
to develop and operate the project.

ANNUAL INFORMATION FORM |29

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MINING AND PROCESSING

Mining operations, including exploration, development and
production of mineral deposits, generally involve a high degree of risk and are
subject to conditions and events beyond our control. Our operations are subject
to all of the hazards and risks normally encountered in the mining industry
including: adverse environmental conditions; industrial and environmental
accidents; metallurgical and other processing problems; unusual or unexpected
rock formations; ground or slope failures; structural cave-ins or slides;
flooding or fires; seismic activity; rock bursts; equipment failures; and
periodic interruptions due to weather conditions. These risks could result in
significant damage, including destruction of mines, equipment and other
operations, resulting in partial or complete shutdowns, personal injury or
death, environmental or other damage to our properties or the properties of
others, delays in mining, monetary losses and potential legal liability. In
addition, although we conduct extensive maintenance and incur significant costs
to maintain and upgrade our fixed and mobile equipment and infrastructure,
failures may occur that cause injuries or production loss.

Failure to achieve production, cost or life-of-mine estimates
could have an adverse impact on our future cash flows, profitability, results of
operations and financial condition. Our actual production, costs and the
productive life of a mine may vary from estimates for a variety of reasons,
including actual ore mined varying from estimates of grade, tonnage, dilution
and metallurgical and other characteristics, short-term operating factors
relating to the mineral reserves, such as the need for sequential development of
ore bodies and the processing of new or different ore grades, revisions to mine
plans, risks and hazards relating to mining and availability of and cost of
labour and materials. As a mine matures and nears the end of its life, such as
our 777 mine, the risks that may cause actual production to vary from previous
estimates increases and the extraction of mineral reserves may become
uneconomic.

Any inability to provide adequate feed to our processing
facilities could adversely impact our profitability or impair the viability of
our processing facilities.

GOVERNMENTAL AND ENVIRONMENTAL REGULATION

Our activities are subject to various laws and regulations
governing prospecting, development, production, taxes, labour standards,
occupational health, mine safety, toxic substances, protection of the
environment and other matters. Environmental regulation is evolving in a manner
that will require stricter standards and enforcement, increased fines and
penalties for non-compliance, and more stringent environmental assessments of
proposed projects. There can be no assurance that existing or future
environmental regulation will not materially adversely affect our business,
financial condition and results of operations. There is contamination on
properties that we own or owned or for which we have or have had care,
management or control and, in some cases on neighbouring properties, that may
result in remediation requirements, fines and personal injury or natural
resource damage claims, which could result in material costs. We could be held
responsible for investigative-cleanup cost relating to presently unknown
contamination on our properties. We may also acquire properties with
environmental risks. Any investigative and remediation costs for known or
unknown contamination, or for future releases of hazardous or toxic substances
at our properties or related to our activities, could be material.

Although we believe that our operations are currently carried
out in material compliance with applicable laws and regulations, no assurance
can be given that new laws and regulations will not be enacted or that existing
laws and regulations will not be amended or applied in a manner that could have
a material adverse effect on our business, financial condition and results of
operations. Any failure to comply with such laws and regulations may result in
enforcement actions, including orders issued by regulatory or judicial
authorities causing operations to cease or be curtailed, and may include
corrective measures requiring capital expenditures, installation of additional
equipment, or remedial actions. We may be required to compensate those suffering
loss or damage relating to mining activities, and we may have civil or criminal
fines or penalties imposed for violations of applicable laws or regulations,
which costs could be material.

ANNUAL INFORMATION FORM |30

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GOVERNMENT APPROVALS AND PERMITS

Government approvals and permits are currently required in
connection with all of our operations, and further approvals and permits will be
required in the future. The success of our efforts to obtain and maintain
permits is contingent upon many variables outside of our control. Obtaining and
complying with governmental permits may increase costs and cause delays. There
can be no assurance that all necessary permits will be obtained and, if
obtained, that the time and costs involved will not exceed our estimates or that
we will be able to maintain such permits as a result of, among other things,
conditions imposed or legal challenges. To the extent such approvals are
required and not obtained or maintained, our operations may be curtailed or we
may be prohibited from proceeding with planned exploration, development, or
operation of mineral properties. As discussed above, in particular, the
development of our Rosemont project is contingent on receiving key permits and
successfully resolving legal challenges, among other things.

HUMAN RESOURCES

The success of our operations and development projects depend
in part on our ability to attract and retain geologists, engineers,
metallurgists and other personnel with specialized skill and knowledge about the
mining industry in the geographic areas in which we operate. The success of our
operations in Snow Lake, Manitoba and southern Peru, in particular, depend in
part on our ability to attract new skilled personnel to work for us in these
geographic areas.

We also are dependent on a number of key management and
operating personnel, and our success will depend in large part on the efforts of
these individuals and our ability to retain them. We do not have any key person
insurance on any of these individuals.

There can be no assurance that our business will not suffer
from a work stoppage at any location where we operate. The collective agreements
that we have with our employees at our Flin Flon and Snow Lake operations expire
in December 2017 and there can be no assurance that we will be able to
successfully negotiate new collective agreements.As is typical with
large Peruvian mining operations following startup, some of the employees at
Constancia have formed a labour union and we recently entered into a collective
agreement with these employees to cover a one year period from November 2016 to
November 2017. There can be no assurance that we will be able to successfully
negotiate an extension to this agreement. From time to time we may temporarily
suspend or close certain of our operations and we may incur significant labour
and severance costs as a result of a suspension or closure. Further, temporary
suspensions and closures may adversely affect our future access to skilled
labour, as employees who are laid off may seek employment elsewhere.

ANTI-BRIBERY LEGISLATION

We are subject to the U.S. Foreign Corrupt Practices Act
(FCPA), which prohibits corporations and individuals from paying,
offering to pay, or authorizing the payment of anything of value to any foreign
government official, government staff member, political party, or political
candidate in an attempt to obtain or retain business or to otherwise influence a
person working in an official capacity. The FCPA also requires public companies
to make and keep books and records that accurately and fairly reflect their
transactions and to devise and maintain an adequate system of internal
accounting controls. We are also subject to Canadas Corruption of Foreign
Public Officials Act (CFPOA), which prohibits corporations and
individuals from giving or offering to give a benefit of any kind to a foreign
public official, or any other person for the benefit of the foreign public
official, where the ultimate purpose is to obtain or retain a business
advantage.

Our international activities, including our Constancia mine and
exploration activities elsewhere in South America, create the risk of
unauthorized payments or offers of payments by our employees, consultants or
agents to foreign persons. While we have implemented safeguards that are
intended to prevent these practices, our existing safeguards and any future
improvements to such safeguards may not be completely effective, and our
employees, consultants or agents may engage in conduct for which we might be
held responsible. Any failure to comply with the FCPA, the CFPOA and applicable
laws and regulations in foreign jurisdictions could result in substantial
penalties or restrictions on our ability to conduct business in certain foreign jurisdictions, which may have a material
adverse impact on us and our share price.

ANNUAL INFORMATION FORM |31

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ENERGY PRICES AND AVAILABILITY

Our mining operations and facilities are intensive users of
electricity and carbon based fuels. Energy prices can be affected by numerous
factors beyond our control, including global and regional supply and demand,
political and economic conditions, and applicable regulatory regimes. The prices
of various sources of energy we rely on may increase significantly from current
levels and any carbon-based energy we use may become subject to a carbon tax;
any such significant increase or punitive tax could have an adverse effect on
our profitability.

TRANSPORTATION AND INFRASTRUCTURE

At our mines in northern Manitoba and Saskatchewan, we are
dependent upon a single railway and certain short-line rail networks to
transport products from the Flin Flon metallurgical complex for further
processing or to our customers. In addition, concentrate production from the
Constancia mine must travel approximately 450 kilometres by road to the Port of
Matarani. The method and route of transportation of Constancia concentrates give
rise to a number of risks, including road safety and community and environmental
risks. We may have similar dependencies at future mining and processing
operations. Inability to secure reliable and cost-effective transportation and
other infrastructure, or disruption of these services due to community or
political protests, weather-related problems, strikes, lock-outs or other events
could have a material adverse effect on our operations. If transportation for
our products is or becomes unavailable, our ability to market our products could
suffer. In addition, increases in our transportation costs, relative to those of
our competitors, could make our operations less competitive and could adversely
affect our profitability.

COMPETITION

The mining industry is intensely competitive and we compete
with many companies possessing greater financial and technical resources than
us. Since mines have a limited life, we must compete with others who seek
mineral reserves for attractive, high quality mining assets. In addition, we
also compete for the technical expertise to find, develop, and operate such
properties, the labour to operate the properties and the capital for the purpose
of funding such properties. Existing or future competition in the mining
industry could materially adversely affect our prospects for mineral exploration
and success in the future.

MINERAL RESOURCE AND RESERVE ESTIMATES

There are numerous uncertainties inherent in estimating mineral
reserves and mineral resources and the future cash flows that might be derived
from their production. Estimates of mineral reserves and mineral resources, and
future cash flows necessarily depend upon a number of variable factors and
assumptions, including, among other things, ability to achieve anticipated
tonnages and grade, geological and mining conditions that may not be fully
identified by available exploration data or that may differ from experience in
current operations, historical production from the area compared with production
from other producing areas, the assumed effects of regulation by governmental
agencies and assumptions concerning metals prices, exchange rates, interest
rates, inflation, operating costs, development and maintenance costs,
reclamation costs, and the availability and cost of labour, equipment, raw
materials and other services required to mine and refine the ore. In addition,
there can be no assurance that mineral recoveries in small scale laboratory
tests will be duplicated in larger scale tests under on-site conditions or
during production. For these reasons, estimates of our mineral reserves and
mineral resources in our public disclosure, and any estimates of future cash
flows may vary substantially from our actual results.

RECLAMATION AND MINE CLOSURE COSTS

The ultimate timing of, and costs for, future removal and site
restoration could differ from current estimates. Our estimates for this future
liability are subject to change based on amendments to applicable laws and
legislation, the nature of ongoing operations and technological innovations. In
addition, regulatory authorities in various jurisdictions require us to post
financial assurances to secure, in whole or in part, future reclamation and
restoration obligations in such jurisdictions. Changes to the amounts required,
as well as the nature of the collateral to be provided, could significantly
increase our costs, making the maintenance and development of existing and new
mines less economically feasible, and any capital resources we utilize for this
purpose will reduce the resources available for our other operations and
commitments. Although we accrue for future closure costs, we do not necessarily
reserve cash in respect of these obligations or otherwise fund these obligations
in advance. As a result, we will have significant cash costs when we are
required to close and restore mine sites, including our 777 mine and Flin Flon
operations.

ANNUAL INFORMATION FORM |32

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POST-RETIREMENT OBLIGATIONS

We have assets in defined benefit pension plans which
accumulate through employer contributions and returns on investments made by the
plans. The returns on investments are subject to fluctuations depending upon
market conditions and we are responsible for funding any shortfall of pension
assets compared to our pension obligations under these plans. Our liabilities
under defined benefit pension plans are estimated based on actuarial and other
assumptions. These assumptions may prove to be incorrect and may change over
time and the effect of these changes can be material. We also have substantial
commitments for post- retirement health and other benefits for which no specific
funding arrangements are in place.

CREDIT RISK

We mitigate credit risk relating to customers of our copper,
zinc and precious metals by carrying out credit evaluations on our customers,
making a significant portion of sales on a cash basis and maintaining insurance
on trade receivables. If customers default on the credit extended to them and
our loss is not covered by insurance, results of operations could be materially
adversely affected. Further, we may enter into offsetting derivative contracts
for which we do not obtain collateral or other security. In the event of
non-performance by counterparties in connection with such derivative contracts,
we are further exposed to credit risk.

INSURANCE

Our insurance will not cover all the potential risks associated
with our operations. In addition, although certain risks are insurable, we may
be unable to maintain insurance to cover these risks at economically feasible
premiums. Insurance against risks such as environmental pollution or other
hazards as a result of exploration and production is not generally available to
us on acceptable terms. Losses from uninsured events may cause us to incur
significant costs.

INFORMATION TECHNOLOGY SYSTEMS

Our operations depend, in part, on information technology
(IT) systems. Our IT systems are subject to disruption, failure or
damage from a number of threats, including, but not limited to, security
breaches, computer viruses, cable cuts, natural disasters, terrorism, power
loss, vandalism and theft. Although to date we have not experienced any material
losses relating to IT system disruptions, failure or damage, cyber attacks or
other information security breaches, there can be no assurance that we will not
incur such losses in the future. Any of these and other events could result in
IT system failures, operational delays, production downtimes, security breaches,
destruction or corruption of data or other improper use of our IT systems and
networks, any of which could have an adverse effect on our reputation, results
of operations and financial performance. Our exposure to these risks cannot be
fully mitigated because of, among other things, the evolving nature of these
threats; as such threats continue to evolve, we may be required to expend
additional resources to continue to change or improve protective measures and to
investigate and remediate any security vulnerabilities.

ANNUAL INFORMATION FORM |33

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DIVIDEND PAYMENTS

The Senior Unsecured Notes impose certain restrictions on our
ability to make restricted payments, including common dividends. Our ability to
make future dividend payments will be subject to compliance with the covenants
contained in our debt agreements along with other liquidity considerations. At
all times, the declaration of dividends is subject to the discretion of our
board of directors.

MARKET PRICE OF COMMON SHARES

Our share price may be significantly affected by changes in
commodity prices or in our financial condition or results of operations. Other
factors unrelated to our performance that may have an effect on the price of our
common shares include a lessening in trading volume and general market interest
in our securities and the size of our public float. As a result of any of these
factors, the market price of our common shares may fall and otherwise may not
accurately reflect our long-term value. Securities class action litigation has
been brought against companies following periods of volatility in the market
price of their securities and issuers listed on U.S. stock exchanges (as we
are), in particular, have been subject to increasing shareholder litigation. We
may in the future be the target of similar litigation.

PASSIVE FOREIGN INVESTMENT COMPANY UNDER THE U.S. INTERNAL
REVENUE CODE

We do not believe we are a passive foreign investment company
under Section 1297(a) of the U.S. Internal Revenue Code (PFIC) for the
current taxable year. If we derive 75% or more of our gross income from certain
types of passive income (such as rents, royalties, interest, dividends, and
other similar types of income), or if the quarterly average value during a
taxable year of our passive assets (generally, assets that generate passive
income) is 50% or more of the average value of all assets held by us, then the
PFIC rules may apply to U.S. taxpayers that hold our common shares (regardless
of the extent of their ownership interest in us). Several look-through rules
apply in determining PFIC status, including that a 25% or more owned subsidiary
corporations income and assets will be deemed those of its parent for purposes
of the PFIC rules. Thus, a sufficiently active subsidiary may allow a parent
corporation to avoid PFIC status, depending on the circumstances. Whether we are
considered a PFIC for a specific taxable year is a factual determination that
must be made annually at the end of that taxable year. As a result, our status
in the current and future years will depend on the composition our gross income,
our assets and activities in those years and our market capitalization as
determined on the end of each calendar quarter, and there can be no assurance
that we will or will not be considered a PFIC for any taxable year.

If we are classified as a PFIC during any portion of a U.S.
taxpayers holding period for our common shares, as determined for U.S. federal
income tax purposes, such taxpayer would be subject to adverse U.S. federal
income tax consequences under the PFIC rules. In such case (except as discussed
below), any excess distribution (generally a distribution in excess of 125% of
the average distribution over a three- year period or shorter holding period for
our common shares) and realized gain on the sale, exchange or other disposition
of our common shares will be treated as ordinary income and generally will be
subject to tax as if (a) the excess distribution or gain had been realized
rateably over the U.S. taxpayers holding period, (b) the amount deemed realized
in each year had been subject to tax in each such year at the highest marginal
rate for such year (other than income allocated to the current period or any
taxable period before we became a PFIC, which would generally be subject to tax
at the U.S. taxpayers regular ordinary income rate for the current year and
would not be subject to the interest charge discussed in (c) below), and (c) the
interest charge generally applicable to underpayments of tax had been imposed on
the taxes deemed to have been payable in those years. Where a company that is a
PFIC meets certain reporting requirements, a U.S. taxpayer may be able to
mitigate certain adverse PFIC consequences described above by making a
qualified electing fund (QEF) election to be taxed currently on its
proportionate share of the PFICs ordinary income and net capital gains. If we
determine that we are a PFIC for any taxable year, we will determine at that
time whether we will comply with the necessary accounting and record keeping
requirements that would allow a U.S. taxpayer to make a QEF election with
respect to us. We have no obligation to determine whether we are a PFIC and may
not make any such determination.

ANNUAL INFORMATION FORM |34

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GROWTH STRATEGY

We evaluate growth opportunities and continue to consider the
acquisition and disposition of exploration and development properties and
mineral assets to achieve our strategy. We, from time to time, engage in
discussions in respect of both acquisitions and dispositions, and other business
opportunities, but there can be no assurance that any such discussions will
result in a successfully completed transaction.

FLUCTUATIONS IN THE VALUE OF EQUITY INVESTMENTS

We are exposed to market risk from the share prices of our
equity investments in listed junior exploration companies. These investments are
made to foster strategic relationships, in connection with joint venture
agreements and for investment purposes. The share prices of these equity
investments may be significantly affected by short-term changes in capital
markets, commodity prices or in their financial condition or results of their
operations, and as a result, will affect the value of our investments.

|DESCRIPTION OF CAPITAL STRUCTURE
|--------------------------------
|                                

COMMON SHARES

We are authorized to issue an unlimited number of common
shares, of which there were 237,271,188 common shares issued and outstanding as
of March 29, 2017.

Holders of common shares are entitled to receive notice of any
meetings of our shareholders, to attend and to cast one vote per common share at
all such meetings. Holders of common shares do not have cumulative voting rights
with respect to the election of directors and, accordingly, holders of a
majority of the common shares entitled to vote in any election of directors may
elect all directors standing for election. Holders of common shares are entitled
to receive, on a pro-rata basis, such dividends, if any, as and when declared by
our board of directors at its discretion from funds legally available therefor.
Upon our liquidation, dissolution or winding up, holders of common shares are
entitled to receive, on a pro-rata basis, our net assets after payment of debts
and other liabilities, in each case, subject to the rights, privileges,
restrictions and conditions attaching to any other series or class of shares
ranking senior in priority to or on a pro-rata basis with the holders of common
shares with respect to dividends or liquidation. The common shares do not carry
any pre-emptive, subscription, redemption or conversion rights, nor do they
contain any sinking or purchase fund provisions.

OPTIONS AND WARRANTS

As of December 31, 2016, we have outstanding obligations to
issue up to 23,861,867 common shares, as follows:

| | Hudbay warrants to acquire an aggregate of 22,391,490
      common shares of Hudbay were outstanding, which are governed by our
      Warrant Indenture dated as of July 15, 2014 with Equity Financial Trust
      Company. The Hudbay warrants entitle the holders to acquire a common share
      of Hudbay at a price of C$15.00 per share on, but not prior to, July 20,
      2018. Hudbay may, at its option, upon written notice to the Hudbay warrant
      holders, settle the exercise of warrants for the in-the-money value, in
      cash, shares or a combination thereof; and
|- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| | options to acquire an aggregate of 1,470,377 common
      shares outstanding, with a weighted average exercise price of C$19.24.                                                                                                                                                                                                                                                                                                                                                                                                                                                             

ANNUAL INFORMATION FORM |35

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PREFERENCE SHARES

We are authorized to issue an unlimited number of preference
shares, none of which were issued and outstanding as of the date of this AIF.
Preference shares may from time to time be issued and the directors may fix the
designation, rights, privileges, restrictions and conditions attaching to any
series of preference shares. Preference shares shall be entitled to preference
over the common shares and over any other of our shares ranking junior to the
preference shares with respect to the payment of dividends and the distribution
of assets or return of capital in the event of our liquidation, dissolution or
winding up or any other return of capital or distribution of our assets among
our shareholders for the purpose of winding up our affairs. Preference shares
may be convertible into common shares at such rate and upon such basis as the
directors in their discretion may determine. No holder of preference shares will
be entitled to receive notice of, attend, be represented at or vote at any
annual or special meeting, unless the meeting is convened to consider our
winding up, amalgamation or the sale of all or substantially all of our assets,
in which case each holder of preference shares will be entitled to one vote in
respect of each preference share held. Holders of preference shares will not be
entitled to vote or have rights of dissent in respect of any resolution to,
among other things, amend our articles to increase or decrease the maximum
number of authorized preference shares, increase or decrease the maximum number
of any class of shares having rights or privileges equal or superior to the
preference shares, exchange, reclassify or cancel preference shares, or create a
new class of shares equal to or superior to the preference shares.

SENIOR UNSECURED NOTES

On December 12, 2016, we issued $1.0 billion aggregate
principal amount of Senior Unsecured Notes, which are fully and unconditionally
guaranteed, jointly and severally, on a senior unsecured basis, by substantially
all of our existing and future subsidiaries other than our subsidiaries
associated with the Rosemont project.

The proceeds from this offering were used, among other things,
to redeem all $920 million of our Redeemed Notes.

The Senior Unsecured Notes contain certain customary covenants
and restrictions for a financing instrument of this type. Although there are no
maintenance covenants with respect to our financial performance, there are
transaction-based restrictive covenants that limit our ability to incur
additional indebtedness and make restricted payments in certain
circumstances.

At any time prior to July 15, 2019 (in the case of the 2023
Notes) or January 15, 2020 (in the case of the 2025 Notes), we may redeem the
Senior Unsecured Notes, in whole but not in part, at a redemption price equal to
100.00% of the aggregate principal amount of the Senior Unsecured Notes plus an
amount equal to the greater of (i) 1% of the principal amount of the Senior
Unsecured Notes to be redeemed and (ii) the excess, if any, of (a) the present
value as of the date of redemption of such Senior Unsecured Notes on July 15,
2019 (in the case of the 2023 Notes) or January 15, 2020 (in the case of the
2025 Notes) (as described below) plus required interest payments through July
15, 2019 (in the case of the 2023 Notes) or January 15, 2020 (in the case of the
2025 Notes) over (b) the then outstanding principal amount of such Senior
Unsecured Notes, plus, in either case, accrued and unpaid interest.

On or after July 15, 2019 (in the case of the 2023 Notes) or
January 15, 2020 (in the case of the 2025 Notes), we may redeem the Senior
Unsecured Notes, at our option in whole or in part, at the redemption prices
(expressed as percentages of the principal amount of such series of the Senior
Unsecured Notes to be redeemed) set forth below, plus accrued and unpaid
interest, if redeemed during the twelve-month period beginning on July 15 (in
the case of the 2023 Notes) or January 15 (in the case of the 2025 Notes) of
each of the years indicated below:

ANNUAL INFORMATION FORM |36

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|2023 Notes          |            | 2025 Notes          |           
|------------------- | ---------- | ------------------- | ----------
|Year                | Percentage | Year                | Percentage
|2019                | 103.625%   | 2020                | 105.719%  
|2020                | 101.813%   | 2021                | 103.813%  
|2021 and thereafter | 100.000%   | 2022                | 101.906%  
|                    |            | 2023 and thereafter | 100.000%  

CREDIT RATINGS

The following table sets out the credit ratings we received
from Standard and Poors Ratings Services (S&P) on October 28 and
November 28, 2016 and Moodys Investors Services (Moodys) on August 19
and November 28, 2016.

|                        | Credit
  Rating Organization
|----------------------- | ----------------------------
|                        | S&P                         
|Corporate Credit Rating | B                           
|Senior Unsecured Notes  | B                           

On October 28, 2016, S&P raised its long-term corporate
credit rating to B from B-. On November 28, 2016, S&P assigned a B
issue-level rating and a 3 recovery rating to the Senior Unsecured Notes,
reaffirmed its long-term corporate credit rating of B. S&Ps outlook on us
is stable.

S&Ps credit ratings are on a rating scale that ranges from
AAA (highest quality) to D (lowest quality). The ratings from AA to CCC may
be modified by the addition of a plus (+) or minus (-) sign to show relative
standing within the major rating categories. According to S&Ps rating
system, an obligor rated B currently has the capacity to meet its financial
commitments, but adverse business, financial, or economic conditions will likely
impair the obligors capacity or willingness to meet its financial commitments.
A B rating is the sixth highest of ten categories in S&Ps rating system.

S&Ps issuer credit ratings are based, in varying degrees,
on its analysis of the following considerations: (i) likelihood of payment; (ii)
nature of and provisions of the obligation; and (iii) protection afforded by,
and relative position of, the obligation in the event of bankruptcy. S&Ps
recovery ratings focus solely on expected recovery in the event of a payment
default of a specific issue, and utilize a numerical scale that runs from 1+ to
6. The recovery rating is not linked to, or limited by, the issuer credit rating
or any other rating, and provides a specific opinion about the expected
recovery. A 3 recovery rating indicates S&Ps expectations of meaningful
(50%-70%) recovery in the event of default.

S&Ps issuer credit rating is a forward-looking opinion
about an obligors overall creditworthiness in order to pay its financial
obligations. This opinion focuses on the obligors capacity and willingness to
meet its financial commitments as they come due. It does not apply to any
specific financial obligation.

On August 19, 2016, Moodys upgraded our corporate family
rating to B2 from B3, its speculative grade liquidity rating to SGL-2 from
SGL-3, its probability of default rating to B2-PD from B3-PD and its
outlook on us to stable from negative. On November 28, 2016, Moodys assigned a
B3 rating to our the Senior Unsecured Notes and reaffirmed its corporate
family rating of B2, speculative grade liquidity rating of SGL-2 and
probability of default rating of B2-PD.

Moodys credit ratings are on a rating scale that ranges from
Aaa (highest quality) to C (lowest quality). Moodys appends numerical modifiers
1, 2, and 3 to each generic rating classification from Aa through Caa. The
modifier 1 indicates that the obligation ranks in the higher end of its generic
rating category; the modifier 2 indicates a mid-range ranking; and the modifier
3 indicates a ranking in the lower end of that generic rating category. Moodys speculative grade liquidity
ratings are on a rating scale that ranges from SGL-1 (best liquidity) to SGL-4
(weakest liquidity).

ANNUAL INFORMATION FORM |37

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According to Moodys credit rating system, obligations rated
B are considered speculative and are subject to high credit risk. A B rating
is the sixth highest of nine categories in Moodys rating system.

According to Moodys speculative grade liquidity rating system,
an issuer with an SGL-2 rating possesses good liquidity and is likely to meet
its obligations over the coming 12 months through internal resources but may
rely on external sources of committed financing. According to the system, the
issuers ability to access committed sources of financing is highly likely based
on Moodys evaluation of near-term covenant compliance.

Moodys corporate family ratings are long-term ratings that
reflect the likelihood of a default on a corporate familys contractually
promised payments and the expected financial loss suffered in the event of
default. A corporate family rating is assigned to a corporate family as if it
had a single class of debt and a single consolidated legal entity structure. A
probability of default rating is a corporate family-level opinion of the
relative likelihood that any entity within a corporate family will default on
one or more of its long-term debt obligations.

Moodys long-term ratings are assigned to issuers or
obligations with an original maturity of one year or more and reflect both on
the likelihood of a default on contractually promised payments and the expected
financial loss suffered in the event of default.

Moodys speculative grade liquidity ratings are opinions of an
issuers relative ability to generate cash from internal resources and the
availability of external sources of committed financing, in relation to its cash
obligations over the coming 12 months.

The credit ratings and stability ratings we received from
S&P and Moodys are not a recommendation to buy, sell or hold our securities
and may be subject to revision or withdrawal at any time by either such credit
rating organization. S&P and Moodys each charged us a fee in respect of the
credit ratings service they provided.

|DIVIDENDS
|---------
|         

Since September 2013, we have paid a semi-annual dividend in
March and September at C$0.01 per share. On February 22, 2017, our board of
directors approved the payment of a dividend of C$0.01 per common share payable
on March 31, 2017 to shareholders of record on March 10, 2017. At all times, the
declaration of dividends is subject to the discretion of our board of directors.

|MARKET FOR SECURITIES
|---------------------
|                     

PRICE RANGE AND TRADING VOLUME

Our common shares are listed on the TSX and the NYSE under the
symbol HBM. The volume of trading and the high and low trading price of our
common shares on the TSX and NYSE during the periods indicated are set forth in
the following table.

ANNUAL INFORMATION FORM |38

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|Trading of
      Common Shares on TSX | Trading
  of Common Shares on NYSE
|------------------------------------- | ----------------------------------
|Period                                | High                              
|(2016)                                | (C$)                              
|                                      |                                   
|January                               | 5.70                              
|February                              | 4.06                              
|March                                 | 5.94                              
|April                                 | 6.63                              
|May                                   | 6.42                              
|June                                  | 6.81                              
|July                                  | 7.25                              
|August                                | 6.63                              
|September                             | 5.59                              
|October                               | 5.65                              
|November                              | 9.75                              
|December                              | 9.73                              

On March 29, 2017, the closing prices of our common shares on
the TSX and NYSE were C$9.29and $7.00per common share,
respectively.

Our warrants are listed on the TSX and the NYSE under the
symbols HBM.WT and HBM/WS, respectively. The volume of trading and the high
and low trading price of our warrants on the TSX and NYSE during the periods
indicated are set forth in the following table.

|Trading of Warrants
      on TSX | Trading
  of Warrants on NYSE
|-------------------------------- | -----------------------------
|Period (2016)                    | **High (C$)**                
|January                          | 0.32                         
|February                         | 0.29                         
|March                            | 0.46                         
|April                            | 0.46                         
|May                              | 0.36                         
|June                             | 0.41                         
|July                             | 0.42                         
|August                           | 0.37                         
|September                        | 0.27                         
|October                          | 0.21                         
|November                         | 0.75                         
|December                         | 0.76                         

On March 29, 2017, the closing prices of our warrants on the
TSX and NYSE were C$0.70 and $0.47 per warrant, respectively.

ANNUAL INFORMATION FORM |39

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|DIRECTORS AND OFFICERS
|----------------------
|                      

BOARD OF DIRECTORS

|Igor Gonzales        | Director since: July 31, 2013   | Mr. Gonzales has more than 30 years of experience in the
      mining industry. He joined Compañia de Minas Buenaventura S.A.A. in
      November 2014 as Vice President of Operations. Mr. Gonzales was with
      Barrick Gold Corporation from 1998 to 2013, most recently as Executive
      Vice President and Chief Operating Officer. Between 1980 and 1996, Mr.
      Gonzales served in various roles with Southern Peru Copper Corporation.
|-------------------- | ------------------------------- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Lima, Peru           | Committee memberships:         
|                     |                                | Environmental, Health,                                                                                                                                                                                                                                                                                                                                                                                                                               
|                     |                                 | Safety and
      Sustainability                                                                                                                                                                                                                                                                                                                                                                                                                      
|                     |                                 | (EHSS) Committee                                                                                                                                                                                                                                                                                                                                                                                                                                   
|                     |                                | Technical Committee                                                                                                                                                                                                                                                                                                                                                                                                                                  
|                     |                                 |                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|Tom A. Goodman       | Director since: June 14, 2012   | Mr. Goodman worked for Hudbay for over 34 years in a wide
      variety of operational, technical and management positions, including his
      last two years as Senior Vice President and Chief Operating Officer. He
      retired as an executive officer effective June 1, 2012.                                                                                                                                                                
|Denare Beach,        | Committee memberships:         
|Saskatchewan, Canada |                                | EHSS Committee (Chair)                                                                                                                                                                                                                                                                                                                                                                                                                               
|                     |                                | Audit
      Committee                                                                                                                                                                                                                                                                                                                                                                                                                                
|                     |                                 |                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|Alan Hair            | Director since: January 1, 2016 | Mr. Hair has been Hudbays President and Chief Executive
      Officer since January 2016. Previously, he served as Hudbays Senior Vice
      President and Chief Operating Officer from 2012 to 2015 and he has held a
      number of senior leadership roles in business development and operations
      at Hudbay since 1996.                                                                                                                  
|Toronto, Ontario,    |                                 |                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|Canada               |                                 |                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|                     |                                 |                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|Alan R. Hibben       | Director since: March 23, 2009  | Mr. Hibben has held several senior
      positions with RBC Capital Markets, including most recently as Managing
      Director, which he held until his retirement in December 2014. He is
      currently the principal of Shakerhill Partners Ltd. which provides advice
      on restructurings, capital markets transactions, and corporate strategy.
      He also provides expert witness services. He is also a corporate director.          
|Toronto, Ontario,    | Committee memberships:         
|Canada               |                                | Compensation Committee                                                                                                                                                                                                                                                                                                                                                                                                                               
|                     |                                 | (Chair)                                                                                                                                                                                                                                                                                                                                                                                                                                              
|                     |                                | Corporate Governance and                                                                                                                                                                                                                                                                                                                                                                                                                             
|                     |                                 | Nominating Committee                                                                                                                                                                                                                                                                                                                                                                                                                                 
|                     |                                 |                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|W. Warren Holmes     | Director since: March 23, 2009  | Mr. Holmes is Hudbays Chairman and was Hudbays
      Executive Vice Chairman from November 2009 to July 2010 and its Interim
      Chief Executive Officer from January 2010 to July 2010. He has over 40
      years of mining industry experience. During that time, Mr. Holmes held
      senior positions with Noranda Inc. and Falconbridge Ltd. He is now a
      corporate director.                                                        
|Stratford, Ontario,  | Committee memberships:         
|Canada               |                                | Corporate Governance and                                                                                                                                                                                                                                                                                                                                                                                                                             
|                     |                                 | Nominating
      Committee                                                                                                                                                                                                                                                                                                                                                                                                                           
|                     |                                 | (Chair)                                                                                                                                                                                                                                                                                                                                                                                                                                              
|                     |                                 |                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|Sarah B. Kavanagh    | Director since: July 31, 2013   | Ms. Kavanagh is a corporate director and a former
      Commissioner at the Ontario Securities Commission, where she served from
      June 2011 through May 2016. Between 1999 and 2010, Ms. Kavanagh served in
      a number of senior investment banking roles at Scotia Capital Inc. She has
      also held senior financial positions in the corporate sector.                                                                                
|Toronto, Ontario,    | Committee memberships:         
|Canada               |                                | Audit Committee (Chair)                                                                                                                                                                                                                                                                                                                                                                                                                              
|                     |                                | Corporate Governance and                                                                                                                                                                                                                                                                                                                                                                                                                             
|                     |                                 | Nominating Committee                                                                                                                                                                                                                                                                                                                                                                                                                                 
|                     |                                 |                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|Carin S. Knickel     | Director since: May 22, 2015    | Ms. Knickel served as Corporate Vice President, Global
      Human Resources of ConocoPhillips from 2003 until her retirement in May
      2012. She joined ConocoPhillips in 1979 and held various senior operating,
      planning and business development positions throughout her career in the
      U.S. and Europe.                                                                                                                          
|Golden, Colorado,    | Committee memberships:         
|United States        |                                | Compensation Committee                                                                                                                                                                                                                                                                                                                                                                                                                               
|                     |                                | EHSS
      Committee                                                                                                                                                                                                                                                                                                                                                                                                                                 

ANNUAL INFORMATION FORM |40

---



|Alan J. Lenczner      | Director since: March 23, 2009 | Mr. Lenczner has been a commercial litigator for over 40
      years. He is Founding Partner and now Counsel at Lenczner Slaght Royce
      Smith Griffin LLP, a litigation- focused law firm. He is also a former
      Commissioner of the Ontario Securities Commission.                                                                                                                                                                                                      
|--------------------- | ------------------------------ | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Toronto, Ontario,     | Committee memberships:        
|Canada                |                               | Audit Committee                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|                      |                               | Compensation Committee                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|                      |                                |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|                      |                                |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|Kenneth G. Stowe      | Director since: June 24, 2010  | Mr. Stowe was Chief Executive Officer of Northgate
      Minerals Corporation from 2001 until his retirement in 2011. He spent the
      first 21 years of his career with Noranda Inc. in various operational,
      research and development, and corporate roles. He is currently a corporate
      director.                                                                                                                                                                 
|Oakville, Ontario,    | Committee memberships:        
|Canada                |                               | Technical Committee (Chair)                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|                      |                               | EHSS Committee                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|                      |                                |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|                      |                                |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|Michael T. **Waites** | Director since: May 8, 2014    | Mr. Waites is the former President and Chief Executive
      Officer of Finning International Inc. He retired from Finning in June 2013
      after serving as President and Chief Executive Officer for five years.
      Prior to that, Mr. Waites was Executive Vice President and Chief Financial
      Officer of Finning. He has also held senior positions with Canadian
      Pacific Railway and Chevron Canada Resources. Mr. Waites is now a
      corporate director.
|Vancouver, *British*  | Committee memberships:        
|Columbia, Canada      |                               | Audit Committee                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|                      |                               | Technical Committee                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|                      |                                |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  

ANNUAL INFORMATION FORM |41

---



The term of office for each director of the Company will expire
upon the completion of the next annual meeting of shareholders of the Company.
Our executive officers as at the date of this AIF are listed below.

EXECUTIVE OFFICERS

Alan Hair Toronto, Ontario, Canada
      President and Chief Executive Officer
    For biographical information for Mr. Hair, refer above to
      the heading Board of Directors.David S. Bryson Toronto, Ontario, Canada
      Senior Vice President and Chief Financial Officer
    Mr. Bryson has been with Hudbay since August 2008. Mr.
      Bryson held senior finance positions with Skye Resources Inc. from March
      2007 to August 2008 and prior to that worked for Terasen Inc., a
      Vancouver-based energy infrastructure firm, in various finance roles for
      16 years.Cashel Meagher Toronto, Ontario, Canada
      Senior Vice President and Chief Operating Officer
    Prior to being appointed to his current role in January
      2016, Mr. Meagher was Vice President, South America Business Unit and
      oversaw the development of the Constancia mine. Prior to joining Hudbay in
      2008, Mr. Meagher held management positions with Vale Inco in exploration,
      technical services, business analysis and mine operations.Eugene Lei Toronto, Ontario, Canada
      Senior Vice President, Corporate Development and Strategy
    Mr. Lei joined Hudbay in September 2012, after 11 years
      as an investment banker. Prior to joining Hudbay, Mr. Lei was Managing
      Director, Mining at Macquarie Capital Markets Canada, working as an
      advisor on global and domestic mergers and acquisitions and equity capital
      markets offerings. Prior to being appointed to his current role in January
      2017, Mr. Lei was Vice President, Corporate Development.Eric Caba Lima, Peru Vice
      President, South America Business Unit
    Prior to being appointed to his current role in January
      2016, Mr. Caba was Director of Operations for the South America Business
      Unit. From 2001 to 2005, Mr. Caba worked as an Operations Manager at
      Hudbays Manitoba Business Unit. Mr. Caba was the Area Operations Manager
      for Carmeuse Lime Ltd. from 2009 to 2013, and on rejoining Hudbay in 2013,
      assumed the role of Operational Readiness Manager for Constancia.David Clarry Toronto, Ontario, Canada
      Vice President, Corporate Social Responsibility
    Mr. Clarry joined Hudbay in February 2011. From June 2009
      to January 2011 he worked through his own firm, Innotain Inc., providing
      consulting services to the mining and energy industries. Prior to that he
      spent 18 years with Hatch Ltd., an international engineering and
      consulting firm, ultimately as Director  Climate Change Initiatives.Patrick Donnelly Oakville, Ontario,
      Canada Vice President and General Counsel
    Prior to being appointed to his current role in July
      2014, Mr. Donnelly was Vice President, Legal and Corporate Secretary for
      over three years. Prior to joining Hudbay in 2008, Mr. Donnelly practiced
      corporate and securities law at Osler, Hoskin & Harcourt LLP.Jon Douglas Toronto, Ontario, Canada
      Vice President, Treasurer
    Mr. Douglas joined Hudbay in January 2015. Prior to
      joining Hudbay, he was Chief Financial Officer of Barrick Gold
      Corporations global copper business unit. Prior to that he was Senior
      Vice President and Chief Financial Officer of Northgate Minerals
      Corporation for over ten years.


ANNUAL INFORMATION FORM | 42

---



Elizabeth Gitajn Toronto, Ontario, Canada
      Vice President, Risk Management
    Ms. Gitajn joined Hudbay in March 2015, prior to which
      she was the Corporate Controller for IAMGOLD Corporation since June 2012.
      From October 2007 to June 2012, she held various management positions
      within Barrick Gold Corporation in the finance areas of risk management,
      financial reporting and planning. Ms. Gitajn also spent 14 years in public
      accounting in the United States, nine of which were with Arthur Andersen
      LLP.Andre Lauzon Sudbury, Ontario, Canada
      Vice President, Manitoba Business Unit
    Mr. Lauzon joined Hudbay in August 2016. Prior to joining
      Hudbay, he held senior positions with Vale Inco in research and
      development, technical services and mine operations. Mr. Lauzon has direct
      leadership experience as a mine manager, acting general manager and
      director of technical services.Terry Linde Phoenix, Arizona, United
      States Vice President, Project and Technical Services
    Prior to being appointed to his current role in July
      2015, Mr. Linde was the Director of Projects in the South America Business
      Unit, where he led the successful engineering and construction of the
      Constancia mine. Prior to joining Hudbay in 2011, Mr. Linde was Director
      of Projects for North and South America for Freeport McMoRan and Vice
      President of Engineering and Project Development for Marcobre S.A.C. in
      Peru.Patrick Merrin Tucson, Arizona, United
      States Vice President, Arizona Business Unit
    Mr. Merrin was appointed to his current role in July
      2014. He was previously Vice President, Business Development and Technical
      Services. Prior to rejoining Hudbay in 2012, he gained experience in a
      variety of mining and metals environments, including as Chief Operating
      Officer of Adex Mining from September 2011 to July 2012, owner of PJM
      Consulting, a consulting firm for the mining industry, from December 2010
      to September 2011, and Managing Director of Lucas Milhaupt Europe from
      July 2007 to July 2010.Mary-Lynn Oke Toronto, Ontario, Canada
      Vice President, Finance
    Ms. Oke has been Vice President, Finance since July 2013
      and she is also Chief Financial Officer, Manitoba Business Unit. Prior to
      this appointment, she was Director, Tax & Treasury. Before joining
      Hudbay in 2007, Ms. Oke worked at Ernst & Young, LLP in various roles
      for 10 years.


As of March 29, 2017, our directors and executive officers, as
a group, beneficially owned, directly or indirectly, or exercised control or
direction over, 501,431 common shares, representing less than 1% of the total
number of common shares outstanding.

CORPORATE CEASE TRADE ORDERS, BANKRUPTCIES, PENALTIES AND
SANCTIONS

Mr. Holmes was a director of Campbell Resources Inc.
(Campbell) from 2006 to 2008. Mr. Holmes joined Campbell as a director
while it was already under the protection of the Companies Creditors
Arrangement Act (Canada) (the CCAA). Mr. Holmes resigned from the board
of directors of Campbell in November 2008. On January 28, 2009, Campbell once
again obtained creditor protection under the CCAA. On December 10, 2009, a
receiver was appointed over Campbells assets with power to solicit offers for
the sale of the assets.

Mr. Holmes was a director of Ferrinov Inc. (Ferrinov),
a private technology company, from December 2008 to July 2012. In July 2012,
Ferrinov filed for bankruptcy and was declared bankrupt under the Bankruptcy and
Insolvency Act.

ANNUAL INFORMATION FORM |43

---



CONFLICTS OF INTEREST

To the best of our knowledge, there are no known existing or
potential conflicts of interest among or between us, our subsidiaries, our
directors, officers or other members of management, as a result of their outside
business interests, except that certain of our directors, officers, and other
members of management serve as directors, officers, promoters and members of
management of other entities and it is possible that a conflict may arise
between their duties as a director, officer or member of management of Hudbay
and their duties as a director, officer, promoter or member of management of
such other entities.

Our directors and officers are aware of the existence of laws
governing accountability of directors and officers for corporate opportunity and
requiring disclosures by directors of conflicts of interest and we will rely
upon such laws in respect of any directors and officers conflicts of interest
or in respect of any breaches of duty by any of our directors or officers. All
such conflicts are required to be disclosed by such directors or officers in
accordance with the CBCA, and such individuals are expected to govern themselves
in respect thereof to the best of their ability in accordance with the
obligations imposed upon them by law. In addition, our Code of Business Conduct
and Ethics requires our directors and officers to act with honesty and integrity
and to avoid any relationship or activity that might create, or appear to
create, a conflict between their personal interests and our interests.

|AUDIT COMMITTEE DISCLOSURE
|--------------------------
|                          

The Audit Committee is responsible for monitoring our systems
and procedures for financial reporting and internal control, reviewing certain
public disclosure documents and monitoring the performance and independence of
our external auditors. The Audit Committee is also responsible for reviewing our
annual audited consolidated financial statements, unaudited consolidated
quarterly financial statements and managements discussion and analysis of
results of operations and financial condition for annual and interim periods
prior to their approval by the full board of directors. There was no instance in
2016 where our board of directors declined to adopt a recommendation of the
Audit Committee.

The Audit Committees charter sets out its responsibilities and
duties, qualifications for membership, procedures for committee appointment and
reporting to our board of directors. A copy of the current charter is attached
hereto as Schedule C.

COMPOSITION

As at December 31, 2016, the Audit Committee consisted of Sarah
B. Kavanagh (Chair), Tom A. Goodman, Alan J. Lenczner and Michael T. Waites.

Relevant Education and Experience

Each member of the Audit Committee is independent and
financially literate within the meaning of NI 52-110. Set out below is a
description of the education and experience of each Audit Committee member that
is relevant to the performance of his responsibilities as an Audit Committee
member.

Sarah B. Kavanagh is an independent trustee and member of the
Audit Committee at WPT Industrial Real Estate Investment Trust and a director
and member of the Audit Committee of Valeant Pharmaceuticals International, Inc.
Ms. Kavanagh is a director and Chair of the Audit Committee at American Stock
Transfer and Canadian Stock Transfer, a director and Chair of the Audit
Committee of Sustainable Development Technology Corporation and a director of
Canadian Tire Bank. She is also a former Commissioner at the Ontario Securities
Commission, where she served from June 2011 through May 2016. Between 1999 and
2010, Ms. Kavanagh served in a number of senior investment banking roles at
Scotia Capital Inc. She has also held senior financial positions in the
corporate sector. Ms. Kavanagh graduated from Harvard Business School with a
Masters in Business Administration and received a Bachelor of Arts degree in
Economics from Williams College in Williamstown, Massachusetts.

ANNUAL INFORMATION FORM |44

---



Tom A. Goodman worked for Hudbay for over 34 years in a wide
variety of operational, technical and management positions, including as Senior
Vice President and Chief Operating Officer, until his retirement in 2012. Mr.
Goodmans prior experience in Hudbays management has given him significant
expertise in the Companys operations, management systems and risk management
processes.

Alan J. Lenczner has been a commercial litigator for over 40
years. During that time he has represented accounting firms with respect to
accounting and auditing issues both in the Superior Court and before the
Institute of Chartered Accountants of Ontario. He is also a former Commissioner
at the Ontario Securities Commission.

Michael T. Waites is the former President and Chief Executive
Officer of Finning International Inc. He retired from Finning in June 2013 after
serving as President and Chief Executive Officer for five years. Prior to that,
Mr. Waites was Executive Vice President and Chief Financial Officer of Finning.
Mr. Waites is currently a director and member of the Audit Committees of Repsol
Oil & Gas Canada Inc. (formerly Talisman Energy Inc.) and Western Forest
Products Inc. He holds a Bachelor of Arts (Honours) in Economics from the
University of Calgary, a Master of Business Administration from Saint Marys
College of California, and a Masters of Arts, Graduate Studies in Economics from
the University of Calgary. He has also completed the Executive Program at The
University of Michigan Business School.

POLICY REGARDING NON-AUDIT SERVICES RENDERED BY AUDITORS

We have adopted a policy requiring Audit Committee pre-approval
of non-audit services. Specifically, the policy requires that proposals seeking
approval by the Audit Committee for routine and recurring non- audit services
describe the terms and conditions and fees for the services and include a
statement by the independent auditor and Chief Financial Officer that the
provision of those services could not be reasonably expected to compromise or
impair the auditors independence. The Audit Committee may pre- approve
non-audit services without the requirement to submit a specific proposal,
provided that any such pre-approval on a general basis shall be applicable for
twelve months. The Chair of the Audit Committee has been delegated authority to
pre-approve, on behalf of the Audit Committee, the provision of specific
non-audit services by the independent auditor where (a) it would be impractical
for the services to be provided by another firm; or (b) the estimated fees
associated with such services are not expected to exceed C$50,000. Any approvals
granted under this delegated authority are to be presented to the Audit
Committee at its next scheduled meeting.

REMUNERATION OF AUDITOR

The following table presents, by category, the fees billed by
Deloitte LLP as external auditor of, and for other services provided to, the
Company for the fiscal years ended December 31, 2016 and 2015.

|Category of Fees         | 2016        | 2015       
|------------------------ | ----------- | -----------
|Audit fees               | C$1,970,314 | C$1,765,133
|Audit-related
      fees | C$198,660   | C$106,300  
|Tax fees                 | -           | -          
|All other fees           | -           | -          
|Total                    | C$2,168,974 | C$1,871,433

Audit fees include fees for auditing annual financial
statements and reviewing the interim financial statements, as well as services
normally provided by the auditor in connection with our statutory and regulatory
filings. Audit-related fees are fees for assurance and related services that
are reasonably related to the performance of the audit or review of our
financial statements and are not reported under Audit fees, including
accounting advisory work, audit work related to our pension, benefit and profit
sharing plans, and work related to acquisitions and offerings as needed. All
other fees are fees for services other than those described in the foregoing
categories. Management presents regular updates to the Audit Committee of the
services rendered by the auditors as part of the Audit Committees oversight
regarding external auditor independence and pre-approved service authorizations.

ANNUAL INFORMATION FORM |45

---



|LEGAL PROCEEDINGS AND REGULATORY ACTIONS
|----------------------------------------
|                                        

LEGAL PROCEEDINGS

Hudbay is subject to three claims in the Ontario Superior Court
in connection with its previous ownership of the Fenix project in Guatemala
through its subsidiary at the time, Compañía Guatemalteca de Níquel S.A.
(CGN).

The first action was served in September 2010. The plaintiff,
Angelica Choc, asserts a claim of negligence against Hudbay and wrongful death,
among other claims, against CGN in connection with the death of her husband
Adolfo Ich Chaman on September 27, 2009. The plaintiff claims that the head of
CGN security shot and killed Mr. Chaman during a confrontation between members
of local communities who were unlawfully occupying CGN property and CGN
personnel. The aggregate amount of the claim is C$12 million.

In the second action, served in March 2011, eleven plaintiffs
claim that they were victims of sexual assault committed by CGN security and
members of the Guatemalan police and army during court ordered and state
implemented evictions in January 2007 (before the project was acquired by
Hudbay). These claims are asserted against Hudbay and its subsidiary at the time
HMI Nickel Inc. The aggregate amount of the claims is C$55 million.

The plaintiff in the third action, German Chub Choc, claims
that he was shot and permanently injured by the head of CGN security during the
same events that gave rise to the claim brought by Ms. Choc. This action was
served in October 2011. The aggregate amount of the claim is C$12 million.

We believe that all of the claims with respect to the Fenix
project are without merit.

We are not aware of any litigation outstanding, threatened or
pending against us as of the date hereof that would reasonably be expected to be
material to our financial condition or results of operations.

REGULATORY ACTIONS

We have not: (a) received any penalties or sanctions imposed
against us by a court relating to securities legislation or by a securities
regulatory authority during the financial year; (b) received any other penalties
or sanctions imposed by a court or regulatory body that would likely be
considered important to a reasonable investor in making an investment decision;
and (c) entered any settlement agreements with a court relating to securities
legislation or with a securities regulatory authority during the financial year.

|INTEREST OF MANAGEMENT AND OTHERS IN MATERIAL
      TRANSACTIONS
|----------------------------------------------------------------
|                                                                

Since January 1, 2014, none of our directors, executive
officers or 10% shareholders and no associate or affiliate of the foregoing
persons has or has had any material interest, direct or indirect, in any
transaction that has materially affected or is reasonably expected to materially
affect us.

ANNUAL INFORMATION FORM |46

---



|TRANSFER AGENT AND REGISTRAR
|----------------------------
|                            

The transfer agent and registrar for our common shares is TSX
Trust Company at its principal office in Toronto, Ontario.

ANNUAL INFORMATION FORM |47

---



|MATERIAL CONTRACTS
|------------------
|                  

Except for those contracts entered into in the ordinary course
of our business, the following are the material contracts we entered into (i)
within the last financial year or (ii) between January 1, 2002 and the beginning
of the last financial year, which are still in effect:

|1. | the Precious Metals Purchase Agreement dated August 8,
      2012, as amended by amending agreements dated as of November 12, 2014 and
      March 27, 2017 with Silver Wheaton, whereby we agreed to sell a portion of
      the precious metals production from our 777 mine to Silver
  Wheaton.                                                                                               
|-- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                   
|2. | the Amended and Restated Precious Metals Purchase
      Agreement dated November 4, 2013, as amended by amending agreements dated
      June 2, 2014, September 10, 2014 and December 31, 2016 with Silver Wheaton
      (Caymans) Ltd. (SW Caymans), whereby we agreed to sell 100% of
      the silver production and 50% of the gold production from our Constancia
      mine to SW Caymans.
|   |                                                                                                                                                                                                                                                                                                                                                                                                   
|3. | the Amended and Restated Precious Metals Purchase
      Agreement, dated as of February 15, 2011 between HudBay Arizona (Barbados)
      SRL (previously Augusta Resource (Barbados) SRL), HudBay Arizona
      Corporation (previously Augusta Resource Corporation), SW Caymans and
      Silver Wheaton;                                                                                       
|   |                                                                                                                                                                                                                                                                                                                                                                                                   
|4. | the Joint Venture Agreement dated September 16, 2010
      between Rosemont Copper Company and UCM, which governs the joint venture
      in respect of the Rosemont project;                                                                                                                                                                                                                     
|   |                                                                                                                                                                                                                                                                                                                                                                                                   
|5. | the Earn-In Agreement made as of September 16, 2010
      between Rosemont Copper Company and UCM, pursuant to which UCM may earn up
      to a 20% interest in the Rosemont project;                                                                                                                                                                                                             
|   |                                                                                                                                                                                                                                                                                                                                                                                                   
|6. | the Indenture dated as of December 12, 2016 with U.S.
      Bank National Association, as trustee, governing the Senior Unsecured
      Notes. For additional details, refer above to the heading Development of
      our Business  Three Year History  Senior Unsecured Notes
      Refinancing;                                                                                            
|   |                                                                                                                                                                                                                                                                                                                                                                                                   
|7. | the Warrant Indenture dated as of July 15, 2014 with
      Equity Financial Trust Company, which provides for the issue of common
      share purchase warrants in connection with the Augusta
  Acquisition;                                                                                                                                                                                     
|   |                                                                                                                                                                                                                                                                                                                                                                                                   
|8. | the Third Amended and Restated Credit Facility with the
      lenders party thereto from time to time and The Bank of Nova Scotia, as
      administrative agent, dated as of March 30, 2016, as amended by amending
      agreements made as of June 17 and September 26, 2016, providing for a
      three year $350 million revolving credit facility; and                                     
|   |                                                                                                                                                                                                                                                                                                                                                                                                   
|9. | the Amended and Restated Credit Facility with the lenders
      party thereto from time to time and The Bank of Nova Scotia, as
      administrative agent, dated as of March 30, 2016, as amended by amending
      agreements made as of June 17 and September 26, 2016, providing for a
      three year $200 million revolving credit facility.                                               

ANNUAL INFORMATION FORM |48

---



|QUALIFIED PERSONS
|-----------------
|                 

The scientific and technical information contained in this AIF
related to the Constancia mine and Rosemont project has been approved by Cashel
Meagher, P.Geo., our Senior Vice President and Chief Operating Officer. The
scientific and technical information related to all other sites and projects
contained in this AIF has been approved by Robert Carter, P.Eng., our Lalor Mine
Manager. Messrs. Meagher and Carter are qualified persons pursuant to NI 43-101.
For a description of the key assumptions, parameters and methods used to
estimate mineral reserves and resources, as well as data verification procedures
and a general discussion of the extent to which the estimates may be affected by
any known environmental, permitting, legal title, taxation, sociopolitical,
marketing or other relevant factors, please see the technical reports for our
material properties as filed by us on SEDAR at www.sedar.com.

|INTERESTS OF EXPERTS
|--------------------
|                    

Cashel Meagher, P.Geo. and Robert Carter, P.Eng. are experts
who have prepared certain technical and scientific reports for us. As at the
date hereof, to our knowledge, the aforementioned persons beneficially own,
directly or indirectly, less than 1% of our outstanding securities and have no
other direct or indirect interest in our company or any of its associates or
affiliates.

The auditor of the Company is Deloitte LLP. Deloitte LLP is
independent within the meaning of the Rules of Professional Conduct of the
Chartered Professional Accountants of Ontario and the applicable rules and
regulations thereunder adopted by the Securities and Exchange Commission (SEC)
and the Public Company Accounting Oversight Board (United States) (PCAOB).

|ADDITIONAL INFORMATION
|----------------------
|                      

Additional information, including directors and officers
remuneration and indebtedness, principal holders of our securities and
securities authorized for issuance under equity compensation plans, as
applicable, is contained in our management information circular dated April 14,
2016. Additional financial information is provided in our financial statements
and managements discussion and analysis for the fiscal year ended December 31,
2016.

Additional information relating to the Company may be found on
SEDAR at www.sedar.com and in the United States on EDGAR at www.sec.gov.

ANNUAL INFORMATION FORM |49

---



|SCHEDULE A: GLOSSARY OF MINING TERMS
|------------------------------------
|                                    

The following is a glossary of certain mining terms used in
this annual information form.

|mineral reserves                | Thatpartofameasuredorindicatedmineralresourcewhichcouldbeeconomicallymined,demonstrated
      by at least a preliminary feasibility study that includes adequate
      information on mining, processing, metallurgical, economic and other
      relevant factors that demonstrate, at the time of reporting, that economic
      extraction can be justified. A mineral reserve includes diluting materials
      and allowances for losses that may occur when the material is mined.
      Mineral reserves are those parts of mineral resources which, after the
      application of all mining factors, result in an estimated tonnage and
      grade which, in the opinion of the qualified person(s) making the
      estimates, is the basis of an economically viable project after taking
      account of all relevant processing, metallurgical, economic, marketing,
      legal, environment, socio-economic and government factors. Mineral
      reserves are inclusive of diluting material that will be mined in
      conjunction with the mineral reserves and delivered to the treatment plant
      or equivalent facility. The term mineral reserve need not necessarily
      signify that extraction facilities are in place or operative or that all
      governmental approvals have been received. It does signify that there are
      reasonable expectations of such approvals. Mineral reserves are subdivided
      into proven mineral reserves and probable mineral reserves. Mineral
      reserves fall under the following categories:
|--------------------------------- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|proven mineral
      reserves   | That part of a measured mineral resource that is the
      economically mineable part of a measured mineral resource, demonstrated by
      at least a preliminary feasibility study that includes adequate
      information on mining, processing, metallurgical, economic, and other
      relevant factors that demonstrate, at the time of reporting, that economic
      extraction is justified.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|                                  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|probable mineral
      reserves | That part of an indicated and in some circumstances a
      measured mineral resource that is economically mineable demonstrated by at
      least a preliminary feasibility study that includes adequate information
      on mining, processing, metallurgical, economic, and other relevant factors
      that demonstrate, at the time of reporting, that economic extraction can
      be justified.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|                                  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|mineral resources               | A concentration or occurrence of natural, solid,
      inorganic or fossilized organic material in or on the Earths crust in
      such form and quantity and of such a grade or quality that it has
      reasonable prospects for economic extraction. The location, quantity,
      grade, geological characteristics and continuity of a mineral resource are
      known, estimated or interpreted from specific geological evidence and
      knowledge. Mineral resources fall under the following categories:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|                                  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|measured mineral
      resource | That part of a mineral resource for which quantity, grade
      or quality, densities, shape and physical characteristics are so well
      established that they can be estimated with confidence sufficient to allow
      the appropriate application of technical and economic parameters to
      support production planning and evaluation of the economic viability of
      the deposit. The estimate is based on detailed and reliable exploration,
      sampling and testing information gathered through appropriate techniques
      from locations such as outcrops, trenches, pits, workings and drill holes
      that are spaced closely enough to confirm both geological and grade
      continuity.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|                                  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|indicated mineral resource      | That part of a mineral resource for which quantity,
      densities, shape and physical characteristics can be estimated with a
      level of confidence sufficient to allow the appropriate application of
      technical and economic parameters and to support mine planning and
      evaluation of the economic viability of the deposit. The estimate is based
      on detailed and reliable exploration and testing information gathered
      through appropriate techniques from locations such as outcrops, trenches,
      pits, workings and drill holes that are spaced closely enough for
      geological and grade continuity to be reasonably assumed.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|                                  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|inferred mineral
      resource | That part of a mineral resource for which quantity and
      grade or quality can be estimated on the basis of geological evidence and
      limited sampling and reasonably assumed, but not verified, geological and
      grade continuity. The estimate is based on limited information and
      sampling gathered through appropriate techniques from locations such as
      outcrops, trenches, pits, workings and drill holes.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           

ANNUAL INFORMATION FORM | A1

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|SCHEDULE B: MATERIAL MINERAL PROJECTS
|-------------------------------------
|                                     

CONSTANCIA MINE

Project Description, Location and Access

We own a 100% interest in the Constancia mine in southern Peru.
Constancia includes the Constancia and Pampacancha deposits and is located
approximately 600 kilometres southeast of Lima at elevations of 4000 to 4500
metres above sea level. Geographic coordinates at the centre of the property are
longitude 71° 47 west and latitude 14° 27 south.

We acquired Constancia in March 2011 through our acquisition of
all of the outstanding shares of Norsemont. We own a 100% interest in the 36
mining concessions (covering an area of 22,516 hectares) that comprise
Constancia, all of which are duly registered in the name of our wholly-owned
subsidiary, HudBay Peru S.A.C.; HudBay Peru S.A.C. also has the required surface
rights to operate the Constancia mine. Most of the known mineralization is
located in the claims Katanga J, Katanga O, Katanga K, and Peta 7, though small
mineralized outcrops are common throughout the area. All the mining concessions
are currently in good standing. The annual concession fee payments of $3.00 per
hectare are due on June 30 each year.

The Constancia mine reached commercial production in the second
quarter of 2015 and reached steady state design production in the second half of
2015.

Constancia is subject to the following taxes, royalties and
other agreements concerning mineral production:

1. Peruvian Tax Regime

Constancia is subject to the Peruvian tax regime, which
includes the mining tax, mining royalty, 8% labour participation, corporate tax
and IGV/VAT. The Special Mining Tax (SMT) and the Mining Royalty
(MR) were introduced in late-2011 for companies in the mineral
extractive industries. Both the SMT and the MR are applicable to mining
operating income based on a sliding scale with progressive marginal rates. The
effective tax rate is calculated according to the operating profit margin of the
Company. Based on Constancias expected life-of-mine operating profit margin,
the effective SMT and MR tax rates are projected to be 2.70% and 2.37% of
operating income over the life of the mine. The MR is subject to a minimum of 1%
of sales during a given month.

2. Precious Metals Stream Agreement

100% of Constancias silver production and 50% of its gold
production is subject to our agreement with Silver Wheaton, as described in this
AIF.

3. Legacy NSR

We are required to pay a net smelter return royalty (NSR) of
0.5% to a maximum of $10.0 million to the previous owners of the property.

Accessibility, Climate, Local Resources, Infrastructure and
Physiography

Constancia is accessible from Lima by flying to either Arequipa
or Cusco and then proceeding by paved and gravel highway to the mine site, which
in each case takes approximately seven hours. The closest town is Yauri
(population 23,000), which is approximately 80 kilometres by road from the mine
site. Copper concentrate is transported via Yauri to the Matarani port,
which is approximately 460 kilometres by road from the mine site.

ANNUAL INFORMATION FORM |B1

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The climate of the region is typical of the Peruvian altiplano
in which the seasons are divided into the wet season between October and March
with slightly higher temperatures and a dry season during April to September
with colder temperatures. Temperatures can dip below -10° Celsius and rise to
20° Celsius. The sun can be very strong with high ultraviolet readings being
common during the mid-day period. There is a climate monitoring station
installed at the mine site.

Elevations on the property range from 4,000 to 4,500 metres
above sea level with moderate relief and grass-covered altiplano terrain. Slopes
are typically covered with grasses at lower elevations. At higher elevations,
talus cover is common with very little vegetation. The grasslands are used as
pasture for animals and at lower elevations for some limited subsistence
agriculture. Water resources are readily available from a number of year-round
streams near the mine site.

Constancias maximum demand for electricity is estimated to be
96 MW with an average load of 85 to 90 MW in the first 5 years. Electricity is
supplied via the 220 kV Tintaya substation located about 70 kilometres from the
mine site and a dedicated transmission line from this substation to Constancia.

Other operating infrastructure includes the tailings management
facility, waste rock facility and water management systems.

We have entered into life-of-mine agreements with the
neighbouring communities of Chilloroya and Uchuccarco. These agreements provide
us the surface rights required for operations and specify our commitments to
these local communities over the course of the mine life. In particular, the
community agreements contemplated cash payments for the land access rights, as
well as funds for facilitation of development projects and investment for local
enterprises. The agreements also outline ongoing annual investments in community
development including medical, educational and agricultural services and
contemplate a bi-annual review of certain of the social development terms. While
we have entered into the life-of-mine agreements, we need to acquire additional
surface rights in order to mine the Pampacancha deposit, and there can be no
assurance that we will be able to secure the agreements required to do so.

The nearby communities can provide unskilled labourers, but
access to skilled mining talent must be obtained through training or enlisting
personnel from outside the area.

History

The original Constancia property, consisting of 13 concessions,
was obtained by Norsemont pursuant to an option agreement with Rio Tinto Mining
and Exploration Ltd. (Rio Tinto). Norsemont acquired an initial 51%
interest in the property from Rio Tinto in November 2007.Pursuant to the option
agreement, in March, 2008 Norsemont acquired the remaining 19% interest in
Constancia held by Rio Tinto. Norsemont acquired the remaining 30% interest in
the project from Mitsui Mining and Smelting Company Limited Sucursal Del Peru
(Mitsui) and 23 additional concessions were obtained by Norsemont in
2007 and 2008.

The San Jose prospect (which forms part of the Constancia
deposit) was explored by Mitsui during the 1980s. Exploration consisted of
detailed mapping, soil sampling, rock chip sampling, and ground magnetic and
induced polarization surveys with several drill campaigns. Drilling was mainly
focused on the western and southern sides of the prospect. Mitsui completed 24
drill holes (4,200 metres) and Minera Katanga completed 24 shallow close-spaced
drill holes at San Jose (1,200 metres).

In 1995, reconnaissance prospecting by Rio Tinto identified
evidence for porphyry style mineralization exposed over an area 1.4 x 0.7
kilometres, open in several directions, with some copper enrichment below a
widespread leach cap developed in both porphyry and skarn.

ANNUAL INFORMATION FORM |B2

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In May 2003, Rio Tinto revisited the area and the presence of a
leached cap and the potential for a significant copper porphyry deposit were
confirmed. Negotiations with Mitsui, Minera Livitaca and Minera Katanga resulted
in agreements being signed on October 31, 2003 with the underlying owners. Rio
Tinto renamed the prospect Constancia.

The Rio Tinto exploration activities consisted of geological
mapping, soil, and rock chip sampling, and surface geophysics (magnetics and
induced polarization). Rio Tinto completed 24 diamond drill holes for a total of
7,500 metres.

Geological Setting, Mineralization, and Deposit Types

The Constancia deposit is a porphyry copper-molybdenum system
which includes copper-bearing skarn mineralization. This type of mineralization
is common in the Yauri-Andahuaylas metallogenic belt where several porphyry
Cu-Mo-Au prospects have been described but not exploited. Multiple phases of
monzonite and monzonite porphyry have intruded a sequence of sandstones,
mudstones and micritic limestone of Cretaceous age. Structural deformation has
played a significant role in preparing and localising the hydrothermal
alteration and copper-molybdenum-silver-gold mineralization, including skarn
formation.

The Pampacancha deposit is a porphyry related skarn system,
with copper-bearing skarn mineralization. This type of mineralization is common
in the Yauri-Andahuaylas metallogenic belt where several skarn deposits have
been developed, including Corocohuayco in the Tintaya District and Las Bambas.

The Constancia porphyry copper-molybdenum system, including
skarn, exhibits five distinct deposit types of mineralization:

|1. | Hypogene fracture-controlled and disseminated
      chalcopyrite mineralization in the monzonite (volumetrically
  small);
|-- | --------------------------------------------------------------------------------------------------------------------------
|2. | Hypogene chalcopyrite (rare bornite) mineralization in
      the skarns (significant);                                    
|3. | Supergene digenite-covellite-chalcocite (rare native
      copper) in the monzonite (significant);                        
|4. | Mixed secondary sulphides/chalcopyrite in the monzonite
      (significant); and                                          
|5. | Oxide copper mineralization (volumetrically
  small).                                                                     

Molybdenite, gold and silver occur within all these
mineralization types.

Two areas of porphyry-style mineralization are known within the
project area, Constancia and San José. At Constancia, mineralization is deeper
than that observed at San José which occurs at surface. The mineralized zone
extends about 1,200 metres in the north-south direction and 800 metres in the
east- west direction.

The Pampacancha deposit is located approximately three
kilometers southeast of the Constancia porphyry. The stratigraphy unit in the
area is the massive, gray micritic limestone of Upper Cretaceous Ferrobamba
Formation; this unit in contact with the dioritic porphyry generates a magnetite
skarn, hosts economic mineralization of Cu-Au-Mo.

The intrusive rocks are Oligocene age unmineralized basement
diorite. Diorite porphyry is recognized as the source for skarn mineralization,
which in turn is cut by mineralized monzonite intrusions which provide minor
local increases in Cu-Au mineralization. Skarn Cu-Au mineralization is best
developed at the upper and lower margins of the limestone body.

Epithermal mineralization of the low sulphidation
quartz-sulphides Au + Cu style, accounts for common supergene enriched Au
anomalies, and along with other features such as hydrothermal alteration and
veins typical of near porphyry settings.

ANNUAL INFORMATION FORM |B3

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Exploration

A geophysical Titan-24 survey was completed in July 2011 to the
south of the Constancia deposit. In late 2013, an aeromag and radiometric
helicopter geophysical survey was carried out over an area of 80 square
kilometers near Constancia.

A mapping and geochemical sampling program was completed
between 2007 to 2014, where 20,789 hectares were mapped. Of the 20,789 hectares,
8,905 were mapped on Hudbay mining concessions, which represent 80% of the
mining rights in the area.

Drilling

Extensive drilling has been conducted at Constancia since the
early 2000s. The two most recent drilling programs were completed by Hudbay,
with prior drilling programs conducted by Rio Tinto and Norsemont Mining. The
following Table summarizes the drill holes used to build the block model and the
current mineral resource estimate.

Company
    Time Period
    Drill HolesNumber
    Feet
    MetersRio Tinto
    2003-2004
    24
    24,551
    7,483NOM
    2005
    41
    32,149
    9,799NOM
    2006
    66
    66,939
    20,403NOM
    2007
    77
    95,341
    29,060NOM
    2008
    219
    206,850
    63,048NOM
    2009
    33
    16,434
    5,009NOM
    2010
    93
    86,060
    26,231Hudbay
    2011
    186
    101,509
    30,940Hudbay
    2012
    46
    18,501
    5,639Hudbay
    2014 - 2015
    26
    14,281
    4,353Total
    
    811
    662,615
    201,975


These drill holes were all drilled using a combination of
reverse circulation (RC) and diamond drilling (coring) methods.

Sampling and Analysis and Security of Samples

The sample preparation, analysis, security procedures and data
verification processes used in the exploration campaigns on the Constancia mine
prior to our acquisition were reviewed through the documentation available in
previously filed technical reports and we have been determined that the sampling
methodology, analyses, security measures and data verification processes were
adequate for the compilation of data at Constancia and Pampacancha and such
processes continue to be used by us.

Constancia

At Constancia, a total of 1,247 bulk density measurements were
taken by ALS Chemex from 145 drill holes using the paraffin wax coat method.
Samples for density measurement in each major rock unit were extracted at
approximately 50 metre intervals. Sample preparation and assaying used for the
resource estimate in Norsemonts 2009 Definitive Feasibility Study was done by
ALS Chemex. In July 2008, the primary lab was changed to SGS del Peru
(SGS) in Lima. Samples were prepared and analyzed using standard procedures, including Fire Assay (for gold) and
Inductively Coupled Plasma  Atomic Emission Spectroscopy and Atomic Absorption
Spectrophotometry (for other elements). All samples with copper values above
0.2% were analyzed by a Sequential Copper Method (although sequential copper
data was not available for Rio Tintos exploration campaign).

ANNUAL INFORMATION FORM |B4

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All lithological, alteration, geotechnical and mineralization
data was logged on paper logs that were later entered in spreadsheets from where
they were imported into the database. It was noted that the data entry
spreadsheets had a number of built-in logical checks to improve the validity of
the database. As was mentioned in Norsemonts 2009 Definitive Feasibility Study,
the geological and sample data was verified by a senior geologist before
importing into a database.

Assay data was delivered in digital form by the main
laboratory. Checks for inconsistent values were made by the senior geologist
before data was uploaded.

We checked collar positions visually on plans for correctness
in the data entry. Down-hole surveys were checked by examining coarse changes in
the variables. Check runs were at regular intervals to check consistency of the
drilling data.

Discrepancies were not identified between the log data and
assay certificates and the drill hole database of text files used for the
mineral resource estimate.

The quality control protocol during Norsemonts Constancia
exploration campaigns from 2006 to 2010 included the insertion of the following
control samples in the sample batches:

| | Twin samples (Core) or field duplicates (RC):
      one in 20 samples.                                   
|- | ---------------------------------------------------------------------------------------------------------
| | Certified Reference Materials (CRMs): one in 20
      samples; four CRMs are inserted in alternate order.
| | Blanks: one in 20 samples.                                                                               

The twin samples, field duplicates, coarse blanks and CRMs were
inserted on the drill site prior to submission to the laboratory and Acme acted
as secondary laboratory for the 2006 and part of the 2007 campaigns to check
samples.

Pampacancha

A total of 56 bulk density measurements were taken from actual
core at the Pampacancha deposit. The density measurements were conducted by ALS
Chemex and are representative of the different rock and mineralization domains
recognized to date.

All samples were sent to SGS for preparation and assaying. The
SGS laboratory conforms to ISO/IEC 17025 and ISO 9002 standards and all samples
were analyzed through Inductively Coupled Plasma  Atomic Emission Spectrometry
after multi-acid digestion and gold was determined by fire assay with Atomic
Absorption Spectroscopy.

During the drilling, blanks were inserted into the sample
stream as per geologist instruction at approximate intervals of every 30
samples. Standard references were prepared with material obtained from the
Pampacancha deposit by us and were analyzed and certified by Acme labs. As part
of the Pampacancha drilling, duplicates were obtained by splitting half core
samples, obtaining two quarter core sub-samples, one quarter representing the
original sample and the other quarter representing the duplicate sample.

We submitted a total of 26,927 samples from 175 drill holes to
SGSs laboratory for analysis. In addition to these samples, 471 blanks, 336
reference standards and 486 duplicates were submitted.

      Blanks: During the drilling,
blanks were inserted into the sample stream as per geologist instruction at
approximate intervals of every 30 samples.

ANNUAL INFORMATION FORM |B5

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      Reference Standards: The
reference standards certified by Acme labs were assayed by SGS. Of the 336
copper standards submitted for assaying, 124 of the assays fell outside the
lower standard deviation indicating possible sub-estimation of copper content.

      Duplicates: The geologist
routinely inserted duplicate core samples to check the homogeneity of the
mineralization and sampling precision; duplicates were inserted approximately
every 30 samples.

An internal validation of the drill hole database against the
original drill logs and assay certificate information was carried out by us. The
validation included 100% of the assay values from the Pampacancha drilling. No
significant discrepancies existed within the database and it is believed to be
accurate and suitable for mineral resource estimation.

Mineral Processing and Metallurgical Testing

The metallurgical responses of Constancia ore (ex: Hypogene,
Supergene, Skarn, Mixed and High Zinc) is acceptable in terms of treatment rate,
recovery and molybdenum and copper concentrate grades. For example, the copper
grade in the final concentrate is higher than 26%, with low levels of zinc,
lead, iron, etc. The molybdenum concentrate produced is over 47% molybdenum with
low contents of copper, lead, iron, etc. Metallurgical test work performed at
laboratory and plant levels with Hypogene, Skarn, Supergene, High Zinc and Mixed
ore from different polygons have enabled the operator to identify different
reagents which show better performance according to each type of ore treated.

Pampacancha testwork is still at the prefeasibility level, so
there are still several assumptions that have been made for Pampacancha ore
recovery and throughput in the Constancia plant.

For the production year 2016 the Constancia plant achieved a
copper recovery of 82%, over the next five years the copper recovery will
gradually increase relative to the proportions of mineral type approaching 90%
when the feed is predominantly hypogene to the end of mine life.

Mineral Resource and Mineral Reserve Estimates

Resource estimation for Constancia was based on integrated
geological and assay interpretations from the information recorded on diamond
core logging and assaying. During the time the resource estimate was created, a
total of 165,693 meters (581 holes) had been drilled. Multi pass ordinary
kriging interpolation setup was used to interpolate the grades in the block
model while honoring the geology. The component of the mineralization within the
block model that meets the requirements for reasonable prospects of economic
extraction was based on the application of a Lerchs-Grossman cone pit algorithm.
The mineral resources are therefore contained within a computer generated open
pit geometry.

The mine production plan contains 689 Mt of waste and 614 Mt of
ore, yielding a waste to ore stripping ratio of 1.1 to 1.0. An average LOM
mining rate of 67.5 Mt/a, with a maximum of 74 Mt/a, will be required to provide
the assumed nominal process feed rate of approximately 29.5 Mt/a. The ore
production schedule for the project shows average grades of 0.31% Cu, 0.009% Mo,
0.05 g/t Au and 3.0 g/t Ag.

ANNUAL INFORMATION FORM |B6

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Reconciliation of Reserves and Resources

A year over year reconciliation of the estimated mineral
reserves and resources at the Constancia mine is set out below.

Constancia

|Mineral Reserve
      Reconciliation (Proven & Probable)     | Tonnes 1                                          
|------------------------------------------------------------ | --------------------------------------------------
|A                                                            | 2016
      Mineral Reserve                        
|B                                                            | 2016
      Production (from Reserves)             
|C                                                            | (A -
      B)                                     
|D                                                            | Geology 2Gain/(Loss)                              
|E                                                            | Mine
      Planning 3Gain/(Loss)                  
|F                                                            | Economics 4Gain/(Loss)                            
|G                                                            | (D + E
      + F)                                 
|H                                                            | 2017
      Mineral Reserve (C + G)                
|                                                             |                                                   
|Mineral Resource Reconciliation
      (Measured & Indicated) | Tonnes 1                                          
|I                                                            | 2016
      Mineral Resource (Measured & Indicated)
|J                                                            | 2017
      Mineral Resource (Measured & Indicated)
|K                                                            | (J -
      I) Gain4/(Loss)                        
|                                                             |                                                   
|Mineral Resource Reconciliation
      (Inferred)             | Tonnes 1                                          
|L                                                            | 2016
      Mineral Resource (Inferred)            
|M                                                            | 2017
      Mineral Resource (Inferred)            
|N                                                            | (M -
      L) Gain34/(Loss)                       

Pampacancha

|Mineral Reserve
      Reconciliation (Proven & Probable)     | Tonnes 1                                          
|------------------------------------------------------------ | --------------------------------------------------
|A                                                            | 2016
      Mineral Reserve                        
|B                                                            | 2016
      Production (from Reserves)             
|C                                                            | (A -
      B)                                     
|D                                                            | 2017
      Mineral Reserve                        
|                                                             |                                                   
|Mineral Resource Reconciliation
      (Measured & Indicated) | Tonnes 1                                          
|I                                                            | 2016
      Mineral Resource (Measured & Indicated)
|J                                                            | 2017
      Mineral Resource (Measured & Indicated)
|K                                                            | (J -
      I) Gain4/(Loss)                        

Notes:

|1. | Totals may not add up correctly due to number
    rounding                                                       
|-- | -----------------------------------------------------------------------------------------------------------------
|2. | Geology - diamond drilling, interpretation, estimation
      (interpolation parameters)                          
|3. | Mine Planning - resultant change of mine plan
    design                                                         
|4. | Economics - mine operating and capital, commodity price
      and foreign exchange, concentrating, TC/RC,
freight

ANNUAL INFORMATION FORM |B7

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Mining Operations

The Constancia mine is a traditional open pit shovel/truck
operation with two deposits, Constancia and Pampacancha. The operation consists
of an open pit mining and flotation of sulphide minerals to produce commercial
grade concentrates of copper. Silver and a small quantity of payable gold
reports to the copper concentrate. Commissioning of a molybdenum circuit is
underway. The Pampacancha deposit exhibits higher grades of copper and gold and
is scheduled to enter into production during 2018.

To match the production requirements, operations are conducted
from 15 meters high benches using large-scale mine equipment, including:
10-5/8-inch-diameter rotary blast hole drills, 27 m3 class hydraulic shovel, 19
m3 front-end loader, and 240 ton off-highway haul trucks.

Processing and Recovery Operations

The processing plant processes a nominal throughput of 90,000
tpd of ore (31 Mtpa at 94% plant availability); however during 2016, it
processed 27 Mtpa of ore from the Constancia and San José ore bodies and the
shortfall was principally due to some one-off maintenance events.

The primary crusher, belt conveyors, thickeners, tanks,
flotation cells, mills and various other types of equipment are located outdoors
without buildings or enclosures. To facilitate the appropriate level of
operation and maintenance, molybdenum concentrate bagging plant, copper
concentrate filters and concentrate storage are housed in clad structural steel
buildings.

The processing plant has been laid out in accordance with
established good engineering practice for traditional grinding and flotation
plants. The major objective is to make the best possible use of the natural
ground contours to minimize pumping requirements by using gravity flows and also
to reduce the height of steel structures.

Infrastructure, Permitting, and Compliance Activities

The infrastructure facilities include the waste rock facility,
tailings management facility, water management, electrical power supply and
transmission, and improvements to the roads and the port. The primary road to
the site consists of a 70km sealed road (National Route PE-3SG) from Yauri to
the Livitaca turn-off and approximately 10 km of unsealed road (CU-764) from the
Livitaca turn-off to site. These roads (and bridges) have been upgraded, as
necessary, to meet the needs for construction and life of mine use.

Copper concentrate is shipped from the Constancia Mine via road
(~460km) and arrives at the Matarani port in trucks. These trucks are equipped
with a hydraulically operated covered-box hinged at the rear, the front of which
can be lifted to allow the concentrate to be deposited in the concentrate shed
assigned to Hudbay by TISUR, the port operator. Pier C has been assigned to
Hudbay and has a 75 Kt capacity. A chute from the shed will feed a conveyor
system in a tunnel below. This feed conveyor has a 1,000 metric tonnes per hour
capacity. The same conveyor and ship loading equipment will be shared with other
copper concentrate exporters.

The Constancia Mine Environmental and Social Impact Assessment
(ESIA) was approved by the Ministry of Energy and Mines (MINEM) in November 2010
and the first amendment to the ESIA (MOD I) was approved in August 2013; the
amendment was to increase the processing capacity and to match the Detailed
Design Feasibility Study.

ANNUAL INFORMATION FORM |B8

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On April 2015, the second amendment to the ESIA (MOD II) was
approved to increase reserves through the expansion of the Constancia Pit,
inclusion of the Pampacancha deposit, and the waste rock facility (WRF) and the
tailings management facility (TMF) expansion, among others.

Hudbay secured all necessary permits and authorizations on time
to start construction activities and operation of the mine.

Capital and Operating Costs

The LOM Sustaining CAPEX is estimated to be $786M (excluding
capitalized stripping) and Pampacancha project capex is estimated to be $54M
(excluding the cost of acquiring the surface rights). All capex items are
reported in real 2016$ USD.

The total includes capital required for major mining equipment
acquisition, rebuilds, and major repair. The cost also includes site
Iinfrastructure expansion (Tailings Management Facility, Waste Rock Facility ,
etc.) and process plant infrastructure.

The operating costs are divided in three catagories: mine,
process plant and G&A. The LOM operating costs are shown the below table.

Operating Costs
    2017(1)
    2018(1)
    2019(1)
    2020(1)
    2021(1)
    2022- 2035(1)
    LOM(1)Unit CostsMining
    2.89
    2.85
    2.66
    2.78
    2.96
    2.71
    2.74Milling
    4.06
    4.00
    4.01
    4.01
    4.01
    4.03
    4.03G&A
    1.48
    1.24
    1.24
    1.24
    1.24
    1.08
    1.14Total Operating Costs (Before Capitalized
      Stripping)
    8.43
    8.09
    7.92
    8.03
    8.22
    7.82
    7.91Total Operating Costs (After Capitalized
      Stripping)
    7.84
    7.53
    7.74
    7.55
    7.80
    7.27
7.39


(1) US$/tonne Milled

Exploration, Development and Production

The Constancia mine commenced initial production in the fourth
quarter of 2014 and achieved commercial production in the second quarter of
2015. Pampacancha is expected to be developed and mined commencing in 2018.

LALOR MINE

Project Description and Location

Lalor is a zinc, gold and copper mine near the town of Snow
Lake in the province of Manitoba. Lalor is located approximately 208 kilometres
by road east of Flin Flon, Manitoba of which 197 kilometres is paved highway.
Lalor commenced initial ore production from the ventilation shaft in August 2012
and commenced commercial production from the main shaft in the second half of
2014.

We own a 100% interest in the property through one mineral
lease and eight Order in Council (OIC) Leases that total approximately
947 hectares with annual rental payments payable to the Manitoba government of
C$10,040. The mineral leases terminate in April and September of 2023 and March
of 2033. There is no royalties payable other than those potentially payable to
the province. Surface rights are held under general permits with total annual
rental payments of C$1,510 and are sufficient for purposes of our development
plans.

ANNUAL INFORMATION FORM |B9

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The Lalor project was envisaged to utilize, to the greatest
extent possible, existing infrastructure in the Snow Lake area from previous
mining activities and currently operating facilities. As such, liabilities
associated with each operational area have been addressed by the closure plans
previously submitted to the regulators and financial assurance has been provided
to cover total closure and remediation costs.

Accessibility, Climate, Local Resources, Infrastructure and
Physiography

The current project infrastructure includes a 3.5 kilometre
main access road that was constructed in 2010 from provincial road 395 and
provides access from the Chisel North mine site to the Lalor site. This access
road includes a corridor with freshwater/discharge pipelines and a main hydro
line. Access to the site is off of paved provincial highway 392, which joins the
town of Snow Lake and provincial highway 39 and provides access to Flin Flon.

The Snow Lake area has a typical mid-continental climate, with
short summers and long, cold winters. Climate generally has only a minor effect
on local exploration and mining activities. The project area is approximately
300 metres above sea level, consisting of ridged to hummocky sloping rocks with
depressional lowlands, and has gentle relief that rarely exceeds 10 metres. The
area of Lalor and surrounding water bodies (Snow, File, Woosey, Anderson and
Wekusko lakes) are located in the Churchill River Upland Ecoregion in the
Wekusko Ecodistrict. The dominant soils are well to excessively drained dystic
brunisols that have developed on shallow, sandy and stony veneers of
water-worked glacial till overlying bedrock. Significant areas consist of
peat-filled depressions with very poorly drained typic and terric fibrisolic and
mesisolic organic soils overlying loamy to clayey glaciolacustrine sediments.

We commissioned a 2,000 US gpm water treatment plant in 2008 at
Chisel Lake, approximately eight kilometres from Lalor, where water from the
Lalor mine is treated in the Water Treatment Plant along with water from the
Chisel Open Pit.

Tailings production associated with the Lalor mine is impounded
in the Anderson Tailings Impoundment Area (TIA).

Power for the site is being transmitted at 25 kV from the Lalor
substation located at the Chisel North minesite via a 3.5 km transmission line.

History

The Lalor deposit is situated in the Chisel Basin. Exploration
in the Chisel Basin has been active since 1955. The Chisel Basin area has hosted
three producing mines, namely, Chisel Lake, Chisel Open Pit and Chisel North.
All three mines have very similar lithological and mineralogical features.

A Crone Geophysics survey in 2003 indicated a highly conductive
shallow-dipping anomaly at a vertical depth of 800 metres. In early 2007, drill
hole DUB168 was drilled almost vertically to test the anomaly and intersected a
band of conductive mineralization between 781.74 metres and 826.87 metres (45.13
metres). Assay results include 0.30% Cu and 7.62% Zn over the 45.13 metres,
including 0.19% Cu and 17.26% Zn over 16.45 metres.

Geological Setting

The Lalor property lies in the eastern (Snow Lake) portion of
the Paleoproterozoic Flin Flon Greenstone Belt and is overlain by a thin veneer
of Pleistocene glacial/fluvial sediments. Located within the Trans-Hudson
Orogen, the Flin Flon Greenstone Belt consists of a variety of distinct 1.92 to
1.87 Ga tectonostratigraphic assemblages including juvenile arc, back-arc,
ocean-floor and ocean-island and evolved volcanic arc assemblages that were
amalgamated to form an accretionary collage (named the Amisk Collage) prior to
the emplacement of voluminous intermediate to granitoid plutons and generally
subsequent deformation. The volcanic assemblages consist of mafic to felsic
volcanic rocks with intercalated volcanogenic sedimentary rocks. The younger
plutons and coeval successor arc volcanics, volcaniclastic, and sedimentary
successor basin rocks include the older, largely marine turbidites of the
Burntwood Group and the terrestrial metasedimentary sequences of the Missi Group.

ANNUAL INFORMATION FORM |B10

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The Snow Lake arc assemblage that hosts the producing and
past-producing mines in the Snow Lake area is a 20 kilometres wide by 6
kilometres thick section that records a temporal evolution in geodynamic setting
from primitive arc (Anderson sequence to the south) to mature arc (Chisel
Basin sequence) to arc- rift (Snow Creek sequence to the northeast). The
mature arc Chisel Basin sequence that hosts the zinc rich Chisel Lake, Ghost
Lake, Chisel North, and Lalor deposits typically contains thin and discontinuous
volcaniclastic deposits and intermediate to felsic flow-dome complexes.

The Lalor deposit is similar to other massive sulphide bodies
in the Chisel Basin sequence, and lies along the same stratigraphic horizon as
the Chisel Lake and Chisel North deposits. It is interpreted that the top of the
zone is near a decollement contact with the overturned hanging wall rocks.

Drilling

The Lalor mine was discovered by drilling a surface exploration
hole testing an electromagnetic geophysical anomaly in March 2007, which
intersected appreciable widths of zinc-rich massive sulphides in hole DUB168.
Surface drilling continued to July 2012. A limited surface exploration drill
program was conducted from August to October 2015 to explore for potential down
plunge extensions of Zone 27 and to test near mine geophysical conductors that
could not be drilled from underground workings. As of January 1, 2017, a total
of 203,037 m of surface drilling was completed at Lalor.

Underground drilling began at Lalor with hole LP0001 in January
2012 and drilling has been continuous to date. Holes are drilled at all dips and
azimuths needed to provide adequate coverage of the orebody for interpretation
and mining purposes. Holes with dips steeper than +70° are preferably avoided
due to poor ergonomics and the increased risk for the drill crews. Underground
drilling at Lalor is divided into five different categories based on the primary
planned purpose of the hole (project, engineering, exploration, definition, or
delineation).

The drill hole database contains 1,707 assayed drill holes
totaling approximately 420,310 metres that were used to support the mineral
resource estimate. All diamond drilling completed from surface or underground
retrieved whole core sizes of BQ and NQ with core recovery near 100%.

Mineralization

Lalor is interpreted as a gold enriched VMS deposit that
precipitated at or near the seafloor in association with contemporaneous
volcanism, forming a stratabound accumulation of sulphide minerals. VMS deposits
typically form during periods of rifting along volcanic arcs, fore arcs, and in
extensional back arc basins. Rifting causes extension and thinning of the crust,
providing the high heat source required to generate and sustain a
high-temperature hydrothermal system.

The location of VMS deposits are often controlled by
synvolcanic faults and fissures, which permit a focused discharge of
hydrothermal fluids. A typical deposit will include the massive mineralization
located proximal to the active hydrothermal vent, footwall stockwork
mineralization, and distal products, which are typically thin but extensive.
Footwall, and less commonly, hanging wall semi-conformable alteration zones are
produced by high temperature water-rock interactions.

The depositional environment for the mineralization at Lalor is
similar to that of present and past producing base metal deposits in felsic to
mafic volcanic and volcaniclastic rocks in the Snow Lake mining camp. The
deposit appears to have an extensive associated hydrothermal alteration pipe.

The Lalor VMS deposit is isoclinaly folded and flat lying, with
zinc mineralization beginning at approximately 600 metres from surface and
extending to a depth of approximately 1,100 metres. The mineralization trends
about 320° to 340° azimuth and dips between 30° and 45° to the northeast. It has
a lateral extent of about 900 metres in the north-south direction and 700 metres
in the east-west direction.

ANNUAL INFORMATION FORM |B11

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Sulphide mineralization is pyrite, sphalerite and chalcopyrite.
In the near solid (semi-massive) to solid (massive) sulphide sections, pyrite
occurs as fine to coarse grained crystals ranging one to six millimetres and
averaging two to three millimetres in size. Sphalerite occurs interstitial to
the pyrite. A crude bedding or lamination is locally discernible between these
two sulphide minerals. Near solid coarse grained sphalerite zones occur locally
as bands or boudins that strongly suggest that remobilization took place during
metamorphism. Disseminated blebs and stringers of pyrrhotite and chalcopyrite
occur locally within the massive sulphides, adjacent to and generally in the
footwall of the massive sulphides.

Notable gold and silver rich zones have also been intersected
in the footwall of the zinc rich base metal mineral resources on the property.
The precious metal mineralization begins at approximately 750 metres from
surface and extends to a depth of approximately 1,480 metres. The current
interpretation suggests the deeper copper-gold lens tends to have a much more
linear trend to the north than the rest of the zones.

Gold and silver enriched zones occur near the margins of the
sulphide lenses and in local silicified footwall alterations. These silicified
areas often correlate with disseminated stringer chalcopyrite, pyrrhotite and
pyrite, whether together or independent of each other. This footwall gold
mineralization is typical of VMS footwall feeder zones with copper-rich
disseminated and vein style mineralization overlain by massive zinc-rich zones.

Seven distinct stacked zinc rich mineralized zones, six stacked
lens groups of gold mineralization of low sulphide either in contact with or
entirely separate to the zinc rich base metal resources and one copper- gold
zone of mineralization were interpreted. The interpreted gold zones are
generally co-paralleled and/or separate to the zinc rich base metal mineral
resource zones. However, gold zones locally merge and are in direct contact with
base metal resources.

The gold bearing lithologies remain open down plunge to the
north and northeast.

Sampling and Analysis: Sampling Methods

Drill core is logged, sample intervals selected and marked
clearly on the core. The majority of exploration core is cut in half with a
diamond saw and a representative portion of the hole is kept. Definition and
delineation core is whole core sampled. All samples are placed in a plastic bag
with its unique sample identification tag.

The bagged samples are placed in a plastic pail with a
submittal sheet that was prepared by the geologist or technician. Samples were
delivered to the Hudbay laboratory in Flin Flon or Bureau Veritas laboratory in
Vancouver, British Columbia. All samples arriving at the laboratory are checked
against the geologists sample submission sheets.

From 2012 to 2016 a total of 104,024 drill core samples were
analyzed at the Hudbay laboratory in Flin Flon. Copper, zinc, and silver were
digested in aqua regia and analyzed by ICP-OES. Gold was determined by
lead-collection fire assay fusion, for total sample decomposition, followed by
atomic absorption spectroscopy (AAS) analysis. Fire assays were performed on 15
to 30g subsample pulps to avoid problems due to potential nuggetty gold. All
samples with gold values (AAS) > 10 g/t were re-assayed using a gravimetric
finish. All analytical balances are certified annually by a third party. Check
weights are used daily to verify calibration of balances. All metal standards
used to make the calibration standards for the AAS and ICP are certified and
traceable. Each is received with a certificate of analysis. Both the AAS and ICP
are serviced twice per year by the instrument manufacturers qualified service
representative to ensure that the instruments meet original design
specifications. The Hudbay laboratory has been participating in CANMET PTP/MAL
round robin testing since 2000. PTP/MAL is a requirement for laboratories that
are ISO 17025 certified. The laboratory has also been participating since 2002
in round robin testing conducted by GEOSTATS of Australia. Fine sample pulps are
kept in secure storage at the laboratory after analysis. Pulps are only released
after all data is validated.

Over the past five years, 2012 to 2016, a total of 23,822 drill
core samples were analyzed at Bureau Veritas laboratories. Copper, zinc, and silver were digested in
aqua regia and analyzed by inductively coupled plasma optical emission
spectrometry (ICP-OES) and more recently in 2016 by inductively coupled plasma
mass spectrometry (ICP-MS). Samples with copper and zinc over the upper limit of
detection (ULD) were analyzed by titration, whereas those samples with silver
values over the ULD were analyzed by fire assay and gravimetric finish. Gold was
determined by lead-collection fire assay fusion, for total sample decomposition,
followed by atomic absorption spectroscopy (AAS) instrumental analysis (Table 11
1). Fire assays were performed on 15 to 30g subsample pulps to circumvent
problems due to potential nugget effect. Samples from selected holes were also
submitted for determination of specific gravity using SPG02 method (volume
determination by submersion followed by drying).

ANNUAL INFORMATION FORM |B12

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A total of 65,792 measurements collected by Hudbay and measured
at Flin Flon laboratory, Bureau Veritas laboratory and at Hudbay logging
facility, using a non-wax-sealed immersion technique to measure the weight of
each sample in air and in water were completed..

A total of 112,732 samples from 3,396 drill holes were
submitted to the Flin Flon assay laboratory for analysis as of the date of the
most recent technical report. The average length for these sample intervals was
1.62 metres.

Sampling and Analysis: Quality Assurance and Quality Control

As part of Hudbay quality assurance and quality control (QAQC)
program, QAQC samples were systematically introduced in the sample stream to
assess sub-sampling procedures, potential cross-contamination, precision, and
accuracy. Hudbay commonly includes 5% certified reference materials (CRM), 2%
certified blanks, and 5% coarse duplicates. Blanks and CRMs were prepared mostly
by Ore Research and Exploration (OREAS). However, a few high-grade gold
standards are from Rocklabs. All QAQC samples were analyzed following the same
analytical procedures as those used for the drill core samples.

Certified OREAS blanks were inserted into the sample stream
commonly one every fifty samples to monitor potential cross-contamination.
Between 2012 and 2016, 841 blanks were analyzed representing 3.5% of the samples
submitted to Bureau Veritas and 2,278 blanks were inserted, representing 2.2% of
the total number of samples analyzed at the Hudbay laboratory.

From 2012 to 2016 a total of 1,601 OREAS and Rocklabs certified
reference materials (CRMs) were analyzed at Bureau Veritas representing 6.7% of
the sample stream and a total of 5,570 OREAS and Rocklabs CRMs were analyzed
representing 5.4% of the total samples submitted to the Hudbay laboratory.
Coarse duplicates, approximately one in every twenty samples, were submitted to
Bureau Veritas laboratory and Hudbay laboratory in order to monitor sub-sampling
precision.

A total of 304 representative pulp samples (1.5%) were selected
and re-analyzed at SGS Canada Inc. (SGS) laboratory in Vancouver to assess the
accuracy of assay results reported by Bureau Veritas and the Hudbay laboratory
relative to the umpire laboratory SGS. Only samples with ≥0.5ppm gold were
submitted for re-analysis at the secondary laboratory. Copper, zinc, and silver
were digested in aqua regia and analyzed by ICP-OES. Gold was fire assayed and
analyzed by AAS. These methods are comparable to those used by Bureau Veritas
and the Hudbay laboratory.

Sampling and Analysis: Data Verification

The performance of blanks indicates that there are no
significant problems with contamination at the Bureau Veritas laboratories,
samples were handled with care, and the assay results are free of contamination
and adequate for the resource estimation. The accuracy and reproducibility of
copper, zinc, silver, and gold assays, as indicated by the CRMs assayed at
Bureau Veritas laboratories, is of good quality for resource estimation. In
reviewing the coarse duplicates submitted to Bureau Veritas, it is concluded
that the sub-sampling procedures were adequate for all metals used in the
resource model.

Overall the performance of blanks indicates no significant
issues with contamination at the Hudbay laboratory in Flin Flon. The
contamination rates are generally low for copper, silver and gold, and high for
zinc but at grade levels that are not economic. Therefore the results are acceptable for the resource   estimation. The analytical accuracy and reproducibility of
copper, zinc, and silver as indicated by the CRM analysis, at the Hudbay
laboratory is appropriate for resource estimation. Gold grades are being under
assayed. This under assaying of gold standards will likely lead to an
underestimation of gold in the resource estimate, since the proportion of
samples assayed at the Hudbay laboratory is approximately 80% of the total
samples assayed between 2012 and 2016. The duplicate pairs display failure rates
of <5% for copper, zinc, and silver indicating that the sub-sampling
procedures employed by the Hudbay laboratory are of good quality for base metals
and silver. However an adequate sub-sampling variance for gold at the Hudbay
laboratory is reached only for gold grades above 1ppm.

ANNUAL INFORMATION FORM |B13

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The duplicate analyses concluded the accuracy achieved by
Bureau Veritas and Hudbay for copper, zinc, silver, and gold, during 2015 and
2016, is of good quality for resource estimation.

Security of Samples

Security measures taken to ensure the validity and integrity of
the samples collected consist of a chain of custody of drill core from the drill
site to the core logging area. All facilities used for core logging and sampling
located are on a secure mine site location. Core sampling is undertaken by
Hudbay geologists and sample splitting and shipping conducted by technicians
under the supervision of Hudbay geologists. Chain of custody for core cutting
through to delivery of samples to laboratories is in place and a well documented
and implemented receiving and processing procedures at the Hudbay and Bureau
Veritas laboratories. The Hudbay laboratory samples results are stored on a
secure mainframe based Laboratory Information Management System (LIMS). The
diamond drill hole database is stored on the secure Hudbay network, using the
acQuire database management system with strict access rights.

Mineral Resource Estimates

The mineral resources for Lalor are estimated either as base
metal lenses or gold zones and classified as Measured, Indicated and Inferred
resources, as of September 30, 2016.

The base metal grade shells were built using MineSight, from 2D
cross sections linked to create solids and verified in plan, using approximate
4.1% zinc equivalency cut-off. The gold-rich grade shell were built with
Leapfrog® version 4.0 and were constrained with the logging, lithogeological
data and an approximate 2.4 g/t gold equivalency or an approximate 1.9% copper
equivalency. The gold-rich mineralized envelopes interpretation was stretched to
follow the geological continuity of the zones.

The resource is based on integrated geological and assay
interpretation of information recorded from diamond drill core logging and
assaying and underground mapping and is comprised of the following steps:
exploratory data analysis, high-grade capping, high yield grade restrictions,
and estimation and interpolation parameters consistent with industry standards.
A total of 420,310 m in 1,707 holes have been drilled at Lalor deposit.

The Lalor block model was validated to ensure appropriate
honouring of the input data by the following methods:

| |  | Visual inspection of the ordinary kriging (OK)
      block model grades in plan and section views in comparison to composites
      grade                                      
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                                                                
| |  | Metal removed via grade capping and high yield
      restriction methodology                                                                                                   
| |   |                                                                                                                                                                                
| |  | Comparison between the interpolation methods of
      nearest neighbour and inverse distance squared weighted to confirm the
      absence of global bias in the OK grade model
| |   |                                                                                                                                                                                
| |  | Swath plot comparisons of the estimation
      methods to investigate local bias                                                                                               
| |   |                                                                                                                                                                                
| |  | Review of block model ordinary kriging quality
      control parameters                                                                                                        
| |   |                                                                                                                                                                                
| |  | Comparison of grade tonnage curves and
      statistics by estimation method                                                                                                   
| |   |                                                                                                                                                                                
| |  | Third party review of the block model and
      estimation process                                                                                                             

ANNUAL INFORMATION FORM |B14

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Mineral Reserve Estimates

The mineral reserves were estimated based on a life of mine
(LOM) plan prepared; using Deswik mine design software that generated mining
inventory based on stope geometry parameters and mine development sequences.
Appropriate dilution and recovery factors were applied based on cut and fill and
longhole open stoping mining methods with a combination of paste and
unconsolidated waste backfill material.

The shallow dipping nature of the deposit and stacking of
lenses results in multiple lenses being grouped together for mining purposes in
the stope optimizer routines of Deswik so that they can be extracted as a single
mining unit, based on stope mining parameters by mining method.

Internal dilution and external dilution are included as part of
the optimized mining shape. Dilution, set at zero grade and a bulk density of
2.8 tonnes per cubic metre, is based on the full mining shape with internal and
external dilution. Average dilution of the mineral resources that are in the LOM
production plan is 18.9% . Mining recovery is defined as the ratio of mineral
resource tonnes delivered to the concentrator to the in-situ mineral resource
tonnes. Average recovery of the mineral resources that are in the LOM production
plan is 81.1% .

Diluted and recovered mineral resources exceeding a Net Smelter
Return (NSR) cut-off of $88 per tonne for longhole open stoping and $111 per
tonne for cut and fill mining method are included in the mineral reserves. NSRs
are based on metal grades from the stope optimizer and block model, long-term
metal prices, concentrator recoveries, smelter treatment, refining and
payabilities and a Hudbay Manitoba Business Unit administration cost. Metal
prices of $1.07 per pound zinc (includes premium), $1,260/oz gold, $3.00/lb
copper, and $18.00/oz silver with a CAD/US foreign exchange of 1.10 was used to
estimate mineral reserves.

The orebody is polymetallic with economically significant
metals being zinc, gold, copper and silver. There are two different ore types,
both of which are assumed to be treated using conventional flotation at the
Stall concentrator:

| |  | Base metals ores. Near solid to solid sulphide ores, with
      dominant pyrite and sphalerite with minor blebs and stringers of
      chalcopyrite and pyrrhotite.
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                                                    
| |  | Gold rich ores. Silicified gold and silver enriched ores
      with stringers to disseminated chalcopyrite and sphalerite mineralization.                          

Metallurgical performance at Stall concentrator indicates that
the base metal and gold rich ores can be blended and two concentrates will be
produced, a zinc concentrate that will be shipped to the Hudbay Flin Flon
metallurgical complex for production of refined zinc, and a gold enriched copper
concentrate that will be shipped to third party smelters.

ANNUAL INFORMATION FORM |B15

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Reconciliation of Reserves and Resources

A year over year reconciliation of our estimated mineral
reserves and resources, exclusive of reserves at the Lalor mine is set out
below.

|Lalor Mine                                                                 
|---------------------------------------------------------------------------
|Mineral Reserve Reconciliation
      (Proven & Probable)                   
|A                                                                          
|B                                                                          
|C                                                                          
|D                                                                          
|E                                                                          
|                                                                           
|Mineral Resource Reconciliation 
      Base Metal (Measured and Indicated)
|F                                                                          
|G                                                                          
|H                                                                          
|                                                                           
|Mineral Resource Reconciliation 
      Base Metal (Inferred) Tonnes       
|I                                                                          
|J                                                                          
|K                                                                          
|                                                                           
|Mineral Resource Reconciliation 
      Gold Zones (Measured and Indicated)
|L                                                                          
|M                                                                          
|N                                                                          
|                                                                           
|Mineral Resource Reconciliation 
      Gold Zones (Inferred)              
|O                                                                          
|P                                                                          
|Q                                                                          

Mining Operations: Mine Planning

Lalor mine is a multi-lens, flat lying orebody with ramp access
from surface and shaft access to the 955 metre level. Internal ramps located in
the footwall of the orebody provide access between mining levels. Stopes are
accessed by cross cuts from the major mining levels.

Power is provided to the mine via power cables located in the
production shaft, electrical distribution to the mine workings consist of 13.8
kV that is further stepped down to 600 V. The Chisel North mine ventilation system in sequence with the Lalor mine Downcast
Raise, provide 400,000 cfm down the Lalor mine Access Ramp, with 150,000 cfm
exhausting to surface via the Chisel North mine Ramp. An additional 555,000 cfm
is downcast via the Lalor mine Production Shaft for a total of 955,000 cfm
exhausting up the Main Exhaust Shaft. Mine ventilation air is heated by direct
fired propane heaters located at each of the intakes. Lalor mines fresh water
source is Chisel Lake. Water is pumped from Chisel Lake to Lalor via heat traced
pipeline. Fresh water pipe lines are located in the production shaft, with
secondary water from natural ground water in the Lalor ramp. Mine water reports
to the water treatment plant at Chisel Lake where it is treated and released.
The main collection areas feeding the water treatment plant are the 140 metre
level Pump Station at Photo Lake mine via the main ramp, surface portal and
Photo Lake Pump House; the 840 metre level Sump via the Lalor mine Ventilation
Raise and Lalor mine Lift station; and the 955 metre level main pumps via the
Lalor mine Production Shaft and Lalor mine Lift Station. The Chisel North mine
water is collected and that water is pumped to the 410 metre level sump where it
continues to the 955 metre level main pumps at Lalor mine. All water within the
mine is collected in intermediary collection sumps and proceeds to the main
collection areas via drain lines, drain holes or drainage ditches.

ANNUAL INFORMATION FORM |B16

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In 2016, we mined 1,086,362 tonnes of ore via the production
shaft at Lalor and ore was trucked to the Stall concentrator for processing.

Mining is done using mobile rubber tired diesel equipment. Load
haul dump (LHD) units vary from 8 to 10 cubic yards. Trucks are
currently 42 to 60 tonne units that haul both ore and waste. Ore is directed to
rock breakers located near the production shaft at the 910 metre level, where it
is sized to 0.55 metre and conveyed to the shaft for hoisting to surface by two
16 tonne capacity bottom dump skips in balance. Hoisted ore is hauled by truck
to the Chisel North mine site, crushed to less than 0.15 metre and stockpiled.
Crushed ore is loaded by front end loader to tractor trailers and hauled to the
Hudbay concentrator at Stall Lake. Waste rock is disposed of as backfill
underground.

Lateral advance is made in 4 m long segments (rounds), with
typical dimensions of 6 metre wide by 5 metre high. Lateral drilling is
completed with two boom electric hydraulic jumbo drills, each round requires
approximately 80 holes. Ore and waste are mucked using LHDs. Following mucking,
standard ground support, consisting of resin grouted rebar and welded wire mesh
to within 1.8 metre of the sill, is installed. Mine services, including
compressed air, process water and discharge water pipes, paste backfill
pipeline, power cables, leaky feeder communications antenna and ventilation duct
are installed in main levels and stope entrances.

Two main mining methods are used at Lalor mine, cut and fill
and longhole open stoping. Cut and fill methods include: mechanized cut and
fill, post pillar cut and fill and drift and fill. Longhole open stoping methods
include: transverse, longitudinal retreat and uppers retreat. Each mining area
is evaluated to determine the most economic stoping method. In general where the
dip exceeds 35° and the orebody is of sufficient thickness, longhole open
stoping is used and lateral based cut and fill mining methods are used in
flatter areas. Approximately 65% of the mineral reserves are mined using the
longhole open stoping methods and 35% are mined with cut and fill methods. All
stope mining is done using emulsion explosives.

Current production rates are approximately 3,000 to 3,500
tonnes per day and the mine is ramping up production to 4,500 tonnes per day by
2018. The production ramp-up is supported by the underground ore handling
circuit capable of 4,500 tonnes per day, transitioning to more bulk mining
methods (65% of reserves) with additional mining fronts and design changes to
improve mining efficiencies, developing ore passes and transfer raises to reduce
truck haulage cycle times from the upper portions of the mine and commissioning
of a paste backfill plant in the first quarter of 2018.

Autonomous operation of a LHD loader underground is currently
being trialed from surface by tele-remote monitoring with changes to standard
designs to allow isolation of autonomous areas and buffer storage for in-between
shift mucking.

Ore is received at the Stall concentrator, approximately 16
kilometres east of Lalor mine, and placed in coarse ore bins or on a stockpile
at the mill. Ore is conveyed to a three stage crushing plant and crushed to 19mm. Crushed ore is conveyed to two sequential rod and ball
mill combinations operating parallel with each other. The mills feed a
sequential flotation process where a bulk rougher copper concentrate is floated
first. The copper rougher concentrate is reground, followed by three stages of
cleaning producing a concentrate grading approximately 21% copper. The copper
concentrate is thickened and filtered to remove water, and is conveyed to
concentrate storage. Copper concentrate is loaded to semi tractor trailer trucks
for transport to Flin Flon for transport to third party smelters.

ANNUAL INFORMATION FORM |B17

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The tails from the copper circuit feed the zinc flotation
circuit which produces a zinc rougher concentrate. This is followed by three
stages of zinc cleaning which produces a concentrate grading approximately 51%
zinc. Zinc concentrate is thickened and filtered and is conveyed to concentrate
storage. Zinc concentrate is loaded to semi tractor trailer trucks for transport
to Flin Flon where it is processed into refined zinc. Final tails from the Stall
concentrator are currently pumped to the Anderson TIA for permanent
disposal.

The increase in production to 4,500 tonnes per day at Lalor is
complemented by the Stall concentrator expansion to 4,500 tpd, which is
currently underway and is expected to be commissioned in the third quarter of
2018. The expansion addresses the following areas: crushing, copper and zinc
flotation, thickening, dewatering, electrical power distribution, compressed air
systems and water distribution systems that will enable the concentrator to
operate at 4,500 tpd.

The Lalor paste plant project, which was approved in February
2017, is critical for the sustainability of the mine production plan. The paste
plant will be located northeast of the existing headframe complex at Lalor mine
and delivery capacity of the paste is 165 tonnes per hour solids (tails) or 93
cubic metres per hour paste. The paste plant is designed to fill voids left by
mining of approximately 4,500 tonnes per day. Taking into account waste
generated from development in the LOM and the plan not to hoist waste from
underground the combined paste/waste backfilling capacity is approximately 6,000
tonnes per day. The paste plant will be capable of varying the binder content in
the paste to provide flexibility in the strength gain of the paste where higher
and early strength may be required depending on mining method.

Tails that are currently pumped from the Stall concentrator to
the Anderson TIA will be diverted to the Anderson booster pump station. Capacity
of the pumping station will range from 110 to 130 tonnes per hour to allow for
some variation in the output of tailings from the concentrator. The tailings
will be directed into the Anderson TIA when not required for the paste plant.

Two pipelines will be installed between the Anderson booster
pump station and the paste plant located at Lalor mine site, approximately a 13
kilometre distance. Paste will be delivered underground via one of two  nominal
8 inch diameter, cased boreholes from surface to the 780 metre level the mine.
Only one borehole is required during normal operation, with the second borehole
available as a spare in the event of a plug or excessive wear on the primary
hole. The boreholes were drilled and cased in 2016.

A network of underground lateral piping and level to level
boreholes will transfer the paste from the base of the discharge hopper to the
required underground locations. Underground development is required to extend an
existing drift on the 780 metre level to intersect the surface boreholes and
short cross-cuts on several levels for level to level boreholes. The majority of
the underground distribution system will utilize existing drifts or planned
future development.

Permitting and Environmental

In March 2014, we received the Environment Act Licence
(EAL) for the Lalor mine which allowed the mine to move into full
production and skip tonnes up the main production shaft after construction and
commissioning was completed in the third quarter of 2014.

Commencing in 2007, AECOM carried out extensive environmental
baseline investigations needed to conclude an environmental impact assessment
for the Lalor project, including all necessary terrestrial and aquatic field
studies. This baseline work was utilized in the Lalor Paste Plant Notice of
Alteration (NoA) which was submitted to Manitoba Sustainable Development in the
fourth quarter of 2016 and was approved in January 2017. Additional baseline
work and studies was completed for the Anderson Tailings Impoundment Area (TIA) expansion NoA submitted in the third
quarter of 2016 to Manitoba Sustainable Development for approval. Due to the
extensive work already completed and other existing studies as part of
Environmental Effects Monitoring (EEM) programs at the various operations in the
Snow Lake area, it is contemplated that no additional baseline studies are
necessary for potential future improvement projects. There is no present
indication that future approvals will not be obtained to meet potential future
construction schedules.

ANNUAL INFORMATION FORM |B18

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Presently the New Britannia site inclusive of the Birch Lake
Tailings Management Facility (BLTMF), in Snow Lake, although currently on care
and maintenance, has a current EAL and the seasonal discharge from BLTMF is
regulated under the Metal Mines Effluent Regulation. Hudbay is currently in the
process of applying for a new water withdrawal licence for this site which is
anticipated to be obtained before potential operational needs. Potential future
use of the New Britannia site will require the submission of a NoA in order to
process material from the Lalor mine.

As a requirement of the Lalor mine EAL, an updated closure plan
was submitted for approval in September 2014 and is currently under review by
the regulatory authorities. NoA applications for the paste plant, expansion of
the Anderson TIA, and potential upgrades to the New Britannia site also will
require the submission of updated closure plans and financial assurance.

Exploration and Development

Since 2014, one exploration drift and one exploration ramp were
developed at Lalor for a total of 1,891 metres. The development was undertaken
to establish underground platforms to conduct exploration drilling on targets
that could not be drilled from existing mine infrastructure. Prudent care was
taken in the placement and size of both the exploration ramp and drift to assure
the selected locations can accommodate future mining equipment and related
infrastructure.

In 2015, thirty-one drill holes were completed for a total of
10,395 metres focusing on the copper-gold, Zone 27. Exploration drilling
continued on Zone 25 from March to July of 2016 for a total of sixty-nine drill
holes and 16,098 metres. The purpose of the exploration programs was to upgrade
inferred resources, specifically focused on identifying areas of enriched gold
and copper-gold mineralization. Due to the low angle and stacking nature of the
mineralization at Lalor, holes were extended beyond the gold target depths to
explore the on-strike and plunge potential of known base metal lenses, which led
to increases in mineral resource inventory.

In the fourth quarter of 2016, Hudbay developed 37 drift rounds
at Lalor to assess the continuity and variability of non-contact gold
mineralization within discrete areas of Zones 21 and 25. Approximately 10,000
tonnes of bulk sample material was mined and hauled to surface. The material was
primary crushed and processed through a sample tower to collect a representative
subsample of each development round. The integrity of the material was
maintained at all times through a rigorous chain of custody process. The mined
material, stored on surface, is available for milling pending the potential
economic viability of refurbishing the New Britannia gold mill in Snow Lake by
Hudbay.

The preliminary results indicate that the gold grades from the
bulk sample program are as expected with minor variations when compared to those
modeled based on diamond drill data. The bulk sample program has increased the
confidence and the understating of the gold zones and gold mineralization at
Lalor.

777 MINE

Project Description and Location

The 777 mine is an underground copper and zinc mine with
significant precious metals credits located in Flin Flon, Manitoba. Unless the
context indicates otherwise references to the 777 mine include the 777 North
expansion.

ANNUAL INFORMATION FORM |B19

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We own a 100% interest in the properties that comprise the 777
mine through mineral leases, Order in Council (OIC) leases and mineral
claims in Manitoba and Saskatchewan. The properties cover approximately 3,800
hectares, including approximately 500 hectares in Manitoba and approximately
3,300 hectares in Saskatchewan. Annual lease rental payments are C$6,913 and
C$1,600 to the Manitoba and Saskatchewan governments, respectively, and the
annual work expenditure requirement for the Saskatchewan properties is
C$257,025. Individual leases have different term expiry dates that range from
2017 to 2036. Our surface rights and permits are sufficient for purposes of our
current mining operations.

Liabilities associated with the 777 mine are addressed by the
closure plans that have been submitted to regulators in both Saskatchewan and
Manitoba and financial assurance has been provided to cover the demolition and
remediation activities outlined in such closure plans. The closure and
remediation liability in respect of the property is estimated at C$1.8 million
as of December 31, 2016. In addition, closure plans have been submitted and are
backed with financial assurance for the associated Flin Flon Metallurgical
Complex (FFMC), which includes the Flin Flon Tailings Impoundment
System (FFTIS) utilized by the 777 mine.

Mineral production from the 777 mine property is subject to a
4% net smelter returns royalty and a 27.56 cents (Canadian) per tonne production
royalty pursuant to a Royalty Agreement (the Royalty Agreement) dated
as of January 1, 2015 between HBMS and Callinan Royalties Corporation
(Callinan). The Royalty Agreement replaces the previous Net Profits
Interest and Royalty Agreement, which was terminated in conjunction with the
execution of the Royalty Agreement.

Precious metals production from the 777 mine is subject to our
agreement with Silver Wheaton, as described in this AIF.

Accessibility, Climate, Local Resources, Infrastructure and
Physiography

The 777 mine is located in Flin Flon, Manitoba, which has a
population of approximately 6,000 people, and is accessible by paved highway.
Flin Flon is the site of our principal concentrator and zinc plant and has well
developed access to rail and air transportation. Personnel requirements for our
777 mine and processing facilities are largely drawn from the immediate area.

Electrical power is supplied from the Manitoba Hydro and
Saskatchewan Power Corporation power grids, which are fed by three hydroelectric
generating stations. No issues are foreseen for securing additional electrical
power in the future if required.

Water for mining activities is supplied from a reservoir
located adjacent to the 777 mine site and is sufficient for operations.

Tailings from milling are sent to the Paste Backfill Plant
located at the lower level of the mill building. Mixed paste backfill is pumped
to one of two lined boreholes adjacent to the mill, where paste is gravity fed
to 1,082 metre level for distribution to mined out stopes. Tailings not used in
paste production are pumped to the FFTIS. The FFTIS is located in Saskatchewan
approximately 500 metres to the west of our Flin Flon Metallurgical Complex.

The 777 mine site is 311 metres above sea level. The
geographical area has cool summers and very cold winters with a mean annual
temperature of 0.6° C. Operating costs in the first and fourth quarters are
typically higher due to additional heating and other seasonal costs.

History

In 1993, the 777 deposit was discovered by an underground
exploration hole that intersected the mineralization at a depth of 1,000 metres.
In 1995, a drilling program delineated the ore body and by 1997, this ore body
was defined. In 1999, development of the 777 mine began as part of the 777
Project and commercial production from the mine commenced in January 2004. By
this time, Minorco S.A. had merged with Anglo American Corporation of South Africa to form
Anglo American plc (Anglo American). In December 2004, we acquired HBMS
and the 777 mine from Anglo American.

ANNUAL INFORMATION FORM |B20

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HBMS took a working option on the 777 property in 1967 from
Callinan. In 1988, HBMS acquired Callinans remaining interest in the property
and in return granted Callinan a production royalty and a net profit interest,
which net profit interest has since been converted to a net smelter return
royalty, as described above.

Geological Setting

The 777 deposit lies in the western portion of the
Paleoproterozoic Flin Flon Greenstone Belt. The Greenstone Belt is interpreted
to be comprised of a variety of distinct 1.92 to 1.87 Ga tectonostratigraphic
assemblages including juvenile arc, back-arc, ocean floor and ocean island, and
evolved volcanic arc assemblages that were amalgamated to form an accretionary
collage prior to the emplacement of voluminous intermediate to granitoid plutons
and generally subsequent deformation. The volcanic assemblages consist of mafic
to felsic volcanic rocks with intercalated volcanogenic sedimentary rocks. The
younger plutons and coeval successor arc volcanics, volcaniclastic, and
sedimentary successor basin rocks include the older, largely marine turbidites
of the Burntwood Group and the terrestrial metasedimentary sequences of the
Missi Group (which includes the Flin Flon formation).

The Flin Flon formation is subdivided into three mappable
members containing units of heterolithic and monolithic breccias, rhyolite flows
and domes, and massive and pillowed basalt flows and flow-top breccias. It is
comprised of the Millrock member, which contains the 777 and Callinan
mineralization, and in footwall to it the Blue Lagoon and Club members.

A complex succession of felsic and basalt-dominated
heterolithic volcaniclastic rocks host the Flin Flon Main, Callinan and 777
volcanogenic massive sulphide (VMS) deposits within the Greenstone
Belt. The north-trending, VMS-hosting, 30 to 700 metre thick
volcanic/volcaniclastic succession is recognized for at least 5 kilometres along
strike and has an average dip of 60°E. The volcaniclastic rocks have been
interpreted to occupy a volcano-tectonic depression within a basaltic footwall
succession.

Exploration: Drilling

Diamond drilling is the only drilling type carried out for the
purposes of exploration, ore zone definition and sampling of our 777 mine
mineralization. The modern 777 drilling program began in the early 2000s and,
as at September 30, 2016, a total of 2,572 holes and 359,347 metres had been
drilled. All holes, except a geotechnical shaft pilot hole and surface North
expansion exploration holes, were drilled from underground by a contractor using
AW-34, AQTK, BQ and NQ core sizes. Drill hole spacing along the 777 deposit is
generally 30 to 50 metres. Core recovery is near 100% for all holes. Drilling
was categorized as definition, exploration, or geotechnical. Geotechnical
drilling was completed in areas of planned underground infrastructure to ensure
competency.

Standard procedure is that the core is initially logged for
lithology then descriptively for grain size, foliation, minor units, alteration
minerals and intensity, faults, RQD, joints and contacts. Sample intervals are
determined by both lithology and a visual estimate of the sulphide
mineralization. As a general rule, sample intervals are approximately one metre,
though the length varies depending on lithology or type of mineralization.
However, as many of the assays are historic in nature, several were split when
they overlapped lithological boundaries in the resource block model and resulted
in shorter sample intervals.

Exploration: Surveying

We routinely conduct time-domain borehole electromagnetic
surveys with three dimensional probes on drill holes. These probes used are
induction coil probes which measure the secondary magnetic field induced by the
primary field created by a loop. These electronic methods can generally detect
off hole targets up to 150 metres or more from the hole depending on the size
and conductivity of the target. The sample quality can be affected by active
mine workings and the proximity of the geophysical apparatus to a large ore
body, such as 777, which can leave an imprint of the mine itself on
the data.

ANNUAL INFORMATION FORM |B21

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After the initial aggressive exploration program that defined
the 777 deposit, fewer holes were downhole geophysical surveyed. The first
modern exploration drill hole at the 777 mine, T7X-001, was pulsed in late 2004.
Following that hole, little exploration work was conducted between 2005 and 2008
with only 56 holes being drilled during that four year period. Since 2009,
exploration efforts have increased along with the use of downhole geophysical
surveying.

In 2007 a total of 75 kilometres of high resolution 2D seismic
profiles as well as a 3D survey covering approximately 10 square kilometres was
completed. Results were hampered by the significant challenges posed by the
complex crystalline geology of the area, proximity to an active town, active
mining operations, and the highly variable terrain.

The survey resulted in a greater understanding of the area
geology. Also, the discovery of Zone 33 at the 777 Mine was attributed to this
survey as it showed a seismic reflector in the footwall, which was later
followed up with drilling and downhole pulsing. Previous downhole geophysical
surveys had noted this anomaly, but it was previously discounted as a shadow
effect from the 777Mine.

Mineralization

The 777 and Callinan deposits occur within an east-facing
sequence of volcanic rocks documented as tholeiitic and basalt-dominated, and
dated around 1888 Ma. The rocks immediately hosting the mineralization, however,
consist of quartz-phyric (QP) and quartzfeldspar-phyric rhyolite flows
and quartz-feldspar crystal-lithic volcaniclastic rocks of rhyolitic
composition.

The 777 deposit can be divided into two main southeast plunging
trends, the North Limb and the South Limb, as well as the West Zone. All three
zones lie within the same stratigraphic sequence with the same lithofacies as
described above. The West Zone lies in the footwall in what is interpreted to be
a lower thrust slice and both limbs have the same stratigraphic sequence. On
average the lenses strike at 010° and dip to the east at 45°. All zones have a
relatively shallow plunge trending at -35° towards 140°. Horizontal widths
throughout the deposit range from 2.5 metres to 70 metres in thickness, and can
be thicker when two or more zones overlap.

There are a total of nine distinct sulphide lenses contained
within the 777 deposit. Each of the zones is distinguished based on grade and
mineralization type as well as their spatial location. The 777 deposit
encompasses an area approximately 1,300m downplunge by 550 metres across and
varying in depth from approximately 870 to 1,600 metres below surface. Lenses in
general are fairly continuous with the exception of scattered diorite
intrusions.

The Callinan deposit is subdivided into two rhyolite horizons
termed the East-QP and the West-QP. The East-QP is host to the lenses of the
North Zone (northern portion), and the East Zone (southeast portion), and is on
the same horizon as the 777 mineralization. The West-QP hosts the South Zone
(southwest portion) and its associated lenses. Each of these zones is further
subdivided into a number of mineralized lenses. The subdivision of Zones into
lenses was based on the spatial distribution of the mineralization. The South
Zone lenses generally strikes to the north and dip at 50° to the east with a
plunge trending at -50° towards 135°. The North and East Zones generally strike
at 020° with a 50° dip to the east with a shallow plunge trending at -30°
towards 145°.

There are a total of 20 sulphide lenses contained within the
three broad zones of the Callinan deposit. The Callinan mineralization is a
distal deposit that has a matrix supported breccia with variable amounts of
wallrock fragments in a fine to medium grained sulphide matrix. The wallrock
fragments are intensely altered with chlorite, talc and sericite with some
degree of pyritization and carbonation. These lenses contain variable amounts of
pyrite, sphalerite, chalcopyrite and minor pyrrhotite.

Mineralization is generally medium to coarse grained
disseminated to solid sulphides consisting of pyrite, chalcopyrite, sphalerite, pyrrhotite, and magnetite. The
principle gangue minerals are chlorite and quartz. Alteration minerals include
biotite, epidote and actinolite.

ANNUAL INFORMATION FORM |B22

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Sampling and Analysis: Sampling Methods

The majority of sample intervals from definition and
exploration drilling were whole rock sampled with the core placed in a plastic
bag with its unique sample identification tag. Typically when exploration
drilling in new areas, all samples are either split or cut in half with a
diamond saw and a representative portion of the hole is kept.

The bagged samples were placed in either a burlap bag or a
plastic pail with a submittal sheet that was prepared by the geologist or
technician. Samples were delivered to the Flin Flon assay laboratory, located in
the Flin Flon Metallurgical Complex, which is owned and operated by us. Samples
are checked by laboratory personnel to ensure that they match the submittal
sheet.

The samples were analyzed for the following elements: gold,
silver, copper, zinc, lead, iron, arsenic and nickel. Base metal and silver
assaying was completed by aqua regia digestion and read by a simultaneous ICP
unit. The gold analysis was completed on each sample by AAS after fire assay
lead collection. Gold values greater than 10g/t were re-assayed using a
gravimetric finish. All analytical balances are certified annually by a third
party. Check weights are used daily to verify calibration of balances. All metal
standards used to make the calibration standards for the AAS and ICP are
certified and traceable. Each is received with a certificate of analysis. The
Flin Flon assay laboratory is certified to the ISO 9001 quality management
system and pertinent methods are accredited to ISO 17025 for gold AAS, base
metal ICP and environmental methods to help ensure it meets our needs as well as
those of other stakeholders.

A total of 112,732 samples from 3,396 drill holes were
submitted to the Flin Flon assay laboratory for analysis as of the date of the
most recent technical report. The average length for these sample intervals was
1.62 metres.

Bulk density measurements were taken on 2,982 of the
mineralized samples selected for assaying as of the date of the most recent
technical report. The measurement methodology consisted of first weighing the
core sample in air, then, the sample was suspended in a tub filled with water by
a chain on the underside of the scale in such a way that it did not touch the
sides of the water-filled tub and the weight of the submerged sample was
recorded.

Sampling and Analysis: Quality Assurance and Quality
Control

As part of our Quality Assurance and Quality Control
(QAQC) measures, a portion of the pulp duplicates has been sent to
Bureau Veritas Commodities Canada Ltd. (Bureau Veritas) in Vancouver,
British Columbia, formerly Acme Analytical Laboratories Ltd., for comparison and
verification purposes since early 2006. Our QAQC measures also involve the use
of blank materials, reference standards, internal duplicates, and repeats.

During the drilling programs at 777 a total of four different
types of blanks were inserted into the sample stream between early 2000 and
September 2011. Blanks were inserted at a rate of one for every twenty assays
until the fall of 2003, when this was reduced to one for every fifty assays as a
means of cost reduction. Since our assay laboratory runs batches of 50-60
samples at a time this should place at least one blank in every batch.

The use of reference standards has become increasingly
systematic and they are now inserted into the sample stream at every 20th assay
interval.

Duplicates are used as a check to verify the repeatability of
the assay data. Duplicates are run at our laboratory at a frequency of one in
twenty samples, and also at Bureau Veritas as an independent check. Repeats,
typically referred to as blinds, are run on a monthly basis on one sample out
of every four or five duplicates that were analyzed during that month. The
results are considered an internal independent check on our assay laboratory results.

ANNUAL INFORMATION FORM |B23

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Sampling and Analysis: Data Verification

Examination and mapping of the underground drifting visually
confirmed the geology and VMS style of mineralization. As well, the examination
of drill core for several holes has also confirmed the mineralization and
geology and compared well to underground mapping with drill logs and assays.

A visit was conducted to the 777 core logging and storage area,
exploration core storage facility, and our assay facility and each was deemed to
be secure and in reasonable condition. In addition, the qualified person has had
several discussions with current and former geologists as well as other
personnel that have worked at the deposit to verify various details of the
mining, infrastructure, geology, drilling and sampling.

Full verification of the data was not able to be completed as a
small portion of the data from the Callinan portion of the deposit is considered
historic in nature.

Security of Samples

For security purposes, all sample preparation, splitting,
handling, and storage was in the control of our personnel at all times in
accordance with then applicable chain of custody policies which were consistent
with industry standards at the time. We implemented a documented full chain of
custody procedure in August 2011. This involves the creation of a submittal
sheet with all batches of drill core sent for assay by the geologist daily. The
sheet is signed both by the geologist, to verify the samples were stored
securely, and by the laboratory personnel, to verify it was in their control
from the time it left the core logging and sampling facility and is consistent
with the current industry standards.

Mineral Resource and Mineral Reserve Estimates

1. Mineral Resources

Mineral resources were separated into the 777 and Callinan
portions of the deposit. This was done for mining and planning purposes as the
Callinan lenses represent the upper, and more historic, portion of the
mineralization and the 777 zones represent the lower more recently drilled and
identified mineralization. The interpreted lenses of the 777 zones and certain
Callinan lenses were built by digitizing polylines around the mineralization.
Polylines were then linked with tag strings and triangulated in order to create
three dimensional wireframe solids. The remainder of the mineralization was
interpreted by digitizing polylines in a 2D plane around mineralized intercepts.
The average strike and dip of the zone was estimated and utilized to calculate
the horizontal width of the mineralization for both the 2D Gridded Seam Model
and the polygonal interpretations.

The mineral resource estimate, effective as of a September 30,
2016 cut-off date for diamond drilling, was completed using MineSight 11.5
software in mine coordinates, and for the Callinan lenses, the current version
of MineSight at the time of estimation. The block model was constrained by
interpreted 3D wireframes of the mineralization. Gold, silver, copper, zinc,
iron, specific gravity and in some cases dilution variables and horizontal width
were estimated into blocks using either ordinary kriging or relative co-ordinate
kriging for most lenses. Lens intersections were generally selected based on a
metal grade of 3.3% zinc equivalent over 2 metres. Intersections were modelled
as low as 0.3m to provide additional information for statistical and mine
planning purposes.

2. Mineral Reserves

Mining, processing and economic parameters were applied to the
block model to form the basis of the reserve estimate with an effective date of
January 1, 2017. The measured resources were used to estimate the proven mineral
reserves and the indicated resources were used to estimate the probable mineral
reserves. For mining purposes, there are eight active mining areas in the mine
to allow for a blended product with the end goal to send a blended grade to the
mill. Mining methods were established for each mining area and a net smelter return (NSR) was calculated to
determine the economic viability. NSR revenues were calculated for each mining
area comprised of blocks from the block model assuming metallurgical recoveries
and our four year average metal prices and exchange rates. To determine the
economic viability and NSR margin of each mining block, onsite operating costs,
capital development and offsite costs were estimated and applied against copper
and zinc concentrate produced for each mining block. The final step of the
reserving process involved developing an annualized life-of-mine production plan
and supporting cash flow analysis to determine the mineral reserves.

ANNUAL INFORMATION FORM |B24

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Reconciliation of Reserves and Resources

A year over year reconciliation of our estimated mineral
reserves and resources at the 777 mine is set out below.

|777 Mine                                                
|--------------------------------------------------------
|Mineral Reserve Reconciliation (Proven &
      Probable)
|A                                                       
|B                                                       
|C                                                       
|D                                                       
|E                                                       
|F                                                       
|G                                                       
|H                                                       
|                                                        
|777 Mine                                                
|Mineral Resource Reconciliation (Indicated)             
|I                                                       
|J                                                       
|K                                                       
|                                                        
|777 Mine                                                
|Mineral Resource Reconciliation (Inferred)              
|L                                                       
|M                                                       
|N                                                       

Notes:

|1. | Geology - diamond drilling, interpretation, estimation
      (interpolation parameters)                           
|-- | ------------------------------------------------------------------------------------------------------------------
|2. | Mine Planning - resultant change of mine plan design,
      dilution and recovery                                 
|3. | Economics - mine operating and capital, commodity price
      and CDN$/US$ exchange, concentrating, TC/RC, freight
|4. | Totals may not add up currently due to
      rounding                                                             

ANNUAL INFORMATION FORM |B25

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Mining Operations

The 777 mine is a multi-lens orebody with shaft access down to
the 1508 metre level. The mine consists of an internal ramp that provides access
to each mining level. Mobile tired diesel equipment is utilized. Load haul dump
(LHD) units vary from 8 to 10 cubic yard. Trucks are 40 to 50 ton units
feeding an ore pass system or direct to rock-breakers which feed an underground
crusher and ore is skipped to surface via the shaft.

Long-hole open stope is the mining method used at the 777 mine.
Mine sequencing involves primary, secondary, chevron and longitudinal retreat
stopes that are either paste or unconsolidated loose waste rock backfilled.
Long-hole stopes are mined at 15 to 17 metre vertical sill to sill intervals.
Stope strike lengths are generally 16 metres with widths of 3 to 100 metres,
with an average of approximately 20 metres. The ore is undercut at the top and
bottom of the block, providing access for drilling and mucking. Drilling is done
by top hammer long-hole drills with holes varying in length between 10 metres
and 20 metres long and a hole diameter of 3 inches. Mucking is accomplished by
remote LHD units and then loaded to haul trucks. Ore at 777 mine is loaded by
LHDs to underground haul trucks, which dump to a series of ore passes that feed
three chutes on 1412 metre level. Haul trucks are loaded from the chutes and
haul the ore directly to the main ore pass system on 1412 metre level. The ore
is temporarily stored in a 1,725 tonne coarse ore bin that feeds the crusher.
From the crusher it is conveyed to a 1,600 tonne fine ore bin, where it is
conveyed to a loading pocket at the 1508 metre level and placed into two 15
tonne skips and hoisted to surface. The ore on surface is hauled by 53 to 63
tonne haulage trucks directly to the Flin Flon concentrator or is dumped on a
stockpile close to the concentrator.

Ore from 777 North expansion is loaded onto haul trucks by LHDs
and transported up the ramp to surface. The ore is dumped on the ground prior to
being sent through a surface crusher operated by a contractor. The ore is then
loaded and transported for processing at the Flin Flon concentrator or
stockpiled nearby.

Our Flin Flon concentrator processes 777 ore into copper and
zinc concentrates. Copper concentrate is sold to third party purchasers and zinc
concentrate is sent to our Flin Flon zinc plant where it is further processed
into special high grade zinc before being sold to third party purchasers. See
Description of our Business  Other Assets  Processing Facilities and
Description of our Business  Other Information  Products and Marketing.

Production from 777 is subject to federal and provincial income
taxes, as well as the Manitoba mining tax. The combined federal and provincial
income tax rates are assumed to be approximately 27% for the life of the mine.

The 777 mine has been in commercial production since 2004 and
the original project capital has already been paid back and ongoing capital is
defined as sustaining capital.

Exploration and Development

2011 marked the first year that a concentrated effort on
exploration drilling was conducted from underground at the 777 mine. Much of the
drilling to that date had been focused on converting resources to reserves. In
excess of 113,700 metres of underground exploration drilling has been drilled at
the 777 mine targeting additional resources in the hanging wall, footwall, along
strike and in upgrading inferred resources.

An extensive exploration program was conducted from 2014 to
2015 to extend the mine life of 777. Specific work included the analysis of
7,696 lithogeochemistry samples to determine rock types and ore associated
signatures, 18 select historical drill holes were geophysically re-surveyed and
geology from more than 6,000 drill holes in the area were collated and reviewed.
The drilling program included 18 holes from surface for 15,466 metres and 55
holes from underground for 34,564 metres. No new mineable zones were added to
the mine life as the result of the program and all high priority targets have
been followed up with drilling as well as most of the lesser category targets.

ANNUAL INFORMATION FORM |B26

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The War Baby claim prospect, defined as the area down plunge
from the high grade 777 mine 30 and 60 lenses, was optioned from Callinan
Royalties in late 2014. Callinan Royalties had drilled several wedges in the
late 1990s from one surface hole that showed sporadic near ore grade
intersections. The 777 mine geology team reviewed the information provided by
Callinan Royalties and drilled seven drill holes from December 2014 to November
2015 from existing underground development to confirm historical mineralized
intersections and also to provide step-out geological information. Results of
this drilling indicated the sporadic mineralization was stringer type material
within an intense chlorite alteration zone associated with the Second Panel, and
the Upper Panel rhyolite that hosts the 777 mine lenses was almost barren of
economic sulphides. As a result, Hudbay has allowed the War Baby option to
terminate. The down plunge extents of 777 mine 30 and 60 lenses were not
entirely defined by this drilling, however geophysical information and previous
testing suggests that no significant mineralization remains at depth.

The majority of the exploration holes drilled during the 2014
to 2015 program had time domain electromagnetic surveys completed. All high
priority geophysical targets were tested during the program and no further work
is warranted. In total, 36 borehole electromagnetic surveys from surface and 74
from underground have been completed to date at 777 mine.

ROSEMONT PROJECT

Project Description, Location and Access

The Rosemont project is located on the eastern flanks of the
Santa Rita Mountain range approximately 50 kilometres southeast of Tucson, in
Pima County, Arizona. Existing graded dirt roads provide good access into and
around the Project and connect the property with State Route 83. The city of
Tucson, Arizona, provides the nearest major railroad and air transport services
to support the Project. The Rosemont projects geographical coordinates are
approximately 31o 50N and 110o 45W.

The lands are under a combination of private ownership by
Rosemont Copper Company, a subsidiary of Hudbay, and Federal ownership. The
lands occur within Townships 18 and 19 South, Ranges 15 and 16 East, Gila &
Salt River Meridian. The core of the Rosemont project mineral resource is
contained within the 132 patented mining claims that in total encompass an area
of approximately 2,000 acres (809 hectares). Surrounding the patented claims is
a contiguous package of 1,064 unpatented mining claims with an aggregate area of
more than 16,000 acres (6,475 hectares). Unpatented claims Agave 7, 8 and 9 and
a small fraction named the Recorder Fraction were staked in 2014. Associated
with the mining claims are 38 parcels of fee (private) land consisting of
approximately 2,300 acres (931 hectares) (the Associated Fee Lands). The area
covered by the patented claims, unpatented claims and Associated Fee Lands
totals approximately 20,300 acres (8,215 hectares). The patented mining claims
are considered to be private lands that provide the owner with both surface and
mineral rights. The patented mining claim block, including the core of the
mineral resource, is monumented in the field by surveyed brass caps on short
pipes cemented into the ground. The fee lands are located by legal description
recorded at the Pima County Recorders Office. The patented claims and
Associated Fee Lands are subject to annual property taxes amounting to a total
of approximately $8,800.

Mineral Rights on US Forest Service and Bureau of Land
Management (BLM) lands have been reserved to Rosemont Copper Company, via the
unpatented claims that surround the patented claims. Wooden posts and stone
cairns mark the unpatented claim corners, end lines and discovery monuments, all
of which have been surveyed. The unpatented claims are maintained through the
payment of annual maintenance fees of $155.00 per claim, for a total of
approximately $165,000 per year, payable to the BLM.

There is a 3% Net Smelter Return (NSR) royalty on all 132
patented claims, 603 of the unpatented claims, and one parcel of the Associated
Fee Lands with an area of approximately 180 acres.

ANNUAL INFORMATION FORM |B27

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As discussed in the body of this AIF, Hudbays ownership in the
Rosemont project is subject to an earn-in agreement with United Copper &
Moly LLC (UCM) and a precious metals stream agreement with Silver Wheaton.

As discussed in this AIF, the permitting process for Rosemont
is well advanced and continues to progress. The remaining key federal permits
are the final Record of Decision from the U.S. Forest Service and the Clean
Water Act Section 404 Permit from the U.S. Army Corps of Engineers.

History

By the late 1950s, the Banner Mining Company (Banner) had
acquired most of the claims in the area and had drilled the discovery hole into
the Rosemont deposit. In 1963 Anaconda Co. acquired options to lease the Banner
holdings and over the next ten years they carried out an extensive drilling
program on both sides of the mountain. The exploration program demonstrated that
a large scale porphyry/skarn existed at Rosemont.

In 1973 Anaconda Mining Co. and Amax Inc. formed a 50/50
partnership to form the Anamax Mining Co. (the Anamax). In 1977, following
years of drilling and evaluation, the Anamax Joint Venture commissioned the
mining consulting firm of Pincock, Allen & Holt, Inc. to estimate a resource
for the Rosemont Deposit. Their historical resource estimate of about 445
million tons of sulfide mineralization averaged 0.54% copper using a cut-off
grade of 0.20% copper. In addition to the sulfide material, 69 million tons of
oxide mineralization averaging 0.45% copper was estimated. Hudbay considers the
estimate done by Anaconda to be historical in nature since no work has been done
by a Hudbay Qualified Person to verify the estimate, and the estimate should not
be relied upon by investors.

ASARCO purchased the patented and unpatented mining claims in
the Helvetia-Rosemont mining district in August 1988 and renewed exploration of
the Peach-Elgin and initiated engineering studies on Rosemont. In 1995, ASARCO
succeeded in acquiring patents on 21 mining claims in the Rosemont area just
prior to the moratorium placed on patented mining claims in 1996. In 1999, Grupo
Mexico acquired the Helvetia-Rosemont property through a merger with ASARCO. In
2004 Grupo Mexico sold the Rosemont property to a Tucson developer.

In April 2005 Augusta purchased the property from Triangle
Ventures LLC. Over the next several years, Augusta continued to evaluate the
mineral potential at Rosemont and refine the economics of developing this
resource.

Hudbay acquired all of the issued and outstanding common shares
of Augusta pursuant to take-over bid, which expired July 29, 2014, and a
subsequent acquisition transaction, which closed on September 23, 2014. Hudbay
completed a 43-hole, 92,909 feet (28,319 meters) drill program from September to
December 2014 and a 46-hole, 75,164 feet (22,910 meters) drill program from
August to November 2015 in further efforts to gain a better understanding of the
geological setting and mineralization of the deposit and to collect additional
metallurgical and geotechnical information.

Geological Setting, Mineralization, and Deposit Types

The Rosemont deposit consists of copper-molybdenum-silver-gold
mineralization primarily hosted in skarn that formed in the Paleozoic rocks as a
result of the intrusion of quartz latite to quartz monzonite porphyry
intrusions. Bornite-chalcopyrite-molybdenite mineralization occurs as veinlets
and disseminations in the skarn.

ANNUAL INFORMATION FORM |B28

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Three mineralization domains (oxide, mixed and sulfide) were
defined based on the soluble to total copper ratio (ASCu/TCu) collected in the
Augusta (2005 to 2012) and Hudbay (2014 and 2015) drilling programs. The
oxidation and mixed mineralization occurs mainly above a low angle fault
defining the contact between the Palozoic and Mesozoic rocks as chrysocolla,
copper carbonates and supergene chalcocite.

Drilling to date has defined mineralized zones of approximately
1,100 meters in diameter that extends to a depth of at least 600 meters below
the surface. The north-trending, steeply dipping Backbone Fault juxtaposes
marginally mineralized Precambrian granodiorite and Lower Paleozoic quartzite
and limestone to the west against a block of younger, well-mineralized Paleozoic
limestone units to the east.

Most of the copper sulfide resource is contained in the eastern
block of the Backbone Fault. Structurally overlying the sulfide resource is a
block of Mesozoic sedimentary and volcanic rocks that contains lower grade
copper mineralization (predominantly as oxides). These two blocks are separated
by the shallowly dipping Low Angle Fault (LAF). Other post-mineral
features include a deep, gravel-filled Tertiary paleochannel on the south side
of the deposit and a significant thickness of Cretaceous and Tertiary
volcaniclastic material to the northeast of the deposit.

Sulfide mineralization on the east side of the Backbone Fault
and below the LAF is hosted in an east- dipping package of Paleozoic-age
sedimentary rocks that includes the Escabrosa Limestone, Horquilla Limestone,
Earp Formation and Epitaph Formation. The Horquilla Limestone is the most
significant, accounting for almost half of the sulfide resource.

Relatively minor mineralization occurs in the other Paleozoic
units. To the south, the mineralization in this block appears to weaken and
eventually die out. To the north, mineralization appears to narrow but continues
under cover amid complex faulting. Mineralization is locally open to the east of
the defined resource, beyond the limit of drilling and beneath an increasingly
thick block of Mesozoic sediments.

The Mesozoic rocks of the structural block above the LAF
consist predominantly of arkosic siltstones, sandstones, and conglomerate.
Within the Arkose are subordinate andesite flows or sills that range from a few
tens of feet to several hundred feet thick. Also structurally wedged into the
upper plate block at the base of the Arkose are the Glance Conglomerate, a
limestone-cobble conglomerate, and some occurrences of relatively fresh
Paleozoic formations.

Exploration

A Titan 24 induced polarization/resistivity (DCIP) survey over
the Rosemont deposit, performed in 2011, discovered significant chargeability
anomalies which are partially-tested. These anomalies appear to define
mineralization and also certain unmineralized lithologic units. A regional scale
airborne magnetics survey was also completed in 2008. A mapping and geochemical
sampling program was completed in the latter half of 2015 on the Rosemont
property to reassess the interpretation of the regional geology and deposit
setting.

Drilling

Extensive drilling has been conducted at the Rosemont deposit
by several successive property owners. The most recent drilling was by Hudbay,
with prior drilling campaigns completed by Banner Mining Company, Anaconda
Mining Co., Anamax, ASARCO and Augusta. Table 0-1summarizes the drill
holes used to estimate the current mineral resource estimate, with regional
exploration holes excluded.

ANNUAL INFORMATION FORM |B29

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TABLE0-1:ROSEMONTDEPOSITDRILLINGSUMMARY

Company
    Time Period
    Drill HolesNumber
    Feet
    MetersBanner Mining
    1950s to 1963
    3
    4,300
    1,311Anaconda Mining
    1963 to 1973
    113
    136,838
    41,708Anamax
    1973 to 1986
    52
    54,350
    16,566ASARCO
    1988 to 2004
    11
    14,695
    4,479Augusta
    2005 to 2012
    87
    132,525
    40,394Hudbay
    2014 to 2015
    90
    168,286
    51,294Total
    
    355
    510,780
    155,686


These drill holes were all drilled using diamond drilling
(coring) methods. In some cases, the top portion of the older holes were drilled
using a rock bit to set the collar or by rotary drilling methods and switching
to core drilling before intercepting mineralization.

In all of the drilling campaigns, efforts were consistently
made to obtain representative samples by drilling either H-size (2.5 inch or
63.5 mm diameter) or N-size (1.9 inch or 47.6 mm diameter) core. Generally,
drill programs were on east-west grid lines spaced approximately 200 feet (61
meters) apart.

Sampling, Analysis, and Data Verification

Prior to Hudbay and Augusta, significant diamond drilling,
drill core sampling, and assaying programs were executed by the previous
property owners. Records are not available that detail the sampling and security
protocols used by these property owners. There are no available QA/QC records
for sample preparation and assaying methodologies for Banner, Anaconda, and
Anamax. Copper, molybdenum, silver, and soluble copper were analyzed by Anaconda
and Anamax at their in-house laboratories. Silver was regularly analyzed by
Anamax, but not commonly assayed by Banner and Anaconda. Asarco assayed drill
core samples for total copper, molybdenum, and acid soluble copper at Skyline
laboratory.

The drill core was generally sampled continuously down the
hole, at a nominal five-foot sample length. In taking a sample, the core is
generally halved (split) along the long axis, taking care to evenly distribute
veinlets and other small-scale mineralized features where present, into both
halves of the core.

The core samples from the Augusta drilling programs from 2005
to 2012 were transported to Skyline Assayers and Laboratories (Skyline), Tucson,
Arizona, USA for preparation and analysis. In total, 21,197 samples were
analyzed for total copper and 16,619 samples for molybdenum. Total copper and
molybdenum were dissolved using a hot 3-acid digestion at 482°F and subsequently
analyzed by AAS and ICP-OES, respectively. The lower detection limits for
molybdenum are high relative to the average molybdenum grade of the Rosemont
deposit. Silver was determined in 15,334 samples, which were digested using an
aqua regia leach in 0.25 g subsample pulp and analyzed by AAS. A total of 391
drill core samples across the Rosemont deposit were measured for specific
gravity at Skyline.

Augusta conducted its own internal QA/QC program to
independently evaluate the quality of the assays reported by Skyline. Augusta
verified the accuracy and precision of its geochemical analyses by inserting
standards of known metal content in the sample stream at
periodic intervals and by reanalyzing approximately 5% of all samples to check
the repeatability of results. Standards were submitted with a frequency of one
per 20 samples. The inserted standards were chosen to be similar in grade to the
drill holes samples that they accompanied whenever possible. Blank samples were
submitted with a frequency of one per 40 samples. Approximately 5% of all
samples were reanalyzed in what was called their check assay program.

ANNUAL INFORMATION FORM |B30

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Under Hudbay ownership, private 24-hour per day security guards
administered by Securitas Inc., controlled site access and oversaw sample
security at each camp and drill site. Drill core samples from Hudbays 2014 and
2015 drill programs were picked up at the core processing facilities and
transported to Inspectorate America Corporations preparation facility at
Sparks, Nevada, USA. Samples were weighed upon arrival, dried at 60°C, and
crushed in jaw crushers to ≥70% passing through 10 mesh (2 mm). The entire
crushed sample was homogenized, riffle split, and a 1,000 g subsample was
pulverized to ≥85% passing through 200 mesh (75 μm) using Essa standard steel
grinding bowls. Jaw crushers, preparation pans, and grinding bowls were cleaned
by brush and compressed air between samples. Cleaning with a quartz wash was
conducted between jobs and between highly mineralized samples.

Once samples were pulverized a 150 g subsample pulp was
collected and air freighted to Bureau Veritas Commodities Canada Ltd., (Bureau
Veritas) in Vancouver, Canada, for analysis. The remaining 850 g master pulps
and the coarse rejects were stored at the Inspectorate laboratory in Nevada.

Bureau Veritas has a quality system that is compliant with the
International Standards Organization 9001 Model for Quality Assurance and
ISO/IEC 17025 General Requirements for the Competence of testing and
Calibration. As part of Hudbays quality control and quality assurance (QA/QC)
program, QA/QC samples were systematically introduced in the sample stream to
assess adequate sub-sampling procedures, potential cross-contamination,
precision, and accuracy. A total of 1,000 representative pulp samples (5.4%)
from 2014 drilling and 742 representative pulp samples (5.0%) from 2015 drilling
were selected and re-analyzed at SGS Canada Inc., laboratory in Vancouver. The
blanks, CRM and duplicates samples all indicated the laboratory used did not
have contamination issues and produced accurate and precise results.

Hudbay built an entirely new drill hole database from all
pre-Hudbay drilling and assaying information. Orix Geoscience Inc. was employed
to digitally enter collar, downhole surveys and assay information from scanned
drill logs and assay certificates for all holes drilled prior to Augusta.

Mineral Processing and Metallurgical Testing

Recorded metallurgical testwork on Rosemont ores comprises work
beginning as early 1974 by Anamax Mining Company. Augusta continued the work and
concluded it with the publication of NI 43-101 Technical Reports, the first in
2007, followed by a NI 43-101 report dated August 28, 2012. These historical
metallurgical testwork programs were undertaken by reputable companies such as
Mountain State R&D International (MSRDI), SGS and G&T Metallurgical
Services, with dewatering and rheology testing undertaken by Pocock, Outotec and
FLSmidth.

Following the acquisition of Rosemont in 2014, Hudbay completed
two drilling programs (years 2014 and 2015) and initiated a series of phased
metallurgical testing programs, each designed to advance its understanding of
the deposit and metallurgical performance in response to treatment. In 2014,
Hudbay engaged XPS Consulting & Testwork Services (XPS) to undertake mineral
characterization and metallurgical testwork. Base Met Laboratory (BML) was
engaged in late 2015 to provide confirmation testwork of the XPS testwork and
additional process optimization.

ANNUAL INFORMATION FORM |B31

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The principal objectives of the 2014 and 2015 phased
metallurgical testing programs were to:

| | Confirm the quality of the prior metallurgical testwork                                        
|- | -----------------------------------------------------------------------------------------------
| | Identify downstream processing methods, forecast
      recoveries and quality of final products
| | Evaluate characteristics of tailing products                                                   
| | Derive a required ore processing flowsheet and size
      process equipment                    

Three composite samples were prepared for metallurgical testing
in 2015, and among these were a set of three samples that corresponded to ore
that was projected to report from the mine during the first five years of
operation, the second five years, and a third sample for the balance of
operations.

As reporting from the first phase of metallurgical testwork
programs became available, a revised set of composites was prepared to further
enhance our the understanding of the orebody, more particularly as it related to
metallurgical performance in the presence of clays, as well as process equipment
sizing and selection (principally flotation and dewatering equipment).

Through the course of all the mineral processing and
metallurgical testing, no deleterious elements were found to have a negative
impact on plant performance or on the marketable value of the copper and
molybdenum concentrates to be produced at Rosemont.

On the basis of the body of testwork that exists, including
both the historical testwork, and the testing programs completed by Hudbay since
the acquisition of Rosemont, forecasts of recovery, concentrate grade and
quality, as well as characteristics of the resultant tailing product have been
developed. The following summarizes LOM average recoveries expected.

Average LOM recoveries

Copper (Cu):
    80.4%Molybdenum (Mo):
    53.4%Silver (Ag):
    74.4%Gold (Au):
    65.1%


Mineral Reserves and Mineral Resources Estimates

Mineral reserves for the Rosemont deposit were classified under
the 2014 CIM Definition Standards for Mineral Resources and Mineral
Reserves1 by application of a NSR that reflects the combined benefit
of producing copper, molybdenum and silver in addition to mine operating,
processing and off-site costs.

Proven and probable mineral reserves within the designed final
pit total 592 million tons (537 million tonnes) grading 0.45% Cu, 0.012% Mo and
4.58 g/t Ag. There are 1.25 billion tons (1.13 billion tonnes) of waste
materials, resulting in a stripping ratio of 2.1:1 (tonnes waste per tonne of
ore). Total material in the pit is 1.66 billion tonnes. Contained metal in
proven and probable mineral reserves is estimated at 5.30 billion pounds of
copper, 142 million pounds of molybdenum and 79 million ounces of silver. Nearly
80% of the mineral reserves in the Rosemont ultimate pit are classified as
proven with the remaining 20% identified as probable. The Rosemont ultimate pit
contains approximately 10 million tons of inferred mineral resources that are
above the $6.00/ton NSR cut-off value for ore. Inferred mineral resources are
considered too speculative geologically to have the economic considerations
applied to them that would enable them to be categorized as mineral
reserves.

______________________

ANNUAL INFORMATION FORM |B32

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Multi pass ordinary kriging interpolation setup was used to
interpolate the grades in the block model while honoring the geology. The
component of the mineralization within the block model that meets the
requirements for reasonable prospects of economic extraction was based on the
application of a Lerchs-Grossman cone pit algorithm. The mineral resources are
therefore contained within computer generated open pit geometry.

The following assumptions were applied to the determination of
the mineral resources:

      Economic benefit was applied
to measured, indicated and inferred classified material within the resource
cone.

      No effort was made to
establish a pit with maximum return on investment; consequently, the mineral
resource cone was the direct result of the following metal prices: $3.15/lb
copper, $11.00/lb molybdenum, $18.00/oz silver with a revenue ratio of 1.0, i.e.
break-even logic.

      A constant 45-degree pit
slope was used for the resource estimate.

All of the mineral reserve estimates presented in this report
are dependent on market prices for the contained metals, metallurgical
recoveries and ore processing, mining and general/administration cost estimates.
Mineral reserve estimates in subsequent evaluations of the Rosemont Deposit may
vary according to changes in these factors. As of the effective date of this
report, there are no other known mining, metallurgical, infrastructure or other
relevant factors that may materially affect the mineral reserve estimates.

Mining Operations

The Rosemont project will be a traditional open pit
shovel/truck operation. To match the production requirements, the proposed pit
operations will be conducted from 50-foot-high benches using large-scale mine
equipment, including: 10-5/8-inch-diameter rotary blast hole drills, 60 yd3
class electric mining shovels, 46 yd3 class hydraulic shovels, 25 yd3 front-end
loaders, and 260 ton off-highway haul trucks.

Mine operations are scheduled for 24 hours per day, 365 days
per year. A mining rate of 132 million tons per year through year 11 will be
required to provide the assumed nominal process feed rate of 32.9 million tons
of ore per year. From year 12 through year 18, the annual mining rate decreases
due to lower stripping ratios, starting with an average of 50 million tons per
year and ending with approximately 33 million tons in production year 18. Ore
shortfall will be made up from ore stockpiles.

Processing and Recovery Operations

The process plant design is based on a combination of
metallurgical testwork, Rosemont Copper production plan and in-house
information. The flowsheet has been developed from previous feasibility study
work, value engineering studies and the recent testwork. Benchmarking has been
used to define and support the design parameters. This includes the
copper-molybdenum separation circuit where testwork has been limited to a few
tests. This is due to the relatively large sample mass required for a more
detailed molybdenum testwork program and analysis. The molybdenum plant design
is based primarily on projected mass flows, grades and densities as well as the
recent Constancia Plant design.

The flowsheet consists of primary crushing, followed by two
parallel SAG, ball milling and pebble crushing (SABC) circuits, copper flotation
with regrinding ahead of cleaning, a moly separation circuit, concentrate
thickening and filtering and tailings thickening, filtering and dry stacking.
With minor modifications, the process plant is designed to treat on average
90,000 tons/d (or 32.8 million tons/y).

ANNUAL INFORMATION FORM |B33

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Capital and Operating Costs

Initial project capital costs are estimated to be $1,921
million including 15% contingency on all items. The LOM sustaining capital costs
are estimated to be $387 million excluding capitalized stripping and $1,168
million including capitalized stripping. The capital cost estimate is considered
to be a Class 3 estimate as defined by AACE Recommended Practice 47R-11 for the
mining and mineral process industry.

The average LOM operating costs (mining, milling and G&A)
are estimated to be $9.24/ton milled (before deducting capitalized stripping)
and $7.92/ton milled (after deducting capitalized stripping). Over the first 10
years, C1 cash costs (net of by-product credits at stream prices) are estimated
to average $1.40 per pound of copper before deducting capitalized stripping and
$1.14 per pound of copper after deducting capitalized stripping. LOM C1 cash
costs are estimated to be $1.47 per pound of copper before deducting capitalized
stripping and $1.29 per pound of copper after deducting capitalized stripping.
Including royalties and sustaining capital, sustaining cash costs estimated to
be $1.59 per pound of copper over the first 10 years and average $1.65 over the
LOM.

The economic viability of the Project has been evaluated using
the metal prices outlined below. The metal prices used in the economic analysis
are based on a blend of consensus metal price forecasts from over 30 well known
financial institutions and Wood Mackenzie.

Metal Price Assumptions:Spot Copper:
    $3.00 (US$/lb)Spot Molybdenum:
    $11.00 (US$/lb)Spot Silver:
    $18.00 (US$/oz)Streamed Silver1:
    $3.90 (US$/oz)


(1) Subject to a 1% escalation after 3 years

At the effective realized prices including the impact of the
stream, the revenue breakdown at Rosemont is approximately 92% copper, 6%
molybdenum, and 2% silver.

Rosemonts annual copper production (contained copper in
concentrate) and C1 cash costs (net of byproducts at stream prices after
deducting capitalized stripping) are shown in the figure below. Over the first
10 years, annual production is expected to average 140 thousand tons of copper
at an average C1 cash cost of $1.14/lb. Over the 19 year LOM, annual production
is expected to average 112 thousand tons of copper at an average C1 cash cost of
$1.29/lb.

ANNUAL INFORMATION FORM |B34

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FIGURE0-1ROSEMONTANNUAL COPPER PRODUCTION ANDC1CASH COSTS



Rosemont has an unlevered after-tax NPV8% of $769 million and a
15.5% after-tax IRR using a copper price of $3.00/lb as summarized below. The
Project NPV and IRR are calculated using end of period quarterly discounting in
the quarter immediately before development capital is spent.

Metric
    Units
    LOM TotalGross Revenue (Stream Prices)
    $M
    $13,377TCRCs
    $M
    ($1,837)On-Site Operating Costs (after deducting of capitalized
      stripping)
    $M
    ($4,691)Royalties
    $M
    ($368)Operating Margin
    $M
    $6,480Development Capital
    $M
    ($1,921)Stream Upfront Payment
    $M
    $230Sustaining Capital (excludes capitalized stripping)
    $M
    ($387)Capitalized Stripping
    $M
    ($781)Pre-Tax Cash Flow
    $M
    $3,622Cash Income Taxes
    $M
    ($718)After-Tax Free Cash Flow
    $M
    $2,903After-Tax NPV8%
    $M
    $769After-Tax NPV10%
    $M
    $496After-Tax IRR
    %
    15.5%After-Tax Payback Period
    Years
5.5


The NPV8% (100% project basis) was sensitized based on
percentage changes in various input assumptions above or below the base case.
Each input assumption change was assumed to occur independently from changes in
other inputs. The Project is most sensitive to the copper price, followed by
initial capital costs, on-site operating costs and the molybdenum price. The
table below reports the after-tax NPV8%, NPV10%, IRR and Payback of the Project
at various flat copper prices assuming all other inputs remain constant.

ANNUAL INFORMATION FORM |B35

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|                          | Flat Copper Price ($/lb)
|------------------------- | ------------------------
|                          | $2.50                   
|After-Tax NPV8% ($M)      | $45                     
|After-Tax NPV10% ($M)     | ($122)                  
|After-Tax IRR (%)         | 8.5%                    
|After-Tax Payback (years) | 6.9                     

The existing Joint Venture Agreement requires cash payments
from UCM totaling $106 million to the Joint Venture in order for UCM to complete
its earn-in for 20% ownership of the Project. The payments will be made on an
installment basis to fund the initial development capital and payments will
commence once certain milestones are achieved. The NPV attributable to Hudbay is
improved beyond 80% of the standalone project NPV due to the Joint Venture
payments, and the IRR attributable to Hudbay is improved beyond the standalone
project IRR as a result of the reduced time period between development capital
spending and positive project cash flow. Below are the adjusted key financial
metrics attributable to Hudbay.

Metric
    Units
    LOM TotalDevelopment Capital (100% Basis)
    $M
    $1,921Stream Upfront Payment
    $M
    ($230)Joint Venture Earn-in Payment
    $M
    ($106)JV Share of Remaining Capital (20%)
    $M
    ($317)JV Loan Repayment to Hudbay1
    $M
    ($20)Hudbay's Share of Development Capital
    $M
    $1,248After-Tax NPV8% to Hudbay
    $M
    $719After-Tax NPV10% to Hudbay
    $M
    $499After-Tax IRR to Hudbay
    %
    17.7%After-Tax Payback Period to Hudbay
    Years
4.9


|1. Hudbay is funding
      the JVs share of project expenditures until receipt of material permits
      and approximately $20M in principal and accrued interest is due to Hudbay
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Exploration, Development, and Production

Major exploration work has not been completed outside the
current resource pit. Hudbay has no plans to conduct any additional exploration
work at the moment.

ANNUAL INFORMATION FORM |B36

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|SCHEDULE C: AUDIT COMMITTEE CHARTER
|-----------------------------------
|                                   

HUDBAY MINERALS INC.(THECOMPANY)AUDIT COMMITTEE CHARTER

|PURPOSE
|-------
|       

The Audit Committee is appointed by the Board of Directors to
assist the Board of Directors in its oversight and evaluation of:

| | the quality and integrity of the financial statements of
      the Company,                                                                                     
|- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------
|  |                                                                                                                                                                 
| | the compliance by the Company with legal and regulatory
      requirements in respect of financial disclosure,                                                  
|  |                                                                                                                                                                 
| | the qualification, independence and performance of the
      Companys independent auditor,                                                                     
|  |                                                                                                                                                                 
| | the appointment, independence and performance of the
      Companys head of the internal audit function,                                                       
|  |                                                                                                                                                                 
| | the assessment, monitoring and management of the
      strategic, operational, reporting and compliance risks of the Companys
      business (the Risks), and
|  |                                                                                                                                                                 
| | The performance of the Companys Chief Financial Officer.                                                                                                       

In addition, the Audit Committee provides an avenue for
communication among the independent auditor, the internal audit function, the
Companys Chief Financial Officer and other financial senior management, other
employees and the Board of Directors concerning accounting, auditing and Risk
management matters.

The Audit Committee is directly responsible for the
recommendation of the appointment and retention (and termination) and for the
compensation and the oversight of the work of the independent auditor (including
oversight of the resolution of any disagreements between senior management and
the independent auditor or the internal audit function regarding financial
reporting) for the purpose of preparing audit reports or performing other audit,
review or attest services for the Company. Also, the Audit Committee is directly
responsible for the approval of the appointment and retention (and termination)
and the oversight of the work of the internal audit function.

The Audit Committee is not responsible for:

| | planning or conducting audits,                                                                                                                                                                              
|- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  |                                                                                                                                                                                                             
| | certifying or determining the completeness or accuracy of
      the Companys financial statements or that those financial statements are
      in accordance with generally accepted accounting principles.

Each member of the Audit Committee shall be entitled to rely in
good faith upon:

| | financial statements of the Company represented
      to him or her by senior management of the Company or in a written report
      of the independent auditor to present fairly the financial position of the
      Company in accordance with generally accepted accounting principles; and
|- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  |                                                                                                                                                                                                                                                                                               
| | any report of a lawyer, accountant, engineer,
      appraiser or other person whose profession lends credibility to a
      statement made by any such person.                                                                                                                                

The fundamental responsibility for the Companys financial
statements and disclosure rests with senior management.

ANNUAL INFORMATION FORM |C1

---



|REPORTS
|-------
|       

The Audit Committee shall report to the Board of Directors on a
regular basis and, in any event, before the public disclosure by the Company of
its quarterly and annual financial results. The reports of the Audit Committee
shall include any issues of which the Audit Committee is aware with respect to
the quality or integrity of the Companys financial statements, its compliance
with legal or regulatory requirements, the performance and independence of the
Companys independent auditor, the performance and independence of the Companys
internal audit function and changes in Risks.

The Audit Committee also shall prepare, as required by
applicable law, any audit committee report required for inclusion in the
Companys publicly filed documents.

|COMPOSITION
|-----------
|           

The members of the Audit Committee shall be three or more
individuals who are appointed (and may be replaced) by the Board of Directors on
the recommendation of the Companys Corporate Governance and Nominating
Committee. The appointment of members of the Audit Committee shall take place
annually at the first meeting of the Board of Directors after a meeting of
shareholders at which directors are elected, provided that if the appointment of
members of the Audit Committee is not so made, the directors who are then
serving as members of the Audit Committee shall continue as members of the Audit
Committee until their successors are appointed. The Board of Directors may
appoint a member to fill a vacancy that occurs in the Audit Committee between
annual elections of directors. Any member of the Audit Committee may be removed
from the Audit Committee by a resolution of the Board of Directors. Unless the
Chair is elected by the Board of Directors, the members of the Audit Committee
may designate a Chair by majority vote of the members of the Audit Committee.

Each of the members of the Audit Committee shall meet the
Companys Categorical Standards for Determining Independence of Directors and
shall be financially literate (or acquire that familiarity within a reasonable
period after appointment) in accordance with applicable legislation and stock
exchange requirements. No member of the Audit Committee shall:

| | accept (directly or indirectly) any consulting, advisory
      or other compensatory fee from the Company or any of its
      subsidiaries1(other than remuneration for acting in his or her
      capacity as a director or committee member) or be an affiliated
      person2of the Company or any of its subsidiaries, or                                                                                                                                                                        
|- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | concurrently serve on the audit committee of more than
      three other public companies without the prior approval of the Audit
      Committee, the Corporate Governance and Nominating Committee and the Board
      of Directors and their determination that such simultaneous service would
      not impair the ability of the member to effectively serve on the Audit
      Committee (which determination shall be disclosed in the Companys annual
      management information circular).

A majority of the members of the Audit committee shall be
resident Canadians, as contemplated by the

Canada Business Corporations Act.

Notes:

1A company is a subsidiary of another company if it
is controlled, directly or indirectly, by that other company (through one or
more intermediaries or otherwise).

2An affiliate of a person is a person that,
directly or indirectly, through one or more intermediaries, controls, or is
controlled by, or is under common control with the first person.

ANNUAL INFORMATION FORM |C2

---



|RESPONSIBILITIES
|----------------
|                

INDEPENDENT AUDITOR

The Audit Committee shall:

| | Recommend the appointment and the compensation of, and,
      if appropriate, the termination of the independent auditor, subject to
      such Board of Directors and shareholder approval as is required under
      applicable legislation and stock exchange requirements.                                                                                       
|- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  |                                                                                                                                                                                                                                                                                                                                                                      
| | Obtain confirmation from the independent auditor that it
      ultimately is accountable, and will report directly, to the Audit
      Committee and the Board of Directors.                                                                                                                                                                                         
|  |                                                                                                                                                                                                                                                                                                                                                                      
| | Oversee the work of the independent auditor, including
      the resolution of any disagreements between senior management and the
      independent auditor regarding financial reporting.                                                                                                                                                                          
|  |                                                                                                                                                                                                                                                                                                                                                                      
| | Pre-approve all audit and non-audit services (including
      any internal control-related services) provided by the independent auditor
      (subject to any restrictions on such non-audit services imposed by
      applicable legislation, regulatory requirements and policies of the
      Canadian Securities Administrators).                               
|  |                                                                                                                                                                                                                                                                                                                                                                      
| | Adopt such policies and procedures as it determines
      appropriate for the pre-approval of the retention of the independent
      auditor by the Company and any of its subsidiaries for any audit or
      non-audit services, including procedures for the delegation of authority
      to provide such approval to one or more members of the Audit Committee.
|  |                                                                                                                                                                                                                                                                                                                                                                      
| | Provide notice to the independent auditor of every
      meeting of the Audit Committee.                                                                                                                                                                                                                                                                             
|  |                                                                                                                                                                                                                                                                                                                                                                      
| | Approve all engagements for accounting advice prepared to
      be provided by an accounting firm other than independent auditor.                                                                                                                                                                                                                                    
|  |                                                                                                                                                                                                                                                                                                                                                                      
| | Review quarterly reports from senior management on tax
      advisory services provided by accounting firms other than the independent
      auditor.                                                                                                                                                                                                                
|  |                                                                                                                                                                                                                                                                                                                                                                      
| | Review expense reports of the Chairman and the Chief
      Executive Officer.                                                                                                                                                                                                                                                                                        

INTERNAL AUDIT FUNCTION

The Audit Committee shall:

| | Approve the appointment and, if appropriate, the
      termination of the head of the internal audit function.                                                          
|- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  |                                                                                                                                                                         
| | Obtain confirmation from the head of the internal audit
      function that he or she is ultimately accountable, and will report
      directly, to the Audit Committee.
|  |                                                                                                                                                                         
| | Oversee the work of the internal audit function,
      including the resolution of any disagreements between senior management
      and the internal audit function.   
|  |                                                                                                                                                                         
| | Approve the internal audit function annual plan.                                                                                                                        
|  |                                                                                                                                                                         
| | Review quarterly reports from the head of the internal
      audit function.                                                                                            

ANNUAL INFORMATION FORM |C3

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THE AUDIT PROCESS, FINANCIAL STATEMENTS AND RELATED
DISCLOSURE

The Audit Committee shall:

| | Meet with senior management and/or the
      independent auditor to review and discuss,
|- | ---------------------------------------------------------------------------------------

| |  | the planning and staffing of the audit by the independent
      auditor,                                                                                                                                                                                                                                                                                                                                                                 
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                          
| |  | before public disclosure, the Companys annual audited
      financial statements and quarterly financial statements, the Companys
      accompanying disclosure of Managements Discussion and Analysis and
      earnings press releases and make recommendations to the Board of Directors
      as to their approval and dissemination of those statements and disclosure,                                                          
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                          
| |  | financial information and earnings guidance provided to
      analysts and rating agencies: this review need not be done on a case by
      case basis but may be done generally (consisting of a discussion of the
      types of information disclosed and the types of presentations made) and
      need not take place in advance of the disclosure,                                                                                
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                          
| |  | any significant financial reporting issues and judgments
      made in connection with the preparation of the Companys financial
      statements, including any significant changes in the selection or
      application of accounting principles, any major issues regarding auditing
      principles and practices, and the adequacy of internal controls that could
      significantly affect the Companys financial statements,
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                          
| |  | all critical accounting policies and practices used,                                                                                                                                                                                                                                                                                                                                                                                     
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                          
| |  | all alternative treatments of financial information
      within IFRS that have been discussed with senior management, ramifications
      of the use of such alternative disclosures and treatments, and the
      treatment preferred by the independent auditor,                                                                                                                                                                      
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                          
| |  | the use of pro forma or adjusted non-IFRS
      information,                                                                                                                                                                                                                                                                                                                                                                         
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                          
| |  | the effect of new regulatory and accounting
      pronouncements,                                                                                                                                                                                                                                                                                                                                                                        
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                          
| |  | the effect of any material off-balance sheet structures,
      transactions, arrangements and obligations (contingent or otherwise) on
      the Companys financial statements,                                                                                                                                                                                                                                                         
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                          
| |  | any disclosures concerning any weaknesses or any
      deficiencies in the design or operation of internal controls or disclosure
      controls made to the Audit Committee in connection with certification of
      forms by the Chief Executive Officer and/or the Chief Financial Officer
      for filing with applicable securities regulators, and                                                                               
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                          
| |  | the adequacy of the Companys internal accounting
      controls and management information systems and its financial, auditing
      and accounting organizations and personnel (including any fraud involving
      an individual with a significant role in internal controls or management
      information systems) and any special steps adopted in light of any
      material control deficiencies.                             

| | Review disclosure of financial information
      extracted or derived from the Companys financial statements.
|- | --------------------------------------------------------------------------------------------------------------
|  |                                                                                                               
| | Review with the independent auditor,                                                                          

| |  | the quality, as well as the acceptability of the
      accounting principles that have been applied,                                                                                                                                                                                                                                                                                                                                                                                                                                       
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| |  | any problems or difficulties the independent auditor may
      have encountered during the provision of its audit services, including any
      restrictions on the scope of activities or access to requested information
      and any significant disagreements with senior management, any management
      letter provided by the independent auditor or other material communication
      (including any schedules of unadjusted differences) to senior management
  and the Companys response to that letter or communication, and

ANNUAL INFORMATION FORM |C4

---



| |  | any changes to the Companys significant auditing and
      accounting principles and practices suggested by the independent auditor
      or other members of senior management.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Risks

The Audit Committee shall:

| | Recommend to the Board of Directors for
      approval a policy that sets out the Risks philosophy of the Company and
      the expectations and accountabilities for identifying, assessing,
      monitoring and managing Risks (the ERM Policy) that is developed
      and is to be implemented by senior management.                                                                                                                                                                                     
|- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| | Meet with senior management to review and
      discuss senior managements timely identification of the most significant
      Risks, including those Risks related to or arising from the Corporations
      weaknesses, threats to the Corporations business and the assumptions
      underlying the Corporations strategic plan (Principal Risks).                                                                                                                                                    
|  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| | Approve a formalized, disciplined and
      integrated enterprise risk management process (the ERM
      Process) that is developed by senior management and, as
      appropriate, the Board and its Committees, to monitor, manage and report
      Principal Risks.                                                                                                                                                                                                                                        
|  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| | Recommend to the Board of Directors for
      approval policies (and changes thereto) setting out the framework within
      which each identified Principal Risks of the Corporation shall be managed.                                                                                                                                                                                                                                                                                                         
|  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| | At least semi-annually, obtain from senior
      management and, as appropriate, with the input of one or more of the
      Boards Committees, a report specifying the management of the Principal
      Risks of the Corporation including compliance with the ERM Policy and
      other policies of the Corporation for the management of Principal Risks.                                                                                                                                                  
|  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| | Review with senior management the Companys
      tolerance for financial Risk and senior managements assessment of the
      significant financial Risks facing the Company.                                                                                                                                                                                                                                                                                                                                  
|  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| | Discuss with senior management, at least
      annually, the guidelines and policies utilized by senior management with
      respect to financial Risk assessment and management, and the major
      financial Risk exposures and the procedures to monitor and control such
      exposures in order to assist the Audit Committee to assess the
      completeness, adequacy and appropriateness of financial Risk disclosure in
      Managements Discussion and Analysis and in the financial statements.
|  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| | Review policies and compliance therewith that
      require significant actual or potential liabilities, contingent or
      otherwise, to be reported to the Board of Directors in a timely fashion.                                                                                                                                                                                                                                                                                                           
|  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| | Review the adequacy of insurance coverages
      maintained by the Company.                                                                                                                                                                                                                                                                                                                                                                                                                                     
|  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| | Discharge the Boards oversight function in
      respect of the administration of the pension and other retirement plans of
      the Company and its affiliates.                                                                                                                                                                                                                                                                                                                                              

ANNUAL INFORMATION FORM |C5

---



Compliance

The Audit Committee shall:

| | Obtain reports from senior management that the Companys
      subsidiary/foreign affiliated entities are in conformity with applicable
      legal requirements and the Companys Code of Business Conduct and Ethics
      including disclosures of insider and affiliated party transactions and
      environmental protection laws and regulations.
|- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  |                                                                                                                                                                                                                                                                                                                                                         
| | Review with senior management and the independent auditor
      any correspondence with regulators or governmental agencies and any
      employee complaints or published reports, which raise material issues
      regarding the Companys financial statements or accounting policies.                                                              
|  |                                                                                                                                                                                                                                                                                                                                                         
| | Review senior managements written representations to the
      independent auditor.                                                                                                                                                                                                                                                                    
|  |                                                                                                                                                                                                                                                                                                                                                         
| | Advise the Board of Directors with respect to the
      Companys policies and procedures regarding compliance with applicable
      laws and regulations and with the Companys Code of Business Conduct and
      Ethics.                                                                                                                             
|  |                                                                                                                                                                                                                                                                                                                                                         
| | Review with the Companys General Counsel legal matters
      that may have a material impact on the financial statements, the Companys
      compliance policies and any material reports or inquiries received from
      regulators or governmental agencies.                                                                                       
|  |                                                                                                                                                                                                                                                                                                                                                         
| | Establish procedures for,                                                                                                                                                                                                                                                                                                                               

| |  | the receipt, retention and treatment of complaints
      regarding accounting, internal accounting controls or auditing matters,
      and
| | - | ------------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                           
| |  | the confidential, anonymous submission by employees of
      the Company with concerns regarding any accounting or auditing matters.      

Delegation

To avoid any confusion, the Audit Committee responsibilities
identified above are the sole responsibility of the Audit Committee, unless
otherwise directed by the Board of Directors.

|INDEPENDENT ADVICE
|------------------
|                  

In discharging its mandate, the Audit Committee shall have the
authority to retain (and authorize the payment by the Company of) and receive
advice from special legal, accounting or other advisors as the Audit Committee
determines to be necessary to permit it to carry out its duties.

ANNUAL INFORMATION FORM |C6

---