(a) Revenue

Hudbay's revenue by significant product types:

Consideration from the Company's stream agreements is considered variable (note 20). Gold and silver stream revenue can be subject to cumulative adjustments when the amount of precious metals to be delivered under the contract changes. As a result of changes in the Company's mineral reserve and resource estimate in the first quarter of 2025, the amortization rate by which deferred revenue is drawn down into income was adjusted and, as required, a variable consideration adjustment was made for all prior year stream revenues since the stream agreement inception date. This variable consideration adjustment for the year ended December 31, 2025 resulted in an increase in revenue of $9.9 million (year ended December 31, 2024 - decrease in revenue of $3.8 million).

(b) Depreciation and amortization

Depreciation of property, plant and equipment and amortization of intangible assets are reflected in the consolidated statements of income as follows:

(c) Share-based compensation expense

Share-based compensation expenses are reflected in the consolidated statements of income as follows:

During the year ended December 31, 2025, the Company granted 828,720 stock options (year ended December 31, 2024 - 902,874). For further details on stock options, see note 26b.

The increase in share-based compensation expense during the year ended December 31, 2025 compared with the same periods last year primarily relates to the change in the Company's share price, in addition to anticipated adjustments to the performance based multiplier on performance share units.

(d) Employee benefits expense

This table presents employee benefit expense recognized in the consolidated statements of income, including amounts transferred from inventory upon sale of goods:

Manitoba has a profit sharing plan required by the collective bargaining agreement whereby 10% of Manitoba's after tax profit (excluding provisions or recoveries for deferred income tax and deferred mining tax) for any given fiscal year will be distributed to all eligible employees in the Flin Flon/Snow Lake operations, with the exception of executive officers and key management personnel.

Peru has a profit sharing plan required by Peruvian law whereby 8% of Peru's taxable income will be distributed to all employees within Peru's operations.

The Company has an employee share purchase plan for executives and other eligible employees where participants may contribute between 1% and 10% of their pre-tax base salary to acquire Hudbay shares. The Company makes a matching contribution of 75% of the participant's contribution.

In addition, the Company recognized a past service cost provision adjustment related to pensions and post-employment plans for certain Manitoba employees of $nil during the year ended December 31, 2025 (year ended December 31, 2024 - $4.3 million).

See note 22 for a description of Hudbay's pension plans and note 23 for Hudbay's other employee benefit plans.

(e) Other operating expenses

During the year ended December 31, 2025, the Manitoba business unit incurred costs related to emergency and evacuation activities of $4.4 million as a result of regional wildfires in Snow Lake, Flin Flon and surrounding areas. 

During the year ended December 31, 2025, a recovery of $25.0 million was recorded to reflect the business interruption insurance proceeds related to the wildfire evacuation and temporary suspension of operations at Manitoba. As of December 31, 2025, all of the proceeds related to this gain have been received.

The Flin Flon concentrator and tailings impoundment is on care and maintenance to provide optionality should another mineral discovery occur in the Flin Flon area. During the year ended December 31, 2025, care & maintenance costs were $13.2 million (year ended December 31, 2024 - $14.6 million).

The Arizona business unit held an option to acquire water rights and land, which expired during the first quarter of 2024 without being extended or exercised. The previously capitalized cost to maintain the option, net of accrued interest, of $8.1 million is presented as part of write-down of PP&E in 2024.

During the year ended December 31, 2024, the British Columbia business unit has recognized an impairment loss on a ball mill that is no longer being used in its operation. As a result, the carrying value of the asset has been written down to its recoverable amount, and $7.2 million is presented as part of write-down of PP&E. Furthermore, the British Columbia business unit recognized a loss of $7.8 million resulting from the replacement of components of mobile equipment and disposal of other mill equipment during the year ended December 31, 2024.

(g) Consideration received from sale of non-core project

As part of a contingent consideration deed dated December 12, 2022, Harmony Gold (Australia) PTY Limited agreed to pay the Company a contingent amount upon the discovery of a new resource beyond certain parameters at the Eva project, which was previously sold by Copper Mountain prior to Hudbay's acquisition of Copper Mountain in June 2023. During the year ended 2025, a new discovery was made at the Eva project. As a result, the Company recognized the contingent payment received of $14.9 million as other income on the consolidated statements of income.

(h) Net finance expense

Other finance expense relates primarily to standby fees on Hudbay's revolving credit facilities.

Commencing in the first quarter of 2024, Hudbay has entered into copper forward sales, copper costless collars and gold costless collars which are non-quotational pricing ("non-QP") contracts (note 29b). Subsequent movements in the fair value of non-QP contracts are recognized in change in fair value of financial instruments in the consolidated statements of income. As of December 31, 2025, there are no non-QP hedges outstanding.

During the third quarter of 2024, the Company completed the final delivery and settled the obligation for the gold prepayment liability.