24. Income and mining taxes

(a) Tax expense:

The tax expense is applicable as follows:

		Year ended December 31,
		2025			2024
Current:
Income taxes	$	209.1		$	119.7
Mining taxes		83.4			57.0
Adjustments in respect of prior years		(1.2	)		0.2
		291.3			176.9
Deferred:
Income tax expense (recovery) - origination, revaluation and/or reversal of temporary differences		61.3			15.3
Mining tax recovery - origination, revaluation and/or reversal of temporary difference		(3.8	)		(5.6	)
Adjustments in respect of prior years		(1.1	)		(2.8	)
		56.4			6.9
	$	347.7		$	183.8

Adjustments in respect of prior years refers to amounts changing due to the filing of tax returns and assessments from government authorities as well as any change identified that would result in a difference to our current or deferred tax balances as reported in the prior fiscal year end.

(b) Deferred tax assets and liabilities as represented on the consolidated balance sheets:

		Dec. 31, 2025			Dec. 31, 2024
Deferred income tax asset	$	66.5		$	102.6

Deferred income tax liability		(343.1	)		(305.5	)
Deferred mining tax liability		(32.2	)		(34.9	)
		(375.3	)		(340.4	)
Net deferred tax liability balance, end of year	$	(308.8	)	$	(237.8	)

(c) Changes in deferred tax assets and liabilities:

		Year ended December 31,
		2025			2024
Net deferred tax liability balance, beginning of year	$	(237.8	)	$	(255.3	)
Deferred tax expense (note 24a)		(56.4	)		(6.9	)
OCI transactions		(0.7	)		(3.2	)
Foreign currency translation on the deferred tax liability		(13.9	)		27.6
Net deferred tax liability balance, end of year	$	(308.8	)	$	(237.8	)

(d) Reconciliation to statutory tax rate:

As a result of its mining operations, the Company is subject to both income and mining taxes. Generally, most expenditures incurred are deductible in computing income tax, whereas mining tax legislation, although based on a measure of profitability from carrying on mining operations, is more restrictive in respect of the deductions permitted in computing income subject to mining tax. These restrictions include costs unrelated to mining operations as well as deductions for financing expenses, such as interest and royalties. In addition, income unrelated to carrying on mining operations is not subject to mining tax.

A reconciliation between tax expense and the product of accounting profit multiplied by the Company's statutory income tax rate for the years ended December 31, 2025 and 2024 is as follows:

		Year ended December 31,
		2025			2024
Income before tax	$	912.0		$	251.6
Statutory tax rate		26.7%			26.7%
Tax expense at statutory rate		243.5			67.2
Effect of:
Deductions related to mining taxes		(24.2	)		(16.3	)
Adjusted income taxes		219.3			50.9
Mining tax expense		76.9			50.0
		296.2			100.9

Permanent differences related to:
Capital items		(7.4	)		0.5
Other income tax permanent differences		(0.8	)		4.1
Withholding tax on dividends		9.0			1.8
Impact of remeasurement on decommissioning liability		(1.7	)		6.5
Temporary income tax differences (recognized)/not recognized		(5.4	)		8.3
Recognition of previously unrecognized deferred tax assets		(2.4	)		-
Impact related to differences in tax rates in foreign operations		71.6			36.7
Impact of changes to statutory tax rates		-			(4.4	)
Effect of flow through shares		4.3			3.9
Foreign exchange on non-monetary items		(15.4	)		26.2
Impact related to tax assessments and tax return amendments		0.4			(1.2	)
Other		(0.7	)		0.5
Tax expense	$	347.7		$	183.8

(e) Income tax effect of temporary differences - recognized:

The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities at December 31, 2025 and 2024 are as follows:

		Balance sheet
		Dec. 31, 2025			Dec. 31, 2024
Deferred income tax (liability) asset
Property, plant and equipment	$	(65.5	)	$	(54.5	)
Pension obligation		2.3			2.0
Other employee benefits		35.8			25.1
Decommissioning and restoration provision		24.4			19.3
Non-capital losses		53.7			107.3
Share issuance and debt cost		2.9			3.8
Deferred revenue		1.8			1.7
Other		11.1			(2.1	)
Deferred income tax asset		66.5			102.6

Deferred income tax liability (asset)
Property, plant and equipment		526.9			451.6
Other employee benefits		(1.7	)		(1.2	)
Decommissioning and restoration provision		(12.8	)		(11.8	)
Non-capital losses		(158.7	)		(116.7	)
Other		(10.6	)		(16.4	)
Deferred income tax liability		343.1			305.5

Net deferred income tax liability	$	(276.6	)	$	(202.9	)

The above reconciling items are disclosed at the tax rates that apply in the jurisdiction where they have arisen.

(f) Income tax temporary differences - not recognized:

The Company has not recognized a deferred tax asset on $30.0 million of non-capital losses (December 31, 2024 - $57.2 million), $130.2 million of capital losses (December 31, 2024 - $158.7 million) and $561.6 million (December 31, 2024 - $651.3 million) of other deductible temporary differences since the realization of any related tax benefit through future taxable profits is not probable. The capital losses have no expiry dates and the other deductible temporary differences do not expire under current tax legislation.

The Canadian non-capital losses were incurred between 2013 and 2025 and have a twenty-year carry forward period. The United States net operating losses incurred between 2004 and 2017 have a twenty-year carry forward period. United States net operating losses incurred between 2018 and 2025 may be carried forward indefinitely but are restricted to being applied against a maximum of 80% of taxable income.

(g) Mining tax effect of temporary differences:

The tax effects of temporary differences that give rise to significant portions of the deferred mining tax assets and liabilities at December 31, 2025 and 2024 are as follows:

Canada		Dec. 31, 2025			Dec. 31, 2024
Property, plant and equipment	$	(40.5	)	$	(40.2	)
Other		13.9			12.8
	$	(26.6	)	$	(27.4	)

Peru		Dec. 31, 2025			Dec. 31, 2024
Property, plant and equipment	$	(5.6	)	$	(7.5	)

For the year ended December 31, 2025, Hudbay had unrecognized deferred mining tax assets of approximately $8.8 million (December 31, 2024 - $9.1 million).

(h) Unrecognized taxable temporary differences associated with investments:

There are no taxable temporary differences associated with investments in subsidiaries, associates and joint ventures, for which a deferred tax liability has not been recognized.

(i) Taxes receivable/payable:

The timing of payments results in significant variances in period-to-period comparisons of the tax receivable and tax payable balances.

(j) Other disclosure:

The tax rules and regulations applicable to mining companies are highly complex and subject to interpretation. The Company may be subject in the future to a review of its historic income and other tax filings and, in connection with such reviews, disputes can arise with tax authorities over the interpretation or application of certain tax rules and regulations in respect of the Company's business. These reviews may alter the timing or amount of taxable income or deductions. The amount ultimately reassessed upon resolution of issues raised may differ from the amount accrued.