HUDBAY MINERALS INC. AND LUNDIN MINING CORPORATION

EXECUTION COPY

HUDBAY MINERALS INC.

AND

▇▇▇▇▇▇ MINING CORPORATION

DATED NOVEMBER 21, 2008

A-1


Article 1	INTERPRETATION	1
1.1	Definitions	1
1.2	Interpretation Not Affected by Headings	13
1.3	Number and Gender	13
1.4	Date for Any Action	13
1.5	Currency	13
1.6	Accounting Matters	14
1.7	Knowledge	14
1.8	Schedules	14
Article 2	THE ARRANGEMENT	14
2.1	Arrangement	14
2.2	Interim Orders	15
2.3	▇▇▇▇▇▇ Meeting	15
2.4	▇▇▇▇▇▇ Circular	16
2.5	Securities Law Compliance	18
2.6	Final Order	19
2.7	Court Proceedings	19
2.8	Articles of Arrangement and Effective Date	19
2.9	Issue of HudBay Shares	20
2.10	Preparation of Filings	20
2.11	Announcement and Shareholder Communications	20
2.12	Withholding Taxes	20
2.13	U.S. Tax Matters	21
Article 3	REPRESENTATIONS AND WARRANTIES OF ▇▇▇▇▇▇	21
3.1	Representations and Warranties	21
3.2	Survival of Representations and Warranties	37
Article 4	REPRESENTATIONS AND WARRANTIES OF SUBCO AND HUDBAY	37
4.1	Representations and Warranties	37
4.2	Survival of Representations and Warranties	50
Article 5	COVENANTS OF ▇▇▇▇▇▇ AND HUDBAY	50
5.1	Covenants of ▇▇▇▇▇▇ Regarding the Conduct of Business	50
5.2	Covenants of ▇▇▇▇▇▇ Relating to the Arrangement	53
5.3	Covenants of HudBay Regarding the Conduct of Business	54
5.4	Covenants of HudBay Regarding the Performance of Obligations	57
5.5	Pre-Acquisition Reorganization	58
5.6	Employment Agreements	60
Article 6	CONDITIONS	60
6.1	Mutual Conditions Precedent	60
6.2	Additional Conditions Precedent to the Obligations of HudBay	61
6.3	Additional Conditions Precedent to the Obligations of ▇▇▇▇▇▇	62
6.4	Satisfaction of Conditions	63
Article 7	ADDITIONAL AGREEMENTS	63
7.1	Notice and Cure Provisions	63
7.2	Non-Solicitation	64
7.3	Right to Match	66

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7.4	HudBay Non-Solicitation	67
7.5	Expenses and Termination Fees	69
7.6	Access to Information; Confidentiality	71
7.7	Insurance and Indemnification	71
Article 8	TERM, TERMINATION, AMENDMENT AND WAIVER	72
8.1	Term	72
8.2	Termination	73
8.3	Amendment	74
8.4	Waiver	74
Article 9	GENERAL PROVISIONS	74
9.1	Privacy	74
9.2	Notices	75
9.3	Governing Law; Waiver of Jury Trial	76
9.4	Injunctive Relief	76
9.5	Time of Essence	77
9.6	Entire Agreement, Binding Effect and Assignment	77
9.7	Severability	77
9.8	Counterparts, Execution	77

ARRANGEMENT AGREEMENT

THIS ARRANGEMENT AGREEMENT dated November 21, ▇▇▇▇,

▇ ▇ ▇ ▇ ▇ ▇ ▇:

HUDBAY MINERALS INC., a corporation continued under the laws of Canada (“HudBay”)

- and -

▇▇▇▇▇▇ MINING CORPORATION, a corporation incorporated under the laws of Canada (“▇▇▇▇▇▇”)

The parties intend that the Arrangement will qualify as a reorganization within the meaning of Section 368(a) of the Code (as defined herein) and applicable Treasury Regulations and that this Agreement shall constitute a plan of reorganization within the meaning of Treasury Regulations promulgated under the Code.

THIS AGREEMENT WITNESSES THAT in consideration of the covenants and agreements herein contained and other good and valuable consideration (the receipt and sufficiency of which are hereby acknowledged), the parties hereto covenant and agree as follows:

ARTICLE 1
INTERPRETATION

1.1

Definitions

In this Agreement, unless the context otherwise requires:

“Acquisition Proposal” means, other than the transactions contemplated by this Agreement and other than any transaction involving only a Party and/or one or more of its wholly-owned subsidiaries, any offer, proposal or inquiry from any person, whether or not in writing and whether or not delivered to the shareholders of a Party, after the date hereof relating to: (a) any acquisition or purchase, direct or indirect, of: (i) the assets of a Party and/or one or more of its subsidiaries that, individually or in the aggregate, constitute 20% or more of the fair market value of the consolidated assets of that Party and its subsidiaries; or (ii) 20% or more of any voting or equity securities of that Party or any of its subsidiaries whose assets, individually or in the aggregate, constitute 20% or more of the fair market value of the consolidated assets of that Party and its subsidiaries; (b) any take-over bid, tender offer or exchange offer that, if consummated, would result in such person beneficially owning 20% or more of any class of voting or equity securities of that Party; or (c) a plan of arrangement, merger, amalgamation, consolidation, share exchange, business combination, reorganization, recapitalization, liquidation, dissolution or other similar transaction involving a Party or any of its subsidiaries whose assets or revenues, individually or in the aggregate, constitute 20% or more of the consolidated assets or revenues, as applicable, of that Party;

“affiliate” has the meaning ascribed thereto in the CBCA;

“Agreement” means this arrangement agreement, including all schedules annexed hereto, together with the ▇▇▇▇▇▇ Disclosure Letter and the HudBay Disclosure Letter, as the same may be amended, supplemented or otherwise modified from time to time in accordance with the terms hereof;

“Arrangement” means the arrangement under Section 192 of the CBCA on the terms and subject to the conditions set out in the Plan of Arrangement, subject to any amendments or variations thereto made in accordance with Section 8.3 hereof or the Plan of Arrangement or made at the direction of the Court in the Final Order with the consent of ▇▇▇▇▇▇ and HudBay, each acting reasonably;

“Arrangement Resolution” means the special resolution of the ▇▇▇▇▇▇ Shareholders approving the Plan of Arrangement which is to be considered at the ▇▇▇▇▇▇ Meeting and shall be substantially in the form and content of Schedule “B” hereto;

“Articles of Arrangement” means the articles of arrangement of ▇▇▇▇▇▇ in respect of the Arrangement that are required to be sent to the Director in compliance with the CBCA after the Final Order is made, which shall be in form and content satisfactory to ▇▇▇▇▇▇ and HudBay, each acting reasonably;

“business day” means any day, other than a Saturday, a Sunday or a statutory or civic holiday in Toronto, Ontario;

“CBCA” means the Canada Business Corporations Act and the regulations made thereunder, as promulgated or amended from time to time;

“Certificate of Arrangement” means the certificate of arrangement to be issued by the Director pursuant to Section 192(7) of the CBCA in respect of the Articles of Arrangement;

“CFPOA” means the Corruption of Foreign Public Officials Act (Canada) and the regulations promulgated thereunder, as amended from time to time;

“Change of Control Proposal” means a bona fide unsolicited written Acquisition Proposal made by a third party after the date of this Agreement (and not obtained in violation of Section 7.4) that relates to the acquisition of 50% or more of the outstanding HudBay Shares (other than HudBay Shares owned by the person making the Change of Control Proposal) or all or substantially all of the assets of HudBay and its subsidiaries.

“Change in Recommendation” has the meaning ascribed thereto in Section 8.2.1(c)(i);

“Code” means the U.S. Internal Revenue Code of 1986, as amended;

“Competition Act” means the Competition Act (Canada), as amended from time to time;

“Confidentiality Agreement” means the letter agreement dated November 6, 2008 between HudBay and ▇▇▇▇▇▇, pursuant to which HudBay has been provided with access to the confidential information of ▇▇▇▇▇▇ and ▇▇▇▇▇▇ has been provided with access to the confidential information of HudBay;

“Consideration” means the consideration to be received by the ▇▇▇▇▇▇ Shareholders pursuant to the Plan of Arrangement as consideration for their ▇▇▇▇▇▇ Shares, consisting of 0.3919 of a HudBay Share for each ▇▇▇▇▇▇ Share;

“Contract” means any contract, agreement, license, franchise, lease, arrangement, commitment, understanding, joint venture, partnership or other right or obligation (written or oral) to which a Party or any of its subsidiaries is a party or by which it or any of its subsidiaries is bound or affected or to which any of their respective properties or assets is subject;

“Court” means the Ontario Superior Court of Justice (Commercial List);

“Credit Agreement” has the meaning ascribed thereto in Section 6.2(e);

“Depositary” means any trust company, bank or financial institution agreed to in writing between HudBay and ▇▇▇▇▇▇ for the purpose of, among other things, exchanging certificates representing ▇▇▇▇▇▇ Shares for certificates representing HudBay Shares in connection with the Arrangement;

“Director” means the director appointed pursuant to Section 260 of the CBCA;

“Dissent Rights” means the rights of dissent exercisable by the ▇▇▇▇▇▇ Shareholders in respect of the Arrangement described in Article 4 of the Plan of Arrangement;

“Effective Date” means the date shown on the Certificate of Arrangement giving effect to the Arrangement;

“Effective Time” has the meaning ascribed thereto in the Plan of Arrangement;

“Environmental Laws” means all applicable federal, provincial, state, local and foreign Laws, imposing obligations, responsibilities, liabilities or standards of conduct for or relating to the regulation or control of pollution, contamination, activities, materials, substances or wastes in connection with or for or to the protection of human health or safety, the environment or natural resources (including climate, air, surface water, groundwater, wetlands, land surface, subsurface strata, wildlife, aquatic species and vegetation);

“Environmental Liabilities” means, with respect to any person, all liabilities, obligations, responsibilities, responses, losses, damages, punitive damages, property damages, consequential damages, treble damages, costs (including control, remedial and removal costs, investigation costs, capital costs, operation and maintenance costs), expenses, fines, penalties and sanctions incurred as a result of or related to any claim, suit, action, administrative or court order, investigation, proceeding or demand by any person, arising under or related to any Environmental Laws, Environmental Permits, or in connection with any Release or threatened Release or presence of a Hazardous Substance;

“Environmental Permits” means all Permits or program participation requirements with or from any Governmental Entity under any Environmental Laws;

“Exchange” or “TSX” means the Toronto Stock Exchange;

“FCPA” means the United States’ Foreign Corrupt Practices Act and the regulations promulgated thereunder, as amended from time to time;

“Final Order” means the final order of the Court pursuant to Section 192 of the CBCA, in a form acceptable to ▇▇▇▇▇▇ and HudBay, each acting reasonably, approving the Arrangement, as such order may be amended by the Court (with the consent of both ▇▇▇▇▇▇ and HudBay, each acting reasonably) at any time prior to the Effective Date or, if appealed, then, unless such appeal is withdrawn or denied, as affirmed or as amended (provided that any such amendment is acceptable to both ▇▇▇▇▇▇ and HudBay, each acting reasonably) on appeal;

“GAAP” means Canadian generally accepted accounting principles;

“Governmental Entity” means: (a) any multinational, federal, provincial, state, regional, municipal, local or other government, governmental or public department, central bank, court, tribunal, arbitral body, commission, board, bureau, agency or entity, domestic or foreign; (b) any stock exchange, including the Exchange and the NYSE; (c) any subdivision, agent, commission, board or authority of any of the foregoing; or (d) any quasi-governmental or private body, including any tribunal, commission, regulatory agency or self-regulatory organization, exercising any regulatory, expropriation or taxing authority under or for the account of any of the foregoing;

“Hazardous Substance” means any pollutant, contaminant, waste or chemical or any toxic, radioactive, ignitable, corrosive, reactive or otherwise hazardous or deleterious substance, waste or material, including arsenic, cadmium, copper, lead, mercury, petroleum, polychlorinated biphenyls, asbestos and urea-formaldehyde insulation, and any other material, substance, pollutant or contaminant regulated or defined pursuant to, or that could result in liability under, any Environmental Law;

“HSR Act” means the United States ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of 1976, and the rules and regulations promulgated thereunder, as amended from time to time;

“HudBay Benefit Plans” has the meaning ascribed thereto in Section 4.1(u)(i);

“HudBay Data Room” means the electronic data room established and maintained by HudBay at ▇▇▇▇▇://▇▇▇▇▇▇▇▇.▇▇▇▇▇▇▇▇▇▇▇.▇▇▇;

“HudBay Data Room Information” means the documents listed in the index attached to the HudBay Disclosure Letter;

“HudBay Disclosure Letter” means the disclosure letter executed by HudBay and delivered to ▇▇▇▇▇▇ prior to the execution of this Agreement;

“HudBay Financial Statements” has the meaning ascribed thereto in Section 4.1(i);

“HudBay Internal Reorganization” means a transaction or series of transactions between HudBay and one or more subsidiaries of HudBay or between subsidiaries of HudBay which does not involve the disposition of any assets, rights or properties of HudBay or any such subsidiary to a third party other than HudBay or a subsidiary of HudBay;

“HudBay Mineral Rights” means all of HudBay's and the Material HudBay Subsidiaries’ mineral interests and rights (including any claims, concessions, royalty interests, exploration licences, exploitation licences, prospecting permits, mining leases and mining rights);

“HudBay Options” means the outstanding options to purchase HudBay Shares granted under the HudBay Option Plans;

“HudBay Option Plans” means (a) the stock option plan approved by HudBay Shareholders on June 23, 2005, as amended; (b) the stock option plan approved by HudBay Shareholders on July 9, 2002, as amended; and (c) the stock option plan approved by HudBay Shareholders on May 29, 2008;

“HudBay Preference Shares” has the meaning ascribed thereto in Section 4.1(e);

“HudBay Public Disclosure Record” means all documents and information filed by HudBay on SEDAR during the three (3) years prior to the date hereof;

“HudBay Representatives” has the meaning ascribed thereto in Section 7.4.1;

“HudBay Shareholders” means the holders of HudBay Shares;

“HudBay Shares” means common shares in the authorized share capital of HudBay;

“HudBay Warrants” means (a) the outstanding warrants to purchase HudBay Shares governed by the warrant indenture dated December 21, 2004 made between HudBay and Equity Transfer Services Inc. as warrant agent, as amended; and (b) the outstanding warrants to purchase HudBay Shares governed by the warrant indenture dated October 26, 2007 made between Skye Resources Inc. and CIBC Mellon Trust Company, as Warrant Agent, as amended by a supplemental indenture pursuant to which the warrants outstanding under such indenture became exercisable for HudBay Shares;

“including” means including without limitation, and “include” and “includes” have a corresponding meaning;

“Interim Order” means the interim order of the Court contemplated by Section 2.2 of this Agreement and made pursuant to Section 192(3) of the CBCA, in a form acceptable to ▇▇▇▇▇▇ and HudBay, each acting reasonably, providing for, among other things, the calling and holding of the ▇▇▇▇▇▇ Meeting, as the same may be amended by the Court with the consent of ▇▇▇▇▇▇ and HudBay, each acting reasonably;

“Investment Canada Act” means the Investment Canada Act, as amended from time to time;

“Key Regulatory Approvals” means those sanctions, rulings, consents, orders, exemptions, permits and other approvals (including the lapse, without objection, of a prescribed time under a statute or regulation that states that a transaction may be implemented if a prescribed time lapses following the giving of notice without an objection being made) of Governmental Entities set out in Schedule “C” hereto;

“Key Third Party Consents” means those consents, approvals and notices required from any third party, including from customers, as set out in Schedule “D” hereto;

“Law” or “Laws” means all laws (including common law), by-laws, statutes, rules, regulations, principles of law and equity, orders, rulings, ordinances, judgements, injunctions, determinations, awards, decrees or other requirements, whether domestic or foreign, and the terms and conditions of any Permit of or from any Governmental Entity or self-regulatory authority (including the Exchange, the NYSE and the OMX), and the term “applicable” with respect to such Laws and in a context that refers to one or more Parties, means such Laws as are applicable to such Party or its business, undertaking, property or securities and emanate from a Person having jurisdiction over the Party or Parties or its or their business, undertaking, property or securities;

“Liens” means any hypothecs, mortgages, pledges, assignments, liens, charges, security interests, encumbrances and adverse rights or claims, other third party interest or encumbrance of any kind, whether contingent or absolute, and any agreement, option, right or privilege (whether by Law, contract or otherwise) capable of becoming any of the foregoing;

“Locked-up Shareholders” means: (a) certain of the officers and directors of ▇▇▇▇▇▇ as designated in writing by HudBay to ▇▇▇▇▇▇; and (b) each of Ellegrove Capital Ltd., Abalone Capital Ltd., Lorito Holdings Ltd. and Zebra Holdings and Investments Inc. and 1875 Finance SA, representing, collectively, not less than 21.1% of the issued and outstanding shares of ▇▇▇▇▇▇;

“▇▇▇▇▇▇ Benefit Plans” has the meaning ascribed thereto in Section 3.1(x)(i);

“▇▇▇▇▇▇ Board” means the board of directors of ▇▇▇▇▇▇ as the same is constituted from time to time;

“▇▇▇▇▇▇ Circular” means the notice of the ▇▇▇▇▇▇ Meeting and accompanying management information circular, including all schedules, appendices and exhibits thereto and enclosures therewith, to be sent to the ▇▇▇▇▇▇ Shareholders in connection with the ▇▇▇▇▇▇ Meeting, as amended, supplemented or otherwise modified from time to time;

“▇▇▇▇▇▇ Data Room” means the physical data room established and maintained by ▇▇▇▇▇▇ in Lisbon, Portugal;

“▇▇▇▇▇▇ Data Room Information” means the documents listed in the index attached to the ▇▇▇▇▇▇ Disclosure Letter and the information contained in the physical data room located in Lisbon, Portugal;

“▇▇▇▇▇▇ Disclosure Letter” means the disclosure letter executed by ▇▇▇▇▇▇ and delivered to HudBay prior to the execution of this Agreement;

“▇▇▇▇▇▇ Financial Statements” has the meaning ascribed thereto in Section 3.1(k);

“▇▇▇▇▇▇ Investment Companies” means the public companies in which ▇▇▇▇▇▇ has an equity interest and which are not subsidiaries;

“▇▇▇▇▇▇ Meeting” means the special meeting of ▇▇▇▇▇▇ Shareholders, including any adjournment or postponement thereof, to be called and held in accordance with the Interim Order to consider the Arrangement Resolution;

“▇▇▇▇▇▇ Mineral Rights” means all of ▇▇▇▇▇▇'▇ and the ▇▇▇▇▇▇ Subsidiaries’ mineral interests and rights (including any claims, concessions, royalty interests, exploration licences, exploitation licences, prospecting permits, mining leases and mining rights);

“▇▇▇▇▇▇ Options” means the outstanding options to purchase ▇▇▇▇▇▇ Shares granted under the ▇▇▇▇▇▇ Stock Option Plan;

“▇▇▇▇▇▇ Public Disclosure Record” means all documents and information required to be filed by ▇▇▇▇▇▇ on SEDAR during the three (3) years prior to the date hereof;

“▇▇▇▇▇▇ SARs” means stock appreciation rights granted pursuant to the ▇▇▇▇▇▇ Stock Option Plan and outstanding on the Effective Date;

“▇▇▇▇▇▇ Shareholders” means the holders of ▇▇▇▇▇▇ Shares, including the holders of SDRs;

“▇▇▇▇▇▇ Shareholder Approval” has the meaning ascribed thereto in Section 2.2(a)(ii);

“▇▇▇▇▇▇ Shares” means the common shares in the authorized share capital of ▇▇▇▇▇▇, including the ▇▇▇▇▇▇ Shares represented by the SDRs;

“▇▇▇▇▇▇ Significant Interest Companies” means the private entities in which ▇▇▇▇▇▇ has an equity interest in excess of 10% but less than 50%;

“▇▇▇▇▇▇ Stock Option Plan” means the stock option plan of ▇▇▇▇▇▇, as approved by the ▇▇▇▇▇▇ Shareholders on May 15, 2003, as amended;

“▇▇▇▇▇▇ Subsidiaries” means the corporations listed on Schedule “E” hereto;

“Material Adverse Change” means, in respect of any person, any one or more changes, events or occurrences, and “Material Adverse Effect” means, in respect of any person, any one or more changes, effects, events or occurrences, which, in either case, either individually or in the aggregate, is or would reasonably be expected to be material and adverse to the business, operations, results of operations or financial condition of that person taken as a whole, or that would prevent or materially impede the completion of the Arrangement, except any change, effect, event or occurrence resulting from or relating to: (a) the public announcement of the execution of this Agreement or the transactions contemplated hereby or the performance of any obligation hereunder or, in the case of ▇▇▇▇▇▇, communication by HudBay of its plans or intentions with respect to ▇▇▇▇▇▇ and/or any of its subsidiaries; (b) any change in applicable Laws or in the interpretation thereof by any Governmental Entity provided that it does relate primarily only to that person and does not have a materially disproportionate effect on such person relative to comparable mining companies; (c) any change in GAAP; (d) any natural disaster provided that it does not have a materially disproportionate affect on such person relative to comparable mining companies; (e) changes affecting the mining industry generally or the price of zinc, copper, lead or nickel, provided that such changes do not have a materially disproportionate effect on such Party relative to comparable mining companies; (f) general economic, financial, currency exchange, securities or commodity market conditions; (g) any act of terrorism or outbreak or escalation of hostilities or armed conflict; or (h) any change in the market price of the ▇▇▇▇▇▇ Shares or the HudBay Shares, as applicable, (it being understood without limiting the applicability of paragraphs (a) to (h), the cause or causes of any such change in the market price of the ▇▇▇▇▇▇ Shares may constitute, in and of itself, a Material Adverse Change or Material Adverse Effect and may be taken into account in determining whether a Material Adverse Change or Material Adverse Effect has occurred), and references in this Agreement to dollar amounts are not intended to be and shall not be deemed to be illustrative or interpretative for purposes of determining whether a “Material Adverse Effect” or a “Material Adverse Change” has occurred;

“Material Contracts” means in respect of a Party any Contract: (a) that if terminated or modified or if it ceased to be in effect, would reasonably be expected to have a Material Adverse Effect on such Party; (b) under which such Party or any of its subsidiaries has directly or indirectly guaranteed any liabilities or obligations of a third party (other than ordinary course endorsements for collection) in excess of $2,000,000 in the aggregate; (c) relating to indebtedness for borrowed money, whether incurred, assumed, guaranteed or secured by any asset, with an outstanding principal amount in excess of $2,000,000; (d) providing for the establishment, investment in, organization or formation of any joint ventures or partnerships; (e) under which such Party or any of its subsidiaries is obligated to make or expects to receive payments in excess of $2,000,000 over the remaining term of the contract; (f) that limits or restricts such Party or any of its subsidiaries from engaging in any line of business or any geographic area in any material respect or that creates an exclusive dealing arrangement or right of first offer or refusal; (g) that is a collective bargaining agreement, a labour union contract or any other memorandum of understanding or other agreement with a union representing the employees of ▇▇▇▇▇▇ or the ▇▇▇▇▇▇ Subsidiaries; or (h) with a Governmental Entity; or (i) that is otherwise material to such Party and its subsidiaries, considered as a whole;

“material fact” and “material change” have the meanings ascribed thereto in the Securities Act;

“Material HudBay Subsidiaries” means the corporations listed on Schedule “G” hereto and “Material HudBay Subsidiary” means any one of them;

“NYSE” means the New York Stock Exchange;

“OMX” means the OMX Nordic Exchange Stockholm AB;

“ordinary course of business”, “ordinary course of business consistent with past practice”, or any similar reference, means, with respect to an action taken by a person, that such action is consistent with the past practices of such person and is taken in the ordinary course of the normal day-to-day business and operations of such person; provided that in any event such action is not unreasonable or unusual;

“OSC” means the Ontario Securities Commission;

“Outside Date” means May 30, 2009, or such later date as may be agreed to in writing by the Parties;

“Parties” means ▇▇▇▇▇▇ and HudBay, and “Party” means any of them;

“Permit” means any license, permit, certificate, consent, order, grant, approval, agreement, classification, registration or other authorization of and from any Governmental Entity;

“person” includes an individual, partnership, association, body corporate, trustee, executor, administrator, legal representative, government (including any Governmental Entity) or any other entity, whether or not having legal status;

“Plan of Arrangement” means the plan of arrangement, substantially in the form of Schedule “A”, and any amendments or variations thereto made in accordance with the Plan of Arrangement or upon the direction of the Court in the Final Order with the consent of ▇▇▇▇▇▇ and HudBay, each acting reasonably;

“Pre-Acquisition Reorganization” has the meaning ascribed thereto in Section 5.5(a);

“Qualified Person” has the meaning ascribed thereto in National Instrument 43-101- Standards of Disclosure for Mineral Projects;

“Release” means any release, spill, emission, leaking, pumping, pouring, emitting, emptying, escape, injection, deposit, disposal, discharge, dispersal, dumping, leaching or migration of any Hazardous Substance in the indoor or outdoor environment, including the movement of Hazardous Substance through or in the air, soil, surface water, ground water or property;

“Representatives” has the meaning ascribed thereto in Section 7.2.1;

“Response Period” has the meaning ascribed thereto in Section 7.3(b);

“Returns” means all reports, forms, elections, information statements and returns (whether in tangible, electronic or other form) and including any amendments, schedules, attachments, supplements, appendices and exhibits thereto relating to, or required to be filed or prepared in connection with any Taxes;

“Schedule 13E-3” means the Rule 13e-3 Transaction Statement on Schedule 13E-3 under the U.S. Exchange Act to be filed by ▇▇▇▇▇▇ and HudBay in connection with the transaction contemplated hereafter;

“SDRs” means the Swedish Depositary Receipts of ▇▇▇▇▇▇ listed on the OMX;

“SDR Depositary” means ▇. ▇▇▇▇▇ J:or Fondkommission AB;

“SDR Documents” means a summary of the ▇▇▇▇▇▇ Circular and the procedures to be followed by holders of SDRs to cause the ▇▇▇▇▇▇ Shares underlying their SDRs to be voted in respect of the Arrangement Resolution;

▇▇

“▇▇▇” ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ Securities and Exchange Commission;

“Securities Act” means the Securities Act (Ontario) and the rules, regulations and published policies made thereunder, as now in effect and as they may be promulgated or amended from time to time;

“Securities Authorities” means: (i) the OSC and the applicable securities commissions and other securities regulatory authorities in each of the other provinces and territories of Canada; (ii) the SEC; and (iii) the Swedish Financial Supervisory Authority;

“Securities Laws” means the Securities Act, together with all other applicable provincial securities laws, rules and regulations and published policies thereunder, and any other applicable state, federal or other securities laws of the United States, including the U.S. Exchange Act and the U.S. Securities Act, or any other country (including, without limitation, Sweden), as now in effect and as they may be promulgated or amended from time to time;

“SEDAR” means the System for Electronic Document Analysis and Retrieval;

“Special Committee” means the special committee of the ▇▇▇▇▇▇ Board;

“subsidiary” means, with respect to a specified body corporate, any body corporate of which more than 50% of the outstanding shares ordinarily entitled to elect a majority of the board of directors thereof (whether or not shares of any other class or classes shall or might be entitled to vote upon the happening of any event or contingency) are at the time owned directly or indirectly by such specified body corporate and shall include any body corporate, partnership, joint venture or other entity over which such specified body corporate exercises direction or control or which is in a like relation to a subsidiary;

“Superior Proposal” means a bona fide unsolicited written Acquisition Proposal made by a third party after the date of this Agreement (and not obtained in violation of Section 7.2) that relates to the acquisition of all of the outstanding ▇▇▇▇▇▇ Shares (other than ▇▇▇▇▇▇ Shares owned by the person making the Superior Proposal) or all or substantially all of the assets of ▇▇▇▇▇▇ and its subsidiaries and (a) that is reasonably capable of being completed taking into account all financial, legal, regulatory and other aspects of such proposal (as compared to the terms herein) and the person making such proposal; (b) that, in the case of an Acquisition Proposal to acquire the outstanding ▇▇▇▇▇▇ Shares, is made available to all ▇▇▇▇▇▇ Shareholders on the same terms and conditions; (c) in respect of which, to the extent necessary, binding financial commitments have been provided from the sources of financing to be used to complete the transaction contemplated by such proposal, establishing that such financing is available without undue delay or conditions (other than the conditions attached to the Acquisition Proposal and conditions which are usual and customary conditions for similar financings and which, in the good faith judgment of the Board, are likely to be satisfied by the relevant party); (d) is not subject to a due diligence condition; and (e) in respect of which the ▇▇▇▇▇▇ Board determines, in its good faith judgment, after consultation with its outside legal counsel and financial advisors, that failure to recommend such Acquisition Proposal to the ▇▇▇▇▇▇ Shareholders would be inconsistent with its fiduciary duties under applicable Law and would, if consummated in accordance with its terms (but not assuming away any risk of non-completion), result in a transaction more favourable to the ▇▇▇▇▇▇ Shareholders from a financial point of view than the Arrangement, after taking into account any change to the Arrangement proposed by HudBay pursuant to Section 7.3;

“Swedish Prospectus” shall have the meaning ascribed to such term in Section 2.5 hereof;

“Taxes” means: (a) any and all taxes, imposts, levies, withholdings, duties, fees, premiums, assessments and other charges of any kind, however denominated and instalments in respect thereof, including any interest, penalties, fines or other additions that have been, are or will become payable in respect thereof, imposed by any Governmental Entity, including for greater certainty all income or profits taxes, payroll and employee withholding taxes, employment taxes, unemployment insurance, disability taxes, social insurance taxes, sales and use taxes, ad valorem taxes, excise taxes, goods and services taxes, harmonized sales taxes, franchise taxes, gross receipts taxes, capital taxes, business license taxes, mining royalties, alternative minimum taxes, estimated taxes, abandoned or unclaimed (escheat) taxes, occupation taxes, real and personal property taxes, stamp taxes, environmental taxes, transfer taxes, severance taxes, workers’ compensation, government pension plan premiums or contributions and other governmental charges, and other obligations of the same or of a similar nature to any of the foregoing, which a Party or any of its subsidiaries is required to pay, withhold or collect, together with any interest, penalties or other additions to tax that may become payable in respect of such taxes, and any interest in respect of such interest, penalties and additions whether disputed or not; and (b) any liability for the payment of any amount described in paragraph (a) of this definition as a result of being a member of an affiliated, consolidated, combined or unitary group for any period, as a result of any Tax sharing or Tax allocation agreement, arrangement or understanding, or as a result of being liable to another person’s Taxes as a transferee or successor, by contract or otherwise;

“Tax Returns” includes all returns, reports, declarations, elections, notices, filings, forms, statements and other documents (whether in tangible, electronic or other form) and including any amendments, schedules, attachments, supplements, appendices and exhibits thereto, made, prepared, filed or required by a Governmental Entity to be made, prepared or filed by law in respect of Taxes;

“Termination Fee” has the meaning ascribed thereto in Section 7.5.3;

“Termination Fee Event” has the meaning ascribed thereto in Section 7.5.4;

“Transaction Personal Information” has the meaning ascribed thereto in Section 9.1.

“United States” means the United States of America, its territories and possessions, any State of the United States and the District of Columbia;

“U.S. Exchange Act” means the United States Securities Exchange Act of 1934, and the rules and regulations promulgated thereunder, as the same has been and hereafter from time to time may be amended;

“U.S. Person” has the meaning ascribed to it in Rule 902 of Regulation S of the U.S. Securities Act;

“U.S. Securities Act” means the United States Securities Act of 1933 and the rules and regulations promulgated thereunder, as the same has been and hereafter from time to time may be amended; and

“Voting Agreements” means the voting agreements (including all amendments thereto) between HudBay and the Locked-up Shareholders setting forth the terms and conditions upon which they have agreed to vote their ▇▇▇▇▇▇ Shares (including ▇▇▇▇▇▇ Shares underlying SDRs) in favour of the Arrangement Resolution, substantially in the forms attached as Schedule “H” and Schedule “I” hereto.

1.2

Interpretation Not Affected by Headings

The division of this Agreement into Articles, Sections, subsections and paragraphs and the insertion of headings are for convenience of reference only and shall not affect in any way the meaning or interpretation of this Agreement. Unless the contrary intention appears, references in this Agreement to an Article, Section, subsection, paragraph or Schedule by number or letter or both refer to the Article, Section, subsection, paragraph or Schedule, respectively, bearing that designation in this Agreement.

1.3

Number and Gender

In this Agreement, unless the contrary intention appears, words importing the singular include the plural and vice versa, and words importing gender include all genders.

1.4

Date for Any Action

If the date on which any action is required to be taken hereunder by a Party is not a business day, such action shall be required to be taken on the next succeeding day which is a business day.

1.5

Currency

Unless otherwise stated, all references in this Agreement to sums of money are expressed in lawful money of Canada and “$” refers to Canadian dollars.

1.6

Accounting Matters

Unless otherwise stated, all accounting terms used in this Agreement in respect of ▇▇▇▇▇▇ shall have the meanings attributable thereto under GAAP and all determinations of an accounting nature in respect of ▇▇▇▇▇▇ required to be made shall be made in a manner consistent with GAAP consistently applied.

1.7

Knowledge

(a)

In this Agreement, references to “the knowledge of ▇▇▇▇▇▇” means the actual knowledge of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, in his capacity as Chief Executive Officer of ▇▇▇▇▇▇ and ▇▇▇ ▇▇▇▇▇▇, in his capacity as the Chief Financial Officer of ▇▇▇▇▇▇, in each case, after reviewing relevant records or due enquiry within ▇▇▇▇▇▇ and the ▇▇▇▇▇▇ Subsidiaries.

(b)

In this Agreement, references to “the knowledge of HudBay” means the actual knowledge of ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, in his capacity as Chief Executive Officer of HudBay and ▇▇▇▇▇ ▇▇▇▇▇▇, in his capacity as the Chief Financial Officer of HudBay, in each case, after reviewing relevant records or due enquiry within HudBay and its affiliates.

1.8

Schedules

The following Schedules are annexed to this Agreement and are incorporated by reference into this Agreement and form a part hereof:


Schedule A	-	Plan of Arrangement
Schedule B	-	Arrangement Resolution
Schedule C	-	Key Regulatory Approvals
Schedule D	-	Key Third Party Consents
Schedule E	-	▇▇▇▇▇▇ Subsidiaries
Schedule F	-	▇▇▇▇▇▇ Significant Interest Companies and ▇▇▇▇▇▇ Investment Companies
Schedule G	-	Material HudBay Subsidiaries
Schedule H	-	Form of Voting Agreement
Schedule I	-	Form of Voting Agreement (Directors and Officers)

ARTICLE 2
THE ARRANGEMENT

2.1

Arrangement

▇▇▇▇▇▇ and HudBay agree that the Arrangement will be implemented in accordance with and subject to the terms and conditions contained in this Agreement and the Plan of Arrangement.

2.2

Interim Order

(a)

As soon as reasonably practicable following the execution of this Agreement, ▇▇▇▇▇▇ shall apply to the Court in a manner acceptable to HudBay, acting reasonably, pursuant to Section 192 of the CBCA and prepare, file and diligently pursue an application for the Interim Order, which shall provide, among other things:

(i)

for the class of persons to whom notice is to be provided in respect of the Arrangement and the ▇▇▇▇▇▇ Meeting and for the manner in which such notice is to be provided;

(ii)

that the requisite approval for the Arrangement Resolution shall be 66 2/3% of the votes cast on the Arrangement Resolution by the ▇▇▇▇▇▇ Shareholders present in person or by proxy at the ▇▇▇▇▇▇ Meeting and voting as a single class (the “▇▇▇▇▇▇ Shareholder Approval”);

(iii)

that, in all other respects, the terms, conditions and restrictions of the ▇▇▇▇▇▇ constating documents, including quorum requirements and other matters, shall apply in respect of the ▇▇▇▇▇▇ Meeting;

(iv)

for the grant of Dissent Rights to the ▇▇▇▇▇▇ Shareholders who are registered ▇▇▇▇▇▇ Shareholders;

(v)

for the notice requirements with respect to the presentation of the application to the Court for the Final Order;

(vi)

that the ▇▇▇▇▇▇ Meeting may be adjourned from time to time by management of ▇▇▇▇▇▇ subject to the terms of this Agreement without the need for additional approval of the Court; and

(vii)

that the record date for ▇▇▇▇▇▇ Shareholders entitled to notice of and to vote at the ▇▇▇▇▇▇ Meeting will not change in respect of any adjournment(s) of the ▇▇▇▇▇▇ Meeting.

(b)

▇▇▇▇▇▇ shall advise the Court of its intention to rely upon Section 3(a)(10) of the U.S. Securities Act to implement the transactions contemplated hereby in respect of the ▇▇▇▇▇▇ Shareholders and holders of ▇▇▇▇▇▇ Options who are resident in the United States.

2.3

▇▇▇▇▇▇ Meeting

(a)

Subject to the terms of this Agreement, ▇▇▇▇▇▇ agrees to convene and conduct the ▇▇▇▇▇▇ Meeting in accordance with the Interim Order, ▇▇▇▇▇▇'▇ articles of incorporation, bylaws and applicable Law as soon as reasonably practicable.

(b)

Subject to Section 7.3, except as required for quorum purposes or otherwise permitted under this Agreement, ▇▇▇▇▇▇ shall not adjourn (except as required by Law or by valid ▇▇▇▇▇▇ Shareholder action), postpone or cancel (or propose or permit the adjournment, postponement or cancellation of) the ▇▇▇▇▇▇ Meeting without HudBay's prior consent.

(c)

Subject to the terms of this Agreement, ▇▇▇▇▇▇ will use its commercially reasonable efforts to solicit proxies in favour of the approval of the Arrangement Resolution, including, if so requested by HudBay, using proxy solicitation services in North America and in Sweden with respect to the SDRs.

(d)

▇▇▇▇▇▇ will advise HudBay as HudBay may reasonably request, and at least on a daily basis on each of the last ten (10) business days prior to the date of the ▇▇▇▇▇▇ Meeting, as to the aggregate tally of the proxies received by ▇▇▇▇▇▇ in respect of the Arrangement Resolution.

(e)

▇▇▇▇▇▇ will promptly advise HudBay of any written notice of dissent or purported exercise by any Lundin Shareholder of Dissent Rights received by ▇▇▇▇▇▇ in relation to the Arrangement and any withdrawal of Dissent Rights received by ▇▇▇▇▇▇ and, subject to applicable Law, any written communications sent by or on behalf of ▇▇▇▇▇▇ to any ▇▇▇▇▇▇ Shareholder exercising or purporting to exercise Dissent Rights in relation to the Arrangement.

(f)

Upon receipt by ▇▇▇▇▇▇ from HudBay of all necessary documents required to be executed by it, ▇▇▇▇▇▇ will use its best efforts to prepare or cause to be prepared and provide to HudBay lists of the holders of all classes and series of securities of ▇▇▇▇▇▇, including lists of the ▇▇▇▇▇▇ Shareholders, the holders of ▇▇▇▇▇▇ Options and the holders of SDRs, as well as a security position listing from each depositary of its securities, including The Canadian Depositary for Securities Limited and The Depository Trust Company, within five business days after the date hereof and will obtain and deliver to HudBay thereafter on demand supplemental lists setting out any changes thereto, all such deliveries to be in printed form and, if available, in computer-readable format.

(g)

As soon as reasonably practicable following execution of this Agreement, ▇▇▇▇▇▇ will convene a meeting of the ▇▇▇▇▇▇ Board to approve the ▇▇▇▇▇▇ Circular and the SDR Documents.

2.4

▇▇▇▇▇▇ Circular

(a)

▇▇▇▇▇▇ shall prepare the ▇▇▇▇▇▇ Circular and, to the extent required by Law, the Schedule 13E-3 in compliance in all material respects with applicable Securities Laws and file on a timely basis the ▇▇▇▇▇▇ Circular with respect to the ▇▇▇▇▇▇ Meeting and, to the extent required by Law, the Schedule 13E-3 in all jurisdictions where the same is required to be filed and mail the same as required in accordance with all applicable Laws and with respect to the ▇▇▇▇▇▇ Circular, as required by the Interim Order, in all jurisdictions where the same is required, complying in all material respects with all applicable Laws on the date of mailing thereof and containing sufficient detail to enable the ▇▇▇▇▇▇ Shareholders to form a reasoned judgement concerning the matters to be placed before them at the ▇▇▇▇▇▇ Meeting and, subject to Section 2.4(c) below, containing full, true and plain disclosure of all material facts required by all applicable Laws to be disclosed thereunder. In particular, to the extent required by Swedish Securities Laws, ▇▇▇▇▇▇ shall prepare the SDR Documents in English and Swedish and arrange for their distribution to the holders of SDRs through the SDR Depositary or otherwise. ▇▇▇▇▇▇ shall, in consultation with HudBay, use all commercially reasonable efforts to abridge the timing contemplated by National Instrument 54-101 – Communication with Beneficial Owners of Securities of a Reporting Issuer, as provided in Section 2.20 thereof (it being agreed that such efforts shall not necessarily include the making of an application for a waiver or exemption from such National Instrument).

(b)

▇▇▇▇▇▇ shall ensure that the ▇▇▇▇▇▇ Circular, the Schedule 13E-3, to the extent required by Law, and the SDR Documents comply in all material respects with all applicable Securities Laws, and, without limiting the generality of the foregoing, that the ▇▇▇▇▇▇ Circular, the Schedule 13E-3, to the extent required by Law, and the SDR Documents will not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements contained therein not misleading in light of the circumstances in which they are made (other than in each case with respect to any information relating to HudBay and its affiliates, including HudBay Shares) and to allow HudBay to rely upon the exemption from registration provided under Section 3(a)(10) of the U.S. Securities Act with respect to the issuance of HudBay Shares in exchange for ▇▇▇▇▇▇ Shares (including ▇▇▇▇▇▇ Shares underlying SDRs) and the ▇▇▇▇▇▇ Options pursuant to the transactions described herein. Subject to Section 7.2, ▇▇▇▇▇▇ will include in the ▇▇▇▇▇▇ Circular the unanimous recommendation of the ▇▇▇▇▇▇ Board that ▇▇▇▇▇▇ Shareholders vote in favour of the Arrangement Resolution, and a statement that each director of ▇▇▇▇▇▇ intends to vote all of such director’s ▇▇▇▇▇▇ Shares (including any ▇▇▇▇▇▇ Shares issued upon the exercise of any ▇▇▇▇▇▇ Options) in favour of the Arrangement Resolution, subject to the other terms of this Agreement and the Voting Agreements.

(c)

HudBay shall provide to ▇▇▇▇▇▇ all information regarding HudBay, its affiliates and the HudBay Shares, including any pro forma financial statements prepared in accordance with applicable Laws as required by the Interim Order or applicable Laws for inclusion in the ▇▇▇▇▇▇ Circular and Schedule 13E-3 (if required by Law to be filed) or in any amendments or supplements to such ▇▇▇▇▇▇ Circular and Schedule 13E-3 (if required by Law to be filed). HudBay shall also use commercially reasonable efforts to obtain any necessary consents from any of its Qualified Persons, auditors and any other advisors to the use of any financial, technical or other expert information required to be included in the ▇▇▇▇▇▇ Circular or the Schedule 13E-3 (if required by Law to be filed) and to the identification in the ▇▇▇▇▇▇ Circular or the Schedule 13E-3 (if required by Law to be filed) of each such advisor. HudBay shall ensure that no such information will include any untrue statement of a material fact or omit to state a material fact required to be stated in the ▇▇▇▇▇▇ Circular or the Schedule 13E-3 (if required by Law to be filed) in order to make any information so furnished or any information concerning HudBay not misleading in light of the circumstances in which it is disclosed and shall constitute full, true and plain disclosure of such information concerning HudBay and its subsidiaries.

(d)

HudBay and its legal counsel shall be given a reasonable opportunity to review and comment on the ▇▇▇▇▇▇ Circular, the Schedule 13E-3 (if required by Law to be filed) and the SDR Documents prior to the ▇▇▇▇▇▇ Circular, the Schedule 13E-3 (if required by Law to be filed) and the SDR Documents being printed and filed with the Securities Authorities and the SEC, and reasonable consideration shall be given to any comments made by HudBay and its counsel, provided that all information relating solely to HudBay, its affiliates and the HudBay Shares included in the ▇▇▇▇▇▇ Circular or the Schedule 13E-3 (if required by Law to be filed) shall be in form and content satisfactory to HudBay, acting reasonably. ▇▇▇▇▇▇ shall provide HudBay with final copies of the ▇▇▇▇▇▇ Circular, the Schedule 13E-3 (if required by Law to be filed) and the SDR Documents prior to the mailing to the ▇▇▇▇▇▇ Shareholders.

(e)

▇▇▇▇▇▇ and HudBay shall each promptly notify each other if at any time before the Effective Date either becomes aware (in the case of ▇▇▇▇▇▇ only with respect to ▇▇▇▇▇▇ and in the case of HudBay only with respect to HudBay or its subsidiaries) that the ▇▇▇▇▇▇ Circular, the Schedule 13E-3 (if required by Law to be filed) or the SDR Documents contain an untrue statement of a material fact or omits to state a material fact required to be stated therein or necessary to make the statements contained therein not misleading in light of the circumstances in which they are made, or that otherwise requires an amendment or supplement to the ▇▇▇▇▇▇ Circular, the Schedule 13E-3 (if required by Law to be filed) or the SDR Documents and the Parties shall co-operate in the preparation of any amendment or supplement to the ▇▇▇▇▇▇ Circular, the Schedule 13E-3 (if required by Law to be filed) or the SDR Documents, as required or appropriate, and ▇▇▇▇▇▇ shall promptly mail or otherwise publicly disseminate any amendment or supplement to the ▇▇▇▇▇▇ Circular, the Schedule 13E-3 (if required by Law to be filed) or the SDR Documents to ▇▇▇▇▇▇ Shareholders and, if required by the Court or applicable Laws, file the same with the Securities Authorities, the SEC and as otherwise required.

2.5

Securities Law Compliance

HudBay and ▇▇▇▇▇▇ shall co-operate and use their reasonable commercial efforts in good faith to take, or cause to be taken, all reasonable actions, including the preparation of any applications for orders, registrations, consents, filings, circulars and approvals and the preparation of any required documents, in each case as reasonably necessary to discharge their respective obligations under this Agreement and the Arrangement, and to complete any of transactions contemplated by this Agreement, including their obligations under applicable Securities Laws. It is acknowledged and agreed that, except as set forth below, HudBay shall not be required to file a prospectus or similar document or otherwise become subject to the securities laws of any jurisdiction (other than a Province or Territory of Canada) in order to complete the Arrangement. HudBay may elect, at its sole discretion, to make such securities and other regulatory filings in the United States, Sweden or other jurisdictions as may be necessary or desirable in connection with the completion of the Arrangement. In addition, if required under applicable Securities Laws of Sweden, HudBay shall prepare and file a prospectus (the “Swedish Prospectus”) with the applicable Swedish Securities Authority in order to qualify the distribution of the HudBay Shares to ▇▇▇▇▇▇ Shareholders resident in Sweden or otherwise subject to Swedish Securities Laws. ▇▇▇▇▇▇ shall provide to HudBay all information regarding ▇▇▇▇▇▇ and its affiliates as required by applicable Securities Laws in connection with such filings. ▇▇▇▇▇▇ shall also use commercially reasonable efforts to obtain any necessary consents from any of its Qualified Persons, auditors and any other advisors to the use of any financial, technical or other expert information required to be included in such filings and to the identification in such filings of each such advisor.

2.6

Final Order

If the Interim Order is obtained and the Arrangement Resolution is passed at the ▇▇▇▇▇▇ Meeting by the ▇▇▇▇▇▇ Shareholders as provided for in the Interim Order and as required by applicable Law, ▇▇▇▇▇▇ shall as soon as reasonably practicable thereafter, and, in any event, within three (3) business days following the approval of the Arrangement Resolution at the ▇▇▇▇▇▇ Meeting, take all steps necessary or desirable to submit the Arrangement to the Court and diligently pursue an application for the Final Order pursuant to Section 192 of the CBCA.

2.7

Court Proceedings

Subject to the terms of this Agreement, HudBay will cooperate with, assist and consent to ▇▇▇▇▇▇ seeking the Interim Order and the Final Order, including by providing ▇▇▇▇▇▇ on a timely basis any information required to be supplied by HudBay in connection therewith. ▇▇▇▇▇▇ will provide legal counsel to HudBay with reasonable opportunity to review and comment upon drafts of all material to be filed with the Court in connection with the Arrangement, and will give reasonable consideration to all such comments. ▇▇▇▇▇▇ will also provide legal counsel to HudBay on a timely basis with copies of any notice of appearance or notice of intent to oppose and any evidence served on ▇▇▇▇▇▇ or its legal counsel in respect of the application for the Interim Order or the Final Order or any appeal therefrom. Subject to applicable Law, ▇▇▇▇▇▇ will not file any material with the Court in connection with the Arrangement or serve any such material, and will not agree to modify or amend materials so filed or served, except as contemplated by this Section 2.7 or with HudBay's prior written consent, such consent not to be unreasonably withheld, conditioned or delayed; provided that nothing herein shall require HudBay to agree or consent to any increase in Consideration or other modification or amendment to such filed or served materials that expands or increases HudBay's obligations set forth in any such filed or served materials or under this Agreement.

2.8

Articles of Arrangement and Effective Date

The Articles of Arrangement shall implement the Plan of Arrangement. No later than the fifth (5) business day after the satisfaction or, where not prohibited, the waiver (subject to applicable Law) of the conditions (excluding conditions that, by their terms, cannot be satisfied until the Effective Date, but subject to the satisfaction or, where not prohibited, the waiver of those conditions as of the Effective Date) set forth in Article 6, unless another time or date is agreed to in writing by the Parties, the Articles of Arrangement shall be filed by ▇▇▇▇▇▇ with the Director. From and after the Effective Time, the Plan of Arrangement will have all of the effects provided by applicable Law, including the CBCA.

2.9

Issue of HudBay Shares

HudBay will, following receipt by ▇▇▇▇▇▇ of the Final Order and prior to the Effective Time, ensure that the Depositary has been provided with sufficient HudBay Shares in escrow to issue the aggregate Consideration pursuant to the Arrangement.

2.10

Preparation of Filings

HudBay and ▇▇▇▇▇▇ shall reasonably cooperate with each other in the prompt and diligent preparation of any application for the Key Regulatory Approvals and any other orders, registrations, consents, filings, rulings, exemptions, no-action letters and approvals and the preparation of any documents reasonably deemed by either of the Parties to be necessary to discharge its respective obligations under this Agreement or otherwise required or advisable under applicable Laws in connection with the Arrangement, this Agreement or the Plan of Arrangement.

2.11

Announcement and Shareholder Communications

HudBay and ▇▇▇▇▇▇ shall each publicly announce the transactions contemplated hereby promptly following the execution of this Agreement by HudBay and ▇▇▇▇▇▇, the text and timing of each such announcement to be approved by HudBay and ▇▇▇▇▇▇ in advance, acting reasonably. HudBay and ▇▇▇▇▇▇ agree to co-operate in the preparation of presentations, if any, to ▇▇▇▇▇▇ Shareholders regarding the Plan of Arrangement, and no Party shall (a) issue any press release or otherwise make public announcements with respect to this Agreement or the Plan of Arrangement without the consent of the other Party (which consent shall not be unreasonably withheld or delayed) or (b) make any filing with any Governmental Entity, with the Exchange, the NYSE or the OMX with respect thereto without prior consultation with the other Party; provided, however, that the foregoing shall be subject to each Party’s overriding obligation to make any disclosure or filing required under applicable Laws or stock exchange rules, and the Party making such disclosure shall use all commercially reasonable efforts to give prior oral or written notice to the other Party and reasonable opportunity to review or comment on the disclosure or filing, and if such prior notice is not possible, to give such notice immediately following the making of such disclosure or filing.

2.12

Withholding Taxes

HudBay, ▇▇▇▇▇▇ and the Depositary shall be entitled to deduct and withhold from any consideration payable or otherwise deliverable to any person hereunder and from all dividends or other distributions otherwise payable to any former ▇▇▇▇▇▇ Shareholder such amounts as HudBay, ▇▇▇▇▇▇ or the Depositary may be required or permitted to deduct and withhold therefrom under any provision of applicable Laws in respect of Taxes. To the extent that such amounts are so deducted, withheld and remitted, such amounts shall be treated for all purposes under this Agreement as having been paid to the person to whom such amounts would otherwise have been paid.

2.13

U.S. Tax Matters

The Arrangement is intended to qualify as a reorganization within the meaning of Section 368(a) of the Code and applicable Treasury Regulations. The Parties agree to act (and to cause their respective affiliates to act) in a manner that is consistent with the foregoing and to not take any position (including any position on a Tax Return or otherwise) that is inconsistent with such treatment, in each case except as otherwise required by Law or a good faith resolution of a contest. Without limiting the generality of the foregoing, HudBay hereby represents and warrants that it is under no binding commitment, and has no current plan or intention, to (a) cause ▇▇▇▇▇▇ to amalgamate, merge or otherwise combine with any entity (other than a possible amalgamation of ▇▇▇▇▇▇ and HudBay), (b) cause ▇▇▇▇▇▇ to liquidate for U.S. federal income tax purposes, or (c) sell shares of ▇▇▇▇▇▇. None of the proceeds of any sale of ▇▇▇▇▇▇ Shares by ▇▇▇▇▇▇ to HudBay or other funds transferred by HudBay to ▇▇▇▇▇▇ will be paid to Shareholders of ▇▇▇▇▇▇ in connection with the Arrangement, including payments to former Shareholders of ▇▇▇▇▇▇ exercising Dissent Rights. Neither HudBay nor ▇▇▇▇▇▇ makes any representation or warranty to any person regarding the U.S. federal income tax consequences of the Arrangement.

ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF ▇▇▇▇▇▇

3.1

Representations and Warranties

Except as disclosed in the ▇▇▇▇▇▇ Disclosure Letter (which shall make reference to the applicable section, subsection, paragraph or subparagraph below in respect of which such qualification is being made), ▇▇▇▇▇▇ hereby represents and warrants to HudBay as follows, and acknowledges that HudBay is relying upon such representations and warranties in connection with the entering into of this Agreement:

(a)

Board Approval. As of the date hereof, the ▇▇▇▇▇▇ Board (other than Messrs. ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇▇▇▇ Charter and ▇▇▇▇ ▇. ▇▇▇▇▇), prior to the execution of this Agreement, after consultation with its outside legal counsel and on receipt of a recommendation of the Special Committee, has determined unanimously that the Plan of Arrangement is fair to the ▇▇▇▇▇▇ Shareholders and is in the best interests of ▇▇▇▇▇▇ and has resolved unanimously to recommend to the ▇▇▇▇▇▇ Shareholders that they vote in favour of the Arrangement Resolution. The ▇▇▇▇▇▇ Board (other than Messrs. ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇▇▇▇ Charter and ▇▇▇▇ ▇. ▇▇▇▇▇) has approved the Arrangement pursuant to the Plan of Arrangement and the execution and performance of this Agreement.

(b)

Fairness Opinion. The Special Committee has received the opinion of ▇▇▇▇▇▇▇ Securities Inc., the financial advisor to the Special Committee, to the effect that, as of the date of such opinion, subject to the assumptions and limitations set out therein, the Consideration to be received by the ▇▇▇▇▇▇ Shareholders (other than HudBay and its affiliates) in connection with the transactions contemplated by this Agreement is fair, from a financial point of view, to such ▇▇▇▇▇▇ Shareholders (other than HudBay and its affiliates).

(c)

Organization and Qualification. ▇▇▇▇▇▇, each of the ▇▇▇▇▇▇ Subsidiaries and, to the knowledge of ▇▇▇▇▇▇, each of the ▇▇▇▇▇▇ Significant Interest Companies (other than ▇▇▇▇▇▇▇ (Overseas) Ltd.), is a corporation duly incorporated or an entity duly organized or formed and validly existing under all applicable Laws of its jurisdiction of incorporation, continuance, organization or formation and has all necessary corporate or other organizational power, authority and capacity to own its property and assets and to carry on its business as it is currently owned and conducted. ▇▇▇▇▇▇, each of the ▇▇▇▇▇▇ Subsidiaries and, to the knowledge of ▇▇▇▇▇▇, each of the ▇▇▇▇▇▇ Significant Interest Companies (other than ▇▇▇▇▇▇▇ (Overseas) Ltd.): (i) except as disclosed in Schedule 3.1(c) of the ▇▇▇▇▇▇ Disclosure Letter, has all material Permits necessary to conduct its business substantially as now conducted or as intended to be conducted as disclosed in the ▇▇▇▇▇▇ Public Disclosure Record, except for those Permits the absence of which has not had and would not be reasonably expected to have, individually or in the aggregate, a Material Adverse Effect on ▇▇▇▇▇▇; and (ii) is duly registered or otherwise authorized and qualified to do business and each is in good standing in each jurisdiction in which the character or location of its properties, owned, leased, licensed or otherwise held, or the nature of its activities makes such qualification necessary, except for those jurisdictions where the failure to be so registered or qualified has not had and would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect on ▇▇▇▇▇▇.

(d)

Authority Relative to this Agreement. ▇▇▇▇▇▇ has the requisite corporate power and authority to enter into this Agreement and to perform its obligations hereunder. The execution and delivery of this Agreement by ▇▇▇▇▇▇ and the performance by ▇▇▇▇▇▇ of its obligations under this Agreement have been duly authorized by the ▇▇▇▇▇▇ Board and, except for the approval by the ▇▇▇▇▇▇ Board of the ▇▇▇▇▇▇ Circular and subject, in the case of the Arrangement, to obtaining the approval of the ▇▇▇▇▇▇ Shareholders pursuant to the Interim Order, no other corporate proceedings on its part are necessary to authorize this Agreement or the Arrangement pursuant to the Plan of Arrangement. This Agreement has been duly executed and delivered by ▇▇▇▇▇▇ and constitutes a legal, valid and binding obligation of ▇▇▇▇▇▇, enforceable against ▇▇▇▇▇▇ in accordance with its terms, subject to the qualification that such enforceability may be limited by bankruptcy, insolvency, reorganization or other Laws of general application relating to or affecting the rights of creditors and that equitable remedies, including specific performance, are discretionary and may not be ordered.

(e)

No Violations. Neither the authorization, execution and delivery of this Agreement by ▇▇▇▇▇▇ nor the completion of the transactions contemplated by this Agreement or the Arrangement pursuant to the Plan of Arrangement, nor the performance of its obligations thereunder, nor compliance by ▇▇▇▇▇▇ with any of the provisions hereof will: (i) violate, conflict with, or result (with or without notice or the passage of time) in a violation or breach of any provision of, or require, except in respect of the Key Third Party Consents, any consent, approval or notice under, or constitute a default (or an event which, with notice or lapse of time or both, would constitute a default) or result in a right of termination or acceleration under, or result in the creation of any Lien upon, any of the properties or assets of ▇▇▇▇▇▇, any ▇▇▇▇▇▇ Subsidiary or, to the knowledge of ▇▇▇▇▇▇, any ▇▇▇▇▇▇ Significant Interest Company, or cause any indebtedness to come due before its stated maturity or cause any credit commitment to cease to be available or cause any payment or other obligation to be imposed on ▇▇▇▇▇▇ or any ▇▇▇▇▇▇ Subsidiary under any of the terms, conditions or provisions of: (A) their respective articles, charters or by-laws or other comparable organizational documents; or (B) any Permit or Material Contract to which ▇▇▇▇▇▇, any ▇▇▇▇▇▇ Subsidiary is a party or to which any of them, or any of their respective properties or assets, may be subject or by which ▇▇▇▇▇▇ or any ▇▇▇▇▇▇ Subsidiary is bound; or (ii) subject to obtaining the Key Regulatory Approvals, (A) result (with or without notice or the passage of time) in a violation or breach of or constitute a default under any provisions of any Laws applicable to ▇▇▇▇▇▇ or any ▇▇▇▇▇▇ Subsidiary or any of their respective properties or assets; or (B) cause the suspension or revocation of any Permit currently in effect in regard to ▇▇▇▇▇▇ or any ▇▇▇▇▇▇ Subsidiary (except, in the case of each of clauses (i) and (ii) above, for such violations, conflicts, breaches, defaults, terminations, accelerations or creations of Liens which, or any consents (expressly excluding the Key Third-Party Consents and Key Regulatory Approvals), approvals or notices which if not given or received, would not, individually or in the aggregate, reasonably be expected to have any Material Adverse Effect). The authorization of this Agreement, the execution and delivery by ▇▇▇▇▇▇ of this Agreement and the performance by it of its obligations under this Agreement, and the consummation by ▇▇▇▇▇▇ of the Arrangement, will not (x) give rise to any rights of first refusal or, except as disclosed in Section 3.1(e) of the ▇▇▇▇▇▇ Disclosure Letter, trigger any change in control provisions or any restrictions or limitation under any such note, bond, mortgage, indenture, contract, license, franchise or Permit, or result in the imposition of any encumbrance, charge or Lien upon any of ▇▇▇▇▇▇'▇ assets or the assets of any ▇▇▇▇▇▇ Subsidiary; or (y) result in the imposition of any Liens upon any assets of ▇▇▇▇▇▇ or any ▇▇▇▇▇▇ Subsidiary. The Key Third Party Consents listed in Schedule “D” are the only consents, approvals and notices required from any third party under any Material Contracts of ▇▇▇▇▇▇ or any ▇▇▇▇▇▇ Subsidiary in order for ▇▇▇▇▇▇ and its subsidiaries to proceed with the execution and delivery of this Agreement and the completion of the transactions contemplated by this Agreement and the Arrangement pursuant to the Plan of Arrangement.

(f)

Capitalization. The authorized share capital of ▇▇▇▇▇▇ consists of an unlimited number of ▇▇▇▇▇▇ Shares and one special share. As of the close of business on November 19, 2008, 390,436,279 ▇▇▇▇▇▇ Shares were issued and outstanding (including ▇▇▇▇▇▇ Shares represented by SDRs). As of the close of business on November 19, 2008, the special share was not issued or outstanding. As of the close of business on November 19, 2008, an aggregate of 11,695,740 ▇▇▇▇▇▇ Options were outstanding and, except as disclosed in Schedule 3.1(f) of the ▇▇▇▇▇▇ Disclosure Letter, there are no options, warrants, conversion privileges or other rights, shareholder rights plans, agreements, arrangements or commitments (pre-emptive, contingent or otherwise) of any character whatsoever requiring or which may require the issuance, sale or transfer by ▇▇▇▇▇▇ of any securities of ▇▇▇▇▇▇ (including ▇▇▇▇▇▇ Shares), or any securities or obligations convertible into, or exchangeable or exercisable for, or otherwise evidencing a right or obligation to acquire, any securities of ▇▇▇▇▇▇ (including ▇▇▇▇▇▇ Shares) or ▇▇▇▇▇▇ Subsidiaries. As of the close of business on November 19, 2008, 306,720 stock appreciation rights of ▇▇▇▇▇▇ were outstanding. All outstanding ▇▇▇▇▇▇ Shares have been duly authorized and validly issued, are fully paid and non-assessable, and no such ▇▇▇▇▇▇ Shares have been issued in violation of any pre-emptive or similar rights. All securities of ▇▇▇▇▇▇ (including the ▇▇▇▇▇▇ Shares and the ▇▇▇▇▇▇ Options) have been issued in compliance with all applicable Laws. Other than the ▇▇▇▇▇▇ Options, there are no securities of ▇▇▇▇▇▇ or any ▇▇▇▇▇▇ Subsidiaries outstanding which have the right to vote generally (or are convertible into or exchangeable for securities having the right to vote generally) with the ▇▇▇▇▇▇ Shareholders on any matter. Except as disclosed in Schedule 3.1(f) of the ▇▇▇▇▇▇ Disclosure Letter, there are no outstanding contractual or other obligations of ▇▇▇▇▇▇ or any of the ▇▇▇▇▇▇ Subsidiaries to repurchase, redeem or otherwise acquire any of its securities or with respect to the voting or disposition of any outstanding securities of any of the ▇▇▇▇▇▇ Subsidiaries, other than the ▇▇▇▇▇▇ Options. There are no outstanding bonds, debentures or other evidences of indebtedness of ▇▇▇▇▇▇ or any of the ▇▇▇▇▇▇ Subsidiaries having the right to vote with the holders of the outstanding ▇▇▇▇▇▇ Shares on any matters.

(g)

Material Contracts. Schedule 3.1(g) of the ▇▇▇▇▇▇ Disclosure Letter includes a complete and accurate list of all Material Contracts to which ▇▇▇▇▇▇ or any ▇▇▇▇▇▇ Subsidiary is a party. All Material Contracts to which ▇▇▇▇▇▇ or any ▇▇▇▇▇▇ Subsidiary is a party is in full force and effect, and ▇▇▇▇▇▇ or the ▇▇▇▇▇▇ Subsidiary party thereto is entitled to all rights and benefits thereunder in accordance with the terms thereof. ▇▇▇▇▇▇ has made available to HudBay for inspection true and complete copies of all Material Contracts to which ▇▇▇▇▇▇ or any ▇▇▇▇▇▇ Subsidiary is a party and has made available all Material Contracts to which each ▇▇▇▇▇▇ Significant Interest Company is a party to which it has access. All Material Contracts listed in Schedule 3.1(g) of the ▇▇▇▇▇▇ Disclosure Letter and all Material Contracts to which each ▇▇▇▇▇▇ Significant Interest Company is a party to which ▇▇▇▇▇▇ has access are contained in the ▇▇▇▇▇▇ Data Room Information or have been provided directly to HudBay. All of the Material Contracts are valid and binding obligations of ▇▇▇▇▇▇ or a ▇▇▇▇▇▇ Subsidiary, as applicable, enforceable in accordance with their respective terms, except as may be limited by bankruptcy, insolvency and other Laws affecting the enforcement of creditors’ rights generally and subject to the qualification that equitable remedies may only be granted in the discretion of a court of competent jurisdiction. ▇▇▇▇▇▇ and the ▇▇▇▇▇▇ Subsidiaries have complied in all material respects with all terms of such Material Contracts, have paid all amounts due thereunder, have not waived any rights thereunder and no default or breach exists in respect thereof on the part of ▇▇▇▇▇▇ or any ▇▇▇▇▇▇ Subsidiary or on the part of any other party thereto, and no event has occurred which, after the giving of notice or the lapse of time or both, would constitute such a default or breach or trigger a right of termination of any of the Material Contracts. Except as disclosed in Schedule 3.1(g), as at the date hereof, neither ▇▇▇▇▇▇ nor any ▇▇▇▇▇▇ Subsidiary has received written notice that any party to a Material Contract intends to cancel, terminate or otherwise modify or not renew such Material Contract, and to the knowledge of ▇▇▇▇▇▇, no such action has been threatened. Neither ▇▇▇▇▇▇ nor any ▇▇▇▇▇▇ Subsidiary is a party to any Material Contract that contains any non-competition obligation or otherwise restricts in any material way the business of ▇▇▇▇▇▇ or any of the ▇▇▇▇▇▇ Subsidiaries.

(h)

Reporting Status and Securities Laws Matters. ▇▇▇▇▇▇ is a “reporting issuer” and not on the list of reporting issuers in default under applicable Securities Laws in the Provinces of British Columbia, Alberta, Ontario, Quebec and Nova Scotia.

(i)

Ownership of Subsidiaries, Significant Interest Companies and Investment Companies. Schedule “E” is a complete and accurate list of all direct and indirect subsidiaries of ▇▇▇▇▇▇, each of which is wholly-owned other than as disclosed in Schedule “E”. Schedule “F” is a complete and accurate list of all ▇▇▇▇▇▇ Significant Interest Companies and all ▇▇▇▇▇▇ Investment Companies, which list includes a description of the percentage of equity interests held by ▇▇▇▇▇▇, directly or indirectly, in each ▇▇▇▇▇▇ Significant Interest Company and ▇▇▇▇▇▇ Investment Company. All of the issued and outstanding shares of capital stock and other ownership interests of ▇▇▇▇▇▇ in each of the ▇▇▇▇▇▇ Subsidiaries and, to the knowledge of ▇▇▇▇▇▇, the ▇▇▇▇▇▇ Significant Interest Companies and the ▇▇▇▇▇▇ Investment Companies have been duly authorized, validly issued, fully paid and non-assessable, and all such shares and other ownership interests held directly or indirectly by ▇▇▇▇▇▇ are legally and beneficially owned free and clear of all Liens, and there are no outstanding options, warrants, rights, entitlements, understandings or commitments (contingent or otherwise) regarding the right to purchase or acquire, or securities convertible into or exchangeable for, any such shares of capital stock or other ownership interests in or material assets or properties of any of the ▇▇▇▇▇▇ Subsidiaries, the ▇▇▇▇▇▇ Significant Interest Companies or the ▇▇▇▇▇▇ Investment Companies except as disclosed in Schedule 3.1(i) of the ▇▇▇▇▇▇ Disclosure Letter. There are no contracts, commitments, agreements, understandings, arrangements or restrictions which require any ▇▇▇▇▇▇ Subsidiary to issue, sell or deliver any shares in its share capital or other ownership interests, or any securities or obligations convertible into or exchangeable for, any shares of its share capital or other ownership interests.

(j)

Public Filings. Except as set forth in Schedule 3.1(j) of the ▇▇▇▇▇▇ Disclosure Letter, since January 1, 2007, ▇▇▇▇▇▇ has filed all documents required to be filed by it in accordance with applicable Securities Laws with the Securities Authorities, the Exchange, the NYSE and the OMX. All such documents and information comprising the ▇▇▇▇▇▇ Public Disclosure Record, as of their respective dates (and the dates of any amendments thereto), (i) did not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein in light of the circumstances in which they were made not misleading, and (ii) complied in all material respects with the requirements of applicable Securities Laws, and any amendments to the ▇▇▇▇▇▇ Public Disclosure Record required to be made have been filed on a timely basis with the Securities Authorities, the Exchange, the NYSE or the OMX. ▇▇▇▇▇▇ has not filed any confidential material change reports with any Securities Authorities that at the date of this Agreement remain confidential. Except as set forth in Schedule 3.1(j) of the ▇▇▇▇▇▇ Disclosure Letter, there are no outstanding or unresolved comments in comment letters received from any Securities Authority, the Exchange, the NYSE or the OMX staff with respect to the ▇▇▇▇▇▇ Public Disclosure Record. To the knowledge of ▇▇▇▇▇▇, none of the filings comprising the ▇▇▇▇▇▇ Public Disclosure Record is the subject of ongoing review, comment or investigation by any Securities Authority, the Exchange, the NYSE or the OMX.

(k)

▇▇▇▇▇▇ Financial Statements. ▇▇▇▇▇▇'▇ audited consolidated financial statements as at and for the fiscal year ended December 31, 2007 (including the notes thereto) and ▇▇▇▇▇▇'▇ unaudited consolidated financial statements as at and for the nine (9) months ended September 30, 2008 (collectively, the “▇▇▇▇▇▇ Financial Statements”) were prepared in accordance with GAAP consistently applied (except (i) as otherwise indicated in such financial statements and the notes thereto or, in the case of the audited consolidated financial statements, in the related report of ▇▇▇▇▇▇'▇ independent auditors, or (ii) in the case of unaudited consolidated interim financial statements, are subject to normal period-end adjustments and may omit notes which are not required by applicable Laws in the unaudited statements) and fairly present, in all material respects, the consolidated financial position, results of operations and cash flows of ▇▇▇▇▇▇ and the ▇▇▇▇▇▇ Subsidiaries as of the dates thereof and for the periods indicated therein (subject, in the case of any unaudited consolidated interim financial statements, to normal period-end adjustments) and reflect reserves required by GAAP in respect of all material contingent liabilities, if any, of ▇▇▇▇▇▇, the ▇▇▇▇▇▇ Subsidiaries and the ▇▇▇▇▇▇ Significant Interest Companies on a consolidated basis. There has been no material change in ▇▇▇▇▇▇'▇ accounting policies, except as described in the notes to the ▇▇▇▇▇▇ Financial Statements, since December 31, 2007.

(l)

Internal Controls and Financial Reporting. ▇▇▇▇▇▇: (i) maintains disclosure controls and procedures (as defined in Rule 13a-15(e) under the U.S. Exchange Act); (ii) maintains internal control over financial reporting (as defined in Rule 13a-15 under the U.S. Exchange Act). ▇▇▇▇▇▇ has disclosed, based on its management’s most recent evaluation of internal control over financial reporting prior to the date hereof, to ▇▇▇▇▇▇'▇ auditors and audit committee (A) any significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting that are reasonably likely to adversely affect ▇▇▇▇▇▇'▇ ability to record, process, summarize and report financial information and (B) any fraud, whether or not material, that involves management or other employees who have a significant role in internal control over financial reporting. Except as set forth in Schedule 3.1(l) of the ▇▇▇▇▇▇ Disclosure Letter, ▇▇▇▇▇▇ has not received any complaint, allegation, assertion, or claim in writing regarding the accounting practices, procedures, methodologies, or methods of ▇▇▇▇▇▇ or its internal control over financial reporting, including any such complaint, allegation, assertion, or claim that ▇▇▇▇▇▇ has engaged in questionable accounting or auditing practices. ▇▇▇▇▇▇ is in material compliance with all applicable effective provisions of the United States ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act of 2002 and the rules and regulations promulgated thereunder.

(m)

Books and Records. The financial books, records and accounts of ▇▇▇▇▇▇ and each of the ▇▇▇▇▇▇ Subsidiaries, in all material respects: (i) have been maintained in accordance with good business practices, on a basis consistent with prior years; and (ii) in each case, in reasonable detail, accurately and fairly reflect the material transactions and dispositions of the assets of ▇▇▇▇▇▇ and the ▇▇▇▇▇▇ Subsidiaries and accurately and fairly reflect the basis for the ▇▇▇▇▇▇ Financial Statements.

(n)

Minute Books. Except as disclosed in Schedule 3.1(n) of the ▇▇▇▇▇▇ Disclosure Letter, the minute books of ▇▇▇▇▇▇ and each of the ▇▇▇▇▇▇ Subsidiaries are true, correct and complete in all material respects.

(o)

No Undisclosed Liabilities. ▇▇▇▇▇▇ and the ▇▇▇▇▇▇ Subsidiaries have no outstanding indebtedness or liabilities of any kind whatsoever, whether accrued, contingent, absolute, determined, determinable, or otherwise, and are not party to or bound by any suretyship, guarantee, indemnification or assumption agreement, or endorsement of, or any other similar commitment with respect to the obligations, liabilities or indebtedness of any person, other than those disclosed in the audited consolidated balance sheet of ▇▇▇▇▇▇ as of December 31, 2007 forming part of the ▇▇▇▇▇▇ Financial Statements, liabilities or obligations incurred in connection with the transactions contemplated hereby or to the extent disclosed in Schedule 3.1(o) of the ▇▇▇▇▇▇ Disclosure Letter, liabilities and obligations incurred in the ordinary course of business since the date of the most recent financial statements of ▇▇▇▇▇▇ filed on SEDAR since December 31, 2007.

(p)

No Material Change. Since December 31, 2007, except as disclosed in the ▇▇▇▇▇▇ Public Disclosure Record, the business of ▇▇▇▇▇▇, the ▇▇▇▇▇▇ Subsidiaries and the ▇▇▇▇▇▇ Significant Interest Companies has been conducted in the ordinary course consistent with past practice and there has not been any event, occurrence, development or state of circumstances or facts that would be reasonably expected to cause, individually or in the aggregate, a Material Adverse Change in respect of ▇▇▇▇▇▇. Since December 31, 2007, the debt, business and material properties of ▇▇▇▇▇▇ and the ▇▇▇▇▇▇ Subsidiaries conform in all respects to the description thereof contained in the ▇▇▇▇▇▇ Public Disclosure Record, and there has been no dividend or distribution of any kind declared, paid or made by ▇▇▇▇▇▇ on any ▇▇▇▇▇▇ Shares.

(q)

Litigation. Except as disclosed in Schedule 3.1(q) of the ▇▇▇▇▇▇ Disclosure Letter, there are no material claims, actions, suits, grievances, orders, complaints or proceedings pending or, to the knowledge of ▇▇▇▇▇▇, threatened against ▇▇▇▇▇▇, any ▇▇▇▇▇▇ Subsidiary or affecting any of their respective properties or assets at law or in equity before or by any Governmental Entity. Neither ▇▇▇▇▇▇ nor any ▇▇▇▇▇▇ Subsidiary nor their respective assets or properties is subject to any outstanding material judgment, order, writ, injunction or decree.

(r)

Taxes. Except as disclosed in writing to HudBay's solicitors or as would not, individually or in the aggregate, reasonably be expected to have a Material Averse Effect with respect to ▇▇▇▇▇▇:

(i)

▇▇▇▇▇▇ and each ▇▇▇▇▇▇ Subsidiary has duly and in a timely manner made or prepared all Tax Returns required to be made or prepared by it, and duly and in a timely manner filed all Tax Returns required to be filed by it with the appropriate Governmental Entity, such Tax Returns are complete and correct in all material respects and ▇▇▇▇▇▇ and each ▇▇▇▇▇▇ Subsidiary has paid all Taxes, including instalments on account of Taxes for the current year required by applicable Law, which are due and payable by it whether or not assessed by the appropriate Governmental Entity and ▇▇▇▇▇▇ has provided adequate accruals in accordance with GAAP in the most recently published financial statements of ▇▇▇▇▇▇ for any Taxes for the period covered by such financial statements that have not been paid whether or not shown as being due on any Tax Returns. Since such publication date, no material liability in respect of Taxes not reflected in such statements or otherwise provided for has been assessed, proposed to be assessed, incurred or accrued, other than in the ordinary course of business.

(ii)

▇▇▇▇▇▇ and each ▇▇▇▇▇▇ Subsidiary has duly and timely withheld all Taxes and other amounts required by Law to be withheld by it (including Taxes and other amounts required to be withheld by it in respect of any amount paid or credited or deemed to be paid or credited or deemed to be paid or credited by it to or for the benefit or any person) and has duly and timely remitted to the appropriate Governmental Entity such Taxes or other amounts required by applicable Law to be remitted by it.

(iii)

▇▇▇▇▇▇ and each ▇▇▇▇▇▇ Subsidiary has duly and timely collected all amounts on account of any sales or transfer Taxes, including goods and services, harmonized sales and provincial and territorial taxes, required by Law to be collected by it and has duly and timely remitted to the appropriate Governmental Entity such amounts required by Law to be remitted to it.

(iv)

Other than actions in the ordinary course, there are no actions, suits, proceedings, investigations or claims threatened against ▇▇▇▇▇▇ or any ▇▇▇▇▇▇ Subsidiary in respect of Taxes, or any matters under discussion with any Governmental Entity relating to Taxes asserted by any such authority.

(v)

Neither ▇▇▇▇▇▇ nor any ▇▇▇▇▇▇ Subsidiary has requested, offered to enter into or entered into any agreement or other arrangement, or executed any waiver, providing for any extension of time within which: (A) to file any Tax Return covering any Taxes for which ▇▇▇▇▇▇ or any ▇▇▇▇▇▇ Subsidiary is or may be liable; (B) to file any elections, designations or similar filings relating to Taxes for which ▇▇▇▇▇▇ or any ▇▇▇▇▇▇ Subsidiary is or may be liable; (C) ▇▇▇▇▇▇ or any ▇▇▇▇▇▇ Subsidiary is required to pay or remit any Taxes or amounts on account of Taxes; or (D) any Governmental Entity may assess or collect Taxes for which ▇▇▇▇▇▇ or any ▇▇▇▇▇▇ Subsidiary is or may be liable.

(vi)

Other than ordinary course audits and claims, there are no proceedings, investigations audits or claims in progress or, to the knowledge of ▇▇▇▇▇▇, pending or threatened against ▇▇▇▇▇▇ nor any ▇▇▇▇▇▇ Subsidiary in respect of Taxes and there are no matters under discussion, audit or appeal with any Governmental Entity relating to Taxes.

(vii)

Neither ▇▇▇▇▇▇ nor any ▇▇▇▇▇▇ Subsidiary has acquired property from a non-arm’s length person, within the meaning of the Tax Act: (A) for consideration the value of which is less than the fair market value of the property; or (B) as a contribution of capital for which no shares were issued by the acquirer of the property.

(viii)

▇▇▇▇▇▇ has made available to HudBay copies of: (A) all Tax Returns relating to the Taxes of ▇▇▇▇▇▇ or any ▇▇▇▇▇▇ Subsidiary that to the knowledge of ▇▇▇▇▇▇ have been filed in the last three (3) years; and (B) all material written communications to or from any Governmental Entity relating to the Taxes of ▇▇▇▇▇▇ or any ▇▇▇▇▇▇ Subsidiary that to the knowledge of ▇▇▇▇▇▇ has been received or sent in the last three (3) years.

(ix)

For the purposes of the Tax Act:

(A)

▇▇▇▇▇▇ is resident in Canada; and

(B)

each of the ▇▇▇▇▇▇ Subsidiaries (other than Rio Narcea Gold Mines, Ltd., 4258703 Canada Inc., 6565522 Canada Inc. and Defiance Quebec Inc.) is not resident in Canada.

(x)

There are no Liens for Taxes upon any properties or assets of ▇▇▇▇▇▇ or any of the ▇▇▇▇▇▇ Subsidiaries (other than Liens relating to Taxes not yet due and payable and for which adequate reserves have been recorded on the most recent consolidated balance sheet included in ▇▇▇▇▇▇'▇ audited consolidated financial statements).

(s)

Interest in Mineral Rights. Except as disclosed in Schedule 3.1(s) of the ▇▇▇▇▇▇ Disclosure Letter, each of ▇▇▇▇▇▇, the ▇▇▇▇▇▇ Subsidiaries and, to the knowledge of ▇▇▇▇▇▇, the ▇▇▇▇▇▇ Significant Interest Companies has sufficient title, free and clear of any title defect or Liens, to its properties (other than property as to which it is a lessee, in which case it has a valid leasehold interest and no rents due thereunder are in default), and to its mineral interests and rights (including any claims, concessions, exploration licences, exploitation licences, prospecting permits, royalty interests, mining leases and mining rights), except such defects in title or Liens that, individually or in the aggregate, do not have and would not reasonably be expected to result in a Material Adverse Effect on ▇▇▇▇▇▇. All real and tangible personal property of the ▇▇▇▇▇▇ and the ▇▇▇▇▇▇ Subsidiaries is in generally good repair and is operational and usable in the manner in which it is currently being used, subject to normal wear and tear, repair or replacement in the ordinary course of business.

(t)

Permits. Except as disclosed in Schedule 3.1(t) of the ▇▇▇▇▇▇ Disclosure Letter, ▇▇▇▇▇▇, each ▇▇▇▇▇▇ Subsidiary and, to ▇▇▇▇▇▇ knowledge, each of the ▇▇▇▇▇▇ Significant Interest Companies, has obtained and is in compliance with all material Permits required by applicable Laws which are necessary to lawfully conduct its current businesses as they are now being conducted or as intended to be conducted as set forth in the ▇▇▇▇▇▇ Public Disclosure Documents (which, for greater certainty, includes the exploration for and exploitation of mineral deposits) or which are necessary for the lawful ownership, use and occupation of its properties and assets. Except as disclosed in Schedule 3.1(t) of the ▇▇▇▇▇▇ Disclosure Letter, all such Permits are in full force and effect and, to the knowledge of ▇▇▇▇▇▇, there are no facts, events or circumstances that would reasonably be expected to result in a failure to obtain or be in compliance with such Permits as are necessary to conduct the business of ▇▇▇▇▇▇, any ▇▇▇▇▇▇ Subsidiary or any ▇▇▇▇▇▇ Significant Interest Company as it is proposed to be conducted. Each such Permit can be renewed in the ordinary course of business by ▇▇▇▇▇▇, the ▇▇▇▇▇▇ Subsidiary or, to ▇▇▇▇▇▇'▇ knowledge, the ▇▇▇▇▇▇ Significant Interest Company to which the Permit was granted. ▇▇▇▇▇▇ has received no notice of any actual or threatened proceeding to modify, suspend, revoke, withdraw, terminate or otherwise limit any such Permit and, to the knowledge of ▇▇▇▇▇▇, there is no valid basis for any such proceeding, including on the basis of the transactions contemplated hereby. ▇▇▇▇▇▇ has received no notice of any actual or threatened administrative or governmental action or proceeding in connection with the expiration, continuance or renewal of any such Permit and, to the knowledge of ▇▇▇▇▇▇, there is no valid basis for any such proceeding. To the knowledge of ▇▇▇▇▇▇, there is no reason why any Governmental Entity would not approve a properly filed request for a change in control of ▇▇▇▇▇▇ as contemplated by this Agreement for any jurisdiction where ▇▇▇▇▇▇, any ▇▇▇▇▇▇ Subsidiary or any ▇▇▇▇▇▇ Significant Interest Company conducts business, to the extent such approval may be necessary or required in such jurisdiction (except that ▇▇▇▇▇▇ makes no representation as to any information regarding HudBay or its affiliates).

(u)

HSR Act. ▇▇▇▇▇▇, together with all entities it controls directly or indirectly, does not hold assets located in the United States having an aggregate fair market value of over U.S.$63,100,000, and did not generate sales in or into the United States exceeding U.S.$63,100,000, during ▇▇▇▇▇▇'▇ most recent fiscal year. For the purposes of this section “control” shall have the meaning set forth in Title 16 of the U.S. Code of Federal Regulations § 801.1(b).

(v)

Environmental Matters. Except for any matters that, individually or in the aggregate, would not have or would not reasonably be expected to have a Material Adverse Effect on ▇▇▇▇▇▇ or as disclosed in Schedule 3.1(v) of the ▇▇▇▇▇▇ Disclosure Letter:

(i)

all facilities and operations of ▇▇▇▇▇▇, the ▇▇▇▇▇▇ Subsidiaries and to the knowledge of ▇▇▇▇▇▇, the ▇▇▇▇▇▇ Significant Interest Companies, have been conducted, and are now, in compliance with all Environmental Laws. Neither ▇▇▇▇▇▇ nor any of the ▇▇▇▇▇▇ Subsidiaries, in respect of which no representation is made, is under investigation with respect to the foregoing, or has received any notice that any violation of the foregoing is being or may be alleged;

(ii)

▇▇▇▇▇▇ and the ▇▇▇▇▇▇ Subsidiaries are in possession of, and in compliance with, all Environmental Permits that are required to own, lease and operate the ▇▇▇▇▇▇ Mineral Rights and to conduct their respective businesses as they are now being conducted or as intended to be conducted as set forth in the ▇▇▇▇▇▇ Public Disclosure Record (which, for greater certainty, includes the exploration for and exploitation of mineral deposits) or which are necessary for the lawful ownership, use and occupation of its properties and assets. All such Environmental Permits are in full force and effect and, to the knowledge of ▇▇▇▇▇▇, there are no facts, events or circumstances that would reasonably be expected to result in a failure to obtain or be in compliance with such Environmental Permits as are necessary to conduct the business of ▇▇▇▇▇▇ or any ▇▇▇▇▇▇ Subsidiary as it is proposed to be conducted. Each such Environmental Permit can be renewed in the ordinary course of business by ▇▇▇▇▇▇ or any ▇▇▇▇▇▇ Subsidiary to which the Environmental Permit was granted. ▇▇▇▇▇▇ has received no notice of any actual or threatened proceeding to modify, suspend, revoke, withdraw, terminate or otherwise limit any such Environmental Permit and, to the knowledge of ▇▇▇▇▇▇, there is no valid basis for any such proceeding, including on the basis of the transactions contemplated hereby. ▇▇▇▇▇▇ has received no notice of any actual or threatened administrative or governmental action or proceeding in connection with the expiration, continuance or renewal of any such Environmental Permit and, to the knowledge of ▇▇▇▇▇▇, there is no valid basis for any such proceeding;

(iii)

no environmental, remediation, rehabilitation, reclamation or closure obligation, demand, notice or work order presently exists with respect to any portion of any currently or formerly owned, leased, occupied, used or otherwise controlled property, interests and rights or relating to the operations and business of ▇▇▇▇▇▇ and the ▇▇▇▇▇▇ Subsidiaries and, to the knowledge of ▇▇▇▇▇▇, there is no basis for any such obligations, demands, notices or work orders to arise in the future as a result of any activity in respect of such property, interests, rights, operations and business;

(iv)

there is no proceeding, application, order, directive, claim, action, suit, investigation or complaint under or pursuant to any Environmental Laws pending or, to the knowledge of ▇▇▇▇▇▇, threatened, affecting ▇▇▇▇▇▇ or any ▇▇▇▇▇▇ Subsidiary or affecting any of their respective properties or assets before or by any Governmental Entity; and

(v)

▇▇▇▇▇▇ and the ▇▇▇▇▇▇ Subsidiaries have made available to HudBay all material audits, assessments and investigation reports with respect to environmental matters in its possession.

(w)

Mineral Reserves and Resources. The estimated proven and probable mineral reserves and the estimated indicated, measured and inferred mineral resources disclosed in the ▇▇▇▇▇▇ Public Disclosure Record filed on SEDAR as of the year-ended December 31, 2007 have been prepared and disclosed in all material respects in accordance with all applicable Laws, including National Instrument 43-101- Standards of Disclosure for Mineral Projects. There has been no material reduction in the aggregate amount of estimated mineral reserves or estimated mineral resources of ▇▇▇▇▇▇, the ▇▇▇▇▇▇ Subsidiaries or, to the knowledge of ▇▇▇▇▇▇, the ▇▇▇▇▇▇ Significant Interest Companies, taken as a whole, from the amounts disclosed in the ▇▇▇▇▇▇ Public Disclosure Record other than as a result of mining activities undertaken in the ordinary course.

(x)

Benefit Plans. Except for any matters disclosed in Schedule 3.1(y) of the ▇▇▇▇▇▇ Disclosure Letter:

(i)

▇▇▇▇▇▇ and each of the ▇▇▇▇▇▇ Subsidiaries has complied, in all material respects, with the terms of all agreements, health, welfare, supplemental unemployment benefit, bonus, incentive, profit sharing, deferred compensation, stock purchase, stock compensation, stock option, disability, pension or retirement plans and other employee compensation or benefit plans, policies, arrangements, practices or undertakings, whether oral or written, formal or informal, funded or unfunded, insured or uninsured which are maintained by or binding upon ▇▇▇▇▇▇, or in respect of which ▇▇▇▇▇▇ or such ▇▇▇▇▇▇ Subsidiary has any actual or potential liability (collectively, the “▇▇▇▇▇▇ Benefit Plans”) and with all applicable Laws and collective bargaining agreements relating thereto.

(ii)

Schedule 3.1(x) of the ▇▇▇▇▇▇ Disclosure Letter sets forth a complete list of the ▇▇▇▇▇▇ Benefit Plans. Current and complete copies of all written ▇▇▇▇▇▇ Benefit Plans as amended to date or, where oral, written summaries of the terms thereof have been delivered or made available to HudBay together with copies of all material documents relating to the ▇▇▇▇▇▇ Benefit Plans.

(iii)

Each ▇▇▇▇▇▇ Benefit Plan is registered (if required), qualified, invested and administered, in all material respects, in compliance with the terms of such ▇▇▇▇▇▇ Benefit Plan (including the terms of any documents in respect of such ▇▇▇▇▇▇ Benefit Plan), all applicable Laws and any collective bargaining agreement relating thereto.

(iv)

No Taxes, including social security contributions, are owing or exigible under any of the ▇▇▇▇▇▇ Benefit Plans by ▇▇▇▇▇▇ or its subsidiaries. All employer and employee payments, contributions and premiums required to be remitted, paid to or in respect of each ▇▇▇▇▇▇ Benefit Plan have been paid or remitted in a timely fashion in accordance with its terms and all applicable Laws.

(v)

Each ▇▇▇▇▇▇ Benefit Plan is insured or funded in compliance with the terms of such ▇▇▇▇▇▇ Benefit Plan, all applicable Laws and any collective bargaining agreement relating thereto and is in good standing with such Governmental Entities as may be applicable and, as of the date hereof, no currently outstanding notice of under-funding, non-compliance, failure to be in good standing or otherwise has been received by ▇▇▇▇▇▇ or any of the ▇▇▇▇▇▇ Subsidiaries from any such Governmental Entities.

(vi)

To the knowledge of ▇▇▇▇▇▇, (A) no ▇▇▇▇▇▇ Benefit Plan is subject to any pending investigation, examination or other proceeding, action or claim initiated by any Governmental Entity, or by any other party (other than routine claims for benefits), and (B) there exists no state of facts which after notice or lapse of time or both would reasonably be expected to give rise to any such investigation, examination or other proceeding, action or claim or to affect the registration or qualification of any ▇▇▇▇▇▇ Benefit Plan required to be registered or qualified.

(vii)

Neither ▇▇▇▇▇▇ nor any of the ▇▇▇▇▇▇ Subsidiaries have any formal plan and have not made any promise or commitment, whether legally binding or not, to create any additional ▇▇▇▇▇▇ Benefit Plan or to improve or change the benefits provided under any ▇▇▇▇▇▇ Benefit Plan.

(viii)

Except as disclosed in Schedule 3.1(y) of the ▇▇▇▇▇▇ Disclosure Letter, neither the execution and delivery of this Agreement by ▇▇▇▇▇▇ nor completion of the Arrangement pursuant to the Plan of Arrangement nor compliance by ▇▇▇▇▇▇ with any of the provisions hereof shall, subject to Section 5.6, result in any payment (including severance, unemployment compensation, bonuses or otherwise) becoming due to any director or employee of ▇▇▇▇▇▇ or any ▇▇▇▇▇▇ Subsidiary or result in any increase or acceleration of contributions, liabilities or benefits or acceleration of vesting, under any ▇▇▇▇▇▇ Benefit Plan or restriction held in connection with a ▇▇▇▇▇▇ Benefit Plan.

(y)

Labour and Employment.

(i)

All current assessments under applicable workers’ compensation or similar legislation in relation to the employees of ▇▇▇▇▇▇ or any ▇▇▇▇▇▇ Subsidiary have been paid by ▇▇▇▇▇▇ or such ▇▇▇▇▇▇ Subsidiary as applicable, and neither ▇▇▇▇▇▇ nor any ▇▇▇▇▇▇ Subsidiary is subject to any special or penalty assessment under such legislation that has not been paid.

(ii)

Except for those agreements or provisions described in Schedule 3.1(y)(ii) of the ▇▇▇▇▇▇ Disclosure Letter, no employee of ▇▇▇▇▇▇ or any ▇▇▇▇▇▇ Subsidiary is party to a change of control, severance, termination, golden parachute or similar agreement or provision and would receive payments under such agreement or provision as a result of the Arrangement.

(iii)

Other than as disclosed in Schedule 3.1(y)(iii) of the ▇▇▇▇▇▇ Disclosure Letter, there are no outstanding or, to the knowledge of ▇▇▇▇▇▇, threatened labour tribunal proceedings of any kind, including unfair labour practice proceedings or any proceedings which could result in certification of a trade union as bargaining agent for any employees of ▇▇▇▇▇▇ or any ▇▇▇▇▇▇ Subsidiary not already covered by a collective agreement. Other than as disclosed in Schedule 3.1(y)(iii) of the ▇▇▇▇▇▇ Disclosure Letter there are no threatened or apparent union organizing activities involving employees of ▇▇▇▇▇▇ or any ▇▇▇▇▇▇ Subsidiary nor is ▇▇▇▇▇▇ or any ▇▇▇▇▇▇ Subsidiary currently negotiating any of the collective agreements listed in Schedule 3.1(y)(iii) of the ▇▇▇▇▇▇ Disclosure Letter. There is no default or violation under any collective agreement listed in Schedule 3.1(y)(iii) of the ▇▇▇▇▇▇ Disclosure Letter. There is no strike or lockout involving the employees covered by the collective agreements listed in Schedule 3.1(y)(iii) of the ▇▇▇▇▇▇ Disclosure Letter.

(z)

Compliance with Laws. ▇▇▇▇▇▇, the ▇▇▇▇▇▇ Subsidiaries and, to the knowledge of ▇▇▇▇▇▇, the ▇▇▇▇▇▇ Significant Interest Companies, have complied with and are not in violation of any applicable Laws, other than non-compliance or violations which would not, individually or in the aggregate, have a Material Adverse Effect on ▇▇▇▇▇▇. Neither ▇▇▇▇▇▇, nor any of the ▇▇▇▇▇▇ Subsidiaries nor, to the knowledge of ▇▇▇▇▇▇, any of the ▇▇▇▇▇▇ Significant Interest Companies, is under investigation with respect to the foregoing, or has received any notice that any violation of the foregoing is being alleged.

(aa)

Absence of Cease Trade Orders. No order ceasing or suspending trading of the ▇▇▇▇▇▇ Shares or any other securities of ▇▇▇▇▇▇ has been issued by any regulatory authority and is continuing in effect and no proceedings for that purpose have been instituted or, to the knowledge of ▇▇▇▇▇▇, are pending, contemplated or threatened under any Securities Laws or by any other regulatory authority.

(bb)

Related Party Transactions. Except as contemplated hereby or as disclosed in Schedule 3.1(bb) of the ▇▇▇▇▇▇ Disclosure Letter, there are no Contracts or other transactions currently in place between ▇▇▇▇▇▇ or any ▇▇▇▇▇▇ Subsidiary, on the one hand, and: (i) to the knowledge of ▇▇▇▇▇▇, any officer or director of ▇▇▇▇▇▇ or any ▇▇▇▇▇▇ Subsidiary; (ii) to the knowledge of ▇▇▇▇▇▇, any holder of record or, to the knowledge of ▇▇▇▇▇▇, beneficial owner of 10% or more of the ▇▇▇▇▇▇ Shares; and (iii) to the knowledge of ▇▇▇▇▇▇, any affiliate or associate (including any spouse, parent, sibling or descendant of such person and any trust for the benefit of any of the foregoing persons) of any such, officer, director, holder of record or beneficial owner, on the other hand.

(cc)

Expropriation. Since December 31, 2007, no material part of the property or assets of ▇▇▇▇▇▇ or any ▇▇▇▇▇▇ Subsidiary has been taken, condemned or expropriated by any Governmental Entity nor has any written notice or proceeding in respect thereof been received by ▇▇▇▇▇▇ or any ▇▇▇▇▇▇ Subsidiary is there any intent or proposal to give such notice or commence any such proceedings.

(dd)

Rights of Other Persons. Other than as disclosed in Schedule 3.1(dd) of the ▇▇▇▇▇▇ Disclosure Letter, no person has any right of first refusal or option to purchase or any other right of participation in any of the material properties or assets owned by ▇▇▇▇▇▇, any ▇▇▇▇▇▇ Subsidiary or, to the knowledge of ▇▇▇▇▇▇, any ▇▇▇▇▇▇ Significant Interest Company, or any part thereof.

(ee)

Registration Rights. No ▇▇▇▇▇▇ Shareholder has any right to compel ▇▇▇▇▇▇ to register or otherwise qualify the ▇▇▇▇▇▇ Shares (or any of them) for public sale or distribution.

(ff)

Restrictions on Business Activities. Except as set forth in Schedule 3.1 (ff) of the ▇▇▇▇▇▇ Disclosure Letter, as of the date hereof, there is no contract, agreement, undertaking, arbitral award, judgment, injunction, constitutional ruling, order or decree binding upon ▇▇▇▇▇▇ or any ▇▇▇▇▇▇ Subsidiary that has or would reasonably be expected to have the effect of prohibiting, restricting, or impairing any business practice of any of them, any acquisition or disposition of property by any of them, or the conduct of the business by any of them as currently conducted, which would reasonably be expected to have a Material Adverse Effect on ▇▇▇▇▇▇.

(gg)

Brokers. No agent, broker, investment banker, financial advisor or other person, other than ▇▇▇▇▇▇▇ Securities Inc., is entitled to any broker’s, finder’s, financial advisor’s or other similar fee or commission in connection with the transactions contemplated by this Agreement based upon arrangements made by or on behalf of ▇▇▇▇▇▇ or any ▇▇▇▇▇▇ Subsidiary.

(hh)

Fees and Expenses. Schedule 3.1(hh) of the ▇▇▇▇▇▇ Disclosure Letter sets forth (i) the amount of fees and expenses reasonably attributable to this Agreement and the transactions contemplated hereby that ▇▇▇▇▇▇ has incurred to date and expects to incur by the Effective Date (other than the fees and expenses payable to those brokers identified to HudBay in Schedule 3.1(gg) of the ▇▇▇▇▇▇ Disclosure Letter and (ii) the amount of such fees and expenses that has been paid to date.

(ii)

Insurance. As of the date hereof, ▇▇▇▇▇▇ and the ▇▇▇▇▇▇ Subsidiaries maintain the policies of insurance set forth in Schedule 3.1(ii) of the ▇▇▇▇▇▇ Disclosure Letter. All such insurance policies maintained are in full force and effect and in good standing and, neither ▇▇▇▇▇▇ nor any ▇▇▇▇▇▇ Subsidiary is in default, whether as to payment of premium or otherwise, under the terms of any such insurance policy, nor has ▇▇▇▇▇▇ or any of the ▇▇▇▇▇▇ Subsidiaries failed to give any notice or present any material claim under any such insurance in a due and timely fashion or received notice or otherwise become aware of any intent of an insurer to either claim any default on the part of ▇▇▇▇▇▇ or any ▇▇▇▇▇▇ Subsidiary or not to renew any policy of insurance on its expiry or to increase any deductible or cost, except where such failure or default has not had and would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.

(jj)

▇▇▇▇▇▇ Data Room Information. All ▇▇▇▇▇▇ Data Room Information was accurate in all material respects as at its respective date as stated therein, or, if any ▇▇▇▇▇▇ Data Room Information was undated, as of the date of its delivery to the website for purposes of the transactions contemplated by this Agreement. Additionally, all information provided to HudBay in relation to HudBay's due diligence requests, including information not provided in the ▇▇▇▇▇▇ Data Room Information, is accurate in all material respects as at its respective date as stated therein. To the extent that there has been a material change to any of the ▇▇▇▇▇▇ Data Room Information or any other information provided to HudBay since the date posted to the website or provided to HudBay, as the case may be, such information is accurate in all material respects or is no longer relevant or material to ▇▇▇▇▇▇ or additional information has been provided in the ▇▇▇▇▇▇ Data Room or to HudBay which supersedes or replaces such information.

(kk)

United States Securities Laws.

(i)

▇▇▇▇▇▇ is a “foreign private issuer” as defined in Rule 3b-4 under the U.S. Exchange Act;

(ii)

▇▇▇▇▇▇ Shares have been at all times during the 12-month period ending on the date of this Agreement and remain registered pursuant to Section 12 of the U.S. Exchange Act and ▇▇▇▇▇▇ has been at all times during the 12-month period ending on the date of this Agreement and remain required to file reports under Section 13 of the U.S. Exchange Act; and

(iii)

▇▇▇▇▇▇ is not required to register as an “investment company” under the United States Investment Company Act of 1940, as amended.

(ll)

FCPA and CFPOA. To the knowledge of ▇▇▇▇▇▇, neither ▇▇▇▇▇▇, its affiliates nor any of their respective officers, directors, employees, agents, representatives or any other person acting on behalf of ▇▇▇▇▇▇ or any of its affiliates has taken, committed to take or been alleged to have taken any action which would cause ▇▇▇▇▇▇ or any of its affiliates to be in violation of the FCPA or CFPOA or any applicable Law of similar effect of another jurisdiction.

3.2

Survival of Representations and Warranties

The representations and warranties of ▇▇▇▇▇▇ contained in this Agreement shall not survive the completion of the Arrangement and shall expire and be terminated on the earlier of the Effective Time and the date on which this Agreement is terminated in accordance with its terms.

ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF HUDBAY

4.1

Representations and Warranties

Except as set forth in the HudBay Disclosure Letter (which shall make reference to the applicable section, subsection, paragraph or subparagraph below in respect of which such qualification is being made) HudBay hereby represents and warrants to ▇▇▇▇▇▇ as follows, and acknowledges that ▇▇▇▇▇▇ is relying upon such representations and warranties in connection with the entering into of this Agreement:

(a)

Authority Relative to this Agreement. HudBay has the requisite corporate power and authority to enter into this Agreement and to perform its obligations hereunder. The execution and delivery of this Agreement by HudBay and the performance by HudBay of its obligations under this Agreement have been duly authorized by the board of directors of HudBay, and no other corporate proceedings on its part are necessary to authorize this Agreement or the Arrangement pursuant to the Plan of Arrangement. This Agreement has been duly executed and delivered by HudBay and constitutes a legal, valid and binding obligation of HudBay enforceable against HudBay in accordance with its terms, subject to the qualification that such enforceability may be limited by bankruptcy, insolvency, reorganization or other Laws of general application relating to or affecting the rights of creditors and that equitable remedies, including specific performance, are discretionary and may not be ordered.

(b)

Organization and Qualification. HudBay and, except as set forth in Schedule 4.1(b) of the HudBay Disclosure Letter, each of its subsidiaries is a corporation duly incorporated or an entity duly organized or formed and validly existing under all applicable Laws of its jurisdiction of incorporation, continuance, organization or formation and has all necessary corporate or other organizational power, authority and capacity to own its property and assets and to carry on its business as it is currently owned and conducted. HudBay and each of the Material HudBay Subsidiaries: (i) has all Permits necessary to conduct its business substantially as now conducted or as intended to be conducted as disclosed in the HudBay Public Disclosure Record, except for those Permits the absence of which has not had and would not be reasonably expected to have, individually or in the aggregate, a Material Adverse Effect, and (ii) is duly registered or otherwise authorized and qualified to do business and each is in good standing in each jurisdiction in which the character or location of its properties, owned, leased, licensed or otherwise held, or the nature of its activities makes such qualification necessary, except for those jurisdictions where the failure to be so registered or qualified has not had and would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.

(c)

No Violations. Neither the execution and delivery of this Agreement by HudBay nor the completion of the Arrangement pursuant to the Plan of Arrangement nor compliance by HudBay with any of the provisions hereof will violate, conflict with, or result in a breach of any material provision of, require any consent, approval or notice under, or constitute a default (or an event which, with notice or lapse of time or both, would constitute a default) under (i) the articles of incorporation or by-laws of HudBay or (ii) any Material Contract or other instrument or obligation to which HudBay or any of its subsidiaries is a party or to which any of them, or any of its properties or assets, may be subject or by which HudBay or any of its subsidiaries is bound and, in each case, individually or in the aggregate, would have a Material Adverse Effect on HudBay's ability to perform its obligations under this Agreement or (iii) violate any Law applicable to HudBay or any of its subsidiaries or any of its properties or assets.

(d)

Ownership of Material HudBay Subsidiaries. Schedule “G” is a complete and accurate list of all direct and indirect material subsidiaries of HudBay, each of which is wholly-owned other than as disclosed in Schedule “G”. All of the issued and outstanding shares of capital stock and other ownership interests of HudBay in each of the Material HudBay Subsidiaries, are duly authorized, validly issued, fully paid and non-assessable, and all such shares and other ownership interests held directly or indirectly by HudBay are legally and beneficially owned free and clear of all Liens, and there are no outstanding options, warrants, rights, entitlements, understandings or commitments (contingent or otherwise) regarding the right to purchase or acquire, or securities convertible into or exchangeable for, any such shares of capital stock or other ownership interests in or material assets or properties of any of the Material HudBay Subsidiaries, except as disclosed in Schedule 4.1(d) of the HudBay Disclosure Letter. There are no contracts, commitments, agreements, understandings, arrangements or restrictions which require any Material HudBay Subsidiary to issue, sell or deliver any shares in its share capital or other ownership interests, or any securities or obligations convertible into or exchangeable for, any shares of its share capital or other ownership interests.

(e)

Capitalization. The authorized share capital of HudBay consists of an unlimited number of HudBay Shares and an unlimited number of preference shares, issuable in series (“HudBay Preference Shares”). As of the close of business on November 14, 2008, 153,000,124 HudBay Shares were issued and outstanding, no HudBay Preference Shares were issued and outstanding and an aggregate of up to 7,440,939 HudBay Shares were issuable upon the exercise of 7,418,418 HudBay Options and 22,521 HudBay Warrants and there are no options, warrants, conversion privileges or other rights, shareholder rights plans, agreements, arrangements or commitments (pre-emptive, contingent or otherwise) of any character whatsoever requiring or which may require the issuance, sale or transfer by HudBay of any securities of HudBay (including HudBay Shares), or any securities or obligations convertible into, or exchangeable or exercisable for, or otherwise evidencing a right or obligation to acquire, any securities of HudBay (including HudBay Shares) or subsidiaries of HudBay. All outstanding HudBay Shares have been duly authorized and validly issued, are fully paid and non-assessable, and no such HudBay Shares have been issued in violation of any pre-emptive or similar rights. All securities of HudBay (including the HudBay Shares, the HudBay Options and the HudBay Warrants) have been issued in compliance with all applicable Laws. Other than convertible securities or other securities exercisable to HudBay Shares, there are no securities of HudBay or of any of its subsidiaries outstanding which have the right to vote generally (or are convertible into or exchangeable for securities having the right to vote generally) with the HudBay Shareholders on any matter. There are no outstanding contractual or other obligations of HudBay or any subsidiary of HudBay to repurchase, redeem or otherwise acquire any of its securities or with respect to the voting or disposition of any outstanding securities of any of its subsidiaries, other than the HudBay Options. There are no outstanding bonds, debentures or other evidences of indebtedness of HudBay or any of its subsidiaries having the right to vote with the holders of the outstanding HudBay Shares on any matters.

(f)

Material Contracts. Schedule 4.1(f) of the HudBay Disclosure Letter includes a complete and accurate list of all Material Contracts to which HudBay or any Material HudBay Subsidiary is a party. All Material Contracts to which HudBay or any Material HudBay Subsidiary is a party is in full force and effect, and HudBay or the Material HudBay Subsidiary party thereto is entitled to all rights and benefits thereunder in accordance with the terms thereof. HudBay has made available to ▇▇▇▇▇▇ for inspection true and complete copies of all Material Contracts, to which HudBay or any Material HudBay Subsidiary is a party. All such Material Contracts are contained in the HudBay Data Room Information other than the Fenix Project Contracts listed in Schedule 4.1(f) of the HudBay Disclosure Letter. All of the Material Contracts are valid and binding obligations of HudBay or a Material HudBay Subsidiary, as applicable, enforceable in accordance with their respective terms, except as may be limited by bankruptcy, insolvency and other Laws affecting the enforcement of creditors’ rights generally and subject to the qualification that equitable remedies may only be granted in the discretion of a court of competent jurisdiction. HudBay and the Material HudBay Subsidiaries have complied in all material respects with all terms of such Material Contracts, have paid all amounts due thereunder, have not waived any rights thereunder and no default or breach exists in respect thereof on the part of HudBay or any Material HudBay Subsidiary or on the part of any other party thereto, and no event has occurred which, after the giving of notice or the lapse of time or both, would constitute such a default or breach or trigger a right of termination of any of the Material Contracts. As at the date hereof, neither HudBay nor any Material HudBay Subsidiary has received written notice that any party to a Material Contract intends to cancel, terminate or otherwise modify or not renew such Material Contract, and to the knowledge of HudBay, no such action has been threatened. Neither HudBay nor any Material HudBay Subsidiary is a party to any Material Contract that contains any non-competition obligation or otherwise restricts in any material way the business of HudBay or any of the Material HudBay Subsidiaries.

(g)

Reporting Status and Securities Laws Matters. HudBay is a “reporting issuer” and not on the list of reporting issuers in default under applicable Securities Laws in each of the Provinces of Canada.

(h)

Public Filings. Since January 1, 2007, HudBay has filed all documents required to be filed by it in accordance with applicable Securities Laws with the Securities Authorities or the Exchange. All such documents and information comprising the HudBay Public Disclosure Record, as of their respective dates (and the dates of any amendments thereto), (i) did not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein in light of the circumstances in which they were made not misleading, and (ii) complied in all material respects with the requirements of applicable Securities Laws, and any amendments to the HudBay Public Disclosure Record required to be made have been filed on a timely basis with the Securities Authorities or the Exchange. HudBay has not filed any confidential material change reports with any Securities Authorities that at the date of this Agreement remain confidential. There has been no change in a material fact or a material change (as those terms are defined under the Securities Act) in any of the information contained in the HudBay Public Disclosure Record, except for changes in material facts or material changes that are reflected in a subsequently filed document included in the HudBay Public Disclosure Record. There are no outstanding or unresolved comments in comment letters received from any Securities Authority or the Exchange with respect to the HudBay Public Disclosure Record. To the knowledge of HudBay, none of the filings comprising the HudBay Public Disclosure Record is the subject of ongoing review, comment or investigation by any Securities Authority or the Exchange.

(i)

HudBay Financial Statements. HudBay's audited consolidated financial statements as at and for the fiscal year ended December 31, 2007 (including the notes thereto) and HudBay's unaudited consolidated financial statements as at and for the nine (9) months ended September 30, 2008 (collectively, the “HudBay Financial Statements”) were prepared in accordance with GAAP consistently applied (except (i) as otherwise indicated in such financial statements and the notes thereto or, in the case of the audited consolidated financial statements, in the related report of HudBay's independent auditors, or (ii) in the case of unaudited consolidated interim financial statements, are subject to normal period-end adjustments and may omit notes which are not required by applicable Laws in the unaudited statements) and fairly present, in all material respects, the consolidated financial position, results of operations and cash flows of HudBay and its subsidiaries as of the dates thereof and for the periods indicated therein (subject, in the case of any unaudited consolidated interim financial statements, to normal period-end adjustments) and reflect reserves required by GAAP in respect of all material contingent liabilities, if any, of HudBay and its subsidiaries on a consolidated basis. There has been no material change in HudBay's accounting policies, except as described in the notes to the HudBay Financial Statements, since December 31, 2007.

(j)

Internal Controls and Financial Reporting. HudBay has designed disclosure controls and procedures to provide reasonable assurance that material information relating to HudBay, including its consolidated subsidiaries, is made known to the Chief Executive Officer and the Chief Financial Officer of HudBay by others within those entities, particularly during the periods in which filings are being prepared. HudBay has not received any complaint, allegation, assertion, or claim in writing regarding the accounting practices, procedures, methodologies, or methods of HudBay or its internal controls, including any such complaint, allegation, assertion, or claim that HudBay has engaged in questionable accounting or auditing practices. The Chief Executive Officer and Chief Financial Officer of HudBay have made all certifications required by applicable Securities Laws and the statements contained in all such certifications were as of the respective dates made, complete and correct.

(k)

Books and Records. The financial books, records and accounts of HudBay and each of the Material HudBay Subsidiaries, in all material respects: (i) have been maintained in accordance with good business practices, on a basis consistent with prior years; and (ii) in each case are stated in reasonable detail and accurately and fairly reflect the material transactions and dispositions of the assets of HudBay and the Material HudBay Subsidiaries and accurately and fairly reflect the basis for HudBay Financial Statements.

(l)

Minute Books. The minute books of HudBay and each of the Material HudBay Subsidiaries are true, correct and complete in all material respects.

(m)

No Undisclosed Liabilities. HudBay and the Material HudBay Subsidiaries have no outstanding indebtedness or liabilities of any kind whatsoever, whether accrued, contingent, absolute, determined, determinable, or otherwise, and are not party to or bound by any suretyship, guarantee, indemnification or assumption agreement, or endorsement of, or any other similar commitment with respect to the obligations, liabilities or indebtedness of any person, other than those disclosed in the audited consolidated balance sheet of HudBay as of December 31, 2007 forming part of the HudBay Financial Statements, liabilities or obligations incurred in connection with the transactions contemplated hereby or, to the extent disclosed in Schedule 4.1(m) of the HudBay Disclosure Letter, and liabilities and obligations incurred in the ordinary course of business since the date of the most recent financial statements of HudBay filed on SEDAR since December 31, 2007.

(n)

No Material Change. Since December 31, 2007, except as disclosed in the HudBay Public Disclosure Record, the business of HudBay and the Material HudBay Subsidiaries has been conducted in the ordinary course consistent with past practices and there has not been any event, occurrence, development or state of circumstances or facts that would be reasonably expected to cause, individually or in the aggregate, a Material Adverse Change in respect of HudBay and the Material HudBay Subsidiaries, taken as a whole. Since December 31, 2007, the debt, business and material properties of HudBay and the Material HudBay Subsidiaries conform in all respects to the description thereof contained in the HudBay Public Disclosure Record, and there has been no dividend or distribution of any kind declared, paid or made by HudBay on any HudBay Shares.

(o)

Litigation. Except as disclosed in Schedule 4.1(o) of the HudBay Disclosure Letter, there are no material claims, actions, suits, grievances, complaints or proceedings pending or, to the knowledge of HudBay, threatened against HudBay or any Material HudBay Subsidiary or affecting any of their respective properties or assets at law or in equity before or by any Governmental Entity. None of HudBay nor any Material HudBay Subsidiary nor their respective assets or properties is subject to any outstanding material judgment, order, writ, injunction or decree.

(p)

Taxes. Except as disclosed in writing to HudBay's solicitors or as would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect with respect to HudBay:

(i)

HudBay and each Material HudBay Subsidiary has duly and in a timely manner made or prepared all Tax Returns required to be made or prepared by it, and duly and in a timely manner filed all Tax Returns required to be filed by it with the appropriate Governmental Entity, such Tax Returns were complete and correct in all material respects and HudBay and each Material HudBay Subsidiary has paid all Taxes, including instalments on account of Taxes for the current year required by applicable Law, which are due and payable by it whether or not assessed by the appropriate Governmental Entity and HudBay has provided adequate accruals in accordance with GAAP in the most recently published financial statements of HudBay for any Taxes for the period covered by such financial statements that have not been paid whether or not shown as being due on any Tax Returns. Since such publication date, no material liability in respect of Taxes not reflected in such statements or otherwise provided for has been assessed, proposed to be assessed, incurred or accrued, other than in the ordinary course of business.

(ii)

HudBay and each Material HudBay Subsidiary has duly and timely withheld all Taxes and other amounts required by Law to be withheld by it (including Taxes and other amounts required to be withheld by it in respect of any amount paid or credited or deemed to be paid or credited or deemed to be paid or credited by it to or for the benefit or any person) and has duly and timely remitted to the appropriate Governmental Entity such Taxes or other amounts required by applicable Law to be remitted by it.

(iii)

HudBay and each Material HudBay Subsidiary has duly and timely collected all amounts on account of any sales or transfer Taxes, including goods and services, harmonized sales and provincial and territorial taxes, required by Law to be collected by it and has duly and timely remitted to the appropriate Governmental Entity such amounts required by Law to be remitted to it.

(iv)

Other than actions in the ordinary course, there are no actions, suits, proceedings, investigations or claims threatened against HudBay or any Material HudBay Subsidiary in respect of Taxes, or any matters under discussion with any Governmental Entity relating to Taxes asserted by any such authority.

(v)

Neither HudBay nor any Material HudBay Subsidiary has requested, offered to enter into or entered into any agreement or other arrangement, or executed any waiver, providing for any extension of time within which: (A) to file any Tax Return covering any Taxes for which HudBay or any Material HudBay Subsidiary is or may be liable; (B) to file any elections, designations or similar filings relating to Taxes for which HudBay or any Material HudBay Subsidiary is or may be liable; (C) HudBay or any Material HudBay Subsidiary is required to pay or remit any Taxes or amounts on account of Taxes; or (D) any Governmental Entity may assess or collect Taxes for which HudBay or any Material HudBay Subsidiary is or may be liable.

(vi)

Other than ordinary course audits and claims, there are no proceedings, investigations audits or claims in progress or, to the knowledge of HudBay, pending or threatened against HudBay nor any Material HudBay Subsidiary in respect of Taxes and there are no matters under discussion, audit or appeal with any Governmental Entity relating to Taxes.

(vii)

Except as disclosed in Schedule 4(p)(vii) of the HudBay Disclosure Letter, neither HudBay nor any Material HudBay Subsidiary has acquired property from a non-arm’s length person, within the meaning of the Tax Act: (A) for consideration the value of which is less than the fair market value of the property; or (B) as a contribution of capital for which no shares were issued by the acquirer of the property.

(viii)

HudBay has made available to ▇▇▇▇▇▇ copies of: (A) all Tax Returns relating to the Taxes of HudBay or any Material HudBay Subsidiary that to the knowledge of HudBay have been filed in the last three (3) years; and (B) all material written communications to or from any Governmental Entity relating to Taxes of HudBay or any Material HudBay Subsidiary that to the knowledge of HudBay has been received or sent in the last three (3) years.

(ix)

There are no Liens for Taxes upon any properties or assets of HudBay or any of the Material HudBay Subsidiaries (other than Liens relating to Taxes not yet due and payable and for which adequate reserves have been recorded on the most recent consolidated balance sheet included in HudBay's audited consolidated financial statements).

(q)

Interest in Mineral Rights. Except as disclosed in Schedule 4.1(q) of the HudBay Disclosure Letter, HudBay and each of the Material HudBay Subsidiaries has sufficient title, free and clear of any title defect or Liens, to its properties (other than property as to which it is a lessee, in which case it has a valid leasehold interest), and to its mineral interests and rights (including any claims, concessions, exploration licences, exploitation licences, prospecting permits, royalty interests, mining leases and mining rights) except such defects in title or Liens that, individually or in the aggregate, do not have and would not reasonably be expected to result in a Material Adverse Effect on HudBay. All real and tangible personal property of HudBay and the Material HudBay Subsidiaries is in generally good repair and is operational and usable in the manner in which it is currently being used, subject to normal wear and tear, repair or replacement in the ordinary course of business.

(r)

Permits. Except as disclosed in Schedule 4.1(r) of the HudBay Disclosure Letter, HudBay and each Material HudBay Subsidiary has obtained and is in compliance with all material Permits required by applicable Laws which are necessary to lawfully conduct its current businesses as they are now being conducted or as intended to be conducted as set forth in the HudBay Public Disclosure Documents (which, for greater certainty, includes the exploration for and exploitation of mineral deposits) or which are necessary for the lawful ownership, use and occupation of its properties and assets. All such Permits are in full force and effect and, to the knowledge of HudBay, there are no facts, events or circumstances that would reasonably be expected to result in a failure to obtain or be in compliance with such Permits as are necessary to conduct the business of HudBay or any Material HudBay Subsidiary as it is proposed to be conducted. Each such Permit can be renewed in the ordinary course of business by HudBay or any Material HudBay Subsidiary to which the Permit was granted. HudBay has received no notice of any actual or threatened proceeding to modify, suspend, revoke, withdraw, terminate or otherwise limit any such Permit and, to the knowledge of HudBay, there is no valid basis for any such proceeding, including on the basis of the transactions contemplated hereby. HudBay has received no notice of any actual or threatened administrative or governmental action or proceeding in connection with the expiration, continuance or renewal of any such Permit and, to the knowledge of HudBay, there is no valid basis for any such proceeding.

(s)

Environmental Matters. Except for any matters that, individually or in the aggregate, would not have or would not reasonably be expected to have a Material Adverse Effect on HudBay or as disclosed in Schedule 4.1(s) of the HudBay Disclosure Letter:

(i)

all facilities and operations of HudBay and the Material HudBay Subsidiaries have been conducted, and are now, in compliance with all Environmental Laws. Neither HudBay nor any of the Material HudBay Subsidiaries is under investigation with respect to the foregoing, or has received any notice that any violation of the foregoing is being or may be alleged;

(ii)

HudBay and the Material HudBay Subsidiaries are in possession of, and in compliance with, all Environmental Permits that are required to own, lease and operate the HudBay Mineral Rights and to conduct their respective businesses as they are now being conducted or as intended to be conducted as set forth in the HudBay Public Disclosure Record (which, for greater certainty, includes the exploration for and exploitation of mineral deposits) or which are necessary for the lawful ownership, use and occupation of its properties and assets. All such Environmental Permits are in full force and effect and, to the knowledge of HudBay, there are no facts, events or circumstances that would reasonably be expected to result in a failure to obtain or be in compliance with such Environmental Permits as are necessary to conduct the business of HudBay or any Material HudBay Subsidiary as it is proposed to be conducted. Each such Environmental Permit can be renewed in the ordinary course of business by HudBay or any Material HudBay Subsidiary to which the Environmental Permit was granted. HudBay has received no notice of any actual or threatened proceeding to modify, suspend, revoke, withdraw, terminate or otherwise limit any such Environmental Permit and, to the knowledge of HudBay, there is no valid basis for any such proceeding, including on the basis of the transactions contemplated hereby. HudBay has received no notice of any actual or threatened administrative or governmental action or proceeding in connection with the expiration, continuance or renewal of any such Environmental Permit and, to the knowledge of HudBay, there is no valid basis for any such proceeding;

(iii)

no environmental, remediation, rehabilitation, reclamation or closure obligation, demand, notice or work order presently exists with respect to any portion of any currently or formerly owned, leased, occupied, used or otherwise controlled property, interests and rights or relating to the operations and business of HudBay and the Material HudBay Subsidiaries and, to the knowledge of HudBay, there is no basis for any such obligations, demands, notices or work orders to arise in the future as a result of any activity in respect of such property, interests, rights, operations and business;

(iv)

there is no proceeding, application, order, directive, claim, action, suit, investigation or complaint under or pursuant to any Environmental Laws pending or, to the knowledge of HudBay, threatened, affecting HudBay or any Material HudBay Subsidiary or affecting any of their respective properties or assets before or by any Governmental Entity; and

(v)

HudBay and the Material HudBay Subsidiaries have made available to ▇▇▇▇▇▇ all material audits, assessments and investigation reports with respect to environmental matters in its possession.

(t)

Mineral Reserves and Resources. The estimated proven and probable mineral reserves and the estimated indicated, measured and inferred mineral resources disclosed in the HudBay Public Disclosure Record filed on SEDAR as of the year-ended December 31, 2007 have been prepared and disclosed in all material respects in accordance with all applicable Laws, including National Instrument 43-101 Standards of Disclosure for Mineral Projects. There has been no material reduction in the aggregate amount of estimated mineral reserves or estimated mineral resources of HudBay or the Material HudBay, taken as a whole, from the amounts disclosed in the HudBay Public Disclosure Record other than as a result of mining activities undertaken in the ordinary course.

(u)

Benefit Plans. Except for any matters disclosed in Schedule 4.1(u) of the HudBay Disclosure Letter:

(i)

HudBay and each of the Material HudBay Subsidiaries has complied, in all material respects, with the terms of all agreements, health, welfare, supplemental unemployment benefit, bonus, incentive, profit sharing, deferred compensation, stock purchase, stock compensation, stock option, disability, pension or retirement plans and other employee compensation or benefit plans, policies, arrangements, practices or undertakings, whether oral or written, formal or informal, funded or unfunded, insured or uninsured which are maintained by or binding upon HudBay, or in respect of which HudBay or such Material HudBay Subsidiary has any actual or potential liability (collectively, the “HudBay Benefit Plans”) and with all applicable Laws and collective bargaining agreements relating thereto.

(ii)

Each HudBay Benefit Plan is insured or funded in compliance with the terms of such HudBay Benefit Plan, all applicable Laws and any collective bargaining agreement relating thereto and is in good standing with such Governmental Entities as may be applicable and, as of the date hereof, no currently outstanding notice of under-funding, non-compliance, failure to be in good standing or otherwise has been received by HudBay or any of the Material HudBay Subsidiaries from any such Governmental Entities.

(v)

Labour and Employment.

(i)

Except for those agreements or provisions described in Schedule 4.1(v)(i) of the HudBay Disclosure Letter, no employee of HudBay or any Material HudBay Subsidiary is party to a change of control, severance, termination, golden parachute or similar agreement or provision and would receive payments under such agreement or provision as a result of the Arrangement.

(ii)

Schedule 4.1(v)(ii) of the HudBay Disclosure Letter sets forth a complete list of the collective agreements, either directly or by operation of law, between HudBay or any Material HudBay Subsidiary with any trade union or association which may qualify as a trade union. Other than as disclosed in Schedule 4.1(v)(ii) of the HudBay Disclosure Letter, there are no outstanding or, to the knowledge of HudBay, threatened labour tribunal proceedings of any kind, including unfair labour practice proceedings or any proceedings which could result in certification of a trade union as bargaining agent for any employees of HudBay or any Material HudBay Subsidiary not already covered by a collective agreement. Other than as disclosed in Schedule 4.1(v)(ii) of the HudBay Disclosure Letter there are no threatened or apparent union organizing activities involving employees of HudBay or any Material HudBay Subsidiary nor is HudBay or any Material HudBay Subsidiary currently negotiating any of the collective agreements listed in Schedule 4.1(v)(ii) of the HudBay Disclosure Letter. There is no default or violation under any collective agreement listed in Schedule 4.1(v)(ii) of the HudBay Disclosure Letter. There is no strike or lockout involving the employees covered by the collective agreements listed in Schedule 4.1(v)(ii) of the HudBay Disclosure Letter.

(w)

Compliance with Laws. HudBay and the Material HudBay Subsidiaries have complied with and are not in violation of any applicable Laws, other than non-compliance or violations which would not, individually or in the aggregate, have a Material Adverse Effect on HudBay. Neither HudBay nor any of the Material HudBay Subsidiaries is under investigation with respect to the foregoing, or has received any notice that any violation of the foregoing is being or may be alleged.

(x)

Related Party Transactions. Except as contemplated hereby or as disclosed in Schedule 4.1(x) of the HudBay Disclosure Letter, there are no Contracts or other transactions currently in place between HudBay or any Material HudBay Subsidiary, on the one hand, and: (i) to the knowledge of HudBay, any officer or director of HudBay or any Material HudBay Subsidiary; (ii) to the knowledge of HudBay, any holder of record or, to the knowledge of HudBay, beneficial owner of 10% or more of the HudBay Shares; and (iii) to the knowledge of HudBay, any affiliate or associate (including any spouse, parent, sibling or descendant of such person and any trust for the benefit of any of the foregoing persons) of any such, officer, director, holder of record or beneficial owner, on the other hand.

(y)

Expropriation. Since December 31, 2007, no material part of the property or assets of HudBay or any Material HudBay Subsidiary has been taken, condemned or expropriated by any Governmental Entity nor has any written notice or proceeding in respect thereof been received by HudBay or any Material HudBay Subsidiary nor, to the knowledge of HudBay, is there any intent or proposal to give such notice or commence any such proceedings.

(z)

Rights of Other Persons. Other than as disclosed in Schedule 4.1(z) of the HudBay Disclosure Letter, no person has any right of first refusal or option to purchase or any other right of participation in any of the material properties or assets owned by HudBay or any Material HudBay Subsidiary or any part thereof.

(aa)

Restrictions on Business Activities. As of the date hereof, there is no contract, agreement, undertaking, arbitral award, judgment, injunction, constitutional ruling, order or decree binding upon HudBay or any Material HudBay Subsidiary that has or would reasonably be expected to have the effect of prohibiting, restricting, or impairing any business practice of any of them, any acquisition or disposition of property by any of them, or the conduct of the business by any of them as currently conducted, which would reasonably be expected to have a Material Adverse Effect on HudBay.

(bb)

Brokers. No agent, broker, investment banker, financial advisor or other person, other than GMP Securities L.P., is entitled to any broker’s, finder’s, financial advisor’s or other similar fee or commission in connection with the transactions contemplated by this Agreement based upon arrangements made by or on behalf of HudBay or any Material HudBay Subsidiary.

(cc)

Insurance. As of the date hereof, HudBay and the Material HudBay Subsidiaries maintain the policies of insurance set forth in Schedule 4.1(cc) of the HudBay Disclosure Letter. All such insurance policies maintained are in full force and effect and in good standing and, neither HudBay nor any Material HudBay Subsidiary is in default, whether as to payment of premium or otherwise, under the terms of any such insurance policy, nor has HudBay or any of the Material HudBay Subsidiaries failed to give any notice or present any material claim under any such insurance in a due and timely fashion or received notice or otherwise become aware of any intent of an insurer to either claim any default on the part of HudBay or any Material HudBay Subsidiary or not to renew any policy of insurance on its expiry or to increase any deductible or cost, except where such failure or default has not had and would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.

(dd)

Data Room Information. All HudBay Data Room Information was accurate in all material respects as at its respective date as stated therein, or, if any HudBay Data Room Information was undated, as of the date of its delivery to the website for purposes of the transactions contemplated by this Agreement. Additionally, all information provided to ▇▇▇▇▇▇ in relation to ▇▇▇▇▇▇'▇ due diligence requests, including information not provided in the HudBay Data Room Information, is accurate in all material respects as at its respective date as stated therein. To the extent that there has been a material change to any of the HudBay Data Room Information or any other information provided to HudBay since the date posted to the website or provided to ▇▇▇▇▇▇, as the case may be, such information is accurate in all material respects or is no longer relevant or material to HudBay or additional information has been provided in the HudBay Data Room or to ▇▇▇▇▇▇ which supersedes or replaces such information.

(ee)

Issuance of HudBay Shares. The HudBay Shares to be issued as part of the Consideration will, when issued pursuant to the Arrangement, be duly and validly issued as fully paid and non-assessable common shares in the capital of HudBay.

(ff)

Absence of Cease Trade Orders. No order ceasing or suspending trading of the HudBay Shares or any other securities of HudBay has been issued by any regulatory authority and is continuing in effect and no proceedings for that purpose have been instituted or, to the knowledge of HudBay, are pending, contemplated or threatened under any Securities Laws or by any other regulatory authority.

(gg)

Investment Canada. HudBay is a “Canadian” for purposes of the Investment Canada Act, as that term is defined in the Investment Canada Act and the regulations thereunder.

(hh)

United States Securities Laws.

(i)

HudBay is a “foreign private issuer” as defined in Rule 3b-4 under the U.S. Exchange Act;

(ii)

No securities of HudBay have been or were required to be during the 12-month period ending on the date of this Agreement and are not registered or required to be registered under Section 12 of the U.S. Exchange Act, and HudBay has not been during the 12-month period ending on the date of this Agreement and is not required to file reports under Section 13 or Section 15(d) of the U.S. Exchange Act, and

(iii)

HudBay is not an “investment company” as defined in the United States Investment Company Act of 1940, as amended.

(ii)

Use of Short Form Prospectus. HudBay meets the general eligibility requirements for use of a short form prospectus under National Instrument 44-101 – Short Form Prospectus of the Securities Authorities.

(jj)

FCPA and CFPOA. To HudBay's knowledge, neither HudBay, any of its affiliates nor any of their respective officers, directors, employees, agents, representatives or any other person acting on behalf of HudBay or any of its affiliates has taken, committed to take or been alleged to have taken any action which would cause HudBay or any of its affiliates to be in violation of the FCPA or CFPOA, or any applicable Law of similar effect of another jurisdiction.

(kk)

Exchange Listing and United States Trading.

(i)

Hercules Shares have been at all times during the 12-month period ending on the date of this Agreement and are listed on the Exchange;

(ii)

At least 55% of the trading of Hercules Shares took place in, on or through the facilities of the Exchange during the 12-month period ending on the date of this Agreement; and

(iii)

The average daily trading volume of Hercules Shares in the United States has been no greater than five percent of the average daily trading volume of Hercules Shares on a worldwide basis during the 12-month period ending on the date of this Agreement.

4.2

Survival of Representations and Warranties

The representations and warranties of HudBay contained in this Agreement shall not survive the completion of the Arrangement and shall expire and be terminated on the earlier of the Effective Time and the date on which this Agreement is terminated in accordance with its terms.

ARTICLE 5
COVENANTS OF ▇▇▇▇▇▇ AND HUDBAY

5.1

Covenants of ▇▇▇▇▇▇ Regarding the Conduct of Business

▇▇▇▇▇▇ covenants and agrees that, during the period from the date of this Agreement until the earlier of the Effective Time and the time that this Agreement is terminated in accordance with its terms, except as set forth in Schedule 5.1 of the ▇▇▇▇▇▇ Disclosure Letter, expressly required or permitted by this Agreement, required by applicable Law or Governmental Entity or consented to by HudBay in writing (which consent shall not be unreasonably withheld or delayed), ▇▇▇▇▇▇ shall, and shall cause each ▇▇▇▇▇▇ Subsidiary to, conduct its business in the ordinary course of business consistent with past practice. Without limiting the generality of the foregoing, from the date of this Agreement until the earlier of the Effective Time and the time that this Agreement is terminated in accordance with its terms, except as set forth in Schedule 5.1 of the ▇▇▇▇▇▇ Disclosure Letter, expressly required or permitted by this Agreement or required by applicable Law or Governmental Entity, ▇▇▇▇▇▇ shall not, nor shall it permit any ▇▇▇▇▇▇ Subsidiary to, directly or indirectly, without the prior written consent of HudBay (which consent shall not be unreasonably withheld or delayed):

(a)

except as set forth in Schedule 5.1(a) of the ▇▇▇▇▇▇ Disclosure Letter, take any action except in the ordinary course of business of ▇▇▇▇▇▇ and the ▇▇▇▇▇▇ Subsidiaries, and ▇▇▇▇▇▇ shall use commercially reasonable efforts to maintain and preserve its and the ▇▇▇▇▇▇ Subsidiaries’ business organization, assets, employees, goodwill and business relationships;

(b)

except as set forth in Schedule 5.1(b) of the ▇▇▇▇▇▇ Disclosure Letter, (i) amend its articles, charter or by-laws or other comparable organizational documents; (ii) split, combine or reclassify any shares in the capital of ▇▇▇▇▇▇ or any ▇▇▇▇▇▇ Subsidiary, or declare, set aside or pay any dividend or other distribution or payment (whether in cash, securities or property or any combination thereof) in respect of the ▇▇▇▇▇▇ Shares owned by any person or the securities of any subsidiary owned by a person other than ▇▇▇▇▇▇ other than, in the case of any wholly-owned ▇▇▇▇▇▇ Subsidiary, any dividends payable to ▇▇▇▇▇▇, by any of its wholly-owned ▇▇▇▇▇▇ Subsidiaries; (iii) issue, grant, deliver, sell or pledge, or agree to issue, grant, deliver, sell or pledge, any ▇▇▇▇▇▇ Shares or similar rights convertible into or exchangeable or exercisable for, or otherwise evidencing a right to acquire, shares or other securities of ▇▇▇▇▇▇, a ▇▇▇▇▇▇ Subsidiary or a ▇▇▇▇▇▇ Significant Interest Company, other than: (A) a grant of ▇▇▇▇▇▇ Options pursuant to the terms of contractual commitments described in Schedule 5.1(b) of the ▇▇▇▇▇▇ Disclosure Letter; (B) transactions in the ordinary course of business and consistent with past practices between two or more wholly-owned ▇▇▇▇▇▇ Subsidiaries or between ▇▇▇▇▇▇ and a wholly-owned ▇▇▇▇▇▇ Subsidiary, and (C) as required under applicable Law or existing Material Contracts set forth in Schedule 3.1(g) of the ▇▇▇▇▇▇ Disclosure Letter; (iv) redeem, purchase or otherwise acquire, or offer to redeem, purchase or otherwise acquire, any outstanding securities of ▇▇▇▇▇▇ or any ▇▇▇▇▇▇ Subsidiary, (v) amend the terms of any of its securities; (vi) adopt a plan of liquidation or resolution providing for the liquidation or dissolution of ▇▇▇▇▇▇ or any ▇▇▇▇▇▇ Subsidiary; (vii) amend its accounting policies or adopt new accounting policies, in each case except as required in accordance with GAAP; or (viii) make or amend any Tax election, change any method of Tax accounting, settle or compromise any Tax liability, file any material amended Tax Return, enter into a closing agreement, surrender any right to claim a material Tax refund, or consent to the extension or waiver of the limitation period applicable to any material Tax claim or assessment;

(c)

except in the ordinary course of business consistent with past practice and except as set forth in Schedule 5.1(c) of the ▇▇▇▇▇▇ Disclosure Letter: (i) sell, pledge, hypothecate, lease, license, sell and lease back, mortgage, dispose of or encumber or otherwise transfer, any assets, securities, properties, interests or businesses of ▇▇▇▇▇▇ or any ▇▇▇▇▇▇ Subsidiary; (ii) acquire (by merger, amalgamation, consolidation or acquisition of shares or assets or otherwise), directly or indirectly, any assets, securities, properties, interests, businesses, corporation, partnership or other business organization or division thereof, or make any investment either by the purchase of securities, contributions of capital, property transfer, or purchase of any other property or assets of any other person, for an amount greater than $10,000,000; (iii) incur, create, assume or otherwise become liable for, any indebtedness for borrowed money or any other liability or obligation or issue any debt securities or assume, guarantee, endorse or otherwise as an accommodation become responsible for the obligations of any other person, or make any loans, capital contributions, investments or advances; (iv) pay, discharge or satisfy any material claims, liabilities or obligations; (v) waive, release, grant or transfer any rights of material value; or (vi) authorize or propose any of the foregoing;

(d)

except as set forth in Schedule 5.1(d) of the ▇▇▇▇▇▇ Disclosure Letter and except in the ordinary course of business with respect to ▇▇▇▇▇▇, other than as is necessary to comply with applicable Laws or Contracts, or in accordance with the ▇▇▇▇▇▇ Benefit Plans: (i) grant to any officer, employee or director of ▇▇▇▇▇▇ or any ▇▇▇▇▇▇ Subsidiary an increase in compensation in any form, or grant any general salary increase; (ii) make any loan to any officer, employee, or director of ▇▇▇▇▇▇ or any ▇▇▇▇▇▇ Subsidiary; (iii) take any action with respect to the grant of any severance, change of control, bonus or termination pay to, or enter into any employment agreement, deferred compensation or other similar agreement (or amend such existing agreement) with, or hire or terminate employment (except for just cause) of, any officer, employee or director of ▇▇▇▇▇▇ or any ▇▇▇▇▇▇ Subsidiary; (iv) increase any benefits payable under any existing severance or termination pay policies or employment agreements, or adopt or materially amend or other bonus, profit sharing, option, pension, retirement, deferred compensation, insurance, incentive compensation, compensation or other similar plan, agreement, trust, fund or arrangement for the benefit of directors, officers or employees or former directors, officers, employees of ▇▇▇▇▇▇ or any ▇▇▇▇▇▇ Subsidiary; (v) increase compensation, bonus levels or other benefits payable to any director, executive officer or employee of ▇▇▇▇▇▇ or any ▇▇▇▇▇▇ Subsidiary; (vi) provide for accelerated vesting, removal of restrictions or an exercise of any stock based or stock related awards (including stock options, stock appreciation rights, deferred share units, performance units and restricted share awards) upon a change of control occurring on or prior to the Effective Time; (vii) establish, adopt or amend (except as required by applicable Law) any collective bargaining agreement or similar agreement; or (viii) effectuate a closing of a mine or a similar facility or cause a mass termination of employees affecting in whole or in part any site of employment, facility, operating unit or employee of ▇▇▇▇▇▇ or the ▇▇▇▇▇▇ Subsidiaries;

(e)

settle, pay, discharge, satisfy, compromise, waive, assign or release (i) any action, claim or proceeding brought against ▇▇▇▇▇▇ or any Lundin Subsidiary other than an action, claim or proceeding disclosed in Schedule 5.1(e) of the ▇▇▇▇▇▇ Disclosure Letter; or (ii) any action, claim or proceeding brought by any present, former or purported holder of its securities in connection with the transactions contemplated by this Agreement or the Plan of Arrangement, except, in each case, any action, claim or proceeding the settlement of which would not (A) restrict in any material respect the business of ▇▇▇▇▇▇ or any of the ▇▇▇▇▇▇ Subsidiaries or (B) exceed $5,000,000 in cost or value to ▇▇▇▇▇▇ or any of the ▇▇▇▇▇▇ Subsidiaries;

(f)

enter into any agreement or arrangement that limits or otherwise restricts in any material respect ▇▇▇▇▇▇ or any ▇▇▇▇▇▇ Subsidiary or any successor thereto, or that would, after the Effective Time, limit or restrict in any material respect ▇▇▇▇▇▇ or any ▇▇▇▇▇▇ Subsidiary from competing in any manner;

(g)

except as set forth in Schedule 5.1(g) of the ▇▇▇▇▇▇ Disclosure Letter, waive, release or assign any material rights, claims or benefits of ▇▇▇▇▇▇ or any ▇▇▇▇▇▇ Subsidiary;

(h)

other than in the ordinary course of business consistent with past practice, (i) enter into any agreement that, if entered into prior to the date hereof, would have been a Material Contract; (ii) modify, amend in any material respect, transfer or terminate any Material Contract, or waive, release or assign any material rights or claims thereto or thereunder;

(i)

take any action or fail to take any action which action or failure to act would result in the material loss, expiration or surrender of, or the loss of any material benefit under, or reasonably be expected to cause any Governmental Entities to institute proceedings for the suspension, revocation or limitation of rights under, any material Permits listed in Schedule 5.1(i) of the ▇▇▇▇▇▇ Disclosure Letter of or from any Governmental Entities necessary to conduct its businesses as now conducted or as proposed to be conducted; or fail to prosecute with commercially reasonable due diligence any pending applications to any Governmental Entities;

(j)

take any action or fail to take any action that is intended to, or would reasonably be expected to, individually or in the aggregate, prevent, materially delay or materially impede the ability of ▇▇▇▇▇▇ to consummate the Arrangement or the other transactions contemplated by this Agreement, other than in connection with a Pre-Acquisition Reorganization;

(k)

take any action or fail to take any action if such action or failure to take action would be inconsistent with Section 2.13 hereof; or

(l)

agree, resolve or commit to do any of the foregoing.

▇▇▇▇▇▇ shall use its commercially reasonable efforts to cause the current insurance (or re-insurance) policies maintained by ▇▇▇▇▇▇ or any ▇▇▇▇▇▇ Subsidiary, including directors’ and officers’ insurance, not to be cancelled or terminated or any of the coverage thereunder to lapse, unless simultaneously with such termination, cancellation or lapse, replacement policies underwritten by insurance or re-insurance companies of nationally recognized standing having comparable deductions and providing coverage equal to or greater than the coverage under the cancelled, terminated or lapsed policies for substantially similar premiums and covering the same periods are in full force and effect; provided that, subject to Section 7.7, none of ▇▇▇▇▇▇ or any ▇▇▇▇▇▇ Subsidiary shall obtain or renew any insurance (or re-insurance) policy for a term exceeding 12 months.

5.2

Covenants of ▇▇▇▇▇▇ Relating to the Arrangement

▇▇▇▇▇▇ shall and shall cause the ▇▇▇▇▇▇ Subsidiaries to perform all obligations required or desirable to be performed by ▇▇▇▇▇▇ or any ▇▇▇▇▇▇ Subsidiary under this Agreement, co-operate with HudBay in connection therewith, and do all such other acts and things as may be necessary or desirable in order to consummate and make effective the transactions contemplated in this Agreement and, without limiting the generality of the foregoing, ▇▇▇▇▇▇ shall and, where applicable, shall cause the ▇▇▇▇▇▇ Subsidiaries to:

(a)

promptly, and in any event within two (2) business days following the date of this Agreement, provide to HudBay (if providing a copy of such agreement is not prohibited by the terms of such agreement) a copy of each confidentiality and/or standstill agreement which has been entered into by ▇▇▇▇▇▇ and any third party pursuant to which confidential information of ▇▇▇▇▇▇ has been provided to such third party;

(b)

apply for and use its commercially reasonable efforts to obtain all Key Regulatory Approvals relating to ▇▇▇▇▇▇ or any ▇▇▇▇▇▇ Subsidiary which are typically applied for by an offeree and, in doing so, keep HudBay reasonably informed as to the status of the proceedings related to obtaining the Key Regulatory Approvals, including providing HudBay with copies of all related applications and notifications in draft form (except where such material is confidential in which case it will be provided (subject to applicable Laws) to HudBay's outside counsel on an “external counsel” basis), in order for HudBay to provide its comments thereon. Without limiting the foregoing, neither ▇▇▇▇▇▇ nor any of its affiliates shall be required to sell, transfer, divest or otherwise dispose of any of its respective business, assets or properties in connection with this Agreement or any of the transactions contemplated hereby;

(c)

use its best efforts to obtain as soon as practicable following execution of this Agreement all third party consents, approvals and notices required under any of the Material Contracts, and all Key Third Party Consents;

(d)

defend all lawsuits or other legal, regulatory or other proceedings against ▇▇▇▇▇▇ challenging or affecting this Agreement or the consummation of the transactions contemplated hereby;

(e)

subject to applicable law, make available and cause to be made available to HudBay, and the agents and advisors thereto, information reasonably requested by HudBay for the purposes of preparing, considering and implementing integration and strategic plans for the combined businesses of HudBay and ▇▇▇▇▇▇ going forward and confirming the representations and warranties of ▇▇▇▇▇▇ set out in Section 3.1 of this Agreement; and

(f)

use commercially reasonable efforts to satisfy all conditions precedent in this Agreement and take all steps set forth in the Interim Order.

5.3

Covenants of HudBay Regarding the Conduct of Business

HudBay covenants and agrees that, during the period from the date of this Agreement until the earlier of the Effective Time and the time that this Agreement is terminated in accordance with its terms, except as set forth in Schedule 5.3 of the HudBay Disclosure Letter, expressly required or permitted by this Agreement, required by applicable Law or Governmental Entity or consented to by ▇▇▇▇▇▇ in writing (which consent shall not be unreasonably withheld or delayed), HudBay shall, and shall cause each of its subsidiaries to, conduct its business in the ordinary course of business consistent with past practice. Without limiting the generality of the foregoing, from the date of this Agreement until the earlier of the Effective Time and the time that this Agreement is terminated in accordance with its terms, except as set forth in Schedule 5.2 of the HudBay Disclosure Letter, expressly required or permitted by this Agreement or required by applicable Law or Governmental Entity, HudBay shall not, nor shall it permit any of its subsidiaries to, directly or indirectly, without the prior written consent of ▇▇▇▇▇▇ (which consent shall not be unreasonably withheld or delayed):

(a)

except as set forth in Schedule 5.3(a) of the HudBay Disclosure Letter, take any action except in the ordinary course of business of HudBay and its subsidiaries, and HudBay shall use commercially reasonable efforts to maintain and preserve its and its subsidiaries’ business organization, assets, employees, goodwill and business relationships;

(b)

except as set forth in Schedule 5.3(b) of the HudBay Disclosure Letter or except in connection with a HudBay Internal Reorganization, (i) amend HudBay's articles, charter or by-laws or other comparable organizational documents or, except in connection with a HudBay Internal Reorganization, amend the articles, charter or by-laws or other comparable organizational documents; (ii) split, combine or reclassify any shares in the capital of HudBay or any of its subsidiaries, or declare, set aside or pay any dividend or other distribution or payment (whether in cash, securities or property or any combination thereof) in respect of the HudBay Shares, except for dividends by any of its wholly-owned subsidiaries; (iii) issue, grant, deliver, sell or pledge, or agree to issue, grant, deliver, sell or pledge, any HudBay Shares or similar rights convertible into or exchangeable or exercisable for, or otherwise evidencing a right to acquire, shares or other securities of HudBay, any of its subsidiaries, other than: (A) a grant of HudBay Options pursuant to the terms of the HudBay Option Plans; (B) transactions in the ordinary course of business and consistent with past practices between two or more wholly-owned subsidiaries of HudBay or between HudBay and a wholly-owned subsidiary of HudBay, and (C) as required under applicable Law or existing Material Contracts; (iv) redeem, purchase or otherwise acquire, or offer to redeem, purchase or otherwise acquire, any outstanding securities of HudBay or any of its subsidiaries, (v) amend the terms of any of its securities; (vi) except in connection with a HudBay Internal Reorganization, adopt a plan of liquidation or resolution providing for the liquidation or dissolution of HudBay or any of its subsidiaries; or (vii) amend its accounting policies or adopt new accounting policies, in each case except as required in accordance with GAAP;

(c)

except in the ordinary course of business consistent with past practice and except as set forth in Schedule 5.3(c) of the HudBay Disclosure Letter, (i) sell, pledge, hypothecate, lease, license, sell and lease back, mortgage, dispose of or encumber or otherwise transfer, any assets, securities, properties, interests or businesses of HudBay or any subsidiary of HudBay; (ii) acquire (by merger, amalgamation, consolidation or acquisition of shares or assets or otherwise), directly or indirectly, any assets, securities, properties, interests, businesses, corporation, partnership or other business organization or division thereof, or make any investment either by the purchase of securities, contributions of capital, property transfer, or purchase of any other property or assets of any other person, for an amount greater than $10,000,000; (iii) incur, create, assume or otherwise become liable for, any indebtedness for borrowed money or any other liability or obligation or issue any debt securities or assume, guarantee, endorse or otherwise as an accommodation become responsible for the obligations of any other person, or make any loans, capital contributions, investments or advances; (iv) pay, discharge or satisfy any material claims, liabilities or obligations; (v) waive, release, grant or transfer any rights of material value; or (vi) authorize or propose any of the foregoing;

(d)

settle, pay, discharge, satisfy, compromise, waive, assign or release (i) any action, claim or proceeding brought against HudBay or any subsidiary of HudBay; or (ii) any action, claim or proceeding brought by any present, former or purported holder of its securities in connection with the transactions contemplated by this Agreement or the Plan of Arrangement, except, in each case, any action, claim or proceeding the settlement of which would not (A) restrict in any material respect the business of HudBay or any subsidiary of HudBay or (B) exceed $ 5,000,000 in cost or value to HudBay or any subsidiary of HudBay;

(e)

enter into any agreement or arrangement that limits or otherwise restricts in any material respect HudBay or any subsidiary of HudBay or any successor thereto, or that would, after the Effective Time, limit or restrict in any material respect HudBay or any subsidiary of HudBay from competing in any manner;

(f)

except as set forth in Schedule 5.3(g) of the HudBay Disclosure Letter, waive, release or assign any material rights, claims or benefits of HudBay or any subsidiary of HudBay;

(g)

take any action or fail to take any action which action or failure to act would result in the material loss, expiration or surrender of, or the loss of any material benefit under, or reasonably be expected to cause any Governmental Entities to institute proceedings for the suspension, revocation or limitation of rights under, any material Permits listed in Schedule 5.3(g) of the HudBay Disclosure Letter of or from any Governmental Entities necessary to conduct its businesses as now conducted or as proposed to be conducted; or fail to prosecute with commercially reasonable due diligence any pending applications to any Governmental Entities;

(h)

take any action or fail to take any action that is intended to, or would reasonably be expected to, individually or in the aggregate, prevent, materially delay or materially impede the ability of HudBay to consummate the Arrangement or the other transactions contemplated by this Agreement;

(i)

take any action or fail to take any action if such action or failure to take action would be inconsistent with Section 2.13 hereof; or

(j)

agree, resolve or commit to do any of the foregoing.

5.4

Covenants of HudBay Regarding the Performance of Obligations

HudBay shall, and shall cause its subsidiaries to, perform all obligations required or desirable to be performed by HudBay or any of HudBay's subsidiaries under this Agreement, co-operate with ▇▇▇▇▇▇ in connection therewith, and do all such other acts and things as may be necessary or desirable in order to consummate and make effective, as soon as reasonably practicable, the transactions contemplated in this Agreement and, without limiting the generality of the foregoing, HudBay shall and where appropriate shall cause its subsidiaries to:

(a)

apply for and use its commercially reasonable efforts to obtain all Key Regulatory Approvals relating to HudBay or any of HudBay’s subsidiaries which are typically applied for by an acquiror and, in doing so, keep ▇▇▇▇▇▇ reasonably informed as to the status of the proceedings related to obtaining the Key Regulatory Approvals, including providing ▇▇▇▇▇▇ with copies of all related applications and notifications in draft form (except where such material is confidential in which case it will be provided (subject to applicable Laws) to ▇▇▇▇▇▇'▇ outside counsel on an “external counsel” basis), in order for ▇▇▇▇▇▇ to provide its reasonable comments thereon. Without limiting the foregoing, neither HudBay nor any of its affiliates shall be required to sell, transfer, divest or otherwise dispose of any of its respective business, assets or properties in connection with this Agreement or any of the transactions contemplated hereby;

(b)

subject to the terms and conditions of this Agreement and of the Plan of Arrangement and applicable Laws, pay the aggregate Consideration to be paid pursuant to the Arrangement at the time provided herein;

(c)

defend all lawsuits or other legal, regulatory or other proceedings against HudBay challenging or affecting this Agreement or the consummation of the transactions contemplated hereby;

(d)

following the Effective Time, take all steps required and cause ▇▇▇▇▇▇ or its successor to take all steps required to fulfill the obligations of ▇▇▇▇▇▇ or its successor to deliver HudBay Shares on any exercise of ▇▇▇▇▇▇ Options or ▇▇▇▇▇▇ Warrants;

(e)

if, after the Effective Time, the Hercules Shares are deemed, pursuant to Rule 12g-3 under the U.S. Exchange Act, to be registered under Section 12 of the U.S. Exchange Act, then, as soon as practicable after the Effective Time, Hercules shall file with the SEC a Form 15F to terminate the registration of the Hercules Shares with the SEC;

(f)

subject to applicable Law (including the rules or policies of the Exchange) vote any other ▇▇▇▇▇▇ Shares beneficially owned by it in favour of the Arrangement;

(g)

apply for and use commercially reasonable efforts to obtain conditional approval of the listing and posting for trading on the TSX of the HudBay Shares comprising the Consideration and all HudBay Shares that would be issued on the exercise of the ▇▇▇▇▇▇ Options outstanding at the Effective Time, subject only to satisfaction by HudBay of customary listing conditions of the TSX;

(h)

subject to applicable Law, make available and cause to be made available to ▇▇▇▇▇▇, and its agents and advisors, information reasonably requested by ▇▇▇▇▇▇ for the purposes of confirming the representations and warranties of HudBay set out in Section 4.1 of this Agreement;

(i)

use commercially reasonable efforts to ensure that, immediately following the Effective Time, the board of directors of HudBay is comprised of ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇. Charter, ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, R. ▇▇▇▇▇ ▇▇▇▇▇▇ and M. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, and the Chief Executive Officer of HudBay is ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇; and

(j)

use commercially reasonable efforts to satisfy all conditions precedent in this Agreement and take all steps set forth in the Interim Order.

5.5

Pre-Acquisition Reorganization

(a)

▇▇▇▇▇▇ shall effect such reorganization of its business, operations, subsidiaries and assets or such other transactions (each, a “Pre-Acquisition Reorganization”) as HudBay may reasonably request prior to the Effective Date, and the Plan of Arrangement, if required, shall be modified accordingly; provided, however, that ▇▇▇▇▇▇ need not effect a Pre-Acquisition Reorganization which in the opinion of ▇▇▇▇▇▇, acting reasonably: (i) would require ▇▇▇▇▇▇ to obtain the prior approval of the ▇▇▇▇▇▇ Shareholders in respect of such Pre-Acquisition Reorganization other than at the ▇▇▇▇▇▇ Meeting; (ii) would impede or materially delay the consummation of the Arrangement; or (iii) would be inconsistent with Section 2.13 hereof. Without limiting the foregoing and other than as set forth in clause (i) above, ▇▇▇▇▇▇ shall use its best efforts to obtain all necessary consents, approvals or waivers from any persons to effect each Pre-Acquisition Reorganization, and ▇▇▇▇▇▇ shall cooperate with HudBay in structuring, planning and implementing any such Pre-Acquisition Reorganization. HudBay shall provide written notice to ▇▇▇▇▇▇ of any proposed Pre-Acquisition Reorganization at least ten (10) business days prior to the date of the ▇▇▇▇▇▇ Meeting. In addition:

(i)

HudBay shall indemnify and save harmless the officers, directors, employees, agents, advisors and representatives of ▇▇▇▇▇▇ and the ▇▇▇▇▇▇ Subsidiaries from and against any and all liabilities, Taxes, losses, damages, claims, costs, expenses, interest awards, judgments and penalties suffered or incurred by any of them in connection with or as a result of any Pre-Acquisition Reorganization;

(ii)

if the Plan of Arrangement is not completed, HudBay shall pay the implementation costs of the Pre-Acquisition Reorganization and any direct or indirect costs and liabilities thereof, including employment costs, Taxes and liabilities as well as any costs, Taxes and liabilities that may be incurred to unwind any such Pre-Acquisition Reorganization (including actual out-of-pocket costs and expenses for Filing fees and external counsel).

(iii)

any Pre-Acquisition Reorganization or required cooperation of ▇▇▇▇▇▇ in structuring, planning and implementing any Pre-Acquisition Reorganization shall not become effective unless HudBay shall have waived or confirmed in writing the satisfaction of all conditions in its favour in Section 6.1 and Section 6.2 and shall have confirmed in writing that it is prepared to promptly without condition (other than the satisfaction of the condition contemplated by Section 6.2(a)) proceed to effect the Arrangement;

(iv)

any Pre-Acquisition Reorganization or required cooperation of ▇▇▇▇▇▇ in structuring, planning and implementing any Pre-Acquisition Reorganization shall not unreasonably interfere in material operations prior to the Effective Time of ▇▇▇▇▇▇ or any ▇▇▇▇▇▇ Subsidiary;

(v)

unless the Parties otherwise agree, any Pre-Acquisition Reorganization shall not require any filings with, notifications to or approvals of any Governmental Entity or third party (other than such Tax rulings, and filing such Tax elections or notifications and prefilings or pre-clearances with corporations branches or similar Governmental Entities, as are necessary or advisable in the circumstances);

(vi)

any Pre-Acquisition Reorganization shall not require ▇▇▇▇▇▇ or any ▇▇▇▇▇▇ Subsidiary to contravene any applicable Laws, their respective organizational documents or any Material Contract;

(vii)

▇▇▇▇▇▇ and the ▇▇▇▇▇▇ Subsidiaries shall not be obligated to take any action that could result in any Taxes being imposed on, or any adverse Tax or other consequences to, any securityholder of ▇▇▇▇▇▇ incrementally greater than the Taxes or other consequences to such party in connection with the consummation of the Arrangement in the absence of any Pre-Acquisition Reorganization; and

(viii)

such cooperation does not require the directors, officers, employees or agents of ▇▇▇▇▇▇ or the ▇▇▇▇▇▇ Subsidiaries to take any action in any capacity other than as a director, officer or employee.

(b)

HudBay acknowledges and agrees that the planning for and implementation of any Pre-Acquisition Reorganization shall not be considered a breach of any covenant under this Agreement and shall not be considered in determining whether a representation or warranty of ▇▇▇▇▇▇ hereunder has been breached. HudBay and ▇▇▇▇▇▇ shall work cooperatively and use reasonable commercial efforts to prepare prior to the Effective Time all documentation necessary and do such other acts and things as are necessary to give effect to such Pre-Acquisition Reorganization. For greater certainty, ▇▇▇▇▇▇ shall not be liable for the failure of HudBay to benefit from any anticipated tax efficiency as a result of a Pre-Acquisition Reorganization.

5.6

Employment Agreements

Following the approval of the Arrangement Resolution, HudBay shall cause ▇▇▇▇▇▇ to honour such obligations, if any, under ▇▇▇▇▇▇'▇ employment agreements as are disclosed in Schedule 5.6 of the ▇▇▇▇▇▇ Disclosure Letter.

ARTICLE 6
CONDITIONS

6.1

Mutual Conditions Precedent

The obligations of the Parties to complete the Arrangement are subject to the fulfillment, on or before the Effective Time, of each of the following conditions precedent, each of which may only be waived with the mutual consent of the Parties:

(a)

the Arrangement Resolution shall have been approved and adopted by the ▇▇▇▇▇▇ Shareholders at the ▇▇▇▇▇▇ Meeting in accordance with the Interim Order;

(b)

the Interim Order and the Final Order shall each have been obtained on terms consistent with this Agreement, and shall not have been set aside or modified in a manner unacceptable to ▇▇▇▇▇▇ and HudBay, acting reasonably, on appeal or otherwise;

(c)

there shall not exist any prohibition at Law, including a cease trade order, injunction or other prohibition or order at Law or under applicable legislation, against HudBay or ▇▇▇▇▇▇ which shall prevent the consummation of the Arrangement;

(d)

HudBay Shares to be issued in the United States pursuant to the Arrangement shall be exempt from registration requirements under the U.S. Securities Act pursuant to Section 3(a)(10) of the U.S. Securities Act; provided, however, that ▇▇▇▇▇▇ shall not be entitled to rely on the provisions of this Section 6.1(d) in failing to complete the transactions contemplated by this Agreement in the event that ▇▇▇▇▇▇ fails to advise the Court prior to the hearing in respect of the Final Order, as required by the terms of the foregoing exemptions, that HudBay will rely on the foregoing exemption based on the Court’s approval of the transaction;

(e)

the Key Regulatory Approvals shall have been obtained; and

(f)

this Agreement shall not have been terminated pursuant to Article 8.

6.2

Additional Conditions Precedent to the Obligations of HudBay

The obligation of HudBay to complete the Arrangement is subject to the fulfillment of each of the following conditions precedent (each of which is for the exclusive benefit of HudBay and may be waived by HudBay):

(a)

all covenants of ▇▇▇▇▇▇ under this Agreement to be performed on or before the Effective Time which have not been waived by HudBay shall have been duly performed by ▇▇▇▇▇▇ in all material respects and HudBay shall have received a certificate of Lundin addressed to HudBay and dated the Effective Time, signed on behalf of ▇▇▇▇▇▇ by two senior executive officers of ▇▇▇▇▇▇ (on ▇▇▇▇▇▇'▇ behalf and without personal liability), confirming the same as at the Effective Date;

(b)

the representations and warranties of ▇▇▇▇▇▇ set forth in (i) the first sentence of Section 3.1(c), Section 3.1(d) and Section 3.1(e) shall be true and correct as of the Effective Time as if made at and as of such time (except that any such representations and warranty that by its terms speaks specifically as of the date of this Agreement or another date shall be true and correct as of such date) and (ii) Article 3, other than those to which clause (i) above applies, shall be true and correct (disregarding for purposes of this Section 6.2(b) any materiality, Material Adverse Change or Material Adverse Effect qualification contained in any such representations or warranties) in all material respects as of the Effective Time as though made on and as of the Effective Time (except that any such representation and warranty that by its terms speaks specifically as of the date of this Agreement or another date shall be true and correct as of such date), except in the case of this clause (ii) where the failure to be so true and correct, individually and in the aggregate, has not had or would not be reasonably expected to have a Material Adverse Effect on ▇▇▇▇▇▇, and HudBay shall have received a certificate signed on behalf of ▇▇▇▇▇▇ by two executive officers of ▇▇▇▇▇▇ (without personal liability) to this effect;

(c)

since the date of this Agreement, there shall not have occurred any event, occurrence, development or circumstance that, individually or in the aggregate has had or would reasonably be expected to have a Material Adverse Effect on ▇▇▇▇▇▇;

(d)

the relevant Portuguese Governmental Entity shall have been notified of the Arrangement and (1) 60 days shall have elapsed from the date of such notification and (2) no Portuguese Governmental Entity shall have made a final determination that the Arrangement would result in a change in control of Somincor S.A. and shall haven taken any action in respect of such determination that would materially and adversely impair Somincor S.A.’s rights under the ▇▇▇▇▇-▇▇▇▇▇ mining concession contract between Somincor S.A., its shareholders and the Portuguese Republic dated as of November 24, 1994, and as amended as of June 18, 2004;

(e)

the “Majority Lenders” (as such term is defined in the credit agreement between ▇▇▇▇▇▇ and ▇▇▇▇▇▇ Mining AB (as borrowers) and The Bank of Nova Scotia; BNP Paribas (Suisse) SA; ▇▇▇▇▇▇ ▇▇, ▇▇▇▇▇▇▇ Branch; Bank of Montreal; Bank of Montreal Ireland PLC; ING Bank N.V.; Skandinavisk Enskilda ▇▇▇▇▇▇ ▇▇ (publ); ABN Amro Bank N.V., Stockholm Branch; Commonwealth Bank of Australia; and HSH Nordbank AG, Copenhagen Branch (as lenders) dated as of May 28, 2007, as amended (the “Credit Agreement”)) shall have consented to the Arrangement and waived any Event of Default (as such term is defined in the Credit Agreement) including, without limitation, any Event of Default caused by the completion of the Arrangement. ;

(f)

in the event that HudBay is required by any Governmental Entity, Securities Authority or the Exchange to call and hold a meeting of its shareholders to obtain their approval of the Arrangement or any aspect of the Arrangement, such shareholder approval shall have been obtained; and

(g)

holders of no more than 8% of the ▇▇▇▇▇▇ Shares shall have exercised Dissent Rights.

The foregoing conditions will be for the sole benefit of HudBay and may be waived by it in whole or in part at any time.

6.3

Additional Conditions Precedent to the Obligations of ▇▇▇▇▇▇

The obligation of ▇▇▇▇▇▇ to complete the Arrangement is subject to the fulfillment of each of the following conditions precedent (each of which is for the exclusive benefit of ▇▇▇▇▇▇ and may be waived by ▇▇▇▇▇▇):

(a)

all covenants of HudBay under this Agreement to be performed on or before the Effective Time which have not been waived by ▇▇▇▇▇▇ shall have been duly performed by HudBay in all material respects and ▇▇▇▇▇▇ shall have received a certificate of HudBay, addressed to ▇▇▇▇▇▇ and dated the Effective Time, signed on behalf of HudBay by two of its senior executive officers (on HudBay's behalf and without personal liability), confirming the same as of the Effective Date;

(b)

the representations and warranties of HudBay set forth in: (i) Section 4.1(a), the first sentence of Section 4.1(b) and Section 4.1(e) shall be true and correct as of the Effective Time as if made at and as of such time (except that any such representation and warranty that by its terms speaks specifically as of the date of the Agreement or another date shall be true and correct as of such date); and (ii) Article 4, other than those to which clause (i) above applies, shall be true and correct (disregarding for purposes of this Section 6.3(b) any materiality, Material Adverse Change or Material Adverse Effect qualification contained in any such representations or warranties) as of the Effective Time as though made on and as of the Effective Time (except that any such representation and warranty that by its terms speaks specifically as of the date of this Agreement or another date shall be true and correct as of such date), except in the case of this clause (ii) where the failure to be so true and correct, individually and in the aggregate, has not had or would not be reasonably expected to have a Material Adverse Effect on HudBay, and ▇▇▇▇▇▇ shall have received a certificate signed on behalf of HudBay by two executive officers of HudBay (without personal liability) to this effect;

(c)

(d)

HudBay shall have delivered evidence satisfactory to ▇▇▇▇▇▇, acting reasonably, of the approval of the listing and posting for trading on the TSX of the HudBay Shares comprising the Consideration and all HudBay Shares that would be issued on the exercise of any convertible securities of ▇▇▇▇▇▇ outstanding at the Effective Time, subject only to satisfaction of the customary listing conditions of the TSX.

The foregoing conditions will be for the sole benefit of ▇▇▇▇▇▇ and may be waived by it in whole or in part at any time.

6.4

Satisfaction of Conditions

The conditions precedent set out in Section 6.1, Section 6.2 and Section 6.3 shall be conclusively deemed to have been satisfied, waived or released at the Effective Time.

ARTICLE 7
ADDITIONAL AGREEMENTS

7.1

Notice and Cure Provisions

Each Party will give prompt notice to the other of the occurrence, or failure to occur, at any time from the date hereof until the earlier to occur of the termination of this Agreement pursuant to its terms and the Effective Time of any event or state of facts which occurrence or failure would, or would be likely to:

(a)

cause any of the representations or warranties of any Party contained herein to be untrue or inaccurate in any material respect on the date hereof or at the Effective Time (provided that this paragraph (a) shall not apply in the case of any event or state of facts resulting from actions or omissions of ▇▇▇▇▇▇ which are permitted or required by this Agreement); or

(b)

result in the failure to comply with or satisfy any covenant, condition or agreement to be complied with or satisfied by any Party hereunder prior to the Effective Time.

HudBay may not exercise its right to terminate this Agreement pursuant to Sections 8.2.1(c)(ii) and 8.2.1(c)(iii) and ▇▇▇▇▇▇ may not exercise its right to terminate this Agreement pursuant to Sections 8.2.1(d)(ii) and 8.2.1(d)(iii), unless the Party intending to rely thereon has delivered a written notice to the other Party specifying in reasonable detail all breaches of covenants, representations and warranties or other matters which the Party delivering such notice is asserting as the basis for the non-fulfilment of the applicable condition or termination right, as the case may be.

7.2

Non-Solicitation

7.2.1

Except as otherwise expressly provided in this Section 7.2, ▇▇▇▇▇▇ shall not, directly or indirectly, through any officer, director, employee, representative (including any financial or other advisor) or agent of ▇▇▇▇▇▇ or any of its subsidiaries (collectively, the “Representatives”): (a) solicit, initiate, knowingly encourage or facilitate (including by way of furnishing information or entering into any form of agreement, arrangement or understanding) any inquiries or proposals regarding an Acquisition Proposal; (b) engage in any discussions or negotiations with any person (other than HudBay or any of its affiliates) regarding an Acquisition Proposal, provided, however, that ▇▇▇▇▇▇ may advise any Person making an Acquisition Proposal that it does not constitute a Superior Proposal when the ▇▇▇▇▇▇ Board has so determined; (c) approve, accept, endorse or recommend, or propose publicly to accept, approve, endorse or recommend, any Acquisition Proposal; (d) accept or enter into or publicly propose to accept or enter into, any letter of intent, agreement in principle, agreement, understanding or arrangement in respect of an Acquisition Proposal; or (e) make a Change in Recommendation.

7.2.2

Except as otherwise provided in this Section 7.2, ▇▇▇▇▇▇ shall, and shall cause the ▇▇▇▇▇▇ Subsidiaries and the Representatives to immediately cease and cause to be terminated any solicitation, encouragement, discussion or negotiation with any persons conducted heretofore by ▇▇▇▇▇▇, any subsidiary of ▇▇▇▇▇▇ or any Representatives with respect to any Acquisition Proposal, and, in connection therewith, ▇▇▇▇▇▇ will discontinue access to any of its confidential information (and not establish or allow access to any of its confidential information, or any data room, virtual or otherwise) and shall as soon as possible request, to the extent that it is entitled to do so (and exercise all rights it has to require) the return or destruction of all confidential information regarding ▇▇▇▇▇▇ and its subsidiaries previously provided to any such person or any other person and will request (and exercise all rights it has to require) the destruction of all material including or incorporating or otherwise reflecting any material confidential information regarding ▇▇▇▇▇▇ and its subsidiaries. ▇▇▇▇▇▇ agrees that neither it nor any of its subsidiaries, shall terminate, waive, amend or modify any provision of any existing confidentiality agreement relating to an Acquisition Proposal or any standstill agreement to which it or any of its subsidiaries is a party (it being acknowledged and agreed that the automatic termination of any standstill provisions of any such agreement as the result of the entering into and announcement of this Agreement by ▇▇▇▇▇▇, pursuant to the express terms of any such agreement, shall not be a violation of this Section 7.2.2) and ▇▇▇▇▇▇ undertakes to enforce all standstill, non-disclosure, non-disturbance, non-solicitation and similar covenants that it or any of its subsidiaries have entered into prior to the date hereof, provided that ▇▇▇▇▇▇ shall not be prevented from considering any Superior Proposal if the provisions of this Section 7.2 are otherwise complied with.

7.2.3

Notwithstanding Sections 7.2.1 and 7.2.2 and any other provision of this Agreement or of any other agreement between the Parties or between ▇▇▇▇▇▇ and any other person, including the provisions of any confidentiality or standstill agreement, if at any time following the date of this Agreement and prior to obtaining the approval of the Arrangement Resolution at the ▇▇▇▇▇▇ Meeting, ▇▇▇▇▇▇ receives a written Acquisition Proposal that the ▇▇▇▇▇▇ Board determines in good faith, after consultation with its financial advisors and outside counsel, constitutes or, if consummated in accordance with its terms, could reasonably be expected to result in a Superior Proposal, then ▇▇▇▇▇▇ may, provided it is in compliance with Section 7.2.4:

(a)

furnish information with respect to ▇▇▇▇▇▇ and its subsidiaries to the person making such Acquisition Proposal; and/or

(b)

enter into, participate, facilitate and maintain discussions or negotiations with, and otherwise cooperate with or assist, the person making such Acquisition Proposal,

provided that ▇▇▇▇▇▇ shall not, and shall not allow its Representatives to, disclose any non-public information with respect to ▇▇▇▇▇▇ to such person (i) if such non public information has not been previously provided to, or is not concurrently provided to, HudBay; and (ii) without entering into an agreement with such person substantially in the form of the Confidentiality Agreement containing terms that are no more favourable to such person than those found in the Confidentiality Agreement and that are not individually or in the aggregate materially more favourable to such person than those found in the Confidentiality Agreement. In particular but without limitation such agreement may not include any provision calling for an exclusive right to negotiate with ▇▇▇▇▇▇ and may not restrict ▇▇▇▇▇▇ or the ▇▇▇▇▇▇ Subsidiaries from complying with this Section 7.2.

7.2.4

▇▇▇▇▇▇ shall promptly notify HudBay, at first orally and then in writing within 24 hours of receipt of the Acquisition Proposal, in the event it receives an Acquisition Proposal, or a request for non-public information, including the material terms and conditions thereof, and the identity of the person or persons making the Acquisition Proposal, and shall include copies of any such proposal, inquiry, offer or request, or any amendment to any of the foregoing. ▇▇▇▇▇▇ shall thereafter also provide such other details of such proposal, inquiry, offer or request, or any amendment to any of the foregoing, as HudBay may reasonably request. ▇▇▇▇▇▇ shall keep HudBay fully informed as to the status, including any changes to the material terms, of such proposal, inquiry, offer or request, or any amendment to any of the foregoing, and shall respond promptly to all inquiries from HudBay with respect thereto.

7.2.5

Notwithstanding anything in this Agreement to the contrary, but subject to Section 7.3, if at any time following the date of this Agreement and prior to obtaining the ▇▇▇▇▇▇ Shareholder Approval at the ▇▇▇▇▇▇ Meeting, ▇▇▇▇▇▇ receives an Acquisition Proposal which the ▇▇▇▇▇▇ Board concludes in good faith constitutes a Superior Proposal, the ▇▇▇▇▇▇ Board may enter into a definitive agreement with respect to such Superior Proposal.

7.2.6

Subject to Section 7.3, nothing contained in this Agreement shall prohibit the ▇▇▇▇▇▇ Board from taking any action or making a Change in Recommendation or from making any disclosure to any securityholders of ▇▇▇▇▇▇ prior to the Effective Time, if, in the good faith judgment of the ▇▇▇▇▇▇ Board, after consultation with outside legal counsel, failure to take such action or make such disclosure would be inconsistent with the ▇▇▇▇▇▇ Board’s exercise of its fiduciary duties or such action or disclosure is otherwise required under applicable Law (including by responding to an Acquisition Proposal under a directors’ circular or otherwise as required under applicable Securities Laws); provided that, for greater certainty, in the event of a Change in Recommendation and a termination by HudBay of this Agreement pursuant to Section 8.2.1(c)(i) (but not including a termination by HudBay pursuant to Section 8.2.1(c)(i) in circumstances where the Change in Recommendation resulted from the occurrence of a Material Adverse Change with respect to HudBay), ▇▇▇▇▇▇ shall pay the Termination Fee as required by Section 7.5. In addition, subject to the provisions of this Section 7.2 and Section 7.3, nothing contained in this Agreement shall prevent ▇▇▇▇▇▇ or the ▇▇▇▇▇▇ Board from calling and holding a meeting of ▇▇▇▇▇▇ Shareholders, or any of them, requisitioned by ▇▇▇▇▇▇ Shareholders, or any of them, in accordance with the CBCA or ordered to be held by a court in accordance with applicable Laws.

7.3

Right to Match

▇▇▇▇▇▇ covenants that it will not accept, approve, endorse, recommend or enter into any agreement, understanding or arrangement in respect of an Acquisition Proposal (other than a confidentiality and standstill agreement permitted by Section 7.2.3) or make a Change in Recommendation in respect of an Acquisition Proposal unless:

(a)

▇▇▇▇▇▇ has complied with its obligations under Section 7.2 in all material respects and has provided HudBay with a copy of the Acquisition Proposal, pursuant to Section 7.2.4; and

(b)

a period (the “Response Period”) of five (5) business days has elapsed from the date that is the later of: (x) the date on which HudBay receives written notice from the ▇▇▇▇▇▇ Board that the ▇▇▇▇▇▇ Board has determined that the Acquisition Proposal constitutes a Superior Proposal, and to accept, approve, endorse, recommend or enter into a definitive agreement with respect to such Acquisition Proposal or to make a Change in Recommendation in respect of such Acquisition Proposal; and (y) the date HudBay receives a copy of the Acquisition Proposal.

7.3.2

During the Response Period, HudBay will have the right, but not the obligation, to offer to amend this Agreement and the Plan of Arrangement, including an increase in, or modification of, the aggregate Consideration. The ▇▇▇▇▇▇ Board shall review any such offer by HudBay to amend this Agreement and the Plan of Arrangement to determine whether the Acquisition Proposal to which HudBay is responding would continue to be a Superior Proposal when assessed against the Arrangement as it is proposed in writing by HudBay to be amended. If the ▇▇▇▇▇▇ Board determines that the Acquisition Proposal no longer constitutes a Superior Proposal, the ▇▇▇▇▇▇ Board will cause ▇▇▇▇▇▇ to enter into an amendment to this Agreement with HudBay incorporating the amendments to the Agreement and Plan of Arrangement as set out in the written offer to amend, and will promptly reaffirm its recommendation of the Arrangement and the prompt issuance of a press release to that effect. If the ▇▇▇▇▇▇ Board determines that the Acquisition Proposal continues to be a Superior Proposal, ▇▇▇▇▇▇ may approve and recommend that ▇▇▇▇▇▇ Shareholders accept such Superior Proposal and may make a Change in Recommendation in respect of the Superior Proposal or, subject to Section 7.3.4, terminate this Agreement pursuant to Section 8.2.1(d)(i) in order to accept or enter into an agreement, understanding or arrangement to proceed with the Superior Proposal.

7.3.3

Each successive amendment to any Acquisition Proposal that results in an increase in, or modification of, the Consideration (or value of such Consideration) to be received by the holders of the ▇▇▇▇▇▇ Shares shall constitute a new Acquisition Proposal for the purposes of this Section 7.3 and HudBay shall be afforded a new Response Period and the rights afforded in paragraph 7.3.2 in respect of each such Acquisition Proposal.

7.3.4

If prior to the expiry of the Response Period and during the Response Period, HudBay requests in writing that the ▇▇▇▇▇▇ Meeting proceed in compliance with Section 2.3 hereof, ▇▇▇▇▇▇ shall not be permitted to terminate the Agreement pursuant to Section 8.2.1(d)(i). Notwithstanding the foregoing, ▇▇▇▇▇▇ shall be permitted to accept or enter into an agreement, understanding or arrangement to proceed with a Superior Proposal provided that any such agreement, understanding or arrangement shall terminate if the Arrangement is approved at the ▇▇▇▇▇▇ Meeting and does not prevent the ▇▇▇▇▇▇ Meeting from proceeding in compliance with Section 2.3 hereof or impose any termination, expense reimbursement or other fees on ▇▇▇▇▇▇ or any of its Subsidiaries or result in the grant of any options or rights to acquire assets or securities of ▇▇▇▇▇▇ or any of its Subsidiaries, in each case that would be effective prior to the termination of this Agreement or survive the Effective Date.

7.3.5

Either ▇▇▇▇▇▇ or HudBay shall be entitled to adjourn or postpone the ▇▇▇▇▇▇ Meeting for a period of up to seven (7) business days from the date that ▇▇▇▇▇▇ has provided HudBay with a notice of an Acquisition Proposal under Section 7.3.1 if the Acquisition Proposal is received by ▇▇▇▇▇▇ less than seven (7) business days prior to the date of the ▇▇▇▇▇▇ Meeting provided, however, that the ▇▇▇▇▇▇ Meeting shall not be adjourned or postponed to a date later than the seventh (7) business day prior to the Outside Date.

7.4

HudBay Non-Solicitation

7.4.1

Except as otherwise expressly provided in this Section 7.4.1, HudBay shall not, directly or indirectly, through any officer, director, employee, representative (including any financial or other advisor) or agent of HudBay or any of its subsidiaries (collectively, the “HudBay Representatives”): (a) solicit, initiate, knowingly encourage or facilitate (including by way of furnishing information or entering into any form of agreement, arrangement or understanding) any inquiries or proposals regarding an Acquisition Proposal; (b) engage in any discussions or negotiations with any person regarding an Acquisition Proposal; (c) approve, accept, endorse or recommend, or propose publicly to accept, approve, endorse or recommend, any Acquisition Proposal; or (d) accept or enter into or publicly propose to accept or enter into, any letter of intent, agreement in principle, agreement, understanding or arrangement in respect of an Acquisition Proposal.

7.4.2

Except as otherwise provided in this Section 7.4, HudBay shall, and shall cause its subsidiaries and the HudBay Representatives to immediately cease and cause to be terminated any solicitation, encouragement, discussion or negotiation with any persons conducted heretofore by HudBay, any subsidiary of HudBay or any HudBay Representatives with respect to any Acquisition Proposal, and, in connection therewith, HudBay will discontinue access to any of its confidential information (and not establish or allow access to any of its confidential information, or any data room, virtual or otherwise) and shall as soon as possible request, to the extent that it is entitled to do so (and exercise all rights it has to require) the return or destruction of all confidential information regarding HudBay and its subsidiaries previously provided to any such person or any other person and will request (and exercise all rights it has to require) the destruction of all material including or incorporating or otherwise reflecting any material confidential information regarding HudBay and its subsidiaries. HudBay agrees that neither it nor any of its subsidiaries, shall terminate, waive, amend or modify any provision of any existing confidentiality agreement relating to an Acquisition Proposal or any standstill agreement to which it or any of its subsidiaries is a party (it being acknowledged and agreed that the automatic termination of any standstill provisions of any such agreement as the result of the entering into and announcement of this Agreement by HudBay, pursuant to the express terms of any such agreement, shall not be a violation of this Section 7.4.2) and HudBay undertakes to enforce all standstill, non-disclosure, non-disturbance, non-solicitation and similar covenants that it or any of its subsidiaries have entered into prior to the date hereof.

7.4.3

Notwithstanding Sections 7.4.1 and 7.4.2 and any other provision of this Agreement or of any other agreement between the Parties or between HudBay and any other person, including the provisions of any confidentiality or standstill agreement, if at any time following the date of this Agreement and prior to the Effective Time, HudBay receives a Change of Control Proposal, then HudBay may, provided it is in compliance with Section 7.4.4:

(a)

furnish information with respect to HudBay and its subsidiaries to the person making such Change of Control Proposal; and/or

(b)

enter into, participate, facilitate and maintain discussions or negotiations with, and otherwise cooperate with or assist, the person making such Change of Control Proposal,

provided that HudBay shall not, and shall not allow the HudBay Representatives to, disclose any non-public information with respect to HudBay to such person (i) if such non-public information has not been previously provided to, or is not concurrently provided to, ▇▇▇▇▇▇; and (ii) if such person is not already party to a Confidentiality Agreement with HudBay, without entering into an agreement with such person substantially in the form of the Confidentiality Agreement containing terms that are no more favourable to such person than those found in the Confidentiality Agreement and that are not individually or in the aggregate materially more favourable to such person than those found in the Confidentiality Agreement. In particular but without limitation such agreement may not include any provision calling for an exclusive right to negotiate with HudBay and may not restrict HudBay or its subsidiaries from complying with this Section 7.4.3.

7.4.4

HudBay shall promptly notify ▇▇▇▇▇▇, at first orally and then in writing within 24 hours of receipt of the Acquisition Proposal, in the event it receives an Acquisition Proposal, or a request for non-public information, including the material terms and conditions thereof, and the identity of the person or persons making the Acquisition Proposal, and shall include copies of any such proposal, inquiry, offer or request, or any amendment to any of the foregoing. HudBay shall thereafter also provide such other details of such proposal, inquiry, offer or request, or any amendment to any of the foregoing, as ▇▇▇▇▇▇ may reasonably request. HudBay shall keep ▇▇▇▇▇▇ fully informed as to the status, including any changes to the material terms, of such proposal, inquiry, offer or request, or any amendment to any of the foregoing, and shall respond promptly to all inquiries from ▇▇▇▇▇▇ with respect thereto.

7.4.5

Notwithstanding anything in this Agreement to the contrary, at any time following the date of this Agreement and prior to the Effective Time, the board of directors of HudBay may publicly accept or recommend that its shareholders accept and/or enter into a definitive agreement with respect to such Change of Control Proposal provided that:

(a)

if the Change of Control Proposal is structured as a take-over bid, the date upon which any securities may be taken up by the offeror shall be after the Effective Date, and

(b)

if the Change of Control Proposal requires approval by the HudBay Shareholders, the record date for any meeting of HudBay Shareholders that is required to be held to consider the Change of Control Proposal shall be after the Effective Date.

7.5

Expenses and Termination Fees

7.5.1

Except as otherwise provided herein, all fees, costs and expenses incurred in connection with this Agreement and the Plan of Arrangement shall be paid by the Party incurring such fees, costs or expenses.

7.5.2

If a Termination Fee Event occurs, ▇▇▇▇▇▇ shall pay HudBay (by wire transfer of immediately available funds) the Termination Fee in accordance with Section 7.5.5.

7.5.3

For the purposes of this Agreement, “Termination Fee” means $24,250,000.

7.5.4

For the purposes of this Agreement, “Termination Fee Event” means the termination of this Agreement:

(a)

by HudBay pursuant to Section 8.2.1(c)(i) (but not including a termination by HudBay pursuant to Section 8.2.1(c)(i) in circumstances where the Change in Recommendation resulted from the occurrence of a Material Adverse Change with respect to HudBay) or Section 8.2.1(c)(v), in either case prior to the ▇▇▇▇▇▇ Meeting;

(b)

by HudBay pursuant to Section 8.2.1(c)(iv);

(c)

by ▇▇▇▇▇▇ pursuant to Section 8.2.1(d)(i); or

(d)

by HudBay pursuant to Section 8.2.1(b)(i) or by either Party pursuant to 8.2.1(b)(iii), but only if, in the case of this paragraph (d), prior to the earlier of the termination of this Agreement or the holding of the ▇▇▇▇▇▇ Meeting, a bona fide Acquisition Proposal, or the intention to make an Acquisition Proposal, with respect to ▇▇▇▇▇▇ shall have been made to ▇▇▇▇▇▇ or publicly announced by any person (other than HudBay or any of its affiliates) and, within twelve months following the date of such termination: (i) an Acquisition Proposal is consummated; or (ii) ▇▇▇▇▇▇ or one or more of its Subsidiaries enters into a definitive agreement in respect of an Acquisition Proposal or the ▇▇▇▇▇▇ Board approves or recommends such Acquisition Proposal which is subsequently consummated at any time thereafter, provided that for the purposes of this Section 7.5.4(d), all references to “20%” in the definition of “Acquisition Proposal” shall be deemed to be references to “50%”.

7.5.5

If a Termination Fee Event occurs due to a termination of this Agreement by ▇▇▇▇▇▇ pursuant to Section 8.2.1(d)(i), or by HudBay pursuant to Section 8.2.1(c)(i) or Section 8.2.1(c)(v), the Termination Fee shall be payable simultaneously with the occurrence of such Termination Fee Event. If a Termination Fee Event occurs due to a termination of this Agreement by HudBay pursuant to Section 8.2.1(c)(iv), the Termination Fee shall be payable within two (2) business days following such Termination Fee Event. If a Termination Fee Event occurs in the circumstances set out in Section 7.5.4(d), the Termination Fee shall be payable within two (2) business days following the closing of the applicable transaction referred to therein.

7.5.6

If ▇▇▇▇▇▇ terminates this Agreement pursuant to Section 8.2.1(d)(iv), HudBay shall pay ▇▇▇▇▇▇ (by wire transfer of immediately available funds) the Termination Fee within two (2) business days following such termination.

7.5.7

If ▇▇▇▇▇▇ terminates this Agreement pursuant to Section 8.2.1(d)(iii), HudBay shall pay ▇▇▇▇▇▇ $2,500,000 within two (2) business days following such termination.

7.5.8

If HudBay terminates this Agreement pursuant to Section 8.2.1(c)(iii), ▇▇▇▇▇▇ shall pay HudBay $2,500,000 within two (2) business days following such termination.

7.5.9

Each of the Parties acknowledges that the agreements contained in this Section 7.4 are an integral part of the transactions contemplated in this Agreement and that, without those agreements, the Parties would not enter into this Agreement. Each Party acknowledges that all of the payment amounts set out in this Section 7.4 are payments of liquidated damages which are a genuine pre-estimate of the damages, which the Party entitled to such damages will suffer or incur as a result of the event giving rise to such payment and the resultant termination of this Agreement and are not penalties. Each of ▇▇▇▇▇▇ and HudBay irrevocably waives any right it may have to raise as a defence that any such liquidated damages are excessive or punitive. For greater certainty, each Party agrees that, upon any termination of this Agreement under circumstances where ▇▇▇▇▇▇ or HudBay is entitled to the Termination Fee and such Termination Fee is paid in full, ▇▇▇▇▇▇ or HudBay, as the case may be, shall be precluded from any other remedy against the other Party at law or in equity or otherwise (including, without limitation, an order for specific performance), and shall not seek to obtain any recovery, judgment, or damages of any kind, including consequential, indirect, or punitive damages, against the other Party or any of its subsidiaries or any of their respective directors, officers, employees, partners, managers, members, shareholders or affiliates in connection with this Agreement or the transactions contemplated hereby.

7.5.10

For the avoidance of doubt, in no event shall ▇▇▇▇▇▇ or HudBay be obligated to pay to the other Party an amount in respect of the termination of this Agreement that is, in aggregate, in excess of the Termination Fee.

7.5.11

Nothing in this Section 7.4 shall preclude a Party from seeking injunctive relief to restrain any breach or threatened breach of the covenants or agreements set forth in this Agreement or the Confidentiality Agreement or otherwise to obtain specific performance of any such covenants or agreements, without the necessity of posting bond or security in connection therewith.

7.6

Access to Information; Confidentiality

From the date hereof until the earlier of the Effective Time and the termination of this Agreement, subject to compliance with applicable Law and the terms of any existing Contracts, ▇▇▇▇▇▇ shall, and shall cause its subsidiaries and their respective officers, directors, employees, independent auditors, accounting advisers and agents to, afford to HudBay and to the officers, employees, agents and representatives of HudBay such access as HudBay may reasonably require at all reasonable times, including for the purpose of facilitating integration business planning, to their officers, employees, agents, properties, books, records and Contracts, and shall furnish HudBay with all data and information as HudBay may reasonably request. HudBay and ▇▇▇▇▇▇ acknowledge and agree that information furnished pursuant to this Section 7.6 shall be subject to the terms and conditions of the Confidentiality Agreement.

7.7

Insurance and Indemnification

7.7.1

HudBay will, or will cause ▇▇▇▇▇▇ and its subsidiaries to, maintain in effect without any reduction in scope or coverage for six (6) years from the Effective Date customary policies of directors’ and officers’ liability insurance providing protection no less favourable to the protection provided by the policies maintained by ▇▇▇▇▇▇ and its subsidiaries which are in effect immediately prior to the Effective Date and providing protection in respect of claims arising from facts or events which occurred on or prior to the Effective Date; provided, however, that HudBay acknowledges and agrees that prior to the Effective Date, ▇▇▇▇▇▇ may, in the alternative, purchase run off directors’ and officers’ liability insurance for a period of up to six (6) years from the Effective Date.

7.7.2

HudBay agrees that it shall directly honour all rights to indemnification or exculpation now existing in favour of present and former officers and directors of ▇▇▇▇▇▇ and its subsidiaries to the extent that they are disclosed in Schedule 7.7.2 of the ▇▇▇▇▇▇ Disclosure Letter, and acknowledges that such rights, to the extent that they are disclosed in Schedule 7.7.2 of the ▇▇▇▇▇▇ Disclosure Letter, shall survive the completion of the Plan of Arrangement and shall continue in full force and effect for a period of not less than six (6) years from the Effective Date.

7.7.3

The provisions of this Section 7.7 are intended for the benefit of, and shall be enforceable by, each insured or indemnified person, his or her heirs and his or her legal representatives and, for such purpose, ▇▇▇▇▇▇ hereby confirms that it is acting as agent and trustee on their behalf. Furthermore, this Section 7.7 shall survive the termination of this Agreement as a result of the occurrence of the Effective Date for a period of six (6) years.

ARTICLE 8
TERM, TERMINATION, AMENDMENT AND WAIVER

8.1

Term

This Agreement shall be effective from the date hereof until the earlier of the Effective Time and the termination of this Agreement in accordance with its terms.

8.2

Termination

8.2.1

This Agreement may be terminated at any time prior to the Effective Time (notwithstanding any approval of this Agreement or the Arrangement Resolution by the ▇▇▇▇▇▇ Shareholders by the Court):

(a)

by mutual written agreement of ▇▇▇▇▇▇ and HudBay; or

(b)

by either ▇▇▇▇▇▇ or HudBay, if:

(i)

the Effective Time shall not have occurred on or before the Outside Date, except that the right to terminate this Agreement under this 8.2.1(b)(i) shall not be available to any Party whose failure to fulfill any of its obligations or breach of any of its representations and warranties under this Agreement has been the cause of, or resulted in, the failure of the Effective Time to occur by such Outside Date; or

(ii)

after the date hereof, there shall be enacted or made any applicable Law that makes consummation of the Arrangement illegal or otherwise prohibited or enjoins ▇▇▇▇▇▇ or HudBay from consummating the Arrangement and such applicable Law (if applicable) or enjoinment shall have become final and non-appealable; or

(iii)

the Arrangement Resolution shall have failed to obtain the ▇▇▇▇▇▇ Shareholder Approval at the ▇▇▇▇▇▇ Meeting (including any adjournment or postponement thereof) in accordance with the Interim Order; or

(c)

by HudBay, if:

(i)

prior to obtaining the ▇▇▇▇▇▇ Shareholder Approval, the ▇▇▇▇▇▇ Board fails to recommend or withdraws, amends, modifies or qualifies, in a manner adverse to HudBay or fails to reaffirm its recommendation of the Arrangement within five business days (and in any case prior to the ▇▇▇▇▇▇ Meeting) after having been requested in writing by HudBay to do so, in a manner adverse to HudBay, (it being understood that the taking of a neutral position or no position with respect to an Acquisition Proposal beyond a period of five business days (or beyond the date which is one day prior to the ▇▇▇▇▇▇ Meeting, if sooner) shall be considered an adverse modification) (a “Change in Recommendation”); or

(ii)

any of the conditions set forth in Section 6.1 or Section 6.2 is not satisfied, and such condition is incapable of being satisfied by the Outside Date; or

(iii)

a breach of any representation or warranty or failure to perform any covenant or agreement on the part of ▇▇▇▇▇▇ set forth in this Agreement shall have occurred that would cause the conditions set forth in Section 6.2(a) or 6.2(b) not to be satisfied, and such conditions are incapable of being satisfied by the Outside Date, as reasonably determined by HudBay; provided that HudBay is not then in breach of this Agreement so as to cause any of the conditions set forth in Section 6.1 or Section 6.3 not to be satisfied; or

(iv)

▇▇▇▇▇▇ shall have wilfully and materially breached any of its obligations or covenants set forth in Section 7.2; or

(v)

▇▇▇▇▇▇ shall have entered into a binding written agreement relating to a Superior Proposal in accordance with Section 7.3.4;

(d)

by ▇▇▇▇▇▇, if

(i)

▇▇▇▇▇▇, subject to complying with the terms of this Agreement, shall have entered into a legally binding agreement with respect to a Superior Proposal in accordance with Section 7.3; provided that concurrently with such termination, ▇▇▇▇▇▇ pays the Termination Fee payable pursuant to Section 7.4; or

(ii)

any of the conditions set forth in Section 6.1 or Section 6.3 is not satisfied, and such condition is incapable of being satisfied by the Outside Date; or

(iii)

a breach of any representation or warranty or failure to perform any covenant or agreement on the part of HudBay set forth in this Agreement shall have occurred that would cause the conditions set forth in Section 6.3(a) or 6.3(b) not to be satisfied, and such conditions are incapable of being satisfied by the Outside Date; provided that ▇▇▇▇▇▇ is not then in breach of this Agreement so as to cause any of the conditions set forth in Section 6.1 or Section 6.2 not to be satisfied; or

(iv)

HudBay shall have wilfully and materially breached any of its obligations or covenants set forth in Section 7.4.

8.2.2

The Party desiring to terminate this Agreement pursuant to this Section 8.2 (other than pursuant to Section 8.2.1(a)) shall give notice of such termination to the other Parties.

8.2.3

If this Agreement is terminated pursuant to this Section 8.2, this Agreement shall become void and be of no further force or effect without liability of any Party (or any shareholder, director, officer, employee, agent, consultant or representative of such Party) to any other Party hereto, except as otherwise expressly contemplated hereby, and provided that the provisions of this Section 8.2.3 and Sections 7.5, 9.3, 9.6 and 9.7 and all related definitions set forth in Section 1.1, the reimbursement obligations in Section 5.5 and the provisions of the Confidentiality Agreement (other than any standstill provisions contained therein) shall survive any termination hereof pursuant to Section 8.2.1; provided, further, that neither the termination of this Agreement nor anything contained in this Section 8.2 shall relieve a Party from any liability arising prior to such termination.

8.3

Amendment

Subject to the provision of the Interim Order, the Plan of Arrangement and applicable Laws, this Agreement may, at any time and from time to time before or after the holding of the ▇▇▇▇▇▇ Meeting but not later than the Effective Time, be amended by mutual written agreement of the Parties, without further notice to or authorization on the part of the ▇▇▇▇▇▇ Shareholders, and any such amendment may without limitation:

(a)

change the time for performance of any of the obligations or acts of the Parties;

(b)

waive any inaccuracies or modify any representation or warranty contained herein or in any document delivered pursuant hereto;

(c)

waive compliance with or modify any of the covenants herein contained and waive or modify performance of any of the obligations of the Parties; and

(d)

waive compliance with or modify any mutual conditions precedent herein contained.

8.4

Waiver

Any Party may (a) extend the time for the performance of any of the obligations or acts of the other Party, (b) waive compliance, except as provided herein, with any of the other Party’s agreements or the fulfilment of any conditions to its own obligations contained herein, or (c) waive inaccuracies in any of the other Party’s representations or warranties contained herein or in any document delivered by the other Party; provided, however, that any such extension or waiver shall be valid only if set forth in an instrument in writing signed on behalf of such Party and, unless otherwise provided in the written waiver, will be limited to the specific breach or condition waived; and provided further that, for the purposes of this Section 8.4, HudBay shall be deemed to constitute one and the same Party.

ARTICLE 9
GENERAL PROVISIONS

9.1

Privacy

Each Party shall comply with applicable privacy Laws in the course of collecting, using and disclosing personal information about an identifiable individual (the “Transaction Personal Information”). HudBay shall not disclose Transaction Personal Information to any person other than to its advisors who are evaluating and advising on the transactions contemplated by this Agreement. If HudBay completes the transactions contemplated by this Agreement, HudBay shall not, following the Effective Date, without the consent of the individuals to whom such Transaction Personal Information relates or as permitted or required by applicable Law, use or disclose Transaction Personal Information:

(a)

for purposes other than those for which such Transaction Personal Information was collected by ▇▇▇▇▇▇ prior to the Effective Date; and

(b)

which does not relate directly to the carrying on of ▇▇▇▇▇▇'▇ business or to the carrying out of the purposes for which the transactions contemplated by this Agreement were implemented.

HudBay shall protect and safeguard the Transaction Personal Information against unauthorized collection, use or disclosure. HudBay shall cause its advisors to observe the terms of this Section 9.1 and to protect and safeguard Transaction Personal Information in their possession. If this Agreement shall be terminated, HudBay shall promptly deliver to ▇▇▇▇▇▇ all Transaction Personal Information in its possession or in the possession of any of its advisors, including all copies, reproductions, summaries or extracts thereof, except, unless prohibited by applicable Law, for electronic backup copies made automatically in accordance with the usual backup procedures of HudBay.

9.2

Notices

All notices and other communications given or made pursuant to this Agreement shall be in writing and shall be deemed to have been duly given and received on the day it is delivered, provided that it is delivered on a business day prior to 5:00 p.m. local time in the place of delivery or receipt. However, if notice is delivered after 5:00 p.m. local time or if such day is not a business day then the notice shall be deemed to have been given and received on the next business day. Notice shall be sufficiently given if delivered (either in person, by courier service or other personal method of delivery), or if transmitted by facsimile or email to the Parties at the following addresses (or at such other addresses as shall be specified by any Party by notice to the other given in accordance with these provisions):

(a)

if to HudBay:

HudBay Minerals Inc.

Dundee Place

▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, #▇▇▇▇

▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇

Attention:

▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇

Facsimile:

(▇▇▇) ▇▇▇-▇▇▇▇

Email:

▇▇▇▇▇.▇▇▇▇▇▇▇▇@▇▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇

with a copy (which shall not constitute notice) to:

▇▇▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇ LLP

2100 – ▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇

▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇

Attention:

▇▇▇▇ ▇. ▇▇▇▇▇

Facsimile:

(▇▇▇) ▇▇▇-▇▇▇▇

Email:

▇▇▇▇▇▇@▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇

(b)

if to ▇▇▇▇▇▇:

▇▇▇▇▇▇ Mining Corporation

▇▇▇▇-▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇

▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇

Attention:

▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇

Facsimile:

(▇▇▇) ▇▇▇-▇▇▇▇

Email:

▇▇▇▇.▇▇▇▇▇▇@▇▇▇▇▇▇▇▇▇▇▇▇.▇▇

with a copy (which shall not constitute notice) to:

Osler, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ ▇▇▇

▇▇▇ ▇▇, ▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇

▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇

Attention:

▇▇▇▇ ▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇

Facsimile:

(▇▇▇) ▇▇▇-▇▇▇▇

Email:

▇▇▇▇▇▇▇@▇▇▇▇▇.▇▇▇/▇▇▇▇▇▇▇▇▇@▇▇▇▇▇.▇▇▇

9.3

Governing Law; Waiver of Jury Trial

This Agreement shall be governed, including as to validity, interpretation and effect, by the laws of the Province of Ontario and the laws of Canada applicable therein. Each of the Parties hereby irrevocably attorns to the exclusive jurisdiction of the Courts of the Province of Ontario in respect of all matters arising under and in relation to this Agreement and the Arrangement and waives any defences to the maintenance of an action in the Courts of the Province of Ontario. EACH PARTY TO THIS AGREEMENT HEREBY WAIVES ANY RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THE ACTIONS OF THE PARTIES IN THE NEGOTIATION, ADMINISTRATION, PERFORMANCE AND ENFORCEMENT OF THIS AGREEMENT.

9.4

Injunctive Relief

Subject to Section 7.5, the Parties agree that irreparable harm would occur for which money damages would not be an adequate remedy at law in the event that any of the provisions of this Agreement were not performed in accordance with their specific terms or were otherwise breached. It is accordingly agreed that the Parties shall be entitled to an injunction or injunctions and other equitable relief to prevent breaches of this Agreement, any requirement for the securing or posting of any bond in connection with the obtaining of any such injunctive or other equitable relief hereby being waived.

9.5

Time of Essence

Time shall be of the essence in this Agreement.

9.6

Entire Agreement, Binding Effect and Assignment

This Agreement (including the exhibits and schedules hereto and the ▇▇▇▇▇▇ Disclosure Letter and the HudBay Disclosure Letter) and the Confidentiality Agreement constitute the entire agreement, and supersede all other prior agreements and understandings, both written and oral, between the Parties, or any of them, with respect to the subject matter hereof and thereof and, except as expressly provided herein, this Agreement is not intended to and shall not confer upon any person other than the Parties any rights or remedies hereunder. Neither this Agreement nor any of the rights, interests or obligations hereunder may be assigned by either of the Parties without the prior written consent of the other Parties.

9.7

Severability

If any term or other provision of this Agreement is invalid, illegal or incapable of being enforced by any rule or Law or public policy, all other conditions and provisions of this Agreement shall nevertheless remain in full force and effect so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner materially adverse to any Party. Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, the Parties shall negotiate in good faith to modify this Agreement so as to effect the original intent of the Parties as closely as possible in an acceptable manner to the end that the transactions contemplated hereby are fulfilled to the fullest extent possible.

9.8

Counterparts, Execution

This Agreement may be executed in two or more counterparts, each of which shall be deemed to be an original but all of which together shall constitute one and the same instrument. The Parties shall be entitled to rely upon delivery of an executed facsimile or similar executed electronic copy of this Agreement, and such facsimile or similar executed electronic copy shall be legally effective to create a valid and binding agreement between the Parties.

[Remainder of page intentionally left blank. Signature page follows.]

IN WITNESS WHEREOF HudBay and ▇▇▇▇▇▇ have caused this Agreement to be executed as of the date first written above by their respective officers thereunto duly authorized.


		HUDBAY MINERALS INC.
		By:	/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
			Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
			Title: Chief Executive Officer

		By:	/s/ H. ▇▇▇▇▇ ▇▇▇▇▇▇
			Name: H. ▇▇▇▇▇ ▇▇▇▇▇▇
			Title: Vice President and General Counsel

		▇▇▇▇▇▇ MINING CORPORATION
		By:	/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
			Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
			Title: President and Chief Executive Officer

		By:	/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
			Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
			Title: Director

SCHEDULE A
TO THE ARRANGEMENT AGREEMENT

PLAN OF ARRANGEMENT

UNDER SECTION 192 OF THE
CANADA BUSINESS CORPORATIONS ACT

ARTICLE ONE

DEFINITIONS AND INTERPRETATION

Section 1.01 Definitions

In this Plan of Arrangement, unless the context otherwise requires, the following words and terms with the initial letter or letters thereof capitalized shall have the meanings ascribed to them below:

(b)

“Arrangement” means the arrangement under Section 192 of the CBCA on the terms and subject to the conditions set out in this Plan of Arrangement, subject to any amendments or variations thereto made in accordance with Section 8.3 of the Arrangement Agreement or this Plan of Arrangement or made at the direction of the Court in the Final Order with the consent of ▇▇▇▇▇▇ and HudBay, each acting reasonably;

(c)

“Arrangement Agreement” means the arrangement agreement dated as of November 21, 2008 between HudBay and ▇▇▇▇▇▇, as amended, amended and restated or supplemented prior to the Effective Date;

(d)

“Arrangement Resolution” means the Special Resolution of the ▇▇▇▇▇▇ Shareholders approving the Arrangement and certain other matters;

(e)

“Articles of Arrangement” means the articles of ▇▇▇▇▇▇ in respect of the Arrangement, to be filed with the Director in compliance with the CBCA after the Final Order is made, which shall be in form and content satisfactory to ▇▇▇▇▇▇ and HudBay, each acting reasonably;

(f)

“business day” means any day other than a Saturday, a Sunday or a statutory or civic holiday in Toronto, Ontario;

(g)

“CBCA” means the Canada Business Corporations Act and the regulations made thereunder, as promulgated or amended from time to time;

(h)

“Certificate of Arrangement” means the certificate of arrangement to be issued by the Director pursuant to Section 192(7) of the CBCA in respect of the Articles of Arrangement;

(i)

“Consideration” shall have the meaning ascribed thereto in Section 3.01(b);

(j)

“Converted HudBay Option” shall have the meaning ascribed thereto in Section 3.01(d);

(k)

“Converted HudBay Option In-The-Money Amount” in respect of a ▇▇▇▇▇▇ Option means the amount, if any, by which the total fair market value (determined immediately after the Effective Time) of the HudBay Shares that a holder is entitled to acquire on exercise of the Converted HudBay Option at and from the Effective Time exceeds the amount payable the reunder to acquire such shares;

(l)

“Court” means the Ontario Superior Court of Justice (Commercial List);

(m)

(n)

“Director” means the Director appointed pursuant to Section 260 of the CBCA;

(o)

“Dissent Right” shall have the meaning ascribed thereto in Section 4.01;

(p)

“Dissenting Shareholder” means a registered holder of ▇▇▇▇▇▇ Shares who dissents in respect of the Arrangement in strict compliance with the Dissent Rights and who is ultimately entitled to be paid fair value for their ▇▇▇▇▇▇ Shares;

(q)

“Dissenting Shares” means ▇▇▇▇▇▇ Shares held by a Dissenting Shareholder who has demanded and perfected Dissent Rights in respect of the ▇▇▇▇▇▇ Shares in accordance with the Interim Order and who, as of the Effective Time has not effectively withdrawn or lost such Dissent Rights;

(r)

“Effective Date” means the date shown on the Certificate of Arrangement giving effect to the Arrangement;

(s)

“Effective Time” means 12:01 a.m. on the Effective Date;

(t)

“Final Order” means the final order of the Court pursuant to Section 192 of the CBCA, in a form acceptable to ▇▇▇▇▇▇ and HudBay, each acting reasonably, approving the Arrangement as such order may be amended by the Court (with the consent of both ▇▇▇▇▇▇ and HudBay, each acting reasonably) at any time prior to the Effective Date or, if appealed, then, unless such appeal is withdrawn or denied, as affirmed or as amended (provided that any such amendment is acceptable to both ▇▇▇▇▇▇ and HudBay, each acting reasonably) on appeal;

(u)

“final proscription date” shall have the meaning ascribed thereto in Section 5.05;

(v)

“Former ▇▇▇▇▇▇ Shareholders” means, at and following the Effective Time, the holders of ▇▇▇▇▇▇ Shares immediately prior to the Effective Time;

(w)

“HudBay” means HudBay Minerals Inc., a corporation continued under the CBCA;

(x)

“HudBay Shares” means the common shares in the authorized share capital of HudBay;

(y)

“Interim Order” means the interim order of the Court made pursuant to Section 192(3) of the CBCA, in a form acceptable to ▇▇▇▇▇▇ and HudBay, each acting reasonably, providing for, among other things, the calling and holding of the ▇▇▇▇▇▇ Meeting, as the same may be amended by the Court with the consent of ▇▇▇▇▇▇ and HudBay, each acting reasonably;

(z)

“▇▇▇▇▇▇” means ▇▇▇▇▇▇ Mining Corporation, a corporation incorporated under the CBCA;

(aa)

(bb)

“▇▇▇▇▇▇ Options” means the outstanding options to purchase ▇▇▇▇▇▇ Shares granted under the ▇▇▇▇▇▇ Stock Option Plan;

(cc)

“▇▇▇▇▇▇ Shareholders” means the holders of ▇▇▇▇▇▇ Shares, including the holders of SDRs;

(dd)

“▇▇▇▇▇▇ Share Exchange Ratio” means 0.3919;

(ee)

“▇▇▇▇▇▇ Shares” means the common shares in the authorized share capital of ▇▇▇▇▇▇, including the ▇▇▇▇▇▇ Shares represented by the SDRs;

(ff)

“▇▇▇▇▇▇ Stock Option Plan” means the stock option plan of ▇▇▇▇▇▇ approved by the ▇▇▇▇▇▇ Shareholders on May 15, 2003, as amended; and

(gg)

“▇▇▇▇▇▇ Stock Option In-The-Money Amount” in respect of a ▇▇▇▇▇▇ Option means the amount, if any, by which the total fair market value (determined immediately before the Effective Time) of the ▇▇▇▇▇▇ Shares that a holder is entitled to acquire on exercise of the ▇▇▇▇▇▇ Option immediately before the Effective Time exceeds the amount payable thereunder to acquire such shares;

(hh)

“Parties” means ▇▇▇▇▇▇ and HudBay, and “Party” means any of them;

(ii)

“Plan of Arrangement” means this plan of arrangement and any amendments or variations hereto made in accordance with this plan of arrangement or upon the direction of the Court in the Final Order with the consent of ▇▇▇▇▇▇ and HudBay, each acting reasonably;

(jj)

“SDRs” means the Swedish Depositary Receipts of ▇▇▇▇▇▇ listed on the OMX; and

(kk)

“Tax Act” means the Income Tax Act (Canada) and the regulations thereunder, as amended from time to time.

In addition, words and phrases used herein and defined in the CBCA and not otherwise defined herein or in the Arrangement Agreement shall have the same meaning herein as in the CBCA unless the context otherwise requires.

Section 1.02 Interpretation Not Affected by Headings

The division of this Plan of Arrangement into articles, sections, paragraphs and subparagraphs and the insertion of headings herein are for convenience of reference only and shall not affect the construction or interpretation of this Plan of Arrangement. The terms “this Plan of Arrangement”, “hereof”, “herein”, “hereto”, “hereunder” and similar expressions refer to this Plan of Arrangement and not to any particular article, section or other portion hereof and include any instrument supplementary or ancillary hereto.

Section 1.03 Number, Gender and Persons

In this Plan of Arrangement, unless the context otherwise requires, words importing the singular shall include the plural and vice versa, words importing the use of either gender shall include both genders and neuter and the word person and words importing persons shall include a natural person, firm, trust, partnership, association, corporation, joint venture or government (including any governmental agency, political subdivision or instrumentality thereof) and any other entity or group of persons of any kind or nature whatsoever.

Section 1.04 Date for any Action

If the date on which any action is required to be taken hereunder is not a business day, such action shall be required to be taken on the next succeeding day which is a business day.

Section 1.05 Statutory References

Any reference in this Plan of Arrangement to a statute includes all regulations made thereunder, all amendments to such statute or regulation in force from time to time and any statute or regulation that supplements or supersedes such statute or regulation.

Section 1.06 Currency

Unless otherwise stated, all references herein to amounts of money are expressed in lawful money of Canada.

Section 1.07 Governing Law

This Plan of Arrangement shall be governed, including as to validity, interpretation and effect, by the laws of the Province of Ontario and the laws of Canada applicable therein.

ARTICLE TWO

ARRANGEMENT AGREEMENT

Section 2.01 Arrangement Agreement

This Plan of Arrangement is made pursuant to, and is subject to the provisions of, the Arrangement Agreement, except in respect of the sequence of the steps comprising the Arrangement, which shall occur in the order set forth herein.

Section 2.02 Binding Effect

At the Effective Time, this Arrangement shall be binding on:

(a)

HudBay;

(b)

▇▇▇▇▇▇;

(c)

all registered and beneficial holders of ▇▇▇▇▇▇ Shares, including holders of SDRs; and

(d)

all registered and beneficial holders of ▇▇▇▇▇▇ Options.

ARTICLE THREE

ARRANGEMENT

Section 3.01 Arrangement

At the Effective Time, except as otherwise noted herein, the following shall occur and shall be deemed to occur sequentially, in the following order, without any further act or formality, in each case, effective at the Effective Time:

(a)

each ▇▇▇▇▇▇ Share outstanding immediately prior to the Effective Time held by a Former ▇▇▇▇▇▇ Shareholder (other than a Dissenting Shareholder or HudBay or any subsidiary of HudBay) shall be transferred by the holder thereof to HudBay and, in consideration therefor, HudBay shall issue HudBay Shares on the basis of 0.3919 of a fully paid and non-assessable HudBay Share for each ▇▇▇▇▇▇ Common Share (the “Consideration”), subject to Sections 3.03, 3.04 and Article 5 hereof; and

(b)

contemporaneous with the transaction in paragraph (b) above, each ▇▇▇▇▇▇ Option outstanding immediately prior to the Effective Time, whether or not vested, shall be exchanged for an option (a “Converted HudBay Option”) to acquire (on the same terms and conditions as were applicable to such ▇▇▇▇▇▇ Option immediately before the Effective Time under the ▇▇▇▇▇▇ Stock Option Plan and the agreement evidencing the grant except to the extent that such Converted HudBay Option will expire on the expiry date for such option), the number (rounded down to the nearest whole number) of HudBay Shares equal to the product of: (A) the number of ▇▇▇▇▇▇ Shares subject to such ▇▇▇▇▇▇ Option immediately prior to the Effective Time and (B) the ▇▇▇▇▇▇ Share Exchange Ratio. The exercise price per HudBay Share subject to any such converted HudBay Option shall be the amount (rounded up to the nearest one-hundredth of a cent) equal to the quotient of (A) the exercise price per ▇▇▇▇▇▇ Share subject to such ▇▇▇▇▇▇ Option immediately before the Effective Time divided by (B) the ▇▇▇▇▇▇ Share Exchange Ratio, provided that the exercise price otherwise determined shall be adjusted to the extent, if any, required to ensure that the Converted HudBay Option In-the-Money Amount immediately after the exchange is equal to (but in no event greater than) the ▇▇▇▇▇▇ Stock Option In-the-Money Amount of the exchanged ▇▇▇▇▇▇ Option immediately before the Effective Time.

Section 3.02 Post-Effective Time Procedures

(c)

Following the receipt of the Final Order and prior to the Effective Date, HudBay shall deliver or arrange to be delivered to the Depositary certificates representing the HudBay Shares required to be issued to Former ▇▇▇▇▇▇ Shareholders in accordance with the provisions of Section 3.01 hereof, which certificates and cash shall be held by the Depositary as agent and nominee for such Former ▇▇▇▇▇▇ Shareholders for distribution to such Former ▇▇▇▇▇▇ Shareholders in accordance with the provisions of Article 5 hereof.

(d)

Subject to the provisions of Article 5 hereof, and upon return of a properly completed letter of transmittal by a registered Former ▇▇▇▇▇▇ Shareholder together with certificates representing ▇▇▇▇▇▇ Shares and such other documents as the Depositary may require, Former ▇▇▇▇▇▇ Shareholders shall be entitled to receive delivery of the certificates representing the HudBay Shares and a cheque for the cash consideration to which they are entitled pursuant to Section 3.01(b) hereof.

Section 3.03 No Fractional HudBay Shares

No fractional HudBay Shares shall be issued to Former ▇▇▇▇▇▇ Shareholders. The number of HudBay Shares to be issued to Former ▇▇▇▇▇▇ Shareholders shall be rounded up to the nearest whole HudBay Share in the event that a Former ▇▇▇▇▇▇ Shareholder is entitled to a fractional share representing 0.5 or more of a HudBay Share and shall be rounded down to the nearest whole HudBay Share in the event that a Former ▇▇▇▇▇▇ Shareholder is entitled to a fractional share representing less than 0.5 of a HudBay Share.

ARTICLE FOUR

DISSENT RIGHTS

Section 4.01 Rights of Dissent

Pursuant to the Interim Order, registered holders of ▇▇▇▇▇▇ Shares may exercise rights of dissent (“Dissent Rights”) under Section 190 of the CBCA, as modified by this Article 4, the Interim Order and the Final Order, with respect to ▇▇▇▇▇▇ Shares in connection with the Arrangement, provided that the written notice setting forth the objection of such registered ▇▇▇▇▇▇ Shareholders to the Arrangement and exercise of Dissent Rights must be received by ▇▇▇▇▇▇ not later than 5:00 p.m. on the business day that is two (2) business days before the ▇▇▇▇▇▇ Meeting or any date to which the ▇▇▇▇▇▇ Meeting may be postponed or adjourned and provided further that holders who exercise such rights of dissent and who:

(a)

are ultimately entitled to be paid fair value for their ▇▇▇▇▇▇ Shares, which fair value, notwithstanding anything to the contrary contained in Part XV of the CBCA, shall be determined as of the close of business on the day before the Effective Date, shall be deemed to have transferred their ▇▇▇▇▇▇ Shares to ▇▇▇▇▇▇ for cancellation immediately prior to the Effective Time, and ▇▇▇▇▇▇ shall fund such payment using its own assets; and

(b)

are ultimately not entitled, for any reason, to be paid fair value for their ▇▇▇▇▇▇ Shares shall be deemed to have participated in the Arrangement, as of the Effective Time, on the same basis as a non-dissenting holder of ▇▇▇▇▇▇ Shares and shall be entitled to receive only the consideration contemplated in Section 3.01(a) hereof that such holder would have received pursuant to the Arrangement if such holder had not exercised Dissent Rights.

ARTICLE FIVE

DELIVERY OF HUDBAY SHARES

Section 5.01 Delivery of HudBay Shares

(a)

Upon surrender to the Depositary for cancellation of a certificate that immediately before the Effective Time represented one or more outstanding ▇▇▇▇▇▇ Shares that were exchanged for HudBay Shares in accordance with Section 3.01 hereof, together with such other documents and instruments as would have been required to effect the transfer of the ▇▇▇▇▇▇ Shares formerly represented by such certificate under the CBCA and the articles of ▇▇▇▇▇▇ and such additional documents and instruments as the Depositary may reasonably require, the holder of such surrendered certificate shall be entitled to receive in exchange therefor, and the Depositary shall deliver to such holder following the Effective Time, a certificate representing the HudBay Shares that such holder is entitled to receive in accordance with Section 3.01 hereof.

(b)

After the Effective Time and until surrendered for cancellation as contemplated by Section 5.01(a) hereof, each certificate that immediately prior to the Effective Time represented one or more ▇▇▇▇▇▇ Shares shall be deemed at all times to represent only the right to receive in exchange therefor a certificate representing HudBay Shares that the holder of such certificate is entitled to receive in accordance with Section 3.01 hereof.

Section 5.02 Lost Certificates

If any certificate, that immediately prior to the Effective Time represented one or more outstanding ▇▇▇▇▇▇ Shares that were exchanged for HudBay Shares in accordance with Section 3.01 hereof, shall have been lost, stolen or destroyed, upon the making of an affidavit of that fact by the holder claiming such certificate to be lost, stolen or destroyed, the Depositary shall deliver in exchange for such lost, stolen or destroyed certificate, a certificate representing HudBay Shares that such holder is entitled to receive in accordance with Section 3.01 hereof. When authorizing such delivery of a certificate representing HudBay Shares that such holder is entitled to receive in exchange for such lost, stolen or destroyed certificate, the holder to whom a certificate representing such HudBay Shares is to be delivered shall, as a condition precedent to the delivery of such HudBay Shares, give a bond satisfactory to HudBay and the Depositary in such amount as HudBay and the Depositary may direct, or otherwise indemnify HudBay and the Depositary in a manner satisfactory to HudBay and the Depositary, against any claim that may be made against HudBay or the Depositary with respect to the certificate alleged to have been lost, stolen or destroyed and shall otherwise take such actions as may be required by the articles of ▇▇▇▇▇▇.

Section 5.03 Distributions with Respect to Unsurrendered Certificates

No dividend or other distribution declared or made after the Effective Time with respect to HudBay Shares with a record date after the Effective Time shall be delivered to the holder of any unsurrendered certificate that, immediately prior to the Effective Time, represented outstanding ▇▇▇▇▇▇ Shares unless and until the holder of such certificate shall have complied with the provisions of Section 5.01 or Section 5.02 hereof. Subject to applicable Law and to Section 5.04 hereof, at the time of such compliance, there shall, in addition to the delivery of a certificate representing HudBay Shares to which such holder is thereby entitled, be delivered to such holder, without interest, the amount of the dividend or other distribution with a record date after the Effective Time theretofore paid with respect to such HudBay Shares.

Section 5.04 Withholding Rights

HudBay and the Depositary shall be entitled to deduct and withhold from all dividends or other distributions otherwise payable to any Former ▇▇▇▇▇▇ Shareholder such amounts as HudBay or the Depositary is required or permitted to deduct and withhold with respect to such payment under the Tax Act, the United States Internal Revenue Code of 1986 or any provision of any applicable federal, provincial, state, local or foreign tax Law or treaty, in each case, as amended. To the extent that amounts are so withheld, such withheld amounts shall be treated for all purposes hereof as having been paid to the Former ▇▇▇▇▇▇ Shareholder in respect of which such deduction and withholding was made, provided that such withheld amounts are actually remitted to the appropriate taxing authority.

Section 5.05 Limitation and Proscription

To the extent that a Former ▇▇▇▇▇▇ Shareholder shall not have complied with the provisions of Section 5.01 or Section 5.02 hereof on or before the date that is six (6) years after the Effective Date (the “final proscription date”), then the HudBay Shares that such Former ▇▇▇▇▇▇ Shareholder was entitled to receive shall be automatically cancelled without any repayment of capital in respect thereof and the certificates representing such HudBay Shares to which such Former ▇▇▇▇▇▇ Shareholder was entitled, shall be delivered to HudBay by the Depositary and the certificates shall be cancelled by HudBay, and the interest of the Former ▇▇▇▇▇▇ Shareholder in such HudBay Shares to which it was entitled shall be terminated as of such final proscription date.

ARTICLE SIX

AMENDMENTS

Section 6.01 Amendments to Plan of Arrangement

(a)

HudBay and ▇▇▇▇▇▇ reserve the right to amend, modify or supplement this Plan of Arrangement at any time and from time to time, provided that each such amendment, modification or supplement must be: (i) set out in writing; (ii) agreed to in writing by HudBay and ▇▇▇▇▇▇; (iii) filed with the Court and, if made following the ▇▇▇▇▇▇ Meeting, approved by the Court; and (iv) communicated to holders or former holders of ▇▇▇▇▇▇ Shares if and as required by the Court.

(b)

Any amendment, modification or supplement to this Plan of Arrangement may be proposed by ▇▇▇▇▇▇ at any time prior to the ▇▇▇▇▇▇ Meeting provided that HudBay shall have consented thereto in writing, with or without any other prior notice or communication, and, if so proposed and accepted by the persons voting at the ▇▇▇▇▇▇ Meeting (other than as may be required under the Interim Order), shall become part of this Plan of Arrangement for all purposes.

(c)

Any amendment, modification or supplement to this Plan of Arrangement that is approved by the Court following the ▇▇▇▇▇▇ Meeting shall be effective only if: (i) it is consented to in writing by each of HudBay and ▇▇▇▇▇▇; and (ii) if required by the Court, it is consented to by holders of the ▇▇▇▇▇▇ Shares voting in the manner directed by the Court.

(d)

Any amendment, modification or supplement to this Plan of Arrangement may be made following the Effective Time unilaterally by HudBay, provided that it concerns a matter that, in the reasonable opinion of HudBay, is of an administrative nature required to better give effect to the implementation of this Plan of Arrangement and is not adverse to the economic interest of any Former ▇▇▇▇▇▇ Shareholder.

(e)

This Plan of Arrangement may be withdrawn prior to the occurrence of any of the events in Section 3.01 in accordance with the terms of the Arrangement Agreement.

ARTICLE 7
FURTHER ASSURANCES

Section 7.01 Further Assurances

Notwithstanding that the transactions and events set out herein shall occur and be deemed to occur in the order set out in this Plan of Arrangement without any further act or formality, each of the parties to the Arrangement Agreement shall make, do and execute, or cause to be made, done and executed, all such further acts, deeds, agreements, transfers, assurances, instruments or documents as may reasonably be required by any of them in order further to document or evidence any of the transactions or events set out therein.

SCHEDULE B
TO THE ARRANGEMENT AGREEMENT

ARRANGEMENT RESOLUTION

BE IT RESOLVED THAT:

The arrangement (the “Arrangement”) under Section 192 of the Canada Business Corporations Act (the “CBCA”) involving ▇▇▇▇▇▇ Mining Corporation, a corporation existing under the laws of Canada (“▇▇▇▇▇▇”), all as more particularly described and set forth in the Management Proxy Circular (the “Circular”) of ▇▇▇▇▇▇ dated l, 2008, accompanying the notice of this meeting (as the Arrangement may be, or may have been, modified or amended in accordance with its terms), is hereby authorized, approved and adopted.

The plan of arrangement (the “Plan of Arrangement”), involving ▇▇▇▇▇▇ and implementing the Arrangement, the full text of which is set out in Appendix C to the Circular (as the Plan of Arrangement may be, or may have been, modified or amended in accordance with its terms), is hereby authorized, approved and adopted.

The arrangement agreement (the “Arrangement Agreement”) between ▇▇▇▇▇▇ and HudBay, dated November 21, 2008, and all the transactions contemplated therein, the actions of the directors of ▇▇▇▇▇▇ in approving the Arrangement and the actions of the directors and officers of ▇▇▇▇▇▇ in executing and delivering the Arrangement Agreement and any amendments thereto are hereby ratified and approved.

Notwithstanding that this resolution has been passed (and the Arrangement approved) by the shareholders of ▇▇▇▇▇▇ or that the Arrangement has been approved by the Ontario Superior Court of Justice, the directors of ▇▇▇▇▇▇ are hereby authorized and empowered, without further notice to, or approval of, the securityholders of ▇▇▇▇▇▇:

(a)

to amend the Arrangement Agreement or the Plan of Arrangement to the extent permitted by the Arrangement Agreement or the Plan of Arrangement; or

(b)

subject to the terms of the Arrangement Agreement, not to proceed with the Arrangement.

Any director or officer of ▇▇▇▇▇▇ is hereby authorized and directed for and on behalf of ▇▇▇▇▇▇ to execute, whether under corporate seal of ▇▇▇▇▇▇ or otherwise, and to deliver articles of arrangement and such other documents as are necessary or desirable to the Director under the CBCA in accordance with the Arrangement Agreement for filing.

Any one or more directors or officers of ▇▇▇▇▇▇ is hereby authorized, for and on behalf and in the name of ▇▇▇▇▇▇, to execute and deliver, whether under corporate seal of ▇▇▇▇▇▇ or otherwise, all such agreements, forms waivers, notices, certificate, confirmations and other documents and instruments and to do or cause to be done all such other acts and things as in the opinion of such director or officer may be necessary, desirable or useful for the purpose of giving effect to these resolutions, the Arrangement Agreement and the completion of the Plan of Arrangement in accordance with the terms of the Arrangement Agreement, including:

(a)

all actions required to be taken by or on behalf of ▇▇▇▇▇▇, and all necessary filings and obtaining the necessary approvals, consents and acceptances of appropriate regulatory authorities; and

(b)

the signing of the certificates, consents and other documents or declarations required under the Arrangement Agreement or otherwise to be entered into by ▇▇▇▇▇▇;

such determination to be conclusively evidenced by the execution and delivery of such document, agreement or instrument or the doing of any such act or thing.

SCHEDULE C
TO THE ARRANGEMENT AGREEMENT

KEY REGULATORY APPROVALS

“Competition Act Approval” means, if required, the Commissioner of Competition (the “Commissioner”) appointed under the Competition Act shall have: (a) issued an advance ruling certificate under Section 102 of the Competition Act; or (b) advised HudBay and ▇▇▇▇▇▇ in writing that the Commissioner has determined not to file an application for an order under Part VIII of the Competition Act and any terms and conditions attached to such advice shall be acceptable to HudBay and ▇▇▇▇▇▇, each acting reasonably;

SCHEDULE D
TO THE ARRANGEMENT AGREEMENT

KEY THIRD PARTY CONSENTS

Credit agreement between ▇▇▇▇▇▇ Mining Corporation and ▇▇▇▇▇▇ Mining AB (as borrowers) and The Bank of Nova Scotia; BNP Paribas (Suisse) SA; ▇▇▇▇▇▇ ▇▇, ▇▇▇▇▇▇▇ Branch; Bank of Montreal; Bank of Montreal Ireland PLC; ING Bank N.V.; Skandinavisk Enskilda ▇▇▇▇▇▇ ▇▇ (publ); ABN Amro Bank N.V., Stockholm Branch; Commonwealth Bank of Australia; and HSH Nordbank AG, Copenhagen Branch (as lenders) dated as of May 28, 2007.

First amending agreement between ▇▇▇▇▇▇ Mining Corporation and ▇▇▇▇▇▇ Mining AB (as borrowers) and The Bank of Nova Scotia; BNP Paribas (Suisse) SA; ▇▇▇▇▇▇ ▇▇, ▇▇▇▇▇▇▇ Branch; Bank of Montreal; Bank of Montreal Ireland PLC; ING Bank N.V.; Skandinavisk Enskilda ▇▇▇▇▇▇ ▇▇ (publ); ABN Amro Bank N.V., Stockholm Branch; Commonwealth Bank of Australia; HSH Nordbank AG, Copenhagen Branch; and N.M. Rothschild & Sons Limited (as lenders) dated as of May 15, 2008.

SCHEDULE E
TO THE ARRANGEMENT AGREEMENT

▇▇▇▇▇▇ SUBSIDIARIES

Subsidiary Name	Jurisdiction	% Ownership
▇▇▇▇▇▇ Mining AB	Sweden	100
Zinkgruvan Mining AB	Sweden	100
▇▇▇▇▇▇ Mining Exploration AB	Sweden	▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Natural Resources AB	Sweden	100
▇▇▇▇▇▇ Mining Ltd.	Ireland	100
▇▇▇▇▇▇ Resources Ltd.	Ireland	100
▇▇▇▇▇▇ Mining Exploration Ltd.	Ireland	100
Rio Narcea Gold Mines, Ltd.	Canada	100
Rio Narcea Corporativa, S.L.	Spain	100
Rio Narcea Recursos, S.A.	Spain	100
Rio Narcea Nickel, S.A.	Spain	100
Rio Narcea Gold Mines, S.L.	Spain	100
Rio Narcea Gold Mines, S.A.	Portugal	100
▇▇▇▇▇▇ Mining Katanga	DRC	99.99
Naraval Gold S.L.	Spain	100
Explorac. Mineras del Cantabrico, ▇.▇.	▇▇▇▇▇	▇▇
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇.▇.	▇▇▇▇▇	100
4258703 Canada Inc.	Canada	100
6565522 Canada Inc.	Canada	100
Defiance Quebec Inc.	Canada	100
Tasiast Holdings S.A.	Luxembourg	100
Geomaque de Honduras, S.A. De C.V.	Honduras	100
Rio Narcea Tasiast Luxembourg S.A.	Luxembourg	100
Rio Narcea Finance	Ireland	100
▇▇▇▇▇▇ Mining Exploration S.L. Sociedad Unipersonal	Spain	100
▇▇▇▇▇▇ Mining UK Ltd.	Great Britain	100
Galmoy Mines Ltd.	Ireland	100⁽¹⁾
▇▇▇▇▇▇ Zinc Ltd.	Ireland	100⁽²⁾
▇▇▇▇▇▇ Mining Holdings AB	▇▇▇▇▇▇	▇▇▇
▇▇▇▇▇▇▇ Enterprises Company Limited	Cyprus	100
Somincor S.A.	Portugal	100
AGC Minas de Portugal	Portugal	100
Zinc Holdings Limited	Cyprus	100
Pirites Alentejanas, S.A.	Portugal	99.86
Transminas-Operadar Portuario, LDA	Portugal	99.86⁽³⁾
South Atlantic (Bermuda) I Ltd.	Bermuda	100
Tenke Holdings Ltd.	Bermuda	100

Notes

¹ ▇▇▇▇▇▇ Mining AB and ▇▇▇▇▇▇ Mining Ltd. each own 50% of Galmoy Mines Ltd.

² ▇▇▇▇▇▇ Mining AB and ▇▇▇▇▇▇ Mining Ltd. each own 50% of ▇▇▇▇▇▇ Zinc Ltd.

³ Pirites Alentejanas, S.A. owns 100% of Transminas-Operadar Portuario, LDA

SCHEDULE F
TO THE ARRANGEMENT AGREEMENT

▇▇▇▇▇▇ SIGNIFICANT INTEREST COMPANIES AND ▇▇▇▇▇▇ INVESTMENT COMPANIES

▇▇▇▇▇▇ Significant Interest Companies

Subsidiary Name	Jurisdiction	% Ownership
▇▇▇▇▇▇▇ (Overseas) Ltd.	Cyprus	49
Ozernoe GOK OAO	Russia	49⁽¹⁾
Techprominvest OOO	Russia	49⁽²⁾
Liarova Holdings Ltd.	Cyprus	49⁽³⁾
TF Holdings Ltd.	Bermuda	30
Tenke Fungurume Mining Corp. SARL	DRC	24.75⁽⁴⁾

Notes

¹ ▇▇▇▇▇▇ Mining AB owns 49% of ▇▇▇▇▇▇▇ (Overseas) Ltd. who owns 100% of Ozernoe GOK OAO.

² ▇▇▇▇▇▇ Mining AB owns 49% of ▇▇▇▇▇▇▇ (Overseas) Ltd. who owns 100% of Techprominvest OOO.

³ ▇▇▇▇▇▇ Mining AB owns 49% of ▇▇▇▇▇▇▇ (Overseas) Ltd. who owns 100% of Liarova Holdings Ltd.

⁴ Tenke Holdings Ltd. owns 30% of TF Holdings Ltd. who owns 82.5% of Tenke Fungurume Mining Corp. SARL.

▇▇▇▇▇▇ Investment Companies

Company Name	Jurisdiction	% Ownership
Union Resources Limited	Australia	▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇	▇▇▇▇▇▇	15
Mantle Resources Inc.	Canada	9
▇▇▇▇ Resources Ltd.	Canada	10
Chariot Resources Ltd.	Canada	20

SCHEDULE G
TO THE ARRANGEMENT AGREEMENT

MATERIAL HUDBAY SUBSIDIARIES

Subsidiary Name	Jurisdiction	% Ownership
▇▇▇▇▇▇ Bay Mining and Smelting Co., Limited	Canada	100
HudBay Marketing & Sales Inc.	Canada	100
Consider Metal Marketing S.A.	Luxembourg	50
Consider Metal Marketing Inc.	Canada	▇▇▇
▇▇▇▇▇▇ ▇▇▇ Exploration and Development Company Limited	Canada	100
HudBay USA, Inc.	Michigan, USA	100
White Pine Copper Refinery Inc.	Delaware, USA	100
▇▇▇▇▇▇ Holding Corporation	Delaware, USA	▇▇▇
▇▇. ▇▇▇▇▇▇▇▇ Zinc Company LLC	Delaware, USA	100
HMI Nickel Inc.	British Columbia	100
Skye Resources (B.V.I.) Inc.	British Virgin Islands	100
Skye Resources Guatemala (B.V.I.) Inc.	British Virgin Islands	▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ JV (B.V.I.) Inc.	British Virgin Islands	100
Bocaneuva S.A.	Guatemala	100 ⁽¹⁾
Compañía Guatemalteca de Níquel, S.A.	Guatemala	98.2 ^{(1) (2)}
Inversiones Arcadia S.A.	Guatemala	100
Skye SdG1 (B.V.I.) Inc.	British Virgin Islands	100
Skye SdG2 (B.V.I.) Inc.	British Virgin Islands	▇▇▇
▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇▇, S.A.	Guatemala	100 ⁽¹⁾
Tampico, S.A.	Guatemala	100 ⁽¹⁾

Notes

¹ By law a Guatemalan corporation must have two shareholders and in the case of Skye de Guatemala S.A., Tampico S.A., Inversiones Arcadia S.A. and Bocanueva S.A., Skye has made arrangements for a second shareholder to hold one or more shares for the indicated 100% shareholder in each case.

² Skye Resources Guatemala (B.V.I.) Inc. and Skye Guatemala JV (B.V.I.) Inc. each own 49.1% of the Compañía Guatemalteca de Níquel S.A.

SCHEDULE H
TO THE ARRANGEMENT AGREEMENT

FORM OF VOTING AGREEMENT

SCHEDULE I
TO THE ARRANGEMENT AGREEMENT

FORM OF VOTING AGREEMENT
(DIRECTORS AND OFFICERS)

HUDBAY MINERALS INC. AND LUNDIN MINING CORPORATION

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