EARLY WARNING REPORT FILED PURSUANT TO PART 3 OF NATIONAL INSTRUMENT 62-103

A. The name and address of the Offeror:

HudBay Minerals Inc. (“HudBay”) Dundee Place 1 Adelaide Street East, Suite 2501 Toronto, ON M5C 2V9

B The designation and number or principal amount of securities and the offeror’s securityholding percentage in the class or securities of which the offeror acquired ownership or control in the transaction or occurrence giving rise to the obligation to file the news release, and whether it was ownership or control that was acquired in those circumstances.

On December 11, 2008, HudBay completed the previously announced purchase of 96,997,492 Common Shares of Lundin Mining Corporation (“Lundin”) from Lundin (the “Private Placement”), representing approximately 19.9% of Lundin’s outstanding Common Shares.

C. The designation and number or principal amount of securities and the offeror’s securityholding percentage in the class of securities immediately after the transaction or occurrence giving rise to the obligation to file the news release.

HudBay owns 96,997,492 Common Shares of Lundin, representing approximately 19.9% of Lundin’s outstanding Common Shares.

D. The designation and number of principal amount of securities and the percentage of outstanding securities of the class of securities referred to in paragraph (c) over which:

(i) the offeror, either alone or together with any joint actors, has ownership and control:

Not applicable.

(ii) the offeror, either alone or together with any joint actors, has ownership but control is held by other persons or companies other than the offeror or any joint actor:

Not applicable.

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(iii) the offeror, either alone or together with any joint actors, has exclusive or shared control but does not have ownership:

Not applicable.

E. The name of the market in which the transaction or occurrence that gave rise to the news release took place:

Not applicable.

F. The purpose of the offeror and any joint actors in effecting the transaction or occurrence that gave rise to the news release, including any future intention to acquire ownership of, or control over, additional securities of the reporting issuer:

If the proposed plan of arrangement between HudBay and Lundin (the “Plan of Arrangement”) announced on November 21, 2008 is approved by the shareholders of Lundin and, if all regulatory and Court approvals are obtained, HudBay will acquire 100% of Lundin’s issued and outstanding shares.

G. The general nature and the material terms of any agreement, other than lending arrangements, with respect to securities of the reporting issuer entered into by the offeror, or any joint actor, and the issuer of the securities or any other entity in connection with the transaction or occurrence giving rise to the news release, including agreements with respect to the acquisition, holding, disposition or voting of any of the securities:

Completion of the Private Placement was not conditional upon the completion of the Plan of Arrangement.

H. The names of any joint actors in connection with the disclosure required by this Form:

Not applicable.

I. In the case of a transaction or occurrence that did not take place on a stock exchange or other market that represents a published market for the securities, including an issuance from treasury, the nature and value of the consideration paid by the offeror:

The Common Shares of Lundin were acquired on a private placement basis from Lundin at a price of $1.40 per share for a total cash subscription price of $135,796,488.80.

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J. If applicable, a description of any change in any material fact set out in a previous report by the offeror under the early warning requirements or Part 4 of National Instrument 62-103 in respect of the reporting issuer’s securities:

See B above.

Dated this 15th day of December, 2008.

HUDBAY MINERALS INC.

By: “H. Maura Lendon”

H. Maura Lendon Vice-President and General Counsel

Regards

Hg