Hudbay Minerals Inc. (“Hudbay” or the “company”)
(TSX, NYSE:HBM) today released its second quarter 2023
financial results. All amounts are in U.S. dollars, unless
otherwise noted.
Positioned for Strong Production Growth and Free Cash
Flow Generation in the Second Half of 2023
- Reaffirmed full year 2023 consolidated production, cash cost
and sustaining cash cost guidance for Hudbay’s Peru and Manitoba
operations.
- On June 20, 2023, Hudbay completed the acquisition of Copper
Mountain Mining Corporation (“Copper Mountain”), creating a
150,000-tonnes-per-year copper producer with three long-life mines
in tier-one jurisdictions and a world-class pipeline of organic
copper growth projects.
- Copper Mountain owns 75% of the Copper Mountain mine in British
Columbia (the “Copper Mountain Mine Joint Venture”), with
Mitsubishi Materials Corporation (“MMC”) holding the remaining
non-controlling interest.
- Hudbay expects to release an updated technical report for the
Copper Mountain mine in the fourth quarter, which will include
updated annual production and cost estimates for the mine.
- Achieved higher grades from Pampacancha in July with 1.6
million tonnes of ore mined at 0.63% copper and 0.31 grams per
tonne gold, consistent with the mine plan and company expectations
for higher production in Peru in the third and fourth quarters of
2023.
Second Quarter Operating and Financial
Results
- Consolidated production in the second quarter was 21,715 tonnes
of copper and 48,996 ounces of gold, which includes production from
the Copper Mountain mine during the 10-day stub period following
the June 20, 2023 acquisition date.
- Consolidated cash cost and sustaining cash cost per pound of
copper produced, net of by-product creditsi, in the second quarter,
were $1.60 and $2.73, respectively, excluding Copper
Mountain’s costs during the 10-day stub period.
- Peru operations successfully managed through a transitional
quarter with elevated stripping activities at Pampacancha completed
in June to enable mining high grade portions of the orebody in the
second half of 2023. The Peru operations maintained steady
performance, producing 17,682 tonnes of copper in the second
quarter, which was in line with mine plan expectations. Peru cash
cost per pound of copper produced, net of by-product creditsi, in
the second quarter was $2.14, in line with quarterly cadence
expectations as Pampacancha is expected to deliver higher copper
production and precious metal by-product credits in the second half
of 2023.
- Manitoba operations produced 35,253 ounces of gold, which was
impacted by lower throughput at the Stall mill due to downtime to
complete the Stall mill Phase I recovery improvement project
tie-ins which resulted in a buildup of surface ore stockpiles at
the end of the second quarter. Lalor achieved an 11% increase in
ore mined versus the first quarter as the company continues to
implement improvements to reduce costs and target higher production
levels. Manitoba cash cost per ounce of gold produced, net of
by-product creditsi, was $1,097 and is expected to decline to be
within the annual guidance range due to higher throughput, gold
recoveries and gold grades expected in the second half of
2023.
- Second quarter net loss and loss per share were $14.9 million
and $0.05, respectively. After adjusting for $6.8 million of
transaction costs incurred during the quarter associated with the
acquisition of Copper Mountain and a non-cash gain of $4.7 million
related to a quarterly revaluation of the company’s closed site
environmental reclamation provision, among other items, second
quarter adjusted lossi per share was $0.07.
- Operating cash flow before change in non-cash working capital
was $55.9 million and adjusted EBITDAi was $81.2 million in the
second quarter.
- Cash and cash equivalents declined during the second quarter to
$179.7 million and were negatively impacted by lower base metal
prices and lower production volumes as a result of scheduled mill
maintenance programs, elevated stripping activity in Peru and a
buildup of ore stockpiles in Manitoba. Cash and cash equivalents
were also impacted by $25.8 million in total transaction costs
related to the acquisition of Copper Mountain, $65.9 million of
capital investments, primarily related to sustaining capital
investments, and a $31.9 million bond interest payment.
Executing on Growth Initiatives and
Prudent Financial Planning
- Copper Mountain integration activities are progressing in line
with expectations with over 50% of the targeted annualized
corporate and tax synergies already achieved to date. The company
is focused on advancing its plans to stabilize the operation over
the next 12 months, to be further detailed in a technical report,
which will include an updated mine plan and mineral reserve and
resource estimates, expected to be released in the fourth
quarter.
- Copper World pre-feasibility study for Phase I is well-advanced
and expected to be released in the third quarter.
- Snow Lake drilling intersected new high-grade
copper-gold-silver zone 500 metres northwest of Lalor and indicates
the hosting mineralization at Lalor continues down plunge for at
least two kilometres.
- Completed the acquisition of the Cook Lake properties in Snow
Lake, providing the potential for a new discovery on claims
untested by modern geophysics and where historical drilling
intersected base metal and gold mineralization at a fraction of
Lalor’s current known depth.
- Announced the entry into a definitive agreement to acquire all
the issued and outstanding common shares of Rockcliff Metals Corp.
(“Rockcliff”), which is expected to increase Hudbay’s land position
within trucking distance of its Snow Lake processing facilities by
more than 250%. The transaction is expected to close in the third
quarter.
- On July 6, 2023, established framework for a multi-year
exploration partnership with Marubeni Corporation focused on the
discovery of new deposits within trucking distance of Hudbay’s
processing facilities in Flin Flon, Manitoba.
- First phase of the Stall recovery improvement project was
completed during the second quarter with commissioning completed in
May and ramp-up to higher metal recoveries expected in the second
half of 2023.
- In connection with the Copper Mountain transaction, Hudbay
amended its Revolving Credit Facilities ("RCFs") to (i) exclude the
Copper Mountain group from the financial covenant calculations in
the RCFs until the Copper Mountain Nordic bonds are repaid in full
and (ii) increase the net debt to EBITDA covenant ratio to provide
greater financial flexibility during the integration period.
- Subsequent to quarter end, Hudbay drew $90 million from its
RCFs to finance the redemption of a portion of Copper Mountain’s
Nordic bonds, thus improving the company’s ability to deleverage
and repay debt sooner than the bond maturity.
- On track to deliver annual discretionary spending reduction
targets for 2023 with lower growth capital and exploration
expenditures compared to 2022. As a result of a continued focus on
discretionary spending reductions, total capital expenditures for
2023 are expected to be approximately $15 million lower than
guidance levels, representing 5% of total capital expenditure
guidance.
“We remain on track to meet our 2023 guidance as
we completed many transitional activities in the second quarter
that position us for stronger production and improved costs during
the second half of 2023,” said Peter Kukielski, President and Chief
Executive Officer. “The higher grades we are currently mining at
Pampacancha, the planned improved throughput and recoveries in Snow
Lake and the recent completion of the Copper Mountain acquisition
are expected to generate strong free cash flows starting in the
third quarter of 2023. With Copper Mountain we have a larger and
more resilient operating platform to deliver diversified cash flows
to prudently advance our leading organic pipeline of brownfield
expansion and greenfield exploration and development opportunities
across our portfolio.”
Summary of Second Quarter
Results
Consolidated copper production in the second
quarter of 2023 was 21,715 tonnes, a decrease of 4% compared to the
first quarter of 2023 as the company completed the higher volume
stripping program at Pampacancha in June and a scheduled mill
maintenance program at Constancia, partially offset by a 10-day
stub period of production from the newly acquired Copper Mountain
mine (the “Copper Mountain Stub Period”). Consolidated gold
production in the quarter was 48,996 ounces, a 4% increase over the
prior quarter, primarily due to slightly higher gold grades and
higher gold recoveries in Peru. Consolidated silver production in
the second quarter was 612,310 ounces, a decrease of 13% compared
to the first quarter primarily due to lower silver grades in Peru.
Consolidated zinc production in the second quarter was 8,758
tonnes, a decline of 11% compared to the first quarter due to lower
throughput and zinc head grades at Stall.
Consolidated cash cost per pound of copper
produced, net of by-product creditsi, in the second quarter of 2023
was $1.60, compared to $0.85 in the first quarter of 2023. This
increase was mainly the result of higher mining, milling and
treatment and refining costs and lower copper production.
Consolidated cash cost for the first six months of 2023 was above
2023 guidance ranges but remained in line with quarterly cadence
expectations, and the company expects consolidated cash cost to
decline in the second half of 2023 to be within the full year
guidance range. Consolidated sustaining cash cost per pound of
copper produced, net of by-product creditsi, was $2.73 in the
second quarter of 2023 compared to $1.83 in the first quarter.
Consolidated all-in sustaining cash cost per pound of copper
produced, net of by-product creditsi, was $2.98 in the second
quarter of 2023, higher than $2.07 in the first quarter, primarily
due to the same reasons outlined above. Consolidated cash cost
and sustaining cash cost for the second quarter and year-to-date
exclude Copper Mountain's operations, as no revenues or
corresponding cost of sales were recorded during the Copper
Mountain Stub Period.
Cash generated from operating activities in the
second quarter of 2023 decreased to $24.6 million compared to $71.3
million in the first quarter primarily due to higher operating
costs in Peru associated with the scheduled mill maintenance
program and higher planned stripping activities at Pampacancha.
Operating cash flow before changes in non-cash working capital was
$55.9 million during the second quarter of 2023, lower than the
first quarter, due to the same reasons noted above.
Net loss and loss per share in the second
quarter of 2023 were $14.9 million and $0.05, respectively,
compared to net earnings and earnings per share of $5.5 million and
$0.02, respectively, in the first quarter. The results were
negatively impacted by $6.8 million of transaction costs associated
with the acquisition of Copper Mountain and a $1.4 million foreign
exchange loss. This was partially offset by a non-cash gain of $4.7
million related to the quarterly revaluation of the environmental
reclamation provision at the company’s closed sites and a $1.1
million revaluation gain related to the gold prepayment
liability.
Adjusted net lossi and adjusted net loss per
sharei in the second quarter of 2023 were $18.3 million and $0.07
per share, respectively, after adjusting for $6.8 million of
transaction costs associated with the acquisition of Copper
Mountain and the non-cash revaluation gain of the environmental
reclamation provision, among other items. Second quarter adjusted
EBITDAi was $81.2 million, compared to $101.9 million in the first
quarter of 2023, as higher operating costs in Peru associated with
the scheduled mill maintenance program more than offset higher
revenue from an increase in sales volumes.
On June 20, 2023, Hudbay successfully completed
its previously announced acquisition of Copper Mountain (the
“Copper Mountain Transaction”). Copper Mountain’s first shipment of
copper concentrate following the acquisition occurred on July 23,
2023 after a brief strike action at the Port of Vancouver earlier
in July. As such, Hudbay’s second quarter results were not
materially affected by Copper Mountain’s operations with no
revenues or corresponding cost of sales recorded during the Copper
Mountain Stub Period. Combined acquisition-related costs incurred
were $25.8 million, of which $6.8 million related to Hudbay’s legal
and advisory fees that were expensed during the second quarter,
while the remaining costs were incurred by Copper Mountain prior to
completion of the acquisition.
As at June 30, 2023, liquidity included $179.7
million in cash and cash equivalents as well as undrawn
availability of $184.1 million under the company’s RCFs. Subsequent
to quarter end, Hudbay drew $90 million from its RCFs to finance
the redemption of $83.3 million of Copper Mountain’s bonds, thereby
reducing the aggregate amount of Copper Mountain bonds outstanding
to $59.7 million and improving the company’s ability to deleverage
and repay debt sooner than the 2026 bond maturity. Based on
expected free cash flow generation in the second half of 2023,
Hudbay continues to expect to make progress on its deleveraging
targets as outlined in its “3-P” plan for sanctioning Copper World.
Current liquidity combined with cash flow from operations is
expected to be sufficient to meet liquidity needs for the
foreseeable future.
Consolidated Financial Condition ($000s)3 |
|
Jun. 30, 2023 |
Mar. 31, 2023 |
Dec. 31, 2022 |
Cash |
|
179,734 |
|
255,563 |
225,665 |
Total long-term debt |
|
1,370,682 |
|
1,225,023 |
1,184,162 |
Net debt1 |
|
1,190,948 |
|
969,460 |
958,497 |
Working capital2 |
|
(61,357) |
|
100,987 |
76,534 |
Total assets |
|
5,242,140 |
|
4,367,982 |
4,325,943 |
Equity |
|
2,001,970 |
|
1,574,521 |
1,571,809 |
1 Net debt is a non-IFRS financial performance measure with no
standardized definition under IFRS. For further information, please
see the “Non-IFRS Financial Performance Measures” section of this
news release.2 Working capital is determined as total current
assets less total current liabilities as defined under IFRS and
disclosed on the consolidated interim financial statements. Working
capital reflects the full $145 million balance of Copper Mountain
Nordic bonds as current, however, subsequent to quarter end, the
company drew $90 million from its revolving credit facilities to
finance the redemption of a portion of Copper Mountain’s Nordic
bonds. As of the date hereof, the remaining Copper Mountain Nordic
bonds will be presented as long-term as well as the $90 million
revolver draw.3 Following completion of the Copper Mountain
acquisition on June 20, 2023, the company’s financial condition has
been impacted by the inclusion of Copper Mountain as at June 30,
2023 and accordingly there is no comparable period information.
Consolidated Financial Performance2 |
|
Three Months Ended |
|
|
Jun. 30, 2023 |
Mar. 31, 2023 |
Jun. 30, 2022 |
Revenue |
$000s |
312,166 |
|
295,219 |
415,454 |
Cost of sales |
$000s |
289,273 |
|
228,706 |
325,940 |
Earnings (loss) before tax |
$000s |
(30,731) |
|
17,430 |
21,504 |
Earnings (loss) |
$000s |
(14,932) |
|
5,457 |
32,143 |
Basic and diluted earnings (loss) per share |
$/share |
(0.05) |
|
0.02 |
0.12 |
Adjusted earnings (loss) per share1 |
$/share |
(0.07) |
|
0.00 |
0.12 |
Operating cash flow before change in non-cash working capital |
$ millions |
55.9 |
|
85.6 |
123.9 |
Adjusted EBITDA1 |
$ millions |
81.2 |
|
101.9 |
141.4 |
1 Adjusted (loss)
earnings per share and adjusted EBITDA are non-IFRS financial
performance measures with no standardized definition under IFRS.
For further information, please see the “Non-IFRS Financial
Performance Measures” section. |
2 Following
completion of the Copper Mountain acquisition on June 20, 2023, the
company’s financial performance has not been materially affected by
Copper Mountain's operations with no revenues or corresponding cost
of sales recorded during the Copper Mountain Stub Period of
2023. |
Consolidated Production and Cost Performance |
Three Months Ended |
|
|
Jun. 30, 2023 |
Mar. 31, 2023 |
Jun. 30, 2022 |
Contained metal in concentrate and doré
produced1 |
|
|
|
Copper |
tonnes |
21,715 |
22,562 |
25,668 |
Gold |
ounces |
48,996 |
47,240 |
58,645 |
Silver |
ounces |
612,310 |
702,809 |
864,853 |
Zinc |
tonnes |
8,758 |
9,846 |
17,053 |
Molybdenum |
tonnes |
414 |
289 |
390 |
Payable metal sold |
|
|
|
|
Copper |
tonnes |
23,078 |
18,541 |
23,650 |
Gold2 |
ounces |
47,533 |
49,720 |
50,884 |
Silver2 |
ounces |
805,448 |
541,884 |
738,171 |
Zinc3 |
tonnes |
8,641 |
5,628 |
20,793 |
Molybdenum |
tonnes |
314 |
254 |
208 |
Consolidated cash cost per pound of copper
produced4 |
|
|
|
Cash cost |
$/lb |
1.60 |
0.85 |
0.65 |
Sustaining cash cost |
$/lb |
2.73 |
1.83 |
1.87 |
All-in sustaining cash cost |
$/lb |
2.98 |
2.07 |
1.93 |
1 Metal reported in concentrate is prior to deductions
associated with smelter contract terms. Consolidated production
includes production results from Copper Mountain for the Copper
Mountain Stub Period.2 Includes total payable gold and silver in
concentrate and in doré sold.3 For the three months ended June 30,
2023 and the three months ended March 31, 2023 this metric includes
payable zinc in concentrate sold. For the three months ended June
30, 2022, this metric also includes payable refined zinc metal
sold.4 Consolidated cash cost, sustaining cash cost and all-in
sustaining cash cost per pound of copper produced, net of
by-product credits, does not include Copper Mountain production or
costs for the Copper Mountain Stub Period at the end of the second
quarter of 2023, nor the comparative periods. Cash cost, sustaining
cash cost and all-in sustaining cash cost per pound of copper
produced, net of by-product credits, gold cash cost, sustaining
cash cost per ounce of gold produced, net of by-product credits,
are non-IFRS financial performance measures with no standardized
definition under IFRS. For further information, please see the
“Non-IFRS Financial Performance Measures” section of this news
release.
Peru Operations Review
Peru Operations |
Three Months Ended |
|
|
Jun. 30, 2023 |
Mar. 31, 2023 |
Jun. 30, 2022 |
Constancia ore mined1 |
tonnes |
3,647,399 |
3,403,181 |
7,017,114 |
Copper |
% |
0.31 |
0.34 |
0.33 |
Gold |
g/tonne |
0.04 |
0.04 |
0.04 |
Silver |
g/tonne |
2.49 |
2.52 |
3.53 |
Molybdenum |
% |
0.01 |
0.01 |
0.01 |
Pampacancha ore mined |
tonnes |
2,408,495 |
897,295 |
1,211,387 |
Copper |
% |
0.36 |
0.49 |
0.29 |
Gold |
g/tonne |
0.34 |
0.52 |
0.28 |
Silver |
g/tonne |
2.81 |
5.12 |
4.25 |
Molybdenum |
% |
0.02 |
0.01 |
0.01 |
Total ore mined |
tonnes |
6,055,894 |
4,300,476 |
8,228,501 |
Strip ratio2 |
|
1.74 |
1.84 |
1.22 |
Ore milled |
tonnes |
7,223,048 |
7,663,728 |
7,770,706 |
Copper |
% |
0.31 |
0.33 |
0.32 |
Gold |
g/tonne |
0.09 |
0.08 |
0.09 |
Silver |
g/tonne |
2.78 |
3.69 |
3.64 |
Molybdenum |
% |
0.01 |
0.01 |
0.01 |
Copper recovery |
% |
80.0 |
81.7 |
85.0 |
Gold recovery |
% |
61.1 |
56.8 |
60.3 |
Silver recovery |
% |
65.1 |
60.7 |
64.2 |
Molybdenum recovery |
% |
40.5 |
34.8 |
38.8 |
Contained metal in concentrate |
|
|
|
Copper |
tonnes |
17,682 |
20,517 |
20,880 |
Gold |
ounces |
12,998 |
11,206 |
13,858 |
Silver |
ounces |
419,642 |
552,167 |
584,228 |
Molybdenum |
tonnes |
414 |
289 |
390 |
Payable metal sold |
|
|
|
Copper |
tonnes |
21,207 |
16,316 |
18,473 |
Gold |
ounces |
14,524 |
11,781 |
8,430 |
Silver |
ounces |
671,532 |
392,207 |
484,946 |
Molybdenum |
tonnes |
314 |
254 |
208 |
Combined unit operating cost3,4,5 |
$/tonne |
14.07 |
11.47 |
12.02 |
Cash cost5 |
$/lb |
2.14 |
1.36 |
1.82 |
Sustaining cash cost5 |
$/lb |
3.06 |
2.12 |
2.62 |
1 Reported tonnes and grade for ore mined are estimates based on
mine plan assumptions and may not reconcile fully to ore milled.2
Strip ratio is calculated as waste mined divided by ore mined.3
Reflects combined mine, mill and general and administrative
(“G&A”) costs per tonne of ore milled. Reflects the deduction
of expected capitalized stripping costs.4 Excludes approximately
$1.3 million, or $0.16 per tonne, COVID-related costs during the
three months ended June 30, 2022.5 Combined unit operating cost,
cash cost and sustaining cash cost per pound of copper produced,
net of by-product credits, are non-IFRS financial performance
measures with no standardized definition under IFRS. For further
information, please see the “Non-IFRS Financial Performance
Measures” section of this news release.
During the second quarter of 2023, the
Constancia operations produced 17,682 tonnes of copper, 12,998
ounces of gold, 419,642 ounces of silver and 414 tonnes of
molybdenum. With the period of higher planned stripping activities
in the Pampacancha pit completed in June and ore mined from
Pampacancha in July totaling 1.6 million tonnes at 0.63% copper and
0.31 grams per tonne gold, the company is well on track to achieve
the higher expected production in the second half of the year, in
line with the full year 2023 Peru production guidance.
Total ore mined in the second quarter of 2023
increased by 41% compared to the first quarter as mining activities
returned to normal after the company reduced mining activities in
the first quarter to conserve fuel during the period of logistical
constraints caused by civil unrest earlier this year.
Ore milled during the second quarter of 2023 was
6% lower than the prior quarter primarily due to a schedule plant
maintenance shutdown in the second quarter without a corresponding
shutdown in the first quarter. Milled copper grades were slightly
lower than the first quarter due to the continued processing of
lower-grade ore from stockpiles as the company completed a period
of higher planned stripping activities in the Pampacancha pit in
June. Recoveries of copper during the second quarter of 2023
remained at low levels, as expected, due to higher levels of
impurities in stockpiled ore. Recoveries for gold and silver were
8% and 7% higher, respectively, than the first quarter due to
higher gold grades and lower zinc content impurities in ore
processed.
Combined mine, mill and G&A unit operating
costs in the second quarter of 2023 were 23% higher than the first
quarter primarily due to higher costs related to the scheduled
plant shutdown and lower milled ore throughput during the
quarter.
Peru’s cash cost per pound of copper produced,
net of by-product creditsi, in the second quarter of 2023 was
$2.14, higher than the first quarter primarily due to higher
mining, milling and treatment and refining charges and lower copper
production. This cost measure remains above the upper end of the
2023 guidance range. However, it is expected to decline
meaningfully in the second half of 2023 and the full year cash cost
is expected to remain within the 2023 guidance range with higher
expected copper production and contributions from precious metal
by-product credits from Pampacancha later this year.
Peru’s sustaining cash cost per pound of copper
produced, net of by-product creditsi, in the second quarter of 2023
was $3.06, higher than the first quarter due to the same factors
affecting cash cost noted above.
Manitoba Operations Review
Manitoba Operations |
|
Three Months Ended |
|
|
Jun. 30, 2023 |
Mar. 31, 2023 |
Jun. 30, 20221 |
Lalor |
|
|
|
|
Ore mined |
tonnes |
413,255 |
373,599 |
412,653 |
Gold |
g/tonne |
4.07 |
3.96 |
3.73 |
Copper |
% |
0.81 |
0.57 |
0.70 |
Zinc |
% |
3.14 |
3.32 |
3.06 |
Silver |
g/tonne |
23.27 |
18.24 |
23.95 |
New Britannia |
|
|
|
|
Ore milled |
tonnes |
141,905 |
143,042 |
144,589 |
Gold |
g/tonne |
5.82 |
6.05 |
5.69 |
Copper |
% |
0.77 |
0.61 |
0.73 |
Zinc |
% |
0.85 |
0.76 |
0.94 |
Silver |
g/tonne |
25.79 |
22.39 |
19.77 |
Gold recovery - concentrate |
% |
55.0 |
62.0 |
62.7 |
Copper recovery - concentrate |
% |
91.2 |
91.7 |
92.4 |
Silver recovery - concentrate |
% |
57.0 |
61.9 |
62.9 |
Stall Concentrator |
|
|
|
Ore milled |
tonnes |
238,633 |
242,619 |
261,417 |
Gold |
g/tonne |
3.12 |
2.78 |
2.95 |
Copper |
% |
0.85 |
0.59 |
0.73 |
Zinc |
% |
4.47 |
4.81 |
4.45 |
Silver |
g/tonne |
22.15 |
17.14 |
26.31 |
Gold recovery |
% |
59.9 |
61.9 |
54.6 |
Copper recovery |
% |
88.5 |
87.0 |
88.0 |
Zinc recovery |
% |
82.2 |
84.4 |
84.3 |
Silver recovery |
% |
60.3 |
56.3 |
56.1 |
Total contained metal in concentrate
anddoré2 |
|
|
Gold |
ounces |
35,253 |
36,034 |
44,787 |
Copper |
tonnes |
2,794 |
2,045 |
4,788 |
Zinc |
tonnes |
8,758 |
9,846 |
17,053 |
Silver |
ounces |
180,750 |
150,642 |
280,625 |
Total payable metal sold |
|
|
|
Gold3 |
ounces |
33,009 |
37,939 |
42,454 |
Copper |
tonnes |
1,871 |
2,225 |
5,177 |
Zinc |
tonnes |
8,641 |
5,628 |
20,793 |
Silver3 |
ounces |
133,916 |
149,677 |
253,225 |
Combined unit operating cost4,5 |
C$/tonne |
220 |
216 |
168 |
Gold cash cost5 |
$/oz |
1,097 |
938 |
(207) |
Gold sustaining cash cost5 |
$/oz |
1,521 |
1,336 |
519 |
1 The 777 mine and Flin Flon concentrator information for June
30, 2022 is not disclosed in the table above. The operations were
closed in June 2022. The relevant comparative information can be
found in the Summary of Historical Results section in the
Management’s Discussion and Analysis for the second quarter of
2023. Total contained metal in concentrate and doré, total payable
metal sold, unit cost and cash costs for June 30, 2022 include the
impact of the Flin Flon operations.2 Doré includes sludge, slag and
carbon fines in three months ended June 30, 2023 and March 31,
2023.3 Includes total payable precious metals in concentrate and
doré sold.4 Reflects combined mine, mill and G&A costs per
tonne of ore milled. 5 Combined unit operating cost, cash cost and
sustaining cash cost per ounce of gold produced, net of by-product
credits, are non-IFRS financial performance measures with no
standardized definition under IFRS. For further information, please
see the “Non-IFRS Financial Performance Measures” section of this
news release.
During the second quarter of 2023, the Manitoba
operations produced 35,253 ounces of gold, 8,758 tonnes of zinc,
2,794 tonnes of copper and 180,750 ounces of silver. Production of
copper and silver was higher than the first quarter due to higher
grades and recoveries. Production of gold and zinc was lower than
the first quarter due to lower recoveries and lower zinc grades,
partially offset by higher gold grades. With the completion of a
number of key initiatives aimed to continue to support higher
production levels at Lalor, improved metal recoveries at the mills
and a prioritization of mining higher gold grade zones at Lalor in
the second half of 2023, as planned, full year Manitoba production
of all metals remains on track to achieve guidance ranges. However,
with a slower ramp-up of gold recoveries associated with the Stall
Phase I recovery improvement project in the second quarter, gold
production is trending towards the lower end of the 2023 guidance
range for Manitoba, while copper and zinc production is trending
towards the upper end of the guidance ranges.
The Manitoba team continues to advance several
key initiatives to support higher production levels and improved
metal recoveries at the Snow Lake operations. Significant progress
has been made at Lalor in optimizing development drift size,
improving shaft availability and implementing changes to achieve
better stope muck fragmentation, which enabled the elimination of
inefficient trucking of ore to surface via the ramp late in the
second quarter. The first phase of the Stall mill recovery
improvement project, consisting of new cyclone packs,
state-of-the-art Jameson Cells on the copper and zinc circuits and
process control improvements, was completed during the second
quarter. Commissioning of the circuits quickly achieved targeted
copper and zinc concentrate grades, while gold recovery
improvements progressed slower than planned. Changes to optimize
the circuit are underway and the company expects to achieve higher
gold recoveries in the second half of 2023. Hudbay also implemented
tailings deposition improvements that are expected to maximize the
Anderson facility tailings capacity and defer incremental dam
construction activities to future years.
Hudbay successfully completed planned
maintenance of the muck circuit, rock breaker boom change out and
repairs and electrical installations at Lalor during the second
quarter. Despite this planned maintenance program, ore mined from
Lalor increased by 11% in the second quarter compared to the first
quarter, averaging over 4,500 tonnes per day. Lalor continues to
implement improvements to reduce costs and target higher production
levels with a focus on equipment fleet availability and building of
longhole inventory. Gold, copper and silver grades mined during the
second quarter of 2023 were 3%, 42% and 28% higher, respectively,
than the first quarter, while zinc grades were 5% lower than the
first quarter, consistent with the mine plan.
The Stall mill processed similar levels of ore
compared to the first quarter of 2023, in line with expectations,
due to completion of the Phase I recovery improvement project
during the quarter and the commissioning of new Jameson cells
requiring associated tie-ins of piping, pump boxes and electrical
instrumentation, as noted above. As a result of the temporary
interruptions introduced by the project tie-ins, there was a
buildup of approximately 30,000 tonnes of base metal ore stockpiles
above normal levels at the end of second quarter that will be
milled during the second half of 2023.
The New Britannia mill continued to achieve
consistent production in the second quarter of 2023, averaging
approximately 1,560 tonnes per day. Hudbay continues to advance
improvement initiatives at New Britannia requiring minimal capital
outlays with a focus on reducing reagent and grinding media
consumption while further improving overall metal recoveries and
copper concentrate grades. There was a buildup of approximately
15,000 tonnes of gold ore stockpiles above normal levels at the end
of the second quarter, which will be milled during the second half
of 2023.
Combined mine, mill and G&A unit operating
costs in the second quarter of 2023 slightly increased compared to
the first quarter reflecting slightly lower mill throughput due, in
part, to the 45,000 tonnes of additional ore stockpiled above
normal operating levels at the end of the second quarter.
Manitoba’s cash cost per ounce of gold produced,
net of by-product creditsi, in the second quarter was $1,097,
higher than the first quarter of 2023, primarily due to higher
mining costs, higher treatment and refining charges and lower gold
production, partially offset by lower G&A. Gold cash cost is
expected to decline in the second half of 2023 and the full year
cash cost is expected to remain within the 2023 guidance range.
Sustaining cash cost per ounce of gold produced,
net of by-product creditsi, in the second quarter was $1,521,
higher than the first quarter due to the same factors affecting
cash cost noted above.
Completion of the Copper Mountain
Acquisition
On June 20, 2023, Hudbay successfully completed
its previously announced acquisition of Copper Mountain, pursuant
to which Hudbay has acquired all of the issued and outstanding
common shares of Copper Mountain. As a result of the completion of
the Copper Mountain Transaction, Copper Mountain became a
wholly-owned subsidiary of Hudbay and Hudbay became the indirect
owner of 75% of the Copper Mountain Mine Joint Venture. In
aggregate, Hudbay issued 84,165,617 Hudbay common shares under the
Copper Mountain Transaction to former Copper Mountain shareholders
as consideration for their Copper Mountain shares. The Copper
Mountain shares were de-listed from the TSX on June 21, 2023 and an
application has been submitted with the applicable Canadian
securities commissions for Copper Mountain to cease to be a
reporting issuer under Canadian securities laws. In connection with
the closing, Hudbay appointed Jeane Hull and Paula Rogers, former
directors of Copper Mountain, to the board of Hudbay.
The Copper Mountain Transaction creates a
premier Americas-focused copper mining company that is
well-positioned to deliver sustainable cash flows from an operating
portfolio of three long-life mines, as well as compelling organic
growth from a world-class pipeline of copper mine expansion and
development projects. All assets in the combined portfolio are
located in the tier-one mining-friendly jurisdictions of Canada,
Peru and the United States. The combined company represents the
third largest copper producer in Canada based on 2023 estimated
copper production.
Integrating the Copper Mountain
Mine
Copper Mountain integration activities are
progressing in line with expectations and over 50% of the targeted
annualized corporate and tax synergies have already been achieved
to date. The company is focused on advancing its plans to stabilize
the operation over the next 12 months, including opening up the
mine by adding additional mining faces and re-mobilizing idle haul
trucks, optimizing the ore feed to the plant and implementing plant
improvement initiatives. Further details on Hudbay’s plans will be
provided in a technical report, including an updated mine plan,
revised mineral reserve and resource estimates, and updated annual
production and cost estimates for the Copper Mountain mine, which
is expected to be released in the fourth quarter.
During the Copper Mountain Stub Period, the
Copper Mountain mine produced 1,239 tonnes of copper, 745 ounces of
gold and 11,918 ounces of silver. The first copper concentrate
shipment following the acquisition date was completed on July 23,
2023 after a brief strike at the Port of Vancouver earlier in
July.
As an additional prudent measure to ensure free
cash flow generation in the second half of 2023 as Hudbay
stabilizes the Copper Mountain operations, subsequent to
quarter-end, the Copper Mountain Mine Joint Venture entered into
forward sales contracts for a total of 2,000 tonnes of copper
production over the five-month period from August to December 2023
at an average price of $3.86 per pound.
Copper World Permitting and
Pre-Feasibility Study Well-Advanced
In late 2022, Hudbay submitted the state-level
applications for an Aquifer Protection Permit and an Air Quality
Permit to the Arizona Department of Environmental Quality. The
company expects to receive these two outstanding state permits by
early 2024.
In May 2023, Hudbay received a favourable ruling
from the U.S. Court of Appeals for the Ninth Circuit that reversed
the U.S. Fish and Wildlife Service's designation of the area near
Copper World and the former Rosemont project as jaguar critical
habitat. While this ruling doesn't impact the state permitting
process for Phase I of Copper World, it is expected to simplify the
federal permitting process for Phase II of the Copper World
project.
Pre-feasibility activities for Phase I are
well-advanced and a pre-feasibility study is expected to be
released in the third quarter of 2023. Hudbay intends to initiate a
minority joint venture partner process prior to commencing a
definitive feasibility study, which will allow the potential joint
venture partner to participate in the funding of definitive
feasibility study activities in 2024 as well as in the final
project design for Copper World.
Potential for Snow Lake Mine Life
Extension with Discovery of New Mineralized Zones Near Lalor and
Significant Regional Land Consolidation
In July 2023, the company announced positive
results from its 2023 winter drill program near Lalor in Snow Lake,
Manitoba, and significant land consolidation in the Snow Lake
region through several strategic transactions. The agreements with
multiple land holders will increase Hudbay's holdings in the Snow
Lake region by more than 250%. Hudbay intends to explore these
claims in hopes of finding a new anchor deposit to maximize and
extend the life of Hudbay’s Snow Lake operations beyond 2038.
Lalor New Mineralized Zones
The 2023 winter drill program in Snow Lake
included the testing of a geophysical anomaly located northwest of
Lalor, within 500 metres of existing underground infrastructure.
All holes intersected an alteration zone that is known to host the
Lalor mineralization. Certain holes intersected several sulphide
horizons with both zinc and copper-gold-silver mineralization. Hole
CH2303 intersected three mineralized zones, including 7.0 metres of
3.06% zinc and 15.1 grams per tonne silver; 3.5 metres of 3.81%
copper, 3.75 grams per tonne gold and 104.5 grams per tonne silver;
and 7.5 metres of 3.87% zinc and 7.5 grams per tonne silver. For
more information on the drill holes, please refer to Hudbay's news
release dated July 27, 2023.
The winter drill program also included testing
of the down-plunge copper-gold extensions of the Lalor deposit, in
the first drilling in the deeper zones at Lalor since the initial
discovery of the copper-gold zones in 2009 and 2010. This initial
campaign consisted of eight widely spaced drill holes over a
distance of two kilometres, and all holes intersected the zone of
strong alteration known to host the Lalor mineralization and have
shown many occurrences of disseminated copper sulfides indicating
the potential close proximity of one or more higher grade
copper-gold feeder zones similar to Lens 27 currently in production
at Lalor. These initial results from widely spaced drilling are an
encouraging indication that the rocks hosting the rich copper-gold
mineralization at Lalor continue down-plunge as predicted by
Hudbay’s geological models. For more information on the drill
holes, please refer to Hudbay's news release dated July 27,
2023.
Hudbay expects to refine targets for its 2024
winter drilling campaign to the northwest and down-plunge from
Lalor using the results from geophysical borehole surveys.
Acquisition of Cook Lake Properties in Snow
Lake
In late June 2023, Hudbay completed the
acquisition of the Cook Lake properties from Glencore plc. The Cook
Lake properties are located within ten kilometres and along the
same regional trend as the Lalor mine, and have the potential to
host a new discovery at depth. The properties include the Cook Lake
North and South properties, which are within 30 kilometres of
Hudbay’s Stall and New Britannia processing facilities.
Hudbay has received data regarding approximately
60,000 metres of historical drilling that was competed on the Cook
Lake properties between 1971 and 2012, with an average depth of
only 275 metres, which is a fraction of the depth of Lalor’s
current known mineralization of approximately 600 to 1,500 metres.
The historical drill holes appear to have intersected base metal
and copper-gold mineralization typical to the Snow Lake region.
Although the historical data has not been validated by a qualified
person (see “Qualified Person and NI 43-101”), the mineralization
indicates that there is the potential for new deposits on the same
favourable mineralized horizons as many known deposits in the area,
including the Lalor, 1901 and Chisel deposits. The Cook Lake
properties are untested by modern deep geophysics, which was the
discovery method for the Lalor mine.
Acquisition of Rockcliff to Consolidate
Significant Land Package in Snow Lake
On June 19, 2023, Hudbay entered into a
definitive agreement to acquire 100% of the issued and outstanding
common shares of Rockcliff that it does not already own (the
“Rockcliff Transaction”). Under the Rockcliff Transaction,
Rockcliff shareholders will receive 0.006776 of a Hudbay common
share for each Rockcliff common share held. The enterprise value to
Hudbay, net of Rockcliff’s cash, is approximately $13 million.
Rockcliff is one of the largest landholders in
the Snow Lake area with more than 1,800 square kilometres across
all of its properties. The completion of the Rockcliff Transaction
will consolidate Hudbay’s ownership of the Talbot deposit and
provide the company with additional exploration properties in the
vicinity of its Stall and New Britannia mills, including the land
adjacent to Hudbay’s Pen II deposit, which is a low tonnage and
high-grade zinc deposit that starts from surface and is located
approximately six kilometres by road from the Lalor mine.
Completion of the Rockcliff Transaction is
contingent upon court approval from the Ontario Superior Court of
Justice (Commercial List), shareholder approval of at least
two-thirds of the votes cast by Rockcliff shareholders at a special
meeting scheduled to be held on August 31, 2023 and other customary
conditions and stock exchange approvals. The Rockcliff Transaction
is expected to close in the third quarter of 2023.
Advancing Metallurgical Testwork for the
Flin Flon Tailings Reprocessing Opportunity
In 2021, Hudbay identified the opportunity to
reprocess Flin Flon tailings where in excess of 100 million tonnes
of tailings have been deposited for over 90 years. The company
completed confirmatory drilling in 2022 which covered about
two-thirds of the facility. The results indicated higher zinc,
copper and silver grades than predicted from historical mill
records while confirming the historical gold grade. Hudbay is
completing metallurgical test work and evaluating metallurgical
technologies, including the recent signing of a testwork agreement
with Cobalt Blue Holdings Limited ("Cobalt Blue") to assess the
processing viability of the Flin Flon tailings using Cobalt Blue's
proprietary processing technology that recovers copper, zinc, gold
and silver while converting sulphides into stable and benign
sulphur.
Other Exploration Update
Constancia In-Mine Exploration
Hudbay continues to execute a limited drill
program and technical evaluations at the Constancia deposit to
confirm the economic viability of adding an additional mining phase
to the current mine plan that would convert a portion of the
mineral resources to mineral reserves. The results from this drill
program and technical and economic evaluations are expected to be
incorporated in the next annual mineral reserve and resource
update.
Maria Reyna and Caballito Exploration
Hudbay controls a large, contiguous block of
mineral rights with the potential to host satellite mineral
deposits in close proximity to the Constancia processing facility,
including the past producing Caballito property and the highly
prospective Maria Reyna property. Hudbay commenced early
exploration activities at Maria Reyna and Caballito after
completing a surface rights exploration agreement with the
community of Uchucarcco in August 2022. Surface investigation
activities together with baseline environmental and archaeological
activities necessary to support drill permit applications have been
completed. Surface mapping and geochemical sampling confirm that
both Caballito and Maria Reyna host sulfide and oxide rich copper
mineralization in skarns, hydrothermal breccias and large porphyry
intrusive bodies.
Lalor In-Mine Exploration
Hudbay continues to compile results from ongoing
infill drilling at Lalor, which will be incorporated into the next
annual mineral resource and reserve estimate update.
Flin Flon Exploration Partnership with
Marubeni
On July 6, 2023, Hudbay announced the signing of
a memorandum of understanding (“MOU”) with Marubeni Corporation
(“Marubeni”) that establishes the framework for a multi-year
exploration partnership focused on the discovery of new deposits on
Hudbay’s mineral properties within trucking distance of the
company’s processing facilities in Flin Flon, Manitoba. In
connection with the MOU, Hudbay and Marubeni have agreed to
negotiate the terms of a definitive agreement to govern the
relationship between the parties and the Flin Flon properties that
would form the subject of the exploration partnership (the “Project
Properties”). It is currently contemplated that Marubeni would fund
approximately $10 to $15 million of exploration expenditures on the
Project Properties and that Hudbay will act as operator and carry
out the exploration activities.
Dividend Declared
A semi-annual dividend of C$0.01 per share was
declared on August 8, 2023. The dividend will be paid out on
September 22, 2023 to shareholders of record as of September 1,
2023.
Website Links
Hudbay:
www.hudbay.com
Management’s Discussion and Analysis:
http://www.hudbayminerals.com/files/doc_financials/2023/Q2/MDA823.pdf
Financial Statements:
http://www.hudbayminerals.com/files/doc_financials/2023/Q2/FS823.pdf
Conference Call and Webcast
Date: |
Wednesday, August 9, 2023 |
Time: |
8:30 a.m. ET |
Webcast: |
www.hudbay.com |
Dial
in: |
1-416-915-3239 or
1-800-319-4610 |
Qualified Person and NI 43-101
The technical and scientific information in this
news release related to the company’s material mineral projects has
been approved by Olivier Tavchandjian, P. Geo, Senior Vice
President, Exploration and Technical Services. Mr. Tavchandjian is
a qualified person pursuant to National Instrument 43-101 –
Standards of Disclosure for Mineral Projects (“NI 43-101”).
Hudbay cautions that neither the historical
information nor the quality assurance and quality control program
that was applied during the execution of the Cook Lake drill
program has been independently verified by a qualified person and,
as such, Hudbay cautions that this information should not be relied
upon by investors.
Non-IFRS Financial Performance
Measures
Adjusted net earnings (loss), adjusted net
earnings (loss) per share, adjusted EBITDA, net debt, cash cost,
sustaining and all-in sustaining cash cost per pound of copper
produced, cash cost and sustaining cash cost per ounce of gold
produced and combined unit cost are non-IFRS performance measures.
These measures do not have a meaning prescribed by IFRS and are
therefore unlikely to be comparable to similar measures presented
by other issuers. These measures should not be considered in
isolation or as a substitute for measures prepared in accordance
with IFRS and are not necessarily indicative of operating profit or
cash flow from operations as determined under IFRS. Other companies
may calculate these measures differently.
Management believes adjusted net earnings (loss)
and adjusted net earnings (loss) per share provides an alternate
measure of the company’s performance for the current period and
gives insight into its expected performance in future periods.
These measures are used internally by the company to evaluate the
performance of its underlying operations and to assist with its
planning and forecasting of future operating results. As such, the
company believes these measures are useful to investors in
assessing the company’s underlying performance. Hudbay provides
adjusted EBITDA to help users analyze the company’s results and to
provide additional information about its ongoing cash generating
potential in order to assess its capacity to service and repay
debt, carry out investments and cover working capital needs. Net
debt is shown because it is a performance measure used by the
company to assess its financial position. Cash cost, sustaining and
all-in sustaining cash cost per pound of copper produced are shown
because the company believes they help investors and management
assess the performance of its operations, including the margin
generated by the operations and the company. Cash cost and
sustaining cash cost per ounce of gold produced are shown because
the company believes they help investors and management assess the
performance of its Manitoba operations. Combined unit cost is shown
because Hudbay believes it helps investors and management assess
the company’s cost structure and margins that are not impacted by
variability in by-product commodity prices.
The following tables provide detailed
reconciliations to the most comparable IFRS measures.
Adjusted Net Earnings (Loss)
Reconciliation
|
Three Months Ended |
(in $ millions) |
Jun. 30, 2023 |
Mar. 31, 2023 |
Jun. 30, 2022 |
(Loss) profit for the period |
(14.9 |
) |
5.4 |
|
32.1 |
|
Tax (recovery) expense |
(15.8 |
) |
12.0 |
|
(10.6 |
) |
(Loss) profit before tax |
(30.7 |
) |
17.4 |
|
21.5 |
|
Adjusting items |
|
|
|
Mark-to-market adjustments1 |
0.6 |
|
6.8 |
|
(14.0 |
) |
Foreign exchange loss (gain) |
1.4 |
|
0.3 |
|
(2.2 |
) |
Inventory adjustments |
0.9 |
|
— |
|
1.9 |
|
Variable consideration adjustment - stream revenue and
accretion |
— |
|
(5.0 |
) |
— |
|
Re-evaluation adjustment - environmental provision3 |
(4.7 |
) |
(8.2 |
) |
(60.7 |
) |
Impairment |
— |
|
— |
|
95.0 |
|
Acquisition related costs |
6.8 |
|
— |
|
— |
|
Evaluation expenses |
— |
|
— |
|
0.7 |
|
Insurance recovery |
— |
|
— |
|
(5.7 |
) |
Restructuring charges - Manitoba2 |
— |
|
— |
|
3.7 |
|
Loss on disposal of investments |
— |
|
0.7 |
|
3.1 |
|
Loss on disposal of plant and equipment and non-current assets -
Manitoba & Arizona |
0.3 |
|
0.1 |
|
— |
|
Adjusted (loss) earnings before income taxes |
(25.4 |
) |
12.1 |
|
43.3 |
|
Tax
recovery (expense) |
15.8 |
|
(12.0 |
) |
10.6 |
|
Tax
impact on adjusting items |
(8.7 |
) |
— |
|
(23.4 |
) |
Adjusted net (loss) earnings |
(18.3 |
) |
0.1 |
|
30.5 |
|
Adjusted net (loss) earnings $/share |
(0.07 |
) |
0.00 |
|
0.12 |
|
Basic weighted average number of common shares outstanding
(millions) |
272.2 |
|
262.0 |
|
261.9 |
|
1 Includes changes in fair value of the gold prepayment
liability, Canadian junior mining investments, other financial
assets and liabilities at fair value through profit or loss and
share-based compensation expenses.2 Includes closure cost for the
Flin Flon operations.3 Changes from movements to environmental
reclamation provisions are primarily related to the Flin Flon
operations, which were fully depreciated as of June 30, 2022, as
well as other Manitoba non-operating sites.Adjusted EBITDA
Reconciliation
|
Three Months Ended |
(in $ millions) |
Jun. 30, 2023 |
Mar. 31, 2023 |
Jun. 30, 2022 |
(Loss) profit for the period |
(14.9 |
) |
5.4 |
|
32.1 |
|
Add back: |
|
|
|
Tax (recovery) expense |
(15.8 |
) |
12.0 |
|
(10.6 |
) |
Net finance expense |
30.5 |
|
35.0 |
|
24.4 |
|
Other expenses |
13.9 |
|
5.0 |
|
(1.3 |
) |
Depreciation and amortization |
88.7 |
|
67.4 |
|
87.3 |
|
Amortization of deferred revenue and variable consideration
adjustment |
(18.1 |
) |
(15.9 |
) |
(19.2 |
) |
|
84.3 |
|
108.9 |
|
112.7 |
|
Adjusting items (pre-tax): |
|
|
|
Re-evaluation adjustment - environmental provision |
(4.7 |
) |
(8.2 |
) |
(60.7 |
) |
Impairment losses |
— |
|
— |
|
95.0 |
|
Inventory adjustments |
0.9 |
|
— |
|
1.9 |
|
Share-based compensation expense (recovery)1 |
0.7 |
|
1.2 |
|
(7.5 |
) |
Adjusted EBITDA |
81.2 |
|
101.9 |
|
141.4 |
|
1 Share-based compensation expenses reflected in
cost of sales and selling and administrative expenses.
Net Debt Reconciliation
(in $ thousands) |
|
|
Jun. 30, 2023 |
Mar. 31, 2023 |
Dec. 31, 2022 |
Total long-term debt |
1,370,682 |
|
1,225,023 |
|
1,184,162 |
|
Cash |
(179,734 |
) |
(255,563 |
) |
(225,665 |
) |
Net debt |
1,190,948 |
|
969,460 |
|
958,497 |
|
Copper Cash Cost Reconciliation
Consolidated |
Three Months Ended |
Net pounds of copper produced1 |
|
|
|
(in thousands) |
Jun. 30, 2023 |
Mar. 31, 2023 |
Jun. 30, 2022 |
Peru |
38,982 |
45,233 |
46,032 |
Manitoba |
6,160 |
4,508 |
10,556 |
Net pounds of copper produced |
45,142 |
49,741 |
56,588 |
1 Contained copper in concentrate.
Consolidated |
Three Months Ended |
|
Jun. 30, 2023 |
Mar. 31, 2023 |
Jun. 30, 2022 |
Cash cost per pound of copper produced |
$000s |
$/lb |
$000s |
$/lb |
$000s |
$/lb |
Mining |
73,335 |
|
1.62 |
|
64,538 |
|
1.30 |
|
86,800 |
|
1.53 |
|
Milling |
69,869 |
|
1.55 |
|
61,039 |
|
1.23 |
|
65,684 |
|
1.16 |
|
Refining
(zinc) |
— |
|
— |
|
— |
|
— |
|
14,379 |
|
0.26 |
|
G&A |
20,975 |
|
0.47 |
|
26,555 |
|
0.53 |
|
41,930 |
|
0.74 |
|
Onsite
costs |
164,179 |
|
3.64 |
|
152,132 |
|
3.06 |
|
208,793 |
|
3.69 |
|
Treatment
& refining |
26,670 |
|
0.59 |
|
18,495 |
|
0.37 |
|
15,033 |
|
0.27 |
|
Freight & other |
17,766 |
|
0.39 |
|
17,776 |
|
0.36 |
|
20,076 |
|
0.35 |
|
Cash
cost, before by-product credits |
208,615 |
|
4.62 |
|
188,403 |
|
3.79 |
|
243,902 |
|
4.31 |
|
By-product credits |
(136,417 |
) |
(3.02 |
) |
(146,111 |
) |
(2.94 |
) |
(207,191 |
) |
(3.66 |
) |
Cash cost, net of by-product credits |
72,198 |
|
1.60 |
|
42,292 |
|
0.85 |
|
36,711 |
|
0.65 |
|
Consolidated |
Three Months Ended |
|
Jun. 30, 2023 |
Mar. 31, 2023 |
Jun. 30, 2022 |
Supplementary cash cost information |
$000s |
$/lb1 |
$000s |
$/lb1 |
$000s |
$/lb1 |
By-product credits2: |
|
|
|
|
|
|
Zinc |
21,896 |
|
0.48 |
17,374 |
|
0.35 |
88,548 |
|
1.56 |
Gold3 |
86,026 |
|
1.91 |
93,479 |
|
1.88 |
91,317 |
|
1.61 |
Silver3 |
17,281 |
|
0.38 |
11,998 |
|
0.24 |
17,956 |
|
0.32 |
Molybdenum & other |
11,214 |
|
0.25 |
23,260 |
|
0.47 |
9,370 |
|
0.17 |
Total by-product
credits |
136,417 |
|
3.02 |
146,111 |
|
2.94 |
207,191 |
|
3.66 |
Reconciliation to IFRS: |
|
|
|
|
|
|
Cash cost, net of by-product credits |
72,198 |
|
|
42,292 |
|
|
36,711 |
|
|
By-product credits |
136,417 |
|
|
146,111 |
|
|
207,191 |
|
|
Treatment and refining charges |
(26,670 |
) |
|
(18,495 |
) |
|
(15,033 |
) |
|
Share-based compensation expense |
60 |
|
|
79 |
|
|
(632 |
) |
|
Inventory adjustments |
906 |
|
|
— |
|
|
1,933 |
|
|
Change in product inventory |
15,114 |
|
|
(9,409 |
) |
|
4,494 |
|
|
Royalties |
2,578 |
|
|
706 |
|
|
3,971 |
|
|
Depreciation and amortization4 |
88,670 |
|
|
67,422 |
|
|
87,305 |
|
|
Cost of sales5 |
289,273 |
|
|
228,706 |
|
|
325,940 |
|
|
1 Per pound of copper produced.2 By-product credits are computed
as revenue per financial statements, including amortization of
deferred revenue and pricing and volume adjustments.3 Gold and
silver by-product credits do not include variable consideration
adjustments with respect to stream arrangements. Variable
consideration adjustments are cumulative adjustments to gold and
silver stream deferred revenue primarily associated with the net
change in mineral reserves and resources or amendments to the mine
plan that would change the total expected deliverable ounces under
the precious metal streaming arrangement. For the three months
ended June 30, 2023, the variable consideration adjustments were
$nil, for the three months ended March 31, 20233 - $4,885 and for
the three months ended June 30, 2022 - $nil. 4 Depreciation is
based on concentrate sold.5 As per IFRS financial statements.
Peru |
Three Months Ended |
(in thousands) |
Jun. 30, 2023 |
Mar. 31, 2023 |
Jun. 30, 2022 |
Net pounds of copper produced1 |
38,982 |
45,233 |
46,032 |
1 Contained copper in concentrate.
Peru |
Three Months Ended |
|
Jun. 30, 2023 |
Mar. 31, 2023 |
Jun. 30, 2022 |
Cash cost per pound of copper produced |
$000s |
$/lb |
$000s |
$/lb |
$000s |
$/lb |
Mining |
31,654 |
|
0.81 |
|
26,786 |
|
0.59 |
|
32,300 |
|
0.70 |
|
Milling |
54,676 |
|
1.40 |
|
46,191 |
|
1.03 |
|
44,731 |
|
0.97 |
|
G&A |
14,867 |
|
0.38 |
|
16,466 |
|
0.36 |
|
18,677 |
|
0.41 |
|
Onsite
costs |
101,197 |
|
2.59 |
|
89,443 |
|
1.98 |
|
95,708 |
|
2.08 |
|
Treatment
& refining |
17,097 |
|
0.44 |
|
10,603 |
|
0.24 |
|
9,226 |
|
0.20 |
|
Freight & other |
12,424 |
|
0.32 |
|
12,427 |
|
0.27 |
|
12,297 |
|
0.26 |
|
Cash
cost, before by-product credits |
130,718 |
|
3.35 |
|
112,473 |
|
2.49 |
|
117,231 |
|
2.54 |
|
By-product credits |
(47,193 |
) |
(1.21 |
) |
(50,899 |
) |
(1.13 |
) |
(33,268 |
) |
(0.72 |
) |
Cash cost, net of by-product credits |
83,525 |
|
2.14 |
|
61,574 |
|
1.36 |
|
83,963 |
|
1.82 |
|
Peru |
Three Months Ended |
|
Jun. 30, 2023 |
Mar. 31, 2023 |
Jun. 30, 2022 |
Supplementary cash cost information |
$000s |
$/lb1 |
$000s |
$/lb1 |
$000s |
$/lb1 |
By-product credits2: |
|
|
|
|
|
|
Gold3 |
21,638 |
|
0.55 |
19,301 |
|
0.43 |
14,191 |
|
0.31 |
Silver3 |
14,341 |
|
0.37 |
8,577 |
|
0.19 |
11,687 |
|
0.25 |
Molybdenum |
11,214 |
|
0.29 |
23,021 |
|
0.51 |
7,390 |
|
0.16 |
Total
by-product credits |
47,193 |
|
1.21 |
50,899 |
|
1.13 |
33,268 |
|
0.72 |
Reconciliation to IFRS: |
|
|
|
|
|
|
Cash cost, net of by-product credits |
83,525 |
|
|
61,574 |
|
|
83,963 |
|
|
By-product credits |
47,193 |
|
|
50,899 |
|
|
33,268 |
|
|
Treatment and refining charges |
(17,097 |
) |
|
(10,603 |
) |
|
(9,226 |
) |
|
Inventory adjustments |
— |
|
|
— |
|
|
(97 |
) |
|
Share-based compensation expenses |
29 |
|
|
(14 |
) |
|
(100 |
) |
|
Change in product inventory |
27,078 |
|
|
(11,135 |
) |
|
(8,394 |
) |
|
Royalties |
2,479 |
|
|
665 |
|
|
1,117 |
|
|
Depreciation and amortization4 |
67,340 |
|
|
41,960 |
|
|
47,811 |
|
|
Cost of sales5 |
210,547 |
|
|
133,346 |
|
|
148,342 |
|
|
1 Per pound of copper produced.2 By-product
credits are computed as revenue per financial statements, including
amortization of deferred revenue and pricing and volume
adjustments.3 Gold and silver by-product credits do not include
variable consideration adjustments with respect to stream
arrangements. 4 Depreciation is based on concentrate sold.5 As per
IFRS financial statements.
Copper Sustaining and All-in Sustaining Cash
Cost Reconciliation
Consolidated |
Three Months Ended |
|
Jun. 30, 2023 |
Mar. 31, 2023 |
Jun. 30, 2022 |
All-in sustaining cash cost per pound of copper
produced |
$000s |
$/lb |
$000s |
$/lb |
$000s |
$/lb |
Cash
cost, net of by-product credits |
72,198 |
1.60 |
42,292 |
0.85 |
36,711 |
0.65 |
Cash
sustaining capital expenditures |
48,253 |
1.07 |
47,869 |
0.96 |
65,173 |
1.15 |
Royalties |
2,578 |
0.06 |
706 |
0.02 |
3,971 |
0.07 |
Sustaining cash cost, net of by-product
credits |
123,029 |
2.73 |
90,867 |
1.83 |
105,855 |
1.87 |
Corporate
selling and administrative expenses & regional costs |
9,603 |
0.21 |
10,215 |
0.20 |
2,479 |
0.04 |
Accretion and amortization of decommissioning and community
agreements1 |
1,792 |
0.04 |
1,958 |
0.04 |
874 |
0.02 |
All-in sustaining cash cost, net of by-product
credits |
134,424 |
2.98 |
103,040 |
2.07 |
109,208 |
1.93 |
Reconciliation to property, plant and equipment additions: |
|
|
|
|
|
|
Property,
plant and equipment additions |
47,574 |
|
33,554 |
|
70,712 |
|
Capitalized stripping net additions |
21,640 |
|
26,984 |
|
27,302 |
|
Total
accrued capital additions |
69,214 |
|
60,538 |
|
98,014 |
|
Less other non-sustaining capital costs2 |
28,006 |
|
19,850 |
|
45,489 |
|
Total
sustaining capital costs |
41,208 |
|
40,688 |
|
52,525 |
|
Capitalized
lease cash payments - operating sites |
4,374 |
|
4,702 |
|
9,313 |
|
Community
agreement cash payments |
1,290 |
|
1,189 |
|
370 |
|
Accretion and amortization of decommissioning and restoration
obligations3 |
1,381 |
|
1,290 |
|
2,965 |
|
Cash sustaining capital expenditures |
48,253 |
|
47,869 |
|
65,173 |
|
1 Includes accretion of decommissioning relating
to non-productive sites, and accretion and amortization of current
community agreements.2 Other non-sustaining capital costs include
Arizona capitalized costs, capitalized interest, capitalized
exploration and growth capital expenditures.3 Includes amortization
of decommissioning and restoration PP&E assets and accretion of
decommissioning and restoration liabilities related to producing
sites.
Peru |
Three Months Ended |
|
Jun. 30, 2023 |
Mar. 31, 2023 |
Jun. 30, 2022 |
Sustaining cash cost per pound of copper
produced |
$000s |
$/lb |
$000s |
$/lb |
$000s |
$/lb |
Cash
cost, net of by-product credits |
83,525 |
2.14 |
61,574 |
1.36 |
83,963 |
1.82 |
Cash
sustaining capital expenditures |
33,425 |
0.86 |
33,564 |
0.74 |
35,527 |
0.78 |
Royalties |
2,479 |
0.06 |
665 |
0.02 |
1,117 |
0.02 |
Sustaining cash cost per pound of copper
produced |
119,429 |
3.06 |
95,803 |
2.12 |
120,607 |
2.62 |
Gold Cash Cost and Sustaining Cash Cost Reconciliation
Manitoba |
Three Months Ended |
(in thousands) |
Jun. 30, 2023 |
Mar. 31, 2023 |
Jun. 30, 2022 |
Net ounces of gold produced1 |
35,253 |
36,034 |
44,787 |
1 Contained gold in concentrate and doré.
Manitoba |
Three Months Ended |
|
Jun. 30, 2023 |
Mar. 31, 2023 |
Jun. 30, 2022 |
Cash cost per ounce of gold produced |
$000s |
$/oz |
$000s |
$/oz |
$000s |
$/oz |
Mining |
41,681 |
|
1,182 |
|
37,752 |
|
1,048 |
|
54,500 |
|
1,217 |
|
Milling |
15,193 |
|
431 |
|
14,848 |
|
412 |
|
20,953 |
|
468 |
|
Refining
(zinc) |
— |
|
— |
|
— |
|
— |
|
14,379 |
|
321 |
|
G&A |
6,108 |
|
173 |
|
10,089 |
|
280 |
|
23,253 |
|
519 |
|
Onsite
costs |
62,982 |
|
1,786 |
|
62,689 |
|
1,740 |
|
113,085 |
|
2,525 |
|
Treatment
& refining |
9,573 |
|
271 |
|
7,892 |
|
219 |
|
5,807 |
|
130 |
|
Freight
& other |
5,342 |
|
152 |
|
5,349 |
|
148 |
|
7,779 |
|
173 |
|
Cash cost, before by-product credits |
77,897 |
|
2,209 |
|
75,930 |
|
2,107 |
|
126,671 |
|
2,828 |
|
By-product credits |
(39,218 |
) |
(1,112 |
) |
(42,131 |
) |
(1,169 |
) |
(135,924 |
) |
(3,035 |
) |
Gold cash cost, net of by-product credits |
38,679 |
|
1,097 |
|
33,799 |
|
938 |
|
(9,253 |
) |
(207 |
) |
Manitoba |
Three Months Ended |
|
Jun. 30, 2023 |
Mar. 31, 2023 |
Jun. 30, 2022 |
Supplementary cash cost information |
$000s |
$/oz1 |
$000s |
$/oz1 |
$000s |
$/oz1 |
By-product credits2: |
|
|
|
|
|
|
Zinc |
21,896 |
|
621 |
17,374 |
|
482 |
88,548 |
|
1,977 |
Copper |
14,382 |
|
408 |
21,097 |
|
585 |
39,127 |
|
874 |
Silver3 |
2,940 |
|
83 |
3,421 |
|
95 |
6,269 |
|
140 |
Other |
— |
|
— |
239 |
|
7 |
1,980 |
|
44 |
Total
by-product credits |
39,218 |
|
1,112 |
42,131 |
|
1,169 |
135,924 |
|
3,035 |
Reconciliation to IFRS: |
|
|
|
|
|
|
Cash
cost, net of by-product credits |
38,679 |
|
|
33,799 |
|
|
(9,253 |
) |
|
By-product credits |
39,218 |
|
|
42,131 |
|
|
135,924 |
|
|
Treatment
and refining charges |
(9,573 |
) |
|
(7,892 |
) |
|
(5,807 |
) |
|
Inventory
adjustments |
906 |
|
|
— |
|
|
— |
|
|
(Curtailment)/past service cost |
— |
|
|
— |
|
|
(532 |
) |
|
Share-based compensation expenses |
31 |
|
|
93 |
|
|
2,030 |
|
|
Change in
product inventory |
(11,964 |
) |
|
1,726 |
|
|
12,888 |
|
|
Royalties |
99 |
|
|
41 |
|
|
2,854 |
|
|
Depreciation and amortization4 |
21,330 |
|
|
25,462 |
|
|
39,494 |
|
|
Cost of sales5 |
78,7265 |
|
|
95,360 |
|
|
177,598 |
|
|
1 Per ounce of gold produced.2 By-product
credits are computed as revenue per financial statements,
amortization of deferred revenue and pricing and volume
adjustments.3 Silver by-product credits do not include variable
consideration adjustments with respect to stream arrangements.4
Depreciation is based on concentrate sold.5 As per IFRS financial
statements, excluding impairment adjustments.
Manitoba |
Three Months Ended |
|
Jun. 30, 2023 |
Mar. 31, 2023 |
Jun. 30, 2022 |
Sustaining cash cost per pound of gold
produced |
$000s |
$/oz |
$000s |
$/oz |
$000s |
$/oz |
Gold cash cost, net of by-product credits |
38,679 |
1,097 |
33,799 |
938 |
(9,253 |
) |
(207 |
) |
Cash
sustaining capital expenditures |
14,828 |
421 |
14,304 |
397 |
29,646 |
|
662 |
|
Royalties |
99 |
3 |
41 |
1 |
2,854 |
|
64 |
|
Sustaining cash cost per pound of gold
produced |
53,606 |
1,521 |
48,144 |
1,336 |
23,247 |
|
519 |
|
Combined Unit Cost Reconciliation
Peru |
Three Months Ended |
(in thousands except ore tonnes milled and unit cost per
tonne) |
Combined unit cost per tonne processed |
Jun. 30, 2023 |
Mar. 31, 2023 |
Jun. 30, 2022 |
Mining |
31,654 |
|
26,786 |
|
32,300 |
|
Milling |
54,676 |
|
46,191 |
|
44,731 |
|
G&A1 |
14,867 |
|
16,466 |
|
18,677 |
|
Other G&A2 |
458 |
|
(1,539 |
) |
(1,050 |
) |
|
101,655 |
|
87,904 |
|
94,658 |
|
Less: Covid related costs |
— |
|
— |
|
1,275 |
|
Unit
cost |
101,655 |
|
87,904 |
|
93,383 |
|
Tonnes ore milled |
7,223 |
|
7,664 |
|
7,771 |
|
Combined unit cost per tonne |
14.07 |
|
11.47 |
|
12.02 |
|
Reconciliation to IFRS: |
|
|
|
Unit cost |
101,655 |
|
87,904 |
|
93,383 |
|
Freight & other |
12,424 |
|
12,427 |
|
12,297 |
|
Covid related costs |
— |
|
— |
|
1,275 |
|
Other G&A |
(458 |
) |
1,539 |
|
1,050 |
|
Share-based compensation expenses |
29 |
|
(14 |
) |
(100 |
) |
Inventory adjustments |
— |
|
— |
|
(97 |
) |
Change in product inventory |
27,078 |
|
(11,135 |
) |
(8,394 |
) |
Royalties |
2,479 |
|
665 |
|
1,117 |
|
Depreciation and amortization |
67,340 |
|
41,960 |
|
47,811 |
|
Cost of sales3 |
210,547 |
|
133,346 |
|
148,342 |
|
1 G&A as per cash cost reconciliation
above.2 Other G&A primarily includes profit sharing costs.3 As
per IFRS financial statements, excluding impairment
adjustments.
Manitoba |
Three Months Ended |
(in thousands except tonnes ore milled and unit cost per
tonne) |
Combined unit cost per tonne processed |
Jun. 30, 2023 |
Mar. 31, 2023 |
Jun. 30, 2022 |
Mining |
41,681 |
|
37,752 |
|
54,500 |
|
Milling |
15,193 |
|
14,848 |
|
20,953 |
|
G&A1 |
6,108 |
|
10,089 |
|
23,253 |
|
Less: G&A allocated to zinc metal production |
— |
|
— |
|
(3,141 |
) |
Less: Other G&A related to profit sharing costs |
(682 |
) |
(1,139 |
) |
(10,206 |
) |
Unit cost |
62,300 |
|
61,550 |
|
85,359 |
|
USD/CAD implicit exchange rate |
1.34 |
|
1.35 |
|
1.27 |
|
Unit cost - C$ |
83,659 |
|
83,193 |
|
108,806 |
|
Tonnes ore milled |
380,538 |
|
385,661 |
|
649,318 |
|
Combined unit cost per tonne - C$ |
220 |
|
216 |
|
168 |
|
Reconciliation to IFRS: |
|
|
|
Unit cost |
62,300 |
|
61,550 |
|
85,359 |
|
Freight & other |
5,342 |
|
5,349 |
|
7,779 |
|
Refined zinc |
— |
|
— |
|
14,379 |
|
G&A allocated to zinc metal production |
— |
|
— |
|
3,141 |
|
Other G&A related to profit sharing |
682 |
|
1,139 |
|
10,206 |
|
Share-based compensation expenses |
31 |
|
93 |
|
(532 |
) |
Inventory adjustments |
906 |
|
— |
|
2,030 |
|
Change in product inventory |
(11,964 |
) |
1,726 |
|
12,888 |
|
Royalties |
99 |
|
41 |
|
2,854 |
|
Depreciation and amortization |
21,330 |
|
25,462 |
|
39,494 |
|
Cost of sales2 |
78,726 |
|
95,360 |
|
177,598 |
|
1 G&A as per cash cost reconciliation
above.2 As per IFRS financial statements, excluding impairment
adjustments.
Forward-Looking
Information
This news release contains forward-looking information within the
meaning of applicable Canadian and United States securities
legislation. All information contained in this news release, other
than statements of current and historical fact, is forward-looking
information. Often, but not always, forward-looking information can
be identified by the use of words such as “plans”, “expects”,
“budget”, “guidance”, “scheduled”, “estimates”, “forecasts”,
“strategy”, “target”, “intends”, “objective”, “goal”,
“understands”, “anticipates” and “believes” (and variations of
these or similar words) and statements that certain actions, events
or results “may”, “could”, “would”, “should”, “might” “occur” or
“be achieved” or “will be taken” (and variations of these or
similar expressions). All of the forward-looking information in
this news release is qualified by this cautionary note.
Forward-looking information includes, but is not
limited to, statements with respect to the expected production and
cash flow generation during the second half of the year, the
expected timing for the release of an updated Copper Mountain mine
technical report, the expected timing for the release of the Copper
World pre-feasibility study for Phase I, the expected timing and
effectiveness of the ongoing integration and optimization of Copper
Mountain’s operations, the expected consummation, timing and
benefits of the Rockcliff Transaction and other Manitoba growth
initiatives; approval of the Rockcliff Transaction by Rockcliff’s
shareholders, the satisfaction of the conditions precedent to the
consummation of the Rockcliff Transaction, statements regarding the
company’s production, cost and capital and exploration expenditure
guidance, expectations regarding reductions in discretionary
spending, capital expenditures and net debt, expectations regarding
the impact of inflationary pressures on the company’s cost of
operations, financial condition and prospects, the company’s
ability to deleverage and repay debt as needed, the consummation
and timing of a potential partnership with Marubeni, expectations
regarding the company’s cash balance and liquidity, expectations
regarding the Copper World project, the estimated timelines and
pre-requisites for sanctioning the project and the pursuit of a
potential minority joint venture partner, expectations regarding
the permitting requirements for the Copper World project and
permitting related litigation (including expected timing for
receipt of such applicable permits), the company’s ability to
increase the mining rate at Lalor, the anticipated timing for
completing the Stall recovery improvement program and anticipated
benefits therefrom, expectations regarding the ability to conduct
exploration work on the Maria Reyna and Caballito properties and to
advance related drill plans, the timing of mining higher-grade ore
in the Pampacancha pit and the company’s expectations resulting
therefrom, expectations regarding the ability for the company to
reduce greenhouse gas emissions, the company’s evaluation of
opportunities to reprocess tailings, expectations regarding the
prospective nature of the Maria Reyna and Caballito properties, the
anticipated impact of brownfield growth projects on the company’s
performance, anticipated expansion opportunities in Snow Lake and
the ability for Hudbay to find a new anchor deposit near the
company’s Snow Lake operations, anticipated drill programs and
exploration activities, anticipated mine plans, anticipated metals
prices and the anticipated sensitivity of the company’s financial
performance to metals prices, events that may affect its operations
and development projects, anticipated cash flows from operations
and related liquidity requirements, the anticipated effect of
external factors on revenue, such as commodity prices, estimation
of mineral reserves and resources, mine life projections,
reclamation costs, economic outlook, government regulation of
mining operations, and business and acquisition strategies.
Forward-looking information is not, and cannot be, a guarantee of
future results or events. Forward-looking information is based on,
among other things, opinions, assumptions, estimates and analyses
that, while considered reasonable by the company at the date the
forward-looking information is provided, inherently are subject to
significant risks, uncertainties, contingencies and other factors
that may cause actual results and events to be materially different
from those expressed or implied by the forward-looking
information.
The material factors or assumptions that Hudbay
has identified and were applied in drawing conclusions or making
forecasts or projections set out in the forward-looking information
include, but are not limited to:
- the ability to achieve production and cost guidance;
- the ability to achieve discretionary spending reductions
without impacting operations;
- no significant interruptions to operations due to social or
political unrest in the regions Hudbay operates, including the
navigation of the complex political and social environment in
Peru;
- no interruptions to the company’s plans for advancing the
Copper World project, including with respect to timely receipt of
applicable permits;
- the ability for the company to successfully integrate and
optimize the Copper Mountain operations and develop and maintain
good relations with key stakeholders;
- the ability to ramp up exploration in respect of the Maria
Reyna and Caballito properties and to advance related drill
plans;
- the ability to satisfy the conditions to closing the Rockcliff
Transaction, including the receipt of shareholder, stock exchange
and court approvals;
- that no third party would make a superior proposal to the
Rockcliff Transaction;
- that the definitive agreement for the Rockcliff Transaction
would not be terminated in certain circumstances;
- the success of mining, processing, exploration and development
activities;
- the scheduled maintenance and availability of the company’s
processing facilities;
- the accuracy of geological, mining and metallurgical
estimates;
- anticipated metals prices and the costs of production;
- the supply and demand for metals the company produces;
- the supply and availability of all forms of energy and fuels at
reasonable prices;
- no significant unanticipated operational or technical
difficulties;
- the execution of the company’s business and growth strategies,
including the success of its strategic investments and
initiatives;
- the availability of additional financing, if needed;
- the ability to complete project targets on time and on budget
and other events that may affect the company’s ability to develop
its projects;
- the timing and receipt of various regulatory and governmental
approvals;
- the availability of personnel for the company’s exploration,
development and operational projects and ongoing employee
relations;
- maintaining good relations with the employees at the company’s
operations, including in British Columbia;
- maintaining good relations with the labour unions that
represent certain of the company’s employees in Manitoba and
Peru;
- maintaining good relations with the communities in which the
company operates, including the neighbouring Indigenous communities
and local governments;
- no significant unanticipated challenges with stakeholders at
the company’s various projects;
- no significant unanticipated events or changes relating to
regulatory, environmental, health and safety matters;
- no contests over title to the company’s properties, including
as a result of rights or claimed rights of Indigenous peoples or
challenges to the validity of the company’s unpatented mining
claims;
- the timing and possible outcome of pending litigation and no
significant unanticipated litigation;
- certain tax matters, including, but not limited to current tax
laws and regulations, changes in taxation policies and the refund
of certain value added taxes from the Canadian and Peruvian
governments; and
- no significant and continuing adverse changes in general
economic conditions or conditions in the financial markets
(including commodity prices and foreign exchange rates).
The risks, uncertainties, contingencies and
other factors that may cause actual results to differ materially
from those expressed or implied by the forward-looking information
may include, but are not limited to, risks related to the failure
to effectively integrate and optimize the Copper Mountain
operations, the failure to receive approval of the Rockcliff
Transaction by Rockcliff’s shareholders or the required court,
stock exchange and other consents and approvals to effect the
Rockcliff Transaction, the potential of a third party making a
superior proposal to the Rockcliff Transaction, the possibility
that the definitive agreement for the Rockcliff Transaction could
be terminated under certain circumstances, political and social
risks in the regions Hudbay operates, including the navigation of
the complex political and social environment in Peru, risks
generally associated with the mining industry and the current
geopolitical environment, including future commodity prices,
currency and interest rate fluctuations, energy and consumable
prices, supply chain constraints and general cost escalation in the
current inflationary environment, uncertainties related to the
development and operation of the company’s projects, risks related
to the Copper World project, including in relation to permitting,
litigation, project delivery and financing risks, risks related to
the Lalor mine plan, including the ability to convert inferred
mineral resource estimates to higher confidence categories,
dependence on key personnel and employee and union relations, risks
related to political or social instability, unrest or change, risks
in respect of Indigenous and community relations, rights and title
claims, operational risks and hazards, including the cost of
maintaining and upgrading the company's tailings management
facilities and any unanticipated environmental, industrial and
geological events and developments and the inability to insure
against all risks, failure of plant, equipment, processes,
transportation and other infrastructure to operate as anticipated,
compliance with government and environmental regulations, including
permitting requirements and anti-bribery legislation, depletion of
the company’s reserves, volatile financial markets and interest
rates that may affect the company’s ability to obtain additional
financing on acceptable terms, the failure to obtain required
approvals or clearances from government authorities on a timely
basis, uncertainties related to the geology, continuity, grade and
estimates of mineral reserves and resources, and the potential for
variations in grade and recovery rates, uncertain costs of
reclamation activities, the company’s ability to comply with its
pension and other post-retirement obligations, the company’s
ability to abide by the covenants in its debt instruments and other
material contracts, tax refunds, hedging transactions, as well as
the risks discussed under the heading “Risk Factors” in the
company’s most recent Annual Information Form and under the heading
“Financial Risk Management” in the company’s most recent
management’s discussion and analysis.
Should one or more risk, uncertainty,
contingency or other factor materialize or should any factor or
assumption prove incorrect, actual results could vary materially
from those expressed or implied in the forward-looking information.
Accordingly, you should not place undue reliance on forward-looking
information. Hudbay does not assume any obligation to update or
revise any forward-looking information after the date of this news
release or to explain any material difference between subsequent
actual events and any forward-looking information, except as
required by applicable law.
Note to United States
Investors
This news release has been prepared in
accordance with the requirements of the securities laws in effect
in Canada, which may differ materially from the requirements of
United States securities laws applicable to U.S. issuers.
About Hudbay
Hudbay (TSX, NYSE: HBM) is a copper-focused
mining company with three long-life operations and a world-class
pipeline of copper growth projects in tier-one mining-friendly
jurisdictions of Canada, Peru and the United States.
Hudbay’s operating portfolio includes the
Constancia mine in Cusco (Peru), the Snow Lake operations in
Manitoba (Canada) and the Copper Mountain mine in British Columbia
(Canada). Copper is the primary metal produced by the company,
which is complemented by meaningful gold production. Hudbay’s
growth pipeline includes the Copper World project in Arizona, the
Mason project in Nevada (United States), the Llaguen project in La
Libertad (Peru) and several expansion and exploration opportunities
near its existing operations.
The value Hudbay creates and the impact it has
is embodied in its purpose statement: “We care about our people,
our communities and our planet. Hudbay provides the metals the
world needs. We work sustainably, transform lives and create better
futures for communities.” Hudbay’s mission is to create sustainable
value and strong returns by leveraging its core strengths in
community relations, focused exploration, mine development and
efficient operations.
For further information, please contact:
Candace BrûléVice President, Investor Relations
(416) 814-4387investor.relations@hudbay.com
_________________________________
i Adjusted net earnings (loss) and adjusted net
earnings (loss) per share; adjusted EBITDA; cash cost, sustaining
cash cost and all-in sustaining cash cost per pound of copper
produced, net of by-product credits; cash cost and sustaining cash
cost per ounce of gold produced, net of by-product credits;
combined unit costs and net debt are non-IFRS financial performance
measures with no standardized definition under IFRS. For further
information and a detailed reconciliation, please see the “Non-IFRS
Financial Performance Measures” section of this news release.
Hudbay Minerals (TSX:HBM)
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