Hudbay Minerals Inc. (“Hudbay” or the “company”) (TSX,
NYSE:HBM) today released its second quarter 2019 financial
results. All amounts are in U.S. dollars, unless otherwise noted.
“Hudbay delivered strong operating results in
the second quarter, including record mine production at Lalor,
record throughput at the Stall concentrator and successful
semi-annual maintenance activities at the Constancia mill,” said
Peter Kukielski, Interim President and Chief Executive Officer.
“Based on these results, we are on track to achieve our full year
2019 production and cost guidance.”
“We were surprised and disappointed by the
court’s decision on Rosemont, which we intend to appeal,” stated
Mr. Kukielski. “Rosemont aside, we continue to execute our
strategy. In Snow Lake, we are pleased to announce the initial
resource estimate for the 1901 deposit, a mere six months from the
initial discovery. In the second half of the year, we will continue
advancing the WIM, Pen II and New Britannia zones to upgrade them
to a reserve classification, while advancing feasibility work on
the 1901 deposit. In Peru, our focus will continue to be on
accessing the high-grade Pampacancha satellite deposit while
advancing discussions with the communities to the northwest to
explore the other satellite properties.”
Net loss and loss per share in the second
quarter of 2019 were $54.1 million and $0.21, respectively,
compared to a net profit and earnings per share of $24.7 million
and $0.09, respectively, in the second quarter of 2018.
Net loss and loss per share in the second quarter of 2019 were
affected by, among other things, the following items:
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Pre-tax gain
(loss) |
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After-tax
gain (loss) |
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Per share
gain (loss) |
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($ millions) |
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($ millions) |
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($/share) |
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Non-cash deferred tax adjustments |
- |
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(15.1) |
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(0.06) |
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Write down of UCM receivable |
(26.0) |
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(26.0) |
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(0.10) |
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Costs associated with recent proxy contest |
(3.0) |
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(2.2) |
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(0.01) |
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As previously disclosed, as part of the orderly
acquisition of the remaining interest in the Rosemont copper
project on April 25, 2019, Hudbay, immediately prior to closing the
acquisition, agreed to release United Copper & Moly LLC ("UCM")
from its repayment obligations under the Rosemont project loan in
exchange for an increase in equity interest in Rosemont. As a
result, the loan receivable balance was written down in the income
statement and other capital reserves, a component of shareholder's
equity, was subsequently increased.
Cash generated from operating activities
increased to $107.0 million in the second quarter of 2019 from
$97.0 million in the same quarter of 2018. Operating cash flow
before change in non-cash working capital was $81.1 million during
the second quarter of 2019, reflecting a decrease of $50.5 million
compared to the second quarter of 2018. The decrease in operating
cash flow is primarily the result of lower realized copper and zinc
prices and lower sales volumes of copper and zinc, compared to the
second quarter of 2018. Copper-equivalent production in the second
quarter of 2019 decreased by 14% compared to the same period in
2018, primarily as a result of lower mine grades at Constancia, as
planned, and the closure of the Reed mine.
In the second quarter of 2019, consolidated cash
cost per pound of copper produced, net of by-product credits1, was
$1.27, an increase compared to $0.96 in the same period last year.
Cash costs per pound of copper produced, net of by–product credits,
increased as a result of lower copper and zinc production and lower
realized zinc prices. Incorporating sustaining capital, capitalized
exploration, royalties, selling, administrative and regional costs,
consolidated all-in sustaining cash cost per pound of copper
produced, net of by-product credits1, in the second quarter of 2019
was $2.26, which increased from $1.50 in the same period last year,
driven mainly by higher cash costs and increased sustaining capital
expenditures.
Net debt1 decreased by $3.8 million from March
31, 2019 to $487.7 million at June 30, 2019, as the upfront payment
to acquire the Rosemont minority joint venture interest and other
capital expenditures was offset by free cash flow from operations.
At June 30, 2019, total liquidity, including cash and available
credit facilities, was $910.7 million, down from $940.3 million as
at March 31, 2019 due to additional letters of credit posted to
support reclamation obligations.
1Cash cost, all-in sustaining cash cost per
pound of copper produced, net of by-product credits, and net debt
are non-IFRS financial performance measures with no standardized
definition under IFRS. For further information, please see page 9
of this news release.
Financial Condition ($000s) |
Jun. 30, 2019 |
Dec. 31, 2018 |
Cash
and cash equivalents |
489,527 |
515,497 |
Total long-term
debt |
977,196 |
981,030 |
Net debt1 |
487,669 |
465,533 |
Working capital |
428,078 |
445,228 |
Total assets |
4,737,938 |
4,685,635 |
Equity |
2,130,719 |
2,178,856 |
1 Net debt is a non-IFRS financial performance measure with no
standardized definition under IFRS. For further information, please
see page 9 of this news release.
Financial Performance |
Three months ended |
Six months ended |
($000s except per share and cash cost amounts) |
Jun. 30 |
Jun. 30 |
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2019 |
2018 |
2019 |
2018 |
Revenue |
329,414 |
371,288 |
621,672 |
757,944 |
Cost
of sales |
286,271 |
278,827 |
526,718 |
544,712 |
Profit before tax (loss) |
(43,931) |
49,797 |
(62,044) |
122,900 |
Profit (loss) |
(54,145) |
24,673 |
(67,562) |
66,118 |
Basic
and diluted (loss) earnings per share |
(0.21) |
0.09 |
(0.26) |
0.25 |
Operating cash flow before change in non-cash working
capital |
81,146 |
131,635 |
170,740 |
263,428 |
Production and Cost Performance |
Three months ended |
Three months ended |
|
Jun. 30, 2019 |
Jun. 30, 2018 |
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Peru |
Manitoba |
Total |
Peru |
Manitoba |
Total |
Contained metal in concentrate produced1 |
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Copper |
tonnes |
24,232 |
6,131 |
30,363 |
26,818 |
10,807 |
37,625 |
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Gold |
oz |
3,794 |
24,305 |
28,099 |
5,190 |
27,290 |
32,480 |
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Silver |
oz |
551,807 |
260,000 |
811,807 |
596,570 |
355,091 |
951,661 |
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Zinc |
tonnes |
- |
31,838 |
31,838 |
- |
33,170 |
33,170 |
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Molybdenum |
Tonnes |
334 |
- |
334 |
141 |
- |
141 |
Payable metal in concentrate sold |
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Copper |
tonnes |
25,778 |
7,393 |
33,171 |
25,409 |
10,062 |
35,471 |
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Gold |
oz |
4,056 |
26,482 |
30,538 |
3,764 |
25,932 |
29,696 |
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Silver |
oz |
504,259 |
300,042 |
804,301 |
438,532 |
250,952 |
689,484 |
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Zinc2 |
tonnes |
- |
24,224 |
24,224 |
- |
28,168 |
28,168 |
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Molybdenum |
tonnes |
419 |
- |
419 |
- |
- |
- |
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Cash cost3 |
$/lb |
1.63 |
(0.15) |
1.27 |
1.64 |
(0.71) |
0.96 |
Sustaining cash cost3 |
$/lb |
2.09 |
2.11 |
|
1.82 |
0.38 |
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All-in sustaining cash cost3 |
$/lb |
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|
2.26 |
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|
1.50 |
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Six months ended |
Six months ended |
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Jun. 30, 2019 |
Jun. 30, 2018 |
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Peru |
Manitoba |
Total |
Peru |
Manitoba |
Total |
Contained metal in concentrate produced1 |
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Copper |
tonnes |
56,075 |
12,260 |
68,335 |
58,369 |
18,462 |
76,831 |
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Gold |
oz |
9,151 |
44,510 |
53,661 |
10,608 |
52,965 |
63,573 |
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Silver |
oz |
1,186,737 |
544,265 |
1,731,002 |
1,242,456 |
686,343 |
1,928,799 |
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Zinc |
tonnes |
- |
59,875 |
59,875 |
- |
61,952 |
61,952 |
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Molybdenum |
tonnes |
638 |
- |
638 |
205 |
- |
205 |
Payable metal in concentrate sold |
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Copper |
tonnes |
52,440 |
12,448 |
64,888 |
54,977 |
17,000 |
71,977 |
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Gold |
oz |
10,274 |
42,893 |
53,167 |
8,671 |
47,082 |
55,753 |
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Silver |
oz |
1,256,518 |
530,689 |
1,787,207 |
1,034,162 |
541,778 |
1,575,940 |
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Zinc2 |
tonnes |
- |
47,178 |
47,178 |
- |
53,620 |
53,620 |
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Molybdenum |
tonnes |
653 |
- |
653 |
137 |
- |
137 |
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Cash cost3 |
$/lb |
1.38 |
0.31 |
1.19 |
1.46 |
(0.58) |
0.97 |
Sustaining cash cost3 |
$/lb |
1.69 |
2.48 |
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1.63 |
0.65 |
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All-in sustaining cash cost3 |
$/lb |
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|
2.01 |
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|
1.48 |
1 Metal
reported in concentrate is prior to deductions associated with
smelter contract terms.2 Includes refined zinc metal sold and
payable zinc in concentrate sold.3 Cash cost, sustaining cash cost
and all-in 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 page 9 of this news release. |
Peru Operations Review
During the quarter, the Constancia mine produced
24,232 tonnes of copper, 11,677 ounces of precious metals and 334
tonnes of molybdenum. Production results were lower than the same
period last year mainly due to lower grades, as per the mine plan,
partially offset by higher copper recoveries from recent
metallurgical initiatives. Hudbay expects production of all metals
and costs at Constancia to be in line with the full year guidance
for 2019.
Ore mined at Constancia during the second
quarter of 2019 was 6% lower compared to the same period in 2018
due to mining from areas with a higher stripping ratio than the
areas mined in the second quarter of 2018, in line with the mine
plan. Milled copper grades in the second quarter were approximately
16% lower than the same period in 2018 as lower grade phases
continue to be mined, in line with the mine plan. Mill throughput
in the second quarter of 2019 was consistent compared to the same
period in 2018.
Copper recoveries in the second quarter of 2019
improved by 6% compared to the same period in 2018. The increased
copper recoveries were a result of sustained metallurgical
improvements initiated in 2018. While recoveries vary from quarter
to quarter depending on the complexity and grade of the ore feed,
the company is seeing results from ongoing recovery improvement
initiatives. These initiatives include those targeting flotation
operating efficiencies (improvement at the washing station in
column cells and water distribution in the processing plant), and
the integration of an automated, advanced process control system in
the grinding and bulk flotation circuits.
During the second quarter of 2019, a six-day
scheduled maintenance shutdown of the Constancia mill was
performed. Combined mine, mill and general and administrative
(“G&A”) unit operating costs in the second quarter of 2019 were
consistent with the same period in 2018 reflecting correspondingly
lower ore throughput and higher maintenance costs due to the plant
shutdown. In addition, in line with the mine plan and the first
quarter 2019 operations update, mined copper grades during the
second quarter of 2019 were below the expected annual average. The
maintenance shutdown and the variations in copper grade are
consistent with the full year plan for Constancia, and Hudbay
continues to expect production and cost guidance to be met for the
full year 2019.
Cash cost per pound of copper produced, net of
by-product credits, for the second quarter of 2019 is in line with
the same period in 2018 due to lower copper production being offset
by higher by-product credits. Sustaining cash cost per pound of
copper produced, net of by-product credits, for the three and six
months ended June 30, 2019 was $2.09 and $1.69, respectively.
The southern Peru copper mining corridor has
seen heightened political activity over the past several months,
including large protests related to the granting of a permit to
another company’s mining project. These protests have blocked the
entrance to the port of Matarani since mid-July. While the protests
are unrelated to Constancia, Hudbay and other copper miners use the
Matarani port to ship copper concentrates and import consumables.
Mining and milling operations have continued at Constancia, but
there has been a substantial concentrate inventory buildup at the
Constancia site, costs for consumables such as diesel have
increased, and Constancia’s molybdenum production has been affected
due to the unavailability of necessary consumables.
The Peruvian government has taken recent steps
to address the road blockages with some intermittent access
currently available to the port of Matarani. The company is
continuing to work to manage the impact of these disruptions.
Manitoba Operations Review
The Manitoba operations reflect the first full
quarter of the Lalor mine achieving 4,500 tonnes per day and the
Stall mill achieving record quarterly throughput. The 777 mine and
Lalor mine output increased by 35% and 21%, respectively, during
the second quarter of 2019 compared to the same quarter in 2018.
Total ore mined at the Manitoba operations during the second
quarter of 2019 increased by 1% compared to the same period in 2018
due to these production increases being offset by the closure of
the Reed mine in August 2018. As a result, the combined Manitoba
operations produced 31,838 tonnes of zinc, 6,131 tonnes of copper
and 28,019 ounces of gold-equivalent precious metals. Total copper,
gold and silver produced were lower compared to the same period in
2018 due to the closure of Reed mine, partially offset by increased
production at 777 and Lalor. Precious metals production in the
second quarter of 2019 was also affected by the stope sequencing of
Lalor gold zone ores and the timing of processing as this material
is currently transported to the Flin Flon mill and blended to
achieve optimal recoveries. Full year production of all metals is
expected to be within the annual guidance ranges.
In Manitoba, overall copper and silver grades
were 36% and 14% lower, respectively, in the second quarter of 2019
compared to the same period of 2018 while zinc grades were 7%
higher and gold grades were consistent over the period. Lower
copper grades reflect the cessation of high-grade copper production
from Reed following its closure, while grade variances for zinc and
silver were due to planned stope sequencing at 777 and Lalor.
Ore processed in Flin Flon in the second quarter
of 2019 was 16% lower than the same period in 2018 due to the Reed
mine closure, partially offset by increased production from the 777
mine. Copper, gold and silver recoveries in the second quarter of
2019 were 6%, 6%, and 16% lower, respectively, compared with the
same period in 2018 due to lower head grades. Zinc recoveries were
consistent quarter-over-quarter.
The Stall concentrator achieved record ore
throughput which was 7% higher than the same period in 2018 due to
ongoing operational and maintenance improvements. Copper recoveries
were 1% higher and zinc recoveries were 3% lower in the second
quarter of 2019 compared with the same period in 2018.
Manitoba combined mine, mill and G&A unit
operating costs in the second quarter of 2019 were 13% higher than
in the same period in 2018 due mainly to the Reed closure and
higher mining costs at Lalor associated with the production ramp
up. In addition, combined unit costs were negatively impacted due
to the timing of batching the Lalor ore in the Flin Flon mill, as
not all of the ore that was transported to Flin Flon was milled
during the quarter. Manitoba combined unit costs are expected to be
within guidance ranges for the full year 2019.
Cash cost per pound of copper produced, net of
by-product credits, in the second quarter of 2019 was negative
$0.15 per pound of copper produced. These costs were higher
compared to the same period in 2018, primarily as a result of lower
copper production and zinc by-product revenue. Sustaining cash cost
per pound of copper produced, net of by-product credits, in the
second quarter of 2019 was $2.11, which is higher than the prior
year period due to higher cash costs and increased capital
development expenditures at Lalor. Copper produced in the second
quarter of 2019 was 43% lower than the same quarter in 2018 as a
result of the closure of Reed mine, offset by increased production
at 777 and Lalor.
Snow Lake Exploration
Update
1901 Deposit Initial Resource
Estimate
Since its discovery in February 2019, drilling
has continued to define the extent and geometry of the 1901
deposit. This focused drill program, along with geological
interpretation and resource modeling, has resulted in an initial
resource estimate a mere six months from discovery. The deposit is
located between the former producing Chisel North mine and Lalor
mine, less than 1,000 metres from an active underground ramp at a
depth ranging from 550 to 650 metres and within 15 kilometres
trucking distance of the Stall concentrator (please see Figure 1,
which outlines the underground location of the 1901 deposit). The
property is 100% owned by Hudbay, free of any royalties or streams.
The mineralization is interpreted as two zinc-rich volcanogenic
massive sulphide lenses with locally high-grade gold and silver
content. The mineralization occurs along the hanging wall contact
of the stratigraphic horizon hosting the Chisel North deposit.
Based on these recent drilling results, Hudbay
is pleased to announce an initial mineral resource estimate for the
1901 deposit:
1901 Deposit Mineral Resource
Estimate1,2,3,4,5 |
Tonnes (millions) |
Zn Grade (%) |
Au Grade (g/t) |
Ag Grade (g/t) |
Cu Grade (%) |
Inferred |
|
2.1 |
9.67 |
0.87 |
30.7 |
0.25 |
1 CIM definitions were followed for the
estimation of mineral resources. Mineral resources that are not
mineral reserves do not have demonstrated economic viability.2
Mineral resources are reported within an economic envelope defined
by a mineral stope optimization algorithm assuming a selective
mining method.3 Long-term metal prices of $1,260/oz gold, $18.00/oz
silver, $3.10/lb copper and $1.10/lb zinc were used for the
estimation of the mineral resources. 4 Metal recovery estimates are
based on the assumption that this mineralization would be processed
at Hudbay’s Stall concentrator and would present a similar
performance to those experienced historically for the Chisel and
Lalor zinc-rich lenses. 5 Specific gravity measurements using
industry standard techniques were completed on all assayed
intervals.
The methodology followed to estimate mineral
resources at the 1901 deposit was identical to the approach used to
recently update the mineral resource estimates for the Lalor mine
(please refer to the NI 43-101 Technical Report for Lalor dated
March 28, 2019 for more details) and constrains the resource within
a stope optimization envelope that is expected to lead to a higher
mineral resource to mineral reserve conversion factor.
There remain opportunities for extension of the
mineralization discovered at the 1901 deposit (please refer to
Figure 2). Exploration targets for new discrete lenses also exist
in the immediate vicinity of 1901 and two drills are actively
exploring in the area. The company is studying alternatives to
develop the 1901 deposit to optimize the net present value of the
Manitoba business unit.
High-Grade Gold and Copper-Gold
Intercepts
In addition to the initial resource estimate on
the 1901 deposit, drilling has also identified several high-grade
gold and copper-gold zones but drilling density is not yet at a
level to establish a mineral resource estimate. Highlights of the
drill hole intersections occurring in the footwall of the zinc rich
lenses are summarized in the table below and the drill hole
locations are shown in Figure 3. Drill hole CH1916 assayed 29.8 g/t
Au and 401.8 g/t Ag over 7.5 metres from 580.5 to 588.0 metres, and
drill hole CH1925 assayed 3.2 g/t Au, 19.9 g/t Ag and 2.83% Cu over
9 metres from 637.5 to 646.5 metres. Several other high-grade
copper and gold intersections of less than 3 metres occur
throughout the footwall zone in altered felsic units. As drilling
progresses to an infill stage to convert the inferred zinc-rich
resource estimates to an indicated category, the company also
expects to establish the continuity of the gold and copper-gold
rich mineralization and report a mineral resource estimate for this
portion of the mineralization. The gold and copper-gold rich
mineralization is likely to constitute a suitable feed for the New
Britannia gold mill after its refurbishment is completed in 2022
and could further enhance the gold production profile from the Snow
Lake camp.
Hole ID |
From |
To |
Intercept1 |
Depth |
Au |
Ag |
Cu |
Zn |
(m) |
(m) |
(m) |
(m) |
(g/t) |
(g/t) |
(%) |
(%) |
CH1916 |
580.5 |
588.0 |
7.5 |
574 |
29.8 |
401.8 |
0.16 |
0.04 |
CH1918 |
570.0 |
575.5 |
5.5 |
570 |
14.2 |
105.3 |
0.13 |
0.21 |
CH1931 |
617.9 |
625.0 |
7.1 |
565 |
13.4 |
28.3 |
0.04 |
0.75 |
CH1934 |
692.8 |
696.0 |
3.2 |
646 |
14.3 |
181.2 |
0.21 |
0.04 |
CH1925 |
637.5 |
646.5 |
9.0 |
621 |
3.2 |
19.9 |
2.83 |
0.17 |
Note: all grade values are uncut.1 True widths
cannot be estimated at this stage as there is insufficient
knowledge on the orientation of the gold and copper-gold
mineralization
Hole ID |
From (m) |
To (m) |
Azimuth at Intercept |
Dip at Intercept |
Easting |
Northing |
Elevation |
Easting |
Northing |
Elevation |
CH1916 |
427067 |
6078909 |
-270 |
427068 |
6078909 |
-278 |
087 |
-85 |
CH1918 |
427094 |
6078818 |
-265 |
427094 |
6078818 |
-271 |
052 |
-83 |
CH1931 |
427083 |
6078909 |
-259 |
427081 |
6078908 |
-266 |
247 |
-65 |
CH1934 |
427072 |
6078847 |
-322 |
427070 |
6078846 |
-326 |
237 |
-64 |
CH1925 |
427185 |
6078904 |
-307 |
427183 |
6078903 |
-315 |
229 |
-75 |
Other Snow Lake Regional
Exploration
During the second quarter of 2019, Hudbay has
also continued in-mine exploration activities at the Lalor mine and
progressed engineering studies for its other 100%-owned deposits in
the Snow Lake area, including the WIM, Pen II and New Britannia
mine properties. Drilling and studies will continue throughout the
year and are expected to be incorporated in the annual mineral
reserve and resource estimate.
Rosemont Developments
On July 31, 2019, the U.S. District Court for
the District of Arizona (“Court”) issued a ruling in the lawsuits
challenging the U.S. Forest Service’s issuance of the Final Record
of Decision (“FROD”) for the Rosemont project in Arizona. The Court
ruled to vacate and remand the FROD such that Rosemont cannot
proceed with construction at this time. Hudbay strongly believes
that the Court has misinterpreted federal mining laws and Forest
Service regulations as they apply to Rosemont. As such the company
intends to appeal the Court’s decision to the U.S. Ninth Circuit
Court of Appeals and is evaluating other options to advance
Rosemont. Hudbay is also reassessing the optimal timeline for
financing Rosemont, including the previously announced process to
identify a joint venture partner for Rosemont.
Hudbay had previously initiated an early works
program for Rosemont with anticipated 2019 project capital spending
of $122 million. The company has suspended most of the early works
activities and now expects Rosemont project spending of
approximately $30 million in 2019, including costs to demobilize
engineering work and complete committed procurement. These costs
are in addition to $20 million of Rosemont non-project costs that
are still expected to be incurred in 2019.
Dividend Declared
A semi-annual dividend of C$0.01 per share was
declared on August 8, 2019. The dividend will be paid on September
27, 2019 to shareholders of record as of September 6, 2019.
Non-IFRS Financial Performance
Measures
Net debt is shown in this news release 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. Combined unit operating costs are
shown because the measures are used by the company as a key
performance indicator to assess the performance of its mining and
milling operations. 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. For
further details on these measures, including reconciliations to the
most comparable IFRS measures, please refer to page 31 of Hudbay’s
management’s discussion and analysis for the three and six months
ended June 30, 2019 available on SEDAR at www.sedar.com and EDGAR
at www.sec.gov.
Website Links
Hudbay:
www.hudbay.com
Management’s Discussion and Analysis:
http://www.hudbayminerals.com/files/doc_financials/2019/Q2/MDA192.pdf
Financial Statements:
http://www.hudbayminerals.com/files/doc_financials/2019/Q2/FS192.pdf
Conference Call and Webcast
Date: |
Friday, August 9, 2019 |
Time: |
9:00 a.m. ET |
Webcast: |
www.hudbay.com |
Dial in: |
1-416-915-3239 or
1-800-319-4610 |
Qualified Person
The technical and scientific information in this
news release related to the Constancia mine and Rosemont project
has been approved by Cashel Meagher, P. Geo, Hudbay’s Senior Vice
President and Chief Operating Officer. The technical and scientific
information related to the company’s other material mineral
projects contained in this news release has been approved by
Olivier Tavchandjian, P. Geo, Hudbay’s Vice-President Exploration
and Geology. Messrs. Meagher and Tavchandjian are qualified persons
pursuant to NI 43‑101. For a description of the key assumptions,
parameters and methods used to estimate mineral reserves and
resources at Hudbay’s material properties, as well as data
verification procedures and a general discussion of the extent to
which the estimates of scientific and technical information may be
affected by any known environmental, permitting, legal title,
taxation, sociopolitical, marketing or other relevant factors,
please see the technical reports for the company’s material
properties as filed by Hudbay on SEDAR at www.sedar.com.
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, production, cost and capital and exploration
expenditure guidance, anticipated production at the company’s mines
and processing facilities, the anticipated impact of the recent
blockades affecting access to the Port of Matarani, expectations
regarding the company's CEO transition, the expected benefits of
implementing the metallurgical recovery and optimization
initiatives at Constancia processing plant and expectations
regarding the schedule for acquiring the Pampacancha surface rights
and mining the Pampacancha deposit, the anticipated timing, cost
and benefits of developing the Rosemont project and the outcome of
litigation challenging Rosemont's permits, the company’s intention
to appeal the recent U.S. district court decision overturning the
U.S. Forest Service’s FROD for Rosemont and to evaluate other
options available to advance the project, expectations regarding
the financing, sanctioning and schedule for developing the Rosemont
project, expectations regarding the Lalor gold strategy, including
the refurbishment of the New Britannia mill, and the possibility of
optimizing the value of the gold resources in Manitoba, the future
potential of the 1901 deposit, including the possibility of
identifying additional gold resources, the possibility of
converting inferred mineral resource estimates to higher confidence
categories, the potential and the anticipated plans for advancing
the mining properties surrounding Constancia and the Ann Mason
project, anticipated mine plans, anticipated metals prices and the
anticipated sensitivity of the company’s financial performance to
metals prices, events that may affect the company’s 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
identified and were applied by the company in drawing conclusions
or making forecasts or projections set out in the forward-looking
information include, but are not limited to:
- the schedule for the refurbishment and commissioning of the New
Britannia mill;
- the success of the Lalor gold strategy;
- Hudbay’s ability to appeal the U.S. district court’s decision
setting aside the U.S. Forest Service’s FROD for Rosemont;
- the availability of other options to advance Rosemont
notwithstanding the U.S. district court’s recent decision;
- the successful resolution of the recent blockades affecting
access to the Port of Matarani;
- the ability to secure required land rights to develop and
commence mining the Pampacancha deposit;
- 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 exploration, development
and operational projects and ongoing employee relations;
- maintaining good relations with the communities in which the
company operates, including the communities surrounding the
Constancia mine and Rosemont project and First Nations communities
surrounding the Lalor mine;
- 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 aboriginal 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 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 generally associated
with the mining industry, such as economic factors (including
future commodity prices, currency fluctuations, energy prices and
general cost escalation), the appointment of a permanent CEO and
any changes related thereto, uncertainties related to the
development and operation of the company’s projects (including
risks associated with the permitting, development and financing of
the Rosemont project), risks related to the U.S. district court’s
recent decision to set aside the U.S. Forest Service’s FROD for
Rosemont and other legal challenges related to Rosemont’s permits,
risks related to the new Lalor mine plan, including the schedule
and cost for the refurbishment of the New Britannia mill and the
ability to convert inferred mineral resource estimates to higher
confidence categories, risks related to the schedule for mining the
Pampacancha deposit (including the timing and cost of acquiring the
required surface rights and the impact of any schedule delays),
dependence on key personnel and employee and union relations, risks
related to political or social unrest or change, risks in respect
of aboriginal and community relations, rights and title claims,
operational risks and hazards, including 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 reserves, volatile financial
markets 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 Hudbay’s
most recent Annual Information Form.
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 an integrated mining
company primarily producing copper concentrate (containing copper,
gold and silver), molybdenum concentrate and zinc metal. With
assets in North and South America, the company is focused on the
discovery, production and marketing of base and precious metals.
Directly and through its subsidiaries, Hudbay owns three
polymetallic mines, four ore concentrators and a zinc production
facility in northern Manitoba and Saskatchewan (Canada) and Cusco
(Peru), and copper projects in Arizona and Nevada (United States).
The company’s growth strategy is focused on the exploration and
development of properties it already controls, as well as other
mineral assets it may acquire that fit its strategic criteria.
Hudbay’s vision is to be a responsible, top-tier operator of
long-life, low-cost mines in the Americas. Hudbay’s mission is to
create sustainable value through the acquisition, development and
operation of high-quality, long-life deposits with exploration
potential in jurisdictions that support responsible mining, and to
see the regions and communities in which the company operates
benefit from its presence. The company is governed by the Canada
Business Corporations Act and its shares are listed under the
symbol "HBM" on the Toronto Stock Exchange, New York Stock Exchange
and Bolsa de Valores de Lima. Further information about Hudbay can
be found on www.hudbay.com.
For further information, please contact:
Candace BrûléDirector, Investor Relations(416)
814-4387candace.brule@hudbay.com
Photos accompanying this announcement are
available at:
https://www.globenewswire.com/NewsRoom/AttachmentNg/54f3cc86-3e81-4013-8e42-608a38ff9274
https://www.globenewswire.com/NewsRoom/AttachmentNg/8d0d6931-3e20-4fe2-9cd5-fa07fe88bc23
https://www.globenewswire.com/NewsRoom/AttachmentNg/463fdbf0-291d-46fa-b6c1-7ec6c4b51c5e
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