Hudbay Minerals Inc. (“Hudbay” or the “company”) (TSX,
NYSE:HBM) today released its first quarter 2023 financial
results. All amounts are in U.S. dollars, unless otherwise noted.
First Quarter Operating and Financial
Results; Production and Cost Guidance Reaffirmed
- Consolidated production in the
first quarter included 22,562 tonnes of copper and 47,240 ounces of
gold. Consolidated cash cost and sustaining cash cost per pound of
copper produced, net of by-product creditsi, were $0.85 and $1.83,
respectively, representing an improvement of 21% and 17%,
respectively, compared to the fourth quarter of 2022.
- Reaffirmed full year 2023
consolidated production guidance of 100,000 to 128,000 tonnes of
copper at a cash cost of $0.40 to $0.80 per poundii and sustaining
cash cost of $1.35 to $2.05 per poundii as first quarter production
was in line with quarterly cadence expectations.
- Peru operations successfully
managed through a complex environment to maintain steady
performance and produce 20,517 tonnes of copper in the first
quarter. The Peru team remained focused on maintaining strong
margins and achieved a cash cost per pound of copper produced, net
of by-product creditsi, of $1.36, which was overall in line with
the strong cost performance in the fourth quarter of 2022.
Transportation and supply chains in Peru have normalized since
mid-February and Constancia's concentrate inventory is now at
normal levels, well ahead of schedule.
- Full mining activities resumed at
the Pampacancha pit in February and the period of higher stripping
from March to June is progressing well with mining of higher-grade
ore now expected to commence late in the second quarter of 2023,
slightly ahead of schedule.
- Manitoba operations produced 36,034
ounces of gold at a cash cost per ounce of gold produced, net of
by-product creditsi, of $938, which was affected by temporary
challenges at the Lalor mine in the quarter that were partly offset
by strong throughput and gold recoveries at the New Britannia mill.
- Lalor ore production reached 4,800
tonnes per day late in the first quarter and throughout April after
implementing changes to improve stope fragmentation and
load-haul-dump equipment availability, together with many
production optimization initiatives underway at the mine.
- First quarter net earnings and
earnings per share were $5.5 million and $0.02, respectively. After
adjusting for a non-cash gain of $8.2 million related to a
quarterly revaluation of the closed site environmental reclamation
provision and a $6.1 million revaluation loss related to the gold
prepayment liability, among other items, first quarter adjusted
earnings per share were $0.00.
- Operating cash flow before change
in non-cash working capital was $85.6 million and adjusted EBITDAi
was $101.9 million in the first quarter.
- Cash and cash equivalents increased
during the first quarter to $255.6 million and were positively
impacted by the steady operation of the Constancia mill throughout
the transportation and supply chain interruptions earlier in the
quarter and the successful conversion of concentrate inventory into
cash during the quarter, ahead of schedule.
- Signed a new 10-year agreement for
100% renewable energy supply to Constancia, resulting in an
expected 40% reduction in total Scope 1 and Scope 2 greenhouse gas
emissions company-wide, in line with Hudbay’s climate change target
of a 50% reduction by 2030.
Executing on Growth Initiatives and
Prudent Financial Planning
- On April 13, 2023, Hudbay announced
a definitive agreement (the “Arrangement Agreement”) to acquire all
issued and outstanding common shares of Copper Mountain Mining
Corporation (“Copper Mountain"), to create 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. The combined company will be the third
largest Canadian copper producer and its complementary asset base
and technical expertise is expected to unlock $30 million in annual
operating efficiencies and corporate synergies over the course of
three years.
- Three-year production guidance
includes average annual copper production of 110,000 tonnes from
Constancia and average annual gold production of more than 190,000
ounces from Snow Lake, a 23% and 30% increase, respectively, from
2022 levels.
- Received positive permitting update
at Copper World from the Army Corps of Engineers (“ACOE”) and the
required state level permits continue to be expected in 2023.
Pre-feasibility study for Phase I of the Copper World project is
well-advanced and on track for mid-2023.
- Peru exploration activities resumed
with a focus on drill permitting for highly prospective satellite
properties while evaluating the potential for reserve expansion at
Constancia and Pampacancha through future mining phases.
- Snow Lake exploration activities
are prioritizing step-out drilling for new discoveries to support
future growth in annual production and mine life extension.
- Lalor 2023 winter exploration
program intersected numerous occurrences of disseminated copper
sulfides over two kilometres down plunge, indicating the potential
close proximity of copper-gold feeder zones similar to the deeper
lenses at Lalor.
- The Stall recovery improvement
program is on track for commissioning in May with ramp-up to higher
metal recoveries by mid-2023.
- Nevada drill program is planned for
late 2023 to test high-grade skarn and large porphyry targets
identified through recent geophysical surveys on private land
claims near Mason.
- To benefit from strong current gold
prices, Hudbay deferred eight months of prepaid gold deliveries
from 2023 into 2024, which is expected to increase the company’s
cash position by approximately $53 million in 2023 at prevailing
gold prices.
- As an additional prudent measure to
ensure free cash flow generation in 2023, Hudbay entered into a
zero-cost collar program in April for approximately 10% of copper
production expected in the second half of 2023 at a floor price of
$3.95 per pound while providing upside to copper price increases up
to $4.28 per pound.
- On track to deliver the
discretionary spending reduction targets for 2023 with lower growth
capital and exploration expenditures compared to 2022.
“We continue to be on track to achieve higher
production and cash flows in 2023 as we successfully managed the
recent Peru logistical interruptions to ensure steady operations at
Constancia and are executing initiatives to increase the output
from our Lalor mine in Snow Lake,” said Peter Kukielski, President
and Chief Executive Officer. “We took several prudent measures this
quarter to improve our free cash flow for 2023 and we remain
focused on being disciplined with capital allocation as we continue
to de-risk Copper World. We are also pleased to be expanding our
copper production profile with the recently announced combination
with Copper Mountain, which creates a larger, more resilient and
more diversified cash flow platform to prudently advance our
leading organic copper growth pipeline.”
Summary of First Quarter
Results
Consolidated copper production in the first
quarter of 2023 was 22,562 tonnes, a decrease compared to the
fourth quarter of 2022 primarily due to lower copper grades in Peru
and Manitoba, as planned. Consolidated gold production was 47,240
ounces, a decrease compared to the fourth quarter primarily due
lower gold grades in Peru, partially offset by higher throughput in
Snow Lake. Consolidated zinc production in the first quarter was
9,846 tonnes, higher than the fourth quarter primarily due to
higher zinc grades and throughput in Snow Lake. First quarter
production was in line with expectations and Hudbay has reaffirmed
its 2023 production guidance for all metals.
Consolidated cash cost per pound of copper
produced, net of by-product creditsi, in the first quarter of 2023
improved to $0.85, compared to $1.08 in fourth quarter of 2022.
This significant improvement was primarily a result of lower
mining, milling and freight costs and higher by-product credits,
partially offset by higher general and administrative costs and
lower consolidated copper production. Consolidated sustaining cash
cost per pound of copper produced, net of by-product creditsi, was
$1.83 in the first quarter compared to $2.21 in the fourth quarter.
This decrease was primarily due to the same reasons outlined above
and lower sustaining capital expenditures and capitalized
exploration. Both measures are expected to further decline in
future quarters with higher expected copper production and
contributions from precious metals by-product credits. The company
is reaffirming its full year 2023 consolidated cash cost and
sustaining cash cost guidance. Consolidated all-in sustaining cash
cost per pound of copper produced, net of by-product creditsi, was
$2.07 in the first quarter, 14% lower than $2.41 in the fourth
quarter of 2022, primarily due to the same reasons outlined
above.
Cash generated from operating activities in the
first quarter of 2023 decreased to $71.3 million compared to $86.4
million in the fourth quarter of 2022. Protests and civil unrest in
the southern Peru mining corridor impacted the company’s Peru
operations early in the first quarter; however, these disruptions
have abated since mid-February. Transportation of Constancia’s
concentrate and critical supplies has since returned to normal.
Operating cash flow before change in non-cash working capital was
$85.6 million during the first quarter of 2023, compared to $109.1
million in the fourth quarter of 2022. This decrease was primarily
the result of lower copper and zinc sales volumes, partially offset
by higher realized prices of all metals.
Net earnings and earnings per share in the first
quarter of 2023 were $5.5 million and $0.02, respectively, compared
to a net loss and loss per share of $17.4 million and $0.07,
respectively, in the fourth quarter of 2022. The 2023 first quarter
results were positively impacted by a non-cash gain of $8.2 million
related to the quarterly revaluation of the company’s closed site
environmental reclamation provision and a $5.0 million variable
consideration adjustment with respect to stream revenue and
accretion. These items were offset by a $6.1 million revaluation
loss related to the gold prepayment liability.
Adjusted net earningsi and adjusted net earnings
per sharei in the first quarter of 2023 were $0.1 million and $0.00
per share, respectively, after adjusting for the non-cash
revaluation gain of the environmental reclamation provision and the
revaluation loss on the gold prepayment liability, among other
items. This compares to adjusted net earnings and adjusted net
earnings per share of $2.6 million, and $0.01 in the fourth quarter
of 2022. First quarter adjusted EBITDAi was $101.9 million,
compared to $124.7 million in the fourth quarter of 2022 because of
the same factors affecting operating cash flow noted above.
As at March 31, 2023, the company’s liquidity
includes $255.6 million in cash as well as undrawn availability of
$355.4 million under its revolving credit facilities.
Consolidated Financial Condition ($000s) |
|
Mar. 31, 2023 |
Dec. 31, 2022 |
Mar. 31, 2022 |
Cash |
|
255,563 |
225,665 |
213,359 |
Total long-term debt |
|
1,225,023 |
1,184,162 |
1,181,119 |
Net debt1 |
|
969,460 |
958,497 |
967,760 |
Working capital2 |
|
100,987 |
76,534 |
161,846 |
Total assets |
|
4,367,982 |
4,325,943 |
4,538,214 |
Equity |
|
1,574,521 |
1,571,809 |
1,561,978 |
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 interim consolidated
financial statements.
Consolidated Financial Performance |
|
Three Months Ended |
|
|
Mar. 31, 2023 |
Dec. 31, 2022 |
Mar. 31, 2022 |
Revenue |
$000s |
295,219 |
321,196 |
378,619 |
Cost of sales |
$000s |
228,706 |
251,520 |
293,351 |
Earnings (loss) before tax |
$000s |
17,430 |
(14,287) |
88,861 |
Earnings (loss) |
$000s |
5,457 |
(17,441) |
63,815 |
Basic and diluted earnings (loss) per share |
$/share |
0.02 |
(0.07) |
0.24 |
Adjusted earnings per share1 |
$/share |
0.00 |
0.01 |
0.02 |
Operating cash flow before change in non-cash working capital |
$ millions |
85.6 |
109.1 |
77.6 |
Adjusted EBITDA1 |
$ millions |
101.9 |
124.7 |
110.2 |
1 Adjusted earnings (loss) 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 of this
news release.
Consolidated Production and Cost Performance |
Three Months Ended |
|
|
Mar. 31, 2023 |
Dec. 31, 2022 |
Mar. 31, 2022 |
Contained metal in concentrate and doré
produced1 |
|
|
|
Copper |
tonnes |
22,562 |
29,305 |
24,702 |
Gold |
ounces |
47,240 |
53,920 |
53,956 |
Silver |
ounces |
702,809 |
795,015 |
784,357 |
Zinc |
tonnes |
9,846 |
6,326 |
22,252 |
Molybdenum |
tonnes |
289 |
344 |
207 |
Payable metal sold |
|
|
|
|
Copper |
tonnes |
18,541 |
25,415 |
20,609 |
Gold2 |
ounces |
49,720 |
47,256 |
48,343 |
Silver2 |
ounces |
541,884 |
559,306 |
864,591 |
Zinc3 |
tonnes |
5,628 |
8,230 |
17,306 |
Molybdenum |
tonnes |
254 |
421 |
213 |
Consolidated cash cost per pound of
copper4
produced4 |
|
|
|
Cash cost |
$/lb |
0.85 |
1.08 |
1.11 |
Sustaining cash cost |
$/lb |
1.83 |
2.21 |
2.29 |
All-in sustaining cash cost |
$/lb |
2.07 |
2.41 |
2.54 |
1 Metal reported in concentrate is prior to
deductions associated with smelter contract terms.2 Includes total
payable gold and silver in concentrate and doré sold.3 For the
three months ended March 31, 2023 and December 31, 2022 this metric
includes payable zinc in concentrate sold. For the three months
ended March 31, 2022, this metric also includes payable refined
zinc metal sold.4 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 the “Non-IFRS Financial Reporting Measures”
section of this news release.
Peru Operations Review
Peru Operations |
Three Months Ended |
|
|
Mar. 31, 2023 |
Dec. 31, 2022 |
Mar. 31, 2022 |
Constancia ore mined1 |
tonnes |
3,403,181 |
5,614,918 |
6,908,151 |
Copper |
% |
0.34 |
0.40 |
0.32 |
Gold |
g/tonne |
0.04 |
0.04 |
0.04 |
Silver |
g/tonne |
2.52 |
3.48 |
3.22 |
Molybdenum |
% |
0.01 |
0.01 |
0.01 |
Pampacancha ore mined |
tonnes |
897,295 |
3,771,629 |
847,306 |
Copper |
% |
0.49 |
0.37 |
0.27 |
Gold |
g/tonne |
0.52 |
0.29 |
0.43 |
Silver |
g/tonne |
5.12 |
3.84 |
4.06 |
Molybdenum |
% |
0.01 |
0.01 |
0.01 |
Total ore
mined |
tonnes |
4,300,476 |
9,386,547 |
7,755,457 |
Strip ratio2 |
|
1.84 |
0.97 |
1.10 |
Ore milled |
tonnes |
7,663,728 |
7,795,735 |
7,213,833 |
Copper |
% |
0.33 |
0.41 |
0.31 |
Gold |
g/tonne |
0.08 |
0.12 |
0.08 |
Silver |
g/tonne |
3.69 |
3.93 |
3.26 |
Molybdenum |
% |
0.01 |
0.01 |
0.01 |
Copper recovery |
% |
81.7 |
85.1 |
85.3 |
Gold
recovery |
% |
56.8 |
69.6 |
59.8 |
Silver
recovery |
% |
60.7 |
66.5 |
66.9 |
Molybdenum recovery |
% |
34.8 |
37.7 |
21.1 |
Contained metal in concentrate |
|
|
|
Copper |
tonnes |
20,517 |
27,047 |
19,166 |
Gold |
ounces |
11,206 |
20,860 |
10,789 |
Silver |
ounces |
552,167 |
655,257 |
505,568 |
Molybdenum |
tonnes |
289 |
344 |
207 |
Payable metal sold |
|
|
|
Copper |
tonnes |
16,316 |
23,789 |
16,825 |
Gold |
ounces |
11,781 |
15,116 |
14,452 |
Silver |
ounces |
392,207 |
411,129 |
636,133 |
Molybdenum |
tonnes |
254 |
421 |
213 |
Combined unit operating cost3,4,5 |
$/tonne |
11.47 |
13.64 |
12.37 |
Cash cost5 |
$/lb |
1.36 |
1.34 |
1.54 |
Sustaining cash cost5 |
$/lb |
2.12 |
2.09 |
2.27 |
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 $0.7 million, or $0.09 per tonne, of COVID-related
costs during the three months ended December 31, 2022 and $2.3
million, or $0.32 per tonne, during the three months ended March
31, 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 first quarter of 2023, the Constancia
operations produced 20,517 tonnes of copper, 11,206 ounces of gold,
552,167 ounces of silver and 289 tonnes of molybdenum. Production
levels were lower than the fourth quarter of 2022 due to lower
grades from the processing of stockpiles, as discussed below. Due
to this and higher stripping activities planned in the Pampacancha
pit in the second quarter of 2023, Hudbay continues to expect 2023
Peru production to be higher in the second half of 2023 and the
company is on track to achieve full year 2023 Peru production
guidance.
Ore mined from Pampacancha in the first quarter
of 2023 was 897,295 tonnes at record high grades of 0.49% copper
and 0.52 grams per tonne gold. Despite this achievement, total ore
mined in the first quarter of 2023 was lower than the fourth
quarter of 2022 mainly due to the processing of stockpiles in order
to conserve fuel during protests and civil unrest in Peru that
occurred in early 2023. Since mid-February, transportation of
Constancia’s concentrate and critical supplies has returned to
normal.
Full mining activities resumed in the
Pampacancha pit in February and the period of higher stripping from
March to June is progressing well with mining of higher-grade ore
now expected to resume late in the second quarter of 2023, slightly
ahead of the original schedule.
The logistical risk mitigation plans implemented
during the first quarter, together with strong continued support
from the local communities, enabled Hudbay’s plant to continue to
operate uninterrupted at full capacity supplemented with
approximately 3.9 million tonnes of stockpiled ore. Ore milled
during the first quarter of 2023 was relatively unchanged from the
fourth quarter of 2022. Milled grades decreased in the first
quarter compared to the fourth quarter due to the processing of
lower-grade stockpiles as discussed above. Recoveries of all metals
during the first quarter were lower than the fourth quarter due to
higher levels of impurities in stockpile ore. Hudbay expects to
continue to process a significant amount of stockpiles during the
second quarter of 2023 while the company completes the planned
three-month stripping period in the Pampacancha pit, in line with
the mine plan.
Combined mine, mill and G&A unit operating
costsi in the first quarter of 2023 were 16% lower than the fourth
quarter of 2022 primarily due to lower mining costs.
Peru’s cash cost per pound of copper produced,
net of by-product creditsi, in the first quarter of 2023 was $1.36
and relatively unchanged from the fourth quarter of 2022. This cost
measure remains slightly above the upper end of the 2023 guidance
range. However, cash cost per pound of copper produced, net of
by-product credits, is expected to decline and full year cash costs
are expected to remain within the 2023 guidance range with higher
expected copper production and contributions from precious metal
by-product credits later this year.
Peru’s sustaining cash cost per pound of copper
produced, net of by-product creditsi, in the first quarter of 2023
was $2.12 and relatively in line with the fourth quarter of 2022 as
lower mining costs and capitalized exploration were offset by lower
copper production.
Manitoba Operations Review
Manitoba Operations Three Months Ended |
|
|
Mar. 31, 2023 |
Dec. 31, 2022 |
Mar. 31, 20221 |
Lalor ore mined |
tonnes |
373,599 |
369,453 |
386,752 |
Gold |
g/tonne |
3.96 |
4.00 |
3.76 |
Copper |
% |
0.57 |
0.73 |
0.80 |
Zinc |
% |
3.32 |
2.17 |
4.06 |
Silver |
g/tonne |
18.24 |
19.37 |
22.94 |
New Britannia Mill: |
|
Ore
milled |
tonnes |
143,042 |
141,142 |
124,176 |
Gold |
g/tonne |
6.05 |
6.11 |
5.63 |
Copper |
% |
0.61 |
0.91 |
0.86 |
Zinc |
% |
0.76 |
0.67 |
0.85 |
Silver |
g/tonne |
22.39 |
22.09 |
22.03 |
Copper
recovery - concentrate |
% |
91.7 |
89.3 |
89.0 |
Gold
recovery - concentrate |
% |
62.0 |
56.6 |
61.4 |
Silver
recovery - concentrate |
% |
61.9 |
55.4 |
63.4 |
Stall Concentrator: |
|
|
|
Ore
milled |
tonnes |
242,619 |
204,350 |
273,125 |
Gold |
g/tonne |
2.78 |
2.50 |
3.07 |
Copper |
% |
0.59 |
0.61 |
0.81 |
Zinc |
% |
4.81 |
3.43 |
5.78 |
Silver |
g/tonne |
17.14 |
19.24 |
23.68 |
Copper
recovery |
% |
87.0 |
89.0 |
86.7 |
Zinc
recovery |
% |
84.4 |
90.1 |
85.7 |
Gold
recovery |
% |
61.9 |
62.4 |
55.8 |
Silver recovery |
% |
56.3 |
56.6 |
58.6 |
Total contained metal in concentrate and doré2 |
|
|
Gold |
ounces |
36,034 |
33,060 |
43,167 |
Copper |
tonnes |
2,045 |
2,258 |
5,536 |
Zinc |
tonnes |
9,846 |
6,326 |
22,252 |
Silver |
ounces |
150,642 |
139,758 |
278,789 |
Total payable metal sold |
|
|
|
Gold3 |
ounces |
37,939 |
32,140 |
33,891 |
Copper |
tonnes |
2,225 |
1,626 |
3,784 |
Zinc |
tonnes |
5,628 |
8,230 |
17,306 |
Silver3 |
ounces |
149,677 |
148,177 |
228,458 |
Combined unit operating cost4,5 |
C$/tonne |
216 |
241 |
176 |
Gold cash
cost5 |
$/oz |
938 |
922 |
416 |
Gold sustaining cash cost5 |
$/oz |
1,336 |
1,795 |
1,187 |
1 The 777 mine and Flin Flon concentrator information for March
31, 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 Results section in the Management’s
Discussion and Analysis for the third quarter of 2022. Total
contained metal in concentrate and doré, total payable metal sold,
unit cost and cash costs for March 31, 2022 include the impact of
the Flin Flon operations.2 Doré includes slag and carbon fines in
the first quarter of 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 first quarter of 2023, the Manitoba
operations produced 36,034 ounces of gold, 9,846 tonnes of zinc,
2,045 tonnes of copper and 150,642 ounces of silver. Production of
gold, zinc and silver were higher than the fourth quarter of 2022
primarily due to higher throughput and higher grades. Copper
production was lower than the fourth quarter due to lower head
grades. With the completion of a number of key initiatives aimed to
support higher production levels at Lalor, improved metal
recoveries at the mills and a prioritization of mining higher gold
grade zones at Lalor throughout the year, as planned, full year
Manitoba production of all metals remains on track to achieve
guidance ranges for 2023.
The Manitoba team continues to advance a number
of key initiatives to support higher production levels and improved
metal recoveries at Hudbay’s Snow Lake operations and have made
significant progress in building longhole inventory, optimizing the
development drift size and focusing on shaft availability
improvements to enable more ore to be hoisted to surface while
minimizing inefficient trucking of ore via the ramp. The first
phase of the Stall mill recovery project, consisting of new cyclone
packs, state-of-the-art Jameson Cells on the copper and zinc
circuits and process control improvements, is on track for
commissioning in May with ramp-up to higher metal recoveries
expected by mid-2023.
Ore mined at Lalor was slightly higher than the
fourth quarter of 2022 despite being impacted by stope muck
fragmentation issues that created delays at the rock breakers and
low load-haul-dump equipment availability in March. The company
implemented changes to improve stope fragmentation and
load-haul-dump equipment availability, which together with the many
production optimization initiatives underway at Lalor, resulted in
Lalor achieving higher production levels of 4,800 tonnes per day
late in the first quarter and throughout April.
The Stall mill processed 19% more ore in the
first quarter compared to the fourth quarter of 2022, in line with
the base metal ore production from Lalor. Stall recoveries were
consistent with the metallurgical model for the head grades
delivered. The New Britannia mill continued to achieve consistent
production above its nameplate capacity in the first quarter of
2023, averaging approximately 1,590 tonnes per day. Hudbay
continues to advance improvement initiatives at New Britannia with
a focus on reducing reagent and grinding media consumption. These
initiatives entail minimal capital outlays while further improving
overall metal recoveries and copper concentrate grades.
Combined mine, mill and G&A unit operating
costsi in the first quarter decreased by 10% compared to the fourth
quarter of 2022, reflecting higher throughput as a result of the
production efficiency initiatives underway.Cash cost per ounce of
gold produced, net of by-product creditsi, in the first quarter was
$938, slightly higher than the fourth quarter of 2022 primarily due
to lower by-product credits and higher G&A, partially offset by
higher gold production. Full year cash costs are expected to
decline to be within the 2023 guidance range with increasing gold
production throughout the year from higher grades and throughput at
Lalor and the completion of the Stall recovery project in the
second quarter, as planned.
Sustaining cash cost per ounce of gold produced,
net of by-product creditsi, in the first quarter was $1,336, lower
than the fourth quarter of 2022 primarily due to lower sustaining
capital expenditures.
Combination with Copper Mountain to
Create a Premier Americas-Focused Copper Producer
On April 13, 2023, Hudbay entered into the
Arrangement Agreement to acquire all of the issued and outstanding
common shares of Copper Mountain (the "Transaction").
Upon completion, the Transaction will create a
premier Americas-focused copper mining company with annual copper
production of 150,000 tonnes, based on 2023 production guidance,
from three long-life mines and a world-class pipeline of organic
copper growth projects. The combined company will represent the
third largest copper producer in Canada based on 2023 estimated
copper production, and its complementary assets are expected to
unlock $30 million in annual operating efficiencies and corporate
synergies over the course of three years. The combined company will
be well-positioned to deliver sustainable cash flows with
compelling organic growth and the opportunity for a valuation
re-rate as a larger, more diversified copper producer with enhanced
liquidity. The Transaction meets Hudbay’s stringent financial and
strategic acquisition criteria for pursing value accretive
opportunities and the incremental diversified cash flows will
further strengthen the company’s balance sheet and support its
deleveraging initiatives.
Under the terms of the Transaction, Copper
Mountain shareholders will receive 0.381 of a Hudbay common share
for each Copper Mountain common share held, representing
approximately C$2.67 per Copper Mountain common share and a US$439
million equity value based on Hudbay’s closing share price on April
12, 2023. The Transaction will be implemented by way of a court
approved plan of arrangement under the Business Corporations Act
(British Columbia). In addition to court approval, the Transaction
is subject to customary closing conditions, including approval by
Hudbay and Copper Mountain shareholders and approval under the
Competition Act (Canada). The Transaction is expected to close by
late June 2023.
100% Renewable Power Supply at
Constancia
During the first quarter of 2023, Hudbay signed
a new 10-year power purchase agreement with ENGIE Energía Perú for
access to a 100% renewable energy supply to its Constancia
operations in Peru. The agreement will come into effect in January
2026 following the expiry of Constancia's existing power supply
agreement. The agreement provides several improvements over the
existing power supply contract, including improved flexibility in
power supply levels, lower contracted costs and guaranteed supply
to meet fluctuating demand requirements and no penalties for
reduced usage. Total Scope 1 and Scope 2 greenhouse gas ("GHG")
emissions company-wide at Hudbay’s current operations are expected
to decline by 40% during the life of the contract, positioning the
company well to achieve its 2030 climate change target of a 50%
reduction in Scope 1 and Scope 2 GHG emissions.
Copper World Positive Permitting Update;
Pre-Feasibility Study Well-Advanced
In March 2023, Hudbay received confirmation from
the ACOE that its previous surrender of the Section 404 Clean Water
Act permit for the former Rosemont project (“404 Permit”) was
formally accepted and revoked as requested. The ACOE also
reaffirmed the validity of the March 2021 approved jurisdictional
determinations whereby the ACOE determined there are no waters of
the U.S. in the area submitted for analysis, which is consistent
with internal studies that also contemplate the full Copper World
area.
Hudbay surrendered the 404 Permit to the ACOE in
April 2022 as there is no evidence of jurisdictional waters of the
U.S. on the former Rosemont project site. In May 2022, Judge Soto
from the U.S. District Court for the District of Arizona issued a
favourable ruling that affirmed Hudbay’s surrender of the 404
Permit was effective and that the new Copper World project is not
connected to the previous federal permitting process.
Hudbay commenced the permitting process for
Copper World with the approval of a Mined Land Reclamation Plan in
May 2022. This approval by the Arizona State Mine Inspector was
challenged in state court but the challenge was dismissed in May
2023 as having no basis.
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 continues to expect to receive these two outstanding state
permits in 2023.
In May 2023, the Arizona Corporation Commission
approved an amendment to the Certificate of Environmental
Compatibility (“CEC”) authorizing the electric transmission line to
site. The CEC was granted for the Rosemont project in 2012 and the
amendment removed the requirements for federal permits so that the
CEC can be used to construct the transmission line for Copper
World.
Clearing and grading work to prepare for the
development of Copper World continues at site, including the
construction of roads and other facilities. Phase I of Copper World
reflects an operation with processing infrastructure on Hudbay’s
private lands and mining occurring on patented mining claims,
requiring only state and local permits. Pre-feasibility activities
for Phase I are well-advanced and a pre-feasibility study is
expected to be released in mid-2023. Upon receipt of the state
level permits, Hudbay expects to evaluate a bulk sampling program
at Copper World to continue to de-risk the project by testing grade
continuity, variable cut-off effectiveness and metallurgical
strategies. The company also intends to initiate a minority joint
venture partner process following receipt of permits, 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.
Continued Focus on Free Cash Flow
Generation
Hudbay was successful in ensuring steady
operation of the Constancia mill throughout the Peru transportation
and supply chain interruptions experienced earlier in the quarter.
This was achieved through effective logistical risk mitigation
plans and with the continued strong support from the local
communities. Despite building up excess concentrate inventories at
site in February, the company successfully reduced concentrate
inventories throughout March, well ahead of schedule, which
improved sales volumes and cash flow during the quarter.
With a focus on generating positive cash flow
and strong returns on invested capital in 2023, Hudbay is committed
to deleveraging and disciplined capital allocation. In an effort to
receive full exposure to current strong gold prices, the company
amended its gold forward sale and prepay agreements during the
first quarter of 2023 to defer eight months of deliveries starting
with February 2023. Deliveries of the outstanding 37,500 ounces of
gold will resume in fixed monthly amounts starting October 2023 and
continue until August 2024. The deferral of gold deliveries is
expected to increase the company’s cash position in 2023 by
approximately $53 million at prevailing gold prices as part of its
continued focus on reducing net debt.
As an additional prudent measure to ensure free
cash flow generation and continued financial discipline in 2023,
Hudbay successfully extended its existing quotational period
hedging program in the first quarter for approximately 8,000 tonnes
of contained copper in the previously unsold concentrate inventory
in Peru to lock in prevailing copper prices. In addition, in April
2023, the company entered into a zero-cost collar program for
approximately 10% of copper production expected in the second half
of 2023. The program is for 1,200 tonnes of copper per month for
six months starting in July 2023 and establishes a floor price of
$3.95 per pound while providing upside to increases in the copper
price up to a maximum of $4.28 per pound.
The company is on track to deliver its
discretionary spending reduction targets by reducing growth capital
and exploration spending in Arizona, Manitoba and Peru in 2023
compared to 2022. Total growth capital expenditures in the first
quarter of 2023 were approximately $16.3 million, a 22% reduction
from the fourth quarter of 2022. Total exploration expenses for
2023 are on track to be in line with annual guidance of $20
million, a 42% decrease from 2022 levels.
Annual Reserve and Resource
Update
Hudbay provided its annual mineral reserve and
resource update on March 30, 2023. Current mineral reserve
estimates at Constancia total 492 million tonnes at 0.30% copper
with approximately 1.5 million tonnes of contained copper. The
expected mine life of Constancia has been maintained and extends
until 2038. The copper contained in measured and indicated mineral
resources has increased in 2023 due to success in converting
inferred mineral resources.
Current mineral reserve estimates in Snow Lake
total 18 million tonnes with approximately 2.1 million ounces in
contained gold, and the expected mine life of the Snow Lake
operations has been maintained and extends until 2038. With the
Snow Lake operations achieving higher production levels after the
full ramp-up of the New Britannia mill in 2022 and the transition
of the Flin Flon workforce and equipment to the Lalor mine,
exploration activities are now prioritizing step-out drilling to
identify opportunities for meaningful additions to the mineral
resource base to support future growth. Total gold contained in
inferred resources was unchanged at 1.7 million ounces, which
provides the potential to maintain strong production levels beyond
2030 and further extend the mine life in Snow Lake.
The company released its updated three-year
production guidance with its annual mineral reserve and resource
update. Annual production at the Constancia operations is expected
to average approximately 110,000 tonnes of copper and 87,000 ounces
of gold over the next three years, representing a 23% and 49%
increase, respectively, from 2022 levels. Annual gold production
from Snow Lake is expected to average more than 190,000 ounces over
the next three years, which represents a further increase of 30%
from 2022 levels.
Exploration Update
Constancia and Pampacancha In-Mine
Exploration
Hudbay is completing 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 company is also completing a
drill program at the Pampacancha deposit to test mineral reserve
extension potential. The results from these drill programs 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. The company 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. Drill permit applications are expected to be submitted
in the coming months. 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 Near-Mine Exploration
Hudbay commenced a winter drill program in
January 2023 with four drill rigs testing the down-plunge gold and
copper extensions of the Lalor deposit, in the first step-out
drilling in the deeper zones at Lalor since the initial discovery
of the gold and copper-gold zones in 2009 and 2010. This initial
campaign consisted of eight widely spaced drill holes over a
distance of two kilometres. Seven of the drill holes reached their
planned minimum depth of 1,500 metres prior to the spring thaw that
necessitated an early end of the program. All these drill 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. Furthermore, three of the holes
have shown better mineral endowment with several intercepts of a
minimum of four metres of copper mineralization. Although assay
results are pending, these initial results are very encouraging
indications that the rocks hosting the rich Cu-Au mineralization at
Lalor continue down plunge. Geophysical borehole surveying will be
completed on all drill holes and will help refine the targets for
the next phase of drilling to be conducted in early 2024.
One additional drill rig is testing a
geophysical anomaly located within 400 metres of existing Lalor
underground infrastructure. Four drill holes were completed during
the winter drill program and assay results from base metal and
copper-gold mineralized intercepts identified from core logging are
pending.
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 to assess the processing viability of the Flin Flon
tailings.
Mason Exploration
The Mason project is a large greenfield copper
deposit located in the historic Yerington District of Nevada and is
one of the largest undeveloped copper porphyry deposits in North
America. Hudbay completed a PEA in 2021 which demonstrated robust
project economics from a 27-year mine life operation. There is
opportunity to further enhance the project economics through
exploration for higher grade satellite deposits on the company’s
prospective land package near Mason, including Mason Valley. The
Mason Valley property hosts several historical underground copper
mines that were in production in the early 1900s. Much of the Mason
Valley property is located on Hudbay’s wholly owned private lands
within 15 kilometres of the planned processing infrastructure for
the Mason project and contains highly prospective skarn
mineralization. A conductivity-resistivity IP ground survey
conducted in the fourth quarter of 2022 was successful in
identifying the mineralization associated with the historical mines
and confirmed the potential for both high-grade skarn targets as
well as a large porphyry target below the historical mines. These
results, in combination with a re-interpretation of geological data
from past operating mines and previous exploration data, will be
used to finalize a drill plan to test these targets in late
2023.
Senior Management Team
Appointments
In March 2023, Hudbay promoted Javier Del Rio to
Senior Vice President, South America and USA and Olivier
Tavchandjian to Senior Vice President, Exploration and Technical
Services. In March 2023, Hudbay appointed Warren Flannery as Vice
President, Business Planning and Reclamation.
Mr. Del Rio joined Hudbay in 2010 and has been
instrumental in establishing and growing the company’s Peruvian
business, and in early 2022, he assumed responsibility for Hudbay’s
Arizona business unit. He has over 30 years of mining experience
and prior to joining Hudbay, he held management positions in
business planning, optimization processes and business analysis
with Newmont Mining Corporation in the USA and Peru.
Mr. Tavchandjian has been a key member of
Hudbay’s senior management team since 2017, leading Hudbay’s
exploration strategy and adding significant value through growing
the mineral resources and reserves at all the company’s key assets.
He assumed responsibility for Hudbay’s technical services function
in April 2022, has more than 30 years of experience in strategic
and life of mine planning and has provided invaluable support to
the operations and corporate development teams.
Mr. Flannery is responsible for capital planning
and operations strategy, as well as reclamation and non-producing
facilities. He is an experienced mining professional with nearly 30
years of extensive experience in mine operations, planning and
project development at global mining companies, including Vale
Inco, Barrick, PotashCorp and Falconbridge. Prior to joining
Hudbay, he was head of the Mining Technical group at CIBC’s global
mining corporate and investment banking arm for ten years, working
on a broad range of capital markets financing and advisory
mandates.
Website Links
Hudbay:
www.hudbay.com
Management’s Discussion and Analysis:
http://www.hudbayminerals.com/files/doc_financials/2023/Q1/MDA523.pdf
Financial Statements:
http://www.hudbayminerals.com/files/doc_financials/2023/Q1/FS523.pdf
Conference Call and Webcast
Date: |
Tuesday, May 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”).
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.
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) |
Mar. 31, 2023 |
Dec. 31, 2022 |
Mar. 31, 2022 |
Profit (loss) for the period |
5.4 |
|
(17.4 |
) |
63.8 |
|
Tax expense |
12.0 |
|
3.1 |
|
25.0 |
|
Profit (loss) before tax |
17.4 |
|
(14.3 |
) |
88.8 |
|
Adjusting items: |
|
|
|
Mark-to-market adjustments1 |
6.8 |
|
10.7 |
|
10.5 |
|
Peru inventory reversal |
— |
|
— |
|
(0.5 |
) |
Foreign exchange loss |
0.3 |
|
0.2 |
|
1.5 |
|
Variable consideration adjustment - stream revenue and
accretion |
(5.0 |
) |
— |
|
(5.8 |
) |
Re-evaluation adjustment - environmental provision4 |
(8.2 |
) |
13.5 |
|
(79.9 |
) |
Evaluation expenses |
— |
|
0.1 |
|
7.0 |
|
Restructuring charges - Manitoba2 |
— |
|
1.0 |
|
0.7 |
|
Loss on disposal of investments |
0.7 |
|
0.5 |
|
— |
|
Post-employment plan (curtailment) / past service cost
adjustment |
— |
|
(2.4 |
) |
— |
|
Loss on disposal of plant and equipment and non-current assets -
Manitoba & Arizona |
0.1 |
|
0.4 |
|
— |
|
Changes in other provisions (non-capital)3 |
— |
|
5.8 |
|
— |
|
Adjusted earnings before income taxes |
12.1 |
|
15.5 |
|
22.3 |
|
Tax expense |
(12.0 |
) |
(3.1 |
) |
(25.0 |
) |
Tax impact on adjusting items |
— |
|
(9.8 |
) |
7.9 |
|
Adjusted net earnings |
0.1 |
|
2.6 |
|
5.2 |
|
Adjusted net earnings ($/share) |
0.00 |
|
0.01 |
|
0.02 |
|
Basic weighted average number of common shares outstanding
(millions) |
262.0 |
|
262.0 |
|
261.7 |
|
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 Includes changes in other provisions related
to corporate restructuring costs and costs which do not pertain to
operations.4 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) |
Mar. 31, 2023 |
Dec. 31, 2022 |
Mar. 31, 2022 |
Profit (loss) for the period |
5.4 |
|
(17.4 |
) |
63.8 |
|
Add back: |
|
|
|
Tax expense |
12.0 |
|
3.1 |
|
25.0 |
|
Net finance expense |
35.0 |
|
36.7 |
|
36.7 |
|
Other expenses |
5.0 |
|
18.5 |
|
9.0 |
|
Depreciation and amortization |
67.4 |
|
79.4 |
|
81.1 |
|
Amortization of deferred revenue and variable consideration
adjustment |
(15.9 |
) |
(10.4 |
) |
(28.2 |
) |
|
108.9 |
|
109.9 |
|
187.4 |
|
Adjusting items (pre-tax): |
|
|
|
Re-evaluation adjustment - environmental provision |
(8.2 |
) |
13.5 |
|
(79.9 |
) |
Peru inventory reversal |
— |
|
— |
|
(0.5 |
) |
Post-employment plan (curtailment)/past service cost
adjustment |
— |
|
(2.4 |
) |
— |
|
Share-based compensation expense1 |
1.2 |
|
3.7 |
|
3.2 |
|
Adjusted EBITDA |
101.9 |
|
124.7 |
|
110.2 |
|
1 Share-based compensation expenses reflected in
cost of sales and selling and administrative expenses.
Net Debt Reconciliation
(in $ thousands) |
|
|
Mar. 31, 2023 |
Dec. 31, 2022 |
Mar. 31, 2022 |
Total long-term debt |
1,225,023 |
|
1,184,162 |
|
1,181,119 |
|
Cash |
(255,563 |
) |
(225,665 |
) |
(213,359 |
) |
Net debt |
969,460 |
|
958,497 |
|
967,760 |
|
Copper Cash Cost Reconciliation
Consolidated |
Three Months Ended |
Net pounds of copper
produced1 |
|
|
|
(in thousands) |
Mar. 31, 2023 |
Dec. 31, 2022 |
Mar. 31, 2022 |
Peru |
45,233 |
59,628 |
42,254 |
Manitoba |
4,508 |
4,978 |
12,205 |
Net pounds of copper produced |
49,741 |
64,606 |
54,459 |
1 Contained copper in concentrate.
Consolidated |
Three Months Ended |
|
Mar. 31, 2023 |
Dec. 31, 2022 |
Mar. 31, 2022 |
Cash cost per pound of copper produced |
$000s |
$/lb |
$000s |
$/lb |
$000s |
$/lb |
Mining |
64,538 |
|
1.30 |
|
79,759 |
|
1.23 |
|
87,835 |
|
1.61 |
|
Milling |
61,039 |
|
1.23 |
|
65,591 |
|
1.02 |
|
69,164 |
|
1.27 |
|
Refining (zinc) |
— |
|
— |
|
— |
|
— |
|
18,376 |
|
0.34 |
|
G&A |
26,555 |
|
0.53 |
|
21,269 |
|
0.33 |
|
38,993 |
|
0.72 |
|
Onsite costs |
152,132 |
|
3.06 |
|
166,619 |
|
2.58 |
|
214,368 |
|
3.94 |
|
Treatment & refining |
18,495 |
|
0.37 |
|
19,968 |
|
0.31 |
|
12,083 |
|
0.22 |
|
Freight & other |
17,776 |
|
0.36 |
|
22,055 |
|
0.34 |
|
15,607 |
|
0.29 |
|
Cash cost, before by-product credits |
188,403 |
|
3.79 |
|
208,642 |
|
3.23 |
|
242,058 |
|
4.45 |
|
By-product credits |
(146,111 |
) |
(2.94 |
) |
(138,990 |
) |
(2.15 |
) |
(181,673 |
) |
(3.34 |
) |
Cash cost, net of by-product credits |
42,292 |
|
0.85 |
|
69,652 |
|
1.08 |
|
60,385 |
|
1.11 |
|
Consolidated |
Three Months Ended |
|
Mar. 31, 2023 |
Dec. 31, 2022 |
Mar. 31, 2022 |
Supplementary cash cost information |
$000s |
$/lb1 |
$000s |
$/lb1 |
$000s |
$/lb1 |
By-product credits2: |
|
|
|
|
|
|
Zinc |
17,374 |
|
0.35 |
24,744 |
|
0.38 |
67,129 |
|
1.23 |
Gold3 |
93,479 |
|
1.88 |
76,336 |
|
1.18 |
84,174 |
|
1.55 |
Silver3 |
11,998 |
|
0.24 |
9,592 |
|
0.15 |
18,639 |
|
0.34 |
Molybdenum & other |
23,260 |
|
0.47 |
28,318 |
|
0.44 |
11,731 |
|
0.22 |
Total by-product credits |
146,111 |
|
2.94 |
138,990 |
|
2.15 |
181,673 |
|
3.34 |
Reconciliation to IFRS: |
|
|
|
|
|
|
Cash cost, net of by-product credits |
42,292 |
|
|
69,652 |
|
|
60,385 |
|
|
By-product credits |
146,111 |
|
|
138,990 |
|
|
181,673 |
|
|
Treatment and refining charges |
(18,495 |
) |
|
(19,968 |
) |
|
(12,083 |
) |
|
Share-based compensation expense |
79 |
|
|
490 |
|
|
448 |
|
|
Inventory adjustments |
— |
|
|
7 |
|
|
(461 |
) |
|
Past service pension cost (curtailment) |
— |
|
|
(2,384 |
) |
|
— |
|
|
Change in product inventory |
(9,409 |
) |
|
(16,425 |
) |
|
(20,920 |
) |
|
Royalties |
706 |
|
|
1,750 |
|
|
3,218 |
|
|
Depreciation and amortization4 |
67,422 |
|
|
79,408 |
|
|
81,091 |
|
|
Cost of sales5 |
228,706 |
|
|
251,520 |
|
|
293,351 |
|
|
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 March 31, 2023 the variable consideration adjustments
amounted to an expense of $4,885, the three months ended December
31, 2022 - $nil, and for the three months ended March 31, 2022 -
$3,245. 4 Depreciation is based on concentrate sold.5 As per IFRS
financial statements, excluding impairment adjustments.
Peru |
Three Months Ended |
(in thousands) |
Mar. 31, 2023 |
Dec. 31, 2022 |
Mar. 31, 2022 |
Net pounds of copper
produced1 |
45,233 |
59,628 |
42,254 |
1 Contained copper in concentrate.
Peru |
Three Months Ended |
|
Mar. 31, 2023 |
Dec. 31, 2022 |
Mar. 31, 2022 |
Cash cost per pound of copper produced |
$000s |
$/lb |
$000s |
$/lb |
$000s |
$/lb |
Mining |
26,786 |
|
0.59 |
|
41,647 |
|
0.70 |
|
28,402 |
|
0.67 |
|
Milling |
46,191 |
|
1.03 |
|
50,723 |
|
0.85 |
|
47,655 |
|
1.13 |
|
G&A |
16,466 |
|
0.36 |
|
14,817 |
|
0.25 |
|
16,100 |
|
0.38 |
|
Onsite costs |
89,443 |
|
1.98 |
|
107,187 |
|
1.80 |
|
92,157 |
|
2.18 |
|
Treatment & refining |
10,603 |
|
0.24 |
|
11,962 |
|
0.20 |
|
7,585 |
|
0.18 |
|
Freight & other |
12,427 |
|
0.27 |
|
15,607 |
|
0.26 |
|
9,477 |
|
0.22 |
|
Cash cost, before by-product credits |
112,473 |
|
2.49 |
|
134,756 |
|
2.26 |
|
109,219 |
|
2.58 |
|
By-product credits |
(50,899 |
) |
(1.13 |
) |
(54,563 |
) |
(0.92 |
) |
(43,997 |
) |
(1.04 |
) |
Cash cost, net of by-product credits |
61,574 |
|
1.36 |
|
80,193 |
|
1.34 |
|
65,222 |
|
1.54 |
|
Peru |
Three Months Ended |
|
Mar. 31, 2023 |
Dec. 31, 2022 |
Mar. 31, 2022 |
Supplementary cash cost information |
$000s |
$/lb1 |
$000s |
$/lb1 |
$000s |
$/lb1 |
By-product credits2: |
|
|
|
|
|
|
Gold3 |
19,301 |
|
0.43 |
19,934 |
|
0.33 |
21,712 |
|
0.51 |
Silver3 |
8,577 |
|
0.19 |
7,025 |
|
0.12 |
12,991 |
|
0.31 |
Molybdenum |
23,021 |
|
0.51 |
27,604 |
|
0.47 |
9,294 |
|
0.22 |
Total by-product credits |
50,899 |
|
1.13 |
54,563 |
|
0.92 |
43,997 |
|
1.04 |
Reconciliation to IFRS: |
|
|
|
|
|
|
Cash cost, net of by-product credits |
61,574 |
|
|
80,193 |
|
|
65,222 |
|
|
By-product credits |
50,899 |
|
|
54,563 |
|
|
43,997 |
|
|
Treatment and refining charges |
(10,603 |
) |
|
(11,962 |
) |
|
(7,585 |
) |
|
Inventory adjustments |
— |
|
|
— |
|
|
(461 |
) |
|
Share-based compensation expenses |
(14 |
) |
|
95 |
|
|
98 |
|
|
Change in product inventory |
(11,135 |
) |
|
(15,685 |
) |
|
(4,772 |
) |
|
Royalties |
665 |
|
|
1,656 |
|
|
854 |
|
|
Depreciation and amortization4 |
41,960 |
|
|
58,256 |
|
|
48,362 |
|
|
Cost of sales5 |
133,346 |
|
|
167,116 |
|
|
145,715 |
|
|
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 |
|
Mar. 31, 2023 |
Dec. 31, 2022 |
Mar. 31, 2022 |
All-in sustaining cash cost per pound of copper
produced |
$000s |
$/lb |
$000s |
$/lb |
$000s |
$/lb |
Cash cost, net of by-product credits |
42,292 |
0.85 |
69,652 |
1.08 |
60,385 |
1.11 |
Cash sustaining capital expenditures |
47,869 |
0.96 |
60,002 |
0.92 |
60,963 |
1.12 |
Capitalized exploration |
— |
— |
11,500 |
0.18 |
— |
— |
Royalties |
706 |
0.02 |
1,750 |
0.03 |
3,218 |
0.06 |
Sustaining cash cost, net of by-product
credits |
90,867 |
1.83 |
142,904 |
2.21 |
124,566 |
2.29 |
Corporate selling and administrative expenses & regional
costs |
10,215 |
0.20 |
11,876 |
0.19 |
13,060 |
0.24 |
Accretion and amortization of decommissioning and community
agreements1 |
1,958 |
0.04 |
722 |
0.01 |
721 |
0.01 |
All-in sustaining cash cost, net of by-product
credits |
103,040 |
2.07 |
155,502 |
2.41 |
138,347 |
2.54 |
Reconciliation to property, plant and equipment additions: |
|
|
|
|
|
|
Property, plant and equipment additions |
33,554 |
|
76,933 |
|
39,399 |
|
Capitalized stripping net additions |
26,984 |
|
15,169 |
|
24,146 |
|
Total accrued capital additions |
60,538 |
|
92,102 |
|
63,545 |
|
Less other non-sustaining capital costs2 |
19,850 |
|
41,850 |
|
20,604 |
|
Total sustaining capital costs |
40,688 |
|
50,252 |
|
42,941 |
|
Capitalized lease cash payments - operating sites |
4,702 |
|
5,848 |
|
9,259 |
|
Community agreement cash payments |
1,189 |
|
2,854 |
|
3,772 |
|
Accretion and amortization of decommissioning and restoration
obligations3 |
1,290 |
|
1,048 |
|
4,991 |
|
Cash sustaining capital expenditures |
47,869 |
|
60,002 |
|
60,963 |
|
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 |
|
Mar. 31, 2023 |
Dec. 31, 2022 |
Mar. 31, 2022 |
Sustaining cash cost per pound of copper
produced |
$000s |
$/lb |
$000s |
$/lb |
$000s |
$/lb |
Cash cost, net of by-product credits |
61,574 |
1.36 |
80,193 |
1.34 |
65,222 |
1.54 |
Cash sustaining capital expenditures |
33,564 |
0.74 |
31,240 |
0.53 |
30,039 |
0.71 |
Capitalized exploration1 |
— |
— |
11,500 |
0.19 |
— |
— |
Royalties |
665 |
0.02 |
1,656 |
0.03 |
854 |
0.02 |
Sustaining cash cost per pound of copper
produced |
95,803 |
2.12 |
124,589 |
2.09 |
96,115 |
2.27 |
1 Only includes exploration costs incurred for locations near to
existing mine operations.
Gold Cash Cost and Sustaining Cash Cost Reconciliation
Manitoba |
Three Months Ended |
(in thousands) |
Mar. 31 2023 |
Dec. 31, 2022 |
Mar. 31 2022 |
Net ounces of gold produced1 |
36,034 |
33,060 |
43,167 |
1 Contained gold in concentrate and doré.
Manitoba |
Three Months Ended |
|
Mar. 31, 2023 |
Dec. 31, 2022 |
Mar. 31, 2022 |
Cash cost per ounce of gold produced |
$000s |
$/oz |
$000s |
$/oz |
$000s |
$/oz |
Mining |
37,752 |
|
1,048 |
|
38,112 |
|
1,153 |
|
59,433 |
|
1,377 |
|
Milling |
14,848 |
|
412 |
|
14,868 |
|
450 |
|
21,509 |
|
498 |
|
Refining (zinc) |
— |
|
— |
|
— |
|
— |
|
18,376 |
|
426 |
|
G&A |
10,089 |
|
280 |
|
6,452 |
|
195 |
|
22,893 |
|
530 |
|
Onsite costs |
62,689 |
|
1,740 |
|
59,432 |
|
1,798 |
|
122,211 |
|
2,831 |
|
Treatment & refining |
7,892 |
|
219 |
|
8,006 |
|
242 |
|
4,498 |
|
104 |
|
Freight & other |
5,349 |
|
148 |
|
6,448 |
|
195 |
|
6,130 |
|
142 |
|
Cash cost, before by-product credits |
75,930 |
|
2,107 |
|
73,886 |
|
2,235 |
|
132,839 |
|
3,077 |
|
By-product credits |
(42,131 |
) |
(1,169 |
) |
(43,407 |
) |
(1,313 |
) |
(114,874 |
) |
(2,661 |
) |
Gold cash cost, net of by-product credits |
33,799 |
|
938 |
|
30,479 |
|
922 |
|
17,965 |
|
416 |
|
Manitoba |
Three Months Ended |
|
Mar. 31, 2023 |
Dec. 31, 2022 |
Mar. 31, 2022 |
Supplementary cash cost information |
$000s |
$/oz1 |
$000s |
$/oz1 |
$000s |
$/oz1 |
By-product credits2: |
|
|
|
|
|
|
Zinc |
17,374 |
|
482 |
24,744 |
|
748 |
67,129 |
|
1,555 |
Copper |
21,097 |
|
585 |
15,382 |
|
465 |
39,660 |
|
919 |
Silver3 |
3,421 |
|
95 |
2,567 |
|
78 |
5,648 |
|
131 |
Other |
239 |
|
7 |
714 |
|
22 |
2,437 |
|
56 |
Total by-product credits |
42,131 |
|
1169 |
43,407 |
|
1,313 |
114,874 |
|
2,661 |
Reconciliation to IFRS: |
|
|
|
|
|
|
Cash cost, net of by-product credits |
33,799 |
|
|
30,479 |
|
|
17,965 |
|
|
By-product credits |
42,131 |
|
|
43,407 |
|
|
114,874 |
|
|
Treatment and refining charges |
(7,892 |
) |
|
(8,006 |
) |
|
(4,498 |
) |
|
Inventory
adjustments |
— |
|
|
7 |
|
|
— |
|
|
(Curtailment)/past service cost |
— |
|
|
(2,384 |
) |
|
— |
|
|
Share-based compensation expenses |
93 |
|
|
395 |
|
|
350 |
|
|
Change in product inventory |
1,726 |
|
|
(740 |
) |
|
(16,148 |
) |
|
Royalties |
41 |
|
|
94 |
|
|
2,364 |
|
|
Depreciation and amortization4 |
25,462 |
|
|
21,152 |
|
|
32,729 |
|
|
Cost of sales5 |
95,360 |
|
|
84,404 |
|
|
147,636 |
|
|
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 |
|
Mar. 31, 2023 |
Dec. 31, 2022 |
Mar. 31, 2022 |
Sustaining cash cost per pound of gold
produced |
$000s |
$/oz |
$000s |
$/oz |
$000s |
$/oz |
Gold cash cost, net of by-product credits |
33,799 |
938 |
30,479 |
922 |
17,965 |
416 |
Cash sustaining capital expenditures |
14,304 |
397 |
28,762 |
870 |
30,924 |
716 |
Royalties |
41 |
1 |
94 |
3 |
2,364 |
55 |
Sustaining cash cost per pound of gold
produced |
48,144 |
1,336 |
59,335 |
1,795 |
51,253 |
1,187 |
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 |
Mar. 31, 2023 |
Dec. 31, 2022 |
Mar. 31, 2022 |
Mining |
26,786 |
|
41,647 |
|
28,402 |
|
Milling |
46,191 |
|
50,723 |
|
47,655 |
|
G&A1 |
16,466 |
|
14,817 |
|
16,100 |
|
Other G&A2 |
(1,539 |
) |
(152 |
) |
(571 |
) |
|
87,904 |
|
107,035 |
|
91,586 |
|
Less: Covid related costs |
— |
|
689 |
|
2,321 |
|
Unit cost |
87,904 |
|
106,346 |
|
89,265 |
|
Tonnes ore milled |
7,664 |
|
7,796 |
|
7,214 |
|
Combined unit cost per tonne |
11.47 |
|
13.64 |
|
12.37 |
|
Reconciliation to IFRS: |
|
|
|
Unit cost |
87,904 |
|
106,346 |
|
89,265 |
|
Freight & other |
12,427 |
|
15,607 |
|
9,477 |
|
Covid related costs |
— |
|
689 |
|
2,321 |
|
Other G&A |
1,539 |
|
152 |
|
571 |
|
Share-based compensation expenses |
(14 |
) |
95 |
|
98 |
|
Inventory adjustments |
— |
|
— |
|
(461 |
) |
Change in product inventory |
(11,135 |
) |
(15,685 |
) |
(4,772 |
) |
Royalties |
665 |
|
1,656 |
|
854 |
|
Depreciation and amortization |
41,960 |
|
58,256 |
|
48,362 |
|
Cost of sales3 |
133,346 |
|
167,116 |
|
145,715 |
|
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 |
Mar. 31, 2023 |
Dec. 31, 2022 |
Mar. 31, 2022 |
Mining |
37,752 |
|
38,112 |
|
59,433 |
|
Milling |
14,848 |
|
14,868 |
|
21,509 |
|
G&A1 |
10,089 |
|
6,452 |
|
22,893 |
|
Less: G&A allocated to zinc metal production |
— |
|
— |
|
(13,407 |
) |
Less: Other G&A related to profit sharing costs |
(1,139 |
) |
1,939 |
|
— |
|
Unit cost |
61,550 |
|
61,371 |
|
90,428 |
|
USD/CAD implicit exchange rate |
1.35 |
|
1.36 |
|
1.27 |
|
Unit cost - C$ |
83,193 |
|
83,363 |
|
114,504 |
|
Tonnes ore milled |
385,661 |
|
345,492 |
|
651,333 |
|
Combined unit cost per tonne - C$ |
216 |
|
241 |
|
176 |
|
Reconciliation to IFRS: |
|
|
|
Unit cost |
61,550 |
|
61,371 |
|
90,428 |
|
Freight & other |
5,349 |
|
6,448 |
|
6,130 |
|
Refined zinc |
— |
|
— |
|
18,376 |
|
G&A allocated to zinc metal production |
— |
|
— |
|
13,407 |
|
Other G&A related to profit sharing |
1,139 |
|
(1,939 |
) |
— |
|
Share-based compensation expenses |
93 |
|
395 |
|
350 |
|
Inventory adjustments |
— |
|
7 |
|
— |
|
(Curtailment) / past service pension |
— |
|
(2,384 |
) |
— |
|
Change in product inventory |
1,726 |
|
(740 |
) |
(16,148 |
) |
Royalties |
41 |
|
94 |
|
2,364 |
|
Depreciation and amortization |
25,462 |
|
21,152 |
|
32,729 |
|
Cost of sales2 |
95,360 |
|
84,404 |
|
147,636 |
|
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 consummation and timing
of the Transaction; approval by Copper Mountain’s and Hudbay’s
shareholders; the satisfaction of the conditions precedent to the
consummation of the Transaction; the strengths, characteristics and
potential operating efficiencies and corporate synergies resulting
from the Transaction; growth potential and expectations regarding
the timing, receipt and anticipated effects of court, regulatory
and other consents and approvals; the impact of the Transaction on
shareholders of Hudbay and Copper Mountain and other stakeholders
and other anticipated benefits of the 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 expected results and benefits of the new 10-year agreement for
100% renewable energy supply to Constancia, expectations regarding
the company’s cash balance and liquidity for 2023, expectations
regarding the Copper World project, including with respect to the
company’s plans for a pre-feasibility study, 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, 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 potential impact of
short-term mine plan changes implemented at Constancia,
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, 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 satisfy the
conditions to closing the Transaction, including the receipt of
shareholder, regulatory and court approvals;
- that no third party would make a
superior proposal to the Transaction;
- that the Arrangement Agreement
would not be terminated in certain circumstances;
- 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 environment in
Peru;
- no interruptions to the company’s
plans for advancing the Copper World project;
- the ability to ramp up exploration
in respect of the Maria Reyna and Caballito properties and to
advance related drill plans;
- the ability to increase the mining
rate at Lalor;
- 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
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 failure to
receive approval of the Transaction by Hudbay or Copper Mountain
shareholders, the required court, regulatory and other consents and
approvals to effect the Transaction, the potential of a third party
making a superior proposal to the Transaction, the possibility that
the Arrangement Agreement could be terminated under certain
circumstances, political and social risks in the regions Hudbay
operates, including the uncertainty with respect to the political
and social environment in Peru and its potential impact on the
company’s mining operations (as further described below), 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 diversified mining
company with long-life assets in North and South America. The
company’s Constancia operations in Cusco (Peru) produce copper with
gold, silver and molybdenum by-products. Its Snow Lake operations
in Manitoba (Canada) produce gold with copper, zinc and silver
by-products. Hudbay has an organic pipeline that includes the
Copper World project in Arizona and the Mason project in Nevada
(United States), and its growth strategy is focused on the
exploration, development, operation, and optimization of properties
it already controls, as well as other mineral assets it may acquire
that fit its strategic criteria. 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. Further information about Hudbay can be
found on www.hudbay.com.
For further information, please contact:
Candace BrûléVice President, Investor Relations(416)
814-4387candace.brule@hudbay.com
i Adjusted net earnings and adjusted net earnings 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; and net debt 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.ii
Consolidated cash cost and sustaining cash cost guidance per pound
of copper produced, net of by-product credits.
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