TORONTO, Feb. 19, 2019 (GLOBE NEWSWIRE) -- Hudbay Minerals Inc. (“Hudbay” or the “company”) (TSX, NYSE:HBM) today released its fourth quarter and full year 2018 financial results and production and cost guidance for 2019. All amounts are in U.S. dollars, unless otherwise noted.

Summary
•On a consolidated basis, copper production exceeded the mid-point of 2018 guidance by 14% and production of zinc and precious metals were within 2018 guidance ranges; copper production at Constancia exceeded the top end of 2018 guidance and Manitoba copper production was at the top end of the guidance range
•Constancia achieved record mill throughput, record copper recoveries and record molybdenum production in 2018
•Cash generated from operating activities was $137.3 million in the fourth quarter of 2018 and $479.6 million in the full year 2018
•Net debt decreased to $465.5 million as at December 31, 2018, including cash and cash equivalents of $515.5 million
•Updated reserve and resource estimate at Lalor including a 65% increase in gold reserves1
•New Lalor mine plan more than doubles annual gold production from current levels once the New Britannia mill is operating with average annual gold production of approximately 140,000 ounces over the first five years at a sustaining cash cost, net of by-product credits, of $450 per ounce, positioning Lalor as one of the lowest cost gold mines in Canada1

Operating cash flow before change in non cash working capital decreased to $107.9 million in the fourth quarter of 2018 from $171.9 million in the same quarter of 2017. The decrease is due mainly to lower realized prices and sales volumes for copper and zinc, partially offset by higher molybdenum concentrate sales volumes. In the fourth quarter of 2018, cash generated from operating activities was $137.3 million, which increased from $129.4 million in the same period of 2017 as cash flows from changes in non-cash working capital more than offset the factors described above. Net loss and basic and diluted loss per share in the fourth quarter of 2018 were $3.5 million and $0.01, respectively, compared to a net profit and earnings per share of $94.3 million and $0.36, respectively, in the fourth quarter of 2017.

Net loss and loss per share in the fourth quarter of 2018 were affected by, among other things, the following items:

Pre-tax gain (loss) After-tax gain
(loss) Per share gain (loss)
($ millions) ($ millions) ($/share)

Foreign exchange gain 2.6 1.5 0.01
Mark-to-market adjustments of various items (3.9) (2.9) (0.01)
Non-cash accounting loss on pension plan de-risking transaction (2.2) (1.4) (0.01)
Non-cash deferred tax adjustments - (12.9) (0.05)

“In the fourth quarter, we continued our trend of generating strong operating cash flow as we remained focused on our strategic priorities of developing and operating our portfolio of high-quality assets in mining friendly jurisdictions,” said Alan Hair, president and chief executive officer. “We are very pleased to release the next phase of our plan for the gold-zinc business at Lalor, which we believe will unlock value in the Snow Lake region through the refurbishment of the New Britannia gold mill and the potential for future resource conversion and further regional exploration success. We are also pleased with the success we’ve had at optimizing our Constancia mine, which achieved record mill throughput and copper recoveries in 2018, resulting in the business exceeding copper production guidance in 2018.”

Hudbay’s Board and management remain committed to the company’s disciplined approach to driving long-term and sustainable value creation. Over the last several years, Hudbay has grown beyond its Manitoba base through acquisition, exploration and development into a leading mid-tier copper producer with low-cost, long-life assets in Canada, Peru, Arizona, and most recently in Nevada with the acquisition of the Ann Mason project.

Hudbay’s management team has a proven track record of successful new mine development and expertise in both open pit and underground mining. In 2015, Hudbay completed the best in-class development and ramp-up of the Constancia mine in Peru, which is now the lowest cost per tonne open-pit copper mine in South America2. Constancia was a greenfield project in a new jurisdiction for Hudbay and the strong community relationships the company has built provides it with the social license to continue to grow its Peruvian business.

During this time, Hudbay also completed the construction of its Lalor underground mine in Manitoba, a deposit that was discovered by Hudbay’s exploration team in 2007 and achieved commercial production only seven years after its discovery. Hudbay continues to further unlock value at Lalor through the plan to refurbish the New Britannia gold mill by 2022, which is expected to more than double Lalor’s annual gold production over an extended mine life and establish Lalor as one of the lowest cost gold mines in Canada. Hudbay will continue exploration and infill drilling and advance engineering studies on both Lalor and the three satellite deposits in the Snow Lake region that could provide feed for further extensions of the Stall and New Britannia processing facilities. Please refer to Hudbay’s February 19, 2019 press release titled “Hudbay Announces Increased Lalor Mineral Reserves and Resources and Updated Mine Plan that Confirms Substantial Increase in Gold Production” for further information.

“Our focus for 2019 is to deliver on a number of near-term catalysts, including advancing our new Lalor gold strategy, developing the high-grade Pampacancha satellite deposit, continuing to maximize throughput and recoveries at Constancia, advancing both near-mine and greenfield exploration activities, and obtaining the final Section 404 water permit at Rosemont and moving the project into development,” stated Mr. Hair.

Compared to the same quarter in 2017, copper-equivalent production in the fourth quarter of 2018 decreased by 14%, primarily as a result of lower production in Manitoba following the closure of the Reed mine and lower planned copper grades at Constancia. In the fourth quarter of 2018, consolidated cash cost per pound of copper produced, net of by-product credits, was $0.94, an increase compared to $0.77 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 production. Incorporating sustaining capital, capitalized exploration, royalties and corporate selling and administrative expenses, consolidated all-in sustaining cash cost per pound of copper produced, net of by-product credits, in the fourth quarter of 2018 was $1.73, which increased from $1.56 in the fourth quarter of 2017, driven mainly by the decrease in copper production.

On a consolidated basis, Hudbay's copper production exceeded 2018 guidance and production of zinc and precious metals were within 2018 guidance ranges. Combined unit costs at Manitoba were within revised 2018 guidance ranges. Combined unit costs at Peru were in line with 2018 guidance ranges after reflecting the cost of higher than expected molybdenum production, and total capital expenditures were in line with expectations.

Cash and cash equivalents increased by $159.0 million from December 31, 2017 to $515.5 million as at December 31, 2018. This increase was a result of cash generated from operating activities of $479.6 million. These inflows were partly offset by $190.9 million of capital investments primarily at the Peru and Manitoba operations, interest payments of $74.8 million, finance lease payments of $20.9 million, net financing fees paid of $20.6 million, and $19.1 million of net cash paid to acquire Mason Resources Corp.

Net debt decreased by $50.9 million from September 30, 2018 to $465.5 million at December 31, 2018, primarily due to free cash flow generation. At December 31, 2018, total liquidity, including cash and available credit facilities, was $937.0 million, up from $878.4 million as at September 30, 2018.

During the fourth quarter of 2018, Hudbay completed a pension de-risking transaction whereby certain defined benefit pension obligations with an estimated solvency liability value of $126.0 million were transferred to a third party insurer in exchange for a payment from plan assets of $120.0 million. The transaction reduced the overall size and risk profile of the company’s defined benefit pension obligations, and improved the plans’ solvency funding position, which is used to determine funding requirements, by approximately $6.0 million. A non-cash accounting pre-tax loss on the transaction of $2.2 million was recognized in the fourth quarter of 2018.

Financial Condition ($000s) Dec. 31, 2018 Dec. 31, 2017
(Restated)
Cash and cash equivalents 515,497 356,499
Total long-term debt 981,030 979,575
Net debt1 465,533 623,076
Working capital 445,228 251,388
Total assets 4,685,635 4,728,016
Equity 2,178,856 2,112,345

1 Net debt is a non-IFRS financial performance measure with no standardized definition under IFRS. For further information, please see page 11 of this news release.


see & read more on
https://www.hudbayminerals.com/English/Media-Centre/News-Releases/News-Release-Details/2019/Hudbay-Announces-Fourth-Quarter-and-Full-Year-2018-Results-and-Provides-2019-Guidance/default.aspx