TORONTO, Aug. 09, 2021 (GLOBE NEWSWIRE) -- Hudbay Minerals Inc. (“Hudbay” or the “company”) (TSX, NYSE:HBM) today released its second quarter 2021 financial results. All amounts are in U.S. dollars, unless otherwise noted.

Second Quarter Operating and Financial Results

Generated $404.2 million in revenue, $132.8 million of operating cash flow before change in non-cash working capital and $143.2 million of adjusted EBITDA1 in the second quarter of 2021 from higher realized metal prices and higher copper and precious metals sales volumes, partially offset by lower zinc sales volumes.
Consolidated copper production in the second quarter was 23,474 tonnes at cash cost and sustaining cash cost per pound of copper produced, net of by-product creditsi, of $0.84 and $2.25, respectively. Consolidated gold production increased to 39,848 ounces in the second quarter, a record for Hudbay.
Second quarter Peru production was boosted by higher metal recoveries and initial production from Pampacancha in April 2021. Pampacancha production continues to ramp up in line with the recently published Constancia mine plan, which contemplates an increase in average annual copper production to approximately 102,000 tonnes over the next eight years starting in 2022.
Second quarter Manitoba metal production was impacted by lower copper and zinc grades, lower precious metal recoveries and production interruptions.
On track to meet annual guidance for copper, zinc and precious metals production, consolidated sustaining capital expenditures, and Manitoba unit operating costs in 2021. After adjusting for unbudgeted COVID-related costs in Peru, full year unit operating costs for Peru are expected to be within the 2021 guidance range.
Second quarter net loss and loss per share were $3.4 million and $0.01, respectively. After adjusting for the net mark-to-market loss on financial instruments, amongst other items, second quarter adjusted net earningsi per share were $0.02.
Cash and cash equivalents decreased during the second quarter to $294.3 million, as at June 30, 2021, mainly as a result of $100.6 million of capital investments primarily for the construction of the New Britannia refurbishment project and sustaining capital expenditures, partially offset by cash generated from operations.
On June 19, a worker employed by a service provider at the Lalor mine was fatally injured from a fall while working at height. The company is undertaking a number of initiatives to learn from this tragic incident.
Executing on Growth Initiatives

New Britannia project continues to track ahead of the original schedule with approximately 95% of the project completed at the end of July. New Britannia gold circuit commissioning completed in July 2021 and first gold pour is expected in August, ahead of the original schedule. Annual gold production from Lalor and the Snow Lake operations is expected to increase to over 180,000 ounces at average cash cost and sustaining cash cost, net of by-product credits, of $412 and $788 per ounce of gold, respectively, during the first six full years of operation starting in 2022.
Due to additional costs and COVID-19 related impacts, approximately $20 million in additional growth capital is expected to be spent this year at New Britannia and 2021 growth capital guidance has been revised accordingly.
Following the finalization of the remaining land user agreement for Pampacancha, first production was achieved in April, consistent with the recently published mine plan.
Completed 85,000 feet of drilling at the Copper World property in Arizona in the first half of the year and the company remains on track to complete an initial inferred resource estimate before the end of the year and a preliminary economic assessment in the first half of 2022.
Released the 18th Annual Sustainability Report in May 2021 discussing Hudbay’s key accomplishments and initiatives in 2020, how the company manages the social, environmental and economic risks, impacts and opportunities associated with its activities, and the importance of continuous improvement in these areas for the company’s long-term success.
“We are deeply saddened by the fatality at our Lalor mine in June and we are committed more than ever to our objective of zero harm across the organization,” said Peter Kukielski, President and Chief Executive Officer. “Operationally, our second quarter results benefited from higher production at our Peru operations after the successful ramp up of mining activities at Pampacancha during the quarter. We also expect to achieve our first gold pour at the New Britannia mill this month, ahead of the original schedule, which together with the startup of Pampacancha, is expected to result in increased cash flows from these high-return investments starting in the second half of 2021. COVID-19 continues to have an impact our operations, but we remain focused on managing these impacts while continuing to execute our growth initiatives and focusing on operating safely and efficiently.”

Summary of Second Quarter Results

Cash generated from operating activities in the second quarter of 2021 increased to $96.4 million compared to $51.8 million in the first quarter of 2021. Operating cash flow before change in non-cash working capital was $132.8 million during the second quarter of 2021, reflecting an increase of $42.1 million compared to the first quarter of 2021. The increase in operating cash flow is primarily the result of higher realized metal prices and higher copper and precious metals sales volumes, partially offset by lower zinc sales volumes.

Consolidated copper production in the second quarter of 2021 was 23,474 tonnes, a 4% decrease from the first quarter of 2021, primarily as a result of lower copper grades in Manitoba, partially offset by higher throughput in Peru. Consolidated gold production in the second quarter of 2021 was 39,848 ounces, an increase of 12% versus the first quarter of 2021, due to record gold production in Peru as mining from the high-grade Pampacancha deposit commenced in the quarter. Consolidated zinc production in the quarter decreased by 23% while silver production decreased by 2% versus the first quarter, primarily as a result of lower grades and recoveries.

In the second quarter of 2021, consolidated cash cost per pound of copper produced, net of by-product creditsi, was $0.84, compared to $1.04 in the first quarter of 2021. This decrease was mainly a result of higher by-product credits. Sustaining cash cost per pound of copper produced, net of by-product creditsi, increased to $2.25 in the second quarter of 2021, from $2.16 in the same period in 2020 primarily due to higher sustaining capital expenditures, partially offset by higher by-product credits. Hudbay continues to expect consolidated cash cost and sustaining cash cost per pound of copper produced, net of by-product credits, to be within the guidance ranges for 2021.

Net loss and loss per share in the second quarter of 2021 were $3.4 million and $0.01, respectively, compared to a net loss and loss per share of $60.1 million and $0.23, respectively, in the first quarter of 2021. Second quarter earnings benefited from higher realized prices of copper, zinc and gold, combined with higher copper and precious metals sales volumes, which were partially offset by lower zinc sales volumes and higher tax expenses.

Adjusted net earningsi and adjusted net earnings per sharei in the second quarter of 2021 were $5.4 million and $0.02 per share after adjusting for the net mark-to-market loss on financial instruments among other items. This compares to an adjusted net loss and adjusted net loss per share of $16.1 million and $0.06 per share in the first quarter of 2021. Second quarter adjusted EBITDAi was $143.2 million, compared to $104.2 million in the first quarter of 2021. As previously disclosed, sales volumes in the first quarter of 2021 were impacted by shipping delays in Peru and Manitoba, resulting in the delayed parcels being recognized as revenue in the second quarter of 2021.

As at June 30, 2021, Hudbay’s liquidity includes $294.3 million in cash and cash equivalents as well as undrawn availability of $295.2 million under its credit facilities. The company expects that the current liquidity together with cash flows from operations will be sufficient to meet its liquidity needs for the foreseeable future.

Financial Condition ($000s) Jun. 30, 2021 Mar. 31, 2021 Dec. 31, 2020
Cash and cash equivalents 294,287 310,564 439,135
Total long-term debt 1,181,195 1,180,798 1,135,675
Net debt1 886,908 870,234 696,540
Working capital 219,799 236,281 306,888
Total assets 4,587,827 4,549,196 4,666,645
Equity 1,658,924 1,660,250 1,699,806
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 Reporting Measures” section of this news release.

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