TORONTO, Aug. 08, 2023 (GLOBE NEWSWIRE) -- Hudbay Minerals Inc. (“Hudbay” or the “company”) (TSX, NYSE:HBM) today released its second quarter 2023 financial results. All amounts are in U.S. dollars, unless otherwise noted.

Positioned for Strong Production Growth and Free Cash Flow Generation in the Second Half of 2023

Reaffirmed full year 2023 consolidated production, cash cost and sustaining cash cost guidance for Hudbay’s Peru and Manitoba operations.
On June 20, 2023, Hudbay completed the acquisition of Copper Mountain Mining Corporation (“Copper Mountain”), creating a 150,000-tonnes-per-year copper producer with three long-life mines in tier-one jurisdictions and a world-class pipeline of organic copper growth projects.
Copper Mountain owns 75% of the Copper Mountain mine in British Columbia (the “Copper Mountain Mine Joint Venture”), with Mitsubishi Materials Corporation (“MMC”) holding the remaining non-controlling interest.
Hudbay expects to release an updated technical report for the Copper Mountain mine in the fourth quarter, which will include updated annual production and cost estimates for the mine.
Achieved higher grades from Pampacancha in July with 1.6 million tonnes of ore mined at 0.63% copper and 0.31 grams per tonne gold, consistent with the mine plan and company expectations for higher production in Peru in the third and fourth quarters of 2023.
Second Quarter Operating and Financial Results

Consolidated production in the second quarter was 21,715 tonnes of copper and 48,996 ounces of gold, which includes production from the Copper Mountain mine during the 10-day stub period following the June 20, 2023 acquisition date.
Consolidated cash cost and sustaining cash cost per pound of copper produced, net of by-product creditsi, in the second quarter, were $1.60 and $2.73, respectively, excluding Copper Mountain’s costs during the 10-day stub period.
Peru operations successfully managed through a transitional quarter with elevated stripping activities at Pampacancha completed in June to enable mining high grade portions of the orebody in the second half of 2023. The Peru operations maintained steady performance, producing 17,682 tonnes of copper in the second quarter, which was in line with mine plan expectations. Peru cash cost per pound of copper produced, net of by-product creditsi, in the second quarter was $2.14, in line with quarterly cadence expectations as Pampacancha is expected to deliver higher copper production and precious metal by-product credits in the second half of 2023.
Manitoba operations produced 35,253 ounces of gold, which was impacted by lower throughput at the Stall mill due to downtime to complete the Stall mill Phase I recovery improvement project tie-ins which resulted in a buildup of surface ore stockpiles at the end of the second quarter. Lalor achieved an 11% increase in ore mined versus the first quarter as the company continues to implement improvements to reduce costs and target higher production levels. Manitoba cash cost per ounce of gold produced, net of by-product creditsi, was $1,097 and is expected to decline to be within the annual guidance range due to higher throughput, gold recoveries and gold grades expected in the second half of 2023.
Second quarter net loss and loss per share were $14.9 million and $0.05, respectively. After adjusting for $6.8 million of transaction costs incurred during the quarter associated with the acquisition of Copper Mountain and a non-cash gain of $4.7 million related to a quarterly revaluation of the company’s closed site environmental reclamation provision, among other items, second quarter adjusted lossi per share was $0.07.
Operating cash flow before change in non-cash working capital was $55.9 million and adjusted EBITDAi was $81.2 million in the second quarter.
Cash and cash equivalents declined during the second quarter to $179.7 million and were negatively impacted by lower base metal prices and lower production volumes as a result of scheduled mill maintenance programs, elevated stripping activity in Peru and a buildup of ore stockpiles in Manitoba. Cash and cash equivalents were also impacted by $25.8 million in total transaction costs related to the acquisition of Copper Mountain, $65.9 million of capital investments, primarily related to sustaining capital investments, and a $31.9 million bond interest payment.
Executing on Growth Initiatives and Prudent Financial Planning

Copper Mountain integration activities are progressing in line with expectations with over 50% of the targeted annualized corporate and tax synergies already achieved to date. The company is focused on advancing its plans to stabilize the operation over the next 12 months, to be further detailed in a technical report, which will include an updated mine plan and mineral reserve and resource estimates, expected to be released in the fourth quarter.
Copper World pre-feasibility study for Phase I is well-advanced and expected to be released in the third quarter.
Snow Lake drilling intersected new high-grade copper-gold-silver zone 500 metres northwest of Lalor and indicates the hosting mineralization at Lalor continues down plunge for at least two kilometres.
Completed the acquisition of the Cook Lake properties in Snow Lake, providing the potential for a new discovery on claims untested by modern geophysics and where historical drilling intersected base metal and gold mineralization at a fraction of Lalor’s current known depth.
Announced the entry into a definitive agreement to acquire all the issued and outstanding common shares of Rockcliff Metals Corp. (“Rockcliff”), which is expected to increase Hudbay’s land position within trucking distance of its Snow Lake processing facilities by more than 250%. The transaction is expected to close in the third quarter.
On July 6, 2023, established framework for a multi-year exploration partnership with Marubeni Corporation focused on the discovery of new deposits within trucking distance of Hudbay’s processing facilities in Flin Flon, Manitoba.
First phase of the Stall recovery improvement project was completed during the second quarter with commissioning completed in May and ramp-up to higher metal recoveries expected in the second half of 2023.
In connection with the Copper Mountain transaction, Hudbay amended its Revolving Credit Facilities ("RCFs") to (i) exclude the Copper Mountain group from the financial covenant calculations in the RCFs until the Copper Mountain Nordic bonds are repaid in full and (ii) increase the net debt to EBITDA covenant ratio to provide greater financial flexibility during the integration period.
Subsequent to quarter end, Hudbay drew $90 million from its RCFs to finance the redemption of a portion of Copper Mountain’s Nordic bonds, thus improving the company’s ability to deleverage and repay debt sooner than the bond maturity.
On track to deliver annual discretionary spending reduction targets for 2023 with lower growth capital and exploration expenditures compared to 2022. As a result of a continued focus on discretionary spending reductions, total capital expenditures for 2023 are expected to be approximately $15 million lower than guidance levels, representing 5% of total capital expenditure guidance.
“We remain on track to meet our 2023 guidance as we completed many transitional activities in the second quarter that position us for stronger production and improved costs during the second half of 2023,” said Peter Kukielski, President and Chief Executive Officer. “The higher grades we are currently mining at Pampacancha, the planned improved throughput and recoveries in Snow Lake and the recent completion of the Copper Mountain acquisition are expected to generate strong free cash flows starting in the third quarter of 2023. With Copper Mountain we have a larger and more resilient operating platform to deliver diversified cash flows to prudently advance our leading organic pipeline of brownfield expansion and greenfield exploration and development opportunities across our portfolio.”

Summary of Second Quarter Results
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