TORONTO, Nov. 03, 2020 (GLOBE NEWSWIRE) -- Hudbay Minerals Inc. (“Hudbay” or the “company”) (TSX, NYSE:HBM) today released its third quarter 2020 financial results. All amounts are in U.S. dollars, unless otherwise noted.

Third Quarter Operating and Financial Results
Delivered a solid operating quarter with steady production and cost performance from the Manitoba and Peru operations, including an increase in copper production over the first two quarters of 2020 and strong gold production driven by increased gold grades at Lalor.
Third quarter net loss was $24.0 million or $0.09 per share. Third quarter adjusted net loss1 per share was $0.10 and adjusted EBITDAi was $96.1 million.
Operating cash flow before change in non-cash working capital increased to $84.4 million in the third quarter of 2020, from $29.5 million in the second quarter of 2020, due to higher realized prices and increased sales volumes at Constancia after the successful ramp up to full production.
Cash and cash equivalents increased during the third quarter to $449.0 million as at September 30, 2020 as a result of the net proceeds received from the refinancing of the 2023 notes and cash generated from operations, partially offset by capital investments in the New Britannia refurbishment project and the company’s Peru business and interest payments.

On Track to Achieve Annual Guidance
Owing to the outstanding performance from the Manitoba operations during the first three quarters of 2020, and the steady operations at Constancia since the eight-week suspension earlier this year, Hudbay continues to expect to meet all production, consolidated sustaining capital expenditures and unit cost guidance for 2020, despite ongoing COVID-19 operating challenges.
Fourth quarter 2020 production and sales volumes in Manitoba will be impacted by the production interruption at the 777 mine. With the implementation of production mitigation plans, the company continues to expect to achieve full year guidance for Manitoba.

Executing on Growth Initiatives
The New Britannia gold mill refurbishment project is ahead of schedule and within budget, with detailed engineering approximately 99% complete and construction activities approximately 45% complete. Commissioning of the gold plant is expected in mid-2021, three months earlier than originally planned.
Early mining of the gold zone at Lalor is well-underway with underground development in the gold rich lenses advancing ahead of schedule in preparation for the mid-2021 ramp up of New Britannia. The New Britannia gold mill is expected to increase average annual gold production from Lalor to over 150,000 ounces commencing in 2022.
Successfully advanced individual land-user agreements at Pampacancha with 79% of the land turned over to Hudbay as of September 30, 2020 (as compared to approximately 33% as of June 30, 2020).
Constancia North follow-up drilling continues to intersect porphyry and skarn mineralization north of the Constancia pit, including one intersection of 78.6 metres grading 1.39% copper, 305 grams per tonne molybdenum, 0.43 grams per tonne gold and 16.0 grams per tonne silver.
Completed offering of $600.0 million of 6.125% senior notes due 2029 and redeemed all of the outstanding $400.0 million of 7.250% senior notes due 2023.

“We continue to be pleased with the team’s ability to maintain strong operating and financial performance while executing on our growth initiatives,” said Peter Kukielski, President and Chief Executive Officer. “Our Peru operations have been successfully running at full capacity after having been temporarily suspended in the second quarter due to government-imposed COVID-19 restrictions, and we have maintained positive momentum at Pampacancha. Our Manitoba operations had the best quarterly cost performance in the last two years, demonstrating our focus on continuous improvement initiatives and cost control. The New Britannia project is on budget and ahead of schedule with first gold production expected three months earlier in 2021 than originally planned. The 777 skip incident was an unfortunate event but we are grateful all underground personnel were safely evacuated and we are hopeful the repairs will be completed quickly. We are proud of our team’s achievement of several significant milestones while adapting to the ever-changing COVID-19 environment and focus on keeping our workforce and communities safe during this pandemic.”

Summary of Third Quarter Results

Consolidated copper production in the third quarter of 2020 was 25,395 tonnes, a 41% increase from the second quarter of 2020, primarily as a result of the successful ramp up at Constancia after the eight-week temporary suspension from mid-March to mid-May. Consolidated gold production decreased by 10% compared to the second quarter of 2020 due to lower production from Manitoba as a result of the planned maintenance at the Lalor mine in the third quarter and the record quarterly gold production achieved in the second quarter in Manitoba. Consolidated zinc production in the third quarter was in line with the second quarter of 2020.

In the third quarter of 2020, consolidated cash cost per pound of copper produced, net of by-product creditsi, was $0.65, higher than the second quarter of 2020 when cash costs, net of by-product credits, were more heavily impacted by the lower cash costs in Manitoba due to the temporary Peru suspension. Incorporating sustaining capital, capitalized exploration, royalties, selling, administrative and regional costs, consolidated all-in sustaining cash cost per pound of copper produced, net of by-product creditsi, in the third quarter of 2020 was $2.25, higher than the prior quarter due to the same factors affecting cash costs, and higher sustaining capital expenditures.

Cash generated from operating activities in the third quarter of 2020 increased to $77.9 million compared to $31.4 million in the second quarter of 2020. Operating cash flow before change in non-cash working capital was $84.4 million during the third quarter of 2020, reflecting an increase of $54.9 million compared to the second quarter of 2020. The increase in operating cash flow is primarily the result of increased sales volumes at Constancia due to the ramp up to full production after the temporary suspension, lower operating costs in Manitoba and improved commodity prices.

Net loss and loss per share in the third quarter of 2020 were $24.0 million and $0.09, respectively, compared to a net loss and loss per share of $51.9 million and $0.20, respectively, in the second quarter of 2020. During the third quarter of 2020, Hudbay recorded a non-cash adjustment on streaming revenues due to an amendment to the 777 mine plan leading to fewer inferred resources expected to be mined than previously planned as the mine nears its expected closure in 2022. The increased deferred revenue drawdown rate, which is recalculated back to the inception of the stream, resulted in a positive pre-tax non-cash earnings impact of approximately $14.1 million. This was partially offset by $7.3 million in costs primarily relating to the call premium paid to redeem all of the outstanding $400.0 million of 7.25% senior unsecured notes due 2023 (the “Redeemed Notes”) and a $3.8 million write-down of unamortized transaction costs related to the Redeemed Notes and the company’s revolving credit facilities, which were restructured during the quarter.

Adjusted net lossi and adjusted EBITDAi in the third quarter of 2020 were $25.4 million, or $0.10 per share, and $96.1 million, respectively, after adjusting for the call premium paid on the Redeemed Notes, the write-down of unamortized transaction costs related to the Redeemed Notes and amended credit facilities, and the non-cash adjustment on streaming revenues. This compares to an adjusted net loss and adjusted EBITDA of $51.9 million, or $0.15 per share, and $49.1 million, respectively, in the second quarter of 2020. The increase in adjusted EBITDA in the third quarter of 2020 was primarily due to increased sales volumes in Peru after the successful mine ramp up, lower operating costs in Manitoba and higher realized prices, partially offset by lower sales volumes in Manitoba.

Financial Condition ($000s) Sep. 30, 2020 Jun. 30, 2020 Dec. 31, 2019
Cash and cash equivalents 449,014 391,136 396,146
Total long-term debt 1,175,104 988,418 985,255
Net debt1 726,090 597,282 589,109
Working capital 403,441 260,672 271,284
Total assets 4,590,688 4,498,892 4,461,057
Equity 1,684,464 1,706,303 1,848,123

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.

Consolidated Financial Performance Three Months Ended
Sep. 30, 2020 Jun. 30, 2020 Sep. 30, 2019
Revenue $000s 316,108 208,913 291,282
Cost of sales $000s 276,830 221,567 260,327
Earnings (loss) before tax $000s (23,944 ) (74,604 ) (348,367 )
Earnings (loss) $000s (23,955 ) (51,901 ) (274,796 )
Basic and diluted earnings (loss) per share $/share (0.09 ) (0.20 ) (1.05 )
Adjusted earnings (loss) per share1 $/share (0.10 ) (0.15 ) (0.09 )
Operating cash flow before change in non-cash working capital $ millions 84.4 29.5 71.2
Adjusted EBITDA1 $ millions 96.1 49.1 76.2

1 Adjusted 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 Reporting Measures” section of this news release.

Consolidated Operational Performance Three Months Ended
Sep. 30, 2020 Jun. 30, 2020 Sep. 30, 2019
Contained metal in concentrate produced 1
Copper tonnes 25,395 18,026 36,422
Gold ounces 29,277 32,614 28,319
Silver ounces 671,685 580,817 924,191
Zinc tonnes 30,570 31,222 28,639
Molybdenum tonnes 392 124 262
Precious metals2 ounces 36,824 39,140 41,522
Payable metal in concentrate sold
Copper tonnes 25,903 15,951 29,916
Gold ounces 30,605 30,590 25,488
Silver ounces 705,495 541,785 756,296
Zinc3 tonnes 26,520 27,604 29,140
Molybdenum tonnes 313 120 334
Precious metals2 ounces 38,532 36,677 36,292
Cash cost4 $/lb 0.65 0.29 0.71
All-in sustaining cash cost4 $/lb 2.25 1.91 1.69

1 Metal reported in concentrate is prior to deductions associated with smelter contract terms.
2 Precious metals production includes gold and silver production on a gold-equivalent basis. For 2019, silver is converted to gold at a ratio of 70:1. For 2020, silver is converted to gold at a ratio of 89:1.
3 Includes refined zinc metal sold.
4 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
Three Months Ended
Sep. 30, 2020 Jun. 30, 2020 Sep. 30, 2019
Ore mined1 tonnes 8,455,668 2,775,286 8,413,367
Copper % 0.31 0.34 0.44
Gold g/tonne 0.03 0.04 0.05
Silver g/tonne 2.55 2.90 3.93
Molybdenum % 0.02 0.02 0.02
Ore milled tonnes 7,480,655 4,355,482 8,240,344
Copper % 0.33 0.34 0.44
Gold g/tonne 0.03 0.04 0.04
Silver g/tonne 2.68 3.04 3.76
Molybdenum % 0.02 0.01 0.02
Copper recovery % 83.3 76.6 86.0
Gold recovery % 51.6 43.4 48.3
Silver recovery % 66.7 59.6 68.9
Molybdenum recovery % 30.4 19.9 20.2
Contained metal in concentrate
Copper tonnes 20,803 11,504 31,091
Gold ounces 3,333 2,311 5,565
Silver ounces 430,208 253,687 686,258
Molybdenum tonnes 392 124 262
Precious metals2 ounces 8,167 5,161 15,369
Payable metal sold
Copper tonnes 21,654 9,023 25,314
Gold ounces 3,753 1,317 3,858
Silver ounces 433,595 242,519 529,139
Molybdenum tonnes 313 120 334
Combined unit operating cost3,4 $/tonne 9.85 7.77 8.63
Cash cost4 $/lb 1.54 1.31 1.06
Sustaining cash cost4 $/lb 2.29 1.84 1.53

1 Reported tonnes and grade for ore mined are estimates based on mine plan assumptions and may not reconcile fully to ore milled.
2 Precious metals production includes gold and silver production on a gold-equivalent basis. For 2019, silver is converted to gold at a ratio of 70:1. For 2020, silver is converted to gold at a ratio of 89:1.
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 Combined unit cost, cash cost and sustaining cash cost 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.


The Constancia team has demonstrated strong operating performance in an environment of strict COVID-19 measures and controls. Hudbay works collaboratively with the health authorities to ensure its workforce and partners adhere to the company’s COVID-19 protocols while continuing to operate safely and efficiently.

During the quarter, the Constancia mine produced 20,803 tonnes of copper, 8,167 ounces of precious metals and 392 tonnes of molybdenum. Production results were significantly higher than the second quarter of 2020 as a result of the ramp-up to full production after the temporary suspension of operations until mid-May.

The ramp-up also resulted in a significant increase in ore milled during the third quarter at Constancia compared to the second quarter of 2020. Compared to the same period in 2019, ore milled was 9% lower due to a deferred plant maintenance shutdown in August, which typically occurs in the second and fourth quarters, as previously disclosed, as well as lower throughput caused by increased ore hardness. Milled copper grades in the third quarter were slightly lower than the second quarter of 2020, in line with the mine plan. Copper recoveries in the third quarter were higher than the second quarter of 2020 due to the processing of stockpile ore after the mill ramp-up in the second quarter.

Combined mine, mill and G&A unit operating costsi in the third quarter of 2020 were higher than the second quarter of 2020, primarily due to abnormally low operating costs during the second quarter as a result of the processing of stockpile ore after the mill ramp up. Unit operating costs in the quarter were within the guidance range for 2020.

Peru’s cash cost per pound of copper produced, net of by-product credits, for the three months ended September 30, 2020 was $1.54, higher than the previous quarter primarily due to higher operating costs, as described above, and lower grades. Peru’s sustaining cash cost per pound of copper produced, net of by-product credits, for the three months ended September 30, 2020 also increased compared to the prior quarter primarily due to the same factors affecting cash cost as well as accelerated sustaining capital spending following a full ramp up of operations to normal levels in early July 2020 at Constancia.

Production of all metals and unit operating costs at Constancia are expected to be in line with the revised full year guidance for 2020 that was released with second quarter results.

Manitoba Operations Review
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