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Hudbay Announces First Quarter 2022 Results

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Hudbay Announces First Quarter 2022 Results

 

 

 

 

 

Hudbay Minerals Inc. (TSX:HBM) (NYSE:HBM) released its first quarter 2022 financial results. All amounts are in U.S. dollars, unless otherwise noted.

 

First Quarter Operating and Financial Results

  • Consolidated production in the first quarter was 24,702 tonnes of copper and 53,956 ounces of gold. Cash cost and sustaining cash costi per pound of copper produced, net of by-product credits, were $1.11 and $2.29, respectively.
  • Full year 2022 production and cost guidance reaffirmed as first quarter production was in line with quarterly cadence expectations and Hudbay achieved strong unit operating cost performance despite the inflationary environment.
  • Peru’s operations in the first quarter were impacted by COVID-19 related employee absenteeism and high rainfalls resulting in reduced Pampacancha production relative to the fourth quarter of 2021, as well as a semi-annual scheduled mill maintenance period in January.
  • Manitoba achieved first quarter gold production of 43,167 ounces at a cash cost per ounce of gold produced, net of by-product creditsi, of $416 as New Britannia’s gold metallurgical recoveries improved significantly relative to previous months. Manitoba sales volumes were impacted by the availability of railcars during the quarter, with excess inventory of approximately 7,000 tonnes of copper concentrate containing high gold content and 6 million pounds of refined zinc at the end of the quarter, collectively valued at approximately $45 million.
  • First quarter net earnings and earnings per share were $63.8 million and $0.24, respectively. After adjusting for a non-cash gain of $79.9 million mostly related to a quarterly revaluation of the Flin Flon environmental provision given higher long term risk-free discount rates, amongst other items, first quarter adjusted net earningsi per share were $0.02.
  • Operating cash flow before change in non-cash working capital was $77.1 million and adjusted EBITDAi was $110.2 million in the first quarter of 2022, benefiting from strong realized base metals prices but negatively impacted by the temporary buildup of unsold inventory in Manitoba.
  • Cash and cash equivalents decreased during the first quarter to $213.4 million, as at March 31, 2022, mainly as a result of $55.9 million of sustaining capital investments, $31.9 million of interest payments and an $18.6 million partial repayment of the gold prepay liability, partially offset by cash generated from operations, which was negatively impacted by limited railcar availability leading to an inventory buildup in Manitoba.

 

Executing on Growth Initiatives

  • The Copper World preliminary economic assessment is nearing completion and is expected to reflect a two-phase mine plan contemplating the development of the Copper World deposits in conjunction with an alternative plan for the Rosemont deposit.
  • In April 2022, the New Britannia mill consistently achieved throughput greater than 1,500 tonnes per day after scheduled rod mill liner maintenance was completed in the first quarter.
  • Announced annual reserve and resource update with mineral reserve growth replacing close to 100% of 2021 mining depletion and extending the mine life at each of Constancia and Snow Lake by one year to 2038.
  • Significant exploration activity continues across the business with seven drill rigs now turning at the Copper World site to conduct infill and extension drilling and to support future economic studies, winter drilling campaigns recently completed in the Snow Lake region and at the Flin Flon tailings facility, and the advancement of exploration initiatives in Peru.

 

“We maintained steady operations during the first quarter despite being faced with a number of external challenges, including COVID-related absenteeism, extreme weather conditions and inflationary cost pressures,” said Peter Kukielski, President and Chief Executive Officer. “This led to strong unit cost performance which is a testament to our effective risk management systems and focus on operating efficiencies. We have seen strong performance from the New Britannia mill in Manitoba and we are on track to mine the significantly higher grades in Peru later this year. As such, we have reaffirmed our 2022 production and cost guidance. We look forward to continuing to advance our world-class project pipeline, including the release of a robust PEA on our Copper World project in the second quarter.”

 

Summary of First Quarter Results

 

Consolidated copper production in the first quarter of 2022 was 24,702 tonnes, in line with expected quarterly cadence for the year. Consolidated gold production decreased by 16% compared to the fourth quarter, primarily due to lower gold production in Peru as COVID-19 related absenteeism and high rainfalls limited production from the Pampacancha pit during the quarter. Consolidated zinc production in the first quarter was 4% lower than the fourth quarter primarily due to lower zinc grades at Lalor and 777.

 

Consolidated cash cost per pound of copper produced, net of by-product creditsi, in the first quarter of 2022 was $1.11, compared to $0.51 in fourth quarter of 2021. This increase was a result of higher milling costs and lower copper production in Peru and higher general and administrative costs in Manitoba, partially offset by slightly higher by-product credits per pound. Consolidated sustaining cash cost per pound of copper produced, net of by-product creditsi, was $2.29 in the first quarter of 2022 compared to $1.95 in the fourth quarter. This increase was primarily due to the same reasons outlined above, partially offset by lower sustaining capital expenditures and capitalized exploration. Both measures were slightly above the company’s 2022 guidance ranges primarily as a result of the by-product credit impact from lower sales volumes in the first quarter, as described below, and therefore, consolidated cash cost and sustaining cash cost are expected to decline in future quarters to within the 2022 guidance ranges with higher expected copper production and contributions from precious metal by-product credits.

 

In the first quarter of 2022, Peru and Manitoba maintained steady operations with unit operating cost performance of $12.37 per tonne and C$176 per tonne, respectively, in line with the 2022 guidance ranges. This strong cost performance was achieved despite continuing to experience broad based inflationary pressures caused by higher input prices for many services and consumables, such as power, fuel, grinding media, freight and insurance, leading to higher than budgeted operating costs during the first quarter of 2022. The company also continues to face intermittent operational, labour and travel disruptions with periodic waves of COVID-19 cases.

 

Cash generated from operating activities in the first quarter of 2022 decreased to $63.6 million compared to $95.8 million in the fourth quarter of 2021. Operating cash flow before change in non-cash working capital was $77.1 million during the first quarter of 2022, compared to $156.9 million in the fourth quarter 2021. These decreases were due to lower sales volumes for copper, gold and zinc, primarily as a result of limited railcar availability in Manitoba as detailed below, partially offset by higher silver sales volumes and higher base metals realized prices.

 

As previously announced, first quarter Manitoba sales were impacted by limited railcar availability resulting in approximately 7,000 tonnes of copper concentrate inventory containing high gold content, and 6 million pounds of refined zinc inventory in excess of normal operating levels. Had the excess copper concentrate and zinc inventory been sold during the first quarter, Hudbay would have realized approximately $45 million of incremental revenue, assuming end of quarter commodity prices. The above quantities are expected to be recognized as revenue and converted to cash as inventory levels are drawn down over the next several months with increased railcar access as weather conditions improve.

 

Net earnings and earnings per share in the first quarter of 2022 were $63.8 million and $0.24, respectively, compared to a net loss and loss per share of $10.5 million and $0.04, respectively, in the fourth quarter of 2021. First quarter earnings benefited from a non-cash gain of $79.9 million mostly related to the quarterly revaluation of the Flin Flon environmental provision, which was impacted by rising long term risk-free discount rates. With Flin Flon operations closing in June of this year and given the long-term nature of the reclamation cash flows, quarterly revaluation of the corresponding environmental provision remains highly sensitive to changes in long-term risk-free discount rates and, as such, the company expects to continue to experience quarterly environmental provision revaluations. The quarterly financial results were also negatively impacted by $10.5 million in non-cash mark-to-market losses arising from the revaluation of the gold prepayment liability, among other items.

 

Adjusted net earningsi and adjusted net earnings per sharei in the first quarter of 2022 were $5.2 million and $0.02 per share, respectively, after adjusting for the non-cash gain related to the revaluation of the environmental provision, among other items. This compares to an adjusted net earnings and adjusted net earnings per share of $32.7 million, and $0.13 per share in fourth quarter of 2021. First quarter adjusted EBITDAi was $110.2 million, compared to $180.3 million in the fourth quarter of 2021, primarily as a result of the same factors affecting operating cash flow noted above.

 

As at March 31, 2022, the company’s liquidity includes $213.4 million in cash as well as undrawn availability of $357.5 million under its revolving credit facilities. The company expects that the current liquidity combined with cash flow from operations will be sufficient to meet its liquidity needs for the foreseeable future. Given the elevated inventory levels in Manitoba at the end of the first quarter and the positive expected quarterly production cadence, the company projects its cash balance to grow throughout the remainder of the year based on current commodity prices.

 

 

Consolidated Financial Condition ($000s)   Mar. 31, 2022 Dec. 31, 2021 Mar. 31, 2021
Cash   213,359 270,989 310,564
Total long-term debt   1,181,119 1,180,274 1,180,798
Net debt1   967,760 909,285 870,234
Working capital2   161,846 147,512 236,281
Total assets   4,538,214 4,616,231 4,549,196
Equity   1,561,978 1,476,828 1,660,250

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.
2 Working capital is determined as total current assets less total current liabilities as defined under IFRS and disclosed on the consolidated financial statements

 

 

 

Consolidated Financial Performance   Three Months Ended
    Mar. 31, 2022 Dec. 31, 2021 Mar. 31, 2021
Revenue $000s 378,619 425,170   313,624  
Cost of sales $000s 293,351 343,426   261,112  
Earnings (loss) before tax $000s 88,861 (149)   (69,592)  
Earnings (loss) $000s 63,815 (10,453)   (60,102)  
Basic and diluted earnings (loss) per share $/share 0.24 (0.04)   (0.23)  
Adjusted earnings (loss) per share1 $/share 0.02 0.13   (0.06)  
Operating cash flow before change in non-cash working capital $ millions 77.1 156.9   90.7  
Adjusted EBITDA1 $ millions 110.2 180.3   104.2  
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 Reporting Measures” section of this news release.

 

 

 

Consolidated Production and Cost Performance Three Months Ended
    Mar. 31, 2022 Dec. 31, 2021 Mar. 31, 2021
Contained metal in concentrate and doré produced1      
Copper tonnes 24,702   28,198   24,553  
Gold ounces 53,956   64,159   35,500  
Silver ounces 784,357   899,713   696,673  
Zinc tonnes 22,252   23,207   27,940  
Molybdenum tonnes 207   275   294  
Payable metal sold        
Copper tonnes 20,609   24,959   20,929  
Gold2 ounces 48,343   56,927   25,383  
Silver2 ounces 864,591   638,640   509,760  
Zinc3 tonnes 17,306   21,112   28,343  
Molybdenum tonnes 213   245   284  
Consolidated cash cost per pound of copper produced4    
Cash cost $/lb 1.11   0.51   1.04  
Peru $/lb 1.54   1.28   1.82  
    Manitoba $/lb (0.40)   (2.77)   (1.04)  
Sustaining cash cost $/lb 2.29   1.95   2.16  
Peru $/lb 2.27   2.46   2.36  
    Manitoba $/lb 2.33   (0.23)   1.62  
All-in sustaining cash cost $/lb 2.54   2.20   2.37  

1 Metal reported in concentrate is prior to deductions associated with smelter contract terms.
2 Includes total payable gold and silver in concentrate and in doré sold.
3 Includes refined zinc metal and payable zinc in concentrate 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, 2022 Dec. 31, 2021 Mar. 31, 2021
Constancia ore mined1 tonnes 6,908,151 7,742,469 7,747,466
Copper % 0.32 0.33 0.30
Gold g/tonne 0.04 0.04 0.04
Silver g/tonne 3.22 2.81 2.90
Molybdenum % 0.01 0.01 0.01
Pampacancha ore mined1 tonnes 847,306 2,107,196
Copper % 0.27 0.27
Gold g/tonne 0.43 0.34
Silver g/tonne 4.06 4.26
Molybdenum % 0.01 0.01
Ore milled tonnes 7,213,833 8,048,925 6,362,752
Copper % 0.31 0.33 0.33
Gold g/tonne 0.08 0.11 0.04
Silver g/tonne 3.26 3.67 2.84
Molybdenum   0.01 0.01 0.01
Copper recovery % 85.3 86.0 84.1
Gold recovery % 59.8 63.6 52.0
Silver recovery % 66.9 60.8 69.9
Molybdenum recovery % 21.1 26.7 33.4
Contained metal in concentrate      
Copper tonnes 19,166 22,856 17,827
Gold ounces 10,789 17,917 4,638
Silver ounces 505,568 578,140 405,714
Molybdenum tonnes 207 275 294
Payable metal sold      
Copper tonnes 16,825 20,551 14,836
Gold ounces 14,452 16,304 2,963
Silver ounces 636,133 380,712 337,612
Molybdenum tonnes 213 245 284
Combined unit operating cost2,3,4 $/tonne 12.37 9.96 11.74
Cash cost4 $/lb 1.54 1.28 1.82
Sustaining cash cost3,4 $/lb 2.27 2.46 2.36

1 Reported tonnes and grade for ore mined are estimates based on mine plan assumptions and may not reconcile fully to ore milled.
2 Reflects combined mine, mill and general and administrative (“G&A”) costs per tonne of ore milled. Reflects the deduction of expected capitalized stripping costs.
3 Excludes approximately $2.3 million, or $0.32 per tonne, of COVID-19 related costs during the three months ended March 31, 2022, $4.1 million, or $0.51 per tonne, of COVID-related costs during the three months ended December 31, 2021 and $4.6 million, or $0.72 per tonne, during the three months ended March 31, 2021.
4 Combined unit 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 Reporting Measures” section of this news release.

 

The Peru operations were impacted by the COVID-19 Omicron variant during January and February of 2022, resulting in high employee absenteeism which had a direct impact on the quarter’s production. Despite the high absenteeism, COVID-19 containment costs have decreased considerably as the severity of the variant appears lower and COVID-19 protocols have been modified to align with recommended public health measures. Full year production of all metals and costs in Peru are expected to be within guidance ranges for 2022.

 

During the first quarter of 2022, the Constancia operations produced 19,166 tonnes of copper, 10,789 ounces of gold, 505,568 ounces of silver and 207 tonnes of molybdenum. Production of all metals was lower than the fourth quarter of 2021 primarily due to a planned semi-annual mill maintenance shutdown in January and lower grades. As previously disclosed, full year production in Peru is expected to benefit from significantly higher grades in the fourth quarter of 2022.

 

Total ore mined declined during the first quarter of 2022, relative to the fourth quarter of 2021, due to high rainfalls and labour shortages, which resulted in delays affecting the water management system and lower production from Pampacancha. Ore milled during the first quarter of 2022 was lower compared to the fourth quarter of 2021 due to the planned mill maintenance shutdown in January. Milled copper grades and recoveries were lower than the previous quarter’s levels but were consistent with the mine plan. Milled gold grades and recoveries were lower than the previous quarter due to a lower contribution of Pampacancha ore in the quarter.

 

Combined mine, mill and G&A unit operating costs in the first quarter of 2022 were $12.37 per tonne, and higher than the fourth quarter of 2021, primarily due to continued inflationary pressures on consumables and energy costs and fewer tonnes of ore milled due to the planned mill maintenance shutdown. Hudbay experienced unbudgeted inflationary pressure on costs in the first quarter of 2022 as a result of higher fuel prices, higher power prices, higher steel prices affecting grinding media costs, higher community costs and higher insurance costs. Despite these inflationary cost pressures, full year unit operating costs in Peru are expected to be within the 2022 guidance range.

 

Peru’s cash cost per pound of copper produced, net of by-product credits, in the first quarter of 2022 was $1.54, higher than the fourth quarter primarily due to higher milling costs and lower copper production. Cash costs in the first quarter were above the upper end of the 2022 guidance range in part due to lower production and higher costs related to the scheduled semi-annual plant maintenance shutdown in the quarter. 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 2022 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 credits, in the first quarter of 2022 improved to $2.27, compared to $2.46 in the fourth quarter, as lower sustaining capital expenditures and lower capitalized exploration more than offset the higher milling costs and lower production in the quarter.

 

Manitoba Operations Review

 

Manitoba Operations                                                                              Three Months Ended
    Mar. 31, 2022 Dec. 31, 2021 Mar. 31, 2021
Lalor ore mined tonnes 386,752 422,208 421,602
Copper % 0.80 0.78 0.57
Zinc % 4.06 4.19 5.20
Gold g/tonne 3.76 3.92 2.67
Silver g/tonne 22.94 30.35 22.75
777 ore mined tonnes 258,069 266,744 275,260
Copper % 1.19 1.13 2.06
Zinc % 4.12 4.16 4.00
Gold g/tonne 1.69 1.80 2.39
Silver g/tonne 21.05 25.02 29.32
Stall Concentrator & New Britannia Mill:  
Ore milled tonnes 397,301 419,727 361,344
Copper % 0.82 0.75 0.60
Zinc % 4.24 4.12 5.53
Gold g/tonne 3.87 3.90 2.57
Silver g/tonne 23.16 30.07 23.40
Copper recovery % 87.5 88.7 85.7
Zinc recovery % 85.7 87.4 91.1
Gold recovery % 58.4 54.6 57.5
Silver recovery % 60.0 53.9 56.2
Flin Flon Concentrator:      
Ore milled tonnes 254,032 262,565 283,386
Copper % 1.20 1.12 1.88
Zinc % 4.13 4.16 4.20
Gold g/tonne 1.70 1.78 2.34
Silver g/tonne 21.23 25.04 28.01
Copper recovery % 87.6 86.7 91.3
Zinc recovery % 83.2 83.1 81.8
Gold recovery % 57.7 59.2 64.0
Silver recovery % 52.5 45.6 54.1
Total contained metal in concentrate    
Copper tonnes 5,536 5,342 6,726
Zinc tonnes 22,252 23,207 27,940
Gold ounces 36,887 37,644 30,862
Silver ounces 268,743 315,054 290,959
Total metal in doré        
Gold ounces 6,280 8,598
Silver ounces 10,046 6,519
Total payable metal sold      
Copper tonnes 3,784 4,408 6,093
Zinc1 tonnes 17,306 21,112 28,343
Gold2 ounces 33,891 40,623 22,420
Silver2 ounces 228,458 257,928 172,148
Combined unit operating cost3,4 C$/tonne 176 168 151
Gold cash cost4,5 $/oz 416
Gold sustaining cash cost4,5 $/oz 1,187

1 Includes refined zinc metal sold and payable zinc in concentrate sold.
2 Includes total payable precious metals in concentrate and in doré sold.
3 Reflects combined mine, mill and G&A costs per tonne of ore milled.
4 Combined unit 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 Reporting Measures” section of this news release.
5 Cash cost and sustaining cash cost per ounce of gold produced were introduced in 2022 and do not have a published comparative.

 

During the first quarter of 2022, the Manitoba operations produced 43,167 ounces of gold, 22,252 tonnes of zinc, 5,536 tonnes of copper and 278,789 ounces of silver. Copper production increased by approximately 4%, whereas gold, zinc and silver production decreased by 7%, 4% and 13%, respectively, compared to the fourth quarter due to expected grade variability quarter-to-quarter and lower ore milled. As previously mentioned, sales volumes in Manitoba were impacted by limited railcar availability, and the resulting excess copper concentrate and refined zinc inventory buildup is expected to normalize over the next several months with increased access to railcars as weather conditions improve. Full year production of all metals and costs in Manitoba are expected to be within guidance ranges for 2022.

 

Ore mined at the Manitoba operations during the first quarter of 2022 was lower than the fourth quarter of 2021 due to employee absenteeism caused by COVID-19, unplanned maintenance requirements of the ore handling system that temporarily affected hoisting ability at Lalor and planned lower production at 777 as the mine approaches closure in June 2022.

 

Lalor production processes to separate gold and base metal ores are fully established to optimally provide feed for both the New Britannia and Stall mills based on the ore metal content. Higher gold content ore is processed at the New Britannia facility and higher base metal content ore is directed towards Stall. A production ramp-up strategy to achieve 5,300 tonnes per day at Lalor by the end of 2022 is underway and includes advancing development for new mining fronts, additions to the mine equipment fleet, transition of workforce from the 777 mine upon closure, and expansion of change house and office facilities. A planned Lalor maintenance period has been advanced to the second quarter of 2022 in order to allow for increased availability during the third quarter after 777 has closed and the additional workforce and equipment have transitioned to Lalor. The 777 equipment relocation strategy will commence in the second quarter of 2022, ahead of expected timeframes to advance the production ramp-up to 5,300 tonnes per day.

 

The 777 mine is within months of closure and the focus continues to be on safely mining out the remaining reserves by completing the necessary ground rehabilitation to access remnant and pillar stoping blocks. Challenging ground conditions continue to cause delays in the production sequence and result in higher dilution than planned. These challenges are expected to continue until the end of the mine life in June 2022. Pre-closure activities are well underway in mined out areas to decommission stationary equipment of value for redeployment at Lalor. As development requirements wind down, personnel and equipment are being redeployed to Lalor as part of the Lalor ramp-up strategy.

 

The New Britannia mill averaged approximately 1,400 tonnes per day in the first quarter of 2022, slightly below the targeted 1,500 tonnes per day as a result of completing scheduled rod mill liner maintenance during the quarter. Since completing the mill maintenance, New Britannia has consistently achieved greater than 1,500 tonnes per day in April. With the inclusion of doré, the gold and silver recoveries at the New Britannia mill have also improved significantly with metallurgical recoveries in March higher in relation to previous months. Additional initiatives are planned in the second quarter to further improve recoveries to be in line with metallurgical models.

 

The combined Snow Lake mills processed less ore in the first quarter compared to the fourth quarter as a result of less ore being mined at Lalor. Stall recoveries were consistent with the metallurgical model for the head grades delivered. The Flin Flon concentrator consumed the available ore feed from the 777 mine in the first quarter of 2022. Recoveries were consistent with the metallurgical model for the head grades delivered.

 

Combined mine, mill and G&A unit operating costs in the first quarter of 2022 increased by 5% compared to the fourth quarter of 2021. The increase was primarily due to higher propane usage during the colder winter coupled with continued inflationary cost pressures for bulk commodities and fuel, and lower tonnes processed. Full year combined unit costs are expected to remain within 2022 guidance ranges.

 

Cash cost per ounce of gold produced, net of by-product credits, in the first quarter of 2022 was $416 and in line with the 2022 guidance range for Manitoba.

 

Supply Chain and Cost Inflation

 

The company continues to experience higher operating costs as a result of higher input prices for many services and consumables, such as power, fuel and grinding media, due to global supply chain disruptions. Hudbay also continues to face intermittent operational labour and travel disruptions with periodic waves of COVID-19 cases. However, these external challenges are effectively being managed and Hudbay has been able to maintain steady operations during the first quarter while continuing to track in line with 2022 unit operating cost guidance.

 

Copper World Preliminary Economic Assessment Nearing Completion

 

The initial technical studies for Copper World have been completed and the results are being incorporated into a Preliminary Economic Assessment (“PEA”) contemplating the development of the Copper World deposits in conjunction with an alternative plan for the Rosemont deposit to capitalize on regional synergies. The PEA is expected to incorporate a two-phase mine plan with the first phase reflecting a standalone operation utilizing Hudbay’s private land for processing infrastructure and contemplating mining portions of Copper World and Rosemont located on patented mining claims. The first phase is designed as an economically viable standalone plan, requiring only state and local permits and is expected to reflect an approximate 15-year mine life.  The second phase of the mine plan is expected to extend the mine life and incorporate an expansion onto federal lands to mine the entire Rosemont and Copper World deposits. The second phase of the mine plan would be subject to the federal NEPA permitting process. Hudbay expects the PEA to demonstrate positive economics for this low-cost, long-life copper project and the company is on track to publish the results in a NI 43-101 Technical Report in the second quarter of 2022.

 

In April, Hudbay commenced early site works at Copper World with initial grading and clearing activities taking place on the company’s private land. The company has also increased the number of drill rigs at site to seven to conduct infill drilling and to support future feasibility studies.

 

Rosemont / Copper World Litigation Update

 

In April, two groups of project opponents provided separate notices of their intent to bring citizen suits against Rosemont under the Clean Water Act. In each case, project opponents have alleged that Copper World contains jurisdictional waters of the United States (“WOTUS”) and that Rosemont requires a Section 404 Clean Water Act permit to advance the project. The Army Corps of Engineers has never determined that there are WOTUS on the site and Hudbay has independently concluded that none of the dry washes in the area are WOTUS.

 

In addition to the citizen suits under the Clean Water Act, the same groups subsequently filed motions for a preliminary injunction in the two lawsuits challenging the 404 permit for the Rosemont project. These lawsuits had been stayed following the suspension of the 404 permit in 2019. Hudbay is in the process of relinquishing the suspended 404 Permit and has a filed a motion to dismiss these cases as moot on that basis.

 

Hudbay continues to await a decision from the U.S. Court of Appeals for the Ninth Circuit relating to the District Court’s 2019 ruling to vacate the final record of decision (“FROD”) in respect of the Rosemont project. The FROD was issued by the U.S. Forest Service and is based upon a standalone development plan for the Rosemont project, as set forth in Hudbay’s 2017 feasibility study.

 

Mineral Reserve and Resource Growth at Constancia and Snow Lake

 

Hudbay provided its annual mineral reserve and resource update on March 28, 2022. In Peru, mine planning gains and economic re-evaluations have resulted in additional mineral reserves at Constancia which have largely offset 2021 mining depletion. Current mineral reserve estimates at Constancia total 521 million tonnes at 0.31% copper with over 1.6 million tonnes of contained copper. As a result, Constancia’s expected mine life has been extended one year to 2038. The inferred mineral resources have also increased in 2022 due to the inclusion of the Constancia Norte underground mineral resource estimates.

 

In 2021, a positive scoping study was completed, which resulted in an inferred mineral resource estimate of 6.5 million tonnes at 1.2% copper in two high grade skarn lenses located below the open pit in the Constancia Norte area. The study concluded these two lenses could be mined by underground methods starting in 2029 to supplement the open pit production. The company intends to conduct infill drilling and an internal pre-feasibility study in hopes of converting the underground mineral resources to mineral reserves for inclusion in the mine plan for the Constancia operations.

 

As a result of exploration success in Manitoba in 2021, additional mineral reserves were identified at Lalor and the 1901 deposit, which are expected to extend the mine life of the Snow Lake operations by one year until 2038, maintaining the 17-year mine life. Resource to reserve conversion has more than offset 2021 mining depletion with a net gain for all metals, including an additional 218,000 ounces of gold contained in reserves after adjusting for 2021 mining depletion.

 

Inferred mineral resources at Lalor and 1901 increased by 1.1 million tonnes despite delays in underground drill programs caused by COVID-19 related restrictions. This increases the total inferred mineral resources at Lalor and 1901 to 8.1 million tonnes. These inferred mineral resources have the potential to maintain the 5,300 tonnes per day production level in Snow Lake beyond 2028 and further extend the mine life.

 

Other Exploration Updates

 

Peru Regional Exploration

 

Hudbay controls a large, contiguous block of mineral rights with the potential to hold mineable deposits within trucking distance of the Constancia processing facility, including the past producing Caballito property and the highly prospective Maria Reyna and Kusiorcco properties. Exploration agreement discussions with the communities of Uchucarcco and Anahuichi on the Maria Reyna, Kusiorcco and Caballito properties are in progress.

 

Drilling continues at the Llaguen copper porphyry target in northern Peru with a total of 9,250 metres in 21 holes completed to-date. Assays have been received for eight holes and all holes have intersected mineralization. Based on the positive results from the initial drilling, a second phase of drilling has been initiated aimed at defining an initial inferred mineral resource estimate for Llaguen in the third quarter of 2022.

 

Snow Lake Regional Exploration

 

The company has been actively conducting surface and underground winter drilling activities in the Snow Lake area, primarily focused on the copper-gold rich feeder zone at the 1901 deposit, the drilling gap between 1901 and lens 17 at Lalor, and a high-priority geophysical target located immediately north of Lalor. In addition, Hudbay continues to compile results from ongoing infill drilling programs at Lalor and 1901.

 

Arizona Regional Exploration

 

In addition to infill drilling to support feasibility studies at Copper World, Hudbay continues to test regional exploration targets. There remain several opportunities to further extend economic mineralization within the private land limits at Copper World and Rosemont, including to the north and south of Bolsa through infill drilling to bridge the gaps.

 

Flin Flon Tailings Reprocessing Opportunity

 

Hudbay is exploring the concept to potentially reprocess the Flin Flon tailings in the future. In early January 2022, the company commenced a confirmatory drill program on the tailings facility in Flin Flon to support the evaluation of the tailings reprocessing opportunity. This opportunity could utilize the Flin Flon concentrator, with modifications, after the closure of the 777 mine, creating operating and economic benefits in northern Manitoba and Saskatchewan. It could also provide the opportunity to redesign the closure plans, increase metal production, defer or reduce certain closure costs and reduce the environmental impacts of the tailings facility.

 

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, Vice President, Exploration and Technical Services. Mr. Tavchandjian is a qualified person pursuant to 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.

 

During 2021, there were non-recurring adjustments for Manitoba operations, including severance, past service pension costs, write-downs of certain machinery and equipment, and inventory supplies write-downs as well as non-cash impairment charges related to an updated Flin Flon closure plan and lower long term discount rates in the fourth quarter, none of which management believes are indicative of ongoing operating performance and have therefore been excluded from the calculations of adjusted net earnings (loss) and adjusted EBITDA.

 

Cash cost and sustaining cash cost per pound of zinc produced was a previously disclosed non-IFRS measure, most recently published in the company’s MD&A for the year ended December 31, 2021, dated February 23, 2022. With the planned closure of 777 mine and Flin Flon operations, including the zinc plant, in the second quarter of 2022, the production profile of Manitoba has shifted from zinc to gold and therefore the company has ceased providing this measure on a go forward basis.

 

The following tables provide detailed reconciliations to the most comparable IFRS measures.

 

Adjusted Net Earnings (Loss) Reconciliation

 

  Three Months Ended
(in $ millions) Mar. 31, 2022 Dec. 31, 2021 Mar. 31, 2021
Profit (loss) for the period 63.8   (10.5 ) (60.1 )
Tax expense (recovery) 25.0   10.3   (9.5 )
Profit (loss) before tax 88.8   (0.2 ) (69.6 )
Adjusting items:      
Mark-to-market adjustments           10.5   13.3   40.8  
Peru inventory reversal           (0.5 )   (0.7 )
Variable consideration adjustment – stream revenue and accretion           (5.8 )   (1.0 )
Foreign exchange loss           1.5   1.1   1.7  
Environmental obligation adjustments           (79.9 )    
       
Restructuring charges – Manitoba1           0.7   3.4    
Evaluation expenses           7.0      
Impairment – environmental obligation           —   46.2    
Write-down of unamortized transaction costs           —     2.5  
Premium paid on redemption of notes           —     22.9  
Past service pension cost           —   0.7    
Loss on disposal of plant and equipment – Manitoba           —   2.4    
Adjusted earnings (loss) before income taxes           22.3   66.9   (3.4 )
Tax (expense) recovery           (25.0 ) (10.3 ) 9.5  
Tax impact of adjusting items1           7.9   (23.9 ) (22.2 )
Adjusted net earnings (loss)                 5.2   32.7   (16.1 )
Adjusted net earnings (loss) ($/share)           0.02   0.13   (0.06 )
Basic weighted average number of common shares outstanding (millions) 261.7   261.6   261.3  

1 Includes severance accrued for unionized employees and write down of materials and supply inventories at the Flin Flon operations.
Adjusted EBITDA Reconciliation

 

 

  Three Months Ended
(in $ millions) Mar. 31, 2022 Dec. 31, 2021 Mar. 31, 2021
(Loss) profit for the period           63.8   (10.5 ) (60.1 )
   Add back: Tax expense (recovery)           25.0   10.3   9.5  
   Add back: Net finance expense           36.7   38.6   108.5  
   Add back: Other expenses           2.0   16.1   1.1  
       
   Add back: Evaluation expenses           7.0      
   Add back: Depreciation and amortization           81.1   89.9   82.7  
   Add back: Environmental obligation adjustments           (79.9 )   (4.4 )
   Less: Amortization of deferred revenue and variable consideration adjustment           (28.2 ) (17.3 ) (15.7 )
  107.5   127.1   103.1  
   Adjusting items (pre-tax):      
   Peru inventory reversal           (0.5 )   (0.7 )
   Impairment – environmental obligation           —   46.2    
   Past service pension cost           —   0.7    
   Share-based compensation expenses1           3.2   6.3   1.8  
Adjusted EBITDA           110.2   180.3   104.2  

1 Share-based compensation expenses reflected in cost of sales and selling and administrative expenses.

 

Net Debt Reconciliation

 

(in $ thousands)  
  Mar. 31, 2022 Dec. 31, 2021 Mar. 31, 2021
Total long-term debt           1,181,119           1,180,274             1,180,798
Cash and cash equivalents           213,359           (270,989 )           310,564
Net debt           967,760           909,285             870,234

 

Copper Cash Cost Reconciliation

 

Consolidated Three Months Ended
Net pounds of copper produced      
(in thousands) Mar. 31, 2022 Dec. 31, 2021 Mar. 31, 2021
Peru           42,254           50,389           39,302
Manitoba           12,205           11,777           14,828
Net pounds of copper produced           54,459           62,166           54,130

 

 

Consolidated Three Months Ended
  Mar. 31, 2022 Dec. 31, 2021 Mar. 31, 2021
Cash cost per pound of copper produced $000s $/lb1 $000s $/lb1 $000s $/lb1
Cash cost, before by-product credits 242,058   4.45   232,224   3.73   209,866   3.88  
By-product credits (181,673 ) (3.34 ) (200,306 ) (3.22 ) (153,515 ) (2.84 )
Cash cost, net of by-product credits 60,385   1.11   31,918   0.51   56,351   1.04  

1 Per pound of copper produced.

 

Consolidated Three Months Ended
  Mar. 31, 2022 Dec. 31, 2021 Mar. 31, 2021
Supplementary cash cost information $000s $/lb 1 $000s $/lb 1 $000s

$/lb 1

By-product credits2:            
   Zinc 67,129   1.23 74,585   1.20 82,315   1.52
   Gold 3 84,174   1.55 99,728   1.60 45,134   0.83
   Silver 3 18,639   0.34 14,853   0.24 15,135   0.28
   Molybdenum & other 11,731   0.22 11,140   0.18 10,931   0.20
Total by-product credits 181,673   3.34 200,306   3.22 153,515   2.84
Reconciliation to IFRS:            
Cash cost, net of by-product credits 60,385     31,918     56,351    
By-product credits 181,673     200,306     153,515    
Treatment and refining charges (12,083 )   (13,721 )   (11,936 )  
Share-based compensation         expense           448     744     184    
Inventory adjustments           (461 )       (723 )  
Past service pension cost           —     737        
Change in product inventory (20,920 )   (16,247 )   (22,864 )  
Royalties           3,218     3,594     3,903    
Depreciation and amortization4 81,091     89,927     82,682    
Cost of sales5 293,351     297,258     261,112    

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, 2022 the variable consideration adjustments amounted to income of $3,245. For the three months ended December 31, 2021 – nil. For the three months ended March 31, 2021 – income of $1,617.
4 Depreciation is based on concentrate sold.
5 As per IFRS financial statements.

 

Peru Three Months Ended
(in thousands) Mar. 31, 2022 Dec. 31, 2021 Mar. 31, 2021
Net pounds of copper produced1           42,254           50,389           39,302

1 Contained copper in concentrate.

 

Peru Three Months Ended
  Mar. 31, 2022 Dec. 31, 2021 Mar. 31, 2021
Cash cost per pound of copper produced $000s $/lb $000s $/lb $000s $/lb
Mining 28,402   0.67   27,756   0.55   21,539   0.55  
Milling 47,655   1.13   40,121   0.80   43,320   1.10  
G&A 16,100   0.38   18,351   0.36   14,420   0.37  
Onsite costs 92,157   2.18   86,228   1.71   79,279   2.02  
Treatment & refining 7,585   0.18   8,636   0.17   6,614   0.17  
Freight & other 9,477   0.22   11,609   0.23   8,688   0.22  
Cash cost, before by-product credits 109,219   2.58   106,473   2.11   94,581   2.41  
By-product credits (43,997 ) (1.04 ) (41,900 ) (0.83 ) (22,864 ) (0.58 )
Cash cost, net of by-product credits 65,222   1.54   64,573   1.28   71,717   1.82  

 

Peru Three Months Ended
  Mar. 31, 2022 Dec. 31, 2021 Mar. 31, 2021
Supplementary cash cost information $000s $/lb1 $000s $/lb1 $000s $/lb1
By-product credits2:            
Gold3 21,712   0.51 24,325   0.49 4,155   0.11
Silver3 12,991   0.31 7,793   0.15 9,337   0.24
Molybdenum 9,294     0.22 9,782     0.19 9,372   0.24
Total by-product credits 43,997   1.04 41,900   0.83 22,864   0.58
Reconciliation to IFRS:            
Cash cost, net of by-product credits 65,222     64,573     71,717    
By-product credits 43,997     41,900     22,864    
Treatment and refining charges (7,585 )   (8,636 )   (6,614 )  
Inventory adjustments (461 )                 (723 )  
Share-based compensation expenses 98     145     19    
Change in product inventory (4,772 )   (4,507 )   (10,575 )  
Royalties 854     762     1,165    
Depreciation and amortization4 48,362     54,078     40,435    
Cost of sales5 145,715     148,315     118,288    

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.

 

Manitoba Three Months Ended
(in thousands) Mar. 31, 2022 Dec. 31, 2021 Mar. 31, 2021
Net pounds of copper produced1           12,205           11,777           14,828

1 Contained copper in concentrate.

Manitoba Three Months Ended
  Mar. 31, 2022 Dec. 31, 2021 Mar. 31, 2021
Cash cost per pound of copper produced $000s $/lb $000s $/lb $000s $/lb
Mining 59,433   4.87   58,891   5.01   54,420   3.67  
Milling 21,509   1.76   22,193   1.88   12,662   0.85  
Refining (Zinc) 18,376   1.51   19,008   1.61   19,607   1.32  
G&A 22,893   1.88   13,746   1.17   15,787   1.06  
Onsite costs 122,211   10.01   113,838   9.67   102,476   6.91  
Treatment & refining 4,498   0.37   5,085   0.43   5,322   0.36  
Freight & other 6,130   0.50   6,828   0.58   7,487   0.50  
Cash cost, before by-product credits 132,839   10.88   125,751   10.68   115,285   7.77  
By-product credits (137,676 ) (11.28 ) (158,406 ) (13.45 ) (130,651 ) (8.81 )
Cash cost, net of by-product credits (4,837 ) (0.40 ) (32,655 ) (2.77 ) (15,366 ) (1.04 )

 

 

Manitoba Three Months Ended
  Mar. 31, 2022 Dec. 31, 2021 Mar. 31, 2021
Supplementary cash cost information $000s $/lb $000s $/lb $000s $/lb
By-product credits2:            
Zinc 67,129   5.50 74,585   6.33 77,593   6.15
Gold3 62,462   5.12 75,403   6.40 55,616   4.41
Silver3 5,648   0.46 7,060   0.60 7,040   0.56
Other 2,437   0.20 1,358   0.12 1,595   0.13
Total by-product credits 137,676   11.28 158,406   13.45 141,844   11.24
Reconciliation to IFRS:            
Cash cost, net of by-product credits (4,837 )  

(32,655

)

  (15,366 )  
By-product credits 137,676     158,406     130,651    
Treatment and refining charges (4,498 )   (5,085 )   (5,322 )  
Past service pension cost           —     737               —    
Share-based compensation expenses 350      

599

    165    
Change in product inventory (16,148 )   (11,740 )   (12,289 )  
Royalties 2,364     2,832     2,738    
Depreciation and amortization4 32,729     35,849     42,247    
Cost of sales5 147,636     148,943     142,824    

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.

 

 

Sustaining and All-in Sustaining Cash Cost Reconciliation

 

Consolidated Three Months Ended
  Mar. 31, 2022 Dec. 31, 2021 Mar. 31, 2021
All-in sustaining cash cost per pound of copper produced  $000s $/lb $000s $/lb $000s $/lb
Cash cost, net of by-product credits 60,385   1.11 31,918   0.51 56,351   1.04
Cash sustaining capital expenditures 60,963   1.12 77,539   1.25 56,456   1.04
Capitalized exploration   8,000   0.13  
Royalties 3,218   0.06 3,594   0.06 3,903   0.07
Sustaining cash cost, net of by-product credits 124,566   2.29 121,051   1.95 116,170   2.16
Corporate selling and administrative expenses & regional costs 13,060   0.24 14,729   0.24 10,765   0.20
Accretion and amortization of decommissioning and community agreements1 721   0.01 894   0.01 579   0.01
All-in sustaining cash cost, net of by-product credits  

138,347

   

2.54

136,674

 

2.20

128,054

 

2.37

Reconciliation to property, plant and equipment additions:            
Property, plant and equipment additions 39,399     91,432     82,378    
Capitalized stripping net additions 24,146     19,201     18,625    
Total accrued capital additions 63,545     110,633     101,003    
Less other non-sustaining capital costs2 12,832     43,176     67,159    
Total sustaining capital costs 50,713     67,457     33,844    
Right of use leased assets (7,772 )   (6,714 )   (1,321 )  
Capitalized lease cash payments – operating sites 9,259     9,099     9,188    
Community agreement cash payments 3,772     1,266     235    
Accretion and amortization of decommissioning and restoration obligations 4,991     6,431     14,510    
Cash sustaining capital expenditures 60,963     77.539     56,456    
             

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, growth capital expenditures.

 

 

Peru Three Months Ended
  Mar. 31, 2022 Dec. 31, 2021 Mar. 31, 2021
Sustaining cash cost per pound of copper produced $000s $/lb $000s $/lb $000s $/lb
Cash cost, net of by-product credits 65,222 1.54 64,573 1.28 71,717 1.82
Cash sustaining capital expenditures 30,039 0.71 50,423 1.00 19,802 0.50
Capitalized exploration1           — 0.00 8,000 0.16           — 0.00
Royalties 854 0.02 762 0.02 1,165 0.03
Sustaining cash cost per pound of copper produced 96,115 2.27 123,758 2.46 92,684 2.36

1 Only includes exploration costs incurred for locations near to existing mine operations.

 

 

Manitoba Three Months Ended
  Mar. 31, 2022 Dec. 31, 2021 Mar. 31, 2021
Sustaining cash cost per pound of copper produced $000s $/lb $000s $/lb $000s $/lb
Cash cost, net of by-product credits (4,837 ) (0.40 ) (32,655 ) (2.77 ) (15,366 ) (1.04 )
Cash sustaining capital expenditures 30,924   2.53    27,116   2.30   36,654   2.47  
Royalties 2,364   0.19   2,832   0.24   2,738   0.18  
Sustaining cash cost per pound of copper produced 28,451   2.33   (2,707 ) (0.23 ) 24,026   1.62  

Manitoba Gold Cash Cost and Sustaining Cash Cost Reconciliation

 

 

Manitoba   Three Months Ended
    Mar. 31, 2022
Net ounces of gold produced      43,167

 

 

Manitoba         Three Months Ended
            Mar. 31, 2022
Cash cost per ounce of gold produced   $000s $/oz
Cash cost, net of by-product credits         132,839   3,077  
By-product credits         (114,874 ) (2,661 )
Gold cash cost, net of by-product credits         17,965   416  

 

 

Manitoba         Three Months Ended
            Mar. 31, 2021
Supplementary cash cost information         $000s $/oz1
By-product credits2:            
Copper         39,660   919
Zinc         67,129   1,555
Silver3         5,648   131
Other         2,437   56
Total by-product credits         114,874   2,661
Reconciliation to IFRS:            
Cash cost, net of by-product credits         17,965    
Treatment and refining charges         114,874    
Share-based compensation expenses         (4,498 )  
Change in product inventory         350      
Royalties         (16,148 )  
Depreciation and amortization4         2,364    
Cost of sales5         32,729    

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. For more information, please see the realized price reconciliation table in the Q1 2022 Management Discussion and Analysis posted on hudbayminerals.com
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.

 

 

Manitoba         Three Months Ended
      Mar. 31, 2022
Sustaining cash cost per ounce of gold produced         $000s $/oz
Gold cash cost, net of by-product credits         17,965 416
Cash sustaining capital expenditures         30,924 716
Royalties         2,364 55
Gold sustaining cash cost, net of by-product credits         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, 2022 Dec. 31, 2021 Mar. 31, 2021
Mining 28,402   27,756   21,539  
Milling 47,655   40,121   43,320  
G&A 1 16,100   18,351   14,420  
Other G&A2           (571 )           (1,937 )           19  
  91,586   84.291   79,298  
Less: Covid related costs 2,321   4,041   4,601  
Unit Cost           91,586             80,250             79,298  
Tonnes ore milled 7,214             8,049             6,363  
Combined unit cost per tonne 12.37             9.96             11.74  
Reconciliation to IFRS:      
Unit cost 89,265   80,250   74,697  
Freight & other 9,477   11,609   8,688  
Covid related costs 2,321   4,041   4,601  
Other G&A 571   1,937   (19 )
Share-based compensation expenses 98   145   19  
Inventory adjustments (461 )   (723 )
Change in product inventory (4,772 ) (4,507 ) (10,575 )
Royalties 854   762   1,165  
Depreciation and amortization 48,362   54,078   40,435  
Cost of sales3 145,715   148,315   118,288  

1 G&A as per cash cost reconciliation above.
2 Other G&A primarily includes profit sharing costs.
3 As per IFRS financial statements.

 

Manitoba Three Months Ended
(in thousands except tonnes ore milled and unit cost per tonne)      
Combined unit cost per tonne processed Mar. 31, 2022 Dec. 31, 2021 Mar. 31, 2021
Mining           59,433             58,891             54,420  
Milling           21,509             22,193             12,662  
G&A 1           22,893             13,746             15,787  
Less: G&A allocated to zinc metal production           (13,407 )           (3,762 )           (3,818 )
Unit cost           90,428             91,068             76,872  
USD/CAD implicit exchange rate           1.27             1.26             1.27  
Unit cost – C$           114,504             114,751             97,341  
Tonnes ore milled           651,333             682,292             644,730  
Combined unit cost per tonne – C$           176             168             151  
Reconciliation to IFRS:      
Unit cost           90,428             91,068             76,872  
Freight & other           6,130             6,828             7,487  
Refined (zinc)           18,376             19,008             19,607  
G&A allocated to zinc metal production           13,407             3,762             3,818  
Share-based compensation expenses           350             599             165  
Past service pension cost           —             737             —  
Change in product inventory           (16,148 )           (11,740 )           (12,289 )
Royalties           2,364             2,832             2,738  
Depreciation and amortization           32,729             35,849             42,247  
Cost of sales2 147,636   148,943   142,824  

1 G&A as per cash cost reconciliation above.
2 As per IFRS financial statements.

 

 

About Hudbay

 

Hudbay is a diversified mining company primarily producing copper concentrate (containing copper, gold and silver), zinc metal and silver/gold doré. Directly and through its subsidiaries, Hudbay owns three polymetallic mines, four ore concentrators and a zinc production facility in northern Manitoba and Saskatchewan (Canada) and Cusco (Peru), and copper projects in Arizona and Nevada (United States). The company’s 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.

 

Posted May 10, 2022

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December 8, 2022

Defense Metals Closes Oversubscribed Private Placement of $6.1 Million

Defense Metals Corp. (TSX-V: DEFN) (OTCQB: DFMTF) (FSE: 35D) is pleased ... READ MORE

December 8, 2022

Mayfair Gold Reports 1.85 g/t Gold over 130.5m Including 5.14 g/t Au over 29.2m from Fenn-Gib Drill Program

105,500m of 110,000m Infill and Expansion Drill Program Complete... READ MORE

December 8, 2022

HighGold Mining Intersects 15.5 Meters at 4.04 g/t Gold Equivalent in Step-out drilling at Ellis Zone Discovery, Johnson Tract Project, Alaska

Including 25.70 g/t Gold, 0.81% Zinc over 1.5 meters HighG... READ MORE

December 8, 2022

We acknowledge the [financial] support of the Government of Canada.

Government of Canada Supported
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