|
Third Quarter Operating and Financial Results
- Delivered a solid operating quarter with steady production and cost performance from the
Manitoba andPeru 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 atSeptember 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’sPeru 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 forManitoba .
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 ofJune 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
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
In the third quarter of 2020, consolidated cash cost per pound of copper produced, net of by-product creditsi, was
Cash generated from operating activities in the third quarter of 2020 increased to
Net loss and loss per share in the third quarter of 2020 were
Adjusted net lossi and adjusted EBITDAi in the third quarter of 2020 were
Financial Condition ($000s) | |||
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 | ||||||
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 | |||
Contained metal in concentrate produced1 | ||||
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 | ||||
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
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
Three Months Ended | |||||||
Lalor ore mined | tonnes | 357,213 | 407,408 | 346,456 | |||
Copper | % | 0.66 | 0.77 | 0.68 | |||
Zinc | % | 5.98 | 6.05 | 6.16 | |||
Gold | g/tonne | 2.28 | 2.64 | 2.21 | |||
Silver | g/tonne | 21.23 | 28.40 | 25.56 | |||
777 ore mined | tonnes | 264,905 | 281,890 | 273,319 | |||
Copper | % | 0.98 | 1.72 | 1.33 | |||
Zinc | % | 3.95 | 4.13 | 3.01 | |||
Gold | g/tonne | 2.01 | 1.91 | 1.63 | |||
Silver | g/tonne | 24.25 | 25.73 | 15.42 | |||
Stall Concentrator: | |||||||
Ore milled | tonnes | 335,739 | 334,601 | 318,539 | |||
Copper | % | 0.68 | 0.76 | 0.64 | |||
Zinc | % | 6.11 | 6.16 | 6.22 | |||
Gold | g/tonne | 2.35 | 2.70 | 2.12 | |||
Silver | g/tonne | 22.08 | 28.72 | 25.16 | |||
Copper recovery | % | 84.0 | 86.6 | 84.4 | |||
Zinc recovery | % | 92.7 | 92.4 | 91.8 | |||
Gold recovery | % | 57.4 | 62.3 | 54.3 | |||
Silver recovery | % | 57.5 | 62.1 | 57.4 | |||
Flin Flon Concentrator: | |||||||
Ore milled | tonnes | 322,156 | 324,906 | 331,216 | |||
Copper | % | 0.99 | 1.52 | 1.22 | |||
Zinc | % | 4.07 | 4.41 | 3.64 | |||
Gold | g/tonne | 1.99 | 1.99 | 1.74 | |||
Silver | g/tonne | 24.01 | 25.56 | 17.36 | |||
Copper recovery | % | 83.9 | 87.3 | 89.1 | |||
Zinc recovery | % | 87.9 | 84.9 | 86.7 | |||
Gold recovery | % | 55.3 | 58.6 | 59.1 | |||
Silver recovery | % | 42.0 | 50.7 | 48.7 | |||
Total contained metal in concentrate | |||||||
Copper | tonnes | 4,592 | 6,522 | 5,331 | |||
Zinc | tonnes | 30,570 | 31,222 | 28,639 | |||
Gold | ounces | 25,994 | 30,303 | 22,754 | |||
Silver | ounces | 241,477 | 327,130 | 237,933 | |||
Precious metals1 | ounces | 28,657 | 33,979 | 26,153 | |||
Total payable metal sold | |||||||
Copper | tonnes | 4,249 | 6,928 | 4,602 | |||
Zinc2 | tonnes | 26,520 | 27,604 | 29,140 | |||
Gold | ounces | 26,852 | 29,273 | 21,630 | |||
Silver | ounces | 271,900 | 299,266 | 227,157 | |||
Combined unit operating cost3,4 | C$/tonne | 126 | 135 | 130 | |||
Cash cost4 | $/lb | (3.41 | ) | (1.52 | ) | (1.31 | ) |
Sustaining cash cost4 | $/lb | 0.83 | 1.15 | 2.15 | |||
1 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. 2 Includes refined zinc metal sold and payable zinc in concentrate 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 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
Production during the quarter included 30,570 tonnes of zinc, 4,592 tonnes of copper and 28,657 ounces of precious metals. Production results were slightly lower compared to the previous quarter primarily due to lower head grades and planned maintenance at the Lalor mine during the third quarter.
Operational performance during the third quarter at both Lalor and 777 was strong, with ore production generally in line with the same period in 2019 and grades at both mines remaining in line with the mine plan. At Lalor, a two-week planned maintenance program was completed on schedule, and the company achieved a third quarter production rate averaging 4,600 tonnes per day outside of the maintenance period. The 777 mine maintained consistent and stable performance during the third quarter as it approaches its planned closure in 2022.
Operational readiness activities in support of the early start-up of New Britannia are on track, including ensuring that a sufficient and consistent volume of gold ore will be available. Underground development at Lalor in gold-rich lenses 25 and 27 is advancing ahead of schedule in preparation for the mid-2021 start-up of New Britannia, which is three months earlier than originally planned. Mining of the first stope in lens 27 was completed in September and the trend of increased precious metal production from Lalor is expected to continue.
At the Stall concentrator, ore processed during the third quarter of 2020 was in line with the second quarter, as both periods had planned outages for capital upgrades. Although lower than the first half of 2020, the trend of improved gold recoveries has continued compared to the same periods in 2019 due to improved ore characteristics and numerous operational improvement projects implemented at the Stall mill. At the
Combined mine, mill and G&A unit operating costs in the third quarter decreased by 7% compared to the second quarter of 2020 primarily due to lower operating costs. Manitoba’s combined unit costs are expected to be within the guidance range for the full year 2020.
Manitoba’s cash cost per pound of copper produced, net of by-product credits, for the third quarter of 2020 was negative
COVID-19 Business Update
Amidst the COVID-19 pandemic, Hudbay’s business response plan continued to be executed throughout the quarter, as the company adapts to this fluid environment. The focus remained on the health and safety of Hudbay’s workforce and families, and the communities in which the company operates. The evolution of the pandemic has been closely monitored in each of the regions Hudbay operates in and the company is continuously reviewing and adapting procedures based on the latest local situation.
Hudbay’s business units have developed site-specific measures intended to identify and limit COVID-19 exposure and transmission and maintain a safe environment for workers and communities. Site-specific measures include testing of incoming workers prior to their travel to site, pre-screening protocols, quarantine periods for incoming workers, workplace physical distancing protocols, and adjustment of work rotation schedules. These measures continue to evolve as the status of the pandemic changes in each of the regions in which the company operates with measures being adapted to the regional health authorities’ latest restrictions and guidelines.
Hudbay believes the most important way the company can support the communities in which it operates is to manage safe operations, which provide income for local employees, businesses, and communities. While the company has had members of its workforce contract COVID-19, to date there have been no identified cases of transmission within its workplaces, or transmission between rotational employees and local communities. The company believes that its diligence in screening and testing, and workplace protocols have been effective in achieving the objective of being a safe employer and neighbour. In addition to the company’s efforts to maintain safe operations, it has been supporting public health efforts and providing COVID-19 relief funding, supplies and services to neighbouring communities.
777 Operations Update
Production at the 777 mine was temporarily suspended due to an incident that occurred on
A preliminary video inspection of the mine shaft indicates that damage is limited to the headframe and the bottom of the shaft in the skip compartment. It does not appear that the cage compartments or the ore loading area were damaged, and the structural integrity of the shaft does not appear to have been compromised by the incident. A full inspection of the shaft and skip compartment will require an in-person inspection, which is underway.
Underground mining activity has resumed at 777 with limited production from the mine’s ramp access. If it is confirmed there is no further damage beyond what has been identified to date, it is expected that the 777 shaft could resume full production in December at a repair cost that is not expected to exceed
While fourth quarter production and sales volumes will be impacted, the company is implementing production mitigation plans. Based on the preliminary video inspection and mitigation plans, the company continues to expect the
The New Britannia refurbishment project is ahead of schedule and on budget. Overall project progress is approximately 64% complete, which includes the completion of 99% of detailed engineering, 98% of project procurement and 45% of construction. Commissioning of the gold plant is expected in mid-2021, three months earlier than planned. Construction of the new copper flotation building continues to advance as planned and is on track to have the external structure fully enclosed before winter. Construction of the pipeline between the New Britannia and Stall mills also continues as planned.
As previously disclosed, Hudbay has identified the potential to produce gold from the New Britannia mill earlier in 2021 than originally expected. The refurbishment activities at the gold plant are ahead of schedule and commissioning of the gold plant is now expected in mid-2021, followed by ramp-up and first production in the third quarter of 2021. Copper flotation building construction activities continue to be on track for completion in
Hudbay continues with the early mining of the gold zone at Lalor as part of stope sequencing in preparation for the start of the New Britannia gold mill. Once the New Britannia mill is ramped-up, average annual gold production from Lalor is expected to increase to over 150,000 ounces commencing in 2022 at cash costs and sustaining cash costs, net of by-product credits, of approximately
Pampacancha Update
The company completed the Pampacancha surface rights agreement with the local community of Chilloroya in
Constancia Regional Exploration
Hudbay has recently completed a follow-up drill program at Constancia North to continue to test a possible extension of copper porphyry and high-grade skarn mineralization occurring within 300 metres of the northern edge of the current Constancia pit. The drill program was a follow-up to the drill intersections announced on
Hole ID1 | From | To | Intercept | Estimated True Thickness2 | Cu3 | Mo3 | Au3,4 | Ag3 | Mineralization Type |
(m) | (m) | (m) | (m) | (%) | (g/t) | (g/t) | (g/t) | ||
CO-19-306 | 368.0 | 408.6 | 40.6 | 39.3 | 0.52 | 42.4 | 0.79 | 17.9 | Porphyry |
CO-19-307 (top) | 42.0 | 64.0 | 22.0 | 20.5 | 0.19 | 26.1 | 0.03 | 3.5 | Porphyry |
CO-19-307 (bottom) | 400.0 | 408.0 | 8.0 | 7.3 | 0.60 | 10.8 | 0.08 | 6.9 | Porphyry |
CO-19-308 | 35.0 | 57.0 | 22.0 | 21.3 | 0.24 | 23.7 | 0.07 | 2.0 | Porphyry |
CO-19-309 | 70.0 | 92.3 | 22.3 | 21.0 | 0.27 | 9.0 | 0.19 | 9.7 | Porphyry |
CO-19-310 | 263.0 | 361.0 | 98.0 | 91.9 | 1.10 | 27.9 | 0.08 | 5.9 | Skarn |
CO-19-311 | 90.3 | 118.0 | 27.7 | 23.6 | 0.54 | 4.3 | 0.45 | 11.8 | Porphyry |
CO-20-313 | 116.5 | 125.0 | 8.5 | 7.6 | 0.63 | 4.5 | 1.04 | 11.5 | Porphyry |
CO-20-314 | 7.3 | 100.0 | 92.7 | 89.4 | 0.16 | 89.9 | 0.02 | 1.2 | Porphyry |
CO-20-315 | 19.0 | 87.9 | 68.9 | 67.1 | 0.30 | 99.2 | 0.02 | 3.9 | Porphyry |
CO-20-316 (top) | 136.0 | 187.0 | 51.0 | 48.0 | 0.22 | 363.7 | 0.02 | 2.4 | Skarn |
CO-20-316 (bottom) | 208.1 | 291.7 | 83.6 | 78.6 | 1.39 | 305.0 | 0.43 | 16.0 | Skarn |
CO-20-319 | 193.0 | 252.0 | 59.0 | 58.7 | 0.21 | 52.2 | 0.35 | 9.9 | Skarn |
CO-20-320 (top) | 19.3 | 103.9 | 84.6 | 79.7 | 0.19 | 39.0 | 0.03 | 2.8 | Skarn |
CO-20-320 (bottom) | 143.5 | 231.0 | 87.5 | 81.8 | 0.29 | 30.5 | 0.03 | 2.9 | Skarn |
CO-20-321 (top) | 118.0 | 151.0 | 33.0 | 30.9 | 0.21 | 84.3 | 0.02 | 2.6 | Skarn |
CO-20-321 (bottom) | 181.0 | 234.0 | 53.0 | 49.5 | 0.61 | 42.9 | 0.05 | 7.4 | Skarn |
CO-20-322 (top) | 0.0 | 65.0 | 65.0 | 62.9 | 0.25 | 171.9 | 0.02 | 1.8 | Porphyry |
CO-20-322 (bottom) | 99.0 | 197.0 | 98.0 | 94.1 | 0.31 | 103.9 | 0.03 | 6.1 | Porphyry |
CO-20-324 | 4.0 | 175.6 | 171.6 | 165.1 | 0.29 | 61.8 | 0.03 | 2.9 | Porphyry |
CO-20-325 | 0.0 | 15.0 | 15.0 | 14.5 | 0.80 | 38.2 | 0.09 | 4.3 | Skarn |
CO-20-326 | 0.0 | 16.3 | 16.3 | 15.9 | 0.85 | 24.9 | 0.10 | 4.8 | Skarn |
CO-07-1095 | 305.0 | 348.0 | 43.0 | 37.2 | 1.54 | 59.7 | 0.23 | 9.1 | Skarn |
CO-08-2155 (top) | 20.1 | 59.8 | 39.7 | 37.2 | 0.24 | 4.5 | 0.24 | 12.6 | Porphyry |
CO-08-2155 (bottom) | 217.3 | 346.0 | 128.7 | 123.3 | 0.82 | 37.0 | 0.05 | 13.6 | Skarn |
1 For details relating to the coordinates of each drill hole, please refer to the data table in the “Additional Drill Hole Information” section of this news release. 2 True width estimates are based on the current knowledge and interpretation of skarn mineralization geometry. 3 Specific gravity results are pending - assay results are length weighted. 4 Gold values capped at 10 g/t. 5 Historical drill results from 2007 and 2008. | |||||||||
Other Regional Exploration
Hudbay’s patient and consistent approach to community negotiations has proven successful, demonstrating strong relationships with the neighbouring communities near Constancia and positioning the company well to gain access to other regional growth targets in
Rosemont Update
The appeal of the unprecedented
In
Senior Unsecured Notes Refinancing
On
The proceeds from this offering were primarily used to redeem all
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, 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.
Hudbay believes adjusted net earnings (loss) and adjusted net earnings (loss) per share better reflect the company’s performance for the current period and are better indications of 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. The company provides adjusted EBITDA to help users analyze its results and to provide additional information about the company’s 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. Combined unit cost is shown because the company believes it helps investors and management assess the cost structure and margins that are not impacted by variability in by-product commodity prices.
In the first half of 2020, a government-imposed shutdown of non-essential businesses led to a temporary suspension of the Constancia mining operations. As such, fixed overhead production costs incurred during the suspension were directly charged to cost of sales. These costs did not contribute to production of inventory and were therefore excluded from the calculations of adjusted net earnings (loss), adjusted EBITDA and cash costs.
Effective
For further details on these measures, including reconciliations to the most comparable IFRS measures, please refer to page 42 of Hudbay’s management’s discussion and analysis for the three and nine months ended
Website Links
Hudbay:
www.hudbay.com
Management’s Discussion and Analysis:
http://www.hudbayminerals.com/files/doc_financials/2020/Q3/MDA203.pdf
Financial Statements:
http://www.hudbayminerals.com/files/doc_financials/2020/Q3/FS203.pdf
Conference Call and Webcast
Date: | |
Time: | |
Webcast: | http://services.choruscall.ca/links/hudbay20201104.html |
Dial in: | 1-416-915-3239 or 1-800-319-4610 |
Qualified Person
The technical and scientific information in this news release related to the Constancia mine and
Forward-Looking Information
This news release contains forward-looking information within the meaning of applicable Canadian and
Forward-looking information includes, but is not limited to, production, cost and capital and exploration expenditure guidance and potential revisions to such guidance, anticipated production at Hudbay’s mines and processing facilities, expectations regarding the impact of the COVID-19 pandemic on the company’s operations, financial condition and prospects, the ability to complete the shaft inspection activities at 777 in the anticipated timeframe, the ability to identify the extent of any damage to the 777 mine shaft, the expected timeline and costs to complete repairs at the 777 mine, the ability to continue production and use of the 777 mine′s ramp access as a temporary substitute to the shaft, the expected timeline to resume full production at 777, expectations regarding the timing of mining activities at the Pampacancha deposit and the related capital expenditures, the anticipated timing, cost and benefits of developing the
The material factors or assumptions that Hudbay identified and were applied by the company in drawing conclusions or making forecasts or projections set out in the forward-looking information include, but are not limited to:
- the ability to continue to operate safely and at full capacity during the COVID-19 pandemic;
- the outcome of the inspections at the 777 mine, the ability and cost to remedy the damage and resume production at the 777 mine and the ability to mitigate production while the 777 shaft is not operating;
- the ability to achieve production and unit cost guidance;
- no significant interruptions to the company’s operations or significant delays to its development projects in
Manitoba andPeru due to the COVID-19 pandemic; - the timing of development and production activities on the Pampacancha deposit;
- the timing of the Consulta Previa and permitting process for mining the Pampacancha deposit;
- the timing for reaching additional agreements with individual community members and no significant unanticipated delays to the development of Pampacancha;
- the successful completion of the New Britannia project on budget and on schedule;
- the successful outcome of the
Rosemont litigation; - the success of mining, processing, exploration and development activities;
- the scheduled maintenance and availability of the processing facilities;
- the accuracy of geological, mining and metallurgical estimates;
- anticipated metals prices and the costs of production;
- the supply and demand for metals the company produces;
- the supply and availability of all forms of energy and fuels at reasonable prices;
- no significant unanticipated operational or technical difficulties;
- the execution of the company’s business and growth strategies, including the success of its strategic investments and initiatives;
- the availability of the revolving credit facilities and additional financing, if needed;
- the ability to complete project targets on time and on budget and other events that may affect the company’s ability to develop its projects;
- the timing and receipt of various regulatory and governmental approvals;
- the availability of personnel for the exploration, development and operational projects and ongoing employee relations;
- maintaining good relations with the labour unions that represent certain of the company’s employees in
Manitoba andPeru ; - maintaining good relations with the communities in which the company operates, including the neighbouring Indigenous communities;
- no significant unanticipated challenges with stakeholders at Hudbay’s various projects;
- no significant unanticipated events or changes relating to regulatory, environmental, health and safety matters;
- no contests over title to the company’s properties, including as a result of rights or claimed rights of Indigenous peoples or challenges to the validity of the company’s unpatented mining claims;
- the timing and possible outcome of pending litigation and no significant unanticipated litigation;
- certain tax matters, including, but not limited to current tax laws and regulations and the refund of certain value added taxes from the Canadian and Peruvian governments; and
- no significant and continuing adverse changes in general economic conditions or conditions in the financial markets (including commodity prices and foreign exchange rates).
The risks, uncertainties, contingencies and other factors that may cause actual results to differ materially from those expressed or implied by the forward-looking information may include, but are not limited to, risks associated with the COVID-19 pandemic and its effect on Hudbay’s operations, financial condition, projects and prospects, the possibility of a global recession arising from the COVID-19 pandemic and attempts to control it, the state of emergency and political situation in
Should one or more risk, uncertainty, contingency or other factor materialize or should any factor or assumption prove incorrect, actual results could vary materially from those expressed or implied in the forward-looking information. Accordingly, you should not place undue reliance on forward-looking information. Hudbay does not assume any obligation to update or revise any forward-looking information after the date of this news release or to explain any material difference between subsequent actual events and any forward-looking information, except as required by applicable law.
Note to
This news release has been prepared in accordance with the requirements of the securities laws in effect in
About Hudbay
Hudbay (TSX, NYSE: HBM) is a diversified mining company primarily producing copper concentrate (containing copper, gold and silver) and zinc metal. Directly and through its subsidiaries, Hudbay owns three polymetallic mines, four ore concentrators and a zinc production facility in northern
For further information, please contact:
Director, Investor Relations
(416) 814-4387
candace.brule@hudbay.com
Figure 1: Location of Constancia North Drill Holes is available at https://www.globenewswire.com/NewsRoom/AttachmentNg/f5c9d44f-d8b3-4a6c-9712-68811d3d66e3
3D view of drill hole locations north of the existing Constancia reserve pit. Several of the drill holes intersected porphyry or skarn mineralization along a SE-NW trend.
Additional Drill Hole Information
Hole ID | From (m) | To (m) | Azimuth at Intercept | Dip at Intercept | Core Size | ||||
Easting | Northing | Elevation | Easting | Northing | Elevation | ||||
CO-19-306 | 200,773 | 8,400,165 | 3,924 | 200,763 | 8,400,163 | 3,885 | 261 | -76 | HQ |
CO-19-307 (top) | 200,841 | 8,400,370 | 4,236 | 200,835 | 8,400,364 | 4,215 | 228 | -69 | HQ |
CO-19-307 (bottom) | 200,733 | 8,400,290 | 3,904 | 200,730 | 8,400,288 | 3,897 | 236 | -67 | HQ |
CO-19-308 | 200,849 | 8,400,385 | 4,241 | 200,845 | 8,400,389 | 4,220 | 316 | -75 | HQ |
CO-19-309 | 200,657 | 8,400,579 | 4,218 | 200,661 | 8,400,573 | 4,197 | 150 | -70 | HQ |
CO-19-310 | 200,767 | 8,400,674 | 4,086 | 200,783 | 8,400,644 | 3,994 | 153 | -70 | HQ |
CO-19-311 | 200,620 | 8,400,635 | 4,227 | 200,630 | 8,400,624 | 4,203 | 138 | -58 | HQ |
CO-20-313 | 200,608 | 8,400,525 | 4,164 | 200,611 | 8,400,523 | 4,157 | 124 | -64 | HQ |
CO-20-314 | 200,811 | 8,400,101 | 4,255 | 200,833 | 8,400,100 | 4,173 | 92 | -75 | HQ |
CO-20-315 | 200,883 | 8,400,328 | 4,259 | 200,873 | 8,400,316 | 4,192 | 219 | -77 | HQ |
CO-20-316 (top) | 200,879 | 8,400,146 | 4,152 | 200,885 | 8,400,130 | 4,104 | 159 | -70 | HQ |
CO-20-316 (bottom) | 200,888 | 8,400,123 | 4,084 | 200,897 | 8,400,096 | 4,006 | 161 | -70 | HQ |
CO-20-319 | 200,847 | 8,400,179 | 4,088 | 200,842 | 8,400,176 | 4,029 | 236 | -85 | HQ |
CO-20-320 (top) | 200,911 | 8,400,092 | 4,270 | 200,923 | 8,400,066 | 4,190 | 155 | -70 | HQ |
CO-20-320 (bottom) | 200,928 | 8,400,054 | 4,153 | 200,940 | 8,400,025 | 4,071 | 158 | -69 | HQ |
CO-20-321 (top) | 200,908 | 8,400,110 | 4,176 | 200,912 | 8,400,099 | 4,145 | 158 | -69 | HQ |
CO-20-321 (bottom) | 200,916 | 8,400,089 | 4,117 | 200,923 | 8,400,071 | 4,067 | 158 | -69 | HQ |
CO-20-322 (top) | 200,961 | 8,400,108 | 4,290 | 200,952 | 8,400,122 | 4,227 | 326 | -75 | HQ |
CO-20-322 (bottom) | 200,947 | 8,400,129 | 4,194 | 200,931 | 8,400,151 | 4,100 | 325 | -74 | HQ |
CO-20-324 | 200,944 | 8,400,144 | 4,291 | 200,913 | 8,400,179 | 4,126 | 319 | -74 | HQ |
CO-20-325 | 200,981 | 8,400,065 | 4,275 | 200,979 | 8,400,069 | 4,260 | 335 | -75 | HQ |
CO-20-326 | 200,981 | 8,400,065 | 4,275 | 200,982 | 8,400,061 | 4,259 | 170 | -78 | HQ |
CO-07-1094 | 200,762 | 8,400,618 | 4,055 | 200,777 | 8,400,602 | 4,018 | 135 | -60 | HQ |
CO-08-215 (top) | 200,891 | 8,400,237 | 4,260 | 200,877 | 8,400,237 | 4,222 | 271 | -70 | HQ |
CO-08-215 (bottom) | 200,827 | 8,400,238 | 4,073 | 200,790 | 8,400,237 | 3,950 | 268 | -73 | HQ |
_______________
1 Adjusted net loss and adjusted net loss per share, adjusted EBITDA, net debt, unit operating costs, cash cost, sustaining 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.
Source:
2020 GlobeNewswire, Inc., source