TSX, NYSE – HBM 2021 No. 12 Hudbay Announces First Quarter 2021 Results
TSX, NYSE – HBM
2021 No. 12
Hudbay Announces First Quarter 2021 Results
Toronto, Ontario, May 11, 2021 – Hudbay Minerals Inc. (“Hudbay” or the “ company”) (TSX, NYSE:HBM) today
released its first quarter 2021 financial results. All amounts are in U.S. dollars, unless otherwise noted.
First Quarter Operating and Financial Results
• Consolidated copper production in the first quarter was 24,553 tonnes at cash cost and sustaining cash costi
per pound of copper produced, net of by-product credits, of $1.04 and $2.16, respectively. Consolidated gold
production in the first quarter was 35,500 ounces, a record for Hudbay.
• Full year 2021 production and operating cost guidance reaffirmed; Pampacancha production commenced in
April 2021, in line with guidance.
• First quarter Manitoba copper production significantly increased from 2020 levels primarily due to higher
grades at 777 and higher recoveries at the Flin Flon concentrator; sales volumes were impacted by the
availability of railcars during the quarter with 5,000 tonnes of copper concentrate inventory in excess of
normal operating levels, valued at approximately $18 million.
• First quarter Peru sales impacted by a 10,000 tonne shipment of copper concentrate, valued at
approximately $21 million, for which a payment was received but not recorded as revenue due to the timing
of the shipment being delayed to early April. Peru's production in the first quarter was impacted by increased
ore hardness as well as a semi-annual scheduled plant shutdown in January.
• First quarter net loss and loss per share were $60.1 million and $0.23, respectively. After adjusting for one -
time financing charges mainly related to the redemption of the 2025 senior notes and a revaluation of the
gold prepayment liability, first quarter adjusted net loss per share i was $0.06. First quarter adjusted EBITDAi
was $104.2 million.
• Operating cash flow before change in non -cash working capital increased to $90.7 million in the first quarter
of 2021, from $ 86.1 million in the fourth quarter of 2020 due to higher realized metal prices , offset by lower
sales volumes.
• Cash and cash equivalents decreased during the first quarter to $310.6 million, as at March 31, 2021, mainly
as a result of $83.0 million of capital investments primarily for the New Britannia project and Pampacancha
development activities, $50.8 million of interest payments and $31.0 million in net transaction and early
redemption costs related to the refinancing of the company’s 2025 notes, partially offset by cash generated
from operations.
Executing on Growth Initiatives
• Announced three -year production guidance; consolidated copper and gold production are expected to
increase by 36% and 125% ii, respectively, by 2023 from 2020 levels as the company brings the
Pampacancha and New Britannia growth projects into production.
• Finalized the remaining land user agreement for Pampacancha in early April 2021. This provided Hudbay
with full access to the site to complete pit development and commence first ore production in late April, in
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line with timelines assumed in the company’s updated mine plan. Total 2021 growth capital guidance for
Peru has increased to $25 million to include the final land user costs.
• New Britannia project continues to track ah ead of the original schedule and is nearing completion, with
approximately 82% of the project completed at the end of April ; first gold production continues to be
expected early in the third quarter and the new copper flotation facility remains on track for commissioning
and ramp-up in the fourth quarter of 2021.
• Announced a year -over-year increase to total mineral reserves of approximately 170,000 tonnes of
contained copper and 360,000 ounces of contained gold, after adjusting for 2020 mining depletion.
• Announced an updated Constancia mine plan resulting in an increase in average annual copper production
to approximately 102,000 tonnes over the next eight years at an average cash cost of $1.18 per pound of
copper produced, net of by-product credits.
• Announced an updated Lalor and Snow Lake mine plan resulting in an increase in annual gold production to
over 180,000 ounces during the first six years of New Britannia ’s operation at an average cash cost of $412
per ounce of gold produced, net of by-product credits.
• Announced a significant new discovery at the company’s Copper World properties adjacent to Rosemont on
wholly-owned private land. Four deposits have been identified to date with a combined strike length of over
five kilomet res consisting of high -grade copper sulphide and oxide mineralization at shallow depth. The
follow-up 2021 exploration program has been expanded to further test the potential for additional
mineralization, develop an initial inferred resource estimate and complete a preliminary economic
assessment. As a result, Hudbay has increased its 2021 spending on Copper World by approximately $2 4
million.
• Announced a preliminary economic assessment ("PEA") for the Mason copper project with a 27 -year mine
life and average annual copper production of approximately 140,000 tonnes over the first ten years of full
production. The PEA indicates an after -tax net pre sent value iii of $519 million and approximately 14%
internal rate of return at $3.10 per pound copper, which increases to $773 million and approximately 15%,
respectively, at $3.25 per pound copper.
• Issued $600.0 million of 4.5% senior notes due 2026 and redeemed all of the company’s outstanding $600.0
million of 7.625% senior notes due 2025, thereby reducing its annual cash interest payments.
• On May 10, 2021, an amendment to the Constancia streaming agreement was signed with Wheaton
Precious Metals ("Wheaton"). The amendment eliminates the requirement to deliver an additional 8,020
ounces of gold to Wheaton for not mining four million tonnes of ore from the Pampacancha deposit by June
30, 2021, while increasing the fixed gold recovery applied to Constancia ore processed during the reserve
life of Pampacancha and introduces an additional potential future deposit of $4 million from Wheaton.
“Our operations remain on track to achieve full year production and unit cost guidance following a strong quarter of
production at the Manitoba business unit and lower first quarter production in Peru as a result of planned mill
maintenance,” said Peter Kukielski, President and Chief Executive Officer. “We are very pleased to have commenced
production at Pampacancha and we look forward to our first gold pour at the New Britannia mill , which remains on
schedule for the third quarter. We expect to begin to see increased cash flows from these high-return investments in
the second half of 2021 . We also expect to significantly advance our longer -term copper growth opportunities this
year, including the Rosemont, Copper World and Mason projects. We believe we will continue to leverage our
exploration and develo pment expertise to create significant value from our attractive organic growth pipeline at
Hudbay.”
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Summary of First Quarter Results
Consolidated copper production in the first quarter of 202 1 was 24,553 tonnes, a 10% decrease from the fourth
quarter of 20 20, primarily as a result of lower mill throughput at Constancia due to a scheduled semi -annual mill
maintenance shutdown, partially offset by higher copper grades at 777 and higher copper recoveries at the Flin Flon
mill. Consolidated gold p roduction increased by 10% compared to the fourth quarter of 2020 due to higher gold
grades at 777, higher gold recoveries at the Flin Flon concentrator and higher gold grades at Constancia .
Consolidated zinc production in the first quarter was 8% higher than the fourth quarter of 2020 due to higher zinc
grades and throughput.
In the first quarter of 2021, consolidated cash cost per pound of copper produced, net of by -product credits i, was
$1.04, an increase compared to $0. 43 in the fourth quarter due to lower copper production, higher operating costs
and lower by -product credits . Incorporating cash sustaining capital, royalties, selling, administrative and regional
costs, consolidated all -in sustaining cash cost per pound of copper produced, net of by -product credits i, in the first
quarter of 2021 was $2.37, which increased from $2.24 in the fourth quarter due to the same factors impacting cash
costs, partially offset by lower cash sustaining capital.
Cash generated from operating activities in the first quarter of 202 1 decreased to $51.8 million compared to $ 121.1
million in the fourth quarter of 2020 , primarily as a resul t of changes in non -cash working capital and lower sales
volumes. Operating cash flow before change in non -cash working capital was $ 90.7 million during the first quarter of
2021, reflecting a slight increase from $86.1 million in the fourth quarter. The increase in cash generated from
operating activities is primarily the result of higher realized prices, offset by lower sales volumes during the quarter.
Net loss and loss per share in the first quarter of 2021 were $60.1 million and $0.23, respectively, compared to a net
earnings and earnings per share of $7.4 million and $0.03 , respectively, in the fourth quarter of 2020. First quarter
earnings benefited from hig her realized prices for all metals, which was offset by lower sales volumes of all metals
due to the timing of sales in Peru and a buildup of copper concentrate in Manitoba caused by limited railcar
availability. First quarter results included a $12.5 million non -cash gain on the revaluation of the gold prepayment
liability but were negatively impacted by charges related to the refinancing of the 2025 senior notes, including a non -
cash write off of $49.8 million connected with the exercise of the redemption option, a call premium payment of $22.9
million and a non -cash expense of unamortized transaction costs of $2.5 million in relation to the 2025 notes that
were redeemed. A variable consideration adjustment to deferred gold and silver revenue resulted in a net increase to
revenue of $1.6 million.
Adjusted net lossi and adjusted net loss per sharei in the first quarter of 2021 were $16.1 million and $0.06 per share
after adjusting for the finance charges and the net mark -to-market loss on financial instruments, among other items .
This compares to an adjusted net loss and adjusted net loss per share of $16.4 million and $0.06 per share in the
fourth quarter of 2020 . First quarter adjusted EBITDA i was $104.2 million, compared to $106.9 million in the fourth
quarter of 2020.
First quarter Peru sales were impacted by a 10,000 tonne shipment of copper concentrate valued at approximately
$21 million for which a payment w as received but did not meet the revenue recognition criteria due to the delayed
timing of the shipment into early April. First quarter Manitoba sales were impacted by a delay in accessing additional
railcars after a strong copper production quarter resulting in approximately 5,000 tonnes of copper concentrate
inventory in excess of normal operating levels , valued at approximately $18 million . Had both parcels of copper
concentrate been sold during the first quarter, the company would have realized approxim ately $3 9 million of
incremental revenue, assuming end of quarter commodity prices. The above quantities have been recognized as
revenue in the second quarter of 2021. First quarter results were also negatively impacted by the realized copper
price hedging of the company’s provisionally priced copper sales.
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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
Mar. 31, 2021 Dec. 31, 2020 Mar. 31, 2020
Revenue $000s 313,624 322,290 245,105
Cost of sales $000s 261,112 287,923 267,096
Earnings (loss) before tax $000s (69,592) 911 (81,452)
Earnings (loss) $000s (60,102) 7,406 (76,134)
Basic and diluted earnings (loss) per share $/share (0.23) 0.03 (0.29)
Adjusted earnings (loss) per share1 $/share (0.06) (0.06) (0.15)
Operating cash flow before change in non-
cash working capital
$ millions 90.7 86.1 42.0
Adjusted EBITDA1 $ millions 104.2 106.9 55.0
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 Production and Cost Performance Three Months Ended
Mar. 31, 2021 Dec. 31, 2020 Mar. 31, 2020
Contained metal in concentrate produced1
Copper tonnes 24,553 27,278 24,635
Gold ounces 35,500 32,376 30,355
Silver ounces 696,673 730,679 767,692
Zinc tonnes 27,940 25,843 30,495
Molybdenum tonnes 294 333 354
Payable metal in concentrate sold
Copper tonnes 20,929 22,963 24,072
Gold ounces 25,383 35,179 26,574
Silver ounces 509,760 762,384 575,922
Zinc2 tonnes 28,343 28,431 26,792
Molybdenum tonnes 284 457 431
Consolidated cash cost per pound of
copper produced3
Cash cost $/lb 1.04 0.43 0.98
Peru $/lb 1.82 1.47 1.42
Manitoba $/lb (1.04) (3.48) (0.62)
Sustaining cash cost $/lb 2.16 1.97 2.05
Peru $/lb 2.36 2.58 1.91
Manitoba $/lb 1.62 (0.36) 2.54
All-in sustaining cash cost $/lb 2.37 2.24 2.17
1 Metal reported in concentrate is prior to deductions associated with smelter contract terms.
Financial Condition ($000s) Mar. 31, 2021 Dec. 31, 2020 Mar. 31, 2020
Cash and cash equivalents 310,564 439,135 305,997
Total long-term debt 1,180,798 1,135,675 988,074
Net debt1 870,234 696,540 682,077
Working capital 236,281 306,888 193,045
Total assets 4,549,196 4,666,645 4,366,226
Equity 1,660,250 1,699,806 1,778,277
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2 Includes refined zinc metal sold.
3 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, 2021 Dec. 31, 2020 Mar. 31, 2020
Ore mined1 tonnes 7,747,466 9,313,784 6,985,212
Copper % 0.30 0.31 0.34
Gold g/tonne 0.04 0.03 0.03
Silver g/tonne 2.90 2.61 3.10
Molybdenum 0.01 0.01 0.02
Ore milled tonnes 6,362,752 7,741,714 6,719,466
Copper % 0.33 0.33 0.34
Gold g/tonne 0.04 0.03 0.03
Silver g/tonne 2.84 2.74 3.13
Molybdenum 0.01 0.02 0.02
Copper recovery % 84.1 85.3 84.3
Gold recovery % 52.0 52.7 50.2
Silver recovery % 69.9 70.1 68.2
Molybdenum recovery 33.4 28.4 35.0
Contained metal in concentrate
Copper tonnes 17,827 21,554 19,290
Gold ounces 4,638 3,689 3,062
Silver ounces 405,714 477,775 461,302
Molybdenum tonnes 294 333 354
Payable metal sold
Copper tonnes 14,836 18,583 19,247
Gold ounces 2,963 3,297 2,618
Silver ounces 337,612 480,843 361,591
Molybdenum tonnes 284 457 431
Combined unit
operating cost2,3
$/tonne 12.464 10.17 9.31
Cash cost3 $/lb 1.82 1.47 1.42
Sustaining cash cost3 $/lb 2.36 2.58 1.91
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 Combined unit cost, cash cost and sustaining cash cost are non-IFRS financial performance measure s with no standard ized
definition under IFRS. For further information, please see the “Non -IFRS Financial Reporting Measures” section of this news
release.
4 Includes approximately $4.6 million, or $0.72 per tonne, of COVID-related costs during the first quarter of 2021.
The Constancia team continues to effectively operate in an environment of strict COVID -19 measures and controls.
This includes working collaboratively with the local health authorities to ensure the company’s workforce and partners
adhere to COVID-19 protocols while continuing to operate safely and efficiently. Full year production of all metals and
unit operating costs at Constancia are on track to achieve the guidance ranges for 2021.
During the quarter, the Constancia operations produced 17,827 tonnes of copper, 4,638 ounces of gold, 405,714
ounces of silver and 294 tonnes of molybdenum. Production was lower than the fourth quarter of 2020 primarily as a
result of lower throughput from a scheduled mill maintenance program in the first quarter.
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Ore mined during the first quarter of 2021 was lower than the fourth quarter of 2020 as mining levels were optimized
for lower mill throughput while managing the level of contaminants and hardness in the ore sent to the mill. Ore milled
during the first quarter of 202 1 was lower compared to the fourth quarter of 2020 due to the deferral of a fourth
quarter plant maintenance shutdown to January 2021 and increased ore hardness . Milled grades for copper were
relatively consistent with fourth quarter levels while milled gold grades were higher as the company accessed high
grade ore from the deeper banks of the pit . Recoveries of copper were lower than t he previous quarter, but in line
with the recently updated Constancia mine plan, and gold and silver recoveries remained consistent with the previous
quarter.
Combined mine, mill and G&A unit operating costs in the first quarter of 2021 were $12.46 per tonne, and higher than
the fourth quarter of 2020, primarily due to fewer tonnes of ore milled and increased operating costs related to the
planned plant maintenance shutdown and enhanced COVID -19 protocols. Excluding COVID-related costs in Peru of
$4.6 million, the unit operating costs in the first quarter were $11.74 per tonne. The company expects full year unit
operating costs to decline and be in line with the 2021 guidance range.
Peru’s c ash cost per pound of copper produced, net of by-product credits, in the first quarter of 202 1 was $1.82,
higher than the previous quarter primarily due to higher milling costs and lower copper production. Peru’s sustaining
cash cost per pound of copper produced, net of by -product credits, in the first quarter of 2021 improved to $2.36,
compared to $2.58 in the prior quarter, due to lower cash sustaining capital spending in the first quarter, partially
offset by the same factors affecting cash costs during the quarter.
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Manitoba Operations Review
Manitoba Operations Three Months Ended
Mar. 31, 2021 Dec. 31, 2020 Mar. 31, 2020
Lalor ore mined tonnes 421,602 468,101 421,518
Copper % 0.57 0.80 0.70
Zinc % 5.20 5.54 5.43
Gold g/tonne 2.67 2.79 2.27
Silver g/tonne 22.75 24.96 26.18
777 ore mined tonnes 275,260 164,856 279,925
Copper % 2.06 1.89 1.18
Zinc % 4.00 2.98 4.11
Gold g/tonne 2.39 1.85 1.82
Silver g/tonne 29.32 21.64 23.86
Stall Concentrator:
Ore milled tonnes 361,344 372,624 369,787
Copper % 0.60 0.79 0.70
Zinc % 5.53 5.47 5.38
Gold g/tonne 2.57 2.88 2.28
Silver g/tonne 23.40 24.43 26.28
Copper recovery % 85.7 87.1 86.5
Zinc recovery % 91.1 90.9 91.4
Gold recovery % 57.5 59.5 60.9
Silver recovery % 56.2 60.3 61.1
Flin Flon Concentrator:
Ore milled tonnes 283,386 225,663 332,589
Copper % 1.88 1.59 1.11
Zinc % 4.20 3.87 4.36
Gold g/tonne 2.34 1.99 1.88
Silver g/tonne 28.01 22.65 24.33
Copper recovery % 91.3 88.1 84.1
Zinc recovery % 81.8 83.9 85.0
Gold recovery % 64.0 56.6 53.5
Silver recovery % 54.1 46.5 44.3
Total contained metal in concentrate
Copper tonnes 6,726 5,724 5,345
Zinc tonnes 27,940 25,843 30,495
Gold ounces 30,862 28,687 27,293
Silver ounces 290,959 252,904 306,390
Total payable metal sold
Copper tonnes 6,093 4,380 4,852
Zinc1 tonnes 28,343 28,431 26,792
Gold ounces 22,420 31,882 23,956
Silver ounces 172,148 281,541 214,331
Combined unit
operating cost2,3
C$/tonne 151 140 127
Cash cost3 $/lb (1.04) (3.48) (0.62)
Sustaining cash cost3 $/lb 1.62 (0.36) 2.54
1 Includes refined zinc metal sold and payable zinc in concentrate sold.
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2 Reflects combined mine, mill and G&A costs per tonne of ore milled.
3 Combined unit cost, cash cost and sustaining cash cost are non-IFRS financial performance measure s with no standardized
definition under IFRS. For further information, please see the “N on-IFRS Financial Reporting Measures” section of this news
release.
The Manitoba business unit had stable operating performance across the mines, mills and zinc plant during the first
quarter while facing increasing COVID -19 related logistical challenges. Late in 2020, Hudbay added new controls at
the Snow Lake camp by int roducing point of care PCR testing. Similar testing is being introduced in Flin Flon during
the second quarter. COVID -19 vaccinations are currently being rolled out throughout the Snow Lake and Flin Flon
communities and workforce. Full year production of a ll metals and unit operating costs in Manitoba are on track to
achieve the guidance ranges for 2021.
Production during the quarter included 27,940 tonnes of zinc, 6,726 tonnes of copper , 30,862 ounces of gold and
290,959 ounces of silver . Production results for all metals were higher than the previous quarter primarily due to
higher throughput, head grades and recoveries.
Ore mined at the Manitoba operations during the first quarter of 2021 was higher than the fourth quarter of 2020 due
to full production levels at the 777 mine following the shaft repairs that were completed in the fourth quarter. Copper
and gold grades at 777 were higher than the fourth quarter as higher grade remnant stopes were mined as 777 nears
the end of its mine life.
Development and underground construction activities continue in the lower part of the Lalor mine in order to ensure
the company maintains consistent gold and copper-gold production for the start-up and ongoing operation of the New
Britannia mill, scheduled for early in the third quarter of 2021. As at the end of the first quarter, approximately 26,000
tonnes of gold ore had been stockpiled as initial fee d for the New Britannia mill, up from 12,000 tonnes at the end of
the fourth quarter of 2020. The incremental mining activity associated with growing the gold ore stockpile has
contributed to elevated combined mine, mill and G&A unit operating costs during the first quarter of 2021. The gold
ore stockpile is expected to continue to grow during the second quarter of 2021.
At the Stall concentrator, ore processed during the first quarter of 2021 was only 3% lower than the fourth quarter of
2020, which was a record quarter for Stall , despite the continued stockpil ing of Lalor gold ore ahead of the New
Britannia mill. Stall recoveries during the first quarter of 2021 were consistent with the metallurgical model. In early
April, production at the Stall mill was suspended for four days as a precaution due to COVID related absenteeism.
Hudbay does not expect any material impact to second quarter financial results related to the Stall mill production
suspension. Or e processed at the Flin Flon concentrator in the first quarter of 2021 increased compared to the
previous quarter as a result of the 777 shaft repairs impacting the previous quarter, but were not as high as prior
periods as less Lalor ore was processed in Flin Flon in order to grow the gold ore stockpile a s initial feed for the New
Britannia mill. Recoveries of copper, gold and silver at the Flin Flon concentrator during the first quarter of 2021 were
higher than the previous quarter due to higher head grades from the mining out of higher grade remnant stopes at
777.
Combined mine, mill and G&A uni t operating costs in the first quarter of 2021 increased by 8% compared to the
fourth quarter of 2020 , but remained within the annual guidance range. The increase was primarily due to lower
capitalized development at both Lalor and 777, as well as higher mining activity at Lalor to grow the gold stockpile.
Manitoba’s cash cost per pound of copper produced, net of by -product credits, for the first quarter of 202 1 was
negative $1.04, higher than the prior quarter primarily due to higher mining and general and administrative costs and
lower by-product credits, offset by higher copper production . Manitoba’s sustaining cash cost per pound of copper
produced, net of by-product credits, in the first quarter of 2021 was $1.62, higher than the previous quarter due to the
same factors affecting cash costs.