TSX, NYSE – HBM 2021 No. 23 Hudbay Announces Third Quarter 2021 Results
TSX, NYSE – HBM
2021 No. 23
Hudbay Announces Third Quarter 2021 Results
Toronto, Ontario, November 3, 2021 – Hudbay Minerals Inc. (“Hudbay” or the “ company”) (TSX, NYSE:HBM)
today released its third quarter 2021 financial results. All amounts are in U.S. dollars, unless otherwise noted.
Third Quarter Operating and Financial Results
• Generated $359.0 million in revenue, $103.5 million of operating cash flow before change in non -cash
working capital and $119.3 million of adjusted EBITDAi in the third quarter of 2021 from higher realized base
metals prices and higher gold sales volumes, partially offset by lower base metals sales volumes.
• Consolidated copper production in the third quarter was 23,245 tonnes ; quarterly c onsolidated gold
production increased by 35% to 53,872 ounces in the third quarter, compared to the second quarter in 2021,
a record for Hudbay.
• Consolidated cash cost and sustaining cash cost per pound of copper produced, net of by -product creditsi,
were $0.62 and $1.97, respectively , an improvement of 26% and 12% compared to the second quarter of
2021.
• Third quarter Peru production was boosted by significantly higher gold grades from Pampacancha and
record gold recoveries, leading to record quarterly go ld revenue. Pampacancha production continues to
ramp-up, achieving a 109% increase in ore production quarter over quarter.
• Third quarter Manitoba production benefited from higher throughput and higher gold grades at Lalor but was
negatively impacted by lo wer zinc grades and zinc recoveries, limiting overall zinc concentrate feed to the
zinc plant. Manitoba results included initial gold production from New Britannia's gold circuit.
• On track to meet annual production guidance for copper, gold, zinc and silver in concentrate and doré,
consolidated sustaining capital expenditures, and Manitoba unit operating cost in 2021. After adjusting for
unbudgeted COVID-related costs in Peru, full year unit operating costs for Peru are expected to be around
the top end of the 2021 guidance range.
• Third quarter net loss and loss per share were $17 0.4 million and $0.65, respectively. After normalizing for
an impairment charge related to higher estimated closure costs associated with the company’s updated Flin
Flon closure p lan and the Flin Flon restructuring charges, amongst other items, third quarter adjusted net
earningsi per share were $0.15.
• Cash and cash equivalents increased during the third quarter to $297.5 million as at September 30, 2021,
mainly as a result of $139.8 million of cash generated from operations, partially offset by $89.1 million of
capital investments primarily for the cons truction of the New Britannia project and sustaining capital
expenditures, and $33.6 million of interest paid on the company’s senior unsecured notes.
Executing on Growth Initiatives
• New Britannia has achieved project completion as construction activities at the new copper flotation facility
concluded in October. Refurbishment and commissioning activities at the gold mill were completed in July
2021, and the mill achieved first gold production on August 11, 2021. Commissioning of the copper circuit
was completed and first production of concentrate was achieved in October, ahead of the original schedule ,
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while ramp-up activities at the flotation plant continue. Annual gold production from Lalor and the Snow Lake
operations is on track to increase to over 180,000 ounces at an average cash cost and sustaining cash cost,
net of by -product credits, of $412 and $788 per ounce of gold, respectively, during the first six full years of
operation starting in 2022.
• Mining activities at the Pampacancha satellite pit continue to advance as planned with grades and tonnes
reconciling well against the mine plan, achieving the expected increase in gold grades in 2021 and on track
for achieving higher copper grades in 2022, in line with recent company guidance.
• Recent Copper World drilling has identified three new deposits for a total of seven distinct deposits with a
combined strike length of over seven kilometres. The company remains on track to complete an initial
inferred resource estimate before the end of the year and a preliminary economic assessment in the first half
of 2022.
• Scoping study planned for 2022 to examine the opportunity to reprocess tailings in Flin Flon after the closure
of the 777 mine, which could further increase metal production, defer closure costs and reduce the
environmental footprint of the tailings facility.
• Amended and restated Hudbay’s senior secured revolving credit facilities to increase available borrowings to
$450 million and enhance the company’s financial flexibility, while extending the maturity to 2025.
“Our third quarter performance demonstrates our continued focus on execution and delivery in 2021 as we enjoyed
the first full quarter of Pampacancha production and we started to see the benefits of higher gold from the New
Britannia mill,” said Peter Kukielski, President and Chief Executive Officer. “We also recently commissioned the new
copper flotation circuit at New Britannia, ahead of our expected timelines. With the completion of the Pampacancha
and New Britannia growth projects , we are on the cusp of achieving significantly increased cash flows from these
high-return investments for many years to come . We are also very pleased to have continued exploration success at
our Copper World project and look forward to advancing the opportunity for a private land operation in Arizona to
unlock further value for our stakeholders.”
Summary of Third Quarter Results
Cash generated from operating activities in the third quarter of 2021 increased to $139.8 million, compared to $96.4
million in the second quarter and $51.8 million in the first quarter of 2021. Operating cash flow before change in non -
cash working capital was $103.5 million during the third quarter of 2021, reflecting a decrease of $ 29.3 million
compared to the second quarter of 2021, primarily as a result of lower base metals sales volumes and lower realized
copper and precious metals prices, partially offset by higher precious metals sales volumes.
Consolidated copper production in the third quarter of 202 1 was 23,245 tonnes, generally in-line with the second
quarter of 2021 as slightly lower copper production in Peru was offset by higher copper production in Manitoba .
Consolidated gold production in the third quarter of 2021 was 53,872 ounces, a quarterly record for Hudbay and a
35% increase from the second quarter of 2021 , due to higher gold grades from Pampacancha and record gold
recoveries in Peru, along with significantly higher gold grades at Lalor . Zinc production in the quarter was 20,844
tonnes, a slight decrease from the second quarter as production volumes were lower in Flin Flon. Consolidated silver
production increased to 763,168 ounces, an 11% increase versus the second quarter of 2021, primarily due to higher
silver grades milled in Peru and Snow Lake.
In the third quarter of 2021, consolidated cash cost per pound of copper produced, net of by -product credits i, was
$0.62, compared to $ 0.84 in the second quarter of 2021. This 26% decrease was mainly a result of lower operating
costs. Sustaining cash cost per pound of copper produced, net of by -product creditsi, decreased to $1.97 in the third
quarter of 2021, from $2. 25 in the second quarter, primarily due to the same factors affecting cash cost as well as
slightly lower sustaining capital expenditures . Consolidated cash cost and sustaining cash cost per pound of copper
produced, net of by-product credits, are expected to remain within the guidance ranges for 2021.
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Net loss and loss per share in the third quarter of 202 1 were $170.4 million and $0. 65, respectively, compared to a
net loss and loss per share of $3.4 million and $0. 01, respectively, in the second quarter of 2021. Third quarter
results were negatively impacted by an updated closure plan reflecting higher estimates for closure activities in Flin
Flon, primarily related to water treatment costs . The higher closure cost estimate has resulted in an increase to the
company’s environmental obligation and a corresponding increase to Flin Flon’s property plant and equipment.
However, as the closure of Flin Flon is expected to commence within 12 months, an impairment charge was made
resulting in a loss of $147.3 million. The quar terly financial results were also negatively impacted by Flin Flon
restructuring charges comprising an inventory supplies write down of $5.4 millio n and a severance accrual of $3.6
million for unionized employees , as well as an increase in past service pension cost provision of $4. 2 million related
to pensions for Manitoba unionized employees.
Adjusted net earningsi and adjusted net earnings per sharei in the third quarter of 2021 were $ 38.2 million and $0.15
per share after normalizing for an impairment due to the updated Flin Flon closure plan and the Flin Flon restructuring
charges, among other items . This compares to adjusted net earnings and adjusted net earnings per share of $5.4
million and $0.02 per share in the second quarter of 202 1. Third quarter adjusted EBITDA i was $1 19.3 million,
compared to $143.2 million in the second quarter of 2021, primarily due to lower base metal sales volumes and lower
realized copper and precious metals prices, partially offset by higher precious metals sales volumes.
As at September 30, 2021, Hudbay’s liquidity includes $29 7.5 million in cash and cash equivalents as well as
undrawn availability of $297.3 million under its credit facilities. The company’s liquidity position was further enhanced
in October through the successful renegotiation of the credit facilities to increase available borrowings to $450 million,
while extending the maturity to 2025.
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.
Financial Performance Three Months Ended
Sep. 30, 2021 Jun. 30, 2021 Sep. 30, 2020
Revenue $000s 358,961 404,242 316,108
Cost of sales $000s 444,379 322,060 276,830
(Loss) earnings before tax $000s (147,830) 14,819 (23,944)
(Loss) earnings $000s (170,411) (3,395) (23,955)
Basic and diluted (loss) earnings per share $/share (0.65) (0.01) (0.09)
Adjusted earnings (loss) per share1 $/share 0.15 0.02 (0.10)
Operating cash flow before change in non-
cash working capital
$ millions 103.5 132.8 84.4
Adjusted EBITDA1 $ millions 119.3 143.2 96.1
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.
Financial Condition ($000s) Sep. 30, 2021 Jun. 30, 2021 Dec. 31, 2020
Cash and cash equivalents 297,451 294,287 439,135
Total long-term debt 1,182,612 1,181,195 1,135,675
Net debt1 885,161 886,908 696,540
Working capital 159,917 219,799 306,888
Total assets 4,504,661 4,587,827 4,666,645
Equity 1,490,180 1,658,924 1,699,806
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Consolidated Production and Cost Performance Three Months Ended
Sep. 30, 2021 Jun. 30, 2021 Sep. 30, 2020
Contained metal in concentrate produced1
Copper tonnes 23,245 23,474 25,395
Gold ounces 53,872 39,848 29,277
Silver ounces 763,168 685,916 671,685
Zinc tonnes 20,844 21,538 30,570
Molybdenum tonnes 282 295 392
Precious metal in doré produced
Gold ounces 404 — —
Silver ounces 10 — —
Payable metal sold
Copper tonnes 21,136 25,176 25,903
Gold2 ounces 47,844 38,205 30,605
Silver2 ounces 701,601 577,507 705,495
Zinc3 tonnes 21,619 25,361 26,520
Molybdenum tonnes 304 265 313
Consolidated cash cost per pound of
copper produced4
Cash cost $/lb 0.62 0.84 0.65
Peru $/lb 1.26 1.85 1.54
Manitoba $/lb (1.64) (3.51) (3.41)
Sustaining cash cost $/lb 1.97 2.25 2.02
Peru $/lb 2.31 2.69 2.29
Manitoba $/lb 0.75 0.36 0.83
All-in sustaining cash cost $/lb 2.18 2.48 2.25
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 sold 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.
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Peru Operations Review
Peru Operations Three Months Ended
Sep. 30, 2021 Jun. 30, 2021 Sep. 30, 2020
Constancia ore mined1 tonnes 6,208,019 8,016,373 8,455,668
Copper % 0.30 0.30 0.31
Gold g/tonne 0.04 0.04 0.03
Silver g/tonne 2.76 3.02 2.55
Molybdenum 0.01 0.01 0.02
Pampacancha ore mined tonnes 2,050,813 982,992 —
Copper % 0.27 0.26 —
Gold g/tonne 0.27 0.27 —
Silver g/tonne 3.58 4.43 —
Molybdenum 0.01 0.01 —
Ore milled tonnes 6,985,035 7,413,043 7,480,655
Copper % 0.30 0.31 0.33
Gold g/tonne 0.11 0.07 0.03
Silver g/tonne 3.93 2.88 2.68
Molybdenum 0.01 0.01 0.02
Copper recovery % 84.9 83.3 83.3
Gold recovery % 71.9 62.2 51.6
Silver recovery % 59.1 68.2 66.7
Molybdenum recovery 33.5 33.3 30.4
Contained metal in concentrate
Copper tonnes 18,072 19,058 20,803
Gold ounces 17,531 10,220 3,333
Silver ounces 521,036 468,057 430,208
Molybdenum tonnes 282 295 392
Payable metal sold
Copper tonnes 16,065 19,946 21,654
Gold ounces 16,902 5,638 3,753
Silver ounces 457,263 315,064 433,595
Molybdenum tonnes 304 265 313
Combined unit operating
cost2,3,4
$/tonne 11.62 11.25 9.85
Cash cost4 $/lb 1.26 1.85 1.54
Sustaining cash cost4 $/lb 2.31 2.69 2.29
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 measures with no standardized
definition under IFRS. For further information, please see the “Non -IFRS Financial Reporting Measures” section of this news
release.
4 Includes approximately $4.8 million, or $0.69 per tonne, of COVID -related costs during the three months ended September 30,
2021 and $6.3 million, or $0.85 per tonne, during the three months ended June 30, 2021.
While Peru has experienced notable improvements in COVID -19 statistics throughout 2021, Hudbay continues to
maintain stringent COVID -19 measures and controls to ensure the safety of its workforce, partners and the
communities in which the company operates. This has allowed Constancia to continue to operate safely although it
has resulted in elevated unit operating costs due to the ongoing COVID-related protocols.
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During the third quarter 2021, the Constancia operations produced 18,072 tonnes of copper, 17,531 ounces of gold,
521,036 ounces of silver and 282 tonnes of molybdenum. While copper production was 5% lower than the second
quarter due to a planned semi -annual mill maintenance shutdown in July , gold and silver production increased by
72% and 11%, respectively, due to significantly higher gold and silver head grades from Pampacancha and
significantly higher gold recoveries. This was a record quarter for gold production, grade s and recoveries in Peru.
Other than molybdenum, which is expected to fall slightly below the 2021 guidance range but in-line with the recently
published mine plan , Hudbay expects the production of all other metals in Peru to be in line with the 2021 full year
guidance.
Total ore mined during the third quarter of 2021 decreased by 8% from the second quarter of 2021 as mining levels
were optimized for mill throughput . Ramp-up of mining activity at Pampacancha has increased steadily since first
production in April 2021. Total Pampacancha ore mined during the third quarter increased by 109% to 2.1 million
tonnes compared to the second quarter of 2021. Tonnes of ore milled during the third quarter of 2021 were 6% lower
than the second quarter of 2021 due to the scheduled mill mai ntenance shutdown. Milled grades for copper were
slightly lower than the second quarter but were in line with the mine plan . Milled grades for gold and silver were 57%
and 36% higher, respectively, than the second quarter due to significantly higher precio us metal head grades from
Pampacancha.
Peru achieved record gold recoveries in the third quarter of 2021, significantly above the second quarter of 2021 ,
mainly due to higher grades from Pampacancha . Meanwhile, copper recoveries increased due to lower levels of
contaminants and silver recoveries decreased as a result of lower -than-expected recoverable silver values in the
earlier, more oxidized ores from Pampacancha. Recent metallurgical test work in dicates that Pampacancha silver
recoveries are expected to increase to targeted levels in 2022.
Combined mine, mill and G&A unit operating costs in the third quarter of 2021 were $11.62 per tonne, compared to
$11.25 in the second quarter of 202 1, primarily due to higher milling costs and fewer tonnes milled due to the
scheduled mill maintenance program during the quarter . Costs have been generally higher in 2021 as a result of
higher ore hardness, higher steel prices affecting grinding media costs, higher fuel prices impacting hauling costs and
COVID-19 expenditures. COVID-related costs in Peru were $4.8 million in the third quarter and are expected to
continue at a similar run-rate into the fourth quarter of 2021. Unit operating costs in the third quarter were $10.93 per
tonne excluding these COVID-related costs. Hudbay expects Peru unit operating costs to be around the top end of
the 2021 guidance range after adjusting for unbudgeted COVID-related costs.
Peru’s cash cost per pound of copper produced, net of by -product credits, in the third quarter of 202 1 was $1.26, a
32% improvement over the second quarter . The significant reduction in cash cost was due to higher by -product
credits and lower operating costs, partially offset by lower copper production. Peru’s sustaining cash cost per pound
of copper produced, net of by-product credits, in the third quarter of 2021 decreased to $2.31, compared to $2.69 in
the second quarter of 2021, due to same factors noted above affecting cash costs, offset by higher sustaining capital
expenditures.
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Manitoba Operations Review
Manitoba Operations Three Months Ended
Sep. 30, 2021 Jun. 30, 2021 Sep. 30, 2020
Lalor ore mined tonnes 392,380 356,951 357,213
Copper % 0.86 0.64 0.66
Zinc % 3.60 3.81 5.98
Gold g/tonne 3.85 3.19 2.28
Silver g/tonne 22.13 22.98 21.23
777 ore mined tonnes 256,536 255,170 264,905
Copper % 1.06 0.82 0.98
Zinc % 3.88 3.57 3.95
Gold g/tonne 1.96 1.97 2.01
Silver g/tonne 22.99 23.35 24.25
Stall Concentrator & New Britannia Mill:
Ore milled tonnes 408,201 317,484 335,739
Copper % 0.82 0.68 0.68
Zinc % 3.58 4.06 6.11
Gold g/tonne 3.84 3.19 2.35
Silver g/tonne 23.32 22.02 22.08
Copper recovery % 84.3 88.8 84.0
Zinc recovery % 88.2 88.1 92.7
Gold recovery % 53.4 55.5 57.4
Silver recovery % 52.7 55.1 57.5
Flin Flon Concentrator:
Ore milled tonnes 258,062 329,503 322,156
Copper % 1.06 0.89 0.99
Zinc % 3.86 3.65 4.07
Gold g/tonne 1.96 2.06 1.99
Silver g/tonne 22.93 23.65 24.01
Copper recovery % 85.2 84.8 83.9
Zinc recovery % 82.2 84.8 87.9
Gold recovery % 58.1 52.9 55.3
Silver recovery % 42.4 37.5 42.0
Total contained metal in concentrate and doré
Copper tonnes 5,173 4,416 4,592
Zinc tonnes 20,844 21,538 30,570
Gold ounces 36,745 29,628 25,944
Silver ounces 242,141 217,859 241,477
Total payable metal sold
Copper tonnes 5,071 5,230 4,249
Zinc1 tonnes 21,619 25,361 26,520
Gold2 ounces 30,941 32,567 26,852
Silver2 ounces 244,338 262,443 271,900
Combined unit
operating cost3,4
C$/tonne 147 148 126
Cash cost4 $/lb (1.64) (3.51) (3.41)
Sustaining cash cost4 $/lb 0.75 0.36 0.83
1 Includes refined zinc metal sold and payable zinc in concentrate sold.
2 Includes total payable precious metals in concentrate and in doré sold.
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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 measure s with no standardized
definition under IFRS. For further information, please see the “Non -IFRS Financial Reporting Measures” section of this news
release.
As the Manitoba business started to see the benefits from the commencement of gold production at the New
Britannia mill, production of copper, gold and silver increased during the third quarter, compared to the second
quarter of 2021, while production of zinc decreased . Production during the quarter included 5,173 tonnes of copper,
36,745 ounces of gold, 242,141 ounces of silver and 20,844 tonnes of zinc . Hudbay expects the production of all
metals contained in concentrate and doré in Manitoba to be in line with the 2021 full year guidance.
Mining operations at Lalor have started to consistently produce and separate the gold and copper -gold ores as feed
for the New Britannia mill. At the end of the third quarter of 2021, approximately 35,000 tonnes of gold ore is
stockpiled as feed for New Br itannia, a decrease of approximately 12,000 tonnes from the end of the second quarter
of 2021. The 777 mine is now within nine months of closure and the focus continues to be on mining out the
remaining reserves by completing the necessary ground rehabilit ation in order to access old workings and remnant
stopes.
Ore mined at the Manitoba operations during the third quarter of 2021 was higher than the second quarter of 202 1
due to higher production rates at Lalor . Copper and g old grades were higher compared to the previous quarter,
mainly due to increased mining of gold and copper -gold stopes at Lalor, in line with the mine plan. Mined zinc grades
were lower than the previous quarter as mining of the gold zones at Lalor were prioritized during the quarter.
During the third quarter of 2021, New Britannia processed 41,827 tonnes of high gold content ore and produced 404
ounces of gold in doré after pouring its first doré bar on August 11. The gold and silver recoveries are expect ed to
increase in the fourth quarter after ramp -up of the mill during the third quarter. Construction of the new copper
flotation circuit was completed in October 2021 , followed by a brief commissioning period completed ahead of
schedule. Ramp-up activities at the copper circuit are underway and are on track for completion in the fourth quarter
of 2021.
Ore processed at the Stall concentrator and New Britannia mill during the third quarter was 29% higher than the
second quarter. Combined Stall and New Britannia recoveries during the third quarter of 2021 were higher for zinc
and lower for copper, gold and silver, versus the previous quarter, but were consistent with expectations as the third
quarter was a partial ramp -up period for the New Britannia mill . Operations at the Flin Flon concentrator during the
third quarter were constrained by ore feed availability from 777 and, as such, ore processed decreased by 22%
compared to the second quarter of 2021. Recoveries of copper, gold and silver at the Flin Flon concentrator during
the second quarter of 2021 were higher than the previous quarter mainly due to higher copper head grades from the
777 mine, consistent with the metallurgical model.
Combined mine, mill and G&A unit operating costs in the third quarter of 2021 slightly decreased compared to the
second quarter of 2021. Hudbay expects Manitoba unit operating costs in 2021 to be in line with the annual guidance
range.
Manitoba’s cash cost per pound of copper produced, net of by -product credits, for the third quarter of 202 1 was
negative $ 1.64, higher than the second quarter primarily due to lower by -product credits, partially offset by lower
onsite costs. Manitoba’s sustaining cash cost per pound of copper produced, net of by -product credits, in the third
quarter of 2021 was $0.75 compared to $0.36 in the second quarter, primarily due to the same reasons listed above,
offset by lower comparative sustaining capital expenditures.