TSX, NYSE – HBM 2023 No. 20 Hudbay Announces Second Quarter 2023 Results
TSX, NYSE – HBM
2023 No. 20
Hudbay Announces Second Quarter 2023 Results
Toronto, Ontario, August 8, 2023 – Hudbay Minerals Inc. (“Hudbay” or the “company”) (TSX, NYSE:HBM) today
released its second quarter 2023 financial results. All amounts are in U.S. dollars, unless otherwise noted.
Positioned for Strong Production Growth and Free Cash Flow Generation in the Second Half of 2023
• Reaffirmed full year 2023 consolidated production, cash cost and sustaining cash cost guidance for Hudbay’s
Peru and Manitoba operations.
• On June 20, 2023, Hudbay completed the acquisition of Copper Mountain Mining Corporation (“Copper
Mountain”), creating a 150,000-tonnes-per-year copper producer with three long- life mines in tier -one
jurisdictions and a world-class pipeline of organic copper growth projects.
o Copper Mountain owns 75% of the Copper Mountain mine in British Columbia (the “Copper Mountain
Mine Joint Venture”) , with M itsubishi Materials Corporation (“MMC”) holding the remaining non-
controlling interest.
o Hudbay expects to release an updated technical report for the Copper Mountain mine in the fourth
quarter, which will include updated annual production and cost estimates for the mine.
• Achieved higher grades from Pampacancha in July with 1.6 million tonnes of ore mined at 0.63% copper and
0.31 grams per tonne gold, consistent with the mine plan and company expectations for higher production in
Peru in the third and fourth quarters of 2023.
Second Quarter Operating and Financial Results
• Consolidated production in the second quarter was 21,715 tonnes of copper and 48,996 ounces of gold, which
includes production from the Copper Mountain mine during the 10-day stub period following the June 20, 2023
acquisition date.
• Consolidated cash cost and sustaining cash cost per pound of copper produced, net of by-product creditsi, in
the second quarter, were $1.60 and $2.73, respectively, excluding Copper Mountain’s costs during the 10-day
stub period.
• Peru operations successfully managed through a transitional quarter with elevated stripping activities at
Pampacancha completed in June to enable mining high grade portions of the orebody in the second half of
2023. The Peru operations maintained steady performance, producing 17,682 tonnes of copper in the second
quarter, which was in line with mine plan expectat ions. Peru cash cost per pound of copper produced, net of
by-product credits i, in the second quarter was $2.14, in line with quarterly cadence expectations as
Pampacancha is expected to deliver higher copper production and precious metal by -product credits in the
second half of 2023.
• Manitoba operations produced 35,253 ounces of gold, which was impacted by lower throughput at the Stall
mill due to downtime to complete the Stall mill Phase I recovery improvement project tie-ins which resulted in
a buildup of surface ore stockpiles at the end of the second quarter . Lalor achieved an 11% increase in ore
mined versus the first quarter as the company continues to implement improvements to reduce costs and
target higher production levels. Manitoba cash cost per ounce of gold produced, net of by -product creditsi,
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was $1,097 and is expected to decline to be within the annual guidance range due to higher throughput, gold
recoveries and gold grades expected in the second half of 2023.
• Second quarter net loss and loss per share were $14.9 million and $0.05, respectively. After adjusting for $6.8
million of transaction costs incurred during the quarter associated with the acquisition of Copper Mountain and
a non-cash gain of $4.7 million related to a quarterly revaluation of the company’s closed site environmental
reclamation provision, among other items, second quarter adjusted lossi per share was $0.07.
• Operating cash flow before change in non-cash working capital was $55.9 million and adjusted EBITDAi was
$81.2 million in the second quarter.
• Cash and cash equivalents declined during the second quarter to $179.7 million and were negatively impacted
by lower base metal prices and lower production volumes as a result of scheduled mill maintenance programs,
elevated stripping activity in Peru and a buildup of ore stockpiles in Manitoba. Cash and cash equivalents
were also impacted by $25.8 million in total transaction costs related to the acquisition of Copper Mountain,
$65.9 million of capital investments, primarily related to sustaining capital investments , and a $31.9 million
bond interest payment.
Executing on Growth Initiatives and Prudent Financial Planning
• Copper Mountain integration activities are progressing in line with expectations with over 50% of the targeted
annualized corporate and tax synergies already achieved to date. The company is focused on advancing its
plans to stabilize the operation over the next 12 months, to be further detailed in a technical report, which will
include an updated mine plan and mineral reserve and resource estimates , expected to be released in the
fourth quarter.
• Copper World pre-feasibility study for Phase I is well -advanced and expected to be released in the third
quarter.
• Snow Lake drilling intersected new high-grade copper -gold-silver zone 500 metres northwest of Lalor and
indicates the hosting mineralization at Lalor continues down plunge for at least two kilometres.
• Completed the a cquisition of the Cook Lake properties in Snow Lake, providing the potential for a new
discovery on claims untested by modern geophysics and where historical drilling intersected base metal and
gold mineralization at a fraction of Lalor’s current known depth.
• Announced the entry into a definitive agreement to acquire all the issued and outstanding common shares of
Rockcliff Metals Corp. (“Rockcliff”) , which is expected to increase Hudbay’s land position within trucking
distance of its Snow Lake processing facilities by more than 250%. The transaction is expected to close in the
third quarter.
• On July 6, 2023, established framework for a multi -year exploration partnership with Maru beni Corporation
focused on the discovery of new deposits within trucking distance of Hudbay’s processing facilities in Flin Flon,
Manitoba.
• First phase of the Stall recovery improvement project was completed during the second quarter with
commissioning completed in May and ramp-up to higher metal recoveries expected in the second half of 2023.
• In connection with the Copper Mountain transaction, Hudbay amended its Revolving Credit Facilities ("RCFs")
to (i) exclude the Copper Mountain group from the financial covenant calculations in the RCFs until the Copper
Mountain Nordic bonds are repaid in full and (ii) increase the net debt to EBITDA covenant ratio to provide
greater financial flexibility during the integration period.
• Subsequent to quarter end, Hudbay drew $90 million from its RCFs to finance the redemption of a portion of
Copper Mountain’s Nordic bonds, thus improving the company’s ability to deleverage and repay debt sooner
than the bond maturity.
• On track to deliver annual discretionary spending reduction targets for 2023 with lower growth capital and
exploration expenditures compared to 2022. As a result of a continued focus on discretionary spending
reductions, total capital expenditures for 2023 are expected to be approxi mately $15 million lower than
guidance levels, representing 5% of total capital expenditure guidance.
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“We remain on track to meet our 2023 guidance as we completed many transitional activities in the second quarter that
position us for stronger production and improved costs during the second half of 2023,” said Peter Kukielski, President
and Chief Executive Officer. “ The higher grades we are currently mining at Pampacancha, the planned improved
throughput and recoveries in Snow Lake and the recent completion of the Copper Mountain acquisition are expected
to generate strong free cash flows starting in the third quarter of 2023. With Copper Mountain we have a larger and
more resilient operating platform to deliver diversified cash flows to prudently advance our leading organic pipeline of
brownfield expansion and greenfield exploration and development opportunities across our portfolio.”
Summary of Second Quarter Results
Consolidated copper production in the second quarter of 2023 was 21,715 tonnes, a decrease of 4% compared to the
first quarter of 2023 as the company completed the higher volume stripping program at Pampacancha in June and a
scheduled mill maintenance program at Constancia, partially offset by a 10- day stub period of production from the
newly acquired Copper Mountain mine (the “Copper Mountain Stub Period”). Consolidated gold production in the
quarter was 48,996 ounces, a 4% increase over the prior quarter, primarily due to slightly higher gold grades and higher
gold recoveries in Peru. Consolidated silver production in the second quarter was 612,310 ounces, a decrease of 13%
compared to the first quarter primarily due to lower silver grades in Peru. Consolidated zinc production in the second
quarter was 8,758 tonnes, a decline of 11% compared to the first quarter due to lower throughput and zinc head grades
at Stall.
Consolidated cash cost per pound of copper produced, net of by -product creditsi, in the second quarter of 2023 was
$1.60, compared to $0.85 in the first quarter of 2023. This increase was mainly the result of higher mining, milling and
treatment and refining costs and lower copper production. Consolidated cash cost for the first six months of 2023 was
above 2023 guidance ranges but remained in line with quarterly cadence expectations , and the company expects
consolidated cash cost to decline in the second half of 2023 to be within the full year guidance range. Consolidated
sustaining cash cost per pound of copper produced, net of by-product creditsi, was $2.73 in the second quarter of 2023
compared to $1.83 in the first quarter. Consolidated all-in sustaining cash cost per pound of copper produced, net of
by-product creditsi, was $2.98 in the second quarter of 2023, higher than $2.07 in the first quarter, primarily due to the
same reasons outlined above. Consolidated cash cost and sustaining cash cost for the second quarter and year -to-
date exclude Copper Mountain's operations, as no revenues or corresponding cost of sales were recorded during the
Copper Mountain Stub Period.
Cash generated from operating activities in the second quarter of 2023 decreased to $24.6 million compared to $71.3
million in the first quarter primarily due to higher operating costs in Peru associated with the scheduled mill maintenance
program and high er planned stripping activities at Pampacancha. Operating cash flow before changes in non -cash
working capital was $ 55.9 million during the second quarter of 2023, lower than the first quarter, due to the same
reasons noted above.
Net loss and loss per share in the second quarter of 2023 were $14.9 million and $0.05, respectively, compared to net
earnings and earnings per share of $5.5 million and $0.02, respectively, in the first quarter. The results were negatively
impacted by $6.8 million of transacti on costs associated with the acquisition of Copper Mountain and a $1.4 million
foreign exchange loss. This was partially offset by a non- cash gain of $4.7 million related to the quarterly revaluation
of the environmental reclamation provision at the company’s closed sites and a $1.1 million revaluation gain related to
the gold prepayment liability.
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Adjusted net loss i and adjusted net loss per share i in the second quarter of 2023 were $18.3 million and $0.07 per
share, respectively, after adjusting for $6.8 million of transaction costs associated with the acquisition of Copper
Mountain and the non-cash revaluation gain of the environmental reclamation provision, among other items. Second
quarter adjusted EBITDAi was $81.2 million, compared to $101.9 million in the first quarter of 2023, as higher operating
costs in Peru associated with the scheduled mill maintenance program more than offset higher revenue from an
increase in sales volumes.
On June 20, 2023, Hudbay successfully completed its previously announced acquisition of Copper Mountain (the
“Copper Mountain Transaction”) . Copper Mountain’ s first shipment of copper concentrate following the acquisition
occurred on July 23, 2023 after a brief strike action at the Port of Vancouver earlier in July. As such, Hudbay’s second
quarter results were not materially affected by Copper Mountain’ s operations with no revenues or corresponding cost
of sales recorded during the Copper Mountain Stub Period . Combined acquisition-related costs incurred were $25.8
million, of which $6.8 million related to Hudbay’s legal and advisory fees that were expensed during the second quarter,
while the remaining costs were incurred by Copper Mountain prior to completion of the acquisition.
As at June 30, 2023, liquidity include d $179.7 million in cash and cash equivalents as well as undrawn availability of
$184.1 million under the company’s RCFs. Subsequent to quarter end, Hudbay drew $90 million from its RCFs to
finance the redemption of $83.3 million of Copper Mountain’s bonds, thereby reducing the aggregate amount of Copper
Mountain bonds outstanding to $59.7 million and improving the company’s ability to deleverage and repay debt sooner
than the 2026 bond maturity. Based on expected free cash flow generation in the second half of 2023, Hudbay continues
to expect to make progress on its deleveraging targets as outlined in its “3-P” plan for sanctioning Copper World.
Current liquidity combined with cash flow from operations is expected to be sufficient to meet liquidity needs for the
foreseeable future.
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 Performance 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 interim financial statements. Working capital reflects the full $145 million balance of Copper Mountain Nordic bonds as
current, however, subsequent to quarter end, the company drew $90 million from its revolving credit facilities to finance the
redemption of a portion of Copper Mountain’s Nordic bonds. As of the date hereof, the remaining Copper Mountain Nordic bonds will
be presented as long-term as well as the $90 million revolver draw.
3 Following completion of the Copper Mountain acquisition on June 20, 2023, the company’s financial condition has been impacted
by the inclusion of Copper Mountain as at June 30, 2023 and accordingly there is no comparable period information.
Consolidated Financial Condition ($000s)3 Jun. 30, 2023 Mar. 31, 2023 Dec. 31, 2022
Cash 179,734 255,563 225,665
Total long-term debt 1,370,682 1,225,023 1,184,162
Net debt1 1,190,948 969,460 958,497
Working capital2 (61,357) 100,987 76,534
Total assets 5,242,140 4,367,982 4,325,943
Equity 2,001,970 1,574,521 1,571,809
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Consolidated Financial Performance2 Three Months Ended
Jun. 30, 2023 Mar. 31, 2023 Jun. 30, 2022
Revenue $000s 312,166 295,219 415,454
Cost of sales $000s 289,273 228,706 325,940
Earnings (loss) before tax $000s (30,731) 17,430 21,504
Earnings (loss) $000s (14,932) 5,457 32,143
Basic and diluted earnings (loss) per share $/share (0.05) 0.02 0.12
Adjusted earnings (loss) per share1 $/share (0.07) 0.00 0.12
Operating cash flow before change in non-
cash working capital
$ millions 55.9 85.6 123.9
Adjusted EBITDA1 $ millions 81.2 101.9 141.4
1 Adjusted (loss) earnings 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 Performance Measures” section.
2 Following completion of the Copper Mountain acquisition on June 20, 2023, the company’s financial performance has not been
materially affected by Copper Mountain's operations with no revenues or corresponding cost of sales recorded during the Copper
Mountain Stub Period of 2023.
Consolidated Production and Cost Performance Three Months Ended
Jun. 30, 2023 Mar. 31, 2023 Jun. 30, 2022
Contained metal in concentrate and doré produced1
Copper tonnes 21,715 22,562 25,668
Gold ounces 48,996 47,240 58,645
Silver ounces 612,310 702,809 864,853
Zinc tonnes 8,758 9,846 17,053
Molybdenum tonnes 414 289 390
Payable metal sold
Copper tonnes 23,078 18,541 23,650
Gold2 ounces 47,533 49,720 50,884
Silver2 ounces 805,448 541,884 738,171
Zinc3 tonnes 8,641 5,628 20,793
Molybdenum tonnes 314 254 208
Consolidated cash cost per pound of copper produced4
Cash cost $/lb 1.60 0.85 0.65
Sustaining cash cost $/lb 2.73 1.83 1.87
All-in sustaining cash cost $/lb 2.98 2.07 1.93
1 Metal reported in concentrate is prior to deductions associated with smelter contract terms. Consolidated production includes
production results from Copper Mountain for the Copper Mountain Stub Period.
2 Includes total payable gold and silver in concentrate and in doré sold.
3 For the three months ended June 30, 2023 and the three months ended March 31, 2023 this metric includes payable zinc in
concentrate sold. For the three months ended June 30, 2022, this metric also includes payable refined zinc metal sold.
4 Consolidated cash cost, sustaining cash cost and all-in sustaining cash cost per pound of copper produced, net of by-product credits,
does not include Copper Mountain production or costs for the Copper Mountain Stub Period at the end of the second quarter of 2023,
nor the comparative periods. Cash cost, sustaining cash cost and all-in sustaining cash cost per pound of copper produced, net of by-
product credits, gold cash cost, 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
Performance Measures” section of this news release.
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Peru Operations Review
Peru Operations Three Months Ended
Jun. 30, 2023 Mar. 31, 2023 Jun. 30, 2022
Constancia ore mined1 tonnes 3,647,399 3,403,181 7,017,114
Copper % 0.31 0.34 0.33
Gold g/tonne 0.04 0.04 0.04
Silver g/tonne 2.49 2.52 3.53
Molybdenum % 0.01 0.01 0.01
Pampacancha ore mined tonnes 2,408,495 897,295 1,211,387
Copper % 0.36 0.49 0.29
Gold g/tonne 0.34 0.52 0.28
Silver g/tonne 2.81 5.12 4.25
Molybdenum % 0.02 0.01 0.01
Total ore mined tonnes 6,055,894 4,300,476 8,228,501
Strip ratio2 1.74 1.84 1.22
Ore milled tonnes 7,223,048 7,663,728 7,770,706
Copper % 0.31 0.33 0.32
Gold g/tonne 0.09 0.08 0.09
Silver g/tonne 2.78 3.69 3.64
Molybdenum % 0.01 0.01 0.01
Copper recovery % 80.0 81.7 85.0
Gold recovery % 61.1 56.8 60.3
Silver recovery % 65.1 60.7 64.2
Molybdenum recovery % 40.5 34.8 38.8
Contained metal in concentrate
Copper tonnes 17,682 20,517 20,880
Gold ounces 12,998 11,206 13,858
Silver ounces 419,642 552,167 584,228
Molybdenum tonnes 414 289 390
Payable metal sold
Copper tonnes 21,207 16,316 18,473
Gold ounces 14,524 11,781 8,430
Silver ounces 671,532 392,207 484,946
Molybdenum tonnes 314 254 208
Combined unit operating cost3,4,5 $/tonne 14.07 11.47 12.02
Cash cost5 $/lb 2.14 1.36 1.82
Sustaining cash cost5 $/lb 3.06 2.12 2.62
1 Reported tonnes and grade for ore mined are estimates based on mine plan assumptions and may not reconcile fully to ore milled.
2 Strip ratio is calculated as waste mined divided by ore mined.
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 Excludes approximately $1.3 million, or $0.16 per tonne, COVID-related costs during the three months ended June 30, 2022.
5 Combined unit operating 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 Performance Measures” section of this news release.
During the second quarter of 2023, the Constancia operations produced 17,682 tonnes of copper, 12,998 ounces of
gold, 419,642 ounces of silver and 414 tonnes of molybdenum. With the period of higher planned stripping activities in
the Pampacancha pit completed in June and ore mined from Pampacancha in July totaling 1.6 million tonnes at 0.63%
copper and 0.31 grams per tonne gold, the company is well on track to achieve the higher expected production in the
second half of the year, in line with the full year 2023 Peru production guidance.
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Total ore mined in the second quarter of 2023 increased by 41% compared to the first quarter as mining activities
returned to normal after the company reduced mining activities in the first quarter to conserve fuel during the period of
logistical constraints caused by civil unrest earlier this year.
Ore milled during the second quarter of 2023 was 6 % lower than the prior quarter primarily due to a schedule plant
maintenance shutdown in the second quarter without a corresponding shutdown in the first quarter . Milled copper
grades were slightly lower than the first quarter due to the continued processing of lower-grade ore from stockpiles as
the company completed a period of higher planned stripping activities in the Pampacancha pit in June. Recoveries of
copper during the second quarter of 2023 remained at low levels, as expected, due to higher levels of impurities in
stockpiled ore. Recoveries for gold and silver were 8% and 7% higher, respectively, than the first quarter due to higher
gold grades and lower zinc content impurities in ore processed.
Combined mine, mill and G&A unit operating costs in the second quarter of 2023 were 23% higher than the first quarter
primarily due to higher costs related to the scheduled plant shutdown and lower milled ore throughput during the quarter.
Peru’s cash cost per pound of copper produced, net of by -product creditsi, in the second quarter of 2023 was $2.14,
higher than the first quarter primarily due to higher mining, milling and treatment and refining charges and lower copper
production. This cost measure remains above the upper end of the 2023 guidance range. However, it is expected to
decline meaningfully in the second half of 2023 and the full year cash cost is expected to remain within the 2023
guidance range with higher expected copper production and contributions from precious metal by-product credits from
Pampacancha later this year.
Peru’s sustaining cash cost per pound of copper produced, net of by -product creditsi, in the second quarter of 2023
was $3.06, higher than the first quarter due to the same factors affecting cash cost noted above.
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Manitoba Operations Review
Manitoba Operations Three Months Ended
Jun. 30, 2023 Mar. 31, 2023 Jun. 30, 20221
Lalor
Ore mined tonnes 413,255 373,599 412,653
Gold g/tonne 4.07 3.96 3.73
Copper % 0.81 0.57 0.70
Zinc % 3.14 3.32 3.06
Silver g/tonne 23.27 18.24 23.95
New Britannia
Ore milled tonnes 141,905 143,042 144,589
Gold g/tonne 5.82 6.05 5.69
Copper % 0.77 0.61 0.73
Zinc % 0.85 0.76 0.94
Silver g/tonne 25.79 22.39 19.77
Gold recovery - concentrate % 55.0 62.0 62.7
Copper recovery - concentrate % 91.2 91.7 92.4
Silver recovery - concentrate % 57.0 61.9 62.9
Stall Concentrator
Ore milled tonnes 238,633 242,619 261,417
Gold g/tonne 3.12 2.78 2.95
Copper % 0.85 0.59 0.73
Zinc % 4.47 4.81 4.45
Silver g/tonne 22.15 17.14 26.31
Gold recovery % 59.9 61.9 54.6
Copper recovery % 88.5 87.0 88.0
Zinc recovery % 82.2 84.4 84.3
Silver recovery % 60.3 56.3 56.1
Total contained metal in concentrate and doré2
Gold ounces 35,253 36,034 44,787
Copper tonnes 2,794 2,045 4,788
Zinc tonnes 8,758 9,846 17,053
Silver ounces 180,750 150,642 280,625
Total payable metal sold
Gold3 ounces 33,009 37,939 42,454
Copper tonnes 1,871 2,225 5,177
Zinc tonnes 8,641 5,628 20,793
Silver3 ounces 133,916 149,677 253,225
Combined unit operating cost4,5 C$/tonne 220 216 168
Gold cash cost5 $/oz 1,097 938 (207)
Gold sustaining cash cost5 $/oz 1,521 1,336 519
1 The 777 mine and Flin Flon concentrator information for June 30, 2022 is not disclosed in the table above. The operations were
closed in June 2022. The relevant comparative information can be found in the Summary of Historical Results section in the
Management’s Discussion and Analysis for the second quarter of 2023. Total contained metal in concentrate and doré, total payable
metal sold, unit cost and cash costs for June 30, 2022 include the impact of the Flin Flon operations.
2 Doré includes sludge, slag and carbon fines in three months ended June 30, 2023 and March 31, 2023.
3 Includes total payable precious metals in concentrate and doré sold.
4 Reflects combined mine, mill and G&A costs per tonne of ore milled.
5 Combined unit operating 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 Performance Measures” section of this news release.