TSX, NYSE – HBM 2023 No. 24 Hudbay Announces Third Quarter 2023 Results
TSX, NYSE – HBM
2023 No. 24
Hudbay Announces Third Quarter 2023 Results
Toronto, Ontario, November 8, 2023 – Hudbay Minerals Inc. (“Hudbay” or the “ company”) (TSX, NYSE:HBM)
today released its third quarter 2023 financial results. All amounts are in U.S. dollars, unless otherwise noted.
Delivering Record Third Quarter Operating and Financial Results
• Achieved record quarterly revenue of $480.5 million with strong consolidated copper production of 41,964
tonnes and record quarterly consolidated gold production of 101,417 ounces as higher grades from the
Pampacancha deposit in Peru and the Lalor mine in Manitoba were realized together with the first full quarter
of Copper Mountain production for Hudbay.
• Reaffirmed full year 2023 production, cash cost and sustaining cash cost guidance for Hudbay’s Peru and
Manitoba operations. Issued Copper Mountain production, cash cost and capital expenditure guidance for the
period since completion of the acquisition on June 20, 2023. Hudbay consolidated production, cash cost and
capital guidance updated to include Copper Mountain contributions in 2023.
• Delivered a significant increase in operating cash flow before change in non-cash working capital of $182.0
million in the third quarter, compared to $55.9 million in the second quarter.
• Consolidated cash cost and sustaining cash cost per pound of copper produced, net of by-product creditsi, in
the third quarter, were $1. 10 and $1.89, respectively, and both metrics improved by 31% compared to the
second quarter.
• Peru operations benefitted from significantly higher grades at the Pampacancha pit during the third quarter of
2023, resulting in 29,081 tonnes of copper production and 40,596 ounces of gold production in the third
quarter. Peru cash cost per pound of copper produced, net of by-product creditsi, in the third quarter declined
to $0.83, in line with quarterly cadence expectations . Pampacancha began delivering on anticipated higher
copper production and precious metal by -product credits in the third quarter . This strong performance is
expected to continue in the fourth quarter, enabling the Peru operations to meet all metal production and cost
guidance for 2023.
• Manitoba operations produced 56,213 ounces of gold in the third quarter as production focused on mining the
higher gold and copper grade zones at Lalor. Mill recoveries also increased meaningfully compared to the
prior period as a result of changes to optimize the circuits at the Stall and New Britannia mills. Manitoba cash
cost per ounce of gold produced, net of by -product creditsi, was $670 during the third quarter and full year
cash costs are expected to be within the annual guidance range.
• First full quarter of Copper Mountain operations produced 9,303 tonnes of copper at a cash cost per pound of
copper produced, net of by -product creditsi, of $2. 67. With integration activities well-advanced, continuous
improvement methodologies applied at Hudbay’s Constancia operations have started to be implemented in
the Copper Mountain mill as the company continues its operational stabilization plans.
• Third quarter net earnings and earnings per share were $45.5 million and $0.13, respectively. After adjusting
for a non-cash gain of $32.4 million related to a quarterly revaluation of Hudbay’s closed site environmental
reclamation provision, among other items, third quarter adjusted earningsi per share were $0.07.
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• Cash and cash equivalents increased by $65.5 million to $245.2 million during the third quarter due to strong
operating cash flows bolstered by higher copper and gold sales volumes from mining the high-grade zones of
the Pampacancha deposit and higher gold and copper grade zones at Lalor.
• Revenue, earnings and operating cash flow would have further benefitted from the sale of approximately
20,000 ounces of consolidated gold production that remained unsold at the end of the third quarter.
Generating Free Cash Flow with Increased Production and Continued Financial Discipline
• Executed on planned higher production levels and achieved continued operating and capital cost efficiencies
to generate significant free cash flow in the third quarter.
• Achieved adjusted EBITDAi of $190.7 million in the third quarter, the highest quarterly level over the last five
years and a 135% increase from the second quarter.
• Increased cash and total liquidity by $175.8 million to $539.6 million, including increased availability under the
company’s credit facilities due to higher EBITDA levels, lower net debt and renegotiated covenants.
• Net debt reduced to $1,132 million during the third quarter, which together with higher levels of adjusted
EBITDA, has improved the company’s net debt to EBITDA ratioi compared to the second quarter.
• Deleveraging efforts continued subsequent to quarter-end into October 2023 with a $40 million repayment on
the company’s credit facilities, a $5 million principal repayment on the Copper Mountain bonds and the
recommencement of deliveries under the gold forward sale and prepay agreement to reduce the gold
prepayment liability.
• 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 (excluding Copper Mountain) are expected to be approximately
$30 million lower than previous guidance levels, a further decrease from the $15 million reduction announced
in the second quarter, representing a 10% reduction in total capital expenditures.
Executing on Growth Initiatives and Prudent Financial Planning
• Post-acquisition plans to stabilize the Copper Mountain operations are underway with a focus on mining fleet
ramp-up activities, accelerated stripping and increasing mill reliability. To date, approximately $9 million of the
$10 million in targeted annualized corporate synergies have been achieved.
• As previously announced, a new technical report for the Copper Mountain mine is expected to be released in
the fourth quarter. The new technical report will include an updated mine plan and updated annual production
and cost estimates. The new technical report will also include updated mineral reserve and resource estimates
and mill throughput assumptions.
• Successfully completed ramp up of the Stall recovery improvement program with significantly higher copper,
gold and silver recoveries realized in the third quarter.
• Released results of the de-risked and enhanced Copper World pre-feasibility study for Phase I in September
2023, which demonstrated a simplified mine plan with an extended 20-year mine life requiring only state and
local permits, an after-tax net present value (8%) of $1.1 billion and a 19% internal rate of return at a copper
price of $3.75 per pound.
• Completed the acquisition of Rockcliff Metals Corp. (“Rockcliff”) on September 14, 2023, which has increased
the company’s land position within trucking distance of the Snow Lake processing facilities by more than
250%.
• Commenced initial drill program at the company’s Mason project in Nevada to test high grade targets on
satellite properties with 25% of the program completed and assay results pending.
“We delivered on our plan for significantly higher production, revenue and cash flow in the third quarter , marking an
inflection point as we generate strong returns from our recent brownfield and growth investments across the business,”
said Peter Kukielski, President and Chief Executive Officer. “We are reaffirming our 2023 full year guidance with strong
copper and gold grades from Pampacancha in Peru and higher gold grades at Lalor in Manitoba, while remaining
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disciplined with capital spending. This, together with the contribution from our first full quarter of operating Copper
Mountain, led to meaningful cash flow generation and demonstrates Hudbay’s resilient operating platform and
continued focus on deleveraging.”
Summary of Third Quarter Results
Consolidated copper production in the third quarter of 2023 was 41,964 tonnes, a 93% increase from the second quarter
of 2023. Consolidated gold production in the quarter was 101,417 ounces, a 107% increase over the second quarter.
Consolidated silver production in the third quarter was 1,063,032 ounces, a 74% increase over the second quarter. The
significant increase in production was driven by meaningfully higher recoveries in Peru and Manitoba, mining of the
higher copper and gold grade zones at the Pampacancha deposit, higher gold and copper grade zones at Lalor and
incremental production from the Copper Mountain mine. Consolidated zinc production in the third quarter increased by
18% compared to the prior quarter primarily due to higher mill throughput and higher zinc grades. Annual production
guidance ranges for 2023 have been reaffirmed for both Peru and Manitoba, and consolidated production guidance
has been updated to include contributions from Copper Mountain.
Consolidated cash cost per pound of copper produced, net of by-product creditsi, was $1.10 in the third quarter of 2023,
compared to $1.60 in the second quarter. This improvement was driven by strong copper and gold production in Peru
and Manitoba, which more than offset the higher mining, milling , G&A, freight and treatment and refining charges
associated with now having three operations. Consolidated sustaining cash cost per pound of copper produced, net of
by-product creditsi, was $1.89 in the third quarter of 2023, compared to $2.73 in the second quarter. This decrease was
primarily due to the same factors affecting consolidated cash cost , partially offset by higher cash sustaining capital
expenditures. Both cash cost measures are expected to continue to be strong in the fourth quarter with higher expected
copper production and continued strong contributions from precious metal by -product credits. Full year cash cost
guidance ranges for 2023 are reaffirmed for each of Peru and Manitoba and consolidated cash cost and sustaining
cash cost guidance ranges have been updated to include Copper Mountain. Consolidated all-in sustaining cash cost
per pound of copper produced, net of by -product creditsi, was $2.04 in the third quarter of 2023, lower than $2. 98 in
the second quarter , due to the same reasons outlined above as well as slightly higher corporate selling and
administrative expenses.
Cash generated from operating activities in the third quarter of 2023 significantly increased to $151.9 million compared
to $24.6 million in the second quarter . Operating cash flow before change in non-cash working capital was a record
$182.0 million during the third quarter, reflecting an increase of $126.1 million over the prior quarter. The increase in
operating cash flow was primarily the result of higher copper sales volumes from mining the high grade zones of the
Pampacancha deposit, higher gold and copper grade zones at Lalor and an incremental contribution from the Copper
Mountain mine.
Net earnings and earnings per share in the third quarter of 2023 were $45.5 million and $0.13, respectively, compared
to net loss and loss per share of $14.9 million and $0.05, respectively, in the second quarter of 2023. The results were
positively impacted by a non -cash gain of $32.4 million related to the quarterly revaluation of the environmental
reclamation provision at the company’s closed sites , partially offset by a $2.3 million one-time charge related to
restructuring costs arising from the Copper Mountain acquisition.
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Adjusted net earningsi and adjusted net earnings per share i in the third quarter of 2023 were $24. 4 million and $0.07
per share, respectively, after adjusting for the non-cash gain related to the revaluation of the environmental provision,
among other items. This compares to adjusted net loss and adjusted net loss per share of $18. 3 million and $0.07 in
the second quarter of 2023. Adjusted EBITDAi was $190.7 million, a 135% increase compared to $81.2 million in the
second quarter. Revenue, earnings and cash would have further benefitted from the sale of approximately 20,000
ounces of consolidated gold production that was unsold at the end of the third quarter and is expected to be sold in the
fourth quarter.
As at September 30, 2023, total liquidity increased to $539.6 million, including $245.2 million in cash and cash
equivalents as well as undrawn availability of $294 .4 million under the company’s revolving credit facilities. N et debt
declined during the quarter to $1,132 million as at September 30, 2023. Subsequent to quarter end, Hudbay repaid $40
million on its revolving credit facilities and made a $5 million principal repayment on the Copper Mountain bonds. Based
on continued expected free cash flow generation in the fourth quarter of 2023, the company continues to expect to
make progress on its deleveraging targets as outlined in the “3-P” plan for sanctioning Copper World. Current liquidity
combined with cash flow from operations is expected to be sufficient to meet the company’s 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.
3 Equity attributable to owners of the company.
Consolidated Financial Performance2 Three Months Ended
Sep. 30, 2023 Jun. 30, 2023 Sep. 30, 2022
Revenue $000s 480,456 312,166 346,171
Cost of sales $000s 374,057 289,273 313,741
Earnings (loss) before tax $000s 84,149 (30,731) (263)
Earnings (loss) $000s 45,490 (14,932) (8,135)
Basic and diluted earnings (loss) per share $/share 0.13 (0.05) (0.03)
Adjusted earnings (loss) per share1 $/share 0.07 (0.07) (0.05)
Operating cash flow before change in non-
cash working capital
$ millions 182.0 55.9 81.6
Adjusted EBITDA1 $ millions 190.7 81.2 99.3
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.
Consolidated Financial Condition ($000s) Sep. 30, 2023 Jun. 30, 2023 Dec. 31, 2022
Cash 245,217 179,734 225,665
Total long-term debt 1,377,443 1,370,682 1,184,162
Net debt1 1,132,226 1,190,948 958,497
Working capital2 128,463 (61,357) 76,534
Total assets 5,250,596 5,242,140 4,325,943
Equity3 2,044,684 2,001,970 1,571,809
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Consolidated Production and Cost Performance5 Three Months Ended
Sep. 30, 2023 Jun. 30, 2023 Sep. 30, 2022
Contained metal in concentrate and doré produced1
Copper tonnes 41,964 21,715 24,498
Gold ounces 101,417 48,996 53,179
Silver ounces 1,063,032 612,310 717,069
Zinc tonnes 10,291 8,758 9,750
Molybdenum tonnes 466 414 437
Payable metal sold
Copper tonnes 39,371 23,078 24,799
Gold2 ounces 74,799 47,533 66,932
Silver2 ounces 748,955 805,448 816,416
Zinc3 tonnes 7,125 8,641 12,714
Molybdenum tonnes 426 314 511
Consolidated cash cost per pound of copper produced4
Cash cost $/lb 1.10 1.60 0.58
Sustaining cash cost $/lb 1.89 2.73 1.91
All-in sustaining cash cost $/lb 2.04 2.98 2.16
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 For the three months ended September 30, 2023 and the three months ended June 30, 2023 this metric includes payable zinc in
concentrate sold. For the three months ended September 30, 2022, this metric also included payable refined zinc metal 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 Performance Measures” section of this news release.
5Includes production results from the Copper Mountain mine following the June 20, 2023 acquisition completion date.
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Peru Operations Review
Peru Operations Three Months Ended
Sep. 30, 2023 Jun. 30, 2023 Sep. 30, 2022
Constancia ore mined1 tonnes 1,242,198 3,647,399 6,300,252
Copper % 0.30 0.31 0.36
Gold g/tonne 0.04 0.04 0.05
Silver g/tonne 2.91 2.49 3.38
Molybdenum % 0.01 0.01 0.01
Pampacancha ore mined tonnes 5,894,013 2,408,495 2,488,928
Copper % 0.53 0.36 0.29
Gold g/tonne 0.30 0.34 0.23
Silver g/tonne 4.22 2.81 4.30
Molybdenum % 0.02 0.02 0.01
Total ore mined tonnes 7,136,211 6,055,894 8,789,180
Strip ratio2 1.36 1.74 1.26
Ore milled tonnes 7,895,109 7,223,048 7,742,020
Copper % 0.43 0.31 0.34
Gold g/tonne 0.21 0.09 0.08
Silver g/tonne 3.75 2.78 3.48
Molybdenum % 0.02 0.01 0.01
Copper recovery % 85.2 80.0 84.5
Gold recovery % 74.8 61.1 61.9
Silver recovery % 73.2 65.1 65.2
Molybdenum recovery % 37.2 40.5 41.0
Contained metal in concentrate
Copper tonnes 29,081 17,682 22,302
Gold ounces 40,596 12,998 12,722
Silver ounces 697,211 419,642 564,299
Molybdenum tonnes 466 414 437
Payable metal sold
Copper tonnes 27,490 21,207 20,718
Gold ounces 32,757 14,524 11,970
Silver ounces 460,001 671,532 513,470
Molybdenum tonnes 426 314 511
Combined unit operating cost3,4,5 $/tonne 12.20 14.07 13.06
Cash cost5 $/lb 0.83 2.14 1.68
Sustaining cash cost5 $/lb 1.51 3.06 2.46
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 costs, 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.
4 Excludes approximately $0.9 million, or $0.12 per tonne, of COVID -related costs during the three months ended September 30,
2022.
5 Strip ratio is calculated as waste mined divided by ore mined.
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During the third quarter of 2023, the Peru operations produced 29,081 tonnes of copper, 40,596 ounces of gold,
697,211 ounces of silver and 466 tonnes of molybdenum. The significant increases in c opper and gold production
compared to the second quarter were a result of higher copper, gold and silver grades from mining the high grade
zones of the Pampacancha deposit, higher recoveries and higher throughput. Full year production in Peru is expected
to continue to benefit from higher grades in the fourth quarter of 2023 and, as such, full year production of all metals in
Peru remains on track to achieve the guidance ranges for 2023.
Total ore mined in the third quarter of 2023 increased by 18% compared to the second quarter, in line with the mine
plan, despite a decline in ore mined from the Constancia pit associated with the commencement of phase five stripping
activities. Ore mined from Pampacancha increased to 5.9 million tonnes during the third quarter at average grades of
0.53% copper and 0.30 grams per tonne gold.
Ore milled during the third quarter of 2023 was 9% higher than the second quarter primarily as a result of a scheduled
plant maintenance shutdown in the second quarter . Milled copper and gold grades increased to 0.43% and 0.21
g/tonne, respectively, in the third quarter of 2023, representing a 39% and 133% increase, respectively, compared to
the second quarter, due to a significant increase in the mining of higher grade copper-gold ore from Pampacancha.
Recoveries of copper, gold and silver during the third quarter of 2023 were 7 %, 22% and 12% higher, respectively,
than the second quarter and were in line with metallurgical models . Recoveries benefitted from the completion of the
recovery uplift program in the second quarter as well as higher head grades and lower contaminants.
Combined mine, mill and G&A unit operating costsi in the third quarter of 2023 were 13% lower than the second quarter
primarily as a result of lower milling costs and higher throughput as the second quarter was impacted by a scheduled
plant maintenance shutdown.
Peru’s cash cost per pound of copper produced, net of by -product credits i, in the third quarter of 202 3 was $0.83
compared to $2.14 in the second quarter of 2023. This 61% improvement was primarily a result of higher by-product
credits mainly from gold, higher pounds of copper produced and lower milling costs . This was partly offset by higher
profit sharing expenses and higher treatment & refining and freight costs. This cost measure is declining meaningfully,
as expected, in the second half of 2023 and the full year cash cost is expected to remain within the 2023 guidance
range with continued higher copper production and contributions from precious metal by -product credits from
Pampacancha expected in the fourth quarter of 2023.
Peru’s sustaining cash cost per pound of copper produced, net of by -product creditsi, in the third quarter of 2023 was
$1.51, representing a 51% decline from the second quarter due to the same factors affecting cash cost noted above ,
partially offset by higher sustaining capital expenditures. However, total annual sustaining capital expenditures in Peru
are expected to be $10 million lower than the original 2023 guidance levels primarily a result of lower capitalized
stripping costs.
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Manitoba Operations Review
Manitoba Operations Three Months Ended
Sep. 30, 2023 Jun. 30, 2023 Sep. 30, 2022
Lalor
Ore mined tonnes 367,491 413,255 347,345
Gold g/tonne 5.08 4.07 4.57
Copper % 1.02 0.81 0.71
Zinc % 3.31 3.14 3.27
Silver g/tonne 27.80 23.27 21.27
New Britannia
Ore milled tonnes 146,927 141,905 132,362
Gold g/tonne 6.93 5.82 7.70
Copper % 1.22 0.77 0.72
Zinc % 0.90 0.85 0.73
Silver g/tonne 23.88 25.79 20.11
Gold recovery - concentrate % 64.7 55.0 60.6
Copper recovery - concentrate % 97.4 91.2 92.3
Silver recovery - concentrate % 63.2 57.0 61.2
Stall Concentrator
Ore milled tonnes 255,516 238,633 229,746
Gold g/tonne 3.70 3.12 2.81
Copper % 0.77 0.85 0.67
Zinc % 4.88 4.47 4.82
Silver g/tonne 28.82 22.15 20.98
Gold recovery % 67.8 59.9 61.3
Copper recovery % 93.9 88.5 85.8
Zinc recovery % 82.6 82.2 88.0
Silver recovery % 64.9 60.3 55.7
Total contained metal in concentrate and doré1
Gold ounces 56,213 35,253 40,457
Copper tonnes 3,580 2,794 2,196
Zinc tonnes 10,291 8,758 9,750
Silver ounces 264,752 180,750 152,770
Total payable metal sold
Gold2 ounces 36,713 33,009 54,962
Copper tonnes 2,925 1,871 4,081
Zinc3 tonnes 7,125 8,641 12,714
Silver2 ounces 197,952 133,916 302,946
Combined unit operating cost4,5 C$/tonne 217 220 235
Gold cash cost5 $/oz 670 1,097 216
Gold sustaining cash cost5 $/oz 939 1,521 1,045
1 Doré includes sludge, slag and carbon fines in three months ended September 30, 2023 and June 30, 2023.
2 Includes total payable precious metals in concentrate and doré sold.
3 Includes refined zinc metal and payable zinc in concentrate 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.