TSX, NYSE – HBM 2020 No. 4 Hudbay Announces Fourth Quarter and Full Year 2019 Results and Provides Annual Guidance
TSX, NYSE – HBM
2020 No. 4
Hudbay Announces Fourth Quarter and Full Year 2019 Results and Provides
Annual Guidance
• Achieved 2019 production and unit cost guidance in Peru and Manitoba ; strong performance at the Lalor
and 777 mines resulted in zinc production exceeding the top end of the guidance range
• Constancia achieved record mill throughput and copper recoveries in 2019
• Lalor and 777 increased mine output by 22% and 15%, respectively, year-over-year
• Cash generated from operating activities was $98. 7 million in the fourth quar ter of 2019, an increase from
the third quarter of 2019
• Cash and cash equivalents of $396.1 million as at D ecember 31, 2019 was relatively unchanged during the
quarter and positions the company well for executing future growth initiatives
• 2020 production guidance of 107,500i tonnes of copper and 172,500i ounces of precious metals with copper
and precious metals production expected to grow by 18%i and 67%i, respectively, by 2022
• Reached a community agreement to acquire Pampacancha surface rights
• The New Britannia gold mill refurbishment remains on track to be completed before the end of 2021, which
is expected to increase Lalor’s annual gold production to approximately 140,000 ounces starting in 2022
• Hudbay’s Manitoba operations received the Towards Sustainable Mining Leadership Award in 2019
Toronto, Ontario, February 20, 2020 – Hudbay Minerals Inc. (“Hudbay” or the “company”) (TSX, NYSE:HBM)
today released its fourth quarter and full year 2019 financial results and annual production and c ost guidance. All
amounts are in U.S. dollars, unless otherwise noted.
“We delivered solid ope rating resu lts in the fourth qua rter as a result of our focus on mai ntaining steady mine
performance while continuing to imple ment various process improvement in itiatives across the business,” said Peter
Kukielski, President and Chief Executive Offi cer. “We ar e on -track to deliver our ne xt phase of growth, including
mining the high-grade Pampacancha satellite deposit in Peru in 2020 and completing the refu rbishment of t he New
Britannia gold mill in Manitob a by 2022. Both projects are low capital intensity, high return brownfield projects with
short paybacks on our invested capital. We are proud of our ESG and operating achievements in 2019, as well as our
successful track record of ac hieving annual copper production guidance for the past five years. We look forward to
delivering significant near-term copper and gold production growth as we execute on our strategic plan.”
Summary of Fourth Quarter Results
Consolidated copper production in the fourth quarter of 2019 was 32, 422 tonnes, a decrease from the third quarter of
2019 primarily as a result of lower planned production in Peru due to the regularly scheduled mill mai ntenance shut-
down and normal quarter-to-quarter variance in copper grades. Consolidated zinc production was higher in the fourth
quarter compared to the third quarter of 2019 due to higher zinc grades in Manitoba. Copper sales volumes increased
in the fou rth qu arter as copper concentrate inventory levels in P eru returned to normal levels, while zinc sales
volumes were lower as a result of the one-week Canadian National Railway strike during the quarter.
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In the four th quarter of 2019, consolidated cash co st per pound of copper produced, net of by -product creditsii, was
$1.23, an increase compared to $0.9 8 in the third quarter due to lower copper production and lo wer zinc by-product
revenue, partially offset by higher precious metals by -product revenue . Inco rporating cash sustaining capital,
capitalized exploration, royalties, selling, administrative and regional costs, consolidated all -in sustaining cash cost
per pound of copper produced, net of by-product credits ii, in th e fourth quarter of 2019 was $2.55, which increased
from $1.98 in the third quarter, driven mainly by increased sustaining capital expenditures and the same factors noted
above affecting consolidated cash costs.
Net loss and loss per share in the fourth quarter of 2019 were $1.5 million and $0.01, respectively. Net loss and loss
per share in the fourth quarter of 2019 were affected by, among other things, the following items:
Pre-tax gain
(loss)
After-tax gain
(loss)
Per share gain
(loss)
($ millions) ($ millions) ($/share)
Mark-to-market adjustments (9.0) (6.6) (0.03)
Non-cash deferred tax adjustments - 30.4 0.12
Cash generated from operating activities increased to $98.7 million in the fourth quarter of 2019 from $43.5 million in
the third quarter of 2019. Operating cash flow before change in non-cash working capital was $69.1 million during the
fourth quarter of 2019, relatively unchanged from the third quarter. The increase in cash generated from o perating
activities is primarily the result of the reduction of ex cess inventories and other working capital changes during the
quarter.
Consolidated Financial Performance Three Months Ended
($000s except per share amounts) Dec. 31, 2019 Sep. 30, 2019 Dec. 31, 2018
Revenue 324,485 291,282 351,773
Cost of sales 298,852 260,327 276,547
Earnings (loss) before tax (42,352) (348,367) 17,650
Earnings (loss) (1,455) (274,796) (3,510)
Basic and diluted earnings (loss) per share (0.01) (1.05) (0.01)
Operating cash flow before change in non-cash
working capital
69,141 71,204 104,264
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Consolidated Operational Performance Three Months Ended
Dec. 31, 2019 Sep. 30, 2019 Dec. 31, 2018
Contained metal in concentrate produced1
Copper tonnes 32,422 36,422 37,238
Gold ounces 32,712 28,319 28,051
Silver ounces 930,137 924,191 1,014,684
Zinc tonnes 30,592 28,639 27,408
Molybdenum tonnes 372 262 329
Precious metals2 ounces 46,000 41,522 42,546
Payable metal in concentrate sold
Copper tonnes 33,715 29,916 36,350
Gold ounces 30,344 25,488 25,861
Silver ounces 909,423 756,296 909,500
Zinc3 tonnes 28,001 29,140 31,134
Molybdenum tonnes 199 334 447
Precious metals2 ounces 43,336 36,292 38,854
Cash cost4 $/lb 1.23 0.98 0.94
All-in sustaining cash cost4 $/lb 2.55 1.98 1.80
1 Metal reported in concentrate is prior to deductions associated with smelter contract terms.
2 Precious metals production includes gold and silver production on a gold-equivalent basis. Silver is converted to gold at a ratio of
70:1.
3 Includes refined zinc metal sold and payable zinc in concentrate sold.
4 Cash cost and all-in sustaining cash cost per pound of copper produced, net of by-product credits, are non-IFRS financial
performance measures with no standardized definition under IFRS. For further information, please see the “Non-IFRS Financial
Reporting Measures” section of this news release.
Summary of Full Year Results
On a consolidated basis, Hudbay’s copper and precious metals production met 2019 guidance and production of zinc
and molybdenum exceeded 2019 guidanc e ranges. Production of copper be nefited from increased throughput and
recoveries at Constanc ia despite expe cted lower p lanned grades. Strong zinc pro duction was a res ult of Lalor
achieving its ramp up to 4,500 tonnes per day and the 777 mine implementing operational improvements. Combined
unit costs in both Peru and Manitoba were within 2019 guidance ranges. Total capital expenditures were above 2019
guidance due prima rily to increased sustaining capita l expenditure s related to mining equipment that is now
accounted for as a capitalized lease under IFRS.
Consolidated cash cost per pound of copper produced, net of by-product credits , was $1.14 in 2019 , an increase
compared to $0.94 in 2018 primarily due to lower co pper production from planned lower grades at Constancia and
the clo sure of the Reed m ine in Manitoba in August 2018 . Incorporating cash sustaining capi tal, capitalized
exploration, royalties, selling, administrative and regional costs, consolidated all-in sustaining cash cost per pound of
copper produced, net of by-product credits, in 2019 was $2.17, which increased from $1.60 in 2018, driven mainly by
increased sustaining capital expenditures and the same factors noted above affecting consolidated cash costs.
Cash generated from operating activities decreased to $310.9 million in 2019 fro m $479.6 million in 2018. Operating
cash flow befor e change in non -cash working capital decreas ed to $307.3 million from $ 501.4 million in 2018. The
decrease is the result of lower copper sales volumes and lower margins mainly from lower realized base metal prices.
Cash and cash equivalent s decreased by $119 .4 million year-over-year to $396.1 million as at December 31, 2019.
This decrease was mainly a result of $ 259.2 million of fund ing for ca pital investments, interest payments and
financing activities of $1 37.8 million and the acquisition of the remaining i nterest in t he Rosemont project for $45.0
million. This decrease was partially offset by cash flow from operating activities of $310.9 million.
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Consolidated Financial Performance Year Ended
($000s except per share amounts) Dec. 31, 2019 Dec. 31, 2018
Revenue 1,237,439 1,472,366
Cost of sales 1,085,897 1,098,626
Profit (loss) before tax (452,763) 170,837
Profit (loss) (343,810) 85,416
Basic and diluted earnings (loss) per share (1.32) 0.33
Operating cash flow before change in non-cash working capital 307,284 501,352
Consolidated Operational Performance Year Ended
Dec. 31, 2019 Dec. 31, 2018
Contained metal in concentrate produced1
Copper tonnes 137,179 154,550
Gold ounces 114,692 119,882
Silver ounces 3,585,330 3,954,469
Zinc tonnes 119,106 115,588
Molybdenum tonnes 1,272 904
Precious metals2 ounces 165,911 176,374
Payable metal in concentrate sold
Copper tonnes 128,519 147,923
Gold ounces 108,999 113,097
Silver ounces 3,452,926 3,372,353
Zinc3 tonnes 104,319 115,723
Molybdenum tonnes 1,186 819
Precious metals2 ounces 158,327 161,273
Cash cost4 $/lb 1.14 0.94
All-in sustaining cash cost4 $/lb 2.17 1.60
1 Metal reported in concentrate is prior to deductions associated with smelter contract terms.
2 Precious metals production includes gold and silver production on a gold-equivalent basis. Silver is converted to gold at a ratio of
70:1.
3 Includes refined zinc metal sold and payable zinc in concentrate sold.
4 Cash cost and all-in sustaining cash cost per pound of copper produced, net of by-product credits, are non-IFRS financial
performance measures with no standardized definition under IFRS. For further information, please see the “Non-IFRS Financial
Reporting Measures” section of this news release.
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Peru Operations Review
Peru Operations Three Months Ended Year Ended
Dec. 31,
2019
Sep. 30,
2019
Dec. 31,
2018
Dec. 31,
2019
Dec. 31,
2018
Ore mined1 tonnes 8,049,063 8,413,367 7,329,423 33,308,369 34,372,156
Copper % 0.41 0.44 0.47 0.43 0.49
Gold g/tonne 0.04 0.05 0.05 0.04 0.05
Silver g/tonne 3.87 3.93 4.16 3.76 4.15
Ore milled tonnes 7,474,136 8,240,344 7,657,943 31,387,281 31,282,610
Copper % 0.42 0.44 0.48 0.42 0.47
Gold g/tonne 0.04 0.04 0.06 0.04 0.05
Silver g/tonne 3.86 3.76 4.26 3.64 4.08
Copper recovery % 85.6 86.0 84.8 85.7 82.6
Gold recovery % 50.0 48.3 48.5 48.1 47.4
Silver recovery % 68.2 68.9 71.6 68.2 66.5
Contained metal in concentrate
Copper tonnes 26,659 31,091 30,834 113,825 122,178
Gold ounces 5,007 5,565 7,522 19,723 24,189
Silver ounces 631,774 686,258 750,747 2,504,769 2,729,859
Molybdenum tonnes 372 262 329 1,272 904
Precious metals2 ounces 14,033 15,369 18,247 55,506 63,187
Payable metal sold
Copper tonnes 28,430 25,314 31,252 106,184 116,449
Gold ounces 4,824 3,858 7,262 18,956 20,420
Silver ounces 666,839 529,139 672,756 2,452,496 2,255,700
Molybdenum tonnes 199 334 447 1,186 819
Combined unit
operating cost3,4
$/tonne 10.20 8.63 9.88 9.50 9.44
Cash cost4 $/lb 1.66 1.26 1.31 1.41 1.36
Sustaining cash cost4 $/lb 2.47 1.75 1.66 1.90 1.59
1 Reported tonnes and grade for ore mined are estimates based on mine plan assumptions and may not reconcile fully to ore milled.
2 Precious metals production includes gold and silver production on a gold-equivalent basis. Silver converted to gold at a ratio of
70:1.
3 Reflects combined mine, mill and general and administrative (“G&A”) costs per tonne of ore milled. Reflects the deduction of
expected capitalized stripping costs.
4 Combined unit cost, cash cost and sustaining cash cost are non-IFRS financial performance measures with no standardized
definition under IFRS. For further information, please see the “Non-IFRS Financial Reporting Measures” section of this news
release.
Constancia achieved record mill throughput and record cop per recoveries in 2019 as a result of several metallurgical
initiatives, and full year copper recoveries exceeded the levels anticipated in the National Instrument (“NI”) 43-101
technical report issued in March 2018.
During the quarter, the Constancia mine produced 26,659 tonnes of coppe r, 14,033 ounces of preci ous metals and
372 tonnes of molybdenum. Production results were lower than the third quarter of 2019 primarily as a result of lower
throughput as the mine reached fu ll-year mill throughput limits impose d by its o perating permits . Year -over-year
copper production decreased as copp er grades declined in line with the mine plan, partially offset by hig her
throughput and copper recoveries. Full year production of copper was within 2019 guidance ranges , while precious
metals and molybdenum production exceeded the guidance ranges.
Mill throughput in th e fourth quarter of 2019 was lower compared to the th ird quarter of 2019 , which was a record
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throughput quarter. Mill throughput was lower in the fourth quarter primarily d ue to the scheduled semi -annual
maintenance shut down as well as a requirement to comply wi th full year p ermit limitations on throughput. Milled
copper grades in the fourth quarter were slightly lower than the third quarter, in line with the mine plan.
Copper r ecoveries in the fourth quarter of 2019 were consistent with the third quarter levels as a result of the
sustained metallur gical improveme nts implemented through out t he year . While recoveries vary fr om quarter to
quarter depending on the complexity and grade of the ore feed, the company is seeing results from ongoing recovery
optimization initiatives. These results are demonstrated through the year-over-year increase i n copper reco veries to
85.7% in 2019 from 82.6% in 2018. Highlights of the initiatives include the continued integration of an automat ed,
advanced process con trol system and the installation of enhanced cl assification and flotation equipment in the
grinding and bulk flotation circuits.
Combined mine, mill and G&A unit operating costs in t he fourth quarter were hig her than th e third quarter of 2019,
reflecting correspondingly lower ore t hroughput and higher maintenance costs due to the planned plant shutdown.
Full year 2019 combined unit costs for Constancia we re similar to 2018 levels and were in line with 2019 guidance
expectations.
Peru cash cost per pound of copper produced, net of by-product credits, in the fourth quarter of 2019 was $1.66, 32%
higher than in the third quarter due to lower copper production, in line with the mine plan , higher operating costs and
lower by-product credits. Peru sustaining cash cost per pound of copper produced, net of by -product creditsii, was
$2.47 in the fourth quarter of 2019. This repre sents a 41% increase from the third quarter due to the same facto rs
that affected cash costs as well as higher sustaining costs in heavy civil wor ks and capitalized stripping costs, and
timing of payments on long-term community agreements and leases.
Peru cash cost per pound of copper produced, net of by -product credits, for the full year 2019 was $1.41, 4% higher
than the full year 2018 primarily due to lower copper production, in line with the mine plan, offset by higher by-product
credits. Peru sustaining cash cost per pound of copper produced, net of by-product credits, was $1.90 for the full year
2019. This represents a 19% increase from 2018 due to the same fact ors that affected sustaining cash costs in the
fourth quarter.
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Manitoba Operations Review
Manitoba Operations Three Months Ended Year Ended
Dec. 31,
2019
Sep. 30,
2019
Dec. 31,
2018
Dec. 31,
2019
Dec. 31,
2018
777 ore mined tonnes 269,342 273,319 244,613 1,109,782 966,567
Copper % 1.17 1.33 1.76 1.37 1.47
Zinc % 3.33 3.01 3.46 3.22 4.43
Gold g/tonne 1.52 1.63 1.61 1.61 1.83
Silver g/tonne 18.52 15.42 24.37 18.67 28.34
Lalor ore mined tonnes 390,140 346,456 317,616 1,536,780 1,260,241
Copper % 0.80 0.68 0.82 0.75 0.74
Zinc % 6.20 6.16 6.80 6.36 6.25
Gold g/tonne 2.63 2.21 2.09 2.16 2.19
Silver g/tonne 28.38 25.56 24.66 25.51 25.39
Flin Flon Concentrator:
Ore milled tonnes 374,529 331,216 259,569 1,362,006 1,423,744
Copper % 1.11 1.22 1.73 1.27 1.90
Zinc % 4.05 3.64 3.55 3.78 3.71
Gold g/tonne 1.75 1.74 1.62 1.72 1.63
Silver g/tonne 20.56 17.36 24.79 19.84 23.48
Copper recovery % 86.9 89.1 90.4 88.0 92.3
Zinc recovery % 85.8 86.7 83.7 85.5 84.2
Gold recovery % 56.1 59.1 62.8 59.4 64.5
Silver recovery % 49.2 48.7 54.8 50.8 60.2
Stall Concentrator:
Ore milled tonnes 310,622 318,539 313,995 1,290,300 1,201,466
Copper % 0.80 0.64 0.84 0.73 0.72
Zinc % 6.24 6.22 6.83 6.39 6.38
Gold g/tonne 2.60 2.12 2.09 2.13 2.15
Silver g/tonne 28.12 25.16 24.58 25.48 25.27
Copper recovery % 85.9 84.4 88.6 85.9 85.7
Zinc recovery % 90.7 91.8 91.9 91.1 92.8
Gold recovery % 61.1 54.3 57.1 56.8 57.6
Silver recovery % 62.9 57.4 60.7 60.4 59.2
Total contained metal in concentrate
Copper tonnes 5,763 5,331 6,404 23,354 32,372
Zinc tonnes 30,592 28,639 27,408 119,106 115,588
Gold ounces 27,705 22,754 20,529 94,969 95,693
Silver ounces 298,363 237,933 263,937 1,080,561 1,224,610
Precious metals1 ounces 31,967 26,153 24,300 110,406 113,188
Total payable metal sold
Copper tonnes 5,285 4,602 5,098 22,335 31,474
Zinc2 tonnes 28,001 29,140 31,134 104,346 115,723
Gold ounces 25,520 21,630 18,599 90,043 92,677
Silver ounces 242,584 227,157 236,744 1,000,430 1,116,653
Combined unit
operating cost3,4
C$/tonne 128 130 143 134 130
Cash cost4 $/lb (0.76) (0.68) (0.87) (0.18) (0.64)
Sustaining cash cost4 $/lb 2.33 2.77 1.76 2.63 1.18
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1 Precious metals production includes gold and silver production on a gold-equivalent basis. Silver converted to gold at a ratio of
70:1.
2 Includes refined zinc metal sold and payable zinc in concentrate sold.
3 Reflects combined mine, mill and G&A costs per tonne of ore milled. 2018 numbers include the cost of ore purchased from the joint
venture partner at the Reed mine.
4 Combined unit cost, cash cost and sustaining cash cost are non-IFRS financial performance measures with no standardized
definition under IFRS. For further information, please see the “Non-IFRS Financial Reporting Measures” section of this news
release.
The Manitoba operations benefitted fr om strong performanc e from both the 777 and Lal or m ines in 2019. Lalor
successfully achieved the ramp up to 4,500 tonnes per day in early 2019 and 777 successfully implemented
efficiency initiatives focused on maximizing the output from the mine.
During the qua rter, the Manitoba operations produced 30,592 tonnes of zinc, 5,763 tonnes of copper and 31,967
ounces of precious metals . Production r esults were higher than the third quarter of 2019 primarily due to higher
tonnes and grades at Lalor . Year -over-year copp er productio n decreased due to t he clos ure of the Reed mine in
August 2018, while zinc production increased due to the Lalor mine’s ramp up. Full year production of zinc exceeded
2019 guidance ranges, while copper and precious metals production were within 2019 guidance ranges.
Ore mine d at the Manitoba operations d uring the fourth quarter of 2019 i ncreased by 6% compared to the third
quarter of 2019 due to higher production volumes at Lalor. Overall zinc, gold and silver grades were higher compared
to the third quarter of 2019, while copper grades were lower, due to planned stope sequencing based on life of mine
production schedules at 777 and Lalor. Higher gold grades at Lalor were due to mining of gold enriched base metal
stopes in the fourth quarter of 2019.
Ore m ined at the Manitoba operations for the full year 2019 increased by 4% o ver 2018 levels due to higher
production volumes at both 777 and Lalor, partially offset by the closure of the R eed mine. The 15% year-over-year
increase in ore min ed at 777 is attributable to implementat ion of management systems designed to improve mobile
equipment availability and key performance i ndicators for drilling, bla sting and b ackfilling processes. The 22% year-
over-year increase in o re mined at Lalor is at tributable to a numb er of initiatives im plemented a s p art of the
production ramp up to 4,500 tonnes per day, including mine design changes, contract strategies, asset integrity and
work management programs.
Ore processed in Flin Flon in the fourth quarter of 2019 was 13% higher than the third quarter of 2019 as a result of
increased ore feed trucked from Lalor. Ore processed at the Stall concentrator was marginally lower than the th ird
quarter of 20 19. Ore processed in Flin Flon for the full year 2019 was 4% lower than in 2018 due to the Reed m ine
closure, partially offset by increased producti on from the 7 77 mine. Ore processed at the Stall concentrator was 7%
higher in 2019 versus 2018 due to ongoing op erational and maintenance improvements. Full year operating costs at
the Flin Flon and Stall concentrators were 9% and 1% lower, respectively, in 2019 compared to 2018 primarily due to
higher plant efficiencies.
Manitoba combined mine, mill and G&A unit o perating costs in the fourth quarter of 2019 were 2% lower than in the
third quarter of 20 19 mainly due to unit costs trending lower following Lalor’s ramp up, with third and f ourth quarter
unit costs well below the levels reported in th e first half of 201 9. Manitoba combined unit costs for the full year 2019
were in line with the annual guidance range.
Manitoba c ash cost pe r pound o f copper produced, net of by-product credits, in the fourth quarter of 2019 was
negative $0.76. These costs were lower compared to the third quarter of 2019, primarily as a result of higher copper
production and higher by-product revenue. Manitoba sustaining cash cost per p ound of copper produced, net of by-
product credits, in the fourth quarter of 2019 was $2. 33, which was 14% lower than the third quarter due to lower
capitalized exploration partially offset by increased capital development expenditures at Lalor, in addition to the same
factors that affected cash costs.