TSX, NYSE – HBM 2022 No. 15 Hudbay Announces Second Quarter 2022 Results
TSX, NYSE – HBM
2022 No. 15
Hudbay Announces Second Quarter 2022 Results
Toronto, Ontario, August 8 , 20 22 – Hudbay Minerals Inc. (“Hudbay” or the “ company”) (TSX, NYSE:HBM)
today released its second quarter 2022 financial results. All amounts are in U.S. dollars, unless otherwise noted.
Strong Operating and Financial Results
• Full year 202 2 production and operating cost guidance is reaffirmed as second quarter production was in
line with expectations and Hudbay achieved strong unit operating cost performance despite inflationary
pressures from higher input prices for many services and consumables.
• Second quarter net earnings and earnings per share were $ 32.1 million and $0.1 2, respectively. After
adjusting for a non -cash gain of $60.7 million prima rily related to a quarterly revaluation of the Flin Flon
environmental provision given higher long -term risk -free discount rates , and a $9 5.0 million pre -tax
impairment loss related to certain specific capitalized costs and assets associated with the previ ous stand-
alone development plan for the Rosemont deposit, among other items, second quarter adjusted net
earningsi per share were $0.12.
• Operating cash flow before change in non -cash working capital was $123.9 million and adjusted EBITDA i
was $141.4 million in the second quarter of 2022 , a significant increase from the first quarter of 2022 due to
higher copper, zinc and gold sales volumes.
• Consolidated production in the second quarter included 25,668 tonnes of copper and 58,645 ounces of gold,
an increase from the first quarter of 2022 . Consolidated cash cost and all-in sustaining cash cost per pound
of copper produced, net of by -product credits i, were $ 0.65 and $1.93, respectively, a significant decrease
from the first quarter of 2022.
• Peru delivered strong operating performance in the second quarter with copper production of 20,880 tonnes
as mill throughput and copper grades improved over the first quarter of 2022.
• Manitoba achieved second quarter gold production of 44,787 ounces at a cash cost per ounce of gold
produced, net of by -product credits i, of negative $207 as New Britannia achieved higher than targeted
throughput rates and gold recoveries continue to improve.
• After 18 years of ste ady production at Hudbay’s 777 mine in Manitoba, the final reserves were depleted in
June 2022, consistent with the mine plan. Closure activities to safely decommission the 777 mine, the Flin
Flon concentrator and the zinc plant commenced in the second qua rter and are advancing ahead of
schedule.
• Cash increased by $45.2 million during the second quarter to $258.6 million as at June 30, 2022, mainly as
a result of $165.6 million of cash generated from operations, partially offset by $78.9 million of mostly
sustaining capital investments, an $18.6 million payment toward the gold prepayment liability and a $10.0
million scheduled deferred payment related to the acquisition of the former minority partner's interest in
Rosemont.
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Executing on Growth Initiatives
• Recently released the results of the Copper World Complex preliminary economic assessment ("PEA") ,
which entails a two -phase mine plan that has an after -tax net present value (10%) of $1,296 million and
generates an 18% internal rate of return at $3.50 per pound copper.1
• Advancing a pre -feasibility study for Phase I of the Copper World Complex, which will focus on converting
the remaining inferred mineral resources to measured and indicated and evaluating many of the project
optimization and upside opportunities.
• Exploration agreement on the Maria Reyna and Caballito satellite properties in Peru is nearing completion.
• Released the company’s 19th Annual Sustainability Report in June 2022 discussing Hudbay's key
accomplishments and initiatives in 2021, and the company is currently working toward specific emission
reduction targets to align with the global 2030 and 2050 climate change goals.
“Our op erating performance was strong during the second quarter with higher consolidated copper and gold
production and lower consolidated cash costs,” said Peter Kukielski, President and Chief Executive Officer. “This was
a result of a continuous focus on operating efficiencies which has allowed us to reaffirm our production and operating
cost guidance for 2022. We have seen steady performance from our operations in Peru and the New Britannia mill in
Manitoba achieved higher than expected throughput. We are advancing a pre-feasibility stud y to evaluate project
optimization opportunities on the private land plan at our Copper World Complex, and we have been focused on
closure activities in Flin Flon and a smooth transition of our workforce to Snow Lake.”
Summary of Second Quarter Results
Consolidated copper production in the second quarter of 202 2 was 25,668 tonnes, an increase of 4% compared to
the first quarter of 2022 and in line with expected quarterly cadence for the year . Consolidated gold production was
58,645 ounces, an in crease of 9% compared to the previous quarter due to higher gold grades in Peru and higher
gold output from New Britannia. Consolidated zinc production in the second quarter was 23% lower than the first
quarter primarily due to lower tonnes and grades at 777 as the mine approached the end of its mine life and the
continued transition toward mining the gold lenses at Lalor with a corresponding decrease of production from the
base metal zones.
Consolidated cash cost per pound of copper produced, net of by -product creditsi, in the second quarter of 2022 was
$0.65, compared to $ 1.11 in first quarter of 2022. This improvement was a result of higher zinc and gold by-product
credits and higher copper production. Consolidated sustaining cash cost per pound of copper produced, net of by -
product creditsi, was $1.87 in the second quarter of 2022 compared to $ 2.29 in the first quarter. This decrease was
primarily due to the same reasons affecting consolidated cash cost . Both measures were within the 2022 guidance
ranges and the company is reaffirming its full year consolidated cash cost guidance. Consolidated all-in sustaining
cash cost per pound of copper produced, net of by -product creditsi, was $1.93 in the second quarter of 2022, lower
than $2.54 in the first quarter of 2022, due to the same reasons outlined above along with lower corporate selling and
administrative expenses.
Cash generated from operating activities in the second quarter of 202 2 increased to $ 165.6 million compared to
$63.3 million in the first quarter of 202 2. The increase is primarily the result of an increase in non -cash working
capital, higher realized zinc metal prices and higher copper, gold and zinc sales volumes. Operating cash flow before
change in non-cash working capital increased to $123.9 million during the second quarter of 2022, compared to $77.1
million in the first quarter of 2022, primarily due to the same factors above.
1 The preliminary economic assessment for the Copper World Complex is preliminary in nature, includes inferred resources that are
considered too speculative geologically to have the economic considerations applied to them that would enable them to be
categorized as mineral reserves and there is no certainty the preliminary economic assessment will be realized.
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Net earnings and earnings per share in the second quarter of 202 2 were $ 32.1 million and $0. 12, respectively,
compared to net earnings and earnings per share of $63.8 million and $0.24, respectively, in the first quarter. Second
quarter earnings benefited from a non-cash gain of $60.7 million mostly related to the quarterly revaluation of the Flin
Flon environmental provision , which was impacted by rising long term risk -free discount rates. Given the long -term
nature of the reclamation cash flows, the related environmental provision is highly sensitive to changes in long -term
risk-free discount rates and, as such, Hudbay may co ntinue to experience quarterly environmental provision
revaluations. The quarterly financial results were also negatively impacted by $ 95.0 million pre-tax impairment loss
related to certain specific capitalized costs and assets associated with the previou s stand-alone development plan for
the Rosemont deposit, which were determined to no longer be recoverable.
Adjusted net earningsi and adjusted net earnings per share i in the second quarter of 202 2 were $30.5 million and
$0.12 per share, respectively, after adjusting for the non -cash gain related to the revaluation of the environmental
provision and the specific asset impairment loss , among other items. This compares to an adjusted net earnings and
adjusted net earnings per share of $5.2 million, and $0.02 per share in first quarter of 2022. Second quarter adjusted
EBITDAi was $141.4 million, compared to $110.2 million in the first quarter of 2022, primarily as a result of the same
factors affecting operating cash flow noted above.
As at June 30, 2022, the company’s liquidity includes $258.6 million in cash as well as undrawn availability of $3 63.6
million under its revolving credit facilities. The company expects that current liquidity combined with cash flow from
operations, particularly in the fourth quarter when production in Peru is expected to benefit from higher grades, will be
sufficient to meet its liquidity needs for the foreseeable future. As such, Hudbay is well positioned to weather the
volatility in commodity prices experienced during the second quarter.
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.
2 Working capital is determined as total current assets less total current liabilities as defined under IFRS and disclosed on the
consolidated financial statements
Consolidated Financial Performance Three Months Ended
Jun. 30, 2022 Mar. 31, 2022 Jun. 30, 2021
Revenue $000s 415,454 378,619 404,242
Cost of sales $000s 325,940 293,351 322,060
Earnings (loss) before tax $000s 21,504 88,861 14,819
Earnings (loss) $000s 32,143 63,815 (3,395)
Basic and diluted earnings (loss) per share $/share 0.12 0.24 (0.01)
Adjusted earnings (loss) per share1 $/share 0.12 0.02 0.02
Operating cash flow before change in non-
cash working capital
$ millions 123.9 77.1 132.8
Adjusted EBITDA1 $ millions 141.4 110.2 143.2
1 Adjusted earnings (loss) per share and adjusted EBITDA are non-IFRS financial performance measures with no standardized
definition under IFRS. For further information, please see the “Non-IFRS Financial Reporting Measures” section of this news
release.
Consolidated Financial Condition ($000s) Jun. 30, 2022 Mar. 31, 2022 Dec. 31, 2021
Cash 258,556 213,359 270,989
Total long-term debt 1,182,143 1,181,119 1,180,274
Net debt1 923,587 967,760 909,285
Working capital2 180,371 161,846 147,512
Total assets 4,382,727 4,538,214 4,616,231
Equity 1,601,123 1,561,978 1,476,828
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Consolidated Production and Cost Performance Three Months Ended
Jun. 30, 2022 Mar. 31, 2022 Jun. 30, 2021
Contained metal in concentrate and doré produced1
Copper tonnes 25,668 24,702 23,474
Gold ounces 58,645 53,956 39,848
Silver ounces 864,853 784,357 685,916
Zinc tonnes 17,053 22,252 21,538
Molybdenum tonnes 390 207 295
Payable metal sold
Copper tonnes 23,650 20,609 25,176
Gold2 ounces 50,884 48,343 38,205
Silver2 ounces 738,171 864,591 577,507
Zinc3 tonnes 20,793 17,306 25,361
Molybdenum tonnes 208 213 265
Consolidated cash cost per pound of copper produced4
Cash cost $/lb 0.65 1.11 0.84
Peru $/lb 1.82 1.54 1.85
Manitoba $/lb (4.48) (0.40) (3.51)
Sustaining cash cost $/lb 1.87 2.29 2.25
Peru $/lb 2.62 2.27 2.69
Manitoba $/lb (1.40) 2.33 0.36
All-in sustaining cash cost $/lb 1.93 2.54 2.48
Manitoba gold cash cost per ounce of gold produced4,5
Cash cost $/oz (207) 416 —
Sustaining cash cost $/oz 519 1,187 —
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 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.
5 Cash cost and sustaining cash cost per ounce of gold produced, net of by -product credits, were introduced in 2022 and do not
have a published comparative for 2021.
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Peru Operations Review
Peru Operations Three Months Ended
Jun. 30, 2022 Mar. 31, 2022 Jun. 30, 2021
Constancia ore mined1 tonnes 7,017,114 6,908,151 8,016,373
Copper % 0.33 0.32 0.30
Gold g/tonne 0.04 0.04 0.04
Silver g/tonne 3.53 3.22 3.02
Molybdenum % 0.01 0.01 0.01
Pampacancha ore mined1 tonnes 1,211,387 847,306 982,992
Copper % 0.29 0.27 0.26
Gold g/tonne 0.28 0.43 0.27
Silver g/tonne 4.25 4.06 4.43
Molybdenum % 0.01 0.01 0.01
Total ore mined tonnes 8,228,501 7,755,457 8,999,365
Strip ratio2 1.22 1.10 0.83
Ore milled tonnes 7,770,706 7,213,833 7,413,043
Copper % 0.32 0.31 0.31
Gold g/tonne 0.09 0.08 0.07
Silver g/tonne 3.64 3.26 2.88
Molybdenum % 0.01 0.01 0.01
Copper recovery % 85.0 85.3 83.3
Gold recovery % 60.3 59.8 62.2
Silver recovery % 64.2 66.9 68.2
Molybdenum recovery % 38.8 21.1 33.3
Contained metal in concentrate
Copper tonnes 20,880 19,166 19,058
Gold ounces 13,858 10,789 10,220
Silver ounces 584,228 505,568 468,057
Molybdenum tonnes 390 207 295
Payable metal sold
Copper tonnes 18,473 16,825 19,946
Gold ounces 8,430 14,452 5,638
Silver ounces 484,946 636,133 315,064
Molybdenum tonnes 208 213 265
Combined unit operating
cost3,4,5
$/tonne 12.02 12.37 10.40
Cash cost5 $/lb 1.82 1.54 1.85
Sustaining cash cost5 $/lb 2.62 2.27 2.69
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, of COVID-related costs during the three months ended June 30, 2022,
$2.3 million, or $0.32 per tonne, of COVID-related costs during the three months ended March 31, 2022 and $6.3 million, or $0.85
per tonne, during the three months ended June 30, 2021.
5 Combined unit 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 Reporting Measures” section of this news release.
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During the first quarter of 2022, the Constancia operations produced 20,880 tonnes of copper, 13,858 ounces of gold,
584,228 ounces of silver and 390 tonnes of molybdenum. Production of all metals was higher than the first quarter of
2022 due to an increase in throughput and milled grades . As previously disclosed, full year production in Peru is
expected to benefit from higher grades in the fourth quarter of 2022. As such, full year production of all metals
remains on track to achieve guidance ranges for 2022.
Total ore mined slightly declined in the second quarter of 2022 compared to the first quarter of 2022 due to higher
amounts of waste being mined. Ore mined from Pampacancha increased in the second quarter as mining rates in the
pit returned to normal productivity levels following heavy rains and delays in the water management system earlier in
the year. Ore milled during the second quarter of 2022 was higher compared to the previous quarter and copper, gold
and silver grades increased over the first quarter of 2022.
Combined mine, mill and G&A unit operating costs i in the second quarter of 2022 were $12.02 per tonne, lower than
the first quarter of 2022 primarily due to lower milling costs and higher throughput.
Peru’s cash cost per pound of copper produced, net of by-product creditsi, in the second quarter of 2022 was $1.82,
higher than the previous quarter primarily due to higher mining and general and administrative costs and lower by -
product credits, partially offset by lower milling costs . Cash cost per pound of copper produced, net of by -product
creditsi, is expected to decline with higher expected copper production and contributions from precious metal by -
product credits in the fourth quarter . However, full year cash cost is expected to trend towards the upper end of the
2022 guidance range, reflecting the current inflationary cost environment.
Peru’s sustaining cash cost per pound of copper produced, net of by -product creditsi, in the second quarter of 2022
increased to $2.62, compared to $2.27 in the first quarter, mainly due to the same factors affecting cash cost , and
slightly higher sustaining capital expenditures.
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Manitoba Operations Review
Manitoba Operations Three Months Ended
Jun. 30, 2022 Mar. 31, 2021 Jun. 30, 2021
Lalor ore mined tonnes 412,653 386,752 356,951
Copper % 0.70 0.80 0.64
Zinc % 3.06 4.06 3.81
Gold g/tonne 3.73 3.76 3.19
Silver g/tonne 23.95 22.94 22.98
777 ore mined tonnes 226,286 258,069 255,170
Copper % 1.03 1.19 0.82
Zinc % 3.51 4.12 3.57
Gold g/tonne 1.62 1.69 1.97
Silver g/tonne 20.63 21.05 23.35
Stall Concentrator & New Britannia Mill:
Ore milled tonnes 406,006 397,301 317,484
Copper % 0.73 0.82 0.68
Zinc % 3.20 4.24 4.06
Gold g/tonne 3.93 3.87 3.19
Silver g/tonne 23.98 23.16 22.02
Copper recovery - concentrate % 89.5 87.5 88.8
Zinc recovery – concentrate (Stall) % 84.3 85.7 88.1
Gold recovery - concentrate % 58.8 58.4 55.5
Silver recovery - concentrate % 58.1 60.0 55.1
Flin Flon Concentrator:
Ore milled tonnes 243,312 254,032 329,503
Copper % 1.02 1.20 0.89
Zinc % 3.60 4.13 3.65
Gold g/tonne 1.64 1.70 2.06
Silver g/tonne 20.76 21.23 23.65
Copper recovery % 85.5 87.6 84.8
Zinc recovery % 82.9 83.2 84.8
Gold recovery % 56.4 57.7 52.9
Silver recovery % 51.0 52.5 37.5
Total contained metal in concentrate and doré
Copper tonnes 4,788 5,536 4,416
Zinc tonnes 17,053 22,252 21,538
Gold ounces 44,787 43,167 29,628
Silver ounces 280,625 278,789 217,859
Total payable metal sold
Copper tonnes 5,177 3,784 5,230
Zinc1 tonnes 20,793 17,306 25,361
Gold2 ounces 42,454 33,891 32,567
Silver2 ounces 253,225 228,458 262,443
Combined unit operating cost3,4 C$/tonne 168 176 148
Gold cash cost4,5 $/oz (207) 416 —
Gold sustaining cash cost4,5 $/oz 519 1,187 —
1 Includes refined zinc metal sold and payable zinc in concentrate sold.
2 Includes total payable precious metals in concentrate and in doré sold.
3 Reflects combined mine, mill and G&A costs per tonne of ore milled.
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4 Combined unit 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 Reporting Measures” section of this news release.
5 Cash cost and sustaining cash cost per ounce of gold produced were introduced in 2022 and do not have a published comparative.
During the second quarter of 2022, the Manitoba operations produced 44,787 ounces of gold, 17,053 tonnes of zinc,
4,788 tonnes of copper and 280,625 ounces of silver. Gold and silver production increased by 4% and 1% ,
respectively, while copper and zinc production decreased by approximately 14% and 23%, respectively, compared to
the first quarter of 2022. Copper and zinc production declined due to lower grades at Lalor and 777, and precious
metals production increased due to higher throughput and recoveries at the New Britannia mill. Full year production
of all metals in Manitoba are on track to achieve guidance ranges for 2022.
After 18 years of steady production at the 777 mine in Manitoba, the final reserves were depleted with the last ore
hoisted on June 17, 2022, consistent with the mine plan. Closure activities to safely decommission the mine
commenced in the second quarter and are advancing ahead of schedule. As 777 mining activities wound down,
Hudbay employees and equipment transitioned from 777 to Lalor to support Lalor's ramp-up strategy.
The company continued to advance the Lalor ramp-up strategy and remains on track to achieve 5,300 tonnes per day
by the end of 2022. Hudbay also further refined the processes to separate gold and base metal ores from Lalor to
optimize feed for the New Britannia and Stall mills. Metal grades form the basis of separating higher gold content ore
for processing at New Britannia from base metal ore which is directed towards Stall. Lalor successfully completed
planned maintenance in the second quarter to allow for increased availability in the third quarter.
Ore mined at Lalor increased by 7% in the second quarter of 202 2, while production at 777 decreased as the mine
approached closure in June 2022, resulting in an overall 1% decline in total ore mined in Manitoba compared to the
first quarter. Mined zinc and copper grades were lower compared to the first quarter, in line with the mine plan, while
precious metal grades remained relatively constant.
The New Britannia mill achieved higher than targeted throughput in the second quarter of 2022 , averaging
approximately 1,590 tonnes per day , due to a number of improvement initiatives aimed at increasing throughput and
further improving recoveries. With the inclusion of doré, the gold and silver recoveries at the New Britannia mill have
also improved significantly in relation to previous quarters. Additional improvement initiatives will continue to be
advanced in the second half of 2022 to further improve gold and silver recoveries.
The combined Snow Lake mills processed 2% more ore in the second quarter compared to the first quarter of 2022,
tracking the increase in Lalor's production over the same period . Stall mill recoveries were consistent with the
metallurgical model for the head grades delivered . The Flin Flon concentrator consumed all available ore feed from
the 777 mine in the second quarter of 2022. Last ore from 777 was processed on June 21, 2022 and closure activities
to safely place the Flin Flon concentrator on lon g-term care and maintenance are ahead of schedule. Flin Flon mill
recoveries were consistent with the metallurgical model for the head grades delivered.
Combined mine, mill and G&A unit operating costs i in the second quarter of 2022 decreased by 5% compared to the
first quarter of 202 2, mainly due to lower costs at 777 as the mine ceased operations during the quarter, partially
offset by higher inflationary cost pressures for bulk commodities, fuel, and Lalor contractor costs. Looking ahead to
the second half of 2022, the company expects combined unit operating costs to increase due to ongoing inflationary
cost pressures and the removal of the lower-cost Flin Flon operations. As such , Hudbay expects the full year
combined unit costs to trend towards the upper end of the 2022 guidance range.
Cash cost per ounce of gold produced, net of by -product creditsi, in the second quarter of 2022 was negative $207,
lower than the first quarter of 2022 and well below the 2022 guidance range as the operations benefited from higher
zinc by-product credits, lower operating costs and higher gold production.