TSX, NYSE – HBM 2022 No. 20 Hudbay Announces Third Quarter 2022 Results
TSX, NYSE – HBM
2022 No. 20
Hudbay Announces Third Quarter 2022 Results
Toronto, Ontario, November 2, 2022 – Hudbay Minerals Inc. (“Hudbay” or the “ company”) (TSX, NYSE:HBM)
today released its third quarter 2022 financial results. All amounts are in U.S. dollars, unless otherwise noted.
Third Quarter Operating and Financial Results; Production Guidance Reaffirmed
• Full year 2022 consolidated production, cash cost and sustaining cash cost guidance is reaffirmed.
• Third quarter net loss and loss per share were $8.1 million and $0.03, respectively. After adjusting for a non -
cash gain of $6.4 million related to a quarterly revaluation of the Flin Flon environmental provision due to
changes in real, long -term risk -free discount rates, and a $6. 0 million gain on disposal of plant and
equipment and non-current assets, among other items, third quarter adjusted net lossi per share was $0.05.
• Operating cash flow before change in non-cash working capital was $81.6 million and adjusted EBITDAi was
$99.3 million in the third quarter of 2022 , benefiting from higher copper , gold and silver sales volumes
compared to the second quarter of 2022.
• Consolidated production in the third quarter included 24,498 tonnes of copper and 53,179 ounces of gold.
• Consolidated cash cost per pound of copper produced, net of by -product credits i, was $0.58 in the third
quarter, an 11% improvement from the second quarter of 2022. Consolidated sustaining cash cost per
pound of copper produced, net of by -product creditsi, was $1.91 in the third quarter, a 2% increase from the
second quarter of 2022, but within the guidance range.
• Peru delivered strong operating performance in the third quarter with 7% higher copper production of 22,302
tonnes and 8% lower cash cost per pound of copper produced, net of by-product creditsi, of $1.68 as copper
grades improved over the second quarter of 2022.
• Despite being focused on transition activities and overcoming one-off production interruptions, Manitoba
achieved third quarter gold production of 40,457 ounces at a cash cost per ounce of gold produced, net of
by-product creditsi, of $216 as New Britannia continued to deliver strong throughput and gold recoveries.
• Closure activities to safely decommission the 777 mine (“777”), the Flin Flon concentrator and the zinc plant
were substantially completed in the third quarter , ahead of schedule. A majority of Flin Flon employees and
equipment of value have transitioned to Snow Lake to support Lalor’s ramp -up strategy of 5,300 tonnes per
day in early 2023.
• Cash increased by $27.6 million during the third quarter to $286.1 million, as at September 30, 2022, mainly
as a result of $172.5 million of cash generated from operations, partially offset by $119.0 million of capital
investments and a $17.1 million payment toward the gold prepayment liability.
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Executing on Growth Initiatives
• The company is realizing benefits from recent brownfield growth investments including the successful ramp-
up of the high grade Pampacancha satellite deposit and the achievement of higher throughput and gold
recoveries at the New Britannia mill , as evidenced by the success ive quarterly increases in copper
production in Peru and higher gold production in Snow Lake.
• Pre-feasibility study for Phase I of the Copper World Complex (“Copper World”) is well-advanced with the
process plant pre-feasibility level engineering at 85% completion and geotechnical and hydrogeological site
investigation activities completed. The focus remains on converting remaining inferred mineral resources to
measured and indicated and evaluating many of the project optimization and upside opportunities.
• Submitted remaining state permit applications for Phase I of Copper World in September and October 2022.
• Executed an exploration agreement on the Maria Reyna and Caballito satellite properties in Peru in August
2022 and early exploration activities on the prospective properties are underway.
• Announced an initial mineral resource estimate for the Llaguen copper-molybdenum porphyry deposit in
northern Peru, including 271 million tonnes of indicated resources at 0.42% copper -equivalentii and 83
million tonnes of inferred resources at 0.30% copper-equivalentii.
• Assays from the confirmatory drill program at the Flin Flon tailings facility indicate higher grade s than
predicted from historical mill records.
Focus on Deleveraging and Disciplined Capital Allocation
• Reduced net debt to $897.1 million, a reduction of $70.7 million since the completion of the brownfield
investment program in the quarter ended March 31, 2022.
• Repaid 38% of the gold prepayment liability to date in 2022 with the balance to be repaid by the end of
2023.
• Reduced 2022 discretionary spending by $30 million, reflecting lower expenditures in Arizona, Manitoba and
Peru, and the company is targeting 2023 discretionary spending reductions of more than $50 million.
• Divested non-core assets with the sale of Hudbay’s Lordsburg property during the third quar ter of 2022 and
the sale of its equity interest in Fireweed Metals Corp. in November 2022.
• Prioritized Copper World activities to focus on completion of the pre -feasibility study, receipt of state level
permits and conduc ting a bulk sample program to de -risk the project in 2023, while deferring the definitive
feasibility study to 2024.
• Announced disciplined capital allocation approach with the introduction of three prerequisites for sanctioning
Copper World, including a pr udent financing strategy with multi -faceted financial targets focused on a
minimum cash balance, a stated maximum leverage, limited non -recourse project level debt and committed
financial partners.
“We are realizing the benefits from our recent brownfield investment program with steady quarterly copper production
increases in Peru, growing quarterly gold production in Snow Lake and two consecutive quarters of positive cash flow
generation this year,” said Peter Kukie lski, President and Chief Executive Officer. “We have reaffirmed consolidated
production and cash cost guidance, and in light of continued inflationary cost pressures at our operations, we have
taken many steps to reduce our discretionary spending this yea r as we focus on deleveraging and disciplined capital
allocation. This will allow us to be able to continue to deliver copper and gold production growth over the next several
years while prudently advancing our leading organic copper growth pipeline.”
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Summary of Third Quarter Results
Consolidated copper production in the third quarter of 202 2 was 24,498 tonnes, a 5% decrease compared to the
second quarter of 2022 due to the planned closure of 777 in June 2022, partially offset by higher copper grades in
Peru. Consolidated gold production was 53,179 ounces, a decrease of 9% compared to the second quarter due the
closure of 777 in June and slightly lower gold grades in Peru , partially offset by significantly higher Lalor gold grades
and higher gold recoveries in Snow Lake and Peru . Consolidated zinc production in the second quarter was 9,750
tonnes, lower than the second quarter primarily due to the closure of 777 and one-off production interruption s in
Snow Lake during the quarter . Hudbay anticipates stronger production in fourth quarter and has reaffirmed its 2022
production guidance for all metals.
Consolidated cash cost per pound of copper produced, net of by -product creditsi, in the third quarter of 2022 declined
to $0.58, compared to $ 0.65 in second quarter of 2022. This significant improvement was primarily a result of lower
onsite costs in Manitoba, partially offset by higher onsite costs in Peru, higher treatment and refining charges and
freight costs in Peru and Manitoba and lower consolidated copper production with the closure of 777 . Consolidated
sustaining cash cost per pound of copper produced, net of by -product creditsi, was $1.91 in the third quarter of 2022
compared to $ 1.87 in the second quarter. This slight increase was primarily due to higher sustaining capital
expenditures, partially offset by lower cash costs described above and lower royalties . Both measures are tracking
well with respect to the 2022 guidance ranges and the company is reaffirming its full year consolidated cash cost and
sustaining cash cost guidance. Consolidated all -in sustaining cash cost per pound of copper produced, net of by -
product credits i, was $ 2.16 in the third quarter of 2022, 12% higher than $ 1.93 in the second quarter of 2022 ,
primarily due to higher corporate selling and administrative expenses and accretion and amortization of
decommissioning and community agreements.
Cash generated from operating activities in the third quarter of 2022 increased to $172.5 million compared to $ 165.6
million in the second quarter of 2022. The increase is primarily the result of an increase in non-cash working capital.
Operating cash flow before change in non -cash working capital was $81.6 million during the third quarter of 202 2,
compared to $123.9 million in the second quarter of 2022. This decrease was primarily the result of lower zinc sales
volumes, lower realized prices for all metals and inflationary cost pressures on mine operating costs.
Net loss and loss per share in the third quarter of 202 2 were $8.1 million and $0. 03, respectively, compared to net
earnings and earnings per share of $32.1 million and $0. 12, respectively, in the previous quarter. During the third
quarter of 2022, Hudbay recorded a non-cash gain of $6.4 million related to the quarterly revaluation of the Flin Flon
environmental provision in response to changes in real, long -term discount rates, a $6.7 million revaluation gain of
the gold prepayment liability and a $6. 0 million gain on the disposal of plant and equipment and non -current assets.
These costs were offset by a $5. 1 million charge related to the restructuring of th e Manitoba operations due to the
closure of the Flin Flon operations.
Adjusted net lossi and adjusted net loss per sharei in the third quarter of 2022 were $12.4 million and $0.05 per share,
respectively, after adjusting for the non -cash gain related to the revaluation of the environmental provision and the
revaluation gain on the gold prepayment liability, among other items . This compares to adjusted net earnings and
adjusted net earnings per share of $30.5 million and $0. 12 per share in second quarter of 202 2. Third quarter
adjusted EBITDAi was $99.3 million, compared to $141.4 million in the second quarter of 2022, primarily as a result of
the same factors affecting operating cash flow noted above.
As at September 30, 2022, the company’s liquidity includes $286.1 million in cash as well as undrawn availability of
$368.7 million under its revolving credit facilities.
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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 financial statements
Consolidated Financial Performance Three Months Ended
Sep. 30, 2022 Jun. 30, 2022 Sep. 30, 2021
Revenue $000s 346,171 415,454 358,961
Cost of sales $000s 313,741 325,940 444,379
Earnings (loss) before tax $000s (263) 21,504 (147,830)
Earnings (loss) $000s (8,135) 32,143 (170,411)
Basic and diluted earnings (loss) per share $/share (0.03) 0.12 (0.65)
Adjusted earnings (loss) per share1 $/share (0.05) 0.12 —
Operating cash flow before change in non-
cash working capital
$ millions 81.6 123.9 103.5
Adjusted EBITDA1 $ millions 99.3 141.4 119.2
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 Performance Measures” section of this news
release.
Consolidated Financial Condition ($000s) Sep. 30, 2022 Jun. 30, 2022 Dec. 31, 2021
Cash 286,117 258,556 270,989
Total long-term debt 1,183,237 1,182,143 1,180,274
Net debt1 897,120 923,587 909,285
Working capital2 99,807 180,371 147,512
Total assets 4,287,794 4,382,727 4,616,231
Equity 1,570,889 1,601,123 1,476,828
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Consolidated Production and Cost Performance Three Months Ended
Sep. 30, 2022 Jun. 30, 2022 Sep. 30, 2021
Contained metal in concentrate and doré produced1
Copper tonnes 24,498 25,668 23,245
Gold ounces 53,179 58,645 54,276
Silver ounces 717,069 864,853 763,177
Zinc tonnes 9,750 17,053 20,844
Molybdenum tonnes 437 390 282
Payable metal sold
Copper tonnes 24,799 23,650 21,136
Gold2 ounces 66,932 50,884 47,843
Silver2 ounces 816,416 738,171 701,601
Zinc3 tonnes 12,714 20,793 21,619
Molybdenum tonnes 511 208 304
Consolidated cash cost per pound of copper produced4
Cash cost $/lb 0.58 0.65 0.62
Peru $/lb 1.68 1.82 1.26
Manitoba $/lb (10.64) (4.48) (1.64)
Sustaining cash cost $/lb 1.91 1.87 1.97
Peru $/lb 2.46 2.62 2.31
Manitoba $/lb (3.71) (1.40) 0.75
All-in sustaining cash cost $/lb 2.16 1.93 2.18
Manitoba gold cash cost per ounce of gold produced4,5
Cash cost $/oz 216 (207) —
Sustaining cash cost $/oz 1,045 519 —
1 Metal reported in concentrate is prior to deductions associated with smelter contract terms.
2 Includes total payable gold and silver in concentrate and in doré sold.
3 Includes refined zinc metal sold and payable zinc in concentrate sold.
4 Cash cost, sustaining cash cost and all-in sustaining cash cost per pound of copper produced, net of by-product credits, are non-
IFRS financial performance measures with no standardized definition under IFRS. For further information, please see the “Non-IFRS
Financial Performance 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
Sep. 30, 2022 Jun. 30, 2022 Sep. 30, 2021
Constancia ore mined1 tonnes 6,300,252 7,017,114 6,208,019
Copper % 0.36 0.33 0.30
Gold g/tonne 0.05 0.04 0.04
Silver g/tonne 3.38 3.53 2.76
Molybdenum % 0.01 0.01 0.01
Pampacancha ore mined1 tonnes 2,488,928 1,211,387 2,050,813
Copper % 0.29 0.29 0.27
Gold g/tonne 0.23 0.28 0.27
Silver g/tonne 4.30 4.25 3.58
Molybdenum % 0.01 0.01 0.01
Total ore mined tonnes 8,789,180 8,228,501 8,258,832
Strip ratio2 1.26 1.22 1.46
Ore milled tonnes 7,742,020 7,770,706 6,985,035
Copper % 0.34 0.32 0.30
Gold g/tonne 0.08 0.09 0.11
Silver g/tonne 3.48 3.64 3.93
Molybdenum % 0.01 0.01 0.01
Copper recovery % 84.5 85.0 84.9
Gold recovery % 61.9 60.3 71.9
Silver recovery % 65.2 64.2 59.1
Molybdenum recovery % 41.0 38.8 33.5
Contained metal in concentrate
Copper tonnes 22,302 20,880 18,072
Gold ounces 12,722 13,858 17,531
Silver ounces 564,299 584,228 521,036
Molybdenum tonnes 437 390 282
Payable metal sold
Copper tonnes 20,718 18,473 16,065
Gold ounces 11,970 8,430 16,902
Silver ounces 513,470 484,946 457,263
Molybdenum tonnes 511 208 304
Combined unit operating cost3,4,5 $/tonne 13.06 12.02 10.93
Cash cost5 $/lb 1.68 1.82 1.26
Sustaining cash cost5 $/lb 2.46 2.62 2.31
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 $0.9 million, or $0.12 per tonne, of COVID-19 related costs during the three months ended September 30,
2022, $1.3 million, or $0.16 per tonne, of COVID-related costs during the three months ended June 30, 2022 and $5.5 million, or
$0.78 per tonne, during the three months ended September 30, 2021.
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.
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During the third quarter of 2022, the Constancia operations produced 22,302 tonnes of copper, 12,722 ounces of
gold, 564,299 ounces of silver and 437 tonnes of molybdenum. Production of copper and molybdenum was higher
than the second quarter of 2022 due to higher copper grades and higher molybdenum recoveries , partially offset by
lower throughput due to a planned semi-annual mill maintenance program during the third quarter . Production of gold
and silver was lower in the third quarter compared to the second quarter of 2022 due to lower grades, partially offset
by higher recoveries. 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 in the third quarter of 2022 increased compared to the second quarter of 2022 due to higher amounts
of ore mined from Pampacancha. The Constancia mill performed well during the third quarter with o re milled only
0.3% lower than the second quarter despite the planned maintenance shutdown described above . Milled copper
grades increased in the third quarter in comparison to the second quarter of 2022 due to higher than planned grades
from Constancia. Milled gold grades decreased in the third quarter of 2022 mainly due to temporarily lower gold
grades from Pampacancha.
Combined mine, mill and G&A unit operating costs i in the third quarter of 202 2 were $13.06 per tonne, 9% higher
than the second quarter of 202 2 primarily due to continued inflationary pressures on fuel, consumables and energy
costs. Hudbay expects to complete a four -day mill shutdown at Constancia in November 2022 to advance
maintenance activities that were originally planned for the first quarter of 2023. As a result of ongoing inflationary cost
pressures and the additional mill maintenance in the fourth quarter, full year unit operating costs in Peru are expected
to be near the top end of the 2022 guidance range.
Peru’s cash cost per pound of copper produced, net of by-product creditsi, in the third quarter of 2022 declined by 8%
to $1.68, compared to $1.82 in the second quarter, primarily due to higher by -product credits and higher copper
production. Although copper cash cost is expected to continue to decline in the fourth quarter with hi gher anticipated
copper production and contributions from precious metals by -product credits, full year cash cost in Peru is expected
to exceed the upper end of the 2022 guidance range by approximately 5% , primarily due to the inflationary cost
environment.
Peru’s s ustaining cash cost per pound of copper produced, net of by -product credits i, in the third quarter of 2022
declined by 6% to $2.46, compared to $2.62 in the second quarter, mainly due to the same factors affecting cash
cost, offset by slightly higher sustaining capital expenditures and royalties . Year-to-date sustaining cash cost per
pound of copper produced, net of by -product credits i, of $2.46 was unchanged from 2022 compared to the same
period in 2021 despite inflationary cost pressures.
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Manitoba Operations Review
Manitoba Operations Three Months Ended
Sep. 30, 2022 Jun. 30, 2022 Sep. 30, 2021
Lalor ore mined tonnes 347,345 412,653 392,380
Copper % 0.71 0.70 0.86
Zinc % 3.27 3.06 3.60
Gold g/tonne 4.57 3.73 3.85
Silver g/tonne 21.27 23.95 22.13
777 ore mined tonnes — 226,286 256,536
Copper % — 1.03 1.06
Zinc % — 3.51 3.88
Gold g/tonne — 1.62 1.96
Silver g/tonne — 20.63 22.99
Stall Concentrator & New Britannia Mill:
Ore milled tonnes 362,108 406,006 408,201
Copper % 0.69 0.73 0.82
Zinc % 3.33 3.20 3.58
Gold g/tonne 4.60 3.93 3.84
Silver g/tonne 20.66 23.98 23.32
Copper recovery - concentrate % 88.3 89.5 84.3
Zinc recovery - concentrate (Stall) % 88.0 84.3 88.2
Gold recovery - concentrate % 60.9 58.8 53.4
Silver recovery - concentrate % 57.6 58.1 52.7
Flin Flon Concentrator:
Ore milled tonnes — 243,312 258,062
Copper % — 1.02 1.06
Zinc % — 3.60 3.86
Gold g/tonne — 1.64 1.96
Silver g/tonne — 20.76 22.93
Copper recovery % — 85.5 85.2
Zinc recovery % — 82.9 82.2
Gold recovery % — 56.4 58.1
Silver recovery % — 51.0 42.4
Total contained metal in concentrate and doré
Copper tonnes 2,196 4,788 5,173
Zinc tonnes 9,750 17,053 20,844
Gold ounces 40,457 44,787 36,745
Silver ounces 152,770 280,625 242,141
Total payable metal sold
Copper tonnes 4,081 5,177 5,071
Zinc1 tonnes 12,714 20,793 21,619
Gold2 ounces 54,962 42,454 30,941
Silver2 ounces 302,946 253,225 244,338
Combined unit operating cost3,4 C$/tonne 235 168 147
Gold cash cost4,5 $/oz 216 (207) —
Gold sustaining cash cost4,5 $/oz 1,045 519 —
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.