Hudbay reports Q3 profit as Peru, Manitoba ops ramp up

VANCOUVER (miningweekly.com) – Canadian base metals miner Hudbay Minerals is back in the black, boosted by strong performances from the Constancia mine, in Peru, and its Manitoba operations in Canada, which improved volumes and benefited from slightly higher prices.

Since reaching commercial production in the second quarter of 2015, the ramp up of Constancia has increased production volumes, pushing revenues and gross profit higher since the end of 2014, notwithstanding lower realised metals prices.

"Our strong operating performance, together with the cost efficiencies achieved at our operations, enabled us to generate increased operating cash flow and earnings during the quarter," stated president and CEO Alan Hair.

The increase in concentrate production in both Peru and Manitoba has resulted in lower unit costs as a result of the economies of scale achieved and the focus on cost optimisation at all sites, the miner said Wednesday.

In the third quarter, Toronto-headquartered Hudbay recorded a profit of $33.6-million, or $0.14 a share, compared with a loss of $11.8-million, or $0.05 a share, for the same period in 2015.

Revenue for the period was $311.4-million, $41.6-million higher than the same period in 2015, mainly as a result of higher sales volumes resulting from the ramp up of production since last year at Constancia, and slightly higher metal prices. This increase was partially offset by higher treatment and refining charges.

The average realised prices for commodities produced in the third quarter remained flat at $2.20/lb for copper and 14% better for zinc at $1.08/lb. Gold was up 11% at $1 303/oz; silver was also up year-on-year at $18.43/oz.

Results at Hudbay's operations were strong, with record quarterly consolidated copper-equivalent output and continued low cash costs in both Peru and Manitoba. In the third quarter, consolidated cash cost per pound of copper produced, net of by-product credits, was $0.91, which is nearly unchanged compared with the same period last year when it was $0.90/lb.

Net debt stood at $1.1-billion, down 9.5% over the same period last year.

Hudbay’s TSX-listed stock jumped 8.5% in the last few minutes of trading before settling down 2.6% at C$5.63 apiece at market close.