For a full explanation of results, the unaudited interim
Consolidated Financial Statements, Management's Discussion and Analysis,
and mine statistics, please visit the company's website,
www.hudbayminerals.com.
TORONTO, ONTARIO, May 5, 2009 (Marketwire via COMTEX News Network) -- Highlights
- Positive operating cash flow (before changes in non-working capital) of $14.0 million(1);
- Revenues of $161.8 million;
- Cash and cash equivalents of $609.8 million; and
- Continuing positive drilling results from the Lalor deposit near Snow Lake, Manitoba.
HudBay
Minerals Inc. ("HudBay", "the company") (TSX:HBM) today released its
unaudited first quarter 2009 results. Net earnings in the first quarter
were a loss of $4.0 million compared with $21.6 million of earnings in
the first quarter of 2008. The lower earnings primarily reflect
significantly lower realized prices for copper and zinc in 2009 compared
to the same quarter in 2008, offset in part by reduced operating costs.
Operationally, HudBay continued to deliver solid results, with
consistent mine production
and continuing positive results from exploration drilling of the gold
zones
at the company's 100%-owned Lalor zinc deposit.
"I am pleased
with HudBay's operational performance during the first quarter," said
Peter R. Jones, HudBay's chief executive officer. "HudBay can weather a
prolonged period of weak base metals prices and can advance growth to
allow the company to thrive when better economic conditions return. I am
also pleased with the continuing excellent precious metal intersections
at Lalor, which continues to be a key opportunity for organic growth."
Financial Highlights
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Three Months Ended
($000s except per share amounts) March 31
----------------------
2009 2008
----------------------------------------------------------------------------
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Revenue 161,784 271,637
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(Loss) earnings before tax (5,280) 46,597
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Net (loss) earnings (3,958) 21,552
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EBITDA (1)(2) 15,493 70,965
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Operating cash flow (1)(3) 13,972 70,651
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Basic EPS (4) (0.03) 0.17
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Cash, cash equivalents and short-term investments (5) 609,829 781,048
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Total assets (5) 1,940,577 1,576,209
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(1) EBITDA and operating cash flow before changes in non-cash working
capital are non-GAAP measures and may not be comparable to similar data
presented by other mining companies. See "Non-GAAP Measures" in our
Management's Discussion and Analysis for the first quarter of 2009
(2) EBITDA represents earnings before interest, taxes, depreciation and
amortization, loss on derivative instruments, exploration, and interest
and other income
(3) Operating cash flow before changes in non-cash working capital
(4) (Loss) earnings per share
(5) At March 31
HudBay's reported cash and cash equivalents declined from $704.7
million at December 31, 2008 to $609.8 million at March 31, 2009. The
decrease of $94.8 million in cash and cash equivalents during the first
quarter included several factors that we do not expect to recur in the
current economic environment. HudBay reclassified cash and cash
equivalents of $52.3 million to restricted cash in order to support
letters of credit that were previously supported by the company's credit
facility, which expired on February 27, 2009. HudBay expects to
establish a replacement credit facility once credit market conditions
are more favourable for borrowers generally. HudBay also paid $22.4
million during the quarter for 2008 taxes and recorded $4.8 million
related to the Lundin transaction, shareholder litigation, proxy
solicitation, and other merger and acquisition related activities, as
well as approximately $2.8 million for severance.
As a result of
continuing positive drilling results on its 100% owned Lalor deposit in
the Flin Flon Greenstone Belt, HudBay intends to spend an additional
$6.1 million for exploration and definition drilling on the Lalor
deposit in 2009, in addition to the $6.9 million originally projected in
HudBay's MD&A for the year ended December 31, 2008. Capitalized
exploration on the Lalor deposit was $3.1 million in the quarter.
Financial and Operating Results
Net Earnings
For
the first quarter of 2009, HudBay recorded a net loss of $4.0 million,
reflecting a $25.6 million decrease from the first quarter of 2008.
Significant variances affecting net earnings were:
- Lower revenues decreased earnings before tax by $109.9 million;
- Lower operating costs increased earnings before tax by $51.6 million;
- Changes in foreign exchange gains and losses increased earnings before tax by $3.9 million;
-
Decreases in other expenses increased earnings before tax by $2.0
million, mainly due to decreases in depreciation and amortization of
$3.2 million and decreases in stock-based compensation of $2.3 million,
partially offset by increases in general and administrative expense of
$3.3 million, which related to merger and acquisition activity,
severance and other corporate activities;
- Other items increased
earnings before tax by $0.3 million, including decreases in interest
and other income of $5.8 million and decreases in exploration expenses
of $5.0 million; and
- Tax benefits in the first quarter of 2009,
as compared to tax expenses in the first quarter of 2008, increased net
earnings by $26.4 million.
Operations
Production is on
track to meet overall
2009 targets. Mine production for the quarter was 610,395 tonnes of ore,
compared to 751,382 tonnes for the same quarter in 2008 due to the
lower production from the Chisel North and Balmat mines resulting from
the suspension of both operations. Ore grade for zinc was 3.79%, and for
copper was 2.28%, as compared to 4.89% for zinc and 1.89% for copper
for the same quarter in 2008. Lower production from Balmat and Chisel
North negatively impacted average zinc grades.
In line with the
reduced mine output, production from our zinc plant decreased to 25,640
tonnes, compared to 27,695 tonnes in the same quarter of 2008. Unit
operating costs decreased by 4% to 31.0 cents/lb., reflecting lower
costs for operating and maintenance materials.
Non-recycled
copper production was lower by 16% due primarily to lower availability
of economic purchased concentrate. The smelter's unit
operating costs, which exclude recycled production, decreased by 2% to
34.9 cents/lb. of copper produced, the impact of lower production being
more than offset by the reduction in costs for heavy fuel oil.
Gold
production decreased 8% due to lower volumes of concentrates and lower
head grades. Silver production increased by 29%, primarily from a
specific purchased concentrate source.
For the quarter, our cash cost per pound of zinc sold, net of
by-product credits from copper, precious metals, zinc oxide and other
associated revenue, was US$0.32/lb. compared to negative US$0.13/lb. in
the same quarter of last year, excluding costs and sales related to
Balmat and HMI Nickel (refer to "Non-GAAP Measures" on page 31 of
HudBay's first quarter MD&A). The increase was principally due to
lower by-product copper credits arising mainly from lower volumes and
prices, offset in
part by the benefit of a weaker Canadian dollar.
As noted above,
economic conditions prompted us to evaluate our operations and assets,
which resulted in our decision to suspend certain operations. Management
has concluded that the values of our operational assets continue to
support their recorded amounts.
Production and sales
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Three Months Ended March 31
---------------------------
2009 2008
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Production
----------------------------------------------------------------------------
Zinc (1) tonnes 25,640 34,710
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Copper (2) tonnes 16,239 19,272
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Gold (2) troy oz. 21,262 22,999
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Silver (2) troy oz. 564,875 436,913
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Metal Sold
----------------------------------------------------------------------------
Zinc (3) tonnes 26,949 32,916
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Copper tonnes 16,191 20,602
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Gold troy oz. 28,624 19,808
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Silver troy oz. 606,031 283,467
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(1) Production includes Balmat payable metal in concentrate shipped
(2) Production excludes recycled spent anode and represents non-recycled
anode production only
(3) Zinc sales include sales to our Zochem facility and the Balmat payable
metal in concentrate shipped (including to Hudson Bay Mining And
Smelting Co., Limited, "HBMS")
Revenue
Total revenue for the first quarter was $161.8
million, $109.9 million lower than for the same quarter last year. The
decline in revenues was mainly due to lower copper and zinc prices,
which reduced revenues by $102.8 million and $45.6 million,
respectively, offset in part by a weaker Canadian dollar, which
increased our revenues denominated in US dollars by $61.7 million.
Revenues were also affected by lower copper and Balmat concentrate sales
volumes and higher gold sales volumes.
Operating Expenses
For
the first quarter of 2009, operating expenses were $135.1 million,
$51.6 million lower than for the same quarter last year. Operating costs
declined mainly as a result of lower purchased concentrate prices, as
well as a reduction in purchased concentrate volumes, net of the
offsetting impact of a weaker Canadian dollar. Operating costs also
declined as a result of the suspension of operations at the Balmat mine,
the impact of weaker metals prices and earnings performance on profit
sharing and net profits interest expenses.
Realized Metal Prices and Exchange Rate
----------------------------------------------------------------------------
HudBay Realized Prices (1)
Three Months Ended
Q1 2009 Q1 2008 --------------------------
Average Average Mar 31 Mar 31
Prices (2) Prices (2) 2009 2008
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Prices in US$
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Zinc US$/lb. 0.53 1.10 0.56 1.18
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Copper US$/lb. 1.56 3.54 1.69 3.50
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Gold US$/troy oz. 909 927 885 840
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Silver US$/troy oz. 12.61 17.68 12.40 15.65
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Prices in C$
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Zinc C$/lb. 0.66 1.11 0.70 1.19
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Copper C$/lb. 1.94 3.55 2.11 3.51
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Gold C$/troy oz. 1,132 931 1,117 843
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Silver C$/troy oz. 15.70 17.75 15.65 15.70
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Exchange rate US$1 to C$ 1.25 1.00 1.25 1.00
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(1) Realized prices are before refining and treatment charges and only on
the sale of finished metal, excluding metal in concentrates
(2) London Metals Exchange ("LME") average for zinc, copper and gold prices,
London Spot US equivalent for silver prices. HudBay's copper sales
contracts are primarily based on Comex copper prices
Website Links
HudBay Minerals Inc.:
www.hudbayminerals.com
Management's Discussion and Analysis:
http://media3.marketwire.com/docs/HBMMDA0505.pdf
Financial Statements:
http://media3.marketwire.com/docs/HBMQ10505.pdf
Conference Call and Webcast
Peter
R. Jones, chief executive officer, Michael D. Winship, president and
chief operating officer, and David S. Bryson, senior vice president and
chief financial officer, will host a conference call to discuss the
company's first quarter results on Wednesday, May 6, 2009. First Quarter
2009 Results Conference Call and Webcast:
Date: Wednesday, May 6, 2009
Time: 10:00 a.m. (Eastern Time)
Webcast: www.hudbayminerals.com
Dial in: 416-644-3431 or 800-814-4862
Replay: 416-640-1917 or 877-289-8525
Replay Passcode: 21305161#
The conference call replay will be available until midnight (Eastern
Time) on May 20, 2009. An archived audio webcast of the call also will
be available on HudBay's website.
HudBay Minerals Inc.: Strength to Build the Future
HudBay
Minerals Inc. (TSX:HBM) is a Canadian integrated mining company with
assets in North and Central America principally focused on the
discovery, production and marketing of base metals. The company's
objective is to maximize shareholder value through efficient operations,
organic growth and accretive acquisitions, while maintaining its
financial strength. A member of the S&P/TSX Composite Index and the
S&P/TSX Global Mining Index, HudBay is committed to high standards
of corporate governance and sustainability.
Forward Looking Information
This
news release and its attachments contain "forward-looking information"
within the meaning of applicable securities laws. Forward looking
information includes but is not limited to information concerning the
potential impact of changing economic conditions on HudBay's financial
results, potential plans for the Lalor project, HudBay's exploration and
development plans, and its strategies and future prospects. Generally,
forward-looking information can be identified by the use of
forward-looking terminology such as "plans", "expects", or "does not
expect", "is expected", "budget", "scheduled", "estimates", "forecasts",
"intends", "anticipates", "understands" or "does not anticipate", or
"believes" or variations of such words and phrases or statements that
certain actions, events or results "will", "may", "could", "would",
"might", or "will be taken", "occur", or "be achieved". Forward-looking
information is based on the views, opinions, intentions and
estimates of management at the date the information is made, and is
based on a number of assumptions and subject to a variety of risks and
uncertainties and other factors that could cause actual events or
results to differ materially from those anticipated or projected in the
forward-looking information (including the actions of other parties who
have agreed to do certain things and the approval of certain regulatory
bodies).
Many of these assumptions are based on factors and
events that are not within the control of HudBay and there is no
assurance they will prove to be correct. Factors that could cause actual
results or events to vary materially from results or events anticipated
by such forward-looking information include risks associated with the
mining industry such as economic factors (including future commodity
prices, currency fluctuations and energy prices), failure of
plant, equipment, processes and transportation services to operate as
anticipated, dependence on key personnel and employee relations,
environmental risks, government regulation, actual results of current
exploration activities, possible variations in ore grade or recovery
rates, permitting timelines, capital expenditures, reclamation
activities, land titles, and social and political developments and other
risks of the mining industry, as well as those risk factors discussed
in the company's Annual Information Form dated March 30, 2009, which
risks may cause actual results to differ materially from any
forward-looking statement.
Although HudBay has attempted to
identify important factors that could cause actual actions, events or
results to differ materially from those described in forward-looking
information, there may be other factors that cause actions, events or
results not to
be anticipated, estimated or intended. There can be no assurance that
forward-looking information will prove to be accurate, as actual results
and future events could differ materially from those anticipated in
such information. HudBay undertakes no obligation to update
forward-looking information if circumstances or management's estimates
or opinions should change except as required by applicable securities
laws, or to comment on analyses, expectations or statements made by
third parties in respect of HudBay, its financial or operating results
or its securities. The reader is cautioned not to place undue reliance
on forward-looking information.
This news release and the
information contained herein does not constitute an offer of securities
for sale in the United States and securities may not be offered or sold
in the United States absent registration or exemption from
registration.
(HBM-F)
SOURCE: HudBay Minerals Inc.
HudBay Minerals Inc.
Annemarie Brissenden
Manager, Investor Relations
(416) 362 0615
Email: annemarie.brissenden@hudbayminerals.com
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