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.
Highlights
- Positive operating cash flow (before changes in non-working capital) of $28.9 million(1);
- Revenues of $197.7 million;
- Cash and cash equivalents of $846.0 million;
- Strategic plan announced in June 2009; and
- Board approval received to file a normal course issuer bid for up to 9.0% of HudBay's common shares.
TORONTO, ONTARIO, Aug 6, 2009 (Marketwire via COMTEX News
Network) -- HudBay Minerals Inc. ("HudBay", "the company") (TSX:HBM)
today released its unaudited second quarter 2009 results. Net earnings
in the second quarter were $89.4 million compared with $33.2 million in
the second quarter of 2008. The higher earnings primarily reflect a gain
of $99.9 million arising from the disposition in May 2009 of HudBay's
shareholding in Lundin Mining Corporation ("Lundin Mining"). Partially
offsetting this gain was the impact of significantly lower realized
prices for copper and zinc in 2009 compared to the same quarter in 2008
and a foreign exchange loss of $14.7 million resulting from Canadian
dollar appreciation.
Operationally, strong production from
HudBay's 777 mine and overall solid operating cost performance offset
challenging mining conditions in the Trout Lake mine. HudBay has
also made significant progress strategically, outlining its strategic
plan
to grow the company in June 2009 and also announcing today a new
subscription, option and joint venture agreement with Aquila Resources
Inc. ("Aquila") to further explore and develop Aquila's Back Forty
project in Michigan. Financially, HudBay's cash position was
strengthened during the quarter by $235.7 million in proceeds from the
Lundin Mining disposition, leaving HudBay with a total of $846.0 million
in cash and cash equivalents and no debt, a strong base from which to
carry out HudBay's strategic plan.
HudBay's board of directors
has also approved a normal course issuer bid ("NCIB") on the Toronto
Stock Exchange which, subject to regulatory approval, would enable
HudBay to take advantage of opportunities that may arise from time to
time to acquire its own shares at attractive prices.
The NCIB is
expected to permit HudBay to acquire up to approximately 13.7 million
common shares or up to 9.0% of the total common shares outstanding of
HudBay during the 12 months following approval of the filing by the
Toronto Stock Exchange. The filing of the NCIB does not commit HudBay to
repurchase a fixed number of its common shares; rather, HudBay intends
to utilize the NCIB opportunistically to repurchase shares from time to
time. HudBay's management and board remain committed to pursuing growth
organically and through acquisitions, as outlined in the company's
strategic plan.
"During the past quarter we made good progress in
all aspect of our business," said Peter R. Jones, HudBay's chief
executive officer. "Our management and board transition is complete, and
we are focused on executing the initiatives set out in our strategic
plan. HudBay is well positioned to grow organically through the Lalor
and Fenix projects and our growth profile has been
enhanced with the acquisition of the joint venture opportunity with
Aquila."
Financial Highlights
----------------------------------------------------------------------------
($000s except per Three Months Ended June 30 Six Months Ended June 30
share amounts) --------------------------------------------------------
2009 2008 2009 2008
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Revenue 197,657 284,035 359,441 555,672
----------------------------------------------------------------------------
Earnings before tax 104,705 64,542 99,425 111,139
----------------------------------------------------------------------------
Net earnings 89,415 33,202 85,457 54,754
----------------------------------------------------------------------------
EBITDA(1),(2) 28,598 86,351 44,091 157,316
----------------------------------------------------------------------------
Operating cash
flow(1),(3) 28,865 70,721 42,837 141,372
----------------------------------------------------------------------------
Basic earnings
per share 0.58 0.26 0.56 0.43
----------------------------------------------------------------------------
Cash, cash
equivalents and
short-term
investments(4) 845,956 728,986 845,956 728,986
----------------------------------------------------------------------------
Total assets(4) 1,972,198 1,562,927 1,972,198 1,562,927
----------------------------------------------------------------------------
(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 second 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) At June 30
Flin Flon Copper Smelter Anticipated Closure
On June 18, 2009,
HudBay announced that we expect to close our Flin Flon copper smelter
before July 1, 2010, and the White Pine Copper Refinery ("WPCR") shortly
thereafter. The impact on HudBay's ongoing financial results is
expected to be minimal, as the processing costs from the sale of
concentrates are expected to be similar to existing costs. Further, the
smelter is part of an integrated complex and reclamation costs, which
have been fully accounted for on the company's balance sheet, will occur
only when the entire Flin Flon metallurgical complex ultimately shuts
down. HudBay anticipates employee reductions as a result of the closure
to be approximately 225 in Flin Flon and 65 at the WPCR, and has accrued
a severance provision of approximately $6.1 million in June 2009
corresponding with the estimated contractual
obligations upon severance. Actual severance costs may vary
significantly from this amount depending on the implementation of
employee reductions. In addition, the carrying values of the smelter and
copper refinery at June 30, 2009 were $29.3 million and $20.1 million
respectively; HudBay has increased the rates of depreciation so that
these carrying values, net of salvage values, are fully depreciated by
the respective closure dates.
Disposition of Lundin Mining Shares
On
May 26, 2009, HudBay completed the previously announced sale of its
16.7 per cent stake in Lundin Mining to GMP Securities L.P., for cash
proceeds of approximately $235.7 million, representing a gain of
approximately $99.9 million.
Financial and Operating Results
Net Earnings
For
the second quarter of 2009, HudBay recorded net earnings of $89.4
million, reflecting a $56.2 million
increase from the second quarter of 2008. The principal reason for the
increase was a gain of $99.9 million on the disposition of our interest
in Lundin Mining. Other significant variances affecting net earnings
were:
- Lower revenues decreased earnings before tax by $86.4 million;
- Lower operating costs increased earnings before tax by $42.9 million;
- Changes in foreign exchange gains and losses decreased earnings before tax by $14.9 million;
-
Reduced tax expense in the second quarter of 2009, as a result of
reduced operating income and other factors, increased net earnings by
$16.1 million.
Year-to-date 2009 net earnings of $85.5 million
reflected a $30.7 million increase from year-to-date 2008. Significant
variances were:
- Lower revenues decreased earnings before tax by $196.2 million;
- Lower operating costs increased earnings
before tax by $93.7 million;
- Changes in foreign exchange gains and losses decreased earnings before tax by $11.0 million;
-
Decreases in other expenses increased earnings before tax by $2.3
million, mainly due to decreases in depreciation and amortization of
$2.8 million and decreases in stock-based compensation of $4.8 million,
partially offset by increases in general and administrative expense of
$4.9 million, which related to merger and acquisition activity,
severance and other corporate activities;
- Other items increased
earnings before tax by $99.5 million, including the Lundin Mining
disposition gain of $99.9 million, decreases in interest and other
income of $11.5 million and decreases in exploration expenses of $9.9
million; and
- Reduced tax expense in 2009, as a result of reduced operating income and other factors, increased net earnings by $42.4
million.
Operations
Production is on track to meet overall
2009 targets, although zinc production from HudBay sources is expected
to be at the lower end of the previously announced guidance of 75,000 -
90,000 tonnes in 2009. Mine production for the second quarter was
576,779 tonnes of ore, compared to 767,005 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 3.46%, and for copper was 2.08%, as compared to 5.49% for zinc
and 1.72% for copper for the same quarter in 2008. Lower production from
Balmat and Chisel North negatively impacted average zinc grades and
positively impacted average copper grades.
In line with the
reduced mine output, second quarter production from our zinc plant
decreased to 23,999 tonnes, compared to 26,436 tonnes in the
same quarter of 2008. Unit operating costs decreased by 5% to 31.3
cents/lb., reflecting lower costs for consumables and other cost
containment efforts.
Non-recycled copper production in the second
quarter was lower by 11% due primarily to lower availability of
economic purchased concentrate. The smelter's unit operating costs,
which exclude recycled production, decreased by 18% to 32.3 cents/lb. of
copper produced, the impact of lower production being more than offset
by the reduction in costs for heavy fuel oil.
Gold and silver production in the quarter decreased 15% and 6%, respectively, due mainly to lower head grades.
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 negative US$0.06/lb. compared to negative US$0.55/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 32 of HudBay's second quarter MD&A). The
increase was principally due to lower by-product copper credits arising
mainly from lower prices, offset in part by the benefit of a weaker
Canadian dollar.
Production and sales
----------------------------------------------------------------------------
Three Months Ended June 30 Six Months Ended June 30
--------------------------------------------------------
2009 2008 2009 2008
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Production
----------------------------------------------------------------------------
Zinc(1) tonnes 23,999 33,672 49,639 68,382
----------------------------------------------------------------------------
Copper(2) tonnes 15,521 17,384 31,760 36,656
----------------------------------------------------------------------------
Gold(2) troy oz. 24,333 28,506 45,595 51,505
----------------------------------------------------------------------------
Silver(2) troy oz. 490,966 524,608 1,055,841 961,521
----------------------------------------------------------------------------
Metal Sold
----------------------------------------------------------------------------
Zinc(3) tonnes 24,473 34,802 51,422 67,718
----------------------------------------------------------------------------
Copper tonnes 19,633 18,957 35,824 39,559
----------------------------------------------------------------------------
Gold troy oz. 24,397 30,311 53,021 50,119
----------------------------------------------------------------------------
Silver troy oz. 599,033 554,733 1,205,064 838,200
----------------------------------------------------------------------------
(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)
Revenue
Total revenue for the second quarter was $197.7
million, $86.4 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 $76.7 million and $23.1 million, respectively,
offset in part by a weaker Canadian dollar, which increased our
revenues denominated in US dollars by $41.8 million. Revenues were also
affected by lower Balmat concentrate sales volumes and lower gold sales
volumes.
Realized Metal Prices and Exchange Rate
----------------------------------------------------------------------------
HudBay Realized HudBay Realized
Prices(1) Prices(1)
Three Months Ended Six Months Ended
Q2 2009 Q2 2008 -------------------------------------
Average Average Jun 30 Jun 30 Jun 30 Jun 30
Prices(2) Prices(2) 2009 2008 2009 2008
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Prices in US$
----------------------------------------------------------------------------
Zinc US$/lb. 0.67 0.96 0.70 1.03 0.63 1.11
----------------------------------------------------------------------------
Copper US$/lb. 2.12 3.83 2.22 3.79 1.98 3.64
----------------------------------------------------------------------------
Gold US$/troy oz. 922 896 919 925 901 891
----------------------------------------------------------------------------
Silver US$/troy oz. 13.73 17.17 13.55 17.75 12.97 17.04
----------------------------------------------------------------------------
Prices in C$
----------------------------------------------------------------------------
Zinc C$/lb. 0.78 0.97 0.82 1.04 0.76 1.12
----------------------------------------------------------------------------
Copper C$/lb. 2.47 3.87 2.60 3.82 2.38 3.66
----------------------------------------------------------------------------
Gold C$/troy oz. 1,076 905 1,077 937 1,099 899
----------------------------------------------------------------------------
Silver C$/troy oz. 16.03 17.35 15.85 18.00 15.75 17.22
----------------------------------------------------------------------------
Exchange
rate US$1 to C$ 1.17 1.01 1.17 1.01 1.21 1.01
----------------------------------------------------------------------------
(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.
Operating Expenses
For the second quarter of 2009, operating
expenses were $145.5 million, $42.9 million lower than the same quarter
last year. Operating costs declined mainly as a result of lower
purchased concentrate prices, 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 and the impact of weaker
metals prices and earnings performance on profit sharing and net profits
interest expenses. In addition, $6.1 million in costs were recorded in
the second quarter of 2009 associated with employee reductions arising
from the anticipated closure of the Flin Flon copper smelter and WPCR in
2010.
Website Links
HudBay Minerals Inc.:
www.hudbayminerals.com
Management's Discussion and Analysis:
http://media3.marketwire.com/docs/hbmmdaQ209.pdf
Financial Statements:
http://media3.marketwire.com/docs/hbmifsQ209.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 second quarter results
on Friday, August 7, 2009.
Second Quarter 2009 Results Conference Call and Webcast:
Date: Friday, August 7, 2009
Time: 10:00 a.m. (Eastern Time)
Webcast: www.hudbayminerals.com
Dial in: 416-644-3425 or 800-595-8550
Replay: 416-640-1917 or 877-289-8525
Replay Passcode: 21310832#
The conference call replay will be available until midnight (Eastern
Time) on August 14, 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.
(HBM-F)
SOURCE: HudBay Minerals Inc.
HudBay Minerals Inc.
John Vincic, Vice President,
Investor Relations and Corporate Communications
(416) 362 0615
Email: john.vincic@hudbayminerals.com
Website: www.hudbayminerals.com
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