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.
Q3 Highlights
- Positive operating cash flow (before changes in non-cash working capital) of $48.2 million(1);
- Net earnings of $20.0 million ($0.13 per share);
- Revenue of $194.6 million;
- Cash and cash equivalents of $880.3 million;
- Announced subscription, option and joint venture agreement with Aquila Resources Inc.;
- Announced discovery of new copper-gold zone at Lalor deposit;
- Normal course issuer bid approved by TSX;
- Subsequent to quarter end announced $85 commitment for Phase 1 development at Lalor deposit; and
- Subsequent to quarter end announced restart of operations at Chisel North mine.
TORONTO, ONTARIO, Nov 3, 2009 (Marketwire via COMTEX News
Network) -- HudBay Minerals Inc. ("HudBay", "the company") (TSX:HBM)
today reported quarterly net income of $20.0 million, or $0.13 per share
compared with net income of $2.8 million or $0.02 per share in the
third quarter of 2008. These results reflected reduced exploration
expense, higher gold prices and operating cost savings from the
suspension of operations at Balmat, which were more than offset by lower
copper prices and volumes. Earnings during the third quarter of 2008
were affected by an asset impairment charge of $27.2 million related to
Balmat and $3.9 million in equity losses related to HudBay's ownership
of Skye Resources. Cash provided by operating activities (before changes
in working capital) in the third quarter of 2009 was $48.2 million,
down from $54.5 million in 2008.
Operationally, HudBay's 777 mine
production and operating cost performance continued to improve over the
same period last year. Overall, unit operating costs decreased as
operations were suspended at Chisel North and Balmat. HudBay also
announced the commitment of an $85 million expenditure for Phase 1 of
the development of the Lalor deposit, in line with its strategic plan
announced in June 2009. The TSX also approved the company's filing of a
normal course issuer bid during the quarter.
"This quarter was
marked by our discovery of the new copper-gold zone and other
advancements at the Lalor deposit," said Peter R. Jones, HudBay's chief
executive officer. "Since then we have made a commitment to advance
Lalor on a fast track basis and we are focused on making Lalor our next
big mine."
"The decision to restart Chisel North in early 2010
will help optimize our zinc plant capacity in Flin Flon," added Mr.
Jones. "Combined with our development of Lalor, this will increase our
domestic supply of zinc concentrate and lessen our need to purchase
third-party zinc concentrate."
FINANCIAL HIGHLIGHTS
-------------------------------------------------------------------------
($000s except per share Three Months Ended Sept. Nine Months Ended Sept.
amounts) 30 30
------------------------------------------------
2009 2008 2009 2008
-------------------------------------------------------------------------
Revenue 194,608 247,441 554,049 803,113
-------------------------------------------------------------------------
Earnings before tax 32,811 33,898 132,236 145,037
-------------------------------------------------------------------------
Net earnings 19,975 2,780 105,432 57,534
-------------------------------------------------------------------------
EBITDA(1,2) 59,065 88,633 103,156 245,949
-------------------------------------------------------------------------
Operating cash flow(1,3) 48,214 54,484 91,051 195,856
-------------------------------------------------------------------------
Basic EPS 0.13 0.02 0.69 0.44
-------------------------------------------------------------------------
Cash, cash equivalents
and short-term
investments 880,292 844,384 880,292 844,384
-------------------------------------------------------------------------
Total assets 2,000,776 1,918,353 2,000,776 1,918,353
-------------------------------------------------------------------------
(1) EBITDA, operating cash flow before changes in non-cash working
capital, operating cash flow per share, and cash cost per pound of
zinc sold are considered non-GAAP measures (refer to "Non-GAAP
Measures" on page 31 of our Management's Discussion and Analysis
("MD&A) for the third quarter of 2009 ). For EBITDA refer to page 17
of our MD&A. For the reconciliation of operating cash flow before
changes in non-cash working capital and operating cash flow per share,
refer to page 19 of our MD&A. For the reconciliation of cash cost per
pound of zinc sold, net of by-product credits, refer to page 32 of
our MD&A.
(2) EBITDA represents earnings before interest, taxes, depreciation and
amortization, gain/loss on derivative instruments, exploration and
interest and other income.
(3) Before changes in non-cash working capital.
Operations
Overall, production remains on track to meet our
2009 guidance, 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. Mine production in the third quarter was 551,329 tonnes
of ore, compared to 683,627 tonnes for the same quarter in 2008. The
lower production was due to the suspension of operations at the Chisel
North and Balmat mines.
Production of cast zinc in the third
quarter was 1% lower than the same quarter in 2008. Operating costs per
pound of zinc metal produced were 3% lower. The lower production was the
result of insufficient concentrate available in 2009 to allow for full
production. Unit costs were lower during the third quarter of 2009 as a
result of lower consumable costs and other cost containment actions.
For
the quarter, our cash cost per
pound of zinc sold, net of by-product credits was negative US$0.16/lb.
compared to negative US$0.58/lb. in the third quarter of 2008, excluding
costs and sales related to Balmat and HMI Nickel (refer to "Non-GAAP
Measures" on page 32 of HudBay third 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 Nine Months
Ended Sept. 30 Ended Sept. 30
----------------------------------------------------
2009 2008 2009 2008
--------------------------------------------------------------------------
Production
--------------------------------------------------------------------------
Zinc tonnes 28,428 30,998 78,067 99,380
--------------------------------------------------------------------------
Copper tonnes 14,290 19,167 46,050 55,823
--------------------------------------------------------------------------
Gold troy oz. 22,988 26,920 68,583 78,425
--------------------------------------------------------------------------
Silver troy oz. 477,769 630,168 1,533,610 1,591,689
--------------------------------------------------------------------------
Metal Sold
--------------------------------------------------------------------------
Zinc tonnes 29,349 32,647 80,771 100,365
--------------------------------------------------------------------------
Copper tonnes 15,293 19,190 51,117 58,749
--------------------------------------------------------------------------
Gold troy oz. 21,900 20,632 74,921 70,751
--------------------------------------------------------------------------
Silver troy oz. 506,148 364,944 1,711,212 1,203,144
--------------------------------------------------------------------------
Highlights
Revenues of $194.6 million for the quarter and $554.0 million year-to-date
Revenues for the quarter:
-
represent a decrease of 2% over Q2 2009 (revenues were $197.7 in Q2
2009); and - represent a decrease of 21% over Q3 2008 (revenues
were $247.4 in Q3 2008).
Total revenue for the third quarter was
$194.6 million; $52.8 million lower than the same quarter last year.
Year-to-date revenue was $554.0 million; $249.1 million lower than 2008.
These variances are due to the following:
-----------------------------------------------------------------
Three Months Nine Months
Ended Ended
(in $ millions) Sep 30,2009 Sep 30,2009
-----------------------------------------------------------------
Metal prices
Lower zinc prices (3.1) (69.5)
Lower copper prices (29.7) (204.6)
Sales volumes
Lower copper sales volumes (25.9) (43.2)
Higher silver sales volumes 2.2 8.0
Higher gold sales volumes 2.1 4.5
-----------------------------------------------------------------
Other
Favorable foreign exchange 13.2 109.9
Lower Balmat concentrate sales (3.9) (20.5)
Disposal of CMMSA(1) (8.2) (21.1)
Other volume and pricing
differences 0.5 (12.6)
-----------------------------------------------------------------
Decrease in net revenues in 2009
compared to 2008 (52.8) (249.1)
-----------------------------------------------------------------
(1) During 2009, we disposed of our 50% ownership in Considar Metal
Marketing SA Inc. ("CMMSA"). The transaction will not have a material
effect on our marketing activities.
Realized Prices decreased in the third quarter of 2009
--------------------------------------------------------------------------
HudBay Realized Prices (1)
Three Months Nine Months
Ended Ended
Average market --------------------------------
price(2), Q3 Sep 30 Sep 30 Sep 30 Sep 30
2009 2008 2009 2008 2009 2008
--------------------------------------------------------------------------
Prices in US$
Zinc (3) US$/lb. 0.80 0.80 0.83 0.87 0.70 1.02
Copper (3) US$/lb. 2.66 3.48 2.74 3.38 2.21 3.55
Gold US$/troy oz. 960 870 955 862 917 883
Silver US$/troy oz. 14.70 15.03 14.51 13.36 13.43 15.93
Prices in C$
Zinc (3) C$/lb. 0.88 0.84 0.91 0.91 0.81 1.04
Copper (3) C$/lb. 2.92 3.63 3.01 3.51 2.57 3.61
Gold C$/troy oz. 1,054 906 1,046 892 1,083 897
Silver C$/troy oz. 16.13 15.66 15.93 13.70 15.80 16.15
Exchange rate US$1 to C$ 1.10 1.04 1.10 1.04 1.17 1.02
--------------------------------------------------------------------------
(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.
(3) The realized components of our metal swap cash flow hedges resulted
in a gain of US$0.01/lb. for zinc and a gain of US$0.02/lb. for copper
during the third quarter of 2009. Refer to "Base Metal Price Strategic
Risk Management" on page 21 of our MD&A.
For the third quarter of 2009, our operating expenses were $119.3
million; $35.5 million lower than the same quarter last year.
Year-to-date operating expenses were $399.9 million, $130.1 million
lower than in 2008. These variances are due to the following:
--------------------------------------------------------------------------
Three Months Nine Months
Ended Ended
(in $ millions) Sep 30,2009 Sep 30,2009
--------------------------------------------------------------------------
Increased volumes of purchased zinc concentrate 11.5 27.4
Increased cost of concentrate due to
unfavorable exchange rate 3.5 29.9
Care & maintenance costs for Chisel North,
Balmat & HMI Nickel 2.4 12.9
Accrual for termination costs due to closure of
refinery - 6.1
Higher (lower) net profits interest 2.1 (2.1)
Reduced cost and volumes of purchased copper
concentrate (29.8) (92.8)
Suspension of Balmat operations (9.4) (31.9)
Suspension of Chisel North operations (7.7) (17.4)
Disposal of interest in CMMSA (7.4) (18.8)
Lower production volumes and lower input costs
in metallurgical plants (4.0) (16.4)
Lower profit sharing (2.1) (11.0)
Reduced price for purchased zinc concentrate - (7.6)
Other operating expenses and changes in
volumes 5.4 (8.4)
--------------------------------------------------------------------------
Decrease in operating expenses in 2009 compared
to 2008 (35.5) (130.1)
--------------------------------------------------------------------------
Website Links
HudBay Minerals Inc.: www.hudbayminerals.com
Management's Discussion and Analysis: http://media3.marketwire.com/docs/hbmmdaQ309.pdf
Financial Statements: http://media3.marketwire.com/docs/hbmifsQ309.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 third quarter results on Wednesday, November 4, 2009. Third
Quarter 2009 Results Conference Call and Webcast:
Date: Wednesday, November 4, 2009
Time: 10:00 a.m. (Eastern Time)
Webcast: www.hudbayminerals.com
Dial in: 416-644-3422 or 800-732-1073
Replay: 416-640-1917 or 877-289-8525
Replay Passcode: 4176694#
The conference call replay will be available until midnight (Eastern
Time) on November 18, 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
john.vincic@hudbayminerals.com
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