Highlights
- First quarter operating cash flow of $59.1 million(1)
- First quarter net earnings of $23.6 million, or $0.15 per share
- Revenues of $240.3 million
- Announced new NI 43-101 mineral resource for Fenix nickel project
- Total cash of $910.0 million and working capital of $950.8 million at end of quarter
(1)
Operating cash flow is considered a non-GAAP measure. See "Non-GAAP
Performance Measures" in our Management's Discussion and Analysis for
the quarter ended March 31, 2010.
TORONTO, ONTARIO, May 4, 2010 (Marketwire via COMTEX News
Network) -- HudBay Minerals Inc. ("HudBay", the "company") (TSX:HBM) net
earnings in the first quarter of 2010 were $23.6 million, or $0.15 per
share compared with a loss of $4.0 million or $0.03 per share in the
first quarter of 2009. Cash provided by operating activities (before
changes in working capital) in the first quarter of 2010 was $59.1
million, versus $14.0 million in the same period last year.
Earnings
in the first quarter of 2010 were positively impacted by higher metals
prices and reduced general and administrative expenses, partially offset
by the strong performance of the Canadian dollar, higher depreciation
expense and a higher tax rate on earnings. Cash costs per pound of zinc
sold, net of by-product credits, were negative US$0.28 per pound,
compared to positive US$0.32 per pound in the first quarter of
2009. This decrease in cash costs per pound of zinc sold was primarily
due to higher by-product copper credits arising mainly from higher
copper prices, offset in part by the stronger Canadian dollar. Overall
we remain on track to meet our full year production guidance for 2010.
During
the quarter, we repurchased a total of 1,748,100 of our shares at a
cost of $23.1 million as part of the normal course issuer bid announced
on September 29, 2009.
"The continuing strong performance of our
operating assets in northern Manitoba, combined with an improved price
environment for all metals, yielded strong results during the first
quarter," said W. Warren Holmes, executive vice chairman and interim
chief executive officer. "During the quarter HudBay continued investment
at the Lalor project, announced a new improved-grade resource for the
Fenix nickel project and continued to prepare the Chisel North mine and
Snow Lake concentrator for full production
beginning in the second quarter."
Lalor Project Update
Our
Lalor project continues to advance on an expedited basis. The
development of the main access ramp encountered minor delays due to
water inflows. At the end of the quarter the access ramp had advanced
320 metres. The pilot hole for the production shaft has been completed
along with a wedge hole to explore the crusher, load out and other
infrastructure zones adjacent to the main shaft area. Drilling results
indicate the ground and rock conditions at the proposed site for the
shaft are competent and drilling is planned for a pilot hole for the
main air exhaust raise. Design of the access road to site has been
completed with contractor selection expected in early May and
construction work to commence shortly afterwards. We have also received
the advanced exploration permits required at Lalor.
Currently six
drills
are operating at Lalor. One drill is conducting in-fill drilling on the
gold zones and two drills are concentrating efforts on the copper-gold
zone. Results will be disclosed as they are compiled and evaluated.
Other drilling efforts are focused on regional exploration in areas
proximate to Lalor, drilling the test pilot hole for an auxiliary
ventilation raise at Lalor as described above, drilling short holes
characterizing the rock in the immediate vicinity of the Lalor project
for civil and geotechnical characteristics and suitability for surface
infrastructure, and testing regional exploration anomalies south east of
the Snow Lake camp.
Fenix Project Update
On March 31,
2010, we announced a new NI 43-101 compliant mineral resource estimate
for our Fenix project in eastern Guatemala. Measured and Indicated
resources are 36.19 million tonnes of 1.92% nickel contained in
saprolite.
This new resource estimate replaces the previously
reported Proven and Probable reserves, as contained in the technical
report on Fenix filed in November 2008. We expect this resource will be
converted into a reserve with the completion of the updated feasibility
study for Fenix scheduled for the third quarter of 2010.
The
saprolite resource for the areas outside of the immediate project area,
which offer potential exploration upside and opportunity for life of
mine expansion, are currently being recalculated and they will also be
included with the updated feasibility study.
In parallel with the work that has been ongoing to update the resource estimates:
-- We are in the midst of a 7,000 meter diamond drill program at the Fenix
project which we expect to complete in the second half of 2010. With
four drills operating, the program is concentrated on proposed mining
areas 212 and 213, which are located closest to the plant where previous
mining by Inco had occurred and where little to no diamond drilling was
conducted;
-- We have been advancing a revised power strategy for Fenix;
-- We have engaged Hatch Engineering and Golder Associates to update the
prior feasibility study incorporating the new resource estimate and
results are expected in the third quarter of 2010; and
-- We are continuing to evaluate financing alternatives for Fenix.
We expect that the various initiatives underway will help us
reach a decision on restarting construction on the Fenix project later
in 2010.
Financial Highlights
----------------------------------------------------------------------------
($000s except per share amounts) Three Months Ended Mar.31
------------------------------------
2010 2009
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Revenue 240,320 161,784
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Earnings (loss) before tax 52,365 (5,280)
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Net earnings (loss) 23,559 (3,958)
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EBITDA(1),(2) 83,444 15,493
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Operating cash flow(1),(3) 59,071 13,972
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Basic and diluted EPS(4) 0.15 (0.03)
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Cash cost per pound of zinc sold (US$0.28) US$0.32
----------------------------------------------------------------------------
Cash and cash equivalents 909,993 886,814
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Total assets 2,038,002 2,032,267
----------------------------------------------------------------------------
(1) EBITDA and operating cash flow before changes in non-cash working
capital are considered non-GAAP measures. See "Non-GAAP Performance
Measures" in our Management's Discussion and Analysis for the quarter
ending March 31, 2010.
(2) EBITDA represents earnings before interest expense, taxes, depreciation
and amortization, gain/loss on derivative instruments, exploration and
interest and other income.
(3) Before changes in non-cash working capital.
(4) Earnings per share.
Production and Sales
Mine production in the first
quarter was 520,988 tonnes of ore, compared to 610,395 tonnes for the
same quarter in 2009. The lower production was primarily due to the
suspension of operations at the Chisel North mine. Copper and silver
metal production declined as a result of reduced purchased concentrate
volumes.
For the first quarter of 2010, our cash cost per pound
of zinc sold was negative US$0.28, a net decrease of US$0.60 from the
same period in 2009. The decrease in cost per pound was due primarily to
higher by-product copper credits arising from higher prices and
volumes, together with reduced general and administrative expense, as
2009 included costs related to the Lundin transaction, shareholder
litigation, proxy solicitation and severance.
----------------------------------------------------------------------------
Three Months Ended Mar.31
----------------------------------
2010 2009
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Production (HBMS contained metal in
concentrate)
----------------------------------------------------------------------------
Zinc tonnes 15,142 19,890
----------------------------------------------------------------------------
Copper tonnes 11,717 12,859
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Gold troy oz. 20,010 21,358
----------------------------------------------------------------------------
Silver troy oz. 192,985 247,416
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Production
----------------------------------------------------------------------------
Zinc tonnes 27,011 25,640
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Copper tonnes 11,725 16,239
----------------------------------------------------------------------------
Gold troy oz. 20,764 21,262
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Silver troy oz. 209,360 564,875
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Metal Sold
----------------------------------------------------------------------------
Zinc tonnes 29,766 26,949
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Copper tonnes 15,881 16,191
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Gold troy oz. 27,507 28,624
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Silver troy oz. 456,704 606,031
----------------------------------------------------------------------------
Revenues
Total revenue for the first quarter was $240.3
million; $78.5 million higher than the same quarter last year. These
variances are due to the following:
----------------------------------------------------------------------------
Three Months Ended
(in $ millions) Mar. 31, 2010
----------------------------------------------------------------------------
Metal prices
Higher zinc prices 31.4
Higher copper prices 59.5
Higher gold prices 6.5
Sales volumes
Higher zinc sales volumes 9.0
Lower copper sales volumes (2.3)
Other
Unfavorable change in foreign exchange (26.5)
Lower Balmat concentrate sales 0.9
----------------------------------------------------------------------------
Increase in net revenues in 2010 compared to 2009 78.5
----------------------------------------------------------------------------
Realized prices
----------------------------------------------------------------------------
Realized prices(1) for quarter
LME ended
------------------------------------------------
Q1 Mar. 31 Mar. 31
------------------------------------------------
2010(2) 2010 2009
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Prices in US$
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Zinc US$/lb. 1.04 1.08 0.56
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Copper US$/lb. 3.28 3.29 1.69
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Gold US$/troy oz. 1,109 1,112 885
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Silver US$/troy oz. 16.92 16.86 12.40
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Prices in C$
----------------------------------------------------------------------------
Zinc C$/lb. 1.08 1.13 0.70
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Copper C$/lb. 3.41 3.43 2.11
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Gold C$/troy oz. 1,154 1,155 1,117
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Silver C$/troy oz. 17.61 17.55 15.65
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Exchange rate US$1 to C$ 1.04 1.25
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(1) Realized prices are before refining and treatment charges and only on
the sale of finished metal.
(2) LME average for zinc, copper and gold prices, London Spot U.S.
equivalent for silver prices. HudBay's copper sales contracts are
primarily based on Comex copper prices.
Operating expenses
For the first quarter of 2010, our
operating expenses were $144.8 million, or $9.7 million higher than the
same quarter last year. These variances are due to the following:
----------------------------------------------------------------------------
Three Months Ended
(in $ millions) Mar. 31, 2010
----------------------------------------------------------------------------
Increased volumes of purchased zinc concentrate 4.4
Decreased volumes of purchased copper concentrate (21.8)
Suspension of Chisel North operations (3.5)
Changes in domestic inventory 25.8
Higher profit sharing 3.1
Other operating expenses 1.7
----------------------------------------------------------------------------
Increase in operating expenses in 2010 compared to 2009 9.7
----------------------------------------------------------------------------
Purchased copper concentrate volumes decreased due to the lack
of available concentrate on economic terms. During the first quarter, we
sold excess copper inventory that had accumulated in the fourth quarter
of 2009, resulting in copper sales which exceeded production and a
higher inventory charge in operating expenses compared to the first
quarter of 2009.
Please also see our consolidated financial
statements and related notes together with Management's Discussion and
Analysis of Operations and Financial Condition for the quarter ended
March 31, 2010, which are available under our profile on SEDAR at www.sedar.com and on our website at www.hudbayminerals.com.
Website Links
HudBay Minerals Inc.:
www.hudbayminerals.com
2010 First Quarter Management's Discussion and Analysis:
http://media3.marketwire.com/docs/hbmmdaQ110.pdf
2010
First Quarter Financial Statements:
http://media3.marketwire.com/docs/hbmfsQ110.pdf
Conference Call and Webcast
Date: Wednesday, May 5, 2010
Time: 10:00 a.m. (Eastern Time)
Webcast: www.hudbayminerals.com
Dial in: 416-644-3418 or 877-974-0446
Replay: 416-640-1917 or 877-289-8525
Replay Passcode: 4284150#
The conference call replay will be available until midnight
(Eastern Time) on May 12, 2010. 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.
(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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