Hudbay Minerals Inc. (“Hudbay” or the “company”) (TSX,
NYSE:HBM) today released its fourth quarter and full year
2022 financial results and annual production and cost guidance. All
amounts are in U.S. dollars, unless otherwise noted.
Fourth Quarter and Full Year Operating
and Financial Results
- Achieved 2022 consolidated production guidance for all metals
and consolidated cash cost and sustaining cash cost guidance.
- Full year consolidated copper production of 104,173 tonnes,
consolidated gold production of 219,700 ounces and consolidated
silver production of 3,161,294 increased by 5%, 13% and 4%,
respectively, in 2022 compared to 2021.
- The Peru operations delivered strong performance in the fourth
quarter with a 21% increase in copper production and a 64% increase
in gold production, compared to the third quarter of 2022, as
grades and recoveries improved. The fourth quarter of 2022 was a
record quarter for gold production in Peru. Peru's cash cost per
pound of copper produced, net of by-product creditsi, improved to
$1.34 in the fourth quarter, representing a 20% decline compared to
the third quarter of 2022.
- The Manitoba operations saw a 6% increase in Lalor’s ore
production in the fourth quarter compared to the third quarter of
2022, and the Lalor mine continues to ramp up following the
transition of Flin Flon employees to Snow Lake. Manitoba’s full
year gold cash cost per ounce of gold produced, net of by-product
creditsi, was 1% below the low end of the annual guidance
range.
- Full year consolidated cash cost and sustaining cash cost per
pound of copper produced, net of by-product creditsi, were $0.86
and $2.07, respectively, and similar to 2021 levels, despite
inflationary cost pressures which were offset by higher copper
production and higher by-product credits.
- Fourth quarter net loss and loss per share were $17.4 million
and $0.07, respectively. After adjusting for a non-cash loss of
$13.5 million related to a quarterly revaluation of the Flin Flon
environmental reclamation provision due to changes in real,
long-term risk-free discount rates, and an $8.0 million revaluation
loss related to the gold prepayment liability, among other items,
fourth quarter adjusted earningsi per share were $0.01.
- Operating cash flow before change in non-cash working capital
was $109.1 million and adjusted EBITDAi was $124.7 million in the
fourth quarter, an increase of 34% and 26%, respectively, over the
third quarter of 2022, benefiting from higher copper sales volumes
and higher molybdenum prices and sales volumes, but negatively
impacted by a temporary buildup of unsold inventory in Peru.
- Constancia continued to operate throughout nation-wide road
blockades in Peru in December, and while the company was successful
in completing two port shipments in December, inventory of
approximately 25,000 wet metric tonnes of copper concentrate in
Peru was unsold at the end of the quarter.
Executing on Growth Initiatives and
Disciplined Capital Allocation
- Successful completion of recent brownfield investment program
in 2022 with the Pampacancha satellite deposit contributing higher
grade feed to Constancia and the New Britannia mill operating at
targeted capacity.
- Invested approximately $80 million in 2022 to successfully
execute a new strategy at Copper World focused on project
de-risking. The pre-feasibility study for Phase I of Copper World
is well-advanced with the main facility engineering completed and
metallurgical test work being analyzed as part of the concentrate
leaching trade off evaluations.
- Reached a community exploration agreement in 2022 to access the
Maria Reyna and Caballito satellite properties located north of
Constancia in Peru. Completed the surface investigation work needed
to support drill permit applications.
- Initiated deep drilling at Lalor in January 2023 to test the
down-dip gold and copper extensions and potentially unlock further
value in Snow Lake.
- The Stall recovery improvement program is well-advanced and
remains on track for completion in early 2023 with higher gold and
copper recoveries expected to commence in the second quarter of
2023.
- Reinvigorated focus on free cash flow and delivered on
discretionary spending reduction targets by reducing 2022 growth
capital and exploration spending by approximately $30 million in
Arizona, Manitoba and Peru.
- Reduced 2023 discretionary spending by more than $50 million
primarily related to the deferral of the Copper World definitive
feasibility study and the pebble crusher in Peru.
- Repaid approximately 50% of the original gold prepayment
liability in 2022 and the company remains focused on reducing net
debt throughout 2023.
- Prudent approach to capital allocation demonstrated with the
introduction of three prerequisites for sanctioning Copper World,
including a prudent financing strategy with multi-faceted financial
targets focused on a minimum cash balance, a stated maximum
leverage, limited non-recourse project level debt and committed
financial partners.
“We delivered on our plan for higher copper
production in Peru and higher gold production in Manitoba in 2022,
as a result of the successful completion of approximately $250
million in brownfield investments,” said Peter Kukielski, President
and Chief Executive Officer. “We are proud to have achieved
consolidated production guidance as the team successfully managed
the regional logistics and supply chain challenges in Peru at the
end of the year and we benefitted from the ongoing optimization
efforts at our Snow Lake operations. Our focus for 2023 is to
generate free cash flow through continued increases in copper and
gold production and remain disciplined with capital allocation as
we de-risk the Copper World project in Arizona and unlock value
from our exciting pipeline of organic growth opportunities.”
2023 Annual Guidance and
Outlook
- Consolidated copper production is forecast to increase by 10%ii
to 114,000ii tonnes in 2023, compared to 2022, with higher grades
from the Pampacancha deposit in Peru.
- Consolidated gold production is forecast to increase by 30%ii
to 285,500ii ounces, compared to 2022, due to significantly higher
gold production in Peru and Manitoba.
- Consolidated copper and gold production is expected to further
increase in 2024, similar to the previously issued guidance, and
2025 copper and gold production is expected to benefit from an
extension of mining activities at Pampacancha into the first half
of 2025.
- Consolidated cash cost, net of by-product creditsi, in 2023 is
expected to decline by 30%ii and be within a range of $0.40 and
$0.80 per pound of copper as a result of higher copper production
and gold by-product credits.
- Approximately $65 million reduction in growth capital
expenditures and exploration spending is expected in 2023 compared
to 2022.
- Total capital expenditures are expected to decline by 13%
year-over-year to $300 million in 2023.
- Exploration expenditures are expected to decline by 61% in 2023
as activities are focused on areas with high potential for new
discovery and mineral reserve and resource expansion.
Summary of Fourth Quarter
Results
Consolidated copper production in the fourth
quarter of 2022 was 29,305 tonnes, an increase of 20% compared to
the third quarter of 2022, primarily due to higher copper grades in
Peru. Consolidated gold production in the fourth quarter of 2022
was 53,920 ounces, a slight increase from the third quarter of 2022
as higher gold grades in Peru partially offset lower Lalor gold
grades in Manitoba.
Consolidated cash cost per pound of copper
produced, net of by-product creditsi, was $1.08 in the fourth
quarter of 2022, compared to $0.58 in the third quarter of 2022.
This increase was a result of lower zinc and precious metal sales
volumes and continued inflationary cost pressures, partially offset
by higher copper production. Consolidated sustaining cash cost per
pound of copper produced, net of by-product creditsi, was $2.21 in
the fourth quarter of 2022 compared to $1.91 in the third quarter
of 2022. This increase was primarily due to the same reasons
outlined above and higher capitalized exploration, slightly offset
by lower sustaining capital expenditures. Consolidated all-in
sustaining cash cost per pound of copper produced, net of
by-product creditsi, was $2.41 in the fourth quarter of 2022,
higher than $2.16 in the third quarter of 2022, due to the same
reasons outlined above.
Cash generated from operating activities in the
fourth quarter of 2022 decreased to $86.4 million compared to
$172.5 million in the third quarter of 2022, primarily due to a
decrease in changes in non-cash working capital. Peru operations
were impacted by increasing social unrest following a change in
political leadership in December 2022, which resulted in
lower-than-planned grades in the fourth quarter. Constancia
continued to operate throughout these disruptions with the
continued strong support from the local communities and the
company’s local workforce. Operating cash flow before change in
non-cash working capital was $109.1 million during the fourth
quarter of 2022, reflecting an increase from $81.6 million in the
third quarter of 2022, primarily as a result of higher copper, gold
and molybdenum prices and higher copper sales volumes.
Net loss and loss per share in the fourth
quarter of 2022 were $17.4 million and $0.07, respectively,
compared to a net loss and loss per share of $8.1 million and
$0.03, respectively, in the third quarter of 2022. The 2022 fourth
quarter results were negatively impacted by a non-cash loss of
$13.5 million related to the quarterly revaluation of the Flin Flon
environmental reclamation provision due to changes in real,
long-term discount rates, an $8.0 million revaluation loss related
to the gold prepayment liability and a $5.8 million loss on changes
to other provisions. These costs were offset by a $2.4 million
Manitoba post-employment plan curtailment gain.
Adjusted net earningsi and adjusted net earnings
per sharei in the fourth quarter of 2022 were $2.6 million and
$0.01 per share, respectively, after adjusting for the non-cash
revaluation loss of the environmental reclamation provision and the
revaluation loss related to the gold prepayment liability, among
other items. This compares to adjusted net lossi and adjusted net
loss per sharei of $12.4 million, and $0.05 in the third quarter of
2022. Fourth quarter adjusted EBITDAi was $124.7 million, an
increase of 26% from $99.3 million in the third quarter of
2022.
As at December 31, 2022, the company’s liquidity
includes $225.7 million in cash as well as undrawn availability of
$354.3 million under its revolving credit facilities. Hudbay
expects that its current liquidity combined with cash flow from
operations, will be sufficient to meet the company’s liquidity
needs for the foreseeable future.
Summary of Full Year
Results
Hudbay achieved its 2022 consolidated production
guidance for all metals. However, production of copper and gold
was at the lower end of the guidance range primarily due to
lower-than-planned grades in the fourth quarter in Peru caused
by short-term mine plan changes that were implemented to mitigate
the risks associated with logistical and supply chain disruptions
in Peru.
Consolidated cash costs per pound of copper
produced, net of by-product creditsi, in 2022 was $0.86 compared to
$0.74 in 2021 and consolidated sustaining cash cost per pound of
copper produced, net of by-product creditsi, in 2022 remained
substantially unchanged from 2021 at $2.07. Both measures remained
in line with the 2022 guidance ranges.
Cash generated from operating activities
increased to $487.8 million in 2022 from $385.1 million in 2021.
A portion of the increase is due to changes in non-cash
working capital caused primarily by timing and changes in
provisionally priced receivables and changes to other financial
assets, liabilities and inventories. Operating cash flow before
changes in non‑cash working capital decreased to $391.7 million
from $483.9 million in 2021. The decrease is the result of lower
copper prices, lower zinc sales volumes and inflationary cost
pressures on mine operating costs, partially offset by higher zinc
prices and higher gold sales volumes. Zinc sales volumes were lower
than the prior year due to the planned closure of the company’s 777
mine in June 2022.
Net earnings and earnings per share for 2022
were $70.4 million and $0.27, respectively, compared to a net loss
and loss per share of $244.4 million and $0.93, respectively, in
2021. The prior period results were negatively impacted by a $193.5
million revaluation of the Flin Flon environmental reclamation
provision resulting in an impairment charge of the same amount as
well as a $66.7 million in mark-to-market loss mostly from $49.8
million of write-offs for a non-cash embedded derivative on the
early redemption option associated with the company’s extinguished
senior unsecured notes. Full year 2022 net earnings benefited from
a non-cash gain of $133.5 million related to the revaluation of the
Flin Flon environmental reclamation provision. The full year 2022
financial results were negatively impacted by a $95.0 million
pre-tax impairment loss related to certain specific capitalized
costs and assets associated with the previous stand-alone
development plan for the Rosemont deposit, which were determined to
no longer be recoverable.
Financial Condition ($000s) |
Dec. 31, 2022 |
Sep. 30, 2022 |
Dec. 31, 2021 |
Cash and
cash equivalents |
225,665 |
286,117 |
270,989 |
Total
long-term debt |
1,184,162 |
1,183,237 |
1,180,274 |
Net
debt1 |
958,497 |
897,120 |
909,285 |
Working
capital2 |
76,534 |
99,807 |
147,512 |
Total
assets |
4,325,943 |
4,287,794 |
4,616,231 |
Equity |
1,571,809 |
1,570,889 |
1,476,828 |
|
|
|
|
1 Net debt is a non-IFRS financial performance
measure with no standardized definition under IFRS. For further
information, please see the “Non-IFRS Financial Reporting Measures”
section of this news release.2 Working capital is determined as
total current assets less total current liabilities as defined
under IFRS and disclosed on the consolidated financial
statements.
Financial Performance |
|
Three Months Ended |
|
|
Dec. 31, 2022 |
Sep. 30, 2022 |
Dec. 31, 2021 |
Revenue |
$000s |
321,196 |
|
346,171 |
|
425,170 |
|
Cost of sales |
$000s |
251,520 |
|
313,741 |
|
343,426 |
|
(Loss) earnings before tax |
$000s |
(14,287 |
) |
(263 |
) |
(149 |
) |
Net (loss) earnings |
$000s |
(17,441 |
) |
(8,135 |
) |
(10,453 |
) |
Basic and diluted (loss) earnings per share |
$/share |
(0.07 |
) |
(0.03 |
) |
(0.04 |
) |
Adjusted earnings (loss) per share1 |
$/share |
0.01 |
|
(0.05 |
) |
0.13 |
|
Operating cash flow before change in non-cash working capital |
$ millions |
109.1 |
|
81.6 |
|
156.9 |
|
Adjusted EBITDA1 |
$ millions |
124.7 |
|
99.3 |
|
180.8 |
|
|
|
Year Ended |
|
|
Dec. 31, 2022 |
Dec. 31, 2021 |
Revenue |
$000s |
1,461,440 |
1,501,998 |
|
Cost of sales |
$000s |
1,184,552 |
1,370,979 |
|
Earnings (loss) before tax |
$000s |
95,815 |
(202,751 |
) |
Net earnings (loss) |
$000s |
70,382 |
(244,358 |
) |
Basic and diluted (loss) earnings per share |
$/share |
0.27 |
(0.93 |
) |
Adjusted earnings per share1 |
$/share |
0.10 |
0.09 |
|
Operating cash flow before change in non-cash working capital |
$ millions |
391.7 |
483.9 |
|
Adjusted EBITDA1 |
$ millions |
475.9 |
547.8 |
|
1 Adjusted earnings (loss) per share and adjusted EBITDA are
non-IFRS financial performance measures with no standardized
definition under IFRS. For further information, please see the
“Non-IFRS Financial Reporting Measures” section of this news
release. |
Consolidated Production and Cost Performance |
Three Months Ended |
|
|
Dec. 31, 2022 |
Sep. 30, 2022 |
Dec. 31, 2021 |
Contained metal in concentrate and doré
produced1 |
|
|
|
Copper |
tonnes |
29,305 |
24,498 |
28,198 |
Gold |
ounces |
53,920 |
53,179 |
64,159 |
Silver |
ounces |
795,015 |
717,069 |
899,713 |
Zinc |
tonnes |
6,326 |
9,750 |
23,207 |
Molybdenum |
tonnes |
344 |
437 |
275 |
Payable metal sold |
|
|
|
|
Copper |
tonnes |
25,415 |
24,799 |
24,959 |
Gold2 |
ounces |
47,256 |
66,932 |
56,927 |
Silver2 |
ounces |
559,306 |
816,416 |
638,640 |
Zinc3 |
tonnes |
8,230 |
12,714 |
21,112 |
Molybdenum |
tonnes |
421 |
511 |
245 |
Consolidated cash cost per pound of copper
produced4 |
|
|
Cash cost |
$/lb |
1.08 |
0.58 |
0.51 |
Sustaining cash cost |
$/lb |
2.21 |
1.91 |
1.95 |
All-in sustaining cash cost |
$/lb |
2.41 |
2.16 |
2.20 |
|
Year Ended |
|
|
Dec. 31, 2022 |
Dec. 31, 2021 |
Contained metal in concentrate and doré
produced1 |
|
|
Copper |
tonnes |
104,173 |
99,470 |
Gold |
ounces |
219,700 |
193,783 |
Silver |
ounces |
3,161,294 |
3,045,481 |
Zinc |
tonnes |
55,381 |
93,529 |
Molybdenum |
tonnes |
1,377 |
1,146 |
Payable metal sold |
|
|
|
Copper |
tonnes |
94,473 |
92,200 |
Gold2 |
ounces |
213,415 |
168,358 |
Silver2 |
ounces |
2,978,485 |
2,427,508 |
Zinc3 |
tonnes |
59,043 |
96,435 |
Molybdenum |
tonnes |
1,352 |
1,098 |
Consolidated cash cost per pound of copper
produced4 |
|
Cash cost |
$/lb |
0.86 |
0.74 |
Sustaining cash cost |
$/lb |
2.07 |
2.07 |
All-in sustaining cash cost |
$/lb |
2.26 |
2.30 |
|
|
|
|
1 Metal reported in concentrate is prior to
deductions associated with smelter contract terms.2 Includes total
payable gold and silver in concentrate and in doré sold.3 Includes
refined zinc metal sold and payable zinc in concentrate sold.4 Cash
cost, sustaining cash cost and all-in sustaining cash cost per
pound of copper produced, net of by-product credits, are non-IFRS
financial performance measures with no standardized definition
under IFRS. For further information, please see the “Non-IFRS
Financial Reporting Measures” section of this news release.
Peru Operations Review
Peru Operations |
Three Months Ended |
Year Ended |
|
|
Dec. 31, 2022 |
Sep. 30, 2022 |
Dec. 31, 2021 |
Dec. 31, 2022 |
Dec. 31, 2021 |
Constancia ore mined1 |
tonnes |
5,614,918 |
6,300,252 |
7,742,469 |
25,840,435 |
29,714,327 |
Copper |
% |
0.40 |
0.36 |
0.33 |
0.35 |
0.31 |
Gold |
g/tonne |
0.04 |
0.05 |
0.04 |
0.04 |
0.04 |
Silver |
g/tonne |
3.48 |
3.38 |
2.81 |
3.40 |
2.88 |
Molybdenum |
% |
0.01 |
0.01 |
0.01 |
0.01 |
0.01 |
Pampacancha ore mined1 |
tonnes |
3,771,629 |
2,488,928 |
2,107,196 |
8,319,250 |
5,141,001 |
Copper |
% |
0.37 |
0.29 |
0.27 |
0.33 |
0.27 |
Gold |
g/tonne |
0.29 |
0.23 |
0.34 |
0.29 |
0.30 |
Silver |
g/tonne |
3.84 |
4.30 |
4.26 |
4.06 |
4.02 |
Molybdenum |
% |
0.01 |
0.01 |
0.01 |
0.01 |
0.01 |
Total ore mined |
tonnes |
9,386,547 |
8,789,180 |
9,849,665 |
34,159,685 |
34,855,328 |
Strip Ratio2 |
|
0.97 |
1.26 |
0.95 |
1.13 |
1.02 |
Ore milled |
tonnes |
7,795,735 |
7,742,020 |
8,048,925 |
30,522,294 |
28,809,755 |
Copper |
% |
0.41 |
0.34 |
0.33 |
0.34 |
0.32 |
Gold |
g/tonne |
0.12 |
0.08 |
0.11 |
0.09 |
0.08 |
Silver |
g/tonne |
3.93 |
3.48 |
3.67 |
3.58 |
3.35 |
Molybdenum |
% |
0.01 |
0.01 |
0.01 |
0.01 |
0.01 |
Copper recovery |
% |
85.1 |
84.5 |
86.0 |
85.0 |
84.6 |
Gold recovery |
% |
69.6 |
61.9 |
63.6 |
63.6 |
64.6 |
Silver recovery |
% |
66.5 |
65.2 |
60.8 |
65.7 |
63.7 |
Molybdenum recovery |
% |
37.7 |
41.0 |
26.7 |
34.8 |
31.5 |
Contained metal in concentrate |
|
|
|
|
|
Copper |
tonnes |
27,047 |
22,302 |
22,856 |
89,395 |
77,813 |
Gold |
ounces |
20,860 |
12,722 |
17,917 |
58,229 |
50,306 |
Silver |
ounces |
655,257 |
564,299 |
578,140 |
2,309,352 |
1,972,949 |
Molybdenum |
tonnes |
344 |
437 |
275 |
1,377 |
1,146 |
Payable metal sold |
|
|
|
|
|
Copper |
tonnes |
23,789 |
20,718 |
20,551 |
79,805 |
71,398 |
Gold |
ounces |
15,116 |
11,970 |
16,304 |
49,968 |
41,807 |
Silver |
ounces |
411,129 |
513,470 |
380,712 |
2,045,678 |
1,490,651 |
Molybdenum |
tonnes |
421 |
511 |
245 |
1,352 |
1,098 |
Combined unit operating cost3,4,5 |
$/tonne |
13.64 |
13.06 |
9.96 |
12.78 |
10.70 |
Cash cost4,5 |
$/lb |
1.34 |
1.68 |
1.28 |
1.58 |
1.54 |
Sustaining cash cost4,5 |
$/lb |
2.09 |
2.46 |
2.46 |
2.35 |
2.46 |
|
|
|
|
|
|
|
1 Reported tonnes and grade for ore mined are
estimates based on mine plan assumptions and may not reconcile
fully to ore milled.2 Strip ratio is calculated as waste mined
divided by ore mined.3 Reflects combined mine, mill and general and
administrative ("G&A") costs per tonne of ore milled. Reflects
the deduction of expected capitalized stripping costs.4 Combined
unit cost, cash cost and sustaining cash cost per pound of copper
produced, net of by-product credits, are non-IFRS financial
performance measures with no standardized definition under IFRS.
For further information and a detailed reconciliation, please see
the discussion under the "Non-IFRS Financial Reporting Measures"
section of this news release. 5 Excludes approximately $0.7
million, or $0.09 per tonne, of COVID-19 related costs during the
three months ended December 31, 2022, $0.9 million, or $0.12 per
tonne, of COVID-19 related costs during the three months ended
September 30, 2022 and $4.1 million, or $0.51 per tonne, during the
three months ended December 31, 2021.Excludes approximately $5.2
million, or $0.17 per tonne, of COVID-19 related costs during the
twelve months ended December 31, 2022 and $19.8 million or $0.69
per tonne, of COVID-19 related costs during the twelve months ended
December 31, 2021.
During the fourth quarter of 2022, the
Constancia operations produced 27,047 tonnes of copper, 20,860
ounces of gold, 655,257 ounces of silver and 344 tonnes of
molybdenum. Production of copper, gold and silver was 21%, 64% and
16% higher than the third quarter of 2022 due to higher grades and
recoveries, partially offset by a planned mill maintenance shutdown
in November. The fourth quarter of 2022 was a record quarter for
gold production in Peru.
Full year 2022 production of copper increased by
15% year-over-year to 89,395 tonnes, within the guidance range.
Similarly, full year 2022 production of gold, silver and molybdenum
increased by 16%, 17% and 20%, respectively, compared to 2021 due
to higher throughput, higher copper and precious metal grades and
higher copper, silver and molybdenum recoveries. Molybdenum
production was in line with annual guidance range, whereas silver
production exceeded the top end of the annual guidance range by
10%. Gold production fell short of the annual guidance range
primarily due to lower-than-planned grades from the Pampacancha pit
in the fourth quarter of 2022 as a result of short-term changes in
the mine plan, as described below.
Total ore mined in the fourth quarter of 2022
increased by 7% compared to the third quarter of 2022, despite a
short-term change in the mine plan that prioritized the processing
of lower grade stockpiles and shorter haulage distance ore from the
Constancia pit. These changes were implemented to ration fuel
during a period of nation-wide social unrest and road blockades
following a change in Peru's political leadership in early December
2022, and ensured the plant continued to operate uninterrupted.
Despite impacts on the ability to steadily receive fuel and
transport concentrates, the Constancia mill continued to operate
throughout these disruptions as the company implemented plans to
mitigate the risk to its operations with strong support from the
local communities, the company’s local workforce and the
community-owned concentrate transportation companies.
Ore milled during the fourth quarter of 2022 was
slightly higher than the third quarter of 2022 despite the impact
of the planned mill maintenance program in November. Milled copper
grades increased by 21% in the fourth quarter of 2022 compared to
the third quarter due to higher head grades from both Pampacancha
and Constancia. Copper, gold and silver recoveries in the fourth
quarter of 2022 were higher than the third quarter of 2022 due to
higher milled grades, and the fourth quarter achieved a record
quarterly gold recovery rate of 70%.
Combined mine, mill and G&A unit operating
costsi in the fourth quarter of 2022 were 4% higher than the third
quarter of 2022, primarily due to higher mining costs from
continued inflationary pressures. Full year combined mine, mill and
G&A unit operating costs for 2022 were 19% higher than the same
period in 2021 due to a higher strip ratio, higher mining costs and
inflationary pressures on fuel, consumables and energy costs,
partially offset by higher ore milled.
Peru’s cash cost per pound of copper produced,
net of by-product creditsi, in the fourth quarter of 2022 declined
by 20% to $1.34, compared to $1.68 in the third quarter, primarily
due to higher copper production and higher by-product credits
resulting from higher grades in the fourth quarter. Peru’s full
year cash cost per pound of copper produced, net of by-product
creditsi, was $1.58, a slight increase of 3% compared to the same
period of 2021. This exceeded the upper end of the 2022 guidance
range primarily due to higher mining and milling costs from input
cost inflation and lower than expected by-product credits due to
lower-than-expected gold grades from Pampacancha in the fourth
quarter of 2022, as described above.
Peru’s sustaining cash cost per pound of copper
produced, net of by-product creditsi, in the fourth quarter of 2022
declined by 15% to $2.09, compared to $2.46 in the third quarter,
primarily due to the same factors affecting cash cost and lower
sustaining capital expenditures, partially offset by higher
capitalized exploration. Peru’s full year sustaining cash cost per
pound of copper produced, net of by-product creditsi, declined by
4% compared to 2021, due to lower sustaining capital expenditures
and higher copper and gold production, offset, in part, by higher
mining and milling costs from input cost inflation.
While Hudbay was able to complete two copper
concentrate shipments from the Matarani port during December,
Peru's copper, gold and silver sales in the fourth quarter of 2022
were impacted by higher-than-normal unsold copper concentrate
inventory levels of approximately 25,000 wet metric tonnes as at
December 31, 2022, due to the nation-wide road blockades in early
December. Hudbay has been able to steadily operate the Constancia
mill throughout the recent road blockades, and despite completing
three copper concentrate shipments from the port in January, Peru’s
copper concentrate inventory levels at site reached a peak of
approximately 47,000 wet metric tonnes in mid-February when
transportation of concentrate resumed with the assistance of the
community-based concentrate trucking companies. Hudbay expects
concentrate inventory levels to normalize over the next several
months.
Manitoba Operations Review
Manitoba Operations |
Three Months Ended |
Year Ended |
|
|
Dec. 31, 2022 |
Sep. 30, 2022 |
Dec. 31, 2021 |
Dec. 31, 2022 |
Dec. 31, 2021 |
Lalor ore mined |
tonnes |
369,453 |
347,345 |
422,208 |
1,516,203 |
1,593,141 |
Copper |
% |
0.73 |
0.71 |
0.78 |
0.73 |
0.71 |
Zinc |
% |
2.17 |
3.27 |
4.19 |
3.14 |
4.23 |
Gold |
g/tonne |
4.00 |
4.57 |
3.92 |
4.00 |
3.41 |
Silver |
g/tonne |
19.37 |
21.27 |
30.35 |
21.96 |
24.66 |
777 ore mined |
tonnes |
— |
— |
266,744 |
484,355 |
1,053,710 |
Copper |
% |
— |
— |
1.13 |
1.12 |
1.28 |
Zinc |
% |
— |
— |
4.16 |
3.83 |
3.91 |
Gold |
g/tonne |
— |
— |
1.80 |
1.66 |
2.03 |
Silver |
g/tonne |
— |
— |
25.02 |
20.85 |
25.25 |
Stall Concentrator & New Britannia Mill: |
Ore milled |
tonnes |
345,492 |
362,108 |
419,727 |
1,510,907 |
1,506,756 |
Copper |
% |
0.73 |
0.69 |
0.75 |
0.75 |
0.72 |
Zinc |
% |
2.31 |
3.33 |
4.12 |
3.30 |
4.30 |
Gold |
g/tonne |
3.98 |
4.60 |
3.90 |
4.08 |
3.42 |
Silver |
g/tonne |
20.40 |
20.66 |
30.07 |
22.15 |
24.95 |
Copper recovery - concentrate |
% |
89.2 |
88.3 |
88.7 |
88.6 |
86.8 |
Zinc recovery - concentrate (Stall) |
% |
90.1 |
88.0 |
87.4 |
86.6 |
88.9 |
Gold recovery - concentrate |
% |
58.8 |
60.9 |
54.6 |
59.2 |
54.9 |
Silver recovery - concentrate |
% |
56.1 |
57.6 |
53.9 |
58.1 |
54.4 |
Flin Flon Concentrator: |
|
|
|
|
|
Ore milled |
tonnes |
— |
— |
262,565 |
497,344 |
1,133,516 |
Copper |
% |
— |
— |
1.12 |
1.11 |
1.23 |
Zinc |
% |
— |
— |
4.16 |
3.87 |
3.95 |
Gold |
g/tonne |
— |
— |
1.78 |
1.67 |
2.04 |
Silver |
g/tonne |
— |
— |
25.04 |
21.00 |
24.90 |
Copper recovery |
% |
— |
— |
86.7 |
86.7 |
87.7 |
Zinc recovery |
% |
— |
— |
83.1 |
83.0 |
83.0 |
Gold recovery |
% |
— |
— |
59.2 |
57.1 |
58.5 |
Silver recovery |
% |
— |
— |
45.6 |
51.8 |
45.1 |
Total
contained metal in concentrate and doré |
|
Copper |
tonnes |
2,258 |
2,196 |
5,342 |
14,778 |
21,657 |
Zinc |
tonnes |
6,326 |
9,750 |
23,207 |
55,381 |
93,529 |
Gold |
ounces |
33,060 |
40,457 |
46,242 |
161,471 |
143,477 |
Silver |
ounces |
139,758 |
152,770 |
321,573 |
851,942 |
1,072,532 |
Total payable metal sold |
|
|
|
|
|
Copper |
tonnes |
1,626 |
4,081 |
4,408 |
14,668 |
20,802 |
Zinc1 |
tonnes |
8,230 |
12,714 |
21,112 |
59,043 |
96,435 |
Gold2 |
ounces |
32,140 |
54,962 |
40,623 |
163,447 |
126,551 |
Silver2 |
ounces |
148,177 |
302,946 |
257,928 |
932,807 |
936,857 |
Combined unit operating cost3,4 |
C$/tonne |
241 |
235 |
168 |
195 |
154 |
Gold cash cost4,5 |
$/oz |
922 |
216 |
— |
297 |
— |
Gold sustaining cash cost4,5 |
$/oz |
1,795 |
1,045 |
— |
1,091 |
— |
|
|
|
|
|
|
|
1 Includes refined zinc metal sold and payable
zinc in concentrate sold.2 Includes total payable precious metals
in concentrate and in doré sold.3 Reflects combined mine, mill and
G&A costs per tonne of ore milled. 4 Combined unit cost, cash
cost, sustaining cash cost per ounce of gold produced, net of
by-product credits, are non-IFRS financial performance measures
with no standardized definition under IFRS. For further
information, please see the “Non-IFRS Financial Reporting Measures”
section of this news release.5 Cash cost and sustaining cash cost
per ounce of gold produced, net of by-product credits, were
introduced in 2022 and do not have a published comparative for
2021.
During the fourth quarter of 2022, the Manitoba
operations produced 33,060 ounces of gold, 2,258 tonnes of copper,
6,326 tonnes of zinc and 139,758 ounces of silver. Gold, zinc and
silver production was lower than the third quarter of 2022
primarily as a result of lower grades at Lalor, in line with the
mine plan. Year-over-year metal production was impacted by the
planned closure of 777 in June 2022, resulting in a decrease in
copper, zinc and silver production, while full year gold production
increased by 13%, compared to the prior year, as New Britannia
ramped up to full production. Full year production of all metals in
Manitoba achieved the 2022 annual guidance ranges.
During the fourth quarter of 2022, the Manitoba
team continued to focus on integrating the Flin Flon employees and
equipment into the Snow Lake operations and reducing reliance on
higher cost contractors. Lalor's ore production during the quarter
was impacted by a planned maintenance program to replace surface
ore chutes as well as various other pre-winter maintenance
activities including the muck circuit, hoist drive and electrical
maintenance. The company continues to advance several key
initiatives to support higher production levels at Lalor, including
building longhole inventory, improving stope muck fragmentation,
optimizing the development drift size and focusing on shaft
availability improvements to enable more ore to be hoisted to
surface while reducing inefficient trucking of ore via the
ramp.
Ore mined at Lalor increased by 6% in the fourth
quarter of 2022, compared to the third quarter of 2022, mainly due
to the higher production initiatives and the integration of the
Flin Flon employees and equipment, partially offset by the planned
maintenance program mentioned above. Gold, zinc and silver grades
mined during the fourth quarter of 2022 were lower than the third
quarter and copper grades were higher.
The combined Snow Lake mills processed 5% less
ore in the fourth quarter of 2022 compared to the third quarter of
2022, mainly due to the above noted transition and planned
maintenance program impacting Lalor and the milling operations.
Stall recoveries were consistent with the metallurgical model for
the head grades delivered. The New Britannia mill continued to
achieve consistent production in the fourth quarter, averaging
approximately 1,530 tonnes per day. Metal recoveries have now
stabilized near targeted levels for the mill. Additional
improvement initiatives will continue to be advanced in the
upcoming quarters with a focus on reducing reagent and grinding
media consumption, which has contributed to higher operating costs
than planned. These initiatives require minimal capital
expenditures and will further improve overall metal recoveries and
copper concentrate grades.
Combined mine, mill and G&A unit operating
costsi in the fourth quarter of 2022 were at similar levels
compared to the third quarter of 2022. Full year 2022 combined unit
operating costs increased by 27% compared to 2021, reflecting the
standalone higher cost structure of Snow Lake after the closure of
the 777 mine and the Flin Flon operations in mid-2022. As
previously disclosed, combined unit operating costs for 2022 have
exceeded the upper end of the guidance range by 5% due to ongoing
inflationary cost pressures and the Snow Lake transition.
Manitoba’s cash cost per ounce of gold produced,
net of by-product creditsi, in the fourth quarter of 2022 was $922,
higher than the third quarter of 2022, primarily due to lower
by-product credits and lower gold production. This was partially
offset by lower mining, milling and general and administrative
costs as well as lower treatment, refining and freight costs.
However, full year 2022 cash cost per ounce of gold produced, net
of by-product creditsi, was $297, 1% below the low end of the 2022
guidance range.
Manitoba’s sustaining cash cost per ounce of
gold produced, net of by-product creditsi, in the fourth quarter
was $1,795, higher than the third quarter of 2022, primarily due to
the same factors affecting cash cost, partially offset by lower
sustaining capital expenditures.
Commitment to Climate Change
Initiatives
On December 12, 2022, Hudbay announced its
commitment to achieve net zero greenhouse gas ("GHG") emissions by
2050 and the adoption of interim 2030 GHG reduction targets to
support this commitment. The company initiated a roadmap to further
identify and manage risks associated with climate change, and
opportunities to reduce GHG emissions in alignment with global
decarbonization goals.
While Hudbay’s operations are well-positioned in
the lower half of the global GHG emissions curve for copper
operations, the company recognizes its role in mitigating climate
change. Hudbay’s GHG emissions reduction plan includes the
following initiatives:
- Pursuing a 50% reduction in absolute Scope 1 and Scope 2
emissions from existing operations by 2030 (compared to 2021)
- Achieving net zero total emissions by 2050
- Reporting on material Scope 3 emissions in the near-term
- Assessing acquisitions and new projects against corporate
emissions targets
- Continuing to be transparent with GHG performance data
disclosure, including reporting total GHG emissions and GHG
intensity
Hudbay's efforts have been focused on improving
operating efficiencies to reduce the GHG emissions intensity at its
mines through initiatives such as ore sorting and recovery
improvement programs. The company has identified multiple
opportunities to achieve further reductions in emissions, including
grid decarbonization in Peru, fleet and heating electrification and
fuel switching in mobile equipment. Hudbay will continue to monitor
and evaluate existing and new technologies as they become
financially viable to implement at the company’s operations. The
company will also consider emissions reduction opportunities in the
design of its brownfield and greenfield growth projects. All
initiatives will balance emissions and economic targets as part of
the company’s disciplined capital allocation strategy.
Advancing Activities to Prudently
De-risk Copper World
In 2022, Hudbay invested approximately $80
million at Copper World to successfully execute a new strategy
focused on a two-phase mine plan with the first phase located on
private land claims. This strategy involved significant drilling
campaigns to delineate seven newly discovered deposits adjacent to
the known East deposit, the expansion of the company’s private land
package to over 4,500 acres, and the completion of a robust
preliminary economic assessment for Copper World demonstrating a
16-year mine plan for Phase I, requiring only state level permits,
and an expansion to a 44-year operation in Phase II with the
utilization of federal lands.
Hudbay continues to advance pre-feasibility
activities for Phase I of the Copper World project, which is
expected to support the conversion of mineral resources to mineral
reserves and optimize the layout and sequencing of the mineral
processing facilities, in addition to evaluating other upside
opportunities. Pre-feasibility level engineering of the main
processing facility was completed by year-end together with
geotechnical and hydrogeological site investigation activities.
Metallurgical test work activities continued into 2023 and the
results are being analyzed as part of concentrate leaching trade
off evaluations. A pre-feasibility study for Phase I of the Copper
World project is expected to be released in the second quarter of
2023.
In late 2022, Hudbay submitted the applications
for an Aquifer Protection Permit and an Air Quality Permit to the
Arizona Department of Environmental Quality ("ADEQ"). Hudbay
continues to expect to receive these two remaining state permits in
2023. The other key state permit, the Mined Land Reclamation Plan,
was received in 2022. In January 2023, Hudbay received an approved
right-of-way from the State Land Department that will allow for
infrastructure, such as roads, pipelines and powerlines, to connect
between the properties in the company’s private land package at
Copper World.
Upon receipt of the state level permits, the
company expects to conduct a bulk sampling program at Copper World
to continue to de-risk the project by testing grade continuity,
variable cut-off effectiveness and metallurgical strategies. Hudbay
also intends to initiate a minority joint venture partner process
following receipt of permits, which will allow the potential joint
venture partner to participate in and help fund the definitive
feasibility study activities in 2024.
Continued Focus on Cost Reductions and
Capital Discipline
With a focus on generating positive cash flow,
Hudbay delivered on its discretionary spending reduction targets by
reducing 2022 growth capital and exploration spending by
approximately $30 million in Arizona, Manitoba and Peru. The
company also reduced planned 2023 discretionary spending by more
than $50 million primarily related to the deferral of the Copper
World definitive feasibility study and the pebble crusher in Peru.
Furthermore, planned 2023 growth and exploration expenditures are
expected to be approximately $65 million lower than 2022
levels.
As an additional prudent measure intended to
ensure positive cash flow generation and continued financial
discipline, Hudbay expects to extend its existing quotational
period hedging program to cover approximately 13,000 tonnes of
contained copper in the unsold concentrate inventory in Peru to
lock in current copper prices.
The company expects spending on its Copper World
project in 2023 will be limited to de-risking activities, including
the completion of the pre-feasibility study and state level
permitting. The opportunity to sanction Copper World is not
expected until 2025 based on current estimated timelines. This,
together with the company’s 2023 discretionary spending reductions,
reflects a conservative approach to capital spending at Copper
World over the next two years. As part of Hudbay’s disciplined
financial planning approach to Copper World, the company identified
three specific prerequisites that would need to be achieved prior
to making an investment decision in the project:
- Permits – receipt of all state level permits required for Phase
I;
- Plan – completion of a definitive feasibility study with an
internal rate of return of greater than 15%; and
- Prudent Financing Strategy – multi-faceted financial targets
focused on a minimum cash balance, a stated maximum leverage,
limited non-recourse project level debt and committed financial
partners.
Exploration Update
Peru Regional Exploration
Hudbay controls a large, contiguous block of
mineral rights with the potential to host mineral deposits within
trucking distance of the Constancia processing facility, including
the past producing Caballito property and the highly prospective
Maria Reyna property. Following the execution of a surface rights
exploration agreement with the community of Uchucarcco in August
2022, the company has commenced early exploration activities at the
Maria Reyna and Caballito properties. Surface investigation
activities together with baseline environmental and archaeological
activities necessary to support drill permit applications for the
Maria Reyna and Caballito prospects have been completed. Ground
geophysical surveys commenced in the fourth quarter of 2022 and
will continue once the Peruvian social situation improves. Field
evidence confirms that both Caballito and Maria Reyna host sulfide
and oxide rich copper mineralization in skarns, hydrothermal
breccias and large porphyry intrusive bodies.
Recent activities at the Llaguen
copper-molybdenum porphyry deposit in the Otuzco province in
northern Peru have been focused on initiating metallurgical test
work.
Manitoba Regional Exploration
Hudbay commenced a winter drill program in
January 2023 with four drill rigs testing the down-dip gold and
copper extensions of the Lalor deposit, which is the first time the
company has completed step-out drilling in the deeper zones at
Lalor since the initial discovery of the gold and copper-gold zones
in 2009 and 2010. One additional drill rig is testing a target
located to the north of Lalor.
Arizona Regional Exploration
Recent drilling activities at Copper World have
focused on close spaced infill drilling to support potential future
bulk sampling programs. This drilling is now completed, and no
additional drilling is planned for 2023.
Nevada Regional Exploration
A conductivity-resistivity IP ground survey
commenced in the fourth quarter of 2022 on Hudbay’s private land
claims near the Mason project. This work, in combination with a
re-interpretation of geological data from past operating mines and
previous exploration data, will be used to finalize a future drill
plan to test high grade skarn targets.
2023 Key Objectives and Annual
Guidance
Hudbay’s key objectives for 2023 are to:
- Deliver copper and gold production growth with low cash costs
driven by efficient operations;
- Position Hudbay to unlock its copper development pipeline
through generating cash flow, managing discretionary spending,
deleveraging and achieving strong returns on invested capital;
- De-risk the Copper World project through the completion of
pre-feasibility studies, state permitting activities, evaluating a
bulk sampling program and a potential joint venture
partnership;
- Progress Constancia's leading efficiency metrics by applying
smart technologies to continuously improve operating performance,
including sensor-based ore sorting and the mill recovery
improvement project;
- Advance plans to drill the prospective Maria Reyna and
Caballito properties near Constancia;
- Continue to navigate the complex environment in Peru while
maintaining aligned and supportive relationships with local
communities;
- Execute expansion opportunities in Snow Lake with the
completion of the Stall mill recovery improvement program and the
ramp up beyond 4,650 tonnes per day at Lalor;
- Test the down-dip extensions at Lalor where the gold and copper
zones remain open at depth and have the potential to expand Snow
Lake gold mineralization beyond the current 2.4 million ounces of
reserves and 1.7 million ounces of resources;
- Investigate opportunities to utilize the operating
infrastructure in Snow Lake for potential future tailings
reprocessing;
- Assess opportunities to reduce greenhouse gas emissions in
alignment with the company’s climate change commitments and global
decarbonization goals;
- Prudently advance the three pre-requisites plan required for
Copper World sanctioning; and
- Evaluate and execute growth opportunities that meet the
company’s stringent strategic criteria and allocate capital to
pursue those opportunities that create sustainable value for the
company and its stakeholders.
Hudbay’s annual production and operating cost
guidance, along with its annual capital and exploration expenditure
forecasts are discussed in detail below.
Production Guidance
Contained Metal in Concentrate and
Doré1 |
2023 Guidance |
Year Ended Dec. 31, 2022 |
2022 Guidance |
Peru |
|
|
|
|
Copper |
tonnes |
91,000 - 116,000 |
89,395 |
89,000 - 115,000 |
Gold |
ounces |
83,000 - 108,000 |
58,229 |
70,000 - 90,000 |
Silver |
ounces |
2,210,000 - 2,650,000 |
2,309,352 |
1,620,000 - 2,100,000 |
Molybdenum |
tonnes |
1,300 - 1,600 |
1,377 |
1,100 - 1,400 |
|
|
|
|
|
Manitoba |
|
|
|
|
Gold |
ounces |
175,000 - 205,000 |
161,471 |
150,000 - 185,000 |
Zinc |
tonnes |
28,000 - 36,000 |
55,381 |
50,000 - 70,000 |
Copper |
tonnes |
9,000 - 12,000 |
14,778 |
12,000 - 16,000 |
Silver |
ounces |
750,000 - 1,000,000 |
851,942 |
800,000 - 1,100,000 |
|
|
|
|
|
Total |
|
|
|
|
Copper |
tonnes |
100,000 - 128,000 |
104,173 |
101,000 - 131,000 |
Gold |
ounces |
258,000 - 313,000 |
219,700 |
220,000 - 275,000 |
Zinc |
tonnes |
28,000 - 36,000 |
55,381 |
50,000 - 70,000 |
Silver |
ounces |
2,960,000 - 3,650,000 |
3,161,294 |
2,420,000 - 3,200,000 |
Molybdenum |
tonnes |
1,300 - 1,600 |
1,377 |
1,100 - 1,400 |
1 Metal reported in concentrate and doré is prior to refining
losses or deductions associated with smelter terms. |
|
On a consolidated basis, Hudbay met 2022
production guidance for all metals. Consolidated copper and gold
production was on the lower end of the guidance range primarily due
to lower-than-planned grades in the fourth quarter of 2022 in Peru
due to short-term mine plan changes that were implemented to
mitigate the risks associated with logistical and supply chain
disruptions in Peru.
In 2023, consolidated copper production is
forecast to increase to 114,000ii tonnes, an increase of
approximately 10%ii compared to 2022 levels, primarily as a result
of higher expected copper production in Peru, with higher planned
copper grades from the Pampacancha pit more than offsetting lower
copper production in Manitoba. Consolidated gold production in 2023
is expected to increase by 30%ii to 285,500ii ounces
year-over-year, due to significantly higher gold production in both
Peru and Manitoba.
In early 2023, the mine plan for Peru was
adjusted to prioritize the processing of lower grade stockpiles and
shorter haulage distance ore to manage through the regional
logistical challenges and ensure steady operation of the plant.
This is expected to result in more ore being mined from the
Constancia pit and less from the Pampacancha pit in the early part
of the year, as well as lower recoveries due to the varying ore
types present in the stockpiles. Despite these mine plan changes,
2023 copper and gold production in Peru is expected to be 103,500ii
tonnes and 95,500ii ounces, representing year-over-year increases
of 16%ii and 64%ii, respectively. The revised mine plan for 2023
reflects a period of higher stripping activities in the Pampacancha
pit from March to June with significantly higher copper and gold
grades expected to be mined in the second half of 2023. Peru’s
production guidance also reflects regularly scheduled semi-annual
mill maintenance shutdowns at Constancia during the second and
fourth quarters of 2023.
In Manitoba, 2023 gold production is expected to
increase by 18%ii to 190,000ii ounces compared to 2022 due to
higher gold grades and a 10% increase in ore throughput at the
Lalor mine. The 2023 mine plan at Lalor reflects higher production
from the gold and copper-gold zones as those zones are expected to
be prioritized over the base metal zones. The production guidance
reflects a 10% increase in New Britannia mill throughput in 2023
given the mill has been consistently operating above its 1,500
tonnes per day nameplate capacity. The 2023 mine plan achieves gold
production levels consistent with the most recent mine plan for
Snow Lake but without the full ramp up to 5,300 tonnes per day as
it maximizes value per tonne of ore at Lalor by prioritizing the
mining of the gold-rich zones over the zinc-rich base metal zones
and reflects higher throughput at the New Britannia mill.
Year-over-year zinc production is expected to decline by 42%ii
primarily as a result of the closure of the 777 mine in June 2022
and prioritizing the mining of the gold-rich zones over the
zinc-rich base metal zones at Lalor. Manitoba’s production guidance
reflects regularly scheduled maintenance programs at the Lalor mine
during the second and fourth quarters of 2023.
Given the short-term mine plan changes
implemented at Constancia in early 2023 and the Lalor ramp-up
strategy, as mentioned above, the company is examining the
potential impact of these changes to 2024 and 2025 production.
Hudbay expects its 2024 production guidance to be similar to the
previously issued guidance on February 23, 2022, reflecting a
further increase in copper production in Peru and gold production
in Manitoba from 2023 levels. As a result of the 2023 mine plan
changes in Peru, the company now expects mining activities at the
Pampacancha deposit to continue into the first half of 2025, which
is expected to result in higher copper and gold production from
Peru in 2025 beyond the levels shown in the most recent technical
report for Constancia, dated March 29, 2021. Hudbay expects to
release its new three-year production outlook together with its
annual mineral reserve and resource update at the end of March
2023.
Capital Expenditure Guidance
Capital Expenditures1(in $ millions) |
2023 Guidance2 |
Year EndedDec. 31, 2022 |
2022 Guidance |
Sustaining capital |
|
|
|
Peru3 |
160 |
102 |
105 |
Manitoba4 |
75 |
125 |
115 |
Total sustaining capital |
235 |
227 |
220 |
Growth capital |
|
|
|
Peru |
10 |
4 |
10 |
Manitoba4 |
15 |
34 |
50 |
Arizona5 |
30 |
36 |
40 |
Total growth capital |
55 |
74 |
100 |
Capitalized exploration5 |
10 |
42 |
40 |
Total capital expenditures |
300 |
343 |
360 |
1 Excludes capitalized costs not considered to be sustaining or
growth capital expenditures.2 2023 capital expenditure guidance
excludes right-of-use lease additions. 3 Includes capitalized
stripping costs.4 2023 capital expenditures are converted into U.S.
dollars using an exchange rate of 1.35 Canadian dollars.5 2022
guidance reflects revised Arizona spending guidance issued on June
8, 2022, which includes $5 million in additional growth
expenditures and $15 million in additional capitalized exploration
related to Copper World. |
|
2022 total capital expenditures were 5% below
guidance expectations as a result of the discretionary capital
reductions across the business, partially offset by higher
sustaining capital expenditures in Manitoba primarily due to
inflationary cost pressures and lease additions that were not
originally contemplated in guidance.
Hudbay expects to continue to reduce
discretionary spending with an expected 13% year-over-year decline
in total capital expenditures to $300 million in 2023, primarily
due to lower discretionary growth spending and capitalized
exploration in 2023.
Peru’s sustaining capital expenditures in 2023
are expected to increase from 2022 levels primarily due to higher
costs associated with heavy civil works for the completion of a
tailings dam raise in 2023 and higher capitalized stripping costs
as a result of the mine plan resequencing in 2023. Peru’s growth
capital spending of $10 million in 2023 includes costs associated
with mill recovery improvement initiatives targeted to increase
copper and molybdenum recoveries.
Manitoba’s sustaining capital expenditures in
2023 are expected to be lower than 2022 primarily due to lower
equipment spending at Lalor and in the mills after the Snow Lake
transition and ramp up period in 2022. Manitoba’s growth capital
spending of $15 million in 2023 relates to the costs for the
completion of the Stall mill recovery improvement project, which is
expected to involve several flow sheet enhancements to increase
gold and copper recoveries starting in the second quarter of 2023.
These low-capital brownfield growth projects are expected to
generate attractive returns and are part of Hudbay’s continuous
improvement efforts. The Manitoba spending guidance excludes
approximately $20 million of annual care and maintenance costs
related to the Flin Flon facilities in 2023, which are expected to
be recorded as other operating expenses.
Arizona’s growth capital spending of $30 million
includes approximately $20 million in annual carrying and
permitting costs for the Copper World and Mason projects and
approximately $10 million for economic studies and site works in
2023.
Exploration Guidance
Exploration Expenditures(in $ millions) |
2023 Guidance1 |
Year EndedDec. 31, 2022 |
2022 Guidance |
Peru |
15 |
|
25 |
|
25 |
|
Manitoba |
15 |
|
14 |
|
15 |
|
Arizona and other2 |
0 |
|
38 |
|
40 |
|
Total exploration expenditures |
30 |
|
77 |
|
80 |
|
Capitalized spending2 |
(10 |
) |
(42 |
) |
(40 |
) |
Total exploration expense |
20 |
|
35 |
|
40 |
|
|
|
|
|
|
|
|
1 2023 exploration guidance excludes $5 million
of non-cash amortization of community agreements for exploration
properties.2 2022 guidance reflects an additional $15 million in
capitalized exploration at Copper World announced on June 8,
2022.
Total expected exploration expenditures of $30
million in 2023 are 61% lower than 2022 levels due to Hudbay’s
continued focus on discretionary spending reductions. The company’s
2023 exploration activities are focused on areas with high
potential for new discovery and mineral reserve and resource
expansion.
In Peru, 2023 exploration activities will focus
on permitting and drill preparation for the Maria Reyna and
Caballito properties near Constancia. The company also expects to
complete a limited drill program at Pampacancha in 2023 to test the
potential to add an incremental phase at depth to the reserve pit.
In Manitoba, the company has initiated a winter drill program
focused on testing the deep extensions of the gold and copper zones
at Lalor and a target to the north of Lalor.
Cash Cost Guidance
Copper remains the primary revenue contributor
on a consolidated basis, and therefore, consolidated cost guidance
has been presented as cash cost per pound of copper produced. The
company has also provided cash cost guidance for each of its
operations based on their respective primary metal contributors.
While Hudbay expects combined unit operating costs in both Peru and
Manitoba to trend lower in 2023, the company no longer plans to
issue combined unit operating cost guidance, as it believes cash
cost is a more common metric used to measure operating
performance.
Cash cost1 |
|
2023 Guidance |
Year EndedDec. 31, 2022 |
2022 Guidance |
Peru cash
cost per pound of copper2 |
$/lb |
1.05 - 1.30 |
1.58 |
1.10 - 1.40 |
Manitoba
cash cost per ounce of gold3 |
$/oz |
500 - 800 |
297 |
300 - 550 |
|
|
|
|
|
Consolidated cash cost per pound of copper2 |
$/lb |
0.40 - 0.80 |
0.86 |
0.60 - 1.05 |
Consolidated sustaining cash cost per pound of copper2 |
$/lb |
1.35 - 2.05 |
2.07 |
1.60 – 2.25 |
|
|
|
|
|
1 Cash cost and sustaining cash cost per pound
of copper produced, net of by-product credits, and cash cost per
ounce of gold produced, net of by-product credits, are non-IFRS
financial performance measures with no standardized definition
under IFRS. For further information, please see the “Non-IFRS
Financial Reporting Measures” section of this news release.2 Peru
cash cost per pound of copper and consolidated copper cash cost per
pound of copper contained in concentrate assumes by-product credits
are calculated using the gold and silver deferred revenue drawdown
rates in effect on December 31, 2022 for the streamed ounces in
Peru and the following commodity prices: $1,800 per ounce gold,
$21.00 per ounce silver, $25.00 per pound molybdenum, $1.40 per
pound zinc and an exchange rate of 1.35 C$/US$. 3 Manitoba gold
cash cost per ounce of gold contained in concentrate and doré
assumes by-product credits are calculated using the following
commodity prices: $1.40 per pound zinc, $21.00 per ounce silver,
$3.75 per pound copper and an exchange rate of 1.35 C$/US$.
Copper cash cost in Peru is expected to decline
by 26%ii in 2023 versus 2022, primarily due to higher gold
by-product credits and higher copper production.
Gold cash cost in Manitoba is expected to
increase in 2023 compared to 2022 as a result of the transition to
a primary gold operation with lower by-product credits after the
closure of the 777 mine in June 2022.
Consolidated copper cash cost in 2023 is
expected to decline by 30%ii compared to 2022 levels due to the
expected increase in copper production and higher expected gold
by-product credits from the increase in annual gold production.
Consolidated sustaining cash cost in 2023 is expected to be 18%ii
lower than 2022 levels due to the same factors affecting
consolidated cash cost, partially offset by slightly higher
sustaining capital expenditures.
Metal production in any given quarter may vary
from the annual guidance rate based on variations in grades and
recoveries due to mine sequencing in the quarter, the timing of
planned maintenance, and other factors. Cash cost and sustaining
cash cost in any particular quarter can vary from the annual
guidance ranges based on a variety of factors, including the
scheduling of maintenance events, the prevailing commodity prices
affecting by-product credits, the impact of social and political
tensions in Peru, and seasonal heating requirements, particularly
in Manitoba.
Dividend Declared
A semi-annual dividend of C$0.01 per share was
declared on February 23, 2023. The dividend will be paid out on
March 24, 2023 to shareholders of record as of March 7, 2023.
Website Links
Hudbay:
www.hudbay.com
Management’s Discussion and Analysis:
https://hudbayminerals.com/MDA224
Financial Statements:
https://hudbayminerals.com/FS224
Conference Call and Webcast
Date: |
|
Friday, February 24, 2023 |
Time: |
|
8:30 a.m. ET |
Webcast: |
|
www.hudbay.com |
Dial
in: |
|
1-416-915-3239 or
1-800-319-4610 |
Qualified Person and NI
43-101
The technical and scientific information in this
news release related to the company’s material mineral projects has
been approved by Olivier Tavchandjian, P. Geo, Vice President,
Exploration and Technical Services. Mr. Tavchandjian is a qualified
person pursuant to NI 43‑101 – Standards of Disclosure for Mineral
Projects (“NI 43-101”).
For a description of the key assumptions,
parameters and methods used to estimate mineral reserves and
resources at Hudbay's material properties, as well as data
verification procedures and a general discussion of the extent to
which the estimates of scientific and technical information may be
affected by any known environmental, permitting, legal title,
taxation, sociopolitical, marketing or other relevant factors,
please see the technical reports for the company’s material
properties as filed by Hudbay on SEDAR at www.sedar.com.
Non-IFRS Financial Performance
Measures
Adjusted net earnings (loss), adjusted net
earnings (loss) per share, adjusted EBITDA, net debt, cash cost,
sustaining and all-in sustaining cash cost per pound of copper
produced, cash cost and sustaining cash cost per ounce of gold
produced and combined unit cost are non-IFRS performance measures.
These measures do not have a meaning prescribed by IFRS and are
therefore unlikely to be comparable to similar measures presented
by other issuers. These measures should not be considered in
isolation or as a substitute for measures prepared in accordance
with IFRS and are not necessarily indicative of operating profit or
cash flow from operations as determined under IFRS. Other companies
may calculate these measures differently.
Management believes adjusted net earnings (loss)
and adjusted net earnings (loss) per share provides an alternate
measure of the company’s performance for the current period and
gives insight into its expected performance in future periods.
These measures are used internally by the company to evaluate the
performance of its underlying operations and to assist with its
planning and forecasting of future operating results. As such, the
company believes these measures are useful to investors in
assessing the company’s underlying performance. Hudbay provides
adjusted EBITDA to help users analyze the company’s results and to
provide additional information about its ongoing cash generating
potential in order to assess its capacity to service and repay
debt, carry out investments and cover working capital needs. Net
debt is shown because it is a performance measure used by the
company to assess its financial position. Cash cost, sustaining and
all-in sustaining cash cost per pound of copper produced are shown
because the company believes they help investors and management
assess the performance of its operations, including the margin
generated by the operations and the company. Cash cost and
sustaining cash cost per ounce of gold produced are shown because
the company believes they help investors and management assess the
performance of its Manitoba operations. Combined unit cost is shown
because Hudbay believes it helps investors and management assess
the company’s cost structure and margins that are not impacted by
variability in by-product commodity prices.
During 2021 and 2022, there were non-recurring
adjustments for Arizona and Manitoba operations, including
severance, past service pension costs, disposals of certain
non-current assets, and inventory supplies write-downs as well as
non-cash impairment charges related to an updated Flin Flon closure
plan and lower long-term discount rates in the fourth quarter of
2021, none of which management believes are indicative of ongoing
operating performance and therefore are adjusting items in the
calculations of adjusted net earnings (loss) and adjusted
EBITDA.
During 2022, Hudbay recorded a non-cash gain of
$133.5 million, mostly related to the quarterly revaluation of its
Flin Flon environmental reclamation provision, which was impacted
by rising long-term risk-free discount rates. With the closure of
777 and Flin Flon operations in the second quarter of 2022 and
given the long-term nature of the reclamation cash flows, quarterly
revaluation of the corresponding environmental reclamation
provision remains highly sensitive to changes in real, long-term
risk-free discount rates and, as such, the company expects to
continue to experience quarterly environmental reclamation
provision revaluations, which is not indicative of the company’s
ongoing operating performance. This item has been included
prospectively in the calculation of adjusted earnings.
The following tables provide detailed
reconciliations to the most comparable IFRS measures.
Adjusted Net Earnings (Loss) Reconciliation
|
Three Months Ended |
(in $ millions) |
Dec. 31, 2022 |
Sep. 30, 2022 |
Dec. 31, 2021 |
(Loss) profit for the period |
(17.4 |
) |
(8.1 |
) |
(10.5 |
) |
Tax expense (recovery) |
3.1 |
|
7.8 |
|
10.3 |
|
(Loss)
profit before tax |
(14.3 |
) |
(0.3 |
) |
(0.2 |
) |
Adjusting
items: |
|
|
|
Mark-to-market adjustments1 |
10.7 |
|
(4.2 |
) |
13.3 |
|
Foreign exchange loss (gain) |
0.2 |
|
(4.8 |
) |
1.1 |
|
Inventory adjustments |
— |
|
2.1 |
|
— |
|
Variable consideration adjustment - stream revenue and
accretion |
— |
|
3.9 |
|
— |
|
Impairment loss |
— |
|
— |
|
46.2 |
|
Re-evaluation adjustment - environmental provision2 |
13.5 |
|
(6.4 |
) |
— |
|
Evaluation expenses |
0.1 |
|
0.1 |
|
— |
|
Insurance recovery |
— |
|
— |
|
— |
|
Restructuring charges - Manitoba3 |
1.0 |
|
5.1 |
|
3.4 |
|
Loss on disposal of investments |
0.5 |
|
— |
|
— |
|
Post-employment plan (curtailment) / past service cost
adjustment |
(2.4 |
) |
— |
|
0.7 |
|
Loss (gain) on disposal of plant and equipment and non-current
assets - Manitoba & Arizona |
0.4 |
|
(6.0 |
) |
2.4 |
|
Changes in other provisions (non-capital)4 |
5.8 |
|
— |
|
— |
|
Adjusted
earnings (loss) before income taxes |
15.5 |
|
(10.5 |
) |
66.9 |
|
Tax expense |
(3.1 |
) |
(7.8 |
) |
(10.3 |
) |
Tax impact on adjusting items |
(9.8 |
) |
5.9 |
|
(23.9 |
) |
Adjusted net earnings (loss) |
2.6 |
|
(12.4 |
) |
32.7 |
|
Adjusted net earnings (loss) ($/share) |
0.01 |
|
(0.05 |
) |
0.13 |
|
Basic weighted average number of common shares outstanding
(millions) |
262.0 |
|
261.9 |
|
261.6 |
|
1 Includes changes in fair value of the gold
prepayment liability, Canadian junior mining investments, other
financial assets and liabilities at fair value through profit or
loss and share-based compensation expenses.2 Changes from movements
to environmental reclamation provisions are primarily related to
the Flin Flon operations, which were fully depreciated as of June
30, 2022, as well as other Manitoba non-operating sites.3 Includes
closure cost (severance and site preparation costs) for Flin Flon
operations.4 Includes changes in other provisions related to
corporate restructuring costs and costs which do not pertain to
operations.
|
Year Ended |
(in $ millions) |
Dec. 31, 2022 |
Dec. 31, 2021 |
Profit (loss) for the period |
70.4 |
|
(244.4 |
) |
Tax expense |
25.4 |
|
41.6 |
|
Profit
(loss) before tax |
95.8 |
|
(202.8 |
) |
Adjusting
items: |
|
|
Mark-to-market adjustments1 |
3.0 |
|
66.7 |
|
Foreign exchange (gain) loss |
(5.4 |
) |
1.5 |
|
Inventory adjustments |
3.6 |
|
4.0 |
|
Variable consideration adjustment - stream revenue and
accretion |
(1.9 |
) |
(1.0 |
) |
Impairment loss |
95.0 |
|
193.5 |
|
Re-evaluation adjustment - environmental provision2 |
(133.5 |
) |
— |
|
Evaluation expenses |
7.9 |
|
— |
|
Insurance recovery |
(5.7 |
) |
— |
|
Restructuring charges - Manitoba3 |
10.6 |
|
7.0 |
|
Loss on disposal of investments |
3.6 |
|
— |
|
Write-down of unamortized transaction costs |
— |
|
2.5 |
|
Premium paid on redemption of notes |
— |
|
22.9 |
|
Post-employment plan (curtailment) / past service cost
adjustment |
(2.4 |
) |
5.0 |
|
(Gain) loss on disposal of plant and equipment and non-current
assets - Manitoba & Arizona |
(6.3 |
) |
7.8 |
|
Changes in other provisions (non-capital)4 |
5.8 |
|
— |
|
Adjusted
earnings before income taxes |
70.1 |
|
107.1 |
|
Tax expense |
(25.4 |
) |
(41.6 |
) |
Tax impact on adjusting items |
(18.3 |
) |
(42.4 |
) |
Adjusted net earnings |
26.4 |
|
23.1 |
|
Adjusted net earnings ($/share) |
0.10 |
|
0.09 |
|
Basic weighted average number of common shares outstanding
(millions) |
261.9 |
|
261.5 |
|
1 Includes changes in fair value of the gold prepayment
liability, Canadian junior mining investments, other financial
assets and liabilities at fair value through profit or loss and
share-based compensation expenses.2 Changes from movements to
environmental reclamation provisions are primarily related to the
Flin Flon operations, which were fully depreciated as of June 30,
2022, as well as other Manitoba non-operating sites.3 Includes
closure cost (severance and site preparation costs) for Flin Flon
operations.4 Includes changes in other provisions related to
corporate restructuring costs and costs which do not pertain to
operations.
Adjusted EBITDA Reconciliation
|
Three Months Ended |
(in $ millions) |
Dec. 31, 2022 |
Sep. 30, 2022 |
Dec. 31, 2021 |
(Loss) profit for the period |
(17.4 |
) |
(8.1 |
) |
(10.5 |
) |
Add back: Tax expense |
3.1 |
|
7.8 |
|
10.3 |
|
Add back: Net finance expense |
36.7 |
|
20.6 |
|
38.6 |
|
Add back: Other expense |
18.5 |
|
6.3 |
|
16.3 |
|
Add back: Depreciation and amortization |
79.4 |
|
89.8 |
|
89.9 |
|
Add back: Amortization of deferred revenue and variable
consideration adjustment |
(10.4 |
) |
(15.3 |
) |
(17.3 |
) |
|
109.9 |
|
101.1 |
|
127.3 |
|
Adjusting items (pre-tax): |
|
|
|
Re-evaluation adjustment - environmental provision1 |
13.5 |
|
(6.4 |
) |
0.3 |
|
Impairment losses |
— |
|
— |
|
46.2 |
|
Inventory adjustments |
— |
|
2.1 |
|
— |
|
Post-employment plan (curtailment) / past service cost
adjustment |
(2.4 |
) |
— |
|
0.7 |
|
Share-based compensation expenses2 |
3.7 |
|
2.5 |
|
6.3 |
|
Adjusted EBITDA |
124.7 |
|
99.3 |
|
180.8 |
|
1 Environmental reclamation provision
adjustments were presented within other expense for 2021 periods.2
Share-based compensation expenses reflected in cost of sales and
selling and administrative expenses.
|
Year Ended |
(in $ millions) |
Dec. 31, 2022 |
Dec. 31, 2021 |
Profit (loss) for the period |
70.4 |
|
(244.4 |
) |
Add back: Tax expense |
25.4 |
|
41.6 |
|
Add back: Net finance expense |
118.5 |
|
221.0 |
|
Add back: Other expense |
32.6 |
|
35.1 |
|
Add back: Depreciation and amortization |
337.6 |
|
357.9 |
|
Add back: Amortization of deferred revenue and variable
consideration adjustment |
(73.2 |
) |
(73.1 |
) |
|
511.3 |
|
338.1 |
|
Adjusting items (pre-tax): |
|
|
Re-evaluation adjustment - environmental provision1 |
(133.5 |
) |
(4.6 |
) |
Impairment losses |
95.0 |
|
193.5 |
|
Inventory adjustments |
3.6 |
|
4.0 |
|
Post-employment plan (curtailment) / past service cost
adjustment |
(2.4 |
) |
5.0 |
|
Share-based compensation expenses2 |
1.9 |
|
11.8 |
|
Adjusted EBITDA |
475.9 |
|
547.8 |
|
1 Environmental reclamation provision
adjustments were presented within other expense for 2021 periods.2
Share-based compensation expenses reflected in cost of sales and
selling and administrative expenses.
Net Debt Reconciliation
|
|
(in $ thousands) |
Dec. 31, 2022 |
Sep. 30, 2022 |
Dec. 31, 2021 |
Total long-term debt |
1,184,162 |
1,183,237 |
1,180,274 |
Less: Cash |
225,665 |
286,117 |
270,989 |
Net debt |
958,497 |
897,120 |
909,285 |
Copper Cash Cost Reconciliation
Consolidated |
Three Months Ended |
Net pounds of copper produced1 |
|
|
|
(in thousands) |
Dec. 31, 2022 |
Sep. 30, 2022 |
Dec. 31, 2021 |
Peru |
59,628 |
49,167 |
50,389 |
Manitoba |
4,978 |
4,841 |
11,777 |
Net pounds of copper produced |
64,606 |
54,008 |
62,166 |
1 Contained copper in concentrate.
Consolidated |
Year Ended |
Net pounds of copper produced1 |
|
|
(in thousands) |
Dec. 31, 2022 |
Dec. 31, 2021 |
Peru |
197,082 |
171,548 |
Manitoba |
32,580 |
47,745 |
Net pounds of copper produced |
229,662 |
219,293 |
1 Contained copper in concentrate.
Consolidated |
Three Months Ended |
|
Dec. 31, 2022 |
Sep. 30, 2022 |
Dec. 31, 2021 |
Cash cost per pound of copper produced |
$000s |
|
$/lb |
|
$000s |
|
$/lb |
|
$000s |
|
$/lb |
|
Cash cost, before by-product credits |
208,642 |
|
3.23 |
|
211,664 |
|
3.92 |
|
232,224 |
|
3.73 |
|
By-product credits |
(138,990 |
) |
(2.15 |
) |
(180,464 |
) |
(3.34 |
) |
(200,306 |
) |
(3.22 |
) |
Cash cost, net of by-product credits |
69,652 |
|
1.08 |
|
31,200 |
|
0.58 |
|
31,918 |
|
0.51 |
|
Consolidated |
Year Ended |
|
Dec. 31, 2022 |
Dec. 31, 2021 |
Cash cost per pound of copper produced |
$000s |
|
$/lb |
|
$000s |
|
$/lb |
|
Cash cost, before by-product credits |
906,265 |
|
3.94 |
|
867,607 |
|
3.95 |
|
By-product credits |
(708,334 |
) |
(3.08 |
) |
(704,345 |
) |
(3.21 |
) |
Cash cost, net of by-product credits |
197,931 |
|
0.86 |
|
163,262 |
|
0.74 |
|
Consolidated |
Three Months Ended |
|
Dec. 31, 2022 |
Sep. 30, 2022 |
Dec. 31, 2021 |
Supplementary cash cost information |
$000s |
|
$/lb1 |
$000s |
|
$/lb1 |
$000s |
|
$/lb1 |
By-product credits2: |
|
|
|
|
|
|
Zinc |
24,744 |
|
0.38 |
43,606 |
|
0.81 |
74,585 |
|
1.20 |
Gold3 |
76,336 |
|
1.18 |
101,650 |
|
1.88 |
99,728 |
|
1.60 |
Silver3 |
9,592 |
|
0.15 |
16,066 |
|
0.30 |
14,853 |
|
0.24 |
Molybdenum & other |
28,318 |
|
0.44 |
19,142 |
|
0.35 |
11,140 |
|
0.18 |
Total
by-product credits |
138,990 |
|
2.15 |
180,464 |
|
3.34 |
200,306 |
|
3.22 |
Reconciliation to IFRS: |
|
|
|
|
|
|
Cash cost, net of by-product credits |
69,652 |
|
|
31,200 |
|
|
31,918 |
|
|
By-product credits |
138,990 |
|
|
180,464 |
|
|
200,306 |
|
|
Treatment and refining charges |
(19,968 |
) |
|
(21,852 |
) |
|
(13,721 |
) |
|
Share-based compensation expense |
490 |
|
|
114 |
|
|
744 |
|
|
Inventory adjustments |
7 |
|
|
2,074 |
|
|
— |
|
|
(Curtailment) / past service pension |
(2,384 |
) |
|
— |
|
|
737 |
|
|
Change in product inventory |
(16,425 |
) |
|
29,726 |
|
|
(16,247 |
) |
|
Royalties |
1,750 |
|
|
2,204 |
|
|
3,594 |
|
|
Depreciation and amortization4 |
79,408 |
|
|
89,811 |
|
|
89,927 |
|
|
Cost of sales5 |
251,520 |
|
|
313,741 |
|
|
297,258 |
|
|
1 Per pound of copper produced.2 By-product
credits are computed as revenue per financial statements, including
amortization of deferred revenue and pricing and volume
adjustments.3 Gold and silver by-product credits do not include
variable consideration adjustments with respect to stream
arrangements. Variable consideration adjustments are cumulative
adjustments to gold and silver stream deferred revenue primarily
associated with the net change in mineral reserves and resources or
amendments to the mine plan that would change the total expected
deliverable ounces under the precious metal streaming arrangement.
For the three months ended December 31, 2022 the variable
consideration adjustments amounted to expense of $nil, the three
months ended September 30, 2022 - $2,286, and for the three months
ended December 31, 2021 - $nil. Excludes approximately $5.2
million, or $0.17 per tonne, of COVID-19 related costs during the
twelve months ended December 31, 2022 and $19.8 million or $0.69
per tonne, of COVID-19 related costs during the twelve months ended
December 31, 2021.4 Depreciation is based on concentrate sold.5 As
per IFRS financial statements, excluding impairment
adjustments.
Consolidated |
Year Ended |
|
Dec. 31, 2022 |
Dec. 31, 2021 |
Supplementary cash cost information |
$000s |
|
$/lb1 |
$000s |
|
$/lb1 |
By-product credits2: |
|
|
|
|
Zinc |
224,043 |
|
0.98 |
302,301 |
|
1.38 |
Gold3 |
353,478 |
|
1.53 |
289,981 |
|
1.32 |
Silver3 |
62,252 |
|
0.27 |
61,388 |
|
0.28 |
Molybdenum & other |
68,561 |
|
0.30 |
50,675 |
|
0.23 |
Total
by-product credits |
708,334 |
|
3.08 |
704,345 |
|
3.21 |
Reconciliation to IFRS: |
|
|
|
|
Cash cost, net of by-product credits |
197,931 |
|
|
163,262 |
|
|
By-product credits |
708,334 |
|
|
704,345 |
|
|
Treatment and refining charges |
(68,936 |
) |
|
(55,430 |
) |
|
Share-based compensation expense |
420 |
|
|
1,347 |
|
|
Inventory adjustments |
3,553 |
|
|
3,999 |
|
|
(Curtailment) / past service pension |
(2,384 |
) |
|
4,965 |
|
|
Change in product inventory |
(3,125 |
) |
|
(18,180 |
) |
|
Royalties |
11,144 |
|
|
15,274 |
|
|
Depreciation and amortization4 |
337,615 |
|
|
357,924 |
|
|
Cost of sales5 |
1,184,552 |
|
|
1,177,506 |
|
|
|
|
|
|
|
|
|
1 Per pound of copper produced.2 By-product
credits are computed as revenue per financial statements, including
amortization of deferred revenue and pricing and volume
adjustments.3 Gold and silver by-product credits do not include
variable consideration adjustments with respect to stream
arrangements. Variable consideration adjustments are cumulative
adjustments to gold and silver stream deferred revenue primarily
associated with the net change in mineral reserves and resources or
amendments to the mine plan that would change the total expected
deliverable ounces under the precious metal streaming arrangement.
For the three months ended December 31, 2022 the variable
consideration adjustments amounted to expense of $nil, the three
months ended September 30, 2022 - $2,286, and for the three months
ended December 31, 2021 - $nil. Excludes approximately $5.2
million, or $0.17 per tonne, of COVID-19 related costs during the
twelve months ended December 31, 2022 and $19.8 million or $0.69
per tonne, of COVID-19 related costs during the twelve months ended
December 31, 2021.4 Depreciation is based on concentrate sold.5 As
per IFRS financial statements, excluding impairment
adjustments.
Peru |
Three Months Ended |
(in thousands) |
Dec. 31, 2022 |
Sep. 30, 2022 |
Dec. 31, 2021 |
Net pounds of copper produced1 |
59,628 |
49,167 |
50,389 |
1 Contained copper in concentrate.
Peru |
Year Ended |
(in thousands) |
Dec. 31, 2022 |
Dec. 31, 2021 |
Net pounds of copper produced1 |
197,082 |
171,548 |
1 Contained copper in concentrate.
Peru |
Three Months Ended |
|
Dec. 31, 2022 |
Sep. 30, 2022 |
Dec. 31, 2021 |
Cash cost per pound of copper produced |
$000s |
|
$/lb |
|
$000s |
|
$/lb |
|
$000s |
|
$/lb |
|
Mining |
41,647 |
|
0.70 |
|
35,197 |
|
0.72 |
|
27,756 |
|
0.55 |
|
Milling |
50,723 |
|
0.85 |
|
52,043 |
|
1.06 |
|
40,121 |
|
0.80 |
|
G&A |
14,817 |
|
0.25 |
|
13,421 |
|
0.27 |
|
18,351 |
|
0.36 |
|
Onsite
costs |
107,187 |
|
1.80 |
|
100,661 |
|
2.05 |
|
86,228 |
|
1.71 |
|
Treatment
& refining |
11,962 |
|
0.20 |
|
10,814 |
|
0.22 |
|
8,636 |
|
0.17 |
|
Freight & other |
15,607 |
|
0.26 |
|
12,905 |
|
0.26 |
|
11,609 |
|
0.23 |
|
Cash
cost, before by-product credits |
134,756 |
|
2.26 |
|
124,380 |
|
2.53 |
|
106,473 |
|
2.11 |
|
By-product credits |
(54,563 |
) |
(0.92 |
) |
(41,659 |
) |
(0.85 |
) |
(41,900 |
) |
(0.83 |
) |
Cash cost, net of by-product credits |
80,193 |
|
1.34 |
|
82,721 |
|
1.68 |
|
64,573 |
|
1.28 |
|
Peru |
Year Ended |
|
Dec. 31, 2022 |
Dec. 31, 2021 |
Cash cost per pound of copper produced |
$000s |
|
$/lb |
|
$000s |
|
$/lb |
|
Mining |
137,546 |
|
0.70 |
|
98,200 |
|
0.57 |
|
Milling |
195,152 |
|
0.99 |
|
168,477 |
|
0.99 |
|
G&A |
63,015 |
|
0.32 |
|
63,629 |
|
0.37 |
|
Onsite
costs |
395,713 |
|
2.01 |
|
330,306 |
|
1.93 |
|
Treatment
& refining |
39,587 |
|
0.20 |
|
32,365 |
|
0.19 |
|
Freight & other |
50,284 |
|
0.25 |
|
41,316 |
|
0.24 |
|
Cash
cost, before by-product credits |
485,584 |
|
2.46 |
|
403,987 |
|
2.36 |
|
By-product credits |
(173,488 |
) |
(0.88 |
) |
(139,885 |
) |
(0.82 |
) |
Cash cost, net of by-product credits |
312,096 |
|
1.58 |
|
264,102 |
|
1.54 |
|
Peru |
Three Months Ended |
|
Dec. 31, 2022 |
Sep. 30, 2022 |
Dec. 31, 2021 |
Supplementary cash cost information |
$000s |
|
$/lb1 |
$000s |
|
$/lb1 |
$000s |
|
$/lb1 |
By-product credits2: |
|
|
|
|
|
|
Gold3 |
19,934 |
|
0.33 |
12,793 |
|
0.26 |
24,325 |
|
0.49 |
Silver3 |
7,025 |
|
0.12 |
9,967 |
|
0.20 |
7,793 |
|
0.15 |
Molybdenum |
27,604 |
|
0.47 |
18,899 |
|
0.39 |
9,782 |
|
0.19 |
Total
by-product credits |
54,563 |
|
0.92 |
41,659 |
|
0.85 |
41,900 |
|
0.83 |
Reconciliation to IFRS: |
|
|
|
|
|
|
Cash cost, net of by-product credits |
80,193 |
|
|
82,721 |
|
|
64,573 |
|
|
By-product credits |
54,563 |
|
|
41,659 |
|
|
41,900 |
|
|
Treatment and refining charges |
(11,962 |
) |
|
(10,814 |
) |
|
(8,636 |
) |
|
Share-based compensation expenses |
95 |
|
|
(16 |
) |
|
145 |
|
|
Change in product inventory |
(15,685 |
) |
|
(2,497 |
) |
|
(4,507 |
) |
|
Royalties |
1,656 |
|
|
1,740 |
|
|
762 |
|
|
Depreciation and amortization4 |
58,256 |
|
|
56,614 |
|
|
54,078 |
|
|
Cost of sales5 |
167,116 |
|
|
169,407 |
|
|
148,315 |
|
|
1 Per pound of copper produced.2 By-product
credits are computed as revenue per financial statements, including
amortization of deferred revenue and pricing and volume
adjustments.3 Gold and silver by-product credits do not include
variable consideration adjustments with respect to stream
arrangements. 4 Depreciation is based on concentrate sold.5 As per
IFRS financial statements, excluding impairment adjustments.
Peru |
Year Ended |
|
Dec. 31, 2022 |
Dec. 31, 2021 |
Supplementary cash cost information |
$000s |
|
$/lb1 |
$000s |
|
$/lb1 |
By-product credits2: |
|
|
|
|
Gold3 |
68,630 |
|
0.35 |
61,510 |
|
0.37 |
Silver3 |
41,671 |
|
0.21 |
35,154 |
|
0.20 |
Molybdenum |
63,187 |
|
0.32 |
43,221 |
|
0.25 |
Total
by-product credits |
173,488 |
|
0.88 |
139,885 |
|
0.82 |
Reconciliation to IFRS: |
|
|
|
|
Cash cost, net of by-product credits |
312,096 |
|
|
264,102 |
|
|
By-product credits |
173,488 |
|
|
139,885 |
|
|
Treatment and refining charges |
(39,587 |
) |
|
(32,365 |
) |
|
Inventory adjustments |
(558 |
) |
|
(1,446 |
) |
|
Share-based compensation expenses |
77 |
|
|
247 |
|
|
Change in product inventory |
(31,348 |
) |
|
(13,743 |
) |
|
Royalties |
5,367 |
|
|
3,503 |
|
|
Depreciation and amortization4 |
211,043 |
|
|
194,408 |
|
|
Cost of sales5 |
630,578 |
|
|
554,591 |
|
|
1 Per pound of copper produced.2 By-product
credits are computed as revenue per financial statements, including
amortization of deferred revenue and pricing and volume
adjustments.3 Gold and silver by-product credits do not include
variable consideration adjustments with respect to stream
arrangements. 4 Depreciation is based on concentrate sold.5 As per
IFRS financial statements, excluding impairment adjustments.
Copper Sustaining and All-in Sustaining Cash
Cost Reconciliation
Consolidated |
Three Months Ended |
|
Dec. 31, 2022 |
Sep. 30, 2022 |
Dec. 31, 2021 |
All-in sustaining cash cost per pound of copper
produced |
$000s |
|
$/lb |
$000s |
|
$/lb |
$000s |
|
$/lb |
Cash
cost, net of by-product credits |
69,652 |
|
1.08 |
31,200 |
|
0.58 |
31,918 |
|
0.51 |
Cash
sustaining capital expenditures |
60,002 |
|
0.92 |
69,588 |
|
1.29 |
77,539 |
|
1.25 |
Capitalized exploration |
11,500 |
|
0.18 |
— |
|
— |
8,000 |
|
0.13 |
Royalties |
1,750 |
|
0.03 |
2,204 |
|
0.04 |
3,594 |
|
0.06 |
Sustaining cash cost, net of by-product
credits |
142,904 |
|
2.21 |
102,992 |
|
1.91 |
121,051 |
|
1.95 |
Corporate
selling and administrative expenses & regional costs |
11,876 |
|
0.19 |
11,384 |
|
0.21 |
14,729 |
|
0.24 |
Accretion and amortization of decommissioning and community
agreements1 |
722 |
|
0.01 |
2,099 |
|
0.04 |
894 |
|
0.01 |
All-in sustaining cash cost, net of by-product
credits |
155,502 |
|
2.41 |
116,475 |
|
2.16 |
136,674 |
|
2.20 |
Reconciliation to property, plant and equipment additions: |
|
|
|
|
|
|
Property, plant and equipment additions |
76,933 |
|
|
72,237 |
|
|
91,432 |
|
|
Capitalized stripping net additions |
15,169 |
|
|
22,645 |
|
|
19,201 |
|
|
Total accrued capital additions |
92,102 |
|
|
94,882 |
|
|
110,633 |
|
|
Less other non-sustaining capital costs2 |
41,585 |
|
|
34,649 |
|
|
43,176 |
|
|
Total sustaining capital costs |
50,517 |
|
|
60,233 |
|
|
67,457 |
|
|
Right of use leased assets |
(265 |
) |
|
(5,158 |
) |
|
(6,714 |
) |
|
Capitalized lease cash payments - operating sites |
5,848 |
|
|
8,852 |
|
|
9,099 |
|
|
Community agreement cash payments |
2,854 |
|
|
2,491 |
|
|
1,266 |
|
|
Accretion and amortization of decommissioning and restoration
obligations |
1,048 |
|
|
3,170 |
|
|
6,431 |
|
|
Cash sustaining capital expenditures |
60,002 |
|
|
69,588 |
|
|
77,539 |
|
|
1 Includes accretion of decommissioning relating
to non-productive sites, and accretion and amortization of current
community agreements.2 Other non-sustaining capital costs include
Arizona capitalized costs, capitalized interest, capitalized
exploration and growth capital expenditures.
Consolidated |
Year Ended |
|
Dec. 31, 2022 |
Dec. 31, 2021 |
All-in sustaining cash cost per pound of copper
produced |
$000s |
|
$/lb |
$000s |
|
$/lb |
Cash
cost, net of by-product credits |
197,931 |
|
0.86 |
163,262 |
|
0.74 |
Cash
sustaining capital expenditures |
255,725 |
|
1.11 |
268,190 |
|
1.22 |
Capitalized exploration |
11,500 |
|
0.05 |
8,000 |
|
0.04 |
Royalties |
11,144 |
|
0.05 |
15,274 |
|
0.07 |
Sustaining cash cost, net of by-product
credits |
476,300 |
|
2.07 |
454,726 |
|
2.07 |
Corporate
selling and administrative expenses & regional costs |
38,799 |
|
0.17 |
46,663 |
|
0.21 |
Accretion and amortization of decommissioning and community
agreements1 |
4,416 |
|
0.02 |
2,830 |
|
0.01 |
All-in sustaining cash cost, net of by-product
credits |
519,515 |
|
2.26 |
504,219 |
|
2.30 |
Reconciliation to property, plant and equipment additions: |
|
|
|
|
Property, plant and equipment additions |
259,281 |
|
|
346,335 |
|
|
Capitalized stripping net additions |
89,262 |
|
|
79,426 |
|
|
Total accrued capital additions |
348,543 |
|
|
425,761 |
|
|
Less other non-sustaining capital costs2 |
122,054 |
|
|
196,435 |
|
|
Total sustaining capital costs |
226,489 |
|
|
229,326 |
|
|
Right of use leased assets |
(25,695 |
) |
|
(26,685 |
) |
|
Capitalized lease cash payments - operating sites |
33,271 |
|
|
35,071 |
|
|
Community agreement cash payments |
9,486 |
|
|
1,691 |
|
|
Accretion and amortization of decommissioning and restoration
obligations |
12,174 |
|
|
28,987 |
|
|
Cash sustaining capital expenditures |
255,725 |
|
|
268,390 |
|
|
1 Includes accretion of decommissioning relating
to non-productive sites, and accretion and amortization of current
community agreements.2 Other non-sustaining capital costs include
Arizona capitalized costs, capitalized interest, capitalized
exploration and growth capital expenditures.
Peru |
Three Months Ended |
|
Dec. 31, 2022 |
Sep. 30, 2022 |
Dec. 31, 2021 |
Sustaining cash cost per pound of copper
produced |
$000s |
$/lb |
$000s |
$/lb |
$000s |
$/lb |
Cash
cost, net of by-product credits |
80,193 |
1.34 |
82,721 |
1.68 |
64,573 |
1.28 |
Cash
sustaining capital expenditures |
31,240 |
0.53 |
36,507 |
0.74 |
50,423 |
1.00 |
Capitalized exploration1 |
11,500 |
0.19 |
— |
— |
8,000 |
0.16 |
Royalties |
1,656 |
0.03 |
1,740 |
0.04 |
762 |
0.02 |
Sustaining cash cost per pound of copper
produced |
124,589 |
2.09 |
120,968 |
2.46 |
123,758 |
2.46 |
1 Only includes exploration costs incurred for locations near to
existing mine operations.
Peru |
Year Ended |
|
Dec. 31, 2022 |
Dec. 31, 2021 |
Sustaining cash cost per pound of copper
produced |
$000s |
$/lb |
$000s |
$/lb |
Cash
cost, net of by-product credits |
312,096 |
1.58 |
264,102 |
1.54 |
Cash
sustaining capital expenditures |
133,313 |
0.68 |
146,044 |
0.85 |
Capitalized exploration1 |
11,500 |
0.06 |
8,000 |
0.05 |
Royalties |
5,367 |
0.03 |
3,503 |
0.02 |
Sustaining cash cost per pound of copper
produced |
462,276 |
2.35 |
421,649 |
2.46 |
1 Only includes exploration costs incurred for locations near to
existing mine operations.
Gold cash cost and sustaining cash cost reconciliation
Manitoba |
Three Months Ended |
Year Ended |
(in thousands) |
Dec. 31, 2022 |
Sep. 30, 2022 |
Dec. 31, 2022 |
Net ounces of gold produced1 |
33,060 |
40,457 |
161,471 |
1 Contained gold in concentrate and doré.
Manitoba |
Three Months Ended |
|
Dec. 31, 2022 |
Sep. 30, 2022 |
Cash cost per ounce of gold produced |
$000s |
|
$/oz |
|
$000s |
|
$/oz |
|
Mining |
38,112 |
|
1,153 |
|
40,659 |
|
1,005 |
|
Milling |
14,868 |
|
450 |
|
16,573 |
|
410 |
|
Refining
(zinc) |
— |
|
— |
|
— |
|
— |
|
G&A |
6,452 |
|
195 |
|
9,841 |
|
243 |
|
Onsite
costs |
59,432 |
|
1,798 |
|
67,073 |
|
1,658 |
|
Treatment
& refining |
8,006 |
|
242 |
|
11,038 |
|
273 |
|
Freight & other |
6,448 |
|
195 |
|
9,173 |
|
226 |
|
Cash
cost, before by-product credits |
73,886 |
|
2,235 |
|
87,284 |
|
2,157 |
|
By-product credits |
(43,407 |
) |
(1,313 |
) |
(78,565 |
) |
(1,941 |
) |
Gold cash cost, net of by-product credits |
30,479 |
|
922 |
|
8,719 |
|
216 |
|
Manitoba |
Year Ended |
|
Dec. 31, 2022 |
Cash cost per ounce of gold produced |
$000s |
$/oz |
Mining |
192,704 |
|
1,193 |
|
Milling |
73,903 |
|
458 |
|
Refining
(zinc) |
32,755 |
|
203 |
|
G&A |
62,439 |
|
387 |
|
Onsite
costs |
361,801 |
|
2,241 |
|
Treatment
& refining |
29,349 |
|
181 |
|
Freight
& other |
29,531 |
|
183 |
|
Cash cost, before by-product credits |
420,681 |
|
2,605 |
|
By-product credits |
(372,783 |
) |
(2,308 |
) |
Gold cash cost, net of by-product credits |
47,898 |
|
297 |
|
Manitoba |
Three Months Ended |
|
Dec. 31, 2022 |
Sep. 30, 2022 |
Supplementary cash cost information |
$000s |
|
$/oz1 |
$000s |
|
$/oz1 |
By-product credits2: |
|
|
|
|
Copper |
15,382 |
|
465 |
28,617 |
|
707 |
Zinc |
24,744 |
|
748 |
43,606 |
|
1,077 |
Silver3 |
2,567 |
|
78 |
6,099 |
|
151 |
Other |
714 |
|
22 |
243 |
|
6 |
Total
by-product credits |
43,407 |
|
1,313 |
78,565 |
|
1,941 |
Reconciliation to IFRS: |
|
|
|
|
Cash cost, net of by-product credits |
30,479 |
|
|
8,719 |
|
|
By-product credits |
43,407 |
|
|
78,565 |
|
|
Treatment and refining charges |
(8,006 |
) |
|
(11,038 |
) |
|
(Curtailment) / past service pension |
(2,384 |
) |
|
— |
|
|
Share-based compensation expenses |
395 |
|
|
130 |
|
|
Inventory adjustments |
7 |
|
|
2,074 |
|
|
Change in product inventory |
(740 |
) |
|
32,223 |
|
|
Royalties |
94 |
|
|
464 |
|
|
Depreciation and amortization4 |
21,152 |
|
|
33,197 |
|
|
Cost of sales5 |
84,404 |
|
|
144,334 |
|
|
1 Per ounce of gold produced.2 By-product
credits are computed as revenue per financial statements,
amortization of deferred revenue and pricing and volume
adjustments.3 Silver by-product credits do not include variable
consideration adjustments with respect to stream arrangements.4
Depreciation is based on concentrate sold.5 As per IFRS financial
statements, excluding impairment adjustments.
Manitoba |
Year Ended |
|
Dec. 31, 2022 |
Supplementary cash cost information |
$000s |
|
$/oz1 |
By-product credits2: |
|
|
Copper |
122,785 |
|
760 |
Zinc |
224,043 |
|
1,388 |
Silver3 |
20,581 |
|
127 |
Other |
5,374 |
|
33 |
Total
by-product credits |
372,783 |
|
2,308 |
Reconciliation to IFRS: |
|
|
Cash cost, net of by-product credits |
47,898 |
|
|
By-product credits |
372,783 |
|
|
Treatment and refining charges |
(29,349 |
) |
|
(Curtailment) / past service pension |
(2,384 |
) |
|
Share-based compensation expenses |
343 |
|
|
Inventory adjustments |
4,111 |
|
|
Change in product inventory |
28,223 |
|
|
Royalties |
5,777 |
|
|
Depreciation and amortization4 |
126,572 |
|
|
Cost of sales5 |
553,974 |
|
|
1 Per ounce of gold produced.2 By-product
credits are computed as revenue per financial statements,
amortization of deferred revenue and pricing and volume
adjustments.3 Silver by-product credits do not include variable
consideration adjustments with respect to stream arrangements.4
Depreciation is based on concentrate sold.5 As per IFRS financial
statements, excluding impairment adjustments.
Manitoba |
Three Months Ended |
|
Dec. 31, 2022 |
Sep. 30, 2022 |
Sustaining cash cost per ounce of gold
produced |
$000s |
$/oz |
$000s |
$/oz |
Gold cash
cost, net of by-product credits |
30,479 |
922 |
8,719 |
216 |
Cash
sustaining capital expenditures |
28,762 |
870 |
33,081 |
818 |
Royalties |
94 |
3 |
464 |
11 |
Sustaining cash cost per ounce of gold
produced |
59,335 |
1,795 |
42,264 |
1,045 |
Manitoba |
Year Ended |
|
Dec. 31, 2022 |
Sustaining cash cost per ounce of gold
produced |
$000s |
$/oz |
Gold cash
cost, net of by-product credits |
47,898 |
297 |
Cash
sustaining capital expenditures |
122,412 |
758 |
Royalties |
5,777 |
36 |
Sustaining cash cost per ounce of gold
produced |
176,087 |
1,091 |
Combined Unit Cost Reconciliation
Peru |
Three Months Ended |
(in thousands except ore tonnes milled and unit cost per
tonne) |
Combined unit cost per tonne processed |
Dec. 31, 2022 |
|
Sep. 30, 2022 |
|
Dec. 31, 2021 |
|
Mining |
41,647 |
|
35,197 |
|
27,756 |
|
Milling |
50,723 |
|
52,043 |
|
40,121 |
|
G&A1 |
14,817 |
|
13,421 |
|
18,351 |
|
Other G&A2 |
(152 |
) |
1,342 |
|
(1,937 |
) |
|
107,035 |
|
102,003 |
|
84,291 |
|
Less: Covid related costs |
689 |
|
929 |
|
4,041 |
|
Unit
cost |
106,346 |
|
101,074 |
|
80,250 |
|
Tonnes ore milled |
7,796 |
|
7,742 |
|
8,049 |
|
Combined unit cost per tonne |
13.64 |
|
13.06 |
|
9.96 |
|
Reconciliation to IFRS: |
|
|
|
Unit cost |
106,346 |
|
101,074 |
|
80,250 |
|
Freight & other |
15,607 |
|
12,905 |
|
11,609 |
|
Covid related costs |
689 |
|
929 |
|
4,041 |
|
Other G&A |
152 |
|
(1,342 |
) |
1,937 |
|
Share-based compensation expenses |
95 |
|
(16 |
) |
145 |
|
Change in product inventory |
(15,685 |
) |
(2,497 |
) |
(4,507 |
) |
Royalties |
1,656 |
|
1,740 |
|
762 |
|
Depreciation and amortization |
58,256 |
|
56,614 |
|
54,078 |
|
Cost of sales3 |
167,116 |
|
169,407 |
|
148,315 |
|
1 G&A as per cash cost reconciliation
above.2 Other G&A primarily includes profit sharing costs.3 As
per IFRS financial statements, excluding impairment
adjustments.
Peru |
Year Ended |
(in thousands except ore tonnes milled and unit cost per
tonne) |
Combined unit cost per tonne processed |
Dec. 31, 2022 |
|
Dec. 31, 2021 |
|
Mining |
137,546 |
|
98,200 |
|
Milling |
195,152 |
|
168,477 |
|
G&A1 |
63,015 |
|
63,629 |
|
Other G&A2 |
(414 |
) |
(2,152 |
) |
|
395,299 |
|
328,154 |
|
Less: Covid related costs |
5,214 |
|
19,760 |
|
Unit
cost |
390,085 |
|
308,394 |
|
Tonnes ore milled |
30,522 |
|
28,810 |
|
Combined unit cost per tonne |
12.78 |
|
10.70 |
|
Reconciliation to IFRS: |
|
|
Unit cost |
390,085 |
|
308,394 |
|
Freight & other |
50,284 |
|
41,316 |
|
Covid related costs |
5,214 |
|
19,760 |
|
Other G&A |
414 |
|
2,152 |
|
Share-based compensation expenses |
77 |
|
247 |
|
Inventory adjustments |
(558 |
) |
(1,446 |
) |
Change in product inventory |
(31,348 |
) |
(13,743 |
) |
Royalties |
5,367 |
|
3,503 |
|
Depreciation and amortization |
211,043 |
|
194,408 |
|
Cost of sales3 |
630,578 |
|
554,591 |
|
1 G&A as per cash cost reconciliation
above.2 Other G&A primarily includes profit sharing costs.3 As
per IFRS financial statements, excluding impairment
adjustments.
Manitoba |
Three Months Ended |
(in thousands except tonnes ore milled and unit cost per
tonne) |
Combined unit cost per tonne processed |
Dec. 31, 2022 |
|
Sep. 30, 2022 |
|
Dec. 31, 2021 |
|
Mining |
38,112 |
|
40,659 |
|
58,891 |
|
Milling |
14,868 |
|
16,573 |
|
22,193 |
|
G&A1 |
6,452 |
|
9,841 |
|
13,746 |
|
Less: G&A allocated to zinc metal production |
— |
|
— |
|
(3,762 |
) |
Less: Other G&A related to profit sharing costs |
1,939 |
|
(1,784 |
) |
— |
|
Unit cost |
61,371 |
|
65,289 |
|
91,068 |
|
USD/CAD implicit exchange rate |
1.36 |
|
1.31 |
|
1.26 |
|
Unit cost - C$ |
83,363 |
|
85,225 |
|
114,751 |
|
Tonnes ore milled |
345,492 |
|
362,108 |
|
682,292 |
|
Combined unit cost per tonne - C$ |
241 |
|
235 |
|
168 |
|
Reconciliation to IFRS: |
|
|
|
Unit cost |
61,371 |
|
65,289 |
|
91,068 |
|
Freight & other |
6,448 |
|
9,173 |
|
6,828 |
|
Refined zinc |
— |
|
— |
|
19,008 |
|
G&A allocated to zinc metal production |
— |
|
— |
|
3,762 |
|
Other G&A related to profit sharing |
(1,939 |
) |
1,784 |
|
— |
|
Share-based compensation expenses |
395 |
|
130 |
|
599 |
|
Inventory adjustments |
7 |
|
2,074 |
|
— |
|
(Curtailment) / past service pension |
(2,384 |
) |
— |
|
737 |
|
Change in product inventory |
(740 |
) |
32,22 |
|
(11,740 |
) |
Royalties |
94 |
|
464 |
|
2,832 |
|
Depreciation and amortization |
21,152 |
|
33,197 |
|
35,849 |
|
Cost of sales2 |
84,404 |
|
144,334 |
|
148,943 |
|
1 G&A as per cash cost reconciliation
above.2 As per IFRS financial statements, excluding impairment
adjustments.
Manitoba |
Year Ended |
(in thousands except tonnes ore milled and unit cost per
tonne) |
Combined unit cost per tonne processed |
Dec. 31, 2022 |
|
Dec. 31, 2021 |
|
Mining |
192,704 |
|
222,660 |
|
Milling |
73,903 |
|
62,995 |
|
G&A1 |
62,439 |
|
52,963 |
|
Less: G&A allocated to zinc metal production and other
areas |
(6,523 |
) |
(14,656 |
) |
Less: Other G&A related to profit sharing costs |
(20,075 |
) |
— |
|
Unit cost |
302,448 |
|
323,962 |
|
USD/CAD implicit exchange rate |
1.30 |
|
1.25 |
|
Unit cost - C$ |
391,782 |
|
406,164 |
|
Tonnes ore milled |
2,008,251 |
|
2,640,272 |
|
Combined unit cost per tonne - C$ |
195 |
|
154 |
|
Reconciliation to IFRS: |
|
|
Unit cost |
302,448 |
|
323,962 |
|
Freight & other |
29,531 |
|
29,545 |
|
Refined zinc |
32,755 |
|
72,392 |
|
G&A allocated to zinc metal production |
6,523 |
|
14,656 |
|
Other G&A related to profit sharing |
20,075 |
|
— |
|
Share-based compensation expenses |
343 |
|
1,100 |
|
Inventory adjustments |
4,111 |
|
5,445 |
|
(Curtailment) / past service pension |
(2,384 |
) |
4,965 |
|
Change in product inventory |
28,223 |
|
(4,437 |
) |
Royalties |
5,777 |
|
11,771 |
|
Depreciation and amortization |
126,572 |
|
163,516 |
|
Cost of sales2 |
553,974 |
|
622,915 |
|
|
|
|
|
|
1 G&A as per cash cost reconciliation
above.2 As per IFRS financial statements, excluding impairment
adjustments.
Forward-Looking
Information
This news release contains forward-looking information within the
meaning of applicable Canadian and United States securities
legislation. All information contained in this news release, other
than statements of current and historical fact, is forward-looking
information. Often, but not always, forward-looking information can
be identified by the use of words such as “plans”, “expects”,
“budget”, “guidance”, “scheduled”, “estimates”, “forecasts”,
“strategy”, “target”, “intends”, “objective”, “goal”,
“understands”, “anticipates” and “believes” (and variations of
these or similar words) and statements that certain actions, events
or results “may”, “could”, “would”, “should”, “might” “occur” or
“be achieved” or “will be taken” (and variations of these or
similar expressions). All of the forward-looking information in
this news release is qualified by this cautionary note.
Forward-looking information includes, but is not
limited to, statements regarding the company’s production, cost and
capital and exploration expenditure guidance, the anticipated
timing of the company’s issuance of new three-year production
outlook, expectations regarding reductions in discretionary
spending, capital expenditures and net debt, expectations regarding
the impact of inflationary pressures on the company’s cost of
operations, financial condition and prospects, expectations
regarding the company’s cash balance and liquidity for 2023,
expectations regarding the Copper World project, including with
respect to the company’s plans for a pre-feasibility study and the
estimated timelines and pre-requisites for sanctioning the project,
expectations regarding the permitting requirements for the Copper
World project and permitting related litigation, the company’s
ability to increase the mining rate at Lalor beyond 4,650 tonnes
per day, the anticipated timing for completing the Stall recovery
improvement program, expectations regarding the ability to conduct
exploration work on the Maria Reyna and Caballito properties and to
advance related drill plans, expectations regarding the duration
and potential impact of short-term mine plan changes implemented at
Constancia, expectations regarding the ability for the company to
reduce greenhouse gas emissions, the company’s evaluation of
opportunities to reprocess tailings, expectations regarding the
prospective nature of the Maria Reyna and Caballito properties, the
anticipated impact of brownfield growth projects on the company’s
performance, anticipated expansion opportunities in Snow Lake,
anticipated drill programs, anticipated mine plans, anticipated
metals prices and the anticipated sensitivity of the company’s
financial performance to metals prices, events that may affect its
operations and development projects, anticipated cash flows from
operations and related liquidity requirements, the anticipated
effect of external factors on revenue, such as commodity prices,
estimation of mineral reserves and resources, mine life
projections, reclamation costs, economic outlook, government
regulation of mining operations, and business and acquisition
strategies. Forward-looking information is not, and cannot be, a
guarantee of future results or events. Forward-looking information
is based on, among other things, opinions, assumptions, estimates
and analyses that, while considered reasonable by the company at
the date the forward-looking information is provided, inherently
are subject to significant risks, uncertainties, contingencies and
other factors that may cause actual results and events to be
materially different from those expressed or implied by the
forward-looking information.
The material factors or assumptions that Hudbay
has identified and were applied in drawing conclusions or making
forecasts or projections set out in the forward-looking information
include, but are not limited to:
- the ability to achieve production and cost guidance;
- the ability to achieve discretionary spending reductions
without impacting operations;
- no significant interruptions to operations due to social or
political unrest in the regions Hudbay operates, including the
navigation of the complex environment in Peru;
- no interruptions to the company’s plans for advancing the
Copper World project;
- the ability to ramp up exploration in respect of the Maria
Reyna and Caballito properties and to advance related drill
plans;
- the ability to ramp up the Lalor mine beyond 4,650 tonnes per
day;
- the success of mining, processing, exploration and development
activities;
- the scheduled maintenance and availability of the company’s
processing facilities;
- the accuracy of geological, mining and metallurgical
estimates;
- anticipated metals prices and the costs of production;
- the supply and demand for metals the company produces;
- the supply and availability of all forms of energy and fuels at
reasonable prices;
- no significant unanticipated operational or technical
difficulties;
- the execution of the company’s business and growth strategies,
including the success of its strategic investments and
initiatives;
- the availability of additional financing, if needed;
- the ability to complete project targets on time and on budget
and other events that may affect the company’s ability to develop
its projects;
- the timing and receipt of various regulatory and governmental
approvals;
- the availability of personnel for the company’s exploration,
development and operational projects and ongoing employee
relations;
- maintaining good relations with the labour unions that
represent certain of the company’s employees in Manitoba and
Peru;
- maintaining good relations with the communities in which the
company operates, including the neighbouring Indigenous communities
and local governments;
- no significant unanticipated challenges with stakeholders at
the company’s various projects;
- no significant unanticipated events or changes relating to
regulatory, environmental, health and safety matters;
- no contests over title to the company’s properties, including
as a result of rights or claimed rights of Indigenous peoples or
challenges to the validity of the company’s unpatented mining
claims;
- the timing and possible outcome of pending litigation and no
significant unanticipated litigation;
- certain tax matters, including, but not limited to current tax
laws and regulations, changes in taxation policies and the refund
of certain value added taxes from the Canadian and Peruvian
governments; and
- no significant and continuing adverse changes in general
economic conditions or conditions in the financial markets
(including commodity prices and foreign exchange rates).
The risks, uncertainties, contingencies and
other factors that may cause actual results to differ materially
from those expressed or implied by the forward-looking information
may include, but are not limited to, political and social risks in
the regions Hudbay operates, including the uncertainty with respect
to the political and social environment in Peru and its potential
impact on the company’s mining operations (as further described
below), risks generally associated with the mining industry and the
current geopolitical environment, including future commodity
prices, currency and interest rate fluctuations, energy and
consumable prices, supply chain constraints and general cost
escalation in the current inflationary environment, uncertainties
related to the development and operation of the company’s projects,
risks related to the Copper World project, including in relation to
permitting, litigation, project delivery and financing risks, risks
related to the new Lalor mine plan, including the ability to
convert inferred mineral resource estimates to higher confidence
categories, dependence on key personnel and employee and union
relations, risks related to political or social instability, unrest
or change, risks in respect of Indigenous and community relations,
rights and title claims, operational risks and hazards, including
the cost of maintaining and upgrading the company's tailings
management facilities and any unanticipated environmental,
industrial and geological events and developments and the inability
to insure against all risks, failure of plant, equipment,
processes, transportation and other infrastructure to operate as
anticipated, compliance with government and environmental
regulations, including permitting requirements and anti-bribery
legislation, depletion of the company’s reserves, volatile
financial markets and interest rates that may affect the company’s
ability to obtain additional financing on acceptable terms, the
failure to obtain required approvals or clearances from government
authorities on a timely basis, uncertainties related to the
geology, continuity, grade and estimates of mineral reserves and
resources, and the potential for variations in grade and recovery
rates, uncertain costs of reclamation activities, the company’s
ability to comply with its pension and other post-retirement
obligations, the company’s ability to abide by the covenants in its
debt instruments and other material contracts, tax refunds, hedging
transactions, as well as the risks discussed under the heading
“Risk Factors” in the company’s most recent Annual Information Form
and under the heading “Financial Risk Management” in the company’s
management’s discussion and analysis for the year ended December
31, 2022.
Additionally, as a result of the heightened
tensions, protests and social unrest in Peru following a recent
change in the country's political leadership, the company has
experienced intermittent disruptions to commerce and supply chains,
including the ability to steadily receive critical supplies, and
transport and sell concentrates. A prolonged disruption of
logistics and supply chains may adversely impact operations at
Hudbay’s Constancia mine. Given the uncertainty of the duration and
extent of the social and political tensions in Peru, and the
relative contribution of the company’s Peru operations to its
overall output, Hudbay’s 2023 production and cost guidance is
subject to a higher-than-normal degree of uncertainty.
Should one or more risk, uncertainty,
contingency or other factor materialize or should any factor or
assumption prove incorrect, actual results could vary materially
from those expressed or implied in the forward-looking information.
Accordingly, you should not place undue reliance on forward-looking
information. Hudbay does not assume any obligation to update or
revise any forward-looking information after the date of this news
release or to explain any material difference between subsequent
actual events and any forward-looking information, except as
required by applicable law.
Note to United States
Investors
This news release has been prepared in
accordance with the requirements of the securities laws in effect
in Canada, which may differ materially from the requirements of
United States securities laws applicable to U.S. issuers.
About Hudbay
Hudbay (TSX, NYSE: HBM) is a diversified mining
company with long-life assets in North and South America. The
company’s Constancia operations in Cusco (Peru) produce copper with
gold, silver and molybdenum by-products. Its Snow Lake operations
in Manitoba (Canada) produce gold with copper, zinc and silver
by-products. Hudbay has an organic pipeline that includes the
Copper World project in Arizona and the Mason project in Nevada
(United States), and its growth strategy is focused on the
exploration, development, operation, and optimization of properties
it already controls, as well as other mineral assets it may acquire
that fit its strategic criteria. Hudbay’s mission is to create
sustainable value through the acquisition, development and
operation of high-quality, long-life deposits with exploration
potential in jurisdictions that support responsible mining, and to
see the regions and communities in which the company operates
benefit from its presence. Further information about Hudbay can be
found on www.hudbay.com.
For further information, please contact:
Candace BrûléVice President, Investor Relations(416)
814-4387candace.brule@hudbay.com
________________________i Adjusted net earnings and adjusted net
earnings per share; adjusted EBITDA; cash cost, sustaining cash
cost and all-in sustaining cash cost per pound of copper produced,
net of by-product credits; cash cost and sustaining cash cost per
ounce of gold produced, net of by-product credits; net debt and
unit operating cost per tonne are non-IFRS financial performance
measures with no standardized definition under IFRS. For further
information, please see the “Non-IFRS Financial Performance
Measures” section of this news release.
ii Calculated using the mid-point of the guidance range.
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