TORONTO (miningweekly.com) – Canadian base metals miner Hudbay Minerals has reported a narrower first-quarter loss on the back of improved output and sales, despite reporting a significant inventory build-up.

The Toronto-based company, with assets in Canada, the US and Peru, reported a net loss of $23.7-million, or $0.10 a share, for the three months ended March 31, compared with a net loss of $27.2-million, or $0.15 a share, in the first quarter of 2014.

Cash flow from operations and net earnings were positively impacted by higher revenue as a result of significant increases in output of all metals as the Reed and Lalor mines, in Manitoba, achieved commercial production in 2014.

While substantially improved when compared to the previous year, unsold copper and gold negatively impacted cash flow from operations, net earnings and cash cost per pound of copper in the quarter under review. Hudbay reported unsold inventory of about 6 000 t of copper-in-concentrate as a result of logistical and other issues, as well as about 9 000 oz of unstreamed gold in the three months ended March 31.

Net earnings were also negatively affected by higher depreciation expenses resulting from commercial production at Reed and Lalor, as well as higher depreciation expense due to revised mine planning assumptions at 777, also in Manitoba.

Revenues rose more than 50% to $160.7-million, on the back of improved copper and gold sales. Copper sales almost doubled to 10 995 t and gold sales rose 15% to 12 350 oz. Silver sales, at 100 317 oz, and refined zinc sales, at 23 779 t, were 2% lower and 13% higher respectively, year-over-year.

Hudbay further reported that the Constancia mine, in Peru, which started copper concentrate production in December, had achieved commercial production last week. Ocean shipments started last month and the mine and concentrator were operating at or above design capacity.

As at March 31, Hudbay had total available and committed liquidity of about $464-million, including $122.5-million in cash and cash equivalents and availability under its credit facilities.

Meanwhile, the collective agreements with employees represented by seven labour unions at its Manitoba operations had expired on December 31. The membership of the International Association of Machinists and Aerospace Workers Local No 1848 (IAM), rejected a formal offer and started strike action on Saturday.

Hudbay said it expected that operations would continue under a comprehensive contingency plan during the IAM strike, while negotiations with the other six unions were ongoing.

Earlier this month, Hudbay bought the New Brittania mine and mill, located in Snow Lake, Manitoba, for about $16-million. Should the mill, which is currently on care and maintenance, be refurbished, it was expected to be a low-cost means for the company to improve capacity at the Lalor mine, and eliminate the need to build a new concentrator at Lalor.

Hudbay’s results pleased investors, who drove the company’s TSX-listed stock up 5.5% over Thursday’s closing price to C$12.44 apiece early on Friday morning.