Toronto-headquartered Hudbay Minerals on Tuesday confirmed that it would meet its production guidance for 2018, but flagged higher operating costs at its Manitoba unit, citing cold weather conditions, higher costs at the 777 mine and the impact of a fan outage at Lalor.

The combined mine and mill unit operating cost for the Manitoba unit is now expected to be between C$125/t and C$135/t in 2018, compared with an initial guidance of C$110/t to C$123/t.

Hudbay said that the operating costs at Lalor would continue to be affected by additional costs to truck ore to the Flin Flon mill, while the Lalor exhaust fan repairs were completed.

The company stated that its unit cost guidance of $7.5/t to $9.20/t for its Peru unit remained intact.

Compared with the second quarter of 2017, production of contained copper-equivalent in concentrate in the second quarter of 2018 decreased by 6.7% as a result of lower production of copper and zinc, partially offset by higher production of precious metals. Hudbay said this reflected lower grades at the Constancia mine, in Peru, in accordance with the mine plan, offset in part by higher Constancia mill throughput.

Hudbay produced a total of 37 625 t of copper, 32 480 oz of gold, 951 661 oz of silver and 33 170 t of zinc in concentrate during the June quarter.

Net profit and earnings a share in the second quarter of 2018 were $24.7-million and $0.09, respectively, compared with a net profit and earnings a share of $19.1-million and $0.08, respectively, in the second quarter of 2017.

Operating cash flow before change in noncash working capital increased to $131.6-million from $124.1-million in the same quarter of 2017. The increase in operating cash flow is the result of higher realised prices for copper, zinc and precious metals, partially offset by decreases in the sales volumes of copper, zinc and silver and higher mine operating costs.

“In the first half of the year, we delivered solid production results and growing free cash flow, and applied that cash flow to substantial net debt reduction and funding the development of our exploration pipeline,” said president and CEO Alan Hair.

“Our focus for the remainder of the year is to deliver on our operating targets, complete the ramp-up of ore production at Lalor and move Rosemont through the permitting process into development.”

The company is currently working with the US Forest Service on the draft mine plan for Rosemont. The remaining key federal permit outstanding is the Section 404 water permit from the US Army Corps of Engineers.