VANCOUVER (miningweekly.com) – Base metals producer Hudbay Minerals has reported a strong 314% improvement in first-quarter net profit to $41.4-million, or $0.16 a share, which came in below average analyst estimates of $0.18 a share.
Revenues for the period grew nearly 50% to $386.66-billion, the Toronto-based company reported, as copper and silver sales accelerated, and were boosted by higher metals prices.
In the first quarter ended March 31, the consolidated cash cost per pound of copper produced, net of by-product credits, was $0.98, an increase on the $0.88/lb in the same period last year. The increase is mainly owing to increased operating costs at Hudbay’s 777 and Reed mines, in Manitoba, as the mines approach the later stages of their lives and reduced capitalised stripping at Constancia, in Peru, resulting in higher operating expense.
Incorporating sustaining capital, capitalised exploration, royalties and corporate selling and administrative expenses, consolidated all-in sustaining cash costs per pound of copper produced, net of by-product credits, in the first quarter, were $1.45, down slightly from $1.46 in the first quarter of 2017.
Cash and cash equivalents increased by $36.3-million during the period to $392.8-million as at March 31, the company advised. This increase was mainly a result of cash generated from operating activities of $131.4-million. This inflow was partly offset by $48.7-million of financing expenditures that were driven by $37.4-million in interest paid on outstanding debt, and $46-million of investing activities primarily at Hudbay’s Peru and Manitoba operations.
Net debt declined by $37.7-million from December 31, to $585.4-million at the end of the quarter, as a result of cash flow from Hudbay’s operations. At March 31, total liquidity, including cash and available credit facilities, was $810-million, up from $777.9-million as at December 31.
Hudbay noted that its Peru precious metals output is expected to be 15 000 oz lower than previously guided, as a result of an anticipated delay in mining of Pampacancha, with the majority of the estimated $45-million of Peru growth capital expected to be deferred to 2019. As a result, the company recognised an obligation to deliver additional precious metal credits to Wheaton Precious Metals as a result of the Pampacancha delay.
The company expects to meet all other production and cost guidance for 2018.
Further, test mining of Lalor gold Zone 25 has confirmed the possibility of using selective methods for the gold zone to mine fewer tonnes at a higher grade than reported in the current mineral resource estimate. The company is currently conducting trade-off studies to assess the mining and processing options for the gold mineral resources at Lalor.
The company’s NYSE-listed equity closed 2.22% higher on Wednesday at $6.90 a share.