JOHANNESBURG (miningweekly.com) – TSX-listed base metals producer Hudbay Minerals reported a net loss and loss per share of $5.7-million and $0.02, respectively, in the second quarter of 2016 compared with a first-quarter net loss of $15.8-million, representing the company’s sixth consecutive quarterly loss.
The company’s losses in the second quarter of 2016 were affected by non-cash cash flows generated from operating activities, which increased to $137.5-million from $10.4-million in the second quarter of 2016.
In addition, the company reported that operating cash flow before change in non-cash working capital increased to $75.1-million in the current quarter.
Operating cash flow in the quarter benefited from substantially higher copper and precious metals sales volumes, owing to the Constancia project, located in southern Peru, which reached commercial production on April 30, 2015.
Total liquidity increased to $293.5-million compared to $190.1-million at the end of the first quarter of 2016, including new commitments of $30-million under Hudbay's revolving credit facilities
The increase in sales volumes and associated economies of scale more than offset the decline in realised sales prices of copper and zinc metals compared with the same quarter last year.
"We continue to be pleased with Constancia's strong operating performance and the cost efficiencies achieved at all of our operations, resulting in positive free cash flow generated from the business," said CEO Alan Hair.
He added that the company remained on track to meet the cost-reduction initiatives it announced earlier this year, as well as its production, operating and capital cost guidance for 2016.
Notwithstanding lower copper and zinc realised prices, revenues nearly doubled and gross profit increased more than ten-fold as a result of higher sales volumes and cost improvements at Hudbay's operations.
The sales of copper contained in concentrate lagged production in the second quarter of 2016 mainly as a result of a delay in loading a 20 000 t parcel of concentrate at the port of Matarani, in Peru, owing to extended ocean swells in late June.
Earnings a share and operating cash flow per share would have been $0.02 and $0.05 higher, respectively, if this parcel had loaded before the end of the second quarter of 2016.
Hudbay advised that concentrate inventory at the Constancia mine site and the Matarani port are currently at normal working levels.
Meanwhile, during the second quarter, a Canadian chartered bank joined the syndicate for Hudbay's Canadian and Peruvian senior secured revolving credit facilities with $30-million in new commitments, bringing total commitments under the facilities to $530-million.
Including this additional credit availability, cash flow generated from the business and Peruvian sales tax refunds collected during the quarter totalled $293.5-million as at June 30, compared with $190.1-million as at March 31.
PERU OPERATIONS
Ore mined during the second quarter of 2016 at the company’s Constancia mining operations decreased slightly compared with the first quarter of 2016, as ore production rates were aligned to mill throughput rates.
Total copper recovery in the second quarter of 2016 was 82.7%, compared with 81.8% in the first quarter of 2016, as the metallurgy associated with the varying ore types is now better understood.
MANITOBA OPERATIONS
Ore mined at Hudbay's Manitoba mines in Canada during the second quarter of 2016 increased by 17% as a result of increased production at Lalor and 777. Copper grades were higher at Reed owing to the stopes mined, which was offset by lower copper grades at the 777 and Lalor mines.