The eight-week suspension of operations at the Constancia mine, owing to Covid-19 measures in Peru, had a significant impact on gold and base metals miner Hudbay Minerals’ second-quarter results, with the company posting a $51.9-million, or $0.20 a share, net loss.
After adjusting for the impact of the Peru suspension costs and partial reversal of the Peru inventory writedown, the adjusted net loss a share for the quarter was $0.15 a share and adjusted earnings before interest, taxes, depreciation and amortisation (Ebitda) was $49.1-million.
CFO Steve Douglas said that the strong performance of Hudbay’s Manitoba business, in Canada, had helped to offset the reduced contribution from Peru operations, resulting in second-quarter adjusted earnings remaining unchanged from first-quarter levels, while adjusted Ebitda was slightly below first-quarter levels.
The Manitoba operations delivered an "outstanding" operational performance, with record gold production in the quarter and a significant increase in revenues over the first quarter. Production during the quarter included 31 222 t of zinc, 6 522 t of copper and 33 979 oz of precious metals.
In Peru, the Constancia mine produced 11 504 t of copper, 5 161 oz of precious metals and 124 t of molybdenum.
Consolidated copper production in the second quarter of 2020 was 18 026 t, a 27% decrease from the first quarter of 2020, primarily as a result of the temporary suspension of operations at Constancia until mid-May. Consolidated gold production increased by 7% compared with the first quarter of 2020, owing to higher production from Manitoba as a result of higher gold grades and record quarterly gold recoveries at the Stall mill. Consolidated zinc production in the second quarter of 2020 was in line with the first quarter of 2020.
Meanwhile, Hudbay slashed its guidance for its operations in Peru. Overall, copper production is forecast to be between 83 000 t and 97 000 t, of which 65 000 t to 75 000 t will come from Peru. The precious metals guidance is 135 000 oz to 170 000 oz, comprising 25 000 oz to 35 000 oz from Peru and 110 000 oz to 135 000 oz from Manitoba.
"The situation in Peru remains fluid. The state of emergency, first declared by the government in response to the Covid-19 pandemic on March 15, has since been extended to August 31, 2020 and there remains a risk of further disruptions to mining operations," Hudbay cautioned.