TORONTO (miningweekly.com) – Toronto- and New York-listed HudBay Minerals on Thursday said profit for the fourth quarter ended December 31 was down almost 80% year-on-year at $7.4-million or 4c a share, on lower sales and weaker metals prices.
This compared with a profit of $34.3-million or 21c a share in the fourth quarter of 2011.
Total revenue for the fourth quarter was $181-million, which was $73.3-million lower than the same period in 2011. This decrease was mainly owing to lower sales volumes compared with the fourth quarter of 2011, when the company drew down on unusually high copper concentrate inventory.
Lower gold prices in the fourth quarter reflected, in part, the effect of the precious metals stream agreement which it had entered into with Silver Wheaton in August, to help fund construction of its $1.5-billion Constancia copper mine, in Peru.
Under the agreement the streaming company paid $750-million in upfront deposit payments for all of the gold and silver produced from HudBay’s operating 777 zinc mine, in Canada, as well as all of the silver produced from the Constancia mine once it is operational.
For the full year, revenue was $702.6-million, $188.2-million lower than in 2011, mainly owing to the lower sales volumes and lower metals prices.
Fourth-quarter ore production at Hudbay's Manitoba mines was 20% lower than the previous year's fourth quarter owing to the planned permanent closures of the Trout Lake and Chisel North mines in June and September respectively, offset partly by the start of production at Lalor, also in Manitoba.
Overall mine operating costs per ton were 13% lower than the previous year's quarter, with the closure of the higher-cost Trout Lake and Chisel North mines; however, this was offset by operating cost per ton of ore processed at the Flin Flon and Snow Lake concentrators increasing in the fourth quarter as a result of reduced feed to the Flin Flon concentrator, costs associated with the new Snow Lake copper circuit and preparations for the ramp-up of Lalor mine production.
Production of all metals in concentrate and overall unit operating costs met full-year guidance.
"For the sixth consecutive year, Hudbay met its production guidance, which is a testament to our operating team and our reliable northern Manitoba assets. Our focus in 2013 is to continue to advance our robust portfolio of development assets, which we expect to provide significant copper, gold and zinc production growth over the next two years as they are brought into production,” Hudbay's president and CEO David Garofalo said.
HudBay reported development of its three new mines were proceeding well with the first full quarter of ore production recorded from the ventilation shaft at Lalor, full-scale civil works under way at Constancia and ramp development advancing well at Reed, which it is developing with Otis Gold.
However, capital expenditures for the Lalor project were expected to be about $90-million higher than the original budget of $263-million for the concentrator portion of the now-$794-million project.
The company said Scope changes and improved estimation from completion of basic engineering account for the increase. The scope changes included an increase in the grinding capacity by 20% to 5 400 t/d to better match the 6 000 t/d potential production shaft capacity.
HudBay shares closed down 5.36% at C$10.07 apiece on Wednesday on the TSX.