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01/09 23:39
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The earnings call summary reflects a positive sentiment with strong financial performance, strategic partnerships, and optimistic guidance. The minority joint venture with Mitsubishi for the Copper World project is a significant positive catalyst. Despite some operational challenges, management's confidence in meeting production targets and improving cost guidance is reassuring. The Q&A session did not reveal any major concerns, and the market cap indicates moderate stock price sensitivity. Overall, the sentiment leans towards a positive reaction in the stock price over the next two weeks.
Consolidated copper production 24,000 tonnes in Q3 2025, lower than Q2 due to wildfire disruptions in Manitoba and temporary production interruption in Peru.
Consolidated gold production 54,000 ounces in Q3 2025, lower than Q2 due to wildfire disruptions in Manitoba and temporary production interruption in Peru.
Consolidated silver production 730,000 ounces in Q3 2025.
Zinc production 548 tonnes in Q3 2025.
Adjusted EBITDA $143 million in Q3 2025, decreased compared to Q2 due to temporary operational interruptions and delayed copper concentrate shipment in Peru valued at $60 million.
Cash generated from operating activities $114 million in Q3 2025.
Operating cash flow before change in noncash working capital $70 million in Q3 2025.
Adjusted net earnings $0.03 per share in Q3 2025, after adjusting for noncash items including a $322 million impairment reversal related to Copper World.
Consolidated cash costs $0.42 per pound in Q3 2025, increased compared to Q2 due to lower gold byproduct credits in Manitoba.
Consolidated sustaining cash costs $2.09 per pound in Q3 2025, increased compared to Q2 due to lower gold byproduct credits in Manitoba.
Total liquidity $1.04 billion as of Q3 2025, including $611 million in cash and cash equivalents.
Net debt-to-EBITDA ratio 0.5x as of Q3 2025.
Peru operations copper production 18,000 tonnes in Q3 2025, lower than Q2 due to temporary operational shutdown.
Peru operations gold production 26,000 ounces in Q3 2025, higher than Q2 due to stronger head grades from Pampacancha.
Peru operations silver production 577,000 ounces in Q3 2025.
Peru operations molybdenum production 195 tonnes in Q3 2025.
Peru operations cash costs $1.30 per pound in Q3 2025, decreased from Q2 due to higher gold byproduct credits and lower maintenance costs.
Manitoba operations gold production 22,000 ounces in Q3 2025, lower than Q2 due to 2-month wildfire evacuation.
Manitoba operations copper production 800 tonnes in Q3 2025.
Manitoba operations zinc production 500 tonnes in Q3 2025.
Manitoba operations silver production 102,000 ounces in Q3 2025.
Manitoba operations gold cash costs $379 per ounce in Q3 2025, decreased compared to Q2 due to higher byproduct credits and recovery of secondary gold products.
British Columbia operations copper production 5,200 tonnes in Q3 2025, decreased compared to Q2 due to restricted mining efficiencies and lower grades.
British Columbia operations gold production 4,800 ounces in Q3 2025.
British Columbia operations silver production 51,000 ounces in Q3 2025.
British Columbia operations cash costs $3.21 per pound in Q3 2025, higher than Q2 due to lower copper production and lower byproduct credits.
Copper World Project: Secured Mitsubishi as a long-term partner, reducing Hudbay's share of future equity contributions. Mitsubishi acquired a 30% stake for $600 million, providing $420 million in cash upon closing and $180 million within 18 months. The project is on track for a sanction decision in 2026 and first production in 2029.
SAG2 Mill Conversion Project: Progress made in British Columbia to enhance mill throughput. Initial phase completed in July, with ramp-up demonstrating positive contributions. Final phase expected to complete by December 2025.
Copper and Gold Production: Consolidated copper production was 24,000 tonnes and gold production was 54,000 ounces in Q3. Production was impacted by wildfires in Manitoba and operational interruptions in Peru.
Copper World Strategic Partnership: The partnership with Mitsubishi validates Copper World as a top-tier copper asset and enhances Hudbay's financial strength.
Cost Guidance Improvement: Improved full-year consolidated cash cost guidance to $0.15-$0.35 per pound of copper and sustaining cash costs to $1.85-$2.25 per pound.
Debt Reduction: Reduced total debt by $330 million since 2024, with $13.2 million repurchased in Q3 and an additional $20 million post-Q3. Total liquidity stands at $1.04 billion.
Snow Lake Exploration Program: Largest exploration program in company history underway, focusing on near-mine exploration, regional satellite deposits, and new anchor deposits.
Copper World Development: Strategic joint venture with Mitsubishi to advance Copper World, with feasibility study completion expected in mid-2026.
Wildfire evacuations in Manitoba: Mandatory wildfire evacuations caused temporary operational interruptions, reducing production and deferring gold production. A business interruption insurance claim has been submitted to compensate for the downtime.
Social unrest in Peru: Countrywide protests and illegal blockades disrupted transportation routes and operations, leading to temporary shutdowns and production interruptions. This impacted concentrate transportation and supply chains.
Ocean swells in Peru: Ocean swells at the port delayed a 20,000 dry metric tonne copper concentrate shipment, valued at approximately $60 million, impacting sales volumes and cash flow.
Copper Mountain operations in British Columbia: Unplanned maintenance on the primary SAG mill (SAG1) and processing of lower-grade stockpile material led to reduced production and higher cash costs. Full-year copper production is expected to be below guidance.
Severe winter storms in Manitoba: A week-long power outage caused by severe winter storms further deferred gold production, adding to the challenges from earlier wildfire evacuations.
Copper World project financing and execution: While the Mitsubishi partnership reduces financial burden, the project still requires significant capital contributions and faces risks related to feasibility, permitting, and execution timelines.
Zinc production in Manitoba: Prioritization of gold production over zinc has led to expectations of full-year zinc production being below guidance, potentially impacting byproduct revenue.
Transportation and supply chain disruptions in Peru: Protests and blockades caused limitations in supplies and concentrate transportation, requiring adjustments in mine sequencing and stockpile blending.
Consolidated Copper and Gold Production: Hudbay expects consolidated full-year copper and gold production to be near the low end of the guidance ranges for 2025. However, strong production is anticipated in the fourth quarter.
Cost Guidance: Full-year consolidated cash cost guidance has been improved to a range of $0.15 to $0.35 per pound of copper, down from the previously reduced range of $0.65 to $0.85 per pound. Sustaining cash cost guidance has also been improved to $1.85 to $2.25 per pound of copper, from the original range of $2.25 to $2.65 per pound.
Capital Expenditures: Total capital expenditures are expected to be $35 million lower than the original guidance for 2025, with $15 million in reduced sustaining capital expenditures and $20 million in lower growth capital expenditures deferred to 2026.
Copper World Project: Hudbay plans to advance the Copper World project towards a sanction decision in 2026 and first production in 2029. A strategic joint venture with Mitsubishi has been secured, providing $600 million in funding, with $420 million in cash expected upon closing in late 2025 or early 2026. Hudbay's share of remaining capital contributions is reduced to approximately $200 million, with no contributions required until 2028 at the earliest.
Peru Operations: Fourth quarter is expected to be the strongest copper and gold production quarter in Peru for 2025. Full-year copper production guidance is reaffirmed, while gold production is expected to exceed the top end of the guidance range.
Manitoba Operations: Gold production is expected to be slightly below the low end of the 2025 guidance range due to wildfire evacuations and a week-long power outage in October. Zinc production is also expected to be below the low end of the guidance range. Full-year cash cost guidance is reaffirmed.
British Columbia Operations: Copper production is expected to be below the low end of the 2025 guidance range due to lower mill throughput and processing of lower-grade stockpile material. Full-year cash cost guidance is reaffirmed.
Copper World Feasibility Study: A definitive feasibility study for the Copper World project is expected to be completed by mid-2026, with a sanction decision planned for the same year.
Snow Lake Exploration: Hudbay is conducting the largest exploration program in its history in Manitoba, focusing on near-mine exploration, regional satellite deposits, and identifying a new anchor deposit. The Talbot deposit is being explored as a potential supplemental feed to the Stall mill, with pre-feasibility study activities planned for 2026.
Share Repurchase: To continue our prudent balance sheet management, we repurchased and retired $13.2 million of senior unsecured notes through open market purchases at a discount to par during the third quarter. Following the quarter-end, we repurchased and retired an additional $20 million in senior unsecured notes, reducing our total principal debt levels to $1 billion. Since the beginning of 2024, we have reduced total debt and gold prepay liabilities by approximately $330 million.
The earnings call summary reflects a positive sentiment with strong financial performance, strategic partnerships, and optimistic guidance. The minority joint venture with Mitsubishi for the Copper World project is a significant positive catalyst. Despite some operational challenges, management's confidence in meeting production targets and improving cost guidance is reassuring. The Q&A session did not reveal any major concerns, and the market cap indicates moderate stock price sensitivity. Overall, the sentiment leans towards a positive reaction in the stock price over the next two weeks.
The earnings call highlights strong financial performance, including record low cash costs, significant free cash flow, and reduced net debt. Production guidance remains robust, with promising output expectations for copper and gold. The strategic partnership with Mitsubishi and potential project financing benefits are favorable, and management's responses in the Q&A address risks and uncertainties effectively. Despite minor disruptions, the overall outlook is optimistic, suggesting a positive stock price movement.
The earnings call highlighted record revenues, strong free cash flow, and effective cost management, with significant debt reduction and a stable balance sheet. The Q&A session revealed confidence in operational performance, despite some regulatory uncertainties. The company's strategic focus on exploration and partnerships, along with a potential buyback program, further supports a positive outlook. Given the market cap of $3.54 billion, the stock price is likely to experience a positive movement of 2% to 8% over the next two weeks, driven by strong financial metrics and strategic initiatives.
The company reported record revenues, significant debt reduction, and strong free cash flow. The Copper World Project and acquisition of Copper Mountain are promising for future growth. Despite some unclear responses in the Q&A, the overall sentiment is positive due to strong financial metrics, optimistic guidance, and strategic initiatives. The market cap indicates moderate price sensitivity, suggesting a positive stock price movement of 2% to 8% over the next two weeks.
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