Hudbay Releases First Quarter 2013 Results Summary

Hudbay Releases First Quarter 2013 Results Summary 
- Commercial production commenced for the first phase of Lalor
effective April 1, 2013  
- First quarter operating cash flow before change in non-cash working
capital decreased to $12.3 million from $42.2 million in the first
quarter of 2012, mainly due to lower sales volumes and realized
metals prices and the impact of the precious metals stream
transaction  
- Profit and earnings per share in the first quarter of 2013 were
$1.9 million and $0.01, respectively, compared to a profit and
earnings per share of $3.4 million and $0.03 in the first quarter of
2012, primarily due to lower sales volumes and realized metals prices 
- Full year 2013 guidance for production and operating costs remains
unchanged 
TORONTO, ONTARIO -- (Marketwired) -- 05/01/13 -- HudBay Minerals Inc.
("Hudbay" or the "company") (TSX:HBM)(NYSE:HBM) today released its
first quarter 2013 financial results. In the first quarter of 2013,
Hudbay recorded a profit and earnings per share of $1.9 million and
$0.01, respectively, compared to a profit and earnings per share of
$3.4 million and $0.03, respectively, in the first quarter of 2012. 


 
                                                                            
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                                        Pre-tax      After-tax              
                                     gain (loss)   gain (loss)    Per Share 
                                    ($ millions)  ($ millions)    ($/share) 
Impairments and mark-to-market                                              
 adjustment related to junior                                               
 mining investments                         (1.9)         (1.9)       (0.01)
Gain on mark-to-market of embedded                                          
 derivative related to long term                                            
 debt                                        1.8           1.8         0.01 
Impact on deferred tax expense of                                           
 translation of Peruvian tax basis             -          (2.1)       (0.01)
Impact on deferred taxes of change                                          
 in discount rates on                                                       
 decommissioning and restoration                                            
 liabilities                                   -           1.2         0.01 
Foreign exchange gain                        4.5           3.0         0.02 
Loss as a result of provisional                                             
 pricing adjustments                        (2.2)         (1.4)       (0.01)
Loss on forward zinc purchase                                               
 contracts related to fixed price                                           
 customer sales                             (2.5)         (1.8)       (0.01)
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The first quarter of 2013 profit was affected by, among other things,
the following items: 
Financial and Operating Results  
Total revenue for the first quarter of 2013 was $119.9 million, $67.1
million lower than the same period in 2012. This decrease was
primarily due to lower sales volumes mainly as a result of the
closures of Trout Lake and Chisel North mines and lower metals prices
compared to the first quarter of 2012.  
First quarter 2013 ore production at Hudbay's Manitoba business unit
was 16% lower than the prior year's first quarter due to the planned
permanent closures of the Trout Lake and Chisel North mines in June
2012 and September 2012, respectively, partially offset by production
at Lalor. Overall mine operating costs per tonne were 6% lower than
the prior year's quarter with the closure of the higher-cost Trout
Lake and Chisel North mines, partially offset by higher operating
costs per tonne of ore at the 777 mine.  
Operating costs per tonne of ore at 777 in the first quarter of 2013
were 21% higher, compared to the same period in 2012, primarily due
to increased contractor costs and additional ground support
requirements. Additional contractor work was required at 777 in the
past two quarters due to issues with equipment availability in the
fall of 2012 that reduced operating development rates. Equipment
availability has returned to normal levels, operating development
progress is sufficient to support normal mining rates, and
contractors are no longer assigned to operating development work.
Full year unit operating costs at 777 are expected to be in line with
guidance.  
The operating cost per tonne of ore processed in the first quarter of
2013 at the Flin Flon concentrator increased as expected by 22%
compared to the same period in 2012, largely due to reduced ore
throughput following closure of the Trout Lake mine. Operating costs
at the Snow Lake concentrator for the first quarter of 2013 increased
27% from the same period in 2012 due to transitional work to process
Lalor ore and additional manpower and training costs to prepare for
increased concentrator throughput for the remainder of 2013. Hudbay
expects its full year metal in concentrate production and unit costs
will be within the guidance range.  
Cash Flows  
Operating cash flows before change in non-cash working capital were
$12.3 million, reflecting a decrease of $30.0 million compared to
2012, mainly as a result of lower sales volumes, lower realized
prices and reduced gold and silver cash receipts, within the quarter,
as a result of the precious metals stream transaction in 2012.  
Cash and cash equivalents decreased by $286.6 million from December
31, 2012 to $1,050.5 million as at March 31, 2013. This decrease was
mainly driven by $201.3 million in capital expenditures primarily at
the Lalor and Constancia projects, and interest and dividend payments
of $26.7 million and $17.2 million, respectively.  
As at March 31, 2013, Hudbay has total available liquidity of
$1,536.0 million, comprised of $1,050.5 million in cash and cash
equivalents, US$250.0 million in deposits to be received from Silver
Wheaton and availability under its credit facility of $235.5 million
net of outstanding letters of credit. These amounts do not include
anticipated cash flow from operations. The company is also
considering additional financing opportunities, including equipment
financing for the Constancia mobile fleet.  
Lalor  
The company has invested approximately $338 million of its $794
million capital construction budget for the Lalor project to March
31, 2013 and has entered into an additional $84 million in
commitments for the project.  
During the first quarter of 2013, Hudbay hoisted 81,800 tonnes of ore
from the ventilation shaft at Lalor at a copper grade of 0.57% and
zinc grade of 9.94%. During the same period, underground project
development continued to advance. The company's primary focus is to
complete the 910 metre shaft station in the second quarter of 2013
and to continue to ramp to the 955 metre level, which the company
expects to reach by the end of the third quarter of 2013. Hudbay is
developing ore and waste handling systems as well as the dewatering
areas on the 910 and 955 metre levels.  
Given the nature of the Lalor project, Hudbay expects to refer to
three phases of the Lalor project when determining commercial
production for accounting purposes. The first phase of the project
includes the main ventilation shaft and associated surface and
underground workings that will contribute to the production of ore
between 2012 and 2014. Hudbay commenced this phase of commercial
production on April 1, 2013 with Lalor initial production
contributing to profit starting at that time.  
As of April 26, 2013 the main production shaft was sunk to
approximately 710 metres and is approximately 72% complete. Hudbay
expects shaft sinking to be completed in late 2013. Upon completion
of sinking, the installation of the steel sets and guides as well as
the headframe changeover will begin. Ore production is expected to
transition from the ventilation shaft to the main production shaft by
the fourth quarter of 2014, subject to receipt of required regulatory
permits.  
Hudbay is in the process of completing the final engineering work for
the load-out facilities located at the 955 metre level, as well as
the main pumping installations. The company is preparing for
construction of the main intake fan systems and the main substation,
which is scheduled to be completed in the fourth quarter of 2013.  
Hudbay expects to submit the Environment Act Licence application for
the new concentrator to the Manitoba government in the second quarter
of 2013. The new design will incorporate a larger grinding circuit
being fed from the surface stockpile. Hudbay will hoist uncrushed ore
up the main production shaft at Lalor to be crushed on surface and
then conveyed to the surface stockpile. The stockpile will feed a SAG
mill and ball mill combination that has design capacity of 5,400
tonnes per day.  
Reed Copper Project  
During the first quarter, Hudbay's focus for its 70% owned Reed
copper project near Flin Flon, Manitoba was advancing the underground
ramp and sinking the escape and ventilation raises from surface. Of
Hudbay's $72 million capital construction budget, the company has
invested approximately $37 million on the project to March 31, 2013
and has entered into an additional $13 million in commitments.
Capital expenditures at Reed are expected to total approximately $44
million in 2013.  
After completing the first portal development round in October 2012,
the underground ramp had advanced approximately 363 metres as of
March 31, 2013. In March 2013, Hudbay was able to start hauling waste
from underground via haul trucks, which is expected to reduce cycle
times and improve the rate of ramp development.  
Hudbay expects initial production at the Reed copper project by the
fourth quarter of 2013 and full production of approximately 1,300
tonnes of ore per day by the first quarter of 2014.  
Constancia  
Hudbay has incurred approximately US$480 million in costs of its
US$1.5 billion capital construction budget on the Constancia project
to March 31, 2013 and has entered into an additional US$534 million
in commitments for the project.  
The company has secured the mine fleet with 18 haul trucks scheduled
for delivery between June 2013 and August 2014.  
Tire procurement is underway with a number of tires purchased and
contracts arranged to meet fleet requirements. Hudbay expects the
arrival of the three hydraulic shovels in August 2013, September 2013
and January 2014, respectively, and to begin pre-stripping activities
late in 2013.  
Development of the project is approximately 25% complete. Civil earth
works for the process plant area are approximately 70% complete and
remain on schedule. The principal foundations for the ball and SAG
mills are poured and complete. Forms are being erected for the
reclaim tunnels and crusher foundation. Progress on the tailings
management facility has been negatively impacted by the unusually
high rainfall in the first quarter. However, the dry season commenced
in April and Hudbay believes the impact on project schedule is
recoverable. Targets for initial production in late 2014 and full
production in the second quarter of 2015 remain unchanged.  
Land access for the power transmission line is being arranged and the
negotiation of the power purchase agreement is well advanced. The
principal port operator has provided assurances that the concentrate
shipments will be accommodated, and Hudbay is considering short term
and long term solutions to best serve the project's needs.  
In accordance with the agreements Hudbay has entered into with local
communities, relocation of affected families is underway and the
construction of new housing is in progress. Hudbay has delivered new
homes to 14 families, and the remaining 22 families are scheduled to
be relocated in 2013.  
Permitting and regulatory efforts remain on schedule. The next major
permit is the operating permit, which Hudbay expects to receive in
the normal course upon commissioning of the mine which is scheduled
for early 2015. The company has already received the beneficiation
concession, mining permit and approval for the early refund of value
added tax on purchases with retroactive effect to December 2012.  
Key Financial Results 


 
                                                                            
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                                                          Three Months Ended
($000s except per share and cash cost amounts)                      March 31
                                                ----------------------------
                                                          2013          2012
----------------------------------------------------------------------------
Revenue                                                119,881       187,038
----------------------------------------------------------------------------
Profit before tax                                        7,924        16,969
----------------------------------------------------------------------------
Basic and diluted earnings per share(1)                   0.01          0.03
----------------------------------------------------------------------------
Profit for the period                                    1,907         3,355
----------------------------------------------------------------------------
Operating cash flow(2)                                  12,261        42,247
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Operating cash flow per share(3)                          0.07          0.25
----------------------------------------------------------------------------
Cash cost per pound of copper sold(3)                     1.78          1.18
----------------------------------------------------------------------------
Cash and cash equivalents                            1,050,476  1,337,088(4)
----------------------------------------------------------------------------
Total assets                                         3,508,748     3,476,497
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(1)Attributable to owners of the company.                                   
(2)Before change in non-cash working capital.                               
(3)Refer to "Non-IFRS Financial Performance Measures" below.                
(4)As at December 31, 2012.                                                 

 
Non-IFRS Financial Performance Measures  
Operating cash flow per share and cash costs per pound of copper sold
("cash cost") are included in this news release because the company
believes that, in the case of operating cash flow per share, it helps
investors to evaluate changes in cash flow while taking into account
changes in shares outstanding, and in the case of cash costs, they
help investors assess the performance of the Company's operations.
These measures do not have a meaning prescribed by IFRS and are
therefore unlikely to be comparable to similar measures presented by
other issuers. These measures should not be considered in isolation
or as a substitute for measures prepared in accordance with IFRS and
are not necessarily indicative of operating profit or cash flow from
operations as determined under IFRS. Other companies may calculate
these measures differently. 
Operating cash flow per share  
The following table presents Hudbay's calculation of operating cash
flow per share for the three months ended March 31, 2013: 


 
                                                                            
----------------------------------------------------------------------------
                                                      Three Months Ended    
                                                                            
                                                 ---------------------------
                                                                            
                                                       Mar. 31       Mar. 31
($000s except share and per share amounts)                2013          2012
                                                                            
----------------------------------------------------------------------------
Operating cash flow before change in non-cash                               
 working capital                                        12,261        42,247
                                                                            
Weighted average shares outstanding                172,012,192   171,912,598
                                                                            
----------------------------------------------------------------------------
Operating cash flow per share                             0.07          0.25
                                                                            
----------------------------------------------------------------------------

 
Cash cost per pound of copper sold  
Cash cost per pound of copper sold is a non-IFRS measure that
management uses as a key performance indicator to assess the
performance of the company's operations. Hudbay's calculation takes a
by-product costing approach, under which the company designates
copper as its primary metal of production and from which the company
subtracts the net revenues realized from the sale of other metals
mined with copper. As there is significant variation in calculation
methodologies in practice, Hudbay's cash cost may not be directly
comparable with the cash cost of other companies.  
Cost to copper concentrate includes all direct mining, milling, and
concentrating costs incurred in the production of copper concentrate
at Hudbay's mines and mills in addition to general and administrative
expenses directly related to those operations. Downstream costs
include freight, distribution, and treatment charges related to
copper concentrate plus copper refining costs. Net by-product credits
include revenue from the sale of zinc, gold, silver, and other
by-products less the production costs of zinc and refining costs
associated with gold and silver. Realization of deferred revenue
under the precious metals stream agreement with Silver Wheaton is not
included in net by-product credits. 


 
                                                                            
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                                                       Three Months Ended   
                                                        Mar. 31     Mar. 31 
                                                           2013        2012 
Cash cost per pound of copper sold                                          
$/lb                                                                        
Mining, milling, concentrating                             1.66        1.77 
On-site administration and general expenses                0.24        0.18 
Cost to copper concentrate                                 1.90        1.95 
Treatment and refining                                     0.20        0.17 
Freight and distribution                                   0.34        0.31 
Other                                                      0.01        0.03 
Downstream costs                                           0.55        0.51 
Net by-product credits                                    (0.67)      (1.28)
Cash cost per pound of copper sold                         1.78        1.18 
                                                                            
Reconciliation to Income Statement                                          
($000s)                                                                     
Cost of sales - mine operating costs                     81,021     120,063 
Treatment and refining charges                            4,951       6,970 
Pre-production revenue                                    4,677             
By-product revenues                                     (69,186)    (97,259)
Less: change in deferred revenue                          9,443             
                                                         30,906      29,774 
                                                                            
Less: indirect costs(1)                                                     
Share based payment                                         258         334 
Adjustments related to zinc inventory write-downs                           
 (reversals)                                                  -       1,058 
Demolition and rehabilitation                                 -          40 
Subtotal - cash costs                                    30,648      28,342 
Copper sales (000s lbs)                                  17,242      24,072 
Cash cost per pound of copper sold ($/lb)                  1.78        1.18 
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(1)Indirect costs in cost of sales - mine operating costs                   

 
Cash cost for the first quarter of 2013 was $1.78/lb, compared to
$1.18/lb for the same period in 2012. The increase is due primarily
to the commencement of deliveries of gold and silver to Silver
Wheaton under the stream agreement as the non-cash portion of these
sales is excluded from by-product credits and the total sales price
is relatively lower than the first quarter of 2012. The impact of the
stream agreement reduced net by-product credits by approximately
$0.79/lb during the quarter.  


 
                                                                            
Website Links                                                               
                                                                            
Hudbay:                                                                     
                                                                            
http://www.hudbayminerals.com/                                              
                                                                            
Management's Discussion and Analysis:                                       
                                                                            
http://media3.marketwire.com/docs/HUDBQ1MDA2013.pdf                         
                                                                            
Financial Statements:                                                       
                                                                            
http://media3.marketwire.com/docs/HUDBQ1FS2013.pdf                          
                                                                            
Conference Call and Webcast                                                 
                                                                            
Date:              Thursday, May 2, 2013                                    
                                                                            
Time:              10 a.m. ET                                               
                                                                            
Webcast:           http://www.hudbayminerals.com/                           
                                                                            
Dial in:           416-644-3415 or 877-974-0445                             
                                                                            
Replay:            416-640-1917 or 877-289-8525                             
                                                                            
Replay Passcode:   4610976#                                                 

 
The conference call replay will be available until midnight (Eastern
Time) on May 16, 2013. An archived audio webcast of the call also
will be available on Hudbay's website.  
Forward-Looking Information  
This news release contains "forward-looking statements" and
"forward-looking information" (collectively, "forward-looking
information") within the meaning of applicable Canadian and United
States securities legislation. All information contained in this news
release, other than statements of current and historical fact, is
forward-looking information. Forward-looking information includes
information that relates to, among other things, our objectives,
strategies, and intentions and future financial and operating
performance and prospects. Often, but not always, forward-looking
information can be identified by the use of words such as "plans",
"expects", "budget", "guidance", "scheduled", "estimates",
"forecasts", "strategy", "target", "intends", "objective", "goal",
"understands", "anticipates" and "believes" (and variations of these
or similar words) and statements that certain actions, events or
results "may", "could", "would", "should" or "might" "occur" or "be
achieved" or "will be taken" (and variations of these or similar
expressions). All of the forward-looking information in this news
release is qualified by this cautionary statement.  
Forward-looking information includes, but is not limited to,
continued production at Hudbay's 777 and Lalor mines, continued
processing at the company's Flin Flon concentrator, Snow Lake
concentrator and Flin Flon zinc plant, Hudbay's ability to develop
its Lalor, Constancia and Reed projects and the anticipated scope of,
cost of and development plans for, these projects, anticipated timing
of Hudbay's projects and events that may affect the company's
projects, Hudbay's expectation that it will receive the remaining
US$250 million deposit payment under the precious metals stream
transaction with Silver Wheaton Corp., the anticipated effect of
external factors on revenue, such as commodity prices, anticipated
exploration and development expenditures and activities and the
possible success of such activities, estimation of mineral reserves
and resources, mine life projections, timing and amount of estimated
future production, reclamation costs, economic outlook, government
regulation of mining operations, and business and acquisition
strategies.  
Forward-looking information is not, and cannot be, a guarantee of
future results or events. Forward-looking information is based on,
among other things, opinions, assumptions, estimates and analyses
that, while considered reasonable by the company at the date the
forward-looking information is provided, inherently are subject to
significant risks, uncertainties, contingencies and other factors
that may cause actual results and events to be materially different
from those expressed or implied by the forward-looking information.
The material factors or assumptions that Hudbay identified and were
applied by the company in drawing conclusions or making forecasts or
projections set out in the forward looking information include, but
are not limited to: 


 
--  the success of mining, processing, exploration and development
    activities; 
--  the accuracy of geological, mining and metallurgical estimates; 
--  the costs of production; 
--  the supply and demand for metals Hudbay produces; 
--  the volatility of commodity prices; 
--  the volatility in foreign exchange rates; 
--  the supply and availability of concentrate for Hudbay's processing
    facilities; 
--  the supply and availability of reagents for Hudbay's concentrators; 
--  the availability of third party processing facilities for Hudbay's
    concentrate; 
--  the supply and availability of all forms of energy and fuels at
    reasonable prices; 
--  the availability of transportation services at reasonable prices; 
--  no significant unanticipated operational or technical difficulties; 
--  the availability of financing for Hudbay's exploration and development
    projects and activities; 
--  the ability to complete project targets on time and on budget and other
    events that may affect Hudbay's ability to develop its projects; 
--  the timing and receipt of various regulatory and governmental approvals;
--  the availability of personnel for Hudbay's exploration, development and
    operational projects and ongoing employee relations; 
--  maintaining good relations with the communities in which Hudbay
    operates, including the communities surrounding the company's Constancia
    project and First Nations communities surrounding the company's Lalor
    and Reed projects; 
--  no significant unanticipated challenges with stakeholders at Hudbay's
    various projects; 
--  no significant unanticipated events relating to regulatory,
    environmental, health and safety matters; 
--  no contests over title to Hudbay's properties, including as a result of
    rights or claimed rights of aboriginal peoples; 
--  the timing and possible outcome of pending litigation and no significant
    unanticipated litigation; 
--  certain tax matters, including, but not limited to current tax laws and
    regulations; and 
--  no significant and continuing adverse changes in general economic
    conditions or conditions in the financial markets. 

 
The risks, uncertainties, contingencies and other factors that may
cause actual results to differ materially from those expressed or
implied by the forward-looking information may include, but are not
limited to, risks generally associated with the mining industry, such
as economic factors (including future commodity prices, currency
fluctuations and energy prices), uncertainties related to the
development and operation of the company's projects, depletion of its
reserves, risks related to political or social unrest or change and
those in respect of aboriginal and community relations and title
claims, operational risks and hazards, including unanticipated
environmental, industrial and geological events and developments and
the inability to insure against all risks, failure of plant,
equipment, processes, transportation and other infrastructure to
operate as anticipated, compliance with government and environmental
regulations, including permitting requirements and anti-bribery
legislation, dependence on key personnel and employee relations,
volatile financial markets that may affect our ability to obtain
financing on acceptable terms, uncertainties related to the geology,
continuity, grade and estimates of mineral reserves and resources and
the potential for variations in grade and recovery rates, uncertain
costs of reclamation activities, Hudbay's ability to comply with the
company's pension and other post-retirement obligations, Hudbay's
ability to abide by the covenants in the company's debt instruments,
as well as the risks discussed under the heading "Risk Factors" in
Hudbay's most recent Annual Information Form and Form 40-F.  
Should one or more risk, uncertainty, contingency or other factor
materialize or should any factor or assumption prove incorrect,
actual results could vary materially from those expressed or implied
in the forward-looking information. Accordingly, you should not place
undue reliance on forward-looking information. Hudbay does not assume
any obligation to update or revise any forward-looking information
after the date of this news release or to explain any material
difference between subsequent actual events and any forward-looking
information, except as required by applicable law.  
Note to United States Investors  
Information concerning Hudbay's mineral properties has been prepared
in accordance with the requirements of Canadian securities laws,
which differ in material respects from the requirements of the
Securities and Exchange Commission ("SEC") Industry Guide 7.  
Under SEC Industry Guide 7, mineralization may not be classified as a
"reserve" unless the determination has been made that the
mineralization could be economically and legally produced or
extracted at the time of the reserve determination, and the SEC does
not recognize the reporting of mineral deposits which do not meet the
United States Industry Guide 7 definition of "Reserve".  
In accordance with NI 43-101 of the Canadian Securities
Administrators, the terms "mineral reserve", "proven mineral
reserve", "probable mineral reserve", "mineral resource", "measured
mineral resource", "indicated mineral resource" and "inferred mineral
resource" are defined in the Canadian Institute of Mining, Metallurgy
and Petroleum (the "CIM") Definition Standards for Mineral Resources
and Mineral Reserves adopted by the CIM Council on December 11, 2005. 
While the terms "mineral resource", "measured mineral resource",
"indicated mineral resource" and "inferred mineral resource" are
recognized and required by NI 43-101, the SEC does not recognize
them. You are cautioned that, except for that portion of mineral
resources classified as mineral reserves, mineral resources do not
have demonstrated economic value. Inferred mineral resources have a
high degree of uncertainty as to their existence and as to whether
they can be economically or legally mined.  
It cannot be assumed that all or any part of an inferred mineral
resource will ever be upgraded to a higher category. Therefore, you
are cautioned not to assume that all or any part of an inferred
mineral resource exists, that it can be economically or legally
mined, or that it will ever be upgraded to a higher category.
Likewise, you are cautioned not to assume that all or any part of
measured or indicated mineral resources will ever be upgraded into
mineral reserves. You are urged to consider closely the disclosure on
the technical terms in Schedule A "Glossary of Mining Terms" of
Hudbay's annual information form for the fiscal year ended December
31, 2012, available on SEDAR at www.sedar.com and incorporated by
reference as Exhibit 99.1 in Hudbay's Form 40-F dated March 28, 2013
(File No. 001-34244).  
About Hudbay  
Hudbay (TSX:HBM)(NYSE:HBM) is a Canadian integrated mining company
with assets in North and South America principally focused on the
discovery, production and marketing of base and precious metals.
Hudbay's objective is to maximize shareholder value through efficient
operations, organic growth and accretive acquisitions, while
maintaining its financial strength. A member of the S&P/TSX Composite
Index and the S&P/TSX Global Mining Index, Hudbay is committed to
high standards of corporate governance and sustainability. Further
information about Hudbay can be found onwww.hudbayminerals.com. 
Contacts:
HudBay Minerals Inc.
John Vincic
Vice President
Investor Relations and Corporate Communications
(416) 362-0615
john.vincic@hudbayminerals.com
 
 
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