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TORONTO,
ONTARIO--(Marketwire - May 5, 2009) -
Highlights
- Positive operating cash flow (before changes in non-working capital)
of $14.0 million(1);
- Revenues of $161.8 million;
- Cash and cash equivalents of $609.8 million; and
- Continuing positive drilling results from the Lalor deposit near Snow
Lake, Manitoba.
HudBay Minerals Inc. ("HudBay", "the company")
(TSX:HBM) today released its unaudited first quarter 2009 results. Net
earnings in the first quarter were a loss of $4.0 million compared with
$21.6 million of earnings in the first quarter of 2008. The lower
earnings primarily reflect significantly lower realized prices for
copper and zinc in 2009 compared to the same quarter in 2008, offset in
part by reduced operating costs. Operationally, HudBay continued to
deliver solid results, with consistent mine production and continuing
positive results from exploration drilling of the gold zones at the
company's 100%-owned Lalor zinc deposit.
"I am pleased with HudBay's operational performance during the
first quarter," said Peter R. Jones, HudBay's chief executive
officer. "HudBay can weather a prolonged period of weak base
metals prices and can advance growth to allow the company to thrive
when better economic conditions return. I am also pleased with the
continuing excellent precious metal intersections at Lalor, which
continues to be a key opportunity for organic growth."
Financial Highlights ---------------------------------------------------------------------------- Three Months Ended ($000s except per share amounts) March 31 ---------------------- 2009 2008 ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- Revenue 161,784 271,637 ---------------------------------------------------------------------------- (Loss) earnings before tax (5,280) 46,597 ---------------------------------------------------------------------------- Net (loss) earnings (3,958) 21,552 ---------------------------------------------------------------------------- EBITDA (1)(2) 15,493 70,965 ---------------------------------------------------------------------------- Operating cash flow (1)(3) 13,972 70,651 ---------------------------------------------------------------------------- Basic EPS (4) (0.03) 0.17 ---------------------------------------------------------------------------- Cash, cash equivalents and short-term investments (5) 609,829 781,048 ---------------------------------------------------------------------------- Total assets (5) 1,940,577 1,576,209 ---------------------------------------------------------------------------- (1) EBITDA and operating cash flow before changes in non-cash working capital are non-GAAP measures and may not be comparable to similar data presented by other mining companies. See "Non-GAAP Measures" in our Management's Discussion and Analysis for the first quarter of 2009 (2) EBITDA represents earnings before interest, taxes, depreciation and amortization, loss on derivative instruments, exploration, and interest and other income (3) Operating cash flow before changes in non-cash working capital (4) (Loss) earnings per share (5) At March 31
HudBay's
reported cash and cash equivalents declined from $704.7 million at
December 31, 2008 to $609.8 million at March 31, 2009. The decrease of
$94.8 million in cash and cash equivalents during the first quarter
included several factors that we do not expect to recur in the current
economic environment. HudBay reclassified cash and cash equivalents of $52.3 million
to restricted cash in order to support letters of credit that were
previously supported by the company's credit facility, which expired on
February 27, 2009. HudBay expects to establish a replacement credit
facility once credit market conditions are more favourable for
borrowers generally. HudBay also paid $22.4 million during the quarter
for 2008 taxes and recorded $4.8 million related to the Lundin
transaction, shareholder litigation, proxy solicitation, and other
merger and acquisition related activities, as well as approximately
$2.8 million for severance.
As a result of continuing positive drilling results on its 100% owned
Lalor deposit in the Flin Flon Greenstone Belt, HudBay intends to spend
an additional $6.1 million for exploration and definition drilling on
the Lalor deposit in 2009, in addition to the $6.9 million originally
projected in HudBay's MD&A for the year ended December 31, 2008.
Capitalized exploration on the Lalor deposit was $3.1 million in the
quarter.
Financial and Operating Results
Net Earnings
For the first quarter of 2009, HudBay recorded a net loss of $4.0
million, reflecting a $25.6 million decrease from the first quarter of
2008. Significant variances affecting net earnings were:
- Lower revenues decreased earnings before tax by $109.9 million;
- Lower operating costs increased earnings before tax by $51.6 million;
- Changes in foreign exchange gains and losses increased earnings
before tax by $3.9 million;
- Decreases in other expenses increased earnings before tax by $2.0
million, mainly due to decreases in depreciation and amortization of
$3.2 million and decreases in stock-based compensation of $2.3 million,
partially offset by increases in general and administrative expense of
$3.3 million, which related to merger and acquisition activity,
severance and other corporate activities;
- Other items increased earnings before tax by $0.3 million, including
decreases in interest and other income of $5.8 million and decreases in
exploration expenses of $5.0 million; and
- Tax benefits in the first quarter of 2009, as compared to tax
expenses in the first quarter of 2008, increased net earnings by $26.4
million.
Operations
Production is on track to meet overall 2009 targets. Mine production
for the quarter was 610,395 tonnes of ore, compared to 751,382 tonnes
for the same quarter in 2008 due to the lower production from the
Chisel North and Balmat mines resulting from the suspension of both
operations. Ore grade for zinc was 3.79%, and for copper was 2.28%, as
compared to 4.89% for zinc and 1.89% for copper for the same quarter in
2008. Lower production from Balmat and Chisel North negatively impacted
average zinc grades.
In line with the reduced mine output, production from our zinc plant
decreased to 25,640 tonnes, compared to 27,695 tonnes in the same
quarter of 2008. Unit operating costs decreased by 4% to 31.0
cents/lb., reflecting lower costs for operating and maintenance
materials.
Non-recycled copper production was lower by 16% due primarily to lower
availability of economic purchased concentrate. The smelter's unit
operating costs, which exclude recycled production, decreased by 2% to
34.9 cents/lb. of copper produced, the impact of lower production being
more than offset by the reduction in costs for heavy fuel oil.
Gold production decreased 8% due to lower volumes of concentrates and
lower head grades. Silver production increased by 29%, primarily from a
specific purchased concentrate source.
For the quarter, our cash cost per pound of zinc sold, net of
by-product credits from copper, precious metals, zinc oxide and other
associated revenue, was US$0.32/lb. compared to negative US$0.13/lb. in
the same quarter of last year, excluding costs and sales related to
Balmat and HMI Nickel (refer to "Non-GAAP Measures" on page
31 of HudBay's first quarter MD&A). The increase was principally
due to lower by-product copper credits arising mainly from lower
volumes and prices, offset in part by the benefit of a weaker Canadian
dollar.
As noted above, economic conditions prompted us to evaluate our
operations and assets, which resulted in our decision to suspend
certain operations. Management has concluded that the values of our
operational assets continue to support their recorded amounts.
Production and sales ---------------------------------------------------------------------------- Three Months Ended March 31 --------------------------- 2009 2008 ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- Production ---------------------------------------------------------------------------- Zinc (1) tonnes 25,640 34,710 ---------------------------------------------------------------------------- Copper (2) tonnes 16,239 19,272 ---------------------------------------------------------------------------- Gold (2) troy oz. 21,262 22,999 ---------------------------------------------------------------------------- Silver (2) troy oz. 564,875 436,913 ---------------------------------------------------------------------------- Metal Sold ---------------------------------------------------------------------------- Zinc (3) tonnes 26,949 32,916 ---------------------------------------------------------------------------- Copper tonnes 16,191 20,602 ---------------------------------------------------------------------------- Gold troy oz. 28,624 19,808 ---------------------------------------------------------------------------- Silver troy oz. 606,031 283,467 ---------------------------------------------------------------------------- (1) Production includes Balmat payable metal in concentrate shipped (2) Production excludes recycled spent anode and represents non-recycled anode production only (3) Zinc sales include sales to our Zochem facility and the Balmat payable metal in concentrate shipped (including to Hudson Bay Mining And Smelting Co., Limited, "HBMS")
Revenue
Total revenue for the first quarter was $161.8 million, $109.9 million
lower than for the same quarter last year. The decline in revenues was
mainly due to lower copper and zinc prices, which reduced revenues by
$102.8 million and $45.6 million, respectively, offset in part by a
weaker Canadian dollar, which increased our revenues denominated in US
dollars by $61.7 million. Revenues were also affected by lower copper
and Balmat concentrate sales volumes and higher gold sales volumes.
Operating Expenses
For the first quarter of 2009, operating expenses were $135.1 million,
$51.6 million lower than for the same quarter last year. Operating
costs declined mainly as a result of lower purchased concentrate
prices, as well as a reduction in purchased concentrate volumes, net of
the offsetting impact of a weaker Canadian dollar. Operating costs also
declined as a result of the suspension of operations at the Balmat
mine, the impact of weaker metals prices and earnings performance on
profit sharing and net profits interest expenses.
Realized Metal Prices and Exchange Rate ---------------------------------------------------------------------------- HudBay Realized Prices (1) Three Months Ended Q1 2009 Q1 2008 -------------------------- Average Average Mar 31 Mar 31 Prices (2) Prices (2) 2009 2008 ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- Prices in US$ ---------------------------------------------------------------------------- Zinc US$/lb. 0.53 1.10 0.56 1.18 ---------------------------------------------------------------------------- Copper US$/lb. 1.56 3.54 1.69 3.50 ---------------------------------------------------------------------------- Gold US$/troy oz. 909 927 885 840 ---------------------------------------------------------------------------- Silver US$/troy oz. 12.61 17.68 12.40 15.65 ---------------------------------------------------------------------------- Prices in C$ ---------------------------------------------------------------------------- Zinc C$/lb. 0.66 1.11 0.70 1.19 ---------------------------------------------------------------------------- Copper C$/lb. 1.94 3.55 2.11 3.51 ---------------------------------------------------------------------------- Gold C$/troy oz. 1,132 931 1,117 843 ---------------------------------------------------------------------------- Silver C$/troy oz. 15.70 17.75 15.65 15.70 ---------------------------------------------------------------------------- Exchange rate US$1 to C$ 1.25 1.00 1.25 1.00 ---------------------------------------------------------------------------- (1) Realized prices are before refining and treatment charges and only on the sale of finished metal, excluding metal in concentrates (2) London Metals Exchange ("LME") average for zinc, copper and gold prices, London Spot US equivalent for silver prices. HudBay's copper sales contracts are primarily based on Comex copper prices
Website Links
HudBay Minerals Inc.:
www.hudbayminerals.com
Management's Discussion and Analysis:
http://media3.marketwire.com/docs/HBMMDA0505.pdf
Financial Statements:
http://media3.marketwire.com/docs/HBMQ10505.pdf
Conference Call and Webcast
Peter R. Jones, chief executive officer, Michael D. Winship, president
and chief operating officer, and David S. Bryson, senior vice president
and chief financial officer, will host a conference call to discuss the
company's first quarter results on Wednesday, May 6, 2009. First
Quarter 2009 Results Conference Call and Webcast:
Date: Wednesday, May 6, 2009 Time: 10:00 a.m. (Eastern Time) Webcast: www.hudbayminerals.com Dial in: 416-644-3431 or 800-814-4862 Replay: 416-640-1917 or 877-289-8525 Replay Passcode: 21305161#
The
conference call replay will be available until midnight (Eastern Time)
on May 20, 2009. An archived audio webcast of the call also will be
available on HudBay's website.
HudBay Minerals Inc.: Strength to Build the Future
HudBay Minerals Inc. (TSX:HBM) is a Canadian integrated mining company
with assets in North and Central America principally focused on the
discovery, production and marketing of base metals. The company'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.
Forward Looking Information
This news release and its attachments contain "forward-looking
information" within the meaning of applicable securities laws. Forward
looking information includes but is not limited to information
concerning the potential impact of changing economic conditions on
HudBay's financial results, potential plans for the Lalor project,
HudBay's exploration and development plans, and its strategies and
future prospects. Generally, forward-looking information can be
identified by the use of forward-looking terminology such as
"plans", "expects", or "does not expect",
"is expected", "budget", "scheduled",
"estimates", "forecasts", "intends", "anticipates",
"understands" or "does not anticipate", or
"believes" or variations of such words and phrases or
statements that certain actions, events or results "will",
"may", "could", "would",
"might", or "will be taken", "occur", or
"be achieved". Forward-looking information is based on the
views, opinions, intentions and estimates of management at the date the
information is made, and is based on a number of assumptions and
subject to a variety of risks and uncertainties and other factors that
could cause actual events or results to differ materially from those
anticipated or projected in the forward-looking information (including
the actions of other parties who have agreed to do certain things and
the approval of certain regulatory bodies).
Many of these assumptions are based on factors and events that are not
within the control of HudBay and there is no assurance they will prove
to be correct. Factors that could cause actual results or events to
vary materially from results or events anticipated by such
forward-looking information include risks associated with the mining
industry such as economic factors (including future commodity prices,
currency fluctuations and energy prices), failure of plant, equipment,
processes and transportation services to operate as anticipated,
dependence on key personnel and employee relations, environmental
risks, government regulation, actual results of current exploration
activities, possible variations in ore grade or recovery rates,
permitting timelines, capital expenditures, reclamation activities,
land titles, and social and political developments and other risks of
the mining industry, as well as those risk factors discussed in the
company's Annual Information Form dated March 30, 2009, which risks may
cause actual results to differ materially from any forward-looking
statement.
Although HudBay has attempted to identify important factors that could
cause actual actions, events or results to differ materially from those
described in forward-looking information, there may be other factors
that cause actions, events or results not to be anticipated, estimated
or intended. There can be no assurance that forward-looking information
will prove to be accurate, as actual results and future events could
differ materially from those anticipated in such information. HudBay
undertakes no obligation to update forward-looking information if
circumstances or management's estimates or opinions should change
except as required by applicable securities laws, or to comment on
analyses, expectations or statements made by third parties in respect
of HudBay, its financial or operating results or its securities. The
reader is cautioned not to place undue reliance on forward-looking
information.
This news release and the information contained herein does not
constitute an offer of securities for sale in the United States and
securities may not be offered or sold in the United States absent
registration or exemption from registration.
(HBM-F)
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