Hudbay Minerals(US:HBM)2025-08-14 15:17Financial Performance - Hudbay reported strong second quarter financial results, reaffirming production targets and improving cost guidance[12]. - Achieved revenue of $536.4 million and adjusted EBITDA of $245.2 million in Q2 2025, with a 15% decrease in adjusted EBITDA compared to Q1 2025 but a 69% increase compared to Q2 2024[20]. - Net earnings attributable to owners were $117.7 million, or $0.30 per share, a 17% increase compared to Q1 2025 and a significant increase compared to a net loss of $16.5 million in Q2 2024[21]. - Cash generated from operating activities was $259.9 million, reflecting higher gross margins and stable copper production, with operating cash flow before changes in non-cash working capital at $193.9 million[19]. - Total liquidity was $1,050.2 million as of June 30, 2025, including $625.5 million in cash and cash equivalents, with net debt reduced to $434.1 million[27]. - Delivered $87.8 million in free cash flow during Q2 2025, resulting in over $400 million in annual free cash flow over the last twelve months[20]. - Achieved record trailing twelve-month adjusted EBITDA of $995.9 million and over $400 million in annual free cash flow generation[53]. - Year-to-date net earnings attributable to owners reached $218.1 million in 2025, compared to $5.8 million in the same period of 2024, marking an increase of $212.3 million[162]. Production and Operations - Consolidated copper production was 29,956 tonnes and gold production was 56,271 ounces in Q2 2025, with a reaffirmed full year 2025 production guidance of 117,000 to 149,000 tonnes of copper and 247,500 to 308,000 ounces of gold[18]. - Copper production guidance for 2025 is set between 117,000 and 149,000 tonnes, with actual production of 60,914 tonnes in the first half of 2025[42]. - Copper production in Q2 2025 was 21,710 tonnes, a 7% increase from Q2 2024, while year-to-date production decreased by 4% to 42,003 tonnes compared to 2024[81][82]. - Gold production in Q2 2025 was 7,366 ounces, down 31% from Q2 2024, with year-to-date production at 15,235 ounces, a 62% decrease from the previous year[81][82]. - Silver production in Q2 2025 reached 551,979 ounces, a 22% increase from Q2 2024, with year-to-date production at 1,106,671 ounces, slightly higher than the previous year[81][82]. - The company reaffirmed its 2025 production guidance for all metals in Peru, with copper guidance set between 80,000 and 97,000 tonnes[95][96]. - The last major stripping program at Pampacancha was completed in Q2 2025, with the deposit expected to be depleted in Q1 2026[77]. Cost Management - Improved full year 2025 consolidated cash cost guidance to $0.65 to $0.85 per pound from $0.80 to $1.00 per pound, driven by increased exposure to gold by-product credits and strong cost control[18]. - Consolidated cash cost per pound of copper produced was $(0.02) in Q2 2025, demonstrating industry-leading cost performance, while sustaining cash cost was $1.65[23][24]. - Cash cost per pound of copper produced in Q2 2025 was $1.45, a 19% decrease from Q2 2024, but a 31% increase from Q1 2025[90][91]. - Sustaining cash cost per pound of copper produced in Q2 2025 was $2.63, a 1% increase from Q2 2024, and a 37% increase from Q1 2025[92]. - Combined unit operating costs for the three months ended June 30, 2025, were $13.59 per tonne, reflecting an increase from the previous quarter[72]. Strategic Initiatives - The growth pipeline includes several projects such as the Copper World project in Arizona and the Mason project in Nevada[7]. - Announced a $600 million joint venture transaction with Mitsubishi Corporation for a 30% minority interest in Copper World, enhancing financial flexibility and project IRR to approximately 90%[17]. - The joint venture with Mitsubishi for Copper World involves an initial contribution of $600 million for a 30% equity interest, with $420 million payable upon closing[49]. - Hudbay signed an exploration agreement with Mosakahiken Cree Nation to explore the Talbot deposit, indicating ongoing market expansion efforts[104]. Community and Sustainability - The company emphasizes sustainable operations, aiming to minimize environmental impact while providing critical metals for energy transition[11]. - Hudbay is committed to investing in local communities through long-term employment and economic development initiatives[10]. - Hudbay's purpose statement reflects its commitment to caring for people, communities, and the planet while providing essential metals[10]. - The company committed over C$2 million in funding support, including C$1.6 million for evacuated employees and a C$500,000 donation to the Canadian Red Cross[56]. Market and Revenue - Revenue for Q2 2025 was $536.4 million, an increase of $110.9 million compared to Q2 2024, driven by higher sales volumes of copper, gold, and silver, along with strong realized prices for copper and gold[164]. - Gold accounted for 36% of total revenues in Q2 2025, reflecting higher gold prices compared to Q2 2024, contributing to revenue diversification[165]. - Average realized prices for copper, gold, zinc, and silver for Q2 2025 were $4.32/lb, $3,289/oz, $1.15/lb, and $26.17/oz, respectively[171]. - The realized price for gold in the first half of 2025 was $3,075/oz, compared to $2,043/oz in the same period of 2024, reflecting a substantial increase[171]. - The total revenue from contracts for Q2 2025 was $526.4 million, with adjustments for pricing and volume resulting in a net revenue of $539.7 million[178]. Tax and Expenses - Tax expense for the three months ended June 30, 2025, increased by $17.7 million compared to the same period in 2024, totaling $38.4 million[197]. - Hudbay recorded a mining tax expense of $34.8 million for the year-to-date of 2025, reflecting the variability in effective mining tax rates[199]. - The effective income tax rate for Hudbay was lower than the estimated Canadian statutory rate of 26.7%, resulting in a recorded income tax expense of $75.7 million against an estimated tax expense of $86.6 million[198]. - Exploration expenses increased by $4.7 million due to Hudbay's planned Snow Lake exploration program, funded largely by flow-through financing[196].