Hudbay Minerals(HBM) - 2023 Q1 - Quarterly Report

INTRODUCTION Our Business Hudbay is a diversified mining company with long-life assets in the Americas, focusing on growth through exploration and optimization - Hudbay is a diversified mining company with long-life assets in North and South America[6] - Constancia operations in Peru produce copper with gold, silver, and molybdenum by-products[6] - Snow Lake operations in Manitoba, Canada, produce gold with copper, zinc, and silver by-products[6] - Growth strategy focuses on exploration, development, operation, and optimization of controlled properties and strategic acquisitions[6] SUMMARY Summary of First Quarter Results Q1 2023 net profit declined significantly YoY to $5.5 million, impacted by lower sales volumes, though operating cash flow and unit costs improved Q1 2023 vs Q1 2022 Key Financial Results | Metric | Q1 2023 | Q1 2022 | Change (YoY) | | :--- | :--- | :--- | :--- | | Net Earnings (millions) | $5.5 | $63.8 | -$58.3 | | Basic and Diluted EPS | $0.02 | $0.24 | -$0.22 | | Adjusted EPS | $0.00 | $0.02 | -$0.02 | | Operating Cash Flow before non-cash WC (millions) | $85.6 | $77.6 | +$8.0 | | Adjusted EBITDA (millions) | $101.9 | $110.2 | -$8.3 | | Consolidated Copper Production (tonnes) | 22,562 | 24,702 | -8.7% | | Consolidated Gold Production (ounces) | 47,240 | 53,956 | -12.4% | | Consolidated Silver Production (ounces) | 702,809 | 784,357 | -10.4% | | Consolidated Zinc Production (tonnes) | 9,846 | 22,252 | -55.7% | | Consolidated Cash Cost per lb Copper | $0.85 | $1.11 | -23.4% | | Consolidated Sustaining Cash Cost per lb Copper | $1.83 | $2.29 | -20.1% | - Q1 2023 net earnings were positively impacted by an $8.2 million non-cash gain from environmental reclamation provision revaluation and a $5.0 million variable consideration adjustment, offset by a $6.1 million revaluation loss on gold prepayment liability[13] - Consolidated copper production (excluding 777 mine) increased by 2% YoY due to higher throughput and copper grades in Peru[12] - Consolidated gold production increased by 3% YoY due to higher Peru throughput and higher Lalor gold grades/recoveries[12] - Consolidated zinc production declined by 27% YoY due to the transition towards gold lenses at Lalor[12] - Consolidated cash cost per pound of copper ($0.85) improved by 23% YoY, driven by lower mining, milling, and S&A expenses, partially offset by higher freight/treatment charges and lower by-product credits[15] - Full year 2023 consolidated production and cost guidance reaffirmed, with Q1 production in line with expectations[10][12][15] KEY FINANCIAL RESULTS Financial Condition The company's cash position and working capital improved as of March 31, 2023, while net debt saw a slight increase Financial Condition (in $ thousands) | Metric | Mar. 31, 2023 | Dec. 31, 2022 | | :--- | :--- | :--- | | Cash | $255,563 | $225,665 | | Total long-term debt | $1,225,023 | $1,184,162 | | Net debt | $969,460 | $958,497 | | Working capital | $100,987 | $76,534 | | Total assets | $4,367,982 | $4,325,943 | | Equity | $1,574,521 | $1,571,809 | Financial Performance Q1 2023 revenue and net earnings declined significantly YoY, though operating cash flow before working capital changes increased Financial Performance (in $ thousands, except per share amounts) | Metric | Mar. 31, 2023 | Mar. 31, 2022 | | :--- | :--- | :--- | | Revenue | $295,219 | $378,619 | | Cost of sales | $228,706 | $293,351 | | Earnings before tax | $17,430 | $88,861 | | Net earnings | $5,457 | $63,815 | | Basic and diluted earnings per share | $0.02 | $0.24 | | Adjusted earnings per share | $0.00 | $0.02 | | Operating cash flow before changes in non-cash working capital | $85.6 | $77.6 | | Adjusted EBITDA | $101.9 | $110.2 | KEY PRODUCTION RESULTS Contained Metal in Concentrate and Doré Produced Consolidated production of copper, gold, and zinc decreased YoY in Q1 2023, primarily due to the 777 mine closure Contained Metal in Concentrate and Doré Produced (Q1 2023 vs Q1 2022) | Metal | Unit | Mar. 31, 2023 (Total) | Mar. 31, 2022 (Total) | Change (YoY) | | :--- | :--- | :--- | :--- | :--- | | Copper | tonnes | 22,562 | 24,702 | -8.7% | | Gold | oz | 47,240 | 53,956 | -12.4% | | Silver | oz | 702,809 | 784,357 | -10.4% | | Zinc | tonnes | 9,846 | 22,252 | -55.7% | | Molybdenum | tonnes | 289 | 207 | +39.6% | - Peru's copper production increased by 7.1% YoY to 20,517 tonnes, while Manitoba's copper production decreased by 63.1% YoY to 2,045 tonnes[22] - Manitoba's gold production decreased by 16.5% YoY to 36,034 ounces, while Peru's gold production increased by 3.9% YoY to 11,206 ounces[22] Payable Metal Sold Payable metal sales volumes for copper, silver, and zinc declined in Q1 2023, while gold and molybdenum sales increased Payable Metal Sold (Q1 2023 vs Q1 2022) | Metal | Unit | Mar. 31, 2023 (Total) | Mar. 31, 2022 (Total) | Change (YoY) | | :--- | :--- | :--- | :--- | :--- | | Copper | tonnes | 18,541 | 20,609 | -10.0% | | Gold | oz | 49,720 | 48,343 | +2.8% | | Silver | oz | 541,884 | 864,591 | -37.3% | | Zinc | tonnes | 5,628 | 17,306 | -67.5% | | Molybdenum | tonnes | 254 | 213 | +19.2% | KEY COST RESULTS Cash and Sustaining Cash Costs Consolidated cash cost per pound of copper improved significantly YoY, though Manitoba's gold cash cost increased above guidance Key Cost Results (Q1 2023 vs Q1 2022) | Metric | Unit | Mar. 31, 2023 | Mar. 31, 2022 | Annual 2023 Guidance | | :--- | :--- | :--- | :--- | :--- | | Peru Cash Cost per lb Copper | $/lb | 1.36 | 1.54 | 1.05 - 1.30 | | Peru Sustaining Cash Cost per lb Copper | $/lb | 2.12 | 2.27 | | | Manitoba Cash Cost per oz Gold | $/oz | 938 | 416 | 500 - 800 | | Manitoba Sustaining Cash Cost per oz Gold | $/oz | 1,336 | 1,187 | | | Consolidated Cash Cost per lb Copper | $/lb | 0.85 | 1.11 | 0.40 - 0.80 | | Consolidated Sustaining Cash Cost per lb Copper | $/lb | 1.83 | 2.29 | 1.35 - 2.05 | | Consolidated All-in Sustaining Cash Cost per lb Copper | $/lb | 2.07 | 2.54 | | - Peru's cash cost decreased due to lower mining costs, higher capitalized stripping, higher molybdenum by-product credits, and higher copper production, partially offset by higher fuel/labor costs and freight/treatment charges[63] - Manitoba's cash cost per ounce of gold increased significantly due to lower throughput from Stall mill, lower by-product credits, and higher treatment and refining charges, partially offset by lower mining, milling, G&A, freight costs, and elimination of zinc refining costs[89] - Both consolidated and Peru cost measures are expected to decline in future quarters with higher expected copper production and precious metal by-product credits, remaining within 2023 guidance[15][63][89] RECENT DEVELOPMENTS Combination with Copper Mountain to Create a Premier Americas-Focused Copper Producer Hudbay announced a definitive agreement to acquire Copper Mountain, creating a larger Americas-focused copper producer - Hudbay entered an agreement to acquire Copper Mountain on April 13, 2023[25] - The acquisition will create a 150,000 tonnes per year copper producer with three long-life mines[10][26] - Expected to unlock $30 million in annual operating efficiencies and corporate synergies over three years[10][26] - Copper Mountain shareholders will receive 0.381 Hudbay common shares per share, valuing the equity at US$439 million[27] - Transaction is subject to shareholder and regulatory approvals, expected to close by late June 2023[27] 100% Renewable Power Supply at Constancia A new 10-year agreement secures 100% renewable energy for the Constancia operations, reducing company-wide GHG emissions - New 10-year power purchase agreement signed with ENGIE Energía Perú for 100% renewable energy supply to Constancia[10][28] - Agreement effective January 2026, offering improved flexibility, lower costs, and guaranteed supply[28] - Expected 40% reduction in total Scope 1 and Scope 2 GHG emissions company-wide, contributing to a 50% reduction target by 2030[10][28] Copper World Positive Permitting Update; Pre-Feasibility Study Well-Advanced The Copper World project received positive permitting updates, with a pre-feasibility study on track for mid-2023 release - Army Corps of Engineers (ACOE) formally accepted the surrender of the Section 404 Clean Water Act permit for the former Rosemont project[29] - ACOE reaffirmed no waters of the U.S. in the submitted area, consistent with internal studies for the full Copper World area[29] - State-level permits (Aquifer Protection and Air Quality) are expected in 2023[10][31] - Pre-feasibility study for Phase I of Copper World is well-advanced and on track for mid-2023 release[10][33] - Plans to evaluate a bulk sampling program and initiate a minority joint venture partner process after receiving permits[33] Continued Focus on Free Cash Flow Generation The company is enhancing free cash flow through deferred gold deliveries, copper price hedging, and discretionary spending cuts - Successfully ensured steady operation of Constancia mill and reduced concentrate inventories ahead of schedule despite Peru disruptions[10][34] - Deferred eight months of prepaid gold deliveries from 2023 to 2024, expected to increase 2023 cash position by approximately $53 million[15][35] - Entered a zero-cost collar program in April for ~10% of H2 2023 copper production, with a floor price of $3.95/lb and upside to $4.28/lb[15][36] - On track to deliver discretionary spending reduction targets for 2023; Q1 growth capital expenditures reduced by 22% QoQ to $16.3 million[15][37] - Total exploration expenses for 2023 are on track for $20 million, a 42% decrease from 2022 levels[37] Annual Reserve and Resource Update The annual update maintained long mine lives for Constancia and Snow Lake and provided an increased three-year production outlook - Constancia mineral reserves total 492 million tonnes at 0.30% copper, with 1.5 million tonnes of contained copper, maintaining mine life until 2038[39] - Snow Lake mineral reserves total 18 million tonnes with 2.1 million ounces of contained gold, maintaining mine life until 2038[40] - Constancia's annual copper production expected to average 110,000 tonnes (23% increase from 2022) and gold 87,000 ounces (49% increase from 2022) over the next three years[10][41] - Snow Lake's annual gold production expected to average over 190,000 ounces (30% increase from 2022) over the next three years[10][41] 3-Year Production Outlook (Contained Metal in Concentrate and Doré) | Metal | Unit | 2023 Guidance | 2024 Guidance | 2025 Guidance | | :--- | :--- | :--- | :--- | :--- | | Peru | | | | | | Copper | tonnes | 91,000 - 116,000 | 107,000 - 132,000 | 94,000 - 120,000 | | Gold | oz | 83,000 - 108,000 | 96,000 - 117,000 | 53,000 - 64,000 | | Silver | oz | 2,210,000 - 2,650,000 | 2,600,000 - 3,100,000 | 2,400,000 - 3,000,000 | | Molybdenum | tonnes | 1,300 - 1,600 | 1,600 - 1,900 | 1,400 - 1,700 | | Manitoba | | | | | | Gold | oz | 175,000 - 205,000 | 175,000 - 205,000 | 175,000 - 225,000 | | Zinc | tonnes | 28,000 - 36,000 | 35,000 - 43,000 | 35,000 - 45,000 | | Copper | tonnes | 9,000 - 12,000 | 9,000 - 13,000 | 7,000 - 11,000 | | Silver | oz | 750,000 - 1,000,000 | 800,000 - 1,000,000 | 900,000 - 1,200,000 | | Total | | | | | | Copper | tonnes | 100,000 - 128,000 | 116,000 - 145,000 | 101,000 - 131,000 | | Gold | oz | 258,000 - 313,000 | 271,000 - 322,000 | 228,000 - 289,000 | | Zinc | tonnes | 28,000 - 36,000 | 35,000 - 43,000 | 35,000 - 45,000 | | Silver | oz | 2,960,000 - 3,650,000 | 3,400,000 - 4,100,000 | 3,300,000 - 4,200,000 | | Molybdenum | tonnes | 1,300 - 1,600 | 1,600 - 1,900 | 1,400 - 1,700 | Exploration Update Exploration programs are underway to extend reserves at existing sites and test new high-grade targets in multiple regions - Limited drill program and technical evaluations at Constancia to confirm economic viability of adding an additional mining phase[43] - Drill program at Pampacancha deposit to test mineral reserve extension potential[43] - Early exploration activities commenced at Maria Reyna and Caballito, with drill permit applications expected soon, confirming copper mineralization[10][44] - Lalor winter drill program intersected numerous occurrences of disseminated copper sulfides over two kilometers down plunge, indicating potential high-grade copper-gold feeder zones[15][44] - Stall recovery improvement program is on track for commissioning in May with ramp-up to higher metal recoveries by mid-2023[15] - Evaluating metallurgical test work for reprocessing Flin Flon tailings, with drilling indicating higher zinc, copper, and silver grades than historical records[46] - Nevada drill program planned for late 2023 to test high-grade skarn and large porphyry targets near Mason[15][47] Senior Management Team Appointments The company announced several promotions and a new appointment to its senior management team in March 2023 - Javier Del Rio promoted to Senior Vice President, South America and USA[48][49] - Olivier Tavchandjian promoted to Senior Vice President, Exploration and Technical Services[48][50] - Warren Flannery appointed as Vice President, Business Planning and Reclamation[48][51] PERU OPERATIONS REVIEW Operational Performance Peru's Q1 2023 ore milled and metal production increased YoY, while unit operating costs decreased by 7% Peru Operational Performance (Q1 2023 vs Q1 2022) | Metric | Unit | Mar. 31, 2023 | Mar. 31, 2022 | Change (YoY) | | :--- | :--- | :--- | :--- | :--- | | Total ore mined | tonnes | 4,300,476 | 7,755,457 | -44.6% | | Ore milled | tonnes | 7,663,728 | 7,213,833 | +6.2% | | Milled Copper Grade | % | 0.33 | 0.31 | +6.5% | | Copper recovery | % | 81.7 | 85.3 | -4.2% | | Gold recovery | % | 56.8 | 59.8 | -5.0% | | Silver recovery | % | 60.7 | 66.9 | -9.3% | | Molybdenum recovery | % | 34.8 | 21.1 | +64.9% | | Combined unit operating costs | $/tonne | 11.47 | 12.37 | -7.3% | | Copper produced | tonnes | 20,517 | 19,166 | +7.1% | | Gold produced | oz | 11,206 | 10,789 | +3.9% | | Silver produced | oz | 552,167 | 505,568 | +9.2% | | Molybdenum produced | tonnes | 289 | 207 | +39.6% | - Total ore mined decreased due to processing stockpiles to ration fuel during civil unrest in early 2023[56] - Full mining activities resumed in the Pampacancha pit in February, with higher-grade ore expected late in Q2 2023, ahead of schedule[10][57] - Lower recoveries for copper, gold, and silver were due to higher levels of impurities in stockpile ore[59] - Peru production is expected to be higher in H2 2023 and is on track to achieve full year 2023 guidance[60] Peru Cash Cost and Sustaining Cash Cost Peru's cash cost per pound of copper decreased by 11.7% YoY, driven by lower mining costs and higher by-product credits Peru Cash and Sustaining Cash Cost (Q1 2023 vs Q1 2022) | Metric | Unit | Mar. 31, 2023 | Mar. 31, 2022 | Annual 2023 Guidance | | :--- | :--- | :--- | :--- | :--- | | Cash cost per lb Copper produced | $/lb | 1.36 | 1.54 | 1.05 - 1.30 | | Sustaining cash cost per lb Copper produced | $/lb | 2.12 | 2.27 | | - Cash cost decreased due to lower mining costs, higher capitalized stripping, higher molybdenum by-product credits, and higher copper production[63] - Offsetting factors included higher fuel prices, labor costs, and freight/treatment/refining costs[63] - Cash cost remains slightly above the 2023 guidance range but is expected to decline and meet full-year guidance[63] Metal Sold Q1 2023 metal sales in Peru were impacted by higher unsold concentrate inventory due to temporary road blockades Peru Payable Metal in Concentrate Sold (Q1 2023 vs Q1 2022) | Metal | Unit | Mar. 31, 2023 | Mar. 31, 2022 | | :--- | :--- | :--- | :--- | | Copper | tonnes | 16,316 | 16,825 | | Gold | oz | 11,781 | 14,452 | | Silver | oz | 392,207 | 636,133 | | Molybdenum | tonnes | 254 | 213 | - Copper, gold, and silver sales impacted by higher unsold concentrate inventory due to road blockades, now normalized[65][66] - Payable gold sales decreased by 18% YoY, and silver sales decreased by 38% YoY, partly due to a precious metal stream sale settling post-quarter[66] MANITOBA OPERATIONS REVIEW Operational Performance Manitoba's Q1 2023 production and costs were impacted by the 777 mine closure and temporary issues at Lalor Manitoba Operational Performance (Q1 2023 vs Q1 2022) | Metric | Unit | Mar. 31, 2023 | Mar. 31, 2022 | Change (YoY) | | :--- | :--- | :--- | :--- | :--- | | Lalor ore mined | tonnes | 373,599 | 386,752 | -3.4% | | Lalor Gold Grade | g/tonne | 3.96 | 3.76 | +5.3% | | Lalor Copper Grade | % | 0.57 | 0.80 | -28.7% | | Lalor Zinc Grade | % | 3.32 | 4.06 | -18.2% | | Lalor Silver Grade | g/tonne | 18.24 | 22.94 | -20.5% | | New Britannia ore milled | tonnes | 143,042 | 124,176 | +15.2% | | Stall ore milled | tonnes | 242,619 | 273,125 | -11.2% | | Combined mine/mill unit operating costs | C$/tonne | 216 | 176 | +22.7% | | Gold produced | oz | 36,034 | 43,167 | -16.5% | | Copper produced | tonnes | 2,045 | 5,536 | -63.1% | | Zinc produced | tonnes | 9,846 | 22,252 | -55.7% | | Silver produced | oz | 150,642 | 278,789 | -46.0% | - Lalor's ore production was impacted by stope muck fragmentation issues and low load-haul-dump equipment availability, but reached 4,800 tonnes per day by late Q1[10][74] - Total mine unit operating costs increased by 8% YoY due to lower ore production volumes and inflationary pressures[76] - The zinc plant in Flin Flon permanently ceased operations in June 2022, resulting in no production in Q1 2023[80] - Full year Manitoba production of all metals remains on track to achieve guidance ranges for 2023[84] Manitoba Cash Cost and Sustaining Cash Cost Manitoba's cash cost per ounce of gold increased significantly in Q1 2023, exceeding guidance due to lower throughput and credits Manitoba Cash and Sustaining Cash Cost (Q1 2023 vs Q1 2022) | Metric | Unit | Mar. 31, 2023 | Mar. 31, 2022 | Annual 2023 Guidance | | :--- | :--- | :--- | :--- | :--- | | Cash cost per oz Gold produced | $/oz | 938 | 416 | 500 - 800 | | Sustaining cash cost per oz Gold produced | $/oz | 1,336 | 1,187 | | - Cash cost increased due to lower throughput from Stall mill, lower by-product credits, and higher treatment and refining charges[89] - Partially offset by lower mining, milling, G&A, freight costs, and elimination of zinc refining costs due to 777 mine and zinc plant closure[89] - Cash cost was 17% above the upper end of 2023 guidance but is expected to decline and meet guidance with increasing gold production and Stall recovery project completion[89] Metal Sold Manitoba's gold sales increased by 12% YoY in Q1 2023, while other metal sales declined in line with production Manitoba Payable Metal in Concentrate and Doré Sold (Q1 2023 vs Q1 2022) | Metal | Unit | Mar. 31, 2023 | Mar. 31, 2022 | | :--- | :--- | :--- | :--- | | Gold | oz | 37,939 | 33,891 | | Copper | tonnes | 2,225 | 3,784 | | Zinc | tonnes | 5,628 | 17,306 | | Silver | oz | 149,677 | 228,458 | - Gold sales increased by 12% YoY due to higher gold grades and throughput at New Britannia mill[92] - Copper, silver, and zinc sales were lower YoY, consistent with production trends[92] FINANCIAL REVIEW Financial Results Net profit for Q1 2023 was $5.5 million, a significant reduction from the prior year, driven by lower revenues - Net profit for Q1 2023 was $5.5 million, a $58.3 million reduction from Q1 2022[95] Components of Profit or Loss Variance (Q1 2023 vs Q1 2022) | Component | Increase (decrease) in $ millions | | :--- | :--- | | Revenues | (83.4) | | Mine operating costs | 51.0 | | Depreciation and amortization | 13.7 | | Selling and administrative expenses | 2.6 | | Exploration expenses | 10.4 | | Re-evaluation adjustment - environmental obligation | (71.6) | | Other expenses | 4.1 | | Net finance expense | 1.8 | | Tax expense | 13.1 | | Reduction in profit for the period | (58.3) | Revenue Q1 2023 revenue decreased by $83.4 million YoY due to lower commodity prices and reduced sales volumes - Q1 2023 revenue was $295.2 million, $83.4 million lower than Q1 2022[96] - Primary drivers for revenue decrease: lower copper prices (-$22.4M), lower zinc prices (-$4.4M), lower copper sales volumes (-$20.7M), lower zinc sales volumes (-$45.2M), and higher treatment and refining charges (-$6.4M)[98] - Partially offset by higher gold prices (+$6.9M) and molybdenum/other volume and pricing differences (+$11.5M)[98] Revenue by Product Type (in $ millions) | Metal | Mar. 31, 2023 | Mar. 31, 2022 | | :--- | :--- | :--- | | Copper | 164.2 | 209.0 | | Zinc | 19.8 | 66.4 | | Gold | 74.9 | 67.6 | | Silver | 6.3 | 6.6 | | Molybdenum | 19.0 | 9.2 | | Other metals | 0.2 | 2.4 | | Revenue from contracts | 284.4 | 361.2 | | Amortization of deferred revenue | 11.0 | 25.0 | | Pricing and volume adjustments | 13.4 | 1.2 | | Treatment and refining charges | (18.5) | (12.1) | | Total Revenue | 295.2 | 378.6 | Realized Sales Prices (Q1 2023 vs Q1 2022) | Metal | Unit | LME QTD 2023 | Mar. 31, 2023 | Mar. 31, 2022 | | :--- | :--- | :--- | :--- | :--- | | Copper | $/lb | 4.05 | 3.98 | 4.53 | | Zinc | $/lb | 1.42 | 1.39 | 1.76 | | Gold | $/oz | | 1,881 | 1,741 | | Silver | $/oz | | 22.14 | 21.56 | - Average LME copper prices increased by 12% QoQ, but realized copper price was 2% below LME average due to timing of Peru sales[106] Stream Sales The company details Q1 2023 gold and silver stream sales from Peru, including realized prices and deferred revenue rates Stream Sales (Peru, Q1 2023) | Metric | Unit | Mar. 31, 2023 (Peru) | | :--- | :--- | :--- | | Gold | oz | 6,579 | | Silver | oz | 365,644 | | Gold deferred revenue drawdown rate | $/oz | 820 | | Gold cash rate | $/oz | 416 | | Total gold stream realized price | $/oz | 1,236 | | Silver deferred revenue drawdown rate | $/oz | 15.26 | | Silver cash rate | $/oz | 6.14 | | Total silver stream realized price | $/oz | 21.40 | - Deferred revenue amortization rates for Peru increased to $820/oz gold and $15.26/oz silver in Q1 2023 (from $734/oz gold and $14.95/oz silver in Q1 2022)[115] - Cash rates for gold and silver streams increase by 1% compounded annually[117] Cost of Sales Total cost of sales decreased by $64.7 million YoY, primarily due to the closure of Manitoba's 777 mine and zinc plant Cost of Sales by Region (in $ thousands) | Component | Mar. 31, 2023 | Mar. 31, 2022 | | :--- | :--- | :--- | | Peru | | | | Mining | 26,786 | 28,402 | | Milling | 46,191 | 47,655 | | Changes in product inventory | (11,135) | (4,772) | | Depreciation and amortization | 41,960 | 48,362 | | G&A | 16,452 | 16,198 | | Freight, royalties and other charges | 13,092 | 10,331 | | Total Peru cost of sales | 133,346 | 145,715 | | Manitoba | | | | Mining | 37,752 | 59,433 | | Milling | 14,848 | 21,509 | | Zinc plant | - | 18,376 | | Changes in product inventory | 1,726 | (16,148) | | Depreciation and amortization | 25,462 | 32,729 | | G&A | 10,182 | 23,243 | | Freight, royalties and other charges | 5,390 | 8,494 | | Total Manitoba cost of sales | 95,360 | 147,636 | | Total Cost of Sales | 228,706 | 293,351 | - Peru cost of sales decreased due to changes in product inventory (buildup of copper concentrate) and lower mining/depreciation from adjusted mine plans[118] - Manitoba cost of sales decreased due to zinc plant closure, 777 mine closure, reduced mining/milling/depreciation, lower G&A and freight, and favorable foreign exchange[119] - Re-evaluation adjustment for environmental provision decreased by $71.6 million due to changes in long-term risk-free discount and inflation rates[120] - Exploration expenses decreased by $10.4 million as Copper World drilling costs are now capitalized[125] Net finance expense Net finance expense decreased by $1.8 million YoY to $35.0 million, driven by higher interest income and lower revaluations Net Finance Expense (in $ thousands) | Component | Mar. 31, 2023 | Mar. 31, 2022 | | :--- | :--- | :--- | | Interest expense on long-term debt | 17,007 | 16,898 | | Accretion on streaming agreements | 6,501 | 4,836 | | Change in fair value of financial assets and liabilities | 5,597 | 7,216 | | Total Net finance expense | 34,976 | 36,744 | - Net finance expense decreased by $1.8 million YoY[124] - Driven by a $1.4 million increase in interest income and a $1.6 million decrease in gold prepayment liability revaluation[124] - Offset by a $1.7 million increase from variable consideration adjustment net of accretion on streaming arrangements[124] Tax Expense Tax expense decreased by $13.1 million YoY, with the effective tax rate differing from the statutory rate due to various factors Tax Expense (in $ thousands) | Component | Mar. 31, 2023 | Mar. 31, 2022 | | :--- | :--- | :--- | | Deferred tax (recovery) expense | (5,149) | 14,591 | | Current tax expense | 17,122 | 10,455 | | Total Tax expense | 11,973 | 25,046 | - Tax expense decreased by $13.1 million YoY[126] - Effective income tax rate differed from Canadian statutory rate (26.3%) due to deductible temporary differences in Peru and foreign exchange on deferred tax balances[127][128] - Manitoba mining tax rates are progressive, ranging from 10% to 17% based on mining taxable profit[129] - Peru imposes Special Mining Tax and Modified Royalty on a sliding scale, with progressive rates from 1.0% to 12.0%[131] LIQUIDITY AND CAPITAL RESOURCES Liquidity Position The company maintained a strong liquidity position with $255.6 million in cash and $355.4 million in undrawn credit facilities - Liquidity as of March 31, 2023: $255.6 million cash and $355.4 million undrawn revolving credit facilities[17][132] - Senior unsecured notes total $1.2 billion, due April 2026 (4.5%) and April 2029 (6.125%)[133] - $40.0 million drawn from Canadian revolving credit facility in March 2023 to improve working capital flexibility[134] - C$130.0 million bilateral letter of credit facility, with $56.8 million drawn by Manitoba as of March 31, 2023[135] - $12.8 million in surety bonds for Arizona and $118.0 million in letters of credit for Peru to support reclamation and operating matters[136] Gold Prepay The company amended its gold prepay agreement to defer eight months of deliveries, improving its 2023 cash position - Amended gold forward sale and prepay agreements to defer eight months of deliveries starting February 2023[138] - Outstanding 37,500 ounces of gold deliveries will resume in fixed monthly amounts from October 2023 to August 2024[138] - Fair value of the financial liability was $70.9 million as of March 31, 2023[138] Financial Condition and Cash Flows Cash increased by $29.9 million in Q1 2023, driven by operating activities and a draw on credit facilities - Cash increased by $29.9 million to $255.6 million in Q1 2023[139] - Main drivers: $71.3 million from operating activities and $40.0 million draw on Credit Facilities[139] - Offset by $66.9 million in investing and other financing cash outflows[139] - Working capital increased by $24.5 million to $101.0 million[140] Summary of Cash Flows (in $ thousands) | Cash Flow Activity | Mar. 31, 2023 | Mar. 31, 2022 | | :--- | :--- | :--- | | Operating cash flow before change in non-cash working capital | 85,608 | 77,615 | | Change in non-cash working capital | (14,329) | (14,308) | | Cash generated from operating activities | 71,279 | 63,307 | | Cash used in investing activities | (65,076) | (55,732) | | Cash generated from (used in) financing activities | 23,245 | (64,719) | | Effect of movement in exchange rates on cash | 450 | (486) | | Increase (Decrease) in cash | 29,898 | (57,630) | Capital Expenditures Total capital additions decreased by 5% YoY to $60.4 million, with spending focused on sustaining and growth projects Capital Expenditures (in $ millions) | Category | Mar. 31, 2023 | Mar. 31, 2022 | Annual 2023 Guidance | | :--- | :--- | :--- | :--- | | Manitoba sustaining capital expenditures | 11.6 | 24.0 | 75.0 | | Peru sustaining capital expenditures | 29.1 | 18.9 | 160.0 | | Total sustaining capital expenditures | 40.7 | 42.9 | 235.0 | | Arizona capitalized costs | 6.1 | 3.1 | 30.0 | | Peru growth capitalized expenditures | 1.8 | 0.1 | 10.0 | | Manitoba growth capitalized expenditures | 8.4 | 4.9 | 15.0 | | Other capitalized costs | 2.8 | 9.4 | - | | Capitalized exploration | 0.6 | 3.1 | 10.0 | | Total capital additions | 60.4 | 63.5 | | - Total capital additions declined by 5% YoY[145] - Peru sustaining capital expenditures increased by $10.2 million due to increased capitalized stripping at Pampacancha[146] - Manitoba growth capital ($8.4 million) mainly for Stall recovery improvement project, expected to increase metal recoveries in H2 2023[147] - Arizona capital expenditures ($6.1 million) for pre-feasibility study and Copper World carrying costs[148] Capital Commitments and Contractual Obligations The company reported total capital commitments of $75.5 million and contractual obligations of $3.9 billion as of March 31, 2023 - Total capital commitments of $75.5 million as of March 31, 2023[149][150] - Arizona commitments of $42.7 million primarily for Copper World project[149] Significant Contractual Obligations (in $ millions) | Payment Schedule | Total | Less than 12 months | 13 - 36 months | 37 - 60 months | More than 60 months | | :--- | :--- | :--- | :--- | :--- | :--- | | Long-term debt obligations | 1,582.4 | 107.6 | 132.7 | 687.0 | 655.1 | | Gold prepayment obligation | 70.9 | 38.6 | 32.3 | - | - | | Lease obligations | 120.1 | 41.7 | 46.5 | 13.6 | 18.3 | | Purchase obligation - capital commitments | 75.5 | 23.4 | 24.5 | 27.6 | - | | Purchase obligation - other commitments | 1,495.2 | 377.6 | 462.8 | 187.0 | 467.8 | | Pension and other employee future benefits obligations | 95.1 | 7.6 | 11.2 | 28.2 | 48.1 | | Community agreement obligations | 66.8 | 9.1 | 7.5 | 7.8 | 42.4 | | Decommissioning and restoration obligations | 413.0 | 4.4 | 9.9 | 7.1 | 391.6 | | Total | 3,919.0 | 610.0 | 727.4 | 958.3 | 1,623.3 | Outstanding Share Data As of May 5, 2023, the company had approximately 262.1 million common shares issued and outstanding - 262,053,610 common shares issued and outstanding as of May 5, 2023[152] - 2,259,886 stock options outstanding[152] FINANCIAL RISK MANAGEMENT Business Integration Risk with Copper Mountain The proposed acquisition of Copper Mountain presents significant integration risks that could impact future financial performance - Realizing benefits of Copper Mountain acquisition depends on successful and timely integration of operations, procedures, and personnel[154] - Integration may divert management's focus and resources from other strategic opportunities and operational matters[154] - Potential challenges include loss of key employees, disruption of ongoing businesses, and inconsistencies in standards, controls, procedures, and policies[154] - Inability to successfully integrate could materially adversely affect Hudbay's business, financial condition, and results[154] Implication of Copper World Pre-feasibility Study on Phase I of Copper World The upcoming Copper World pre-feasibility study may trigger an impairment indicator or reversal for the project - Forthcoming Copper World pre-feasibility study may result in an impairment indicator or impairment reversal due to changes in timing and extent of operating and capital expenditures[155] - Management will assess impairment considerations related to the project's development[155] TREND ANALYSIS AND QUARTERLY REVIEW Consolidated Financial and Operational Trends Q1 2023 saw a rebound in commodity prices, but revenue and production declined QoQ due to operational challenges Selected Consolidated Financial Information (Q1 2023 vs Q4 2022) | Metric | Q1 2023 | Q4 2022 | | :--- | :--- | :--- | | Production on a copper equivalent basis (tonnes) | 38,614 | 45,454 | | Average realized copper price ($/lb) | 3.98 | 3.61 | | Revenue (millions) | 295.2 | 321.2 | | Gross profit (loss) (millions) | 66.5 | 69.7 | | Profit (loss) before tax (millions) | 17.4 | (14.3) | | Profit (loss) (millions) | 5.5 | (17.4) | | Basic and diluted earnings (loss) per share | 0.02 | (0.07) | | Adjusted net earnings (loss) per share | 0.00 | 0.01 | | Operating cash flow (millions) | 85.6 | 109.1 | | Adjusted EBITDA (millions) | 101.9 | 124.7 | - Commodity prices rebounded in Q1 2023, positively impacting gross profit, but also contributed to inflationary pressures[159] - Political unrest in Peru caused logistics and supply chain disruptions until mid-February 2023, affecting revenues and profit[159] - Q4 2022 revenues were negatively impacted by lower production due to planned maintenance, 777 mine closure, mine plan changes in Peru, and product inventory buildup[161] - Q2 2022 results included a $60.7 million revaluation gain on environmental reclamation provision and a $95.0 million pre-tax impairment loss related to Copper World[163] NON-IFRS FINANCIAL PERFORMANCE MEASURES Adjusted Net Earnings (Loss) Adjusted net earnings, a non-IFRS measure, were $0.1 million ($0.00 per share) for Q1 2023 - Adjusted net earnings (loss) excludes mark-to-market adjustments, impairment charges, revaluation of environmental provision for closed sites, and foreign exchange (gain) loss[171] Reconciliation of Net Earnings to Adjusted Net Earnings (in $ millions) | Metric | Mar. 31, 2023 | Mar. 31, 2022 | | :--- | :--- | :--- | | Profit for the period | 5.4 | 63.8 | | Tax expense | 12.0 | 25.0 | | Profit before tax | 17.4 | 88.8 | | Adjusting items: | | | | Mark-to-market adjustments | 6.8 | 10.5 | | Foreign exchange loss | 0.3 | 1.5 | | Variable consideration adjustment | (5.0) | (5.8) | | Re-evaluation adjustment - environmental provision | (8.2) | (79.9) | | Adjusted net earnings | 0.1 | 5.2 | | Adjusted net earnings ($/share) | 0.00 | 0.02 | Adjusted EBITDA Adjusted EBITDA, a non-IFRS measure of cash generating potential, was $101.9 million for Q1 2023 - Adjusted EBITDA is profit or loss before net finance expense/income, tax expense/recoveries, depreciation and amortization, and certain other adjustments[176] Reconciliation of Net Earnings to Adjusted EBITDA (in $ millions) | Metric | Mar. 31, 2023 | Mar. 31, 2022 | | :--- | :--- | :--- | | Profit for the period | 5.4 | 63.8 | | Add back: | | | | Tax expense | 12.0 | 25.0 | | Net finance expense | 35.0 | 36.7 | | Other expense | 5.0 | 9.0 | | Depreciation and amortization | 67.4 | 81.1 | | Amortization of deferred revenue and variable consideration adjustment | (15.9) | (28.2) | | Adjusting items (pre-tax): | | | | Re-evaluation adjustment - environmental provision | (8.2) | (79.9) | | Share-based compensation expense | 1.2 | 3.2 | | Adjusted EBITDA | 101.9 | 110.2 | Net Debt Net debt, a non-IFRS measure of financial position, increased slightly to $969.5 million as of March 31, 2023 - Net debt is a non-IFRS measure used to assess financial position[169] Net Debt Calculation (in $ thousands) | Metric | Mar. 31, 2023 | Dec. 31, 2022 | | :--- | :--- | :--- | | Total long-term debt | 1,225,023 | 1,184,162 | | Cash | (255,563) | (225,665) | | Net debt | 969,460 | 958,497 | Cash Cost, Sustaining and All-in Sustaining Cash Cost (Copper Basis) Consolidated cash cost per pound of copper produced, a non-IFRS measure, improved to $0.85 in Q1 2023 - Cash cost, sustaining cash cost, and all-in sustaining cash cost per pound of copper produced are key performance indicators[179][180] Consolidated Cash Cost per lb Copper Produced (Q1 2023 vs Q1 2022) | Metric | $000s (Mar. 31, 2023) | $/lb (Mar. 31, 2023) | $000s (Mar. 31, 2022) | $/lb (Mar. 31, 2022) | | :--- | :--- | :--- | :--- | :--- | | Cash cost, before by-product credits | 188,403 | 3.79 | 242,058 | 4.45 | | By-product credits | (146,111) | (2.94) | (181,673) | (3.34) | | Cash cost, net of by-product credits | 42,292 | 0.85 | 60,385 | 1.11 | Consolidated All-in Sustaining Cash Cost per lb Copper Produced (Q1 2023 vs Q1 2022) | Metric | $000s (Mar. 31, 2023) | $/lb (Mar. 31, 2023) | $000s (Mar. 31, 2022) | $/lb (Mar. 31, 2022) | | :--- | :--- | :--- | :--- | :--- | | Cash cost, net of by-product credits | 42,292 | 0.85 | 60,385 | 1.11 | | Cash sustaining capital expenditures | 47,869 | 0.96 | 60,963 | 1.12 | | Royalties | 706 | 0.02 | 3,218 | 0.06 | | Sustaining cash cost, net of by-product credits | 90,867 | 1.83 | 124,566 | 2.29 | | Corporate selling and administrative expenses & regional costs | 10,215 | 0.20 | 13,060 | 0.24 | | Accretion and amortization of decommissioning and community agreements | 1,958 | 0.04 | 721 | 0.01 | | All-in sustaining cash cost, net of by-product credits | 103,040 | 2.07 | 138,347 | 2.54 | - Total by-product credits decreased from $181.7 million in Q1 2022 to $146.1 million in Q1 2023, primarily due to lower zinc and silver credits, partially offset by higher molybdenum credits[184] Gold Cash Cost and Gold Sustaining Cash Cost Manitoba's gold cash cost per ounce, a non-IFRS measure, increased significantly to $938 in Q1 2023 - Gold cash cost and gold sustaining cash cost per ounce of gold produced are key performance indicators for Manitoba operations[196][199] Manitoba Gold Cash Cost per oz Produced (Q1 2023 vs Q1 2022) | Metric | $000s (Mar. 31, 2023) | $/oz (Mar. 31, 2023) | $000s (Mar. 31, 2022) | $/oz (Mar. 31, 2022) | | :--- | :--- | :--- | :--- | :--- | | Cash cost, before by-product credits | 75,930 | 2,107 | 132,839 | 3,077 | | By-product credits | (42,131) | (1,169) | (114,874) | (2,661) | | Gold cash cost, net of by-product credits | 33,799 | 938 | 17,965 | 416 | Manitoba Gold Sustaining Cash Cost per oz Produced (Q1 2023 vs Q1 2022) | Metric | $000s (Mar. 31, 2023) | $/oz (Mar. 31, 2023) | $000s (Mar. 31, 2022) | $/oz (Mar. 31, 2022) | | :--- | :--- | :--- | :--- | :--- | | Gold cash cost, net of by-product credits | 33,799 | 938 | 17,965 | 416 | | Cash sustaining capital expenditures | 14,304 | 397 | 30,924 | 716 | | Royalties | 41 | 1 | 2,364 | 55 | | Sustaining cash cost per ounce of gold produced | 48,144 | 1,336 | 51,253 | 1,187 | - Total by-product credits for Manitoba decreased significantly from $114.9 million in Q1 2022 to $42.1 million in Q1 2023, primarily due to lower copper and zinc credits[200] Combined Unit Cost Peru's combined unit cost decreased by 7.3% YoY, while Manitoba's increased by 22.7% due to lower throughput - Combined unit cost assesses mining and milling operations, excluding by-product deductions and profit-sharing costs[203] Peru Combined Unit Cost per Tonne Processed (Q1 2023 vs Q1 2022) | Metric | Mar. 31, 2023 | Mar. 31, 2022 | | :--- | :--- | :--- | | Mining | 26,786 | 28,402 | | Milling | 46,191 | 47,655 | | G&A | 16,466 | 16,100 | | Other G&A | (1,539) | (571) | | Unit cost | 87,904 | 89,265 | | Tonnes ore milled (thousands) | 7,664 | 7,214 | | Combined unit cost per tonne | 11.47 | 12.37 | Manitoba Combined Unit Cost per Tonne Processed (Q1 2023 vs Q1 2022) | Metric | Mar. 31, 2023 | Mar. 31, 2022 | | :--- | :--- | :--- | | Mining | 37,752 | 59,433 | | Milling | 14,848 | 21,509 | | G&A | 10,089 | 22,893 | | Less: G&A allocated to zinc metal production and other areas | - | (13,407) | | Less: Other G&A related to profit sharing costs | (1,139) | - | | Unit cost | 61,550 | 90,428 | | Tonnes ore milled (thousands) | 385,661 | 651,333 | | Combined unit cost per tonne - C$ | 216 | 176 | - The Flin Flon zinc plant ceased operations in June 2022, with Q1 2022 unit cost per pound of C$0.62[209] ACCOUNTING CHANGES AND CRITICAL ESTIMATES New Standards and Interpretations Adopted and Not Yet Adopted Details on new accounting standards are available in note 4 of the interim financial statements - Refer to note 4 of the March 31, 2023 consolidated interim financial statements for information on new accounting standards and interpretations[212] Estimates and Judgements The preparation of financial statements involves critical management estimates, detailed in note 2 of the interim statements - Preparation of consolidated financial statements requires judgments, estimates, and assumptions affecting reported amounts[213] - Estimates are reviewed continuously, and revisions are recognized in the period of change[214] - Certain estimates are 'critical' due to their subjective nature and potential for material differences[214] - Further information on judgments and estimates is in note 2 of the March 31, 2023 consolidated interim financial statements[215] CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING ICFR Statement No material changes were made to the company's internal control over financial reporting during Q1 2023 - Management is responsible for establishing and maintaining adequate internal control over financial reporting (ICFR)[216] - No material changes to ICFR occurred during the three months ended March 31, 2023[217] NOTES TO READER Forward-Looking Information This report contains forward-looking statements subject to significant risks, uncertainties, and assumptions - MD&A contains forward-looking information subject to significant risks, uncertainties, contingencies, and other factors[218][220][222] - Forward-looking information includes statements on Copper Mountain acquisition, production/cost guidance, Copper World project, exploration, and financial performance[219] - Assumptions include achieving production/cost guidance, no significant operational interruptions, successful project advancement, and stable commodity prices[221][225] - Risks include failure to receive transaction approvals, political/social risks in operating regions, commodity price fluctuations, and uncertainties in project development[222] - Readers should not place undue reliance on forward-looking information; Hudbay does not assume obligation to update or revise unless required by law[223] Note to United States Investors This report is prepared under Canadian securities laws, which may differ from those in the United States - MD&A prepared under Canadian securities laws, which may differ from U.S. securities laws[224] Qualified Person and NI 43-101 Technical and scientific information in this report has been approved by a qualified person under NI 43-101 - Technical and scientific information approved by Olivier Tavchandjian, P. Geo, Senior Vice President, Exploration and Technical Services[226] - Mr. Tavchandjian is a qualified person under National Instrument 43-101[226] - Key assumptions, parameters, and methods for mineral reserve and resource estimates are detailed in technical reports filed on SEDAR[227] SUMMARY OF RESULTS Consolidated Financial Condition and Performance The company's cash position improved in Q1 2023, while net earnings declined compared to the prior year Consolidated Financial Condition ($000s) | Metric | Q1 2023 | 2022 | Q4 2022 | Q3 2022 | Q2 2022 | Q1 2022 | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Cash | $255,563 | $225,665 | $225,665 | $286,117 | $258,556 | $213,359 | | Total long-term debt | 1,225,023 | 1,184,162 | 1,184,162 | 1,183,237 | 1,182,143 | 1,181,119 | | Net debt | 969,460 | 958,497 | 958,497 | 897,120 | 923,587 | 967,760 | Consolidated Financial Performance ($000s except per share amounts) | Metric | Q1 2023 | 2022 | Q4 2022 | Q3 2022 | Q2 2022 | Q1 2022 | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Revenue | $295,219 | $1,461,440 | $321,196 | $346,171 | $415,454 | $378,619 | | Earnings (loss) before tax | 17,430 | 95,815 | (14,287) | (263) | 21,504 | 88,861 | | Earnings (loss) | 5,457 | 70,382 | (17,441) | (8,135) | 32,143 | 63,815 | | Basic and diluted earnings (loss) per share | $0.02 | $0.27 | $(0.07) | $(0.03) | $0.12 | $0.24 | | Adjusted earnings (loss) per share | $0.00 | $0.10 | $0.01 | $(0.05) | $0.12 | $0.02 | | Operating cash flow before change in non cash working capital | 85,608 | 391,729 | 109,148 | 81,617 | 123,911 | 77,615 | | Adjusted EBITDA (in $ millions) | 101.9 | 475.9 | 124.7 | 99.3 | 141.4 | 110.2 | Consolidated Operational Performance Consolidated metal production and sales volumes decreased in Q1 2023, though cash costs per pound of copper improved Consolidated Contained Metal in Concentrate and Doré Produced | Metal | Unit | Q1 2023 | 2022 | Q4 2022 | Q3 2022 | Q2 2022 | Q1 2022 | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Copper | tonnes | 22,562 | 104,173 | 29,305 | 24,498 | 25,668 | 24,702 | | Gold | ounces | 47,240 | 219,700 | 53,920 | 53,179 | 58,645 | 53,956 | | Silver | ounces | 702,809 | 3,161,294 | 795,015 | 717,069 | 864,853 | 784,357 | | Zinc | tonnes | 9,846 | 55,381 | 6,326 | 9,750 | 17,053 | 22,252 | | Molybdenum | tonnes | 289 | 1,377 | 344 | 437 | 390 | 207 | Consolidated Payable Metal in Concentrate and Doré Sold | Metal | Unit | Q1 2023 | 2022 | Q4 2022 | Q3 2022 | Q2 2022 | Q1 2022 | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Copper | tonnes | 18,541 | 94,473 | 25,415 | 24,799 | 23,650 | 20,609 | | Gold | ounces | 49,720 | 213,415 | 47,256 | 66,932 | 50,884 | 48,343 | | Silver | ounces | 541,884 | 2,978,485 | 559,306 | 816,416 | 738,171 | 864,591 | | Zinc | tonnes | 5,628 | 59,043 | 8,230 | 12,714 | 20,793 | 17,306 | | Molybdenum | tonnes | 254 | 1,352 | 421 | 511 | 208 | 213 | Consolidated Cash Costs | Metric | Unit | Q1 2023 | 2022 | Q4 2022 | Q3 2022 | Q2 2022 | Q1 2022 | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Cash cost | $/lb | 0.85 | 0.86 | 1.08 | 0.58 | 0.65 | 1.11 | | Sustaining cash cost | $/lb | 1.83 | 2.07 | 2.21 | 1.91 | 1.87 | 2.29 | | All-in sustaining cash cost | $/lb | 2.07 | 2.26 | 2.41 | 2.16 | 1.93 | 2.54 | Peru Operations Summary Peru operations saw increased metal production and improved unit costs in Q1 2023 compared to the prior year Peru Operations Summary (Q1 2023 vs Q1 2022) | Metric | Unit | Q1 2023 | Q1 2022 | | :--- | :--- | :--- | :--- | | Constancia ore mined | tonnes | 3,403,181 | 6,908,151 | | Pampacancha ore mined | tonnes | 897,295 | 847,306 | | Ore milled | tonnes | 7,663,728 | 7,213,833 | | Milled Copper Grade | % | 0.33 | 0.31 | | Copper recovery | % | 81.7 | 85.3 | | Gold recovery | % | 56.8 | 59.8 | | Silver recovery | % | 60.7 | 66.9 | | Contained Copper produced | tonnes | 20,517 | 19,166 | | Contained Gold produced | ounces | 11,206 | 10,789 | | Contained Silver produced | ounces | 552,167 | 505,568 | | Combined unit operating cost | $/tonne | 11.47 | 12.37 | | Cash cost | $/lb | 1.36 | 1.54 | | Sustaining cash cost | $/lb | 2.12 | 2.27 | Manitoba Operations Summary Manitoba's Q1 2023 operations reflect the closure of the 777 mine, with increased unit and gold cash costs Manitoba Operations Summary (Q1 2023 vs Q1 2022) | Metric | Unit | Q1 2023 | Q1 2022 | | :--- | :--- | :--- | :--- | | Lalor ore mined | tonnes | 373,599 | 386,752 | | Lalor Gold Grade | g/tonne | 3.96 | 3.76 | | Stall & New Britannia Ore milled | tonnes | 385,661 | 397,301 | | Gold recovery | % | 62.0 | 58.4 | | Copper recovery | % | 88.8 | 87.5 | | Zinc recovery | % | 84.4 | 85.7 | | Total Manitoba contained Gold produced (concentrate) | ounces | 30,647 | 36,887 | | Precious metal in doré produced (Gold) | ounces | 5,387 | 6,280 | | Combined unit operating cost | C$/tonne | 216 | 176 | | Gold cash cost | $/oz | 938 | 416 | | Sustaining gold cash cost | $/oz | 1,336 | 1,187 | - The 777 mine ceased operations in June 2022, impacting comparative production volumes[236] - Flin Flon Concentrator ceased operations in Q3 2022, impacting comparative milling data[236]