Hudbay Minerals(US:HBM)2024-08-13 20:13Financial Data and Key Metrics Changes - Consolidated copper production was 29,000 tons and gold production was 59,000 ounces in Q2 2024, aligning with production expectations for the year [5] - Consolidated cash costs were $1.14 per pound of copper, with improved guidance for 2024 now ranging from $0.90 to $1.10 per pound, down from $1.05 to $1.25 per pound [7][10] - Adjusted EBITDA for the quarter was $145 million, lower than the previous quarter, but trailing 12-month adjusted EBITDA increased to $824 million from $407 million a year ago [8] Business Line Data and Key Metrics Changes - Peru operations produced 19,000 tons of copper and 11,000 ounces of gold, with total ore mined increasing by 38% compared to the prior quarter [11][12] - Manitoba operations achieved production of 43,000 ounces of gold and 2,600 tons of copper, with a decrease in total ore mined by 5% due to production interruptions [15][16] - British Columbia produced 6,700 tons of copper and 4,500 ounces of gold, with cash costs at $2.67 per pound of copper, a 23% decrease from the prior quarter [19] Market Data and Key Metrics Changes - The company expects stronger production in the second half of 2024, with copper production likely below the midpoint of guidance and gold production above the midpoint [6] - The regulatory change in Peru allows mining companies to increase throughput by up to 10%, potentially enhancing future production at Constancia [13] Company Strategy and Development Direction - The company is focused on advancing growth initiatives, including the Copper World project, which has significant copper exposure and attractive project economics [24] - The 3-P plan aims to sanction Copper World, with ongoing efforts to secure necessary permits and engage potential joint venture partners [25][56] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving production guidance and highlighted strong cost control measures that have improved cash cost guidance [4][7] - The management noted that investor interest has increased, particularly following the successful equity offering, and they anticipate continued positive cash flow generation [58] Other Important Information - The company has reduced net debt by over $550 million in the past 12 months, with a net debt to adjusted EBITDA ratio of 0.8x as of June 30 [10] - Exploration activities are ongoing, with a focus on extending known mineralization and identifying new deposits in Manitoba [26][27] Q&A Session Summary Question: What kind of grade is expected in Peru in the second half of the year? - Management expects grades to increase towards Q4, with Q3 grades slightly higher than Q2 [35][36] Question: Can drilling at Maria Reyna begin immediately after receiving the EIA permit? - Additional steps are required, typically taking about 12 months after the EIA award to start drilling [38] Question: What is the outlook for the new BRIT expansion in Manitoba? - The expansion involves low capital outlay and is focused on throughput enhancements rather than major capital allocation [40][41] Question: What is the current posture on potential acquisitions? - The company remains disciplined in evaluating assets that fit their strategic and financial criteria, focusing on Tier 1 mining jurisdictions [50][52] Question: Were there any strong arguments against the Copper World project during the public comment period? - Comments were generally supportive, with a significant number received in favor of the project [53] Question: Will the permitting process be affected by the upcoming election? - Management is confident that the permitting process will proceed without delays related to the political landscape [54][55] Question: Why does the company trade at a discount to peers? - Investors are awaiting outcomes from the Copper World permitting process, which may contribute to the valuation delta [57][58]