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Hudbay Minerals(HBM) - 2024 Q4 - Earnings Call Transcript
HBMHudbay Minerals(HBM)2025-02-19 20:30
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Financial Data and Key Metrics Changes - Hudbay Minerals achieved record revenues exceeding 2billionandrecordfreecashflowgenerationofover2 billion and record free cash flow generation of over 350 million in 2024, demonstrating strong financial performance [6][10] - Adjusted EBITDA for the fourth quarter was 257million,a25257 million, a 25% increase from the prior quarter, leading to a full-year adjusted EBITDA of 823 million, up from 648millionin2023[14]−Thecompanyreducednetdebtbyover648 million in 2023 [14] - The company reduced net debt by over 500 million in 2024, resulting in a net debt to adjusted EBITDA ratio of 0.6 times, down from 1.6 times at the end of 2023 [18] Business Line Data and Key Metrics Changes - Peru operations produced 34,000 tons of copper and 38,000 ounces of gold in Q4 2024, with full-year production of 99,000 tons of copper and 98,000 ounces of gold, exceeding guidance [20][21] - Manitoba operations achieved record annual gold production of 214,000 ounces in 2024, with cash costs of 607perounce,significantlybelowguidance[24][28]−BritishColumbiaoperationsproduced6,000tonsofcopperand4,600ouncesofgoldinQ42024,withfull−yearproductionbelowguidanceduetolowergrades[30][31]MarketDataandKeyMetricsChanges−Theportionofrevenuesfromgoldincreasedto35607 per ounce, significantly below guidance [24][28] - British Columbia operations produced 6,000 tons of copper and 4,600 ounces of gold in Q4 2024, with full-year production below guidance due to lower grades [30][31] Market Data and Key Metrics Changes - The portion of revenues from gold increased to 35% in 2024, up from 29% in 2023, highlighting the diversification of revenue sources [13] - Cash costs in Peru were 1.18 per pound for copper in 2024, outperforming the low end of the annual cost guidance range [22] - Manitoba's sustaining cash costs averaged 868perouncein2024,makingitthelowest−costgoldmineinCanada[29]CompanyStrategyandDevelopmentDirection−ThecompanyisfocusedonadvancingtheCopperWorldprojectinArizona,whichhasreceivedkeypermitsandisexpectedtosignificantlyincreasecopperproduction[11][52]−HudbayplanstocontinueoptimizingmillthroughputinBritishColumbiaandPeru,withafocusonmaintainingstrongcostcontrolandoperationalefficiencies[9][38]−ThecompanyaimstoreplicatethesuccessoftheNewBritanniarefurbishmentprojectacrossitsoperations,emphasizingdisciplinedcapitalallocation[45][49]Management′sCommentsonOperatingEnvironmentandFutureOutlook−Managementexpressedconfidenceinachievingstableproductionandcostsin2025,despiteareductioninguidanceprimarilyduetochallengesatPampacancha[66][68]−Thecompanyanticipatesstrongdemandforcopperinthelongterm,drivenbysupplyconstraintsandrobustmarketfundamentals[61]−Managementhighlightedtheimportanceofmaintainingaresilientbalancesheettosupportgrowthinitiativesandcapitalizeonmarketopportunities[10][61]OtherImportantInformation−ThecompanycompletedasuccessfulequityofferinginMay2024,contributingtocashandcashequivalentsof868 per ounce in 2024, making it the lowest-cost gold mine in Canada [29] Company Strategy and Development Direction - The company is focused on advancing the Copper World project in Arizona, which has received key permits and is expected to significantly increase copper production [11][52] - Hudbay plans to continue optimizing mill throughput in British Columbia and Peru, with a focus on maintaining strong cost control and operational efficiencies [9][38] - The company aims to replicate the success of the New Britannia refurbishment project across its operations, emphasizing disciplined capital allocation [45][49] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving stable production and costs in 2025, despite a reduction in guidance primarily due to challenges at Pampacancha [66][68] - The company anticipates strong demand for copper in the long term, driven by supply constraints and robust market fundamentals [61] - Management highlighted the importance of maintaining a resilient balance sheet to support growth initiatives and capitalize on market opportunities [10][61] Other Important Information - The company completed a successful equity offering in May 2024, contributing to cash and cash equivalents of 582 million by year-end [16] - Hudbay is executing the largest exploration program in its history in Snow Lake, aiming to extend mine life and discover new deposits [54] - The company is committed to producing made-in-America copper cathode at the Copper World project, enhancing its strategic positioning [126] Q&A Session Summary Question: Can you provide more color on your 2025 production guidance in Peru? - Management noted that the reduction is primarily due to more mining dilution than expected in Pampacancha, with conservative resource-to-reserve conversion factors applied [66][67] Question: What kind of interest are you seeing for the Copper World minority interest process? - Management indicated strong interest from various types of investors, including traditional partners and strategic investors, expecting a competitive process [82][83] Question: How much exposure does the Manitoba business have to the Canadian dollar? - The company conservatively budgeted for a CAD/USD exchange rate of $1.35, with a significant impact on cash flow and EBITDA from exchange rate fluctuations [100] Question: What is the timeline for potential production from the Caballito and Maria Reina deposits? - Management indicated that production from these deposits is unlikely before the early 2030s, but they are working on plans to mitigate lower-grade future years [94][97] Question: Can you elaborate on the dilution in ore losses? - Management clarified that the issue appears to be more geostatistical rather than operational, with ongoing updates to models to improve accuracy [108][109]