Hudbay Minerals(HBM) - 2025 Q3 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Hudbay's adjusted EBITDA for Q3 2025 was $143 million, a decrease compared to the previous quarter primarily due to operational interruptions and lower sales volumes [8] - Cash generated from operating activities was $114 million, with operating cash flow before changes in non-cash working capital at $70 million [8] - Adjusted net earnings were $0.03 per share, after adjusting for various non-cash items [9] - Consolidated cash costs increased to $0.42 per pound, while sustaining cash costs rose to $2.09 per pound compared to the prior quarter [9][10] - Total liquidity at the end of the quarter was $1.04 billion, including $611 million in cash and cash equivalents [12] Business Line Data and Key Metrics Changes - Consolidated copper production was 24,000 tons and gold production was 54,000 ounces in Q3, lower than Q2 due to wildfire disruptions and temporary production interruptions in Peru [6][10] - Manitoba operations produced 22,000 ounces of gold, 800 tons of copper, 500 tons of zinc, and 102,000 ounces of silver, lower than the previous quarter due to wildfire evacuations [17] - Peru operations produced 18,000 tons of copper and 26,000 ounces of gold, with cash costs at $1.30 per pound, decreasing from the prior quarter [13][16] - British Columbia operations produced 5.2 thousand tons of copper and 4.8 thousand ounces of gold, with cash costs at $3.21 per pound, higher than the prior quarter [21][24] Market Data and Key Metrics Changes - The company faced mandatory wildfire evacuations in Manitoba and social unrest in Peru, impacting operations [4][13] - The Copper World project secured a strategic partnership with Mitsubishi, reducing future equity contributions and enhancing financial strength [5][25] Company Strategy and Development Direction - Hudbay aims to reduce long-term debt while reinvesting in high-return growth initiatives [4] - The company is focused on advancing the Copper World project towards a sanctioned decision in 2026 and first production in 2029 [5][26] - A threefold strategy is being executed in Snow Lake to enhance near-term production and extend mine life [27][30] Management's Comments on Operating Environment and Future Outlook - Management expressed pride in the team's resilience amid operational challenges and reaffirmed production guidance despite interruptions [10][14] - The fourth quarter is expected to be the strongest for copper and gold production in Peru, with confidence in achieving full-year guidance [15][50] - The company anticipates a significant increase in copper production from the Copper World project, enhancing its position as a major copper producer [31][32] Other Important Information - The company has submitted a business interruption insurance claim related to wildfire downtime [18] - Total capital expenditures are expected to be $35 million lower than originally guided, with deferrals to 2026 [10][11] Q&A Session Summary Question: Construction decision timeline for Copper Mountain - Management expects to complete the feasibility study and make a construction decision in mid-2026, with pre-construction spending planned [34][35] Question: Clarification on sustaining CapEx - Sustaining CapEx for 2026 is expected to be similar to this year's guidance, with some deferrals due to operational interruptions [38][39] Question: Impact of informal mining in Peru - Informal mining is not seen as a material impediment to permitting processes, though it complicates the social environment [40][41] Question: Performance of Copper Mountain - Management remains confident in the acquisition of Copper Mountain, noting ongoing optimization efforts despite recent challenges [44][46] Question: Confidence in Constancia's production - Management is confident in achieving high production levels at Constancia for the remainder of the year, supported by strong grades from Pampakancha [49][50] Question: Insurance claim related to wildfires - The company has good coverage for property and business interruption, but it is premature to provide a specific claim amount [55]