HudBay Minerals NYSE: HBM reported what President and CEO Peter Kukielski described as “a great start to the year,” citing record quarterly revenue, record adjusted EBITDA and record adjusted earnings in the company’s first-quarter 2026 results call.
Kukielski said the quarter was driven by “steady operating performance, our focus on cost control, and the continued benefit from margin expansion with our unique mix of copper and gold exposure.” He added that Hudbay’s “leading operating cost performance resulted in record low consolidated cash costs in the Q1,” helping support strong free cash flow generation. Management said all operations are on track to meet 2026 production and cost guidance.
Record revenue and earnings, with low consolidated costs
Hudbay reported record quarterly revenue of $757 million and record adjusted EBITDA of $422 million for Q1 2026. Cash generated from operating activities was $211 million, which Kukielski said was “remaining relatively consistent” with the prior quarter due to favorable non-cash working capital changes.
Adjusted net earnings were a record $159 million, or $0.40 per share, which management attributed to higher realized metal prices and cost control efforts that improved gross profit margins.
On the cost side, Kukielski said Hudbay delivered “record low consolidated cash costs of negative $1.80 per pound of copper and sustaining cash costs of $0,” noting that higher gold by-product credits helped drive the result. He also said gold represented 39% of gross revenues in the quarter.
After sustaining capital but before growth investments, Hudbay generated $102 million of free cash flow in Q1, bringing trailing 12-month free cash flow to “approximately $400 million,” according to management.
Balance sheet and liquidity update
Hudbay ended Q1 with “over $1 billion in cash and cash equivalents,” Kukielski said, helped by $420 million received from Mitsubishi as the initial cash contribution when the Copper World joint venture closed in January. As of March 31, total liquidity was $1.4 billion, and net debt was “nearly 0,” with net debt-to-EBITDA at its lowest point in more than a decade, the company said.
Following quarter-end, Hudbay repaid its 2026 senior unsecured notes at maturity on April 1 using a combination of cash and a $272 million draw on its revolving credit facilities. After the repayment, Kukielski said total liquidity declined by $473 million to $957 million, which management said still provides flexibility as it advances Copper World toward a sanctioning decision later in 2026.
Operational highlights across Peru, Manitoba, and British Columbia
On a consolidated basis, Hudbay reported Q1 copper production of 28,000 tons and gold production of 62,000 ounces, with higher mill throughput across its three operating regions compared to the previous quarter.
- Peru: Hudbay’s Peru operations produced 21,000 tons of copper, 9,000 ounces of gold, 530,000 ounces of silver, and 380 tons of molybdenum. Kukielski said copper and gold production declined from Q4 due to the depletion of higher-grade Pampacancha ore in late 2025. Mill throughput averaged about 90,700 tons per day, a quarterly record. Hudbay received permit approval on March 6 to increase annual mill throughput capacity to 31.1 million tons from 29.9 million tons, establishing a new base for Peru’s 10% above-permit operating allowance. Peru cash costs were $0.70 per pound of copper, up 23% sequentially, due mainly to lower by-product credits. Hudbay said it is advancing installation of pebble crushers later in 2026 to further lift throughput in the second half.
- Manitoba: Manitoba produced 48,000 ounces of gold, 2,500 tons of copper, 5,000 tons of zinc, and 213,000 ounces of silver. Kukielski said the operation managed lower equipment utilization and labor availability at Lalor by prioritizing gold ore feed for the New Britannia mill, supporting higher gold production versus Q4 due to higher recoveries and throughput. Management expects higher production in the second half of 2026 due to grade sequencing and higher ore output from Lalor. Manitoba gold cash costs were $408 per ounce, outperforming the low end of guidance. The company also highlighted progress at the 1901 deposit, with plans to prioritize exploration and infrastructure in preparation for full production in 2027.
- British Columbia (Copper Mountain): Copper Mountain produced 4,800 tons of copper, 5,200 ounces of gold, and 43,000 ounces of silver, in line with guidance and planned sequencing. Mining reached record total material movement of over 25 million tons. Hudbay said mill throughput improved following completion of the second SAG mill and optimization work, with the second SAG averaging 10,000 tons per day in March. The primary SAG mill is operating under reduced load ahead of a head replacement planned for late June into July. Management said the mill remains on track to reach its permitted capacity of 50,000 tons per day in the second half of 2026. British Columbia cash costs were $2.41 per pound of copper, lower sequentially due to higher gold by-product credits and fewer maintenance issues.
Permitting and growth projects: New Ingerbelle, Copper World, Cactus, and Mason
Hudbay highlighted permitting progress and growth initiatives across its portfolio. At Copper Mountain, management said the New Ingerbelle project received amended Mines Act and Environmental Management Act permits in February. Kukielski said a group identified as the LSIB filed an application for judicial review in March of the regulatory decision granting the permit amendment. He said Hudbay remains “very confident in the integrity and the robustness of that regulatory process” and believes the court will uphold the decision, while also aiming to work constructively with the LSIB through mechanisms in a participation agreement.
Executives said New Ingerbelle is designed to access higher grade mineralization with a stripping ratio about three times lower than current mining areas and supports increased gold production and mine life extension. In response to a question, CFO Eugene Lei said gold production with New Ingerbelle “essentially doubles” from about 20,000 ounces per year to about 40,000 ounces per year, with a current reserve mine life of 10 years and potential for expansion as drilling converts resources.
In the U.S., Kukielski said the Copper World definitive feasibility study (DFS) was more than 85% complete at the end of March and remains on track for completion in mid-2026, with a sanctioning decision later in the year. Responding to questions about inflation risk and long-lead items, Kukielski said Hudbay expects to “lock in pricing on all of that equipment” between the DFS and final investment decision (FID), and Lei added that orders and preparation have been underway for more than a year. Lei said the company expects some inflation and escalation versus the pre-feasibility study from three years ago, but is “not expecting a blowup in terms of capital,” adding that Hudbay would provide the updated figures once the DFS is released.
Hudbay also discussed the planned acquisition of Arizona Sonoran and the addition of the Cactus project, which management expects to close in Q2 2026. Management said an updated view of Cactus post-transaction would not be ready by year-end and is “definitely into next year,” with work continuing on permitting discussions. Kukielski said Cactus is expected to follow Copper World Phase 1 given synergies, while Copper World Phase 2 permitting would come later to avoid overlapping processes.
In Nevada, Lei said Hudbay has started pre-feasibility work at its Mason copper project, with approximately $20 million budgeted for 2026, largely for studies and related work, and expects the pre-feasibility study to be completed in 2027.
Cost pressures and capital returns
During Q&A, Lei addressed emerging cost pressures, particularly fuel. He said Hudbay has not faced fuel availability disruptions and is “fairly well insulated” by its gold exposure. Lei estimated that in Peru a $10 per barrel increase in oil is roughly a 4% or $0.04 per pound cash cost increase, while in British Columbia it is about $0.10 per pound due to heavy stripping. If oil prices stayed about 50% above the company’s budget level for the year, Lei said it could be about a $45 million cash flow hit, while gold prices about 20% above budget could add close to $200 million, making gold a “natural hedge.” Kukielski added that Manitoba is “largely insulated” from oil price effects because much of its underground equipment is electrically or battery driven.
On capital returns, Lei said the company’s allocation framework is designed to fund Copper World, reduce debt with a target of less than 1x net debt-to-EBITDA through the build cycle, fund brownfield investments, and “consider for the first time shareholder returns well ahead of what our goal was.” He said Hudbay’s “first step” was a dividend increase—described as nominal but the first in company history—while noting the company is not committing to a set share buyback amount in 2026 and wants flexibility during the Copper World sanctioning year.
About HudBay Minerals NYSE: HBM
HudBay Minerals Inc is a Canada-based mining company engaged in the exploration, development and production of base and precious metals. Its primary products include copper, zinc, gold and silver concentrates, which are sold to smelters and refiners worldwide. The company's operations span multiple stages of the mining cycle, from resource definition and feasibility studies to mine construction, extraction and reclamation.
The company traces its roots back to 1927, when it was established as Hudson Bay Mining & Smelting Co Limited.
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