HudBay Minerals Q2 Earnings Call Highlights

Key Points

• Strong second-quarter results: Hudbay Minerals reported $631 million in revenue, $321 million in adjusted EBITDA and $114 million in adjusted net earnings, while producing 28,000 tonnes of copper and 51,000 ounces of gold. The company remains on track to meet full-year production guidance and posted record trailing-12-month adjusted EBITDA of $1.3 billion.
• Solid financial position and operational progress: Hudbay generated more than $100 million in free cash flow after sustaining capital expenditures and ended the quarter with over $1 billion in liquidity and $80 million in net cash. Production improved at Copper Mountain, while Manitoba operations are expected to benefit from staffing and grade improvements in the second half.
• Copper growth pipeline advancing: Brownfield investments are expected to lift consolidated copper production 24% to roughly 150,000 tonnes next year. Copper World remains targeted for a final investment decision later this year and first production in late 2029, while the Cactus and Mason projects support Hudbay’s longer-term goal of reaching approximately 250,000 tonnes of annual copper production by decade-end.

Hudbay Minerals NYSE: HBM reported second-quarter results marked by steady operating performance, record trailing-12-month adjusted EBITDA and continued progress on its copper growth pipeline, including projects in Arizona and British Columbia.

The company generated $631 million in revenue and $321 million in adjusted EBITDA during the quarter. Adjusted net earnings attributable to owners totaled $114 million, or $0.28 per share, while operating cash flow before changes in non-cash working capital was $210 million.

Chief Executive Officer Peter Kukielski said Hudbay produced 28,000 tonnes of copper and 51,000 ounces of gold in the quarter and remains on track to meet full-year production guidance for all metals. Consolidated cash costs were negative $0.40 per pound of copper, while sustaining cash costs were $1.39 per pound.

“We achieved record trailing 12-month adjusted EBITDA of $1.3 billion,” Kukielski said, citing the company’s copper and gold diversification and cost-control efforts. Gold represented 38% of Hudbay’s gross revenue during the second quarter.

After sustaining capital expenditures but before growth investments, Hudbay generated more than $100 million in free cash flow, similar to the first quarter. Over the past 12 months, the company generated more than $400 million in free cash flow. As of June 30, Hudbay had more than $1 billion in liquidity, including $890 million in cash and cash equivalents, and reported a net cash position of $80 million.

Leadership Changes

Hudbay also announced executive changes. Eugene Lei was appointed President and Chief Financial Officer, while Rob Carter was named Chief Operating Officer. Carter will succeed Andre Lauzon, who plans to retire at the end of September.

Kukielski said Lei had been instrumental in the company’s transformation since becoming CFO in 2022, including efforts to strengthen the balance sheet, advance Copper World and establish a capital-allocation framework. He credited Carter with helping revitalize Manitoba operations and bringing operational practices to the company’s Copper Mountain operation in British Columbia.

Operating Performance Across Regions

At Constancia in Peru, Hudbay produced 19,000 tonnes of copper, 5,000 ounces of gold, 565,000 ounces of silver and 277 tonnes of molybdenum. Production was modestly lower than the prior quarter because of a planned semiannual plant maintenance shutdown.

The operation moved 24 million tonnes of total material during the quarter, including its highest monthly total material moved in a decade during May. Hudbay received permit amendments allowing annual milling capacity at Constancia to rise to 34 million tonnes from 31 million tonnes. The company expects pebble crushers being installed at the site to support higher throughput beginning in the third quarter.

Peru cash costs were $1.66 per pound of copper, reflecting lower gold by-product credits following the depletion of the Pampacancha gold stockpile, higher fuel prices and the maintenance shutdown. Separately, temporary port closures caused by ocean swells deferred about 10,000 dry metric tonnes of copper concentrate sales into early July.

In Manitoba, Hudbay produced 40,000 ounces of gold, 2,300 tonnes of copper, 4,800 tonnes of zinc and 209,000 ounces of silver. Production declined from the first quarter because of lower tonnes milled, though the company expects higher second-half output due to grade sequencing and greater ore output from Lalor.

The company faced labor availability constraints at Lalor during the quarter but said corrective steps are underway. Lauzon said Hudbay hired roughly 100 employees, brought in contractors to advance the 1901 deposit and expanded training and retention programs. Carter said production improved in June and July following those measures.

A June hoist gearbox failure at Lalor was repaired within several days using a critical spare. Carter described the issue as isolated and said the company does not expect it to be a continuing problem.

Manitoba gold cash costs were $776 per ounce, within the company’s full-year guidance range. Hudbay said it is working toward an updated long-term profile for the Snow Lake operations based on reserves, with Carter describing a potential enhanced five-year gold-production profile during the question-and-answer session.

At Copper Mountain in British Columbia, Hudbay produced 6,500 tonnes of copper, 5,600 ounces of gold and 71,000 ounces of silver. Output improved from the first quarter on higher ore mined, better grades and higher mill throughput.

Mining reached a record 30 million tonnes of total material moved, supported by a record daily average mining rate of 331,000 tonnes. Mill throughput averaged approximately 40,000 tonnes per day, the highest quarterly average since Hudbay acquired the operation.

The primary SAG mill was taken offline in late June for roughly one month to replace its feed-end head. Carter said the mill restarted July 28 and that Hudbay remains confident it can reach its permitted 50,000-tonnes-per-day capacity later in the second half. The second SAG mill reached commercial production and has recently operated at up to 20,000 tonnes per day, according to Carter.

Growth Projects and Capital Plans

Hudbay said its brownfield investments are expected to increase consolidated copper production by 24% to roughly 150,000 tonnes next year. At Copper World in Arizona, feasibility work is 95% complete and a final investment decision remains targeted for later this year, with first production expected in the second half of 2029.

Kukielski said the definitive feasibility study for Copper World will show higher capital expenditures than the 2023 pre-feasibility study, due to inflation and design changes intended to preserve future mill-expansion options. He said the magnitude of the increase has not yet been finalized but does not expect a “blowout.” The company now expects release of the study to be more likely in early fourth quarter than in the third quarter.

In June, Copper World received $52 million from long-term municipal bonds with a 4.5% fixed interest rate and an initial mandatory tender date in 2036.

Hudbay also completed its acquisition of Arizona Sonoran, adding the Cactus copper project. The company plans to spend about $30 million on Cactus during the second half of 2026 for an updated pre-feasibility study, site de-risking and exploration. The updated study is expected in the second half of 2027.

Management said Cactus is expected to follow Copper World in the company’s development sequence, while the Mason project in Nevada is also advancing through a pre-feasibility study targeted for completion in the second half of 2027. Hudbay said it sees a path to approximately 250,000 tonnes of annual copper production by the end of the decade and 500,000 tonnes by the middle of the following decade, assuming staged development of Copper World, Cactus and Mason.

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.

This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to contact@marketbeat.com.