A near tripling of company-wide copper output and improved production in northern Manitoba could not stave off a year-opening loss for Hudbay.
The company was out $15.8 million in the first quarter of 2016, its fifth consecutive quarter in the red, amid stubbornly low metal prices.
But Alan Hair, president and chief executive officer, touted Hudbay’s ability to generate increasing cash flow despite the weak markets.
Indeed Q1 2016 saw operating cash flow (before changes in non-cash working capital) rise more than fourfold from $16.9 million to $71.9 million.
Hair said Hudbay remains on track with a previously announced plan to reduce costs by more than $100 million from earlier projections.
The company does not expect those cost reductions to hinder production. Much of the reductions have been or will be implemented in Peru, where Hudbay operates the Constancia copper mine.
In Flin Flon and Snow Lake, Hudbay reported a 12 per cent increase in ore mined in Q1 2016 versus Q1 2015. The company credited higher production at the 777 and Lalor mines.
The increase was not uniform. Hudbay said Flin Flon-Snow Lake copper production dropped 11 per cent due to lower production from the Flin Flon concentrator and lower copper head grades from 777 and Lalor.
The volume of ore processed in Flin Flon in the latest quarter declined eight per cent from the same period last year. Hudbay blamed an unscheduled maintenance and said the shortfall should be made up over the rest of 2016.
It was a different story in Snow Lake, where the company cited higher production at Lalor mine in a 47 per cent increase in ore processed.
Notwithstanding lower metal prices, company-wide revenues nearly doubled in Q1 2016 to $253.6 million.
This increase was mainly due to higher sales volumes stemming from commercial production at Constancia, Hudbay said, adding that those volumes were partially offset by lower copper and zinc prices.
In Q1 2016, company-wide copper production totalled 38,879 tonnes, nearly three times the 15,008 tonnes recorded in Q1 2015. Gold and zinc production were up modestly, while silver production more than doubled.
Meanwhile, Hudbay’s plans for a major new copper mine in Arizona face delays due to low copper prices, the Arizona Daily Star reported in March.
