Hudbay announced a net profit of $99.7 million in its fourth quarter results last week.
“I’m pleased to report that our operations in Peru and Manitoba delivered solid operating results in 2017,” said Alan Hair,
president and CEO of Hudbay during a conference call on Feb. 22.
“On a consolidated basis, our full year copper production exceeded 2017 guidance and production of zinc and precious metals were within 2017 guidance ranges.”
Basic and diluted earnings per share in the fourth quarter were 38 cents. The numbers represent a significant increase over the net loss of $47.3 million and loss per share of 20 cents in the fourth quarter of 2016.
The company also saw an increase in operating cash flow before change in non-cash working capital of $171.9 million, compared to $122.3 million in the same time period of 2016. Hudbay attributes the increase in operating cash flow to the higher realized copper and zinc prices along with higher zinc sales and precious metals sales offsetting lower copper sales.
Increased mine throughput at Lalor mine and higher zinc grades at 777 saw increased production of zinc gold and silver throughput.
In the fourth quarter, Hudbay’s Manitoba operations produced 33,055 tonnes of zinc, 9,338 tonnes of copper and 32,150 ounces of gold-equivalent precious metals. Zinc saw an increase in production over the same period in 2016 of about 13 per cent and precious metals saw an increase of about 22 per cent, both as a result of higher grades at all mines as well as higher ore production at Lalor. Ore mined at the Manitoba operations decreased by five per cent in the fourth quarter compared to the same period in 2016 as a result of lower production at 777.
In the third quarter of 2017, Hudbay stopped capitalizing Reed development costs, as the mine is expected to close in the third quarter of 2018. This resulted in higher Reed unit operating costs compared to previous periods.
Lalor’s unit costs reflect operating and capital development work used to increase Lalor’s production rate to 4,500 tonnes per day by the third quarter of 2018. Hair said Hudbay is on track to increase Lalor’s production to 4,500 tonnes per day for the third quarter of 2018.
“Manitoba combined mine, mill and [general and administrative] unit operating costs in the fourth quarter were higher than the third quarter, mainly due to lower production at 777, the cessation of the capitalization of Reed development costs and the higher costs at Lalor incurred increased production to 4,500 tonnes per day in accordance with the revised mine plan,” said Hair.
“Combined unit operating costs in Manitoba exceeded the guidance range for these reasons, while zinc plant production and unit operating costs [were] well within the 2017 guidance range.”
Combined unit operating costs were 29 per cent higher in the fourth quarter and 27 per cent higher in the full year of 2017 over 2016.
