An inability to get copper and zinc to market from Flin Flon held Hudbay’s earnings to a modest $300,000 in the second quarter.
But any profit was welcome after the company lost $27.2 million in the first quarter of 2014 following three consecutive years of red ink.
Hudbay said last week that 14 per cent of copper in concentrate and eight per cent of zinc produced in the second quarter went unsold due to poor rail service availability.
Hudbay CEO David Garofalo said “extreme weather conditions” in early 2014 and recent flooding in Manitoba are to blame.
“Steps have been taken to improve railcar availability,” he told a media conference call.
Drawn down
Garofalo said the excess metal inventories are expected to be drawn down over the remainder of 2014, mostly in the fourth quarter.
Despite that challenge, he said Hudbay experienced “notable increases” in production, earnings and cash flow compared to the second quarter of 2013.
“These increases are especially significant since it represents the beginning of our expected production, earnings and cash-flow increases as we are on the verge of completing the mine-building plan laid out four years ago,” Garofalo said.
Hudbay’s total revenue for the second quarter was $139.3 million, nearly $9 million higher than the same period of 2013. The company largely credited more copper sales and higher metal prices.
Those positive developments were partially offset, however, by lower zinc, gold and silver sales volumes, the company said.
Second quarter ore production at Hudbay’s Manitoba operations was up 23 per cent compared to the same period last year, thanks to higher output at the Lalor mine and a full quarter of production at the Reed mine.
Operating costs per tonne of ore at Flin Flon’s 777 mine were slightly lower than in 2013, due largely to the decreased employment of contractors.
Looking ahead, Hudbay said its Constancia copper mine in Peru was about 71 per cent complete as of March 31 and remains on schedule for first production in the final quarter of this year.
Commercial production at Constancia is anticipated in the second quarter of 2015.
During the last six months of 2014, Hudbay expects to make roughly $291 million in capital expenditures on its Constancia project in Peru and Lalor.
