The Reminder is making its archives back to 2003 available on our website. Please note that, due to technical limitations, archive articles are presented without the usual formatting.
Jonathon Naylor Editor The fast-depleting Trout Lake Mine has received a slight reprieve as HudBay Minerals reports a massive quarterly loss related to an overseas project. The HBMS parent announced last week that Trout Lake, located six kilometres outside Flin Flon, will likely close about three months later than originally expected. "Trout Lake's mine life is expected to be extended slightly to the end of the first quarter of 2012 from the end of 2011, as previously projected," the company said in a news release. As of January, Trout Lake had about 150 HBMS workers. Contractor Cementation had about another 36 workers at the mine. In unveiling its latest financial results last week, HudBay said tonnage costs at Trout Lake, as well as the soon-to-close Chisel North Mine in Snow Lake, are on the rise. But this is to be expected, the company said, "due to the complex nature of these late-stage mining operations and reduced cost capitalization given the short remaining mine life." Those increased costs were not the main factor behind HudBay's second-quarter net loss of $171.9 million, its worst quarter since purchasing HBMS in 2004. Instead, HudBay cited asset impairments related primarily to the Fenix nickel project in Guatemala, a development the company is now in the process of selling. Losses During the quarter, HudBay recognized pre-tax impairment losses of $212.7 million on Fenix and $1.4 million related to available-for-sale investments. If not for those expenses, HudBay would have turned a profit of $40 million Ð and recorded its strongest quarter in two years. "Our operating mines delivered very strong performance during the second quarter of 2011 and we remain confident in our ability to meet our production and cost guidance for the remainder of the year," said David Garofalo, president and CEO, in the release. See 'Sales...' on pg. 6 Continued from pg. 1 Helping to boost the pre-impairment bottom line was the sale of copper concentrate that had been stockpiled in Flin Flon due to a lack of railcars to ship the material to buyers. The railcar shortage had diminished HudBay profits in recent quarters, but Garofalo said the company has now secured enough cars to "significantly reduce" the inventory. HudBay expects copper concentrate sales to exceed production in the remaining two quarters of the year, resulting in the sale of most of the excess inventory. The company enjoyed revenues of $246.8 million Ð up 32 per cent from the second quarter of 2010 - largely on the strength of both higher sales and improved metal prices. Unit costs in Flin Flon of $14.15 per tonne in the quarter were higher than the average expected for the full year due to scheduled downtime for preventative maintenance. Cost control pleases But HudBay said it was pleased with its cost control at the 777 Mine as mining costs of $33.49 per tonne were essentially unchanged from the same quarter last year. Overall capital expenditures rose to $55.2 million due to the acceleration of construction at Lalor near Snow Lake and the commencement of pre-construction activity at the Constancia copper project in Peru. These added costs were offset in part by reduced sustaining capital expenditures. Total cash and cash equivalents decreased to $747.7 million as of June 30, from $901.7 million as of December 31, 2010. HudBay said this stemmed mainly from its acquisition of Norsemont Mining, owners of Constancia, as well as capital expenditures, strategic investments and payment of dividends. HudBay's board of directors has declared a semi-annual dividend of 10 cents per common share, payable on Sept. 30 to shareholders of record as of Sept. 15. Agreement Earlier this month, HudBay announced it had entered into a definitive agreement with Russia's Solway Group to sell its interest in the Fenix project for US$140 million in cash at closing and US$30 million upon the satisfaction of certain conditions during the course of Solway's development of the project. Closure of the transaction is expected by the end of September.
