After three years of bleeding red ink, Hudbay has finally sutured the wound.
The company turned a profit of $71.87 million in 2014, the first time since 2010 it was in the black.
Between wrapping up construction on three new mines and boosting copper production by 26 per cent, president and chief executive officer David Garofalo called 2014 “a turning point” for Hudbay.
“In 2015, we remain on track to achieve our target of at least a further 270 per cent year-over-year increase in copper production and to improve our unit operating costs significantly through further economies of scale,” he said in a news release.
Financial success in 2014 came despite the fact Hudbay lost nearly $27 million through the first six months of the year.
Profits of $49.2 million and $49.6 million in the third and fourth quarters put finances back on track, though the company failed to meet its Manitoba production targets for zinc and precious metals.
Below target
Flin Flon and Snow Lake operations yielded 82,542 tonnes of zinc, which was five per cent below the low end of the production target range.
Precious metals production totalled 85,703 ounces, which was 13 per cent below the low end of the target.
Hudbay blamed the shortfalls on an eight-day shutdown at 777 mine in October, the result of an unexpected equipment malfunction.
The shutdown also hindered copper production, but the company was still within target range. Hudbay said about 40 per cent of copper produced in the fourth quarter was in transit and unsold at year’s end.
With production well underway at the Lalor and Reed mines outside Snow Lake, Hudbay is turning much of its attention to its massive Constancia copper mine in Peru.
Physical construction at Constancia was essentially completed and copper concentrate production began as expected in the final quarter of 2014.
Commercial production remains on track for the second quarter of 2015, with Constancia expected to achieve full capacity in the second half of the year, Hudbay said.
The company said commissioning is ongoing and copper concentrate produced to date has met specifications.
Rosemont drilling
Meanwhile, at the Rosemont copper project in Arizona, Hudbay said a 43-hole confirmatory drill program concluded in December with about 93,000 feet drilled.
A metallurgical test program has commenced at Rosemont with initial results anticipated in the second quarter of 2015 and final results in the third quarter.
Permitting efforts remain ongoing, Hudbay said.
Hudbay’s ownership in the Rosemont project is subject to an earn-in agreement with United Copper & Moly LLC, pursuant to which the latter company may earn up to a 20 per cent interest.
Hudbay said it has received commitments from a syndicate of banks to raise its corporate revolving credit facility from US$100 million to US$250 million.
The credit facility is intended to provide additional liquidity as the Constancia project ramps up to commercial production, the company said.
Hudbay’s cash and cash equivalents fell by $210.4 million from Sept. 30, 2014 to $207.3 million as of Dec. 31, 2014, mainly as a result of investments at Constancia.
Hudbay lost a combined $292.3 million in 2011, 2012 and 2013. The 2011 loss of $161.9 million marked the worst year for the company since it purchased the former HBM&S in 2004.
(Figures referenced in this article are in Canadian dollar unless otherwise noted).
