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.
If Hudbay hopes to recover from a lacklustre 2012, this isn't the way to do it. The company last week unveiled first-quarter financials for 2013 that showed a profit of just $1.9 million. That was a 74 per cent drop from the final quarter of 2012. Compared to the first quarter of 2012, it was a 44 per cent plummet. Hudbay blamed the year-over-year decrease in part on lower sales volumes, as the Trout Lake and Chisel North mines have closed and metal prices have declined. A 16 per cent year-over-year production drop in Manitoba, stemming from the two mine closures, was partially offset by some early production at the Lalor mine. Overall mine operating costs per tonne were six per cent lower, with the closure of the high-cost Trout Lake and Chisel North partially offset by higher costs at the 777 mine. Operating costs per tonne at 777 shot up 21 per cent, something Hudbay blamed on increased contractor costs and additional ground support requirements. The company said additional contractor work has been needed at 777 in the past two quarters because of issues with equipment availability last fall that reduced operating development rates. Equipment availability has returned to normal, operating development progress is sufficient to support normal mining rates, and contractors are no longer assigned to operating development work, Hudbay said. With all of that said, Hudbay expects operating costs at 777 to fall within its projections for 2013. See 'Conce...' on pg. Continued from pg. At the Flin Flon concentrator, the cost per tonne of ore processed rose 22 per cent, largely due to reduced throughput following Trout Lake's closure. Operating costs at the Snow Lake concentrator jumped 27 per cent due to transitional work to process Lalor ore and additional manpower and training costs to prepare for increased throughput for the remainder of 2013. Hudbay expects its full-year metal in concentrate production, and unit costs, to be within projected levels. The company's overall cash and cash equivalents lessened by $286.6 million from Dec. 31, 2012 to $1.05 billion as at March 31, 2013. Hudbay said this was mainly driven by capital expenditures primarily at the Lalor and Constancia projects, and interest and dividend payments. Aside from progress at Lalor near Snow Lake (see front page), work moved ahead in the first quarter at the Reed and Constancia projects. Hudbay's focus at Reed, located between Snow Lake and Flin Flon, was advancing the underground ramp and sinking the escape and ventilation raises from surface. After completing the first portal development round last October, the underground ramp had advanced about 363 metres as of March 31. In March, Hudbay started hauling waste from underground via haul trucks, which is expected to reduce cycle times and improve the rate of ramp development. Of the company's $72-million capital construction budget for Reed, roughly $37 million had been spent as of March 31. Hudbay has entered into an additional $13 million in commitments. Total capital expenditures at Reed, a copper mine, are expected to total about $44 million in 2013. Hudbay still expects initial production at Reed by the fourth quarter of this year and full production _Êroughly 1,300 tonnes of ore a day _ by the first quarter of next year. In Peru, as of March 31 Hudbay had incurred some US$480 million in costs at its massive, US$1.5-billion Constancia copper project. It has entered into an additional US$534 million in commitments for the project. The company has secured the mine fleet with 18 haul trucks scheduled for delivery between June 2013 and August 2014. Tire procurement is underway with a number of tires purchased and contracts arranged to meet fleet requirements. Hudbay expects the arrival of the three hydraulic shovels in August 2013, September 2013 and January 2014, respectively, and to begin pre-stripping activities late in 2013. Development of the project is about 25 per cent complete. Civil earth works for the process plant area are roughly 70 per cent complete and remain on schedule. The principal foundations for the ball and SAG mills are poured and complete. Forms are being erected for the reclaim tunnels and crusher foundation. Progress on the tailings management facility has been negatively impacted by the unusually high rainfall in the first quarter. However, the dry season commenced last month and Hudbay believes the impact on project schedule is recoverable. Targets for initial production in late 2014 and full production in the second quarter of 2015 remain unchanged. In accordance with the agreements Hudbay has entered into with local communities, relocation of affected families is underway and the construction of new housing is in progress. Hudbay has delivered new homes to 14 families. The remaining 22 families are scheduled to be relocated later this year. Hudbay lost $21.1 million in 2012.
