This improvement was a result of higher zinc and gold byproduct credits and higher copper production, the company said. Sustaining cash cost per pound of copper produced (net of byproduct credits) was $1.87 in the second quarter compared to $2.29 in the first.
Given that its second quarter metal production and costs were both in line with expectations, the company has therefore reaffirmed its full year guidance, including 101,000-131,000 tonnes of copper and 220,000-275,000 ounces of gold.
“Our operating performance was strong during the second quarter with higher consolidated copper and gold production and lower consolidated cash costs,” CEO Peter Kukielski said in a news release.
“This was a result of a continuous focus on operating efficiencies which has allowed us to reaffirm our production and operating cost guidance for 2022. We have seen steady performance from our operations in Peru and the New Britannia mill in Manitoba achieved higher-than-expected throughput,” Kukielski said. “We are advancing a pre-feasibility study to evaluate project optimization opportunities on the private land plan at our Copper World Complex, and we have been focused on closure activities in Flin Flon and a smooth transition of our workforce to Snow Lake.”
On the financial front, Hudbay recorded net earnings of $32.1 million for the second quarter of 2022, compared with $63.8 million in Q1 2022 and a net loss of $3.4 million in last year’s comparable quarter.
The Q2 2022 earnings were negatively impacted by a $95 million pre-tax impairment loss related to certain capitalized costs and assets associated with the previous standalone development plan for the Rosemont project in Arizona, which suffered a setback earlier this year. The company did benefit from a non-cash gain of $60.7 million that was mostly related to the quarterly revaluation of the Flin Flon environmental provision.
Adjusted net earnings in the second quarter were $30.5 million, after taking into account the non-cash gain related to the revaluation of the environmental provision and the specific asset impairment loss, among other items. This compares much favourably to an adjusted net earnings of $5.2 million for the first quarter.
By quarter-end, the company’s liquidity includes $258.6 million in cash as well as undrawn availability of $363.6 million under its credit facilities. Hudbay said it expects that its current liquidity, combined with cash flow from operations, particularly in the fourth quarter when production in Peru is expected to benefit from higher grades, will be sufficient to meet its liquidity needs for the foreseeable future.
