HudBay Minerals Inc announced Q3 2011 financial results. The company reported a net loss of USD 41.1 million or USD 0.23 per share in the Q3 of 2011 compared to a loss of USD 0.01 per share in the Q3 of 2010.
Operating cash flow before changes in non cash working capital more than doubled to USD 58.3 million or USD 0.34 per share in the Q3 of 2011 from USD 25.6 million or USD 0.17 per share in 2010 mainly as a result of higher sales volumes and higher prices received for copper and gold.
Q3 2011 profit under IFRS was negatively affected by a number of non cash, unusual charges all of which are presented after tax.
Revenues increased to USD 212.3 million in the Q3 of 2011 compared to USD 167.8 million in 2010. Revenue growth was driven by higher metal prices and sales volumes. Increased availability of railcars helped to substantially eliminate the stockpile of copper concentrate in Flin Flon that had previously accumulated. HudBay continues to expect copper concentrate sales to exceed production in the Q4 of 2011 resulting in the sale of most of the remaining excess inventory.
Due to the extraction of higher-value copper ore, copper and gold grades at 777 are anticipated to be higher than 2011 guidance, whereas 777 zinc grades are expected to be lower than 2011 guidance. The reduced 777 zinc grades are expected to be partially offset by higher zinc grades from Trout Lake which are expected to average 3.4% for 2011 compared to previous guidance of 2.8%.
Co product costs per unit sold in the third quarter of 2011 were USD 1.63 per pound of copper, USD 500 per ounce of gold and USD 0.94 per pound of zinc. For the first 9 months of 2011, co product costs of copper decreased compared to the same period in 2010 mainly as a result of higher by product credits from the sale of miscellaneous copper bearing material while zinc co product costs increased mainly as a result of reduced zinc oxide and other by-product credits.
HudBay continued to achieve good cost control at its operations, with operating costs per tonne at the 777 mine, the Flin Flon concentrator and zinc plant all expected to remain within the range of guidance for 2011 as set forth in HudBay's press release dated December 13th 2010. Mining operating costs at the Trout Lake mine remain above comparable 2010 levels due to additional expensed development work associated with extending mine life. Trout Lake's mine life is now expected to be extended to June 2012 from early 2012 as previously projected.
Mr David Garofalo president & CEO of HudBay said that "Our operating mines delivered very strong performance during the Q3 of 2011. With the transportation bottleneck in Manitoba resolved, our sales volumes have increased significantly, resulting in strong cash flows. We also continue to execute well on our production growth objectives as Lalor advances to first production by the middle of 2012 and Constancia project engineering, optimization and exploration are expected to lead to a formal project decision by the Q1 of 2012. In addition, the submission of permit applications for the Reed copper deposit and continued pre-feasibility work on Back Forty give HudBay incremental growth opportunities."
