HUDBAY MINERALS INC. Condensed Consolidated Interim Balance Sheets (Unaudited and in thousands of US dollars) |
Mar. 31, | Dec. 31, | ||||||
Note | 2024 | 2023 | |||||
Assets | |||||||
Current assets | |||||||
Cash and cash equivalents | $ | 284,385 | $ | 249,794 | |||
Trade and other receivables | 7 | 197,732 | 203,429 | ||||
Inventories | 8 | 201,965 | 207,334 | ||||
Prepaid expenses and other current assets | 14,138 | 6,289 | |||||
Other financial assets | 9 | 1,678 | 4,102 | ||||
Taxes receivable | 578 | 2,300 | |||||
700,476 | 673,248 | ||||||
Receivable | 7 | 12,010 | 12,157 | ||||
Inventories | 8 | 16,321 | 24,450 | ||||
Other financial assets | 9 | 6,846 | 7,089 | ||||
Intangibles and other assets | 10 | 50,780 | 52,453 | ||||
Property, plant and equipment | 11 | 4,231,536 | 4,316,006 | ||||
Deferred tax assets | 139,830 | 151,946 | |||||
Goodwill | 73,484 | 75,285 | |||||
$ | 5,231,283 | $ | 5,312,634 | ||||
Liabilities | |||||||
Current liabilities | |||||||
Trade and other payables | $ | 238,977 | $ | 239,149 | |||
Taxes payable | 39,941 | 53,441 | |||||
Other liabilities | 12 | 34,685 | 30,035 | ||||
Other financial liabilities | 13 | 43,775 | 42,235 | ||||
Gold prepayment liability | 14 | 37,945 | 55,901 | ||||
Lease liabilities | 15 | 31,920 | 28,902 | ||||
Deferred revenue | 17 | 72,383 | 87,672 | ||||
499,626 | 537,335 | ||||||
Other financial liabilities | 13 | 58,835 | 51,720 | ||||
Lease liabilities | 15 | 60,236 | 61,433 | ||||
Long-term debt | 16 | 1,278,587 | 1,287,536 | ||||
Deferred revenue | 17 | 329,142 | 330,848 | ||||
Pension obligations | 5,786 | 6,010 | |||||
Other employee benefits | 97,863 | 101,849 | |||||
Environmental and other provisions | 18 | 301,342 | 321,912 | ||||
Deferred tax liabilities | 388,833 | 407,152 | |||||
3,020,250 | 3,105,795 | ||||||
Equity | |||||||
Share capital | 20b | 2,241,841 | 2,240,233 | ||||
Reserves | 19,523 | 30,177 | |||||
Retained earnings | (153,832 | ) | (173,599 | ) | |||
Equity attributable to owners of the Company | 2,107,532 | 2,096,811 | |||||
Non-controlling interest | 103,501 | 110,028 | |||||
$ | 5,231,283 | $ | 5,312,634 |
1
HUDBAY MINERALS INC. Condensed Consolidated Interim Statement of Earnings (Unaudited and in thousands of US dollars, except per share amounts) |
Note | Three months ended March 31, | |||||||
2024 | 2023 | |||||||
Revenue | 6a | $ | 524,989 | $ | 295,219 | |||
Cost of sales | ||||||||
Mine operating costs | 263,762 | 161,284 | ||||||
Depreciation and amortization | 6b | 109,273 | 67,422 | |||||
373,035 | 228,706 | |||||||
Gross profit | 151,954 | 66,513 | ||||||
Selling and administrative expenses | 16,607 | 9,146 | ||||||
Exploration expenses | 12,593 | 8,242 | ||||||
Other expenses | 6c | 16,260 | 4,959 | |||||
Re-evaluation adjustment - environmental provision | 18 | (5,269 | ) | (8,240 | ) | |||
Results from operating activities | 111,763 | 52,406 | ||||||
Net interest expense on long term debt | 6d | 19,208 | 17,007 | |||||
Accretion on streaming arrangements | 6d | 6,176 | 6,501 | |||||
Change in fair value of financial instruments | 6d | 6,954 | 5,597 | |||||
Other net finance costs | 6d | 11,675 | 5,871 | |||||
Net finance expense | 44,013 | 34,976 | ||||||
Earnings before tax | 67,750 | 17,430 | ||||||
Tax expense | 19 | 49,215 | 11,973 | |||||
Net earnings for the period | $ | 18,535 | $ | 5,457 | ||||
Attributable to: | ||||||||
Owners of the Company | $ | 22,358 | $ | 5,457 | ||||
Non-controlling interest | (3,823 | ) | - | |||||
Net earnings for the period | $ | 18,535 | $ | 5,457 | ||||
Net earnings per share | ||||||||
Basic and diluted | $ | 0.05 | $ | 0.02 | ||||
Weighted average number of common shares outstanding: | ||||||||
Basic | 21 | 350,781,240 | 262,030,805 | |||||
Diluted | 21 | 350,970,348 | 262,324,929 |
2
HUDBAY MINERALS INC. Condensed Consolidated Interim Statements of Comprehensive Income (Loss) (Unaudited and in thousands of US dollars) |
Three months ended March 31, | ||||||
2024 | 2023 | |||||
Net earnings for the period | $ | 18,535 | $ | 5,457 | ||
Other comprehensive income: | ||||||
Item that will be reclassified subsequently to net earnings: | ||||||
Recognized directly in equity: | ||||||
Net (loss) gain on translation of foreign currency balances | (16,821 | ) | 136 | |||
(16,821 | ) | 136 | ||||
Items that will not be reclassified subsequently to net earnings: | ||||||
Recognized directly in equity: | ||||||
Gold prepayment revaluation | (15 | ) | 15 | |||
Tax effect | 4 | (4 | ) | |||
Remeasurement - actuarial loss (gain) | 3,575 | (1,245 | ) | |||
Tax effect | 19 | (270 | ) | |||
3,583 | (1,504 | ) | ||||
Other comprehensive loss net of tax, for the period | (13,238 | ) | (1,368 | ) | ||
Attributable to: | ||||||
Owners of the Company | $ | 11,824 | $ | 4,089 | ||
Non-controlling interest | (6,527 | ) | - | |||
Total comprehensive income for the period | $ | 5,297 | $ | 4,089 |
3
HUDBAY MINERALS INC. Condensed Consolidated Interim Statements of Cash Flows (Unaudited and in thousands of US dollars) |
Three months ended March 31, | |||||||
2024 | 2023 | ||||||
Cash generated from operating activities: | |||||||
Net earnings for the period | $ | 18,535 | $ | 5,457 | |||
Tax expense | 19 | 49,215 | 11,973 | ||||
Items not affecting cash: | |||||||
Depreciation and amortization | 6b | 109,759 | 67,752 | ||||
Share-based compensation expense | 5,858 | 1,195 | |||||
Net finance expense | 6d | 44,013 | 34,976 | ||||
Amortization of deferred revenue and variable consideration | 6a | (23,171 | ) | (15,857 | ) | ||
Pension and other employee benefit payments, net of accruals | 3,227 | 3,074 | |||||
Amortization of community agreements | 3,021 | 1,610 | |||||
Re-evaluation adjustment - environmental obligation | 18 | (5,269 | ) | (8,240 | ) | ||
Decommissioning and restoration payments | (148 | ) | (904 | ) | |||
Other | 24a | 6,319 | (6,470 | ) | |||
Taxes paid | (63,820 | ) | (8,958 | ) | |||
Operating cash flow before change in non-cash working capital | 147,539 | 85,608 | |||||
Change in non-cash working capital | 24b | (7,863 | ) | (14,329 | ) | ||
139,676 | 71,279 | ||||||
Cash used in investing activities: | |||||||
Acquisition of property, plant and equipment | (62,371 | ) | (64,952 | ) | |||
Community agreements | (1,379 | ) | (1,912 | ) | |||
Grants received | 11 | 2,400 | - | ||||
Net sale of investments | - | 53 | |||||
Change in restricted cash | - | 138 | |||||
Interest received | 2,430 | 1,597 | |||||
(58,920 | ) | (65,076 | ) | ||||
Cash (used in) generated from financing activities: | |||||||
Proceeds from revolving credit facility | - | 40,000 | |||||
Repayment of revolving credit facility | 16b | (10,000 | ) | - | |||
Interest paid on long-term debt | (903 | ) | - | ||||
Financing costs | (5,330 | ) | (3,133 | ) | |||
Lease payments | 15 | (7,749 | ) | (5,364 | ) | ||
Equipment financing payments | (850 | ) | - | ||||
Gold prepayment repayments | 14 | (21,433 | ) | (6,428 | ) | ||
Net proceeds from exercise of stock options and warrants | 1,256 | 78 | |||||
Dividends paid | 20b | (2,591 | ) | (1,908 | ) | ||
(47,600 | ) | 23,245 | |||||
Effect of movement in exchange rates on cash | 1,435 | 450 | |||||
Net increase in cash and cash equivalents | 34,591 | 29,898 | |||||
Cash and cash equivalents, beginning of the period | 249,794 | 225,665 | |||||
Cash and cash equivalents, end of the period | $ | 284,385 | $ | 255,563 |
4
HUDBAY MINERALS INC. Condensed Consolidated Interim Statements of Changes in Equity (Unaudited and in thousands of US dollars) |
Share capital (note 20) |
Other capital reserves |
Foreign currency translation reserve |
Remeasurement reserve |
Retained earnings | Total |
Non- controlling interest | Total equity | |||||||||||||||||
Balance, January 1, 2023 | $ | 1,780,774 | $ | 58,503 | $ | (14,759 | ) | $ | (17,206 | ) | $ | (235,503 | ) | $ | 1,571,809 | $ | - | $ | 1,571,809 | |||||
Net earnings | - | - | - | - | 5,457 | 5,457 | - | 5,457 | ||||||||||||||||
Other comprehensive income (loss) | - | - | 136 | (1,504 | ) | - | (1,368 | ) | - | (1,368 | ) | |||||||||||||
Total comprehensive income (loss) | - | - | 136 | (1,504 | ) | 5,457 | 4,089 | - | 4,089 | |||||||||||||||
Contributions by and distributions to owners: | ||||||||||||||||||||||||
Dividends (note 20b) | - | - | - | - | (1,908 | ) | (1,908 | ) | - | (1,908 | ) | |||||||||||||
Stock options | - | 453 | - | - | - | 453 | - | 453 | ||||||||||||||||
Issuance of shares related to stock options exercised | 118 | (40 | ) | - | - | - | 78 | - | 78 | |||||||||||||||
Total contributions by and distributions to owners | 118 | 413 | - | - | (1,908 | ) | (1,377 | ) | - | (1,377 | ) | |||||||||||||
Balance, March 31, 2023 | $ | 1,780,892 | $ | 58,916 | $ | (14,623 | ) | $ | (18,710 | ) | $ | (231,954 | ) | $ | 1,574,521 | $ | - | $ | 1,574,521 | |||||
Net earnings | - | - | - | - | 60,910 | 60,910 | 3,176 | 64,086 | ||||||||||||||||
Other comprehensive income (loss) | - | - | 9,215 | (6,969 | ) | - | 2,246 | (124 | ) | 2,122 | ||||||||||||||
Total comprehensive income (loss) | - | - | 9,215 | (6,969 | ) | 60,910 | 63,156 | 3,052 | 66,208 | |||||||||||||||
Contributions by and distributions to owners: | ||||||||||||||||||||||||
Dividends (note 20b) | - | - | - | - | (2,555 | ) | (2,555 | ) | - | (2,555 | ) | |||||||||||||
Shares issued on acquisition of Copper Mountain, net of share issuance costs (note 4) | 436,499 | - | - | - | - | 436,499 | 106,976 | 543,475 | ||||||||||||||||
Shares and warrants issued on acquisition of Rockcliff (note 5) | 12,503 | 725 | - | - | - | 13,228 | - | 13,228 | ||||||||||||||||
Flow-through shares issued, net of share issuance costs (note 20b) | 10,166 | - | - | - | - | 10,166 | - | 10,166 | ||||||||||||||||
Stock options | - | 1,684 | - | - | - | 1,684 | - | 1,684 | ||||||||||||||||
Issuance of shares related to stock options exercised | 173 | (61 | ) | - | - | - | 112 | - | 112 | |||||||||||||||
Total contributions by and distributions to owners | 459,341 | 2,348 | - | - | (2,555 | ) | 459,134 | 106,976 | 566,110 | |||||||||||||||
Balance, December 31, 2023 | $ | 2,240,233 | $ | 61,264 | $ | (5,408 | ) | $ | (25,679 | ) | $ | (173,599 | ) | $ | 2,096,811 | $ | 110,028 | $ | 2,206,839 |
5
HUDBAY MINERALS INC. Condensed Consolidated Interim Statements of Changes in Equity (Unaudited and in thousands of US dollars) |
Share capital (note 20) |
Other capital reserves |
Foreign currency translation reserve |
Remeasurement reserve |
Retained earnings | Total |
Non- controlling interest | Total equity | |||||||||||||||||
Balance, January 1, 2024 | $ | 2,240,233 | $ | 61,264 | $ | (5,408 | ) | $ | (25,679 | ) | $ | (173,599 | ) | $ | 2,096,811 | $ | 110,028 | $ | 2,206,839 | |||||
Net earnings | - | - | - | - | 22,358 | 22,358 | (3,823 | ) | 18,535 | |||||||||||||||
Other comprehensive (loss) income | - | - | (14,117 | ) | 3,583 | - | (10,534 | ) | (2,704 | ) | (13,238 | ) | ||||||||||||
Total comprehensive (loss) income | - | - | (14,117 | ) | 3,583 | 22,358 | 11,824 | (6,527 | ) | 5,297 | ||||||||||||||
Contributions by and distributions to owners: | ||||||||||||||||||||||||
Dividends (note 20b) | - | - | - | - | (2,591 | ) | (2,591 | ) | - | (2,591 | ) | |||||||||||||
Stock options | - | 223 | - | - | - | 223 | - | 223 | ||||||||||||||||
Issuance of shares related to stock options and warrants exercised | 1,608 | (343 | ) | - | - | - | 1,265 | - | 1,265 | |||||||||||||||
Total contributions by and distributions to owners | 1,608 | (120 | ) | - | - | (2,591 | ) | (1,103 | ) | - | (1,103 | ) | ||||||||||||
Balance, March 31, 2024 | $ | 2,241,841 | $ | 61,144 | $ | (19,525 | ) | $ | (22,096 | ) | $ | (153,832 | ) | $ | 2,107,532 | $ | 103,501 | $ | 2,211,033 |
6
HUDBAY MINERALS INC. Notes to Unaudited Condensed Consolidated Interim Financial Statements (in thousands of US dollars, except where otherwise noted) For the three months ended March 31, 2024 and 2023 |
1.Reporting entity
Hudbay Minerals Inc. ("HMI" or the "Company") is a company existing under the Canada Business Corporations Act. The address of the Company's principal executive office is 25 York Street, Suite 800, Toronto, Ontario. The unaudited condensed consolidated interim financial statements ("financial statements") of the Company for the three months ended March 31, 2024 and 2023 represent the financial position and the financial performance of the Company and its subsidiaries (together referred to as "Hudbay").
Wholly owned subsidiaries as at March 31, 2024 included HudBay Peru Inc., HudBay Peru S.A.C. ("Hudbay Peru"), HudBay (BVI) Inc., Hudbay Arizona Inc., Copper World, Inc. ("Copper World") and Mason Resources (US) Inc. ("Mason"). On January 1, 2024, the Company amalgamated with Copper Mountain Mining Inc., Hudbay British Columbia Inc. and Rockcliff Metals Corp. ("Rockcliff") and continued carrying on business as Hudbay Minerals Inc. Following the amalgamation, the Company directly holds a 75% interest in Copper Mountain Mine (BC) Ltd. ("CMBC") and is the direct holder of all of Rockcliff's mineral properties. Mitsubishi Materials Corporation ("MMC"), an arms-length party, owns the remaining 25% interest in CMBC.
Hudbay is a diversified mining company with long-life assets in North and South America. Hudbay's operations in Cusco (Peru) produce copper with gold, silver and molybdenum by-products. Hudbay's operations in Manitoba (Canada) produce gold with copper, zinc and silver by-products. Hudbay's operations in British Columbia (Canada) produce copper with gold and silver by-products. Hudbay has a development pipeline that includes copper development projects in Arizona and Nevada (United States), and a focused growth strategy on exploration, development, operation, and optimization of properties that Hudbay already controls, as well as other mineral assets that Hudbay may acquire that fit the Company's strategic criteria. The Company is governed by the Canada Business Corporations Act and its shares are listed under the symbol "HBM" on the Toronto Stock Exchange, New York Stock Exchange and Bolsa de Valores de Lima.
2.Basis of preparation
(a)Statement of compliance:
These interim financial statements have been prepared in accordance with IAS 34, Interim Financial Reporting as issued by the International Accounting Standards Board ("IASB") and do not include all of the information required for full annual financial statements by International Financial Reporting Standards ("IFRS") as issued by the IASB.
These interim financial statements should be read in conjunction with the Company's audited consolidated financial statements for the year ended December 31, 2023 which includes information necessary or useful to understanding the Company's business and financial statement presentation. In particular, the Company's material accounting policies are presented as note 3 in the Company's audited consolidated financial statements for the year ended December 31, 2023 and have been consistently applied in the preparation of these interim financial statements, in addition to the new standard noted below.
The Board of Directors approved these interim financial statements on May 13, 2024.
7
HUDBAY MINERALS INC. Notes to Unaudited Condensed Consolidated Interim Financial Statements (in thousands of US dollars, except where otherwise noted) For the three months ended March 31, 2024 and 2023 |
(b)Use of judgements and estimates:
The preparation of the interim financial statements in conformity with IFRS requires Hudbay to make judgements, estimates and assumptions, in applying accounting policies that affect reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the interim financial statements, as well as reported amounts of revenue and expenses during the reporting period. Actual results may differ from these judgements, estimates and assumptions. The interim financial statements reflect the judgements and estimates outlined by Hudbay in its audited consolidated financial statements for the year ended December 31, 2023.
3.New standards
New standards and interpretations adopted
Amendment to IAS 1 - Presentation of Financial Statements
The amendments to IAS 1 clarify that only covenants with which an entity is required to comply on or before the reporting date affect the classification of a liability as current or non-current. In addition, an entity has to disclose information in the notes that enables users of financial statements to understand the risk that non-current liabilities with covenants could become repayable within twelve months. Classification is unaffected by the expectations that the entity will exercise its right to defer settlement of a liability. Lastly, the amendments clarify that settlement refers to the transfer to the counterparty of cash, equity instruments, other assets. The amendments are effective for annual periods beginning on or after January 1, 2024. The amendments have been adopted by the Company and the amendments did not result in any changes to the interim financial statements.
4.Acquisition of Copper Mountain Mining Corporation
On June 20, 2023, Hudbay acquired all of the issued and outstanding common shares of Copper Mountain Mining Inc. (formerly, Copper Mountain Mining Corp., and referred to herein as "Copper Mountain"), as part of a court-approved plan of arrangement. At the time, Copper Mountain held 75% of CMBC, the entity that owns 100% of the Copper Mountain mine. MMC owns the remaining 25% interest in CMBC as a non-controlling interest.
As a result of the acquisition, Hudbay obtained control of Copper Mountain on June 20, 2023.
Management determined that the assets and processes comprised a business and therefore accounted for the transaction as a business combination, using the acquisition method of accounting.
Consideration transferred:
The purchase consideration paid by Hudbay was for 100% of the net assets of Copper Mountain and their 100% owned subsidiaries ("100% owned entities") and a 75% ownership in CMBC. The aggregate purchase consideration for the acquired assets, net of the liabilities assumed is as follows:
Equity instruments (84,165,617 common shares of Hudbay) | $ | 436,687 | |
Cash | 3,794 | ||
Consideration transferred - June 20, 2023 | $ | 440,481 |
The fair value of the common shares issued was based on Hudbay's listed share price of C$6.87 at the June 20, 2023 acquisition date. Immediately prior to the acquisition, Copper Mountain settled its outstanding restricted share units and performance share units through the issuance of shares and settled its stock options for replacement Hudbay options that were immediately settled in cash.
8
HUDBAY MINERALS INC. Notes to Unaudited Condensed Consolidated Interim Financial Statements (in thousands of US dollars, except where otherwise noted) For the three months ended March 31, 2024 and 2023 |
Hudbay incurred acquisition related costs of $6,932 during the year ended December 31, 2023, mainly relating to external legal and advisory fees and due diligence costs, which were recorded in other expense in the consolidated income statements. In addition, Hudbay incurred share issuance costs of $188 and presented these as a deduction from share capital.
Identifiable assets acquired and liabilities assumed:
The fair value of the net assets was determined using a combination of market, income and cost methods. The fair value of the non-controlling interest was then computed at a 25% of the equity interest in CMBC.
The following presents the allocation of the final purchase price, resulting in recognized fair value amounts of identifiable assets acquired and liabilities assumed as follows:
Fair value of net assets acquired / (liabilities) assumed | Final | ||
Cash and cash equivalent | $ | 14,483 | |
Trade and other receivables | 19,110 | ||
Inventories | 47,875 | ||
Prepaid expenses | 3,096 | ||
Other financial assets | 8,495 | ||
Property, plant and equipment | 434,821 | ||
Mineral properties | 369,000 | ||
Inventories - low grade stockpile | 6,000 | ||
Trade and other payables | (77,111 | ) | |
Advances from Hudbay | (3,421 | ) | |
Lease liabilities | (34,617 | ) | |
Other financial liabilities | (9,550 | ) | |
Long-term debt | (144,981 | ) | |
Environmental and other provisions | (12,702 | ) | |
Deferred tax liabilities | (148,246 | ) | |
Total fair value of net identifiable assets acquired | $ | 472,252 |
The fair values of mineral properties, low grade stockpile and other property, plant and equipment have been determined based on an independent valuation, using a combination of market, income and cost methods. In particular, the fair values of the mineral properties and low grade stockpile have been calculated using significant judgements and estimates.
Trade receivables acquired as part of the acquisition have a fair value of $8,764 which is equal to their gross contractual value. Other receivables acquired have a fair value of $10,346 which is equal to their gross contractual value. Trade and other receivables are expected to be collected during the next 12 months.
Hudbay provided advances to Copper Mountain prior to the acquisition date, which have been recorded as a purchaser loan.
Hudbay recognized goodwill as a result of the acquisition as follows:
9
HUDBAY MINERALS INC. Notes to Unaudited Condensed Consolidated Interim Financial Statements (in thousands of US dollars, except where otherwise noted) For the three months ended March 31, 2024 and 2023 |
Final | |||
Total consideration transferred | $ | 440,481 | |
Non-controlling interest | 106,976 | ||
Less: value of net identifiable assets acquired | (472,252 | ) | |
Goodwill upon acquisition at June 20, 2023 | $ | 75,205 |
The goodwill balance arose from the requirement to record deferred income tax liabilities measured at the tax effect of the difference between the fair values of the assets acquired and liabilities assumed and their tax bases. None of the goodwill recognized is expected to be deductible for income tax purposes.
The results of operations have been consolidated with those of the Company from the date of acquisition and included in the British Columbia operating segment.
5.Acquisition of Rockcliff Metals Corporation
On September 14, 2023, Hudbay acquired all of the issued and outstanding common shares of Rockcliff, as part of a court-approved plan of arrangement. In doing so, Hudbay obtained control of Rockcliff on September 14, 2023.
Management determined that substantially all of the fair value of the gross assets acquired is concentrated in the Talbot exploration property and therefore accounted for the transaction as an asset acquisition.
The purchase consideration paid was 2,675,324 Hudbay common shares and 517,460 Hudbay warrants. For asset acquisitions settled with equity, entities are required to record the net assets acquired based on the fair value of the assets received in exchange for the equity issued, unless that fair value cannot be estimated reliably. Hudbay incurred acquisition related costs of $518 during the third quarter of 2023, mainly relating to external legal and advisory fees and due diligence costs, which were capitalized and included as a cost of acquiring the net assets.
The fair value of the net assets acquired was determined using a combination of income and cost methods. In particular, the fair values of the exploration property have been calculated using significant judgements and estimates. The following presents the fair value amounts of identifiable assets acquired and liabilities assumed:
Fair value of net assets acquired / (liabilities) assumed | |||
Cash and cash equivalents | $ | 270 | |
Accounts receivable and prepaid expenses | 98 | ||
Property, plant & equipment | 33 | ||
Exploration property | 14,198 | ||
Accounts payable and accrued liabilities | (305 | ) | |
Advance from Hudbay | (548 | ) | |
Total fair value of net identifiable assets acquired | $ | 13,746 |
10
HUDBAY MINERALS INC. Notes to Unaudited Condensed Consolidated Interim Financial Statements (in thousands of US dollars, except where otherwise noted) For the three months ended March 31, 2024 and 2023 |
6.Revenue and expenses
(a)Revenue
Hudbay's revenue by significant product types:
Three months ended March 31, | ||||||
2024 | 2023 | |||||
Copper | $ | 285,156 | $ | 164,242 | ||
Gold | 178,130 | 74,926 | ||||
Zinc | 14,931 | 19,842 | ||||
Silver | 12,168 | 6,301 | ||||
Molybdenum | 18,195 | 18,962 | ||||
Other | - | 239 | ||||
Revenue from contracts | 508,580 | 284,512 | ||||
Non-cash streaming arrangement items 1 | ||||||
Amortization of deferred revenue - gold | 16,448 | 5,392 | ||||
Amortization of deferred revenue - silver | 10,572 | 5,580 | ||||
Amortization of deferred revenue - variable consideration adjustments - prior periods | (3,849 | ) | 4,885 | |||
23,171 | 15,857 | |||||
Pricing and volume adjustments 2 | 20,902 | 13,345 | ||||
552,653 | 313,714 | |||||
Treatment and refining charges | (27,664 | ) | (18,495 | ) | ||
$ | 524,989 | $ | 295,219 |
1 See note 17.
2 Pricing and volume adjustments represent mark-to-market adjustments on initial estimate of provisionally priced sales, realized and unrealized changes to fair value of quotational pricing hedge derivative contracts and adjustments to originally invoiced weights and assays.
Consideration from the Company's stream agreements is considered variable (note 17). Gold and silver stream revenue can be subject to cumulative adjustments when the amount of precious metals to be delivered under the contract changes. As a result of changes in the Company's mineral reserve and resource estimate in the first quarter of 2024, the amortization rate by which deferred revenue is drawn down into income was adjusted and, as required, a variable consideration adjustment was made for all prior year stream revenues since the stream agreement inception date. This variable consideration adjustment for the three months ended March 31, 2024 resulted in a decrease of revenue of $3,849 (March 31, 2023 - increase of revenue of $4,885).
(b)Depreciation and amortization
Depreciation of property, plant and equipment and amortization of intangible assets are reflected in the condensed consolidated interim statements of earnings as follows:
Three months ended March 31, | ||||||
2024 | 2023 | |||||
Cost of sales | $ | 109,273 | $ | 67,422 | ||
Selling and administrative expenses | 486 | 330 | ||||
$ | 109,759 | $ | 67,752 |
11
HUDBAY MINERALS INC. Notes to Unaudited Condensed Consolidated Interim Financial Statements (in thousands of US dollars, except where otherwise noted) For the three months ended March 31, 2024 and 2023 |
(c) Other expenses
Three months ended March 31, | ||||||
2024 | 2023 | |||||
Regional costs | $ | 1,487 | $ | 1,069 | ||
Write-down/loss on disposal of PP&E | 9,045 | 69 | ||||
Amortization of community costs (other assets) | 1,757 | 340 | ||||
Restructuring | 943 | - | ||||
Care & maintenance - Manitoba | 3,129 | 3,995 | ||||
Evaluation costs | 588 | 91 | ||||
Reduction of obligation to renounce flow-through expenditures | (675 | ) | - | |||
Option agreement proceeds | (363 | ) | - | |||
Other | 349 | (605 | ) | |||
$ | 16,260 | $ | 4,959 |
The Arizona business unit held an option to acquire water rights and land, which expired during the first quarter of 2024 without being extended or exercised. The previously capitalized cost to maintain the option, net of accrued interest, of $8,133 is presented as part of write-down of PP&E.
On March 7, 2024, Hudbay and Marubeni Corporation executed an option agreement whereby Marubeni will fund certain minimum annual exploration expenditures for agreed upon properties. During the first quarter of 2024, proceeds of $363 were received and recorded as other income.
12
HUDBAY MINERALS INC. Notes to Unaudited Condensed Consolidated Interim Financial Statements (in thousands of US dollars, except where otherwise noted) For the three months ended March 31, 2024 and 2023 |
(d) Net finance expense
Three months ended March 31, | ||||||
2024 | 2023 | |||||
Net interest expense on long-term debt | ||||||
Net interest expense on long-term debt | $ | 19,208 | $ | 17,007 | ||
Accretion on streaming arrangements (note 17) | ||||||
Additions | 6,000 | 6,597 | ||||
Variable consideration adjustments - prior periods | 176 | (96 | ) | |||
6,176 | 6,501 | |||||
Change in fair value of financial instruments | ||||||
Gold prepayment liability (note 14) | 3,462 | 6,097 | ||||
Net unrealized loss on non-quotational pricing hedges | 3,328 | - | ||||
Investments | 164 | (500 | ) | |||
6,954 | 5,597 | |||||
Other net finance costs | ||||||
Net foreign exchange loss | 4,827 | 306 | ||||
Accretion on community agreements measured at amortized cost | 959 | 763 | ||||
Accretion on environmental provisions | 2,676 | 2,404 | ||||
Accretion on Wheaton refund liability | 150 | 139 | ||||
Withholding taxes | 923 | 1,405 | ||||
Loss on disposal of investments | - | 652 | ||||
Other finance expense | 4,590 | 1,730 | ||||
Interest income | (2,450 | ) | (1,528 | ) | ||
11,675 | 5,871 | |||||
Net finance expense | $ | 44,013 | $ | 34,976 |
Other finance expense relates primarily to standby fees on Hudbay's revolving credit facilities and leases.
Commencing in the first quarter of 2024, Hudbay has entered into copper forward sale, copper costless collars and gold costless collars which are non-quotational pricing ("QP") contracts (note 22b). Subsequent movements in the fair value of non-QP contracts are recognized in change in fair value of financial instruments in the condensed consolidated interim statements of earnings.
13
HUDBAY MINERALS INC. Notes to Unaudited Condensed Consolidated Interim Financial Statements (in thousands of US dollars, except where otherwise noted) For the three months ended March 31, 2024 and 2023 |
7.Trade and other receivables
Mar. 31, 2024 | Dec. 31, 2023 | |||||
Current | ||||||
Trade receivables | $ | 150,282 | $ | 169,806 | ||
Statutory receivables | 42,798 | 27,215 | ||||
Other receivables | 4,652 | 6,408 | ||||
197,732 | 203,429 | |||||
Non-current | ||||||
Taxes receivable | 12,010 | 12,157 | ||||
$ | 209,742 | $ | 215,586 |
8.Inventories
Mar. 31, 2024 | Dec. 31, 2023 | |||||
Current | ||||||
Stockpile | $ | 56,284 | $ | 52,454 | ||
Finished goods | 48,904 | 61,266 | ||||
Materials and supplies | 96,777 | 93,614 | ||||
201,965 | 207,334 | |||||
Non-current | ||||||
Stockpile | 1,577 | 9,591 | ||||
Low grade stockpile1 | 5,867 | 5,875 | ||||
Materials and supplies | 8,877 | 8,984 | ||||
16,321 | 24,450 | |||||
$ | 218,286 | $ | 231,784 |
1Stockpile of inventory that is not expected to be processed until the end of the Copper Mountain mine life.
The cost of inventories recognized as an expense, including depreciation, and included in cost of sales amounted to $328,502 for the three months ended March 31, 2024 (three months ended March 31, 2023 - $204,910).
14
HUDBAY MINERALS INC. Notes to Unaudited Condensed Consolidated Interim Financial Statements (in thousands of US dollars, except where otherwise noted) For the three months ended March 31, 2024 and 2023 |
9.Other financial assets
Mar. 31, 2024 | Dec. 31, 2023 | |||||
Current | ||||||
Derivative assets | $ | 520 | $ | 1,416 | ||
Guaranteed investment certificates | 622 | 722 | ||||
Restricted cash | 536 | 1,964 | ||||
1,678 | 4,102 | |||||
Non-current | ||||||
Investments at fair value through profit or loss | 6,137 | 6,452 | ||||
Guaranteed investment certificates | 709 | 637 | ||||
6,846 | 7,089 | |||||
$ | 8,524 | $ | 11,191 |
10.Intangibles and other assets
Intangibles and other assets of $50,780 (December 31, 2023 - $52,453) includes $47,063 of other assets (December 31, 2023 - $48,428) and $3,717 of intangibles (December 31, 2023 - $4,025).
Other assets represent the carrying value of certain future community costs that relate to original agreements with communities for the Constancia operation which allow Hudbay to extract minerals over the useful life of the Peru operation. The liability remaining for these costs is recorded in agreements with communities recorded at amortized cost (note 13). Amortization of the carrying amount is recorded in the condensed consolidated interim income statements within other expenses (note 6c) or exploration expense, depending on the nature of the agreement.
Intangibles mainly represent computer software costs.
15
HUDBAY MINERALS INC. Notes to Unaudited Condensed Consolidated Interim Financial Statements (in thousands of US dollars, except where otherwise noted) For the three months ended March 31, 2024 and 2023 |
11.Property, plant and equipment
Mar. 31, 2024 | Cost |
Accumulated depreciation and amortization |
Carrying amount | ||||||
Exploration and evaluation assets | $ | 98,617 | $ | - | $ | 98,617 | |||
Capital works in progress | 819,995 | - | 819,995 | ||||||
Mining properties | 2,497,275 | (1,133,789 | ) | 1,363,486 | |||||
Plant and equipment | 3,219,375 | (1,384,349 | ) | 1,835,026 | |||||
Plant and equipment-ROU Assets1 | 261,002 | (146,590 | ) | 114,412 | |||||
$ | 6,896,264 | $ | (2,664,728 | ) | $ | 4,231,536 | |||
Dec. 31, 2023 | Cost |
Accumulated depreciation and amortization |
Carrying amount | ||||||
Exploration and evaluation assets | $ | 96,901 | $ | - | $ | 96,901 | |||
Capital works in progress | 804,020 | - | 804,020 | ||||||
Mining properties | 2,481,118 | (1,093,839 | ) | 1,387,279 | |||||
Plant and equipment | 3,262,854 | (1,345,604 | ) | 1,917,250 | |||||
Plant and equipment - ROU Assets1 | 253,344 | (142,788 | ) | 110,556 | |||||
$ | 6,898,237 | $ | (2,582,231 | ) | $ | 4,316,006 |
1 Includes $4,492 of capital works in progress - ROU assets (cost) that relate to the Arizona segment (December 31, 2023 - $4,800 related to the Arizona segment).
During the first quarter of 2024, Hudbay received a grant of $2,400 from the Environment and Climate Change Canada related to the purchase of an electric mining shovel in the third quarter of 2023. The carrying amount of the shovel has been deducted by the amount of the grant received. The grant will be recognized in profit or loss over the life of the shovel as a reduced depreciation expense. There were no significant unfulfilled conditions attached to the grant.
12.Other liabilities
Mar. 31, 2024 | Dec. 31, 2023 | |||||
Unearned revenue | $ | 304 | $ | 616 | ||
Environmental and other provisions (note 18) | 26,333 | 22,292 | ||||
Pension liability | 4,256 | 3,284 | ||||
Other employee benefits | 3,792 | 3,843 | ||||
$ | 34,685 | $ | 30,035 |
16
HUDBAY MINERALS INC. Notes to Unaudited Condensed Consolidated Interim Financial Statements (in thousands of US dollars, except where otherwise noted) For the three months ended March 31, 2024 and 2023 |
13.Other financial liabilities
Mar. 31, 2024 | Dec. 31, 2023 | |||||
Current | ||||||
Derivative liabilities | $ | 12,030 | $ | 11,811 | ||
Equipment financing | 4,663 | 3,300 | ||||
Deferred Rosemont acquisition consideration | 9,855 | 9,713 | ||||
Agreements with communities recorded at amortized cost | 17,227 | 17,411 | ||||
43,775 | 42,235 | |||||
Non-current | ||||||
Equipment financing | 11,321 | 7,499 | ||||
Agreements with communities recorded at amortized cost | 40,702 | 37,568 | ||||
Wheaton refund liability | 6,812 | 6,653 | ||||
58,835 | 51,720 | |||||
$ | 102,610 | $ | 93,955 |
Agreements with communities recorded at amortized cost relate to agreements with communities near the Constancia operation which allow Hudbay to extract minerals over the useful life of the Constancia operation, carry out exploration and evaluation activities in the area and provide Hudbay with community support to operate in the region.
As part of the streaming agreement for the 777 mine, Hudbay must repay, with precious metals credits, the stream deposit by August 1, 2052, the expiry date of the agreement. If the stream deposit is not fully repaid with precious metals credits from 777 production by the expiry date, a payment for the remaining amount will be due at the expiry date of the agreement. As the 777 mine has concluded all mining activities following the depletion of reserves and finalized the sales of produced concentrate, Hudbay concluded that the remaining stream deposit will not be repaid by means of precious metals credits from 777 production. The repayment amount is recorded as a Wheaton refund liability, which is and will be discounted at the 9.0% rate inherent in the original 777 stream agreement and accreted over the remaining term of the agreement.
14.Gold prepayment liability
Gold prepayment liabilities are reflected in the condensed consolidated interim balance sheets as follows:
Mar. 31, 2024 | Dec. 31, 2023 | |||||
Current | $ | 37,945 | $ | 55,901 |
17
HUDBAY MINERALS INC. Notes to Unaudited Condensed Consolidated Interim Financial Statements (in thousands of US dollars, except where otherwise noted) For the three months ended March 31, 2024 and 2023 |
The following table summarizes changes in the gold prepayment liability:
Balance, January 1, 2023 | $ | 71,208 | |
Change in fair value recorded in income statement | 11,223 | ||
Change in fair value recorded in other comprehensive income | 192 | ||
Repayments | (26,722 | ) | |
Balance, December 31, 2023 | $ | 55,901 | |
Change in fair value recorded in income statement (note 6d) | 3,462 | ||
Change in fair value recorded in other comprehensive income | 15 | ||
Repayments | (21,433 | ) | |
Balance, March 31, 2024 | $ | 37,945 |
During the first quarter of 2023, Hudbay renegotiated its agreements with various financial institutions and deferred eight months of scheduled gold deliveries. Monthly deliveries of the outstanding gold ounces under the new agreements have resumed in October 2023 and will continue until August 2024.
15.Lease liabilities
Balance, January 1, 2023 | $ | 61,019 | |
Acquired through the acquisition of Copper Mountain | 34,617 | ||
Additional capitalized leases | 21,401 | ||
Lease payments | (25,216 | ) | |
Derecognized leases | (685 | ) | |
Accretion and other movements | (801 | ) | |
Balance, December 31, 2023 | $ | 90,335 | |
Additional capitalized leases | 7,849 | ||
Lease payments | (7,749 | ) | |
Derecognized leases | (12 | ) | |
Accretion and other movements | 1,733 | ||
Balance, March 31, 2024 | $ | 92,156 |
Lease liabilities are reflected in the condensed consolidated interim balance sheets as follows:
Mar. 31, 2024 | Dec. 31, 2023 | |||||
Current | $ | 31,920 | $ | 28,902 | ||
Non-current | 60,236 | 61,433 | ||||
$ | 92,156 | $ | 90,335 |
Hudbay has entered into leases which expire between 2024 and 2037. The interest rates on leases which were capitalized have interest rates between 2.39% and 8.49%, per annum. The range of interest rates utilized for discounting varies depending mostly on the Hudbay entity acting as lessee and duration of the lease. For certain leases, Hudbay has the option to purchase the equipment and vehicles leased at the end of the terms of the leases. Hudbay's obligations under these leases are secured by the lessor's title to the leased assets. The present value of applicable lease payments has been recognized as an ROU asset, which was included as a non-cash addition to property, plant and equipment, and a corresponding amount as a lease liability.
There are no restrictions placed on Hudbay by entering into these leases.
18
HUDBAY MINERALS INC. Notes to Unaudited Condensed Consolidated Interim Financial Statements (in thousands of US dollars, except where otherwise noted) For the three months ended March 31, 2024 and 2023 |
The following outlines expenses recognized within the Company's condensed consolidated interim statements of earnings, relating to leases for which a recognition exemption was applied.
Three months ended March 31, | ||||||
2024 | 2023 | |||||
Short-term leases | $ | 890 | $ | 1,175 | ||
Low value leases | 98 | 112 | ||||
Variable leases | 6,490 | 6,394 | ||||
Total | $ | 7,478 | $ | 7,681 |
Payments made for short-term, low value and variable leases would mostly be captured as expenses in the condensed consolidated interim statements of earnings, however, certain amounts may be capitalized to PP&E for the Arizona segment during its development phase and certain amounts may be reported in inventories given the timing of sales. Variable payment leases include equipment used for heavy civil works at Constancia.
16.Long-term debt
Long-term debt is comprised of the following:
Mar. 31, 2024 | Dec. 31, 2023 | |||||
Senior unsecured notes (a) | $ | 1,191,220 | $ | 1,190,586 | ||
Senior secured revolving credit facilities (b) | 87,367 | 96,950 | ||||
$ | 1,278,587 | $ | 1,287,536 |
(a)Senior unsecured notes
Balance, January 1, 2023 | $ | 1,188,132 | |
Accretion of transaction costs and premiums | 2,454 | ||
Balance, December 31, 2023 | $ | 1,190,586 | |
Accretion of transaction costs and premiums | 634 | ||
Balance, March 31, 2024 | $ | 1,191,220 |
As at March 31, 2024, $1,200,000 aggregate principal amount of senior notes were outstanding in two series: (i) a series of 4.50% senior notes due 2026 in an aggregate principal amount of $600,000 and (ii) a series of 6.125% senior notes due 2029 in an aggregate principal amount of $600,000.
The senior notes are guaranteed on a senior unsecured basis by substantially all of the Company's subsidiaries, other than HudBay (BVI) Inc. and certain excluded or unrestricted subsidiaries, which includes CMBC (the Company's 75% owned subsidiary that owns the Copper Mountain mine), and subsidiaries that hold the Copper World and Mason projects as well as any newly formed or acquired subsidiaries that primarily hold or may develop non-producing mineral assets that are in the pre-construction phase of development.
19
HUDBAY MINERALS INC. Notes to Unaudited Condensed Consolidated Interim Financial Statements (in thousands of US dollars, except where otherwise noted) For the three months ended March 31, 2024 and 2023 |
(b)Senior secured revolving credit facilities
Balance, January 1, 2023 1 | $ | (3,970 | ) |
Proceeds from drawdown, net of repayments | 100,000 | ||
Accretion of transaction costs | 1,627 | ||
Transaction costs | (707 | ) | |
Balance, December 31, 2023 | $ | 96,950 | |
Repayments | (10,000 | ) | |
Accretion of transaction costs | 485 | ||
Transaction costs | (68 | ) | |
Balance, March 31, 2024 | $ | 87,367 |
1 Balance, representing deferred transaction costs, is in an asset position.
Hudbay has two senior secured revolving credit facilities with total commitments of $450 million and substantially similar terms and conditions for its Canadian and Peruvian businesses. Hudbay's revolving credit facilities are secured against substantially all of the Company's assets, other than those associated with the Copper World and Mason projects.
During the three months ended March 31, 2024, Hudbay repaid $10,000 under its Canadian revolving credit facility.
At March 31, 2024, we had $90,000 of debt outstanding under our Peruvian revolving credit facilities. The Company may repay any borrowings under the revolving credit facility at any time without premium or penalty.
As at March 31, 2024, the Peru segment had nil in letters of credit issued under the Peru revolving credit facility to support its reclamation obligations and the Manitoba segment had $25,518 in letters of credit issued under the Canadian revolving credit facility to support its reclamation and pension obligations. As at March 31, 2024, we were in compliance with our covenants under the revolving credit facilities.
Surety bonds
The Arizona segment had $8,666 in surety bonds issued to support future reclamation and closure obligations. No cash collateral is required to be posted under these surety bonds.
The British Columbia segment had $45,509 in surety bonds issued to support future reclamation and closure obligations and $4,893 in surety bonds with BC Hydro in relation to the BC Hydro transmission system at the Copper Mountain Mine. No cash collateral is required to be posted under these surety bonds.
Other letters of credit
The Peru segment had $126,094 in letters of credit issued with various Peruvian financial institutions to support future reclamation and other operating matters. No cash collateral is required to be posted under these letters of credit.
Hudbay has a C$130.0 million bilateral letter of credit facility ("LC Facility") with a major Canadian financial institution. As at March 31, 2024, the Manitoba segment had $55,296 in letters of credit issued under the LC Facility to support its reclamation and pension obligations.
17.Deferred revenue
Peru Stream Agreement
20
HUDBAY MINERALS INC. Notes to Unaudited Condensed Consolidated Interim Financial Statements (in thousands of US dollars, except where otherwise noted) For the three months ended March 31, 2024 and 2023 |
For the three months ended March 31, 2024, the drawdown rates for the Peru stream agreement for gold and silver were $817 and $14.56 per ounce, respectively (year ended December 31, 2023 - $820 and $15.26 per ounce, respectively).
The following table summarizes changes in deferred revenue:
Balance, January 1, 2023 | $ | 469,538 | |
Amortization of deferred revenue | |||
Liability drawdown | (72,424 | ) | |
Variable consideration adjustments - prior periods | (4,885 | ) | |
Accretion on streaming arrangements | |||
Current year additions | 26,387 | ||
Variable consideration adjustments - prior periods | (96 | ) | |
Balance, December 31, 2023 | $ | 418,520 | |
Amortization of deferred revenue (note 6a) | |||
Liability drawdown | (27,020 | ) | |
Variable consideration adjustments - prior periods | 3,849 | ||
Accretion on streaming arrangements (note 6d) | |||
Current year-to-date additions | 6,000 | ||
Variable consideration adjustments - prior periods | 176 | ||
Balance, March 31, 2024 | $ | 401,525 |
Consideration from the Company's stream agreement is considered variable. Gold and silver stream revenue can be subject to cumulative adjustments when the number of ounces to be delivered under the contract changes. As a result of changes in the Company's mineral reserve and resource estimate in the first quarter of 2024, the amortization rate by which deferred revenue is drawn down into income was adjusted and, as required, a current period variable adjustment was made for all prior period stream revenues since the stream agreement inception date. This variable consideration adjustment resulted in a decrease in revenue of $3,849 and an increase of finance expense of $176 for the three months ended March 31, 2024 (December 31, 2023 - increase in revenue of $4,885 and a decrease of finance expense of $96).
Deferred revenue is reflected in the condensed consolidated interim balance sheets as follows:
Mar. 31, 2024 | Dec. 31, 2023 | |||||
Current | $ | 72,383 | $ | 87,672 | ||
Non-current | 329,142 | 330,848 | ||||
$ | 401,525 | $ | 418,520 |
21
HUDBAY MINERALS INC. Notes to Unaudited Condensed Consolidated Interim Financial Statements (in thousands of US dollars, except where otherwise noted) For the three months ended March 31, 2024 and 2023 |
18.Environmental and other provisions
Reflected in the condensed consolidated interim balance sheets as follows:
Mar. 31, 2024 |
Decommissioning, restoration and similar liabilities |
Deferred share units |
Restricted share units |
Performance share units | Other1 | Total | ||||||||||||
Current (note 12) | $ | 2,630 | $ | 11,364 | $ | 2,835 | $ | 1,438 | $ | 8,066 | $ | 26,333 | ||||||
Non-current | 298,407 | - | 1,569 | 1,366 | - | 301,342 | ||||||||||||
$ | 301,037 | $ | 11,364 | $ | 4,404 | $ | 2,804 | $ | 8,066 | $ | 327,675 | |||||||
Dec. 31, 2023 |
Decommissioning, restoration and similar liabilities |
Deferred share units |
Restricted share units |
Performance share units | Other 1 | Total | ||||||||||||
Current (note 12) | $ | 1,370 | $ | 8,660 | $ | 2,147 | $ | 727 | $ | 9,388 | $ | 22,292 | ||||||
Non-current | 313,971 | - | 2,941 | 1,853 | 3,147 | 321,912 | ||||||||||||
$ | 315,341 | $ | 8,660 | $ | 5,088 | $ | 2,580 | $ | 12,535 | $ | 344,204 |
1 Relates primarily to flow-through share premiums, restructuring costs and other non-capital provisions.
Decommissioning and restoration obligation ("DRO") are remeasured at each reporting date to reflect changes in discount rates, exchange rates, and timing and extent of cash outflows which can significantly affect the liabilities. This provision has been recorded based on estimates and assumptions that management believes are reasonable; however, actual decommissioning and restoration costs may differ from expectations.
During the first quarter of 2024, the Company recorded a non-cash gain of $5,269 in the condensed consolidated interim income statements mainly related to a revaluation adjustment to the Flin Flon operation's environmental reclamation provision. The current quarter was impacted by an increase in long term, risk-free discount rates based on changes in Canadian bond yields, slightly offset by an increase in inflation rates. Typically, an operating location will reflect any revaluation adjustments to the environmental reclamation provision against its reclamation assets. However, as the Flin Flon operations closed in June 2022, the corresponding Flin Flon assets have been fully depreciated and cannot be reduced below residual value resulting in the remaining impact being recorded as a gain in the condensed consolidated interim income statements.
As at March 31, 2024, decommissioning, restoration and similar liabilities have been discounted to their present value at rates ranging from 3.34% to 5.19% per annum (December 31, 2023 - 3.01% to 4.86%), using pre-tax, risk-free interest rates that reflect the estimated maturity of each specific liability.
During the first quarter of 2023, the Company recorded a non-cash gain of $8,240 in the condensed consolidated interim income statements mainly related to a revaluation adjustment to the Flin Flon operation's environmental reclamation provision.
22
HUDBAY MINERALS INC. Notes to Unaudited Condensed Consolidated Interim Financial Statements (in thousands of US dollars, except where otherwise noted) For the three months ended March 31, 2024 and 2023 |
19.Income and mining taxes
The tax expense is applicable as follows:
Three months ended March 31, | ||||||
2024 | 2023 | |||||
Current: | ||||||
Income tax expense | $ | 35,397 | $ | 10,765 | ||
Mining tax expense | 12,753 | 6,357 | ||||
Adjustments in respect of prior years | (112 | ) | - | |||
48,038 | 17,122 | |||||
Deferred: | ||||||
Income tax expense (recovery) - origination, revaluation and/or reversal of temporary differences | 3,254 | (3,722 | ) | |||
Mining tax recovery - origination, revaluation and/or reversal of temporary difference | (2,264 | ) | (1,999 | ) | ||
Adjustments in respect of prior years | 187 | 572 | ||||
1,177 | (5,149 | ) | ||||
$ | 49,215 | $ | 11,973 |
Adjustments in respect of prior years refers to amounts changing due to the filing of tax returns and assessments from government authorities as well as any change identified that would result in a difference to our current or deferred tax balances as reported in the prior fiscal year end.
23
HUDBAY MINERALS INC. Notes to Unaudited Condensed Consolidated Interim Financial Statements (in thousands of US dollars, except where otherwise noted) For the three months ended March 31, 2024 and 2023 |
20.Share capital
(a)Preference shares:
Authorized: Unlimited preference shares without par value.
Issued and fully paid: Nil.
(b)Common shares:
Authorized: Unlimited common shares without par value.
Issued and fully paid:
Three months ended March 31, 2024 |
Year ended Dec. 31, 2023 | |||||||||||
Common shares | Amount |
Common shares | Amount | |||||||||
Balance, beginning of year | 350,728,536 | $ | 2,240,233 | 262,019,857 | $ | 1,780,774 | ||||||
Exercise of options | 181,504 | 1,128 | 67,145 | 291 | ||||||||
Exercise of warrants | 88,088 | 480 | - | - | ||||||||
Shares issued on acquisition of Copper Mountain, net of share issuance costs | - | - | 84,165,617 | 436,499 | ||||||||
Shares issued on acquisition of Rockcliff | - | - | 2,675,324 | 12,503 | ||||||||
Flow through shares, net of share issuance costs | - | - | 1,960,000 | 10,166 | ||||||||
Cancelled shares | - | - | (159,407 | ) | - | |||||||
Balance, end of period | 350,998,128 | $ | 2,241,841 | 350,728,536 | $ | 2,240,233 |
During the three months ended March 31, 2024, the Company declared a dividend of C$0.01 per share. The Company paid $2,591 in dividends on March 22, 2024 to shareholders of record as of March 5, 2024.
During the year ended December 31, 2023, the Company declared two semi-annual dividends of C$0.01 per share. The Company paid $1,908 and $2,555 in dividends on March 24, 2023 and September 22, 2023 to shareholders of record as of March 7, 2023 and September 1, 2023.
During the year ended December 31, 2023, the Company completed a Canadian Development Expense and Canadian Exploration Expense flow-through financing. The Company issued 1,960,000 common shares for proceeds, net of transaction costs, of $14,424. The implied premium on the flow-through shares of $4,258 was recorded as a flow-through share liability. At March 31, 2024, the Company has incurred $1,880 in qualifying expenditures related to this flow-through financing. The flow-through share liability will be recognized in earnings as eligible expenditures are made.
24
HUDBAY MINERALS INC. Notes to Unaudited Condensed Consolidated Interim Financial Statements (in thousands of US dollars, except where otherwise noted) For the three months ended March 31, 2024 and 2023 |
(c)Equity-settled share-based compensation - stock options:
The Company's stock option plan was approved in June 2005 and amended in May 2008 (the "Plan"). Under the amended Plan, the Company may grant to employees, officers, directors or consultants of the Company or its affiliates options to purchase up to a maximum of 13 million common shares of Hudbay. The Company has determined that the appropriate accounting treatment is to classify the stock options as equity settled transactions.
The following table outlines the changes in the number of stock options outstanding:
Mar. 31, 2024 | Dec. 31, 2023 | |||||||||||
Number of shares subject to option |
Weighted- average exercise price C$ |
Number of shares subject to option |
Weighted average exercise price C$ | |||||||||
Balance, beginning of year | 2,182,970 | $ | 7.23 | 1,528,760 | $ | 7.38 | ||||||
Number of units granted | 902,874 | $ | 7.50 | 801,661 | $ | 6.75 | ||||||
Exercised | (181,504 | ) | $ | 4.76 | (67,145 | ) | $ | 3.79 | ||||
Forfeited | (36,024 | ) | $ | 7.92 | (80,306 | ) | $ | 8.33 | ||||
Expired | (12,087 | ) | $ | 10.24 | - | $ | - | |||||
Balance, end of period | 2,856,229 | $ | 7.45 | 2,182,970 | $ | 7.23 |
The following table presents the weighted average fair value assumptions used in the Black-Scholes valuation of these options:
For options granted during the period | Mar. 31, 2024 | Dec. 31, 2023 | ||||
Weighted average share price at grant date (CAD) | $ | 7.50 | $ | 6.75 | ||
Risk-free rate | 3.49% | 3.40% | ||||
Expected dividend yield | 0.3% | 0.3% | ||||
Expected stock price volatility (based on historical volatility) | 51.4% | 56.0% | ||||
Expected life of option (months) | 84 | 84 | ||||
Weighted average per share fair value of stock options granted (CAD) | $ | 4.11 | $ | 3.90 |
The following table outlines stock options outstanding and exercisable:
Mar. 31, 2024 | |||||||||||||||
Range of exercise prices C$ |
Number of options outstanding |
Weighted average remaining contractual life (years) |
Weighted average exercise price C$ |
Number of options exercisable |
Weighted average share price at exercise date C$ | ||||||||||
$3.76 - $5.90 | 445,854 | 2.9 | $ | 3.76 | 445,854 | $ | 3.76 | ||||||||
$5.91 - $6.75 | 722,206 | 5.9 | $ | 6.75 | 217,750 | $ | 6.75 | ||||||||
$6.76 - $8.76 | 905,748 | 6.9 | $ | 7.50 | - | $ | - | ||||||||
$8.77 - $10.17 | 448,036 | 4.9 | $ | 9.92 | 298,594 | $ | 9.92 | ||||||||
$10.18 - $10.42 | 334,385 | 3.9 | $ | 10.42 | 334,385 | $ | 10.42 |
25
HUDBAY MINERALS INC. Notes to Unaudited Condensed Consolidated Interim Financial Statements (in thousands of US dollars, except where otherwise noted) For the three months ended March 31, 2024 and 2023 |
Dec. 31, 2023 | |||||||||||||||
Range of exercise prices C$ |
Number of options outstanding |
Weighted average remaining contractual life (years) |
Weighted average exercise price C$ |
Number of options exercisable |
Weighted average share price at exercise date C$ | ||||||||||
$3.76 - $4.82 | 568,801 | 3.15 | $ | 3.76 | 568,801 | $ | 3.76 | ||||||||
$5.91 - $6.75 | 779,959 | 6.17 | $ | 6.75 | - | $ | - | ||||||||
$6.76 - $10.17 | 488,340 | 5.17 | $ | 9.76 | 174,989 | $ | 9.57 | ||||||||
$10.18 - $10.42 | 345,870 | 4.15 | $ | 10.42 | 230,514 | $ | 10.42 |
Hudbay estimates expected life of options and expected volatility based on historical data, which may differ from actual outcomes.
21.Earnings per share
Three months ended March 31, | ||||||
2024 | 2023 | |||||
Weighted average common shares outstanding | ||||||
Basic | 350,781,240 | 262,030,805 | ||||
Plus net incremental shares from: | ||||||
Assumed conversion: stock options | 167,472 | 294,124 | ||||
Assumed conversion: warrants | 21,636 | - | ||||
Diluted weighted average common shares outstanding | 350,970,348 | 262,324,929 |
26
HUDBAY MINERALS INC. Notes to Unaudited Condensed Consolidated Interim Financial Statements (in thousands of US dollars, except where otherwise noted) For the three months ended March 31, 2024 and 2023 |
22.Financial instruments
(a)Fair value and carrying value of financial instruments:
The following presents the fair value ("FV") and carrying value ("CV") of Hudbay's financial instruments and non-financial derivatives:
Mar. 31, 2024 | Dec. 31, 2023 | |||||||||||
FV | CV | FV | CV | |||||||||
Financial assets at amortized cost | ||||||||||||
Cash and cash equivalents1 | $ | 284,385 | $ | 284,385 | $ | 249,794 | $ | 249,794 | ||||
Guaranteed investment certificates1 | 1,331 | 1,331 | 1,359 | 1,359 | ||||||||
Restricted cash1 | 536 | 536 | 1,964 | 1,964 | ||||||||
Fair value through profit or loss | ||||||||||||
Trade and other receivables2,3 | 154,934 | 154,934 | 176,214 | 176,214 | ||||||||
Non-hedge derivative assets 4 | 520 | 520 | 1,416 | 1,416 | ||||||||
Investments 5 | 6,137 | 6,137 | 6,452 | 6,452 | ||||||||
Total financial assets | $ | 447,843 | $ | 447,843 | $ | 437,199 | $ | 437,199 | ||||
Financial liabilities at amortized cost | ||||||||||||
Trade and other payables1,2 | 222,202 | 222,202 | 219,304 | 219,304 | ||||||||
Deferred Rosemont acquisition consideration 8 | 9,855 | 9,855 | 9,713 | 9,713 | ||||||||
Agreements with communities 6 | 55,723 | 57,929 | 53,459 | 54,979 | ||||||||
Wheaton refund liability10 | 10,604 | 6,812 | 10,346 | 6,653 | ||||||||
Senior unsecured notes 7 | 1,174,692 | 1,191,220 | 1,176,312 | 1,190,586 | ||||||||
Senior secured revolving credit facilities11 | 87,367 | 87,367 | 96,950 | 96,950 | ||||||||
Fair value through profit or loss | ||||||||||||
Gold prepayment liability 9 | 37,945 | 37,945 | 55,901 | 55,901 | ||||||||
Non-hedge derivative liabilities 4 | 12,030 | 12,030 | 11,811 | 11,811 | ||||||||
Total financial liabilities | $ | 1,610,418 | $ | 1,625,360 | $ | 1,633,796 | $ | 1,645,897 |
1 Cash and cash equivalents, guaranteed investment certificates, restricted cash, trade and other payables are recorded at carrying value, which approximates fair value due to their short-term nature and generally negligible credit losses.
2 Excludes tax and other statutory amounts.
3 Trade and other receivables contain receivables including provisionally priced receivables classified as FVTPL and various other items at amortized cost. The fair value of provisionally priced receivables is determined using forward metals prices (level 2).
4 Derivatives are carried at their fair value, which is determined based on observable forward market commodity prices corresponding to the maturity of the contract (level 2),
5 All investments are carried at their fair value, which is determined using quoted market bid prices in active markets for listed shares.
6 These financial liabilities relate to agreements with communities near the Constancia project in Peru (note 13). Fair values have been determined using an applicable credit-risk adjusted discounted rate and foreign exchange rates (level 3).
7 Fair value of the senior unsecured notes (note 16a) has been determined using an applicable credit-risk adjusted discount rate (level 3).
8 Discounted value based on a risk adjusted discount rate.
9 The gold prepayment liability (note 14) is designated as fair value through profit or loss under the fair value option. Fair value is determined using observable gold forward prices corresponding to the delivery of gold ounces in the contract along with an estimate of credit-risk for similar instruments (level 3). Gains and losses related to the Company's own credit-risk have been recorded at fair value through other comprehensive income. The fair value adjustment recorded in other comprehensive income for the three months ended March 31, 2024 was a loss of $15 (year ended December 31, 2023 was a loss of $192).
10 Discounted value based on a market rate at inception of the applicable Wheaton contract for carrying value (note 13) and fair value using an applicable credit-risk adjusted discount rate (level 3).
11 Fair value of the senior secured revolving credit facility is valued using an applicable credit adjusted discount rate (level 3).
27
HUDBAY MINERALS INC. Notes to Unaudited Condensed Consolidated Interim Financial Statements (in thousands of US dollars, except where otherwise noted) For the three months ended March 31, 2024 and 2023 |
Fair value hierarchy
The table below provides an analysis by valuation method of financial instruments that are measured at fair value subsequent to recognition as well as financial instruments not measured at fair value but for which a fair value is disclosed. Levels 1 to 3 are defined based on the degree to which fair value inputs are observable and have a significant effect on the recorded fair value, as follows:
-Level 1: Quoted prices in active markets for identical assets or liabilities;
-Level 2: Valuation techniques use significant observable inputs, either directly or indirectly, or valuations are based on quoted prices for similar instruments; and,
-Level 3: Valuation techniques use significant inputs that are not based on observable market data.
March 31, 2024 | Level 1 | Level 2 | Level 3 | Total | ||||||||
Financial assets at FVTPL: | ||||||||||||
Non-hedge derivatives | $ | - | $ | 520 | $ | - | $ | 520 | ||||
Investments | 6,137 | - | - | 6,137 | ||||||||
$ | 6,137 | $ | 520 | $ | - | $ | 6,657 | |||||
Financial liabilities at FVTPL: | ||||||||||||
Non-hedge derivatives | $ | - | $ | 12,030 | $ | - | $ | 12,030 | ||||
Gold prepayment liability | - | 37,945 | - | 37,945 | ||||||||
Financial liabilities at amortized cost: | ||||||||||||
Agreements with communities | - | - | 55,723 | 55,723 | ||||||||
Wheaton refund liability | - | - | 10,604 | 10,604 | ||||||||
Senior secured revolving credit facilities | - | - | 87,367 | 87,367 | ||||||||
Senior unsecured notes | 1,174,692 | - | - | 1,174,692 | ||||||||
$ | 1,174,692 | $ | 49,975 | $ | 153,694 | $ | 1,378,361 |
December 31, 2023 | Level 1 | Level 2 | Level 3 | Total | ||||||||
Financial assets at FVTPL: | ||||||||||||
Non-hedge derivatives | $ | - | $ | 1,416 | $ | - | $ | 1,416 | ||||
Investments | 6,452 | - | - | 6,452 | ||||||||
$ | 6,452 | $ | 1,416 | $ | - | $ | 7,868 | |||||
Financial liabilities at FVTPL: | ||||||||||||
Non-hedge derivatives | $ | - | $ | 11,811 | $ | - | $ | 11,811 | ||||
Gold prepayment liability | - | 55,901 | - | 55,901 | ||||||||
Financial liabilities at amortized cost: | ||||||||||||
Agreements with communities | - | - | 53,459 | 53,459 | ||||||||
Wheaton refund liability | - | - | 10,346 | 10,346 | ||||||||
Senior secured revolving credit facilities | - | - | 96,950 | 96,950 | ||||||||
Senior unsecured notes | 1,176,312 | - | - | 1,176,312 | ||||||||
$ | 1,176,312 | $ | 67,712 | $ | 160,755 | $ | 1,404,779 |
The Company's policy is to recognize transfers into and transfers out of fair value hierarchy levels as of the date of the event or change in circumstances that caused the transfer. During the three months ended March 31, 2024 and year ended December 31, 2023, Hudbay did not make any such transfers.
28
HUDBAY MINERALS INC. Notes to Unaudited Condensed Consolidated Interim Financial Statements (in thousands of US dollars, except where otherwise noted) For the three months ended March 31, 2024 and 2023 |
Valuation techniques used for instruments categorized in Levels 2 and 3 are consistent with the year ended December 31, 2023.
(b)Derivatives and hedging:
Copper fixed for floating swaps
Hudbay enters into copper fixed for floating swaps in order to manage the risk associated with provisional pricing terms in copper concentrate sales agreements. As at March 31, 2024, Hudbay had 83.6 million pounds of net copper swaps outstanding at an effective average price of $3.91/lb and settling from April to July 2024. As at December 31, 2023, Hudbay had 90.6 million pounds of net copper swaps outstanding at an effective average price of $3.74/lb and settling from January to May 2024. The aggregate fair value of the transactions at March 31, 2024 was a liability of $8,607 (December 31, 2023 - a liability position of $9,515).
Zinc fixed for floating swaps
Hudbay enters into zinc fixed for floating swaps in order to manage the risk associated with provisional pricing terms in zinc concentrate sales agreements. As at March 31, 2024, Hudbay had 9.2 million pounds of net zinc swaps outstanding at an effective average price of $1.14/lb and settling in May 2024. As at December 31, 2023, Hudbay had 13.9 million pounds of net zinc swaps outstanding at an effective average price of $1.14/lb and settling from January to March 2024. The aggregate fair value of the transactions at March 31, 2024 was an asset of $423 (December 31, 2023 - a liability position of $945).
Copper forward sales
As at March 31, 2024, Hudbay had 15.9 million pounds of copper forwards outstanding at an effective average price of $3.95/lb and settling from May 2024 to April 2025. As of December 31, 2023, Hudbay had 7.9 million pounds of copper forwards outstanding at an effective average price of $3.93/lb and settling from May 2024 to April 2025. The aggregate fair value of the transactions at March 31, 2024 was a liability of $1,752 (December 31, 2023 - an asset position of $65).
Copper costless collars
At at March 31, 2024, Hudbay had 19.8 million pounds of copper collars outstanding settling from May 2024 to April 2025 at an average floor price of $3.88/lb and an average cap price of $4.14/lb. As at December 31, 2023, Hudbay had 13.2 million pounds of copper collars outstanding settling from May 2024 to April 2025 at an average floor price of $3.83/lb and an average cap price of $4.03/lb. The aggregate fair value of the position at March 31, 2024 was a liability of $1,122 (December 31, 2023 - nil).
Gold costless collars
During the first quarter of 2024, Hudbay entered into zero-cost collar program for 4,000 ounces of gold production per month over the period of April 2024 to December 2024 at an average floor price of $2,088/oz and an average cap price of $2,458/oz. As at March 31, 2024, 36,000 ounces of gold collars were unsettled (December 31, 2023 - nil). The aggregate fair value of the position at March 31, 2024 was a liability of $452 (December 31, 2023 - nil).
29
HUDBAY MINERALS INC. Notes to Unaudited Condensed Consolidated Interim Financial Statements (in thousands of US dollars, except where otherwise noted) For the three months ended March 31, 2024 and 2023 |
(c)Provisionally priced receivables
Changes in fair value of provisionally priced receivables
Hudbay records changes in fair value of provisionally priced receivables related to provisional pricing in concentrate purchase, concentrate sale and certain other sale contracts. Under the terms of these contracts, prices are subject to final adjustment at the end of a future period after title transfers based on quoted market prices during the quotation period specified in the contract. The period between provisional pricing and final pricing is typically up to three months.
Changes in fair value of provisionally priced receivables are presented in trade and other receivables when they relate to sales contracts and in trade and other payables when they relate to purchase contracts. At each reporting date, provisionally priced metals are marked-to-market based on the forward market price for the quotation period stipulated in the contract, with changes in fair value recognized in revenue for sales contracts and in inventory or cost of sales for purchase concentrate contracts. Cash flows related to changes in fair value of provisionally priced receivables are classified in operating activities.
As at March 31, 2024 and December 31, 2023, Hudbay's net position consisted of contracts awaiting final pricing are as indicated below:
Metal in concentrate | Sales awaiting final pricing | Average YTD price ($/unit) | |||||||||||
Unit | Mar. 31, 2024 | Dec. 31, 2023 | Mar. 31, 2024 | Dec. 31, 2023 | |||||||||
Copper | pounds (in thousands) | 94,483 | 111,069 | 4.01 | 3.87 | ||||||||
Gold | troy ounces | 45,707 | 50,563 | 2,224 | 2,072 | ||||||||
Silver | troy ounces | 176,157 | 205,579 | 24.89 | 23.94 | ||||||||
Zinc | pounds (in thousands) | 5,711 | 16,416 | 1.09 | 1.20 | ||||||||
The aggregate fair value of provisionally priced receivables within the copper and zinc concentrate at March 31, 2024, was an asset position of $25,159(December 31, 2023 - an asset position of $22,635).
(d)Other financial liabilities
Gold prepayment liability
The gold prepayment liability (note 14) requires settlement by physical delivery of gold ounces or equivalent gold credits. The fair value of the financial liability at March 31, 2024 was $37,945 (December 31, 2023 - a liability of $55,901).
23.Commitments
Capital commitments
As at March 31, 2024, Hudbay had outstanding capital commitments in Manitoba of approximately $11,422 of which $7,500 can be terminated, approximately $9,863 in British Columbia, all of which can be terminated, approximately $66,469 in Peru, all of which can be terminated, and approximately $34,718 in Arizona, primarily related to the Copper World Complex, of which none can be terminated.
30
HUDBAY MINERALS INC. Notes to Unaudited Condensed Consolidated Interim Financial Statements (in thousands of US dollars, except where otherwise noted) For the three months ended March 31, 2024 and 2023 |
24.Supplementary cash flow information
(a)Other operating activities:
Three months ended March 31, | ||||||
2024 | 2023 | |||||
Share-based compensation paid | $ | (2,524 | ) | $ | (5,817 | ) |
Write-down/loss on disposal of PP&E | 9,045 | 69 | ||||
Restructuring paid | (207 | ) | (575 | ) | ||
Other | 5 | (147 | ) | |||
$ | 6,319 | $ | (6,470 | ) |
(b)Change in non-cash working capital:
Three months ended March 31, | ||||||
2024 | 2023 | |||||
Change in: | ||||||
Trade and other receivables | $ | 3,928 | $ | 9,780 | ||
Other financial assets/liabilities | (242 | ) | (10,531 | ) | ||
Inventories | 5,668 | (19,290 | ) | |||
Prepaid expenses | (7,979 | ) | 766 | |||
Trade and other payables | (13,254 | ) | (18,934 | ) | ||
Provisions and other liabilities | 4,016 | 23,880 | ||||
$ | (7,863 | ) | $ | (14,329 | ) |
(c)Non-cash transactions:
During the three months ended March 31, 2024 and 2023, Hudbay entered into the following non-cash investing and financing activities which are not reflected in the condensed consolidated interim statements of cash flows:
-Remeasurement of Hudbay's decommissioning and restoration liabilities led to a net decrease in related property, plant and equipment assets of $5,932 (March 31, 2023 - a net increase of $6,112), mainly related to changes to real discount rates associated with remeasurement of the liabilities.
-Property, plant and equipment included $7,849 (March 31, 2023 - $560) of capital additions related to the recognition of ROU assets and $7,341 (March 31, 2023 - nil) of capital additions related to the recognition of property, plant and equipment that has been financed. Property, plant and equipment and other assets include $1,845 of capital additions related to agreements with communities (March 31, 2023 - nil).
31
HUDBAY MINERALS INC. Notes to Unaudited Condensed Consolidated Interim Financial Statements (in thousands of US dollars, except where otherwise noted) For the three months ended March 31, 2024 and 2023 |
25.Segmented information
Hudbay has the following reportable segments identified by the individual mining operations of Manitoba, British Columbia, Peru, as well as Arizona which holds our Copper World project. Corporate and other activities are not considered an operating segment and are included as a reconciliation to total consolidated results. No results for the British Columbia segment are reflected in the prior period comparative figures as Copper Mountain acquisition closed on June 20, 2023. Corporate and other activities include the Company's exploration activities in Chile, Canada and the State of Nevada. These exploration entities are not individually significant, as they do not meet the minimum quantitative thresholds for standalone segment disclosure.
Three months ended March 31, 2024 | ||||||||||||||||||
Peru | Manitoba |
British Columbia | Arizona |
Corporate and other activities | Total | |||||||||||||
Revenue from external customers | $ | 287,906 | $ | 169,236 | $ | 67,847 | $ | - | $ | - | $ | 524,989 | ||||||
Cost of sales | ||||||||||||||||||
Mine operating costs | 128,827 | 78,023 | 56,912 | - | - | 263,762 | ||||||||||||
Depreciation and amortization | 71,030 | 26,594 | 11,649 | - | - | 109,273 | ||||||||||||
Gross profit (loss) | 88,049 | 64,619 | (714 | ) | - | - | 151,954 | |||||||||||
Selling and administrative expenses | - | - | - | - | 16,607 | 16,607 | ||||||||||||
Exploration expenses | 2,192 | 8,456 | 353 | - | 1,592 | 12,593 | ||||||||||||
Other expenses | 3,206 | 3,205 | 1,142 | 8,246 | 461 | 16,260 | ||||||||||||
Re-evaluation adjustment - environmental provision | - | (5,269 | ) | - | - | - | (5,269 | ) | ||||||||||
Results from operating activities | $ | 82,651 | $ | 58,227 | $ | (2,209 | ) | $ | (8,246 | ) | $ | (18,660 | ) | $ | 111,763 | |||
Net interest expense on long term debt | 19,208 | |||||||||||||||||
Accretion on streaming arrangements | 6,176 | |||||||||||||||||
Change in fair value of financial instruments | 6,954 | |||||||||||||||||
Other net finance costs | 11,675 | |||||||||||||||||
Earnings before tax | 67,750 | |||||||||||||||||
Tax expense | 49,215 | |||||||||||||||||
Net earnings for the period | $ | 18,535 |
32
HUDBAY MINERALS INC. Notes to Unaudited Condensed Consolidated Interim Financial Statements (in thousands of US dollars, except where otherwise noted) For the three months ended March 31, 2024 and 2023 |
Three months ended March 31, 2023 | |||||||||||||||
Peru | Manitoba | Arizona |
Corporate and other activities | Total | |||||||||||
Revenue from external customers | $ | 186,802 | $ | 108,417 | $ | - | $ | - | $ | 295,219 | |||||
Cost of sales | |||||||||||||||
Mine operating costs | 91,386 | 69,898 | - | - | 161,284 | ||||||||||
Depreciation and amortization | 41,960 | 25,462 | - | - | 67,422 | ||||||||||
Gross profit | 53,456 | 13,057 | - | - | 66,513 | ||||||||||
Selling and administrative expenses | - | - | - | 9,146 | 9,146 | ||||||||||
Exploration expenses | 3,509 | 4,578 | - | 155 | 8,242 | ||||||||||
Other expenses | 1,221 | 3,549 | 175 | 14 | 4,959 | ||||||||||
Re-evaluation adjustment - environmental provision | - | (8,240 | ) | - | - | (8,240 | ) | ||||||||
Results from operating activities | $ | 48,726 | $ | 13,170 | $ | (175 | ) | $ | (9,315 | ) | $ | 52,406 | |||
Net interest expense on long term debt | 17,007 | ||||||||||||||
Accretion on streaming arrangements | 6,501 | ||||||||||||||
Change in fair value of financial instruments | 5,597 | ||||||||||||||
Other net finance costs | 5,871 | ||||||||||||||
Earnings before tax | 17,430 | ||||||||||||||
Tax expense | 11,973 | ||||||||||||||
Net earnings for the period | $ | 5,457 |
March 31, 2024 | ||||||||||||||||||
Peru | Manitoba |
British Columbia | Arizona |
Corporate and other activities | Total | |||||||||||||
Total assets | $ | 2,396,322 | $ | 624,115 | $ | 1,002,857 | $ | 729,746 | $ | 478,243 | $ | 5,231,283 | ||||||
Total liabilities | 1,026,040 | 407,358 | 269,313 | 21,461 | 1,296,078 | 3,020,250 | ||||||||||||
Property, plant and equipment1 | 1,971,190 | 662,663 | 834,387 | 721,235 | 42,061 | 4,231,536 |
1 Included in Corporate and other activities are $27.6 million of property, plant and equipment that is located in Nevada.
December 31, 2023 | ||||||||||||||||||
Peru | Manitoba2 |
British Columbia2 | Arizona |
Corporate and other activities2 | Total | |||||||||||||
Total assets | $ | 2,406,260 | $ | 673,437 | $ | 1,018,602 | $ | 736,680 | $ | 477,655 | $ | 5,312,634 | ||||||
Total liabilities | 1,086,229 | 413,355 | 274,510 | 23,446 | 1,308,255 | 3,105,795 | ||||||||||||
Property, plant and equipment1 | 2,001,716 | 693,972 | 850,477 | 727,903 | 41,938 | 4,316,006 |
1 Included in Corporate and other activities are $27.6 million of property, plant and equipment that is located in Nevada.
2 On January 1, 2024, the Company amalgamated with Copper Mountain Mining Inc., Hudbay British Columbia Inc. and Rockcliff Metals Corp. and continued carrying on business as Hudbay Minerals Inc. Following the amalgamation Copper Mountain Mining Inc. and Hudbay British Columbia Inc, which do not contain operating assets and have liabilities primarily related to head office finance leases, have moved from British Columbia to Corporate and other activities. Rockcliff Metals Corp. has move from Corporate and other activities to the Manitoba segment
33
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HudBay Minerals Inc. published this content on 14 May 2024 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 14 May 2024 21:08:25 UTC.