Hudbay Delivers Strong Second Quarter 2025 Results
Associated Press19 hours ago
TORONTO, Aug. 13, 2025 (GLOBE NEWSWIRE) -- Hudbay Minerals Inc. ('Hudbay' or the 'Company') (TSX, NYSE: HBM) today released its second quarter 2025 financial results. All amounts are in U.S. dollars, unless otherwise noted.
'We delivered another quarter of significant free cash flow generation driven by continued industry-leading cost margins and diversified exposure to copper and gold,' said Peter Kukielski, President and Chief Executive Officer. 'Our strong financial performance enabled us to further reduce long-term debt, invest in our many high-return growth projects and further strengthen our balance sheet to its best position in over a decade. With the strong performance in the first half of the year, we are reaffirming our full year consolidated production guidance and are favourably tracking well below our full year consolidated cost guidance for 2025. The announcement of our Copper World joint venture agreement with Mitsubishi further solidifies our financial strength and significantly reduces our funding requirement for project development. We are delighted to have secured the premier joint venture partner and look forward to establishing a long-term strategic partnership that will unlock significant value in our copper growth pipeline. Through a highly accretive joint venture, an agreement to enhance the Copper World precious metals stream terms, and the achievement of our financial targets, we have successfully realized the key elements of our prudent financial plan and significantly de-risked the Copper World project as we advance towards a sanction decision in 2026.'
Delivered Strong Second Quarter Financial Results; Production Reaffirmed and Cost Guidance Improved
Continued Free Cash Flow Generation Driving Further Debt Reduction and Balance Sheet Resilience
Prudently Advancing Copper World with Accretive Minority Joint Venture Transaction, Enhanced Stream Transaction and Successful Achievement of '3-P' Plan
Reinvesting in High-return Growth Initiatives to Further Enhance Copper and Gold Exposure
Summary of Second Quarter Results
Steady production continued into the second quarter of 2025 with consolidated copper production of 29,956 tonnes and consolidated gold production of 56,271 ounces. Consolidated copper and gold production was lower than the first quarter of 2025 primarily due to the impacts of a temporary suspension of operations in Manitoba as a result of mandatory wildfire evacuation orders. Consolidated silver production of 814,989 ounces and zinc production of 5,130 tonnes in the second quarter of 2025 were also lower than the first quarter of 2025 for the aforementioned reason.
Cash generated from operating activities of $259.9 million increased compared to the first quarter of 2025 as a result of higher gross margins driven by stable copper production, higher realized prices and positive working capital management with reductions in finished goods inventories and receivable balances. Operating cash flow before change in non-cash working capital was $193.9 million during the second quarter of 2025, reflecting an increase of $30.4 million compared to the first quarter of 2025. The increase compared to the first quarter of 2025 was primarily the result of lower cash taxes paid offset by lower gold and copper sales volume in Manitoba. Second quarter adjusted EBITDAi was $245.2 million, a 15% decrease compared to $287.2 million in the first quarter of 2025 due to lower sales volume partially offset by higher gold prices.
Net earnings attributable to owners in the second quarter of 2025 was $117.7 million, or $0.30 per share, compared to $100.4 million, or $0.25 per share, in the first quarter of 2025. The increase in earnings is the result of high gross margins from strong revenue growth on the back of stable copper production and higher realized gold prices. In addition, the quarter benefited from various non-cash charges for revaluation gain of closed sites reclamation provisions, and significantly reduced net finance expenses, among other items, more than offsetting the high mining and income tax expense experienced in the current quarter.
Adjusted net earnings attributable to ownersi and adjusted net earnings per share attributable to ownersi in the second quarter of 2025 were $75.5 million and $0.19 per share, respectively, after adjusting for various non-cash items on a pre-tax basis such as a non-cash $18.9 million foreign exchange gain, a non-cash gain of $13.8 million related to quarterly revaluation of Hudbay's closed site environmental reclamation provision, a $6.3 million mark-to-market revaluation gain on various instruments such as investments and share-based compensation, and a $1.2 million gain related to flow-through share expenditures, among other items. This compares to adjusted net earnings attributable to ownersi and net earnings per share attributable to ownersi of $93.8 million and $0.24 per share in the first quarter of 2025.
In the second quarter of 2025, consolidated cash costi per pound of copper produced, net of by-product credits, was $(0.02), compared to $(0.45) in the first quarter of 2025 as the Company continued to demonstrate industry-leading cost performance. The change from the first quarter was a result of lower by-product credits and lower production levels in Manitoba during the second quarter. Consolidated sustaining cash costi per pound of copper produced, net of by-product credits, was $1.65 in the second quarter of 2025, compared to $0.72 in the first quarter of 2025. The increase was driven by planned higher sustaining capital expenditures and the aforementioned variance in cash cost. Consolidated all-in sustaining cash costi per pound of copper produced, net of by-product credits, was $2.03 in the second quarter of 2025, higher than $0.97 in the first quarter of 2025 mainly due to the same reasons outlined above as well as higher corporate G&A from the revaluation of the Company's stock based compensation due to relative higher share prices.
As at June 30, 2025, total liquidity was $1,050.2 million, including $625.5 million in cash and cash equivalents, and undrawn availability of $424.7 million under Hudbay's revolving credit facilities. Net debti at the end of the second quarter was $434.1 million, marking a $92.0 million improvement from the first quarter of 2025 as a result of deleveraging activities.
Peru Operations Review
The Peru operations continued to demonstrate steady operating performance with production and costs in line with expectations. During the second quarter of 2025, the Peru operations produced 21,710 tonnes of copper, 7,366 ounces of gold, 551,979 ounces of silver and 375 tonnes of molybdenum. Copper production increased in the second quarter of 2025 compared to the first quarter of 2025 as milled copper grades exceeded first quarter levels, partially offset by planned lower mill throughput due to a scheduled mill maintenance shutdown in the second quarter. Production of all other metals were relatively in line with the first quarter of 2025.
The last major stripping program at Pampacancha was completed in the second quarter of 2025, which included higher amounts of waste stripping than planned. As a result, the Company replaced higher grade Pampacancha ore with higher grade Constancia ore in the second quarter and the Pampacancha deposit is now expected to be depleted in the first quarter of 2026 rather than in late 2025. Protests that started early in the third quarter temporarily impacted the transportation of supplies and concentrate to and from the Constancia site and has affected mine sequencing. The Constancia mill has continued to operate during this period, and the road blockades along the concentrate transportation route have since reopened, allowing Hudbay to reduce site concentrate inventory levels and replenish supplies. Despite short-term mine plan changes, the Company remains on track to achieve its 2025 production guidance for all metals in Peru.
Total ore mined in Peru in the second quarter of 2025 was lower than the first quarter of 2025 but remained in line with mine plan expectations.
Mill throughput levels averaged approximately 83,100 tonnes per day in the second quarter of 2025, lower than the first quarter of 2025 due to the planned semi-annual mill maintenance shutdown during the current quarter. Milled copper grades increased by 13% relative to the first quarter of 2025 due to higher grades in the Constancia pit. Milled gold grades in the second quarter remained consistent with gold grades in the first quarter of 2025 as Pampacancha stripping activities were underway in both quarters. The mill achieved copper recoveries of 85% in the second quarter of 2025, remaining consistent with the first quarter of 2025. Recoveries of gold and silver during the quarter were in line with Hudbay's metallurgical models for the ore that was being processed.
Combined mine, mill and G&A unit operating costi in the second quarter of 2025 was $13.59 per tonne, 23% higher than the first quarter, as expected, due to higher plant maintenance costs and lower tonnes processed associated with the planned semi-annual mill maintenance shutdown.
Cash costi per pound of copper produced, net of by-product credits, in the second quarter of 2025 was $1.45, an increase of 31% compared to the first quarter of 2025 due to planned higher maintenance costs and lower by-product credits, partially offset by lower treatment and refining charges and higher copper production. Sustaining cash costi per pound of copper produced, net of by-product credits, was $2.63 in the second quarter of 2025, an increase compared to the first quarter of 2025 due to planned higher sustaining capital typically associated with the period after the rainy season is complete, as well as the same factors affecting cash costs. Hudbay is reaffirming its full year 2025 cash cost guidance range in Peru.
Manitoba Operations Review
Despite significant disruptions from the mandatory wildfire evacuation orders in May and June of this year, the Manitoba operations showed remarkable resilience and achieved several key milestones in the second quarter of 2025. Notably, the New Britannia mill achieved record monthly production in April, the 1901 mining area delivered its first ore for processing in June, and Hudbay signed an exploration agreement with Mosakahiken Cree Nation to explore the Talbot deposit.
The Manitoba operations delivered strong results in the second quarter of 2025, producing 43,235 ounces of gold, 1,612 tonnes of copper, 5,130 tonnes of zinc and 197,970 ounces of silver. Compared to the first quarter of 2025, production of gold, copper, silver and zinc in the second quarter of 2025 decreased by 28%, 54%, 31% and 18%, respectively, due to lower production in June associated with the wildfire evacuation shutdown, in addition to the first quarter of 2025 having significantly better than expected gold grades.
Hudbay's dedicated on-site team demonstrated tremendous effort and unwavering commitment during the unprecedented wildfire situation near the Company's Flin Flon and Snow Lake operations during the second quarter. The team tirelessly safeguarded Hudbay's assets and collaborated closely with local communities and provincial authorities, providing essential support to emergency response efforts. These efforts resulted in no damage to Hudbay's infrastructure and facilities.
The Lalor mine managed through a period of reduced workforce prior to and after the 13-day temporary suspension of operations in June due to mandatory wildfire evacuation orders. Despite these challenges, the mine averaged 3,300 tonnes per day in the second quarter, strategically prioritizing mining from gold zones to ensure a consistent feed for the New Britannia mill. Gold grades were in line with mine plan expectations, while being lower than the exceptional gold grade mined in the first quarter of 2025. Copper, zinc and silver grades were also consistent with mine plan expectations for the quarter. Continuous improvement efforts at Lalor focused on ore quality and advancing stope modifications to enhance mucking productivity. Capital development continued, aiming to secure high-grade copper-gold mineralization from Zone 27 and prepare Zone 17 for the next copper-gold mining front.
The New Britannia mill achieved record monthly production levels in April, exceeding 2,300 tonnes per day. This significant milestone is a testament to ongoing low-capital projects and recent piping improvements that boosted throughput and maintained gold recoveries. The New Britannia mill throughput averaged approximately 1,800 tonnes per day in the second quarter of 2025, reflecting the record levels achieved in April, offset by lower throughput levels in June associated with the wildfire evacuation shutdown. Gold recovery in the second quarter of 2025 was 89%, remaining relatively consistent with the first quarter of 2025.
In the second quarter, the Stall mill continued to process less ore compared to prior periods, which is aligned with Hudbay's strategy of allocating more Lalor ore feed to New Britannia to maximize gold recoveries. The Stall mill achieved gold recoveries of 68% in the second quarter of 2025, reflecting benefits from recent recovery improvement programs.
The Manitoba operations continued to drive operating efficiencies despite temporary disruptions from wildfire evacuations orders in June. Combined mine, mill and G&A unit operating costsi in the second quarter were C$241 per tonne, higher than the comparative period primarily due to lower total throughput in June, partially offset by continued strong cost performance at New Britannia. Mining costs were higher than in the first quarter of 2025 as a result of the wildfires in June; milling costs were higher as a result of higher unit costs at Stall associated with lower throughput as mentioned above, offset by strong unit cost performance at New Britannia.
Cash costi per ounce of gold produced, net of by-product credits, in the second quarter of 2025 was $710, an increase from the first quarter of 2025 primarily due to lower gold production and lower by-product credits as per the production variances mentioned above. Sustaining cash costi per ounce of gold produced, net of by-product credits, in the second quarter of 2025 was $1,025, an increase compared to the first quarter of 2025, primarily due to the same factors affecting cash cost, partially offset by lower sustaining capital costs during the quarter. With the first half of the year outperforming the low end of the cash cost guidance range, Hudbay is well positioned to achieve the 2025 cash cost guidance range in Manitoba.
On July 10, 2025, a second mandatory wildfire evacuation order was issued for the town of Snow Lake and a controlled, safe and orderly temporary suspension of the Snow Lake operations was implemented. Essential personnel, authorized by emergency services, have remained onsite when safe to do so in order to continue supporting fire mitigation activities and safeguarding Hudbay's assets. To-date, there has been no structural damage to Hudbay's onsite surface infrastructure and facilities. As of August 12, 2025, the wildfire situation near Snow Lake has improved and Hudbay anticipates returning to normal operations later in August. The Company continues to expect to achieve its 2025 annual guidance metrics for all metals in Manitoba, despite the impact from the wildfires.
British Columbia Operations Review
Hudbay continues its focus on advancing optimization plans at the Copper Mountain mine, including ramping up mining activities to optimize the mine ore feed to the plant and implementing site improvement initiatives that mirror Hudbay's successful processes at Constancia. These optimization initiatives have successfully increased the total tonnes moved and improved mill reliability.
The British Columbia operations produced 6,634 tonnes of copper, 5,670 ounces of gold and 65,040 ounces of silver during the second quarter of 2025. Production of copper and silver decreased compared to the first quarter of 2025 primarily as a result of lower head grades from the use of stockpiled ore. Production of gold was higher than the first quarter of 2025, largely due to higher recoveries. Hudbay remains on track to achieve its 2025 production guidance for all metals in British Columbia and continues to expect higher production in the second half of the year as the mill improvement projects take effect.
Mining activities are focused on continuing to execute the three-year accelerated stripping program intended to bring higher grade ore into the mine plan. During the first half of 2025, Hudbay made significant progress on the key mill improvement project to ultimately increase the nominal plant capacity to its permitted level of 50,000 tonnes per day. The project entails the conversion of the third ball mill to a second SAG mill, and the initial phase of this project was successfully completed shortly following the end of the second quarter on time and on budget with the achievement of first ore production on July 10. The final phase of the project involves converting an interim feed arrangement to a permanent configuration and remains on target for completion in the second half of 2025.
Total ore mined at Copper Mountain in the second quarter of 2025 was 2.5 million tonnes, a 5% decrease compared to the first quarter of 2025 due to unplanned production loading fleet activities, despite an increase in total material moved in the quarter as a result of effective usage of the mining fleet to execute the accelerated stripping program to access higher grade phases in the pit. Planned ore stockpiles were utilized as ore feed to the mill while the mine operation team continued to increase waste stripping activities to expose additional ore mining fronts. The continued focus in the second quarter of 2025 was on mining efficiencies, including a significant improvement with blasted muck inventories and operator recruitment to effectively utilize the available haul truck fleet. As a result, total material moved is expected to increase quarter-over-quarter in 2025 as per the mine plan.
The mill processed 2.9 million tonnes of ore during the second quarter of 2025, higher than the first quarter of 2025, but was limited by both planned and unplanned maintenance, elevated clay material which impacted the secondary crushing circuit, and the planned lowering of the main crushed live ore pile feeding the mill due to area constraints related to the completion of the ball mill to SAG conversion project. Several mill initiatives were implemented in 2025, including recovery improvements, crushing circuit chute modifications, installation of advanced semi-autogenous grinding control instrumentation, and redesigned SAG liner package. Progressive mill improvements and updated operational procedures are expected to continue through 2025.
Milled copper grades during the second quarter of 2025 were lower than the first quarter due to higher amounts of ore processed from stockpile in the second quarter, as mentioned above, as well as the mining of a high-grade mining sequence during the first quarter of 2025. Copper recoveries were 81% in the second quarter of 2025, an increase from 78% in the first quarter of 2025 despite lower copper head grades. Gold recoveries of 68% in the second quarter of 2025 were higher than the first quarter of 2025, despite slightly lower gold head grades.
Combined mine, mill and G&A unit operating costsi in the second quarter of 2025 were C$24.51 per tonne milled, lower than the first quarter of 2025 due to lower milling and G&A costs and higher ore milled, partially offset by higher mining costs.
Cash costi and sustaining cash costi per pound of copper produced, net of by-product credits, in the second quarter of 2025 were $2.39 and $5.18, respectively. Cash costs were 2% lower than in the first quarter of 2025, largely due to higher by-product credits. Sustaining cash costs were 22% higher than the first quarter of 2025 due to higher sustaining capital including higher capitalized stripping costs. With cash costsi in the first half of the year at the low-end of the 2025 guidance range, Hudbay is well positioned to achieve the full year 2025 cash cost guidance range in British Columbia.
Continued Free Cash Flow Generation from Strong Copper and Gold Exposure
Hudbay has delivered eight consecutive quarters of meaningful free cash flowi generation as a result of steady operating performance, expanding margins from strong copper and gold exposure and a focus on cost control across the business:
Significant Debt Reduction
As a result of the continued free cash flowi generation and prudent balance sheet management, Hudbay was able to repurchase and retire $50.0 million of senior unsecured notes at a discount to par, during the second quarter of 2025. This has contributed to approximately $295 million in total debt repayments and gold prepayment liability reductions since the beginning of 2024:
These deleveraging achievements have reduced total principal debt to $1.07 billion as of June 30, 2025, which together with Hudbay's increased cash balance, has substantially reduced net debti to $434.1 million, compared to $631.8 million as of June 30, 2024. Incorporating higher levels of adjusted EBITDAi over the last twelve months, Hudbay's net debt to adjusted EBITDA ratioi has significantly improved to 0.4x.
Secured Premier Long-term Strategic Partner in Copper World JV Transaction
The joint venture will be structured as a new limited liability corporation, Copper World LLC. Under the JV Transaction, the initial contribution of $600 million for a 30% equity interest in Copper World LLC, will consist of $420 million upon closing and a $180 million matching contribution payable no later than 18 months following closing. Hudbay will retain 100% of its existing U.S. federal net operating losses of approximately $275 million and Arizona state losses of $210 million.
Hudbay welcomes a premier, long-term, strategic partner with deep technical expertise and a proven trading platform which Mitsubishi has established throughout its demonstrated history of industry partnerships. Mitsubishi's impressive track record in co-developing and operating some of the world's largest and highest quality copper projects will complement Hudbay's proven track record as a successful mine builder and operator.
Mitsubishi will be contributing 30% of the ongoing costs beginning August 31, 2025 and will participate in the funding of the DFS as well as the final project design, project financing, and project construction for Copper World.
The JV Transaction is expected to close in late 2025 or early 2026 and is conditioned upon receipt of certain regulatory approvals and the satisfaction of other customary closing conditions.
Enhanced Wheaton Precious Metals Stream
Hudbay is also pleased to announce that it has concurrently executed a non-binding term sheet to amend its existing Wheaton stream agreement for 100% of the gold and silver produced at Copper World (the 'Wheaton Stream'), which will increase the value of the project and provide upside exposure to higher precious metal prices.
Key terms of this enhanced Wheaton Stream to include (subject to execution of definitive documentation):
Successfully Completed '3-P' Plan for Advancing Copper World Towards a Sanction Decision in 2026
As part of Hudbay's disciplined financial planning approach to developing Copper World, the Company implemented its 3-P plan in late 2022, including specific leverage targets that it would need to achieve prior to making an investment decision in the project:
As a result of the completion of the prudent financing strategy, Hudbay's estimated share of the remaining capital contributions for the construction of Copper World is approximately $200 millioniii, and Hudbay's first capital contribution is deferred until 2028 at the earliest based on PFS estimates. Based on Hudbay's pro-forma cash and cash equivalents of more than $1.0 billion and total liquidity of more than $1.5 billion, using figures as at June 30, 2025, the Company has significant financial flexibility to fund its share of the remaining equity contributions at Copper World while continuing to maintain a strong balance sheet throughout the project construction period.
Manitoba Temporary Wildfire Evacuation Orders
Since the end of May, seasonal wildfires in northern Manitoba have resulted in evacuation orders in the regions where Hudbay operates. Emergency preparedness protocols were immediately activated and Hudbay has continued to work closely with local and provincial authorities to ensure the safety and well-being of its employees and nearby communities. The first mandatory wildfire evacuation orders resulted in Hudbay temporarily suspending operations in June for 13 days and operating with a reduced workforce since the end of May, before and after the operation suspension. The Company committed over C$2 million in funding support in June, including C$1.6 million in direct financial support for evacuated Hudbay employees and a C$500,000 donation to the Canadian Red Cross to support wildfire emergency relief and rebuilding efforts in northern Manitoba. The Company's Canadian Red Cross donation was part of a collective C$1.25 million donation that was made by the three leading mining companies that operate in Manitoba, including Hudbay, Vale Base Metals and Alamos Gold Inc. In addition, Hudbay established a Community Relief Donations Fund whereby Hudbay doubled the amounts donated by its employees to the Canadian Red Cross, further multiplying the support for emergency response efforts in the region.
Hudbay's Manitoba team continues to show remarkable resilience as demonstrated by the tremendous effort and unwavering commitment during this unprecedented wildfire season. They have tirelessly safeguarded the Company's assets and collaborated closely with local communities and provincial authorities, providing essential support to emergency response efforts.
On July 10, 2025, a second mandatory wildfire evacuation order was issued for the town of Snow Lake and a controlled, safe and orderly temporary suspension of the Snow Lake operations was implemented. As of August 12, 2025, the wildfire situation near Snow Lake has improved and Hudbay anticipates returning to normal operations later in August. The Company continues to expect to achieve its 2025 annual guidance metrics for all metals in Manitoba, despite the temporary wildfire impacts.
British Columbia Mill Optimization Project Achieves Key Milestone
In July, shortly following the end of the second quarter, Hudbay reached a significant milestone on the Copper Mountain mill optimization project to convert the third ball mill to a second SAG mill. The mill project is intended to increase nominal processing capacity to its permitted capacity of 50,000 tonnes per day starting in 2026.
The initial phase of the project achieved first ore production on July 10, a key milestone to ramp up mill capacity. The first phase was completed on time with more than 41,000 hours worked and zero lost-time incidents, which is a testament to the dedication and safety culture of Hudbay's team. The project remains on budget as it moves into the final phase of the project, which includes converting an interim feed arrangement to a permanent configuration and remains on track for completion in the second half of 2025.
New Ingerbelle Permit Application Achieves Key Milestone
On May 12, 2025, Hudbay's permitting application for the New Ingerbelle growth project at Copper Mountain was successfully accepted into review by the B.C. Major Mines Office and is now proceeding through a Mine Review Committee process. The Copper Mountain team continues ongoing engagement with First Nations and other local stakeholder groups as part of the Company's commitment to cultivating transparency and mutually beneficial relationships.
Exploration Update
LargeSnow Lake Exploration Program Continues to Execute Threefold Strategy
Hudbay continues to execute the largest exploration program in Snow Lake in the Company's history through extensive geophysical surveying and multi-phased drilling campaigns as part of Hudbay's threefold exploration strategy:
Maria Reyna and Caballito Drill Permits Update
Hudbay controls a large, contiguous block of mineral rights with the potential to host satellite mineral deposits in close proximity to the Constancia processing facility, including the past producing Caballito property and the highly prospective Maria Reyna property. The Company commenced the drill permitting process at Maria Reyna and Caballito after completing a surface rights exploration agreement with the community of Uchucarcco in August 2022. As part of the drill permitting process, environmental impact assessment (EIA) applications were approved by the government in June 2024 for Maria Reyna and September 2024 for Caballito. The remaining steps in the drill permitting process include the completion by the government of the Consulta Previa consultation process with the local community.
Senior Management Team Appointments
In May 2025, Hudbay promoted Robert Carter to Senior Vice President, Canada and John O'Shaughnessy to Vice President, Manitoba Business Unit.
In his new role, Mr. Carter is responsible for the strategic oversight of Hudbay's business activities in Manitoba and British Columbia. Mr. Carter previously held the role of Vice President, Manitoba Business Unit since April 2022 and prior to that was the General Manager of Hudbay's Manitoba mines since 2018. He has over 25 years of mining industry experience in technical, operational and senior leadership roles, with a majority of those years at Hudbay.
As the new leader of the Manitoba Business Unit, Mr. O'Shaughnessy is responsible for the strategic and operational performance of Hudbay's activities in Manitoba. He previously held the role of Vice President, Business Development at Hudbay where he provided expert oversight and strategic leadership of the global mine planning process. He has over 25 years of mining industry experience, including numerous progressive engineering, operational and leadership roles at Vale's mining operations in Ontario and Newfoundland and Labrador.
Dividend Declared
A semi-annual dividend of C$0.01 per share was declared on August 12, 2025. The dividend will be paid out on September 19, 2025 to shareholders of record as of close of business on September 2, 2025.
Website Links
Hudbay: www.hudbay.com
Management's Discussion and Analysis:
https://www.hudbayminerals.com/MDA825
Financial Statements:
https://www.hudbayminerals.com/FS825
Conference Call and Webcast
Qualified Person and NI 43-101
The technical and scientific information in this news release related to all of Hudbay's material mineral projects other than the Copper Mountain mine has been approved by Olivier Tavchandjian, P. Geo., Senior Vice President, Exploration and Technical Services. The technical and scientific information in this news release related to the Copper Mountain mine has been approved by Marc-Andre Brulotte, P. Geo., Director, Global Exploration and Resource Evaluation. Messrs. Tavchandjian and Brulotte are qualified persons pursuant to NI 43‑101.
For a description of the key assumptions, parameters and methods used to estimate mineral reserves and resources at Hudbay's material mineral properties, as well as data verification procedures and a general discussion of the extent to which the estimates of scientific and technical information may be affected by any known environmental, permitting, legal title, taxation, sociopolitical, marketing or other relevant factors, please see the technical reports for the Company's material properties are available on SEDAR+ at www.sedarplus.ca and EDGAR at www.sec.gov.
Non-GAAP Financial Performance Measures
Adjusted net earnings (loss) attributable to owners, adjusted net earnings (loss) per share attributable to owners, adjusted EBITDA, net debt, net debt to adjusted EBITDA, free cash flow, cash cost, sustaining and all-in sustaining cash cost per pound of copper produced, cash cost and sustaining cash cost per ounce of gold produced, combined unit cost and ratios based on these measures are non-GAAP performance measures. These measures do not have a meaning prescribed by IFRS and are therefore unlikely to be comparable to similar measures presented by other issuers. These measures should not be considered in isolation or as a substitute for measures prepared in accordance with IFRS and are not necessarily indicative of operating profit or cash flow from operations as determined under IFRS. Other companies may calculate these measures differently.
Management believes adjusted net earnings (loss) attributable to owners and adjusted net earnings (loss) per share attributable to owners provides an alternate measure of the Company's performance for the current period and gives insight into its expected performance in future periods. These measures are used internally by the Company to evaluate the performance of its underlying operations and to assist with its planning and forecasting of future operating results. As such, the Company believes these measures are useful to investors in assessing the Company's underlying performance. Hudbay provides adjusted EBITDA to help users analyze the Company's results and to provide additional information about its ongoing cash generating potential in order to assess its capacity to service and repay debt, carry out investments and cover working capital needs. Net debt is shown because it is a performance measure used by the Company to assess its financial position. Net debt to adjusted EBITDA is shown because it is a performance measure used by the Company to assess its financial leverage and debt capacity. Free cash flow is shown as it provides investors and management additional information in assessing the Company's ability to generate cash flow from current operations after investing in capital to sustain the operations. Cash cost, sustaining and all-in sustaining cash cost per pound of copper produced are shown because the Company believes they help investors and management assess the performance of its operations, including the margin generated by the operations and the Company. Cash cost and sustaining cash cost per ounce of gold produced are shown because the Company believes they help investors and management assess the performance of its Manitoba operations. Combined unit cost is shown because Hudbay believes it helps investors and management assess the Company's cost structure and margins that are not impacted by variability in by-product commodity prices.
The following tables provide detailed reconciliations to the most comparable IFRS measures.
Adjusted Net Earnings (Loss) Reconciliation
Adjusted EBITDA Reconciliation
Net Debt Reconciliation
Free Cash Flow Reconciliation
Copper Cash Cost Reconciliation
Sustaining and All-in Sustaining Cash Cost Reconciliation
Gold Cash Cost and Sustaining Cash Cost Reconciliation
Combined Unit Cost Reconciliation
Forward-Looking Information
This news release contains forward-looking information within the meaning of applicable Canadian and United States securities legislation. All information contained in this news release, other than statements of current and historical fact, is forward-looking information. Often, but not always, forward-looking information can be identified by the use of words such as 'plans', 'expects', 'budget', 'guidance', 'scheduled', 'estimates', 'forecasts', 'strategy', 'target', 'intends', 'objective', 'goal', 'understands', 'anticipates' and 'believes' (and variations of these or similar words) and statements that certain actions, events or results 'may', 'could', 'would', 'should', 'might' 'occur' or 'be achieved' or 'will be taken' (and variations of these or similar expressions). All of the forward-looking information in this news release is qualified by this cautionary note.
Forward-looking information includes, but is not limited to, statements with respect to Hudbay's production, cost and capital and exploration expenditure guidance, and the potential impact thereon from wildfires and any related evacuation or government orders in Manitoba and British Columbia or social unrest in Peru, the Snow Lake operations' ability to ramp up to full production in a timely manner after its suspension of operations, expectations regarding reductions in discretionary spending and capital expenditures, Hudbay's ability to advance and complete the optimization of the Copper Mountain mine operation including with respect to the ongoing SAG mill conversion and configuration project, the implementation of stripping strategies and the expected benefits therefrom, the estimated timelines and pre-requisites for sanctioning the Copper World project, the consummation and timing of the JV Transaction, the satisfaction of the conditions precedent to the JV Transaction, including but not limited to receipt of regulatory approvals, expectations regarding the anticipated benefits of the JV Transaction to Hudbay, and the United States, the consummation and timing of the DFS, expectations regarding the results of any challenges to the permits for the Copper World project and the potential impact of recent policy decisions from the United States government, the expected benefits of the sanctioning of Copper World project, and the benefits, timing and consummation of the amended Wheaton Stream, the expected benefits of Manitoba growth initiatives, including the use of the exploration drift at the 1901 deposit, and the potential utilization of excess capacity at the Stall mill, Hudbay's future deleveraging strategies and Hudbay's ability to deleverage and repay debt as needed, expectations regarding Hudbay's cash balance and liquidity, expectations regarding tax synergies, expectations regarding the ability to conduct exploration work and execute on exploration programs on its properties and to advance related drill plans, including the advancement of the exploration program at Maria Reyna and Caballito and the status and anticipated timing of the related drill permit application process, expectations regarding the prospective nature of the Maria Reyna and Caballito properties, the ability to continue mining higher-grade ore in the Pampacancha pit and Hudbay's expectations resulting therefrom, Hudbay's evaluation and assessment of opportunities to reprocess tailings using various metallurgical technologies, the anticipated impact of brownfield and greenfield growth projects on Hudbay's performance, anticipated expansion opportunities and extension of mine life in Snow Lake and Hudbay's ability to find a new anchor deposit near Hudbay's Snow Lake operations, anticipated future drill programs and exploration activities and any results expected therefrom, anticipated mine plans, anticipated metals prices and the anticipated sensitivity of Hudbay's financial performance to metals prices, events that may affect Hudbay's operations and development projects, anticipated cash flows from operations and related liquidity requirements, the anticipated effect of external factors on revenue, such as commodity prices, estimation of mineral reserves and resources, mine life projections, reclamation costs, economic outlook, government regulation of mining operations, and business and acquisition strategies. Forward-looking information is not, and cannot be, a guarantee of future results or events. Forward-looking information is based on, among other things, opinions, assumptions, estimates and analyses that, while considered reasonable by Hudbay at the date the forward-looking information is provided, inherently are subject to significant risks, uncertainties, contingencies and other factors that may cause actual results and events to be materially different from those expressed or implied by the forward-looking information.
The material factors or assumptions that Hudbay has identified and were applied in drawing conclusions or making forecasts or projections set out in the forward-looking information include, but are not limited to:
The risks, uncertainties, contingencies and other factors that may cause actual results to differ materially from those expressed or implied by the forward-looking information may include, but are not limited to, risks associated with satisfying the conditions to the closing of the JV Transaction, including the timing, receipt and any conditions associated with regulatory approvals, risks associated with reaching a definitive agreement with Wheaton in respect of the enhanced precious metals stream, risks related to the failure to effectively advance and complete the optimization of the Copper Mountain mine operations including with respect to the ongoing SAG mill conversion and configuration project, political and social risks in the regions Hudbay operates, including the complex political and social environment in Peru and potential disruptions to operations arising from community protests and grievances, risks generally associated with the mining industry and the current geopolitical environment, including future commodity prices, the potential implementation or expansion of tariffs, currency and interest rate fluctuations, energy and consumable prices, supply chain constraints and general cost escalation in the current inflationary environment, uncertainties related to the development and operation of Hudbay's projects, the risk of an indicator of impairment or impairment reversal relating to a material mineral property, risks related to the Copper World project, including in relation to project delivery and financing risks, risks related to the Lalor mine plan, including the ability to convert inferred mineral resource estimates to higher confidence categories, dependence on key personnel and employee and union relations, risks related to political or social instability, unrest or change, risks in respect of Indigenous and community relations, rights and title claims, operational risks and hazards, including the cost of maintaining and upgrading Hudbay's tailings management facilities and any unanticipated environmental, industrial and geological events and developments and the inability to insure against all risks (including any unanticipated significant interruptions to operations due to adverse effects from extreme weather events), failure of plant, equipment, processes, transportation and other infrastructure to operate as anticipated, compliance with government and environmental regulations, including permitting requirements and anti-bribery legislation, depletion of Hudbay's reserves, volatile financial markets and interest rates that may affect Hudbay's ability to obtain additional financing on acceptable terms, the failure to obtain required approvals or clearances from government authorities on a timely basis, uncertainties related to the geology, continuity, grade and estimates of mineral reserves and resources, and the potential for variations in grade and recovery rates, uncertain costs of reclamation activities, Hudbay's ability to comply with Hudbay's pension and other post-retirement obligations, Hudbay's ability to abide by the covenants in Hudbay's debt instruments and other material contracts, tax refunds, hedging transactions, as well as the risks discussed under the heading 'Risk Factors' in Hudbay's most recent Annual Information Form which is available on the Company's SEDAR+ profile at www.sedarplus.ca and the Company's EDGAR profile at www.sec.gov.
Should one or more risk, uncertainty, contingency or other factor materialize or should any factor or assumption prove incorrect, actual results could vary materially from those expressed or implied in the forward-looking information. Accordingly, you should not place undue reliance on forward-looking information. Hudbay does not assume any obligation to update or revise any forward-looking information after the date of this news release or to explain any material difference between subsequent actual events and any forward-looking information, except as required by applicable law.
Note to United States Investors
This news release has been prepared in accordance with the requirements of the securities laws in effect in Canada, which may differ materially from the requirements of United States securities laws applicable to U.S. issuers.
About Hudbay
Hudbay (TSX, NYSE: HBM) is a copper-focused critical minerals mining company with three long-life operations and a world-class pipeline of copper growth projects in tier-one mining jurisdictions of Canada, Peru and the United States.
Hudbay's operating portfolio includes the Constancia mine in Cusco (Peru), the Snow Lake operations in Manitoba (Canada) and the Copper Mountain mine in British Columbia (Canada). Copper is the primary metal produced by the Company, which is complemented by meaningful gold production and by-product zinc, silver and molybdenum. Hudbay's growth pipeline includes the Copper World project in Arizona (United States), the Mason project in Nevada (United States), the Llaguen project in La Libertad (Peru) and several expansion and exploration opportunities near its existing operations.
The value Hudbay creates and the impact it has is embodied in its purpose statement: 'We care about our people, our communities and our planet. Hudbay provides the metals the world needs. We work sustainably, transform lives and create better futures for communities.' Hudbay's mission is to create sustainable value and strong returns by leveraging its core strengths in community relations, focused exploration, mine development and efficient operations.
For further information, please contact:
Candace Brûlé
Vice President, Investor Relations, Financial Analysis and External Communications
(416) 814-4387
[email protected]
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i Adjusted net earnings (loss) - attributable to owners and adjusted net earnings (loss) per share - attributable to owners, adjusted EBITDA, cash cost, sustaining cash cost, all-in sustaining cash cost per pound of copper produced, net of by-product credits, cash cost, sustaining cash cost per ounce of gold produced, net of by-product credits, combined unit cost, net debt, net debt to adjusted EBITDA ratio and free cash flow are non-GAAP financial performance measures with no standardized definition under IFRS. For further information and a detailed reconciliation, please see the discussion under the 'Non-GAAP Financial Performance Measures' section of this news release.
ii Average analyst consensus net asset value estimate for 100% of Copper World is approximately $1.16 billion as of August 12, 2025.
iii Based on the initial capital investment and the $3.75 per pound copper price used in the PFS published on September 8, 2023 with assumptions of approximately $145 million for pre-sanctioning costs, $230 million from the precious metals stream, $350 million from project-level financing and approximately $700 million from the joint venture partner earn-in, matching contribution and capital contribution.
iv Copper Mountain copper production comparison based on the mid-point of the 2027 guidance range compared to 2024 actuals.
'We delivered another quarter of significant free cash flow generation driven by continued industry-leading cost margins and diversified exposure to copper and gold,' said Peter Kukielski, President and Chief Executive Officer. 'Our strong financial performance enabled us to further reduce long-term debt, invest in our many high-return growth projects and further strengthen our balance sheet to its best position in over a decade. With the strong performance in the first half of the year, we are reaffirming our full year consolidated production guidance and are favourably tracking well below our full year consolidated cost guidance for 2025. The announcement of our Copper World joint venture agreement with Mitsubishi further solidifies our financial strength and significantly reduces our funding requirement for project development. We are delighted to have secured the premier joint venture partner and look forward to establishing a long-term strategic partnership that will unlock significant value in our copper growth pipeline. Through a highly accretive joint venture, an agreement to enhance the Copper World precious metals stream terms, and the achievement of our financial targets, we have successfully realized the key elements of our prudent financial plan and significantly de-risked the Copper World project as we advance towards a sanction decision in 2026.'
Delivered Strong Second Quarter Financial Results; Production Reaffirmed and Cost Guidance Improved
Continued Free Cash Flow Generation Driving Further Debt Reduction and Balance Sheet Resilience
Prudently Advancing Copper World with Accretive Minority Joint Venture Transaction, Enhanced Stream Transaction and Successful Achievement of '3-P' Plan
Reinvesting in High-return Growth Initiatives to Further Enhance Copper and Gold Exposure
Summary of Second Quarter Results
Steady production continued into the second quarter of 2025 with consolidated copper production of 29,956 tonnes and consolidated gold production of 56,271 ounces. Consolidated copper and gold production was lower than the first quarter of 2025 primarily due to the impacts of a temporary suspension of operations in Manitoba as a result of mandatory wildfire evacuation orders. Consolidated silver production of 814,989 ounces and zinc production of 5,130 tonnes in the second quarter of 2025 were also lower than the first quarter of 2025 for the aforementioned reason.
Cash generated from operating activities of $259.9 million increased compared to the first quarter of 2025 as a result of higher gross margins driven by stable copper production, higher realized prices and positive working capital management with reductions in finished goods inventories and receivable balances. Operating cash flow before change in non-cash working capital was $193.9 million during the second quarter of 2025, reflecting an increase of $30.4 million compared to the first quarter of 2025. The increase compared to the first quarter of 2025 was primarily the result of lower cash taxes paid offset by lower gold and copper sales volume in Manitoba. Second quarter adjusted EBITDAi was $245.2 million, a 15% decrease compared to $287.2 million in the first quarter of 2025 due to lower sales volume partially offset by higher gold prices.
Net earnings attributable to owners in the second quarter of 2025 was $117.7 million, or $0.30 per share, compared to $100.4 million, or $0.25 per share, in the first quarter of 2025. The increase in earnings is the result of high gross margins from strong revenue growth on the back of stable copper production and higher realized gold prices. In addition, the quarter benefited from various non-cash charges for revaluation gain of closed sites reclamation provisions, and significantly reduced net finance expenses, among other items, more than offsetting the high mining and income tax expense experienced in the current quarter.
Adjusted net earnings attributable to ownersi and adjusted net earnings per share attributable to ownersi in the second quarter of 2025 were $75.5 million and $0.19 per share, respectively, after adjusting for various non-cash items on a pre-tax basis such as a non-cash $18.9 million foreign exchange gain, a non-cash gain of $13.8 million related to quarterly revaluation of Hudbay's closed site environmental reclamation provision, a $6.3 million mark-to-market revaluation gain on various instruments such as investments and share-based compensation, and a $1.2 million gain related to flow-through share expenditures, among other items. This compares to adjusted net earnings attributable to ownersi and net earnings per share attributable to ownersi of $93.8 million and $0.24 per share in the first quarter of 2025.
In the second quarter of 2025, consolidated cash costi per pound of copper produced, net of by-product credits, was $(0.02), compared to $(0.45) in the first quarter of 2025 as the Company continued to demonstrate industry-leading cost performance. The change from the first quarter was a result of lower by-product credits and lower production levels in Manitoba during the second quarter. Consolidated sustaining cash costi per pound of copper produced, net of by-product credits, was $1.65 in the second quarter of 2025, compared to $0.72 in the first quarter of 2025. The increase was driven by planned higher sustaining capital expenditures and the aforementioned variance in cash cost. Consolidated all-in sustaining cash costi per pound of copper produced, net of by-product credits, was $2.03 in the second quarter of 2025, higher than $0.97 in the first quarter of 2025 mainly due to the same reasons outlined above as well as higher corporate G&A from the revaluation of the Company's stock based compensation due to relative higher share prices.
As at June 30, 2025, total liquidity was $1,050.2 million, including $625.5 million in cash and cash equivalents, and undrawn availability of $424.7 million under Hudbay's revolving credit facilities. Net debti at the end of the second quarter was $434.1 million, marking a $92.0 million improvement from the first quarter of 2025 as a result of deleveraging activities.
Peru Operations Review
The Peru operations continued to demonstrate steady operating performance with production and costs in line with expectations. During the second quarter of 2025, the Peru operations produced 21,710 tonnes of copper, 7,366 ounces of gold, 551,979 ounces of silver and 375 tonnes of molybdenum. Copper production increased in the second quarter of 2025 compared to the first quarter of 2025 as milled copper grades exceeded first quarter levels, partially offset by planned lower mill throughput due to a scheduled mill maintenance shutdown in the second quarter. Production of all other metals were relatively in line with the first quarter of 2025.
The last major stripping program at Pampacancha was completed in the second quarter of 2025, which included higher amounts of waste stripping than planned. As a result, the Company replaced higher grade Pampacancha ore with higher grade Constancia ore in the second quarter and the Pampacancha deposit is now expected to be depleted in the first quarter of 2026 rather than in late 2025. Protests that started early in the third quarter temporarily impacted the transportation of supplies and concentrate to and from the Constancia site and has affected mine sequencing. The Constancia mill has continued to operate during this period, and the road blockades along the concentrate transportation route have since reopened, allowing Hudbay to reduce site concentrate inventory levels and replenish supplies. Despite short-term mine plan changes, the Company remains on track to achieve its 2025 production guidance for all metals in Peru.
Total ore mined in Peru in the second quarter of 2025 was lower than the first quarter of 2025 but remained in line with mine plan expectations.
Mill throughput levels averaged approximately 83,100 tonnes per day in the second quarter of 2025, lower than the first quarter of 2025 due to the planned semi-annual mill maintenance shutdown during the current quarter. Milled copper grades increased by 13% relative to the first quarter of 2025 due to higher grades in the Constancia pit. Milled gold grades in the second quarter remained consistent with gold grades in the first quarter of 2025 as Pampacancha stripping activities were underway in both quarters. The mill achieved copper recoveries of 85% in the second quarter of 2025, remaining consistent with the first quarter of 2025. Recoveries of gold and silver during the quarter were in line with Hudbay's metallurgical models for the ore that was being processed.
Combined mine, mill and G&A unit operating costi in the second quarter of 2025 was $13.59 per tonne, 23% higher than the first quarter, as expected, due to higher plant maintenance costs and lower tonnes processed associated with the planned semi-annual mill maintenance shutdown.
Cash costi per pound of copper produced, net of by-product credits, in the second quarter of 2025 was $1.45, an increase of 31% compared to the first quarter of 2025 due to planned higher maintenance costs and lower by-product credits, partially offset by lower treatment and refining charges and higher copper production. Sustaining cash costi per pound of copper produced, net of by-product credits, was $2.63 in the second quarter of 2025, an increase compared to the first quarter of 2025 due to planned higher sustaining capital typically associated with the period after the rainy season is complete, as well as the same factors affecting cash costs. Hudbay is reaffirming its full year 2025 cash cost guidance range in Peru.
Manitoba Operations Review
Despite significant disruptions from the mandatory wildfire evacuation orders in May and June of this year, the Manitoba operations showed remarkable resilience and achieved several key milestones in the second quarter of 2025. Notably, the New Britannia mill achieved record monthly production in April, the 1901 mining area delivered its first ore for processing in June, and Hudbay signed an exploration agreement with Mosakahiken Cree Nation to explore the Talbot deposit.
The Manitoba operations delivered strong results in the second quarter of 2025, producing 43,235 ounces of gold, 1,612 tonnes of copper, 5,130 tonnes of zinc and 197,970 ounces of silver. Compared to the first quarter of 2025, production of gold, copper, silver and zinc in the second quarter of 2025 decreased by 28%, 54%, 31% and 18%, respectively, due to lower production in June associated with the wildfire evacuation shutdown, in addition to the first quarter of 2025 having significantly better than expected gold grades.
Hudbay's dedicated on-site team demonstrated tremendous effort and unwavering commitment during the unprecedented wildfire situation near the Company's Flin Flon and Snow Lake operations during the second quarter. The team tirelessly safeguarded Hudbay's assets and collaborated closely with local communities and provincial authorities, providing essential support to emergency response efforts. These efforts resulted in no damage to Hudbay's infrastructure and facilities.
The Lalor mine managed through a period of reduced workforce prior to and after the 13-day temporary suspension of operations in June due to mandatory wildfire evacuation orders. Despite these challenges, the mine averaged 3,300 tonnes per day in the second quarter, strategically prioritizing mining from gold zones to ensure a consistent feed for the New Britannia mill. Gold grades were in line with mine plan expectations, while being lower than the exceptional gold grade mined in the first quarter of 2025. Copper, zinc and silver grades were also consistent with mine plan expectations for the quarter. Continuous improvement efforts at Lalor focused on ore quality and advancing stope modifications to enhance mucking productivity. Capital development continued, aiming to secure high-grade copper-gold mineralization from Zone 27 and prepare Zone 17 for the next copper-gold mining front.
The New Britannia mill achieved record monthly production levels in April, exceeding 2,300 tonnes per day. This significant milestone is a testament to ongoing low-capital projects and recent piping improvements that boosted throughput and maintained gold recoveries. The New Britannia mill throughput averaged approximately 1,800 tonnes per day in the second quarter of 2025, reflecting the record levels achieved in April, offset by lower throughput levels in June associated with the wildfire evacuation shutdown. Gold recovery in the second quarter of 2025 was 89%, remaining relatively consistent with the first quarter of 2025.
In the second quarter, the Stall mill continued to process less ore compared to prior periods, which is aligned with Hudbay's strategy of allocating more Lalor ore feed to New Britannia to maximize gold recoveries. The Stall mill achieved gold recoveries of 68% in the second quarter of 2025, reflecting benefits from recent recovery improvement programs.
The Manitoba operations continued to drive operating efficiencies despite temporary disruptions from wildfire evacuations orders in June. Combined mine, mill and G&A unit operating costsi in the second quarter were C$241 per tonne, higher than the comparative period primarily due to lower total throughput in June, partially offset by continued strong cost performance at New Britannia. Mining costs were higher than in the first quarter of 2025 as a result of the wildfires in June; milling costs were higher as a result of higher unit costs at Stall associated with lower throughput as mentioned above, offset by strong unit cost performance at New Britannia.
Cash costi per ounce of gold produced, net of by-product credits, in the second quarter of 2025 was $710, an increase from the first quarter of 2025 primarily due to lower gold production and lower by-product credits as per the production variances mentioned above. Sustaining cash costi per ounce of gold produced, net of by-product credits, in the second quarter of 2025 was $1,025, an increase compared to the first quarter of 2025, primarily due to the same factors affecting cash cost, partially offset by lower sustaining capital costs during the quarter. With the first half of the year outperforming the low end of the cash cost guidance range, Hudbay is well positioned to achieve the 2025 cash cost guidance range in Manitoba.
On July 10, 2025, a second mandatory wildfire evacuation order was issued for the town of Snow Lake and a controlled, safe and orderly temporary suspension of the Snow Lake operations was implemented. Essential personnel, authorized by emergency services, have remained onsite when safe to do so in order to continue supporting fire mitigation activities and safeguarding Hudbay's assets. To-date, there has been no structural damage to Hudbay's onsite surface infrastructure and facilities. As of August 12, 2025, the wildfire situation near Snow Lake has improved and Hudbay anticipates returning to normal operations later in August. The Company continues to expect to achieve its 2025 annual guidance metrics for all metals in Manitoba, despite the impact from the wildfires.
British Columbia Operations Review
Hudbay continues its focus on advancing optimization plans at the Copper Mountain mine, including ramping up mining activities to optimize the mine ore feed to the plant and implementing site improvement initiatives that mirror Hudbay's successful processes at Constancia. These optimization initiatives have successfully increased the total tonnes moved and improved mill reliability.
The British Columbia operations produced 6,634 tonnes of copper, 5,670 ounces of gold and 65,040 ounces of silver during the second quarter of 2025. Production of copper and silver decreased compared to the first quarter of 2025 primarily as a result of lower head grades from the use of stockpiled ore. Production of gold was higher than the first quarter of 2025, largely due to higher recoveries. Hudbay remains on track to achieve its 2025 production guidance for all metals in British Columbia and continues to expect higher production in the second half of the year as the mill improvement projects take effect.
Mining activities are focused on continuing to execute the three-year accelerated stripping program intended to bring higher grade ore into the mine plan. During the first half of 2025, Hudbay made significant progress on the key mill improvement project to ultimately increase the nominal plant capacity to its permitted level of 50,000 tonnes per day. The project entails the conversion of the third ball mill to a second SAG mill, and the initial phase of this project was successfully completed shortly following the end of the second quarter on time and on budget with the achievement of first ore production on July 10. The final phase of the project involves converting an interim feed arrangement to a permanent configuration and remains on target for completion in the second half of 2025.
Total ore mined at Copper Mountain in the second quarter of 2025 was 2.5 million tonnes, a 5% decrease compared to the first quarter of 2025 due to unplanned production loading fleet activities, despite an increase in total material moved in the quarter as a result of effective usage of the mining fleet to execute the accelerated stripping program to access higher grade phases in the pit. Planned ore stockpiles were utilized as ore feed to the mill while the mine operation team continued to increase waste stripping activities to expose additional ore mining fronts. The continued focus in the second quarter of 2025 was on mining efficiencies, including a significant improvement with blasted muck inventories and operator recruitment to effectively utilize the available haul truck fleet. As a result, total material moved is expected to increase quarter-over-quarter in 2025 as per the mine plan.
The mill processed 2.9 million tonnes of ore during the second quarter of 2025, higher than the first quarter of 2025, but was limited by both planned and unplanned maintenance, elevated clay material which impacted the secondary crushing circuit, and the planned lowering of the main crushed live ore pile feeding the mill due to area constraints related to the completion of the ball mill to SAG conversion project. Several mill initiatives were implemented in 2025, including recovery improvements, crushing circuit chute modifications, installation of advanced semi-autogenous grinding control instrumentation, and redesigned SAG liner package. Progressive mill improvements and updated operational procedures are expected to continue through 2025.
Milled copper grades during the second quarter of 2025 were lower than the first quarter due to higher amounts of ore processed from stockpile in the second quarter, as mentioned above, as well as the mining of a high-grade mining sequence during the first quarter of 2025. Copper recoveries were 81% in the second quarter of 2025, an increase from 78% in the first quarter of 2025 despite lower copper head grades. Gold recoveries of 68% in the second quarter of 2025 were higher than the first quarter of 2025, despite slightly lower gold head grades.
Combined mine, mill and G&A unit operating costsi in the second quarter of 2025 were C$24.51 per tonne milled, lower than the first quarter of 2025 due to lower milling and G&A costs and higher ore milled, partially offset by higher mining costs.
Cash costi and sustaining cash costi per pound of copper produced, net of by-product credits, in the second quarter of 2025 were $2.39 and $5.18, respectively. Cash costs were 2% lower than in the first quarter of 2025, largely due to higher by-product credits. Sustaining cash costs were 22% higher than the first quarter of 2025 due to higher sustaining capital including higher capitalized stripping costs. With cash costsi in the first half of the year at the low-end of the 2025 guidance range, Hudbay is well positioned to achieve the full year 2025 cash cost guidance range in British Columbia.
Continued Free Cash Flow Generation from Strong Copper and Gold Exposure
Hudbay has delivered eight consecutive quarters of meaningful free cash flowi generation as a result of steady operating performance, expanding margins from strong copper and gold exposure and a focus on cost control across the business:
Significant Debt Reduction
As a result of the continued free cash flowi generation and prudent balance sheet management, Hudbay was able to repurchase and retire $50.0 million of senior unsecured notes at a discount to par, during the second quarter of 2025. This has contributed to approximately $295 million in total debt repayments and gold prepayment liability reductions since the beginning of 2024:
These deleveraging achievements have reduced total principal debt to $1.07 billion as of June 30, 2025, which together with Hudbay's increased cash balance, has substantially reduced net debti to $434.1 million, compared to $631.8 million as of June 30, 2024. Incorporating higher levels of adjusted EBITDAi over the last twelve months, Hudbay's net debt to adjusted EBITDA ratioi has significantly improved to 0.4x.
Secured Premier Long-term Strategic Partner in Copper World JV Transaction
The joint venture will be structured as a new limited liability corporation, Copper World LLC. Under the JV Transaction, the initial contribution of $600 million for a 30% equity interest in Copper World LLC, will consist of $420 million upon closing and a $180 million matching contribution payable no later than 18 months following closing. Hudbay will retain 100% of its existing U.S. federal net operating losses of approximately $275 million and Arizona state losses of $210 million.
Hudbay welcomes a premier, long-term, strategic partner with deep technical expertise and a proven trading platform which Mitsubishi has established throughout its demonstrated history of industry partnerships. Mitsubishi's impressive track record in co-developing and operating some of the world's largest and highest quality copper projects will complement Hudbay's proven track record as a successful mine builder and operator.
Mitsubishi will be contributing 30% of the ongoing costs beginning August 31, 2025 and will participate in the funding of the DFS as well as the final project design, project financing, and project construction for Copper World.
The JV Transaction is expected to close in late 2025 or early 2026 and is conditioned upon receipt of certain regulatory approvals and the satisfaction of other customary closing conditions.
Enhanced Wheaton Precious Metals Stream
Hudbay is also pleased to announce that it has concurrently executed a non-binding term sheet to amend its existing Wheaton stream agreement for 100% of the gold and silver produced at Copper World (the 'Wheaton Stream'), which will increase the value of the project and provide upside exposure to higher precious metal prices.
Key terms of this enhanced Wheaton Stream to include (subject to execution of definitive documentation):
Successfully Completed '3-P' Plan for Advancing Copper World Towards a Sanction Decision in 2026
As part of Hudbay's disciplined financial planning approach to developing Copper World, the Company implemented its 3-P plan in late 2022, including specific leverage targets that it would need to achieve prior to making an investment decision in the project:
As a result of the completion of the prudent financing strategy, Hudbay's estimated share of the remaining capital contributions for the construction of Copper World is approximately $200 millioniii, and Hudbay's first capital contribution is deferred until 2028 at the earliest based on PFS estimates. Based on Hudbay's pro-forma cash and cash equivalents of more than $1.0 billion and total liquidity of more than $1.5 billion, using figures as at June 30, 2025, the Company has significant financial flexibility to fund its share of the remaining equity contributions at Copper World while continuing to maintain a strong balance sheet throughout the project construction period.
Manitoba Temporary Wildfire Evacuation Orders
Since the end of May, seasonal wildfires in northern Manitoba have resulted in evacuation orders in the regions where Hudbay operates. Emergency preparedness protocols were immediately activated and Hudbay has continued to work closely with local and provincial authorities to ensure the safety and well-being of its employees and nearby communities. The first mandatory wildfire evacuation orders resulted in Hudbay temporarily suspending operations in June for 13 days and operating with a reduced workforce since the end of May, before and after the operation suspension. The Company committed over C$2 million in funding support in June, including C$1.6 million in direct financial support for evacuated Hudbay employees and a C$500,000 donation to the Canadian Red Cross to support wildfire emergency relief and rebuilding efforts in northern Manitoba. The Company's Canadian Red Cross donation was part of a collective C$1.25 million donation that was made by the three leading mining companies that operate in Manitoba, including Hudbay, Vale Base Metals and Alamos Gold Inc. In addition, Hudbay established a Community Relief Donations Fund whereby Hudbay doubled the amounts donated by its employees to the Canadian Red Cross, further multiplying the support for emergency response efforts in the region.
Hudbay's Manitoba team continues to show remarkable resilience as demonstrated by the tremendous effort and unwavering commitment during this unprecedented wildfire season. They have tirelessly safeguarded the Company's assets and collaborated closely with local communities and provincial authorities, providing essential support to emergency response efforts.
On July 10, 2025, a second mandatory wildfire evacuation order was issued for the town of Snow Lake and a controlled, safe and orderly temporary suspension of the Snow Lake operations was implemented. As of August 12, 2025, the wildfire situation near Snow Lake has improved and Hudbay anticipates returning to normal operations later in August. The Company continues to expect to achieve its 2025 annual guidance metrics for all metals in Manitoba, despite the temporary wildfire impacts.
British Columbia Mill Optimization Project Achieves Key Milestone
In July, shortly following the end of the second quarter, Hudbay reached a significant milestone on the Copper Mountain mill optimization project to convert the third ball mill to a second SAG mill. The mill project is intended to increase nominal processing capacity to its permitted capacity of 50,000 tonnes per day starting in 2026.
The initial phase of the project achieved first ore production on July 10, a key milestone to ramp up mill capacity. The first phase was completed on time with more than 41,000 hours worked and zero lost-time incidents, which is a testament to the dedication and safety culture of Hudbay's team. The project remains on budget as it moves into the final phase of the project, which includes converting an interim feed arrangement to a permanent configuration and remains on track for completion in the second half of 2025.
New Ingerbelle Permit Application Achieves Key Milestone
On May 12, 2025, Hudbay's permitting application for the New Ingerbelle growth project at Copper Mountain was successfully accepted into review by the B.C. Major Mines Office and is now proceeding through a Mine Review Committee process. The Copper Mountain team continues ongoing engagement with First Nations and other local stakeholder groups as part of the Company's commitment to cultivating transparency and mutually beneficial relationships.
Exploration Update
LargeSnow Lake Exploration Program Continues to Execute Threefold Strategy
Hudbay continues to execute the largest exploration program in Snow Lake in the Company's history through extensive geophysical surveying and multi-phased drilling campaigns as part of Hudbay's threefold exploration strategy:
Maria Reyna and Caballito Drill Permits Update
Hudbay controls a large, contiguous block of mineral rights with the potential to host satellite mineral deposits in close proximity to the Constancia processing facility, including the past producing Caballito property and the highly prospective Maria Reyna property. The Company commenced the drill permitting process at Maria Reyna and Caballito after completing a surface rights exploration agreement with the community of Uchucarcco in August 2022. As part of the drill permitting process, environmental impact assessment (EIA) applications were approved by the government in June 2024 for Maria Reyna and September 2024 for Caballito. The remaining steps in the drill permitting process include the completion by the government of the Consulta Previa consultation process with the local community.
Senior Management Team Appointments
In May 2025, Hudbay promoted Robert Carter to Senior Vice President, Canada and John O'Shaughnessy to Vice President, Manitoba Business Unit.
In his new role, Mr. Carter is responsible for the strategic oversight of Hudbay's business activities in Manitoba and British Columbia. Mr. Carter previously held the role of Vice President, Manitoba Business Unit since April 2022 and prior to that was the General Manager of Hudbay's Manitoba mines since 2018. He has over 25 years of mining industry experience in technical, operational and senior leadership roles, with a majority of those years at Hudbay.
As the new leader of the Manitoba Business Unit, Mr. O'Shaughnessy is responsible for the strategic and operational performance of Hudbay's activities in Manitoba. He previously held the role of Vice President, Business Development at Hudbay where he provided expert oversight and strategic leadership of the global mine planning process. He has over 25 years of mining industry experience, including numerous progressive engineering, operational and leadership roles at Vale's mining operations in Ontario and Newfoundland and Labrador.
Dividend Declared
A semi-annual dividend of C$0.01 per share was declared on August 12, 2025. The dividend will be paid out on September 19, 2025 to shareholders of record as of close of business on September 2, 2025.
Website Links
Hudbay: www.hudbay.com
Management's Discussion and Analysis:
https://www.hudbayminerals.com/MDA825
Financial Statements:
https://www.hudbayminerals.com/FS825
Conference Call and Webcast
Qualified Person and NI 43-101
The technical and scientific information in this news release related to all of Hudbay's material mineral projects other than the Copper Mountain mine has been approved by Olivier Tavchandjian, P. Geo., Senior Vice President, Exploration and Technical Services. The technical and scientific information in this news release related to the Copper Mountain mine has been approved by Marc-Andre Brulotte, P. Geo., Director, Global Exploration and Resource Evaluation. Messrs. Tavchandjian and Brulotte are qualified persons pursuant to NI 43‑101.
For a description of the key assumptions, parameters and methods used to estimate mineral reserves and resources at Hudbay's material mineral properties, as well as data verification procedures and a general discussion of the extent to which the estimates of scientific and technical information may be affected by any known environmental, permitting, legal title, taxation, sociopolitical, marketing or other relevant factors, please see the technical reports for the Company's material properties are available on SEDAR+ at www.sedarplus.ca and EDGAR at www.sec.gov.
Non-GAAP Financial Performance Measures
Adjusted net earnings (loss) attributable to owners, adjusted net earnings (loss) per share attributable to owners, adjusted EBITDA, net debt, net debt to adjusted EBITDA, free cash flow, cash cost, sustaining and all-in sustaining cash cost per pound of copper produced, cash cost and sustaining cash cost per ounce of gold produced, combined unit cost and ratios based on these measures are non-GAAP performance measures. These measures do not have a meaning prescribed by IFRS and are therefore unlikely to be comparable to similar measures presented by other issuers. These measures should not be considered in isolation or as a substitute for measures prepared in accordance with IFRS and are not necessarily indicative of operating profit or cash flow from operations as determined under IFRS. Other companies may calculate these measures differently.
Management believes adjusted net earnings (loss) attributable to owners and adjusted net earnings (loss) per share attributable to owners provides an alternate measure of the Company's performance for the current period and gives insight into its expected performance in future periods. These measures are used internally by the Company to evaluate the performance of its underlying operations and to assist with its planning and forecasting of future operating results. As such, the Company believes these measures are useful to investors in assessing the Company's underlying performance. Hudbay provides adjusted EBITDA to help users analyze the Company's results and to provide additional information about its ongoing cash generating potential in order to assess its capacity to service and repay debt, carry out investments and cover working capital needs. Net debt is shown because it is a performance measure used by the Company to assess its financial position. Net debt to adjusted EBITDA is shown because it is a performance measure used by the Company to assess its financial leverage and debt capacity. Free cash flow is shown as it provides investors and management additional information in assessing the Company's ability to generate cash flow from current operations after investing in capital to sustain the operations. Cash cost, sustaining and all-in sustaining cash cost per pound of copper produced are shown because the Company believes they help investors and management assess the performance of its operations, including the margin generated by the operations and the Company. Cash cost and sustaining cash cost per ounce of gold produced are shown because the Company believes they help investors and management assess the performance of its Manitoba operations. Combined unit cost is shown because Hudbay believes it helps investors and management assess the Company's cost structure and margins that are not impacted by variability in by-product commodity prices.
The following tables provide detailed reconciliations to the most comparable IFRS measures.
Adjusted Net Earnings (Loss) Reconciliation
Adjusted EBITDA Reconciliation
Net Debt Reconciliation
Free Cash Flow Reconciliation
Copper Cash Cost Reconciliation
Sustaining and All-in Sustaining Cash Cost Reconciliation
Gold Cash Cost and Sustaining Cash Cost Reconciliation
Combined Unit Cost Reconciliation
Forward-Looking Information
This news release contains forward-looking information within the meaning of applicable Canadian and United States securities legislation. All information contained in this news release, other than statements of current and historical fact, is forward-looking information. Often, but not always, forward-looking information can be identified by the use of words such as 'plans', 'expects', 'budget', 'guidance', 'scheduled', 'estimates', 'forecasts', 'strategy', 'target', 'intends', 'objective', 'goal', 'understands', 'anticipates' and 'believes' (and variations of these or similar words) and statements that certain actions, events or results 'may', 'could', 'would', 'should', 'might' 'occur' or 'be achieved' or 'will be taken' (and variations of these or similar expressions). All of the forward-looking information in this news release is qualified by this cautionary note.
Forward-looking information includes, but is not limited to, statements with respect to Hudbay's production, cost and capital and exploration expenditure guidance, and the potential impact thereon from wildfires and any related evacuation or government orders in Manitoba and British Columbia or social unrest in Peru, the Snow Lake operations' ability to ramp up to full production in a timely manner after its suspension of operations, expectations regarding reductions in discretionary spending and capital expenditures, Hudbay's ability to advance and complete the optimization of the Copper Mountain mine operation including with respect to the ongoing SAG mill conversion and configuration project, the implementation of stripping strategies and the expected benefits therefrom, the estimated timelines and pre-requisites for sanctioning the Copper World project, the consummation and timing of the JV Transaction, the satisfaction of the conditions precedent to the JV Transaction, including but not limited to receipt of regulatory approvals, expectations regarding the anticipated benefits of the JV Transaction to Hudbay, and the United States, the consummation and timing of the DFS, expectations regarding the results of any challenges to the permits for the Copper World project and the potential impact of recent policy decisions from the United States government, the expected benefits of the sanctioning of Copper World project, and the benefits, timing and consummation of the amended Wheaton Stream, the expected benefits of Manitoba growth initiatives, including the use of the exploration drift at the 1901 deposit, and the potential utilization of excess capacity at the Stall mill, Hudbay's future deleveraging strategies and Hudbay's ability to deleverage and repay debt as needed, expectations regarding Hudbay's cash balance and liquidity, expectations regarding tax synergies, expectations regarding the ability to conduct exploration work and execute on exploration programs on its properties and to advance related drill plans, including the advancement of the exploration program at Maria Reyna and Caballito and the status and anticipated timing of the related drill permit application process, expectations regarding the prospective nature of the Maria Reyna and Caballito properties, the ability to continue mining higher-grade ore in the Pampacancha pit and Hudbay's expectations resulting therefrom, Hudbay's evaluation and assessment of opportunities to reprocess tailings using various metallurgical technologies, the anticipated impact of brownfield and greenfield growth projects on Hudbay's performance, anticipated expansion opportunities and extension of mine life in Snow Lake and Hudbay's ability to find a new anchor deposit near Hudbay's Snow Lake operations, anticipated future drill programs and exploration activities and any results expected therefrom, anticipated mine plans, anticipated metals prices and the anticipated sensitivity of Hudbay's financial performance to metals prices, events that may affect Hudbay's operations and development projects, anticipated cash flows from operations and related liquidity requirements, the anticipated effect of external factors on revenue, such as commodity prices, estimation of mineral reserves and resources, mine life projections, reclamation costs, economic outlook, government regulation of mining operations, and business and acquisition strategies. Forward-looking information is not, and cannot be, a guarantee of future results or events. Forward-looking information is based on, among other things, opinions, assumptions, estimates and analyses that, while considered reasonable by Hudbay at the date the forward-looking information is provided, inherently are subject to significant risks, uncertainties, contingencies and other factors that may cause actual results and events to be materially different from those expressed or implied by the forward-looking information.
The material factors or assumptions that Hudbay has identified and were applied in drawing conclusions or making forecasts or projections set out in the forward-looking information include, but are not limited to:
The risks, uncertainties, contingencies and other factors that may cause actual results to differ materially from those expressed or implied by the forward-looking information may include, but are not limited to, risks associated with satisfying the conditions to the closing of the JV Transaction, including the timing, receipt and any conditions associated with regulatory approvals, risks associated with reaching a definitive agreement with Wheaton in respect of the enhanced precious metals stream, risks related to the failure to effectively advance and complete the optimization of the Copper Mountain mine operations including with respect to the ongoing SAG mill conversion and configuration project, political and social risks in the regions Hudbay operates, including the complex political and social environment in Peru and potential disruptions to operations arising from community protests and grievances, risks generally associated with the mining industry and the current geopolitical environment, including future commodity prices, the potential implementation or expansion of tariffs, currency and interest rate fluctuations, energy and consumable prices, supply chain constraints and general cost escalation in the current inflationary environment, uncertainties related to the development and operation of Hudbay's projects, the risk of an indicator of impairment or impairment reversal relating to a material mineral property, risks related to the Copper World project, including in relation to project delivery and financing risks, risks related to the Lalor mine plan, including the ability to convert inferred mineral resource estimates to higher confidence categories, dependence on key personnel and employee and union relations, risks related to political or social instability, unrest or change, risks in respect of Indigenous and community relations, rights and title claims, operational risks and hazards, including the cost of maintaining and upgrading Hudbay's tailings management facilities and any unanticipated environmental, industrial and geological events and developments and the inability to insure against all risks (including any unanticipated significant interruptions to operations due to adverse effects from extreme weather events), failure of plant, equipment, processes, transportation and other infrastructure to operate as anticipated, compliance with government and environmental regulations, including permitting requirements and anti-bribery legislation, depletion of Hudbay's reserves, volatile financial markets and interest rates that may affect Hudbay's ability to obtain additional financing on acceptable terms, the failure to obtain required approvals or clearances from government authorities on a timely basis, uncertainties related to the geology, continuity, grade and estimates of mineral reserves and resources, and the potential for variations in grade and recovery rates, uncertain costs of reclamation activities, Hudbay's ability to comply with Hudbay's pension and other post-retirement obligations, Hudbay's ability to abide by the covenants in Hudbay's debt instruments and other material contracts, tax refunds, hedging transactions, as well as the risks discussed under the heading 'Risk Factors' in Hudbay's most recent Annual Information Form which is available on the Company's SEDAR+ profile at www.sedarplus.ca and the Company's EDGAR profile at www.sec.gov.
Should one or more risk, uncertainty, contingency or other factor materialize or should any factor or assumption prove incorrect, actual results could vary materially from those expressed or implied in the forward-looking information. Accordingly, you should not place undue reliance on forward-looking information. Hudbay does not assume any obligation to update or revise any forward-looking information after the date of this news release or to explain any material difference between subsequent actual events and any forward-looking information, except as required by applicable law.
Note to United States Investors
This news release has been prepared in accordance with the requirements of the securities laws in effect in Canada, which may differ materially from the requirements of United States securities laws applicable to U.S. issuers.
About Hudbay
Hudbay (TSX, NYSE: HBM) is a copper-focused critical minerals mining company with three long-life operations and a world-class pipeline of copper growth projects in tier-one mining jurisdictions of Canada, Peru and the United States.
Hudbay's operating portfolio includes the Constancia mine in Cusco (Peru), the Snow Lake operations in Manitoba (Canada) and the Copper Mountain mine in British Columbia (Canada). Copper is the primary metal produced by the Company, which is complemented by meaningful gold production and by-product zinc, silver and molybdenum. Hudbay's growth pipeline includes the Copper World project in Arizona (United States), the Mason project in Nevada (United States), the Llaguen project in La Libertad (Peru) and several expansion and exploration opportunities near its existing operations.
The value Hudbay creates and the impact it has is embodied in its purpose statement: 'We care about our people, our communities and our planet. Hudbay provides the metals the world needs. We work sustainably, transform lives and create better futures for communities.' Hudbay's mission is to create sustainable value and strong returns by leveraging its core strengths in community relations, focused exploration, mine development and efficient operations.
For further information, please contact:
Candace Brûlé
Vice President, Investor Relations, Financial Analysis and External Communications
(416) 814-4387
[email protected]
____________________
i Adjusted net earnings (loss) - attributable to owners and adjusted net earnings (loss) per share - attributable to owners, adjusted EBITDA, cash cost, sustaining cash cost, all-in sustaining cash cost per pound of copper produced, net of by-product credits, cash cost, sustaining cash cost per ounce of gold produced, net of by-product credits, combined unit cost, net debt, net debt to adjusted EBITDA ratio and free cash flow are non-GAAP financial performance measures with no standardized definition under IFRS. For further information and a detailed reconciliation, please see the discussion under the 'Non-GAAP Financial Performance Measures' section of this news release.
ii Average analyst consensus net asset value estimate for 100% of Copper World is approximately $1.16 billion as of August 12, 2025.
iii Based on the initial capital investment and the $3.75 per pound copper price used in the PFS published on September 8, 2023 with assumptions of approximately $145 million for pre-sanctioning costs, $230 million from the precious metals stream, $350 million from project-level financing and approximately $700 million from the joint venture partner earn-in, matching contribution and capital contribution.
iv Copper Mountain copper production comparison based on the mid-point of the 2027 guidance range compared to 2024 actuals.
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