Lower copper and zinc prices sent HudBay Minerals’ (HBM-T, HBMFF-O) net earnings into negative territory in the first quarter of 2009, but lower operating costs helped cushion the fall.
HudBay posted a loss of $4 million compared with net earnings of $21.6 million in the first quarter of 2008.
The company’s realized price for zinc for the three months ended March 31 was US56¢ per lb., down from US$1.18 in the year-ago quarter, while its realized copper price sank to US$1.69 per lb. from US$3.50.
Lower operating costs helped staunch HudBay’s losses, increasing earnings before tax by $51.6 million.
Revenues in the first quarter slid to $161.78 million, or 40%, from $271.64 million in the year-ago quarter.
Cash and equivalents declined from $704.7 million at Dec. 31, 2008, to $609.8 million at March 31, 2009.
The suspension of the Chisel North and Balmat zinc mines sent first-quarter production down to 610,395 tonnes of ore from 751,382 tonnes in the year-earlier quarter.
Non-recycled copper production was down 16%, mainly because of a lower availability of concentrate at economic prices.
Gold production decreased 8% due to lower volumes of concentrates and lower head grades. Silver production rose by 29%.
HudBay recently announced it was selling its 16.7% stake in Lundin Mining (LUN-T, LUNCF-O) to GMP Securities for $236 million, for a pretax gain of $100 million. HudBay, which recently tried to acquire Lundin in a plan that proved unpopular with shareholders, was cashing in on recent strength in the price of zinc. The metal’s spot price has risen to around US72¢ per lb.
Looking ahead, HudBay plans to continue exploration and definition drilling at its promising Lalor deposit near Snow Lake in Manitoba.
Lalor lies in the Chisel basin of the Flin Flon greenstone belt and has an indicated resource of 3.4 million tonnes grading 1.9 grams gold per tonne, 20.5 grams silver, 0.71% copper and 8.82% zinc. Inferred resources total 13.2 million tonnes grading 2.9 grams gold, 34.1 grams silver, 0.7% copper and 8.19% zinc.
Six drills are currently turning at Lalor, which is about 15 km from HudBay’s concentrator in Snow Lake.
At presstime in Toronto, HudBay was trading at $7.96 per share. The company has a 52-week trading range of $2.70-20.32 per share and 153.01 million shares outstanding.
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