HudBay Minerals releases first quarter results

Improved metal prices and solid performances put in by HudBay Minerals  ‘ (HBM-T) operating assets in northern Manitoba resulted in strong first-quarter financial results. The three months ended Mar. 31 were also notable for an updated and improved resource estimate for the company’s Fenix nickel project in Guatemala.

Net earnings in the first quarter of 2010 reached $23.6 million, or $0.15 per share, compared with a loss of $4 million or $0.03 per share in the first quarter of 2009.

First quarter operating cash flow was $59.1 million, versus $14 million in the same period last year.
Cash cost per lb. zinc sold, net of by-product credits, was negative US$0.28 per lb., a net decrease of US$0.60 from the same period in 2009.

Total revenue for the first quarter was $240.3 million, $78.5 million more than the same quarter last year.

At the end of the quarter HudBay had cash of $910 million and working capital of $950.8 million.

Meanwhile, six drills are operating at ithe company’s Lalor project, which is open to the North and West. Progress has also been made developing the access ramp, which by the end of the first quarter had advanced 320 metres.

In addition, the pilot hole for the production shaft has been completed along with a wedge hole to explore the crusher, load out and other infrastructure zones adjacent to the main shaft area, and the company has obtained advanced exploration permits,

At the Fenix project in Guatemala, a new resource estimate demonstrates measured and indicated resources of 36.19 million tonnes of 1.92% nickel contained in saprolite. An updated feasibility study is on track to be completed in the third quarter of 2010 and the company has already started a 7,000 metre diamond drill program, which is expected to be finished in the second half of 2010. HudBay thinks it will be in a position to make a decision on whether to restart construction at the Fenix project later this year.

At presstime in Toronto HudBay was trading at $11.84 per share. The company has traded in a 52-week range of $6.15-17.00 and has 152.2 millon shares outstanding.

Onno Rutten, an analyst at UBS Investment Research, has a 12 month target price on the stock of $14.50 per share. He believes the appointment of a new chief executive to replace Peter Jones, who retired in November 2009, is one of the key catalysts for the company going forward.