Hudbay Minerals Inc . (NYSE:HBM) delivered a robust financial performance in the fourth quarter of 2023, marked by record gold production in Manitoba and increased copper output.

The company achieved significant milestones, including the successful acquisition and integration of the Copper Mountain mine, which bolstered its operating platform. Hudbay also advanced its commitment to environmental sustainability by securing renewable energy contracts and implementing new energy-efficient initiatives.

Their financial achievements were underscored by generating over $160 million in free cash flow and reducing their net debt to adjusted EBITDA ratio to 1.6 times.

Key Takeaways

• Hudbay Minerals reported record gold production and increased copper production in the fourth quarter.
• The company successfully integrated the Copper Mountain mine into its operations.
• Hudbay met its consolidated production guidance for all metals in 2023 and exceeded cost expectations.
• The company reduced net debt and improved its leverage ratio, ending the quarter with a net debt to adjusted EBITDA ratio of 1.6 times.
• Hudbay is focused on sustainability, securing renewable energy contracts, and implementing electric equipment.
• Production guidance for 2024 includes increased copper production and consistent gold production in Manitoba, with capital expenditures projected at $335 million.

Company Outlook

• Hudbay anticipates consistent gold production at the Lalor mine with 185,000 ounces in 2024.
• Copper production in British Columbia is projected to be 37,000 tonnes, aligning with Copper Mountain's technical report.
• The company plans to prioritize higher gold and copper grades, which will result in a 10% decline in zinc production.
• Capital expenditures for 2024 are expected to be $335 million, with a focus on stabilization and stripping activities in British Columbia.

Bearish Highlights

• Cash cost guidance for 2024 is forecasted to be higher due to lower by-product credits and increased contributions from British Columbia.

Bullish Highlights

• Hudbay aims to increase copper production and decrease cash costs through stabilization initiatives at Copper Mountain.
• The company is optimistic about the potential for increased production and capacity in their mills.
• Hudbay is progressing with plans to trial battery electric vehicles, which could enhance operational efficiency.

Misses

• The company did not specify any particular misses during the call.

Q&A Highlights

• Executives reaffirmed their commitment to obtaining permits, securing financing, and finding a partner for their 3-P program.
• The company is receiving significant interest from potential partners for the Copper World project, with permits expected in the third quarter of 2024.
• Hudbay is focused on the exploration drift to 1901 in Manitoba and other satellite deposits to increase production.
• Exploration and production plans include owning the entire Rockcliff acquisition and considering the previously shelved Bur mine due to increased mill capacity.

Hudbay Minerals Inc. has demonstrated a strong end to 2023, with strategic acquisitions and an emphasis on operational efficiency and sustainability. The company's focus on copper and gold production, coupled with its exploration initiatives, position it for continued success in the forthcoming year. Investors and stakeholders will be watching closely as Hudbay advances its projects and strives to enhance its financial and operational performance in 2024.