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SEC filingHudbay Minerals delivered record revenue of $1.69 billion in 2023, driven by higher copper and gold production from its expanded operations, and improved cash costs, while net income remained flat due to one-time gains and impairments in the prior year.
Hudbay Minerals reported record annual revenue of $1,690 million for the year ended December 31, 2023, a 15.6% increase from $1,461 million in 2022. The growth was driven primarily by higher copper and gold sales volumes from the high-grade Pampacancha satellite pit in Peru and the newly acquired Copper Mountain mine in British Columbia. Gross profit rose 41.8% to $393 million, with gross margin expanding from 18.9% to 23.2%, reflecting lower cash costs per pound of copper and higher by-product credits. Operating income increased 38.7% to $297 million, while net income was essentially flat at $69.5 million compared to $70.4 million in 2022. The prior year included a $95 million impairment charge for Arizona and a $133.5 million non-cash gain on environmental provision revaluation, which masked underlying performance. Diluted EPS was $0.22 versus $0.27 in 2022. Adjusted EBITDA grew 36% to $648 million, underscoring stronger operational cash generation.
At December 31, 2023, total assets increased to $5.31 billion from $4.33 billion year-over-year, largely due to the Copper Mountain acquisition. Cash and cash equivalents stood at $250 million, up from $226 million at the end of 2022. Long-term debt rose to $1.29 billion from $1.18 billion, reflecting borrowings to finance the acquisition and bond redemptions. Net debt increased to $1.04 billion from $958 million, but the net debt to adjusted EBITDA ratio improved to 1.6x from 2.0x due to higher EBITDA. Working capital improved to $136 million from $77 million, driven by higher receivables and inventories from the acquisition and higher sales volumes. The company has $324 million undrawn under its revolving credit facilities, providing ample liquidity.
Operating cash flow before changes in non-cash working capital was $570 million, up 45% from $392 million in 2022, driven by higher sales volumes and copper/gold prices. Cash generated from operations was $477 million, slightly lower than $488 million in 2022 due to a $93 million negative working capital change (mainly trade receivables build). Capital expenditures totaled $281 million (excluding right-of-use assets), resulting in free cash flow of approximately $196 million. The company used free cash flow and debt to fund the acquisition, redeem $143 million in Copper Mountain bonds, repay $27 million of the gold prepayment, and pay $4.5 million in dividends. The full-year free cash flow was positive, and the company ended the year with increased cash.
Management highlighted that 2023 marked the transition to a diversified, multi-mine producer with the addition of Copper Mountain. Key operational achievements included record gold production from Manitoba, successful completion of mill recovery improvement projects, and higher grades from Pampacancha. The company reduced discretionary spending by $57 million versus original guidance and deleveraged in the fourth quarter. For 2024, consolidated copper production is guided at 137,000–176,000 tonnes and gold at 263,000–319,000 ounces, with consolidated cash cost of $1.05–$1.25 per pound of copper, net of by-products. Capital expenditures are planned at $335 million, with a continued focus on free cash flow generation and deleveraging. Key catalysts include the Copper World project permitting and potential joint venture, the largest-ever Snow Lake exploration program, and stabilization of Copper Mountain operations.
Revenue by metal: copper comprised $1.07 billion (63% of total), gold $463 million (27%), zinc $77 million, silver $36 million, and molybdenum $79 million. The company reported its precious metals stream agreements: 100% of silver and 50% of gold from Constancia are sold to Wheaton Precious Metals at fixed cash rates. In Q1 2023, a variable consideration adjustment increased deferred revenue amortization by $4.9 million. Segment results: Peru operating income of $237 million (22.8% margin); Manitoba $81 million (16.8% margin); British Columbia $23 million (14.0% margin, partial year). Adjusted net earnings were $72.5 million, excluding $21.4 million mark-to-market losses, $11.4 million environmental provision gain, $6.9 million acquisition costs, and other items. Share-based compensation was $7.4 million. Goodwill of $75 million was recorded on the Copper Mountain acquisition; no impairment was required. The company's effective tax rate was 54.2%, impacted by non-deductible items and foreign tax rate differences.