Hudbay Releases First Quarter 2014 Results
TORONTO, ONTARIO--(Marketwired - Apr 30, 2014) -
Summary
- Full year production and operating cost guidance remains
unchanged with improvements achieved in Lalor and 777 operating
costs, and underground rehabilitation at 777 now complete, as
expected.
- Constancia project approximately 71% complete at March 31,
2014; on track for first production during Q4 2014.
- Lalor on budget and on schedule to double production capacity
and increase production rates in the second half of 2014.
- Reed achieved commercial production ahead of guidance and
completed construction under budget.
- On February 9, 2014, Hudbay announced its intention to commence
an offer to acquire Augusta Resource Corporation, operator of the
undeveloped Rosemont Project in Arizona.
- Received commitment letter in connection with a US$150 million,
four-year Constancia standby credit facility; closing expected in
the second quarter of 2014.
HudBay Minerals Inc. ("Hudbay" or the "company")
(TSX:HBM)(NYSE:HBM) today released its first quarter 2014 financial
results. In the first quarter of 2014, operating cash flow before
change in non-cash working capital decreased to negative $4.6
million from $12.3 million in the first quarter of 2013. Hudbay
recorded a net loss and loss per share of $27.2 million and $0.15,
respectively, in the first quarter of 2014 compared to a profit and
earnings per share of $1.9 million and $0.01 in the first quarter
of 2013.
Cash flow from operations, net earnings and cash cost per pound
of copper were all negatively affected by a significant
accumulation of unsold copper (29% of quantity produced in the
quarter) and precious metals (44% of quantity produced in the
quarter). As a result of rehabilitation work at the 777 mine that
was successfully completed in February 2014, production of copper
concentrate rebounded as expected late in the first quarter and was
in line with overall expectations. This limited the availability of
concentrate for shipping prior to quarter end, and extreme cold
weather in the quarter affected railway service from Hudbay's
Manitoba operations.
First quarter of 2014 loss was affected by, among other things,
the following items:
|
|
Pre-tax gain (loss) ($ millions) |
|
|
After-tax gain (loss) ($ millions) |
|
|
Earnings Per Share Impact ($/share) |
|
Mark-to-market gain on metal price hedging |
|
8.6 |
|
|
6.3 |
|
|
0.03 |
|
Gain on mark-to-market of embedded derivative related to long-term
debt |
|
2.9 |
|
|
2.9 |
|
|
0.02 |
|
Loss as a result of provisional pricing adjustments |
|
(2.9 |
) |
|
(1.8 |
) |
|
(0.01 |
) |
Foreign currency translation loss |
|
(8.6 |
) |
|
(10.9 |
) |
|
(0.06 |
) |
Augusta transaction costs |
|
(3.7 |
) |
|
(3.7 |
) |
|
(0.02 |
) |
Impairments and mark-to-market adjustments related to junior mining
investments |
|
(0.7 |
) |
|
(0.7 |
) |
|
- |
|
Loss on disposal of Back Forty project |
|
(6.5 |
) |
|
(6.5 |
) |
|
(0.04 |
) |
Impact on deferred taxes of certain Peru costs and change in
discount rates on decommissioning and restoration liabilities |
|
- |
|
|
(3.5 |
) |
|
(0.02 |
) |
"Hudbay is poised to deliver growth in production, earnings and
cash flows in the second half of this year as we approach the end
of our $2.2 billion three-mine construction program," said David
Garofalo, president and chief executive officer. "Constancia
continues to advance toward completion and initial production
during the fourth quarter of this year. Growth will also come from
our core Manitoba business as Reed is now at steady-state
production and we are on track to double Lalor's production
capacity in the second half of 2014."
On February 9, 2014, Hudbay announced its intention to commence
an offer to acquire all of the issued and outstanding common shares
of Augusta Resource Corporation ("Augusta") not already owned by
Hudbay (the "Offer"). Under the terms of the Offer, Augusta
shareholders are entitled to receive 0.315 of a Hudbay common share
for each Augusta common share held, representing a premium of
approximately 62% based on the 20-day volume-weighted average share
prices of Hudbay and Augusta on the TSX for the period ended
February 7, 2014.
The Offer is currently open for acceptance until 5:00 p.m.
(Toronto time) on May 5, 2014, unless extended or withdrawn. Hudbay
will not extend the Offer beyond May 5, 2014 unless, at or by that
date, the remaining conditions to the Offer have been satisfied or
waived, including the condition that Augusta's shareholder rights
plan (the "Shareholder Rights Plan") has been waived, invalidated
or cease-traded.
On April 14, 2014, Hudbay applied to the British Columbia
Securities Commission for an order to cease trade the Shareholder
Rights Plan and a hearing commenced on April 29, 2014. The hearing
was adjourned to May 2, 2014 when the parties will make additional
submissions to the Commission.
Hudbay is arranging a US$150 million standby credit facility to
provide financing for expenditures on the Constancia project, if
required. BNP Paribas and ING Capital LLC are acting as Mandated
Lead Arrangers and have provided a commitment letter for the
financing, subject to customary conditions and other terms
contained therein including completion of due diligence and
definitive documentation. The facility is expected to have a term
of four years, with any drawdowns bearing interest at LIBOR +
3.50%. In addition, Hudbay intends to enter into a long-term
agreement with Louis Dreyfus Commodities Metals Suisse S.A. for the
sale of approximately 20% of the life of mine copper concentrate
production from Constancia on standard market terms. The definitive
agreements are expected to be finalized during the second quarter
of 2014.
Financial and Operating Results
Total revenue for the first quarter of 2014 was $106.8 million,
$13.1 million lower than the same period in 2013. This decrease was
primarily due to lower sales volumes and lower copper prices
compared to the first quarter of 2013. This decrease was partially
offset by favourable movements in foreign exchange rates and
unrealized gains on copper and zinc hedges.
First quarter 2014 ore production at Hudbay's Manitoba business
unit was 19% higher than the prior year's first quarter as a result
of a full quarter of production at the Lalor and Reed mines.
Operating costs per tonne of ore mine in the first quarter at 777
were 12% lower, compared to the same period in 2013, primarily due
to reduced contractor costs, offset partly by increased propane
heating costs due to an abnormally cold winter. Costs during the
first quarter of 2013 at Lalor were capitalized. Operating costs
per tonne of ore in the first quarter of 2014 at Lalor improved by
12% when compared to the fourth quarter of 2013 as progress was
made in replacing contractors with permanent employees. Further
economies of scale are projected in the second half of 2014 when
Lalor is expected to double its production capacity rate to 2,700
tonnes of ore per day.
The operating cost per tonne of ore processed in the first
quarter of 2014 at the Flin Flon concentrator was 9% lower than the
same period in 2013, largely due to the increase in production in
the first quarter of 2014 as a result of Reed pre-commercial
production. Operating costs per tonne of ore processed at the Snow
Lake concentrator in the fourth quarter of 2014 decreased by 20%
compared to the same period in 2013 due to increased ore throughput
as the Lalor mine continued to ramp up production.
Cash Flows
Operating cash flows before change in stream deposit and non
cash working capital were negative $4.6 million, reflecting a
decrease of $16.9 million compared to 2013, mainly as a result of
lower sales volumes and lower copper prices.
Cash and cash equivalents increased by $132.6 million from
December 31, 2013 to $764.0 million as at March 31, 2014. This
increase was mainly driven by net proceeds related to the January
equity offering of $165 million, the receipt of the third deposit
under the precious metals stream transaction with Silver Wheaton
Corp. of US$125 million, net drawdowns of the equipment financing
facility of $59 million, and $52 million of value added-tax refunds
from the Peruvian government. This was partly offset by $233
million of investments primarily at the Constancia project, and
interest and dividend payments of $42 million.
During the last nine months of 2014, Hudbay anticipates making
$551 million in capital expenditures on the Constancia and Lalor
projects, in addition to $150.8 million in accrued but unpaid
expenditures on these projects as at March 31, 2014. Hudbay has
total pro forma available and committed liquidity of approximately
$1.2 billion, including $764.0 million in cash and cash equivalents
at March 31, 2014, US$135 million due from Silver Wheaton, US$150
million in availability under the Constancia credit facility,
together with amounts available under the Cat Financial equipment
finance facility, the corporate revolving credit facility and cash
tax refunds expected to be received during the first half of 2014.
In addition, Hudbay has a US$100 million credit facility available
if required to refinance any indebtedness of Augusta which may
become repayable as a result of completion of the Offer.
Constancia
At Hudbay's 100% owned Constancia copper project in Peru, the
project was over 71% complete on a proportion spent basis at the
end of March 2014. Of the total project capital budget of US$1.7
billion, Hudbay has incurred approximately US$1.2 billion in costs
to March 31, 2014 and entered into an additional US$200 million in
commitments.
Hudbay continues to advance construction activities on the power
transmission line from Tintaya to Constancia, with construction
approximately 75% complete and completion is expected in July 2014,
in time for Constancia commissioning activities. The Socabaya to
Tintaya 220kV transmission line upgrade is complete and was
energized in April of this year. All families in areas critical to
commencement of operations have been resettled. All required mining
equipment for pre-stripping operations has been commissioned and
pre-stripping activities commenced on schedule in early March 2014.
Purchased power and port services contracts are in place.
Significant progress has been achieved on construction of the
concentrator. All fabricated structural steel is on site, and
deliveries of fabricated mechanical steel and piping continue. The
crusher, mills, flotation cells and other major mechanical
equipment have been placed, and mechanical fit-out continues. Water
and tailings pipeline and water reclaim piping construction are
advancing. Electrical and instrumentation installation is underway
and electrical rooms are being delivered to site for installation.
Dam construction on the east tailings embankment is well underway
and on schedule, and water retention in the east tailings
impoundment has commenced. Water capture to build operations water
inventory began in December 2013.
Constancia construction remains on track for first production in
late 2014 and commercial production in the second quarter of
2015.
Lalor
At Hudbay's 100% owned Lalor project in Manitoba, of the total
mine construction budget of $441 million, Hudbay has invested
approximately $390 million and has entered into an additional $42
million in commitments to March 31, 2014. The underground mine
remains on schedule and on budget. Hudbay is continuing underground
project development and has completed the excavation of the
production shaft. Hudbay has completed the steel guide installation
to the 955 metre level, and is currently constructing the loading
pocket along with the remaining sets in the shaft. Hudbay expect to
complete the steel guide installation in the second quarter of
2014.
Construction is proceeding well on the 910 and 955 metre levels
on the mine dewatering systems, rock breakers and the loadout
systems. Commissioning of the production shaft, completion of mine
construction, doubling of the production capacity at the mine and
concentrator to 2,700 tonnes per day and an increase to the
production rate remain on schedule for July 2014.
The completion of surface construction is expected late in 2014.
Hudbay has recently received the Environment Act licence for Lalor,
which will enable full production via the main shaft.
Reed
Hudbay's 70% owned Reed mine in Manitoba achieved commercial
production at the end of the first quarter, ahead of guidance,
having operated at an average of 792 tonnes per day in the first
quarter of 2014. Of Hudbay's $72 million estimated capital
construction budget, the company has invested approximately $66
million to March 31, 2014 to complete the project under budget.
Approximately $4 million of project capital will be spent as
sustaining capital over the life of the mine. As of March 31, 2014,
project development had advanced 2,332 metres with an additional
883 metres of pre-production development for a total of 3,215
metres of advancement.
During the first quarter of 2014, Hudbay mined 71,236 tonnes of
ore at a copper grade of 1.92% and a zinc grade of 2.14% from a
combination of ore development and longhole stope mining.
Key Financial Results
($000s except per share and cash cost amounts) |
|
Three Months Ended March 31 |
|
|
2014 |
|
2013 |
Revenue |
|
106,779 |
|
119,881 |
(Loss) profit before tax |
|
(24,139 |
) |
7,924 |
Basic and diluted (loss) earnings per share1 |
|
(0.15 |
) |
0.01 |
Profit (loss) for the period |
|
(27,219 |
) |
1,907 |
Operating cash flow2,3 |
|
(4,634 |
) |
12,261 |
Operating cash flow per share3 |
|
(0.02 |
) |
0.07 |
Cash cost, after by-product credits (per pound sold)3 |
|
2.53 |
|
1.85 |
1
Attributable to owners of the company. |
2
Before stream deposit and change in non-cash working capital. |
3
Refer to "Non-IFRS Financial Performance Measures" below. |
|
|
($000s except per share and cash cost amounts) |
|
March 31, 2014 |
|
December 31, 2013 |
Cash and cash equivalents |
|
764,001 |
|
631,427 |
Total assets |
|
4,401,233 |
|
3,843,986 |
Non-IFRS Financial Performance Measures
Operating cash flow per share and cash costs per pound of copper
sold ("cash cost") are included in this news release because the
company believes that, in the case of operating cash flow per
share, it helps investors to evaluate changes in cash flow while
taking into account changes in shares outstanding, and in the case
of cash costs, they help investors assess the performance of the
Company's operations. 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.
Operating cash flow per share
The following table presents Hudbay's calculation of operating
cash flow per share for the three months ended March 31, 2014 and
March 31, 2013:
($000s except share and per share amounts) |
|
Three Months Ended March 31 |
|
2014 |
|
2013 |
Operating cash flow before stream deposit and change in non-cash
working capital |
|
(4,634) |
|
12,261 |
|
|
|
|
|
Weighted average shares outstanding |
|
186,031,709 |
|
172,012,192 |
Operating cash flow per share |
|
(0.02) |
|
0.07 |
Cash cost per pound of copper sold
Cash cost per pound of copper sold is a non-IFRS measure that
management uses as a key performance indicator to assess the
performance of the company's operations. Hudbay's calculation
designates copper as its primary metal of production as it is
currently, and is expected to be, the largest component of
revenues. The calculation is presented in two manners:
- Cash cost per pound of copper sold, before by-product credits -
This measure is gross of by-product revenues and is a function of
the efforts and costs incurred to mine and process all ore mined.
However, the measure divides this aggregate cost over only pounds
of copper sold, Hudbay's primary metal of production. This measure
is generally less volatile from period to period, as it is not
affected by changes in the price received for by-product metals. It
is, however, significantly affected by the relative mix of metal
sales, and an increase in production of a by-product metal will
tend to result in an increase in cash costs under this measure,
regardless of the profitability of the increased by-product metal
production.
- Cash cost per pound of copper sold, net of by-product credits -
In order to calculate the cost to produce and sell copper, the net
of by-product credits measure subtracts the revenues realized from
the sale of the metals other than copper. The by-product revenues
from zinc, gold and silver are significant and are integral to the
economics of Hudbay. The economics that support Hudbay's decision
to produce and sell copper would be different if the company did
not receive revenues from the other significant metals being
extracted and processed. This measure provides management and
investors with an indication of the minimum copper price consistent
with positive operating cash flows and operating margins, assuming
by-product metal prices are consistent with those prevailing during
the reporting period. It also serves as an important operating
statistic that management and investors utilize to measure Hudbay's
operating performance versus that of its competitors. However, it
is important to understand that if by-product metal prices decline
alongside copper prices, the cash cost net of by-product credits
would increase, requiring a higher copper price than that reported
to maintain positive cash flows and operating margins.
The following table presents Hudbay's calculation of gross cash
cost per pound of copper sold and cash cost per pound of copper
sold, net of by-product credits for the three months ended March
31, 2014 and 2013.
(000's) |
|
Three Months Ended March 31 |
|
|
|
2014 |
|
2013 |
|
By product credits: |
|
|
|
|
|
Zinc |
|
52,189 |
|
51,615 |
|
Gold |
|
14,115 |
|
13,992 |
|
Silver |
|
2,343 |
|
2,204 |
|
Other |
|
984 |
|
1,375 |
|
Total by product credits |
|
69,631 |
|
69,186 |
|
Less: deferred revenue |
|
(7,061 |
) |
(9,443 |
) |
Less: pre-production credits |
|
(4,548 |
) |
(4,677 |
) |
Total by product credits, net of pre-production credits |
|
58,022 |
|
55,066 |
|
|
|
|
|
|
|
By product credits, per net copper pound sold: |
|
|
|
|
|
Zinc |
|
4.82 |
|
3.12 |
|
Gold |
|
1.30 |
|
0.85 |
|
Silver |
|
0.22 |
|
0.13 |
|
Other |
|
0.09 |
|
0.08 |
|
Total by product credits |
|
6.43 |
|
4.18 |
|
Less: deferred revenue |
|
(0.65 |
) |
(0.57 |
) |
Less: pre-production credits |
|
(0.42 |
) |
(0.28 |
) |
Total by product credits, net of pre-production credits |
|
5.36 |
|
3.33 |
|
|
|
|
|
|
|
Cash cost, before by-product credits |
|
85,422 |
|
85,714 |
|
By-product credits, net of pre-production credits |
|
(58,022 |
) |
(55,066 |
) |
Cash cost, after by-product credits |
|
27,400 |
|
30,648 |
|
|
|
|
|
|
|
Pounds of copper sold |
|
12,212 |
|
17,242 |
|
Less: pre-production pounds of copper sold |
|
(1,384 |
) |
(706 |
) |
Net pounds of copper sold |
|
10,828 |
|
16,536 |
|
|
|
|
|
|
|
Cash cost, before by-product credits (per pound sold) |
|
7.89 |
|
5.18 |
|
By-product credits (per pound sold) |
|
(5.36 |
) |
(3.33 |
) |
Cash cost, after by-product credits (per pound sold) |
|
2.53 |
|
1.85 |
|
|
|
|
|
|
|
Reconciliation to IFRS: |
|
|
|
|
|
Cash cost, after by-product credits |
|
27,400 |
|
30,648 |
|
By-product credits |
|
69,631 |
|
69,186 |
|
Change in deferred revenues |
|
(7,061 |
) |
(9,443 |
) |
Pre-production revenue |
|
(4,548 |
) |
(4,677 |
) |
Treatment and refining charges |
|
(5,054 |
) |
(4,951 |
) |
Share based payment |
|
241 |
|
258 |
|
Adjustments related to zinc inventory write-downs (reversals) |
|
674 |
|
- |
|
Cost of sales - operating costs (excluding depreciation) |
|
81,283 |
|
81,021 |
|
Cash cost after by-product credits for the first quarter of 2014
was $2.53/lb, compared to $1.85/lb for the same period in 2013.
Although the costs, expressed in absolute terms, were similar to
the same period in 2013, a decline in pounds of copper sold in the
current period was the primary cause of the increase of the metric
on a per pound basis.
Website Links
Hudbay:
www.hudbayminerals.com
Management's Discussion and Analysis:
http://media3.marketwire.com/docs/HUDBQ1MDA2014.pdf
Financial Statements:
http://media3.marketwire.com/docs/HUDBQ1FS2014.pdf
Conference Call and Webcast
Date: |
Thursday, May 1, 2014 |
|
|
Time: |
10
a.m. ET |
|
|
Webcast: |
www.hudbayminerals.com |
|
|
Dial
in: |
416-644-3415 or
877-974-0445 |
|
|
Replay: |
416-640-1917 or
877-289-8525 |
|
|
Replay Passcode: |
4676300# |
The conference call replay will be available until midnight
(Eastern Time) on May 8, 2014. An archived audio webcast of the
call also will be available on Hudbay's website.
Qualified Persons
The technical and scientific information in this news release
related to the Constancia project has been approved by Cashel
Meagher, P. Geo, Hudbay's Vice-President, South America. The
technical and scientific information related to all other sites and
projects contained in this news release has been approved by Robert
Carter, P. Eng, Hudbay's Director, Technical Services. Messrs.
Meagher and Carter are qualified persons pursuant to National
Instrument 43-101 - Standards of Disclosure for Mineral
Projects. For a description of the key assumptions, parameters
and methods used to estimate mineral reserves and resources, 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 each of our material
properties as filed on SEDAR at www.sedar.com.
Forward-Looking Information
This news release contains "forward-looking statements" and
"forward-looking information" (collectively, "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 the anticipated timing, mechanics,
completion and settlement of the Offer, the market for and listing
of the common shares Hudbay may issue pursuant to the Offer, the
value of the Hudbay common shares that may be received as
consideration under the Offer, Hudbay's ability to complete the
transactions contemplated by the Offer, the permitting, development
and financing of Augusta's Rosemont project, the purpose of the
Offer, the completion of any compulsory acquisition or subsequent
acquisition transaction in connection with the Offer and any
commitment to acquire outstanding shares of Augusta, Hudbay's
objectives, strategies, intentions, expectations and guidance and
future financial and operating performance and prospects,
production at Hudbay's 777, Lalor and Reed mines and initial
production from the Constancia project, continued processing at
Hudbay's Flin Flon concentrator, Snow Lake concentrator and Flin
Flon zinc plant, Hudbay's ability to complete the development of
Hudbay's Lalor and Constancia projects and the anticipated scope
and cost of any development plans for these projects, anticipated
timing of Hudbay's projects and events that may affect Hudbay's
projects, including the anticipated issue of required licenses and
permits, Hudbay's expectation that the company will receive the
remaining deposit amounts under the amended precious metals stream
transaction with Silver Wheaton Corp. and additional funding under
Hudbay's equipment financing transaction with Caterpillar Financial
Services Corporation, expectations with respect to additional
credit facilities, the anticipated effect of external factors on
revenue, such as commodity prices, anticipated exploration and
development expenditures and activities and the possible success of
such activities, estimation of mineral reserves and resources, mine
life projections, timing and amount of estimated future production,
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 us 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 identified and
were applied by the company in drawing conclusions or making
forecasts or projections set out in the forward looking information
include, but are not limited to:
- the success of mining, processing, exploration and development
activities;
- the accuracy of geological, mining and metallurgical
estimates;
- the costs of production;
- the supply and demand for metals Hudbay produces;
- no significant and continuing adverse changes in financial
markets, including commodity prices and foreign exchange
rates;
- the supply and availability of concentrate for Hudbay's
processing facilities;
- the supply and availability of reagents for Hudbay's
concentrators;
- the availability of third party processing facilities for
Hudbay's concentrate;
- the supply and availability of all forms of energy and fuels at
reasonable prices;
- the availability of transportation services at reasonable
prices;
- no significant unanticipated operational or technical
difficulties;
- the execution of Hudbay's business and growth strategies,
including the success of Hudbay's strategic investments and
initiatives;
- the availability of financing for Hudbay's exploration and
development projects and activities;
- the ability to complete project targets on time and on budget
and other events that may affect Hudbay's ability to develop
Hudbay's projects;
- the timing and receipt of various regulatory and governmental
approvals;
- the availability of personnel for Hudbay's exploration,
development and operational projects and ongoing employee
relations;
- Hudbay's ability to secure required land rights to complete its
Constancia project;
- maintaining good relations with the communities in which Hudbay
operates, including the communities surrounding the Constancia
project and First Nations communities surrounding the Lalor project
and Reed mines;
- no significant unanticipated challenges with stakeholders at
Hudbay's various projects;
- no significant unanticipated events or changes relating to
regulatory, environmental, health and safety matters;
- no contests over title to Hudbay's properties, including as a
result of rights or claimed rights of aboriginal peoples;
- the timing and possible outcome of pending litigation and no
significant unanticipated litigation;
- certain tax matters, including, but not limited to current tax
laws and regulations and the refund of certain value added taxes
from the Canadian and Peruvian governments;
- no significant and continuing adverse changes in general
economic conditions or conditions in the financial markets;
- the accuracy of Augusta's public disclosure;
- that all conditions to the Offer will be satisfied or waived;
and
- the timing and likelihood of entering into a standby credit
facility and offtake arrangement in respect of Constancia.
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, the impact of the issuance of Hudbay's common
shares as consideration under the Offer on the market price of
Hudbay's common shares, the development of the Rosemont Project not
occurring as planned, the exercising of dissent and appraisal
rights by Augusta shareholders should a compulsory acquisition or
subsequent acquisition transaction be undertaken in connection with
the Offer, the reduced trading liquidity of common shares of
Augusta not deposited under the Offer, Augusta becoming a
minority-owned or majority-owned subsidiary of Hudbay after
consummation of the Offer, the possibility that Hudbay may remain a
minority shareholder of Augusta after consummation of the Offer
without the ability to control the management or direction of
Augusta, the inaccuracy of Augusta's public disclosure upon which
the Offer is predicated, the triggering of change of control
provisions in Augusta's agreements leading to adverse consequences,
the failure to obtain required approvals or clearances from
government authorities on a timely basis, risks generally
associated with the mining industry, such as economic factors
(including future commodity prices, currency fluctuations, energy
prices and general cost escalation), uncertainties related to the
development and operation of Hudbay's projects (including the
impact on project cost and schedule of construction delays and
unforeseen risks and other factors beyond the company's control),
depletion of Hudbay's reserves, risks related to political or
social unrest or change and those in respect of aboriginal and
community relations, rights and title claims, operational risks and
hazards, including unanticipated environmental, industrial and
geological events and developments and the inability to insure
against all risks, 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, dependence on
key personnel and employee relations, volatile financial markets
that may affect Hudbay's ability to obtain financing on acceptable
terms, 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 its pension
and other post-retirement obligations, Hudbay's ability to abide by
the covenants in its debt instruments or other material contracts,
tax refunds, hedging transactions, as well as the risks discussed
under the heading "Risk Factors" in the company's most recent
Annual Information Form.
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.
Information Concerning Augusta
Except as otherwise expressly indicated herein, the information
concerning Augusta contained in this news release has been taken
from and is based solely upon Augusta's public disclosure on file
with the relevant securities regulatory authorities. Augusta has
not reviewed this document and has not confirmed the accuracy and
completeness of the information in respect of Augusta contained in
this news release. Although Hudbay has no knowledge that would
indicate that any information or statements contained in this news
release concerning Augusta taken from, or based upon, such public
disclosure contain any untrue statement of a material fact or omit
to state a material fact that is required to be stated or that is
necessary to make a statement not misleading in light of the
circumstances in which it was made, none of Hudbay's directors or
officers have verified the accuracy or completeness of such
information or statements or are aware of any failure by Augusta to
disclose events or facts which may have occurred or which may
affect the significance or accuracy of any such information or
statements. Hudbay has no means of verifying the accuracy or
completeness of any of the information contained herein that is
derived from Augusta's publicly available documents or records or
whether there has been any failure by Augusta to disclose events
that may have occurred or may affect the significance or accuracy
of any information. Except as otherwise indicated, information
concerning Augusta is given based on information in Augusta's
public disclosure available as of the date of the Offer.
Cautionary Note in Respect of the Offer
The full details of the Offer are set out in the takeover bid
circular and accompanying offer documents, as amended
(collectively, the "Offer Documents"), which Hudbay filed with the
Canadian securities regulatory authorities. Hudbay also filed with
the SEC a registration statement on Form F-10, as amended (the
"Registration Statement"), which contains a prospectus relating to
the Offer (the "Prospectus"), and a tender offer statement on
Schedule TO, as amended (the "Schedule TO"). The disclosure related
to the Offer in this news release is not a substitute for the Offer
Documents, the Prospectus, the Registration Statement or the
Schedule TO. AUGUSTA SHAREHOLDERS AND OTHER INTERESTED PARTIES ARE
URGED TO READ THESE DOCUMENTS, ALL DOCUMENTS INCORPORATED BY
REFERENCE, ALL OTHER APPLICABLE DOCUMENTS AND ANY AMENDMENTS OR
SUPPLEMENTS TO ANY SUCH DOCUMENTS WHEN THEY BECOME AVAILABLE,
BECAUSE EACH WILL CONTAIN IMPORTANT INFORMATION ABOUT HUDBAY,
AUGUSTA AND THE OFFER. Materials filed with the Canadian securities
regulatory authorities are available electronically without charge
at www.sedar.com. Materials filed with the SEC are available
electronically without charge at the SEC's website at www.sec.gov.
All such materials may also be obtained without charge at Hudbay's
website, www.hudbayminerals.com or by directing a written or oral
request to the information agent for the Offer, Kingsdale
Shareholder Services at 1-866-229-8874 (North
American Toll Free Number) or 1-416-867-2272
(outside North America), or by email at
contactus@kingsdaleshareholder.com or to the Vice President, Legal
and Corporate Secretary of Hudbay at 25 York Street, Suite 800,
Toronto, Ontario, telephone (416)
362-8181.
This news release does not constitute an offer to buy or the
solicitation of an offer to sell any of the securities of Hudbay or
Augusta.
About Hudbay
Hudbay (TSX:HBM)(NYSE:HBM) is a Canadian integrated mining
company with assets in North and South America principally focused
on the discovery, production and marketing of base and precious
metals. Hudbay's objective is to maximize shareholder value through
efficient operations, organic growth and accretive acquisitions,
while maintaining its financial strength. A member of the
S&P/TSX Composite Index and the S&P/TSX Global Mining
Index, Hudbay is committed to high standards of corporate
governance and sustainability. Further information about Hudbay can
be found on www.hudbayminerals.com.
HudBay Minerals Inc.Candace BruleDirector, Investor
Relations(416)
814-4387candace.brule@hudbayminerals.comwww.hudbayminerals.com
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