HudBay Minerals Announces Third Quarter 2005 Results.TORONTO Toronto (tərŏn`tō), city (1998 est pop. 2,400,000), provincial capital, S Ont., Canada, on Lake Ontario. Toronto is the largest city in Canada and since the 1970s has been one of the fastest-changing cities in North America, experiencing -- HudBay Minerals Inc. (TSX TSX Toronto Stock Exchange (TSE before April, 2002) TSX Transfer from Stack Pointer to Index TSX True Space Extension :HBM HBM Human Body Model HBM Human Brain Mapping HBM Hottinger Baldwin Messtechnik GmbH (German company) HBM High Bone Mass HBM Hybrid Bilayer Membrane HBM Humming Bird Medal HBM Her/His Britannic Majesty ) - Highlights during the quarter: - Earnings jumped 169% over 2nd quarter of 2005 to $23.4 million or EPS (Encapsulated PostScript) A PostScript file format used to transfer a graphic image between applications and platforms. EPS files contain PostScript code as well as an optional preview image in TIFF, WMF, PICT or EPSI, the latter being an ASCII-only format. of $0.28 - Sales revenue increased 7.0% over 2nd quarter of 2005 to $169.3 million - Total ore ore, metal-bearing mineral mass that can be profitably mined. Nearly all rock deposits contain some metallic minerals, but in many cases the concentration of metal is too low to justify mining the ore. production advanced 0.8% over 2nd quarter of 2005 to 660,044 tonnes - $10.0 million exploration drilling program continues - Cash position of $125.9 million - Third quarter since acquisition of Hudson Bay Hudson Bay, inland sea of North America, c.475,000 sq mi (1,230,000 sq km), c.850 mi (1,370 km) long and c.650 mi (1,050 km) wide, E central Canada. Hudson Bay and James Bay (its southern extension) and all their islands border Nunavut Territory, Manitoba, Ontario, Mining and Smelting smelting, in metallurgy, any process of melting or fusion, especially to extract a metal from its ore. Smelting processes vary in detail depending on the nature of the ore and the metal involved, but they are typified in the use of the blast furnace. Co., Limited Highlights subsequent to end of the quarter: - Completed exercise of option to acquire White Pine pine, common name for members of the Pinaceae, a family of resinous woody trees with needlelike, usually evergreen leaves. The Pinaceae reproduce by means of cones (see cone) rather than flowers and many have winged seeds, suitable for wind distribution. Copper Refinery - Announced expected reopening Reopening Treasury offerings of additional amounts of outstanding issues, rather than an entirely new issue. A reopened issue will always have the same maturity date, CUSIP number, and interest rate as the original issue. of Balmat Mine in New York New York, state, United States New York, Middle Atlantic state of the United States. It is bordered by Vermont, Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S), Lakes Erie and Ontario and the Canadian province of State with first ore early second quarter of 2006 - Evaluation of provisions for closure and reclamation Reclamation A claim for the right to return or the right to demand the return of a security that has been previously accepted as a result of bad delivery or other irregularities in the delivery and settlement process. completed as described on page 12 HudBay Minerals Inc. (TSX:HBM) (HudBay) earned $23.4 million or $0.28 per share in the third quarter of 2005, compared to $8.7 million or $0.11 per share in the second quarter of 2005. This marked the third full quarter of operations since the acquisition of Hudson Bay Mining and Smelting Co., Limited (HBMS HBMS Hudson Bay Mining and Smelting (Manitoba, Canada) ) on December December: see month. 21, 2004. "Our results during the quarter were solid and we are particularly pleased with our improvements in sales revenues and net earnings," said Peter Jones, President and CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. , HudBay Minerals. Subsequent to the end of the third quarter, HudBay announced that through its wholly owned subsidiary Wholly Owned Subsidiary A subsidiary whose parent company owns 100% of its common stock. Notes: In other words, the parent company owns the company outright and there are no minority owners. Hudson Bay Mining and Smelting Co., Limited (HBMS), it has exercised an option to acquire 100% ownership of White Pine Copper Refinery Inc. (White Pine), a Michigan-based copper refinery. The acquisition is expected to close in late 2005 or early 2006. The purchase price to be paid for White Pine is US$13 million, subject to certain adjustments. HudBay also announced that through its wholly owned St. Lawrence Lawrence. 1 City (1990 pop. 26,763), Marion co., central Ind., a residential suburb of Indianapolis, on the West Fork of the White River. It has light manufacturing. 2 City (1990 pop. 65,608), seat of Douglas co., NE Kans. Zinc Company, LLC (Logical Link Control) See "LANs" under data link protocol. LLC - Logical Link Control (SLZ SLZ San Lawrenz (postal locality, Malta) SLZ Sao Luiz, Maranhao, Brazil - Tirirical (Airport Code) SLZ Star Light Zone (Sonic 1 level) ), it expects to reopen re·o·pen tr. & intr.v. re·o·pened, re·o·pen·ing, re·o·pens 1. To open or be opened again: Officials reopened the airport after the snow was cleared. Schools reopen in September. Balmat No. 4 Zinc Mine in the Balmat zinc mining district of New York state. "White Pine has processed the copper anode anode (ăn`ōd), electrode through which current enters an electric device. In electrolysis, it is the positive electrode in the electrolytic cell. anode Terminal or electrode from which electrons leave a system. produced by HBMS into refined copper cathode for a number of years and this will continue after the acquisition," said Mr. Jones. "Balmat is a readily available zinc source and will be accretive to HudBay's performance when it is expected to produce first ore early in the second quarter of 2006," he added. Summarized Financial Results The following table sets out summary consolidated con·sol·i·date v. con·sol·i·dat·ed, con·sol·i·dat·ing, con·sol·i·dates v.tr. 1. To unite into one system or whole; combine: financial information for the Company at and for the three-month periods ("quarters") ended September September: see month. 30 and June June: see month. 30, as well as the nine-month periods ended September 30, 2005, and 2004:
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Three months ended Nine months
Sept 30 June 30 Sept 30 ended September 30
----------------------------------------------------
2005 2005 2004(1)(2) 2005 2004(1)(2)
---------------------------------------------------------------------
($000s except per share amounts)
---------------------------------------------------------------------
Statement of
operations:
Sales 169,264 158,188 - 478,977 -
Earnings (loss) 23,405 8,691 (3,281) 41,277 (7,062)
Earnings (loss)
per common
share (3):
Basic $0.28 $0.11 $(0.48) $0.51 $(1.10)
Diluted $0.28 $0.11 na(4) $0.51 na(4)
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As at
----------------------------------
Sept 30 June 30 Sept 30
----------------------------------
2005 2005 2004
----------------------------------
($000s)
---------------------------------------------------------------------
Balance sheet:
Cash and cash
equivalents 125,880 123,967 2,951
Total assets 694,766 695,427 13,535
Working capital 195,371 190,670 146,079
Total long term debt
and capital leases,
excluding current
portion 223,366 235,076 1,839
Shareholders' equity 214,963 189,914 9,104
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(1) Excludes results of HBMS.
(2) Restated to give effect to change in accounting policy related to
expensing of exploration costs, consistent with HBMS practice.
(3) As of November 7, 2005, there were 84,257,012 common shares of
the Company issued and outstanding, as well as 1,091,132,785
warrants (pre-consolidated at 30 warrants per one common share)
exercisable for a maximum of 36,371,092 common shares. In
addition, options exercisable for 1,247,378 common shares were
outstanding.
(4) The conversion of stock options and warrants to calculate fully
diluted was not done for 2004 as the conversion would have been
anti-dilutive.
Operational Review Mines and Concentrators Production at the 777 mine for the quarter ended September 30, 2005 increased by 6.2% compared to the previous quarter, consistent with plans to ramp up Ramp Up To increase a company's operations in anticipation of increased demand. Notes: A company might 'ramp up' operations if they just signed a contract creating substantially more demand for their product. See also: Demand, Economies of Scale production to a rate of 1.35 million tonnes per year by January January: see month. 1, 2006. Compared to the second quarter of 2005, Konuto Lake mine production was down 7.9% in the third quarter as expected given the planned closure of the mine at the end of November November: see month. 2005. Total production from all mines increased by 0.8% in the third quarter of 2005 as compared to the second quarter, while copper and zinc metal content decreased by 3.5% and 6.0% respectively, primarily as a result of mining lower zinc grade areas of the Chisel chisel Cutting tool with a sharpened edge at the end of a metal blade, used (often by driving with a mallet or hammer) in dressing, shaping, or working a solid material such as wood, stone, or metal. North mine, and a change in the mine plan at the Trout Lake Trout Lake may refer to:
On a unit cost basis, total mine operating costs operating costs npl → gastos mpl operacionales increased by approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. 1.6% in the third quarter of 2005 as compared to the second quarter. The increase was primarily associated with additional operating development costs at the Trout Lake and Chisel North mines that were largely offset by similar decreases in capital development. For the third quarter of 2005, Flin Flon Flin Flon (flĭn flŏn), city (1991 pop. in Manitoba, 7,119; in Saskatchewan, 330), on the Man.-Sask. border, Canada. It is a mining and smelting center in a region producing copper, zinc, silver, gold, and cadmium; it also serves a lumbering concentrator throughput The speed with which a computer processes data. It is a combination of internal processing speed, peripheral speeds (I/O) and the efficiency of the operating system and other system software all working together. 1. increased by approximately 4.6% compared to the second quarter, with the increase primarily reflecting the maintenance shutdown shut·down n. A cessation of operations or activity, as at a factory. shutdown Noun the closing of a factory, shop, or other business Verb shut down taken in the second quarter. Both copper head grade and recovery improved marginally mar·gin·al adj. 1. Of, relating to, located at, or constituting a margin, a border, or an edge: the marginal strip of beach; a marginal issue that had no bearing on the election results. 2. in the third quarter. Zinc head grade declined in the third quarter largely as a result of the change in the Trout Lake mine plan as noted above. The lower head grade resulted in a decrease in zinc recovery in the concentrator for the quarter. Gold recovery was lower in the third quarter due to summer temperatures increasing process An increasing process is a stochastic process where the random variables water temperature. Unit cost for the Flin Flon concentrator increased by approximately 2.6% in the third quarter of 2005 as compared to the second quarter, with the increase arising primarily from a non-recurring repair to a coarse ore bin. For the third quarter of 2005, Snow Lake concentrator throughput increased to match mine production from the Chisel North mine, and the throughput increased by approximately 5.1% compared to the second quarter. Zinc recovery reduced marginally as a result of lower zinc head grade from the mine. Unit cost for the concentrator decreased by approximately 8.6% in the third quarter of 2005 as compared to the second quarter, with the decrease resulting primarily from the additional throughput. Metallurgical met·al·lur·gy n. 1. The science that deals with procedures used in extracting metals from their ores, purifying and alloying metals, and creating useful objects from metals. 2. Plants Copper production for the third quarter of 2005 decreased by approximately 1.6% compared to the second quarter. On a unit cost basis, operating costs were approximately 8.3% higher in the third quarter of 2005 as compared to the second quarter, with the increase largely related to increased costs for heavy fuel oil. For the third quarter of 2005, operating costs in the zinc plant, on a total dollar basis, were approximately 2% lower than the second quarter of 2005; however, on a unit cost basis, third quarter costs increased by approximately 10% relative to the second quarter as zinc production decreased by approximately 3,400 tonnes (or 11.7%). This decrease related to planned downtime The time during which a computer is not functioning due to hardware, operating system or application program failure. for general plant maintenance and the replacement of a cellhouse transformer transformer, electrical device used to transfer an alternating current or voltage from one electric circuit to another by means of electromagnetic induction. , together with repair work in the oxygen plant and a period of less than full oxygen supply. Quarterly Information The following table sets forth our selected consolidated financial information for each of the eight most recently completed quarters. Note that the results reflect the acquisition of HBMS as of December 21, 2004.
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2005 2004 2003
---------------------------------------------------------------------
Q3 Q2 Q1 Q4 Q3 Q2 Q1 Q4
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(In $000s, except per share information)
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Net
Revenue 169,264 158,188 151,525 13,308 6 7 6 5
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Earnings
(loss) 23,405 8,691 9,181 (2,891)(3,281)(2,083)(1,664)(3,429)
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Per
Common
Share
---------------------------------------------------------------------
Basic 0.28 0.11 0.12 (0.18) (0.48) (0.30) (0.29) (0.65)
Diluted(1) 0.28 0.11 0.12 na na na na na
---------------------------------------------------------------------
(1) Based on the treasury method of calculating fully diluted shares
outstanding.
Results of Operations With the exception of ten days in December This article or section needs sources or references that appear in reliable, third-party publications. Alone, primary sources and sources affiliated with the subject of this article are not sufficient for an accurate encyclopedia article. 2004, HudBay had no production and was essentially a development stage enterprise. As such, discussion and analysis of 2005 compared to 2004 has been limited, and additionally, a comparison of results achieved in the second and third quarters of 2005 has been provided. Quarter Ended September 30, 2005 Compared to Quarter Ended June 30, 2005 Net income for the quarter ended September 30, 2005 was $23.4 million compared to $8.7 million for the quarter ended June 30, 2005. Total sales revenue for the quarter ended September 30, 2005 was $169.3 million from sales of approximately 19,800 tonnes of copper, and 29,500 tonnes of zinc which included 8,300 tonnes sold to our Zochem division for use in the production of zinc oxide zinc oxide, chemical compound, ZnO, that is nearly insoluble in water but soluble in acids or alkalies. It occurs as white hexagonal crystals or a white powder commonly known as zinc white. . In the third quarter of 2005, Zochem had sales of approximately 10,700 tonnes of zinc oxide. Revenues for the quarter also included sales of approximately 21,800 ounces of gold, and 309,500 ounces of silver. Over the quarter, gross realized prices averaged US$1.80/lb copper, US$0.62/lb zinc, US$446/troy oz gold, and US$7.16/troy oz silver. The Canadian Canadian (kənā`dēən), river, 906 mi (1,458 km) long, rising in NE New Mexico. and flowing E across N Texas and central Oklahoma into the Arkansas River in E Oklahoma. to US dollar exchange rate averaged Cdn $1.20 per US $1.00 for the quarter. Total sales for the third quarter of 2005 improved by 7.0% compared to the second quarter largely as a result of a decrease in inventory at Considar Metal Marketing ("CMM (Capability Maturity Model) A process developed by SEI in 1986 to help improve, over time, the application of an organization's supporting software technologies. "), our joint venture marketing company, and a 14.6% improvement in copper price, which more than offset a 4,700 ounce ounce, in zoology ounce, in zoology: see leopard. ounce, unit of measurement ounce: see English units of measurement. reduction in gold sales. Approximately one-half of the gold sales decrease arose from lower output from the Flin Flon concentrator, and the balance from processing less copper concentrate from owned mines compared to purchased concentrates in the copper smelter. Additional purchased copper concentrate was treated in the third quarter as suppliers increased deliveries to HBMS in order to make up for minor shortfalls against contractual deliveries in the first and second quarters. Operating expenses Operating expenses The amount paid for asset maintenance or the cost of doing business, excluding depreciation. Earnings are distributed after operating expenses are deducted. in the third quarter of 2005, of $125.4 million, increased by approximately 9.9% compared to the second quarter of $114.1 million. This increase primarily related to a $10.8 million increase in the cost of purchased copper concentrate treated, which arose as a result of the additional volume treated, as well as a significant increase in copper price over the quarter. For the quarter ended September 30, 2005, operating costs in the mines and concentrators increased by approximately 2.8% compared to the previous quarter. This increase resulted from additional operating development activity, and was offset by a similar decrease in capital development. General and administrative ("G&A") expense for the quarter ended September 30, 2005 was $3.1 million compared to $4.6 million for the quarter ended June 30, 2005. Costs for the third quarter of 2005 were lower as total G&A expenses for the previous two quarters included approximately $1.6 million of non-recurring expenses. The previously announced program of exploration on the Company's lands in Manitoba Manitoba (mănĭtō`bə), province (2001 pop. 1,119,583), 250,934 sq mi (650,930 sq km), including 39,215 sq mi (101,580 sq km) of water surface, W central Canada. and Saskatchewan Saskatchewan, province, Canada Saskatchewan (səskăch`əwən, –wän', săs'–), province (2001 pop. 978,933), 251,700 sq mi (651,903 sq km), W Canada. continued during the quarter. The program provides for $10 million of planned exploration in the Flin Flon Greenstone Belt Greenstone belts are zones of variably metamorphosed mafic to ultramafic volcanic sequences with associated sedimentary rocks that occur within Archaean and Proterozoic cratons between granite and gneiss bodies. during 2005 and the first quarter of 2006, of which approximately $3.9 million has been spent as of September 30, 2005. For the nine months ended September 30, 2005, exploration expenditures of $7.7 million as shown on the income statement include $3.9 million relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc flow-through activity, $3.0 million for Balmat feasibility fea·si·ble adj. 1. Capable of being accomplished or brought about; possible: a feasible plan. See Synonyms at possible. 2. costs, and $0.8 million of other costs (primarily Flin Flon area non flow-through related). For the quarter ended September 30, 2005, the Company recorded a foreign exchange loss of $2.9 million compared to a gain of $0.4 million in the previous quarter. This relates primarily to the change in the value of the Company's cash balance which is held largely in US$ deposits, and was converted to Canadian dollars Noun 1. Canadian dollar - the basic unit of money in Canada; "the Canadian dollar has the image of loon on one side of the coin" loonie dollar - the basic monetary unit in many countries; equal to 100 cents at a quarter end exchange rate of Cdn $1.16 per US $1.00, compared to a rate of Cdn $1.22 per US $1.00 for the previous quarter. For the quarter ended September 30, 2005, operating earnings Operating Earnings Profits after subtracting expenses such as marketing, cost of goods sold, administration and general operating costs from revenue. Notes: Tax and interest expenses are not subtracted - operating earnings are synonymous with EBIT (earnings before was $19.1 million compared to $21.5 million for the three months ended June 30, 2005. The unfavourable variance The discrepancy between what a party to a lawsuit alleges will be proved in pleadings and what the party actually proves at trial. In Zoning law, an official permit to use property in a manner that departs from the way in which other property in the same locality of $2.4 million can be summarized broadly as follows: increased sales of $11.1 million plus miscellaneous net cost reductions of $0.7 million, offset by increased concentrate purchases of $10.9 million and non-cash foreign exchange losses of $3.3 million. For the quarter ended September 30, 2005, the Company recorded a foreign exchange gain on long-term debt Long-Term Debt Loans and financial obligations lasting over one year. Notes: For example debts obligations such as bonds and notes which have maturities greater than one year would be considered long-term debt. of $11.0 million compared to a loss of $2.8 million in the previous quarter. This gain was a result of the change in US$ denominated debt as valued at month end exchange rates. In the quarter ended September 30, 2005, the Company recorded a $1.5 million gain on derivative instruments Derivative instruments Contracts such as options and futures whose price is derived from the price of an underlying financial asset. compared to a $1.8 million loss for the quarter ended June 30, 2005. The derivatives derivatives In finance, contracts whose value is derived from another asset, which can include stocks, bonds, currencies, interest rates, commodities, and related indexes. Purchasers of derivatives are essentially wagering on the future performance of that asset. are forward contracts placed in conjunction conjunction, in astronomy conjunction, in astronomy, alignment of two celestial bodies as seen from the earth. Conjunction of the moon and the planets is often determined by reference to the sun. with CMM fixed price sales contracts Sales Contract Contract between a seller and buyer for the sale of goods, services, or both. . Unexpired contracts are valued based on month end market price compared to the forward price. In the quarter ended September 30, 2005, the Company recorded a non-cash tax expense of $3.2 million compared to an expense of $2.7 million in the quarter ended June 30, 2005. The Company has sufficient tax pools to shelter A general term used in statutes that relates to the provision of food, clothing, and housing for specified individuals; a home with a proper environment that affords protection from the weather. income and does not anticipate significant cash income taxes in the foreseeable fore·see tr.v. fore·saw , fore·seen , fore·see·ing, fore·sees To see or know beforehand: foresaw the rapid increase in unemployment. future. For the quarter ended September 30, 2005, net earnings was $23.4 million compared to $8.7 million for the three months ended June 30, 2005. The net $14.7 million variance can be summarized broadly as follows: increased sales of $11.1 million, foreign exchange gains $10.5 million, derivative derivative: see calculus. derivative In mathematics, a fundamental concept of differential calculus representing the instantaneous rate of change of a function. gains $3.4 million, and miscellaneous cost reductions of $0.6 million, offset by a $10.9 million increase in concentrate purchase cost. Quarter Ended September 30, 2005 Compared to Quarter Ended September 30, 2004 Net income for the quarter ended September 30, 2005 was $23.4 million compared with a loss of $3.3 million for the quarter ended September 30, 2004. Total sales revenue for the quarter ended September 30, 2005 was $169.3 million from sales of metals produced. The Company had no metal sales in the third quarter of 2004. Operating costs for the quarter ended September 30, 2005 increased to $125.4 million from $0.9 million for the quarter ended September 30, 2004. Costs in the third quarter of 2004 primarily related to care and maintenance costs of the Balmat Mine acquired in September 2003 but also included care and maintenance costs of the Gays River property. Nine Months Ended September 30, 2005 Compared to Nine Months Ended June 30, 2004 Net income for the nine months ended September 30, 2005 was $41.3 million compared with a loss of $7.1 million for the nine months ended September 30, 2004. Total sales revenue for the nine months ended September 30, 2005 was $479.0 million. The Company had no metal sales in the first nine months of 2004. Operating costs for the nine months ended September 30, 2005 increased to $357.2 million from $2.6 million for the nine months ended September 30, 2004. Costs in the first nine months of 2004 primarily related to care and maintenance of the Balmat and Gays River properties. Cash Cost per Pound of Zinc Sold HudBay's total cash cost net of by-product by·prod·uct or by-prod·uct n. 1. Something produced in the making of something else. 2. A secondary result; a side effect. by-product Noun 1. credits for the quarter ended September 30, 2005 was US$0.15 per pound of zinc sold. The Company had no metal sales in the same quarter of 2004. Non GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). Reconciliation of Cash Cost per Pound of Zinc Sold, Net of By-Product Credits
HudBay Minerals Inc. Three Three Three Nine
Months Months Months Months
Ended Ended Ended Ended
March 31, June 30, Sept 30, Sept 30,
2005 2005 2005 2005
------------------------------------------------
($000) ($000) ($000) ($000)
Expenses C$135,049 C$136,726 C$150,140 421,915
Non-cash operating costs
Depreciation and
amortization (12,724) (13,228) (13,618) (39,570)
Stock-based compensation 0 (1,354) (591) (1,945)
Accretion and other
non-cash (652) (649) (655) (1,956)
Foreign exchange gain
(loss) 250 424 (2,850) (2,176)
------------------------------------------------
121,923 121,919 132,426 376,268
Less: By-product
credits(1) (106,263) (111,408) (120,812) (338,483)
------------------------------------------------
Cash cost net of
by-products C$15,660 C$10,511 C$11,614 C$37,785
Exchange rate
(C$/U.S$)(2) 1.227 1.244 1.200 1.223
------------------------------------------------
Cash cost net of
by-products US$12,763 US$8,449 US$9,682 US$30,894
Zinc sales (000 lbs) 59,739 62,754 65,015 187,508
Cash cost per pound of
zinc, net of
by-product credits US$0.21 US$0.13 US$0.15 US$0.16
------------------------------------------------
------------------------------------------------
Exploration cost
per pound US$0.04 US$0.05 US$0.03
------------------------------------------------
Cash cost per
pound of zinc, net
of by-product
credits and
excluding
exploration US$0.21 US$0.09 US$0.10 US$0.13
------------------------------------------------
------------------------------------------------
(1) By-product credits include revenues from sale of copper, gold,
silver, the premium on zinc oxide sales and the Company's
proportionate share of by-product sales by its marketing joint
venture.
(2) Weighted average exchange rate for sales during the period.
The above table shows a US 2.0 cent per pound net increase in the cash cost per pound of zinc for the quarter ended September 30, 2005 compared to the quarter ended June 30, 2005. The change is comprised of favourable variances of approximately US 0.4 cents from additional sales volume, and US 18.8 cents from increased by-product credits. Unfavourable variances include approximately US 15.4 cents increase in copper concentrate purchases, a US 2.4 cent net increase in all other operating costs, and a US 3.4 cent exchange impact on Canadian dollar costs. The calculation of cash cost per pound of zinc is strongly influenced by by-product metal prices, which may fluctuate going forward. In the future, the Company will report the cash cost per pound of zinc excluding exploration costs as these are not deemed to be a current cash cost of producing zinc.
Operating Costs
Nine
Quarter Quarter Quarter Months
Ended Ended Ended Ended
Mar 31, June 30, Sept 30, Sept 30,
2005 2005 2005 2005
----------------------------------------
----------------------------------------
Mines
Trout Lake $/tonne 36.39 31.49 34.81 34.20
Konuto $/tonne 40.32 34.81 31.94 35.74
777 $/tonne 42.20 36.07 32.33 36.47
Chisel North $/tonne 36.28 37.56 47.62 40.56
----------------------------------------
Total mines $/tonne 39.16 34.55 35.09 36.16
Concentrators
Flin Flon $/tonne 8.21 7.68 7.88 7.92
Snow Lake $/tonne 16.51 17.30 15.82 16.53
Metallurgical Plants
Zinc Plant $/lb Zn 0.25 0.25 0.28 0.26
Copper Smelter $/lb Cu 0.24 0.24 0.26 0.25
Non-Gaap
Reconciliation
of Operating
Expenses
($000):
Mines:
Trout Lake C$000 7,754 6,926 7,338 22,018
Konuto 3,510 3,132 2,648 9,290
777 10,136 9,488 9,029 28,653
Chisel North 3,141 3,084 4,147 10,372
Concentrators:
Flin Flon 4,538 4,290 4,605 13,433
Snow Lake 1,414 1,375 1,322 4,111
Metallurgical Plants:
Zinc Plant 16,015 16,005 15,646 47,666
Copper Smelter 10,770 11,226 11,970 33,966
Other:
Purchased Concentrate
Treated 34,555 32,747 43,606 110,908
Anode Freight
& Refining 6,313 5,931 5,713 17,957
Services
& Administration 6,059 6,186 7,024 19,269
Care & Maintenance 820 1,122 878 2,820
Zochem (excluding
zinc purchases
from HBMS) 4,131 4,279 3,081 11,491
Other(1) 8,557 8,319 8,359 25,235
----------------------------------------
Total Operating
Expenses, per
financials 117,713 114,110 125,366 357,189
----------------------------------------
----------------------------------------
(1) Includes profit sharing, changes in domestic inventory, share of
CMM, and miscellaneous minor provisions.
Cash Flows, Liquidity, and Capital Resources
The following table summarizes our cash flows for the three and nine
month periods ended September 30, 2005, and 2004:
---------------------------------------------------------------------
Three months ended Nine months
Sept 30 June 30 Sept 30 ended September 30
----------------------------------------------------
2005 2005 2004(1)(2) 2005 2004(1)(2)
($000s) ($000s) ($000s) ($000s) ($000s)
---------------------------------------------------------------------
Operating
activities
Earnings (loss)
for the period 23,405 8,691 (3,281) 41,277 (7,062)
Items not
affecting cash 9,758 24,160 1,184 49,545 1,434
Net change in
non-cash items (11,349) 5,157 1,144 (3,114) 1,028
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Cash generated
by (required
for) operating
activities 21,814 38,008 (953) 87,708 (4,600)
Cash generated by
(required for)
investing
activities (15,341) (18,313) 35 (37,952) (2,415)
Cash generated
by financing
activities 201 6,099 778 15,368 7,852
Foreign exchange
loss on cash
held in foreign
currency (4,761) 720 - (3,797) -
---------------------------------------------------------------------
Increase in cash
and short term
deposits 1,913 26,514 (139) 61,327 838
---------------------------------------------------------------------
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(1) Excludes results of HBMS.
(2) Restated to give effect to change in accounting policy relating
to expensing of exploration costs, consistent with HBMS practice,
and to retroactively adopt recommendations under Section 3110,
Asset Retirement Obligations.
With the exception of ten days in December 2004, HudBay had no production and was essentially a development stage enterprise. As such, discussion and analysis of 2005 compared to 2004 has been limited, and additionally, a comparison of results achieved in the second and third quarters of 2005 has been provided. Quarter Ended September 30, 2005 Compared to Quarter Ended June 30, 2005 As of September 30, 2005, HudBay had cash and cash equivalents of $125.9 million compared to $124.0 million as at June 30, 2005. As at September 30, 2005, there were outstanding letters of credit in the amount of $35.2 million. This is unchanged from the letters of credit outstanding as at June 30, 2005. Cash flow from operating activities totaled $21.8 million for the quarter ended September 30, 2005 compared to $38.0 million for the quarter ended June 30, 2005. The decrease in cash flow from operations Cash flow from operations A firm's net cash inflow resulting directly from its regular operations (disregarding extraordinary items such as the sale of fixed assets or transaction costs associated with issuing securities), calculated as the sum of net income plus noncash expenses resulted primarily from increased sales of $11.1 million and net miscellaneous items of $0.3 million that were offset by interest payments of $11.5 million on long term debt and $1.2 million on capital leases, a decrease of $10.9 million relating to increased concentrate purchase costs net of changes in accounts payable and accrued liabilities Accrued liabilities are liabilities which have occurred, but have not been paid or logged under accounts payable during an accounting period; in other words, obligations for goods and services provided to a company for which invoices have not yet been received. , and an increase of approximately $4 million in prepaid expenses Prepaid Expense An asset that arises on a balance sheet because of the payment of something in advance (prepayment). Services for the payment will be received in the near future. (primarily insurance). In the third quarter of 2005, a net total of $15.3 million was required for investing activities, which related largely to mine development and other sustaining capital expenditures at HBMS. This compares to $18.3 million required for investment in development and other sustaining capital in the second quarter of 2005. The decrease in the third quarter relates to a decrease in capital development activity at the Trout Lake and Chisel North mines, which has been offset by additional operating development. As planned, the third quarter decrease in investing activities primarily relates to equipment purchases rescheduled for next quarter. Financing activities in the third quarter of 2005 generated $0.2 million which included approximately $1.1 million proceeds from the exercise of warrants, net of a $0.9 million repayment Repayment The act of paying back a debt. Notes: Everyone has to repay their debts eventually. See also: Debt, Defeasance, Loan under capital lease obligations. Financing activities in the second quarter of 2005 generated $6.1 million, which included flow through share funding of exploration activities. As at September 30, 2005, HudBay had long-term Long-term Three or more years. In the context of accounting, more than 1 year. long-term 1. Of or relating to a gain or loss in the value of a security that has been held over a specific length of time. Compare short-term. financial debt (excluding the current portion) of $213.4 million compared to $224.1 as at June 30, 2005. The change in the amount outstanding arises from a change in the quarter-end exchange rate used to convert US$ denominated debt. The Company will consider, from time to time, reducing debt through various means including open market purchases of senior secured notes. Net cash flow for the quarter ended September 30, 2005 was $1.9 million compared to $26.5 million for the quarter ended June 30, 2005. Decreases in cash flow included $12.0 million interest on long term debt and capital leases, an $8.1 million decrease in financing (primarily relating to the flow through funding done in the second quarter, with none in the third), a $10.9 million decrease relating to increased concentrate purchase costs net of changes in accounts payable and accrued liabilities, a $4.0 million increase in prepaid expenses and other assets other assets Assets of relatively small value. For financial reporting purposes, firms frequently combine small assets into a single category rather than listing each item separately. (primarily insurance), $1.7 million in reduced copper sales volume (arising from an inventory increase associated with repairs to an anode vessel VESSEL, mar. law. A ship, brig, sloop or other craft used in navigation. 1 Boul. Paty, tit. 1, p. 100. See sup. 2. By an act of congress, approved July 29, 1850, it is provided that any person, not being an owner, who shall on the high seas, willfully, with. in the smelter), and $2.6 million in reduced gold sales volume as discussed above. Offsetting increases in cash flow included $8.9 million related to copper price, $2.9 million from reduced capital expenditure, $2.0 million government debt repayment (in previous quarter), and $1.6 million in reduced G&A and other costs. New cash requirements for the near term include approximately US$13 million plus adjustments, to be incurred in late 2005 or early 2006, for the purchase of the White Pine Refinery, and an estimated US$20 million for the start-up Start-up The earliest stage of a new business venture. of the Balmat mine, of which approximately US$10 million is expected to be spent in the first five months of the project. Quarter Ended September 30, 2005 Compared to Quarter Ended September 30, 2004 As of September 30, 2005, HudBay had cash and cash equivalents of $125.9 million compared to $3.0 million as at September 30, 2004. As at September 30, 2005, there were outstanding letters of credit in the amount of $35.2 million, secured by an equal amount of cash, while there were no outstanding letters of credit in 2004. Cash flow from operations totaled $21.8 million for the quarter ended September 30, 2005. This relates primarily to HBMS operations, which contributed $17.0 million, and compares with $1.0 million cash required for operating activities in the same period in 2004 when the Company incurred a loss of $3.3 million primarily in relation to management fees, mine care and maintenance activities and debenture debenture (dəbĕn`chər), document acknowledging indebtedness. In Great Britain a debenture is practically the same as a bond, and debenture stock is similar to preferred stock. interest expense. Nine Months Ended September 30, 2005 Compared to Nine Months Ended September 30, 2004 Cash flow from operations totaled $87.7 million for the nine months ended September 30, 2005. This relates primarily to HBMS operations, which contributed $91.1 million, and compares with $4.6 million cash required for operating activities in the same period in 2004 when the Company incurred a loss of $7.1 million primarily in relation to management fees, mine care and maintenance activities and debenture interest expense. Interim Financial Condition Financial Condition at September 30, 2005 Compared to Financial Condition as at December 31, 2004 With the exception of the items discussed below, the financial condition of the Company as at September 30, 2005 is not materially different from that as at December 31, 2004: - Cash and cash equivalents at September 30, 2005 increased by $61.3 million compared to December 31, 2004. - Restricted cash decreased by $13 million as funds placed in trust for the Provinces of Manitoba and Saskatchewan as financial assurance for the Company's asset retirement obligations Asset Retirement Obligations provide for future disposal of assets as required by SFAS 143 [1]. Firms must recognize the ARO liability in the period it was acquired, generally acquisition. were replaced with letters of credit that are also supported by cash in an equivalent amount. - Working capital improved by $49.3 million, reflecting the improved cash position net of $13.0 million of restricted cash and routine fluctuations in other working capital items. - Common share capital increased by $20.8 million, which included $11.4 million from exercise of warrants and $10.0 million from flow-through shares net of $0.6 million share issue costs, - HudBay's contractual obligations at September 30, 2005 are materially unchanged from December 31, 2004 except that, for the mutual benefit of both parties, the evergreen evergreen, term commonly used as synonymous with conifer and applied also to all those broad-leaved plants that bear green leaves throughout the year. Of the latter, most are plants of the tropics, subtropics, and other areas where the growing season is prolonged (e. concentrate purchase agreement with Compania Minera Minera (Welsh: Mwynglawdd) is a small village in the county borough of Wrexham in north-east Wales. It borders Coedpoeth to the east and Bwlchgwyn to the west. Dona Do·ña n. Used as a courtesy title before the name of a woman in a Spanish-speaking area. [Spanish, from Latin domina, feminine of dominus, lord; see don1. Ines de Collahuasi was terminated ter·mi·nate v. ter·mi·nat·ed, ter·mi·nat·ing, ter·mi·nates v.tr. 1. To bring to an end or halt: effective June 30, 2005. Pursuant to the agreement, the Company purchased 40,000 dmt of copper concentrate per year. The termination The point where a line, channel or circuit ends. See SCSI termination and hybrid. of the agreement, which would otherwise have expired ex·pire v. ex·pired, ex·pir·ing, ex·pires v.intr. 1. To come to an end; terminate: My membership in the club has expired. 2. in 2008, is not expected to impact the Company's ability to obtain copper concentrate for its Flin Flon smelter. - In October October: see month. 2005, the Company announced its intention to acquire 100% ownership of White Pine Copper Refinery Inc., through HBMS, by exercising an option held by its joint venture marketing company Considar Metal Marketing Inc. (CMM). The acquisition is expected to close in late 2005 or early 2006. - Pursuant to a previous commitment to exchange HBMS' outstanding 9 5/8% Senior Secured Notes due January 15, 2012 (issued on December 21, 2004 in a private placement), a prospectus A document, notice, circular, advertisement, letter, or communication in written form or by radio or television that offers any security for sale, or confirms the sale of any security. was filed in Ontario Ontario, city, United States Ontario, city (1990 pop. 133,179), San Bernardino co., S Calif., near Los Angeles, in a region of vineyards; inc. 1891. and a registration statement on Form F-10 (for which that prospectus formed a part) was filed with the SEC. The Form F-10 registration statement registered the exchange of HBMS' outstanding notes for 9 5/8% Senior Secured Exchange Notes due January 15, 2012 under the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. Securities Act of 1933, as amended a·mend v. a·mend·ed, a·mend·ing, a·mends v.tr. 1. To change for the better; improve: amended the earlier proposal so as to make it more comprehensive. 2. (the "Securities Act of 1933"). The terms of the exchange notes are identical in all material respects to those of the previously outstanding notes, except that the exchange notes are not subject to the same transfer restrictions. The exchange offer was both commenced and completed during the quarter ended September 30, 2005. 100% of the notes were exchanged. - The Company has received a commitment from the Bank of Nova Scotia Nova Scotia (nō`və skō`shə) [Lat.,=new Scotland], province (2001 pop. 908,007), 21,425 sq mi (55,491 sq km), E Canada. Geography to establish a revolving credit Revolving Credit A line of credit where the customer pays a commitment fee and is then allowed to use the funds when they are needed. It is usually used for operating purposes, fluctuating each month depending on the customers current cash flow needs. facility in the total amount of C$50 million. The first $25 million is committed, with the remainder contingent upon Adj. 1. contingent upon - determined by conditions or circumstances that follow; "arms sales contingent on the approval of congress" contingent on, dependant on, dependant upon, dependent on, dependent upon, depending on, contingent meeting certain conditions precedent A court decision that is cited as an example or analogy to resolve similar questions of law in later cases. The Anglo-American common-law tradition is built on the doctrine of Stare Decisis ("stand by decided . The facility is expected to close before the end of the year. Risk Management The Company uses forward exchange or currency collar Collar 1. A protective options strategy that is implemented after a long position in a stock has experienced substantial gains. It is created by purchasing an out of the money put option while simultaneously writing an out of the money call option. 2. contracts to limit the effects of movements in exchange rates on foreign currency denominated assets and liabilities and future anticipated transactions. At September 30, 2005 the Company held US dollar put options giving it the right, but not the obligation, to sell up to US$56.9 million in equal quarterly amounts at $1.20482 per US dollar, from October 2005 and continuing to January 2009. From time to time the Company maintains price protection programs and conducts commodity price risk management to reduce risk through the use of financial instruments. Through its joint venture interest in CMM, the Company manages risk associated with forward physical sales that are made on a fixed price basis regarding zinc and zinc oxide and, accordingly, enters into forward zinc purchase contracts. These contracts effectively offset the Company's forward sales forward sales npl → ventas fpl a término price commitments. In the current environment of strong base metal market prices, the Company has benefited from full exposure to metal price movements, and will consider implementing protection to limit the effects of future price changes. Closure and Environmental Reclamation Provisions HBMS has completed an evaluation of the closure and reclamation plans for its Manitoba and Saskatchewan operations and substantially completed a review of other potential environmental costs to a feasibility level of accuracy. The closure plans have been updated and completed to the feasibility level of accuracy by a major Canadian environmental engineering firm. Based on the results of the evaluations to date, HudBay is satisfied that current financial statement provisions for closure and environmental reclamation obligations in Manitoba, Saskatchewan and elsewhere, are adequate and appropriate. The HudBay financial statement provision for closure and environmental reclamation has not been audited by external auditors The examples and perspective in this article or section may not represent a worldwide view of the subject. Please [ improve this article] or discuss the issue on the talk page. and may also be modified mod·i·fy v. mod·i·fied, mod·i·fy·ing, mod·i·fies v.tr. 1. To change in form or character; alter. 2. based on comments yet to be received from the governments of Manitoba and Saskatchewan. Accordingly changes to the provision may be necessary. Balmat Through its wholly owned subsidiary, St. Lawrence Zinc Company, LLC ("SLZ"), the Company expects to reopen the Balmat No 4 Zinc Mine (the Mine) in the Balmat zinc mining district of New York state. The Mine has been maintained to a high standard, during care and maintenance, since 2001. The Mine includes a 3,200 ft. deep shaft shaft (shaft) a long slender part, such as the diaphysis of a long bone. shaft n. 1. An elongated rodlike structure, such as the midsection of a long bone. 2. , underground development to five ore zones and extensive mining equipment as well as a 5,000 ton per day concentrator. SLZ also owns approximately 52,000 acres of exploration land in the Balmat district. Based on mineral reserves, resources and a planned increase to resources from an underground exploration program, the mine life will be approximately eight years and have a capital cost of approximately US$20 million. First ore production is planned within five months building to full production of an estimated 635,000 tons (Transparent Optical Networking Services) A marketing term for providing dark fiber to a customer. The customer is responsible for generating the transmission signal and interpreting it at the other end. See dark fiber. per annum Per annum Yearly. , within 35 months. Operating costs including concentrate treatment are expected to be US$0.40 per lb. of zinc while total costs including capital is expected to be US$0.48 per lb. of zinc over the mine life and based on a zinc price of US$0.56 per lb. for three years and US$0.50 per lb. thereafter produce a greater than 20% IRR IRR In currencies, this is the abbreviation for the Iranian Rial. Notes: The currency market, also known as the Foreign Exchange market, is the largest financial market in the world, with a daily average volume of over US $1 trillion. after tax. At November 1, 2005, HudBay recalculated the Mine's mineral reserves and resources in compliance with National Instrument 43 - 101 based on high grade selective mining. The mineral reserves are estimated at 1,858,532 tons at 11.2% zinc and mineral resources Noun 1. mineral resources - natural resources in the form of minerals natural resource, natural resources - resources (actual and potential) supplied by nature at 1,387,249 tons at 12.9% zinc. These results have been prepared under the guidance of Kim Kim orphan wanders streets of India with lama. [Br. Lit.: Kim] See : Adventurousness J. Lau, B.Sc., P. Geo., a Senior Mineral Resource Analyst of HudBay's wholly-owned subsidiary Hudson Bay Mining and Smelting Co., Limited (HBMS) and Gary Gary, city (1990 pop. 116,646), Lake co., NW Ind., a port of entry on Lake Michigan; inc. 1909. Gary was founded by the U.S. Steel Corporation, which purchased the land in 1905 and landscaped it for a city. M. Allen Al·len , Edgar 1892-1943. American anatomist who is noted for his studies of hormones and for the discovery (1923) of estrogen. , M.Eng., P.Eng P.Eng Professional Engineer ., employed as Manager Mines Technical Services by HBMS. Both Ms. Lau and Mr. Allen are designated as Qualified Persons with the ability and authority to verify (1) To prove the correctness of data. (2) In data entry operations, to compare the keystrokes of a second operator with the data entered by the first operator to ensure that the data were typed in accurately. See validate. the authenticity The correct attribution of origin such as the authorship of an e-mail message or the correct description of information such as a data field that is properly named. Authenticity is one of the six fundamental components of information security (see Parkerian Hexad). and validity of this data. At full production, the Mine will produce approximately 60,000 tons of zinc metal in concentrates which are planned to be processed at the Canadian Electrolytic e·lec·tro·lyt·ic adj. 1. Of or relating to electrolysis. 2. Produced by electrolysis. 3. Of or relating to electrolytes. e·lec Refinery in Valleyfield Valleyfield, city (1991 pop. 27,598), S Que., Canada, on the Beauharnois canal, at the northeast end of Lake St. Francis, SW of Montreal. A port of entry and industrial center, it has cotton and synthetic textile mills, a zinc refinery, and plants making chemicals, , Quebec Quebec, city, Canada Quebec, Fr. Québec, city (1991 pop. 167,517), provincial capital, S Que., Canada, at the confluence of the St. Lawrence and St. Charles rivers. with an option for up to 40% of the concentrate to be treated at HudBay's zinc plant in Flin Flon. HBMS Production A summary of production statistics for the third quarter of 2005, as well as year-to-date Year-to-date (YTD) The period beginning at the start of the calendar year up to the current date. data, together with comparative information for 2004 is shown in the following table:
Third Quarter Results Three months ended Nine months
Sep 30 June 30 Sep 30 ended Sep 30
-----------------------------------------------
2005 2005 2004 2005 2004
-----------------------------------------------
-----------------------------------------------
Mines:
Trout
Lake: Tonnes 210,802 219,913 239,340 643,769 689,467
Copper % 1.29 1.19 1.54 1.25 1.50
Zinc % 5.70 6.51 4.65 6.20 5.08
Gold g/tonne 1.57 1.43 1.48 1.52 1.46
Silver g/tonne 14.63 14.46 13.62 15.01 12.88
Konuto: Tonnes 82,895 89,986 84,453 259,943 252,277
Copper % 3.35 4.47 3.34 4.02 4.11
Zinc % 2.07 1.66 1.84 1.70 2.06
Gold g/tonne 1.33 1.84 2.01 1.64 1.99
Silver g/tonne 8.32 9.28 8.70 8.71 9.58
7 7 7: Tonnes 279,258 263,078 246,375 785,584 730,200
Copper % 2.28 2.16 2.56 2.22 3.01
Zinc % 4.34 4.54 5.20 4.22 4.59
Gold g/tonne 2.18 2.29 2.45 2.12 2.34
Silver g/tonne 23.93 25.93 25.37 23.56 23.77
Chisel
North: Tonnes 87,090 82,100 79,846 255,735 244,695
Copper % 0.21 0.22 0.15 0.19 0.15
Zinc % 8.31 9.08 9.52 9.01 10.36
Gold g/tonne 0.45 0.77 0.35 0.63 0.52
Silver g/tonne 21.15 36.20 21.85 27.11 27.17
Total
Mines: Tonnes 660,044 655,077 650,014 1,945,032 1,916,640
Copper % 1.83 1.91 1.99 1.88 2.25
Zinc % 5.01 5.37 5.09 5.17 5.17
Gold g/tonne 1.65 1.75 1.78 1.66 1.75
Silver g/tonne 18.63 21.08 18.44 19.21 18.42
Third Quarter Results Three months ended Nine months ended
Sep 30 June 30 Sep 30 Sep 30 Sep 30
----------------------------------------------
2005 2005 2004 2005 2004
----------------------------------------------
Concentrators:
Flin Flon
Concent-
rator: tonnes 584,362 558,919 566,324 1,696,110 1,626,176
Copper % 2.13 2.10 2.33 2.11 2.54
Zinc % 4.44 4.85 4.53 4.60 4.44
Gold g/tonne 1.85 1.87 1.99 1.81 1.92
Silver g/tonne 18.19 18.42 17.88 17.86 17.28
Copper
Concentrate
Produced tonnes 48,763 44,957 50,507 139,386 161,880
Grade % Cu 23.94 24.27 24.21 23.76 23.79
Zinc
Concentrate
Produced tonnes 42,488 44,366 40,632 126,302 112,977
Grade % Zn 51.40 52.10 50.86 51.31 50.31
Copper
recovery
to Cu Conc % 93.7 92.9 92.7 92.5 93.3
Gold
recovery
to Cu Conc % 71.8 78.3 65.2 75.7 66.6
Silver
recovery
to Cu Conc % 64.6 66.6 66.4 66.4 65.4
Zn
recovery
to Zn Conc % 84.1 85.3 80.6 83.0 78.8
Snow Lake
Concent-
rator: tonnes 83,570 79,496 84,805 248,698 242,273
Zinc % 8.26 9.09 9.63 9.00 10.36
Zinc
Concentrate
Produced tonnes 13,058 13,643 15,480 42,528 47,393
Grade % Zn 51.25 51.68 51.40 51.26 51.53
Zn
recovery
to Zn Conc % 96.9 97.5 97.4 97.4 97.3
Third Quarter Results Three months ending Nine months ending
Sep 30 June 30 Sep 30 Sep 30 Sep 30
----------------------------------------------
2005 2005 2004 2005 2004
----------------------------------------------
Smelter:
Copper
Concentrate
Treated:
Domestic tonnes 49,780 53,038 35,894 151,170 130,281
Purchased tonnes 28,212 26,057 15,023 83,108 70,497
----------------------------------------------
Total tonnes 77,992 79,095 50,917 234,278 200,778
Zinc Plant:
Zinc
Concentrate
Treated:
Domestic tonnes 51,339 58,105 58,306 168,254 162,777
Purchased tonnes 0 0 0 0 3,488
----------------------------------------------
Total tonnes 51,339 58,105 58,306 168,254 166,265
Metal
Produced:
From HBMS
Mines:
Copper tonnes 11,538 12,407 8,801 35,356 31,095
Zinc tonnes 25,733 29,162 29,146 84,072 80,080
Gold oz 22,759 27,177 16,018 75,133 51,391
Silver oz 205,144 232,797 145,944 652,551 456,118
From
Purchased
Concentrates:
Copper tonnes 9,182 8,652 5,300 27,121 23,890
Zinc tonnes 43 26 1 95 1,791
Gold oz 441 363 282 1,381 995
Silver oz 126,685 106,201 62,633 356,571 282,023
Total
Metal
Produced:
Copper tonnes 20,720 21,060 14,101 62,477 54,985
Zinc tonnes 25,775 29,188 29,147 84,168 81,871
Gold oz 23,200 27,540 16,300 76,514 52,386
Silver oz 331,829 338,998 208,577 1,009,122 738,141
HBMS Metal Sold:
Copper tonnes 19,800 20,200 13,300 60,400 53,100
Zinc, Incl
sales to
Zochem tonnes 29,500 28,500 28,800 85,100 83,800
Gold oz 21,800 26,500 15,300 73,700 50,200
Silver oz 309,500 322,200 193,000 963,400 700,900
HudBay Minerals Inc.
Consolidated Balance Sheet
As at September 30, 2005 and December 31, 2004.
(expressed in thousands of Canadian dollars)
September December
30, 2005 31, 2004
(unaudited)
---------------------------
Assets
Current assets
Cash and cash equivalents (note 9a) $ 125,880 $ 64,553
Accounts receivable 71,147 73,210
Inventories 90,937 100,282
Prepaid expenses and other assets 9,458 3,496
Current portion of fair value of
derivatives 2,886 3,418
Future income taxes 12,900 12,900
---------------------------
313,208 257,859
Investments 463 463
Property, plant and equipment (note 4) 370,078 358,662
Deferred financing costs and intangible
assets 8,890 10,152
Restricted cash - 13,000
Environmental deposits 1,755 1,789
Fair value of derivatives 372 772
---------------------------
$694,766 $642,697
---------------------------
---------------------------
Liabilities
Current liabilities
Accounts payable 61,679 64,669
Accrued liabilities 26,156 26,548
Interest payable on long-term debt 4,080 563
Current portion of obligations under
capital leases 3,774 3,338
Current portion of long-term debt 4,000 2,000
Current portion of pension obligation 16,042 12,650
Current portion of other employee future
benefits 2,106 2,012
---------------------------
117,837 111,780
Obligations under capital leases 9,987 11,719
Debt obligations (note 9a) 213,379 223,529
Pension obligation 49,925 57,437
Other employee future benefits 60,172 57,929
Asset retirement obligation 28,503 27,120
Other non-current liabilities - 417
---------------------------
479,803 489,931
---------------------------
---------------------------
Shareholders' equity
Common shares (note 5a) 141,368 120,138
Warrants (note 5b) 31,723 35,850
Contributed surplus (see note 5c) 7,144 3,288
Cumulative translation adjustments (63) (24)
Retained earnings (deficit) 34,791 (6,486)
---------------------------
214,963 152,766
---------------------------
$ 694,766 $ 642,697
---------------------------
---------------------------
HudBay Minerals Inc.
Consolidated Statement of Operations
For the periods ended September 30, 2005 and 2004
(expressed in thousands of Canadian dollars except share
and per share amounts)
(Unaudited)
Three Months Ended Nine Months Ended
September 30 September 30
----------------------------------------
2005 2004 2005 2004
----------------------------------------
Sales $169,264 $ - $478,977 $ -
----------------------------------------
Expenses
Operating 125,366 872 357,189 2,586
General and administrative 3,130 1,061 11,364 1,978
Stock-based compensation
(note 5c) 591 484 1,945 644
Depreciation and
amortization 13,618 40 39,570 115
Accretion 655 41 1,956 53
Exploration 3,930 417 7,715 1,315
Foreign exchange loss 2,850 - 2,176 -
----------------------------------------
150,140 2,915 421,915 6,691
----------------------------------------
Operating earnings (loss) 19,124 (2,915) 57,062 (6,691)
Other income 1,243 5 2,348 19
Amortization of deferred
financing costs (353) - (1,060) -
Foreign exchange gain (loss)
on long-term debt 10,973 (146) 6,878 (64)
Gain on derivative
instruments 1,544 - 2,089 -
Interest expense (5,375) (225) (16,763) (723)
----------------------------------------
Earnings (loss) before taxes 27,156 (3,281) 50,554 (7,459)
Taxes (recovery) 3,751 - 9,277 (397)
----------------------------------------
Earnings (loss) for the
period $23,405 $(3,281) $41,277 $(7,062)
----------------------------------------
----------------------------------------
Earnings (loss) per share
Basic $ .28 $(.48) $ .51 $(1.10)
Diluted (note 5d) $ .28 note 5d $ .51 note 5d
Weighted average number of
commons shares outstanding
Basic 83,782,135 6,881,816 81,020,128 6,431,090
Diluted (note 5d) 84,064,498 note 5d 81,495,026 note 5d
HudBay Minerals Inc.
Consolidated Statement of Retained Earnings (Deficit)
For the periods ended September 30, 2005 and 2004
(expressed in thousands of Canadian dollars)
(Unaudited)
Three Months Ended Nine Months Ended
September 30 September 30
---------------------------------------
2005 2004 2005 2004
---------------------------------------
Retained earnings (deficit) -
beginning of period
As previously stated $11,386 $(21,979) $(6,486) $(19,096)
Changes in accounting policies
Exploration - (1,487) - (589)
---------------------------------------
As restated 11,386 (23,466) (6,486) (19,685)
Earnings (loss) for the period 23,405 (3,281) 41,277 (7,062)
---------------------------------------
Retained earnings (deficit) -
end of period $34,791 $(26,747) $34,791 $(26,747)
---------------------------------------
---------------------------------------
HudBay Minerals Inc.
Consolidated Statement of Cash Flow
(expressed in thousands of Canadian dollars)
(Unaudited)
Three Months Ended Nine Months Ended
September 30 September 30
---------------------------------------
2005 2004 2005 2004
---------------------------------------
Cash generated (utilized) by:
Operating activities
Earnings (loss) for the
period $ 23,405 $(3,281) $41,277 $(7,062)
Items not affecting cash
Depreciation and
amortization 13,618 40 39,570 115
Accretion of debt
component of
convertible
debentures - 156 - 489
Accretion on asset
retirement obligation 655 41 1,956 53
Non-cash interest 225 - 727 -
Future income taxes 3,225 - 8,695 (397)
Unrealized portion of
change in fair value
of derivative (699) - 932 -
Amortization of deferred
financing charges 354 499 1,061 499
Stock-based compensation 591 484 1,945 644
Unrealized foreign
exchange gain on debt (10,972) 32 (6,877) 32
Unrealized foreign
exchange loss on
cash held in
foreign currency 4,761 - 3,797 -
Net change in other
non-cash
operating items (2,000) (67) (2,261) -
---------------------------------------
33,163 (2,096) 90,822 (5,627)
Net change in non-cash
working capital
items (note 9c) (11,349) 1,144 (3,114) 1,028
---------------------------------------
21,814 (952) 87,708 (4,599)
---------------------------------------
Investing activities
Increase in environmental
deposits 55 45 34 (284)
Decrease (increase) in
restricted cash - - 13,000 -
Property, plant and
equipment expenditures (15,396) (10) (50,986) (2,131)
---------------------------------------
(15,341) 35 (37,952) (2,415)
---------------------------------------
Financing activities
Financing and
acquisition costs - (529) (350) (1,306)
Decrease in debenture
subscription receivable - - - 2,000
Issuance of common shares - - - 600
Proceeds on exercise of
stock options - - - 64
Proceeds on exercise of warrants - - - 104
Repayments of obligations under
capital lease (912) - (1,296) -
Repayment of debt obligations - - (2,000) -
Issuance of shares and warrants 1,113 1,307 19,014 6,390
---------------------------------------
201 778 15,368 7,852
---------------------------------------
Unrealized foreign exchange
loss on cash held in
foreign currency (4,761) - (3,797) -
---------------------------------------
Change in cash and cash
equivalents 1,913 (139) 61,327 838
Cash and cash equivalents
- beginning of period 123,967 3,091 64,553 2,114
---------------------------------------
Cash and cash equivalents
- end of period 125,880 2,952 125,880 2,952
---------------------------------------
---------------------------------------
About HudBay Minerals Inc. HudBay Minerals Inc. is an integrated mining and metal producing company that operates mines and concentrators in northern Manitoba and Saskatchewan and a metal processing complex in Flin Flon, Manitoba. The company also operates a zinc oxide production facility in Brampton, Ontario Brampton (IPA: ˈbræmptən, ˈbræmtən) is a city in the GTA of Ontario, Canada and the seat of Peel Region. As of the 2006 census, Brampton's population stood at 433,806. and the former producing mines of Balmat in New York State and Gays River in Nova Scotia that are being evaluated for re-opening. Unless the context otherwise suggests, references to "we", "us", "our" and similar terms, as well as references to the "Company", refer to HudBay Minerals Inc.All figures are in Canadian dollars unless otherwise noted This press release contains certain forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. . All statements, other than statements of historical fact, included herein, including without limitation, statements regarding the Company's future plans and objectives are forward-looking statements that involve various risks and uncertainties.There can be no assurance that such statements will prove accurate, and actual results and future events could differ materially from those anticipated in such statements.Important factors that could cause actual results to differ materially from the Company's expectations are disclosed dis·close tr.v. dis·closed, dis·clos·ing, dis·clos·es 1. To expose to view, as by removing a cover; uncover. 2. To make known (something heretofore kept secret). in documents that we have filed from time to time with the Toronto Stock Exchange Toronto Stock Exchange (TSE) Canada's largest stock exchange, trading approximately 1,200 company stocks and 33 options. and other regulatory authorities Noun 1. regulatory authority - a governmental agency that regulates businesses in the public interest regulatory agency administrative body, administrative unit - a unit with administrative responsibilities . Certain items of financial information in this press release, including unit operating expenses, and cash cost per pound of zinc, net of by-product credits are furnished fur·nish tr.v. fur·nished, fur·nish·ing, fur·nish·es 1. To equip with what is needed, especially to provide furniture for. 2. to provide additional information and are non-GAAP measures. As non-GAAP measures they do not have standardized standardized pertaining to data that have been submitted to standardization procedures. standardized morbidity rate see morbidity rate. standardized mortality rate see mortality rate. meanings nor are they necessarily comparable with similar measures presented by other companies.These measures should not be considered in isolation as a substitute for measures of performance prepared in accordance Accordance is Bible Study Software for Macintosh developed by OakTree Software, Inc.[] As well as a standalone program, it is the base software packaged by Zondervan in their Bible Study suites for Macintosh. with generally accepted accounting principles The standard accounting rules, regulations, and procedures used by companies in maintaining their financial records. Generally accepted accounting principles (GAAP) provide companies and accountants with a consistent set of guidelines that cover both broad accounting and are not necessarily indicative indicative: see mood. of operating expenses as determined under generally accepted accounting principles.These measures are intended to provide investors with information about the cash generating capabilities of the Company's operations.HudBay uses this information for the same purpose.Mining operations are capital intensive.These measures exclude capital expenditures. Capital expenditures are discussed throughout the press release and the unaudited consolidated financial statements Consolidated Financial Statements The combined financial statements of a parent company and its subsidiaries. Notes: Because consolidated financial statements present an aggregated look at the financial position of a parent and its subsidiaries, they enable you to gauge . HudBay Minerals Inc. (TSX:HBM) |
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