Hudbay posts US$51.9M loss on Constancia suspension

Haul truck at Hudbay's Constancia copper mine in Peru. Credit: Hudbay Minerals

Canadian miner Hudbay Minerals (TSX: HBM, NYSE: HBM) posted a US$51.9 million loss in the second quarter, as an eight-week suspension of its Constancia copper mine in Peru weighed on results.

The Toronto-based company revised down its production targets for its Peruvian operations to 65,000-75,000 tonnes of copper and 25,000-35,000 ounces of precious metals. Hudbay had earlier forecast 80,000-95,000 tonnes of copper and 45,000-55,000 ounces of gold for 2020.

The new guidance also reflects the change in Pampacancha production start date to early 2021 from the second half of this year. The delay was a result of Peru’s state of emergency due to the coronavirus pandemic declared on March 15, as well as the impact of consultation with local communities, Hudbay said.

The company noted that the mill at Constancia resumed full operations on May 18, adding that mining returned to normal levels in early July.

Miners operating in the South American nation, the world’s second copper producer after Chile, are facing a fresh wave of community hostility. Mobs attacked three mining and oil sector firms over the past few days, two of which were forced to halt operations after deadly clashes.

Angry residents in the country’s Andean and Amazon regions demand economic aid and healthcare support during the Covid-19 pandemic, already in its second wave. The health emergency has underscored stark divisions between the rich and often rural poor in the country.

The company’s chief financial officer, Steve Douglas, said that the strong performance of the Manitoba business, in Canada, had helped to offset the reduced contribution from the Peruvian operations.

This resulted in second-quarter adjusted earnings remaining unchanged from first-quarter levels, with adjusted earnings slightly below first quarter figures.

Hudbay referred to its ongoing appeal to a US court decision last year, which barred it from proceeding with construction at its $1.9 million Rosemont copper project in Arizona.

It said it had received the official support of industry groups, including the National Mining Association, the American Exploration and Mining Association, and the Southern Arizona Business Coalition.

If Hudbay wins the battle, Rosemont would be the third-largest copper mine in the US, accounting for approximately 10% of the country’s total copper production.

Located about 50 km southeast of Tucson, the project contemplates an open pit on the eastern slope of the Santa Rita that will churn out 112,000 tonnes of copper concentrate a year.

— This article first appeared in our sister publication, MINING.com

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