Unaudited Condensed Consolidated Interim Financial Statements (In US dollars)
HUDBAY MINERALS INC.
For the three months ended March 31, 2024 and 2023
HUDBAY MINERALS INC.
Condensed Consolidated Interim Balance Sheets (Unaudited and in thousands of US dollars)
Mar. 31, | Dec. 31, | |||
Note | 2024 | 2023 | ||
Assets | ||||
Current assets | ||||
Cash and cash equivalents | $ | 284,385 | $ | 249,794 |
Trade and other receivables | 7 | 197,732 | 203,429 | |
Inventories | 8 | 201,965 | 207,334 | |
Prepaid expenses and other current assets | 14,138 | 6,289 | ||
Other financial assets | 9 | 1,678 | 4,102 | |
Taxes receivable | 578 | 2,300 | ||
700,476 | 673,248 | |||
Receivable | 7 | 12,010 | 12,157 | |
Inventories | 8 | 16,321 | 24,450 | |
Other financial assets | 9 | 6,846 | 7,089 | |
Intangibles and other assets | 10 | 50,780 | 52,453 | |
Property, plant and equipment | 11 | 4,231,536 | 4,316,006 | |
Deferred tax assets | 139,830 | 151,946 | ||
Goodwill | 73,484 | 75,285 | ||
$ | 5,231,283 | $ | 5,312,634 | |
Liabilities | ||||
Current liabilities | ||||
Trade and other payables | $ | 238,977 | $ | 239,149 |
Taxes payable | 39,941 | 53,441 | ||
Other liabilities | 12 | 34,685 | 30,035 | |
Other financial liabilities | 13 | 43,775 | 42,235 | |
Gold prepayment liability | 14 | 37,945 | 55,901 | |
Lease liabilities | 15 | 31,920 | 28,902 | |
Deferred revenue | 17 | 72,383 | 87,672 | |
499,626 | 537,335 | |||
Other financial liabilities | 13 | 58,835 | 51,720 | |
Lease liabilities | 15 | 60,236 | 61,433 | |
Long-term debt | 16 | 1,278,587 | 1,287,536 | |
Deferred revenue | 17 | 329,142 | 330,848 | |
Pension obligations | 5,786 | 6,010 | ||
Other employee benefits | 97,863 | 101,849 | ||
Environmental and other provisions | 18 | 301,342 | 321,912 | |
Deferred tax liabilities | 388,833 | 407,152 | ||
3,020,250 | 3,105,795 | |||
Equity | ||||
Share capital | 20b | 2,241,841 | 2,240,233 | |
Reserves | 19,523 | 30,177 | ||
Retained earnings | (153,832) | (173,599) | ||
Equity attributable to owners of the Company | 2,107,532 | 2,096,811 | ||
Non-controlling interest | 103,501 | 110,028 | ||
$ | 5,231,283 | $ | 5,312,634 |
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HUDBAY MINERALS INC.
Condensed Consolidated Interim Statement of Earnings
(Unaudited and in thousands of US dollars, except per share amounts)
Three months ended March 31, | |||||
Note | 2024 | 2023 | |||
Revenue | 6a | $ | 524,989 | $ | 295,219 |
Cost of sales | |||||
Mine operating costs | 263,762 | 161,284 | |||
Depreciation and amortization | 6b | 109,273 | 67,422 | ||
373,035 | 228,706 | ||||
Gross profit | 151,954 | 66,513 | |||
Selling and administrative expenses | 16,607 | 9,146 | |||
Exploration expenses | 12,593 | 8,242 | |||
Other expenses | 6c | 16,260 | 4,959 | ||
Re-evaluation adjustment - environmental provision | 18 | (5,269) | (8,240) | ||
Results from operating activities | 111,763 | 52,406 | |||
Net interest expense on long term debt | 6d | 19,208 | 17,007 | ||
Accretion on streaming arrangements | 6d | 6,176 | 6,501 | ||
Change in fair value of financial instruments | 6d | 6,954 | 5,597 | ||
Other net finance costs | 6d | 11,675 | 5,871 | ||
Net finance expense | 44,013 | 34,976 | |||
Earnings before tax | 67,750 | 17,430 | |||
Tax expense | 19 | 49,215 | 11,973 | ||
Net earnings for the period | $ | 18,535 | $ | 5,457 | |
Attributable to: | |||||
Owners of the Company | $ | 22,358 | $ | 5,457 | |
Non-controlling interest | (3,823) | - | |||
Net earnings for the period | $ | 18,535 | $ | 5,457 | |
Net earnings per share | |||||
Basic and diluted | $ | 0.05 | $ | 0.02 | |
Weighted average number of common shares outstanding: | |||||
Basic | 21 | 350,781,240 | 262,030,805 | ||
Diluted | 21 | 350,970,348 | 262,324,929 |
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HUDBAY MINERALS INC.
Condensed Consolidated Interim Statements of Comprehensive Income (Loss) (Unaudited and in thousands of US dollars)
Three months ended March 31, | ||||
2024 | 2023 | |||
Net earnings for the period | $ | 18,535 | $ | 5,457 |
Other comprehensive income: | ||||
Item that will be reclassified subsequently to net earnings: | ||||
Recognized directly in equity: | ||||
Net (loss) gain on translation of foreign currency balances | (16,821) | 136 | ||
(16,821) | 136 | |||
Items that will not be reclassified subsequently to net earnings: | ||||
Recognized directly in equity: | ||||
Gold prepayment revaluation | (15) | 15 | ||
Tax effect | 4 | (4) | ||
Remeasurement - actuarial loss (gain) | 3,575 | (1,245) | ||
Tax effect | 19 | (270) | ||
3,583 | (1,504) | |||
Other comprehensive loss net of tax, for the period | (13,238) | (1,368) | ||
Attributable to: | ||||
Owners of the Company | $ | 11,824 | $ | 4,089 |
Non-controlling interest | (6,527) | - | ||
Total comprehensive income for the period | $ | 5,297 | $ | 4,089 |
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HUDBAY MINERALS INC.
Condensed Consolidated Interim Statements of Cash Flows (Unaudited and in thousands of US dollars)
Three months ended March 31, | ||||
2024 | 2023 | |||
Cash generated from operating activities: | ||||
Net earnings for the period | $ | 18,535 | $ | 5,457 |
Tax expense | 19 | 49,215 | 11,973 | |
Items not affecting cash: | ||||
Depreciation and amortization | 6b | 109,759 | 67,752 | |
Share-based compensation expense | 5,858 | 1,195 | ||
Net finance expense | 6d | 44,013 | 34,976 | |
Amortization of deferred revenue and variable consideration | 6a | (23,171) | (15,857) | |
Pension and other employee benefit payments, net of accruals | 3,227 | 3,074 | ||
Amortization of community agreements | 3,021 | 1,610 | ||
Re-evaluation adjustment - environmental obligation | 18 | (5,269) | (8,240) | |
Decommissioning and restoration payments | (148) | (904) | ||
Other | 24a | 6,319 | (6,470) | |
Taxes paid | (63,820) | (8,958) | ||
Operating cash flow before change in non-cash working capital | 147,539 | 85,608 | ||
Change in non-cash working capital | 24b | (7,863) | (14,329) | |
139,676 | 71,279 | |||
Cash used in investing activities: | ||||
Acquisition of property, plant and equipment | (62,371) | (64,952) | ||
Community agreements | (1,379) | (1,912) | ||
Grants received | 11 | 2,400 | - | |
Net sale of investments | - | 53 | ||
Change in restricted cash | - | 138 | ||
Interest received | 2,430 | 1,597 | ||
(58,920) | (65,076) | |||
Cash (used in) generated from financing activities: | ||||
Proceeds from revolving credit facility | - | 40,000 | ||
Repayment of revolving credit facility | 16b | (10,000) | - | |
Interest paid on long-term debt | (903) | - | ||
Financing costs | (5,330) | (3,133) | ||
Lease payments | 15 | (7,749) | (5,364) | |
Equipment financing payments | (850) | - | ||
Gold prepayment repayments | 14 | (21,433) | (6,428) | |
Net proceeds from exercise of stock options and warrants | 1,256 | 78 | ||
Dividends paid | 20b | (2,591) | (1,908) | |
(47,600) | 23,245 | |||
Effect of movement in exchange rates on cash | 1,435 | 450 | ||
Net increase in cash and cash equivalents | 34,591 | 29,898 | ||
Cash and cash equivalents, beginning of the period | 249,794 | 225,665 | ||
Cash and cash equivalents, end of the period | $ | 284,385 | $ | 255,563 |
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HUDBAY MINERALS INC.
Condensed Consolidated Interim Statements of Changes in Equity (Unaudited and in thousands of US dollars)
Share capital | Other capital | Foreign currency | Remeasurement | Retained | Non- | |||||||||
Total | controlling | Total equity | ||||||||||||
(note 20) | reserves | translation reserve | reserve | earnings | interest | |||||||||
Balance, January 1, 2023 | $ | 1,780,774 | $ | 58,503 | $ | (14,759) | $ | (17,206) | $ | (235,503) | $1,571,809 | $ | - | $ 1,571,809 |
Net earnings | - | - | - | - | 5,457 | 5,457 | - | 5,457 | ||||||
Other comprehensive income (loss) | - | - | 136 | (1,504) | - | (1,368) | - | (1,368) | ||||||
Total comprehensive income (loss) | - | - | 136 | (1,504) | 5,457 | 4,089 | - | 4,089 | ||||||
Contributions by and distributions to | ||||||||||||||
owners: | ||||||||||||||
Dividends (note 20b) | - | - | - | - | (1,908) | (1,908) | - | (1,908) | ||||||
Stock options | - | 453 | - | - | - | 453 | - | 453 | ||||||
Issuance of shares related to stock | 118 | (40) | - | - | - | 78 | - | 78 | ||||||
options exercised | ||||||||||||||
Total contributions by and distributions | 118 | 413 | - | - | (1,908) | (1,377) | - | (1,377) | ||||||
to owners | ||||||||||||||
Balance, March 31, 2023 | $ | 1,780,892 | $ | 58,916 | $ | (14,623) | $ | (18,710) | $ | (231,954) | $1,574,521 | $ | - | $ 1,574,521 |
Net earnings | - | - | - | - | 60,910 | 60,910 | 3,176 | 64,086 | ||||||
Other comprehensive income (loss) | - | - | 9,215 | (6,969) | - | 2,246 | (124) | 2,122 | ||||||
Total comprehensive income (loss) | - | - | 9,215 | (6,969) | 60,910 | 63,156 | 3,052 | 66,208 | ||||||
Contributions by and distributions to | ||||||||||||||
owners: | ||||||||||||||
Dividends (note 20b) | - | - | - | - | (2,555) | (2,555) | - | (2,555) | ||||||
Shares issued on acquisition of | ||||||||||||||
Copper Mountain, net of share | 436,499 | - | - | - | - | 436,499 | 106,976 | 543,475 | ||||||
issuance costs (note 4) | ||||||||||||||
Shares and warrants issued on | 12,503 | 725 | - | - | - | 13,228 | - | 13,228 | ||||||
acquisition of Rockcliff (note 5) | ||||||||||||||
Flow-through shares issued, net of | 10,166 | - | - | - | - | 10,166 | - | 10,166 | ||||||
share issuance costs (note 20b) | ||||||||||||||
Stock options | - | 1,684 | - | - | - | 1,684 | - | 1,684 | ||||||
Issuance of shares related to stock | 173 | (61) | - | - | - | 112 | - | 112 | ||||||
options exercised | ||||||||||||||
Total contributions by and distributions | 459,341 | 2,348 | - | - | (2,555) | 459,134 | 106,976 | 566,110 | ||||||
to owners | ||||||||||||||
Balance, December 31, 2023 | $ | 2,240,233 | $ | 61,264 | $ | (5,408) | $ | (25,679) | $ | (173,599) | $2,096,811 | $ | 110,028 | $ 2,206,839 |
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HUDBAY MINERALS INC.
Condensed Consolidated Interim Statements of Changes in Equity (Unaudited and in thousands of US dollars)
Share capital | Other capital | Foreign currency | Remeasurement | Retained | Non- | |||||||||||
Total | controlling | Total equity | ||||||||||||||
(note 20) | reserves | translation reserve | reserve | earnings | interest | |||||||||||
Balance, January 1, 2024 | $ | 2,240,233 | $ | 61,264 | $ | (5,408) | $ | (25,679) | $ | (173,599) | $ | 2,096,811 | $ | 110,028 | $ | 2,206,839 |
Net earnings | - | - | - | - | 22,358 | 22,358 | (3,823) | 18,535 | ||||||||
Other comprehensive (loss) income | - | - | (14,117) | 3,583 | - | (10,534) | (2,704) | (13,238) | ||||||||
Total comprehensive (loss) income | - | - | (14,117) | 3,583 | 22,358 | 11,824 | (6,527) | 5,297 | ||||||||
Contributions by and distributions to | ||||||||||||||||
owners: | ||||||||||||||||
Dividends (note 20b) | - | - | - | - | (2,591) | (2,591) | - | (2,591) | ||||||||
Stock options | - | 223 | - | - | - | 223 | - | 223 | ||||||||
Issuance of shares related to stock | 1,608 | (343) | - | - | - | 1,265 | - | 1,265 | ||||||||
options and warrants exercised | ||||||||||||||||
Total contributions by and distributions | 1,608 | (120) | - | - | (2,591) | (1,103) | - | (1,103) | ||||||||
to owners | ||||||||||||||||
Balance, March 31, 2024 | $ | 2,241,841 | $ | 61,144 | $ | (19,525) | $ | (22,096) | $ | (153,832) | $ | 2,107,532 | $ | 103,501 | $ | 2,211,033 |
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HUDBAY MINERALS INC.
Notes to Unaudited Condensed Consolidated Interim Financial Statements (in thousands of US dollars, except where otherwise noted)
For the three months ended March 31, 2024 and 2023
1. Reporting entity
Hudbay Minerals Inc. ("HMI" or the "Company") is a company existing under the Canada Business Corporations Act. The address of the Company's principal executive office is 25 York Street, Suite 800, Toronto, Ontario. The unaudited condensed consolidated interim financial statements ("financial statements") of the Company for the three months ended March 31, 2024 and 2023 represent the financial position and the financial performance of the Company and its subsidiaries (together referred to as "Hudbay").
Wholly owned subsidiaries as at March 31, 2024 included HudBay Peru Inc., HudBay Peru S.A.C. ("Hudbay Peru"), HudBay (BVI) Inc., Hudbay Arizona Inc., Copper World, Inc. ("Copper World") and Mason Resources (US) Inc. ("Mason"). On January 1, 2024, the Company amalgamated with Copper Mountain Mining Inc., Hudbay British Columbia Inc. and Rockcliff Metals Corp. ("Rockcliff") and continued carrying on business as Hudbay Minerals Inc. Following the amalgamation, the Company directly holds a 75% interest in Copper Mountain Mine (BC) Ltd. ("CMBC") and is the direct holder of all of Rockcliff's mineral properties. Mitsubishi Materials Corporation ("MMC"), an arms-length party, owns the remaining 25% interest in CMBC.
Hudbay is a diversified mining company with long-life assets in North and South America. Hudbay's operations in Cusco (Peru) produce copper with gold, silver and molybdenum by-products. Hudbay's operations in Manitoba (Canada) produce gold with copper, zinc and silver by-products. Hudbay's operations in British Columbia (Canada) produce copper with gold and silver by-products. Hudbay has a development pipeline that includes copper development projects in Arizona and Nevada (United States), and a focused growth strategy on exploration, development, operation, and optimization of properties that Hudbay already controls, as well as other mineral assets that Hudbay may acquire that fit the Company's strategic criteria. The Company is governed by the Canada Business Corporations Act and its shares are listed under the symbol "HBM" on the Toronto Stock Exchange, New York Stock Exchange and Bolsa de Valores de Lima.
2. Basis of preparation
-
Statement of compliance:
These interim financial statements have been prepared in accordance with IAS 34, Interim Financial Reporting as issued by the International Accounting Standards Board ("IASB") and do not include all of the information required for full annual financial statements by International Financial Reporting Standards ("IFRS") as issued by the IASB.
These interim financial statements should be read in conjunction with the Company's audited consolidated financial statements for the year ended December 31, 2023 which includes information necessary or useful to understanding the Company's business and financial statement presentation. In particular, the Company's material accounting policies are presented as note 3 in the Company's audited consolidated financial statements for the year ended December 31, 2023 and have been consistently applied in the preparation of these interim financial statements, in addition to the new standard noted below.
The Board of Directors approved these interim financial statements on May 13, 2024.
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HUDBAY MINERALS INC.
Notes to Unaudited Condensed Consolidated Interim Financial Statements (in thousands of US dollars, except where otherwise noted)
For the three months ended March 31, 2024 and 2023
-
Use of judgements and estimates:
The preparation of the interim financial statements in conformity with IFRS requires Hudbay to make judgements, estimates and assumptions, in applying accounting policies that affect reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the interim financial statements, as well as reported amounts of revenue and expenses during the reporting period. Actual results may differ from these judgements, estimates and assumptions. The interim financial statements reflect the judgements and estimates outlined by Hudbay in its audited consolidated financial statements for the year ended December 31, 2023.
3. New standards
New standards and interpretations adopted
Amendment to IAS 1 - Presentation of Financial Statements
The amendments to IAS 1 clarify that only covenants with which an entity is required to comply on or before the reporting date affect the classification of a liability as current or non-current. In addition, an entity has to disclose information in the notes that enables users of financial statements to understand the risk that non-current liabilities with covenants could become repayable within twelve months. Classification is unaffected by the expectations that the entity will exercise its right to defer settlement of a liability. Lastly, the amendments clarify that settlement refers to the transfer to the counterparty of cash, equity instruments, other assets. The amendments are effective for annual periods beginning on or after January 1, 2024. The amendments have been adopted by the Company and the amendments did not result in any changes to the interim financial statements.
4. Acquisition of Copper Mountain Mining Corporation
On June 20, 2023, Hudbay acquired all of the issued and outstanding common shares of Copper Mountain Mining Inc. (formerly, Copper Mountain Mining Corp., and referred to herein as "Copper Mountain"), as part of a court-approved plan of arrangement. At the time, Copper Mountain held 75% of CMBC, the entity that owns 100% of the Copper Mountain mine. MMC owns the remaining 25% interest in CMBC as a non-controlling interest.
As a result of the acquisition, Hudbay obtained control of Copper Mountain on June 20, 2023.
Management determined that the assets and processes comprised a business and therefore accounted for the transaction as a business combination, using the acquisition method of accounting.
Consideration transferred:
The purchase consideration paid by Hudbay was for 100% of the net assets of Copper Mountain and their 100% owned subsidiaries ("100% owned entities") and a 75% ownership in CMBC. The aggregate purchase consideration for the acquired assets, net of the liabilities assumed is as follows:
Equity instruments (84,165,617 common shares of Hudbay) | $ | 436,687 |
Cash | 3,794 | |
Consideration transferred - June 20, 2023 | $ | 440,481 |
The fair value of the common shares issued was based on Hudbay's listed share price of C$6.87 at the June 20, 2023 acquisition date. Immediately prior to the acquisition, Copper Mountain settled its outstanding restricted share units and performance share units through the issuance of shares and settled its stock options for replacement Hudbay options that were immediately settled in cash.
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HUDBAY MINERALS INC.
Notes to Unaudited Condensed Consolidated Interim Financial Statements (in thousands of US dollars, except where otherwise noted)
For the three months ended March 31, 2024 and 2023
Hudbay incurred acquisition related costs of $6,932 during the year ended December 31, 2023, mainly relating to external legal and advisory fees and due diligence costs, which were recorded in other expense in the consolidated income statements. In addition, Hudbay incurred share issuance costs of $188 and presented these as a deduction from share capital.
Identifiable assets acquired and liabilities assumed:
The fair value of the net assets was determined using a combination of market, income and cost methods. The fair value of the non-controlling interest was then computed at a 25% of the equity interest in CMBC.
The following presents the allocation of the final purchase price, resulting in recognized fair value amounts of identifiable assets acquired and liabilities assumed as follows:
Fair value of net assets acquired / (liabilities) assumed | Final | |
Cash and cash equivalent | $ | 14,483 |
Trade and other receivables | 19,110 | |
Inventories | 47,875 | |
Prepaid expenses | 3,096 | |
Other financial assets | 8,495 | |
Property, plant and equipment | 434,821 | |
Mineral properties | 369,000 | |
Inventories - low grade stockpile | 6,000 | |
Trade and other payables | (77,111) | |
Advances from Hudbay | (3,421) | |
Lease liabilities | (34,617) | |
Other financial liabilities | (9,550) | |
Long-term debt | (144,981) | |
Environmental and other provisions | (12,702) | |
Deferred tax liabilities | (148,246) | |
Total fair value of net identifiable assets acquired | $ | 472,252 |
The fair values of mineral properties, low grade stockpile and other property, plant and equipment have been determined based on an independent valuation, using a combination of market, income and cost methods. In particular, the fair values of the mineral properties and low grade stockpile have been calculated using significant judgements and estimates.
Trade receivables acquired as part of the acquisition have a fair value of $8,764 which is equal to their gross contractual value. Other receivables acquired have a fair value of $10,346 which is equal to their gross contractual value. Trade and other receivables are expected to be collected during the next 12 months.
Hudbay provided advances to Copper Mountain prior to the acquisition date, which have been recorded as a purchaser loan.
Hudbay recognized goodwill as a result of the acquisition as follows:
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HudBay Minerals Inc. published this content on 14 May 2024 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 14 May 2024 10:06:21 UTC.