Hudbay Minerals reported an adjusted loss of $0.15 per share, a $0.05 per share improvement from what analysts expected. Several factors drove the narrower loss, including strong production and cost performance at its operations in Manitoba, and rising production of all other metals elsewhere, including record gold output. That strong gold production came at an ideal time as prices soared during the period.
The mining company's excellent performance in Manitoba during the first half of the year has it on track to achieve its full-year production and cost guidance for those operations despite the impact of COVID-19. But the company did warn that the pandemic had a significant effect on its operations in Peru, where the government required it to suspend work in mid-March. While the company resumed operations at its Constancia mill in mid-May and returned to normal levels by early July, it had to cut its 2020 production forecast for Peru. That's because of the Constancia suspension and pushing back the start of mining at Pampacancha until early next year.
Hudbay Minerals' operations in Manitoba helped offset some of the weakness in Peru during the quarter. But that country will become increasingly important as the company starts mining at Pampacancha early next year. That project, when combined with the planned restart of the New Britannia gold mill in Manitoba, will put the company on track to begin generating significant free cash, assuming metals prices cooperate.