RE:RE:TD updateHere is the full TD opinion.
Hudbay reported Q4/20 adjusted EPS of $(0.06), in line with TD and consensus at $(0.07). Adjusted EBITDA of ~$107mm was also in line with TD's forecast of ~ $103mm.
Impact: POSITIVE Q4/20 consolidated contained copper production of 27,278t was 9% above TD's forecast of ~25,000t. Consolidated C1 costs were $0.43/lb copper; AISC was $2.24/lb (flat with Q3/20). Contained zinc production was 25,843t, 15% below TD's forecast of 30,250t. Consolidated gold production was in line with TD's forecast at 32,376 ozs.
Updated three-year guidance coming at the end of March. Hudbay will provide updated mine plans for both Constancia and the Snow Lake operations. Management is guiding towards improvements relative to current mine plans at both operations, including higher throughput at Snow Lake (>4,650tpd vs. 4,500tpd in the current plan) and the inclusion of the recently discovered Constancia North zone into the mine plan for the Constancia main pit (that will affect near-term production and extend the life of the pit). We have increased throughput at the Lalor Mine to 4,650tpd in our model and note that average throughput over the past two months has been ~4,900tpd.
2021 guidance — higher capex and higher gold production. Capex for 2021 is projected at $340mm, higher than consensus of ~$300mm and TD at $240mm. This is partially offset by higher-than-expected consolidated gold production of 190,000-215,000 ozs (TD's previous forecast: 188,000 ozs). Operating cost guidance is up ~10% y/y for the Manitoba (partly due to higher costs per tonne in the New Britannia mill) and 5% for the Peru operations (harder ore in the Constancia pit).
Our NAV-8% has increased to C$10.14/share (from C$9.27/share). Our higher NAV reflects increased throughput at the Lalor Mine and adjustments to our model to reflect higher copper and gold production from Constancia in 2024/2025 for the mining of the Pampacancha deposit. We expect additional upside to our NAV with the upcoming guidance at the end of March. TD Investment Conclusion We are maintaining our BUY recommendation. Our target price increases to C $12.50 (from C$11.00) based on our higher NAV-8% and an increase in our target EV/2022E EBITDA multiple to 5.0x from 4.5x
------------------------------------------------------------------------------------------------------------------------------------------------------- something else.
One overhang issue due to covid. Besides that hopefully Rosemount will get a positive outcome
The Covid-19 restrictions implemented in Peru on January 26 will remain in place until at least February 28, at which point the government will reassess the situation.
“If we fail to meet this milestone, the company will be required to deliver an additional 8 020 oz of gold to Wheaton Precious Metals in equal quarterly instalments, at prevailing market prices, starting September 30, 2021. Hudbay and Wheaton are currently in discussions about, among other things, alternatives to defer the additional gold deliveries over the Pampacancha mine life,” Hudbay stated.