Post by
Ridgeback on Nov 13, 2024 1:15pm
TD UPDATE
THE TD COWEN INSIGHT Hudbay delivered strong Q3 results supported by record gold production out of its Snow Lake operations. EBITDA of $206M was well above TD Cowen at $189M and consensus of $176M, leading to strong FCF of $88M in the quarter.
Copper guidance was maintained, while cash cost guidance was lowered reflecting the higher than expected gold production. We expect shares to outperform today on the results.
Impact: POSITIVE HBM reported Q3/24 adjusted EPS of $0.13, versus TD of $0.06 and consensus at $0.04. Adjusted EBITDA of $206M was also above TD at $189M and well above consensus of $176M. We calculate the company generated $88M in FCF in the quarter versus TD at $41M. Q3/24 consolidated copper production was 31.4kt (TD: 30.7kt, consensus 30.8kt); consolidated cash costs for the quarter were $0.18/lb, below our forecast and consensus of $1.00/lb.
Consolidated gold production for the period was 89.1kozs, well above our estimate of 61.0kozs and driving the earnings beat. Constancia produced 21.2kt of copper-in-concentrate during the quarter, meeting our forecast of 20.9kt. Constancia's C1 cost was $1.80/lb, 8% above our forecast of $1.67/lb. Manitoba produced 62.5koz gold in concentrate and in dor during the quarter, 37% above our forecast of 45.7koz. Manitoba cash cost was $372/oz, which compares with our forecast of $719/oz. Production at Snow Lake is now expected to exceed the top-end of the guidance range of 200koz.
Copper Mountain produced 6.7kt of copper-in-concentrate during the quarter, missing our forecast of 7.2kt by 7%. Production is expected to fall short of the lower-end of guidance, but improvements are being made including on the recovery front which achieved 84%. Copper Mountain's C1 cost was $1.81/lb, below our estimate of $2.39/lb. Production guidance unchanged at 137,000 to 176,000 tonnes, with the company continuing to guide to the low-end of the range based on softer H1/24 results (TD at 139kt) and a weaker performance at Copper Mountain.
The company continues to guide to higher copper production in Q4 as they return to mining higher grades from Pampacancha. Copper cash cost guidance was lowered to $0.65-0.85/lb from $0.90-$1.10/lb, reflecting the stronger gold prices and production.