Financially, HudBay Minerals Inc.'s (HBM:TSX; HBM:NYSE) Q3/21 was "noisy" with beats and misses but overall was positive, reported BMO Capital Markets analyst Jackie Przybylowski in a Nov. 4 research note. Operationally, the company advanced two key projects.
"HudBay is not taking a break," Przybylowski commented. "It is pushing exploration forward, it continues to progress the Copper World option in Arizona and the company has outlined a new opportunity to reprocess tailings in Flin Flon."
During Q3/21, the Toronto, Ontario-based miner commissioned the copper flotation circuit ahead of schedule at its New Brittannia mill in Manitoba. in Also, it achieved full production at its Pampacancha mine in Peru "and is now delivering higher gold grades (and higher copper in Q4/21) as promised," Przybylowski relayed.
As for HudBay's Q3/21 financial performance, Przybylowski highlighted that the miner's earnings per share came in higher than expected. Other positives included in line production and unchanged full-year guidance. Also during Q3/21, HudBay improved its liquidity.
On the other hand, the company fell short of expectations in terms of sales and EBITDA, Przybylowski noted. "Shipment timing issues" caused sales to lag production, most significantly with respect to copper in Peru and gold in Manitoba.
Looking forward, Przybylowski pointed out that HudBay is "continuing to introduce opportunities for new positive catalysts." Those include achieving milestones at the company's Copper World project in Arizona, such as completion of an initial Inferred mineral resource estimate, expected by year-end 2021, and a preliminary economic assessment, anticipated in H1/22. Also by year-end, a ruling on HudBay's appeal regarding Rosemont could come down.
Additional events likely to move the company's stock are updates on exploration at its Peru and Manitoba projects and reprocessing tailings at the Flin Flon operation, also in Manitoba.
BMO maintained its Outperform rating and CA$15.50 per share target price on HudBay Minerals. Its stock is trading now at about CA$8.23 per share.
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IMPORTANT DISCLOSURES for BMO, Hudbay Minerals Inc., Nov. 4, 2021
Analyst's Certification
I, Jackie Przybylowski, hereby certify that the views expressed in this report accurately reflect my personal views about the subject securities or issuers. I also certify that no part of my compensation was, is, or will be, directly or indirectly, related to the specific recommendations or views expressed in this report.
Analysts who prepared this report are compensated based upon (among other factors) the overall profitability of BMO Capital Markets and their affiliates, which includes the overall profitability of investment banking services. Compensation for research is based on effectiveness ingenerating new ideas and in communication of ideas to clients, performance of recommendations, accuracy of earnings estimates, and service to clients.
Analysts employed by BMO Nesbitt Burns Inc. and/or BMO Capital Markets Limited are not registered as research analysts with FINRA. These analysts may not be associated persons of BMO Capital Markets Corp. and therefore may not be subject to the FINRA Rule 2241 restrictions on communications with a subject company, public appearances and trading securities held by a research analyst account.
Company Specific Disclosures
Disclosure 1: BMO Capital Markets has undertaken an underwriting liability with respect to Hudbay Minerals within the past 12 months.
Disclosure 2: BMO Capital Markets has provided investment banking services with respect to Hudbay Minerals within the past 12 months.
Disclosure 3: BMO Capital Markets has managed or co-managed a public offering of securities with respect to Hudbay Minerals within the past12 months.
Disclosure 4: BMO Capital Markets or an affiliate has received compensation for investment banking services from Hudbay Minerals within the past 12 months.
Disclosure 5: BMO Capital Markets or an affiliate received compensation for products or services other than investment banking services within the past 12 months from Hudbay Minerals.
Disclosure 6A: Hudbay Minerals is a client (or was a client) of BMO Nesbitt Burns Inc., BMO Capital Markets Corp., BMO Capital Markets Limited or an affiliate within the past 12 months: A) Investment Banking Services
Disclosure 6C: Hudbay Minerals is a client (or was a client) of BMO Nesbitt Burns Inc., BMO Capital Markets Corp., BMO Capital Markets Limited or an affiliate within the past 12 months: C) Non-Securities Related Services.
