Confident it will withstand legal challenges, Hudbay getting finances in place to construct $1.9 billion Rosemont Mine

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Toronto-based Hudbay Minerals Inc. is taking significant financial steps to free up cash in anticipation of receiving final government approvals to begin construction on its proposed $1.9 billion Rosemont Mine and is confident the company will withstand all legal challenges to its permits, according to financial reports and statements by company officials.

“We’re feeling very well positioned now,” Hudbay Chief Financial Officer David Bryson told stock analysts during a Nov. 2 conference call related to Hudbay’s 3rd quarter earnings.

Bryson said the company’s recent stock offering along with profitable mining operations in Peru and Manitoba has put the company in good position to finance construction of Rosemont. The company raised $242 million in September by selling 24 million shares of common stock.

“Obviously, we have an underlying business,” Bryson said. “It’s capable of generating substantial amount of cash flow over what would be Rosemont’s likely construction period.”

Hudbay officials expressed confidence that the company will withstand all legal challenges to its permits. Organizations that oppose the mine think differently.  They are still convinced that the proposed mine will not overcome the required legal hurdles (click here and here for examples.)

Four environmental groups, including Save the Scenic Santa Ritas, a Tucson citizens group opposed to the Rosemont project, in August filed a 60-day notice of intent to sue the U.S. Forest Service alleging the agency violated the Clean Water Act when it issued the Final Record of Decision approving construction of the mine.

The Center for Biological Diversity, a Tucson-based environmental group, in September filed a federal lawsuit against the U.S. Forest Service and the U.S. Fish and Wildlife Service challenging, among other things, the issuance of the “biological opinion” that the mine will not seriously impact endangered species, including the jaguar.

“This lawsuit is one of many challenges against the Rosemont permitting process and Hudbay is confident the permits will be upheld,” the company states in its 3rd Quarter Management Discussion & Analysis report.

Hudbay CEO Alan Hair told analysts a “robust” permitting process has been ongoing for 12 years and that the legal challenges have always been expected.

“As we have said all along, we think that good science should prevail,” Hair said.

Higher copper and zinc prices along with steady production in Manitoba and Peru helped Hudbay strengthen its balance sheet in anticipation of future construction at Rosemont.

“Our strong cash flow generation helped to significantly reduce our debt balances this quarter,” Hair said. “We also applied part of the proceeds from the equity offering in late September to fast track debt reduction and have fully repaid the remaining cash borrowings under our senior secured credit facilities.”

Net profits and earnings per share in the third quarter were $41 million and $0.17 respectively compared to a net profit and profit per share of $26 million and $0.11 respectively in the second quarter of 2017.

Hudbay increased its available cash to $329 million at the end of the 3rd quarter, up from $153 million at the end of the 2nd quarter, according to a company report. Hudbay increased its total liquidity to $750 million as of Sept. 30, up from $497 million at the end of the 2nd quarter on June 30. The company’s long-term debt was $986 million, according to its 3rd quarter financial statement.

The company has one outstanding federal permit application pending before the U.S. Army Corps of Engineers which is determining whether to issue a Clean Water Act permit needed to build the mine. The Corps’ Los Angeles district office recommended denying the permit in July 2016. But a final decision has not been made by the San Francisco regional office.

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4 Responses to Confident it will withstand legal challenges, Hudbay getting finances in place to construct $1.9 billion Rosemont Mine

  1. ALAN JOHNSON says:

    HUDBAY IS BEING VERY OPEN WITH ITS INTENTIONS AND EXPRESSES COMPLETE CONFIDENCE IN OVERCOMING THE HURDLES THAT IT FACES IN THE PERMITTING PROCESS . THIS IS A SHOT ACROSS THE BOW OF THE OPPOSITION .

    HUDBAY HAS BEEN ALLOWED TO GAIN ITS POSITION REGARDING THE ROSEMONT COPPER PROJECT THANKS TO THE SHEER INCOMPETENCE OF THE US GOVERNMENT AND ALL OF ITS AGENCIES AT ALL LEVELS INVOLVED IN THE PERMITTING PROCESS . THANK YOUR CONGRESS PERSON , GOVERNOR , SENATOR , ETC FOR HELPING TO MAKE HUDBAY’S EFFORTS A SUCCESS .

    HUDBAY , LIKE ALL MINING COMPANIES , ARE OPPORTUNISTS WHO ARE WELL VERSED IN THE LEGAL ISSUES SURROUNDING THE DEVELOPMENT OF A MINE . THEY ARE BY NO MEANS , FAINT OF HEART AND HAVE TIME AND DEEP POCKETS IN THEIR FAVOUR .

    THERE HAS REALLY BEEN NO EFFECTIVE EFFORT TO DATE IN ORDER TO CHALLENGE GOVERNMENT AGENCIES , DEMANDING THEM TO TERMINATE THE PERMITTING PROCESS . HUDBAY KNOWS WHERE THEY STAND AND ARE CONFIDENT THAT , IN THE END , THEY WILL DEVELOP THE ROSEMONT COPPER PROJECT INTO THE MINE INTENDED COME HELL OR HIGH WATER .

    STOP THE CARNAGE BEFORE IT BEGINS . DECLARE ” WAR ” AGAINST HUDBAY AND REPORT THEM TO THE CANADIAN AUTHORITIES CONCERNED .

    THANK YOU

  2. Bruce Hamilton says:

    Just the water usage alone should be enough to stop this project….or the permanent damage to the riparian areas….much higher traffic increase… or the fact that after just 20 years of available minerals they will walk away and the Arizonans that drive that route daily or out of state visitors on a scenic weekend trip to beautiful wine country will get to witness the shortsighted decisions of our government for eternity…..you just have to ask yourself, WHEN will it stop.

  3. Ed Conrad says:

    It’s a lose/lose/lose situation for Arizona:

    1. Permanent loss of Arizona minerals to an international entity.
    2. Permanent scarring of the land.
    3. Heavy water consumption in a desert environment.
    4. Permanent ecological damage.
    5. Most likely a huge taxpayer burden for remediation.
    6. Tailings, tailings, tailings.

    All for what? Pennies on the dollar tax revenues from mining profits? A few hundred jobs…mostly blue collar?

  4. Chris Werkhoven says:

    Again more intimidation, Hudbay got probably strengthened by the backward looking policies of our new government and think it can continues along the path that worked in the past as well, including throwing money at public officials and private citizens.
    It is 2017 though and it is surprising to see that one can be so naïve to think that the names and bank accounts of these officials and private citizens will remain hidden from investigative reporters. That era has gone, as today’s panic in Washington already is showing. But greed makes many blind so there is work to do. Among this is exposing that what Hudbay and its so-called experts are touting on containing pollution, replenishing the ground water and how to restore the landscape, is not underpinned at all. History has shown mining companies fall short on their promises by declaring bankruptcy as they know the process is irreversible and costs are astronomical. They know that from the very start and in AZ you don’t have to drive far to see the magnitude of these effects. But AZ is not a part of the world anymore where you can bride your way into communities, remove those who are in your way and think you can get away with it. Maybe in Canada you still can.
    Surprising too is that those who collaborate with or are accepting money from Hudbay can look their children and fellow citizens straight in the face and be proud of their accomplishments. Pollution is now the #1 cause of death worldwide but “captains of industry” would rather have citizens be quiet about that and keep watching NFL and drink beer. However, investigative reporting is well on its way to correct that. The Santa Ritas will be a “mountain too high” for Hudbay.

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