We use cookies to understand how you use our site and to improve your experience.
This includes personalizing content and advertising.
By pressing "Accept All" or closing out of this banner, you consent to the use of all cookies and similar technologies and the sharing of information they collect with third parties.
You can reject marketing cookies by pressing "Deny Optional," but we still use essential, performance, and functional cookies.
In addition, whether you "Accept All," Deny Optional," click the X or otherwise continue to use the site, you accept our Privacy Policy and Terms of Service, revised from time to time.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Can HBM Sustain Its Free Cash Flow Momentum Amid Copper Price Swings?
Read MoreHide Full Article
Key Takeaways
Hudbay posts eight straight quarters of free cash flow supported by low consolidated costs.
HBM benefits from strong gold by-product credits that help offset copper-market disruptions.
Hudbay faces risks from inflation, Peru unrest and Copper World spending as volatility rises.
Hudbay Minerals’ (HBM - Free Report) third-quarter results underscore a company that has learned to generate cash in tough conditions — and intends to keep doing so. The miner has now delivered eight consecutive quarters of free cash flow, producing more than $400 million over the past 12 months, even as wildfires in Manitoba, social unrest in Peru and supply-chain challenges disrupted operations.
Management credits diversified copper-gold exposure, tight cost control, and disciplined capital allocation for the performance. But as copper enters a choppier macro cycle, investors are asking — can the trend last?
Hudbay’s margin profile is undeniably stronger. Consolidated cash costs were 42 cents/lb, and thanks to high gold by-product credits, especially from Pampacancha, the company now expects full-year cash costs to be between 15 cents and 35 cents/lb, implying near-zero or even negative net copper cash costs at certain operations.
In the third quarter, CFO Eugene Lei highlighted that byproduct strength and operating discipline helped offset lower sales volumes tied to delayed concentrate shipments. Such structurally low costs offer a buffer against copper price volatility.
Hudbay’s dual exposure to copper and gold also acts as a natural hedge. With gold production exceeding expectations in Peru and Manitoba, gold revenues have softened the impact of temporary copper-related disruptions — a strategic advantage as global macro uncertainty persists.
Yet, sustainability risks remain. Inflationary pressures continue to challenge miners globally and Hudbay is also not immune to it. The company trimmed 2025 capital spending by $35 million, but much of this reflects timing shifts rather than structural savings. Management’s push toward Copper World, a multi-year build involving pre-sanction spend and engineering acceleration, could reopen the door to CapEx creep.
Meanwhile, political volatility in Peru, described by CEO Peter Kukielski as “stable instability,” poses ongoing operational and permitting uncertainty. Social unrest already forced temporary shutdowns this year, and future disruptions could again pressure free cash flow.
For now, a combination of low costs, gold leverage, and disciplined balance-sheet management supports Hudbay’s free-cash-flow momentum. But, as copper markets wobble and geopolitical headwinds intensify, maintaining that streak will require continued operational precision, along with a bit of luck.
Peer Updates
American Resources Corporation (AREC - Free Report) is reshaping its mining strategy by evolving from distressed coal assets into a diversified critical-minerals feedstock platform. AREC is leveraging its partnership with ReElement to commercialize refining technologies and expand into rare earths, tungsten, germanium and other unconventional ore streams.
AREC is increasingly targeting global mining investments, from Southeast Asia to the United States, to secure feedstock ownership and governance rights, enabling long-term supply security for ReElement’s refining footprint. AREC’s mining initiatives now prioritize high-value tailings, coal-waste monetization and minority stakes in new mines, positioning American Resources as a strategic midstream-aligned minerals aggregator.
Paladin Energy (PALAF - Free Report) is aggressively scaling its mining portfolio through a dual-continent growth strategy anchored in uranium. The company is ramping up production at the Langer Heinrich Mine, which is expected to reach full output in fiscal 2027.
Simultaneously, Paladin Energy is advancing the Patterson Lake South (“PLS”) project in Canada, acquired through the Fission Uranium deal, giving the company a high-grade, near-term development pipeline in one of the world’s premier uranium districts. With PLS engineering reviews confirming robust economics, the company is derisking the project toward FID while expanding exploration across the Athabasca Basin. Paladin Energy’s mining initiatives support its ambition to become a top independent uranium supplier.
HBM’s Price Performance, Valuation and Estimates
Shares of HBM have surged 94% in the year-to-date period compared with a 19.4% increase for the industry.
Image Source: Zacks Investment Research
From a valuation standpoint, Hudbay trades at a forward price-to-earnings ratio of 13.26, below the industry average. It is also lower than its five-year median of 13.46. HBM carries a Value Score of B.
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for Hudbay’s 2025 earnings implies a 56.3% rise from the year-ago period’s level.
Image: Bigstock
Can HBM Sustain Its Free Cash Flow Momentum Amid Copper Price Swings?
Key Takeaways
Hudbay Minerals’ (HBM - Free Report) third-quarter results underscore a company that has learned to generate cash in tough conditions — and intends to keep doing so. The miner has now delivered eight consecutive quarters of free cash flow, producing more than $400 million over the past 12 months, even as wildfires in Manitoba, social unrest in Peru and supply-chain challenges disrupted operations.
Management credits diversified copper-gold exposure, tight cost control, and disciplined capital allocation for the performance. But as copper enters a choppier macro cycle, investors are asking — can the trend last?
Hudbay’s margin profile is undeniably stronger. Consolidated cash costs were 42 cents/lb, and thanks to high gold by-product credits, especially from Pampacancha, the company now expects full-year cash costs to be between 15 cents and 35 cents/lb, implying near-zero or even negative net copper cash costs at certain operations.
In the third quarter, CFO Eugene Lei highlighted that byproduct strength and operating discipline helped offset lower sales volumes tied to delayed concentrate shipments. Such structurally low costs offer a buffer against copper price volatility.
Hudbay’s dual exposure to copper and gold also acts as a natural hedge. With gold production exceeding expectations in Peru and Manitoba, gold revenues have softened the impact of temporary copper-related disruptions — a strategic advantage as global macro uncertainty persists.
Yet, sustainability risks remain. Inflationary pressures continue to challenge miners globally and Hudbay is also not immune to it. The company trimmed 2025 capital spending by $35 million, but much of this reflects timing shifts rather than structural savings. Management’s push toward Copper World, a multi-year build involving pre-sanction spend and engineering acceleration, could reopen the door to CapEx creep.
Meanwhile, political volatility in Peru, described by CEO Peter Kukielski as “stable instability,” poses ongoing operational and permitting uncertainty. Social unrest already forced temporary shutdowns this year, and future disruptions could again pressure free cash flow.
For now, a combination of low costs, gold leverage, and disciplined balance-sheet management supports Hudbay’s free-cash-flow momentum. But, as copper markets wobble and geopolitical headwinds intensify, maintaining that streak will require continued operational precision, along with a bit of luck.
Peer Updates
American Resources Corporation (AREC - Free Report) is reshaping its mining strategy by evolving from distressed coal assets into a diversified critical-minerals feedstock platform. AREC is leveraging its partnership with ReElement to commercialize refining technologies and expand into rare earths, tungsten, germanium and other unconventional ore streams.
AREC is increasingly targeting global mining investments, from Southeast Asia to the United States, to secure feedstock ownership and governance rights, enabling long-term supply security for ReElement’s refining footprint. AREC’s mining initiatives now prioritize high-value tailings, coal-waste monetization and minority stakes in new mines, positioning American Resources as a strategic midstream-aligned minerals aggregator.
Paladin Energy (PALAF - Free Report) is aggressively scaling its mining portfolio through a dual-continent growth strategy anchored in uranium. The company is ramping up production at the Langer Heinrich Mine, which is expected to reach full output in fiscal 2027.
Simultaneously, Paladin Energy is advancing the Patterson Lake South (“PLS”) project in Canada, acquired through the Fission Uranium deal, giving the company a high-grade, near-term development pipeline in one of the world’s premier uranium districts. With PLS engineering reviews confirming robust economics, the company is derisking the project toward FID while expanding exploration across the Athabasca Basin. Paladin Energy’s mining initiatives support its ambition to become a top independent uranium supplier.
HBM’s Price Performance, Valuation and Estimates
Shares of HBM have surged 94% in the year-to-date period compared with a 19.4% increase for the industry.
Image Source: Zacks Investment Research
From a valuation standpoint, Hudbay trades at a forward price-to-earnings ratio of 13.26, below the industry average. It is also lower than its five-year median of 13.46. HBM carries a Value Score of B.
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for Hudbay’s 2025 earnings implies a 56.3% rise from the year-ago period’s level.
Image Source: Zacks Investment Research
The stock currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.