Hudbay (HBM) Q3 2026 earnings review
Hudbay's sales reach a record, and Copper World wins approval
Copper and gold miner Hudbay set a sales record as its mines produced more and prices held up. Revenue reached $766 million, 21% above the second quarter. Free cash flow nearly doubled, and Hudbay approved the Copper World mine in Arizona with partner Mitsubishi. But by our math, the middle of the full-year copper range needs a fourth quarter about 25% bigger than the third.
| Revenue | $765.9M +21% from last quarter; +121% from a wildfire-hit year ago |
|---|---|
| Free cash flow | $201.9M −$16.1M a year ago |
| Copper cost per pound, after gold and other metal credits | −$0.19 $0.42 a year ago |
| Full-year cost outlook | Improved again middle of the range: −$0.45 a pound, from −$0.35 |
⚖️ Verdict: 🟢 Bullish
The story got better, because gold kept paying for Hudbay's copper costs and the miner improved its cost outlook again. One caution: Constancia in Peru and Copper Mountain in British Columbia both ran above their annual cost ranges. Copper World's budget also includes about $200 million of added scope.
The question now is whether Hudbay can lift copper output before December. Either new crushers at Constancia and a quicker mill at Copper Mountain deliver, or the year ends near the bottom of the range. Fourth-quarter production figures will tell.
🐂 Bull Case
Gold Pays for Hudbay's Copper Costs
Hudbay reports the cash cost of each pound of copper after subtracting what it earns from the gold, silver, zinc and molybdenum mined alongside it. Gold does most of that work, so the figure sits below zero.
In the third quarter those other metals brought in $4.87 for each pound of copper, while mining, milling and site overhead cost $4.44. The Toronto miner improved its full-year cost range for a second time this year.
- Cost of sales, the cost of mining and processing the ore: 54.8% of revenue, 2.6 percentage points below last quarter
- Site costs before depreciation: 41.5% of revenue, from 43.3%
- Gold credit per pound of copper: $3.85, from $2.53 a year ago
Finance chief Eugene Lei credits "operating efficiencies, which have more than offset external cost pressures". The numbers back him only in part: site costs per pound rose from the second quarter while credits slipped. The wider margin came mostly from selling 27% more copper at higher prices. The gold link also works in reverse.
What to watch: the full-year cash cost in the annual results. Hudbay said results so far sit well below its new range, so a year-end figure inside the range would mean gold credits weakened late in the year.
Hudbay and Mitsubishi Approve Copper World
Copper World is an open-pit copper project in Arizona. Hudbay owns 70% and Japan's Mitsubishi holds the rest. Chief executive Peter Kukielski calls it "one of the best copper growth projects in the Americas", and after the quarter the partners approved construction.
The plan targets first copper in the second half of 2029. The study shows 102,000 tonnes a year over the first ten years. Finance chief Eugene Lei says cash flow lets Hudbay fund its part and still invest to "double our copper production per share".
Partners and lenders pay first. Mitsubishi's $600 million stake and a $230 million advance from Wheaton Precious Metals, which buys part of the mine's future gold and silver, come first. Planned project debt of about $650 million follows. That leaves Hudbay about $500 million to pay, with "capital contributions not expected to be required until 2028".
This matters because the approval turns the largest part of the growth plan from a study into a funded build. What to watch: the project loan, which Hudbay still has to sign. Signed terms would confirm that the parent's share stays near $500 million.
Mills at Constancia and Snow Lake Set Records
Hudbay's plan for more copper and gold before Copper World rests on pushing more ore through the mills it already owns. Constancia, its open-pit mine in Peru, milled a record of about 91,300 tonnes a day, 7% more than in the second quarter.
The miner finished a third rougher line, extra equipment to recover copper, and reported "immediate improvements in copper recoveries". In Manitoba, the New Britannia mill ran at a record 2,250 tonnes a day, against a design rate of 1,500. A new mine plan extends Snow Lake's reserves to 2043.
What to watch: Constancia's fourth-quarter mill rate, after two pebble crushers start up in November. A rate above the third quarter's would show that the new equipment adds tonnes, not just recoveries.
🐻 Bear Case
Copper World Costs $2.07 Billion, Including New Scope
Kukielski says Copper World offers "favourable capital intensity", meaning a low building cost for each tonne of yearly output. The study puts the initial building cost at $2.07 billion. Hudbay says the total "includes approximately $200 million related to changes in project scope since the 2023 PFS", its earlier study.
- Return after tax at $5.00 copper: 17% a year
- Return after tax at $6.00 copper: 22% a year
- Payback: 5.4 years
- Cash cost once running: $1.65 a pound over the first ten years
Building cost per tonne of capacity is low, at about $22,600 by Hudbay's figures, so Kukielski's claim passes that test. But the return leans on price: one dollar more per pound adds five points. Copper World will also cost more to run than Hudbay's mines do today, because Wheaton pays only 15% of market price for its gold and silver.
What to watch: Copper World spending in 2027, the first full year of building. Spending ahead of budget would show that cost growth did not stop with the study.
Copper Mountain Still Costs More Than Its Plan
Copper Mountain, Hudbay's copper mine in British Columbia, missed its copper targets in each of the last two years. Kukielski said: "Our three-year operational turnaround at Copper Mountain has delivered the first quarter of positive free cash flow".
Its cash cost was $3.09 a pound, above the top of its annual range. Hudbay blamed "elevated fuel prices, higher fuel consumption from increased material moved and timing of equipment maintenance".
The miner shut the main grinding mill for 33 planned days, and the mill reached about 43,500 tonnes a day in September. But even the bottom of the copper range needs about 7,200 tonnes in the fourth quarter by our math, more than any quarter this year.
What to watch: fourth-quarter copper output in British Columbia. Less than about 7,200 tonnes would mean a third straight year below plan.
Peru's Copper Costs Rose Above the Annual Range
Constancia, Hudbay's open-pit mine in southern Peru, finished mining its gold-rich Pampacancha pit at the end of 2025. Since then, the mine earns less from the gold and silver that offset its copper costs.
- By-product credits: $36.7 million, from $59.7 million last quarter
- Cash cost: $2.23 a pound, up 34% from last quarter
- Annual cash cost range: $1.70 to $2.10 a pound
Hudbay said the overrun came "primarily due to lower by-product credits, partially offset by better treatment and refining charges", the fees smelters charge. Earlier quarters ran far cheaper, so the company still expects Peru to finish the year inside its range.
What to watch: Peru's fourth-quarter cash cost, once the new pebble crushers add tonnes. A cost still above $2.10 would show that extra copper alone cannot replace the lost gold.
Snow Lake Still Depends on Contractors and New Hires
Snow Lake, Hudbay's underground gold and copper operation in Manitoba, ran short of skilled miners in the first half. The gap slowed development at the Lalor mine and at 1901, a newer deposit nearby.
Hudbay "embedded an experienced mining contractor at 1901" and moved its own crews to Lalor. It also reported "onboarding over 150 new employees" this year. Gold output rose 42% from the second quarter, to 57,261 ounces.
One quarter does not settle the risk, because the new staff are still "undergoing upskilling" and the contractor fills a gap. The miner still targets full production at 1901 in late 2027.
What to watch: development progress at 1901 in next year's reports, against the late-2027 target. A delay would mean the labour gap has moved rather than closed.
Risks this quarter didn't answer
Three risks from earlier quarters got no new numbers, rulings or decisions in the third-quarter release, so each still waits for a later report.
- Court challenge at New Ingerbelle, the Copper Mountain expansion: the Lower Similkameen Indian Band's judicial review of its permits got no update; a ruling would move the Copper Mountain case.
- Exploration permits in Peru: no news on the delayed permits for the Maria Reyna and Caballito areas; approval would let drilling widen beyond the current mine area.
- More share-funded deals: Hudbay announced no new purchase; another all-share deal would add to the dilution from Cactus.
👓 Other Themes
Diesel Raised Costs at Two Operations
Diesel raised costs at two of Hudbay's three operations. In Peru, the miner cited "the continued higher fuel prices" and extra fuel burned moving more rock, and Copper Mountain faced the same. Net earnings still rose from the second quarter, which Hudbay credited to "cost control resilience in the face of higher diesel prices".
💲 Other KPIs
Free cash flow, the cash left after running and maintaining the mines, nearly doubled from the second quarter. A year ago it stood at minus $16.1 million, when wildfires shut Manitoba. Twelve-month free cash flow reached a record $631.0 million, even though working capital absorbed $99.0 million this quarter.
Net debt, borrowings minus cash, ended the quarter at about zero, against $439.7 million last December. Net cash of $80.5 million in June shrank as Hudbay bought investments and spent on growth projects. In November the group enlarged its credit lines, lifting available funds to about $1.2 billion.
The average share count rose 12% from a year ago because Hudbay issued 46.8 million shares in June to buy Arizona Sonoran, owner of the Cactus copper project. The third quarter was the first to carry the new shares for the full period. The board declared another quarterly dividend of C$0.01 a share.
🔮 Guidance
Unchanged. The plan still calls for 110,000 to 138,000 tonnes of copper this year. By our math, the bottom of the range needs only about 23,700 tonnes in the fourth quarter. The middle needs about 37,700, roughly 25% more than the third quarter. Hudbay has met its annual copper target for 11 straight years.
Unchanged. At the middle of the range, the plan has gold output about 9% below last year's. By our math, the middle needs about 62,100 ounces in the fourth quarter, about 11% less than the third. The miner expects Peru's gold to beat the top of that mine's own range.
Improved again. The middle of the range now sits at minus $0.45 a pound. Hudbay has moved it down twice this year, by $0.15 and then $0.10. The company said results so far run well below the new range. By our math, that leaves room for a fourth quarter near plus $0.17.
Improved. Sustaining cash cost adds the spending needed to keep the mines running, and its range now centres on $1.60, or $0.30 better than the original plan. Hudbay pointed to income from gold and to cost control. The third quarter came in at $1.61, close to the new middle.
Lowered. Hudbay now plans to spend $35 million less on keeping its mines running, about $400 million by our math. It cited "lower capitalized stripping in Peru and British Columbia and capital deferrals and efficiencies". Stripping means removing waste rock to reach ore, and deferred work can return in later years.
Raised. Spending on Copper World this year now totals $245 million for the whole partnership. The extra $110 million pays for construction in the fourth quarter, after the partners approved the build in October. The earlier figure covered only work before approval, so the rise reflects the start of building rather than an overrun.
Held, at the top. Hudbay kept the British Columbia range but expects the full year near its high end. It expects costs to ease in the fourth quarter as copper output climbs. So far this year the mine has run above the range in two of three quarters.
❓ Key Questions
How much copper will Hudbay mine in 2027?
An earlier three-year outlook put 2027 at 140,000 to 184,000 tonnes. This release did not repeat it, and the size of next year's step decides how much growth arrives before Copper World.
What raised Copper World's cost above the earlier study?
Hudbay named about $200 million of scope changes but not the 2023 starting figure or the part due to inflation and tariffs. That split shows how much room the budget has during construction.
When will Copper Mountain's costs fall inside its range?
The mine ran above its cash cost range in two of three quarters. Investors need a date for the 50,000-tonne daily mill rate and for better gold recoveries at coarser grinding.
Can Peru's costs recover without Pampacancha's gold?
By-product credits in Peru fell by $23 million in one quarter. Hudbay should say what credits it expects from Constancia next year, once the pebble crushers lift throughput.
Will Hudbay seek a partner for Cactus?
Hudbay shared Copper World's cost with Mitsubishi and Wheaton. Cactus, bought with shares in June, will need its own building budget after its 2027 study, and a partner would limit further dilution.