Hudbay Q2 2025 slides: Record LTM EBITDA and $600M Mitsubishi investment

Hudbay Minerals Inc (NYSE:HBM)(TSX:HBM) shares surged over 18% on Wednesday after the company’s Q2 2025 presentation revealed strong financial performance and a major strategic partnership with Mitsubishi Corporation. The miner reported continued free cash flow generation, record trailing 12-month EBITDA, and a transformative $600 million investment in its Copper World project.

Quarterly Performance Highlights

Hudbay delivered solid Q2 2025 results with adjusted EBITDA of $245 million and free cash flow of $88 million. The company produced 30,000 tonnes of copper at an impressive cash cost of negative $0.02 per pound, demonstrating exceptional cost efficiency. Management reaffirmed full-year production guidance while improving consolidated cost guidance to $0.65-$0.85 per pound.

The company achieved a record trailing 12-month adjusted EBITDA of $996 million, continuing a steady upward trend from $476 million in December 2022 to $648 million in December 2023 and $823 million in December 2024.

As shown in the following chart of quarterly financial performance:

This represents a slight decrease from Q1 2025’s adjusted EBITDA of $287 million, though the overall trend remains strongly positive. The company’s premarket trading reflected investor enthusiasm, with shares up nearly 17% before market open.

Detailed Financial Analysis

Hudbay’s balance sheet continues to strengthen, with eight consecutive quarters of meaningful free cash flow generation. The company reported $413 million in trailing twelve-month free cash flow, with cash and cash equivalents reaching $626 million by quarter-end, up from $583 million in Q1 2025.

Net debt decreased to $434 million, a significant improvement from $526 million in the previous quarter, resulting in a leverage ratio of just 0.4x net debt to adjusted EBITDA. The company executed $50 million in bond buy-backs and achieved a $92 million improvement in net debt during Q2 alone, contributing to $295 million in total debt repayments since the beginning of 2024.

The following chart illustrates this consistent debt reduction trend:

"Our balance sheet is well-positioned to advance growth initiatives," noted the company in its presentation, highlighting how this financial flexibility supports upcoming strategic projects.

Operational Performance

Hudbay’s operations across three regions delivered steady performance in line with expectations. In Peru, the Constancia mine produced 22,000 tonnes of copper and 7,000 ounces of gold at a cash cost of $1.45 per pound. The company noted that depletion of the Pampacancha deposit has been deferred to Q1 2026, extending its productive life.

Manitoba operations prioritized gold zones at the Lalor mine, producing 43,000 ounces of gold and 1,600 tonnes of copper at a gold cash cost of $710 per ounce. The New Britannia mill achieved monthly record production levels during the quarter.

British Columbia operations at Copper Mountain contributed 6,600 tonnes of copper and 5,700 ounces of gold at a cash cost of $2.39 per pound. The company completed the consolidation of 100% ownership of Copper Mountain during the quarter and reported that optimization plans are advancing, including the initial SAG2 conversion.

The operational details for each region are summarized in the following tables:

Strategic Mitsubishi Partnership

The most significant announcement in the presentation was a $600 million strategic investment from Mitsubishi Corporation for a 30% interest in Hudbay’s Copper World project. The joint venture will be structured with Hudbay maintaining 70% ownership and operatorship, while Mitsubishi gains a 30% stake.

The partnership is expected to close in late 2025 or early 2026 and provides Hudbay with a projected +90% levered project IRR. The company emphasized that Mitsubishi is aligned on the definitive feasibility study completion and project timelines.

The following slide details the key terms of this transformative partnership:

Mitsubishi Corporation represents a premier strategic partner as the largest Japanese trading house with extensive experience in joint ventures. The company has investments in several major global copper mines, making Copper World its first major copper investment since 2018.

This partnership significantly reduces Hudbay’s remaining equity contribution to approximately $200 million, with a projected pro forma cash balance of around $1 billion. The funding structure optimizes capital allocation while maintaining Hudbay’s controlling interest in the project.

Copper World Project and Growth Outlook

The Copper World project represents a significant growth driver for Hudbay, with the potential to increase consolidated copper production by more than 50%. The project has achieved all state-level permits and is positioned to be among the largest open-pit copper mines in the United States.

Initial direct investment is projected at over $1.5 billion with more than $850 million in U.S. tax contributions. The project is expected to create more than 400 direct jobs and up to 3,000 indirect jobs, representing a significant investment in U.S. critical minerals.

The project economics appear robust across various copper price scenarios, as illustrated in the following sensitivity analysis:

The long-term production profile shows how Copper World will transform Hudbay’s output and geographic diversification:

Forward-Looking Statements

Hudbay’s presentation indicates that the company has achieved its "3-P" plan for Copper World: fully permitted, prudent financing, and in place. With these milestones reached, the company appears positioned for a potential sanctioning decision in 2026.

The improved cost guidance for 2025 reflects operational efficiencies and optimization initiatives across all sites. With eight consecutive quarters of free cash flow generation and a strengthened balance sheet, Hudbay appears well-positioned to fund its growth initiatives while continuing to reduce debt.

The Mitsubishi partnership represents a significant vote of confidence in the Copper World project and provides substantial financial flexibility. As copper demand continues to grow globally, particularly for clean energy applications, Hudbay’s increased focus on copper production aligns with long-term market trends.

Investors have responded positively to these developments, with the stock trading up 18.17% at the time of writing, reflecting confidence in both current performance and future growth prospects.

Full presentation:

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