HudBay Minerals Inc. enjoyed a big increase in net profit in the first quarter but revenue was down sharply as a shortage of rail cars hampered its ability to ship product.
The Toronto-based miner said Monday that net earnings attributable to shareholders were $16.8-million or 11 cents per share, compared with $10.6-million or seven cents in the first quarter of 2010.
Earnings in the first quarter of 2011 included a charge of $5.8-million, or 4 cents per share, for transaction costs associated with the successful acquisition of Norsemont Mining Inc. in March.
Revenue was $177.3-million, down from $241.3-million in the same 2010 period.
Analysts had estimated HudBay would have 15 cents per share of profit, according to figures compiled by Thomson Reuters.
Revenue was expected to be $190.76-million, according to the consensus estimate.
"Earnings grew during the quarter mainly due to higher metal prices and reduced exploration expense, partly offset by lower sales volumes, a stronger Canadian dollar and Norsemont transaction costs," the company said in a release.
Production of all key metals was higher in the first quarter of 2011 compared with the same period last year and remains on track to meet 2011 guidance, the company said.
Copper production was up 23 per cent to 14,386 tonnes, zinc production up 27 per cent to 19,205 tonnes and precious metals production up 31 per cent to 30,006 gold-equivalent ounces.
Shipments of copper concentrate continued to be affected in the first quarter of 2011 by an insufficient supply of rail cars to HudBay's Manitoba operations and copper concentrate inventory continued to grow during the quarter, the company said.
Had the company been able to sell its increase in inventory at average realized prices in the quarter, the impact on revenues, earnings before tax and net earnings per share would have been an estimated additional $102-million or 14 cents per share, it said.
Rail car availability has improved significantly since the end of the first quarter, and copper concentrate inventories at Flin Flon have been steadily drawn down. the company said.
HudBay expects copper concentrate sales to exceed production in each of the ensuing three quarters of 2011, resulting in the sale of most of the excess inventory by the end of 2011.
The company has mining and processing operations in Canada, Guatemala and Peru.
Its main operations are in Manitoba, where HudBay has a copper smelter and zinc plant at Flin Flon. It's also developing the Lalor copper and gold deposit near Snow Lake, Man..
Among HudBay's holdings is the Constancia copper project in Peru. HudBay acquired Constancia with its friendly takeover of Norsemont Mining Inc. It also owns the Fenix nickel project in Guatemala.
"After outlining our growth strategy in 2010, which entailed acquiring development stage assets with exploration upside, our current focus is to execute against that strategy," president and CEO said David Garofalo said in a release accompanying the results.
"We continued to make significant progress at Lalor and our production timelines for the project remain on track. We have also commenced pre-construction and feasibility study optimization activities at Constancia and expect to make a formal construction decision in early 2012."
During the quarter, a group of 11 women from Guatemala filed a suit in Canada against the company. They are seeking $11-million in general damages and $44-million in punitive damages for alleged gang rapes in 2007.
HudBay, which didn't own the mining operations when the alleged offences occurred, said it will investigate allegations that security personnel, along with members of the police and military, attacked the women.
However, the company said the accusations in a $55-million lawsuit against the company and a subsidiary contradict available information and that it would defend itself "vigorously against them."