Big profit jump for HudBay - but due to Lundin stake sale gain
A $100 million gain from the sale of Lundin Mining shares bought during last year's take-over attempt led to HudBay making a Q2 profit.
TORONTO (Reuters) -
HudBay Minerals (HBM.TO: Quote) said on Thursday its second-quarter profit jumped nearly 170 percent percent, as a C$100 million gain on the sale of its 16.7 percent stake in Lundin Mining (LUN.TO: Quote) more than offset the impact of weaker copper and zinc prices.
HudBay, which bought the stake last year as part of its ill-fated attempt to take over Lundin, earned C$89.4 million ($82.8 million), or 58 Canadian cents a share, in the three months ended June 30.
That compared with a profit of C$33.2 million, or 26 Canadian cents a share, in the year-before period.
Operating cash flow fell to C$28.9 million from C$70.7 million.
Revenue fell 30 percent to C$197.7 million, as realized prices for copper and zinc fell sharply year-over-year, while ore production eased because production was suspended at the Chisel North and Balmat mines due to low zinc prices.
The company said production is on track to meet overall 2009 targets, although zinc output is expected to be at the lower end of the expected 75,000-90,000 tonne range.
Chief Executive Peter Jones -- who began his second term at HudBay's helm in March -- said in June the miner was seeking acquisitions valued as high as C$1 billion, as it looks to expand following its failed attempt to buy Lundin.
HudBay abandoned the bid earlier this year because of opposition from its own shareholders, which also led to the board stepping down and being replaced by a slate that included Jones.
Speculation has also swirled that HudBay could be a target for a larger buyer, particularly after Indian mining giant Vedanta Resources (VED.L: Quote) bought a 9.5 percent share in the Canadian miner earlier this year.
($1=$1.08 Canadian) (Reporting by Cameron French; editing by Rob Wilson)
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