Moody's has upgraded Hudbay Minerals' rating to Ba3 with a stable outlook.

Investing.com - Moody’s on Friday upgraded Hudbay Minerals Inc.'s corporate family rating from B1 to Ba3, citing significant debt reduction supported by rising copper and gold prices and solid operational performance.

The rating agency also upgraded the company’s probability of default rating from B1-PD to Ba3-PD and upgraded the senior unsecured notes rating from B2 to B1. Moody’s upgraded the speculative-grade liquidity rating from SGL-2 to SGL-1, with the outlook changing from positive to stable.

“This upgrade reflects Hudbay’s substantial debt reduction supported by rising copper and gold prices and solid operational results. Additionally, the optimization of the Copper Mountain mine has reduced concentration and costs, while the Copper World joint venture has lowered risks associated with future capital expenditures,” said Moody’s analyst Jamie Koutsoukis.

The Toronto-based mining company operates the Constancia mine in Cusco, Peru, the Snow Lake operations in Manitoba, Canada, and the Copper Mountain mine in British Columbia, Canada. Its project reserves include the Copper World project in Arizona and the Mason project in Nevada.

Hudbay’s ratings benefit from its mines being located in Canada and Peru, its product diversity including gold, silver, zinc, and molybdenum beyond copper, an adjusted debt-to-EBITDA ratio expected to remain below 2x, and long reserve life at its operating mines. The Constancia mine has a 17-year reserve life, Lalor/Snow Lake 13 years, and Copper Mountain 19 years.

The rating is constrained by factors such as moderate scale, with 2025 combined copper production of 118,188 tons and gold production of 267,934 ounces; current operating cash flow concentrated in two producing mines; and exposure to commodity price risks.

Combined copper production is expected to remain relatively stable until 2026, then increase in 2027 due to optimization activities at Copper Mountain. Compared to 2025, combined gold production is expected to decline in 2026 and 2027 mainly due to the completion of high-grade ore mining at the Pampacancha deposit in Peru.

The Copper World joint venture reduces capital expenditure risks by lowering initial financing needs. Mitsubishi’s $600 million strategic investment introduces third-party capital at the project level, minimizing Hudbay’s equity commitment and reducing reliance on additional corporate debt financing for construction.

Moody’s assigns Hudbay a very strong liquidity rating. The company’s liquidity sources include $569 million in cash as of December 31, 2025, and a total of $922 million in committed cash including the Mitsubishi transaction, as well as approximately $425 million available under its $450 million secured credit facility, which matures on November 13, 2028.

Moody’s expects free cash flow in 2026 to be negative $250 million, based on copper prices of $4.30 per pound and gold prices of $3,400 per ounce, with notes maturing in April 2026 totaling $473 million.

The stable outlook reflects Moody’s expectation that Hudbay will maintain stable operational performance at its mines and uphold financial discipline, keeping its financial leverage below 2.5x.

This article was translated with the assistance of artificial intelligence. For more information, please see our terms of use.