The second-quarter earnings season has been pretty good for Canadian mining companies with exposure to gold. Gold price surged by leaps and bounds amidst tariff uncertainties, interest rate cuts, and increasing gold buying by world central banks. Most gold mining stocks, including Lundin Gold and Barrick Gold, rallied 40% and 27%, respectively, in August. Joining them was the copper mining company Hudbay Minerals (TSX: HBM), whose stock price jumped 31% last month and continues to rise.
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Why did shares of Hudbay Minerals zoom 31% last month?
Hudbay Minerals is primarily focused on mining copper with three long-life operations and several copper growth projects in Canada, Peru, and the United States. The byproducts of copper mining are gold, silver, zinc, and molybdenum in different mines. While copper is its core product, it was gold that drove the stock price last month.
Hudbay’s second-quarter revenue from gold surged 58% year over year to US$189.2 million, accounting for 36% of its overall revenue. Gold price surged to $3,300 per troy ounce, which helped it earn windfall gains.
Strengthening the balance sheet
Like most commodity and mining companies, Hudbay is using this windfall gain from rising gold prices to reduce its debt and lower costs. As mining companies cannot control commodity prices, they strive to keep their cost down and debt low to stay profitable when prices fall.
Until last year, Hudbay Minerals was making losses, reporting a net loss of US$20.3 million in the second quarter of 2024. There wasn’t much difference in expenses between last year and this year, but the higher revenue from increased gold prices converted the net loss to a net profit of $114.7 million in the second quarter of 2025.
The company used this profit to lower interest expenses by repaying a portion of its debt and increasing its cash reserve. At the end of June 2025, Hudbay Minerals had a gross debt of over US$1 billion and a cash reserve of US$625.5 million, its best debt situation in a decade.
Investment from Mitsubishi
Another thing working in Hudbay’s favour is a $600 million strategic investment by Japan’s Mitsubishi in Copper World. This investment will come in two phases: an initial cash contribution of $420 million in late 2025 or early 2026 and a second contribution of $180 million 18 months later. This cash will reduce Hudbay’s financial risk and increase copper production.
Unaffected by U.S. tariffs
Many commodity stocks took a hit when the U.S. announced a 50% tariff on semi-finished copper products and intensive copper derivative imports, as of August 1, 2025. As the tariff is on semi-finished copper products, Hudbay Minerals remains unaffected. Moreover, even if the tariff was levied on copper, Hudbay Minerals can use its Arizona (Copper World) and Nevada (Mason) projects to cater to the United States instead of importing it from Canada or Peru.
Is Hudbay Minerals stock a buy now?
Hudbay Minerals stock is trading at its 15-year high of over $17.5. While the fundamentals are improving and its valuation looks attractive in the light of recent profits, it is not a stock to buy at its peak. Commodity prices are cyclical, and Hudbay does not have a cost or volume advantage over its competitors.
The stock is well-placed to ride the cyclical rally, but it would be better to wait for some correction. The earnings rally is ripe, which has made it an oversold stock. Its 0.11% dividend yield is not attractive. There are better dividend options on the TSX. However, it is a good stock to buy on the dip and take advantage of cyclical rallies in the short term. A 20-40% dip and rally is normal for the stock, making it a good stock for active investing.
