Moody's Ratings announced an across-the-board upgrade for Hudbay Minerals Inc., lifting the company's corporate family rating to Ba3 from B1 and improving a suite of credit measures on Friday. The probability of default rating moved to Ba3-PD from B1-PD, senior unsecured notes were upgraded to B1 from B2, and the speculative grade liquidity rating was raised to SGL-1 from SGL-2. Moody's also revised the company's outlook to stable from positive.
"The upgrade reflects Hudbay having reduced debt meaningfully on the back of higher copper and gold prices and solid operating results. Furthermore, the optimization of Copper Mountain reduces concentration and costs, while the joint venture at Copper World mitigates risks associated with future capital expenditures," said Jamie Koutsoukis, a Moody's Ratings analyst.
Moody's highlighted several factors that supported the upgrade. The agency pointed to meaningful debt reduction, stronger pricing for copper and gold, and solid operational outcomes at the company's producing assets. Hudbay's asset base comprises the Constancia mine in Cusco, Peru; the Snow Lake operations, including Lalor, in Manitoba, Canada; and the Copper Mountain mine in British Columbia, Canada. The company is advancing projects including Copper World in Arizona and the Mason project in Nevada.
The ratings agency noted Hudbay's product diversification beyond copper to include gold, silver, zinc and molybdenum, and commented on long reserve lives at its operations. Moody's reported reserve lives of 17 years at Constancia, 13 years for Lalor and the Snow Lake operations, and 19 years at Copper Mountain. Adjusted debt to EBITDA is expected to stay well below 2x, a factor Moody's cited as supportive of the credit profile.
Moody's identified constraints to the rating as well. The company is of modest scale, with Moody's citing 2025 consolidated copper production of 118,188 tonnes and consolidated gold production of 267,934 ounces. The agency noted that current operating cash flows are relatively concentrated in two producing mines and that Hudbay remains exposed to commodity price volatility.
Production trends outlined by Moody's include stable consolidated copper output through 2026 followed by an increase in 2027 attributable to optimization activities at the Copper Mountain mine. By contrast, consolidated gold production is projected to decline in 2026 and 2027 relative to 2025, largely because mining at the higher-grade Pampacancha deposit at Constancia comes to an end.
On project financing and capital risk, Moody's described the Copper World joint venture as a mechanism that reduces Hudbay's capital spending risk by lowering the company's initial funding requirement. A $600 million strategic investment from Mitsubishi places third-party capital at the project level, reducing Hudbay's equity commitment and lessening the need for additional corporate debt to bankroll construction.
Liquidity received particular attention. Moody's assigned Hudbay a very good liquidity rating and detailed the company's liquidity position as including $569 million of cash as of December 31, 2025. Pro-forma for the closing of the Mitsubishi transaction, Moody's cited a pro-forma cash balance of $922 million. The ratings agency also reported about $425 million of availability under Hudbay's $450 million secured credit facility, which matures on November 13, 2028.
Looking ahead to 2026, Moody's expects negative free cash flow of $250 million under a base-case price assumption of $4.30 per pound for copper and $3,400 per ounce for gold. The agency also flagged a near-term refinancing need, noting $473 million in notes that come due in April 2026.
The stable outlook communicates Moody's expectation that Hudbay will deliver steady operational performance across its mines and maintain financial discipline, keeping financial leverage below 2.5x over the medium term.
Contextual recap
- Ratings raised: corporate family rating to Ba3 from B1; PD rating to Ba3-PD from B1-PD; senior unsecured to B1 from B2; SGL to SGL-1 from SGL-2.
- Key liquidity and funding measures include $569 million cash at Dec. 31, 2025, $922 million pro-forma with Mitsubishi closing, and about $425 million available under a $450 million credit facility maturing Nov. 13, 2028.
- Operational profile: 2025 consolidated copper production of 118,188 tonnes; 2025 consolidated gold production of 267,934 ounces; reserve lives of 17, 13 and 19 years at Constancia, Lalor/Snow Lake and Copper Mountain respectively.