S&P affirms HudBay on add-on

Standard & Poor's said it affirmed HudBay Minerals Inc.'s ratings following news of the company's proposed senior unsecured notes add-on of up to $100 million.

The agency also said it affirmed the B- long-term corporate credit rating on the company and its B- issue-level rating on HudBay's existing senior unsecured debt.

The 3 recovery rating on the debt is unchanged.

The outlook is stable.

The proceeds from the proposed notes will be used to help fund the company's capital spending requirements at its major growth projects and for working capital requirements, S&P said.

The agency said it affirmed all other ratings based on an opinion that the company's liquidity position will remain adequate as execution risks at its two major growth projects moderate despite an expectation of high capital spending through 2014.

The ratings reflect the company's high growth-oriented capital expenditures through 2014, weak pro forma cash flow/leverage ratios and very limited operating diversity, said George Economou, an S&P analyst.

These weaknesses are offset somewhat by some spending flexibility at HudBay's growth projects and relatively stable operations in Manitoba, a jurisdiction viewed as a relatively low-risk mining jurisdiction, Economou said.

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