Marketwired .

Subscribe to Marketwired .: eMailAlertsEmail Alerts
Get Marketwired . via: homepageHomepage mobileMobile rssRSS facebookFacebook twitterTwitter linkedinLinkedIn

News Feed Item

Lundin Mining Provides Operational Outlook & Update

TORONTO, ONTARIO -- (Marketwired) -- 11/29/17 -- Lundin Mining Corporation ("Lundin Mining" or the "Company") (TSX:LUN)(OMX:LUMI) provides the following production guidance for the three-year period beginning in 2018, cash costs, capital and exploration expenditure guidance for 2018, as well as ten-year guidance for our Candelaria operation. Key highlights are as follows:

--  The Company will make significant investments in both the mine and mill
    at Candelaria to increase the copper production profile over the life-
    of-mine. A particular focus is on improvements in years 2021 and beyond.
    Forecasts for 2018 and 2019 have been lowered from the previous outlook
    under the new re-phased open pit life-of-mine plan and to address
    localized pit wall instability, reflecting the short-term impact on
    production from a recent slide. 
--  Zinc production guidance has increased for 2019 incorporating the Zinc
    Expansion Project (ZEP) at Neves-Corvo, though lowered for 2018. Total
    zinc production is on-track to increase in 2020 by a forecast 60% over
    2018 levels with the ZEP to be contributing at full production rates. 
--  Nickel production forecasts remain in line with previous guidance. Final
    approval of permit amendments to develop and mine Eagle East were
    received November 20, 2017. 
--  Eagle and Zinkgruvan are to remain first-quartile producers, and
    Candelaria and Neves-Corvo well positioned on global cash operating cost
    curves in 2018. 

Paul Conibear, President and CEO commented, "We are significantly expanding investment in our own assets including a number of low-risk, positive return initiatives, further positioning all of our operations for sustained reliability of production and lower operating costs, taking a long-term view.

"The life-of-mine copper production profile of Candelaria has once again been improved as we reinvest in the mine fleet, advance a mill optimization project, and expand underground production.

"The Zinc Expansion Project at Neves-Corvo and development of Eagle East remain on budget and schedule with first production from both growth projects anticipated in the second half of 2019, and early 2020, respectively."

Attributable Production Outlook (tonnes of metal) 2018 - 2020(1)

                                  2018               2019               2020
  Candelaria (80%)   104,000 - 109,000  116,000 - 121,000  132,000 - 137,000
  Eagle                15,000 - 18,000    12,000 - 15,000    12,000 - 15,000
  Neves-Corvo          39,000 - 44,000    40,000 - 45,000    41,000 - 46,000
  Zinkgruvan             1,000 - 2,000      1,000 - 2,000      2,000 - 3,000
Total Attributable                                                          
 Copper              159,000 - 173,000  169,000 - 183,000  187,000 - 201,000
  Neves-Corvo          68,000 - 73,000    88,000 - 93,000  155,000 - 160,000
  Zinkgruvan           76,000 - 81,000    78,000 - 83,000    79,000 - 84,000
Total Zinc           144,000 - 154,000  166,000 - 176,000  234,000 - 244,000
  Eagle                14,000 - 17,000    10,000 - 13,000    13,000 - 16,000
Total Nickel           14,000 - 17,000    10,000 - 13,000    13,000 - 16,000

--  Candelaria: The copper production profile for Candelaria has been
    improved over the life-of-mine and next ten years. Re-phasing of the
    open pit mine plan, increased planned production from underground mines,
    mine fleet reinvestment and initiatives to increase mill capacity have
    all contributed to the improved production profile. An updated NI 43-101
    Technical Report is being completed and expected to be released before
    the end of 2017. Ten-year guidance for Candelaria is provided in
    Appendix A.
    The latest open pit plan considers new phase designs, production
    sequences and a change in pit ore excavation and truck loading
    methodology. It also addresses recent instability in a localized area of
    the pit's east wall and a slide which occurred October 31, 2017. Both
    have impacted 2018 and 2019 production forecasts. Production guidance
    for 2017 remains unchanged. Candelaria attributable copper production
    guidance of 104,000 to 109,000 tonnes in 2018 is less (20%) than the
    previous outlook for the year. As a result of the recent slide and to
    take a more conservative approach in mining this area of the pit, the
    near-term plans have been altered to focus on waste push backs above the
    area prior to mining where the slide occurred. In the meantime, low
    grade stockpile ore will make up the difference in mill feed.
    Forecast copper production over the next ten years has increased in
    aggregate by approximately 290,000 tonnes (20%) with particular focus on
    improvements in years 2021 and beyond. 
--  Eagle: Consistent with original expectations, year-over-year production
    levels of nickel and copper are expected to gradually decline as the
    highest-grade ore is mined earlier in the plan and prior to production
    commencing from the Eagle East ore body. Forecast 2018 copper production
    from Eagle has increased modestly to 15,000 to 18,000 tonnes with
    forecast nickel production remaining consistent with our prior outlook,
    while forecast 2019 levels have decreased modestly.
    Final approval of permit amendments to develop and mine Eagle East was
    granted by the Michigan Department of Environmental Quality (MDEQ) on
    November 20, 2017. Permit amendment requests for processing of Eagle
    East ore at our Humboldt plant continue to progress and are anticipated
    by mid-2018. Full production from Eagle East in 2020 is reflected in our
    three-year production outlook. 
--  Neves-Corvo: Forecast zinc and copper production guidance now
    incorporate the ZEP which is expected to approximately double zinc
    production from current levels. First production from ZEP remains on
    schedule for the second half of 2019. Forecast zinc and copper
    production guidance for 2018 are modestly less than (3% and 6%,
    respectively) the previous outlook provided on November 30, 2016, as
    average mill feed grades and recoveries have been reassessed. Zinc
    production is expected to increase significantly in 2019 and ramp up to
    full tonnage in 2020. Both copper and zinc production are forecast to
    benefit from metallurgical improvements in the process plants undertaken
    as part of the ZEP and result in better metal recoveries. 
--  Zinkgruvan: The 1350 Zinc Expansion Project was commissioned on schedule
    and budget in mid-2017 increasing mill capacity to approximately 1.35
    million tonnes per annum (1.17 million tonnes of zinc-lead ore and 0.18
    million tonnes of copper ore). Average zinc and lead mill recoveries
    have been reassessed in this production outlook. Significant focus is
    being given to improvement projects in the process plant including
    initiatives to improve ore feed characteristics, throughput, metal
    recoveries and overall concentrate quality. Prioritization remains on
    the processing of zinc-lead ores. An updated NI 43-101 Technical Report
    is being completed and expected to be released before the end of 2017. 

(1) Production Guidance is based on certain estimates and assumptions, including but not limited to; mineral resources and mineral reserves, geological formations, grade and continuity of deposits and metallurgical characteristics.

2018 Cash Cost Guidance(2)

--  At Candelaria, estimated C1 cash costs are expected to approximate
    $1.70/lb(3) copper after by-product credits. By-product credits have
    been adjusted for the terms of the streaming agreement but exclude any
    allocation of upfront cash received. 
--  Eagle's estimated C1 cash costs are expected to approximate $1.35/lb
    nickel after by-product credits, primarily copper as well as cobalt and
    precious metals. Eagle cash costs are to remain well positioned in the
    lowest quartile of the global nickel producer cost curve. 
--  At Neves-Corvo, estimated C1 cash costs for 2018 are expected to
    approximate $1.30/lb copper after zinc and lead by-product credits. 
--  Zinkgruvan's estimated C1 cash costs are expected to approximate
    $0.45/lb zinc after copper and lead by-product credits. Zinkgruvan is
    expected to remain a low cost zinc producer for the foreseeable future. 

C1 Cash Cost(2)                                                         2018
  Candelaria (80%)                                               $1.70/lb(3)
  Neves-Corvo                                                       $1.30/lb
  Zinkgruvan                                                        $0.45/lb
  Eagle                                                             $1.35/lb

(2) C1 cash costs are based on various assumptions and estimates, including, but not limited to; production volumes, as noted above, commodity prices (2018 - Cu: $2.75/lb, Zn: $1.30/lb, Pb: $1.00/lb, Ni: $5.00/lb) foreign currency exchange rates (2018 - EUR/USD:1.20, USD/SEK:8.00, CLP/USD:625) and operating costs. All figures in are in US$ unless otherwise noted.

(3) 68% of Candelaria's total gold and silver production are subject to a streaming agreement and as such C1 cash costs are calculated based on receipt of $404/oz and $4/oz, respectively, on gold and silver sales in the year. No consideration has been made for the upfront payment received in the calculation of C1 cash costs.

2018 Capital Expenditure Guidance

--  Capital expenditures in 2018 for mines operated by the Company are
    expected to be approximately $850 million on a 100% basis, which

Capital Expenditures ($ millions)(4)                                    2018
Candelaria (100% basis):                                                    
  Capitalized Stripping                                                  200
  Los Diques Tailings                                                     60
  New Mine Fleet Investment                                               75
  Mill Optimization Investment                                            50
  Candelaria Sur Development                                              20
  Other Sustaining                                                       105
Candelaria Sustaining                                                    510
Eagle Sustaining                                                          25
Neves-Corvo Sustaining                                                    55
Zinkgruvan Sustaining                                                     40
Total Sustaining Capital                                                 630
Eagle East                                                                30
Zinc Expansion (Neves-Corvo)                                             190
Total Expansionary Capital                                               220
Total Capital Expenditures                                               850

--  Candelaria: At Candelaria capital expenditures are expected to total
    $510 million in 2018. The Company will invest in several low-risk
    positive return initiatives focussed on improving the life-of-mine
    production profile and increasing the value of the operation.
    Capitalized stripping expenditures are estimated to be $200 million in
    2018 under the new mine plan as more waste material is moved to ensure
    production requirements and flexibility for future years. Short term use
    of a mining contractor is planned to accelerate stripping rates,
    supporting both the short-term mine plan changes and the new improved
    life of mine production plan.
    The Los Diques Tailings Project remains on budget and on schedule for
    tailings deposition in the first quarter of 2018. Estimated costs to
    complete remain unchanged at $295 million with $45 million to be spent
    in 2018, from $30 million previously disclosed due to timing of
    payments, to complete the construction of the first phase of the main
    embankment. Future lifts of the embankment have been initiated ahead of
    schedule to benefit from synergies with the current project and readily
    available mine waste. An additional $15 million of capital is forecast
    in 2018 to construct two additional lifts, bringing the forecast total
    capital expenditures on the facility to $60 million for the year.
    New Mine Fleet Investment is estimated to be $75 million in 2018.
    Ongoing exploration efforts have significantly increased Candelaria
    Mineral Reserves and extended mine life well beyond the original 20-year
    life when the open pit began production in 1994. Mine equipment has been
    rebuilt and maintained in line with industry standards, however
    reinvestment in a latest generation loading and haulage fleet is
    expected to generate a positive payback gained through increased ore
    loading and haulage capacity and efficiency, while improving equipment
    availability and reliability. Management believes upside potential
    exists, for additional productivity gains which have not yet been
    reflected in the open pit plan.
    Mill Optimization Investment studies have identified several low-risk
    improvements to increase metal production, reduce maintenance costs and
    improve safety. Mill Optimization Investment capital expenditures are
    expected to be $50 million in 2018. Upgrades are planned for the primary
    crusher, cyclones, ball mills, pebble crushing and flotation circuits.
    In addition, desalination plant debottlenecking and pipeline
    improvements will increase fresh water supply. These investments are
    forecast to take approximately two years to come on line and are
    expected to increase mill throughput by approximately 4,000 tonnes per
    day and improve metal recovery rates for an approximate increase of more
    than 6,000 tonnes of copper per year. The Mill Optimization Investment
    presents near-term low-risk initiatives that would also provide benefit
    under potential future expansions.
    Increased production from Candelaria underground mines also contribute
    meaningfully to the improved forecast production profile. In the third
    quarter of 2017 the Company received an environmental permit to expand
    production from the Candelaria underground deposits to 14,000 tonnes per
    day from 6,000. Production ramp-up from Candelaria underground North
    sector has begun with levels currently in the range of 8,000 tonnes per
    day and 10,000 tonnes per day targeted by 2019. Development of
    Candelaria underground South sector (Susana-Damiana deposits) has been
    brought forward and is expected to contribute to production in the
    second half of 2019 at a mining rate of 4,000 tonnes per day. The total
    pre-production capital is $47 million, $20 million of which will be
    spent in 2018.
    The Other Sustaining Capital noted in Appendix A includes funds for
    horizontal and vertical development, ventilation, self-perform mining
    equipment purchase and supporting infrastructure being invested to
    expand the Candelaria, Alcaparrosa and Santos underground mine
--  Eagle: Capital expenditures at Eagle are estimated to total $55 million
    in 2018, of which $30 million is development of Eagle East. The Eagle
    East project remains on schedule and on budget. Recently approved permit
    amendments from the MDEQ have authorized complete ramp development as
    well as mine development and mining of the orebody. 
--  Neves-Corvo: At Neves-Corvo capital costs are expected to total $245
    million in 2018, $190 million of which is expansionary capital
    expenditure on the ZEP. The project remains on budget and on target to
    commence production ramp up in the second half of 2019. Review by
    authorities of the ZEP project engineering and construction permit
    (RECAPE) package is in progress and construction of the process plant
    expansion and surface infrastructure is expected to commence in the
    first quarter of 2018 once RECAPE approvals are in hand. 
--  Zinkgruvan: At Zinkgruvan sustaining capital expenditures are estimated
    to total $40 million in 2018. Approximately half is for underground
    development and half for mine and plant maintenance and improvement

(4) Forecast capital expenditures have been reported on a cash basis. Discrepancies may exist with other external reports which have been reported on an accrual basis, most notably for the Los Diques Tailings Project in 2018.

2018 Exploration Investment Guidance

Exploration expenditures are planned to be $83 million in 2018. This is a 12% increase over estimated 2017 expenditures reflecting a results-driven commitment to aggressive exploration programs. Approximately $70 million will be spent on in-mine and near-mine targets ($34 million at Candelaria, $18 million at Eagle, $13 million at Zinkgruvan and $5 million at Neves-Corvo), with the remainder to advance exploration activities for new South American and Eastern European exploration projects.

About Lundin Mining

Lundin Mining is a diversified Canadian base metals mining company with operations in Chile, the United States of America, Portugal, and Sweden, primarily producing copper, nickel and zinc. In addition, Lundin Mining holds an indirect 24% equity stake in the Freeport Cobalt Oy business, which includes a cobalt refinery located in Kokkola, Finland.

This is information that Lundin Mining Corporation is obliged to make public pursuant to the EU Market Abuse Regulation. The information was submitted for publication, through the agency of the contact persons set out below on November 29, 2017 at 5:00 p.m. Eastern Time.

Cautionary Statement in Forward-Looking Information

Certain of the statements made and information contained herein or incorporated by reference is "forward-looking information" within the meaning of applicable Canadian securities laws. All statements other than statements of historical facts in this news release constitute forward-looking information based on current expectations, estimates, forecasts and projections as well as beliefs and assumptions made by the Company's management. Such forward-looking statements include but are not limited to those regarding the Company's outlook and guidance on estimated metal production and production profile, costs, and exploration and capital expenditures; the Zinc Expansion Project at Neves-Corvo and the Eagle East project ; Mineral Reserves, Mineral Resources, life-of-mine (or mine life); all of which are estimates (and the parameters, expectations and assumptions underlying, and realization of, such estimates including, but not limited to metal price assumptions, and permitting and development expectations. Words such "aim", "anticipate", "assumption", "believe", "budget", "commitment", "estimate, "expansionary", "expect", "exploration", "flexibility", "focus", "forecast", "foreseeable", "forward", "future", "growth", "guidance", "initiative", "on-track", "outlook", "plan", "positioning", "potential", "priority", "profile", "project", "ramp-up", "risk", "schedule", "study", "target" or "view", or variations of or similar such terms, or statements that certain actions, events or results could, may, might or will be taken or occur or be achieved,, or variations of these terms or similar terminology or statements that certain actions, events or results could, may, might or will be taken or occur or be achieved are intended to identify such forward-looking information. These estimates, expectations and other forward-looking statements are based on a number of assumptions and are subject to a variety of risks and uncertainties which could cause actual events or results to differ materially from those reflected in the forward-looking statements.

Such risks and uncertainties include, without limitation, risks and uncertainties inherent in and/or relating to: estimates of future production and operations, cash and all-in sustaining costs; metal and commodity price fluctuations; foreign currency fluctuations; mining operations including but not limited to environmental hazards, industrial accidents, ground control problems and flooding; geology including, but not limited to, unusual or unexpected geological formations, estimation and modelling of grade, tonnes, metallurgy continuity of mineral deposits, dilution, and Mineral Resources and Mineral Reserves, and actual ore mined and/or metal recoveries varying from such estimates; mine plans, and life of mine estimates; the possibility that future exploration, development or mining results will not be consistent with expectations; the expected strike by union workers (and potential further such strikes) at Neves-Corvo, and the potential for and effects of other labour disputes or shortages, or other unanticipated difficulties with or interruptions in production; potential for unexpected costs and expenses including, without limitation, for mine closure and reclamation at current and historical operations; uncertain political and economic environments; changes in laws or policies, foreign taxation, delays or the inability to obtain necessary governmental approvals and/or permits, including but not limited to the Alcaparrosa underground mine operating license, the Punta Padrones process operating license and the Ojos del Salado mill tailings line permit at Candelaria which are required by the end of the year; regulatory investigations, enforcement, sanctions and/or related or other litigation; and other risks and uncertainties, including but not limited to those described in the "Managing Risks" section of the Company's Management's Discussion and Analysis for the financial period ending December 31, 2016 and completed financial quarters in 2017, and the "Risks and Uncertainties" section of our most recently filed Annual Information Form.

In addition, forward-looking information is based on various assumptions including, without limitation, the expectations and beliefs of management; assumed prices of copper, nickel, zinc and other metals; that the Company can access financing, appropriate equipment and sufficient labour; and that the political environment where the Company operates will continue to support the development and operation of mining projects. Should one or more of these risks and uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those described in forward-looking statements. Accordingly, there can be no assurance that forward-looking information will prove to be accurate, and readers should not place undue reliance on forward-looking statements. The Company disclaims any intention or obligation to update or revise forward-looking statements or to explain any material difference between such and subsequent actual events, except as required by applicable law.

Appendix A - Candelaria Ten-Year Outlook

Candelaria (100%                                                           
 basis)                    2018       2019       2020       2021       2022
Copper Production(1)  130,000 -  145,000 -  165,000 -  171,000 -  182,000 -
 (tonnes)               136,250    151,250    171,250    178,000    189,000
C1 Cash Cost(3)        $1.70/lb   $1.60/lb   $1.60/lb   $1.55/lb   $1.45/lb
Capital Expenditures                                                       
 ($ millions)(4)                                                           
   Stripping                200        170        135        140        115
  Los Diques Tailings                                                      
   (All Phases)              60          5         10         30         45
  New Mine Fleet                                                           
   Investment                75        100         35         10         25
  Mill Optimization                                                        
   Investment                50         25          -          -          -
  Candelaria Sur             20         25         10         15         10
  Other Sustaining                                                         
   Capex                    105         50         45         25         25
Total Candelaria                                                           
 Capital Expenditures       510        375        235        220        220

Candelaria (100%                                                            
 basis)                     2023       2024       2025       2026       2027
Copper Production(1)   182,000 -  150,000 -  159,000 -  153,000 -  168,000 -
 (tonnes)                189,000    156,000    165,000    159,000    174,000
C1 Cash Cost(3)         $1.15/lb   $1.50/lb   $1.25/lb   $1.25/lb   $1.10/lb
Capital Expenditures                                                        
 ($ millions)(4)                                                            
   Stripping                 120         85         55         65         70
  Los Diques Tailings                                                       
   (All Phases)               50         25         30         30          -
  New Mine Fleet                                                            
   Investment                 20          -         10          5          -
  Mill Optimization                                                         
   Investment                  -          -          -          -          -
  Candelaria Sur               5          -          -          -          -
  Other Sustaining                                                          
   Capex                      25         25         10          5          5
Total Candelaria                                                            
 Capital Expenditures        220        135        105        105         75

Mark Turner
Director, Business Valuations and Investor Relations

Sonia Tercas
Senior Associate, Investor Relations

Robert Eriksson
Investor Relations Sweden
+46 8 545 015 50

More Stories By Marketwired .

Copyright © 2009 Marketwired. All rights reserved. All the news releases provided by Marketwired are copyrighted. Any forms of copying other than an individual user's personal reference without express written permission is prohibited. Further distribution of these materials is strictly forbidden, including but not limited to, posting, emailing, faxing, archiving in a public database, redistributing via a computer network or in a printed form.