Lundin Mining Corporation(TSX:LUN)(OMX:LUMI) ("Lundin Mining" or the "Company"),
provides the following production guidance for the three-year period of 2014
through 2016. Key highlights are as follows:
-- Commissioning and production at Eagle is expected to add significantly
to total nickel and copper production, starting in late 2014.
-- 2014 to 2016 annual attributable copper production is expected to
increase more than 20% from the Company's wholly owned operations.
-- Zinc production is expected to increase by 10% between 2014 to 2016, as
Neves-Corvo zinc production continues to ramp-up owing to higher
throughput levels and zinc grades from Lombador Phase I.
-- Nickel production is expected to increase significantly as Eagle reaches
full production levels in 2015. Additionally, mining at Aguablanca is
now expected to continue until 2018 as the underground project has been
approved for development owing to the favourable economics of the
project.
"For 2014, we anticipate continuing our strong execution at the current
operations and completing construction of the Eagle Mine on target. Our assets
continue to offer attractive, low risk, near-term production growth with
relatively modest levels of capital requirements, which ideally positions us to
continue to add significant shareholder value over the next several years," said
Mr. Paul Conibear, President & CEO.
Production Outlook 2014 - 2016(1):
2014 2015 2016
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Copper: Tonnes Tonnes Tonnes
Neves-Corvo 50,000 - 55,000 50,000 - 55,000 50,000 - 55,000
Zinkgruvan 3,000 - 4,000 2,000 - 3,000 2,000 - 3,000
Aguablanca 5,000 - 6,000 3,000 - 4,000 4,000 - 5,000
Eagle 2,000 - 3,000 17,000 - 22,000 17,000 - 22,000
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Copper wholly-owned
operations 60,000 - 68,000 72,000 - 84,000 73,000 - 85,000
Tenke(2) (24%) approx. 50,000 approx. 50,000 approx. 50,000
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Total Attributable
Copper 110,000 - 118,000 122,000 - 134,000 123,000 - 135,000
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Zinc:
Neves-Corvo 60,000 - 65,000 75,000 - 80,000 75,000 - 80,000
Zinkgruvan 75,000 - 80,000 80,000 - 85,000 75,000 - 80,000
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Total Zinc 135,000 - 145,000 155,000 - 165,000 150,000 - 160,000
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Lead:
Neves-Corvo 2,000 - 2,500 2,000 - 2,500 2,000 - 2,500
Zinkgruvan 27,000 - 30,000 30,000 - 34,000 30,000 - 34,000
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Total Lead 29,000 - 32,500 32,000 - 36,500 32,000 - 36,500
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Nickel:
Aguablanca 6,000 - 7,000 4,000 - 5,000 4,000 - 5,000
Eagle 2,000 - 3,000 20,000 - 25,000 20,000 - 25,000
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Total Nickel 8,000 - 10,000 24,000 - 30,000 24,000 - 30,000
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-- Neves-Corvo: Copper production is expected to be maintained above 50,000
tonnes per annum with an increasing zinc by-product credit. The zinc
plant operated at full capacity in 2013, processing approximately 1.0
million tonnes per annum ("Mtpa") of ore and is expected to reach 125%
of nameplate capacity in 2015 with minor investments in plant
debottlenecking, taking advantage of higher grade Lombador feed and
expected improvements in zinc price. The production forecasts assume
that the zinc plant will be used exclusively to process zinc ore over
the next three years, though the plant has already proven to have the
flexibility to process either zinc or copper ores.
-- Zinkgruvan: Zinc production over the outlook period is expected to
remain relatively steady, as plans to increase throughput by investment
in an ore dressing plant have been deferred indefinitely. In 2015,
production is expected to increase modestly due to higher zinc grades as
per the mine plan. Thereafter production is expected to remain
relatively steady between 75,000 - 80,000 tonnes of zinc.
-- Aguablanca: The Company's Board of Directors has approved the
development of the underground project which is expected to result in
production continuing until 2018. Total capital expenditures for the
project are expected to be approximately $30 million spread over the
period 2014 - 2017. Economics of the underground project are expected to
be very attractive with a rapid payback period, even at current
depressed nickel prices.
-- Eagle: The project remains on schedule and budget. Shipment of the first
saleable concentrates of copper and nickel are expected to occur prior
to the end of 2014. Following an initial ramp up period, ore is expected
to be processed at a rate of 2,000 tonnes/day by mid-2015. The Company
is also pleased to announce that Mr. Michael Welch has joined Lundin
Mining as General Manager Eagle Mine effective in early January, 2014.
Mr. Welch has more than 20 years of combined operations and project
management experience, and holds a Bachelor of Science Honors Degree in
Geology as well as a Master of Science Degree in Geology. Mr. Welch was
most recently responsible for Glencore Xstrata's Raglan nickel
operations in Quebec, and previously served as project director on the
successful construction and start up of the Nickel Rim South project in
Sudbury, Ontario.
-- Tenke Fungurume: 2014 production guidance has not yet been provided by
Freeport, the mine's operator. Lundin Mining anticipates production from
Tenke in 2014 to be largely consistent with that of 2013. The three year
outlook for Tenke does not reflect potential increases in copper
production that could occur from Phase III expansion initiatives which
could entail further plant debottlenecking and heap leach investment to
fully utilize the 270,000 tpa copper electro-winning capacity that has
been installed as part of the Phase II project. The Lundin Mining
estimate and comments do not represent the official guidance for the
mine which will ultimately be provided by Freeport.
2014 Cash Costs(3)
-- At Neves-Corvo, estimated C1 cash costs for 2014 are expected to
approximate $1.90/lb Cu after zinc by-product credits. Improvement on
this estimated unit cost could occur if zinc prices are higher than
internal assumptions.
-- At Zinkgruvan, estimated C1 cash costs are expected to approximate
$0.35/lb Zn after copper and lead by-product credits. Zinkgruvan is
expected to remain one of the lower cost zinc producers for the
foreseeable future.
-- At Aguablanca, estimated C1 cash costs for 2014 are expected to
approximate $4.50/lb Ni after by-product credits.
-- For Tenke, cash cost guidance will be provided by Freeport in due
course.
2014 Capital Expenditure Guidance
Capital expenditures for 2014 are expected to be $460 million including Eagle
and excluding Tenke (compared to an estimated $255 million in 2013, on the same
basis) which includes:
-- Sustaining capital in European operations: $100 million (vs. $100
million in 2013), consisting of approximately $55 million for Neves-
Corvo, $40 million for Zinkgruvan and $5 million across other sites.
-- New investment capital expenditures in European operations: $60 million
(vs. $45 million in 2013), consisting of approximately $50 million for
Neves-Corvo (including $38 million for Lombador Phase I, $6 million for
Lombador Phase II and underground drilling, and $5 million for zinc
plant expansion and shaft upgrade project studies), and $10 million in
support of the underground mining project at Aguablanca.
-- Eagle: $300 million to complete construction of the Humboldt mill and
Eagle mine.
-- Tenke: All of the capital expenditures are expected to be self-funded by
cash flow from Tenke operations. If current metal prices and operating
conditions prevail and construction of future phases of expansion are
not commenced in 2014, the Company believes it is reasonable to expect
Lundin's attributable cash distributions to range between $130 to $150
million in 2014.
2014 Exploration Investment
Exploration expenditures are expected to be in the range of $40 million in 2014
(2013 - estimated at $33 million). These expenditures are expected to be
directed primarily towards Neves-Corvo, Zinkgruvan and Eagle, where drilling
programs will advance exploration on various in and near mine targets. A portion
of 2014 exploration budgets are allocated to South American and Eastern European
exploration work.
About Lundin Mining
Lundin Mining Corporation is a diversified Canadian base metals mining company
with operations in Portugal, Sweden, Spain and the US, producing copper, zinc,
lead and nickel. In addition, Lundin Mining holds a 24% equity stake in the
world-class Tenke Fungurume copper/cobalt mine in the Democratic Republic of
Congo and in the Freeport Cobalt Oy business, which includes a cobalt refinery
in Kokkola, Finland.
On Behalf of the Board,
Paul Conibear, President and CEO
Forward Looking Statements
Certain of the statements made and information contained herein is
"forward-looking information" within the meaning of the Ontario Securities Act.
This release includes, but is not limited to, forward looking statements with
respect to the Company's estimated annual metal production, C1 cash costs and
capital expenditures. These estimates 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 from those
reflected in the forward-looking statements, including, without limitation,
risks and uncertainties relating to estimated operating and cash costs, timing
and quantities of production from the Eagle Project, cost estimates for the
Eagle Project, foreign currency fluctuations; risks inherent in mining including
environmental hazards, industrial accidents, unusual or unexpected geological
formations, ground control problems and flooding; risks associated with the
estimation of mineral resources and reserves and the geology, grade and
continuity of mineral deposits; the possibility that future exploration,
development or mining results will not be consistent with the Company's
expectations; the potential for and effects of labour disputes or other
unanticipated difficulties with or shortages of labour or interruptions in
production; actual ore mined varying from estimates of grade, tonnage, dilution
and metallurgical and other characteristics; the inherent uncertainty of
production and cost estimates and the potential for unexpected costs and
expenses, commodity price fluctuations; uncertain political and economic
environments; changes in laws or policies, foreign taxation, delays or the
inability to obtain necessary governmental permits; and other risks and
uncertainties, including those described under Risk Factors Relating to the
Company's Business in the Company's Annual Information Form and in each
management discussion and analysis. Forward-looking information is in addition
based on various assumptions including, without limitation, the expectations and
beliefs of management, the assumed long term price of copper, nickel, lead and
zinc; 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, readers are advised
not to place undue reliance on forward-looking statements.
(1) Production guidance is based on certain estimates and assumptions, including
but not limited to; mineral resources and reserves, geological formations, grade
and continuity of deposits and metallurgical characteristics.
(2) Tenke guidance has not yet been provided by operator, Freeport McMoRan
Copper and Gold Inc. ("Freeport"). Lundin Mining anticipates production from
Tenke in 2014 to be comparable to expected 2013 production.
(3) Cash Costs and C1 cash costs are based on various assumptions and estimates,
including, but not limited to; production volumes, as noted above, commodity
prices (2014 - Cu: $3.15, Zn: $0.87, Pb: $1.00, Ni: $6.50) foreign currency
exchange rates (2014 - EUR/USD:1.30, USD/SEK:6.50) and operating costs.
FOR FURTHER INFORMATION PLEASE CONTACT:
Lundin Mining Corporation
Sophia Shane
Investor Relations North America
+1-604-689-7842
Lundin Mining Corporation
John Miniotis
Senior Business Analyst
+1-416-342-5565
Lundin Mining Corporation
Robert Eriksson
Investor Relations Sweden
+46 8 545 015 50
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