TORONTO, Nov. 26, 2019 /CNW/ - (TSX: LUN; Nasdaq
Stockholm: LUMI) Lundin Mining Corporation ("Lundin Mining" or
the "Company") provides the following production guidance for the
three-year period of 2020 through 2022, as well as cash cost,
capital and exploration expenditure forecasts for 2020.
Additionally, the Company announces an anticipated 33% increase in
the quarterly dividend and renewal of its Normal Course Issuer Bid
("NCIB"), both pending final approvals as detailed herein.
- Copper production is forecast to increase over 20% in 2020,
compared to 2019, with full-year contributions from Chapada and
higher grades at Candelaria. The three-year outlook has improved
primarily on the inclusion of the Chapada copper-gold mine, as well
as refinement of Candelaria's production profile.
- Zinc production is forecast to increase over 15% in 2020,
compared to 2019. The Neves-Corvo Zinc Expansion Project (ZEP)
continues to advance on schedule for phased ramp-up in 2020. Zinc
production is forecast to increase a further 30% in 2021, over
2020, with a full-year contribution from the ZEP.
- Nickel production is forecast to increase over 25% in 2020,
compared to 2019, and remain at this increased level over the
three-year period as higher-grade ore from Eagle East contributes
to the mill feed.
Production Outlook 2020 - 20221
|
|
2020
|
|
2021
|
|
2022
|
Copper
(t)
|
|
|
|
|
|
|
|
|
|
|
|
|
Candelaria (100%
basis)
|
165,000
|
-
|
175,000
|
|
185,000
|
-
|
195,000
|
|
180,000
|
-
|
190,000
|
|
Chapada
|
51,000
|
-
|
56,000
|
|
51,000
|
-
|
56,000
|
|
51,000
|
-
|
56,000
|
|
Eagle
|
15,000
|
-
|
18,000
|
|
14,000
|
-
|
17,000
|
|
17,000
|
-
|
20,000
|
|
Neves-Corvo
|
38,000
|
-
|
43,000
|
|
41,000
|
-
|
46,000
|
|
41,000
|
-
|
46,000
|
|
Zinkgruvan
|
3,000
|
-
|
4,000
|
|
3,000
|
-
|
4,000
|
|
3,000
|
-
|
4,000
|
|
Total
Copper
|
272,000
|
-
|
296,000
|
|
294,000
|
-
|
318,000
|
|
292,000
|
-
|
316,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Zinc
(t)
|
|
|
|
|
|
|
|
|
|
|
|
|
Neves-Corvo
|
95,000
|
-
|
105,000
|
|
155,000
|
-
|
160,000
|
|
155,000
|
-
|
160,000
|
|
Zinkgruvan
|
77,000
|
-
|
82,000
|
|
72,000
|
-
|
77,000
|
|
69,000
|
-
|
74,000
|
|
Total
Zinc
|
172,000
|
-
|
187,000
|
|
227,000
|
-
|
237,000
|
|
224,000
|
-
|
234,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gold
(oz)
|
|
|
|
|
|
|
|
|
|
|
|
|
Candelaria (100%
basis) 2
|
100,000
|
-
|
105,000
|
|
110,000
|
-
|
115,000
|
|
105,000
|
-
|
110,000
|
|
Chapada
|
90,000
|
-
|
95,000
|
|
70,000
|
-
|
75,000
|
|
75,000
|
-
|
80,000
|
|
Total
Gold
|
190,000
|
-
|
200,000
|
|
180,000
|
-
|
190,000
|
|
180,000
|
-
|
190,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nickel
(t)
|
|
|
|
|
|
|
|
|
|
|
|
|
Eagle
|
15,000
|
-
|
18,000
|
|
15,000
|
-
|
18,000
|
|
15,000
|
-
|
18,000
|
|
Total
Nickel
|
15,000
|
-
|
18,000
|
|
15,000
|
-
|
18,000
|
|
15,000
|
-
|
18,000
|
- Candelaria: Copper production is forecast to increase
over the next two years, primarily on improving copper head grade
and as the benefits of reinvestment initiatives undertaken the last
two years are realized. At the midpoint of the guidance range,
copper production is forecast to increase by 20,000 t (13%)
year-over-year in 2020 and by a further 20,000 t (12%) in
2021. Refinement to mine phasing and operating plans have increased
forecast 2021 copper production by 10,000 t (6%) over the
prior outlook. Copper production is forecast to average
approximately 180,000 tpa over the ten-year period 2020
through 2029.
- Chapada: The three-year production outlook is based on
the NI 43-101 Technical Report on the Chapada copper-gold mine
filed on SEDAR on October 10, 2019. The Company is continuing
to optimize the production schedule while advancing options for
mine and plant expansion in parallel with a significant increase in
exploration.
Copper production is forecast to be between 51,000 t
and 56,000 t over the next three years based on the current 24
Mtpa throughput rate and mine plan as outlined in the Technical
Report.
Gold production is forecast to be between 70,000 oz and
95,000 oz over the next three years. The acquisition of
Chapada has significantly increased the Company's unstreamed gold
production.
- Eagle: First ore from Eagle East was mined in the third
quarter of 2019, ahead of original plan. The operation's mine life
has been extended into 2025 incorporating the previously announced
June 30, 2019 Mineral Reserve
estimate update.
Nickel production at the midpoint of the 2020 guidance range is
forecast to increase 3,500 t (27%) over that of 2019. This is
a modest decrease compared to the prior outlook on refinement of
the mine plan which has resulted in less variability in annual
grade profile and is more than offset by a 2,000 t (14%)
increase to the 2021 forecast.
Copper production at the midpoint of the 2020 guidance range is
forecast to increase 2,500 t (18%) over 2019 guidance. This is
a decrease compared to the prior outlook for 2020 on refinement of
the near-term mine plan. Copper production is forecast to increase
again in 2022 to 17,000-20,000 t.
- Neves-Corvo: The ZEP continues to advance in accordance
with the schedule and budget for the phased start-up strategy and
production during 2020. Forecast zinc and copper production over
the three-year outlook reflect this phased approach.
Zinc production at the midpoint of the 2020 guidance range is
forecast to increase 25,500 t (34%) over 2019 guidance, as the
ZEP is commissioned and ramped-up during the year. This is
consistent with the most recent zinc production guidance previously
provided. Zinc production is forecast to increase a further 30% in
2021, over 2020, to 155,000-160,000 t with the ZEP
contributing a full year of production at design throughput. This
is consistent with the prior outlook provided for 2021.
Copper production at the midpoint of the 2020 guidance range is
forecast to be consistent with 2019 levels. This is a decrease (7%)
compared to the prior outlook for 2020 on refinement of the
near-term mine plan impacting the forecast copper head grade for
the year. Copper production is forecast to increase again in 2021
and 2022 to between 41,000 t and 46,000 t.
- Zinkgruvan: Zinc production at the midpoint of
guidance is expected to be at a similar level in 2020 as 2019. This
is a modest improvement (3%) over the prior outlook, while the 2021
forecast has decreased slightly (5%) compared to the prior outlook
on mine plan revisions that have deferred mining of the high grade
Burkland orebody.
Copper production in 2020 is forecast to increase over that of 2019
to 3,000-4,000 t. Similarly, 2021 and 2022 forecast copper
production has increased compared to the prior outlook, to
3,000-4,000 t.
2020 Cash Cost Guidance3
C1 Cash
Cost2
|
2020
|
Copper
|
|
Candelaria
|
$1.45/lb3
|
Chapada
|
$1.15/lb
|
Neves-Corvo
|
$1.80/lb
|
|
|
Zinc
|
|
Zinkgruvan
|
$0.55/lb
|
|
|
Nickel
|
|
Eagle
|
$1.00/lb
|
- Candelaria's C1 cash costs are expected to reduce year-on-year
to $1.45/lb4 copper in
2020, after by-product credits. By-product credits have been
adjusted for the terms of the streaming agreement.
- At Chapada, C1 cash costs are expected to approximate
$1.15/lb copper after significant
gold by-product credits. Effects of copper stream agreements are to
be reflected in the realized copper revenue.
- Eagle's C1 cash costs in 2020 are expected to reduce
year-on-year to $1.00/lb nickel after
by-product credits as higher grades from Eagle East reduce per
pound unit costs.
- At Neves-Corvo, C1 cash costs for 2020 are expected to
approximate $1.80/lb copper after
zinc and lead by-product credits.
- Zinkgruvan's C1 cash costs are expected to approximate
$0.55/lb zinc after copper and lead
by-product credits.
2020 Capital Expenditure Guidance
- Capital expenditures in 2020 are forecast to be $620 million on a 100% basis, which
includes:
Capital
Expenditures ($
millions)5
|
2020
|
Sustaining
Capital
|
|
|
Candelaria (100%
basis)
|
265
|
|
Chapada
|
60
|
|
Eagle
|
15
|
|
Neves-Corvo
|
75
|
|
Zinkgruvan
|
50
|
|
Total Sustaining
Capital
|
465
|
|
|
|
Zinc Expansion
Project (Neves-Corvo)
|
155
|
|
|
|
Total Capital
Expenditures
|
620
|
- Candelaria: At Candelaria, capital expenditures are
expected to total $265 million in
2020. Capitalized expenditures are to decrease compared to the
reinvestment years of 2018 and 2019 as the low-risk initiatives
undertaken to increase the production profile and value of the
operation are completed. Capitalized stripping expenditures are
estimated to be $115 million and
capital expenditures on Los Diques Tailings Storage Facility to be
$15 million in 2020.
The Mill Optimization Investment to increase metal production,
reduce maintenance costs and improve safety and reliability remains
on schedule to be complete in the first quarter of 2020. The
project is being coordinated with scheduled mill downtime so as to
not impact current production. Project capital expenditures remain
on budget with approximately $15
million to be spent in 2020 to complete the
project.
Other sustaining capital expenditures are primarily for horizontal
and vertical mine development, supporting infrastructure and
equipment.
- Chapada: Capital expenditures at Chapada are estimated
to total $60 million in 2020.
Sustaining capital expenditures are consistent with the
October 10, 2019 NI 43-101 Technical
Report for the current operations which included $17 million for capitalized stripping,
$12 million for a semi-mobile crusher
unit to be delivered in the second half of 2020, and other
sustaining capital items such as in-fill drilling and equipment
replacement. The estimated capital expenditures also include
amounts for discretionary exploration land acquisitions which will
be dependent on the availability of desired areas and whether
agreement can be made with owners.
- Eagle: At Eagle, 2020 capital expenditures are estimated
to total $15 million. Approximately
half is for underground development and mine and mill improvement
initiatives, with the remaining for smaller sustaining investments
including capacity upgrades of the mill water treatment plant.
- Neves-Corvo: Capital expenditures are estimated to total
$230 million in 2020, of which
$155 million is the remaining pre-production capital for the
ZEP. The $75 million of estimated
sustaining capital expenditures are primarily for underground mine
development and mobile equipment.
The ZEP continues to advance in accordance with the schedule and
budget for the phased start-up strategy and production during 2020.
The preproduction capital cost estimate, including contingency, of
$430M (€360M) remains unchanged.
- Zinkgruvan: At Zinkgruvan, sustaining capital
expenditures are estimated to total $50 million in 2020.
Approximately 60% is for underground development and mine equipment
replacement, with the remaining for in-fill drilling and
improvement initiatives.
2020 Exploration Investment Guidance
Exploration expenditures are planned to be $65 million in 2020. Approximately $55 million will be spent supporting significant
in-mine and near-mine targets at our operations ($20 million at Candelaria, $15 million at Zinkgruvan, $10 million at Chapada, and $10 million at
Neves-Corvo). The remaining $10
million is planned to advance activities on exploration
stage projects, primarily in South
America.
Shareholder Returns Update
Anticipated Dividend Increase
A 33% increase in the quarterly dividend to C$0.04 per common share of the Company ("Common
Shares"), or C$0.16 annualized, is
anticipated to be declared with the release of 2019 full-year
financial results in February 2020
pending approval by the Company's Board of Directors.
The anticipated increase is consistent with Lundin Mining's
strategy of providing leading returns for our shareholders
throughout the cycle. With the addition of Chapada and reinvestment
initiatives at Candelaria nearing completion, the Company is well
positioned to enhance shareholder returns by increasing the regular
dividend, while maintaining balance sheet strength and investing in
disciplined growth.
The dividend policy will continue to undergo periodic review by
Lundin Mining management and the Board of Directors and may change
at any time depending on the Company's earnings, financial
requirements and other factors existing at the time.
Normal Course Issuer Bid Renewal
Additionally, Lundin Mining intends to renew its NCIB to
purchase up to 63,818,420 Common Shares on the Toronto Stock
Exchange (the "TSX"). The Company intends to utilize the
discretionary NCIB from time-to-time to actively manage the number
of outstanding Common Shares and make opportunistic purchases to
create shareholder value.
The NCIB renewal has been approved by the Company's Board of
Directors; however, it is subject to acceptance by the TSX and, if
accepted, will be made in accordance with the applicable rules and
policies of the TSX and applicable Canadian securities laws. Under
the NCIB, Common Shares may be repurchased in open market
transactions on the TSX and/or other Canadian exchanges, or by such
other means as may be permitted by the TSX and applicable Canadian
securities laws. The price that Lundin Mining will pay for Common
Shares in open market transactions will be the market price at the
time of purchase.
Pursuant to the NCIB renewal, which will commence following
expiry of the current NCIB, it is expected that the Company will be
able to purchase up to 63,818,420 Common Shares, representing 10%
of the total outstanding Common Shares as of November 26, 2019, minus those Common Shares
beneficially owned, or over which control or direction is exercised
by the Company, the senior officers and directors of the Company
and every shareholder who owns or exercises control or direction
over more than 10% of the outstanding Common Shares, over a period
of twelve months commencing after TSX approval. In accordance with
TSX rules, any daily purchases, other than pursuant to a block
purchase exception, on the TSX under the NCIB will be limited to a
maximum 25% of the average daily trading volume on the TSX for the
six months ended November 30, 2019.
Any Common Shares that are purchased under the NCIB will be
cancelled.
The actual number of Common Shares that may be purchased and the
timing of such purchases will be determined by the Company.
Decisions regarding purchases will be based on market conditions,
share price, best use of available cash, and other factors.
Under the Company's current NCIB that commenced on December 7, 2018 and which expires on
December 6, 2019, the Company
previously sought and received approval from the TSX to purchase up
to 63,718,842 Common Shares. As of November
26, 2019, the Company has purchased 2,585,756 Common Shares
under its current NCIB through open market transactions at a
weighted average price of approximately $6.37 per Common Share.
About Lundin Mining
Lundin Mining is a diversified Canadian base metals mining
company with operations in Brazil,
Chile, Portugal, Sweden and the
United States of America, primarily producing copper, zinc,
gold and nickel. 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.
The information in this release is subject to the disclosure
requirements of Lundin Mining under the EU Market Abuse Regulation.
The information was submitted for publication, through the agency
of the contact persons set out below on November 26, 2019 at 16:30
Eastern Time.
Cautionary Statement in Forward-Looking Information
Certain of the statements made and information contained
herein is "forward-looking information" within the meaning of
applicable Canadian securities laws. All statements other than
statements of historical facts included in this document constitute
forward-looking information, including but not limited to
statements regarding the Company's plans, prospects and business
strategies; the Company's guidance on the timing and amount of
future production and its expectations regarding the results of
operations; expected costs; permitting requirements and timelines;
timing and possible outcome of pending litigation; the results of
any Preliminary Economic Assessment, Feasibility Study, or Mineral
Resource and Mineral Reserve estimations, life of mine estimates,
and mine and mine closure plans; anticipated market prices of
metals, currency exchange rates, and interest rates; the
development and implementation of the Company's Responsible Mining
Management System; the Company's ability to comply with contractual
and permitting or other regulatory requirements; anticipated
exploration and development activities at the Company's projects;
and the Company's integration of acquisitions (such as the Chapada
mine) and any anticipated benefits thereof. Words such as
"believe", "expect", "anticipate", "contemplate", "target", "plan",
"goal", "aim", "intend", "continue", "budget", "estimate", "may",
"will", "can", "could", "should", "schedule" and similar
expressions identify forward-looking statements.
Forward-looking information is necessarily based upon various
estimates and assumptions including, without limitation, the
expectations and beliefs of management, including that the Company
can access financing, appropriate equipment and sufficient labour;
assumed and future price of copper, nickel, zinc, gold and other
metals; anticipated costs; ability to achieve goals; the prompt and
effective integration of acquisitions; that the political
environment in which the Company operates will continue to support
the development and operation of mining projects; and assumptions
related to the factors set forth below. While these factors and
assumptions are considered reasonable by Lundin Mining as at the
date of this document in light of management's experience and
perception of current conditions and expected developments, these
statements are inherently subject to significant business, economic
and competitive uncertainties and contingencies. Known and unknown
factors could cause actual results to differ materially from those
projected in the forward-looking statements and undue reliance
should not be placed on such statements and information. Such
factors include, but are not limited to: risks inherent in and/or
associated with operating in foreign countries; uncertain political
and economic environments; community activism, shareholder activism
and risks related to negative publicity with respect to the Company
or the mining industry in general; changes in laws, regulations or
policies including but not limited to those related to permitting
and approvals, environmental and tailings management, labour, trade
relations, and transportation; delays or the inability to obtain
necessary governmental approvals and/or permits; regulatory
investigations, enforcement, sanctions and/or related or other
litigation; risks associated with business arrangements and
partners over which the Company does not have full control; risks
associated with acquisitions and related integration efforts
(including with respect to the Chapada mine), including the ability
to achieve anticipated benefits, unanticipated difficulties or
expenditures relating to integration and diversion of management
time on integration; competition; development or mining results not
being consistent with the Company's expectations; estimates of
future production and operations; operating, cash and all-in
sustaining cost estimates; allocation of resources and capital;
litigation; uninsurable risks; volatility and fluctuations in metal
and commodity prices; the estimation of asset carrying values;
funding requirements and availability of financing; indebtedness;
foreign currency fluctuations; interest rate volatility; changes in
the Company's share price, and equity markets, in general; changing
taxation regimes; counterparty and credit risks; health and safety
risks; risks related to the environmental impact of the Company's
operations and products and management thereof; unavailable or
inaccessible infrastructure and risks related to ageing
infrastructure; risks inherent in mining including but not limited
to risks to the environment, industrial accidents, catastrophic
equipment failures, unusual or unexpected geological formations or
unstable ground conditions; actual ore mined varying from estimates
of grade, tonnage, dilution and metallurgical and other
characteristics; ore processing efficiency; risks relating to
attracting and retaining of highly skilled employees; ability to
retain key personnel; the potential for and effects of labour
disputes or other unanticipated difficulties with or shortages of
labour or interruptions in production; the price and availability
of energy and key operating supplies or services; the inherent
uncertainty of exploration and development, and the potential for
unexpected costs and expenses including, without limitation, for
mine closure and reclamation at current and historical operations;
risks associated with the estimation of Mineral Resources and
Mineral Reserves and the geology, grade and continuity of mineral
deposits including but not limited to models relating thereto;
actual ore mined and/or metal recoveries varying from Mineral
Resource and Mineral Reserve estimates; mine plans, and life of
mine estimates; the possibility that future exploration,
development or mining results will not be consistent with
expectations; natural phenomena such as earthquakes, flooding, and
unusually severe weather; potential for the allegation of fraud and
corruption involving the Company, its customers, suppliers or
employees, or the allegation of improper or discriminatory
employment practices, or human rights violations; security at the
Company's operations; breach or compromise of key information
technology systems; materially increased or unanticipated
reclamation obligations; risks related to mine closure activities;
risks related to closed and historical sites; title risk and the
potential of undetected encumbrances; risks associated with the
structural stability of waste rock dumps or tailings storage
facilities; and other risks and uncertainties, including but not
limited to those described in the "Risk and Uncertainties" section
of the Annual Information Form for the year ended December 31, 2018 and the "Managing Risks"
section of the Company's MD&A for the year ended December 31, 2018, which are available on SEDAR
at www.sedar.com under the Company's profile. All of the
forward-looking statements made in this document are qualified by
these cautionary statements. Although the Company has attempted to
identify important factors that could cause actual results to
differ materially from those contained in forward-looking
information, there may be other factors that cause results not to
be as anticipated, estimated, forecast or intended and readers are
cautioned that the foregoing list is not exhaustive of all factors
and assumptions which may have been used. 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 information. Accordingly,
there can be no assurance that forward-looking information will
prove to be accurate and forward-looking information is not a
guarantee of future performance. Readers are advised not to place
undue reliance on forward-looking information. The forward-looking
information contained herein speaks only as of the date of this
document. The Company disclaims any intention or obligation to
update or revise forward‐looking information or to
explain any material difference between such and subsequent actual
events, except as required by applicable law.
____________________________________
|
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.
|
2
|
68% of Candelaria's
total gold and silver production are subject to a streaming
agreement.
|
3
|
C1 cash costs are
based on various assumptions and estimates, including, but not
limited to: production volumes, as noted above, commodity prices
(2020 - Cu: $2.70/lb, Zn: $1.10/lb, Ni: $6.00/lb, Pb: $0.90/lb, Au:
$1,350/oz) foreign currency exchange rates (2020 - €/USD:1.20,
USD/SEK:8.50, CLP/USD:675, SD/BRL:3.75) and operating costs. All
figures in are in US$ unless otherwise noted
|
4
|
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 $412/oz and $4.12/oz, respectively, on gold and silver sales in
the year.
|
5
|
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.
|
SOURCE Lundin Mining Corporation