TORONTO, Feb. 19, 2021 /PRNewswire/ -- (TSX:
LUN) (Nasdaq Stockholm: LUMI) Lundin Mining
Corporation ("Lundin Mining" or the "Company") today
reported cash flows of $172.7 million
generated from operations in its fourth quarter 2020 and
$565.9 million for the year. Adjusted
operating cash flow2 for the quarter was $175.7 million ($0.24 per share) and $644.6 million ($0.88 per share) for the year. Attributable net
earnings for the quarter was $119.2
million ($0.16 per share) and
$168.8 million ($0.23 per share) for the year. Adjusted
earnings2 for the quarter was $106.7 million ($0.15 per share) and $225.2 million ($0.31 per share) for the year. Adjusted
EBITDA2 was $234.8 million for the quarter and
$856.9 million for the year.
Marie Inkster, President and CEO
commented, "We expect 2021 to be an exciting and
rewarding year for Lundin Mining. We responded decisively with
clear action plans to overcome our fourth quarter challenges and as
a result we ended the year in a strong position. Candelaria and
Chapada both returned to full production capacity in the fourth
quarter of 2020, and the Zinc Expansion Project at Neves-Corvo
officially restarted in January 2021.
Eagle set a new record for annual throughput and achieved
impressive cash costs to generate significant free cash flow and
margins. Lastly, in its 164th year of continuous
production Zinkgruvan set new annual records for both tonnes
hoisted from the mine and tonnes milled.
We expect to benefit significantly in 2021 from the
investments made in our operations the last several years, taking
advantage of the favourable metal price environment, to generate
meaningful free cash flow and returns for our
shareholders."
Summary Financial Results
|
Three months
ended
|
|
|
Twelve months
ended
|
|
December 31,
2020
|
|
|
December 31,
2020
|
US$ Millions (except
per share amounts)
|
2020
|
|
2019
|
|
|
2020
|
|
2019
|
|
Revenue
|
529.5
|
|
568.4
|
|
|
2,041.5
|
|
1,892.7
|
|
Gross
profit
|
179.4
|
|
145.5
|
|
|
498.1
|
|
440.4
|
|
Attributable net
earnings1
|
119.2
|
|
97.0
|
|
|
168.8
|
|
167.3
|
|
Net
earnings
|
120.8
|
|
104.8
|
|
|
189.1
|
|
189.2
|
|
Adjusted earnings
1,2
|
106.7
|
|
93.2
|
|
|
225.2
|
|
159.5
|
|
Adjusted
EBITDA2
|
234.8
|
|
234.6
|
|
|
856.9
|
|
705.7
|
|
Basic and diluted net
earnings per share1
|
0.16
|
|
0.13
|
|
|
0.23
|
|
0.23
|
|
Adjusted basic and
diluted earnings per share1,2
|
0.15
|
|
0.13
|
|
|
0.31
|
|
0.22
|
|
Cash flow from
operations
|
172.7
|
|
186.4
|
|
|
565.9
|
|
564.6
|
|
Adjusted operating
cash flow2
|
175.7
|
|
206.7
|
|
|
644.6
|
|
550.7
|
|
Adjusted operating
cash flow per share2
|
0.24
|
|
0.28
|
|
|
0.88
|
|
0.75
|
|
Cash and cash
equivalents
|
141.4
|
|
250.6
|
|
|
141.4
|
|
250.6
|
|
Net
debt2
|
63.2
|
|
60.2
|
|
|
63.2
|
|
60.2
|
|
1
Attributable to shareholders of Lundin Mining
Corporation.
|
2 These
are non-GAAP measures. Please refer to the Company's discussion of
non-GAAP measures in its Management's Discussion and Analysis for
the year ended December 31, 2020.
|
Highlights
Operational Performance
Annual production of all metals met or exceeded the Company's
most recent annual production guidance despite the operational
challenges of the latter part of the year. The Company continued to
effectively manage costs and all operations reported cash costs
that were better than the most recent annual guidance. Annual
capital expenditures of $431.2
million were modestly lower than the most recent guidance of
$445.0 million.
In March 2020, the World Health
Organization declared the COVID-19 outbreak a global pandemic. The
Company has adapted to a new way of operating and continues to
manage and respond to the COVID-19 pandemic. Preventative measures
have been implemented across the organization to ensure the safety
of its workforce, local communities and other key stakeholders. To
date, production disruptions have been minimal and there has been
no significant disruption in the delivery of concentrate or receipt
of goods at our operations as a result of COVID-19.
Candelaria (80% owned): Candelaria produced, on a
100% basis, 126,702 tonnes of copper, approximately 76,000 ounces
of gold and 1.1 million ounces of silver in concentrate during the
year. Copper and gold production exceeded guidance for the current
year but was lower than the prior year as a result of lower
throughput in the fourth quarter of 2020 due to union strike work
stoppages and ore hardness in the first half of 2020. Copper cash
costs1 of $1.45/lb were
better than annual guidance and the prior year, largely due to the
impact of favourable foreign exchange. The Candelaria Mill
Optimization Project is now complete after the final ball mill
motor installation in the fourth quarter.
Chapada (100% owned): Chapada produced 50,038 tonnes
of copper and approximately 87,000 ounces of gold, both exceeding
guidance due to a faster than anticipated recovery from the mill
interruption at the end of the third quarter, resulting in higher
than expected throughput in the fourth quarter. Full year copper
cash costs $0.29/lb were also better
than guidance, benefitting from higher mill throughput and
favourable foreign exchange.
Eagle (100% owned): Eagle production for the year
met guidance and exceeded the prior year, producing
16,718 tonnes of nickel and 18,663 tonnes of copper. A new
annual mill throughput record was set at 761,000 tonnes.
Nickel cash costs of $0.10/lb for the
year were better than guidance and the prior year due primarily to
higher copper by-product prices.
Neves-Corvo (100% owned): Neves-Corvo produced
32,032 tonnes of copper for the year, meeting guidance. Zinc
production of 69,143 tonnes was marginally below guidance resulting
from lower than planned grades in the fourth quarter. Overall metal
production was lower than the prior year due to reduced throughput
and grades. Copper cash costs of $2.09/lb for the year were in-line with guidance,
but were higher than the prior year due to lower copper sales
volumes.
Official restart of the Zinc Expansion Project ("ZEP") began in
January 2021. During 2020, work
continued to prepare the surface and underground construction sites
for the restart including ventilation raise work, activities on the
surface conveyor installations and SAG mill including commissioning
with waste rock.
Zinkgruvan (100% owned): Zinc production of 73,601
tonnes and copper production of 3,346 tonnes both met guidance, and
new annual production records were set for both tonnes hoisted from
the mine and milled tonnes. Zinc and lead production (24,128
tonnes) were lower than the prior year, impacted by lower head
grades resulting from a change in mine sequencing early in the
year. Zinc cash costs of $0.52/lb for
the year were better than guidance.
1 This is
a non-GAAP measure. Please refer to the Company's discussion of
non-GAAP measures in its Management's Discussion and Analysis for
the year ended December 31, 2020.
|
Total Production
(Contained metal
in
concentrate)
|
2020
|
2019
|
Total
|
Q4
|
Q3
|
Q2
|
Q1
|
Total
|
Q4
|
Q3
|
Q2
|
Q1
|
Copper
(t)a,b
|
230,781
|
41,885
|
61,444
|
65,285
|
62,167
|
235,498
|
67,131
|
74,560
|
47,685
|
46,122
|
Zinc (t)
|
142,744
|
41,428
|
32,787
|
31,582
|
36,947
|
151,515
|
38,925
|
35,028
|
37,116
|
40,446
|
Gold
(koz)a,b
|
163
|
35
|
45
|
44
|
39
|
142
|
43
|
58
|
21
|
20
|
Nickel (t)
|
16,718
|
4,909
|
4,854
|
3,380
|
3,575
|
13,494
|
2,651
|
3,232
|
3,398
|
4,213
|
a - Candelaria's
production is on a 100% basis.
|
b - Chapada results
included are for the Company's ownership period.
|
Corporate Updates
- On February 20, 2020, the Company
declared a 33% increase in the quarterly cash dividend, to
C$0.04 per share, compared to the
dividend paid in 2019.
- On March 15, 2020, major
construction and commissioning activities for ZEP were suspended in
order to reduce the COVID-19 risks on the local communities,
employees and contractors. Zinc production and capital cost
guidance was withdrawn. The official restart of ZEP commenced in
January 2021.
- On June 30, 2020, the Company
published its annual Sustainability Report which is available on
the Company's website (www.lundinmining.com).
- On September 8, 2020, the Company
reported its Mineral Resource and Mineral Reserve estimates as at
June 30, 2020. On a consolidated and attributable basis,
estimated contained metal in the Proven and Probable Mineral
Reserve categories totalled 5,518 kt of copper, 3,123 kt of zinc,
100 kt of nickel, 936 kt of lead and 6.9 million oz of gold.
- On September 25, 2020, the
Company reported a fatal accident at its Neves-Corvo mine. The
incident occurred during underground mining operations. No other
personnel were injured in the incident.
- On September 27, 2020, the
Company announced that processing activities had been interrupted
at the Chapada mine due to a power outage which damaged all four
mill motors; full year production, cash costs and capital
expenditure guidance were withdrawn. Operations resumed at a
reduced capacity in early October, and returned to full production
in December 2020.
- On October 7, 2020, the Company
reported that mediation with Candelaria's Mine Workers Union ended
without an agreement and the workers commenced strike action.
Subsequently, on October 20, 2020,
negotiations with the Candelaria AOS Union failed to reach an
agreement and this union also commenced strike action. With both
unions on strike, the Company undertook an orderly shutdown of
operations and withdrew its production and cash cost guidance for
2020 pending resolution of the labour actions.
- In late November 2020, the
Company announced ratifications of new collective agreements with
the striking unions as well as two additional unions that had
collective agreements with approaching expiry dates.
- On December 4, 2020, the Company
renewed its Normal course issuer bid ("NCIB") which allows the
Company to purchase up to 63,682,170 common shares over a period of
twelve months commencing on December 9,
2020.
Financial Performance
- Gross profit for the year ended December
31, 2020 was $498.1 million,
an increase of $57.7 million in
comparison to the prior year due primarily to a full year of
operating results from Chapada which was acquired in July 2019 ($81.2
million). The increase was partially offset by lower overall
copper sales volumes at the other operations, particularly at
Candelaria due to the strike action in the fourth quarter, as well
as higher depreciation expense.
- For the year ended December 31,
2020, net earnings of $189.1
million were generally in-line with the prior year as higher
gross profit and lower general exploration costs were offset by
higher deferred tax expense.
- Adjusted earnings for the year were higher than the prior year
primarily due to higher gross profit and reduced general
exploration costs.
Financial Position and Financing
- Cash and cash equivalents decreased by $109.1 million during 2020, ending the year at
$141.4 million. Cash flow from
operations of $565.9 million was used
to fund capital expenditures of $431.2
million and financing activities of $236.9 million, including debt repayment on
a net basis, distributions to shareholders ($88.0 million) and to non-controlling
interests ($26.0 million), as well as
the negative effect of foreign exchange ($17.1 million).
- Net debt position at December 31,
2020 was $63.2 million
relatively unchanged from the $60.2
million at the prior year-end.
- As of February 18, 2021, the
Company had a cash and net debt balance of approximately
$165.0 million and $50.0 million, respectively.
Outlook
Production, cash cost and capital expenditure guidance for 2021
remains unchanged from that provided on November 30, 2020 (see news release "Lundin
Mining Provides Operational Outlook & Shareholder Returns
Update").
2021 Production and Cash Cost Guidancea
(contained metal in
concentrate)
|
Production
|
|
Cash
Costsb
|
Copper
(t)
|
Candelaria
(100%)
|
172,000
|
-
|
182,000
|
|
$1.35/lb
|
|
Chapada
|
48,000
|
-
|
53,000
|
|
$1.10/lb
|
|
Eagle
|
17,000
|
-
|
20,000
|
|
|
|
Neves-Corvo
|
35,000
|
-
|
40,000
|
|
$2.20/lb
|
|
Zinkgruvan
|
3,000
|
-
|
4,000
|
|
|
|
Total
|
275,000
|
-
|
299,000
|
|
|
Zinc
(t)
|
Neves-Corvo
|
70,000
|
-
|
75,000
|
|
|
|
Zinkgruvan
|
71,000
|
-
|
76,000
|
|
$0.65/lb
|
|
Total
|
141,000
|
-
|
151,000
|
|
|
Gold
(oz)
|
Candelaria
(100%)
|
95,000
|
-
|
100,000
|
|
|
|
Chapada
|
75,000
|
-
|
80,000
|
|
|
|
Total
|
170,000
|
-
|
180,000
|
|
|
Nickel
(t)
|
Eagle
|
15,000
|
-
|
18,000
|
|
$0.50/lb
|
a. Guidance as
outlined in the news release entitled "Lundin Mining Provides
Operational Outlook & Shareholder Returns Update" dated
November 30, 2020.
|
b. Cash costs are
based on various assumptions and estimates, including but not
limited to: production volumes, as noted above, commodity prices
(Cu: $2.95/lb, Zn: $1.00/lb, Ni: $6.25/lb, Pb: $0.85/lb, Au:
$1,700/oz), foreign exchange rates (€/USD:1.20, USD/SEK:8.50,
USD/CLP:675,USD/BRL:4.75) and operating costs.
|
c. 68% of
Candelaria's total gold and silver production are subject to a
streaming agreement and silver production at Zinkgruvan and
Neves-Corvo are also subject to streaming agreements. Cash costs
are calculated based on receipt of approximately $416/oz gold and
$4.16/oz to $4.48/oz silver.
|
d. Chapada cash costs
are calculated on a by-product basis and do not include the effects
of its copper stream agreements. Effects of copper stream
agreements are reflected in copper revenue and will impact realized
revenue per pound.
|
2021 Capital Expenditure Guidance
Capital expenditures, excluding capitalized interest, are
outlined below.
($millions)
|
|
Guidance
|
Sustaining
Capital
|
|
|
Candelaria (100%
basis)
|
|
345
|
Chapada
|
|
65
|
Eagle
|
|
15
|
Neves-Corvo
|
|
65
|
Zinkgruvan
|
|
50
|
Total Sustaining
Capital
|
|
540
|
Zinc Expansion
Project (Neves-Corvo)
|
|
70
|
Total Capital
Expenditures
|
|
610
|
2021 Exploration Investment Guidance
Planned exploration expenditures are expected to be $40.0 million in 2021. Approximately $32.0 million will be spent supporting
significant in-mine and near-mine targets at our operations
($14.0 million at Candelaria,
$6.0 million at Zinkgruvan,
$8.0 million at Chapada, and
$4.0 million at Neves-Corvo). The
remaining amount is planned to advance activities on exploration
stage and new business development projects.
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.
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 February 18, 2021 at 19:45 Eastern Time.
Cautionary Statement on 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 or labour
disputes; timing for any required repairs and resumption of any
interrupted operations; the results of any 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 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: volatility and
fluctuations in metal and commodity prices; global financial
conditions and inflation; 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, and natural phenomena
such as earthquakes, flooding or unusually severe weather;
uninsurable risks; changes in the Company's share price, and
volatility in the equity markets in general; the threat associated
with outbreaks of viruses and infectious diseases, including the
novel COVID-19 virus; risks related to negative publicity with
respect to the Company or the mining industry in general; reliance
on a single asset; 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; actual ore mined
and/or metal recoveries varying from Mineral Resource and Mineral
Reserve estimates, estimates of grade, tonnage, dilution, mine
plans and metallurgical and other characteristics; 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; ore processing efficiency;
risks inherent in and/or associated with operating in foreign
countries and emerging markets; security at the Company's
operations; changing taxation regimes; health and safety risks;
exploration, development or mining results not being consistent
with the Company's expectations; unavailable or inaccessible
infrastructure and risks related to ageing infrastructure;
counterparty and credit risks and customer concentration; risks
related to the environmental regulation and environmental impact of
the Company's operations and products and management thereof;
exchange rate fluctuations; reliance on third parties and
consultants in foreign jurisdictions; community and stakeholder
opposition; civil disruption; the potential for and effects of
labour disputes or other unanticipated difficulties with or
shortages of labour or interruptions in production; uncertain
political and economic environments; litigation; regulatory
investigations, enforcement, sanctions and/or related or other
litigation; risks associated with the structural stability of waste
rock dumps or tailings storage facilities; changes in laws,
regulations or policies including but not limited to those related
to mining regimes, permitting and approvals, environmental and
tailings management, labour, trade relations, and transportation;
climate change; compliance with environmental, health and safety
laws; enforcing legal rights in foreign jurisdictions; information
technology and cybersecurity risks; estimates of future production
and operations; estimates of operating, cash and all-in sustaining
cost estimates; delays or the inability to obtain, retain or comply
with permits; compliance with foreign laws; risks related to mine
closure activities and closed and historical sites; challenges or
defects in title; the price and availability of key operating
supplies or services; historical environmental liabilities and
ongoing reclamation obligations; indebtedness; funding requirements
and availability of financing; liquidity risks and limited
financial resources; risks relating to attracting and retaining of
highly skilled employees; risks associated with acquisitions and
related integration efforts, including the ability to achieve
anticipated benefits, unanticipated difficulties or expenditures
relating to integration and diversion of management time on
integration; the estimation of asset carrying values; internal
controls; competition; dilution; existence of significant
shareholders; conflicts of interest; activist shareholders and
proxy solicitation matters; risks relating to dividends; risks
associated with business arrangements and partners over which the
Company does not have full control; and other risks and
uncertainties, including but not limited to those described in the
"Risks and Uncertainties" section of the Annual Information Form
for the year ended December 31, 2019
and the "Managing Risks" section of the Company's MD&A for the
year ended December 31, 2020, 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.