Lundin Mining Corporation (TSX:LUN)(OMX:LUMI) ("Lundin Mining" or
the "Company") provides the following production guidance for the
three-year period of 2013 through 2015. Key highlights are as
follows:
-- 2013 to 2015 annual attributable copper production is expected to be in
the range of 100-110kt assuming Tenke production remains flat at Phase
II expansion nameplate levels.
-- Zinc production is expected to continue to grow progressively year-over-
year, as Neves-Corvo zinc production continues to ramp-up and plant
modernization initiatives become operative at Zinkgruvan.
-- Lead production is expected to continue to represent a valuable by-
product credit for the Company.
-- Aguablanca nickel and copper production forecasts reflect a conservative
modified mine plan, pending results of ongoing investigations related to
south pit wall instability.
Commenting on the production guidance, Mr. Paul Conibear,
President and CEO of Lundin Mining said, "We will continue to
strive to optimize performance of our operations, to meet
production targets and focus on profitability. Our assets offer
attractive, low risk, near-term production growth with only modest
capital investment required, maintaining a strong balance sheet to
pursue future opportunities."
Production Outlook 2013 - 2015:
2013 2014 2015
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Copper: Tonnes Tonnes Tonnes
Neves-Corvo 50,000 - 55,000 50,000 - 55,000 50,000 - 55,000
Zinkgruvan 2,500 - 3,500 2,000 - 3,000 4,000 - 5,000
Aguablanca 4,500 - 5,000 1,000 - 1,500 -
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Copper wholly-
owned operations 57,000 - 63,500 53,000 - 59,500 54,000 - 60,000
Tenke(1) (24%) approx. 47,000 approx. 47,000 approx. 47,000
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Total Attributable
Copper 104,000 - 110,500 100,000 - 106,500 101,000 - 107,000
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Zinc:
Neves-Corvo 45,000 - 50,000 57,000 - 62,000 75,000 - 80,000
Zinkgruvan 73,000 - 78,000 80,000 - 85,000 85,000 - 90,000
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Total Zinc 118,000 - 128,000 137,000 - 147,000 160,000 - 170,000
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Lead:
Zinkgruvan 33,000 - 36,000 35,000 - 38,000 30,000 - 33,000
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Total Lead 33,000 - 36,000 35,000 - 38,000 30,000 - 33,000
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Nickel:
Aguablanca 5,000 - 5,500 1,500 - 2,000 -
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Total Nickel 5,000 - 5,500 1,500 - 2,000 -
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(1) Note - Tenke guidance has not yet been provided by operator, Freeport
McMoRan Copper and Gold Inc. ("Freeport"). Lundin Mining anticipates
production from Tenke in 2013 to be at least Phase II expansion
nameplate capacity of 195,000 tpa copper cathode.
-- 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 is expected to operate at full capacity in 2013 and beyond,
initially processing approximately 1.0 million tonnes per annum ("Mtpa")
of ore, and reaching 125% of nameplate capacity in 2015 with minor
investment in plant debottlenecking, to take 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. This plant has been already proven
to have the flexibility to process either zinc or copper ores and
therefore the plan may be adjusted going forward in order to optimize
the profitability of the operation depending on relative zinc and copper
prices, and concentrate customer commitments.
-- Zinkgruvan: Zinc production in 2013 is expected be in line with 2012 and
grow in 2014 and 2015 reflecting potential new investment in the front
end of the plant to modernize and increase total site processing
capacity to approximately 1.5 Mtpa of ore. The copper plant is expected
to reach its full throughput capacity of 300,000 tpa in 2015.
-- Aguablanca: The mine has continued to experience south pit wall
instability and this has resulted in restricted access to certain areas
in the pit. The current production guidance reflects a reduction in the
mineable reserve to only those areas not affected by the instability and
assumes no additional investment to attempt to recover reserves in the
affected area. Revised life of mine plan and reserves remain under
evaluation.
-- Tenke Fungurume: 2013 production guidance has not yet been provided by
Freeport, the mine's operator. Lundin Mining anticipates production from
Tenke in 2013 to be significantly greater than 2012, reflecting
completion of the Phase II expansion project to 195,000 tpa of copper
cathode (production on a 100%-basis). 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.
2013 Cash Costs
-- At Neves-Corvo, estimated C1 cash costs for 2013 are expected to
approximate $1.80/lb Cu after zinc by-product credits. Improvement on
this estimated unit cost could occur if zinc prices are higher than
internal assumptions and if increased productivity can be realized from
the new continuous underground shift regime and recent projects targeted
to improve operational efficiency.
-- At Zinkgruvan, estimated C1 cash costs are expected to approximate
$0.20/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.
-- Aguablanca C1 cash cost for 2013 is estimated to be $5.00/lb Ni.
-- For Tenke, cash cost guidance will be provided by Freeport in due
course.
The 2013 cash cost estimates were calculated using the following
metals price and exchange rate assumptions.
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Cost Guidance Assumptions $/lb 2013
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Copper $3.50
Zinc $0.95
Nickel $8.00
Lead $1.00
EUR/USD 1.30
USD/SEK 6.75
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2013 Capital Expenditure Guidance
Capital expenditures for 2013 are expected to be $270 million
(compared to an estimated $380 million in 2012) which includes:
-- Sustaining capital in European operations: $110 million, consisting of
approximately $70 million for Neves-Corvo and $40 million for
Zinkgruvan.
-- New investment capital expenditures in European operations: $70 million,
on the basis of:
-- Neves-Corvo Future Future Materials Handling Studies - significant
work advanced during 2012 on multiple scenarios to consider
potential economic merits of a major re-investment in underground
access by a new shaft or large inclined ramp from surface. This new
infrastructure would enable access to deeper deposits such as
Semblana and lower portions of the Lombador deposits enabling large
mine production rates (greater than 5.0 Mtpa) through new
underground infrastructure and an expanded zinc processing plant.
Results from these multi-year, large investment studies were
compared to scenarios to access Semblana and Lombador Phase II
mineralization using lower capital cost, lower risk, shorter
schedule, lower tonnage approaches consisting of internal ramps from
existing underground workings and hoisting up the existing main
shaft. Merits of each scenario were found to be particularly
sensitive to future zinc price assumptions. Given near term
projected zinc prices remain weak, a decision has been made to
suspend further new major infrastructure studies for the time being
and focus on lower cost internal ramp investment until economic
projections for new major underground infrastructure investment are
more compelling.
-- Lombador Phase I ($30 million) - for underground development,
improvements to the main surface substation, installation of surface
power cables, and other items related to positioning for increased
copper and zinc production from the Lombador ore bodies over the
next several years. Portions of the underground investment for
Lombador in 2013 are aimed at advancing greater copper production
than previously envisioned taking preference over zinc for better
returns. A preliminary economic assessment will also advance in 2013
to assess the exploitation of deeper Lombador copper and zinc
mineralization ("Lombador Phase II") using internal ramps and the
existing mine hoisting infrastructure. In parallel a study is
advancing to assess further de-bottlenecking of the existing shaft
-- Semblana ($8 million) - for engineering studies, drilling and access
ramp development. The Semblana deposit lies within the Castro Verde
exploration concession, adjacent to the Neves-Corvo mining permits.
A preliminary economic assessment study is in progress based on
Semblana's current inferred resource to support permitting,
discussions with the government on conversion to a mining concession
and as a basis for discussions with EDM, the Portuguese state entity
that holds an option for a 15% contributing interest in discoveries
made on the Castro Verde concessions. Subject to positive outcomes
on those discussions it is the Company's intent to aggressively
advance the Semblana twin access ramps to support underground infill
drilling of the deposit. The main ramp, which commenced development
in the first half of this year will facilitate infill drilling
access but is sized for production haulage. A parallel ramp has now
started to enable faster overall underground drilling access and for
future ventilation and production capability.
-- Neves-Corvo industrial water dam ($9 million). Work was to have
commenced in 2012 on this dam but was delayed until 2013 due to
drilling on the Monte Branco copper discovery which lies beneath.
-- Zinkgruvan ore dressing plant ($13 million). During 2012, a pre-
feasibility study was completed showing that with an approximately
$52 million investment over 20 - 24 months, replacement of the
current crushing, screening and grinding circuits would provide a
number of advantages including higher plant availability, lower
operating costs, improved noise and dust emissions and a significant
increase in mine production - all with an economically attractive
end result. A feasibility study is advancing with expected
completion in the first half of 2013. Permitting of the plant
modernization and tailings facility expansion is in progress and,
subject to positive results of the study and permitting progress,
investment will proceed in a fast track manner on the zinc plant
modernization.
-- Other improvement initiatives ($10 million).
-- Tenke: Assuming substantial completion of the Phase II expansion by year
end 2012, we contemplate our share of remaining Phase II expansion costs
and sustaining capital funding to be in the range of $90 million for
2013. 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 it is reasonable to expect meaningful amounts of
excess operating cashflows from Tenke to come back to the partners to
repay initial capital investments on a 70/30 basis.
2013 Exploration Investment
Exploration expenditures are expected to be in the range of $40
million in 2013 (2012 - estimated at $50 million). Approximately
$18 million of this will be spent at Neves-Corvo where a large
drilling program will advance exploration on various targets
including the new copper discovery at Monte Branco. An additional
$5 million will be spent on several high priority targets in the
Iberian Region.
The Company continues to seek exploration investment
opportunities. In November 2012, Lundin Mining signed an Option
Agreement with Southern Hemisphere Mining (ASX:SUH) to earn up to
75% interest in the Llahuin Project in Chile by investing $35
million in development over 6 years; $6.9 million is expected to be
spent in 2013. Other exploration opportunities, particularly in
Eastern Europe and the Americas, will be pursued in the year
ahead.
About Lundin Mining
Lundin Mining Corporation is a diversified Canadian base metals
mining company with operations in Portugal, Sweden, Spain and
Ireland, producing copper, zinc, lead and nickel. In addition,
Lundin Mining holds a development project pipeline which includes
expansion projects at Neves-Corvo and Zinkgruvan mines along with
its equity stake in the world class Tenke Fungurume copper/cobalt
mine in the Democratic Republic of Congo.
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. Forward-looking statements 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 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.
Contacts: 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 www.lundinmining.com
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