Toronto, April 29, 2014 (TSX: LUN; OMX: LUMI) Lundin Mining Corporation (“Lundin Mining” or the “Company”) today reported net earnings of $13.3 million ($0.02 per share) for the quarter ended March 31, 2014. Cash flows of $27.5 million were generated from operations in the quarter, not including the Company’s attributable cash flows from Tenke Fungurume.
Paul Conibear, President and CEO commented, "This year remains an exciting year for the Company as we prepare to bring the high grade Eagle nickel/copper mine into production. We are pleased that Eagle continues to remain on time and budget with first saleable concentrate expected in the fourth quarter of 2014. During the first quarter, production at our operations was generally in-line with expectations, however unit costs in some areas were higher than our annual average cost guidance. Mine performance improved as the quarter advanced and we maintain our annual production and cost guidance."
Summary financial results for the quarter: |
Three months ended | ||||||
March 31 | ||||||
US$ Millions (except per share amounts) | 2014 | 2013 | ||||
Sales | 149.9 | 188.2 | ||||
Operating earnings1 | 43.1 | 68.1 | ||||
Net earnings | 13.3 | 50.1 | ||||
Basic earnings per share | 0.02 | 0.09 | ||||
Cash flow from operations | 27.5 | 45.8 | ||||
Ending net (debt) / cash position | (148.3) | 199.4 |
Operational Highlights
Wholly-owned operations: Copper, nickel, and lead production all exceeded expectations, while zinc production was in-line with targeted production. Higher throughput at Neves-Corvo and Aguablanca resulted in better than expected copper and nickel production, respectively, while significantly higher lead grades at Zinkgruvan resulted in lead production exceeding expectations.
Tenke: Tenke operations continue to perform well.
Eagle Nickel/Copper Project: advancing on time, on budget.
1 Operating earnings is a non-GAAP measure defined as sales, less operating costs (excluding depreciation) and general and administrative costs.
2 Cash cost/lb of copper, zinc or nickel are non-GAAP measures defined as all cash costs directly attributable to mining operating, less royalties and by-product credits.
Financial Performance
Financial Position and Financing
Outlook
2014 Production and Cost Guidance
(contained tonnes) | Tonnes | Cash Costsa | ||||||
Copper | Neves-Corvo | 50,000 - 55,000 | $1.90/lb | |||||
Zinkgruvan | 3,000 - 4,000 | |||||||
Aguablanca | 5,000 - 6,000 | |||||||
Eagle | 2,000 - 3,000 | |||||||
Wholly-owned | 60,000 - 68,000 | |||||||
Tenke(@24%)b | 47,900 | $1.22/lb | ||||||
Total attributable | 107,900 - 115,900 | |||||||
Zinc | Neves-Corvo | 60,000 - 65,000 | ||||||
Zinkgruvan | 75,000 - 80,000 | $0.35/lb | ||||||
Total | 135,000 - 145,000 | |||||||
Lead | Neves-Corvo | 2,000 - 2,500 | ||||||
Zinkgruvan | 27,000 - 30,000 | |||||||
Total | 29,000 - 32,500 | |||||||
Nickel | Aguablanca | 6,000 - 7,000 | $4.50/lb | |||||
Eagle | 2,000 - 3,000 | |||||||
Total | 8,000 - 10,000 |
a. Cash costs remain dependent upon exchange rates (forecast at €/USD:1.35, USD/SEK:6.50) and metal prices (forecast at Cu: $3.15/lb, Zn: $0.90/lb, Pb: $0.95/lb, Ni: $6.50/lb, Co: $12.00/lb). Prior guidance forecast €/USD at 1.30, Zn at $0.87/lb and Pb at $1.00/lb.
b. Freeport has provided updated 2014 sales and cash costs guidance. Tenke’s 2014 production is assumed to approximate Freeport’s sales guidance.
2014 Capital Expenditure Guidance
Capital expenditures for 2014 are expected to be $440 million (including Eagle, but excluding Tenke), a $20 million reduction from previous guidance. Major capital investments for 2014 are as follows:
Lombador - $25 million (previous guidance - $44 million): For underground vertical and horizontal development and associated mine infrastructure related to the development of the upper Lombador ore bodies for future high grade zinc and copper production. Redesign and optimization of development has allowed for a combination of cost savings and the deferral of certain expenditures into 2015.
Neves-Corvo zinc plant debottlenecking and zinc expansion studies - $5 million: For the installation of a zinc tailings recovery circuit, zinc expansion feasibility studies and Santa Barbara hoisting shaft capacity increase design work.
The Company believes it is reasonable to expect Lundin's attributable cash distributions from Tenke to be in the range of $100 to $130 million in 2014, below previous guidance due to lower copper prices. Guidance will be updated again at the end of the second quarter reflecting copper price trends and expectations for the balance of the year.
2014 Exploration Guidance
About Lundin Mining
Lundin Mining Corporation is a diversified Canadian base metals mining company with operations and development projects in Portugal, Sweden and Spain and the USA, 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 located 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 report includes, but is not limited to, forward looking statements with respect to the Company’s estimated full year metal production, cash costs, exploration expenditures, and capital expenditures, as noted in the Outlook section and elsewhere in this document. 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 the estimated cash costs, timing and amount 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; litigation risks; and other risks and uncertainties, including those described in the Risk and Uncertainties section of the Company's Annual Information Form and in each Management’s Discussion and Analysis. Forward-looking information may also be based on other various assumptions including, without limitation, the expectations and beliefs of management, the assumed long term price of copper, zinc, lead and nickel; 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 the forward-looking statements. Accordingly, readers are advised not to place undue reliance on forward-looking statements.
For further information, please contact:
Sophia Shane, Investor Relations North America: +1-604-689-7842
John Miniotis, Senior Manager, Corporate Development and Investor Relations: +1-416-342-5565
Robert Eriksson, Investor Relations Sweden: +46 8 545 015 50