Toronto, July 30, 2014 (TSX: LUN; OMX: LUMI) Lundin Mining Corporation (“Lundin Mining” or the “Company”) today reported net earnings of $39.7 million ($0.07 per share) for the quarter ended June 30, 2014. Cash flows of $33.7 million were generated from operations in the quarter, not including the Company’s attributable cash flows from Tenke Fungurume.
Paul Conibear, President and CEO commented, "We are pleased with our improvements in operating performance during this last quarter and we remain very well positioned to deliver another year of strong operating results from all our mines, with production and costs as expected or in some cases better than original guidance.
As announced on July 16th, we are very excited with the construction progress at the Eagle Mine, with the delivery of first ore to the mill achieved earlier in the month. The Eagle Mine is expected to be in production in early Q4, and that combined with excellent nickel, copper and zinc price environments is expected to generate strong cash flows from all of our mines as the year advances."
|Summary financial results for the quarter and year-to-date:|
|Three months ended||Six months ended|
|June 30,||June 30,|
|US$ Millions (except per share amounts)||2014||2013||2014||2013|
|Basic earnings per share||0.07||0.03||0.09||0.11|
|Cash flow from operations||33.7||26.6||61.2||72.4|
|Ending net (debt) / cash position2||(174.4)||221.1||(174.4)||221.1|
1. Operating earnings is a non-GAAP measure defined as sales, less operating costs (excluding depreciation) and general and administrative costs.
2. Net cash/debt is a non-GAAP measure defined as cash, less long-term debt and finance leases, before deferred financing fees.
Wholly-owned operations: Nickel and lead production exceeded expectations, while copper and zinc production were in-line with targeted production for the quarter. Higher throughput at Aguablanca resulted in better than expected nickel and copper production, while higher lead grades and throughput at Zinkgruvan resulted in higher lead production. Copper, nickel and lead production guidance has been increased reflecting excellent mine production at Aguablanca, higher throughput at Zinkgruvan and better than expected lead grades from the Lombador ore body at Neves-Corvo.
1. Cash cost/lb of copper, zinc and nickel are non-GAAP measures defined as all cash costs directly attributable to mining operating, less royalties and by-product credits.
Tenke: Tenke operations continue to perform well.
Eagle Nickel/Copper Project: advancing on time and on budget.
|Total production from the Company's assets including attributable share of Tenke:|
On a year-to-date basis, operating earnings of $117.3 million were consistent with the $117.2 million reported for the first six months of 2013. Lower production costs ($22.2 million) were offset by lower sales volumes ($24.4 million).
Sales of $341.7 million for the six months ended June 30, 2014 were $22.7 million lower than the comparable period in 2013 ($364.4 million) due to lower net sales volumes ($33.5 million), primarily at Neves-Corvo, partially offset by higher net realized metal prices and prior period price adjustments ($17.5 million).
Average metal prices for zinc and nickel for the six months ended June 30, 2014 were higher (2% - 6%) than the same period in the prior year, while copper and lead prices declined from the prior year comparable period (4% - 8%).
Operating costs (excluding depreciation) of $211.2 million year-to-date were $24.9 million lower than the prior year of $236.1 million due to the closure of our Galmoy operation and lower sales volumes at Neves-Corvo and Aguablanca, partially offset by higher sales volumes at Zinkgruvan.
Net earnings of $53.1 million ($0.09 per share) year-to-date were $13.5 million lower than the $66.6 million ($0.11 per share) reported in 2013. In 2013, earnings benefited from $15.1 million in insurance proceeds for business interruption at the Aguablanca mine and higher equity income from our investment in Tenke Fungurume ($7.3 million) 2014, partially offset by higher foreign exchange losses ($6.7 million).
For the six months ended June 30, 2014, cash flow from operations was $61.2 million compared to $72.4 million for the same period in 2013. Change in non-cash working capital was the primary contributor to the decrease.
Financial Position and Financing
For the six months ended June 30, 2014, net debt increased $55.1 million due to investments in mineral properties, plant and equipment of $191.7 million, primarily the development of the Eagle project, partially offset by operating cash flows of $61.2 million, distributions from Tenke and Freeport Cobalt of $39.3 million and $7.2 million, respectively, and a $22.5 million withdrawal from restricted funds.
2014 Production and Cost Guidance
|2014 Guidance||Prior Guidance||Revised Guidance|
|(contained tonnes)||Tonnes||C1 Cost||Tonnes||C1 Costa|
|Copper||Neves-Corvo||50,000 – 55,000||$1.90/lb||50,000 – 55,000||$1.85/lb|
|Zinkgruvan||3,000 – 4,000||3,000 – 4,000|
|Aguablanca||5,000 – 6,000||6,000 – 7,000|
|Eagle||2,000 – 3,000||2,000 – 3,000|
|Wholly-owned||60,000 – 68,000||61,000 – 69,000|
|Total attributable||107,900 – 115,900||108,900 – 116,900|
|Zinc||Neves-Corvo||60,000 – 65,000||60,000 – 65,000|
|Zinkgruvan||75,000 – 80,000||$0.35/lb||75,000 – 80,000||$0.35/lb|
|Total||135,000 – 145,000||135,000 – 145,000|
|Lead||Neves-Corvo||2,000 – 2,500||3,500 – 4,500|
|Zinkgruvan||27,000 – 30,000||29,000 – 32,000|
|Total||29,000 – 32,500||32,500 – 36,500|
|Nickel||Aguablanca||6,000 – 7,000||$4.50/lb||7,500 – 8,500||$4.25/lb|
|Eagle||2,000 – 3,000||2,000 – 3,000|
|Total||8,000 – 10,000||9,500 – 11,500|
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: $7.50/lb, Co: $13.00/lb). Prior guidance forecast Ni at $6.50/lb and Co at $12.00/lb.
b. Freeport has provided 2014 sales and cash costs guidance. Tenke’s 2014 production is assumed to approximate sales guidance.
2014 Capital Expenditure Guidance
Capital expenditures for 2014 are expected to be $440 million (including Eagle, but excluding Tenke), unchanged from previous guidance. Major capital investments for 2014 are as follows:
The Company believes it is reasonable to expect Lundin's attributable cash distributions from Tenke to be in the range of $80 to $100 million in 2014, potentially lower than previous guidance due to copper price uncertainty and higher working capital.
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,
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