Toronto, July 21, 2011 (TSX: LUN; OMX: LUMI) Lundin Mining Corporation (“Lundin
Mining” or the “Company”) provides the following corporate update on
operations, projects and continuing exploration success in Portugal and
Ireland.
Commenting on operations, Mr. Paul Conibear, President and CEO of Lundin Mining
said “As mentioned in the Q1 release, the high-grade reserves currently being
mined at Neves Corvo are in an area subject to high stresses and therefore
mining rates are less predictable. This has continued to be the case in Q2 and
as a result, production at Neves Corvo was below expectations.
“We are continuing to work through this and expect things back on track by Q4
of this year, if not sooner.In order to minimize the effect, and given the high
copper prices, the newly expanded zinc plant currently being commissioned will
be dedicated to treating copper ore. As a result of this, we have reduced our
annual guidance for Neves Corvo for the year and updated our costs estimates to
reflect this reduction, as well as the weaker US dollar” Mr. Conibear said.
Commenting on the progress of the Company's projects and future development
activities, Mr. Conibear said, “Our Neves Corvo Zinc Expansion Project team are
to be congratulated for their on time and on-budget performance. This
additional production capacity with the flexibility to process either zinc or
copper ores greatly enhances the value of the Neves Corvo operations. Continued
drilling success at the Semblana discovery combined with Lombador advancement
should further endorse the Company's investment strategy to ensure that the
Neves Corvo operations will continue to be an extremely valuable core asset for
many years to come.
We are also pleased to provide an update on the Belmore-Clare Project which is
progressing well.”
Guidance Update
First half production and revised guidance for the full year 2011 is as
follows:
(contained tonnes) Q2 2011 First half Revised Prior Guidance
2011 Guidance
Tonnes C1 Tonnes C1 Cost Tonnes C1 Cost Tonnes C1
Cost Cost
Neves-Corvo Cu 13,475 2.13 32,173 1.81 72,000 1.65 76,000 1.40
Zn 1,020 1,971 6,000 25,000
Zinkgruvan Zn 17,582 0.26 37,351 0.35 78,000 0.21 78,000 0.15
Pb 7,829 17,350 36,000 38,000
Cu 356 797 3,400 3,400
Galmoy Zn 8,802 16,279 28,000 17,000
(in ore) Pb 2,538 4,430 8,000 6,000
Total:
Wholly-owned
Cu 13,831 32,970 75,400 79,400
Zn 27,404 55,601 112,000 120,000
Pb 10,367 21,780 44,000 44,000
Tenke: 24.0% Cu 7,173 0.94 14,897 30,400 31,200
attrib 0.91
Cash costs remain dependent upon exchange rates (2011 initial forecast €/USD:
1.30 - USD/SEK: 7.50, revised forecast €/USD: 1.40 - USD/SEK: 6.40).
Production targets for 2011 have been adjusted for lower production in Q2 at
Neves-Corvo. Zinkgruvan remains essentially unchanged and we have increased
production guidance at Galmoy. C1 cash costs have been updated for production
changes and changes in the US dollar exchange rates with European currencies.
Operations Commentary
• Neves-Corvo: Production from Neves-Corvo comes from a blend of high-grade
copper sources (approximately 15% of production) and lower-grade
run-of-mine material, often in areas which remain under-defined. The
implication for immediate production is that when an area is developed for
production there are often large areas of lower-grade but economically
viable copper mineralisation found (out-of-reserve grade material).
During Q2, production continued to be affected by poor ground conditions
surrounding important high grade massive sulphide stopes thus slowing down the
high-grade production. This necessitated mining lower grade stockwork zones.
The mine is presently in an area of 500,000 tonnes of out-of-reserve material
with a 1.3% grade. This material is economic and, if not mined now in
sequence, will be sterilized and not accessible in future. These two factors
significantly lowered head-grade for the quarter (2.2% Cu versus a plan of
3.07%). These circumstances are not normal and were not planned. The mine is
expected to return to planned high head-grades and production no later than Q4.
In addition, the annual plant maintenance shutdown was brought forward to June
thus reducing plant availability by 8% over the quarter.
In order to maximize copper production this year, given the presently
overwhelmingly favourable copper versus zinc price, the newly expanded zinc
plant currently being commissioned will be used to treat low-grade copper ores
rather than zinc ores. This will help make up the Q2 shortfall in copper
production.
As a result of these changes, and the weaker US dollar, C1 cost guidance for
the year is increased from $1.40 to $1.65/lb copper.
The Neves Corvo mine continued to hoist and mill record tonnes.
• Zinkgruvan: Annual guidance is maintained except for a reduction in lead
from 38,000 tonnes to 36,000 tonnes as a result of Q2 plant disruptions and
expected lower lead grades to year end. C1 cost guidance has been increased
from $0.15/lb to $0.21/lb zinc, partly owing to higher costs in the first
half as efforts were made to remove waste from the mine, due to additional
contractor costs incurred as a result of under-performance of the crusher,
and the effects of a weaker US dollar. Overall C1 costs remain in the
lowest-cost quartile.
• Aguablanca: A new mining contractor is currently mobilizing and will start
pre-stripping operations in August 2011. First concentrate production is
scheduled for the third quarter of 2012.
Guidance on timing and total investment of €40 million to commence full ore
production is maintained.
• Galmoy: Zinc and lead production continues to exceed targets and thus zinc
and lead annual guidance have been increased to 28,000 tonnes and 8,000
tonnes, respectively.
• Tenke: As reported by Freeport, copper production guidance has been
slightly reduced for the year.
Projects
The Neves Corvo Zinc Expansion Project was completed on schedule and on budget
at €44 million. First ore was milled in early July and a saleable zinc
concentrate has been produced. The circuit is designed for 1.0 million tonnes
per annum (“tpa”) ore throughput enabling 50,000 tpa zinc metal production in
concentrate. Processing of zinc ore over the next few weeks is being performed
to test all circuits against design and equipment supplier specifications.
Thereafter the circuit will be committed to copper production for the balance
of the year.
The Lombador Phase One Feasibility Study is nearing completion and is
undergoing internal review. This study is Phase One of a multi-stage
development planned to exploit zinc and copper ores from the Lombador South,
East and North ore bodies. As previously reported, the grinding mill for the
expanded zinc plant was ordered earlier this year and is scheduled for delivery
in December 2012.
The Lombador Phase One development schedule contemplates expanded zinc plant
start up in 4Q 2013 using zinc ore from existing Neves Corvo ore bodies. The
main access ramp down into Lombador South continues to advance and the study
schedules significant production coming from Lombador South starting in 4Q
2014.
Bids have been received to commence scoping study work to conceptualize Phase
Two development of the deeper portions of the Lombador ore bodies in
conjunction with assessing how to access high grade copper from Semblana.
Exploration
Semblana Deposit, Neves Corvo, Portugal
Drilling has progressed very successfully on the high-grade Semblana copper
discovery with 4 rigs now advancing in-fill and step-out exploration drilling.
The Semblana deposit is located at a nominal depth of 900 m from surface and
just over 1000 m from the adjacent Zambujal and Corvo deposits which are being
actively mined.
A total of 57 drill holes have now been completed at Semblana, extending the
zone of copper mineralization that was first discovered in the second half of
2010. Significant new intersections from Semblana include (true thicknesses
given):
• 11.1 metres (from 831.5 to 842.6 metres) at 14.6% copper in hole PSN44A-1
• 21.0 metres (from 828.0 to 849.0 metres) at 5.9% copper in hole PSN46;
• 57.0 metres (from 860.0 to 917.0 metres) at 3.5% copper in hole PSK50C;
• 18.0 metres (from 946.0 to 964.0 metres) at 4.6% copper in hole PSJ50A
Surface exploration drilling has now delineated a high-grade copper zone over a
continuous area of 600 metres by at least 150 metres. The shape and extent of
deposit has not yet been fully delineated. In addition to this high-grade
copper zone, drilling has encountered significant and separate gold-tin and
zinc-lead-silver mineralization, as indicated in the following drill results
(true thicknesses given):
• 28.4 metres (from 878.6 to 907.0 metres) at 2.25 g/t gold and 0.13% tin in
hole PSK50B;
• 29.7 metres (from 877.9 to 907.6 metres) at 6.0% zinc, 1.9% lead and 120 g/
t silver in hole PSJ50;
• 18.0 metres (from 858.5 to 876.5 metres) at 7.5% zinc, 1.7% lead and 86 g/t
silver in hole PSN46-1;
A full table of drill results and a plan map of drill hole locations are
available on the Company's website.
A high-resolution 3D seismic survey has now been completed over a 21 square
kilometer area surrounding the Neves-Corvo mine. Preliminary results have
clearly imaged the Semblana deposit, verifying the effectiveness of this new
tool in the search for blind massive sulphide deposits. Once the final results
are interpreted during the third quarter, drill-testing the high-priority
seismic anomalies will follow.
Clare Zinc-Lead-Silver Project, Ireland
The Company has been operator of the Clare Project (held by Belmore Reources)
since February 2009. The Company has carried out an aggressive exploration
program that has successfully identified a high-grade zinc-lead-silver deposit
called Kilbricken in addition to discovering additional areas of
zinc-lead-silver mineralization both near to Kilbricken and within other parts
of the large Clare property. In contrast to most other zinc-lead deposits in
Ireland, the Kilbricken deposit is rich in silver. Some of the higher grade
drill intercepts at Kilbricken include (true thicknesses given):
• 21.2 metres (from 441.9 to 463.2 metres) at 11.0% zinc, 4.8% lead, 94.4 g/t
silver in hole 09-3679-06
• 25.8 metres (from 430.3 to 456.1 metres) at 2.6% zinc, 6.7% lead, 114.8 g/t
silver including 9.3 metres (from 442.1 to 451.5 metres) at 4.1% zinc,
12.0% lead, 242.8 g/t silver in hole 10-3679-43
• 20.5 metres (from 415.3 to 435.8 metres) at 7.5% zinc, 9.9% lead, 74.6 g/t
silver in hole 10-3679-46
• 11.8 metres (from 484.6 to 496.4 metres) at 9.8% zinc, 5.7% lead, 178.2 g/t
silver in hole 10-3679-50
• 6.1 metres (from 454.9 to 461.0 metres) at 9.3% zinc, 5.3% lead, 78.4 g/t
silver in hole 11-3679-94
A full table of drill results and a plan map of drill hole locations are
available on the Company's website.
Following the recent acquisition of joint venture partner Belmore Resources,
the Company now controls 100% of the Clare Project. The 2011 Clare exploration
program includes 37,000 metres of surface drilling and a high resolution 3D
seismic survey covering the entire Kilbricken discovery area. The principal
objective of the survey is to identify the key geological structures
controlling the concentration of high-grade zinc-lead-silver mineralization for
further drill-testing.
Sampling and Analytical Protocol:
NQ sized drill core was logged, cut in half with a diamond saw and sampled by
Company personnel at its facilities at the Neves-Corvo mine in Portugal and in
Quin, Ireland. Mineralized intervals are analyzed for a suite of elements
including Zn, Cu, Pb, Ag and Sn at ALS Chemex laboratories in Vancouver
(Neves-Corvo samples, following sample prep at the ALS facility in Seville) and
Ireland (OMAC laboratory was recently acquired by ALS). Bob Carmichael,
P.Eng., General Manager, Resource Exploration, is the Qualified Person as
defined by National Instrument 43-101 for Neves-Corvo and Clare exploration
projects and has reviewed and approved the exploration results information
contained in this release, and verified all exploration data through personal
supervision of the work programs.
About Lundin Mining
Lundin Mining Corporation is a diversified 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 an expansion project at its Neves Corvo mines along with its
equity stake in the world class Tenke Fungurume copper/cobalt project in the
Democratic Republic of Congo.
On Behalf of the Board,
Paul Conibear
President and CEO
For further information, please contact:
Paul Conibear or Marie Inkster: +1-416 342 5560
Robert Eriksson, Investor Relations Europe: +46-701-112615
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.
