TORONTO, ONTARIO--(Marketwired - Feb. 18, 2015) - Lundin Mining Corporation (TSX:LUN)(OMX:LUMI) ("Lundin Mining" or the "Company") today reported net earnings attributable to Lundin Mining shareholders of $25.8 million ($0.04 per share) for the quarter and $112.6 million ($0.19 per share) for the year ended December 31, 2014. Cash flows of $68.4 million were generated from operations in the quarter and $187.4 million for the year, not including the Company's attributable cash flows from Tenke Fungurume.
Net earnings for the fourth quarter included a non-cash, after-tax impairment charge of $32.3 million ($0.05 per share) related to certain Portuguese regional exploration concessions. The impairment was recognized to reflect the cessation of greenfield exploration programs in Portugal and relinquishment of certain mineral concessions. In addition, the fourth quarter included Candelaria operating earnings from November 3, 2014 of $67.8 million. Going forward Candelaria is expected to contribute significantly to the Company's earnings and cash flows.
Paul Conibear, President and CEO commented, "2014 was a very important year for Lundin Mining, as the Company successfully executed on its strategy to rejuvenate its asset base. Many milestones were achieved throughout the year including: bringing the Eagle nickel mine into full scale production ahead of schedule and under budget; successfully acquiring the high quality Candelaria copper operations in Chile; and recording zinc production records at our European operations."
"Our focus for 2015 is to successfully optimize all our existing operations to deliver improved production, cash flow and earnings as the year progresses and the advancement of significant brownfield exploration programs at each of our operations," added Mr. Conibear.
Summary financial results for the quarter and year ended December 31, 2014: | ||||||||
Three months ended | Twelve months ended | |||||||
December 31 | December 31 | |||||||
US$ Millions (except per share amounts) | 2014 | 2013 | 2014 | 2013 | ||||
Sales | 443.0 | 186.9 | 951.3 | 727.8 | ||||
Operating earnings1 | 144.1 | 66.9 | 304.3 | 243.1 | ||||
Net earnings | 36.6 | 42.1 | 123.4 | 136.7 | ||||
Net earnings attributable to Lundin shareholders | 25.8 | 42.1 | 112.6 | 136.7 | ||||
Basic earnings per share | 0.04 | 0.07 | 0.19 | 0.23 | ||||
Cash flow from operations | 68.4 | 55.2 | 187.4 | 154.3 | ||||
Ending net debt position2 | (829.2 | ) | (119.3 | ) | (829.2 | ) | (119.3 | ) |
1 Operating earnings is a non-GAAP measure defined as sales, less operating costs (excluding depreciation) and general and administrative costs. |
2 Net debt is a non-GAAP measure defined as cash and cash equivalents, less long-term debt and finance leases, before deferred financing fees |
Highlights
Operational Performance
For 2014, all of the Company's operations substantially met or performed better than guided on production. Aggregate capital spending was below guidance.
Candelaria (80%): On November 3, 2014, the Company announced the closing of its acquisition of an 80% ownership stake in the Candelaria/Ojos del Salado copper mining operations and supporting infrastructure (together, "Candelaria") from Freeport-McMoRan Inc. ("Freeport"). For the period from November 3, 2014 to December 31, 2014, the Candelaria processing plants collectively produced, on a 100% basis, 28,590 tonnes of copper, 318,000 ounces of silver, and 16,200 ounces of gold in concentrate.
Eagle (100%): Eagle production ramped-up sooner than expected and production of both nickel (4,300 tonnes) and copper (3,905 tonnes) exceeded expectations for the year. Commercial production was achieved in November 2014 and Eagle finished the year with higher than expected throughput, grades and recoveries. By year end, both copper and nickel concentrate quality were respectively at, and above, steady state product specifications. Total project spend for 2014 was $280 million, including capitalized interest, below guidance of $300 million due to under budget performance and timing of payments.
Neves-Corvo (100%): Neves-Corvo produced 51,369 tonnes of copper and 67,378 tonnes of zinc for the year ended December 31, 2014. Production from the Lombador ore body helped contribute to a 26% increase in zinc production over the prior year, and an annual zinc production record. Copper production met guidance, but lower copper head grades, metallurgical recoveries and ore throughput resulted in lower copper production compared to the year ended December 31, 2013. Copper cash costs1 of $1.85/lb for the year were in-line with our latest full-year guidance ($1.85/lb).
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. |
Zinkgruvan (100%): Zinc production of 77,713 tonnes at Zinkgruvan met expectations and was higher than the year ended December 31, 2013 due primarily to record tonnages of ore mined and milled. Lead production of 32,363 tonnes slightly exceeded expectations and was in-line with 2013. Cash costs for zinc of $0.37/lb were largely in-line with guidance ($0.35/lb).
Aguablanca (100%): Aguablanca had a strong year of operational performance, with annual production of 8,631 tonnes of nickel and 7,390 tonnes of copper. Both metals exceeded production expectations for the year ended December 31, 2014 as well as the prior year. Cash costs of $4.38/lb of nickel for the year were slightly higher than full year guidance ($4.25/lb) due to the lower price of by-product credits.
Tenke and Freeport Cobalt (24%): Tenke operations continue to perform well and the Kokkola cobalt business performed in accordance with expectations.
Financial Performance
Corporate Highlights
Financial Position and Financing
Outlook
Market Conditions
Metal prices have declined significantly from our expected base case values set in December 2014. Consequently, the Company has performed an analysis to determine the impact on the 2015 plan and we are progressing immediately with initiatives to protect earnings and cash flows in the event the current price environment continues for a prolonged period or weakens further. The Company is advancing production optimizations, cost savings and cost deferrals that are expected to protect cash flows and profits in 2015. These are reflected in the updated capital expenditure and exploration investment guidance below. To the extent that base metals markets improve, spending restraint plans will be re-assessed as certain expenditures and deferrals would be reconsidered in a moderately stronger metal price environment.
2015 Production and Cost Guidance
(contained tonnes) | Tonnes | Cash Costsa | |
Copper | Candelaria (80%) | 130,000 - 135,000 | $1.55/lbc |
Eagle | 20,000 - 23,000 | ||
Neves-Corvo | 50,000 - 55,000 | $1.80/lb | |
Zinkgruvan | 3,500 - 4,000 | ||
Aguablanca | 4,500 - 5,000 | ||
Tenke (24%)b | 48,400 | $1.31/lb | |
Total attributable | 256,400 - 270,400 | ||
Zinc | Neves-Corvo | 68,000 - 73,000 | |
Zinkgruvan | 78,000 - 82,000 | $0.38/lb | |
Total | 146,000 - 155,000 | ||
Nickel | Aguablanca | 5,800 - 6,500 | $5.00/lb |
Eagle | 25,000 - 28,000 | $2.00/lb | |
Total | 30,800 - 34,500 | ||
Lead | Neves-Corvo | 4,000 - 5,000 | |
Zinkgruvan | 27,000 - 30,000 | ||
Total | 31,000 - 35,000 |
a Cash costs remain dependent upon exchange rates (forecast at EUR/USD:1.30, USD/SEK:7.00, USD/CLP:575) and metal prices (forecast at Cu: $3.00/lb, Zn: $1.05/lb, Pb: $1.00/lb, Ni: $8.00/lb, Co: $13.00/lb). |
b Freeport has provided 2015 sales and cash costs guidance. Tenke's 2015 production is assumed to approximate sales guidance. |
c Cash costs exclude capital expenditures for deferred stripping and by-product credits have been adjusted for the terms of the streaming agreement but exclude any allocation of upfront cash received. |
Commentary on 2015 Production Guidance by Mine
2015 Capital Expenditure Guidance
The Company has initiated action plans to respond to the lower metal price environment. As a result, capital expenditures are expected to be less than the $470 million previously guided. The Company has identified $70 million of savings opportunities that can be achieved in 2015 through cancellation or deferral of certain capital expenditures.
Revised Capital Expenditure Guidance | |||
($ millions) | Original Guidance | Reductions | Revised Guidance |
by Mine | |||
Candelaria | $ 300 | $ 55 | $ 245 |
Eagle | 15 | - | 15 |
Neves-Corvo | 95 | 10 | 85 |
Zinkgruvan | 45 | 5 | 40 |
Aguablanca | 15 | - | 15 |
$ 470 | $ 70 | $ 400 |
Exploration Investment
About Lundin Mining
Lundin Mining Corporation ("Lundin", "Lundin Mining" or the "Company") is a diversified Canadian base metals mining company with operations in Chile, Portugal, Sweden, 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 ("Tenke") copper/cobalt mine in the Democratic Republic of Congo ("DRC") 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
Cautionary Statement on Forward-Looking Information
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 annual 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 estimated operating and cash costs, foreign currency fluctuations; risks inherent in mining including environmental hazards, industrial accidents, unusual or unexpected geological formations, ground control problems and flooding; including 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; inability to successfully integrate the Candelaria operations or realize its anticipated benefits; 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. 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.
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