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(TSX: LUN; Nasdaq Stockholm: LUMI) Lundin Mining Corporation ("Lundin Mining" or the "Company") provides the following production guidance for the three-year period of 2019 through 2021, as well as cash costs, capital and exploration expenditure forecasts for 2019. Key highlights are as follows:
-- Copper production guidance has increased from last year's three-year guidance on refinement to Candelaria's production profile, increasing the top end of its guidance range, as well as the expected early completion of Eagle East.
-- Candelaria's copper production profile has been improved and the mine life extended to 2040, increasing total production by approximately 740,000 tonnes (31%) incorporating the June 30, 2018 Mineral Reserve estimate update. Candelaria's copper production is now forecast to average approximately 180,000 tonnes per annum over the ten-year period 2019 through 2028. An updated NI 43-101 Technical Report for the Candelaria Copper Mining Complex has been filed on SEDAR.
-- Zinc production guidance incorporates the current Zinc Expansion Project (ZEP) schedule. Surface facilities are expected to commence commissioning in early 2020.
-- Forecast 2019 and 2020 nickel production has increased with Eagle East ore expected to contribute to mill feed in the fourth quarter of 2019, ahead of original plan of early 2020.
Production Outlook (tonnes of metal) 2019 - 2021
2019 2020 2021
Copper
Candelaria (100% basis) 145,000 - 155,000 165,000 - 175,000 175,000 - 185,000
Eagle 12,000 - 15,000 19,000 - 22,000 14,000 - 17,000
Neves-Corvo 40,000 - 45,000 41,000 - 46,000 41,000 - 46,000
Zinkgruvan 2,000 - 3,000 2,000 - 3,000 2,000 - 3,000
Total Copper 199,000 - 218,000 227,000 - 246,000 232,000 - 251,000
Zinc
Neves-Corvo 71,000 - 76,000 120,000 - 130,000 155,000 - 160,000
Zinkgruvan 76,000 - 81,000 75,000 - 80,000 76,000 - 81,000
Total Zinc 147,000 - 157,000 195,000 - 210,000 231,000 - 241,000
Nickel
Eagle 12,000 - 15,000 16,000 - 19,000 13,000 - 16,000
Total Nickel 12,000 - 15,000 16,000 - 19,000 13,000 - 16,000
-- Candelaria: As previously guided, copper production over the next three years is expected to increase from that of 2018, primarily on improving copper head grade as a greater portion of mill feed is to be sourced directly from the Candelaria open pit. Refinement to near-term operating plans have modestly increased 2019 and 2020 forecast copper production over the prior outlook. Copper production at the midpoint of the guidance range is now forecast to increase by approximately 15,000 tonnes (11%) year-over-year in 2019 and by approximately 45,000 tonnes (33%) in 2021 over 2018.
Candelaria's copper production profile has been improved and the mine life extended to 2040, from 2035, incorporating the previously announced June 30, 2018 Mineral Reserve estimate update. An updated NI 43-101 Technical Report has been filed on SEDAR concurrent with this release. Forecast copper production from 2019 through 2040 has increased by approximately 740,000 tonnes (31%) with focus on improvements in years 2024 and beyond. Copper production is now forecast to average approximately 180,000 tonnes per annum over the ten-year period 2019 through 2028.
The updated life-of-mine production plan includes refinements to the Candelaria open pit mine plan, extension of all underground mine lives, including Alcaparrosa and Santos mines, and the La Espanola open pit contributing mill feed starting in 2025. The life-of-mine plan also considers significantly reduced electricity prices secured in a new long-term contract.
-- Eagle: First ore from Eagle East is now expected in the fourth quarter of 2019, ahead of original plan of early 2020. Forecast 2019 nickel production has increased modestly to 12,000 to 15,000 tonnes. Forecast 2019 copper production remains consistent with the prior outlook.
Forecast 2020 nickel production at the midpoint of guidance has increased by approximately 3,000 tonnes (21%) and copper production by approximately 7,000 tonnes (52%) with Eagle East ore expected to contribute to mill feed for the full year.
Eagle's mine life has been extended into 2024 incorporating the previously announced June 30, 2018 Mineral Reserve estimate update.
-- Neves-Corvo: Forecast zinc and copper production incorporate the current Zinc Expansion Project (ZEP) schedule. Surface facilities are expected to be construction complete and commence commissioning in early 2020. Underground development is also forecast to complete in early 2020 with ore from this newly developed area of the mine contributing to mill feed in the first quarter of 2020.
Copper production guidance for 2019 remains consistent with the prior outlook while zinc production has been reduced to align with current ZEP schedule. Zinc production is expected to increase significantly in 2020 and ramp up to full processing rates in 2021.
-- Zinkgruvan: Zinc production at the midpoint of guidance is expected to increase by approximately 2,000 tonnes (3%) year-over-year in 2019 from 2018 levels. The 2019 and 2020 zinc production guidance has been modestly reduced (3% and 4%, respectively) on stope resequencing which has deferred mining some higher-grade ore into 2021. Copper production for 2019 has been revised modestly higher with the outlook for 2020 remaining consistent with the prior outlook.
2019 Cash Cost Guidance
-- At Candelaria, C1 cash costs are expected to approximate $1.60/lb copper after by-product credits and consistent with the prior outlook. By-product credits have been adjusted for the terms of the streaming agreement but exclude any allocation of upfront cash received.
-- Eagle's C1 cash costs are expected to approximate $2.20/lb nickel after by-product credits, primarily copper, and are well positioned on the global nickel production cost curve.
-- At Neves-Corvo, C1 cash costs for 2019 are expected to approximate $1.70/lb copper after zinc and lead by-product credits.
-- Zinkgruvan's C1 cash costs are expected to approximate $0.40/lb zinc after copper and lead by-product credits.
Proposed Guidance 2018 (tonnes)
C1 Cash Cost 2019
Copper
Candelaria $1.60/lb
Neves-Corvo $1.70/lb
Zinc
Zinkgruvan $0.40/lb
Nickel
Eagle $2.20/lb
2019 Capital Expenditure Guidance
-- Capital expenditures in 2019 are forecast to be $745 million on a 100% basis, which includes:
Capital Expenditures ($ millions) 2019
Candelaria (100% basis):
Capitalized Stripping 130
Los Diques TSF 10
New Mine Fleet Investment 75
Candelaria Mill Optimization Project 50
Candelaria Underground Development 40
Other Sustaining 70
Candelaria Sustaining 375
Eagle Sustaining 15
Neves-Corvo Sustaining 65
Zinkgruvan Sustaining 50
Total Sustaining Capital 505
Eagle East 30
ZEP (Neves-Corvo) 210
Total Expansionary Capital 240
Total Capital Expenditures 745
-- Candelaria: At Candelaria capital expenditures are expected to total $375 million in 2019. These expenditures continue investment in the low-risk initiatives announced in 2017 focused on delivering the improved the life-of-mine production profile and increasing the value of the operation.
Capitalized stripping expenditures are estimated to be $130 million in 2019. Short term use of the current mining contractor is planned to continue through the first half of 2019 to accelerate stripping rates in support of the updated mine plan.
Future lifts of the Los Diques Tailings Storage Facility have been initiated ahead of original schedule to benefit from synergies with the current project and readily available mine waste. Total forecast capital expenditures on the facility is $10 million for 2019.
New Mine Fleet Investment is estimated to be $75 million in 2019 to take delivery of the much of the remaining equipment. The remaining $25 million is to be incurred over 2020 through 2022. Management believes further upside potential exists for additional productivity and maintenance gains which have not yet been reflected in the open pit plan.
The Mill Optimization Investment to increase metal production, reduce maintenance costs and improve safety and reliability remains on schedule to be complete by the end of 2019 and is being completed with scheduled mill downtime as to not impact current production. Capital expenditures remain on budget with approximately $50 million to be spent in 2019.
Development of Candelaria South Sector continues on schedule and on budget to contribute to production in the second half of 2019. Approximately $40 million of capital expenditures are forecast in 2019 on Candelaria underground development.
Other Sustaining capital funds are for horizontal and vertical development, ventilation and supporting infrastructure being invested to expand or extend the Candelaria, Alcaparrosa and Santos underground mines.
-- Eagle: Capital expenditures at Eagle are estimated to total $45 million in 2019, of which $30 million is the remaining preproduction capital to complete Eagle East. The project is expected to complete ahead of schedule and for approximately $10 million less than the Feasibility Study preproduction capital estimate of $102 million.
-- Neves-Corvo: At Neves-Corvo, capital costs are expected to total $260 million in 2019, $210 million of which is expansionary capital expenditure on the ZEP. Following third-party review of the total project capital cost is now estimated at EUR320 million ($385 million). Through 2018 approximately EUR112 million ($135 million) is expected to have been capitalized for the project.
-- Zinkgruvan: At Zinkgruvan, sustaining capital expenditures are estimated to total $50 million in 2019. Approximately half is for underground development and half for mine and plant improvement initiatives.
2019 Exploration Investment Guidance
Exploration expenditures are planned to be $80 million in 2019. Approximately $67 million will be spent on in-mine and near-mine targets ($14 million at Candelaria, $23 million at Eagle, $23 million at Zinkgruvan and $7 million at Neves-Corvo), with the remainder to advance activities on exploration stage projects, primarily in South America.
Conference Call
The Company will hold a telephone conference call and webcast at 08:00am ET, 14:00 CET on Thursday, November 29, 2018 to answer analyst and investor questions. Conference call details are provided below:
Please call in 10 minutes before the conference starts and stay on the line (an operator will be available to assist you).
Call-in number for the conference call (North America): +1 617 826 1698
Call-in number for the conference call (North America Toll Free): +1 877 648 7976
Call-in number for the conference call (Sweden): +46 (0) 8 5661 9361
To view the live webcast presentation, please log on using this direct link: https://www.webcaster4.com/Webcast/Page/1266/28514
The presentation slideshow will also be available in PDF format for download from the Lundin Mining website http://www.lundinmining.com before the conference call.
A replay of the telephone conference will be available after the completion of the conference call through December 9, 2018.
Replay numbers:
North America: +1 855 859 2056 or +1 404 537 3406
The passcode for the replay is: 7734338
A replay of the webcast will be available by clicking on the direct link above.
About Lundin Mining
Lundin Mining is a diversified Canadian base metals mining company with operations in Chile, the United States of America, Portugal and Sweden, primarily producing copper, nickel and zinc. In addition, Lundin Mining holds an indirect 24% equity stake in the Freeport Cobalt Oy business, which includes a cobalt refinery located in Kokkola, Finland.
The information in this release is subject to the disclosure requirements of Lundin Mining under the EU Market Abuse Regulation. The information was submitted for publication, through the agency of the contact persons set out below on November 28, 2018 at 5:30 p.m. Eastern Time.
For further information, please contact:
Mark Turner, Director, Business Valuations and Investor Relations: +1-416-342-5565
Robert Eriksson, Investor Relations Sweden: +46 8 545 015 50
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