Lundin Mining First Quarter Results
TORONTO, ONTARIO–(Marketwired - April 26, 2017) - Lundin Mining Corporation (“Lundin Mining” or the “Company”) (TSX:LUN)(OMX:LUMI) today reported cash flows of $244.7 million generated from operations in the first quarter of the year, not including the Company’s attributable cash flows from Tenke Fungurume. Net earnings attributable to Lundin Mining shareholders of $91.6 million ($0.13 per share) for the quarter ended March 31, 2017 were aided by improved copper and zinc prices.
(This news release contains forward-looking statements. Please refer to the cautionary language under the heading “Cautionary Statement on Forward-Looking Information and Non-GAAP Performance Measures” below. All dollar amounts expressed in this news release are in US dollars unless otherwise noted.)
Mr. Paul Conibear, President and CEO commented, “Our operations performed reliably and in line with plan during the first quarter. We have improved cash cost guidance at both Eagle and Neves-Corvo, and reconfirm the production outlook for the year. The Company’s cash position now stands at over $2.0 billion, reflecting the nearly $214 million of cash generated during the first quarter, in addition to proceeds from the sale of Tenke received in April.
We remain focused on value creation and disciplined in our approach to investment opportunities both on our own assets and externally. Expansion studies and projects are advancing at all of our operations, and most notably a final Feasibility Study on our Neves-Corvo Zinc Expansion Project, expected to approximately double current zinc production, is on track to be delivered very soon with an expectation of fast tracking this significant value added project.”
Summary financial results for the quarter:
Assisted by higher by-product metal prices, cash costs(1) for the first quarter of 2017 were largely favourable compared to the prior year and guidance. Production for the first quarter of 2017 was consistent with expectations although, with the exception of nickel, was less than that reported in the prior year. The Company remains on track to meet overall full year guidance.
Candelaria (80% owned): The Candelaria operations produced, on a 100% basis, 39,133 tonnes of copper, approximately 23,000 ounces of gold and 357,000 ounces of silver in concentrate during the quarter. Copper production for the quarter was in-line with the mine plan, but was lower than the prior year comparable period due primarily to lower throughput. Copper cash costs of $1.27/lb for the quarter were marginally higher than the prior year and are expected to meet guidance over the full year.
Construction of the Los Diques tailings dam facility continues on schedule and on budget. Approximately $20 million was spent during the quarter. Total forecast spend on the project remains unchanged at $295 million of which approximately $145 million remains to be spent.
Eagle (100% owned): Eagle had an excellent quarter of production generating 6,342 tonnes of nickel and 6,503 tonnes of copper, with both assisted by higher than expected head grades and recoveries. Nickel cash costs of $0.94/lb for the quarter benefited from higher by-product sales than the comparable period in the prior year.
With completion of the Feasibility Study and full Board approval, the Eagle East ramp is advancing on schedule. The exploitation of the Eagle East deposit remains subject to permit approval, which is expected by late 2017.
Neves-Corvo (100% owned): Neves-Corvo produced 10,195 tonnes of copper and 17,948 tonnes of zinc in the first quarter. Zinc production in the quarter modestly exceeded the prior year comparable period, while copper production, as expected, was lower due primarily to lower grades. Copper cash costs of $0.75/lb for the quarter were significantly lower than the prior year comparable period and full year guidance, aided by higher by-product zinc prices.
Zinkgruvan (100% owned): Zinc and lead production in the first quarter of 2017 was consistent with the mine plan and overall guidance expectations but fell short of that produced in the comparable period in 2016, primarily as a result of lower grades. Cash costs for zinc of $0.37/lb for the quarter were consistent with the prior year comparable period and full year guidance.
Tenke (24% owned): Tenke operations continued to perform well, generally meeting expectations for the quarter. Lundin’s attributable share of first quarter production included 12,932 tonnes of copper cathode and 861 tonnes of cobalt in hydroxide. The Company’s attributable share of sales included 13,946 tonnes of copper at an average realized price of $2.63/lb and 867 tonnes of cobalt at an average realized price of $20.86/lb. Tenke’s operating cash costs for the first quarter of 2017 were $0.49/lb of copper sold.
Cash distributions received by Lundin Mining in the quarter were $55.6 million from Tenke.
(1) Cash cost/lb of copper, zinc and nickel are non-GAAP measures defined as all cash costs directly attributable to mining operations, less royalties and by-product credits.
Financial Position and Financing
Production and exploration guidance for 2017 remains unchanged from that provided on November 30, 2016 (see news release entitled “Lundin Mining Provides Operating Outlook”). Forecast improvements in C1 cash cost guidance at Eagle and Neves-Corvo and changes in capital expenditures are noted below.
2017 Production and Cost Guidance
2017 Capital Expenditure Guidance
Capital expenditures, excluding capitalized interest, are expected to be $390 million, (prior guidance $405 million) as outlined below.
The Los Diques tailings project remains on schedule and the project’s capital cost forecast remains unchanged although the expected timing of certain payments have resulted in $15 million of expenditures expected in 2017 that will now be paid in 2018. In particular, due to extended mine life and ongoing exploration success, other sustaining capital expenditures at Candelaria are currently under review. It is expected that capital spending related to large mine mobile equipment and other sustaining capital investment will be increased as part of a rejuvenation program to reinstate capital investments that were deferred under cost constraint programs in 2015 and 2016. A further update will be provided with the second quarter results. Exploration spend remains unchanged at $65 million.
Annual and Special Meeting
The Company reports that it will hold its annual and special meeting of shareholders at the St. Andrew’s Club & Conference Centre, 150 King Street West, 27th Floor (King Street/University Avenue) Toronto, Ontario, on Friday, May 12, 2017 at 10:00 a.m. Toronto time.
On Behalf of the Board,
Paul Conibear, President and CEO
The information in this release is subject to the disclosure requirements of Lundin Mining under the EU Market Abuse Regulation. This information was publicly communicated on April 26, 2017 at 5:30 p.m. Eastern Time.
Cautionary Statement on Forward-Looking Information and Non-GAAP performance measures
Certain of the statements made and information contained or incorporated by reference herein is “forward-looking information” within the meaning of applicable Canadian securities legislation. All statements other than statements of historical facts in this document constitute forward-looking information which is based on current expectations, estimates, forecasts and projections as well as beliefs and assumptions made by the Company’s management. Such forward looking statements include, but are not limited to, those regarding the Company’s guidance on estimated annual metal production, cash costs, exploration and capital expenditures; feasibility studies and their results; and projects. Words such as “approach”, “assume”, “believe”, “budget”, “estimate, “expect”, “feasibility”, “focus”, “forecast”, “future”, “guidance”, “indicate”, “intent”, “on track”, “opportunity”, “outlook”, “plan”, “project”, “schedule”, “study”, or “subject to”, or variations of or similar such terms, or statements that certain actions, events or results could, may, might or will be taken or occur or be achieved, identify forward-looking information. Although the Company believes that the expectations reflected in the forward-looking information herein are reasonable, these statements by their nature involve risks and uncertainties and are not guarantees of future performance. These estimates, expectations 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 materially from those reflected in the forward-looking statements.
Certain financial measures contained herein, such as operating earnings, net debt and cash costs, have no meaning within generally accepted accounting principles under IFRS and therefore amounts presented may not be comparable to similar data presented by other mining companies. This data is intended to provide additional information and should not be considered in isolation or as a substitute for measures or performance prepared in accordance with IFRS.
FOR FURTHER INFORMATION PLEASE CONTACT:
Director, Business Valuations and Investor Relations
Senior Associate, Investor Relations
Investor Relations Sweden
+46 8 545 015 50