Lundin slips on three-year output guidance

Toronto-based Lundin Mining (LUN-T) dropped slightly after publishing its three-year production outlook for 2013 to 2015, as it lowered its estimates for copper, zinc and nickel from its previous guidance, but managed to keep them above 2012 levels.

For 2013, the firm expects to deliver 57,000–63,500 tonnes of copper, excluding output from its 24%-owned Tenke Fungurume copper-cobalt mine in the Democratic Republic of Congo, down from 60,000–70,000 tonnes estimated last December.

Freeport-McMoRan Copper & Gold (FCX-N), which is the operator at Tenke, still has to provide the mine’s output and cash cost estimates. But, Lundin predicts Tenke’s production will remain flat at 47,000 attributable tonnes a year in 2013–2015, bringing Lundin’s three-year copper output at 100,000–110,000 tonnes a year.

A bulk of that will come from the Neves-Corvo copper-zinc mine in Portugal, which is expected to provide a steady copper output of 50,000–55,000 tonnes a year from 2013 to 2015. The mine’s zinc output should also increase as the zinc plant is expected to operate at a full capacity of 1 million tonnes a year in 2013.

Anticipated cash costs for 2013 at Neves-Corvo is US$1.80 per lb. after zinc by-product credits.  

Neves-Corvo and the Zinkgruvan mine in Sweden should generate a combined 118,000 to 128,000 tonnes zinc in 2013, up from 2012’s estimated output of 110,500–122,000 tonnes, with the majority of that coming from Zinkgruvan.

Lundin anticipates 2013 zinc output from the Swedish mine to be similar to 2012 levels, but notes if it modernizes the mine’s plant, it could lift the processing capacity to 1.5 million tonnes a year, and as a result boost production in 2014 and 2015.

Cash cost for Zinkgruvan should average US20¢ per lb. after copper and lead by-product credits in 2013.

Next year’s nickel forecast has been lowered to 4,500–5,000 tonnes at cash costs of US$5 per lb., because of technical problems at the company’s principal nickel mine, Aguablanca in Spain. Instability in the mine’s south pit wall has currently limited access.

Lundin is currently reviewing the mine plan and reserves and has guided production of 1,500–2,000 tonnes of nickel in 2014 and has not given a 2015 figure.

The miner forecasts producing 33,000–36,000 tonnes of lead in 2013 from the Zinkgruvan mine, noting lead continues to be a “valuable by-product credit.” It expects lead output to slightly ramp up in 2014, before dropping to 30,000–33,000 tonnes in 2015.

Capital expenditures for 2013 are anticipated at $270 million, down from 2012’s $380 million estimate. The company is budgeting $40 million for exploration next year and plans to spend $18 million of that on Neves-Corvo’s large drill program.

Lundin closed the day down 4.5% at $5.01 on 5.1 million shares traded.