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Lundin up on revised three-year outlook

Diversified miner Lundin Mining (TSX:LUN) traded nearly 6% higher in Toronto Thursday after announcing an updated production outlook for 2019 to 2021.
Lundin up on revised three-year outlook Lundin up on revised three-year outlook Lundin up on revised three-year outlook Lundin up on revised three-year outlook Lundin up on revised three-year outlook

Lundin Mining closed higher in Toronto

Staff Reporter

The Toronto-based miner expects to produce more copper over this period than previously expected on the back of refined mine sequencing at Candelaria, in Chile, and an expected early completion of the Eagle East project, in the US.

The 2019 copper guidance is expected to range between 199,000 metric tonnes 218,000t in 2019, rising to between 227,000-246,000t in 2020. By 2021, the company guides for production of 232,000-251,000t the following year. These totals are up from the previous forecast calling for 169,000-183,000t of copper in 2019 and 187,000-201,000t in 2020.

Lundin said the mid-point of Candelaria's new guidance range was 11% higher year-on-year in 2019 and about 33% higher in 2021, compared with 2018.

Copper production from Candelaria is now forecast to average about 180,000t/y over the next decade to 2028.

At the Eagle mine, in the Upper Peninsula of Michigan, first ore from the Eagle East project has been moved forward to the fourth quarter of 2019, from earlier estimates of early 2020. While this had not changed the copper production guidance for 2019, it had impacted on the guidance for nickel, the company said.

The Eagle mine is now forecast to produce between 12,000-15,000t of nickel in 2019, compared with the previously guided 10,000-13,000t. As a result, the mid-point of the guided 2020 nickel output increased by about 21% and copper production by about 52%.

In 2020, nickel output would total between 16,000-19,000t, before falling to between 13,000-16,000t in 2021.

At Neves-Corvo, in Portugal, Lundin lowered the zinc guidance for 2019 to align with the schedule of the current Zinc Expansion Project (ZEP), which will result in a significant increase in zinc output. Neves-Corvo will produce between 71,000-76,000t in 2019, but output once the ZEP comes on line will jump to between 120,000-130,000t in 2020, increasing up to 160,000t in 2021.

Lundin also produces zinc at the Zinkgruvan mine, in Sweden, and has forecast total output of 147,000-157,000t for 2019, 195,000-210,000t for 2020 and 231,000-241,000t for 2021.

Lundin also said the Candelaria mine's C1 cash costs for 2019 should be US$1.60/lb copper after by-product credits and that the Eagle mine's cash costs would be about $2.20/lb for nickel after by-product credits. At Neves-Corvo, C1 cash costs were expected to be about $1.70/lb copper after zinc and lead by-product credits and Zinkgruvan's cash costs were forecast to be $0.40/lb.

In 2019, Lundin's capital expenditure were forecast to be $745-million.

Lundin's Toronto-quoted equity has given back about 38% over the past four quarters, but gained 5.75% Thursday to C$5.70, giving the miner a market capitalisation of $4.18 billion.