Lundin Mining Corporation press release
Lundin Mining Provides Operational Outlook & Update
TSX - Toronto Stock Exchange · Copper · Gold · Silver · Iron · Molybdenum · Nickel · Canada
Canada NewsWire
[](https://mma.prnewswire.com/media/1694353/Lundin_Mining_Corporation_Lundin_Mining_Provides_Operational_Out.html)
TORONTO , Nov. 22, 2021 /CNW/ - (TSX: LUN) (Nasdaq Stockholm: LUMI) Lundin Mining Corporation ("Lundin Mining" or the "Company") provides the following production guidance for the three-year period of 2022 through 2024, as well as cash cost, capital and exploration expenditure forecasts for 2022. The Company will hold a conference call and webcast on Tuesday November 23, 2021 , to answer investor and analyst questions. Additionally, the Company announces renewal of its Normal Course Issuer Bid ("NCIB"), pending final approvals.
(This news release contains non-GAAP measures and forward-looking information about expected future events and financial and operating performance of the Company. We refer to the Historical Non-GAAP Measure Comparatives section and the risks and assumptions set out in our Cautionary Statement on Forward-Looking Information section of this press release. All dollar amounts are expressed in U.S. dollars, unless otherwise noted.)
Copper production is to increase to 258,000-282,000 t on a consolidated basis in 2022.
Zinc production is forecast to increase to 188,000-203,000 t in 2022 as the Neves-Corvo Zinc Expansion Project ("ZEP") ramps up and on an improved near-term production profile at Zinkgruvan.
Gold production is forecast to be 153,000-163,000 oz in 2022, of which approximately 85,000 oz, at the midpoint of guidance, are unencumbered and to receive full market pricing.
Nickel production is to moderate to 15,000-18,000 t in 2022 with priority on increasing Eagle East ore.
Production Outlook 2022 - 2024 1
| | | 2022 | | 2023 | | 2024 | | | | | | | | Copper (t) | | | | | | | | | | | | | | | Candelaria (100% basis) | 155,000 | - | 165,000 | | 150,000 | - | 160,000 | | 165,000 | - | 175,000 | | | Chapada | 53,000 | - | 58,000 | | 50,000 | - | 55,000 | | 50,000 | - | 55,000 | | | Eagle | 15,000 | - | 18,000 | | 12,000 | - | 15,000 | | 9,000 | - | 12,000 | | | Neves-Corvo | 33,000 | - | 38,000 | | 35,000 | - | 40,000 | | 35,000 | - | 40,000 | | | Zinkgruvan | 2,000 | - | 3,000 | | 3,000 | - | 4,000 | | 3,000 | - | 4,000 | | | Total Copper | 258,000 | - | 282,000 | | 250,000 | - | 274,000 | | 262,000 | - | 286,000 | | | | | | | | | | | | | | | | Zinc (t) | | | | | | | | | | | | | | | Neves-Corvo | 110,000 | - | 120,000 | | 142,000 | - | 152,000 | | 142,000 | - | 152,000 | | | Zinkgruvan | 78,000 | - | 83,000 | | 85,000 | - | 90,000 | | 83,000 | - | 88,000 | | | Total Zinc | 188,000 | - | 203,000 | | 227,000 | - | 242,000 | | 225,000 | - | 240,000 | | | | | | | | | | | | | | | | Gold (oz) | | | | | | | | | | | | | | | Candelaria (100% basis) 2 | 83,000 | - | 88,000 | | 90,000 | - | 95,000 | | 93,000 | - | 98,000 | | | Chapada | 70,000 | - | 75,000 | | 65,000 | - | 70,000 | | 60,000 | - | 65,000 | | | Total Gold | 153,000 | - | 163,000 | | 155,000 | - | 165,000 | | 153,000 | - | 163,000 | | | | | | | | | | | | | | | | Nickel (t) | | | | | | | | | | | | | | | Eagle | 15,000 | - | 18,000 | | 13,000 | - | 16,000 | | 9,000 | - | 12,000 | | | Total Nickel | 15,000 | - | 18,000 | | 13,000 | - | 16,000 | | 9,000 | - | 12,000 |
| | | 1 Production guidance is based on certain estimates and assumptions, including but not limited to: Mineral Resources and Mineral Reserves, geological formations, grade and continuity of deposits and metallurgical characteristics. | | 2 68% of Candelaria's total gold and silver production are subject to a streaming agreement. |
Production Outlook 2022 - 2024
Candelaria: Copper production for the next three years is forecast to increase over that of 2021, primarily on improved copper head grades and achievement of planned processing rates as initiatives to debottleneck the Candelaria plant pebble crushing circuit are realized in early 2023.
From the Candelaria open pit, ore mining is to continue primarily from the Phase 10 pushback in 2022, with initial ore production from the Phase 11 pushback during the year. In 2023 and 2024, ore is to be mined primarily from Phase 11.
Over the guidance period, total mill throughput is forecast to range between 27-28 million tonnes per annum ("Mtpa"). Debottlenecking initiatives of the Candelaria plant pebble crushing circuit will increase mill capacity starting in early 2023 and, based on the planned mill feed blend and the ore hardness throughput model, annual throughput is expected to exceed 28 Mtpa commencing in 2025.
In 2022 and 2023, Candelaria open pit ore is forecast to contribute approximately 16 Mtpa to the mill feed, increasing to approximately 18 Mtpa in 2024. The underground mines are forecast to contribute approximately 8 Mtpa of ore in each year, with stockpile ore comprising the balance of the mill feed.
Production guidance considers a mine-to-mill grade call factor of 8% in 2022, reducing to 5% in 2023 and 2024. With focus on operational practices, improvement in grade discrepancy was observed in the third quarter of 2021 compared to the prior two quarters, and to-date in the fourth quarter the positive trend has continued. Candelaria is continuing its methodical approach to identify and address sources of unplanned dilution and discrepancy across the mine-to-mill process.
Candelaria's copper production guidance is 155,000-165,000 t for 2022. Copper production is forecast to be modestly greater in the second half of the year than the first, primarily owing to the copper grade profile. Gold production guidance is 83,000-88,000 oz for 2022 and, similarly, modestly weighted to the second half of the year.
Chapada: Copper production guidance is consistent with the prior outlook 3 , while gold production guidance has been increased for 2022 on refinement of near-term operating plans. Production expectations are based on the current 24 Mtpa throughput capacity over the guidance period with annual changes driven primarily by the forecast grade profile.
Chapada's copper production is forecast to increase in 2022 to 53,000-58,000 t. Copper production is expected to be modestly greater in the second half of the year primarily due to the forecast grade profile and seasonal operating considerations. Gold production guidance is 70,000-75,000 oz for 2022 and, similarly, modestly weighted to the second half of 2022 due to the forecast grade profile and seasonal operating considerations. All of Chapada's gold production remains unencumbered and is to receive full market pricing.
Eagle: Nickel production guidance is modestly lower for 2022 and consistent for 2023, compared to the prior outlook 3 , while copper production guidance is consistent for 2022 and for 2023.
Eagle's nickel production is forecast to be 15,000-18,000 t in 2022. Nickel production is expected to be greater in the second half of the year primarily due to the forecast grade profile. Copper production guidance is 15,000-18,000 t for 2022, modestly weighted to the second half of the year on the forecast grade profile.
Neves-Corvo: Copper production guidance has increased for 2022 and 2023 compared to the prior outlook 3 , on refinement of the near-term mine plan positively impacting the forecast copper head grade. Zinc production guidance is modestly lower in 2022 and 2023 compared to the prior outlook 3 , on the metal recovery assumption for these years. Construction of the ZEP is progressing on schedule and on budget to be substantially complete by the end of 2021.
Neves-Corvo's copper production is forecast to increase to 33,000-38,000 t in 2022, modestly weighted to the first half of the year owing to the forecast grade profile. Zinc production is guided to increase over 65% in 2022, to 110,000-120,000 t, as production ramp up from the ZEP is completed in the first half of the year. With the ZEP contributing a full year of production at design throughput, 2023 zinc production is forecast to be 142,000-152,000 t.
Zinkgruvan: Zinc production guidance has increased 14% for 2022 and 11% for 2023, at the midpoint of the ranges compared to the prior outlook 3 , with minor refinement of operating plans forecasting higher head grades and improved metal recoveries. Copper production guidance for 2022 and 2023 is generally consistent with the prior outlook. Zinc production is forecast to increase in 2022 to 78,000-83,000 t.
| _ | | 3 Prior production outlook for 2022 & 2023 as announced by news release entitled "Lundin Mining Provides Operational Outlook & Shareholder Returns Update" dated November 30, 2020. |
2022 Cash Cost Guidance 4 ,5
| Cash Cost 4 | 2022 5 | | | Copper | | | | | Candelaria | $1.55/lb 6 | | | Chapada | $1.60/lb | | | Neves-Corvo | $1.80/lb | | Zinc | | | | | Zinkgruvan | $0.55/lb | | Nickel | | | | | Eagle | $(0.25)/lb |
Candelaria's cash costs are expected to approximate $1.55 /lb 6 copper in 2022, similar to 2021 levels, after by-product credits. By-product credits have been adjusted for the terms of the streaming agreement.
At Chapada, cash costs are expected to approximate $1.60 /lb copper in 2022, after unencumbered gold by-product credits. The forecast increase in Chapada's cash costs reflects higher consumable costs and lower stockpile values. Effects of copper stream agreements are reflected in the realized copper revenue.
Eagle is expected to maintain the first quartile cash costs of negative $0.25 /lb nickel in 2022, considering significant by-product copper credits. The forecast increase in Eagle's cash costs is primarily a reflection of lower volumes.
At Neves-Corvo , cash costs for 2022 are expected to improve year-on-year to approximately $1.80 /lb copper, after zinc and lead by-product credits. The forecast decrease in cash costs is primarily due to increased zinc production volumes.
Zinkgruvan's cash costs for 2022 are expected to approximate $0.55 /lb zinc after copper and lead by-product credits.
| _ | | 4 This is a non-GAAP measure. For historical comparatives see the Historical Non-GAAP Measure Comparatives section of this press release. Please also see the Management's Discussion and Analysis for the year ended December 31, 2020, for discussion of non-GAAP measures. | | 5 2022 cash costs are based on various assumptions and estimates, including, but not limited to: production volumes, commodity prices (2022 - Cu: $3.90/lb, Zn: $1.15/lb, Pb: $0.90/lb, Au: $1,800/oz: Ag: $25.00/oz) foreign currency exchange rates (2022- €/USD:1.20, USD/SEK:8.20, CLP/USD:700, USD/BRL:5.10) and operating costs. | | 6 68% of Candelaria's total gold and silver production are subject to a streaming agreement and as such cash costs are calculated based on receipt of $420/oz and $4.20/oz, respectively, on gold and silver sales in the year. |
2022 Capital Expenditure Guidance
Capital expenditures in 2022 are forecast to be $630 million on a 100% basis, including deferrals from 2021. The majority of sustaining capital expenditures are for open pit waste stripping, underground mine development, and tailings storage facility ("TSF") and water management works. The scope of these activities is generally consistent with prior plans, with expenditure guidance reflecting inflationary cost pressures on key inputs, in particular, fuel, electricity, freight, logistics and labour costs in some markets.
| Capital Expenditures ($ millions) | 2022 7 | | | Sustaining Capital 8 | | | | | Candelaria (100% basis) | 370 | | | Chapada | 65 | | | Eagle | 10 | | | Neves-Corvo | 95 | | | Zinkgruvan | 60 | | | Total Sustaining Capital | 600 | | Zinc Expansion Project (Neves-Corvo) 8 | 30 | | | Total Capital Expenditures | 630 | |
Candelaria: Capital expenditures at Candelaria in 2022 are forecast to total $370 million . Of this total, capitalized waste stripping expenditures are estimated to be $180 million , and underground mine development, including infill drilling and ramp works, is estimated to be approximately $90 million . Capital expenditures for mobile and mine equipment are estimated to be $25 million and $55 million for the continued build of the Los Diques TSF. Pebble crushing debottlenecking initiatives are estimated to be $15 million and forecast to be completed in 2022.
Chapada: Capital expenditures at Chapada in 2022 are estimated to total $65 million . This includes approximately $20 million for capitalized waste stripping, $20 million for TSF and water management systems and $10 million for mine and mobile equipment.
Eagle: Capital expenditures are estimated to total $10 million in 2022 composed of underground mine development, mobile equipment and mill water treatment plant sustaining initiatives.
Neves-Corvo: Capital expenditures are estimated to total $125 million in 2022 of which $30 million is expansionary capital to complete pre-production works on the ZEP and $95 million is forecast sustaining capital. Of the forecast sustaining capital expenditures, approximately $50 million is for underground mine development, including infill drilling, $30 million for TSF works and water initiatives and $15 million for mine and mobile equipment. Total ZEP pre-production capital cost estimate of $430M (€360M) remains unchanged.
Zinkgruvan: Sustaining capital expenditures are estimated to total $60 million in 2022, including approximately $35 million for underground development, including the Dalby orebody, and the remainder primarily for mine and mobile equipment, TSF works and other improvement initiatives.
| | | 7 Capital expenditures are based on various assumptions and estimates, including, but not limited to foreign currency exchange rates (2022- €/USD:1.20, USD/SEK:8.20, CLP/USD:700, USD/BRL:5.10). | | 8 This is a non-GAAP measure. For historical comparatives see the Historical Non-GAAP Measure Comparatives section of this press release. Please also see the Management's Discussion and Analysis for the year ended December 31, 2020, for discussion of non-GAAP measures. Capital expenditures have been reported on a cash basis. Discrepancies may exist with other external reports which have been reported on an accrual basis. |
2022 Exploration Investment Guidance
Exploration expenditures are planned to be $45 million in 2022. Approximately $40 million is to be spent supporting significant in-mine and near-mine targets at our operations ( $15 million at Candelaria, $10 million at Chapada, $8 million at Neves-Corvo, $5 million at Zinkgruvan and $2 million at Eagle). The remaining $5 million is planned to advance activities on exploration stage and new business development projects.
Conference Call
The Company will hold a telephone conference call and webcast at 08:00am ET , 14:00 CET on Tuesday, November 23, 2021 , to answer analyst and investor questions. Conference call details are provided below. Please dial in 15 minutes prior to the call start to ensure placement into the conference on time.
Call-in number for the conference call ( North America ): +1 647 788 4922 Call-in number for the conference call (North America Toll Free): +1 877 223 4471 Call-in number for the conference call ( Sweden ): 020 012 3522
To view the live webcast presentation, please log on using this direct link: https://onlinexperiences.com/Launch/QReg/ShowUUID=33E372D6-219B-4957-98C2-4285AEF61753 .
The presentation slideshow will also be available in PDF format on the Lundin Mining website www.lundinmining.com before the conference call.
A replay of the telephone conference will be available after the completion of the call through December 23, 2021.
Call-in numbers for the replay are ( North America ): +1 800 585 8367 or (internationally) +1 416 621 4642.
The passcode for the replay is: 2127909
A replay of the webcast will be available by clicking on the direct link above.
Normal Course Issuer Bid Renewal
Lundin Mining intends to renew its NCIB to purchase up to 63,761,024 common shares of the Company ("Common Shares") on the Toronto Stock Exchange (the "TSX"). The Company intends to continue to utilize the NCIB from time to time to make opportunistic purchases to create shareholder value and actively manage the number of outstanding Common Shares.
In connection with the NCIB renewal, Lundin Mining intends to enter into an automatic repurchase plan with its designated broker to allow for the repurchase of Common Shares at times when the Company ordinarily would not be active in the market due to its own internal trading blackout periods, insider trading rules or otherwise. Any such plan entered into with the Company's broker will be adopted in accordance with applicable Canadian securities laws. The Company will determine parameters for such a plan based on market conditions, share price, best use of available cash, and other factors.
The NCIB renewal has been approved by the Company's Board of Directors; however, it is subject to acceptance by the TSX and, if accepted, will be made in accordance with the applicable rules and policies of the TSX and applicable Canadian securities laws. Under the NCIB, Common Shares may be repurchased in open market transactions on the TSX and/or other Canadian exchanges, or by such other means as may be permitted by the TSX and applicable Canadian securities laws. The price that Lundin Mining will pay for Common Shares in open market transactions will be the market price at the time of purchase.
Pursuant to the NCIB renewal, which will commence following expiry of the current NCIB, it is expected that the Company will be able to purchase up to 63,761,024 Common Shares, representing 10% of the total outstanding Common Shares as of November 22, 2021 , minus those Common Shares beneficially owned, or over which control or direction is exercised by the Company, the senior officers and directors of the Company and every shareholder who owns or exercises control or direction over more than 10% of the outstanding Common Shares, over a period of twelve months commencing after TSX approval. In accordance with TSX rules, any daily purchases, other than pursuant to a block purchase exception, on the TSX under the NCIB will be limited to a maximum 25% of the average daily trading volume on the TSX for the six months ended November 30, 2021 . Any Common Shares that are purchased under the NCIB will be cancelled.
The actual number of Common Shares that may be purchased and the timing of such purchases will be determined by the Company.
Under the Company's current NCIB that commenced on December 9, 2020 and which expires on December 8, 2021 , the Company previously sought and received approval from the TSX to purchase up to 63,682,170 Common Shares. As of November 22, 2021 , the Company has purchased 4,323,100 Common Shares under its current NCIB through open market transactions at a weighted average price of approximately C$11.25 per Common Share.
About Lundin Mining
Lundin Mining is a diversified Canadian base metals mining company with operations in Brazil , Chile , Portugal , Sweden and the United States of America , primarily producing copper, zinc, gold and nickel.
The information in this release is subject to the disclosure requirements of Lundin Mining under the EU Market Abuse Regulation. The information was submitted for publication, through the agency of the contact persons set out below on November 22, 2021 at 18:00 Eastern Time .
Other Information
The Technical Information in this press release has been prepared in accordance with NI 43-101 and has been reviewed and approved by Jeremy Weyland , P.Eng., Acting Vice President, Technical Services of the Company, a "Qualified Person" under NI 43-101. Mr. Weyland has verified the data disclosed in this release and no limitations were imposed on his verification process.
Historical Non-GAAP Measure Comparatives
Cash Cost – Year Ended December 31, 2020
| Operations | Candelaria | Chapada | Eagle | Neves-Corvo | Zinkgruvan | | | ($ thousands, unless otherwise noted) | (Cu) | (Cu) | (Ni) | (Cu) | (Zn) | Total | | Sales volumes (Contained metal in concentrate): | | | | | | | | Tonnes | 104,796 | 33,495 | 11,622 | 25,950 | 46,051 | | | Pounds (000s) | 231,035 | 73,844 | 25,622 | 57,210 | 101,525 | | | | | | | | | | | Production costs | | | | | | 996,246 | | Less: Royalties and other | | | | | | (42,695) | | | | | | | | 953,551 | | Deduct: By-product credits | (466,556) | | | | | | | Add: Treatment and refining charges | 86,367 | | | | | | | Cash cost | 368,583 | 76,527 | (39,260) | 116,351 | 51,161 | 573,362 | | Cash cost per pound ($/lb) | 1.60 | 1.04 | (1.53) | 2.03 | 0.50 | | | Cash cost is non-GAAP measure. See the Management's Discussion and Analysis for the year ended December 31, 2020, for discussion of non-GAAP measures. | | | | | | |