TORONTO, Nov. 30, 2020 /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 2021 through 2023, as well as cash cost,
capital and exploration expenditure forecasts for 2021. Candelaria
2020 guidance has been reintroduced and an update on the return to
full production capacity at Chapada provided. Additionally, the
Company announces an anticipated 50% increase in the quarterly
dividend and renewal of its Normal Course Issuer Bid ("NCIB"), both
pending final approvals as detailed herein.
- Copper production is forecast to increase over 25% in 2021,
compared to the current 2020 guidance, primarily on increasing
grades at Candelaria and full-year uninterrupted contributions from
both Candelaria and Chapada.
- Zinc production is forecast to increase 30% in 2022, over 2021,
as the Neves-Corvo Zinc Expansion Project ("ZEP") completes its
ramp up in the first half of that year. The ZEP is planned to
restart in January 2021.
- Nickel production is forecast to maintain current levels in
2021 before increasing over 10% in 2022 as higher-grade ore from
Eagle East contributes to the mill feed.
- Gold production is forecast to be 175,000 oz at the midpoint of
2021 guidance. Nearly 110,000 oz are unencumbered.
Production Outlook 2021 - 20231
|
|
2021
|
|
2022
|
|
2023
|
Copper
(t)
|
|
|
|
|
|
|
|
|
|
|
|
|
Candelaria (100%
basis)
|
172,000
|
-
|
182,000
|
|
180,000
|
-
|
190,000
|
|
180,000
|
-
|
190,000
|
|
Chapada
|
48,000
|
-
|
53,000
|
|
53,000
|
-
|
58,000
|
|
50,000
|
-
|
55,000
|
|
Eagle
|
17,000
|
-
|
20,000
|
|
15,000
|
-
|
18,000
|
|
12,000
|
-
|
15,000
|
|
Neves-Corvo
|
35,000
|
-
|
40,000
|
|
30,000
|
-
|
35,000
|
|
33,000
|
-
|
38,000
|
|
Zinkgruvan
|
3,000
|
-
|
4,000
|
|
3,000
|
-
|
4,000
|
|
3,000
|
-
|
4,000
|
|
Total
Copper
|
275,000
|
-
|
299,000
|
|
281,000
|
-
|
305,000
|
|
278,000
|
-
|
302,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Zinc
(t)
|
|
|
|
|
|
|
|
|
|
|
|
|
Neves-Corvo
|
70,000
|
-
|
75,000
|
|
115,000
|
-
|
125,000
|
|
145,000
|
-
|
155,000
|
|
Zinkgruvan
|
71,000
|
-
|
76,000
|
|
68,000
|
-
|
73,000
|
|
76,000
|
-
|
81,000
|
|
Total
Zinc
|
141,000
|
-
|
151,000
|
|
183,000
|
-
|
198,000
|
|
221,000
|
-
|
236,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gold
(oz)
|
|
|
|
|
|
|
|
|
|
|
|
|
Candelaria (100%
basis) 2
|
95,000
|
-
|
100,000
|
|
95,000
|
-
|
100,000
|
|
110,000
|
-
|
115,000
|
|
Chapada
|
75,000
|
-
|
80,000
|
|
67,000
|
-
|
72,000
|
|
65,000
|
-
|
70,000
|
|
Total
Gold
|
170,000
|
-
|
180,000
|
|
162,000
|
-
|
172,000
|
|
175,000
|
-
|
185,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nickel
(t)
|
|
|
|
|
|
|
|
|
|
|
|
|
Eagle
|
15,000
|
-
|
18,000
|
|
17,000
|
-
|
20,000
|
|
13,000
|
-
|
16,000
|
|
Total
Nickel
|
15,000
|
-
|
18,000
|
|
17,000
|
-
|
20,000
|
|
13,000
|
-
|
16,000
|
________________________________
|
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.
|
Candelaria 2020 Guidance & Chapada Update
- Candelaria: Collective agreements have now been reached
with all five unions representing employees at the Candelaria
Copper Mining Complex in Chile.
Ramp up of the operation to full capacity is underway and is
anticipated to be achieved in the coming weeks. Installation of the
fourth, more powerful, ball mill motor as part of the Candelaria
Mill Optimization Project ("CMOP") has been pulled forward and is
to be complete in December 2020.
Following installation, the CMOP will be 100% complete.
With these considerations,
reintroduced 2020 copper production guidance is for
120,000-125,000 t at a cash cost of $1.50/lb. Cash cost guidance is net of credits
from forecast gold production of 70,000-75,000 oz, and
includes expenses related to the strike and period of reduced
operations. Full year 2020 capital expenditures are expected
to be $225 million, of which
$45 million is forecast for the
fourth quarter.
- Chapada: A return to full production capacity in
December 2020 remains on track. The
plant achieved approximately 35% of nameplate capacity while
operating only the SAG mill. Throughput has further improved since
mid-November with the temporary installation of a motor generously
loaned from Samarco Mineração S.A. on the ball mill.
The first repaired motor is
expected to be on site this week and a second motor is anticipated
in mid-December. A step-change increase to full production capacity
is expected once these two motors are available and installed.
Chapada 2020 production guidance
remains 45,000-50,000 t of copper and 80,000-85,000 oz of
gold.
Production Outlook 2021 - 2023
- Candelaria: Copper production for the next three years
is forecast to increase over that of 2020 primarily on improving
copper head grades and achievement of planned processing rates as
the benefits of reinvestment initiatives completed over the last
several years are realized. Refinement to mine phasing and
operating plans have revised forecast 2021 copper and gold, and
2022 gold, production compared to the prior outlook.
Copper production is forecast to
be 172,000-182,000 t in 2021, a near 45% increase over forecast
2020 production. Production is to further increase to
180,000-190,000 t of copper in 2022 and maintain this level
in 2023. Over the next ten years copper production is forecast
to average nearly 180,000 tpa.
Candelaria's gold production is
forecast to be 95,000-100,000 oz in 2021 and 2022, nearly a 35%
increase over the forecast for 2020. Gold production is to further
increase in 2023 to 110,000-115,000 oz, averaging nearly
100,000 oz per annum over the next ten years.
- Chapada: Forecast copper and gold production are
generally consistent with the prior outlook. There have been minor
revisions on refinement of near-term operating plans. Production
expectations are based on the current 24 Mtpa throughput capacity
with annual changes driven primarily by the forecast grade
profile.
Copper production is forecast to
increase over 5% in 2021 to 48,000-53,000 t. Copper production is
to further increase over 10% to 53,000-58,000 t in 2022, before
reducing modestly to 50,000-55,000 t in 2023.
Chapada's gold production is
forecast to be 75,000-80,000 oz in 2021, 5,000 oz more than
the prior outlook for the year. Gold production is then forecast to
modestly decline in 2022 and 2023 on the expected grade profile.
All of Chapada's gold production remains unencumbered and receives
full market pricing.
- Eagle: Nickel production is forecast to be 15,000-18,000
t in 2021, consistent with the prior outlook as Eagle East ore
comprises the majority of the mill feed. Nickel production is
forecast to increase 12% in 2022 to 17,000-20,000 t before
declining to 13,000-16,000 t in 2023 on nickel grades.
Eagle's copper production is
forecast to be 17,000-20,000 t in 2021, a 22% increase over the
prior outlook. Similar to nickel, as Eagle East ore grades begin to
decline, forecast copper production is anticipated to be
15,000-18,000 t in 2022 and 12,000-15,000 t in
2023.
- Neves-Corvo: The ZEP is planned to restart in
January 2021. Plans are to mobilize a
smaller number of contractors with an extended schedule to advance
the project given the current safety requirements for social
distancing and other personnel limitations to safeguard and protect
the workforce and local communities from the spread of COVID-19.
Forecast zinc and copper production over the three-year outlook
reflect this approach.
Zinc production in 2021 is
forecast to be 70,000-75,000 t as the ZEP construction is to
be completed in stages over the course of the year with production
ramp up planned to commence in the fourth quarter. Zinc production
is forecast to increase 66% in 2022 to 115,000-125,000 t as
production ramp up 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 145,000-155,000
t.
Copper production over the outlook
period has been revised on refinement of the near-term mine plan,
impacting the forecast copper head grade.
- Zinkgruvan: Forecast zinc and copper production for 2021
and 2022 are generally consistent with the prior outlook with minor
revision on refinement of operating plans. Zinc production is
forecast to increase in 2023, compared to current and 2021-2022
levels, with planned mining of higher-grade orebodies.
2021 Cash Cost Guidance3
C1 Cash
Cost3
|
2021
|
Copper
|
|
|
Candelaria
|
$1.35/lb4
|
|
Chapada
|
$1.10/lb
|
|
Neves-Corvo
|
$2.20/lb
|
|
|
|
Zinc
|
|
|
Zinkgruvan
|
$0.65/lb
|
|
|
|
Nickel
|
|
|
Eagle
|
$0.50/lb
|
- Candelaria's C1 cash costs are expected to reduce
year-on-year to $1.35/lb4 copper in 2021,
after by-product credits. By-product credits have been adjusted for
the terms of the streaming agreement.
- At Chapada, C1 cash costs are expected to approximate
$1.10/lb copper in 2021 after
significant gold by-product credits. Effects of copper stream
agreements are reflected in the realized copper revenue.
- Eagle is expected to maintain the first quartile C1 cash
costs of $0.50/lb nickel in 2021,
after by-product credits, as higher grades from Eagle East reduce
per pound unit costs.
- At Neves-Corvo, C1 cash costs for 2021 are expected to
approximate $2.20/lb copper, after
zinc and lead by-product credits.
- Zinkgruvan's C1 cash costs for 2021 are expected to
approximate $0.65/lb zinc after
copper and lead by-product credits.
2021 Capital Expenditure Guidance
- Capital expenditures in 2021 are forecast to be $610 million on a 100% basis, which
includes:
Capital
Expenditures ($
millions)5
|
2021
|
Sustaining
Capital
|
|
|
Candelaria (100%
basis)
|
345
|
|
Chapada
|
65
|
|
Eagle
|
15
|
|
Neves-Corvo
|
65
|
|
Zinkgruvan
|
50
|
|
Total Sustaining
Capital
|
540
|
|
|
|
Zinc Expansion
Project (Neves-Corvo)
|
70
|
|
|
|
Total Capital
Expenditures
|
610
|
_____________________
|
3
|
C1 cash costs are
based on various assumptions and estimates, including, but not
limited to: production volumes, as noted above, commodity prices
(2021 - Cu: $2.95/lb, Zn: $1.00/lb, Pb: $0.85/lb, Au: $1,700/oz:
Ag: $16.00/oz) foreign currency exchange rates (2021 - €/USD:1.20,
USD/SEK:8.50, CLP/USD:675, USD/BRL:4.75) and operating costs. All
figures in are in US$ unless otherwise noted.
|
4
|
68% of Candelaria's
total gold and silver production are subject to a streaming
agreement and as such C1 cash costs are calculated based on receipt
of $416/oz and $4.16/oz, respectively, on gold and silver sales in
the year.
|
5
|
Forecast capital
expenditures have been reported on a cash basis. Discrepancies may
exist with other external reports which have been reported on an
accrual basis.
|
- Candelaria: Capital expenditures at Candelaria are
forecast to total $345 million in
2021. Capitalized waste stripping expenditures are estimated to be
$160 million, with capital
expenditures on underground mine development, equipment and
infrastructure to be $80 million.
Capital expenditures on the Los Diques Tailings Storage Facility
("TSF") are estimated to be $35
million.
- Chapada: Capital expenditures at Chapada are estimated
to total $65 million in 2021 which
include $20 million for capitalized
waste stripping, $10 million for
mobile equipment and $15 million for
TSF and water management systems.
- Eagle: At Eagle, 2021 capital expenditures are estimated
to total $15 million. Approximately
half is for underground mine equipment and development, with the
remaining for the mill water treatment plant sustaining
initiatives.
- Neves-Corvo: Capital expenditures are estimated to total
$135 million in 2021, of which
$70 million is expansionary capital
for the ZEP. The $65 million of
estimated sustaining capital expenditures are primarily for
underground mine development and mobile equipment. $10 million is to be spent on water initiatives
and tailings dam expansion works.
Restart of the ZEP is on track for
January 2021. The pre-production
capital cost estimate of $430M
(€360M) remains unchanged. Current plans call for mobilization of a
smaller number of contractors with an extended schedule. A further
$30 million of expansionary capital
is forecast for 2022, reflecting timing of payments, to complete
the project.
- Zinkgruvan: At Zinkgruvan, sustaining capital
expenditures are estimated to total $50
million in 2021. Approximately $25M is for underground development with the
remaining for in-fill drilling and improvement initiatives.
2021 Exploration Investment Guidance
Exploration expenditures are planned to be $40 million in 2021. Approximately $32 million will be spent supporting significant
in-mine and near-mine targets at our operations ($14 million at Candelaria, $6 million at Zinkgruvan, $8 million at Chapada, and $4 million at
Neves-Corvo). The remaining $8
million is planned to advance activities on exploration
stage and new business development projects.
Shareholder Returns Update
Anticipated 50% Dividend Increase
A 50% increase in the quarterly dividend to C$0.06 per common share of the Company ("Common
Shares"), or C$0.24 on an annualized
basis, is anticipated to be declared with the release of 2020
full-year financial results in February 2021 pending approval
by the Company's Board of Directors.
The anticipated increase is consistent with Lundin Mining's
strategy of providing leading returns for our shareholders
throughout the cycle. This expected increase reflects the strong
free cashflow outlook from the Company's current operations. Lundin
Mining is well positioned to enhance shareholder returns with a
progressive regular dividend, while maintaining balance sheet
strength and investing in disciplined growth.
The dividend policy will continue to undergo periodic review by
Lundin Mining management and the Board of Directors and may change
at any time depending on the Company's earnings, financial
requirements and other factors existing at the time.
Normal Course Issuer Bid Renewal
Lundin Mining intends to renew its NCIB to purchase up to
63,682,170 Common Shares on the Toronto Stock Exchange (the "TSX").
The Company intends to continue to utilize the NCIB at its
discretion to make opportunistic purchases to create shareholder
value and 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 63,682,170 Common Shares, representing 10%
of the total outstanding Common Shares as of November 30, 2020, 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, 2020.
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, 2019 and which expires on
December 8, 2020, the Company
previously sought and received approval from the TSX to purchase up
to 63,707,653 Common Shares. As of November
30, 2020, the Company has purchased 2,212,600 Common Shares
under its current NCIB through open market transactions at a
weighted average price of approximately C$6.69 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 30, 2020 at 17:30
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 Stephen Gatley, BSc
(Eng), CENG MIMMM, Vice President - Technical Services of the
Company, a "Qualified Person" under NI 43-101. Mr. Gatley has
verified the data disclosed in this presentation and no limitations
were imposed on his verification process.
Cautionary Statement on Forward-Looking Information
Certain of the statements made and information contained
herein is "forward-looking information" within the meaning of
applicable Canadian securities laws. All statements other than
statements of historical facts included in this document constitute
forward-looking information, including but not limited to
statements regarding the Company's plans, prospects and business
strategies; the Company's guidance on the timing and amount of
future production and its expectations regarding the results of
operations; expected costs; permitting requirements and timelines;
timing and possible outcome of pending litigation or labour
disputes; timing for any required repairs and resumption of any
interrupted operations; the results of any Feasibility Study, or
Mineral Resource and Mineral Reserve estimations, life of mine
estimates, and mine and mine closure plans; anticipated market
prices of metals, currency exchange rates, and interest rates; the
development and implementation of the Company's Responsible Mining
Management System; the Company's ability to comply with contractual
and permitting or other regulatory requirements; anticipated
exploration and development activities at the Company's projects;
and the Company's integration of acquisitions and any anticipated
benefits thereof. Words such as "believe", "expect", "anticipate",
"contemplate", "target", "plan", "goal", "aim", "intend",
"continue", "budget", "estimate", "may", "will", "can", "could",
"should", "schedule" and similar expressions identify
forward-looking statements.
Forward-looking information is necessarily based upon various
estimates and assumptions including, without limitation, the
expectations and beliefs of management, including that the Company
can access financing, appropriate equipment and sufficient labour;
assumed and future price of copper, nickel, zinc, gold and other
metals; anticipated costs; ability to achieve goals; the prompt and
effective integration of acquisitions; that the political
environment in which the Company operates will continue to support
the development and operation of mining projects; and assumptions
related to the factors set forth below. While these factors and
assumptions are considered reasonable by Lundin Mining as at the
date of this document in light of management's experience and
perception of current conditions and expected developments, these
statements are inherently subject to significant business, economic
and competitive uncertainties and contingencies. Known and unknown
factors could cause actual results to differ materially from those
projected in the forward-looking statements and undue reliance
should not be placed on such statements and information. Such
factors include, but are not limited to: volatility and
fluctuations in metal and commodity prices; global financial
conditions and inflation; risks inherent in mining including but
not limited to risks to the environment, industrial accidents,
catastrophic equipment failures, unusual or unexpected geological
formations or unstable ground conditions, and natural phenomena
such as earthquakes, flooding or unusually severe weather;
uninsurable risks; changes in the Company's share price, and
volatility in the equity markets in general; the threat associated
with outbreaks of viruses and infectious diseases, including the
novel COVID-19 virus; risks related to negative publicity with
respect to the Company or the mining industry in general; reliance
on a single asset; potential for the allegation of fraud and
corruption involving the Company, its customers, suppliers or
employees, or the allegation of improper or discriminatory
employment practices, or human rights violations; actual ore mined
and/or metal recoveries varying from Mineral Resource and Mineral
Reserve estimates, estimates of grade, tonnage, dilution, mine
plans and metallurgical and other characteristics; risks associated
with the estimation of Mineral Resources and Mineral Reserves and
the geology, grade and continuity of mineral deposits including but
not limited to models relating thereto; ore processing efficiency;
risks inherent in and/or associated with operating in foreign
countries and emerging markets; security at the Company's
operations; changing taxation regimes; health and safety risks;
exploration, development or mining results not being consistent
with the Company's expectations; unavailable or inaccessible
infrastructure and risks related to ageing infrastructure;
counterparty and credit risks and customer concentration; risks
related to the environmental regulation and environmental impact of
the Company's operations and products and management thereof;
exchange rate fluctuations; reliance on third parties and
consultants in foreign jurisdictions; community and stakeholder
opposition; civil disruption; the potential for and effects of
labour disputes or other unanticipated difficulties with or
shortages of labour or interruptions in production; uncertain
political and economic environments; litigation; regulatory
investigations, enforcement, sanctions and/or related or other
litigation; risks associated with the structural stability of waste
rock dumps or tailings storage facilities; changes in laws,
regulations or policies including but not limited to those related
to mining regimes, permitting and approvals, environmental and
tailings management, labour, trade relations, and transportation;
climate change; compliance with environmental, health and safety
laws; enforcing legal rights in foreign jurisdictions; information
technology and cybersecurity risks; estimates of future production
and operations; estimates of operating, cash and all-in sustaining
cost estimates; delays or the inability to obtain, retain or comply
with permits; compliance with foreign laws; risks related to mine
closure activities and closed and historical sites; challenges or
defects in title; the price and availability of key operating
supplies or services; historical environmental liabilities and
ongoing reclamation obligations; indebtedness; funding requirements
and availability of financing; liquidity risks and limited
financial resources; risks relating to attracting and retaining of
highly skilled employees; risks associated with acquisitions and
related integration efforts, including the ability to achieve
anticipated benefits, unanticipated difficulties or expenditures
relating to integration and diversion of management time on
integration; the estimation of asset carrying values; internal
controls; competition; dilution; existence of significant
shareholders; conflicts of interest; activist shareholders and
proxy solicitation matters; risks relating to dividends; risks
associated with business arrangements and partners over which the
Company does not have full control; and other risks and
uncertainties, including but not limited to those described in the
"Risks and Uncertainties" section of the Annual Information Form
and the "Managing Risks" section of the Company's MD&A for the
year ended December 31, 2019 and the
quarter ended September 30, 2020,
which are available on SEDAR at www.sedar.com under the Company's
profile. All of the forward-looking statements made in this
document are qualified by these cautionary statements. Although the
Company has attempted to identify important factors that could
cause actual results to differ materially from those contained in
forward-looking information, there may be other factors that cause
results not to be as anticipated, estimated, forecast or intended
and readers are cautioned that the foregoing list is not exhaustive
of all factors and assumptions which may have been used. Should one
or more of these risks and uncertainties materialize, or should
underlying assumptions prove incorrect, actual results may vary
materially from those described in forward-looking information.
Accordingly, there can be no assurance that forward-looking
information will prove to be accurate and forward-looking
information is not a guarantee of future performance. Readers are
advised not to place undue reliance on forward-looking information.
The forward-looking information contained herein speaks only as of
the date of this document. The Company disclaims any intention or
obligation to update or revise forward–looking
information or to explain any material difference between such and
subsequent actual events, except as required by applicable
law.
SOURCE Lundin Mining Corporation