Base Metals

Throw Long: Lundin Updates Three-year Copper Guidance

Base Metals

Lundin has set its 2019 copper target between 199,000 and 218,000 tonnes, up 15 percent from its estimation a year ago.

Canada’s Lundin Mining (TSX:LUN) is projecting a 15 percent increase in copper production between 2019 and 2021, in an outlook that also included revisions to zinc and nickel output.

The company’s three-year operational outlook and update released on Thursday (November 29) provided an optimistic future for production across its combined copper assets, which according to projections, will increase production each of the next three years.

On top of year-on-year increases, the three-year forecast also comfortably increases the guidance from last year’s three-year outlook.

Lundin now projects its 2019 copper target to fall between 199,000-218,000 tonnes of copper, up from its estimation of 169,000-183,000 a year ago.

By 2021 it expects Candelaria to produce between 175,000-185,000 tonnes of copper compared to its 2018 guidance of 107,000-109,000 tonnes.

Credit was given to upgrades made at the mine, which has been posting improving production numbers through 2018. Early completion of the Eagle Nest mine (near the operational Eagle mine, due to deplete in 2024) in Michigan also added to the numbers, with first ore expected in Q4 of 2019.

The Candelaria complex is the largest copper asset owned by Lundin, accounting for over 60 percent of the copper produced by the company.

“Candelaria’s copper production profile has been improved and the mine life extended to 2040, increasing total production by approximately 740,000 tonnes (31 percent),” said Lundin.

“Candelaria’s copper production is now forecast to average approximately 180,000 tonnes per annum over the ten-year period 2019 through 2028.”

The company said Candelaria’s life-of-mine production plan included refinements to the open pit mine plan and extension of underground mine life.

Lundin acquired an 80-percent stake in Candelaria from American company Freeport-McMoRan (NYSE:FCX) in 2014 for US$1.8 billion. The remaining 20 percent is owned by Japanese conglomerate Sumitomo (TSE:8053).

Earlier this month, the company announced layoffs at the mine as it streamlined operations, prompting strikes by workers.

Lundin also increased its nickel production outlook in the report, projecting 16,000-19,000 tonnes in 2020 compared to 13,000-16,000 tonnes in the 2017 outlook, with production solely from Eagle and Eagle Nest.

Zinc on the other hand, has had its production outlook revised downward in 2019 due to the company’s zinc expansion project at its Neves-Corvo mine in Portugal, which will contribute to higher zinc production by 2020.

In 2019 Neves-Corvo will produce between 71,000-76,000 tonnes of zinc according to the 2018 outlook, compared to 88,000-93,000 projected in the 2017 outlook, though by 2020 the projection jumps to 120,000-130,000 tonnes, with full ramp-up achieved by 2021 and a target of 155,000-160,000 tonnes.

On Thursday, the company also announced its intention to make a normal course issuer bid for up to 63,718,842 common shares of its own stock — the maximum allowed — representing 10 percent of its shares.

On the TSX, Lundin was trading at C$5.71 as of 3 p.m. EST, up 5.94 percent.

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Securities Disclosure: I, Scott Tibballs, hold no direct investment interest in any company mentioned in this article.

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