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2021-11-22

Lundin Mining Corporation: Lundin Mining Provides Operational Outlook & Update

Toronto, November 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 85,000oz, 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 155,000 - 165,000 150,000 - 160,000 165,000 - 175,000
(100% basis)
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 83,000 - 88,000 90,000 - 95,000 93,000 - 98,000
(100%
basis) (2)
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 Phase11.

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 8Mtpa 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 83,000-88,000oz 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 70,000-75,000oz 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 outlook3, while copper production guidance is consistent for 2022 and for 2023.

Eagle's nickel production is forecast to be 15,000-18,000t 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 outlook3, 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 outlook3, 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 110,000-120,000t, 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 outlook3, 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 Guidance4, 5

[][]
Cash Cost4 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/lb6 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 ...

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