Lundin affected by low price environment, reports second-quarter loss

JOHANNESBURG (miningweekly.com) – Canadian base metals company Lundin Mining has reported a net loss attributable to shareholders of $791.2-million for the quarter ended June 30.

The loss included a $772.1-million asset impairment on the company's 24% interest in the Democratic Republic of Congo-based Tenke Fungurume copper/cobalt project.

Lundin attributed this loss to the negative impact of a lower metal price environment.

Cash flows of $153.2-million were generated from operations in the quarter, excluding the company's attributable cash flows from Tenke Fungurume.

Operating earnings for the period under review were $134.5-million, a decrease of $108.5-million compared with the $243-million earned in the second quarter of 2015.

The decrease was primarily owing to lower metal prices, net of price adjustments and lower sales volumes.

On a year-to-date basis, operating earnings were $286.3-million, a decrease of $230.7-million compared with the $517-million earned in the first six months of 2015.

“As we progress through 2016 and beyond, we intend to maintain focus on consistent high performance at our operations, cost efficiencies, capital discipline, and brownfields growth available at each of our operations,” said CEO Paul Conibear.

CANDELARIA
The company’s 80% owned Candelaria operations, located in Chile, produced 36 907 t of copper, 345 000 oz of silver and 22 000 oz of gold in concentrate.

Copper production was 21% lower than the previous year’s comparable period owing to lower head grades and recoveries.

Copper cash costs of $1.28/lb for the quarter were marginally higher than the prior year’s comparable quarter, but better than full-year guidance owing to cost reduction plans, operational efficiencies, lower electricity and diesel prices, increased productivity, and higher sales volumes.

EAGLE
The company’s Eagle mine, located in Michigan, in the US, produced 6 812 t of nickel and 5 639 t of copper in the current quarter, higher than the prior year’s comparable period for both metals, owing to higher head grades and recoveries.

Nickel cash costs of $1.75/lb for the quarter were lower than the comparable period in 2015, owing largely to cost-control measures, excellent nickel and copper production results and lower treatment costs.

NEVES-CORVO
The Neves-Corvo mine, in Portugal, produced 12 146 t of copper and 18 272 t of zinc in the second quarter.

Copper production was lower than the prior year’s comparable period, as a result of lower mill throughput and recoveries, while zinc production in the quarter exceeded the prior year’s comparable period, as a result of higher throughput, grades and recoveries.

Zinc plant operations exceeded expectations in the year to date with stable, better-than-expected zinc recoveries.

ZINKGRUVAN
Zinc and lead production at Lundin’s Sweden-based mine in the second quarter of 2016 were 19% and 4% lower, respectively, than the comparable period in 2015, partially owing to lower throughput as a result of harder ore milled and lower zinc head grades in the current period.

Cash costs for zinc of $0.34/lb for the quarter were better than both the prior year’s comparable period and previous guidance, owing primarily to higher by-product credits.

TENKE FUNGURUME
Lundin's attributable share of second-quarter production at Tenke Fungurume included 13 300 t of copper cathode and 1 033 t of cobalt in hydroxide. The company's attributable share of sales included 13 539 t of copper at an average realised price of $2.07/lb and 1 011 t of cobalt at an average realised price of $6.58/lb.