Lundin reports significant Q4 loss as low prices force asset impairments

TORONTO (miningweekly.com) – Canadian diversified miner Lundin Mining on Monday reported a $377.7-million, or $0.52 a share, fourth-quarter net loss, on the back of a significant decline in metal prices, which forced the company to book impairments on several assets.

The net loss compared with a profit of $36.6-million, or $0.04 a share, in the comparable period ended December 2014.

The TSX-listed company advised that it had booked an after-tax impairment charge of $278-million, or $0.39 a share, as short-term metal prices negatively impacted the estimated net recoverable values of its operating assets and exploration properties.

Sales fell almost 29% year-on-year to $316-million for the three-month period, but increased nearly 80% for the full year to $1.7-billion, as the company included full-year operating results from the Candelaria mine, in Chile, and the Eagle mine, in the US.

This was partially offset by lower realised metal prices and price adjustments from Lundin’s European operations. Average London Metal Exchange prices for copper fell 20% in 2015, while nickel prices fell 30% and zinc 11%.

On the positive side, president and CEO Paul Conibear pointed out that, for 2015, the company had generated the highest cash flow in the company's history.

“With all of our operations achieving or exceeding their annual production guidance and continuing to generate robust margins, the company has been able to further improve its strong financial position despite the current commodity price environment. As we progress through 2016 and beyond, we intend to maintain our focus on consistent high performance of our operations, which are capable of providing positive margins at current metal prices, and disciplined capital investment, contributing to preservation of a healthy balance sheet,” he said.

During 2015, the company had managed to pay back $387.9-million in debt, reducing its net debt position to $458-million.

For 2016, the company expected attributable production of 245 000 t to 259 000 t of copper, at cash costs of $1.32/lb. Nickel output was expected to reach 21 000 t to 24 000 t, at $2.25/lb, and zinc output 145 000 t to 155 000 t at cash costs of $0.45/lb.