Lundin Mining reports 2022 copper production and 2023 guidance

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Lundin Mining Corp. [LUN-TSX; LUMI-Nasdaq Stockholm] reported production results for the year ended December 31, 2022 and has provided production guidance for the three-year period of 2023 through 2025, as well as cash cost, capital and exploration expenditure forecasts for 2023. All figures are in US$.

2022 Production Highlights: Guidance was substantially achieved on a consolidated basis for copper, nickel, and gold. Nickel and gold production achieved the top end of the guidance ranges. 2022 consolidated copper production was approximately 250,000 t, and total copper-equivalent consolidated production was over 390,000 t.

Candelaria copper production of 152,042 t was modestly below guidance, while gold production of 86,000 oz achieved the top end of the guidance range. Chapada copper production of 45,739 t achieved guidance and gold production of 68,000 oz exceeded the top end of the guidance range. Eagle nickel production of 17,475 t and copper production of 15,895 t both achieved guidance.

Three-Year Production Outlook: Copper production is forecast to be 236,000-260,000 t on a consolidated basis in 2023. Higher consolidated copper production of 256,000-280,000 t is forecast for 2024 due mainly to mine sequencing and the planned copper grade profile at Candelaria.

Zinc production is forecast to increase to 180,000-195,000 t on a consolidated basis in 2023, increasing further over the three-year period to reach 225,000-240,000 t in 2025. The increasing zinc production profile is primarily due to the ramp up of the Neves-Corvo Zinc Expansion Project (ZEP), which is expected to consistently achieve nameplate capacity during 2024.

Consolidated gold production is forecast to be 140,000-150,000 oz in 2023 and to be relatively constant through the three-year outlook period. Nickel production is to be 13,000-16,000 t in 2023 and to moderate over the three-year period driven by the planned mine sequencing and nickel grade as the Eagle East and Upper Keel orebodies at Eagle are mined.

2023 Cash Cost Guidance: Candelaria cash cost is forecast to be $1.80/lb – $1.95/lb of copper, after by-product credits. The cash cost is expected to benefit from an approximately 50% reduction in electricity rates as a new Power Purchase Agreement (PPA) commenced at the beginning of the year. The PPA also ensures a minimum of 80% renewables in the energy mix, prioritizing wind and solar. By-product credits have been adjusted for the terms of the streaming agreement.

Chapada cash cost is forecast to be $2.55/lb – $2.75/lb of copper in 2023, after unencumbered gold by-product credits. The forecast increase in Chapada’s cash costs compared to 2022 reflects mainly higher consumable costs and lower production volumes. Effects of copper stream agreements are reflected in the realized copper revenue.

Eagle: cash cost is forecast to be $1.50/lb – $1.65/lb of nickel in 2023, after by-product copper credits. The forecast increase compared to 2022 is primarily a reflection of planned lower production volumes.

Neves-Corvo: cash cost is forecast to be $2.10/lb – $2.30/lb of copper in 2023, after zinc and lead by-product credits. The cash cost is expected to continue to improve as zinc and lead production volumes increase.

Zinkgruvan: cash cost is forecast to be $0.60/lb – $0.65/lb of zinc, after copper and lead by-product credits, consistent with 2022 levels. 2023 Capital Expenditure Guidance

Capital expenditures are forecast to total $1,100 million on a 100% basis, including expansionary capital expenditures on the Josemaria Project.

A total of 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 $425/oz and $4.25/oz, respectively, on gold and silver sales in the year.

Candelaria: Capital expenditures at Candelaria in 2023 are forecast to total $400 million. Of this, capitalized waste stripping is forecast to be $185 million, and underground mine development, including ramp works, to be approximately $55 million.

Chapada: Capital expenditures at Chapada in 2023 are forecast to total $70 million. This includes approximately $25 million for capitalized waste stripping, $15 million for TSF and water management systems, and $5 million for mine and mobile equipment.

Eagle: Capital expenditures at Eagle in 2023 are forecast to total $20 million in 2023, composed of underground mine development, of which approximately $8 million is for development of the Upper Keel zone, and for mine and mill sustaining initiatives.

Neves-Corvo: Capital expenditures at Neves-Corvo in 2023 are estimated to total $130 million in 2023. Approximately $50 million is forecast for underground mine development, including infill drilling, $60 million for projects to enable ZEP to consistently achieve nameplate capacity, and $10 million for mine and mobile equipment.

Zinkgruvan: Capital expenditures at Zinkgruvan are forecast to total $70 million in 2023, of which approximately $35 million is for underground development, including development of the Dalby orebody. Expenditure on the sequential flotation project, to improve concentrate grades and metal recovery rates, is forecast to be $8 million.

Josemaria Project: Capital expenditures are estimated to be approximately $400 million in 2023 in support of advancing the project prior to a potential construction decision.

Exploration expenditures are planned to be $45 million in 2023 primarily for in-mine and near-mine targets at our operations. The largest portion of the planned expenditure is to be at Candelaria and Chapada with the remaining operations and new business development activities comprising the balance.

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