Lundin tables metal forecasts, ups dividend by 50%

The crusher and process plant at the Fruta del Norte gold project in Ecuador. Source: Lundin Gold Inc.

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Lundin Mining Corp. [LUN-TSX; LUMI-Sweden] released metal production forecasts for the next three years while increasing its quarterly dividend by 50% to $0.06 per share.

The forecasts released after the closing on trading on November 30, 2020, come just days after unionized workers at the company’s Candelaria copper mine in Chile ratified a new 35-month collective agreement. It is a development that has allowed Lundin to ramp Candelaria back up to full capacity and reintroduce the asset into its annual production forecasts.

Lundin has operations in Chile, United States, Portugal, Sweden and Finland, primarily producing copper, nickel and zinc. Lundin also holds an indirect 24% equity stake in the Freeport Cobalt Oy business, which includes a cobalt refinery in Kokkala Finland.

With full year contributions from the Chapada copper-gold mine in Brazil and Candelaria mining complex in Chile, the company previously said copper production was expected to rise by over 20% in 2020 from 235,498 tonnes in 2019.

However, the company now says the previously provided 2020 production, cash cost and capital guidance for Candelaria should no longer be relied upon.

In its latest multi-year production forecasts, the company said consolidated copper production in the next three years (2021-2023) is expected to be 275,000-299,000 tonnes, 281,000-305,000 tonnes and 278,000-302,000 tonnes respectively.

In the same period, Lundin said consolidated zinc production is expected to be 141,000-151,000 tonnes, 183,000-198,000 and 221,000-236,000 tonnes respectively. The zinc production targets are below street forecasts due to a slower planned construction and ramp-up time line for the Neves-Corvo Zinc Expansion Project (ZEP) in Portugal. The ZEP is expected to restart in January, 2021.

Meanwhile, consolidated gold production over the next three years is expected to be 170,000-180,000, 162,000-172,000 and 175,000-185,000 ounces respectively.

Lundin shares declined on the news, falling 5.3% or 55 cents to $9.83 on volume 4.3 million. The shares are currently trading in a 52-week range of $10.43 and $4.08.

The company said copper production is forecast to increase over 25% in 2021, compared to the current 2020 guidance, primarily on increasing grades at Candelaria and full-year uninterrupted contributions from both Candelaria and Chapada.

Candelaria (owned 80% by Lundin and 20% by Sumitomo) is an open pit and underground mine, providing copper ore to an on-site processing plant with a capacity of 75,000 tonnes/day.

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