Lundin ups Candelaria resources; sticks with Nevsun offer

Lundin Mining Corp. [LUN-TSX; LUMI-Sweden] has announced a 27% increase in mineral reserves and a 20% hike in contained copper at its flagship Candelaria mine in Chile.

Total estimated measured and indicated mineral resources at Candelaria have jumped 29% to 952.5 million tonnes at 0.65% copper, from 740.9 million tonnes at 0.70% copper on June 30, 2017. This increase reflects the continued success of the exploration campaigns both in the underground mines and at the newly discovered Espanola surface deposit, which contains an estimated measured and indicated resource of 51.4 million tonnes at 0.41% copper.

Lundin is a diversified Canadian base metals mining company with operations in Chile, the United States, Portugal and Sweden, primarily producing copper, nickel and zinc. In addition, Lundin holds an indirect 24% equity stake in the Freeport Cobalt Oy business, which includes a cobalt refinery located in Kokkola, Finland.

On Friday, Lundin shares advanced on the news, rising 1.29% or $0.08 to $6.28.

The Candelaria Copper Mining Complex consists of two adjacent copper mining operations, including Candelaria and Ojos del Salado, that produce copper concentrates from an open pit and underground mines. The complex is indirectly owned by Lundin Mining with an 80% stake, and Sumitomo Corp. of Japan, which has 20%.

Lundin acquired its ownership interest from Freeport-McMoRan Inc. [FCX-NYSE] in 2014.

Candelaria is expected to produced 130,000-136,250 tonnes of copper at a cash cost of US $1.70 a pound this year.

The complex is located in Chile’s Atacama Region, at an elevation of 650 metres above sea level and 20 km south of Copiapo, a city with a population of 160,000.

The Candelaria underground total mineral reserve estimate is now 10 times the size of that at acquisition, “allowing us to extend underground mine lives and to further enhance medium and long-term copper output,” the company said.

Total estimated Candelaria underground proven and probable mineral reserves now stand at 1,340 million tonnes at 0.85% copper. This is a further significant increase of approximately 50% or 44.7 million tonnes over last year’s estimate, and reflecting continued exploration success in all the underground mines and particularly in the Candelaria North Sector.

Lundin also said it has elected not to amend the terms of a $1.4 billion ($4.75 per share) takeover offer for Nevsun Resources Ltd. [NSU-TSX, NYSE AMERICAN].

Nevsun rejected the offer from Lundin and has since entered a definitive agreement with China’s Zijin Mning, which has pledged to acquire all of the outstanding shares of Nevsun for $1.86 billion or $6 a share. Lundin is not withdrawing the offer, which was announced on July 26, 2018, in case the offer from Zijin fails, analysts say.