Lundin 2018 copper output drops, zinc ticks higher

Canada-based Lundin Mining's copper and nickel production fell in 2018, while zinc output edged higher.

Lundin's copper production totaled 199,630t in 2018, down by 17pc from 2017. A 36pc rise in production to 45,692t at its second-largest copper mine, Neves-Corvo in Portugal, was offset by a 27pc drop to 134,578t at Candelaria in Chile, Lundin's largest copper mine. The decreased production at Candelaria primarily resulted from mill maintenance and the planned processing of lower-grade material from the open pit and stockpiles. Ore grade is expected to improve in the second half of 2019 relative to the first, Lundin said.

Lundin's Candelaria optimization project completed the year on track at 40pc complete. The ramp-up of the site's underground mine continues, with the south sector progressing ahead of schedule, possibly advancing production start up to the end of 2019. Lundin expects copper production in 2019 of 199,000-218,000t.

Total zinc production was up by almost 2pc from the prior year 152,041t. A 6pc increase in output at Neves-Corvo to 75,435t offset a 2pc drop at Zinkgruvan in Sweden to 76,606t. At Neves-Corvo, an ongoing expansion project ongoing will more than than double zinc mining and processing capacity from 1.2mn t/yr to 2.5mn t/yr upon completion in the first quarter of 2020.

In 2019, zinc production is expected to be 147,000-157,000t.

Nickel output the Eagle mine in Michigan reached 17,573t in 2018, a 20pc drop from 2017 but exceeding Lundin's 15,000-17,000t guidance. Nickel production is expected to fall in 2019 to 12,000-15,000t, but should begin to rebound in the fourth quarter once higher grades from Lundin's Eagle East expansion are mined.

Lundin's attributable profits fell by nearly half on the year to $196mn and by 80pc year over year in the fourth quarter to $29mn on lower sales volumes and prices.

Copper sales volumes fell by 15pc to 195,220t in 2018 from 2017, while nickel sales dropped by 20pc to 15,151t. Zinc sales edged down to 124,072t in 2018 from 125,055t a year prior. Lower sales volumes contributed to increased unit costs.

Lundin's realized prices for copper and zinc both fell in 2018. The realized price for copper in 2018 was $2.79/lb of payable metal, compared to $2.98/lb in 2017, while the zinc price fell to $1.25/lb from $1.37/lb in 2017. The realized cost for nickel rose by 17pc to $5.64/lb from $4.84/lb of payable metal.

Copper cash costs at Candelaria climbed by 38pc to $1.68/lb produced from $1.22/lb in 2017, while costs at Neves-Corvo rose by 46pc to $1.28/lb from $0.88/lb. Similarly, zinc cash costs at Zinkgruvan ticked up to 34¢/lb produced from 31¢/lb in 2017. Nickel cash costs also rose by 10pc to $1.01/lb produced from 93¢/lb.

Lundin chief executive Marie Inkster said most major expansion project costs would be behind the company after 2019 and that growing production would help generate cash flow to fund them.