Lundin Mining Provides Operational Outlook & Shareholder Returns Update

Toronto, November 26, 2019 /CNW/ (TSX: LUN; Nasdaq Stockholm: LUMI) Lundin Mining Corporation (“Lundin Mining” or the “Company”) provides the following production guidance for the three-year period of 2020 through 2022, as well as cash cost, capital and exploration expenditure forecasts for 2020. Additionally, the Company announces an anticipated 33% increase in the quarterly dividend and renewal of its Normal Course Issuer Bid (“NCIB”), both pending final approvals as detailed herein.

• Copper production is forecast to increase over 20% in 2020, compared to 2019, with full-year contributions from Chapada and higher grades at Candelaria. The three-year outlook has improved primarily on the inclusion of the Chapada copper-gold mine, as well as refinement of Candelaria’s production profile.
  
  
• Zinc production is forecast to increase over 15% in 2020, compared to 2019. The Neves-Corvo Zinc Expansion Project (ZEP) continues to advance on schedule for phased ramp-up in 2020. Zinc production is forecast to increase a further 30% in 2021, over 2020, with a full-year contribution from the ZEP.
  
  
• Nickel production is forecast to increase over 25% in 2020, compared to 2019, and remain at this increased level over the three-year period as higher-grade ore from Eagle East contributes to the mill feed.

Production Outlook 2020 - 2022 [1]

[1] Production guidance is based on certain estimates and assumptions, including but not limited to: Mineral Resources and Mineral Reserves, geological formations, grade and continuity of deposits and metallurgical characteristics.

[2] 68% of Candelaria’s total gold and silver production are subject to a streaming agreement.

• Candelaria: Copper production is forecast to increase over the next two years, primarily on improving copper head grade and as the benefits of reinvestment initiatives undertaken the last two years are realized. At the midpoint of the guidance range, copper production is forecast to increase by 20,000 t (13%) year-over-year in 2020 and by a further 20,000 t (12%) in 2021. Refinement to mine phasing and operating plans have increased forecast 2021 copper production by 10,000 t (6%) over the prior outlook. Copper production is forecast to average approximately 180,000 tpa over the ten-year period 2020 through 2029.
  
  
• Chapada: The three-year production outlook is based on the NI 43-101 Technical Report on the Chapada copper-gold mine filed on SEDAR on October 10, 2019. The Company is continuing to optimize the production schedule while advancing options for mine and plant expansion in parallel with a significant increase in exploration. 

         Copper production is forecast to be between 51,000 t and 56,000 t over the next three years based on the current 24 Mtpa throughput rate and mine plan as outlined in the Technical Report.

         Gold production is forecast to be between 70,000 oz and 95,000 oz over the next three years. The acquisition of Chapada has significantly increased the Company’s unstreamed gold production.

• Eagle: First ore from Eagle East was mined in the third quarter of 2019, ahead of original plan. The operation’s mine life has been extended into 2025 incorporating the previously announced June 30, 2019 Mineral Reserve estimate update.

         Nickel production at the midpoint of the 2020 guidance range is forecast to increase 3,500 t (27%) over that of 2019. This is a modest decrease compared to the prior outlook on refinement of the mine plan which has resulted in less variability in annual grade profile and is more than offset by a 2,000 t (14%) increase to the 2021 forecast.

        Copper production at the midpoint of the 2020 guidance range is forecast to increase 2,500 t (18%) over 2019 guidance. This is a decrease compared to the prior outlook for 2020 on refinement of the near-term mine plan. Copper production is forecast to increase again in 2022 to 17,000-20,000 t.

• Neves-Corvo: The ZEP continues to advance in accordance with the schedule and budget for the phased start-up strategy and production during 2020. Forecast zinc and copper production over the three-year outlook reflect this phased approach.

         Zinc production at the midpoint of the 2020 guidance range is forecast to increase 25,500 t (34%) over 2019 guidance, as the ZEP is commissioned and ramped-up during the year. This is consistent with the most recent zinc production guidance previously provided. Zinc production is forecast to increase a further 30% in 2021, over 2020, to 155,000-160,000 t with the ZEP contributing a full year of production at design throughput. This is consistent with the prior outlook provided for 2021.

         Copper production at the midpoint of the 2020 guidance range is forecast to be consistent with 2019 levels. This is a decrease (7%) compared to the prior outlook for 2020 on refinement of the near-term mine plan impacting the forecast copper head grade for the year. Copper production is forecast to increase again in 2021 and 2022 to between 41,000 t and 46,000 t.

•  Zinkgruvan: Zinc production at the midpoint of guidance is expected to be at a similar level in 2020 as 2019. This is a modest improvement (3%) over the prior outlook, while the 2021 forecast has decreased slightly (5%) compared to the prior outlook on mine plan revisions that have deferred mining of the high grade Burkland orebody. 

         Copper production in 2020 is forecast to increase over that of 2019 to 3,000-4,000 t. Similarly, 2021 and 2022 forecast copper production has increased compared to the prior outlook, to 3,000-4,000 t.
 

2020 Cash Cost Guidance [3]

• Candelaria’s C1 cash costs are expected to reduce year-on-year to $1.45/lb [4] copper in 2020, after by-product credits. By-product credits have been adjusted for the terms of the streaming agreement.
  
  
• At Chapada, C1 cash costs are expected to approximate $1.15/lb copper after significant gold by-product credits. Effects of copper stream agreements are to be reflected in the realized copper revenue.
  
  
• Eagle’s C1 cash costs in 2020 are expected to reduce year-on-year to $1.00/lb nickel after by-product credits as higher grades from Eagle East reduce per pound unit costs.
  
  
• At Neves-Corvo, C1 cash costs for 2020 are expected to approximate $1.80/lb copper after zinc and lead by-product credits.
  
  
• Zinkgruvan’s C1 cash costs are expected to approximate $0.55/lb zinc after copper and lead by-product credits.

2020 Capital Expenditure Guidance

• Capital expenditures in 2020 are forecast to be $620 million on a 100% basis, which includes:

[3] C1 cash costs are based on various assumptions and estimates, including, but not limited to: production volumes, as noted above, commodity prices (2020 - Cu: $2.70/lb, Zn: $1.10/lb, Ni: $6.00/lb, Pb: $0.90/lb, Au: $1,350/oz) foreign currency exchange rates (2020 - €/USD:1.20, USD/SEK:8.50, CLP/USD:675, SD/BRL:3.75) and operating costs. All figures in are in US$ unless otherwise noted.

[4] 68% of Candelaria’s total gold and silver production are subject to a streaming agreement and as such C1 cash costs are calculated based on receipt of $412/oz and $4.12/oz, respectively, on gold and silver sales in the year.

[5] Forecast capital expenditures have been reported on a cash basis. Discrepancies may exist with other external reports which have been reported on an accrual basis.

• Candelaria: At Candelaria, capital expenditures are expected to total $265 million in 2020. Capitalized expenditures are to decrease compared to the reinvestment years of 2018 and 2019 as the low-risk initiatives undertaken to increase the production profile and value of the operation are completed. Capitalized stripping expenditures are estimated to be $115 million and capital expenditures on Los Diques Tailings Storage Facility to be $15 million in 2020.

         The Mill Optimization Investment to increase metal production, reduce maintenance costs and improve safety and reliability remains on schedule to be complete in the first quarter of 2020. The project is being coordinated with scheduled mill downtime so as to not impact current production. Project capital expenditures remain on budget with approximately $15 million to be spent in 2020 to complete the project.

         Other sustaining capital expenditures are primarily for horizontal and vertical mine development, supporting infrastructure and equipment.

• Chapada: Capital expenditures at Chapada are estimated to total $60 million in 2020. Sustaining capital expenditures are consistent with the October 10, 2019 NI 43-101 Technical Report for the current operations which included $17 million for capitalized stripping, $12 million for a semi-mobile crusher unit to be delivered in the second half of 2020, and other sustaining capital items such as in-fill drilling and equipment replacement. The estimated capital expenditures also include amounts for discretionary exploration land acquisitions which will be dependent on the availability of desired areas and whether agreement can be made with owners.
  
  
• Eagle: At Eagle, 2020 capital expenditures are estimated to total $15 million. Approximately half is for underground development and mine and mill improvement initiatives, with the remaining for smaller sustaining investments including capacity upgrades of the mill water treatment plant.
  
  
• Neves-Corvo: Capital expenditures are estimated to total $230 million in 2020, of which $155 million is the remaining pre-production capital for the ZEP. The $75 million of estimated sustaining capital expenditures are primarily for underground mine development and mobile equipment.

         The ZEP continues to advance in accordance with the schedule and budget for the phased start-up strategy and production during 2020. The preproduction capital cost estimate, including contingency, of $430M (€360M) remains unchanged.

• Zinkgruvan: At Zinkgruvan, sustaining capital expenditures are estimated to total $50 million in 2020. Approximately 60% is for underground development and mine equipment replacement, with the remaining for in-fill drilling and improvement initiatives.

2020 Exploration Investment Guidance

Exploration expenditures are planned to be $65 million in 2020. Approximately $55 million will be spent supporting significant in-mine and near-mine targets at our operations ($20 million at Candelaria, $15 million at Zinkgruvan, $10 million at Chapada, and $10 million at Neves-Corvo). The remaining $10 million is planned to advance activities on exploration stage projects, primarily in South America.

Shareholder Returns Update

Anticipated Dividend Increase

A 33% increase in the quarterly dividend to C$0.04 per common share of the Company (“Common Shares”), or C$0.16 annualized, is anticipated to be declared with the release of 2019 full-year financial results in February 2020 pending approval by the Company’s Board of Directors.

The anticipated increase is consistent with Lundin Mining’s strategy of providing leading returns for our shareholders throughout the cycle. With the addition of Chapada and reinvestment initiatives at Candelaria nearing completion, the Company is well positioned to enhance shareholder returns by increasing the regular dividend, while maintaining balance sheet strength and investing in disciplined growth.

The dividend policy will continue to undergo periodic review by Lundin Mining management and the Board of Directors and may change at any time depending on the Company’s earnings, financial requirements and other factors existing at the time.

Normal Course Issuer Bid Renewal

Additionally, Lundin Mining intends to renew its NCIB to purchase up to 63,818,420 Common Shares on the Toronto Stock Exchange (the “TSX”). The Company intends to utilize the discretionary NCIB from time-to-time to actively manage the number of outstanding Common Shares and make opportunistic purchases to create shareholder value.

The NCIB renewal has been approved by the Company’s Board of Directors; however, it is subject to acceptance by the TSX and, if accepted, will be made in accordance with the applicable rules and policies of the TSX and applicable Canadian securities laws. Under the NCIB, Common Shares may be repurchased in open market transactions on the TSX and/or other Canadian exchanges, or by such other means as may be permitted by the TSX and applicable Canadian securities laws. The price that Lundin Mining will pay for Common Shares in open market transactions will be the market price at the time of purchase.

Pursuant to the NCIB renewal, which will commence following expiry of the current NCIB, it is expected that the Company will be able to purchase up to 63,818,420 Common Shares, representing 10% of the total outstanding Common Shares as of November 26, 2019, minus those Common Shares beneficially owned, or over which control or direction is exercised by the Company, the senior officers and directors of the Company and every shareholder who owns or exercises control or direction over more than 10% of the outstanding Common Shares, over a period of twelve months commencing after TSX approval. In accordance with TSX rules, any daily purchases, other than pursuant to a block purchase exception, on the TSX under the NCIB will be limited to a maximum 25% of the average daily trading volume on the TSX for the six months ended November 30, 2019. Any Common Shares that are purchased under the NCIB will be cancelled.

The actual number of Common Shares that may be purchased and the timing of such purchases will be determined by the Company. Decisions regarding purchases will be based on market conditions, share price, best use of available cash, and other factors.

Under the Company’s current NCIB that commenced on December 7, 2018 and which expires on December 6, 2019, the Company previously sought and received approval from the TSX to purchase up to 63,718,842 Common Shares. As of November 26, 2019, the Company has purchased 2,585,756 Common Shares under its current NCIB through open market transactions at a weighted average price of approximately $6.37 per Common Share.

The information in this release is subject to the disclosure requirements of Lundin Mining under the EU Market Abuse Regulation. The information was submitted for publication, through the agency of the contact persons set out below on November 26, 2019 at 16:30 Eastern Time.

Cautionary Statement in Forward-Looking Information

Certain of the statements made and information contained herein is “forward-looking information” within the meaning of applicable Canadian securities laws. All statements other than statements of historical facts included in this document constitute forward-looking information, including but not limited to statements regarding the Company’s plans, prospects and business strategies; the Company’s guidance on the timing and amount of future production and its expectations regarding the results of operations; expected costs; permitting requirements and timelines; timing and possible outcome of pending litigation; the results of any Preliminary Economic Assessment, Feasibility Study, or Mineral Resource and Mineral Reserve estimations, life of mine estimates, and mine and mine closure plans; anticipated market prices of metals, currency exchange rates, and interest rates; the development and implementation of the Company’s Responsible Mining Management System; the Company’s ability to comply with contractual and permitting or other regulatory requirements; anticipated exploration and development activities at the Company’s projects; and the Company’s integration of acquisitions (such as the Chapada mine) and any anticipated benefits thereof. Words such as “believe”, “expect”, “anticipate”, “contemplate”, “target”, “plan”, “goal”, “aim”, “intend”, “continue”, “budget”, “estimate”, “may”, “will”, “can”, “could”, “should”, “schedule” and similar expressions identify forward-looking statements.

Forward-looking information is necessarily based upon various estimates and assumptions including, without limitation, the expectations and beliefs of management, including that the Company can access financing, appropriate equipment and sufficient labour; assumed and future price of copper, nickel, zinc, gold and other metals; anticipated costs; ability to achieve goals; the prompt and effective integration of acquisitions; that the political environment in which the Company operates will continue to support the development and operation of mining projects; and assumptions related to the factors set forth below. While these factors and assumptions are considered reasonable by Lundin Mining as at the date of this document in light of management’s experience and perception of current conditions and expected developments, these statements are inherently subject to significant business, economic and competitive uncertainties and contingencies. Known and unknown factors could cause actual results to differ materially from those projected in the forward-looking statements and undue reliance should not be placed on such statements and information. Such factors include, but are not limited to: risks inherent in and/or associated with operating in foreign countries; uncertain political and economic environments; community activism, shareholder activism and risks related to negative publicity with respect to the Company or the mining industry in general; changes in laws, regulations or policies including but not limited to those related to permitting and approvals, environmental and tailings management, labour, trade relations, and transportation; delays or the inability to obtain necessary governmental approvals and/or permits; regulatory investigations, enforcement, sanctions and/or related or other litigation; risks associated with business arrangements and partners over which the Company does not have full control; risks associated with acquisitions and related integration efforts (including with respect to the Chapada mine), including the ability to achieve anticipated benefits, unanticipated difficulties or expenditures relating to integration and diversion of management time on integration; competition; development or mining results not being consistent with the Company’s expectations; estimates of future production and operations; operating, cash and all-in sustaining cost estimates; allocation of resources and capital; litigation; uninsurable risks; volatility and fluctuations in metal and commodity prices; the estimation of asset carrying values; funding requirements and availability of financing; indebtedness; foreign currency fluctuations; interest rate volatility; changes in the Company’s share price, and equity markets, in general; changing taxation regimes; counterparty and credit risks; health and safety risks; risks related to the environmental impact of the Company’s operations and products and management thereof; unavailable or inaccessible infrastructure and risks related to ageing infrastructure; risks inherent in mining including but not limited to risks to the environment, industrial accidents, catastrophic equipment failures, unusual or unexpected geological formations or unstable ground conditions; actual ore mined varying from estimates of grade, tonnage, dilution and metallurgical and other characteristics; ore processing efficiency; risks relating to attracting and retaining of highly skilled employees; ability to retain key personnel; the potential for and effects of labour disputes or other unanticipated difficulties with or shortages of labour or interruptions in production; the price and availability of energy and key operating supplies or services; the inherent uncertainty of exploration and development, and the potential for unexpected costs and expenses including, without limitation, for mine closure and reclamation at current and historical operations; risks associated with the estimation of Mineral Resources and Mineral Reserves and the geology, grade and continuity of mineral deposits including but not limited to models relating thereto; actual ore mined and/or metal recoveries varying from Mineral Resource and Mineral Reserve estimates; mine plans, and life of mine estimates; the possibility that future exploration, development or mining results will not be consistent with expectations; natural phenomena such as earthquakes, flooding, and unusually severe weather; potential for the allegation of fraud and corruption involving the Company, its customers, suppliers or employees, or the allegation of improper or discriminatory employment practices, or human rights violations; security at the Company’s operations; breach or compromise of key information technology systems; materially increased or unanticipated reclamation obligations; risks related to mine closure activities; risks related to closed and historical sites; title risk and the potential of undetected encumbrances; risks associated with the structural stability of waste rock dumps or tailings storage facilities; and other risks and uncertainties, including but not limited to those described in the “Risk and Uncertainties” section of the Annual Information Form for the year ended December 31, 2018 and the “Managing Risks” section of the Company’s MD&A for the year ended December 31, 2018, which are available on SEDAR at www.sedar.com under the Company’s profile. All of the forward-looking statements made in this document are qualified by these cautionary statements. Although the Company has attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking information, there may be other factors that cause results not to be as anticipated, estimated, forecast or intended and readers are cautioned that the foregoing list is not exhaustive of all factors and assumptions which may have been used. Should one or more of these risks and uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those described in forward-looking information. Accordingly, there can be no assurance that forward-looking information will prove to be accurate and forward-looking information is not a guarantee of future performance. Readers are advised not to place undue reliance on forward-looking information. The forward-looking information contained herein speaks only as of the date of this document. The Company disclaims any intention or obligation to update or revise forward‐looking information or to explain any material difference between such and subsequent actual events, except as required by applicable law. 

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For further information, please contact:
Mark Turner, Director, Business Valuations and Investor Relations: +1 416 342 5565
Brandon Throop, Manager, Investor Relations: +1 416 342 5583
Robert Eriksson, Investor Relations Sweden: +46 8 440 54 50

About Lundin Mining

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