Update: Lundin Mining Provides Production Outlook For 2015

| About: Lundin Mining (LUNMF)
This article is now exclusive for PRO subscribers.


The production of copper and nickel should grow significantly in 2015.

Cash costs should slightly decline compared to 2014.

Capital costs of $470 million are expected.

Lundin Mining (OTCPK:LUNMF) announced its operation outlook for 2015-2017. Thanks to the acquisition of Candelaria and the startup of Eagle, the production of copper should more than double and the production of nickel should almost triple. The following production numbers are projected:

2015 2016 2017
copper (NYSE:T) 258,000 - 272,000 237,500 - 251,500 225,500 - 244,500
zinc 146,000 - 155,000 143,000 - 151,000 150,000 - 158,000
lead 31,000 - 35,000 35,000 - 41,000 37,000 - 43,000
nickel 30,800 - 34,500 26,500 - 30,000 22,500 - 26,000

The cash costs should be similar to 2014 in 2015. The projected cash costs after by-product credits are as follows (assuming the abovementioned production numbers and metal prices of: $3/lb of copper, $1.05/lb of zinc, $1/lb of lead, $8/lb of nickel and taking into account the streaming agreement on gold and silver from Candelaria):

mine metal cash costs after by-product credits
Neves-Corvo copper $1.8/lb
Zinkgruvan zinc $0.38/lb
Aguablanca nickel


Eagle nickel $2/lb
Candelaria copper $1.9/lb
Tenke copper to be announced by Freeport

The capital expenditures should be in the range of $470 million. Approximately $300 million will be used on Candelaria alone.

The exploration expenses should be approximately $75 million. The majority of the exploration budget will be directed towards the near mine targets near Candelaria.

Although the expected production growth is quite impressive, Lundin Mining has a significant exposure to the copper market, which may cause some problems in the short term, if the copper price doesn't improve. On the other hand, I am still bullish on nickel, as I mentioned in my previous article. If the expectations of the 2015 nickel bull run come true, the shares of Lundin Mining should benefit from it.

Disclosure: The author has no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

The author wrote this article themselves, and it expresses their own opinions. The author is not receiving compensation for it (other than from Seeking Alpha). The author has no business relationship with any company whose stock is mentioned in this article.

Editor's Note: This article discusses one or more securities that do not trade on a major U.S. exchange. Please be aware of the risks associated with these stocks.