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:
|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|
|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.
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