Lundin Mining (LUN:TSX), Lukas Lundin’s namesake multi-billion dollar base metal mining company, announced today that they would be spending in excess of $460 million in capital in 2014, (compared to an estimated $255 million for fiscal 2013). The bulk of the spending, $300 million will go towards completing construction of the Humboldt mill and their recently acquired Eagle mine, a high-grade nickel-copper-PGM deposit. Lundin bought the mine, which was 50% complete, from Rio Tinto this summer for $315 million ($250 million cash and the rest in project expenditures) and expects the mine to cost a total of $400 million to complete.
Always a prudent acquirer, Lundin was able to acquire a project which had over $470 million invested into it for $250 million. Eagle is currently on schedule to hit its nameplate throughput rate of 2,000tpd by 2015.
“For 2014, we anticipate continuing our strong execution at the current operations and completing construction of the Eagle mine on target. Our assets continue to offer attractive low-risk near-term production growth with relatively modest levels of capital requirements, which ideally positions us to continue to add significant shareholder value over the next several years,” said Paul Conibear, president and CEO.
The company also revealed good news out of their Aguablanca mine which is expected to continue producing through 2018 after passing the bar with favorable economics in an underground scenario. Lundin’s Neves-Corvo and Zinkgruvan mines are expected to grow production modestly over 2014-2015. The bulk of Lundin’s copper and nickel growth is expected to come from Eagle late in 2014.
Tenke Fungurume also has growth potential, says the company, by debottlenecking the massive 270,000tpa mill, but the company is waiting for guidance from the 56% operator on the project, Freeport-McMoRan (LUN holds 24% and the Congolese state mining company, holds a 20% free carried interest in the project). Any of these potential capital initiatives at Tenke are expected to be funded through cash flow at the mine (Lundin is responsible for 30% of the funding with the remainder coming from Freeport).
Lundin expects to grow copper production 20% over 2014-2016. The company also expects zinc production to increase roughly 10% over the same period. The company hasn’t given up on exploration either, they made room for some $40 million in exploration spending which the company expects to be focused on Neves-Corvo, Zinkgruvan and Eagle.