Here’s a miner that’s making progress and money

POSTED ON September 24, 2014 BY Travis McPherson
CATEGORY Lundin Mining, Stories,

Unsurprisingly one of the few groups in the out-of-favour resource sector spending significant money to build new mines and finance risky ventures are the Lundin's.

Yesterday, Lundin Mining (LUN:TSX), the $3.2 billion mining company that its namesake founder Lukas Lundin owns 12.5% of, announced that it started concentrate production ahead of schedule and on budget at the recently acquired Eagle nickel-copper mine in Michigan. Mill commissioning was compelted last week and they have run it at full capacity without issue (typically a challenging time filled with setbacks).

The Eagle mine represents one of very few new nickel mines around the world. It also happens to be one of the highest grade ones as well. The company expects to ship first saleable copper and nickel concentrates during the first half of October and is expected to reach full design rates in Q2/2015.

The Eagle Mine is one of the highest grade deposits in the world (Image: Lundin Mining)

Mr. Paul Conibear, President and CEO commented, "We are extremely proud of the tremendous achievement that has been accomplished at the Eagle Mine. The Eagle Mine is a significant new, high-quality, low-cost mine, that has been constructed to the highest of safety, environmental and social responsibility standards."

The company is guiding 23,000 tonnes of nickel and 20,000 tonnes of copper concentrate annually during the first 3 years of production (2015-2017). Importantly, the mine is expected to generate significant margin and free cash flow. Cash costs of approximately $2 per pound provide significant capacity for cash flow generation. With nickel currently trading at $7.80 per pound, the Eagle mine could generate nearly $300 million of operating profit next year from their nickel production alone (not including any of their copper production).

With the rumours that Lundin is in advance talks to acquire the Fruta del Norte project in Ecuador, we've heard that Lukas Lundin is in Europe gauging investor appetite for this acquisition which could be between $250 million and $1 billion.

In October 2007, the year before Fruta del Norte was taken over by Kinross, the deposit had at least 13.7 million ounces at 7.23 g/t gold with plenty of upside. Kinross acquired the project by buying Aurelian Resources in 2008 for $1.2 billion but subsequently recorded a $720 million write down last year after the company was unsuccessful at negotiating economic terms with the Ecuadorian President.

By all accounts the Lundin's are the best in the business, but raising that kind of money in this market (even for a group like that) is no easy feat. If they can't find the money, the rest of us might as well go on vacation for a couple of years because we haven't got a chance. If anyone can do it, its them.

Read: Lundin Mining Commences Production at the Eagle Mine

Travis McPherson

trav@ceo.ca

Travis McPherson

trav@ceo.ca

Disclaimer:

Readers are advised that the material contained herein is solely for information purposes. Readers are encouraged to conduct their own research and due diligence, and/or obtain professional advice. Nothing contained herein constitutes a representation by the publisher, nor a solicitation for the purchase or sale of securities. The information contained herein is based on sources which the publisher believes to be reliable, but is not guaranteed to be accurate, and does not purport to be a complete statement or summary of the available data. Any opinions expressed are subject to change without notice. The owner, editor, writer and publisher and their associates are not responsible for errors or omissions. They may from time to time have a position in the securities of the companies mentioned herein, and may change their positions without notice. (Any significant positions will be disclosed explicitly. This article is not intended to meet your specific individual investment needs and it is not tailored to your personal financial situation. Nothing contained herein constitutes, is intended, or deemed to be — either implied or otherwise — investment advice. Thomas Humphreys, Pacific Website Company Inc., and other entities in which he has an interest, employees, officers, family, and associates may from time to time have positions in the securities or commodities covered in these publications or web site. We reserve the right to buy and sell such securities or commodities without notice to readers. While the information herein is believed to be accurate and reliable it is not guaranteed or implied to be so. The information herein may not be complete or correct; it is provided in good faith but without any legal responsibility or obligation to provide future updates. Neither Thomas Humphreys, nor anyone else, accepts any responsibility, or assumes any liability, whatsoever, for any direct, indirect or consequential loss arising from the use of the information in these publications or web site.

Forward-Looking Statements: This article may include certain "forward-looking information" within the meaning of Canadian securities legislation. Forward-looking statements include predictions, projections and forecasts and are often, but not always, identified by the use of words such as "seek", "anticipate", "believe", "plan", "estimate", "forecast", "expect", "potential", "project", "target", "schedule", budget" and "intend" and statements that an event or result "may", "will", "should", "could" or "might" occur or be achieved and other similar expressions and includes the negatives thereof. All statements other than statements of historical fact included in this release, including, without limitation, statements regarding the potential of the Company's properties are forward-looking statements that involve various risks and uncertainties. There can be no assurance that such statements will prove to be accurate and actual results and future events could differ materially from those anticipated in such statements. Forward-looking statements are based on a number of material factors and assumptions. Important factors that could cause actual results to differ materially from Company's expectations include actual exploration results, changes in project parameters as plans continue to be refined, future metal prices, availability of capital and financing on acceptable terms, general economic, market or business conditions, uninsured risks, regulatory changes, delays or inability to receive required approvals, and other exploration or other risks detailed herein and from time to time in the filings made by the Company with securities regulators. Although the Company has attempted to identify important factors that could cause actual actions, events or results to differ from those described in forward-looking statements, there may be other factors that cause such actions, events or results to differ materially from those anticipated. There can be no assurance that forward-looking statements will prove to be accurate and accordingly readers are cautioned not to place undue reliance on forward-looking statements which speak only as of the date of this article. The Company disclaims any intention or obligation, except to the extent required by law, to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

Always do your own due diligence. We seek safe harbor.