Good morning!
Please find enclosed a news release issued this morning. If
you have any questions or require further information, please do not hesitate
to call.
Best regards,
Sophia Shane
Ph. 604-689-7842
LUNDIN MINING ADVISED
OF REVISED CAPITAL COST PROJECTIONS ON TENKE PROJECT
Vancouver, April 23,
2008 (TSX: LUN; OMX: LUMI; NYSE: LMC) Lundin Mining Corporation
(“Lundin Mining” or the “Company”) reports that
Freeport McMoRan Copper and Gold Company (“Freeport” ) has advised
of further capital cost increases on the Tenke Project, which is under
construction in the Democratic Republic of Congo (“DRC”).
The Company holds an effective
24.75% equity interest in the Tenke Project. Freeport holds an effective 57.75 % interest
and is the project operator.
The initial Tenke project is based
on mining and processing ore reserves approximating 100 million tons with ore
grades of 2.3% copper and 0.3% cobalt. Annual production in the initial years
of the project is expected to approximate 115,000 tonnes of copper and 8,000
tonnes of cobalt. Freeport
expects the results of drilling activities will enable significant future
expansion of the initial production.
Approximately $US 475 million in project
costs have been incurred to date. Construction activities are being advanced
with in excess of 2,200 construction personnel onsite. Current activities are
focused on concrete placement, steel tank erection, structural steel, and
infrastructure development including shops, warehouses, and extensive social
and regional infrastructure programs. All long lead time equipment has been
ordered and Freeport
advise that initial production is targeted during the second half of 2009.
Freeport is engaged in a review of the
capital cost estimates for the project, which were estimated in October 2007 to
be $900 million ($1 billion including advances to a third party for the
refurbishment of provincial power facilities).
A recent capital cost review
prepared in April 2008 indicates estimated capital costs of approximately $1.75
billion, (approximately $1.9 billion including loans to a third party for power
development). These estimates include substantial amounts for infrastructure to
support a larger scale operation than the initial phase of the project. This
includes the provision of expanded power generating capacity providing improved
reliability for the region. This regional power infrastructure investment is
now estimated to be in the range of US$175 million, the majority of which is
expected to be funded through a loan to the DRC State
power authority.
The latest capital cost estimates
include: provision for expanded housing and support facilities for the project
work force; enhancements to national roads and bridges; extended social and
training initiatives. The latest estimates also reflect substantial
industry-wide escalation in construction costs and the incremental costs to
develop the project in Central Africa, where infrastructure and logistics are challenging
in developing a greenfield
project.
Freeport is responsible for funding 70
percent of the project development cost and is also responsible for financing
Lundin Mining’s share of certain project overruns.
The Company has previously indicated
that it expected its contribution to the Tenke Project to be in the range of
US$150 million - US$180 million in 2008. This is now expected to be in the
range of US$180 million - US$210 million.
Freeport is currently reviewing the latest
cost estimate with its partners and will strive to enhance the economic returns
of the project while progressing its plans for developing infrastructure in the
area that will enable rapid expansion of this high potential resource.
Commenting on the increase Mr. Phil Wright,
President and CEO of Lundin Mining, said “We have just been advised of
this overrun situation and an increase of this magnitude was not expected.
“Fortunately the funding of
the majority of this increase is covered by our overrun protection from Freeport and we do not
expect this to have a material impact on our cash flow through to start-up.
“We are continuing to review
the details, however, we remain extremely positive on the longer-term prospects
of this Project” Mr. Wright said.
About Lundin Mining
Lundin Mining Corporation
is a rapidly growing, diversified base metals mining company with operations in
Portugal, Spain, Sweden
and Ireland.
The Company currently has six mines in operation producing copper, nickel, lead
and zinc. In addition, Lundin Mining holds a development project pipeline
which includes the world class Tenke Fungurume copper/cobalt project in the
Democratic Republic of Congo and the Ozernoe zinc project in Russia as well as major expansion
programs at its Neves-Corvo and Zinkgruvan mines. The Company holds an
extensive exploration portfolio and interests in international mining and
exploration ventures.
On Behalf of the Board,
Phil Wright
President and CEO
For further information, please contact:
Catarina Ihre, Manager,
Investor Relations: +46-706-07 92 63
Sophia Shane,
Investor Relations North America:
+1-604-689-7842
Forward
Looking Statements
Certain of the
statements made and information contained herein is “forward-looking
information” within the meaning of the Ontario Securities Act or
“forward-looking statements” within the meaning of Section 21E
of the Securities Exchange Act of 1934 of the United States. Forward-looking
statements are subject to a variety of risks and uncertainties which could
cause actual events or results to differ from those reflected in the
forward-looking statements, including, without limitation, risks and
uncertainties relating to foreign currency fluctuations; risks inherent in
mining including environmental hazards, industrial accidents, unusual or
unexpected geological formations, ground control problems and flooding; risks
associated with the estimation of mineral resources and reserves and the
geology, grade and continuity of mineral deposits; the possibility that future
exploration, development or mining results will not be consistent with the Company’s
expectations; the potential for and effects of labour disputes or other
unanticipated difficulties with or shortages of labour or interruptions in
production; actual ore mined varying from estimates of grade, tonnage, dilution
and metallurgical and other characteristics; the inherent uncertainty of
production and cost estimates and the potential for unexpected costs and
expenses, commodity price fluctuations; uncertain political and economic
environments; changes in laws or policies, foreign taxation, delays or the
inability to obtain necessary governmental permits; and other risks and
uncertainties, including those described under Risk Factors Relating to the
Company’s Business in the Company’s Annual Information Form and in
each management discussion and analysis. Forward-looking information is in
addition based on various assumptions including, without limitation, the
expectations and beliefs of management, the assumed long term price of copper,
lead and zinc; that the Company can access financing, appropriate equipment and
sufficient labour and that the political environment where the Company operates
will continue to support the development and operation of mining projects. 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 statements. Accordingly, readers are advised not
to place undue reliance on forward-looking statements.
Cautionary Notes to
Investors - Reserve and Resource Estimates
In accordance with applicable
Canadian securities regulatory requirements, all mineral reserve and mineral
resource estimates of the Company disclosed or incorporated by reference in
this Annual Information Form have been prepared in accordance with Canadian
National Instrument 43-101 - Standards of Disclosure for Mineral Projects
(“NI 43-101”), classified in accordance with Canadian Institute of
Mining Metallurgy and Petroleum’s “CIM Standards on Mineral
Resources and Reserves Definitions and Guidelines” (the “CIM
Guidelines”). The definitions of mineral reserves and mineral resources
are set out in our disclosure of our mineral reserve and mineral resource estimates
that are disclosed or incorporated by reference in this Annual Information
Form.
The Company uses the terms
“mineral resources”, “measured mineral resources”,
“indicated mineral resources” and “inferred mineral
resources”. While those terms are recognized by Canadian securities
regulatory authorities, they are not recognized by the United States Securities
and Exchange Commission (the “SEC”) and the SEC does not permit U.S.
companies to disclose resources in their filings with the SEC.
Pursuant to the CIM Guidelines,
mineral resources have a higher degree of uncertainty than mineral reserves as
to their existence as well as their economic and legal feasibility. Inferred
mineral resources, when compared with measured or indicated mineral resources,
have the least certainty as to their existence, and it cannot be assumed that
all or any part of an inferred mineral resource will be upgraded to an
indicated or measured mineral resource as a result of continued exploration.
Pursuant to NI 43-101, inferred mineral resources may not form the basis of any
economic analysis, including any feasibility study. Accordingly, readers are
cautioned not to assume that all or any part of a mineral resource exists, will
ever be converted into a mineral reserve, or is or will ever be economically or
legally mineable or recovered.