Lundin Mining Provides Operating Outlook for 2012-2014

December 12, 2011

TORONTO, ONTARIO–(Marketwire - Dec. 12, 2011) - Lundin Mining Corporation (TSX:LUN)(OMX:LUMI) (“Lundin Mining” or the “Company”), subsequent to its annual budget Board meeting held today, provides the following operating guidance for the three-year period of 2012 through 2014. Guidance for 2011 remains unchanged for the year as noted in our Third Quarter release and therefore has not been included below. Key highlights are as follows:

  • 2012 guidance noted below is consistent with early guidance included in our Third Quarter news release.
  • 2013 and 2014 total attributable copper production is expected to be in the range of 107-117kt, an increase of approximately 25% from 2012 levels.
  • Zinc production is expected to continue to grow progressively year-over-year, as Neves-Corvo zinc production continues to ramp-up and incremental production initiatives become operative at Zinkgruvan.
  • Lead production is expected to continue to represent a valuable by-product credit for the company.
  • Nickel production will increase in 2013, as Aguablanca resumes full-scale production in late 2012.

Commenting on the production guidance, Mr. Paul Conibear, President and CEO of Lundin Mining said, “We are very focused on improving our performance and meeting and improving on current production and cost targets. We have added depth both corporately and at the operations to facilitate better reliability from our mines. Lundin Mining is in a unique position as we offer meaningful near-term production growth to copper, zinc and nickel, all of which is expected to be fully-funded from operational cash flow going forward.”

Production Outlook 2012 - 2014:
  2012 2013 2014
Copper: Tonnes Tonnes Tonnes
  Neves-Corvo 52,500 - 57,000 50,000 - 57,000 50,000 - 57,000
  Zinkgruvan 2,000 - 3,000 5,000 - 6,000 5,000 - 6,000
  Aguablanca 500 - 1000 5,000 - 7,000 6,000 - 7,000
  Copper wholly-owned operations 55,000 - 61,000 60,000 - 70,000 61,000 - 70,000
  Tenke1 24% >31,000 ~47,000 ~47,000
Total Attributable Copper 86,000 - 92,000 107,000 - 117,000 108,000 - 117,000
  Neves-Corvo 30,000 - 40,000 50,000 - 55,000 60,000 - 65,000
  Zinkgruvan 75,000 - 81,000 75,000 - 80,000 85,000 - 90,000
  Galmoy (50%) 4,000 - 4,500 - -
Total Zinc 109,000 - 125,500 125,000 - 135,000 145,000 - 155,000
  Zinkgruvan 34,000 - 39,000 32,000 - 35,000 32,000 - 35,000
  Galmoy (50%) 500 - 1,000 - -
Total Lead 34,500 - 40,000 32,000 - 35,000 32,000 - 35,000
  Aguablanca 500 - 1,000 5,000 - 7,000 6,000 - 7,000
Total Nickel 500 - 1,000 5,000 - 7,000 6,000 - 7,000
1 Note -Tenke 2012 guidance has not yet been provided by Operator Freeport McMoRan Copper and Gold Inc. (“Freeport”). Lundin Mining anticipates production from Tenke in 2012 to be greater than 2011 guidance, and anticipates the Phase 2 expansion to be completed by 2013.
  • Neves-Corvo - Copper: For the next few years copper production is expected to remain similar to 2012 levels. The copper plant is expected to have excess milling capacity next year, thereby providing the operation with flexibility to process additional copper from lower-grade stopes, should economics warrant it.
  • Neves-Corvo - Zinc: The new zinc plant is expected to operate at full capacity processing approximately 1.0 million tonnes per annum (“Mtpa”) in 2013 and 2014 (up from 0.5Mtpa in 2012). The production forecasts assume that the zinc plant will be used exclusively to process zinc ore over the next three years. This plant has been already proven to have the flexibility to process either zinc or copper ores and therefore the plan may be adjusted going forward in order to optimize the profitability of the operation depending on relative zinc and copper prices, and concentrate customer commitments.
  • Zinkgruvan: Zinc production is expected to increase from 2012 due to debottlenecking initiatives and as higher grade material becomes available due to the mine sequencing of the various ore bodies. Copper production increases in 2013 as the copper plant reaches its full throughput capacity of 300ktpa.
  • Aguablanca: Production from Aguablanca is expected to resume in late-2012. The current production plan is based solely from the open pit and does not include any production from the potential development of higher grade underground mineralization.
  • Galmoy: High grade mining is expected to conclude in the first half of 2012, however sales are expected to continue into early-2013 as stockpiled ore will continue to be milled at a third party processing facility.
  • Tenke Fungurume: 2012 Production guidance has not yet been provided by Freeport, the mine’s operator. Lundin Mining anticipates production from Tenke in 2012 to be greater than 2011, and anticipates the Phase 2 expansion project to 195,000 tpa of copper cathode (production on a 100%-basis) to be completed by 2013. All operating decisions are ultimately made by Freeport and therefore these production assumptions should not be perceived as representing official guidance for the operation.

2012 Cash Costs

  • At Neves-Corvo, estimated C1 cash costs are expected to approximate $1.80/lb after zinc by-product credits in 2012. Improvement on this estimated unit cost could occur if zinc prices are higher than 2012 budget assumptions and as a result of operating cost-cutting initiatives in progress.
  • At Zinkgruvan, estimated C1 cash costs are expected to approximate $0.25/lb after copper and lead by-product credits. Zinkgruvan is expected to remain as one of the lower cost zinc producers for the foreseeable future.
  • Guidance on Aguablanca C1 cash cost estimates will be provided closer to the timing of plant start-up.
  • At Tenke, cash cost guidance will be provided by Freeport in due course.

The 2012 cash cost estimates were calculated using the following metals prices and exchange rates (royalties included where applicable).

Budget Assumptions 2012
Copper $3.50
Zinc $0.95
Lead $0.98
€/USD 1.35
US$/SEK 6.50

2012 Capital Expenditure Guidance

Capital expenditures for 2012 are expected to be $410 million (2011 - guidance $290 million) which includes:

  • Sustaining capital in European operations: $95 million (2011 ‐ $100 million). The modest decrease is related to slightly lower sustaining capital expenditures at Neves‐Corvo for the year ahead.
  • New investment capex in European operations: $65 million (2011 ‐ $70 million), consisting of:
    • Lombador Phase One ($40 million) including underground development, final SAG mill delivery payments, and other critical path items. Lombador Phase One underground work is proceeding on schedule and the main access ramp has reached approximately 800m below surface. It is expected to reach 900 meters depth by the second quarter of 2012 to facilitate the development of an exploration drive to allow for further underground exploration of the Lombador deposits.
    • Neves-Corvo dam ($13 million) related to tailings and water storage capacity increases
    • Other plant improvements and debottlenecking ($12 million) at both Neves-Corvo and Zinkgruvan
  • New Investment in Tenke: We have assumed the Phase II expansion at Tenke to be completed by 2013, and we contemplate our share of expansion funding and sustaining capital funding to be up to $250 million for next year. The capital spending, if prices remain strong, is expected to be cash neutral to the Company as Tenke operating cash flows should be sufficient.

2012 Exploration Investment

Exploration expenditures are expected to increase from around $43 million in 2011 to $50 million in 2012. Approximately $34 million of this will be spent at Neves-Corvo, where a 90,000 metre surface drilling program is planned for 2012 which will continue to test resource expansion targets at Semblana in addition to drill-testing the multiple high priority targets recently identified within the Neves-Corvo near mine area. Additionally, next year’s exploration program will also test several greenfield targets in the Iberian Region, as well as continued resource definition drilling at the Company’s Clare exploration project in Ireland.

Other Opportunities

The Company is evaluating several optimization projects and expansions of current operations that could further increase production over the next few years. The following projects could contribute to production above the current planed levels in the near to medium term horizon:

  • Neves-Corvo Copper Plant: The current higher cutoff grade production plan leaves spare capacity in the copper plant, which could be used to treat lower-grade ore, should copper prices rise above current levels.
  • Neves-Corvo Zinc Plant Expansion: A further expansion of the existing zinc capacity to 2.5 Mtpa ore feed capacity (to a peak 150,000tpa zinc production averaging 112,000tpa) has been evaluated as described in the Company’s Lombador Phase One feasibility study press release of September 2011. While the SAG mill has been ordered and certain other surface critical path items are still advancing, less schedule sensitive expenditures related to the zinc plant expansion have been put on hold pending completion of the overall Neves-Corvo Underground Materials Handling Study.
  • Neves-Corvo Underground Materials Handling Study: In order to seek optimal value from the Neves-Corvo asset, a conceptual level study is progressing to evaluate the relative merits of accessing and extracting copper rich Semblana deposit mineralization in advance of exploiting deeper zinc and copper mineralization from Lombador (“Lombador Phase Two”). This study is comparing underground infrastructure investment options including a new vertical shaft, inclined ramps and conveyors, and debottlenecking of the current shaft and underground infrastructure. No allowance has been included in the 2012 capital estimates for such investments pending completion study work.
  • Semblana/Lombador Phase Two: No production forecasts have been included for material from these deposits, pending the completion of the Underground Materials Handling Study.
  • Tenke Heap-Leach Project: Freeport is conducting small scale heap leach pad trials on low grade oxide stockpile ore. Should these be successful, heap leaching could add additional copper cathode production in the near to medium term.
  • Zinkgruvan 2012 Copper Plant: For 2012, the copper plant at Zinkgruvan is expected to have approximately 150kt of excess throughput capacity, which could be used to process any additional zinc ore that may be mined. The new copper plant has already been proven to be able to successfully process zinc ore giving the operation additional flexibility to respond to anticipated zinc market demand.
  • Aguablanca Underground Project: No production estimates have been included for the underground project at this stage, pending the completion of the Underground Pre-Feasibility Study in early 2012.

Commenting on the three year outlook for the Company, Mr. Conibear said, “As we enter 2012, we are very well positioned to continue to increase output with a good balance sheet, several internal optimization opportunities and a strong exploration focus. We look forward to delivering on our objectives of internal growth, to maximize the value of our existing assets and we are now in pursuit of the additional near term and existing production assets with the intent of acquiring value accretive investments complimentary to our existing business.”

About Lundin Mining

Lundin Mining Corporation is a diversified Canadian base metals mining company with operations in Portugal, Sweden, Spain and Ireland, producing copper, zinc, lead and nickel. In addition, Lundin Mining holds a development project pipeline which includes expansion projects at Neves‐Corvo mine along with its equity stake in the world class Tenke Fungurume copper/cobalt mine in the Democratic Republic of Congo.

On Behalf of the Board,

Paul Conibear, President and CEO

Forward Looking Statements

Certain of the statements made and information contained herein is “forward-looking information” within the meaning of the Ontario Securities Act. 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, nickel, 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.



Lundin Mining Corporation
Sophia Shane
Investor Relations North America

Lundin Mining Corporation
John Miniotis
Senior Business Analyst

Lundin Mining Corporation
Robert Eriksson
Investor Relations Sweden
+46 8 545 015 50
Lundin Mining Corporation

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