VANCOUVER, BRITISH COLUMBIA--(MARKET WIRE)--Apr 23, 2008 -- Lundin Mining Corporation ("Lundin Mining" or the "Company")
(Toronto:
LUN.TO -
News)(NYSE:
LMC -
News)(OMX: LUMI) 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 $US475 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
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.