LUNDIN MINING REPORTS FIRST QUARTER RESULTS

Lundin Mining Corporation 

26.04.2012 08:00
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Toronto, 2012-04-26 08:00 CEST (GLOBE NEWSWIRE) -- April 25, 2012 (TSX: LUN;
OMX: LUMI) Lundin Mining Corporation ('Lundin Mining' or the 'Company') today
reported net income of $58.3 million ($0.10 per share) for the three months
ended March 31, 2012 compared to $71.2 million ($0.12 per share) for the first
quarter of 2011 and $36.1 million ($0.06 per share) for the fourth quarter of
2011. 

Paul Conibear, President and CEO commented, 'We followed up our strong
production results from the fourth quarter of 2011 with another quarter of
solid performance. Operational improvement programs led by new site management
are producing good results, with our operations meeting or exceeding our
targets.' 

Neves-Corvo produced 16,609 tonnes of copper at a cash cost of $1.63 per pound
during the quarter, which was better than expected primarily due to more tonnes
milled and higher plant recoveries than planned. The zinc plant at Neves-Corvo
produced 7,020 tonnes of zinc which is expected to be an increasing by-product
credit as the year progresses. 

Zinkgruvan produced 20,431 tonnes of zinc and 10,348 tonnes of lead. This
strong result was achieved through record milling performance and excellent
recoveries of zinc on lower grade ores.  Cash costs were $0.22 per pound. 

Mr. Conibear commented, 'Bengt Sundelin, who joined as our new General Manager
of Zinkgruvan in September, has recently improved his operating team. The
results have been exceptional with Zinkgruvan setting a new record for milling
performance, the best in its 155 year history.' 

Tenke recorded another strong quarter of production, with the Company's share
of attributable copper production for the quarter amounting to 8,924 tonnes.
The Company's attributable cash flow from operations from Tenke was $31
million, with all cash being retained at the mine to fund the Phase II
Expansion Project, which continues to track on schedule and on budget. 

The Company continued the pursuit of new growth opportunities most notably
signing an option agreement on the Touro copper project located in northern
Spain (see news release April 11, 2012, entitled Lundin Mining Enters into
Option Agreement to Acquire Copper Project in Spain). 



Summary financial results for the quarter and year:

US $ millions (except per share amounts)  Three Months Ended March 31
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                                               2012          2011    
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Sales                                         212.8         211.5    
Operating earnings*                           105.4         118.4    
Net income                                     58.3          71.2    
Basic & diluted income per share               0.10          0.12    
Cash provided by operations                    51.3         132.2    
Cash position at March 31                     274.2         293.8    
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* Operating earnings is a non-GAAP measure defined as sales, less operating
costs (excluding depreciation) and general and administrative costs. 



Corporate Highlights

At the corporate level, Mr. Joao Carrelo will be stepping down from his role as
Executive Vice-President and Chief Operating Officer effective June 30, 2012 to
pursue other personal interests. Mr. Carrelo has been instrumental in the
growth and development of the Company's operations for many years and his
significant contributions are much appreciated. 

Mr. Michael Hulmes has joined the Company as General Manager at Neves-Corvo.
Mr. Hulmes is a Mining Engineer with substantial underground and open pit
experience. He has worked in a number of international base metals and gold
companies. Most recently he served as General Manager - Operations at the Ok
Tedi copper mine in Papua New Guinea. He spent 17 years with Homestake/Barrick
where he ultimately served as General Manager - Operations, responsible for a
group of three Barrick mines and their interest in the Kalgoorlie Consolidated
Gold Mines JV. 



Operational Highlights

Wholly-owned operations:  Outstanding operational performance generated higher
than expected copper, zinc and lead production. Sales volumes were higher and
operating costs were lower than expectations. 

  -- With better than expected tonnages processed and record copper plant
     recovery rates, Neves-Corvo had a solid three months of copper production.
     Copper plant recoveries averaged 91% over the quarter as compared to the
     2011 average of 85%.
  -- Zinkgruvan achieved record milled tonnage levels. Total zinc metal produced
     was 20,431 tonnes over the quarter compared to the average of 18,790 tonnes
     per quarter achieved in 2011.
  -- At Aguablanca, significant progress has been made in re-establishing the
     pit ramp and restart of production is on track for the second half of 2012.
  -- Galmoy outperformed production expectations and this has resulted in the
     Company increasing its zinc and lead production guidance for the year.

Tenke: The mine and mill continue to perform well and the $850 million Phase II
expansion is on track. 

  -- Production in the current quarter was above expectations due to higher
     throughput, grade and improved tank-house operation. Tenke's operator,
     Freeport, has increased copper production guidance slightly for 2012.
  -- No cash calls were made to the Company to fund the Phase II Expansion
     Project due to surplus cash from Tenke operations being greater than
     budgeted year to date.
  -- On March 26, 2012, the President and Prime Minister of DRC signed the
     decree approving the bylaw changes for Tenke Fungurume Mining SARL ('TFM')
     which were previously agreed after the conclusion of the mining contract
     review in October 2010.

Total Q1 production was as follows:

                        Q1     Total     Q4      Q3      Q2      Q1  
                       2012    2011     2011    2011    2011    2011 
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Copper (tonnes)       17,145   75,877  27,488  15,419  13,831  19,139
Zinc (tonnes)         33,743  111,445  27,053  28,791  27,404  28,197
Lead (tonnes)         11,766   41,130   9,273  10,077  10,367  11,413
Nickel (tonnes)          -          -       -       -       -       -
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Tenke attributable**   8,924   31,523   8,635   7,982   7,398   7,508
Copper (tonnes)                                                      
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** Lundin Mining's attributable share of Tenke's production was reduced from
24.75% to 24.0% effective March 26, 2012, when changes to  bylaws of TFM were
signed. 





  -- Operating earnings1 decreased by $13.0 million from $118.4 million in the
     first quarter of 2011 to $105.4 million in the first quarter of 2012.  This
     was largely attributable to lower metal prices, partially offset by the
     comparative impact of prior period price adjustments.
  -- Sales were largely unchanged, Q1-2012 over Q1-2011.  For the quarter ended
     March 31, 2012, sales of $212.8 million were slightly higher than the
     $211.5 million in the comparable period in 2011.  Increase in sales volume
     ($14.8 million) and prior period price adjustments ($20.1 million) were
     offset by lower metal prices ($33.6 million).
  -- Average metal prices for copper, zinc and lead in the first quarter of 2012
     were 14%-20% lower than the quarter ended March 31, 2011.
  -- Operating costs (excluding depreciation) for the quarter ended March 31,
     2012 increased by $11.9 million over the prior year comparative quarter and
     this is primarily attributable to:
     -- Neves-Corvo ($9.0 million): higher operating costs are attributable to
        the higher sales volume and changes in per unit production costs ($11.8
        million) experienced during the quarter, offset partially by a weakness
        in the Euro against the US dollar ($2.8 million);
     -- Zinkgruvan ($3.2 million): higher operating costs are primarily the
        result of increased metal sales and changes in per unit production costs
        ($4.4 million), offset partially by a weakness in the SEK against the US
        dollar ($1.2 million).

  -- Net earnings of $58.3 million ($0.10 per share) were $12.9 million below
     the $71.2 million ($0.12 per share) reported in the first quarter of 2011. 
     In addition to lower operating earnings1 of $13.0 million, deferred taxes
     were higher in the current quarter ($11.3 million) due to higher taxable
     losses at Aguablanca and prior period adjustments in 2011.

  -- Excluding the impact of changes in non-cash working capital, cash flow from
     operations in the current quarter was $63.6 million, compared to $68.5
     million in the first quarter of 2011, with the decrease primarily
     attributable to reduced operating earnings1 of $13.0 million. Total cash
     flow from operations for the current quarter was $51.3 million compared to
     $132.2 million for the corresponding period in 2011.



Tenke Fungurume

  -- Milling facilities continued to perform well, with throughput averaging
     12,200 metric tonnes of ore per day in the first quarter of 2012.
  -- For the quarter ended March 31, 2012, Tenke produced 36,130 tonnes of
     copper and sold 31,195 tonnes at an average realized price of $3.74/lb. 
     During the current quarter, 2,727 tonnes of cobalt in hydroxide was
     produced and 2,287 tonnes were sold at an average realized price of
     $8.46/lb.
  -- No cash advances were made to or distributions received from Tenke in the
     quarter ended March 31, 2012. $37.5 million in surplus cash from operations
     was utilized in the quarter to fund Lundin Mining's share of sustaining
     capital and expansion initiatives.
  -- Attributable operating cash flow related to Tenke for the first quarter of
     2012 was $31.0 million.
  -- On February 28, 2012, the Company reported the Mineral Reserve and Resource
     update on Tenke Fungurume as at December 31, 2011. The full release can be
     found on the Company's website at www.lundinmining.com.



Corporate Development

  -- On April 11, 2012, the Company announced it had entered into a purchase
     option agreement to acquire an 80% interest in the Touro copper project
     located in northern Spain. The agreement gives the Company an exclusive
     option until October 1, 2012, subject to extension, to purchase an 80%
     interest in the project by paying EUR60 million in stages based on
     milestones.   Details of the option agreement are more fully discussed in a
     press release entitled 'Lundin Mining enters into option agreement to
     acquire Copper project in Spain'.



Financial Position and Financing

  -- Net cash2 at March 31, 2012 was $242.3 million compared to a net cash2
     position of $236.1 million at December 31, 2011 and $262.0 million at March
     31, 2011.
  -- The $6.2 million increase in net cash during the quarter is primarily
     attributable to cash generated from operations ($51.3 million) partially
     offset by investment in mineral property, plant and equipment ($45.5
     million).
  -- Cash balance at April 23, 2012 was $285.4 million.



1. Operating earnings is a non-GAAP measure defined as sales, less operating
costs (excluding depreciation) and general and administrative costs. 

2. Net cash is a non-GAAP measure defined as available unrestricted cash less
long-term debt and finance leases. 



Outlook

2012 Production and Cost Guidance

  -- Except for Galmoy, full year 2012 production targets for wholly-owned
     operations remain unchanged from the guidance provided on December 12, 2011
     (see news release entitled 'Lundin Mining Provides Operating Outlook for
     2012-2014'). Updated zinc and lead production guidance for Galmoy has been
     reflected below.
  -- Revised guidance from Freeport-McMoRan Copper & Gold Inc. ('Freeport')
     on Tenke's copper sales, from 131,500 to 136,000 tonnes, has been reflected
     below and is based on the assumption that production volume will
     approximate sales.

------------------------------------------------------------------------
                                                 2012 Guidance          
(contained tonnes)                                 Tonnes  C1 Cost  a,b,
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Neves-Corvo                         Cu    52,500 - 57,000        $  1.80
                                    Zn    30,000 - 40,000               
Zinkgruvan                          Zn    75,000 - 81,000        $  0.25
                                    Pb    34,000 - 39,000               
                                    Cu      2,000 - 3,000               
Galmoy c                            Zn      7,000 - 8,000               
(in ore)                            Pb     1,500  - 2,000               
Aguablanca                          Ni        500 - 1,000               
                                    Cu        500 - 1,000               
Total: Wholly-owned operations      Cu    55,000 - 61,000               
                                    Zn  112,000 - 129,000               
                                    Pb    35,500 - 41,000               
                                    Ni        500 - 1,000               
Tenke: 24.0% attributable share  d  Cu             32,600        $  1.13
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a) Cash costs remain dependent on exchange rates (EUR/USD: 1.35, USD/SEK: 6.50)
and metal prices (Cu: $3.50, Zn: $0.95). 
b) Cash cost is a non-GAAP measure reflecting the sum of direct costs less
by-product credits. 
c) Production tonnage is based on a 50% attributable-share to Lundin Mining.
d) Lundin Mining's production from Tenke's attributable share was reduced from
24.75% to 24.0%, after approval of changes to TFM's bylaws. 



2012 Capital Expenditure Guidance

Capital expenditures for 2012 are expected to be $410 million, an increase of
$40 million over previous guidance primarily as a result of a revision in
accounting policy, as described below: 

  -- Sustaining capital in European operations:  $130 million (2011 - $127
     million):  Sustaining capital has increased $35 million over previous
     guidance to account for Aguablanca's pre-stripping costs which, as a result
     of changes in accounting standards (IFRIC 20, Stripping Costs in the
     Production Phase of a Surface Mine), are now being capitalized. The
     guidance provided on December 12, 2011 assumed these costs would be
     expensed as incurred, based on accounting policy at that time.  The net
     cash effect to the Company compared to the previous forecast is nil.
  -- New investment capital expenditures in European operations: $65 million
     (2011 - $52 million)
  -- Zambujal (Neves-Corvo) - Semblana Internal Ramp: $5 million. An internal
     ramp from existing workings in the Zambujal deposit down towards the
     Semblana copper deposit has commenced to facilitate underground exploration
     of Semblana. This ramp is sized to enable haulage of Semblana material if
     exploration success and subsequent economic studies prove this is viable.
  -- New investment in Tenke ($210 million): Total capital expenditure for the
     Phase II expansion is expected to be $850 million.  If metal prices remain
     strong, the capital spend is expected to be cash neutral to the Company, as
     Tenke's operating cash flows should be sufficient to meet this capital
     funding requirement. Year to date, no cash calls have been made by TFM from
     Lundin as surplus cash from operations, benefiting from higher than
     expected copper prices, has covered all Phase II expansion costs incurred
     during the period.



About Lundin Mining

Lundin Mining Corporation is a diversified 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 its Neves‐Corvo mine, along with an equity
stake in the world-class Tenke Fungurume copper/cobalt mine in the Democratic
Republic of Congo, which is undergoing expansion to 195,000 tpa copper cathode
production. 



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's 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,
zinc, lead and nickel; 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. 




         For further information, please contact:
         Sophia Shane, Investor Relations North America:  +1-604-689-7842
         John Miniotis, Senior Business Analyst:  +1-416-342-5565
         Robert Eriksson, Investor Relations Sweden:  +46 8 545 015 50
News Source: NASDAQ OMX



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Language:     English
Company:      Lundin Mining Corporation
              
               
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