Canadian base metals miner Lundin has reported lower earnings for the first quarter of 2023, with profit affected by higher operating costs as a result of inflationary impacts, lower metal prices and lower sales volumes.

Net earnings fell to $165.3-million, from $212.8-million in the prior-year comparable period, while adjusted earnings reduced to $125.7-million, from $295.6-million a year earlier.

Lundin generated revenue of $751.3-million in the quarter ended March 2023. Production costs were higher than in the prior-year quarter, however, the firm stated that it was on track to achieve its guidance.

Overall, operations performed well in the quarter and the company said it was on track to achieve its production guidance.

“Our operations performed well in the first quarter of 2023, reflecting our continued focus on improving operational consistency and excellence.

“Copper production increased quarter-over-quarter with strong performance across our portfolio. Zinc production also increased meaningfully with the ongoing ramp-up of the Zinc Expansion Project at Neves-Corvo delivering a fourth quarter of sequential improvement and achieving record quarterly zinc production of nearly 27 800 t,” commented CEO Peter Rockandel.

The 80%-owned Candelaria mine, in Chile, produced 49 167 t of copper and 24 000 oz of gold in concentrate, on a 100% basis. Copper production was lower than the comparable prior year quarter owing to grades whereas gold production was higher than the prior year quarter owing to throughput. Current quarter production costs and copper cash costs of $2.21/lb were higher than the prior year quarter largely owing to higher contractor and maintenance costs. Cash cost was further impacted by union bonus payments for the finalisation of the remaining two union negotiations which were successfully completed during the first quarter 2023, and lower sales volumes.

The 100%-owned Chapada mine, in Brazil, produced 9 864 t of copper and 12 000 oz of gold in concentrate in the quarter. Copper production was lower than the prior year quarter primarily owing to planned lower recoveries partially offset by higher throughput. Current quarter production for both metals was above expectations due to higher throughput. Production costs were lower due to lower sales volumes. Copper cash cost of $2.37/lb for the quarter was higher than the prior year quarter due to higher consumable costs and lower sales volumes.

During the quarter, the fully-owned Eagle mine, in the US, produced 3 724 t of nickel and 3 140 t of copper which were lower than the prior year quarter owing to planned lower grades and lower throughput. Production costs were higher than the comparable prior year quarter owing to higher consumable costs. Nickel cash cost in the quarter of $2.43/lb was higher than the prior year quarter due primarily to lower by-product copper price and lower sales volumes.

Neves-Corvo, in Portugal, produced 7 574 t of copper for the quarter and 27 793 t of zinc. Copper production was lower than the prior year comparable quarter, owing primarily to lower throughput and grades, while zinc production was higher primarily as a result of the increased throughput driven by the ramp-up of the Zinc Expansion Project. Production costs were higher than the prior year owing to higher zinc volumes and the copper cash cost of $1.69/lb for the quarter was comparable to the prior year quarter.

At Zinkgruvan, in Sweden, zinc production of 20 760 t, lead production of 7 407 t and copper production of 1 717 t were higher than the prior-year quarter. Production costs were lower than the prior-year quarter owing to favourable foreign exchange. Zinc cash cost of $0.54/lb was higher than the prior-year quarter owing to lower by-product credits.

"With healthy metal prices, we generated adjusted Ebitda of over $335-million and free cash flow from operations of over $70-million in the first quarter. We continue to be very constructive on the outlook for the metals we produce and look forward to immediately growing our business with the closing and integration of our acquisition of an initial 51% interest in the Caserones copper/molybdenum mine early in the second half of this year,” said Rockandel.