The completion of the Neves-Corvo zinc expansion project in Portugal has been pushed back and the cost of the project has risen by €55-million, Canada-headquartered Lundin Mining has reported.
The preproduction cost of the expansion project is now estimated at €360-million, while the total project capital cost is estimated at €380-million.
Lundin said that the cost increase comprises €10-million for potential contractor claims for surface delays and time extensions, €10-million for owners and indirect costs related to schedule delays, €7-million for an underground paste backfill expansion, which was not included in the initial project scope, and a €28-million contingency.
The new cost estimate was reported in Lundin’s second-quarter financial results announcement this week, in which the company said it had reduced its 2019 capital spend on the project by $70-million to $140-million (€120-million) as project work is deferred to 2020.
The mining company reported that, while commissioning of surface facilities was still expected to start by the end of the first quarter of 2020, a phased approach would take several quarters to ramp up, and that full throughput rates were expected by the fourth quarter of next year.
Commissioning of the underground crushing and conveying systems was expected to occur during the second quarter of 2020.
The Neves-Corvo mine produced 18 251 t of zinc and 9 651 t of copper in the June quarter, both lower than the prior-year comparable quarter, owing to lower head grades.
The group, which also owns the Zinkgruvan mine in Sweden, Candelaria in Chile, Eagle in the US and the newly acquired Chapada in Brazil, produced a total of 47 685 t of copper, 47 116 t of zinc and 3 398 t of nickel.
Lundin has also updated its copper guidance for the year to reflect the acquisition of Chapada, with the 27 000 t to 30 000 t expected to come from this new asset offsetting the lower forecast production from the Neves-Corvo mine. The new guidance for 2019 is to produce 224 000 t to 245 000 t of copper, up from a previous guidance of 199 000 t to 218 000 t.
The zinc guidance remained unchanged at 147 000 t to 157 000 t, while the nickel guidance for the year is between 12 000 t and 14 000 t.
Lundin reported a net loss for the quarter of $8.6-million, a decrease of $96.1-million from net earnings of $87.5-million reported in the prior year quarter. The decrease was attributable to lower gross profit, partially offset by lower income taxes. Gross profit fell to $25-million, from $155.1-million a year earlier, owing to lower revenues on weaker prices.