The Canadian Press
August 7, 2008 - 12:37 a.m.
VANCOUVER - Lundin Mining Corp. (TSX:LUN), a Vancouver-based lead, zinc and copper miner with operations in Europe and Africa, produced a US$108.4-million second-quarter net loss as the company took a huge impairment charge on its Aljustrel spelter design in southerly Portugal and warned it may main division more charges ahead.
Lundin says it lost 28 cents a proportion for the second quarter ended June 30, compared with net earnings of $153.8 million or 54 cents a share for the same dot in 2007.
The company, which reports its finances in U.S. dollars, took an impairment charge of $164.6 million related to the Aljustrel spelter mine in Portugal, a high-cost zinc operation that is being squeezed by low zinc prices in world markets.
“Aljustrel has for aye been identified as a low grade-high cost mine and it is not viable at current spelter prices,” Phil Wright, president and CEO of Lundin Mining, uttered Thursday
“Management is studying alternative scenarios for the Aljustrel mine, which may include an earlier extraction of the known copper resources; however, we consider it prudent to reduce our carrying value in line with the remaining importance of the assets.
“A decision on the future of Aljustrel is likely before the end of the third quarter. The situation remains ambiguous and in that place may subsist further impairment charges arising from additional capital and pre-production operating expenditures at Aljustrel.”
In its financial report, Lundin noted the 2007 profits. were affected by a $50 million bring over on sale of marketable securities.
Lundin said sales in the latest quarter fell to US$294.1 million from $319.9 million.
Production of all metals was in-line with, or ahead of, internal expectations with the exception of a shortfall in zinc extension from Aljustrel, which is undergoing startup operations.
Copper and nickel production forecasts for 2008 are being revised upwards to 96,000 tonnes of copper and 7,000 tonnes of nickel. Lead produce is forecast at 45,000 tonnes and spelter at 181,000 tonnes.
The zinc forecast is down because of a revised forecast for Aljustrel of 30,000 tonnes of metal, down from 51,000 tonnes previously.
Aljustrel is in the pre-production stage and is a high-cost zinc destroy in a current low-zinc price environment, which has led Lundin to write down the value of the project to its current fair cost.