Lundin bets on exploration at Neves-Corvo

On Sept. 4 Toronto-based producer Lundin Mining (LUN-T) released results from an expansive, 90,000-metre resource drill program at its wholly owned Neves-Corvo polymetallic mine — including copper, zinc, lead, silver and gold — 100 km north of Faro, Portugal. The company’s results incorporate 53,000 metres over 56 diamond drill holes collared at the Semblana copper-silver deposit and newly minted Monte Branco copper discovery.

The Semblana delineation program expanded inferred resources to 7.1 million tonnes grading 2.8% copper and 26 grams silver per tonne, though Lundin has determined that additional surface drilling will be inadequate going forward due to restraints on deep intercept spacing. The company is advancing a US$25-million “high-priority underground exploration drift” at the site to tap “good copper-silver potential,” with US$5 million budgeted on the project this year.

“We are pleased that the exploration program at [Neves-Corvo] once again more than replaced mineral resources mined during the past year,” president and CEO Paul Conibear comments. “Now that our main access ramp into the Lombador South deposit has reached a critical depth that has allowed commencement of copper mining, we are able to advance important underground exploration drilling in this area, targeting further expansion of copper resources.”

Located 300 metres south of the existing resource, the Semblana South extension is a copper-zinc-lead-silver-gold zone covering 270 metres of strike length and containing areas of thick, silver-gold enriched sulphide mineralization.

Lundin released four holes from the Semblana South program at depths exceeding 800 metres, including: 67 metres averaging 0.3% copper, 2.6% zinc and 0.7% lead in hole PSP-44; 20 metres grading 0.6% copper, 2.8% zinc and 0.72% lead in hole PSQ-42; and 13 metres of 1.9% copper, 2.64% zinc, 0.25% lead and 55.7 grams silver in hole PSR-42.

Lundin reported in late July that the majority of its surface drilling would focus on a new copper discovery located 1.2 km south of Semblana, close to its tailings facility. The company named the discovery Monte Branco, which is a 250-by-220-metre system containing both massive and stockwork sulphides intercepted between depths of 540 and 700 metres.

Lundin developed a stepout program based on discovery hole SCA-26, which intersected 32.5 metres grading 2.2% copper. The company is sinking 25,000 metres at the target this year, and released preliminary results including 4 metres averaging 7.3% copper in hole SCA-26A, 9 metres grading 2.5% copper in hole SBA-26B and 16 metres averaging 2.3% copper in hole SBA-26A. Silver assays on the results are still pending.

As of June, Neves-Corvo held proven and probable reserves totalling 24 million tonnes averaging 3.1% copper, 0.9% zinc, 0.2% lead and 40 grams silver, for 758,000 contained tonnes copper, 222,000 contained tonnes zinc, 54,000 contained tonnes lead and 31 million contained oz. silver.

The company continues to improve operations at Neves-Corvo, with mill rates performing better than expected and improved recovery rates holding steady. Lundin bumped its 2012 copper guidance at the mine during its second-quarter report, increasing expected production to between 55,000 and 60,000 tonnes copper. Cash costs are also expected to perform better than expected, with guidance dropping from US$1.80 per lb. copper to US$1.70 per lb.

Company shares have had a solid performance during the second quarter, having jumped 14%, or 55¢ since early July, en route to a $4.57 press-time close. Lundin traded at high volumes following news of the exploration update as 7.8 million shares traded hands, and the company jumped 3.4%, or 15¢ on the day.

The company has 583 million shares outstanding for a $2.7-billion market capitalization.