Lundin bets on exploration program at Neves-Corvo

VANCOUVER — 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 pollymetallic 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 in order to tap “very 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,” commented president and CEO Paul Conibear. “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 roughly 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 Sumblana 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 will focus on a new copper discovery located 1.2 km south of Semblana, close to its tailing 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 step-out 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% zince, 0.2% lead, and 40 grams silver for 758,000 tonnes contained copper, 222,000 tonnes contained zinc, 54,000 tonnes contained lead, and 31 million oz. contained 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 tonne copper to US$1.70 per tonne.

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.