Lundin Mining Fourth Quarter and Full Year 2012 Results

Lundin Mining Fourth Quarter and Full Year 2012 Results 
TORONTO, ONTARIO -- (Marketwire) -- 02/21/13 -- Lundin Mining
Corporation (TSX:LUN)(OMX:LUMI) ("Lundin Mining" or the "Company")
today reported net earnings before impairment charges of $45.0
million ($0.08 per share) for the quarter ended December 31, 2012.
Cash flows of $49.4 million were generated from operations during the
quarter, not including the Company's attributable cash flows of $39.2
million from Tenke Fungurume. 
Paul Conibear, President and CEO, commented, "Our operations continue
to consistently perform. Especially pleasing this last quarter was
the performance of Zinkgruvan, with record production of zinc, lead
and copper in concentrate and maintaining a cash cost of 12 cents per
pound of zinc for the quarter and 13 cents per pound for the year. 
With the staged commissioning and substantial completion of Tenke's
Phase II expansion achieved by year end 2012, we also saw record
copper production at Tenke and continue to be very pleased with how
this operation is running and the cash flow being generated. 
Looking forward, we expect our own mine's aggregate 2013 production
and operating costs to be substantially in line with that achieved in
2012, and surplus cash flows from Tenke contributing materially to
our balance sheet." 

Summary financial results for the quarter and full year:
                                     Three months ended Twelve months ended
                                            December 31         December 31
US$ Millions (except per share       ------------------ -------------------
 amounts)                                2012      2011      2012      2011
Sales                                   176.4     242.1     721.1     783.8
Operating earnings(1)                    51.8     124.3     308.7     381.9
Net (loss) earnings                     (17.1)     36.1     123.2     183.8
Net earnings, before impairment(2)       45.0      71.9     185.3     219.5
Basic (loss) earnings per share         (0.03)     0.06      0.21      0.32
Cash flow from operations                49.4     113.9     194.0     308.7
Ending cash position                    275.1     265.4     275.1     265.4
(1) Operating earnings is a non-GAAP measure defined as sales, less
    operating costs (excluding depreciation) and general and administrative
(2) Add back of asset impairment expense is net of tax.

Fourth quarter earnings were affected by a non-cash impairment charge
of $67.3 million ($62.1 million after-tax) from a write down of
mineral properties, plant and equipment and goodwill at the
Aguablanca mine. Although the decision regarding the future
configuration of the pit is not anticipated until the second quarter
of 2013, the Company revalued the assets reflecting a reduction in
the mineable reserve to only those areas not affected by pit wall
instability and for the time being we assume no additional investment
to attempt to recover reserves in the affected area. 

Operational Highlights
Wholly-owned operations: The Company's strong and steady performance
throughout the year is reflected in the production results which are at the
high end of guidance targets.
--  Neves-Corvo met its production goals for both zinc and copper. A
    significant amount of incremental lower grade, but profitable, copper
    ore was mined, compared to the reserve models, as additional volumes of
    mineralization on the periphery of stopes was encountered. Near record
    copper recoveries in the plant were achieved. Cash costs per pound of
    copper sold were $2.17 for the quarter as a result of the processing of
    more tonnes of ore at lower grades, and $1.79 for the year. 
--  Zinkgruvan finished the year with record production of zinc, lead and
    copper in concentrate and continued to report high recovery performance
    in the process plant. Zinc, copper and lead grades and plant recoveries
    met, and in some cases exceeded expectations. Cash costs per pound of
    zinc sold were $0.12 for the quarter and $0.13 for the year. 
--  Aguablanca's processing operations were restarted in August, with full
    production achieved earlier than planned, resulting in higher than
    expected nickel and copper metal production. Grades mined and plant
    recoveries for both nickel and copper were slightly better than
    expected. Cash costs per pound of nickel sold were $6.19 for the
    quarter, which was the first quarter of full production since mining was
    suspended in the fourth quarter of 2010. 
--  Galmoy's mining production from remnant ores exceeded expectations for
    the year. Although mining ceased in the fourth quarter of 2012,
    processing of stockpiled ore by a third party processing facility will
    continue into 2013. 
Tenke: Tenke achieved record mining, milling and production rates in 2012
facilitated by the staged commissioning of Phase II expansion facilities.
The Phase II expansion is substantially complete, on schedule and on budget.
--  By the end of 2012, the expanded facilities were operating near full
    Phase II design capacity. Fourth quarter production of 44,130 tonnes of
    copper cathode is 91% of the expanded annual design capacity of 195,000
    tonnes per annum copper cathode, on a prorated basis. 
--  During the year, the Phase II expansion and sustaining capital funding
    was met almost entirely with cash available from Tenke operations with
    the exception of a cash call for $15.0 million funded by the Company. 
--  Attributable operating cash flow related to Tenke for 2012 was $145.9
Financial Highlights
--  Operating earnings for the year ended December 31, 2012 were $308.7
    million, a decrease of $73.2 million from the $381.9 million reported in
    2011. The decrease was primarily attributable to a change in sales mix,
    as less profitable zinc replaced copper sales in 2012 ($48.0 million),
    lower realized prices and price adjustments from prior period sales
    ($39.7 million), higher costs ($10.4 million) and lower overall sales
    volume ($3.2 million) which more than offset the impact of the
    favourable exchange rates ($22.3 million) and restart of the Aguablanca
    operation ($5.8 million). 
--  For the year ended December 31, 2012, sales of $721.1 million decreased
    $62.7 million from the prior year ($783.8 million) which was mainly as a
    result of lower net sales volume ($24.8 million) and lower realized
    metal prices and prior period price adjustments ($39.7 million).
    Increased volume of metal concentrate sales at Zinkgruvan and the
    restart of the Aguablanca mine were more than offset by lower copper
    sales at Neves-Corvo and overall reduced sales at Galmoy. 
--  Average London Metal Exchange ("LME") metal prices for copper, zinc,
    lead and nickel for the year ended December 31, 2012 were significantly
    lower (10% - 23%) than that of the prior year. 
--  Operating costs (excluding depreciation) of $385.0 million in the
    current year were slightly higher than the prior year of $382.0 million.
    Excluding increased costs from Aguablanca ($18.2 million) associated
    with restart of production, costs decreased by $15.2 million which is
    primarily attributable to: 
    --  Neves-C
orvo ($11.5 million): Favourable foreign exchange rate and
        lower royalty charge, partially offset by higher per unit costs; and
    --  Galmoy ($4.4 million): Lower production and cessation of mining
--  Net earnings of $123.2 million ($0.21 per share) for the current year
    were $60.6 million lower than the $183.8 million ($0.32 per share)
    reported in 2011. Earnings were impacted by: 
    --  lower operating earnings primarily due to lower sales and lower
        realized metal prices ($73.2 million) 
    --  higher impairment loss on write-down of Aguablanca's mineral
        properties, plant and equipment and goodwill in 2012 compared to
        2011 ($31.6 million); 
    --  higher exploration and business development expenditures ($15.4
        million); offset by 
    --  lower depreciation, depletion and amortization expense ($31.4
        million) as a result of lower production at Neves-Corvo and foreign
        exchange rates; and 
    --  lower tax expense of $27.6 million, reflecting lower operating
        earnings and a decrease in Sweden's future tax rate from 26.3% to
        22% effective January 1, 2013. 
--  Cash flow from operations for the year was $194.0 million compared to
    $308.7 million for 2011. The comparative decrease in the cash flow is
    mostly attributable to lower operating earnings and changes in working
--  Shortly after the restart of production at Aguablanca, the mine
    encountered pit stability issues on the south wall which restricted
    access to certain areas of the pit. As the Company continues to assess
    its options, the mine is operating on a modified mine plan with a mine
    life of only two years due to restricted access to its ore. This has
    resulted in a decrease in the value of certain of Aguablanca's assets
    below their carrying values. Accordingly, the Company has recognized an
    impairment loss of $39.2 million ($34.0 million after-tax) on mineral
    properties, plant and equipment and $28.1 million on goodwill. 
Tenke Fungurume
--  Milling facilities continued to produce above rated capacity, with
    throughput averaging approximately 13,000 metric tonnes of ore per day
    during 2012, an estimated 1,900 metric tonnes of ore per day higher than
    the previous year. 
--  For the year ended December 31, 2012, Tenke produced 157,671 tonnes of
    copper and sold 152,355 tonnes at an average realized price of $3.51/lb.
    In addition, 11,669 tonnes of cobalt in hydroxide was produced and
    11,259 tonnes were sold at an average realized price of $7.83/lb of
--  Cash costs(1) of $1.23/lb of copper for the year were higher than the
    $1.07/lb reported in the prior year, primarily resulting from lower
    cobalt credits. 
--  During the year, $158.9 million was spent on the Company's attributable
    share of Tenke's capital requirements which was funded by a cash advance
    of $15.0 million and excess cash flow from operations. 
(1) Cash cost/lb of copper are non-GAAP measures defined as all cash costs
    directly attributable to mining operating, less royalties and by-product
Corporate Highlights
--  On September 4, 2012, the Company reported its Mineral Reserve and
    Resource estimates as at June 30, 2012. The Company also filed
    independent NI 43-101 compliant technical reports on the Neves-Corvo
    mine (including the Semblana deposit) and the Zinkgruvan mine in January
--  In December 2012, the Company executed an amendment to its revolving
    credit agreement that increases the amount of its credit facility to
    $350 million from $300 million, reducing the costs of borrowing and
    extending the term of the facility to December 2015. 
--  In January 2013, the Company, together with its partners in Tenke
    Fungurume, entered into a definitive agreement to acquire a large scale
    cobalt chemical refinery in Finland to provide direct end-market access
    for Tenke's cobalt hydroxide production. See press release entitled,
    "Lundin Mining, together with Tenke partners, to acquire Kokkola cobalt
    operations in Finland", dated January 21, 2013. 
Financial Position and Financing
--  Net cash(1) position at December 31, 2012 was $265.1 million compared to
    a net cash position of $236.1 million at December 31, 2011. 
--  The $29.0 million increase in net cash during the year was primarily
    attributable to cash inflow from operations of $194.0 million, offset by
    investment in mineral properties, plant and equipment of $159.4 million,
    a $15.0 million cash advance to Tenke and a full repayment of the
    Company's commercial paper program ($19.7 million). 
(1) Net cash is a Non-GAAP measure defined as available unrestricted cash
    less long-term debt and finance leases.
2013 Production and Cost Guidance
--  Production guidance for the three-year period of 2013 through 2015 for
    wholly-owned operations remains unchanged from the guidance provided on
    December 6, 2012 (see news release entitled "Lundin Mining Provides
    Operating Outlook for 2013-2015"). Production and cash cost guidance for
    2013 are as follows: 
2013 Guidance                                                              
(contained tonnes)                                    Tonnes      C1 Cost(a)
Copper                    Neves-Corvo        50,000 - 55,000         $ 1.80
                           Zinkgruvan          2,500 - 3,500               
                           Aguablanca          4,500 - 5,000               
                         Wholly-owned        57,000 - 63,500               
                        Tenke(@24%)(b)                44,650         $ 1.03
                   Total attributable      101,650 - 108,150               
Zinc                      Neves-Corvo        45,000 - 50,000               
                           Zinkgruvan        73,000 - 78,000         $ 0.20
                                Total      118,000 - 128,000               
Lead                       Zinkgruvan        33,000 - 36,000               
Nickel                     Aguablanca          5,000 - 5,500         $ 5.00
(a) Cash costs remain dependent upon exchange rates (forecast at
    EUR/USD:1.30, USD/SEK:6.75) and metal prices (forecast at Cu: $3.50,
    Zn: $0.95, Pb: $1.00,Ni: $8.00, Co: $12.00).
(b) Freeport has provided 2013 sales and C1 cash cost guidance. The sales
    guidance is assumed to approximate Tenke's production.
2013 Capital Expenditure Guidance
Capital expenditures for 2013 are expected to be $285 million (2012: $318.3
million), an increase of $15 million from our previously released estimate
of $270 million on December 6, 2012. This increase is primarily attributable
to revised forecasts for 2013 capital investments at Tenke. Major capital
investments for 2013 are as follows:
--  Sustaining capital in European operations - $110 million (2012: $129.5
    million), consisting of approximately $70 million for Neves-Corvo and
    $40 million for Zinkgruvan. 
--  New investment capital in European operations - $60 million (2012: $29.9
    million), consisting of: 
    --  Lombador Phase I ($30 million) - For underground development,
        improvements to the main surface substation, installation of surface
        power cables, and other items related to positioning for increased
        copper and zinc production from the Lombador ore bodies over the
        next several years. 
    --  Neves-Corvo industrial water dam ($9 million) - Work was to have
        commenced in 2012 on this dam but was delayed until 2013 due to
        drilling on the Monte Branco copper discovery which lies beneath. 
    --  Zinkgruvan ore dressing plant ($13 million) - During 2012, a pre-
        feasibility study was completed showing that with an estimated $52
investment over a 24 month period, replacement of the
        current crushing, screening and grinding circuits would result in
        higher plant availability, lower operating costs, improved noise and
        dust emissions and an increase in mine production. A feasibility
        study is advancing with expected completion in the first half of
        2013. Permitting of the plant modernization and tailings facility
        expansion is in progress and, subject to positive results,
        investment in the zinc plant modernization will be fast tracked. 
    --  Other improvement initiatives ($8 million). 
--  New investment in Tenke - $115 million (2012: $158.9 million), estimated
    by the Company as its share of the remaining Phase II expansion costs
    and sustaining capital funding for 2013. All of the capital expenditures
    are expected to be self-funded by cash flow from Tenke operations. If
    current metal prices and operating conditions prevail, it is reasonable
    to expect meaningful amounts of excess operating cash flows from Tenke
    to come back to the funding partners to repay initial capital
    investments on a 70/30 basis. 
Exploration Investment
--  Exploration expenditures are expected to be in the range of $40 million
    in 2013 (2012: $50.9 million). Approximately $18 million of this will be
    spent at Neves-Corvo where a large drilling program will advance
    exploration on various targets including the new copper discovery at
    Monte Branco. An additional $5 million will be spent on several other
    copper targets in the Iberian Region. 
--  The Company continues to seek exploration investment opportunities. In
    November 2012, Lundin Mining signed an Option Agreement with Southern
    Hemisphere Mining (ASX:SUH) to earn up to a 75% interest in the Llahuin
    Project in Chile by investing $35 million in development over a period
    of 6 years; approximately $7 million is expected to be spent in 2013. 

About Lundin Mining 
Lundin Mining Corporation is a diversified base metals mining company
with operations in Portugal, Sweden, Spain and Ireland, producing
copper, zinc, lead and nickel. In addition, Lundin Mining holds a 24%
equity stake in the world-class Tenke Fungurume copper/cobalt mine in
the Democratic Republic of Congo. 
On Behalf of the Board, 
Paul Conibear, President and CEO 
Forward-Looking Statements 
Certain of the statements made and information contained herein is
"forward-looking information" within the meaning of the Ontario
Securities Act. Forward-looking statements are subject to a variety
of risks and uncertainties which could cause actual events or results
to differ from those reflected in the forward-looking statements,
including, without limitation, risks and uncertainties relating to
foreign currency fluctuations; risks inherent in mining including
environmental hazards, industrial accidents, unusual or unexpected
geological formations, ground control problems and flooding; risks
associated with the estimation of mineral resources and reserves and
the geology, grade and continuity of mineral deposits; the
possibility that future exploration, development or mining results
will not be consistent with the Company's expectations; the potential
for and effects of labour disputes or other unanticipated
difficulties with or shortages of labour or interruptions in
production; actual ore mined varying from estimates of grade,
tonnage, dilution and metallurgical and other characteristics; the
inherent uncertainty of production and cost estimates and the
potential for unexpected costs and expenses; commodity price
fluctuations; uncertain political and economic environments; changes
in laws or policies, foreign taxation, delays or the inability to
obtain necessary governmental permits; and other risks and
uncertainties, including those described under Risk Factors Relating
to the Company's Business in the Company's Annual Information Form
and in each management's discussion and analysis. Forward-looking
information is, in addition, based on various assumptions including,
without limitation, the expectations and beliefs of management, the
assumed long-term price of copper, zinc, lead and nickel; that the
Company can access financing, appropriate equipment and sufficient
labour and that the political environment where the Company operates
will continue to support the development and operation of mining
projects. Should one or more of these risks and uncertainties
materialize, or should underlying assumptions prove incorrect, actual
results may vary materially from those described in forward-looking
statements. Accordingly, readers are advised not to place undue
reliance on forward-looking statements.
Lundin Mining Corporation
Sophia Shane
Investor Relations North America
Lundin Mining Corporation
John Miniotis
Senior Business Analyst
Lundin Mining Corporation
Robert Eriksson
Investor Relations Sweden
+46 8 545 015 50
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