Lundin profit rises 51%, mine delay may cut forecast

Zinc drives Lundin profit

Lundin Mining Corp, the company that bought more than $2 billion in base-metal assets last year, said March quarter profit rose 51% after zinc output rose.

Net income climbed to US$78.8 million, or 20 cents a share, from US$52.1 million, or 18 cents, Vancouver-based Lundin said in a statement. Sales gained 58% to US$305.7 million.

The company said it may reduce its zinc forecast by as much as 7000 metric tons after a delay in the startup of the Aljustrel mine.

"We continue to see a strong operating performance at each of the mines with production running at near record levels," chief executive officer Phil Wright said in the statement. Mr Wright was named CEO on January 16.

Lundin rose 68 cents, or 8.8%, to C$8.38 in Toronto Stock Exchange trading, the biggest daily gain since February 27. The shares have fallen 12% this year.

Zinc production in the quarter increased 14% to 43,019t, while silver advanced 5.4% to 717,515oz. Copper rose 1% to 24,940t.

Demand for zinc will lag behind supply by 215,000t this year, according to the International Lead and Zinc Study Group. Zinc has fallen 41% on the London Metal Exchange in the past year, to $2318/t.

Lundin acquired copper assets in the past year under former CEO Karl-Axel Waplan, to take advantage of prices that have almost tripled in the past three years on demand from China and other developing economies. The company bought Rio Narcea Gold Mines Ltd, giving it control of the Aguablanca nickel and copper mine in Spain, and a stake in the Tenke Fungurume copper and cobalt project in the Democratic Republic of Congo as part of a separate transaction.

Lundin eyes