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Canada's Lundin Mining Begins Production of Copper Cathodes from Tenke Fungurume Deposits in Congo

BANGALORE, INDIA--April 6, 2009--Researched by Industrial Info Resources (Sugar Land, Texas)-- Lundin Mining Corporation (NYSE:LMC) (Toronto, Ontario), a base metals mining firm, has begun production of copper cathodes from the Tenke Fungurume copper/cobalt deposits in the Democratic Republic of Congo (DRC). The facility has been designed with an initial capacity of 115,000 tons per year of copper cathode of London Grade A quality, and 8,000 tons per year of cobalt in the form of cobalt metal or as intermediate cobalt hydroxide.

The Tenke Fungurume deposit, one of the world's highest-grade and largest underdeveloped resources of copper and cobalt, is spread over an area of 1,500 square kilometers, about 110 miles northwest of Lubumbashi in Katanga province. In 2007, Lundin secured an equity interest of 24.75% in the project through the acquisition of Tenke Mining Corporation (Vancouver, British Columbia). The other partners of the project are Freeport-McMoRan Gold and Copper Incorporated (NYSE:FCX) (Phoenix, Arizona), with a stake of 57.75%, and La Generale des Carrieres et des Mines (Gecamines) (Lubumbashi, DRC), which holds 17.5% in the project as a free carried interest.

According to earlier exploration activities conducted by independent qualified persons authorized by Tenke Mining, the measured and indicated resources of the deposit were determined to be 235 million tons, with 3.01% of copper and 0.31% of cobalt. Inferred resources were estimated at 264 million tons, with 2.6% of copper and 0.19% of cobalt. Freeport, which is also the operator of the mine, estimated reserves at 100 million tons, with 2.27% of copper and 0.33% of cobalt.

In 2006, the board of directors of Phelps Dodge International Corporation (Phoenix, Arizona), a mining firm that was subsequently acquired by Freeport, formally approved construction of production facilities at the Tenke Fungurume deposits. The initial production capacity was based on open-pit mining operations and a 40-year mine plan to process ore reserves of 100 million tons with an average grade of 2.3% of copper and 0.3% of cobalt. The mined ore is crushed in a semi-autogenous grinding mill. The finely ground ore is sent through a solution-extraction/electro-winning process to produce electrolytic copper cathodes.

The first phase of the project entailed an investment of $1.75 billion. Drilling, exploration and metallurgical testing activities are under way at the site to fully assess the potential of the deposit. The project plan calls for exploration drilling up to 200 kilometers through 2011.

Lundin will ramp up production of copper in the coming months and expects to achieve 250,000 tons per year of production by the second half of the year. The firm will also complete the development of the cobalt circuit and acid plant simultaneously. The site is being developed to have mining, processing and support facilities with a capacity to produce 400,000 tons per year of copper for a period of 50-100 years.

Following initial production, the Tenke Fungurume project is expected to generate over 1,000 direct and 4,000 indirect employment opportunities. In addition to boosting the economy of the region, the project partners have also made significant investments in developing local infrastructure such as power generation and transmission systems, improvement of national highway and regional roads, and establishment of schools and clinics in the region.

Commencement of initial production in the Tenke Fungurume project also bodes well for Lundin, which is expected to use the cash proceeds to repay a loan of $200 million to Freeport by the deadline of June 5, 2009. Lundin had secured a revolving credit facility of $575 million, of which $266.7 million had been drawn. As of December 31, 2008, the firm was in default of its tangible net worth covenant on the credit facility. However, a syndicate of lenders subsequently waived the covenant and the deadline for repayment was renegotiated to June 5, 2009.