Lundin Mining reports 37% increase in quarterly profit
High metal prices and increased production helped to boost the diversified base metal miner's profits to $71.2m for the quarter
Posted: Wednesday , 11 May 2011
TORONTO (Reuters) -
Lundin Mining (LUN.TO) reported a 37 percent increase in its quarterly profit on Tuesday, as higher metal prices and increased production helped boost results at the diversified base metal miner.
Lundin, which is exploring a possible sale after the collapse of a proposed tie-up with rival Inmet Mining (IMN.TO), said it is pushing ahead with the strategic review.
"The review process is well underway, and we will keep the market informed of any material developments," Chief Executive Phil Wright said in a statement.
The failed C$9 billion tie-up with Inmet kicked off an M&A frenzy among mid-tier base metal miners. The proposed "merger of equals" fell apart after Equinox Minerals (EQN.TO) launched a hostile C$4.7 billion bid for Lundin.
Equinox's move prompted Chinese metals trader Minmetals Resources (1208.HK) to make an unsolicited C$6.3 billion bid for Equinox, which recently failed after Equinox agreed to be acquired by the world's top gold miner Barrick Gold (ABX.TO) in a C$7.3 billion deal.
The slew of M&A activity in the sector has been driven largely by higher metal prices that have swelled the coffers of both miners across the globe. The prices of gold, copper and other metals have recently hit all time highs, mainly due to surging demand from China, India and other emerging economies.
Net income in the first quarter rose to $71.2 million, or 12 cents a share, from $51.9 million, or 9 cents.
Excluding one-time items, earnings rose to 14 cents a share, up from 6 cents, a year earlier.
Analysts, on average, had forecast earnings of 21 cents a share, according to Thomson Reuters I/B/E/S.
"Given the strong copper price, the increase in net income is less than we would have liked and has been affected by suspension of operations at Aguablanca and by shipping disruptions at quarter end resulting in sales tonnages being well below production for the quarter," said Wright.
In March, the company said operations at its Aguablanca mine in Spain would not resume until 2012, after heavy rains caused a landslide at the nickel-copper mine in December.
The company also said that costs rose as it mined lower-than-expected average grades at its Neves-Corvo copper-zinc mine in Portugal.
Quarterly revenue rose almost 50 percent to $211.5 million, the company said.
However, the company said sales tonnage in the quarter was less than production tonnage, due to shipping delays resulting from heavy ice in the Baltic and other scheduling issues.
The company said its quarter-end inventories were above normal and this will likely result in higher sales and earnings in the second-quarter of this year. (Reporting by Euan Rocha; editing by Frank McGurty)