"Unfortunately, our earnings were affected by significant provisional pricing adjustments given the late-quarter decline in base metal prices," the company's president and CEO Peter Rockandel said.
The company has also revised down its 2022 production guidance, while lifting its cash cost forecasts.
Lundin's total copper production guidance now stands at 250,000-274,000 tonnes, down from the previous guidance of 258,000-282,000t. Zinc production guidance now stands at 168,000-183,000t, which compares to previous guidance of 188,000-203,000t. The gold production guidance was dropped to 145,000-155,000 ounces, from 153,000-163,000oz.
Nickel production guidance was left unchanged at 15,000-18,000t.
"We have revised production guidance for Chapada given impacts of the very wet start to the year, and for Neves-Corvo zinc as we progress ramping the zinc expansion project towards full capacity," Rockandel said.
Copper cash cost guidance for Candelaria and Chapada were raised to $1.75/pound and $2.25/lb from $1.55/lb and $1.60/lb, respectively.
"We expect inflationary impacts on mining consumables to persist, which is reflected in our revised cash cost and capital expenditure guidance for Chapada and Candelaria," Rockandel said.
"Despite challenging inflationary conditions in the second quarter, Lundin Mining generated over $365 million of cash from operating activities and $215 million of free cash flow," he said.
He noted that the company has $470 million of net cash and total liquidity of about $2.3 billion as of the end of the quarter.
Lundin Mining's share price was up 2% day on day on July 28 at C$7.22 (US$5.63). National Bank of Canada Financial Markets has a target price for the company of C$9.50.
"Lundin is well suited to weather a prolonged period of depressed copper prices; however, elevated cash costs and the potential development of Josemaria adds significant financial uncertainty and deteriorates near-term [free cash flow] generation," NBF said.
"A favourable outcome to Chilean tax/royalty revisions and sequencing of lower capital-intensive growth projects, like the potential expansion of Chapada, would improve our near-term outlook for the company," it said.
