Start up probs hit Africa’s largest copper mine output forecast and costs

17 November 2009 | 04:06 Code : 19443 Geoscience events
Equinox Minerals (EQN.TO: Quote) has cut its 2009 copper production forecast....

Equinox Minerals (EQN.TO: Quote) has cut its 2009 copper production forecast and raised its cost expectations due to problems starting up its Lumwana mine in Zambia, the company said on Thursday.The mine, which opened in December and reached commercial production in April, should produce 110,000-120,000 tonnes of copper in concentrate this year, down from its previous target of 170,000 tonnes, the company said in a statement.Average operating costs for the mine, Africa’s largest open pit copper operation, will be $1.35-$1.50 per pound, up from the previous estimate of $1.15 a pound, it said.The company warned in early July that it would likely cut its 2009 production estimate due to a series of factors that have slowed ramp-up of the mine, including a lack of mine trucks and mobile shovels, productivity problems, and unexpected areas of low-grade ore.Luwmana, which is Equinox’s only producing asset, has been plagued with troubles from the start. Its opening last year was delayed by five months due to a fire at the processing plant.The company said it expects the orebody-related issues should improve in the coming months, while the equipment issues are being addressed.The mine produced 24,413 tonnes of copper during the quarter at an average cost of $1.44 a pound, the Perth, Australia-based company said.Its shares were little changed on the news, as investors had been expecting a cut to the production outlook.Just after midday, the Toronto-listed shares were up 4 Canadian cents at C$2.77.In a note, UBS Investment Research analyst Onno Rutten said the mine’s slow start-up makes long-term production expectations murky."We believe that visibility on the long-term potential of Lumwana should improve once an extensive on-site consultant review of the mine plan has been completed," he said.He maintained his 2010 production estimate of 149,000 tonnes -- which is below Equinox’s long-term target of 170,000 tonnes -- and kept a 12-month target of C$3.10 on the stock.Equinox also mines uranium ore from Lumwana and plans to build a uranium processing plant when prices improve.($1=$1.08 Canadian) (Reporting by Cameron French; editing by Peter Galloway)

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