* Lundin cuts its 2011 copper, zinc output forecast
* Analysts cut ratings, price targets on Lundin’s stock
* Lundin shares down more than 5 pct in early trading
TORONTO, July 22 (Reuters) - Lundin Mining Corp LUN.TO reported disappointing second-quarter production, prompting analysts to cut their ratings on the diversified miner and sending its shares down on Friday.
The Toronto-listed company, late on Thursday, said output from its Neves Corvo copper-zinc mine in Portugal was weaker than expected, due to poor ground conditions around some of its higher-grade material.
The company also said lead production this year from its Zinkgruvan zinc-lead-silver mine in Sweden would miss earlier expectations because of plant disruptions and lower lead grades.
In addition Lundin will feel the impact of a reduced copper production forecast for the huge Tenke Fungurume copper-cobalt mine in the Democratic Republic of Congo. Freeport McMoran FCX.N operates the mine and Lundin has a stake in it.
“This news is a tough starting point for interim CEO Paul Conibear,” wrote SEB Enskilda analyst Julian Beer in a note to clients.
Conibear, who was Lundin’s head of corporate development, took over the reins at Lundin from Chief Executive Phil Wright, who stepped down at the end of June. The company has yet to name a new permanent CEO.
“While the Neves situation looks recoverable, higher than expected costs and the somewhat cautious expansion at Tenke are out of Lundin’s control,” said Beer, who thinks that this may explain Lundin’s difficulty in obtaining a premium disposal value.
Lundin earlier this year failed to reach a deal with any suitors after going thorough strategic alternatives process that followed a hostile bid from larger rival Equinox Minerals.
The hostile bid, which foiled Lundin’s proposed friendly tie-up with Inmet Mining IMN.TO, also fell apart after Equinox itself was acquired by the world’s top gold miner Barrick Gold ABX.TO for about C$7.3 billion.
Lundin now expects 2011 copper production of 75,400 tonnes, down from a prior forecast of 79,400 tonnes. It also cut its zinc output forecast to 112,000 tonnes from 120,000 tonnes.
Lundin’s disappointing production results and outlook prompted analysts at both TD Newcrest and SEB Enskilda to cut their ratings and price targets on the company.
TD analyst Greg Barnes, in a note to clients, said the latest data also portends higher near-term operating costs at Tenke. Barnes cut his price target on shares of Lundin to C$8 from C$9.
Shares of Lundin fell 5.4 percent to C$6.82 in early trading on the Toronto Stock Exchange on Friday. (Reporting by Euan Rocha; Editing by Frank McGurty)