* Production outlook for 2011 lowered
* CEO sees lower copper output at Neves for “a few years”
* Shares down 7.43 percent on TSX (In U.S. dollars unless noted)
Oct 27 (Reuters) - Shares of Lundin Mining (LUN.TO) fell more than 7 percent on Thursday, after the company reported an 80 percent drop in third-quarter profit and cut its production outlook for the year.
The Canadian miner’s earnings, released after markets closed on Wednesday, were hit by lower base metal prices, lower grades at its Neves-Corvo copper mine in Portugal and operational issues at a zinc mine in Sweden.
Lundin trimmed the 2011 output forecast for Neves-Corvo to 70,000 tonnes of copper. It also marginally lowered its overall zinc and lead output forecast for the year.
In a conference call on Thursday, Chief Executive Paul Conibear told investors that production at Neves-Corvo, which is the company’s main copper mine, will remain lower for at least a few years.
“Last year we did 80,000 tonnes from Neves, this year nominally 70,000, next year you can see that it’s obviously a decline step change to that,” he said. “It would be prudent to assume similar levels to next year for a few years moving forward.”
Lundin’s share of copper production at the Tenke Fungurume mine in Democratic Republic of Congo, which is operated by copper-gold miner Freeport McMoran (FCX.N), was 15,419 tonnes in the third quarter.
Lundin shares slipped 7.43 percent to C$4.11 on Thursday on the Toronto Stock Exchange on the gloomy outlook and weaker quarterly earnings.
On Wednesday, Lundin reported earnings of $12.4 million, or 2 cents a share, in the quarter ended Sept. 30, down from a year-ago profit of $66 million, or 11 cents a share.
Overall copper and lead production guidance was reduced by about 5 percent each for the year. At the same time, the company said cash costs at Neves-Corvo would increase 9 percent, while costs at Zinkgruvan in Sweden have been raised by around 50 percent due to operational difficulties.
Lundin said an issue with the copper mill at Zinkgruvan has been fixed, while a problem with the zinc mill is expected to be resolved by the end of the month.
Over the past year, Lundin has had strategic hiccups as a tie-up with rival Inmet Mining IMN.TO fell apart after Equinox Minerals launched a hostile bid for Lundin. But Equinox itself was taken over by Barrick Gold (ABX.TO) and Lundin failed to attract any new suitors.
$1=$0.99 Canadian Reporting by Julie Gordon; editing by Rob Wilson