July 28, 2010 / 2:24 PM / 8 years ago

UPDATE 2-Lundin operating profit hurt by lower sales

* Lundin reports lower copper, zinc, nickel and lead sales

* Q2 net income boosted by sale of stake in Chariot

* Shares down 3.8 pct in early trade (Adds details on results, share price move. In U.S. dollars, unless noted)

TORONTO, July 28 (Reuters) - Lundin Mining (LUN.TO) reported a lower quarterly operating profit on Wednesday, hurt by a drop in sales volumes, higher unit costs and a mine closure.

Its shares fell 1.8 percent in early trade.

The Canadian-based owner of base-metals mines across Europe and Africa said it expects volatility to remain high in 2010, with the outlook improving thereafter.

Lundin said second-quarter operating earnings fell to $80.8 million from $91 million a year earlier, when results benefited from the company’s Galmoy zinc mine in Ireland, which ceased operation in June 2009.

Net income in the quarter rose, largely due to a gain from the sale of Lundin’s shares in Chariot Resources.

The company reported net income of $75.6 million, or 13 cents a share, up from $43.5 million, or 8 cents a share, in the year-before quarter.

Revenue dropped 6 percent to $183.1 million as copper, zinc, lead and nickel production fell due to a strike at Lundin’s Neves-Corvo copper-zinc mine in Portugal and weather-related problems at its Aguablanca nickel-copper mine in Spain.

Lundin, which owns a 24.75 stake in Freeport’s (FCX.N) Tenke Fungurume copper-cobalt mine in the Democratic Republic of Congo, said the mine is now performing above design capacity levels, after working through production problems in April.

Freeport and Lundin expect copper production from Tenke to increase to more than 130,000 tonnes in 2011 from 115,000 tonnes in 2010..

It trimmed its nickel and copper production forecast from Aguablanca, however, as heavy rain has led to instability in certain parts of the pit. The company cut its 2010 nickel output forecast by 5 percent to 7,500 tonnes and its copper output forecast by 7 percent to 6,500 tonnes.

The company also warned that it has been notified of possible rolling strikes at Aguablanca commencing on July 31.

Shares of the company were down 7 Canadian cents at C$3.84 in morning trade on the Toronto Stock Exchange on Wednesday.


For Sector Comparison: link.reuters.com/wyv79m


$1=$1.04 Canadian Reporting by Julie Gordon and Euan Rocha; editing by Peter Galloway

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