April 29, 2010 / 1:57 PM / 8 years ago

UPDATE 2-Lundin Mining returns to profit on higher prices

* Q1 EPS $0.07 vs analyst forecast $0.13

* Revenue rises on metals prices, but output lower

* Shares fall 0.8 percent. (Adds details, background. In U.S. dollars unless noted)

TORONTO, April 29 (Reuters) - Lundin Mining (LUN.TO) said on Thursday it rebounded to a profit in the first quarter from a year-before loss due to rising metal prices, but production was hurt by labor, technical and weather issues.

The Toronto-based miner earned $38 million, or 7 cents a share, in the quarter ended March 31. That compared with a loss of $8.6 million, or 2 cents a share, a year earlier.

Analysts polled by Thomson Reuters I/B/E/S had expected, on average, a profit of 13 cents a share, before exceptional items.

Shares of Lundin, which runs three mines in Europe and owns a 24.75 percent stake in the Tenke-Fungurume copper-cobalt mine in Democratic Republic of Congo, were down 4 Canadian cents at C$4.96 on the Toronto Stock Exchange.

Revenue rose to $141.7 million from $123.4 million as an approximate doubling of copper, zinc, lead and nickel prices more than made up for a sharp fall in production.

“Production for the quarter from our European business was below trend,” Chief Executive Phil Wright said in a statement. “Measures have been taken to reduce the effect on the full year’s results of this quarter’s lower production.”

Output at the company’s Neves-Corvo copper and zinc mine in Portugal was hurt by periodic worker strikes, which the company said are expected to continue.

At the Zinkgruvan zinc mine in Sweden output was hurt by a blocked orepass and bad weather, which impacted the performance of its mill, Lundin said.

Results were helped by output from Tenke, which started production last year, and added $17.2 million in profit, Lundin said.

The company said Tenke, which is majority-owned by U.S. miner Freeport-McMoRan (FCX.N), has been dealing with start-up and quality issues in the cobalt milling circuit and said sustained target cobalt production rates should be reached during the year.

Copper production at the mine has been ramping up, although uncertainty lingers over delays in resolving a government contract review that began nearly three years ago.

$1=$1.01 Canadian Reporting by Cameron French; editing by Rob Wilson

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