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Candelaria Operations Gold & Copper Operations Production Exceed Expectations

TORONTO, ON - Lundin Mining Corporation reported that the Candelaria operations in Chile produced, on a 100% basis, 181,040 tonnes of copper, approximately 1,874,000 ounces of silver, and 102,500 ounces of gold in concentrate, with copper and gold production exceeding expectations as a result of higher throughput. Copper cash costs for the year were lower than full year guidance. Ongoing exploration is being conducted on the Candelaria Mining Complex in Chile, with the primary purpose of supporting mining and increasing Mineral Resources and Mineral Reserves available for mining. Exploration is focused on the known mantos, veins, and breccia masses in proximity to existing underground infrastructure. Historically, this strategy has proven very effective in defining new Mineral Resources available for underground mining. Much of the exploration is conducted from underground, requiring significant underground development to provide adequate drilling stations. Regional exploration is also undertaken on the large properties surrounding the mines to identify targets and define new Mineral Resource areas.
The Candelaria and Ojos del Salado mines and surrounding tenements are located in Chile’s Atacama Province, Region III, approximately 20 kilometres south of the city of Copiapó and approximately 650 kilometres north of Santiago. Minera Candelaria consists of an open pit mine and an underground mine providing copper ore to an on-site concentrator. Minera Ojos del Salado comprises two underground mines, Santos and
Alcaparrosa. The Santos mine provides copper ore to an on-site concentrator, Pedro Aguirre Cerde (PAC), while
ore from the Alcaparrosa mine is treated at the Candelaria concentrator.
There is a current Candelaria tailings facility that receives the flotation tails from both the Candelaria and PAC processing plants. This existing facility has permitted capacity to 2017. Plans and permitting for a new storage facility called Los Diques are underway as part of “Candelaria 2030.”
The Candelaria property comprises 249 mining exploitation concessions and 51 mining exploration concessions. The Ojos del Salado property comprises of 195 mining exploitation concessions and 37 mining exploration concessions. The Candelaria and Ojos del Salado properties are easily accessed using the public road system. Copiapó is strategically located on the Pan-American Highway, a well-maintained multi-lane highway. Copiapó is the closest city to Minera Candelaria and Minera Ojos del Salado, and is a modern city with a population of 160,000. Numerous mining related businesses are located in the city, and personnel employed by the mines come from the Copiapó region.
The region has a desert climate with mild temperatures year round. Winters are mild with warm temperatures. Annual precipitation averages approximately 17 millimetres, the majority of which falls in the winter months. The climate allows for year round mining and exploration activities. The project area is mountainous with a relief varying between 200 and 1,000 metres. Vegetation is minimal outside of inhabited valleys where irrigation is used to support vegetation that is capable of withstanding the desert environment. The mines are located in an active seismic zone. Electrical power is supplied to the mines through long-term contracts with a local energy company. The main water supply comes from a desalination plant, which was commissioned in 2013 and is located at the Punta Padrones port facility at the sea port of Caldera. Local treated sewage water can also be used by the mines.
The Candelaria mine was discovered by Phelps Dodge Corporation in 1987. A feasibility study was completed in 1990, and construction started in October 1992. Production commenced in early 1995. In 1996, Phelps Dodge announced plans to expand concentrator throughput with the installation of a second semi-autogenous grinding (SAG) mill. The expansion further included additional mining facilities and new and expanded concentrator facilities. This upgrade was completed in 1997. Sumitomo acquired a 20% stake in the property in 1992.
Mine site and district exploration programs have been active since the Candelaria deposit discovery. This work resulted in the discovery of the Alcaparrosa and Candelaria Norte deposits, both of which are now producing mines.
In 2007, property ownership changed when Freeport acquired Phelps Dodge. Operations at Candelaria continued uninterrupted. In the middle of 2011, Freeport announced the completion of a pipeline to bring water from a nearby sewage water treatment facility to the Candelaria mine. In addition, Freeport started engineering for a desalination plant at the port of Caldera to meet the long-term water needs of the mine. The plant was commissioned in 2013 at a capacity of 500 litres per second.
The Santos mine has been in production since 1929; at that time the operation was known as Planta Punta de Cobre and was owned by Caja de Crédito Minero (CACREMI). The plant started with an initial throughput capacity of 250 tonnes per day. It was later renamed the Pedro Aguirre Cerde (PAC) plant. In 1978, the PAC plant was acquired by private individuals from Empresa Nacional de Minería (ENAMI), legal successor to CACREMI. The Santos mine and Resguardo claims were also acquired, which together formed Compañía Minera Ojos del Salado S.A. MINOSAL. The processing capacity was increased to 650 tonnes per day. Phelps Dodge acquired 10% of Ojos del Salado in 1983 and became sole owner of the property in 1985. The PAC plant was expanded for a second time in 1988, increasing capacity to 1,700 tonnes per day, and the capacity of the plant is now 3,800 tonnes per day. Sumitomo acquired its 20% interest in Minera Ojos del Salado in 2005. In 1995, construction of a second underground operation at Alcaparrosa commenced, with production starting in early 1996.
The Candelaria deposit is located at the boundary between the Coastal Cordillera and the Copiapó Precordillera. The Coastal Cordillera of Chañaral and Copiapó is composed of Permian to Lower Cretaceous intrusions within a basement of metasedimentary rocks of Devonian to Carboniferous age. Volcanic, volcaniclastic, and marine carbonate rocks represent intra- and back-arc sequences that were deposited during Early to Mid-Cretaceous.
The Candelaria, Santos, and Alcaparrosa mines are located in the district of Punta del Cobre. The polymetallic sulphide deposits are hosted in volcanic rocks of the Punta del Cobre Formation. Polyme- tallic sulphide deposits in the Punta del Cobre district are located to the east of the main branches of the Atacama fault zone, a subduction-linked strike-slip fault system stretching over 1,000 kilometres along the Chilean coast and active at least since the Jurassic period. The dominant structural elements of the Punta del Cobre area are the northeast-trending Tierra Amarilla Anticlinorium, a southeast verg- ing fold-and-thrust system and a series of north-northwest- to northwest-trending high-angle faults.
From 2010 to 2013, Minera Candelaria and Minera Ojos del Salado invested more than US$105 million in exploration to expand Mineral Resources primarily below the Candelaria open pit, to the north and south, and at the three underground mines. Information from that program was used to define approximately 14 million tonnes of new underground Mineral Reserves at a grade of 0.93% copper. In addition, at Minera Candelaria, new discoveries were made beneath the eastern and southern portions of the open pit (the Susana and Damiana orebodies and as well at the existing Candelaria Norte underground operations (Wendy Norte orebody). These new discoveries are expected to extend the mine life at Candelaria and potentially allow future increases in production.
Building on this exploration success, an exploration program is planned for the period 2014 to 2018, targeting the lateral extensions of the areas investigated since 2010. The planned exploration program includes 5,180 metres of underground development and 384,000 metres of core drilling at an estimated total cost of US$133 million. The exploration potential of the Minera Candelaria and Minera Ojos del Salado properties remains very good.
The main mineralized body at the Candelaria mine is hosted in rocks of the Punta del Cobre Formation. Specifically, the host rocks are massive andesite and breccias of the lower andesite, and volcanic tuffs and volcaniclastic rocks at the base of the upper andesite. In the metasedimentary rock, the mineralization is confined to a few isolated layers (mantos).
Chalcopyrite is the only primary copper sulphide present in the Santos mine. Additionally to copper mineralization, there are economic values of gold. Most frequent gangue minerals are pyrite, magnetite, actinolite, k-feldspar, chlorite, biotite and hematite. Mineralized bodies at the Alcaparrosa mine have a mantotype geometry that trend to the northeast and dip to the west. Ore and gangue mineralogy consists of chalcopyrite, pyrite, and magnetite, with trace pyrrhotite, molybdenite, and arsenopyrite.
Minera Candelaria consists of the Candelaria open pit and the Candelaria Norte underground mine. Minera Ojos del Salado consists of the Santos and Alcaparrosa underground mines. The ore from the Candelaria open pit, Candelaria Norte and Alcaparrosa underground mines is processed at the Cande- laria concentrator. Ore from the Santos underground mine is processed at the PAC plant located on the Ojos del Salado property.
In 2013 the two operations combined production was 191.4 kilotonnes of copper and 101,000 ounces of gold. Based on the December 31, 2013 Mineral Reserves, the projects are expected to continue operations until 2028. Aggressive ongoing resource expansion exploration, however, has the potential to extend the mine life beyond 2028 and significantly change the projected copper production profile by replacing low grade open pit and stockpile mill feed by higher grade ore extracted from the expanding underground mines and defer depletion of the low grade stockpiles.
The Candelaria open pit mine is a conventional owner operated, drill and blast, load and haul open pit. The three underground mines on the property, Candelaria Norte, Alcaparrosa, and Santos, are mined with sub-level open stoping, have large vertical stopes, and Mineral Reserve grades of approximately 1.0% copper or higher. All Candelaria and Ojos del Salado mines have good geotechnical conditions.
The Candelaria processing plant flowsheet is conventional comprising two parallel process lines for grinding and flotation, reclaimed process water from a conventional tailings dam, final concentrate filtration, and shipping of bulk copper concentrates. Run of mine ore is trucked to a primary gyratory crusher. Grinding takes place in a multi-stage closed circuit using semi-autogenous grinding (SAG) mills, ball mills, and pebble crushing. A multi-stage flotation circuit using an arrangement of mechanical cells, regrind mills, and column cells produces copper concentrate. Final flotation copper concentrate with gold and silver by-product metals is thickened, filtered, and stored on site.
The PAC concentrator flowsheet comprises a closed-circuit crushing plant including a primary jaw crusher, a secondary cone crusher, and two tertiary cone crushers. The grinding circuit has three ball mills operating in parallel and in direct closed-circuit with hydro-cyclone classification. The flotation plant uses conventional multi-stage, mechanical, self-aspired and forced-air flotation cells, regrind milling, and column cells for the final concentrate cleaning stage. Final concentrate is thickened and filtered using a ceramic disc filter.