On Feb. 14, Lundin Mining Corp. (LUNMF, Financial) (TSX:LUN, Financial) reported its fourth-quarter and full-year 2018 results.
GAAP earnings were $31.8 million for the quarter, or 4 cents per share, reflecting a 22.2% decrease on a year-over-year basis.
Revenue came in at $407.7 million, which was a nearly 24% decline from the prior-year quarter.
The top and bottom lines were affected by lower metal prices, a decrease in sales volumes and higher operating costs.
Due to the same factors, Lundin Mining recorded for the year a 16.9% decline in total revenue to $1.73 billion, a 47.3% decrease in earnings from continuing operations to $195.9 million and a 47.3% loss in operating cash flow to $476.4 million.
Based in Toronto, the company produces copper, zinc and nickel from its metallic properties in the Americas and Europe. It also derives a small percentage of its total revenue from gold, silver, lead and other metals. Lundin Mining is creating value for shareholders through organic growth as well as acquisitions.
In 2018, the company allocated approximately $675.4 million for investing activities and $92 million for the distribution of dividends. But since cash outflows exceeded cash inflows, the miner had to use part of its liquidity on hand to run the business during the year. Thus, Lundin Mining recorded a 27.6% year-over-year decrease in the net cash position to $804.4 million. The existing credit lines bring the total liquidity to nearly $1.4 billion.
During the year, the Canadian miner produced 198,244 tons of copper, 17,573 tons of nickel and 152,041 tons of zinc, topping guidance for each metal.
Thanks to progress at the Candelaria mining complex in Chile, the Eagle East underground mine in Michigan and the Neves-Corvo underground mine in Portugal, Lundin will boost production and will increase free cash flow over the next several years starting in 2020.
For full-year 2019, Lundin Mining guided for attributable copper production of 199,000 to 218,000 tons, zinc production of 147,000 to 157,000 tons and nickel production of 12,000 to 15,000 tons.
The closing share price of Lundin Mining was $4.55 on Thursday for a market capitalization of roughly $3.4 billion. The share price is below the 200-day simple moving average line, but above the 100 and 50-day lines. Thursday's closing price was 26.4% above the 52-week low of $3.60 and 55.8% off the 52-week high of $7.09.
The 14-day relative strength index is 57.74, suggesting the stock is neither oversold nor overbought.
In addition, Lundin Mining has announced a cash quarterly dividend of 3 Canadian cents per share for shareholders of record as of March 22. The company will pay the dividend on April 10. The ex-dividend date is scheduled for March 21. The distribution in on par with the previous one and leads to a forward dividend yield of 2.04% based on the closing share price on Thursday.
Wall Street has issued a buy recommendation rating with an average target price of $8.53 per share.
Disclosure: I have no positions in any securities mentioned.
Read more here:
