This file photo shows the interior of a Lundin mine in central Sweden. On Friday Lundin’s CEO apologized to investors for poor communication after a rockslide occurred at the company’s key Chilean copper minePETTER KOUBEK/The Globe and Mail
The chief of executive officer of Lundin Mining Corp. has apologized to investors for poor communication in the aftermath of a rock slide that is hampering production at its flagship copper mine.
On Thursday, Lundin shares fell more than 16 per cent, after it disclosed 2018 production at its Candelaria mine in Chile would be about 20 per cent lower than planned, because of the slide. Candelaria is by far the Toronto-based miner's biggest producing asset, accounting for more than half of its revenue.
"Clearly we have not communicated well enough," Paul Conibear said in his opening remarks on a conference call with analysts on Friday.
"Our stock price took a big hit yesterday. That's a black eye for us," he added later.
"I apologize for not communicating more clearly on some of the background behind the investments and the production plan."
During the call, the company also gave more details on the specifics of the rock slide which occurred on Oct. 31 in the open pit section of the mine.
Phil Brumit, president and managing director of the Candelaria operations, said Lundin came upon a previously unseen and unmapped structure that led to a "wedge failure" at the mine site. Technicians saw movement in the affected area about 5 days before the slide happened. All personnel were then evacuated out of the area. During the slide, between six and seven hundred thousand tonnes of waste material slid into the pit floor. Now the company must devote some of its energy to clearing out the significant amounts of waste material and also ensuring the stability of that section of the mine.
One analyst questioned the company about why it did not anticipate the slide better, pointing out that five days was not a lot of lead time. He also asked whether Lundin can rule out another similar occurrence.
Mr. Brumit downplayed the likelihood of another occurrence, although Lundin continues to do geotechnical drilling to look for the same kind of structural issues on site.
"We went through a very detailed analysis...looking for areas of instability" he said.
"At this time there's none that present the same type of issues."
Shares in Lundin closed down 4 per cent to $7.22 apiece on the Toronto Stock Exchange on Friday.
Niall McGee