Lundin Trims Caserones Copper Guidance After Second Chile Storm

Lundin Mining lowered its 2026 copper production guidance for its Caserones mine in Chile to 120,000-130,000 tons from 130,000-140,000 tons after a second Atacama winter storm re-damaged a transmission tower and knocked the site onto backup generators on August 14.

Lundin Mining (TSX: LUN, OTC: LUNMF) has cut the 2026 copper production target for its Caserones mine in northern Chile after a second winter storm in the Atacama region undid repair work from the first, leaving the operation running on backup generators and pushing back the restart of normal output.

The Vancouver-based miner now expects Caserones to produce between 120,000 and 130,000 tons of copper this year, down from a prior range of 130,000 to 140,000 tons. Cash cost guidance for the mine — the direct operating cost of producing a pound of copper, before capital spending — was raised, reflecting fixed costs spread over fewer tons.

A transmission tower broken twice in three weeks

The proximate cause is unglamorous and entirely physical: a single transmission tower on the line feeding Caserones. It was damaged by a storm in late July, repaired, and then damaged again by the follow-up system. The mine lost grid power on August 14 and switched to backup generators, which can keep critical systems alive but cannot run a large open-pit concentrator at full rate.

Crews were working to restore full grid power by the end of that week, with a gradual ramp-up to follow. That sequencing matters. Concentrators do not snap back to nameplate throughput the moment the lights come on; grinding circuits, flotation and tailings handling are restarted in stages, and recoveries typically lag until the plant is stable.

Chief Executive Jack Lundin framed the revision as a function of the second event rather than the first. "Following the first storm, we expected the impact on production to remain within the lower end of our original guidance range," he said in a company update reported by INN Precious Metals. "Unfortunately, a second severe storm disrupted recovery efforts and delayed our planned return to full operations, leading to additional unplanned downtime. As a result, we have revised our guidance to reflect the extended recovery period."

Sizing the tonnage that just disappeared

The arithmetic of the revision is straightforward. Both ends of the range came down by 10,000 tons. On a midpoint basis — 135,000 tons before, 125,000 tons after — that is a reduction of roughly 7.4%, an illustrative calculation from the two guidance ranges rather than a figure the company published.

What the company has not quantified publicly in this update is the revenue or cash-flow consequence, and that will depend on the copper price realized over the balance of the year and on how much of the shortfall is deferred rather than lost. Ore left in the pit is not destroyed; it is mined later. But a year is a hard accounting boundary, and tonnage that slips past December 31 lands in the next reporting period, not this one.

The cost side is the less visible half of the story. When a mine runs below plan, labor, maintenance, contractor and site overhead do not fall proportionally, so unit cash costs rise mechanically. Running on generators adds diesel expense on top. The guidance increase Lundin disclosed reflects both effects, and it is the metric analysts will scrutinize when the company reports, because it speaks to how the asset performs once weather normalizes.

Why Atacama weather is now a modelling problem

The Atacama is one of the driest places on earth, and mines built there were not engineered around repeated severe winter storms. Two damaging systems inside a matter of weeks, hitting the same piece of transmission infrastructure, is the kind of event that forces both operators and analysts to reconsider how much weather contingency belongs in a Chilean copper production model.

Chile remains the anchor of global copper supply, and the market has spent recent years absorbing a steady drip of grade declines, water constraints, permitting friction and now weather interruption. Each individual event is small against world output. Collectively, they explain why supply forecasts have repeatedly proven optimistic and why buyers of concentrate treat guidance ranges with caution.

For Lundin specifically, Caserones is one asset in a portfolio, and a single-tower outage is a repairable problem rather than a structural one. The question investors will weigh is whether grid resilience at the site needs capital — redundant lines, hardened towers, larger on-site generation — and whether that spending shows up in future capital budgets.

How the shares took it

Lundin's US over-the-counter line, LUNMF, last traded at 25.59, down 1.84% on the day, having closed previously at 26.07. The session range ran from 25.09 to 25.78, meaning the stock finished nearer the upper end of its intraday band after an early leg lower. The quote carries no currency designation in the data feed, so the level should be read alongside the primary Toronto listing rather than in isolation.

That decline came against a broadly steady tape. The S&P 500 tracker (SPY) closed at $769.06, up 0.21%, the Dow 30 fund (DIA) at $534.27, up 0.26%, while the Nasdaq 100 (QQQ) eased 0.20% to $716.08. In other words, the move in Lundin was company-specific rather than a read on the market's mood, which is what you would expect from a guidance cut tied to a discrete operational event.

What to watch from here

Three things will determine whether this stays a one-quarter irritant. First, confirmation that grid power has been fully restored and that the ramp-up is tracking to plan — any further slippage would put the low end of the new 120,000-ton floor at risk. Second, the updated cash cost figure once actuals are reported, which will show how much of the increase is one-time diesel and repair spending versus persistent fixed-cost absorption. Third, any commitment to spending on power redundancy at Caserones, which would signal management views the storm exposure as recurring rather than freak.

Copper's price path is the wildcard. A shortfall of this size at a single mine does not move the global balance, but it lands in a market already sensitive to Chilean supply disappointment.

Key facts

• Stock (last close): LUNMF 25.59, -1.84%, as of 19 Aug 2026 20:00 GMT
• New Caserones guidance: 120,000-130,000 tons of copper in 2026
• Prior guidance: 130,000-140,000 tons
• Trigger: Grid power lost August 14 after storm re-damaged transmission tower

Frequently asked questions

How much did Lundin Mining cut its copper guidance?

Lundin lowered 2026 copper production guidance for the Caserones mine in Chile to a range of 120,000 to 130,000 tons, from a previous range of 130,000 to 140,000 tons. That is a reduction of 10,000 tons at each end of the range. The company also raised cash cost guidance for the mine.

What caused the disruption at Caserones?

A second severe winter storm in Chile's Atacama region re-damaged a transmission tower serving the mine that repair crews had already fixed after a late July storm. The site lost grid power on August 14 and switched to backup generators while crews worked to restore full supply ahead of a gradual production ramp-up.

What did CEO Jack Lundin say about the revision?

Jack Lundin said the company had expected the first storm's impact to keep production within the lower end of the original guidance range. He said the second storm disrupted recovery efforts and delayed the planned return to full operations, causing additional unplanned downtime, and that guidance was revised to reflect the extended recovery period.

How did Lundin Mining shares react?

The US over-the-counter listing, LUNMF, last traded at 25.59, down 1.84% from a previous close of 26.07, with a session range of 25.09 to 25.78. The decline came while broad US benchmarks were roughly flat to slightly higher, indicating a company-specific rather than market-wide move.

Why do cash costs rise when a mine produces less?

Cash cost measures direct operating spending per unit of metal produced. Labor, maintenance, contractors and site overhead are largely fixed in the short term, so when tonnage falls those costs are spread across fewer pounds of copper, lifting the per-unit figure. Running on backup generators adds diesel expense on top.

Is the lost production gone permanently?

Not necessarily. Ore left unmined remains in the ground and can be recovered in later periods, so much of the shortfall is deferred rather than destroyed. However, tonnage that slips beyond the calendar year falls into the next reporting period, which is why annual guidance had to be reduced even if the resource is intact.

Sources

• Lundin Cuts Copper Target After Another Storm Hits Chile — INN Precious Metals

Photo: Francesco Ungaro · Pexels Licence — source