LUNDIN MINING ANNOUNCES FEASIBILITY STUDY RESULTS FOR THE LOMBADOR PHASE I PROJECT

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1 Corporate Office 150 King Street West, Suite 1500 P.O. Box 38 Toronto, ON M5H 1J9 Phone: Fax: UK Office 70 Oathall Road, Haywards Heath West Sussex, RH16 3EN United Kingdom Phone: +44 (0) Fax: +44 (0) NEWS RELEASE LUNDIN MINING ANNOUNCES FEASIBILITY STUDY RESULTS FOR THE LOMBADOR PHASE I PROJECT Toronto, September 08, 2011 (TSX: LUN; OMX: LUMI) Lundin Mining Corporation ( Lundin Mining or the Company ) announces the results of the Feasibility Study for the Lombador Phase I project ( the Project ). Highlights The Feasibility Study shows that Lombador Phase I, which is designed to exploit only the upper portions of the Lombador zinc/copper ore bodies can be developed as a profitable and value accretive extension to the Neves Corvo mine. The Project extends the mine life to at least 2026 and creates a platform for further extensions. The Project adds approximately $100M to the NPV 8% of the mine at Lundin s Base Case price assumptions. Incremental Lombador project C1 cash costs of $0.56/lb Zn. The Lombador project adds significant value to Lundin Mining and provides flexibility to zinc and copper production from the Neves Corvo operation. Its implementation also serves as a precursor to expansions to exploit the deeper portions of adjacent Lombador South, East and North ore bodies and provides the necessary underground access for ongoing Lombador area zinc and copper exploration drilling. The Lombador project is of strategic value to Lundin Mining and is a natural extension to the existing Neves Corvo mine. This study confirms the Company s view that the Lombador Phase I project can be developed into a successful and profitable expansion to the existing operations. The combined Neves Corvo/Lombador measured and indicated zinc resource is one of the largest undeveloped near mine zinc resources available today in the industry. The initial phase of Lombador development enables zinc production to ramp up taking advantage of the expected strong zinc markets evolving over the next several years. said Mr. Paul Conibear, CEO of Lundin Mining. Lombador Phase I Feasibility Study The zinc copper rich Lombador orebodies are located immediately to the north east of the existing Neves Corvo mine workings and lie below the bottom of the mine s existing extraction infrastructure at depths between 700 metres and 1,200 metres below surface. The objective of the Phase I study was to define an economically accretive project to exploit upper portions of the Lombador ore bodies, not only to enhance the overall financial performance of Neves Corvo but to facilitate underground exploration of the extensive Lombador area mineralization serving further expansions. The Lombador Phase I project is an expansion to the current Neves Corvo operations and comprises: Copper and zinc production from the upper 300 metres of primarily the Lombador South orebody; Mine deepening by a new haulage ramp extending 300 m below the existing lowest extraction level. Extraction of up to 1.1 million tonnes per annum ( Mtpa ) of zinc ore and 0.5Mtpa of copper ore. In combination with the existing Neves Corvo operations, the study base mine plan has ore production peaking at 3.7 million tonnes of copper and zinc ores in 2019; Zinc recoveries are expected to average 80% and copper recoveries average 87% from Lombador ore. Expansion of the existing zinc plant ore processing capacity from 1.0Mtpa to 2.5Mtpa, with nominal zinc metal production increasing from 50,000 tpa to a peak of approximately 150,000 tpa (averaging 112,000 tpa over the study base life of mine);

2 Expansion of surface infrastructure necessary for the increased mine and processing capacity; The development of an exploration drift at the lower level of the Lombador Phase I mineralization to better define footwall copper mineralisation and to explore the deeper Lombador East and North (Phase II) deposits, both of which remain open at depth. Lombador Phase I Overview Some key features of the Lombador Phase I Feasibility Study include: The use of a bulk optimised bench and fill mining method on three new mining levels to process a total 8.8Mt of zinc ore at an average grade of 7.9% Zn. The use of existing drift and fill mining methods to produce a total of 4.1Mt of copper ore at an average grade of 1.9% Cu. Expansion of the existing zinc plant to 2.5Mtpa capacity. The study is based on the plant being commissioned in the second half of 2013, and being fed with zinc ores from existing Neves Corvo orebodies until Lombador production commences. The copper plant will retain its current capacity of 2.5Mtpa. The study assumes Lombador Phase I underground ore production commences in late 2014 and continues until 2026, a total of 12 years. The total initial capital cost estimate for the project is 164 million, of which approximately 50% is underground expenditure. The estimate is at an accuracy of 10 15%, is in 2011 euros and includes a contingency allowance of approximately 10%. Sustaining capital until 2026 totals 99M, of which 77M is for underground mine development. Average operating costs for the incremental Lombador production are estimated to be 34/t mined. Average C1 cash costs for the incremental Lombador production are estimated as $0.56/lb zinc (Lombador copper credits applied to zinc), and places the project in the third quartile of zinc producers. The above Phase I study base mine plan of 8.8 million tonnes of Lombador zinc ore and 4.1 million tonnes of copper ore represents only partial exploitation of the overall Lombador deposit mineralization, which is the target of Phase II development studies just started. Overall Lombador measured and indicated resources are 46.1 million tonnes of 6.69% zinc and 8.6 million tonnes of 2.11% copper. 2

3 Lombador Project Economics The following table provides a summary of the key incremental Lombador Phase I economic parameters: Parameter Units Base Case 1 After tax NPV (8%) $ millions 100 Cumulative (undiscounted) after tax cash flow $ millions 303 Internal Rate of Return % 18 Notes to Project Economics Table: 1. Base Case metal prices are: Long Term Copper $4.25 $4.14 $4.00 $3.86 $3.71 $3.56 $3.44 $3.36 $3.31 $2.80 zinc $1.09 $1.20 $1.20 $1.20 $1.20 $1.20 $1.20 $1.20 $1.20 $ Dollar:Euro exchange rate used in the above analysis was 1.40:1 Further Neves Corvo Studies The discovery of the Semblana copper deposit and recent identification of other nearby targets in parallel to completion the Lombador Phase I study has introduced new factors at Neves Corvo that now need to be taken into account prior to final decisions on Lombador Phase I investment. In order to seek optimal value from the Neves Corvo asset, a Future Materials Handling study has been initiated to evaluate options for accessing and extracting the deeper and more distant mineral resources now known to exist. The study will consider not only those known resources in Lombador Phases I and II but also Semblana and the recently defined targets identified by this summer s 3D seismic survey. One of the main scenarios being considered is a new shaft and extended underground materials handling systems strategically located to enable optimal exploitation of the asset base. 3

4 Results from the Future Materials Handling concept study are anticipated by year end. Next Steps at Neves Corvo The following next steps are anticipated at Neves Corvo: Consideration by the Board of the results of the study and delaying surface capital expenditure for further zinc plant expansion pending additional studies on mine development optimization. These studies include how to maximize copper production up the shaft, in combination with higher grade zinc mining scenarios such as accessing high grade zinc mineralization sooner in the upper third of Lombador South mining panels. This could allow deferment of capital development expenses for the lower two mining panels for better economic returns. Continued priority on underground development expenditures to access higher grade stopes and exploration platforms. The Lombador ramp, which has currently reached the second panel, will continue to be advanced towards the lowest (third) panel to facilitate the deeper exploration drive. Exploration drilling on Semblana will continue with multiple surface rigs. An initial resource estimate is expected prior to year end in parallel to Semblana resource exploitation concept studies. Drill testing of the first of the 18 near mine targets identified by the recent 3D seismic survey has commenced and exploration budgets will be expanded to progressively drill remaining targets. The Materials Handling study will be advanced with the highest of priorities to define optimized medium and long term underground deposit access and extraction infrastructure, followed by progressive stages of feasibility study to maximize net asset value of the Neves Corvo area deposits. About Lundin Mining Lundin Mining Corporation is a diversified Canadian base metals mining company with operations in Portugal, Sweden, Spain and Ireland, producing copper, zinc, lead and nickel. In addition, Lundin Mining holds a development project pipeline which includes expansion projects at Neves Corvo mine along with its equity stake in the world class Tenke Fungurume copper/cobalt mine in the Democratic Republic of Congo. On Behalf of the Board, Paul Conibear, CEO For further information, please contact: Sophia Shane, Investor Relations North America: John Miniotis, Senior Business Analyst: Robert Eriksson, Investor Relations Sweden: Forward Looking Statements Certain of the statements made and information contained herein is forward looking information within the meaning of the Ontario Securities Act. Forward looking statements are subject to a variety of risks and uncertainties which could cause actual events or results to differ from those reflected in the forward looking statements, including, without limitation, risks and uncertainties relating to foreign currency fluctuations; risks inherent in mining including environmental hazards, industrial accidents, unusual or unexpected geological formations, ground control problems and flooding; risks associated with the estimation of Mineral Resources and Reserves and the geology, grade and continuity of mineral deposits; the possibility that future exploration, development or mining results will not be consistent with the Company s expectations; the potential for and effects of labour disputes or other unanticipated difficulties with or shortages of labour or interruptions in production; actual ore mined varying from estimates of grade, tonnage, dilution and metallurgical and other characteristics; the inherent uncertainty of production and cost estimates and the potential for unexpected costs and expenses, commodity price fluctuations; uncertain political and economic environments; changes in laws or policies, foreign taxation, delays or the inability to obtain necessary governmental permits; and other risks and uncertainties, including those described under Risk Factors Relating to the Company s Business in the Company s Annual Information 4

5 Form and in each management discussion and analysis. Forward looking information is in addition based on various assumptions including, without limitation, the expectations and beliefs of management, the assumed long term price of copper, nickel, lead and zinc; that the Company can access financing, appropriate equipment and sufficient labour and that the political environment where the Company operates will continue to support the development and operation of mining projects. Should one or more of these risks and uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those described in forward looking statements. Accordingly, readers are advised not to place undue reliance on forward looking statements. Cautionary Notes to Investors Reserve and Resource Estimates In accordance with applicable Canadian securities regulatory requirements, all Mineral Reserve and Mineral resource estimates of the Company disclosed or incorporated by reference in this news release have been prepared in accordance with Canadian National Instrument Standards of Disclosure for Mineral Projects ( NI ), classified in accordance with Canadian Institute of Mining Metallurgy and Petroleum s CIM Standards on Mineral Resources and Reserves Definitions and Guidelines (the CIM Guidelines ). The definitions of Mineral Reserves and Mineral resources are set out in our disclosure of our Mineral Reserve and Mineral resource estimates in our Annual Information Form. The Company uses the terms Mineral resources, measured Mineral resources, indicated Mineral resources and inferred Mineral resources. While those terms are recognized by Canadian securities regulatory authorities, they are not recognized by the United States Securities and Exchange Commission the SEC ) and the SEC does not permit U.S. companies to disclose resources in their filings with the SEC. Pursuant to the CIM Guidelines, Mineral resources have a higher degree of uncertainty than Mineral Reserves as to their existence as well as their economic and legal feasibility. Inferred Mineral resources, when compared with measured or indicated Mineral resources, have the least certainty as to their existence, and it cannot be assumed that all or any part of an inferred Mineral resource will be upgraded to an indicated or measured Mineral resource as a result of continued exploration. Pursuant to NI , inferred Mineral resources may not form the basis of any economic analysis, including any feasibility study. Accordingly, readers are cautioned not to assume that all or any part of a Mineral resource exists, will ever be converted into a Mineral Reserve, or is or will ever be economically or legally mineable or recovered. The Neves Corvo and Lombador Mineral Resources are reported above cut off grades of 1.0% for copper and 3.0% for zinc. The copper Mineral Reserves are reported above a cut off of 1.4% while for zinc Mineral Reserves a cut off of 5.0% is used for orebodies other than Lombador. For the Lombador Phase 1 a zinc cut off of 6.0% was applied for Mineral Reserve reporting. Mineral Reserves and Resources for Neves Corvo were estimated by the mine s geology and mine engineering departments under the guidance of Nelson Pacheco, Chief Geologist and Fernando Cartaxo, Chief Mine Planning Engineer. Qualified Persons are Graham Greenway, Group Resource Geologist and Stephen Gatley, Director Technical Services, both employed by Lundin Mining. 5