The initial Tenke project is based on mining and processing ore reserves approximating 100 million tons with ore grades of 2.3% copper and 0.3% cobalt. Annual production in the initial years of the project is expected to approximate 115,000 mt of copper and 8,000 mt of cobalt. Freeport expects the results of drilling activities will enable significant future expansion of the initial production.

According to Lundin, approximately $475 million in project costs have been incurred to date. Current construction activities are focused on concrete placement, steel tank erection, structural steel, and infrastructure development including shops, warehouses, and extensive social and regional infrastructure programs. All long lead time equipment has been ordered and Freeport has reported that initial production is targeted for the second half of 2009.

Freeport has conducted a review of the capital cost estimates for the project, which were estimated in October 2007 to be $900 million ($1 billion including advances to a third party for the refurbishment of provincial power facilities). However, the most recent review, prepared in April 2008, indicates estimated capital costs of approximately $1.75 billion, (approximately $1.9 billion including loans to a third party for power development). These estimates include substantial amounts for infrastructure to support a larger-scale operation than the initial phase of the project. This includes the provision of expanded power generating capacity providing improved reliability for the region. This regional power infrastructure investment is now estimated to be in the range of $175 million, the majority of which is expected to be funded through a loan to the DRC state power authority.

The latest capital cost estimates include provision for expanded housing and support facilities for the project work force, enhancements to national roads and bridges, and extended social and training initiatives. The latest estimates also reflect substantial industrywide escalation in construction costs and the incremental costs to develop the project in Central Africa, where infrastructure and logistics are challenging in developing a greenfield project.

Freeport is responsible for funding 70% of the project development cost and is also responsible for financing Lundin Mining's share of certain project overruns. Lundin has previously indicated that it expected its contribution to the Tenke Project to be in the range of $150 million to $180 million in 2008. This is now expected to be in the range of $180 million to $210 million.

Phil Wright, president and CEO of Lundin Mining, said, “We have just been advised of this overrun situation and an increase of this magnitude was not expected. Fortunately the funding of the majority of this increase is covered by our overrun protection from Freeport and we do not expect this to have a material impact on our cash flow through to startup. We are continuing to review the details, however, we remain extremely positive on the longer-term prospects of this project.”.