Corporate Update August 2016 TSX: LUN OMX: LUMI

Transcription

1 Corporate Update August 2016 TSX: LUN OMX: LUMI

2 Cautionary Statements Caution Regarding Forward-Looking Information and Non-GAAP Performance Measures This presentation contains forward-looking information, including, but not limited to, guidance on estimated annual production and cash costs. This forward-looking information is not based on historical facts, but rather on current expectations and projections about future events and is subject to risks and uncertainties. Any statements not including historical facts are forwardlooking statements and may be identified by terminology such as believe, budget, continue, can, estimate, expect, intend, likely, should, target, will and any similar expressions. Forward-looking statements involve known and unknown risks and uncertainties, and as such, they are not guarantees of future performance. Actual results may differ materially from those projected in the forward-looking statements. Potential risks leading to differing results include, without limitation: fluctuation to foreign currency rates, change in commodity prices, industry risks, drilling results, labour disputes or difficulties resulting in labour shortages or interruptions in production, environmental risks, political risks including changes in national or local government legislation, taxation, or regulation, climate and weather related risks, diminishing quantities or grades of reserves, operating or technical difficulties with mining or development activities, and increased costs, delays or suspensions. Readers are cautioned that many of the assumptions on which the Company s forward-looking statements are based are likely to change. Lundin cautions that it does not have any intention to update forward-looking statements as a result of new information, future changes, or otherwise. For further details of other risks and uncertainties see Risk Factors Relating to the Company s Business in the Company s Annual Information Form and Management s Discussion and Analysis. This presentation contains certain financial measures such as operating earnings, net debt, operating cash flow per share and cash costs which have no meaning within generally accepted accounting principles under IFRS and therefore amounts presented may not be comparable to similar data presented by other mining companies. This data is intended to provide additional information and should not be considered in isolation or as a substitute for measures or performance prepared in accordance with IFRS. Note: All dollar amounts are in US dollars unless otherwise denoted. 2

3 Globally Diversified Portfolio Zinkgruvan Zinc-Lead-Copper (Sweden) Freeport Cobalt 1 Cobalt Refinery (Finland) Eagle Nickel-Copper (USA) Neves-Corvo Copper-Zinc (Portugal) Candelaria 2 Copper-Gold-Silver (Chile) Tenke Fungurume 1 Copper-Cobalt (DRC) LUN trades in Toronto (TSX) and Stockholm (OMX) Operations: 6 underground mines and 1 large open pit 24% equity stake in world-class Tenke Fungurume & Freeport Cobalt 2016E production: 260 kt Cu, 23 kt Ni, 150 kt Zn 1. Lundin Mining holds a 24% equity stake in the world-class Tenke Fungurume copper/cobalt mine in the Democratic Republic of Congo and in the Freeport Cobalt Oy business, which includes a cobalt refinery located in Kokkola, Finland. 2. Lundin Mining holds an 80% interest in Candelaria. 3

4 2016 Second Quarter Operating Highlights Operations continued to perform well and position us to meet or exceed full-year guidance on metal production, capital spending, and cash costs All mines were cash flow positive during the quarter contributing to additional balance sheet strength Copper (Cu) Nickel (Ni) Zinc (Zn) Copper production guidance is increased to reflect above plan production, primarily on greater throughput at Candelaria Full year cash costs at Neves-Corvo and Candelaria are lowered given results to date and on-going success of cost saving programs Strong nickel production at Eagle due to improved head grades and plant recoveries Neves-Corvo zinc plant operations exceeded expectations year-todate with stable throughput and good zinc recoveries Zinc production at Zinkgruvan was lower in Q2 due to processing copper ore on both lines to reduce a large stockpile 4

5 2016 Second Quarter Revenue Breakdown Majority of sales were from Candelaria with good contribution from each of Neves-Corvo, Eagle and Zinkgruvan 64% of sales derived from copper; increasing contribution from zinc revenues Sales Breakdown by Mine Sales Breakdown by Metal Zinkgruvan 12% Gold 7% Lead 3% Other 4% Nickel 9% Neves-Corvo 20% Eagle 17% Candelaria 51% Zinc 13% Copper 64% 5

6 Balance Sheet Remains Strong Net debt position improved by ~$100M during Q to $342M Cash position increased to $658M and working capital to $780M $350M revolving credit facility remains undrawn Cash and Cash Equivalents Liquidity Position (Jun. 30, 2016) 35% $507M $550M $557M $561M $658M $1.0B 65% Q2-15 Q3-15 Q4-15 Q1-16 Q2-16 Cash and Cash Equivalents Undrawn Credit Facility 1. The Company s senior secured notes are comprised of: $550M at 7.5% due in 2020, and $445M at 7.875% due in

7 2016 Revised Production and Cash Cost Guidance Metal and Mines Production (Tonnes) 1 C1 Cash Costs 2 Copper Nickel Zinc Candelaria (80%) 128, ,000 $1.35/lb Eagle 20,000 23,000 Neves-Corvo 50,000 55,000 $1.55/lb Zinkgruvan 2,500 3,000 Tenke (@24%) 52,800 $1.28/lb Total attributable 253, ,800 Eagle 21,000 24,000 $2.00/lb Total 21,000 24,000 Neves-Corvo 65,000 70,000 Zinkgruvan 80,000 85,000 $0.40/lb Total 145, ,000 * Revisions to guidance highlighted in blue Copper production guidance increased to reflect above plan production on greater throughput at our Candelaria Operations Cash cost guidance at Candelaria, Neves-Corvo and Zinkgruvan lowered to reflect full year impact of cost savings initiatives and operating improvements 1. Production guidance is based on certain estimates and assumptions, including but not limited to; mineral resources and reserves, geological formations, grade and continuity of deposits and metallurgical characteristics. 2. Cash costs remain dependent upon exchange rates (forecast at /USD:1.15, USD/SEK:8.30, USD/CLP:690) and metal prices (forecast at Cu: $2.10/lb, Ni: $4.00/lb, Zn: $0.80/lb, Pb: $0.75/lb, Au: $1,150/oz, Ag: $15.00/oz, Co: $11.00/lb). Prior guidance assumed an exchange rate of /USD:1.10, USD/SEK:8.50 and metal prices of Zn: $0.75/lb and Co: $10.00/lb. 7

8 2016 Capital Expenditure and Exploration Guidance Reduction of capital expenditures from previous guidance a result of project deferrals and cost savings achieved at Candelaria and Neves-Corvo Capital Expenditures 1 (US$M) 2016 Total Capitalized Stripping 2 30 Los Diques Tailings Capex 60 Other Sustaining Capex 10 Total Candelaria (100% Basis) 100 Total Eagle 10 Total Neves-Corvo 40 Total Zinkgruvan 35 Capital expenditures for 2016 reduced by $35M (from $220M) Exploration spending in 2016 increased to $50M (from $40M) Updated cost to complete Los Diques facility is $225M (from July 1, 2016) $35M to be spent in second half 2016, $150M in 2017 and $40M in 2018 Total Capital Costs $ 185 million 1. Excludes capitalized interest. Amounts forecast above are on a cash basis, and may vary from accruals based estimates. 2. During the production phase, waste stripping costs which provide probable future economic benefits and improved access to the orebody are capitalized to mineral properties. The Company capitalizes waste costs when experienced strip ratios are above the average planned strip ratio for each open pit phase under development. 8

9 Operational Overview and Outlook Eagle (100%) Neves-Corvo (100%) Candelaria (80%) Zinkgruvan (100%) Tenke Fungurume (24%) 9

10 Candelaria (Cu/Au/Ag), Chile Atacama Province, Region III, approximately 20 km south of Copiapó 10

11 Production (k tonnes, 100% basis) Candelaria 2016 Second Quarter Results and Outlook Copper production of 30 kt (80%) and cash costs of $1.28/lb were in line with expectations Total mine and mill costs consistent with Q2 2015, but lower grades and lower metal sales resulted in higher costs on a per unit basis Location Chile Ownership 80% 2016 Production Guidance (80%) 128, ,000 t Cu 2016 Cost Guidance $1.35/lb Cu Los Diques project progressing under budget and on schedule Estimated cost to complete of $225M Expected Mine Life years Cu $2.00 $ $1.80 Sernageomin and DGA approved construction of the main Los Diques tailings embankment $1.70 $1.60 $1.50 $1.40 $1.30 Cash Cost ($/lb Cu) Conceptual studies are advancing to increase production from 5 U/G deposits including feasibility of a potential incremental mill expansion $1.20 $1.10 $1.00 Q2-15 Q3-15 Q4-15 Q1-16 Q2-16 Copper Cash Cost (right axis) 11

12 Eagle Mine (Ni/Cu), Michigan, U.S.A. 50 km northwest of Marquette in the Upper Peninsula of Michigan 12

13 Production (k tonnes) Eagle 2016 Second Quarter Results and Outlook Production of 6.8 kt Ni and 5.6 kt Cu Cash costs of $1.75/lb Ni lower than prior year due to cost savings and lower treatment costs, offset by lower by-product credits Maiden Eagle East Inferred Resource 1.18 Mt grading 5.2% Ni and 4.3% Cu Location Michigan, USA Ownership 100% 2016 Production Guidance 21,000 24,000 t Ni 20,000 23,000 t Cu 2016 Cost Guidance $2.00/lb Ni Mine Life years $3.00 $2.80 $2.60 $2.40 $2.20 $2.00 $1.80 $1.60 $1.40 $1.20 Cash Cost ($/lb Ni) 0 Q2-15 Q3-15 Q4-15 Q1-16 Q2-16 $1.00 Nickel Copper Cash Cost (right axis) The Eagle East Mineral Resources estimate is reported above a fixed NSR cut-off of US$141/t and is dated June 29, The NSR is calculated on a recovered payable basis taking in to account grades, metallurgical recoveries, metal prices and realization costs. The metal prices used for the NSR calculations are $8.50/lb Ni, $2.75/lb Cu, $1,000/oz Au, $1,500 Pt, $550/oz Pd and $13.00/lb Co. The Eagle East Mineral Resources estimates has been prepared by or under the supervision of Lundin Mining Qualified Persons as defined in National Instrument and audited by independent Qualified Persons on behalf of Lundin Mining. The Qualified Person responsible for the Eagle East Mineral Resource is David Rennie, P.Eng., Associate Principal Geologist of Roscoe Postle Associates Inc.. 13

14 Eagle East Update Feasibility Study targeted for completion by year end 2016 Development ramp commenced on July 12,

15 Neves-Corvo (Cu/Zn), Portugal Situated 220 km southeast of Lisbon 15

16 Production (k tonnes) Neves-Corvo 2016 Second Quarter Results and Outlook Copper production of 12 kt lower than comparable periods due to lower mill throughput and lower recoveries Zinc production of 18 kt higher than comparable periods due to higher throughput, ore grades and plant recoveries Cash costs of $1.49/lb Cu in Q2; full-year cash costs guidance lowered to $1.55/lb Zinc Expansion Project permitting progressing towards submission of EIA by year end 2016 Location Portugal Ownership 100% 2016 Production Guidance 50,000 55,000 t Cu 65,000 70,000 t Zn 2016 Cost Guidance $1.55/lb Cu Mine Life years Cu + Zn $2.40 $2.20 $2.00 $1.80 $1.60 $1.40 $1.20 Q2-15 Q3-15 Q4-15 Q1-16 Q2-16 Copper Zinc Cash Cost (right axis) Cash Cost ($/lb Cu) 16

17 Zinkgruvan (Zn/Pb/Cu), Sweden Situated 200 km southwest of Stockholm 17

18 Production (k tonnes) Zinkgruvan 2016 Second Quarter Results and Outlook Zinc production of 17 kt lower than comparable periods due to harder ore in combination with initiative to process copper ore on both lines to reduce stockpile Zinc cash costs of $0.34/lb lower than planned, due to lower mine costs and treatment charges 1350 Zinc Expansion Project on schedule for mid-2017 commissioning $16M brownfield project to increase overall mill capacity by ~10% Location Sweden Ownership 100% 2016 Production Guidance 80,000 85,000 t Zn 2,500-3,000 t Cu 2016 Cost Guidance $0.40/lb Zn Mine Life years $0.80 $0.70 $0.60 $0.50 $0.40 $0.30 $0.20 $0.10 Cash Cost ($/lb Zn) Estimated $6M to be spent in second half of Q2-15 Q3-15 Q4-15 Q1-16 Q2-16 Zinc Cash Cost (right axis) $- 18

19 Tenke Fungurume (Cu/Co), DRC Situated 175 km northwest of Lubumbashi 19

20 Production (k tonnes) Tenke 2016 Second Quarter Results and Outlook Copper production of 55 kt (100%) benefited from higher mill throughput and recoveries. Cobalt production of 4.3 kt (100%) Cash costs of $1.34/lb higher than Q due to lower cobalt by-product credits Cash distributions of ~$22M from Tenke related investments year to date. Distributions of $50-$60M expected to LUN in 2016 Freeport extended the ROFO date to 15 September. LUN continues to evaluate all of its options Location Democratic Republic of Congo Ownership 24% 2016 Production Guidance (attributable share) 52,800 t Cu 2016 Costs 1 $1.28/lb Cu Expected Mine Life Q2-15 Q3-15 Q4-15 Q1-16 Q2-16 Copper Cobalt Cash Cost (right axis) +40 years $2.50 $2.30 $2.10 $1.90 $1.70 $1.50 $1.30 $1.10 $0.90 $0.70 Cash Cost ($/lb Cu) 1. Freeport projects 2016 cash costs to approximate $1.28/lb of copper, based on current sales volume and cost estimates and assuming an average cobalt price of $11.00/lb. 20

21 Lundin Mining Well Positioned in Any Market High quality, competitively positioned mines Diversified base metals and geographic asset base Meaningful production scale Strong cash flows with focus on preservation of margins Conservative balance sheet with low leverage ratios 21

22 Appendices TSX: LUN OMX: LUMI

23 Production Outlook Attributable Production Outlook (contained tonnes) Candelaria (80%) 128, , , , , ,000 Copper Eagle 20,000 23,000 17,000 20,000 14,000 17,000 Neves-Corvo 50,000 55,000 50,000 55,000 50,000 55,000 Zinkgruvan 2,500 3,000 3,500 4,000 3,000 3,500 Wholly-owned operations 200, , , , , ,500 Tenke (@24%) 2 52,800 ~50,000 ~50,000 Total Attributable 253, , , , , ,500 Nickel Eagle 21,000 24,000 18,000 21,000 15,000 18,000 Total 21,000 24,000 18,000 21,000 15,000 18,000 Zinc Neves-Corvo 65,000 70,000 65,000 70,000 65,000 70,000 Zinkgruvan 80,000 85,000 80,000 85,000 90,000 95,000 Total 145, , , , , , Production guidance is based on certain estimates and assumptions, including but not limited to; mineral resources and reserves, geological formations, grade and continuity of deposits and metallurgical characteristics. This guidance was announced on December 2, Freeport has provided 2016 sales and cash cost guidance. Tenke s 2016 production is assumed to approximate sales guidance. 23

24 Candelaria Integrated Mining Complex Alcaparrosa Mine Tierra Amarilla Successful operating track record Magnetite Plant Proposed Tailings Facility Candelaria Open Pit Candelaria Norte Susana Candelaria Plant Damiana Santos Mine Ojos-Plant PAC Large prospective regional mineral property position near mine Opportunity to continue to extend mine life with exploration programs 4 km 24

25 KT Candelaria Complex LOM Production Profile Cu (kt) - New Cu (kt) - Old 2.4 Mt total copper production vs. 1.9 Mt previously (25% increase) Mine life extended to 2032 from 2028 previously Over remaining LOM, average annual production of 138 kt Cu, 84 koz Au and 1.5 Moz Ag 1. Production shown on 100% basis and reflects NI Technical Report filed September

26 Candelaria Complex Mineral Reserves and Resources June 30, 2015 (100% Basis) Classification Quantity Grade Contained Metal Copper (%) Gold (g/t) Silver (g/t) Copper (kt) Gold (koz) Silver (koz) Proven and Probable Open Pit 314, ,784 1,317 20,160 WIP 93, ,487 Underground 46, ,555 Total P&P 455, ,571 1,915 31,202 Measured & Indicated Open Pit 432, ,379 1,766 26,494 WIP 93, ,487 Underground 117, ,876 Total M&I 643, ,033 3,007 49,857 Inferred Total Inferred 82, ,589 Total Proven and Probable (P&P) Mineral Reserves increased by ~20% to Mt at 0.56% Cu (from Mt at 0.54% Cu at Dec. 31, 2013) Underground P&P Reserves increased by +270% with significant mine life extensions Measured and Indicated (M&I) Mineral Resources increased by ~28% to Mt at 0.63% Cu (from Mt at 0.54% Cu at Dec. 2013) Supportive of exploration potential in and around the current mines 26

27 Eagle Mine and Eagle East Deposit Overviews Eagle K Tonnes Grade Ni (%) Grade Cu (%) Contained Ni (kt) Contained Cu (kt) P&P 4, M&I 4, Inferred Eagle East Inferred 1,

28 Neves-Corvo Site Overview Copper K Tonnes Grade (%) Contained (k tonnes) P&P 25, M&I 69, ,864 Inferred 13, Zinc K Tonnes Grade (%) Contained (k tonnes) P&P 25, ,798 M&I 106, ,519 Inferred 12,

29 Zinkgruvan Site Overview K Tonnes Grade Zn (%) Grade Pb (%) Contained Zn (k tonnes) Contained Pb (k tonnes) P&P 11, M&I 16, , Inferred 7,

30 Tenke Fungurume Site Overview (100% Basis) K Tonnes Grade Cu (%) Grade Co (%) Contained Cu (k tonnes) Contained Co (k tonnes) P&P 144, , M&I 680, ,857 1,832 Inferred 531, ,594 1,291 30

31 NI Compliance Unless otherwise indicated, Lundin Mining Corporation has prepared the technical information in this presentation ( Technical Information ) based on information contained in the technical reports and news releases (collectively the Disclosure Documents ) available under Lundin Mining Corp. s company profile on SEDAR at Each Disclosure Document was prepared by or under the supervision of a qualified person (a Qualified Person ) as defined in National Instrument Standards of Disclosure for Mineral Projects of the Canadian Securities Administrators ( NI ). For readers to fully understand the information in this presentation, they should read the Technical Reports (available on in their entirety, including all qualifications, assumptions and exclusions that relate to the information set out in this presentation which qualifies the Technical Information. Readers are advised that mineral resources that are not mineral reserves do not have demonstrated economic viability. The Disclosure Documents are each intended to be read as a whole, and sections should not be read or relied upon out of context. The Technical Information is subject to the assumptions and qualifications contained in the Disclosure Documents. The technical information in this presentation has been prepared in accordance with Canadian regulatory requirements set out in National Instrument Standards of Disclosure for Mineral Projects of the Canadian Securities Administrators ("NI ") and reviewed by Stephen Gatley, Vice President - Technical Services of the Company, a "Qualified Person" under NI Mr. Gatley has verified the data disclosed in this presentation and no limitations were imposed on his verification process. Mineral Reserves and Resources are shown on a 100 percent basis for each mine. The Measured and Indicated Mineral Resources are inclusive of those Mineral Resources modified to produce the Mineral Reserves. All estimates, with the exception of Tenke Fungurume, are prepared as at June 30, The Tenke Fungurume estimate is dated December 31, Estimates for all majority owned operations are prepared by or under the supervision of a Qualified Person as defined in National Instrument , or have been audited by independent Qualified Persons on behalf of Lundin Mining. Tenke Proven and Probable Mineral Reserves are estimated by the operator Freeport-McMoRan Copper & Gold Inc., and are prepared to SEC standards and are reviewed by Lundin Mining's independent Qualified Persons. Unless indicated otherwise in the Notes on Mineral Resource and Reserve Table in Lundin Mining s news release on August 31, 2015, Mineral Reserves have been calculated using metal prices of US$2.75/lb copper, US$1.00/lb zinc, US$1.00/lb lead, US$8.50/lb nickel, US1,000/oz gold and exchange rates of EUR/US$ 1.25, US$/SEK 7.50 and Chilean Peso/US$

32 Thank You TSX: LUN OMX: LUMI