TSX: LUN OMX: LUMI Corpora Corpor t a e t Presen esen a t tion

Transcription

1 TSX: LUN OMX: LUMI Corporate Presentation August 2013

2 Cautionary Statements Caution Regarding Forward Looking Statements This presentation contains forward looking statements. These forward looking statements are not based on historical facts, but rather on current expectations and projections about future events. These forward looking statements are subject to risks and uncertainties. These risks and uncertainties could cause actual results to differ materially from the future results expressed or implied by the forward looking statements. Such risks may include, without limitation: risks and uncertainties relating to foreign currency fluctuations; risks inherent in mining including environmental hazards, unusual or unexpected geological g 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 labor disputes or other unanticipated difficulties with or shortages of labor 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; and commodity price fluctuations. For further details of other risks and uncertainties ti see Risk Factors Relating to the Company s Business in the Company s Annual Information Form and in each management discussion and analysis. Note: All dollar amounts are in US dollars unless otherwise denoted. d 2

3 Key Asset Overview European Operations Neves Corvo, Portugal (Cu/Zn) Zinkgruvan, Sweden (Zn/Pb/Cu) Aguablanca, Spain (Ni/Cu) Kokkola Cobalt ltrfi Refinery, Finland (24% interest) Tenke Fungurume Tier 1 Cu/Co asset 24% interest Freeport McMoRan operator Phase II expansion project completed Growth Projects Eagle Mine Lombador Phase I Tenke Expansions 3

4 Lundin Highlights Significant copper producer majority of revenues from copper Leverage to zinc, lead, nickel and cobalt Wholly owned high h quality assets portfolio of long life, relatively l low cost mines in stable jurisdictions Stake in Tenke a world class producing copper mine, contributing significant free cash flow to Lundin Strong financial position all operations generating good cash flow. No high risk capital projects Disciplined focus on value creation through incremental growth 4

5 Operations and Outlook 5

6 Production and Cost Guidance Guidance Tonnes C1 Cost a Copper Neves Corvo 50,000 55,000 $1.80 Zinkgruvan 2,500 3,500 Aguablanca 5,000 5,500 Wholly owned 57,500 64,000 Tenke (@ 24%) b 49,000 $1.24 Total 106, ,000 Zinc Neves Corvo 45,000 50,000 Zinkgruvan 73,000 78,000 $0.30 Total 118, ,000 Lead Zinkgruvan 33,000 36,000 Nickel Aguablanca 6,000 6,500 $5.00 a. Cash cost guidance remains dependent on exchange rates ( /USD: 1.30, USD/SEK: 6.60) and metal prices (Cu: $3.30, Zn: $0.85, Pb: $1.00, Ni:$6.85 Co:$12.00) b. Freeport has provided 2013 sales guidance and C1 cash cost. The sales guidance is assumed to approximate Tenke s production. 6

7 Cost Restraint Initiatives Capital expenditures for 2013 *, have been reduced by $55 million to $230 million The $55 million reduction is comprised as follows: $40 million Tenke $10 million new investment $5 million in sustaining capex Exploration expenditures have also been reduced by $10 million to $28 million for the year Other cost saving initiatives include retendering operations related contracts and other measures to preserve margins and profitability *excluding capex for the Eagle Mine 7

8 Neves Corvo 8

9 Neves Corvo Snapshot Underground copper and zinc mine located in Portugal Ati Active mining i in five major ore bodies underground d Potential for future growth from Lombador zinc/copper deposit and the Semblana copper deposit Zinc production achieved a new quarterly record in Q2 due to increased throughput in the zinc plant Significant copper exploration and zinc expansion potential nearmine Location 2013 Production Guidance Portugal kt Cu kt Zn 2013 C1 Costs $1.80/lb Cu Mine Life +10 years Cu + Zn 9

10 Neves Corvo Outlook Stope blasting in Lombador zinc ore commenced in June Zinc grades increasing in the second half of 2013 Favourable preliminary results on expanding shaft hoist capacity could enable production increases with relatively low capex Reviewing shaft feed infrastructure to assess system capacities and possible expansion opportunities related to Lombador 10

11 Neves Corvo Production Outlook Midpoint of guidance range assumed for

12 Zinkgruvan 12

13 Zinkgruvan Snapshot Underground zinc/lead/copper mine located 200km southwest of Stockholm High quality zinc concentrate sought after by European smelters Lowest quartile cost producer due to high zinc grades and strong by product credits Lead production achieved record levels in Q2 Location 2013 Production Guidance Sweden kt Zn kt Pb kt Cu 2013 C1 Costs $0.30/lb Zn Mine Life +10 years 13

14 Zinkgruvan Outlook Interim measures to improve plant availability and reduce dust and noise emissions have accomplished measurable improvements Plant modernization contemplated but deferred pending zinc market improvement 14

15 Zinkgruvan Production Profile Midpoint of guidance range assumed for

16 Aguablanca 16

17 Aguablanca Snapshot Open pit nickel/copper mine located 100km north of Seville, Spain Operations going very well, annual production guidance increased in Q2 Pit life extended until Q1/2015. Further pushbacks to the south wall in progress Location Spain Ownership 100% 2013 Production Guidance 6,000 6,500 t Ni 5,000 5,500 t Cu 2013 C1 Costs $5.00/lb Ni Mine Life 2 years 17

18 Tenke Fungurume 18

19 Tenke Snapshot One of the world s largest known copper cobalt resources located in Katanga Province, DRC Operated by Freeport McMoRan Lundin 24% equity interest Phase 2 Expansion completed, increasing i capacity to at least 195,000 tpa of copper cathode and 15,000 tpa of cobalt hydroxide Cash distribution of $72 million received by Lundin during first six months representing significant investment milestone Location Democratic Republic of Congo Ownership 24% 2013 Sales Estimate (LMC share) 49,000 tonnes Cu 2013 C1 Cost $1.24/lb Cu Mine Life +40 years 19

20 Tenke Outlook Significant Cash returns Expected to Continue in 2013/2014 Capital reduction initiatives are expected to result in capex being reduced in 2013 & 2014 Further expansion investment timing under review by operator Freeport LUN expects significant cash flows from Tenke to continue, assisting in balance sheet strength 20

21 Eagle Mine 21

22 Eagle Mine Acquisition Summary Acquired the high grade Eagle nickel/copper mine from Rio Tinto for approximately $315 million Advanced stage of construction (over 50% completed), scheduled for startup in Q4/2014 Acquisition to be funded from cash on hand & credit facilities Transaction closed on July 17th, ahead of schedule 22

23 Eagle Construction Progress Mill site facilities Underground mine ramp Mine site facilities 23

24 Exploration Upside Eagle East and Deep Targets Eagle East: 900 m deep. Initial drilling indicates lower grade, sizeable deposit Eagle Deep: Target located 400 m beneath the lowest mine development level. Target is high grade massive Ni Cu mineralization concentrated within Eagle root feeder system Eagle West: Target along the same intersection line of the mafic dykes as Eagle Deep 24

25 Eagle Property Exploration Targets Mag 1 20 Eagle West Eagle Eagle East Cody Melt Eagle Deep Magnetics Analytic Signal 1 km High priority drill targets Generative targets

26 Eagle Low Cost Nickel Project We estimate Eagle LOM C1 cash cost at $2.55/lb, which is in the lowest estcost quartile Eagle (est.) 26

27 Lundin Mining Low Cost Operations Cu & Zn 2013 C1 Copper Cost Curve, Grouped by Mine ($/lb) $3.00 $2.50 Neves Corvo $2.00 $1.50 Tenke Fungurume Weighted Average $1.00 $0.50 $0.00 As Tenke production increases, Lundin will move down the cost curve 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Cumulative Percentile Production 2013 C1 Zinc Cost Curve, Grouped by Mine ($/lb) $1.40 $1.20 $1.00 $0.80 $0.60 $0.40 $ ($0.20) Zinkgruvan ($0.40) -- 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Source: BrookHunt / WoodMackenize Cumulative Percentile Production 14

28 Lundin Mining Summary Portfolio of high quality, long life mines that are performing well Optimization opportunities and exploration potential at all existing assets No high risk major capital projects Proven disciplined growth approach Geographic and base metal diversification Neves Corvo Zinkgruvan Eagle Tenke Fungurume 28

29 TSX: LUN OMX: LUMI