Corporate Update May 2015

Transcription

1 Corporate Update May 2015

2 Cautionary Statements Caution Regarding Forward-Looking Information 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 forward-looking 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 Businessin the Company s Annual Information Form and Management s Discussion and Analysis. Note: All dollar amounts are in US dollars unless otherwise denoted. 2

3 Diversified Assets: Americas, Europe and Africa Zinkgruvan (100%) Zinc-Lead-Copper (Sweden) Freeport Cobalt (24%) Cobalt Refinery (Finland) Eagle (100%) Nickel-Copper (USA) Neves-Corvo (100%) Copper-Zinc (Portugal) Aguablanca (100%) Nickel-Copper (Spain) Candelaria (80%) Copper-Gold-Silver (Chile) Tenke Fungurume (24%) Copper-Cobalt (DRC) 7 underground mines and 1 large open pit Pacific port facility and desalination plant Equity stake in Tenke and Kokkola Refinery 3

4 Q1-15 Highlights Excellent Start to Year Production and Costs Outperformed Expectations Copper: Production achieved a new quarterly record and exceeded expectations Zinc: Production met expectations supported by higher zinc grades from the Lombador deposit at Neves-Corvo Nickel: Production achieved a new quarterly record and exceeded expectations. Eagle surpassed expectations on throughput, grades & recoveries Cash Costs: Outperformed expectations. Annual guidance has been improved at all operations with the exception of Candelaria and Eagle which will be reviewed and updated as appropriate at the end of Q2 4

5 Q1-15 Operating Results New Records Set Record Quarterly Sales Levels for Copper and Nickel 5

6 Revenue Breakdown by Mine and Metal For the quarter, 72% of Sales were from Candelariaand Eagle Sales Breakdown by Mine Sales Breakdown by Metal 6

7 Cash Cost Summary Very Competitive Q1/15 Cash Costs Across All Operations 2015 Cash Costs - Copper $/lb Cu $4.00 $3.00 $2.00 $1.00 Candelaria $1.20 Tenke $1.26 Neves-Corvo $1.39 $0.00 5% 15% 19% 24% 36% 43% 52% 56% 63% 66% 70% 74% 76% 78% 80% 84% 86% 90% 92% 93% 94% 96% 98% 99% 2015 Cash Costs - Nickel $9.00 Aguablanca $0.91 Eagle $1.45 $6.00 $/lb Ni $3.00 $0.00 -$3.00 -$ % 22.1% 29.1% 33.0% 36.5% 44.2% 47.4% 51.1% 54.1% 57.5% 64.7% 68.6% 74.3% 78.2% 84.9% 96.7% 98.4% 99.7% 2015 Cash Costs - Zinc $/lb Zn $1.50 $1.00 $0.50 $ % 22% 27% 34% 39% 48% 54% 58% 61% 68% 72% 78% 84% 88% 91% 93% 95% 98% 100% Zinkgruvan $0.42 Source: Cost curves from Wood Mackenzie as of Q Cash cost curves are based on the expected annual costs for 2015, whereas quarterly costs have been highlighted for LUN assets for illustrative purposes. 7

8 Transformational Production Growth -Copper Candelaria is Expected to More Than Double our Copper Production Profile in 2015 Impact to Copper Production (kt) Percentage Increase over 2013: 125 % 109% 101% 300 Lundin excl. Candelaria Candelaria (80%) Actual 2013 Actual 2014 Actual 2015 Estimate 2016 Estimate 2017 Estimate (2) Notes: Production estimate for 2015 based on mid-point of guidance range provided in Q1/2015 MD&A. Production estimates for 2016 and 2017 based on mid-point of guidance ranges provided in the Company s 3-yr operating outlook announced on Dec. 4, Copper profile includes attributable production from Tenke Fungurume and Candelaria(where applicable). 8

9 Significant Production Growth -Zinc & Nickel Excellent Production Growth Expected For Both Zinc and Nickel Increase in Zinc Production (kt) Increase in Nickel Production (kt) Percentage Increase over 2013: 21% 18% 23% Percentage Increase over 2013: 325% 250% 200% 160 Total Zinc Production 40.0 Total Nickel Production Actual 2013 Actual 2014 Actual 2015 Estimate 2016 Estimate 2017 Estimate Actual 2013 Actual 2014 Actual 2015 Estimate 2016 Estimate 2017 Estimate Notes: Production estimate for 2015 based on mid-point of guidance range provided in Q1/2015 MD&A. Production estimates for 2016 and 2017 based on mid-point of guidance ranges provided in the Company s 3-yr operating outlook announced on Dec. 4,

10 Strong Financial Position & Outlook Net Cash Balance Expected to Grow Rapidly From Strong Free Cash Flows US$ M Net Debt Balance 1 (Apr 29, 2015) $630 Available Credit Facilities $350 (1) The Company s Senior Secured Notes comprise of: $550 million at 7.5% due in 2020, and $450 million at 7.875% due in 2022 (2) Consensus estimates sourced from Bloomberg on May 5,

11 Priorities for 2015 Strong Focus on Operations Continued Focus on Cash Generation & Asset Optimization Continue successful production ramp-up at Eagle Optimize mine plan at Candelaria with aim of improving 5-year production profile Foster improved margins at European operations Aggressive exploration focus at Candelaria and Eagle and continue exploration at European operations Maintain a strong balance sheet with a growing net cash balance 11

12 Operations & Outlook Candelaria (80%) Eagle (100%) Neves-Corvo (100%) Zinkgruvan (100%) Aguablanca (100%) Tenke Fungurume (24%) 12

13 Candelaria(Cu/Au/Ag), Chile Atacama Province, Region III, approximately 650 km north of Santiago 13

14 Candelaria Q Results & Outlook Production (49.4kt Cu) surpassed expectations aided by high throughput and excellent recoveries Cash costs averaged $1.20/lb Cu due to lower mining and milling costs, favourable FX rates and higher production levels Focus also remains on continuing to contribute to flood relief efforts in a meaningful way Construction of new tailings facility expected to start in H2/15, following receipt of permits Five year mine plan optimization is underway with results due to be announced in Q3/15 1 Production in the chart for Q4/14 is shown solely for the period of LUN ownership from Nov. 3 Dec. 31 st. Location Chile Ownership 80% 2015 Production Guidance (80%) 2015 Cost Guidance Expected Mine Life Production (k ton nnes) , ,000 t Cu 28.6 $1.55/lb Cu +15 years Cu 49.4 Q1-14 Q2-14 Q3-14 Q4-14 Q1-15 Copper Cash Cost (right axis) Cash Cost ($/lb Cu) 14

15 Eagle Mine (Ni/Cu), Michigan, U.S.A. 50 km northwest of Marquette in the Upper Peninsula of Michigan 15

16 Eagle Mine Q Results & Outlook Nickel and copper production (7.3kt Ni, 6.4kt Cu) exceeded expectations due to high throughput, grades and recoveries Performing consistently at design rates or above on all key parameters Costs averaged $1.45/lb Ni due to strong production figures and targeted cost savings Exploration focussed on Eagle East Location Michigan, USA Ownership 100% 2015 Production Guidance 2015 Cost Guidance Mine Life Production (k to onnes) ,000 28,000 t Ni 20,000 23,000 t Cu $2.00/lb Ni 6.4 Q1-14 Q2-14 Q3-14 Q4-14 Q1-15 Nickel Copper Cash Cost (right axis) 8 years Cash Cost ($/lb Ni) 16

17 Neves-Corvo (Cu/Zn), Portugal Situated 220 km southeast of Lisbon 17

18 Neves-Corvo Q Results & Outlook Strong copper production (15.5kt) reflects high grades and recoveries achieved from bulk stopes Zinc production (17.3kt) increased as +50% of ore is sourced from the higher grade Lombador deposit Cash costs of $1.39/lb Cu were better than expected and annual guidance has been improved Feasibility study on zinc expansion scheduled for completion mid-2015 Location Portugal Ownership 100% 2015 Production Guidance 2015 Cost Guidance Mine Life onnes) Production (k t ,000 55,000 t Cu 68,000 73,000 t Zn 4,000-5,000 t Pb $1.60/lb Cu +10 years Cu + Zn $2.50 $2.00 $1.50 $1.00 $0.50 $- Q1-14 Q2-14 Q3-14 Q4-14 Q1-15 Copper Zinc Cash Cost (right axis) 18 lb Cu) Cash Cost ($/l

19 Zinkgruvan (Zn/Pb/Cu), Sweden Situated 200 km southwest of Stockholm 19

20 Zinkgruvan Q Results & Outlook Zinc production (18.4kt) met expectations as higher throughput and recoveries were offset by lower grades Lead and copper production (7.4kt Pb, 0.6kt Cu) were impacted by low head grades Cash costs of $0.42/lb Zn were in-line with guidance, as higher unit costs were offset by favourable FX rates Cash cost guidance has been modestly improved for the year Location Sweden Ownership 100% 2015 Production Guidance 2015 Cost Guidance Production (k to onnes) Mine Life ,000 82,000 t Zn 27,000 30,000 t Pb 2,000 3,000 t Cu 19.1 $0.35/lb Zn +10 years $0.80 $0.70 $0.60 $0.50 $0.40 $0.30 $0.20 $0.10 lb Zn) Cash Cost ($/l 0 Q1-14 Q2-14 Q3-14 Q4-14 Q1-15 Zinc Lead Cash Cost (right axis) $- 20

21 Aguablanca (Ni/Cu), Spain Situated 80 km north of Seville 21

22 Aguablanca Q Results & Outlook Nickel and copper production (2.7kt Ni, 2.1kt Cu) achieved a historical quarterly record Production from the open pit was completed in April Underground stope production is expected to commence in Q2 Location Spain Ownership 100% 2015 Production Guidance 2015 Cost Guidance Mine Life Cash costs of $0.91/lb Ni were significantly better than expected Production and cost guidance have all been improved for the year Production (k to onnes) ,000 7,500 t Ni 5,500 6,000 t Cu 2.1 $3.75/lb Ni 2.7 ~4 years $7.00 $6.00 $5.00 $4.00 $3.00 $2.00 lb Ni) Cash Cost ($/l Q1-14 Q2-14 Q3-14 Q4-14 Q1-15 Copper Nickel Cash Cost (right axis) $1.00 $- 22

23 TenkeFungurume (Cu/Co), DRC Situated 175 km northwest of Lubumbashi 23

24 Tenke Q Results & Outlook Production (100% basis) of 52.7kt copper was positively impacted by high grades and milling exceeding design capacity Cash costs averaged $1.26/lb Cu Construction of 2 nd sulphuric acid plant on schedule for completion in 2016 Location Democratic Republic of Congo Ownership 24% 2015 Production Guidance (attributable share) 49,500 t Cu 2015 Costs $1.26/lb Cu Expected Mine Life 2015 cash distribution is now expected 60 to be approximately $20 million 49.5 Production (k tonnes) Q1-14 Q2-14 Q3-14 Q4-14 Q1-15 Copper Cobalt Cash Cost (right axis) +40 years $1.60 $1.40 $1.20 $1.00 $0.80 $0.60 $0.40 $0.20 $- Cash Cost ($/ /lb Cu) 24

25 Lundin Mining Summary Geographic and base metal diversification Portfolio of high quality, long-life mines Exploration potential at all existing assets No high risk capital projects Priorities for 2015 optimize current operations 25

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