TSX: LUN OMX: LUMI Bank of America Merrill Lynch Canada Mining Conference September 2015
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 Business in the Company s Annual Information Form and Management s Discussion and Analysis. Note: All dollar amounts are in US dollars unless otherwise denoted. 2
Lundin Mining Globally Diversified Portfolio Lundin Mining Head Office Toronto, Canada Zinkgruvan (100%) Zinc-Lead-Copper (Sweden) Lundin Mining UK Office West Sussex, UK 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) LUN trades in Toronto (TSX) and Stockholm (OMX) Assets: Americas, Europe and Africa 7 underground mines and 1 large open pit 2015E production: 270 kt Cu, 34 kt Ni, 145 kt Zn, 35 Kt Pb 3
Operating Highlights Operations performing well meeting or exceeding expectations Copper (Cu) Zinc (Zn) Nickel (Ni) Strong performance in first half of 2015 Improved production and cost outlook at Candelaria, Neves-Corvo and Tenke Solid results at Zinkgruvan. Increased production guidance Zinc plant improvement progressed at Neves- Corvo Production at Eagle and Aguablanca largely meeting or exceeding expectations to date Costs coming in below annual guidance All mines continue to deliver good margins 4
Sales Mix First Half 2015 70% of sales were from Candelaria (Chile Cu) and Eagle (U.S.A. Ni/Cu) 66% of sales were from copper Sales Breakdown by Mine Sales Breakdown by Metal Neves- Corvo 17% Zinkgruvan 8% Aguablanca 5% Candelaria 53% Nickel 14% Zinc 8% Gold 6% Other 6% Eagle 17% Copper 66% 5
YTD Cash Costs Very Competitive Source: Cost curves from Wood Mackenzie as of Q2 2015 * Cash cost curves are based on the expected annual costs for 2015, whereas YTD costs have been highlighted for LUN assets for illustrative purposes 6
$US M Strong Financial Position US$ M June 30, 2015 Cash and Cash Equivalents $507 Net Debt 1 $497 Available Credit Facilities $360 600 Cash and Cash Equivalents $507 400 $355 200 $175 - Q4/14 Q1/15 Q2/15 Cash balance grew by over $300M in the first six months of the year Net debt has improved from $829M at year end 2014 to $497M end of Q2/2015 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. 7
2015 Production and Cost Outlook Raised copper and lead production guidance and lowered copper cost outlook Zinkgruvan outperforming, offset by lower zinc production at Neves-Corvo Capex for 2015 was reduced by $50M to $350M (ex-tenke) 2015 exploration guidance of $60M (unchanged) Guidance (contained tonnes) Tonnes Cash Costs a Copper Nickel Zinc Lead Candelaria (80%) 135,000 140,000 $1.35/lb Eagle 20,000 23,000 Neves-Corvo 50,000 55,000 $1.55/lb Zinkgruvan 2,000 3,000 Aguablanca 5,500 6,000 Tenke (@24%) b 50,000 $1.12/lb Total Attributable 262,500 277,000 Eagle 25,000 28,000 $2.00/lb Aguablanca 7,000 7,500 $3.75/lb Total 32,000 35,500 Neves-Corvo 60,000 65,000 Zinkgruvan 80,000 85,000 $0.40/lb Total 140,000 150,000 Neves-Corvo 4,000 5,000 Zinkgruvan 30,000 33,000 Total 34,000 38,000 a. Cash costs remain dependent upon exchange rates (forecast at /USD:1.15, USD/SEK:8.25, USD/CLP:625) and metal prices (forecast at Cu: $2.70/lb, Zn: $0.95/lb, Pb: $0.80/lb, Ni: $6.25/lb, Co: $13.00/lb). Prior guidance forecast /USD at 1.10. b. Freeport has provided 2015 sales and cash costs guidance. Tenke s 2015 production is assumed to approximate sales guidance. 8
Operational Overview and Outlook Candelaria (80%) Neves-Corvo (100%) Eagle (100%) Zinkgruvan (100%) Aguablanca (100%) Tenke Fungurume (24%) 9
Candelaria (Cu/Au/Ag), Chile Atacama Province, Region III, approximately 20 km south of Copiapó 10
Production (k tonnes) Candelaria H1/15 Performance and Outlook Production (100% basis) of 96.0 kt in H1/15 exceeded expectations as a result of higher throughput and recoveries Cash costs of $1.20/lb YTD, below annual guidance due to operating strength and FX 2015 production and cost guidance improved due to strong operating results to date Approval received for Candelaria 2030 EIA Early works construction started for infrastructure relocation Major construction of Los Diques civil works to begin late 2016 Los Diques initial capex from 2016-2018 of ~$326 million Location Chile Ownership 80% 2015 Production Guidance (80%) 135,000-140,000 t Cu 2015 Cost Guidance $1.35/lb Cu Expected Mine Life 60 50 40 30 20 10 0 28.6 49.4 +15 years Cu 46.7 Q1-14 Q2-14 Q3-14 Q4-14 Q1-15 Q2-15 Copper Cash Cost (right axis) $1.60 $1.50 $1.40 $1.30 $1.20 $1.10 $1.00 Cash Cost ($/lb Cu) * Production in the chart for Q4/14 is shown solely for the period of LUN ownership from Nov. 3 Dec. 31 st 11
Candelaria New Mine Plan Improved Production & Costs 25% increase in LOM copper production (2.4 Mt vs. 1.9 Mt) Mine life extended to 2032 from 2028 Low cost operation with average LOM cash costs of $1.54/lb Total capex of $460 million for 2016 2019 (+ capitalized waste stripping of $436 million), mainly associated with the new tailings facility ~26% increase new vs. old plan New Plan - Cumulative Cu (kt): 615 x Old Plan - Cumulative Cu (kt): 488 12
Eagle Mine (Ni/Cu), Michigan, U.S.A. 50 km northwest of Marquette in the Upper Peninsula of Michigan 13
Production (k tonnes) Eagle H1/15 Performance and Outlook Nickel production of 13.7 kt and copper production of 11.8 kt in H1/15 Meeting expectations in its first full year of production On-track to meet full year production guidance Cash costs of $1.81/lb in H1/15 below full year guidance of $2.00/lb Eagle East high grade discovery a high priority Location Michigan, USA Ownership 100% 2015 Production Guidance 25,000 28,000 t Ni 20,000 23,000 t Cu 2015 Cost Guidance $2.00/lb Ni Mine Life 8 7 6 5 4 3 2 4.1 3.6 7.3 6.4 6.3 5.4 8 years 2.6 2.4 2.2 2 1.8 1.6 1.4 Cash Cost ($/lb Ni) 1 0 1.2 0.3 0.2 1 Q1-14 Q2-14 Q3-14 Q4-14 Q1-15 Q2-15 Nickel Copper Cash Cost (right axis) 14
Neves-Corvo (Cu/Zn), Portugal Situated 220 km southeast of Lisbon 15
Production (k tonnes) Neves-Corvo H1/15 Performance and Outlook Strong copper production of 30.8 kt in H1/15 higher throughput and better grades Zinc production of 33.4 kt in H1/15 Lower plant throughput and recoveries Location Portugal Ownership 100% 2015 Production Guidance 50,000 55,000 t Cu 60,000 65,000 t Zn 4,000-5,000 t Pb 2015 Cost Guidance $1.55/lb Cu Mine Life +10 years Cu + Zn Copper cash costs of $1.41/lb were better than expected due to FX and lower mine/mill costs 2015 cost guidance lowered due to favorable FX and strong copper production to date 20 18 16 14 12 10 8 14.2 12.8 17.9 17.9 13.5 10.9 17.3 17.3 16.0 15.5 15.3 14.2 $2.20 $2.10 $2.00 $1.90 $1.80 $1.70 $1.60 $1.50 $1.40 $1.30 Cash Cost ($/lb Cu) 6 Q1-14 Q2-14 Q3-14 Q4-14 Q1-15 Q2-15 $1.20 Copper Zinc Cash Cost (right axis) 16
Zinc Expansion Project Neves-Corvo Feasibility Study for expansion of zinc substantially complete Scope covers underground development of lower Lombador Zn deposits Expansion of shaft capacity to 5.6 Mtpa Zinc plant expansion to 2.5 Mtpa of ore throughput Maximum zinc production nominally of 165 ktpa 25 ktpa of lead by-product Estimated capital cost is approximately 245 million Estimated timeline from approval to commissioning ~24 months Investment decision deferred pending additional work to improve existing zinc plant recoveries and plant stability, and improved metal markets 17
Zinkgruvan (Zn/Pb/Cu), Sweden Situated 200 km southwest of Stockholm 18
Production (k tonnes) Zinkgruvan H1/15 Performance and Outlook Zinc production of 39.7 kt in H1/15 Higher throughput and recoveries Lead production of 14.8 kt in H1/15 impacted by lower grades Location Sweden Ownership 100% 2015 Production Guidance 80,000 85,000 t Zn 30,000 33,000 t Pb 2,000 3,000 t Cu 2015 Cost Guidance $0.40/lb Zn Increased 2015 production guidance for zinc and lead due to shift in priority Mine Life 25 +10 years $0.80 Copper circuit can process zinc ores 20 19.2 19.3 20.1 19.1 18.4 21.2 $0.70 $0.60 Cash costs of $0.43/lb above guidance due to lower by-product credits 2015 cash cost guidance raised slightly (to $0.40/lb from $0.35/lb) 15 10 5 0 9.1 9.2 6.5 7.5 7.4 7.4 Q1-14 Q2-14 Q3-14 Q4-14 Q1-15 Q2-15 $0.50 $0.40 $0.30 $0.20 $0.10 $- Cash Cost ($/lb Zn) Zinc Lead Cash Cost (right axis) 19
Aguablanca (Ni/Cu), Spain Situated 80 km north of Seville 20
Production (k tonnes) Aguablanca H1/15 Performance and Outlook Nickel production of 5.0 kt and copper production of 4.1 kt Consistent higher grades YTD with lower throughput impacting Q2 only Nickel cash costs of $1.28/lb YTD significantly lower than 2015 guidance Extended open pit mining into Q2, favorable FX, higher volumes and lower maintenance costs Open-pit mining completed April 2015, underground mining halted pending resolution of permitting issues Mill running until October on stockpile material. Guidance under review Location Spain Ownership 100% 2015 Production Guidance 7,000 7,500 t Ni 5,500 6,000 t Cu 2015 Cost Guidance $3.75/lb Ni Mine Life 3.0 2.8 2.6 2.4 2.2 2.0 1.8 1.6 1.4 1.2 1.0 1.7 2.0 1.8 2.2 2.0 1.9 2.0 2.5 2.1 2.7 2.0 2.2 Q1-14 Q2-14 Q3-14 Q4-14 Q1-15 Q2-15 Copper Nickel Cash Cost (right axis) ~4 years $7.00 $6.00 $5.00 $4.00 $3.00 $2.00 $1.00 $- Cash Cost ($/lb Ni) 21
Tenke Fungurume (Cu/Co), DRC Situated 175 km northwest of Lubumbashi 22
Production (k tonnes) Tenke H1/15 Performance and Outlook Copper production (100% basis) of 105.0 kt in H1/15 Cobalt production (100% basis) of 7.5 kt in H1/15 Copper cash costs of $1.18/lb YTD Location Democratic Republic of Congo Ownership 24% 2015 Production Guidance (attributable share) 50,000 t Cu 2015 Costs $1.12/lb Cu Expected Mine Life +40 years 2015 guidance improved by Freeport Construction of 2 nd sulphuric acid plant progressing with completion expected in 2016 2015 cash distribution now expected to be ~$20-$30M 60 50 40 30 20 10 51.9 52.9 52.7 52.3 49.5 48.4 3.0 3.4 3.5 3.4 3.3 4.1 $1.50 $1.40 $1.30 $1.20 $1.10 $1.00 $0.90 $0.80 Cash Cost ($/lb Cu) 0 Q1-14 Q2-14 Q3-14 Q4-14 Q1-15 Q2-15 $0.70 Copper Cobalt Cash Cost (right axis) 23
Well Positioned in Any Market High quality, diversified asset base Diversified metals exposure Meaningful production scale Strong free cash flow and good margins Conservative balance sheet 24
Thank You TSX: LUN OMX: LUMI