Slide 1: Corporate Presentation May 2006
Corporate Presentation May 2006 Active Explorer for Minerals and Fast Growing Producer of Base Metals with a Focus on Zinc
Slide 2: Lundin Mining: LUN TSX, LUMI STO
“LUN” : TSX “LUMI” : STO Lundin Mining Zinkgruvan Mine Galmoy Mine Storliden Mine Lundin Mining Lundin Mining Sweden Ireland Sweden Exploration Investments Union Resources Sunridge Gold Corp.
Slide 3: A growing producer 2004–2005
A growing producer 2004–2005 Annual production (’000 tonnes) 200 180 160 140 120 100 80 60 40 20 0 South Atlantic Lundin Acquisition Lundin Acquisition Lundin + Ventures of Zinkgruvan of Boliden’s NAN Arcon+NAN shareholding Minorities Storliden Zinkgruvan Galmoy 3
Slide 4: Strategy
Strategy • Optimising existing mining operations. • Brownfield exploration near existing mines. • Greenfield exploration in Sweden and Ireland. • Acquisitions – operational mines, development and exploration projects. • Financial investments in projects. Generation of value through a combination of
Slide 5: Operating Highlights - Q1 2006
Operating Highlights - Q1 2006 • Lundin Mining posted a record high quarterly net profit of US$ 21.5m • New, significant, mineralization discovered at Galmoy. • Alliance and financing arrangement signed with Sunridge Corp. Sunridge is drilling several promising exploration projects in Eritrea. • Min
Slide 6: Metals Prices
Metals Prices LME/LBMA average Q1-06 Q1-05 Change, % Avg., % Zinc US$/lb 1.02 0.60 +70 0.63 US$/t 2,242 1,316 1,381 Lead US$/lb 0.56 0.44 +27 0.44 US$/t 1,242 978 976 Copper US$/lb 2.24 1.48 +51 1.67 US$/t 4,940 3,267 3,678 Silver US$/oz 9.69 6.97 +39 7.31 6
Slide 7: Financial Results - Q1 2006
Financial Results - Q1 2006 US$m Q1-06 Q1-05 FY 2005 Sales 91.8 36.0 191.2 Exploration 1.6 1.6 7.1 EBITDA 50.3 15.0 75.4 Net profit 21.5 2.9 30.0 Operating cash flow 22.7 7.5 66.7 Capex 4.9 2.4 18.0 EPS, basic, US$ 0.53 0.09 0.78 EPS, diluted, US$ 0.52 0.09 0.78 7
Slide 8: Financial strength
Financial strength US$m March 31, 2006 Dec 31, 2005 Fixed assets 301.2 301.0 Cash & short term inv. 89.3 74.4 Net bank debt Nil Nil Shareholders’ equity 268.5 244.5 Equity/Asset-ratio 62 60 Equity per share, USD 6.60 6.01 8
Slide 9: Cash Flow/Share & EPS
Cash Flow/Share & EPS USD USD 0.9 0,6 0.8 0,5 0.7 0.6 0,4 0.5 0,3 0.4 0.3 0,2 0.2 0,1 0.1 0 0 Q1-2005 Q2-2005 Q3-2005 Q4-2005 Q1-2006 Q1-2005 Q2-2005 Q3-2005 Q4-2005 Q1-2006 Op cash flow per share EPS, fully diluted 9
Slide 10: Hedging contracts
Hedging contracts Q2-06 Q3-06 Q4-06 2006 Copper (t) 1,300 800 625 2,725 Forward sales US$/pound 1.74 1.74 1.74 US$/tonne 3,825 3,825 3,825 Lead (t) 6,000 6,000 6,000 18,000 Bought put options US$/pound 0.43 0.43 0.43 US$/tonne 950 950 950 Sold call options US$/pound 0.53 0.53 0.53 US$/tonne 1,170 1,
Slide 11: Exploration
Exploration IN-MINE & BROWNFIELD EXPLORATION Zinkgruvan zinc-lead-silver mine Norrbotten District Galmoy zinc-lead mine Storliden copper-zinc mine Skellefte District GREENFIELD EXPLORATION Bergslagen District Norrbotten District Skellefte District Bergslagen District Ireland Greenfields Ireland Gree
Slide 12: Near-mine Exploration at Galmoy
Near-mine Exploration at Galmoy • A new zone of Zn-Pb-Ag mineralization, CW Southeast Zone, was discovered and is defined by 25 metre step-out delineation drilling covering approx a 100x50 metre area, only 100 meters from existing underground works. Rapla South Additional step-out delineation drilli
Slide 13: Ireland Greenfields – Keel property
Ireland Greenfields – Keel property • Compilation and reintepretation of historic exploration data. • Target definition programme of surface geophysical surveying, IP and gravity. Keel • Will identify new targets for drill- testing in Q2-06 13
Slide 14: Northern Sweden
Northern Sweden Norrbotten • Latest stage of drilling at Rakkurjärvi complete • Programme in review Storliden • Near-mine drilling continues in Q2-06 14
Slide 15: Copperstone-Eva
Copperstone-Eva • A total of 2,458 metres in 15 drill holes was completed in Q1-06. • In Q1-06, drilling has focused on testing to the south of Eva, for higher grade extension of massive sulphide body. • Additional drill targets defined in Q1-06. A drill budget of 6,000 metres is allocated for in 20
Slide 16: Near-mine Exploration at Zinkgruvan/ Bergslagen District
Near-mine Exploration at Zinkgruvan/ Bergslagen District • With the objective to extend Zinkgruvan’s mine life a special exploration team will start working, from Q2-06, to further explore for new mineral reserves. • Lundin Mining believes that the potential for new discoveries is excellent, and tha
Slide 17: Operations
Operations PRODUCTION Zinkgruvan zinc-lead-silver mine Galmoy zinc-lead mine Storliden copper-zinc mine Storliden Zinkgruvan Galmoy 17
Slide 18: Zinkgruvan Mine
Zinkgruvan Mine tonnes Zn Pb (´000) (%) (%) Reserves 8,161 9.7 4.7 Resources (M&I) 1,847 8.4 2.5 Inferred 8,463 10.5 4.4 Est. LOM 18 years Zinc Cash Prod. Cost, Q1-06 USD 0.37/lb (tonnes) Q1 2006 Q1 2005 12m 2005 Ore milled 169,765 225,968 803,883 Zinc metal 17,958 18,311 69,981 produced Lead metal
Slide 19: Zinkgruvan Mine - Q1 2006
Zinkgruvan Mine - Q1 2006 • Ore milled in Q1-06 was lower compared with Q1-05 and Q4-05 due to temporary rock mechanical issues. These issues have been solved. • Higher zinc grades in Q1 (11.2%), compared with 8.8% in Q1-05. Lower volumes of ore milled were compensated for by higher grades and recov
Slide 20: Zinkgruvan Mine
Zinkgruvan Mine rth West res i No! Whine curces Knallagr’' UI Nygruvan 1400 m 20
Slide 21: Galmoy Mine
Galmoy Mine tonnes Zn Pb (´000) (%) (%) Reserves 3,553 14.7 4.1 Resources (M&I) 1,607 10.9 2.2 Inferred - - - Est. LOM 5 years Zinc Cash Prod. Cost, Q1-06 USD 0.60/lb (tonnes) Q1 2006 Q1 2005 12m 2005 Ore milled 156,053 153,725 644,058 Zinc metal 17,217 15,403 74,321 produced Lead metal 4,441 5,672
Slide 22: Galmoy Mine
Galmoy Mine NOTE: This area contains approx. 25,000t of backfill c ontaining detrimental levels of clay and lead carbonate resulting in greatly reduced strength and severly prolonged setting time. set delay ed by 21 day s - Strength estimated from samples to be no greater than 30kPa. Arcon Mines Lim
Slide 23: Galmoy Mine - Q1 2006
Galmoy Mine - Q1 2006 • The improvement project in the mill has not reached the set targets for recoveries and utilisation. Activities outstanding will continue beyond Q1-06, until all targets have been realized. • Ore production of 156,053 tonnes in Q1-06 was in line with Q1-05, but lower than in Q
Slide 24: Storliden Mine
Storliden Mine tonnes Zn Cu (´000) (%) (%) Reserves 527 8.5 3.1 Resources (M&I) 323 4.1 2.4 Inferred 26 2.0 2.3 Est. LOM Until H2 2007 Zinc Cash Prod. Cost, Q1-06 < USD 0/lb (tonnes) Q1 2006 Q1 2005 12m 2005 Ore milled 98,064 91,660 319,411 Zinc metal 3,253 3,199 32,024 produced Copper metal 8,198 1
Slide 25: Storliden Mine - Q1 2006
Storliden Mine - Q1 2006 • Zinc cash cost for Storliden continued to be less than zero in Q1-06, as the credits from the mine’s bi-product, copper, remains higher than production costs and related smelting charges. • Sales and results in Q1-06 was higher than expected thanks to higher metals prices,
Slide 26: Investments - Sunridge Gold Corp., Eritrea
Investments - Sunridge Gold Corp., Eritrea • Alliance and financing arrangement - investment of US$ 4.5m for a 10% ownership of Sunridge. • Aggressive drilling program continues in 2006. • Asmara Project (40% interest), 1,100 km2, close to Eritrea’s capital, Asmara. •Adi Nefas, high-grade zinc/gold/
Slide 27: Investments - Union Resources: Mehdiabad
Investments - Union Resources: Mehdiabad • World’s largest known undeveloped resource of zinc - 1/3 oxide and 2/3 sulphide. • Investment of US$ 3.5m for 19.9% of Union Resources, which holds 50% of the project. • Metal to be produced on site through leaching and electro winning. Feasibility study fi
Slide 28: World Zinc Producers 2005
Production (´000 tonnes) O C ia m M ni in um er N a M 0 100 200 300 400 500 600 700 or d il p o A fri U ca i ch n al in H sk B u H dba P y B il l it o G n ru P e po r i l ya M B e re xic ak o V o w at L to er ra In u n nt du di n im st M V o ri a in l c s P i ng an en Ci ol a e M s in e B ra World Z
Slide 29: Global Exploration 1995–2005
Global Exploration 1995–2005 USDbn 6 5 4 3 2 1 0 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 Cu Zn & Pb Others 29 Sources: Raw Materials Group and MEG.
Slide 30: Zinc consumption growth in China and India
Zinc consumption growth in China and India • Assuming that China and India follow the historical pattern of GDP per capita growth and metals consumption seen in the US, Korea and Taiwan, this would lead to an increase in zinc consumption up until 2010 of: • China 2-4 mt • India 1 mt • A consumption
Slide 31: Projected zinc demand 2006 - 2010
Projected zinc demand 2006 - 2010 Mt 16 14 12 10 China 8 India Rest of World 6 4 2 Source: Häggström, Ericsson, 2006. 0 2005 2006 2007 2008 2009 2010 Assumptions: China & India follow historical growth pattern of zinc consumption for USA, Korea and Taiwan. GDP growth China 9 % and India 6 %. RoW no
Slide 32: Projected zinc balance 2005 - 2010
Projected zinc balance 2005 - 2010 Mt 16 14 12 10 Consumption 8 Production 6 4 2 Sources: Raw Materials Group, 2006; 0 Häggström Ericsson 2006. 2005 2006 2007 2008 2009 2010 Assumptions: Demand - as in previous slide. Supply - all known projects go ahead according to announced time schedule. No mine
Slide 33: Zinc - LME Prices and stocks
Zinc - LME Prices and stocks 33
Slide 34: Zinc Real Prices 1823 – 2001
Zinc Real Prices 1823 – 2001 Source: Crowson. 34
Slide 35: Zinc grades in ore production
Zinc grades in ore production 35
Slide 36: Copper consumption growth in China and India
Copper consumption growth in China and India • Assuming that China and India follow the historical pattern of GDP per capita growth and metals consumption seen in the US, Korea and Taiwan, this would lead to an increase in copper consumption up until 2010 of: • China 5 - 7 mt • India 1 mt • A consum
Slide 37: Projected copper demand 2006 - 2010
Projected copper demand 2006 - 2010 25 Mt 20 15 China India 10 Rest of world 5 Source: Häggström, Ericsson 2006. 0 2005 2006 2007 2008 2009 2010 Assumptions: China & India follows historical growth pattern of zinc consumption for USA, Korea and Taiwan. GDP growth China 9 % and India 6 %. RoW no grow
Slide 38: Projected copper balance 2005 - 2010
Projected copper balance 2005 - 2010 Mt 25 20 15 Consumption Production 10 5 Sources: Raw Materials Group, 2006; 0 Häggström Ericsson 2006. 2005 2006 2007 2008 2009 2010 Assumptions: Demand - as in previous slide. Supply - all known projects go ahead according to announced time schedule. No mine clo
Slide 39: Copper - LME Prices and stocks
Copper - LME Prices and stocks 39
Slide 40: Copper - Real prices 1771-2001
Copper - Real prices 1771-2001 Source: Crowson. 40
Slide 41: Lead - LME Prices and stocks
Lead - LME Prices and stocks 41
Slide 42: Management Team
Management Team LUKAS LUNDIN KJELL LARSSON Chairman Vancouver, Canada V.P. Mining Stockholm, Sweden 25 years international experience 21 years international mining experience Argentina Gold, Alumbrera Copper, Tenke Mining LKAB, Boliden, Inco KARL-AXEL WAPLAN NEIL O’BRIEN President and CEO Stockholm,
Slide 43: Summary
Summary Operational Strength Production from high-grade, low-cost mines Strong base metals markets – Zn, Pb and Cu Financial Strength No financial debt Strong balance sheet and cash flow from operations Solid shareholder base Growth Potential Optimization of existing mining operations Brownfield exp
Slide 44: History in Brief
History in Brief -2004 37% in NAN, Stockholm Nya Marknaden listing, TSX-V March 2004 Farm-in on Anglo-Rio Norrbotten project May/June 2004 Acquisition of Zinkgruvan Mine Aug 2004 Name change to Lundin Mining and TSX listing Nov 2004 Silver production sale from Zinkgruvan to Silver Wheaton Dec 2004 S
Slide 45: Vision
Vision To maximise shareholder value through building a mineral exploration and mining company with the aim of growing into a world leading metals producer. 45
Slide 46: Lundin Mining - a Premier Base Metal Investment
Lundin Mining - a Premier Base Metal Investment 46