Slide 1: Second Quarter Results 2013
TSX: LUN OMX: LUMI Second Quarter Results 2013 July 31, 2013
Slide 2: Cautionary Statements
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
Slide 3: Presenter and Questions
Presenter PAUL CONIBEAR PRESIDENT & CEO Questions MARIE INKSTER SR. VP & CFO PAUL MCRAE SR. VP PROJECTS STEVE GATLEY VP TECHNICAL SERVICES 3
Slide 4: Q2/13 Operational Highlights
Q2/13 Operational Highlights Overall mine performance during the quarter achieved objectives Copper: Neves-Corvo in-line; better than expected at Aguablanca Neves-Corvo copper production on target assisted by higher volumes Aguablanca production was better than expected, resulting in an increase to
Slide 5: Q2/13 Financial Highlights
Q2/13 Financial Highlights Revenues: $176m vs. $172m in Q2/12 Net Income: $17m ($0.03 p/s) vs. $44m ($0.08 p/s) in Q2/12 Operating CF (excluding change in non-cash wc and Tenke cash flows): $24m ($0.04 p/s) vs. $44m ($0.08 p/s) in Q2/12 Cash returns from Tenke & Freeport Cobalt: $28.3m ($0.05 p/s).
Slide 6: Change in Production: Q2/13 vs. Q2/12
Change in Production: Q2/13 vs. Q2/12 Excluding Tenke 13,230 t Tonnes Tonnes attributable share Copper Lead Tonnes Tonnes Nickel Zinc 6
Slide 7: Operating Earnings – Q2/13 vs. Q2/12
Operating Earnings – Q2/13 vs. Q2/12 7
Slide 8: Normalized Earnings
Normalized Earnings Three months ended June 30, $ Millions 2013 2012 Reported Net Income 16.6 44.1 Foreign exchange 8.4 (15.4) Mark to market on securities 3.2 4.6 Tax (on above items) (3.4) 3.9 Tax adjustments* - 7.3 Adjusted Net Income 24.8 44.5 Adjusted Earnings per share $ 0.04 $ 0.08 * 2012 - r
Slide 9: Cash Costs – 2013 vs. 2012
Cash Costs – 2013 vs. 2012 Cash Cost/lb (US dollars) Cash Cost/lb (US dollars) Three months ended Six months ended June 30 June 30 Current 2013 Q2/13 Q2/12 2013 2012 Guidance Neves-Corvo Gross cost $2.42 $1.86 $2.31 $1.88 By-product* ($0.57) ($0.25) ($0.47) ($0.26) Net Cost $/lb - Cu $1.85 $1.61 $1.
Slide 10: Operations and Outlook
Operations and Outlook 10
Slide 11: Production and Cost Guidance - 2013
Production and Cost Guidance - 2013 Prior Guidance Revised Guidance Tonnes C1 Cost a Tonnes C1 Cost a Copper Neves-Corvo 50,000 – 55,000 $1.80 50,000 – 55,000 $1.80 Zinkgruvan 2,500 – 3,500 2,500 – 3,500 Aguablanca 4,500 – 5,000 5,000 – 5,500 Wholly-owned 57,000 – 63,500 57,500 – 64,000 Tenke (@ 24%
Slide 12: Cost Restraint Initiatives
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 $1
Slide 13: Neves-Corvo – Q2/13 Results
Neves-Corvo – Q2/13 Results • Production of 14.1kt copper & 13.9kt zinc • C1 costs of $1.85/lb Cu (net of by-product credits) • Average copper grades of 2.5% with recovery rate of 86% • Significant copper and zinc out of reserve material being found and processed • Zinc production achieved a new qua
Slide 14: Neves-Corvo – Outlook
Neves-Corvo – Outlook • Stope blasting in Lombador zinc ore commenced in June 2013. Zinc grades increasing in the second half of 2013 • Preliminary study results on expanding shaft hoist capacity are favourable and could enable future production increases with relatively low capex • Studies now focu
Slide 15: Zinkgruvan – Q2/13 Results
Zinkgruvan – Q2/13 Results • Production of 18.6kt zinc, 10.5kt lead & 0.4kt copper • Production impacted by ground conditions in a single stope resulted in slower catch up on zinc production • Zinc grades and production volumes back on track by quarter end • Lead production at record levels • Mainta
Slide 16: Zinkgruvan – Outlook
Zinkgruvan – Outlook • Interim measures to improve plant availability and reduce dust and noise emissions have accomplished measurable improvements • Given these improvements and continued low zinc prices, the capital investment for the plant modernization has been deferred 16
Slide 17: Aguablanca – Q2/13 Results and Outlook
Aguablanca – Q2/13 Results and Outlook • Produced 1.9kt nickel and 1.5kt copper at cash cost of $3.50/lb Ni; exceeding expectations for the quarter • Pit life extended until Q1/2015. Further pushbacks to the south wall in progress • Annual production guidance increased and cost guidance maintained L
Slide 18: Tenke – Q2/13 Results
Tenke – Q2/13 Results • Another quarterly record in mining, milling and copper production • Total production (100%) of 55.1kt Cu and 2.3kt Co @ $1.23/lb Cu • Average throughput of 15.0ktpd exceeded Phase II nameplate design capacity of 14.0ktpd • Cash distributions of $27.3 million for the quarter a
Slide 19: Tenke Outlook
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, a
Slide 20: Eagle – Status Update
Eagle – Status Update • Transaction closed on July 17th, ahead of schedule • NI 43-101 Report filed on July 26th • Project ramp-up proceeding well. Concrete and steel erection at mill and mine sites advancing. Equipment delivery being scheduled • Scheduled startup Q4 2014 20
Slide 21: Eagle – Construction Progress
Eagle – Construction Progress Mill site facilities Underground mine ramp Mine site facilities 21
Slide 22: Exploration Upside – Eagle East and Deep Targets
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 s
Slide 23: Eagle Property Exploration Targets
Eagle Property Exploration Targets Mag 1-20 Eagle West Eagle Eagle East Eagle Cody Melt Deep 1 km Magnetics Analytic Signal High priority drill targets Generative targets
Slide 24: Eagle – Low-Cost Nickel Project
Eagle – Low-Cost Nickel Project • We estimate Eagle LOM C1 cash cost at $2.55/lb, which is in the lowest cost quartile Eagle (est.) 24
Slide 25: Lundin Mining - Low-Cost Operations Cu & Zn
Lundin Mining - Low-Cost Operations Cu & Zn 2013 C1 Copper Cost Curve, Grouped by Mine ($/lb) $3.00 $2.50 Neves-Corvo $2.00 Weighted Average Tenke Fungurume $1.50 As Tenke $1.00 production increases, Lundin $0.50 will move down the cost curve $0.00 -- 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Cumulat
Slide 26: Lundin Mining - Summary
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 Zinkgru
Slide 27: Questions & Answers
TSX: LUN OMX: LUMI Questions & Answers