Slide 1: Third Quarter Results
TSX: LUN OMX: LUMI Third Quarter Results October 30, 2014
Slide 2: Cautionary Statements
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
Slide 3: Presenter and Questions
Presenter PAUL CONIBEAR PRESIDENT & CEO Questions MARIE INKSTER SR. VP & CFO STEVE GATLEY VP TECHNICAL SERVICES 3
Slide 4: Q3 - 2014 Operational Highlights
Q3 - 2014 Operational Highlights Nickel, zinc and lead production in-line with expectations Copper: Production at Neves-Corvo was impacted by lower grades and recoveries but annual guidance remains unchanged Zinc: Production met expectations and was higher than prior periods, aided by another quarte
Slide 5: Q3 - 2014 Financial Highlights
Q3 - 2014 Financial Highlights Revenues: Q3/14: $167m; Q3/13: $176m Net Income: Q3/14: $34m ($0.06 p/s); Q3/13: $28m ($0.05 p/s) Operating CF: Q3/14: $58m ($0.10 p/s); Q3/13: $27m ($0.05 p/s) Cash Returns from Tenke: Q3/14: $34m; Q3/13: $38m Net Debt: $215 million vs. $174 million at June 30/14 Debt
Slide 6: Normalized Earnings
Normalized Earnings Normalized Earnings Third quarter Year-to-date $ Millions 2014 2013 2014 2013 Reported Net Earnings 33.7 27.9 86.8 94.6 Foreign exchange (10.4) 0.8 (10.1) 7.8 Mark to market on securities (4.8) 2.3 (1.4) 6.5 Realized loss on sale of securities 4.9 - 4.9 - Insurance proceeds - - -
Slide 7: Change in Production: Q3 2014 vs. 2013
Change in Production: Q3 2014 vs. 2013 Tonnes Tonnes Copper Lead Excluding Tenke 12,694 t attributable share Tonnes Tonnes Nickel Zinc 7
Slide 8: Operating Earnings – Q3 2014 vs. 2013
Operating Earnings – Q3 2014 vs. 2013 8
Slide 9: Cash Costs – Q3 2014 and YTD 2014
Cash Costs – Q3 2014 and YTD 2014 Three months ended September 30 Nine months ended September 30 2014 2013 2014 2013 Cash cost/lb (US dollars) Cash cost/lb (US dollars) Neves-Corvo Gross cost 2.85 2.92 2.80 2.50 By-product 1 (0.89) (0.69) (0.91) (0.54) Net Cost - cost/lb Cu 1.96 2.23 1.89 1.96 Zinkg
Slide 10: Production & Cash Cost Guidance
Production & Cash Cost Guidance (contained tonnes) Tonnes Cash Costsa Copper Neves-Corvo 50,000 - 55,000 $1.85/lb Zinkgruvan 3,000 - 4,000 Aguablanca 6,000 - 7,000 Eagle 2,000 - 3,000 Wholly-owned 61,000 - 69,000 Tenke(@24%)b 48,400 $1.16/lb Total attributable 109,400 - 117,400 Zinc Neves-Corvo 60,0
Slide 11: Operations & Outlook
Operations & Outlook Neves-Corvo Zinkgruvan Aguablanca Tenke Fungurume Eagle Candelaria 11
Slide 12: Neves-Corvo – Q3 2014 Results & Outlook
Neves-Corvo – Q3 2014 Results & Outlook • Production of 10.9kt copper and 17.9kt zinc Location Portugal 50,000–55,000 t Cu 2014 Production • Copper production impacted by change in 60,000–65,000 t Zn Guidance short term mine plan leading to lower grades 3,500-4,500 t Pb & recoveries 2014 C1 Cost $1.
Slide 13: Zinkgruvan – Q3 2014 Results & Outlook
Zinkgruvan – Q3 2014 Results & Outlook • Production of 20.0kt zinc, 6.5kt lead and Location Sweden 0.5kt copper; in-line with expectations 2014 75,000–80,000 t Zn Production 29,000–32,000 t Pb • Achieved a second consecutive quarter of Guidance 3,000–4,000 t Cu record mine production of zinc ore 201
Slide 14: Aguablanca – Q3 2014 Results and Outlook
Aguablanca – Q3 2014 Results and Outlook • Production of 2.0kt nickel and 1.9kt Location Spain copper, in-line with expectations Ownership 100% 2014 • C1 costs of $5.89/lb Ni for the 7,500–8,500 t Ni Production 6,000–7,000 t Cu quarter and $4.63/lb Ni YTD Guidance 2014 C1 Cost • Open pit mining expe
Slide 15: Tenke – Q3 2014 Results & Outlook
Tenke – Q3 2014 Results & Outlook • Production (100% basis) of 52.9kt Cu Location Democratic Republic of Congo and 3.5kt Co, in-line with expectations Ownership 24% 2014 Sales • Milling rates continue to exceed Production 48,400 t Cu design capacity, averaging 15,500tpd Guidance (attributable share)
Slide 16: Eagle Mine - Update
Eagle Mine - Update • On Sept. 23, Eagle officially entered Location Michigan, USA operation ahead of schedule and on 2015-17 ~23,000t Ni budget Production ~20,000t Cu Guidance • First shipment of saleable nickel and 2015-17 C1 Costs ~$2.00/lb Ni copper concentrates took place in Mine Life 8 years O
Slide 17: Eagle Production Stats (Sep. 23 – Oct. 22)
Eagle Production Stats (Sep. 23 – Oct. 22) • Performance to date is ahead of expectations and remains on track to meet or exceed 2014 production guidance • Operating stats during the first month have already achieved design rates for periods of time 17
Slide 18: Candelaria – A Cornerstone Asset
Candelaria – A Cornerstone Asset • On Oct. 6, announced the acquisition of an 80% stake in the Candelaria mining complex for an upfront payment of $1.8 billion • Funding consists of: $1.0 billion in senior secured notes, $600m in equity and $648m from the sale of a gold and silver stream • Transacti
Slide 19: Candelaria – Excellent Strategic Fit for Lundin
Candelaria – Excellent Strategic Fit for Lundin Immediately accretive on key operating and financial metrics including cash flow and earnings per share Increases and diversifies copper production making Lundin a top 20 copper producer globally Adds core strength of large open pit capability Delivers
Slide 20: Pro Forma Geographic Diversification
Pro Forma Geographic Diversification 2015E Attributable Cu Eq. Production by Country (1)(2)(3) Current Pro Forma Spain Spain 6% Sweden 4% Sweden USA 10% 15% 28% Chile 33% DRC 15% DRC 23% Portugal Portugal 19% USA 28% 19% Chile becomes Lundin’s largest producing region (1) Based on midpoint of 2015E
Slide 21: Pro Forma Base Metals Exposure
Pro Forma Base Metals Exposure 2015E Attributable Cu Eq. Production by Commodity (1)(2)(3) Current Pro Forma Lead Cobalt Lead Cobalt 4% 3% 3% 5% Zinc 13% Zinc 19% Copper 46% Nickel 17% Copper 64% Nickel 26% Enhanced copper exposure and strong leverage to nickel and zinc maintained (1) Based on midpo
Slide 22: Lundin Mining – with Candelaria
Lundin Mining – with Candelaria Enhanced earnings and cash flow per share with the addition of an established, large scale, high quality operation Diverse geographic and base metals portfolio - copper, zinc and nickel Further strengthens asset base of long-life mines with strong growth potential Mai
Slide 23: Questions & Answers
TSX: LUN OMX: LUMI Questions & Answers