Slide 1: Third Quarter Results 2011
TSX: LUN OMX: LUMI Third Quarter Results 2011 October 27, 2011
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 JOAO CARRELO EXEC. VP & COO MARIE INKSTER CFO 3
Slide 4: Q3/11 Highlights
Q3/11 Highlights Net Income: $12.4 million ($0.02 p/s) vs. $57.7 m ($0.10 p/s) Q2/11 Copper: Production improved but grades and recoveries lower than planned. Costs were up, sales volumes and net revenues down. New high grade stopes commenced late September. Zinc: Largely in-line. Shortfall at Zinkg
Slide 5: Copper: Change in Production Q3 '11 vs. Q2 '11
Change in Production: Q3 ‘11 vs. Q2 ‘11 Tonnes Copper Excluding Tenke 7,982 attributable share Tonnes Tonnes 45 544 28,791 10,367 487 29,000 10,500 152 1,105 262 10,077 28,500 10,000 Lead 28,000 9,500 Zinc 27,404 27,500 9,000 27,000 8,500 26,500 8,000 Prior Qtr Throughput Grade Recovery Actual Prior
Slide 6: Change in Cash Costs: Q3 '11 vs. Q2 '11
Change in Cash Costs: Q3 ‘11 vs. Q2 ‘11 Cash cost per lb of primary metal (US dollars) (local currency) Q3/11 Q2/11 Q3/11 Q2/11 Neves-Corvo Gross cost 2.50 2.17 1.77 1.51 (Local in €) By-product (0.15) (0.04) (0.10) (0.03) Copper Net Cost 2.35 2.13 1.67 1.48 Zinkgruvan Gross cost 0.83 1.09 5.34 6.81
Slide 7: Change in Operating Earnings: Q3 '11 vs. Q2 '11
Change in Operating Earnings: Q3 ‘11 vs. Q2 ‘11 Lundin Mining - Consolidated 100.0 90.0 82.2 14.1 80.0 30.3 70.0 60.0 3.6 48.7 2.1 0.7 5.9 $millions 50.0 40.0 30.0 20.0 10.0 - Q2 2011 Volume Price & Adj. Cost FX Galmoy Aguablanca Q3 2011 Actual 7
Slide 8: Normalized Earnings
Normalized Earnings $ Millions Q3 '11 Q2 '11 YTD 2011 YTD 2010 Reported Net Income 12.4 57.7 141.3 160.2 Foreign exchange (19.5) 0.1 (3.3) (1.8) Corporate development (Inmet/Equinox) 1.1 0.9 6.8 - Mark to market on securities 6.1 2.0 5.6 (23.2) Gain on derivative contracts - - - (10.2) Tax (on above
Slide 9: Q3/11 Financial Position
Q3/11 Financial Position • Net cash at Sept. 30, 2011 of $209 million, compared to $126 million at Sept. 30, 2010 and $308 million at June 30, 2011 • Change in net cash during the quarter was negatively impacted by the timing of payments: – $58 million outflow for income tax payments – $19 million o
Slide 10: Outlook and Operations 2011/2012
Outlook and Operations 2011/2012 10
Slide 11: 2011 Guidance
2011 Guidance (contained tonnes) Revised 2011 Guidance Previous 2011 Guidance Tonnes C1 Cost1 Tonnes C1 Cost1 Neves-Corvo Cu 70,000 $1.80 72,000 $1.65 Zn 4,500 6,000 Zinkgruvan Zn 76,000 $0.32 78,000 $0.21 Pb 34,000 36,000 Cu 1,500 3,400 Galmoy Zn 31,000 28,000 (in ore) Pb 8,000 8,000 Total: Wholly-
Slide 12: Neves-Corvo – Q3/11 Results
Neves-Corvo – Q3/11 Results • Copper prod’n of 15,070 tonnes vs. 13,475 tonnes in Q2/11 • Stockworks produced lower than expected grades and recoveries • Production from new high grade stopes commenced in late-Sept. Significantly improved production has occurred since then. • C1 Costs of $2.35/lb Cu
Slide 13: Neves-Corvo – Outlook
Neves-Corvo – Outlook • 2012 preliminary prod’n guidance takes into account an ongoing decline in proportion of high grade massive sulphide feed • Several internal projects underway to address changing feed characteristics & improve mine planning • Initial Semblana resource to be announced in Q4/11
Slide 14: Neves-Corvo Growth - Lombador & Semblana
Neves-Corvo Growth - Lombador & Semblana Main Ramp Shaft Zambujal Graca Corvo Semblana Neves Lombador 14
Slide 15: Neves-Corvo – Multiple New Targets
Neves-Corvo – Multiple New Targets Semblana and Lombador 3D seismic results 15
Slide 16: Zinkgruvan – Q3/11 Results
Zinkgruvan – Q3/11 Results • Zinc production of 17,459 tonnes vs. 17,582 tonnes in Q2/11 • Zinc and copper production affected by two grinding mill issues • C1 costs of $0.13/lb Zn vs. $0.26/lb Zn in Q2/11 • New ramp from surface highly successful. Mine continues to outpace mill capacity • New senio
Slide 17: Zinkgruvan - Outlook
Zinkgruvan - Outlook • 2012 Preliminary guidance - largely unchanged from this year • Pursuing several opportunities for incremental improvements • Debottlenecking of materials handling system • Increased investment in underground exploration 17
Slide 18: Aguablanca – Update and Outlook
Aguablanca – Update and Outlook • New mine contractor mobilized in August. Re-instatement of the ramp and pre-stripping progressing well • Restart nickel/copper production in Q3/12 with ~€40M investment for restart - on track • Underground study in progress targeting the addition of higher grade mat
Slide 19: Tenke – Q3/11 Results
Tenke – Q3/11 Results • Copper production of 32,249 tonnes vs. 29,891 tonnes in Q2/11 • C1 costs of $1.12/lb Cu vs. $0.94/lb Cu in Q2/11 • Increased consumable costs, and lower realized cobalt prices affecting by-product credit • Equity income of $17 m vs. $32 m in Q2/11 • Negatively impacted by tim
Slide 20: Tenke – Outlook
Tenke – Outlook • Phase 2 Feasibility Study completed by FCX: • Expansion to ~195ktpa Cu, w/ completion in 2013 • Project capex of ~ $850 m, of which LUN is responsible for 30% (~$250 m) • Early works investment on critical path activities continues • LUN portion of expansion capex expected to be fu
Slide 21: 2012 Preliminary Production Guidance
2012 Preliminary Production Guidance (contained tonnes of metal in concentrate) Preliminary 2012 Current 2011 Guidance Forecast Tonnes Tonnes Neves-Corvo Cu 52,500 – 57,000 70,000 Zn 30,000 – 40,000 4,500 Zinkgruvan Zn 75,000 – 81,000 76,000 Pb 34,000 – 39,000 34,000 Cu 2,000 – 3,000 1,500 Aguablanc
Slide 22: 2011 Exploration Programs
2011 Exploration Programs Exploration spend will increase to $43 m in 2011 (from $24 m - 2010) • Portugal - Semblana drilling continues to intersect thick sections of resource-grade Cu mineralization. Drilling ramped up on new 3D targets. • Spain – Ossa Morena drilling continues - copper /gold targe
Slide 23: Lundin Mining - Summary
Lundin Mining - Summary • High quality, long life reserves; exploration upside • A stake in Tenke - a unique, world-class copper mine • Strong balance sheet and ongoing cash flows • Fully-funded organic growth profile • High leverage to copper and zinc • Very compelling valuation Neves-Corvo Zinkgru
Slide 24: Questions & Answers
TSX: LUN OMX: LUMI Questions & Answers