Second Quarter Results 2010

Transcription

1 1 July 28, 2010 TSX: LUN OMX: LUMI Second Quarter Results 2010

2 2 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 forwardlooking statements are subject to risks and uncertainties. These risks and uncertainties could cause actual results to differ materially from the future results expressed or implied by the forward-looking statements. Such risks may include, without limitation: risks and uncertainties relating to foreign currency fluctuations; risks inherent in mining including environmental hazards, unusual or unexpected geological formations, ground control problems and flooding; risks associated with the estimation of mineral resources and reserves and the geology, grade and continuity of mineral deposits; the possibility that future exploration, development e e or mining results will not be consistent ste t with the tecompany s expectations; the tepotentialt for and ad effects of labor disputes or other unanticipated difficulties with or shortages of labor or interruptions in production; actual ore mined varying from estimates of grade, tonnage, dilution and metallurgical and other characteristics; the inherent uncertainty of production and cost estimates and the potential for unexpected costs and expenses; and commodity price fluctuations. 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 in each management discussion and analysis.

3 3 Presenter PHIL WRIGHT PRESIDENT & CEO Questions JOAO CARRELO EXEC. VP & COO MARIE INKSTER CFO PAUL CONIBEAR SVP CORP DEVELOPMENT

4 4 Q2 Highlights Metal prices 30% to 70% higher than same quarter last year, Euro 7% weaker against US dollar, SEK 5% stronger Production recovering well from Q1 issues. Aguablanca still has some challenges Net Income $75.6 million or $0.13 p/share, improved from last year s $43.5 million or $0.08 per share. Net cash improved by $200+ million. Tenke at copper nameplate capacity. Equity earnings of $8.3 million; EOC facility reduced to $188.9 million, reduction of $26.8 million during the quarter Project advances: Neves-Corvo shaft expansion complete Lombador pre-feasibility complete; and Zinkgruvan copper project successfully started-up

5 5 Normalized Earnings $ Millions Q2 '10 Q2 '09 Q1 '10 Reported Net Income % 38.0 Derivative (gains) losses pre-tax (11.2) AFS securities (gains) pre-tax (32.4) - (0.6) Tax on above 7.7 (2.4) (0.1) Non-recurring tax adjustments 1, (6.2) - Adjusted Net Income % 37.8 Earnings per share - continuing operations 2 Q2 '09 $(6.2) is a partial recovery of valuation allowance on loss carry forwards in Spain $ 0.09 $ 0.08 $ Q2 '10 $13.6 is an increase in future tax liability related to the 2.5% tax rate increase in Portugal Large negative price adjustments in Q vs Q (copper and nickel) No settled nickel sales this year: $12.4 million unrealised gain Q1 reversed in Q2

6 6 Financial Position Net cash at June 30, 2010 of $107.8 million, an increase of $97.6 million for the quarter The change in net cash during the quarter is after: $32.4 million of capital expenditure; $6.8 million advanced in respect of Tenke; and includes $59.9 million from the sale of investments and AFS securities Operating cashflow of $78.8 million during the quarter compared to $63.7 million for the same quarter last year

7 7 Cop pper Tonnes 30, ,000 20, ,000 10, Change in Production: Q2 10 and Q ,992 1,416 4, Excluding Tenke 7,038t attributable share 21,774 Q Throughput Grade Recovery Q Nic ckel Tonnes 2,000 1, ,600 1,400 1,200 1, ,715 Q Throughput Grade Recovery Q Tonnes 40,000 35,000 31, , Tonnes 11,678 14,000 12,000 12, , ,839 10,953 Zinc 30,000 25,000 24,458 Le ead 10,000 20,000 8,000 Q Throughput Grade Recovery Galmoy Q Q Throughput Grade Recovery Galmoy Q2 2010

8 8 Cash Costs: Q and Q Cash cost per lb of primary metal (US cents) (local currency) Q2 '10 Q2 '09 Q2 '10 Q2 '09 Neves-Corvo Gross cost (Local in cents) By-product* (7) (2) (5) (2) Copper Net cost Zinkgruvan Gross cost (Local in SEK) By-product product* (41) (23) (318) (293) Zinc Net cost Aguablanca Gross cost (Local in cents) By-product* (234) (271) (189) (200) Nickel Net cost * By-product is after related TC/RC

9 9 Copper Dominant, Zinc Leverage Q2 10 Revenue Contribution by Metal Q2 09 Revenue Contribution by Metal Note: This analysis does not include Tenke. Inclusion of Tenke in the above would substantially increase the contribution of copper.

10 10 Change in Prices: Q2 10 & Q2 09 Average LME Q2 '10 Q2 '09 Q1 '10 Copper $/lb % % Zinc $/lb % % Lead $/lb % % Nickel $/lb % % EUR/USD (Qtr Avg) % % SEK/USD (Qtr Avg) % %. ( g)

11 11 Financial Results Selected Financial Information: $ Millions Q2 '10 Q2 '09 Q1 '10 Sales % Operating costs including ARO (97.1) (94.6) 3% (72.3) SG&A and stock-based compensation (5.2) (9.2) -43% (4.8) Operating Earnings % 64.6 Add (deduct): Depreciation, Amortization (32.6) (38.5) (36.2) Selected items only Exploration/project investigation (5.6) (4.1) (4.6) Other income and expenses Derivative contracts 11.2 (9.2) (0.5) Gain on sale of AFS securities Tenke equity investment 8.3 (3.4) 17.2 Income tax(expense)/ recovery (31.3) (2.0) (9.9) Income from continuing operations Earnings per share - continuing operations $ 0.13 $ 0.08 $ 0.07

12 12 Change in Operating Earnings: Q2 10 & Q ions US$ mill Q Volume Price & Adj. Cost FX Closures Q Actual

13 13 Tenke Production 100% basis: Lundin attributable 24.75% Q2 '10 Q2 '09 Q1 '10 Copper cathode (tonnes) Production 28,438 16,483 28,769 Sl Sales 24,997 11,894 29,772 Average realized price/lb $ 2.96 $ 2.20 $ 3.26 Cobalt (contained tonnes) Production 1,651 n/a 2,231 Sales 1,718 n/a 1,476 Average realized price/lb $ n/a $ Net cash costs/lb of copper: Gross cost $ n/a $ Cobalt credits $ (0.54) n/a $ (0.40) Royalties $ 0.06 n/a $ 0.07 Net cash cost/lb $ 0.79 n/a $ 1.04

14 14 Tenke Investment $ Millions Q2 '10 Q2 '09 Q1 '10 Income (loss) from investment 8.3 (3.4) 17.2 Excess Overrun Facility Change during quarter (26.8) 42.3 (11.4) Closing balance Production issues in April, throughput now consistently above design capacity Freeport continuing to address start-up and quality issues in the cobalt circuit and implementing corrective actions over the next several quarters Freeport are expecting copper production to increase from 115,000 tpa in 2010 to over 130, in Expansion study work, scheduled for completion around mid-year, will continue into the third quarter of 2010.

15 Lombador South: Advancing to Feasibility Feasibility study underway. Expected completion Q1 11. Technical report will be filed following completion of this study. Phase I of Lombador: Lift zinc at Neves-Corvo from a nominal 50, tpa to 140, tpa Capital cost of approximately 140 million. An expected start-up date of 2013 Cash costs expected to be in third-quartile on a normal costing basis. 270 Level Lombador ramp, commenced in 2009, now at 500 level. Due to reach 300 level (900 metres below surface) by Q An exploration drive to be developed at this level to allow underground exploration of the remainder of the orebody.

16 16 Prior guidance Revised Guidance Tonnes C1 Tonnes C1 Comment Neves-Corvo Cu 77,000 $ ,000 $ No change Zn 6,000 6,000 Zinkgruvan Zn 75,000 $ ,000 $ 0.30 No change Pb 36,000 36,000 Cu 1,000 1,000 Outlook Aguablanca Ni 7,500 $ ,900 $ 6.25 Decreased nickel Cu 6,500 7,000 and copper Galmoy Zn 14,000 14,000 No change (in ore) Pb 4, ,000 Total Cu 84,500 85,000 Zn 95,000 95,000 Pb 40,000 40,000 Ni 7,500 7,900 Tenke Cu 28,500 28,500 No change (attributable share)

17 17 Outlook Guidance for 2010, as given at the end of the first quarter, is maintained for all operations, except Aguablanca Aguablanca is still dealing with the effects of heavy rain which has contributed to the zones of instability in the pit. Aguablanca also notified of possible rolling industrial action commencing July 31, As a precaution, guidance has been reduced. Zinc at Neves-Corvo to resume in 2011 at rate of 50,000 tpa. Earlier start at rate of 25ktpa is under evaluation Capex guidance for the year reduced d to $190 million: Tenke now at $40 million, the bottom-end of previous guidance. Tenke expansion study work will continue into the third quarter Exploration/resource evaluation increased to $24 million Volatility likely to remain high in 2010 with an improving outlook thereafter Corporate Operations Projects Exploration Growth

18 18 Questions PHIL WRIGHT PRESIDENT & CEO JOAO CARRELO EXEC. VP & COO MARIE INKSTER CFO PAUL CONIBEAR SVP CORP DEVELOPMENT