Cautionary Statements

Transcription

1 The Future and Lundin Mining The Mining & Minerals Industry of the Future January 2015

2 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 expectations and projections about future events and is subject to risks and uncertainties. These risks and uncertainties could cause actual results to differ materially from the future results expressed or implied in this document. The forward looking information contained in this document is based on a number of assumptions including, but not limited to, foreign currency rates; metal prices; estimation of mineral resources and reserves and the geology; grade, tonnage, dilution and metallurgical and other characteristics of ore; production capabilities and cost estimates. 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 or mining results will not be consistent with the Company s expectations; the potential for and 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 s Discussion and Analysis. Note: All dollar amounts are in US dollars unless otherwise denoted. 2

3 Metals & Mining Outlook 2015 Growth Opportunities & Challenges For Base Metals Producers Lundin Mining History and Current Assets Our Strategy & the Future 3

4 Metals & Mining Outlook 2015 Outlook for 2015 China Demand: slower not lower (GPD growth rate has slowed to ~7% vs. double-digits however total demand for commodities continues to increase) US dollar strength weaker currencies in many mining jurisdictions Low oil price environment Implications on our business and commodities: Lower cost curves for metal production Short term price uncertainty, but long term fundamentals unchanged - Advantage to lower cost base metal producers Mine capital investment decline three years in a row Ripple effect - on equipment vendors & professional services Implications: Slowing supply growth & future supply challenges 9

5 Growth Challenges Facing Base Metal Producers What Are the Supply Challenges? Declining Head Grades: Vast majority of new projects have low grades which lead to high costs Limited Infrastructure: Many new projects are remote and challenged by lack of infrastructure (i.e.. power and water) Political Risk: Many of the remaining high grade deposits are located in countries with high political risk Limited Acquisition Opportunities: for quality advanced stage assets Exploration investment has dramatically declined few new discoveries Financing: Tough financial terms for companies with large, long term projects We expect significant constraints on long term base metal supply 5

6 Growth Opportunities For Base Metal Producers Opportunities Depressed Valuations: The valuations of most publicly traded junior mining companies are now trading near historic low multiples Non-Core Asset Sales from Majors: Large producers selling non-core assets to focus on their larger operations & reduce capital costs / debt Private Assets: Many privately owned assets are finding it difficult to raise financing, and are keen to partner or sell their assets Less Competition: fewer adequately financed competitors. Private Equity companies have money, but no track record. Reputation an important factor when buying assets from a major Opportunities come up for disciplined, patient companies with a strong balance sheet. 6

7 Lundin Mining Corporation Eagle Mine: 50 km northwest of Marquette in the Upper Peninsula of Michigan 7

8 Growth History 1996/2002 Storliden deposit discovered, financed, put into production 2004 Acquired Zinkgruvan Mine 2006 Acquired Neves Corvo Mine 2007 Acquired Tenke Project 2007 Acquired Aguablanca Mine 2009 Tenke commences production 2013 Acquired stake in Kokkola cobalt refinery 2013 Acquired Eagle Project 2014 Acquired Candelaria (80%) Eagle Mine commences production Zinc production record set by Neves Corvo New mining records set by Zinkgruvan 8

9 2015 Assets: Americas, Europe and Africa Zinkgruvan (100%) (Sweden) Zinc-Lead-Copper Freeport Cobalt (24%) (Finland) Cobalt Refinery Eagle (100%) (USA) Nickel-Copper Neves-Corvo (100%) (Portugal) Copper-Zinc Aguablanca (100%) (Spain) Nickel-Copper Candelaria (80%) (Chile) Copper-Gold-Silver Tenke Fungurume (24%) (DRC) Copper-Cobalt 7 underground mines 1 large open pit Pacific port facility Desalination plant Equity stake in Tenke and Kokkola Refinery 9

10 Base Metals & Geographic Diversification Copper dominant with excellent base metals and geographic diversification 2015E Attributable Cu Eq. Production (1)(2) By Commodity By Country Zinc 13% Cobalt Lead 3% 3% DRC 15% Sweden 10% Spain 4% Chile 33% Nickel 17% Copper 64% Portugal 19% USA 19% (1) Based on midpoint of 2015E production guidance. Only includes commodities for which Lundin provides public guidance. Excludes gold and silver. Based on 80% interest in Candelaria. (2) Equivalency calculated according to the following prices: $3.00/lb Cu, $1.00/lb Zn, $8.00/lb Ni, $12.00/lb Co and $1.05/lb Pb. 10

11 Cost Competitive Across All Commodities 2014E Copper C1 Cash Cost Curve (Net of By-Products) (1) ($/lb) $3.00 $2.50 $2.00 Tenke Fungurume a $1.16 Weighted Average d $1.60 Neves-Corvo a $1.85 $1.50 $1.00 $0.50 $1.69 Candelaria (LOM) c ($/lb) $1.50 $1.20 $0.90 $ % 50% 75% 100% 2014E Zinc C1 Cash Cost Curve (Net of By-Products) (1) 2015E Nickel C1 Cash Cost Curve (Net of By-Products) (1) Zinkgruvan a $0.35 ($/lb) $15.00 $12.00 $9.00 $6.00 Eagle b Aguablanca b $5.00 $2.00 $0.30 $ % 50% 75% 100% % 50% 75% 100% a guidance, at Q Source: Wood Mackenzie, 2014 b. Guidance from LUN operating outlook , at Dec 4, 2014 c. Candelaria LOM avg cash costs excludes sale of the precious metals stream. Including the stream LOM avg. costs are estimated at ~$1.93/lb. 11 d. Weighted average costs are shown prior to the sale of the precious metals stream at Candelaria. Weighted avg costs including the stream are estimated at ~$1.72/lb.

12 Lundin Mining Priorities Improve Health Safety performance. Increased community investment Foster improvements at European operations better margins Expand zinc production at Neves Maximize cash flows from Eagle. Explore aggressively to extend mine life Position for Tenke Phase 3 Expansion Smooth transition of Candelaria ownership. Explore aggressively. Initiate Dividend H if conditions allow 12

13 Positioning for the Future Excel at: Safety performance Community investment and stakeholder engagement Being an employer of choice Continue to invest in our European mines. Expand were possible. Optimize value from Candelaria. Increase South American presence Foster our position on Tenke, and its remarkable potential Maintain conservative balance sheet, build strength for the future Continue to aggressively explore find our own future. 13

14 Exploration Investment $75 million 14

15 A Healthy Future Requires Responsible Mining 15

16 Key elements of our Responsible Mining Framework Health and Safety Community & Stakeholder Engagement Environmental Stewardship Local Impacts & Benefits Governance and Ethical Conduct 16

17 Health & Safety 2014 was our best year of safety performance ever Zinkgruvan had a 33% decline in Total Recordable Injuries 17

18 Stakeholder Engagement (Eagle Quarterly Scorecard) 18

19 Stakeholder Engagement - Zinkgruvan news articles 17 news articles 33 news articles 16.5% positive 66% positive 85% positive 67% negative 17% negative 9% negative 16.5% neutral 17% neutral 6% neutral 19

20 Environmental Stewardship Our approach to sustainability Efficient use of water & natural resources Pollution prevention Enhancing biodiversity Responsible mine closure & reclamation Positive stakeholder engagement and social/economic impact Maintain and improve on a good environmental record Transparency and increased reporting 20

21 Social Investments 2014 Social Investments 7 million targeting >$10 million Priorities: Economic empowerment local to our mine sites Environmental improvements Education Community Health 21

22 Tenke Social Investments Social investment at Tenke sets new benchmarks: Education and training: constructed and renovated 9 schools education opened up for 7,000 elementary & secondary students Health programs anti-malarial, HIV, cholera, fresh water supply Agricultural programs (improved seed and fertilizer use, training, coop buying, market place) Economic stimulus projects: Tenke and Lundin Foundation support for many new business enterprises and savings and loans programs Social Fund: 0.3% of net sales for local programs 22

23 Lundin Mining Geographic and base metal diversification Portfolio of high quality, long-life mines Optimization opportunities and exploration potential at all existing assets No high risk capital projects Proven disciplined growth approach 23

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