2016 TD Securities Mining Conference January 2016 TSX: LUN OMX: LUMI

Transcription

1 2016 TD Securities Mining Conference January 2016 TSX: LUN OMX: LUMI

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. Any statements not including historical facts are forward-looking statements and may be identified by terminology such as believe, budget, continue, can, estimate, expect, intend, likely, should, target, will and any similar expressions. Forward-looking statements involve known and unknown risks and uncertainties, and as such, they are not guarantees of future performance. Actual results may differ materially from those projected in the forward-looking statements. Potential risks leading to differing results include, without limitation: fluctuation to foreign currency rates, change in commodity prices, industry risks, drilling results, labour disputes or difficulties resulting in labour shortages or interruptions in production, environmental risks, political risks including changes in national or local government legislation, taxation, or regulation, climate and weather related risks, diminishing quantities or grades of reserves, operating or technical difficulties with mining or development activities, and increased costs, delays or suspensions. Readers are cautioned that many of the assumptions on which the Company s forward-looking statements are based are likely to change. Lundin cautions that it does not have any intention to update forward-looking statements as a result of new information, future changes, or otherwise. 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 Management s Discussion and Analysis. Note: All dollaramounts are in US dollars unless otherwise denoted. 2

3 Lundin Mining Globally Diversified Portfolio Lundin Mining Head Office Toronto, Canada Lundin Mining UK Office West Sussex, UK Zinkgruvan (100%) Zinc-Lead-Copper (Sweden) Freeport Cobalt (24%) Cobalt Refinery (Finland) Eagle (100%) Nickel-Copper (USA) Neves-Corvo (100%) Copper-Zinc (Portugal) Aguablanca (100%) Nickel-Copper (Spain) Candelaria (80%) Copper-Gold-Silver (Chile) Tenke Fungurume (24%) Copper-Cobalt (DRC) LUN trades in Toronto (TSX) and Stockholm (OMX) Assets: Americas, Europe and Africa 6 underground mines and 1 large open pit 24% equity stake in world-class Tenke Fungurume & Freeport Cobalt 2016E production: 252 kt Cu, 23 kt Ni, 150 kt Zn 3

4 Lundin Mining Stable Production and Balance Sheet Strong Margins and Free Cash Flows Financial results have been favourable despite lower commodity price environment Continued focus on financial flexibility and maximizing cash flows going forward Operations Performed Well in 2015 Achieved or exceeded annual production guidance at each operation last year Conservative Balance Sheet Net debt of $441 million and $350 million undrawn credit facility A diversified base-metals mining company 4

5 2015 Production Results vs. Most Recent Guidance Metal and Mines (Contained Tonnes) Full Year 2015 Production Results 2015 Production Guidance 1 Candelaria (80%) 144, , ,000 Eagle 24,331 23,000-24,000 Neves-Corvo 55,831 54,000-56,000 Copper Zinkgruvan 2,044 2,000 Aguablanca 6,221 6,100 Wholly-owned 233, , ,100 Tenke (24%) 48,951 50,600 Total attributable 282, , ,700 Eagle 27,167 26,000-27,000 Nickel Aguablanca 7,213 7,100 Total 34,380 33,100-34,100 Zinc Neves-Corvo 61,921 59,000-62,000 Zinkgruvan 83,451 82,000-85,000 Total 145, , ,000 Exceeded high-end of annual production guidance for copper and nickel Met overall targets for zinc production 1. Guidance as presented in the Company's Management Discussion and Analysis for the three and nine months ended September 30,

6 2016 Production and C1 Cash Costs Guidance Metal and Mines Production (Tonnes) 1 C1 Cash Costs 2 Copper Nickel Zinc Candelaria (80%) 118, ,000 $1.55/lb Eagle 20,000 23,000 Neves-Corvo 50,000 55,000 $1.65/lb Zinkgruvan 3,500 4,000 Tenke (@24%) 3 54,000 $1.32/lb Total attributable 245, ,000 Eagle 21,000 24,000 $2.25/lb Total 21,000 24,000 Neves-Corvo 65,000 70,000 Zinkgruvan 80,000 85,000 $0.45/lb Total 145, ,000 Production guidance for majority-owned assets unchanged from previous figures disclosed Dec. 2, 2015 Outlook does not include Aguablanca which remains under suspension 2016E cash costs reflect cost review and reduction plans at all operations to help offset impact of lower expected by-product metal prices 1. Production guidance is based on certain estimates and assumptions, including but not limited to; mineral resources and reserves, geological formations, grade and continuity of deposits and metallurgical characteristics. 2. Cash costs remain dependent upon exchange rates (forecast at /USD: 1.10, USD/SEK: 8.50, USD/CLP: 700) and metal prices (forecast at Cu: $2.05/lb, Ni: $4.15/lb, Zn: $0.70/lb, Pb: $0.70/lb, Au: $1,100/oz, Ag: $15.00/oz, Co: $13.00/lb). 3. Freeport-McMoRan Inc. ("Freeport") has provided 2016 sales and cash cost guidance. Tenke s 2016 production is assumed to approximate sales guidance. 6

7 Balance Sheet Remains Strong US$ (Millions) December 31, 2015 Cash and Cash Equivalents ~$560 Net Debt 1 $441 Revolving Credit Facility (Undrawn) $350 Cash and Cash Equivalents $ $US M $400 $ $0 Q1/15 Q2/15 Q3/15 Q4/15 Net debt has improved by $388M from $829M (YE 2014) to $441M (YE 2015) 1. The Company s senior secured notes comprise of: $550 million at 7.5% due in 2020, and $450 million at 7.875% due in

8 2016 Capital Investment and Exploration Guidance Capital and Other Costs ($ millions) 2016 Total Capitalized Stripping 1 35 Los Diques Tailings Capex 2 70 Other Sustaining Capex 15 Total Candelaria (100% Basis) 120 Total Eagle 10 Total Neves-Corvo 55 Total Zinkgruvan 35 Total Capital Investments $ 220 Capital expenditures for 2016 expected to be $220M Exploration expenditures in 2016 are expected to total $40M $18M at Eagle East and $17M at Candelaria 1. During the production phase, waste stripping costs which provide probable future economic benefits and improved access to the orebody are capitalized to mineral properties. The Company capitalizes waste costs when experienced strip ratios are above the average planned strip ratio for each open pit phase under development. 2. The Los Diques project capex is based on project review estimates completed in 2015 which assumed a USD/CLP exchange rate of

9 Operational Overview and Outlook Eagle (100%) Neves-Corvo (100%) Candelaria (80%) Zinkgruvan (100%) Tenke Fungurume (24%) 9

10 Candelaria (Cu/Au/Ag), Chile Atacama Province, Region III, approximately 20 km south of Copiapó 10

11 Candelaria Performance and Outlook Exceeded high end of production guidance in 2015 Near-term production profile improved Cost reductions & deferral of capex in 2016 Significant drilling campaign underway to continue to expand Mineral R&R Candelaria 2030 Los Diques tailings project advancing on budget and on schedule Early works to support major construction of new tailings facility began in August Major civil construction activities expected to begin H once final dam construction permits received Location Chile Ownership 80% 2016 Production Guidance (80%) 118, ,000 t Cu 2016 Cost Guidance $1.55/lb Cu Expected Mine Life Production (100%, k tonnes) years Cu 39.8 Q1-15 Q2-15 Q3-15 Q4-15 Copper Cash Cost (right axis) $2.00 $1.90 $1.80 $1.70 $1.60 $1.50 $1.40 $1.30 $1.20 $1.10 $1.00 Cash Cost ($/lb Cu) 11

12 Eagle Mine (Ni/Cu), Michigan, U.S.A. 50 km northwest of Marquette in the Upper Peninsula of Michigan 12

13 Eagle Performance and Outlook Surpassed Ni/Cu production targets in 2015 Excellent ramp-up achieved, with 2015 expected to be highest producing year Nickel C1 cash costs remain in first quartile Eagle East: Drilling advancing with high priority - six rigs drilling step-out and infill Eagle East remains open Location Michigan, USA Ownership 100% 2016 Production Guidance 21,000 24,000 t Ni 20,000 23,000 t Cu 2016 Cost Guidance $2.25/lb Ni Mine Life Production (k tonnes) years $3.00 $2.80 $2.60 $2.40 $2.20 $2.00 $1.80 $1.60 $1.40 $1.20 Cash Cost ($/lb Ni) 0 Q1-15 Q2-15 Q3-15 Q4-15 $1.00 Nickel Copper Cash Cost (right axis) 13

14 Neves-Corvo (Cu/Zn), Portugal Situated 220 km southeast of Lisbon 14

15 Neves-Corvo Performance and Outlook Achieved copper and zinc production guidance in 2015 Stable copper production expected with increasing zinc production profile in 2016 Feasibility Study for zinc expansion completed in 2015 Investment decision deferred but permitting advancing (critical path) Potential to double production under improved zinc price environment Location Portugal Ownership 100% 2016 Production Guidance 50,000 55,000 t Cu 65,000 70,000 t Zn 2016 Cost Guidance $1.65/lb Cu Mine Life Production (k tonnes) years Cu + Zn 11.1 $2.40 $2.20 $2.00 $1.80 $1.60 $1.40 Cash Cost ($/lb Cu) 0 Q1-15 Q2-15 Q3-15 Q4-15 Copper Zinc Cash Cost (right axis) $

16 Zinkgruvan (Zn/Pb/Cu), Sweden Situated 200 km southwest of Stockholm 16

17 Zinkgruvan Performance and Outlook New annual records for tonnes of ore mined and milled, and zinc produced Consistent Zn production of +80 kt expected in 2016 and beyond Location Sweden Ownership 100% 2016 Production Guidance 80,000 85,000 t Zn 3,500-4,000 t Cu 2016 Cost Guidance $0.45/lb Zn Costs expected to remain steady going forward, lowest cost quartile producer Mine Life years $0.80 Advancing low-cost brownfield project to increase mill capacity by ~10% $8M investment in 2016 with project completion expected by end-2017 Production (k tonnes) $0.70 $0.60 $0.50 $0.40 $0.30 $0.20 $0.10 Cash Cost ($/lb Zn) 0 Q1-15 Q2-15 Q3-15 Q4-15 Zinc Cash Cost (right axis) $- 17

18 Tenke Fungurume (Cu/Co), DRC Situated 175 km northwest of Lubumbashi 18

19 Tenke Performance and Outlook Copper production in-line with expectations with higher cobalt volumes 2016E production expected to improve with near-term priority on maximizing cash flows Location Democratic Republic of Congo Ownership 24% 2016 Production Guidance (attributable share) 54,000 t Cu 2016 Costs $1.32/lb Cu Expected Mine Life +40 years Cost position remains competitive with good margins in current environment $2.50 $2.30 $2.10 Construction of 2 nd sulphuric acid plant is substantially complete Cash distributions expected to benefit from lower capital spending in 2016 Production (k tonnes) $1.90 $1.70 $1.50 $1.30 $ $0.90 $0.70 Q1-15 Q2-15 Q3-15 Q4-15 Copper Cobalt Cash Cost (right axis) Cash Cost ($/lb Cu) 19

20 Well Positioned in Any Market High quality, competitively positioned mines Diversified base metals and geographic asset base Meaningful production scale Strong cash flows with focus on preservation of margins Conservative balance sheet with low leverage ratios 20

21 Appendices TSX: LUN OMX: LUMI

22 Production Outlook Attributable Production Outlook (contained tonnes) Candelaria (80%) 118, , , , , ,000 Copper Eagle 20,000 23,000 17,000 20,000 14,000 17,000 Neves-Corvo 50,000 55,000 50,000 55,000 50,000 55,000 Zinkgruvan 3,500 4,000 3,500 4,000 3,000 3,500 Wholly-owned operations 191, , , , , ,500 Tenke (@24%) 2 54,000 ~50,000 ~50,000 Total Attributable 245, , , , , ,500 Nickel Eagle 21,000 24,000 18,000 21,000 15,000 18,000 Total 21,000 24,000 18,000 21,000 15,000 18,000 Zinc Neves-Corvo 65,000 70,000 65,000 70,000 65,000 70,000 Zinkgruvan 80,000 85,000 80,000 85,000 90,000 95,000 Total 145, , , , , , Production guidance is based on certain estimates and assumptions, including but not limited to; mineral resources and reserves, geological formations, grade and continuity of deposits and metallurgical characteristics. This guidance was announced on December 2, Freeport has provided 2016 sales and cash cost guidance. Tenke s 2016 production is assumed to approximate sales guidance. 22

23 Candelaria Integrated Mining Complex Alcaparrosa Mine Candelaria Norte Tierra Amarilla Santos Mine Ojos-Plant PAC Successful operating track record Large prospective regional mineral property position near mine Magnetite Plant Proposed Tailings Facility Candelaria Open Pit Susana Candelaria Plant Damiana Opportunity to continue to extend mine life with exploration programs 4 km 23

24 Candelaria Complex Mineral Reserves and Resources June 30, 2015 (100% Basis) Classification Quantity Grade Contained Metal Copper (%) Gold (g/t) Silver (g/t) Copper (kt) Gold (koz) Silver (koz) Proven and Probable Open Pit 314, ,784 1,317 20,160 WIP 93, ,487 Underground 46, ,555 Total P&P 455, ,571 1,915 31,202 Measured & Indicated Open Pit 432, ,379 1,766 26,494 WIP 93, ,487 Underground 117, ,876 Total M&I 643, ,033 3,007 49,857 Inferred Total Inferred 82, ,589 Total Proven and Probable (P&P) Mineral Reserves increased by ~20% to Mt at 0.56% Cu (from Mt at 0.54% Cu at Dec. 31, 2013) Underground P&P Reserves increased by +270% with significant mine life extensions Measured and Indicated (M&I) Mineral Resources increased by ~28% to Mt at 0.63% Cu (from Mt at 0.54% Cu at Dec. 2013) Supportive of exploration potential in and around the current mines 24

25 Eagle Mine and Eagle East Deposit Overviews K Tonnes Grade Ni (%) Grade Cu (%) Contained Ni (k tonnes) Contained Cu (k tonnes) P&P 4, M&I 4, Inferred

26 Neves-Corvo Site Overview Copper K Tonnes Grade (%) Contained (k tonnes) P&P 25, M&I 69, ,864 Inferred 13, Zinc K Tonnes Grade (%) Contained (k tonnes) P&P 25, ,798 M&I 106, ,519 Inferred 12,

27 Zinkgruvan Site Overview K Tonnes Grade Zn (%) Grade Pb (%) Contained Zn (k tonnes) Contained Pb (k tonnes) P&P 11, M&I 16, , Inferred 7,

28 Tenke Fungurume Site Overview (100% Basis) K Tonnes Grade Cu (%) Grade Co (%) Contained Cu (k tonnes) Contained Co (k tonnes) P&P 136, , M&I 636, ,747 1,758 Inferred 392, ,

29 NI Compliance Unless otherwise indicated, Lundin Mining Corporation has prepared the technical information in this presentation ( Technical Information ) based on information contained in the technical reports and news releases (collectively the Disclosure Documents ) available under Lundin Mining Corp. s company profile on SEDAR at Each Disclosure Document was prepared by or under the supervision of a qualified person (a Qualified Person ) as defined in National Instrument Standards of Disclosure for Mineral Projects of the Canadian Securities Administrators ( NI ). For readers to fully understand the information in this presentation, they should read the Technical Reports (available on in their entirety, including all qualifications, assumptions and exclusions that relate to the information set out in this presentation which qualifies the Technical Information. Readers are advised that mineral resources that are not mineral reserves do not have demonstrated economic viability. The Disclosure Documents are each intended to be read as a whole, and sections should not be read or relied upon out of context. The Technical Information is subject to the assumptions and qualifications contained in the Disclosure Documents. The technical information in this presentation has been prepared in accordance with Canadian regulatory requirements set out in National Instrument Standards of Disclosure for Mineral Projects of the Canadian Securities Administrators ("NI ") and reviewed by Stephen Gatley, Vice President - Technical Services of the Company, a "Qualified Person" under NI Mr. Gatley has verified the data disclosed in this presentation and no limitations were imposed on his verification process. Mineral Reserves and Resources are shown on a 100 percent basis for each mine. The Measured and Indicated Mineral Resources are inclusive of those Mineral Resources modified to produce the Mineral Reserves. All estimates, with the exception of Tenke Fungurume, are prepared as at June 30, The Tenke Fungurume estimate is dated December 31, Estimates for all majority owned operations are prepared by or under the supervision of a Qualified Person as defined in National Instrument , or have been audited by independent Qualified Persons on behalf of Lundin Mining. Tenke Proven and Probable Mineral Reserves are estimated by the operator Freeport-McMoRan Copper & Gold Inc., and are prepared to SEC standards and are reviewed by Lundin Mining's independent Qualified Persons. Unless indicated otherwise in the Notes on Mineral Resource and Reserve Table in Lundin Mining s news release on August 31, 2015, Mineral Reserves have been calculated using metal prices of US$2.75/lb copper, US$1.00/lb zinc, US$1.00/lb lead, US$8.50/lb nickel, US1,000/oz gold and exchange rates of EUR/US$ 1.25, US$/SEK 7.50 and Chilean Peso/US$

30 Thank You TSX: LUN OMX: LUMI