FULLTEXT DEL 1 AV 2
Årsredovisning 2023
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Management’s Discussion and Analysis
For the year ended December 31, 2023
This management’s discussion and analysis (“MD&A”) has been prepared as of February 21, 2024 and should be read in
conjunction with the Company’s consolidated financial statements for the year ended December 31, 2023 ("Consolidated
Financial Statements"). Those financial statements are prepared in accordance with International Financial Reporting
Standards ("IFRS") as issued by the International Accounting Standards Board. The Company’s presentation currency is
United States (“US”) dollars. Reference herein of $ or USD is to United States dollars, ARS is to Argentine pesos, BRL is to
Brazilian reais, C$ is to Canadian dollars, CLP is to Chilean pesos, € refers to euros, and SEK is to Swedish kronor. "This
quarter" means the fourth quarter ("Q4") of 2023.
About Lundin Mining
Lundin Mining Corporation (“Lundin Mining” or the “Company”) is a diversified Canadian base metals mining company with
projects and operations in Argentina, Brazil, Chile, Portugal, Sweden, and the United States of America, primarily producing
copper, zinc, nickel and gold.
Table of Contents
Highlights ................................................................................................................................................................................ 1
Outlook ................................................................................................................................................................................... 6
Selected Fourth Quarter and Annual Financial Information .................................................................................................. 7
Summary of Quarterly Results ............................................................................................................................................... 8
Revenue Overview .................................................................................................................................................................. 9
Annual Financial Results ......................................................................................................................................................... 13
Fourth Quarter Financial Results ............................................................................................................................................ 15
Mining Operations .................................................................................................................................................................. 17
Production Overview ........................................................................................................................................................ 17
Production Cost and Cash Cost Overview ........................................................................................................................ 18
Capital Expenditures ......................................................................................................................................................... 19
Candelaria ......................................................................................................................................................................... 20
Caserones .......................................................................................................................................................................... 21
Chapada ............................................................................................................................................................................ 22
Eagle .................................................................................................................................................................................. 23
Neves-Corvo ...................................................................................................................................................................... 24
Zinkgruvan ......................................................................................................................................................................... 25
Josemaria Project ................................................................................................................................................................... 26
Metal Prices, LME Inventories, and Smelter Treatment and Refining Charges ..................................................................... 27
Liquidity and Capital Resources .............................................................................................................................................. 28
Related Party Transactions ..................................................................................................................................................... 31
Changes in Accounting Policies and Critical Accounting Estimates and Judgements ............................................................ 31
Non-GAAP and Other Performance Measures ....................................................................................................................... 32
Managing Risks ....................................................................................................................................................................... 40
Management's Report on Internal Controls .......................................................................................................................... 40
Outstanding Share Data ......................................................................................................................................................... 40
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Cautionary Statement on Forward-Looking Information
Certain of the statements made and information contained herein is “forward-looking information” within the meaning of applicable Canadian securities laws. All statements
other than statements of historical facts included in this document constitute forward-looking information, including but not limited to statements regarding the Company’s
plans, prospects and business strategies; the Company’s guidance on the timing and amount of future production and its expectations regarding the results of operations;
expected costs; permitting requirements and timelines; timing and possible outcome of pending litigation; the results of any Preliminary Economic Assessment, Feasibility Study,
or Mineral Resource and Mineral Reserve estimations, life of mine estimates, and mine and mine closure plans; anticipated market prices of metals, currency exchange rates,
and interest rates; the development and implementation of the Company’s Responsible Mining Management System; the Company’s ability to comply with contractual and
permitting or other regulatory requirements; anticipated exploration and development activities at the Company’s projects; the Company’s integration of acquisitions and any
anticipated benefits thereof; and expectations for other economic, business, and/or competitive factors. Words such as “believe”, “expect”, “anticipate”, “contemplate”,
“target”, “plan”, “goal”, “aim”, “intend”, “continue”, “budget”, “estimate”, “may”, “will”, “can”, “could”, “should”, “schedule” and similar expressions identify forward-looking
statements.
Forward-looking information is necessarily based upon various estimates and assumptions including, without limitation, the expectations and beliefs of management, including
that the Company can access financing, appropriate equipment and sufficient labour; assumed and future price of copper, nickel, zinc, gold and other metals; anticipated costs;
ability to achieve goals; the prompt and effective integration of acquisitions; that the political environment in which the Company operates will continue to support the
development and operation of mining projects; and assumptions related to the factors set forth below. While these factors and assumptions are considered reasonable by
Lundin Mining as at the date of this document in light of management’s experience and perception of current conditions and expected developments, these statements are
inherently subject to significant business, economic and competitive uncertainties and contingencies. Known and unknown factors could cause actual results to differ materially
from those projected in the forward-looking statements and undue reliance should not be placed on such statements and information. Such factors include, but are not limited
to: global financial conditions, market volatility and inflation, including pricing and availability of key supplies and services; risks inherent in mining including but not limited to
risks to the environment, industrial accidents, catastrophic equipment failures, unusual or unexpected geological formations or unstable ground conditions, and natural
phenomena such as earthquakes, flooding or unusually severe weather; uninsurable risks; volatility and fluctuations in metal and commodity demand and prices; significant
reliance on assets in Chile; reputation risks related to negative publicity with respect to the Company or the mining industry in general; delays or the inability to obtain, retain or
comply with permits; risks relating to the development of the Josemaria Project; health and safety laws and regulations; risks associated with climate change; risks relating to
indebtedness; economic, political and social instability and mining regime changes in the Company’s operating jurisdictions, including but not limited to those related to
permitting and approvals, nationalization or expropriation without fair compensation, environmental and tailings management, labour, trade relations, and transportation;
inability to attract and retain highly skilled employees; risks inherent in and/or associated with operating in foreign countries and emerging markets, including with respect to
foreign exchange and capital controls; project financing risks, liquidity risks and limited financial resources; health and safety risks; compliance with environmental, unavailable
or inaccessible infrastructure, infrastructure failures, and risks related to ageing infrastructure; changing taxation regimes; the inability to effectively compete in the industry;
risks associated with acquisitions and related integration efforts, including the ability to achieve anticipated benefits, unanticipated difficulties or expenditures relating to
integration and diversion of management time on integration; risks related to mine closure activities, reclamation obligations, environmental liabilities and closed and historical
sites; reliance on key personnel and reporting and oversight systems, as well as third parties and consultants in foreign jurisdictions; information technology and cybersecurity
risks; risks associated with the estimation of Mineral Resources and Mineral Reserves and the geology, grade and continuity of mineral deposits including but not limited to
models relating thereto; actual ore mined and/or metal recoveries varying from Mineral Resource and Mineral Reserve estimates, estimates of grade, tonnage, dilution, mine
plans and metallurgical and other characteristics; ore processing efficiency; community and stakeholder opposition; regulatory investigations, enforcement, sanctions and/or
related or other litigation; financial projections, including estimates of future expenditures and cash costs, and estimates of future production may not be reliable; enforcing legal
rights in foreign jurisdictions; risks associated with the use of derivatives; risks relating to joint ventures and operations; environmental and regulatory risks associated with the
structural stability of waste rock dumps or tailings storage facilities; exchange rate fluctuations; compliance with foreign laws; potential for the allegation of fraud and corruption
involving the Company, its customers, suppliers or employees, or the allegation of improper or discriminatory employment practices, or human rights violations; risks relating to
dilution; risks relating to payment of dividends; counterparty and customer concentration risks; activist shareholders and proxy solicitation matters; estimation of asset carrying
values; relationships with employees and contractors, and the potential for and effects of labour disputes or other unanticipated difficulties with or shortages of labour or
interruptions in production; conflicts of interest; existence of significant shareholders; challenges or defects in title; internal controls; risks relating to minor elements contained
in concentrate products; the threat associated with outbreaks of viruses and infectious diseases; and other risks and uncertainties, including but not limited to those described in
the "Managing Risks” section of this MD&A and the “Risk and Uncertainties” section of the Company’s Annual Information Form, which is available on SEDAR+ at
www.sedarplus.ca under the Company’s profile.
All of the forward-looking statements made in this document are qualified by these cautionary statements. Although the Company has attempted to identify important factors
that could cause actual results to differ materially from those contained in forward-looking information, there may be other factors that cause results not to be as anticipated,
estimated, forecast or intended and readers are cautioned that the foregoing list is not exhaustive of all factors and assumptions which may have been used. Should one or more
of these risks and uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those described in forward-looking
information. Accordingly, there can be no assurance that forward-looking information will prove to be accurate and forward-looking information is not a guarantee of future
performance. Readers are advised not to place undue reliance on forward-looking information. The forward-looking information contained herein speaks only as of the date of
this document. The Company disclaims any intention or obligation to update or revise forward-looking information or to explain any material difference between such and
subsequent actual events, except as required by applicable law.
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Highlights
For the year ended December 31, 2023 the Company generated revenue of $3.4 billion (2022 - $3.0 billion), gross profit of
$652.4 million (2022 - $762.6 million) and adjusted EBITDA1 of $1,363.5 million (2022 - $1,292.5 million). Financial results
include the contribution from the acquisition of the Caserones copper-molybdenum mine ("Caserones") located in Chile,
from the closing date of the transaction on July 13, 2023.
The operations performed well in 2023 with the Company achieving production at the midpoint of guidance or higher for all
metals. Both copper and zinc production had record annual production volumes of 314,798 tonnes and 185,161 tonnes
respectively, whilst nickel production amounted to 16,429 tonnes for the year. The gold production of 148,968 oz was at
the upper end of the guidance whilst molybdenum production of 2,024 tonnes was in excess of the upper end of guidance.
For the quarter ended December 31, 2023 , the Company generated revenue of $1.1 billion (Q4 2022 - $0.8 billion ), gross
profit of $188.9 million (Q4 2022 - $155.2 million) and adjusted EBITDA of $419.7 million (Q4 2022 - $353.7 million).
Operationally, the Company performed well during the fourth quarter of 2023 with 103,337 tonnes of copper and 50,719
tonnes of zinc produced, both record quarterly volumes for the Company.
On February 8, 2024 the Company announced its mineral resource and mineral reserve estimates effective as of December
31, 2023. On a 100% basis, estimated proven and probable mineral reserves of contained copper is 10,630 kt which
represents an increase of 2,220 kt over the previous year, primarily attributable to the addition of Caserones. Additional
drilling at the Sauva deposit in Brazil grew the measured and indicated copper mineral resources at this deposit by 25%.
Candelaria had additional drilling at La Espanola and Santos which contributed to an increase in overall mineral resources,
offsetting changes to underground mining regulations which have impacted underground mineral resources.
1
1 This is a non-GAAP measure - see section "Non-GAAP and Other Performance Measures" of this MD&A for discussion.
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Operational Performance
Candelaria (80% owned): Candelaria produced, on a 100% basis, 152,012 tonnes of copper, approximately 90,000 ounces
of gold and 1.5 million ounces of silver in concentrate during the year. Copper production was consistent with the prior year
due to higher throughput being offset by lower grades and recoveries. Gold production was higher than in the prior year
due to higher throughput and grades. Both metals were within the most recently-disclosed 2023 production guidance
ranges. Production costs were higher than the prior year primarily due to inflationary cost increases and and unfavourable
foreign exchange. Copper cash cost1 of $2.07/lb was within the most recently-disclosed 2023 cash cost guidance range.
Caserones (51% owned): Caserones produced 65,210 tonnes of copper and 2,024 tonnes of molyb denum on a 100% basis
during the year, from the acquisition closing date of July 13, 2023 to the end of the year. Both metals met or exceeded the
most recently-disclosed 2023 production guidance ranges due to strong throughput, grade and recoveries. Copper cash cost
of $1.99/lb was slightly below the low end of the most recently-disclosed cash cost guidance range as a result of higher
production.
Chapada (100% owned): Chapada produced 45,719 tonnes of copper and approximately 59,000 ounces of gold, with
copper production remaining consistent to the prior year and gold production being negatively impacted by lower grade,
throughput, and recoveries. Both metals were within the most recently-disclosed 2023 production guidance ranges.
Production costs were lower than the prior year due to lower sales volumes. Full year copper cash cost of $2.27/lb was
below the low end of the most recently-disclosed cash cost guidance.
Eagle (100% owned): Eagle’s production of 16,429 tonnes of nickel and 13,600 tonnes of copper were near the higher ends
of recently-disclosed 2023 production guidance ranges but lower than that in the prior year due to planned lower grades.
Production costs were lower than the prior year due to lower sales volumes. Nickel cash cost 1 of $2.16/lb was within the
most recently-disclosed 2023 cash cost guidance range but higher than the prior year as a result of lower grade, lower by-
product credits and higher repair and maintenance costs.
Neves-Corvo (100% owned): Neves-Corvo produced 33,823 tonnes of copper and 108,812 tonnes of zinc during the year.
Zinc production increased significantly from the prior year due to higher throughput as a result of the zinc expansion project
("ZEP"). Copper production also increased due to higher throughput and production of both metals was within the most
recently-disclosed 2023 production guidance ranges. Production costs were lower than in the prior year despite higher
sales, primarily due to lower input costs, in particular lower electricity and diesel prices, partially offset by unfavourable
foreign exchange. Copper cash cost of $2.37/lb for the year exceeded the most recently-disclosed 2023 cash cost guidance
range and was higher than in the prior year primarily due to lower zinc by-product credits, higher treatment and refining
charges, and unfavourable foreign exchange.
Zinkgruvan (100% owned): Zinc production of 76,349 tonnes was consistent with the prior year, but slightly below the most
recently-disclosed 2023 production guidance range. Installation of a sequential flotation system during the year is achieving
improved recoveries, but a longer than anticipated ramp-up limited mill availability and reduced recoveries, limiting
production of both lead and zinc. Lead production of 26,284 tonnes was also lower than in the prior year. Production costs
and sales volumes were consistent with the prior year and zinc cash cost1 of $0.43/lb was below the most recently-disclosed
2023 cash cost guidance range but higher than in the prior year, primarily due to lower by-product credits.
2
1 This is a non-GAAP measure - see section "Non-GAAP and Other Performance Measures" of this MD&A for discussion.
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2023 Production, Cash Cost and Capital Expenditure Summary
Total 2023 production, cash costs and capital expenditures are compared to the most recent 2023 guidance as follows:
Production Cash Cost ($/lb)a
(Contained metal in concentrate) Actual Guidanceb Actual Guidanceb
Copper (t) Candelaria (100%) 152,012 147,000 - 153,000 2.07 2.00 - 2.20
Caserones (100%) 65,210 65,000 - 69,000 1.99 2.00 - 2.20
Chapada 45,719 45,000 - 48,000 2.27 2.35 - 2.55
Eagle 13,600 12,000 - 15,000
Neves-Corvo 33,823 33,000 - 36,000 2.37 2.10 - 2.30
Zinkgruvan 4,434 3,000 - 4,000
Total 314,798 305,000 - 325,000
Zinc (t) Neves-Corvo 108,812 103,000 - 110,000
Zinkgruvan 76,349 78,000 - 82,000 0.43 0.45 - 0.50
Total 185,161 181,000 - 192,000
Nickel (t) Eagle 16,429 15,000 - 17,000 2.16 2.00 - 2.20
Gold (koz) Candelaria (100%) 90 87 - 92
Chapada 59 55 - 60
Total 149 142 - 152
Molybdenum (t) Caserones (100%) 2,024 1,500 - 2,000
2023 Capital Expenditurec
($ thousands) Actual Guidanceb
Candelaria (100%) 380,112 375,000
Caserones (100%) 83,880 110,000
Chapada 72,291 70,000
Eagle 22,201 20,000
Neves-Corvo 102,621 105,000
Zinkgruvan 53,358 65,000
Other 12,761 10,000
Total Sustaining Capital 727,224 755,000
Expansionary - Josemaria 275,913 350,000
Total Capital Expenditures 1,003,137 1,105,000
a. Cash cost is a non-GAAP measure - see Section "Non-GAAP and Other Performance Measures" of this MD&A for discussion.
b. Guidance as disclosed in the Company's MD&A for the three and nine months ended September 30, 2023 with trending commentary in the MD&A
for the three and nine months ended September 30, 2023.
c. Sustaining capital expenditure is a supplementary financial measure and expansionary capital expenditure is a non-GAAP measure – see Section
"Non-GAAP and Other Performance Measures" of this MD&A for discussion.
3
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Corporate Updates
• On February 22, 2023, the Company filed updated technical reports for Candelaria and Neves-Corvo.
• On July 10, 2023 the Company published its 2022 Sustainability Report. The report highlights progress towards the
Company's "Focused on the Future" long-term sustainability strategy, launch and rollout of a fatal risk management
program and Candelaria's achievement of The Copper MarkTM certification in early 2023, among other things.
• On July 13, 2023, the Company announced the closing of the acquisition of 51% of the issued and outstanding equity of
SCM Minera Lumina Copper Chile ("Lumina Copper"), which owns the Caserones copper-molybdenum mine located in
Chile. Net cash paid at closing was $648.6 million , consisting of $796.6 million upfront cash consideration after
adjustments, net of $148.0 million cash and cash equivalents held by Lumina Copper at closing on a 100% basis.
Excluding the 49% of cash and cash equivalents held by Lumina Copper at closing that are not attributable to the
Company, net cash paid at closing was $721.1 million for the Company's 51% equity interest in Caserones. Remaining
deferred cash consideration of $150 million will be payable in installments as follows: $50 million to be paid in five
installments of $10 million on the anniversary of the transaction closing date in each of 2024, 2025, 2026, 2027, and
2028; and $100 million shall be paid on the anniversary of the closing date in 2029. Lundin Mining also has the right to
acquire up to an additional 19% interest in Lumina Copper for $350 million over a five-year period commencing on the
first anniversary of the date of closing. A technical report for the Caserones mine titled “NI 43-101 Technical Report on
the Caserones Mining Operation, Caserones Project, Atacama Region, Chile” was filed under the Company's profile on
SEDAR+.
• On September 11, 2023, the Company announced that the Environmental Impact Assessment (“EIA”) for the extension
of operations and mine life for its Candelaria Copper Mine in Chile was approved by the Regional Environmental
Commission of Atacama on September 8, 2023. Approval of the EIA will allow for the extension of Candelaria's mine life
to 2040 and include various measures that will support sustainable social, economic, and environmental development
in the Atacama Region.
• During the year ended December 31, 2023, the Company declared dividends in the amount of $206.1 million, or C$0.36
per share.
• On December 6, 2023, the Company announced that it had renewed its Normal Course Issuer Bid ("NCIB") which allows
the Company to purchase up to 52,538,870 common shares over a twelve-month period commencing on December 11,
2023.
• In December 2023, Jack Lundin, President and former Director of the Company, assumed the role of President and
Chief Executive Officer replacing Peter Rockandel. Mr Rockandel remained on the Board of Directors until December
31, 2023 and Mr Lundin re-joined the Board of Directors on January 1, 2024.
• During 2023, the Company successfully completed a move of its corporate headquarters from Toronto, Ontario to
Vancouver, British Columbia.
• On February 12, 2024, the Company reported an employee fatality at the Neves-Corvo Mine in Portugal. Operations
were voluntarily suspended and restarted on February 15, 2024. The appropriate authorities in Portugal were notified
and the Company is providing its full cooperation in their investigation.
Financial Performance
• Gross profit for the year ended December 31, 2023 was $652.4 million which was $110.2 million lower than the prior
year period. The decrease was primarily due to lower zinc prices at Zinkgruvan and Neves-Corvo and lower nickel
prices and volumes at Eagle offset by the inclusion of Caserones gross profit , which was inclusive of $39.9 million of
fair value adjustments to revalue in-process and concentrate inventory on hand at the acquisition date.
• For the year ended December 31, 2023 , net earnings of $315.2 million were lower than the prior year period due to
lower gross profit, higher financing costs, as well as higher non-cash tax expenses offset partially by lower general
exploration and business development expenses.
4
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• Adjusted earnings1 for the twelve months ended December 31, 2023 of $336.2 million were $146.6 million lower than
the prior year primarily due to the same factors as the change in net earnings described above.
• Cash provided by operating activities for the year ended December 31, 2023 of $1,016.6 million was $139.7 million
higher than the prior year comparable period and benefited from the inclusion of production from Caserones, as well
as a lower outflow from change in working capital during the year.
Financial Position and Financing
• On July 27, 2023, the Company announced it had obtained a three-year term loan (the "Term Loan") of a principal
amount of $800.0 million with an additional $400.0 million accordion option, maturing July 2026 . The Term Loan was
obtained in conjunction with the Company's acquisition of a 51% interest in Caserones , and the $400 million accordion
becomes available, subject to commitments from the lenders, upon closing of up to an additional 19% interest in
Caserones in accordance with the purchase agreement.
• Cash and cash equivalents as at December 31, 2023 were $268.8 million. Cash generated from operations of $1,016.6
million in the year ended December 31, 2023 was used to fund investing activities of $1,674.5 million, which includes
the acquisition of Caserones. Cash generated from financing activities w as $728.6 million, which was comprised
primarily of the proceeds from the Term Loan to finance the Caserones acquisition.
• As at December 31, 2023, the Company had a net debt1 balance of $1,223.4 million. Net debt excluding lease
liabilities1 was $946.2 million.
• As at February 21, 2024, the Company had a cash balance of approximately $446.7 million and a net debt balance
excluding lease liabilities of approximately $851.4 million.
5
1 This is a non-GAAP measure - see section "Non-GAAP and Other Performance Measures" of this MD&A for discussion.
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Outlook
Production, cash cost, capital expenditures and exploration investment guidance for 2024 remains unchanged from the
most recently reported guidance.
2024 Production and Cash Cost Guidance
Guidancea
(contained metal) Production Cash Cost ($/lb)b
Copper (t) Candelaria (100%) 160,000 – 170,000 1.60 – 1.80c
Caserones (100%) 120,000 – 130,000 2.60 – 2.80
Chapada 43,000 – 48,000 1.95 – 2.15d
Eagle 9,000 – 12,000
Neves-Corvo 30,000 – 35,000 1.95 – 2.15c
Zinkgruvan 4,000 – 5,000
Total 366,000 – 400,000
Zinc (t) Neves-Corvo 120,000 – 130,000
Zinkgruvan 75,000 – 85,000 0.45 – 0.50c
Total 195,000 – 215,000
Nickel (t) Eagle 10,000 – 13,000 2.80 – 3.00
Gold (koz) Candelaria (100%) 100 – 110
Chapada 55 – 60
Total 155 – 170
Molybdenum (t) Caserones (100%) 2,500 – 3,000
a. Guidance as outlined in the news release 'Lundin Mining Provides 2024 Guidance & Announces 2023 Production Results' dated January 14, 2024.
b. Cash costs are based on various assumptions and estimates, including but not limited to: production volumes, commodity prices (Cu: $3.75/lb, Zn:
$1.10/lb, Pb: $0.90/lb, Au: $1,800/oz, Mo: $20.00/lb, Ag: $23.00/oz), foreign exchange rates (€/USD: 1.05, USD/SEK:10.50, USD/CLP:850, USD/BRL:5.00)
and production costs. Cash cost is a non-GAAP measure - see section 'Non-GAAP and Other Performance Measures' of this MD&A for discussion.
c. 68% of Candelaria's total gold and silver production are subject to a streaming agreement, and silver production at Zinkgruvan and Neves-Corvo are
also subject to streaming agreements. Cash costs are calculated based on receipt of approximately $429/oz gold and $4.28/oz to $4.68/oz silver.
d. Chapada's cash cost is calculated on a by-product basis and does not include the effects of its copper stream agreements. Effects of the copper stream
agreements are reflected in copper revenue and will impact realized price per pound.
2024 Capital Expenditure Guidanceb
($ millions) Guidancea
Candelaria (100% basis) 300
Caserones (100% basis) 205
Chapada 110
Eagle 25
Neves-Corvo 125
Zinkgruvan 75
Other —
Total Sustaining 840
Expansionary - Josemaria 225
Total Capital Expenditures 1,065
a. Guidance as outlined in the news release 'Lundin Mining Provides 2024 Guidance & Announces 2023 Production Results" dated January 14, 2024.
b. Sustaining capital expenditure is a supplementary financial measure, and expansionary capital expenditure is a non-GAAP measure – see Section "Non-
GAAP and Other Performance Measures" of this MD&A for discussion.
2024 Exploration Investment Guidance
Total exploration expenditure guidance for 2024 is $48.0 million.
6
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Selected Fourth Quarter and Annual Financial Information
Three months ended
December 31,
Year ended
December 31,
($ millions, except share and per share 2023 2022 2023 2022 2021
Revenue 1,060.0 811.4 3,392.1 3,041.2 3,328.8
Costs of goods sold:
Production costs (648.0) (450.9) (2,086.1) (1,661.4) (1,371.3)
Depreciation, depletion and amortization (223.1) (142.7) (653.6) (554.8) (522.8)
Inventory write-down — (62.5) — (62.5) (65.0)
Gross profit 188.9 155.2 652.4 762.6 1,369.7
Net earnings attributable to:
Lundin Mining shareholders 38.8 145.6 241.6 426.9 780.3
Non-controlling interests 28.0 (0.3) 73.7 36.7 99.0
Net earnings 66.8 145.3 315.2 463.5 879.3
Adjusted earnings1 79.7 191.5 336.2 482.8 820.6
Adjusted EBITDA1 419.7 353.7 1,363.5 1,292.5 1,869.4
Cash provided by operating activities 306.1 156.9 1,016.6 876.9 1,485.0
Adjusted operating cash flow1 362.0 289.1 1,024.2 992.9 1,487.1
Free cash flow from (used in) operations1 116.8 (35.7) 345.1 381.4 1,054.5
Free cash flow1 61.2 (124.3) 13.5 34.1 953.2
Capital expenditures2 243.9 281.2 1,013.1 842.9 532.1
Per share amounts:
Basic and diluted (loss) earnings per share
("EPS") attributable to shareholders 0.05 0.19 0.31 0.56 1.06
Adjusted EPS1 0.10 0.25 0.44 0.63 1.11
Adjusted operating cash flow per share1 0.47 0.38 1.33 1.30 2.02
Dividends declared (C$/share) 0.09 0.09 0.36 0.47 0.39
December 31,
2023
December 31,
2022
December 31,
2021
Total assets 10,861.2 8,172.8 7,636.9
Total debt and lease liabilities 1,485.8 197.3 31.0
Net (debt) cash excluding lease liabilities1
(946.2) 16.3 588.9
1 This is a non-GAAP measure - see the "Non-GAAP and Other Performance Measures" section of this MD&A for discussion.
2 Capital expenditures are reported on a cash basis, as presented in the consolidated statement of cash flows.
The Company's annual results have been impacted by the acquisition of the Josemaria Project in April 2022 and the
acquisition of the Caserones mine in July 2023. Project development costs for the Josemaria Project were initially included
in general exploration expenses but began to be capitalized from the fourth quarter of 2022, contributing to higher general
exploration expenses and lower capital expenditure in 2022 as compared to 2023. The acquisition of the Caserones mine in
July 2023 contributed to an increase in total metal production, net earnings and capital expenditures in 2023 as compared
to 2022. Additionally, fair value adjustments of $39.9 million were recorded in production costs in 2023 to re-value the
concentrate and in-process inventory on hand at the acquisition of the Caserones mine.
During the year ended December 31, 2022 inflationary increases in production costs were experienced, including for
electricity, diesel and consumables. Input costs stabilized and in some cases lowered during the year ended December 31,
2023. These movements impacted net earnings, adjusted earnings and adjusted EBITDA in each year. Non-cash write-downs
of long-term ore stockpile inventory at Chapada of $66.8 million and $68.1 million were recognized in each of the years
ended December 31, 2022 and December 31, 2021, respectively, reducing net earnings in those years.
The $800 million Term Loan entered into in conjunction with the Caserones acquisition increased the Company's total debt
in mid-2023 and has increased interest expense, reducing net earnings. From 2022 the Company has entered into derivative
contracts for foreign currency and diesel as part of its risk management strategy, with realized and unrealized gains and
losses impacting net earnings. The Company has also realized foreign exchange and trading gains on debt and equity
investments from mid-2022 to support capital funding for the Josemaria Project.
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Summary of Quarterly Results1
($ millions, except per share data) Q4-23 Q3-23 Q2-23 Q1-23 Q4-22 Q3-22 Q2-22 Q1-22
Revenue 1,060.0 992.2 588.5 751.3 811.4 648.5 590.2 991.1
Gross profit 188.9 197.3 52.8 213.3 155.2 82.5 46.0 478.8
Net earnings (loss) 66.8 21.9 61.3 165.3 145.3 (11.2) (48.6) 378.1
- attributable to shareholders 38.8 (3.0) 59.1 146.6 145.6 (11.2) (52.6) 345.1
Adjusted earnings (loss)2,3 79.7 85.3 45.6 125.7 191.5 30.9 (35.3) 295.6
Adjusted EBITDA2,3 419.7 415.1 191.8 336.9 353.7 202.4 148.6 587.8
EPS - Basic and Diluted 0.05 — 0.08 0.19 0.19 (0.01) (0.07) 0.47
Adjusted EPS2,3 0.10 0.11 0.06 0.16 0.25 0.04 (0.05) 0.40
Cash flow from operations 306.1 303.8 194.8 211.9 156.9 36.3 366.4 317.3
Adjusted operating cash flow per share2 0.47 0.41 0.14 0.30 0.38 0.23 0.06 0.64
Capital expenditure4
243.9 243.2 279.9 246.1 281.2 199.5 217.3 144.9
1 The sum of quarterly amounts may differ from year-to-date results due to rounding.
2 This is a non-GAAP measure - see the "Non-GAAP and Other Performance Measures" section of this MD&A for discussion.
3 Q2 2023 amounts have been adjusted from those presented in the Company's MD&A for the three and six months ended June 30, 2023.
4 Capital expenditures are reported on a cash basis, as presented in the consolidated statement of cash flows
On a quarterly basis the Company's revenue, gross profit and net earnings can be impacted by metal prices, sales volumes
as a result of the timing of concentrate shipments, and provisional pricing adjustments on current and prior period
shipments.
The Company's results have also been impacted by the acquisition of the Josemaria Project in April 2022 and the acquisition
of the Caserones mine in July 2023. Project development costs for the Josemaria Project were initially included in general
exploration expenses following the acquisition of the project in April 2022, but began to be capitalized from the fourth
quarter of 2022. This reduced net earnings in Q2 2022 and Q3 2022 and contributed to higher capital expenditure starting
in Q4 2022.
The acquisition of the Caserones mine in July 2023 contributed to an increase in gross profit and cash flow from operations
in each of Q3 2023 and Q4 2023. Additionally, fair value adjustments of $32.2 million and $7.8 million were recorded in
production costs in Q3 2023 and Q4 2023, respectively, to re-value in-process and concentrate inventory on hand at the
acquisition date. The $800 million Term Loan entered into in conjunction with the acquisition has increased the Company's
interest expense in Q3 2023 and subsequent quarters, reducing net earnings.
During 2022, inflationary price increases were experienced for electricity, diesel and consumables. In 2023, input prices
stabilized, and in some cases lowered. These trends impacted gross profit and net earnings in the quarters presented
above.
A non-cash write-down, including depreciation, of long-term ore stockpile inventory at Chapada of $66.8 million was
recognized in Q4 2022, reducing net earnings.
From Q3 2022, the Company has entered into derivative contracts for foreign currency and diesel as part of its risk
management strategy. From Q2 2022, the Company has also realized foreign exchange and trading gains on debt and equity
investments to support capital funding for the Josemaria Project. Realized and unrealized gains and losses on derivative
contracts and foreign exchange and trading gains on debt equity investments are recorded in other income and impact the
Company's net earnings.
8
===== SIDA 11 =====
Revenue Overview
Sales Volumes by Payable Metal
2023 2022
Total Q4 Q3 Q2 Q1 Total Q4 Q3 Q2 Q1
Copper (t)
Candelaria
(100%) 144,473 38,888 33,668 36,347 35,570 147,251 33,561 35,587 39,655 38,448
Caserones
(100%)1 66,075 35,690 30,385 — — — — — — —
Chapada 43,761 13,080 11,445 10,164 9,072 45,563 12,037 12,817 7,905 12,804
Eagle 11,968 3,055 3,177 2,951 2,785 14,060 2,672 3,721 4,159 3,508
Neves-Corvo 32,054 9,054 8,799 6,170 8,031 31,592 6,351 8,574 8,183 8,484
Zinkgruvan 4,473 845 1,758 1,001 869 4,428 886 1,570 337 1,635
302,804 100,612 89,232 56,633 56,327 242,894 55,507 62,269 60,239 64,879
Zinc (t)
Neves-Corvo 91,115 25,491 21,957 20,125 23,542 66,966 20,205 18,770 16,289 11,702
Zinkgruvan 65,344 17,316 22,042 9,374 16,612 65,684 17,635 13,722 18,525 15,802
156,459 42,807 43,999 29,499 40,154 132,650 37,840 32,492 34,814 27,504
Nickel (t)
Eagle 13,339 3,105 3,640 3,859 2,735 14,427 3,239 3,715 4,206 3,267
Gold (koz)
Candelaria
(100%) 87 23 19 23 22 83 20 20 22 21
Chapada 53 18 13 11 11 65 17 23 10 15
140 41 32 34 33 148 37 43 32 36
Molybdenum (t)
Caserones
(100%)1 2,019 978 1,041 — — — — — — —
Lead (t)
Neves-Corvo 4,970 1,830 1,220 881 1,039 2,908 673 654 818 763
Zinkgruvan 25,527 5,714 9,391 4,944 5,478 30,163 7,654 7,502 10,163 4,844
30,497 7,544 10,611 5,825 6,517 33,071 8,327 8,156 10,981 5,607
Silver (koz)
Candelaria
(100%) 1,322 415 279 333 295 1,442 278 305 412 447
Chapada 129 37 32 29 31 156 50 32 26 48
Eagle 24 8 6 4 6 34 9 9 9 7
Neves-Corvo 821 265 227 158 171 552 92 117 152 191
Zinkgruvan 1,892 449 713 331 399 2,088 551 532 650 355
4,188 1,174 1,257 855 902 4,272 980 995 1,249 1,048
9
1 Caserones results are from July 13, 2023.
===== SIDA 12 =====
Revenue Analysis1
Twelve months ended December 31,
by Mine 2023 2022 Change
($ thousands) $ % $ % $
Candelaria (100%) 1,329,599 38 1,317,223 43 12,376
Caserones (100%) 601,775 18 — — 601,775
Chapada 461,175 14 477,927 16 (16,752)
Eagle 350,895 10 520,472 17 (169,577)
Neves-Corvo 425,042 13 433,486 14 (8,444)
Zinkgruvan 223,591 7 292,120 10 (68,529)
3,392,077 3,041,228 350,849
Three months ended December 31,
by Mine 2023 2022 Change
($ thousands) $ % $ % $
Candelaria (100%) 359,023 33 342,348 42 16,675
Caserones (100%) 317,219 30 — — 317,219
Chapada 143,439 14 142,328 18 1,111
Eagle 73,720 7 157,060 19 (83,340)
Neves-Corvo 115,823 11 102,516 13 13,307
Zinkgruvan 50,783 5 67,178 8 (16,395)
1,060,007 811,430 248,577
Twelve months ended December 31,
by Metal 2023 2022 Change
($ thousands) $ % $ % $
Copper 2,398,619 71 1,909,235 63 489,384
Zinc 297,059 9 371,822 12 (74,763)
Nickel 243,050 7 379,790 12 (136,740)
Gold 235,857 7 227,616 7 8,241
Molybdenum 77,523 2 — — 77,523
Lead 58,445 2 60,624 2 (2,179)
Silver 46,430 1 41,958 1 4,472
Other 35,094 1 50,183 3 (15,089)
3,392,077 3,041,228 350,849
Three months ended December 31,
by Metal 2023 2022 Change
($ thousands) $ % $ % $
Copper 795,067 75 490,367 60 304,700
Zinc 76,206 7 91,263 11 (15,057)
Nickel 47,601 4 128,613 16 (81,012)
Gold 74,098 7 61,584 8 12,514
Molybdenum 28,825 3 — — 28,825
Lead 13,609 1 17,536 2 (3,927)
Silver 13,872 1 8,607 1 5,265
Other 10,729 2 13,460 2 (2,731)
1,060,007 811,430 248,577
1 Caserones results are from July 13, 2023.
10
===== SIDA 13 =====
Revenue for the year ended December 31, 2023 amounted to $3,392.1 million which was higher than the prior year as a
result of the inclusion of Caserones copper and molybdenum revenue offset by decreases in nickel volumes and prices, and
zinc prices.
Revenue from gold and silver for the year ended December 31, 2023 includes the partial recognition of an upfront purchase
price on the sale of precious metals streams for Candelaria, Neves-Corvo, and Zinkgruvan as well as the cash proceeds
which amount to approximately $425/oz for gold and between $4.24/oz and $4.60/oz for silver.
Chapada’s copper revenue includes the recognition of deferred revenue from copper streams acquired with the Chapada
mine, as well as the cash proceeds of 30% of the market price of the copper sold under the streams.
Revenue is recorded using the metal price received for sales that settle during the reporting period. For sales that have not
been settled, an estimate is used based on the expected month of settlement and the forward price of the metal at the end
of the reporting period. The difference between the estimate and the final price received is recognized by adjusting revenue
in the period in which the sale is settled. Settlement dates can range from one to six months after shipment.
Provisionally Valued Revenue as of December 31, 2023
Metal Payable metal Valued at
Copper 117,594 t $3.85 /lb
Zinc 34,047 t $1.21 /lb
Nickel 1,263 t $7.46 /lb
Gold 30 koz $2,074 /oz
Molybdenum 866 t $17.84 /lb
11
===== SIDA 14 =====
Full-Year Reconciliation of Realized Prices
Twelve months ended December 31, 2023
($ thousands) Copper Zinc Nickel Gold Molybdenum Other Total
Revenue from contracts with
customers1 2,576,132 412,479 296,900 277,682 82,069 157,106 3,802,368
Provisional pricing adjustments on
current year concentrate sales (46,426) (17,257) (13,031) (560) (4,593) (2,154) (84,021)
Provisional pricing adjustments on prior
year concentrate sales 21,272 4,251 (37,636) 1,087 47 (363) (11,342)
2,550,978 399,473 246,233 278,209 77,523 154,589 3,707,005
Recognition of deferred revenue 53,823
Copper stream cash effect (19,639)
Gold stream cash effect (84,319)
Less: Treatment and refining charges (264,793)
Total Net Sales 3,392,077
Payable Metal 302,804 t 156,459 t 13,339 t 140 koz 2,019 t
Current period sales 2 $3.79 $1.15 $9.65 $1,983 $17.41
Provisional pricing adjustments on prior
year concentrate sales 0.03 0.01 (1.28) 8 0.01
Realized prices 3,4 $3.82 /lb $1.16 /lb $8.37 /lb $1,991 /oz $17.42 /lb
Twelve months ended December 31, 2022
Copper Zinc Nickel Gold Other Total
Revenue from contracts with
customers1 2,119,529 446,907 358,113 262,737 167,546 3,354,832
Provisional pricing adjustments on
current year concentrate sales (125,933) (21,106) 29,914 567 (1,544) (118,102)
Provisional pricing adjustments on prior
year concentrate sales 15,444 13,818 (1,509) 1,333 — 29,086
2,009,040 439,619 386,518 264,637 166,003 3,265,816
Recognition of deferred revenue 57,681
Copper stream cash effect (23,520)
Gold stream cash effect (75,868)
Less: Treatment & refining charges (182,881)
Total Revenue 3,041,228
Payable Metal 242,894 t 132,650 t 14,427 t 148 koz
Current period sales2 $3.72 $1.46 $12.20 $1,775
Provisional pricing adjustments on prior
year concentrate sales 0.03 0.04 (0.05) 9
Realized prices3,4 $3.75 /lb $1.50 /lb $12.15 /lb $1,784 /oz
1. Revenue from contracts with customers before recognition of deferred revenue, gold and copper stream cash effects and treatment and refining
charges, each of which is presented separately in the table.
2. Includes revenue from contracts with customers and provisional pricing adjustments on current year concentrate sales.
3. This is a non-GAAP measure - see the "Non-GAAP and Other Performance Measures" section of this MD&A for discussion.
4. The realized price for copper inclusive of the impact of streaming agreements for 2023 is $3.79/lb (2022: $3.71/lb). The realized price for gold
inclusive of the impact of streaming agreements for 2023 is $1,387/oz (2022: $1,273/oz).
12
===== SIDA 15 =====
Annual Financial Results
Production Costs
Production costs for the year ended December 31, 2023 were $2,086.1 million an increase from $1,661.4 million in the
prior year. Production costs increases were primarily as a result of the acquisition of Caserones, including $39.9 million fair
value adjustments recorded to re-value concentrate and in-process inventory on hand at the acquisition date that was
subsequently recognized in production costs as the inventory was sold during the year. Production costs also increased at
Candelaria due to higher throughput, inflationary cost increases and unfavourable foreign exchange in the first half of the
year.
Depreciation, Depletion and Amortization
Depreciation, depletion and amortization expense for the year ended December 31, 2023 increased from the prior year.
The increase was primarily attributable to the acquisition of Caserones and higher expense recorded at Neves-Corvo in line
with higher zinc production. These increases were partially offset by decreased expense related to a planned mine life
extension at Eagle.
Depreciation, depletion & amortization Twelve months ended December 31,
($ thousands) 2023 2022 Change
Candelaria 272,377 284,259 (11,882)
Caserones 108,489 — 108,489
Chapada 63,480 49,865 13,615
Eagle 52,050 79,523 (27,473)
Josemaria 38 633 (595)
Neves-Corvo 121,599 101,807 19,792
Zinkgruvan 34,124 36,739 (2,615)
Other 1,439 1,924 (485)
653,596 554,750 98,846
General Exploration and Business Development
Total general exploration and business development expenses of $55.7 million for the year ended December 31, 2023
decreased from $144.4 million in the prior year primarily due to development associated with the Josemaria Project being
capitalized from the fourth quarter of 2022. Business development expenses in the year ended December 31, 2023 also
included $5.2 million in transaction costs related to the acquisition of Caserones.
During the current year, exploration costs were spent primarily on in-mine and near-mine targets at the Company’s
operations. Geophysical surveys were conducted at Chapada and Eagle. The processing and interpretation of the Eagle data
is ongoing into 2024. Drilling at Candelaria was divided between Ojos district and Candelaria near-mine. Exploration drilling
at Neves-Corvo and Zinkgruvan was primarily focused along potential near-mine trends. Drilling at Chapada was focused
between near-mine and the Chapada district. Tender processes for drilling and geophysical surveys were completed at
Caserones and are planned to commence in January 2024.
Finance Income and Costs
Net finance costs of $102.7 million for the year ended December 31, 2023 were higher than $64.2 million in the prior year
primarily due to higher interest expense related to higher outstanding debt through the year, combined with increased
lease liability interest following the acquisition of Caserones.
Other Income and Expense
Net other income of $104.6 million for the year ended December 31, 2023 increased slightly from $98.0 million in the prior
year as realized gains on foreign exchange and diesel derivative contracts that settled during the year were mostly offset by
unrealized losses on unexpired contracts.
Foreign exchange gains and losses recorded in other income primarily resulted from foreign exchange revaluation of
working capital denominated in foreign currencies and changes in fair value of debt and equity instruments supporting
13
===== SIDA 16 =====
capital funding for the Josemaria Project. Period end exchange rates having a meaningful impact on foreign exchange
recorded at December 31, 2023 were:
December 31, 2023 December 31, 2022
Brazilian Real (USD:BRL) 4.84 5.22
Chilean Peso (USD:CLP) 877 860
Euro (USD:€) 0.91 0.94
Swedish Kronor (USD:SEK) 9.98 10.44
Argentine Peso (USD:ARS) 808 177
Income Taxes
Income tax expense (recovery)
Twelve months ended December
31,
($ thousands) 2023 2022 Change
Candelaria 135,078 85,270 49,808
Caserones 19,265 — 19,265
Chapada (1,888) (27,840) 25,952
Josemaria 51,266 — 51,266
Eagle 2,899 28,458 (25,559)
Neves-Corvo (8,690) (3,898) (4,792)
Zinkgruvan 10,923 34,413 (23,490)
Other 7,746 18,225 (10,479)
216,599 134,628 81,971
Income taxes by classification
Twelve months ended December
31,
($ thousands) 2023 2022 Change
Current income tax expense 154,416 149,978 4,438
Deferred income tax expense (recovery) 62,183 (15,350) 77,533
216,599 134,628 81,971
Income tax expense for the year ended December 31, 2023 was higher than the prior year primarily due to the deferred tax
on foreign exchange revaluation of non-monetary assets at the Josemaria Project in Argentina of $53.6 million, deferred
mining tax of $40.2 million recorded at Candelaria due to the increase in the mining tax rate and the acquisition of
Caserones. This was offset by overall lower taxable earnings, excluding Candelaria, when compared to the prior period.
In addition to the $40.2 million in deferred mining taxes, the increase of $49.8 million in taxes in Candelaria is also due to
higher taxable earnings in the current period.
Current taxes for the year are higher due to less taxable losses available to offset the taxable income when compared to the
prior period. Included in the deferred taxes are Chapada’s $24.5 million recovery recorded for deferred tax on foreign
exchange revaluation of non-monetary assets (2022 – $20.7 million expense).
Other taxes in 2023 include withholding taxes on accrued interest on intercompany debt and distributions from Eagle mine.
14
===== SIDA 17 =====
Fourth Quarter Financial Results
Gross Profit
Gross profit for the quarter was $188.9 million, an increase from $155.2 million in the prior year comparable quarter. The
increase was primarily due to the addition of the Caserones gross profit and partially offset by decreases in gross profit at
Eagle and Zinkgruvan as a result of lower nickel and zinc prices.
Net Earnings
Net earnings for the quarter ended December 31, 2023 were $66.8 million which was lower than the prior year quarter net
earnings of $145.3 million. Net earnings decreased as a result of higher non-cash income tax expense during the quarter.
Cash Flow from Operations
Cash provided by operating activities for the quarter was $306.1 million, compared to the prior year comparable quarter of
$156.9 million. The increase was largely due to the inclusion of Caserones cash flows as well as higher gross profit overall at
the operations.
15
===== SIDA 18 =====
Fourth Quarter Reconciliation of Realized Prices
Three months ended December 31, 2023
($ thousands) Copper Zinc Nickel Gold Molybdenum Other Total
Revenue from contracts with customers1 839,120 104,337 54,672 84,851 33,929 44,791 1,161,700
Provisional pricing adjustments on
current period concentrate sales 8,448 3,973 (622) 469 6,169 (296) 18,141
Provisional pricing adjustments on prior
period concentrate sales (3,567) (1,922) (6,964) 3,014 (11,273) (3,170) (23,882)
844,001 106,388 47,086 88,334 28,825 41,325 1,155,959
Recognition of deferred revenue 13,771
Copper stream cash effect (4,987)
Gold stream cash effect (23,464)
Less: Treatment and refining charges (81,272)
Total Net Sales 1,060,007
Payable Metal 100,612 t 42,807 t 3,105 t 41 koz 978 t
Current Period Sales2 $3.82 $1.15 $7.90 $2,074 $18.60
Provisional pricing adjustments on prior
period concentrate sales (0.01) (0.02) (1.02) 74 (5.23)
Realized prices 3,4 $3.81 /lb $1.13 /lb $6.88 /lb $2,148 /oz $13.37 /lb
Three months ended December 31, 2022
Copper Zinc Nickel Gold Other Total
Revenue from contracts with customers1 449,496 112,501 90,453 66,304 42,352 761,106
Provisional pricing adjustments on
current period concentrate sales 17,130 7,233 7,004 1,891 — 33,258
Provisional pricing adjustments on prior
period concentrate sales 45,098 (7,121) 35,493 1,298 — 74,768
511,724 112,613 132,950 69,493 42,352 869,132
Recognition of deferred revenue 15,326
Copper stream cash effect (5,146)
Gold stream cash effect (17,318)
Less: Treatment & refining charges (50,564)
Total Revenue 811,430
Payable Metal 55,507 t 37,840 t 3,239 t 37 koz
Current period sales2 $3.81 $1.44 $13.65 $1,822
Provisional pricing adjustments on prior
period concentrate sales 0.37 (0.09) 4.97 34
Realized prices3,4 $4.18 /lb $1.35 /lb $18.62 /lb $1,856 /oz
1. Revenue from contracts with customers before recognition of deferred revenue, gold and copper stream cash effects and treatment and refining
charges, each of which is presented separately in the table.
2. Includes revenue from contracts with customers and provisional pricing adjustments on current period concentrate sales.
3. This is a non-GAAP measure - see Section "Non-GAAP and Other Performance Measures" of this MD&A for discussion.
4. The realized price for copper inclusive of the impact of streaming agreements for 2023 is $3.79/lb (2022: $4.14/lb). The realized price for gold
inclusive of the impact of streaming agreements for 2023 is $1,577/oz (2022: $1,394/oz).
16
===== SIDA 19 =====
Mining Operations
Production Overview
2023 2022
Total Q4 Q3 Q2 Q1 Total Q4 Q3 Q2 Q1
Copper (t)
Candelaria (100%) 152,012 41,618 34,275 36,952 39,167 152,042 34,398 37,192 40,949 39,503
Caserones (100%)1 65,210 35,389 29,821 — — — — — — —
Chapada 45,719 12,872 12,286 10,697 9,864 45,739 11,306 13,988 10,345 10,100
Eagle 13,600 3,334 3,245 3,881 3,140 15,895 3,081 3,994 4,400 4,420
Neves-Corvo 33,823 9,623 9,016 7,610 7,574 31,906 7,160 7,019 7,867 9,860
Zinkgruvan 4,434 501 1,299 917 1,717 4,077 607 1,737 535 1,198
314,798 103,337 89,942 60,057 61,462 249,659 56,552 63,930 64,096 65,081
Zinc (t)
Neves-Corvo 108,812 31,035 25,807 24,177 27,793 82,435 24,523 22,514 20,647 14,751
Zinkgruvan 76,349 19,684 23,967 11,938 20,760 76,503 19,785 17,813 21,265 17,640
185,161 50,719 49,774 36,115 48,553 158,938 44,308 40,327 41,912 32,391
Nickel (t)
Eagle 16,429 3,729 4,290 4,686 3,724 17,475 4,096 4,379 4,719 4,281
Gold (koz)
Candelaria (100%) 90 25 20 21 24 86 20 21 23 22
Chapada 59 19 15 13 12 68 16 24 16 12
149 44 35 34 36 154 36 45 39 34
Molybdenum (t)
Caserones (100%)1 2,024 928 1,096 — — — — — — —
Lead (t)
Neves-Corvo 5,600 2,030 1,447 951 1,172 3,306 845 743 925 793
Zinkgruvan 26,284 6,418 8,643 3,816 7,407 30,517 7,619 7,046 9,124 6,728
31,884 8,448 10,090 4,767 8,579 33,823 8,464 7,789 10,049 7,521
Silver (koz)
Candelaria (100%) 1,487 468 306 366 347 1,595 306 337 457 495
Chapada 258 73 67 62 56 258 65 75 60 58
Eagle 64 17 19 11 17 93 20 20 26 27
Neves-Corvo 1,902 573 486 407 436 1,383 370 323 346 344
Zinkgruvan 2,300 509 785 374 632 2,621 663 642 739 577
6,011 1,640 1,663 1,220 1,488 5,950 1,424 1,397 1,628 1,501
17
1 Caserones results are from July 13, 2023.
===== SIDA 20 =====
Production Cost and Cash Cost Overview ($ thousand, $/lb)
Three months ended
December 31,
Twelve months ended
December 31,
($ thousands) 2023 2022 2023 2022
Candelaria
Production costs $178,088 $207,596 $726,493 $697,171
Gross cost 2.24 2.95 2.46 2.30
By-product1 (0.46) (0.43) (0.39) (0.34)
Cash Cost (Cu, $/lb)2 1.78 2.52 2.07 1.96
AISC (Cu, $/lb)2 2.76 4.19 3.34 3.22
Caserones3
Production costs $215,855 — $404,837 —
Gross cost 2.73 — 2.59 —
By-product1 (0.40) — (0.60) —
Cash Cost (Cu, $/lb)2 2.33 — 1.99 —
AISC (Cu, $/lb)2 3.48 — 3.03 —
Chapada
Production costs $89,716 $84,247 $317,317 $324,096
Gross cost 3.25 3.23 3.42 3.28
By-product1 (1.37) (1.28) (1.15) (1.20)
Cash Cost (Cu, $/lb)2 1.88 1.95 2.27 2.08
AISC (Cu, $/lb)2 2.75 3.73 3.24 3.36
Eagle
Production cost $48,023 $50,581 $191,704 $193,003
Gross cost 6.19 6.39 5.83 5.21
By-product1 (3.82) (3.99) (3.67) (4.42)
Cash Cost (Ni, $/lb)2 2.37 2.40 2.16 0.79
AISC (Ni, $/lb)2 4.60 5.23 4.22 3.01
Neves-Corvo
Production costs $82,734 $78,402 $326,677 $329,232
Gross cost 4.43 5.82 4.93 4.96
By-product1 (2.47) (3.50) (2.56) (2.69)
Cash Cost (Cu, $/lb)2 1.96 2.32 2.37 2.27
AISC (Cu, $/lb)2 3.50 4.22 3.96 3.40
Zinkgruvan
Production costs $31,520 $29,590 $115,394 $115,553
Gross cost 1.11 0.98 1.06 1.00
By-product1 (0.48) (0.66) (0.63) (0.68)
Cash Cost (Zn, $/lb)2 0.63 0.32 0.43 0.32
AISC (Zn, $/lb)2 0.93 0.77 0.83 0.68
1. By-product is after related treatment and refining charges.
2. All-in Sustaining Cost per pound sold ("AISC") and Cash cost are non-GAAP measures, see the "Non-GAAP and Other Performance Measures" section of
this MD&A for discussion.
3. Caserones results are from July 13, 2023.
18
===== SIDA 21 =====
Capital Expenditures1
Year ended December 31,
2023 2022
($ thousands) Sustaining Expansionary
Capitalized
Interest Total Sustaining Expansionary
Capitalized
Interest Total
Candelaria 380,112 — — 380,112 389,731 — — 389,731
Caserones 83,880 — — 83,880 — — — —
Chapada 72,291 — — 72,291 104,711 — — 104,711
Eagle 22,201 — — 22,201 16,413 — — 16,413
Josemaria — 275,913 9,980 285,893 — 171,094 14 171,108
Neves-Corvo 102,621 — — 102,621 71,222 31,899 65 103,186
Zinkgruvan 53,358 — — 53,358 48,144 — — 48,144
Other 12,761 — — 12,761 9,610 — — 9,610
727,224 275,913 9,980 1,013,117 639,831 202,993 79 842,903
1 Capital expenditures are reported on a cash basis, as presented in the consolidated statement of cash flows. Sustaining capital expenditure is a
supplementary financial measure and expansionary capital expenditure is a non-GAAP measure – see the "Non-GAAP and Other Performance Measures"
section of this MD&A for discussion.
19
===== SIDA 22 =====
Candelaria (Chile)
The Candelaria operations consist of an open pit and underground mines providing copper ore to two on-site processing
plants located near Copiapó in the Atacama region of Chile, as well as a port facility and desalination plant located
approximately 100km from the mine facilities in the town of Caldera. The Company holds an indirect 80% ownership interest
in Candelaria with the remaining 20% interest indirectly held by Sumitomo Metal Mining Co., Ltd and Sumitomo
Corporation. The plants have a combined processing capacity of 28 million tonnes per annum (“mtpa”), producing copper in
concentrate. The primary metal is copper, with gold and silver as by-product metals.
Operating Statistics
2023 2022
(100% Basis) Total Q4 Q3 Q2 Q1 Total Q4 Q3 Q2 Q1
Ore mined (000s tonnes) 25,939 7,793 5,350 6,194 6,602 22,666 4,993 6,239 6,362 5,072
Ore milled (000s tonnes) 28,903 7,609 7,168 6,924 7,202 26,725 6,593 6,642 6,847 6,643
Grade
Copper (%) 0.58 0.60 0.52 0.59 0.59 0.62 0.57 0.60 0.64 0.65
Gold (g/t) 0.14 0.15 0.12 0.14 0.15 0.14 0.13 0.14 0.14 0.14
Recovery
Copper (%) 91.3 90.3 91.0 91.1 92.6 92.7 92.7 93.3 93.0 91.9
Gold (%) 69.5 68.6 70.6 68.8 70.3 73.9 74.0 74.6 73.8 73.0
Production (contained metal)
Copper (tonnes) 152,012 41,618 34,275 36,952 39,167 152,042 34,398 37,192 40,949 39,503
Gold (000 oz) 90 25 20 21 24 86 20 21 23 22
Silver (000 oz) 1,487 468 306 366 347 1,595 306 337 457 495
Revenue ($000s) 1,329,599 359,023 299,745 290,426 380,405 1,317,223 342,348 255,330 261,999 457,546
Production costs ($000s) 726,493 178,088 175,468 184,958 187,979 697,171 207,596 168,602 168,164 152,809
Gross profit ($000s) 330,729 106,997 53,909 35,772 134,051 335,793 69,285 11,956 17,924 236,628
Cash cost ($ per pound copper)1 2.07 1.78 2.19 2.14 2.21 1.96 2.52 1.97 1.86 1.58
AISC ($ per pound copper)1 3.34 2.76 3.43 3.76 3.44 3.22 4.19 3.34 2.89 2.61
1All-in Sustaining Cost per pound sold ("AISC") and Cash cost are non-GAAP measures, see the "Non-GAAP and Other Performance Measures" section of
this MD&A for discussion.
Production
Copper production for the year ended December 31, 2023 remained consistent with the prior year as higher throughput
offset lower grades and recoveries. Copper production for the quarter ended December 31, 2023 was higher than the prior
year comparable period, primarily due to increased throughput as a result of reduced ore hardness. Gold production in the
current quarter and full year was higher than the prior year comparable periods, due to higher throughput and grades,
partially offset by lower recoveries. Annual copper and gold production were at the higher end of the most recently-
disclosed production guidance ranges.
Production Costs and Cash Cost
Production costs for the year ended December 31, 2023 were higher than the prior year, largely as a result of higher
throughput, inflationary cost increases and unfavourable foreign exchange in the first half of the year. Production costs for
the quarter ended December 31, 2023 were lower than the prior year comparable period despite higher sales volumes. This
was mainly attributable to lower maintenance costs, favourable diesel and electricity prices and lower labor costs. Cash cost
per pound for the year ended December 31, 2023 was negatively impacted by higher production costs and higher treatment
charges, but remained in the most recently-disclosed cash cost guidance range. Cash cost per pound for the quarter ended
December 31, 2023 improved from the prior year comparable period primarily due to higher production combined with
cost decreases. All-in sustaining cost per pound ("AISC") for the year ended December 31, 2023 was higher than the prior
year due to increased cash cost per pound. AISC per pound for the quarter ended December 31, 2023 was lower than the
prior year comparable period due to decreased cash cost per pound and lower sustaining capital spend. For the twelve
months ended December 31, 2023, approximately 56,000 oz of gold and 888,500 oz of silver were subject to terms of a
streaming agreement from which approximately $425/oz of gold and $4.24/oz of silver will be received.
Gross Profit
Gross profit for the year ended December 31, 2023 was lower than the prior year, primarily due to higher production costs,
lower grades and recoveries and unfavourable foreign exchange, partially offset by higher copper prices, net of price
adjustments.
20
===== SIDA 23 =====
Caserones (Chile)
Caserones is an open pit copper-molybdenum mine which produces high-quality copper concentrate, copper cathode and
molybdenum concentrate. Lundin Mining is the operator after acquiring a 51% interest in Minera Lumina Copper Chile on
July 13, 2023, with JX Metals Corporation holding the remaining 49% interest. Results presented are from July 13, 2023. In
2023, the copper concentrator treated 31.8 mt.The solvent extraction-electrowinning plant has a capacity of 34.5 ktpa.
Operating Statistics
2023
(100% Basis) Total1 Q4 Q31
Ore mined (000s tonnes) 15,583 7,484 8,099
Ore milled (000s tonnes) 15,424 8,262 7,162
Ore placed on leach 5,541 3,234 2,307
Grade
Copper (%) 0.42 0.41 0.44
Molybdenum (%) 0.203 0.191 0.218
Recovery
Copper (%) 86.1 88.2 83.9
Molybdenum (%) 72.4 73.9 70.9
Production (tonnes)
Copper in concentrate 55,191 29,496 25,695
Copper cathode 10,019 5,893 4,126
Total copper 65,210 35,389 29,821
Molybdenum 2,024 928 1,096
Revenue ($000s) 601,775 317,219 284,556
Production costs ($000s) 404,837 215,855 188,982
Gross profit ($000s) 88,449 31,182 57,267
Cash cost ($ per pound copper)2 1.99 2.33 1.60
AISC ($ per pound copper)2,3 3.03 3.48 2.49
1 Caserones results are from July 13, 2023.
2 All-in Sustaining Cost per pound sold ("AISC") and Cash cost are non-GAAP measures, see the "Non-GAAP and Other Performance Measures" section of
this MD&A for discussion.
3 Q3 2023 AISC has been adjusted from that presented in the Company's MD&A for the three months ended September 30, 2023.
Production
Copper and molybdenum production for the quarter ended December 31, 2023 and from the acquisition closing date of July
13, 2023 were higher than planned, primarily due to increased throughput, and a focus on mining higher-grade phase 5
ahead of shifting to phase 6 in 2024. Both metals achieved the most recently-disclosed production guidance, with
molybdenum exceeding the high end of the range.
Production Costs and Cash Cost
Production costs increased in the quarter ended December 31, 2023 in line with higher sales, and benefited from
favourable foreign exchange and reduced prices for electricity and certain consumables. Annual Production Costs since
acquisition were negatively impacted by $39.9 million of fair value adjustments related to inventory. The fair value
adjustments were recorded to re-value concentrate and in-process inventory on hand at the acquisition date, and were
subsequently recognized in production costs as the inventory was sold. Copper cash cost per pound in the quarter ended
December 31, 2023 and from the acquisition closing date benefited from increased production from higher-grade phase 5.
AISC for the year and quarter ended December 31, 2023 and from the acquisition closing date of July 13, 2023 also
benefited from lower than expected cash cost. Copper cash cost for the period from the acquisition closing date was slightly
below the low end of the most recently-disclosed cash cost guidance range.
Following the acquisition in the second quarter, an ongoing process has been underway to identify and realize synergies
between the Caserones and Candelaria operations. Cost savings resulting from synergies are estimated to be between $20
million to $30 million annually, in areas including supply chain, logistics and support services.
Gross Profit
Gross profit for the quarter ended December 31, 2023 and from the acquisition closing date of July 13, 2023 benefited from
higher than planned production, favourable copper grades and favourable foreign exchange.
21
===== SIDA 24 =====
Chapada (Brazil)
The Chapada mine consists of four open pit mines and on-site processing facilities located in the northern Goiás State of
Brazil, approximately 270 km northwest of the national capital of Brasilia. The processing plant has a capacity of 24.0 mtpa,
producing high-quality gold-rich copper concentrate. The primary metal is copper, with gold and silver as by-product metals.
Operating Statistics
2023 2022
(100% Basis) Total Q4 Q3 Q2 Q1 Total Q4 Q3 Q2 Q1
Ore mined (000s tonnes) 29,508 7,803 8,062 7,522 6,121 26,319 7,801 7,404 4,875 6,239
Ore milled (000s tonnes) 22,233 5,218 5,832 5,207 5,976 22,752 5,296 6,345 5,670 5,441
Grade
Copper (%) 0.26 0.29 0.26 0.26 0.23 0.26 0.25 0.28 0.25 0.23
Gold (g/t) 0.15 0.18 0.15 0.14 0.13 0.16 0.16 0.19 0.17 0.13
Recovery
Copper (%) 80.2 85.9 80.8 80.3 73.3 78.6 83.4 78.8 72.9 79.6
Gold (%) 55.0 61.1 55.3 54.1 48.0 56.0 59.5 58.3 50.6 55.3
Production (contained metal)
Copper (tonnes) 45,719 12,872 12,286 10,697 9,864 45,739 11,306 13,988 10,345 10,100
Gold (000 oz) 59 19 15 13 12 68 16 24 16 12
Silver (000 oz) 258 73 67 62 56 258 65 75 60 58
Revenue ($000s) 461,175 143,439 111,897 94,721 111,118 477,927 142,328 118,734 57,260 159,605
Production costs ($000s) 317,317 89,716 78,854 80,113 68,634 324,096 84,247 88,665 71,507 79,677
Gross profit (loss) ($000s) 80,378 30,126 20,230 (381) 30,403 41,420 (22,522) 17,851 (22,720) 68,811
Cash cost ($ per pound copper)1 2.27 1.88 2.28 2.69 2.37 2.08 1.95 1.92 2.98 1.82
AISC ($ per pound copper)1 3.24 2.75 3.15 3.80 3.42 3.36 3.73 2.80 5.00 2.56
1All-in Sustaining Cost per pound sold ("AISC") and Cash cost are non-GAAP measures, see the "Non-GAAP and Other Performance Measures" section of
this MD&A for discussion.
Production
Copper production for the year ended December 31, 2023 was consistent with the prior year as higher recoveries were
offset by lower throughput. Gold production for the year ended December 31, 2023 was lower than the prior year due to
lower grades, throughput and recoveries. Copper and gold production for the quarter ended December 31, 2023 was higher
than the prior year comparable period primarily due to higher grades and recoveries. Annual copper and gold production
were within the most recently-disclosed production guidance ranges.
Production Costs and Cash Cost
Production costs for the year ended December 31, 2023 were lower than the prior year primarily due to lower sales
volumes. Production costs for the quarter ended December 31, 2023 were higher than the prior year comparable quarter
primarily due to higher sales volumes and un favourable foreign exchange. Copper cash cost per pound for the year ended
December 31, 2023 was higher than the prior year primarily due to lower gold sales, which reduced copper cash cost as by-
product credits. Copper cash cost per pound in the quarter ended December 31, 2023 improved from the prior year
comparable period primarily due to higher production as a result of favourable grades, and contributed to annual copper
cash cost per pound being lower than the most recently-disclosed cash cost guidance range. AISC per pound for the year
and quarter ended December 31, 2023 was lower than the prior year comparable periods primarily due to lower sustaining
capital expenditure. AISC per pound for the quarter ended December 31, 2023 also benefited from lower cash cost per
pound.
Gross Profit
Gross profit for the year ended December 31, 2023 was higher than the prior year despite lower sales volumes. This was
primarily due to a non-cash inventory write-down recognised in 2022, and higher realized copper prices, net of price
adjustments.
22
===== SIDA 25 =====
Eagle (USA)
The Eagle mine consists of the Eagle underground mine, located approximately 53 km northwest of Marquette, Michigan,
U.S.A. and the Humboldt mill, located 61 km west of Marquette. The plant has a processing capacity of 0.7 mtpa, producing
nickel and copper in concentrates. The primary metal is nickel with copper, and minor amounts of cobalt, gold, and
platinum-group metals as by-product metals.
Operating Statistics
2023 2022
(100% Basis) Total Q4 Q3 Q2 Q1 Total Q4 Q3 Q2 Q1
Ore mined (000s tonnes) 725 188 192 189 156 718 165 190 181 182
Ore milled (000s tonnes) 718 186 190 181 161 718 170 187 182 179
Grade
Nickel (%) 2.6 2.3 2.6 2.9 2.6 2.8 2.7 2.7 3.0 2.8
Copper (%) 2.0 1.9 1.8 2.2 2.0 2.3 1.9 2.2 2.5 2.5
Recovery
Nickel (%) 87.4 86.1 86.2 88.8 88.5 86.6 88.6 85.5 87.3 85.3
Copper (%) 96.8 96.5 96.4 97.0 97.2 97.2 96.8 96.5 97.7 97.6
Production (contained metal)
Nickel (tonnes) 16,429 3,729 4,290 4,686 3,724 17,475 4,096 4,379 4,719 4,281
Copper (tonnes) 13,600 3,334 3,245 3,881 3,140 15,895 3,081 3,994 4,400 4,420
Revenue ($000s) 350,895 73,720 102,505 105,250 69,420 520,472 157,060 106,715 106,828 149,869
Production costs ($000s) 191,704 48,023 52,497 45,735 45,449 193,003 50,581 47,736 55,128 39,558
Gross profit ($000s) 107,141 11,794 35,682 46,845 12,820 247,946 87,359 37,329 29,796 93,462
Cash cost ($ per pound nickel)1 2.16 2.37 2.07 1.88 2.43 0.79 2.40 1.05 0.90 (1.25)
AISC ($ per pound nickel)1 4.22 4.60 4.05 3.34 5.16 3.01 5.23 2.77 2.93 1.19
1All-in Sustaining Cost per pound sold ("AISC") and Cash cost are non-GAAP measures, see the "Non-GAAP and Other Performance Measures" section of
this MD&A for discussion.
Production
Nickel and copper production for the year ended December 31, 2023 were lower than the prior year primarily due to lower
grades. In the quarter ended December 31, 2023, nickel production was lower than the prior year comparable period due to
lower grades and recoveries partially offset by higher throughput, and copper production was higher than the prior year
comparable period due to higher throughput. Annual nickel and copper production were within the most recently-disclosed
production guidance ranges.
Production Costs and Cash Cost
Production costs in the year ended December 31, 2023 were lower than the prior year in line with lower sales volumes.
Production costs in the quarter ended December 31, 2023 were lower than the prior year comparable period despite higher
sales volumes as a result of lower royalty expense as a result of lower net smelter revenue . Nickel cash cost per pound in
the year ended December 31, 2023 was higher than the prior year period primarily due to lower grade resulting in lower
production volumes, lower copper by-product credits, and higher repair and maintenance costs. In the quarter ended
December 31, 2023, cash cost per pound was lower than the prior year comparable period due to lower treatment and
refining charges, partially offset by lower production volumes. Annual nickel cash cost per pound was within the most
recently-disclosed cash cost guidance range. AISC for the year ended December 31, 2023 was higher than the prior year due
to increased cash costs per pound and higher sustaining capital expenditures. In the quarter ended December 31, 2023,
AISC was lower than prior year comparable period due to lower cash cost per pound, lower royalty expense and reduced
lease payments.
Gross Profit
Gross profit for the year ended December 31, 2023 was lower than the prior year primarily due to lower copper and nickel
production and sales volumes, combined with a decline in nickel price during the year. These decreases were partly offset
by lower depreciation expense as compared to the prior year following a planned extension of the mine life to mid-2029.
23
===== SIDA 26 =====
Neves-Corvo (Portugal)
Neves-Corvo is located 200 km southeast of Lisbon, Portugal, in the western part of the Iberian Pyrite Belt and consists of an
underground mine and on-site processing facilities. The copper plant has a processing capacity of up to 2.8 mtpa, producing
copper in concentrate, and the zinc plant is ramping up to an expanded capacity of 2.5 mtpa producing zinc and lead
concentrates. The primary metal is copper, with zinc, lead and silver as by-product metals.
Operating Statistics
2023 2022
(100% Basis) Total Q4 Q3 Q2 Q1 Total Q4 Q3 Q2 Q1
Ore mined, copper (000s tonnes) 2,591 677 689 622 603 2,501 611 598 610 682
Ore mined, zinc (000s tonnes) 1,989 549 459 470 511 1,632 462 447 426 297
Ore milled, copper (000s tonnes) 2,588 682 674 628 604 2,499 607 596 606 690
Ore milled, zinc (000s tonnes) 1,989 573 441 465 510 1,633 465 449 420 299
Grade
Copper (%) 1.7 1.9 1.8 1.6 1.6 1.7 1.6 1.6 1.7 1.8
Zinc (%) 6.8 6.6 7.4 6.6 6.7 6.9 6.9 6.9 6.9 7.0
Lead (%) 1.5 1.4 1.5 1.5 1.5 1.5 1.6 1.5 1.5 1.6
Recovery
Copper (%) 76.5 75.6 76.1 77.0 77.7 76.1 75.1 73.0 77.0 78.7
Zinc (%) 78.0 79.9 76.1 76.8 78.7 70.2 74.3 70.3 68.4 66.1
Lead (%) 19.2 25.2 21.3 14.0 15.7 13.2 11.5 11.3 14.6 16.4
Production (contained metal)
Copper (tonnes) 33,823 9,623 9,016 7,610 7,574 31,906 7,160 7,019 7,867 9,860
Zinc (tonnes) 108,812 31,035 25,807 24,177 27,793 82,435 24,523 22,514 20,647 14,751
Lead (tonnes) 5,600 2,030 1,447 951 1,172 3,306 845 743 925 793
Silver (000 oz) 1,902 573 486 407 436 1,383 370 323 346 344
Revenue ($000s) 425,042 115,823 111,202 68,614 129,403 433,486 102,516 102,865 93,538 134,567
Production costs ($000s) 326,677 82,734 82,137 76,080 85,726 329,232 78,402 94,572 77,788 78,470
Gross (loss) profit ($000s) (23,234) 642 (2,288) (35,185) 13,597 2,447 (7,570) (17,006) (8,229) 35,252
Cash cost ($ per pound copper)1 2.37 1.96 2.27 3.99 1.69 2.27 2.32 2.69 2.39 1.70
AISC ($ per pound copper)1 3.96 3.50 3.82 5.73 3.29 3.40 4.22 3.51 3.14 2.92
1All-in Sustaining Cost per pound sold ("AISC") and Cash cost are non-GAAP measures, see the "Non-GAAP and Other Performance Measures" section of
this MD&A for discussion.
Production
Copper production for the year and quarter ended December 31, 2023 was higher than the prior year comparable periods
due to higher throughput, grades and recoveries. Zinc production for the year and quarter ended December 31, 2023 was
higher than the prior year comparable periods due to improved throughput and recoveries driven by the ZEP, following
optimization during the year. Annual copper and zinc production were within the most recently-disclosed production
guidance ranges, with copper being at the lower end of the range and zinc being at the upper end.
Production Costs and Cash Cost
Production costs for t he year ended December 31, 2023 were lower than the prior year despite higher sales volumes. This
was due to lower input costs, in particular electricity and diesel rates, partially offset by unfavourable foreign exchange.
Production costs for the quarter ended December 31, 2023 were higher than the prior year primarily owing to the EUR:USD
foreign exchange rate being unusually low in the fourth quarter of 2022. Copper cash cost per pound for the year ended
December 31, 2023 was higher than the prior year due to lower zinc by-product credits and higher treatment and refining
charges. Copper cash cost per pound for the quarter ended December 31, 2023 improved from the prior year comparable
period due to higher copper production. Annual copper cash cost per pound slightly exceeded the most recently-disclosed
cash cost guidance range. AISC for the year ended December 31, 2023 was higher than the prior year due to higher cash
cost and higher sustaining capital expenditures. AISC for the quarter ended December 31, 2023 was lower than the prior
year comparable period due to lower cash costs, sustaining capital expenditures and royalties.
Gross (Loss) Profit
Gross loss for the year ended December 31, 2023 was $23.2 million compared to the prior year gross profit of $ 2.4 million.
The decrease was a result of lower realized zinc prices, higher treatment and refining charges and higher depreciation
expense in line with increased zinc sales. These decreases were partly offset by lower production costs.
24
===== SIDA 27 =====
Zinkgruvan (Sweden)
The Zinkgruvan mine consists of an underground mine and on-site processing facilities, located approximately 200 km
southwest of Stockholm, Sweden. The plant has processing capacity of 1.6 mtpa. Products are zinc, lead and copper
concentrates. The primary metal is zinc, with lead, silver and copper as by-products.
Operating Statistics
2023 2022
(100% Basis) Total Q4 Q3 Q2 Q1 Total Q4 Q3 Q2 Q1
Ore mined, zinc (000s tonnes) 1,178 313 287 268 310 1,209 325 260 298 326
Ore mined, copper (000s tonnes) 207 36 65 51 55 192 48 61 38 45
Ore milled, zinc (000s tonnes) 1,179 327 326 211 315 1,234 309 293 327 305
Ore milled, copper (000s tonnes) 198 28 58 34 78 225 26 84 27 88
Grade
Zinc (%) 7.3 6.7 8.2 6.6 7.4 7.0 7.3 6.9 7.3 6.5
Lead (%) 2.9 2.5 3.5 2.4 2.9 3.0 3.0 2.9 3.3 2.7
Copper (%) 2.5 2.0 2.5 3.1 2.4 2.1 2.6 2.4 2.3 1.6
Recovery
Zinc (%) 89.0 89.8 90.0 86.3 88.7 88.4 88.3 87.5 89.1 88.7
Lead (%) 77.8 77.1 75.7 76.2 82.1 82.4 82.2 82.5 83.1 81.7
Copper (%) 88.5 86.3 88.7 86.1 90.5 87.1 89.0 86.1 87.7 87.3
Production (contained metal)
Zinc (tonnes) 76,349 19,684 23,967 11,938 20,760 76,503 19,785 17,813 21,265 17,640
Lead (tonnes) 26,284 6,418 8,643 3,816 7,407 30,517 7,619 7,046 9,124 6,728
Copper (tonnes) 4,434 501 1,299 917 1,717 4,077 607 1,737 535 1,198
Silver (000 oz) 2,300 509 785 374 632 2,621 663 642 739 577
Revenue ($000s) 223,591 50,783 82,290 29,520 60,998 292,120 67,178 64,854 70,596 89,492
Production costs ($000s) 115,394 31,520 37,183 17,786 28,905 115,553 29,590 25,709 29,066 31,188
Gross profit ($000s) 74,073 10,519 32,727 6,821 24,006 139,828 29,800 33,703 30,500 45,825
Cash cost ($ per pound)1 0.43 0.63 0.28 0.24 0.54 0.32 0.32 0.18 0.44 0.27
AISC ($ per pound)1 0.83 0.93 0.56 1.06 0.97 0.68 0.77 0.50 0.82 0.57
1All-in Sustaining Cost per pound sold ("AISC") and Cash cost are non-GAAP measures, see the "Non-GAAP and Other Performance Measures" section of
this MD&A for discussion.
Production
Production of zinc in the year and quarter ended December 31, 2023 was consistent with the prior year comparative
periods, but annual production was slightly below the most recently-disclosed production guidance range due to lower
annual throughput and lower grade in the fourth quarter. Lead production in the year and quarter ended December 31,
2023 were lower than the prior year comparative periods, due to lower grades and recoveries. Installation of a sequential
flotation system during the year is achieving improved recoveries, but a longer than anticipated ramp-up limited mill
availability and reduced recoveries, limiting production of both zinc and lead. Copper production in the year ended
December 31, 2023 was higher than the prior year due to higher grades and recoveries, although copper production in the
fourth quarter was reduced by lower grades and recoveries.
Production Costs and Cash Cost
Production costs for the year ended December 31, 2023 were consistent with the prior year and benefited from reduced
electricity prices and favourable foreign exchange, offsetting production limitations during the ramp-up of the sequential
flotation system. Production costs for the quarter ended December 31, 2023 were slightly higher than the prior year
comparable period primarily due to higher throughput and lower grades. Zinc cash cost per pound for the year and quarter
ended December 31, 2023 was higher than the prior year comparable periods, primarily due to lower by-product credits,
but was slightly below the most recently-disclosed annual cash cost guidance range. AISC for the year and quarter ended
December 31, 2023 were higher than the prior year in line with higher cash cost. Higher sustaining capital expenditures,
including the sequential flotation project, also impacted the full year AISC.
Gross Profit
Gross profit for the year ended December 31, 2023 was lower than the prior year due to lower realized zinc prices, lower
lead sales volumes and higher treatment and refining charges.
25
===== SIDA 28 =====
Josemaria Project (Argentina)
Josemaria Project is located in the San Juan Province of Argentina, approximately 9 km east of the Chile-Argentina border.
Access to site is to be from the city of San Juan, currently the operating centre for a significant portion of the project team.
along public two-lane paved roads and a project-developed and maintained gravel road. The project is developing access to
water, grid power, as well as transportation and logistics wholly within San Juan province.
Project Development
The Company continues to de-risk the Josemaria Project in several areas including evaluating inflation and currency
devaluation impacts, developing optimization studies to enhance mining and production plans, plant throughput,
concentrate transportation, infrastructure, further water drilling, modeling and studies, and exploration drilling.
At Josemaria, the water program continues progressing by advancing the identification of water sources, providing data to
update models, and incorporating sectoral permits. The grinding mills and gearless mill drives ("GMDs") deliveries continue
and will be stored in a San Juan facility for care and maintenance.
Work continues on permitting with the technical review of the tailings dam design; the permit application for the access
road and power line as well as minor permits and e nvironmental impact assessment for road maintenance were completed
and submitted for approval. With the newly elected San Juan province governor having taken office on December 10, 2023
negotiations are set to proceed on the infrastructure agreements for the royalty offset funding of the access road and the
power line capital costs. These agreements are expected to be signed in conjunction with several other provincial and
national agreements.
Additionally, the project team continues with the execution of a series of studies de-risking the project as well as advancing
financing and execution readiness activities. A study to increase plant throughput was finalized in the fourth quarter of
2023. Additional studies including concentrate transportation, infrastructure review, mine optimization and equipment
selection, execution plan update, and commercial strategies will be completed in 2024.
Exploration drilling on several of the Cumbre Verde and Portones targets near the Josemaria orebody are advancing
according to plan. An airborne geophysical survey was completed in Q4 2023 at Josemaria and the current drilling program
will continue into 2024.
In 2023, the Company spent $275.9 million in capital expenditure. In 2022, the Company spent $171.1 million which was
recorded as capital expenditure beginning in the fourth quarter of 2022. Prior to capitalization in the fourth quarter of 2022,
project spending was included in general exploration and business development expense on the income statement. Annual
capital spend in 2023 was below the most recently-disclosed guidance estimate of $350.0 million.
26
===== SIDA 29 =====
Metal Prices, LME Inventories and Smelter Treatment and Refining Charges
The average metal prices for copper, zinc, and nickel were lower in 2023 compared to 2022, while the average metal prices
for molybdenum and gold were higher over the same period.
Copper and gold average metal prices were higher in the quarter ended December 31, 2023 compared to the prior year
comparable period, while zinc, molybdenum and nickel average metal prices were lower as compared to the prior year
comparable period. The average metal prices in the quarter ended December 31, 2023 for zinc and gold were 3% and 2%
higher, respectively, than the average metal prices during the third quarter of 2023, while the average metal prices of
copper, molybdenum and nickel were 2%, 22% and 15% lower, respectively, than the average metal prices during the third
quarter of 2023.
Three months ended December 31, Twelve months ended December 31,
(Average LME Price) 2023 2022 Change 2023 2022 Change
Copper US$/pound 3.70 3.63 2 % 3.85 3.99 -4 %
US$/tonne 8,159 8,001 8,478 8,797
Zinc US$/pound 1.13 1.36 -17 % 1.20 1.58 -24 %
US$/tonne 2,498 3,001 2,647 3,478
Nickel US$/pound 7.82 11.47 -32 % 9.74 11.61 -16 %
US$/tonne 17,247 25,292 21,474 25,604
Gold US$/ounce 1,971 1,726 14 % 1,941 1,800 8 %
Molybdenum US$/pound 18.64 21.39 -13 % 24.19 18.73 29 %
US$/tonne 41,086 47,148 53,332 41,291
The LME inventories for copper, zinc and nickel all increased during 2023, ending the year 88%, 602% and 15%, respectively,
higher than the closing levels of 2022.
During the first eight months of 2023 the treatment charges (“TC”) and refining charges (“RC”) in the spot market for
copper concentrates between miners and commodity traders increased from an average spot TC during January of $73 per
dry metric tonne ("dmt") of concentrate and a spot RC of $0.073 per lb of payable copper to a spot TC during August 2023
of $83 per dmt of concentrate and a spot RC of $0.083 per lb of payable copper. Starting in September, with supply
constraints from Central and South America and increased smelting capacity in Asia, the spot TC’s and RC’s for copper
concentrates started to decrease from an average spot TC during September 2023 of $80 per dmt of concentrate and a spot
RC of $0.08 per lb of payable copper to a spot TC during December 2023 of $49 per dmt of concentrate and a spot RC of
$0.049 per lb of payable copper.
Chinese smelter buying terms followed the same trend as for commodity traders, starting the year from a spot TC of $84
per dmt of concentrates and a spot RC of $0.084 per lb payable copper and finishing the year at a spot TC of $68 per dmt of
concentrates and a spot RC of $0.068 per lb payable copper.
For copper concentrates, the terms for annual contracts for 2024 were reached in November 2023 at a TC of $80 per dmt
with a RC of $0.08 per payable lb of copper. This represents an improvement compared to the 2023 annual terms at a TC of
$88.00 per dmt of concentrates and a RC of $0.088 per payable lb of copper.
For zinc concentrates, the spot TC, delivered China, decreased steadily during 2023, starting the year at $275 per dmt, flat,
ending at $80 per dmt, flat. The TC for annual contracts for 2023 was settled at $274 per dmt of concentrates, with an
upscale price escalator of 6% from a price basis of $3,000 per mt zinc without de-escalator, and represented an
improvement of approximately $44 per dmt concentrates in favour of the smelters compared to the prior year. The
negotiation of annual terms for 2024 are not expected to be completed until the end of the first quarter of 2024.
The Company’s nickel concentrate production from Eagle is sold under several long-term contracts at terms in-line with
market conditions. Gold production from Chapada, Candelaria and Caserones is sold at terms in-line with market conditions
for copper concentrates. Molybdenum production from Caserones is sold at terms in-line with market conditions for
molybdenum concentrates.
27
===== SIDA 30 =====
Liquidity and Capital Resources
As at December 31, 2023, the Company had cash and cash equivalents of $268.8 million and a net debt balance of $1,223.4
million.
Cash generated from operations for the year ended December 31, 2023 amounted to $ 1,016.6 million compared to $876.9
million in the prior year primarily due to the inclusion of Caserones cash flows as well as reduced income tax installment
payments.
Cash used in investing activities for the year ended December 31, 2023 amounted to $1,674.5 million. Cash used in
investing activities was higher than in the prior year primarily due to the acquisition of Caserones and increased
investments in mineral properties, plant and equipment.
Cash provided by financing activities in the year ended December 31, 2023 amounted to $728.6 million compared to $251.6
million of cash used in the prior year. The increase was primarily due to proceeds from the Term Loan related to financing
for the Caserones mine and an increased amount drawn on the Company's revolving credit facility at December 31, 2023.
In July 2023, the Company obtained a Term Loan of a principal amount of $800.0 million with an additional $400.0 million
accordion option maturing in July 2026. The Term Loan bears interest at an annual rate equal to Term Secured Overnight
Financing Rate "(Term SOFR") + Credit Spread Adjustment ("CSA") + an applicable margin of 1.60% to 2.65%, depending on
the Company’s net leverage ratio. Principal is payable at maturity. The Term Loan is unsecured, save and except for a charge
over certain assets in the USA, and has similar covenants to the Company’s existing $1,750.0 million revolving credit facility.
The Company used proceeds from the Term Loan to refinance the drawdown under the Company’s revolving credit facility
which was used to fund the upfront cash consideration of the Caserones acquisition.
Capital Resources
The Company continues to expect to be able to fund all its contractual commitments with its operating cash flow, cash on
hand and available capital resources.
As at December 31, 2023, the Company had $1,208.6 million of debt and $277.2 million of lease liabilities outstanding.
As at December 31, 2023 , the Company has a revolving credit facility of $1,750.0 million with $250.0 million outstanding
(December 31, 2022 - $13.7 million). The credit facility bears interest on drawn funds at rates of Term SOFR + CSA of 0.10%
+ 1.45% to Term SOFR + 0.10% + 2.50% depending on the Company’s net leverage ratio. The revolving credit facility is
unsecured, save and except for a charge over certain assets in the USA, and is subject to customary covenants. On April 26,
2023, the credit facility was amended extending the term by one year to April 2028.
As at December 31, 2023, the Company also has unsecured commercial paper programs maturing in 2025 through 2028 of
which $116.0 million (€115.0 million) (December 31, 2022 - $26.7 million) were drawn. As at December 31, 2023 , certain
subsidiaries of the Company had outstanding unsecured term loans totalling $48.9 million (December 31, 2022 - $127.4
million) and accruing interest at rates ranging from 6.80% to 7.15% per annum with interest payable upon maturity. The
maturity dates range from March to April 2024.
During the twelve months ended December 31, 2023 , no shares were purchased under the Company's NCIB (year ended
December 31, 2022 - 10.8 million shares, $59.4 million consideration). In December 2023 the Company renewed its NCIB
which allows the Company to purchase up to 52,538,870 common shares over a twelve month period commencing on
December 11, 2023. As at February 21, 2024 the Company has not purchased any common shares under the renewed NCIB.
In addition, the Company entered into an automatic share purchase plan with its designated broker to allow for the
purchase of common shares at times which the Company ordinarily would not be active in the market due to trading
blackout periods, insider trading rules or otherwise.
The development of the Josemaria Project requires significant capital commitments from the Company, and additional
funding, beyond debt, may be required to advance the project to completion. Such additional funding may take the form of
a partnership, joint venture, royalty, stream or other arrangement (or a combination thereof) for the Josemaria Project, any
of which would dilute the Company’s existing interest in the Josemaria Project. The Company may also be required or elect
28
===== SIDA 31 =====
to pursue equity financing, which could have a dilutive effect on existing securityholders if shares, options, warrants or
other convertible securities are issued.
The Company’s ability to obtain additional financing for the Josemaria Project in the future will depend, in part, on
prevailing capital market conditions and the Company’s financial performance. Failure to secure adequate financing on a
timely basis may cause the Company to postpone, abandon, reduce or terminate its development activities in respect of the
Josemaria Project and could have a material adverse effect on the Company’s business, results of operations, financial
condition and price of common shares.
In addition, the Company’s exploration, acquisition, development and operational activities generally require significant
investment of resources and capital. The Company allocates such resources and capital to support business objectives, and
the availability of required resources and capital is subject to market conditions and the Company’s financial position.
The Company has limited financial resources and there is no assurance that sufficient additional funding or financing will be
available to the Company or its direct and indirect subsidiaries on acceptable terms, or at all, for further exploration or
development of its properties, including the development of the Josemaria Project, or to fulfill its obligations under any
applicable agreements.
The Company may incur substantial debt from time to time to finance working capital, capital expenditures (such as to
advance the Josemaria Project), investments or acquisitions or for other purposes. If the Company does so, the risks related
to the Company’s indebtedness could intensify, including, among other things: substantial interest and capital payments;
increased difficulty in satisfying existing debt obligations; limitations on the ability to obtain additional financing, or
imposed requirements to make non-strategic divestitures; imposed hedging requirements; explicit or implicit restrictions on
the Company’s cash flows for capital investment, dividends or distributions, opportunistic acquisitions and other business
needs; increased vulnerability to general adverse economic and industry conditions; interest rate risk exposure as
borrowings may be at variable rates of interest; decreased flexibility in planning for and reacting to changes in the industry
in which it competes; reduced competitiveness as compared to less leveraged competitors; and increased cost of additional
borrowing.
The terms of the revolving credit facility and Term Loan agreements require the Company to satisfy various affirmative and
negative covenants and to meet certain financial ratios and tests. These covenants limit, among other things, the
Company’s ability to incur further indebtedness if doing so would cause it to fail to meet certain financial covenants, create
certain liens on assets or engage in certain types of transactions. A failure to comply with these covenants, including a
failure to meet the financial tests or ratios, would likely result in an event of default under the revolving credit facility and
Term Loan and would allow the lenders to restrict future loans or accelerate the debt, which could materially and adversely
affect the Company’s business, financial condition and results of operations, its ability to meet payment obligations under
its debt and the price of its common shares. As at December 31, 2023, the Company is in compliance with its debt
covenants.
The Company may issue additional securities to raise funds, to pay for acquisitions or for other reasons. The Company
cannot predict the size of future issuances of securities or the effect, if any, that future issuances and sales of securities will
have on the market price of common shares. Sales or issuances of substantial numbers of common shares, or the
expectation that such sales could occur, may adversely affect prevailing market prices of the Company’s common shares. In
connection with any issuance of common shares, investors will suffer dilution to their voting power and the Company may
experience dilution in its earnings per share.
The Company is exposed to various counterparty risks including, among others: financial institutions that hold the
Company’s cash; companies that have payables to the Company, including concentrate customers; the Company’s
insurance providers; the Company’s lenders and other banking counterparties; companies that have received deposits from
the Company for the future delivery of equipment; and third parties that have agreed to indemnify the Company upon the
occurrence of certain events.
The Company maintains relationships with various banking partners for its operating activities in the jurisdictions in which
the Company operates. The Company’s access to funds under its credit facilities or other debt arrangements is dependent
on the ability of the financial institutions that are counterparties to the facilities to meet their funding commitments.
Default by financial institutions could require the Company to take measures to conserve cash until the markets stabilize or
until alternative credit or other funding arrangements for the Company’s business needs can be obtained.
29
===== SIDA 32 =====
Contractual Obligations, Commitments and Contingencies
The Company has contractual obligations and capital commitments as described in Note 24 “Commitments and
Contingencies” in the Company’s Consolidated Financial Statements. From time to time, the Company may also be involved
in legal proceedings that arise in the ordinary course of its business.
The Company has the following contractual obligations and capital commitments as at December 31, 2023:
Payments due by period1
$ thousands <1 year 1-5 years Thereafter Total
Reclamation and closure provisions 14,442 149,475 756,528 920,445
Long-term debt and lease liabilities 231,944 1,230,036 153,944 1,615,924
Capital commitments 265,870 195,425 — 461,295
Defined pension obligations 603 2,978 4,602 8,183
512,859 1,577,914 915,074 3,005,847
1Reported on an undiscounted basis, before inflation.
Financial Instruments
The Company has entered into derivative contracts consisting of foreign currency forward and option contracts as well as
diesel swap forward contracts. The option contracts consist of put and call contracts in a collar structure. The Company
does not currently utilize financial instruments in hedging metal price or interest rate exposure.
For a detailed discussion of the Company’s financial instruments refer to Note 23 of the Company’s Consolidated Financial
Statements.
Market and Liquidity Risks and Sensitivities
Revenue, cost of goods sold and capital expenditures are affected by certain external factors including fluctuations in metal
prices and changes in exchange rates between the €, the SEK, the CLP, the BRL, the ARS and the $. Foreign exchange
changes may be limited by the cash flow hedges previously described.
Commodity prices, primarily copper, zinc, gold and nickel are key performance drivers and fluctuations in the prices of these
commodities can have a dramatic effect on the results of operations. Prices can fluctuate widely and are affected by
numerous factors beyond the Company’s control. The prices of metals are influenced by supply and demand, exchange
rates, interest rates and interest rate expectations, inflation or deflation and expectations with respect to inflation or
deflation, speculative activities, changes in global economies, and geopolitical, social and other factors. The supply of
metals consists of a combination of new mine production, recycling and existing stocks held by governments, producers and
consumers.
If market prices for metals fall below the Company’s full production costs and remain at such levels for any sustained period
of time, the Company may experience losses and may decide to discontinue mining operations or development of a project
at one or more of its properties. If the prices drop significantly, the economic prospects of the mines and projects in which
the Company has an interest could be significantly reduced or rendered uneconomic, in which case the Company may need
to restate its Mineral Resource and Mineral Reserve estimates. Low metal prices will affect the Company’s liquidity, and if
they persist for an extended period of time, the Company may have to look for other sources of cash flow to maintain
liquidity until metal prices recover. A sustained and material impact on the Company’s liquidity may also impact the
Company’s ability to comply with financial covenants under its credit facilities.
Foreign Currency Denominated Production Costs
For the year ended December 31, 2023, Candelaria and Caserones production costs are approximately 55% and 50% CLP
denominated respectively and Chapada production costs are approximately 80% BRL denominated. Production costs for
Eagle, Neves-Corvo and Zinkgruvan are substantially denominated in their functional currencies.
30
===== SIDA 33 =====
Metal Prices
The following table illustrates the sensitivity of the Company's risk on final settlement of its provisionally priced revenues:
Metal Payable Metal
Provisional price on
December 31, 2023 Change
Effect on Revenue
($millions)
Copper 117,594 t $3.85/lb +/- 10 % +/- $99.8
Zinc 34,047 t $1.21/lb +/- 10 % +/- $9.1
Nickel 1,263 t $7.46/lb +/- 10 % +/- $2.1
Gold 30 koz $2,074/oz +/- 10 % +/- $6.2
Molybdenum 866 t $17.84/lb +/- 10 % +/- $3.4
Related Party Transactions
The Company enters into related party transactions that are in the normal course of business and on an arm’s length basis.
Related party disclosures can be found in Note 26 of the Company’s December 31, 2023 Consolidated Financial Statements.
Changes in Accounting Policies and Critical Accounting Estimates and Judgments
The Company describes its significant accounting policies as well as any changes in accounting policies, including amended
policies as a result of the Caserones acquisition, in Note 2 “Basis of Presentation and Summary of Material Accounting
Policies” of the Consolidated Financial Statements.
31
===== SIDA 34 =====
Non-GAAP and Other Performance Measures
The Company uses certain performance measures in its analysis. These performance measures have no meaning within
generally accepted accounting principles under IFRS and, therefore, amounts presented may not be comparable to similar
data presented by other mining companies. This data is intended to provide additional information and should not be
considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS. The following are
non-GAAP measures that the Company uses as key performance indicators.
Non-GAAP financial
measure or ratio Definition
Most directly
comparable IFRS
measure
Why management uses the
measure and why it may be
useful to investors
Cash cost Includes costs directly attributable to mining operations
(including mining, processing and administration),
treatment, refining and transportation charges, but
excludes royalty expenses, expenses associated with non-
cash fair value adjustments to inventory, depreciation and
amortization and capital expenditures for deferred
stripping. Revenue from sales of by-products, inclusive of
adjustments for the terms of streaming agreements but
excluding the recognition of any deferred revenue from the
allocation of upfront streaming proceeds, reduce cash
costs.
Production costs Copper, zinc and nickel cash
cost per pound sold are useful
measures to assess the
operating performance of the
Company's mines, and their
ability to generate cash. The
inclusion of by-product credits
incorporates the benefit of
other metals extracted in the
production of the primary
metal.
Cash cost per pound
sold
This ratio is calculated by dividing cash cost by the sales
volume of the primary metal (copper, zinc, or nickel).
All-in sustaining cost
("AISC")
Includes cash cost (as defined above), royalties, sustaining
capital expenditure (including deferred stripping and
underground mine development), reclamation and other
closure cost accretion and amortization and lease
payments (cash basis). As this measure seeks to reflect the
full cost of production from current operations,
expansionary capital and certain exploration costs are
excluded as these are costs typically incurred to extend
mine life or materially increase the productive capacity of
existing assets, or for new operations. Corporate general
and administrative expenses have also been excluded as
any attribution of these costs to an operating site would
not necessarily be reflective of costs directly attributable to
the administration of the site. Certain other cash
expenditures, including tax payments, financing charges
(including capitalized interest) and costs related to
business combinations, asset acquisitions and asset
disposals are also excluded.
Production costs Copper, zinc and nickel AISC
and ASIC per pound sold are
useful measures to understand
the full cost of producing and
selling metal at the Company's
mines, and each mine's ability
to generate cash while
sustaining production at current
levels.
AlSC per pound sold This ratio is calculated by dividing AISC by the sales volume
of the primary metal (copper, zinc, or nickel).
Sustaining capital
expenditures
This supplementary financial measure is defined as cash-
basis expenditures which maintain existing operations and
sustain production levels.
Investment in
mineral properties,
plant and
equipment
Sustaining capital expenditures
provide an understanding of
costs required to maintain
existing production levels.
Expansionary capital
expenditures provide
information on costs required
for future growth of existing or
new assets.
Expansionary capital
expenditures
This non-GAAP measure is defined as cash-basis
expenditures which increase current or future production
capacity, cash flow or earnings potential and are reported
excluding capitalized interest. Where an expenditure both
maintains and expands current operations, classification
would be based on the primary decision for which the
expenditure is being made.
32
===== SIDA 35 =====
Non-GAAP financial
measure or ratio Definition
Most directly
comparable IFRS
measure
Why management uses the
measure and why it is useful to
investors
Realized price per
pound and realized
price per ounce1
Defined as revenue from metal sales (copper, zinc, gold,
nickel and molybdenum) adding back treatment and
refining charges, cash effects of gold and copper streams,
recognition of deferred revenue from the allocation of
upfront streaming proceeds and sales of silver and other
metals, divided by the volume of metal sold in the period.
Revenue These measures provide an
understanding of the price
realized in each reporting
period for metal sales.
Earnings before
interest, taxes,
depreciation and
amortization
(EBITDA) and
Adjusted EBITDA
EBITDA represents net earnings or loss for the period
before income tax expense or recovery, depreciation and
amortization, interest income and finance costs. Adjusted
EBITDA removes the effects of items that do not reflect the
Company's underlying operating performance and are not
necessarily indicative of future operating results. These
may include: unrealized foreign exchange, unrealized gains
or losses from derivative contracts, revaluation gains or
losses on marketable securities, derivative liabilities and
purchase options, expenses for acquisition-related fair
value adjustments to inventory, non-cash impairment
charges and reversals, non-cash stockpile inventory or
fixed asset write-downs, costs relating to the sinkhole near
Ojos del Salado operations, income from investments in
associates, gains or losses on disposals of subsidiaries,
insurance proceeds and litigation and settlements.
Net earnings (loss) EBITDA and Adjusted EBITDA
are used to evaluate the
Company's operational
performance and its ability to
generate cash from core
operations.
Adjusted earnings
(loss)
Defined as net earnings or loss attributable to shareholders
of the Company excluding the effects (net of tax) of
significant items that do not reflect the Company's
underlying operating performance. In addition to the items
listed for Adjusted EBITDA, these may also include:
deferred tax recovery or expense arising from foreign
exchange translation and deferred tax recovery or expense
arising from changes in tax rates. Adjustments exclude
amounts attributable to non-controlling interests.
Net earnings (loss)
attributable to
Lundin Mining
Corporation
shareholders
In addition to conventional
measures prepared in
accordance with IFRS, adjusted
earnings and adjusted earnings
per share measure the
underlying operating
performance of the Company.
Adjusted earnings
(loss) per share
This ratio is calculated by dividing adjusted net earnings or
loss by the weighted average number of shares
outstanding.
Free cash flow from
operations
Defined as cash flow provided by operating activities,
excluding general exploration and business development
costs and deducting sustaining capital expenditures (as
defined above).
Cash provided by
operating activities
Free cash flow from operations
is indicative of the Company's
ability to generate cash from its
operations after consideration
of required sustaining capital
expenditure necessary to
maintain existing production
levels.
Free cash flow Defined as cash flow provided by operating activities,
deducting sustaining capital expenditures and
expansionary capital expenditures (both as defined above).
Adjusted operating
cash flow
Defined as cash provided by operating activities, excluding
changes in non-cash working capital items.
Cash provided by
operating activities
These measures are indicative
of the Company's ability to
generate cash from its
operations and remove the
impact of working capital,
which can experience volatility
from period-to-period.
Adjusted operating
cash flow per share
This ratio is calculated by dividing adjusted operating cash
flow by the weighted average number of shares
outstanding.
Net debt Net debt is defined as total debt and lease liabilities
excluding deferred financing fees, less cash and cash
equivalents. Net debt excluding lease liabilities is defined
as total debt excluding lease liabilities, deferred financing
fees, less cash and cash equivalents.
Debt and lease
liabilities, current
portion of debt and
lease liabilities,
cash and cash
equivalents
These measures are indicative
of the Company's financial
position.
Net debt excluding
lease liabilities
1See the 'Revenue Overview' section of this MD&A for reconciliations to revenue, the most directly comparable IFRS measure.
33
===== SIDA 36 =====
Cash Cost per Pound and All-in Sustaining Cost (“AISC”) per Pound
Cash Cost per Pound and All-in Sustaining Costs per pound can be reconciled to Production Costs as follows:
Twelve months ended December 31, 2023
Operations Candelaria Caserones2 Chapada Eagle
Neves-
Corvo Zinkgruvan
($000s, unless otherwise noted) (Cu) (Cu) (Cu) (Ni) (Cu) (Zn) Total
Sales volumes:
Tonnes 144,473 66,075 43,761 13,339 32,054 65,344
Pounds (000s) 318,508 145,670 96,476 29,407 70,667 144,059
Production costs 2,086,108
Less: Royalties and other (66,237)
Inventory fair value adjustment1 (39,945)
1,979,926
Deduct: By-product credits (699,915)
Add: Treatment and refining charges 183,328
Cash cost 660,160 290,553 219,278 63,457 167,424 62,467 1,463,339
Cash cost per pound ($/lb) 2.07 1.99 2.27 2.16 2.37 0.43
Add: Sustaining capital expenditure 380,112 83,880 72,291 22,201 102,621 53,358
Royalties — 15,820 8,568 22,994 3,949 —
Reclamation and other closure
accretion and depreciation 9,258 2,560 7,836 11,331 5,387 3,744
Leases and other 13,325 47,944 4,999 4,100 553 427
All-in sustaining cost 1,062,855 440,757 312,972 124,083 279,934 119,996
AISC per pound ($/lb) 3.34 3.03 3.24 4.22 3.96 0.83
Twelve months ended December 31, 2022
Operations Candelaria Chapada Eagle
Neves-
Corvo Zinkgruvan
($000s, unless otherwise noted) (Cu) (Cu) (Ni) (Cu) (Zn) Total
Sales volumes:
Tonnes 147,251 45,563 14,427 31,592 65,684
Pounds (000s) 324,633 100,449 31,806 69,648 144,808
Production costs 1,661,358
Less: Royalties and other (53,785)
1,607,573
Deduct: By-product credits (656,534)
Add: Treatment and refining charges 124,841
Cash cost 637,486 209,238 25,168 158,351 45,637 1,075,880
Cash cost per pound ($/lb) 1.96 2.08 0.79 2.27 0.32
Add: Sustaining capital expenditure 389,731 104,711 16,413 71,222 48,144
Royalties — 12,298 33,281 4,169 —
Reclamation and other closure
accretion and depreciation 8,001 7,388 18,512 1,562 3,937
Leases and other 11,313 3,988 2,404 1,404 665
All-in sustaining cost 1,046,531 337,623 95,778 236,708 98,383
AISC per pound ($/lb) 3.22 3.36 3.01 3.40 0.68
1Production cost at Caserones in 2023 was negatively impacted by $39.9 million of fair value adjustments related to inventory. The fair value adjustments
were recorded to re-value concentrate and in-process inventory on hand at the acquisition date, and were subsequently recognized in production costs as
the inventory was sold.
2 Caserones results are from July 13, 2023 to December 31, 2023.
34
===== SIDA 37 =====
Three months ended December 31, 2023
Operations Candelaria Caserones Chapada Eagle
Neves-
Corvo Zinkgruvan
($000s, unless otherwise noted) (Cu) (Cu) (Cu) (Ni) (Cu) (Zn) Total
Sales volumes:
Tonnes 38,888 35,690 13,080 3,105 9,054 17,316
Pounds (000s) 85,733 78,683 28,836 6,845 19,961 38,176
Production costs 648,037
Less: Royalties and other (24,520)
Inventory fair value adjustment1 (7,760)
615,757
Deduct: By-product credits (204,164)
Add: Treatment and refining charges 57,938
Cash cost 152,276 183,687 54,108 16,229 39,218 24,013 469,531
Cash cost per pound ($/lb) 1.78 2.33 1.88 2.37 1.96 0.63
Add: Sustaining capital expenditure 79,316 55,031 19,858 6,548 28,070 10,546
Royalties — 8,270 2,174 5,003 1,081 —
Reclamation and other closure
accretion and depreciation 2,158 1,427 2,047 2,620 1,305 933
Leases and other 2,901 25,715 1,131 1,101 106 103
All-in sustaining cost 236,651 274,130 79,318 31,501 69,780 35,595
AISC per pound ($/lb) 2.76 3.48 2.75 4.60 3.50 0.93
Three months ended December 31, 2022
Operations Candelaria Chapada Eagle
Neves-
Corvo Zinkgruvan
($000s, unless otherwise noted) (Cu) (Cu) (Ni) (Cu) (Zn) Total
Sales volumes:
Tonnes 33,561 12,037 3,239 6,351 17,635
Pounds (000s) 73,990 26,537 7,141 14,001 38,878
Production costs 450,927
Less: Royalties and other (15,664)
435,263
Deduct: By-product credits (168,620)
Add: Treatment and refining charges 33,897
Cash cost 186,628 51,782 17,169 32,462 12,499 300,540
Cash cost per pound ($/lb) 2.52 1.95 2.40 2.32 0.32
Add: Sustaining capital expenditure 117,174 41,299 5,968 22,086 16,607
Royalties — 3,137 9,152 3,185 —
Reclamation and other closure
accretion and depreciation 1,999 1,855 4,403 481 902
Leases and other 4,360 932 638 835 118
All-in sustaining cost 310,161 99,005 37,330 59,049 30,126
AISC per pound ($/lb) 4.19 3.73 5.23 4.22 0.77
1Production cost at Caserones in Q4 2023 was negatively impacted by $7.8 million of fair value adjustments related to inventory. The fair value
adjustments were recorded to re-value concentrate and in-process inventory on hand at the acquisition date, and were subsequently recognized in
production costs as the inventory was sold.
35
===== SIDA 38 =====
Adjusted EBITDA
Adjusted EBITDA can be reconciled to Net Earnings (Loss) as follows:
Year ended
December 31,
($thousands) 2023 2022 2021
Net earnings 315,249 463,533 879,301
Add back:
Depreciation, depletion and amortization 653,596 554,750 522,764
Finance income and costs 102,699 64,185 41,387
Income taxes expense 216,599 134,628 365,686
1,288,143 1,217,096 1,809,138
Unrealized foreign exchange loss 1,224 21,164 27,648
Unrealized losses (gains) on derivative contracts 21,932 (62,971) —
Ojos del Salado sinkhole expenses 16,922 63,271 —
Loss (income) from equity investment in associates 60 (3,297) (24,895)
Caserones inventory fair value adjustment 39,945 — —
Ore stockpile inventory write-down — 62,546 65,025
Business interruption insurance settlement — — (16,000)
Gain on disposal of subsidiary (5,718) (16,828) —
Other 1,040 11,525 8,500
Total adjustments - EBITDA 75,405 75,410 60,278
Adjusted EBITDA1 1,363,548 1,292,506 1,869,416
1 Q2 2023 amounts have been adjusted from those presented in the Company's MD&A for the three and six months ended June 30, 2023.
Three months ended
December 31,
($thousands) 2023 2022
Net earnings 66,753 145,295
Add back:
Depreciation, depletion and amortization 223,056 142,710
Finance income and costs 34,891 16,664
Income taxes 102,616 (2,347)
427,316 302,322
Unrealized foreign exchange loss 2,769 (3,836)
Unrealized losses (gains) on derivative contracts (19,309) (62,971)
Ojos del Salado sinkhole expenses 1,687 55,482
Caserones inventory fair value adjustment 7,760 —
Ore stockpile inventory write-down — 62,546
Other (493) 173
Total adjustments - EBITDA (7,586) 51,394
Adjusted EBITDA 419,730 353,716
36
===== SIDA 39 =====
Adjusted Earnings and Adjusted EPS
Adjusted Earnings and Adjusted EPS can be reconciled to Net Earnings (Loss) Attributable to Lundin Mining Shareholders as
follows:
Year ended
December 31,
($thousands, except share and per share amounts) 2023 2022 2021
Net earnings attributable to Lundin Mining shareholders 241,562 426,851 780,348
Add back:
Total adjustments - EBITDA 75,405 75,410 60,278
Tax effect on adjustments (26,925) (797) (21,817)
Deferred tax expense due to change in tax rate 40,200 — —
Deferred tax arising from foreign exchange translation 28,841 (20,733) 1,730
Non-controlling interest on adjustments (22,886) 2,026 64
Total adjustments 94,635 55,906 40,255
Adjusted earnings1 336,197 482,757 820,603
Basic weighted average number of shares outstanding 772,532,260 762,518,753 736,789,666
Net (loss) earnings attributable to Lundin Mining shareholders 0.31 0.56 1.06
Total adjustments 0.13 0.07 0.05
Adjusted EPS1 0.44 0.63 1.11
1 Q2 2023 amounts have been adjusted from those presented in the Company's MD&A for the three and six months ended June 30, 2023.
Three months ended
December 31,
($thousands, except share and per share amounts) 2023 2022
Net earnings attributable to Lundin Mining shareholders 38,797 145,562
Add back:
Total adjustments - EBITDA (7,586) 51,394
Tax effect on adjustments (2,987) 8,214
Deferred tax expense due to change in tax rate 14,500 —
Deferred tax arising from foreign exchange translation 41,168 (14,469)
Non-controlling interest on adjustments (4,221) 829
Total adjustments 40,874 45,967
Adjusted earnings 79,671 191,529
Basic weighted average number of shares outstanding 773,476,216 770,804,446
Net (loss) earnings attributable to Lundin Mining shareholders 0.05 0.19
Total adjustments 0.05 0.06
Adjusted EPS 0.10 0.25
37
===== SIDA 40 =====
Free Cash Flow from Operations and Free Cash Flow
Free Cash Flow from Operations and Free Cash Flow can be reconciled to Cash provided by Operating Activities as follows:
Year ended December 31,
($thousands) 2023 2022 2021
Cash provided by operating activities 1,016,612 876,889 1,484,954
Sustaining capital expenditures (727,224) (639,831) (475,373)
General exploration and business development 55,692 144,353 44,938
Free cash flow from operations 345,080 381,411 1,054,519
General exploration and business development (55,692) (144,353) (44,938)
Expansionary capital expenditures (275,913) (202,993) (56,388)
Free cash flow 13,475 34,065 953,193
Three months ended
December 31,
($thousands) 2023 2022
Cash provided by operating activities 306,081 156,890
General exploration and business development 14,500 12,094
Sustaining capital expenditures (203,827) (204,686)
Free cash flow from operations 116,754 (35,702)
General exploration and business development (14,500) (12,094)
Expansionary capital expenditures (41,082) (76,485)
Free cash flow 61,172 (124,281)
Adjusted Operating Cash Flow and Adjusted Operating Cash Flow per Share
Adjusted Operating Cash Flow and Adjusted Operating Cash Flow per Share can be reconciled to Cash Provided by
Operating Activities as follows:
Year ended December 31,
($thousands, except share and per share amounts) 2023 2022 2021
Cash provided by operating activities 1,016,612 876,889 1,484,954
Changes in non-cash working capital items 7,605 116,056 2,136
Adjusted operating cash flow 1,024,217 992,945 1,487,090
Basic weighted average number of shares outstanding 772,532,260 762,518,753 736,789,666
Adjusted operating cash flow per share 1.33 1.30 2.02
Three months ended
December 31,
($thousands, except share and per share amounts) 2023 2022
Cash provided by operating activities 306,081 156,890
Changes in non-cash working capital items 55,965 132,167
Adjusted operating cash flow 362,046 289,057
Basic weighted average number of shares outstanding 773,476,216 770,804,446
Adjusted operating cash flow per share 0.47 0.38
38
===== SIDA 41 =====
Net (Debt) Cash and Net (Debt) Cash Excluding Lease Liabilities
Net (debt) cash and Net (debt) cash excluding lease liabilities can be reconciled to Debt and Lease Liabilities, Current
Portion of Debt and Lease Liabilities and Cash and Cash Equivalents as follows:
($thousands) December 31, 2023 December 31, 2022 December 31, 2021
Debt and lease liabilities (1,273,162) (27,179) (16,386)
Current portion of debt and lease liabilities (212,646) (170,149) (14,617)
Less deferred financing fees (netted in above) (6,374) (4,926) —
(1,492,182) (202,254) (31,003)
Cash and cash equivalents 268,793 191,387 594,069
Net (debt) cash (1,223,389) (10,867) 563,066
Lease liabilities 277,208 27,166 25,878
Net (debt) cash excluding lease liabilities (946,181) 16,299 588,944
39
===== SIDA 42 =====
Managing Risks
Risks and Uncertainties
The Company’s business activities are subject to a variety and wide range of inherent risks and uncertainties. Any of these
risks could have an adverse effect on the Company, its business and prospects, and could cause actual outcomes and results
to differ materially from those described in forward-looking statements relating to the Company.
For additional discussion on Lundin Mining’s risks, refer to the “Risks and Uncertainties” section of the Company’s Annual
Information Form (“AIF”) for the year ended December 31, 2023 and the “Cautionary Statement on Forward-Looking
Information” of this MD&A.
Management’s Report on Internal Controls
Disclosure Controls and Procedures (“DCP”)
DCP have been designed to provide reasonable assurance that all material information related to the Company is identified
and communicated on a timely basis. Management of the Company, under the supervision of the President and Chief
Executive Officer and the Chief Financial Officer, is responsible for the design and operation of DCP. Management has
evaluated the effectiveness of the Company's DCP and has concluded that they were effective as at December 31, 2023.
Internal Control over Financial Reporting (“ICFR”)
The Company’s ICFR is designed to provide reasonable assurance regarding the reliability of financial reporting and
preparation of financial statements for external purposes in accordance with IFRS. However, due to inherent limitations
ICFR may not prevent or detect all misstatements and fraud. Management will continue to monitor the effectiveness of its
ICFR and may make modifications from time to time as considered necessary.
Control Framework
Management assesses the effectiveness of the Company’s ICFR using the Internal Control – Integrated Framework (2013
Framework) issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”). Management
conducted an evaluation of the effectiveness of ICFR and concluded that it was effective as at December 31, 2023.
Changes in ICFR
There have been no changes in the Company’s ICFR during the three months ended December 31, 2023 that have
materially affected, or are reasonably likely to materially affect, the Company’s financial reporting.
Outstanding Share Data
As at February 21, 2024, the Company has 774,116,995 common shares issued and outstanding, and 5,298,388 stock
options and 1,785,303 share units outstanding under the Company's plans.
Other Information
Additional information regarding the Company is included in the Company’s AIF which is filed with the Canadian securities
regulators. A copy of the Company’s AIF can be obtained on SEDAR+ (www.sedarplus.ca) or on the Company’s website
(www.lundinmining.com).
40
===== SIDA 43 =====
Consolidated Financial Statements of
Lundin Mining Corporation
December 31, 2023
===== SIDA 44 =====
Management’s Report
The accompanying consolidated financial statements of Lundin Mining Corporation ("Lundin Mining" or the “Company”)
and other information contained in the management’s discussion and analysis are the responsibility of management and
have been approved by the Board of Directors. The consolidated financial statements have been prepared by management
in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board
(“IFRS Accounting Standards”) as outlined in Part 1 of the Handbook of the Chartered Professional Accountants (“CPA”) of
Canada, and include some amounts that are based on management’s estimates and judgment.
The Board of Directors carries out its responsibility for the consolidated financial statements principally through its Audit
Committee, which is comprised solely of independent directors. The Audit Committee reviews the Company’s annual
consolidated financial statements and recommends its approval to the Board of Directors. The Company’s auditors have full
access to the Audit Committee, with and without management being present. These consolidated financial statements have
been audited by PricewaterhouseCoopers LLP, Chartered Professional Accountants.
(Signed) Jack Lundin (Signed) Teitur Poulsen
President and Chief Executive Officer Executive Vice President and Chief Financial Officer
Vancouver, British Columbia, Canada
February 21, 2024
===== SIDA 45 =====
PricewaterhouseCoopers LLP
PricewaterhouseCoopers Place, 250 Howe Street, Suite 1400, Vancouver, British Columbia, Canada V6C 3S7
T: +1 604 806 7000, F: +1 604 806 7806, ca_vancouver_main_fax@pwc.com
“PwC” refers to PricewaterhouseCoopers LLP, an Ontario limited liability partnership.
Independent auditor’s report
To the Shareholders of Lundin Mining Corporation
Our opinion
In our opinion, the accompanying consolidated financial statements present fairly, in all material respects,
the financial position of Lundin Mining Corporation and its subsidiaries (together, the Company) as at
December 31, 2023 and 2022, and its financial performance and its cash flows for the years then ended in
accordance with IFRS Accounting Standards as issued by the International Accounting Standards Board
(IFRS Accounting Standards).
What we have audited
The Company’s consolidated financial statements comprise:
the consolidated balance sheets as at December 31, 2023 and 2022;
the consolidated statements of earnings for the years then ended;
the consolidated statements of comprehensive income for the years then ended;
the consolidated statements of changes in equity for the years then ended;
the consolidated statements of cash flows for the years then ended; and
the notes to the consolidated financial statements, which include significant accounting policies and
other explanatory information.
Basis for opinion
We conducted our audit in accordance with Canadian generally accepted auditing standards. Our
responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of
the consolidated financial statements section of our report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our opinion.
Independence
We are independent of the Company in accordance with the ethical requirements that are relevant to our
audit of the consolidated financial statements in Canada. We have fulfilled our other ethical responsibilities
in accordance with these requirements.
===== SIDA 46 =====
Key audit matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our
audit of the consolidated financial statements for the year ended December 31, 2023. These matters were
addressed in the context of our audit of the consolidated financial statements as a whole, and in forming
our opinion thereon, and we do not provide a separate opinion on these matters.
Key audit matter How our audit addressed the key audit matter
Fair value of mineral properties, plant and
equipment acquired as part of the acquisition of
SCM Minera Lumina Copper Chile (Lumina
Copper)
Refer to note 2 – Basis of presentation and
summary of material accounting policies and
note 3 – Business combination to the consolidated
financial statements.
The Company acquired 51% of the issued and
outstanding equity of Lumina Copper for total cash
consideration of $797 million and deferred cash
consideration of $150 million on July 13, 2023. The
total fair value of identifiable assets acquired
included $1.3 billion of mineral properties, plant and
equipment, which have primarily been recognized
as plant and equipment. Management applied
significant judgment in estimating the fair value of
acquired mineral properties, plant and equipment.
Management used discounted cash flow models
and a market-based approach to determine the fair
value of mine assets, including the use of
significant assumptions such as future metal prices,
production based on estimated quantities of Mineral
Reserves and Mineral Resources, production and
capital expenditures, pricing of in-situ mineral
resources implied by the market value of selected
comparable transactions involving the sale of
similar companies and mineral properties (in-situ
multiples) and discount rate. In determining the fair
value of plant and equipment, management
primarily uses the depreciated replacement cost
approach.
Our approach to addressing the matter included the
following procedures, among others:
Tested how management estimated the fair
value of the acquired mineral properties, plant
and equipment, which included the following:
– Read the purchase agreement.
– Tested the underlying data used by
management in the discounted cash flow
model, market-based valuation, and
depreciated replacement cost valuations.
– Evaluated the reasonableness of significant
assumptions such as future metal prices,
production and capital expenditures by (i)
comparing future metal prices to external
market and industry data; (ii) comparing
production and capital expenditures against
current and past performance; and (iii)
assessing whether these assumptions
were consistent with evidence obtained in
other areas of the audit.
– The work of management’s experts was
used in performing the procedures to
evaluate the reasonableness of the
production based on estimated quantities
of Mineral Reserves and Mineral
Resources and production and capital
expenditures. As a basis for using this
work, the competence, capabilities and
objectivity of management’s experts were
evaluated, the work performed was
understood and the appropriateness of the
===== SIDA 47 =====
Key audit matter How our audit addressed the key audit matter
Management’s estimates of production based on
quantities of Mineral Reserves and Mineral
Resources are based on information compiled by
qualified persons (management’s experts).
We considered this a key audit matter due to the
significant auditor effort, subjectivity and significant
judgment in performing procedures to test
significant assumptions used by management in
determining the fair value of acquired mineral
properties, plant and equipment. Professionals with
specialized skill and knowledge in the field of
valuation assisted us in performing our procedures.
work as audit evidence was evaluated. The
procedures performed also included
evaluation of the methods and assumptions
used by management’s experts, tests of
the data used by management’s experts
and an evaluation of their findings.
– Professionals with specialized skill and
knowledge in the field of valuation assisted
in assessing the following: (i)
appropriateness of the discounted cash
flow model and the reasonability of the
discount rate used within the model; (ii)
appropriateness of the depreciated
replacement cost approach and the
reasonability of the resulting fair values
assigned to plant and equipment; and (iii)
reasonability of the in-situ multiples.
Goodwill impairment assessment
Refer to note 2 – Basis of presentation and
summary of material accounting policies and
note 9 – Goodwill to the consolidated financial
statements.
The Company’s total carrying amount of goodwill as
at December 31, 2023 was $241 million. The
Company’s goodwill is required to be tested
annually for impairment or when events or changes
in circumstances indicate that the related carrying
amount may not be recoverable. When the
recoverable amount of the cash-generating unit
(CGU) is less than the carrying amount of that
CGU, an impairment loss is recognized.
The recoverable amount of each CGU was based
on a fair value less cost of disposal method using a
discounted cash flow model and market-based
approach. Management applied significant
judgment in estimating the recoverable amount of
each CGU. Significant assumptions used by
Our approach to addressing the matter included the
following procedures, among others:
Tested how management estimated the
recoverable amount of the CGUs, which
included the following:
– Tested the underlying data used by
management in the discounted cash flow
models and market-based valuation.
– Evaluated the reasonableness of significant
assumptions such as future metal prices,
foreign exchange rates and production and
capital expenditures by (i) comparing future
metal prices and foreign exchange rates
with external market and industry data; (ii)
comparing future production and capital
expenditures against current and past
performance; and (iii) assessing whether
these assumptions were consistent with
evidence obtained in other areas of the
audit.
===== SIDA 48 =====
Key audit matter How our audit addressed the key audit matter
management to determine the recoverable amounts
include future metal prices, production based on
estimated quantities of Mineral Reserves and
Mineral Resources, production and capital
expenditures, foreign exchange rates, in-situ
multiples and discount rates. The recoverable
amount of each CGU determined by management
exceeded its carrying value, and as a result, no
impairment loss was recorded.
Management’s estimates of production based on
quantities of Mineral Reserves and Mineral
Resources are based on information compiled by
qualified persons (management’s experts).
We considered this a key audit matter due to the
significant auditor effort, subjectivity and significant
judgment in performing procedures to test
significant assumptions used by management in
determining the fair value of the CGUs.
Professionals with specialized skill and knowledge
in the field of valuation assisted us in performing
our procedures.
– The work of management’s experts was
used in performing the procedures to
evaluate the reasonableness of the
estimates associated with the production
based on quantities of Mineral Reserves
and Mineral Resources. As a basis for
using this work, the competence,
capabilities and objectivity of
management’s experts were evaluated, the
work performed was understood and the
appropriateness of the work as audit
evidence was evaluated. The procedures
performed also included evaluation of the
methods and assumptions used by
management’s experts, tests of the data
used by management’s experts and an
evaluation of their findings.
– Professionals with specialized skill and
knowledge in the field of valuation assisted
in assessing the following: (i)
appropriateness of the discounted cash
flow models and market-based approach to
determine the recoverable amounts of the
CGUs; and (ii) the reasonableness of the
discount rates and in-situ multiples.
Other information
Management is responsible for the other information. The other information comprises the Management’s
Discussion and Analysis.
Our opinion on the consolidated financial statements does not cover the other information and we do not
express any form of assurance conclusion thereon.
In connection with our audit of the consolidated financial statements, our responsibility is to read the other
information identified above and, in doing so, consider whether the other information is materially
inconsistent with the consolidated financial statements or our knowledge obtained in the audit, or
otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this other
information, we are required to report that fact. We have nothing to report in this regard.
===== SIDA 49 =====
Responsibilities of management and those charged with governance for the
consolidated financial statements
Management is responsible for the preparation and fair presentation of the consolidated financial
statements in accordance with IFRS Accounting Standards, and for such internal control as management
determines is necessary to enable the preparation of consolidated financial statements that are free from
material misstatement, whether due to fraud or error.
In preparing the consolidated financial statements, management is responsible for assessing the
Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going
concern and using the going concern basis of accounting unless management either intends to liquidate
the Company or to cease operations, or has no realistic alternative but to do so.
Those charged with governance are responsible for overseeing the Company’s financial reporting
process.
Auditor’s responsibilities for the audit of theconsolidated financial statements
Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as
a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s
report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a
guarantee that an audit conducted in accordance with Canadian generally accepted auditing standards
will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and
are considered material if, individually or in the aggregate, they could reasonably be expected to influence
the economic decisions of users taken on the basis of these consolidated financial statements.
As part of an audit in accordance with Canadian generally accepted auditing standards, we exercise
professional judgment and maintain professional skepticism throughout the audit. We also:
Identify and assess the risks of material misstatement of the consolidated financial statements,
whether due to fraud or error, design and perform audit procedures responsive to those risks, and
obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of
not detecting a material misstatement resulting from fraud is higher than for one resulting from error,
as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of
internal control.
Obtain an understanding of internal control relevant to the audit in order to design audit procedures
that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the Company’s internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by management.
===== SIDA 50 =====
Conclude on the appropriateness of management’s use of the going concern basis of accounting and,
based on the audit evidence obtained, whether a material uncertainty exists related to events or
conditions that may cast significant doubt on the Company’s ability to continue as a going concern. If
we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report
to the related disclosures in the consolidated financial statements or, if such disclosures are
inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to
the date of our auditor’s report. However, future events or conditions may cause the Company to
cease to continue as a going concern.
Evaluate the overall presentation, structure and content of the consolidated financial statements,
including the disclosures, and whether the consolidated financial statements represent the underlying
transactions and events in a manner that achieves fair presentation.
Obtain sufficient appropriate audit evidence regarding the financial information of the entities or
business activities within the Company to express an opinion on the consolidated financial
statements. We are responsible for the direction, supervision and performance of the group audit. We
remain solely responsible for our audit opinion.
We communicate with those charged with governance regarding, among other matters, the planned scope
and timing of the audit and significant audit findings, including any significant deficiencies in internal
control that we identify during our audit.
We also provide those charged with governance with a statement that we have complied with relevant
ethical requirements regarding independence, and to communicate with them all relationships and other
matters that may reasonably be thought to bear on our independence, and where applicable, related
safeguards.
From the matters communicated with those charged with governance, we determine those matters that
were of most significance in the audit of the consolidated financial statements of the current period and
are therefore the key audit matters. We describe these matters in our auditor’s report unless law or
regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we
determine that a matter should not be communicated in our report because the adverse consequences of
doing so would reasonably be expected to outweigh the public interest benefits of such communication.
The engagement partner on the audit resulting in this independent auditor’s report is Mark Patterson.
Chartered Professional Accountants
Vancouver, British Columbia
February 21, 2024
/s/PricewaterhouseCoopers LLP
===== SIDA 51 =====
LUNDIN MINING CORPORATION
CONSOLIDATED BALANCE SHEETS As at
(in thousands of US dollars) December 31,
2023
December 31,
2022
ASSETS
Cash and cash equivalents (Note 4) $ 268,793 $ 191,387
Trade and other receivables (Note 5) 828,871 576,178
Income taxes receivable 34,542 72,402
Inventories (Note 6) 599,407 296,710
Current portion of derivative assets (Note 23) 38,114 43,521
Other current assets 21,421 38,571
Total current assets 1,791,148 1,218,769
Restricted funds 59,979 50,195
Long-term inventory (Note 6) 797,597 641,877
Derivative assets (Note 23) 9,397 25,111
Other non-current assets (Note 7) 67,090 20,035
Mineral properties, plant and equipment (Note 8) 7,725,169 5,975,686
Deferred tax assets (Note 22) 170,203 3,837
Goodwill (Note 9) 240,616 237,294
9,070,051 6,954,035
Total assets $ 10,861,199 $ 8,172,804
LIABILITIES
Trade and other payables (Note 10) $ 805,763 $ 612,965
Income taxes payable 62,926 45,000
Current portion of derivative liabilities (Note 23) 26,389 24,423
Current portion of debt and lease liabilities (Note 11) 212,646 170,149
Current portion of deferred revenue (Note 12) 87,867 74,061
Current portion of reclamation and other closure provisions (Note 13) 14,442 23,550
Total current liabilities 1,210,033 950,148
Derivative liabilities (Note 23) 3,148 27,876
Debt and lease liabilities (Note 11) 1,273,162 27,179
Deferred revenue (Note 12) 535,363 580,045
Reclamation and other closure provisions (Note 13) 529,734 422,298
Deferred consideration and other long-term liabilities (Note 3) 133,199 24,922
Provision for pension obligations 6,752 5,613
Deferred tax liabilities (Note 22) 751,688 709,602
3,233,046 1,797,535
Total liabilities 4,443,079 2,747,683
SHAREHOLDERS' EQUITY
Share capital (Note 14) 4,574,830 4,555,125
Contributed surplus 55,201 55,769
Accumulated other comprehensive loss (296,617) (342,287)
Retained earnings 627,903 592,425
Equity attributable to Lundin Mining Corporation shareholders 4,961,317 4,861,032
Non-controlling interests (Note 15) 1,456,803 564,089
Total shareholders' equity 6,418,120 5,425,121
Total liabilities and shareholders' equity $ 10,861,199 $ 8,172,804
Commitments and contingencies (Note 24)
The accompanying notes are an integral part of these consolidated financial statements.
APPROVED BY THE BOARD OF DIRECTORS
(Signed) Adam I. Lundin - Director (Signed) Dale C. Peniuk - Director
- 1 -
===== SIDA 52 =====
LUNDIN MINING CORPORATION
CONSOLIDATED STATEMENTS OF EARNINGS
For the years ended December 31, 2023 and 2022
(in thousands of US dollars, except for shares and per share amounts)
2023 2022
Revenue (Note 16) $ 3,392,077 $ 3,041,228
Cost of goods sold
Production costs (Note 17) (2,086,108) (1,661,358)
Depreciation, depletion and amortization (653,596) (554,750)
Inventory write-down (Note 6) — (62,546)
Gross profit 652,373 762,574
General and administrative expenses (66,723) (53,879)
General exploration and business development (Note 19) (55,692) (144,353)
Finance income (Note 20) 11,137 4,211
Finance costs (Note 20) (113,836) (68,396)
Other income (Note 21) 104,589 98,004
Earnings before income taxes 531,848 598,161
Current tax expense (Note 22) (154,416) (149,978)
Deferred tax (expense) recovery (Note 22) (62,183) 15,350
Net earnings $ 315,249 $ 463,533
Net earnings attributable to:
Lundin Mining Corporation shareholders $ 241,562 $ 426,851
Non-controlling interests 73,687 36,682
Net earnings $ 315,249 $ 463,533
Basic and diluted earnings per share attributable to Lundin Mining Corporation
shareholders: $ 0.31 $ 0.56
Weighted average number of shares outstanding (Note 14)
Basic 772,532,260 762,518,753
Diluted 773,292,895 763,594,053
The accompanying notes are an integral part of these consolidated financial statements.
- 2 -
===== SIDA 53 =====
LUNDIN MINING CORPORATION
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
For the years ended December 31, 2023 and 2022
(in thousands of US dollars)
2023 2022
Net earnings $ 315,249 $ 463,533
Other comprehensive income (loss), net of taxes
Item that will not be reclassified to net earnings:
Remeasurements for post-employment benefit plans 2,320 (366)
Item that may be reclassified subsequently to net earnings:
Effects of foreign exchange 43,710 (88,388)
Item that was reclassified to net earnings:
Cumulative translation adjustment — (3,777)
Other comprehensive income (loss) 46,030 (92,531)
Total comprehensive income $ 361,279 $ 371,002
Comprehensive income attributable to:
Lundin Mining Corporation shareholders $ 287,232 $ 334,493
Non-controlling interests 74,047 36,509
Total comprehensive income $ 361,279 $ 371,002
The accompanying notes are an integral part of these consolidated financial statements.
- 3 -
===== SIDA 54 =====
LUNDIN MINING CORPORATION
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
For the years ended December 31, 2023 and 2022
(in thousands of US dollars, except for shares)
Number of
shares
Share
capital
Contributed
surplus
Accumulated
other
comprehensive
loss
Retained
earnings
Non-
controlling
interests Total
Balance, December 31, 2022 770,746,531 $ 4,555,125 $ 55,769 $ (342,287) $ 592,425 $ 564,089 $ 5,425,121
Distributions — — — — — (55,100) (55,100)
Caserones acquisition (Note 3) — — — — — 873,767 873,767
Exercise of share-based awards 2,921,258 19,705 (8,329) — — — 11,376
Share-based compensation — — 7,761 — — — 7,761
Dividends declared (Note 14(g)) — — — — (206,084) — (206,084)
Net earnings — — — — 241,562 73,687 315,249
Other comprehensive income — — — 45,670 — 360 46,030
Total comprehensive income — — — 45,670 241,562 74,047 361,279
Balance, December 31, 2023 773,667,789 $ 4,574,830 $ 55,201 $ (296,617) $ 627,903 $ 1,456,803 $ 6,418,120
Balance, December 31, 2021 734,987,154 $ 4,199,756 $ 58,166 $ (249,929) $ 437,160 $ 547,580 $ 4,992,733
Distributions — — — — — (20,000) (20,000)
Josemaria acquisition 40,031,936 369,175 13,436 — — — 382,611
Exercise of share-based awards 6,488,941 49,813 (23,636) — — — 26,177
Share-based compensation — — 7,803 — — — 7,803
Dividends declared — — — — (275,795) — (275,795)
Shares purchased (10,761,500) (63,619) — — 4,209 — (59,410)
Net earnings — — — — 426,851 36,682 463,533
Other comprehensive loss — — — (92,358) — (173) (92,531)
Total comprehensive (loss) income — — — (92,358) 426,851 36,509 371,002
Balance, December 31, 2022 770,746,531 $ 4,555,125 $ 55,769 $ (342,287) $ 592,425 $ 564,089 $ 5,425,121
The accompanying notes are an integral part of these consolidated financial statements.
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LUNDIN MINING CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the years ended December 31, 2023 and 2022
(in thousands of US dollars)
Cash provided by (used in) 2023 2022
Operating activities
Net earnings $ 315,249 $ 463,533
Items not involving cash and other adjustments
Depreciation, depletion and amortization 653,596 554,750
Share-based compensation 7,301 7,803
Unrealized foreign exchange loss 1,224 21,164
Finance costs, net (Note 20) 102,699 64,185
Recognition of deferred revenue (Note 12) (70,918) (73,605)
Deferred tax expense (recovery) 62,183 (15,350)
Revaluation of marketable securities (Note 21) (1,846) (5,484)
Ore stockpile inventory write-down (Note 6) — 62,546
Revaluation of foreign currency and diesel derivatives (Note 23) (27,780) (68,951)
Reversal of fair value adjustment on acquired inventory (Note 3) 39,945 —
Non-cash inventory write down 9,848 2,816
Other 16,482 (12,940)
Reclamation payments (Note 13) (10,491) (15,903)
Pension payments (1,359) (1,876)
Changes in long-term inventory (71,916) 10,257
Changes in non-cash working capital items (Note 29) (7,605) (116,056)
1,016,612 876,889
Investing activities
Investment in mineral properties, plant and equipment (1,013,117) (842,903)
Acquisition of Caserones, net of cash acquired (Note 3) (648,569) —
Acquisition of Josemaria, net of cash acquired — (126,381)
Cash received from disposal of subsidiary (Note 21) 5,718 16,828
Payment of Chapada derivative liability (Note 24) (25,000) (25,000)
Interest received 10,585 4,152
Josemaria bridge loan — (54,100)
Distributions from associate, net — 18,000
Other (4,151) (3,963)
(1,674,534) (1,013,367)
Financing activities
Proceeds from debt (Note 11) 2,490,597 282,938
Interest paid (61,307) (9,765)
Principal payments of lease liabilities (47,320) (20,152)
Principal repayments of debt (Note 11) (1,451,804) (113,824)
Payment of Josemaria debentures — (47,000)
Dividends paid to shareholders (206,540) (275,448)
Shares purchased (Note 14) — (59,410)
Proceeds from common shares issued 11,376 26,177
Distributions paid to non-controlling interests (55,100) (35,000)
Net proceeds from settlement of foreign currency and diesel derivatives 48,686 4,784
Other (2) (4,926)
728,586 (251,626)
Effect of foreign exchange on cash balances 6,742 (14,578)
Increase (decrease) in cash and cash equivalents during the year 77,406 (402,682)
Cash and cash equivalents, beginning of year 191,387 594,069
Cash and cash equivalents, end of year $ 268,793 $ 191,387
Supplemental cash flow information (Note 29)
The accompanying notes are an integral part of these consolidated financial statements.
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1. NATURE OF OPERATIONS
Lundin Mining Corporation is a diversified Canadian base metals mining company primarily producing copper, zinc,
gold, nickel and molybdenum. The Company owns 80% of the Candelaria and Ojos del Salado mining complex
("Candelaria") and 51% of the Caserones copper-molybdenum mine (“ Caserones”), each of which are located in Chile.
The Company’s wholly-owned operating assets include the Chapada mine located in Brazil, the Eagle mine located in
the United States of America (“USA”), the Neves-Corvo mine located in Portugal, and the Zinkgruvan mine located in
Sweden. In addition, the Company owns the large scale copper-gold Josemaria project ("Josemaria Project"), located in
Argentina.
The Company’s common shares are listed on the Toronto Stock Exchange (“TSX”) in Canada and the Nasdaq Stockholm
Exchange in Sweden. The Company is incorporated under the Canada Business Corporations Act. The Company is
domiciled in Canada and its principal place of business is 885 West Georgia Street, Suite 2000, Vancouver, British
Columbia, Canada.
2. BASIS OF PRESENTATION AND SUMMARY OF MATERIAL ACCOUNTING POLICIES
(i) Basis of presentation and measurement
The consolidated financial statements have been prepared in accordance with International Financial Reporting
Standards as issued by the International Accounting Standards Board ("IFRS Accounting Standards") and which
the Canadian Accounting Standards Board has approved for incorporation into Part 1 of the CPA Canada
Handbook – Accounting.
The consolidated financial statements have been prepared on a historical cost basis except for certain financial
instruments which have been measured at fair value.
The Company's presentation currency is United States (“US”) dollars. Reference herein of $ or USD is to US
dollars, C$ or CAD is to Canadian dollars, SEK is to Swedish krona, € refers to the Euro, CLP refers to the Chilean
peso, BRL refers to the Brazilian real, and ARS refers to the Argentine peso.
Balance sheet items are classified as current if receipt or payment is due within twelve months. Otherwise, they
are presented as non-current.
These consolidated financial statements were approved by the Board of Directors of the Company for issue on
February 21, 2024.
(ii) Material accounting policies
The Company has consistently applied the accounting policies to all the years presented. The material accounting
policies applied in these consolidated financial statements are set out below.
(a) Basis of consolidation
The financial statements consist of the consolidation of the financial statements of the Company and its
subsidiaries.
Subsidiaries are entities over which the Company has control, including the power to govern the financial
and operating policies in order to obtain benefits from their activities. The existence and effect of potential
voting rights that are currently exercisable or convertible are considered when assessing whether the
Company controls another entity. Subsidiaries are fully consolidated from the date on which control is
obtained by the Company and are de-consolidated from the date that control ceases.
LUNDIN MINING CORPORATION
Notes to consolidated financial statements
For the years ended December 31, 2023 and 2022
(Tabular amounts in thousands of US dollars, except for shares and per share amounts)
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===== SIDA 57 =====
Where necessary, adjustments are made to the results of the subsidiaries and associates to bring their
accounting policies in line with those used by the Company. Intra-group transactions, balances, income and
expenses are eliminated on consolidation.
For non wholly-owned controlled subsidiaries, the net assets attributable to outside equity shareholders are
presented as non-controlling interests in the equity section of the consolidated balance sheet. Net earnings
for the period that are attributable to non-controlling interests are calculated based on the ownership of
the minority shareholders in the subsidiary.
(b) Translation of foreign currencies
The functional currency of each entity within the Company is the currency of the primary economic
environment in which it operates. The Company’s presentation currency is US dollars.
Transactions denominated in currencies other than the functional currency are recorded using the exchange
rates prevailing on the dates of the transactions. At each balance sheet date, monetary items denominated
in foreign currencies are translated at the rates prevailing on the balance sheet date. Non-monetary items
that are measured at historical cost in a foreign currency are translated using the exchange rate at the date
of the transaction. Non-monetary items measured at fair value in a foreign currency are translated at the
rates prevailing on the date when the fair value was determined. Foreign currency translation differences on
deferred foreign tax liabilities and assets are reported in deferred tax expense/recovery in the consolidated
statement of earnings.
Exchange differences arising on the settlement of monetary items, and on the translation of monetary
items, are recognized in the consolidated statement of earnings in the period in which they arise. Exchange
differences arising on the translation of non-monetary items carried at fair value are included in the
consolidated statement of earnings. However, exchange differences arising on the translation of certain
non-monetary items are recognized as a separate component of equity.
For the purpose of presenting the consolidated financial statements, the assets and liabilities of the
Company’s foreign operations are translated into US dollars, which is the presentation currency of the
group, at the rate of exchange prevailing at the end of the reporting period. Income and expenses are
translated at the average exchange rates for the period where these approximate the rates on the dates of
transactions.
On disposal of a foreign operation, the historical, cumulative amount of exchange differences recognized as
a separate component of equity is reclassified and recognized in the consolidated statement of earnings.
(c) Cash and cash equivalents
Cash and cash equivalents comprise cash on deposit with banks and highly liquid short-term interest-
bearing investments with a term to maturity at the date of purchase of 90 days or less which are subject to
an insignificant risk of change in value.
(d) Restricted funds
Restricted funds include reclamation funds and cash on deposit that have been pledged for reclamation and
closure activities which are not available for immediate disbursement.
(e) Inventories
Ore and concentrate stockpiles and cathode inventory are valued at the lower of production cost and net
realizable value (“NRV”). Production costs include costs of materials and labour related directly to mining
and processing activities, including production phase stripping costs, depreciation and amortization of
LUNDIN MINING CORPORATION
Notes to consolidated financial statements
For the years ended December 31, 2023 and 2022
(Tabular amounts in thousands of US dollars, except for shares and per share amounts)
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===== SIDA 58 =====
mineral property, plant and equipment directly involved in the related mining and production process,
amortization of any stripping costs previously capitalized and directly attributable overhead costs.
Dump leach pad inventory represents ore that has been mined and placed on leach pads where a solution is
applied to the surface of the heap to dissolve the copper and by-products. The resulting solution is further
processed in a plant to recover the copper. The cost of dump leach inventory is derived from current mining
and leaching costs and is removed at the weighted average cost per recoverable pound ("lb") of copper on
the leach pads as lbs of copper are recovered. Estimates of recoverable copper on the dump leach are
calculated based on the quantities of ore placed on the leach pads (measured tonnes added to the leach
pads), the grade of ore placed on the leach pads (based on assay data), and an estimated recovery
percentage (based on estimated recovery assumptions from the block model). The nature of the leaching
process inherently limits the ability to precisely monitor inventory levels. As a result, estimates are refined
based on actual results and engineering studies over time. The final recovery of copper from the dump leach
will not be known until the leaching process is concluded at the end of the mine life. Ore on the dump leach
that is not expected to be recovered within the next twelve months is classified as non-current.
Materials and supplies inventories are valued at the lower of average cost less allowances for obsolescence
and NRV.
If the carrying value of inventories exceeds NRV, a write-down is recognized. The write-down may be
reversed in a subsequent period if the circumstances which caused the write-down no longer exist.
(f) Mineral properties
Mineral properties are carried at cost, less accumulated depletion and any accumulated impairment
charges. Expenditures of mineral properties include:
i. Acquisition costs which consist of payments for property rights and leases, including the
estimated fair value of exploration properties acquired as part of a business combination or the
acquisition of a group of assets.
ii. Exploration, evaluation and project investigation costs incurred on an area of interest once a
determination has been made that a property has economically recoverable Mineral Resources
and Mineral Reserves (“R&R”) and there is a reasonable expectation that costs can be
recovered by future exploitation or sale of the property. Exploration, evaluation and project
investigation expenditures made prior to a determination that a property has economically
recoverable R&R are expensed as incurred.
iii. Deferred stripping costs which represent the costs incurred to remove overburden and other
waste materials to access ore in an open pit mine. Stripping costs incurred prior to the
production phase of the mine are capitalized and included as part of the carrying value of the
mineral property. During the production phase, stripping costs which provide probable future
economic benefits, identifiable improved access to the ore body and which can be measured
reliably are capitalized to mineral properties. Capitalized stripping costs are amortized using a
unit-of-production basis over the Proven and Probable Mineral Reserve to which they relate.
iv. Development costs incurred in an area of interest, once management has determined the
technical feasibility and commercial viability of a project, the project presents an appropriate
rate of return on investment, and the Board of Directors has demonstrated commitment to
advance the project. When additional development expenditures are made on a property after
commencement of production, the expenditure is capitalized as mineral property when it is
probable that additional economic benefit will be derived from future operations. Development
costs are amortized using a unit-of-production basis over the Proven and Probable Mineral
Reserve to which they relate.
LUNDIN MINING CORPORATION
Notes to consolidated financial statements
For the years ended December 31, 2023 and 2022
(Tabular amounts in thousands of US dollars, except for shares and per share amounts)
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