FULLTEXT DEL 3 AV 3
Årsredovisning 2024
29. RELATED PARTY TRANSACTIONS a) Key management personnel - The Company has identified its directors and senior officers as its key management personnel. Employee benefits for key management personnel are as follows: 2024 2023 Wages and salaries $ 7,281 $ 7,454 Pension benefits 94 130 Share-based compensation 2,246 2,983 Termination benefits — 5,760 $ 9,621 $ 16,327 b) Other related part ies - For the year ended December 31, 2024, the Company incurred $8.4 million (2023 – $4.9 million), and received a refund amounting to $2.1 million (2023 – $nil) for services provided by companies owned by members of key management personnel primarily relating to office rental, renovation costs, and related services. For the year ended December 31, 2024, the Company incurred $2.6 million (2023 – $2.1 million) for services provided by the Lundin Foundation, a not-for-profit organization supporting community economic development programs and related initiatives in the regions in which the Company operates. 30. MANAGEMENT OF FINANCIAL RISK The Company’s financial instruments are exposed to certain financial risks, including credit risk, liquidity risk, foreign exchange risk, commodity price risk and interest rate risk. (a) Credit risk The exposure to credit risk arises through the failure of a customer or another third party to meet its contractual obligations to the Company. The Company believes that its maximum exposure to credit risk as at December 31, 2024 is the carrying value of its trade and other receivables. Concentrate and cathodes produced at the Company’s Candelaria, Caserones, Chapada, and Eagle mines is sold to a number of strategic customers with whom the Company has established long-term relationships. Limited amounts of concentrate are occasionally sold to commodity traders, under prevailing market conditions. Payment terms vary and provisional payments are normally received when concentrate or copper cathodes have been placed on board a vessel for shipment or delivered to a location specified by the customer , in accordance with industry practice, with final settlement up to six months following the date of shipment. Sales to commodity traders are made against secure payment terms such as a letter of credit, pre-payment or payment against scanned shipping documents. Credit worthiness of customers is reviewed by the Company on an annual basis or more frequently, if warranted, and those not meeting certain credit criteria may be asked to make 100% provisional payment up-front or provide an acceptable payment instrument such as a letter of credit. The failure of any of the Company’s strategic customers could have a material adverse effect on the Company’s financial position. For the year ended December 31, 2024, the Company has four customers that individually account for more than 10% of the Company’s total sales. The Company's largest customers represent approximately 20%, 14%, 13%, and 11% of total sales (2023 - four customers representing 23%, 16%, 14%, and 13% of total sales). With respect to credit risk arising from the other financial assets of the Company, which comprise cash and cash equivalents, restricted funds, marketable securities and equity investments, and foreign currency contracts, the Company’s exposure to credit risk arises from default of the counterparty, with a maximum exposure equal to the carrying amount of these instruments. The Company limits material counterparty credit risk on these assets by dealing with financial institutions with long-term credit ratings with Standard & Poor’s of at least A, or the equivalent thereof with Moody’s, or those which have been otherwise approved. LUNDIN MINING CORPORATION Notes to consolidated financial statements For the years ended December 31, 2024 and 2023 (Tabular amounts in thousands of US dollars, except for shares and per share amounts) - 54 - ===== SIDA 115 ===== (b) Liquidity risk The Company has in place a planning and forecasting process to help determine the funds required to support the Company’s normal operating requirements on an ongoing basis. The Company ensures that there is sufficient available capital to meet its short-term business requirements, taking into account its anticipated cash flows from operations and its holdings of cash and cash equivalents. The Company has a revolving credit facility in place to assist with meeting its cash flow needs as required (Note 13). The maturities of the Company’s non-current liabilities are disclosed in Note 13 and Note 27. All current liabilities are due to be settled within one year. (c) Foreign exchange risk The Company operates internationally and is exposed to foreign exchange risk arising from various currencies, primarily with respect to CLP, BRL, and ARS. The Company’s risk management strategy is to manage cash flow risk related to foreign denominated cash flows. The Company is exposed to currency risk related to changes in rates of exchange between foreign denominated balances and the functional currencies of the Company’s principal operating subsidiaries. The Company’s revenues are denominated in US dollars, while most of the Company’s operating and capital expenditures are denominated in the local currencies. The Company may, at its discretion, use forward or derivative contracts to manage its exposure to foreign currencies, the use of which is subject to appropriate approval procedures. A significant change in the currency exchange rates between the US dollar and foreign currencies could have a material effect on the Company’s net earnings and other comprehensive income. The following table illustrates the estimated impact a 10% US dollar change against the €, CLP, SEK and BRL would have on pre-tax earnings as a result of translating the Company's foreign denominated financial instruments as at December 31, 2024 before the impact of derivative contracts: Currency Change Effect on Pre-Tax Earnings Change Effect on Pre-Tax Earnings € +10% $8,033 -10% $(8,033) CLP +10% $(18,095) -10% $18,095 SEK +10% $5,241 -10% $(5,241) BRL +10% $(2,143) -10% $2,143 (d) Commodity price risk The Company is subject to price risk associated with fluctuations in the market prices for metals. A significant change in metal prices could have a material effect on the Company’s revenues. The Company may, at its discretion, use forward or derivative contracts to manage its exposure to changes in commodity prices, the use of which is subject to appropriate approval procedures. The Company is also subject to price risk on the final settlement of its provisionally priced trade receivables. The following table illustrates the sensitivity of the Company’s risk on final settlement of its provisionally priced trade receivables: Metal Payable metal Provisional price on December 31, 2024 Change Effect on Revenue ($millions) Copper 78,322 t $3.96/lb +/-10% +/-68.4 Gold 35 koz $2,638/oz +/-10% +/-9.2 Nickel 709 t $6.87/lb +/-10% +/-1.1 LUNDIN MINING CORPORATION Notes to consolidated financial statements For the years ended December 31, 2024 and 2023 (Tabular amounts in thousands of US dollars, except for shares and per share amounts) - 55 - ===== SIDA 116 ===== (e) Interest rate risk The Company’s exposure to interest rate risk arises from the interest rate impact on its cash and cash equivalents, restricted funds, and debt facilities. Certain of the Company's debt facilities include a variable rate component such as references to Term SOFR on various term loans and credit facilities, as well as applicable credit spreads depending on the Company's net leverage ratio. The interest rates on the Company’s revolving credit facility and non-revolving term loan reference Term SOFR. As at December 31, 2024, holding all other variables constant, a 1% change in the interest rate would result in an approximate $12.5 million change in interest expense on an annualized basis (2023 - $4.2 million). 31. MANAGEMENT OF CAPITAL RISK The Company’s objectives when managing its capital include ensuring a sufficient combination of positive operating cash flows and debt and equity financing in order to meet its ongoing capital development and exploration programs in a way that maximizes the shareholder return given the assumed risks of its operations while, at the same time, safeguarding the Company’s ability to continue as a going concern. The Company considers the following items as capital: excess cash balances, debt and lease liabilities, and share capital reserve. Through the ongoing management of its capital, the Company will modify the structure of its capital based on changing economic conditions in the jurisdictions in which it operates. In doing so, the Company may issue new shares or debt, buy back issued shares, or pay off any outstanding debt. The Company continuously monitors its capital structure to determine the appropriateness of paying dividends. Planning, including life-of-mine plans, annual budgeting and controls over major investment decisions are the primary tools used to manage the Company’s capital. Updates are made as necessary to both capital expenditure and operational budgets in order to adapt to changes in risk factors of proposed expenditure programs and market conditions within the mining industry. 32. SUPPLEMENTARY CASH FLOW INFORMATION 2024 2023 Changes in non-cash working capital items consist of: Trade and income taxes receivable, inventories, and other current assets $ 100,751 $ (2,580) Trade and income taxes payable, and other current liabilities 120,129 (17,452) $ 220,880 $ (20,032) Operating activities included the following cash payments: Income taxes paid $ 184,378 $ 110,482 LUNDIN MINING CORPORATION Notes to consolidated financial statements For the years ended December 31, 2024 and 2023 (Tabular amounts in thousands of US dollars, except for shares and per share amounts) - 56 - ===== SIDA 117 ===== Registered Office 1055 Dunsmuir Street, Suite 2800, Bentall IV, Vancouver, BC V7X 1L2 Tel: +1.604.806.3081 lundinmining.com