FULLTEXT DEL 1 AV 2
Kvartalsrapport Q2 2023
===== SIDA 1 =====
Corporate Office
150 King Street West, Suite 2200
P .O. Box 38, Toronto, ON M5H 1J9
Phone: +1 416 342 5560
Fax: +1 416 348 0303
lundinmining.com
NEWS RELEASE
Lundin Mining Second Quarter 2023 Results
Toronto, August 2, 2023 (TSX: LUN; Nasdaq Stockholm: LUMI) Lundin Mining Corporation (“Lundin Mining” or the
“Company”) today reported net earnings attributable to Lundin Mining shareholders of $59.1 million ($0.08 per share) and
$205.7 million ($0.27 per share) for the three and six months ended June 30, 2023, respectively. The Company also
generated adjusted earnings 1 of $16.0 million ($0.02 per share) and adjusted EBITDA 1 of $162.2 million in the second
quarter. Adjusted earnings were $141.7 million ($0.1 8 per share) and adjusted EBITDA were $499.1 million for the six
months ended Jun e 30, 2023. Adjusted operating cash flow 1 were $110.6 million ($0.14 per share) and $345.7 million
($0.45 per share) for the three and six months ended June 30, 2023.
“Overall, we are pleased with the performance of our operations during the second quarte r. We are currently tracking at the
midpoint or higher for copper, gold and nickel guidance and the lower end for zinc. We generated adjusted EBITDA of over $160
million despite a decline in metal prices early in the second quarter and resulting provisional pricing adjustments. Lundin Mining’s
earnings and cash -generation potential has further increased with the addition of Caserones which closed early in the third
quarter. On a 100% proforma basis, including Caserones, Lundin Mining’s operations produced a pproximately 280,000 tonnes of
copper-equivalent metal in the first half of this year. Caserones produced approximately 70,000 tonnes of copper in the first half
of the year and is off to a strong start in the third quarter,” commented Peter Rockandel, CEO.
Mr. Rockandel added, “With the free cash flow from operations, the new $800 million Term Loan, and the existing $1.75 billion
revolving credit facility, Lundin Mining retains a strong balance sheet and significant liquidity to progress growth projects.”
Summary Financial Results
Three months ended
June 30,
Six months ended
June 30,
US$ Millions (except per share amounts) 2023 2022 2023 2022
Revenue 588.5 590.2 1,339.9 1,581.3
Gross profit 52.8 46.0 266.2 524.8
Attributable net earnings (loss)2 59.1 (52.6) 205.7 292.5
Net earnings (loss) 61.3 (48.6) 226.6 329.5
Adjusted earnings 1,2 16.0 (35.3) 141.7 260.3
Adjusted EBITDA1 162.2 148.6 499.1 736.4
Basic and diluted earnings per share ("EPS")2 0.08 (0.07) 0.27 0.39
Adjusted EPS1,2 0.02 (0.05) 0.18 0.35
Cash flow from operations 194.8 366.4 406.7 683.7
Adjusted operating cash flow1 110.6 49.7 345.7 522.6
Adjusted operating cash flow per share1 0.14 0.06 0.45 0.70
Free cash flow from operations1 20.7 266.3 91.8 461.1
Free cash flow1 (84.6) 149.1 (118.8) 321.5
Cash and cash equivalents 190.2 498.2 190.2 498.2
Net debt1
(229.8) 469.9 (229.8) 469.9
1 These are non-GAAP measures. Please refer to the Company's discussion of non-GAAP and other performance measures in its Management's Discussion and Analysis for the three
and six months ended June 30, 2023 and the Reconciliation of Non-GAAP Measures section at the end of this news release.
2 Attributable to shareholders of Lundin Mining Corporation.
===== SIDA 2 =====
Highlights
For the quarter ended June 30, 2023 the Company generated revenue of $588.5 million (Q2 2022 - $590.2 million), gross
profit of $52.8 million (Q2 2022 - $46.0 million) and adjusted EBITDA of $162.2 million (Q2 2022 - $148.6 million).
Overall, the operations performed well during the second quarter of 2023 and the Company remains on track to achieve
production guidance.
Operational Performance
Candelaria (80% owned): Candelaria produced 36,952 tonnes of copper, and approximately 21,000 ounces of gold in
concentrate on a 100% basis in the quarter. Copper production was lower than the prior year quarter due to grades
partially offset by higher throughput. Gold productio n was lower than the prior year quarter due to recoveries. Current
quarter production costs and copper cash cost1 of $2.14/lb were higher than the prior year quarter largely owing to higher
contractor and maintenance costs. Cash cost was further impacted by lower sales volumes.
Chapada (100% owned): Chapada produced 10,697 tonnes of copper and approximately 13,000 ounces of gold in
concentrate in the quarter. Copper production was higher than the prior year quarter primarily due to higher recoveries in
the quarter. Current quarter production for both metals was better than the first quarter of 2023, due to higher grades
and recoveries. In aggregate, production costs were higher than the prior year comparable quarter due to higher sales
volumes achieved, wh ile the higher sales volumes also led to improvement on a unit basis with a copper cash cost
of$2.69/lb for the quarter.
Eagle (100% owned): During the quarter Eagle produced 4,686 tonnes of nickel and 3,881 tonnes of copper which were
lower than the prio r year quarter due to lower grades and lower throughput. Production costs were lower than the
comparable prior year quarter due to lower consumable costs. Nickel cash cost in the quarter of $1.88/lb was higher than
the prior year quarter due primarily to lower by-product copper price and lower sales volumes.
Neves-Corvo (100% owned): Neves-Corvo produced 7,610 tonnes of copper for the quarter and 24,177 tonnes of zinc.
Copper production was lower than the prior year comparable quarter, due to lower grades, while zinc production was
higher primarily due to increased throughput and recoveries driven by the ramp -up of the Zinc Expansion Project (“ZEP”).
Production costs were comparable to the prior year quarter. Copper cash cost of $3.99/lb was higher than the prior year
quarter due primarily to lower copper sales volumes.
Zinkgruvan (100% owned): Zinc production of 11,938 tonnes and lead production of 3,816 tonnes were lower than the
prior year quarter due to lower throughput due to a shut -down of the mill to perform the planned implementation of the
sequential flotation circuit. Copper production of 917 tonnes was higher than the prior year quarter due to higher grades.
Production costs were lower than the prior year quarter due to lower mine and mill costs . Zinc cash cost of $0.24/lb was
lower than the prior year quarter due to lower production costs.
Total Production
(contained metal)a 2023 2022
YTD Q2 Q1 Total Q4 Q3 Q2 Q1
Copper (t)b 121,519 60,057 61,462 249,659 56,552 63,930 64,096 65,081
Zinc (t) 84,668 36,115 48,553 158,938 44,308 40,327 41,912 32,391
Gold (koz)b 70 34 36 154 36 45 39 34
Nickel (t) 8,410 4,686 3,724 17,475 4,096 4,379 4,719 4,281
a. Tonnes (t) and thousands of ounces (koz)
b. Candelaria's production is on a 100% basis.
===== SIDA 3 =====
Corporate Updates
• On July 10, 2023, the Company published its 2022 Sustainability Report.
• 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
("Caserones") located in Chile. The Company paid an aggregate of approximately $800 million in cash consideration at
closing. Remaining deferred cash consideration of $150 million will be payable in installments over the six ‑year period
following the closing date. 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 “Caserones Mining Operation, Chile, NI 43-101 Technical Report on the Caserones
Mining Operation” was filed under the Company's profile.
• On July 27, 2023, the Company announced it had obtained a three -year term loan ("Term Loan") in a principal amount
of $800 million with an additional $400 million accordion and closing of up to an additional 19% interest in Lumina
Copper.
Financial Performance
• Gross profit for the quarter ended June 30, 2023 was $52.8 million, an increase of $6.8 million and largely comparable
to the prior year quarter. On a year -to-date basis, gross profit for the peri od ended June 30, 2023 was $266.2 million
and was lower than the prior year period due to lower sales volumes and lower metal prices.
• For the three months ended June 30, 2023, net earnings of $61.3 million were $109.9 million higher than the prior
year quarter due primarily to lower general exploration and business development costs and lower income taxes. On
a year -to-date basis net earnings of $226.6 million were lower than the prior year period due to lower gross profit
resulting from lower realized prices, partially offset by lower taxes.
• Adjusted earnings for the three months ended June 30, 2023, of $16.0 million were $51.3 million higher than the
adjusted loss of the prior year quarter due to the same factors as the change in net earnings described above. On a
year-to-date basis adjusted earnings of $141.7 million were lower than the prior year period due to lower gross profit
partially offset by lower income taxes.
Financial Position and Financing
• Cash and cash equiva lents as at June 30, 2023 was $190.2 million. Cash flow from operations of $194.8 million was
used to fund investing activities of $283.5 million. Cash from financing activities was $99.9 million, which was
comprised primarily of the proceeds from debt on a net basis partially offset by dividends paid to shareholders. Cash
and cash equivalents remained relatively unchanged during the six months ended June 30, 2023.
• As at June 30, 2023, the Company had a net debt balance of $229.8 million.
• As at August 2, 2023, the Company had cash and net debt balances of approximately $2 70.0 million and
$930.0 million, respectively. The net debt increase was attributable to debt financing of the acquisition of Caserones.
===== SIDA 4 =====
Outlook
Overall, the operations performed well during the second quarter of 2023. The Company is currently tracking to the
midpoint or higher for copper, gold and nickel guidance and the lower end for zinc. Production continues to be weighted
to the second half of the year. Candelaria and Eagle production is forecast to be modestly weighted to the second half of
the year, primarily owing to mine sequencing and the resultant grade profiles. Chapada production is forecast to be
weighted to the second half of the year due to first half seasonal operating considerations, and forecast grade and
recovery profiles.
Expected cash costs remain consistent with reported guidance for Candelaria, Caserones and Neves -Corvo. Chapada’s
cash cost guidance range has been improved to $2.35 - $2.55/lb of copper, reflecting lower pricing of consumables. Eagle’s
forecast nickel cash cost guidance has been increased to $2.30 - $2.45/lb of nickel. While Eagle’s overall operating costs
remain consistent with the Company’s previou s expectations, nickel cash cost guidance has been increased primarily
driven by lower by-product credits, mainly pricing. Zinkgruvan’s cash cost guidance has been improved to $0.45 - $0.50/lb
of zinc, reflecting greater by-product credits.
A reduction in capital expenditure guidance is expected for the remainder of the year as the timing of several projects at
Candelaria has been deferred into next year. At Josemaria, foreign exchange, a delay in planned equipment deliveries and
reduced activities have lowered capital spend guidance.
2023 Production and Cash Cost Guidance
Previous Guidancea Revised Guidance
(contained metal) Production Cash Cost ($/lb) Production Cash Cost ($/lb)b
Copper (t) Candelaria (100%) 145,000 - 155,000 1.80 – 1.95c 145,000 - 155,000 1.80 – 1.95c
Caserones (100%)e 60,000 - 65,000 2.30 - 2.45 60,000 - 65,000 2.30 - 2.45
Chapada 43,000 - 48,000 2.55 – 2.75d 43,000 - 48,000 2.35 – 2.55d
Eagle 12,000 - 15,000 12,000 - 15,000
Neves-Corvo 33,000 - 38,000 2.10 – 2.30c 33,000 - 38,000 2.10 – 2.30c
Zinkgruvan 3,000 - 4,000 3,000 - 4,000
Total 296,000 - 325,000 296,000 - 325,000
Zinc (t) Neves-Corvo 100,000 - 110,000 100,000 - 110,000
Zinkgruvan 80,000 - 85,000 0.60 – 0.65c 80,000 - 85,000 0.45 – 0.50c
Total 180,000 - 195,000 180,000 - 195,000
Molybdenum (t) Caserones (100%)e 1,500 - 2,000 1,500 - 2,000
Gold (koz) Candelaria (100%) 85 - 90 85 - 90
Chapada 55 - 60 55 - 60
Total 140 - 150 140 - 150
Nickel (t) Eagle 13,000 - 16,000 1.50 – 1.65 13,000 - 16,000 2.30 – 2.45
a. Guidance as outlined in the MD&A for the year ended December 31, 2022 and for Caserones as outlined in the news release "L undin Mining Announces
Closing of the Acquisition of Majority Interest in Caserones Copper -Molybdenum Mine in Chile and Commitments for New $800 Million Term Loan"
provided on July 13, 2023.
b. Cash costs are based on various assumptions and estimates, including but not limited to: production volumes, commodity pri ces (Cu: $3.75/lb, Zn:
$1.30/lb, Mo: $20.00/lb Pb: $0.90/lb, Au: $1,850/oz), foreign exchange rates (€/USD:1.00, USD/SEK:10.50, USD/CLP:800, USD/BRL:5.00) and production costs
for the remainder of 2023.
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 $425/oz gold and $4.25/oz to $4. 57/oz silver.
d. Chapada’s cash cost is calculated on a by-product basis and does not include the e ffects of its copper stream agreements. Effects of the copper stream
agreements are reflected in copper revenue and will impact realized price per pound.
e. Caserones guidance is for the second half of 2023. Closing of the Caserones Acquisition occurred on July 13, 2023.
===== SIDA 5 =====
2023 Capital Expenditureb
($ millions) Previous Guidancea Revisions Revised Guidance
Candelaria (100% basis) 400 (25) 375
Caserones (100% basis)c 110 — 110
Chapada 70 — 70
Eagle 20 — 20
Neves-Corvo 130 — 130
Zinkgruvan 70 — 70
Other 10 — 10
Total Sustaining 810 (25) 785
Josemaria 400 (50) 350
Total Capital Expenditures 1,210 (75) 1,135
a. Guidance as outlined in the MD&A for the year ended December 31, 2022 and for Caserones as outlined in the news release " Lundin Mining
Announces Closing of the Acquisition of Majority Interest in Caserones Copper -Molybdenum Mine in Chile and Commitments for New $800 Million
Term Loan" provided on July 13, 2023.
b. Sustaining capital expenditure is a supplementary financial measure, and expansionary capital expenditure is a non -GAAP measure - see the
Company's Management Discussion and Analysis for the three and six months ended June 30, 2023 and the Reconcilia tion of Non-GAAP Measures at
the end of this news release.
c. Caserones guidance is for the second half of 2023. Closing of the Caserones Acquisition occurred on July 13, 2023.
2023 Exploration Investment Guidance
Total exploration expenditures are on target to be $45.0 million in 2023, unchanged from previous guidance.
Senior Leadership Appointments
The Company would also like to announce the executive appointments of Cara Allaway as Vice President, Finance, Steve
Little as Vice President, Technology and Innovation, Tim Walmsley as Vice President, Exploration and Stephen Williams as
Vice President, Investor Relations.
Cara Allaway
Ms. Allaway has joined Lundin Mining’s Senior Leadership Team as Vice President, Finance. In her previous role with
Eldorado Gold, Cara was Vice President, Finance, where she was responsible for overseeing accounting, financial reporting
and planning and analysis functions. Previous to Eldorado Gold, she held similar roles at Nevsun Resources Ltd. and
Dominion Diamond Mines, and spent 12 years at PwC in the Assurance groups in Halifax and Toronto, and in the Capital
Markets Group in Russia. Cara is a Chartered Professional Accountant and holds a Bachelor of Science in Chemistry from
Mount Allison University and a Master of Management and Professional Accounting from the University of Toronto.
Steve Little
Mr. Little has joined Lundin Mining’s Senior Leadership Team as Vice President, Technology and Innovation. He has over 30
years of experience in providing technology leadership within asset intensive industries such as power generation and
heavy manufacturing, as well as high tech. Prior to joining Lundin Mining, he was most recently Vice President, Business
Technology Solutions for Seaspan Shipyards and Seaspan Marine Transportation. A registered Professional Engineer, Mr.
Little holds a Bachelor of Engineering (Electrical) from the Royal Military College of Canada and an MBA from Queen's
University.
Tim Walmsley
Mr. Walmsley is the Vice President, Exploration for Lundin Mining and has more than 30 years of international experience
in all stages of mineral exploration. Prior to his VP position, he held the role of Senior Director, Exploration. Timothy
joined Lundin Mining as Chile Exploration Manager in 2013. Before joining Lundin Mining, Timothy held progressively
more senior technical roles with Xstrata plc, Falconbridge Limited, and Noranda Inc., based initially in Canada and then
primarily in Chile.
During his career Mr. Walmsley has been responsible for various aspects of exploration and new business development
throughout much of North and South America and has contributed to numerous mineral deposit discoveries.
Timothy holds a Bachelor of Applied Science (Honours) in Geological Engineering from Queen's University in Canada.
Stephen Williams
Mr. Williams has joined Lundin Mining’s Senior Leadership Team as Vice President, Investor Relations. Stephen is joining
from Bluestone Resources, where he was the Vice President, Corporate Development & Investor Relations. Previously he
===== SIDA 6 =====
was a member of the Metals & Mining investment banking team at Canaccord Genuity Corp, where he provided strategic
advice to clients on acquisitions, mergers, and equity financings.
Stephen is a professional engineer by background having worked for Freeport-McMoRan in an operational and process
development capacity. He holds a B.A.Sc. in Metallurgical Engineering from the University of British Columbia and an MBA
from the W. P . Carey School of Business, Arizona State University.
About Lundin Mining
Lundin Mining 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, gold and nickel.
The information in this re lease is subject to the disclosure requirements of Lundin Mining under the EU Market Abuse
Regulation. The information was submitted for publication, through the agency of the contact persons set out below on
August 2, 2023 at 5:30 pm Eastern Time.
For further information, please contact:
Mark Turner, Vice President, Business Valuations and Investor Relations: +1 416 342 5565
Stephen Williams, Vice President, Investor Relations +1 416 342 5117
Irina Kuznetsova, Manager, Investor Relations: +1 416 342 5583
Robert Eriksson, Investor Relations Sweden: +46 8 440 54 40
Technical Information
The scientific and technical information in this press release has been prepared in accordance with the disclosure
standards of National Instrument 43 -101 (“NI 43 -101”) and has been reviewed by Arman Barha, P .Eng., Vice President,
Technical Services, a "Qu alified Person" under NI 43 -101. Mr. Barha has verified the data disclosed in this release and no
limitations were imposed on his verification process.
===== SIDA 7 =====
Reconciliation of Non-GAAP Measures
The Company uses certain performance measure s in its analysis. These performance measures have no standardized
meaning within generally accepted accounting principles under International Financial Reporting Standards and,
therefore, amounts presented may not be comparable to similar data presented b y other mining companies. For
additional details please refer to the Company’s discussion of non -GAAP and other performance measures in its
Management’s Discussion and Analysis for the three and six months ended June 30, 2023 which is available on SEDAR at
www.sedar.com.
Adjusted EBITDA can be reconciled to the Company's Consolidated Statement of Earnings as follows:
Three months ended
June 30,
Six months ended
June 30,
($thousands) 2023 2022 2023 2022
Net earnings (loss) 61,302 (48,626) 226,613 329,483
Add back:
Depreciation, depletion and amortization 130,505 142,042 250,752 271,879
Finance income and costs 15,897 17,309 31,596 32,281
Income taxes (19,601) 49,003 29,092 126,209
188,103 159,728 538,053 759,852
Unrealized foreign exchange (19,285) 2,721 (10,641) 10,574
Revaluation gain on derivatives (14,783) (19,593) (34,033) (16,300)
Sinkhole costs 11,900 — 16,482 —
Revaluation gain on marketable securities (3,464) 1,626 (3,902) (2,266)
Gain on disposal of subsidiary — — (5,718) (16,828)
Other (283) 4,161 (1,110) 1,385
Total adjustments - EBITDA (25,915) (11,085) (38,922) (23,435)
Adjusted EBITDA 162,188 148,643 499,131 736,417
Adjusted earnings and adjusted earnings per share can be reconciled to the Company's Consolidated Statement of
Earnings as follows:
Three months ended
June 30,
Six months ended
June 30,
($thousands, except share and per share amounts) 2023 2022 2023 2022
Net earnings (loss) attributable to Lundin Mining
shareholders
59,109 (52,577) 205,729 292,501
Add back:
Total adjustments - EBITDA (25,915) (11,085) (38,922) (23,435)
Tax effect on adjustments (554) 5,035 (3,180) 3,001
Deferred tax arising from foreign exchange translation (15,989) 23,091 (21,996) (11,863)
Other (634) 260 69 128
Total adjustments (43,092) 17,301 (64,029) (32,169)
Adjusted earnings 16,017 (35,276) 141,700 260,332
Basic weighted average number of shares outstanding 772,255,656 766,775,032 771,739,532 751,676,764
Net earnings (loss) attributable to shareholders 0.08 (0.07) 0.27 0.39
Total adjustments (0.06) 0.02 (0.09) (0.04)
Adjusted earnings per share 0.02 (0.05) 0.18 0.35
Adjusted operating cash flow and adjusted operating cash flow per share can be reconciled to cash provided by operating
activities as follows:
===== SIDA 8 =====
Three months ended
June 30,
Six months ended
June 30,
($thousands, except share and per share amounts) 2023 2022 2023 2022
Cash provided by operating activities 194,844 366,411 406,719 683,668
Changes in non-cash working capital items (84,207) (316,665) (61,015) (161,117)
Adjusted operating cash flow 110,637 49,746 345,704 522,551
Basic weighted average number of shares outstanding 772,255,656 766,775,032 771,739,532 751,676,764
Adjusted operating cash flow per share $ 0.14 0.06 0.45 0.70
Free cash flow from operations can be reconciled to cash provided by operating activities as follows:
Three months ended
June 30,
Six months ended
June 30,
($thousands) 2023 2022 2023 2022
Cash provided by operating activities 194,844 366,411 406,719 683,668
Sustaining capital expenditures (187,820) (151,665) (343,384) (282,423)
General exploration and business development 13,693 51,531 28,458 59,813
Free cash flow from operations 20,717 266,277 91,793 461,058
General exploration and business development (13,693) (51,531) (28,458) (59,813)
Expansionary capital expenditures (91,650) (65,603) (182,169) (79,757)
Free cash flow (84,626) 149,143 (118,834) 321,488
Net (debt) cash can be reconciled as follows:
($thousands) June 30, 2023 December 31, 2022
Cash and cash equivalents 190,182 191,387
Current portion of total debt and lease liabilities (284,656) (170,149)
Debt and lease liabilities (130,359) (27,179)
(415,015) (197,328)
Deferred financing fees (netted in above) (4,998) (4,926)
(420,013) (202,254)
Net debt (229,831) (10,867)
===== SIDA 9 =====
Cash and All-in Sustaining Costs can be reconciled to the Company's operating costs as follows:
Six months ended June 30, 2023
Operations Candelaria Chapada Eagle Neves-
Corvo
Zinkgruvan
($000s, unless otherwise noted) (Cu) (Cu) (Ni) (Cu) (Zn) Total
Sales volumes (Contained metal):
Tonnes 71,917 19,236 6,594 14,201 25,986
Pounds (000s) 158,550 42,408 14,537 31,308 57,289
Production costs
822,962
Less: Royalties and other (20,055)
802,907
Deduct: By-product credits (279,601)
Add: Treatment and refining 69,129
Cash cost 345,212 107,669 30,630 84,163 24,761 592,435
Cash cost per pound ($/lb) 2.18 2.54 2.11 2.69 0.43
Add: Sustaining capital 214,103 35,717 10,664 47,194 30,462
Royalties — 4,252 10,606 1,813 —
Reclamation and other closure
accretion and depreciation
4,751 3,648 5,969 2,620 1,800
Leases & other 6,797 2,137 1,644 306 202
All-in sustaining cost 570,863 153,423 59,513 136,096 57,225
AISC per pound ($/lb) 3.60 3.62 4.09 4.35 1.00
($000s, unless otherwise noted) 2023 Guidance
Cash cost 620,000 260,000 90,000 180,000 90,000
Cash cost per pound($/lb) 1.80 – 1.95 2.35 – 2.55 2.30 – 2.45 2.10 – 2.30 0.45 – 0.50
Six months ended June 30, 2022
Operations Candelaria Chapada Eagle Neves- Zinkgruvan
($000s, unless otherwise noted) (Cu) (Cu) (Ni) (Cu) (Zn) Total
Sales volumes (Contained metal):
Tonnes 78,103 20,709 7,473 16,667 34,327
Pounds (000s) 172,187 45,655 16,475 36,744 75,678
Production costs
784,617
Less: Royalties and other (29,528)
755,089
Deduct: By-product credits (315,735)
Add: Treatment and refining 62,115
Cash cost 296,225 103,309 (638) 75,001 27,572 501,469
Cash cost per pound ($/lb) 1.72 2.26 (0.04) 2.04 0.36
Add: Sustaining capital 169,071 44,215 7,383 33,276 23,122
Royalties — 6,106 18,424 2,197 —
Reclamation and other closure
accretion and depreciation
4,051 3,749 9,300 451 2,073
Leases & other 4,626 2,039 1,282 396 398
All-in sustaining cost 473,973 159,417 35,751 111,321 53,165
AISC per pound ($/lb) 2.75 3.49 2.17 3.03 0.70
===== SIDA 10 =====
Three months ended June 30, 2023
Operations Candelaria Chapada Eagle Neves-Corvo Zinkgruvan
($000s, unless otherwise noted) (Cu) (Cu) (Ni) (Cu) (Zn) Total
Sales volumes (Contained metal):
Tonnes 36,347 10,164 3,859 6,170 9,374
Pounds (000s) 80,132 22,408 8,507 13,603 20,666
Production costs
405,198
Less: Royalties and other (7,969)
397,229
Deduct: By-product credits (122,636)
Add: Treatment and refining 32,514
Cash cost 171,520 60,351 15,990 54,271 4,975 307,107
Cash cost per pound ($/lb) 2.14 2.69 1.88 3.99 0.24
Add: Sustaining capital 123,417 19,690 3,562 22,133 15,994
Royalties — 2,029 4,920 83 —
Interest expense 2,444 1,847 3,011 1,296 739
Leases & other 3,654 1,171 897 148 100
All-in sustaining cost 301,035 85,088 28,380 77,931 21,808
AISC per pound ($/lb) 3.76 3.80 3.34 5.73 1.06
Three months ended June 30, 2022
Operations Candelaria Chapada Eagle Neves-Corvo Zinkgruvan
($000s, unless otherwise noted) (Cu) (Cu) (Ni) (Cu) (Zn) Total
Sales volumes (Contained metal):
Tonnes 39,655 7,905 4,206 8,183 18,525
Pounds (000s) 87,424 17,427 9,273 18,040 40,841
Production costs
402,190
Less: Royalties and other (13,657)
388,533
Deduct: By-product credits (134,728)
Add: Treatment and refining 29,960
Cash cost 162,240 51,872 8,341 43,198 18,114 283,765
Cash cost per pound ($/lb) 1.86 2.98 0.90 2.39 0.44
Add: Sustaining capital 86,107 29,760 2,923 13,760 14,083
Royalties — 2,442 10,633 (616) —
Interest expense 2,082 1,865 4,683 120 956
Leases & other 2,658 1,110 631 194 160
All-in sustaining cost 253,087 87,049 27,211 56,656 33,313
AISC per pound ($/lb) 2.89 5.00 2.93 3.14 0.82
===== SIDA 11 =====
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 stat ements 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 pe nding litigation; the results of any
Preliminary Economic Assessment, Feasibility Study, or Minera l 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 C ompany’s Responsible Mining
Management System; the Company’s ability to comply with contractual and permitting or other regulatory requirements; anticipate d exploration and development
activities at the Company’s projects; the Company’s integration of acquisitions and any anticipated b enefits thereof, including the Caserones transaction; and
expectations for other economic, business, and/or competitive factors. Words such as “believe”, “expect”, “anticipate”, “cont emplate”, “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 expec tations and beliefs of management,
including that the Company can access financing, appropriate equipment and sufficient labour; assumed and future price of cop per, nickel, zinc, gold and other
metals; anticipated costs; ability to achieve goals; the promp t 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 b elow. While these factors and
assumptions are considered reasonable by Lundin Mining as at the date of this document in light of management’s experience an d 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 infor mation. 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 environm ent, industrial accidents, catastrophic equipment
failures, unusual or unexpected geological formations or unstable ground conditions, and natural phenomena such as earthquake s, flooding or unusually severe
weather; uninsurable risks; project financing ris ks, liquidity risks and limited financial resources; volatility and fluctuations in metal and commodity demand and
prices; delays or the inability to obtain, retain or comply with permits; significant reliance on a single asset; reputation risks related to negative publicity with respect to
the Company or the mining industry in general; health and safety risks; risks relating to the development of the Josemaria Pr oject; inability to attract and retain highly
skilled employees; risks associated with climate change; compliance with environmental, health and safety laws and regulations; unavailable or inaccessible
infrastructure, infrastructure failures, and risks related to ageing infrastructure; risks inherent in and/or associated with operating in foreign co untries and emerging
markets, including with respect to foreign exchange and capital controls; economic, political and social instability and mini ng regime changes in the Company’s
operating jurisdictions, including but not limited to those related to perm itting and approvals, environmental and tailings management, labour, trade relations, and
transportation; risks relating to indebtedness; the inability to effectively compete in the industry; risks associated with a cquisitions and related integration effor ts,
including the ability to achieve anticipated benefits, unanticipated difficulties or expenditures relating to integration and diversion of management time on integration,
including with respect to the Caserones transaction; changing taxation regimes; r isks 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 a nd/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; financial pr ojections, including estimates of future expenditures and cash costs, and estimates of future production may not be reliable;
enforcing legal rights in foreign jurisdictions; environmental and regulatory risks associated with the structural stability of wa ste rock dumps or tailings storage
facilities; activist shareholders and proxy solicitation matters; risks relating to dilution; regulatory investigations, enfo rcement, sanctions and/or related or other
litigation; risks relating to payment of dividends; c ounterparty and customer concentration risks; the estimation of asset carrying values; risks associated with the use
of derivatives; relationships with employees and contractors, and the potential for and effects of labour disputes or other u nanticipated difficulties with or shortages of
labour or interruptions in production; conflicts of interest; existence of a significant shareholder; exchange rate fluctuati ons; challenges or defects in title; internal
controls; compliance with foreign laws; potential fo r 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; the threat associated with outbrea ks of viruses and inf ectious diseases;
risks relating to minor elements contained in concentrate products; and other risks and uncertainties, including but not limi ted to those described in the “Risk and
Uncertainties” section of the Company’s Annual Information Form and the “ Managing Risks” section of the Company’s MD&A for the year ended December 31, 2022,
which are available on SEDAR at www.sedar.com under the Company’s profile.
All of the forward-looking statements made in this document are qualified by these cautionary s tatements. 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 assumpti ons which may have been
used. Should one or more of these risks and uncertainties materialize, or should underlying assumptions pro ve 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 fu ture 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 t o update or r evise forward ‑looking
information or to explain any material difference between such and subsequent actual events, except as required by applicable law.
===== SIDA 12 =====
Management’s Discussion and Analysis
For the three and six months ended June 30, 2023
This management’s discussion and analysis (“MD&A”) has been prepared as of August 2, 2023 and should be read in
conjunction with the Company’s condensed interim consolidated financial statements for the three and six months ended
June 30, 2023. Those finan cial statements are prepared in accordance with International Financial Reporting Standards
("IFRS") as issued by the International Accounting Standards Board applicable to the preparation of interim financial
statements, including International Accounting Standard 34, Interim Financial Reporting. 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.
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, C hile, Portugal, Sweden, and the United States of America, primarily producing
copper, zinc, gold and nickel.
Table of Contents
Highlights
..............................................................................................................................................................................................
1
Financial Position and Financing
..............................................................................................................................................................................................
2
Outlook
..............................................................................................................................................................................................
3
Selected Quarterly Financial Information
..............................................................................................................................................................................................
5
Revenue Overview
..............................................................................................................................................................................................
6
Financial Results
..............................................................................................................................................................................................
10
Mining Operations
..............................................................................................................................................................................................
12
Production Overview
........................................................................................................................................................................................
12
Cash Cost Overview
........................................................................................................................................................................................
13
Capital Expenditures
........................................................................................................................................................................................
14
Candelaria
........................................................................................................................................................................................
15
Chapada
........................................................................................................................................................................................
16
Eagle
........................................................................................................................................................................................
17
Neves-Corvo
........................................................................................................................................................................................
18
Zinkgruvan
........................................................................................................................................................................................
19
Josemaria Project
..............................................................................................................................................................................................
20
Metal Prices, LME Inventories, and Smelter Treatment and Refining Charges
..............................................................................................................................................................................................
21
Liquidity and Capital Resources
..............................................................................................................................................................................................
22
Related Party Transactions
..............................................................................................................................................................................................
23
Changes in Accounting Policies and Critical Accounting Estimates and Judgements
..............................................................................................................................................................................................
23
Non-GAAP and Other Performance Measures
..............................................................................................................................................................................................
24
Managing Risks
..............................................................................................................................................................................................
30
Management's Report on Internal Controls
..............................................................................................................................................................................................
30
Outstanding Share Data
..............................................................................................................................................................................................
30
===== SIDA 13 =====
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 thi s 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 acqu isitions and any anticipated benefits thereof,
including the Caserones t ransaction; and expectations for other economic, business, and/or competitive factors. Words such as “believe”, “expect”, “an ticipate”, “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 expectatio ns and beliefs of management, includi ng
that the Company can access financing, appropriate equipment and sufficient labour; assumed and future price of copper, nicke l, 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 an d 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 ea rthquakes, flooding or
unusually severe weather; uninsurable risks; project financing risks, liquidity risks and limited financial resources; volatility and fluctuations in metal and commodity demand and
prices; delays or the inability to obtain, retain or comply with permits; significant reliance on a single asset; reputation risks related to negative publicity with respect to the Company
or the mining industry in general; health and safety risks; risks relating to the development of the Josemaria Project; inabi lity to attract and retain highly skilled employees; risks
associated with climate change; compliance with environmental, health and safety laws and regulations; unavailable or inaccessible infrastructure, infrastructure failures, and risks
related to ageing infrastructure; risks inherent in and/or associated with operating in foreign countries and emerging market s, including wi th respect to foreign exchange and
capital controls; 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, environmental and ta ilings management, labour, trade relations, and transportation; risks relating to indebtedness; 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, including with respect to the Caserones transaction; changing ta xation regimes; risks related to mine closure
activities, reclamation obligations, environmental liabilities and closed and historical sites; reliance on key personnel and reporting an d oversight systems, as well as third parties
and consultants in foreign jurisdictions; information technology and cybersecurity ri sks; 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 Minera l Resource
and Mineral Reserve estimates, estimates of grade, tonnage, dilution, mine plans and metallurgical and other characteristics; ore processing efficiency; community and stakeholder
opposition; 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; environmental and regulatory risks associated with the structural stability of waste rock dumps or tailings storage facilities; activist shareholders and proxy solicitation
matters; risks relating to dilution; regulatory investigations, enforcement, sanctions and/or related or other litigation; ri sks relating to payment of dividends; counterparty and
customer concentration risks; the estimation of asset carrying values; risks associated with the use of derivatives; relationships with employees and c ontractors, 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 a significant
shareholder; exchange rate fluctuations; challenges or defects in title; internal controls; 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; the threat associated with
outbreaks of viruses and infectious diseases; risks relating to minor elements contained in concentrate products; and other risks and uncertainties, including but not limited to those
described in the “Risk and Uncertainties” section of the Company’s Annual Information Form and the “Managing Risks” section o f the Company’s M D&A for the year ended
December 31, 2022, which are available on SEDAR at www.sedar.com 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 thos e 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.
===== SIDA 14 =====
1 This is a non-GAAP measure - see section "Non-GAAP and Other Performance Measures" of this MD&A for discussion.
1
Highlights
For the quarter ended June 30, 2023 the Company generated revenue of $588.5 million (Q2 2022 - $590.2 million), gross
profit of $52.8 million (Q2 2022 - $46.0 million) and adjusted EBITDA1 of $162.2 million (Q2 2022 - $148.6 million).
Overall, the operations performed well during the second quarter of 2023 and the Company remains on track to achieve
production guidance.
Operational Performance
Candelaria (80% owned): Candelaria produced 36,952 tonnes of copper, and approximately 21,000 ounces of gold in
concentrate on a 100% basis in the quarter. Copper production was lower than the prior year quarter due to grades partially
offset by higher throughput. Gold production was lower than the prior year quarter due to recoveries. Current quarter
production costs and copper cash cost1 of $2.14/lb were higher than the prior year quarter largely owing to higher contractor
and maintenance costs. Cash cost was further impacted by lower sales volumes.
Chapada (100% owned): Chapada produced 10,697 tonnes of copper and approximately 13,000 ounces of gold in concentrate
in the quarter. Copper production was higher than the prior year quar ter primarily due to higher recoveries in the quarter.
Current quarter production for both metals was better than the first quarter of 2023, due to higher grades and recoveries. In
aggregate, production costs were higher than the prior year comparable quarter due to higher sales volumes achieved, while
the higher sales volumes also led to improvement on a unit basis with a copper cash cost of $2.69/lb for the quarter.
Eagle (100% owned): During the quarter Eagle produced 4,686 tonnes of nickel and 3,881 tonnes of copper which were lower
than the prior year quarter due to lower grades and lower throughput. Production costs were lower than the comparable
prior year quarter due to lower consumable costs. Nickel cash cost in the quarter of $1.88/lb was higher t han the prior year
quarter due primarily to lower by-product copper price and lower sales volumes.
Neves-Corvo (100% owned): Neves-Corvo produced 7,610 tonnes of copper for the quarter and 24,177 tonnes of zinc. Copper
production was lower than the prior year comparable quarter, due to lower grades, while zinc production was higher primarily
due to increased throughput and reco veries driven by the ramp -up of the Zinc Expansion Project (“ZEP”). Production costs
were comparable to the prior year quarter. Copper cash cost of $3.99/lb was higher than the prior year quarter due primarily
to lower copper sales volumes.
Zinkgruvan (100% owned): Zinc production of 11,938 tonnes and lead production of 3,816 tonnes were lower than the prior
year quarter due to lower throughput due to a shut-down of the mill to perform the planned implementation of the sequential
flotation circuit. Copper production of 917 tonnes was higher than the prior year quarter due to higher grades. Production
costs were lower than the prior year quarter due to lower mine and mill costs. Zinc cash cost of $0.24/lb was lower than the
prior year quarter due to lower production costs.
Total Productiona
(contained metal)
2023 2022
YTD Q2 Q1 Total Q4 Q3 Q2 Q1
Copper (t)b 121,519 60,057 61,462 249,659 56,552 63,930 64,096 65,081
Zinc (t) 84,668 36,115 48,553 158,938 44,308 40,327 41,912 32,391
Gold (koz)b 70 34 36 154 36 45 39 34
Nickel (t) 8,410 4,686 3,724 17,475 4,096 4,379 4,719 4,281
a - Tonnes (t) and thousands of ounces (koz)
b - Candelaria's production is on a 100% basis
===== SIDA 15 =====
1 This is a non-GAAP measure - see section "Non-GAAP and Other Performance Measures" of this MD&A for discussion.
2
Corporate Updates
• On July 10, 2023, the Company published its 2022 Sustainability Report.
• 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
("Caserones") located in Chile. The Company paid an aggregate of approximately $800 million in cash consideration at
closing. Remaining deferred cash consideration of $150 million will be payable in installments over the six ‑year period
following the closing date. 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 “Caserones Mining Operation, Chile, NI 43 -101 Technical Report on the Caserones Mining
Operation” was filed under the Company's profile.
• On July 27, 2023, the Company announced it had obtained a three-year term loan ("Term Loan") in a principal amount of
$800 million with an additional $400 million accordion and closing of up to an additional 19% interest in Lumina Copper.
Financial Performance
• Gross profit for the quarter ended June 30, 2023 was $52.8 million, an increase of $6.8 million and largely comparable to
the prior year quarter. On a year -to-date basis, gross profit for the period ended June 30, 2023 was $266.2 million and
was lower than the prior year period due to lower sales volumes and lower metal prices.
• For the three months ended June 30, 2023, net earnings of $61.3 million were $109.9 million higher than the prior year
quarter due primarily to lower general exploration and business development costs and lower income taxes. On a year -
to-date basis net earnings of $226.6 million were lower than the prior year period due to lower gross profit resulting from
lower realized prices, partially offset by lower taxes.
• Adjusted earnings 1 for the three months ended June 30, 2023, of $16.0 million were $51.3 milli on higher than the
adjusted loss of the prior year quarter due to the same factors as the change in net earnings described above. On a year-
to-date basis adjusted earnings of $141.7 million were lower than the prior year period due to lower gross profit partially
offset by lower income taxes.
Financial Position and Financing
• Cash and cash equivalents as at June 30, 2023 was $190.2 million. Cash flow from operations of $194.8 million was used
to fund investing activities of $283.5 million. Cash from financing activities was $99.9 million which was comprised
primarily of the proceeds from debt on a net basis partially offset b y dividends paid to shareholders. Cash and cash
equivalents remained relatively unchanged during the six months ended June 30, 2023.
• As at June 30, 2023, the Company had a net debt1 balance of $229.8 million.
• As at August 2, 2023, the Company had cash and net debt balances of approximately $ 270.0 million and $930.0 million,
respectively. The net debt increase was attributable to debt financing of the acquisition of Caserones.
===== SIDA 16 =====
3
Outlook
Overall, the operations performed well during the second quarter of 2023. The Company is currently tracking to the midpoint
or higher for copper, gold and nickel guidance and the lower end for zinc. Production continues to be weighted to the second
half of the year. Candelaria and Eagle production is forecast to be modestly weighted to the second half of the year, primarily
owing to mine sequencing and the resultant grade profiles. Chapada production is forecast to be weighted to the second half
of the year due to the first half seasonal operating considerations and forecast grade and recovery profiles.
Expected cash costs remain consistent with reported guidance for Candelaria, Caserones and Neves -Corvo. Chapada’s cash
cost guidance range has been improved to $2.35 - $2.55/lb of copper, reflecting lower pricing of consumables. Eagle’s forecast
nickel cash cost guidance has been increased to $2.30 - $2.45/lb of nickel. While Eagle’s overall operating costs remain
consistent with the Company’s previous expectations, nickel cash cost guidance has been increased primarily driven by lower
by-product credits, mainly pricing. Zinkgruvan’s cash cost guidance has been improved to $0.45 - $0.50/lb of zinc, reflecting
greater by-product credits.
A reduction in capital expenditure guidance is expected for the remainder of the year as timing of several projects at
Candelaria have been deferred into next year. At Josemaria, foreign exchange, a delay in planned equipment deliveries and
reduced activities have lowered capital spend guidance.
2023 Production and Cash Cost Guidance
Guidancea Revised Guidance
(contained metal) Production Cash Cost ($/lb)b Production Cash Cost ($/lb)b
Copper (t) Candelaria (100%) 145,000 – 155,000 1.80 – 1.95c 145,000 – 155,000 1.80 – 1.95c
Caserones (100%)e 60,000 – 65,000 2.30 – 2.45 60,000 – 65,000 2.30 – 2.45
Chapada 43,000 – 48,000 2.55 – 2.75d 43,000 – 48,000 2.35 – 2.55d
Eagle 12,000 – 15,000 12,000 – 15,000
Neves-Corvo 33,000 – 38,000 2.10 – 2.30c 33,000 – 38,000 2.10 – 2.30c
Zinkgruvan 3,000 – 4,000 3,000 – 4,000
Total 296,000 – 325,000 296,000 – 325,000
Zinc (t) Neves-Corvo 100,000 – 110,000 100,000 – 110,000
Zinkgruvan 80,000 – 85,000 0.60 – 0.65c 80,000 – 85,000 0.45 – 0.50c
Total 180,000 – 195,000 180,000 – 195,000
Molybdenum (t) Caserones (100%)e 1,500 – 2,000 1,500 – 2,000
Gold (koz) Candelaria (100%) 85 – 90 85 – 90
Chapada 55 – 60 55 – 60
Total 140 – 150 140 – 150
Nickel (t) Eagle 13,000 – 16,000 1.50 – 1.65 13,000 – 16,000 2.30 – 2.45
a. Guidance as outlined in the MD&A for the year ended December 31, 2022 and for Caserones as outlined in the news release “Lundin Mining Announces
Closing of the Acquisition of Majority Interest in Caserones Copper -Molybdenum Mine in Chile and Commitments for New $800 Million Term Loan”
provided on July 13, 2023.
b. Cash costs are based on various assumptions and estimates, including but not limited to: production volumes, commodity prices (Cu: $3.75/lb, Zn:
$1.30/lb, Mo: $20.00/lb Pb: $0.90/lb, Au: $1,850/oz), foreign exchange rates (€/USD:1.00, USD/SEK:10.50, USD/CLP:800, USD/BRL :5.00) and production
costs for the remainder of 2023.
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 $425/oz gold and $4.25/oz to $4.57/oz silver.
d. Chapada cash cost is calculated on a by -product basis and does not include the effects of its copper stream agreements. Effects of the copper stream
agreements are reflected in copper revenue and will impact realized price per pound.
e. Caserones guidance is for the entire second half of 2023.
===== SIDA 17 =====
4
2023 Capital Expenditure Guidanceb
($ millions) Guidancea Revisions Revised Guidance
Candelaria (100% basis) 400 (25) 375
Caserones (100% basis)c 110 — 110
Chapada 70 — 70
Eagle 20 — 20
Neves-Corvo 130 — 130
Zinkgruvan 70 — 70
Other 10 — 10
Total Sustaining 810 (25) 785
Expansionary - Josemaria 400 (50) 350
Total Capital Expenditures 1,210 (75) 1,135
a. Guidance as outlined in the MD&A for the year ended December 31, 2022 and for Caserones as outlined in the news release "Lundin Mining Announces
Closing of the Acquisition of Majority Interest in Caserones Copper -Molybdenum Mine in Chile and Commitments for New $800 Million Term Loan"
provided on July 13, 2023.
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.
c. Caserones guidance is for entire second half of 2023.
2023 Exploration Investment Guidance
Total exploration expenditures are on target to be $45.0 million in 2023, unchanged from previous guidance.
===== SIDA 18 =====
5
Selected Quarterly Financial Information1
Three months ended
June 30,
Six months ended
June 30,
($ millions, except share and per share amounts) 2023 2022 2023 2022
Revenue 588.5 590.2 1,339.9 1,581.3
Costs of goods sold:
Production costs (405.2) (402.2) (823.0) (784.6)
Depreciation, depletion and amortization (130.5) (142.0) (250.8) (271.9)
Gross profit 52.8 46.0 266.2 524.8
Net earnings (loss) attributable to:
Lundin Mining shareholders 59.1 (52.6) 205.7 292.5
Non-controlling interests 2.2 4.0 20.9 37.0
Net earnings (loss) 61.3 (48.6) 226.6 329.5
Adjusted earnings (loss)3 16.0 (35.3) 141.7 260.3
Adjusted EBITDA3 162.2 148.6 499.1 736.4
Cash flow from operations 194.8 366.4 406.7 683.7
Adjusted operating cash flow3 110.6 49.7 345.7 522.6
Free cash flow from operations 20.7 266.3 91.8 461.1
Free cash flow3 (84.6) 149.1 (118.8) 321.5
Capital expenditures4 279.9 217.3 526.0 362.2
Per share amounts:
Basic and diluted earnings (loss) per share ("EPS") attributable
to shareholders 0.08 (0.07) 0.27 0.39
Adjusted EPS 0.02 (0.05) 0.18 0.35
Adjusted operating cash flow per share3 0.14 0.06 0.45 0.70
Dividends declared (C$/share) 0.09 0.09 0.18 0.29
June 30, 2023
December 31,
2022
Total assets 8,441.8 8,172.8
Total debt and lease liabilities 415.0 197.3
Net debt3 (229.8) (10.9)
Summary of Quarterly Results1,2,5
($ millions, except per share data) Q2-23 Q1-23 Q4-22 Q3-22 Q2-22 Q1-22 Q4-21 Q3-21
Revenue 588.5 751.3 811.4 648.5 590.2 991.1 1,018.6 756.4
Gross profit 52.8 213.3 155.2 82.5 46.0 478.8 433.2 303.9
Net earnings (loss) 61.3 165.3 145.3 (11.2) (48.6) 378.1 266.1 190.6
- attributable to shareholders 59.1 146.6 145.6 (11.2) (52.6) 345.1 228.8 173.7
Adjusted earnings (loss)3 16.0 125.7 191.5 30.9 (35.3) 295.6 281.5 168.4
Adjusted EBITDA3 162.2 336.9 353.7 202.4 148.6 587.8 623.0 411.3
EPS - Basic and Diluted 0.08 0.19 0.19 (0.01) (0.07) 0.47 0.31 0.24
Adjusted EPS3 0.02 0.16 0.25 0.04 (0.05) 0.40 0.38 0.23
Cash flow from operations 194.8 211.9 156.9 36.3 366.4 317.3 384.2 523.1
Adjusted operating cash flow per share3 0.14 0.30 0.38 0.23 0.06 0.64 0.65 0.40
Capital expenditures4 279.9 246.1 281.2 199.5 217.3 144.9 153.9 133.8
1 Except where otherwise noted, financial data has been prepared in accordance with IFRS as issued by the IASB.
2 The sum of quarterly amounts may differ from year-to-date results due to rounding.
3 This is a non-GAAP measure - see the "Non-GAAP and Other Performance Measures" section of this MD&A for discussion.
4 Capital expenditures are reported on a cash basis, as presented in the consolidated statement of cash flows.
5 Variability in revenues and net earnings is largely driven by metal prices and sales volumes. In recent quarters, net earnings has also been impacted by
inflation factors. For further metal price trending discussion, refer to page 21 of this MD&A.
===== SIDA 19 =====
6
Revenue Overview
Sales Volumes by Payable Metal
(Contained metal) 2023 2022
YTD Q2 Q1 Total Q4 Q3 Q2 Q1
Copper (t)
Candelaria (100%) 71,917 36,347 35,570 147,251 33,561 35,587 39,655 38,448
Chapada 19,236 10,164 9,072 45,563 12,037 12,817 7,905 12,804
Eagle 5,736 2,951 2,785 14,060 2,672 3,721 4,159 3,508
Neves-Corvo 14,201 6,170 8,031 31,592 6,351 8,574 8,183 8,484
Zinkgruvan 1,870 1,001 869 4,428 886 1,570 337 1,635
112,960 56,633 56,327 242,894 55,507 62,269 60,239 64,879
Zinc (t)
Neves-Corvo 43,667 20,125 23,542 66,966 20,205 18,770 16,289 11,702
Zinkgruvan 25,986 9,374 16,612 65,684 17,635 13,722 18,525 15,802
69,653 29,499 40,154 132,650 37,840 32,492 34,814 27,504
Gold (koz)
Candelaria (100%) 45 23 22 83 20 20 22 21
Chapada 22 11 11 65 17 23 10 15
67 34 33 148 37 43 32 36
Nickel (t)
Eagle 6,594 3,859 2,735 14,427 3,239 3,715 4,206 3,267
Lead (t)
Neves-Corvo 1,920 881 1,039 2,908 673 654 818 763
Zinkgruvan 10,422 4,944 5,478 30,163 7,654 7,502 10,163 4,844
12,342 5,825 6,517 33,071 8,327 8,156 10,981 5,607
Silver (koz)
Candelaria (100%) 628 333 295 1,442 278 305 412 447
Chapada 60 29 31 156 50 32 26 48
Eagle 10 4 6 34 9 9 9 7
Neves-Corvo 329 158 171 552 92 117 152 191
Zinkgruvan 730 331 399 2,088 551 532 650 355
1,757 855 902 4,272 980 995 1,249 1,048
===== SIDA 20 =====
7
Revenue Analysis
Three months ended June 30, Six months ended June 30,
by Mine 2023 2022 Change 2023 2022 Change
($ thousands) $ % $ % $ $ % $ % $
Candelaria (100%) 290,426 50 261,999 44 28,427 670,831 50 719,545 46 (48,714)
Chapada 94,721 16 57,260 10 37,461 205,839 15 216,865 14 (11,026)
Eagle 105,250 18 106,828 18 (1,578) 174,670 13 256,697 16 (82,027)
Neves-Corvo 68,614 12 93,538 16 (24,924) 198,017 15 228,105 14 (30,088)
Zinkgruvan 29,520 5 70,596 12 (41,076) 90,518 7 160,088 10 (69,570)
588,531 590,221 (1,690) 1,339,875 1,581,300 (241,425)
Three months ended June 30, Six months ended June 30,
by Metal 2023 2022 Change 2023 2022 Change
($ thousands) $ % $ % $ $ % $ % $
Copper 390,953 66 350,911 59 40,042 920,634 69 1,029,986 65 (109,352)
Zinc 34,801 6 87,693 15 (52,892) 133,952 10 195,308 12 (61,356)
Gold 51,007 9 43,072 7 7,935 108,075 8 102,789 7 5,286
Nickel 80,302 14 70,876 12 9,426 122,261 9 177,666 11 (55,405)
Lead 11,049 2 17,383 3 (6,334) 22,508 2 29,220 2 (6,712)
Silver 9,652 2 10,003 2 (351) 18,888 1 23,901 2 (5,013)
Other 10,767 1 10,283 2 484 13,557 1 22,430 1 (8,873)
588,531 590,221 (1,690) 1,339,875 1,581,300 (241,425)
Revenue for the quarter ended June 30, 2023 amounted to $588.5 million which was comparable to the prior year quarter.
On a year -to-date basis revenue was lower than the prior year period primarily as a result of lower sales volumes ($126.6
million) and realized metal prices ($88.9 million).
Revenue from gold and silver for the three and six months ended June 30, 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 $4.25/oz and $4.57/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 pri ce 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.
===== SIDA 21 =====
8
Provisionally Valued Revenue as of June 30, 2023
Metal Payable metal Valued at
Copper 82,405 t $3.77 /lb
Zinc 27,637 t $1.08 /lb
Gold 35 koz $1,929 /oz
Nickel 1,668 t $9.25 /lb
Quarterly Reconciliation of Realized Prices
Three months ended June 30, 2023
($ thousands) Copper Zinc Gold Nickel Total
Current period sales1 473,543 74,219 65,401 78,486 691,649
Prior period price adjustments (53,338) (20,341) (2,949) 2,039 (74,589)
420,205 53,878 62,452 80,525 617,060
Other metal sales 46,124
Copper stream cash effect (4,253)
Gold stream cash effect (20,923)
Less: Treatment & refining charges (49,477)
Total Revenue 588,531
Payable Metal 56,633 t 29,499 t 34 koz 3,859 t
Current period sales1,2 $3.79 $1.14 $1,929 $9.23
Prior period adjustments2 (0.42) (0.31) (87) 0.24
Realized prices2, 3 $3.37 /lb $0.83 /lb $1,842 /oz $9.47 /lb
Three months ended June 30, 2022
Copper Zinc Gold Nickel Total
Current period sales1 502,541 111,814 58,808 102,349 775,512
Prior period price adjustments (127,376) (6,432) (5,652) (31,525) (170,985)
375,165 105,382 53,156 70,824 604,527
Other metal sales 56,114
Copper stream cash effect (5,244)
Gold stream cash effect (20,181)
Less: Treatment & refining charges (44,995)
Total Revenue 590,221
Payable Metal 60,239 t 34,814 t 32 koz 4,206 t
Current period sales1,2 $3.78 $1.46 $1,825 $11.04
Prior period adjustments2 (0.96) (0.09) (176) (3.40)
Realized prices2, 3 $2.82 /lb $1.37 /lb $1,649 /oz $7.64 /lb
1. Includes provisional price adjustments on current period sales.
2. This is a non-GAAP measure – see the "Non-GAAP and Other Performance Measures" section of this MD&A for discussion.
3. The realized price for copper inclusive of the impact of streaming agreements for the three months ended June 30, 2023 is $3.34/lb (2022: $2.78/lb).
The realized price for gold inclusive of the impact of streaming agreements for the three months ended June 30, 2023 is $1,225/oz (2022: $1,023/oz).
===== SIDA 22 =====
9
Year-to-Date Reconciliation of Realized Prices
Six months ended June 30, 2023
($ thousands) Copper Zinc Gold Nickel Total
Current period sales1 949,919 176,090 128,960 143,244 1,398,213
Prior period price adjustments 28,168 1,160 1,145 (18,322) 12,151
978,087 177,250 130,105 124,922 1,410,364
Other metal sales 87,177
Copper stream cash effect (10,763)
Gold stream cash effect (41,519)
Less: Treatment & refining charges (105,384)
Total Revenue 1,339,875
Payable Metal 112,960 t 69,653 t 66 koz 6,594 t
Current period sales1,2 $3.81 $1.15 $1,939 $9.85
Prior period adjustments2 0.12 0.00 17 (1.26)
Realized prices2, 3 $3.93 /lb $1.15 /lb $1,956 /oz $8.59 /lb
Six months ended June 30, 2022
Copper Zinc Gold Nickel Total
Current period sales1 1,068,409 218,906 126,088 191,851 1,605,254
Prior period price adjustments 13,057 5,611 (1,670) (11,754) 5,244
1,081,466 224,517 124,418 180,097 1,610,498
Other metal sales 111,649
Copper stream cash effect (12,384)
Gold stream cash effect (41,289)
Less: Treatment & refining charges (87,174)
Total Revenue 1,581,300
Payable Metal 125,118 t 62,318 t 68 koz 7,473 t
Current period sales1,2 $3.87 $1.59 $1,854 $11.64
Prior period adjustments2 0.05 0.04 (24) (0.71)
Realized prices2, 3 $3.92 /lb $1.63 /lb $1,830 /oz $10.93 /lb
1. Includes provisional price adjustments on current period sales.
2. This is a non-GAAP measure - see the "Non-GAAP and Other Performance Measures" section of this MD&A for discussion.
3. The realized price for copper inclusive of the impact of streaming agreements for 2023 is $3.89/lb (2022: $3.88/lb). The realized price for gold inclusive
of the impact of streaming agreements for 2023 is $1,332/oz (2022: $1,212/oz).
===== SIDA 23 =====
10
Financial Results
Production Costs
Production costs for the quarter ended June 30, 2023 were $405.2 million and were largely comparable to the prior year
quarter. On a year -to-date basis, production costs of $823.0 million was an increase of $38.3 million over the prior year
comparable period primarily due to increased contractor and maintenance costs at Candelaria.
Depreciation, Depletion and Amortization
For the three and six months ended June 30, 2023 depreciation, depletion and amortization expense decreased compared to
the prior year comparative periods, primarily attributable to an extended life of mine at Eagle and reduced Candelaria deferred
stripping amortization.
Depreciation, depletion & amortization Three months ended June 30, Six months ended June 30,
($ thousands) 2023 2022 Change 2023 2022 Change
Candelaria 69,696 75,911 (6,215) 128,071 144,020 (15,949)
Chapada 14,989 8,473 6,516 27,070 19,590 7,480
Eagle 12,670 21,904 (9,234) 23,821 38,753 (14,932)
Josemaria — 288 (288) 38 — 38
Neves-Corvo 27,719 23,979 3,740 57,799 44,824 12,975
Zinkgruvan 4,913 11,030 (6,117) 13,000 23,509 (10,509)
Other 518 457 61 953 895 58
130,505 142,042 (11,537) 250,752 271,591 (20,839)
General Exploration and Business Development
Total general exploration and business development expenses for the quarter and the six months ended June 30, 2023 were
lower than the comparable prior year periods due mainly to project investigation costs incurred in 2022 related to the
Josemaria Project.
During the current quarter, exploration costs were spent primarily on in -mine and near -mine targets at the Company’s
operations. Geophysical surveys were conducted at Chapada, Eagle and Zinkgruvan. Drilling at Candelaria was divided
between Ojos distri ct and Candelaria Underground with six rigs. Exploration drilling at Neves -Corvo and Zinkgruvan was
primarily focused along near -mine mineralized trends; Drilling at Chapada has primarily focused on Saúva and the Chapada
District with four drill rigs opera ting during the quarter. Drilling at Eagle commenced during the second quarter with
geophysical targeting support which will continue into the third quarter.
Other Income
Net other income for the quarter and six months ende d June 30, 2023 increased compared to the prior year comparable
periods due to foreign exchange, trading gains on debt and equity investments and gains on foreign currency contracts. This
was partially offset by Ojos del Salado sinkhole expenses and a comparatively lower gain on disposal in the current year related
to a subsidiary sold in a prior period.
Foreign exchange gains and losses recorded in other income primarily resulted from foreign exchange revaluation of working
capital denomin ated in foreign currencies. Period end exchange rates having a meaningful impact on foreign exchange
recorded at June 30, 2023 were:
===== SIDA 24 =====
11
June 30, 2023 March 31, 2023 December 31, 2022
Brazilian Real (USD:BRL) 4.82 5.08 5.22
Chilean Peso (USD:CLP) 803 789 860
Euro (USD:€) 0.92 0.92 0.94
Swedish Kronor (USD:SEK) 10.85 10.35 10.44
Argentine Peso (USD:ARS) 256 209 177
Income Taxes
Income tax (recovery) expense
Three months ended
June 30,
Six months ended
June 30,
($ thousands) 2023 2022 Change 2023 2022 Change
Candelaria 3,732 5,421 (1,689) 46,279 78,390 (32,111)
Chapada (15,864) 27,265 (43,129) (21,213) (416) (20,797)
Eagle 3,539 2,396 1,143 3,546 16,158 (12,612)
Josemaria 678 982 (304) 678 982 (304)
Neves-Corvo (10,617) (2,405) (8,212) (9,345) 4,706 (14,051)
Zinkgruvan 2,286 11,986 (9,700) 6,265 23,251 (16,986)
Other (3,355) 3,358 (6,713) 2,882 3,138 (256)
(19,601) 49,003 (68,604) 29,092 126,209 (97,117)
Income taxes by classification
Three months ended
June 30,
Six months ended
June 30,
($ thousands) 2023 2022 Change 2023 2022 Change
Current income tax 27,213 75,649 (48,436) 86,714 171,187 (84,473)
Deferred income tax recovery (46,814) (26,646) (20,168) (57,622) (44,978) (12,644)
(19,601) 49,003 (68,604) 29,092 126,209 (97,117)
Income tax (recovery) expense for the three and six months ended June 30, 2023 was lower than the prior year comparable
periods due primarily to lower taxable earnings. Included in Chapada’s income taxes for the current quarter was a $16.0
million recovery and $22.0 million recovery on a year-to-date basis recorded for deferred tax on revaluation of non-monetary
assets and translation of deferred taxes (Q2 2022 – $23.1 million expense, YTD 2022 - $11.9 million recovery).
===== SIDA 25 =====
12
Mining Operations
Production Overview
(Contained metal in
concentrate)
2023 2022
YTD Q2 Q1 Total Q4 Q3 Q2 Q1
Copper (t)
Candelaria (100%) 76,119 36,952 39,167 152,042 34,398 37,192 40,949 39,503
Chapada 20,561 10,697 9,864 45,739 11,306 13,988 10,345 10,100
Eagle 7,021 3,881 3,140 15,895 3,081 3,994 4,400 4,420
Neves-Corvo 15,184 7,610 7,574 31,906 7,160 7,019 7,867 9,860
Zinkgruvan 2,634 917 1,717 4,077 607 1,737 535 1,198
121,519 60,057 61,462 249,659 56,552 63,930 64,096 65,081
Zinc (t)
Neves-Corvo 51,970 24,177 27,793 82,435 24,523 22,514 20,647 14,751
Zinkgruvan 32,698 11,938 20,760 76,503 19,785 17,813 21,265 17,640
84,668 36,115 48,553 158,938 44,308 40,327 41,912 32,391
Gold (koz)
Candelaria (100%) 45 21 24 86 20 21 23 22
Chapada 25 13 12 68 16 24 16 12
70 34 36 154 36 45 39 34
Nickel (t)
Eagle 8,410 4,686 3,724 17,475 4,096 4,379 4,719 4,281
Lead (t)
Neves-Corvo 2,123 951 1,172 3,306 845 743 925 793
Zinkgruvan 11,223 3,816 7,407 30,517 7,619 7,046 9,124 6,728
13,346 4,767 8,579 33,823 8,464 7,789 10,049 7,521
Silver (koz)
Candelaria (100%) 713 366 347 1,595 306 337 457 495
Chapada 118 62 56 258 65 75 60 58
Eagle 28 11 17 93 20 20 26 27
Neves-Corvo 843 407 436 1,383 370 323 346 344
Zinkgruvan 1,006 374 632 2,621 663 642 739 577
2,708 1,220 1,488 5,950 1,424 1,397 1,628 1,501
===== SIDA 26 =====
13
Production Cost and Cash Cost Overview ($ thousand, $/lb)
Three months ended
June 30,
Six months ended
June 30,
($ thousands) 2023 2022 2023 2022
Candelaria
Production costs $184,958 $168,164 $372,937 $320,973
Gross cost 2.51 2.08 2.54 2.02
By-product1 (0.37) (0.22) (0.36) (0.30)
Cash Cost (Cu, $/lb) 2.14 1.86 2.18 1.72
AISC (Cu, $/lb)2 3.76 2.89 3.60 2.75
Chapada
Production costs $80,113 $71,507 $148,747 $151,184
Gross cost 3.72 4.12 3.63 3.33
By-product (1.03) (1.14) (1.09) (1.07)
Cash Cost (Cu, $/lb) 2.69 2.98 2.54 2.26
AISC (Cu, $/lb) 3.80 5.00 3.62 3.49
Eagle
Production cost $45,735 $55,128 $91,184 $94,686
Gross cost 4.81 4.78 5.71 4.76
By-product (2.93) (3.88) (3.60) (4.80)
Cash Cost (Ni, $/lb) 1.88 0.90 2.11 (0.04)
AISC (Ni, $/lb) 3.34 2.93 4.09 2.17
Neves-Corvo
Production costs $76,080 $77,788 $161,806 $156,258
Gross cost 5.96 4.61 5.45 4.47
By-product (1.97) (2.22) (2.76) (2.43)
Cash Cost (Cu, $/lb) 3.99 2.39 2.69 2.04
AISC (Cu, $/lb) 5.73 3.14 4.35 3.03
Zinkgruvan
Production costs $17,786 $29,066 $46,691 $60,254
Gross cost 1.13 0.93 1.07 0.99
By-product (0.89) (0.49) (0.64) (0.63)
Cash Cost (Zn, $/lb) 0.24 0.44 0.43 0.36
AISC (Zn, $/lb) 1.06 0.82 1.00 0.70
1. By-product is after related treatment and refining charges.
2. All-in Sustaining Cost ("AISC") is a non-GAAP measure, see the "Non-GAAP and Other Performance Measures" section of this MD&A for discussion.
===== SIDA 27 =====
14
Capital Expenditures1
Three months ended June 30,
2023 2022
($ thousands) Sustaining Expansionary
Capitalized
Interest Total Sustaining Expansionary
Capitalized
Interest Total
Candelaria 123,417 — — 123,417 86,107 — — 86,107
Chapada 19,690 — — 19,690 29,760 — — 29,760
Eagle 3,562 — — 3,562 2,923 — — 2,923
Josemaria — 91,650 443 92,093 — 54,934 — 54,934
Neves-Corvo 22,133 — — 22,133 13,760 10,669 — 24,429
Zinkgruvan 15,994 — — 15,994 14,083 — — 14,083
Other 3,024 — — 3,024 5,032 — — 5,032
187,820 91,650 443 279,913 151,665 65,603 — 217,268
Six months ended June 30,
2023 2022
($ thousands) Sustaining Expansionary
Capitalized
Interest Total Sustaining Expansionary
Capitalized
Interest Total
Candelaria 214,103 — — 214,103 169,071 — — 169,071
Chapada 35,717 — — 35,717 44,215 — — 44,215
Eagle 10,664 — — 10,664 7,383 — — 7,383
Josemaria — 182,169 479 182,648 — 54,934 — 54,934
Neves-Corvo 47,194 — — 47,194 33,276 24,823 — 58,099
Zinkgruvan 30,462 — — 30,462 23,122 — — 23,122
Other 5,244 — — 5,244 5,356 — — 5,356
343,384 182,169 479 526,032 282,423 79,757 — 362,180
1. Capital expenditures are reported on a cash basis, as presented in the condensed interim consolidated statement of cash flows. Sustaining capital
expenditure is 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.
===== SIDA 28 =====
15
Candelaria (Chile)
Operating Statistics
2023 2022
(100% Basis) YTD Q2 Q1 Total Q4 Q3 Q2 Q1
Ore mined (000s tonnes) 12,796 6,194 6,602 22,666 4,993 6,239 6,362 5,072
Ore milled (000s tonnes) 14,126 6,924 7,202 26,725 6,593 6,642 6,847 6,643
Grade
Copper (%) 0.59 0.59 0.59 0.62 0.57 0.60 0.64 0.65
Gold (g/t) 0.14 0.14 0.15 0.14 0.13 0.14 0.14 0.14
Recovery
Copper (%) 91.9 91.1 92.6 92.7 92.7 93.3 93.0 91.9
Gold (%) 69.6 68.8 70.3 73.9 74.0 74.6 73.8 73.0
Production (contained metal)
Copper (tonnes) 76,119 36,952 39,167 152,042 34,398 37,192 40,949 39,503
Gold (000 oz) 45 21 24 86 20 21 23 22
Silver (000 oz) 713 366 347 1,595 306 337 457 495
Revenue ($000s) 670,831 290,426 380,405 1,317,223 342,348 255,330 261,999 457,546
Production costs ($000s) 372,937 184,958 187,979 697,171 207,596 168,602 168,164 152,809
Gross profit ($000s) 169,823 35,772 134,051 335,793 69,285 11,956 17,924 236,628
Cash cost ($ per pound copper) 2.18 2.14 2.21 1.96 2.52 1.97 1.86 1.58
AISC ($ per pound copper) 3.60 3.76 3.44 3.22 4.19 3.34 2.89 2.61
Gross Profit
Gross profit for the three months ended June 30, 2023 was higher than the prior year quarter, primarily due to higher net
price adjustments for both copper and gold, partially offset by higher production costs. Year -to-date, gross profit was lower
than the prior year period due to higher production costs and lower sales volumes.
Production
Copper production for the three and six months ended June 30, 2023 was lower than the prior year quarter and year-to-date
period due to lower grades from the open pit, partially offset by higher throughput. Gold production in the current quarter
was below the prior year quarter, due to lower recoveries and on a year-to-date basis, gold production was comparable to the
prior year period. Annual copper and gold production are on track to achieve guidance.
Production Costs and Cash Cost
Production costs and copper cash cost for the three and six months ended June 30, 2023 were higher than the prior year
quarter, mainly due to higher contractor services and higher maintenance costs partially mitigated by contracted lower energy
costs. Cash cost was further impacted by lower copper sales volumes. Annual copper cash cost guidance has remained
unchanged from previous guidance. AISC for the three and six months ended June 30, 2023 were higher than the prior year
periods due to higher cash cost and higher sustaining capital expenditures.
For the six months ended June 30, 2023, approximately 29,000 oz of gold and 426,000 oz of silver were subject to terms of a
streaming agreement from which approximately $425/oz of gold and $4.25/oz of silver will be received.
===== SIDA 29 =====
16
Chapada (Brazil)
Operating Statistics
2023 2022
(100% Basis) YTD Q2 Q1 Total Q4 Q3 Q2 Q1
Ore mined (000s tonnes) 13,643 7,522 6,121 26,319 7,801 7,404 4,875 6,239
Ore milled (000s tonnes) 11,183 5,207 5,976 22,752 5,296 6,345 5,670 5,441
Grade
Copper (%) 0.24 0.26 0.23 0.26 0.25 0.28 0.25 0.23
Gold (g/t) 0.14 0.14 0.13 0.16 0.16 0.19 0.17 0.13
Recovery
Copper (%) 76.8 80.3 73.3 78.6 83.4 78.8 72.9 79.6
Gold (%) 50.9 54.1 48.0 56.0 59.5 58.3 50.6 55.3
Production (contained metal)
Copper (tonnes) 20,561 10,697 9,864 45,739 11,306 13,988 10,345 10,100
Gold (000 oz) 25 13 12 68 16 24 16 12
Silver (000 oz) 118 62 56 258 65 75 60 58
Revenue ($000s) 205,839 94,721 111,118 477,927 142,328 118,734 57,260 159,605
Production costs ($000s) 148,747 80,113 68,634 324,096 84,247 88,665 71,507 79,677
Gross (loss) profit ($000s) 30,022 (381) 30,403 41,420 (22,522) 17,851 (22,720) 68,811
Cash cost ($ per pound copper) 2.54 2.69 2.37 2.08 1.95 1.92 2.98 1.82
AISC ($ per pound copper) 3.62 3.80 3.42 3.36 3.73 2.80 5.00 2.56
Gross (Loss) Profit
Gross loss in the second quarter improved over the prior year quarter, largely due to higher copper price and price
adjustments, partially offset by lower sales volumes and higher production costs. Year -to-date, gross profit was lower than
the prior year period, due to higher depreciation expense.
Production
Copper production for the t hree and six months ended June 30, 2023 was higher than the prior year periods due to higher
recoveries in the second quarter of 2023. Gold production in the quarter and year -to-date was lower than the prior year
periods due to lower grades. Production of both metals in the current quarter were higher than production in the first quarter.
Both metals are on track to meet annual production guidance.
Production Costs and Cash Cost
Current quarter production costs were higher than the prior year quarter due primarily to higher volumes sold. Year-to-date,
production costs are comparable to the prior year period.
Copper cash cost in the second quarter was better than the prior year quarter due to higher sales volumes. Year-to-date, cash
cost was higher than 2022 due to lower sales volumes. Annual cash cost guidance has improved from $2.55 - $2.75/lb to $2.35
- $2.55/lb of copper due lower pricing of consumables. AISC was lower in the current quarter and higher year -to-date,
attributable to cash cost movements described above.
Projects
The Company is continuing to evaluate options for long -term mine and plant expansion. Study work is being conducted
following comprehensive exploration efforts focused on near-mine targets since acquisition. The results will be incorporated
in any future expansionary or optimization plans. During the second quarter, approximately 12,700 metres of exploration
drilling were completed, primarily on Saúva area targets.
===== SIDA 30 =====
17
Eagle (USA)
Operating Statistics
2023 2022
(100% Basis) YTD Q2 Q1 Total Q4 Q3 Q2 Q1
Ore mined (000s tonnes) 345 189 156 718 165 190 181 182
Ore milled (000s tonnes) 342 181 161 718 170 187 182 179
Grade
Nickel (%) 2.8 2.9 2.6 2.8 2.7 2.7 3.0 2.8
Copper (%) 2.1 2.2 2.0 2.3 1.9 2.2 2.5 2.5
Recovery
Nickel (%) 88.7 88.8 88.5 86.6 88.6 85.5 87.3 85.3
Copper (%) 97.1 97.0 97.2 97.2 96.8 96.5 97.7 97.6
Production (contained metal)
Nickel (tonnes) 8,410 4,686 3,724 17,475 4,096 4,379 4,719 4,281
Copper (tonnes) 7,021 3,881 3,140 15,895 3,081 3,994 4,400 4,420
Revenue ($000s) 174,670 105,250 69,420 520,472 157,060 106,715 106,828 149,869
Production costs ($000s) 91,184 45,735 45,449 193,003 50,581 47,736 55,128 39,558
Gross profit ($000s) 59,665 46,845 12,820 247,946 87,359 37,329 29,796 93,462
Cash cost ($ per pound nickel) 2.11 1.88 2.43 0.79 2.40 1.05 0.90 (1.25)
AISC ($ per pound nickel) 4.09 3.34 5.16 3.01 5.23 2.77 2.93 1.19
Gross Profit
Gross profit for the quarter ended June 30, 2023 was higher than the prior year quarter, primarily due to positive nickel price
adjustments as well as lower depreciation expense. Year-to-date, gross profit was lower than the comparable period in 2022,
as a result of lower nickel prices and price adjustments and sales volumes.
Production
Nickel and copper production in the current quarter and year-to-date were lower than the prior year comparable periods, due
to lower grades and throughput. Production of b oth metals is trending higher in the current quarter over the first quarter of
2023 and on a year -to-date basis in accordance with expectations. Both metals are on track to meet full year production
guidance.
Production Costs and Cash Cost
Production costs in the second quarter and year -to-date were lower than the prior year periods due to lower costs for
consumables and royalties. Nickel cash cost in the quarter and year -to-date was higher than the prior year periods due to
lower sales volumes and lower copper by-products. Annual cash cost guidance has increased from $1.50 - $1.65/lb to $2.30 -
$2.45/lb of nickel due mainly to lower by -product credits. AISC in the second quarter and year -to-date were higher than the
prior year periods, due to higher cash cost.
===== SIDA 31 =====
18
Neves-Corvo (Portugal)
Operating Statistics
2023 2022
(100% Basis) YTD Q2 Q1 Total Q4 Q3 Q2 Q1
Ore mined, copper (000s tonnes) 1,225 622 603 2,501 611 598 610 682
Ore mined, zinc (000s tonnes) 981 470 511 1,632 462 447 426 297
Ore milled, copper (000s tonnes) 1,232 628 604 2,499 607 596 606 690
Ore milled, zinc (000s tonnes) 975 465 510 1,633 465 449 420 299
Grade
Copper (%) 1.6 1.6 1.6 1.7 1.6 1.6 1.7 1.8
Zinc (%) 6.7 6.6 6.7 6.9 6.9 6.9 6.9 7.0
Recovery
Copper (%) 77.4 77.0 77.7 76.1 75.1 73.0 77.0 78.7
Zinc (%) 77.8 76.8 78.7 70.2 74.3 70.3 68.4 66.1
Production (contained metal)
Copper (tonnes) 15,184 7,610 7,574 31,906 7,160 7,019 7,867 9,860
Zinc (tonnes) 51,970 24,177 27,793 82,435 24,523 22,514 20,647 14,751
Lead (tonnes) 2,123 951 1,172 3,306 845 743 925 793
Silver (000 oz) 843 407 436 1,383 370 323 346 344
Revenue ($000s) 198,017 68,614 129,403 433,486 102,516 102,865 93,538 134,567
Production costs ($000s) 161,806 76,080 85,726 329,232 78,402 94,572 77,788 78,470
Gross (loss) profit ($000s) (21,588) (35,185) 13,597 2,447 (7,570) (17,006) (8,229) 35,252
Cash cost ($ per pound copper) 2.69 3.99 1.69 2.27 2.32 2.69 2.39 1.70
AISC ($ per pound copper) 4.35 5.73 3.29 3.40 4.22 3.51 3.14 2.92
Gross (Loss) Profit
Gross loss was higher on a quarter and year-to-date basis compared to 2022, due to lower net zinc prices.
Production
Copper production for the three and six months ended June 30, 2023, was lower than the prior year comparable periods due
to lower grades. Zinc production in the quarter and year-to-date was higher than the prior year periods, attributable to higher
throughput and better recoveries from the ZEP ramp up. Both metals are expected to achieve ann ual guidance and are as
planned.
Production Costs and Cash Cost
Production costs for the three months ended June 30, 2023, were comparable to the prior year quarter. Year -to-date,
production costs were higher than the six months ended June 30, 2022 primarily due to higher zinc sales volumes.
Copper cash cost for the three and six months were higher than the prior year comparable periods due to lower copper sales
volumes and higher treatment and refining charges and lower zinc by -product credits in the current quarter. Annual copper
cash cost guidance remains unchanged . AISC for the three and six months ended June 30, 2023 were higher than the prior
year quarter due to higher cash cost and higher sustaining capital expenditures from mine development.
===== SIDA 32 =====
19
Zinkgruvan (Sweden)
Operating Statistics
2023 2022
(100% Basis) YTD Q2 Q1 Total Q4 Q3 Q2 Q1
Ore mined, zinc (000s tonnes) 578 268 310 1,209 325 260 298 326
Ore mined, copper (000s tonnes) 106 51 55 192 48 61 38 45
Ore milled, zinc (000s tonnes) 526 211 315 1,234 309 293 327 305
Ore milled, copper (000s tonnes) 112 34 78 225 26 84 27 88
Grade
Zinc (%) 7.1 6.6 7.4 7.0 7.3 6.9 7.3 6.5
Lead (%) 2.7 2.4 2.9 3.0 3.0 2.9 3.3 2.7
Copper (%) 2.6 3.1 2.4 2.1 2.6 2.4 2.3 1.6
Recovery
Zinc (%) 87.8 86.3 88.7 88.4 88.3 87.5 89.1 88.7
Lead (%) 80.0 76.2 82.1 82.4 82.2 82.5 83.1 81.7
Copper (%) 88.9 86.1 90.5 87.1 89.0 86.1 87.7 87.3
Production (contained metal)
Zinc (tonnes) 32,698 11,938 20,760 76,503 19,785 17,813 21,265 17,640
Lead (tonnes) 11,223 3,816 7,407 30,517 7,619 7,046 9,124 6,728
Copper (tonnes) 2,634 917 1,717 4,077 607 1,737 535 1,198
Silver (000 oz) 1,006 374 632 2,621 663 642 739 577
Revenue ($000s) 90,518 29,520 60,998 292,120 67,178 64,854 70,596 89,492
Production costs ($000s) 46,691 17,786 28,905 115,553 29,590 25,709 29,066 31,188
Gross profit ($000s) 30,827 6,821 24,006 139,828 29,800 33,703 30,500 45,825
Cash cost ($ per pound) 0.43 0.24 0.54 0.32 0.32 0.18 0.44 0.27
AISC ($ per pound) 1.00 1.06 0.97 0.68 0.77 0.50 0.82 0.57
Gross Profit
Gross profit for the three and six months ended June 30, 2023, was lower than the prior year periods due to lower net zinc
price combined with lower sales volumes.
Production
Production of zinc and lead in the three and six months ended June 30, 2023 was below the prior year periods, impacted by
lower throughput as a result of a shut -down of the mill to perform the planned implementation of the sequential flotation
system. In the current quarter, zinc and lead production were also impacted by lower grades and r ecoveries. Copper
production in the current quarter and year-to-date was higher than the prior year periods, due to higher grades. Annual zinc
and copper production guidance remains unchanged.
Production Costs and Cash Cost
Production costs for the quarter were lower than the prior year comparable periods due to mainly to lower sales volumes.
Year-to-date production costs also benefitted from foreign exchange. Zinc cash cost was lower than the prior year quarter due
to lower mine and mill costs. On a year-to-date basis cash cost was higher due to lower sales volumes partially offset by lower
production costs and favourable foreign exchange. Full year cash cost guidance has improved from $0.60 - $0.65/lb to $0.45
- $0.50/lb of zinc due to higher by -product credits. AISC for the quarter and year -to-date were higher than the prior year
periods due to higher sustaining capital expenditures.
===== SIDA 33 =====
20
Josemaria Project (Argentina)
Project Development
The Josemaria Project continues to advance in several areas of pre-construction in reducing risks and enhancing the project,
for example by advancing government agreements, evaluating inflation and currency devaluation impacts, enhancing mining
and production plans and further water, geotechnical and exploration drilling planned for the remainder of 2023.
At Josemaria, the construction of the Phase 1 camp is substantially complete with the exception of the installation of the
power supply system and subsequent commissioning of the kitchen. Internal roadwork has also been completed. Site work is
now focused on drilling for additional water resources and after the winter in the fourth quarter exploration drilling will
commence. The long lead grinding mills started to arrive in Argentina and are scheduled to be moved to San Juan in July with
deliveries continuing throughout the remainder of 2023 and into 2024.
Negotiation continues on the San Juan infrastructure agreements for the royalty offset funding of the access road and th e
power line capital costs with signing of these agreements scheduled after the change in provincial governor determined by
the recent July 2nd election. Agreements for the Guandacol access road bypass and road maintenance agreements are nearing
completion and work will be proceeding imminently.
Additionally, a work plan was prepared for the remainder of 2023 focusing on de -risking the project and adding value to
Josemaria as well as advancing project financing and execution readiness activities. This work involves eight work streams in
the categories of mine optimization, throughput and concentrator recovery, concentrate shipping, infrastructure optimization,
commercial reviews and project financing, execution readiness and project permitting and government agreements.
During the current quarter, the Company spent $50.6 million, inclusive of foreign exchange and trading gains on debt and
equity investments of $30.7 million (Q2 2022 - $29.1 million). Capital expenditures during the current quarter were
$91.7 million (Q2 2022 - $54.9 million). On a year -to-date basis the Company spent $141.1 million in project development
costs.
Annual capital guidance has been reduced from $400.0 million to $350.0 million to reflect foreign exchange, a delay in planned
equipment deliveries and reduced activities.
Josemaria Mineral Resources and Mineral Reserves remain unchanged since the 2020 estimates.
===== SIDA 34 =====
21
Metal Prices, LME Inventories and Smelter Treatment and Refining Charges
Overall, the average metal prices for quarter and the year-to-date 2023 were lower than the respective comparative periods
with the exception of gold. The average metal prices for copper, zinc and nickel for the second quarter of 2023 were all lower
than the average prices for the first quarter of 2023 by; 5% copper, 19% zinc and 14% nickel while the average price for gold
for the second quarter of 2023 was 5% higher compared to the first quarter.
Three months ended June 30, Six months ended June 30,
(Average LME Price) 2023 2022 Change 2023 2022 Change
Copper US$/pound 3.84 4.31 -11 % 3.95 4.43 -11 %
US$/tonne 8,464 9,513 8,703 9,761
Zinc US$/pound 1.15 1.78 -35 % 1.29 1.74 -26 %
US$/tonne 2,526 3,915 2,835 3,832
Gold US$/ounce 1,976 1,871 6 % 1,932 1,874 3 %
Nickel US$/pound 10.12 13.13 -23 % 10.98 12.54 -12 %
US$/tonne 22,308 28,940 24,205 27,636
LME inventories for copper and zinc increased by 13% and 79%, respectively, during the second quarter of 2023 while the
LME inventories of nickel decreased by 12%.
During the second quarter 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 April of $71 per dmt of
concentrate and a sp ot RC of $0.071 per lb of payable copper to a spot TC of $84 per dmt of concentrate and a spot RC of
$0.084 per lb of payable copper during June. Also, the spot terms at which Chinese copper smelters were prepared to buy
increased through the quarter from a TC of $83 per dmt of concentrate and a RC of $0.083 per payable lb of copper over April
to a TC of $91 per dmt of concentrate and a RC of $0.091 per payable lb of copper in June. The terms for annual contracts for
copper concentrates for 2023 were reached in December 2022 at a TC of $88 per dmt with a RC of $0.088 per payable lb of
copper.
The spot TC, delivered China, for zinc concentrates during the second quarter of 2023 decreased from $225 per dmt, flat, in
April to $200 per dmt, flat, in June. The 2023 annual terms for zinc concentrates were settled at $274 per dmt of concentrate,
with an upscale price escalator of 6% from a price basis of $3,000 per dmt zinc without de-escalator.
The Company’s nickel concentrate production from Eagle is sold under several long-term contracts at terms in-line with market
conditions. Gold production fro m Chapada and Candelaria is sold at terms in -line with market conditions for copper
concentrates.
===== SIDA 35 =====
22
Liquidity and Capital Resources
As at June 30, 2023, the Company had cash and cash equivalents of $190.2 million and a net debt balance of $229.8 million.
Cash flow from operations for the three months ended June 30, 2023 amounted to $194.8 million and was $171.6 million
lower than the prior year quarter due mainly to a lower comparative change in non -cash working capital, partially offset by
lower income tax and higher foreign exchange and trading gains on debt and equity investments. On a year-to-date basis, cash
flow from operations was $406.7 million and was $276.9 million lower than the prior year comparable period as a result of
lower gross profit before depreciation partially offset by lower income taxes.
Cash flow used in investing activities for the three and six months ended June 30, 2023 amounted to $283.5 million and $523.5
million respectively. Cash flow used in investing activities during the current quarter was lower than the prior year quarter
due to higher expansionary capex in the current period partially offset by the Josemaria acquisition costs and bridge loan
payments. On a year-to-date basis cash flow used in investing activities was comparable to the prior year period.
During the current quarter, the Company used $99.9 million for financing activities which was lower than the amount used in
the prior year quarter due primarily to the payment of a performance dividend in 2022. On a year -to-date basis, there was
cash flow of $119.4 million from financing activities compared to $259.5 million used in the prior year co mparable period.
This change was due to higher net proceeds from debt partially offset with lower dividends paid in the current period.
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 June 30, 2023, the Company had $386.5 million of debt and $28.5 million of lease liabilities outstanding.
As at June 30, 2023, the Company has a revolving Credit Facility of $1,750.0 million with $176.0 million outstanding (December
31, 2022 - $13.7 million). The Credit Facility bears interest on drawn funds at rates of Term Secured Overnight Financing Rate
("Term SOFR") + Credit Spread Adjustment ("CSA") + 1.45% to Term SOFR + CSA + 2.50% d epending on the Company’s net
leverage ratio. The Credit Facility is subject to customary covenants. On April 26, 2023, the Credit Facility was amended
extending the term to April 2028 and reducing the CSA to 0.10%.
The Company also has equipment financin g with an outstanding balance of $1.2 million as at June 30, 2023 (December 31,
2022 - $2.4 million) and a commercial paper program of $27.2 million (€25.0 million) which matures in May 2025. In June the
Company entered into an additional commercial paper program of $54.3 million (€50.0 million) which matures in June 2028.
The amounts outstanding related to both commercial paper programs as at June 30, 2023 was $65.2 million (€60.0 million)
(December 31, 2022 - $26.7 million). As at June 30, 2023, the Company had outstanding short-term unsecured term loans of
$149.1 million (December 31, 2022 - $127.4 million).
In July 2023, the Company entered into a third commercial paper program ("Commercial Paper Program 3") which matures in
July 2028. The $43.5 millio n (€40.0 million) program bears interest on drawn funds at EURIBOR+0.30%. In July 2023, the
Company drew down €30.0 million on Commercial Paper Program 3 and €10.0 million under the second commercial paper
program.
On July 27, 2023, the Company announced that it had received a new term loan in a principal amount of $800 million, which
the Company will use to refinance the drawdown under the Company’s existing $1.750.0 million revolving credit facility which
was used to fund the upfront cash consi deration of the Caserones Acquisition. The term loan has a term of three years and
provides for an additional $400 million non -committed accordion, which would become available upon receipt of additional
binding commitments and closing of up to an addition al nineteen percent (19%) interest in Caserones. The term loan bears
interest on US dollar denominated drawn funds at an annual rate equal to Term SOFR+CSA+1.60% to 2.65%, depending on
the Company’s net leverage ratio. 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.
===== SIDA 36 =====
23
During the three and six months ended June 30, 2023, no shares were purchased under the Company's Normal Course Issuer
Bid (Q2 2022 and YTD 2022 - 1,189,200 shares, $8.1 million consideration).
Contractual Obligations, Commitments and Contingencies
The Company has contractual obligations and capita l commitments as described in Note 19 “Commitments and
Contingencies” in the Company’s Condensed Interim 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.
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 18 of the Company’s Condensed Interim
Consolidated Financial Statements.
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.
Market and Liquidity Risks and Sensitivities
Revenue and cost of goods sold are affected by certain external factors including fluctuations in metal prices and changes in
exchange rates between the €, the SEK, the CLP , the BRL and the $.
Metal Prices
The following table illustrates the sensitivity of the Company's risk on final settlement of its provisionally priced revenues:
Metal Payable Metal
Provisional price on
June 30, 2023 Change
Effect on Revenue
($millions)
Copper 82,405 t $3.77/lb +/- 10 % +/- $68.5
Zinc 27,637 t $1.08/lb +/- 10 % +/- $6.6
Gold 35 koz $1,929/oz +/- 10 % +/- $6.8
Nickel 1,668 t $9.25/lb +/- 10 % +/- $3.4
Related Party Transactions
The Company enters into related party transactions that are in the normal course of business and on an arm’s length basis.
Related party disclosures can be found in Note 21 of the Company’s June 30, 2023 Condensed Interim Consolidated Financial
Statements.
Changes in Accounting Policies and Critical Accounting Estimates and Judgments
The Company describes its significant accounting policies as well as any changes in accounting policies in Note 2 “Basis of
Presentation and Summary of Significant Accounting Policies” of the June 30, 2023 Condensed Interim Consolidated Financial
Statements.
===== SIDA 37 =====
24
Non-GAAP and Other Performance Measures
The Company uses certain performance measures in its analysis. These performance measures have no meaning within
generally accepted accounting principles under IFRS and, therefore, amounts presented may not be comparable to similar
data presented by other mining companies. This data is intended to provide additional i nformation and should not be
considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS. The following are
non-GAAP measures that the Company uses as key performance indicators.
Net Debt
Net debt is a performan ce measure used by the Company to assess its financial position. Management believes that in
addition to conventional performance measures prepared in accordance with IFRS, net debt is a useful indicator to some
investors to evaluate the Company’s financial position. Net debt is defined as cash and cash equivalents, less debt and lease
liabilities, excluding deferred financing fees and can be reconciled as follows:
($thousands) June 30, 2023 December 31, 2022
Cash and cash equivalents 190,182 191,387
Current portion of total debt and lease liabilities (284,656) (170,149)
Debt and lease liabilities (130,359) (27,179)
(415,015) (197,328)
Deferred financing fees (netted in above) (4,998) (4,926)
(420,013) (202,254)
Net debt (229,831) (10,867)
Adjusted Operating Cash Flow and Adjusted Operating Cash Flow per Share
Adjusted operating cash flow per share is a performance measure used by the Company to assess its ability to generate cash
from its operations. Adjusted operating cash flow is defined as cash provided by operating activities, excluding changes in
non-cash working capital items. The Company believes adjusted operating cash flow per share is a relevant measure to some
investors, as it removes the impact of working capital, which can experience variability period -to-period. Adjusted operating
cash flow per share can be reconciled to the Company's cash provided by operating activities as follows:
Three months ended
June 30,
Six months ended
June 30,
($thousands, except share and per share amounts) 2023 2022 2023 2022
Cash provided by operating activities 194,844 366,411 406,719 683,668
Changes in non-cash working capital items (84,207) (316,665) (61,015) (161,117)
Adjusted operating cash flow 110,637 49,746 345,704 522,551
Basic weighted average number of shares outstanding 772,255,656 766,775,032 771,739,532 751,676,764
Adjusted operating cash flow per share 0.14 0.06 0.45 0.70
Free Cash Flow from Operations and Free Cash Flow
The Company believes free cash flow from operations and free cash flow are relevant measures for investors. Free cash flow
from operations is indicative of the Company’s ability to generate cash from operations, after consideration of required
sustaining capital expenditures necessary to maintain operations. Free cash flow is a relevant measure for some investors, as
it is indicative of the Company’s available cash generated.
Free cash flow from operations is defined as cash flow provided by operating act ivities, excluding exploration and project
investigation costs and less sustaining capital expenditures. Free cash flow is defined as free cash flow from operations les s
expansionary capex and exploration and project investigation costs.
===== SIDA 38 =====
25
The Company has r edefined free cash flow so that it encompasses all capital expenditures, including both sustaining and
expansionary, to more fully represent available cash generation. Free cash flow from operations and free cash flow can be
reconciled as follows:
Three months ended
June 30,
Six months ended
June 30,
($thousands) 2023 2022 2023 2022
Cash provided by operating activities 194,844 366,411 406,719 683,668
General exploration and business development 13,693 51,531 28,458 59,813
Sustaining capital expenditures (187,820) (151,665) (343,384) (282,423)
Free cash flow from operations 20,717 266,277 91,793 461,058
General exploration and business development (13,693) (51,531) (28,458) (59,813)
Expansionary capital expenditures (91,650) (65,603) (182,169) (79,757)
Free cash flow (84,626) 149,143 (118,834) 321,488
Adjusted EBITDA, Adjusted Earnings and Adjusted EPS
Adjusted earnings before interest, taxes, depreciation and amortization (“adjusted EBITDA”), adjusted earnings and adjusted
EPS are non -GAAP measures. These measures are presented to provide additional information to investors and other
stakeholders on the Company’s underlying operational performance. The Company believes certain investors find this
information useful to evaluate the Company’s ability to generate cash flow from the Company’s core operations. Certain items
have been excluded from adjusted EBITDA and adjusted earnings such as unrealized foreign exchange and revaluation gains
and losses, impairment charges and reversals, gain or loss on debt settlement, interest on tax refunds and assessments,
litigations, settlements and other items that do no t represent the Company’s current and on -going operations and are not
necessarily indicative of future operating results.
Adjusted EBITDA can be reconciled to the Company's Condensed Interim Consolidated Statement of Earnings as follows:
Three months ended
June 30,
Six months ended
June 30,
($thousands) 2023 2022 2023 2022
Net earnings (loss) 61,302 (48,626) 226,613 329,483
Add back:
Depreciation, depletion and amortization 130,505 142,042 250,752 271,879
Finance income and costs 15,897 17,309 31,596 32,281
Income taxes (19,601) 49,003 29,092 126,209
188,103 159,728 538,053 759,852
Unrealized foreign exchange (19,285) 2,721 (10,641) 10,574
Revaluation gain on derivatives (14,783) (19,593) (34,033) (16,300)
Sinkhole costs 11,900 — 16,482 —
Revaluation gain on marketable securities (3,464) 1,626 (3,902) (2,266)
Gain on disposal of subsidiary — — (5,718) (16,828)
Other (283) 4,161 (1,110) 1,385
Total adjustments - EBITDA (25,915) (11,085) (38,922) (23,435)
Adjusted EBITDA 162,188 148,643 499,131 736,417
===== SIDA 39 =====
26
Adjusted earnings and adjusted EPS can be reconciled to the Company's Condensed Interim Consolidated Statement of
Earnings as follows:
Three months ended
June 30,
Six months ended
June 30,
($thousands, except share and per share amounts) 2023 2022 2023 2022
Net earnings (loss) attributable to Lundin Mining shareholders 59,109 (52,577) 205,729 292,501
Add back:
Total adjustments - EBITDA (25,915) (11,085) (38,922) (23,435)
Tax effect on adjustments (554) 5,035 (3,180) 3,001
Deferred tax arising from foreign exchange translation (15,989) 23,091 (21,996) (11,863)
Other (634) 260 69 128
Total adjustments (43,092) 17,301 (64,029) (32,169)
Adjusted earnings 16,017 (35,276) 141,700 260,332
Basic weighted average number of shares outstanding 772,255,656 766,775,032 771,739,532 751,676,764
Net earnings (loss) attributable to Lundin Mining shareholders 0.08 (0.07) 0.27 0.39
Total adjustments (0.06) 0.02 (0.09) (0.04)
Adjusted EPS 0.02 (0.05) 0.18 0.35
Realized Price per Pound
Realized price per pound and price per ounce are non-GAAP ratios that are calculated using the non-GAAP financial measures
of current period sales and prior period adjustments. Realized prices exclude the effects of the stream cash effects as well as
TC/RCs. Management believes that measuring these prices enables investors to better understand performance based on the
realized metal sales in the current and prior periods.
Capital Expenditures
Identifying capital expenditures, on a cash basis, using a sustaining or expansionary classification provides investors with a
better understanding of costs required to maintain existing operations, and costs required for future growth of exis ting or
new assets.
• Sustaining capital expenditures – Expenditures which maintain existing operations and sustain production levels.
• Expansionary capital expenditures – Expenditures which increase current or future production capacity, cash flow or
earnings potential.
Where an expenditure both maintains and expands current operations, classification would be based on the primary decision
for which the expenditure is being made. Expansionary capital expenditures are reported excluding capitalized interest and
therefore is a non-GAAP measure. Sustaining capital expenditure is a supplementary financial measure.
Cash Cost per Pound
Copper, zinc and nickel cash costs per pound are key performance measures that management uses to monitor performance.
Management uses these statistics to assess how well the Company’s producing mines are performing and to assess overall
efficiency and effectiveness of the mining operations. Cash cost is a non-GAAP measure and, although it is calculated according
to accepted indust ry practice, the Company’s disclosed cash costs may not be directly comparable to other base metal
producers.
• Cash cost per pound, gross – Total cash costs directly attributable to mining operations, excluding any allocation of
upfront streaming proceeds or capital expenditures for deferred stripping, are divided by the sales volume of the primary
metal to arrive at gross cash cost per pound. As this measure is not impacted by fluctuations in sales of by-product metals,
it is generally more consistent across periods.
===== SIDA 40 =====
27
• Cash cost per pound, net of by -products – Credits for by -products sales are deducted from total cash costs directly
attributable to mining operations. By-product revenue is adjusted for the terms of streaming agreements, but excludes
any deferred revenue from the allocation of upfront cash received. The net cash costs are divided by the sales volume of
the primary metal to arrive at net cash cost per pound. The inclusion of by-product credits provides a broader economic
measurement, incorporating the benefit of other metals extracted in the production of the primary metal.
All-in Sustaining Cost (“AISC”) per Pound
AISC per pound is an extension of the cash cost per pound measure discussed above and is also a key performance measure
that management uses to monitor performance. Management uses this measure to analyze margins achieved on existing
assets while sustaining and maintaining production at current levels. Expansionary capital and certain exploration costs are
excluded from this def inition 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
from the all -in sustaining cos t measure, 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.
===== SIDA 41 =====
28
Cash and All-in Sustaining Costs can be reconciled to the Company's production costs as follows:
Three months ended June 30, 2023
Operations Candelaria Chapada Eagle Neves-Corvo Zinkgruvan
($000s, unless otherwise noted) (Cu) (Cu) (Ni) (Cu) (Zn) Total
Sales volumes (Contained metal in concentrate):
Tonnes 36,347 10,164 3,859 6,170 9,374
Pounds (000s) 80,132 22,408 8,507 13,603 20,666
Production costs 405,198
Less: Royalties and other (7,969)
397,229
Deduct: By-product credits (122,636)
Add: Treatment and refining charges 32,514
Cash cost 171,520 60,351 15,990 54,271 4,975 307,107
Cash cost per pound ($/lb) 2.14 2.69 1.88 3.99 0.24
Add: Sustaining capital expenditure 123,417 19,690 3,562 22,133 15,994
Royalties — 2,029 4,920 83 —
Reclamation and other closure accretion and
depreciation 2,444 1,847 3,011 1,296 739
Leases and other 3,654 1,171 897 148 100
All-in sustaining cost 301,035 85,088 28,380 77,931 21,808
AISC per pound ($/lb) 3.76 3.80 3.34 5.73 1.06
($000s, unless otherwise noted) 2023 Guidance
Cash cost 620,000 260,000 90,000 180,000 90,000
Cash cost per pound($/lb) 1.80 – 1.95 2.35 – 2.55 2.30 – 2.45 2.10 – 2.30 0.45 – 0.50
Three months ended June 30, 2022
Operations Candelaria Chapada Eagle Neves-Corvo Zinkgruvan
($000s, unless otherwise noted) (Cu) (Cu) (Ni) (Cu) (Zn) Total
Sales volumes (Contained metal in concentrate):
Tonnes 39,655 7,905 4,206 8,183 18,525
Pounds (000s) 87,424 17,427 9,273 18,040 40,841
Production costs 402,190
Less: Royalties and other (13,657)
388,533
Deduct: By-product credits (134,728)
Add: Treatment and refining charges 29,960
Cash cost 162,240 51,872 8,341 43,198 18,114 283,765
Cash cost per pound ($/lb) 1.86 2.98 0.90 2.39 0.44
Add: Sustaining capital expenditure 86,107 29,760 2,923 13,760 14,083
Royalties — 2,442 10,633 (616) —
Reclamation and other closure accretion and
depreciation 2,082 1,865 4,683 120 956
Leases and other 2,658 1,110 631 194 160
All-in sustaining cost 253,087 87,048 27,211 56,656 33,313
AISC per pound ($/lb) 2.89 5.00 2.93 3.14 0.82
===== SIDA 42 =====
29
Six months ended June 30, 2023
Operations Candelaria Chapada Eagle Neves-Corvo Zinkgruvan
($000s, unless otherwise noted) (Cu) (Cu) (Ni) (Cu) (Zn) Total
Sales volumes (Contained metal in concentrate):
Tonnes 71,917 19,236 6,594 14,201 25,986
Pounds (000s) 158,550 42,408 14,537 31,308 57,289
Production costs 822,962
Less: Royalties and other (20,055)
802,907
Deduct: By-product credits (279,601)
Add: Treatment and refining charges 69,129
Cash cost 345,212 107,669 30,630 84,163 24,761 592,435
Cash cost per pound ($/lb) 2.18 2.54 2.11 2.69 0.43
Add: Sustaining capital expenditure 214,103 35,717 10,664 47,194 30,462
Royalties — 4,252 10,606 1,813 —
Reclamation and other closure accretion and
depreciation 4,751 3,648 5,969 2,620 1,800
Leases and other 6,797 2,137 1,644 306 202
All-in sustaining cost 570,863 153,423 59,513 136,096 57,225
AISC per pound ($/lb) 3.60 3.62 4.09 4.35 1.00
Six months ended June 30, 2022
Operations Candelaria Chapada Eagle Neves-Corvo Zinkgruvan
($000s, unless otherwise noted) (Cu) (Cu) (Ni) (Cu) (Zn) Total
Sales volumes (Contained metal in concentrate):
Tonnes 78,103 20,709 7,473 16,667 34,327
Pounds (000s) 172,187 45,655 16,475 36,744 75,678
Production costs 784,617
Less: Royalties and other (29,528)
755,089
Deduct: By-product credits (315,735)
Add: Treatment and refining charges 62,115
Cash cost 296,225 103,309 (638) 75,001 27,572 501,469
Cash cost per pound ($/lb) 1.72 2.26 (0.04) 2.04 0.36
Add: Sustaining capital expenditure 169,071 44,215 7,383 33,276 23,122
Royalties — 6,106 18,424 2,197 —
Reclamation and other closure accretion and
depreciation 4,051 3,749 9,300 451 2,073
Leases and other 4,626 2,039 1,282 396 398
All-in sustaining cost 473,973 159,417 35,751 111,321 53,165
AISC per pound ($/lb) 2.75 3.49 2.17 3.03 0.70
===== SIDA 43 =====
30
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, 2022 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 a ssurance 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 Chief Executive Officer and
the Chief Financial Officer, is responsible for the design and operation of DCP .
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”).
Changes in ICFR
There have been no changes in the Company’s ICFR during the quarter ended June 30, 2023 that have materially affected, or
are reasonably likely to materially affect, the Company’s financial reporting.
Outstanding Share Data
As at August 2, 2023, the Company has 773,066,071 common shares issued and outstanding, and 6,932,668 stock options
and 1,896,028 share units outstanding under the Company's plans.
Other Information
Additional information regarding the Company is in cluded 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.sedar.com) or on the Company’s website
(www.lundinmining.com).
===== SIDA 44 =====
Condensed Interim Consolidated Financial Statements of
Lundin Mining Corporation
June 30, 2023
(Unaudited)
===== SIDA 45 =====
- 1 -
LUNDIN MINING CORPORATION
CONDENSED INTERIM CONSOLIDATED BALANCE SHEETS As at
(Unaudited - in thousands of US dollars) June 30,
2023
December 31,
2022
ASSETS
Cash and cash equivalents (Note 3) $ 190,182 $ 191,387
Trade and other receivables (Note 4) 508,347 576,178
Income taxes receivable 63,448 72,402
Inventories (Note 5) 352,480 296,710
Current portion of derivative assets (Note 18) 52,794 43,521
Other current assets 25,573 38,571
Total current assets 1,192,824 1,218,769
Restricted funds 55,301 50,195
Long-term inventory (Note 5) 681,536 641,877
Derivative assets (Note 18) 20,147 25,111
Other non-current assets 25,790 20,035
Mineral properties, plant and equipment (Note 6) 6,222,740 5,975,686
Deferred tax assets 4,447 3,837
Goodwill 239,023 237,294
7,248,984 6,954,035
Total assets $ 8,441,808 $ 8,172,804
LIABILITIES
Trade and other payables (Note 7) $ 575,631 $ 612,965
Income taxes payable 39,810 45,000
Current portion of derivative liabilities (Note 18) 26,967 24,423
Current portion of debt and lease liabilities (Note 8) 284,656 170,149
Current portion of deferred revenue (Note 9) 78,170 74,061
Current portion of reclamation and other closure provisions (Note 10) 21,452 23,550
Total current liabilities 1,026,686 950,148
Derivative liabilities (Note 18) 24,792 27,876
Debt and lease liabilities (Note 8) 130,359 27,179
Deferred revenue (Note 9) 556,903 580,045
Reclamation and other closure provisions (Note 10) 460,568 422,298
Other long-term liabilities 21,830 24,922
Provision for pension obligations 5,077 5,613
Deferred tax liabilities 651,316 709,602
1,850,845 1,797,535
Total liabilities 2,877,531 2,747,683
SHAREHOLDERS' EQUITY
Share capital (Note 11) 4,568,943 4,555,125
Contributed surplus 53,714 55,769
Accumulated other comprehensive loss (339,047) (342,287)
Retained earnings 695,803 592,425
Equity attributable to Lundin Mining Corporation shareholders 4,979,413 4,861,032
Non-controlling interests 584,864 564,089
Total shareholders' equity 5,564,277 5,425,121
Total liabilities and shareholders' equity $ 8,441,808 $ 8,172,804
Commitments and contingencies (Note 19)
Subsequent event (Note 23)
The accompanying notes are an integral part of these condensed interim consolidated financial statements.
===== SIDA 46 =====
- 2 -
LUNDIN MINING CORPORATION
CONDENSED INTERIM CONSOLIDATED STATEMENTS OF EARNINGS (LOSS)
(Unaudited - in thousands of US dollars, except for shares and per share amounts)
Three months ended
June 30,
Six months ended
June 30,
2023 2022 2023 2022
Revenue (Note 12) $ 588,531 $ 590,221 $ 1,339,875 $ 1,581,300
Cost of goods sold
Production costs (Note 13) (405,198) (402,190) (822,962) (784,617)
Depreciation, depletion and amortization (130,505) (142,042) (250,752) (271,879)
Gross profit 52,828 45,989 266,161 524,804
General and administrative expenses (14,898) (11,168) (30,008) (22,670)
General exploration and business development (Note 15) (13,693) (51,531) (28,458) (59,813)
Finance income (Note 16) 1,572 883 3,336 1,484
Finance costs (Note 16) (17,469) (18,192) (34,932) (33,765)
Other income (Note 17) 33,361 34,396 79,606 45,652
Earnings before income taxes 41,701 377 255,705 455,692
Current tax expense (27,213) (75,649) (86,714) (171,187)
Deferred tax recovery 46,814 26,646 57,622 44,978
Net earnings (loss) $ 61,302 $ (48,626) $ 226,613 $ 329,483
Net earnings (loss) attributable to:
Lundin Mining Corporation shareholders $ 59,109 $ (52,577) $ 205,729 $ 292,501
Non-controlling interests 2,193 3,951 20,884 36,982
Net earnings (loss) $ 61,302 $ (48,626) $ 226,613 $ 329,483
Basic and diluted earnings (loss) per share attributable to Lundin Mining
Corporation shareholders: $ 0.08 $ (0.07) $ 0.27 $ 0.39
Weighted average number of shares outstanding (Note 11)
Basic 772,255,656 766,775,032 771,739,532 751,676,764
Diluted 773,189,884 766,775,032 772,427,392 753,106,879
The accompanying notes are an integral part of these condensed interim consolidated financial statements.
===== SIDA 47 =====
- 3 -
LUNDIN MINING CORPORATION
CONDENSED INTERIM CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(Unaudited - in thousands of US dollars)
Three months ended
June 30,
Six months ended
June 30,
2023 2022 2023 2022
Net earnings (loss) $ 61,302 $ (48,626) $ 226,613 $ 329,483
Other comprehensive (loss) income, net of taxes
Item that will not be reclassified to net earnings:
Remeasurements for post-employment benefit plans (308) 302 (566) (561)
Item that may be reclassified subsequently to net earnings:
Effects of foreign exchange (15,756) (84,594) 3,697 (108,417)
Other comprehensive (loss) income (16,064) (84,292) 3,131 (108,978)
Total comprehensive income (loss) $ 45,238 $ (132,918) $ 229,744 $ 220,505
Comprehensive income (loss) attributable to:
Lundin Mining Corporation shareholders $ 43,097 $ (136,929) $ 208,969 $ 183,634
Non-controlling interests 2,141 4,011 20,775 36,871
Total comprehensive income (loss) $ 45,238 $ (132,918) $ 229,744 $ 220,505
The accompanying notes are an integral part of these condensed interim consolidated financial statements.
===== SIDA 48 =====
- 4 -
LUNDIN MINING CORPORATION
CONDENSED INTERIM CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
(Unaudited - 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
Exercise of share-based awards 2,091,707 13,818 (6,260)
— — — 7,558
Share-based compensation — — 4,205 — — — 4,205
Dividends declared (Note 11(c)) — — — — (102,351)
— (102,351)
Net earnings — — — — 205,729 20,884 226,613
Other comprehensive income (loss) — — — 3,240 — (109)
3,131
Total comprehensive income — — — 3,240 205,729 20,775 229,744
Balance, June 30, 2023 772,838,238 $ 4,568,943 $ 53,714 $ (339,047) $ 695,803 $ 584,864 $ 5,564,277
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 4,922,141 36,869 (16,408)
— — — 20,461
Share-based compensation — — 5,535 — — — 5,535
Dividends declared — — — — (170,941)
— (170,941)
Shares purchased (1,189,200)
(7,016)
— — (1,034)
— (8,050)
Accrued liability for automatic share purchase plan
commitment — (10,431) — — — — (10,431)
Net earnings — — — — 292,501 36,982 329,483
Other comprehensive loss — — — (108,867)
— (111)
(108,978)
Total comprehensive (loss) income — — — (108,867)
292,501 36,871 220,505
Balance, June 30, 2022 778,752,031 $ 4,588,353 $ 60,729 $ (358,796)
$ 557,686 $ 564,451 $ 5,412,423
The accompanying notes are an integral part of these condensed interim consolidated financial statements.
===== SIDA 49 =====
- 5 -
LUNDIN MINING CORPORATION
CONDENSED INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited - in thousands of US dollars)
Three months ended
June 30,
Six months ended
June 30,
Cash provided by (used in) 2023 2022 2023 2022
Operating activities
Net earnings (loss) $ 61,302 $ (48,626) $ 226,613 $ 329,483
Items not involving cash and other adjustments
Depreciation, depletion and amortization 130,505 142,042 250,752 271,879
Share-based compensation 1,755 2,339 4,021 5,535
Foreign exchange (gain) loss (19,285) 2,721 (10,641) 10,574
Unrealized foreign exchange and trading gains on equity investments — (18,848) — (18,848)
Finance costs, net (Note 16) 15,897 17,309 31,596 32,281
Recognition of deferred revenue (Note 9) (16,919) (19,395) (36,019) (40,100)
Deferred tax recovery (46,814) (26,646) (57,622) (44,978)
Revaluation of marketable securities (Note 17) (3,464) 1,626 (3,902) (2,266)
Revaluation of foreign currency and diesel derivatives (Note 18) 128 — (34,115) —
Other 5,382 (6,251) 13,445 (22,726)
Reclamation payments (Note 10) (2,548) (2,160) (5,129) (3,907)
Other payments (411) (474) (989) (1,025)
Changes in long-term inventory (14,891) 6,109 (32,306) 6,649
Changes in non-cash working capital items (Note 22) 84,207 316,665 61,015 161,117
194,844 366,411 406,719 683,668
Investing activities
Investment in mineral properties, plant and equipment (279,913) (217,268) (526,032) (362,180)
Acquisition of Josemaria, net of cash acquired — (126,381) — (126,381)
Cash received from disposal of subsidiary (Note 17) — — 5,718 16,828
Interest received 1,290 1,175 2,168 1,405
Josemaria bridge loan — (13,600) — (54,100)
Distributions from associate, net — 18,000 — 18,000
Other (4,845) 5,027 (5,388) 897
(283,468) (333,047) (523,534) (505,531)
Financing activities
Proceeds from debt (Note 8) 282,119 — 430,949 —
Interest paid (5,972) (2,066) (10,667) (3,525)
Principal payments of lease liabilities (6,062) (4,872) (11,280) (8,936)
Principal repayments of debt (Note 8) (84,022) (615) (214,502) (1,267)
Payment of Josemaria debentures — (47,000) — (47,000)
Dividends paid to shareholders (104,021) (171,232) (104,021) (171,232)
Shares purchased (Note 11) — (8,050) — (8,050)
Proceeds from common shares issued 5,473 9,569 7,558 20,461
Distributions paid to non-controlling interests — (20,000) — (35,000)
Net proceeds from settlement of foreign currency and diesel derivatives 13,331 — 24,400 —
Other (924) (4,954) (3,009) (4,954)
99,922 (249,220) 119,428 (259,503)
Effect of foreign exchange on cash balances (5,355) (19,777) (3,818) (14,460)
Increase (decrease) in cash and cash equivalents during the period 5,943 (235,633) (1,205) (95,826)
Cash and cash equivalents, beginning of period 184,239 733,876 191,387 594,069
Cash and cash equivalents, end of period $ 190,182 $ 498,243 $ 190,182 $ 498,243
Supplemental cash flow information (Note 22)
The accompanying notes are an integral part of these condensed interim consolidated financial statements.
===== SIDA 50 =====
LUNDIN MINING CORPORATION
Notes to condensed interim consolidated financial statements
For the three and six months ended June 30, 2023 and 2022
(Unaudited - Tabular amounts in thousands of US dollars, except for shares and per share amounts)
- 6 -
1. NATURE OF OPERATIONS
Lundin Mining Corporation is a diversified Canadian base metals mining company primarily producing copper, zinc,
gold and nickel. The Company owns 80% of the Candelaria and Ojos del Salado mining complex ("Candelaria") 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 loca ted 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. On July 13, 2023, the Company announced the closing of the acquisition of a fifty-one percent
(51%) controlling interest in the Caserones copper-molybdenum mine ("Caserones") located in Chile (Note 23).
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 registered address is 150 King Street West, Toronto, Ontario, Canada.
2. BASIS OF PRESENTATION AND SUMMARY OF MATERIAL ACCOUNTING POLICIES
(i) Basis of presentation and measurement
The unaudited condensed interim consolidated financial statements have been prepared in accordance with
International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board
(“IASB”) and Interpretations of the Inter national Financial Reporting Interpretations Committee which the
Canadian Accounting Standards Board has approved for incorporation into Part 1 of the CPA Canada Handbook -
Accounting including IAS 34 Interim Financial Reporting. The condensed interim consolidated financial statements
should be read in conjunction with the annual consolidated financial statements for the year ended December 31,
2022.
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 to $ 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 condensed interim consolidated financial statements were approved by the Board of Directors for issue on
August 2, 2023.
(ii) Material accounting policies
The accounting policies followed in these condensed interim consolidated financial statem ents are consistent
with those disclosed in Note 2 of the Company’s consolidated financial statements for the year ended December
31, 2022, except as discussed below.
(iii) New standards and interpretations adopted
In May 2021, the IASB issued amendments to IAS 12, Income Taxes. The amendments to IAS 12 narrow the scope
of the initial recognition exemption so that it no longer applies to transactions which give rise to equal amounts
of taxable and deductible temporary differences. The amendments require recognition of a deferred tax asset and
deferred tax liability for temporary differences arising on initial recognition for certain transactions, including
leases and reclamation provisions. The amendments to IAS 12 are effective for annual reporting period s
beginning on or after January 1, 2023, with early adoption permitted. The Company adopted the amendments
effective January 1, 2023, with no material impact to the consolidated financial statements for 2023 or the
comparative period.
===== SIDA 51 =====
LUNDIN MINING CORPORATION
Notes to condensed interim consolidated financial statements
For the three and six months ended June 30, 2023 and 2022
(Unaudited - Tabular amounts in thousands of US dollars, except for shares and per share amounts)
- 7 -
In May 2023, the IASB issued amendments to IAS 12, Income Taxes. The amendments provide an exception to the
requirements regarding the recognition of deferred tax assets and liabilities related to the Pillar Two global
minimum tax rules. The Company has applied the exception to recognizing and disclosing information about
deferred tax assets and liabilities related to Pillar Two income taxes whilst it evaluates the impact of these income
taxes on its consolidated financial statements.
(iv) Critical accounting estimates and judgments in applying the entity’s accounting policies
Areas of judgment that have the most significant effect on the amounts recognized in the financial statements are
disclosed in Note 2 of the Company’s consolidated financial statements for the year ended December 31, 2022.
3. CASH AND CASH EQUIVALENTS
Cash and cash equivalents are comprised of the following:
June 30, 2023 December 31, 2022
Cash $ 150,954 $ 158,153
Short-term deposits 39,228 33,234
$ 190,182 $ 191,387
4. TRADE AND OTHER RECEIVABLES
Trade and other receivables are comprised of the following:
June 30, 2023 December 31, 2022
Trade receivables $ 339,648 $ 430,734
Prepaid expenses 87,859 53,767
Value added tax 58,574 65,028
Other receivables 22,266 26,649
$ 508,347 $ 576,178
5. INVENTORIES
Inventories are comprised of the following:
June 30, 2023 December 31, 2022
Ore stockpiles $ 67,157 $ 69,781
Concentrate stockpiles 61,285 42,209
Materials and supplies 224,038 184,720
$ 352,480 $ 296,710
Long-term inventory is comprised of ore stockpiles. As at June 30, 2023, the Company had $410.5 million (December
31, 2022 - $394.2 million) and $271.0 million (December 31, 2022 - $247.7 million) of long- term ore stockpiles at
Candelaria and Chapada, respectively.
===== SIDA 52 =====
LUNDIN MINING CORPORATION
Notes to condensed interim consolidated financial statements
For the three and six months ended June 30, 2023 and 2022
(Unaudited - Tabular amounts in thousands of US dollars, except for shares and per share amounts)
- 8 -
6. MINERAL PROPERTIES, PLANT AND EQUIPMENT
Mineral properties, plant and equipment are comprised of the following:
Cost
Mineral
properties
Plant and
equipment
Assets under
construction1
Development
project2
Software
intangible
assets Total
As at December 31, 2021 $ 5,279,143 $ 3,441,171 $ 342,592 $ 6,631 $ 14,678 $ 9,084,215
Josemaria acquisition — 22,233 — 646,605 — 668,838
Additions 131,361 31,952 127,287 64,777 903 356,280
Disposals and transfers 51,727 139,293 (195,239)
(7,022)
4,530 (6,711)
Effects of foreign exchange (169,007)
(84,926)
(13,355)
— (360)
(267,648)
As at June 30, 2022 5,293,224 3,549,723 261,285 710,991 19,751 9,834,974
Additions 191,104 60,697 149,962 163,685 13,367 578,815
Disposals and transfers 41,378 120,137 (174,448)
1,743 (489)
(11,679)
Effects of foreign exchange 21,217 21,620 (743)
— (3)
42,091
As at December 31, 2022 5,546,923 3,752,177 236,056 876,419 32,626 10,444,201
Additions 153,973 27,214 175,503 147,431 42 504,163
Disposals and transfers 44,937 31,289 (87,431)
— 2,464 (8,741)
Effects of foreign exchange 3,091 9,037 (343)
— (39)
11,746
As at June 30, 2023 $ 5,748,924 $ 3,819,717 $ 323,785 $ 1,023,850 $ 35,093 $ 10,951,369
Accumulated depreciation,
depletion and amortization
Mineral
properties
Plant and
equipment
Assets under
construction1
Development
project2
Software
intangible
assets Total
As at December 31, 2021 $ 2,620,196 $ 1,405,084 $ — $ — $ 8,036 $ 4,033,316
Depreciation 163,615 117,149 — — 1,147 281,911
Disposals and transfers (79)
(2,904)
— — — (2,983)
Effects of foreign exchange (105,266)
(38,381)
— — (103)
(143,750)
As at June 30, 2022 2,678,466 1,480,948 — — 9,080 4,168,494
Depreciation 145,216 134,854 — — 2,682 282,752
Disposals and transfers — (2,557)
— — (119)
(2,676)
Effects of foreign exchange 11,749 8,194 — — 2 19,945
As at December 31, 2022 2,835,431 1,621,439 — — 11,645 4,468,515
Depreciation 146,614 118,343 — — 2,232 267,189
Disposals and transfers — (8,579)
— — — (8,579)
Effects of foreign exchange (564)
2,101 — — (33)
1,504
As at June 30, 2023 $ 2,981,481 $ 1,733,304 $ — $ — $ 13,844 $ 4,728,629
Net book value
Mineral
properties
Plant and
equipment
Assets under
construction1
Development
project2
Software
intangible
assets Total
As at December 31, 2022 $ 2,711,492 $ 2,130,738 $ 236,056 $ 876,419 $ 20,981 $ 5,975,686
As at June 30, 2023 $ 2,767,443 $ 2,086,413 $ 323,785 $ 1,023,850 $ 21,249 $ 6,222,740
¹ Represent assets under construction at the Company's operating mine sites which are currently non-depreciable.
2 Assets relate to the Josemaria Project which are currently non-depreciable.
===== SIDA 53 =====
LUNDIN MINING CORPORATION
Notes to condensed interim consolidated financial statements
For the three and six months ended June 30, 2023 and 2022
(Unaudited - Tabular amounts in thousands of US dollars, except for shares and per share amounts)
- 9 -
During the second quarter of 2022, the Company completed the Josemaria Resources Inc. acquisition acquiring
$668.8 million of mineral properties, plant and equipment related to the Josemaria Project. During the fourth quarter
of 2022, the Company began to capitalize the Josemaria Project development costs.
During the three and six months ended June 30, 2023 , the Company cap italized $4.5 million and $7.8 million,
respectively, of finance costs to the Josemaria Project at a weighted average interest rate of 5.5%. During the three and
six months ended June 30, 2022, the Company capitalized $0.7 million and $1.8 million, respectively, of finance costs to
assets under construction at a weighted average interest rate of 5.5%.
During the three and six months ended June 30, 2023, the Company capitalized $54.5 million (second quarter ("Q2")
2022 - $63.1 million) and $95.8 million (y ear-to-date ("YTD") Q2 2022 - $122.0 million), respectively, of deferred
stripping costs to mineral properties. The depreciation expense related to deferred stripping for the three and six
months ended June 30, 2023, was $26.8 million (Q2 2022 - $38.4 mill ion) and $52.4 million (YTD Q2 2022 - $66.3
million), respectively. Included in the mineral properties balance at June 30, 2023 is $211.7 million (December 31, 2022
- $681.7 million) related to deferred stripping at Candelaria, which is currently non-depreciable.
The Company leases various assets including buildings, rail cars, vehicles, machinery and equipment. The following
table summarizes the changes in right-of-use assets within plant and equipment:
Net book value
As at December 31, 2021 $ 27,597
Josemaria acquisition 32
Additions 8,878
Depreciation (10,089)
Effects of foreign exchange (400)
As at June 30, 2022 26,018
Additions 13,193
Depreciation (11,199)
Disposals (75)
Effects of foreign exchange (14)
As at December 31, 2022 27,923
Additions 11,843
Depreciation (11,755)
Effects of foreign exchange 278
As at June 30, 2023 $ 28,289
===== SIDA 54 =====
LUNDIN MINING CORPORATION
Notes to condensed interim consolidated financial statements
For the three and six months ended June 30, 2023 and 2022
(Unaudited - Tabular amounts in thousands of US dollars, except for shares and per share amounts)
- 10 -
7. TRADE AND OTHER PAYABLES
Trade and other payables are comprised of the following:
June 30, 2023 December 31, 2022
Trade payables $ 254,798 $ 315,948
Unbilled goods and services 128,341 122,390
Employee benefits payable 90,226 88,086
Pricing provisions on concentrate sales 36,549 8,484
Sinkhole provision 31,030 38,000
Royalties payable 15,470 16,283
Other 19,217 23,774
$ 575,631 $ 612,965
The sinkhole provision relates to expected remediation costs and potential fines directly related to the sinkhole near
the Company's Ojos del Salado operations.
Included in pricing provisions on concentrate sales are balances owing to customers and provisions arising from
forward market price adjustments.
===== SIDA 55 =====
LUNDIN MINING CORPORATION
Notes to condensed interim consolidated financial statements
For the three and six months ended June 30, 2023 and 2022
(Unaudited - Tabular amounts in thousands of US dollars, except for shares and per share amounts)
- 11 -
8. DEBT AND LEASE LIABILITIES
Debt and lease liabilities are comprised of the following:
June 30, 2023 December 31, 2022
Revolving credit facility (a) (Note 23) $ 171,002 $ 13,730
Term loans (b) 149,080 127,400
Lease liabilities (c) 28,538 27,166
Commercial paper (d) 65,196 26,665
Line of credit (e) 1,199 2,367
Debt and lease liabilities 415,015 197,328
Less: current portion 284,656 170,149
Long-term portion $ 130,359 $ 27,179
The changes in debt and lease liabilities are comprised of the following:
Leases Debt Total
As at December 31, 2021 $ 25,878 $ 5,125 $ 31,003
Josemaria acquisition 38 47,000 47,038
Additions 8,876 — 8,876
Payments (9,620) (48,267) (57,887)
Interest 684 — 684
Effects of foreign exchange (1,059) (352) (1,411)
As at June 30, 2022 24,797 3,506 28,303
Additions 12,322 282,938 295,260
Payments (12,031) (112,557) (124,588)
Disposals (26) — (26)
Interest 750 — 750
Financing fee amortization — 656 656
Financing fee reclassification — (4,926) (4,926)
Effects of foreign exchange 1,354 545 1,899
As at December 31, 2022 27,166 170,162 197,328
Additions 11,774 430,949 442,723
Payments (12,013) (214,502) (226,515)
Interest 733 — 733
Financing fee amortization — 430 430
Deferred financing fee — (1,158) (1,158)
Effects of foreign exchange 878 596 1,474
As at June 30, 2023 28,538 386,477 415,015
Less: current portion 14,181 270,475 284,656
Long-term portion $ 14,357 $ 116,002 $ 130,359
===== SIDA 56 =====
LUNDIN MINING CORPORATION
Notes to condensed interim consolidated financial statements
For the three and six months ended June 30, 2023 and 2022
(Unaudited - Tabular amounts in thousands of US dollars, except for shares and per share amounts)
- 12 -
a) The Company has a secured revolving credit facility of $1,750.0 million. On April 26, 2023, the credit facility was
amended, extending the term by one year to April 2028 and bearing interest on drawn funds at rates of Term
Secured Overnight Financing Rate (“Term SOFR”) + Credit Spread Adjustment (“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 subject to
customary covenants. During the first quarter of 2023, the Company drew down $25.0 million and subsequently
repaid $13.0 million. During the second quarter of 2023, the Company drew down an additional $146.0 million.
As at June 30, 2023, the balance outstanding was $176.0 million (December 31, 2022 - $18.0 million) with
deferred financing fees of $5.0 million (December 31, 2022 - $4.3 million) netted against borrowings.
In July 2023, the Company repaid $55.0 million on the revolving credit facility.
b) During 2022, Candelaria obtained an unsecured fixed term loan in the amount of $50.0 million which remains
outstanding as at June 30, 2023 (December 31, 2022 - $50.0 million). The loan matures on December 20, 2023
and accrues interest at a rate of 6.13% per annum, with interest payable upon maturity.
Mineração Maracá Indústria e Comércio S/A (“Chapada”), a subsidiary of the Company which owns the Chapada
mine, obtained a series of unsecured fixed term loans totalling $59.5 million and $71.1 million during the first
and second quarter of 2023, respectively. Chapada subsequently repaid $47.1 million and $61.8 million of the
outstanding term loans during the first and second quarter of 2023, respectively.
During 2022, Chapada obtained a series of unsecured fixed term loans totalling $101.4 million. Term loans
totalling $24.0 million were repaid in full upon their respective maturity dates in 2022.
As at June 30, 2023, there were twenty -one term loans outstanding at Chapada totalling $99.1 million
(December 31, 2022 - nine term loans totalling $77.4 million). These outstanding term loans accrue interest a t
rates ranging from 6.19% to 7.27% per annum with interest payable upon maturity. The maturity dates range
from August 9 to October 27, 2023.
c) Lease liabilities relate to leases on buildings, rail cars, vehicles, machinery and equipment which have rema ining
lease terms of one to twelve years and interest rates of 0.8% - 8.0% over the terms of the leases. Additionally,
the Company acts as lessee in certain leases that contain variable lease payment terms that are primarily based
on usage of the right-of-use assets.
d) Sociedade Mineira de Neves -Corvo, S.A. (“Somincor”), a subsidiary of the Company which owns the Neves-
Corvo mine, has a commercial paper program ("Commercial Paper Program 1") which matures in May 2025. The
$27.2 million (€25.0 million) pr ogram bears interest on drawn funds at EURIBOR+0.50%. As at December 31,
2022, the Commercial Paper Program 1 was fully drawn at $26.7 million (€25.0 million). During 2023, Somincor
made several repayments totalling $91.1 million (€85.0 million) and made several drawdowns totalling $86.1
million (€80.0 million) on the program. In June 2023, Somincor entered into an additional commercial paper
program ("Commercial Paper Program 2") which matures in June 2028. The $54.3 million (€50.0 million)
program bears interest on drawn funds at EURIBOR+0.50%. During the second quarter of 2023, Somincor drew
down $43.3 million (€40.0 million) from the program. As at June 30, 2023, Commercial Paper Program 1 and
Commercial Paper Program 2 remain drawn at $21.7 million (€20.0 million) and $43.5 million (€40.0 million),
respectively.
In July 2023, Somincor entered into a third commercial paper program ("Commercial Paper Program 3") which
matures in July 2028. The $43.5 million (€40.0 million) program bears interest on drawn funds at
EURIBOR+0.30%. In July 2023, Somincor drew down €30.0 million on Commercial Paper Program 3 and €10.0
million on Commercial Paper Program 2.
e) As at June 30, 2023, the balance outstanding for Somincor equipment financing was $1.2 million (€1.1 million)
(December 31, 2022 - $2.4 million). Interest rates vary from a fixed rate of 0.88% to EURIBOR+0.84%, dependent
on the piece of equipment, with the debt maturing throughout 2023 and 2024.
===== SIDA 57 =====
LUNDIN MINING CORPORATION
Notes to condensed interim consolidated financial statements
For the three and six months ended June 30, 2023 and 2022
(Unaudited - Tabular amounts in thousands of US dollars, except for shares and per share amounts)
- 13 -
The schedule of undiscounted lease payment and debt obligations is as follows:
Leases Debt Total
Less than one year $ 15,327 $ 270,475 $ 285,802
One to five years 14,286 121,000 135,286
More than five years 2,622 — 2,622
Total undiscounted obligations as at June 30, 2023 $ 32,235 $ 391,475 $ 423,710
9. DEFERRED REVENUE
The following table summarizes the changes in deferred revenue:
As at December 31, 2021 $ 693,467
Recognition of revenue (40,100)
Finance costs 18,898
Effects of foreign exchange (6,690)
As at June 30, 2022 665,575
Recognition of revenue (33,633)
Variable consideration adjustment 3,492
Finance costs 18,723
Effects of foreign exchange (51)
As at December 31, 2022 654,106
Recognition of revenue (36,019)
Finance costs 18,004
Effects of foreign exchange (1,018)
As at June 30, 2023 635,073
Less: current portion 78,170
Long-term portion $ 556,903
Consideration received under the Company’s gold, silver and copper streaming agreements is deemed to be variable
and can be subject to cumulative adjustments when the contractual volume to be delivered changes. In 2022, as a
result of changes to the Compan y’s Mineral Resources and Mineral Reserves estimates, an adjustment was made to
the deferred revenue liability which was recognized through revenue and finance costs.
===== SIDA 58 =====
LUNDIN MINING CORPORATION
Notes to condensed interim consolidated financial statements
For the three and six months ended June 30, 2023 and 2022
(Unaudited - Tabular amounts in thousands of US dollars, except for shares and per share amounts)
- 14 -
10. RECLAMATION AND OTHER CLOSURE PROVISIONS
Reclamation and other closure provisions relating to the Company's mining operations are as follows:
Reclamation
provisions
Other closure
provisions Total
Balance, December 31, 2021 $ 406,966 $ 39,089 $ 446,055
Accretion 7,138 — 7,138
Changes in estimate 18,487 5,780 24,267
Changes in discount rate (41,896) — (41,896)
Payments (1,494) (2,413) (3,907)
Effects of foreign exchange (11,767) (4,070) (15,837)
Balance, June 30, 2022 377,434 38,386 415,820
Accretion 7,206 — 7,206
Changes in estimate 27,279 5,594 32,873
Changes in discount rate (1,771) — (1,771)
Payments (9,681) (2,315) (11,996)
Effects of foreign exchange 553 3,163 3,716
Balance, December 31, 2022 401,020 44,828 445,848
Accretion 10,477 — 10,477
Changes in estimate 5,766 8,794 14,560
Changes in discount rate 13,846 — 13,846
Payments (3,649) (1,480) (5,129)
Effects of foreign exchange (256) 2,674 2,418
Balance, June 30, 2023 427,204 54,816 482,020
Less: current portion 15,511 5,941 21,452
Long-term portion $ 411,693 $ 48,875 $ 460,568
The Company expects these liabilities to be settled between 2023 and 2062. The reclamation provisions are discounted
using current market pre-tax discount rates which range from 2.6% to 11.1% (December 31, 2022 - 2.0% to 13.5%).
===== SIDA 59 =====
LUNDIN MINING CORPORATION
Notes to condensed interim consolidated financial statements
For the three and six months ended June 30, 2023 and 2022
(Unaudited - Tabular amounts in thousands of US dollars, except for shares and per share amounts)
- 15 -
11. SHARE CAPITAL
a) Basic and diluted weighted average number of shares outstanding
Three months ended
June 30,
Six months ended
June 30,
2023 2022 2023 2022
Basic weighted average number of shares outstanding 772,255,656 766,775,032 771,739,532 751,676,764
Effect of dilutive securities (i) 934,228 — 687,860 1,430,115
Diluted weighted average number of shares outstanding 773,189,884 766,775,032 772,427,392 753,106,879
Antidilutive securities 23,175 101,100 1,267,078 574,829
(i) As a result of the Company’s net loss position for the three months ended June 30, 2022, 1,152,354 shares
that would have been dilutive had the Company been in a net earnings position were excluded from diluted
weighted average number of shares outstanding.
The effect of dilutive securities relates to in-the-money outstanding stock options and share units ("SUs").
Upon closing the Josemaria Resources Inc. acquisition in April 2022, the Company issued 40,031,936 common
shares to the former shareholders of Josemaria Resources Inc. with a fair value of $369.2 million.
b) Stock options and SUs granted/issued
Three months ended
June 30,
Six months ended
June 30,
2023 2022 2023 2022
Stock options 18,230 — 1,880,663 1,753,520
Replacement Options — 2,513,866 — 2,513,866
SUs 13,930 — 1,261,503 480,429
In April 2022, the Company issued 2,513,866 Replacement Options upon the acquisition of Josemaria Resources
Inc.
c) Dividends
During the three and six months ended June 30, 2023, the Company declared dividends in the amount of $51.1
million (Q2 2022 - $54.7 million ) or C$0.09 per share ( Q2 2022 - C$0.09), and $102.4 million (YTD Q2 2022 -
$170.9 million) or C$0.18 per share (YTD Q2 2022 - C$0.29), respectively.
d) Normal course issuer bid
For the three and six months ended June 30, 2023, no common shares were purchased by the Company's broker
under the automatic share purchase plan ("ASPP") or at management's discretion pursuant to its normal course
issuer bid ("NCIB").
For the three and six months ended June 30, 2022, 1,189,200 shares were purcha sed by the Company's broker
under the ASPP pursuant to its NCIB at an average price of C$8.67 per share for total consideration of $8.1 million.
All common shares purchased were cancelled. As at June 30, 2022, the Company had recorded an accrual of $10.4
million in trade and other payables representing the contractual maximum share purchases remaining under the
A S P P.
===== SIDA 60 =====
LUNDIN MINING CORPORATION
Notes to condensed interim consolidated financial statements
For the three and six months ended June 30, 2023 and 2022
(Unaudited - Tabular amounts in thousands of US dollars, except for shares and per share amounts)
- 16 -
12. REVENUE
The Company's analysis of revenue from contracts with customers, segmented by product, is as follows:
Three months ended
June 30,
Six months ended
June 30,
2023 2022 2023 2022
Revenue from contracts with customers:
Copper $ 440,162 $ 512,870 $ 921,142 $ 1,136,655
Nickel 97,482 108,535 161,112 193,267
Zinc 50,832 102,136 149,321 202,344
Gold 50,008 46,188 103,351 103,614
Lead 10,463 19,499 23,303 30,952
Silver 9,835 11,125 19,101 25,021
Other 11,860 12,467 16,315 23,526
670,642 812,820 1,393,645 1,715,379
Provisional pricing adjustments on concentrate sales (82,111) (222,599) (53,770) (134,079)
Revenue $ 588,531 $ 590,221 $ 1,339,875 $ 1,581,300
The Company's geographical analysis of revenue from contracts with customers, segmented based on the
destination of product, is as follows:
Three months ended
June 30,
Six months ended
June 30,
2023 2022 2023 2022
Revenue from contracts with customers:
Japan $ 133,408 $ 158,916 $ 327,746 $ 484,160
Spain 128,149 129,793 260,717 195,600
Canada 124,714 154,085 215,830 278,877
China 54,717 53,228 195,282 116,181
Finland 40,605 46,828 107,657 150,078
Germany 45,926 51,172 73,714 131,270
Other 143,123 218,798 212,699 359,213
670,642 812,820 1,393,645 1,715,379
Provisional pricing adjustments on concentrate sales (82,111) (222,599) (53,770) (134,079)
Revenue $ 588,531 $ 590,221 $ 1,339,875 $ 1,581,300
===== SIDA 61 =====
LUNDIN MINING CORPORATION
Notes to condensed interim consolidated financial statements
For the three and six months ended June 30, 2023 and 2022
(Unaudited - Tabular amounts in thousands of US dollars, except for shares and per share amounts)
- 17 -
13. PRODUCTION COSTS
The Company's production costs are comprised of the following:
Three months ended
June 30,
Six months ended
June 30,
2023 2022 2023 2022
Direct mine and mill costs $ 373,519 $ 357,521 $ 751,162 $ 696,881
Transportation 24,647 32,210 55,129 61,009
Royalties 7,032 12,459 16,671 26,727
Total production costs $ 405,198 $ 402,190 $ 822,962 $ 784,617
14. EMPLOYEE BENEFITS
The Company's employee benefits recognized in the consolidated statement of earnings are comprised of the
following:
Three months ended
June 30,
Six months ended
June 30,
2023 2022 2023 2022
Production costs
Wages and benefits $ 78,546 $ 69,457 $ 158,308 $ 145,190
Retirement benefits 485 417 1,061 837
Share-based compensation 438 542 980 1,272
79,469 70,416 160,349 147,299
General and administrative expenses
Wages and benefits 5,994 5,215 11,567 11,057
Retirement benefits 199 252 601 452
Share-based compensation 1,203 1,723 2,843 4,059
Termination benefits 1,349 — 3,198 —
8,745 7,190 18,209 15,568
General exploration and business development
Wages and benefits 1,242 3,170 2,900 4,413
Retirement benefits 11 7 23 13
Share-based compensation 114 74 198 204
Termination benefits 313 — 313 —
1,680 3,251 3,434 4,630
Total employee benefits $ 89,894 $ 80,857 $ 181,992 $ 167,497
===== SIDA 62 =====
LUNDIN MINING CORPORATION
Notes to condensed interim consolidated financial statements
For the three and six months ended June 30, 2023 and 2022
(Unaudited - Tabular amounts in thousands of US dollars, except for shares and per share amounts)
- 18 -
15. GENERAL EXPLORATION AND BUSINESS DEVELOPMENT
The Company's general exploration and business development costs are comprised of the following:
Three months ended
June 30,
Six months ended
June 30,
2023 2022 2023 2022
General exploration $ 11,752 $ 10,200 $ 20,955 $ 17,260
Corporate development 165 — 5,191 —
Project development 1,776 41,331 2,312 42,553
Total general exploration and business development $ 13,693 $ 51,531 $ 28,458 $ 59,813
For the three and six months ended June 30, 2023, corporate development expenses include $0.2 million and $5.0
million, respectively, in transaction costs incurred related to the acquisition of Caserones (Note 23).
Project development expenses include study costs related to potential expansion projects at the Company's operating
sites. During the fourth quarter of 2022, the Company began to capitalize the Josemaria Project development costs.
16. FINANCE INCOME AND COSTS
The Company's finance income and costs are comprised of the following:
Three months ended
June 30,
Six months ended
June 30,
2023 2022 2023 2022
Interest income $ 1,289 $ 883 $ 2,172 $ 1,484
Interest expense and bank fees (6,988) (2,759) (13,197) (4,069)
Deferred revenue finance costs (4,852) (8,701) (10,525) (17,116)
Accretion expense on reclamation provisions (5,268) (3,525) (10,477) (7,138)
Lease liability interest (361) (367) (733) (684)
Other 283 (2,840) 1,164 (4,758)
Total finance costs, net $ (15,897) $ (17,309) $ (31,596) $ (32,281)
Finance income $ 1,572 $ 883 $ 3,336 $ 1,484
Finance costs (17,469) (18,192) (34,932) (33,765)
Total finance costs, net $ (15,897) $ (17,309) $ (31,596) $ (32,281)
===== SIDA 63 =====
LUNDIN MINING CORPORATION
Notes to condensed interim consolidated financial statements
For the three and six months ended June 30, 2023 and 2022
(Unaudited - Tabular amounts in thousands of US dollars, except for shares and per share amounts)
- 19 -
17. OTHER INCOME AND EXPENSE
The Company's other income and expense are comprised of the following:
Three months ended
June 30,
Six months ended
June 30,
2023 2022 2023 2022
Foreign exchange and trading gains on debt and equity
investments (a) $ 30,667 $ 29,093 $ 52,745 $ 29,093
Realized gains on derivative contracts (Note 18) 14,275 — 27,852 —
Unrealized (losses) gains on derivative contracts (Note
18) (14,403) — 6,263 —
Gain on disposal of subsidiary (b) — — 5,718 16,828
Revaluation of marketable securities 3,464 (1,626) 3,902 2,266
Foreign exchange gain (loss) 12,390 10,155 2,445 (629)
Ojos del Salado sinkhole expenses (c) (11,900) — (16,482) —
Revaluation of Chapada derivative liability (380) 745 (1,796) (2,548)
(Loss) income from equity investment in associate — (1,321) (54) 3,375
Other expense (752) (2,650) (987) (2,733)
Total other income, net $ 33,361 $ 34,396 $ 79,606 $ 45,652
a) Foreign exchange and trading gains on debt and equity investments include the changes in fair value of debt and
equity instruments supporting capital funding for the Josemaria Project.
b) Pursuant to the terms of the original sale agreement of Rio Narcea Recursos, S.A. in 2016, the Company received
a $16.8 million payment during the first quarter of 2022, and a further $5.7 million payment in the first quarter
of 2023, which were contingent on historical tax assessments which have now been closed.
c) Ojos del Salado sinkhole expenses include idle costs, maintenance, and remediation work related to the sinkhole
near the Company's Ojos del Salado operations.
===== SIDA 64 =====