FULLTEXT DEL 1 AV 2
Kvartalsrapport Q3 2023
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Corporate Office
885 West Georgia Street, Suite 2000
Vancouver, BC V6C 3E8
Phone: +1 604 689 7842
lundinmining.com
NEWS RELEASE
Lundin Mining Third Quarter 2023 Results
Vancouver, November 1, 2023 (TSX: LUN; Nasdaq Stockholm: LUMI) Lundin Mining Corporation (“Lundin Mining” or
the “Company”) today reported its third quarter 2023 financial results.
"Our operations continued with a strong performance in the third quarter. As a result, we are increasing our production guidance
for Caserones and Eagle. The acquisition of Caserones enabled us to achieve a new record in quarterly consolidated copper
production, and we also achieved a record in quarterly zinc production. This led the Company to an adjusted EBITDA of $415 million
for the period." commented Peter Rockandel, CEO.
Mr. Rockandel added, "During the integration process of Caserones, our team has identified and outlined synergies between
Caserones and Candelaria, which are expected to yield initial annual savings of $20 to $30 million per year. We are excited a bout
launching the largest exploration program at Caserones since production commenced, targeting resource extensions and near-mine
discoveries. The corporate office move to Vancouver is complete and all senior executive positions are in place . As we approach
2024, Lundin Mining is strategically, operationally, and financially, in a strong position to continue to deliver on our plans and
execute on the next phase of growth. On a personal note, as this is my last quarter as CEO, I would like to thank all our employees,
partners and stakeholders for their dedication, hard work and support, all of which have been integral to our current and future
success. I am extremely proud of what the team has been able to accomplish during my tenure as CEO.”
Third Quarter Highlights
• Copper Production: The Company achieved consolidated production of 89,942 tonnes of copper, a new quarterly
record.
• Other Production: During the quarter a total of 49,774 tonnes of zinc, 4,290 tonnes of nickel and approximately 35,000
ounces of gold were produced. A quarterly zinc production record was achieved as the zinc expansion project ("ZEP")
at Neves -Corvo ramps up and a full quarter of operation from the sequential flotation project at Zinkgruvan was
realized.
• Revenue: $992.2 million in the quarter.
• Adjusted Earnings: Net loss attributable to shareholders of the Company was $3.0 million ($0.00 per share). Adjusted
earnings attributable to shareholders of the Company1 was $85.6 million ($0.11 per share).
• Adjusted EBITDA: Adjusted earnings before interest, taxes, depreciation and amortization1 (“EBITDA”) of $415.1 million
in the third quarter.
• Cash Generation: Cash provided by operating activities was $303.8 million and cash and cash equivalents at
September 30, 2023 was $357.3 million . Adjusted operating cash flow 1 was $316.5 million ($0.41 per share), after
removing the impact of working capital. Free cash flow1 was $71.1 million.
• Caserones Acquisition: Completed the acquisition of 51% of the Caserones copper-molybdeum mine on July 13, 2023,
adding another long-life asset in a tier one jurisdiction. The Company anticipates initial annual synergies from supply
chain and service contracts between Caserones and Candelaria to be $20 million to $30 million per year.
• Term Loan: To fund the Caserones acquisition, the Company obtained a term loan in July 2023 of a principal amount
of $800.0 million with an additional $400.0 million accordion option maturing in July 2026. As at September 30, 2023,
the Company had a net debt1 balance of $1,158.9 million.
• CEO Succession: Peter Rockandel, the current Chief Executive Officer announced that he will be stepping down from
the role of CEO and from the Board of Directors as of December 31, 2023. Th ose responsibilities will be assumed by
Jack Lundin, current President, and former Director of the Company.
• Outlook: Revised annual production guidance, including an increase in copper production from 296,000 - 325,000
tonnes to 305,000 - 325,000 tonnes. Cash cost guidance was lowered at Caserones and Eagle and increased at
Candelaria. Annual capital expenditure guidance is lower by $30 million.
1 These are non-GAAP measures. Please refer to the Company's discussion of non -GAAP and other performance measures in its Management's Discussion
and Analysis for the three and nine months ended September 30, 2023 and the Reconciliation of Non -GAAP measures section at the end of this news release.
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Summary Financial Results
Three months ended
September 30,
Nine months ended
September 30,
US$ Millions (except per share amounts) 2023 2022 2023 2022
Revenue 992.2 648.5 2,332.1 2,229.8
Gross profit 197.3 82.5 463.5 607.3
Attributable net earnings (loss)2 (3.0) (11.2) 202.8 281.3
Net earnings (loss) 21.9 (11.2) 248.5 318.2
Adjusted earnings 1,2,3 85.6 30.9 256.9 288.9
Adjusted EBITDA1,3 415.1 202.4 943.8 938.8
Basic and diluted earnings per share ("EPS")2 — (0.01) 0.26 0.37
Adjusted EPS1,2,3 0.11 0.04 0.33 0.38
Cash provided by operating activities 303.8 36.3 710.5 720.0
Adjusted operating cash flow1 316.5 181.3 662.2 703.9
Adjusted operating cash flow per share1 0.41 0.23 0.86 0.93
Free cash flow from (used in) operations1 136.5 (43.9) 228.3 417.1
Free cash flow1 71.1 (163.2) (47.7) 158.3
Cash and cash equivalents 357.3 226.9 357.3 226.9
Net debt1
(1,158.9) 177.6 (1,158.9) 177.6
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 nine months ended September 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.
3 Q2 2023 amounts have been adjusted from those presented in the Company's MD&A for the three and six months ended June 30, 2023.
Quarter Ended September 30, 2023
• The Company generated revenue of $992.2 million, gross profit of $197.3 million and adjusted EBITDA of $415.1
million (Q3 2022 - $202.4 million).
• Net loss attributable to shareholders of the Company was $3.0 million ($0.00 per share) in the third quarter, impacted
by higher interest expense, non -cash unrealized losses on derivative contracts and increased deferred tax expense
as a result of the enactment of the mining royalty law in Chile4.
• Adjusted earnings attributable to shareholders of the Company for the quarter of $8 5.6 million ($0.11 per share
attributable to shareholders of the Company) were $49.5 million higher than the prior year quarter after adjusting
for the non-cash revaluation of derivative contracts, fair value adjustments relating to the Caserones acquisition and
deferred tax relating to the mining royalty rate change4, among other things.
• Cash and cash equivalents as at September 30, 2023 were $357.3 million. Cash generated from operations of $303.8
million during the quarter was used to fund investing activities of $908.8 million. Investing activities in the third
quarter included $648.6 million net cash paid at closing for the acquisition of Caserones, consisting of $796.6 million
upfront cash consideration after adjustments , net of $148 million cash and cash equivalents held by SCM Minera
Lumina Copper Chile at closing on a 100% basis.
• Free cash flow of $71.1 million was $234.3 million higher than the prior year comparable period and benefited from
the inclusion of production from Caserones, combined with higher realized copper prices and higher overall changes
in working capital.
• As at November 1, 2023, the Company had cash and net debt balances of approximately $368.6 million and $1,137.6
million, respectively.
4 Refer to Management's Discussion and Analysis for the three and nine months ended September 30, 2023 for further information related to the deferred
tax relating to the mining royalty rate change.
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Corporate Highlights
• Candelaria EIA: A new Environmental Impact Assessment (“EIA”) was granted at Candelaria for the extension of
operations from 2030 to 2040.
• Exploration: Exploration programs continue at our existing assets while new exploration drilling campaigns are
underway at Caserones and Josemaria. Drilling at Caserones will be the largest exploration program since the mine
began operation in 2013. The initial phase of the drill program is expected to be over 10,000 meters and results are
expected in H1 2024.
• Copper Mark: Caserones has achieved the Copper Mark at its operations, a designation that highlights the Company’s
commitment to sustainable mining practices.
• Josemaria Project: The Company continues to d erisk and advance the Josemaria project through optimization and
trade off studies. These studies will continue into 2024.
• Senior Leadership Appointments: The corporate office move to Vancouver has been completed. The Company is
pleased to announce the following executive appointments, Peter Brady has been hired as General Counsel, Ricardo
Checura as Vice President, Health and Safety and Nathan Monash as Vice President, Sustainability.
Outlook
Production and cash cost guidance for 2023 is updated from that disclosed in the Company's Management's Discussion and
Analysis for the three and six months ended June 30, 2023.
Most production guidance ranges are tightening and improving, with the lower end of the range increasing for copper, nickel
and gold. Cash cost guidance is lower for Caserones and Eagle driven by higher production volumes and by-product credits,
and increasing for Candelaria, reflecting higher operating costs. Production continues to be weighted to the second half of
the year, notably at Chapada due to the first half seasonal operating conditions and forecast grade and recovery profiles.
2023 Production and Cash Cost Guidance
Previous Guidancea Revised Guidance
(contained metal) Production Cash Cost ($/lb)f Production Cash Cost ($/lb)b,f
Copper (t) Candelaria (100%) 145,000 - 155,000 1.80 – 1.95c 147,000 - 153,000 2.00 – 2.20c
Caserones (100%)e 60,000 - 65,000 2.30 – 2.45 65,000 - 69,000 2.00 – 2.20
Chapada 43,000 - 48,000 2.35 – 2.55d 45,000 - 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 - 36,000 2.10 – 2.30c
Zinkgruvan 3,000 - 4,000 3,000 - 4,000
Total 296,000 - 325,000 305,000 - 325,000
Zinc (t) Neves-Corvo 100,000 - 110,000 103,000 - 110,000
Zinkgruvan 80,000 - 85,000 0.45 – 0.50c 78,000 - 82,000 0.45 – 0.50c
Total 180,000 - 195,000 181,000 - 192,000
Molybdenum (t) Caserones (100%)e 1,500 - 2,000 1,500 - 2,000
Gold (koz) Candelaria (100%) 85 - 90 87 - 92
Chapada 55 - 60 55 - 60
Total 140 - 150 142 - 152
Nickel (t) Eagle 13,000 - 16,000 2.30 – 2.45 15,000 - 17,000 2.00 – 2.20
a. Guidance as outlined in the MD&A for the three and six months ended June 30, 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: $1.10/lb,
Mo: $20.00/lb Pb: $0.90/lb, Au: $1,850/oz), foreign exchange rates (€/USD:1.05, 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 Zinkgru van and Neves-Corvo are also
subject to streaming agreements. Cash costs are calculated based on receipt of approximately $425/oz g old 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 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 second half of 2023.
f. 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 nine months ended September 30, 2023 and the Reconciliation of Non -GAAP measures section at the end of this news release.
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As a result of re -phasing several projects at Neves -Corvo and Zinkgruvan, capital expenditure guidance is lower by an
additional $30 million for 2023. As disclosed in the Company's Management's Discussion and Analysis for the three and six
months ended June 30, 2023, c apital spend guidance at Josemaria was previously lowered to $350 million for 2023 due to
foreign exchange, a delay in planned equipment deliveries and reduced activities.
2023 Capital Expenditure
($ millions) Previous Guidancea Revisions Revised Guidance
Candelaria (100% basis) 375 — 375
Caserones (100% basis)c 110 — 110
Chapada 70 — 70
Eagle 20 — 20
Neves-Corvo 130 (25) 105
Zinkgruvan 70 (5) 65
Other 10 — 10
Total Sustaining 785 (30) 755
Josemaria 350 — 350
Total Capital Expenditures 1,135 (30) 1,105
a. Guidance as outlined in the MD&A for the three and six months ended June 30, 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, 202 3 and the Reconciliation of Non-GAAP Measures at the end of this
news release.
c. Caserones guidance is for the 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.
Operational Performance
Total Production
(contained
metal)a
2023 2022
YTD Q3 Q2 Q1 Total Q4 Q3 Q2 Q1
Copper (t)b 211,461 89,942 60,057 61,462 249,659 56,552 63,930 64,096 65,081
Zinc (t) 134,442 49,774 36,115 48,553 158,938 44,308 40,327 41,912 32,391
Molybdenum (t)b 1,096 1,096 —
Gold (koz)b 105 35 34 36 154 36 45 39 34
Nickel (t) 12,700 4,290 4,686 3,724 17,475 4,096 4,379 4,719 4,281
a. Tonnes (t) and thousands of ounces (koz)
b. Candelaria and Caserones production is on a 100% basis. Caserones results are from July 13, 2023.
Candelaria (80% owned): Candelaria produced 34,275 tonnes of copper and approximately 20,000 ounces of gold in
concentrate on a 100% basis in the quarter. Copper production was lower than the prior year quarter primarily due to lower
grades partially offset by higher throughput. Gold production was lower than the prior year quarter due to lower grades and
recoveries. Current quarter production costs and copper cash cost of $2.19/lb were higher than the prior year quarter largely
owing to higher contractor and maintenance costs and unfavorable foreign exchange. Cash cost was further impacted by
lower sales volumes.
Caserones (51% owned): In the three months ended September 30, 2023 Caserones produced 34,427 tonnes of copper and
1,321 tonnes of molybdenum on a 100% basis, of which 29,821 tonnes of copper and 1,096 tonnes of molybdenum were
produced from the acquisition closing date of July 13. Copper and molybdenum production were higher than planned due
to increased throughput and recoveries. Production costs in the quarter were negatively impacted by the recognition of fair
market value adjustments to inventory due t o the acquisition. Copper cash cost of $1.60/lb benefited from higher than
planned production and by-product credits.
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Chapada (100% owned): Chapada produced 12,286 tonnes of copper and approximately 15,000 ounces of gold in
concentrate in the quarter. Copper and gold production was lower than the prior year quarter primarily due to lower
throughput and grades. Production costs were lower than the prior year quarter due to lower sales volumes. Copper cash
cost of $2.28/lb for the quarter increased from the prior year quarter due to lower sales volumes, unfavorable foreign
exchange variances, and lower by-product credits and production.
Eagle (100% owned): During the quarter Eagle produced 4,290 tonnes of nickel and 3,245 tonnes of copper which were lower
than the prior year quarter due to lower planned grades. Production costs were higher than the comparable prior year
quarter due to inflationary contractual cost increases. Nickel cash cost in the quarter of $2.07/lb was higher than the prior
year quarter primarily due to lower by-product credits and higher production costs.
Neves-Corvo (100% owned): Neves-Corvo produced 9,016 tonnes of copper and 25,807 tonnes of zinc in the quarter. Copper
production was higher than in the prior year quarter due to higher throughput, grades and recoveries. Zinc production was
higher than in the prior year quarter primarily due to increased grades and recoveries driven by the Zinc Expansion Project
("ZEP"). Production costs during the quarter were lower than the prior year quarter despite higher sales, primarily due to
reduced electricity cost s. Current quarter copper cash cost per pound of $2.27/lb was lower than the prior year quarter
primarily as a result of lower input costs and benefited from higher production and sales.
Zinkgruvan (100% owned): Zinc production of 23,967 tonnes and lead production of 8,643 tonnes were higher than the prior
year quarter primarily due to higher throughput and grades. Copper production of 1,299 tonnes was lower than the prior
year quarter due to lower throughput. Pr oduction costs were higher than the prior year quarter primarily due to higher
sales volumes. Zinc cash cost per pound of $0.28/lb during the quarter was higher than the prior year quarter primarily as
a result of lower by-product costs per pound and higher treatment and refining charges.
Senior Leadership Appointments
The Company is pleased to announce the executive appointments of Peter Brady as General Counsel , Ricardo Checura as
Vice President, Health and Safety, and Nathan Monash as Vice President, Sustainability.
Peter Brady
General Counsel
Mr. Brady has joined Lundin Mining’s Executive Leadership Team as General Counsel. He has over 20 years of experience in
industry and private practice working with major international mining companies. Prior to joining Lundin Mining, he most
recently was Chief Legal & Governance Officer with Vale Base Metals, responsible for advising their senior leadership team
on all legal and business risk, compliance, and corporate governance matters. Previous to Vale Base Metals, he was a Partner
at McCarthy Tetrault. Mr. Brady holds a Bachelor of Laws from Queen's University and a Master of Arts in Environmental
Law from the University of Windsor.
Ricardo Checura
Vice President Health and Safety
Mr. Checura was previously at BHP Inc, where he spent the past 12 years in various leadership roles, most recently as Head
of Risk Operations. He was a member of BHP’s Global Risk Leadership Team and managed the risk management activities
of their Global Operating Assets. Prior to his most recent role, Ricardo served as their Head of Safety – Minerals Americas
between 2018 to 2021. Mr. Checura’s experience also includes implementing Fatal Risk Management from his previous roles
in the mining industry. Ricardo holds a Bachelor of Science in Engineering f rom the University of Concepción and a Master
of Business Administration from the University of Chile.
Nathan Monash
Vice President, Sustainability
Mr. Monash has joined Lundin Mining’s Senior Leadership Team as Vice President, Sustainability. He has over 20 years of
experience in the mining sector, developing and integrating sustainability strategy and governance structures and advising
operations on community relations, local government relations, human rights and communications. Prior to joining Lundin
Mining, he most recently led Lundin Gold's sustainability activities during the construction and operation of the Fruta del
Norte mine in Ecuador and prior to that led AngloGold Ashanti's sustainability efforts in the Americas. Nathan has also
worked with International Finance Corporation, guiding extractive industry clients on the structure and implementation of
sustainable development strategies, and spent several years with the World Economic Forum where he worked closely with
leaders from business, academia and government to identify and address key economic, social and environmental issues
facing the mining and metals industry. Mr. Monash holds a B achelor of Science in Biology from McGill University and a
Master of Arts from the Fletcher School at Tufts University.
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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, molybdenum, gold and nickel.
The information in this release 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
November 1, 2023 at 3:00 pm Pacific Standard Time.
For further information, please contact:
Stephen Williams, Vice President, Investor Relations +1 604 806 3074
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 "Qualified Person" under NI 43 -101. Mr. Barha has verified the data disclosed in this release and no limitations
were imposed on his verification process.
For further Technical Information on the Company’s material properties, refer to the following technical reports, each of
which is available on the Company’s SEDAR profile at www.sedarplus.ca: Candelaria: technical report entitled Technical
Report for the Candelaria Copper Mining Complex, Atacama Region, Region III, Chile dated February 22, 2023. Caserones:
Caserones Mining Operation, Chile, NI 43 -101 Technical Report on the Caserones Mining Operation, dated July 13, 2023
Chapada: technical report entitled Technical Report on the Chapada Mine, Goiás State, Brazil dated October 10, 2019. Eagle
Mine: technical report entitled Technical Report on the Eagle Mine, Michigan, U.S.A. dated February 22, 2023. Neves-Corvo:
technical report entitled NI 43-101 Technical Report on the Neves-Corvo Mine, Portugal dated February 22, 2023. Josemaria
Project: technical report entitled NI 43 -101 Technical Report, Feasibility Study for the Josemaria Copper -Gold Project, San
Juan Province, Argentina, September 28, 2020, which is available on Josemaria Resources’ SEDAR profile at
www.sedarplus.ca.
Reconciliation of Non-GAAP Measures
The Company uses certain performance measures 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 n ot be comparable to similar data presented by 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 nine months ended September 30, 2023 which is available on SEDAR+ at www.sedarplus.ca.
Net (debt) cash can be reconciled as follows:
($thousands) September 30, 2023 December 31, 2022
Debt and lease liabilities (1,130,754) (27,179)
Current portion of total debt and lease liabilities (380,645) (170,149)
Less deferred financing fees (netted in above) (4,810) (4,926)
(1,516,209) (202,254)
Cash and cash equivalents 357,337 191,387
Net debt (1,158,872) (10,867)
Adjusted operating cash flow and adjusted operating cash flow per share can be reconciled to cash provided by operating
activities as follows:
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Three months ended
September 30,
Nine months ended
September 30,
($thousands, except share and per share amounts) 2023 2022 2023 2022
Cash provided by operating activities 303,812 36,331 710,531 719,999
Changes in non-cash working capital items 12,655 145,006 (48,360) (16,111)
Adjusted operating cash flow 316,467 181,337 662,171 703,888
Basic weighted average number of shares outstanding 773,147,920 775,563,527 772,214,160 759,726,506
Adjusted operating cash flow per share $ 0.41 0.23 0.86 0.93
Free cash flow from operations can be reconciled to cash provided by operating activities as follows:
Three months ended
September 30,
Nine months ended
September 30,
($thousands) 2023 2022 2023 2022
Cash provided by operating activities 303,812 36,331 710,531 719,999
General exploration and business development 12,734 72,446 41,192 132,259
Sustaining capital expenditures (180,013) (152,722) (523,397) (435,145)
Free cash flow from operations 136,533 (43,945) 228,326 417,113
General exploration and business development (12,734) (72,446) (41,192) (132,259)
Expansionary capital expenditures (52,662) (46,766) (234,831) (126,523)
Free cash flow 71,137 (163,157) (47,697) 158,331
Adjusted EBITDA can be reconciled to the Company's Consolidated Statement of Earnings as follows:
Three months ended
September 30,
Nine months ended
September 30,
($thousands) 2023 2022 2023 2022
Net earnings (loss) 21,883 (11,245) 248,496 318,238
Add back:
Depreciation, depletion and amortization 179,788 140,161 430,540 412,040
Finance income and costs 36,212 15,240 67,808 47,521
Income taxes 84,891 10,766 113,983 136,975
322,774 154,922 860,827 914,774
Unrealized foreign exchange 9,096 14,426 (1,545) 25,000
Revaluation loss on derivatives1 47,874 — 43,407 —
Sinkhole costs (1,247) 7,789 15,235 7,789
Revaluation loss (gain) on marketable securities 3,449 (554) (453) 1,712
Caserones inventory fair value adjustment 32,185 — 32,185 —
Unrealized foreign exchange and trading loss on equity
investments
— 18,848
— —
Write-down of fixed assets — 3,617 — 3,619
Gain on disposal of subsidiary — — (5,718) (16,828)
Other 990 3,325 (120) 2,724
Total adjustments - EBITDA 92,347 47,451 82,991 24,016
Adjusted EBITDA1 415,121 202,373 943,818 938,790
1 Q2 2023 amounts have been adjusted from those presented in the Company's MD&A for the three and six months ended June 30, 202 3.
===== SIDA 8 =====
Adjusted earnings and adjusted earnings per share can be reconciled to the Company's Consolidated Statement of Earnings
as follows:
Three months ended
September 30,
Nine months ended
September 30,
($thousands, except share and per share amounts) 2023 2022 2023 2022
Net earnings (loss) attributable to Lundin Mining
shareholders
(2,964) (11,212)
202,765 281,289
Add back:
Total adjustments - EBITDA 92,347 47,451 82,991 24,016
Tax effect on adjustments (20,114) (12,012) (23,295) (11,323)
Deferred tax expense due to change in tax rate 25,700 — 25,700 —
Deferred tax arising from foreign exchange translation 9,669 5,599 (12,327) (6,264)
Non-controlling interest on adjustments (19,049) 1,070 (18,980) 1,197
Total adjustments 88,552 42,108 54,089 7,626
Adjusted earnings1 85,588 30,896 256,854 288,915
Basic weighted average number of shares outstanding 773,147,920 775,563,527 772,214,160 759,726,506
Net (loss) earnings attributable to shareholders — (0.01) 0.26 0.37
Total adjustments 0.11 0.05 0.07 0.01
Adjusted earnings per share1 0.11 0.04 0.33 0.38
1 Q2 2023 amounts have been adjusted from those presented in the Company's MD&A for the three and six months ended June 30, 2023.
===== SIDA 9 =====
Cash and All-in Sustaining Costs can be reconciled to the Company's operating costs as follows:
Three months ended September 30, 2023
Operations Candelaria Caserones Chapada Eagle Neves-
Corvo
Zinkgruvan
($000s, unless
otherwise noted)
(Cu) (Cu) (Cu) (Ni) (Cu) (Zn) Total
Sales volumes
(Contained metal):
Tonnes 33,668 30,385 11,445 3,640 8,799 22,042
Pounds (000s) 74,225 66,987 25,232 8,025 19,398 48,594
Production costs
615,109
Less: Royalties and
other
(21,662)
Inventory fair value
adjustment
(32,185)
561,262
Deduct: By-product (216,150)
Add: Treatment and 56,261
Cash cost 162,672 106,866 57,501 16,598 44,043 13,693 401,373
Cash cost per pound 2.19 1.60 2.28 2.07 2.27 0.28
Add: Sustaining capital
86,693 28,849 16,716 4,989 27,357 12,350
Royalties — 7,550 2,142 7,385 1,055 —
Reclamation and
other closure
accretion and
depreciation
2,349 1,133 2,141 2,742 1,462 1,011
Leases & other 2,841 11,531 865 797 131 86
All-in sustaining cost 254,555 155,929 79,365 32,511 74,048 27,140
AISC per pound ($/lb) 3.43 2.33 3.15 4.05 3.82 0.56
Three months ended September 30, 2022
Operations Candelaria Caserones Chapada Eagle Neves-
Corvo
Zinkgruvan
($000s, unless
otherwise noted)
(Cu) (Cu) (Cu) (Ni) (Cu) (Zn) Total
Sales volumes
(Contained metal):
Tonnes 35,587 — 12,817 3,715 8,574 13,722
Pounds (000s) 78,456 — 28,257 8,190 18,903 30,252
Production costs
425,814
Less: Royalties and (8,593)
417,221
Deduct: By-product (172,179)
Add: Treatment and 28,829
Cash cost 154,633 — 54,147 8,637 50,888 5,566 273,871
Cash cost per pound 1.97 — 1.92 1.05 2.69 0.18
Add: Sustaining capital
103,486 — 19,197 3,062 15,860 8,415
Royalties — — 3,055 5,705 (1,213) —
Reclamation and
other closure
accretion and
depreciation
1,951 — 1,784 4,809 630 962
Leases & other 2,327 — 1,017 484 173 149
All-in sustaining cost 262,397 — 79,201 22,697 66,338 15,092
AISC per pound ($/lb) 3.34 — 2.80 2.77 3.51 0.50
===== SIDA 10 =====
Nine months ended September 30, 2023
Operations Candelaria Caserones Chapada Eagle Neves-
Corvo
Zinkgruva
n
($000s, unless otherwise
noted)
(Cu) (Cu) (Cu) (Ni) (Cu) (Zn) Total
Sales volumes (Contained
metal):
Tonnes 105,585 30,385 30,681 10,234 23,000 48,028
Pounds (000s) 232,775 66,987 67,640 22,562 50,706 105,883
Production costs
1,438,071
Less: Royalties and other (41,717)
Inventory fair value
adjustment
(32,185)
1,364,169
Deduct: By-product credits (495,751)
Add: Treatment and 125,390
Cash cost 507,884 106,866 165,170 47,228 128,206 38,454 993,808
Cash cost per pound
($/lb)
2.18 1.60 2.44 2.09 2.53 0.36
Add: Sustaining capital 300,796 28,849 52,433 15,653 74,551 42,812
Royalties — 7,550 6,394 17,991 2,868 —
Reclamation and
other closure
accretion and
depreciation
7,100 1,133 5,789 8,711 4,082 2,811
Leases & other 9,638 11,531 3,002 2,441 437 288
All-in sustaining cost 825,418 155,929 232,788 92,024 210,144 84,365
AISC per pound ($/lb) 3.55 2.33 3.44 4.08 4.14 0.80
===== SIDA 11 =====
Nine months ended September 30, 2022
Operations Candelaria Caserones Chapada Eagle Neves-
Corvo
Zinkgruvan
($000s, unless otherwise
noted)
(Cu) (Cu) (Cu) (Ni) (Cu) (Zn) Total
Sales volumes (Contained
metal):
Tonnes 113,690 — 33,526 11,188 25,241 48,049
Pounds (000s) 250,643 — 73,912 24,665 55,647 105,930
Production costs
1,210,431
Less: Royalties and other (38,121)
1,172,310
Deduct: By-product (487,914)
Add: Treatment and 90,944
Cash cost 450,858 — 157,456 7,999 125,889 33,138 775,340
Cash cost per pound
($/lb)
1.80 — 2.13 0.32 2.26 0.31
Add: Sustaining capital 272,557 — 63,412 10,445 49,136 31,537
Royalties — — 9,161 24,129 984 —
Reclamation and
closure accretion
and depreciation
6,002 — 5,533 14,109 1,081 3,035
Leases & other 6,953 — 3,056 1,766 569 547
All-in sustaining cost 736,370 — 238,618 58,448 177,659 68,257
AISC per pound ($/lb) 2.94 — 3.23 2.37 3.19 0.64
===== SIDA 12 =====
Cautionary Statement on Forward-Looking Information
Certain of the statements made and information contained herein is “forward -looking information” within the meaning of applicable Canadian securities laws. All
statements other than statements of historical facts included in this document constitute forward-looking information, including but not limited to statements regarding
the Company’s plans, prospects and business strategies; the Company’s guidance on the timing and amount of future production and its expectations regarding the
results of operations; expected costs; permitting requirements and timelines; timing and possible outcome of pending litigation; the results of any Preliminary Economic
Assessment, Feasibility Study, or Mineral Resource and Mineral Reserve estimations, life of mine estimates, an d 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 Minin g 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; th e
Company’s integration of acquisitions and any anticipated benefits thereof, including the Caserones transaction; and expectat ions for other economic, business, and/or
competitive factors. Words such as “believe”, “expect”, “anticipate”, “contemplate”, “target”, “plan”, “goal”, “aim”, “intend ”, “continue”, “budget”, “estimate”, “may”, “will”,
“can”, “could”, “should”, “schedule” and similar expressions identify forward-looking statements.
Forward-looking information is necessarily based upon various estimates and assumptions including, without limitation, the expectatio ns and beliefs of management,
including that the Company can access financing, appropriate equipment and sufficient labour; assumed and future price of copper, nickel, zinc, gold and other metals;
anticipated costs; ability to achieve goals; the prompt and effective integration of acquisitions; that the political environment in which the Company operates will continue
to support the development and operation of mining projects; and assumptions related to the factors set forth below. While these factors and assumptions are considered
reasonable by Lundin Mining as at the date of this document in light of management’s experience and perception of current conditions and expected developments,
these statements are inherently subject to significant business, economic and competitive uncertainties and contingencies. Kn own 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 failur es, unusual or unexpected geological
formations or unstable ground conditions, and natural phenomena such as earthquakes, 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; delay s 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 Comp any or the mining industry in general; health
and safety risks; risks relating to the development of the Josemaria Project; inability to attract and retain highly skilled employees; risks associated with clima te change;
compliance with environmental, health and safety laws and regulations; unavailable or inaccessible infrastructure, infra structure failures, and risks related to ageing
infrastructure; risks inherent in and/or associated with operating in foreign countries and emerging markets, including with respect to foreign exchange and capital
controls; economic, political and social in stability and mining regime changes in the Company’s operating jurisdictions, including but not limited to those related to
permitting 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 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 taxation regimes;
risks related to mine closure activities, reclamation obligations, environmental liabilities and closed and historical sites; reliance on key personnel and reporting and
oversight systems, as well as third parties and consultants in foreign jurisdictions; information technology and cybersecurit y risks; risks associated with the estimation
of Mineral Resources and Mineral Reserves an d the geology, grade and continuity of mineral deposits including but not limited to models relating thereto; actual ore
mined and/or metal recoveries varying from Mineral Resource and Mineral Reserve estimates, estimates of grade, tonnage, dilut ion, mine plans and metallurgical and
other characteristics; ore processing efficiency; community and stakeholder opposition; financial projections, including esti mates of future expenditures and cash costs,
and estimates of future production may not be reliable; en forcing 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 rel ating to dilution; regulatory investigations,
enforcement, sanctions and/or related or other litigation; risks relating to payment of dividends; counterparty and customer concentration risks; the estimation of asset
carrying values; risks associated with the use of derivati ves; relationships with employees and contractors, and the potential for and effects of labour disputes or other
unanticipated difficulties with or shortages of labour or interruptions in production; conflicts of interest; existence of a significant shareholder; exchange rate fluctuations;
challenges or defects in title; internal controls; compliance with foreign laws; potential for the allegation of fraud and co rruption 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 of the Company’s MD&A for the year ended December
31, 2022, which are available on SEDAR+ at www.sedarpl us.ca under the Company’s profile.
All of the forward-looking statements made in this document are qualified by these cautionary statements. Although the Company has attempted to identify important
factors that could cause actual results to differ materially from those contained in forward -looking information, there may be other factors that cause results not to be
as anticipated, estimated, forecast or intended and readers are cautioned that the foregoing list is not exhaustive of all fa ctors 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 ma y vary materially from those
described in forward -looking information. Accordingly, there can be no assurance that forward -looking information will prove to be accurate and forward -looking
information is not a guarantee of future performance. Readers are advised not to place undue reliance on forward-looking information. The forward-looking information
contained herein speaks only as of the date of this document. The Company disclaims any intention or obligation to update or revise forward ‐looking information or to
explain any material difference between such and subsequent actual events, except as required by applicable law.
===== SIDA 13 =====
Management’s Discussion and Analysis
For the three and nine months ended September 30, 2023
This management’s discussion and analysis (“MD&A”) has been prepared as of November 1, 2023 and should be read in
conjunction with the Company’s condensed interim consolidated financial statements for the three and nine months ended
September 30, 2023 . Those financial 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, Chile, Portugal, Sweden, and the United States of America, primarily producing
copper , zinc, molybdenum, gold and nickel.
Table of Contents
Highlights ................................ ................................ ................................ ................................ ................................ ........ 1
Financial Position and Financing ................................ ................................ ................................ ................................ ...... 3
Outlook ................................ ................................ ................................ ................................ ................................ ........... 4
Selected Quarterly Financial Information ................................ ................................ ................................ ......................... 6
Revenue Overview ................................ ................................ ................................ ................................ .......................... 7
Financial Results ................................ ................................ ................................ ................................ .............................. 11
Mining Operations ................................ ................................ ................................ ................................ .......................... 13
Production Overview ................................ ................................ ................................ ................................ ................. 13
Production Cost and Cash Cost Overview ................................ ................................ ................................ ................... 14
Capital Expenditures ................................ ................................ ................................ ................................ .................. 15
Candelaria ................................ ................................ ................................ ................................ ................................ . 16
Caserones ................................ ................................ ................................ ................................ ................................ .. 17
Chapada ................................ ................................ ................................ ................................ ................................ .... 18
Eagle................................ ................................ ................................ ................................ ................................ .......... 19
Neves-Corvo ................................ ................................ ................................ ................................ .............................. 20
Zinkgruvan ................................ ................................ ................................ ................................ ................................ . 21
Josemaria Project ................................ ................................ ................................ ................................ ............................ 22
Metal Prices, LME Inventories, and Smelter Treatment and Refining Charges ................................ ................................ ... 23
Liquidity and Capital Resources ................................ ................................ ................................ ................................ ....... 24
Related Party Transactions ................................ ................................ ................................ ................................ ............... 25
Changes in Accounting Policies and Critical Accounting Estimates and Judgements ................................ .......................... 25
Non-GAAP and Other Performance Measures ................................ ................................ ................................ .................. 26
Managing Risks ................................ ................................ ................................ ................................ ............................... 32
Management's Report on Internal Controls ................................ ................................ ................................ ..................... 32
Outstanding Share Data ................................ ................................ ................................ ................................ ................... 32
===== SIDA 14 =====
Cautionary Statement on Forward-Looking Information
Certain of the statements made and information contained herein is “forward -looking information” within the meaning of applicable Canadian securities laws. All statements
other than statements of historical facts included in this document constitute forward -looking information, including but not limited to statements regarding the Company’s
plans, prospects and business strategies; the significant growth potential to the Company’s portfolio of assets and expected synergies and potential for cost savings; the
potential to unlock additional upside; expectations regarding the world shifting to a lower carbon future; the Company’s expe ctations regarding liquidity; the anticipated
development of Josemaria and other growth projects; the Company’s guidance on the timing and amount of future production and its expectations regarding the potential
production and results of operations; expected cash costs and capital expenditures; permitting requirements and timelines; ti ming and possible outcome of pending litigation;
the results of any Preliminary Economic Assessment, Feasibility Study, or Mineral Resource and Mineral Reserve estimations, l ife of mine estimates, and mine and mine closure
plans; anticipated market prices of metals, currency exchange rates, and interest rates; the development and implementation o f the Company’s Responsible Mining
Management System; the Company’s ability to comply with contractual and permitting or other regulatory requirements; anticipa ted exploration and development activities at
the Company’s projects; the Company’s integration of acquisitions and any anticipated benefits thereof, including the Caseron es transaction; and expectations for other
economic, business, and/or competitive factors. Words such as “believe”, “expect”, “anticipate”, “contemplate”, “target”, “pl an”, “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, including
that the Company can achieve certain synergies, access financing, appropriate equipment and sufficient labour; assumed and fu ture price of copper, nickel, zinc, gold and other
metals; anticipated costs; ability to achieve goals; the prompt and effective integration of acquisitions; that the political environment in which the Company operates will
continue to support the development and operation of mining projects; and assumptions related to the factors set forth below. While these factors and assumptions are
considered reasonable by Lundin Mining as at the date of this document in light of management’s experience and perception of current conditions and expected developments,
these statements are inherently subject to significant business, economic and competitive uncertainties and contingencies. Kn own 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 availabi lity 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 unex pected geological formations or unstable ground
conditions, and natural phenomena such as earthquakes, flooding or unusually severe weather; uninsurable risks; project finan cing 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 a nd safety risks; risks relating to the development of
the Josemaria Project; inability to attract and retain highly skilled employees; risks associated with climate change; compli ance 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 markets, including with 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 tailings management, labour, trade relations,
and transportation; risks relating to indebtedness; the inability to effectively compete in the industry; risks associated wi th 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; changing taxation
regimes; risks related to mine closure activities, reclamation obligations, environmental liabilities and closed and historic al sites; reliance on key personnel and reporting and
oversight systems, as well as third parties and consultants in foreign jurisdictions; information technology and cybersecurit y risks; risks associated with the estimation of Mineral
Resources and Mineral Reserves and the geology, grade and continuity of mineral deposits including but not limited to models relating thereto; actual ore mined and/or metal
recoveries varying from Mineral Resource and Mineral Reserve estimates, estimates of grade, tonnage, dilution, mine plans and metallurgical and other characteristics; ore
processing efficiency; community and stakeholder opposition; financial projections, including estimates of future expenditure s and cash costs, and estimates of future
production may not be reliable; enforcing legal rights in foreign jurisdictions; environmental and regulatory risks associate d with the structural stability of waste rock dumps or
tailings storage facilities; activist shareholders and proxy solicitation matters; risks relating to dilution; regulatory inv estigations, enforcement, sanctions and/or related or other
litigation; risks relating to payment of dividends; counterparty and customer concentration risks; the estimation of asset ca rrying values; risks associated with the use of
derivatives; relationships with employees and contractors, and the potential for and effects of labour disputes or other unan ticipated difficulties with or shortages of labour or
interruptions in production; conflicts of interest; existence of a significant shareholder; exchange rate fluctuations; chall enges 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 em ployees, or the allegation of improper or
discriminatory employment practices, or human rights violations; the threat associated with outbreaks of viruses and infectio us diseases; risks relating to minor elements
contained in concentrate products; and other risks and uncertainties, including but not limited to those described in the “Ri sk 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 ar e available on SEDAR+ at
www.sedarplus.ca under the Company’s profile.
All of the forward -looking statements made in this document are qualified by these cautionary statements. Although the Company has attempted to identify important factors
that could cause actual results to differ materially from those contained in forward -looking information, there may be other factors that cause results not to be as anticipated,
estimated, forecast or intended and readers are cautioned that the foregoing list is not exhaustive of all factors and assump tions 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 mater ially from those described in forward -looking
information. Accordingly, there can be no assurance that forward -looking information will prove to be accurate and forward -looking information is not a guarantee of future
performance. Readers are advised not to place undue reliance on forward -looking information. The forward -looking information contained herein speaks only as of the date of
this document. The Company disclaims any intention or obligation to update or revise forward‐looking information or to explai n any material difference between such and
subsequent actual events, except as required by applicable law.
===== SIDA 15 =====
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 September 30, 2023 the Company generated revenue of $992.2 million (Q3 2022 - $648.5 million),
gross profit of $197.3 million (Q3 2022 - $82.5 million) and adjusted EBITDA 1 of $415.1 million (Q3 2022 - $202.4 million).
Financial results include the contribution from the acquisition of the Caserones copper -molybdenum mine ("Caserones")
located in Chile, which closed on July 13, 2023.
Overall, the operations performed well during the third quarter of 2023 with 89,942 tonnes of copper and 49,774 tonnes of
zinc produced, both record volumes for the Company. The Company remains on track to achieve annual production
guidance.
Operational Performance
Candelaria (80% owned): Candelaria produced 34,275 tonnes of copper and approximately 20,000 ounces of gold in
concentrate on a 100% basis in the quarter . Copper production was lower than the prior year quarter primarily due to lower
grades partially offset by higher throughput. Gold production was lower than the prior year quarter due to lower grades and
recoveries. Current quarter production costs and copper cash cost 1 of $2.19/lb were higher than the prior year quarter
largely owing to higher contractor and maintenance costs and unfavourable foreign exchange. Cash cost was further
impacted by lower sales volumes.
Caserones (51% owned): In the three months ended September 30, 2023 Caserones produced 34,427 tonnes of copper and
1,321 tonnes of molybdenum on a 100% basis, of which 29,821 tonnes of copper and 1,096 tonnes of molybdenum were
produced from the acquisition closing date of July 13. Copper and molybdenum production were higher than planned due
to increased throughput and recoveries. Production costs in the quarter were negatively impacted by the recognition of fair
market value adjustments to inventory due to the acquisition. Copper cash cost of $1.60/lb benefited from higher than
planned production and by-product credits.
Chapada (100% owned): Chapada produced 12,286 tonnes of copper and approximately 15,000 ounces of gold in
concentrate in the quarter . Copper and gold production was lower than the prior year quarter primarily due to lower
throughput and grades. Production costs were lower than the prior year quarter due to lower sales volumes. Copper cash
cost of $2.28/lb for the quarter increased from the prior year quarter due to lower sales volumes, unfavorable foreign
exchange variances, and lower by-product credits and production.
Eagle (100% owned): During the quarter Eagle produced 4,290 tonnes of nickel and 3,245 tonnes of copper which were
lower than the prior year quarter due to lower planned grades. Production costs were higher than the comparable prior
year quarter due to inflationary contractual cost increases. Nickel cash cost in the quarter of $2.07/lb was higher than the
prior year quarter primarily due to lower by-product credits and higher production costs.
Neves-Corvo (100% owned): Neves-Corvo produced 9,016 tonnes of copper and 25,807 tonnes of zinc in the quarter .
Copper production was higher than in the prior year quarter due to higher throughput, grades and recoveries. Zinc
production was higher than in the prior year quarter primarily due to increased grades and recoveries driven by the Zinc
Expansion Project ("ZEP"). Production costs during the quarter were lower than the prior year quarter despite higher sales,
primarily due to reduced electricity costs. Current quarter copper cash cost per pound of $2.27/lb was lower than prior year
quarter primarily as a result of lower input costs, and benefited from higher production and sales.
Zinkgruvan (100% owned): Zinc production of 23,967 tonnes and lead production of 8,643 tonnes were higher than the
prior year quarter primarily due to higher throughput and grades. Copper production of 1,299 tonnes was lower than the
prior year quarter due to lower throughput. Production costs were higher than the prior year quarter primarily due to
higher sales volumes. Zinc cash cost per pound of $0.28/lb during the quarter was higher than the prior year quarter
primarily as a result of lower by-product costs per pound and higher treatment and refining charges.
===== SIDA 16 =====
1 This is a non-GAAP measure - see section "Non-GAAP and Other Performance Measures" of this MD&A for discussion.
2
Total Productiona
2023 2022
YTD Q3 Q2 Q1 Total Q4 Q3 Q2 Q1
Copper (t)b 211,461 89,942 60,057 61,462 249,659 56,552 63,930 64,096 65,081
Zinc (t) 134,442 49,774 36,115 48,553 158,938 44,308 40,327 41,912 32,391
Molybdenum (t)b 1,096 1,096 — — — — — — —
Gold (koz)b 105 35 34 36 154 36 45 39 34
Nickel (t) 12,700 4,290 4,686 3,724 17,475 4,096 4,379 4,719 4,281
a - Tonnes(t) and thousands of ounces (koz).
b - Candelaria and Caserones production are on a 100% basis. Caserones results are from July 13, 2023.
Corporate Updates
• On July 13, 2023, the Company announced the closing of the acquisition of 51% of the issued and outstanding equity of
SCM Minera Lumina Copper Chile ("Lumina Copper"), which owns the Caserones copper -molybdenum mine located in
Chile. Net cash paid at closing was $648.6 million, consisting of $796.6 million upfront cash consideration after
adjustments, net of $148.0 million cash and cash equivalents held by Lumina Copper at closing on a 100% basis.
Excluding the 49% of cash and cash equivalents held by Lumina Copper at closing that are not attributable to the
Company, net cash paid at closing was $721.1 million for the Company's 51% share. Remaining deferred cash
consideration of $150 million will be payable in installments as follows: $50 million to be paid in five installments of $10
million on the anniversary of the transaction closing date in each of 2024, 2025, 2026, 2027, and 2028; and $100 million
shall be paid on the anniversary of the closing date in 2029. Lundin Mining also has the right to acquire up to an
additional 19% interest in Lumina Copper for $350 million over a five -year period commencing on the first anniversary
of the date of closing. A technical report for the Caserones mine titled “Caserones Mining Operation, Chile, NI 43 -101
Technical Report on the Caserones Mining Operation” was filed under the Company's profile on SEDAR+.
• On July 27, 2023, the Company announced it had obtained a three -year term loan ("Term Loan") of a principal amount
of $800.0 million with an additional $400.0 million accordion option, maturing July 2026. The $400 million accordion
becomes available upon closing of up to an additional 19% interest in Lumina Copper.
• On September 11, 2023, the Company announced that the Environmental Impact Assessment (“EIA”) for the extension
of operations and mine life for its Candelaria Copper Mine in Chile was approved by the Regional Environmental
Commission of Atacama on September 8, 2023. Approval of the EIA will allow for the extension of Candelaria's mine life
to 2040 and include various measures that will support sustainable social, economic, and environmental development
in the Atacama Region.
• On October 2, 2023, the Company announced that its Chief Executive Officer, Peter Rockandel, will be stepping down as
of December 31, 2023. The role of President and Chief Executive Officer will be assumed by Jack Lundin, current
President and former Director of the Company, who will rejoin the Board of Directors as of January 1, 2024.
Financial Performance
• Gross profit for the quarter ended September 30, 2023 was $197.3 million, an increase of $114.8 million over the prior
year quarter due to the acquisition of the Caserones mine as well as higher realized copper price. On a year -to-date
basis, gross profit for the period ended September 30, 2023 was $463.5 million which was lower than the prior year
period. The decrease was primarily due to higher input costs at Candelaria combined with higher treatment and
refining charges, offset by the inclusion of Caserones gross profit.
• For the three months ended September 30, 2023, net earnings of $21.9 million were $33.1 million higher than the prior
year quarter. The increase was primarily due to higher gross profit and lower project development costs, and partially
offset by increased interest costs, unrealized losses on derivative contracts, the fair market value adjustment on
inventory and higher tax expenses due primarily to the change in mining royalty in Chile. On a year -to-date basis, net
===== SIDA 17 =====
1 This is a non-GAAP measure - see section "Non-GAAP and Other Performance Measures" of this MD&A for discussion.
3
earnings of $248.5 million were lower than the prior year period due to lower gross profit partially offset by lower
project development costs and taxes.
• Adjusted earnings1 for the three months ended September 30, 2023 of $85.6 million were $54.7 million higher than the
prior year quarter primarily due to the same factors as the change in net earnings described above. On a year-to-date
basis adjusted earnings of $256.9 million were lower than the prior year period due to lower gross profit partially offset
by lower income taxes.
• Free cash flow 1 for the three months ended September 30, 2023 of $71.1 million was $234.3 million higher than the
prior year comparable period and benefited from the inclusion of production from Caserones, combined with higher
realized copper prices and higher overall changes in working capital.
Financial Position and Financing
• Cash and cash equivalents as at September 30, 2023 was $357.3 million. Cash generated from operations of $303.8
million in the three months ended September 30, 2023 was used to fund investing activities of $908.8 million. Investing
activities in the third quarter included $648.6 million net cash paid at closing for the acquisition of Caserones, consisting
of $796.6 million upfront cash consideration after adjustments, net of $148 million cash and cash equivalents held by
Lumina Copper at closing on a 100% basis. Cash generated from financing activities was $773.2 million, which was
comprised primarily of the proceeds from the Term Loan to finance the Caserones acquisition.
• As at September 30, 2023, the Company had a net debt1 balance of $1,158.9 million.
• As at November 1, 2023, the Company had cash and net debt balances of approximately $368.6 million and
$1,137.6 million, respectively.
===== SIDA 18 =====
4
Outlook
Overall, the operations performed well during the third quarter of 2023 and production and cash cost guidance for 2023 has
been updated from that disclosed in the Company's Management's Discussion and Analysis for the three and six months
ended June 30, 2023.
Most production guidance ranges have been tightened and improved, with the lower end of the range being increased for
copper , nickel and gold. Cash cost guidance has been lowered for Caserones and Eagle driven by higher production volumes
and by-product credits, and increased for Candelaria, reflecting higher operating costs. Production continues to be weighted
to the second half of the year , notably at Chapada due to the first half seasonal operating conditions and forecast grade and
recovery profiles.
As a result of re-phasing several projects at Neves-Corvo and Zinkgruvan, capital expenditure guidance has been reduced for
2023. As disclosed in the Company's Management's Discussion and Analysis for the three and six months ended June 30,
2023, capital spend guidance at Josemaria was previously lowered to $350 million for 2023 due to foreign exchange, a delay
in planned equipment deliveries and reduced activities.
2023 Production and Cash Cost Guidance
Guidancea Revised Guidance
(contained metal) Production Cash Cost ($/lb)b Production Cash Cost ($/lb)b
Copper (t) Candelaria (100%) 145,000 – 155,000 1.80 – 1.95c 147,000 – 153,000 2.00 – 2.20c
Caserones (100%)e 60,000 – 65,000 2.30 – 2.45 65,000 – 69,000 2.00 – 2.20
Chapada 43,000 – 48,000 2.35 – 2.55d 45,000 – 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 – 36,000 2.10 – 2.30c
Zinkgruvan 3,000 – 4,000 3,000 – 4,000
Total 296,000 – 325,000 305,000 – 325,000
Zinc (t) Neves-Corvo 100,000 – 110,000 103,000 – 110,000
Zinkgruvan 80,000 – 85,000 0.45 – 0.50c 78,000 – 82,000 0.45 – 0.50c
Total 180,000 – 195,000 181,000 – 192,000
Molybdenum (t) Caserones (100%)e 1,500 – 2,000 1,500 – 2,000
Gold (koz) Candelaria (100%) 85 – 90 87 – 92
Chapada 55 – 60 55 – 60
Total 140 – 150 142 – 152
Nickel (t) Eagle 13,000 – 16,000 2.30 – 2.45 15,000 – 17,000 2.00 – 2.20
a. Guidance as outlined in the MD&A for the three and six months June 30, 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:
$1.10/lb, Mo: $20.00/lb, Pb: $0.90/lb, Au: $1,850/oz), foreign exchange rates (€/USD: 1.05, 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 Zinkgr uvan 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 t o $4.57/oz silver.
d. Chapada's cash cost is calculated on a by -product basis and does not include the effects of its copper stream agreements. Effects of the copper stream
agreements are reflected in copper revenue and will impact realized price per pound.
e. Caserones guidance is for the entire second half of 2023.
===== SIDA 19 =====
5
2023 Capital Expenditure Guidanceb
($ millions) Guidancea Revisions Revised Guidance
Candelaria (100% basis) 375 — 375
Caserones (100% basis)c 110 — 110
Chapada 70 — 70
Eagle 20 — 20
Neves-Corvo 130 (25) 105
Zinkgruvan 70 (5) 65
Other 10 — 10
Total Sustaining 785 (30) 755
Expansionary - Josemaria 350 — 350
Total Capital Expenditures 1,135 (30) 1,105
a. Guidance as outlined in the MD&A for the three and six months ended June 30, 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 $45.0 million in 2023, unchanged from previous guidance.
===== SIDA 20 =====
6
Selected Quarterly Financial Information1
Three months ended
September 30,
Nine months ended
September 30,
($ millions, except share and per share amounts) 2023 2022 2023 2022
Revenue 992.2 648.5 2,332.1 2,229.8
Costs of goods sold:
Production costs (615.1) (425.8) (1,438.1) (1,210.4)
Depreciation, depletion and amortization (179.8) (140.2) (430.5) (412.0)
Gross profit 197.3 82.5 463.5 607.3
Net earnings (loss) attributable to:
Lundin Mining shareholders (3.0) (11.2) 202.8 281.3
Non-controlling interests 24.8 — 45.7 36.9
Net earnings (loss) 21.9 (11.2) 248.5 318.2
Adjusted earnings3 85.6 30.9 256.9 288.9
Adjusted EBITDA3 415.1 202.4 943.8 938.8
Cash provided by operating activities 303.8 36.3 710.5 720.0
Adjusted operating cash flow3 316.5 181.3 662.2 703.9
Free cash flow from (used in) operations 136.5 (43.9) 228.3 417.1
Free cash flow3 71.1 (163.2) (47.7) 158.3
Capital expenditures4 243.2 199.5 769.2 561.7
Per share amounts:
Basic and diluted (loss) earnings per share ("EPS") attributable
to shareholders — (0.01) 0.26 0.37
Adjusted EPS 0.11 0.04 0.33 0.38
Adjusted operating cash flow per share3 0.41 0.23 0.86 0.93
Dividends declared (C$/share) 0.09 0.09 0.27 0.38
September 30,
2023
December 31,
2022
Total assets 10,696.2 8,172.8
Total debt and lease liabilities 1,511.4 197.3
Net debt3 (1,158.9) (10.9)
Summary of Quarterly Results1,2,5
($ millions, except per share data) Q3-23 Q2-23 Q1-23 Q4-22 Q3-22 Q2-22 Q1-22 Q4-21
Revenue 992.2 588.5 751.3 811.4 648.5 590.2 991.1 1,018.6
Gross profit 197.3 52.8 213.3 155.2 82.5 46.0 478.8 433.2
Net earnings (loss) 21.9 61.3 165.3 145.3 (11.2) (48.6) 378.1 266.1
- attributable to shareholders (3.0) 59.1 146.6 145.6 (11.2) (52.6) 345.1 228.8
Adjusted earnings (loss)6,3 85.6 45.6 125.7 191.5 30.9 (35.3) 295.6 281.5
Adjusted EBITDA3,6 415.1 191.8 336.9 353.7 202.4 148.6 587.8 623.0
EPS - Basic and Diluted — 0.08 0.19 0.19 (0.01) (0.07) 0.47 0.31
Adjusted EPS3,6 0.11 0.06 0.16 0.25 0.04 (0.05) 0.40 0.38
Cash flow from operations 303.8 194.8 211.9 156.9 36.3 366.4 317.3 384.2
Adjusted operating cash flow per share3 0.41 0.14 0.30 0.38 0.23 0.06 0.64 0.65
Capital expenditures4 243.2 279.9 246.1 281.2 199.5 217.3 144.9 153.9
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 earning s has also been impacted by
inflation factors. For further metal price trending discussion, refer to page 22 of this MD&A
6 Q2 2023 amounts have been adjusted from those presented in the Company's MD&A for the three and six months ended June 30, 2023.
===== SIDA 21 =====
7
Revenue Overview
Sales Volumes by Payable Metal
2023 2022
YTD Q3 Q2 Q1 Total Q4 Q3 Q2 Q1
Copper (t)
Candelaria (100%) 105,585 33,668 36,347 35,570 147,251 33,561 35,587 39,655 38,448
Caserones (100%)1 30,385 30,385 — — — — — — —
Chapada 30,681 11,445 10,164 9,072 45,563 12,037 12,817 7,905 12,804
Eagle 8,913 3,177 2,951 2,785 14,060 2,672 3,721 4,159 3,508
Neves-Corvo 23,000 8,799 6,170 8,031 31,592 6,351 8,574 8,183 8,484
Zinkgruvan 3,628 1,758 1,001 869 4,428 886 1,570 337 1,635
202,192 89,232 56,633 56,327 242,894 55,507 62,269 60,239 64,879
Zinc (t)
Neves-Corvo 65,624 21,957 20,125 23,542 66,966 20,205 18,770 16,289 11,702
Zinkgruvan 48,028 22,042 9,374 16,612 65,684 17,635 13,722 18,525 15,802
113,652 43,999 29,499 40,154 132,650 37,840 32,492 34,814 27,504
Molybdenum (t)
Caserones (100%)1 1,041 1,041 — — — — — — —
Gold (koz)
Candelaria (100%) 64 19 23 22 83 20 20 22 21
Chapada 35 13 11 11 65 17 23 10 15
99 32 34 33 148 37 43 32 36
Nickel (t)
Eagle 10,234 3,640 3,859 2,735 14,427 3,239 3,715 4,206 3,267
Lead (t)
Neves-Corvo 3,140 1,220 881 1,039 2,908 673 654 818 763
Zinkgruvan 19,813 9,391 4,944 5,478 30,163 7,654 7,502 10,163 4,844
22,953 10,611 5,825 6,517 33,071 8,327 8,156 10,981 5,607
Silver (koz)
Candelaria (100%) 907 279 333 295 1,442 278 305 412 447
Chapada 92 32 29 31 156 50 32 26 48
Eagle 16 6 4 6 34 9 9 9 7
Neves-Corvo 556 227 158 171 552 92 117 152 191
Zinkgruvan 1,443 713 331 399 2,088 551 532 650 355
3,014 1,257 855 902 4,272 980 995 1,249 1,048
1 Caserones results are from July 13, 2023.
===== SIDA 22 =====
8
Revenue Analysis1
Three months ended September 30, Nine months ended September 30,
by Mine 2023 2022 Change 2023 2022 Change
($ thousands) $ % $ % $ $ % $ % $
Candelaria (100%) 299,745 31 255,330 40 44,415 970,576 42 974,875 44 (4,299)
Caserones (100%) 284,556 29 — — 284,556 284,556 12 — — 284,556
Chapada 111,897 11 118,734 18 (6,837) 317,736 14 335,599 15 (17,863)
Eagle 102,505 10 106,715 16 (4,210) 277,175 12 363,412 16 (86,237)
Neves-Corvo 111,202 11 102,865 16 8,337 309,219 13 330,970 15 (21,751)
Zinkgruvan 82,290 8 64,854 10 17,436 172,808 7 224,942 10 (52,134)
992,195 648,498 343,697 2,332,070 2,229,798 102,272
Three months ended September 30, Nine months ended September 30,
by Metal 2023 2022 Change 2023 2022 Change
($ thousands) $ % $ % $ $ % $ % $
Copper 643,992 65 388,882 60 255,110 1,564,626 67 1,418,868 64 145,758
Zinc 86,901 9 85,251 13 1,650 220,853 9 280,559 13 (59,706)
Molybdenum 48,698 5 — — 48,698 48,698 2 — — 48,698
Gold 53,684 5 63,243 10 (9,559) 161,759 7 166,032 7 (4,273)
Nickel 73,188 7 73,511 11 (323) 195,449 8 251,177 11 (55,728)
Lead 22,328 2 13,868 2 8,460 44,836 2 43,088 2 1,748
Silver 13,670 1 9,450 1 4,220 32,558 1 33,351 1 (793)
Other 49,734 6 14,293 3 35,441 63,291 4 36,723 2 26,568
992,195 648,498 343,697 2,332,070 2,229,798 102,272
1. Caserones results are from July 13, 2023.
Revenue for the quarter ended September 30, 2023 amounted to $992.2 million which was higher than the prior year
quarter as a result of the inclusion of Caserones copper and molybdenum revenues as well as a higher realized copper price.
On a year-to-date basis revenue was higher than the prior year period primarily as a result of the Caserones acquisition, and
partially offset by lower sales at the existing operations as a result of sales volumes ($135 million) and higher treatment and
refining charges ($35 million).
Revenue from gold and silver for the three and nine months ended September 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 price received for sales that settle during the reporting period. For sales that have not
been settled, an estimate is used based on the expected month of settlement and the forward price of the metal at the end
of the reporting period. The difference between the estimate and the final price received is recognized by adjusting revenue
in the period in which the sale is settled. Settlement dates can range from one to six months after shipment.
===== SIDA 23 =====
9
Provisionally Valued Revenue as of September 30, 2023
Metal Payable metal Valued at
Copper 120,071 t $3.75 /lb
Zinc 30,946 t $1.20 /lb
Molybdenum 1,150 t $20.27 /lb
Gold 27 koz $1,856 /oz
Nickel 1,404 t $8.40 /lb
Quarterly Reconciliation of Realized Prices
Three months ended September 30, 2023
($ thousands) Copper Zinc Molybdenum Gold Nickel Total
Current period sales1 731,635 120,356 46,971 61,238 73,318 1,033,518
Prior period price adjustments (2,744) (4,521) 1,727 (1,468) 908 (6,098)
728,891 115,835 48,698 59,770 74,226 1,027,420
Other metal sales 66,137
Copper stream cash effect (3,889)
Gold stream cash effect (19,336)
Less: Treatment & refining charges (78,137)
Total Revenue 992,195
Payable Metal 89,232 t 43,999 t 1,041 t 32 koz 3,640 t
Current period sales1,2 $3.72 $1.24 $20.47 $1,907 $9.14
Prior period adjustments2 (0.01) (0.05) 0.75 (45.00) 0.11
Realized prices2, 3 $3.71 /lb $1.19 /lb $21.22 /lb $1,862 /oz $9.25 /lb
Three months ended September 30, 2022
Copper Zinc Gold Nickel Total
Current period sales1 478,775 98,529 71,497 78,425 727,226
Prior period price adjustments (62,926) 3,961 (771) (4,954) (64,690)
415,849 102,490 70,726 73,471 662,536
Other metal sales 54,356
Copper stream cash effect (5,990)
Gold stream cash effect (17,261)
Less: Treatment & refining charges (45,143)
Total Revenue 648,498
Payable Metal 62,269 t 32,492 t 42 koz 3,715 t
Current period sales1,2 $3.49 $1.38 $1,690 $9.58
Prior period adjustments2 (0.46) 0.05 (18.00) (0.61)
Realized prices2, 3 $3.03 /lb $1.43 /lb $1,672 /oz $8.97 /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 September 30, 2023 is $3.69/lb (2022:
$2.99/lb). The realized price for gold inclusive of the impact of streaming agreements for the three months ended September 30, 2023 is $1,259/oz
(2022: $1,264/oz).
===== SIDA 24 =====
10
Year-to-Date Reconciliation of Realized Prices
Nine months ended September 30, 2023
($ thousands) Copper Zinc Molybdenum Gold Nickel Total
Current period sales1 1,679,402 292,262 46,971 188,632 216,648 2,423,915
Prior period price adjustments 27,576 823 1,727 1,243 (17,501)
13,868
1,706,978 293,085 48,698 189,875 199,147 2,437,783
Other metal sales 153,315
Copper stream cash effect
(14,652)
Gold stream cash effect (60,855)
Less: Treatment & refining charges (183,521)
Total Revenue 2,332,070
Payable Metal 202,192 t 113,652 t 1,041 koz 98 koz 10,234 t
Current period sales1,2 $3.77 $1.17 $20.47 $1,913 $9.60
Prior period adjustments2 0.06 — 0.75 12 (0.77)
Realized prices2, 3 $3.83 /lb $1.17 /lb $21.22 /oz $1,925 /oz $8.83 /lb
Nine months ended September 30, 2022
Copper Zinc Gold Nickel Total
Current period sales1 1,481,873 313,191 193,771 255,078 2,243,913
Prior period price adjustments 15,442 13,815 1,374 (1,510) 29,121
1,497,315 327,006 195,145 253,568 2,273,034
Other metal sales 166,005
Copper stream cash effect (18,374)
Gold stream cash effect (58,550)
Less: Treatment & refining charges (132,317)
Total Revenue 2,229,798
Payable Metal 187,387 t 94,810 t 110 koz 11,188 t
Current period sales1,2 $3.59 $1.50 $1,762 $10.34
Prior period adjustments2 0.03 0.06 12 (0.06)
Realized prices2, 3 $3.62 /lb $1.56 /lb $1,774 /oz $10.28 /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 $3.80/lb ( 2022: $3.58/lb). The realized price for gold
inclusive of the impact of streaming agreements for 2023 is $1,308/oz (2022: $1,232/oz).
===== SIDA 25 =====
11
Financial Results
Production Costs
Production costs for the quarter ended September 30, 2023 were $615.1 million and were higher than the prior year
quarter due to the acquisition of Caserones, including $32.2 million fair value adjustments recorded to re-value concentrate
and in-process inventory on hand at the acquisition date, and subsequently recognized in production costs as the inventory
was sold in the third quarter. On a year-to-date basis, production costs of $1,438.1 million increased by $227.6 million over
the prior year comparable period primarily due to the acquisition of Caserones as well as higher maintenance costs at
Candelaria.
Depreciation, Depletion and Amortization
For the three and nine months ended September 30, 2023 depreciation, depletion and amortization expense increased
compared to the prior year comparative periods, primarily attributable to the acquisition of Caserones, partially offset by
decreased amortization related to extended life of mine at Eagle.
Depreciation, depletion & amortization Three months ended September 30, Nine months ended September 30,
($ thousands) 2023 2022 Change 2023 2022 Change
Candelaria 70,368 74,772 (4,404) 198,439 218,792 (20,353)
Caserones 38,307 — 38,307 38,307 — 38,307
Chapada 12,813 12,218 595 39,883 31,808 8,075
Eagle 14,326 21,650 (7,324) 38,147 60,403 (22,256)
Josemaria — 335 (335) 38 623 (585)
Neves-Corvo 31,353 25,299 6,054 89,152 70,123 19,029
Zinkgruvan 12,380 5,442 6,938 25,380 28,951 (3,571)
Other 241 445 (204) 1,194 1,340 (146)
179,788 140,161 39,627 430,540 412,040 18,500
General Exploration and Business Development
Total general exploration and business development expenses for the quarter and the nine months ended September 30,
2023 were lower than 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 and at Eagle where underground down -hole geophysical
surveys continue at Eagle East. Drilling at Candelaria was divided between Ojos district and Candelaria near -mine.
Exploration drilling at Neves -Corvo and Zinkgruvan was primarily focused along potential near -mine trends; Drilling at
Chapada was focused between near -mine and the Chapada district. Tender processes for drilling and geophysical surveys
were advanced at both the Caserones and the Josemaria Project, where in both instances, drilling and geophysical surveys
are planned to commence during the fourth quarter.
Finance Income and Costs
Net finance costs in the current quarter and year -to-date period were higher than the prior year comparable periods
primarily due to higher interest expense related to higher outstanding debt through the year , higher interest rates and
combined with increased lease liability interest following the acquisition of Caserones.
Other Income and Expense
Net other expense of $22.1 million for the quarter ended September 30, 2023 compared to net other income of
$19.5 million for the prior year quarter was negatively impacted by unrealized losses on derivative contracts and foreign
exchange and lower trading gains on debt and equity investments recorded in the current quarter . Net other income was
lower for the nine months ended September 30, 2023 compared to the prior year period due to sinkhole costs and a
comparatively lower gain on disposal than that recognized in the prior year .
===== SIDA 26 =====
12
Foreign exchange gains and losses recorded in other income primarily resulted from foreign exchange revaluation of
working capital denominated in foreign currencies. Period end exchange rates having a meaningful impact on foreign
exchange recorded at September 30, 2023 were:
September 30, 2023 June 30, 2023 December 31, 2022
Brazilian Real (USD:BRL) 5.01 4.82 5.22
Chilean Peso (USD:CLP) 907 803 860
Euro (USD:€) 0.94 0.92 0.94
Swedish Kronor (USD:SEK) 10.84 10.85 10.44
Argentine Peso (USD:ARS) 350 256 177
Income Taxes
Income tax expense (recovery)
Three months ended
September 30,
Nine months ended
September 30,
($ thousands) 2023 2022 Change 2023 2022 Change
Candelaria 39,727 (379) 40,106 86,006 78,011 7,995
Caserones 30,122 — 30,122 30,122 — 30,122
Chapada 11,380 7,565 3,815 (9,833) 7,149 (16,982)
Eagle 569 1,461 (892) 4,115 17,619 (13,504)
Josemaria — (1,181) 1,181 678 (199) 877
Neves-Corvo (2,295) (8,150) 5,855 (11,640) (3,444) (8,196)
Zinkgruvan 6,850 11,408 (4,558) 13,115 34,659 (21,544)
Other (1,462) 42 (1,504) 1,420 3,180 (1,760)
84,891 10,766 74,125 113,983 136,975 (22,992)
Income taxes by classification
Three months ended
September 30,
Nine months ended
September 30,
($ thousands) 2023 2022 Change 2023 2022 Change
Current income tax expense (recovery) 40,115 (9,994) 50,109 126,829 161,193 (34,364)
Deferred income tax expense (recovery) 44,776 20,760 24,016 (12,846) (24,218) 11,372
84,891 10,766 74,125 113,983 136,975 (22,992)
Income tax expense in the quarter ended September 30, 2023 was higher than the prior year quarter due to higher taxable
earnings, and included $25.7 million deferred tax expense recognized in the quarter following the enactment of a new
mining royalty law in Chile that is applicable to Candelaria, and does not apply to Caserones as a result of a tax stability
agreement until 2028. The mining royalty law is effective from January 1, 2024 and increases the Company's expected tax
rates on future net mining income. Income tax expense in the nine months ended September 30, 2023 was lower than the
prior year comparable period due primarily to lower taxable earnings year -to-date. Included in Chapada’s income taxes for
the current quarter was a $9.7 million expense and a $12.3 million recovery on a year-to-date basis recorded for deferred
tax on revaluation of non-monetary assets and translation of deferred taxes which are denominated in BRL (Q3 2022 – $5.6
million expense, YTD 2022 - $6.3 million recovery).
===== SIDA 27 =====
13
Mining Operations
Production Overview
2023 2022
YTD Q3 Q2 Q1 Total Q4 Q3 Q2 Q1
Copper (t)
Candelaria (100%) 110,394 34,275 36,952 39,167 152,042 34,398 37,192 40,949 39,503
Caserones (100%)1 29,821 29,821 — — — — — — —
Chapada 32,847 12,286 10,697 9,864 45,739 11,306 13,988 10,345 10,100
Eagle 10,266 3,245 3,881 3,140 15,895 3,081 3,994 4,400 4,420
Neves-Corvo 24,200 9,016 7,610 7,574 31,906 7,160 7,019 7,867 9,860
Zinkgruvan 3,933 1,299 917 1,717 4,077 607 1,737 535 1,198
211,461 89,942 60,057 61,462 249,659 56,552 63,930 64,096 65,081
Zinc (t)
Neves-Corvo 77,777 25,807 24,177 27,793 82,435 24,523 22,514 20,647 14,751
Zinkgruvan 56,665 23,967 11,938 20,760 76,503 19,785 17,813 21,265 17,640
134,442 49,774 36,115 48,553 158,938 44,308 40,327 41,912 32,391
Molybdenum (t)
Caserones (100%)1 1,096 1,096 — — — — — — —
Gold (koz)
Candelaria (100%) 65 20 21 24 86 20 21 23 22
Chapada 40 15 13 12 68 16 24 16 12
105 35 34 36 154 36 45 39 34
Nickel (t)
Eagle 12,700 4,290 4,686 3,724 17,475 4,096 4,379 4,719 4,281
Lead (t)
Neves-Corvo 3,570 1,447 951 1,172 3,306 845 743 925 793
Zinkgruvan 19,866 8,643 3,816 7,407 30,517 7,619 7,046 9,124 6,728
23,436 10,090 4,767 8,579 33,823 8,464 7,789 10,049 7,521
Silver (koz)
Candelaria (100%) 1,019 306 366 347 1,595 306 337 457 495
Chapada 185 67 62 56 258 65 75 60 58
Eagle 47 19 11 17 93 20 20 26 27
Neves-Corvo 1,329 486 407 436 1,383 370 323 346 344
Zinkgruvan 1,791 785 374 632 2,621 663 642 739 577
4,371 1,663 1,220 1,488 5,950 1,424 1,397 1,628 1,501
1 Caserones results are from July 13, 2023.
===== SIDA 28 =====
14
Production Cost and Cash Cost Overview ($ thousand, $/lb)
Three months ended
September 30,
Nine months ended
September 30,
($ thousands) 2023 2022 2023 2022
Candelaria
Production costs $175,468 $168,602 $548,405 $489,575
Gross cost 2.54 2.31 2.54 2.11
By-product1 (0.35) (0.34) (0.36) (0.31)
Cash Cost (Cu, $/lb) 2.19 1.97 2.18 1.80
AISC (Cu, $/lb)2 3.43 3.34 3.55 2.94
Caserones3
Production costs $188,982 — $188,982 —
Gross cost 2.42 — 2.42 —
By-product (0.82) — (0.82) —
Cash Cost (Cu, $/lb) 1.60 — 1.60 —
AISC (Cu, $/lb) 2.33 — 2.33 —
Chapada
Production costs $78,854 $88,665 $227,601 $239,849
Gross cost 3.25 3.23 3.49 3.30
By-product (0.97) (1.31) (1.05) (1.17)
Cash Cost (Cu, $/lb) 2.28 1.92 2.44 2.13
AISC (Cu, $/lb) 3.15 2.80 3.44 3.23
Eagle
Production cost $52,497 $47,736 $143,681 $142,422
Gross cost 5.72 5.11 5.72 4.87
By-product (3.65) (4.06) (3.63) (4.55)
Cash Cost (Ni, $/lb) 2.07 1.05 2.09 0.32
AISC (Ni, $/lb) 4.05 2.77 4.08 2.37
Neves-Corvo
Production costs $82,137 $94,572 $243,943 $250,830
Gross cost 4.62 5.29 5.13 4.75
By-product (2.35) (2.60) (2.60) (2.49)
Cash Cost (Cu, $/lb) 2.27 2.69 2.53 2.26
AISC (Cu, $/lb) 3.82 3.51 4.14 3.19
Zinkgruvan
Production costs $37,183 $25,709 $83,874 $85,963
Gross cost 1.02 1.04 1.04 1.00
By-product (0.74) (0.86) (0.68) (0.69)
Cash Cost (Zn, $/lb) 0.28 0.18 0.36 0.31
AISC (Zn, $/lb) 0.56 0.50 0.80 0.64
1. By-product is after related treatment and refining charges.
2. All-in Sustaining Cost ("AISC") is a non -GAAP measure, see the "Non-GAAP and Other Performance Measures" section of this MD&A for discussion.
3. Caserones results are from July 13, 2023.
===== SIDA 29 =====
15
Capital Expenditures1
Three months ended September 30,
2023 2022
($ thousands) Sustaining Expansionary
Capitalized
Interest Total Sustaining Expansionary Total
Candelaria 86,693 — — 86,693 103,486 — 103,486
Caserones 28,849 — — 28,849 — — —
Chapada 16,716 — — 16,716 19,197 — 19,197
Eagle 4,989 — — 4,989 3,062 — 3,062
Josemaria — 52,662 10,532 63,194 — 43,264 43,264
Neves-Corvo 27,357 — — 27,357 15,860 3,502 19,362
Zinkgruvan 12,350 — — 12,350 8,415 — 8,415
Other 3,059 — — 3,059 2,702 — 2,702
180,013 52,662 10,532 243,207 152,722 46,766 199,488
Nine months ended September 30,
2023 2022
($ thousands) Sustaining Expansionary
Capitalized
Interest Total Sustaining Expansionary Total
Candelaria 300,796 — — 300,796 272,557 — 272,557
Caserones 28,849 — — 28,849 — — —
Chapada 52,433 — — 52,433 63,412 — 63,412
Eagle 15,653 — — 15,653 10,445 — 10,445
Josemaria — 234,831 11,011 245,842 — 98,198 98,198
Neves-Corvo 74,551 — — 74,551 49,136 28,325 77,461
Zinkgruvan 42,812 — — 42,812 31,537 — 31,537
Other 8,303 — — 8,303 8,058 — 8,058
523,397 234,831 11,011 769,239 435,145 126,523 561,668
1. Capital expenditures are reported on a cash basis, as presented in the condensed interim consolidated statement of cash fl ows. Sustaining capital
expenditure is a supplementary financial measure and expansionary capital expenditure is a non -GAAP measure – see the "Non -GAAP and Other
Performance Measures" section of this MD&A for discussion.
===== SIDA 30 =====
16
Candelaria (Chile)
Operating Statistics
2023 2022
(100% Basis) YTD Q3 Q2 Q1 Total Q4 Q3 Q2 Q1
Ore mined (000s tonnes) 18,146 5,350 6,194 6,602 22,666 4,993 6,239 6,362 5,072
Ore milled (000s tonnes) 21,294 7,168 6,924 7,202 26,725 6,593 6,642 6,847 6,643
Grade
Copper (%) 0.57 0.52 0.59 0.59 0.62 0.57 0.60 0.64 0.65
Gold (g/t) 0.14 0.12 0.14 0.15 0.14 0.13 0.14 0.14 0.14
Recovery
Copper (%) 91.6 91.0 91.1 92.6 92.7 92.7 93.3 93.0 91.9
Gold (%) 69.9 70.6 68.8 70.3 73.9 74.0 74.6 73.8 73.0
Production (contained metal)
Copper (tonnes) 110,394 34,275 36,952 39,167 152,042 34,398 37,192 40,949 39,503
Gold (000 oz) 65 20 21 24 86 20 21 23 22
Silver (000 oz) 1,019 306 366 347 1,595 306 337 457 495
Revenue ($000s) 970,576 299,745 290,426 380,405 1,317,223 342,348 255,330 261,999 457,546
Production costs ($000s) 548,405 175,468 184,958 187,979 697,171 207,596 168,602 168,164 152,809
Gross profit ($000s) 223,732 53,909 35,772 134,051 335,793 69,285 11,956 17,924 236,628
Cash cost ($ per pound copper) 2.18 2.19 2.14 2.21 1.96 2.52 1.97 1.86 1.58
AISC ($ per pound copper) 3.55 3.43 3.76 3.44 3.22 4.19 3.34 2.89 2.61
Gross Profit
Gross profit for the three months ended September 30, 2023 was higher than the prior year quarter , primarily due to higher
copper price s partially offset by higher production costs and unfavorable foreign exchange variance . Year-to-date, gross
profit was lower than the prior year period due to higher production costs, lower sales volumes and unfavorable foreign
exchange being partially offset by higher copper prices.
Production
Copper production for the three and nine months ended September 30, 2023 was lower than the prior year quarter and
year-to-date period due to lower grades partially offset by higher throughput. Gold production in the current quarter and
year-to-date was below the prior year periods, due to lower grades and recoveries, offset partially by higher throughput.
Annual copper and gold production guidance ranges for both metals have been revised to 147,000 – 153,000 tonnes of
copper and 87,000 - 92,000 ounces of gold.
Production Costs and Cash Cost
Production costs for the three and nine months ended September 30, 2023 were higher than the prior year quarter , mainly
due to higher contractor and maintenance costs and unfavorable foreign exchange. Cash cost per pound for the three and
nine months ended September 30, 2023 was impacted by lower sales volumes and unfavorable foreign exchange. Year-to-
date cash cost was also impacted by higher contractor and maintenance costs. Annual copper cash cost guidance has
increased to $2.00 - $2.20 /lb . All -in sustaining cost (" AISC") for the three months ended September 30, 2023 was higher
than the prior year period due to increased cash cost but partially offset by lower sustaining capital spend. The year-to-date
AISC was higher due to increased cash cost and higher sustaining capital expenditures.
For the nine months ended September 30, 2023, approximately 43,000 oz of gold and 659,000 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 31 =====
17
Caserones (Chile)
Operating Statistics
2023
(100% Basis) YTD Q3
Ore mined (000s tonnes) 8,099 8,099
Ore milled (000s tonnes) 7,162 7,162
Ore placed on leach 2,307 2,307
Grade
Copper (%) 0.44 0.44
Molybdenum (%) 0.218 0.218
Recovery
Copper (%) 83.9 83.9
Molybdenum (%) 70.9 70.9
Production (tonnes)
Copper in concentrate 25,695 25,695
Copper cathode 4,126 4,126
Total copper 29,821 29,821
Molybdenum 1,096 1,096
Revenue ($000s) 284,556 284,556
Production costs ($000s) 188,982 188,982
Gross profit ($000s) 57,267 57,267
Cash cost ($ per pound copper) 1.60 1.60
AISC ($ per pound copper) 2.33 2.33
1 Caserones results are from July 13, 2023.
Caserones is an open pit copper -molybdenum mine which produces high -quality copper concentrate, copper cathode and
molybdenum concentrate. Lundin Mining is the operator after acquiring a 51% interest in Minera Lumina Copper Chile on
July 13, 2023, with JX Metals Corporation holding the remaining 49% interest. Results presented are from July 13, 2023.
Following the acquisition, a process is underway to identify and realize synergies between the Caserones and Candelaria
operations. Cost savings resulting from synergies are estimated to be between $20 million to $30 million annually, in areas
including supply chain, logistics and support services.
Production
In the three months ended September 30, 2023 Caserones produced 34,427 tonnes of copper and 1,321 tonnes of
molybdenum on a 100% basis, of which 29,821 tonnes of copper and 1,096 tonnes of molybdenum were produced from the
acquisition closing date of July 13. Copper and molybdenum production were higher than planned due to increased
throughput and recoveries. The guidance range for copper has increased to 65,000 – 69,000 tonnes for the second half of
2023. The molybdenum remains unchanged from the Company's Management Discussion and Analysis for the three and six
months ended June 30, 2023.
Production Costs and Cash Cost
Production cost was negatively impacted by $32.2 million fair value adjustments related to inventory. The fair value
adjustments were recorded to re -value concentrate and in -process inventory on hand at the acquisition date, and were
subsequently recognized in production costs as the inventory was sold in the quarter . Copper cash costs in the quarter were
better than plan and has resulted in a reduction of the cash cost per pound guidance range to $2.00 - $2.20 /lb driven by
higher than anticipated production. Cash cost per pound and AISC benefited from higher by -product credits and higher
volume sold.
===== SIDA 32 =====
18
Chapada (Brazil)
Operating Statistics
2023 2022
(100% Basis) YTD Q3 Q2 Q1 Total Q4 Q3 Q2 Q1
Ore mined (000s tonnes) 21,705 8,062 7,522 6,121 26,319 7,801 7,404 4,875 6,239
Ore milled (000s tonnes) 17,015 5,832 5,207 5,976 22,752 5,296 6,345 5,670 5,441
Grade
Copper (%) 0.25 0.26 0.26 0.23 0.26 0.25 0.28 0.25 0.23
Gold (g/t) 0.14 0.15 0.14 0.13 0.16 0.16 0.19 0.17 0.13
Recovery
Copper (%) 78.2 80.8 80.3 73.3 78.6 83.4 78.8 72.9 79.6
Gold (%) 52.5 55.3 54.1 48.0 56.0 59.5 58.3 50.6 55.3
Production (contained metal)
Copper (tonnes) 32,847 12,286 10,697 9,864 45,739 11,306 13,988 10,345 10,100
Gold (000 oz) 40 15 13 12 68 16 24 16 12
Silver (000 oz) 185 67 62 56 258 65 75 60 58
Revenue ($000s) 317,736 111,897 94,721 111,118 477,927 142,328 118,734 57,260 159,605
Production costs ($000s) 227,601 78,854 80,113 68,634 324,096 84,247 88,665 71,507 79,677
Gross profit (loss) ($000s) 50,252 20,230 (381) 30,403 41,420 (22,522) 17,851 (22,720) 68,811
Cash cost ($ per pound copper) 2.44 2.28 2.69 2.37 2.08 1.95 1.92 2.98 1.82
AISC ($ per pound copper) 3.44 3.15 3.80 3.42 3.36 3.73 2.80 5.00 2.56
Gross Profit
Gross profit in the current quarter improved over the prior year quarter, largely due to higher copper and gold prices ,
partially offset by lower sales volumes. Year -to-date, gross profit was lower than the prior year period, due to lower sales
volume, higher depreciation expense and higher treatment and refining charges, partially offset by higher copper and gold
prices.
Production
Copper and gold production for the three and nine months ended September 30, 2023 was lower than the prior year
comparable periods due to lower throughput and head grades. Annual production guidance for copper has increased to
45,000 – 48,000 tonnes of copper . Gold production guidance remains unchanged.
Production Costs and Cash Cost
Production costs for the three and nine months ended September 30, 2023 were lower than the prior year comparable
periods due primarily to lower production and sales volumes, offset partially by inflationary cost increases in production.
Copper cash cost in the current quarter and year -to-date was higher than the prior year comparable periods due to lower
by-product credits, lower volume sold, and unfavorable FX variances. Annual copper cash cost guidance remains unchanged.
AISC for the three and nine months ended September 30, 2023 were higher than the prior year comparable periods due to
higher cash cost, partially offset by lower sustaining capital expenditure.
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 third quarter, approximately 11,713 metres of exploration
drilling were completed, primarily on Saúva and near-mine area targets.
===== SIDA 33 =====
19
Eagle (USA)
Operating Statistics
2023 2022
(100% Basis) YTD Q3 Q2 Q1 Total Q4 Q3 Q2 Q1
Ore mined (000s tonnes) 537 192 189 156 718 165 190 181 182
Ore milled (000s tonnes) 532 190 181 161 718 170 187 182 179
Grade
Nickel (%) 2.7 2.6 2.9 2.6 2.8 2.7 2.7 3.0 2.8
Copper (%) 2.0 1.8 2.2 2.0 2.3 1.9 2.2 2.5 2.5
Recovery
Nickel (%) 87.8 86.2 88.8 88.5 86.6 88.6 85.5 87.3 85.3
Copper (%) 96.9 96.4 97.0 97.2 97.2 96.8 96.5 97.7 97.6
Production (contained metal)
Nickel (tonnes) 12,700 4,290 4,686 3,724 17,475 4,096 4,379 4,719 4,281
Copper (tonnes) 10,266 3,245 3,881 3,140 15,895 3,081 3,994 4,400 4,420
Revenue ($000s) 277,175 102,505 105,250 69,420 520,472 157,060 106,715 106,828 149,869
Production costs ($000s) 143,681 52,497 45,735 45,449 193,003 50,581 47,736 55,128 39,558
Gross profit ($000s) 95,347 35,682 46,845 12,820 247,946 87,359 37,329 29,796 93,462
Cash cost ($ per pound nickel) 2.09 2.07 1.88 2.43 0.79 2.40 1.05 0.90 (1.25)
AISC ($ per pound nickel) 4.08 4.05 3.34 5.16 3.01 5.23 2.77 2.93 1.19
Gross Profit
Gross profit for the three and nine months ended September 30, 2023 was lower than the prior year comparable periods as
a result of higher production costs. The year-to-date period was also impacted by decreases in nickel prices and lower 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. Year-to-date zinc and copper productions were also impacted by lower throughput. Annual production
guidance for nickel has increased to 15,000 – 17,000 tonnes of nickel. Copper guidance remains unchanged. An extension of
the mine life to mid-2029 is currently planned.
Production Costs and Cash Cost
Production costs in the three and nine months ended September 30, 2023 were higher than the prior year comparable
periods attributed mainly to increased costs resulting from inflationary contractual increases. Nickel cash cost in the quarter
and year-to-date was higher than the prior year periods due to lower copper by -product credits, and higher mine and mill
costs. The year-to-date cash cost was also impacted by lower sales volumes. Annual cash cost guidance has been reduced to
$2.00 - $2.20/lb of nickel. AISC in the third quarter and year-to-date were higher than the prior year periods, due to higher
cash cost and higher sustaining capital expenditures.
===== SIDA 34 =====
20
Neves-Corvo (Portugal)
Operating Statistics
2023 2022
(100% Basis) YTD Q3 Q2 Q1 Total Q4 Q3 Q2 Q1
Ore mined, copper (000s tonnes) 1,914 689 622 603 2,501 611 598 610 682
Ore mined, zinc (000s tonnes) 1,440 459 470 511 1,632 462 447 426 297
Ore milled, copper (000s tonnes) 1,906 674 628 604 2,499 607 596 606 690
Ore milled, zinc (000s tonnes) 1,416 441 465 510 1,633 465 449 420 299
Grade
Copper (%) 1.7 1.8 1.6 1.6 1.7 1.6 1.6 1.7 1.8
Zinc (%) 6.9 7.4 6.6 6.7 6.9 6.9 6.9 6.9 7.0
Recovery
Copper (%) 76.9 76.1 77.0 77.7 76.1 75.1 73.0 77.0 78.7
Zinc (%) 77.2 76.1 76.8 78.7 70.2 74.3 70.3 68.4 66.1
Production (contained metal)
Copper (tonnes) 24,200 9,016 7,610 7,574 31,906 7,160 7,019 7,867 9,860
Zinc (tonnes) 77,777 25,807 24,177 27,793 82,435 24,523 22,514 20,647 14,751
Lead (tonnes) 3,570 1,447 951 1,172 3,306 845 743 925 793
Silver (000 oz) 1,329 486 407 436 1,383 370 323 346 344
Revenue ($000s) 309,219 111,202 68,614 129,403 433,486 102,516 102,865 93,538 134,567
Production costs ($000s) 243,943 82,137 76,080 85,726 329,232 78,402 94,572 77,788 78,470
Gross (loss) profit ($000s) (23,876) (2,288) (35,185) 13,597 2,447 (7,570) (17,006) (8,229) 35,252
Cash cost ($ per pound copper) 2.53 2.27 3.99 1.69 2.27 2.32 2.69 2.39 1.70
AISC ($ per pound copper) 4.14 3.82 5.73 3.29 3.40 4.22 3.51 3.14 2.92
Gross (Loss) Profit
Gross loss in the quarter improved from the prior year quarter due to lower production costs. Year -to-date, gross loss was
23.9 million compared to the prior year period gross profit of $10.0 million, as a result of lower realized zinc prices and
higher treatment and refining charges, partially offset by lower production costs.
Production
Copper production for the quarter ended September 30, 2023, was higher than the prior year comparable period due to
higher throughput, grades and recoveries. Copper production in the nine months ended September 30, 2023 was consistent
with the prior year period. Zinc production in the quarter was higher than the prior year period, attributable to improved
recoveries and grades . Year -to-date zinc production benefitted from higher throughput and higher recoveries. Annual
production guidance for copper has been lowered slightly to 33,000 – 36,000 tonnes and zinc has been increased to 103,000
– 110,000 tonnes.
Production Costs and Cash Cost
Production costs for the three and nine months ended September 30, 2023, were lower than the prior year periods due to
lower input costs , in particular electricity rates, partially offset by unfavourable foreign exchange as well as higher sales
volumes.
Copper cash cost per pound in the current quarter improved from the prior year comparable period due to lower input
costs, partially offset by lower zinc by-product credits and unfavourable foreign exchange. Year-to-date, cash cost per pound
was higher than the prior year period due to lower copper sales volumes and unfavorable foreign exchange, partially offset
by lower input costs.
Annual copper cash cost guidance remains unchanged. AISC for the three and nine months ended September 30, 2023 were
higher than the prior year quarter due to higher sustaining capital expenditures. However, capital expenditure for the year
remains within plan.
===== SIDA 35 =====
21
Zinkgruvan (Sweden)
Operating Statistics
2023 2022
(100% Basis) YTD Q3 Q2 Q1 Total Q4 Q3 Q2 Q1
Ore mined, zinc (000s tonnes) 865 287 268 310 1,209 325 260 298 326
Ore mined, copper (000s tonnes) 171 65 51 55 192 48 61 38 45
Ore milled, zinc (000s tonnes) 852 326 211 315 1,234 309 293 327 305
Ore milled, copper (000s tonnes) 170 58 34 78 225 26 84 27 88
Grade
Zinc (%) 7.5 8.2 6.6 7.4 7.0 7.3 6.9 7.3 6.5
Lead (%) 3.0 3.5 2.4 2.9 3.0 3.0 2.9 3.3 2.7
Copper (%) 2.6 2.5 3.1 2.4 2.1 2.6 2.4 2.3 1.6
Recovery
Zinc (%) 88.7 90.0 86.3 88.7 88.4 88.3 87.5 89.1 88.7
Lead (%) 78.1 75.7 76.2 82.1 82.4 82.2 82.5 83.1 81.7
Copper (%) 88.8 88.7 86.1 90.5 87.1 89.0 86.1 87.7 87.3
Production (contained metal)
Zinc (tonnes) 56,665 23,967 11,938 20,760 76,503 19,785 17,813 21,265 17,640
Lead (tonnes) 19,866 8,643 3,816 7,407 30,517 7,619 7,046 9,124 6,728
Copper (tonnes) 3,933 1,299 917 1,717 4,077 607 1,737 535 1,198
Silver (000 oz) 1,791 785 374 632 2,621 663 642 739 577
Revenue ($000s) 172,808 82,290 29,520 60,998 292,120 67,178 64,854 70,596 89,492
Production costs ($000s) 83,874 37,183 17,786 28,905 115,553 29,590 25,709 29,066 31,188
Gross profit ($000s) 63,554 32,727 6,821 24,006 139,828 29,800 33,703 30,500 45,825
Cash cost ($ per pound) 0.36 0.28 0.24 0.54 0.32 0.32 0.18 0.44 0.27
AISC ($ per pound) 0.80 0.56 1.06 0.97 0.68 0.77 0.50 0.82 0.57
Gross Profit
Gross profit in the current quarter was comparable to the prior year period. Gross profit for the nine months ended
September 30, 2023 was lower than the prior year periods due to lower realized zinc prices.
Production
Production of zinc and lead in the quarter ended September 30, 2023 was higher than the prior year period primarily due to
higher throughput and grades. Zinc production in the nine months ended September 30, 2023 was consistent with the prior
year comparative period. Year- to- date, lead production was lower than the prior year period primarily due to lower
throughput as a result of the installation of a zinc sequential flotation system during the second quarter which limited mill
availability, as well as lower recoveries. Copper production in the current quarter was lower than the prior year period due
to lower throughput from the mill shut down. Year-to-date copper production was higher than the prior year period
primarily due to higher grades. Annual zinc production guidance has been revised to 78,000 – 82,000 tonnes. Copper
guidance remains unchanged.
Production Costs and Cash Cost
Production costs for the quarter were higher than the prior year comparable period primarily due to higher sales volumes.
Year-to-date production costs were consistent with the prior year comparative period. Zinc cash cost per pound for the
quarter was higher than the prior year period mainly due to lower by -product credits and higher treatment and refining
charges. On a year-to-date basis, zinc cash cost was higher than the prior year mainly due to higher treatment and refining
charges. Annual cash cost guidance remains unchanged. AISC for the three and nine months ended September 30, 2023
were higher than the prior year due to higher cash cost and higher sustaining capital expenditures.
===== SIDA 36 =====
22
Josemaria Project (Argentina)
Project Development
The Company continues to de -risk the Josemaria Project in several areas including evaluating inflation and currency
devaluation impacts, developing optimization studies to enhance mining and production plans, plant throughput,
concentrate transportation, infrastructure, further water drilling, modeling and studies, and recommencement of
exploration drilling.
At Josemaria, a water program is currently ongoing to confirm and identify water sources, providing data to update models
and incorporate into sectoral permits. Exploration drilling commenced in late October on several targets near the Josemaria
orebody. The grinding mills and gearless mill drives ("GMDs") started to arrive in Argentina in July and are being moved to a
San Juan storage facility for care and maintenance. Deliveries will continue through the remainder of 2023 and into the first
quarter of 2024.
Work continues on permitting with the technical review of the tailings dam design, preparation of access road and
powerline EIA’s as well as minor permits and EIA’s for road maintenance. Discussions began with the newly elected San Juan
province governor on the infrastructure agreements for the royalty offset funding of the access road and the power line
capital costs. These agreements are expected to be signed after the change in the provincial government which will occur on
December 10, 2023.
Additionally, the project team is performing a series of studies to continue de -risking the project and adding value to
Josemaria as well as advancing financing and execution readiness activities. Some of these studies will culminate during the
fourth quarter of 2023 and the remainder will be done in 2024 covering mine optimization, increasing plant throughput,
concentrate shipping infrastructure review , execution plan update and commercial strategies.
During the current quarter, the Company spent $37.7 million , inclusive of foreign exchange and trading gains on debt and
equity investments of $15.0 million (Q3 2022 - $67.7 million). Capital expenditures during the current quarter were
$52.7 million (Q3 2022 - $43.3 million). On a year -to-date basis the Company spent $178.8 million in project development
costs.
Annual capital guidance of $350.0 million for 2023 remains unchanged from previously reported.
Josemaria Mineral Resources and Mineral Reserves remain unchanged since the 2020 estimates.
===== SIDA 37 =====
23
Metal Prices, LME Inventories and Smelter Treatment and Refining Charges
Overall, copper , molybdenum and gold prices have increased in the current quarter compared to the prior year quarter . On
a year-to-date basis metal prices for all metals except for molybdenum and gold decreased over the prior year comparative
period. The average metal prices for copper, zinc, gold, and nickel over the third quarter of 2023 were all lower than the
average prices for the second quarter by 1%, 4%, 2% and 9% respectively. The average metal price for molybdenum over the
third quarter was 12% higher than the average metal price in the second quarter of 2023.
Three months ended September 30, Nine months ended September 30,
(Average LME Price) 2023 2022 Change 2023 2022 Change
Copper US$/pound 3.79 3.51 8 % 3.89 4.11 -5 %
US$/tonne 8,356 7,745 8,585 9,064
Zinc US$/pound 1.10 1.48 -26 % 1.22 1.65 -26 %
US$/tonne 2,428 3,271 2,696 3,638
Molybdenum US$/pound 23.76 16.10 48 % 26.05 17.83 46 %
US$/tonne 52,392 35,497 57,437 39,318
Gold US$/ounce 1,928 1,729 12 % 1,930 1,824 6 %
Nickel US$/pound 9.23 10.01 -8 % 10.38 11.66 -11 %
US$/tonne 20,344 22,063 22,890 25,709
LME inventories for copper , zinc and nickel all increased during the third quarter of 2023 by 130%, 27% and 9% respectively.
During the third quarter of 2023 the treatment charges (“TC”) and refining charges (“RC”) in the spot market for copper
concentrates between miners and commodity traders decreased slightly from an average spot TC during July of $83 per dmt
of concentrate and a spot RC of $0.083 per lb of payable copper to a spot TC of $80 per dmt of concentrate and a spot RC of
$0.080 per lb of payable copper during September. Also, the spot terms at which Chinese copper smelters were prepared to
buy also decreased through the quarter from a TC of $93 per dmt of concentrate and a RC of $0.093 per payable lb of
copper over July to a TC of $91 per dmt of concentrate and a RC of $0.091 per payable lb of copper in September. 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 third quarter of 2023 decreased from $200 per dmt, flat, in
September to $138 per dmt, flat, in September. 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 from Chapada and Candelaria is sold at terms in-line with market conditions for copper
concentrates.
===== SIDA 38 =====
24
Liquidity and Capital Resources
As at September 30, 2023, the Company had cash and cash equivalents of $357.3 million and a net debt balance of $1,158.9
million.
Cash generated from operations for the three months ended September 30, 2023 amounted to $303.8 million and was
$267.5 million higher than the prior year quarter primarily due to higher gross profit before depreciation mainly attributable
to the acquisition of Caserones, lower general exploration and business development costs and higher non -cash working
capital, partially offset by higher income taxes and finance costs. On a year -to-date basis, cash generated from operations
was $710.5 million and was $9.5 million lower than the prior year comparable period primarily as a result of lower gross
profit before depreciation partially offset by lower income taxes.
Cash used in investing activities for the three and nine months ended September 30, 2023 amounted to $908.8 million and
$1,432.3 million respectively. Cash used in investing activities during these periods were higher than the prior year
primarily due to the acquisition of Caserones and investments in mineral properties, plant and equipment.
During the current quarter, the Company generated cash from financing activities of $773.2 million compared to cash used
in financing activities in the prior year quarter . On a year -to-date basis, there was cash of $892.6 million from financing
activities compared to $339.4 million of cash used in the prior year comparable period. Changes for the quarter and year-to-
date compared to the prior year periods were driven by proceeds from the Term Loan related to financing for the Caserones
mine.
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 September 30, 2023, the Company had $1,233.4 million of debt and $278.0 million of lease liabilities outstanding.
As at September 30, 2023, the Company has a revolving Credit Facility of $1,750.0 million with $164.0 million outs tanding
(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") of 0.10%+ 1.45% to Term SOFR + 0.10% + 2.50%
depending 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 by one year to April 2028.
In July 2023, the Company obtained a term loan of a principal amount of $800.0 million with an additional $400.0 million
accordion option maturing in July 2026. The term loan bears interest at an annual rate equal to Term SOFR + CSA + an
applicable margin of 1.60% to 2.65%, depending on the Company’s net leverage ratio. Principal is payable at maturity. The
Term Loan is unsecured, save and except for a charge over certain assets in the USA, and has similar covenants to the
Company’s existing $1,750.0 million revolving credit facility. The Company used proceeds from the Term Loan to refinance
the drawdown under the Company’s revolving credit facility which was used to fund the upfront cash consideration of the
Caserones acquisition.
As at September 30, 2023 , the Company also has commercial paper programs of which $106.0 million (€115.0 million)
(December 31, 2022 - $26.7 million) were drawn. As at September 30, 2023 , certain of the Company's subsidiaries had
outstanding unsecured term loans totalling $169.3 million (December 31, 2022 - $127.4 million).
During the three and nine months ended September 30, 2023 , no shares were purchased under the Company's Normal
Course Issuer Bid (Q3 2022 -7.7 million shares, $42.1 million consideration and YTD 2022 - 8.9 million shares, $50.2 million
consideration).
Contractual Obligations, Commitments and Contingencies
The Company has contractual obligations and capital commitments as described in Note 22 “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.
===== SIDA 39 =====
25
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 21 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 $.
Metal Prices
The following table illustrates the sensitivity of the Company's risk on final settlement of its provisionally priced revenues:
Metal Payable Metal
Provisional price on
September 30, 2023 Change
Effect on Revenue
($millions)
Copper 120,071 t $3.75/lb +/- 10 % +/- $99.3
Zinc 30,946 t $1.20/lb +/- 10 % +/- $8.2
Molybdenum 1,150 t $20.27/lb +/- 10 % +/- $5.1
Gold 27 koz $1,856/oz +/- 10 % +/- $5.0
Nickel 1,404 t $8.40/lb +/- 10 % +/- $2.6
Related Party Transactions
The Company enters into related party transactions that are in the normal course of business and on an arm’s length basis.
Related party disclosures can be found in Note 24 of the Company’s September 30, 2023 Condensed Interim Consolidated
Financial Statements.
Changes in Accounting Policies and Critical Accounting Estimates and Judgments
The Company describes its significant accounting policies as well as any changes in accounting policies, including amended
policies as a result of the Caserones acquisition, in Note 2 “Basis of Presentation and Summary of Significant Accounting
Policies” of the September 30, 2023 Condensed Interim Consolidated Financial Statements.
===== SIDA 40 =====
26
Non-GAAP and Other Performance Measures
The Company uses certain performance measures in its analysis. These performance measures have no meaning within
generally accepted accounting principles under IFRS and, therefore, amounts presented may not be comparable to similar
data presented by other mining companies. This data is intended to provide additional information and should not be
considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS. The following are
non-GAAP measures that the Company uses as key performance indicators.
Net Debt
Net debt is a performance measure used by the Company to assess its financial position. Management believes that in
addition to conventional performance measures prepared in accordance with IFRS, net debt is a useful indicator to some
investors to evaluate the Company’s financial position. Net debt is defined as debt and lease liabilities, excluding deferred
financing fees, net of cash and cash equivalents and can be reconciled as follows:
($thousands) September 30, 2023 December 31, 2022
Debt and lease liabilities (1,130,754) (27,179)
Current portion of total debt and lease liabilities (380,645) (170,149)
Less deferred financing fees (netted in above) (4,810) (4,926)
(1,516,209) (202,254)
Cash and cash equivalents 357,337 191,387
Net debt (1,158,872) (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
September 30,
Nine months ended
September 30,
($thousands, except share and per share amounts) 2023 2022 2023 2022
Cash provided by operating activities 303,812 36,331 710,531 719,999
Changes in non-cash working capital items 12,655 145,006 (48,360) (16,111)
Adjusted operating cash flow 316,467 181,337 662,171 703,888
Basic weighted average number of shares outstanding 773,147,920 775,563,527 772,214,160 759,726,506
Adjusted operating cash flow per share 0.41 0.23 0.86 0.93
Free Cash Flow from Operations and Free Cash Flow
The Company believes free cash flow from operations and free cash flow are relevant measures of the Company's financial
performance. Free cash flow from operations is indicative of the Company’s ability to generate cash from operations, after
consideration of required sustaining capital expenditures necessary to maintain operations. Free cash flow is a relevant
measure for some investors, as it is indicative of the Company’s available cash generated.
Free cash flow from operations is defined as cash flow provided by operating activities, excluding exploration and project
investigation costs and less sustaining capital expenditures. Free cash flow is defined as free cash flow from operations less
expansionary capex and exploration and project investigation costs.
The Company has redefined free cash flow so that it encompasses all capital expenditures, including both sustaining and
expansionary, to more fully represent available cash generation. Free cash flow from operations and free cash flow can be
reconciled as follows:
===== SIDA 41 =====
27
Three months ended
September 30,
Nine months ended
September 30,
($thousands) 2023 2022 2023 2022
Cash provided by operating activities 303,812 36,331 710,531 719,999
General exploration and business development 12,734 72,446 41,192 132,259
Sustaining capital expenditures (180,013) (152,722) (523,397) (435,145)
Free cash flow from operations 136,533 (43,945) 228,326 417,113
General exploration and business development (12,734) (72,446) (41,192) (132,259)
Expansionary capital expenditures (52,662) (46,766) (234,831) (126,523)
Free cash flow 71,137 (163,157) (47,697) 158,331
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 not 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
September 30,
Nine months ended
September 30,
($thousands) 2023 2022 2023 2022
Net earnings (loss) 21,883 (11,245) 248,496 318,238
Add back:
Depreciation, depletion and amortization 179,788 140,161 430,540 412,040
Finance income and costs 36,212 15,240 67,808 47,521
Income taxes 84,891 10,766 113,983 136,975
322,774 154,922 860,827 914,774
Unrealized foreign exchange 9,096 14,426 (1,545) 25,000
Revaluation loss on derivatives1 47,874 — 43,407 —
Sinkhole costs (1,247) 7,789 15,235 7,789
Revaluation loss (gain) on marketable securities 3,449 (554) (453) 1,712
Caserones inventory fair value adjustment 32,185 — 32,185 —
Unrealized foreign exchange and trading loss on equity investments — 18,848 — —
Write-down of fixed assets — 3,617 — 3,619
Gain on disposal of subsidiary — — (5,718) (16,828)
Other 990 3,325 (120) 2,724
Total adjustments - EBITDA 92,347 47,451 82,991 24,016
Adjusted EBITDA1 415,121 202,373 943,818 938,790
1 Q2 2023 amounts have been adjusted from those presented in the Company's MD&A for the three and six months ended June 30, 202 3.
===== SIDA 42 =====
28
Adjusted earnings and adjusted EPS can be reconciled to the Company's Condensed Interim Consolidated Statement of
Earnings as follows:
Three months ended
September 30,
Nine months ended
September 30,
($thousands, except share and per share amounts) 2023 2022 2023 2022
Net (loss) earnings attributable to Lundin Mining shareholders (2,964) (11,212) 202,765 281,289
Add back:
Total adjustments - EBITDA 92,347 47,451 82,991 24,016
Tax effect on adjustments (20,114) (12,012) (23,295) (11,323)
Deferred tax expense due to change in tax rate 25,700 — 25,700 —
Deferred tax arising from foreign exchange translation 9,669 5,599 (12,327) (6,264)
Non-controlling interest on adjustments (19,049) 1,070 (18,980) 1,197
Total adjustments 88,552 42,108 54,089 7,626
Adjusted earnings1 85,588 30,896 256,854 288,915
Basic weighted average number of shares outstanding 773,147,920 775,563,527 772,214,160 759,726,506
Net (loss) earnings attributable to Lundin Mining shareholders — (0.01) 0.26 0.37
Total adjustments 0.11 0.05 0.07 0.01
Adjusted EPS1 0.11 0.04 0.33 0.38
1 Q2 2023 amounts have been adjusted from those presented in the Company's MD&A for the three and six months ended June 30, 2023.
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 existing 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 industry practice, the Company’s disclosed cash costs may not be directly comparable to
other base metal producers.
===== SIDA 43 =====
29
• 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.
• 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 definition 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 cost 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 44 =====
30
Cash and All-in Sustaining Costs can be reconciled to the Company's production costs as follows:
Three months ended September 30, 2023
Operations Candelaria Caserones Chapada Eagle
Neves-
Corvo Zinkgruvan
($000s, unless otherwise noted) (Cu) (Cu) (Cu) (Ni) (Cu) (Zn) Total
Sales volumes:
Tonnes 33,668 30,385 11,445 3,640 8,799 22,042
Pounds (000s) 74,225 66,987 25,232 8,025 19,398 48,594
Production costs 615,109
Less: Royalties and other (21,662)
Inventory fair value adjustment1 (32,185)
561,262
Deduct: By-product credits (216,150)
Add: Treatment and refining charges 56,261
Cash cost 162,672 106,866 57,501 16,598 44,043 13,693 401,373
Cash cost per pound ($/lb) 2.19 1.60 2.28 2.07 2.27 0.28
Add: Sustaining capital expenditure 86,693 28,849 16,716 4,989 27,357 12,350
Royalties — 7,550 2,142 7,385 1,055 —
Reclamation and other closure
accretion and depreciation 2,349 1,133 2,141 2,742 1,462 1,011
Leases and other 2,841 11,531 865 797 131 86
All-in sustaining cost 254,555 155,929 79,365 32,511 74,048 27,140
AISC per pound ($/lb) 3.43 2.33 3.15 4.05 3.82 0.56
($000s, unless otherwise noted) 2023 Annual Guidance
Cash cost 670,000 290,000 240,000 60,000 160,000 70,000
Cash cost per pound($/lb) 2.00 – 2.20 2.00 – 2.20 2.35 – 2.55 2.00 – 2.20 2.10 – 2.30 0.45 – 0.50
Three months ended September 30, 2022
Operations Candelaria Chapada Eagle
Neves-
Corvo Zinkgruvan
($000s, unless otherwise noted) (Cu) (Cu) (Ni) (Cu) (Zn) Total
Sales volumes:
Tonnes 35,587 12,817 3,715 8,574 13,722
Pounds (000s) 78,456 28,257 8,190 18,903 30,252
Production costs 425,814
Less: Royalties and other (8,593)
417,221
Deduct: By-product credits (172,179)
Add: Treatment and refining charges 28,829
Cash cost 154,633 54,147 8,637 50,888 5,566 273,871
Cash cost per pound ($/lb) 1.97 1.92 1.05 2.69 0.18
Add: Sustaining capital expenditure 103,486 19,197 3,062 15,860 8,415
Royalties — 3,055 5,705 (1,213) —
Reclamation and other closure
accretion and depreciation 1,951 1,784 4,809 630 962
Leases and other 2,327 1,017 484 173 149
All-in sustaining cost 262,397 79,201 22,697 66,338 15,092
AISC per pound ($/lb) 3.34 2.80 2.77 3.51 0.50
1Production cost at Caserones in Q3 2023 was negatively impacted by $32.2 million fair value adjustments related to inventory. The fair value adjustments
were recorded to re-value concentrate and in -process inventory on hand at the acquisition date, and were subsequently recognized in production costs as
the inventory was sold in the quarter.
===== SIDA 45 =====
31
Cash and All-in Sustaining Costs can be reconciled to the Company's production costs as follows:
Nine months ended September 30, 2023
Operations Candelaria Caserones Chapada Eagle
Neves-
Corvo Zinkgruvan
($000s, unless otherwise noted) (Cu) (Cu) (Cu) (Ni) (Cu) (Zn) Total
Sales volumes:
Tonnes 105,585 30,385 30,681 10,234 23,000 48,028
Pounds (000s) 232,775 66,987 67,640 22,562 50,706 105,883
Production costs 1,438,071
Less: Royalties and other (41,717)
Inventory fair value adjustment1 (32,185)
1,364,169
Deduct: By-product credits (495,751)
Add: Treatment and refining charges 125,390
Cash cost 507,884 106,866 165,170 47,228 128,206 38,454 993,808
Cash cost per pound ($/lb) 2.18 1.60 2.44 2.09 2.53 0.36
Add: Sustaining capital expenditure 300,796 28,849 52,433 15,653 74,551 42,812
Royalties — 7,550 6,394 17,991 2,868 —
Reclamation and other closure
accretion and depreciation 7,100 1,133 5,789 8,711 4,082 2,811
Leases and other 9,638 11,531 3,002 2,441 437 288
All-in sustaining cost 825,418 155,929 232,788 92,024 210,144 84,365
AISC per pound ($/lb) 3.55 2.33 3.44 4.08 4.14 0.80
Nine months ended September 30, 2022
Operations Candelaria Chapada Eagle
Neves-
Corvo Zinkgruvan
($000s, unless otherwise noted) (Cu) (Cu) (Ni) (Cu) (Zn) Total
Sales volumes:
Tonnes 113,690 33,526 11,188 25,241 48,049
Pounds (000s) 250,643 73,912 24,665 55,647 105,930
Production costs 1,210,431
Less: Royalties and other (38,121)
1,172,310
Deduct: By-product credits (487,914)
Add: Treatment and refining charges 90,944
Cash cost 450,858 157,456 7,999 125,889 33,138 775,340
Cash cost per pound ($/lb) 1.80 2.13 0.32 2.26 0.31
Add: Sustaining capital expenditure 272,557 63,412 10,445 49,136 31,537
Royalties — 9,161 24,129 984 —
Reclamation and other closure
accretion and depreciation 6,002 5,533 14,109 1,081 3,035
Leases and other 6,953 3,056 1,766 569 547
All-in sustaining cost 736,370 238,618 58,448 177,659 68,257
AISC per pound ($/lb) 2.94 3.23 2.37 3.19 0.64
1Production cost at Caserones in Q3 2023 was negatively impacted by $32.2 million fair value adjustments related to inventory. The fair value adjustments
were recorded to re-value concentrate and in -process inventory on hand at the acquisition date, and were subsequently recognized in production costs as
the inventory was sold in the quarter.
===== SIDA 46 =====
32
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 assurance that all material information related to the Company is identified
and communicated on a timely basis. Management of the Company, under the supervision of the 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”).
Limitations on scope of design
On July 13, 2023, the Company acquired 51% of the issued and outstanding equity of Lumina Copper . However , the
Company has not had sufficient time during the third quarter of 2023 to fully assess the design of DCP and ICFR inherent in
the organization and accordingly has limited the scope of the above assessment on the design of DCP and ICFR to exclude
this entity, which holds the Caserones mine.
Changes in ICFR
There have been no changes in the Company’s ICFR during the quarter ended September 30, 2023 that have materially
affected, or are reasonably likely to materially affect, the Company’s financial reporting.
Outstanding Share Data
As at November 1, 2023 , the Company has 773,418,445 common shares issued and outstanding, and 6,569,234 stock
options and 1,824,378 share units outstanding under the Company's plans.
Other Information
Additional information regarding the Company is included in the Company’s AIF which is filed with the Canadian securities
regulators. A copy of the Company’s AIF can be obtained on SEDAR+ (www.sedarplus.ca) or on the Company’s website
(www.lundinmining.com).
===== SIDA 47 =====
Condensed Interim Consolidated Financial Statements of
Lundin Mining Corporation
September 30, 2023
(Unaudited)
===== SIDA 48 =====
- 1 -
LUNDIN MINING CORPORATION
CONDENSED INTERIM CONSOLIDATED BALANCE SHEETS As at
(Unaudited - in thousands of US dollars) September 30, 2023
December 31, 2022
ASSETS
Cash and cash equivalents (Note 4) $ 357,337 $ 191,387
Trade and other receivables (Note 5) 680,658 576,178
Income taxes receivable 64,398 72,402
Inventories (Note 6) 618,858 296,710
Current portion of derivative assets (Note 21) 23,081 43,521
Other current assets 26,418 38,571
Total current assets 1,770,750 1,218,769
Restricted funds 52,103 50,195
Long-term inventory (Note 6) 798,199 641,877
Derivative assets (Note 21) 6,372 25,111
Other non-current assets 67,731 20,035
Mineral properties, plant and equipment (Note 7) 7,369,884 5,975,686
Deferred tax assets (Note 20) 394,484 3,837
Goodwill 236,670 237,294
8,925,443 6,954,035
Total assets $ 10,696,193 $ 8,172,804
LIABILITIES
Trade and other payables (Note 8) $ 742,043 $ 612,965
Income taxes payable 61,145 45,000
Current portion of derivative liabilities (Note 21) 25,958 24,423
Current portion of debt and lease liabilities (Note 9) 380,645 170,149
Current portion of deferred revenue (Note 10) 85,862 74,061
Current portion of reclamation and other closure provisions (Note 11) 15,364 23,550
Total current liabilities 1,311,017 950,148
Derivative liabilities (Note 21) 5,603 27,876
Debt and lease liabilities (Note 9) 1,130,754 27,179
Deferred revenue (Note 10) 540,893 580,045
Reclamation and other closure provisions (Note 11) 496,511 422,298
Deferred consideration and other long-term liabilities (Note 3) 126,532 24,922
Provision for pension obligations 6,800 5,613
Deferred tax liabilities (Note 20) 673,970 709,602
2,981,063 1,797,535
Total liabilities 4,292,080 2,747,683
SHAREHOLDERS' EQUITY
Share capital (Note 12) 4,572,954 4,555,125
Contributed surplus 54,323 55,769
Accumulated other comprehensive loss (343,319) (342,287)
Retained earnings 640,646 592,425
Equity attributable to Lundin Mining Corporation shareholders 4,924,604 4,861,032
Non-controlling interests (Note 13) 1,479,509 564,089
Total shareholders' equity 6,404,113 5,425,121
Total liabilities and shareholders' equity $ 10,696,193 $ 8,172,804
Commitments and contingencies (Note 22)
The accompanying notes are an integral part of these condensed interim consolidated financial statements.
===== SIDA 49 =====
- 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 September 30, Nine months ended September 30,
2023 2022 2023 2022
Revenue (Note 14) $ 992,195 $ 648,498 $ 2,332,070 $ 2,229,798
Cost of goods sold
Production costs (Note 15) (615,109) (425,814) (1,438,071) (1,210,431)
Depreciation, depletion and amortization (179,788) (140,161) (430,540) (412,040)
Gross profit 197,298 82,523 463,459 607,327
General and administrative expenses (19,444) (14,772) (49,452) (37,442)
General exploration and business development (Note 17) (12,734) (72,446) (41,192) (132,259)
Finance income (Note 18) 3,767 1,112 5,939 2,596
Finance costs (Note 18) (39,979) (16,352) (73,747) (50,117)
Other (expense) income (Note 19) (22,134) 19,456 57,472 65,108
Earnings (loss) before income taxes 106,774 (479) 362,479 455,213
Current tax (expense) recovery (Note 20) (40,115) 9,994 (126,829) (161,193)
Deferred tax (expense) recovery (Note 20) (44,776) (20,760) 12,846 24,218
Net earnings (loss) $ 21,883 $ (11,245) $ 248,496 $ 318,238
Net earnings (loss) attributable to:
Lundin Mining Corporation shareholders $ (2,964) $ (11,212) $ 202,765 $ 281,289
Non-controlling interests 24,847 (33) 45,731 36,949
Net earnings (loss) $ 21,883 $ (11,245) $ 248,496 $ 318,238
Basic and diluted (loss) earnings per share attributable to Lundin Mining
Corporation shareholders: $ 0.00 $ (0.01) $ 0.26 $ 0.37
Weighted average number of shares outstanding (Note 12)
Basic 773,147,920 775,563,527 772,214,160 759,726,506
Diluted 773,147,920 775,563,527 772,918,648 760,909,648
The accompanying notes are an integral part of these condensed interim consolidated financial statements.
===== SIDA 50 =====
- 3 -
LUNDIN MINING CORPORATION
CONDENSED INTERIM CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(Unaudited - in thousands of US dollars)
Three months ended September 30,
Nine months ended September 30,
2023 2022 2023 2022
Net earnings (loss) $ 21,883 $ (11,245) $ 248,496 $ 318,238
Other comprehensive loss, net of taxes
Item that will not be reclassified to net earnings:
Remeasurements for post-employment benefit plans 145 553 (421) (8)
Item that may be reclassified subsequently to net earnings:
Effects of foreign exchange (4,386) (71,285) (689) (179,702)
Other comprehensive loss (4,241) (70,732) (1,110) (179,710)
Total comprehensive income (loss) $ 17,642 $ (81,977) $ 247,386 $ 138,528
Comprehensive income (loss) attributable to:
Lundin Mining Corporation shareholders $ (7,236) $ (82,050) $ 201,733 $ 101,584
Non-controlling interests 24,878 73 45,653 36,944
Total comprehensive income (loss) $ 17,642 $ (81,977) $ 247,386 $ 138,528
The accompanying notes are an integral part of these condensed interim consolidated financial statements.
===== SIDA 51 =====
- 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
Distributions — — — — — (4,000) (4,000)
Caserones Acquisition (Note 3) — — — — — 873,767 873,767
Exercise of share-based awards 2,653,604 17,829 (7,765) — — — 10,064
Share-based compensation — — 6,319 — — — 6,319
Dividends declared (Note 12(c)) — — — — (154,544) — (154,544)
Net earnings — — — — 202,765 45,731 248,496
Other comprehensive loss — — — (1,032) — (78) (1,110)
Total comprehensive (loss) income — — — (1,032) 202,765 45,653 247,386
Balance, September 30, 2023 773,400,135 $ 4,572,954 $ 54,323 $ (343,319) $ 640,646 $ 1,479,509 $ 6,404,113
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 5,715,046 43,750 (20,636) — — — 23,114
Share-based compensation — — 6,431 — — — 6,431
Dividends declared — — — — (224,940) — (224,940)
Shares purchased (8,900,100) (52,516) — — 2,345 — (50,171)
Accrued liability for automatic share purchase plan commitment — (9,189) — — — — (9,189)
Net earnings — — — — 281,289 36,949 318,238
Other comprehensive loss — — — (179,705) — (5) (179,710)
Total comprehensive (loss) income — — — (179,705) 281,289 36,944 138,528
Balance, September 30, 2022 771,834,036 $ 4,550,976 $ 57,397 $ (429,634) $ 495,854 $ 564,524 $ 5,239,117
The accompanying notes are an integral part of these condensed interim consolidated financial statements.
===== SIDA 52 =====
- 5 -
LUNDIN MINING CORPORATION
CONDENSED INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited - in thousands of US dollars)
Three months ended September 30,
Nine months ended September 30,
Cash provided by (used in) 2023 2022 2023 2022
Operating activities
Net earnings (loss) $ 21,883 $ (11,245) $ 248,496 $ 318,238
Items not involving cash and other adjustments
Depreciation, depletion and amortization 179,788 140,161 430,540 412,040
Share-based compensation 1,974 896 5,995 6,431
Unrealized foreign exchange loss (gain) 9,096 14,426 (1,545) 25,000
Finance costs, net (Note 18) 36,212 15,240 67,808 47,521
Recognition of deferred revenue (Note 10) (16,671) (17,296) (52,690) (57,396)
Deferred tax expense (recovery) 44,776 20,760 (12,846) (24,218)
Revaluation of marketable securities (Note 19) 3,449 554 (453) (1,712)
Revaluation of foreign currency and diesel derivatives (Note 21) 34,653 — 538 —
Reversal of fair value adjustment on acquired inventory (Note 3) 32,185 — 32,185 —
Other 8,871 30,491 22,316 (11,083)
Reclamation payments (Note 11) (3,052) (8,712) (8,181) (12,619)
Other payments (5,685) (400) (6,674) (1,425)
Changes in long-term inventory (31,012) (3,538) (63,318) 3,111
Changes in non-cash working capital items (Note 25) (12,655) (145,006) 48,360 16,111 303,812 36,331 710,531 719,999
Investing activities
Investment in mineral properties, plant and equipment (243,207) (199,488) (769,239) (561,668)
Acquisition of Caserones, net of cash acquired (Note 3) (648,569) — (648,569) —
Acquisition of Josemaria, net of cash acquired — — — (126,381)
Cash received from disposal of subsidiary (Note 19) — — 5,718 16,828
Payment of Chapada derivative liability (Note 22) (25,000) (25,000) (25,000) (25,000)
Interest received 3,541 1,078 5,709 2,483
Josemaria bridge loan — — — (54,100)
Distributions from associate, net — — — 18,000
Other 4,479 (4,149) (909) (3,252) (908,756) (227,559) (1,432,290) (733,090)
Financing activities
Proceeds from debt (Note 9) 1,772,531 34,663 2,203,480 34,663
Interest paid (14,975) (2,629) (25,642) (6,154)
Principal payments of lease liabilities (22,954) (4,256) (34,234) (13,192)
Principal repayments of debt (Note 9) (920,677) (15,149) (1,135,179) (16,416)
Payment of Josemaria debentures — — — (47,000)
Dividends paid to shareholders (51,328) (53,019) (155,349) (224,251)
Shares purchased (Note 12) — (42,121) — (50,171)
Proceeds from common shares issued 2,506 2,653 10,064 23,114
Distributions paid to non-controlling interests (4,000) — (4,000) (35,000)
Net proceeds from settlement of foreign currency and diesel derivatives 13,848 — 38,248 —
Other (1,761) — (4,770) (4,954) 773,190 (79,858) 892,618 (339,361)
Effect of foreign exchange on cash balances (1,091) (208) (4,909) (14,668)
Increase (decrease) in cash and cash equivalents during the period 167,155 (271,294) 165,950 (367,120)
Cash and cash equivalents, beginning of period 190,182 498,243 191,387 594,069
Cash and cash equivalents, end of period $ 357,337 $ 226,949 $ 357,337 $ 226,949
Supplemental cash flow information (Note 25) The accompanying notes are an integral part of these condensed interim consolidated financial statements.
===== SIDA 53 =====
LUNDIN MINING CORPORATION
Notes to condensed interim consolidated financial statements
For the three and nine months ended September 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, nickel and molybdenum. The Company owns 80% of the Candelaria and Ojos del Salado mining complex
("Candelaria") and 51% of the Caserones copper-molybdenum mine (“Caserones”), each of which are located in Chile.
The Company’s wholly-owned operating assets include the Chapada mine located in Brazil, the Eagle mine located in
the United States of America (“USA”), the Neves-Corvo mine located in Portugal, and the Zinkgruvan mine located in
Sweden. In addition, the Company owns the large scale copper-gold Josemaria project ("Josemaria Project"), located in
Argentina.
The Company’s common shares are listed on the Toronto Stock Exchange (“TSX”) in Canada and the Nasdaq Stockholm
Exchange in Sweden. The Company is incorporated under the Canada Business Corporations Act. The Company is
domiciled in Canada and its principal place of business is 885 West Georgia Street, Suite 2000, Vancouver, British
Columbia, Canada.
2. BASIS OF PRESENTATION AND SUMMARY OF MATERIAL ACCOUNTING POLICIES
(i) Basis of presentation and measurement
The 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 International 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
November 1, 2023.
(ii) Material accounting policies
The accounting policies followed in these condensed interim consolidated financial statements 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.
a. As a result of the Caserones acquisition (Note 3), the Company has amended its revenue policy to include
sales of copper cathodes. The Company satisfies its performance obligations for its concentrate and
copper cathode sales per specified contract terms which are generally upon shipment or delivery. Revenue
from concentrate and copper cathode sales is recorded based upon forward market prices of the expected
final sales price date. The Company typically receives payment shortly after vessel arrival at its destination
port. All remaining policy elements of revenue recognition remain unchanged from the year ended
December 31, 2022.
===== SIDA 54 =====
LUNDIN MINING CORPORATION
Notes to condensed interim consolidated financial statements
For the three and nine months ended September 30, 2023 and 2022
(Unaudited - Tabular amounts in thousands of US dollars, except for shares and per share amounts)
- 7 -
b. As a result of the Caserones acquisition (Note 3), the Company has amended its inventories policy to
include the valuation of inventory work in progress for the leaching process. Dump leach pad inventory
represents ore that has been mined and placed on leach pads where a solution is applied to the surface of
the heap to dissolve the gold and by-products. The resulting solution is further processed in a plant to
recover the copper. The cost of leach pad inventory is derived from current mining and leaching costs and
is removed at the weighted average cost per recoverable lb of copper on the leach pads as lbs of copper
are recovered. Estimates of recoverable copper in the leach pads are calculated based on the quantities of
ore placed on the leach pads (measured tonnes added to the leach pads), the grade of ore placed on the
leach pads (based on assay data), and an estimated recovery percentage (based on estimated recovery
assumptions from the block model). The nature of the leaching process inherently limits the ability to
precisely monitor inventory levels. As a result, estimates are refined based on actual results and
engineering studies over time. The final recovery of copper from leach pads will not be known until the
leaching process is concluded at the end of the mine life. Ore on leach pads that is not expected to be
recovered within the next twelve months is classified as non-current. All remaining policy elements of
inventories remain unchanged from the year ended December 31, 2022.
(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 periods
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.
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,
except for those noted below.
The Company’s acquisition of fifty-one percent (51%) of the issued and outstanding equity of SCM Minera Lumina
Copper Chile (“Lumina Copper”) (Note 3), which owns Caserones, requires each identified asset and liability to be
measured at its acquisition date fair value. The excess, if any, of the fair value of consideration over the fair value
of the identifiable net assets acquired and liabilities assumed is recognized in goodwill. The determination of fair
values requires management to make assumptions and estimates about future events and judgements such as
production profile, production and capital expenditures, metal prices and discount rates. Changes in these
assumptions or estimates could affect the fair values assigned to assets acquired, liabilities assumed, and goodwill
in the purchase price allocation.
===== SIDA 55 =====
LUNDIN MINING CORPORATION
Notes to condensed interim consolidated financial statements
For the three and nine months ended September 30, 2023 and 2022
(Unaudited - Tabular amounts in thousands of US dollars, except for shares and per share amounts)
- 8 -
3. BUSINESS COMBINATION
On July 13, 2023, the Company completed the acquisition of fifty-one percent (51%) of the issued and outstanding
equity of Lumina Copper, which owns the Caserones copper-molybdenum mine located in Chile, from JX Metals
Corporation and certain of its subsidiaries ("Caserones Acquisition").
The total cash consideration paid after adjustments was $796.6 million, which was funded by the Company's revolving
credit facility. Remaining deferred cash consideration of $150.0 million will be payable in installments as follows: $50.0
million to be paid in five installments of $10.0 million on the anniversary of the transaction closing date in each of
2024, 2025, 2026, 2027, and 2028; and $100 million shall be paid on the anniversary of the closing date in 2029. The
Company also has the right to acquire up to an additional 19% interest in Lumina Copper for $350.0 million over a five-
year period commencing on the first anniversary of the date of closing ("Caserones Purchase Option").
The purchase price is as follows:
Cash consideration $ 796,580
Fair value of additional deferred consideration 112,851
Total consideration for 51% of Caserones $ 909,431
The fair value of the deferred consideration was calculated by discounting the required future payments using a credit
adjusted risk free rate that appropriately reflects the credit risk associated with the future payments. The current
portion of this liability has been recorded in Trade and Other Payables and the non-current portion has been recorded
in Deferred consideration and other long-term liabilities.
Preliminary fair values of assets acquired and liabilities assumed:
Cash and cash equivalents $ 148,011
Trade and other receivables 253,769
Inventories 324,565
Restricted funds 4,196
Long-term inventory 84,705
Other non-current assets (a) 46,994
Mineral properties, plant and equipment 1,117,672
Deferred tax assets (b) 411,503
Total assets $ 2,391,415
Trade and other payables $ 256,161
Lease liability 257,655
Reclamation and other closure provisions 92,440
Other 1,961
Total liabilities $ 608,217
Total assets acquired and liabilities assumed, net $ 1,783,198
Less: Non-controlling interests $ 873,767
Lundin Mining Corporation's 51% share of Caserones $ 909,431
===== SIDA 56 =====
LUNDIN MINING CORPORATION
Notes to condensed interim consolidated financial statements
For the three and nine months ended September 30, 2023 and 2022
(Unaudited - Tabular amounts in thousands of US dollars, except for shares and per share amounts)
- 9 -
a. The Company has assigned a fair value of $47.0 million to its right to acquire up to an additional 19% interest
in Lumina Copper for $350.0 million. The fair value of the Caserones purchase option was determined using
the arithmetic average approximation methodology which assumes a risk-free interest rate of 3.93%, expected
copper price volatility of 22.8%, and a term of 5 years.
b. The Company acquired approximately $4.3 billion in total tax loss carryforward balances associated with
Caserones. The Company has recognized deferred tax assets to the extent that the Company expects to realize
sufficient taxable profit in the foreseeable future.
For the purpose of these financial statements, the preliminary fair value of assets acquired and liabilities assumed is
based on management's best estimates and taking into consideration all currently available information at the time of
acquisition. There may be adjustments to the estimated fair values as the valuation work is finalized, which is expected
to be completed by the end of 2023.
Management primarily used a discounted cash flow model (net present value of expected future cash flows) to
determine the fair value of the mine assets. Management used significant future assumptions in the model such as
metal prices, production based on estimated quantities of Mineral Reserves and Resources, production and capital
expenditures, and discount rate. Average copper price assumptions between 2023 and 2027 used in the valuation was
$3.80 per pound of copper with $3.58 per pound being used as the long-term assumption. In determining the fair
value of plant and equipment, management primarily used the depreciated replacement cost approach and used the
sales comparison approach for certain mobile plant items where secondary market evidence was available.
Short-term inventory was valued based on assumed market price less cost to complete and a reasonable profit margin.
Long-term inventory was valued on the same basis, but also considers a multi-year recovery period for the estimated
payable metal contained in the dump leach.
The Company used the proportionate method in measuring non-controlling interests at the acquisition date. No
goodwill has been recognized on the transaction.
Acquisition related costs of $5.2 million are recorded in the consolidated statement of earnings as a business
development cost (Note 17).
Revenue and net earnings contributed by Caserones since acquisition and included in the consolidated statement of
earnings were $284.6 million and $38.0 million, respectively. For the three months ended September 30, 2023, $32.2
million of metal inventories acquired at fair value were included in Cost of goods sold (production costs).
If Caserones had been consolidated from January 1, 2023, the consolidated statement of earnings for the nine months
ended September 30, 2023 would show pro forma revenue of approximately $3,108.5 million and net earnings of
approximately $453.9 million.
===== SIDA 57 =====
LUNDIN MINING CORPORATION
Notes to condensed interim consolidated financial statements
For the three and nine months ended September 30, 2023 and 2022
(Unaudited - Tabular amounts in thousands of US dollars, except for shares and per share amounts)
- 10 -
4. CASH AND CASH EQUIVALENTS
Cash and cash equivalents are comprised of the following:
September 30, 2023 December 31, 2022
Cash $ 259,355 $ 158,153
Short-term deposits 97,982 33,234
$ 357,337 $ 191,387
5. TRADE AND OTHER RECEIVABLES
Trade and other receivables are comprised of the following:
September 30, 2023
December 31, 2022
Trade receivables $ 521,760 $ 430,734
Prepaid expenses 59,898 53,767
Value added tax 66,755 65,028
Other receivables 32,245 26,649
$ 680,658 $ 576,178
6. INVENTORIES
Inventories are comprised of the following:
September 30, 2023
December 31, 2022
Materials and supplies $ 329,038 $ 184,720
Ore stockpiles and dump leach 200,465 69,781
Finished goods - concentrate stockpiles 77,940 42,209
Finished goods - copper cathode 11,415 —
$ 618,858 $ 296,710
Long-term inventories are comprised of the following:
September 30, 2023
December 31, 2022
Ore stockpiles at Candelaria $ 430,577 $ 394,240
Ore stockpiles at Chapada 277,367 247,637
Dump leach at Caserones 90,255 —
$ 798,199 $ 641,877
===== SIDA 58 =====