FULLTEXT DEL 2 AV 3
Kvartalsrapport Q4 2023
Management’s Report
The accompanying consolidated financial statements of Lundin Mining Corporation ("Lundin Mining" or the “Company”)
and other information contained in the management’s discussion and analysis are the responsibility of management and
have been approved by the Board of Directors. The consolidated financial statements have been prepared by management
in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board
(“IFRS Accounting Standards”) as outlined in Part 1 of the Handbook of the Chartered Professional Accountants (“CPA”) of
Canada, and include some amounts that are based on management’s estimates and judgment.
The Board of Directors carries out its responsibility for the consolidated financial statements principally through its Audit
Committee, which is comprised solely of independent directors. The Audit Committee reviews the Company’s annual
consolidated financial statements and recommends its approval to the Board of Directors. The Company’s auditors have full
access to the Audit Committee, with and without management being present. These consolidated financial statements have
been audited by PricewaterhouseCoopers LLP, Chartered Professional Accountants.
(Signed) Jack Lundin (Signed) Teitur Poulsen
President and Chief Executive Officer Executive Vice President and Chief Financial Officer
Vancouver, British Columbia, Canada
February 21, 2024
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PricewaterhouseCoopers LLP
PricewaterhouseCoopers Place, 250 Howe Street, Suite 1400, Vancouver, British Columbia, Canada V6C 3S7
T: +1 604 806 7000, F: +1 604 806 7806, ca_vancouver_main_fax@pwc.com
“PwC” refers to PricewaterhouseCoopers LLP, an Ontario limited liability partnership.
Independent auditor’s report
To the Shareholders of Lundin Mining Corporation
Our opinion
In our opinion, the accompanying consolidated financial statements present fairly, in all material respects,
the financial position of Lundin Mining Corporation and its subsidiaries (together, the Company) as at
December 31, 2023 and 2022, and its financial performance and its cash flows for the years then ended in
accordance with IFRS Accounting Standards as issued by the International Accounting Standards Board
(IFRS Accounting Standards).
What we have audited
The Company’s consolidated financial statements comprise:
the consolidated balance sheets as at December 31, 2023 and 2022;
the consolidated statements of earnings for the years then ended;
the consolidated statements of comprehensive income for the years then ended;
the consolidated statements of changes in equity for the years then ended;
the consolidated statements of cash flows for the years then ended; and
the notes to the consolidated financial statements, which include significant accounting policies and
other explanatory information.
Basis for opinion
We conducted our audit in accordance with Canadian generally accepted auditing standards. Our
responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of
the consolidated financial statements section of our report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our opinion.
Independence
We are independent of the Company in accordance with the ethical requirements that are relevant to our
audit of the consolidated financial statements in Canada. We have fulfilled our other ethical responsibilities
in accordance with these requirements.
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Key audit matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our
audit of the consolidated financial statements for the year ended December 31, 2023. These matters were
addressed in the context of our audit of the consolidated financial statements as a whole, and in forming
our opinion thereon, and we do not provide a separate opinion on these matters.
Key audit matter How our audit addressed the key audit matter
Fair value of mineral properties, plant and
equipment acquired as part of the acquisition of
SCM Minera Lumina Copper Chile (Lumina
Copper)
Refer to note 2 – Basis of presentation and
summary of material accounting policies and
note 3 – Business combination to the consolidated
financial statements.
The Company acquired 51% of the issued and
outstanding equity of Lumina Copper for total cash
consideration of $797 million and deferred cash
consideration of $150 million on July 13, 2023. The
total fair value of identifiable assets acquired
included $1.3 billion of mineral properties, plant and
equipment, which have primarily been recognized
as plant and equipment. Management applied
significant judgment in estimating the fair value of
acquired mineral properties, plant and equipment.
Management used discounted cash flow models
and a market-based approach to determine the fair
value of mine assets, including the use of
significant assumptions such as future metal prices,
production based on estimated quantities of Mineral
Reserves and Mineral Resources, production and
capital expenditures, pricing of in-situ mineral
resources implied by the market value of selected
comparable transactions involving the sale of
similar companies and mineral properties (in-situ
multiples) and discount rate. In determining the fair
value of plant and equipment, management
primarily uses the depreciated replacement cost
approach.
Our approach to addressing the matter included the
following procedures, among others:
Tested how management estimated the fair
value of the acquired mineral properties, plant
and equipment, which included the following:
– Read the purchase agreement.
– Tested the underlying data used by
management in the discounted cash flow
model, market-based valuation, and
depreciated replacement cost valuations.
– Evaluated the reasonableness of significant
assumptions such as future metal prices,
production and capital expenditures by (i)
comparing future metal prices to external
market and industry data; (ii) comparing
production and capital expenditures against
current and past performance; and (iii)
assessing whether these assumptions
were consistent with evidence obtained in
other areas of the audit.
– The work of management’s experts was
used in performing the procedures to
evaluate the reasonableness of the
production based on estimated quantities
of Mineral Reserves and Mineral
Resources and production and capital
expenditures. As a basis for using this
work, the competence, capabilities and
objectivity of management’s experts were
evaluated, the work performed was
understood and the appropriateness of the
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Key audit matter How our audit addressed the key audit matter
Management’s estimates of production based on
quantities of Mineral Reserves and Mineral
Resources are based on information compiled by
qualified persons (management’s experts).
We considered this a key audit matter due to the
significant auditor effort, subjectivity and significant
judgment in performing procedures to test
significant assumptions used by management in
determining the fair value of acquired mineral
properties, plant and equipment. Professionals with
specialized skill and knowledge in the field of
valuation assisted us in performing our procedures.
work as audit evidence was evaluated. The
procedures performed also included
evaluation of the methods and assumptions
used by management’s experts, tests of
the data used by management’s experts
and an evaluation of their findings.
– Professionals with specialized skill and
knowledge in the field of valuation assisted
in assessing the following: (i)
appropriateness of the discounted cash
flow model and the reasonability of the
discount rate used within the model; (ii)
appropriateness of the depreciated
replacement cost approach and the
reasonability of the resulting fair values
assigned to plant and equipment; and (iii)
reasonability of the in-situ multiples.
Goodwill impairment assessment
Refer to note 2 – Basis of presentation and
summary of material accounting policies and
note 9 – Goodwill to the consolidated financial
statements.
The Company’s total carrying amount of goodwill as
at December 31, 2023 was $241 million. The
Company’s goodwill is required to be tested
annually for impairment or when events or changes
in circumstances indicate that the related carrying
amount may not be recoverable. When the
recoverable amount of the cash-generating unit
(CGU) is less than the carrying amount of that
CGU, an impairment loss is recognized.
The recoverable amount of each CGU was based
on a fair value less cost of disposal method using a
discounted cash flow model and market-based
approach. Management applied significant
judgment in estimating the recoverable amount of
each CGU. Significant assumptions used by
Our approach to addressing the matter included the
following procedures, among others:
Tested how management estimated the
recoverable amount of the CGUs, which
included the following:
– Tested the underlying data used by
management in the discounted cash flow
models and market-based valuation.
– Evaluated the reasonableness of significant
assumptions such as future metal prices,
foreign exchange rates and production and
capital expenditures by (i) comparing future
metal prices and foreign exchange rates
with external market and industry data; (ii)
comparing future production and capital
expenditures against current and past
performance; and (iii) assessing whether
these assumptions were consistent with
evidence obtained in other areas of the
audit.
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Key audit matter How our audit addressed the key audit matter
management to determine the recoverable amounts
include future metal prices, production based on
estimated quantities of Mineral Reserves and
Mineral Resources, production and capital
expenditures, foreign exchange rates, in-situ
multiples and discount rates. The recoverable
amount of each CGU determined by management
exceeded its carrying value, and as a result, no
impairment loss was recorded.
Management’s estimates of production based on
quantities of Mineral Reserves and Mineral
Resources are based on information compiled by
qualified persons (management’s experts).
We considered this a key audit matter due to the
significant auditor effort, subjectivity and significant
judgment in performing procedures to test
significant assumptions used by management in
determining the fair value of the CGUs.
Professionals with specialized skill and knowledge
in the field of valuation assisted us in performing
our procedures.
– The work of management’s experts was
used in performing the procedures to
evaluate the reasonableness of the
estimates associated with the production
based on quantities of Mineral Reserves
and Mineral Resources. As a basis for
using this work, the competence,
capabilities and objectivity of
management’s experts were evaluated, the
work performed was understood and the
appropriateness of the work as audit
evidence was evaluated. The procedures
performed also included evaluation of the
methods and assumptions used by
management’s experts, tests of the data
used by management’s experts and an
evaluation of their findings.
– Professionals with specialized skill and
knowledge in the field of valuation assisted
in assessing the following: (i)
appropriateness of the discounted cash
flow models and market-based approach to
determine the recoverable amounts of the
CGUs; and (ii) the reasonableness of the
discount rates and in-situ multiples.
Other information
Management is responsible for the other information. The other information comprises the Management’s
Discussion and Analysis.
Our opinion on the consolidated financial statements does not cover the other information and we do not
express any form of assurance conclusion thereon.
In connection with our audit of the consolidated financial statements, our responsibility is to read the other
information identified above and, in doing so, consider whether the other information is materially
inconsistent with the consolidated financial statements or our knowledge obtained in the audit, or
otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this other
information, we are required to report that fact. We have nothing to report in this regard.
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Responsibilities of management and those charged with governance for the
consolidated financial statements
Management is responsible for the preparation and fair presentation of the consolidated financial
statements in accordance with IFRS Accounting Standards, and for such internal control as management
determines is necessary to enable the preparation of consolidated financial statements that are free from
material misstatement, whether due to fraud or error.
In preparing the consolidated financial statements, management is responsible for assessing the
Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going
concern and using the going concern basis of accounting unless management either intends to liquidate
the Company or to cease operations, or has no realistic alternative but to do so.
Those charged with governance are responsible for overseeing the Company’s financial reporting
process.
Auditor’s responsibilities for the audit of theconsolidated financial statements
Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as
a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s
report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a
guarantee that an audit conducted in accordance with Canadian generally accepted auditing standards
will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and
are considered material if, individually or in the aggregate, they could reasonably be expected to influence
the economic decisions of users taken on the basis of these consolidated financial statements.
As part of an audit in accordance with Canadian generally accepted auditing standards, we exercise
professional judgment and maintain professional skepticism throughout the audit. We also:
Identify and assess the risks of material misstatement of the consolidated financial statements,
whether due to fraud or error, design and perform audit procedures responsive to those risks, and
obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of
not detecting a material misstatement resulting from fraud is higher than for one resulting from error,
as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of
internal control.
Obtain an understanding of internal control relevant to the audit in order to design audit procedures
that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the Company’s internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by management.
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Conclude on the appropriateness of management’s use of the going concern basis of accounting and,
based on the audit evidence obtained, whether a material uncertainty exists related to events or
conditions that may cast significant doubt on the Company’s ability to continue as a going concern. If
we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report
to the related disclosures in the consolidated financial statements or, if such disclosures are
inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to
the date of our auditor’s report. However, future events or conditions may cause the Company to
cease to continue as a going concern.
Evaluate the overall presentation, structure and content of the consolidated financial statements,
including the disclosures, and whether the consolidated financial statements represent the underlying
transactions and events in a manner that achieves fair presentation.
Obtain sufficient appropriate audit evidence regarding the financial information of the entities or
business activities within the Company to express an opinion on the consolidated financial
statements. We are responsible for the direction, supervision and performance of the group audit. We
remain solely responsible for our audit opinion.
We communicate with those charged with governance regarding, among other matters, the planned scope
and timing of the audit and significant audit findings, including any significant deficiencies in internal
control that we identify during our audit.
We also provide those charged with governance with a statement that we have complied with relevant
ethical requirements regarding independence, and to communicate with them all relationships and other
matters that may reasonably be thought to bear on our independence, and where applicable, related
safeguards.
From the matters communicated with those charged with governance, we determine those matters that
were of most significance in the audit of the consolidated financial statements of the current period and
are therefore the key audit matters. We describe these matters in our auditor’s report unless law or
regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we
determine that a matter should not be communicated in our report because the adverse consequences of
doing so would reasonably be expected to outweigh the public interest benefits of such communication.
The engagement partner on the audit resulting in this independent auditor’s report is Mark Patterson.
Chartered Professional Accountants
Vancouver, British Columbia
February 21, 2024
/s/PricewaterhouseCoopers LLP
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LUNDIN MINING CORPORATION
CONSOLIDATED BALANCE SHEETS As at
(in thousands of US dollars) December 31,
2023
December 31,
2022
ASSETS
Cash and cash equivalents (Note 4) $ 268,793 $ 191,387
Trade and other receivables (Note 5) 828,871 576,178
Income taxes receivable 34,542 72,402
Inventories (Note 6) 599,407 296,710
Current portion of derivative assets (Note 23) 38,114 43,521
Other current assets 21,421 38,571
Total current assets 1,791,148 1,218,769
Restricted funds 59,979 50,195
Long-term inventory (Note 6) 797,597 641,877
Derivative assets (Note 23) 9,397 25,111
Other non-current assets (Note 7) 67,090 20,035
Mineral properties, plant and equipment (Note 8) 7,725,169 5,975,686
Deferred tax assets (Note 22) 170,203 3,837
Goodwill (Note 9) 240,616 237,294
9,070,051 6,954,035
Total assets $ 10,861,199 $ 8,172,804
LIABILITIES
Trade and other payables (Note 10) $ 805,763 $ 612,965
Income taxes payable 62,926 45,000
Current portion of derivative liabilities (Note 23) 26,389 24,423
Current portion of debt and lease liabilities (Note 11) 212,646 170,149
Current portion of deferred revenue (Note 12) 87,867 74,061
Current portion of reclamation and other closure provisions (Note 13) 14,442 23,550
Total current liabilities 1,210,033 950,148
Derivative liabilities (Note 23) 3,148 27,876
Debt and lease liabilities (Note 11) 1,273,162 27,179
Deferred revenue (Note 12) 535,363 580,045
Reclamation and other closure provisions (Note 13) 529,734 422,298
Deferred consideration and other long-term liabilities (Note 3) 133,199 24,922
Provision for pension obligations 6,752 5,613
Deferred tax liabilities (Note 22) 751,688 709,602
3,233,046 1,797,535
Total liabilities 4,443,079 2,747,683
SHAREHOLDERS' EQUITY
Share capital (Note 14) 4,574,830 4,555,125
Contributed surplus 55,201 55,769
Accumulated other comprehensive loss (296,617) (342,287)
Retained earnings 627,903 592,425
Equity attributable to Lundin Mining Corporation shareholders 4,961,317 4,861,032
Non-controlling interests (Note 15) 1,456,803 564,089
Total shareholders' equity 6,418,120 5,425,121
Total liabilities and shareholders' equity $ 10,861,199 $ 8,172,804
Commitments and contingencies (Note 24)
The accompanying notes are an integral part of these consolidated financial statements.
APPROVED BY THE BOARD OF DIRECTORS
(Signed) Adam I. Lundin - Director (Signed) Dale C. Peniuk - Director
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LUNDIN MINING CORPORATION
CONSOLIDATED STATEMENTS OF EARNINGS
For the years ended December 31, 2023 and 2022
(in thousands of US dollars, except for shares and per share amounts)
2023 2022
Revenue (Note 16) $ 3,392,077 $ 3,041,228
Cost of goods sold
Production costs (Note 17) (2,086,108) (1,661,358)
Depreciation, depletion and amortization (653,596) (554,750)
Inventory write-down (Note 6) — (62,546)
Gross profit 652,373 762,574
General and administrative expenses (66,723) (53,879)
General exploration and business development (Note 19) (55,692) (144,353)
Finance income (Note 20) 11,137 4,211
Finance costs (Note 20) (113,836) (68,396)
Other income (Note 21) 104,589 98,004
Earnings before income taxes 531,848 598,161
Current tax expense (Note 22) (154,416) (149,978)
Deferred tax (expense) recovery (Note 22) (62,183) 15,350
Net earnings $ 315,249 $ 463,533
Net earnings attributable to:
Lundin Mining Corporation shareholders $ 241,562 $ 426,851
Non-controlling interests 73,687 36,682
Net earnings $ 315,249 $ 463,533
Basic and diluted earnings per share attributable to Lundin Mining Corporation
shareholders: $ 0.31 $ 0.56
Weighted average number of shares outstanding (Note 14)
Basic 772,532,260 762,518,753
Diluted 773,292,895 763,594,053
The accompanying notes are an integral part of these consolidated financial statements.
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LUNDIN MINING CORPORATION
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
For the years ended December 31, 2023 and 2022
(in thousands of US dollars)
2023 2022
Net earnings $ 315,249 $ 463,533
Other comprehensive income (loss), net of taxes
Item that will not be reclassified to net earnings:
Remeasurements for post-employment benefit plans 2,320 (366)
Item that may be reclassified subsequently to net earnings:
Effects of foreign exchange 43,710 (88,388)
Item that was reclassified to net earnings:
Cumulative translation adjustment — (3,777)
Other comprehensive income (loss) 46,030 (92,531)
Total comprehensive income $ 361,279 $ 371,002
Comprehensive income attributable to:
Lundin Mining Corporation shareholders $ 287,232 $ 334,493
Non-controlling interests 74,047 36,509
Total comprehensive income $ 361,279 $ 371,002
The accompanying notes are an integral part of these consolidated financial statements.
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LUNDIN MINING CORPORATION
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
For the years ended December 31, 2023 and 2022
(in thousands of US dollars, except for shares)
Number of
shares
Share
capital
Contributed
surplus
Accumulated
other
comprehensive
loss
Retained
earnings
Non-
controlling
interests Total
Balance, December 31, 2022 770,746,531 $ 4,555,125 $ 55,769 $ (342,287) $ 592,425 $ 564,089 $ 5,425,121
Distributions — — — — — (55,100) (55,100)
Caserones acquisition (Note 3) — — — — — 873,767 873,767
Exercise of share-based awards 2,921,258 19,705 (8,329) — — — 11,376
Share-based compensation — — 7,761 — — — 7,761
Dividends declared (Note 14(g)) — — — — (206,084) — (206,084)
Net earnings — — — — 241,562 73,687 315,249
Other comprehensive income — — — 45,670 — 360 46,030
Total comprehensive income — — — 45,670 241,562 74,047 361,279
Balance, December 31, 2023 773,667,789 $ 4,574,830 $ 55,201 $ (296,617) $ 627,903 $ 1,456,803 $ 6,418,120
Balance, December 31, 2021 734,987,154 $ 4,199,756 $ 58,166 $ (249,929) $ 437,160 $ 547,580 $ 4,992,733
Distributions — — — — — (20,000) (20,000)
Josemaria acquisition 40,031,936 369,175 13,436 — — — 382,611
Exercise of share-based awards 6,488,941 49,813 (23,636) — — — 26,177
Share-based compensation — — 7,803 — — — 7,803
Dividends declared — — — — (275,795) — (275,795)
Shares purchased (10,761,500) (63,619) — — 4,209 — (59,410)
Net earnings — — — — 426,851 36,682 463,533
Other comprehensive loss — — — (92,358) — (173) (92,531)
Total comprehensive (loss) income — — — (92,358) 426,851 36,509 371,002
Balance, December 31, 2022 770,746,531 $ 4,555,125 $ 55,769 $ (342,287) $ 592,425 $ 564,089 $ 5,425,121
The accompanying notes are an integral part of these consolidated financial statements.
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LUNDIN MINING CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the years ended December 31, 2023 and 2022
(in thousands of US dollars)
Cash provided by (used in) 2023 2022
Operating activities
Net earnings $ 315,249 $ 463,533
Items not involving cash and other adjustments
Depreciation, depletion and amortization 653,596 554,750
Share-based compensation 7,301 7,803
Unrealized foreign exchange loss 1,224 21,164
Finance costs, net (Note 20) 102,699 64,185
Recognition of deferred revenue (Note 12) (70,918) (73,605)
Deferred tax expense (recovery) 62,183 (15,350)
Revaluation of marketable securities (Note 21) (1,846) (5,484)
Ore stockpile inventory write-down (Note 6) — 62,546
Revaluation of foreign currency and diesel derivatives (Note 23) (27,780) (68,951)
Reversal of fair value adjustment on acquired inventory (Note 3) 39,945 —
Non-cash inventory write down 9,848 2,816
Other 16,482 (12,940)
Reclamation payments (Note 13) (10,491) (15,903)
Pension payments (1,359) (1,876)
Changes in long-term inventory (71,916) 10,257
Changes in non-cash working capital items (Note 29) (7,605) (116,056)
1,016,612 876,889
Investing activities
Investment in mineral properties, plant and equipment (1,013,117) (842,903)
Acquisition of Caserones, net of cash acquired (Note 3) (648,569) —
Acquisition of Josemaria, net of cash acquired — (126,381)
Cash received from disposal of subsidiary (Note 21) 5,718 16,828
Payment of Chapada derivative liability (Note 24) (25,000) (25,000)
Interest received 10,585 4,152
Josemaria bridge loan — (54,100)
Distributions from associate, net — 18,000
Other (4,151) (3,963)
(1,674,534) (1,013,367)
Financing activities
Proceeds from debt (Note 11) 2,490,597 282,938
Interest paid (61,307) (9,765)
Principal payments of lease liabilities (47,320) (20,152)
Principal repayments of debt (Note 11) (1,451,804) (113,824)
Payment of Josemaria debentures — (47,000)
Dividends paid to shareholders (206,540) (275,448)
Shares purchased (Note 14) — (59,410)
Proceeds from common shares issued 11,376 26,177
Distributions paid to non-controlling interests (55,100) (35,000)
Net proceeds from settlement of foreign currency and diesel derivatives 48,686 4,784
Other (2) (4,926)
728,586 (251,626)
Effect of foreign exchange on cash balances 6,742 (14,578)
Increase (decrease) in cash and cash equivalents during the year 77,406 (402,682)
Cash and cash equivalents, beginning of year 191,387 594,069
Cash and cash equivalents, end of year $ 268,793 $ 191,387
Supplemental cash flow information (Note 29)
The accompanying notes are an integral part of these consolidated financial statements.
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1. NATURE OF OPERATIONS
Lundin Mining Corporation is a diversified Canadian base metals mining company primarily producing copper, zinc,
gold, nickel and molybdenum. The Company owns 80% of the Candelaria and Ojos del Salado mining complex
("Candelaria") and 51% of the Caserones copper-molybdenum mine (“ Caserones”), each of which are located in Chile.
The Company’s wholly-owned operating assets include the Chapada mine located in Brazil, the Eagle mine located in
the United States of America (“USA”), the Neves-Corvo mine located in Portugal, and the Zinkgruvan mine located in
Sweden. In addition, the Company owns the large scale copper-gold Josemaria project ("Josemaria Project"), located in
Argentina.
The Company’s common shares are listed on the Toronto Stock Exchange (“TSX”) in Canada and the Nasdaq Stockholm
Exchange in Sweden. The Company is incorporated under the Canada Business Corporations Act. The Company is
domiciled in Canada and its principal place of business is 885 West Georgia Street, Suite 2000, Vancouver, British
Columbia, Canada.
2. BASIS OF PRESENTATION AND SUMMARY OF MATERIAL ACCOUNTING POLICIES
(i) Basis of presentation and measurement
The consolidated financial statements have been prepared in accordance with International Financial Reporting
Standards as issued by the International Accounting Standards Board ("IFRS Accounting Standards") and which
the Canadian Accounting Standards Board has approved for incorporation into Part 1 of the CPA Canada
Handbook – Accounting.
The consolidated financial statements have been prepared on a historical cost basis except for certain financial
instruments which have been measured at fair value.
The Company's presentation currency is United States (“US”) dollars. Reference herein of $ or USD is to US
dollars, C$ or CAD is to Canadian dollars, SEK is to Swedish krona, € refers to the Euro, CLP refers to the Chilean
peso, BRL refers to the Brazilian real, and ARS refers to the Argentine peso.
Balance sheet items are classified as current if receipt or payment is due within twelve months. Otherwise, they
are presented as non-current.
These consolidated financial statements were approved by the Board of Directors of the Company for issue on
February 21, 2024.
(ii) Material accounting policies
The Company has consistently applied the accounting policies to all the years presented. The material accounting
policies applied in these consolidated financial statements are set out below.
(a) Basis of consolidation
The financial statements consist of the consolidation of the financial statements of the Company and its
subsidiaries.
Subsidiaries are entities over which the Company has control, including the power to govern the financial
and operating policies in order to obtain benefits from their activities. The existence and effect of potential
voting rights that are currently exercisable or convertible are considered when assessing whether the
Company controls another entity. Subsidiaries are fully consolidated from the date on which control is
obtained by the Company and are de-consolidated from the date that control ceases.
LUNDIN MINING CORPORATION
Notes to consolidated financial statements
For the years ended December 31, 2023 and 2022
(Tabular amounts in thousands of US dollars, except for shares and per share amounts)
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Where necessary, adjustments are made to the results of the subsidiaries and associates to bring their
accounting policies in line with those used by the Company. Intra-group transactions, balances, income and
expenses are eliminated on consolidation.
For non wholly-owned controlled subsidiaries, the net assets attributable to outside equity shareholders are
presented as non-controlling interests in the equity section of the consolidated balance sheet. Net earnings
for the period that are attributable to non-controlling interests are calculated based on the ownership of
the minority shareholders in the subsidiary.
(b) Translation of foreign currencies
The functional currency of each entity within the Company is the currency of the primary economic
environment in which it operates. The Company’s presentation currency is US dollars.
Transactions denominated in currencies other than the functional currency are recorded using the exchange
rates prevailing on the dates of the transactions. At each balance sheet date, monetary items denominated
in foreign currencies are translated at the rates prevailing on the balance sheet date. Non-monetary items
that are measured at historical cost in a foreign currency are translated using the exchange rate at the date
of the transaction. Non-monetary items measured at fair value in a foreign currency are translated at the
rates prevailing on the date when the fair value was determined. Foreign currency translation differences on
deferred foreign tax liabilities and assets are reported in deferred tax expense/recovery in the consolidated
statement of earnings.
Exchange differences arising on the settlement of monetary items, and on the translation of monetary
items, are recognized in the consolidated statement of earnings in the period in which they arise. Exchange
differences arising on the translation of non-monetary items carried at fair value are included in the
consolidated statement of earnings. However, exchange differences arising on the translation of certain
non-monetary items are recognized as a separate component of equity.
For the purpose of presenting the consolidated financial statements, the assets and liabilities of the
Company’s foreign operations are translated into US dollars, which is the presentation currency of the
group, at the rate of exchange prevailing at the end of the reporting period. Income and expenses are
translated at the average exchange rates for the period where these approximate the rates on the dates of
transactions.
On disposal of a foreign operation, the historical, cumulative amount of exchange differences recognized as
a separate component of equity is reclassified and recognized in the consolidated statement of earnings.
(c) Cash and cash equivalents
Cash and cash equivalents comprise cash on deposit with banks and highly liquid short-term interest-
bearing investments with a term to maturity at the date of purchase of 90 days or less which are subject to
an insignificant risk of change in value.
(d) Restricted funds
Restricted funds include reclamation funds and cash on deposit that have been pledged for reclamation and
closure activities which are not available for immediate disbursement.
(e) Inventories
Ore and concentrate stockpiles and cathode inventory are valued at the lower of production cost and net
realizable value (“NRV”). Production costs include costs of materials and labour related directly to mining
and processing activities, including production phase stripping costs, depreciation and amortization of
LUNDIN MINING CORPORATION
Notes to consolidated financial statements
For the years ended December 31, 2023 and 2022
(Tabular amounts in thousands of US dollars, except for shares and per share amounts)
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===== SIDA 72 =====
mineral property, plant and equipment directly involved in the related mining and production process,
amortization of any stripping costs previously capitalized and directly attributable overhead costs.
Dump leach pad inventory represents ore that has been mined and placed on leach pads where a solution is
applied to the surface of the heap to dissolve the copper and by-products. The resulting solution is further
processed in a plant to recover the copper. The cost of dump leach inventory is derived from current mining
and leaching costs and is removed at the weighted average cost per recoverable pound ("lb") of copper on
the leach pads as lbs of copper are recovered. Estimates of recoverable copper on the dump leach are
calculated based on the quantities of ore placed on the leach pads (measured tonnes added to the leach
pads), the grade of ore placed on the leach pads (based on assay data), and an estimated recovery
percentage (based on estimated recovery assumptions from the block model). The nature of the leaching
process inherently limits the ability to precisely monitor inventory levels. As a result, estimates are refined
based on actual results and engineering studies over time. The final recovery of copper from the dump leach
will not be known until the leaching process is concluded at the end of the mine life. Ore on the dump leach
that is not expected to be recovered within the next twelve months is classified as non-current.
Materials and supplies inventories are valued at the lower of average cost less allowances for obsolescence
and NRV.
If the carrying value of inventories exceeds NRV, a write-down is recognized. The write-down may be
reversed in a subsequent period if the circumstances which caused the write-down no longer exist.
(f) Mineral properties
Mineral properties are carried at cost, less accumulated depletion and any accumulated impairment
charges. Expenditures of mineral properties include:
i. Acquisition costs which consist of payments for property rights and leases, including the
estimated fair value of exploration properties acquired as part of a business combination or the
acquisition of a group of assets.
ii. Exploration, evaluation and project investigation costs incurred on an area of interest once a
determination has been made that a property has economically recoverable Mineral Resources
and Mineral Reserves (“R&R”) and there is a reasonable expectation that costs can be
recovered by future exploitation or sale of the property. Exploration, evaluation and project
investigation expenditures made prior to a determination that a property has economically
recoverable R&R are expensed as incurred.
iii. Deferred stripping costs which represent the costs incurred to remove overburden and other
waste materials to access ore in an open pit mine. Stripping costs incurred prior to the
production phase of the mine are capitalized and included as part of the carrying value of the
mineral property. During the production phase, stripping costs which provide probable future
economic benefits, identifiable improved access to the ore body and which can be measured
reliably are capitalized to mineral properties. Capitalized stripping costs are amortized using a
unit-of-production basis over the Proven and Probable Mineral Reserve to which they relate.
iv. Development costs incurred in an area of interest, once management has determined the
technical feasibility and commercial viability of a project, the project presents an appropriate
rate of return on investment, and the Board of Directors has demonstrated commitment to
advance the project. When additional development expenditures are made on a property after
commencement of production, the expenditure is capitalized as mineral property when it is
probable that additional economic benefit will be derived from future operations. Development
costs are amortized using a unit-of-production basis over the Proven and Probable Mineral
Reserve to which they relate.
LUNDIN MINING CORPORATION
Notes to consolidated financial statements
For the years ended December 31, 2023 and 2022
(Tabular amounts in thousands of US dollars, except for shares and per share amounts)
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===== SIDA 73 =====
v. Interest and financing costs on debt or other liabilities, including interest expense on deferred
revenue, that are directly attributed to the acquisition, construction and development of a
qualifying asset. All other borrowing costs are expensed as incurred.
vi. Easement costs incurred to support access to the Company's operating sites and the Josemaria
Project.
Incidental pre-production expenditures, if any, are recognized in the consolidated statement of earnings.
(g) Plant and equipment
Plant and equipment are carried at cost less accumulated depreciation and any accumulated impairment
charges. For production plant and equipment, depreciation is recorded on a units-of-production basis.
Depreciation on all other plant and equipment is recorded on a straight-line basis over the estimated useful
life of the asset or over the estimated remaining life of the mine, if shorter. Residual values and useful lives
are reviewed annually. Gains and losses on disposals are calculated as proceeds received less the carrying
amount and are recognized in the consolidated statement of earnings.
Useful lives are as follows:
Number of years
Buildings 8-20
Plant and machinery 3-20
Equipment 3-8
(h) Intangible assets
Separately acquired intangible assets are initially measured at cost which comprises of its purchase price
and any directly attributable costs of preparing the asset for its intended use. The Company depreciates
intangible assets with finite useful lives on a straight-line basis over the estimated useful life of the asset.
For intangibles with an indefinite useful life, no amortization is calculated.
(i) Impairment and impairment reversals
At the end of each reporting period, the Company assesses whether there is an indication that an asset or
group of assets within a cash generating unit (“CGU”) may be impaired. When impairment indicators exist,
the Company estimates the recoverable amount of the asset or CGU and compares it against the asset or
CGU’s carrying amount. The recoverable amount is the higher of the fair value less cost of disposal
(“FVLCD”) and the asset or CGU’s value in use (“VIU”). If the carrying value exceeds the recoverable amount,
an impairment loss is recorded in the consolidated statement of earnings during the period. If either FVLCD
or VIU exceeds the asset or CGU’s carrying amount, the asset or CGU is not impaired, and the Company does
not estimate the other amount.
In assessing VIU, the estimated future cash flows are discounted to their present value using a pre-tax
discount rate that reflects current market assessments of the time value of money and the risks specific to
the CGU for which the estimates of future cash flows have not been adjusted. The cash flows are based on
best estimates of expected future cash flows from the continued use of the asset or the CGU and its
eventual disposal.
FVLCD is the price that would be received to sell an asset or paid to transfer a liability in an orderly
transaction between market participants, which is best evidenced if obtained from an active market or
binding sale agreement. Where neither exists, the fair value is based partly on a discounted cash flow
projections model. Costs of disposal, other than those that have been recognized as liabilities, are deducted
in measuring FVLCD.
LUNDIN MINING CORPORATION
Notes to consolidated financial statements
For the years ended December 31, 2023 and 2022
(Tabular amounts in thousands of US dollars, except for shares and per share amounts)
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===== SIDA 74 =====
Reversals of impairment are assessed at each reporting period where there is an indication that an
impairment loss recognized previously may no longer exist or has decreased. If an impairment reversal
indicator exists, the recoverable amount is calculated. If the recoverable amount exceeds the carrying
amount, the carrying value of the CGU is increased to the recoverable amount net of depreciation. The
increased carrying amount cannot exceed the carrying amount that would have been determined had no
impairment loss been recognized for the CGU in prior years. A reversal of an impairment loss is recognized
as a gain in the consolidated statement of earnings in the period it is determined.
(j) Business combinations and goodwill
Acquisitions of businesses are accounted for using the purchase method of accounting whereby all
identifiable assets and liabilities are recorded at their fair values as at the date of acquisition. Any excess
purchase price over the aggregate fair value of net assets is recorded as goodwill. Goodwill is identified and
allocated to CGUs, or groups of CGUs, that are expected to benefit from the synergies of the acquisition.
Goodwill is not amortized. Any excess of the aggregate fair value of net assets over the purchase price is
recognized in the consolidated statement of earnings.
A CGU to which goodwill has been allocated is tested for impairment at least annually or when events or
changes in circumstances indicate that the related carrying amount may not be recoverable. For goodwill
arising on an acquisition in a financial year, the CGU to which the goodwill has been allocated is tested for
impairment before the end of that financial year.
When the recoverable amount of the CGU is less than the carrying amount of that CGU, the impairment loss
is allocated to reduce the carrying amount of any goodwill allocated to that CGU first, and then to the other
assets of that CGU on a pro-rata basis of the carrying amount of each asset in the CGU. Any impairment loss
for goodwill is recognized directly in the consolidated statement of earnings. An impairment loss for
goodwill is not reversed in subsequent periods.
On disposal of a subsidiary, the attributable amount of goodwill is included in the determination of the gain
or loss on disposal.
(k) Leases
At inception of a contract, the Company assesses whether the contract is, or contains a lease. A contract is,
or contains a lease, if the contract conveys the right to control the use of an identified asset for a period of
time in exchange for consideration.
The Company has elected not to recognize right-of-use assets and lease liabilities for short-term leases that
have a lease term of 12 months or less, and leases of low-value assets. For these leases, the Company
recognizes the lease payments as an expense in the consolidated statement of earnings on a straight-line
basis over the term of the lease.
The Company recognizes a lease liability and a right-of-use asset at the lease commencement date.
The lease liability is initially measured as the present value of future lease payments discounted using the
interest rate implicit in the lease or, if that rate cannot be readily determined, each operation’s applicable
incremental borrowing rate. The incremental borrowing rate is the rate which the operation would have to
pay to borrow, over a similar term and with a similar security, the funds necessary to obtain an asset of
similar value to the right-of-use asset in a similar economic environment.
Lease payments included in the measurement of the lease liability comprise the following:
- fixed payments, including in-substance fixed payments, less any lease incentives receivable;
- variable lease payments that depend on an index or a rate, initially measured using the index or
rate as at the commencement date;
- amounts expected to be payable by the Company under residual value guarantees;
LUNDIN MINING CORPORATION
Notes to consolidated financial statements
For the years ended December 31, 2023 and 2022
(Tabular amounts in thousands of US dollars, except for shares and per share amounts)
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===== SIDA 75 =====
- the exercise price of a purchase option if the Company is reasonably certain to exercise that option;
and
- payments of penalties for terminating the lease, if the Company expects to exercise an option to
terminate the lease.
The lease liability is subsequently measured by:
- increasing the carrying amount to reflect interest on the lease liability;
- reducing the carrying amount to reflect lease payments made; and
- remeasuring the carrying amount to reflect any reassessment or lease modifications.
Variable lease payments that do not depend on an index or rate are not included in the measurement of the
lease liability.
The lease liability is remeasured when there is a change in future lease payments arising from a change in an
index or rate, if there is a change in the Company’s estimate of the amount expected to be payable under a
residual value guarantee, or if the Company changes its assessment of whether it will exercise a purchase,
extension or termination option.
Each lease payment is allocated between the lease liability and finance cost. The finance cost is recorded as
an expense in the consolidated statement of earnings over the lease period to produce a constant periodic
rate of interest on the remaining balance of the liability for each period.
The right-of-use asset is initially measured at cost, which comprises the following:
- the amount of the initial measurement of the lease liability;
- any lease payments made at or before the commencement date, less any lease incentives received;
- any initial direct costs incurred by the Company; and
- an estimate of costs to be incurred by the Company in dismantling and removing the underlying
asset, restoring the site on which it is located or restoring the underlying asset to the condition
required by the terms and conditions of the lease, unless those costs are incurred to produce
inventories.
The right-of-use asset is subsequently measured at cost, less any accumulated depreciation and any
accumulated impairment losses, and adjusted for any remeasurement of the lease liability. It is depreciated
in accordance with the Company’s accounting policy for plant and equipment, from the commencement
date to the earlier of the end of its useful life or the end of the lease term.
On the consolidated balance sheet, right-of-use assets and lease liabilities are reported in mineral
properties, plant and equipment and debt and lease liabilities, respectively.
(l) Provision for pension obligations
The Company’s Zinkgruvan mine has an unfunded defined benefit pension plan based on employee
pensionable remuneration and length of service. The cost of the defined benefit pension plan is determined
annually by independent actuaries. The actuarial valuation is based on the projected benefit method pro-
rated for service which incorporates management’s best estimate of future salary levels, retirement ages of
employees and other actuarial factors. Actuarial gains and losses are recorded in other comprehensive
income.
Payments to defined contribution plans are expensed when employees render service entitling them to the
contribution.
(m) Reclamation and other closure provisions
The Company incurs reclamation and other closure costs related to its mining properties such as facility
decommissioning and dismantling, end of mine life severance, site restoration and ongoing environmental
LUNDIN MINING CORPORATION
Notes to consolidated financial statements
For the years ended December 31, 2023 and 2022
(Tabular amounts in thousands of US dollars, except for shares and per share amounts)
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===== SIDA 76 =====
monitoring. These costs are a normal consequence of mining and are dependent on the requirements of the
Company’s legal and constructive obligations, as well as any other commitments made to stakeholders. The
majority of these expenditures will be incurred at the end of the life of mine and are dependent upon a
number of factors such as the life and nature of the asset, the operating license conditions and the
environment in which the mine operates.
The future obligations for mine closure activities are estimated by the Company using mine closure plans or
other similar studies which outline the activities to be undertaken to meet regulatory and internal
requirements. Since the obligations are dependent on the laws and regulations of the countries in which the
mines operate, they are regularly evaluated by management and external experts. Costs included in the
obligations encompass all reclamation and other closure activities expected to occur progressively over the
life of the operation at the time of closure and post-closure in connection with disturbances as at the
reporting date.
Obligations may change as a result of amendments in laws and regulations relating to environmental
protection and/or other legislation affecting resource companies. Included in the estimated obligations are
a number of significant assumptions made by management in determining closure provisions. Accordingly,
closure provisions are more uncertain the further into the future mine closure activities are expected to be
carried out.
The Company records the present value of its reclamation and other closure provisions as a liability with a
corresponding increase in the carrying value of the related asset. The provision is discounted to its net
present value using a country specific, current market, pre-tax discount rate. The unwinding of the discount,
referred to as an accretion expense, is included in finance costs in the consolidated statement of earnings
and results in an increase in the carrying amount of the liability. Reclamation obligations settled in the year
are offset against the corresponding liability. Unplanned reclamation costs are reported as either part of the
cost of inventory or recognized as a cost in the consolidated statement of earnings, if they relate to either
production activities or a closed site.
The capitalized cost of the reclamation and other closure activities is recognized in the mineral property and
plant & equipment and depreciated on a unit-of-production basis over the expected mine life of the
operation to which it relates. Depreciation costs are included in the consolidated statement of earnings as
part of cost of goods sold.
Changes in obligations resulting from revisions to the timing or amount of expenditures, discount rate or
foreign exchange rate are recognized as an increase or decrease in the reclamation and other closure
provision liability, and a corresponding change in the carrying amount of the related assets.
(n) Revenue recognition
Revenue from contracts with customers is recognized when a customer obtains control of the promised
asset and the Company satisfies its performance obligation. Revenue is allocated to each performance
obligation. The Company considers the terms of the contract in determining the transaction price. The
transaction price is based upon the amount the entity expects to be entitled to in exchange for the
transferring of promised goods. The Company earns revenue from contracts with customers related to its
concentrate and copper cathode sales, and its copper, gold and silver streaming arrangements.
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.
Deferred revenue arises from up-front payments received by the Company or obligations acquired in
consideration for future commitments as specified in its various streaming arrangements. The accounting
for streaming arrangements is dependent on the facts and terms of each of the arrangements. Revenue
LUNDIN MINING CORPORATION
Notes to consolidated financial statements
For the years ended December 31, 2023 and 2022
(Tabular amounts in thousands of US dollars, except for shares and per share amounts)
- 12 -
===== SIDA 77 =====
from streaming arrangements is recognized when the customer obtains control of the copper, gold and/or
silver metal and the Company has satisfied its performance obligations.
The Company identified significant financing components related to its streaming arrangements resulting
from a difference in the timing of the up-front consideration received and delivery of the promised goods.
Interest expense on deferred revenue is recognized in finance costs, or in mineral properties, plant and
equipment if directly attributable to the acquisition, construction and development of a qualifying asset.
The interest rate is determined based on the rate implicit in each streaming agreement at the date of
inception or acquisition.
The initial consideration received from the streaming arrangements is considered variable, subject to
changes in the total copper, gold and silver volumes to be delivered. Changes to variable consideration are
reflected in revenue in the consolidated statement of earnings.
(o) Share-based compensation
The Company grants share-based awards in the form of share options and share units to certain employees
in exchange for the provision of services. The share options and share units are equity-settled awards. The
Company determines the fair value of the awards on the date of grant. This fair value is charged to the
consolidated statement of earnings using a graded vesting attribution method over the vesting period of the
awards, with a corresponding credit to contributed surplus. When the share options or share units are
exercised, the applicable amounts of contributed surplus are transferred to share capital. At the end of the
reporting period, the Company updates its estimate of the number of awards that are expected to vest and
adjusts the total expense to be recognized over the vesting period. The Company also grants share-based
awards to non-employee Directors in the form of deferred share units (“DSUs”) in exchange for the
provision of services. DSUs are liability awards settled in cash and measured at the quoted market price at
the grant date. The corresponding liability is adjusted for changes in fair value at each subsequent reporting
date until the awards are settled. The fair value of the DSUs are expensed at the grant date and subsequent
changes to fair value are charged to the consolidated statement of earnings.
(p) Current and deferred income taxes
Income tax expense represents the sum of current and deferred tax. Current taxes payable is based on
taxable earnings for the year. Taxable earnings may differ from earnings before income tax as reported in
the consolidated statement of earnings because it may exclude items of income or expense that are taxable
or deductible in other years and it may further exclude items of income or expense that are never taxable or
deductible. The Company’s liability for current tax is calculated using tax rates that have been enacted or
substantively enacted at the balance sheet date.
Income tax assets and liabilities are offset when there is a legally enforceable right to offset the assets and
liabilities and when they relate to income taxes levied by the same tax authority on either the same taxable
entity or different taxable entities where there is an intention to settle the balance on a net basis.
Deferred tax is recognized on differences between the carrying amounts of assets and liabilities in the
financial statements and the corresponding tax bases used in the computation of taxable earnings. Deferred
tax liabilities are generally recognized for all taxable temporary differences and deferred tax assets are
recognized to the extent that it is probable that future taxable profits will be available against which
deductible temporary differences or tax loss carryforwards can be utilized. Such assets and liabilities are not
recognized if the temporary difference arises from goodwill or from the initial recognition (other than in a
business combination) of other assets and liabilities in a transaction that affects neither the taxable earnings
nor the accounting earnings. Deferred tax liabilities are recognized for taxable temporary differences arising
on investments in subsidiaries and investments in associates, except where the Company is able to control
the reversal of the temporary differences and it is probable that the temporary differences will not reverse
in the foreseeable future. The carrying amount of deferred tax assets is reviewed at each balance sheet date
LUNDIN MINING CORPORATION
Notes to consolidated financial statements
For the years ended December 31, 2023 and 2022
(Tabular amounts in thousands of US dollars, except for shares and per share amounts)
- 13 -
===== SIDA 78 =====
and reduced to the extent that it is no longer probable that sufficient taxable earnings will be available to
allow all or part of the asset to be recovered.
Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is
settled or the asset realized, based on tax rates and tax laws that have been enacted or substantively
enacted by the balance sheet date. Deferred tax is charged or credited to earnings, except when it relates to
items charged or credited directly to equity, in which case the deferred tax is reflected in equity.
(q) Earnings per share
Basic earnings per share is calculated using the weighted average number of common shares outstanding
during each reporting period. Diluted earnings per share is calculated assuming the proceeds from the
exercise of “in-the-money” share-based arrangements are used to purchase common shares at the average
market price during the period.
(r) Accounting for debt and equity investments
As part of the capital funding process for ongoing activities at the Josemaria Project, the Company purchases
debt and equity instruments via a third-party investment broker. The instruments are held for a pre-
determined period and then sold. The Company only purchases equity instruments with high trading
volumes and low volatilities. The instruments are designated as held-for-trading, and as such all changes in
the fair value of the underlying instruments are recognized through the consolidated statement of earnings.
Upon receipt of the transferred equity instruments, or in the case of bonds the sale, by the local investment
broker, the Company realizes an immediate foreign exchange impact. This foreign exchange impact is
incurred directly as a result of holding debt and equity instruments with the intention of trading, and as such
the foreign exchange impact is also recognized through the consolidated statement of earnings in Other
income.
(s) Financial instruments
Financial instruments are recognized on the consolidated balance sheet on the trade date, the date on
which the Company becomes a party to the contractual provisions of the financial instrument. The Company
classifies its financial instruments in the following categories:
Financial Assets at Amortized Cost
Assets that are held for collection of contractual cash flows where those cash flows represent solely
payments of principal and interest are measured at amortized cost. The Company intends to hold these
receivables until cash flows are collected. Receivables are recognized initially at fair value, net of any
transaction costs incurred and subsequently measured at amortized cost using the effective interest
method. The Company recognizes a loss allowance for expected credit losses on a financial asset that is
measured at amortized cost.
Financial Assets at Fair Value through Profit or Loss (“FVTPL”)
Financial assets measured at FVTPL are assets which do not qualify as financial assets at amortized cost or
those not designated in hedge relationships.
Provisionally priced trade receivables are measured at FVTPL as some or all of the cash flows are dependent
on commodity prices. These receivables are initially measured at their transaction price. Subsequent
changes to provisionally priced trade receivables are recorded in the consolidated statement of earnings as
revenue from other sources.
LUNDIN MINING CORPORATION
Notes to consolidated financial statements
For the years ended December 31, 2023 and 2022
(Tabular amounts in thousands of US dollars, except for shares and per share amounts)
- 14 -
===== SIDA 79 =====
Marketable securities, equity investments, and derivative assets not designated in hedge relationships are
classified as FVTPL. These financial assets are initially recognized at their fair value with changes to fair
values recognized in the consolidated statement of earnings.
Financial Liabilities at Amortized Cost
Financial liabilities are measured at amortized cost using the effective interest method, unless they are
required to be measured at FVTPL, or the Company has opted to measure them at FVTPL. Long-term debt is
recognized initially at fair value, net of any transaction costs incurred, and subsequently at amortized cost
using the effective interest method.
Financial Liabilities at FVTPL
Financial liabilities at FVTPL are liabilities which include embedded derivatives and cannot be classified as
amortized cost or derivative liabilities not designated in hedge relationships. Financial liabilities at FVTPL are
initially recognized at fair value with changes to fair values recognized in the consolidated statement of
earnings.
The Company derecognizes financial assets only when the contractual rights to cash flows from the financial
assets expire, or when it transfers the financial assets and substantially all of the associated risks and
rewards of ownership. Gains and losses on derecognition are generally recognized in the consolidated
statement of earnings.
The Company derecognizes financial liabilities only when its obligations under the financial liabilities are
discharged, cancelled or expelled. The difference between the carrying amount of the financial liability
derecognized and the consideration paid and payable, including any non-cash assets transferred or liabilities
assumed, is recognized in the consolidated statement of earnings.
The Company may enter into derivative instruments to mitigate exposures to commodity price and currency
exchange rate fluctuations, among other exposures. Unless the derivative instruments qualify for hedge
accounting, and management undertakes appropriate steps to designate them as such, they are classified as
financial assets or liabilities at FVTPL and recorded at their fair value with realized and unrealized gains or
losses arising from changes in the fair value recorded in the consolidated statement of earnings in the
period they occur. Fair values for derivative instruments are determined using valuation techniques. The
valuations use assumptions based on prevailing market conditions on the reporting date.
(iii) New standards and interpretations adopted January 1, 2023
Amendments to IAS 1 and IFRS Practice Statement 2 - Disclosure of Accounting Policies
In February 2021, the IASB issued amendments to IAS 1, Presentation of Financial Statements, and IFRS Practice
Statement 2. The amendments to IAS 1 require an entity to disclose its material accounting policies instead of its
significant accounting policies. The amendments include clarification on how an entity can determine material
accounting policies by applying the 'four-step materiality process' described in IFRS Practice Statement 2. The
amendments to IAS 1 are effective for annual periods beginning on or after January 1, 2023. The Company
adopted the amendments effective January 1, 2023, with no material impact to the consolidated financial
statements for 2023.
Amendments to IAS 12 - Deferred Tax Related to Assets and Liabilities Arising from a Single Transaction
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 can no longer be applied to transactions which give rise to equal
amounts of taxable and deductible temporary differences. The Company is to recognize 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
LUNDIN MINING CORPORATION
Notes to consolidated financial statements
For the years ended December 31, 2023 and 2022
(Tabular amounts in thousands of US dollars, except for shares and per share amounts)
- 15 -
===== SIDA 80 =====
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.
Amendments to IAS 12 - International Tax Reform - Pillar Two Model Rules
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.
Additionally, the amendments to IAS 12 require disclosure of the Company's current tax expense or income
related to Pillar Two income taxes and disclosure of known or reasonably estimable information regarding the
Company's exposure to Pillar Two income taxes. The disclosure amendments to IAS 12 are effective for annual
reporting periods beginning on or after January 1, 2023. The Company adopted the disclosure amendments
effective January 1, 2023, with no material impact to the consolidated financial statements for 2023.
(iv) Critical accounting estimates and judgements in applying the entity’s accounting policies
The preparation of consolidated financial statements in accordance with IFRS requires the use of certain critical
accounting estimates and judgements. These estimates and judgements are based on management’s best
knowledge of the relevant facts and circumstances taking into account previous experience, but actual results
may differ materially from the amounts included in the financial statements.
Areas where critical accounting estimates and judgements have the most significant effect on the amounts
recognized in the consolidated financial statements include:
Depreciation, depletion and amortization of mineral properties, plant and equipment - Mineral properties,
plant and equipment comprise a large component of the Company’s assets and as such, the depreciation,
depletion and amortization of these assets have a significant effect on the Company’s financial statements. Upon
commencement of commercial production, the Company depletes mineral property over the life of the mine
based on the depletion of the mine’s Proven and Probable Mineral Reserves. In the case of mining equipment or
other assets, if the useful life of the asset is shorter than the life of the mine, the asset is amortized over its
expected useful life.
Proven and Probable Mineral Reserves are determined based on a professional evaluation using accepted
international standards for the estimation of Mineral Reserves. The assessment involves geological and
geophysical studies, economic data and the reliance on a number of assumptions. The estimates of the Mineral
Reserves may change based on additional knowledge gained subsequent to the initial assessment. This may
include additional data available from continuing exploration, results from the reconciliation of actual mining
production data against the original Mineral Reserve estimates, or the impact of economic factors such as
changes in the price of commodities or the cost of components of production.
A change in the original estimate of Mineral Reserves would result in a change in the rate of depreciation,
depletion and amortization of the related mineral assets. The effect of a change in the estimates of Mineral
Reserves would have a relatively greater effect on the amortization of the current mining operations at Eagle
because of the relatively short mine life of this operation. A short mine life results in a high rate of amortization
and depreciation, and mineral assets may exist at these sites that have a useful life in excess of the revised life of
the related mine.
Revenue from Contracts with Customers – To determine the transaction price for streaming agreements, the
Company made estimates with respect to future production of the life of mine and R&R quantities. These
estimates are subject to variability and may have an impact on the timing and amount of revenue recognized and
may result in cumulative adjustments.
LUNDIN MINING CORPORATION
Notes to consolidated financial statements
For the years ended December 31, 2023 and 2022
(Tabular amounts in thousands of US dollars, except for shares and per share amounts)
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===== SIDA 81 =====
The Company exercised judgment in the identification of performance obligations under its contracts and the
allocation of the transaction price thereto. Specifically, the Company considers the performance obligations to be
the delivery of gold and silver in concentrate to offtakers and copper to streamers.
Valuation of long-term inventory - The Company carries its long-term inventory at the lower of production cost
and NRV. If the carrying value exceeds the net realizable amount, a write-down is required. The write-down may
be reversed in a subsequent period if the circumstances which caused it no longer exist.
The Company reviews NRV at least annually. In particular, for the NRV of long-term inventory, the Company
makes significant estimates in its use of a discounted NRV model related to future production plans, forecasted
commodity prices, foreign exchange rates, R&R quantities, future capital and production costs to complete,
estimates of recoverable copper in leach pads, and the discount rate. These estimates are subject to various risks
and uncertainties and may have an effect on the NRV estimate and the carrying value of the long-term inventory.
Valuation of mineral properties - The Company carries its mineral properties at cost less accumulated depletion
and any accumulated provision for impairment. The Company expenses exploration costs which are related to
specific projects until technical feasibility and commercial viability of extracting a mineral resource are
demonstrable. The costs of each property and related capitalized development expenditures are depleted over
the economic life of the property on a unit-of-production basis. Costs are charged to the consolidated statement
of earnings when a property is abandoned or when there is a recognized impairment in value.
The Company undertakes a review of the carrying values of mineral properties and related expenditures
whenever events or changes in circumstances indicate that their carrying values may exceed their estimated net
recoverable amounts determined by reference to estimated future operating results and discounted net cash
flows. An impairment loss is recognized when the carrying value of those assets is not recoverable. Where a
previous impairment has been recorded, the Company analyzes any reverse impairment indicators. Impairment
reversals are recognized in subsequent periods when there has been a change in the estimates used to determine
the asset’s recoverable amount since the last impairment loss was recognized. In undertaking this review,
management of the Company is required to make significant estimates of, amongst other things, future
production and sale volumes, metal prices, foreign exchange rates, R&R quantities, future capital and production
costs and reclamation costs to the end of the mine’s life. These estimates are subject to various risks and
uncertainties which may ultimately have an effect on the expected recoverability of the carrying values of the
mineral properties and related expenditures.
The Company, from time to time, acquires exploration and development properties. When a number of
properties are acquired in a portfolio, the Company must make a determination of the fair value attributable to
each of the properties within the total portfolio. When the Company conducts further exploration on acquired
properties, it may determine that certain of the properties do not support the fair values applied at the time of
acquisition. If such a determination is made, the property is written down which could have a material effect on
the consolidated balance sheet and consolidated statement of earnings.
Goodwill - The amount by which the purchase price of a business acquisition exceeds the fair value of identifiable
assets and liabilities acquired is recorded as goodwill. Goodwill is allocated to the CGUs acquired based on the
assessment of which CGU would be expected to benefit from the synergies of the acquisition. Estimates of
recoverable value may be impacted by changes in future metal prices, foreign exchange rates, production based
on estimated quantities of R&R, production and capital expenditures, pricing of in-situ mineral resources implied
by the market value of selected comparable transactions involving the sale of similar companies and mineral
properties, discount rates, and other factors that may be different from those used in determining fair value.
Changes in estimates could have a material impact on the carrying value of the goodwill. Management's
estimates of production based on quantities of R&R are based on information compiled by qualified persons
(management's experts).
Reclamation and other closure provisions - The Company incurs reclamation and other closure costs related to
its mining properties. The future obligations for mine closure activities are estimated by the Company using mine
closure plans or other similar studies which outline the activities to be undertaken to meet regulatory and
LUNDIN MINING CORPORATION
Notes to consolidated financial statements
For the years ended December 31, 2023 and 2022
(Tabular amounts in thousands of US dollars, except for shares and per share amounts)
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===== SIDA 82 =====
internal requirements. Since the obligations are dependent on the laws and regulations of the countries in which
the mines operate, they are regularly reviewed by management and external experts, and could change as a
result of amendments to the laws and regulations. Included in the estimated obligations are a number of
significant assumptions made by management in determining closure provisions. Accordingly, closure provisions
are more uncertain the further into the future the mine closure activities are to be carried out.
The Company’s policy for recording reclamation and other closure provisions is to establish provisions for future
mine closure costs based on the present value of the future cash flows required to satisfy the obligations. This
provision is updated as the estimate for future closure costs change. The amount of the present value of the
provision is added to the cost of the related mineral property and plant & equipment and depreciated over the
life of the mine. The provision is accreted to its future value over the life of mine through a charge to finance
costs.
Income taxes - Deferred tax assets and liabilities are determined based on differences between the financial
statement carrying values of assets and liabilities and their respective income tax bases (“temporary differences”)
and losses carried forward.
The determination of the ability of the Company to utilize tax loss carry-forwards and deductible temporary
differences to offset deferred tax liabilities requires management to exercise judgment and make certain
assumptions about the future performance of the Company. Management is required to assess whether it is
“probable” that the Company will benefit from these prior losses and other deductible temporary differences.
Changes in economic conditions, metal prices and other factors could result in revisions to the estimates of the
benefits to be realized or the timing of utilization of the losses.
Assessment of impairment and reverse impairment indicators - Management applies significant judgement in
assessing whether indicators of impairment or reversal of impairment exist for a CGU which would necessitate
impairment testing. Internal and external factors used by management to determine whether indicators exist
include, but are not limited to, significant changes in the use of the asset, commodity prices, foreign exchange
rates, the Company's market capitalization, capital and production forecasts, R&R quantities, and discount rates.
Contingent liabilities - Contingent liabilities are possible obligations that arise from past events which will be
confirmed by the occurrence or non-occurrence of future events. These contingencies are not recognized in the
consolidated financial statements when the obligation is not probable or if the obligation cannot be measured
reliably. The Company exercises significant judgment when determining the probability of the future outcome
and with regard to any required disclosure of contingencies, and measuring the liability is a significant estimate.
Caserones acquisition - 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
consideration over the fair value of the identifiable net assets acquired and liabilities assumed is recognized in
goodwill. The determination of fair values required management to make assumptions and estimates about
future events and judgements such as future metal prices, production based on estimated quantities of R&R,
production and capital expenditures, pricing of in-situ mineral resources implied by the market value of selected
comparable transactions involving the sale of similar companies and mineral properties, 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. Management's estimates of production based on
quantities of R&R are based on information compiled by qualified persons (management's experts).
LUNDIN MINING CORPORATION
Notes to consolidated financial statements
For the years ended December 31, 2023 and 2022
(Tabular amounts in thousands of US dollars, except for shares and per share amounts)
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===== SIDA 83 =====
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 from 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.
Final fair values of assets acquired and liabilities assumed:
Cash and cash equivalents $ 148,011
Trade and other receivables 253,769
Inventories 324,718
Restricted funds 4,196
Long-term inventory 84,705
Other non-current assets (a) 46,994
Mineral properties, plant and equipment 1,337,542
Deferred tax assets (b) 189,195
Total assets $ 2,389,130
Trade and other payables $ 253,786
Lease liability 257,655
Reclamation and other closure provisions 92,440
Other 2,051
Total liabilities $ 605,932
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
LUNDIN MINING CORPORATION
Notes to consolidated financial statements
For the years ended December 31, 2023 and 2022
(Tabular amounts in thousands of US dollars, except for shares and per share amounts)
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===== SIDA 84 =====
a. The Company assigned a fair value of $47.0 million at acquisition 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.
Management used a discounted cash flow model (net present value of expected future cash flows) and market based
approach to determine the fair value of the mine assets. Management used significant assumptions in the model such
as future metal prices, production based on estimated quantities of R&R, production and capital expenditures, pricing
of in-situ mineral resources implied by the market value of selected comparable transactions involving the sale of
similar companies and mineral properties, 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 19).
Revenue and net earnings contributed by Caserones since acquisition and included in the consolidated statement of
earnings were $601.8 million and $67.1 million, respectively. For the year ended December 31, 2023, $ 39.9 million of
fair value adjustments to metal inventories acquired 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 year ended
December 31, 2023 would show pro forma consolidated revenue of approximately $4,168.5 million and consolidated
net earnings of approximately $438.1 million.
LUNDIN MINING CORPORATION
Notes to consolidated financial statements
For the years ended December 31, 2023 and 2022
(Tabular amounts in thousands of US dollars, except for shares and per share amounts)
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===== SIDA 85 =====
4. CASH AND CASH EQUIVALENTS
Cash and cash equivalents are comprised of the following:
December 31, 2023 December 31, 2022
Cash $ 197,537 $ 158,153
Short-term deposits 71,256 33,234
$ 268,793 $ 191,387
5. TRADE AND OTHER RECEIVABLES
Trade and other receivables are comprised of the following:
December 31, 2023 December 31, 2022
Trade receivables $ 643,722 $ 430,734
Value added tax 80,088 65,028
Prepaid expenses 48,901 53,767
Other receivables 56,160 26,649
$ 828,871 $ 576,178
The Company does not have any significant balances that are past due nor any significant expected credit losses. The
Company's credit risk is discussed in Note 27.
The fair value of trade and other receivables is disclosed in Note 23.
The carrying amounts of trade and other receivables are mainly denominated as follows: $678.7 million, CLP 78.0
billion, €22.9 million, C$22.4 million, SEK 114.1 million, BRL 34.5 million, and ARS 341.2 million as at December 31,
2023 (2022 - $435.1 million, CLP 65.7 billion, €23.1 million, C$15.6 million, SEK 69.0 million, BRL 102.8 million, and ARS
367.7 million).
LUNDIN MINING CORPORATION
Notes to consolidated financial statements
For the years ended December 31, 2023 and 2022
(Tabular amounts in thousands of US dollars, except for shares and per share amounts)
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===== SIDA 86 =====
6. INVENTORIES
Inventories are comprised of the following:
December 31, 2023 December 31, 2022
Materials and supplies $ 313,966 $ 184,720
Ore stockpiles and dump leach 207,602 69,781
Finished goods - concentrate stockpiles 72,515 42,209
Finished goods - copper cathode 5,324 —
$ 599,407 $ 296,710
Long-term Inventories are comprised of the following:
December 31, 2023 December 31, 2022
Ore stockpiles at Candelaria $ 427,075 $ 394,240
Ore stockpiles at Chapada 270,570 247,637
Dump leach at Caserones 99,952 —
$ 797,597 $ 641,877
The Company recognized a net realizable value write-down in the Chapada long-term ore stockpiles of $nil (December
31, 2022 - $66.8 million), with $nil of the write-down included in depreciation, depletion and amortization (December
31, 2022 - $4.2 million).
7. OTHER NON-CURRENT ASSETS
Other non-current assets are comprised of the following:
December 31, 2023 December 31, 2022
Caserones purchase option (Note 3) $ 44,438 $ —
Marketable securities 14,268 12,075
Other 8,384 7,960
$ 67,090 $ 20,035
LUNDIN MINING CORPORATION
Notes to consolidated financial statements
For the years ended December 31, 2023 and 2022
(Tabular amounts in thousands of US dollars, except for shares and per share amounts)
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===== SIDA 87 =====
8. MINERAL PROPERTIES, PLANT AND EQUIPMENT
Mineral properties, plant and equipment are comprised of the following:
Cost
Mineral
properties
Plant and
equipment
Assets under
construction1
Development
project2
Software
intangible
assets Total
As at December 31, 2021 $ 5,279,143 $ 3,441,171 $ 342,592 $ 6,631 $ 14,678 $ 9,084,215
Josemaria acquisition — 22,233 — 646,605 — 668,838
Additions 322,465 92,649 277,249 228,462 14,270 935,095
Disposals and transfers 93,105 259,430 (369,687) (5,279) 4,041 (18,390)
Effects of foreign exchange (147,790) (63,306) (14,098) — (363) (225,557)
As at December 31, 2022 5,546,923 3,752,177 236,056 876,419 32,626 10,444,201
Caserones Acquisition
(Note 3) — 1,243,432 94,110 — — 1,337,542
Additions 280,100 96,281 406,540 253,648 82 1,036,651
Disposals and transfers 117,462 178,080 (409,927) — 30,587 (83,798)
Effects of foreign exchange 70,269 38,027 3,482 — 274 112,052
As at December 31, 2023 $ 6,014,754 $ 5,307,997 $ 330,261 $ 1,130,067 $ 63,569 $ 12,846,648
Accumulated depreciation,
depletion and amortization
Mineral
properties
Plant and
equipment
Assets under
construction1
Development
project2
Software
intangible
assets Total
As at December 31, 2021 $ 2,620,196 $ 1,405,084 $ — $ — $ 8,036 $ 4,033,316
Depreciation 308,831 252,003 — — 3,829 564,663
Disposals and transfers (79) (5,461) — — (119) (5,659)
Effects of foreign exchange (93,517) (30,187) — — (101) (123,805)
As at December 31, 2022 2,835,431 1,621,439 — — 11,645 4,468,515
Depreciation 313,900 346,669 — — 5,270 665,839
Disposals and transfers — (74,790) — — — (74,790)
Effects of foreign exchange 44,744 17,063 — — 108 61,915
As at December 31, 2023 $ 3,194,075 $ 1,910,381 $ — $ — $ 17,023 $ 5,121,479
Net book value
Mineral
properties
Plant and
equipment
Assets under
construction1
Development
project2
Software
intangible
assets Total
As at December 31, 2022 $ 2,711,492 $ 2,130,738 $ 236,056 $ 876,419 $ 20,981 $ 5,975,686
As at December 31, 2023 $ 2,820,679 $ 3,397,616 $ 330,261 $ 1,130,067 $ 46,546 $ 7,725,169
¹ Represent assets under construction at the Company's operating mine sites which are currently non-depreciable.
2 Assets relate to the Josemaria Project which are currently non-depreciable.
During the year ended December 31, 2023, the Company completed the Caserones acquisition (Note 3) acquiring
$1,337.5 million of plant and equipment and assets under construction.
On April 28, 2022, the Company completed the Josemaria Resources Inc. acquisition acquiring $668.8 million of
mineral properties, plant and equipment related to the Josemaria Project. The Company began to capitalize the
Josemaria Project development costs during the fourth quarter of 2022.
LUNDIN MINING CORPORATION
Notes to consolidated financial statements
For the years ended December 31, 2023 and 2022
(Tabular amounts in thousands of US dollars, except for shares and per share amounts)
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===== SIDA 88 =====
During the year ended December 31, 2023, the Company capitalized $20.4 million (December 31, 2022 - $4.4 million)
of finance costs to assets under construction and the Josemaria Project at a weighted average interest rate of 6.2%
(December 31, 2022 - 5.5%).
During the year ended December 31, 2023, the Company capitalized $222.4 million (December 31, 2022 - $253.4
million) of deferred stripping costs to mineral properties. The depreciation expense related to deferred stripping for
the year ended December 31, 2023, was $109.0 million (December 31, 2022 - $123.0 million). Included in the mineral
properties balance at December 31, 2023 is $277.5 million (December 31, 2022 - $681.7 million) related to deferred
stripping at Candelaria and Caserones, which is currently non-depreciable.
The Company's software intangible assets relate primarily to a global, distinct instance of an Enterprise Resource
Planning ("ERP") system, and related configuration and customization costs incurred in preparing the intangible asset
for its intended use. These assets have useful lives of 8 years or less, and are amortized on a straight-line basis.
The Company leases various assets including power line infrastructure, buildings and storage facilities, rail cars,
vehicles, machinery and equipment. The following table summarizes the changes in right-of-use assets within plant
and equipment:
Net book value
As at December 31, 2021 $ 27,597
Josemaria acquisition 32
Additions 22,071
Depreciation (21,288)
Disposals (75)
Effects of foreign exchange (414)
As at December 31, 2022 27,923
Caserones Acquisition (Note 3) 257,655
Additions 54,809
Depreciation (51,391)
Disposals (5,363)
Effects of foreign exchange 364
As at December 31, 2023 $ 283,997
9. GOODWILL
The Company recognized goodwill on the acquisition of Chapada, Neves-Corvo, and Ojos del Salado (“Ojos”). Goodwill
is allocated to the following CGUs:
Chapada Neves-Corvo Ojos¹ Total
Balance at December 31, 2021 $ 134,284 $ 98,008 $ 10,713 $ 243,005
Effects of foreign exchange — (5,711) — (5,711)
Balance at December 31, 2022 134,284 92,297 10,713 237,294
Effects of foreign exchange — 3,322 — 3,322
Balance at December 31, 2023 $ 134,284 $ 95,619 $ 10,713 $ 240,616
¹ Ojos is included in the Candelaria reporting segment.
The Company performs an impairment assessment annually, or more frequently if there are impairment indicators, for
the carrying amount of its CGUs where goodwill is allocated.
The recoverable value of a CGU is determined using the FVLCD method applied by using a discounted cash flow model
based on life-of-mine financial plans, and a market-based approach. Significant assumptions used by management to
LUNDIN MINING CORPORATION
Notes to consolidated financial statements
For the years ended December 31, 2023 and 2022
(Tabular amounts in thousands of US dollars, except for shares and per share amounts)
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===== SIDA 89 =====
determine the recoverable amount include future metal prices, production based on estimated quantities of R&R,
production and capital expenditures, foreign exchange rates, pricing of in-situ mineral resources implied by the market
value of selected comparable transactions involving the sale of similar companies and mineral properties, and discount
rates.
For the 2023 assessment, future metal prices and foreign exchange rates used in the discounted cash flow models are
based on market consensus estimates observed during the fourth quarter of 2023. The valuation of recoverable
amount is most sensitive to changes in metal prices, exchange rates, discount rates and pricing of in-situ mineral
resources.
Production costs and capital expenditures included in the discounted cash flow models are based on operating plans
which consider past and estimated future performance.
Inputs utilized in the discounted cash flow models were based on level 3 fair value measurements (Note 23), which
were not based on observable market data. The R&R were based on the Company’s last published estimate dated
December 31, 2023. Incorporated in the FVLCD are fair value estimates developed by the Company for mineral
resources not captured in the cash flow projections model. These estimates are valued using third-party market
information, which includes pricing of in-situ mineral resources implied by the market value of selected comparable
transactions involving the sale of similar companies and mineral properties.
Chapada
For the Chapada CGU impairment review, the Company used a FVLCD model (level 3 measurement). For the years
ended December 31, 2023 and 2022, the Company determined that the recoverable amount of the Chapada CGU was
higher than its carrying value, and therefore no impairment was recognized.
Sensitivity analysis was performed on the cash flow model for Chapada. At December 31, 2023, impairment would
result from a decrease in the long-term copper price to approximately $3.70/lb, with all other inputs unchanged.
Key assumptions for Chapada
2023 2022
Copper price $/lb 3.80 - 4.20 3.75 - 3.85
Gold price $/oz 1,750 - 2,000 1,700 - 1,750
After-tax discount rate 7.5% 8.0%
BRL/$ exchange rate 5.00 5.00 - 5.20
Life of mine 28 years 29 years
Neves-Corvo
For the Neves-Corvo CGU impairment review, the Company used a FVLCD model (level 3 measurement). For the years
ended December 31, 2023 and 2022, the Company determined that the recoverable amount of the Neves-Corvo CGU
was higher than its carrying value, and therefore no impairment was recognized.
Sensitivity analysis was performed on the cash flow model for Neves-Corvo. Changes in key inputs such as metal prices
(+/-5%) and pricing of in-situ mineral resources (+/-5%) did not have a material impact on the result of the Company’s
goodwill impairment assessment.
LUNDIN MINING CORPORATION
Notes to consolidated financial statements
For the years ended December 31, 2023 and 2022
(Tabular amounts in thousands of US dollars, except for shares and per share amounts)
- 25 -
===== SIDA 90 =====
Key assumptions for Neves-Corvo
2023 2022
Copper price $/lb 3.80 - 4.20 3.75 - 3.85
Zinc price $/lb 1.15 - 1.20 1.15 - 1.30
After-tax discount rate 9.0% 9.0%
$/€ exchange rate 1.05 - 1.15 1.03 - 1.10
Life of mine 10 years 10 years
Ojos
For the Ojos CGU impairment review, the Company used a FVLCD model (level 3 measurement). For the years ended
December 31, 2023 and 2022, the Company determined that the recoverable amount of the Ojos CGU was higher than
its carrying value, and therefore no impairment was recognized.
10. TRADE AND OTHER PAYABLES
Trade and other payables are comprised of the following:
December 31, 2023 December 31, 2022
Trade payables $ 393,829 $ 315,948
Unbilled goods and services 176,444 122,390
Employee benefits payable 114,514 88,086
Sinkhole provision 29,827 38,000
Royalties payable 23,773 16,283
Prepayment from customers 21,963 389
Pricing provisions on concentrate sales 13,201 8,484
Deferred consideration, current portion (Note 3) 10,000 —
Other 22,212 23,385
$ 805,763 $ 612,965
Included in pricing provisions on concentrate sales are balances owing to customers and provisions arising from
forward market price adjustments.
The sinkhole provision relates to expected remediation costs and potential fines directly related to the sinkhole near
the Company's Ojos del Salado operations.
The deferred consideration relates to the current portion of the remaining deferred cash consideration arising from
the Caserones Acquisition (Note 3), payable in installments over the next six years. The long-term portion of $ 106.2
million has been reported in Other Long-Term Liabilities.
LUNDIN MINING CORPORATION
Notes to consolidated financial statements
For the years ended December 31, 2023 and 2022
(Tabular amounts in thousands of US dollars, except for shares and per share amounts)
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===== SIDA 91 =====
11. DEBT AND LEASE LIABILITIES
Debt and lease liabilities are comprised of the following:
December 31, 2023 December 31, 2022
Revolving credit facility (a) $ 245,084 $ 13,730
Term loan (b) 798,542 —
Candelaria and Chapada term loans (c) 48,850 127,400
Lease liabilities (d) 277,208 27,166
Commercial paper (e) 116,025 26,665
Line of credit 99 2,367
Debt and lease liabilities 1,485,808 197,328
Less: current portion 212,646 170,149
Long-term portion $ 1,273,162 $ 27,179
The changes in debt and lease liabilities are comprised of the following:
Leases Debt Total
As at December 31, 2021 $ 25,878 $ 5,125 $ 31,003
Josemaria acquisition 38 47,000 47,038
Additions 21,198 282,938 304,136
Payments (21,651) (160,824) (182,475)
Disposals (26) — (26)
Interest 1,434 — 1,434
Financing fee amortization — 656 656
Financing fee reclassification — (4,926) (4,926)
Effects of foreign exchange 295 193 488
As at December 31, 2022 27,166 170,162 197,328
Caserones Acquisition (Note 3) 257,655 — 257,655
Additions 54,392 2,490,597 2,544,989
Payments (59,841) (1,451,804) (1,511,645)
Disposals (6,221) — (6,221)
Interest 12,521 — 12,521
Financing fee amortization — 846 846
Deferred financing fee — (2,950) (2,950)
Effects of foreign exchange (8,464) 1,749 (6,715)
As at December 31, 2023 277,208 1,208,600 1,485,808
Less: current portion 47,672 164,974 212,646
Long-term portion $ 229,536 $ 1,043,626 $ 1,273,162
LUNDIN MINING CORPORATION
Notes to consolidated financial statements
For the years ended December 31, 2023 and 2022
(Tabular amounts in thousands of US dollars, except for shares and per share amounts)
- 27 -
===== SIDA 92 =====
a) The Company has a revolving credit facility of $1,750.0 million. On April 26, 2023, the credit facility was
amended, extending the term by one year to April 2028 and bearing interest on drawn funds at rates of Term
Secured Overnight Financing Rate (“Term SOFR”) + Credit Spread Adjustment (“CSA”) of 0.10% + 1.45% to Term
SOFR + 0.10% + 2.50%, depending on the Company’s net leverage ratio. The revolving credit facility is
unsecured, save and except for a charge over certain assets in the USA, and is subject to customary covenants.
During the year ended December 31, 2023, the Company drew down $1,209.0 million (December 31, 2022 -
$50.0 million), and repaid $977.0 million (December 31, 2022 - $32.0 million). Of the $1,209.0 million drawn
down, $800.0 million was drawn in July 2023 to fund the upfront cash consideration for the Caserones
Acquisition (Note 3) and was refinanced thereafter following the closing of the term loan . As at December 31,
2023, a principal balance of $250.0 million (December 31, 2022 - $18.0 million) was outstanding, with
unamortized deferred financing fees of $4.9 million (December 31, 2022 - $4.3 million) netted against
borrowings.
b) 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 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 the term loan to refinance the drawdown under the existing $1,750.0 million revolving credit
facility used to fund the upfront cash consideration of $796.6 million for the Caserones acquisition (Note 3). As
at December 31, 2023, a principal balance of $800.0 million was outstanding, with unamortized deferred
financing fees of $1.5 million netted against borrowings.
c) During 2022, Compañia Contractual Minera Candelaria S.A. ("Candelaria") obtained an unsecured fixed term
loan in the amount of $50.0 million, which accrued interest at a rate of 6.13% per annum and was fully repaid
on December 20, 2023. As at December 31, 2023, a principal balance of $nil (December 31, 2022 - $50.0
million) was outstanding. In February 2024, Candelaria obtained an additional unsecured fixed term loan in the
amount of $50.0 million, which accrues interest at a rate of 5.67% per annum and matures in May 2024.
Mineração Maracá Indústria e Comércio S/A (“Chapada”), a subsidiary of the Company which owns the
Chapada mine, obtained a series of unsecured fixed term loans totalling $ 205.7 million during the year ended
December 31, 2023 (December 31, 2022 - $101.4 million). Chapada repaid $234.3 million of the outstanding
term loans during the year ended December 31, 2023 (December 31, 2022 - $24.0 million).
As at December 31, 2023, there were sixteen term loans outstanding at Chapada totalling $48.9 million
(December 31, 2022 - nine term loans totalling $77.4 million). These outstanding term loans accrue interest at
rates ranging from 6.80% to 7.15% per annum with interest payable upon maturity. The maturity dates range
from March to April 2024.
d) Lease liabilities relate to leases on power line infrastructure, buildings and storage facilities, rail cars, vehicles,
machinery and equipment which have remaining lease terms of one to fourteen years and interest rates of
0.8% - 10.4% over the terms of the leases.
Certain leases relating to mine development, exploration, production and transportation equipment contain
variable lease expenses based on tonnage or drilling metres. Variable lease expense for the year ended
December 31, 2023 was $181.7 million (2022 - $173.9 million). The Company has short-term leases related to
mining equipment and office space. Short-term lease expense for the period ended December 31, 2023 was
$6.9 million (2022 - $3.0 million).
LUNDIN MINING CORPORATION
Notes to consolidated financial statements
For the years ended December 31, 2023 and 2022
(Tabular amounts in thousands of US dollars, except for shares and per share amounts)
- 28 -
===== SIDA 93 =====
e) Sociedade Mineira de Neves-Corvo, S.A. (“Somincor”), a subsidiary of the Company which owns the Neves-
Corvo mine, entered into a commercial paper program ("Commercial Paper Program 1") in September 2022
which matures in May 2025 and is unsecured. The $27.6 million (€25.0 million) program bears interest on
drawn funds at EURIBOR+0.50%. In June and July 2023, Somincor entered into a second and third commercial
paper program ("Commercial Paper Program 2" and "Commercial Paper Program 3"), respectively . Commercial
Paper Program 2 is unsecured and has a borrowing capacity of $55.3 million (€50.0 million), matures in June
2028, and bears interest on drawn funds at EURIBOR+0.50%. Commercial Program 3 is unsecured and has a
borrowing capacity of $ 44.2 million (€40.0 million), matures in July 2028, and bears interest on drawn funds at
EURIBOR+0.30%.
During the years ended December 31, 2023 and 2022, Somincor made the following withdrawals and payments
from the respective programs:
Year ended
December 31,
2023 2022
Commercial Paper Program 1
Withdrawals $86,060
(€80 million)
$81,538
(€80.0 million)
Payments $ 86,024
(€80 million)
$55.685
(€55.0 million)
Commercial Paper Program 2
Withdrawals $97,689
(€90 million) —
Payments $43,272
(€40 million) —
Commercial Paper Program 3
Withdrawals $92,120
(€85 million) —
Payments $58,914
(€55 million) —
As at December 31, 2023 , Commercial Paper Program 1, Commercial Paper Program 2, and Commercial Paper
Program 3 remain drawn at $27.6 million (€25 million), $55.3 million (€50.0 million), and $33.2 million (€30.0
million), respectively.
The schedule of undiscounted lease payment and debt obligations is as follows:
Leases Debt Total
Less than one year $ 66,970 $ 164,974 $ 231,944
One to five years 180,036 1,050,000 1,230,036
More than five years 153,944 — 153,944
Total undiscounted obligations as at December 31, 2023 $ 400,950 $ 1,214,974 $ 1,615,924
LUNDIN MINING CORPORATION
Notes to consolidated financial statements
For the years ended December 31, 2023 and 2022
(Tabular amounts in thousands of US dollars, except for shares and per share amounts)
- 29 -
===== SIDA 94 =====
12. DEFERRED REVENUE
The following table summarizes the changes in deferred revenue:
As at December 31, 2021 $ 693,467
Recognition of revenue (73,733)
Variable consideration adjustment 3,492
Finance costs 37,621
Effects of foreign exchange (6,741)
As at December 31, 2022 654,106
Recognition of revenue (72,743)
Variable consideration adjustment 3,018
Finance costs 36,004
Effects of foreign exchange 2,845
As at December 31, 2023 623,230
Less: current portion 87,867
Long-term portion $ 535,363
Consideration received under the Company’s gold, silver and copper streaming agreements is deemed to be variable
and can be subject to cumulative adjustments when the contractual volume to be delivered changes. As a result of
changes to the Company’s R&R, adjustments have been made to the deferred revenue liability for 2022 and 2023
which were recognized through revenue and finance costs.
For the year ended December 31, 2023, the Company recognized finance costs at a weighted average rate of 5.5%
(2022 - 5.5%) on the deferred revenue balances.
a) Candelaria
The Company entered into a stream agreement with Franco-Nevada Corporation (“FN”), whereby the Company
has agreed to sell 68% of all the gold and silver contained in production from Candelaria until 720,000 oz of gold
and 12 million oz of silver have been delivered. Thereafter, FN will be entitled to purchase 40% of the gold and
silver production from Candelaria. The Company received an up-front payment of $648 million which is being
recognized as gold and silver are delivered to FN under the contract.
For each ounce of gold and silver delivered, FN makes payments equal to the lesser of the prevailing market prices
and approximately $425/oz of gold and $4.24/oz of silver (2022 - $420/oz of gold and $4.20/oz of silver), subject to
a 1% annual inflationary adjustment. In 2023, approximately 56,000 oz of gold and 889,000 oz of silver (2022 -
approximately 55,000 oz of gold and 983,000 oz of silver) were subject to the terms of the streaming agreement.
The deferred revenue balance as at December 31, 2023 at Candelaria is $409.7 million (December 31, 2022 -
$435.5 million).
b) Chapada mine
The Company assumed the following streaming agreements with Sandstorm Gold Ltd. (“Sandstorm”) and Altius
Minerals Corporation (“Altius”) when the Chapada mine was acquired:
Sandstorm is entitled to purchase the lesser of 3.9 million pounds (“Mlbs”) or 4.2% of the payable copper produced
annually from Chapada at 30% of the market price. The percentage of payable copper is subject to two reduction
thresholds. Once an aggregate of 39 Mlbs has been delivered, the percentage of payable copper reduces to 3.0%.
Upon delivery of 50 Mlbs of copper in aggregate, the percentage of payable copper reduces to 1.5% for the
LUNDIN MINING CORPORATION
Notes to consolidated financial statements
For the years ended December 31, 2023 and 2022
(Tabular amounts in thousands of US dollars, except for shares and per share amounts)
- 30 -
===== SIDA 95 =====
remaining life of mine. In 2023, approximately 3.5 Mlbs (2022 – 3.9 Mlbs) were delivered under this agreement.
The deferred revenue is being recognized as copper is delivered to Sandstorm under the contract.
Altius is entitled to purchase 3.7% of the payable copper produced from Chapada at 30% of the market price. The
percentage of payable copper is subject to two reduction thresholds. In the event of a specified expansion at
Chapada, the percentage of payable copper reduces to 2.65%. Also, upon delivery of 75 Mlbs of copper in
aggregate, the percentage of payable copper reduces to 1.5% for the remaining life of mine. In 2023,
approximately 3.4 Mlbs (2022 – 3.7 Mlbs) were delivered under this agreement. The deferred revenue is being
recognized as copper is delivered to Altius under the contract.
The deferred revenue balance as at December 31, 2023 at Chapada is $146.2 million (December 31, 2022 - $154.1
million).
c) Neves-Corvo mine
The Company has an agreement to deliver all of the silver contained in concentrate produced from its Neves-Corvo
mine to Wheaton Precious Metals Corporation (“Wheaton”). The Company received an up-front payment which
was deferred and is being recognized in revenue as silver is delivered under the contract. The Company receives
the lesser of a fixed payment (subject to annual inflationary adjustments) and the market price per ounce of silver.
During 2023, the Company received approximately $4.46/oz of silver ( 2022 - $4.42/oz). The agreement extends to
the earlier of September 2057 and the end of mine life.
The deferred revenue balance as at December 31, 2023 at Neves-Corvo is $26.8 million (December 31, 2022 - $25.1
million).
d) Zinkgruvan mine
The Company has an agreement with Wheaton to deliver all of the silver contained in concentrate from its
Zinkgruvan mine. The Company received an up-front payment which was deferred and is being recognized in
revenue as silver is delivered under the contract and receives the lesser of a fixed payment (subject to annual
inflationary adjustments) and the market price per ounce of silver. During 2023, the Company received
approximately $4.60/oz of silver (2022 - $4.53/oz). The agreement includes a guaranteed minimum delivery of 40.0
million oz of silver over an initial 25 year term. If at the end of the initial term the Company has not met its
minimum obligation, it must pay $1.00 for each ounce of silver not delivered. An aggregate total of approximately
33.3 million oz has been delivered since the inception of the contract in 2004.
The deferred revenue balance as at December 31, 2023 at Zinkgruvan is $40.5 million (December 31, 2022 - $39.4
million).
LUNDIN MINING CORPORATION
Notes to consolidated financial statements
For the years ended December 31, 2023 and 2022
(Tabular amounts in thousands of US dollars, except for shares and per share amounts)
- 31 -
===== SIDA 96 =====
13. RECLAMATION AND OTHER CLOSURE PROVISIONS
Reclamation and other closure provisions relating to the Company's mining operations are as follows:
Reclamation
provisions
Other closure
provisions Total
Balance, December 31, 2021 $ 406,966 $ 39,089 $ 446,055
Accretion 14,344 — 14,344
Changes in estimate 45,766 11,374 57,140
Changes in discount rate (43,667) — (43,667)
Payments (11,175) (4,728) (15,903)
Effects of foreign exchange (11,214) (907) (12,121)
Balance, December 31, 2022 401,020 44,828 445,848
Acquisition of Caserones (Note 3) 92,440 — 92,440
Accretion 23,169 — 23,169
Changes in estimate (30,507) 5,572 (24,935)
Changes in discount rate 14,584 — 14,584
Payments (8,842) (1,649) (10,491)
Effects of foreign exchange 5,281 (1,720) 3,561
Balance, December 31, 2023 497,145 47,031 544,176
Less: current portion 9,119 5,323 14,442
Long-term portion $ 488,026 $ 41,708 $ 529,734
The Company expects these liabilities to be settled between 2024 and 2110. The reclamation provisions are
discounted using current market pre-tax discount rates which range from 2.0% to 10.4% (December 31, 2022 - 2.0% to
13.5%).
14. SHARE CAPITAL
(a) Authorized and issued shares
Authorized share capital consists of an unlimited number of voting common shares with no par value and one
special non-voting share with no par value. As at December 31, 2023, there were 773,667,789 fully paid voting
common shares issued (2022 - 770,746,531 shares). The special non-voting share is not issued and outstanding.
(b) Share units
The Company has a Share Unit Plan (“SU Plan”) which provides for share unit awards (“SUs”) to be granted by the
Board of Directors to certain employees of the Company. The maximum number of SUs that are issuable under
the SU Plan is 14,000,000. An SU is a unit representing the right to receive one common share (subject to
adjustments) issued from treasury.
The number and terms of SUs awarded will be determined by the Board of Directors based on the closing market
price on the TSX of the Company’s common shares on the date of the grant. The Company uses the fair value
method of accounting for the recording of SU grants to employees and officers.
i) Time-vesting SUs
During 2023, the Company granted 795,903 time-vesting SUs to employees and officers that expire in 2026.
These SUs vest three years from the grant date with the number of SUs being fixed, and with no vesting
conditions other than service. The fair value of the time-vesting SUs are based on the market value of the
LUNDIN MINING CORPORATION
Notes to consolidated financial statements
For the years ended December 31, 2023 and 2022
(Tabular amounts in thousands of US dollars, except for shares and per share amounts)
- 32 -
===== SIDA 97 =====
shares on the date of the grant and an estimated forfeiture rate of approximately 11% (2022 - 11%). The
weighted average fair value per time-vesting SU granted during 2023 was C$8.23 (2022 - C$11.38). The
Company incurred share-based compensation related expenditures of $2.9 million for 2023 (2022 - $3.1
million) with a corresponding credit to contributed surplus related to time-vesting SUs. As at December 31,
2023, there was $3.8 million (2022 - $2.6 million) of unamortized stock-based compensation expense
related to time-vesting SUs.
ii) Performance-vesting SUs
During 2023, the Company granted 584,900 performance-vesting SUs to officers that expire in 2026. These
SUs vest three years from the grant date with the number of SUs being variable, which can range from zero
to 1,169,800 contingent upon achieving applicable performance vesting conditions. The fair value of the
performance-vesting SUs are based on a Monte Carlo model and an estimated forfeiture rate of
approximately 11% (2022 - 11%). The weighted average fair value per performance-vesting SU granted
during 2023 was C$7.94 (2022 - C$ 13.52). The Company incurred share-based compensation related
expenditures of $1.3 million for 2023 (2022 - $0.3 million) with a corresponding credit to contributed
surplus related to performance-vesting SUs. As at December 31, 2023, there was $2.7 million (2022 - $0.7
million) of unamortized stock-based compensation expense related to performance-vesting SUs.
During 2023, 722,822 common shares (2022 - 1,222,797) were issued as a result of SUs being vested.
(c) Stock options
The Company’s Stock Option Plan provides for stock option awards to be granted by the Board of Directors to
certain employees of the Company. The term of any stock options granted under the Stock Option Plan may not
exceed seven years from the date of grant. The maximum number of stock options that are issuable under the
Stock Option Plan is 42,000,000. The vesting requirements are established by the Board of Directors.
The Company uses the fair value method of accounting for the recording of stock options. Under this method, the
Company incurred share-based compensation related expenditures of $3.6 million for 2023 (2022 - $4.4 million)
with a corresponding credit to contributed surplus.
During 2023, the Company granted 1,918,733 stock options to employees and officers that expire in 2030. The
stock options vest over three years from the grant date. The Black-Scholes option pricing model used to
determine the fair value of the stock options at the date of the grant assumed a dividend of $0.36/share, risk-free
interest rate of 3.09% to 3.96% (2022 - 1.59% to 2.87%), expected life of 4.4 years (2022 - 4.4 years) and expected
price volatility of 47% to 48% (2022 - 47%). Volatility is determined using the historical daily volatility over the
expected life of the options. A forfeiture rate of approximately 11% was applied (2022 - 11%). The weighted
average fair value per stock option granted during 2023 was C$2.51 (2022 - C$3.47). As at December 31, 2023,
there was $1.9 million of unamortized stock-based compensation expense (2022 - $2.1 million) related to stock
options.
During 2023, 2,044,059 common shares ( 2022 - 3,202,107) were issued as a result of stock options being
exercised.
LUNDIN MINING CORPORATION
Notes to consolidated financial statements
For the years ended December 31, 2023 and 2022
(Tabular amounts in thousands of US dollars, except for shares and per share amounts)
- 33 -
===== SIDA 98 =====
(d) Deferred share units
During the year ended December 31, 2023, the Company adopted a Deferred Share Unit Plan effective January 1,
2024 under which DSUs are granted by the Board of Directors quarterly to eligible non-employee D irectors. The
DSUs will accumulate and will be settled in cash at the time of each eligible Director’s departure or at the
termination of the DSU Plan. A director will receive a cash payment equal to the market value of such DSUs plus
accrued dividend equivalents as of the settlement date. At December 31, 2023, there were no DSUs outstanding
as there had been no grants issued under the plan.
(e) Replacement options
During 2022, the Company issued 2,513,866 Replacement Options upon closing of the Josemaria acquisition.
During 2023, 154,377 common shares ( 2022 - 2,064,037) were issued as a result of Replacement Options being
exercised.
The continuity of share-based payments outstanding is as follows:
Number of SUs
Number of
Replacement
Options
Weighted
average
exercise price
(C$)
Number of
options
Weighted
average
exercise price
(C$)
Outstanding, December 31, 2021 2,320,750 — — 8,652,925 8.82
Granted 507,579 — — 1,830,020 11.54
Josemaria acquisition — 2,513,866 4.99 — —
Forfeited (292,476) (14,598) 5.05 (821,841) 11.08
Exercised (1,222,797) (2,064,037) 4.97 (3,202,107) 7.25
Outstanding, December 31, 2022 1,313,056 435,231 5.09 6,458,997 10.08
Granted 1,380,803 — — 1,918,733 8.06
Forfeited (150,096) — — (824,869) 11.53
Exercised (722,822) (154,377) 5.42 (2,044,059) 7.04
Outstanding, December 31, 2023 1,820,941 280,854 4.91 5,508,802 10.26
The following table summarizes options outstanding as at December 31, 2023:
Outstanding Options Exercisable Options
Range of exercise prices (C$)
Number of
Options
Outstanding
Weighted
Average
Remaining
Contractual
Life (Years)
Weighted
Average
Exercise
Price (C$)
Number of
Options
Exercisable
Weighted
Average
Remaining
Contractual
Life (Years)
Weighted
Average
Exercise
Price (C$)
4 to 6.99 328,500 0.6 6.57 328,500 0.6 6.57
7 to 9.99 2,590,731 4.5 7.69 869,498 1.1 7.09
10 to 12.99 1,245,337 4.7 11.54 544,513 4.1 11.54
13 to 15.99 1,344,234 3.8 14.92 1,054,370 3.7 14.91
5,508,802 4.1 10.26 2,796,881 2.6 10.84
LUNDIN MINING CORPORATION
Notes to consolidated financial statements
For the years ended December 31, 2023 and 2022
(Tabular amounts in thousands of US dollars, except for shares and per share amounts)
- 34 -
===== SIDA 99 =====
The following table summarizes Replacement Options outstanding as at December 31, 2023:
Outstanding and Exercisable Replacement Options
Range of exercise prices (C$)
Number of Options
Exercisable
Weighted Average
Remaining Contractual
Life (Years)
Weighted Average
Exercise Price (C$)
4 to 4.99 280,854 1.7 4.91
280,854 1.7 4.91
(f) Basic and diluted weighted average number of shares outstanding
December 31, 2023 December 31, 2022
Basic weighted average number of shares outstanding 772,532,260 762,518,753
Effect of dilutive securities 760,635 1,075,300
Diluted weighted average number of shares outstanding 773,292,895 763,594,053
Antidilutive securities 137,900 423,200
The effect of dilutive securities relates to in-the-money outstanding stock options and SUs.
Upon closing the Josemaria Resources acquisition in 2022, the Company issued 40,031,936 common shares to the
former shareholders of Josemaria Resources with a fair value of $369.2 million.
(g) Dividends
The Company declared dividends in the amount of $206.1 million (2022 - $275.8 million), or C$0.36 per share, for
the year ended December 31, 2023 (2022 - C$0.47 per share).
(h) Normal course issuer bid
In December 2022, the Company obtained approval from the TSX for the renewal of its normal course issuer bid
("NCIB") to purchase up to 65,313,173 common shares between December 9, 2022 and December 8, 2023. Daily
purchases (other than pursuant to a block purchase exemption) on the TSX under the NCIB were limited to a
maximum of 875,921 common shares. In connection with the NCIB renewal, the Company entered into an
automatic share purchase plan (“ASPP”) with its broker to allow for the purchase of common shares at times
when the Company ordinarily would not be active in the market due to trading blackout periods, insider trading
rules or otherwise.
In December 2023, the Company obtained approval from the TSX for the renewal of its NCIB to purchase up to
52,538,870 common shares between December 11, 2023 and December 10, 2024. Daily purchases (other than
pursuant to a block purchase exemption) on the TSX under the NCIB are limited to a maximum of 564,097
common shares. In connection with the NCIB renewal, the Company entered into an ASPP with its broker under
the same terms as the ASPP entered in December 2022.
For the year ended December 31, 2023, 0 shares were purchased under the NCIB.
For the year ended December 31, 2022, 10,761,500 shares were purchased under the NCIB at an average price of
C$7.21 per share for total consideration of $59.4 million. All of the common shares purchased were cancelled.
LUNDIN MINING CORPORATION
Notes to consolidated financial statements
For the years ended December 31, 2023 and 2022
(Tabular amounts in thousands of US dollars, except for shares and per share amounts)
- 35 -
===== SIDA 100 =====
15. NON-CONTROLLING INTERESTS
Set out below is summarized financial information for each subsidiary with non-controlling interest ("NCI") that is
material to the group. As part of its Candelaria segment, the Company owns 80% of Compañia Contractual Minera
Candelaria S.A. ("Candelaria mine") and Compañia Contractual Minera Ojos del Salado S.A.’s ("Ojos mine") copper
mining operations and supporting infrastructure in Chile. In addition, the Company owns 51% of Lumina Copper
("Caserones mine"), also located in Chile.
The continuity of the Company's non-wholly owned subsidiaries with material NCI is as follows:
Candelaria
mine
Ojos
mine
Caserones
mine Total
NCI in subsidiary at December 31, 2023 20% 20% 49%
As at December 31, 2021 $ 511,326 $ 36,254 $ — $ 547,580
Share of net comprehensive income (loss) 38,025 (1,516) — 36,509
Distributions (10,000) (10,000) — (20,000)
As at December 31, 2022 539,351 24,738 — 564,089
Caserones Acquisition (Note 3) — — 873,767 873,767
Share of net comprehensive income (loss) 40,974 779 32,294 74,047
Distributions (11,000) — (44,100) (55,100)
As at December 31, 2023 $ 569,325 $ 25,517 $ 861,961 $ 1,456,803
LUNDIN MINING CORPORATION
Notes to consolidated financial statements
For the years ended December 31, 2023 and 2022
(Tabular amounts in thousands of US dollars, except for shares and per share amounts)
- 36 -
===== SIDA 101 =====
Summarized financial information for the Company's non-wholly owned subsidiaries on a 100% basis, before
inter-company eliminations is as follows:
Summarized Balance Sheets
Candelaria mine Ojos mine Caserones mine
As at Dec.
31, 2023
As at Dec.
31, 2022
As at Dec.
31, 2023
As at Dec.
31, 2022
As at Dec.
31, 2023
As at Dec.
31, 2022
Total current assets $ 455,675 $ 557,565 $ 56,542 $ 77,177 $ 708,927 $ —
Total non-current assets $ 2,975,231 $ 2,818,053 $ 165,568 $ 169,985 $ 1,629,052 $ —
Total current liabilities $ 214,205 $ 299,605 $ 52,109 $ 83,083 $ 323,797 $ —
Total non-current liabilities $ 603,799 $ 564,228 $ 42,390 $ 39,463 $ 267,263 $ —
Summarized Statements of Earnings and Comprehensive Income (Loss)
Candelaria mine Ojos mine Caserones mine1
For the years ended
December 31, 2023 2022 2023 2022 2023 2022
Total revenue $ 1,387,341 $ 1,364,274 $ 142,242 $ 180,726 $ 601,775 $ —
Net earnings (loss) $ 178,989 $ 209,346 $ 2,995 $ (7,586) $ 63,349 $ —
Net comprehensive income (loss) $ 179,349 $ 209,173 $ 2,995 $ (7,586) $ 63,349 $ —
Summarized Statement of Cash Flows
Candelaria mine Ojos mine Caserones mine1
For the years ended
December 31, 2023 2022 2023 2022 2023 2022
Cash provided by operating
activities 494,847 377,704 9,617 28,849 179,371 $ —
Cash used in investing activities (360,743) (371,303) (19,203) (20,096) (129,266) —
Cash (used in)/provided by
financing activities (132,551) (55,388) 1,424 (50,244) (131,807) —
Increase (decrease) in cash and
cash equivalents during the year $ 1,553 $ (48,987) $ (8,162) $ (41,491) $ (81,702) $ —
1Summarized Statements of Earnings and Comprehensive Income (Loss) and Summarized Statement of Cash Flows at
Caserones mine are from the date of acquisition (Note 3)
LUNDIN MINING CORPORATION
Notes to consolidated financial statements
For the years ended December 31, 2023 and 2022
(Tabular amounts in thousands of US dollars, except for shares and per share amounts)
- 37 -
===== SIDA 102 =====
16. REVENUE
The Company's analysis of revenue from contracts with customers, segmented by product, is as follows:
2023 2022
Revenue from contracts with customers:
Copper $ 2,423,639 $ 2,018,678
Zinc 308,806 379,755
Nickel 291,169 351,385
Gold 234,318 225,716
Molybdenum 82,069 —
Lead 60,730 61,245
Silver 47,045 42,654
Other 39,664 50,811
3,487,440 3,130,244
Provisional pricing adjustments on current year concentrate sales (84,021) (118,102)
Provisional pricing adjustments on prior year concentrate sales (11,342) 29,086
Revenue $ 3,392,077 $ 3,041,228
The Company's geographical analysis of revenue from contracts with customers, segmented based on the
destination of product, is as follows:
2023 2022
Revenue from contracts with customers:
China $ 820,587 $ 167,576
Japan 662,513 838,383
Spain 602,942 537,268
Canada 403,911 497,030
Finland 275,361 277,465
Sweden 159,653 148,744
Germany 129,318 241,795
Other 433,155 421,983
3,487,440 3,130,244
Provisional pricing adjustments on current year concentrate sales (84,021) (118,102)
Provisional pricing adjustments on prior year concentrate sales (11,342) 29,086
Revenue $ 3,392,077 $ 3,041,228
Revenue from contracts with customers for the year ended December 31, 2023 includes a decrease of $1.8 million
(2022 - decrease of $0.1 million) due to variable consideration adjustments.
Provisional pricing adjustments on prior year concentrate sales include adjustments on pricing from sales during 2022
in addition to pricing adjustments from Caserones sales prior to the date of Acquisition (Note 3). During the three
months ended December 31, 2023, provisional pricing adjustments on current and prior period concentrate sales were
$18.1 million positive and $23.9 million negative, respectively.
LUNDIN MINING CORPORATION
Notes to consolidated financial statements
For the years ended December 31, 2023 and 2022
(Tabular amounts in thousands of US dollars, except for shares and per share amounts)
- 38 -
===== SIDA 103 =====
17. PRODUCTION COSTS
The Company's production costs are comprised of the following:
2023 2022
Direct mine and mill costs $ 1,897,784 $ 1,490,348
Transportation 136,993 121,262
Royalties 51,331 49,748
Total production costs $ 2,086,108 $ 1,661,358
During the year ended December 31, 2023, the Company incurred $6.3 million (2022 - $20.0 million) related to union
negotiation settlements at the Company’s Candelaria operations in Chile, which were reported in direct mine and mill
costs.
18. EMPLOYEE BENEFITS
The Company's employee benefits recognized in the consolidated statement of earnings are comprised of the
following:
2023 2022
Production costs
Wages and benefits $ 363,992 $ 296,428
Retirement benefits 1,561 1,655
Share-based compensation 1,643 2,325
367,196 300,408
General and administrative expenses
Wages and benefits 25,109 21,876
Retirement benefits 975 875
Share-based compensation 5,412 5,133
Termination benefits 7,173 5,583
38,669 33,467
General exploration and business development
Wages and benefits 5,060 8,030
Retirement benefits 37 35
Share-based compensation 246 345
Termination benefits 313 —
5,656 8,410
Total employee benefits $ 411,521 $ 342,285
LUNDIN MINING CORPORATION
Notes to consolidated financial statements
For the years ended December 31, 2023 and 2022
(Tabular amounts in thousands of US dollars, except for shares and per share amounts)
- 39 -
===== SIDA 104 =====
19. GENERAL EXPLORATION AND BUSINESS DEVELOPMENT
The Company's general exploration and business development costs are comprised of the following:
2023 2022
General exploration $ 44,730 $ 36,750
Corporate development 6,148 297
Project development 4,814 107,306
Total general exploration and business development $ 55,692 $ 144,353
For the year ended December 31, 2023, corporate development expenses include $5.2 million in transaction costs
incurred related to the Caserones Acquisition (Note 3).
Project development expenses include study costs related to potential expansion projects at the Company's operating
sites. During the fourth quarter of 2022, the Company began to capitalize the Josemaria Project development costs.
20. FINANCE INCOME AND COSTS
The Company's finance income and costs are comprised of the following:
2023 2022
Interest income $ 11,137 $ 4,211
Interest expense and bank fees (51,358) (10,196)
Deferred revenue finance costs (25,996) (36,621)
Accretion expense on reclamation provisions (23,169) (14,344)
Lease liability interest (12,521) (1,434)
Other (792) (5,801)
Total finance costs, net $ (102,699) $ (64,185)
Finance income $ 11,137 $ 4,211
Finance costs (113,836) (68,396)
Total finance costs, net $ (102,699) $ (64,185)
LUNDIN MINING CORPORATION
Notes to consolidated financial statements
For the years ended December 31, 2023 and 2022
(Tabular amounts in thousands of US dollars, except for shares and per share amounts)
- 40 -
===== SIDA 105 =====
21. OTHER INCOME AND EXPENSE
The Company's other income and expense are comprised of the following:
2023 2022
Foreign exchange and trading gains on debt and equity investments (a) $ 86,784 $ 93,132
Realized gains on derivative contracts (Note 23) 49,712 5,980
Gain on disposal of subsidiary (b) 5,718 18,829
Foreign exchange gain (loss) 4,236 (15,359)
Revaluation of marketable securities 1,846 5,484
Unrealized (losses) gains on derivative contracts (Note 23) (21,932) 62,971
Ojos del Salado sinkhole expenses (c) (16,922) (63,271)
Revaluation of Chapada derivative liability (2,594) (4,280)
Revaluation of Caserones purchase option (2,556) —
(Loss) income from equity investment in associate (60) 3,297
Other income (expense) 357 (8,779)
Total other income, net $ 104,589 $ 98,004
a) Foreign exchange and trading gains on debt and equity investments include the changes in fair value of debt and
equity instruments supporting capital funding for the Josemaria Project (Note 2).
b) Pursuant to the terms of the original sale agreement of Rio Narcea Recursos, S.A. in 2016, the Company received
a $16.8 million payment during 2022, and a further $5.7 million payment in 2023, which were contingent on
historical tax assessments which have now been closed.
c) Ojos del Salado sinkhole expenses include idle costs, maintenance, demobilization, and remediation work related
to the sinkhole near the Company's Ojos del Salado operations. For the year ended December 31, 2022, sinkhole
expenses included a $5.0 million write-down of mineral properties, plant and equipment.
22. CURRENT AND DEFERRED INCOME TAXES
2023 2022
Current tax expense:
Current tax on net taxable earnings $ 152,637 $ 150,861
Adjustments in respect of prior years 1,779 (883)
154,416 149,978
Deferred tax expense (recovery):
Origination and reversal of temporary differences 39,027 (41,629)
Change in tax rate 39,376 —
Utilization and recognition of previously unrecognized tax losses and temporary
differences (11,628) 638
Temporary differences for which no deferred asset was recognized (4,592) 25,641
62,183 (15,350)
Total tax expense $ 216,599 $ 134,628
LUNDIN MINING CORPORATION
Notes to consolidated financial statements
For the years ended December 31, 2023 and 2022
(Tabular amounts in thousands of US dollars, except for shares and per share amounts)
- 41 -
===== SIDA 106 =====
The tax on the Company's earnings before income tax differs from the amount that would arise using the weighted
average rate applicable to earnings of the consolidated entities as follows:
2023 2022
Earnings excluding income taxes $ 531,848 $ 598,161
Combined basic federal and provincial rates 27.0 % 26.5 %
Income taxes based on Canadian statutory income tax rates $ 143,599 $ 158,513
Effect of different tax rates in foreign jurisdictions 28,630 11,569
Tax calculated at domestic tax rates applicable to earnings in the respective
countries 172,229 170,082
Tax effects of:
Non-deductible and non-taxable items (a) (4,154) (37,398)
Change in tax rates (b) 39,376 —
Adjustments in respect of prior years (c) (17,140) (11,112)
Tax losses and temporary differences for which no deferred income tax
asset was recognized (4,591) 25,641
Foreign exchange impact on temporary differences and other
translation amounts (d) 29,128 (20,733)
Utilization and recognition of previously unrecognized temporary differences (11,628) (2,346)
Tax recovery associated with government grants and other tax
credits (e) (2,682) (10,029)
Net withholding tax on accrued interest and dividends received 16,652 19,526
Other (591) 997
Total tax expense $ 216,599 $ 134,628
The Company operates in tax jurisdictions that have tax rates ranging from 20.6% to 35.0%.
a) Included in the prior period non-taxable items of $37.4 million in 2022 is the impact of the tax depletion
allowance at Eagle of $17.2 million.
b) The new mining royalty law in Chile, which includes a 1% ad-valorem tax on sales, was enacted in the third
quarter of 2023 and will become effective January 1, 2024 for Candelaria and 2028 for Caserones when its tax
stability agreement expires. In addition to the ad-valorem tax, both operations in Chile are expected to pay
mining tax of approximately 8% - 15% on net mining income (currently approximately 5%). The maximum
effective tax rate for the combined mining royalty, corporate income tax and final taxes in Chile is set at 46.5%.
Candelaria has accrued $40.2 million in deferred tax expense in 2023 (2022 - $0.0 million). Caserones continues
to be taxed under the Specific Mining Tax regime until the end of 2027.
c) Adjustments in respect of prior years includes temporary difference true-ups of $6.4 million at Candelaria (2022-
$0.0 million), $12.9 million deferred tax recovery at Josemaria (2022 - $0.0 million), $2.8 million at Chapada
(2022 - $7.4 million) and $2.2 million at Eagle (2022 - $1.9 million).
d) The revaluation of non-monetary assets in Brazil and Argentina and the translation of deferred tax liabilities from
their respective local currency to USD resulted in a net deferred tax recovery of $24.5 million in Brazil (2022 - net
deferred tax recovery of $20.7 million) and a net deferred tax expense of $53.6 million in Argentina (2022 - $0.1
million).
e) In 2023, Neves-Corvo recorded $1.6 million in investment tax credits (2022 - $6.5 million).
Global Minimum Top-up Tax - Pillar Two
The Company is within the scope of OECD Pillar Two model rules. Among the jurisdictions where the Company
operates, Pillar Two legislation has been enacted in Sweden and Netherlands and is expected to be enacted or
LUNDIN MINING CORPORATION
Notes to consolidated financial statements
For the years ended December 31, 2023 and 2022
(Tabular amounts in thousands of US dollars, except for shares and per share amounts)
- 42 -
===== SIDA 107 =====
substantially enacted in Canada and Portugal in 2024. The legislation is applicable to the Company’s fiscal year
beginning on January 1, 2024 and consequently, the Company has no current tax exposure as at the reporting date.
The Company applies the exception to recognizing and disclosing information about deferred tax assets and liabilities
as provided by the amendments to IAS 12 in May 2023. The Company also accounts for any top up taxes as a current
tax when it is incurred. The Company is currently assessing the potential impact of the Pillar Two legislation for when it
comes into effect, but the quantitative impact of the enacted or substantively enacted legislation is not yet reasonably
estimable.
Deferred tax liabilities, net
December 31,
2023
December 31,
2022
Deferred tax assets $ 170,203 $ 3,837
Deferred tax liabilities (751,688) (709,602)
Deferred tax liabilities, net $ (581,485) $ (705,765)
Net deferred tax liabilities of $555.0 million (2022 - $665.2 million) are expected to be settled after 12 months and net
deferred tax liabilities of $26.5 million (2022 - $40.5 million net deferred tax assets) are expected to be settled within
12 months.
The movement in deferred income tax assets and liabilities during the year, without taking into consideration the
offsetting of balances within the same jurisdiction, is as follows:
As at
December 31,
2022
(Expensed)/
recovered
Balance sheet/
Equity
adjustment
Effects of
foreign
exchange
As at
December 31,
2023
Deferred tax assets:
Loss carryforwards $ 5,624 $ 52,438 $ — $ — $ 58,062
Reclamation and other
closure provisions 65,130 (3,623) — 511 62,018
Deferred revenue 12,129 152 — 510 12,791
Future tax credits 6,563 (2,432) — 184 4,315
Leases 5,265 657 — 14 5,936
Sinkhole provision 6,631 — — — 6,631
Other 4,502 1,074 629 (1,383) 4,822
Deferred tax liabilities:
Mineral properties, plant
and equipment (656,975) (34,712) 197,550 (2,003) (496,140)
Right-of-use assets (5,208) (1,758) (24,321) (17) (31,304)
Provisions (23,633) (64,651) — — (88,284)
Mining royalty taxes (22,370) (13,141) 25,922 — (9,589)
Long-term inventory (73,366) (4,046) (10,785) — (88,197)
Fair value gains (15,095) 2,291 — — (12,804)
Foreign currency contracts (14,170) 5,376 — (368) (9,162)
Pension provision (792) 192 — 20 (580)
$ (705,765) $ (62,183) $ 188,995 $ (2,532) $ (581,485)
LUNDIN MINING CORPORATION
Notes to consolidated financial statements
For the years ended December 31, 2023 and 2022
(Tabular amounts in thousands of US dollars, except for shares and per share amounts)
- 43 -
===== SIDA 108 =====
As at
December 31,
2021
(Expensed)/
recovered
Balance Sheet/
Equity
adjustment
Effects of
foreign
exchange
As at
December 31,
2022
Deferred tax assets:
Loss carryforwards $ 50,452 $ (44,828) $ — $ — $ 5,624
Reclamation and other
closure provisions 66,722 (789) — (803) 65,130
Deferred revenue 11,132 2,076 — (1,079) 12,129
Future tax credits — 6,485 — 78 6,563
Leases 4,894 458 — (87) 5,265
Sinkhole provision — 6,631 — — 6,631
Other 2,929 (4,143) — 5,716 4,502
Deferred tax liabilities:
Mineral properties, plant
and equipment (704,362) 42,988 — 4,399 (656,975)
Right-of-use assets (5,284) (30) — 106 (5,208)
Provisions (21,189) (10) (2,434) — (23,633)
Mining royalty taxes (20,047) (2,323) — — (22,370)
Long-term inventory (107,578) 34,212 — — (73,366)
Fair value gains (4,138) (10,957) — — (15,095)
Foreign currency contracts — (14,170) — (14,170)
Pension provision (398) (250) — (144) (792)
$ (726,867) $ 15,350 $ (2,434) $ 8,186 $ (705,765)
Deferred tax assets are recognized for tax loss carry-forwards and other temporary differences to the extent that the
realization of the related tax benefit through future taxable profits is probable. The Company determined that it is
probable that sufficient future taxable profits will be available to allow the benefit of the deferred tax assets to be
utilized.
The Company did not recognize deferred tax assets of $19.0 million (2022 - $21.6 million) arising from the provision for
reclamation at Eagle and $1,116.9 million (2022 - $6.5 million) in respect of losses amounting to $4,141.0 million (2022
- $24.6 million) that can be carried forward against future taxable income.
Caserones has approximately $4.2 billion in net operating losses which can be applied to future taxable income over
the mine life. A deferred tax asset has been recognized to the extent that the Company expects to realize sufficient
taxable profit in the foreseeable future.
The deferred mining tax liability in Candelaria has been revalued using the enacted rates under the new mining royalty
in Chile, resulting in a net additional deferred mining tax expense of $39.4 million (2022 -$0.0 million).
Included in the balance sheet and equity adjustments is a $189.2 million deferred tax asset accounted through the
balance sheet on the Caserones purchase price adjustment.
LUNDIN MINING CORPORATION
Notes to consolidated financial statements
For the years ended December 31, 2023 and 2022
(Tabular amounts in thousands of US dollars, except for shares and per share amounts)
- 44 -
===== SIDA 109 =====
23. FINANCIAL INSTRUMENTS
Derivative instruments
From time to time, the Company uses derivative contracts as part of its risk management strategy to mitigate exposure
to foreign currencies and commodities.
During 2022, the Company entered into EUR, BRL, CLP, SEK and CAD foreign currency options and forward contracts
intended to limit the foreign exchange exposure of its forecasted foreign currency denominated after-tax attributable
operating and capital expenditures. The foreign exchange contracts have not been designated as hedges for purposes
of hedge accounting and are measured at fair value with changes in fair value recognized in the consolidated
statement of earnings.
During 2023, the Company entered into SEK forward contracts in the total amount of SEK 845.7 million at prices
ranging from USD:SEK 10.76 to USD:SEK 10.92, expiring in 2024 and 2025. Additionally, the Company entered into zero
cost collar contracts in the total amounts of SEK 396 million, CLP 303 billion and BRL 391 million with collar ranges of
SEK 10.35 to SEK 11.15, CLP 800 to CLP 1,035, and BRL 5.00 to BRL 6.12, respectively. The contracts expire throughout
2024 and 2025. The following table shows the foreign exchange contract positions and their expiry dates:
Expired in Expiring throughout:
Foreign currency forward contracts 2023 2024 2025
EUR/USD forwards
Average contract price 1.01 1.02 —
Position (EUR millions) 249 155 —
USD/SEK forwards
Average contract price 11.06 10.90 10.83
Position (SEK millions) 1,302 922 758
Expired in Expiring throughout:
Foreign currency zero cost collar contracts 2023 2024 2025
USD/BRL collars
Average contract price 5.00/6.40 5.00/6.40 5.05/6.06
Position (BRL millions) 1,142 974 391
USD/CLP collars
Average contract price 885/1,035 859/1,016 808/969
Position (CLP millions) 285,987 253,947 152,584
USD/CAD collars
Average contract price 1.34/1.38 1.30/1.40 —
Position (CAD millions) 36 19 —
USD/SEK collars
Average contract price — 10.35/11.15 —
Position (SEK millions) — 396 —
Subsequent to December 31, 2023, the Company entered into CLP 171 billion of CLP zero cost collar contracts with a
collar range of CLP 900 to CLP 1,072 expiring throughout 2026.
LUNDIN MINING CORPORATION
Notes to consolidated financial statements
For the years ended December 31, 2023 and 2022
(Tabular amounts in thousands of US dollars, except for shares and per share amounts)
- 45 -
===== SIDA 110 =====
In April 2023, the Company entered into forward swap contracts intended to limit exposure to changes in the price of
diesel fuel purchases at Candelaria.
Expired in Expiring throughout:
Diesel forward swap contracts 2023 2024 2025
Average contract price ($/L) 0.690 0.667 —
Position (USD millions) 28 27 —
The Company’s net unrealized and realized (loss)/gain on foreign currency and diesel derivative contracts are as
follows:
2023 2022
Unrealized (loss)/gain on derivative financial instruments:
Foreign currency contracts $ (21,036) $ 62,971
Diesel forward swap contracts (896) —
(21,932) 62,971
Realized gain on derivative financial instruments:
Foreign currency contracts 47,926 5,980
Diesel forward swap contracts 1,786 —
49,712 5,980
Total unrealized and realized gain on derivative contracts: $ 27,780 $ 68,951
A summary of the fair values of unsettled derivative contracts recorded on the consolidated balance sheet is as
follows:
December 31, 2023 December 31, 2022
Foreign currency contracts:
Current asset position $ 38,114 $ 43,521
Non-current asset position 9,397 25,111
Current liability position 1,124 —
Non-current liability position 3,148 5,524
Diesel forward swap contracts:
Current liability position 896 —
Other contracts:
Chapada derivative current liability 24,369 24,423
Chapada derivative non-current liability — 22,352
During 2023, the Company paid the fourth $25.0 million tranche of the derivative liability related to the Chapada
acquisition (Note 24).
LUNDIN MINING CORPORATION
Notes to consolidated financial statements
For the years ended December 31, 2023 and 2022
(Tabular amounts in thousands of US dollars, except for shares and per share amounts)
- 46 -
===== SIDA 111 =====
Fair values of financial instruments
The Company’s financial assets and financial liabilities have been classified into categories that determine their basis of
measurement. The following table shows the carrying values, fair values and fair value hierarchy of the Company’s
financial instruments as at December 31, 2023 and December 31, 2022:
December 31, 2023 December 31, 2022
Level
Carrying
value Fair value
Carrying
value Fair value
Financial assets
Fair value through profit or loss
Restricted funds 1 $ 59,979 $ 59,979 $ 50,195 $ 50,195
Trade receivables (provisional) 2 605,644 605,644 403,300 403,300
Marketable securities, and debt & equity investments 1 14,268 14,268 12,075 12,075
Foreign currency contracts 2 47,511 47,511 68,632 68,632
Caserones purchase option (Note 3) 3 44,438 $ 44,438 — —
$ 771,840 $ 771,840 $ 534,202 $ 534,202
Financial liabilities
Amortized cost
Debt 3 $ 1,208,600 $ 1,208,600 $ 170,162 $ 170,162
Fair value through profit or loss
Pricing provisions on concentrate sales 2 $ 1,840 $ 1,840 $ 5,006 $ 5,006
Chapada derivative liability 2 24,369 24,369 46,775 46,775
Caserones deferred consideration (Note 3) 2 116,210 116,210 — —
Foreign currency contracts 2 4,272 4,272 5,524 5,524
Diesel forward swap contracts 2 896 896 — —
$ 147,587 $ 147,587 $ 57,305 $ 57,305
Fair values of financial instruments are determined by valuation methods depending on hierarchy levels as defined
below:
Level 1 – Quoted market price in active markets for identical assets or liabilities.
Level 2 – Inputs other than quoted market prices included within Level 1 that are observable for the assets or
liabilities, either directly (i.e. observed prices) or indirectly (i.e. derived from prices).
Level 3 – Inputs for the assets or liabilities are not based on observable market data.
The Company calculates fair values based on the following methods of valuation and assumptions:
Marketable securities/debt and equity investments/restricted funds – The fair value of investments in shares and
bonds is determined based on the quoted market price.
Trade receivables/pricing provisions on concentrate sales – The fair value of trade receivables that contain
provisional pricing sales arrangements are valued using quoted forward market prices. The Company recognized
negative pricing adjustments of $95.4 million in revenue during the year ended December 31, 2023 (2022 - $89.0
million negative pricing adjustments).
LUNDIN MINING CORPORATION
Notes to consolidated financial statements
For the years ended December 31, 2023 and 2022
(Tabular amounts in thousands of US dollars, except for shares and per share amounts)
- 47 -
===== SIDA 112 =====
Foreign currency and diesel forward swap contracts – The fair value of these derivatives are determined by the
counterparties to the contracts and are assessed by Management using pricing models based on active market
prices.
Caserones purchase option – The fair value of the Caserones purchase option is determined using a valuation
model that incorporates such factors as the mine's discounted cash flow projections, metal price volatility, expiry
date, and risk-free interest rate.
Chapada derivative liability – The fair value of this derivative is determined using a valuation model that
incorporates such factors as metal prices, metal price volatility, expiry date, and risk-free interest rate.
Caserones deferred consideration – The fair value of the Caserones deferred consideration has been discounted
at the estimated credit adjusted risk free rate applicable to future payments.
Debt – The fair values approximate carrying values as the interest rates are comparable to current market rates.
The carrying values of certain financial instruments maturing in the short-term approximate their fair values.
These financial instruments include cash and cash equivalents, trade and other receivables other than those
provisionally priced, and trade and other payables other than those provisionally priced, which are classified as
amortized cost.
24. COMMITMENTS AND CONTINGENCIES
a) The Company has capital commitments of $461.3 million on various initiatives, of which $265.9 million is
expected to be paid during 2024.
b) The Chapada acquisition included contingent consideration of up to $125.0 million payable over five years from
the acquisition date if certain gold price thresholds are met. The Company paid $25.0 million tranches in each of
2020, 2021, 2022, and 2023. The maximum remaining contingent consideration is $25.0 million over the next
year as follows:
• a $10.0 million payment if the gold price averages at least $1,350/oz in the annual period,
• a $10.0 million payment if the gold price averages at least $1,400/oz in the annual period,
• a $5.0 million payment if the gold price averages at least $1,450/oz in the annual period.
As part of the Chapada acquisition, the Company has been provided with an indemnity for any tax liabilities that
may arise for periods prior to the date of the acquisition. For identified tax claims existing at the date of
acquisition, the Company has agreed to be liable for up to the first $21.0 million (BRL 101.5 million). While it is
uncertain, no material liabilities have been accrued as the Company believes material payment is not likely due to
the nature of the tax claims.
c) The following summarizes total tax exposure under two contradictory assessments received from the Chilean
Internal Revenue Service (“IRS”). Given that the assessments relate to the same issue, the Company’s potential
exposure is expected to be limited to one of the below scenarios:
i) For taxation years 2014 through 2019, the IRS issued tax assessments denying tax deductions related to
interest expenses arising from an intercompany debt. The total of all assessments amounts to $265.3 million
($145.6 million in taxes plus interest and penalties of $119.7 million). If the Company loses the dispute, it
may be liable for an additional $69.8 million in accrued interest as of December 2023. All tax refunds arising
from the tax deductions related to the intercompany debt have been received up to December 2023. The
Company maintains its position that the assessments are inconsistent with Chilean tax law and, therefore,
without merit.
ii) On the same intercompany debt for taxation years 2016 through 2019, the Company has also received
assessments from the IRS seeking additional withholding taxes, including interest and penalties, on interest
LUNDIN MINING CORPORATION
Notes to consolidated financial statements
For the years ended December 31, 2023 and 2022
(Tabular amounts in thousands of US dollars, except for shares and per share amounts)
- 48 -
===== SIDA 113 =====
payments made. The total of all assessments amounts to $246.6 million ($114.2 million in taxes plus interest
and penalties of $132.4 million). The Company may be liable for an additional $70.3 million in accrued
interest as of December 2023, should it lose the tax dispute. The Company believes it has applied the
correct withholding tax rate according to the Canada-Chile tax treaty.
The Company has filed claims against the tax assessments related to taxation years 2014 to 2019. No tax expense
has been accrued for these assessments as the Company believes its original filing position is in compliance with
tax regulations and intends to vigorously defend its position. The Company does not expect further assessments
to be issued related to this tax matter as the intercompany loan was amended in 2020 with an interest rate
accepted by the IRS.
d) I n July 2022, a sinkhole was detected near the Company's Ojos del Salado operations in Chile. In October 2022,
the Company received an infraction notice from the environmental regulators covering four alleged violations of
its environmental permit for the Alcaparrosa underground mine, which forms part of the Company's Ojos del
Salado operations. The Company has responded to the infraction notice and is working with the regulatory
agencies to resolve this matter.
e) The Company may be involved in legal proceedings arising in the ordinary course of business, including the
actions described below. The potential amount of the liability with respect to such legal proceedings is not
expected to materially affect the Company’s financial position. The Company believes the claims to be without
merit and the loss, if any, cannot be determined at this time for all contingencies. The Company has accordingly
not accrued any amounts related to the litigations below (unless otherwise noted). The Company intends to
vigorously defend these claims.
Two proposed class actions were filed against the Company and certain officers and directors. The first, in the
province of Ontario, on December 7, 2017 (Markowich v. Lundin Mining Corporation et al) and a second
overlapping action in the province of Québec on January 18, 2018 (Prévreau v. Lundin Mining Corporation et al).
Both proposed class actions seek damages of $132.3 million (C$175.0 million) and punitive damages of
$7.6 million (C$10.0 million) and assert various statutory and other claims related to, among other things, alleged
misrepresentations and/or failure to make timely disclosure of material information about the Company’s
business and operations and, in particular, the operations of the Candelaria Mine and a rock slide at the
Candelaria Mine on October 31, 2017. The proposed Ontario class action asserts claims on behalf of a putative
class comprising persons who acquired securities of the Company between October 25, 2017, and November 29,
2017, whereas the proposed Québec class action asserts claims on behalf of only such persons who are resident
or domiciled in Québec. In June 2018, counsel to the plaintiffs in the Québec action agreed to a stay (i.e.,
indefinite cessation) of that proceeding in light of the Ontario action. On August 30, 2018, the Québec Superior
Court, on consent of the parties, stayed the Québec action indefinitely. On September 2, 2020, the plaintiff in the
Ontario action served motion materials for leave and certification with the Ontario Superior Court of Justice. On
January 6, 2022, the Ontario Superior Court of Justice denied the leave application and declined the motion for
certification. On May 24, 2023, the Ontario Court of Appeal granted the plaintiff’s appeal of this decision. In
August 2023, the defendants filed an application for leave to appeal the Ontario Court of Appeal decision to the
Supreme Court of Canada. A decision on the Supreme Court of Canada leave application is expected in the first
half of 2024.
25. SEGMENTED INFORMATION
The Company is engaged in mining, exploration and development of mineral properties at six operating sites located in
Chile, Brazil, USA, Portugal, and Sweden, and at the Josemaria Project located in Argentina. Operating segments are
reported in a manner consistent with the internal reporting provided to executive management who act as the chief
operating decision-makers. The chief operating decision makers consider the business from a site and project-level
perspective. Executive management are responsible for allocating resources and assessing performance of the
operating segments. The Company has identified eight reportable segments which include six operating sites, the
Josemaria Project, and other corporate office operations.
LUNDIN MINING CORPORATION
Notes to consolidated financial statements
For the years ended December 31, 2023 and 2022
(Tabular amounts in thousands of US dollars, except for shares and per share amounts)
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For the year ended December 31, 2023
Candelaria Caserones Chapada Eagle Josemaria Neves-Corvo Zinkgruvan Other Total
Chile Chile Brazil USA Argentina Portugal Sweden
Revenue $ 1,329,599 $ 601,775 $ 461,175 $ 350,895 $ — $ 425,042 $ 223,591 $ — $ 3,392,077
Cost of goods sold
Production costs (726,493) (404,837) (317,317) (191,704) — (326,677) (115,394) (3,686) (2,086,108)
Depreciation, depletion and amortization (272,377) (108,489) (63,480) (52,050) (38) (121,599) (34,124) (1,439) (653,596)
Gross profit (loss) 330,729 88,449 80,378 107,141 (38) (23,234) 74,073 (5,125) 652,373
General and administrative expenses — — — — — — — (66,723) (66,723)
General exploration and business development (14,589) (622) (10,460) (5,691) (2,751) (7,122) (4,560) (9,897) (55,692)
Finance (costs) income (32,214) (7,901) (22,996) (4,336) 18,726 (6,082) (5,188) (42,708) (102,699)
Other (expense) income (402) 6,391 6,229 (597) 84,316 2,927 9,818 (4,093) 104,589
Income tax (expense) recovery (135,078) (19,265) 1,888 (2,899) (51,266) 8,690 (10,923) (7,746) (216,599)
Net earnings (loss) $ 148,446 $ 67,052 $ 55,039 $ 93,618 $ 48,987 $ (24,821) $ 63,220 $ (136,292) $ 315,249
Capital expenditures $ 380,112 $ 83,880 $ 72,291 $ 22,201 $ 285,893 $ 102,621 $ 53,358 $ 12,761 $ 1,013,117
Total non-current assets1 $ 3,134,028 $ 1,405,852 $ 1,391,417 $ 204,776 $ 1,161,771 $ 1,179,919 $ 280,522 $ 5,097 $ 8,763,382
For the year ended December 31, 2022
Candelaria Chapada Eagle Josemaria Neves-Corvo Zinkgruvan Other Total
Chile Brazil USA Argentina Portugal Sweden
Revenue $ 1,317,223 $ 477,927 $ 520,472 $ — $ 433,486 $ 292,120 $ — $ 3,041,228
Cost of goods sold
Production costs (697,171) (324,096) (193,003) — (329,232) (115,553) (2,303) (1,661,358)
Depreciation, depletion and amortization (284,259) (49,865) (79,523) (633) (101,807) (36,739) (1,924) (554,750)
Inventory write-down — (62,546) — — — — — (62,546)
Gross profit (loss) 335,793 41,420 247,946 (633) 2,447 139,828 (4,227) 762,574
General and administrative expenses — — — — — — (53,879) (53,879)
General exploration and business development (15,272) (11,846) (3,564) (100,493) (5,919) (3,221) (4,038) (144,353)
Finance (costs) income (27,660) (18,137) (1,954) 1,312 (5,191) (7,677) (4,878) (64,185)
Other (expense) income (43,700) (13,930) 266 68,886 36,017 23,883 26,582 98,004
Income tax (expense) recovery (85,270) 27,840 (28,458) — 3,898 (34,413) (18,225) (134,628)
Net earnings (loss) $ 163,891 $ 25,347 $ 214,236 $ (30,928) $ 31,252 $ 118,400 $ (58,665) $ 463,533
Capital expenditures $ 389,731 $ 104,711 $ 16,413 $ 171,108 $ 103,186 $ 48,144 $ 9,610 $ 842,903
Total non-current assets1 $ 2,974,567 $ 1,312,488 $ 242,212 $ 902,037 $ 1,148,595 $ 246,131 $ 29,207 $ 6,855,237
1 Non-current assets include long-term inventory, mineral properties, plant and equipment, and goodwill.
LUNDIN MINING CORPORATION
Notes to consolidated financial statements
For the years ended December 31, 2023 and 2022
(Tabular amounts in thousands of US dollars, except for shares and per share amounts)
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26. RELATED PARTY TRANSACTIONS
a) Transactions with associates - The Company may enter into transactions related to its investment in associate.
These transactions are entered into in the normal course of business and on an arm’s length basis.
b) Key management personnel - The Company has identified its directors and senior officers as its key management
personnel. Employee benefits for key management personnel are as follows:
2023 2022
Wages and salaries $ 7,454 $ 7,327
Pension benefits 130 175
Share-based compensation 2,983 2,286
Termination benefits 5,760 1,891
$ 16,327 $ 11,679
c) Other related parties - For the year ended December 31, 2023, the Company incurred $4.9 million (2022 – $nil),
for services provided by companies owned by members of key management personnel primarily relating to office
rental, renovation, and related services.
27. MANAGEMENT OF FINANCIAL RISK
The Company’s financial instruments are exposed to certain financial risks, including credit risk, liquidity risk, foreign
exchange risk, commodity price risk and interest rate risk.
(a) Credit risk
The exposure to credit risk arises through the failure of a customer or another third party to meet its contractual
obligations to the Company. The Company believes that its maximum exposure to credit risk as at December 31,
2023 is the carrying value of its trade and other receivables.
Concentrate and cathodes produced at the Company’s Candelaria, Caserones, Chapada, Eagle, Neves-Corvo and
Zinkgruvan mines is sold to a number of strategic customers with whom the Company has established long-term
relationships. Limited amounts of concentrate are occasionally sold to commodity traders, under prevailing
market conditions. Payment terms vary and provisional payments are normally received shortly after vessel
arrival, in accordance with industry practice, with final settlement up to six months following the date of
shipment. Sales to commodity traders are made against secure payment terms such as a letter of credit, pre-
payment or payment against scanned shipping documents. Credit worthiness of customers is reviewed by the
Company on an annual basis or more frequently, if warranted, and those not meeting certain credit criteria may
be asked to make 100% provisional payment up-front or provide an acceptable payment instrument such as a
letter of credit. The failure of any of the Company’s strategic customers could have a material adverse effect on
the Company’s financial position. For the year ended December 31, 2023, the Company has five customers that
individually account for more than 10% of the Company’s total sales. The Company's largest customers represent
approximately 18%, 16%, 15%, 13% and 12% of total sales ( 2022 - four customers representing 22%, 18%, 16%
and 12% of total sales).
With respect to credit risk arising from the other financial assets of the Company, which comprise cash and cash
equivalents, restricted funds, marketable securities and equity investments, and foreign currency contracts, the
Company’s exposure to credit risk arises from default of the counterparty, with a maximum exposure equal to
the carrying amount of these instruments. The Company limits material counterparty credit risk on these assets
by dealing with financial institutions with long-term credit ratings with Standard & Poor’s of at least A, or the
equivalent thereof with Moody’s, or those which have been otherwise approved.
LUNDIN MINING CORPORATION
Notes to consolidated financial statements
For the years ended December 31, 2023 and 2022
(Tabular amounts in thousands of US dollars, except for shares and per share amounts)
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