Lundin Mining First Quarter 2024 Results

TSX: LUN) (Nasdaq Stockholm: LUMI) Lundin Mining Corporation ("Lundin Mining" or the "Company") today reported its first quarter 2024 financial results. Unless otherwise stated, results are presented in United States dollars on a 100% basis. View PDF

Jack Lundin , President and CEO commented, "Our strategic acquisition of a majority interest in the Caserones copper mine continues to drive revenue and production growth. First quarter revenue and copper production increased 25% and 43%, respectively, compared to the same quarter last year, and was in line with our expectations. Production at Candelaria will be second half weighted due to higher grades as a result of planned mine sequencing. We remain on track to meet our annual production and cash cost guidance."

First Quarter Operational and Financial Highlights

• Copper Production: Consolidated production of 88,013 tonnes of copper in the first quarter.
• Other Production: During the quarter, a total of 45,688 tonnes of zinc, 3,255 tonnes of nickel and approximately 33,000 ounces of gold were produced. All metals are tracking to meet full year guidance.
• Revenue: $937.0 million in the first quarter with a realized copper price ¹ of $3.98 /lb.
• Adjusted EBITDA ¹ : $362.9 million generated during the quarter.
• Adjusted Earnings ¹ : Net earnings attributable to shareholders of the Company were $13.9 million or $0.02 per share in the first quarter with adjusted earnings ¹ of $45.2 million or $0.06 per share.
• Cash Generation: Cash provided by operating activities was $267.5 million and free cash flow from operations ¹ was $67.7 million , which was reduced by a working capital build of $46.1 million .
• Resource Growth: Earlier in the quarter the Company updated Mineral Reserve and Mineral Resource estimates and grew overall Proven and Probable copper reserves by 26% on a 100% basis.
• Outlook: With first quarter 2024 production and cash costs being in line with expectations, the Company's full year guidance remains unchanged:
  • Copper production guidance of 366,000 – 400,000 t.
  • Zinc production guidance of 195,000 – 215,000 t.
  • Gold production guidance of 155,000 – 170,000 oz.
  • Nickel production guidance of 10,000 – 13,000 t.

Summary Financial Results

• For the three months ended March 31, 2024 , the Company generated revenue of $937.0 million (Q1 2023 - $751.3 million ), including 86,189 tonnes of copper sold at a realized price of $3.98 /lb. The increase from the prior year comparable period is primarily due to the inclusion of Caserones revenue and somewhat offset by lower sales volumes at most mines and lower realized copper and zinc prices.
• Gross profit of $185.4 million (2023 - $213.3 million ) and Adjusted EBITDA of $362.9 million (Q1 2023 - $336.9 million ) benefited from the inclusion of Caserones, favourable foreign exchange, and operational improvements at Chapada.
• Net earnings attributable to shareholders of the Company were $13.9 million or $0.02 per share in the three months ended March 31, 2024 , which were lower than in the prior year comparable period primarily due to non-cash unrealized losses related to the mark-to-market valuation of unexpired foreign exchange contracts, lower gross profit, and higher financing costs.
• Adjusted earnings attributable to shareholders of the Company for the three months ended March 31, 2024 of $45.2 million or $0.06 per share were $80.5 million lower than in the prior year comparable period primarily due to lower net attributable earnings.
• Cash and cash equivalents as at March 31, 2024 were $365.5 million . Cash provided by operating activities amounted to $267.5 million and cash used to fund investing activities amounted to $269.7 million .
• Free cash flow[2] for the three months ended March 31, 2024 of negative $1.7 million was $32.5 million higher than in the prior year comparable period as a result of reduced spending relating to the Josemaria Project.
• For the three months ended March 31, 2024 , the Company recognized a non-cash unrealized loss of approximately $53 million on a pre-tax basis related to the mark-to-market valuation of the Company's unexpired foreign exchange and diesel derivative contracts. For the three months ended March 31, 2024 , the Company entered into zero cost collar contracts in the total amounts of $24 million (equivalent to BRL 121 million ) and $950 million (equivalent to CLP 926 billion ) with collar ranges of BRL 5.10 to BRL 6.07 and CLP 900 to CLP 1,085 , respectively.
• As at May 1, 2024 , the Company had a cash balance of approximately $395.0 million and a net debt excluding lease liabilities balance of approximately $1,020.0 million .

Operational Performance

Total Production

Candelaria (80% owned): Candelaria produced 32,527 tonnes of copper and approximately 19,000 ounces of gold in concentrate on a 100% basis in the three months ended March 31, 2024 . Copper and gold production was lower than in the prior year comparable period, primarily due to lower grades as a result of planned mine sequencing. Production costs were lower than in the prior year comparable period largely owing to favourable foreign exchange as a result of the Chilean Peso weakening against the US dollar, and lower sales volumes. Copper cash cost  of $1.89 /lb improved from the prior year comparable period due to favourable foreign exchange and higher by-product credits. Copper and gold production in 2024 are forecast to be weighted to the second half of the year, primarily owing to mine sequencing and the resultant grade profiles.

Caserones (51% owned): During the three months ended March 31, 2024 , Caserones produced 34,216 tonnes of copper and 864  tonnes of molybdenum on a 100% basis. Copper and molybdenum production was slightly lower than expected due to reduced throughput caused by unplanned maintenance, combined with lower recoveries due to mine sequencing. Production costs and cash costs per pound in the three months ended March 31, 2024 were lower than planned primarily due to favourable foreign exchange as a result of the Chilean peso weakening against the US dollar.

Chapada (100% owned): Chapada produced 10,138 tonnes of copper and approximately 14,000 ounces of gold in concentrate in the three months ended March 31, 2024 . Copper and gold production were higher than in the prior year comparable period primarily due to higher recoveries. Production costs were lower than in the prior year comparable period primarily due to lower sales volumes and lower mining costs as a result of a planned reduction in waste movement. Copper cash cost of $2.01 /lb for the three months ended March 31, 2024 improved from the prior year comparable period due to higher by-product credits combined with mining cost decreases due to operational improvements.

Eagle (100% owned): During the three months ended March 31, 2024 , Eagle produced 3,255 tonnes of nickel and  2,514 tonnes of copper which were lower than in the prior year comparable period due to lower planned grades and recoveries. Production costs were lower than in the prior year comparable period due to lower sales volumes. Nickel cash cost of $4.04 /lb was higher than in the prior year comparable period and was impacted by lower sales volumes and lower by-product credits.

Neves-Corvo (100% owned): Neves-Corvo produced 7,044 tonnes of copper and 26,487 tonnes of zinc in the three months ended March 31, 2024 . Both copper and zinc production was lower than in the prior year comparable period due to lower grades and recoveries. Throughput was lower than planned in the three months ended March 31, 2024 due to a voluntary three-day shutdown and subsequent ramp-up following the fatality that occurred in February 2024 .  Production costs during the quarter were lower than in the prior year comparable period due to lower sales volumes and lower unit production costs. Copper cash cost per pound of $3.24 /lb was higher than prior year comparable period as a result of lower production volumes, lower by-product credits and unfavorable foreign exchange.

Zinkgruvan (100% owned): Zinc production of 19,201 tonnes was lower than in the prior year comparable period primarily due to lower grades. Lead production of 6,748  tonnes and copper production of 1,574 tonnes were lower than in the prior year comparable period primarily due to lower grades as a result of delays in mining high-grade stopes. Production costs were slightly higher than in the prior year comparable period and  zinc cash cost per pound of $0.65 /lb was higher than in the prior year comparable period primarily due to lower production volumes.

Outlook

Overall, operations performed well in the first quarter of 2024 and the Company is expected to meet annual production and cash cost guidance as disclosed in the Company's MD&A for the year ended December 31, 2023 .

Metal production continues to be weighted to the second half of the year at Candelaria, Chapada and Neves-Corvo due to mine sequencing and resultant forecasted grade profiles. As a result of production challenges at Neves-Corvo in the first quarter of 2024, copper production at that operation is tracking to the lower end of its annual production guidance range. Production challenges at Neves-Corvo, Eagle and Zinkgruvan in the first quarter of 2024 led to higher-than-expected cash costs per pound, which are expected to improve later in 2024.

Capital expenditure guidance also remains consistent as disclosed in the Company's MD&A for the year ended December 31, 2023 including $840 million sustaining capital expenditure and $225 million of expenditure related to the Josemaria Project. Similarly, exploration expenditure of $48 million remains on target  for 2024.

Exploration

During the quarter ended March 31, 2024 , exploration activity focused on in-mine and near-mine targets at the Company's operations. Exploration drilling at Zinkgruvan was focused on resource expansion, Candelaria drilling was focused on Candelaria Norte , and Chapada drilling concentrated on delineating the high-grade, near-mine trend at Corpo Sul.

At Caserones, exploration remains in the early stages. Geophysical surveys were recently carried out on the land package and the data collected will help to refine our targets and advance our efforts. Exploration drilling was completed in the lower portion of the mineral resource and at the Angelica oxide and sulphide targets, both near-mine targets that would add potential mineral resources and extend the life of the operation.

At Josemaria, seasonal exploration drilling is coming to a close at the Cumbre Verde target near the Josemaria ore body. Six holes were drilled targeting the same mineralized system and structures that hosted high grade mineralization on the neighbouring property that run towards Josemaria. Exploration remains in its early stages and initial results highlight copper/gold/silver mineralization. The data obtained will help further refine and target this mineralization. Work will continue throughout the remainder of 2024, although it will be minimized during the winter season.

There was no exploration drilling at Neves-Corvo and Eagle in the quarter.

About Lundin Mining

Lundin Mining is a diversified Canadian base metals mining company with projects and operations in Argentina , Brazil , Chile , Portugal , Sweden and the United States of America , primarily producing copper, zinc, nickel and gold.

The information in this release is subject to the disclosure requirements of Lundin Mining under the EU Market Abuse Regulation. The information was submitted for publication, through the agency of the contact persons set out below on May 1, 2024 at 14:30 Pacific Standard Time .

Technical Information

The scientific and technical information in this press release has been prepared in accordance with the disclosure standards of National Instrument 43-101 ("NI 43-101") and has been reviewed by Arman Barha , P.Eng., Vice President, Technical Services, a "Qualified Person" under NI 43-101. Mr. Barha has verified the data disclosed in this release and no limitations were imposed on his verification process.

Reconciliation of Non-GAAP Measures

The Company uses certain performance measures in its analysis. These performance measures have no standardized meaning within generally accepted accounting principles under International Financial Reporting Standards and, therefore, amounts presented may not be comparable to similar data presented by other mining companies. For additional details please refer to the Company's discussion of non-GAAP and other performance measures in its Management's Discussion and Analysis for the three months ended March 31, 2024 which is available on SEDAR+ at www.sedarplus.com .

Cash Cost per Pound and All-in Sustaining Costs per pound can be reconciled to Production Costs on the Company's Condensed Interim Consolidated Statement of Earnings as follows:

Adjusted EBITDA can be reconciled to Net Earnings (Loss) on the Company's Condensed Interim Consolidated Statement of Earnings as follows:

Adjusted Earnings and Adjusted EPS can be reconciled to Net Earnings (Loss) Attributable to Lundin Mining Shareholders on the Company's Condensed Interim Consolidated Statement of Earnings as follows:

Free Cash Flow from Operations and Free Cash Flow can be reconciled to Cash provided by Operating Activities on the Company's Condensed Interim Consolidated Statement of Cash Flows as follows:

Adjusted Operating Cash Flow and Adjusted Operating Cash Flow per Share can be reconciled to Cash Provided by Operating Activities on the Company's Condensed Interim Consolidated Statement of Cash Flows as follows:

Net debt  and net debt excluding lease liabilities can be reconciled to Debt and Lease Liabilities, Current Portion of Debt and Lease Liabilities and Cash and Cash Equivalents on the Company's condensed interim consolidated balance sheet as follows:

Cautionary Statement on Forward-Looking Information

Certain of the statements made and information contained herein is "forward-looking information" within the meaning of applicable Canadian securities laws. All statements other than statements of historical facts included in this document constitute forward-looking information, including but not limited to statements regarding the Company's plans, prospects and business strategies; the Company's guidance on the timing and amount of future production and its expectations regarding the results of operations; expected costs; permitting requirements and timelines; timing and possible outcome of pending litigation; the results of any Preliminary Economic Assessment, Feasibility Study, or Mineral Resource and Mineral Reserve estimations, life of mine estimates, and mine and mine closure plans; anticipated market prices of metals, currency exchange rates, and interest rates; the development and implementation of the Company's Responsible Mining Management System; the Company's ability to comply with contractual and permitting or other regulatory requirements; anticipated exploration and development activities at the Company's projects; the Company's integration of acquisitions and any anticipated benefits thereof; and expectations for other economic, business, and/or competitive factors. Words such as "believe", "expect", "anticipate", "contemplate", "target", "plan", "goal", "aim", "intend", "continue", "budget", "estimate", "may", "will", "can", "could", "should", "schedule" and similar expressions identify forward-looking statements.

Forward-looking information is necessarily based upon various estimates and assumptions including, without limitation, the expectations and beliefs of management, including that the Company can access financing, appropriate equipment and sufficient labour; assumed and future price of copper, nickel, zinc, gold and other metals; anticipated costs; ability to achieve goals; the prompt and effective integration of acquisitions; that the political environment in which the Company operates will continue to support the development and operation of mining projects; and assumptions related to the factors set forth below. While these factors and assumptions are considered reasonable by Lundin Mining as at the date of this document in light of management's experience and perception of current conditions and expected developments, these statements are inherently subject to significant business, economic and competitive uncertainties and contingencies. Known and unknown factors could cause actual results to differ materially from those projected in the forward-looking statements and undue reliance should not be placed on such statements and information. Such factors include, but are not limited to: global financial conditions, market volatility and inflation, including pricing and availability of key supplies and services; risks inherent in mining including but not limited to risks to the environment, industrial accidents, catastrophic equipment failures, unusual or unexpected geological formations or unstable ground conditions, and natural phenomena such as earthquakes, flooding or unusually severe weather; uninsurable risks; volatility and fluctuations in metal and commodity demand and prices; significant reliance on assets in Chile ; reputation risks related to negative publicity with respect to the Company or the mining industry in general; delays or the inability to obtain, retain or comply with permits; risks relating to the development of the Josemaria Project; health and safety laws and regulations; risks associated with climate change; risks relating to indebtedness; economic, political and social instability and mining regime changes in the Company's operating jurisdictions, including but not limited to those related to permitting and approvals, nationalization or expropriation without fair compensation, environmental and tailings management, labour, trade relations, and transportation; inability to attract and retain highly skilled employees; risks inherent in and/or associated with operating in foreign countries and emerging markets, including with respect to foreign exchange and capital controls; project financing risks, liquidity risks and limited financial resources; health and safety risks; compliance with environmental, unavailable or inaccessible infrastructure, infrastructure failures, and risks related to ageing infrastructure; changing taxation regimes; the inability to effectively compete in the industry; risks associated with acquisitions and related integration efforts, including the ability to achieve anticipated benefits, unanticipated difficulties or expenditures relating to integration and diversion of management time on integration; risks related to mine closure activities, reclamation obligations, environmental liabilities and closed and historical sites; reliance on key personnel and reporting and oversight systems, as well as third parties and consultants in foreign jurisdictions; information technology and cybersecurity risks; risks associated with the estimation of Mineral Resources and Mineral Reserves and the geology, grade and continuity of mineral deposits including but not limited to models relating thereto; actual ore mined and/or metal recoveries varying from Mineral Resource and Mineral Reserve estimates, estimates of grade, tonnage, dilution, mine plans and metallurgical and other characteristics; ore processing efficiency; community and stakeholder opposition; regulatory investigations, enforcement, sanctions and/or related or other litigation; financial projections, including estimates of future expenditures and cash costs, and estimates of future production may not be reliable; enforcing legal rights in foreign jurisdictions; risks associated with the use of derivatives; risks relating to joint ventures and operations; environmental and regulatory risks associated with the structural stability of waste rock dumps or tailings storage facilities; exchange rate fluctuations; compliance with foreign laws; potential for the allegation of fraud and corruption involving the Company, its customers, suppliers or employees, or the allegation of improper or discriminatory employment practices, or human rights violations; risks relating to dilution; risks relating to payment of dividends; counterparty and customer concentration risks; activist shareholders and proxy solicitation matters; estimation of asset carrying values; relationships with employees and contractors, and the potential for and effects of labour disputes or other unanticipated difficulties with or shortages of labour or interruptions in production; conflicts of interest; existence of significant shareholders; challenges or defects in title; internal controls; risks relating to minor elements contained in concentrate products; the threat associated with outbreaks of viruses and infectious diseases; and other risks and uncertainties, including but not limited to those described in the "Managing Risks" section of the Company's MD&A and the "Risks and Uncertainties" section of the Company's Annual Information Form for the year ended December 31, 2023 , which are available on SEDAR+ at www.sedarplus.com under the Company's profile.

All of the forward-looking statements made in this document are qualified by these cautionary statements. Although the Company has attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking information, there may be other factors that cause results not to be as anticipated, estimated, forecast or intended and readers are cautioned that the foregoing list is not exhaustive of all factors and assumptions which may have been used. Should one or more of these risks and uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those described in forward-looking information. Accordingly, there can be no assurance that forward-looking information will prove to be accurate and forward-looking information is not a guarantee of future performance. Readers are advised not to place undue reliance on forward-looking information. The forward-looking information contained herein speaks only as of the date of this document. The Company disclaims any intention or obligation to update or revise forward‐looking information or to explain any material difference between such and subsequent actual events, except as required by applicable law.

SOURCE Lundin Mining Corporation

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