Corporate Presentation

TSX: LUN
OMX: LUMI
Corporate Presentation
October 2014
Cautionary Statements
Caution Regarding Forward Looking Information
This presentation contains forward-looking information, including, but not limited to, guidance on estimated annual
production and cash costs. This forward-looking information is not based on historical facts, but rather on current
expectations and projections about future events and is subject to risks and uncertainties. These risks and uncertainties
could cause actual results to differ materially from the future results expressed or implied in this document.
The forward looking information contained in this document is based on a number of assumptions including, but not
limited to, foreign currency rates; metal prices; estimation of mineral resources and reserves and the geology; grade,
tonnage, dilution and metallurgical and other characteristics of ore; production capabilities and cost estimates.
Such risks may include, without limitation: risks and uncertainties relating to foreign currency fluctuations; risks
inherent in mining including environmental hazards, unusual or unexpected geological formations, ground control
problems and flooding; risks associated with the estimation of mineral resources and reserves and the geology, grade
and continuity of mineral deposits; the possibility that future exploration, development or mining results will not be
consistent with the Company’s expectations; the potential for and effects of labor disputes or other unanticipated
difficulties with or shortages of labor or interruptions in production; actual ore mined varying from estimates of grade,
tonnage, dilution and metallurgical and other characteristics; the inherent uncertainty of production and cost estimates
and the potential for unexpected costs and expenses; and commodity price fluctuations.
For further details of other risks and uncertainties see Risk Factors Relating to the Company’s Business in the
Company’s Annual Information Form and in each Management ‘s Discussion and Analysis.
Note: All dollar amounts are in US dollars unless otherwise denoted.
2
Lundin Mining- Global Operations
Wholly-Owned
Operations
•
•
•
•
Neves-Corvo, Portugal
Zinkgruvan, Sweden
Eagle Mine, Michigan
Aguablanca, Spain
Tenke Fungurume
•
•
•
Tier 1 Cu/Co asset (24%
interest)
Kokkola Cobalt Refinery,
Finland (24% interest)
Freeport-McMoRan
operator
Growth Projects
•
Neves-Corvo Zinc
Expansion
•
•
Tenke Expansions
Exploration projects
(South America &
Europe)
Neves-Corvo
Portugal
Zinkgruvan Mine
Sweden
Aguablanca
Spain
Tenke Fungurume
DRC
Freeport Cobalt
Finland
Eagle Mine
USA
3
Good Growth Profile in all Metals
Nickel Production (kt)
30
24 – 30
24 – 30
25
140
123 - 135
122 - 134
20
120
15
10
Copper Production (kt)
7.6
116.6
108.9 – 116.9
100
9.5 – 11.5
5
80
2013
2014E
2015E
2016E
200
Zinc Production (kt)
150
135 - 145
155 - 165
125
150 - 160
60
40
20
-
100
2013
2014E
2015E
2016E
50
Wholly owned
2013
2014E
2015E
Tenke
2016E
*LUN production profile based on 3-yr guidance provided in Dec-2013. Copper profile does not include
any future expansions at Tenke
4
Cost Competitive Across All Commodities
2014 C1 Copper Cost Curve
($US/lb)
Neves-Corvo a
Weighted
Average
Tenke Fungurume a
$1.85
$1.54
$1.21
Cumulative Percentile Production
2014 C1 Zinc Cost Curve
2015 C1 Nickel Cost Curve
Zinkgruvan a
$0.35
Cumulative Percentile Production
a. 2014 guidance, at Q2 2014
b. Guidance for the first 3 years of operation
($US/lb)
($US/lb)
Aguablanca a
Eagle b
$4.25
$2.00
Cumulative Percentile Production
Source: Wood Mackenzie, 2014
5
Sustaining & Growth Investment- 2014
Sustaining
Neves-Corvo
Zinkgruvan
Other
$35
$5
$100
Total Sustaining
New Investment Neves
Aguablanca
Eagle
Total New Investment
Total Tenke a
Exploration Budget
a.
$US M
$60
$30
$10
$300
$340
$50
$35
Tenke capex guidance has not been provided by operator, Freeport-McMoRan Inc. ("Freeport")
6
Financial Outlook
• Strong balance sheet with excellent flexibility
• Net cash balance expected to grow rapidly as Eagle enters production
$1,200
$US M
Cash & Equivalents
$942
$900
$142
Total Debt
$316
Total Net Debt Balance
$174
Available Credit Facility
Outstanding
~$278
$604
$600
US$M
As of June 30, 2014
$300
$102
$0
-$300
Credit Facility totalling $600M completed in October 2013, for
a four year term with rates between LIBOR +2.75% to LIBOR
+3.75%
a.
Consensus Estimates - Net Cash / (Debt) a
-$282
-$600
2014E
2015E
2016E
2017E
Consensus estimates sourced from Bloomberg on Sep. 04, 2014
7
Operations & Projects
Neves-Corvo
Zinkgruvan
Aguablanca
Tenke Fungurume
Eagle
8
Neves-Corvo Snapshot
• Active mining in five major ore
bodies underground
• Significant copper exploration and
zinc expansion potential near-mine
• 2014 YTD production of 26kt copper
and 32kt zinc at cost of $1.85/lb Cu
Portugal
2014 Production
Guidance
50,000–55,000 t Cu
60,000–65,000 t Zn
2014 C1 Costs
$1.85/lb Cu
Mine Life
+10 years Cu + Zn
Forecasted Production (kt)
90
80
70
60
50
40
30
20
10
-
140
130
120
110
100
Total Production
• Zinc mining rates expected to
continue to increase from bulk
stopes in upper Lombador
Location
Copper, Zinc
• Underground copper and zinc mine
located in Portugal
90
2013
2014E
Zn
Cu
2015E
2016E
Total Production
Note: Midpoint of guidance range assumed for 2014 - 2016
9
Neves-Corvo Outlook
• Zinc expansion feasibility study progressing to plan with completion
expected in Q1 2015
• Study basis ~150,000 tpa zinc in 2017. Brownfields with low capex
intensity
10
Zinkgruvan Snapshot
• Underground zinc/lead/copper
mine located 200 km southwest of
Stockholm
Location
• High quality zinc concentrate
sought after by European smelters
2014 C1 Costs
75,000–80,000 t Zn
29,000–32,000 t Pb
3,000–4,000 t Cu
$0.35/lb Zn
Mine Life
+10 years
Forecasted Growth (kt)
Cu, Pb, Zn Production
• 2014 YTD production of 39kt zinc,
18kt lead and 2kt copper at cost of
$0.31/lb Zn
2014
Production
Guidance
90
80
70
60
50
40
30
20
10
-
140
120
100
80
60
40
Total Production
• Lowest quartile cost producer due
to high zinc grades and strong byproduct credits
Sweden
20
2013
Cu
2014
Pb
2015E
Zn
2016E
Total Production (t)
Note: Midpoint of guidance range assumed for 2014 - 2016
11
Zinkgruvan Outlook
• Overall production profile expected to remain steady going forward
• Progressive investments continue in the paste backfilling system to
improve system availability/expand capacity
12
Aguablanca Snapshot
• Open-pit nickel/copper mine
located 100 km north of Seville,
Spain
• Underground mining extends
mine life to 2018 for total capex
of $30M spread over 2014-2017
Location
Spain
Ownership
100%
2014
Production
Guidance
7,500–8,500 t Ni
6,000–7,000 t Cu
2014 C1 Costs
$4.25/lb Ni
Mine Life
• Operations going very wellexpected to achieve high end of
2014 production guidance
~4 years
Forecasted Production (kt)
8
30
25
6
• 2014 YTD production of 4kt
nickel and 3kt copper at cost of
$4.05/lb Ni
20
4
15
10
2
5
-
2013
2014E
Ni
Cu
2015E
Total Metal
2016E
Note: Midpoint of guidance range assumed for 2014 - 2016
13
Tenke Snapshot
• Operated by FreeportMcMoRan
•
6th
year of operation
• 2014 YTD production (100%
basis) of 101kt Cu and 6kt Co
at cost of $1.06/lb Cu
Location
Ownership
Democratic Republic of Congo
24%
2014 Sales
Production
Guidance (24%)
47,900 t Cu
2014 C1 Costs
$1.21/lb Cu
Mine Life
+40 years
14
Tenke Outlook
• For the year, cash distributions are
expected to be in range of $80 $100m
• New acid plant scheduled to be
completed in 2016 and is sized to
support future expansion initiatives
• Exploration and studies continue to
support expansion plans
15
Eagle Mine - Update
• Construction essentially completed;
on schedule with initial guidance
• Total capital costs from acquisition to
completion expected at $400m; on
budget with initial guidance
Location
Michigan, USA
2015-17
Production
Guidance
~23,000t Ni
~20,000t Cu
2015-17 C1 Costs
~$2.00/lb Ni
Mine Life
8 years
• Mine/mill commissioning complete
• Production ramp up progressing
• First saleable copper and nickel
concentrates expected in October
Eagle
Eagle East
Eagle Long Section Looking South
100 m grid: UTM/meters above sea level
16
Eagle Mine – In Operation
• Mine and mill site operations fully
staffed
• Ore for start-up stockpiled at mine and
mill sites
• Good initial start up phase tonnages,
plant recoveries and nickel and copper
concentrate grades being achieved
• All concentrate committed for initial
years of production under competitive
terms
• Ramp up to full capacity (2,000tpd)
expected in Q2 2015
17
Eagle – Construction On Time & Budget
Eagle Mine Site
Humboldt Mill
Mill Water Treatment Plant
Ball Mills
18
18
Eagle Reserves in Perspective
Ni Deposits and Districts - Total resources
10
Eagle
Raglan
Grade (% Ni)
Thompson
Noril'sk
Voisey's Bay
Punta Gorda
Pechenga
Jinchuan
Murrin-Murrin
Serovskoe
1
Sudbury
Mt Keith
Platreef
Duluth
0.1
1
10
Laterite Deposits
100
Million tonnes
Sulphide Deposits
1000
10000
Sulphide Districts
Exceptional Grades
Eagle ranks amongst the highest grade nickel deposits in the world
Source: Wood Mackenzie, 2014 19
Lundin Mining Summary
Geographic and base metal diversification
Portfolio of high quality, long-life mines
Optimization opportunities and exploration potential at all existing assets
No high risk major capital projects
Proven disciplined growth approach
20
TSX: LUN
OMX: LUMI