Aris Mining Corporation press release
Lundin Mining Fourth Quarter and Full Year 2022 Results
TSX - Toronto Stock Exchange · Gold · Silver · Lead · Zinc · Copper · Canada
Canada NewsWire
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TORONTO , Feb. 22, 2023 /CNW/ - (TSX: LUN) (Nasdaq Stockholm: LUMI) Lundin Mining Corporation ("Lundin Mining" or the "Company") today reported net earnings attributable to Lundin Mining shareholders of $145.6 million ( $0.19 per share) in the fourth quarter and $426.9 million ( $0.56 per share) for the year ended December 31, 2022 . Adjusted earnings 1 were $191.5 million ( $0.25 per share) for the quarter and $482.8 million ( $0.63 per share) for the year. Adjusted EBITDA 1 for the quarter and year were $353.7 million and $1,292.5 million , respectively.
"The Lundin Mining team delivered solid operating and financial results in 2022. Despite challenging site–specific and global inflationary conditions, production guidance was achieved for copper, nickel and gold, and we generated over $3.0 billion in revenue, nearly $1.0 billion of adjusted operating cash flow and $1.3 billion of adjusted EBITDA. We also returned over $330 million to our shareholders in dividends and share buybacks," commented Peter Rockandel , CEO.
Mr. Rockandel added, "In 2023, we are focused on delivering-to-plan at each of our operations while diligently advancing our significant growth projects. Our long-life cost-competitive mines and strong financial position, provide a solid base for us to create value and material growth beyond the ~400,000 tonnes of copper-equivalent production we delivered in 2022."
Summary Financial Results
| | Three months ended
December 31, | | Year ended
December 31, | | | | US$ Millions (except per share amounts) | 2022 | 2021 | | 2022 | 2021 | | Revenue | 811.4 | 1,018.6 | | 3,041.2 | 3,328.8 | | Gross profit | 155.2 | 433.2 | | 762.6 | 1,369.7 | | Attributable net earnings 2 | 145.6 | 228.8 | | 426.9 | 780.3 | | Net earnings | 145.3 | 266.1 | | 463.5 | 879.3 | | Adjusted earnings (loss) 1,2 | 191.5 | 281.5 | | 482.8 | 820.6 | | Adjusted EBITDA 1 | 353.7 | 623.0 | | 1,292.5 | 1,869.4 | | Basic and diluted earnings per share ("EPS") 2 | 0.19 | 0.31 | | 0.56 | 1.06 | | Adjusted EPS 1,2 | 0.25 | 0.38 | | 0.63 | 1.11 | | Cash flow from operations | 156.9 | 384.2 | | 876.9 | 1,485.0 | | Adjusted operating cash flow 1 | 289.1 | 481.5 | | 992.9 | 1,487.1 | | Adjusted operating cash flow per share 1 | 0.38 | 0.65 | | 1.30 | 2.02 | | Free cash flow from operations 1 | (35.7) | 256.2 | | 381.4 | 1,054.5 | | Free cash flow 1 | (124.3) | 230.3 | | 34.1 | 953.2 | | Cash and cash equivalents | 191.4 | 594.1 | | 191.4 | 594.1 | | Net (debt) cash 1 | (10.9) | 563.1 | | (10.9) | 563.1 |
| 1 These are non-GAAP measures. Please refer to the Company's discussion of non-GAAP and other performance measures in its Management's Discussion and Analysis for the year ended December 31, 2022 and the Reconciliation of Non-GAAP Measures section at the end of this news release. | | 2 Attributable to shareholders of Lundin Mining Corporation. |
Highlights
For the year ended December 31, 2022 , the Company generated revenue in excess of $3.0 billion (2021 - $3.3 billion ). The Company achieved gross profit of $762.6 million (2021 - $1,369.7 million ) and adjusted EBITDA of $1,292.5 million (2021 - $1,869.4 million ). The Company remains in a strong balance sheet position maintaining low leverage with ample liquidity available.
Total copper and gold production substantially achieved the most recent guidance, with gold at the top end of the guidance range. Total zinc produced exceeded the prior year but was below the guidance range. Total nickel produced achieved guidance. Production costs and C1 costs were higher than the prior year primarily due to inflationary impacts on consumables, particularly diesel and electricity, as well as on contractor costs, partially offset by favourable foreign exchange.
Operational Performance
Candelaria (80% owned): Candelaria produced, on a 100% basis, 152,042 tonnes of copper, approximately 86,000 ounces of gold and 1.6 million ounces of silver in concentrate during the year. Production of copper was higher than the prior year due to higher grades. Gold production was lower than the prior year due to throughput. Copper production was modestly below guidance but gold production was within the guidance range. Production costs were higher than the prior year due primarily to higher costs for energy and consumables. Copper cash cost 1 of $1.96 /lb were higher than the annual guidance due primarily to bonuses paid resulting from early successful union negotiations, and higher than the prior year due to the impact of higher production costs, partially offset by a weaker CLP.
Chapada (100% owned): Chapada produced 45,739 tonnes of copper and approximately 68,000 ounces of gold, with both metals lower than the prior year due to mine sequencing impacting grades as a result of above average rainfall experienced in the first half of 2022. Copper production was within the guidance range and gold production exceeded guidance. Production costs were higher than the prior year due to higher costs for energy and other input costs. Full year copper cash cost of $2.08 /lb was better than guidance.
Eagle (100% owned): Eagle's production of 17,475 tonnes of nickel and 15,895 tonnes of copper were both lower than the prior year due to planned lower grades. Both metals achieved annual guidance. Production costs were higher than the prior year due to higher energy and consumable costs. Nickel cash cost of $0.79 /lb was higher than the prior year as a result of higher production costs and exceeded guidance due to by-product copper prices.
Neves-Corvo (100% owned): Neves-Corvo produced 31,906 tonnes of copper and 82,435 tonnes of zinc during the year. Copper production was lower than prior year due to lower grades and recoveries, while zinc production was higher than the prior year as a result of increased throughput from ZEP ("Zinc Expansion Project"). However, both metals were below guidance. Production costs were higher than the prior year due primarily to inflationary impacts on electricity, partially offset by a weaker Euro. Copper cash cost of $2.27 /lb for the year was higher than the prior year due to increased production costs. Cash cost was higher than guidance due to higher production costs and lower zinc by-product volumes.
Zinkgruvan (100% owned): Zinc production of 76,503 tonnes was below the prior year and annual guidance due to grades. Lead production of 30,517 tonnes was higher than the prior year due to higher grades. Production costs were higher than the prior year, but on a per unit basis, zinc cash cost of $0.32 /lb for the current year was better than guidance and prior year due to higher by-product credits.
Total Production
| (Contained metal in concentrate) a | 2022 | 2021 | | | | | | | | | | YTD | Q4 | Q3 | Q2 | Q1 | Total | Q4 | Q3 | Q2 | Q1 | | | Copper (t) b | 249,659 | 56,552 | 63,930 | 64,096 | 65,081 | 262,884 | 76,996 | 65,077 | 63,457 | 57,354 | | Zinc (t) | 158,938 | 44,308 | 40,327 | 41,912 | 32,391 | 143,797 | 36,830 | 38,769 | 34,833 | 33,365 | | Gold (koz) b | 154 | 36 | 45 | 39 | 34 | 167 | 46 | 46 | 41 | 34 | | Nickel (t) | 17,475 | 4,096 | 4,379 | 4,719 | 4,281 | 18,353 | 4,101 | 4,124 | 4,774 | 5,354 | | a. Tonnes (t) and thousands of ounces (koz) | | | | | | | | | | | | b. Candelaria's production is on a 100% basis. | | | | | | | | | | |
| | | 1 These are non-GAAP measures. Please refer to the Company's discussion of non-GAAP and other performance measures in its Management's Discussion and Analysis for the year ended December 31, 2022 and the Reconciliation of Non-GAAP Measures section at the end of this news release. |
Corporate Updates
On February 17, 2022 , the Company declared a semi-annual performance dividend of C$0.11 per share. On March 23, 2022 , the Company announced the appointment of Ms. Juliana Lam to the Company's Board of Directors effective the same date. The Company also announced the retirement of Director Mr. Peter Jones effective as at the Company's 2022 annual shareholders meeting. On March 30, 2022 , and September 30, 2022 , the Company reported two independent fatalities at its Neves-Corvo mine in Portugal . Operations were voluntarily temporarily suspended following each incident and relevant authorities were notified. Mandatory regulatory investigations were commenced and the Company continues to cooperate fully with those investigations. On April 26, 2022 , the Company executed a fourth amended and restated credit agreement that increased its revolving credit facility (the "Credit Facility" or the "Credit Agreement") to $1,750.0 million (previously $800.0 million with a $200.0 million accordion option), reduced the cost of borrowing, and extended the term to April 2027 , from August 2023 . The amended Credit Facility bears interest on drawn funds at rates of Term Secured Overnight Financing Rate ("Term SOFR") + Credit Spread Adjustment ("CSA") + 1.45% to Term SOFR+CSA+2.50% depending upon the Company's net leverage ratio, reduced from LIBOR+1.75% to LIBOR+2.75%, previously. The amendment and restatement provides the Company with more favourable covenants, reduced security on assets and included other customary revisions. On February 16, 2023 , the Company received commitments from the lenders of the revolving Credit Facility to, upon completion and execution of the First Amendment to the Fourth Amended and Restated Credit Agreement, extend the term by one year to April 2028 and reduce the Credit Spread Adjustment. On April 28, 2022 , the Company completed the plan of arrangement (the "Arrangement") to acquire all of the issued and outstanding shares of Josemaria Resources Inc. ("Josemaria Resources"). Under the terms of the Arrangement, Josemaria Resources shareholders were provided with the right to elect to receive (i) 0.1487 of a common share of Lundin Mining (each whole share, a "Lundin Mining Share") per Josemaria Resources common share ("Josemaria Resources Share") plus C$0.11 for each whole Lundin Mining Share issued to such shareholder; (ii) or C$1.60 in cash for each Josemaria Resources Share; (iii) or any combination thereof, subject to pro-ration of a total maximum number Lundin Mining Shares and cash consideration. Pursuant to the acquisition, the Company paid an aggregate of $144 .4 million in cash and issued 40,031,936 Lundin Mining Shares to Josemaria Resources shareholders. On May 12, 2022 , following the Company's annual shareholders meeting, the Company announced the appointment of Mr. Adam Lundin as the Chair of the Board of Directors following the retirement of Mr. Lukas H. Lundin . On July 19, 2022 , the Company announced the publication of its 2021 Sustainability Report, which highlighted its new Focused on the Future long-term sustainability strategy which included a 35% reduction target in greenhouse gas emissions by 2030. On July 27, 2022 , the Company announced the passing of the Company's founder and former Chairman, Mr. Lukas H. Lundin . The Company also announced the appointment of Ms. Natasha Vaz to the Company's Board of Directors, and the following executive leadership appointments: Mr. Juan Andres Morel , Senior Vice President and Chief Operating Officer; Mr. Teitur Poulsen, Senior Vice President and Chief Financial Officer; Mr. David Dicaire , Senior Vice President, Josemaria Project ; and Ms. Kristen Mariuzza , Senior Vice President, Sustainability, Health and Safety. On July 30, 2022 , a sinkhole was detected near the Company's Alcaparrosa mine in Chile . All personnel at the operation and in the community were safe and the appearance of the sinkhole did not result in any injuries. All mining operations at the Alcaparrosa underground mine remain suspended and the Company mobilized resources in support of the ongoing investigation. On October 12, 2022 , the Company announced the passing of its Board member Ms. Karen Poniachik, who had served on the Board of Directors since February 2021 . On December 5, 2022 , the Company announced that it had renewed its Normal Course Issuer Bid ("NCIB") which allows the Company to purchase up to 65,313,173 common shares over a period of twelve months commencing on December 9, 2022 and expiring on December 8, 2023 . As at February 22, 2023 , the Company has not purchased any common shares under the renewed NCIB. On December 6, 2022 , the Company announced the appointment of Mr. Jack Lundin as President. Concurrently, Mr. Jack Lundin has stepped down from the Company's Board of Directors. During the last quarter of 2022, the Company decided to relocate its corporate head office from Toronto to Vancouver, Canada , to be effective in the second half of 2023. On February 8, 2023 , the Company reported (1) a maiden Mineral Resource for the Saúva deposit and (2) its Mineral Resource and Mineral Reserve estimates as at December 31, 2022 (or as otherwise specified therein).
Financial Performance
Gross profit for the year ended December 31, 2022 was $762.6 million , which was $607.1 million lower than the prior year due to lower metal prices, higher operating costs impacted by inflation partially offset by favourable foreign exchange impacts. Adjusted EBITDA of $1,292.5 million for the year ended December 31, 2022 was 31% lower than the prior year due to lower gross profit before depreciation. For the year ended December 31, 2022 net earnings of $463.5 million were 47% lower than the prior year due to lower gross profit and higher project development costs partially offset by lower income taxes, higher foreign exchange and trading gain on equity investment as well as unrealized gain on revaluation of hedges. Adjusted earnings of $482.8 million for the year ended December 31, 2022 were 41% lower than the prior year due to lower net earnings.
Financial Position and Financing
During the year ended December 31, 2022 cash and cash equivalents decreased by $402.7 million . Cash flow from operations of $876.9 million was used to fund investing activities of $1,013.4 million , which includes the Josemaria Resources acquisition. Cash used for financing activities were $251.6 million which includes the payment of shareholder dividends of $275.4 million , share repurchase of $59.4 million and distributions to non-controlling interests partially offset by net proceeds from debt. As at December 31, 2022 , the Company had a net debt balance of $10.9 million . Excluding the impact of finance leases the Company would be in a net cash position. Net debt changed from a net cash position during the year due to the activities described above for cash and cash equivalents. As at February 22, 2023 , the Company had cash and net debt balances of approximately $220.0 million and $15.0 million , respectively.
Outlook
Guidance for 2023 remains unchanged from that provided on January 12, 2023 (see news release "Lundin Mining Announces 2022 Production Results & Provides 2023 Guidance").
2023 Production and Cash Cost Guidance
| | | Guidance a | | | | | | | Production | Cash Costs (lb) b | | | | Copper (t) | Candelaria (100%) | 145,000 | - | 155,000 | 1.80 - 1.95 c | | | Chapada | 43,000 | - | 48,000 | 2.55 - 2.75 d | | | Eagle | 12,000 | - | 15,000 | | | | Neves-Corvo | 33,000 | - | 38,000 | 2.10 - 2.30 c | | | Zinkgruvan | 3,000 | - | 4,000 | | | | Total | 236,000 | - | 260,000 | | | Zinc (t) | Neves-Corvo | 100,000 | - | 110,000 | | | | Zinkgruvan | 80,000 | - | 85,000 | 0.60 - 0.65 c | | | Total | 180,000 | - | 195,000 | | | Gold (koz) | Candelaria (100%) | 85 | - | 90 | | | | Chapada | 55 | - | 60 | | | | Total | 140 | - | 150 | | | Nickel (t) | Eagle | 13,000 | - | 16,000 | 1.50 - 1.65 |
| a. Guidance as outlined in the news release "Lundin Mining Announces 2022 Production and Provides 2023 Guidance), dated January 12, 2023. | | b. Cash costs are based on various assumptions and estimates, including but not limited to: production volumes, as noted above, commodity prices (Cu: $3.75/lb, Zn: $1.30/lb, Pb: $0.90/lb, Au: $1,750/oz), foreign exchange rates (€/USD:1.00, USD/SEK:10.50, USD/CLP:850, USD/BRL:5.00) and production costs. | | c. 68% of Candelaria's total gold and silver production are subject to a streaming agreement and silver production at Zinkgruvan and Neves-Corvo are also subject to streaming agreements. Cash costs are calculated based on receipt of approximately $425/oz gold and $4.25/oz to $4.57/oz silver. | | d. Chapada cash cost is calculated on a by-product basis and does not include the effects of its copper stream agreements. Effects of the copper stream agreements are reflected in copper revenue and will impact realized price per pound. |
2023 Capital Expenditure Guidance a,b
| | ($ millions) | | | Candelaria (100% basis) | 400 | | | Chapada | 70 | | | Eagle | 20 | | | Neves-Corvo | 130 | | | Zinkgruvan | 70 | | | Other | 10 | | | Total Sustaining Capital | 700 | | | Josemaria | 400 | | | Total Capital Expenditures | 1,100 | | | | | |
| a. Guidance as outlined in the news release dated January 12, 2023. | | b. Sustaining capital expenditure is a supplementary financial measure and expansionary capital expenditure is a non-GAAP measure – see Section "Non-GAAP and Other Performance Measures" of this MD&A for discussion. |
2023 Exploration Investment Guidance
Exploration expenditures are planned to be $45.0 million in 2023 primarily for in-mine and near-mine targets. The largest portion of the planned expenditures are to be at Candelaria and Chapada with the remaining operations and new business development activities comprising the balance.
About Lundin Mining
Lundin Mining is a diversified Canadian base metals mining company with projects and operations in Argentina , Brazil , Chile , Portugal , Sweden and the United States of America , primarily producing copper, zinc, gold and nickel.
The information in this release is subject to the disclosure requirements of Lundin Mining under the EU Market Abuse Regulation. The information was submitted for publication, through the agency of the contact persons set out below on February 22, 2023 at 19:15 Eastern Time .
Technical Information
The scientific and technical information in this press release has been prepared in accordance with the disclosure standards of National Instrument 43-101 ("NI 43-101") and has been reviewed by Arman Barha , P.Eng., Vice President, Technical Services of the Company, a "Qualified Person" under NI 43-101. Mr. Barha has verified the data disclosed in this release and no limitations were imposed on his verification process.
Reconciliation of Non-GAAP Measures
The Company uses certain performance measures in its analysis. These performance measures have no standardized meaning within generally accepted accounting principles under International Financial Reporting Standards and, therefore, amounts presented may not be comparable to similar data presented by other mining companies. For additional details please refer to the Company's discussion of non-GAAP and other performance measures in its Management's Discussion and Analysis for the year ended December 31, 2022 which is available on SEDAR at www.sedar.com .
Adjusted EBITDA can be reconciled to the Company's Consolidated Statement of Earnings as follows:
| | Three months ended
December 31, | | Year ended
December 31, | | | | ($thousands) | 2022 | 2021 | | 2022 | 2021 | | Net earnings | 145,295 | 266,070 | | 463,533 | 879,301 | | Add back: | | | | | | | Depreciation, depletion and amortization | 142,710 | 145,367 | | 554,750 | 522,764 | | Finance income and costs | 16,664 | 11,070 | | 64,185 | 41,387 | | Income taxes | (2,347) | 127,495 | | 134,628 | 365,686 | | | 302,322 | 550,002 | | 1,217,096 | 1,809,138 | | Unrealized foreign exchange | (3,836) | 24,121 | | 21,164 | 27,648 | | Unrealized (gain) loss of derivative asset and liability | (59,681) | 4,581 | | (58,691) | 3,836 | | Income from investment in associates | — | (2,661) | | (3,297) | (24,895) | | Gain on disposal of subsidiary | — | — | | (16,828) | — | | Sinkhole costs | 55,482 | — | | 63,271 | — | | Ore stockpile inventory write-down | 62,546 | 65,025 | | 62,546 | 65,025 | | Business interruption insurance settlement | — | (16,000) | | — | (16,000) | | Other | (3,117) | (2,114) | | 7,245 | 4,664 | | Total adjustments - EBITDA | 51,394 | 72,952 | | 75,410 | 60,278 | | Adjusted EBITDA | 353,716 | 622,954 | | 1,292,506 | 1,869,416 | | | | | | | |