Freeport-McMoRan Inc. press release

Lundin Mining Third Quarter 2024 Results

2024-11-06

NYSE - New York Stock Exchange · Copper · Gold · Molybdenum · United States · Corporate Finance

Canada NewsWire

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VANCOUVER, BC , Nov. 6, 2024 /CNW/ - (TSX: LUN) (Nasdaq Stockholm: LUMI) Lundin Mining Corporation ("Lundin Mining" or the "Company") today reported its third quarter 2024 financial results. Unless otherwise stated, results are presented in United States dollars on a 100% basis.

Jack Lundin , President and CEO commented, "Our overall performance has contributed to another near record quarter for revenue and copper production for the Company and we are on track to meeting full-year consolidated copper guidance. Operationally, Candelaria had an excellent third quarter producing 50,000 tonnes of copper driven by planned higher copper head grades. This was one of Candelaria's strongest quarters and materially contributed to our success.

"During the quarter the Company realized two significant growth opportunities. We increased our ownership at our Caserones copper-molybdenum mine from 51% to 70%, which immediately added attributable copper production to the Company. Caserones, located within the Vicuña District, is a long-life mine that yields strong cash flow generation. It is within this District where we also announced a transformational transaction with BHP to jointly acquire Filo Corp. and form a new joint arrangement incorporating the world-class Filo del Sol Project and the Josemaria Project in Argentina to create a top-tier multi-generational mining complex. Filo shareholders have overwhelmingly voted in favour of the transaction which is expected to close in the first quarter of 2025. Around the time of closing, we will also provide an update to the market on the key milestones and next steps to advance these projects.

"On exploration we are ramping up for another drill season in the Vicuña District. We will continue the near-mine campaign at Caserones and follow up on our Cumbre Verde target near Josemaria. During the quarter we continued to drill near-mine targets at our other operations with the objective to replace resources, add mine life and seek out future expansion opportunities, such as the Saúva resource located near our Chapada operation.

"As we enter the final quarter of 2024, we have tightened the production guidance ranges at our sites and are re-affirming our full-year consolidated production guidance for copper and gold. For our other metals, we have marginally reduced our full year guidance for zinc and are maintaining our revised nickel guidance."

Third Quarter Operational and Financial Highlights

Copper Production: Consolidated production of 99,855 tonnes of copper in the third quarter. Other Production: During the quarter, a total of 46,610 tonnes of zinc, 893 tonnes of nickel and approximately 47,000 ounces of gold were produced. Revenue: $1,073.0 million in the third quarter with a realized copper price 1 of $4.29 /lb and a realized zinc price 1 of $1.29 /lb. Net Earnings and Adjusted Earnings 1 : Net earnings attributable to shareholders of the Company were $101.2 million or $0.13 per share in the third quarter with adjusted earnings of $72.5 million or $0.09 per share. Adjusted EBITDA 1 : $457.7 million generated during the quarter. Cash Generation: Cash provided by operating activities was $139.3 million and adjusted operating cash flow 1 was $305.2 million , excluding the impact of a working capital build of $165.9 million . Growth: During the quarter the Company announced two significant transactions: On July 2, 2024 , the Company closed the option to increase ownership in Caserones to 70%, which adds approximately 23,000 tonnes of additional attributable copper production to the Company's production profile 2 . The consideration of $350 million was fully funded through an increase to the Company's term loan from $800 million to $1.15 billion . On July 29 , 2024, Lundin Mining and BHP announced the joint acquisition of Filo Corp. Lundin Mining and BHP will form a 50/50 joint arrangement to hold the Filo del Sol Project and Lundin Mining's Josemaria Project. The partnership will create a multi-generational mining district with world-class potential that could support a globally ranked mining complex.

Outlook: The Company's full year production and cash cost guidance update is as follows: Copper: Annual copper production guidance ranges have been tightened for several of the assets and the new consolidated copper guidance for the year is now 366,000 to 389,000 tonnes compared to the previous range of 366,000 to 400,000 tonnes. The Company is on track to meet full year consolidated copper guidance. Zinc: Annual production guidance for Zinkgruvan has been increased which was offset by adjustments to zinc guidance at Neves-Corvo. New consolidated zinc guidance for the year has been adjusted to 190,000 to 199,000 tonnes from 195,000 tonnes to 215,000 tonnes. Gold: Annual gold guidance has remained unchanged incorporating an increase in guidance at Chapada offset by a reduction at Candelaria. Cash Costs: Forecast annual cash cost guidance at Chapada and Zinkgruvan has improved while cash cost guidance at Eagle has been adjusted upwards. All other sites remain unchanged. Sustaining Capital Expenditures1: Sustaining capital will be reduced by $75 million and is expected to total $720 million (previously $795 million ) for the year, primarily due to reductions in planned spending at Candelaria and Caserones. The Josemaria Project guidance has increased by $5 million to $230 million and exploration guidance increased by $7 million to $55.0 million for 2024. The increase in exploration expenditure is primarily due to accelerating exploration efforts at Caserones where drilling is targeting higher-grade copper breccia bodies to improve grades in the resource, as well as follow-up drilling at Cumbre Verde after positive results in the first half of 2024.

Summary Financial Results

| | Three months ended

September 30, | | Nine months ended

September 30, | | | | US$ Millions (except per share amounts) | 2024 | 2023 | | 2024 | 2023 | | Revenue | 1,073.0 | 992.2 | | 3,093.6 | 2,332.1 | | Gross profit | 291.8 | 197.3 | | 756.7 | 463.5 | | Attributable net earnings a | 101.2 | (3.0) | | 236.6 | 202.8 | | Net earnings | 127.8 | 21.9 | | 343.1 | 248.5 | | Adjusted earnings a,b | 72.5 | 85.3 | | 239.8 | 256.5 | | Adjusted EBITDA b | 457.7 | 415.1 | | 1,281.4 | 943.8 | | Basic earnings per share ("EPS") a | 0.13 | 0.00 | | 0.31 | 0.26 | | Diluted EPS a | 0.13 | 0.00 | | 0.30 | 0.26 | | Adjusted EPS a,b | 0.09 | 0.11 | | 0.31 | 0.33 | | Cash provided by operating activities | 139.3 | 303.8 | | 898.6 | 710.5 | | Adjusted operating cash flow b | 305.2 | 316.5 | | 988.7 | 662.2 | | Adjusted operating cash flow per share b | 0.39 | 0.41 | | 1.28 | 0.86 | | Free cash flow from operations b | 1.7 | 136.5 | | 406.9 | 228.3 | | Free cash flow b | (61.8) | 71.1 | | 173.3 | (47.7) | | Cash and cash equivalents | 295.5 | 357.3 | | 295.5 | 357.3 | | Net debt excluding lease liabilities b | 1,541.7 | 880.9 | | 1,541.7 | 880.9 | | Net debt b | 1,802.5 | 1,158.9 | | 1,802.5 | 1,158.9 |

| a Attributable to shareholders of Lundin Mining Corporation. | | b These are non-GAAP measures. Please refer to the Company's discussion of non-GAAP and other performance measures in its Management's Discussion and Analysis for the three and nine months ended September 30, 2024 and the Reconciliation of Non-GAAP Measures section at the end of this news release. |

The Company generated revenue of $1,073.0 million during the quarter, driven by 90,069 tonnes of copper sold at a realized price of $4.29 /lb. Revenue benefited from higher realized copper, gold, and zinc prices, partially offset by $5.3 million negative provisional pricing adjustments on prior period concentrate sales. Gross profit of $291.8 million and Adjusted EBITDA of $457.7 million in the quarter reflect higher realized copper, zinc and gold prices partially offset by decreases in zinc and nickel sales volumes. Net earnings attributable to shareholders of the Company were $101.2 million or $0.13 per share in the quarter. Adjusted earnings attributable to shareholders of the Company for the quarter were $72.5 million or $0.09 per share after removing $30.6 million unrealized gains on derivative contracts and adding $14.8 million in expenses relating to the partial suspension of underground operations at Eagle, among other things. Cash and cash equivalents as at September 30, 2024 were $295.5 million . Cash provided by operating activities amounted to $139.3 million and cash used to fund investing activities amounted to $264.5 million . The Company had a net debt excluding lease liabilities 1 balance of $1,541.7 million as at September 30, 2024 ( December 31, 2023 - $946.2 million ). Free cash flow 1 for the quarter of $(61.8) million was impacted by $165.9 million of working capital outflows as a result of timing of sales at Candelaria and Chapada. As at November 6, 2024 , the Company had a cash balance of approximately $466.1 million and a net debt excluding lease liabilities balance of approximately $1,362.6 million .

Operational Performance

Total Production

| (Contained metal) a | 2024 | 2023 | | | | | | | | | YTD | Q3 | Q2 | Q1 | Total | Q4 | Q3 | Q2 | Q1 | | | Copper (t) b | 267,576 | 99,855 | 79,708 | 88,013 | 314,798 | 103,337 | 89,942 | 60,057 | 61,462 | | Zinc (t) | 139,758 | 46,610 | 47,460 | 45,688 | 185,161 | 50,719 | 49,774 | 36,115 | 48,553 | | Nickel (t) | 5,869 | 893 | 1,721 | 3,255 | 16,429 | 3,729 | 4,290 | 4,686 | 3,724 | | Gold (koz) b | 112 | 47 | 32 | 33 | 149 | 44 | 35 | 34 | 36 | | Molybdenum (t) b | 2,271 | 693 | 714 | 864 | 2,024 | 928 | 1,096 | — | — | | a. Tonnes (t) and thousands of ounces (koz) | | | | | | | | | | | b. Candelaria and Caserones production is on a 100% basis. | | | | | | | | | |

_Candelaria (80% owned): _Candelaria produced 50,018 tonnes of copper and approximately 29,000 ounces of gold in concentrate on a 100% basis during the quarter. Production in the quarter was positively impacted by higher copper head grades from Phase 11. Access to higher grade Phase 11 ore is anticipated to continue through most of the fourth quarter of 2024 as per the planned mine sequence. Production costs in the quarter were higher than in the prior year quarter due to higher copper sales, but also partially offset by favourable foreign exchange. Cash cost of $1.55 /lb was positively impacted by higher sales volumes, favourable foreign exchange and favourable by-product credits.

_Caserones (70% owned): _Caserones produced 29,033 tonnes of total copper and 693 tonnes of molybdenum on a 100% basis during the quarter. Copper and molybdenum production in the quarter was impacted by labour action in August lasting 14 days which reduced throughput during that period to approximately 50% of capacity. Lower head grades were realized during the quarter as a result of a higher proportion of ore from Phase 6 due to hydrogeologic conditions in Phase 5. Production costs in the quarter were lower than in the prior year comparable period due to lower copper concentrate and molybdenum volumes and favourable foreign exchange. Cash cost of $2.96 /lb was negatively impacted by lower sales volumes as a result of the labour action.

_Chapada (100% owned): _Chapada produced 11,694 tonnes of copper and approximately 18,000 ounces of gold in concentrate during the quarter. Copper production was positively impacted by higher throughput that was offset by lower grades and recoveries as a result of processing of stockpiled ore as part of an optimized mine plan that significantly reduces waste movement. Gold production reflected higher grades as a result of increased ore mined from the South and Central pits replacing older low-grade stockpiles. Production costs increased due to higher sales volumes, partially offset by favourable foreign exchange. Cash cost of $1.37/lb benefited from higher gold by-product credits and favourable foreign exchange combined with mining cost decreases due to operational improvements.

_Eagle (100% owned): _Eagle produced 893 tonnes of nickel and 1,027 tonnes of copper in the quarter. Production has been impacted by the fall of ground in the lower ramp in Eagle East during the second quarter of 2024 which restricted access to Eagle East, and reduced mining rates until ramp rehabilitation is completed. Normal throughput rates are expected to resume in late 2024. Production costs were reduced by lower sales and production volumes leading to reduced spend in milling, transportation and lower royalty expense. Production costs in the quarter excluded approximately $14 .8 million of overhead costs that have been recorded in Other Income and Expense as a result of the partial suspension of underground mining operations. Nickel cash cost 1 of $7.24 /lb was impacted by lower sales volumes, partially offset by higher by-product credits as a result of higher realized copper prices.

_Neves-Corvo (100% owned): _Neves-Corvo produced 6,698 tonnes of copper and 29,509 tonnes of zinc during the quarter. Copper production was impacted by lower throughput and grades. The decrease in throughput and grades is attributed to changes in mine sequencing as a result of adjustments made to the mining method and cable bolting requirements. Additional development work in Lombador North and rehabilitation work also limited ore availability. Zinc production benefitted from higher throughput and recoveries as a result of the zinc expansion project. During the month of August, there was a record in shaft hoisting of 440,000 tonnes over the month, in addition to record zinc production of 10,527 tonnes. During the month of September, the daily shaft hoisting of 19,000 tonnes set a new record for the mine. Production costs increased due to an increase in zinc and lead sales volumes and cash cost of $2.13 /lb benefitted from higher by-product credits.

_Zinkgruvan (100% owned): _Zinkgruvan produced 17,101 tonnes of zinc and 5,693 tonnes of lead in the quarter reflecting lower grades and throughput which were driven by changes in mine sequencing from operational and maintenance interruptions. Copper production of 1,385 tonnes in the quarter reflected higher throughput. Production costs decreased due to lower sales volumes and zinc cash cost of $0.16 /lb benefitted from higher copper by-product credits as a result of higher realized copper prices.

| | | 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 ("MD&A") for the three and nine months ended September 30, 2024 and the Reconciliation of Non-GAAP measures section at the end of this news release. | | 2 Based on Caserones 2024 revised production guidance as outlined in the outlook section of the MD&A for the three and nine months ended September 30, 2024. |

Outlook

Annual guidance for 2024 has been updated from that disclosed in the Company's Management's Discussion and Analysis for the three and six months ended June 30, 2024 .

The Company remains on track to meet annual consolidated copper production guidance. The total production guidance range for copper has been tightened with the top end of the range at Candelaria increased as a result of continued access to higher grade ore in the second half of the year. Copper production guidance ranges at Caserones and Neves-Corvo have been tightened and lowered slightly. At Caserones, this reflects the impact of the labour action during the quarter that reduced operations for 14 days. At Neves-Corvo, changes in mine sequencing due to rehabilitation and development efforts led to the change in guidance.

Total production guidance for zinc has been revised, guidance range for Zinkgruvan increased slightly and the guidance range for Neves-Corvo reduced as a result of rehabilitation and development work impacting mine sequencing. Annual gold guidance has remained unchanged, incorporating an increase in guidance at Chapada offset by a reduction at Candelaria. For molybdenum, the guidance range has increased to reflect expected results according to the mine plan.

Cash cost guidance at Chapada and Zinkgruvan was lowered with cash costs continuing to benefit from increased realized prices on by-product sales and weaker local currencies. Cash cost guidance at Eagle has increased due to reduced mining rates following a fall of ground that continues to limit production.

Annual sustaining capital expenditure guidance has been lowered to $720 million from $795 million with reductions primarily at Caserones and Candelaria. Expenditure guidance related to the Josemaria Project of $230 million and exploration guidance of $55 .0 million have been revised for 2024. The increase in exploration expenditure is primarily due to accelerating exploration efforts at Caserones where drilling is targeting the higher-grade copper breccia bodies to improve grades in the resource, as well as follow-up drilling at Cumbre Verde after positive results in the first half of 2024.

2024 Production and Cash Cost Guidance

| | | | Previous Guidance a | Revised Guidance | | | | | (contained metal) | Production | Cash Cost ($/lb) b | Production | Cash Cost ($/lb) b | | | | Copper (t) | Candelaria (100%) | 160,000 – 170,000 | 1.60 – 1.80 c | 165,000 – 173,000 | 1.60 – 1.80 c | | | | Caserones (100%) | 124,000 – 135,000 | 2.60 – 2.80 | 121,000 – 125,000 | 2.60 – 2.80 | | | | Chapada | 43,000 – 48,000 | 1.95 – 2.15 d | 43,000 – 48,000 | 1.55 – 1.65 d | | | | Eagle | 5,000 – 7,000 | | 6,000 – 8,000 | | | | | Neves-Corvo | 30,000 – 35,000 | 1.95 – 2.15 c | 27,000 – 30,000 | 1.95 – 2.15 c | | | | Zinkgruvan | 4,000 – 5,000 | | 4,000 – 5,000 | | | | | Total | 366,000 – 400,000 | | 366,000 – 389,000 | | | | Zinc (t) | Neves-Corvo | 120,000 – 130,000 | | 111,000 – 116,000 | | | | | Zinkgruvan | 75,000 – 85,000 | 0.45 – 0.50 c | 79,000 – 83,000 | 0.40 – 0.45 c | | | | Total | 195,000 – 215,000 | | 190,000 – 199,000 | | | | Nickel (t) | Eagle | 7,000 – 9,000 | 3.20 – 3.40 | 7,000 – 9,000 | 3.70 – 3.90 | | | Gold (koz) | Candelaria (100%) | 100 – 110 | | 92 – 102 | | | | | Chapada | 55 – 60 | | 63 – 68 | | | | | Total | 155 – 170 | | 155 – 170 | | | | Molybdenum (t) | Caserones (100%) | 2,500 - 3,000 | | 2,800 – 3,300 | |

| a. Guidance as outlined in the Company's Management Discussion and Analysis ("MD&A") for the three and six months ended June 30, 2024.

b. Cash costs are based on various assumptions and estimates, including but not limited to: production volumes, commodity prices (Cu: $3.75/lb, Zn: $1.10/lb, Pb: $0.90/lb, Au: $1,800/oz, Mo: $20.00/lb, Ag: $23.00/oz), foreign exchange rates (€/USD:1.05, USD/SEK:10.50, USD/CLP:850, USD/BRL:5.00) and production costs. Cash cost is a non-GAAP measure - see the Company's Management Discussion and Analysis for the three and nine months ended September 30, 2024 and the Reconciliation of Non-GAAP Measures at the end of this news release.

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 $429/oz gold and $4.28/oz to $4.68/oz silver.

d. Chapada's cash cost is calculated on a by-product basis and does not include the effects of its copper stream agreements. Effects of the copper stream agreements are reflected in copper revenue and will impact realized price per pound. |

2024 Capital Expenditure Guidance b

| | ($ millions) | Previous Guidance a | Revisions | Revised Guidance | | | Candelaria (100% basis) | 300 | (25) | 275 | | | Caserones (100% basis) | 175 | (40) | 135 | | | Chapada | 110 | — | 110 | | | Eagle | 25 | — | 25 | | | Neves-Corvo | 115 | (5) | 110 | | | Zinkgruvan | 70 | (5) | 65 | | | Other | — | — | — | | | Total Sustaining | 795 | (75) | 720 | | | Josemaria (Expansionary) | 225 | 5 | 230 | | | Total Capital Expenditures | 1,020 | (70) | 950 |