Yukon Metals Corp press release

Lundin Mining First Quarter 2024 Results

2024-05-01

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VANCOUVER, BC , May 1, 2024 /CNW/ - (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.

| | | 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 months ended March 31, 2024 and the Reconciliation of Non-GAAP measures section at the end of this news release. |

Summary Financial Results

| | Three months ended

March 31, | | | US$ Millions (except per share amounts) | 2024 | 2023 | | Revenue | 937.0 | 751.3 | | Gross profit | 185.4 | 213.3 | | Attributable net earnings a | 13.9 | 146.6 | | Net earnings | 58.6 | 165.3 | | Adjusted earnings a,b | 45.2 | 125.7 | | Adjusted EBITDA b | 362.9 | 336.9 | | Basic and diluted earnings per share ("EPS") a | 0.02 | 0.19 | | Adjusted EPS a,b | 0.06 | 0.16 | | Cash provided by operating activities | 267.5 | 211.9 | | Adjusted operating cash flow b | 313.7 | 235.1 | | Adjusted operating cash flow per share b | 0.41 | 0.30 | | Free cash flow from operations b | 67.7 | 71.1 | | Free cash flow b | (1.7) | (34.2) | | Cash and cash equivalents | 365.5 | 184.2 | | Net debt excluding lease liabilities b | 981.4 | 9.1 | | Net debt b | 1,241.9 | 34.6 |

| 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 months ended March 31, 2024 and the Reconciliation of Non-GAAP Measures section at the end of this news release. |

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 .

| _ | | 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 months ended March 31, 2024 and the Reconciliation of Non-GAAP measures section at the end of this news release. |

Operational Performance

Total Production

| (Contained metal) a | 2024 | 2023 | | | | | | Q1 | Total | Q4 | Q3 | Q2 | Q1 | | | Copper (t) b | 88,013 | 314,798 | 103,337 | 89,942 | 60,057 | 61,462 | | Zinc (t) | 45,688 | 185,161 | 50,719 | 49,774 | 36,115 | 48,553 | | Nickel (t) | 3,255 | 16,429 | 3,729 | 4,290 | 4,686 | 3,724 | | Gold (koz) b | 33 | 149 | 44 | 35 | 34 | 36 | | Molybdenum (t) b | 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 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:

| | Three months ended March 31, 2024 | | | | | | | | Operations | Candelaria | Caserones | Chapada | Eagle | Neves-Corvo | Zinkgruvan | | | ($000s, unless otherwise noted) | (Cu) | (Cu) | (Cu) | (Ni) | (Cu) | (Zn) | Total | | Sales volumes (Contained metal): | | | | | | | | | Tonnes | 33,536 | 35,211 | 8,742 | 2,163 | 5,886 | 15,825 | | | Pounds (000s) | 73,934 | 77,627 | 19,273 | 4,769 | 12,976 | 34,888 | | | Production costs | | | | | | | 567,134 | | Less: Royalties and other | | | | | | | (19,970) | | | | | | | | | 547,164 | | Deduct: By-product credits | | | | | | | (165,308) | | Add: Treatment and refining | | | | | | | 46,951 | | Cash cost | 139,490 | 166,439 | 38,735 | 19,249 | 42,057 | 22,837 | 428,807 | | Cash cost per pound | 1.89 | 2.14 | 2.01 | 4.04 | 3.24 | 0.65 | | | Add: Sustaining capital | 99,532 | 42,754 | 29,199 | 4,078 | 22,413 | 14,341 | | | Royalties | 2,968 | 8,814 | 1,617 | 2,678 | 735 | — | | | Reclamation and other closure accretion and depreciation | 2,167 | 1,040 | 2,679 | 1,968 | 1,335 | 1,186 | | | Leases & other | 3,033 | 15,381 | 765 | 1,236 | 64 | 78 | | | All-in sustaining cost | 247,190 | 234,428 | 72,995 | 29,209 | 66,604 | 38,442 | | | AISC per pound ($/lb) | 3.34 | 3.02 | 3.79 | 6.12 | 5.13 | 1.10 | |

| | Three months ended March 31, 2023 | | | | | | | | Operations | Candelaria | Caserones | Chapada | Eagle | Neves-Corvo | Zinkgruvan | | | ($000s, unless otherwise noted) | (Cu) | (Cu) | (Cu) | (Ni) | (Cu) | (Zn) | Total | | Sales volumes (Contained metal): | | | | | | | | | Tonnes | 35,570 | — | 9,072 | 2,735 | 8,031 | 16,612 | | | Pounds (000s) | 78,418 | — | 20,000 | 6,030 | 17,705 | 36,623 | | | Production costs | | | | | | | 417,764 | | Less: Royalties and other | | | | | | | (12,086) | | | | | | | | | 405,678 | | Deduct: By-product credits | | | | | | | (156,965) | | Add: Treatment and refining | | | | | | | 36,615 | | Cash cost | 173,692 | — | 47,318 | 14,640 | 29,892 | 19,786 | 285,328 | | Cash cost per pound | 2.21 | — | 2.37 | 2.43 | 1.69 | 0.54 | | | Add: Sustaining capital | 90,686 | — | 16,027 | 7,102 | 25,061 | 14,468 | | | Royalties | — | — | 2,223 | 5,686 | 1,730 | — | | | Reclamation and other closure accretion and depreciation | 2,307 | — | 1,801 | 2,958 | 1,324 | 1,061 | | | Leases & other | 3,143 | — | 966 | 747 | 158 | 102 | | | All-in sustaining cost | 269,828 | — | 68,335 | 31,133 | 58,165 | 35,417 | | | AISC per pound ($/lb) | 3.44 | — | 3.42 | 5.16 | 3.29 | 0.97 | |

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

| | Three months ended March 31, | | | ($thousands) | 2024 | 2023 | | Net earnings | 58,555 | 165,311 | | Add back: | | | | Depreciation, depletion and amortization | 184,492 | 120,247 | | Finance income and costs | 35,694 | 15,699 | | Income taxes | 50,566 | 48,693 | | | 329,307 | 349,950 | | Unrealized foreign exchange loss (gain) | (15,500) | 8,644 | | Unrealized losses (gains) on derivative contracts | 52,832 | (20,666) | | Ojos del Salado sinkhole (recoveries) expenses | (1,031) | 4,582 | | Revaluation loss (gain) on marketable securities | (2,430) | (438) | | Gain on disposal of subsidiary | — | (5,718) | | Other | (322) | 589 | | Total adjustments - EBITDA | 33,549 | (13,007) | | Adjusted EBITDA | 362,856 | 336,943 | | | | |

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:

| | Three months ended March 31, | | | ($thousands, except share and per share amounts) | 2024 | 2023 | | Net earnings attributable to Lundin Mining shareholders | 13,883 | 146,620 | | Add back: | | | | Total adjustments - EBITDA | 33,549 | (13,007) | | Tax effect on adjustments | (1,767) | (3,126) | | Deferred tax arising from foreign exchange translation | (6,300) | (6,007) | | Non-controlling interest on adjustments | 5,852 | 1,202 | | Total adjustments | 31,335 | (20,938) | | Adjusted earnings | 45,218 | 125,682 | | | | | | Basic weighted average number of shares outstanding | 773,048,710 | 771,216,060 | | | | | | Net earnings attributable to shareholders | 0.02 | 0.19 | | Total adjustments | 0.04 | (0.03) | | Adjusted earnings per share | 0.06 | 0.16 |

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:

| | Three months ended March 31, | | | ($thousands) | 2024 | 2023 | | Cash provided by operating activities | 267,531 | 211,875 | | Sustaining capital expenditures | (213,260) | (155,564) | | General exploration and business development | 13,451 | 14,765 | | Free cash flow from operations | 67,722 | 71,076 | | General exploration and business development | (13,451) | (14,765) | | Expansionary capital expenditures | (55,981) | (90,519) | | Free cash flow | (1,710) | (34,208) |