Lundin Mining Corporation

Good day and thank you for standing by. Welcome to the Lundin Mining Second Quarter 2025 Financial Results Conference Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1-1 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 1-1 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Jacqueline Dean, President and CEO. Please go ahead.

Good morning and welcome to our 2025 Second Quarter Conference Call. A press release and presentation summarizing the financial results for the quarter is available on our website, where a replay of this call will be available. All figures presented today are in US dollars and less otherwise noted. Before we begin, please note that today's presentation will include forward-looking statements that are subject to various risks and uncertainties. We encourage you to review the cautionary statements on slide 2, as well as the forward-looking information disclaimer in our MDNA and related filings available on CDAR. With me on the call today are two members of our senior executive team. Our Chief Operating Officer, Juan Andres Morel and our Chief Financial Officer, Tidor Poulsen. On June 18th, we held our first ever Capital Markets Day, where we outlined our strategic vision and financial outlook to support our growth ambitions. We have set a target to become a top 10 global copper producer, targeting over 500,000 tons per year of copper, as well as over 550,000 ounces of gold. To support our strategic vision, we highlighted multiple near-term growth initiatives at our existing operations, in addition to the longer-term opportunity that is presented with the Vicuña project. The mineral resources contained within this project establishes Vicuña as one of the world's largest copper, gold and silver mineral resources. There is a replay of the CMD available on our website, where the audience can go to view to get the full overview, as well as highlights from the day. On April 16th, we completed the sale of our two European mines to Boliden. This transaction generated cash proceeds of $1.4 billion, and the use of the proceeds went towards fully repaying and canceling the company's Caseronas term loan, and towards substantially paying down the outstanding balance on our revolving credit facility, bringing our net debt, excluding lease liabilities, down to about $135 million, as at the end of Q2. As a result, our reporting now focuses solely on our four continuing operations, which are Candelaria, Caseronas, Chapada and Eagle. In May, we announced the initial mineral resource at Philadelphia, demonstrating one of the world's largest copper, gold and silver resources. Combined together with the updated mineral resource of Jose Maria, the project contains 38 million tons of copper, over 80 million ounces of gold and nearly 1.4 billion ounces of silver, making it a truly unique asset. Also during the quarter, we published our 2024 sustainability report, highlighting the company's environmental health and safety governance and social performance. We are proud to note that in 2024, based on our recalculated 2019 baseline emissions, which now include Caseronas, our Scope 1 and Scope 2 emissions targets for 2030 has been achieved. Even without the inclusion of Caseronas, our other operations reached 91% of the emissions reduction target. This was primarily due to Candelaria expanding its contractual agreement to purchase 100% of its electricity from renewable sources with zero carbon emissions in 2024. Our full sustainability report can be found on our website under the sustainability page. Importantly, there were no major injuries in the first half of the year and the total recordable injury frequency rate, our TRIF, was the lowest in 10 years at 0.33. The team's strong safety performance in the first half of the year reflects our shared commitment to identifying and mitigating critical risks. Our continued proactive efforts are driving meaningful improvements to the critical controls we are implementing. Now touching on Q2 2025 highlights. Copper production for the quarter totaled 80,000 tonnes, higher than Q1, primarily driven by a strong performance at Candelaria and Caseronas, along with improved copper and gold grades at Chapada. In the first half of the year, we produced 157,000 tonnes of copper, keeping us on track to meet our annual copper production guidance range of 303,000 to 330,000 tonnes. Gold production also increased significantly quarter over quarter from 32,000 ounces to 38,100 ounces this quarter, positioning us well again to achieve the full year guidance range of 135,000 to 150,000 ounces of gold. This year, we included a consolidated copper cash cost range in our annual guidance. During the quarter, we produced copper at a consolidated cost of $1.92 a pound, coming in below our revised guidance range of 195 to $215 a pound, which was supported by strong by-product credits and gold prices. Our operations delivered close to $1 billion in revenue, supported by strong gold and copper prices, $395 million in adjusted EBITDA, and $277 million in adjusted operating cash flow. This quarter, we declared our 36th regular quarterly dividend, which has been adjusted down to just under $0.03 a share per quarter, making room for 4.6 million shares to be repurchased under our NCIB program in Q2. Year to date, we have bought back 12.6 million shares, representing approximately 104 million US in share repurchases. Our updated shareholder distribution policy targets approximately $220 million in annual returns, combining an annualized dividend of $0.11 per share with $150 million in share buybacks under our NCIB program. I will now pass the call over to Juan Andres, our Chief Operating Officer, to talk about our production results in more detail.

Thank you, Jack, and good morning, everyone. The company is tracking to production guidance on consolidated bases for copper, gold, and nickel for 2025. As mentioned earlier, copper production for the company was 80,000 tons for the quarter and 157,000 tons for the first half of the year. Gold production for the quarter totalled approximately 38,000 ounces and 70,000 ounces for the first half of the year. At Candelaria, copper production for the quarter totalled 37,000 tons, along with 20,500 ounces of gold. Operationally, Candelaria performed well during the quarter, and softer mill feed continued into the first part of Q2. This drove higher throughput in the mill, which processed 7.8 million tons in the period. In the first half of the year, Candelaria produced 74,000 tons of copper and 41,500 ounces of gold. We anticipate steady production levels for the second half of the year, which keeps Candelaria firmly on track to meet full year guidance for copper and gold. At Caserones, copper production reached 29,300 tons in Q2 and 58,000 tons for the first half of the year. All mill was in line with planned production despite unplanned downtime caused by a blockage in the primary crusher. In the second half of the year, it is expected that copper head grades will improve to approximately 0.4%. Cattle production continued to outperform expectations with 5,800 tons produced in the quarter, driven by increased material placed on the leach paths. In the quarter, Chapada produced 11,300 tons of copper and 17,500 ounces of gold. Performance improved due to higher grades and better copper recoveries from increased processing of fresh ore and reduced reliance on stockpile material. Production at Chapada is expected to be slightly weighted toward the second half of the year and on a quarterly basis similar to production levels in Q2. At Eagle, nickel production was 2,700 tons and copper production was 2,500 tons for the quarter. Equipment availability and power outage during the period limited throughput. We expect these to improve in the second half of the year. Grades and ore availability are expected to normalize, which will support the annual guidance forecast for the year. I will now turn the call over to Titer to provide the summary on our financial results.

Thank you, Fanandrias, and good morning, everybody. So I'm pleased to be able to present yet another solid quarter of financial performance for the company driven by continued good operational performance, as you just heard from Fanandrias, coupled with relatively stable LME copper price environment in addition to higher gold prices. All these factors have allowed the company to post another set of good quarterly results. Before going into the numbers, I remind you that we continue to report the contribution from our European assets as discontinued operations. And as this transaction closed on the 16th of April, our second quarter report reflects contribution from these assets for the first 15 days of the quarter. The revenue for the quarter from continuing operations came in at nine hundred and thirty seven million, with our revenues remaining heavily weighted towards copper, which accounted for 82 percent of the revenue mix. Gold and nickel contributed 11 and 3 percent respectively. As you can see on this slide, our two Chilean mines, Candelaria and Casarola, remain the key revenue contributors and represent 77 percent of the revenue generation in the second quarter. And when including Chapada in Brazil, 94 percent of our revenues are generated from our South American operations. Now looking at volume sold and realized pricing during the period, we sold 79000 tons of copper at a realized price of four dollars forty per pound, which is slightly better pricing than the average LME spot price for copper during the period. For the second consecutive quarter, we had sales volumes exceeding the copper production volume at Casarola due to shipping schedules. We had a negative provisional pricing impact of six million in the second quarter and approximately 113000 tons of copper were provisionally priced at four dollars forty nine per pound at the end of the quarter and remain open for final pricing adjustments. Turning to slide 14, production costs totaled 507 million for the quarter, consistent with the past few quarters. At Candelaria, total costs were higher compared to previous quarter due to higher sales volumes, while C1 costs over the last two quarters are somewhat higher compared to the second half of last year, as the mining sequence is now back to normalized grades compared to the elevated grades that were mined during the second half of last year. Casarola's costs for the second quarter have normalized compared to first quarter when we had abnormally high sales volume from delayed shipments at the end of last year. Total costs were in line with expectations at 205 million for the quarter and cash costs are trending in line with recent quarters at two dollars forty five per pound. Chapada total costs for the second quarter amounted to 75 million. C1 costs have significantly decreased compared to prior periods, primarily due to higher byproduct credits from gold prices and favorable FX rates. Given the continuing low C1 costs at Chapada, we are reducing the full year guidance range to one dollar ten to one dollar thirty per pound from the previous guidance of one thirty to one dollar fifty per pound. This updated guidance represents a 37% reduction from the midpoint of the original C1 cost guidance as released in the beginning of the year. On a consolidated basis, our C1 costs for the quarter was one dollar ninety two per pound, slightly below our revised full year guidance range of one ninety five to two dollar fifteen per pound. Total capital expenditure, including both sustaining and expansionary investments was 150 million for the quarter and 325 million for the first half of the year. Full year guidance for total capital expenditure has been revised upward by 60 million to 795 million due to an increase in the Vekunya budget as announced at our capital markets day in June. An increase in capital expenditure at Chapada from additional tailings developments and higher capitalized stripping has been offset by lower capital expenditure at Casarones due to certain projects being delayed into 2026. After Vekunya, the second quarter expenditures were primarily focused on field activities for water program, geotechnical investigations, road maintenance and the procurement of certain long lead equipment. Our key financial metrics for the second quarter are presented on slide 16. We generated adjusted EBITDA of 395 million and achieved an adjusted EBITDA margin of 42%. Our adjusted operating cash flow was 277 million and was negatively impacted by cash tax payments, a candelaria of 165 million of which 92 million related to a payment to fully settle the 2024 taxes due. Working capital decreased by 37 million, which positively impacted cash flow and was the result of a partial release from the significant working capital built in the first quarter of the year. The company achieved solid free cash flow from operations of 211 million, despite the relatively large cash tax payment made during the quarter. Adjusted earnings amounted to 98 million for the quarter, which translates into an adjusted earnings per share of 11 cents US. Turning now to slide 18, with the closing of the European asset sale in April, there have been a number of cash inflows and outflows impacting our cash flow statement and our net debt positions during the quarter. As you can see on the left of this chart, we entered the quarter with around 1.44 billion in net debt and we exited the quarter with net debt of only 135 million. From the sale of the European assets, we received approximately 1.3 billion in net proceeds when allowing for closing adjustments as regulated in the SPA and when netting out the cash sitting in the acquired subsidiaries. Following the closing of the sale, the company paid off 1.15 billion in term loans, as well as repaid 170 million of debt drawn on the revolving credit facility. The adjusted operating cash flow and working capital inflow amounted to 350 million and with total capital investments of 150 million resulted in free cash flow for the quarter of 165 million. We had total share of distribution of 108 million during the quarter of which 72 million related to the payment of the regular dividends declared for the fourth quarter 2024 of nine Canadian cents per share and for the first quarter 2025 of 2.75 Canadian cents per share. Dividends to non-controlling interest at Candelaria and Casarone during the quarter amounted to 41 million while other items amounted to a cash outflow of 23 million leaving the company with a very strong balance sheet with net debt position at the end of the quarter of 135 million. The company continues to hold significant liquidity headroom from its 1.75 billion revolving credit facility with just over 1.5 billion remaining on drawn as of June 30th. That wraps up the summary for the second quarter financial performance and I'll now turn the call back to Jack.

Thank you, Tedder. I'll take a few moments to talk about our joint venture partnership with BHP which holds the Zucuna project, a project which combines the Jose Maria and Filo del Sol deposits. Combined together, the Zucuna project ranks in the top 10 mineral resources for copper, gold and for silver when comparing against the world's largest operating mines. In May this year, we released the Maiden Mineral Resource Estimate for Filo del Sol and updated the Mineral Resource Estimate at Jose Maria. In addition to the size demonstrated by these deposits is an impressive amount of volume contained within the high grade core. The Filo del Sol high grade core contains over 10 million tons of copper and 19 million ounces of gold and over 390 million ounces of silver. While Jose Maria has a high grade core of 1 million tons of copper, 2.4 million ounces of gold and 11 million ounces of silver. Looking on this slide, the image on the right shows the additional drill holes from the Filo del Sol completed after the cutoff of the Mineral Resource Estimate. Over 20 additional holes targeting resource expansion and infill drilling primarily along the eastern boundary of the deposit as shown in the figure on the right are showing good progress and will make its way into an updated Mineral Resource Estimate as part of our integrated technical studies. A total of 60,000 meters of drilling is budgeted for the calendar year 2025 of which already over 50% has been drilled. In addition to the solid progress made on drilling, an updated EIA for Jose Maria was submitted in the second quarter as per the plan. Ongoing work to support the parallel studies for the multi-phase development plan are progressing on schedule. We anticipate the integrated technical report, which will incorporate all phases of the full scale project to be complete by Q1 in calendar year 2026. Preparations for the Fiscal Stability Application, otherwise known as RIGI, are also progressing in parallel to the ongoing project study work. Overall, the Vicuña project team continues to make solid progress and remains on track with its 2025 work plan. As presented at the CMB, we have identified several low capital intensity midterm organic growth opportunities. These are targeting 30,000 to 40,000 tons of copper and 60,000 to 70,000 ounces of gold in additional annual production for the company. At Chapada, the Saova project presents a near term opportunity to increase annual production in the range of 15 to 20,000 tons of copper and 50 to 60,000 ounces of gold representing 50 and 100% growth respectively. This study includes adding grinding capacity to process higher grade ore from Saova through the Chapada mill. Permitting and technical work are ongoing with a pre-feasibility study targeted for completion by the end of 2025. At Candelaria, we are implementing a two-step process to ultimately improve performance with the goal of eventually increasing throughput from the underground. Starting with insourcing the underground mining contractor, which is expected to improve both mechanical availability and ultimately development rates in the underground. We will be able to insource as a first step and the second step will be to lead a campaign to improve mining rates in the range of 50 to 60%, bringing underground throughput capacity from where it is today at around 14,000 tons per day up to about 22,000 tons per day. This could deliver an additional 14,000 tons of copper annually for Candelaria and recruitment training and licensing for internalization of the crews is already underway. These brownfield opportunities complement the longer term vision of developing the Vicuña project. We will continue to provide updates as we continue to advance and de-risk these near and longer term initiatives. In conclusion, solid operational performance from our high quality operations and higher commodity prices drove strong financial results for the company in Q2. We remain firmly on track to meet annual guidance on all metals for the year. We revised cash cost guidance at Chapada, which improved the consolidated cash cost guidance for the company, which is now at $1.95 a pound to $2.15 a pound. Net debt stands at the end of the quarter at 135 million, which was significantly reduced in the quarter using proceeds from the sale of our European assets. The company is very well positioned for the future. The Vicuña district and near term growth opportunities that are existing operations provides a clear path to becoming a top 10 copper producer as outlined at our capital market today in June. The team remains focused on meeting operational targets, enhancing margins through discipline cost management, while maintaining the highest health and safety standards to protect our workforce. Thank you. And I would now like to open the call for questions.

Thank you. As a reminder to ask a question, please press star 1-1 on your telephone and wait for your name to be announced. To withdraw your question, please press star 1-1 again. Please stand by while we compile the Q&A roster. And our first question comes from Ralph Profitti of Stiefel Financial. Your line is open.

Thank you, operator. Good morning, Jack and team. Juan Andres, there was some caseronis crusher downtime in the quarter. I'm just wondering, it seems as though this was unanticipated. Just wondering what the root cause was, how much downtime and are these issues behind you?

Good morning, Ralph. Yeah, so it was basically some clayish material that created a blockage in the primary crusher. It took us probably around 16 to 20 hours to solve the problem. So nothing structural. It was probably some material coming from a faulty area in one of the benches that got clogged in the chamber of the primary crusher.

I see. Yes, thank you. Juan Andres, a second follow-up. You talked about some softer ore mill feed at Candelaria. Is this a function of phase 11 or phase 12? And as you also speak about some higher anticipated copper grades coming from phase 12, is that also anticipated with higher strip ratios or are you maintaining that kind of life of mind 2.1 ratio that I see from the technical report?

Yes, that's a good point, Ralph. It was something temporary, nothing structural in the strip ratio on phase 12. So there were some delays in the ore coming from the underground. So we went a little further on phase 12 and took some extra tons from the lower benches. But we will get back on track with the spatial compliance by the end of the year. And regarding the softer ore question, Due to these small changes in the short term, we took more ore from the stockpile. We had a let's call it mid-grade stockpile, not a low-grade stockpile that we used that material to feed the mill. And that material was softer than anticipated. So that is what created these better results in the throughput.

Gotcha. Very helpful answers. Thank you.

Thank you. And our next question comes from Arrest Wakadaw of Scotiabank. Your line is open.

Hi, good morning. Also a question around Candelaria. Pretty strong results in the first half. Your guidance talks about grades being higher, but production being flat versus the first half. Is there, beyond the softer ore issue, which I guess is now behind you, is there some planned downtime here in the second half? Or is there maybe just some potential upside? Are you being conservative with the guidance for the second half?

Morning, Orres. Thank you. No, this is a very steady year for Candelaria, so we're not second half weighted as last year. So grades are going to be very stable along the year. So we don't anticipate any differences from our performance in the first half of the year. So maintenance is as planned for the second half and grades will be back on track for the full year in the second half. Thrupple is expected to be in line with our projections, so no big changes in the second half of the year.

Oh, sorry. Sorry to clarify. Are you saying grades at Candelaria are similar to the first half? I thought I heard earlier they're going to be up.

No, in Candelaria, slightly lower because they were higher in the first half. Okay.

Thank you.

Thank you. And our next question comes from Anita Soni of CIBC.

Your line is open. Good morning, Jack Titor and Juan Andres. A couple of questions. A little follow up on Candelaria. So I thought I had read that you had some, the throughputs were stronger because you also had some rescheduled maintenance. Can you let us know when that maintenance is now going to be taking place?

It's a normal schedule shutdown and sometimes since we had softer ore, the liners of the mill were at a lower pace, so we decided to postpone that shutdown from June to July.

Okay. And July is over, so how long did that shutdown take?

They're normally 90 hours.

Okay, so fairly short. Okay. And then secondly, in terms of the CAPEX spend this year, could you just give us a little bit of colour on the back half of the year for each of the assets? I think both on sustaining and growth capital, you're a little under the half-year run rate, so I'm just trying to understand how those pick up over the rest of the year.

Yeah, hi. Good morning Anita. Yeah, we are a little bit behind on Casa Rolney in particular on certain projects, which indeed was also the case last year. So the scope of work is running a little bit behind planned, so that's more facing. It's not really any savings identified at this point. And therefore, you know, there could be a slight chance that we are slightly underspending on Casa Rolney for the full year. But we have also taken down guidance on Casa Rolney since compared to the original guidance. And then in Chapada in particular, there was some extra work needed to be done on the tailing stamp, which is now more or less behind us. So we've increased guidance on Chapada and we're also doing more stripping or more fresh ore and less from the stockpile, which also has increased the capitalized stripping costs a little bit. So those are the key moving parts. But, you know, seven hundred and ninety five million dollars is the full year guidance, including the growth capex. And we reaffirmed that guidance today.

OK, so am I just on the the Castor Onis, you said that some of those projects may be, I guess, pushed into to next year. Is that are you saying that that you're going to hit the seven ninety five for the year or is there a chance that you're going to be underspending this year?

Well, let's see how we do in the in the in the second half. I mean, we are now assuming that what's planned to be done in the second half will be done, which is why we reaffirming the guidance. But all I'm saying is that the trend has been that the workers progress a little slower than than planned. So we will have to wait and see.

All right. And when you said that you've taken your guidance down, you were referring to the production guidance, right? For Castor Onis or the

capex.

No, it was

capex.

The capex. So then my question is, if if it works, going a little slower than planned, is there any production impact that we should be expecting?

No, there's not.

OK. All right. And then final question from me in terms of the cost guidance, you you revise the Chappell Chippata cost guidance down, but maintain the overall cost guidance for the consolidated copper cost guidance for the company. So is that just a function of the relative weighting of Chippata relative to the other assets or is there just you're just expecting to be maybe at the lower end of the overall guide or is there something else I should be thinking about?

Yeah, we we we thought about that. I mean, obviously the big reduction in guidance was released at the time of the day because originally Chappata was guided, I think, was one eighty to two dollars per pound. And we took that down to one thirty to one fifty. And at that point, we did also guide down the consolidated group guidance between 10 to 15 cents because of that. But this subsequent reduction in Chappata guidance has such a small impact on the weighted outreach for the group that we decided to leave intact. But mathematically, I think it would represent to achieve cents further reduction in the consolidated guidance.

OK, all right. Thank you. That's it for my questions. Thank you.

And our next question comes from Matthew Murphy of BMO Capital Markets. Your line is open.

Hi, another one on Candelaria, just the recruiting for insourcing the underground mining. How many people do you have to hire and how would you describe current levels of mining labor availability in Chile?

Morning, Matt. Juan Andres here. The total insourcing process, which will take us at least two years, is a four wave process. And in total, there will be approximately 250 people or positions involved. But since we're insourcing, we have already started conversations with the contractor and we will, of course, give priority to the employees that work for the contractor. So we don't see any problems in finding the right skills to complete this insourcing process.

OK, got it. OK, separate question I had on the Reggie deadline. I think there was a San Juan Copper Conference this week and just some headlines about companies racing for the deadline. Do you have any view on the likelihood that the timeline gets extended and when we might hear about that? And would there be any benefit to the Vicuna JV from a slightly looser Reggie deadline timeline?

I can take that. Hi, Matt. Thanks for the question. So we don't have kind of any any commentary to provide or any understanding that there's going to be a extended deadline for the Reggie application. Recall that the deadline is July 2026. And so for Vicuna Corp, we're tracking on to that schedule and can't speak for any other companies that are looking to apply with the Reggie application. But we are

trending on schedule. OK, thanks,

Art. Thank you. And our next question comes from Lawson Winder of Bank of America Securities. Your line is open.

Great. Thank you very much, operator. Hello, Jochen team. Nice quarterly result and thanks for today's update. Just in light of the really, really strong gold price, your updated guidance from Chipada reflects that as part of the low cap expansion that Chipada, is there an opportunity to perhaps focus that asset on increased gold production, either through an updated mine plan or perhaps an optimized flow sheet? And partly where I'm coming from is, as you know, when you guys bought this, you bought this from an operator that actually operated that asset as a gold mine. So it's a huge gold endowment.

Morning, Lawson. Yeah, you're absolutely right. We're, of course, looking at opportunities to increase recoveries in both copper and gold, but especially given the current gold prices. There's a greater opportunity to add more value from Chipada if we can achieve higher gold recoveries. So we're looking at a few options that later in the year we could share with the market.

Interesting. And then I guess then I'd ask the same question about Candelaria in light of the same considerations and further with consideration to the fact that the Franco-Nevada stream, the percent that they take, should drop off next year.

Yes, in Candelaria in general, we have a very good performance at the mill. If you look at our copper recoveries, they are in the order of 92 percent. So any changes to the flow sheet? We don't see a lot of opportunities there, but of course, we will always be open to any new technology or any marginal improvement to our flow sheet to increase recoveries in all the metals.

OK, fantastic. Thank you very much.

Thank you. And our next question comes from Matt Green of Goldman Sachs. Your line is open.

Hi, good morning. I guess just following on from the gold theme on Sorve. OK, the PFS expected later this year, just thinking about the go-forward, what are the limitations, any sort of key technical or regulatory hurdles you have highlighted permitting, but just trying to, I guess, get a sense of how conservative the development timeline is for Phase 1 and is there scope to possibly accelerate that?

The schedule for Phase 1, I think we're very confident that we can achieve that. Of course, we're still looking at the permitting process. I think we've shared during the capital markets day that we have received the unified license, which will give us some advantages, but we need to confirm that approach. So I think in the second half, we will have more clarity together with the completion of the pre-feasibility study.

And maybe just to add to that as well, I mean, we're already looking at collecting baseline data that will support the environmental licensing process. And so we're working to get the pathway to permitting as soon as possible. Technical studies are underway. And so we'll be looking to follow the quickest pathway possible following this environmental licensing process.

That's great. Thanks. And look, just one more from me. I guess just on the buyback, any specific financial or broader thresholds you would need to see before you would consider expanding the scope of that buyback program from about 150 million a year?

No, I think we simply just remain opportunistic around when we do the buybacks. We've done just over 100 million a year to date, so two thirds. And the target is 150. And what we have said is if for whatever reason we do not reach the 150 million in buybacks, then the whatever gap that exists will be paid out as a special dividend in the fourth quarter dividend declaration. So IE is paid out in 2026. But we monitor this obviously, you know, continuously as to when we think the opportunity window of opportunities to buy back.

That's great. Very clear.

Thanks and congrats on the quarter.

Thank you. And our next question comes from Daniel Major of UBS. Your line is open.

Hi, Jack and Tim. Thanks for the call. First, just a small operational question. The cathodes production at Kasseronis continues to remain sort of around the six, six and a half million thousand tons a quarter. Is that expected to sustain through the remainder of the year? And I think your guidance for 26 is 14 to 18. So coming off a bit, how's that profile in the cathodes at Kasseronis?

Morning, Daniel. Yes. During the capital market stay, we outlined some opportunities to increase the utilization of our cathode plant in Kasseronis. And we have been working on those options. So, as you said, for this year, we're expecting a little higher production than what we planned initially in the year. And that should also carry over in 2026. So we're looking at improving our irrigation strategy, improving also our the way we model the production. We have found more oxide ore in the first benches of the phase seven, which is the new phase in Kasseronis. And then further on, we're looking at bringing potentially some oxides from Angelica and testing some leaching technologies for the future. So with all that set of alternatives, we're looking at maximizing the utilization of our SXCW facility.

OK, thanks. So if we look at the run rate for this year, if you were to extrapolate that, it would be fair to say five to ten thousand tons upside to your guidance you previously gave potential the

cathodes. No, I think what we're what we're doing is maintaining the

guidance that we had. I mean, the significant increase in cathode production will probably come later once we've actually been able to improve

the capacity of the cathode plant.

OK, thanks. And then second

financial question to pass to it. Your cash tax looks like it's still trending below P&L tax. Can you give us any guidance on where do you expect cash tax to be for the year? And then secondly, you reverse some of the working capital in the second quarter. How should we be thinking about that in the second half?

Yeah, I mean, we did actually have quite a high cash tax payment in the quarter because we as I said, we were doing a final settlement of the 2024 Candelaria tax due. So that was 92 million dollars. And then as we go through this year, now we are now starting to install cash taxes as per the 2024 tax assessment. So the tax installments for the next two quarters are going to be slightly higher than they were in the installment for Q1 this year, because the Q1 tax installment this year still reflected the 2023 tax assessment. But essentially our cash taxes, as we tried to outline in our couple of markets today, is relatively low compared to the effective tax rate on the P&L because of these tax losses we have at Casa Rona. So what we have been guiding is sort of between 15 to 20 percent effective cash tax as a percentage of the EBITDA generation. So we should expect that trend to continue for a long time, given the significant tax losses we have at Casa Rona.

OK, so 15 to 20 percent cash tax. And so that's the EBITDA. EBITDA. EBITDA. OK, thanks. And then final question. BHP has been in the joint venture for a few months now. Can you share any kind of changes or what you think sort of the direction of development, what BHP has brought in terms of the process since the formation of the JV?

Yeah, sure. I mean, obviously BHP brings a lot of bench strength with them and a lot of experience with large scale projects and operations. And so the partnership that we formed, transaction closed in January. And really the biggest thing was bringing together Filo and Jose Maria and looking at this as a joint development project and a large scale phase development project. And so the Vicuna Corp team, the project team is working away on parallel studies. We've got independent review teams established to look at the packages of work that will be coming out. And together, both BHP and Lundin Mining are providing support as peer reviewers. And I think overall the partnership is strong and we're very aligned. I mean, this was a culmination of several years of getting aligned before doing the deal. And so I think it was really, you know, things are moving as per plan and the

partnership is very strong today.

Great. Thank you. And that's not

a

good quarter.

Thank you. And our next question comes from Ioiannis Mastoulis of Morgan Stanley. Your line is open.

Hello, Jagged Team. Thank you very much for the presentation and also from my side. Well done on the results. Just a couple of questions left from my side. The first on Chapada, where we saw very good performance, especially on unit costs, which I would think it's a combination of your own initiatives that you launched a few years ago, but clearly also FX and gold tailwinds. As we move forward into the second half of next year, do you see potential for more progress on an underlying basis from self-help or are you largely where you want to be? And here I'm just looking at the current operations, ignoring the sell of opportunity. And also Peter for the first one.

Yes. Hi Ioiannis. Yeah, definitely we have had a very good performance in Chapada. And as you said, is the result of a combination of the full potential initiative that we launched in 2023, but also with the help of the increased metal prices. So what we're seeing today is the result of that work and we expect to continue seeing that level of performance in 2026. Probably the main change would be that we're working on reducing our reliance on the low grade stockpile. So the effect of that could be a slight increase in the head grade and improvement in their recoveries. So we're still working on the next year budget and mind plan, but those are some changes that we could expect going forward.

That's very interesting. Thanks for that. And second question, we've seen some of your peers looking to capitalize on the elevated gold prices via streaming contracts and hedges. Is this something you are considering actively to further bolster your balance sheet ahead of the next capex cycle? And within that, as it was mentioned earlier, you've got the Franco Nevada step down on the current streaming. Just wondering whether you have the appetite to look at financing right here right now, or is it something that you will consider once the technical report is out next year and you have more visibility on the capital commitments?

Yeah, I mean,

the Franco stream is obviously there and it was entered into to enable the acquisition of Candelaria in the first place. So it sort of had to be done at that point in time. And with the elevated gold prices, I should say now, the stream is becoming quite costly. But it is what it is. And the 68 percent streams of Franco gets at the moment is projected to step down to 40 percent. You know, at this current production rate, we anticipate that to happen towards the end of next year, end of 2026. So from 2027, we should get a higher gold revenue coming from that. And of course, you know, there are options around how we how we play that. But at the moment, the construction relationship is to step down to 40 percent. That meant in time. So, you know, we obviously know with the funding requirements that we have with the Bikunia build that we do need to increase our liquidity lines to fund that. And at the moment, the base case for us is simply to increase our reward and credit facility. We see that as the most cost efficient way of getting access to a higher funding capacity. But we are not ruling out anything else, but it was purely be done on what we believe is the most cost efficient way of doing it. And the streaming arrangements we are seeing at the moment that we don't think are cost competitive to our RGF. But, you know, that's always up for negotiation. And if there's an attractive offer, we will look at it. We don't rule it out by principle.

Very clear. Thank you very much.

Thank you. This concludes our question and answer session and today's conference call. Thank you for participating and you may now disconnect.