Lundin Mining Corporation

Good morning. My name is Adrienne, and I will be your conference operator today. At this time, I would like to welcome everyone to the Lundeen Mining First Quarter Results Conference Call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star, then the number one on your telephone keypad. If you would like to withdraw your question, press the pound key. Thank you. I would now like to turn the call over to your host, Marie Inkester. Please go ahead.

Thank you, Operator, and thank you, everyone, for joining Lending and Mining's first quarter 2020 results call. As always, I would like to draw your attention to the cautionary statements on slide two. We will be making several forward-looking statements throughout the course of this presentation and likely in the Q&A as well. On the call today to assist with the presentation and answering questions are Jinhee McGee, our Senior Vice President and Chief Financial Officer, and Peter Richardson, our Senior Vice President and Chief Operating Officer. Through our prepared remarks, we will be focusing on the quarterly results and our current outlook. We recognize that there is continuing interest in our readiness and response to COVID-19, and we'll be happy to answer any questions in detail during the Q&A to specifically address our activities in this regard. At Lundin Mining, safety is one of our four fundamental values and is always at the core of our business decisions. COVID-19 is a global threat, which requires a united response from governments, industry, and our communities to ensure the safety, health, and well-being of all. Each of our operations are continuing to manage and respond within the framework of the company's pandemic response plan, recommendations of health authorities, and local and national regulatory requirements. Properly and at each operation, we continue to identify and implement measures to protect our workforce and our communities. Across money and mining, we are taking numerous steps to ensure needs are being addressed in the communities and regions in which we operate. We are sharing action plans and the preventative measures being taken with our employees, unions, contractors, communities, and industry peers, while seeking and considering their input to ensure we are delivering responsive actions consistent with broader efforts. Further, we are actively providing support in the form of community donations of emergency funding, essential supplies, and numerous other forms. The photos on this page demonstrate some of the basic measures being implemented and the coordination with government and local health authorities to protect our workforce and our communities. There are numerous other measures we are taking. Just one example is at Candelaria where we have provided an air-conditioned construction trailer to help local authorities conduct effective roadside health checks. I would like to acknowledge all of the London Mining employees and our contractors who are working tirelessly and have risen to many challenges to keep our operations running and, most importantly, safe. COVID-19 is impacting the way we operate, but we will strive to continue delivering on our mission to responsibly mine base metals vital to society, delivering meaningful value to all of our stakeholders. And now I'll turn the call over to Jinhee to look at our summary financial results. Jinhee.

Thank you, Marie. Looking at a summary of our results on slide 4, our operations in aggregate produced over 112,000 tons of base metals and approximately 38,000 ounces of gold in the first quarter. We sold over 101,000 tons of payable base metals and approximately 39,000 ounces of gold, generating revenue of $370,000. The quarter's revenue was significantly impacted by negative provisional pricing adjustments given the decline in the market price of many of the metals we produced. The negative impact on revenue was $63 million for prior period adjustments and $86 million in total for 12 cents per share, including mark-to-market of current period sales. Additional information on our provisional prices and pricing adjustments is included in our MD&A and Note 12 of our financial statements. 64% of our revenues were generated from copper. Gold contributed an increased 15% to overall revenue with the contribution of unencumbered gold production from Chapada and the strong gold price. Zinc, nickel, and lead contributed a combined 21% to total revenue. Slide 55 presents a summary of the quarter's financial results, the details of which are in our financial statements that MD&A issued last night. First quarter revenue was 9% below that of the same quarter last year, in part owing to lower metal prices and negative price adjustments as discussed. The price decline was offset by higher copper, nickel, and gold sales volumes, mainly due to the acquisition of Chapada and increased production from Candelaria. Gross profit was significantly lower, reflecting the decline in revenue as well as inclusion of Chapada production and depreciation amortization costs, and increased amortization of deferred stripping at Candelaria with mining in Phase 10 of the open test. Attributable loss from our operations was $0.15 per share. First quarter net loss was negatively impacted by the gross profit as discussed and $62 million or $0.08 per share of deferred tax expense at Chapada arising from foreign exchange translation which has no cash impact. Adjusted loss was $0.06 per share for the quarter Details of the adjusted loss are in our MD&A issued last night. Despite the negative provisional pricing adjustment, we generated EBITDA of over $90 million in the quarter. Cash flow from operations was $83 million in adjusted operating cash flow before changes in non-cash working capital was $28 million, or 4 cents per share. First quarter capital expenditures on a cash basis were $141 million. We will discuss more details of CapEx later in the context of reducing this year's overall capital expenditure guidance by 30%. We ended the quarter in a strong financial position with $367 million in cash and equivalents, net debt of $118 million, and a further $430 million available under the company's revolving credit facility, excluding the $200 million accordion. In March, the company drew down $150 million on the revolver and took out an additional term loan at Candelaria as precautionary measures to protect against economic insurgencies. This is reflected in the increase in the debt position this quarter. Yesterday, our Board of Directors declared a regular quarterly dividend of $0.04 CAD per share or $0.16 CAD on an annualized basis, maintaining the increase announced last quarter. We remain in a strong financial position with ample liquidity and minimal financial leverage. I will now turn the call back to Marie to discuss the operations and projects.