Lundin Mining Corporation

Ladies and gentlemen, thank you for standing by and welcome to the Lundin Mining Second Quarter 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 this session, you will need to press star 1 on your telephone. Please be advised that today's conference is being recorded. If you require any further assistance, please press star 0. I would now like to hand the conference over to your speaker today, Marie Inkster, President and CEO. Thank you. Please go ahead, Madam.

Thank you, Operator, and thank you, everyone, for joining LendingMining's second quarter 2020 results call. 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 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. Before we dig into the second quarter results, I'd like to highlight that we issued our 2019 sustainability report late last month, and it is now available on our website. This report is our ninth annual report as a standalone document. Though we have been communicating our CSR ESG and health and safety performance initiatives well prior to that. I encourage you to read the report and learn about our sustainability related performance, our stated goals, and our strategies for the future. We have been recognized by several of our research analysts and their firms for our achievements in addressing key ESG challenges and opportunities for our industry. We thank you for that support. If you have specific questions after your review of this report, we would be happy to follow up with you to provide additional information, including access to the appropriate members of our ESG team and leadership at LendingMining. During the second quarter, fast-growing infection rates of COVID-19 in Brazil and Chile have increased the risk of outbreaks in the communities near Chapada and Candelaria operations. At the same time, rates of infection in the areas near our operations in Sweden, Portugal, and the Upper Peninsula of Michigan in the U.S. have remained relatively stable. We're continuing to learn and adapt to new ways of operating in response to COVID-19 while remaining focused on ensuring the safety of our workforce and local communities. We are doing this within the framework of our pandemic response plan, recommendations of health authorities, and local and national regulatory requirements, identifying and implementing measures to protect our workforce and our communities. To help address the effects of the pandemic in our local communities, our operations have contributed approximately 3 million in direct relief efforts. I would like to thank our streaming partners at all sites. Franklin, Nevada, Wheaton-Precious, Sandstorm, and Altius all reached out to us to offer assistance and contributed to our efforts. Lastly, I would like to again acknowledge all of the Lenny Mining employees and our contractors who continue to rise to the challenge to keep our operations running smoothly and, most importantly, safe. Before I turn the call over to Jinhee and Peter to run through the summary results and performance of our operations, I wanted to highlight that we celebrated the first anniversary of the acquisition of Chapada earlier this month. It has been a very successful first year, and we look forward to delivering many more as the asset is developed to its full potential.

Thank you, Murray. During the second quarter, our operations and aggregate produced over 105,000 tons of base metals and approximately 44,000 ounces of gold. We sold nearly 100,000 tons of base metals and approximately 42,000 ounces of gold, generating revenue of $533 million. Overall, there was a positive pricing adjustment this quarter as the market price recovered for many of the metals we produced. The positive impact on revenue was $32 million for adjustments on prior period sales. Additional information on our provisional prices and pricing adjustment is included in our MD&A and Note 12 of the financial statements. Copper generated 71% of our revenues, up from 64% in the first quarter. Gold contributed 13%, down slightly from the 15% in Q1, while zinc, nickel, and lead contributed a combined 15%. Slide 6 represents a summary of the quarter's financial results. We realized a copper price of $2.85 per pound in the quarter, well above the average market price, in part reflecting prior period adjustments of 21 cents per pound. Second quarter revenue was 44% above that of the same quarter last year. This is mainly due to increased copper and gold sales volumes with the acquisition of Chapada, as well as the higher realized copper price. Attributable net earnings from operations were $0.05 per share and adjusted earnings were $0.07 per share for the quarter. Details of the adjustments, including the deferred tax expense at Chapada arising from foreign exchange translation, which has no cash impact, are broken down in our MD&A issued last night. I would also note that our cash costs and production costs include expenses related to our readiness in response to COVID-19, as many of these costs are likely to be required for some time. We have, however, excluded $3.8 million of one-time project standby and suspension costs from adjusted earnings and adjusted EBITDA as broken down in our MD&A. With our operations performing well and the increase in metal prices, we generated adjusted EBITDA of over $230 million in the quarter. Cash flow from operations was $38 million and adjusted operating cash flow before changes in non-cash working capital was nearly $180 million or $0.24 per share. Working capital was negatively impacted in the quarter by higher trade receivables due to timing of shipments and higher metal prices. Second quarter capital expenditures on a cash basis were $100 million, bringing the total of the first half of the year to roughly $240 million. Our board of directors has again declared a regular quarterly dividend of $0.04 Canadian per share or $0.16 Canadian per share on an annualized basis, maintaining the increase of last quarter. We remain in a strong financial position with significant liquidity and low leverage. We ended the quarter with $284 million in cash and equivalents and a net debt position of $220 million. A further $430 million of liquidity remains available under the company's revolving credit facility, excluding the $200 million accordion. Our net debt position has improved further since the end of the second quarter and is now approximately $190 million. I will now turn the call to Peter to discuss our operations.