Lundin Mining Corporation

Good day and thank you for standing by. Welcome to the Lundeen Mining fourth quarter 2021 results call and webcast. At this time, all participants are in a listen-only mode. After the speaker presentation, there will be a question and answer session. To ask a question during the session, you will need to press star one on your telephone. Please be advised that today's conference is being recorded. If you require any further assistance, please press star zero. I would now like to hand the conference over to your speaker today, Peter Rockendale, President and CEO.

Thank you, Operator, and thank you, everyone, for joining Lending Mining's fourth quarter and full year 2021 results call. I will draw your attention to the cautionary statements on slide two, as we will be making several forward-looking comments throughout the prepared remarks and likely during the Q&A. Yesterday, we announced that our Chairman, Lucas Lendeen, will be retiring at the upcoming 2022 Annual Shareholders Meeting. Our many stakeholders have benefited immensely from his vision, insight, and experience, shared over a lifetime of leading many successful natural resource companies. I would like to thank Lucas for his counsel and support, as Lundy Mining has grown over the past nearly three decades. I know he's very constructive on the outlook of base metals, and I share his confidence that Lundy Mining has the culture, people, and prospects in place to continue to deliver on his vision. On the call to assist with the presentation and answer questions are Jinhee McGee, our Senior Vice President and Chief Financial Officer, Peter Richardson, our Senior Vice President and Chief Operating Officer, and Kira Talbot, our Vice President of Exploration. On slide four, I would like to touch on several of Lundin Mining's 2021 highlights as they position us well for 2022 and beyond. 2021 was an excellent year for safety as measured by the total injury frequency rate. We set a best-ever rate of 0.54 per 200,000 hours worked. we met or exceeded our most recent production guidance for all metals. Recognizing that Candelaria had a challenging first nine months, the balance of our minds operated in line with plans and all finished the year with strong fourth quarter results. We achieved cash costs in line or better than guidance, including particularly low first quartile cash costs at Eagle, while managing the impacts of global inflation. We took advantage of the strong base metal price environment and set new records for annual earnings, adjusted EBITDA, and free cash flows. Planned, we advanced the zinc expansion project at Nevis Corvo. At year end, construction was substantially complete and commissioning is now underway. At Chapada, we continued to progress on our expansion study and last week announced initial results for exciting new high-grade sauva discovery. We will discuss this in greater detail later in the call. At Candelaria, internal study worked evaluating expansion of the north and south sector underground mines from the current 14,000 tonnes per day to 26,000 tonnes has been completed and is being finalized. At EGLE, we have completed internal study work on the upper keel zone. We believe the upper keel to be technically and financially feasible and aim to include it in our Life of Mind plans later this year. We remain focused on value creation through the disciplined allocation of our shareholders' capital. Dividends declared in 2021 increased nearly 145% over 2020, and yesterday, our Board of Directors declared a regular quarterly dividend of $0.09 Canadian per share and a semi-annual performance dividend of 11 Canadian cents per share. Throughout the year, we opportunistically repurchased approximately 4.5 million shares under our normal course issuer bid. Lastly, in late December, we announced the acquisition of Jose Maria Resources. The Jose Maria project will complement our existing portfolio of high-quality mines and will elevate our position to a major base metals producer with high-quality, low-cost copper exfoliator. Closing remains on track for the second quarter of this year. In short, we are well positioned to deliver on our strategy of operating, upgrading, and growing a base metal portfolio that provides leading returns for our shareholders throughout the cycle. And with that, I would like to turn the call over to Jinhee to review our financial results.

Thank you, Peter. On slide five, production of copper, zinc, nickel, and gold in concentrate all increased in 2021 over that of 2020. In particular, copper production increased nearly 15% year on year. We produced over 450,000 tons of base metals and approximately 167,000 ounces of gold. We also sold nearly 410,000 tons of base metals and approximately 157,000 ounces of gold on a payable basis, generating record annual revenue of over $3.3 billion. We remain predominantly leveraged to copper with the metal generating 70% of the year's revenue, zinc, nickel and gold each contributing 97%. Slide 6 presents a summary of our 2021 financial results and I will also touch on our fourth quarter results. We benefited from significantly higher base metal prices in the fourth quarter and over the course of 2021 compared to the prior period. We realized a copper price of $4.76 per pound in the fourth quarter, reflecting a 37 cent per pound of prior period adjustments. Prior period pricing adjustments for zinc, nickel, and gold were also positive, though less impactful. Details of the pricing adjustments are in our MD&A. 2021 revenue of $3.3 billion increased more than 60% compared to 2020. primarily owing to increased sales volumes and higher realized metal prices. Record gross profit of $1.4 billion was 175% higher year-on-year. Attributable net earnings from operations were $1.06 per share for the year and $0.31 per share for the fourth quarter. Record adjusted earnings were $1.11 per share for the year and $0.38 per share for the fourth quarter. Fourth quarter adjustments included write down of the Chapada or stockpile and recognition of insurance proceeds from the Chapada 2020 power interruption. Details of these adjustments are in our MD&A. We generated record adjusted EBITDA of $1.9 billion in 2021, a nearly 120% increase over 2020, which includes over $620 million generated in the fourth quarter. 2021 cash flow from operations was $1.5 billion, a 160% increase over 2020. Fourth quarter capital expenditures on a cash basis were nearly $155 million, bringing the total spend for 2021 to $532 million, lower than the most recent guidance of $575 million. We ended the year with nearly $600 million in cash and equivalents and a net cash position of over $560 million. As of February 17, 2022, this has further improved to $650 million in cash equivalents and $620 million of net cash. Lastly, our Board of Directors declared regular quarterly dividends and a maiden semi-annual dividend totaling 39 cents Canadian per share in 2021. This is nearly 145% increase over total dividends declared in 2020. And as Peter mentioned, yesterday our board approved the next quarterly regular dividend and semi-annual performance dividend, which together total 20 cents Canadian per share. We believe our regular quarterly dividend is sustainable throughout the metal price cycle and considers our capital requirements. As we progress with our growth projects, we expect limited semi-annual performance dividends to be declared during the development period. I will now turn the call to Peter Richardson to discuss our operations.

Thank you, Jinhee. Starting with Candelaria on slide 7, the operation had a strong finish to the year, producing nearly 45,600 tons of copper and approximately 26,000 ounces of gold at a cash cost of $1.31 per pound of copper in the fourth quarter. This was the best quarterly production since the third quarter of 2017. As mentioned, with the release of our production results in early January, The positive trend of improvement in grade discrepancy continued each month in the fourth quarter and averaged approximately 4%. This has continued thus far in 2022. Candelaria's 2022 production, cast cost, and capital expenditure guidance are unchanged. As previously disclosed, production is expected to be abundantly greater in the second half of the year, primarily owing to the copper grade profile. From the open pit, ore mining is to continue primarily from phase 10 pushback with initial ore production from phase 11 pushed back later in the year. Initiatives to de-bottleneck the pebble crushing circuit are continuing as planned and will increase mill capacity starting in 2023. As mentioned by Peter, internal study work evaluating expansion of the north and south sector underground mines from current 14,000 tons per day to 26,000 tons is now being finalized. The study work indicates a technically and financially robust project under the current royalty and taxation structure. Lastly, on the exploration front, we have over 54,000 meters of drilling and $50 million of expenditures planned for the Candelaria this year. Much of this is to focus on growing and upgrading underground resources where we have demonstrated success in the past. Moving to Chapada on slide 8. Chapada had a good fourth quarter operating in line with plans. A new annual mill throughput record was set with 24.1 million tons processed. This was With this, we exceeded copper production guidance, achieved the top end of gold production guidance, and beat cash cost guidance for the year. Chapada's 2022 production, cash cost, and capital expenditure guidance are all unchanged. As previously disclosed, production is to be weighted to the second half of the year, owing to the great profile and seasonal operating conditions. While we consider the impact of a typical rain season in guidance, Chapada has received significantly amounts of rainfall to start this year, The team has managed this well and has continued to operate safely. On the exploration and expansion front, we continue to make progress with our study work. We are very excited about the discovery of Sahuva announced last week and potential implications as we evaluate and advance several expansion scenarios. Our planned exploration expenditures for this year at Chapada are 10 million U.S. dollars, which includes 60,000 meters of drilling. I will now turn the call over to Kiara Talbot, our Vice President of Exploration, to speak to the Sauva discovery.

Thank you, Peter. Moving to slide 9, we're very excited to have announced the discovery of Sauva last week. Sauva is located approximately 15 kilometers from the current Chapada plant and a long strike from the previously identified Formica sector. Initial drilling has intersected shallow high-grade copper-gold mineralization and has returned intercepts of copper and gold, which are multiples of what has presently been processed at Chapada. Upon our acquisition of Chapada in mid-2019, this concession was identified as a high priority and we were able to acquire the exploration license in the federal auction process mid-last year. The first two drill holes completed in September confirmed the presence of shallow copper-gold mineralization. Through last week, we completed drilling 47 holes and had received assay results for 29 of them. The collar locations and several of the highlight intercepts are shown on the next slide. Moving to slide 10, the horizontal footprint of the presently defined mineralized area measures approximately 750 meters by 650 meters, and importantly remains open in all directions. We are evaluating and interpreting the results as we continue to explore for extensions of the system. There are currently three drill rigs testing areas to the northeast and west of the discovery area, and this slide shows the location of the completed holes where assay results are pending. We plan to aggressively and methodically drill this sector as part of the $10 million exploration program outlined for Chapada this year. Additional drill rigs in approximately 50 holes are planned to test northeast along Stripe towards the Formica sector and seen in the planned collar locations on this slide. While at an early stage, we are very pleased with this initial discovery and believe it supports our view that many opportunities exist to increase the size and quality of our mineral resource base at Chapada. The implications that this new high-grade system may have for our ongoing expansion studies will be evaluated as this discovery evolves during the year. Now I'll turn the call back to Peter.

Thank you, Ciara. Moving to EGLE on slide 11. EGLE had a good quarter and a strong year. Mill throughput and grades were impacted in the fourth quarter when compared to prior quarters, given mine sequencing that at times limited ore production rates. Mill maintenance was pulled forward during this time. We achieved annual nickel and copper production guidance and significantly beat full year cash cost guidance at a negative $1.24 per pound of nickel with the help of a greater than forecasted byproduct copper prices. With minimal capital expenditures of $60 million for the year, EGLE generated approximately $290 million of cash. 2022 production, cash cost, and capital expenditure guidance is unchanged. As previously disclosed, production is to be weighted to second half of the year, owing primarily to the expected grade profile. Internal work studies indicate that the upper kill zone, seen in the figure on this slide, is technically and financially feasible. We look to incorporate the upper kill zone into the mineral R&R estimates in 2022. In addition, we are continuing to drill from underground as part of our $2 million 2022 program testing extension targets, primarily off of Eagle East. Moving to Nevis Corvo on slide 12. The operation had a strong finish to the year, producing 12,100 tons of copper and nearly 18,800 tons of zinc at a cash cost of $1.36 per pound of copper in the fourth quarter. This is a notable improvement over the third quarter. We achieved annual copper production guidance and were within 1% of the zinc production guidance range and beat the full year cash cost guidance. Full-year capital expenditure guidance was below plan, primarily on timing of payments. Construction of the zinc expansion project was substantially complete at the year end. Nevis Corpus 2022 production, cast costs, and capital expenditure guidance are all unchanged. As previously disclosed, while copper production is to be modestly weighted to the first half of the year, given the copper grade profile, zinc production is to be second half weighted as production from ZEPP is ramped up over the course of the year. This year, we intend to initiate feasibility study level work evaluating the potential to develop the Zamblana copper deposit and improve the copper production profile, having recently purchased the outstanding interest in the deposit. Slide 13 shows construction and commissioning progress, some of the underground aspects of that during the fourth quarter. During the quarter, the materials handling and crushing systems were commissioned with first ore in December. The service water piping construction was finalized all the watering piping supports installed, and electrical rooms commissioned. The photos on slide 14 show the surface construction progress. During the quarter, we finalized all process plant circuits, completed commissioning and startup of the backfill cyclones, completed commissioning of the third tailings thickener, and continued paste fill expansion works. Construction of the zinc expansion project was substantially completed at year end, and commissioning is now underway. Lastly, on the operation front, Zinc Ruben continued to perform very well. We achieved annual zinc production guidance and beat full-year cash cost guidance. 2022 production, cash costs, and capital expenditure guidance is unchanged. As previously disclosed, zinc production is to increase in 2022 and 2023 over 2021, primarily on increasing head grades. Zinc production is to be weighted to the second half of the year. Additionally, we are evaluating the potential of utilizing sequential flotation to further improve concentrate rates and metal recovery rates with minimal capital expenditure. Exploration efforts continue this year with primary focus on increasing mineral resources at Dalby and Ygruvan. Over 20,000 meters of exploration drilling is planned as part of the 2022 exploration program. With that, I'll turn the call back to Peter.

Thank you, Peter. Slide 16 provides a summary of our current guidance. On an operational basis, this is unchanged from our previous disclosures. I will note that a global enterprise resource planning software project to optimize and standardize our systems was recently approved and is included in other capital expenditures. In aggregate, 2022 total capital guidance is for $655 million. Full-year exploration expenditure guidance remains at $45 million, including over 170,000 meters of planned exploration drilling. On slide 17, closing the Jose Maria resources acquisition remains on track for the second quarter of this year. The Jose Maria project will complement our existing portfolio of high-quality mines and will elevate our position to a major base metals producer with high-quality, low-cost copper exposure. We are excited to have this project come under our ownership in the coming months. In summary, on slide 18, our operations performed well in the fourth quarter, most notably with quarter-over-quarter improvements at Candelaria and Neves Corvo. For the year, we were able to take advantage of the base metal price environment, setting annual records for earnings, adjusted EBITDA of $1.9 billion and free cash flow of over $1 billion. Of this free cash flow, we directly returned over $227 million through our dividend framework, not including the regular dividend and performance dividend declared yesterday. At the same time, we indirectly returned over $40 million through the repurchase of our shares in the open market. We remain focused on value creation through the disciplined allocation of our shareholders' capital. We're also excited to welcome a new SVP of Technical Services and Growth, a VP of Technical Services, and soon a VP of Projects to our team. Their additions, as well as recent senior hires at our operation, enhance the technical expertise across our organization. With growth opportunities in each of our assets and the recent addition of Jose Maria, we are well positioned to deliver on our strategy and drive shareholder returns. And with that, operator, I would like to open the lines for questions.

As a reminder to ask a question, please press star then the number one on your telephone keypad. And your first question comes from Ioannis Mesvelis with Morgan Stanley.

Yes, hello. Good morning and thanks for the presentation. The first question is on Chapada in light of the high-grade discovery that you announced. Can you share with us your latest view on the most attractive expansion option here? Clearly, with the Jose Maria acquisition, I would like to also ask how the timeline of Jose Maria and potential to bring in a partner could influence your decision around the size and the timing of the Chapada expansion. Thank you.

It's Peter Rockendell. I'll address the question. With respect to Chapada, our focus right now is on a potential expansion to 32 million tons per annum. We were looking at multiple different scenarios, and we've narrowed it down to that specific one. We are still reviewing some options with respect to development of an underground opportunity, but we'll have to wait and see how that plays out. And with respect to the more recent discovery, obviously that's going to be ongoing. As Kira pointed out, it is open in all directions. So as we continue to drill there and get results, that information will feed into any potential expansion scenarios at Chapada. I expect The timeline for completion of the study will be later this year. We had initially wanted that to be a bit earlier, but we were reviewing multiple opportunities. So this is why now we've narrowed it down to the existing one. This will not impact how we move forward with Jose Maria. You asked a question about the funding. I think I could point out that we ended the year with a very strong cash balance. Clearly, in these commodity price environments, we're going to have considerable free cash flow in 2022. We have currently an $800 million line available, which there's a possibility of increasing that as well. And since the announcement of Jose Maria, there have been a number of different inbounds from other corporates, streamers. I won't get too specific, but a number of different parties that would be interested in partnering on that. You know, we have a lot of conviction on Jose Maria, and we need to make sure that we are going to get the best deal for our shareholders. So we'll be patient on that, and through the passage of time, we'll figure out what the best funding opportunity is.

Great. Thanks very much for that. And the second question, you already talked about the strong free cash flow, but if I look at your guidance, you suggest that most of the operations will have a softer H1 and a stronger H2. Is there any flexibility to bring some of the high-grade material forward given the very high commodity prices, or you don't have that level of flexibility, and hence you rely to some extent on commodity prices staying strong into the second half to monetize the higher-grade material?

It's Peter Richardson here. You know, the mine plans are built on a specific sequence, so it's a challenge and difficult to change that around and potentially causing us more problems and challenges going forward. So, you know, we have our plan and then we aim to execute according to that plan.

That makes sense. Thank you. And just the last question from me on the constitutional reform process in Chile. We've seen lots of radical proposals over the past several weeks. When do you think we'll have better visibility on what may be included in the draft constitution? Do we have to wait a few more weeks or could it take several months before there is more visibility on the final proposals? Thank you.

Yeah, I would assume that will occur after March 11th when the new government comes into place. So look for a timeline after that to get better clarity.

And the same goes with the royalty bill? Yes. Great. Thanks very much.

Your next question is from Daniel Major with UBS.

Yeah, thanks for the questions. I guess the first one just to clarify on Chapada and thanks for narrowing the scope of the expansion that you're currently thinking on the table 24 to 32. Am I right that the new discovery is independent from a perspective of timeline and inclusion in this expansion and would facilitate further development of the asset beyond that? That's the first part of the question. Can you give us any preliminary sort of capex guidance range you might be thinking of for sort of ballpark for expansion to 32 million tons at Chapada?

Yeah, so regardless of the new discovery, we are moving forward with the plan to go to 32 million tons per annum. We will look on whether or not Salvo gets to a situation where it could have its own facilities or It's just a matter of trucking the ore, but we will move forward regardless. On the CapEx side, we'll get better clarity on that towards the back half of this year.

Okay, thanks. And then I just flew up on Jose Maria and obviously not completed the acquisition yet, but can you give us any an indication on the timeline about when you would be able to make a first cut review of, in particular, the capital budget for the project and give us a sense of the magnitude of upside relative to the, I think, $3.1 billion that came out in the November 2020 study on the asset.

Yeah, I mean, there's a lot of work going on as we speak. Many people probably wouldn't be aware that Jose Maria actually assembled a pretty world-class team. A lot of the people were ex-Freeport and key in the construction of 10K. They're working in conjunction with some of our more recent hires at Lundin, as mentioned earlier on the call, the SVP of Technical Services, as well as the VP of Projects. We've also got alignment between a number of different areas, finance. We can go through them all. So we'll be working with Jose Maria. Fleur is also involved. I think from a timing perspective, we hope to come out with clarity on the path forward in Q4, and that will obviously be the time in which we'll also speak more specifically to what the capex will be.

Okay, so Q4 of this year is the sort of timeline I'm looking at. Okay, great. Thanks so much for the questions. No problem.

Your next question is from Orist Welkegel with Scotiabank.

Hi, good morning. I'm just following up on the last question about Jose Maria. Given you've had a couple months now to take a look at Jose Maria, I'm wondering how much confidence you have in the capex estimate of the $3.1 billion at this point.

Well, we looked at Jose Maria for quite a considerable amount of time before the deal, and We made our own assumptions on that capex prior to the acquisition. And, you know, I won't give specific numbers, but I will say that the assumptions we made were higher than 3.1. Okay.

And obviously I would think those assumptions are going up just given the inflationary pressures we're seeing in the market as well. Is that fair?

You know, we've had discussions as recently as yesterday with floor and the numbers that we assumed during our due diligence are still intact. Okay. But, I mean, we're not, I mean, clearly inflation is a concern out there, but it's something we're monitoring closely.

Okay, thanks, Peter. And just in terms of sort of milestones for Jose Maria, so you just mentioned, I guess, Q4 for an update on your capital estimate. Is that the same? Are you still expecting... Q4 for timing of a new stability agreement in Argentina related to the project?

We are hoping that some of the milestones that are key to the project will be completed much sooner than that. The Jose Maria team is in fact leaving this weekend heading down to Argentina to meet with both provincial and federal government officials and some of the key topics, the stability agreement, environmental permits and an export tax the purpose of the trip I think I think two of the three items they're making very good progress on clearly there was a bit of focus in Argentina with respect to the IMF and so now that that's getting better clarity I think things will pivot back to the Jose Maria team okay and then just finally would it be fair to say that you know things like streaming and partnering are likely going to come after

Do you have that agreement with the Argentinian government?

We're looking at all opportunities of potential ways to finance this. And even though some have already been presented to us as we speak, I think it would be better for Lundin Mining to enter those negotiations after better clarity in Argentina. Okay. Thank you. No problem.

Your next question is from Bryce Adams with CIBC Capital Markets.

Good morning all. Thanks for the presentation. I wanted to ask a few questions related to the stockpile write down of $65 million at Chapada. So how many tons of oil were impacted and what was the driver for the write down? Is that resampling, metallurgy or something else? Just hoping that you could add a little extra color to that please.

Sure, I can take that. The write-down of the stockpile was a result of various additional information and, as you noted, some volumes, grade, recovery estimates, so it's a combination of all those things. It's based on new processes that we implemented in 2021 to just get better information, including we did some laser scanning of the stockpile and estimating the density. We did some great sampling and also reflecting on kind of results from that, better estimated our recovery rate expectations. So I would say the biggest factor in that was actually the change in the recovery rate changing it from I think we had it around 72% to 68% again given the oxidation and the lower grade and that had an impact of about $60 million on the overall net realizable value of the low-grade stockpile. Sampling of the grade, I think the grade lowered a bit as well and that had I would say probably the next largest impact. Overall I think what we have to What's kind of important to keep in mind here is that because when Lundin purchased Chapada, we had to fair value the stockpile, it was already at a high value as opposed to when we build up the stockpile, it's at cost. So there's headroom if there is any change to lowering that net realizable value. So that lowering in the net realizable value had a direct impact on our book value, and that's how we took the write-down.

Okay, thanks. That's good detail. Can you say how many tons were impacted?

I'm going to say it's about 8 million tons.

Yes. Got it. That's all for me. Thanks a lot.

Your next question is from Lawson Winder with Bank of America Securities.

Thanks, operator. Good morning, and thank you for the update. Yeah, maybe if I could just come back to Chapada to perhaps better understand the path forward. So when you've committed to the 32 million or the extension of 32 million tons, obviously that's without a study. Is there a risk that, or not a risk, but is there a possibility that that changes just given that there isn't a finalized study at this point?

Well, no, we are in the process of a study as we speak. Sorry, so maybe that wasn't clear. And we are working close with, I believe it's S&C, Asanko, Hatch. So, no, this will be based off of a study.

Okay. And so the study you're working on now, it is only focused on the 32 million tons. So just to be clear on that? Correct. Okay. Okay, great. Thank you for that. Yeah, just a couple other questions. So with the ERP, the additional $25 million of spend this year, will that spend continue in the 23 and 24 and perhaps beyond that, or is this just a one-year thing?

No, it will continue. It's a global project, so we are doing the phases across our operations. So it is about a three-year project. So the spend will continue and overall expected to be around $80 million in total.

Oh, great. Thanks for that. And then just looking at costs in Candelaria from a couple of points of view, one from an FX point of view and the other from a power point of view. So my understanding is that your new power contracts will take effect next year. So will that have any positive or otherwise negative impact on costs? And then two, in terms of the peso, can you provide any sensitivity in terms of your cost guidance around increases and decreases in the peso? And I'm just asking because it's, I mean, the peso had declined and it's been quite a nice tailwind on costs through 2021 and now it is starting to rebound. And then maybe just remind us, what percent of operating capital costs are in Chilean pesos?

Yeah, so I can start with that. So, yes, the power contract will lower the electricity costs, I'd say, probably around excess of 50%, 60% lowering of the electricity cost. And on the peso about, 50% of our costs are in pesos. If you work that into our cash costs, that should give you a good indication on the sensitivity.

And in terms of your power costs, so you're going to get a 50% reduction. Is my memory correct in that about 10% of your costs totally on site are power?

Yeah, I think roughly that, yeah.

Okay, and then maybe if I might just sneak in one more question on Sumblana. What's kind of the timeline on that? I mean, it's certainly a potentially intriguing project here, a little different than the others, given that it's just copper and silver. Can we expect a study on this sometime, and when can we expect some more detail on that? Thanks.

Yeah, so it's Peter Richardson here. So we will be commencing the update of our feasibility study. So we've done feasibility study on this before. So we're taking an approach of updating those studies. We'll be commencing them in Q2 and hope to have a final product by the end of this year.

Thanks very much.

Your next question is from Stephen Ionel with Cormark Securities.

Yeah, thanks, guys. Actually, my questions have been answered. Thanks again.

Your next question is from Dalton Barreto with Kinecord.

Thanks, operator. Good morning, everybody. A couple of questions for me. I want to start with Shipwater and this 32 million time per annum expansion. Peter, correct me if I'm wrong, but that's the same kind of order of magnitude that Yamana had decided on, right? And I'm just wondering, you know, after all this time, why you settled on that number after all?

So they, I believe, I'm just going from memory, had three different studies they were looking at, and this would have been the top end of the study they were reviewing. For us, we looked at it as the one that currently provides the best economics.

Okay, and in their original study... There was a substantial amount of capital involved in moving infrastructure to access the super pure ore, and it was supposed to kind of kick in around this time. How should we think about that?

Well, it's Peter Richardson again. So that's part of that study that we're doing. So we're reviewing options on the relocation of the infrastructure, both timing, cost, and, you know, yeah, timing and cost primarily. Okay. So that's part of this study to review again.

Got it. Okay. And then just moving on to condolaria and the underground study, it sounds like it's almost fully baked internally. And I'm wondering, you know, is a green light on this study contingent on the new fiscal regime? And that's really all that's waiting. And then part B of that is how robust are the economics under the current regime? Or in other words, how much of an increase in the tax rate can it absorb? Thanks.

I'll give a stab at that. Basically, the study is complete or pretty much complete. It will take it from 14,000 tons up to 26,000 tons. That would add an incremental 21,000 tons of copper per year. There's also some ESG benefits, if you will, because by going underground, we'll see a reduction in the amount of dust, noise, and things like that. Under the current tax situation, it does show a positive IRR in the double digits. But it just would be prudent for us to wait to see what kind of royalty changes come through and then we can factor that into the model and determine the impact. But to your point, we are going to wait until we see what the changes may be for a path forward. If the changes come and it still dictates a strong IRR, we will move forward with the project.

Okay, great. And then just a last couple on Jose Maria here. The investment agreement or the stability agreement you guys are looking at, Jose Maria has been leading the charge on that one for some time now. And there was some talk that it would be specific to Jose Maria. Then there was some talk that it could be more of a countrywide mining code type change. I'm just wondering, is the discussion now back specifically to Jose Maria in terms of fiscal regime?

Yeah, I mean, the government may be looking at it from their own side across the whole country, but Jose Maria is just working specifically on it for them. And I think that they've come to an agreement, if you will, on the terms. It just needs to be approved at the federal level.

Okay, great. And then just last one for me. Once the acquisition of Jose Maria is completed, will Adam Lundy have a role at Lundy Mining?

Yeah, we haven't determined specifically, but Adam will be involved. I think his relationships in the country are exceptional. I've been to Argentina with him. I've met with the governor with him, a number of other government officials. And so I think it will be key for him to help manage those relationships on a going forward basis.

That's great. Thanks, guys. That's all for me.

And there are no further questions at this time.

Okay, thank you, operator. I mean, just in closing, I'll make a quick comment to say, you know, Lundin Mining is really well positioned for 2022. Each of our assets, as we pointed out in this presentation, has an opportunity to continue to add further value, and I think our people are very focused on achieving this. So I would like to personally thank the employees of Lundin Mining for all their hard work and dedication, and particularly through a challenging time with this global pandemic. And thank you, everyone, today for joining the call.

This concludes today's conference call. Thank you for participating. You may now disconnect.