Lundin Mining Corporation

Good morning, ladies and gentlemen, and welcome to the Lending Mining second quarter 2022 conference call. At this time, all lines are in a listen-only mode. Following the presentation, we will conduct a question and answer session. If at any time during this call you require assistance, please press star zero for the operator. This call is being recorded on Thursday, July 28, 2022. I would now like to turn the conference over to President and CEO, Peter Rockendale. Please go ahead.

Thank you, Operator, and thank you, everyone, for joining Lundin Mining's second quarter 2022 results call. Before we get into the formalities of the call, it is a profound sadness that I'm announcing the passing of our former chairman, founder, and friend, Lucas H. Lundin. Lucas passed away after a courageous two-year battle with brain cancer. Lucas founded Lundin Mining with his father in the mid-'90s and was a member of the board and chairman of the company for more than 25 years until he stepped down this past May. In his role as chairman, Lucas oversaw Lundin Mining's development from an exploration stage company into a global mid-tier producer with a strong copper focus and a portfolio of world-class assets. The many successes of Lundin Mining and the Lundin Group owe directly to Lucas' extraordinary strategic foresight, massed by his relentless drives. His guidance and support for his colleagues will be deeply missed, however, as his pursuit and vision of creating a world-class base metals company lives on. Lucas would say, get the right people, empower the people, and have good assets. Those of us that work closest with Lucas share in his approach and will continue to build upon his legacy. Thank you, everyone. And now I will continue with our quarterly calls. 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 as well. On the call to assist with the presentation and answer questions are Jinhee McGee, our Senior Vice President and Chief Financial Officer, and Peter Richardson, our Senior Vice President and Chief Operating Officer. As you would have seen from our news release last night, this will be the last earnings call for Jinhee and Peter with Lundin Mining. Jinhee will be retiring at the end of September, and Peter will soon be moving over to the gold space with Barracole in Nevada. I want to thank both Jinhee and Peter for their dedication and contributions to Lundin Mining. I'm also excited to also announce the appointment of a new member to Lenny's Mining Board of Directors and four strong leaders to our executive team. Natasha Vav will be joining our board on August 1st. Natasha is currently the Executive Vice President and Chief Operating Officer leading Agnico Eagle Mines, Operations, and Project Development teams. We look forward to the operational leadership, insights, and perspectives Natasha will bring to our board. Juan Andres Moral will be joining the management team as our new SPP and Chief Operating Officer next week. Juan Andres is a well-known mining executive with an exceptional track record over 30 years, including more recently as the General Manager of Mining Operations for BHP's Escondida. Prior to that, Juan spent 14 years with Antipagas at various senior operational leadership positions, including Head of Operations at Las Palombras. Juan also worked at Codelco as Head of Strategy and Director of Technical Services. One vast open pit and South American experience will be a strong and natural fit. Tedder Folsom will be joining as SVP and CFO on September 1st. Tedder is coming from Lending Energy following his acquisition by Acra BP for approximately $14 billion, where he has been CFO since 2017 and also has many years of experience in finance and strategy. Dave DeCair is joining as SVP at Jose Maria and will have overall responsibility for the project. He has over 40 years of mining and EPCM experience in a variety of global projects. Most recently, David was at Lundin Gold where he oversaw the successful construction of the Fruto del Norte project in Ecuador. Before that, he was with Freeport-McMoran as project director for the highly successful multi-billion dollar Cerro Verde expansion project in Peru. David was also general manager of project development for South America for Extrata Copper. Lastly, I'm happy to announce the promotion of Kristin Mariusa to SVP Sustainability, Health and Safety. Kristin successfully led our Eagle Mine as Managing Director for several years, prior to being appointed VP Environment and Social Performance. She joined Lundeen Mining in 2013 with the acquisition of the Eagle Mine from Rio Tinto and has held senior positions in Operations, Environment, Permitting and Health and Safety. I'm very pleased to welcome these exceptional colleagues to Lundeen Mining. I believe their depth of experience will prove to be invaluable additions to our team as we continue to develop Lundin Mining into a world-class base metal producer. Continuing with sustainability and responsible mining on slide four, earlier this month we published our 2021 sustainability report. As many of our long-term shareholders are aware, Lundin Mining has been reporting on our sustainability performance in a standalone document since 2010. Within this year's report, we are proud to have announced our new Focused on the Future long-term sustainability and strategy. Focused on the Future is comprised of a promise, a purpose, and five pillars as described in the image on this slide. The foundational work incorporates initiatives already underway at Lend-E-Mining as well as new ones. It will guide us as we continue to develop meaningful performance indicators to track and measure our sustainability efforts. Under this framework, we are pleased to have announced an interim Scope 1 and Scope 2 GHG Absolute Emissions Reduction target of 35% by 2030 compared to our 2019 baseline year. Though we are already a leader with an industry-low GHG emission intensity for the base metals we produce, we acknowledge our role in the call for action to reduce emissions, commit to low-carbon alternatives, and develop climate resilience. The bullet points on the right side of the slide outline just a few of our 2021 safety, environment, and social performance highlights discussed in this year's report. I encourage those interested in additional detail and more information on our approach and performance to read this report. And as always, please reach out with any questions. I will now turn the call over to Junhee.

Thank you, Peter. On slide five, second quarter copper and zinc production exceeded that of the prior year quarter while nickel production was in line. We produced over 120,000 tons of base metals and approximately 39,000 ounces of gold. We also sold over 110,000 tons of base metals and approximately 32,000 ounces of gold on a payable basis, generating revenue of $590 million. Unfortunately, second quarter revenue was affected by significant provisional pricing adjustments given the late quarter decline in base metal prices. We remain predominantly leveraged to copper, with the metal generating nearly 60% of the second quarter's revenue after pricing adjustments. Zinc contributed 15%, an increase over recent quarters, in part given increasing zinc production with the ramp-up of Nevis Corvaux Zinc Expansion Project, and nickel contributed 12%. Slide 6 presents a summary of our second quarter financial results compared to the same quarter last year. With the late quarter decline in base metal prices, our second quarter revenue and financial results were significantly impacted by provisional price adjustments. Prior period adjustments and the marked market of current period sales that remained to be settled at the end of the quarter were approximately negative $220 million. Details of pricing adjustments are in our MD&A and financial statements. Ultimately, we realized a copper price of $2.82 per pound, including a negative $0.96 per pound prior period adjustment. The nickel price of $7.64 per pound, including a negative $3.40 per pound prior period adjustment. Second quarter revenue of $590 million was 32% below that of the same quarter last year due to lower realized metal prices net of price adjustments. On a year-to-date basis, revenue was comparable to the first half of 2021. We reported an attributable loss of $0.07 per share and adjusted loss of $0.05 per share. Details of these adjustments are broken down in our MD&A as well. Despite the earnings loss, we generated adjusted EBITDA of nearly $150 million and cash flow from operations of over $365 million. Adjusted operating cash flow before changes in non-cash working capital was $50 million or $0.06 per share. On a cash basis, capital expenditures are roughly $215 million in the second quarter for a first half-year total of approximately $360 million. Capital expenditures at Eagle, Nevis Corvo, and Zinc Rubin are all tracking well to guidance. As will be discussed in the operations section, capital expenditure guidance for Candelaria and Chapada have been revised given inflationary cost impacts on capitalized stripping, including diesel and other mining consumables. We generated over $215 million of free cash flow in the quarter, paid over $170 million in dividends to shareholders, and purchased $8 million of shares under our normal course issuer bid in late June. The balance sheet remains in a very strong position with cash equivalents of approximately $500 million and total liquidity of approximately $2.3 billion at quarter end. Lastly, our Board of Directors declared a regular quarterly dividend yesterday of $0.09 per share Canadian. I will now turn the call over to Peter Richardson to speak to our operations.