Lundin Mining Corporation

Good morning, ladies and gentlemen, and welcome to the London Mining Third 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 you require needed assistance, please press star zero for the operator. Also note that this call is being recorded on Wednesday, October 26, 2022. And I would like to turn the conference over to President and CEO, Peter Rockendale. Please go ahead, sir.

Thank you, operator. And thank you everyone for joining Lending and Mining Third Quarter 2022 Results Call. Before we get into the formalities of the call, it is with great sadness that I address the passing of our board member, Ms. Karen Ponjic, on October 11th in Chile, as well as the tragic loss of a contractor colleague at Neves Corvo in Portugal on September 30th. Karen was appointed to our board in February of 2021 and brought with her a wealth of wisdom, local context and insight gained through her distinguished career and many contributions to mining in Chile. We extend our heartfelt condolences to Karen's family and friends. She will be greatly missed by many. Also, unfortunately, a fatal accident occurred underground at Neves Corvo in late September. In this isolated incident, the employee of the materials handling contractor was fatally injured while driving a piece of mobile equipment. We continue to support those impacted and have held safety stand-downs at every operation, and at our head office to reflect on the loss and reconfirm our strict commitment to zero harm. Thank you. I will now draw your attention to the cautionary statements on slide two, as we will be making several forward-looking comments throughout prepared remarks and likely during the Q&A. On the call to assist with the presentation and answer questions are Titor Polson, our Senior Vice President and Chief Financial Officer, and Juan Andres Morel, our Senior Vice President and Chief Operating Officer. Juan Andres joined us as SVP and COO on August 1st. Juan Andres has an exceptional track record with over 30 years in the industry. More recently, he was the General Manager of Mining Operations at BHP's Escondida in Chile, currently one of the world's largest copper mines. From 2005 to 2017, he held progressively senior roles with Antofagasta, including Head of Operations at Las Palambres and Chief of Technical Services. Earlier in his career, he spent seven years with Codelco as Chief Strategy Officer of the LT&A Division, Director of Corporate Operational Excellence, and Chief of Open Pit Mine Planning, amongst other roles. Titor joined us as SVP and CFO on September 1st. Titor brings over 20 years of financial experience, most recently as CFO of Lundin Energy, which was acquired by Accra PP for approximately $14 billion earlier this year. Continuing with the key highlights in the third quarter on slide four, overall, we had a strong quarter. Candelaria, Eagle, and zinc-driven operations all continued to deliver as per plan. Chapada rebounded from the weather-impacted first half of the year with mill throughput, feed grades, and metal recovery rates all improving in the third quarter. Copper and gold production increased 35% and 50%, respectively, over Q2. Ramp-up of the Nevis Corvo zinc expansion program is progressing. Quarter-over-quarter improvements have been seen in over-processed grades and recoveries. Overall, production of all metals is tracking to their annual guidance ranges. Despite the macroeconomic conditions, we generated adjusted EBITDA of over $200 million and adjusted operating cash flow of over $180 million, exceeding Q2 by 35% and 260% respectively. Our balance sheet remains strong with $1.9 billion of liquidity at quarter end, and as Titor will speak to, we have initiated a foreign exchange hedging program to protect operating costs and business plans. We continued our balanced and disciplined approach to capital allocation. We remained growth-focused while at the same time delivering leading cash returns to our shareholders. We have paid nearly $225 million in dividends and purchased 10.8 million shares for approximately $50 million year to date. The current regular dividend yield of 5.42% is the strongest within our direct peer group. With Jose Maria, LendingMining is well positioned to deliver meaningful growth in the coming years. We are continuing to progress the project and are targeting to complete an updated technical report for publication to the market in the second half of 2023. And as I will speak to a bit later, The high-grade copper-gold mineralization at Saúva continues to grow and remains open. A maiden mineral resource estimate for Saúva is targeted for release in early 2023. I will now turn the call over to Titor to speak to our summary results.

Thank you, Peter. It's great to have joined the mining sector, and I'm looking forward to talking through some of the financial highlights. On this, my inaugural earnings call will be mining. On slide number five, we produced over 116,000 tons of base metals and approximately 45,000 ounces of gold in the third quarter. In terms of sold volumes, we sold close to 107,000 tons of base metals and around 43,000 ounces of gold. Total copper production was essentially in line with the second quarter of this year, though below that of the third quarter last year. This is primarily due to lower production from Chapata year-on-year, while being in line to best themselves for this quarter. Total sink production exceeded the third quarter last year, primarily due to ramp-up of the sink expansion project. Production was slightly lower quarter-over-quarter at sink groove and batch process, a greater portion of copper ore in Q3 than it did in the second quarter, given the minor schedule. Similarly, nickel production was greater this quarter than prior year quarter, the lower than the second quarter on lower feed grades at the Eagle. Gold production increased over 15% in the third quarter compared to the second quarter on improved operations at Chapata, and was flat compared to last year's quarter. Our metal mix remains predominantly leveraged to copper. with the copper generating 60% of quarters revenue after pricing adjustments. Tin and nickel contributed 13 and 11% respectively, while gold contributed 10%. Moving to slide six, third quarter revenue increased 10% over the second quarter to nearly $650 million. With the price decline for several of the metals produced over the quarter of the quarter, revenue was negatively impacted by $65 million due to prior period price adjustments. Slide 6 provides a summary of the realized metal prices for the quarter, breaking out the prior period adjustments, as well as the mark-to-market at the end of the quarter. Ultimately, for the third quarter, we realized prices of just over $3 per pound of copper, $1.43 per pound of zinc, and just below £9 per pound of nickel, including pricing adjustments. At the end of the third quarter, approximately 90,000 tons of copper were provisionally priced at $3.46 per pound and remained open for final pricing adjustments. Aspid, over 31,000 tons of zinc at $1.36 per pound, and 5,500 tons of nickel at $9.36 per pound. Details of these pricing adjustments are outlined in the MD&A and financial statements. Turning to slide seven, production costs total just over $1.2 billion for the first nine months this year. and have been approximately 20% higher compared to the same period last year. This increase has largely been a result of higher consumable costs, primarily at Candelaria, Ciampatta, and Nevis Corvo, given inflationary pressures, particularly diesel and electricity, felt earlier in the year, and partially offset by the effects of favorable foreign exchange. This figure on this slide presents the relative impact of key drivers to total operating and capital costs by each operation year-to-date. Forecast cash costs remain consistent with guidance for Candelaria and Zapata, while Nibus Corvo forecast cost is trending above, considering mainly electricity prices and forecast byproduct sink volumes and pricing. Eagle's forecast liquid cash cost is also trending above guidance, considering mainly forecast byproduct copper pricing. while think-proven cash cost is trending favorably due to foreign exchange impacts. Total capital expenditure are tracking well to guidance, with third-quarter spend amounting to $200 million, whilst the spend for the first nine months is totaling $562 million. And as Peter mentioned, we have initiated some foreign exchange hedges, on our foreign currencies to protect operating costs and business plan. And turning to slide A, you can see here the company has entered into a series of foreign exchange hedges over recent weeks to provide better visibility on the US dollar funding requirements for our future operating costs and capital expenditure over the period from now to end of 2020. descended into zero-cost colors for the Chilean pesos and the Brazilian real. The company has hedged over half a billion dollars worth of Chilean pesos and just below half a billion dollars worth of Brazilian real and euros, respectively, and $234 million worth of Swedish crores. These hedges cover a certain proportion of the estimated exposure in these respective currencies, and the company will consider considered to enter into further hedges for 2024 and potentially also for 2023 new course and assuming that the market conditions are favorable. Turning to slide 9, this is a summary of the third quarter key financial metrics. Third quarter revenue of nearly $650 million was 10% greater than the second quarter. so below the same quarter last year, mainly due to lower U.S. metal prices, net of adjustments, and offsetting higher sales volumes. We generated adjusted EBITDA of over $200 million, adjusted earnings of over $30 million, and adjusted operating cash flow of over $180 million. Details of the adjustments are written down in our MD&A. Beyond metal prices and are the Josemaría expense costs. Costs for engineering building and other related costs for Josemaría project were nearly $55 million for the third quarter of 2022. We remain in a strong net cash position of nearly $180 million at quarter end, which includes a working capital bill during the third quarter of $145 million. The company's liquidity headroom by the end of the third quarter was approximately $1.9 billion. Slide 10 presents greater detail on the sources and uses of cash in the third quarter. Before changes in working capital, the direction and timing of wages influenced by provisional pricing, our operations generated over $180 million of adjusted operating cash flow, net of nearly $55 million dollars extents on the Rosa Maria project, as well as $58 million paid in cash taxes. Ultimately, cash and cash equivalent and port rent were approximately $230 million, a decrease of roughly $270 million with cash flow from operations used to fund capital investments in our assets, digital power acquisition, gold price, contingent payment, share of the dividends of $50 million and share buybacks of over $40 million. As of October 25th, the cash and net cash balances have improved to approximately 255 million and 205 million respectively. I'll now turn the call over to Juan Andres to speak to our operation.