Lundin Mining Corporation

Ladies and gentlemen, and welcome to the Lundeen Mining fourth quarter and full year 2022 results call and webcast. 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 immediate assistance, please press star zero for the operator. This call is being recorded on Thursday, February 23, 2023. I would now like to turn the conference over to CEO Peter Rockendale. Please go ahead.

Thank you, operator, and thank you, everyone, for joining us today. I will draw your attention to the cautionary statements on slide two, as we will be making several forward-looking statements during the prepared remarks and likely during the Q&A. On the call to assist with the presentation and answer questions are Tyler Polson, our Senior Vice President and Chief Financial Officer, and Juan Andres Morel, our Senior Vice President and Chief Operating Officer. Beginning on slide four, I want to touch on a few of our 2022 achievements as they position Lundee Mining well to deliver on our strategy and industry-leading returns in the years ahead. We delivered solid production results in 2022. We substantially met our copper production guidance of 250,000 tons, and we achieved the upper end of our production guidance ranges for both nickel and gold. Our portfolio of high-quality operations produced over 400,000 tons of copper-equivalent metal. We generated significant adjusted EBITDA, operating cash flow, and free cash flow from our operations, despite challenging inflationary conditions and lower year-on-year metal prices. Throughout 2022, we made good progress advancing our many growth initiatives. While ramp-up of the Nevis Coral Zinc expansion project was slower than planned, It delivered sequential quarterly production improvements and is tracking well to our plans this year. At Candelaria, study work evaluating expansion of the underground mines to add roughly 20,000 tons of copper per year to the production profile has been completed. With the potential changes to mining royalties and taxation in Chile being moderated from earlier proposals, we're looking forward to a potential investment decision upon approval of the 2040 EIA. We announced the first mineral resource estimate for the Saouba deposit earlier this month. The maiden estimate is for nearly 180 million tons of indicated resource containing 1.3 billion pounds of copper and 1.1 million ounces of gold. We expect the estimate to increase with ongoing exploration efforts and influence our plans of how best to expand production at Chapada. The upper keel zone at Eagle and the sequential flotation project at Zincroon are now incorporated into our life of mine plans. With the upper kill zone included, Eagle's mine life now extends into 2027. Zinc Rubin's recoveries and concentrate rates are expected to increase later this year with the completion of the sequential flotation project. We made good progress in 2022 advancing our large-scale Jose Maria copper bullet project. Detailed engineering is now approximately 40% complete and we are on track to deliver an updated technical report in the second half of this year. We remain focused on value creation through disciplined growth and the prudent allocation of our shareholders' capital. Yesterday, our Board of Directors declared a regular quarterly dividend of $0.09 Canadian per share. The annualized dividend of $0.36 Canadian continues to be a leading return amongst our peers. We directly returned over $275 million in dividends in 2022 and indirectly returned a further $60 million to shareholders with the opportunistic repurchase of 10.8 million shares under our normal course issuer bid. Further, we increased the strategic and technical strength of our team this year with the addition of experienced and proven leaders to our executive and operational teams as well as our board of directors. In short, Lundin Mining is well positioned and focused on delivering on our strategy of operating, upgrading and growing a base metal portfolio that provides leading returns throughout the cycle. Moving to slide five, we previously released our production results earlier this year, so I'll speak briefly to some of the details provided in our full results yesterday. We produced 250,000 tons of copper in 2022, including over 56,000 tons in the fourth quarter, substantially meeting our production guidance. Chapada and Eagle met guidance, while Candelaria and Nevis-Corvo were modestly below. Candelaria and Nevis-Corvo's fourth quarter production were both impacted by throughput and to a lesser extent grade, partially offset by better than planned recoveries at Candelaria. Chapada had a strong second half recovering from the weather and COVID absenteeism, which impacted the start of 2022. We produced roughly 160,000 tons of zinc or within 5% of our guidance. While below plan, ZEPP delivered its fourth quarter of sequential production improvement and overall increased zinc production 25% over that of 2021. The ramp-up of Zest this year is tracking well to plan. Zinc-Gruven's fourth quarter zinc production was impacted by lower-than-plan zinc head grades and short-term re-sequencing of the MyPlan to the Knee-Gruven area. Eagle continues its reliable performance, producing over 17,000 tons of nickel in 2022 and achieving the upper end of the guidance range. The upper end of the guidance range was also achieved for gold, with production of over 154,000 ounces. Candelaria met and Chapada exceeded their gold production guidance ranges. Similar to copper, Chapada had a strong second half of the year, achieving better than planned gold recoveries in the fourth quarter. I will now turn the call over to Titor to provide a summary of our financial results.

Okay, thank you, Peter, and good morning, everybody. Moving to slide six, as Peter mentioned, we generated significant adjusted EBITDA, operating cash flow, and free cash flow from operations in 2022, despite the lower year-on-year average metal prices and inflationary conditions that we have experienced. Starting with the top line, we generated $3 billion in sales for the year, including over $810 million in the fourth quarter as metal prices strengthened. This compares to the record-setting 3.3 billion for the full year in 2021. Our sales remain predominantly leveraged to copper, with the metal generating 63% of the year's revenue. Zinc and nickel contributed 12% each, while gold contributed 7%. Other revenues include sales from lead, cobalt, PGMs, iron, and other byproduct metals from our operations. With metal prices finishing the year on a strong note, 2022's revenue was positively impacted by $30 million of prior period price adjustments, including nearly $75 million of positive adjustments for the fourth quarter. A summary of realized copper, zinc, and nickel prices for the year are presented in the bar charts on this slide. Ultimately, we realized prices of $3.75 per pound of copper $1.50 per pound of zinc and $12.15 per pound of nickel for the year, including the adjustments. At the end of the fourth quarter, approximately 90,000 tons of copper were provisionally priced at $3.79 per pound and remained open for final pricing adjustment. As did over 36,000 tons of zinc at $1.35 per pound and nearly 5,000 tons of nickel at $13.60 per pound. Moving to slide seven, production costs totaled close to $1.7 billion for 2022 and were approximately 20% higher than last year. The increase that we have seen this year has largely been a result of broad inflationary impacts on prices of consumables, particularly diesel and electricity, primarily at Candelaria, Chapata, and Nevis-Kirbel. The chart on this slide presents the relative impact of key drivers to the total operating and capital costs by each operation for the full year. The Candelaria's full year cash cost was impacted by the successful early agreement of labor contracts in the fourth quarter, as well as higher energy and maintenance costs and lower production volumes than forecast. Three-year labor agreements were reached with three of the unions late in the fourth quarter, well ahead of expiry of the existing agreements occurring this year. Candelaria's fourth quarter production cost and cash flow were impacted by $20 million with the pulling forward of the agreement bonuses. On a cash cost basis, this represents $0.06 per copper for the year and $0.27 per pound for the fourth quarter. Candelaria's costs are to benefit from the roughly 50% lower electricity rate under our new power purchase agreement, which commenced on 1 January. The new power purchase agreement also ensures a minimum of 80% renewables in the energy mix, prioritizing wind and solar. Cash cost guidance is for $1.80 per pound to $1.95 of copper in 2023, and includes the savings from the new power purchase agreement. Chapada's full-year cash cost was better than guidance, benefiting from greater than planned gold volumes in the fourth quarter. Cash cost guidance is for $2.55 to $2.75 per pound of copper in 2023, mainly reflecting the expectation of higher year-on-year average consumable costs and forecast lower production volumes. Nevis Corwell's full-year cash cost was above guidance, largely driven by a lower-than-planned volume of copper and zinc, as well as cost inflation, particularly for electricity. Cash cost guidance is for $2.10 to $2.30 per pound of copper in 2023, with improvements expected as zinc and lead production volumes increase with the continued ramp-up of SEP towards nameplate. Eagle's full-year cash cost was above guidance primarily due to lower byproduct copper volumes and prices than forecast, combined with inflationary increases in operating costs. Cash cost guidance is for $1.50 to $1.65 per pound of nickel in 2023, with the expected year-on-year increase primarily a reflection of the planned lower production volumes. Syncroin's full-year cash cost of $0.32 cents per pound of zinc was 40% better than guidance, owing mainly to greater lead and copper byproduct credits and more favorable for an exchange than planned. Cash cost guidance is for 60 to 65 cents per pound of zinc in 2023, net of the lead and copper byproduct credits. Total capital expenditure tracked well to our guidance with sustaining capex of $640 million compared to guidance of $670 million and total capex of $845 million including expansionary capital on set and to advance the Jose Maria project. Lastly on this slide, we have begun to realize the benefits of our foreign exchange hedging program intended to provide better visibility on our US dollar funding requirements of future operating costs and capex. In the fourth quarter, we realized a gain of $6 million and an unrealized gain of $63 million on our FX hedging contracts. Details of the program are available in the year-end financials. Our full year and fourth quarter key financial metrics are presented on this slide eight. Full year revenue, as I said, was over $3 billion, and the fourth quarter revenue was over $810 million. We generated adjusted EBITDA of $1.3 billion for the year, including nearly $355 million in the fourth quarter, which is greater than the adjusted EBITDA generated over the previous two quarters combined. Full year adjusted earnings were over $480 million, Adjusted operating cash flow was nearly $1 billion, and free cash flow from operations was over $380 million. Details of the adjustments are broken down in our MD&A. We remain in a strong financial position. We finished the year in a very modest net debt position, and today we remain in a modest net debt position of roughly $14 million. We have significant liquidity of approximately 1.7 billion today and recently received commitments from our leading lending syndicate to extend the term of our revolver by a year to April 2028, along with a modest reduction in our borrowing rate spreads. Slide 9 presents greater detail as to the sources and uses of cash in 2022. Before changes in working capital, our operations generated nearly a billion dollars in 2022, net of approximately 66 million expensed on the Jose Maria project in the second and third quarters, and just over $300 million of cash taxes relating to prior year settlement as well as tax installments for 2022. Cash and cash equivalent at year end were approximately 190 million, a decrease of roughly $400 million with cash flow from operations used to fund investments in our assets, the acquisition of Jose Maria, shareholder dividends of $275 million, and share buybacks of nearly $60 million. With that, I'll turn the call back to Peter. Thank you.