TORONTO, Oct. 28, 2020 /CNW/ - (TSX: LUN) (Nasdaq Stockholm: LUMI) Lundin Mining Corporation (“Lundin Mining” or the “Company”) today announced that its Board of Directors has declared a dividend of CAD$0.04 per share, payable on December 16, 2020, to shareholders of record at the close of business on December 4, 2020. This dividend qualifies as an ‘eligible dividend’ for Canadian income tax purposes. The declaration, timing, amount and payment of future dividends remain at the discretion of the Board of Directors.

Dividends on shares traded on the Toronto Stock Exchange (“TSX”) will be paid in Canadian Dollars (“CAD”) on December 16, 2020.

Dividends on shares traded on Nasdaq Stockholm will be paid in Swedish kronor (“SEK”) in accordance with Euroclear principles on December 17, 2020. To execute the payment of the dividend, a temporary administrative cross-border transfer closure will be applied by Euroclear from December 3, 2020 up to and including December 4, 2020 during which period shares of the Company cannot be transferred between TSX and Nasdaq Stockholm.

Notice to all Non-Canadian Resident Shareholders

In 2012, the Canada Revenue Agency (“CRA”) changed how the tax withholding rate applied to dividend payments made to non-residents is determined. The CRA now requires a certification of residency from each shareholder so that the preferred tax treaty rate can be applied where applicable to person’s resident in countries which have a tax treaty with Canada.

Shares traded on Toronto Stock Exchange

AND 3 Q news
TORONTO, Oct. 28, 2020 /CNW/ - (TSX: LUN) (Nasdaq Stockholm: LUMI) Lundin Mining Corporation (“Lundin Mining” or the “Company”) today reported cash flows of $272.2 million generated from operations in its third quarter 2020. Adjusted operating cash flow2 for the quarter was $262.0 million ($0.36 per share). Attributable net earnings for the quarter was $122.4 million ($0.17 per share) and adjusted earnings2 was $106.4 million ($0.14 per share). Adjusted EBITDA2 was $300.3 million for the quarter.

Marie Inkster, President and CEO commented, “Though we have had challenges on several fronts over the past month, each has been met with immediate action plans. Our team is organized and determined. We will respond to adversity with action, to overcome our challenges in the most expeditious way possible.

Safety stand downs across our organization have given us time to honour our colleague at Neves-Corvo and reflect on our shared commitment to our goal of Zero Harm. Both our Alcaparrosa mine at Candelaria and Eagle mine were recognized by national governing bodies for their outstanding safety records, and our Company is on-track for our lowest injury rate year.

Operationally, noticeable progress has been made at Candelaria to improve overall mill throughput. The operation is well positioned for a return to full production rates once fair and sustainable labour agreements are reached. Chapada’s strong performance continued until late in the quarter. The team has done an excellent job to minimize the expected impact and to take advantage of the downtime, as seen by reinstated 2020 guidance. Official restart of the Zinc Expansion Project at Neves-Corvo is scheduled for early 2021 with planned fourth quarter 2020 activities to include commissioning of the SAG mill with waste. And lastly, Eagle and Zinkgruvan continue to perform well, taking advantage of the improving nickel, copper and zinc prices, as evidenced by Eagle’s record cash cost and free cash flow generation.”

Summary Financial Results
Three months ended Nine months ended September 30, September 30,

US$ Millions (except per share amounts) 2020 2019 2020 2019
Revenu 600.7 538.7 1,512.0 1,324.4
Gross profit 199.3 128.6 318.8 294.9
Attributable net earnings1 122.4 26.4 49.6 70.2
Net earnings 133.6 32.1 68.3 84.4
Adjusted earnings 1,2 106.4 25.6 120.0 77.5
Adjusted EBITDA2 300.3 224.3 622.1 476.9
Basic and diluted net earnings per share1 0.17 0.04 0.07 0.10
Adjusted basic and diluted earnings per share1,2 0.14 0.03 0.16 0.11
Cash flow from operations 272.2 111.6 393.2 378.2
Adjusted operating cash flow2 262.0 155.0 468.9 344.1
Adjusted operating cash flow per share2 0.36 0.21 0.64 0.47
Cash and cash equivalents 220.0 184.6 220.0 184.6
Net debt2 124.0 185.0 124.0 185.0

1 Attributable to shareholders of Lundin Mining Corporation.


2 These are non-GAAP measures. Please refer to the Company’s discussion of non-GAAP measures in its Management’s Discussion and Analysis for the three and nine months ended September 30, 2020.

Highlights
Operational Performance
All operations continued to effectively manage costs, but metal production was impacted by lower grades and throughput. In addition, while there was no significant impact to production, the Company had two unplanned operational suspensions in the last week of the quarter.

The Company continues to manage and respond to the COVID-19 pandemic and has implemented preventative measures to ensure the safety of its workforce, local communities and other key stakeholders. To date, production disruptions as a result of COVID-19 have been minimal and there has been no significant disruption in the delivery or receipt of goods at our operations.

Candelaria (80% owned): Candelaria produced 35,836 tonnes of copper, and approximately 21 thousand ounces of gold in concentrate on a 100% basis in the quarter. Copper production for the quarter was lower than the prior year quarter primarily due to lower grades. Ore milled during the third quarter of 2020 significantly improved over that achieved in the first two quarters of the year as measures to address variability in ore hardness and mill circuit availabilities began to take hold. Mining is advancing through the areas of Phase 10 which were in proximity to where pit wall displacement issues occurred in Phase 9, without issue. Copper cash costs1 of $1.37/lb for the quarter were better than the prior year comparable quarter largely owing to the impact of favourable foreign exchange.

Chapada (100% owned): Chapada produced 12,990 tonnes of copper and approximately 24 thousand ounces of gold which were lower than the prior year quarter due primarily to lower throughput as a result of expected increase in ore hardness as well as the mill interruption at quarter-end. Processing activities were interrupted on September 27, 2020 when the protection system at the operation’s main electrical substation failed after the restoration of an outage, damaging all four SAG and ball mill motors. Two spare motors have since been installed and the operation is currently operating at approximately 30% of its throughput capacity. A return to full production is expected late in the fourth quarter. Despite the late quarter interruption, copper cash costs of $0.21/lb for the quarter were better than expected benefitting from favourable foreign exchange and higher gold by-product prices.

Eagle (100% owned): Eagle produced 4,854 tonnes of nickel and 5,055 tonnes of copper during the quarter. Nickel and copper production was higher than the prior year quarter due to higher grades from Eagle East. By-product credits, aided by rising copper prices, exceeded gross cash costs in the quarter resulting in record nickel cash costs of $(0.63)/lb. Gross costs were lower primarily due to treatment and refining charges.

Neves-Corvo (100% owned): Neves-Corvo produced 6,518 tonnes of copper and 15,459 tonnes of zinc for the quarter. Copper and zinc production were lower than the prior year quarter due to lower throughput. A voluntary 5-day suspension of mining and milling operations took place following a fatal accident on September 25, 2020. The Company held safety stand downs at all its operations globally and remains committed to safe production. Copper grades were also lower while zinc grades improved over the prior quarter. Copper cash costs of $1.97/lb for the quarter were higher than the prior year quarter due to lower sales volumes which were partially offset by higher by-product credits from higher zinc prices.

Restart of the Zinc Expansion Project (ZEP) is on track for early 2021. During the third quarter, work continued to prepare the surface and underground construction sites for the restart. Preparation work that is planned for the fourth quarter of 2020 includes ventilation raise work, activities on the SAG mill, including commissioning with waste, and surface conveyor installations.

Zinkgruvan (100% owned): Zinc production of 17,328 tonnes was higher than the prior year quarter due to higher achieved throughput. Lead production of 5,571 tonnes was lower than the prior year quarter due to lower feed grades. Zinc cash costs of $0.55/lb were higher than the prior year quarter as a result of higher per-unit operating costs as well as unfavourable foreign exchange.

1 This is a non-GAAP measure. Please refer to the Company’s discussion of non-GAAP measures in its Management’s Discussion and Analysis for the three and nine months ended September 30, 2020.

Total Production
(Contained metal in concentrate)
2020 2019 YTD Q3 Q2 Q1 Total Q4 Q3 Q2 Q1
Copper (t)a,b 188,896 61,444 65,285 62,167 235,498 67,131 74,560 47,685 46,122
Zinc (t) 101,316 32,787 31,582 36,947 151,515 38,925 35,028 37,116 40,446
Gold (koz)a,b 128 45 44 39 142 43 58 21 20
Nickel (t) 11,809 4,854 3,380 3,575 13,494 2,651 3,232 3,398 4,213

a - Candelaria’s production is on a 100% basis.
b - Chapada results included are for the Company’s ownership period.

Corporate Updates
•On September 8, 2020, the Company reported its Mineral Resource and Mineral Reserve estimates as at June 30, 2020. On a consolidated and attributable basis, estimated contained metal in the Proven and Probable Mineral Reserve categories totalled 5,518 kt of copper, 3,123 kt of zinc, 100 kt of nickel, 936 kt of lead and 6.9 million ounces of gold.

•On September 25, 2020, the Company reported that a fatal accident occurred at its Neves-Corvo mine in Portugal. The incident occurred during underground mining operations. No other personnel were injured in the incident and the scene has been secured. Operations were temporarily suspended.

•On September 27, 2020, the Company announced that processing activities have been interrupted at the Chapada mine in Brazil. The operation suffered a power outage in the morning of September 27, 2020 and when power was restored, the protection system at the operation’s main electrical substation failed, resulting in significant damage to all four SAG and ball mill motors. In addition to assessing a staged resumption of processing, the Company will be bringing forward planned maintenance and refocusing mining on waste removal and development activities.

•On October 7, 2020, the Company reported that mediation with Candelaria’s Mine Workers Union, which represents approximately 350 workers, ended without an agreement thereby putting the Union in a legal position to strike.

On October 18, 2020, the Company announced that despite mediation with the Candelaria AOS Union, the parties had failed to reach an agreement and Candelaria AOS Union could legally be on strike commencing October 20, 2020.


Both the Mine Workers Union and the AOS Union are currently on strike and, as a result, Candelaria operations are temporarily suspended. Critical works continue to be executed to protect required onsite personnel, the operation and the environment.

Financial Performance
•Gross profit for the quarter ended September 30, 2020 was $199.3 million, an increase of $70.7 million compared to the prior year quarter. The increase was primarily due to higher realized metal prices and price adjustments ($81.0 million), partially offset by lower sales volumes ($9.1 million).

•On a year-to-date basis, gross profit was $318.8 million, an increase of $23.8 million over the prior year comparative period due to the acquisition of Chapada in July 2019 ($81.2 million) and favourable foreign exchange ($51.5 million), partially offset by lower metal prices and price adjustments ($46.6 million) and higher depreciation ($67.6 million).

•Net earnings for the quarter ended September 30, 2020 were $133.6 million, an increase of $101.5 million compared to the prior year quarter. The increase was attributable to higher gross profit, lower finance costs and lower income taxes.

On a year-to-date basis, net earnings were $68.3 million, a decrease of $16.1 million from the prior year comparative period as lower general exploration and business development expenses, higher foreign exchange gains of $38.9 million and lower finance costs were more than offset by higher income taxes from the inclusion of Chapada mine

•Adjusted earnings for the quarter were $106.4 million, an increase of $80.8 million over the prior year quarter due mainly to higher gross profit. On a year-to-date basis, adjusted earnings were $120.0 million, $42.5 million higher than the prior year primarily due to higher gross profit, foreign exchange gains and lower finance and general exploration and business development costs.

Financial Position and Financing
•Cash and cash equivalents of $222.0 million as at September 30, 2020 decreased by $62.0 million during the quarter. Cash flow from operations of $272.2 million was used to invest in capital expenditures ($89.8 million), pay shareholder dividends ($22.3 million) and the derivative liability related to the Chapada acquisition ($25.0 million), as well as make distributions to non-controlling interests ($26.0 million). The Company also repaid approximately $160.0 million in debt on a net basis, including $145.0 million on its revolving credit facility.

•On a year-to-date basis, cash and cash equivalents decreased by $28.6 million as cash flow from operations of $393.2 million was more than offset by capital expenditure of $331.0 million and cash flow used in financing activities of $80.7 million.

•Net debt of $124.0 million as at September 30, 2020 reflects an increase of $63.8 million since December 31, 2019. Operating cash flow of $393.2 million for the first nine months of 2020 was offset by capital investment ($331.0 million), dividend payments to shareholders ($64.9 million), distributions paid to non-controlling interests of $26.0 million and the negative effect of foreign exchange on cash of $23.0 million.

•As of October 28, 2020, the Company had a cash and net debt balance of approximately $280.0 million and $65.0 million, respectively.

Outlook
Candelaria’s guidance was withdrawn on October 18, 2020 to reflect the temporary suspension of operations due to the current labour action. Guidance for Chapada assumes 60 days of production at approximately 30% capacity following the mill interruption at the end of September. Metal production guidance for Neves-Corvo has been updated and tightened to reflect the impact of lower grades and ore availability to date and expectations for the fourth quarter.

Cash costs at Chapada and Eagle have been better than expected due to continued favourable by-product metal prices and, at Chapada, favourable foreign exchange; accordingly, cash cost guidance for these two operations has been reduced.

While the Company has not experienced significant disruptions to production, shipments of concentrate, or its supply chain due to COVID-19, we caution that a localized outbreak at the operations may require the need to implement increased isolation and containment measures which could impact production, delay maintenance activities or disrupt supply chains. Given the uncertainty of the duration and magnitude of the impact of COVID-19, production and cash cost estimates are subject to a higher than normal degree of uncertainty. The guidance below does not reflect any potential for additional suspensions or other significant disruption to operations due to COVID-19.

2020 Production and Cash Cost Guidance
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