Cautionary Statements

Transcription

1 Eagle Mine Site Visit November 3-4, 2014

2 Cautionary Statements Caution Regarding Forward Looking Statements This presentation contains forward-looking statements. These forward-looking statements are not based on historical facts, but rather on current expectations and projections about future events. These forward-looking statements are subject to risks and uncertainties. These risks and uncertainties could cause actual results to differ materially from the future results expressed or implied by the forward-looking statements. Such risks may include, without limitation: risks and uncertainties relating to foreign currency fluctuations; risks inherent in mining including environmental hazards, unusual or unexpected geological formations, ground control problems and flooding; risks associated with the estimation of mineral resources and reserves and the geology, grade and continuity of mineral deposits; the possibility that future exploration, development or mining results will not be consistent with the Company s expectations; the potential for and effects of labor disputes or other unanticipated difficulties with or shortages of labor or interruptions in production; actual ore mined varying from estimates of grade, tonnage, dilution and metallurgical and other characteristics; the inherent uncertainty of production and cost estimates and the potential for unexpected costs and expenses; and commodity price fluctuations. For further details of other risks and uncertainties see Risk Factors Relating to the Company s Business in the Company s Annual Information Form and in each management discussion and analysis. Note: All dollar amounts are in US dollars unless otherwise denoted. 2

3 Table of Contents Introduction Safety, Environment & Social Responsibility Project Overview Exploration Corporate Update 3

4 INTRODUCTION (Mike Welch) 4

5 Location Excellent Mining Jurisdiction Project located in Upper Peninsula of Michigan, US Eagle Mine is 28 mi (45 km) northwest of City of Marquette and 12 mi (20 km) from Lake Superior Humboldt Mill is 25 mi (40 km) west of City of Marquette Mine and Mill are approximately 65 mi (105 km) apart via county roads Eagle Mine Marquette Twsp Marquette City Truck Route Train Route Humboldt Mill 5

6 Overview High Grade Nickel and Copper Producer High grade, low cost nickel and copper concentrate producer Start-up commenced in Q Operations commenced on time and on budget Good government and community support 6

7 Health & Safety Eagle Project Lifetime (end of project) Hours worked = 4,549,364 LTI injuries = 14 Total recordable injuries = 22 Project LTIF = 0.62 Project TRIF = 0.97 Injuries prevented = 62 Based on construction industry rates Eagle Project Post LMC (end of project) Hours worked = 1,887,367 LTI injuries = 1 Total recordable injuries = 7 Project LTIF = 0.11 Project TRIF =.074 Performance YTD 2014 (Sept month-end) >1.4 million hours since last LTI LTI injuries = 1 Total recordable injuries = 4 YTD LTIF = 0.14 YTD TRIF =

8 Eagle Mine On Time and On Budget On Sept. 23, Eagle officially entered operation ahead of schedule and on budget First shipment of saleable nickel and copper concentrates took place in October Capital costs expected to be below initial $400m budget Total capital spend ytdof $321m of which $96m was spent in Q3. Residual capex expected through end of year Location Production Guidance Michigan, USA ~23,000t Ni ~20,000t Cu C1 Costs ~$2.00/lb Ni Mine Life 8 years 8

9 Human Resources - Workforce Effective 1 Oct 2014 Employees Contractors Total Mine Operations Humboldt Mill TOTAL Local hires constitute 71% of our workforce NOTE: Contractor numbers include remaining construction contractors Operational contractors forecasted to be ~160 9

10 Environment and Social Responsibility (Kristen Mariuzza & Matt Johnson) 10

11 Environmental & Permitting: Mine Site Eagle Mine has obtained all environmental permits required to begin operations Renewals/reissuances will occur throughout the life of the mine per the regulations Best in class environmental performance Comprehensive internal environmental monitoring program Community Environmental Monitoring Program Water management key driver in mine site design 11

12 Environmental & Permitting: Mill Site Tailings management key driver in the mill site permitting and design Subaqueous disposal in historical open pit iron ore mine Existing tailings from previous operation Grout curtain/cutoff wall approved for operations Water Treatment Facility 12

13 Community Approval Rating (Scorecard) Public Tours Scorecard Data June - September % 90% 33% 80% 70% 54% 62% 49% 49% 60% 50% Exceeds expectations 40% 55% 30% 39% 46% 43% Meets expectations 20% 34% Below expectations 10% 0% 8% Environmental Performance 2% 3% Health & Safety Local Hire Transparency & Communication 5% 8% 2% 4% 1% 6% Community Development Need more information Sample size

14 Community Approval Rating (Scorecard) 100% Community engagement is Eagle s social responsibility 80% 60% 40% 20% 0% Fall 2012 Spring 2013 Fall 2013 Spring 2014 Summer 2014 Environment Safety Local Hire Transparency Community Development 14

15 Project Overview (Mike Welch) 15

16 Key Dates 16

17 Mine Operations Mine Operations 17

18 Metallurgy Eagle is an ultramafic-intrusive-hosted high grade Ni-Cu deposit, with associated cobalt, platinum, palladium & gold Two Predominate Ore Types: I. Massive Unit (MU) Pyrrhotite, pentlandite,chalcopyrite Soft, high grade II. Semi-Massive Unit (SMU) Serpentine, talc, chlorites and other silicates Harder, lower grade 18

19 Mine Plan & Design - Underground Mine: 2000 tpd longhole open stope mine with backfill Access: 2.8 mi (4,500 m) of lateral development Lower internal ramp:1000m to lowest level -145L. Switchback design to provide diamond drill access along strike Surfaces raises: Twin 560 ft. (170 m) raisebores for intake/egress and exhaust 19

20 Mining 20

21 Mine Production Tonnes Cumulative Tonnes and Grade Mined Jun-14 Jul-14 Aug-14 Sep-14 Ore Grades (%) Budget Actual Forecast- Ni (%) Actual- Ni (%) Forecast- Cu (%) Actual- Cu (%) 21

22 Ore Transportation 22

23 Humboldt Mill Mill Operations 23

24 Metallurgy High Level Design Criteria 2,000 tpd operation at 95% availability 3-stage crushing plant (8 hr/day, 7-day/week operation) Concentrator (24 hr/day, 7-day/week operation) Concentrate Load-out (8 hr/day, 7 days/week depending on production) Straight Forward Processing Circuit Conventional flotation to produce separate Ni and Cu concentrates Expected life of mine recovery is 82% nickel and 93% copper Flotation tailings thickened and deposited subaqueouslyin the existing Humboldt tailings disposal facility 24

25 Milling Process

26 Metal Concentrates Nickel concentrate grade is estimated at 11% -14% and copper concentrate at 31% By-product credits include: Copper, cobalt, platinum, palladium, gold and silver Storage capacity at site approximately 3,000 wmtfor nickel concentrates and 1,000 wmtfor copper Concentrates will be railed directly to either Canadian smelters or to the ports on the St. Lawrence, east or west coasts for overseas shipping 26

27 Mill Throughput EAGLE CONCENTRATOR Cumulative Milled Tonnes Thousands Aug 25-Aug 1-Sep 8-Sep 15-Sep 22-Sep 29-Sep 6-Oct Original Budget Actual 27

28 Eagle Production Stats (Sep. 23 Oct. 22) Performance to date is ahead of expectations and remains on track to meet or exceed 2014 production guidance Operating stats during the first month have already achieved design rates in some cases 28

29 Transport and Marketing Rail spur was built connecting mill site to Canadian National Railroad network Concentrateswill be loaded to covered rails cars for shipping to smelters or ports All concentrate off take agreements have been finalized: Nickel: Three off take agreements in place for 2+ years Copper: One off take agreement for copper to a smelter five year agreement at annual market terms 29

30 LOM Production & Cost Profile Average Life of Mine (LOM) production of 17 ktpaniand 17 ktpacuat cash costs (excl. royalties) of ~$2.50/lb Ni Average production in first three full years of 23 ktpaniand 20 ktpacuat cash costs (excl. royalties) of approximately $2.00/lb Ni Approximately 8 year mine life (late ) with upside potential Ore Tonnes (kt) Total ,184 Ni(%) Cu (%)

31 Annual Production Profile Average Life of Mine revenue percentage breakdown is as follows 1: 71% Nickel; 23% Copper; 3% Platinum, 2% Cobalt, 1% Palladium, 1% Gold 1 Based on price assumptions used in the July Tech Report., which assume long-term prices of: $9.25/lb Ni, $3.00/lb Cu, $1820/oz Pt, $12.75/lb Co, $790/oz Pd and $1405/oz Au 31

32 Expected Operating Costs Average $/t % of Total Cost Mining Total: $67 51% Transport& Processing: Transportation (ore to mill) $14 10% Processing $26 21% Transport & Processing Total: $40 31% G&A Total: $24 18% Total Operating Cost $131/t 100% Average LOM Net Smelter Return is $456/t 32

33 Eagle Mine: Low-Cost Nickel Producer We estimate Eagle LOM C1 cash cost at $2.50/lb, which is in the lowest cost quartile Eagle (est.) 33

34 Project Capital Cost 30 September 2014 Table below represents spend since time of acquisition of Eagle Mine by Lundin (17 July 2013) $Millions Actual to 30 September 2014 Forecast at time of Acquisition Mine surface Mill Product transport Ore transport Underground mine EPCM Owners Subtotal Contingency - 27 Total All costs are on a cash basis Eagle project payables at 30 September 2014 are $38 million 34

35 Exploration (Mike Welch) 35

36 Eagle Reserves and Resources Reserves 000's Tonnes Ni% Cu% Ni T (000's) Cu T (000's) Proven 1, Probable 3, Total 5, Resources Measured 1, Indicated 2, Inferred As of June 30,

37 Eagle Reserves in Perspective 10 Ni deposits and districts - Total resources (past production+current resources) Eagle Grade (weight % Ni) 1 Raglan Ovoid Kabanga Kambalda Thompson Agnew Voisey's Bay Noril'sk Goro La Sampala Punta Gorda Pechenga Jinchuan Sudbury Murrin-Murrin Serovskoe Mt Keith Platreef Great Dyke Duluth Merensky million tonnes Laterite Deposits Sedimentary Deposits Sulphide Deposits Sulphide Districts 37

38 Near Mine Exploration Eagle near mine exploration: targeting for massive sulphide sill extensions. A little massive sulfide goes a long way. NS Section NS Section New MSU Drill Intercepts 2012 New MSU Model Extensions Previous MSU model 38

39 Eagle East Feeder PR July 16,

40 Eagle East Feeder: PR July 16, 2014 BHID From (m) To (m) 08EA222C EA222C Interv al (m) * ROCK Mineralized peridotite/intrusive breccia Intrusive breccia/ Semi-massive sulphide Ni % Cu % Au pp m Pt pp m Pd pp m Co % EA222D Mineralized peridotite Includes Mineralized peridotite Includes Intrusive breccia EA222D Semi-massive sulphide, net texture

41 Eagle D Seismic Survey 41

42 Massive Sulphide Seismic Reflectors 42

43 Program Continued (model driven) drilling on Eagle East feeder conduit 3D seismic results and interpretation Ongoing borehole geophysics Integration with airborne and ground geophysics (GOCAD) Target generation Drilling Eagle East Looking North Basement contact 43

44 Corporate Update (Paul Conibear) 44

45 Lundin Well Diversified Base Metals Producer Copper dominant with excellent base metals and geographic diversification Zinkgruvan (100%) (Sweden) Freeport Cobalt (24%) (Finland) Eagle (100%) (USA) Zinc-Lead-Copper Neves-Corvo (100%) (Portugal) Cobalt Refinery Aguablanca(100%) (Spain) Nickel-Copper Copper-Zinc Nickel-Copper Candelaria (80%) (Chile) Tenke Fungurume (24%) (DRC) 2014 Guidance Production (k tonnes) Copper Zinc Copper-Gold-Silver Lead Copper-Cobalt Nickel guidance includes attributable share of Tenke and full-year for Candelaria

46 Candelaria A Cornerstone Asset On Oct. 6, announced the acquisition of an 80% stake in the Candelariamining complex for upfront payment of $1.8 billion. Funding consists of: $1.0 billion in senior secured notes, $600m in equity and $648m from the sale of a gold and silver stream Transaction remains on track to close in Q4 Candelaria Overview: Cu-Au-Ag mine located in northern Chile Reserve life through 2028 (14 years). Mine life expected to be extended by exploration Operations include a large open pit, three underground mines and two process plants Significant infrastructure including a large port and new desalination plant 46

47 Candelaria Large-Scale, Long-Life Asset Average LoM production 100% 80% 126 ktpa Cu 101ktpa Cu 77koz Au 1.4Moz Ag 62koz Au 1.1Moz Ag Average Cu production over next 5 years of 139ktpa (100% basis) Total Copper Production (ktpa) 100% basis year remaining life based on 2P reserves High grade (30% Cu) quality copper concentrates with low impurities Au: 101 koz Au: 83 koz Au: 101 koz Au: 97 koz Ag: 1.9 Moz Au: 106 koz Ag: 2.0 Moz Au: 73 koz Ag: 1.5 Moz Au: 77 koz Ag: 1.4 Moz Sumitomo will remain a strategic 20% partner with concentrate off-take agreements at market terms 2011A (1) 2012A (1) 2013A (1) 2014E 2015E 2016E Remaining LOM Avg. Note: (1) Production figures sourced from Freeport s historical year-end results 47

48 Enhances Lundin's Copper Exposure Impact to Copper Production (kt) Impact to Copper 2P Reserves (Mt) Candelaria (80%) Lundin Standalone Candelaria (80%) Lundin Standalone 350 Percentage Increase over 2013: +103% +129% Actual 2014E Guidance 2014E Pro-Forma (1) 2015E Pro-Forma -- Lundin Candelaria Pro-Forma Source: Company filings. Notes: Lundin production profile based on mid-point of 3-yr guidance provided in December Copper profile does not include any future expansions at Tenke. Includes attributable production from Tenke Fungurume and Candelaria(where applicable). (1) Reflects full year production from Candelaria for illustrative purposes. 48

49 Pro Forma Geographic Diversification 2015E Attributable Cu Eq. Production by Country (1)(2)(3) Current Pro Forma Sweden 15% Spain 6% USA 28% DRC 15% Sweden 10% Spain 4% Chile 33% DRC 23% Portugal 28% Portugal 19% USA 19% Chile becomes Lundin s largest producing region (1) Based on midpoint of 2015E production guidance provided by Lundin. Only includes commodities for which Lundin provides public guidance. Excludes gold and silver. Based on 80% interest in Candelaria. (2) Equivalency calculated according to the following prices: $3.00/lb Cu, $1.00/lb Zn, $8.00/lb Ni, $12.00/lb Co and $1.05/lb Pb. (3) Cobalt guidance for 2015E assumed equal to 2014E guidance. 49

50 Pro Forma Base Metals Exposure 2015E Attributable Cu Eq. Production by Commodity (1)(2)(3) Current Pro Forma Zinc 19% Lead Cobalt 4% 5% Copper 46% Nickel 17% Zinc 13% CobaltLead 3% 3% Copper 64% Nickel 26% Enhanced copper exposure and strong leverage to nickel and zinc maintained (1) Based on midpoint of 2015E production guidance provided by Lundin. Only includes commodities for which Lundin provides public guidance. Excludes gold and silver. Based on 80% interest in Candelaria. (2) Equivalency calculated according to the following prices: $3.00/lb Cu, $1.00/lb Zn, $8.00/lb Ni, $12.00/lb Co and $1.05/lb Pb. (3) Cobalt guidance for 2015E assumed equal to 2014E guidance. 50

51 Lundin Mining with Candelaria Enhanced earnings and cash flow per share with the addition of an established, large scale, high quality operation Diverse geographic and base metals portfolio - copper, zinc and nickel Further strengthens asset base of long-life mines with strong growth potential Maintains a conservative balance sheet going forward Secures Lundin sposition as a leading intermediate base metals producer with competitive costs 51

52 Questions and Answers