Earnings call transcript: Lundin Mining’s Q2 2025 performance and future outlook

Lundin Mining Corporation reported its financial results for the second quarter of 2025, revealing a strong performance driven by stable copper sales and strategic operational improvements. The company announced a quarterly revenue of $937 million and an adjusted earnings per share (EPS) of $0.11. The stock saw a slight increase of 0.79% in its price following the announcement, pushing it near its 52-week high of $11.17. According to InvestingPro data, the company’s impressive 27.45% revenue growth over the last twelve months reflects its operational strength, though current valuations suggest the stock may be trading above its Fair Value.

Key Takeaways

• Lundin Mining achieved a significant reduction in net debt, down to $135 million.
• The company declared a quarterly dividend of approximately $0.03 per share.
• Copper production reached 80,000 tons in Q2, with a year-to-date total of 157,000 tons.
• The Vicuna project continues to be a major focus, with substantial copper, gold, and silver reserves.
• Lundin Mining targets becoming a top 10 global copper producer.

Company Performance

Lundin Mining’s Q2 2025 performance reflects a robust operational strategy and strong commodity market conditions. The company reported copper sales of 79,000 tons at an average price of $4.40 per pound. With a market capitalization of $9.6 billion and an EBITDA of $1.24 billion in the last twelve months, the focus on increasing production while maintaining low cash costs has positioned Lundin Mining favorably within the industry. InvestingPro analysis reveals a strong financial health score of 2.89 (rated as GOOD), supported by solid profitability metrics and momentum indicators. Subscribers can access 12+ additional ProTips and detailed financial analysis in the comprehensive Pro Research Report. Additionally, the company is advancing its Vicuna project, which boasts substantial reserves of copper, gold, and silver, further solidifying its competitive edge.

Financial Highlights

• Revenue: $937 million
• Adjusted EBITDA: $395 million (42% margin)
• Adjusted Operating Cash Flow: $277 million
• Adjusted Earnings: $98 million ($0.11 per share)
• Net Debt: Reduced to $135 million from $1,440 million

Outlook & Guidance

Lundin Mining has set ambitious production targets, aiming for 303,000-330,000 tons of copper and 135,000-150,000 ounces of gold annually. The company also plans a total capital expenditure of $795 million. In the near term, Lundin Mining is exploring optimization of gold recovery at its Chapada operation and expects to release an integrated technical report on the Vicuna project by Q1 2026.

Executive Commentary

CEO Jacqueline Dean stated, "We have set a target to become a top 10 global copper producer," highlighting the company’s strategic focus on expanding its copper production capabilities. COO Juan Andres Morel added, "We’re looking at opportunities to increase recoveries in both copper and gold," indicating ongoing efforts to enhance operational efficiencies. CFO Titor Polson noted the company’s favorable tax position, saying, "Our cash taxes are relatively low compared to the effective tax rate."

Risks and Challenges

• Fluctuations in copper and gold prices could impact revenue.
• Operational disruptions, such as the Casarones crusher downtime, pose risks to production targets.
• Macroeconomic pressures and geopolitical tensions in South America may affect operations.
• Potential delays in project developments, such as the Vicuna project, could impact future growth.
• Competition from other mining companies striving for similar production targets.

Q&A

During the earnings call, analysts inquired about the downtime at the Casarones crusher, which lasted 16-20 hours. The company explained its efforts to improve underground mining rates at Candelaria and confirmed that the BHP joint venture is progressing well. Additionally, Lundin Mining explored potential streaming and financing options to support its growth initiatives. InvestingPro data shows the company maintains a healthy current ratio of 1.88 and an impressive Altman Z-Score of 6.04, indicating strong financial stability. These metrics, along with detailed peer comparisons and expert analysis, are available in the Pro Research Report, helping investors make more informed decisions about mining sector investments.

Full transcript - Lundin Mining Corporation (LUN) Q2 2025:

Conference Operator: Good day and thank you for standing by. Welcome to the Lundin Mining Second Quarter twenty twenty five Financial Results Conference Call. At this time, all participants are in a listen only mode. After the speakers’ presentation, there will be a question and answer session. To ask a question during the session, you will need to press 11 on your telephone.

You will then hear an automated message advising your hand is raised. To withdraw your question, please press 11 again. Please be advised that today’s conference is being recorded. I would now like to hand the conference over to your speaker today, Jacqueline Dean, President and CEO. Please go ahead.

Jacqueline Dean, President and CEO, Lundin Mining: Good morning, and welcome to our twenty twenty five second quarter conference call. A press release and presentation summarizing the financial results for the quarter is available on our website, where a replay of this call will be available. All figures presented today are in U. S. Dollars unless otherwise noted.

Before we begin, note that today’s presentation will include forward looking statements that are subject to various risks and uncertainties. We encourage you to review the cautionary statements on slide two, as well as the forward looking information disclaimer in our MD and A and related filings available on SEDAR. With me on the call today are two members of our senior executive team, our chief operating officer, Juan Andres Morel, and our chief financial officer, Titor Polson. On June 18, we held our first ever Capital Markets Day where we outlined our strategic vision and financial outlook to support our growth ambitions. We have set a target to become a top 10 global copper producer, targeting over 500,000 tons per year of copper as well as over 550,000 ounces of gold.

To support our strategic vision, we highlighted multiple near term growth initiatives at our existing operations in addition to the longer term opportunity that is presented with the Vicuna project. The mineral resources contained within this project establishes Vicuna as one of the world’s largest copper, gold, and silver mineral resources. There is a replay of the CMD available on our website where the audience can go to view to get the full overview as well as highlights from the day. On April 16, we completed the sale of our two European mines to Bolivia. This transaction generated cash proceeds of 1,400,000,000.0, and the use of the proceeds went towards fully repaying and canceling the company’s Casaronis term loan and towards substantially paying down the outstanding balance on our revolving credit facility, bringing our net debt excluding lease liabilities down to about 135,000,000 as at the end of Q2.

As a result, our reporting now focuses solely on our four continuing operations, which are Candelaria, Casaronis, Chapada and Eagle. In May, we announced the initial mineral resource at Fila Del Sol demonstrating one of the world’s largest copper, gold, and silver resources. Combined together with the updated mineral resource of Jose Maria, the project contains 38,000,000 tons of copper, over 80,000,000 ounces of gold, and nearly 1,400,000,000 ounces of silver, making it a truly unique asset. Also during the quarter, we published our 2024 sustainability report, highlighting the company’s environmental health and safety, governance, and social performance. We are proud to note that in 2024, based on our recalculated 2019 baseline emissions, which now include Casaronis, our scope one and scope two emissions targets for 2,030 has been achieved.

Even without the inclusion of Casaronis, our other operations reached 91% of the emissions reduction target. This was primarily due to Candelaria expanding its contractual agreement to purchase 100% of its electricity from renewable sources with zero carbon emissions in 2024. Our full sustainability report can be found on our website under the sustainability page. Importantly, there were no major injuries in the first half of the year, and the total recordable injury frequency rate, or TRIF, was the lowest in ten years at zero point three three. The team’s strong safety performance in the first half of the year reflects our shared commitment to identifying and mitigating critical risks.

Our continued proactive efforts are driving meaningful improvements to the critical controls we are implementing. Now touching on Q2 twenty twenty five highlights. Copper production for the quarter totaled 80,000 tons higher than Q1, primarily driven by a strong performance at Candelaria and Casaronis along with improved copper and gold grades at Chapada. In the first half of the year, we produced 157,000 tons of copper keeping us on track to meet our annual copper production guidance range of 303,000 to 330,000 tons. Gold production also increased significantly quarter over quarter from 32,000 ounces to 38,100 ounces this quarter, positioning us well again to achieve the full year guidance range of 135,000 to 150,000 ounces of gold.

This year we included a consolidated copper cash cost range in our annual guidance. During the quarter, we produced copper at a consolidated cost of $1.92 a pound, coming in below our revised guidance range of $1.95 to $2.15 a pound, which was supported by strong byproduct credits and gold prices. Our operations delivered close to $1,000,000,000 in revenue supported by strong gold and copper prices, $395,000,000 in adjusted EBITDA, and $277,000,000 in adjusted operating cash flow. This quarter, we declared our thirty sixth regular quarterly dividend, which has been adjusted down to just under $03 a share per quarter, making room for 4,600,000.0 shares to be repurchased under our NCIB program in Q2. Year to date, we have bought back 12,600,000.0 shares, representing approximately $104,000,000 U.

S. In share repurchases. Our updated shareholder distribution policy targets approximately US220 million dollars in annual returns combining an annualized dividend of $0.11 per share with US150 million dollars in share buybacks under our NCIB program. I will now pass the call over to Juan Andres, our Chief Operating Officer to talk about our production results in more detail.

Juan Andres Morel, Chief Operating Officer, Lundin Mining: Thank you, Jack, and good morning everyone. The company is tracking to production guidance on consolidated basis for copper, gold and nickel for 2025. As mentioned earlier, copper production for the company was 80,000 tons for the quarter and 157,000 tons for the first half of the year. Gold production for the quarter totaled approximately 38,000 ounces and 70,000 ounces for the first half of the year. At Candelaria, copper production for the quarter totaled 37,000 tons along with 20,500 ounces of gold.

Operationally, Candelaria performed well during the quarter and softer mill feed continued into the first part of Q2. This drove higher throughput in the mill, which processed 7,800,000 tons in the period. In the first half of the year, Candelaria produced 74,000 tons of copper and 41,500 ounces of gold. We anticipate steady production levels for the second half of the year, which keeps current Dalaria firmly on track to meet full year guidance for copper and gold. At Casarones, copper production reached 29,300 tons in Q2 and 58,000 tons for the first half of the year.

Ore mill was in line with planned production despite unplanned downtime caused by a blockage in the primary crusher. In the second half of the year, it is expected that copper head grades will improve to approximately 0.4%. Capital production continued to outperform expectations with 5,800 tons produced in the quarter driven by increased material placed on the leach pads. In the quarter Chapada produced 11,300 tons of copper and 17,500 ounces of gold. Performance improved due to higher grades and better copper recoveries from increased processing of fresh ore and reduced reliance on stockpile material.

Production at Chapada is expected to be slightly weighted toward the second half of the year and on a quarterly basis similar to production levels in Q2. At Eagle, nickel production was 2,700 tons and copper production was 2,500 tons for the quarter. Equipment availability and power outage during the period limited throughput. We expect these to improve in the second half of the year. Grades and ore availability are expected to normalize, which will support the annual guidance forecast for the year.

I will now turn the call over to Teiter to provide the summary on our financial results.

Titor Polson, Chief Financial Officer, Lundin Mining: Thank you, Valerius, and good morning, everybody. So I’m pleased to be able to present yet another solid quarter of financial performance for the company driven by continued good operational performance, as you just heard from Valerius, coupled with relatively stable LME copper price environment in addition to higher gold prices. All these factors have allowed the company to post another set of good quarterly results. Before going into the numbers, a reminder that we continue to report the contribution from our European assets as discontinued operations. And as this transaction closed on the April 16, our second quarter reporting reflects contribution from these assets for the first fifteen days of the quarter.

The revenue for the quarter from continuing operations came in at $937,000,000 with our revenues remaining heavily weighted towards copper, which accounted for 82% of the revenue mix. Gold and nickel contributed 113%, respectively. As you can see on this slide, our two Chilean lines, Candelaria and Casarone, remained the key revenue contributors and represents 77% of the revenue generation in the second quarter. And when including Chapada in Brazil, 94% of our revenues are generated from our South American operations. Now looking at volumes sold and realized pricing.

During the period, we sold 79,000 tons of copper at a realized price of $4.4 per pound, which is slightly better pricing than the average LME spot price for copper during the period. For the second consecutive quarter, we had sales volumes exceeding the copper production volume at Casarona due to shipping schedules. We had a negative provisional pricing impact of $6,000,000 in the second quarter, and approximately 113,000 tons of copper were provisionally priced at $4.49 per pound at the end of the quarter and remain open for final pricing adjustments. Turning to Slide 14. Production costs totaled $5.00 $7,000,000 for the quarter, consistent with the past few quarters.

At Candelaria, total costs were higher compared to previous quarter due to higher sales volumes, while C1 costs over the last two quarters are somewhat higher compared to the second half of last year as the mining sequence is now back to normalized grades compared to the elevated grades that were mined during the second half of last year. Casarone’s costs for the second quarter have normalized compared to first quarter when we had abnormally high sales volume from delayed shipments at the end of last year. Total costs were in line with expectations at $2.00 $5,000,000 for the quarter, and cash costs are trending in line with recent quarters at $2.45 per pound. Chapada total costs for the second quarter amounted to $75,000,000 C1 costs have significantly decreased compared to prior periods, primarily due to higher byproduct credits from gold prices and favorable FX rates. Given the continuing low C1 cost at Chapada, we are reducing the full year guidance range to $1.1 to $1.3 per pound from the previous guidance of $1.3 to $1.5 per pound.

This updated guidance represents a 37% reduction from the midpoint of the original C1 cost guidance as released in the beginning of the year. On a consolidated basis, our C1 cost for the quarter was $1.92 per pound, slightly below our revised full year guidance range of $1.95 to $2.15 per pound. Total capital expenditure, including both sustaining and expansionary investments, was $150,000,000 for the quarter and $325,000,000 for the first half of the year. Full year guidance for total capital expenditure has been revised upward by $60,000,000 to $795,000,000 due to an increase in the Vicuna budget as announced at our Capital Markets Day in June. An increase in capital expenditure at Chapada from additional tailings development and higher capitalized stripping has been offset by lower capital expenditure at Casaronis due to certain projects being delayed into 2026.

At Vicuna, the second quarter expenditures were primarily focused on field activities for water program, geotechnical investigations, road maintenance and the procurement of certain long lead equipment. Our key financial metrics for the second quarter are presented on Slide 16. We generated adjusted EBITDA of $395,000,000 and achieved an adjusted EBITDA margin of 42%. Our adjusted operating cash flow was $277,000,000 and was negatively impacted by cash tax payments at Candelaria of $165,000,000 of which $92,000,000 related to a payment to fully settle the 2024 taxes due. Working capital decreased by $37,000,000 which positively impacted cash flow and was the result of a partial release from the significant working capital build in the first quarter of the year.

The company achieved solid free cash flow from operations of $211,000,000 despite the relatively large cash tax payment made during the quarter. Adjusted earnings amounted to $98,000,000 for the quarter, which translates into an adjusted earnings per share of $0.11 Turning now to Slide 18. With the closing of the European asset sale in April, there have been a number of cash inflows and outflows impacting our cash flow statement and our net debt positions during the quarter. As you can see on the left of this chart, we entered the quarter with around $1,440,000,000 in net debt, and we exited the quarter with net debt of only $135,000,000 From the sale of the European assets, we received approximately $1,300,000,000 in net proceeds when allowing for closing adjustments as regulated in the SPA and when netting out the cash sitting in the acquired subsidiaries. Following the closing of the sale, the company paid off $1,150,000,000 in term loans as well as repaid $170,000,000 of debt drawn on the revolving credit facility.

The adjusted operating cash flow and working capital inflow amounted to $315,000,000 and with total capital investments of $150,000,000 resulted in free cash flow for the quarter of $165,000,000 We had total shareholder distribution of $108,000,000 during the quarter, of which 72,000,000 related to the payment of the regular dividends declared for the fourth quarter twenty twenty four of $09 per share and for the first quarter twenty twenty five of $0.02 $75 per share. Dividends to non controlling interest at Candelaria and Casaroni during the quarter amounted to $41,000,000 while other items amounted to a cash outflow of $23,000,000 leaving the company with a very strong balance sheet with net debt position at the end of the quarter of $135,000,000 The company continues to hold significant liquidity headroom from its 1,750,000,000 revolving credit facility with just over $1,500,000,000 remaining undrawn as of June 30. That wraps up the summary for the second quarter financial performance, and I’ll now turn the call back to Jack.

Jacqueline Dean, President and CEO, Lundin Mining: Thank you, Teder. I’ll take a few moments to talk about our joint venture partnership with BHP, which holds the Vicuna project, a project which combines the Jose Maria and Silo Del Sol deposits. Combined together, the Vicuna project ranks in the top 10 mineral resources for copper, gold, and for silver when comparing against the world’s largest operating mines. In May, we released the maiden mineral resource estimate for Filo Del Sol and updated the mineral resource estimate at Jose Maria. In addition to the size demonstrated by these deposits is an impressive amount of volume contained within the high grade core.

The Filo Del Sol high grade core contains over 10,000,000 tons of copper and 19,000,000 ounces of gold and over 390,000,000 ounces of silver. While Jose Maria has a high grade core of 1,000,000 tons of copper, 2,400,000 ounces of gold, and eleven eleven million ounces of silver. Looking on this slide, the image on the right shows the additional drill holes from the Philo Del from Philo Del Sol completed after the cutoff of the mineral resource estimate. Over 20 additional holes targeting resource expansion and infill drilling, primarily along the Eastern boundary of the deposit, as shown in the figure on the right, are showing good progress and will make its way into an updated mineral resource estimate as part of our integrated technical studies. A total of 60,000 meters of drilling is budgeted for the calendar year 2025, of which already over 50% has been drilled.

In addition to the solid progress made on drilling, an updated EIA for Jose Maria was submitted in the second quarter as per the plan. Ongoing work to support the parallel studies for the multiphase development plan are progressing on schedule. We anticipate the integrated technical report, which will incorporate all phases of the full scale project to be complete by Q1 in calendar year 2026. Preparations for the fiscal stability application, otherwise known as RIGI, are also progressing in parallel to the ongoing project study work. Overall, the Vicuna project team continues to make solid progress and remains on track with its 2025 work plan.

As presented at the CMD, we have identified several low capital intensity and midterm organic growth opportunities. These are targeting 30 to 40,000 tons of copper and 60 to 70,000 ounces of gold in additional annual production for the company. At Chapada, the Saulva project presents a near term opportunity to increase annual production in the range of 15 to 20,000 tons of copper and 50 to 60,000 ounces of gold, representing 5,100 growth respectively. This study includes adding grinding capacity to process higher grade ore from Sauba through the Trepada mill. Permitting and technical work are ongoing with a pre feasibility study targeted for completion by the 2025.

At Candelaria, we are implementing a two step process to ultimately improve performance with the goal of eventually increasing throughput from the underground. Starting with insourcing the underground mining contractor, which is expected to improve both mechanical availability and ultimately development rates in the underground. We will be able to in source as a first step, and the second step will be to lead a campaign to improve mining rates in the range of 50 to 60%, bringing underground throughput capacity from where it is today at around 14,000 tonnes per day up to about 22,000 tonnes per day. This could deliver an additional 14,000 tonnes of copper annually for Candelaria, and recruitment, training, and licensing for internalization of the crews is already underway. These brownfield opportunities complement the longer term vision of developing the Vicuna project.

We will continue to provide updates as we continue to advance and derisk these near and longer term initiatives. In conclusion, solid operational performance from our high quality operations and higher commodity prices drove strong financial results for the company in q two. We remain firmly on track to meet annual guidance on all metals for the year. We revised cash cost guidance at Chapada, which improved the consolidated cash cost guidance for the company, which is now at $1.95 a pound to $2.15 a pound. Net debt stands at the end of the quarter at $135,000,000 which was significantly reduced in the quarter using proceeds from the sale of our European assets.

The company is very well positioned for the future. The Vicuna District and near term growth opportunities at our existing operations provides a clear path to becoming a top 10 copper producer as outlined at our Capital Markets Day in June. The team remains focused on meeting operational targets, enhancing margins through disciplined cost management, while maintaining the highest health and safety standards to protect our workforce. Thank you, and I would now like to open the call for questions.

Conference Operator: Thank you. As a reminder, to ask a question, please press 11 on your telephone and wait for your name to be announced. And our first question comes from Ralph Profiti Your line is open.

Ralph Profiti, Analyst: Thank you, operator. Good morning, Jack and team. Juan Andres, there was some casirones crusher downtime in the quarter. I’m just wondering, it seems as though this was unanticipated. Just wondering what the root cause was, how much downtime and are these issues behind you?

Juan Andres Morel, Chief Operating Officer, Lundin Mining: Good morning, Ralph. Yes, so it was basically some clay ish material that created a blockage in the primary crusher, and it took us probably around sixteen to twenty hours to solve the problem. So nothing structural. It was probably some material coming from a faulty area in one of the benches that got clogged in the chamber of the primary crusher.

Ralph Profiti, Analyst: I see. I see. Yes, thank you. Juan Andres, a second follow-up. You talked about some softer ore mill feed at Candelaria.

Is this a function of phase 11 or phase 12? And as you also speak about some higher anticipated copper grades coming from phase 12, is that also anticipated with higher strip ratios or are you maintaining that kind of life of mine 2.1 ratio that I see from the technical report?

Juan Andres Morel, Chief Operating Officer, Lundin Mining: Yes, that’s a good point, Ralph. It was something temporary, nothing structural in the strip ratio on Phase 12. So we there were some delays in the ore coming from the underground, so we went a little further on Phase 12 and took some extra tons from the lower benches, but we will get back on track with the spatial compliance by the end of the year. And regarding the softer ore question, due to these small changes in the short term, we took more ore from the stockpile. We had a, let’s call it, mid grade stockpile, not a low grade stockpile, that we used that material to feed the mill and that material was softer than anticipated.

So that is what created these better results in the throughput.

Ralph Profiti, Analyst: Got you. Very helpful answers. Thank you.

Conference Operator: Thank you. And our next question comes from Res Wakadaw of Scotiabank. Your line is open.

Res Wakadaw, Analyst, Scotiabank: Hi, good morning. Also a question around Candelaria, pretty strong results in the first half. Your guidance talks about grades being higher, but production being flat versus the first half. Is there beyond the softer ore issue, which I guess is now behind you, is there some planned downtime here in the second half? Or is there maybe just some potential upside?

Are you being conservative with the guidance for the second half?

Juan Andres Morel, Chief Operating Officer, Lundin Mining: Morning, Orest. Thank you. No, this is a very steady year for Candelaria, so we’re not second half weighted as last year. So grades are going to be very stable along the year. So we don’t anticipate any differences from our performance in the first half of the year.

So maintenance is as planned for the second half and grades will be back on track for the full year in the second half. Throughput is expected to be at in line with our projections, so no big changes in the second half of the year.

Res Wakadaw, Analyst, Scotiabank: Sorry, to clarify, are you saying grades at Candelaria are similar to the first half? I thought I heard earlier they’re going to be up.

Juan Andres Morel, Chief Operating Officer, Lundin Mining: No, in Candelaria slightly lower because they were higher in the first half.

Res Wakadaw, Analyst, Scotiabank: Okay, thank you.

Conference Operator: Thank you. And our next question comes from Anita Soni of CIBC. Your line is open.

Anita Soni, Analyst, CIBC: Good morning, Jack, Teeter, and Juan Andres. A couple of questions, a little follow-up on Candelaria. So, I thought I had read that you had some the throughputs were stronger because you also had some rescheduled maintenance. Can you can you let us know when that maintenance is now going to be taking place?

Juan Andres Morel, Chief Operating Officer, Lundin Mining: It’s a it’s a normal schedule shutdown and sometimes since we had softer ore, the liners of the mill were at a lower pace, so we decided to postpone that shutdown from June to July.

Anita Soni, Analyst, CIBC: Okay. July is over, so how long did that shutdown take?

Juan Andres Morel, Chief Operating Officer, Lundin Mining: They’re normally ninety hours.

Anita Soni, Analyst, CIBC: Okay, so fairly short. And then secondly, in terms of the CapEx spend this year, could you just give us a little bit of color on the back half of the year for each of the assets? I think both on sustaining and growth capital, you’re a little under the half year run rate, so I’m just trying to understand how those pick up over the rest of the year.

Titor Polson, Chief Financial Officer, Lundin Mining: Yeah. Hi. Good morning, Anita. Yeah. I mean, we are a little bit behind on Casa Roni in particular on certain projects, which indeed was also the case last year.

So the scope of work is running a little bit behind plan. So that’s more phasing. It’s not really any savings sort of identified at this point. And therefore, you know, there could be a slight chance that we are slightly underspending on casirone for the full year. But we have also taken down guidance on casirone since compared to the original guidance.

And then in Chapada in particular, there there was some extra work needed to be done on on the tailings dam, which is now more or less behind us. So we have increased guidance on Chapada, and we’re also doing more stripping or more fresh ore and less from the stockpile, which also has increased capitalized stripping costs a little bit. So those are the key moving parts. But, you know, dollars $795,000,000 is the full year guidance, including the growth CapEx, and we reaffirm that guidance today.

Anita Soni, Analyst, CIBC: Okay. So am I just on the the Casaronis, you said that some of those projects may be, I guess, pushed into to next year. Is that so are are you saying that that you’re gonna hit the $7.95 for the year, or is there a chance that, you’re gonna be under spending this year?

Titor Polson, Chief Financial Officer, Lundin Mining: Well, let’s see how we do in the in the in the second half. I mean, we are now assuming that what’s planned to be done in the second half will be done, which is why we are reaffirming the guidance. But all I’m saying is that the trend has been that the workers’ progress are a little slower than planned. So we will have to wait and see.

Anita Soni, Analyst, CIBC: All right. And when you said that it’s you’ve taken your guidance down, you were referring to the production guidance, right, for Casaronis or the the CapEx? No.

Titor Polson, Chief Financial Officer, Lundin Mining: Was CapEx.

Anita Soni, Analyst, CIBC: The CapEx. So then my question is, if if it works going a little slower than planned, is there any production impact that we should be expecting?

Titor Polson, Chief Financial Officer, Lundin Mining: No, there’s not. Okay.

Anita Soni, Analyst, CIBC: All right. And then final question from me. In terms of the cost guidance, you revised the Shepatic cost guidance down, but maintained the overall cost guidance for the consolidated copper cost guidance for the company. Is that just a function of the relative weighting of Chapada relative to the other assets or is there just you’re just expecting to be maybe at the lower end of the overall guide? Or is there something else that I should be thinking about?

Titor Polson, Chief Financial Officer, Lundin Mining: Yeah. We we talked about that. I mean, obviously, the the big reduction in guidance was released at the Capital Markets Day because originally, Chapada was guided at, I think it was $1.80 to $2 per pound, and we took that down to $1.30 to $1.50. And at that point, we did also, guide down the consolidated group guidance between $0.01 0 to $0.15 because of that. But this subsequent reduction in Chapala guidance has such a small impact on the weighted average for the group that we decided to leave it intact.

But mathematically, think it would represent 2 or 3¢ further reduction in the consolidated guidance.

Anita Soni, Analyst, CIBC: Okay. All right. Thank you. That’s it for my questions.

Conference Operator: Thank you. And our next question comes from Matthew Murphy of BMO Capital Markets. Your line is open.

Matthew Murphy, Analyst, BMO Capital Markets: Hi. Another one on Candelaria, just the recruiting for insourcing the underground mining. How many people do you have to hire and how would you describe current levels of mining labor availability in Chile?

Juan Andres Morel, Chief Operating Officer, Lundin Mining: Morning, Matt. Juan Andres here. The total in sourcing process, will take us at least two years, is a four wave process. And in total, there will be approximately two fifty people or positions involved. But since we’re insourcing, we have already started conversations with the contractor and we will of course give priority to the employees that work for the contractor.

So we don’t see any problems in finding the right skills to complete this in sourcing process.

Matthew Murphy, Analyst, BMO Capital Markets: Okay. Got it. Okay. Separate question I had on the Regi deadline. I think there was a San Juan Copper Conference this week and just some headlines about companies racing for the deadline.

Jacqueline Dean, President and CEO, Lundin Mining: Do you

Matthew Murphy, Analyst, BMO Capital Markets: have any view on the likelihood that the timeline gets extended and when we might hear about that? And like would there be any benefit to the Vekuno JV from a slightly looser RIgI deadline timeline?

Jacqueline Dean, President and CEO, Lundin Mining: I can take that. Hi Matt, thanks for the question. So we don’t have kind of any commentary to provide or any understanding that there’s going to be an extended deadline for the application. Recall that the deadline is July 2026, and so for Vicuna Corp, we’re tracking onto that schedule, and can’t speak for any other companies that are looking to apply with the Reedy application, but we are trending on schedule.

Matthew Murphy, Analyst, BMO Capital Markets: Okay. Thanks, Chuck.

Conference Operator: Thank you. And our next question comes from Lawson Winder of Bank of America Securities. Your line is open.

Lawson Winder, Analyst, Bank of America Securities: Great. Thank you very much, operator. Hello, Josh and team. Nice quarterly results and thanks for today’s update. Just in light of the really, really strong gold price, your updated guidance from Chapada reflects that.

As part of the low CapEx expansion at Chapada, is there an opportunity to perhaps focus that asset on increased gold production either through an updated mine plan or perhaps an optimized flow sheet? Partly where I’m coming from is as you know, when you guys bought this, you bought this from an operator that actually operated that asset as a gold mine. So it’s a huge gold endowment.

Juan Andres Morel, Chief Operating Officer, Lundin Mining: Good morning, Lawson. Yeah, you’re absolutely right. We’re of course looking at opportunities to increase recoveries in both copper and gold, but especially given the current gold prices, there’s a greater opportunity to add more value from Chapada if we can achieve higher gold recoveries. So we’re looking at a few options that later in the year we could share with the market.

Lawson Winder, Analyst, Bank of America Securities: Interesting. And then I guess then I’d ask the same question about Candelaria in light of the same considerations and further with consideration to the fact that the Franco Nevada stream, the percent that they take should drop off next year.

Juan Andres Morel, Chief Operating Officer, Lundin Mining: Yes, in Candelaria in general we have a very good performance at the mill. If you look at our copper recoveries, they are in the order of 92%. So any changes to the flow sheet, we don’t see a lot of opportunities there, but of course, we’ll always be open to any new technology or any marginal improvement to our flow sheet to increase recoveries in all the metals.

Lawson Winder, Analyst, Bank of America Securities: Okay, fantastic. Thank you very much.

Conference Operator: Thank you. And our next question comes from Matt Green of Goldman Sachs. Your line is open.

Matt Green, Analyst, Goldman Sachs: Hi, good morning. I guess just following on from the with the gold theme on survey. The PFS expected later this year, just thinking about the going forward, what are the limitations, any sort of key technical or regulatory hurdles you have highlighted permitting? Just trying to, I guess, get a sense of how conservative the development timeline is for Phase one and is there scope to possibly accelerate that?

Juan Andres Morel, Chief Operating Officer, Lundin Mining: The schedule for phase one, I think we’re very confident that we can achieve that. Of course, we’re still looking at the permitting process. I think we have shared during the Capital Markets Day that we have received the unified license, which will give us some advantages, but we need to confirm that approach. So I think in the second half we will have more clarity together with the completion of the pre feasibility study.

Jacqueline Dean, President and CEO, Lundin Mining: And maybe just to add to that as well, I mean we’re already looking at collecting baseline data that will support the environmental licensing process, and we’re working to get the pathway to permitting as soon as possible. Technical studies are underway, and so we’ll be looking to follow the the quickest pathway possible following this environmental licensing process.

Matt Green, Analyst, Goldman Sachs: That’s great. Thanks. Look, just one more for me. I guess just on the buyback, any specific financial or broader thresholds you would need to see before you would consider expanding the scope of that buyback program from about €150,000,000 a year?

Titor Polson, Chief Financial Officer, Lundin Mining: No. I think we simply just remain opportunistic around when we do the buybacks. We’ve done just over €100,000,000 year to date, so two thirds. And the target is 150,000,000 And what we have said is if, for whatever reason, we do not reach the 150,000,000 in buybacks, then the whatever gap there exists will be paid out as a special dividend in the fourth quarter dividend declaration, so I. E, it’s it’s it’s paid out in in 2026.

But we monitor this, obviously, continuously as to when we think the window of opportunity is to buy back.

Matt Green, Analyst, Goldman Sachs: That’s great. Very clear. Thanks, and congrats on the quarter.

Conference Operator: Thank you. And our next question comes from Daniel Major of UBS. Your line is open.

Jacqueline Dean, President and CEO, Lundin Mining0: Hi, Jack and team. Thanks for the call. First, just a small operational question. The cathodes production at Casa Arenas continues to remain sort of around the six six point five million tons a quarter. Is that expected to sustain through the remainder of the year?

And I think your guidance for 2026 is 14,000,000 to 18,000,000, so coming off a bit. How’s that profile in the cathodes at Casa Maranis?

Juan Andres Morel, Chief Operating Officer, Lundin Mining: Good morning, Daniel. Yes, during the Capital Markets Day, we outlined some opportunities to increase the utilization of our cathode plant in Casa Dones, and we have been working on those options. So as you said, for this year, we’re expecting a little higher production than what we had planned initially in the year, and that should also carry over in 2026. So we’re looking at improving our irrigation strategy, improving also our the way we model the production. We have found more oxide ore in the phase in the first benches of the phase seven, which is the new phase in Casa Dones.

And then further on, we’re looking at bringing potentially some oxides from Angelica and testing some leaching technologies for the future. So with all that set of alternatives, we’re looking at maximizing the utilization of our SXCW facility.

Jacqueline Dean, President and CEO, Lundin Mining0: Okay. Thanks. So if we look at the run rate for this year, you were to extrapolate that into next

Matt Green, Analyst, Goldman Sachs: year, would it be fair to say 5,000

Jacqueline Dean, President and CEO, Lundin Mining0: to 10,000 tons upside to your guidance you previously gave potential, the cathodes?

Jacqueline Dean, President and CEO, Lundin Mining: No, think what we’re doing is maintaining the guidance that we had. I mean the significant increase in cathode production will probably come later once we’ve actually been able to improve the capacity of the cathode plant.

Jacqueline Dean, President and CEO, Lundin Mining0: Okay, thanks. And then second financial question, two parts to it. Your cash tax looks like it’s still trending below P and L tax. Can you give us any guidance on where do you expect cash tax to be for the year? And then secondly, you reversed some of the working capital in the second quarter.

How should we be thinking about that in the second half?

Titor Polson, Chief Financial Officer, Lundin Mining: Yes. I mean, we did actually have quite a high cash tax payment in the quarter because we, as I said, we were doing a final settlement of the 2024 Candelaria tax due. So that was $92,000,000. And then as we go through this year now, we are now starting to install cash taxes as per the 2024 tax assessment. So the tax installments for the next two quarters are gonna be slightly higher than they were in the installments for Q1 this year because the Q1 tax installment this year still reflected the 2023 tax assessment.

But essentially, our cash taxes, as we try to outline in our Capital Markets Day deck, is relatively low compared to the effective tax rate on the P and L because of these tax losses we have at Casa Rona. So what we have been guiding is sort of between 15% to 20% effective cash tax as a percentage of the EBITDA generation. So we should expect that trend to continue, you know, for a long time given the significant tax losses we have at Gazeron.

Jacqueline Dean, President and CEO, Lundin Mining0: Okay. So 15% to 20% cash tax. I’m sorry, that’s of EBIT or EBITDA? Okay. Thanks.

And then final question, BHP has been in the joint venture for a few months now. Can you share any kind of changes or what you think sort of the direction of development, what BHP has brought in terms of, yeah, to the process since, yeah, since the formation of the JV?

Jacqueline Dean, President and CEO, Lundin Mining: Yeah. Sure. I mean, obviously, BHP brings a lot of bench strength with them and a lot of experience with large scale projects and operations. And so the partnership that we formed transaction closed in in January, and and really the biggest thing was bringing together Philo and and Jose Maria and looking at this as a joint development project and and a and a large scale phase development project. And so the Vicuna Corp team, the project team is working away on parallel studies.

We’ve got independent review teams established to look at the packages of work that will be coming out, and together both BHP and Lundin Mining are providing support as as peer reviewers. And I think overall the partnership is strong, and we’re we’re very aligned. I mean, was a culmination of several years of of getting aligned before doing the deal. And so I think it was really, you know, things things are moving as per plan, and the partnership is very strong today.

Jacqueline Dean, President and CEO, Lundin Mining0: Great. Thank you and congrats on a good quarter.

Conference Operator: Thank you. And our next question comes from Ioannis Mathoulas of Morgan Stanley. Your line is open.

Jacqueline Dean, President and CEO, Lundin Mining1: Hello, Jack and team. Thank you very much for the presentation and also from my side well done on the results. Just a couple of questions left from my side. The first on Chapada, where we saw very good performance, especially on unit costs, which I would think is a combination of your own initiatives that you launched a few years ago, but clearly also FX and gold tailwinds. As we move forward into the second half of next year, do you see potential for more progress on an underlying basis from self help?

Or are you largely where you want to be? And here, I’m just looking at the current operations, ignoring the solve opportunity. And I’ll stop here for the first one.

Juan Andres Morel, Chief Operating Officer, Lundin Mining: Yes. Hi, Arnes. Yeah, definitely we have had a very good performance in Chapada, and as you said, it’s the result of a combination of the full potential initiative that we launched in 2023, but also with the help of the increased metal prices. So what we’re seeing today is the result of that work, and we expect to continue seeing that level of performance in 2026. Probably the main change would be that we’re working on reducing our reliance on the low grade stockpile.

So the effect of that could be a slight increase in the head grade and improvement in the recoveries. So we’re still working on the next year budget and mine plan, but those are some changes that we could expect going forward.

Jacqueline Dean, President and CEO, Lundin Mining1: That’s very interesting. Thanks for that. And second question, we’ve seen some of your peers looking to capitalize on the elevated gold prices via streaming contracts and hedges. Is this something you are considering actively to further bolster bolster your balance sheet ahead of the next CapEx cycle? And within that, so as it was mentioned earlier, you’ve got the Franco Nevada step down on the current streaming.

Just wondering whether you have the appetite to look at financing right here, right now, or is it something that you will consider once the technical report is out next year and you have more visibility on the capital commitments?

Titor Polson, Chief Financial Officer, Lundin Mining: Yeah. Hi. Yeah. That’s yeah. I mean, the Franco stream is obviously there, and and it was entered into to fund you know, to enable the acquisition of Candelaria in the first place.

So it sort of had to be done at that point in time. And, you know, with the elevated gold prices, I should say, now upstream is is becoming quite costly, but it is what it is. And 68% streams that Franklin gets at the moment is projected to step down to 40%. You know, at this current production rate, we anticipate that to happen towards the end of next year, 2026. So from 2027, we should get a higher gold revenue coming from that.

And, of course, you know, there are options around how we play that, but at the moment, the construction relationship is about to step down to 40% at that point in time. So, you know, we obviously know with the funding requirements that we have with the Wikunya build that we do need to increase our liquidity lines to fund that. And at the moment, the base case for us is simply to increase our revolving credit facility. We see that as the most cost efficient way of getting access to a higher funding capacity. But we are not ruling out anything else, but it’ll surely be done on what we believe is the most cost efficient way of doing it.

And the streaming arrangements we are seeing at the moment that we don’t think are cost competitive to our RCF, but, you know, that’s always up for negotiation. And and and if if there’s not a chart to offer, we we will look at it. We don’t rule it out by principle, but it does mean.

Jacqueline Dean, President and CEO, Lundin Mining1: Very clear. Thank you very much.

Conference Operator: Thank you. This concludes our question and answer session and today’s conference call. Thank you for participating, and you may now disconnect.

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