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Eagle Mine Site Visit
November 3-4, 2014
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
Table of Contents
• Introduction
• Safety, Environment & Social Responsibility
• Project Overview
• Exploration
• Corporate Update
3
INTRODUCTION
(Mike Welch)
4
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
Overview – High Grade Nickel and Copper Producer
• High grade, low cost nickel and copper concentrate producer
• Start-up commenced in Q3 2014
• Operations commenced on time and on budget
• Good government and community support
6
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 = 0.57
7
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
Location
Michigan, USA
2015-17
Production
Guidance
~23,000t Ni
~20,000t Cu
2015-17 C1 Costs
~$2.00/lb Ni
Mine Life
8 years
• Capital costs expected to be below
initial $400m budget
• Total capital spend ytd of $321m of
which $96m was spent in Q3. Residual
capex expected through end of year
8
Human Resources - Workforce
Effective 1 Oct 2014
Employees
Contractors
Total
Mine Operations
29
196
225
Humboldt Mill
160
284
444
TOTAL
189
480
669
Local hires constitute 71% of our workforce
NOTE:
Contractor numbers include remaining construction contractors
Operational contractors forecasted to be ~160
9
Environment and Social Responsibility
(Kristen Mariuzza & Matt Johnson)
10
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
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
Community Approval Rating (Scorecard)
Public Tours Scorecard Data
June - September 2014
100%
90%
33%
80%
49%
54%
49%
62%
70%
60%
50%
Exceeds expectations
55%
40%
30%
46%
39%
43%
Meets expectations
34%
20%
Below expectations
5%
10%
8%
2%
2%
3%
8%
4%
1%
6%
Need more information
0%
Environmental
Performance
Health & Safety
Local Hire
Transparency &
Communication
Community
Development
Sample size 264
13
Community Approval Rating (Scorecard)
“Community engagement is Eagle’s social responsibility”
100%
80%
60%
40%
20%
0%
Fall 2012
Environment
Spring 2013
Safety
Fall 2013
Local Hire
Transparency
Spring 2014
Summer 2014
Community Development
14
Project Overview
(Mike Welch)
15
Key Dates
16
Mine Operations
Mine Operations
17
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
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
Mining
20
Mine Production
Ore
Grades (%)
3.00
Cumulative Tonnes and Grade Mined
Tonnes
80000
70000
2.50
60000
2.00
50000
40000
1.50
30000
1.00
20000
0.50
10000
0
0.00
Jun-14
Jul-14
Aug-14
Sep-14
Budget
Actual
Forecast- Ni (%)
Actual- Ni (%)
Forecast- Cu (%)
Actual- Cu (%)
21
Ore Transportation
22
Humboldt Mill
Mill Operations
23
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 subaqueously in the existing
Humboldt tailings disposal facility
24
Milling Process
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 wmt for nickel concentrates and
1,000 wmt for 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
Mill Throughput
EAGLE CONCENTRATOR
Cumulative Milled Tonnes 2015
60
50
Thousands
40
30
20
10
0
18-Aug
25-Aug
1-Sep
8-Sep
15-Sep
Original Budget
22-Sep
Actual
29-Sep
6-Oct
27
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
Transport and Marketing
• Rail spur was built connecting mill site to Canadian National Railroad network
• Concentrates will 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
LOM Production & Cost Profile
• Average Life of Mine (LOM) production of 17 ktpa Ni and 17 ktpa Cu at cash
costs (excl. royalties) of ~$2.50/lb Ni
• Average production in first three full years of 23 ktpa Ni and 20 ktpa Cu at
cash costs (excl. royalties) of approximately $2.00/lb Ni
• Approximately 8 year mine life (late 2014-2022) with upside potential
2014
2015
2016
2017
2018
2019
2020
2021
2022
Total
Ore
Tonnes
(kt)
57.9
663.4
739.9
712.7
717.3
751.2
723.5
666.8
151.0
5,184
Ni (%)
4.09
4.21
4.08
3.64
2.65
2.32
1.94
1.82
1.70
2.93
Cu (%)
2.75
3.03
3.08
3.14
2.65
2.35
1.64
1.65
1.70
2.49
30
Annual Production Profile
Average Life of Mine revenue percentage breakdown is as follows1:
71% Nickel; 23% Copper; 3% Platinum, 2% Cobalt, 1% Palladium, 1% Gold
1
Based on price assumptions used in the July 2013 43-101 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
Expected Operating Costs
Average $/t
% of Total Cost
$67
51%
Transportation (ore to mill)
$14
10%
Processing
$26
21%
Transport & Processing Total:
$40
31%
G&A Total:
$24
18%
$131/t
100%
Mining Total:
Transport & Processing:
Total Operating Cost
• Average LOM Net Smelter Return is $456/t
32
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
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
30
33
Mill
135
153
Product transport
14
14
Ore transport
31
41
Underground mine
27
34
EPCM
19
21
Owners
65
78
Subtotal
321
374
Contingency
-
27
Total
-
401
All costs are on a cash basis – Eagle project payables at 30 September 2014 are $38 million
34
Exploration
(Mike Welch)
35
Eagle Reserves and Resources
Reserves
000's
Tonnes
Ni%
Cu%
Ni T
Cu T
(000's) (000's)
Proven
1,953 4.2
3.4
83
67
Probable
3,212 2.4
2.0
78
66
Total
5,164 3.1
2.6
161
132
Measured
1,774 4.8
3.9
86
69
Indicated
2,845 3.0
2.5
86
71
1.2
-
-
Resources
Inferred
8
1.2
As of June 30, 2014
36
Eagle Reserves in Perspective
Ni deposits and districts - Total resources (past production+current resources)
10
Eagle
Raglan
`
Ovoid
Kabanga
Kambalda
Thompson
Grade (weight % Ni)
Agnew
La
1
Noril'sk
Voisey's Bay
Goro
Punta Gorda
Sudbury
Pechenga
Sampala
Jinchuan
Murrin-Murrin
Serovskoe
Mt Keith
Platreef
Great Dyke
Duluth
Merensky
0.1
1
10
100
1000
10000
million tonnes
Laterite Deposits
Sedimentary Deposits
Sulphide Deposits
Sulphide Districts
37
Near Mine Exploration
• Eagle near mine exploration: targeting for massive sulphide “sill” extensions.
A little massive sulfide goes a long way.
NS Section 431522
2012 New MSU Drill
Intercepts
NS Section 431522
2012 New MSU Model
Extensions
Previous MSU model
38
Eagle East Feeder PR July 16, 2014
39
Eagle East Feeder: PR July 16, 2014
BHID
08EA222C
08EA222C
Interv
From
al (m)
(m) To (m)
*
ROCK
Mineralized peridotite/Intrusive
832.68 867.26 34.58
breccia
Intrusive breccia/ Semi-massive
867.26 876.44
9.18
sulphide
Ni
%
Cu
%
Au
pp
m
Pt
pp
m
Pd
pp
m
Co
%
1.33 1.02 0.12 0.25 0.17 0.04
1.62 1.32 0.15 0.59 0.43 0.05
08EA222D
828.95
883.63
54.68
Mineralized peridotite
1.24 0.93 0.10 0.27 0.19 0.04
Includes
839.45
863.24
23.79
Mineralized peridotite
1.44 1.06 0.11 0.28 0.18 0.04
Includes
875.46
883.63
8.17
Intrusive breccia
1.44 0.99 0.12 0.49 0.38 0.04
08EA222D
932.21
938.71
6.50
Semi-massive sulphide, net texture
1.67 1.89 0.08 0.12 0.07 0.06
40
Eagle 2014 3D Seismic Survey
41
Massive Sulphide Seismic Reflectors
42
2014-2015 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
•
•
•
•
Basement contact
Eagle
East
Looking
North
43
Corporate Update
(Paul Conibear)
44
Lundin – Well Diversified Base Metals Producer
Copper dominant with excellent base metals and geographic diversification
Zinkgruvan (100%)
Freeport Cobalt (24%)
(Sweden)
(Finland)
Eagle (100%)
(USA)
Zinc-Lead-Copper
Cobalt Refinery
Neves-Corvo (100%)
Aguablanca (100%)
(Portugal)
(Spain)
Copper-Zinc
Nickel-Copper
Nickel-Copper
Candelaria (80%)
(Chile)
Tenke Fungurume (24%)
(DRC)
2014
Guidance
Copper
Copper-Gold-Silver
Copper-Cobalt
Production
(k tonnes)
234.2– 242.2
Zinc
135 – 145
Lead
32.5 – 36.5
Nickel
9.5 – 11.5
45
2014 guidance includes attributable share of Tenke and full-year for Candelaria
Candelaria – A Cornerstone Asset
• On Oct. 6, announced the acquisition of an
80% stake in the Candelaria mining 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
Candelaria – Large-Scale, Long-Life Asset
• Average LoM production
100%
Total Copper Production (ktpa) – 100% basis
80%
191
126 ktpa Cu
101ktpa Cu
77koz Au
62koz Au
1.4Moz Ag
1.1Moz Ag
175
174
156
147
125
126
Note:
(1) Production figures sourced from Freeport’s historical year-end results
Au: 73 koz
Ag: 1.5 Moz
Au: 77 koz
Ag: 1.4 Moz
2012A(1) 2013A(1)
Au: 106 koz
Ag: 2.0 Moz
2011A(1)
Au: 97 koz
Ag: 1.9 Moz
• Sumitomo will remain a strategic 20%
partner with concentrate off-take
agreements at market terms
Au: 101 koz
• High grade (30% Cu) quality copper
concentrates with low impurities
Au: 83 koz
• 14 year remaining life based on 2P
reserves
Au: 101 koz
• Average Cu production over next 5
years of 139ktpa (100% basis)
2014E
2015E
2016E
Remaining
LOM Avg.
47
Enhances Lundin's Copper Exposure
Impact to Copper Production (kt)
Candelaria (80%)
350
Impact to Copper 2P Reserves (Mt)
Lundin Standalone
Percentage Increase over 2013:
+103%
Candelaria (80%)
+129%
Lundin Standalone
4.5
4.0
300
3.7
267
250
3.5
237
3.0
1.6
200
139
2.5
125
2.0
2.0
150
1.6
117
112
1.5
100
1.0
50
117
112
112
2.0
128
0.5
--
-2013 Actual 2014E Guidance
2014E
(1)
Pro-Forma
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 2013. 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
Pro Forma Geographic Diversification
2015E Attributable Cu Eq. Production by Country (1)(2)(3)
Current
Pro Forma
Spain
6%
Sweden
15%
Spain
Sweden 4%
10%
USA
28%
Chile
33%
DRC
15%
DRC
23%
Portugal
28%
Portugal
19%
USA
19%
Chile becomes Lundin’s largest producing region
(1)
(2)
(3)
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.
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.
Cobalt guidance for 2015E assumed equal to 2014E guidance.
49
Pro Forma Base Metals Exposure
2015E Attributable Cu Eq. Production by Commodity (1)(2)(3)
Current
Pro Forma
Cobalt Lead
3% 3%
Lead
Cobalt
4%
5%
Zinc
13%
Zinc
19%
Copper
46%
Nickel
17%
Copper
64%
Nickel
26%
Enhanced copper exposure and strong leverage to nickel and zinc maintained
(1)
(2)
(3)
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.
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.
Cobalt guidance for 2015E assumed equal to 2014E guidance.
50
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’s position as a leading intermediate base metals
producer with competitive costs
51
Questions and Answers