Release Date: July 31, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Lundin Mining Corp (LUNMF, Financial) reported a strong financial performance with $461 million in adjusted EBITDA and $338 million in free cash flow from operations.
- The company announced a joint acquisition of Filo with BHP, which is expected to transform its growth profile and solidify its presence in the Vicuna district in Argentina.
- Lundin Mining Corp (LUNMF) achieved Coppermark Certification at Candelaria and Casarones, highlighting its commitment to sustainability.
- The company exercised its option to increase ownership in Casarones to 70%, enhancing its copper-dominant portfolio.
- Record revenue of $1.1 billion was achieved in Q2 2024, driven by higher commodity prices.
Negative Points
- Operational challenges included unscheduled maintenance and lower mining rates, impacting production at several sites.
- Nickel production at Eagle was affected by additional ramp rehabilitation work, leading to a revision of guidance for the remainder of the year.
- Casarones experienced a challenging winter with prolonged snowstorms and unscheduled maintenance events, impacting mill throughput.
- Neves-Corvo copper production is expected to be on the lower end of the guidance range for the year.
- Eagle's nickel production guidance has been revised downward due to operational challenges, impacting overall production targets.
Q & A Highlights
Q: Can you give us an update on the timing of the decision and possible CapEx implications for the Candelaria underground expansion project? How does it fit into your growth aspirations in light of the JV with BHP?
A: The Candelaria underground expansion project is undergoing design and capital optimization. We anticipate updating the market towards the end of this year. It remains a priority in terms of capital allocation and shows promising early-stage results. (Jack Lundin, CEO)
Q: Could you provide more color on the $50 million tax reversal related to Josemaria?
A: This relates to a reversal of a tax expense incurred in Q4 due to Argentinian currency devaluation. The reversal reflects a non-cash tax receipt of $50 million in Q2. (Teitur Poulsen, CFO)
Q: Can you remind us about the labor negotiations at Casarones and how they reflect in your cost guidance?
A: We have three unions at Casarones. The first negotiation closed in Q1, and we are in the final stage with the second union. Our guidance already includes assumptions on these labor contracts. (Juan Andrés Morel, COO)
Q: Can you give us an idea of the achieved and future synergy potential between your two Chilean assets?
A: We have started the full potential initiative at Casarones and Candelaria, showing good results. We have also established a regional support function unit for joint bidding processes, yielding positive outcomes. (Juan Andrés Morel, COO)
Q: Can you provide a steer on the CapEx outlook for Argentina in 2025 post the JV formation with BHP?
A: We are completing the 2024 program and will update the market towards the end of this year. The first half of 2025 will provide more clarity on work plans and studies. (Jack Lundin, CEO)
Q: Is there a possibility of bringing in another partner for the JV with BHP in the future?
A: Currently, we are focused on the 50/50 JV structure with BHP. We keep the option open for a third partner in the future but are concentrating on the current partnership. (Jack Lundin, CEO)
Q: Can you explain the $690 million payment from BHP for the 50% stake in Josemaria?
A: The $690 million is BHP's valuation for 50% of Josemaria, reflecting their internal models and the anticipated value of combining both assets. (Jack Lundin, CEO)
Q: Can you talk us through the potential adjustments to the $690 million payment from BHP?
A: We are funding the work program for Josemaria for the remainder of this year. Depending on actual expenditure, there might be adjustments to the $690 million payment. From 2025 onward, we will fund capital expenditure 50/50. (Teitur Poulsen, CFO)
Q: Do you see the 2025-26 production guidance at Eagle as achievable given the current challenges?
A: We plan to finish the rehab work by the end of Q3, beginning of Q4, and expect to return to full-scale production by year-end. We don't see an impact on 2025 guidance yet. (Juan Andrés Morel, COO)
Q: How fast could the Josemaria mill be in production given that key parts have been ordered?
A: We have purchased long-lead items and large-scale fixed equipment for Josemaria, which are now in storage. We will utilize this equipment when the time is right for development, but we still need to complete various studies and integration efforts. (Jack Lundin, CEO)
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
