Lundin Mining Q2 2026 Earnings Report

Lundin Mining EPS Results

• Actual EPS: C$0.43
• Consensus EPS: N/A
• Beat/Miss: N/A
• One Year Ago EPS: N/A

Lundin Mining Revenue Results

• Actual Revenue: $1.72 billion
• Expected Revenue: N/A
• Beat/Miss: N/A
• YoY Revenue Growth: N/A

Lundin Mining Announcement Details

• Quarter: Q2 2026
• Date: 8/5/2026
• Time: After Market Closes
• Conference Call Date: Thursday, August 6, 2026
• Conference Call Time: 10:00AM ET

Lundin Mining (TSE:LUN) Corp is a diversified Canadian base metals mining company with operations in Brazil Chile Portugal Sweden and the United States of America producing copper zinc gold and nickel. Its material mineral properties include Candelaria Chapada Eagle and Neves-Corvo.

Lundin Mining Q2 2026 Earnings Call Transcript

Key Takeaways

• Positive Sentiment: Strong financial performance: Q2 revenue reached approximately $1.2 billion, adjusted EBITDA was $658 million, and free cash flow from operations was $360 million, supported by strong copper and gold prices.
• Positive Sentiment: Lundin Mining reiterated its full-year production guidance of 310,000–335,000 tonnes of copper and 134,000–149,000 ounces of gold, despite weather-related disruptions at Caserones; consolidated cash-cost guidance of $1.90–$2.10 per pound was also maintained.
• Negative Sentiment: Severe winter storms in Chile caused a 12-day power outage and operational shutdown at Caserones, leading management to shift its site-level outlook toward the lower half of its copper guidance range; higher diesel prices added roughly $15 million to Q2 costs.
• Positive Sentiment: Vicuña advanced toward a potential year-end sanction decision with Argentine fiscal-stability approval, a provincial royalty and infrastructure agreement, and approval to build key power infrastructure, although Lundin will make a $125 million net upfront infrastructure contribution.
• Positive Sentiment: The company increased its Caserones ownership to 75%, acquired a 31% interest in the Los Helados project, approved a $65 million Chapada ball mill, and repurchased 2.2 million shares in Q2, reflecting continued portfolio growth and shareholder returns.

Presentation

[Operator]

Ladies and gentlemen, thank you for standing by. Welcome to Lundin Mining's second quarter 2026 financial results call. At this time, all participants are on a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. To ask a question during the session, you would need to press star one one on your telephone. You would then hear an automated message advising your hand is raised. To withdraw your question, please press star one one again. Please be advised that today's conference is being recorded. I would like now to turn the conference over to Jack Lundin, President and Chief Executive Officer. Please go ahead.

[Jack Lundin, President and CEO at Lundin Mining]

Good morning. Welcome to Lundin Mining's second quarter 2026 conference call. Thank you for joining us today. A press release and presentation summarizing the quarter's results are available on our website, where a replay of this call will also be made available. Before we begin, I would like to remind everyone that today's presentation and certain comments during the call, including our Q&A, will include forward-looking information that is subject to risks and uncertainties. I draw your attention to the cautionary statements on slide two and encourage you to review our MD&A and related filings available on SEDAR for a full description of the relevant risk factors. As a reminder, all amounts discussed on today's call are in US dollars, unless otherwise noted. Joining me on the call today is Juan Andrés Morel, our Chief Operating Officer, and Teitur Poulsen, our Chief Financial Officer.

[Jack Lundin, President and CEO at Lundin Mining]

Turning to slide four, the second quarter was another productive period for the company, operationally, financially, and strategically. In line with our corporate vision, we completed the acquisition of an additional 5% interest in Caserones from our partner, JX Advanced Metals, bringing our total ownership to 75%. We also acquired a 31% interest in the Los Salados project, all for total consideration of $215 million. Los Salados is a large copper-gold deposit located approximately 17 km south of Caserones. This transaction strengthens our mineral resource base while providing compelling long-term growth optionality in a district we know well. On June 17th, we hosted our second annual Capital Markets Day, where we built on our strategic vision from last year and updated our financial outlook for the next 5 and 10 years.

[Jack Lundin, President and CEO at Lundin Mining]

We highlighted multiple low capital intensive brownfield expansion opportunities at our three existing operations, Candelaria, Caserones, and Chapada, alongside the transformational long-term growth potential of the Vicuña project. These opportunities collectively underpin our path to becoming a top 10 global copper producer. At the CMD, we approved the construction of an additional ball mill at Chapada, which will result in improved recoveries at the operation in anticipation of the Saúva growth project, another tangible step in converting our brownfield pipeline into production. Construction is expected to commence by year-end, with commissioning targeted for late 2027. At Vicuña, a significant milestone was achieved during the quarter with the approval of the inclusion of the Josemaría and Filo del Sol deposits under Argentina's RIGI PEELP program. Vicuña is the first copper mining project in Argentina to receive this more favorable designation.

[Jack Lundin, President and CEO at Lundin Mining]

The approval provides long-term fiscal stability and investment certainty and is a meaningful step forward as we advance towards a stage 1 sanctioning decision. Subsequent to the quarter, Vicuña announced a long-term royalty and infrastructure trust agreement with the San Juan Province over the life-of-mine, which consolidates preexisting provincial royalties on the Filo del Sol and Josemaría deposits into one framework. This includes a 3% mining royalty and a 1.5% gross revenue royalty to form a provincial infrastructure trust. The agreement provides long-term economic certainty and enhances the stability of the operating framework as we continue to progress toward a sanctioning decision. Lastly, on this slide, we repurchased approximately 2.2 million shares during the quarter, bringing our total year-to-date up to 6.1 million, which is consistent with our confidence in the intrinsic value of the company and the strength of our balance sheet.

[Jack Lundin, President and CEO at Lundin Mining]

Since 2017, we have returned over $1.8 billion to shareholders through dividends and buybacks. Operationally, the quarter was very consistent, benefiting from disciplined execution across our operations and a supportive copper price environment. Copper production of approximately 76,900 tonnes at a consolidated cash cost of $2.11 /lb translated into $1.2 billion in revenue and $360 million of free cash flow from operations, further strengthening our balance sheet and providing the financial flexibility to continue investing in our growth pipeline while returning capital to shareholders. Despite the storm event after the quarter, which Juan Andrés will talk to in more detail in the operations section, at the halfway point of the year, we continue to remain on track to achieve our annual production guidance range. Our operations have performed well, giving us confidence in our ability to deliver on our full-year objectives.

[Jack Lundin, President and CEO at Lundin Mining]

Operational costs during the quarter were impacted by higher diesel prices. Should current pricing persist throughout the remainder of the year, we do still expect to be within our guided cost outlook. Looking ahead, our focus continues to be on safety performance, delivering operational excellence, advancing our portfolio of organic growth opportunities, and progressing the Vicuña project toward a sanctioning decision. Supported by high-margin, long-life assets, a disciplined capital allocation strategy, and one of the strongest copper growth profiles in the industry, we believe Lundin Mining is well-positioned to deliver sustainable long-term value for our shareholders. I will now hand it over to Juan Andrés to walk through the operational results in more detail.

[Juan Andrés Morel, COO at Lundin Mining]

Thank you, Jack, and good morning, everyone. Our operations performed consistently in the second quarter, and we remain on track to meet our annual production guidance for both copper and gold. Subsequent to the end of the quarter, the storm in Chile impacted operations at Caserones, and I will provide more detail on this later on in the presentation. For the quarter, copper production from our three operations totaled 76,900 tonnes, as mentioned previously, and for the first half of the year, we produced approximately 157,000 tonnes of copper. Gold production for the quarter was 33,000 oz, bringing our year-to-date gold production to approximately 65,000 oz. When we compare our first half copper production to our full-year guidance range of 310,000 tonnes-335,000 tonnes, we are tracking to guidance despite the weather-related events mentioned earlier, which is consistent with our expectations that production will be second-half weighted, particularly at Candelaria.

[Juan Andrés Morel, COO at Lundin Mining]

For gold, we're also well-positioned to achieve our full-year guidance of 134,000 oz to 149,000 oz. Overall, the portfolio is performing in line with our planning assumptions, and our operations are delivering the consistency we need to meet our targets. Moving to each operation individually, at Caserones, copper production for the quarter was approximately 34,000 tonnes, with higher grades from phase 6 and strong throughput continuing to benefit from our full potential program initiatives. Year-to-date production is 73,000 tonnes. Copper production at Candelaria for the quarter was approximately 31,000 tonnes, with mining grades somewhat lower than the first quarter, reflecting additional travel maintenance and ramp work in phase 11 of the open pit. We remain confident that Candelaria is on track to meet its full-year guidance. Candelaria's production profile remains second-half weighted, with higher grades plan expected in the third and fourth quarter as we continue advancing phase 12.

[Juan Andrés Morel, COO at Lundin Mining]

Gold production for the quarter was approximately 18,000 oz, in line with expectations. At Chapada, we had a good quarter, with strong throughput and copper grades slightly better than recent periods as we access higher grades portions in the south pit. Copper production for the quarter was approximately 12,000 tonnes, and gold production was 16,000 oz. We anticipate production levels to remain consistent with Q2 through the second half of the year. Subsequent to the quarter, Chile's Atacama region suffered severe winter storms that caused regional floodings and significant snowfall. Candelaria saw over 35 mm of rain, and Caserones had 3.4 m of snow. The country reported 13 fatalities and over 2,200 injuries associated with the storm, a truly tragic event that impacted several regions in Chile.

[Juan Andrés Morel, COO at Lundin Mining]

I want to acknowledge the Caserones and Candelaria teams for all their hard work and proactively taking precautionary measures to protect employees. A special thank you to the crew at Caserones that were isolated at the site during the storm for their dedication. We're fortunate that everyone was safe and no injuries were reported at our operations. Mining operations at Candelaria were briefly impacted by heavy rainfall. However, the mill was able to continue to operate using existing ore stockpiles. Mining operations have since returned to full capacity, and the company remains on track to meet its full-year production guidance. At Caserones, operations were disrupted due to the heavy snowfall and high winds, which limited access to site and knocked out power for 12 days. Backup power generators supported critical activities during this time.

[Juan Andrés Morel, COO at Lundin Mining]

Winds reached over 125 kph. Ice buildup damaged two power line towers that required repairs. Crews worked all last week to remove the damaged structure and replace it. The photo on the right highlights the damage to the upper tower and cross-arm of one of the towers. Power has been restored at site. The restart of operations at Caserones is currently underway. Initial concentrate production is expected by the end of the week and full capacity early next week. Prior to the storm, Caserones was tracking to the upper end of the copper guidance, producing 73,000 tonnes in the first half of the year against the range of 130,000 tonnes-140,000 tonnes. We account for some weather-related disruptions during our planning process, not to this magnitude.

[Juan Andrés Morel, COO at Lundin Mining]

After reviewing the mine plan for the remainder of the year and making some adjustments, we now anticipate coming in on the lower half of the guidance range at Caserones. This assumes that the weather cooperates with us for the rest of the year and operations perform well in the third and fourth quarter. Cash cost guidance at Caserones remains the same. Year-to-date, we're tracking below the guidance range at $1.85/lb, and we now anticipate being within the cost guidance range of Caserones, which is $2.05/lb to $2.25/lb. Candelaria and Chapada continue to perform well, and we reiterate our full year consolidated production guidance range of 310,000 tonnes-335,000 tonnes of copper and 134,000 oz-149,000 oz of gold for the year. I will now turn the call over to Teitur to provide a summary on our financial results.

[Teitur Poulsen, CFO at Lundin Mining]

Thank you, Juan Andrés, and good morning, everybody. As mentioned earlier, this was another quarter of consistent operational performance, which has translated into excellent financial results. Revenue from operations for the quarter was over $1.2 billion, a near record, driven by strong copper and gold prices, alongside consistent production volumes across our three operations. Our revenue mix remained heavily skewed toward copper, which accounted for approximately 88% of total revenue in the quarter, providing one of the highest leverages to copper amongst our peers. Gold contributed approximately 8% and moly approximately 2%, with the remainder from silver and other metals. By operation, Caserones was the largest revenue contributor at approximately $518 million, followed by Candelaria at approximately $476 million, and Chapada at $219 million.

[Teitur Poulsen, CFO at Lundin Mining]

On a year-to-date basis, revenue totaled $2.4 billion, reflecting the significant step-up in realized prices for both copper and gold compared to prior year comparable periods. Now turning to volumes sold and realized prices. During the quarter, we produced 77,000 tonnes copper and sold approximately 74,000 tonnes. One of the lower quarters in recent times in terms of sales volumes for copper. This relatively low sales volume was offset by a record high realized copper price of $6.51/lb, and a meaningful uplift from $4.40/lb realized in the same quarter last year. Gold was sold at a realized price of $4,385/oz. At the end of the quarter, approximately 47,600 tonnes of copper remained provisionally priced at $6.07/lb, with final pricing to be settled in the coming quarters, with the majority of these to be settled during the third quarter.

[Teitur Poulsen, CFO at Lundin Mining]

Moving to production cost, the underlying cost structure across our operations remained stable during the quarter, with total production costs of approximately $513 million. The primary driver of modest cost pressure in the quarter was higher diesel prices, which impacted all three operations to varying degrees. As Jack noted, should diesel pricing persist at current levels through the remainder of the year, we still expect to meet consolidated cash cost guidance of $1.90/lb-$2.10/lb copper. Excluding this fuel-driven impact, the underlying operational cost base continues to perform in line with our expectation. Higher diesel prices increased costs by approximately $15 million in the second quarter as compared to the first quarter, equating to approximately $0.08/lb-$0.10/lb copper on a consolidated basis. Our consolidated cash cost was $2.11/lb of copper for the quarter, demonstrating disciplined cost management despite higher diesel prices.

[Teitur Poulsen, CFO at Lundin Mining]

Although this was slightly above our 2026 guidance range of $1.90/lb to $2.10/lb, we remain on track to achieve full-year guidance. Year-to-date cash costs are $1.88/lb, below the low end of the full-year guidance range. At Caserones, cash costs remained broadly in line with expectation at $2.14/lb. The cash costs are continuing to benefit from strong cathode production and favorable TCRC terms, and somewhat offset by higher diesel costs during this quarter. At Candelaria, cash costs were somewhat higher in the quarter at $2.65/lb, reflecting lower by-product credits driven by a lower realized gold price compared to recent periods, as well as slightly higher stripping costs and lower sold volumes relative to the prior quarter.

[Teitur Poulsen, CFO at Lundin Mining]

In addition, Candelaria also has a higher level of diesel consumption relative to our other assets. Therefore, the increase in diesel prices is more impactful at Candelaria compared to our other assets. At Chapada, the absolute costs for the quarter amounted to $84 million, which is in line with prior quarter. The cash cost recorded was $0.62/lb, which is below the bottom end of the full-year guidance at Chapada at $0.75/lb to $0.95/lb, with the outperformance mainly relating to higher by-product credits from a higher realized gold price, as well as higher gold volume sold. The company's consolidated cash cost guidance for the year remains at $1.90/lb to $2.10/lb of copper.

[Teitur Poulsen, CFO at Lundin Mining]

Turning to capital expenditure, sustaining capital expenditure for the quarter were $111 million. With spending across all three operations primarily directed toward open-pit waste stripping, underground mine development, tailing storage facility upgrades, and investment in new mining equipment. Expansionary capital expenditure were $83 million in the quarter, bringing year-to-date expansionary spend to $137 million. The majority of the expansionary capital in the quarter was attributable to the Vicuña Project, where spending totaled $74 million as activities continue to ramp-up, including engineering, training, and early earthworks. As previously announced at Chapada, the sanctioning of the additional ball mill on the Saúva growth project has increased our full-year expansionary capital guidance from $50 million to $85 million, with construction expected to commence before year-end and commissioning targeted for late 2027.

[Teitur Poulsen, CFO at Lundin Mining]

Full-year sustaining capital guidance remains unchanged at $550 million. We continue to reaffirm our total 2027 capital expenditure guidance of $1 ,030 million for the full-year, implying a higher spend rate in the second half of the year to meet that guidance. Our key financial metrics for the second quarter are presented on slides 16 and 17. We generated adjusted EBITDA of $658 million for the quarter and adjusted operating cash flow of $495 million. On a year-to-date basis, adjusted EBITDA now stands at approximately $1.3 billion and adjusted operating cash flow at $945 million, both of which are tracking ahead of our full-year guidance as provided at our recent Capital Markets Day event in June.

[Teitur Poulsen, CFO at Lundin Mining]

Free cash flow from operations for the quarter was $360 million, which reflects our working capital build of $36 million, sustaining capital investment of $111 million, as well as cash taxes paid of $139 million. Adjusted earnings attributable to Lundin Mining shareholders was $257 million, and on a per-share basis, $0.30 for the quarter. Slide 18 presents in greater detail the sources and uses of cash in the second quarter. The company's balance sheet remains strong, and we continue to hold a net cash position on the balance sheet. As already mentioned, the company generated adjusted operating cash flow of $495 million during the quarter. After working capital build and capital investments, the free cash flow generated during the quarter amounted to $265 million. We completed the $250 million acquisition of an additional 5% interest in Caserones, along with a 31% interest in Los Salados during the quarter.

[Teitur Poulsen, CFO at Lundin Mining]

This acquisition was funded entirely from our balance sheet. During the quarter, we paid two regular quarterly dividends, with one payment occurring in April and another in June, in total $34 million. In addition, we completed approximately $56 million of share repurchases under our normal course issuer bid in the quarter. After the distribution of $82 million to the minority shareholder in Caserones and certain other smaller cash outlays, the net result is a balance sheet which remains in a net cash position of $79 million. Despite having returned $90 million to shareholders during the quarter, in addition to the significant investments in the Vicuña district through the acquisition of an additional equity stake in Caserones mine, as well as a meaningful stake in the Los Salados project, in parallel with the continued capital investments into the Vicuña project. In addition, having returned $90 million in shareholder distributions.

[Teitur Poulsen, CFO at Lundin Mining]

In addition to the net cash on the balance sheet, the company continues to have liquidity of $2.5 billion available through its corporate revolving credit facility. This facility will increase to $4.5 billion once the stage 1 of Vicuña has been sanctioned, thus leaving the company fully funded for stage 1 constructions at the Vicuña project. I will now turn the call back to Jack to provide an update on the Vicuña project and our concluding remarks.

[Jack Lundin, President and CEO at Lundin Mining]

Thank you, Teitur. Vicuña continues to make significant progress towards the potential sanction decision, with project activities already underway and a strong foundation being established for future development. We are pleased to announce that yesterday we secured a long-term royalty agreement with San Juan Province that locks in fiscal stability for the life-of-mine. The provincial royalty agreement marks another important milestone in advancing the project and further reinforces the strong collaborative relationship we have established with the province of San Juan. The Vicuña project is subject to two existing provincial royalties, a 3% mining royalty and a 1.5% provincial infrastructure trust. Both of these royalties were reflected in the economics of the PEA.

[Jack Lundin, President and CEO at Lundin Mining]

The provincial agreement consolidates infrastructure obligations associated with both deposits into a single 1.5% gross revenue infrastructure trust and caps the provincial mining royalty at 3% of gross revenue, both fixed for the life-of-the mine. As part of the agreement, the province will receive an upfront $250 million infrastructure trust contribution $125 million net to Lundin Mining that will provide funds to the San Juan province for local infrastructure and community initiatives. The advance will help deliver near-term tangible benefits to stakeholders while contributing to the broader development of the project. Vicuña will receive a five-year infrastructure trust payment holiday from first production. The agreement is subject to provincial approval, and the advance payment is expected to close in the fourth quarter of 2026.

[Jack Lundin, President and CEO at Lundin Mining]

Last week, we also received approval from the National Gas and Electric Regulatory Entity to build the high voltage power line and electrical infrastructure for the project. Once completed, it will tie into the Argentine Interconnection System. Vicuña will build out the Rodeo–Chaparro corridor as part of the future electrical infrastructure of San Juan, which will contribute to the growth of the province in the decades to come. This approval now clears the way, through the funding of the infrastructure, it allows Vicuña to access the majority of the capacity with the remainder available for public use. Together with the recent RIGI PEELP approval and the provincial agreements, it strengthens the foundation for Vicuña and supports our objective of responsibly unlocking the full potential of the project for the benefit of all stakeholders.

[Jack Lundin, President and CEO at Lundin Mining]

Our near-term priorities are to advance project and operational readiness, deliver the stage 1 estimate update, unlock further value across stages 2 and 3 through trade-offs and engineering, and position Vicuña for a successful sanction decision as early as before the end of this year. With the support of Lundin Mining and our partners, BHP, and the benefits provided through RIGI PEELP, we are building the foundation for what has the potential to become one of the world's most significant copper, gold, silver districts. The quarter demonstrated the operational consistency of our business, high margin production from three long life assets at a time of strong copper and gold prices, which translated into $1.2 billion in revenue, $658 million of adjusted EBITDA, and $360 million of free cash flow from operations.

[Jack Lundin, President and CEO at Lundin Mining]

At the midway point of this year, we remain on track to achieve our full-year consolidated production guidance range. Although the storm affected operations at Caserones subsequent to the second quarter, we still expect to achieve guidance at Caserones, given we're tracking towards the upper-end of the guidance range prior to this shutdown. While we are facing modest cost pressures from higher diesel prices, we expect to remain within cost guidance for the year. Strategically, the quarter was significant with the RIGI PEELP approval, royalty agreement, and power line approval at Vicuña, the sanctioning of the Chapada ball mill, the closing of the transaction to increase in ownership in Caserones, and the addition of the Los Salados interest, all reflect disciplined execution of a clear and well-funded growth strategy. Each of these steps moves us meaningfully closer to our goal of becoming a top 10 global copper producer.

[Jack Lundin, President and CEO at Lundin Mining]

Operator, I will now open the call for any questions. Thank you.

[Operator]

Thank you. As a reminder to ask a question, please press star one one on your telephone and wait for your name to be announced. To withdraw your question, please press star one one again. Our first question will come from Orest Wowkodaw with Scotiabank. Your line is open.

[Orest Wowkodaw, Analyst at Scotiabank]

Hi. Good morning. A question about the increase, the $100 million or up to $100 million increase in the NCIB, that was announced. I'm curious if you could speak or give us a little bit of color on that. It's very positive to see something like that as you're about to go into a big project build. I'm just curious if there's any read-through on that with respect to where you're seeing your balance sheet, but also whether we could see similar increases to the NCIB, moving forward, say, for next year.

[Jack Lundin, President and CEO at Lundin Mining]

Hi, Orest. Thank you for the question. As we mentioned in the press release and on the call here that we've increased it for a one-time up to $100 million additional inclusive of the $150 million original buyback approval. For us, we're looking at that based on the valuation that we have this year, based on the financial performance that we've had and the positive tailwinds that we're seeing in commodity prices. Therefore, I think, we're being opportunistic and the Board was able to approve that. Going forward, it's too early to say if we're going to be looking to increase. As you mentioned, we're going to be coming into a pretty capital-intensive period with Vicuña and our other brownfield expansion opportunities.

[Jack Lundin, President and CEO at Lundin Mining]

We'll look at that later down the line, but for now, I think looking at maintaining our absolute shareholder distribution program of $220 million a year in dividends and buybacks, we'll look for that to be maintained in the long-term, and this is more of a one-off opportunity.

[Orest Wowkodaw, Analyst at Scotiabank]

Appreciate the color. If I could just shift gears for a second to Vicuña. You mentioned you're working on the stage 1 update. Can you just walk us through what milestones are left that would be in front of a sanctioning decision, I guess, later this fall?

[Jack Lundin, President and CEO at Lundin Mining]

Absolutely. Mainly, it's the bottom-up estimate that we're doing for stage 1 and kind of refining the execution plan and working with our contractors to really put ourselves in a position to have a successful execution plan for stage 1. As you've seen, we've now got the long-term stability agreement in place with the province of San Juan. That came on the heels of achieving the RIGI PEELP approval back in June. From a permitting approval perspective, we're basically there. There are some various sectoral permits that we're still going to be achieving, which would be a requirement for a sanction decision. Really, the focus for us now is getting these bottom-up estimates completed, reviewing that with the technical independent peer review teams both at BHP and Lundin Mining, and then seeking a favorable sanction approval, potentially before the end of this year.

[Orest Wowkodaw, Analyst at Scotiabank]

Appreciate the color. Thank you very much.

[Operator]

Thank you. Our next question is going to come from Matt Greene with Goldman Sachs. Your line is open.

[Matt Greene, Analyst at Goldman Sachs]

Hey, good morning, Jack and team. Thanks for taking my question. Juan Andrés, perhaps this is one for you. Look, I appreciate you're juggling some extreme external factors here with the weather, just on Candelaria with the rain well beyond your normal operating assumptions, how do regulators approach this when you have to maybe temporarily discharge water? Perhaps you can just talk us through how you manage all that excess water. Do you have to direct it into the pits? I appreciate you're back at production now, but I'm just thinking of how you're able to manage that and if there's anything around from an environmental standpoint that could come back.

[Juan Andrés Morel, COO at Lundin Mining]

Thank you, Matt, for the question. Interesting angle for the event. We're in the middle of the desert, most of the water is absorbed by the pit and the waste dump. We don't have any contact water that we need to discharge to any nearby river or body of water. This is a normal operation. We did have an inspection from SERNAGEOMIN, which is the agency that oversees the mining industry in Chile, they visited all our facilities in Candelaria and found that everything was being operated and managed as expected.

[Matt Greene, Analyst at Goldman Sachs]

Okay, that's great to hear. Then just on Caserones, in your opening remarks, you said you're reviewing the mine plan and making some adjustments, you feel comfortable in the guidance range. Can you just expand on what adjustments you are making to the mine plan in the second half?

[Juan Andrés Morel, COO at Lundin Mining]

Yeah, we found some opportunities. Basically, by adjusting the location of some loading equipment, we will be able to ensure the high grades that we had in the fourth quarter to make sure that they are going to be mined during the year. Basically keeping the high grades within the mine plan of 2026. We also found an opportunity to postpone one shutdown at the mill. Given that we will be basically not operating for several weeks, we think that the liners of the mill can be postponed until the first week of January.

[Matt Greene, Analyst at Goldman Sachs]

Got it. That's great. If I could just squeeze one more in, more for clarification. Teitur, congratulations on the San Juan government province agreement. Just to be clear, that payment is into the same quarter. Is that already budgeted in your CapEx guidance? Sorry if I missed that.

[Teitur Poulsen, CFO at Lundin Mining]

No, it's not budgeted, and we don't really see it as a CapEx item. This is an advanced contribution in return for getting a five-year royalty hold today when we start off production. We've paid upfront $250 million, and that's roughly NPV-neutral when you look at saving royalties for the first five years of production.

[Matt Greene, Analyst at Goldman Sachs]

Okay. Got it. Thank you.

[Operator]

Thank you. The next question is going to come from Ioannis Masvoulas with Morgan Stanley. Your line is open.

[Ioannis Masvoulas, Analyst at Morgan Stanley]

Hello. Thank you very much for the presentation. First question on Vicuña. I guess we'll have to wait for the FID decision and the outcome of the CapEx review for stage 1 sometime by the end of the year. I also wanted to ask about stages 2 and 3, where you're planning to release a PFS by the second half of next year. Can you talk about your latest thoughts around possible changes to the flow sheet and mine planning and whether a similar bottom-up CapEx review is on the cards like we've seen with stage 1? Thank you.

[Jack Lundin, President and CEO at Lundin Mining]

Hey, Ioannis, thanks for the question. Definitely before we would look to sanction the future stages of Vicuña, we would be doing a bottom-up estimate on both stages 2 and 3. Right now, as we guided in our Capital Markets Day, second half of next year to have an updated study on stages 2 and 3. We are looking at simplifying the flow sheet for stage 2. A bit complex in what we presented in the PEA, the team is working on a simplified flow sheet, which will probably form the basis of the PFS. On stage 3, a lot of the information is coming through the updated drill program that we have. We continue to drill out the deposit, looking at the lateral extensions east and west in the Aurora zone. We're also finding some mineralization to the north and south.

[Jack Lundin, President and CEO at Lundin Mining]

The deposit continues to grow in all directions. That will inform our optimized mine plan. There's going to be some changes and some improvements that will be presented in the second half of next year, but nothing substantive that we could be reporting on other than that flow sheet optimization that I mentioned for stage 2.

[Ioannis Masvoulas, Analyst at Morgan Stanley]

Thanks for that, Jack. Second question on Caserones on the moly production, which was fairly weak relative to expectations due to recoveries that have come down to 27%. Can you give a sense on what we should expect for the second half of this year? When do you actually expect recoveries to improve towards the historical levels?

[Juan Andrés Morel, COO at Lundin Mining]

Hi, Ioannis. Thank you for the question. We have been experiencing some metallurgical problems in the moly plant. As we move from the secondary portion of the deposit into the primary portion of the deposit, we're seeing a new mineralogical species coming up with the moly, and that has been causing some recovery issues at the moly plant. We're dealing with that. We're investigating different reagents and changes to the flow sheet. Definitely for this year, we do not expect to meet the target that we had for the moly, and we expect to resume the level of recoveries and performance in the next year. Of course, as we move away from that zone in the pit, recoveries will improve. As long as we're in that part of the deposit, we'll be seeing these challenges.

[Ioannis Masvoulas, Analyst at Morgan Stanley]

Okay. Very clear. Thank you very much. Maybe one last question for Teitur on this upfront payment of $250 million on a 100% basis related to the infrastructure trust. If I were to put everything on spot, it would seem that it's actually potentially NPV-positive for Lundin Mining. Is that fair to say? Was your comment on NPV-neutral based on a more conservative price tag? Would you have a different conclusion based on what you have on your production profile?

[Teitur Poulsen, CFO at Lundin Mining]

Yeah, it all, I guess, depends on what your view on copper price is at the time when we start up, and it will also obviously depend on the ramp-up profile in that initial phase because the term is locked for five years. Depending on the cumulative production volume over that five years, then that'll dictate whether this has been neutral or slightly positive or negative. I think all stakeholders, us and BHP and the province have looked at this as being roughly a neutral deal to everybody.

[Ioannis Masvoulas, Analyst at Morgan Stanley]

Very clear. Thanks very much, and best of luck.

[Teitur Poulsen, CFO at Lundin Mining]

Thank you.

[Operator]

Thank you. The next question will come from Matthew Murphy with BMO Capital Markets. Your line is open.

[Matthew Murphy, Analyst at BMO Capital Markets]

Hello. I had another weather question. How did Vicuña fare in this winter storm? You said Caserones, I think, got 3.5 m of snow. Did you see the same thing on the Argentina side of the border?

[Jack Lundin, President and CEO at Lundin Mining]

Hey, Matt. Great question. Yeah, definitely on the Argentinian side of the border and where the Batidero camp is located, approximately 40 km or 50 km away from where Caserones is, it was an extreme weather event that they felt at Batidero and in the upper region of the San Juan Province. Fortunately, no major safety incidents and the recovery program is less extensive because we're not in project development mode or in operations. There are some early work activities that had to be paused. Drilling in the winter for the Vicuña district is always tightened up to make sure that we're not having rigs exposed in far-to-reach areas. I think they were well prepared, but no doubt it was a significant severe weather event that impacted both sides of that mountain range.

[Matthew Murphy, Analyst at BMO Capital Markets]

Do you know last time Caserones would've experienced something like this?

[Juan Andrés Morel, COO at Lundin Mining]

Yes. Hi, Matt. This is Juan Andrés. In 2017, the previous operator also experienced a similar situation like this. At that time, they had 320 cm of snow, and they also experienced a shutdown. We could say luckily, there was some experience in the team on dealing with a situation like this.

[Matthew Murphy, Analyst at BMO Capital Markets]

Got it. Okay. Yeah, just interested because everyone thinks about high altitude and how risky, then you have a major event and no guidance cut, that's good to see. Then the language around sanctioning where it says, as early as year-end, are we still okay to read that as likely before year-end for Vicuña?

[Jack Lundin, President and CEO at Lundin Mining]

Matt, it's Jack here. Of course. That's what we've been setting our targets on since the earlier part of this year, that still remains intact. As you've seen, we've made a lot of progress on getting the various stability agreements in place, now we're working on the estimate and the execution plan for stage 1. We're still trending towards the end of this year.

[Matthew Murphy, Analyst at BMO Capital Markets]

Okay. One more just on the cadence of CapEx. You're tracking fairly low relative to guidance, really across the board, but especially on expansionary CapEx items. Any thoughts around how we might see that ramp?

[Teitur Poulsen, CFO at Lundin Mining]

No. I think that's just a notch, the nature of a big project like Vicuña. You're continuously ramping0up, activity levels towards the end of the year are always going to be higher than at the beginning of the year. That's not really outside our forecast at the moment. On the sustaining CapEx side I think it's particularly Caserones, which is lagging a bit behind our guidance, that's again related to the cadence of certain equipment purchases and certain other projects that are scheduled in the second half, notably on IT improvements, telecommunication improvements, et cetera. The Caserones team feels confident that they will be able to catch up in the second half on some of these projects. Therefore, we retain full-year guidance on all fronts.

[Jack Lundin, President and CEO at Lundin Mining]

To complement what Teitur was saying, also remember that we sanctioned the additional ball mill at Chapada at the midpoint of this year, that expansionary CapEx wouldn't have come in until now.

[Teitur Poulsen, CFO at Lundin Mining]

Yes. Exactly.

[Matthew Murphy, Analyst at BMO Capital Markets]

Okay. Thank you.

[Operator]

Thank you. As a reminder, to ask a question, please press star one one on your telephone. Our next question will come from Lawson Winder with Bank of America. Your line's open.

[Adam Smiarowski, Analyst at Bank of America]

Hi, this is Adam Smiarowski calling on behalf of Lawson. Just following up on the Chapada. How should we think about growth CapEx there in 2027? Should we expect to see a level similar to 2026? Any detail would be appreciated there.

[Teitur Poulsen, CFO at Lundin Mining]

For the ball mill, that project is going to be all-in around about $65 million, of which we're spending $35 million this year. It's roughly a split 50/50 between this year and next year. If you couple in this phase 1 of Saúva, we've guided the all-in CapEx of $110 million for that project, including the ball mill. The ball mill is $65 million out of the $110 million, and the rest will be allocated on Saúva as and when that's finally sanctioned by our Board.

[Adam Smiarowski, Analyst at Bank of America]

Fantastic. Thank you. I was hoping you could talk about the strategy on M&A following the activity this quarter with the increased stake in Caserones and acquiring interest at Los Salados. Is there an appetite for more or for larger acquisitions?

[Jack Lundin, President and CEO at Lundin Mining]

Thanks for the question. As always, Lundin Mining being a Lundin Group entity, we stay opportunistic when we're looking at opportunities to grow our portfolio through M&A activities. We've got a very solid asset base today. We're looking to grow production at all of our sites, with the big development project of Vicuña, I think we've got a good plate of opportunities in the existing portfolio. That being said, with the financial standing that we have and where we're seeing the market today, there's always opportunities to look at. At the moment, we're not actively pursuing anything of scale, and we really are focused on the assets that we have in our portfolio.

[Adam Smiarowski, Analyst at Bank of America]

Thank you very much.

[Operator]

Thank you. Our next question will come from Stefan Ioannou with ATB. Your line is now open.

[Stefan Ioannou, Analyst at ATB]

Yeah, great. Thanks very much. Just curious, you mentioned the stage 2 sort of update study anticipated sometime later next year would look to sort of a simplified flow sheet or operation. Can you just tell me, is that centered largely on the gold and the copper sort of components coming out of Filo? Or should we read into that you may also be considering potentially other sort of strategic feed sources going into stage 2?

[Jack Lundin, President and CEO at Lundin Mining]

Thanks for the question. No, really it is just optimizing around the ore body of the Filo del Sol deposit and the oxide zone at Filo. It's still very much intact on building off of what we designed for stage 2, but just looking to optimize and potentially simplify that flow sheet.

[Stefan Ioannou, Analyst at ATB]

Okay, great. Thanks very much, guys.

[Operator]

Thank you. Our next question will come from Matt Greene with Goldman Sachs. Your line is open.

[Matt Greene, Analyst at Goldman Sachs]

Hey, Jack Lundin, thanks for taking my follow-up. Actually, just to follow on from that phase 2 streamlining. To the extent you can, are you looking at sort of new technologies, novel technologies? Is this part of your thinking?

[Jack Lundin, President and CEO at Lundin Mining]

Yes, Matt. Good question as well. We're definitely looking at different types of leaching technologies and seeing how we can implement that into the design for stage 2. Too early to say what that is and how we're going to be building off of it, but absolutely, we're seeing some very promising technologies being produced today for leaching, and that's something that we would love to and will look to incorporate in the updated study for stage 2.

[Matt Greene, Analyst at Goldman Sachs]

That's great. Thank you.

[Operator]

Thank you. This does conclude today's Q&A session, and also this will conclude today's conference call. Thank you for participating, and you may now disconnect.

Participants

Executives

• Jack Lundin, President and CEO
• Juan Andrés Morel, COO
• Teitur Poulsen, CFO

Analysts

• Orest Wowkodaw, Analyst at Scotiabank
• Matt Greene, Analyst at Goldman Sachs
• Ioannis Masvoulas, Analyst at Morgan Stanley
• Matthew Murphy, Analyst at BMO Capital Markets
• Adam Smiarowski, Analyst at Bank of America
• Stefan Ioannou, Analyst at ATB