Release Date: November 07, 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 strong copper production of approximately 100,000 tons for the quarter, contributing to solid revenue performance of over USD 1 billion.
- The company increased its ownership in Caserones to 70%, adding valuable copper tonnes to its production profile.
- Candelaria had an excellent quarter, producing 50,000 tonnes of copper, driven by planned higher head grades, contributing to strong financial results.
- The joint venture with BHP to acquire Philo Mining is expected to significantly grow Lundin Mining Corp (LUNMF)'s business and aligns with its long-term ambitions to become a top-tier copper producer.
- The company declared its regular dividend to shareholders for the 31st consecutive quarter, demonstrating a commitment to returning value to shareholders.
Negative Points
- A 14-day labor strike at Caserones impacted production, resulting in lower grades and recoveries during the quarter.
- The company faced challenges with mine dewatering at Caserones, affecting recoveries temporarily.
- Nickel production at Eagle was limited due to ramp rehabilitation, resulting in lower output for the quarter.
- Working capital build of $166 million negatively impacted free cash flow from operations during the quarter.
- The company recorded a one-off charge of around $11 million at Candelaria related to repairs and maintenance costs.
Q & A Highlights
Q: Can you provide an update on the potential sale of European assets? Are you considering a piecemeal divestment or a single buyer approach? Would you prefer a cash deal or a stock component?
A: We are progressing with the decision on whether to fully divest or maintain the assets long-term. We are not in a position where we need to sell; it's an opportunistic approach based on interest received. We are likely to divest fully out of Europe rather than maintaining one of the assets. - Jack Lundin, President and CEO
Q: Regarding Candelaria, you mentioned access to high-grade Phase 11 ore should continue for most of Q4. Will higher grades persist into next year?
A: We expect the higher grades to end by the end of the fourth quarter and do not anticipate these levels continuing into 2025. - Jack Lundin, President and CEO
Q: On Caserones, recoveries seem low compared to other copper mines. Is there a structural reason for this, and is there upside potential?
A: We faced challenges with mine dewatering in Phase 5, leading to a temporary shift to Phase 6 with higher oxidation levels, affecting recoveries. Now that dewatering is back, recoveries should return to normal levels in the upper 80s. - Juan Andres Morel, COO
Q: Can you update us on the asset optimization initiatives and when we might see formal updates?
A: As we move forward with design and implementation, we will report improvements to the market. Over time, we aim to demonstrate cost reductions and performance improvements through these initiatives. - Jack Lundin, President and CEO
Q: What is the free cash flow outlook considering commodity prices and potential investments? Will Lundin Mining generate free cash flow before construction starts at Jose Maria?
A: It depends on copper prices and the ramp-up of expenditure on Jose Maria. We should generate sizable free cash flow next year at current copper prices. We are comfortable with our balance sheet and do not see leverage going much above 2.5 times during the growth phase. - Teitur Poulsen, CFO
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
