Lundin Mining (LUN) Q2 2024 earnings summary

Executive summary

• Achieved record Q2 2024 revenue of $1.1 billion, driven by higher commodity prices, strong operational performance, and working capital inflows.

• Exercised option to increase Caserones ownership to 70%, adding 25,000 tonnes of attributable copper at an attractive price.

• Advanced copper growth strategy through a joint acquisition of Filo with BHP, forming a JV to develop the Vicuña District in Argentina.

• Maintained focus on sustainability, achieving Copper Mark certification at Candelaria and Caserones, and published the 2023 Sustainability Report.

• Tracking to full-year production guidance for copper, zinc, and gold, with business improvements and asset optimization initiatives underway.

Financial highlights

• Adjusted EBITDA for Q2 2024 was $461 million, up from $363 million in Q1; adjusted EBITDA margin was approximately 42.5%.

• Net earnings attributable to shareholders were $121.6 million; adjusted earnings were $122 million for the quarter.

• Free cash flow from operations reached $338 million; operating cash flow was $492 million, benefiting from working capital release.

• Net debt stood at $893.8 million as of June 30, 2024, with a leverage ratio of 0.5x LTM adjusted EBITDA and $1,470 million liquidity headroom.

• Declared a quarterly dividend of CAD 0.09 per share, annualized at CAD 0.36 per share.

Outlook and guidance

• On track to meet full-year consolidated production guidance for copper (366,000–400,000 tonnes), zinc, and gold; nickel guidance reduced.

• Caserones copper guidance increased to 124,000–135,000 tonnes; Eagle guidance reduced, but consolidated copper guidance unchanged.

• Sustaining capital expenditure guidance for 2024 reduced by $45 million to $795 million, mainly due to reduced spending at Caserones, Neves-Corvo, and Zinkgruvan.

• Exploration budget set at $48 million, focusing on near-mine and higher-grade resources.

• Metal production at Candelaria, Chapada, and Neves-Corvo expected to be higher in H2 2024 due to mine sequencing and higher grades.