Management's Discussion and Analysis

For the three months ended March 31, 2020

This management's discussion and analysis ("MD&A") has been prepared as of April 29, 2020 and should be read in conjunction with the Company's condensed interim consolidated financial statements for the three months ended March 31, 2020. Those financial statements are prepared in accordance with International Financial Reporting Standards ("IFRS") as issued by the International Accounting Standards Board. The Company's presentation currency is United States ("US") dollars. Reference herein of $ is to United States dollars, C$ is to Canadian dollars, CLP is to Chilean pesos, € refers to the euro, BRL is to Brazilian reais, and SEK is to Swedish krona.

About Lundin Mining

Lundin Mining Corporation ("Lundin Mining" or the "Company") is a diversified Canadian base metals mining company with operations in Brazil, Chile, Portugal, Sweden, and the United States of America, primarily producing copper, zinc, gold and nickel.

Table of Contents

Highlights ....................................................................................................................................

1

Financial Position ........................................................................................................................

2

Outlook .......................................................................................................................................

3

Selected Quarterly Financial Information...................................................................................

5

Revenue Overview ......................................................................................................................

6

Financial Results .........................................................................................................................

9

Mining Operations ......................................................................................................................

11

Production Overview .............................................................................................................

11

Cash Cost Overview ...............................................................................................................

12

Capital Expenditures..............................................................................................................

12

Candelaria..............................................................................................................................

13

Chapada .................................................................................................................................

15

Eagle Mine .............................................................................................................................

16

Neves-Corvo Mine .................................................................................................................

17

Zinkgruvan Mine ....................................................................................................................

19

Metal Prices, LME Inventories and Smelter Treatment and Refining Charges...........................

20

Liquidity and Financial Condition................................................................................................

21

Related Party Transactions .........................................................................................................

22

Changes in Accounting Policies and Critical Accounting Estimates and Judgments ..................

22

Non-GAAP Performance Measures ............................................................................................

23

Managing Risks ...........................................................................................................................

27

Management's Report on Internal Controls...............................................................................

27

Outstanding Share Data..............................................................................................................

27

Cautionary Statement on Forward-Looking Information

Certain of the statements made and information contained herein is "forward-looking information" within the meaning of applicable Canadian securities laws. All statements other than statements of historical facts included in this document constitute forward-looking information, including but not limited to statements regarding the Company's plans, prospects and business strategies; the Company's guidance on the timing and amount of future production and its expectations regarding the results of operations; expected costs; permitting requirements and timelines; timing and possible outcome of pending litigation; the results of any Feasibility Study, or Mineral Resource and Mineral Reserve estimations, life of mine estimates, and mine and mine closure plans; anticipated market prices of metals, currency exchange rates, and interest rates; the development and implementation of the Company's Responsible Mining Management System; the Company's ability to comply with contractual and permitting or other regulatory requirements; anticipated exploration and development activities at the Company's projects; and the Company's integration of acquisitions and any anticipated benefits thereof. Words such as "believe", "expect", "anticipate", "contemplate", "target", "plan", "goal", "aim", "intend", "continue", "budget", "estimate", "may", "will", "can", "could", "should", "schedule" and similar expressions identify forward-looking statements.

Forward-looking information is necessarily based upon various estimates and assumptions including, without limitation, the expectations and beliefs of management, including that the Company can access financing, appropriate equipment and sufficient labour; assumed and future price of copper, nickel, zinc, gold and other metals; anticipated costs; ability to achieve goals; the prompt and effective integration of acquisitions; that the political environment in which the Company operates will continue to support the development and operation of mining projects; and assumptions related to the factors set forth below. While these factors and assumptions are considered reasonable by Lundin Mining as at the date of this document in light of management's experience and perception of current conditions and expected developments, these statements are inherently subject to significant business, economic and competitive uncertainties and contingencies. Known and unknown factors could cause actual results to differ materially from those projected in the forward-looking statements and undue reliance should not be placed on such statements and information. Such factors include, but are not limited to: volatility and fluctuations in metal and commodity prices; global financial conditions and inflation; risks inherent in mining including but not limited to risks to the environment, industrial accidents, catastrophic equipment failures, unusual or unexpected geological formations or unstable ground conditions, and natural phenomena such as earthquakes, flooding or unusually severe weather; uninsurable risks; changes in the Company's share price, and volatility in the equity markets in general; the threat associated with outbreaks of viruses and infectious diseases, including the novel COVID-19 virus; risks related to negative publicity with respect to the Company or the mining industry in general; reliance on a single asset; potential for the allegation of fraud and corruption involving the Company, its customers, suppliers or employees, or the allegation of improper or discriminatory employment practices, or human rights violations; actual ore mined and/or metal recoveries varying from Mineral Resource and Mineral Reserve estimates, estimates of grade, tonnage, dilution, mine plans and metallurgical and other characteristics; risks associated with the estimation of Mineral Resources and Mineral Reserves and the geology, grade and continuity of mineral deposits including but not limited to models relating thereto; ore processing efficiency; risks inherent in and/or associated with operating in foreign countries and emerging markets; security at the Company's operations; changing taxation regimes; health and safety risks; exploration, development or mining results not being consistent with the Company's expectations; unavailable or inaccessible infrastructure and risks related to ageing infrastructure; counterparty and credit risks and customer concentration; risks related to the environmental regulation and environmental impact of the Company's operations and products and management thereof; exchange rate fluctuations; reliance on third parties and consultants in foreign jurisdictions; community and stakeholder opposition; civil disruption; the potential for and effects of labour disputes or other unanticipated difficulties with or shortages of labour or interruptions in production; uncertain political and economic environments; litigation; regulatory investigations, enforcement, sanctions and/or related or other litigation; risks associated with the structural stability of waste rock dumps or tailings storage facilities; changes in laws, regulations or policies including but not limited to those related to mining regimes, permitting and approvals, environmental and tailings management, labour, trade relations, and transportation; climate change; compliance with environmental, health and safety laws; enforcing legal rights in foreign jurisdictions; information technology and cybersecurity risks; estimates of future production and operations; estimates of operating, cash and all-in sustaining cost estimates; delays or the inability to obtain, retain or comply with permits; compliance with foreign laws; risks related to mine closure activities and closed and historical sites; challenges or defects in title; the price and availability of key operating supplies or services; historical environmental liabilities and ongoing reclamation obligations; indebtedness; funding requirements and availability of financing; liquidity risks and limited financial resources; risks relating to attracting and retaining of highly skilled employees; risks associated with acquisitions and related integration efforts, including the ability to achieve anticipated benefits, unanticipated difficulties or expenditures relating to integration and diversion of management time on integration; the estimation of asset carrying values; internal controls; competition; dilution; existence of significant shareholders; conflicts of interest; activist shareholders and proxy solicitation matters; risks relating to dividends; risks associated with business arrangements and partners over which the Company does not have full control; and other risks and uncertainties, including but not limited to those described in the "Risks and Uncertainties" section of the Annual Information Form and the "Managing Risks" section of the Company's MD&A for the year ended December 31, 2019, which are available on SEDAR at www.sedar.com under the Company's profile. All of the forward-looking statements made in this document are qualified by these cautionary statements. Although the Company has attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking information, there may be other factors that cause results not to be as anticipated, estimated, forecast or intended and readers are cautioned that the foregoing list is not exhaustive of all factors and assumptions which may have been used. Should one or more of these risks and uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those described in forward-looking information. Accordingly, there can be no assurance that forward-looking information will prove to be accurate and forward-looking information is not a guarantee of future performance. Readers are advised not to place undue reliance on forward-looking information. The forward-looking information contained herein speaks only as of the date of this document. The Company disclaims any intention or obligation to update or revise forward‐looking information or to explain any material difference between such and subsequent actual events, except as required by applicable law.

Highlights

Operational Performance

On March 11, 2020 the World Health Organization declared the rapidly spreading COVID-19 outbreak a global pandemic. Lundin Mining has been closely monitoring developments in the COVID-19 outbreak since January 2020 and has implemented preventive measures to ensure the safety of our workforce and local communities. To date, there have been no outbreaks of COVID-19 at any of our sites and there have been no significant disruptions to production, shipment of concentrate or supply chain. However, we have made changes to our business and how we operate in order to minimize the risks to our employees, communities and other stakeholders. In Portugal, the Zinc Expansion Project ("ZEP") at Neves-Corvo has been temporarily suspended and at all of our operations changes have been made to implement new procedures in order to reduce the risk of the spread of COVID-19. Some of these actions were detailed in the Company's news release dated March 25, 2020 entitled Lundin Mining Provides Update on Readiness and Response toCOVID-19,and Operational and Guidance Update.

Lundin Mining continues to manage and respond to COVID-19 within the framework of its Pandemic Response Plan, along with recommendations of health authorities and local and national regulatory requirements. The Company has implemented business continuity measures in an effort to mitigate and minimize potential impacts of this pandemic.

Candelaria (80% owned):Candelaria produced 36,297 tonnes of copper, and approximately 21,000 ounces of gold in concentrate on a 100% basis. Copper production in the quarter was higher than the prior year comparable quarter primarily due to higher copper head grades as more ore was sourced directly from the open pit and underground mines as opposed to stockpiles. Copper cash costs1of $1.31/lb for the quarter were better than the prior year comparable quarter largely owing to the impact of favourable foreign exchange.

Chapada (100% owned):Chapada produced 11,881 tonnes of copper and approximately 18,000 ounces of gold, as planned. Copper cash costs of $0.92/lb were better than guidance benefitting from favourable foreign exchange rates and higher gold by-product prices.

Eagle (100% owned):Eagle produced 3,575 tonnes of nickel and 4,378 tonnes of copper during the quarter with part of the production from the Eagle East orebody. Nickel production was lower than the prior year comparable period due to lower grades and recoveries partially offset by increased mill throughput. Copper production was higher than the prior year comparable period as a result of increased throughput. Gross operating costs were better than expectations. Nickel cash costs of $1.43/lb for the quarter were higher than the prior year comparable quarter due to lower by-product credits resulting from lower copper prices.

Neves-Corvo(100% owned):Neves-Corvo produced 9,075 tonnes of copper and 17,948 tonnes of zinc for the quarter. Copper production was higher than the prior year comparable period benefitting from higher grades, while zinc production was lower due primarily to lower recoveries. Though operating costs in the current quarter were in-line with Q1 2019, copper cash costs of $2.24/lb were higher than the prior year comparable quarter due to lower by-product credits stemming from lower realized zinc prices.

On March 15, 2020, the Company announced that construction and commissioning of ZEP would be temporarily suspended to reduce the risk of the spread of COVID-19 to local communities, employees and contractors.

Zinkgruvan (100% owned):Zinc production of 18,999 tonnes was lower than the prior year comparable quarter due to lower grades and recoveries, partially offset by higher mill throughput. Lead production of 8,013 tonnes was better than the prior year comparable period owing to higher throughput and recoveries. Zinc cash costs of $0.51/lb were higher than Q1 2019 largely owing to higher zinc treatment and refining charges.

1This is a non-GAAP measure - see page 23 of this MD&A for discussion of non-GAAP measures.

1

Total Production

2020

2019

(Contained metal in concentrate)

Q1

Total

Q4

Q3

Q2

Q1

Copper (t)ab

62,167

235,498

67,131

74,560

47,685

46,122

Zinc (t)

36,947

151,515

38,925

35,028

37,116

40,446

Gold (koz)ab

39

142

43

58

21

20

Nickel (t)

3,575

13,494

2,651

3,232

3,398

4,213

a - Candelaria's production is on a 100% basis.

b - Chapada results included are for the Company's ownership period.

Financial Performance

  • Gross loss for the quarter ended March 31, 2020 was $22.7 million, a decrease in gross profit of $163.9 million compared to the first quarter of 2019. The decrease was primarily due to lower revenues as a result of lower metal prices ($51.2 million) and negative price adjustments ($153.2 million), partially offset by higher copper and nickel sales volumes ($35.0 million) and the addition of the Chapada mine ($21.9 million).
  • Net loss for the current quarter was $113.6 million, a decrease in net earnings of $174.5 million from the first quarter of 2019. The decrease was primarily attributable to lower gross profit and higher deferred tax expense on the revaluation ofnon-monetary assets at Chapada, partially offset by higher other income derived from foreign exchange gains.
  • Adjusted loss1for the quarter was $40.6 million, compared to adjusted earnings of $62.9 million in Q1 2019 and reflects lower net earnings offset by lower adjusted income taxes.

Corporate Highlights

  • On February 20, 2020, the Company declared a 33% increase in cash dividend, to $0.04 per share, compared to the quarterly dividend paid in 2019.

Financial Position and Financing

  • Cash and cash equivalents increased $116.3 million during the quarter ended March 31, 2020, from $250.6 million to $366.9 million.
  • During the quarter, $120.0 million net was drawn on the Company's revolving credit facility and an additional $55.0 million term loan was obtained by Candelaria, primarily for the management ofshort-term working capital.
  • Cash flow from operations of $83.4 million were offset by capital expenditures of $141.1 million and the effects of foreign exchange which further reduced cash balances. During the current quarter, the Company received proceeds of $25.7 million related to contingent consideration from the 2017 sale of the Company's investment in the Tenke Fungurume mine.
  • Net debt1as at March 31, 2020 was $117.7 million, an increase of $57.5 million from December 31, 2019. The increase in net debt reflects capital expenditures and the impact of foreign exchange on cash balances, partially offset by operating cashflows of $83.4 million.
  • As of April 29, 2020, the Company had a cash and net debt balance of approximately $300.0 million and $185.0 million, respectively.

1These are non-GAAP measures - see page 23 of this MD&A for discussion of non-GAAP measures.

2

Outlook

As noted in the Highlights section, to date, the Company has not experienced significant disruptions to production, shipments of concentrate or its supply chain as a result of COVID-19. However, the Company has reassessed production guidance in light of the temporary suspension of ZEP and the other changes to operating procedures that the Company has implemented to reduce the risk of infections at our sites. In addition, cost reduction programs have been implemented to respond to the low metal price environment. As a result, certain capital and operational spending has been eliminated or deferred.

The following changes have been made to production guidance:

Candelaria: Full year guidance range for copper production has been widened and gold production has been moderately reduced. Copper cash cost guidance has been lowered to $1.35/lb, reflecting favourable foreign exchange rates.

Chapada: Copper production guidance is maintained. Gold production is moderately reduced reflecting lower recoveries. Annual cash cost guidance for copper has been reduced to $0.85/lb, reflecting favourable foreign exchange rates and higher gold by-product prices.

Eagle: Production and cost guidance remains unchanged.

Neves-Corvo: Full year guidance range for copper production has been lowered to reflect first quarter production. Due to uncertainty regarding the timing of the restart of ZEP, full year zinc production guidance for 2020 has been lowered to reflect current production rates without contribution from ZEP. The Company is currently reviewing 2021 zinc production estimates, and accordingly, previously provided guidance should no longer be relied upon. Copper cash cost guidance for 2020 has been increased to $2.10/lb to reflect lower zinc by-product credits.

Zinkgruvan: Full year zinc production guidance has been moderately reduced to reflect lower average head grades expected for the year. Annual cash cost guidance for zinc has been moderately increased to $0.60/lb.

We caution that the global effects of COVID-19 are still evolving. Given the uncertainty of the duration and magnitude of the impact, our production and cash cost estimates are subject to a higher than normal degree of uncertainty. The guidance below does not reflect any potential for additional suspensions or other significant disruption to operations due to COVID-19.

3

2020 Production and Cash Cost

Previous Guidancea

Revised Guidance

(contained metal in concentrate)

Tonnes

C1 Cost

Tonnes

C1 Costb

Copper (t)

Candelaria (100%)

165,000

- 175,000

$1.45/lb

160,000

- 175,000

$1.35/lbc

Chapada

51,000 - 56,000

$1.15/lb

51,000 - 56,000

$0.85/lbd

Eagle

15,000 - 18,000

15,000 - 18,000

Neves-Corvo

38,000 - 43,000

$1.80/lb

35,000 - 40,000

$2.10/lbc

Zinkgruvan

3,000 - 4,000

3,000 - 4,000

Total

272,000

- 296,000

264,000

- 293,000

Zinc (t)

Neves-Corvo

95,000

- 105,000

70,000 - 75,000

Zinkgruvan

77,000 - 82,000

$0.55/lb

72,000 - 77,000

$0.60/lbc

Total

172,000

- 187,000

142,000

- 152,000

Gold (oz)

Candelaria (100%)

100,000

- 105,000

90,000

- 100,000

Chapada

90,000 - 95,000

85,000 - 90,000

Total

190,000

- 200,000

175,000

- 190,000

Nickel (t)

Eagle

15,000 - 18,000

$1.00/lb

15,000 - 18,000

$1.00/lb

a. Guidance as outlined in the Management's Discussion and Analysis for the year ended December 31, 2019.

b. Cash costs are based on various assumptions and estimates, including but not limited to; production volumes, as noted above, commodity prices (Cu: $2.25/lb, Zn: $0.85/lb, Ni: $5.00/lb, Pb: $0.75/lb, Au: $1,500/oz.), foreign exchange rates (€/USD:1.10, USD/SEK:9.50, USD/CLP:850, USD/BRL:4.75) and operating costs, for the remainder of 2020.

c. 68% of Candelaria's total gold and silver production are subject to a streaming agreement and as such costs are calculated based on receipt of $412/oz and $4.12/oz respectively, on gold and silver sales. Silver production at Zinkgruvan and Neves-Corvo are also subject to streaming agreements, and cash costs are calculated based on receipt of approximately $4.40/oz and $4.30/oz, respectively, on silver sales.

d. Chapada cash costs are calculated on a by-product basis and do not include the effects of copper stream agreements. Effects of copper stream agreements are reflected in copper revenue and will impact realized revenue per pound.

2020 Capital Expenditure Guidance

Total sustaining capital expenditures guidance has been reduced by $80.0 million. Sustaining capital expenditure deferrals include deferred stripping, mine development, underground drilling and equipment. The ZEP capital expenditure guidance includes payments for work performed to date.

($ millions)

Previous Guidancea

Revisions

Revised Guidance

Candelaria (100% basis)

265

(35)

230

Chapada

60

(20)

40

Eagle Sustaining

15

-

15

Neves-Corvo Sustaining

75

(20)

55

Zinkgruvan Sustaining

50

(5)

45

Total Sustaining Capital

465

(80)

385

Zinc Expansion Project (Neves-Corvo)

155

(100)

55

Total Capital Expenditures

620

(180)

440

a. Guidance as outlined in the Management's Discussion and Analysis for the year ended December 31, 2019.

2020 Exploration Investment Guidance

Planned exploration expenditures are expected to be $35.0 million in 2020, $20.0 million lower than previous guidance. Reductions include deferred drilling, and some planned geophysical surveys. Most of the planned expenditures for 2020 will be spent supporting in-mine and near-mine targets at our operations including $15.0 million at Candelaria, $7.0 million at Zinkgruvan, $7.0 million at Chapada, and $2.0 million at Neves-Corvo.

4

Selected Quarterly Financial Information

Three months ended

($ millions, except share and per share amounts)

March 31,

2020

2019

Revenue

378.0

416.4

Cost of goods sold:

Production costs

(278.7)

(205.1)

Depreciation, depletion and amortization

(122.0)

(70.1)

Gross (loss) profit

(22.7)

141.2

Net (loss) earnings attributable to: Lundin Mining shareholders

(111.5)

51.7

Non-controlling interests

(2.1)

9.3

Net (loss) earnings

(113.6)

60.9

Adjusted (loss) earnings3

(40.6)

62.9

Adjusted EBITDA3

90.3

177.0

Cash flow from operations

83.4

62.1

Capital expenditures4

141.1

182.0

Per share amounts:

Basic and diluted (loss) earnings per share attributable to

(0.15)

shareholders

0.07

Adjusted (loss) earnings per share3

(0.06)

0.09

Adjusted operating cash flow per share3

0.04

0.19

Dividends declared (C$/share)

0.04

0.03

March 31,

December 31,

Total assets

2020

2019

6,870.6

6,917.2

Total debt and lease liabilities

482.6

308.5

Net debt3

117.7

60.2

Summary of Quarterly Results1,2,5

($ millions, except per share data)

Q1-20

Q4-19

Q3-19

Q2-19

Q1-19

Q4-18

Q3-18

Q2-18

Revenue

378.0

568.4

538.7

369.3

416.4

407.7

379.7

467.7

Cost of goods sold

(400.7)

(422.9)

(410.1)

(344.1)

(275.2)

(335.7)

(320.1)

(312.6)

Gross (loss) profit

(22.7)

145.5

128.6

25.1

141.2

72.0

59.6

155.1

Net (loss) earnings

(113.6)

104.8

32.1

(8.6)

60.9

31.8

9.1

87.5

- attributable to shareholders

(111.5)

97.0

26.4

(7.8)

51.7

28.8

7.0

78.8

EPS- Basic and diluted

(0.15)

0.13

0.04

(0.01)

0.07

0.04

0.01

0.11

Cash flow from operations

83.4

186.4

111.6

204.5

62.1

44.2

140.9

118.3

Adjusted operating cash flow per share

0.04

0.28

0.21

0.07

0.19

0.16

0.11

0.16

Capital expenditures4

141.1

139.6

165.0

178.7

182.0

234.1

173.7

193.2

  1. Except where otherwise noted, financial data has been prepared in accordance with IFRS as issued by the IASB. Upon the adoption of new standards, the Company has elected not to restate comparative periods presented.
  2. Results reflect the inclusion of Chapada for the period of Lundin Mining's ownership.
  3. These arenon-GAAP measures please see 23 of this MD&A for discussion of non-GAAP measures.
  4. Capital expenditures are reported on a cash basis, as presented in the consolidated statement of cash flows.
  5. The sum of quarterly amounts may differ fromyear-to-date results due to rounding.

5

Revenue Overview

Sales Volumes by Payable Metal

(Contained metal in

2020

2019

concentrate)

Q1

Total

Q4

Q3

Q2

Q1

Copper (tonnes)

37,766

Candelaria (100%)

139,051

34,564

42,276

31,138

31,073

Chapada1

11,487

29,884

16,127

13,757

-

-

Eagle

4,399

12,767

2,819

2,615

4,286

3,047

Neves-Corvo

7,728

41,252

11,311

12,343

9,888

7,710

Zinkgruvan

543

2,673

779

981

913

-

61,923

225,627

65,600

71,972

46,225

41,830

Zinc (tonnes)

15,064

Neves-Corvo

59,143

14,713

14,567

14,466

15,397

Zinkgruvan

14,284

67,463

19,314

12,657

19,466

16,026

29,348

126,606

34,027

27,224

33,932

31,423

Gold (000 oz)

22

Candelaria (100%)

83

20

25

19

19

Chapada1

17

55

28

27

-

-

39

138

48

52

19

19

Nickel (tonnes)

2,809

Eagle

10,682

3,167

1,889

3,935

1,691

Lead (tonnes)

1,298

792

Neves-Corvo

4,591

1,210

1,313

1,276

Zinkgruvan

6,024

23,875

9,518

4,684

5,799

3,874

7,322

28,466

10,728

5,476

7,112

5,150

Silver (000 oz)

321

Candelaria (100%)

1,152

275

342

252

283

Chapada1

34

119

67

52

-

-

Eagle

20

72

12

22

25

13

Neves-Corvo

180

801

189

185

201

226

Zinkgruvan

349

1,594

571

335

460

228

904

3,738

1,114

936

938

750

1.Sales results are for the period of Lundin Mining's ownership.

6

Revenue Analysis

Three months ended March 31,

by Mine

2020

2019

Change

($ thousands)

$

%

$

%

$

Candelaria (100%)

172,972

46

232,661

56

(59,689)

Chapada1

84,121

22

-

-

84,121

Eagle

47,337

13

46,208

11

1,129

Neves-Corvo

45,777

12

85,147

20

(39,370)

Zinkgruvan

27,778

7

52,368

13

(24,590)

377,985

416,384

(38,399)

1. Revenue results are for the period of Lundin Mining's ownership.

by Metal

Three months ended March 31,

2020

2019

Change

($ thousands)

$

%

$

%

$

Copper

243,509

64

266,090

64

(22,581)

Zinc

32,104

8

82,674

20

(50,570)

Gold

56,584

15

22,705

5

33,879

Nickel

24,378

6

25,825

6

(1,447)

Lead

9,859

3

9,765

2

94

Silver

8,719

2

7,914

2

805

Other

2,832

2

1,411

1

1,421

377,985

416,384

(38,399)

Revenue for the quarter ended March 31, 2020 was $378.0 million, a decrease of $38.4 million in comparison to the $416.4 million reported in the first quarter of the prior year. The decrease was due to lower metal prices and negative price adjustments ($204.4 million), partially offset by higher copper and nickel sales volumes ($70.0 million) and the addition of Chapada mine.

Revenue from gold and silver for the quarter ended March 31, 2020 includes the recognition of an upfront purchase price on the sale of precious metals streams for Candelaria, Neves-Corvo, and Zinkgruvan as well as the cash proceeds which amount to $412/oz for gold and between $4.12/oz and $4.40/oz for silver.

Revenue from copper also includes the recognition of deferred revenue from the copper streams acquired with the Chapada mine, as well as the cash proceeds of 30% of the market price of copper sold.

Revenue is recorded using the metal price received for sales that settle during the reporting period. For sales that have not been settled, an estimate is used based on the expected month of settlement and the forward price of the metal at the end of the reporting period. The difference between the estimate and the final price received is recognized by adjusting revenue in the period in which the sale is settled. Settlement dates can range from one to six months after shipment.

Provisionally valued revenue as of March 31, 2020

Metal

Payable metal

Valued at $ per lb/oz

Copper

37,140 t

$2.24

/lb

Zinc

32,461 t

$0.86

/lb

Gold

26,455 oz

$1,606

/oz

Nickel

2,586 t

$5.19

/lb

7

Quarterly Reconciliation of Realized Prices

Three months ended March 31, 2020

($ thousands)

Copper

Zinc

Gold

Nickel

Total

Current period sales1

312,620

58,332

61,902

33,932

466,786

Prior period price adjustments

(46,223)

(8,151)

1,784

(10,219)

(62,809)

266,397

50,181

63,686

23,713

403,977

Other metal sales

39,176

Copper stream cash effect

(3,787)

Gold stream cash effect

(16,567)

Less: Treatment & refining charges

(44,814)

Total Revenue

377,985

Payable Metal

61,923

t

29,348

t

39

koz

2,809

t

Current period sales1

$2.29

$0.90

$1,597

$5.48

Prior period adjustments

(0.34)

(0.12)

46

(1.65)

Realized prices

$1.95

/lb

$0.78

/lb

$1,644

/oz

$3.83

/lb

Three months ended March 31, 2019

Copper

Zinc

Gold

Nickel

Total

Current period sales1

268,742

90,571

24,725

21,989

406,027

Prior period price adjustments

18,442

4,760

(291)

9,220

32,131

287,184

95,331

24,434

31,209

438,158

Other metal sales

29,197

Gold stream cash effect

(10,723)

Less: Treatment & refining charges

(40,248)

Total Revenue

416,384

Payable Metal

41,830 t

31,423 t

22 koz

1,691 t

Current period sales1

$2.91

$1.31

$1,146

$5.90

Prior period adjustments

0.20

0.07

(13)

2.47

Realized prices

$3.11 /lb

$1.38 /lb

$1,133 /oz

$8.37 /lb

1. Includes provisional price adjustments on current period sales.

8

Financial Results

Production Costs

Production costs for the quarter ended March 31, 2020 were $278.7 million, an increase of $73.6 million in comparison to the $205.1 million reported in the first quarter of the prior year. This increase was primarily due to the inclusion of production costs from the Chapada mine of $50.7 million and higher sales volumes at Candelaria and Eagle ($34.9 million).

Depreciation, Depletion and Amortization

Depreciation, depletion and amortization expense for the current quarter increased compared to the prior year comparable quarter due primarily to increased amortization of deferred stripping at Candelaria associated with the increased production from Phase 10 of the open pit, the inclusion of Chapada, as well as increased sales volume at Eagle.

Depreciation by operation

Three months ended March 31,

($ thousands)

2020

2019

Change

Candelaria

71,069

39,799

31,270

Chapada

11,610

-

11,610

Eagle

18,767

10,175

8,592

Neves-Corvo

13,649

12,603

1,046

Zinkgruvan

6,456

7,064

(608)

Other

424

463

(39)

121,975

70,104

51,871

Loss from Equity Investment in Associate

Loss from equity investment in associate was lower than the prior year quarter due to the sale of the cobalt refinery and related cobalt cathode precursor business in the fourth quarter of 2019.

General Exploration and Business Development

General exploration and business development expenses for the current quarter were $13.2 million, a decrease against the prior year comparable quarter by $5.5 million. Exploration drilling in the current quarter was primarily focused on near-mine targets at the Company's operations. At Neves-Corvo, regional drilling tested two geophysical targets and a new geophysics gravity survey was initiated. Exploration at Zinkgruvan and Chapada was focused along known mineralized trends. Candelaria drilling was primarily focused within the underground workings. As a result of the COVID-19 pandemic and poor market conditions, some exploration work programs have been curtailed.

Finance Costs

Finance costs of $16.2 million for the quarter ended March 31, 2020 reflects a cost increase of $12.5 million against the prior year comparable quarter. The majority of the increase is attributable to higher deferred revenue financing costs at Candelaria and Chapada. In addition, in the third quarter of 2019 the Company used cash on hand and drew down debt on its credit facility to pay for the acquisition of the Chapada mine. The combination of lower interest income on cash and higher interest expense on debt also contributed to higher finance costs.

Other Income and Expenses

Net other income for the quarter ended March 31, 2020 was $29.0 million, an increase of $30.4 million over the net other expense of $1.4 million recorded in the first quarter of 2019. The change was primarily due to foreign exchange revaluations.

9

Foreign exchange gains recorded in other income and expenses relate to the foreign exchange revaluation of working capital denominated in foreign currencies that was held by the Company. Period end exchange rates affecting foreign exchange recorded at March 31, 2020 were $1.00:CLP846 (December 31, 2019 - $1.00:CLP749), $1.00:BRL5.20 (December 31, 2019 - $1.00:BRL4.03), $1.10:€1.00 (December 31, 2019 - $1.12:€1.00) and $1.00:SEK10.08 (December 31, 2019 - $1.00:SEK9.32).

Income Taxes

Income taxes by mine

Income tax expense (recovery)

Three months ended March 31,

($ thousands)

2020

2019

Change

Candelaria

2,727

13,714

(10,987)

Chapada

76,213

-

76,213

Eagle

(42)

177

(219)

Neves-Corvo

(6,877)

4,670

(11,547)

Zinkgruvan

2,712

6,130

(3,418)

Other

3,798

6,154

(2,356)

78,531

30,845

47,686

Income taxes by classification

Income tax expense

Three months ended March 31,

($ thousands)

2020

2019

Change

Current income tax

26,163

25,708

455

Deferred income tax

52,368

5,137

47,231

78,531

30,845

47,686

Income tax expense of $78.5 million for the three months ended March 31, 2020 was $47.7 million higher than the $30.8 million expense recorded in the comparable quarter of the prior year.

Excluding Chapada, all sites reported lower tax expense due to lower taxable earnings compared to the first quarter in the prior year. Included in the $2.7 million in taxes in Chile is a deferred tax expense of $13.5 million resulting from the newly enacted tax reform which reduces the rate of tax refunds on taxes paid on dividends.

Chapada reported a deferred tax expense of $62.4 million related to the impact of foreign exchange translation on non-monetary assets due to significant declines in the BRL compared to the USD.

Current income tax expense for the current period includes taxes payable of $7.8 million on foreign exchange gains on USD denominated receivables in Brazil.

10

Mining Operations

Production Overview

2020

2019

Q2

Q1

(Contained metal in concentrate)

Q1

Total

Q4

Q3

Copper (tonnes)

36,297

Candelaria (100%)

146,330

39,221

40,698

33,633

32,778

Chapada1

11,881

30,529

12,884

17,645

-

-

Eagle

4,378

14,297

3,626

3,042

3,732

3,897

Neves-Corvo

9,075

41,436

10,898

12,055

9,615

8,868

Zinkgruvan

536

2,906

502

1,120

705

579

62,167

235,498

67,131

74,560

47,685

46,122

Zinc (tonnes)

17,948

Neves-Corvo

73,202

17,946

18,232

18,251

18,773

Zinkgruvan

18,999

78,313

20,979

16,796

18,865

21,673

36,947

151,515

38,925

35,028

37,116

40,446

Gold (000 oz)

21

Candelaria (100%)

88

23

24

21

20

Chapada1

18

54

20

34

-

-

39

142

43

58

21

20

Nickel (tonnes)

3,575

Eagle

13,494

2,651

3,232

3,398

4,213

Lead (tonnes)

1,468

Neves-Corvo

5,474

1,365

1,106

1,350

1,653

Zinkgruvan

8,013

27,703

9,361

6,291

6,219

5,832

9,481

33,177

10,726

7,397

7,569

7,485

Silver (000 oz)

331

Candelaria (100%)

1,305

337

355

292

321

Chapada1

57

144

63

81

-

-

Eagle

35

143

31

40

45

27

Neves-Corvo

377

1,706

385

431

392

498

Zinkgruvan

662

2,464

724

630

631

479

1,462

5,762

1,540

1,537

1,360

1,325

1. Production results are for the period of Lundin Mining's ownership.

11

Cash Cost Overview1

Three months ended March 31,

2020

2019

Candelaria (cost/lb Cu)

1.57

Gross cost

1.87

By-product1

(0.26)

(0.25)

Net Cash Cost

1.31

1.62

All-in Sustaining Cost2

2.26

3.30

Chapada (cost/lb Cu)

2.06

Gross cost

-

By-product

(1.14)

-

Net Cash Cost

0.92

-

All-in Sustaining Cost

1.22

-

Eagle (cost/lb Ni)

5.14

Gross cost

5.84

By-product

(3.71)

(5.47)

Net Cash Cost

1.43

0.37

All-in Sustaining Cost

3.50

1.65

Neves-Corvo (cost/lb Cu)

3.33

Gross cost

3.43

By-product

(1.09)

(2.51)

Net Cash Cost

2.24

0.92

All-in Sustaining Cost

3.28

1.72

Zinkgruvan (cost/lb Zn)

0.87

Gross cost

0.68

By-product

(0.36)

(0.24)

Net Cash Cost

0.51

0.44

All-in Sustaining Cost

0.79

0.69

  1. By-productis after related treatment and refining charges.
  2. All-inSustaining Cost ("AISC") is a non-GAAP measure - see page 23 of this MD&A for discussion of non-GAAP measures.

Capital Expenditures 1,2

Three months ended March 31,

2020

2019

Capitalized

Capitalized

($ thousands)

Sustaining

Expansionary

Interest

Total

Sustaining

Expansionary

Interest

Total

by Mine

76,580

-

-

76,580

108,946

-

-

108,946

Candelaria

Chapada

3,724

-

-

3,724

-

-

-

-

Eagle

5,431

-

-

5,431

1,917

7,695

-

9,612

Neves-Corvo

15,801

30,946

451

47,198

10,876

42,371

-

53,247

Zinkgruvan

7,934

-

-

7,934

10,149

-

-

10,149

Other

199

-

-

199

43

-

-

43

109,669

30,946

451

141,066

131,931

50,066

-

181,997

  1. Capital expenditures are reported on a cash basis, as presented in the consolidated statement of cash flows.
  2. Sustaining and expansionary capital expenditures arenon-GAAP measures - see page 23 of this MD&A for discussion of non-GAAP measures.

12

Candelaria (Chile)

Operating Statistics

2020

2019

(100% Basis)

Q1

Total

Q4

Q3

Q2

Q1

Ore mined (000s tonnes)

8,081

28,753

10,067

9,329

5,620

3,737

Ore milled (000s tonnes)

5,707

26,287

6,336

6,295

6,450

7,206

Grade

0.67

Copper (%)

0.60

0.66

0.70

0.57

0.49

Gold (g/t)

0.15

0.14

0.15

0.16

0.14

0.11

Recovery

94.7

Copper (%)

92.3

92.8

92.9

91.4

91.9

Gold (%)

73.0

72.1

74.4

71.8

70.6

70.5

Production (contained metal)

36,297

Copper (tonnes)

146,330

39,221

40,698

33,633

32,778

Gold (000 oz)

21

88

23

24

21

20

Silver (000 oz)

331

1,305

337

355

292

321

Revenue ($000s)

172,972

896,283

235,015

249,930

178,677

232,661

Gross (loss) profit ($000s)

(16,785)

180,650

57,989

42,612

1,390

78,659

Cash cost ($ per pound)

1.31

1.54

1.38

1.39

1.86

1.62

AISC ($ per pound)

2.26

2.88

2.22

2.49

3.73

3.30

Gross (Loss) Profit

Candelaria recorded a gross loss for the three months ended March 31, 2020 which was lower than the prior year comparable quarter's gross profit by $95.4 million. The loss is as a result of lower copper metal prices and negative price adjustments in the current period.

Production

Copper production for the current quarter was higher than the comparable quarter in 2019. The increase in copper production over the prior year comparable period was the result of higher grades as more ore tonnes were sourced from the open pit and underground mines, and less from the low-grade stockpile. This increase in copper production was offset by lower throughput due to ore hardness and fewer available operational hours for the SAG mills.

Full year guidance for production of copper has been widened with a modest reduction at the low end. Gold guidance has been revised on expectation of lower throughput.

Cash Costs

Copper cash costs for the three months ended March 31, 2020 were $0.31/lb lower than the prior year comparable period, largely as a result of favourable foreign exchange in the current quarter.

All-in sustaining costs were lower than the prior year comparable quarter due to lower sustaining capital expenditures in the current period as several projects, including the mine fleet reinvestment and development of the South Sector underground mine, were concluded by the end of 2019.

Approximately 14,000 oz of gold and 218,000 oz of silver were subject to terms of a streaming agreement in which $412/oz and $4.12/oz were received for gold and silver, respectively.

As a result of planned reductions in operating costs as well as expected positive effects of foreign currency, Candelaria's full year cash cost guidance has been improved from $1.45/lb to $1.35/lb.

13

Projects

The Candelaria Mill Optimization Project ("CMOP") continued to progress during the first quarter of 2020. Upgrade of one additional ball mill motor was completed during the quarter, and installation of new cyclone clusters is on-going. All remaining equipment is on site and available for installation.

CMOP is now expected to be completed in the second half of 2020 due to restrictions arising from the COVID-19 pandemic, limiting the ability to safely mobilize consultants and contractors, as well as utilizing scheduled mill maintenance down-time to minimize disruption to production.

14

Chapada (Brazil)

Operating Statistics

2020

2019

(100% Basis)

Q1

Total

Q4

Q3

Q2

Q1

Ore mined (000s tonnes)

8,452

18,240

7,592

10,648

-

-

Ore milled (000s tonnes)

5,488

11,911

5,731

6,180

-

-

Grade

0.27

Copper (%)

0.31

0.27

0.34

-

-

Gold (g/t)

0.20

0.24

0.20

0.28

Recovery

80.9

Copper (%)

82.7

81.6

83.7

-

-

Gold (%)

51.0

59.4

57.0

61.0

Production (contained metal)

11,881

Copper (tonnes)

30,529

12,884

17,645

-

-

Gold (000 oz)

18

54

20

34

-

-

Silver (000 oz)

57

144

63

81

-

-

Revenue ($000s)

84,121

248,011

133,144

114,867

-

-

Gross profit ($000s)

21,833

104,445

56,581

47,864

-

-

Cash cost ($ per pound)

0.92

0.58

0.77

0.35

-

-

AISC ($ per pound)

1.22

0.97

1.28

0.62

-

-

1. Operating results are for the period of Lundin Mining's ownership.

Gross Profit

Gross profit for the three months ended March 31, 2020 was negatively impacted by copper price adjustments, partially offset by higher gold prices and favourable foreign exchange rates.

Production

Copper production for the three months ended March 31, 2020 was in-line with expectations. Above plan mill throughput offset moderately lower than planned recoveries and grades. Gold production for the quarter was lower than planned due to lower recoveries.

Chapada remains on-track to achieve full year copper production guidance as lower expected throughput is expected to be offset by higher grades. Gold guidance has been reduced on the expectation of lower throughput and recoveries.

Cash Costs

Copper cash costs for the quarter ended March 31, 2020 were better than plan, benefitting primarily from favourable foreign exchange rates, as well as continued strong gold prices which improved the realized by-product credit. Full year guidance has been improved to $0.85/lb, from $1.15/lb.

AISC was also better than expected due to lower cash costs and capital spending.

Projects

The Company is continuing to evaluate options for long-term mine and plant expansion. Study work is being completed in parallel with exploration efforts, largely focused on near-mine targets, with the results to be incorporated in any future expansionary plans.

The 2020 exploration program includes approximately 40,000 metres of drilling, reduced from 50,000 metres, and geophysical surveys. During the current quarter, the Company completed 5,394 metres of the drill program. These targets were shallow and close to the mine infrastructure.

15

Eagle (USA)

Operating Statistics

2020

2019

Q1

Total

Q4

Q3

Q2

Q1

Ore mined (000s tonnes)

189

748

194

197

192

165

Ore milled (000s tonnes)

194

747

191

197

194

165

Grade

2.2

Nickel (%)

2.2

1.7

2.0

2.1

3.0

Copper (%)

2.4

2.0

2.0

1.6

2.0

2.4

Recovery

83.9

Nickel (%)

82.1

80.5

80.4

81.3

85.0

Copper (%)

96.3

96.0

95.3

95.5

95.7

97.6

Production (contained metal)

3,575

Nickel (tonnes)

13,494

2,651

3,232

3,398

4,213

Copper (tonnes)

4,378

14,297

3,626

3,042

3,732

3,897

Revenue ($000s)

47,337

212,929

53,592

53,717

59,412

46,208

Gross (loss) profit ($000s)

(8,788)

35,987

(1,021)

19,350

(800)

18,458

Cash cost ($ per pound)

1.43

2.84

3.53

3.25

3.14

0.37

AISC ($ per pound)

3.50

3.74

4.53

4.37

3.65

1.65

Gross (Loss) Profit

Gross loss for the three months ended March 31, 2020 was lower than the gross profit recorded in the prior year comparable period by $27.3 million. Higher sales volumes in the current quarter were more than offset by lower realized metal prices and price adjustments.

Production

For the current quarter, nickel production was lower than the prior year comparable period, while copper production was higher than the first quarter of 2019. Production from the lower-grade lower region of the Eagle East orebody contributed to an increase in throughput in the current period compared to the weather-impacted prior year comparable period, which contributed to the quarter-over quarter increase in copper production. However, a change in mine sequence impacted nickel ore grades and resulted in lower nickel production in the current quarter.

Nickel and copper full year production guidance remains unchanged.

Cash Costs

Nickel cash costs for the three months ended March 31, 2020 were higher than the prior year largely due to lower realized price for copper by-product credits, partially offset by lower treatment and refining charges. Eagle remains on-track to achieve full year cash cost guidance.

All-in sustaining costs for the quarter were higher than that reported in the comparable prior year period due to higher cash costs.

Projects

Eagle East project capital development and construction activities supporting production were completed during the first quarter in 2020. The project was completed a full quarter ahead of schedule and below budget. Final project cost was $93.1 million compared to the project budget of $107.2 million.

16

Neves-Corvo (Portugal)

Operating Statistics

2020

2019

Total

Q4

Q3

Q2

Q1

Q1

Ore mined, copper (000 tonnes)

640

2,702

686

699

628

689

Ore mined, zinc (000 tonnes)

286

1,153

290

284

283

296

Ore milled, copper (000 tonnes)

639

2,679

681

702

626

670

Ore milled, zinc (000 tonnes)

284

1,137

286

285

280

286

Grade

1.8

Copper (%)

2.0

2.1

2.1

2.0

1.7

Zinc (%)

8.0

7.9

7.8

7.8

7.9

8.0

Recovery

77.4

Copper (%)

78.3

77.9

80.6

75.8

79.3

Zinc (%)

77.7

78.8

78.0

80.2

78.6

78.3

Production (contained metal)

9,075

Copper (tonnes)

41,436

10,898

12,055

9,615

8,868

Zinc (tonnes)

17,948

73,202

17,946

18,232

18,251

18,773

Lead (tonnes)

1,468

5,474

1,365

1,106

1,350

1,653

Silver (000 oz)

377

1,706

385

431

392

498

Revenue ($000s)

45,777

337,167

88,492

86,009

77,519

85,147

Gross (loss) profit ($000s)

(19,926)

42,896

8,772

11,546

3,834

18,744

Cash cost (€ per pound)

2.03

1.42

1.61

1.44

1.68

0.81

Cash cost ($ per pound)

2.24

1.59

1.78

1.60

1.88

0.92

AISC ($ per pound)

3.28

2.38

2.65

2.35

2.60

1.72

Gross (Loss) Profit

Neves-Corvo recorded a gross loss for the three months ended March 31, 2020 which was lower than the gross profit recorded in the comparable period in 2019 by $38.7 million.The movement from profit to loss was due to lower realized zinc and copper metal prices and price adjustments.

Production

Copper production for the three months ended March 31, 2020 was higher than the prior year comparable quarter as a result of higher head grades while zinc production was lower than the prior year comparable period due to lower throughput and recoveries, though in-line with expectations for the quarter.

Full year copper production guidance range has been lowered, and zinc guidance has been reduced to 70,000t - 75,000t, from 95,000t - 105,000t, as a result of the temporary suspension of ZEP.

Cash Costs

Copper cash costs for the quarter ended March 31, 2020 were higher than that of the corresponding prior year quarter as a result of lower zinc prices and by-product credits ($1.42/lb). Per-unit mine, mill and administrative costs were lower than the prior year comparable period resulting from the impact of favourable foreign exchange rates. However, given lower expectations of full year production, cash cost guidance has been increased to $2.10/lb.

All-in sustaining costs were higher than the prior year comparable period as a result of higher cash costs.

The Company is actively assessing cost reduction initiatives in all areas of operations, exploration and capital programs in order to reduce these costs.

17

Projects

On March 15, 2020, ZEP construction and commissioning activities were temporarily suspended in order to reduce the risk to our local communities, employees and contractors as a result of the COVID-19 pandemic.

Prior to the temporary suspension of ZEP, construction advanced in accordance with the revised schedule and budget for the phased start-up strategy and production during 2020.

Underground project progress is over 88% with civil and mechanical works largely completed. Mechanical and electrical equipment installations for the crusher and the 3.5 kilometre conveyor systems are well advanced and were the focus of work prior to temporary suspension. Development of the lower zinc ore stopes was advancing as planned with the first two sub-levels continuing, as well as deepening of the ramp to reach the next sub-levels in the Lower Lombador orebody.

Surface construction and commissioning activities continued throughout the current quarter with a focus on completing the remaining mechanical, electrical and instrumentation installations of the materials handling system and the SAG mill which was on track to begin commissioning at the end of the quarter. Surface construction of ZEP was nearly 80% complete at the end of the quarter, with the materials handling and SAG portion of the project more than 98% completed. Mechanical, electrical instrumentation and pre-commissioning work was advancing as planned for the flotation circuits, dewatering circuit, backfill cyclone station, tailings and water supply piping systems, and a new paste fill tailings thickener.

Demobilization of construction contractors and owners' team was completed during March and the project remains in temporary suspension. The timing of the restart is uncertain and will be dependent on public health restrictions to reduce the spread of COVID-19 and the Company's internal policies in order to safeguard and protect the workforce from exposure to the virus, as well as prevailing metal prices and market conditions.

18

Zinkgruvan (Sweden)

Operating Statistics

2020

2019

Q1

Total

Q4

Q3

Q2

Q1

Ore mined, zinc (000 tonnes)

324

1,138

336

230

303

269

Ore mined, copper (000 tonnes)

44

182

28

65

37

52

Ore milled, zinc (000 tonnes)

329

1,120

322

254

292

252

Ore milled, copper (000 tonnes)

21

178

26

63

48

41

Grade

6.4

Zinc (%)

7.6

7.1

7.2

7.2

9.3

Lead (%)

2.9

3.1

3.5

3.1

2.7

2.9

Copper (%)

2.8

1.8

2.2

1.9

1.7

1.6

Recovery

90.4

Zinc (%)

91.5

91.7

92.2

89.7

92.5

Lead (%)

83.0

80.9

83.0

80.8

80.0

78.6

Copper (%)

90.6

89.1

89.6

90.8

86.0

89.1

Production (contained metal)

18,999

Zinc (tonnes)

78,313

20,979

16,796

18,865

21,673

Lead (tonnes)

8,013

27,703

9,361

6,291

6,219

5,832

Copper (tonnes)

536

2,906

502

1,120

705

579

Silver (000 oz)

662

2,464

724

630

631

479

Revenue ($000s)

27,778

198,323

58,120

34,192

53,643

52,368

Gross profit ($000s)

2,203

81,341

23,928

8,557

21,873

26,983

Cash cost (SEK per pound)

4.96

3.69

2.95

4.02

3.88

4.08

Cash cost ($ per pound)

0.51

0.39

0.31

0.42

0.41

0.44

AISC ($ per pound)

0.79

0.65

0.62

0.70

0.63

0.69

Gross Profit

Gross profit for the three months ended March 31, 2020 was lower than the first quarter of 2019, due to lower realized metal prices and price adjustments, as well as lower zinc sales volumes partially offset by favourable foreign exchange.

Production

Ore mined and milled were both higher in the three months ended March 31, 2020 than in the prior year comparable period.

Zinc production for the first quarter of 2020 was lower than the prior year comparable period, largely due to lower head grades. Ground conditions encountered in certain high-grade stopes resulted in a change in mine sequencing which has deferred production from these areas to the fourth quarter of 2020 and first quarter of 2021. This was partially offset by higher throughput.

Lead production for the quarter was higher than the comparable period in the prior year resulting from higher throughput and recoveries.

Due to the change in mine sequencing, as noted above, lower average zinc grades will be realized over the year resulting in a modest reduction in full year zinc production to 72,000 - 77,000 tonnes. Copper guidance remains unchanged.

Cash Costs

Zinc cash costs in the first quarter of 2020 were higher than the comparable prior year period, as higher by-product credits were more than offset by higher zinc treatment and refining charges. Full year cash cost guidance has been moderately increased to $0.60/lb.

All-in sustaining cost was higher than the prior year comparable period, resulting from higher cash costs.

19

Metal Prices, LME Inventories and Smelter Treatment and Refining Charges

The average metal prices for copper, zinc and nickel for the first quarter 2020 were lower than the average prices for the last quarter of 2019 by; 4% copper, 11% zinc and 18% nickel. The average metal price for gold for the first quarter 2020 was higher than the average price for the last quarter of 2019 by 7%. Prices for copper, zinc and nickel decreased through the quarter on the backdrop of concerns surrounding the COVID-19 pandemic.

Three months ended March 31,

(Average LME Price)

2020

2019

Change

Copper

US$/pound

2.56

2.82

-9%

US$/tonne

5,637

6,215

Zinc

US$/pound

0.97

1.23

-21%

US$/tonne

2,128

2,702

Gold

US$/ounce

1,583

1,304

21%

Nickel

US$/pound

5.77

5.61

3%

US$/tonne

12,723

12,369

LME inventories for copper, zinc and nickel increased during the first quarter of 2020 by 53%, 43% and 53%, respectively.

During the first three months of 2020 the treatment charges ("TC") and refining charges ("RC") in the spot market for copper concentrates between miners and commodity traders fluctuated from an average spot TC during January of $48 per dmt of concentrate and a spot RC of $0.048 per lb of payable copper, increasing in February to an average spot TC of $63 per dmt of concentrate and a spot RC of $0.063 per lb of payable copper before falling to a spot TC of $61 per dmt of concentrate and a spot RC of $0.061 per lb of payable copper during March 2020. Also, the spot terms at which Chinese copper smelters were prepared to buy increased through the quarter from a TC of $59 per dmt of concentrate and a RC of $0.059 per payable lb of copper over January to a TC of $71 per dmt of concentrate and a RC of $0.071 per payable lb of copper at the end of March. The terms for annual contracts for copper concentrates for 2020 were reached in November 2019 at a TC of $62 per dmt with a RC of $0.062 per payable lb of copper. This represents an improvement for the mines compared to the 2019 annual terms at a TC of $80.80 per dmt of concentrates and a RC of $0.0808 per payable lb of copper.

The spot TC, delivered China, for zinc concentrates during the first three months of 2020 ranged from $310 per dmt, flat, at the beginning of the year to $265 per dmt, flat, by the end of the first quarter, on extremely limited activity in the Chinese market. At the end of March, there had been a reported settlement in the negotiations between a mine and smelters for annual contracts for zinc concentrates at a level of $299.75 per dmt, flat. This would result in an improvement of approximately $71 per dmt in favour of the smelters compared to the reported annual settlement agreed for 2019, using the March 31, 2020 zinc price.

The Company's nickel concentrate production from Eagle is sold under several long-term contracts at terms inline with market conditions. Gold production from Chapada and Candelaria is sold at terms in-line with market conditions for copper concentrates.

20

Liquidity and Capital Resources

As at March 31, 2020, the Company had cash and cash equivalents of $366.9 million. Given the COVID-19 pandemic, a great deal of uncertainty remains in the marketplace, possibly impacting production, supply chain, delivery of concentrates, commodity prices and many other variables. However, the Company continues to expect to be able to fund all its contractual commitments and obligations through operating cash flow generated, cash on hand and available debt facilities.

Cash flow from operations for the quarter ended March 31, 2020 was $83.4 million, an increase of $21.3 million in comparison to the $62.1 million reported in the first quarter of 2019. The increase was primarily attributable to a positive comparative change in non-cash working capital ($132.5 million) partially offset by lower gross profit before depreciation.

Cash flow used in investing activities decreased when compared to the prior year comparable quarter primarily due to lower investments in mineral properties, plant and equipment and receipt of contingent consideration on the Company's sale of its interest in the Tenke Fungurume mine ($25.7 million). The decrease in capital investments is related primarily to Candelaria and ZEP.

Cash flow generated from financing activities increased by $126.5 million compared to the first quarter in 2019 due primarily to an increase in borrowings.

The negative effects of foreign exchange on cash balances increased by $13.7 million reflecting the weakening of foreign currencies against the USD.

Capital Resources

As at March 31, 2020, the Company had $482.6 million of debt and lease liabilities.

As at March 31, 2020, the Company had $345.0 million drawn on its credit facility and an additional $90.0 million in term loans outstanding. Equipment financing of $9.3 million were also utilized.

During the quarter, the Company purchased 1.6 million shares under its Normal Course Issuer Bid for total consideration of $7.4 million. All of the common shares purchased have been cancelled.

Contractual Obligations, Commitments and Contingencies

The Company has contractual obligations and capital commitments as described in the Note 19 "Commitments and Contingencies" in the Company's Condensed Interim Consolidated Financial Statements. From time to time, the Company may also be involved in legal proceedings that arise in the ordinary course of its business.

Financial Instruments

The Company does not currently utilize complex financial instruments in hedging metal price, foreign exchange or interest rate exposure. Any hedging activity requires approval of the Company's Board of Directors. The Company will not hold or issue derivative instruments for speculation or trading purposes.

For details of the Company's financial instruments refer to Note 18 of the Company's Condensed Interim Consolidated Financial Statements.

Market and Liquidity Risks and Sensitivities

Revenue and cost of goods sold are affected by certain external factors including fluctuations in metal prices and changes in exchange rates between the €, the SEK, the CLP, the BRL and the $.

21

The following table illustrates the sensitivity of the Company's risk on final settlement of its provisionally priced revenues:

Provisional price on

Effect on Revenue

Metal

Payable Metal

March 31, 2020

Change

($millions)

Copper

37,140

t

$2.24/lb

+/- 10%

+/- $18.3

Zinc

32,461

t

$0.86/lb

+/- 10%

+/- $6.2

Gold

26,455 oz

$1,606/oz

+/- 10%

+/- $4.2

Nickel

2,586

t

$5.19/lb

+/- 10%

+/- $3.0

The following table presents the Company's sensitivity to certain currencies and the impact of exchange rates, against the US dollar, on cost of goods sold:

For the three months ended

Currency

Change

March 31, 2020 ($millions)

Chilean peso

+/- 10%

+/- $8.6

Euro

+/- 10%

+/- $6.4

Swedish krona

+/- 10%

+/- $2.6

Brazilian real

+/- 10%

+/- $4.6

Related Party Transactions

The Company enters into related party transactions that are in the normal course of business and on an arm's length basis. Related party disclosures can be found in Note 21 of the Company's March 31, 2020 Consolidated Financial Statements.

Changes in Accounting Policies and Critical Accounting Estimates and Judgments

The Company describes its significant accounting policies as well as any changes in accounting policies in Note 2 "Basis of Presentation and Significant Accounting Policies" of the March 31, 2020 Condensed Interim Consolidated Financial Statements. No significant changes in accounting policies have occurred.

22

Non-GAAP Performance Measures

The Company uses certain performance measures in its analysis. These performance measures have no meaning within generally accepted accounting principles under IFRS and, therefore, amounts presented may not be comparable to similar data presented by other mining companies. This data is intended to provide additional information and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS. The following are non-GAAP measures that the Company uses as key performance indicators.

Net Debt

Net debt is a performance measure used by the Company to assess its financial position. Net debt is defined as cash and cash equivalents, less debt and lease liabilities, excluding deferred financing fees and can be reconciled as follows:

($thousands)

March 31, 2020

December 31, 2019

Current portion of total debt and lease liabilities

104,754

80,782

Long-term debt and lease liabilities

377,824

227,767

482,578

308,549

Deferred financing fees (netted in above)

2,088

2,238

484,666

310,787

Cash and cash equivalents

(366,920)

(250,563)

Net debt

117,746

60,224

Adjusted Operating Cash Flow per Share

Adjusted operating cash flow per share is a performance measure used by the Company to assess its ability to generate cash from its operations, while also taking into consideration changes in the number of outstanding shares of the Company. Adjusted operating cash flow per share is defined as cash provided by operating activities, excluding changes in non-cash working capital items, divided by the basic weighted average number of shares outstanding.

Adjusted operating cash flow per share can be reconciled to cash provided by operating activities as follows:

Three months ended March 31,

($thousands, except share and per share amounts)

2020

2019

Cash provided by operating activities

83,411

62,140

Changes in non-cash working capital items

(55,529)

76,981

Adjusted operating cash flow before changes in non-cash working capital

27,882

139,121

Weighted average common shares outstanding

734,487,266

735,256,205

Adjusted operating cash flow per share

0.04

0.19

23

Adjusted EBITDA, Adjusted Earnings and Adjusted Earnings per Share

Adjusted EBITDA, adjusted earnings and adjusted earnings per share are non-GAAP measures. These measures are presented to provide additional information to investors and other stakeholders on the Company's underlying operational performance. Certain items have been excluded from adjusted EBITDA and adjusted earnings such as unrealized foreign exchange and revaluation gains and losses, impairment charges and reversals, gain or loss on debt settlement, interest on tax refunds and assessments, litigations settlements and other items that do not represent the Company's current and on-going operations and are not necessarily indicative of future operating results.

Three months ended March 31,

($thousands)

2020

2019

Net (loss) earnings

(113,568)

60,949

Add back:

121,975

Depreciation, depletion and amortization

70,104

Finance income and costs

16,164

3,736

Income taxes

78,531

30,845

103,102

165,634

Unrealized foreign exchange (gain) loss

(25,274)

554

Unrealized revaluation (gain) loss of derivative asset and liability

4,838

(170)

Unrealized revaluation loss of marketable securities

2,188

8

Loss from investment in associates

84

11,935

Project standby costs

2,512

-

Other

2,892

(1,000)

Total adjustments - EBITDA

(12,760)

11,327

Adjusted EBITDA

90,342

176,961

Three months ended March 31,

($thousands, except share and per share amounts)

2020

2019

Net (loss) earnings attributable to Lundin Mining shareholders

(111,485)

51,666

Add back:

Total adjustments - EBITDA

(12,760)

11,327

Tax effect on adjustments

7,583

(132)

Effects of tax rate change on deferred tax balances

13,562

-

Deferred tax expense arising from foreign exchange translation

62,453

-

Total adjustments

70,838

11,195

Adjusted (loss) earnings

(40,647)

62,861

Weighted average number of shares outstanding:

Basic

734,487,266

735,256,205

Diluted

734,487,266

736,073,671

Basic and diluted earnings per share attributable to Lundin Mining shareholders:

Net (loss) earnings

(0.15)

0.07

Total adjustments

0.09

0.02

Adjusted (loss) earnings per share

(0.06)

0.09

24

Capital Expenditures

Identifying capital expenditures, on a cash basis, using a sustaining or expansionary classification provides management with a better understanding of costs required to maintain existing operations, and costs required for future growth of existing or new assets.

  • Sustaining capital expenditures -Expenditures which maintain existing operations and sustain production levels.
  • Expansionary capital expenditures -Expenditures which increase current or future production capacity, cash flow or earnings potential.

Where an expenditure both maintains and expands current operations, classification would be based on the primary decision for which the expenditure is being made. Sustaining and expansionary capital expenditures are reported excluding capitalized interest.

Cash Cost per Pound

Copper, zinc and nickel cash costs per pound are key performance measures that management uses to monitor performance. Management uses these statistics to assess how well the Company's producing mines are performing and to assess overall efficiency and effectiveness of the mining operations. Cash cost is not an IFRS measure and, although it is calculated according to accepted industry practice, the Company's disclosed cash costs may not be directly comparable to other base metal producers.

  • Cash cost per pound, gross -Total cash costs directly attributable to mining operations, excluding any allocation of upfront streaming proceeds or capital expenditures for deferred stripping, are divided by the sales volume of the primary metal to arrive at gross cash cost per pound. As this measure is not impacted by fluctuations in sales of by-product metals, it is generally more consistent across periods.
  • Cash cost per pound, net ofby-products-Credits for by-products sales are deducted from total cash costs directly attributable to mining operations. By-product revenue is adjusted for the terms of streaming agreements, but excludes any deferred revenue from the allocation of upfront cash received. The net cash costs are divided by the sales volume of the primary metal to arrive at net cash cost per pound. The inclusion of by-product credits provides a broader economic measurement, incorporating the benefit of other metals extracted in the production of the primary metal.

All-in Sustaining Cost (AISC) per Pound

AISC per pound is an extension of the cash cost per pound measure discussed above and is also a key performance measure that management uses to monitor performance. Management uses this measure to analyze margins achieved on existing assets while sustaining and maintaining production at current levels. Expansionary capital and certain exploration costs are excluded from this definition as these are costs typically incurred to extend mine life or materially increase the productive capacity of existing assets, or for new operations. Corporate general and administrative expenses have also been excluded from the all-in sustaining cost measure, as any attribution of these costs to an operating site would not necessarily be reflective of costs directly attributable to the administration of the site.

25

Cash and All-in Sustaining Costs can be reconciled to the Company's production costs as follows:

Three months ended March 31, 2020

Operations

Candelaria

Chapada

Eagle

Neves-Corvo

Zinkgruvan

Total

($000s, unless otherwise noted)

(Cu)

(Cu)

(Ni)

(Cu)

(Zn)

Sales volumes (Contained metal in concentrate):

Tonnes

37,766

11,487

2,809

7,728

14,284

Pounds (000s)

83,260

25,324

6,193

17,037

31,491

Production costs

278,685

Less: Royalties and other

(9,872)

268,813

Deduct: By-product credits

(103,260)

Add: Treatment and refining charges

29,575

Cash cost

108,680

23,276

8,871

38,160

16,141

195,128

Cash cost per pound ($/lb)

1.31

0.92

1.43

2.24

0.51

Add: Sustaining capital expenditure

76,580

3,724

5,431

15,801

7,934

Royalties

-

2,238

4,863

412

-

Interest expense

1,216

968

312

74

129

Leases & other

1,761

712

2,199

1,470

773

All-in sustaining cost

188,237

30,918

21,676

55,917

24,977

AISC per pound ($/lb)

2.26

1.22

3.50

3.28

0.79

Three months ended March 31, 2019

Operations

Candelaria

Chapada

Eagle

Neves-Corvo

Zinkgruvan

Total

($000s, unless otherwise noted)

(Cu)

(Cu)

(Ni)

(Cu)

(Zn)

Sales volumes (Contained metal in concentrate):

Tonnes

31,073

-

1,691

7,710

16,026

Pounds (000s)

68,504

-

3,728

16,998

35,331

Production costs

205,070

Less: Royalties and other

(4,146)

200,924

Deduct: By-product credits

(88,143)

Add: Treatment and refining charges

30,973

Cash cost

111,103

-

1,372

15,589

15,690

143,754

Cash cost per pound ($/lb)

1.62

-

0.37

0.92

0.44

Add: Sustaining capital expenditure

112,815

-

2,756

10,681

8,397

Royalties

-

-

1,204

1,554

-

Interest expense

1,477

-

489

193

76

Leases & other

779

-

315

1,164

299

All-in sustaining cost

226,174

-

6,136

29,181

24,462

AISC per pound ($/lb)

3.30

-

1.65

1.72

0.69

26

Managing Risks

Risks and Uncertainties

The Company's business activities are subject to a variety and wide range of inherent risks and uncertainties. Any of these risks could have an adverse effect on the Company, its business and prospects, and could cause actual outcomes and results to differ materially from those described in forward-looking statements relating to the Company.

For a detailed discussion on Lundin Mining's risks, refer to the "Risks and Uncertainties" section of the Company's most recently filed Annual Information Form ("AIF").

Management's Report on Internal Controls

Disclosure controls and procedures ("DCP")

DCP have been designed to provide reasonable assurance that all material information related to the Company is identified and communicated on a timely basis. Management of the Company, under the supervision of the President and Chief Executive Officer and the Chief Financial Officer, is responsible for the design and operation of DCP.

Internal control over financial reporting ("ICFR")

The Company's ICFR is designed to provide reasonable assurance regarding the reliability of financial reporting and preparation of financial statements for external purposes in accordance with IFRS. However, due to inherent limitations ICFR may not prevent or detect all misstatements and fraud. Management will continue to monitor the effectiveness of its ICFR and may make modifications from time to time as considered necessary.

Control Framework

Management assesses the effectiveness of the Company's ICFR using the Internal Control - Integrated Framework (2013 Framework) issued by the Committee of Sponsoring Organizations of the Treadway Commission ('COSO').

Changes in ICFR

There have been no changes in the Company's ICFR during the three-month period ended March 31, 2020 that have materially affected, or are reasonably likely to materially affect, the Company's financial reporting.

Outstanding Share Data

As at April 29, 2020, the Company has 733,574,447 common shares issued and outstanding, and 13,061,030 stock options and 2,705,600 share units outstanding under the Company's incentive plans.

Other Information

Additional information regarding the Company is included in the Company's AIF which is filed with the Canadian securities regulators. A copy of the Company's AIF can be obtained on SEDAR (www.sedar.com) or on the Company's website (www.lundinmining.com).

27

Condensed Interim Consolidated Financial Statements of

Lundin Mining Corporation

March 31, 2020 (Unaudited)

LUNDIN MINING CORPORATION

CONDENSED INTERIM CONSOLIDATED BALANCE SHEETS

March 31,

December 31,

(Unaudited - in thousands of US dollars)

2020

2019

ASSETS

$

366,920

Cash and cash equivalents (Note 3)

$

250,563

Trade and other receivables (Note 4)

225,365

335,782

Income taxes receivable

61,204

52,523

Inventories (Note 5)

217,630

216,503

Other current assets

15,780

14,330

Total current assets

886,899

869,701

Restricted cash

43,401

47,666

Long-term inventory (Note 5)

577,448

550,561

Other non-current assets

5,099

7,970

Mineral properties, plant and equipment (Note 6)

4,991,480

5,065,556

Investment in associate

28,856

28,957

Deferred tax assets

97,579

104,627

Goodwill

239,802

242,208

5,983,665

6,047,545

Total assets

$

6,870,564

$

6,917,246

LIABILITIES

$

362,429

Trade and other payables (Note 7)

$

370,067

Income taxes payable

43,958

66,825

Current portion of debt and lease liabilities (Note 8)

104,754

80,782

Current portion of deferred revenue (Note 9)

83,525

83,960

Current portion of reclamation and other closure provisions (Note 10)

3,325

3,735

Total current liabilities

597,991

605,369

Debt and lease liabilities (Note 8)

377,824

227,767

Deferred revenue (Note 9)

662,849

674,186

Reclamation and other closure provisions (Note 10)

350,674

380,049

Other long-term liabilities

84,433

84,837

Provision for pension obligations

9,487

10,938

Deferred tax liabilities

660,845

636,700

2,146,112

2,014,477

Total liabilities

2,744,103

2,619,846

SHAREHOLDERS' EQUITY

4,182,994

Share capital (Note 11)

4,184,667

Contributed surplus

51,134

51,339

Accumulated other comprehensive loss

(317,500)

(284,649)

Deficit

(312,425)

(178,298)

Equity attributable to Lundin Mining Corporation shareholders

3,604,203

3,773,059

Non-controlling interests

522,258

524,341

4,126,461

4,297,400

$

6,870,564

$

6,917,246

Commitments and contingencies (Note 19)

The accompanying notes are an integral part of these condensed interim consolidated financial statements.

- 1 -

LUNDIN MINING CORPORATION

CONDENSED INTERIM CONSOLIDATED STATEMENTS OF (LOSS) EARNINGS (Unaudited - in thousands of US dollars, except for shares and per share amounts)

Three months ended March 31,

2020

2019

Revenue (Note 12)

$

377,985

$

416,384

Cost of goods sold

(278,685)

Production costs (Note 13)

(205,070)

Depreciation, depletion and amortization

(121,975)

(70,104)

Gross (loss) profit

(22,675)

141,210

General and administrative expenses

(11,944)

(13,618)

General exploration and business development

(13,215)

(18,700)

Finance income (Note 15)

371

5,066

Finance costs (Note 15)

(16,535)

(8,802)

Loss from equity investment in associate

(84)

(11,935)

Other income (expense) (Note 16)

29,045

(1,427)

(Loss) earnings before income taxes

(35,037)

91,794

Current tax expense (Note 17)

(26,163)

(25,708)

Deferred tax expense (Note 17)

(52,368)

(5,137)

Net (loss) earnings

$

(113,568)

$

60,949

Net (loss) earnings attributable to:

$

(111,485)

Lundin Mining Corporation shareholders

$

51,666

Non-controlling interests

(2,083)

9,283

Net (loss) earnings

$

(113,568)

$

60,949

Basic and diluted (loss) earnings per share attributable to Lundin Mining Corporation

(0.15)

shareholders

$

$

0.07

Weighted average number of shares outstanding (Note 11)

734,487,266

Basic

735,256,205

Diluted

734,487,266

736,073,671

The accompanying notes are an integral part of these condensed interim consolidated financial statements.

- 2 -

LUNDIN MINING CORPORATION

CONDENSED INTERIM CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME (Unaudited - in thousands of US dollars)

Three months ended March 31,

2020

2019

Net (loss) earnings

$

(113,568)

$

60,949

Other comprehensive (loss) income, net of taxes

Item that may be reclassified subsequently to net (loss) earnings:

(32,851)

Effects of foreign exchange

(20,151)

Other comprehensive loss

(32,851)

(20,151)

Total comprehensive (loss) income

$

(146,419)

$

40,798

Comprehensive (loss) income attributable to:

(144,336)

Lundin Mining Corporation shareholders

$

31,515

Non-controlling interests

(2,083)

9,283

Total comprehensive (loss) income

$

(146,419)

$

40,798

The accompanying notes are an integral part of these condensed interim consolidated financial statements.

- 3 -

LUNDIN MINING CORPORATION

CONDENSED INTERIM CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (Unaudited - in thousands of US dollars, except for shares)

Accumulated

other

Non-

Number of

Share

Contributed

comprehensive

controlling

shares

capital

surplus

loss

Deficit

interests

Total

Balance, December 31, 2019

734,233,642

$

4,184,667

$

51,339

$

(284,649)

$

(178,298)

$

524,341

$

4,297,400

Exercise of share-based awards

932,405

5,251

(3,194)

-

-

-

2,057

Share-based compensation

-

-

2,989

-

-

-

2,989

Dividends declared (Note 11(c))

-

-

-

-

(22,139)

-

(22,139)

Share purchase (Note 11(d))

(1,591,600)

(6,924)

-

-

(503)

-

(7,427)

Net loss

-

-

-

-

(111,485)

(2,083)

(113,568)

Other comprehensive loss

-

-

-

(32,851)

-

-

(32,851)

Total comprehensive loss

-

-

-

(32,851)

(111,485)

(2,083)

(146,419)

Balance, March 31, 2020

733,574,447

$

4,182,994

$

51,134

$

(317,500)

$

(312,425)

$

522,258

$

4,126,461

Balance, January 1, 2019

733,534,879

$

4,177,660

$

49,424

$

(260,179)

$

(275,759)

$

502,420

$

4,193,566

Exercise of share-based awards

2,779,980

13,964

(7,605)

-

-

-

6,359

Share-based compensation

-

-

4,696

-

-

-

4,696

Dividends declared

-

-

-

-

(16,611)

-

(16,611)

Net earnings

-

-

-

-

51,666

9,283

60,949

Other comprehensive loss

-

-

-

(20,151)

-

-

(20,151)

Total comprehensive (loss) income

-

-

-

(20,151)

51,666

9,283

40,798

Balance, March 31, 2019

736,314,859

$

4,191,624

$

46,515

$

(280,330)

$

(240,704)

$

511,703

$

4,228,808

The accompanying notes are an integral part of these condensed interim consolidated financial statements.

- 4 -

LUNDIN MINING CORPORATION

CONDENSED INTERIM CONSOLIDATED STATEMENTS OF CASH FLOW (Unaudited - in thousands of US dollars)

Cash provided by (used in)

Three months ended March 31,

2020

2019

Operating activities

$

(113,568)

Net (loss) earnings

$

60,949

Items not involving cash and other adjustments

121,975

Depreciation, depletion and amortization

70,104

Share-based compensation

2,989

4,696

Foreign exchange (gain) loss

(25,274)

554

Finance costs, net

16,164

3,736

Recognition of deferred revenue (Note 9)

(18,004)

(12,524)

Deferred tax expense

52,368

5,137

Loss from equity investment in associate

84

11,935

Revaluation of derivative asset and liability (Note 16)

4,838

(170)

Revaluation of marketable securities (Note 16)

2,188

8

Other

3,036

627

Reclamation payments (Note 10)

(655)

(4,165)

Other payments

(460)

(2,390)

Changes in long-term inventory

(17,799)

624

Changes in non-cash working capital items (Note 22)

55,529

(76,981)

83,411

62,140

Investing activities

(141,066)

Investment in mineral properties, plant and equipment

(181,997)

Contingent consideration received (Note 4)

25,714

-

Interest received

378

4,124

Other

621

596

(114,353)

(177,277)

Financing activities

(3,564)

Interest paid

(1,387)

Share purchase (Note 11)

(7,427)

-

Principal payments of lease liabilities

(3,570)

(2,638)

Principal repayments of debt (Note 8)

(30,626)

-

Proceeds from debt (Note 8)

207,005

35,000

Proceeds from common shares issued

2,057

6,359

163,875

37,334

Effect of foreign exchange on cash balances

(16,576)

(2,884)

Increase (decrease) in cash and cash equivalents during the period

116,357

(80,687)

Cash and cash equivalents, beginning of period

250,563

815,429

Cash and cash equivalents, end of period

$

366,920

$

734,742

Supplemental cash flow information (Note 22)

The accompanying notes are an integral part of these condensed interim consolidated financial statements.

- 5 -

LUNDIN MINING CORPORATION

Notes to condensed interim consolidated financial statements

For the three months ended March 31, 2020

(Unaudited - Tabular amounts in thousands of US dollars, except for shares and per share amounts)

  1. NATURE OF OPERATIONS
    Lundin Mining Corporation (the "Company") is a diversified Canadian base metals mining company primarily producing copper, zinc, gold and nickel. The Company's wholly-owned operating assets include the Chapada mine located in Brazil, the Eagle mine located in the United States of America ("USA"), the Neves-Corvo mine located in Portugal, and the Zinkgruvan mine located in Sweden. The Company also owns 80% of the Candelaria and Ojos del Salado mining complex ("Candelaria") located in Chile.
    The Company's common shares are listed on the Toronto Stock Exchange ("TSX") in Canada and the Nasdaq Stockholm Exchange in Sweden. The Company is incorporated under the Canada Business Corporations Act. The Company is domiciled in Canada and its registered address is 150 King Street West, Toronto, Ontario, Canada.
  2. BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES
    1. Basis of presentation and measurement
      The unaudited condensed interim consolidated financial statements have been prepared in accordance with International Financial Reporting Standards ("IFRS") as issued by the International Accounting Standards Board ("IASB") and Interpretations of the International Financial Reporting Interpretations Committee ("IFRIC") which the Canadian Accounting Standards Board has approved for incorporation into Part 1 of the CPA Canada Handbook - Accounting including IAS 34 Interim financial reporting. The condensed interim consolidated financial statements should be read in conjunction with the annual consolidated financial statements for the year ended December 31, 2019.
      The consolidated financial statements have been prepared on a historical cost basis except for certain financial instruments which have been measured at fair value.
      The Company's presentation currency is United States ("US") dollars. Reference herein of $ or USD is to US dollars, C$ is to Canadian dollars, SEK is to Swedish krona, € refers to the Euro, CLP refers to the Chilean peso and BRL refers to the Brazilian real.
      Balance sheet items are classified as current if receipt or payment is due within twelve months. Otherwise, they are presented as non-current.
      These condensed interim consolidated financial statements were approved by the Board of Directors for issue on April 29, 2020.
    2. Critical accounting estimates and judgments in applying the entity's accounting policies
      Areas of judgment that have the most significant effect on the amounts recognized in the financial statements are disclosed in Note 2 of the Company's consolidated financial statements for the year ended December 31, 2019, except for those noted below.
      On March 11, 2020, the World Health Organization declared the rapidly spreading COVID-19 outbreak a global pandemic. The Company has been closely monitoring developments in the COVID-19 outbreak since January 2020 and has implemented preventive measures to ensure the safety of its workforce and local communities. To date, there have been no outbreaks of COVID-19 at any of the Company's sites and there have been no significant disruptions to production, shipment of concentrate or supply chain. However, the Company has made changes to its business and how it operates in order to minimize the risks to employees, communities and other stakeholders. The Zinc Expansion Project at Neves-Corvo has been temporarily suspended and new procedures have been implemented at all operations to reduce the risk of the spread of COVID-19.
      • 6 -

LUNDIN MINING CORPORATION

Notes to condensed interim consolidated financial statements

For the three months ended March 31, 2020

(Unaudited - Tabular amounts in thousands of US dollars, except for shares and per share amounts)

The Company continues to manage and respond to COVID-19 within the framework of its Pandemic Response Plan, along with recommendations of health authorities and local and national regulatory requirements. The Company has implemented business continuity measures in an effort to mitigate and minimize potential impacts of this pandemic.

As at March 31, 2020, a trigger of impairment of long-lived assets was identified. As a result, an impairment assessment was performed with no impairments identified. Future metal prices, exchange rates, discount rates and other key assumptions used in the Company's assessment are subject to greater uncertainty given the current economic environment. Changes in these assumptions could significantly impact the valuation of the Company's assets in the future.

The carrying value of the Neves-Corvo cash generating unit of $979.5 million, Chapada's ore stockpile of $260.5 million, and deferred tax assets of $32.8 million relating to Eagle are most sensitive to changes in these key assumptions.

  1. Significant accounting policies
    The accounting policies followed in these condensed interim consolidated financial statements are consistent with those disclosed in Note 2 of the Company's consolidated financial statements for the year ended December 31, 2019.

3. CASH AND CASH EQUIVALENTS

Cash and cash equivalents are comprised of the following:

March 31,

December 31,

2020

2019

Cash

$

337,882

$

233,466

Short-term deposits

29,038

17,097

$

366,920

$

250,563

4. TRADE AND OTHER RECEIVABLES

Trade and other receivables are comprised of the following:

March 31,

December 31,

2020

2019

Trade receivables

$

161,472

$

229,730

Value added tax

30,506

44,948

Prepaid expenses

20,477

21,726

Other receivables

12,910

39,378

$

225,365

$

335,782

In 2019, other receivables included $25.7 million for contingent consideration due under the terms of the TF Holdings Limited disposal that occurred in 2017. The Company received this payment in January 2020.

- 7 -

LUNDIN MINING CORPORATION

Notes to condensed interim consolidated financial statements

For the three months ended March 31, 2020

(Unaudited - Tabular amounts in thousands of US dollars, except for shares and per share amounts)

5. INVENTORIES

Inventories are comprised of the following:

March 31,

December 31,

2020

2019

Ore stockpiles

$

55,972

$

49,696

Concentrate stockpiles

37,147

44,015

Materials and supplies

124,511

122,792

$

217,630

$

216,503

Long-term inventory is comprised of ore stockpiles. As at March 31, 2020, the Company had $316.9 million (December 31, 2019 - $297.3 million) and $260.5 million (December 31, 2019 - $253.3 million) of long-term ore stockpiles at Candelaria and Chapada, respectively.

6. MINERAL PROPERTIES, PLANT AND EQUIPMENT

Mineral properties, plant and equipment are comprised of the following:

Mineral

Plant and

Assets under

Cost

properties

equipment

construction

Total

As at January 1, 2019

$

3,656,432

$

2,458,440

$

350,269

$

6,465,141

Additions

72,733

372

108,879

181,984

Disposals and transfers

(479)

91,276

(91,804)

(1,007)

Effects of foreign exchange

(35,347)

(13,793)

(3,885)

(53,025)

As at March 31, 2019

3,693,339

2,536,295

363,459

6,593,093

Chapada acquisition

672,642

237,371

18,700

928,713

Additions

156,870

29,690

378,092

564,652

Disposals and transfers

125,703

178,625

(333,359)

(29,031)

Effects of foreign exchange

(948)

(116)

745

(319)

As at December 31, 2019

4,647,606

2,981,865

427,637

8,057,108

Additions

29,931

4,096

70,116

104,143

Disposals and transfers

2,995

68,071

(71,777)

(711)

Effects of foreign exchange

(62,932)

(25,662)

(6,856)

(95,450)

As at March 31, 2020

$

4,617,600

$

3,028,370

$

419,120

$

8,065,090

- 8 -

LUNDIN MINING CORPORATION

Notes to condensed interim consolidated financial statements

For the three months ended March 31, 2020

(Unaudited - Tabular amounts in thousands of US dollars, except for shares and per share amounts)

Accumulated depreciation,

Mineral

Plant and

Assets under

depletion and amortization

properties

equipment

construction

Total

As at January 1, 2019

$

1,719,761

$

883,198

$

-

$

2,602,959

Depreciation

31,415

42,257

-

73,672

Disposals and transfers

-

(138)

-

(138)

Effects of foreign exchange

(21,937)

(7,154)

-

(29,091)

As at March 31, 2019

1,729,239

918,163

-

2,647,402

Depreciation

226,823

140,817

-

367,640

Disposals and transfers

(282)

(22,579)

-

(22,861)

Effects of foreign exchange

(624)

(5)

-

(629)

As at December 31, 2019

1,955,156

1,036,396

-

2,991,552

Depreciation

85,631

50,084

-

135,715

Disposals and transfers

-

(296)

-

(296)

Effects of foreign exchange

(40,524)

(12,837)

-

(53,361)

As at March 31, 2020

$

2,000,263

$

1,073,347

$

-

$

3,073,610

Mineral

Plant and

Assets under

Net book value

properties

equipment

construction

Total

As at December 31, 2019

$

2,692,450

$

1,945,469

$

427,637

$

5,065,556

As at March 31, 2020

$

2,617,337

$

1,955,023

$

419,120

$

4,991,480

During the three months ended March 31, 2020, the Company capitalized $3.1 million (Q1 2019 - $2.3 million) of finance costs to assets under construction, at a weighted average interest rate of 4.4% (Q1 2019 - 5.1%).

During the three months ended March 31, 2020, the Company capitalized $33.9 million (Q1 2019 - $50.6 million) of deferred stripping costs to mineral properties. The depreciation expense related to deferred stripping for the current quarter was $41.0 million (Q1 2019 - $3.2 million). Included in the mineral properties balance at March 31, 2020 is $237.3 million (December 31, 2019 - $205.4 million) related to deferred stripping at Candelaria and $87.6 million (December 31, 2019 - $84.3 million) related to underground development of the Zinc Expansion Project at the Neves- Corvo mine, which are currently non-depreciable.

- 9 -

LUNDIN MINING CORPORATION

Notes to condensed interim consolidated financial statements

For the three months ended March 31, 2020

(Unaudited - Tabular amounts in thousands of US dollars, except for shares and per share amounts)

The Company leases various assets including buildings, rail cars, vehicles, machinery and equipment. The following table summarizes the changes in right-of-use assets within plant and equipment:

Plant and equipment

Net book value

As at January 1, 2019

$

43,262

Additions

347

Depreciation

(2,574)

Effects of foreign exchange

(67)

As at March 31, 2019

40,968

Additions

15,318

Depreciation

(10,068)

Disposals

(1,800)

Effects of foreign exchange

(54)

As at December 31, 2019

44,364

Additions

3,595

Depreciation

(3,512)

Effects of foreign exchange

(530)

As at March 31, 2020

$

43,917

The Company acts as lessee in certain leases that contain variable lease payment terms that are primarily based on usage of the right-of-use assets.

7. TRADE AND OTHER PAYABLES

Trade and other payables are comprised of the following:

March 31,

December 31,

2020

2019

Trade payables

$

165,404

$

188,430

Unbilled goods and services

68,411

72,702

Employee benefits payable

45,779

59,792

Chapada derivative liability - current portion

24,584

22,472

Dividends payable

20,731

-

Royalties payable

10,731

8,769

Prepayment from customer

9,794

6,562

Other

16,995

11,340

$

362,429

$

370,067

- 10 -

LUNDIN MINING CORPORATION

Notes to condensed interim consolidated financial statements

For the three months ended March 31, 2020

(Unaudited - Tabular amounts in thousands of US dollars, except for shares and per share amounts)

8. DEBT AND LEASE LIABILITIES

Debt and lease liabilities are comprised of the following:

March 31,

December 31,

2020

2019

Revolving credit facility (a)

$

342,912

$

222,762

Term loans (b)

90,000

35,000

Lease liabilities (c)

40,341

42,616

Line of credit (d)

9,325

8,171

Debt and lease liabilities

482,578

308,549

Less: current portion

104,754

80,782

Long-term portion

$

377,824

$

227,767

The changes in debt and lease liabilities are comprised of the following:

Leases

Debt

Total

As at January 1, 2019

$

42,644

$

-

$

42,644

Additions

1,054

35,000

36,054

Payments

(2,953)

-

(2,953)

Interest

316

-

316

Effects of foreign exchange

(171)

-

(171)

As at March 31, 2019

40,890

35,000

75,890

Additions

12,848

418,418

431,266

Payments

(10,530)

(187,754)

(198,284)

Disposals

(1,870)

-

(1,870)

Interest

1,325

-

1,325

Financing fee amortization

-

196

196

Effects of foreign exchange

(47)

73

26

As at December 31, 2019

42,616

265,933

308,549

Additions

2,996

207,005

210,001

Payments

(3,920)

(30,626)

(34,546)

Interest

350

-

350

Financing fee amortization

-

150

150

Effects of foreign exchange

(1,701)

(225)

(1,926)

As at March 31, 2020

40,341

442,237

482,578

Less: current portion

12,267

92,487

104,754

Long-term portion

$

28,074

$

349,750

$

377,824

  1. The Company has a secured revolving credit facility of $800.0 million with a $200.0 million accordion option, maturing in August 2023. The credit facility bears interest on drawn funds at rates of LIBOR +1.75% to LIBOR +2.75%, depending on the Company's net leverage ratio. The revolving credit facility is subject to customary covenants. During the first quarter of 2020, the Company repaid $30.0 million and subsequently drew down $150.0 million on the credit facility. As at March 31, 2020, the balance outstanding was $345.0 million (December 31, 2019 - $225.0 million), along with letters of credit totaling $22.5 million (SEK 162.0 million and €5.9 million) (December 31, 2019 - $23.6 million). Deferred financing fees of $2.0 million, at March 31, 2020, have been netted against borrowings.

- 11 -

LUNDIN MINING CORPORATION

Notes to condensed interim consolidated financial statements

For the three months ended March 31, 2020

(Unaudited - Tabular amounts in thousands of US dollars, except for shares and per share amounts)

  1. During 2019, Candelaria obtained an unsecured fixed term loan ("Term loan A") in the amount of $50.0 million, of which $15.0 million was subsequently repaid. The net balance accrues interest at a rate of 2.2% per annum, with interest payable upon maturity on August 29, 2020. During the first quarter of 2020, Candelaria obtained two additional unsecured fixed term loans ("Term loan B" and "Term loan C") in the amount of $20.0 million and $35.0 million, respectively. Term loan B accrues interest at a rate of 2.3% per annum, with interest payable upon maturity on January 28, 2021. Term loan C accrues interest at a rate of 2.7% per annum, with interest payable upon maturity on March 1, 2021. As at March 31, 2020, the total balance outstanding was $90.0 million (December 31, 2019 - $35.0 million).
  2. Lease liabilities relate to leases on buildings, rail cars, vehicles, machinery and equipment which have remaining lease terms of one to fifteen years and interest rates of 0.8% - 7.1% over the terms of the leases.
  3. Sociedade Mineira deNeves-Corvo, S.A. ("Somincor"), a subsidiary of the Company which owns the Neves-Corvo mine, has a $27.4 million (€25.0 million) line of credit for equipment financing. During the first quarter of 2020, Somincor drew down $2.0 million (€1.8 million) on the line of credit for purchases of equipment. As at March 31, 2020, the balance outstanding was $9.3 million (€8.5 million). Interest rates vary from a fixed rate of 0.88% to EURIBOR +0.84%, dependent on the piece of equipment, with the debt maturing throughout 2023 and 2024.

The schedule of undiscounted lease payment and debt obligations is as follows:

Leases

Debt

Total

Less than one year

$

13,775

$

92,487

$

106,262

One to five years

24,343

351,838

376,181

More than five years

4,120

-

4,120

Total undiscounted obligations as at March 31, 2020

$

42,238

$

444,325

$

486,563

9. DEFERRED REVENUE

The following table summarizes the changes in deferred revenue:

As at December 31, 2018

$

588,854

Recognition of revenue

(12,524)

Finance costs

7,503

Effects of foreign exchange

(1,019)

As at March 31, 2019

582,814

Chapada acquisition

175,360

Recognition of revenue

(46,571)

Variable consideration adjustment

18,227

Finance costs

28,268

Effects of foreign exchange

48

As at December 31, 2019

758,146

Recognition of revenue

(18,004)

Finance costs

10,290

Effects of foreign exchange

(4,058)

As at March 31, 2020

746,374

Less: current portion

83,525

Long-term portion

$

662,849

- 12 -

LUNDIN MINING CORPORATION

Notes to condensed interim consolidated financial statements

For the three months ended March 31, 2020

(Unaudited - Tabular amounts in thousands of US dollars, except for shares and per share amounts)

Consideration from the Company's stream agreements are considered variable. Gold, silver and copper revenue can be subject to cumulative adjustments when the volume to be delivered under the contracts changes. In 2019, the Company recognized an adjustment to gold and silver revenue and finance costs due to an increase in the Company's Mineral Resources and Mineral Reserves estimates.

10. RECLAMATION AND OTHER CLOSURE PROVISIONS

Reclamation and other closure provisions relating to the Company's mining operations are as follows:

Reclamation

Other closure

provisions

provisions

Total

Balance, December 31, 2018

$

253,484

$

45,206

$

298,690

Accretion

1,970

-

1,970

Changes in estimate

1,038

18

1,056

Changes in discount rate

929

-

929

Payments

(4,165)

-

(4,165)

Effects of foreign exchange

(2,037)

(1,090)

(3,127)

Balance, March 31, 2019

251,219

44,134

295,353

Chapada acquisition

71,154

-

71,154

Accretion

7,755

-

7,755

Changes in estimate

(3,524)

(3,535)

(7,059)

Changes in discount rate

22,816

-

22,816

Payments

(6,330)

-

(6,330)

Effects of foreign exchange

22

73

95

Balance, December 31, 2019

343,112

40,672

383,784

Accretion

2,699

-

2,699

Changes in estimate

(26,666)

(15)

(26,681)

Changes in discount rate

2,186

-

2,186

Payments

(655)

-

(655)

Effects of foreign exchange

(3,795)

(3,539)

(7,334)

Balance, March 31, 2020

316,881

37,118

353,999

Less: current portion

3,325

-

3,325

Long-term portion

$

313,556

$

37,118

$

350,674

The Company expects these liabilities to be settled between 2020 and 2055. The provisions are discounted using current market pre-tax discount rates which range from 0.1% to 8.2% (December 31, 2019 - 0.3% to 7.0%).

- 13 -

LUNDIN MINING CORPORATION

Notes to condensed interim consolidated financial statements

For the three months ended March 31, 2020

(Unaudited - Tabular amounts in thousands of US dollars, except for shares and per share amounts)

11. SHARE CAPITAL

  1. Basic and diluted weighted average number of shares outstanding

Three months ended March 31,

2020

2019

Basic weighted average number of shares outstanding

734,487,266

735,256,205

Effect of dilutive securities (i)

-

817,466

Diluted weighted average number of shares outstanding

734,487,266

736,073,671

Antidilutive securities

4,268,500

4,602,500

  1. As a result of the Company's net loss position for the current quarter, 1,022,578 shares that would have been dilutive had the Company been in a net earnings position were excluded from diluted weighted average number of shares outstanding.

The effect of dilutive securities relates to in-the-money outstanding stock options and share units ("SUs").

b) Stock options and SUs granted

Three months ended March 31,

2020

2019

Stock options

3,899,000

3,934,000

SUs

1,002,500

1,029,500

  1. Dividends
    During the three months ended March 31, 2020, the Company declared dividends in the amount of $22.1 million (Q1 2019 - $16.6 million) or C$0.04 per share (Q1 2019 - C$0.03) payable on April 8, 2020.
  2. Normal course issuer bid
    In 2019, the Company obtained approval from the TSX for the renewal of its normal course issuer bid ("NCIB") to purchase up to 63,797,653 common shares between December 9, 2019 and December 8, 2020. Daily purchases (other than pursuant to a block purchase exemption) on the TSX under the NCIB are limited to a maximum of 517,131 common shares. The price that the Company will pay for common shares in open market transactions will be the market price at the time of purchase.
    For the three months ended March 31, 2020, 1,591,600 shares were purchased under the NCIB at an average price of C$6.24 per share for total consideration of $7.4 million. All the common shares purchased have been cancelled. No common shares were purchased under the NCIB during the three months ended March 31, 2019.

- 14 -

LUNDIN MINING CORPORATION

Notes to condensed interim consolidated financial statements

For the three months ended March 31, 2020

(Unaudited - Tabular amounts in thousands of US dollars, except for shares and per share amounts)

12. REVENUE

The Company's analysis of revenue from contracts with customers segmented by product is as follows:

Three months ended March 31,

2020

2019

Copper

$

307,530

$

245,454

Gold

56,341

22,605

Zinc

40,465

77,836

Nickel

36,357

16,209

Lead

9,983

9,994

Silver

7,652

7,063

Other

5,387

2,957

463,715

382,118

Provisional pricing adjustments on concentrate sales

(85,730)

34,266

Revenue

$

377,985

$

416,384

The Company's geographical analysis of revenue from contracts with customers segmented based on the destination of product is as follows:

Three months ended March 31,

2020

2019

Asia

$

204,062

$

183,342

Europe

186,103

161,413

North America

55,971

25,348

South America

17,579

12,015

463,715

382,118

Provisional pricing adjustments on concentrate sales

(85,730)

34,266

Revenue

$

377,985

$

416,384

13. PRODUCTION COSTS

The Company's production costs are comprised of the following:

Three months ended March 31,

2020

2019

Direct mine and mill costs

$

248,913

$

186,960

Transportation

22,259

15,352

Royalties

7,513

2,758

Total production costs

$

278,685

$

205,070

- 15 -

LUNDIN MINING CORPORATION

Notes to condensed interim consolidated financial statements

For the three months ended March 31, 2020

(Unaudited - Tabular amounts in thousands of US dollars, except for shares and per share amounts)

14. EMPLOYEE BENEFITS

The Company's employee benefits are comprised of the following:

Three months ended March 31,

2020

2019

Production costs

$

58,824

Wages and benefits

$

57,253

Retirement benefits

771

231

Share-based compensation

761

1,125

General and administrative expenses

60,356

58,609

4,851

Wages and benefits

5,939

Retirement benefits

291

207

Share-based compensation

2,174

3,509

General exploration and business development

7,316

9,655

1,108

Wages and benefits

2,096

Retirement benefits

13

16

Share-based compensation

54

62

1,175

2,174

Total employee benefits

$

68,847

$

70,438

15. FINANCE INCOME AND COSTS

The Company's finance income and costs are comprised of the following:

Three months ended March 31,

2020

2019

Interest income

$

371

$

4,066

Deferred revenue finance costs

(7,639)

(5,203)

Interest expense and bank fees

(2,920)

(1,313)

Accretion expense on reclamation provisions

(2,699)

(1,970)

Lease liability interest

(350)

(316)

Other

(2,927)

1,000

Total finance costs, net

$

(16,164)

$

(3,736)

Finance income

$

371

$

5,066

Finance costs

(16,535)

(8,802)

Total finance costs, net

$

(16,164)

$

(3,736)

- 16 -

LUNDIN MINING CORPORATION

Notes to condensed interim consolidated financial statements

For the three months ended March 31, 2020

(Unaudited - Tabular amounts in thousands of US dollars, except for shares and per share amounts)

16. OTHER INCOME AND EXPENSE

The Company's other income and expense are comprised of the following:

Three months ended March 31,

2020

2019

Foreign exchange gain (loss)

$

39,829

$

(1,595)

Revaluation of marketable securities

(2,188)

(8)

Revaluation of derivative asset and liability

(4,838)

170

Other (expense) income

(3,758)

6

Total other income (expense), net

$

29,045

$

(1,427)

  1. INCOME TAXES
    Income tax expense is recognized based on management's estimate of the weighted average annual income tax rate expected for the full financial year.
  2. FAIR VALUES OF FINANCIAL INSTRUMENTS
    The Company's financial assets and financial liabilities have been classified into categories that determine their basis of measurement. The following table shows the carrying values, fair values and fair value hierarchy of the Company's financial instruments as at March 31, 2020 and December 31, 2019:

March 31, 2020

December 31, 2019

Carrying

Carrying

Level

value

Fair value

value

Fair value

Financial assets

Fair value through profit or loss

Restricted cash

1

$

43,401

$

43,401

$

47,666

$

47,666

Trade receivables (provisional)

2

154,060

154,060

203,565

203,565

Marketable securities

1

1,815

1,815

4,331

4,331

Derivative asset

2

-

-

25,714

25,714

$

199,276

$

199,276

$

281,276

$

281,276

Financial liabilities

Amortized cost

$

442,237

$

442,237

Debt

2

$

265,933

$

265,933

Fair value through profit or loss

$

96,655

$

96,655

Chapada derivative liability

2

$

91,817

91,817

Fair values of financial instruments are determined by valuation methods depending on hierarchy levels as defined below:

Level 1 - Quoted market price in active markets for identical assets or liabilities.

Level 2 - Inputs other than quoted market prices included within Level 1 that are observable for the assets or liabilities, either directly (i.e. observed prices) or indirectly (i.e. derived from prices).

- 17 -

LUNDIN MINING CORPORATION

Notes to condensed interim consolidated financial statements

For the three months ended March 31, 2020

(Unaudited - Tabular amounts in thousands of US dollars, except for shares and per share amounts)

Level 3 - Inputs for the assets or liabilities are not based on observable market data.

The Company calculates fair values based on the following methods of valuation and assumptions:

Marketable securities/restricted cash - The fair value of investments in shares is determined based on the quoted market price.

Trade receivables - The fair value of the embedded derivatives on provisional sales are valued using quoted forward market prices. The Company recognized negative pricing adjustments of $85.7 million in revenue during the three months ended March 31, 2020 (Q1 2019 - $34.3 million positive pricing adjustments).

Derivative asset & derivative liabilities - The fair value of these derivatives is determined using a valuation model that incorporates such factors as metal prices, metal price volatility, expiry date, and risk-free interest rate.

Debt - The fair values approximate carrying values as the interest rates are comparable to current market rates.

The carrying values of certain financial instruments maturing in the short-term approximate their fair values. These financial instruments include cash and cash equivalents, trade and other receivables other than those provisionally priced, and trade and other payables which are classified as amortized cost.

19. COMMITMENTS AND CONTINGENCIES

  1. The Company has capital commitments of $119.6 million on various initiatives, of which $92.2 million is expected to be paid during 2020.
  2. The Company may be involved in legal proceedings arising in the ordinary course of business. The potential amount of the liability with respect to such legal proceedings is not expected to materially affect the Company's financial position.
  3. Significant changes to commitments and contingencies, since that reported at December 31, 2019, are described below:

In March 2020, a tax claim was filed with the Chilean tax court related to the 2016 tax assessment for additional withholding taxes on intercompany interest payments. No tax expense was accrued for this assessment as the Company believes its original filing position was in compliance with tax regulations and intends to vigorously defend this position.

20. SEGMENTED INFORMATION

The Company is engaged in mining, exploration and development of mineral properties, primarily in Chile, Brazil, USA, Portugal and Sweden. Operating segments are reported in a manner consistent with the internal reporting provided to executive management who act as the chief operating decision-maker. Executive management are responsible for allocating resources and assessing performance of the operating segments.

- 18 -

LUNDIN MINING CORPORATION

Notes to condensed interim consolidated financial statements

For the three months ended March 31, 2020

(Unaudited - Tabular amounts in thousands of US dollars, except for shares and per share amounts)

For the three months ended March 31, 2020

Candelaria

Chapada

Eagle

Neves-Corvo

Zinkgruvan

Other

Total

Chile

Brazil

USA

Portugal

Sweden

Revenue

$

172,972

$

84,121

$

47,337

$

45,777

$

27,778

$

-

$

377,985

Cost of goods sold

Production costs

(118,688)

(50,678)

(37,358)

(52,054)

(19,119)

(788)

(278,685)

Depreciation, depletion and amortization

(71,069)

(11,610)

(18,767)

(13,649)

(6,456)

(424)

(121,975)

Gross (loss) profit

(16,785)

21,833

(8,788)

(19,926)

2,203

(1,212)

(22,675)

General and administrative expenses

-

-

-

-

-

(11,944)

(11,944)

General exploration and business development

(4,663)

(794)

(96)

(1,172)

(3,832)

(2,658)

(13,215)

Finance costs

(7,897)

(4,042)

(422)

(526)

(905)

(2,372)

(16,164)

Loss from equity investment in associate

-

-

-

-

-

(84)

(84)

Other income (expense)

4,695

31,387

(544)

1,739

2,498

(10,730)

29,045

Income tax (expense) recovery

(2,727)

(76,213)

42

6,877

(2,712)

(3,798)

(78,531)

Net loss

$

(27,377)

$

(27,829)

$

(9,808)

$

(13,008)

$

(2,748)

$

(32,798)

$

(113,568)

Capital expenditures

$

76,580

$

3,724

$

5,431

$

47,198

$

7,934

$

199

$

141,066

- 19 -

LUNDIN MINING CORPORATION

Notes to condensed interim consolidated financial statements

For the three months ended March 31, 2020

(Unaudited - Tabular amounts in thousands of US dollars, except for shares and per share amounts)

For the three months ended March 31, 2019

Candelaria

Chapada

Eagle

Neves-Corvo

Zinkgruvan

Other

Total

Chile

Brazil

USA

Portugal

Sweden

Revenue

$

232,661

$

-

$

46,208

$

85,147

$

52,368

$

-

$

416,384

Cost of goods sold

Production costs

(114,203)

-

(17,575)

(53,800)

(18,321)

(1,171)

(205,070)

Depreciation, depletion and amortization

(39,799)

-

(10,175)

(12,603)

(7,064)

(463)

(70,104)

Gross profit (loss)

78,659

-

18,458

18,744

26,983

(1,634)

141,210

General and administrative expenses

-

-

-

-

-

(13,618)

(13,618)

General exploration and business development

(5,851)

-

(5,105)

(1,828)

(4,175)

(1,741)

(18,700)

Finance (costs) income

(8,019)

-

(173)

270

(850)

5,036

(3,736)

Loss from equity investment in associate

-

-

-

-

-

(11,935)

(11,935)

Other (expense) income

(1,818)

-

20

1,885

1,640

(3,154)

(1,427)

Income tax expense

(13,714)

-

(177)

(4,670)

(6,130)

(6,154)

(30,845)

Net earnings (loss)

$

49,257

$

-

$

13,023

$

14,401

$

17,468

$

(33,200)

$

60,949

Capital expenditures

$

108,946

$

-

$

9,612

$

53,247

$

10,149

$

43

$

181,997

- 20 -

LUNDIN MINING CORPORATION

Notes to condensed interim consolidated financial statements

For the three months ended March 31, 2020

(Unaudited - Tabular amounts in thousands of US dollars, except for shares and per share amounts)

21. RELATED PARTY TRANSACTIONS

  1. Transactions with associates- The Company enters into transactions related to its investment in associate. These transactions are entered into in the normal course of business and on an arm's length basis.
  2. Key management personnel -The Company has identified its directors and senior officers as its key management personnel. Employee benefits for key management personnel are as follows:

Three months ended March 31,

2020

2019

Wages and benefits

$

1,836

$

1,768

Pension benefits

41

38

Share-based compensation

1,160

870

$

3,037

$

2,676

22. SUPPLEMENTARY CASH FLOW INFORMATION

Three months ended March 31,

2020

2019

Changes in non-cash working capital items consist of:

$

64,553

Trade and income tax receivables, inventories, and other current assets

$

(18,135)

Trade and income taxes payable, and other current liabilities

(9,024)

(58,846)

$

55,529

$

(76,981)

Operating activities included the following cash payments:

$

40,121

Income taxes paid

$

50,409

- 21 -

Corporate Office

150 King Street West, Suite 2200, P.O. Box 38, Toronto, ON M5H 1J9

Phone: +1 416 342 5560 Fax: +1 416 348 0303

lundinmining.com

Attachments

  • Original document
  • Permalink

Disclaimer

Lundin Mining Corporation published this content on 29 April 2020 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 30 April 2020 14:07:06 UTC