Management's Discussion and Analysis

For the three and six months ended June 30, 2020

This management's discussion and analysis ("MD&A") has been prepared as of July 29, 2020 and should be read in conjunction with the Company's condensed interim consolidated financial statements for the three and six months ended June 30, 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 $ or USD is to United States dollars, C$ is to Canadian dollars, CLP is to Chilean pesos, BRL is to Brazilian reais, € refers to euros, and SEK is to Swedish kronor.

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 ........................................................................................................................

3

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

4

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

6

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

7

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

11

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

13

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

13

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

14

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

15

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

16

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

18

Eagle ......................................................................................................................................

19

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

20

Zinkgruvan .............................................................................................................................

22

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

23

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

24

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

25

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

25

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

26

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

31

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

31

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

31

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

Operations performed well in the quarter with copper production at all operations higher than the prior year comparable quarter and record combined throughput of over 1.0 million tonnes at Neves-Corvo. With the exception of Candelaria, production at all mines remain on target to achieve previously disclosed annual guidance, despite challenges of the COVID-19 pandemic. Furthermore, cash costs at all operations were in-line or better than expected. For Chapada and Eagle, annual cash cost guidance is improving by 24% and 15%, respectively.

As the Company adapts to a new way of operating under COVID-19, Lundin Mining continues to manage and respond to the pandemic within the framework of its Crisis Management and Pandemic Response Plan, along with recommendations of health authorities and local and national regulatory requirements. The Company has implemented preventative measures to ensure the safety of its workforce, local communities and other key stakeholders. The Zinc Expansion Project ("ZEP") at Neves-Corvo continues to be temporarily suspended and business continuity measures have been implemented at all of our sites in an effort to mitigate and minimize potential future impacts of this pandemic, particularly with travel and contractors from outside the immediate mine regions.

During the second quarter of 2020, the fast-growing infection rates in Brazil, Chile and the USA have increased the risk of outbreaks in the communities near Chapada, Candelaria and Eagle whereas rates of infection in the areas near our operations in Sweden and Portugal remained relatively stable. In the event of a localized outbreak in any of our operating jurisdictions, there may be a need to implement increased isolation and containment measures to prevent the spread of the virus. These actions could impact production levels, delay maintenance activities and disrupt supply chains.

To date, production disruptions have been minimal and there has been no significant disruption in the delivery or receipt of goods at our operations as a result of COVID-19.

Candelaria (80% owned): Candelaria produced 35,060 tonnes of copper, and approximately 21 thousand ounces of gold in concentrate on a 100% basis. Copper production for the quarter was higher than the prior year quarter primarily due to higher copper head grades and recoveries as more higher-grade open pit and underground ore was mined. However, throughput was lower than planned due to ore hardness, operational issues and an unplanned maintenance stop. In addition, COVID-19 has further delayed the Candelaria Mill Optimization Project ("CMOP") and installation of the final ball mill motor is now planned for January 2021; accordingly, full year production guidance has been reduced. Copper cash costs1 of $1.36/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 13,799 tonnes of copper and approximately 23 thousand ounces of gold, in-line with plan. Copper cash costs of $0.21/lb were better than expected benefitting from favourable foreign exchange and higher gold by-product prices.

Eagle (100% owned): Eagle produced 3,380 tonnes of nickel and 4,102 tonnes of copper during the quarter. Nickel production was comparable to the prior year comparable quarter. Copper production was higher than the prior year quarter as a result of higher grades. Nickel cash costs of $1.13/lb for the quarter were lower than the prior year comparable quarter due primarily to lower treatment and refining costs.

Neves-Corvo(100% owned): Neves-Corvo produced 10,559 tonnes of copper and 18,986 tonnes of zinc for the quarter. Copper production was higher than the prior year quarter benefitting from record throughput and better recoveries, while zinc production was higher due to higher grades. Copper cash costs of $1.75/lb for the quarter were lower than the prior year quarter due to favourable foreign exchange which was partially offset by lower byproduct credits stemming from lower realized zinc prices.

1 This is a non-GAAP measure - see page 26 of this MD&A for discussion of non-GAAP measures.

1

Major construction and commissioning of ZEP continues to be temporarily suspended to reduce the risk of the spread of COVID-19 to employees, contractors and local communities.

Zinkgruvan (100% owned): Zinc production of 12,596 tonnes and lead production of 3,799 tonnes was lower than the prior year quarter due to grades and lower throughput as a result of the sequencing of copper production. Zinc cash costs of $0.56/lb were higher than the prior year quarter as a result of lower sales volumes and byproduct credit metal prices.

Total production

(Contained metal in

YTD

2020

2019

concentrate)

Q2

Q1

Total

Q4

Q3

Q2

Q1

Copper (t)ab

127,452

65,285

62,167

235,498

67,131

74,560

47,685

46,122

Zinc (t)

68,529

31,582

36,947

151,515

38,925

35,028

37,116

40,446

Gold (koz)ab

83

44

39

142

43

58

21

20

Nickel (t)

6,955

3,380

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.

2

Financial Performance

  • Gross profit for the quarter ended June 30, 2020 increased by $117.0 million compared to the prior year quarter. The increase was primarily due to the addition of the Chapada mine ($59.3 million), higher realized metal prices and price adjustments ($40.0 million) and favourable foreign exchange ($19.0 million), partially offset by higher depreciation expense at Candelaria ($22.1 million).
    On a year-to-date basis, gross profit decreased by $46.9 million from the prior year comparative period. The decrease was primarily due to lower metal prices and price adjustments ($154.4 million) and higher depreciation ($59.4 million). These decreases were partially offset by the addition of Chapada mine which contributed $81.2 million to gross profit, favourable foreign exchange ($36.7 million) and higher net sales volumes ($19.9 million).
  • Net earnings for the quarter ended June 30, 2020 increased by $56.9 million from the prior year quarter. The increase was attributable to higher gross profit, partially offset by higher income taxes ($55.9 million).
    On a year-to-date basis, net earnings decreased by $117.6 million from the prior year comparative period. The decrease was attributable to lower gross profit, higher income taxes ($103.6 million) and higher finance costs, partially offset by lower general exploration and business development expenses and higher foreign exchange gains.
  • Adjusted earnings1 for the quarter were $63.8 million higher than the prior year quarter due mainly to higher gross profit offset by higher income taxes. On a year-to-date basis, adjusted earnings were $40.2 million lower than the prior year due to lower gross profit.

Corporate Highlights

  • On June 30, 2020, the Company published its annual Sustainability Report which provides updates on the economic, safety, environmental and social issues that are of greatest interest to communities near the Company's operations, employees, investors, and other stakeholders. A copy of the Sustainability Report is available on the Company's website (www.lundinmining.com).

Financial Position and Financing

  • Cash and cash equivalents of $283.9 million as at June 30, 2020 decreased by $83.0 million during the quarter including cash flow from operations of $37.6 million, which included an outflow of $141.4 million for changes in working capital. $100.2 million was invested in capital expenditures.
    On a year-to-date basis, cash and cash equivalents increased by $33.4 million. In addition to $121.0 million in operating cash flow, the Company drew down approximately $200.0 million in debt, invested $241.2 million in capital expenditures and returned $42.6 million to shareholders in dividend payments.
  • Net debt1 of $220.0 million as at June 30, 2020 reflects an increase of $159.7 million since December 31, 2019. Operating cash flow of $121.0 million was more than offset by capital investment ($241.2 million) and dividend payments to shareholders ($42.6 million).
  • As of July 29, 2020, the Company had a cash and net debt balance of approximately $225.0 million and $190.0 million, respectively.

1 These are a non-GAAP measure - see page 26 of this MD&A for discussion of non-GAAP measures.

3

Outlook

All operations had a good quarter and, other than Candelaria, are on track to meet previously disclosed production guidance. Candelaria continued to experience lower throughput than planned due to ore hardness, operational issues and unplanned maintenance stops. Production guidance for Candelaria has been reduced to reflect the lower production to date, as well as a further delay in CMOP due to COVID-19. Cash costs at Chapada and Eagle have been better than expected due to favourable by-product metal prices and, at Chapada, favourable foreign exchange; accordingly, cash cost guidance for these two operations has been reduced.

While the Company has not experienced significant disruptions to production, shipments of concentrate, or its supply chain due to COVID-19, we caution that the global effects of COVID-19 are continuing to evolve. The number of new cases in the USA, Brazil and Chile have continued to increase. Given the uncertainty of the duration and magnitude of the impact of COVID-19, 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.

2020 Production and Cash Cost

Previous Guidancea

Revised Guidance

(contained metal in concentrate)

Tonnes

C1 Cost

Tonnes

C1 Costb

Copper (t)

Candelaria (100%)

160,000

- 175,000

$1.35/lb

145,000 - 155,000

$1.35/lbc

Chapada

51,000 - 56,000

$0.85/lb

51,000 - 56,000

$0.65/lbd

Eagle

15,000 - 18,000

17,000 - 19,000

Neves-Corvo

35,000 - 40,000

$2.10/lb

35,000 - 40,000

$2.10/lbc

Zinkgruvan

3,000 - 4,000

3,000 - 4,000

Total

264,000

- 293,000

251,000 - 274,000

Zinc (t)

Neves-Corvo

70,000 - 75,000

70,000 - 75,000

Zinkgruvan

72,000 - 77,000

$0.60/lb

72,000 - 77,000

$0.60/lbc

Total

142,000

- 152,000

142,000 - 152,000

Gold (oz)

Candelaria (100%)

90,000

- 100,000

80,000 - 90,000

Chapada

85,000 - 90,000

85,000 - 90,000

Total

175,000

- 190,000

165,000 - 180,000

Nickel (t)

Eagle

15,000 - 18,000

$1.00/lb

15,000 - 18,000

$0.85/lb

a. Guidance as outlined in the Management's Discussion and Analysis for the three months ended March 31, 2020.

b. Cash costs are based on various assumptions and estimates, including but not limited to; production volumes, as noted above, commodity prices (Cu: $2.35/lb, Zn: $0.85/lb, Ni: $5.25/lb, Pb: $0.75/lb, Au: $1,600/oz.), foreign exchange rates (€/USD:1.15, USD/SEK:9.25, USD/CLP:800, USD/BRL:5.00) 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.

4

2020 Capital Expenditure Guidance

Sustaining capital expenditure guidance remains the same as the prior quarter. ZEP capital expenditure guidance has been updated to include a limited number of critical path items that can be undertaken without introducing additional risk to the operation. Total pre-production cost for ZEP remains unchanged from previous guidance at €360 million.

($ millions)

Previous Guidancea

Revisions

Revised Guidance

Candelaria (100% basis)

230

-

230

Chapada

40

-

40

Eagle

15

-

15

Neves-Corvo

55

-

55

Zinkgruvan

45

-

45

Total Sustaining Capital

385

-

385

Zinc Expansion Project (Neves-Corvo)

55

10

65

Total Capital Expenditures

440

10

450

a. Guidance as outlined in the Management's Discussion and Analysis for the three months ended March 31, 2020.

2020 Exploration Investment Guidance

Planned exploration expenditures of $35.0 million in 2020 remain unchanged from guidance provided in the previous quarter. 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, $6.0 million at Zinkgruvan, $6.0 million at Chapada, and $2.0 million at Neves-Corvo.

5

Selected Quarterly Financial Information1

Three months ended June 30,

Six months ended June 30,

($ millions, except share and per share amounts)

2020

2019

2020

2019

Revenue

533.3

369.3

911.3

785.6

Cost of goods sold:

Production costs

(273.0)

(255.8)

(551.7)

(460.9)

Depreciation, depletion and amortization

(118.2)

(88.3)

(240.2)

(158.4)

Gross profit

142.1

25.1

119.4

166.3

Net earnings (loss) attributable to:

38.7

(72.7)

Lundin Mining shareholders

(7.8)

43.9

Non-controlling interests

9.6

(0.8)

7.4

8.5

Net earnings (loss)

48.3

(8.6)

(65.3)

52.3

Adjusted earnings (loss)3

52.8

(11.1)

11.7

51.9

Adjusted EBITDA3

231.5

75.6

321.8

252.6

Cash flow from operations

37.6

204.5

121.0

266.6

Adjusted operating cash flow 3

179.0

49.9

206.9

189.1

Capital expenditures4

100.2

178.7

241.2

360.7

Per share amounts:

Basic and diluted earnings (loss) per share

attributable to shareholders

0.05

(0.01)

(0.10)

0.06

Adjusted earnings (loss) per share3

0.07

(0.02)

0.02

0.07

Adjusted operating cash flow per share3

0.24

0.07

0.28

0.26

Dividends declared (C$/share)

0.04

0.03

0.08

0.06

June 30, 2020

December 31,

Total assets

2019

6,980.5

6,917.2

Total debt and lease liabilities

502.0

308.5

Net debt3

220.0

60.2

Summary of Quarterly Results1,2,5

($ millions, except per share data)

Q2-20

Q1-20

Q4-19

Q3-19

Q2-19

Q1-19

Q4-18

Q3-18

Revenue

533.3

378.0

568.4

538.7

369.3

416.4

407.7

379.7

Cost of goods sold

(391.2)

(400.7)

(422.9)

(410.1)

(344.1)

(275.2)

(335.7)

(320.1)

Gross profit (loss)

142.1

(22.7)

145.5

128.6

25.1

141.2

72.0

59.6

Net earnings (loss)

48.3

(113.6)

104.8

32.1

(8.6)

60.9

31.8

9.1

- attributable to shareholders

38.7

(111.5)

97.0

26.4

(7.8)

51.7

28.8

7.0

EPS - Basic and diluted

0.05

(0.15)

0.13

0.04

(0.01)

0.07

0.04

0.01

Cash flow from operations

37.6

83.4

186.4

111.6

204.5

62.1

44.2

140.9

Adjusted operating cash flow per share

0.24

0.04

0.28

0.21

0.07

0.19

0.16

0.11

Capital expenditures4

100.2

141.1

139.6

165.0

178.7

182.0

234.1

173.7

  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 are non-GAAP measures please see 26 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 from year-to-date results due to rounding.

6

Revenue Overview

Sales Volumes by Payable Metal

(Contained metal in concentrate)

2020

2019

Total

Q2

Q1

Total

Q4

Q3

Q2

Q1

Copper (tonnes)

71,896

34,130

Candelaria (100%)

37,766

139,051

34,564

42,276

31,138

31,073

Chapada1

24,933

13,446

11,487

29,884

16,127

13,757

-

-

Eagle

8,067

3,668

4,399

12,767

2,819

2,615

4,286

3,047

Neves-Corvo

19,199

11,471

7,728

41,252

11,311

12,343

9,888

7,710

Zinkgruvan

1,453

910

543

2,673

779

981

913

-

125,548

63,625

61,923

225,627

65,600

71,972

46,225

41,830

Zinc (tonnes)

30,960

Neves-Corvo

15,896

15,064

59,143

14,713

14,567

14,466

15,397

Zinkgruvan

24,749

10,465

14,284

67,463

19,314

12,657

19,466

16,026

55,709

26,361

29,348

126,606

34,027

27,224

33,932

31,423

Gold (000 oz)

41

19

Candelaria (100%)

22

83

20

25

19

19

Chapada1

40

23

17

55

28

27

-

-

81

42

39

138

48

52

19

19

Nickel (tonnes)

5,228

2,419

Eagle

2,809

10,682

3,167

1,889

3,935

1,691

Lead (tonnes)

2,607

Neves-Corvo

1,309

1,298

4,591

1,210

792

1,313

1,276

Zinkgruvan

11,729

5,705

6,024

23,875

9,518

4,684

5,799

3,874

14,336

7,014

7,322

28,466

10,728

5,476

7,112

5,150

Silver (000 oz)

593

Candelaria (100%)

272

321

1,152

275

342

252

283

Chapada1

65

31

34

119

67

52

-

-

Eagle

42

22

20

72

12

22

25

13

Neves-Corvo

450

270

180

801

189

185

201

226

Zinkgruvan

776

427

349

1,594

571

335

460

228

1,926

1,022

904

3,738

1,114

936

938

750

1. Chapada's sales volumes are presented for the period of Lundin Mining's ownership.

7

Revenue Analysis

Three months ended June 30,

Six months ended June 30,

by Mine

2020

2019

Change

2020

2019

Change

($ thousands)

$

%

$

%

$

$

%

$

%

$

Candelaria (100%)

255,132

48

178,677

48

76,455

428,104

47

411,338

52

16,766

Chapada

114,125

21

-

-

114,125

198,246

22

-

-

198,246

Eagle

52,689

10

59,412

16

(6,723)

100,026

11

105,620

13

(5,594)

Neves-Corvo

81,188

15

77,519

21

3,669

126,965

14

162,666

21

(35,701)

Zinkgruvan

30,185

6

53,643

15

(23,458)

57,963

6

106,011

14

(48,048)

533,319

369,251

164,068

911,304

785,635

125,669

Three months ended June 30,

Six months ended June 30,

by Metal

2020

2019

Change

2020

2019

Change

($ thousands)

$

%

$

%

$

$

%

$

%

$

Copper

376,510

71

226,953

62

149,557

620,019

68

493,043

63

126,976

Zinc

35,120

7

59,679

16

(24,559)

67,224

7

142,353

18

(75,129)

Gold

69,645

13

23,756

6

45,889

126,229

14

46,461

6

79,768

Nickel

30,086

6

33,352

9

(3,266)

54,464

6

59,177

8

(4,713)

Lead

8,490

2

12,438

3

(3,948)

18,349

2

22,203

3

(3,854)

Silver

10,914

1

8,883

3

2,031

19,633

2

16,797

2

2,836

Other

2,554

-

4,190

1

(1,636)

5,386

1

5,601

-

(215)

533,319

369,251

164,068

911,304

785,635

125,669

Revenue for the quarter ended June 30, 2020 increased in comparison to the second quarter of the prior year mainly due to the addition of Chapada mine ($114.1 million) as well as higher realized copper metal prices ($50.9 million)

On a year-to-date basis, revenue was also higher than the prior year comparable period. The increase in revenue from the addition of the Chapada mine ($198.2 million) as well as higher sales volumes ($62.2 million) was partially offset by lower realized metal prices, net of price adjustments ($154.4 million).

Revenue from gold and silver for the three and six months ended June 30, 2020 includes the partial 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 for the three and six months ended June 30, 2020 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.

8

Provisionally valued revenue as of June 30, 2020

Metal

Payable metal

Valued at $ per lb/oz

Copper

60,742 t

$2.73

/lb

Zinc

14,778 t

$0.92

/lb

Gold

30,859 oz

$1,826

/oz

Nickel

682 t

$5.79

/lb

Quarterly Reconciliation of Realized Prices

Three months ended June 30, 2020

($ thousands)

Copper

Zinc

Gold

Nickel

Total

Current period sales1

370,779

53,589

74,549

30,480

529,398

Prior period price adjustments

29,532

(571)

3,378

(701)

31,637

400,311

53,018

77,927

29,779

561,035

Other metal sales

38,720

Copper stream cash effect

(2,690)

Gold stream cash effect

(17,951)

Less: Treatment & refining charges

(45,795)

Total Revenue

533,319

Payable Metal

63,625

t

26,361

t

42

koz

2,419

t

Current period sales1, 2

$2.64

$0.92

$1,784

$5.72

Prior period adjustments

0.21

(0.01)

81

(0.14)

Realized prices

$2.85

/lb

$0.91

/lb

$1,865

/oz

$5.58

/lb

Three months ended June 30, 2019

Copper

Zinc

Gold

Nickel

Total

Current period sales1

277,238

87,472

24,216

50,171

439,097

Prior period price adjustments

(27,274)

(7,466)

2,580

(1,067)

(33,227)

249,964

95,331

26,796

49,104

405,870

Other metal sales

35,634

Gold stream cash effect

(11,835)

Less: Treatment & refining charges

(60,418)

Total Revenue

369,251

Payable Metal

46,225 t

33,932 t

19 koz

3,935 t

Current period sales1,2

$2.72

$1.17

$1,275

$5.78

Prior period adjustments

(0.27)

(0.10)

136

(0.12)

Realized prices

$2.45 /lb

$1.07 /lb

$1,410 /oz

$5.66 /lb

  1. Includes provisional price adjustments on current period sales.
  2. The realized price for copper inclusive of the impact of streaming agreements for 2020 is $2.83/lb (2019: n/a). The realized price for gold inclusive of the impact of streaming agreements for 2020 is $1,435/oz (2019: $830/oz).

9

Year-to-Date Reconciliation of Realized Prices

Six months ended June 30, 2020

($ thousands)

Copper

Zinc

Gold

Nickel

Total

Current period sales1

709,479

114,214

140,494

65,509

1,029,695

Prior period price adjustments

(42,771)

(11,015)

1,119

(12,017)

(64,683)

666,708

103,199

141,613

53,492

965,012

Other metal sales

77,899

Copper stream cash effect

(6,477)

Gold stream cash effect

(34,518)

Less: Treatment & refining charges

(90,612)

Total Revenue

911,304

Payable Metal

125,548

t

55,709

t

81

koz

5,228

t

Current period sales1, 2

$2.56

$0.93

$1,744

$5.68

Prior period adjustments

(0.15)

(0.09)

14

(1.04)

Realized prices

$2.41

/lb

$0.84

/lb

$1,758

/oz

$4.64

/lb

Six months ended June 30, 2019

Copper

Zinc

Gold

Nickel

Total

Current period sales1

529,453

173,870

48,941

71,924

824,188

Prior period price adjustments

7,695

1,467

2,380

8,389

19,931

537,148

175,337

51,321

80,313

844,119

Other metal sales

64,740

Gold stream cash effect

(22,558)

Less: Treatment & refining charges

(100,666)

Total Revenue

785,635

Payable Metal

88,055

t

65,355

t

38

koz

5,626

t

Current period sales1, 2

$2.73

$1.21

$1,351

$5.80

Prior period adjustments

0.04

0.01

63

0.68

Realized prices

$2.77

/lb

$1.22

/lb

$1,413

/oz

$6.48

/lb

  1. Includes provisional price adjustments on current period sales.
  2. The realized price for copper inclusive of the impact of streaming agreements for 2020 is $2.39/lb (2019: n/a). The realized price for gold inclusive of the impact of streaming agreements for 2020 is $1,330/oz (2019: $710/oz).

10

Financial Results

Production Costs

Production costs for the quarter and six months ended June 30, 2020 were $17.2 million and $90.8 million higher, respectively, than the comparable prior year periods, due to the inclusion of production costs from the Chapada mine (Q2 2020 - $44.0 million, YTD 2020 - $94.7 million) and higher sales volumes at Candelaria, partially offset by favourable foreign exchange.

Depreciation, Depletion and Amortization

Depreciation, depletion and amortization expense increased for the quarter and six months ended June 30, 2020 compared to the prior year periods. The increase was primarily attributable to increased amortization of deferred stripping at Candelaria of Phase 10, as well as the inclusion of Chapada.

Depreciation by operation

Three months ended June 30,

Six months ended June 30,

($ thousands)

2020

2019

Change

2020

2019

Change

Candelaria

68,065

45,962

22,103

139,134

85,761

53,373

Chapada

10,820

-

10,820

22,430

-

22,430

Eagle

17,139

20,141

(3,002)

35,906

30,316

5,590

Neves-Corvo

13,944

12,795

1,149

27,593

25,398

2,195

Zinkgruvan

7,787

8,966

(1,179)

14,243

16,030

(1,787)

Other

449

429

20

873

892

(19)

118,204

88,293

29,911

240,179

158,397

81,782

Loss from Equity Investment in Associate

In the fourth quarter of 2019, Freeport Cobalt sold its interest in the cobalt refinery and related cobalt precursor business. In the prior six-month period ended June 30, 2019 a loss of $10.6 million was recognized, due mainly to inventory revaluations as a result of lower cobalt prices.

General Exploration and Business Development

General exploration and business development expenses for the three and six months ended June 30, 2020 decreased against the prior year comparable periods by $14.6 million and $20.1 million, respectively. Due to the COVID-19 pandemic, surface exploration drilling and geophysical work at Neves-Corvo and Zinkgruvan continued to be postponed. The Chapada exploration program was stopped throughout April while related health and safety measures were implemented, and subsequently, a reduced drilling program was re-started later in the quarter. Limited exploration drilling at Candelaria has primarily focused on known mineralized trends within the underground workings.

Finance Income and Costs

Net finance costs for the three and six months ended June 30, 2020 increased over the prior year comparable periods by $10.6 million and $23.0, million respectively, primarily due to higher interest expense from deferred revenue and lower interest income.

Other Income and Expenses

Net other income for the six months ended June 30, 2020 was $19.2 million, compared to net other expense of $2.8 million in the prior year to date period. The higher income in the current year period reflects higher foreign exchange gains of $46.7 million offset by the negative revaluation of a derivative liability related to the acquisition of the Chapada mine ($17.7 million). Net other expense for the three months ended June 30, 2020 was $8.5 million higher than the prior year quarter, primarily due to the revaluation of the Chapada derivative liability.

11

Foreign exchange gains and losses recorded in other income and expenses relate to working capital denominated in foreign currencies that were held by the Company. Period end exchange rates having a meaningful impact on foreign exchange recorded at June 30, 2020 were as follows:

June 30, 2020

March 31, 2020

December 31, 2019

Chilean Peso

$1.00:CLP813

$1.00:CLP846

$1.00:CLP749

Euro

$1.12:€1.00

$1.10:€1.00

$1.12:€1.00

Brazilian Real

$1.00:BRL5.48

$1.00:BRL5.20

$1.00:BRL4.03

Swedish Kroner

$1.00:SEK9.35

$1.00:SEK10.08

$1.00:SEK9.32

Income Taxes

Income taxes by mine

Income tax expense (recovery)

Three months ended June 30,

Six months ended June 30,

($ thousands)

2020

2019

Change

2020

2019

Change

Candelaria

17,481

(10,335)

27,816

20,208

3,379

16,829

Chapada

29,506

-

29,506

105,719

-

105,719

Eagle

(41)

(2,086)

2,045

(83)

(1,909)

1,826

Neves-Corvo

657

(5,185)

5,842

(6,220)

(515)

(5,705)

Zinkgruvan

(2,935)

3,124

(6,059)

(223)

9,254

(9,477)

Other

6,045

9,314

(3,269)

9,843

15,468

(5,625)

50,713

(5,168)

55,881

129,244

25,677

103,567

Income taxes by classification

Income tax expense (recovery)

Three months ended June 30,

Six months ended June 30,

($ thousands)

2020

2019

Change

2020

2019

Change

Current income tax

9,671

5,684

3,987

35,834

31,392

4,442

Deferred income tax (recovery)

41,042

(10,852)

51,894

93,410

(5,715)

99,125

50,713

(5,168)

55,881

129,244

25,677

103,567

Income tax expense for the three months ended June 30, 2020 was higher than the prior year comparable period due primarily to the acquisition of Chapada mine ($29.5 million), which includes the deferred tax impact of a weakening BRL on non-monetary assets ($13.2 million), and higher taxable earnings at Candelaria.

Income tax expense for the six months ended June 30, 2020 was higher than the tax expense recorded in the prior year comparable period due primarily to the acquisition of Chapada mine. Included in Chapada's tax expense of $105.7 million for the six months ended June 30, 2020 is a non-cash expense of $75.7 million arising from the revaluation of non-monetary assets in BRL to USD. In addition, higher taxable earnings at Candelaria were partially offset by lower taxable earnings across the other operations, as well as a $4.5 million tax recovery from prior periods in Chile.

12

Mining Operations

Production Overview

(Contained metal in

2020

2019

Q2

Q1

concentrate)

YTD

Q2

Q1

Total

Q4

Q3

Copper (tonnes)

71,357

35,060

Candelaria (100%)

36,297

146,330

39,221

40,698

33,633

32,778

Chapada

25,680

13,799

11,881

30,529

12,884

17,645

-

-

Eagle

8,480

4,102

4,378

14,297

3,626

3,042

3,732

3,897

Neves-Corvo

19,634

10,559

9,075

41,436

10,898

12,055

9,615

8,868

Zinkgruvan

2,301

1,765

536

2,906

502

1,120

705

579

127,452

65,285

62,167

235,498

67,131

74,560

47,685

46,122

Zinc (tonnes)

36,934

18,986

Neves-Corvo

17,948

73,202

17,946

18,232

18,251

18,773

Zinkgruvan

31,595

12,596

18,999

78,313

20,979

16,796

18,865

21,673

68,529

31,582

36,947

151,515

42,024

35,028

37,116

40,446

Gold (000 oz)

42

21

Candelaria (100%)

21

88

23

24

21

20

Chapada

41

23

18

54

20

34

-

-

83

44

39

142

43

58

21

20

Nickel (tonnes)

6,955

3,380

Eagle

3,575

13,494

2,651

3,232

3,398

4,213

Lead (tonnes)

3,027

1,559

Neves-Corvo

1,468

5,474

1,365

1,106

1,350

1,653

Zinkgruvan

11,812

3,799

8,013

27,703

9,361

6,291

6,219

5,832

14,839

5,358

9,481

33,177

10,726

7,397

7,569

7,485

Silver (000 oz)

636

305

Candelaria (100%)

331

1,305

337

355

292

321

Chapada

126

69

57

144

63

81

-

-

Eagle

70

35

35

143

31

40

45

27

Neves-Corvo

856

479

377

1,706

385

431

392

498

Zinkgruvan

1,051

389

662

2,464

724

630

631

479

2,739

1,277

1,462

5,762

1,540

1,537

1,360

1,325

13

Cash Cost Overview

($/lb)

Three months ended June 30,

Six months ended June 30,

2020

2019

2020

2019

Candelaria (cost/lb Cu)

1.68

1.62

Gross cost

2.12

1.99

By-product1

(0.32)

(0.26)

(0.29)

(0.25)

Net Cash Cost

1.36

1.86

1.33

1.74

All-In Sustaining Cost2

2.10

3.73

2.19

3.52

Chapada (cost/lb Cu)

1.56

1.79

Gross cost

-

-

By-product

(1.35)

-

(1.25)

-

Net Cash Cost

0.21

-

0.54

-

All-In Sustaining Cost

0.64

-

0.91

-

Eagle (cost/lb Ni)

Gross cost

5.36

6.14

5.24

6.04

By-product

(4.23)

(3.00)

(3.95)

(3.74)

Net Cash Cost

1.13

3.14

1.29

2.30

All-In Sustaining Cost

2.48

3.65

3.02

3.05

Neves-Corvo (cost/lb Cu)

2.64

2.91

Gross cost

3.14

3.27

By-product

(0.89)

(1.26)

(0.96)

(1.81)

Net Cash Cost

1.75

1.88

1.95

1.46

All-In Sustaining Cost

2.32

2.60

2.71

2.23

Zinkgruvan (cost/lb Zn)

Gross cost

1.18

0.81

1.00

0.74

By-product

(0.62)

(0.40)

(0.47)

(0.32)

Net Cash Cost

0.56

0.41

0.53

0.42

All-In Sustaining Cost

1.03

0.63

0.89

0.66

  1. By-productis after related treatment and refining charges.
  2. All-inSustaining Cost ("AISC") is a non-GAAP measure - see page 26 of this MD&A for discussion of non-GAAP measures.

14

Capital Expenditures1,2

Three months ended June 30,

by Mine

2020

2019

Capitalized

Total

Capitalized

($ thousands)

Sustaining

Expansionary

Interest

Sustaining

Expansionary

Interest

Total

Candelaria

53,615

-

-

53,615

123,946

-

-

123,946

Chapada

8,304

-

-

8,304

-

-

-

-

Eagle

2,214

-

-

2,214

1,257

9,277

-

10,534

Neves-Corvo

11,730

14,711

-

26,441

13,521

21,473

-

34,994

Zinkgruvan

9,571

-

-

9,571

9,208

-

-

9,208

Other

16

-

-

16

35

-

-

35

85,450

14,711

-

100,161

147,967

30,750

-

178,717

by Mine

Six months ended June 30,

2020

2019

Capitalized

Total

Capitalized

($ thousands)

Sustaining

Expansionary

Interest

Sustaining

Expansionary

Interest

Total

Candelaria

130,195

-

-

130,195

232,892

-

-

232,892

Chapada

12,028

-

-

12,028

-

-

-

-

Eagle

7,645

-

-

7,645

3,174

16,972

-

20,146

Neves-Corvo

27,531

45,657

451

73,639

24,397

63,844

-

88,241

Zinkgruvan

17,505

-

-

17,505

19,357

-

-

19,357

Other

215

-

-

215

78

-

-

78

195,119

45,657

451

241,227

279,898

80,816

-

360,714

  1. Capital expenditures are reported on a cash basis, as presented in the consolidated statement of cash flows.
  2. Sustaining and expansionary capital expenditures are non-GAAP measures - see page 26 of this MD&A for discussion of non-GAAP measures.

15

Candelaria (Chile)

Operating Statistics

Total

2020

2019

(100% Basis)

Q2

Q1

Total

Q4

Q3

Q2

Q1

Ore mined (000s tonnes)

17,166

9,085

8,081

28,753

10,067

9,329

5,620

3,737

Ore milled (000s tonnes)

11,811

6,104

5,707

26,287

6,336

6,295

6,450

7,206

Grade

0.65

0.62

Copper (%)

0.67

0.60

0.66

0.70

0.57

0.49

Gold (g/t)

0.15

0.14

0.15

0.14

0.15

0.16

0.14

0.11

Recovery

94.0

93.5

Copper (%)

94.7

92.3

92.8

92.9

91.4

91.9

Gold (%)

73.6

74.0

73.0

72.1

74.4

71.8

70.6

70.5

Production (contained metal)

71,357

35,060

Copper (tonnes)

36,297

146,330

39,221

40,698

33,633

32,778

Gold (000 oz)

42

21

21

88

23

24

21

20

Silver (000 oz)

636

305

331

1,305

337

355

292

321

Revenue ($000s)

428,104

255,132

172,972

896,283

235,015

249,930

178,677

232,661

Gross profit (loss) ($000s)

54,759

71,544

(16,785)

180,650

57,989

42,612

1,390

78,659

Cash cost ($ per pound)

1.33

1.36

1.31

1.54

1.38

1.39

1.86

1.62

AISC ($ per pound)

2.19

2.10

2.26

2.88

2.22

2.49

3.73

3.30

Gross Profit

Gross profit for the three months ended June 30, 2020 was higher than the prior year quarter largely due to higher realized metal prices, lower mine and mill costs and the positive impact of foreign exchange, partially offset by higher depreciation.

Gross profit for the six months ended June 30, 2020 was $25.3 million lower than the comparable period in 2019. The decrease was largely due to lower realized copper prices ($58.2 million) and higher depreciation expense, partially offset by higher sales volumes ($21.6 million) and the positive impact of foreign exchange.

Production

Copper production for the three and six months ended June 30, 2020 was higher than the comparable periods in 2019. The increase in copper production is largely attributable to higher head grades and recoveries as more high- grade open pit and underground ore was mined in the current year. This increase in copper production was offset partially by lower throughput due to ore hardness and fewer available operational hours at the mill.

Full year production guidance for both copper and gold have been reduced to reflect actual results to date, as well as the expectation of lower than previously planned throughput for the balance of the year.

Candelaria open pit mining is advancing in Phase 10 areas in proximity to and with geomechanical conditions similar to where previous pit wall displacement issues occurred in Phase 9. Additional caution is being taken to plan and monitor ground conditions while mining in this area. Candelaria continuously performs geomechanical analysis and monitoring of pit walls, including internal operating and blasting protocols, daily inspections, high precision radars, prism with robotic control and extensometers, all aligned with industry best practices and Chilean safe mining regulations.

Cash Costs

Copper cash costs for the three and six months ended June 30, 2020 were lower than cash costs in the prior year comparable periods. The decrease was largely due to the favourable impact of foreign exchange as well as lower per unit production costs from better diesel prices and higher sales volumes. Candelaria is well positioned to meet full year cash cost guidance of $1.35/lb.

All-in sustaining costs for the three and six months ended June 30, 2020 were lower than those of the

16

corresponding periods in 2019 due to lower cash costs. All-in sustaining costs further benefitted from lower sustaining capital expenditures in the current periods as several major projects, such as the mine fleet reinvestment and development of the South Sector underground mine, were concluded by the end of 2019.

For the six months ended June 30, 2020, approximately 27,000 oz of gold and 406,000 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.

Projects

CMOP achieved substantial completion in the first half of 2020, with the exception of the replacement of the fourth ball mill motor. The installation of the final ball mill has been postponed to January 2021 due to the limited ability to safely mobilize contractors and consultants as a result of COVID-19 and the objective to follow planned mill maintenance down-time to optimize production. All remaining equipment necessary to complete the project is on site and available for installation.

17

Chapada (Brazil)

Operating Statistics

Total

2020

2019

(100% Basis)

Q2

Q1

Total

Q4

Q3

Q2

Q1

Ore mined (000s tonnes)

15,980

7,528

8,452

18,240

7,592

10,648

-

-

Ore milled (000s tonnes)

10,766

5,278

5,488

11,911

5,731

6,180

-

-

Grade

0.28

0.30

Copper (%)

0.27

0.31

0.27

0.34

-

-

Gold (g/t)

0.21

0.23

0.20

0.24

0.20

0.28

-

-

Recovery

83.7

Copper (%)

86.1

80.9

82.7

81.6

83.7

-

-

Gold (%)

55.8

60.0

51.0

59.4

57.0

61.0

-

-

Production (contained metal)

25,680

13,799

Copper (tonnes)

11,881

30,529

12,884

17,645

-

-

Gold (000 oz)

41

23

18

54

20

34

-

-

Silver (000 oz)

126

69

57

144

63

81

-

-

Revenue ($000s)

198,246

114,125

84,121

248,011

133,144

114,867

-

-

Gross profit ($000s)

81,153

59,320

21,833

104,445

56,581

47,864

-

-

Cash cost ($ per pound)

0.54

0.21

0.92

0.58

0.77

0.35

-

-

AISC ($ per pound)

0.91

0.64

1.22

0.97

1.28

0.62

-

-

Gross Profit

Gross profit for the three and six months ended June 30, 2020 was lower than expected due to negative copper price adjustments, partially offset by higher gold prices and favourable foreign exchange rates.

Production

The production of both copper and gold was in-line with expectations for the three and six months ended June 30, 2020, as improving ore grades and recoveries for both metals offset lower throughput resulting from ore hardness.

Chapada remains on-track to achieve full year copper and gold production guidance.

Cash Costs

Copper cash costs for the three and six months ended June 30, 2020 were better than expected, benefitting primarily from favourable foreign exchange rates, as well as continued strong gold prices which improved the realized by-product credit. As a result, full year cash cost guidance has improved to $0.65/lb from $0.85/lb.

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

Projects

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

The 2020 exploration program includes approximately 40,000 metres of planned drilling and geophysical surveys. During the quarter, 4,416 metres of drilling were completed, for a total of 9,810 metres year-to-date. Drilling during the second half of the year will continue to focus primarily on the Buriti, Santa Cruz Extension and Cava Norte NE near mine targets. Restrictions on contractors due to COVID-19 have impacted exploration drilling and, if prolonged, could impact the overall achievement of annual drilling plans.

18

Eagle (USA)

Operating Statistics

Total

2020

2019

Q2

Q1

Total

Q4

Q3

Q2

Q1

Ore mined (000s tonnes)

374

185

189

748

194

197

192

165

Ore milled (000s tonnes)

377

183

194

747

191

197

194

165

Grade

2.2

2.2

Nickel (%)

2.2

2.2

1.7

2.0

2.1

3.0

Copper (%)

2.3

2.3

2.4

2.0

2.0

1.6

2.0

2.4

Recovery

83.2

82.5

Nickel (%)

83.9

82.1

80.5

80.4

81.3

85.0

Copper (%)

96.4

96.6

96.3

96.0

95.3

95.5

95.7

97.6

Production (contained metal)

6,955

3,380

Nickel (tonnes)

3,575

13,494

2,651

3,232

3,398

4,213

Copper (tonnes)

8,480

4,102

4,378

14,297

3,626

3,042

3,732

3,897

Revenue ($000s)

100,026

52,689

47,337

212,929

53,592

53,717

59,412

46,208

Gross profit (loss) ($000s)

(5,026)

3,762

(8,788)

35,987

(1,021)

19,350

(800)

18,458

Cash cost ($ per pound)

1.29

1.13

1.43

2.84

3.53

3.25

3.14

0.37

AISC ($ per pound)

3.02

2.48

3.50

3.74

4.53

4.37

3.65

1.65

Gross Profit

Gross profit for the three months ended June 30, 2020 was higher than the gross loss recorded in the prior year comparable period due primarily to lower treatment and refining costs in the current quarter.

On a year-to-date basis, a gross loss was recorded compared to the gross profit recorded in the prior year comparative period. The decrease was due to lower realized metal prices ($27.8 million) in the current year, partially offset by lower treatment and refining costs.

Production

Nickel production for the three months ended June 30, 2020 was in-line with the prior year comparable periods. On a year-to-date basis nickel production was lower than the prior year period as a result of lower grades.

Copper production for the three and six months ended June 30, 2020 was higher than the comparable periods in 2019 due largely to higher grades.

Full year production guidance for copper has been improved.

Cash Costs

Nickel cash costs for the three and six months ended June 30, 2020 were lower than cash costs reported in the prior year comparable periods. The decrease in cash costs is primarily due to lower treatment and refining charges. Full year cash cost guidance has been improved to $0.85/lb from $1.00/lb due to improved by-product metal price outlook.

All-in sustaining costs for the three and six months ended June 30, 2020 were lower than those of the corresponding periods in 2019, as a result of lower cash costs.

19

Neves-Corvo (Portugal)

Operating Statistics

2020

2019

Total

Q1

Total

Q4

Q3

Q2

Q1

Q2

Ore mined, copper (000 tonnes)

1,355

715

640

2,702

686

699

628

689

Ore mined, zinc (000 tonnes)

558

272

286

1,153

290

284

283

296

Ore milled, copper (000 tonnes)

1,373

734

639

2,679

681

702

626

670

Ore milled, zinc (000 tonnes)

570

286

284

1,137

286

285

280

286

Grade

1.8

1.8

Zinc (%)

1.8

2.0

2.1

2.1

2.0

1.7

Copper (%)

8.3

8.5

8.0

7.9

7.8

7.8

7.9

8.0

Recovery

79.4

81.3

Copper (%)

77.4

78.3

77.9

80.6

75.8

79.3

Zinc (%)

77.2

76.7

77.7

78.8

78.0

80.2

78.6

78.3

Production (contained metal)

19,634

10,559

Copper (tonnes)

9,075

41,436

10,898

12,055

9,615

8,868

Zinc (tonnes)

36,934

18,986

17,948

73,202

17,946

18,232

18,251

18,773

Lead (tonnes)

3,027

1,559

1,468

5,474

1,365

1,106

1,350

1,653

Silver (000 oz)

856

479

377

1,706

385

431

392

498

Revenue ($000s)

126,965

81,188

45,777

337,167

88,492

86,009

77,519

85,147

Gross profit (loss) ($000s)

(13,627)

6,299

(19,926)

42,896

8,772

11,546

3,834

18,744

Cash cost (€ per pound)

1.76

1.58

2.03

1.42

1.61

1.44

1.68

0.81

Cash cost ($ per pound)

1.95

1.75

2.24

1.59

1.78

1.60

1.88

0.92

AISC ($ per pound)

2.71

2.32

3.28

2.38

2.65

2.35

2.60

1.72

Gross Profit

Gross profit for the three months ended June 30, 2020 was higher than the comparable period in 2019, as higher sales volumes, cost savings, and favourable foreign exchange more than offset lower realized prices.

Gross profit for the six months ended June 30, 2020 was lower than the prior year period resulting from lower metal prices and price adjustments realized primarily in the first quarter.

Production

Copper production for the three and six months ended June 30, 2020 was higher than the prior year comparable periods, benefitting from record throughput in the current year, as well as improved recoveries.

Zinc production for the three months ended June 30, 2020 was higher than the prior year period largely due to higher head grades. Zinc production for the six months ended June 30, 2020 was comparable to the prior year.

Both copper and zinc full year production guidance targets remain unchanged.

Cash Costs

Copper cash costs for the three months ended June 30, 2020 were lower than those of the corresponding period in 2019. The decrease is a result of higher sales volumes in the current quarter as well as favourable foreign exchange, partially offset by the effect of lower by-product metal prices.

Year-to-date, copper cash costs were higher than the prior year comparable period, as lower per unit costs and favourable foreign exchange in the current year were more than offset by lower by-product credits arising from lower metal prices.

Full year cash cost guidance of $2.10/lb remains unchanged.

All-in sustaining costs for the three months ended June 30, 2020 were lower than the corresponding period in 2019 due to lower cash costs and decreased spending on sustaining capital expenditures. For the six months ended

20

June 30, 2020 all-in sustaining costs were higher than the prior year comparable period, as lower sustaining capital expenditures were more than offset by higher cash costs.

Projects

Major construction and commissioning activities on ZEP continue to be temporarily suspended in order to reduce the risk to our employees, contractors and local communities as a result of the COVID-19 pandemic.

During the second quarter, minor works were carried out to secure the surface and underground construction sites, as well as demobilization of some contractor equipment and supplies. Minor works that can be carried out without introducing additional risk to the operation have been planned for the second half of 2020 include ventilation raise work, pre-commissioning activities on the SAG mill and surface conveyor installations.

A revised 2020 capital expenditure estimate of ZEP is estimated to be $65 million which includes the above- mentioned remaining 2020 activities. Total project expenditure remains unchanged from previous guidance of €360.0 million.

Restart is planned for early 2021. This timing will be dependent on public health restrictions and recommendations, as well as the Company's internal policies, in order to safeguard and protect the workforce from the spread of COVID-19. If current safety requirements for social distancing and other personnel limitations remain in place in 2021 it is anticipated that the project would mobilize a smaller number of contractors than originally planned with an extended schedule in order to take the project forward.

21

Zinkgruvan (Sweden)

Operating Statistics

Total

2020

2019

Q2

Q1

Total

Q4

Q3

Q2

Q1

Ore mined, zinc (000 tonnes)

603

279

324

1,138

336

230

303

269

Ore mined, copper (000 tonnes)

125

81

44

182

28

65

37

52

Ore milled, zinc (000 tonnes)

569

239

329

1,120

322

254

292

252

Ore milled, copper (000 tonnes)

119

98

21

178

26

63

48

41

Grade

6.2

5.9

Zinc (%)

6.4

7.6

7.1

7.2

7.2

9.3

Lead (%)

2.6

2.0

2.9

3.1

3.5

3.1

2.7

2.9

Copper (%)

2.2

2.1

2.8

1.8

2.2

1.9

1.7

1.6

Recovery

90.1

89.5

Zinc (%)

90.4

91.5

91.7

92.2

89.7

92.5

Lead (%)

81.4

78.1

83.0

80.9

83.0

80.8

80.0

78.6

Copper (%)

86.1

84.8

90.6

89.1

89.6

90.8

86.0

89.1

Production (contained metal)

31,595

12,596

Zinc (tonnes)

18,999

78,313

20,979

16,796

18,865

21,673

Lead (tonnes)

11,812

3,799

8,013

27,703

9,361

6,291

6,219

5,832

Copper (tonnes)

2,301

1,765

536

2,906

502

1,120

705

579

Silver (000 oz)

1,051

389

662

2,464

724

630

631

479

Revenue ($000s)

57,963

30,185

27,778

198,323

58,120

34,192

53,643

52,368

Gross profit ($000s)

4,442

2,239

2,203

81,341

23,928

8,557

21,873

26,983

Cash cost (SEK per pound)

5.19

5.50

4.96

3.69

2.95

4.02

3.88

4.08

Cash cost ($ per pound)

0.53

0.56

0.51

0.39

0.31

0.42

0.41

0.44

AISC ($ per pound)

0.89

1.03

0.79

0.65

0.62

0.70

0.63

0.69

Gross Profit

Gross profit for the three and six months ended June 30, 2020 was lower than the comparable periods in 2019. The decrease is largely attributable to lower sales volumes and lower comparable metal prices net of price adjustments.

Production

Zinc production for the three and six months ended June 30, 2020 was lower than the prior year comparable periods. Ground conditions encountered in certain high-grade stopes in the first quarter resulted in a change in mine sequencing, which has deferred production from these areas into the second half of 2020 and first quarter of 2021.

Lead production for the three and six months ended June 30, 2020 was lower than the prior year comparable periods as a result of lower head grades.

Zinc and lead production have also been negatively affected by increased sequencing of copper production.

Copper production for the three and six months ended June 30, 2020 was significantly higher than the comparable periods due to a combination of higher throughput in the mill and higher grades from sequencing.

Full year zinc and copper production guidance remains unchanged.

Cash Costs

Zinc cash costs for the three and six months ended June 30, 2020 were higher than the prior year comparable period largely due to lower sales volumes, resulting in higher per unit costs, and lower by-product metal prices.

Zinkgruvan expects to achieve the full year cash cost target of $0.60/lb.

All-in sustaining costs for the three and six months ended June 30, 2020 were higher than those reported in the corresponding periods in 2019 due to higher cash costs as well as higher per unit sustaining capital expenditures.

22

Metal Prices, LME Inventories and Smelter Treatment and Refining Charges

The average metal prices for copper, zinc and nickel for the second quarter 2020 were lower than the average prices for the first quarter by; 5% copper, 8% zinc and 4% nickel. The average metal price for gold during the second quarter 2020 was higher than the average price for the first quarter by 8%. The prices for copper, zinc and nickel decreased during April and May on the backdrop of concerns surrounding the COVID-19 pandemic but recovered in June as supply cuts and increased demand in China became evident.

(Average LME Price)

Three months ended June 30,

Six months ended June 30,

2020

2019

Change

2020

2019

Change

Copper

US$/pound

2.43

2.77

-12%

2.49

2.80

-11%

US$/tonne

5,356

6,113

5,500

6,165

Zinc

US$/pound

0.89

1.25

-29%

0.93

1.24

-25%

US$/tonne

1,961

2,763

2,047

2,732

Gold

US$/ounce

1,711

1,309

31%

1,645

1,307

26%

Nickel

US$/pound

5.54

5.56

-

5.66

5.59

1%

US$/tonne

12,215

12,258

12,475

12,315

LME inventories for zinc and nickel increased during the second quarter of 2020 by 68% and 2%, respectively while the LME inventory for copper decreased by 3% during the same period.

During the second quarter of 2020 the treatment charges ("TC") and refining charges ("RC") in the spot market for copper concentrates between miners and commodity traders decreased from an average spot TC during April of $45 per dmt of concentrate and a spot RC of $0.045 per lb of payable copper to a spot TC of $39 per dmt of concentrate and a spot RC of $0.039 per lb of payable copper during June 2020. Also, the spot terms at which Chinese copper smelters were prepared to buy decreased through the quarter from a TC of $60 per dmt of concentrate and a RC of $0.060 per payable lb of copper over April to a TC of $51 per dmt of concentrate and a RC of $0.051 per payable lb of copper at the end of June. 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.

The spot TC, delivered China, for zinc concentrates during the second quarter of 2020 decreased from $265 per dmt, flat, at the end of March to $170 per dmt, flat, by the end of the second quarter, on limited supply of zinc concentrates due to mine closures in Latin America caused by the COVID-19 pandemic. 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.

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.

23

Liquidity and Capital Resources

As at June 30, 2020, the Company had cash and cash equivalents of $283.9 million. With the ongoing COVID-19 pandemic, a great deal of uncertainty remains in the marketplace, as well as potential risks to 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 June 30, 2020 was $37.6 million, a decrease of $166.9 million in comparison to the $204.5 million reported in the prior year quarter. The decrease was primarily attributable to the comparative change in non-cash working capital ($295.9 million) partially offset by higher gross profit before depreciation. On a year-to-date basis cash flow from operations was $145.6 million lower than the prior year due primarily to the change in non-cash working capital.

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. The decrease in capital investments reflects the completion of some major projects at Candelaria and the temporary suspension of ZEP. On a year-to-date basis, less cash flow was used in investing activities due to reduced capital spending and receipt of a contingent consideration on the Company's sale of its interest in the Tenke Fungurume mine ($25.7 million).

Cash flow used in financing activities decreased by $13.8 million compared to the prior year quarter due to a net increase in debt proceeds in the current quarter. On a year-to-date basis cash flow generated from financing activities was higher than the prior year period by $140.3 million also due to a net increase in the proceeds from debt.

Capital Resources

As at June 30, 2020, the Company had $502.0 million of debt and lease liabilities.

As at June 30, 2020, the Company had $345.0 million drawn on its credit facility, $90.0 million in outstanding term loans, $22.5 million of commercial paper and $8.9 million of equipment financing.

During the second quarter of 2020, the Company did not make any purchases under its Normal Course Issuer Bid. For the six months ended June 30, 2020, 1.6 million shares were purchased 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.

24

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 $.

Foreign Currency Denominated Production Costs

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:

Three months ended

Six months ended

June 30, 2020

June 30, 2020

Currency

Change

($millions)

($millions)

Chilean peso

+/-10%

+/-$8.7

+/-$17.3

Euro

+/-10%

+/-$7.3

+/-$12.5

Swedish krona

+/-10%

+/-$2.7

+/-$4.6

Brazilian real

+/-10%

+/-$3.1

+/-$7.7

Metal Price Sensitivity

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

June 30, 2020

Change

($millions)

Copper

60,742 t

$2.73/lb

+/- 10%

+/- $36.6

Zinc

14,778 t

$0.92/lb

+/- 10%

+/- $3.0

Gold

30,859 oz

$1,826/oz

+/- 10%

+/- $5.6

Nickel

682 t

$5.79/lb

+/- 10%

+/- $0.9

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 June 30, 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 June 30, 2020 Condensed Interim Consolidated Financial Statements. No significant changes in accounting policies have occurred.

25

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)

June 30, 2020

March 31, 2020 December 31, 2019

Current portion of debt and lease liabilities

127,616

104,754

80,782

Debt and lease liabilities

374,349

377,824

227,767

501,965

482,578

308,549

Deferred financing fees (netted in above)

1,938

2,088

2,238

503,903

484,666

310,787

Cash and cash equivalents

(283,940)

(366,920)

(250,563)

Net debt

219,963

117,746

60,224

Adjusted Operating Cash Flow and Adjusted Operating Cash Flow per Share

Adjusted operating cash flow 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 is defined as cash provided by operating activities, excluding changes in non-cash working capital items. Adjusted operating cash flow per share is adjusted operating cash flow divided by the basic weighted average number of shares outstanding.

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

Three months ended June 30,

Six months ended June 30,

($thousands, except share and per share amounts)

2020

2019

2020

2019

Cash provided by operating activities

37,611

204,469

121,022

266,609

Changes in non-cash working capital items

141,359

(154,530)

85,830

(77,549)

Adjusted operating cash flow

178,970

49,939

206,852

189,060

Weighted average common shares outstanding

733,632,700

735,934,553

734,059,980

735,598,232

Adjusted operating cash flow per share

0.24

0.07

0.28

0.26

26

Adjusted EBITDA, Adjusted Earnings and Adjusted Earnings per Share

Adjusted earnings before interest, taxes, depreciation and amortization ("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.

Adjusted EBITDA can be reconciled to the Company's Consolidated Statement of Earnings as follows:

Three months ended June 30,

Six months ended June 30,

($thousands)

2020

2019

2020

2019

Net earnings (loss)

48,258

(8,626)

(65,310)

52,323

Add back:

118,204

240,179

Depreciation, depletion and amortization

88,293

158,397

Finance income and costs

15,272

4,670

31,436

8,406

Income taxes

50,713

(5,168)

129,244

25,677

232,447

79,169

335,549

244,803

Unrealized foreign exchange

(12,599)

(1,417)

(37,873)

(863)

Unrealized revaluation loss (gain) on derivative asset/liability

12,826

(192)

17,664

(362)

Revaluation of marketable securities

(1,635)

(589)

553

(581)

(Income) loss from investment in associates

(2,030)

(1,288)

(1,946)

10,647

Project standby and suspension costs

3,829

-

6,341

-

Other

(1,386)

(45)

1,518

(1,045)

Total adjustments - EBITDA

(995)

(3,531)

(13,743)

7,796

Adjusted EBITDA

231,452

75,638

321,806

252,599

Adjusted earnings and adjusted earnings per share can be reconciled to the Company's Consolidated Statement of Earnings as follows:

Three months ended June 30,

Six months ended June 30,

($thousands, except share and per share amounts)

2020

2019

2020

2019

Net earnings (loss) attributable to Lundin Mining

38,729

(72,756)

shareholders

(7,793)

43,873

Add back:

(995)

(13,743)

Total adjustments - EBITDA

(3,531)

7,796

Tax effect on adjustments

3,479

442

11,062

310

Deferred tax arising from foreign exchange translation

13,209

-

75,662

-

Tax asset revaluations

-

-

13,562

-

Other

(1,635)

(170)

(2,062)

(86)

Total

14,058

(3,259)

84,481

8,020

Adjusted earnings (loss)

52,787

(11,052)

11,725

51,893

Weighted average number of shares outstanding:

Basic

733,632,700

735,934,553

734,059,980

735,598,232

Diluted

734,501,902

735,934,553

734,059,980

736,337,361

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

Net earnings (loss)

0.05

(0.01)

(0.10)

0.06

Total adjustments

0.02

(0.01)

0.12

0.01

Adjusted earnings (loss) per share

0.07

(0.02)

0.02

0.07

27

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 of by-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.

28

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

Three months ended June 30, 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

34,130

13,446

2,419

11,471

10,465

Pounds (000s)

75,244

29,643

5,333

25,289

23,071

Production costs

273,024

Less: Royalties and other

(7,264)

265,760

Deduct: By-product credits

(123,887)

Add: Treatment and refining charges

29,700

Cash cost

102,099

6,284

6,000

44,220

12,970

171,573

Cash cost per pound ($/lb)

1.36

0.21

1.13

1.75

0.56

Add: Sustaining capital expenditure

53,615

8,304

2,214

11,730

9,571

Royalties

-

2,709

2,878

899

-

Interest expense

964

1,249

313

74

-

Leases & other

1,629

446

1,803

1,728

1,179

All-in sustaining cost

158,307

18,992

13,208

58,651

23,720

AISC per pound ($/lb)

2.10

0.64

2.48

2.32

1.03

Three months ended June 30, 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

31,138

-

3,935

9,888

19,466

Pounds (000s)

68,647

-

8,675

21,799

42,915

Production costs

255,838

Less: Royalties and other

(2,531)

253,307

Deduct: By-product credits

(88,337)

Add: Treatment and refining charges

48,352

Cash cost

127,478

-

27,213

41,073

17,558

213,322

Cash cost per pound ($/lb)

1.86

-

3.14

1.88

0.41

Add: Sustaining capital expenditure

126,249

-

1,073

13,867

8,930

Royalties

-

-

2,550

447

-

Interest expense

1,544

-

490

193

73

Leases & other

841

-

315

1,164

305

All-in sustaining cost

256,112

-

31,641

56,744

26,866

AISC per pound ($/lb)

3.73

-

3.65

2.60

0.63

29

Six months ended June 30, 2020

Operations

Candelaria

Chapada

Eagle

Neves-Corvo

Zinkgruvan

($000s, unless otherwise noted)

(Cu)

(Cu)

(Ni)

(Cu)

(Zn)

Total

Sales volumes (Contained metal in concentrate):

Tonnes

71,896

24,933

5,228

19,199

24,749

Pounds (000s)

158,503

54,968

11,526

42,326

54,562

Production costs

551,709

Less: Royalties and other

(17,106)

534,603

Deduct: By-product credits

(227,147)

Add: Treatment and refining charges

59,275

Cash cost

210,779

29,560

14,871

82,380

29,141

366,731

Cash cost per pound ($/lb)

1.33

0.54

1.29

1.95

0.53

Add: Sustaining capital expenditure

130,195

12,028

7,645

27,531

17,505

Royalties

-

4,947

7,741

1,311

-

Interest expense

2,180

2,217

625

148

129

Leases & other

3,333

1,158

3,883

3,177

1,934

All-in sustaining cost

346,487

49,910

34,765

114,547

48,709

AISC per pound ($/lb)

2.19

0.91

3.02

2.71

0.89

Six months ended June 30, 2019

Operations

Candelaria

Chapada

Eagle

Neves-Corvo

Zinkgruvan

($000s, unless otherwise noted)

(Cu)

(Cu)

(Ni)

(Cu)

(Zn)

Total

Sales volumes (Contained metal in concentrate):

Tonnes

62,211

-

5,626

17,598

35,492

Pounds (000s)

137,152

-

12,403

38,797

78,246

Production cost

460,908

Less: Royalties and other

(6,677)

454,231

Deduct: By-product credits

(176,480)

Add: Treatment and refining charges

79,325

Cash cost

238,581

-

28,585

56,662

33,248

357,076

Cash cost per pound ($/lb)

1.74

-

2.30

1.46

0.42

Add: Sustaining capital expenditure

239,064

-

3,829

25,271

17,327

Royalties

-

-

3,754

2,001

-

Interest expense

255

-

167

57

48

Leases & other

4,386

-

1,442

2,657

705

All-in sustaining cost

482,286

-

37,777

86,648

51,328

AISC per pound ($/lb)

3.52

-

3.05

2.23

0.66

30

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.

As a result of the global COVID-19 pandemic increased levels of volatility have adversely impacted the economies and financial markets of many countries. If increased levels of volatility continue or in the event of a rapid destabilization of global economic conditions, it may result in a material adverse effect on commodity prices, demand for metals, availability of credit, investor confidence, and general financial market liquidity, all of which may adversely affect the Company's business and the market price of the Company's securities. In addition, there may not be an adequate response to emerging infectious diseases. There are potentially significant economic and social impacts, including labour shortages and shutdowns, delays and disruption in supply chains, social unrest, government or regulatory actions or inactions (including but not limited to permanent changes in taxation or policies), decreased demand or the inability to sell and deliver concentrates and resulting commodities, declines in the price of commodities, delays in permitting or approvals, governmental disruptions or other unknown but potentially significant impacts. Given the global nature of the Company's operations, the Company may not be able to accurately predict which operations will be impacted. Any outbreak or threat of an outbreak of a contagion or epidemic disease could have a material adverse effect on the Company, its business and operational results.

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 June 30, 2020 that have materially affected, or are reasonably likely to materially affect, the Company's financial reporting.

Outstanding Share Data

As at July 29, 2020, the Company has 733,777,747 common shares issued and outstanding, and 12,751,630 stock options and 2,657,000 share units outstanding under the Company's incentive plans.

31

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).

32

Condensed Interim Consolidated Financial Statements of

Lundin Mining Corporation

June 30, 2020 (Unaudited)

LUNDIN MINING CORPORATION

CONDENSED INTERIM CONSOLIDATED BALANCE SHEETS

June 30,

December 31,

(Unaudited - in thousands of US dollars)

2020

2019

ASSETS

$

283,940

Cash and cash equivalents (Note 3)

$

250,563

Trade and other receivables (Note 4)

375,559

335,782

Income taxes receivable

47,982

52,523

Inventories (Note 5)

221,741

216,503

Other current assets

24,478

14,330

Total current assets

953,700

869,701

Restricted cash

45,432

47,666

Long-term inventory (Note 5)

613,352

550,561

Other non-current assets

7,129

7,970

Mineral properties, plant and equipment (Note 6)

5,004,561

5,065,556

Investment in associate

24,886

28,957

Deferred tax assets

89,546

104,627

Goodwill

241,895

242,208

6,026,801

6,047,545

Total assets

$

6,980,501

$

6,917,246

LIABILITIES

$

334,630

Trade and other payables (Note 7)

$

370,067

Income taxes payable

41,609

66,825

Current portion of debt and lease liabilities (Note 8)

127,616

80,782

Current portion of deferred revenue (Note 9)

83,325

83,960

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

2,860

3,735

Total current liabilities

590,040

605,369

Debt and lease liabilities (Note 8)

374,349

227,767

Deferred revenue (Note 9)

660,048

674,186

Reclamation and other closure provisions (Note 10)

374,407

380,049

Other long-term liabilities

96,556

84,837

Provision for pension obligations

10,273

10,938

Deferred tax liabilities

689,478

636,700

2,205,111

2,014,477

Total liabilities

2,795,151

2,619,846

SHAREHOLDERS' EQUITY

4,183,605

Share capital (Note 11)

4,184,667

Contributed surplus

53,122

51,339

Accumulated other comprehensive loss

(288,390)

(284,649)

Deficit

(294,774)

(178,298)

Equity attributable to Lundin Mining Corporation shareholders

3,653,563

3,773,059

Non-controlling interests

531,787

524,341

4,185,350

4,297,400

$

6,980,501

$

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

Three months ended

Six months ended

June 30,

June 30,

2020

2019

2020

2019

Revenue (Note 12)

$

533,319

$

369,251

$

911,304

$

785,635

Cost of goods sold

(273,024)

(551,709)

Production costs (Note 13)

(255,838)

(460,908)

Depreciation, depletion and amortization

(118,204)

(88,293)

(240,179)

(158,397)

Gross profit

142,091

25,120

119,416

166,330

General and administrative expenses

(10,608)

(10,169)

(22,552)

(23,787)

General exploration and business development

(9,405)

(23,995)

(22,620)

(42,695)

Finance income (Note 15)

1,701

3,749

686

8,815

Finance costs (Note 15)

(16,973)

(8,419)

(32,122)

(17,221)

Income (loss) from equity investment in associate

2,030

1,288

1,946

(10,647)

Other (expense) income (Note 16)

(9,865)

(1,368)

19,180

(2,795)

Earnings (loss) before income taxes

98,971

(13,794)

63,934

78,000

Current tax expense (Note 17)

(9,671)

(5,684)

(35,834)

(31,392)

Deferred tax (expense) recovery (Note 17)

(41,042)

10,852

(93,410)

5,715

Net earnings (loss)

$

48,258

$

(8,626)

$

(65,310)

$

52,323

Net earnings (loss) attributable to:

$

38,729

$

(72,756)

Lundin Mining Corporation shareholders

$

(7,793)

$

43,873

Non-controlling interests

9,529

(833)

7,446

8,450

Net earnings (loss)

$

48,258

$

(8,626)

$

(65,310)

$

52,323

Basic and diluted earnings (loss) per share attributable to

Lundin Mining Corporation shareholders

$

0.05

$

(0.01)

$

(0.10)

$

0.06

Weighted average number of shares outstanding (Note 11)

733,632,700

734,059,980

Basic

735,934,553

735,598,232

Diluted

734,501,902

735,934,553

734,059,980

736,337,361

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

- 2 -

LUNDIN MINING CORPORATION

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

Three months ended

Six months ended

June 30,

June 30,

2020

2019

2020

2019

Net earnings (loss)

$

48,258

$

(8,626)

$

(65,310)

$

52,323

Other comprehensive income (loss), net of taxes

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

29,110

(3,741)

Effects of foreign exchange

9,396

(10,755)

Other comprehensive income (loss)

29,110

9,396

(3,741)

(10,755)

Total comprehensive income (loss)

$

77,368

$

770

$

(69,051)

$

41,568

Comprehensive income (loss) attributable to:

67,839

$

(76,497)

Lundin Mining Corporation shareholders

$

1,603

$

33,118

Non-controlling interests

9,529

(833)

7,446

8,450

Total comprehensive income (loss)

$

77,368

$

770

$

(69,051)

$

41,568

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

1,061,505

5,862

(3,597)

-

-

-

2,265

Share-based compensation

-

-

5,380

-

-

-

5,380

Dividends declared (Note 11(c))

-

-

-

-

(43,217)

-

(43,217)

Share purchase (Note 11(d))

(1,591,600)

(6,924)

-

-

(503)

-

(7,427)

Net (loss) earnings

-

-

-

-

(72,756)

7,446

(65,310)

Other comprehensive loss

-

-

-

(3,741)

-

-

(3,741)

Total comprehensive (loss) income

-

-

-

(3,741)

(72,756)

7,446

(69,051)

Balance, June 30, 2020

733,703,547

$

4,183,605

$

53,122

$

(288,390)

$

(294,774)

$

531,787

$

4,185,350

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

3,337,085

16,704

(8,424)

-

-

-

8,280

Share-based compensation

-

-

7,448

-

-

-

7,448

Dividends declared

-

-

-

-

(32,985)

-

(32,985)

Share purchase

(1,283,674)

(5,491)

-

-

(1,003)

-

(6,494)

Net earnings

-

-

-

-

43,873

8,450

52,323

Other comprehensive loss

-

-

-

(10,755)

-

-

(10,755)

Total comprehensive (loss) income

-

-

-

(10,755)

43,873

8,450

41,568

Balance, June 30, 2019

735,588,290

$

4,188,873

$

48,448

$

(270,934)

$

(265,874)

$

510,870

$

4,211,383

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)

Three months ended

Six months ended

Cash provided by (used in)

June 30,

June 30,

2020

2019

2020

2019

Operating activities

$

48,258

$

(65,310)

Net earnings (loss)

$

(8,626)

$

52,323

Items not involving cash and other adjustments

118,204

240,179

Depreciation, depletion and amortization

88,293

158,397

Share-based compensation

2,391

2,752

5,380

7,448

Foreign exchange gain

(12,599)

(1,417)

(37,873)

(863)

Finance costs, net

15,272

4,670

31,436

8,406

Recognition of deferred revenue (Note 9)

(16,510)

(12,811)

(34,514)

(25,335)

Deferred tax expense (recovery)

41,042

(10,852)

93,410

(5,715)

(Income) loss from equity investment in associate

(2,030)

(1,288)

(1,946)

10,647

Revaluation of derivative asset and liability (Note 16)

12,826

(192)

17,664

(362)

Revaluation of marketable securities (Note 16)

(1,635)

(589)

553

(581)

Other

(4,999)

3,869

(1,963)

4,496

Reclamation payments (Note 10)

(567)

(2,202)

(1,222)

(6,367)

Other payments

(301)

(662)

(761)

(3,052)

Changes in long-term inventory

(20,382)

(11,006)

(38,181)

(10,382)

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

(141,359)

154,530

(85,830)

77,549

37,611

204,469

121,022

266,609

Investing activities

(100,161)

(241,227)

Investment in mineral properties, plant and equipment

(178,717)

(360,714)

Contingent consideration received (Note 4)

-

-

25,714

-

Interest received

234

3,797

612

7,921

Distributions from associate

6,000

15,505

6,017

15,730

Other

90

(2,644)

694

(2,273)

(93,837)

(162,059)

(208,190)

(339,336)

Financing activities

(2,854)

(6,418)

Interest paid

(1,034)

(2,421)

Dividends paid to shareholders

(42,624)

(33,061)

(42,624)

(33,061)

Share purchase (Note 11)

-

(6,494)

(7,427)

(6,494)

Principal payments of lease liabilities

(3,700)

(2,712)

(7,270)

(5,350)

Proceeds from debt (Note 8)

38,862

-

245,867

35,000

Principal repayments of debt (Note 8)

(17,496)

-

(48,122)

-

Proceeds from common shares issued

208

1,921

2,265

8,280

(27,604)

(41,380)

136,271

(4,046)

Effect of foreign exchange on cash balances

850

(704)

(15,726)

(3,588)

(Decrease) increase in cash and cash equivalents during the

period

(82,980)

326

33,377

(80,361)

Cash and cash equivalents, beginning of period

366,920

734,742

250,563

815,429

Cash and cash equivalents, end of period

$

283,940

$

735,068

$

283,940

$

735,068

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 and six months ended June 30, 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 owns 80% of the Candelaria and Ojos del Salado mining complex ("Candelaria") located in Chile. 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'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 July 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.
      Lundin Mining continues to manage and respond to the COVID-19 pandemic within the framework of its Crisis Management and Pandemic Response Plan, along with recommendations of health authorities and local and national regulatory requirements. The Company has implemented preventative measures to ensure the safety of its workforce, local communities and other key stakeholders. The Zinc Expansion Project at Neves-Corvo continues to be temporarily suspended and business continuity measures have been implemented at all of our sites in an effort to mitigate and minimize potential future impacts of this pandemic, particularly with travel and contractors from outside the immediate mine regions.
      • 6 -

LUNDIN MINING CORPORATION

Notes to condensed interim consolidated financial statements

For the three and six months ended June 30, 2020

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

During the second quarter of 2020, the fast-growing infection rates in Brazil, Chile and the USA have increased the risk of outbreaks in the communities near Chapada, Candelaria and Eagle whereas rates of infection in the areas near our operations in Sweden and Portugal remained relatively stable. In the event of a localized outbreak in any of our operating jurisdictions, there may be a need to implement increased isolation and containment measures to prevent the spread of the virus. These actions could impact production levels, delay maintenance activities and disrupt supply chains.

To date, production disruptions have been minimal and there has been no significant disruption in the delivery or receipt of goods at our operations as a result of COVID-19.

As at June 30, 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 $1,005.6 million, Chapada's ore stockpile of $266.0 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:

June 30,

December 31,

2020

2019

Cash

$

264,760

$

233,466

Short-term deposits

19,180

17,097

$

283,940

$

250,563

4. TRADE AND OTHER RECEIVABLES

Trade and other receivables are comprised of the following:

June 30,

December 31,

2020

2019

Trade receivables

$

319,922

$

229,730

Value added tax

23,953

44,948

Prepaid expenses

16,720

21,726

Other receivables

14,964

39,378

$

375,559

$

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 and six months ended June 30, 2020

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

5. INVENTORIES

Inventories are comprised of the following:

June 30,

December 31,

2020

2019

Ore stockpiles

$

59,226

$

49,696

Concentrate stockpiles

32,370

44,015

Materials and supplies

130,145

122,792

$

221,741

$

216,503

Long-term inventory is comprised of ore stockpiles. As at June 30, 2020, the Company had $347.4 million (December 31, 2019 - $297.3 million) and $266.0 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

148,649

938

245,524

395,111

Disposals and transfers

118

151,914

(153,414)

(1,382)

Effects of foreign exchange

(20,884)

(7,349)

(1,519)

(29,752)

As at June 30, 2019

3,784,315

2,603,943

440,860

6,829,118

Chapada acquisition

672,642

237,371

18,700

928,713

Additions

80,954

29,124

241,447

351,525

Disposals and transfers

125,106

117,987

(271,749)

(28,656)

Effects of foreign exchange

(15,411)

(6,560)

(1,621)

(23,592)

As at December 31, 2019

4,647,606

2,981,865

427,637

8,057,108

Additions

84,129

11,787

123,667

219,583

Disposals and transfers

30,363

83,994

(117,815)

(3,458)

Effects of foreign exchange

(4,448)

(2,399)

77

(6,770)

As at June 30, 2020

$

4,757,650

$

3,075,247

$

433,566

$

8,266,463

- 8 -

LUNDIN MINING CORPORATION

Notes to condensed interim consolidated financial statements

For the three and six months ended June 30, 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

78,211

84,720

-

162,931

Disposals and transfers

-

(513)

-

(513)

Effects of foreign exchange

(13,622)

(3,948)

-

(17,570)

As at June 30, 2019

1,784,350

963,457

-

2,747,807

Depreciation

180,027

98,354

-

278,381

Disposals and transfers

(282)

(22,204)

-

(22,486)

Effects of foreign exchange

(8,939)

(3,211)

-

(12,150)

As at December 31, 2019

1,955,156

1,036,396

-

2,991,552

Depreciation

173,500

101,169

-

274,669

Disposals and transfers

-

(924)

-

(924)

Effects of foreign exchange

(2,443)

(952)

-

(3,395)

As at June 30, 2020

$

2,126,213

$

1,135,689

$

-

$

3,261,902

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 June 30, 2020

$

2,631,437

$

1,939,558

$

433,566

$

5,004,561

During the six months ended June 30, 2020, the Company capitalized $3.1 million of finance costs to assets under construction, at a weighted average interest rate of 4.4%. There were no finance costs capitalized for the three months ended June 30, 2020. During the three and six months ended June 30, 2019, the Company capitalized $2.8 million and $5.1 million, respectively, of finance costs to assets under construction, at a weighted average interest rate of 5.1% for both periods.

During the three and six months ended June 30, 2020, the Company capitalized $29.7 million (Q2 2019 - $33.3 million) and $63.6 million (YTD Q2 2019 - $83.9 million), respectively, of deferred stripping costs to mineral properties. The depreciation expense related to deferred stripping for the three and six months ended June 30, 2020, was $46.8 million (Q2 2019 - $18.1 million) and $87.8 million (YTD Q2 2019 - $21.3 million), respectively. Included in the mineral properties balance at June 30, 2020, is $262.9 million (December 31, 2019 - $205.4 million) related to deferred stripping at Candelaria and $88.0 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 and six months ended June 30, 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

879

Depreciation

(5,173)

Effects of foreign exchange

84

As at June 30, 2019

39,052

Additions

14,786

Depreciation

(7,469)

Disposals

(1,800)

Effects of foreign exchange

(205)

As at December 31, 2019

44,364

Additions

5,639

Depreciation

(6,999)

Disposals

(450)

Effects of foreign exchange

(114)

As at June 30, 2020

$

42,440

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:

June 30,

December 31,

2020

2019

Trade payables

$

136,200

$

188,430

Unbilled goods and services

76,349

72,702

Employee benefits payable

57,525

59,792

Chapada derivative liability - current portion

25,000

22,472

Royalties payable

10,942

8,769

Prepayment from customer

9,198

6,562

Other

19,416

11,340

$

334,630

$

370,067

The current portion of the Chapada derivative liability ($25.0 million) is expected to be paid in early August 2020.

- 10 -

LUNDIN MINING CORPORATION

Notes to condensed interim consolidated financial statements

For the three and six months ended June 30, 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:

June 30,

December 31,

2020

2019

Revolving credit facility (a)

$

343,062

$

222,762

Term loans (b)

90,000

35,000

Lease liabilities (c)

37,608

42,616

Commercial paper (d)

22,396

-

Line of credit (e)

8,899

8,171

Debt and lease liabilities

501,965

308,549

Less: current portion

127,616

80,782

Long-term portion

$

374,349

$

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

1,583

35,000

36,583

Payments

(5,981)

-

(5,981)

Interest

632

-

632

Effects of foreign exchange

88

-

88

As at June 30, 2019

38,966

35,000

73,966

Additions

12,319

418,418

430,737

Payments

(7,502)

(187,754)

(195,256)

Disposals

(1,870)

-

(1,870)

Interest

1,009

-

1,009

Financing fee amortization

-

196

196

Effects of foreign exchange

(306)

73

(233)

As at December 31, 2019

42,616

265,933

308,549

Additions

5,187

245,867

251,054

Payments

(7,969)

(48,122)

(56,091)

Disposals

(464)

-

(464)

Interest

699

-

699

Financing fee amortization

-

300

300

Effects of foreign exchange

(2,461)

379

(2,082)

As at June 30, 2020

37,608

464,357

501,965

Less: current portion

12,671

114,945

127,616

Long-term portion

$

24,937

$

349,412

$

374,349

  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 June 30, 2020, the balance outstanding was $345.0 million (December 31, 2019 - $225.0 million), along with letters of credit totalling $23.9 million (SEK 162.0 million and €5.9 million) (December 31, 2019 - $23.6 million). Deferred financing fees of $1.9 million, at June 30, 2020, have been netted against borrowings (December 31, 2019 - $2.2 million).
    • 11 -

LUNDIN MINING CORPORATION

Notes to condensed interim consolidated financial statements

For the three and six months ended June 30, 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 June 30, 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 de Neves-Corvo, S.A. ("Somincor"), a subsidiary of the Company which owns the Neves-Corvo mine, has a commercial paper program which matures in October 2021. The $33.6 million (€30.0 million) program bears interest at EURIBOR +0.84%. During the second quarter of 2020, Somincor drew down $16.4 million (€15.0 million) under this program with a required repayment date of June 29, 2020. Upon full repayment, Somincor drew down an additional $22.5 million (€20 million) with a required repayment date of July 29, 2020. As at June 30, 2020, the total balance outstanding was $22.4 million (€20 million).
  4. Somincor has a $28.0 million (€25.0 million) line of credit for equipment financing. During the first quarter of 2020, Somincor drew $2.0 million (€1.8 million) on the line of credit for purchases of equipment. As at June 30, 2020, the balance outstanding was $8.9 million (€7.9 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

$

14,346

$

114,945

$

129,291

One to five years

22,579

351,324

373,903

More than five years

3,807

-

3,807

Total undiscounted obligations as at June 30, 2020

$

40,732

$

466,269

$

507,001

- 12 -

LUNDIN MINING CORPORATION

Notes to condensed interim consolidated financial statements

For the three and six months ended June 30, 2020

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

9. DEFERRED REVENUE

The following table summarizes the changes in deferred revenue:

As at December 31, 2018

$

588,854

Recognition of revenue

(25,335)

Finance costs

14,995

Effects of foreign exchange

(611)

As at June 30, 2019

577,903

Chapada acquisition

175,360

Recognition of revenue

(33,760)

Variable consideration adjustment

18,227

Finance costs

20,776

Effects of foreign exchange

(360)

As at December 31, 2019

758,146

Recognition of revenue

(34,514)

Finance costs

20,627

Effects of foreign exchange

(886)

As at June 30, 2020

743,373

Less: current portion

83,325

Long-term portion

$

660,048

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.

- 13 -

LUNDIN MINING CORPORATION

Notes to condensed interim consolidated financial statements

For the three and six months ended June 30, 2020

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

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

4,008

-

4,008

Changes in estimate

4,069

(1,220)

2,849

Changes in discount rate

20,687

-

20,687

Payments

(6,367)

-

(6,367)

Effects of foreign exchange

(1,147)

49

(1,098)

Balance, June 30, 2019

274,734

44,035

318,769

Chapada acquisition

71,154

-

71,154

Accretion

5,717

-

5,717

Changes in estimate

(5,626)

(2,297)

(7,923)

Changes in discount rate

2,129

-

2,129

Payments

(4,128)

-

(4,128)

Effects of foreign exchange

(868)

(1,066)

(1,934)

Balance, December 31, 2019

343,112

40,672

383,784

Accretion

5,299

-

5,299

Changes in estimate

(27,399)

(225)

(27,624)

Changes in discount rate

18,486

-

18,486

Payments

(1,222)

-

(1,222)

Effects of foreign exchange

(409)

(1,047)

(1,456)

Balance, June 30, 2020

337,867

39,400

377,267

Less: current portion

2,860

-

2,860

Long-term portion

$

335,007

$

39,400

$

374,407

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 0.2% to 6.9% (December 31, 2019 - 0.3% to 7.0%).

- 14 -

LUNDIN MINING CORPORATION

Notes to condensed interim consolidated financial statements

For the three and six months ended June 30, 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

Six months ended

June 30,

June 30,

2020

2019

2020

2019

Basic weighted average number of shares outstanding

733,632,700

735,934,553

734,059,980

735,598,232

Effect of dilutive securities (i)

869,202

-

-

739,129

Diluted weighted average number of shares outstanding

734,501,902

735,934,553

734,059,980

736,337,361

Antidilutive securities

3,249,000

3,513,000

4,251,500

4,518,500

  1. As a result of the Company's net loss position for the six months ended June 30, 2020, 938,673 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.
    For the three months ended June 30, 2019, 750,580 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

Six months ended

June 30,

June 30,

2020

2019

2020

2019

Stock options

75,000

-

3,974,000

3,934,000

SUs

25,000

-

1,027,500

1,029,500

  1. Dividends
    During the three and six months ended June 30, 2020, the Company declared dividends in the amount of $21.1 million (Q2 2019 - $16.4 million) or C$0.04 per share (Q2 2019 - C$0.03), and $43.2 million (YTD Q2 2019 - $33.0 million) or C$0.08 per share (YTD Q2 2019 - C$0.06), respectively.
  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 six months ended June 30, 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 were cancelled. During the three months ended June 30, 2020, no shares were purchased under the NCIB.
    • 15 -

LUNDIN MINING CORPORATION

Notes to condensed interim consolidated financial statements

For the three and six months ended June 30, 2020

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

For the three and six months ended June 30, 2019, 1,283,674 shares were purchased under the NCIB at an average price of C$6.82 per share for total consideration of $6.5 million. All the common shares purchased were cancelled.

12. REVENUE

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

Three months ended

Six months ended

June 30,

June 30,

2020

2019

2020

2019

Copper

$

320,908

$

257,881

$

628,438

$

503,335

Gold

67,012

23,805

123,353

46,410

Zinc

35,583

69,800

76,048

147,636

Nickel

29,330

32,702

65,687

48,911

Silver

11,183

7,488

18,835

14,551

Lead

8,327

13,503

18,310

23,497

Other

4,451

4,782

9,838

7,739

476,794

409,961

940,509

792,079

Provisional pricing adjustments on concentrate sales

56,525

(40,710)

(29,205)

(6,444)

Revenue

$

533,319

$

369,251

$

911,304

$

785,635

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

Three months ended

Six months ended

June 30,

June 30,

2020

2019

2020

2019

Europe

$

274,306

$

227,628

$

460,409

$

389,041

Asia

111,951

150,795

316,013

334,137

North America

43,801

26,508

99,772

51,856

South America

46,736

5,030

64,315

17,045

476,794

409,961

940,509

792,079

Provisional pricing adjustments on concentrate sales

56,525

(40,710)

(29,205)

(6,444)

Revenue

$

533,319

$

369,251

$

911,304

$

785,635

13. PRODUCTION COSTS

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

Three months ended

Six months ended

June 30,

June 30,

2020

2019

2020

2019

Direct mine and mill costs

$

244,480

$

234,322

$

493,393

$

421,282

Transportation

22,058

18,519

44,317

33,871

Royalties

6,486

2,997

13,999

5,755

Total production costs

$

273,024

$

255,838

$

551,709

$

460,908

- 16 -

LUNDIN MINING CORPORATION

Notes to condensed interim consolidated financial statements

For the three and six months ended June 30, 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

Six months ended

June 30,

June 30,

2020

2019

2020

2019

Production costs

$

64,420

$

123,244

Wages and benefits

$

58,831

$

116,084

Retirement benefits

57

213

828

444

Share-based compensation

634

739

1,395

1,864

General and administrative expenses

65,111

59,783

125,467

118,392

4,701

9,552

Wages and benefits

4,903

10,842

Retirement benefits

182

195

473

402

Share-based compensation

1,733

1,965

3,907

5,474

General exploration and business development

6,616

7,063

13,932

16,718

965

2,073

Wages and benefits

1,591

3,687

Retirement benefits

9

13

22

29

Share-based compensation

24

48

78

110

998

1,652

2,173

3,826

Total employee benefits

$

72,725

$

68,498

$

141,572

$

138,936

15. FINANCE INCOME AND COSTS

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

Three months ended

Six months ended

June 30,

June 30,

2020

2019

2020

2019

Interest income

$

315

$

3,704

$

686

$

7,770

Deferred revenue finance costs

(10,337)

(4,648)

(17,976)

(9,851)

Interest expense and bank fees

(3,687)

(1,417)

(6,607)

(2,730)

Accretion expense on reclamation provisions

(2,600)

(2,038)

(5,299)

(4,008)

Lease liability interest

(349)

(316)

(699)

(632)

Other

1,386

45

(1,541)

1,045

Total finance costs, net

$

(15,272)

$

(4,670)

$

(31,436)

$

(8,406)

Finance income

$

1,701

$

3,749

$

686

$

8,815

Finance costs

(16,973)

(8,419)

(32,122)

(17,221)

Total finance costs, net

$

(15,272)

$

(4,670)

$

(31,436)

$

(8,406)

- 17 -

LUNDIN MINING CORPORATION

Notes to condensed interim consolidated financial statements

For the three and six months ended June 30, 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

Six months ended

June 30,

June 30,

2020

2019

2020

2019

Foreign exchange gain (loss)

$

6,845

1,578

$

46,674

(17)

Revaluation of marketable securities

1,635

589

(553)

581

Revaluation of derivative asset and liability

(12,826)

192

(17,664)

362

Other expense

(5,519)

(3,727)

(9,277)

(3,721)

Total other (expense) income, net

$

(9,865)

$

(1,368)

$

19,180

$

(2,795)

Other expenses for the three and six months ended June 30, 2020 includes $3.8 million and $6.3 million, respectively, of idle project costs.

17. 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.

For the three and six months ended June 30, 2020, the deferred tax expense includes $13.2 million (Q2 2019 - nil) and $75.7 million (YTD Q2 2019 - nil), respectively, arising from the revaluation of non-monetary assets from BRL to USD. During the first quarter of 2020, the Company also recorded a $13.6 million (2019 - nil) write-down of recoverable taxes in Chile due to a change in tax rates.

18. 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 June 30, 2020 and December 31, 2019:

June 30, 2020

December 31, 2019

Carrying

Carrying

Level

value

Fair value

value

Fair value

Financial assets

Fair value through profit or loss

Restricted cash

1

$

45,432

$

45,432

$

47,666

$

47,666

Trade receivables (provisional)

2

280,312

280,312

203,565

203,565

Marketable securities

1

3,590

3,590

4,331

4,331

Derivative asset

2

-

-

25,714

25,714

$

329,334

$

329,334

$

281,276

$

281,276

Financial liabilities

Amortized cost

$

464,357

$

464,357

Debt

2

$

265,933

$

265,933

Fair value through profit or loss

$

109,511

$

109,511

Chapada derivative liability

2

$

91,817

91,817

- 18 -

LUNDIN MINING CORPORATION

Notes to condensed interim consolidated financial statements

For the three and six months ended June 30, 2020

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

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).

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 positive pricing adjustments of $56.5 million in revenue during the three months ended June 30, 2020 (Q2 2019 - $40.7 million negative pricing adjustments) and negative pricing adjustments of $29.2 million in revenue during the six months ended June 30, 2020 (YTD Q2 2019 - $6.4 million negative pricing adjustments).

Derivative asset & derivative liability - 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 -

LUNDIN MINING CORPORATION

Notes to condensed interim consolidated financial statements

For the three and six months ended June 30, 2020

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

19. COMMITMENTS AND CONTINGENCIES

  1. The Company has capital commitments of $87.4 million on various initiatives, of which $52.4 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:
    1. 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.
    2. In July 2020, a tax assessment was received for the 2017 taxation year relating to the same matter as above. The Chilean Internal Revenue Service issued a tax assessment of $144.3 million ($66.0 million in withholding taxes plus interest and penalties of $78.3 million) on interest payments made in 2017. The Company will file an administrative appeal in response to the assessment. While not yet assessed, a similar position taken on interest payments made for taxation years 2018 to 2020 year-to-date could equate to approximately $28.4 million in additional withholding taxes, excluding possible penalties and interest.

No tax expenses were accrued for the above assessments as the Company believes its original filing positions were 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.

- 20 -

LUNDIN MINING CORPORATION

Notes to condensed interim consolidated financial statements

For the three and six months ended June 30, 2020

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

For the three months ended June 30, 2020

Candelaria

Chapada

Eagle

Neves-Corvo

Zinkgruvan

Other

Total

Chile

Brazil

USA

Portugal

Sweden

Revenue

$

255,132

$

114,125

$

52,689

$

81,188

$

30,185

$

-

$

533,319

Cost of goods sold

Production costs

(115,523)

(43,985)

(31,788)

(60,945)

(20,159)

(624)

(273,024)

Depreciation, depletion and amortization

(68,065)

(10,820)

(17,139)

(13,944)

(7,787)

(449)

(118,204)

Gross profit (loss)

71,544

59,320

3,762

6,299

2,239

(1,073)

142,091

General and administrative expenses

-

-

-

-

-

(10,608)

(10,608)

General exploration and business development

(6,924)

(796)

(112)

(151)

(699)

(723)

(9,405)

Finance (costs) income

(7,719)

(4,111)

(428)

580

(863)

(2,731)

(15,272)

Income from equity investment in associate

-

-

-

-

-

2,030

2,030

Other (expense) income

(4,318)

7,424

(1,718)

(2,182)

(1,486)

(7,585)

(9,865)

Income tax (expense) recovery

(17,481)

(29,506)

41

(657)

2,935

(6,045)

(50,713)

Net earnings (loss)

$

35,102

$

32,331

$

1,545

$

3,889

$

2,126

$

(26,735)

$

48,258

Capital expenditures

$

53,615

$

8,304

$

2,214

$

26,441

$

9,571

$

16

$

100,161

For the six months ended June 30, 2020

Candelaria

Chapada

Eagle

Neves-Corvo

Zinkgruvan

Other

Total

Chile

Brazil

USA

Portugal

Sweden

Revenue

$

428,104

$

198,246

$

100,026

$

126,965

$

57,963

$

-

$

911,304

Cost of goods sold

Production costs

(234,211)

(94,663)

(69,146)

(112,999)

(39,278)

(1,412)

(551,709)

Depreciation, depletion and amortization

(139,134)

(22,430)

(35,906)

(27,593)

(14,243)

(873)

(240,179)

Gross profit (loss)

54,759

81,153

(5,026)

(13,627)

4,442

(2,285)

119,416

General and administrative expenses

-

-

-

-

-

(22,552)

(22,552)

General exploration and business development

(11,587)

(1,590)

(208)

(1,323)

(4,531)

(3,381)

(22,620)

Finance (costs) income

(15,616)

(8,153)

(850)

54

(1,768)

(5,103)

(31,436)

Income from equity investment in associate

-

-

-

-

-

1,946

1,946

Other (expense) income

377

38,811

(2,262)

(443)

1,012

(18,315)

19,180

Income tax (expense) recovery

(20,208)

(105,719)

83

6,220

223

(9,843)

(129,244)

Net earnings (loss)

$

7,725

$

4,502

$

(8,263)

$

(9,119)

$

(622)

$

(59,533)

$

(65,310)

Capital expenditures

$

130,195

$

12,028

$

7,645

$

73,639

$

17,505

$

215

$

241,227

- 21 -

LUNDIN MINING CORPORATION

Notes to condensed interim consolidated financial statements

For the three and six months ended June 30, 2020

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

For the three months ended June 30, 2019

Candelaria

Chapada

Eagle

Neves-Corvo

Zinkgruvan

Other

Total

Chile

Brazil

USA

Portugal

Sweden

Revenue

$

178,677

$

-

$

59,412

$

77,519

$

53,643

$

-

$

369,251

Cost of goods sold

(131,325)

-

(40,071)

(60,890)

(22,804)

(748)

(255,838)

Production costs

Depreciation, depletion and amortization

(45,962)

-

(20,141)

(12,795)

(8,966)

(429)

(88,293)

Gross profit (loss)

1,390

-

(800)

3,834

21,873

(1,177)

25,120

General and administrative expenses

-

-

-

-

-

(10,169)

(10,169)

General exploration and business development

(9,317)

-

(3,015)

(2,208)

(5,487)

(3,968)

(23,995)

Finance (costs) income

(8,035)

-

(213)

(954)

(784)

5,316

(4,670)

Income from equity investment in associate

-

-

-

-

-

1,288

1,288

Other income (expense)

1,745

-

24

(5,835)

388

2,310

(1,368)

Income tax recovery (expense)

10,335

-

2,086

5,185

(3,124)

(9,314)

5,168

Net (loss) earnings

$

(3,882)

$

-

$

(1,918)

$

22

$

12,866

$

(15,714)

$

(8,626)

Capital expenditures

$

123,946

$

-

$

10,534

$

34,994

$

9,208

$

35

$

178,717

For the six months ended June 30, 2019

Candelaria

Chapada

Eagle

Neves-Corvo

Zinkgruvan

Other

Total

Chile

Brazil

USA

Portugal

Sweden

Revenue

$

411,338

$

-

$

105,620

$

162,666

$

106,011

$

-

$

785,635

Cost of goods sold

(245,528)

-

(57,646)

(114,690)

(41,125)

(1,919)

(460,908)

Production costs

Depreciation, depletion and amortization

(85,761)

-

(30,316)

(25,398)

(16,030)

(892)

(158,397)

Gross profit (loss)

80,049

-

17,658

22,578

48,856

(2,811)

166,330

General and administrative expenses

-

-

-

-

-

(23,787)

(23,787)

General exploration and business development

(15,168)

-

(8,120)

(4,036)

(9,662)

(5,709)

(42,695)

Finance (costs) income

(16,054)

-

(386)

(684)

(1,634)

10,352

(8,406)

Loss from equity investment in associate

-

-

-

-

-

(10,647)

(10,647)

Other (expense) income

(73)

-

44

(3,950)

2,028

(844)

(2,795)

Income tax (expense) recovery

(3,379)

-

1,909

515

(9,254)

(15,468)

(25,677)

Net earnings (loss)

$

45,375

$

-

$

11,105

$

14,423

$

30,334

$

(48,914)

$

52,323

Capital expenditures

$

232,892

$

-

$

20,146

$

88,241

$

19,357

$

78

$

360,714

- 22 -

LUNDIN MINING CORPORATION

Notes to condensed interim consolidated financial statements

For the three and six months ended June 30, 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

Six months ended

June 30,

June 30,

2020

2019

2020

2019

Wages and benefits

$

1,527

$

1,508

$

3,363

$

3,276

Pension benefits

41

41

82

79

Share-based compensation

954

849

2,114

1,719

$

2,522

$

2,398

$

5,559

$

5,074

22. SUPPLEMENTARY CASH FLOW INFORMATION

Three months ended

Six months ended

June 30,

June 30,

2020

2019

2020

2019

Changes in non-cash working capital items consist of:

Trade and income tax receivables, inventories, and

other current assets

$

(136,890)

$

92,588

$

(72,337)

$

74,453

Trade and income taxes payable, and other current

liabilities

(4,469)

61,942

(13,493)

3,096

$

(141,359)

$

154,530

$

(85,830)

$

77,549

Operating activities included the following cash payments:

Income taxes (refunded) paid

$

(4,926)

$

(57,623)

$

35,195

$

(7,214)

- 23 -

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Lundin Mining Corporation published this content on 29 July 2020 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 01 August 2020 15:31:10 UTC