Sumitomo Metal Mining : Explanation Script of the Telephone Conference for Financial Result of 3rd Quarter FY2021

February 8, 2022

Teleconference Explanation Script for Consolidated Financial Results for

the Nine Months Ended December 31, 2021

1. General briefing
   The following is an overview of SMM's consolidated financial results for the nine months ended December 31, 2021 as announced today. Please take a look at the cover summary on the earnings report.

1. Consolidated Financial Results for the nine months ended December 31, 2021: Overview of Business Performance

1. Consolidated operating results for the nine months ended December 31, 2021

• Sales increased by ¥267.3 bn to ¥922.5 bn year-on-year. (Gross profit increased by ¥80.7 bn to ¥180.9 bn year-on-year.)

• Profit before tax increased by ¥130.8 bn to ¥195.4 bn year-on-year.

• Quarterly gross profit increased by ¥134.0 bn to ¥180.9 bn year-on-year.

• Profit for this quarter attributable to owners of the parent company increased by ¥124.7 bn to ¥170.1 bn.

As above, we saw an increase in sales and profit year-on-year.

1. Overview of consolidated financial results for the nine months ended December 31, 2021 The following is an overview of the consolidated financial results for the nine months ended December 31, 2021.

[Consolidated Financial Results for the nine months ended December 31, 2021: Performance Briefing & YoY Comparison]

• Consolidated Sales

Please take a look at page 2 of the attachment to the earnings report.

Copper prices initially saw an upward trend, but the spread of COVID-19 variants caused demand to fall, starting a downward trend. However, they subsequently saw an increase due to supply concerns and other factors. Nickel prices saw an upward trend thanks to the recovering world economy and other factors. While gold prices were on an upward trend as the spread of COVID-19 variants casts a shadow over the prospect of economic recovery, they moved towards a downward trend as the US economy recovered, and went on to stay mainly at a constant level. As a result, copper and nickel prices were both higher year-on- year in the nine-month period at 9,593$/t and 8.51$/lb, respectively, the gold price was lower year-on-year at 1799.9$/toz. In terms of the average exchange rate, the yen depreciated year-on-year to 111.11¥/$.

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Consolidated sales in this period increased by ¥267.3 bn year-on-year to ¥922.5 bn through copper and nickel prices being higher than the same period last year.

1. • Consolidated profit before tax, quarterly gross profit and quarterly profit attributable to owners of the parent company
     In addition to an increased income, share of profit of investments accounted for using equity method also saw improvements through things like a rise in copper prices, resulting in year-on-year increases of ¥130.8 bn to ¥195.4 bn in profit before tax, ¥134.0 bn to ¥180.9 bn in quarterly gross profit, and ¥124.7 bn to ¥170.1 bn in quarterly profit attributable to owners of the parent company.
2. Individual topics

The following covers a range of topics in the consolidated operating results for the nine months ended December 31, 2021. Please refer to page 7 in the Supplementary Explanation for Financial Summary for information on production volume.

• Overseas copper mines
  As we are implementing planned reduced operations, like the suspension of a portion of mills (mineral ore milling machinery), to account for the effect of the spread of COVID-19, production volume in this period saw a year-on-year decrease to 296 thousand tonnes.

• Production volume this period was 294 thousand tonnes, an increase when compared to last year, which had a temporary transition to a care and maintenance status due to the spread of COVID-19.

• Taganito HPAL

Boiler trouble that occurred in the first half of the year, the power outage caused by Typhoon Rai in December, and other factors led to a production volume that decreased year-on-year.

• CBNC (Coral Bay)
  Operations saw a temporary drop in September due to the spread of COVID-19, and with shortages of some materials among other factors, this resulted in production volume slightly decreasing year-on-year.

• Materials business
  Sales in the materials business segment for this period marked an increased income of ¥53.0 bn year-on-year to ¥203.7 bn due to factors including increased demand for battery materials when compared to last year, which saw a temporary period of stagnant demand,

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in addition to ongoing favorable demand in powder materials. Profit for the segment was ¥20.3 bn, marking a ¥15.3 bn year-on-year increase.

2. Full-Year Consolidated Results Forecast for FY2021 (Comparison with November Forecast)

The full-year consolidated results forecast was revised in the previous November; we have again revised our cumulative results forecast for the fiscal year. Please take a look at the lower part of the cover summary of the earnings report and the bottom of page 1 in the Supplementary Explanation for Financial Summary.

1. Sales and profit and loss

We have revised the Full-Year Consolidated Results Forecast for FY2021 as follows.

1. Sales will increase to ¥1,211.0 bn, an income increase of ¥36.0 bn compared to the November forecast
   (Gross profit will increase to ¥230.0 bn, an increase of ¥32.0 bn compared to the November forecast.)
2. Profit before tax will increase by ¥48.0 bn to ¥314.0 bn compared to the November forecast.
3. Profit attributable to owners of the parent company will be ¥248.0 bn, an increase of ¥34.0 bn when compared to the November forecast.

The metal prices and exchange rates used as the foundation for the forecast are as shown on page 5 of the attachments to the earnings report and the lower part of page 1 of the Supplementary Explanation for Financial Summary. We estimate that average metal prices for the fiscal year will be above what were forecast in November, and that the average exchange rate for the fiscal year will show the yen depreciating when compared to the November forecast.

1. Individual topics

The following covers a range of topics in the consolidated results forecast. Please refer to page 7 in the Supplementary Explanation for Financial Summary for information on production volume.

1. Impact of the transfer of all held interests of the Sierra Gorda Copper Mine
   The impact was estimated in the November forecast to be about ¥70.0 bn, assuming the transfer will be completed by March 2022. This has been revised to about ¥74.0 bn and is included in the profit before tax here. The main reason that it has increased by ¥4.0 bn is the impact of exchange rates. This amount is ultimately an estimated value calculated based on the operating results forecast at the time of creation, and it is not fixed.

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1. Overseas copper mines

With the reduced impact of the spread of COVID-19, mining volume was increased from April and the process plant scheduled to restart in 2022 was restarted in July with 50% of its processing capacity. Due to the impact of a powerful monsoon season that lasted longer than average years, the ramping-up from July through September was temporarily sluggish, but the mining volume gradually recovered from October onward, and the full- year production volume is expected to be almost as per the November forecast at 398 thousand tonnes.

We have largely continued smooth operation based on our annual plan, which took the effect of the spread of COVID-19 into account. However, ore grade is showing a decline and we are trying to cover that with processing volume. We estimate that there will be a full-year production volume of 399 thousand tonnes, which is almost as per the November forecast.

In June, our partner Lundin Mining announced a production volume guidance downward revision as mining was delayed due to pit collapse prevention measures taken against faults existing in open-pit mining areas. As we are operating while we take countermeasures to stabilize the pit and continue monitoring we estimated in the November forecast that full-year production volume would be only 107 thousand tonnes, but the impact of the countermeasures to stabilize the pit has eased, and in this forecast we predict an annual production volume of 116 thousand tonnes, which exceeds the November forecast.

For Sierra Gorda, application of the equity method was stopped from Q3.

1. Taganito HPAL
   The impact of the boiler equipment trouble that occurred in the first quarter was incorporated into the November forecast, but due to other factors such as the power outage caused by Typhoon Rai in December, the full-year production volume is predicted to be 26.1 thousand tonnes, a decrease of about 10% compared to the November forecast.
2. CBNC (Coral Bay)
   The temporary drop in operations in September due to the spread of COVID-19 was incorporated in the November forecast, but due to factors including a shortage of some materials, production volume is estimated to slightly decrease compared to the November forecast.

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3. Dividends

This section concerns dividends.

Please take a look at the cover summary on the earnings report and the "Notice Regarding Amendments to the Dividend Forecast for the Year Ending March 2022 (97th period)" that was disclosed today.

Given that we have revised the full-year consolidated results forecast, we are revising the end-of- year dividend forecast.

In the full-year consolidated results forecast, we estimated that the Sierra Gorda divestment will be completed by March 2022 and have included the impact of the series of procedures related to the divestment. However, the date of the divestment is currently undecided, so the impact of the series of procedures related to the Sierra Gorda divestment was excluded from the calculations for the year-end dividend forecast, and the consolidated dividend payout ratio is set at 35% or higher.

As a result, the year-end dividend forecast increased by ¥38 to ¥109 compared to the previous forecast of ¥71/share. As a result, we expect that the annual dividend is going to be a record high of ¥222/share.

Further, included in the impact of the series of procedures related to the Sierra Gorda divestment is an amount equivalent to the reversal of allowances for doubtful debts against the loans, etc. for Sierra Gorda S.C.M. This amount was coordinated with the FY2019 balance of retained earnings at the beginning of the period as the cumulative impact taken with the application of the amended IAS 28 "Investments in Affiliated Companies and Joint Ventures."

The equivalent to this reversal, when the allowance for doubtful debts was confirmed, was not appropriated as a loss in FY2019 as it was a cumulative impact. Instead, it was coordinated at the beginning of the fiscal year to reduce retained earnings and appropriated as such. As it has not undergone profit and loss accounting, it will not be included in dividend forecast calculations disclosed after the transfer date is set. The SMM shareholder return dividend payout ratio will be maintained at 35% or over, assuming this exclusion.

Ⅱ. Breakdown of Gross Profit and Segment Profits, and Other Details

Please look at the Supplementary Explanation for Financial Summary of the results. We will only go over main points.

1. The results/forecast comparison on page 1

1. Q3 FY2021 financial results vs Q3 FY2020 financial results
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