Lundin Mining Corporation

2017 Capital Expenditure and Exploration Guidance

Capital expenditures, excluding capitalized interest, are expected to be $490 million (prior guidance $390 million), as outlined below.
The Los Diques tailings project remains on schedule and the project's overall capital cost forecast remains unchanged, although the expected timing of certain payments have resulted in $15 million of expenditures expected in 2018 that will now be paid in 2017.

Following expansion of Mineral Reserves and life of mine plans, previously announced production level increases, cost restraint driven deferrals in purchases of mobile equipment in 2015 and 2016 and commencement of an initiative to self-perform some underground mining currently done by contractor, management has undergone an intensive review of Candelaria's mobile equipment and identified a number of areas where operating capacity, efficiency and profitability could be improved with the purchase of new additional and larger equipment. As part of this multi-year re-investment program, $45 million is expected to be spent in 2017.

In addition, $10 million in capital infrastructure has been brought forward to further develop Candelaria's underground mines and provide access to new sectors, ensuring ore access in support of near term increased underground mine production plans.

Neves-Corvo's €260 million Zinc Expansion Project was approved by the Board in the second quarter of 2017, with $30 million expected to be spent in 2017.

Exploration spend is expected to increase to $75 million, from $65 million previously guided, in support of expanded near mine exploration programs.

Revised Capital Expenditure Guidance
  ($ millions) Previous Guidancea Revisions Revised Guidance  
  Capitalized Stripping 105 5 110  
  Los Diques Tailings 120 15 135  
  Other Sustaining 25 55 80  
    250 75 325  
  Eagle 10 - 10  
  Neves-Corvo 50 - 50  
  Zinkgruvan 40 - 40  
  Total Sustaining Capital 350 75 425  
  Eagle East 35 (5) 30  
  Zinc Expansion (Neves-Corvo) - 30 30  
  Zinkgruvan Expansion (1350) 5 - 5  
  Total Expansionary Capital 40 25 65  
  Total Capital Expenditures 390 100 490  
a. Guidance as outlined in our Management's Discussion and Analysis for the three months ended March 31, 2017.


Candelaria Mine, Chile (Copper, Gold)

Fourteen rigs drilled 41,464 metres within the three existing underground mines, around the Candelaria open pit mine and on surface in the south district to rapidly expand Mineral Resource and Mineral Reserve estimates and to determine the potential extension of known ore bodies. Geophysics continued in the south district in the second quarter to assist in the development of drilling targets for the remainder of the year.

Eagle Resource Exploration, USA (Nickel, Copper)

Eagle exploration continued in 2017 with four surface rigs. Drilling is focused on tracing the Eagle East conduit. A total of 10,368 surface metres were drilled in the second quarter of 2017, with drilling expected to continue into the third quarter. In addition, a geophysical program is in preparation for the 2017 field season.

European Operations

Exploration planning sessions were held at both Zinkgruvan and Neves-Corvo aimed at strategically expanding exploration efforts for both zinc and copper mineralization extensions. A significant ramp up in exploration activity is underway and will continue for the balance of the year and throughout 2018.

Peru (Copper)

Field work commenced on a copper/gold exploration project acquired in late 2016. Initial work includes geophysical surveys, geological mapping and surface rock and soil sampling, which is aimed at outlining potential drill targets.

Eastern Europe (Copper, Gold)

Project evaluation work is continuing on new copper and zinc-lead opportunities in Eastern Europe. Prospecting permits for polymetallic mineralization were obtained in Romania in an area with a long history of copper-gold mining activities. It is expected that field work will commence on several projects early in the third quarter.