Full Transcript: Lundin Gold Q2 2026 Earnings Call

On Friday, Lundin Gold (TSX: LUG ) discussed second-quarter financial results during its earnings call. The full transcript is provided below. This transcript is brought to you APIs. For real-time access to our entire catalog, please visit for a consultation.

View the webcast at Summary Lundin Mining completed the acquisition of an additional 5% interest in Caserones and a 31% interest in the Los Helados project for $215 million, enhancing long-term growth potential. 2 billion in revenue and $360 million in free cash flow, despite weather-related disruptions. The company remains on track to achieve its full-year production guidance for copper and gold, with adjustments made to the Caserones mine plan due to weather impacts. Lundin Mining announced significant progress at the Vicuna Project, securing a long-term royalty agreement and infrastructure approvals, moving towards a potential sanctioning decision by year-end.

The financial performance was strong, with a near-record revenue driven by high copper prices and disciplined cost management, despite higher diesel prices impacting operational costs. Full Transcript OPERATOR Ladies and gentlemen, thank you for standing by. Welcome to Lundin Mining's second quarter 2026 financial results call. At this time, all participants are in a listen-only mode.

After the speaker's presentation there will be a question-and-answer session, and to ask a question during the session you would need to press star 11 on your telephone. You would then hear an automated message that your hand is raised, and to withdraw your question, please press star 11 again. Please be advised that today's conference is being recorded. I would like now to turn the conference over to Jack Lundin, President and Chief Executive Officer.

Please go ahead. Jack Lundin, President and Chief Executive Officer Good morning and welcome to Lundin Mining's second quarter 2026 conference call. Thank you for joining us today. A press release and presentation summarizing the quarter's results are available on our website, where a replay of this call will also be made available.

Before we begin, I would like to remind everyone that today's presentation and certain comments during the call, including our Q&A, will include forward-looking information that is subject to risks and uncertainties. I draw your attention to the cautionary statements on slide 2 and encourage you to review our MD&A and related filings available on SEDAR for a full description of the relevant risk factors. As a reminder, all amounts discussed on today's call are in US dollars unless otherwise noted. Joining me on the call today is Juan Andres Morel, our Chief Operating Officer, and Tyler Poulson, our Chief Financial Officer.

Turning to slide 4, the second quarter was another productive period for the company operationally, financially, and strategically. In line with our corporate vision, we completed the acquisition of an additional 5% interest in Caserones from our partner JX Advanced Metals, bringing our total ownership to 75%. We also acquired a 31% interest in the Los Helados project, all for total consideration of 215 million. Los Helados is a large copper-gold deposit located approximately 17 kilometers south of Caserones.

This transaction strengthens our mineral resource base while providing compelling long-term growth optionality in a district we know well. On June 17th we hosted our second annual Capital Markets Day where we built on our strategic vision from last year and updated our financial outlook for the next five and 10 years. We highlighted multiple low capital-intensive brownfield expansion opportunities at our three existing operations, Candelaria, Caserones, and Chapada. Alongside the transformational long-term growth potential of the Vicuna Project, these opportunities collectively underpin our path to becoming a top 10 global copper producer.

At the CMD, we approved the construction of an additional ball mill at Chapada, which will result in improved recoveries at the operation, in anticipation of the Tsaouva growth project, another tangible step in converting our brownfield pipeline into production. Construction is expected to commence by year-end with commissioning targeted for late 2027. At Vicuna, a significant milestone was achieved during the quarter with the approval of the inclusion of the Jose Maria and Filo del Sol deposits under Argentina's REDEEP Health Program. Vicuna is the first copper mining project in Argentina to receive this more favorable designation.

The approval provides long-term fiscal stability and investment certainty and is a meaningful step forward as we advance towards a Stage 1 sanctioning decision. Subsequent to the quarter, Vicuna announced a long-term royalty and infrastructure trust agreement with the San Juan Province over the life of mine, which consolidates pre-existing provincial royalties on the Filo del Sol and Jose Maria deposits into one framework. 5% gross revenue royalty to form a provincial infrastructure trust. The agreement provides long-term economic certainty and enhances the stability of the operating framework as we continue to progress toward a sanctioning decision.

1 million, which is consistent with our confidence in the intrinsic value of the company and the strength of our balance sheet. 8 billion to shareholders through dividends and buybacks. Operationally, the quarter was very consistent, benefiting from disciplined execution across our operations and a supportive copper price environment. 2 billion in revenue and $360 million of free cash flow from operations, further strengthening our balance sheet and providing the financial flexibility to continue investing in our growth pipeline while returning capital to shareholders.

Despite the storm event after the quarter, which Juan Andres will talk to in more detail in the operations section, at the halfway point of the year we continue to remain on track to achieve our annual production guidance range. Our operations have performed well, giving us confidence in our ability to deliver on our full-year objectives. Operational costs during the quarter were impacted by higher diesel prices. Should current pricing persist throughout the remainder of the year, we do still expect to be within our guided cost outlook.

Excuse me. Looking ahead, our focus continues to be on safety performance, delivering operational excellence, advancing our portfolio of organic growth opportunities, and progressing the Vicuna Project toward a sanctioning decision. Supported by high-margin, long-life assets, a disciplined capital allocation strategy, and one of the strongest copper growth profiles in the industry, we believe Lundin Mining is well positioned to deliver sustainable long-term value for our shareholders. I will now hand it over to Juan Andres to walk through the operational results in more detail.

Juan Andres Morel, Chief Operating Officer Thank you, Jack, and good morning everyone. Our operations performed consistently in the second quarter, and we remain on track to meet our annual production guidance for both copper and gold. Subsequent to the end of the quarter, the storm in Chile impacted operations at Caserones, and I will provide more detail on these later on in the presentation. For the quarter, copper production from our three operations totaled 76,900 tons, as mentioned previously, and for the first half of the year we produced approximately 157,000 tons of copper.

Gold production for the quarter was 33,000 ounces, bringing our year-to-date gold production to approximately 65,000 ounces. When we compare our first-half copper production to our full-year guidance range of 310,000 to 335,000 tons, we are tracking to guidance despite the weather-related events mentioned earlier, which is consistent with our expectations that production will be second-half weighted, particularly at Candelaria. For gold, we're also well positioned to achieve our full-year guidance of 134,000 to 149,000 ounces.

Overall, the portfolio is performing in line with our planning assumptions and our operations are delivering the consistency we need to meet our targets. Moving to each operation individually: At Caserones, copper production for the quarter was approximately 34,000 tons with higher grades from Phase 6 and strong throughput, continuing to benefit from our Full Potential program initiatives. Year-to-date production is 73,000 tons. Copper production at Candelaria for the quarter was approximately 31,000 tons, with mining rates somewhat lower than the first quarter, reflecting additional shovel maintenance and ramp work in Phase 11 of the open pit.

We remain confident that Candelaria is on track to meet its full-year guidance. Candelaria's production profile remains second-half weighted with higher grades planned and expected in the third and fourth quarter as we continue advancing Phase 12. Gold production for the quarter was approximately 18,000 ounces, in line with expectations. At Chapada, we had a good quarter with strong throughput and copper grades slightly better than recent periods as we accessed higher-grade portions in the south pit.

Copper production for the quarter was approximately 12,000 tonnes and gold production was 16,000 ounces. We anticipate production levels to remain consistent with Q2 through the second half of the year. Subsequent to the quarter, Chile's Atacama region suffered severe winter storms that caused regional flooding and significant snowfall. 4 meters of snow.

The country reported 13 fatalities and over 2,200 injuries associated with the storm, a truly tragic event that impacted several regions in Chile. I want to acknowledge the Caserones and Candelaria teams for all their hard work and proactively taking precautionary measures to protect employees, and a special thank you to the crew at Caserones that were isolated at the site during the storm for their dedication. We are fortunate that everyone was safe and no injuries were reported at our operations. Mining operations at Candelaria were briefly impacted by heavy rainfall; however, the mill was able to continue to operate using existing ore stockpiles.

Mining operations have since returned to full capacity, and the company remains on track to meet its full-year production guidance. At Caserones, operations were disrupted due to the heavy snowfall and high winds, which limited access to site and knocked out power for 12 days. Backup power generators supported critical activities during this time. Winds reached over 125 kilometers per hour and ice buildup damaged two power line towers that require repairs.

Crews worked all last week to remove the damaged structure and replace it. The photo on the right highlights the damage to the upper tower and cross arm of one of the towers. Power has been restored at site, and the restart of operations at Caserones is currently underway. Initial concentrate production is expected by the end of the week and full capacity early next week.

Prior to the storm, Caserones was tracking to the upper end of the copper guidance, producing 73,000 tons in the first half of the year against the range of 130,000 tons to 140,000 tons. We account for some weather-related disruptions during our planning process, but not to this magnitude. After reviewing the mine plan for the remainder of the year and making some adjustments, we now anticipate coming in on the lower half of the guidance range at Caserones. This assumes that the weather cooperates with us for the rest of the year and operations perform well in the third and fourth quarter.

Cash cost guidance at Caserones remains the same. 25 per pound. Candelaria and Chapada continue to perform well, and we reiterate our full-year consolidated production guidance range of 310,000 to 335,000 tons of copper and 134,000 to 149,000 ounces of gold for the year. I will now turn the call over to Tyler to provide a summary on our financial results.

Teitur Poulsen, Chief Financial Officer Thank you, Juan Andres, and good morning everybody. As mentioned earlier, this was another quarter of consistent operational performance which has translated into excellent financial results. 2 billion, a near record driven by strong copper and gold prices alongside consistent production volumes across our three operations. Our revenue mix remained heavily skewed toward copper which accounted for approximately 88% of total revenue in the quarter, providing one of the highest leverages to copper amongst our peers.

Gold contributed approximately 8% and moly approximately 2%, with the remainder from silver and other metals. By operation, Caserones was the largest revenue contributor at approximately 518 million, followed by Candelaria at approximately 476 million and Chapada at 219 million. 4 billion, reflecting the significant step-up in realized prices for both copper and gold compared to the prior-year comparable period. Now turning to volumes sold and realized prices.

During the quarter we produced 77,000 tonnes copper and sold approximately 74,000 tonnes, one of the lower quarters in recent times in terms of sales volumes for copper. 40 per pound realized in the same quarter last year. Gold was sold at a realized price of $4,385 per ounce at the end of the quarter. 07 per pound with final pricing to be settled in the coming quarters, with the majority of these to be settled during the third quarter.

Moving to production cost, the underlying cost structure across our operations remained stable during the quarter with total production cost of approximately 513 million. The primary driver of modest cost pressure in the quarter was higher diesel prices, which impacted all three operations to varying degrees. 10 per pound of copper. Excluding this fuel-driven impact, the underlying operational cost base continues to perform in line with our expectation.

Higher diesel prices increased costs by approximately 15 million in the second quarter as compared to the first quarter, equating to approximately 8 to 10 cents per pound of copper on a consolidated basis. 11 per pound of copper for the quarter, demonstrating disciplined cost management despite higher diesel prices. 10 per pound, we remain on track to achieve full-year guidance. 88 per pound, below the low end of the full-year guidance range.

14 per pound. The cash costs are continuing to benefit from strong cathode production and favorable TCRC terms and somewhat offset by higher diesel costs during this quarter. 65 per pound, reflecting lower by-product credits driven by a lower realized gold price compared to recent periods as well as slightly higher stripping costs and lower sold volumes relative to the prior quarter. In addition, Candelaria also has a higher level of diesel consumption relative to our other assets and therefore the increase in diesel prices is more impactful at Candelaria compared to our other assets.

At Chapada, the absolute cost for the quarter amounted to $84 million which is in line with the prior quarter. The cash cost recorded was 62 cents per pound which is below the bottom end of the full-year guidance, as guided at 75 cents to 95 cents per pound, with the outperformance mainly relating to higher by-product credits from a higher realized gold price as well as higher gold volume sold. 10 per pound of copper.

Turning to capital expenditure, sustaining capital expenditure for the quarter was 111 million with spending across all three operations primarily directed toward open pit waste stripping, underground mine development, tailings storage facility upgrades, and investment in new mining equipment. Expansionary capital expenditure was 83 million in the quarter bringing year-to-date expansionary spend to 237 million. The majority of the expansionary capital in the quarter was attributable to Vicuña. The Vicuña project, where spending totaled 74 million as activities continue to ramp up, including engineering, training, and early earthworks.

As previously announced at Chapada, the sanctioning of the additional ball mill on the Silver project growth project has increased our full-year expansionary capital guidance from 50 million to 85 million with construction expected to commence before year-end and commissioning targeted for late 2027.