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2017-07-27

Lundin Mining Second Quarter Results

Lundin Mining Corporation Halvårsrapport Lundin Mining Second Quarter
Results Toronto, July 26, 2017 (TSX: LUN; OMX: LUMI) Lundin Mining
Corporation (“Lundin Mining” or the “Company”) today reported cash flows of
$179.2 million generated from operations in its second quarter of the year,
with net earnings from continuing operations attributable to Lundin Mining
shareholders of $49.0 million ($0.07 per share) for the quarter ended June
30, 2017. Mr. Paul Conibear, President and CEO commented, “Our operations
delivered another quarter of strong aggregate performance including
excellent production from Candelaria and Eagle that surpassed plan. Copper
production guidance has been updated and tightened, and nickel production
and cash cost guidance improved. All growth projects are on schedule and
budget including the Neves-Corvo Zinc Expansion Project which recently
received preliminary Environmental Impact Assessment approval following a
timely and efficient review process with Portuguese authorities. We remain
focused on value creation through disciplined investment in our existing
assets and potential external acquisition initiatives. As part of a
multi-year reinvestment program at Candelaria we have increased the
sustaining capital expenditure program this year to purchase new and larger
equipment aimed at improving operating capacity, efficiency, and
profitability, and to bring forward underground development in support of
planned near term production increases. Further, on success, we have
increased our Company-wide 2017 exploration budget to $75 million in
support of expanded near-mine programs.” Summary financial results for the
quarter and year-to-date:
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Three months Six months ended ended June 30, June 30,
----------------------------------- US$ Millions (except per share amounts)
2017 2016 2017 2016
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Sales 454.7 342.3 942.5 711.9 Operating costs (209.5) (202.2) (423.6)
(412.5) Operating earnings1 236.2 134.5 500.7 286.3 Impairment reversals /
(impairment) 13.3 (772.1) 21.9 (772.1) Continuing, attributable net
earnings / 49.0 (19.8) 106.6 (37.5) (loss) 2 Attributable net earnings /
(loss) 2 70.0 (791.2) 161.7 (813.3) Net earnings / (loss) 85.0 (787.9)
191.5 (803.4) Basic and diluted earnings / (loss) per 0.10 (1.10) 0.22
(1.13) share3 Cash flow from operations 179.2 153.2 423.9 196.1 Cash and
cash equivalents 2,050.7 657.6 2,050.7 657.6 Net cash / (debt)4 1,045.1
(341.9) 1,045.1 (341.9)
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1. Operating earnings is a non-GAAP measure defined as sales, less
operating costs (excluding depreciation) and general and administrative
costs. 2. Attributable to shareholders of Lundin Mining Corporation. 3.
Basic and diluted earnings / (loss) per share attributable to shareholders
of Lundin Mining Corporation. 4. Net cash / (debt) is a non-GAAP measure
defined as cash and cash equivalents, less long-term debt and finance
leases, before deferred financing fees. Highlights Operational Performance
Overall production for the second quarter of 2017 was consistent with
expectations, with excellent copper production from Candelaria in the
quarter making up for lower production from Neves-Corvo. Nickel and zinc
production were less than that realized in the second quarter of 2016, but
remain in-line with expectations and full year guidance. Cash costs1 for
the quarter are consistent with or lower than those realized in the second
quarter of 2016, benefitting from higher by-product metal prices.
Candelaria (80% owned): The Candelaria operations produced, on a 100%
basis, 52,846 tonnes of copper, approximately 30,000 ounces of gold and
540,000 ounces of silver in concentrate during the quarter. Copper
production for the quarter was slightly higher than expectations and the
prior year comparable period due primarily to higher grades and recoveries.
Copper cash costs of $1.08/lb for the quarter were lower than the prior
year and are expected to meet guidance over the full year. Construction of
the Los Diques tailings dam facility continues on schedule and on budget.
Total forecast spend on the project remains unchanged at $295 million, of
which approximately $115 million remains to be spent as of June 30, 2017,
$85 million in the second half of 2017 and $30 million in 2018. Eagle (100%
owned): Eagle had another strong quarter of production, exceeding
expectations by generating 5,822 tonnes of nickel and 5,674 tonnes of
copper. Amounts were less than the same period in 2016 as a result of
planned lower head grades. Nickel cash costs of $1.02/lb for the quarter
benefited from higher by-product sales than the comparable period in the
prior year. The Eagle East ramp is advancing ahead of schedule with formal
amendment permit approval, for the mining of Eagle East, expected prior to
year-end. Neves-Corvo (100% owned): Neves-Corvo produced 8,098 tonnes of
copper and 18,011 tonnes of zinc in the quarter. Zinc production was
consistent with the prior year comparable period, while copper production
was lower due to lower throughput and grades. Copper cash costs of $1.38/lb
for the quarter remain significantly lower than the prior year comparable
period and full year guidance, aided by higher by-product zinc prices. The
Zinc Expansion Project (“ZEP”) investment to double zinc production at
Neves-Corvo was approved by the Company’s Board during the quarter.
Underground material handling development for ZEP commenced and
environmental permitting is advancing according to plan. Project activities
were highlighted by the receipt of preliminary Environmental Impact
Assessment approval on July 6, 2017 from Portuguese authorities. Zinkgruvan
(100% owned): Zinc and lead production in the second quarter of 2017 was
consistent with the mine plan and overall guidance expectations. Zinc
production, aided by higher throughput, exceeded the prior year comparable
period, while lower lead grades in the current period negatively impacted
its production. Cash costs for zinc of $0.34/lb for the quarter were
consistent with the prior year comparable period and below full year
guidance. During the quarter, the 1350 Project, a process plant investment
increasing production capacity by 10%, was successfully commissioned, on
schedule and on budget. 1. Cash cost/lb of copper, zinc and nickel are
non-GAAP measures defined as all cash costs directly attributable to mining
operations, less royalties and by-product credits. Financial Performance --

Sales for the quarter ended June 30, 2017 were $454.7 million, an increase
of $112.4 million in comparison to the second quarter of the prior year
($342.3 million). The increase was mainly due to higher metal prices, net
of price adjustments ($73.6 million) and higher sales volumes ($31.8
million).

On a year-to-date basis, sales were $942.5 million, an increase of $230.6
million in comparison to the first six months of 2016 ($711.9 million). The
increase was mainly due to higher metal prices, net of price adjustments
($202.2 million) and higher sales volumes ($23.5 million). --

Operating costs (excluding depreciation) for the quarter ended June 30,
2017 were $209.5 million, an increase of $7.3 million in comparison to the
second quarter of the prior year ($202.2 million). The increase was largely
due to higher overall sales volumes ($22.5 million), partially offset by
lower per unit operating costs ($14.2 million).

On a year-to-date basis, operating costs (excluding depreciation) were
$423.6 million, an increase of $11.1 million in comparison to the six
months ended June 30, 2016 ($412.5 million). The increase was largely due
to higher sales volumes ($13.4 million). --

Operating earnings for the quarter ended June 30, 2017 were $236.2 million,
an increase of $101.7 million in comparison to the second quarter of the
prior year ($134.5 million). The increase was primarily due to higher metal
prices, net of price adjustments ($73.6 million), higher sales ($9.2
million) and lower per unit operating costs ($14.2 million).

On a year-to-date basis, operating earnings were $500.7 million, an
increase of $214.4 million in comparison to the first six months of 2016
($286.3 million). The increase was primarily due to higher metal prices in
the current year, net of price adjustments ($202.2 million) and higher
sales volumes ($10.1 million). --

Net earnings from continuing operations for the quarter ended June 30, 2017
were $64.0 million compared to net loss of $16.5 million in the second
quarter of the prior year. Comparative earnings were higher due to:

- higher operating earnings ($101.7 million); partially offset by - higher
net tax expense ($26.2 million). On a year-to-date basis, the Company
reported a net earnings from continuing operations of $136.4 million
compared to a net loss of $27.6 million for the six months ended June 30,
2016. Comparative earnings, in the current year, were higher due to: -
higher operating earnings ($214.4 million); and - lower net interest
expense ($14.8 million); partially offset by - higher net tax expense
($67.0 million). Corporate Highlights --

The Company announced it completed the sale of its indirect interest in TF
Holdings Limited (“TF Holdings”) to an affiliate of BHR Partners for $1.1
billion on April 19, 2017.

Lundin Mining’s effective 24% interest in Tenke Fungurume Mining S.A.
(“Tenke”) was held through its 30% indirect interest in TF Holdings. --

On April 27, 2017, the Company filed an updated technical report for the
Eagle mine. The Technical Report incorporates updates to Eagle mine’s
operations and the results of a Feasibility Study on the high-grade Eagle
East nickel/copper mineralization. A copy of the Technical Report can be
found under the Company’s profile on www.sedar.com.

--

On May 11, 2017, the Company announced the results of a Feasibility Study
on the Zinc Expansion Project at its Neves-Corvo mine. Refer to the news
release entitled “Lundin Mining Announces Neves-Corvo Zinc Expansion
Project Feasibility Study Results” on the Company’s website
(www.lundinmining.com). An updated Technical Report for the Neves-Corvo
Mine, incorporating the ZEP, was filed on June 23, 2017 and can be found
under the Company’s profile on www.sedar.com.

Financial Position and Financing --

Cash and cash equivalents increased $1,121.9 million during the quarter
from $928.8 million at March 31, 2017 to $2,050.7 million at June 30, 2017.
The increase is primarily from the sale of Tenke ($1.1 billion), cash
generated from operating activities of $179.2 million, partially offset by

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