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2017-10-26

Lundin Mining Third Quarter Results

Lundin Mining Corporation Interimsrapport Lundin Mining Third Quarter
Results Toronto, October 25, 2017 (TSX: LUN; OMX: LUMI) Lundin Mining
Corporation (“Lundin Mining” or the “Company”) today reported cash flows of
$249.5 million generated from operations in its third quarter of the year,
with net earnings from continuing operations attributable to Lundin Mining
shareholders of $131.8 million ($0.18 per share) for the quarter ended
September 30, 2017. Mr. Paul Conibear, President and CEO commented, “Our
Candelaria and Eagle operations delivered another quarter of excellent
production and cost performance. Cash cost guidance has been further
improved for both Eagle and Zinkgruvan. We have revised production guidance
for Zinkgruvan and Neves-Corvo which includes an allowance for labour
action by some of the unionized employees of the Neves-Corvo operation in
the fourth quarter. All growth projects are on schedule and budget,
including construction of the Los Diques tailings dam facility at
Candelaria on plan to be ready for use early next year. We remain active
and focused on value creation through disciplined investment in our
existing assets and on potential acquisition initiatives.” Summary
financial results for the quarter and year-to-date:
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Three months Nine months ended ended September 30, September 30,
----------------------------------- US$ Millions (except per share amounts)
2017 2016 2017 2016
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Sales 601.7 374.5 1,544.2 1,086.4 Operating costs (241.4) (225.6) (665.0)
(638.1) Operating earnings1 350.7 142.6 851.4 428.9 Impairment - - -
(772.1) Continuing, attributable net earnings / 131.8 (18.9) 238.4 (56.4)
(loss)2 Attributable net earnings / (loss)2 131.8 (11.4) 293.4 (824.6) Net
earnings / (loss) 156.6 (7.1) 348.0 (810.5) Basic and diluted earnings /
(loss) per 0.18 (0.02) 0.40 (1.15) share3 Cash flow from operations 249.5
59.3 673.4 255.3 Cash and cash equivalents 2,152.9 691.3 2,152.9 691.3 Net
cash / (debt)4 1,145.5 (308.8) 1,145.5 (308.8)
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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
Copper and zinc production for the third quarter of 2017 were higher than
that realized in the third quarter of 2016, while lower nickel grades at
Eagle contributed to lower comparable nickel production. Cash costs1 for
the quarter across all operations benefitted from higher by-product metal
prices, resulting in lower cash costs than those realized in the third
quarter of 2016. Full year cash cost guidance has been lowered for Eagle
and Zinkgruvan to reflect this. Candelaria (80% owned): The Candelaria
operations produced, on a 100% basis, 49,203 tonnes of copper, and
approximately 27,000 ounces of gold and 525,000 ounces of silver in
concentrate during the quarter. Copper production for the quarter was
in-line with expectations, but exceeded the prior year comparable period
due primarily to higher grades. Copper cash costs of $1.17/lb for the
quarter were lower than the prior year and are expected to meet guidance
over the full year. In September, Candelaria achieved successful labour
negotiations with the three organized groups at the operation and these
agreements have since been completed. Agreements were reached ahead of the
2017 year-end contract expiry, and have a term of 36 months. The new
agreements, signed under the new labour law in Chile, recognize the
existing benefits workers have and place a focus on improving the
productivity of the operations, which is of benefit to both workers and the
Company. Construction of the Los Diques tailings dam facility continues on
schedule and on budget, with pre-commissioning activities commencing during
the quarter. Water is now being placed in the containment area for
pre-wetting of the basin ahead of tailings placement that is expected to
commence in the first half of 2018. Total forecast spend on the project
remains unchanged at $295 million, of which approximately $60 million
remains to be spent as of September 30, 2017; $30 million in the fourth
quarter of 2017 and $30 million in 2018. Eagle (100% owned): Eagle
production was in-line with expectations for the quarter, with the
operations producing 5,618 tonnes of nickel and 4,995 tonnes of copper.
Quantities were less than the same period in 2016 as a result of lower head
grades. Nickel cash costs of $0.63/lb for the quarter benefited
significantly from higher copper by-product prices than the comparable
period in the prior year. Full year cash cost guidance has been revised to
$1.10/lb (from $1.35/lb) to reflect the continued benefit from by-products.
The Eagle East ramp is advancing ahead of schedule. Permit amendment review
and approvals for mining and processing of Eagle East ore are progressing
according to plan. Neves-Corvo (100% owned): Neves-Corvo produced 7,946
tonnes of copper and 19,562 tonnes of zinc in the quarter, below
expectations. Zinc production exceeded the prior year comparable period,
while copper production was negatively impacted by lower throughput, grades
and recoveries. Copper cash costs of $0.75/lb for the quarter were
significantly lower than the prior year comparable period, aided by higher
zinc by-product volumes and prices. Year-to-date cash costs of $0.95/lb
remains in line with full year guidance. The Zinc Expansion Project (“ZEP”)
investment to double zinc production at Neves-Corvo progressed over the
quarter and remains on target to commence production ramp up prior to the
end of 2019, with over 2,000 metres of underground development achieved to
date. Subsequent to the end of the quarter, the Company was subject to
labour action at Neves-Corvo. The Mining Industry Workers Union organized a
strike at the mine from October 3-7, 2017. The Company has been advised
that the union intends to undertake another strike during a five-day period
commencing November 6, 2017 and it may repeat this action a third time in
the month of December. The Company has revised production guidance downward
to reflect anticipated lost production from the labour actions. The Company
has engaged in dialogue with the unions, who are looking for changes to
work schedules and other factors that have also been demanded of other
industries as part of a nation-wide union initiative. 1. Cash cost per
pound is a non-GAAP measure – for discussion of non-GAAP measures see page
28 of the Company’s Management’s Discussion & Analysis for the period
ending September 30, 2017 available under the Company’s profile on SEDAR
(www.sedar.com). Zinkgruvan (100% owned): Zinc production of 18,958 tonnes
in the third quarter of 2017 was in-line with the prior year comparable
period, while lead production of 7,899 tonnes was 23% higher, driven by
higher mill throughput of zinc-lead ore and higher lead grades. However,
given the lower zinc head grades realized to date and expected for the
remainder of the year, full year zinc production guidance has been reduced.
Zinc cash costs of $0.30/lb for the quarter were lower than the prior year
comparable period and full year guidance. Given the performance to date,
zinc cash cost guidance has been reduced to $0.35/lb. Senior Operational
Changes The Company is pleased to announce that Peter Richardson has
assumed the position of Chief Operating Officer of Lundin Mining. Mr.
Richardson was most recently General Manager of the Company’s Eagle Mine,
of which he remains Managing Director, and brought more than two decades of
industry experience to Lundin Mining when he joined in 2015. Taking up the
role of General Manager at the Eagle Mine is Kristen Mariuzza. Mrs.
Mariuzza was previously the Health, Safety, Environment, and Permitting
Manager at Eagle Mine and has significant experience from the early project
phase to full production. Financial Performance --

Sales for the quarter ended September 30, 2017 were $601.7 million, an
increase of $227.2 million in comparison to the third quarter of the prior
year ($374.5 million). The increase was mainly due to higher realized metal
prices and price adjustments ($158.2 million) and higher sales volumes
($57.1 million).

On a year-to-date basis, sales were $1,544.2 million, an increase of $457.8
million in comparison to the nine months ended September 30, 2016 ($1,086.4
million). The increase was mainly due to higher realized metal prices and
price adjustments ($359.6 million) and higher sales volumes ($81.5
million). --

Operating costs (excluding depreciation) for the quarter ended September
30, 2017 were $241.4 million, an increase of $15.8 million in comparison to
the third quarter of the prior year ($225.6 million). Although per unit
operating costs were lower ($29.0 million), this was more than offset by
higher sales volumes ($38.6 million) and disadvantageous movements in
foreign exchange ($6.1 million).

On a year-to-date basis, operating costs (excluding depreciation) were
$665.0 million, an increase of $26.9 million in comparison to the nine
months ended September 30, 2016 ($638.1 million). The increase was largely
due to higher overall sales volumes ($48.9 million) and disadvantageous
movements in foreign exchange ($7.0 million), partially offset by lower per
unit operating costs ($27.6 million). --

Operating earnings1 for the quarter ended September 30, 2017 were $350.7
million, an increase of $208.1 million in comparison to the third quarter
of the prior year ($142.6 million). The increase was primarily due to
higher realized metal prices and price adjustments ($158.2 million), lower
per unit operating costs ($29.0 million), and higher sales volumes ($18.5
million), partially offset by negative foreign exchange impacts ($6.1
million).

On a year-to-date basis, operating earnings were $851.4 million, an
increase of $422.5 million in comparison to the nine months ended September
30, 2016 ($428.9 million). The increase was primarily due to higher
realized metal prices and price adjustments ($359.6 million), higher sales
volumes ($32.5 million), and lower per unit operating costs ($27.6
million), partially offset by negative foreign exchange impacts ($7.0
million). --

Net earnings from continuing operations for the quarter ended ...

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