Executives: Paul Conibear - President and Chief Executive Officer Marie Inkster - Senior Vice President and Chief Financial Officer Steve Gatley - Vice President of Technical

Services
Analysts: Alain Gabriel - Morgan Stanley Alex Terentiew - BMO Capital Markets Fawzi Hanano - Berenberg Olof Grenmark - ABG Lawson Winder - Bank of America Merrill Lynch George Topping - Industrial Alliance John Tumazos - John Tumazos Very Independent

Research
Operator: Good morning, my name is Christa and I will be your conference operator today. At this time, I would like to welcome everyone to the Lundin Mining Q2 2017 Earnings Results Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. [Operator Instructions] Thank you, Mr.

Paul Conibear, President and CEO. You may begin your conference, sir.

Paul Conibear: Thanks very much, operator. And thank you everybody for joining Lundin Mining's second quarter earnings call. Naturally I'll point you to the cautionary statements slide, we will be making forward-looking comments during the presentation.

And joining me today to assist in answering questions at the end of the presentation is Marie Inkster, our Senior Vice President and Chief Financial Officer; and Steve Gatley, who is our Vice President of Technical Services. Operating highlights for the second quarter and year-to-date, our all operations are delivering strong aggregate performance and all of our growth projects are advancing on schedule and on budget. Candelaria had excellent copper production on higher head grades and recoveries. We expect production to be at the high end of our guidance, offsetting below expectation copper production at Neves-Corvo. Eagle copper production is above plan on excellent throughput, grade and recovery and we have increased our copper production guidance for the year.

Eagle nickel production is also progressing better than planned. We have therefore increased nickel production and full year cash cost guidance at Eagle. Zinkgruvan has commissioned its mill expansion project on schedule and on budget, which provides an additional approximate 10% increase in zinc and lead production capacity, and their production for the quarter was as expected. Neves-Corvo zinc production is stable with recoveries gradually improving month-by-month, and the highlights for this operation is the zinc expansion project, which was approved by our board and project team formed and the project is ramping up, and a significant highlight for that project was the Environmental Impact Assessment, which was approved by the Portuguese Authorities in early July. Taking a look at a revenue breakdown, we had expected on a percentage basis, significantly improved revenues from zinc, but actually the copper prices kept pace with price increases with zinc.

So we remain 60% dominant in revenue and profits from copper, but significant revenue coming in now from our zinc production. Despite the low nickel price, Eagle continues to produce meaningful profit because of the very higher margins of this excellent mine. I'll turn it over to Marie Inkster for a few financial comments.

Marie Inkster: Thanks, Paul. Looking at the attributable net earnings from continuing operation, this means, it does not include any amounts from Tenke and takes into account 80% of the results from Candelaria.

We've moved from the loss of approximately $20 million in the prior year second quarter to earnings of $49 million in the current year. Operating earnings were $84 million greater than last year's Q2 on the strength of higher metal prices and higher sales volume. And with higher earnings, we've also had higher taxes, so we see the effect on tax expense from moving from loss to profit is $21.6 million increase in taxes. Specifically looking at that operating [ph] earnings increase, here we see the impact of the price and price adjustments having the largest impact on the operating earnings. We saw better realized prices than last year for copper and zinc, while our realized prices for nickel was down compared to last year.

And cost and effects this quarter were also in our favor when compared to last year. Specifically on the metal prices, in this financial highlights slide, you can see that while copper and zinc were 23% and 28% better respectively than the same quarter of last year. Nickel was 13% lower than last year's realized price per pound. We saw improved cash flow from operations and cash flow per share. The cash flow from operations of $179 million is coming straight from our cash flow statement, in the financial statements.

And this includes the effect of changes in non-cash working capital, which was a positive impact during the quarter of $17 million. Stripping out that figure in comparing quarter-over-quarter with last year, the operating cash flow before the effects of working capital, you see considerable improvement over last year. And on a per share basis, it's $0.22 per share, which is nearly double that of the same quarter of last year. And on the balance sheet, with the proceeds from the Tenke sale received during the quarter, we ended the quarter with $2.05 billion of cash compared to $929 million at the end of last quarter, and $658 million at the end of last year's Q2. This is after making payments for both the dividend declared in February as well as the one declared in April during the quarter, which was a total of $32 million.

We also made our semi-annual interest payment on our bonds of approximately $38 million, and distributed excess cash of Candelaria to our partners in the amount of $34 million. So we have a net cash of over $1 billion and cash balances and undrawn facilities provide for available liquidity of approximately $2.4 billion.

Paul Conibear: Thank you, Marie. Understandably the questions were constantly asked is, how do we allocate this capital moving forward with an enviable balance sheet that we have? We are focused on growth, disciplined growth, but our number one priority is the investment in high-return brownfield expansion projects that we have at each of our operations, and very active exploration programs, which we continue to have good success with and are expanding at each of those operations. We serviced our second tranche of our annual dividend recently that will be an ongoing component of the company and we are looking obviously seriously at one of the tranches of our bond, which becomes callable in November has relatively high interest rate.

And we are likely to discharge that bond prior to year-end. The focus of the company moving forward is to keep our balance sheet very flexible to enable us to move quickly and with strength of the cash, if compelling growth opportunities come up and otherwise, focus on our operations and our internal projects. There's quite a bit of detail here that we publish on the ranges likely production coming from each of our mines by commodity. We've increased the production guidance for copper to Candelaria and Eagle and also [technical difficulty] at Eagle. We've lowered our copper guidance at Neves-Corvo for the year.

And we've been able to significantly improve the C1 cash cost guidance for Eagle based on year-to-date performance and our expectations for the balance of the year. We have also updated our capital investment guidance and exploration guidance for the year with improving markets with the excellent value add expansion opportunities that we have at each of the mines. And also being conscious that like all other mine operators over the last couple years there was a lot of restraint in non-essential sustaining capital. We have increased our capital investment guidance for the year, up by about $100 million. On the Los Diques project, we continue to forecast that in a very cost effective $295 million [technical difficulty] overall project because of the progress we made and the updated forecast of timing of paying contractors bills and expense of building dam, we've moved about $10 million forwards from 2018 into 2017 for the spend, but the project remains definitely on track.

Cost-wise; as highlighted in the last quarter with the improvements we've made in reserves and resources, we improved production profiles for Candelaria and taking a medium to longer term view for Candelaria, we are significantly reinvesting for the balance of the year, and in the next few years moving forwards in latest technology mine equipment, we're putting over $55 million into Candelaria in the balance of this year. It includes some new haul trucks, latest generation large underground haul trucks as we start to take over as operator of the underground mines from some of the contract work. And we're also expending some money on underground development to increase the tonnages of the high-grade ore to come out of Candelaria Norte, and advancing development into two of the underground deposits, which have not yet been mined which are Susana and Damiana. So that's approximately $55 million that we'll be putting into regenerating the quality of the fleet and preparing for greater production of the future. And Neves-Corvo, we announced the approval of the zinc expansion project, it's EUR 260 million.

We are forecasting about $30 million spend on ZEP Zinc Expansion Project in the balance of this year. We've had very good exploration success at Zinkgruvan and continue to have that at Candelaria and we've increased the exploration expenditures about $10 million near-mine exploration across the company. Moving to some comments on each of the operations. Candelaria had a sort of very good year-to-date. During the quarter, we did just under 23,000 tonnes of copper and concentrate on a 100% basis, excellent cash operating costs at $1.08 per pound and the production that we've had there is benefited from higher grades and recoveries, that were planned and very, very good performance, in particular in the mill.

Consequently, we've improved with narrow [ph] the guidance and slightly improve our guidance for Candelaria for the year, and that's largely based on our expectations of good grades in the balance of 2017. I've already mentioned the reinvestment that we are starting in the fleet, both underground and in the pit for stripping and for underground development to better prepare Candelaria for a long and very healthy future. The Los Diques tailings facility progresses on schedule. We actually moved to a photo of this, this is probably one of the larger capital projects going on. Actually right now, it's a very large rockfill dam, we are self-performing the majority of this with waste out of the pit.

You can see the main embankment there. The first investment in Los Diques is what we call phases 0 and 1. We are now looking ahead and have actually spend a little bit in what we call phases 2 and 3 which are those smaller strips of rock that you will see to left of the main embankment, and as we take a look at the stripping schedule for the pit as we enhance the pit designs, the waste haul from the pit to this dam is actually a shorter waste haul, we have to blast the waste a little bit more to get the fragmentation we need for engineered fill here. But we are spending a little bit more money than planned and was originally in the Los Diques project to advance phases now 2 and 3, and you'll see some money show up next year for that because I think overall it's most cost-effective to keep this highly performing team advancing on a couple more phases that benefits the overall mine plan, because of the short-haul for waste. Moving to Eagle, outstanding quarter, outstanding year-to-date.

We've improved our guidance on nickel, improved our guidance on copper and producing at a much lower cash, I see one basis than expected part of that, obviously we are benefiting from a good copper price and the credit there, but overall there is excellent performance here on a local basis. The highlights of Eagle this year is the advancement of the Eagle East project. We are expecting to spend about $19 million in the second half of the year. The overall ramp development is 18% complete. We're about 20 days ahead of schedule on that.

We continue to have positive dialog with the regulators on the overall permits for exploitation. I have moved to the slide, which shows in plan on the top and in section, the Eagle mine, which is on the left hand side, the twin ramp down to the Eagle East deposit. We have a Cementation doing contract development of that ramp. They are also the contract miner of Eagle mine. Their execution both on the safety and performance wise has been very, very good.

We're about 20 days ahead of schedule on that ramp so far. Neves-Corvo, we've had a tough quarter and a tough year-to-date on copper production. You can see that in the figures and consequently, we have revised downwards our copper production guidance. On zinc production, we continue to improve month-by-month and quarter-by-quarter. We've got good recoveries and improving recoveries and improving tonnes and grades through the mill.

The highlight obviously is doubling zinc production with our ZEP project here. There are few zinc projects in the works worldwide. And this is a very low technical risk, low cost risk investment we're making, which we expect very high returns from. And there are a number of things which are going to enable a successful project here for zinc expansion in Portugal and one is the approach that the Portuguese authorities take to supporting investment in the country. We put a comprehensive EIA into international standards for the Portuguese government.

At the end of November, we had meetings with regulators on a monthly basis in January and throughout the Q1 and early Q2 and in early July we got our EIA approved in a very comprehensive review. So this is what is possible when government is onside to support an investment in mining and I hope so other countries take notice of what Portugal has done here, because it's a great model. We are also ramping up exploration both for copper and more zinc at Neves-Corvo and there's a bit of a schematic here, but we had previously discovered the Semblana copper deposit, which is an isolated deposit to the east of some of the other facilities here and there is a large gap which remains under drilled in between the Corvo deposit and Semblana, so we've got drill rigs on that and we're advancing both from underground and surface on that and hope for some success in the year to come. Moving to our Swedish operations, the Zinkgruvan mine. The 18,000 tonnes of zinc, that's a pretty normal number when you look quarter-by-quarter over the last two years.

Frankly I think we could probably do a bit of improvement in the mill to get the recoveries up a little bit to get the throughput up and also for concentrated grade. We have modernized the front end of the mill with a new crushing grinding circuits that was commissioned starting in early May and it's ramping up and I think that you'll see some improved statistics on this mine over the balance of the year and certainly next year. We've had some exciting drill results. So I'll turn it to sort of schematic of the deposits at Zinkgruvan. There was multiple deposits here, the big deposits that we are normally mining out of our Burkland and Nygruvan.

Both of these collection of deposits zinc lead are open at depth and small copper ore body which maybe has a little bit more to go. An area that we have been very much focusing on drilling over the last year or so has been on the left hand side of the schematic, the Dalby deposit and to certain extent Mellanby. And historically, over the last few years, we haven't done that much drilling, but we have been advancing from an underground ramp, but earlier this year, we started to drill from surface. And more recently we've stepped out half kilometer away from previous drilling with a hole from surface, which hit some particularly high grade and that got us a bit excited on exploration at Dalby, and we now have three rigs and a 4th rig coming for surface drilling. So, we'll be able to, I think, probably report a little bit more on that with some grades and intercepts and maybe some concepts on how this may influence the future when we come out with our reserves and resources in September.

So, we've increased the –doubled the drilling budget here for Zinkgruvan so far and we're also going to start drilling some satellite targets in the area as the year progresses. That wraps up the earnings call for the quarter. We like our asset base, we got an excellent balance sheet, we continue to look for new opportunities but number one focus is our projects internally and exploration. So I'll open it up now operator to the audience for questions.

Operator: [Operator Instructions] Your first question comes from the line of Alain Gabriel with Morgan Stanley.

Your line is now open.

Alain Gabriel: Two questions if I may. Firstly on the spending at Candelaria, you seem to be ramping up the spending on the fleet upgrade. Paul, you were mentioning with us the total budget for the fleet upgrades and over what time period and are we able to link that spending to any dollar amount in gains, in terms of cost efficiencies or increased production? And the second question is on Zinkgruvan, you sound very excited about the prospects there, what's your vision for that mine? Are we talking here about more life of mine extension or production increases over the current life of mine plan? Thank you.

Paul Conibear: Yes, thanks Alain, at this stage on CapEx investment guidance at Candelaria, we are only prepared to give for the balance of the year and giving a bit of heads up as we refine them the mine plans both pit and underground the next few years ahead, we will be investing more.

We have an older fleet, which has been regularly rebuilt for the pit. We have now invested in five latest generation Cat haul trucks. They are faster, more fuel efficient. I don't know the numbers, off the top of my head on direct return on that investment, but they will pay themselves back. And in any case, we have more tonnes of waste, in order to move them was in the original plan a couple years ago when we bought the asset.

We are going to be taking over the underground mining. We've got three underground mine contractors. We're going to trial taking over the underground haulage in one of the mines in Candelaria Norte, where the biggest tonnages are coming. We're operating about 7,000 tonnes a day from Candelaria Norte. And we have just recently received the permits to go up to 14,000 tonnes a day in that underground collection or deposits there.

So we've bought latest generation 60-ton Cat underground haul trucks there, which we also think will have a good return on the investment. And in any case, we need the additional iron to haul more tonnes. We will come out at the end of November with forward-looking statements on both sustaining capital equipment and pit, but we're not in a position to do that just yet. Taking a look at Zinkgruvan, Zinkgruvan, the 1350 project this modernization of the front end, it takes the production of that facility up to 1.35 million tonnes per year. We would like to take it up to 1.5 million tonnes a year, depending on whether we can get confident enough that we can give or feed into there, which is work that we need to do on first on drilling and then on mine planning.

So we've hit some great grades. We're not quite prepared to put it out. We just don't put out one or two holes at a time, but we'll give a fulsome update on the Dalby drilling in early September when we normally put out the reserve and resource updates across the company, but obviously I'm mentioning it because the grades are pretty good. And I think it's another example of what this excellent asset can do for us in the long-term. Best place to find a new mine is beside an existing mine and best place to find more ore is beside existing ore.

So that's what we're experiencing at all mines.

Alain Gabriel: Thank you. Thank you, Paul.

Operator: Your next question comes from the line of Alex Terentiew with BMO Capital Markets. Your line is now open.

Alex Terentiew: I just wanted to follow-up just on the Candelaria, just a couple more questions. So on the underground going to self-perform mining, can you quantify me, what sort of cost savings, do you think you could see there? And secondly, you talked about the Candelaria Norte, mining 7,000 tonnes a day and you recently received permit to go to 14,000 tonnes, could you see some of that production or could we see some increased production from Candelaria Norte as early as next year and would that just offset or displace some of the lower grade stockpile or open pit ore?

Paul Conibear: Yes. We were already ramping up. Steve, I'm not sure, if you know what the tonnages we are doing out of Candelaria Norte now, it's up already.

Steve Gatley: Yes.

I don't have exact numbers in my head either Paul, but if you go to the technical report we issued earlier this year, it does give you guidance on the stage ramp up at Candelaria Norte.

Paul Conibear: Yes. Still probably good proxy. We might be around 8,500 tonnes a day now from Candelaria Norte, so we're ramping up in stages. And we are significantly increasing the vision of underground mining at Candelaria, where we maybe started at 12,000 tonnes to 14,000 tonnes a day when we became operators of the asset is to, now it's from three deposits, underground deposits is to ramp up production from all five underground deposits and get up in the 25,000 tonnes to 30,000 tonnes a day.

So we're expert underground miners. When you take a look at the economics of taking over from a [technical difficulty], I think that's only one of the factors and we've done these assessments many, many times and you have to speculate on what you think the contractors profit margin is, is it 10%, is it 15% or some other number. But you also have to speculate on whether you are going to actually have better ore delivered to the mill. What dilution will you have from the underground mine compared to the mine contractors, because they're generally motivated by tonnes, not by quality. There's a lot of indirect factors there.

We like to mine ourselves. We think in the medium to long-term, it's got better returns. So that's the approach we're taking, but we've run economic analysis and it's breakeven or better to invest in the capital equipment and mine ourselves, but we think the returns are actually better than that.

Alex Terentiew: Okay, great. Thank you.

Operator: And your next question comes from the line of Fawzi Hanano with Berenberg. Your line is now open.

Fawzi Hanano: Hi Paul, thanks for the update. Just a couple of quick questions. Firstly, with regards to Eagle, given the continued good operating performance there, can we expect a similar type of improvement to production and cost expectation in the next couple of years as we see in 2017? And the second question is with regards to Neves-Corvo, for how much longer would you expect to encounter complex ore metallurgy under the current mine plans?

Paul Conibear: Yes, Fawzi, I'll be a little bit careful about forward-looking statements for next year and subsequent years, because we are literally just finalizing our reserve and resource updates at each of the mines.

And in sort of overlapping that in parallel, we're updating the 2018 mine plan. The five-year mine plans and then we do the life of mines. So that's an exercise literally July, August, September, October. And then the back half of that exercise, we start refining our sustaining CapEx and other details. So I'll just give sort of some qualitative comments here.

Since we started mining Eagle, we benefited from definitely better recoveries, good throughput and better concentrate grades, but also probably as a trend a little bit more copper than we originally thought was in the deposit and that continues to be a positive trend. There was a little bit of change in sequencing in the first half of this year, which actually put us into some higher grade areas. So if Mother Nature stays as we originally predicted that would mean that we're going to get back into declining grades as we've always projected in subsequent years from now. So we've had a little bit of a bump from some resequencing earlier this year, but generally the mines are performing and Mother Nature is giving us a little bit more copper. But again, when you go to valuing our company and modeling, stick with the 43-101 production profile, which was updated to include Eagle East.

That's the best proxy for subsequent years. On to Neves-Corvo, yes, we would continue to experience some challenging metallurgy in copper going into 2018. And I think, recalling some of the mine plans we start to get out of some of that tougher Zambujal and so we've got a lot of different ore deposits there. We've got five remaining out of - and each of them has zones. You've got zones with that are copper focused, you have zones that are zinc focused and you have mixed ore.

And then within those zones, you've got some which have higher lead or higher mercury and those are the negative elements minerals in the copper ore and frankly in zinc ore that we have to be careful with when we process through the plant. So this year and next year and last year too, if you take a look at some of the stats you'll see copper grades definitely declined, recoveries declined and the recovery declined as predominantly because we have to work harder to get the mercury levels and especially the lead levels, and the copper con down, which means longer flotation time, lower recovery and sometimes we have to feed the plants slower. So maybe we're a little bit optimistic in our original guidance for copper production this year. I think we have some execution issues, underground that we need to improve on, mixing backfill with ore and that's diluting the grades a bit in some of the stope, so bunch of things to work on there. We are seeing some improvements month-by-month, but some of this will definitely influence the ultimate guidance that we gave for 2018.

Steve, any more comments on that?

Steve Gatley: I think you've encapsulated it full there, of course, there are two different distinct ore types as you mentioned, it is the massive sulfide, which tends to be highly complex, polymetallic mineralization and then there is the clean stop workhorse [ph], but unfortunately they are slightly lower grade. So it's a constant balancing act between the two mineralization styles in the mine plan.

Paul Conibear: Yes and it's always been in our conceptual plans, we discover the Semblana deposit, I guess probably, I don't know, maybe about seven years ago, yes, 2010. And we always kind of had a view within 10 years that should be in the mine plans. We're starting to look ahead to Semblana which has higher grades.

We had actually started the ramp down there a number of years ago and then stop the ramp, because at time we didn't need the material and there was some cost restraints. So, I think we'll look ahead to bring Semblana into help with the copper production profile moving forwards. The zinc expansion project actually brings a notable additional amount of copper into the production plan once it comes into being in the second half of 2019. So you can go to the technical report and see additional copper coming in there which help sort the current problems we have.

Fawzi Hanano: Thanks Paul and Steve.

Operator: Your next question comes from the line of Olof Grenmark with ABG. Your line is now open.

Olof Grenmark: Yes, good afternoon. Two clarifications, please. You're guiding for increasing average copper grades in Candelaria for the second half of 2017.

What is that increase in relative to, is to the second quarter or is it the second half versus first half and maybe you could say something about the grades going into 2018 in that key asset. That was the first one. And the second one is regarding your increased exploration budget. Just to remind us there, where will the extra money will be spent, in which region so to say?

Paul Conibear: Sure, so on copper grades, at Candelaria, it's second half compared to first half. We started to see, we had good grades in the first half, but improvements expected in the second half.

Looking forwards again, I just have to point you to, we've almost annually updated the 43-101 report on Candelaria because with the - been particularly additional drilling and resource discovery that we've had there, the mine plan continues to change and you'll see a change once again with us focused now on the 10-year plan, we will get that at the end of November. So I wouldn't want to speculate on grades for 2018 or beyond except to point you to the last technical report we had which is the best proxy we had there. On exploration expenditures, we've gone - now, I'll start with Eagle East, I think we started with $16 million for the year and we're now looking at $18 million, Candelaria more or less has stayed about the same around the $32 million range. From Zinkgruvan, we went from I think about $4.5 million to actually $10 million. We've gone up by $1 million at Neves-Corvo.

We've got - we have an interesting copper project that hasn't had a drill hole yet at low altitude in Peru that we've been advancing or maybe able to start drilling there before year-end where the regional budgets contemplate that would take at least a year to get the permits to drill, proved slow to get permits to drill. So that kind of aggregates, taking us from I guess looking at the dollars as from $64 million to $74 million. So we've got it $75 million for the year.

Olof Grenmark: Got you. Thank you.

Operator: Your next question comes from the line of Lawson Winder with Bank of America Merrill Lynch. Your line is now open.

Lawson Winder: Paul, Marie, Steve, just a follow-up on the metallurgical issues at Neves-Corvo, I was just curious given what you're seeing, are you at all considering adding any flotation capacity in order to speed up this processing rates beyond what you've already considered with the ZEP?

Steve Gatley: At this stage, no. Our efforts are focused in the zinc plant, which is essentially completely new plant with significant additional flotation capacity for zinc. We're working on a number of initiatives in the copper plant to overcome some of the challenges we have, more related to water and metallurgy rather than increased flotation capacity at this time.

Paul Conibear: The key thing is to get the lead out of the feed, as soon as it came on the circuit.

Lawson Winder: Great and then just one more question if I might on Candelaria. The 20% expansion study that's still on track for yearend 2017 I assume, and please correct me if I'm wrong, but that expansion is constrained by the consideration that you do not want to increase desalination capacity and then if so, is there a point that what you would have to increase desalination capacity there?

Paul Conibear: Yes, so that is one constraining factor and just to be clear, we haven't decided on put a pin in what size and expansion will be sort of a base case of the study. It ranges between 10 and 25. From the water studies that we've done, I think 20% would probably be what we could do with increasing the pressure in the line without a second line.

So water supply is a key factor, but we sort of - half year I guess we have significantly additional drilling information from the underground deposits. So it's been a bit of a moving target what baseline mine plan to use. We intend to wrap up, I think first stage of our opinions on what to do with the mill before year-end. Yes. But we haven't made any decisions yet on exactly what that capacity increase will be whether it be debottlenecking or something more significant.

Lawson Winder: Thank you very much.

Operator: Your next question comes from the line of George Topping with Industrial Alliance. Your line is now open.

George Topping: So Paul, [indiscernible] Peru and Eastern Europe with early stage exploration, any plans to look elsewhere in the world in the rest of 2017?

Paul Conibear: Yes, George. Yes, to answer that.

Yes, we would love to have two or three other new exploration projects and we're constantly serving the market. We have, I guess despite being at the bottom of the market over the last few years, we've been disappointed by the sort of the junior public company opportunities which were the ones you can get the first eyeball on, because the minute they hit any really decent grades, their market caps go over the top. So where we have found better success is getting quality exploration projects in the private market or through government processes. So we've been very active over the last few years in the Eastern Europe, sort of that Tapian [ph] belt, we've drilled couple of projects in Turkey and walked away. We drilled in Peru another big project Elida walked away.

We drilled in Romania three years ago I guess, initial results were disappointing so we truly love them and leave them fairly quickly if initial results aren't there. Our exploration team size got decimated a little bit over the last few years with the downturn like everybody's. So, we try to focus on areas that are, I think, was complementary to our existing footprint, which is Peru, Chile and Eastern Europe. We haven't looked at anything in Africa or Australia, Asia for a long, long time. So I think probably, yes, we need to attract things, it's going to be in the Americas and Europe.

Yes, the guys have mandate to add another two or three projects if they could find quality ones.

George Topping: Okay. But the focus is those basically two countries in South America and Europe in general?

Paul Conibear: Yes, we'd love to be doing more in Peru, love to be doing more in Chile and many countries. We looked as far I guess Far East is Georgia and that whole Tapian [ph] Belt to go through bulk on area countries.

George Topping: And then just secondly on the billion dollars of net cash, billion dollar question.

Any thoughts on to change on maybe share buybacks or increase dividends or is that, just that's held in reserve for future projects?

Paul Conibear: Yes, I guess, it's foretold little bit about the position of that share buyback and dividends, where it shows up in our slide, it's at the bottom. We discuss it at management and board level from time-to-time, but we have a very unique cash position, we actually had that coming out even before the Tenke sale. At the beginning, I think it was a very, very good base metal cycle and we'd like to be acquisitive with that. Internal projects first making sure our balance sheet is healthy, second and being strong. So if something special comes up, we move on up.

So I think share buyback and increased dividends right now are not at the top of list.

George Topping: Good, I totally agree. Thank you.

Operator: [Operator Instructions] Your next question comes from the line of John Tumazos with John Tumazos Very Independent Research. Your line is now open.

John Tumazos: Good morning, this is John. With copper price rising and copper stocks rising, does this mean, you're little more likely to distribute cash to shareholders, invest in organic projects or in investing in a drill bit?

Paul Conibear: John, I guess, we're for sure, increasing our investment through the drill bit. Sometimes, if you can't buy, you have to go find and that's always been a component I think of a lending group company is, strong exploration focus. But the odds are often against you on discovery at least needle moving discovery, unless you're doing brownfields where opportunities are higher there. We have expanded, I suppose, our acquisition criteria a little bit compared to what we had five or six years ago, in that we are focused on bolt-ons in the past incremental.

We could do something transformational now if a special opportunity came up. But for sure growth is our priority. The movement over the last quarter in copper price or zinc price really has very little to do with that. Its plans that we've had for the last few years. We looked carefully at assets between 2011 and 2013.

And finally, pulled the trigger on Eagle, it's been very successful when we got Candelaria. We did lot of things since we acquired Candelaria, where I think people are aware we've bid on TMAC, lost that. We have looked at a number of things since then, haven't found the right fit. So we're going to continue to look for acquisitions that will range from greenfields projects to operations that fit our criteria. But be fussy until we find something that's fit.

Operator: And we have no further questions at this time, sir.

Paul Conibear: Okay, well, thank you very much everybody for listening in on our call. I know it's a busy day for the analysts, as there's lots of releases. I look forward to speaking with everybody next quarter.

Operator: And this concludes today's conference call.

You may now disconnect