Operator: Good day and thank you for standing by. Welcome to the Lundin Mining Second Quarter 2021 Results Call. At this time all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. Please be advised that today's conference is being recorded.

I would now like to hand the conference over to your speaker today, Marie Inkster, President and CEO. Thank you. Please go ahead. Unidentified

Company Representative: Thank you, operator. Before we begin...

Marie Inkster: Thank you operator and thank you everyone for joining Lundin Mining's second quarter 2021 results call. I would like to draw your attention to the cautionary statements on Slide 2, as we will be making several forward-looking statements throughout the course of this presentation. On the call to assist with the presentation and answering questions, are Jinhee Magie, our Senior Vice President and Chief Financial Officer; and Peter Richardson, our Senior Vice President and Chief Operating Officer. The photo on this slide is our Eagle Planning Engineer, Matthew Younger, inspecting an impressive high grade face on one of the cut-and-fill levels of Eagle East. On Slide 4, we published our 2020 sustainability report earlier this month.

As many of our long-term shareholders know, Lundin Mining has been reporting on our sustainability performance and standalone documents since 2010. In this year’s report, we outlined many of our sustainable improvements in safety environment and social performance, in particular we highlight our proactive efforts in monitoring the evolving COVID-19 pandemic, putting appropriate and protective measures in place while working closely with communities to identify their needs and provide support. Our best ever total recordable injury frequency rate of 0.55, our formal adoption of the global industry standard on tailings management and we had no Level 3 or above environmental incidents and a 13% decrease in Level 2 incidents. In 2020, we initiated a cross functional and collaborative process to further advance our sustainability strategy and performance. This includes a multidisciplinary sustainability working group and executive steering committee and a formal governance structure.

Through these, we will continue to define, integrate and embed sustainability pillars, key themes, performance indicators, and long-term targets. I encourage those entrusted in the additional detail and more information on our approach and performance to read the report. And as always, please reach out to us with any questions. I'll now turn the call over to Jinhee to run through the summary results of the quarter.

Jinhee Magie: Thank you, Marie.

During the second quarter, our operations produced nearly 110,000 tons of base metals and approximately 41,000 ounces of gold. This is the quarter-over-quarter improvement driven by better performance from many of our mines. We sold over 103,000 tons of payable base metals and approximately 39,000 ounces of payable gold generating revenue of over $870 million. As the market price for the metals we produced increase in the second quarter, there was a positive pricing adjustment again this quarter. The positive price impact on revenue was from the settlement of prior period sales was nearly $50 million, a large portion of these settlements was attributable to copper.

Marie Inkster: Thank you, Jinhee. Moving to Slide 7, we have adopted a dividend framework to guide the direct returns to our shareholders while enabling the company to maintain a strong financial position for future growth. The total dividend is supported by this framework aimed at returning a minimum target of 40% of available cash flow through the combination of the sustainable and core quarterly based dividend supplemented by a variable performance dividend declared and paid semi-annually. Available cash flow is determined as operating cash flow after capital investments, contingent payments and distributions to our partners. The table on this slide outlines the calculation.

Our board of directors has declared a regular quarterly dividend of CAD$0.09 per share or $0.36 per share on an annualized basis and this represents an increase of 50% compared to the most recent regular dividend paid in June of this year and 125% increase over the dividend paid at the end of last year. The board has also declared an inaugural semi-annual performance dividend of CAD$0.09 per share for the first half of 2021. In total, CAD$0.18 per share of dividends were for the quarter, which annualizes to CAD$0.54 per share, and a total dividend yield of approximately 5%. I'll now turn the call to Peter to discuss our operations.

Peter Richardson: Thank you, Marie.

Starting with Candelaria on Slide 8, Candelaria performed in line with plan during the second quarter. It produced over 36,000 tons of copper and 24,000 ounces of gold at a cash cost of $1.52 per pound copper following through quarter-over-quarter. Operating costs were above plan impacted by extra mine and mill maintenance. So on a cash cost basis, we're offset by higher than forecast, magnetite and precious metal byproduct credits. Following the 2021 production guidance revisions announced on June 21st, we have re-introduced full year cash cost guidance at $1.55 per pound of copper.

The increase over the prior guidance primarily reflects the lowering of copper and byproduct gold production. Full year capital expenditure guidance has been reiterated at US$345 million with over 150 million of debt being incurred in the first half. Moving to Slide 9, as announced in our June 21st release, we have adjusted the near-term mining sequence in an area of Phase 10 of the open pit for the second half of this year to manage production challenges in a localized area. As can be seen from this photo, while nominal in volume, small movements have the potential to impact activities on lower level, Levels 144, 128, and 112. The photo shows several of the measures and actions we have taken to manage risks in this localized area.

The photo is of current mining on July 18.

Marie Inkster: Thanks Peter. Moving now to Slide 10, we are currently preparing and optimizing our life-of-mine plans for all of our operations as part of our annual planning process. In reviewing the plan and mine performance for the first six months of this year, the preliminary plans for Candelaria are considering a forecast annual processing rate of approximately 28 million tons for the complex, utilizing the existing infrastructure and allowing for a mine to mill copper grade dilution of 5% to 8% for 2022 and 2023. This compares to the most recent 43-101 technical report, which assumes annual throughput of approximately 30 million tons in each year, and does not incorporate an allowance for normal dilution.

While further work is required to complete and confirm the plans on preliminary review production forecast for 2022 and 2023 is expected to be approximately 10% to 15% lower than our prior guidance for both of these years. Alternative plans, trade-off studies and further revisions are being evaluated to improve future year's production. These includes adding and bottlenecking our pebble crushing and grinding capacities, improved grade control, increased contribution to mill feed from our underground mines and an earlier and increased contribution of Phase 11 ore. We aim to finalize our life-of-mine plans over the next few months, and it is approved by the company's board in November. As per our normal course of three year production outlook along with one year cash cost and capital expenditure guidance for all mines will be provided at that time.

Peter and I will be happy to take any questions and elaborate during the Q&A.

Peter Richardson: Thank you, Marie. Moving to Chapada on Slide 11. Second quarter production total over at 11,200 tonnes of copper, this represents improvement of nearly 15% and 30% respectively compared to the first quarter. The operation performed well and set a new monthly mill put record in May processing 2.3 million tonnes.

Metal recoveries improved quarter-over-quarter, and were on plan for copper and better for gold. Gold remain low, those the recent quarters primarily due to the ass planned lower mill feed grades. Operation cost and the second quarter cash costs of $1.33 per pound copper were both in line with plan. Full year copper guidance has been tightened to 48,000 to 50,000 tonnes from 48,000 to 53,000 tonnes previously. The gold production guidance range has been tightened and lowered to 73,000 to 76,000 ounces from 75,000 to 80,000 ounces previously on week sequencing of all sources with the second half.

Full year cash cost guidance of $1.10 per pound of copper has been reiterated. Our gold price assumption for the second half of the year has increased $100 per pound to $1,700. While our Brazilian assumptions remains at US$5.10. Full year capital expenditure guidance remains at 65 million though we have now anticipated lower capitalized for expenditures to be offset by near mine land acquisitions. On the exploration front, we continue the excellent progress achieved in the first quarter.

We completed nearly 18,500 meters of drilling in Q2 being in the first half total to over 29,000 meters and on track complete about 60,000 meters for the year. $9 million has been expended in the first half of the 16 million full year budget. Slide 12 is an area Chapada with several exploration drilling highlights from assets received back during the second quarter. On a slide, you can see the surface expression of last year's measured and indicated mineral resource, which includes the proven and probable mineral reserves at a subset. As you also can see the inferred mineral resource and other areas, we have determined to be highly perspective prior for near-mine exploration.

We are in the late stage preparation of our annual mineral resource and reserves statement across our portfolio, which we aim to announce early September. As in prior years, they are in our same as will have an effective date of June 30, 2021. It's important to mention that to prepare the geological models for this year's update, Chapada's assay's cut-off date was in the first quarter, with this cutoff and the assay delays we have experienced in the first half, unfortunately much of the recent drilling success from early this year will not be incorporated in this year's update; that will be announcing a roughly a month time. As Chapada, our primary focus remains on near mine exploration to better understand and define the mineral resource potential and inform our ongoing expansion study.

Marie Inkster: Thanks Peter.

On Slide 18, we have a summary of our current guidance. As discussed in the operational section, the annual production guidance ranges have been tightened for the operations. Candelaria guidance was updated in late June. Chapada gold and Neves-Corvo zinc production saw modest reduction based largely on forecast mill feed grades, while other metals were tightened within their previous ranges. Full year cash cost guidance for Eagle and Neves-Corvo well have been improved given year-to-date performance and forecast for continued favorable by-product metal prices.

Candelaria cash cost guidance has been reintroduced after the previously disclosed near-term mind sequence changes in phase 10 of the open pit for the second half of the year. Cash cost guidance for Chapada and Zinkgruvan is unchanged. Full year exploration expenditure guidance remains at $40 million. We are well-positioned to achieve the targeted 140,000 meters of planned exploration drilling this year. Lastly, on Slide 19, the investments we have made over the past several years and are completing now at Neves-Corvo have positioned money mining well to benefit from the current commodity price environment with multiple years of strong production, leading cash costs and free cash flow generation.

Our operations perform well in the second quarter particularly as our South American mines continue to address evolving challenges of COVID-19. We were able to take advantage of the current price environment and generate a quarterly record of nearly $300 million of free cash flow for our shareholders. We generated nearly $355 million of free cash flow in the first six months of this year. We have adopted a dividend framework to guide direct returns to shareholders, while enabling the company to maintain its best-in-class balance sheet and strong financial position for future growth. Our total dividend is supported by this framework aimed at returning a minimum target of 40% of available cash flow through the combination of a regular base dividend, which is sustainable throughout the cycle and can be progressively increased as our asset base improves and grows and our new variable performance dividend.

We will continue with our objective to create value by investing in low risk, high return opportunities in our own assets as we remain disciplined in our approach to unlocking accretive external opportunities. And with that operator, I would like to open the lines for questions.

Operator: Thank you, speakers. Participants, we will now begin the question-and-answer session. First question is from the line of Orest Wowkodaw of Scotiabank.

Your line is now open.

Orest Wowkodaw: Hi. Good morning. Given the magnitude of the guidance cuts it Candelaria in 2022, 2223, can you please provide more color on what's driving this? I'm just really confused because my understanding was that you were mining slower through the fault zone in H2 2021, which would have pushed some of that into first half of 2022, but I really don't understand the magnitude of the cuts, especially for 2023. Any color here I think would be very appreciated.

Marie Inkster: Good morning, Orest. Yes, I think, we're pretty clear in our release about what's driving it, the 28 million tons per annum versus the 30 million tons per annum, there's an impact to that. And really it's six months now that we've been running the CMOP at a full rate and we are still having a lot of troubles in the circuit and we're not achieving the sold throughputs that we felt that we would achieve and building that into our plan. So, we need to do some work to address that on additional crushing and grinding. In addition, we are seeing some great dilution in the short-term plan.

And so, we're accounting for that. So those are the two things really that are driving it. Peter, I don't know, you expand on that a little more.

Peter Richardson: No, it's correct, as you said, Marie. The lower efficiency on the CMOP project as we expected 4,000 tons extra per day for six months, we are not seeing that.

So that's the reason that we've cut back from 30 million tons annually to 28 million tons annually. We have a number of investigations ongoing to recover some of that. So we will be making decisions later on this year to be able to increase throughput going forward and can get – as we planned and then also the discrepancy between the short-term model and what we're seeing in the mill. And that's something that we're constantly working on and we have a lot of initiatives to improve that. So we don't see that throughput.

Orest Wowkodaw: Now are these issues limited to 2022 or 2023? Or should we be also taking a hatchet to what's in the mine plan for 2024 and 2025? I mean the technical report calls for production – copper production in the order of over 190,000 tons in those years? It sounds like what I'm hearing is that these are more structural issues that are going to impact life-of-mine, not just 2022, 2023. Is that correct in my thinking?

Marie Inkster: Well, I think, you're being a bit dramatic or seeing that – you're taking a hatchet to the plan. It's still a good plan and we are working on our opportunities to improve the throughputs and there are also opportunities. Right now, we could improve some in the underground to improve the grades were permanent constraints. We actually could move more ton to the underground.

So, there are a number of things that we're looking at. In November, we will give a three year guidance and give some future trending then. So incorporating those plans in the future years, but I think saying you're going to take a hatchet to the plan at this point is a little overdramatic.

Orest Wowkodaw: Okay, thank you.

Operator: Next question is from the line of Jackie Przybylowski of BMO Capital Markets.

Your line is now open.

Jackie Przybylowski: On the new dividend policy, it's great to see you guys are adding returns to shareholders there. Can you maybe talk a little bit about why you chose to use the dividend a special dividend framework? And so what you're thinking on that versus the buyback that you already have in place is? And I guess as a follow-up question, how should we think about that buyback? Should we sort of assume, I guess, at this point that you're not funding to make use of that this year? Thanks.

Marie Inkster: We are focusing on the dividend as the main source of the returns to shareholders at this time, and we do see that with our production, we have really good production and good cash costs, and we'll be generating very good free cash flows. And so with this policy, what it allows us to do is to still retain some cash for growth opportunities, but depending on how we see those playing out to be able to distribute a significant amount of the free cash flows.

We set a minimum of 40%, but we'll look at that in the future and see whether we're building cash and whether it should be above that number, but it will be a minimum of 40%. So on the buyback, we'll probably continue to do that, but not with a focus probably where we see opportunistic – opportunities to use it, but it won't be a focus for us. It still is in place. But I think most people would recognize that unless we're going to put hundreds of millions into substantial buyback program, it's really not going to move the needle. So, right now, we're focusing on the dividends as the return mechanism.

Jackie Przybylowski: Thanks very much. I'll leave it there for now. Thank you.

Operator: Next question is from the line of Ioannis Masvoulas of Morgan Stanley. Your line is now open.

Ioannis Masvoulas: Good morning and thanks for the presentation. A couple of questions from me again on Candelaria, and I'll take them one at a time if that's okay. So regarding the alter years beyond 2023, is it fair to say that you will need to make good progress on those initiatives around additional crushing and grinding capacity, as well as great control initiatives to make sure you get close to the projected production numbers that were included in the technical report? Is it a fair assessment of the situation? And if that's the case, could you give us a sense of what sort of associated CapEx may be required here for those additional investments? Are we talking the low double digit million dollar numbers? Or could be something materially higher than that? Thank you.

Marie Inkster: Yes. So, Ioannis, on the – on your first point, yes, I think it's fair to say that we will need to do some additional work on the crushing and grinding in order to see the full throughput that we would need to do the previous guidance and we are studying those.

We have been studying those for a little while now. And it's both crushing and grinding that we've been looking at as alternatives. And so depending on which one of those is chosen, the CapEx can be quite different. So, of course, the question would be much cheaper than the grinding alternatives. But I think your order of magnitude on the crushing is fairly reasonable.

Peter, anything to add?

Peter Richardson: Yes, just to clarify. So, when we take crushing and grinding, it's the pebbles. So it's – we're producing pebbles that we need to crush before returning them into the grinding circuits. So we've been looking at different options, as Marie is saying, and how to improve both the capacity, but also the reliability of those systems. So depending on what alternative we choose, we're talking mid single digits to a little bit higher depending on chosen opportunities.

And these – we see some of these initiatives we can do within our permitting – within our permits.

Ioannis Masvoulas: Understood, that's helpful. Thank you. And second question, Candelaria, when you lowered your production for 2021, that you took a cut both on copper and gold, but you didn't do so on their preliminary assessment for 2022 and 2023. And so how should we think about the gold production for those two years?

Marie Inkster: Yes, that's because we haven't finished modeling out the gold.

We're in the preliminary stages of our mine plan. And we have been seeing some good improvements and recovery on goals. So it may not be of the order of magnitude, but we're still looking at that. We're still looking at the gold.

Ioannis Masvoulas: Okay.

Okay, understood. And the last question from me on the new dividend policy, it's good to see that payout ratio gives a bit more visibility on what to expect from Lundin, but could you also comment on whether that changes your mindset at all around M&A. Is now the bar potentially higher than potential deals? Or are you looking at shareholder returns and M&A that where you looked at in the past, and we shouldn't really assume any changes at your M&A strategy? Thank you.

Marie Inkster: Yes. So the dividend doesn't change our views on M&A.

We'll still continue to look for opportunities, still focusing on copper. There aren't a lot of opportunities out there and with the characteristics that we would typically look for in the quality that we would typically look for. So we're not seeing a lot right now and something that we'll have to discuss with our board is whether we turn our attention to things that may be a little bit longer dated in order to get some growth in the pipeline, because typically we haven't entered into those types of situations, but really with the lack of available growth opportunities, if we want to continue to grow, we need to do that.

Ioannis Masvoulas: Understood, thank you.

Operator: Next question is from the line of Greg Barnes of TD Securities.

Your line is now open.

Greg Barnes: Yes, thank you, Marie and Peter. I think I understand the crushing issues and the pebble generation. I get that. What I don't really understand is the copper grade dilution, which is pretty significant.

And I would have thought that would have been included in your block models already. I wonder where that's coming from.

Marie Inkster: Yes, sure, Greg. Peter, do you want to address that?

Peter Richardson: Yes. So the correlations between the block model and our long-term – sorry, our short-mine model, it's pretty good, where we're seeing the discrepancy is between the short-term – short-term mine model and what we're seeing in the mill.

So that's where we're seeing the discrepancy. And we have a lot of initiatives ongoing to try to resolve it – to understand it and resolve it. So we've been doing a number of sampling campaigns to checkout our sampling systems, both in the mine – both open pit underground and in the mills, using tracers and especially on the underground lines to track potential dilution doing visual checks in the open pit for dilution risk and contact zones and just working hard in the mill to make sure samples are up and running and the assays –assay system as well. And we continue to do balances twice a month now to really keep track on the discrepancy, so we can catch it early. So there's a lot of – so that's the issue at the moment is that the mine short-term model then what we're seeing in the mill is not adding up.

Greg Barnes: Yes, it's surprising that just suddenly appeared out of nowhere. You just – there must be something that's changed to drive that kind of dilution, but you're not sure where it's coming from the underground or the open pit.

Peter Richardson: No, we're investing where it's coming from. We've seen dilution previously and then it's gone up and then it's gone a little bit down again. Now, we're focused on minimizing this at the moment, right, because it's a little bit higher than normal always.

Greg Barnes: Okay. So you do think this is a short-term issue rather than a longer term issue?

Peter Richardson: Yes, we would hope so it is and that's what we're doing. We're investigating, identifying it and then we're going to be putting measures in place to make sure that it's minimized overall.

Greg Barnes: Just on the Chapada expansion studies, you mentioned in the presentation that you weren't able to get all of the information you would have liked to get into the upcoming reserve and resource update. Will you be able to get more of that information available for the upcoming, I want to make sure that it's a technical study, a concept study about what you're planning to do at Chapada over the – in terms of a potential expansion? Or is that being delayed by these assay delays?

Marie Inkster: The expansion study is not delayed.

We're pushing forward with that. What we wanted to highlight is that we are – because we're behind in the assays by a significant amount here, it's not going to be incorporated into the R&R update, which we expect – once we get those assays in to be able to have a quite substantial increase in our R&R based on all the drilling that we're doing and the good success that we're having. But unfortunately we don't have the results to be able to include it in the R&R update, but we are incorporating into the study some of the concepts about where the future ore bodies and what grade profiles are might be. So it doesn't affect the timing of the study at all. Peter, anything?

Peter Richardson: No, like you said, they're all going in parallel.

Greg Barnes: So, Marie, the study that we are going to get at the end of the year or early next year, what level is it going to be? Is this going to be concept three piece? How you're positioning them?

Marie Inkster: Well, we're hoping to have a scoping by the end of the year.

Greg Barnes: Okay. So what level of detail will that be and what level of accuracy do you think. Is that more of a concept level or pre-seasonal?

Marie Inkster: Yes.

Peter Richardson: It's more scoping.

It's so – it's somewhere between the conceptual and pre-seasonal, so it's...

Greg Barnes: Okay. Fair enough. Thank you.

Operator: Next question is from the line of Daniel Major of UBS.

Your line is now open.

Daniel Major: Hi, there. Couple of questions. First one, operationally Chapada recoveries both copper and gold have been comparatively low in the first half of the year. You will see, reiterated the guidance, but can you give us a stare on the driver of that low recovery rate relative to 2020 and what you're seeing or expecting second half 2021 and into 2022?

Marie Inkster: So, yes, it's really related to where we are mining and it follows the grades as well.

And Peter, I don't know if we had out there an expectation, but we do expect that in different areas it does improve. So the second half of the year was improved on both grade and recovery. Any additional color?

Peter Richardson: It's grade and recovery where we mine and how much stocks we put in. So when we add stocks to the grade, sorry, the recovery go down. So it's a combination of grade and where it's mined.

We have a really good lithology model when it comes to the recovery. So we and that's based on the different pits and stocks, so that’s related.

Marie Inkster: Yes. And I think it typically dips during the rainy season because there are days that we have to stop mining because of safety issues in the pit when it gets really wet. And so we do a supplement from stocks quite a bit more in the wet months than we would in the dry months.

Daniel Major: Okay. So recovery should be getting back to levels more comparable to 2022, second half of this year and into next year in the ’80s for copper so far? Thanks.

Marie Inkster: Yes. That's correct.

Daniel Major: Okay.

Thank you. And yes, nice the questions have been answered, but have you got any update any comments on your expectations around timelines or the Chilean mining tax debate and how your engagement is been so far? Have you sort of been presenting to the Senate, for example in terms of the implications of the proposed changes?

Marie Inkster: Yes. So we have been obviously following very closely and we were invited to present along with a number of other companies. So that should be relatively soon. We know that also Canadian ambassador was invited to present with Mackenzie's presented.

So we think once it got up to the Senate, there was a certain level of sanity that came into the proceedings. And they're really looking at the implications on the policy and how that would affect the industry and foreign investment. So we think it's been positive – positive over the last couple of months positive. And then we also saw of course with the Presidential primaries that the candidates have really moved from the extremes on either right or left and the more central. So we see that as a positive for the country and the markets reacted very well in Chile as well.

So we are following closely and we do expect it to still continue for probably a couple of months. We would be surprised to see any real action on that in the near-term.

Daniel Major: Okay. So just to push on that second point; do you think it's more likely that we'll see a resolution from the Senate following the election? Or do you think we might see some updates or clarity before the election?

Marie Inkster: If I was a – if I was a betting person, I probably put it after the election, but I couldn't rule out the fact that they would do something in the fall. From Canada, it's sometimes hard to have your finger on the pulse, but we do have good contacts that keep us informed on a regular basis, and I think it's something that will go on for some time.

And of course the revenue in Codelco and the taxation revenue that's coming into the country now also will be a big plus for the industry in showing the contribution in the existing sliding scale royalty. So I guess stay tuned and it definitely won't be anything like that, which was originally introduced.

Daniel Major: Got it. Thanks a lot.

Operator: Next question is from line of Abhi Agarwal of Deutsche Bank.

Your line is now open.

Abhi Agarwal: Thank you. Good morning, all. Thanks a lot for the – thanks a lot for the call. So I just have a quick clarification on Candelaria please.

I'm just trying to understand the mechanics behind the – behind the production cost. So if I understand correctly, the lower throughput is an issue with the mill, and the grade dilution. Is that a function of Phase 10? Or is that something different, which you are – with you are observing light now?

Marie Inkster: Yes. So correct on the mill, it's really the – when you make improvements, you remove a bottleneck quite, you often find that you create a new one somewhere else, and we are seeing that we need more upfront crushing and grinding for those pebbles. So you're correct on that one.

On the grade dilution it does vary from time-to-time. Peter, can use explain on that.

Peter Richardson: Yes. And that's, you ask if it's Phase 10, that's what we're trying to pinpoint, where it's coming from. We're doing all these studies and sampling, is it from the underground phase 10, or is it from stocks, so it's too early to say where it's coming from.

But it's the discrepancy between what we're delivering – what we are modeling in the mine and what's being assayed in the mill.

Abhi Agarwal: Okay. Got it. So this is, okay, so it's not possible to separate – separate, if it's a phase 10 issue because the reason why I asked that question – that question was because I know, like, given you move to phase 11 and how sure can you be that these issues are not replicated with phase 11, but I guess it's – it's likely difficult to answer that question. Am I correct in thinking that?

Marie Inkster: Yes.

That's correct.

Abhi Agarwal: One last question from my side, please. Is it possible for, I appreciate its early days, but is it possible for you to separate on what exactly is fixable with better operating practices and what you think is actually structured?

Peter Richardson: Are you referring to team up to the pebbles?

Abhi Agarwal: Yes. So basically at Candelaria, here the grade delusion plus the - plus the mix of what you think is fixable with better operating practices and what you think is potentially a structural issue here.

Peter Richardson: So on the crushing and the pebble crushing and grinding, it's both.

So we're looking at some modifications to the grinding – sorry to the crushing – pebble crushing circuit and also to, potentially to the grinding surface. But then there was also some operational upgrades that we need to practice to make sure that we utilize this circuit as much as possible. So we minimize the downtime, so it's a combination of both that we are working on.

Marie Inkster: And on the dilution, it is practices, as far as we're aware. It's – there's nothing structural in the block model.

It's just a matter of controlling the dilution that comes into the mill.

Abhi Agarwal: Very clear. Thank you very much.

Operator: Next question is from the line of Lawson Winder of Bank of America. Your line is now open.

Lawson Winder: Hello. Good morning. Great. You've recently expressed a five-year copper equivalent production target of 600,000 tons, and I'm curious with the development recently at Candelaria, does this impact your confidence in that – in holding that target out there at all?

Marie Inkster: No. We'll continue to try to achieve that target.

I think it's a reasonable target for us to set with some additional activity, and we'll continue to try to achieve that.

Lawson Winder: Now in terms of the upgrade that Chili, in the past you've said that basically you weren't interested in investing in Chile as the draft constitutional rewrite process was unfolding. Now given kind of the more urgent nature of probably trying to address some of these issues that have emerged; is your thinking around that changed? Are you now willing to make some investments in Chile before that becomes clear?

Marie Inkster: We have instituted a policy that we would make investments depending on the payback period. So if we saw something that had a minimal payback period, we would be willing to do that, but until there's clarity on the fiscal regime, something that would have a long payback period we need more clarity on what that will be before we would dive in.

Lawson Winder: Got it.

Okay. That's great. Now you've highlighted some issues here at Candelaria that to me might impact the current reserve and resource estimate. And I'm just curious, will you have enough information, particularly on the costs and even the great control associated with this to apply any updates to the reserve and reserve – resource update in September 30th? And if not should we possibly watching for a Candelaria standalone reserve and resource update with the three-year guide in November, December?

Marie Inkster: No. The issues don't affect the resource and the reserve? There's no issue with the resource on the reserve.

It is in the processing and mining practice.

Lawson Winder: Okay, great. Thanks for that. And then you also, Peter you mentioned that there might be some aspects of your – of the proposed optimization that might not be within the permit. So you said – you said some of them were within the existing permits, which ones would not be within the existing permits?

Peter Richardson: Well, if for example, if we were to install a brand new larger crusher, that's not described in technical aspects of the permit, but modifications to the existing circuits that is allowed.

But if we were to build, say a new crushing plant that is something that would be outside of the permit as we understand it.

Marie Inkster: Yes. And we do have some additional permitting that's in process right now with our EIA 2040 that does anticipate that we would do the underground expansion. So that would relieve some of the constraints on the underground, but there were probably another year in that process for that EIA, it's been very slowed from COVID.

Lawson Winder: Okay.

So crushing, is there any throughput work that you can do under the existing permit? For example, like...

Peter Richardson: Yes. So we – anything that we can do with the existing infrastructure that we have, so optimizing the crushing circuits that we have – the public crushing circuit that we'll have, we are optimizing the pebble grinding circuit that we have that is allowed within our permit, but constructing new facility needs to be permanent.

Lawson Winder: Okay. Now, that's great.

That's very clear. And then there was some news in the last week or so, just on the get the environmental authority and some issues related to Candelaria. Can you confirm that there is something going on there and just maybe elaborate on what that might be?

Marie Inkster: Yes. So we have received notice from SMA that they're looking at six charges of violation of our permit. So three of those they would consider to be serious; three are purely more administrative in nature.

So we're assessing those and determining whether or not we will dispute them, or whether it's easier to go forward to agree and present a compliance plan. We don't see it as something that would affect the operation or be material to the operation.

Lawson Winder: Okay. Thanks guys for explaining that up.

Marie Inkster: Yes.

Similar to the current process that we were working through since 2013, it's a pretty long process. If you do decide to dispute the charge, so we're working on the 2013. We recently had rulings in court that were in our favor on those, and there's some similar ones in this one, so we'll have to discuss how we proceed with those, but we don't see it as something that's material to the operation. And of course we have a lot of steps to make sure that we're in compliance with our permits. We understand it's very important to have the processes and to ensure compliance, and we continue to have a good track record on compliance with all environmental permits at all operations.

Lawson Winder: Thank you.

Marie Inkster: Thanks. Operator maybe if we take one more question, if there is one more.

Operator: At this time there are no additional questions on queue.

Marie Inkster: Okay, great.

Thank you. And thank you everyone for your attention. And we will provide our next update with our Q3 results.