Operator: Ladies and gentlemen, thank you for standing by, and welcome to the Lundin Mining Third Quarter Results Conference Call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised that today's conference is being recorded. [Operator Instructions] I would now like to hand the conference over to your speaker today, Marie Inkster, President and CEO.

Thank you. Please go ahead.

Marie Inkster: Thank you, operator, and thank you, everyone, for joining Lundin Mining's third quarter 2020 results call. I would like to draw your attention to the cautionary statements on the second slide. We will be making several forward-looking statements throughout the course of this presentation and in the Q&A to follow.

On the call today, 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. As you are all aware, we had a fatality in our underground operations at Neves-Corvo in late September. The picture you see on the slide are from some of the safety stand-downs that we held at every operation and at our head office to reflect on that loss to remind ourselves of the measures we can take to protect ourselves and one another from injury and to reconfirm our shared commitment to zero harm. On Slide 4, I highlight safety as a key aspect of Lundin Mining's commitment to responsible mining. Safety is the foremost of our company's values, along with respect, integrity and excellence.

Our belief is that all occupational injuries and work-related illnesses are preventable. This is why our goal is zero harm. We will continue to pursue this goal and what motivates us is that when we succeed, we send every person home safe and free from injury every shift, every day. Following the fatal accident, we immediately initiated our own internal as well as a third-party root cause investigation, which is expected to be completed in the coming weeks. Safety lessons learned will be shared across our workforce to try to prevent such an accident from occurring again.

It is also important to recognize the achievement, dedication and commitment of all of our employees and contractors throughout Lundin Mining. As a company, we are on track for our lowest ever injury rates on almost all leading and lagging indicators tracked, including the Total Recordable Injury Frequency Rate presented in the chart on this page. In the third quarter, the Alcaparrosa mine at Candelaria and Eagle line [ph] were both recognized by national governing bodies for their outstanding safety records in 2019. Alcaparrosa was recognized as the safest Category A large underground mine by Sernageomin, competing against the largest operations in Chile. Eagle was awarded the Sentinels of Safety as the safest small-sector underground metal mine in the U.S.

by the National Mining Association. And Eagle is continuing on an impressive record, approaching one year without a recordable injury. Lastly, I wanted to highlight the Neves-Corvo and Chapada Emergency Response Team for both having provided critical off-site fire-fighting support this past quarter. These efforts typically go unrecorded and under the radar of the financial community. But they are certainly valued and recognized in our communities and by [indiscernible].

I encourage everyone to visit our website for additional information on our approach to health and safety and responsible mining, or reach out to us with any questions. I will now turn the call over to Jinhee to run through the summary results of the quarter.

Jinhee Magie: Thank you, Marie. During the third quarter, our operations produced over 105,000 tonnes of base metals and approximately 45,000 ounces of gold, We sold nearly 99,000 tonnes of payable base metals and approximately 39,000 ounces of payable gold, generating revenue of over $600 million. As the market price for the core metals we produced continue to recover, there was an aggregate positive pricing adjustment this quarter.

The positive impact on revenue from prior period sales was nearly $40 million. We continue to be predominantly leveraged to copper, which generated 66% of the quarter's revenue. This is down from 71% in the second quarter on a relative basis, as a contribution of nickel and zinc revenues both increased to 9% each on increasing volumes and prices. Despite the increased price, gold contributed 11% to revenues in Q3, down slightly from the 13% in the second quarter as nickel and zinc gained. Slide 6 presents a summary of the quarter's financial results.

We realized a copper price of $3.24 per pound in the quarter above the average market price, largely reflecting $0.25 per pound up prior period adjustments. Third quarter revenue was 12% above that of the same quarter last year, while gross profit increased 54%. Attributable net earnings from operations were $0.17 per share and adjusted earnings were $0.14 per share for the quarter; well above the same quarter last year. Details of the adjustments, including the deferred tax expenses in Brazil, arising from foreign exchange translation, tax asset revaluations in Chile and prior period tax refunds in Portugal, are broken down in our MD&A. With our operations performing well, we generated adjusted EBITDA of over $300 million, up 34% from the same quarter last year.

Cash flow from operations was over $270 million and adjusted operating cash flow before changes in non-cash working capital items was over $260 million or $0.36 per share. Third quarter capital expenditures on a cash basis were approximately $90 million, bringing the total year-to-date spend to approximately $330 million. Our Board of Directors has again declared a regular quarterly dividend of CAD0.04 per share or CAD0.16 per share on an annualized basis, maintaining the increase earlier this year. Lundin Mining is in strong financial position with a net debt position at quarter end of $124 million, including cash and equivalents of approximately $222 million and available credit of approximately $580 million under the company's credit facility, excluding the $200 million accordion. The net debt position has improved further since the end of the third quarter and is now approximately $65 million.

I will now turn the call back to Marie to discuss our operations.

Marie Inkster: Thanks, Jinhee. On Slide 7, we'll start with Candelaria. Mill throughput significantly improved during the quarter over that achieved in the first half of the year. Ore mills increased nearly 20% in the third quarter of 2020 over the first half average.

Measures to address variability in ore hardness and mill circuit availabilities, as well as a natural progression of mining in Phase 10 of the open pit, all began to take hold. The chart in the middle of this slide highlights this improvement on a monthly basis. Planned mill maintenance was performed in early August, impacting throughput that month. Throughput increased to average over 80,000 tonnes per day in September, as mining progressed deeper in Phase 10 of the open pit and operational hours in the mill improved. We will continue to work on increasing the productivity of the pebble circuit.

Installation in the fourth and final ball mill motor under CMOP remains scheduled for installation in early 2021. All equipment necessary to complete the project is onsite and available for installation. Also important to note, as I realize there was a focal point for some in the second quarter results, open pit mining is advancing without any issues through the areas of Phase 10, which are in proximity to where pit wall displacement issues previously occurred. Copper production for the quarter was just under 36,000 tonnes, a small improvement over the second quarter as grade was slightly below plan. The third quarter cash cost of $1.37 per pound of copper remained consistent with prior quarters, and year-to-date $1.34 per pound was directly in line with previous guidance before it was withdrawn.

Focusing on current activities, subsequent to the quarter end, two unions representing approximately 900 numbers of Candelaria's workforce commenced strike action. Despite mediation, the Mine Workers Union, representing approximately 350 workers, began labor action on October 8th. The Candelaria AOS Union, representing approximately 550 workers, began labor action on October 20th. Both unions currently remain on strike. For context, Candelaria has a total workforce of approximately 5,000 full-time equivalents, including approximately 1,400 own employee full-time equivalent.

Operations continued safely with the Mine Workers Union on strike, despite illegal, violent and intimidating actions by some of its members. Operations were systematically wound down for temporary suspension on October 20th, following the initiation of the strike action by the Candelaria AOS Union. Critical work continues to protect required onsite personnel, the operation and the environment. While the PAC plant Alcaparrosa and Santos mines are separate from the main Candelaria operations and are not a part of the labor action, their operation is being impacted at times by members of the striking union. We are committed to responsible, respectful and fair negotiations with the best interest of our workers and the sustainability of our business in mind.

We cannot, however, accept demands that jeopardize the sustainability of our business. I will be happy to take any questions during the Q&A and answer them to the extent that I can. Unfortunately, my answers may be constrained to respective Chile and labor laws. On Slide 8, Chapada had an excellent quarter prior to the interruption of processing activities in the last week of September. Production of nearly 13,000 tonnes of copper and 24,000 ounces of gold was in line with plan, as higher metal recoveries largely offset the lower throughput.

Third quarter cash costs of $0.21 per pound of copper were better than expected, benefiting from favorable foreign exchange and higher gold by-product prices. All gold production continues to be unencumbered, and currency is unhedged. Year to date, the average cash cost is an impressive first quartile $0.44 per pound of copper. As previously disclosed, processing activities were interrupted by an unplanned power outage on September 27th. When power was restored, the protection system of the main electrical substation failed, resulting in damage to four mill motors.

Two spare motors were installed on the SAG in early October. This has allowed the resumption of milling at approximately 30%, while repairs of the other motors are actioned. We continue to expect a return to full production in December. A step-change increase to full production will occur once two of the four outstanding motors that are under repair become available and are installed. To make the most of this time and improve the position of the operation, crusher and conveyor maintenance is planned and mining activities are focusing on building run-of-mine ore stocks and waste removal.

Full-year production guidance has been reinstated, reflecting a return to full processing in December. Copper production is expected to be 45,000 tonnes to 50,000 tonnes, and gold production is expected to be 80,000 ounces to 85,000 ounces. Despite the interruption, annual cash cost guidance has been reduced from the previous forecast to $0.55 per pound of copper. 2020 sustaining capital expenditure guidance remains at $40 million with $20 million having been capitalized year-to-date. Exploration drilling is on track to complete the 40,000 meters targeted.

There are now seven drill rigs on site. We have a strong quarter of drilling, more than doubling the meters drilled in the first half of the year with 22,500 meters completed and $2.5 million spent year-to-date. We'll advance this as aggressively as we can, while maintaining health and safety protocols. Planning for our 2021 campaign, including 60,000 meters of drilling, is well underway. Neves-Corvo, on Slide 9.

Third quarter production of 6,500 tonnes of copper was below plan on a shortfall of available mine copper ore, as well as below planned grade. The voluntary five-day suspension of operations following the fatal accident on September 25th impacted our production further. The availability of Bentonville stopes was less than planned, primarily due to lower development and volumes [ph]. Action plans have been initiated to address the backfill shortfall. Third quarter zinc production of 15,500 tonnes was less than the first two quarters of the year unplanned plant maintenance in July and September, as well as the voluntary suspension later in the quarter.

Neves-Corvo's copper production guidance has been reduced to 32,000 tonnes to 34,000 tonnes. Zinc production guidance has been tightened, 70,000 tonnes to 72,000 tonnes. Aggregate operating costs were better than planned in Q3 and were significantly lower year on year. This helped to offset the impact of lower production on the C1 cash cost. Cash cost guidance has been reaffirmed at $2.10 per pound of copper for the year, having achieved a $1.95 per pound year-to-date.

The official restart of the Zinc Expansion Project is planned for January 2021. During the quarter, work was ongoing to prepare for the restart. Preparation work planned for the fourth quarter includes further progress on ventilation raises, activities on the SAG mill, including commissioning with waste and work on the surface conveying systems. The 2020 capital expenditure guidance for ZEP of $65 million is unchanged, with approximately $8 million remaining to be capitalized in the fourth quarter. The project's pre-production capital expenditure estimate of EUR360 million is also unchanged.

If the current safety requirements for social distancing and other personnel limitations remain in place in 2021, we expect that the project would mobilize a smaller number of contractors than originally planned with an extended schedule in order to take the project forward. We are working towards reinstating 2021 and 2022 zinc production guidance for Neves-Corvo, including contribution from the zinc expansion in our annual guidance update. Moving to Zinkgruvan on Slide 10. The operation had a good quarter. Zinc production increased nearly 40% over the second quarter production to over 17,000 tonnes on improved grade and throughput.

Similarly, lead production increased over 45% compared to the second quarter. The operation is positioned for a strong finish to 2020 and a good start to 202,1 as mine sequencing calls for a return to higher-grade zinc stopes. The full-year 2020 zinc production guidance range has been tightened to 72,000 tonnes to 74,000 tonnes, and copper production guidance remains unchanged. Cash costs have remained stable and favorable at $0.55 per pound of zinc in the third quarter and $0.54 per pound year to date. Cash cost guidance has been reaffirmed at $0.60 per pound for the year.

Underground exploration efforts continued on existing ore bodies, as well as targeting Dalby. Full-year exploration guidance is $6 million, with planned drilling of 17,000 meters. Approximately $5 million has been spent year to date and nearly 12,000 meters of drilling completed. Lastly, on Slide 11. Eagle had an excellent quarter.

It's record for consecutive days without a recordable injury was expanded again and is approaching the one-year milestone next week. Third quarter nickel production increased nearly 45% and copper over 25% compared to the second quarter. Grades and recovery rates of both metals rose as mining progressed into the higher-grade regions within the Eagle East ore body. On the strong operational performance and increasing metal prices, Eagle's already first quartile cash cost improved further, achieving a C1 of negative $0.63 per pound of nickel. Eagle is positioned for a strong finish to 2020.

Full-year copper production guidance has been reiterated at 17,000 tonnes to 19,000 tonnes, and nickel production guidance at 15,000 tonnes to 18,000 tonnes. Cash cost guidance has been improved once again to $0.50 per pound of nickel from $0.85, given the $0.51 per pound achieved in the first three quarters and expectations for continuation of this performance in the fourth. Eagle has generated approximately $81 million of free cash flow in the first three quarters and is well positioned to continue to generate meaningful free cash flow in the fourth quarter and the next several years ahead. Slide 12 provides a summary of current guidance, which was discussed in the operational sections. Candelaria's 2020 guidance has been withdrawn, reflecting the temporary suspension of operations due to the current labor action.

Guidance for Chapada has been reinstated on the assumption that we produced at approximately 30% capacity until early December and then return to full production. Neves-Corvo's copper and zinc production guidance have been updated and tightened to reflect the impact of lower grades and ore availability to date, as well as our expectations for the fourth quarter. Cash costs at Chapada and Eagle have been reduced, given the excellent cost achieved to date and expectations for the fourth quarter. Cash cost at Neves-Corvo and Zinkgruvan had been reiterated. Except for Candelaria, the capital expenditure for each operation remains unchanged, as does our exploration guidance.

During the third quarter, our operations did not experience significant disruptions to production, shipment of concentrate or supply chains as a result of COVID-19. However, as we are all well aware, the global effects of COVID-19 are continuing to evolve and our guidance does not reflect the potential for additional suspensions or other significant disruption to operations due to COVID-19. The number of new cases in Brazil and Chile are declining, while the U.S.A., Portugal and Sweden are recording increases. Moving to Slide 13. Though we have had challenges over the past month, each has been met with immediate action plans.

We expect to finish the year in an even stronger financial position. We continue with our objective to create value by investing in low risk, high return opportunities in our own assets. We have stated often that capital return and disciplined growth are not mutually exclusive, particularly given our financial strength. Our corporate development team continues to actively pursue M&A opportunities within the same criteria, rigor and discipline that we have demonstrated in the past. In the current market, we see few actionable opportunities that would improve or maintain the quality of our mining assets in our portfolio.

And we are not interested in just collecting assets. The core aspect of our capital return strategy is our regular dividend. When excluding [ph] the super majors, there are few base metal mining companies that offer a similar yield. Our policy aims to ensure that the regular dividend is sustainable throughout the cycle and can be progressively increased as the asset base improves and grows. Our current NCIB structure approved with the TSX is a discretionary program.

On renewal of the NCIB, last year, we continued with the structure to retain flexibility in terms of execution. We will look to update our plans for shareholder returns with the issuance of our operational outlook and guidance. We expect to release this update the week commencing November 29. I'll conclude on Slide 14 and summarize our current position. Financially and operationally, we are favorably positioned to address our short-term challenges and continue to execute our strategy.

Noticeable progress has been made at Candelaria to improve mill throughput. The operation is well positioned for a return to full production rate once fair and sustainable labor agreements are reached. The team at Chapada has done an excellent job to minimize the expected impact and take advantage of downtime caused by the power failure. A return to full production is expected later this quarter. Restart of the Zinc Expansion Project and Neves-Corvo is on track for early 2021, with planned fourth quarter 2020 activities to prepare for commissioning of the SAG mill.

And lastly, Eagle and Zinkgruvan continue to perform well, taking advantage of the improving nickel, copper and zinc prices. We look forward to updating you on our continuing efforts in coming weeks and months. Thank you, operator. And with that, I would like to open the lines for questions.

Operator: Thank you.

[Operator Instructions] Please limit your question to one, with one follow-up. Please stand by, while we compile the Q&A roster. Your first question comes from the line of Orest Wowkodaw from Scotiabank. Your line is open.

Orest Wowkodaw: Yes, challenging year operationally across the portfolio.

I mean, you've had to cut guidance at Candelaria, Chapada and Neves on the copper side. And I guess my question is, should we anticipate any impact of the lower '20 guidance in terms of a knock-on impact on '21? Like, is there going to be some kind of effect of knock-on impact in terms of catching up from lower levels this year, or do you still feel confident with the '21 guidance that's out there? For example, Candelaria at 185,000 tonnes to 195,000 tonnes. Or does - should we anticipate that there could be more of a ramp towards those numbers?

Marie Inkster: Yes, good morning, Orest. I think it's been a challenging year for everyone. And we just had to have had a month where we've had a number of challenges.

And we withdrew the guidance for this year only and we're updating our guidance right now with our life of mine and planning for next year. So, we'll update the total guidance for the three-year outlook, as we do every year, on the week commencing this 30th pf November. So, we'll update then. We have not withdrawn the future year guidance. So at this point, we don't believe there's going to be a material impact, but we will reaffirm the guidance in November or early December.

Orest Wowkodaw: Okay, thank you. And just - I'm not really understanding kind of what happened at Neves, with respect to the grades and the guidance cut. Can you give us a bit more color there?

Marie Inkster: Yes, sure. Peter, do you want to take that one?

Peter Richardson: Yes, I can take that one. So, as Marie said during the presentation, the copper shortfall was due to lower available ore tonnes and lower grades.

For ore tonnes, we have fallen behind on development grade. That was primarily due to COVID proactive measures that we took in Q2, where we curtailed some of our own workforce and contractors that was prolonged longer than planned. So, we did fall behind on some capital development there as well. And at the same time, when you have less available ore tonnes, you also produce less waste. So, you have a double effect there.

Those are things that we are working on. We're improving. Of course, we have gotten people back now for the couple of months. So, the production and development crews are back. We're working on productivity improvements with them, and we're also - we have actions planned to improve [indiscernible] which has been good over the last couple of weeks.

So, those are some actions I've been taken. And then, the copper grades. They came back in some of the areas lower than expected. So, we've got action plans going - ongoing to review and study and understand why that happened.

Orest Wowkodaw: Okay, thank you very much.

Operator: Your next question comes from the line of Ioannis Masvoulas from Morgan Stanley. Your line is open.

Ioannis Masvoulas: Good morning, and thanks very much for taking my questions. The first one is around Candelaria. We've seen really good progress on throughput rates and you seem to be towards the top end of your guidance range for September, at least.

But the grade was fairly low, to 0.55%. Is that something that could persist in the next few quarters, as you go deeper into Phase 10, or is it a temporary development? And then the second question. Just in terms of the working capital development, I think we had anticipated some release in the second half. But we saw a small incremental investment in Q3. Can you give some indications on how that plays out into Q4, especially given the disruptions of Chapada and Candelaria that may impact inventories? Thank you.

Marie Inkster: Okay, great. So, in terms of the grades at Candelaria, we're tracking pretty well the plan. If you look at the year-to-date, I think it's tracking exactly where it was in the original technical report that we had filed in November 2018. But, Peter, did you want to give some general guidance on where we're going? We don't forecast rates, but if you want to comment on the progression?

Peter Richardson: Yes. I can, Marie.

As you said, the copper grades are following pretty well; what we anticipated. We were expecting an increase of the grades in the fourth quarter, especially as we mined lower in Phase 10, where we know the grades will improve in the lower parts of Phase 10. So, that was in our plan to do. But otherwise, we're following pretty well the forecast on our latest technical report.

Marie Inkster: Yes.

And Jinhee, did you want to comment on the working capital development? I know we have a much better position now than we did end of quarter. We saw some additional cash flows coming in the month of October. But did you want to comment on working capital flows?

Jinhee Magie: Sure, Marie. So, for the balance of the year, we do expect fairly good and consistent cash flow. We had an increase in our cash in the last three weeks since quarter-end as well.

I would say some the disruptions that we are having in the fourth quarter, we won't actually see the cash impact of that until Q1 of 2021. So I think, for the balance of the year, we are expecting to be in a strong working capital financial position.

Ioannis Masvoulas: So, that's clear. Thanks very much. Thank you.

Operator: Your next question comes from the line of Jackie Przybylowski from BMO Capital Market. Your line is open.

Jackie Przybylowski: Thank you very much. I guess, to follow-up on the last question about working capital, can we talk a little bit about your dividend policy or your capital return policy. I know your net debt is down to a very low number, you nearly finished ZEP, Chapada is restarting.

How are you guys thinking about dividend or capital returns at this point. Is there a potential we might see that get raised in the near future, or do you plan to renew the normal course issuer bid to do a more meaningful share buyback next year?

Marie Inkster: Yes. So again, we look at our dividend policy and the capital allocation at annual budgeting and planning cycle, which we can confirm at the end of this month. Early next month, we'll be updating that. We do have the NCIB in place and that has been - we've continued to have that as discretionary plan.

So, we'll be updating the plans on the returns with the issue of the operational outlook. And I agree with all of your observations. We do have a very strong financial position. We have lowering capital investment requirements and good cash flow generation. So, that's something, I think, that sets us apart and we look to take advantage of that.

So, we'll update as to what we plan to do with the dividend and the NCIB at the end of the month, when we do our three-year outlook.

Jackie Przybylowski: So, the end of next month. Yes, that sounds great. And just on - I guess, switching gears to Chapada. I was just curious if the operational issues that you encountered there with the electrical failures, does that change the way that you guys look at things like spare parts going forward, or was this truly just a really improbable kind of freak accident and is not likely to happen again? Like, how you guys think about mitigating that risk going forward?

Marie Inkster: Yes.

So, we have done some immediate things. Obviously, we did the root cause analysis and we took some steps, Peter, if you can maybe go a little further into detail about the steps that we've taken? But we've also put in our capital budget for next year that we will order two additional spare motors, just recognizing that we have had damage to these ones and it may impair somewhat in the future if they're damaged again, the ability to repair them over and over again. But Peter, do you want to elaborate on the motor failure, the root cause analysis and what we're doing about it?

Peter Richardson: Yes, I can. So, a number of actions. Have been patient to investigate the root cause of the failure of the protection system and also ensure that we have additional redundant - to prevent it from happening again.

One part of the investigation was that we simulated the condition, tested the battery bank pack - our battery pack that was to power [indiscernible] in the event of failure. And we also brought in a specialized technician to help on this investigation. So, we have the root cause. We have taken actions. So at this time, we have replaced the entire battery bank of the substation.

We have - We're also in the final stages of issuing a detailed substation re-energization procedure and for the training of electricians. We have also installed a redundant protection system for the mill circuit breakers. So, we have two systems now, independent of each other. And also, beyond that, we're evaluating further updates to the substation protection system going forward. So with these measures, we are confident that we have additional redundant protection systems in place and that this will not happen again.

And we've shared all these findings with our other sites to make sure that we don't have any other potential flaws in the system. So, we're confident that this was a one-time.

Jackie Przybylowski: That sounds great. Thanks very much, Peter, and thanks, Marie.

Operator: Your next question comes from the line of Daniel Major from UBS.

Your line is open.

Daniel Major: Hi, there. Thanks for the questions. First question is just on the tax, particularly the cash tax outlook, I think you received a rebate of $20 something million dollars this quarter in terms of cash tax. Can you give us any guidance on where you expect that to come in the next couple of quarters, plus where you expect the cash tax rate to be 2021-2022?

Marie Inkster: Jinhee, I'm going to ask you if you can handle that one.

Jinhee Magie: Sure. I speak on the cash - on the tax rebate. Are you referring to the refund that we received in Portugal? Yes. And so net, I believe, you received the tax rebate last quarter, including the tax rebate from Portugal.

Jinhee Magie: Yes.

So, see, rebate that - see, refund that we received in Portugal was related to a tax dispute from back in 2008 and that was finally settled in. So, we received $40 million in taxes and about $5 million in related interest to that. As far as timing of tax payments, that is fairly, I guess, difficult to predict in the sense that it does really align with our taxable earnings. And so, I think our best guidance there would be to say that, going forward, to use our statutory tax rate in the various countries. And that's probably the best benchmark to use for forecasting.

Marie Inkster: Yes. And I guess, Daniel, what it may suggest is that if you're going to touch with Mark and Brandon and our - who handle our IR department and all of our corporate models, then they can help you with some of that modeling for future years.

Daniel Major: Okay, great, thanks. And then second question, Chapada. Got two parts, but what is the estimated cost of the mill repairs and will you incur all of that in the fourth quarter? And there still seems to be quite a lot of CapEx to spend to get to your guidance.

Are you still confident you spend the full $40 million this year?

Marie Inkster: Yes. So, in terms of the cost of the repair, it's not a large amount. It's more of the mis-production that's going to be what we - is the real true cost to us. But the repair will be for all four motors, less than $1 million all told. So, that's not a huge amount to us in terms of the repair.

And then in terms of the CapEx, much of that will be capital stripping. We are continuing to work on the mobile crushing unit. And so, that's also going to be something that we have CapEx coming in. Peter, I don't know if you had any additional comments on the CapEx? But we maintain the guidance. So, we're fairly confident that there is much to be done there, particularly on the capital stripping.

Peter Richardson: Yes. Capital stripping, as you said; the mobile crushing unit; also evaporators. So, we have a number of deliveries in Q4 project.

Daniel Major: Okay, thanks a lot.

Marie Inkster: Yes.

Operator: Your next question comes from the line of Lawson Winder from BofA Securities. Your line is open.

Lawson Winder: Hi, Marie, Peter and team. Yes. Just first question for me on Chapada.

Just looking at the throughput rate, and I know there were some impact at the end of the quarter from the interruption and the damage to the motors. But the daily throughput, nevertheless, came down quite substantially versus prior quarters and versus probably the prior eight or more quarters. I was just hoping you could help me understand how much of that was due to ore hardness versus how much of that might have been due to other factors, and then what the outlook for Q4 would then be around that daily throughput. Thanks very much.

Marie Inkster: Yes, no problem.

And Chapada was tracking quite well to plan. So Peter, can you expand on that? I know there's a lot of variability depending on what we're pulling from in terms of the ore quality and - if you'd like to expand on that a little bit?

Peter Richardson: Yes. So, we were seeing, during Q3, a harder - a little bit harder than expected ore, during the quarter. We took some actions. We had a mill maintenance down, where we made some changes to the relining system, which improved throughput as expected.

So, we saw positive effect of that. Of course, after our mill interruption at the end of September, our throughputs are a lot lower, about 30%, compared to full production due to the fact that we're only running one mill. We're only running the SAG mill with no ball mill at the moment. And we expect that, as Marie mentioned previously, that to be the case through October, November. And then, we will restart the ball mill December, when we get the two remaining motors that are needed for that.

So, we will see lower-than-normal production rates during in Q4 until we had all the mill motors back.

Lawson Winder: Okay. And then, I guess, for my follow-up, I'd like to maybe ask about the pack mill at Candelaria. Are you - I mean, it would be really helpful for us if you could give us an idea of, first of all, with the strike happening, is that mill and mining operation able to effectively operate as it normally would? And then, is it operating through full throughput? And then finally, can you give us any idea of grade? I know you don't provide grade guidance, but maybe even just a range would be helpful. Thanks so much.

Marie Inkster: Yes. So, the pack mill is continuing to operate. We have, from time to time, some disruption in and around the gates. So - with the shipping, when at times the gates are blocked. But it generally has been operating according to normal operating procedures.

It does about 4,000 tonnes per day. And it would be typically higher than the open-pit ore. So - because ore sourced from underground, you would have kind of that higher, 1% above, typical. So, that's what we're running there and continue to do so. The O-hose operations, which the pack plan is part of O-hose and legally not Candelaria are not part of the strike and shouldn't be affected by the strike.

But we do know that being associated with Candelaria, it is subject to, from time to time blockades.

Lawson Winder: Great. Thank you so much, guys.

Marie Inkster: Okay, thanks.

Operator: Your next question comes from the line of Dalton Baretto from Canaccord.

Your line is open.

Dalton Baretto: Good morning, Maria and team. I'm actually surprised, nobody has asked about the strike situation in particular.

Marie Inkster: Actually, me too.

Dalton Baretto: I appreciate you can't comment much, but can you give us a sense for what the ask is, from the unions, relative to some of these CBAs that have settled in Chile recently? Are they egregious, are they in line?

Marie Inkster: Well, I do have to respect the negotiation processes and the labor law.

So, I am limited in what I can say. But as you pointed out, there are several operations in Chile that recently successfully concluded their collective agreements and they are now public record. We have been encouraging the union leaders to look at those recent agreements and come to the table with a willingness to reach agreement on a reasonable basis. And in general, most mining labor negotiations in Chile will focus around base salary increased and the return to work or signing bonus. So, they talk about other issues - soft issues, but realistically, it's all about the money.

So, two important considerations that affect us on the salaries is one, and I think that many of you may know, if we agree to percentage increases to be embedded in this contract, it becomes the floor for our position in any future bargaining, according to the law. So, short-term agreements have long-term implications for us. So - And then secondly, the salaries are already adjusted for CPI inflation. And that's by legislation, all salaries are adjusted quarterly. So, request for base salary increase is over and above the CPI.

They will significantly impact our operating cost structure. So, we can't accept demands that will jeopardize the sustainability by creating unsustainable increases year-over-year. And so, that is something that we have in mind. And we are encouraging the union to come with realistic demands. And, there are some things that we just won't be able to give on.

So, that is the situation. And in this situation, no one's winning. It's a lose-lose right now. And it's just something that we're trying to impress upon them, that nobody is winning right now and that there are something that we won't give. So, we're hopeful that we can come to an agreement and pointing to those other agreements that have been reached as reasonable basis, of which we could do something, but we need to have a meeting [ph] in the mines and we're working very hard towards that.

We do have a mediator in place and we've had numerous meetings, including, I believe, one to be held later today, where we continue to hope that we can have a reasonable discussion and come to an end with this. So, we're working hard to come to a conclusion and will continue to make sure that we do it in a reasonable way that maintains the business sustainability. So, Lawson - or Dalton, long-winded answer there to a short question.

Dalton Baretto: No, that's great, but that's actually very helpful. Are you surprised, I mean - I presume your discussions are only with the union leaders? Right? But I'm - Are you surprised at all with some of these actions that the union members are taking outside your gates?

Marie Inkster: Perhaps, surprise isn't the correct word; I think, disappointed, because the actions are against their co-workers.

So, I guess that's quite sad to see. And what we really don't like is if there is action that's taken that would, for example, hypothetically create an environmental damage or a long-term damage, those are the things that we're very cautious about. But again, we are pursuing different actions on those. So, I won't comment too much on that aspect.

Dalton Baretto: Okay.

And then you mentioned ongoing meetings with union leaders through a mediator. Are the frequency and nature of those meetings at a level that makes you constructive, I guess, that you can come to an agreement soon, or are you guys still fairly far apart in that again?

Marie Inkster: Can't comment at the moment, Dalton, but we'll continue to reach out and try to reach agreement.

Dalton Baretto: Okay. And then one last one for me and somewhat related, but not really. With constitutional reform on the horizon here in Chile, does that raise any red flags view at all? Any concern?

Marie Inkster: Yes.

So, we have been following that in the background as well. So as everyone probably knows, the plebiscite that was held last Sunday was a landslide in favor of drafting a new constitution. So next April, there will be a constitutional assembly elected and then that group will work towards drafting a new constitution to be voted on in the middle of 2022. So, the public mood is one of excitement and people are happy that it's going forward. I think in the near term, we're hoping what this will mean is that it will be a period of relative calm and we'll see coming down of some of the unrest that's marked this movement and people will be satisfied that things are moving forward and that there will be a period of calm.

There are times when - When things are changing, there is always unrest. So, you shouldn't be surprised if there are further incidents, I would say. But we do believe that it may lead to a period of calm here, as we lead up to the next vote. And we do note that in the Atacama, the percentage of voting for new constitution was even higher than Chile and total result was 85 plus percent in the Atacama. So, there is a very strong will for this to happen now.

And what this means is pretty much the same thing that we've been thinking about throughout this, is that to embed healthcare, education and other social programs, there has to be a structure and a way to pay for that to [ph] stifle the economy and hurt the economy of the country. So, we'll watch that very carefully. But it is going to be a lengthy process and we hope for some relative calm, although there may be some people who are not happy that it's not happening faster and some bumps along the way as we get there.

Dalton Baretto: Okay, great. But if tax code revision is a major piece of this, do your stability agreements protect you from that?

Marie Inkster: We do have some stability agreements.

It depends on what's put in place. Right? So, it depends on what the structures are. I think this is something that's been talked about even before they started talking about new constitution, they were talking about social programs and different things to - different means of raising money to pay for those things. So, it's something we're watching and right now, we're not sure what the impact will be, but we are monitoring it along with the industry associations and other business groups.

Dalton Baretto: That's great.

Thank you, Marie.

Marie Inkster: Yes.

Operator: Your next question comes from the line of Stefan Ioannou from Cormark Securities. Your line is open.

Stefan Ioannou: Yes, thanks very much for all the help on that strikes.

That's very helpful. Just wondering, you kind of did allude to earlier that it's great to see that the mining is going great or a much better now at Candelaria in that Phase 10 area. Can you just remind us how long are you going to - in terms of the mine plan, how long are you in that sort of quote-unquote sensitive area that - where you had the Phase 9 failure a few years ago? Like, are you - is this something that's going to be in the mine plan for the next year or two, or just remind us what the schedule is there?

Marie Inkster: No, we move away from that area. Peter, I don't know if you have the exact details that you can give there?

Peter Richardson: I don't have the exact details, but we mined through the sensitive area other than we - you spoke to during the call. And now, we are getting deeper down, right, in Phase 10, where...

Stefan Ioannou: Okay.

Peter Richardson: Yes.

Stefan Ioannou: Okay. And just - it was also good to see. It sounds like you've sort of got the hardness issues there under control.

Is that something that you think you have under a much better handle on now, going forward, or do you think it's still going to be variable for the next few quarters?

Marie Inkster: Well, as we get deeper, the ore softer and so, part of that issues goes away. And I think we're - And again, Peter, maybe I'll pass it off to you. We're doing some additional work on the pebble crushing and in order to prepare for our times in the future, when we do encounter those harder ore areas.

Stefan Ioannou: Okay.

Peter Richardson: Yes.

Exactly, Marie. But the main thing at the moment is that where - the deeper we get on Phase 10, the softer the ore gets. So, - And that's something that we knew about. But in the meantime, we are also revisiting the pebble crushing circuit and grinding circuit to be better prepared for the coming phases. But we've done a lot of improvements, both in the mine and the mill, with the focus to increase the amount of fines to the grinding circuit.

So that's something that we have done and that's been successful and we see positive results of that during the quarter, but also a lot better operational stability during Q3, with grinding and pebble crushing.

Stefan Ioannou: Okay. Okay, great. Thanks very much, guys.

Operator: Your next question is a follow-up from Ioannis Masvoulas from Morgan Stanley.

Your line is again open.

Ioannis Masvoulas: Yes. Thanks, again, for taking the follow-up. Just going back to Candelaria, you have withdrawn the CapEx guidance for the year, which I guess it's in response to the operational suspension right now. But can you talk about any potential to bring forward the stripping or mine development activities, which could lead to some CapEx that was supposed to be spend in the next couple of years to be incurred in the next couple of months? Thank you.

Marie Inkster: Yes, so the stripping is actually why we withdrew the CapEx guidance, because with the mine shutdown, we're unable to do the waste removal that we we're hoping to do during this quarter. So, I think it's not a matter of bringing it forward. We'll have some catch-up to do once we're able to restart. So, the CapEx guidance, it's really a matter of understanding how long will be with the trucks parked and not able to do some of that overburden removal.

Ioannis Masvoulas: That's good.

Very clear. Thanks very much.

Marie Inkster: Yes.

Operator: [Operator Instructions] Your next question is a follow-up from Jackie Przybylowski from BMO Capital Market. Your line is again open.

Jackie Przybylowski: Thanks very much for taking my question. I'll be quick. But I just, I guess I was also a bit surprised that nobody had asked about the Candelaria strikes. So, I'll follow up with Dalton's question. Just the last one maybe for me.

On the other unions that haven't announced a strike, there's two supervisors' unions, from what I understand, that were coming to the end of their contract around this time, around the end of the month. Can you give us an update on if you're negotiating with those supervisors' unions, or if they could be in a strike position over the next little while as well? Thanks.

Marie Inkster: Yes, no problem. We do have five unions at Candelaria. There is one union we reached agreement with this past May.

So, two other unions, we still have and their contracts are expiring. The two remaining unions represent approximately 230 supervisors. And we've started negotiation with one union as per formal negotiation process and we expect to commence with the other one shortly.

Jackie Przybylowski: And I wonder those contracts may expire? I know it's around now. Is that coming up in the next little while?

Marie Inkster: Yes.

By the end of the year.

Jackie Przybylowski: End of the year, okay. Okay. I thought it was around that. Okay, that's it from me.

Thanks very much.

Operator: And we have no further questions at this time. I will turn the call back to our presenters.

Marie Inkster: Okay. Thank you very much, operator, and thank you, everyone, for attending the call.

And we'll have our annual guidance released out at the end of November and look forward to announcing our production results in January. So, thank you all and we'll be speaking again soon. Bye-bye.

Operator: Ladies and gentlemen, this concludes today's conference call. Thank you for participating.

You may now disconnect.