Lundin Mining Corporation

Paul Conibear, President and Chief Executive Officer Marie Inkster - Senior Vice President and CFO Paul McRae - Senior Vice President, Projects Steve Gatley - Vice President, Technical Services

Tom Meyer - CIBC Orest Wowkodaw - Scotia Bank Oskar Lindstrom - Danske Bank David Charles - Dundee Capital Markets Julian Beer - SEB Alex Terentiew - Raymond James Sasha Bukacheva - BMO Capital Markets Kerry Smith - Haywood Securities Greg Barnes - TD Securities Cliff Hale - Sanders - Cormark Securities

Thank you very much, Operator. And thank you, everybody, for joining us on Lundin Mining’s first quarter results call.

Today joining me on the call to assist and answering questions at the end of the presentation are Marie Inkster, our Senior Vice President and CFO of the company; Paul McRae, who is our Senior Vice President of the Projects, who heads the Eagle Investment in Michigan; and Steve Gatley, who is our Vice President of Technical Services. Operational highlights for the first quarter of 2014.

Copper, nickel and lead production exceeded plan and zinc was in line with our expectations. In regards to copper, higher throughput at Neves-Corvo and improve grades and throughput at Aguablanca led better than expected production.

On zinc, production at our Swedish Zinkgruvan mine met expectations and production at Neves-Corvo is expected to improve quarter-by-quarter. On nickel, higher than generated -- higher throughput generated better than expected production at Aguablanca, we had a very good quarter there.

For Tenke, continued performance, extremely well, timing of sales was a bit behind what we expected and certainly lower copper prices reduced our earnings. On cash cost, we had higher than annual average cost costs in Q1, some of that was expected.

But in particular Neves-Corvo, cash cost were affected mainly by lower grades, lower recoveries and to an extent by a very euro against U.S. dollar.

Zinkgruvan production costs were impacted by timing of by-product sales. Overall there performance was pretty good.

Full year targets that we've given as guidance at the beginning of the year is expected to be achieved. Financial highlights, revenues particularly affected by the lower copper prices, $150 million in the first quarter, net income of $13 million, which is a disappointing $0.02 per share.

Operating cash flow $27 million and cash returns from Tenke $17 million for the quarter. As we build the Eagle project, we continued to draw on our $600 million debt facility and our net debt at the end of the quarter was $148 million.

On our normalized earnings basis, not really very many adjustments in this quarter, you can see that the adjusted earnings were pretty similar to the reported net earnings, some minor adjustments due to mark-to-market on securities we hold and tax. Taking look at the physical production changes, this is quarter upon quarter, Q1 2014 versus Q1 2013.

On copper you can see we had improved throughput and particular at Neves-Corvo, lower grade and lower recovery there. So there was about 2,000 ton difference in the copper production in first quarter this year compared to copper production first quarter last year.

On zinc, we had improved throughput, improve grade and really about the same or slightly lower recovery. So, a significant improvement overall year-on-year in zinc production.

On lead, really a similar story with improve throughput grade and recovery, and as I mentioned, Aguablanca had another very strong quarter and up on throughput and improve grades. Taking look at operating earnings, $0.02 a share obviously fell under expectations all around here.

Sales mix contributed, but it really it was volume and lower copper price and some adjustments quarter upon quarter. Cost actually in aggregate were better than a year ago and foreign exchange effected us, both the strong Swedish Krona and the strong euro.

Cash cost at Neves-Corvo on a copper basis we came in at $2.10 per pound of copper produced, at Zinkgruvan $0.45 per pound of zinc and Aguablanca at just under $3 per pound of nickel. We maintained our guidance.

We are confident with the information we have on our forecasting that will end up completed within the ranges that we guided at the beginning of the year, which is up to 116,000 tons of copper, including the attributable share from Tenke, approaching 145,000 tons of zinc on the high-end, good production of a good 30,000 tons of lead and producing at least as much nickel that’s shown in our guidance which is 8,000 tons to 10,000 tons for the year and probably, on the high-end or overachieving that because of the performance at Aguablanca. The cash operating cost, we do maintain the guidance that we gave which is $1.90 per pound of copper produced at Neves-Corvo.

Freeport have just recently slightly lowered improve the cash operating cost forecast for Tenke to $1.22. We remained at $0.35 for Zinkgruvan and I think we very conservatively guide $4.50 as a cash operating cost for the year on nickel.

Taking look mine by mine at the performance in the quarter and the outlook for the balance of the year, Neves-Corvo produced pretty much on budget actually slightly ahead of budget and for internal planning on copper and zinc will ramp up on quarter by quarter basis which has been part of the plan as we continue to extract more stopes, higher grade out of the Lombador area on zinc. Little disappointing on both grade and recovery, below budget for the quarter, we got under some tougher stopes in both upper Lombador and in Neves-Corvo north area.

We had 2.3% average grades and only 82% recovery. Really the issue there is we got some zones which are abnormal compared to the history we have had here of higher lead within the copper ores and as we depress the lead in the process plant to keep the concentrate quality up, we are loosing recovery, that the issue that we experienced in the quarter and that was one of the prime reasons for lower earnings.

Outlook for Neves-Corvo for the balance of the year and moving forwards, in aggregate, we are so confident copper production and costs will be consistent basically with 2013. We will get our zinc production up quarter-by-quarter as we get into more big tonnage higher grade stopes in Lombador and we are pursuing the zinc expansion study with a high priority.

We’ve had preliminary results which we checked from time-to-time on potential economics of expanding zinc and they are looking favorable so far. But there is another 10 months or so to go before we have results that we can publish.

The target if it's economically viable use to be producing upwards of 150,000 tons of zinc out of Neves-Corvo by 2017, that’s the target we have given the team as compared to our currently published guidance, which takes us from 60,000 tons to 65,000 tons this year up to a good 80,000 tons in 2016, which is our current plan. Zinkgruvan, back on track, just under 20,000 tons of zinc production which is a pretty normal number 1,000 tons of lead and good by-product credit from copper, which was completely in line with all of our expectations.

The challenges we had last year operationally with the paste fill plant. I think our reserved were back on track and we did have C1 cost of $0.45 per pound of zinc on guidance of $0.35 average for the year, that was primarily affected by one shipment of lead that we didn’t get out and sold that we will catch-up on in Q2.

I have looked for this mine, really expect, historical performance of this mine and this year compared to last year a little bit higher throughput, little bit more zinc production and on track with lead. We are looking at this, expanding our paste back fill system to handle the future and be more conservative on paste delivery, which was the unique issue we had last year.

Aguablanca, another great quarter of performance here, we are really pushing this pit. We had forecast that we’ll be done mining in the open pit in Q1 of next year.

We are actually hoping to have the pit mined our because we are advancing at a higher rate than expected in the balance of this year for better financial results and the underground project is advancing on track. Tenke production figures here on a 100% basis, just under 50,000 tons of copper cathode, 3,000 tons of cobalt.

Largely in line with expectations on the earnings and their cash returns to the operator, Freeport and ourselves were below expectations primarily because of timing of sales and lower copper price. Cash operating costs, they were very good, $0.89 per pound of copper cathode produced and the cash operating costs compared to guidance was better because of higher by-product credit from cobalt, both cobalt total volume produced and prices.

Tenke outlook on expansions and investment return here, the second big asset plant that’s going in there, the project is progressing well. Civil work has started on site.

This new plant which will produce about 1,400 tons of asset a day on top of the 850, that we currently have is scheduled for start-up in 2016. Freeport, I think they have been pretty open at expansion of the next phase for Tenke.

It has not been decided when it will be, what size we would shape it and expansion will be contingent upon this new asset plan getting into production. We need more asset to produce more copper cathode.

There were widely acknowledged issues with power supply last year, so obviously we want to get more confident with the powers available in the multi-year horizon moving forward, so obviously market conditions and other factors and DRC. We have readjusted our cash distribution expectations to Lunding Mining for 2014, are down to $100 million to $130 million as the range as a result of copper price and we will obviously update some guidance on that quarter-by-quarter depending on how copper price progresses.

Eagle, Eagle project, the new nickel/copper mine that we are building in the Upper Peninsula in Michigan is progressing extremely well despite a really, really tough winter. The team there has overcome a lot of mother nature odds there and the project is on track.

Construction is 80% complete. In fact by the end of this week, all of the significant facilities in the area of the mine have been turned on operational and we are progressing very well at the mill as well with first concentrate still expected in Q4 of 2014.

So completely on track on schedule and on budget and the tough winter and delays that we had there, we are making up with overtime shifts from the contractors. Got a few pictures here, just depicting the progress, the two pictures on the left at the mine site.

On the right, these were taken a few weeks ago. You can see there is one ball mill on the (indiscernible), as well as the second has been placed there since then progressing on piping and wiring and final equipment installation in the mill and related facilities there.

So we are very pleased with the progress at Eagle. Operational readiness, this is the advantage of requiring an asset from a Tier 1 major is the some of their key leadership at the mine have great operating experience here.

So the operational readiness plans are well advanced. We’ve got a mine contractor fully mobilized with underground development completely on track.

Lots of training and hiring going on and on fundamentals of off take here, the copper concentrate and nickel concentrate negotiations on off take are well advanced. We’d expect to conclude them over the next couple months and we are completely ready already for transport and concentrate shipping with contracts in place and trucks of course are arrived on site.

That concludes the update on Lunding Mining for Q1 and I open the call to questions.

Thank you. Good morning, Paul.

I've got a question on the Tenke and I'm just wondering with the strong margin at Tenke, are we seeing any of the benefit of the Freeport cobalt refinery getting slowly baked into that margin?

The investment in Freeport cobalt is an equity investment and it’s reported completely separately. And there are some technical benefits in shipping the Tenke cobalt hydroxide up into the finish refinery.

But we have to be quite careful on transfer pricing and everything, so that’s quite regulated. So it’s fair to say that some of the penalty elements that we might get dingdong by traders and selling direct to the third parties are mitigated there.

But you won't see anything measurable showing up on the Tenke cash operating cost particularly.

Okay. And then I’m just curious on the Lombador capital spend.

You reduced guidance roughly $20 million. Will that -- a good chunk of that $20 million reappear in 2015?

No, I don't think so, Tom. I mean, there is a little bit of a balance there.

There has been some stuff deferred into 2015, but really they’ve done, they have been working pretty hard on mine planning and reducing development and sticking some of the development into market mineralization instead of completely in waste and are just being smarter with the overall capital layoffs. Steve, you want to add anything to that?

I think you’ve summarized that fine, Paul. The development plans have been refined and ultimately led to significantly less both horizontal and vertical developments.

Yeah.

As we mine more and more of these big stokes, we are learning as we go along the way. The Lombador deposit is producing a lot less water than we expected.

So we have been able to cutout a bunch of de-watering and I think we pretty conservatively plan for, that would be an example.

Okay. Great.

I will pass it on.

Hi. Good morning.

Just wanted to revisit the issue of your very strong balance sheet, obviously with Eagle now within 12 months of completion, has management and the Board given any more thought in terms of what’s next in terms of 2015? Certainly, I think there would be some area to consider a dividend policy given the strength of your balance sheet.

But just wondering where your head might be out in that regard versus say another acquisition like Eagle if available?

Orest, yes, our growth plans remain exactly as they have been over a three year period here as far as criteria. When we acquired Eagle, we indicated we basically put our pens down on corporate development until we were sure that Eagle was progressing well.

It is progressing well. We are seeing obviously a great strength in the nickel price, which is giving us some confidence as we head towards the end of the year and starting things up.

But we are going to remain strict to our criteria when we are looking at growth opportunities. So there is not that many of the most there.

A lot of the offsets that were rumored to be coming out from major, there’s been very few of those as you know. We would like to get to the point where we are issuing a regular dividend from Lundin Mining.

We are restricted from issuing a dividend until we’ve past the bank performance checks on start-up of Eagle and getting up into full production. So, I would expect that will be something that we will revisit in mid-2015 barring anything else happening between now and then.

Thank you very much.

Thank you, Operator, and then follow-up on the previous question. Your larger peers, Paul, reattempt their VHP, they are talking about threshold gain targets and possibly giving out the spare cash to the shareholders, ultimately exceeding that target.

Can you consider such a model looking beyond 2014 and also what’s the reasonable run rate net debt for Lundin Mining say in terms of net debt to EBITDA or free cash flow yield?

Yes. So various I guess it appears to that answer.

I mean, we’ve run the company over the last five years with essentially no debt, taking a little bit of debt on Eagles first time and we’ve had anything. And I am not sure Marie with the Eagle pro forma, what would be the sort of gearing that will end up with as a peak?

Still less than 2%.

Yes, less than 2%.

Less than 2%.

And then probably 10% or less on debt to market cap. Some of our peers in the mid tier space run up to 30%.

We would not want to run the company at that high level. However, you’ve got to take a look at the characteristics of the assets or the operation or whatever that you’re putting the debt on.

You can take a higher gearing ratio on more predictable asset. It’s a higher risk asset.

You want to keep you gearing ratio lower. Running in the 10% to 20% range of debt to market cap or I don’t know what ratio you would put as an upper end…

2.5.

2.5 or 3 or something like that on debt to EBITDA.

So EBITDA to -- two times EBITDA.

Yes, 2.5 or 3 of debt to EBITDA I think would be, if we talk to the banks for asset mix like we have would be reasonable targets to run the company.

That would be high end.

At the high end, yes.

And comfortable going above 3.

Yes.

And as you business stream, will you be looking to increase your credit facility or the credits or the space in the credit facility?

Well, we have no use of cash or an increase to where we currently are there, so it’s 600, now which is 2 tiers 350 plus 250. We will use the 250 up first.

We’ve got no plans currently.

All right. Great.

Thanks.

Good morning, Paul. Just a quick question on the cash returns on Tenke.

I mean, they dropped over 40% in the quarter compared to last quarter. I know you sort of said that that was in part related to timing of sales, but sales didn’t go 40%.

I am just wondering, is there anything we should be aware of here? And it does seem that if you maintain your $100 million run rate that that balance might go quite dramatically in the next three quarters.

But I am just a little bit surprised that’s why it’s dropped so much this quarter?

Well, several aspects to the answer there, Dave. I mean, copper prices off more than 15% year upon year, such that that’s the big issue.

First quarter of last year was I think the best grades and recoveries were wherever put you Tenke. So obviously for the quarter upon quarter, year to year we didn’t produce as higher grade, higher quality of copper but we are still very good in this quarter and then timing of sales.

Those are bunch of shipments and sales of seats that are delayed into Q2, so we are expecting a big pickup in Q2, but compared to budget pricing, copper prices off, that’s the biggest factor.

And Tenke, so your view is that copper price will come back up a little bit or do you think that most a little just be timing for sales say over the next three quarters that will get you back to the $100 million annualized run rate?

My own personal feeling and I guess the way we would expect our business to operate here was with the better copper price in $3. It keeps, it’s tested that $2.98, $2.95, $3 raised a couple of times and that hasn’t lasted for more than about a week or two at a time.

So we plan ahead with an average copper price of $3.15 I think is what we’ve got in our pro forma. We would expect that could get a little better.

And maybe just one final question then on Eagle. Is there any sort of critical path issues that you face with on the mill side that could in anyway say perform caused it to have a delay?

I don’t think so, where equipments delivered things are progressing very well there. What is the critical path is the electrical and electrical switch and some stuff at the mill and that’s always the critical path on every project.

So we are working double shifts and seven days a week to advance stuff. So no, I think the risks of a schedule delay are quite low.

Thank you very much.

Thanks, Dave.

Yeah. Thanks.

Good morning to everyone and Paul. Can I just ask on Tenke?

It looks like the cash operating costs were down quite a bit sequentially. Are any aspects of that sustainable going forward?

Yes, I would hope so, but I think there were some special circumstances there as far as volume of cobalt production and sales and better cobalt price, but you will see that free part of only adjusted the overall year see one cost from 1.28 to 1.22. So you should base your forecast on 1.22.

If we achieve better than that, we will enjoy that.

Okay. Back on the Freeport cobalt question, do you expect to report or see any sustained positive earnings from that unit during 2014?

I don’t think anything that will sway the needle. It’s a long-term strategic investment.

So I wouldn’t see it showing up significantly, no.

Okay, fair enough. With regard to the questions on expansion and the need to see a sustainable improvement in the power supply, from cash cost point of view, how exactly -- what exact do you -- will you need to see before being able to engage in investment in the next phase of mine expansion?

You mean on power?

Yes.

There is lot of aspects to that. I mean the government has come out and it’s widely acknowledged that there is pressure on power supply in the copper belt in the south of Katanga.

There are some positive developments in Congo and regionally in regards to power. Everybody is well aware of the challenge and there is initiatives to try to improve things.

We’ve got another 65 megawatts coming on in the Nseke hydro rehabilitation, which will be the 4th of the January if that comes on next year. South Africa has got 4,500 megawatts I think being commissioned now on a big coal-fired plant, which will come up in the grid.

I think there is another 300 megawatts coming on that the Chinese are doing at Kariba Zambia and other initiatives regionally. It all goes on the grid and it all makes more power available to import up into the DRC, the actual initiatives in the DRC Glencore are rebuilding power capacity in the Inga-Shaba, which is the 220 DC supply up north.

So it all contributes, but these are not going to be things that you are going to see in the next quarter, two quarters. It’s going to take a year or two for I think the power availability to be more clear.

We’ve got our initiatives in the partnership and lots of other people have initiatives but these things take time. So power supply to Tenke year-to-date here has been better than it was in Q4 last year but we’re watching it very carefully.

Okay, Paul. Thanks.

That’s very clear. Finally for me, you are indicating that you should hit Eagle full rate mid 2015.

Is that a conservative as through pull or is there some clear budget level that you are expecting for Q1 and Q2 next year?

Yeah, we’ve got our internal plans for sure. Julian, starting up our copper floatation plant is usually dead simple with the decent ore body and you get up the full rate in three, four months.

Nickel can be more complex but this is a very simple metallurgy nickel sulphide. We need about six to eight months to get up to full capacity on the nickel.

I hope it’s conservative but I think it needs to prove itself.

Okay. So it’s impressive but does that mean that you are operating sort of 80% during the first half with ups and down on average or is it more in case very close to top -- maybe you have a sort of week or two down from time to time?

Obviously I don’t know the specific numbers. We’ll be up, we’ll be up to full capacity with an annualized rate of more than 22,000 tons of nickel contained in copper for 2015 based on that ramp-up plan.

Okay.

But Paul -- Paul McRae, if you’ve got some insights there?

No Paul, no further insights from that. What we’ve published is we intent to better that.

We have internal targets of course but naturally we’ll achieve. To design throughput early on, we need to make sure our recoveries are full.

But I think it’s worth adding to our end, Paul that we are planning not to put the very highest grade all through the plant first off. We’re planning to put average breakthrough and then ramp up to the high grade as the year goes on.

Yeah.

Yeah. We probably rebuy it 75% by year end as something would be our target.

Right. That’s very helpful.

Thanks very much. Have a great day.

Thanks.

Hey, good morning guys. I know its early days for the zinc expansion at Neves-Corvo but can you give us an idea of what the main things are that need to be done to see zinc production at the mining lease double and I’m just trying to get a gauge on the complexity of what needs to be done there in capital cost?

Sure. I won’t give you any guidance on capital cost until the study is done but I can talk about the elements of the brown fields expansion scope that we’re studying.

So it starts with very large tonnages out of the Lombador ore body. We might only be taking 0.5 million tons out of Lombador this year and next year, those kind of ranges.

And -- but this is an ore body which is large enough and steeply dipping and enable the bulk mining methods that we kick it up to a couple of million tons just from that ore body. So the mine planning that goes around, expansion from the ore body, pretty straight forward and room to grow even above the criteria we set here.

But then you get to the underground materials handling and that’s really the crux of the study. We’ve got ramps and our single conveyor which could be copper and zinc ore currently from that area over to the shaft.

So do we double up on that? Do we expand the conveyors?

Do we lengthen the conveyors? Is it all going to be trucking?

Is it going to be conveyors and trucking to the shaft? That’s a next element which takes a lot of careful planning to balance capital cost with operating cost.

And then there is the shaft expansion, this shaft was running at 4.5 million tons a year, just with some improvements we’ve given it. We think we’re probably able to push it currently to 4.9 million tons.

The scenarios we are looking at for zinc expansion takes up around 6 million tons a year and this scenario is above and below that. We’re pretty confident that we can with relatively low capital and relatively small amount of downtime debottleneck that shaft, so that one has to happen on surface.

We’re looking at taking the 1.2 million ton per year zinc concentrator and expanding to 2 million tons or 2.5 million tons or 3 million tons a year. Different scenarios, we’ll compare with that.

We have a SAG mill. We bought it.

It’s been delivered. It will be 2 million tons, 2.5 million tons.

And then the final components will be making sure the Tailings Management area could be practically expanded. Water treatment for the extra water, it will be used in an expansion and lastly paced filled back underground.

So those are the key components. The issues on the green fields project, you’d be focused on would be power and access and port.

We have ample capacity for all those. So it’s really the brown fields onsite length from stope through to concentrate load out.

Okay. That’s great.

Thank you. Just one more question there, with the expansion or upgrade at Neves-Corvo.

Would you be targeting an enhanced lead recovery surface as well or is it better lead recovery you’ll be working on regardless?

We would anticipate small quantities of lead through the expansion. But it won’t form a material part of the revenue to the overall project.

But the levels of lead are very backgrounded at Neves-Corvo.

Okay. Okay, that’s it for me.

Thank you.

Good morning. Paul, question on Aguablanca.

What is the percentage of your operating budget that you would say is a question against background conditions? In other words like to what degree could we see an improvement for the balance of the year, assuming ground conditions remain stable?

Yeah. So both last year and this year, I think we’ve guided very conservatively on our C1 forecast.

We had challenges which started in 2010 with the subside of the pit with some stope failure. We’ve invested heavily in stabilizing that with each rainy season that comes which is basically between October and I guess, March or so.

We monitor pretty carefully and it has in the past affected our operating cost. So what did we come in at last year, we came it about 389 on average, or something 390 propound a nickel produce in 2015, we’ve probably guided -- start of the year we are five and then 450.

So you could see we guided conservatively then. I believe we still are guiding quite conservatively now.

We also had -- we saw excellent C1 cost in the first quarter here but that’s because a very good production and also we had a big stock pile we are getting from, so less mining cost of ore. Some improvement is quite likely and we’ll update numbers in Q2.

And on a high level, can you provide any guidance as respect to what percentage of cost savings comes from better production versus better ground conditions. Is that something we can differentiate on?

I don’t know. Steve, you got any feeling there?

I think that’s really difficult. What I would add to what Paul has said is as the open pit goes towards the end of its life, the strip ratio does tend to fall.

And we will be mining less waste throughout 2014 than we did in previous year. So there is some outside potential on the cost going forward at Aguablanca.

Yeah. I mean, we are out -- we just now out of the rainy season, Sasha, but rather than reforecasting rate now, I’d rather give it another couple of months and at the midpoint of the year.

But I think, you should fully expect it would be at the high end of the range on production is not better for the year when we come out with new guidance and definitely lower in cash operating cost burning some surprises.

Okay. Thank you very much.

That’s it for me.

Thanks.

Thanks Operator. Paul, for an average quarter, you talked about production increasing as we move through the last three quarter of the years.

Is that all great driven or is there some mill throughput improvement as well that year, assuming to get to that improvement?

So for first, we’re talking about zinc and really we’re just -- we start getting into primary stopes in Lombador, this big primary stopes in, I think in July of last year. And we’re just now getting into sort of the secondary stope development.

We had a bit of a learning curve on that especially on the wedges where the Zinccorp is up against more rock and hanging on a foot wall. So we had planned on a lower production in Q1 and improving in Q2 and improving in Q3 and improving in Q4, that’s why when you look at our guidance which is 60 to 65 and you just can’t analyze what we did in Q1, so some of its grade related.

There will be less material coming from the older ore bodies at Neves-Corvo and a lot more, sort of, 7% to 8% zinc and maybe up in the 9% in some areas coming at Lombador. And its also just really the mix of volume coming out of Lombador as the year goes by.

Okay. And then on Aguablanca on the cost, you’ve kept the guidance at 450 and I think for the quarter was like kind of 3 bucks.

So that’s a copper credit being lower in the quarter as you must see a significant improvement in unit cost as that operation is at least cost likely to change much as we move through the year in terms of unit cost per ton?

I personally don’t have all those facts and figures on a kind of a month-by-month, quarter-by-quarter basis of that. I think you’ve got to go with our guidance that we have right now plus the comments that we’re likely to improve on that, below the 450.

It’s not that material to our bottom line unfortunately. We wish Aguablanca were bigger.

Okay. That’s good, that’s helpful.

Thanks Paul.

Thanks Operator. Paul, the longer term growth plans, I think at one point you may have indicated you’d like to get about 500,000 tons here of total metal production.

I think now you’re around 350,000. Is that still what you thinking of?

Yeah. I think that scale, I mean, it’s not a magic number Greg.

We would like to add more copper to the company but quality copper, not just volume for volume sake. We have pretty good organic growth obviously in zinc.

So an increasing in nickel, say as equal comes on. So we’d like to keep as a significant copper producer as well.

So that’s primarily what we would like to add. We don’t have the asset base that we can build a project with that so.

If you look at acquisition targets ahead for Lundin Mining, priority is copper. Timeframe anywhere from one to four years depending on opportunities that might arise.

Okay. Just a second question, I’m still mystified by the cobalt refinery.

I understand the equity accounted but I would have thought we’d see more benefit given. The 10-K had been realizing about 65% of the cobalt price realization.

And with the refinery, it should be getting better than that. I don’t understand why we don’t see that flowing through at some point?

Yeah. I think it’s a pretty competitive business, Greg, and so all the people be mystified for (indiscernible).

It’s a new business for Freeport to run that. I would really have to differ comments and questions to them.

Okay. I’ll try them.

Okay.

Thanks Paul.

Hi. Good morning everyone.

Just a quick question on copper sales volume mix, make sure I’m following this right and hopefully didn’t answer this earlier. But I’d never score what you did a period of inventory building in a quarter for blending purposes, just wondering if that was a one-off.

And going forward from that with Aguablanca, just if you could remind me, I’m sure we talk about this in the past. Why copper sales run roughly at a third of production?

Marie, you want to answer on the inventory?

Sure. At Neves, it’s really a change in philosophy where we’ve employed the blending strategy.

We have a nice big concentrate warehouse in order to do blending that was constructed. So whereas we used to target minimal inventories at each month or quarter and ship as soon as we could.

Now, we are building the inventory in order to have a better product. So, say, at year end, we would have had about 4,000 tons of concentrate on hand.

Now we have about 16,000 tons, so we’re looking at quite an increase there. In terms of copper, it would be from say contain metal of the 1,000 tons of copper up to 3,500 tons of copper.

So that’s the different and that’s going to be something that will be maintained going forward where we won’t target minimal inventories as a priority anymore and we’d target a better product.

Is the inventory building done then?

Yes.

Okay.

We wouldn’t expect to have levels higher than this…

Okay

…higher on regular basis.

Cliff, your question on copper in the nickel, copper plan of Aguablanca. Could you repeat that please?

When you present your production and your sales, your sales tend to run roughly at third of it when you look back over the last couple of years on a quarterly basis. Just wondering if you could remind me why exactly that is, is your pay abilities that low, just can’t remember for?

Yeah. It’s about nickel, copper product from Aguablanca and its pay ability only type contract.

Obviously, I can’t give you the pay ability levels or although you could have an educated working on that and the pay ability on copper is pretty low.

Okay.

Thank you. Just a quick follow-up Paul, there’s been a couple of issues in this quarter with -- either productions rates or concentrate builds, which has been part of your plan but the market didn’t know about.

Are there any similar issues you’d like to highlight at this stage that might impact the Q2 operation results?

Nothing specific, I guess really, I mean, if you take a look at -- these are underground mines. So they really deal and sequencing going to different zones and different ore bodies quarter-to-quarter.

And you think at very large variations, quarter-to-quarter, you can look over the last five quarters and you could see that we had a quarter that was horrible but had 2.3% or 2.4% copper and 80% recovery and that’s what -- I think that was Q3 last year and that’s what we experienced in Q1 this year. As we move into Q2 and all the mines back on track.

You’ll see big swings quarter-to-quarter. You’ve got to -- I've got to ask you to rely on the guidance that we gave you on an annual basis and certainly when we see any material deviation likely we will revise that guidance.

Yeah. Absolutely.

I understand, it’s a volatile plan. But same time if you have so much as in the plan, it’s always good to know just ahead of the immediate quarter anyway.

Yeah. I guess—I’d add a bit more color there, Julian.

Zinkgruvan, which had an unusual problem last year as we start out Q2 there, excellent grades, excellent recoveries, great volume, so more than catching up.

They will be smiling in their faces down near the lake.

Okay.

Thanks a lot.

Thanks.

Okay. Thanks Operator.

And thank you everybody for being on the call today and we look forward to better results in Q2.