Lundin Mining Holds Caserones Guidance Despite Historic Chilean Storm While Vicuña Clears Two More Hurdles Toward Year-End Sanctioning
Q2 2026 Earnings Call, August 6, 2026
Lundin Mining delivered a quarter defined less by the numbers themselves and more by how the company navigated a historic weather event that struck its Caserones operation just after the period closed, while simultaneously locking in fiscal certainty for its flagship Vicuña copper-gold project in Argentina. The read for investors: operational resilience is intact, Vicuña's sanctioning timeline has not slipped, but Caserones' full-year copper output is now expected to land in the lower half of guidance rather than the upper end the company was tracking toward before the storm hit.
Caserones Storm Forces Guidance Trim, Not a Guidance Cut
The headline operational news was a severe winter storm that hit Chile's Atacama region in early August, dumping 3.4 meters of snow and generating winds over 125 kilometers per hour at Caserones. The storm knocked out power for 12 days after ice buildup damaged two transmission towers, forcing the site to rely on backup generators for critical activities. Chief Operating Officer Juan Andres Morel confirmed the crew isolated on-site was safe, and power has since been restored, with initial concentrate production expected by the end of the week and full capacity early the following week.
The financial consequence is a downgrade within guidance rather than a miss. "Prior to the storm, Caserones was tracking to the upper end of the copper guidance, producing 73,000 tonnes in the first half of the year against the range of 130,000 tonnes to 140,000 tonnes," Morel said. "We now anticipate coming in on the lower half of the guidance range at Caserones," assuming no further weather disruption. Management is offsetting the lost days by relocating loading equipment to preserve access to high-grade ore originally slated for the fourth quarter and by pushing a scheduled mill liner replacement to early January. Cash cost guidance at Caserones is unchanged at $2.05 to $2.25 per pound, with the operation still tracking below that range year-to-date at $1.85 per pound. Candelaria, which also saw 35 millimeters of rain, kept milling through the disruption by drawing on ore stockpiles and has since returned to full mining capacity; Chief Financial Officer Teitur Poulsen noted a SERNAGEOMIN inspection confirmed no environmental issues at the site. Consolidated full-year guidance of 310,000 to 335,000 tonnes of copper and 134,000 to 149,000 ounces of gold was reaffirmed.
Vicuña Royalty Deal Locks In Economics Ahead of Year-End Sanctioning
The more strategically significant development came from Argentina, where Lundin secured a long-term royalty and infrastructure trust agreement with San Juan province covering the life of the Vicuña mine. The deal consolidates existing provincial royalties on the Josemaria and Filo del Sol deposits — a 3% mining royalty and a 1.5% gross revenue infrastructure trust — into a single framework fixed for the life of mine. In exchange for an upfront $250 million infrastructure trust contribution ($125 million net to Lundin), Vicuña receives a five-year infrastructure trust payment holiday from first production. Poulsen described the arrangement as roughly net-present-value neutral, though he acknowledged that under a more constructive copper price scenario it could tilt positive: "It all depends on what your view on copper price is at the time... but I think all stakeholders, Austin, BHP and the province have looked at this as being roughly a neutral deal to everybody." Notably, this payment is not reflected in current capital expenditure guidance since management does not classify it as a capex item.
This follows the June approval of Josemaria and Filo del Sol under Argentina's RIGI PEELP program — the first copper project in the country to receive that designation — and, just last week, regulatory approval to build the high-voltage power line tying Vicuña into Argentina's national grid. CEO Jack Lundin called out these three milestones together as clearing the major permitting overhang ahead of a sanctioning decision. "The focus for us now is getting this bottom-up estimate completed, reviewing that with the technical independent peer review teams, both at BHP and Lundin Mining, and then seeking a favorable sanction approval before — potentially before — the end of this year," Lundin said, reaffirming the timeline directly in response to analyst questioning. Once Stage 1 is sanctioned, the company's corporate revolving credit facility steps up from $2.5 billion to $4.5 billion, which management says leaves Vicuña fully funded.
Molybdenum Recoveries Deteriorate as Caserones Moves Into Primary Ore
A less-discussed but concrete negative surfaced on moly production at Caserones, where recoveries have fallen to 27% as mining transitions from secondary to primary ore. Morel attributed the drop to a new mineralogic species appearing alongside the molybdenum in the primary zone, which the team is addressing through new reagents and flow sheet changes. "Definitely for this year, we do not expect to meet the target that we had for the moly, and we expect to resume the level of recoveries and performance in the next year," he said, adding that the issue will persist as long as mining remains in that portion of the pit. This is a modest revenue drag given moly represents only around 2% of total revenue, but it signals a structural metallurgical challenge tied to the ore body's evolution rather than a temporary operational hiccup.
Record Copper Prices Drive Near-Record Revenue Despite Soft Sales Volumes
Financially, the quarter benefited from a record realized copper price of $6.51 per pound, up sharply from $4.40 per pound a year earlier, which offset one of the lower quarterly copper sales volumes in recent memory at 74,000 tonnes against production of 77,000 tonnes. Revenue reached over $1.2 billion for the quarter and $2.4 billion year-to-date, with copper contributing 88% of the mix — among the highest copper leverage of any peer, per management. Adjusted EBITDA came in at $658 million for the quarter and $1.3 billion year-to-date, both ahead of the guidance set at June's Capital Markets Day. Free cash flow from operations was $360 million. Consolidated cash costs of $2.11 per pound came in slightly above the $1.90-$2.10 guidance range for the quarter due to higher diesel prices, which added roughly $15 million, or $0.08 to $0.10 per pound, versus the first quarter. Management expects to stay within full-year cost guidance if diesel prices hold steady, with year-to-date costs at $1.88 per pound.
Balance Sheet Strength Prompts One-Off Buyback Increase, Not a New Baseline
The board approved a one-time increase to the normal course issuer bid of up to $100 million, inclusive of the original $150 million authorization, bringing year-to-date share repurchases to 6.1 million shares. Lundin was careful to frame this as opportunistic rather than a shift in capital return policy heading into the capital-intensive Vicuña build. "For now, I think looking at maintaining our absolute shareholder distribution program of $220 million a year in dividends and buybacks, we'll look for that to be maintained in the long term, and this is more of a one-off opportunity," he said. The company closed the quarter with $79 million in net cash despite funding the $215 million Caserones and Los Helados acquisition entirely from the balance sheet and returning $90 million to shareholders in the period. On the M&A front, management indicated no active pursuit of scale transactions beyond the recently closed deals, with Lundin stating the company is "not actively pursuing anything of scale" and remains focused on its existing portfolio.
Stage 2 Flow Sheet Simplification Opens Door to New Leaching Technology
On the longer-dated Vicuña Stages 2 and 3, due for an updated study in the second half of 2027, Lundin indicated the team is working to simplify what was a fairly complex flow sheet in the original preliminary economic assessment, centered specifically on the Filo del Sol oxide and copper-gold ore body rather than incorporating outside feed sources. More notably, management confirmed it is evaluating new leaching technologies for potential incorporation into the Stage 2 design. "We're seeing some very promising technologies being produced today for leaching, and that's something that we would love to and we will look to incorporate in the updated study for Stage 2," Lundin said, while cautioning it is too early to specify which technology or how it would be deployed. Stage 3 optimization continues to be informed by ongoing drilling that is extending the Aurora Zone laterally to the east and west and identifying new mineralization to the north and south, suggesting further resource growth ahead of the next study update.