Lundin Mining's Chile Operations Impacted by Second Severe Winter Storm

Lundin Mining Corporation (LUN) released an operations update and guidance revision on August 19, 2026. The company reported that a second severe winter storm struck Chile’s Atacama region beginning August 13, 2026, bringing heavy rainfall at lower elevations and unusually heavy snowfall and high winds at higher altitudes.

The Caserones mine had already experienced a power outage from July 18 to July 30. A second outage occurred on August 14 after severe winds and snowfall re-damaged a transmission tower that had been affected by the first storm. Repair crews have been mobilized, and backup generators are supporting critical infrastructure. Full power restoration is expected by the end of the week, followed by a gradual and safe ramp-up.

In response to the disruptions, Lundin Mining revised its 2026 copper production guidance for Caserones down from 130,000 to 140,000 tonnes to 120,000 to 130,000 tonnes. Consolidated 2026 copper production guidance was also cut from 310,000 to 335,000 tonnes to 300,000 to 325,000 tonnes.

Cash cost guidance for Caserones was raised from $2.05 to $2.25 per pound to $2.15 to $2.35 per pound. Consolidated 2026 cash cost guidance was raised from $1.90 to $2.10 per pound to $1.95 to $2.15 per pound.

Guidance for other operations remained unchanged. Candelaria copper production guidance stays at 135,000 to 145,000 tonnes, with cash cost guidance unchanged at $2.05 to $2.25 per pound. Chapada copper guidance remains at 45,000 to 50,000 tonnes, with cash cost guidance unchanged at $0.75 to $0.95 per pound.

Gold guidance remains unchanged at 134,000 to 149,000 ounces, with Candelaria at 77,000 to 87,000 ounces and Chapada at 57,000 to 62,000 ounces.

Revised cash cost assumptions include gold at $4,000 per ounce, silver at $70.00 per ounce, USD/CLP of 900, and USD/BRL of 5.00. The release also noted that 68% of Candelaria’s gold and silver production is subject to a streaming agreement, with cash costs reflecting approximately $437 per ounce for streamed gold and $4.36 per ounce for streamed silver.

Lundin Mining Corporation has revised its consolidated copper guidance downward by 10,000 tonnes at the midpoint, a reduction of approximately 3.1%, while raising its consolidated cash cost guidance by $0.05 per pound at the midpoint, or 2.5%. The primary driver of these adjustments is the Caserones asset, which faces a 10,000 tonne production cut and a $0.10 per pound cost increase. Guidance for Candelaria, Chapada, and gold remains unchanged, which helps limit the severity of the overall revision.

Based on the prior Capital Markets Day copper price context of $5.50 per pound, the 10,000 tonne copper reduction equates to roughly 22 million pounds and approximately $120 million of gross revenue, before accounting for costs, royalties, treatment charges, and hedge or stream effects. The consolidated cost increase on approximately 312,500 tonnes of midpoint production amounts to roughly $34 million, calculated using simple arithmetic rather than a company-provided figure. While the combined near-term EBITDA impact could plausibly fall in the low-to-mid $100 million range under high copper price assumptions, the company did not quantify the specific financial impact in this release.

The balance sheet appears positioned to absorb the disruption, with prior-period context showing a net cash position of approximately $79 million at June 30, 2026 and a large upsized credit facility. Market participants appear to have partially anticipated the issue, as the share price fell from the post-Q2 earnings area around C$38.77 on August 5 to C$35.08 on August 13 before partially recovering.

Lundin Mining Corporation (LUN) is a Canadian copper-focused mining company with operating assets in Chile and Brazil, alongside a major development option in Argentina and Chile through the Vicuña project. The company’s current producing assets include Candelaria and Caserones in Chile, and Chapada in Brazil. Candelaria is an 80%-owned copper-gold-silver operation located in Chile’s Atacama region. Its 2026 guidance remains unchanged at 135,000 to 145,000 tonnes of copper, 77,000 to 87,000 ounces of gold, and cash costs of $2.05 to $2.25 per pound.

Caserones is now 75%-owned following Lundin’s acquisition of an additional 5% interest for US$215 million, which was completed together with the Los Helados interest. The asset has been impacted by winter storms, leading to revised 2026 guidance of 120,000 to 130,000 tonnes of copper and cash costs of $2.15 to $2.35 per pound. Chapada is a 100%-owned copper-gold operation in Brazil, with 2026 guidance remaining at 45,000 to 50,000 tonnes of copper, 57,000 to 62,000 ounces of gold, and cash costs of $0.75 to $0.95 per pound.

The company’s major growth asset is its 50% interest in Vicuña, a joint operation with BHP covering Filo del Sol and Josemaria. Vicuña has received RIGI PEELP approval in Argentina, which provides long-term fiscal stability incentives and supports the path toward a potential Stage 1 sanction decision. Lundin also holds a 31% interest in Los Helados, adjacent to Caserones, plus a 0.62% NSR royalty, providing longer-term copper-gold optionality.

Lundin has simplified its portfolio by selling Eagle to Talon Metals and selling Neves-Corvo and Zinkgruvan to Boliden, making the company much more copper-centric. The 2022 investor presentation is considered outdated as it includes Eagle, Neves-Corvo, and Zinkgruvan, which have since been divested, and should only be used as historical context.