2008 Second Quarter Results TSX: LUN NYSE: LMC OMX: LUMI.

2008 Second Quarter Results

TSX: LUNNYSE: LMCOMX: LUMI

Cautionary Statements

Caution Regarding Forward Looking Statements

This presentation contains forward-looking statements. These forward-looking statements are not based on historical facts, but rather on current expectations and projections about future events. These forward-looking statements are subject to risks and uncertainties. These risks and uncertainties could cause actual results to differ materially from the future results expressed or implied by the forward-looking statements.

Caution Regarding Inferred Resources

This presentation uses the terms "Measured", "Indicated" and "Inferred" Resources. U.S. investors are advised that while such terms are recognized and required by Canadian regulations, the Securities and Exchange Commission does not recognize them. "Inferred Resources" have a great amount of uncertainty as to their existence, and great uncertainty as to their economic and legal feasibility. It cannot be assumed that all or any part of an inferred resource will ever be upgraded to a higher category. Under Canadian rules, estimated of Inferred Resources may not form the basis of feasibility or other economic studies. U.S. investors are cautioned not to assume that all or any part of Measured or Indicated Resources will ever be converted into reserves.

Corporate Projects Exploration GrowthOperations

Presenter


PHIL WRIGHTPHIL WRIGHT PRESIDENT & CEO

ANDERS HAKER VP & CFO

JOAO CARRELO EXEC. VP & COO

NEIL O’BRIEN SR. VP EXPL. & BUS. DEV.

Questions

Significant Highlights First half operating earnings of $320 million exceeds internal expectations by

8% Production, excluding Aljustrel, exceeds internal expectations – 2008

production forecast to be revised upwards Copper 65% of revenue for first half 2008 Zinc and nickel prices fallen substantially Large price adjustments affecting comparison quarter to quarter Non-cash impairment charge of $165 million related to write down of Aljustrel

results in net loss for the quarter of $108 million Major new zinc-copper discovery at Neves-Corvo – potential to be largest

combined zinc-copper deposit at this mine


Non-Cash Impairment Charge Aljustrel in pre-production phase High cost zinc mine in a low zinc price environment Write down of carrying value to net $nil Impairment charge of $165 million (153 million + future income tax

expense of $12 million) The write down expenses the previously written-down figure of

$27 million, 2008 capex; pre-production start up costs; and makes provision for contractual obligations if closed

Studying potential for early extraction of copper resources Decision on the future of Aljustrel is expected before year end


Production(tonnes)

Prices(US $/t, US $/lb)

Q2’08 Q2’07 Q2’08 Q2’07

Copper 23,478 22,375 8,4483.83

7,6373.46

Zinc 46,452 40,549 2,1150.96

3,6731.67

Lead 12,397 13,237 2,3161.05

2,1740.99

Nickel 1,954 - 25,73011.67

48,18521.86


Production & Metal Prices: Q2’08 and Q2’07

Change In Production Q1’08 to Q2’08


30,000

9 (986) (484)

50,000 2,701 (234) 991

449 (578) (51)14,000

207 (86) (16)2,000

Q1 08

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Cu

Pb Ni

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24,93923,478

42,99446,452

1,8841,954

12,577 12,397

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Second Quarter: Financial Results$ Millions Q2’08 Q2’08 Q2’07

(incl. impairment)

Sales 294 294 320

Operating Earnings 137 137 219

Add (deduct):General Exploration (10) (10) (8)Amortization (55) (55) (35)Derivatives 7 7 (28)Forex (2) (2) (9)Interest and Other Items (4) (4) 6Investments (1) (1) 50Impairment - (165) -

Earnings Before Income Tax 71 (81) 195

Net Earnings 56 (108) 154


Change in Pre-Tax Earnings Q1’08 to Q2’08 Pre-Impairment


0

20

40

60

80

100

120

140

109.4

41.7

(68.7)

(4.3) 5.0 71.4

Sales Volume

Price & price adjustments

ForexCostsOther

Pretax earnings

Q1 08

Pretax earnings

Q2 08

US

$ (m

illi

on

)

(11.1)

Effect of Price Adjustments on ReportingIndicative only


Q2’08 Q1’08

Net Sales Reported 294.1 305.7

Price Adjustments 11.3 (42.5)

Restated Actuals 305.4 263.2

Q2’08 Q1’08

Operating Earnings Reported 137.2 182.9

Price Adjustments 11.3 (42.5)

Restated Actuals 148.5 140.4

Project ProgressTenke Copper Project Construction progress improved significantly First copper expected 2nd half 2009 Expansion planning underway No developments in contract review process

Ozernoe Project In discussion with partners. No progress to report

Zinkgruvan Copper Project On-budget (in EUR) and on schedule Targeting 2010 for first copper Project improves zinc mining flexibility


Tenke Construction Progress


Iberian Projects


Neves-Corvo Expansion New zinc-copper deposit discovered: thick, high-grade zinc

intersections with good copper potential Presently assessing doubling zinc production from existing ore

bodies to 1 million tpa ore (+ 50,000 tpa zinc in concentrate) Also studying large-scale development utilizing Lombador

deposit. Pre-feasibility studies expected by end of year.

Aguablanca Assessing underground expansion

Aljustrel Assessing copper portential

Growing Our Reserves and Resources


Q2/08 Q2/07

$10 $7.9

2008 est. 2007

40.0 35.4

Neves-Corvo: 9,198 m drilled, major new Lombador East zinc/copper discovery Aljustrel: 6,035 m drilled, expansion and delineation of Feitais copper resource Aguablanca: 7,853 m drilled, expansion of nickel/copper mineralization to

northwest and south Zinkgruvan: 5,340 m drilled, encouraging results

ExplorationExpenditure - $millions

HighlightsApprox. two-thirds is near-mine & one-third is regional exploration

Outlook Contained metal production outlook: 96,000 (92,000) tonnes

copper, 181,000 (202,000) tonnes zinc, 45,000 (47,000) tonnes of lead and 7,000 (6,800) tonnes nickel. (Previous forecasts in brackets)

Aljustrel and Ozernoe under review 2008 Capital expenditure expected to be $400 to $450 million,

result of paste deposition at Neves-Corvo and weaker US Dollar Balance sheet remains strong Positioning ourselves for potentially tough few years in zinc/lead;

focusing on developing resource base and expansion of existing operations

Continue to assess opportunities created by present market conditions


Questions


TSX: LUNNYSE: LMCOMX: LUMI

2008 Second Quarter Results TSX: LUN NYSE: LMC OMX: LUMI.

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Transcript of 2008 Second Quarter Results TSX: LUN NYSE: LMC OMX: LUMI.