Sustainability Report - Lundin Mining

2012 Sustainability Report

What You Will Find In This Report Lundin Mining follows an annual reporting cycle and reports its Health, Safety, Environmental and Community performance using the reporting framework of the Global Reporting Initiative (GRI), including the G3 Guidelines and the Mining and Metals Sector Supplement. The information presented covers the 2012 calendar year. The report covers the Neves-Corvo, Zinkgruvan, Aguablanca and Galmoy operating mines. Galmoy stopped production of concentrate in 2009, and mining ceased in the fourth quarter of 2012, although processing of stockpiled ore by a third party processing facility will continue into 2013. In this report, we have also provided information related to social and economic development at the Tenke Fungurume mine (Democratic Republic of Congo), in which Lundin Mining holds a 24% non-operating equity interest. CONTENTS What You Will Find In This Report A Message from the CEO Corporate Responsibility Highlights 2013 Objectives About Lundin Mining Production Statistics Operated Mines and Major Investments Governance and Ethical Conduct HSEC Management System Economic Responsibility Environmental Responsibility Energy and Carbon Emissions

1 2 4 6 7 8 9 12 14 16 18 20

Water Management 24 Environmental Management 28 Waste Management 34 Land Use and Biodiversity 40 Social Responsibility 44 Safety 50 Human Rights 55 Tenke Fungurume 56 Forward-Looking Statements 63 Glossary 64 Global Reporting Initiative Content Index 66

In determining the scope, content, and boundaries of this report, Lundin Mining considered: the material risks associated with our activities; operational performance; and management’s judgement of the information needs of the Company’s stakeholders. Lundin Mining has self-declared a GRI Application Level B for this report. This report has not been externally assured. Assurance of future sustainability reports will be considered in view of stakeholder interest and other factors. Lundin Mining welcomes your questions and comments, which can be submitted via e-mail to: [email protected]

2012 SUSTAINABILIT Y REPORT

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A Message from the CEO Lundin Mining is a diversified base metals producer. Our corporate goals include development of a high performance, motivated culture, achieving a safe, productive and healthy work environment, and to conduct our business activities ethically and transparently.

Paul Conibear, President and CEO of Lundin Mining Corporation.

To Our Stakeholders Priorities for the Company in 2012 included a concerted focus on operational performance, balance sheet management, adding depth throughout the organization to provide us with greater capability to grow, and restructuring our organization in the areas of Health, Safety, Environment and Community management. We achieved considerable success in all these areas: operations outperformed on expected metal production, our financial position by year-end was the best it has been in five years, we amplified our management and technical teams considerably, and we reorganized safety and environmental management. Our wholly owned European base metals mines – Neves-Corvo, Zinkgruvan and Aguablanca – exceeded their copper production goals. Zinkgruvan also achieved near all-time records for annual production of zinc and lead. Mining at the Aguablanca nickel/copper mine was restarted ahead of schedule, although south pit slope stability issues continue to complicate mining at that location. The Galmoy Mine in Ireland officially closed in October 2012; however, employment continues for staff and contractors performing mine closure

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and reclamation activities. Lundin Mining holds a 24% equity stake in the worldclass Tenke Fungurume Mine in the Democratic Republic of Congo, operated by our partner Freeport-McMoRan Copper and Gold Inc. The mine also achieved new copper production records and the Phase II major expansion project was completed on schedule and on budget, vaulting it up to be one of the larger copper mines in Africa. We expended considerable effort on exploration programs and optimization studies, in particular at Neves-Corvo, to test possibilities of expanding production with new underground infrastructure. This mine is in transition from being primarily a copper producer to a major zinc producer as well, and concentrate customer bases were expanded accordingly. Being one of the larger taxpayers and exporters and a major employer in Portugal, we followed closely the austerity measures that country and its neighbours are successfully advancing to stabilize and rebuild their economies. Lundin Mining is doing its part to deploy available capital on expanding production and further employment at all of our mines where economically viable expansion projects are available. Towards this end, the Company added

management and technical depth at all of our mines, we engaged new human resources staff and embarked on programs for renewed training and career development initiatives to better position ourselves for growth. We also restructured our approach to Health, Safety, Environment and Community management and programs. While our safety performance in 2012 was at least equal to industry peer averages, we strive for industry leading performance and better standardization across our mines, and we have reassigned safety management responsibilities and engaged additional safety professionals to assist in getting there. Environmental Management has been given greater priority with reassigned executive management responsibility, and additional environmental expertise has been hired into the Company to advance environmental programs and respond to the increasingly more stringent regulatory requirements of being a European Union (“EU”) industrial producer.

and education programs. The Lundin Foundation was engaged to assist in managing this expanded investment, in particular for a number of economic stimulus small business projects that are at work in the Democratic Republic of Congo in an area of great need. Lundin Mining also became an active member of the International Zinc Association (“IZA”) and we are using this venue to contribute to EU regulatory advancements affecting industrial operations as well as being an active supporter of the IZA developing world children’s health and agricultural initiatives. We are proud of our achievements in 2012. Moving forward, we will continue to improve our performance, to learn from our experiences and we will strive to earn and maintain a reputation as a valuable partner with the communities in which we operate. Paul Conibear President and CEO

Continuing on with social investment initiatives which we embarked upon in 2011, the Company expanded community investment at all of our mining operations, with priorities on economic development, health care, regional environmental


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Corporate Responsibility Highlights

2012 OBJECTIVES

2012 ACHIEVEMENTS

2012 OBJECTIVES

2012 ACHIEVEMENTS

Occupational Health and Safety

No fatalities and Total Recordable Incident Frequency (TRIF) of 1.2.

TRIF was 2.5 for the Company’s combined operations and there were no fatalities. Comparable benchmarks for 2011 – British Columbia metal mines 2.1 and US metal mines 2.6.

Environmental Spills and Releases

No reportable spills or releases of significance to the environment.

There were two reportable releases in 2012: a water release in Portugal had a short-term, reversible impact on fish in the local Oeiras River; a gaseous release from underground at Galmoy did not have any significant impact.

Water Use / Recycling

Conduct a review of site water management plans and tailings management facilities against “worst-case” predictions for changes in local climate.

Maximum storm event analysis has been completed at each site and studies are progressing to determine “worst-case” predictions for climate change. All sites have addressed increased recycling to reduce reliance on scarce water resources.

Biodiversity

Produce a public report on biodiversity initiatives at Zinkgruvan.

Zinkgruvan has developed a Biodiversity Management Plan. Publication is targeted for 2013.

HSEC Management System

Conduct a test and review of the Company’s Crisis Management and Emergency Response Plans.

All mine Emergency Response Plans were reviewed, updated and relaunched. A Corporate Crisis Management implementation strategy was developed for launch in 2013.

Community

Provide tangible support to the communities which we are a part of in the form of financial assistance centred on economic development, community health, education and the environment.

Objective achieved with contributions from all mine sites and the corporate head office. Initiatives supported included local health, educational, cultural and small business economic stimulus initiatives.

Closure and Reclamation

Continue reclamation activities at Galmoy and complete reclamation at Las Vueltas del Rio gold mine, Honduras.

Galmoy reclamation is progressing well with completion of grazing trials on Phase 1 of the tailings facility. Reclamation works at Las Vueltas del Rio gold mine are substantially completed and proposals for aftercare are being agreed with the authorities.

PERFORMANCE INDEX = Objective achieved = Objective partially achieved = Objective not achieved

2013 Objectives

About Lundin Mining

Occupational Health and Safety

Lundin Mining is a diversified Canadian base metals mining company with operations in Portugal, Sweden, Spain and Ireland. Lundin Mining produces copper, zinc, lead and nickel. In addition, Lundin Mining holds a development project pipeline which includes an expansion project at its Neves-Corvo mine along with its 24% equity stake in the world-class Tenke Fungurume copper/cobalt mine in the Democratic Republic of Congo. Lundin Mining’s principal products and sources of sales are copper, zinc, lead and nickel concentrates from the Neves-Corvo, Zinkgruvan and Aguablanca mines.

No fatalities and Total Recordable Incident Frequency (TRIF) of 1.8.

The Lundin Mining corporate headquarters are in Toronto, Canada, and its operational headquarters are in Haywards Heath, south of London, UK. Lundin Mining’s shares are listed on the Toronto Stock Exchange (“LUN”) and its Swedish Depository Receipts are listed on the OMX Nordic Exchange (“LUMI”).

HSEC Management System Revise and update the HSEC Management Standards to align with our re-organised management structure and appropriate current industry practice. Fully implement the Crisis Management system across the company.

At the end of 2012, Lundin Mining had a total of approximately 1,650 employees and 1,600 contract employees located in Canada, UK, Portugal, Sweden, Spain and Ireland.

Water Use/Recycling

In 2012, Lundin Mining’s total production was 63,878 tonnes of copper, 122,204 tonnes of zinc and 38,464 tonnes of lead. The Company’s concentrates also contained over 3.5 million ounces of silver. The Company’s attributable share of copper related to its 24% equity interest in the Tenke Fungurume mine was 38,105 tonnes.

Review water use at all mine sites and make measurable improvements to the amount of water recycled.

Closure and Reclamation Advance reclamation activities at Galmoy and complete mine closure at Las Vueltas del Rio gold mine, Honduras. Review and update closure plans for Aguablanca mine. Zinkgruvan Sweden

Environmental Spills and Releases No reportable spills or releases to the environment.

Biodiversity Publish a report on the biodiversity of the Neves-Corvo site. Finalize and publish a report on biodiversity initiatives at Zinkgruvan.

Operations Office Haywards Heath, UK Corporate Office Toronto, Canada

Galmoy Ireland Aguablanca Spain Neves-Corvo Portugal

Community Provide tangible support to our local communities with a focus on economic development, community health, education and the environment. Measure and report on the success of each initiative.

Tenke Fungurume Democratic Republic of Congo


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Production Statistics

Operated Mines and Major Investments

COPPER (Tonnes)

2008

2009

2010

2011

2012

Neves-Corvo 89,026 86,462 74,011 74,109 58,559 Storliden 1,847 – – – – Aguablanca 7,071 6,989 5,484 – 2,260 Zinkgruvan – – 540 1,768 3,059 Total 97,944 93,451 80,035 75,877 63,878

ZINC (Tonnes) 2008 2009 2010 2011 2012

Neves-Corvo 22,567 501 6,422 4,227 30,006 Zinkgruvan 65,631 70,968 72,206 75,147 83,209 Galmoy 55,952 29,932 11,501 32,071 8,989 Storliden 7,007 – – – – Aljustrel 16,687 – – – – Total 167,844 101,401 90,129 111,445 122,204

LEAD (Tonnes)

2008

2009

2010

2011

2012

Zinkgruvan 33,075 36,183 36,636 32,339 37,246 Galmoy 11,724 7,669 2,932 8,791 1,131 Neves-Corvo – – – – 87 Total 44,799 43,852 39,568 41,130 38,464

NICKEL (Tonnes)

2008

2009

2010

2011

2012

Aguablanca 8,136 8,029 6,296

– 2,398

Total 8,136 8,029 6,296

– 2,398

SILVER (Ounces)

2008

2009

2010

2011

2012

Zinkgruvan 1,694,566 1,861,029 1,800,827 1,690,863 2,496,217 Galmoy 134,120 70,785 131,986 359,654 162,242 Neves-Corvo 926,740 722,501 725,260 901,085 961,468 Total 2,755,426 2,654,315 2,658,073 2,951,602 3,619,927 Notes: Storliden was closed in 2008 Aljustrel was divested in 2009 Galmoy includes payable metal in ore (50% attributable to Galmoy) from 2010

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Lundin Mining

Neves-Corvo

NEVES - CORVO MINE The Neves-Corvo mine, operated by the local Portuguese company Sociedade Mineira de Neves-Corvo, is situated approximately 220 km southeast of Lisbon in the Alentejo district of southern Portugal. The mine site lies some 15 km southeast of the town of Castro Verde and exploits five major ore bodies from an underground mine. The concession provides the rights to exploit the Neves-Corvo deposits in the district of Beja, for copper, zinc, lead, silver, gold, tin and cobalt for an initial period of 50 years (from 1994) with two further extensions of 20 years each. The ore is processed on-site and tailings are disposed of in the Cerro de Lobo tailings management facility some 3 km from the plant. Concentrates are dispatched by rail to the port of Setúbal for onward shipping to customers. The mining concession is surrounded by an exploration concession that covers an area of 549 km2. In 2010, the Semblana deposit, a new massive sulphide deposit containing a zone of copper-rich sulphide mineralization, was discovered by surface drilling. Following drilling in 2011 and 2012, a NI43-101 compliant Inferred Mineral Resource of 7.13 million tonnes

grading 2.8% copper has been estimated. In mid-2012, twin access ramps were started towards the Semblana deposit from the Zambujal area of the mine, initially for the purpose of gaining access for underground exploration drill drives but with sufficient flexibility in their design to readily convert them to production ramps. A new zone of copper mineralization known as Monte Branco has also been discovered 1.4 km south of Semblana near the tailings management facility and exploration drilling on this continues. The mine is operated under an Integrated Pollution Prevention and Control Licence (IPPC) granted by the Portuguese Environmental Agency in 2008. Fresh water is supplied to the mine via a 400 mm diameter pipeline from the Santa Clara reservoir, approximately 40 km west of the mine. A railway link to the port at Setúbal allows shipment of concentrates and the back-haul of sand for backfill. The mine permit requires that closure plans for the mine are updated every 5 years and an accumulating closure fund is in place to cover final closure costs.


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Operated Mines and Major Investments ZINKGRUVAN MINE Zinkgruvan is an underground mine located approximately 200 km southwest of Stockholm in south-central Sweden. The mine site is some 20 km from the town of Askersund and comprises an underground mine, a processing plant and associated infrastructure and tailings disposal facilities. The operation has a nominal production capacity of one million tonnes of ore. Concentrates are trucked from the mine to the inland port of Otterbäcken on Lake Vänern from where they are shipped via canal and sea to European smelter customers.

Zinkgruvan

AGUABLANCA MINE The Aguablanca nickel-copper mine is located approximately 80 km north of Seville in the Extremadura region of southern Spain. The mine was acquired by Lundin Mining in July 2007 through its purchase of Rio Narcea Gold Mines Ltd. The Aguablanca mine currently operates a single open pit mine using a conventional drill and blast, and truck and shovel fleet. Ore from the mine is treated in a conventional grinding and flotation circuit to produce a bulk nickelcopper concentrate. The concentrate is hauled by truck approximately 140 km to Huelva Port from where it is shipped

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In late 2010, the copper plant was commissioned and, during 2011, modifications were made to allow this plant’s 300,000 tpa ore capacity to be used to also treat zinc/lead ores. In November 2010, an access ramp from the surface to the underground workings was completed, allowing a significant

increase in the mine’s operational flexibility. In 2012, pre-feasibility studies were advanced on the replacement of the front end of the grinding and crushing circuit at the mine with a view to increasing total mill throughput to 1.5 mtpa with improved operational reliability, lower operating costs and environmental performance. The mine is currently operated under an environmental licence granted by the Swedish authorities that is valid until December 2017. The licence includes conditions covering production levels, tailings disposal, water discharge limits, hazardous materials, process chemicals, water recirculation, noise levels, dust pollution, waste handling, energy use and closure planning. Work has commenced on the application to extend this environmental licence.

to customer smelter facilities. Tailings from the process plant are pumped to a fully lined tailings impoundment to the north of the plant site area. Production activities at Aguablanca were suspended in December 2010 following a pit slope failure. Activity restarted in the pit in the third quarter of 2011 and this allowed the resumption of concentrate production in August 2012. Open pit instabilities reoccurred in the south wall of the open pit during the third quarter of 2012. Mining operations continue from the north side of the pit while studies were initiated into the future configuration of the mine.

Galmoy

GALMOY MINE The Galmoy zinc-lead mine is located in south-central Ireland in County Kilkenny. Galmoy was an underground mine with most of the workings between 100 m and 160 m below surface. The primary access was by a decline and mine production was carried out by room-and-pillar and by bench-and-fill methods. Operational mining was originally planned to cease in May 2009 and the mill was sold, but due to positive market factors, the mining of remnant high grade ore continued on a reduced basis until October 2012. Treatment of the stockpiled Galmoy ore at the adjacent mine is expected to be completed by the end of 2013. The decision to continue mining did not have a material impact on closure plans which continued with underground mine equipment removal, mine re-watering and tailings dam rehabilitation.

Aguablanca

Tenke Fungurume

TENKE FUNGURUME (24% equity interest) Tenke Fungurume (“Tenke”) is a major open pit copper-cobalt operation located in the southern part of Katanga Province, Democratic Republic of Congo (“DRC”). Its deposits comprise one of the world’s largest known copper-cobalt resources. Freeport-McMoRan Copper & Gold Inc. (“FCX” or “Freeport”) is the operating partner. La Générale des Carrières et des Mines (“Gécamines”), the Congolese state mining company, holds a 20% free carried interest in the project. The Tenke Fungurume concessions encompass over 1,500 square kilometres and are located approximately 175 km northwest of Lubumbashi in Katanga Province. The mine and mill at Tenke continue to perform well and met 2012 production guidance. The $850 million Phase II Expansion was substantially complete

at the end of 2012 increasing annual copper and cobalt production to 195,000 and 15,000 tonnes per annum, respectively. FCX continues to engage in drilling activities, exploration analyses and metallurgical testing on mixed and sulphide ores to evaluate the full potential of the highly prospective minerals district at Tenke. These analyses are being incorporated in the evaluation of several further phases of expansion. Tenke follows international best practice standards for environmental management, social responsibility and occupational health and safety. In January 2013, the Tenke partners, through a new joint venture entity, entered into a definitive agreement to acquire the Kokkola cobalt refinery in Finland and related sales and marketing business from the OM Group Inc. Lundin Mining will hold an effective 24% ownership interest in the joint venture.


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Governance and Ethical Conduct

As a publicly listed company, Lundin Mining has adopted a Code of Conduct and an Ethical Values Policy. This Code is posted on our website (www.lundinmining.com) and makes reference to related guidelines of the Canadian Securities Administrators. Board of Directors The Board of Directors (“the Board”) is primarily responsible for supervising the management of the Company’s business and affairs. The Board’s chairman, together with the lead director, is responsible for the management, development and effective performance of the Board, for monitoring the Company’s development through regular contact with the President and CEO, and for ensuring that the Board regularly receives reports concerning the development of the Company’s business and operations, including progress in respect of profits, liquidity and significant contractual matters. All business transactions with individuals, corporations or other entities that could potentially, directly or indirectly, be considered to be a related party, must be approved by the Board regardless of the amount involved. Furthermore, Lundin Mining maintains a whistleblower system to facilitate anonymous reporting of any potential improprieties to further ensure the Company is run without incidents of corruption. Of the eight directors of the Company, six are independent according to the criteria set out in National Instrument 58-101 – Disclosure of Corporate Governance Practices, National Policy 58-201 – Corporate Governance Guidelines and National Instrument 52-110 – Audit Committees.

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Lundin Mining’s reputation as a good corporate citizen is important to our long-term success in creating shareholder value. We understand the priority our stakeholders place on sustainability issues and have developed corporate governance processes to underwrite our commitments in this area.

Audit Committee The Audit Committee is comprised of three Board members, each of whom is independent of the Company. The Audit Committee oversees the accounting and financial reporting processes of the Corporation and its subsidiaries on behalf of the Board, and oversees all audits and external reviews of financial statements. The Audit Committee also has general oversight responsibility for the Company’s internal controls and accounting and auditing activities. The Audit Committee meets a minimum of four times a year. Human Resources/ Compensation Committee The overall purpose of the Human Resources/Compensation Committee is to implement and oversee human resources and compensation policies approved by the Board of the Corporation. The Committee is comprised of three non-executive members of the Board. The Committee recommends to the Board human resources and compensation policies and guidelines for application to the Corporation and ensures that the Corporation has programs in place to attract and develop management of the highest caliber. The Human Resources/ Compensation Committee meets a minimum of once a year. Corporate Governance and Nominating Committee The Corporate Governance and Nominating Committee is comprised of three non-executive Board members and assists the Board in identifying qualified individuals for Board membership. The Committee develops and implements corporate governance guidelines, and reports annually to the Company’s shareholders on the Company’s corporate governance.

Health, Safety, Environment and Community Committee The Health, Safety, Environment and Community Committee is comprised of three Board members, the CEO and two non-executive Board members. This Committee assists the Board in its oversight of health, safety, environment and community risks, the Company’s performance in relation to health, safety, environmental and community matters, and compliance with applicable legal and regulatory requirements. The Committee meets four times a year and receives reports from the CEO and Vice President HSEC on the performance of the Company’s operations. Business Ethics At Lundin Mining, there have been no reported incidents of corruption. In 2008, Lundin Mining underwent a full Sarbanes-Oxley audit through which all business units were analyzed for risks related to corruption. As a matter of company policy, Lundin Mining will make no illegal payments of any kind, directly or indirectly. Even the appearance of impropriety in dealing with public officials is unacceptable. Any participation, whether directly or indirectly, in any bribes, kickbacks, indirect contributions or similar payments is expressly forbidden, whether or not they might further the business interests of the Company. Employees are additionally required to avoid all situations in which their personal interests conflict or might conflict with their duties to the Company or with the economic interest of the Company. During 2012, Lundin Mining made no financial or in-kind contributions to political parties, politicians, or related institutions in any of the jurisdictions in which we operate.

We have not been subject to any legal actions or fines for anticompetitive behaviour, anti-trust, or monopoly practices. We have also not been involved in any related international arbitration cases.

Sites conduct regular risk assessments of their activities and these are considered in implementing safe systems of work at our workplaces and in developing corporate HSEC procedures as part of our HSEC Management System.

External Commitments In keeping with the Government of Canada’s Corporate Social Responsibility Strategy for the Canadian International Extractives Sector, Lundin Mining is supportive of global initiatives that address a wide range of corporate responsibility related issues. These include the OECD Guidelines on Multinational Enterprises, the Global Reporting Initiative; the Voluntary Principles on Security and Human Rights; and the IFC Performance Standards on Social and Environmental Sustainability.

The most significant potential environmental risks associated with our operations are tailings dam failure and groundwater contamination. These risks are managed to provide a high level of safety through the establishment and implementation of strictly followed site procedures. The risk of tailings dam failure is further reduced by ensuring dams are well designed and built. The performance of the dams and tailings areas is monitored through regular inspections, audits as part of a Tailings Management System and technical dam safety reviews conducted by outside specialist consultants.

Membership The Company maintains membership in Euromines, the International Zinc Association and the International Lead Association. The Company is also part of the Global Copper Industry Venture organized by the European Copper Institute which deals with the revised classification of copper concentrates to comply with the new rules of the International Maritime Organization. Through Zinkgruvan the company holds membership in Svemin, the Swedish mining association, and through Somincor the company is a member of ANIET, the Portuguese extractive industry association. These associations enable the Company to stay abreast of regulatory and other developments and, where appropriate, to ensure the voice of the industry and Company is heard in the development of regulations and sharing of best practices. Risk Assessment and Issues Management Risk assessment is fundamentally important to our business and operations. HSEC risk assessments are required throughout the life cycle of our operations, starting with environmental impact assessments for new projects and ending with assessment and management of potential risks associated with mine closure.

In our mining operations, the principal safety concerns are related to stope failure, localized underground seismic events or falls of ground in our underground mines and high wall failure in the open pit. These risks are managed through rock mechanics assessments, which permit us to predict areas where problems might be encountered and the selection of mining methods appropriate to the ground conditions encountered. Other potential safety risks that have been identified include incidents involving explosives and incidents involving heavy equipment. These risks are reduced through strict adherence to safety procedures and operator training. The Company maintains an HSEC Issues Management Process to identify emerging concerns that could adversely affect the business, including changes in laws and regulations. One of the more important emerging issues is climate change, which has significantly impacted water management on-site and may affect our ability to access the water required for our processes. One of the more significant regulatory issues being followed has been the UN Environment Programme’s Global Legally Binding Instrument on Mercury for which

the text was finalized in January 2013 and which will be known as the Minamata Convention. This convention will regulate the trade in by-product mercury, emissions from non-ferrous metals operations, emissions from coal power generation, waste management and the use of mercury in artisanal and small scale mining. This is expected to lead to a change in European legislation regarding the disposal of mercury, which is a contaminant in some concentrates. While the form EU rulemaking may take is still not clear, there will most likely be higher costs for the smelters to dispose of the mercury in secure facilities. The smelters will in turn pass on these costs to the mines through penalties or may reject some high mercury concentrates. A regulation that will affect transportation of concentrates is the Marpol Annex V which was implemented by the International Maritime Organization as of January 1, 2013. This requires that all concentrates have to be classified for “Harmful to the Marine Environment” (“HME”) under the Globally Harmonized System of Classification and Labeling of Chemicals (“GHS”). If a concentrate is classified as HME, then the holds of the carrying vessel will have to be washed at the discharge port and the wash water has to be sent to a water treatment plant. The Company has tested and classified its products under GHS and none of the copper, zinc or nickel concentrates produced was classified as HME. However, the Company’s lead concentrates, as all lead concentrates worldwide, are classified as HME and will incur higher transportation costs. Health, Safety, Environment and Community Management System Lundin Mining is committed to high standards of corporate responsibility and continues to develop company-wide operating policies, reporting systems and governance structures that enable us to maintain such standards. Our vision of corporate responsibility is premised on a number of guiding principles which are incorporated into our Health, Safety, Environment and Community Policy.


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HSEC Management System

Lundin Mining’s Health, Safety, Environment and Community Policy Lundin Mining is committed to achieving a safe, productive and healthy work environment. We will uphold the values of human rights and seek to create sustainable value for employees, business partners and the communities in which we work. It is our fundamental policy to conduct our business responsibly and in a manner designed to protect our employees, adjacent communities and the natural environment. Specific goals for Lundin Mining activities are :

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Comply with legal requirements as a minimum and go beyond those requirements where necessary to comply with our fundamental policy.

2

Assess the potential safety, health and environmental effects of our activities and integrate these considerations into our planning, operational decisions and processes.

3

Design, develop and operate our facilities with a view to minimizing any negative environmental impact of our operations; providing efficient use of energy, water and other resources; reducing or preventing pollution, limiting waste generation and disposal; and where waste must be disposed of, doing so responsibly.

4

Progressively rehabilitate areas no longer required for efficient operation using sound practical methods, taking into account ecological values and land-use aspects.

5

Strive for continuous improvement in our health, safety and environmental performance through the development of objectives and targets, and the monitoring and review of that performance.

6

Engage with our employees, contractors, the community, regulators and other interested parties in relation to safety, health and environmental aspects of our business.

7

Advise and train our employees and contractors as necessary to meet our safety, health and environmental undertakings.

8

Establish accountability of employees, especially managers, for safety, health and environmental performance.

9

Regularly review our performance and publicly report our progress.

The HSEC Policy is put into effect through the implementation of a HSEC Management System across the Company. Lundin Mining’s Health, Safety, Environment and Community (“HSEC”) Management System formalizes the Company’s approach to HSEC management and is formulated to achieve consistently high standards across all sites owned or operated by the Company. It also clearly sets out expectations for HSEC management for joint ventures. The Management System describes how the Company’s sites will comply with the Company’s corporate values and HSEC Policy.

Approved by Lundin Mining Board of Directors.

Lundin Mining

• Ensure the sound management of practices and processes are in place in sites across the Company with the aim of achieving high standards of HSEC performance. • Describe and formalize the expectations of the Company with respect to HSEC management. • Provide a systematic approach to the identification of HSEC issues and ensure that a system of risk identification and risk management is in place. • Provide a framework for personal, site and corporate HSEC accountability and leadership and provide a systematic approach for the attainment of corporate HSEC objectives.

Lundin Mining HSEC Policy

• Establish processes to ensure conformity with the Company’s HSEC Policies and review processes to confirm that these continue to be relevant and add values to the business. • Provide a structure to drive continuing improvement of HSEC programs and performance.

Group Standards (Mandatory)

High Consequence Procedures (Mandatory)

Site Life-Saving Rules (Mandatory)

Obligatory for all employees and contractors at all times.

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The Management System exists to:

Group Procedures (Mandatory)

Mandatory at all sites owned or operated by Lundin Mining.

Annual third party audits are planned for our operations in 2013 to fulfill the requirements of the Lundin Mining HSEC standards.

HSEC Group Guidelines (Advisory only)

Site HSEC Procedures

Developed by each site and mandatory at that site.


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Economic Responsibility In 2012, the Company’s strong and steady performance throughout the year is reflected in the production results which are at the high end of guidance targets and expectations.

Landscape near Tenke Fungurume, DRC

ECONOMIC VALUE GENERATED AND DISTRIBUTED ($’000s) COMMUNITY INVESTMENTS

EMPLOYEE COMPENSATION Neves-Corvo achieved near record copper recoveries in the plant, while Zinkgruvan reported record production levels and high recovery performance in the process plant. Tenke achieved record mining, milling and production rates in 2012 facilitated by the staged commissioning of Phase II expansion. At year-end, the Phase II expansion was substantially complete, on schedule and on budget. Lundin Mining’s operations contribute to the economic development and wealth of host communities through a number of channels including wages and salaries paid to employees and contractors, taxes, royalties and fees to governments, local procurement of goods and services, installation/upgrading of local infrastructure and support of community programs. Lundin Mining Corporate and European operations social investment totalled close to $2 million in 2012. The Company also contributed its 30% share of more than $4 million in direct Tenke Fungurume area social investments for community programs in addition to the significant indirect social and infrastructure investments made by the TFM partnership. Local Procurement and Hiring Lundin Mining’s operations provide direct employment for Company personnel, and create additional job opportunities in the local communities through the procurement of goods and services. In 2012, approximately $460 million of goods and services were procured locally (in countries of operation) by Lundin Mining’s operating sites. Recruiting locally creates positive economic impacts in countries and communities which are hosting our operations. Lundin Mining draws its workforce primarily from the host countries where it operates. Employee compensation in 2012 was over $135 million. 16

Lundin Mining

ECONOMIC VALUE GENERATED AND DISTRIBUTED ($’000s) REVENUES

Neves-Corvo

2008 2009 2010 2011 2012

497,936 448,742 544,565 558,044 466,174

Zinkgruvan

123,508 137,281 167,360 188,566 209,621

Aguablanca

120,280 125,146 130,001 n/a

Others

93,570

50,027

39,073

23,144

835,294 844,076 1,170,762 1,108,740 1,055,867

(a) Presents Lundin Mining’s attributable share at 24.75% up to March 25, 2012 and 24% thereafter

OPERATING COSTS (b)

Neves-Corvo

2008 2009 2010 2011 2012

114,636

94,852 116,749 212,647 200,103

Zinkgruvan

46,698

43,344

55,348

64,816

60,808

Aguablanca

70,358

48,951

76,579

5,790

35,123

Tenke Fungurume Others Total

n/a 66,917

72,100 125,878 162,563 168,882 10,752

1,923

17,985

13,307

298,609 269,999 376,477 463,801 478,223

(b) Operating costs exclude employee compensation

2008 2009 2010 2011 2012

131

86

239

110

131

15

–

14

–

25

62,075

58,862

57,231

64,640

71,089

Neves-Corvo

Zinkgruvan

30,057

24,564

27,167

35,117

36,596

Zinkgruvan

Aguablanca

15,159

16,364

9,444

8,342

9,308

Aguablanca

89

43

31

26

59

n/a

23,265

23,760

23,265

26,606

Tenke Fungurume

n/a

3,960

2,970

4,208

4,354

12,328

12,051

10,738

17,985

18,824


119,619 135,106 128,340 149,349 162,423

Others Total

69

3

154

202

1,500

304

4,092

3,408

4,546

6,069

22,167

98,087 278,809 324,954 334,761 34,820

Neves-Corvo

ECONOMIC VALUE RETAINED

PAYMENTS TO GOVERNMENT

Tenke Fungurume (a) Total

(1,897)

2008 2009 2010 2011 2012

2008 2009 2010 2011 2012

Neves-Corvo

47,152

Zinkgruvan

13,503

Aguablanca

43,774 105,036 127,755 2,620

3,424

5,423

Neves-Corvo

11,311

Zinkgruvan

28,009

61,697

Aguablanca

31,163

55,808

2,388

2,812

2,271

12,260

4,434

n/a

32,423

35,145

48,510

48,617

Others

n/a

3,707

1,888

3,423

3,833

63,043

85,336 147,764 197,371 126,333

269,968 249,780 264,148 151,018 135,937


n/a (33,661) 9,837

2,616

83,195 100,767

41,676 (28,315) (26,757) 91,056

86,408 112,908

28,384

(5,780) (17,438)

338,977 336,240 504,973 286,526 305,417

2008 2009 2010 2011 2012

2008 2009 2010 2011 2012

Neves-Corvo

3,974

1,388

1,162

1,874

776

Portugal

Zinkgruvan

5,226

5,056

1,698

15

114

Sweden

42,922

Aguablanca

1,123

1,168

n/a

n/a

n/a

Spain

65,392

n/a

n/a

n/a

n/a

n/a

DRC

n/a

Others

4,419

5,691

6,940

5,871

3,118

Total

14,742

13,303

9,800

7,760

4,008

14,544

7,841

Tenke Fungurume

79,709

LOCAL PROCUREMENT

PAYMENTS TO PROVIDERS OF CAPITAL

2008 2009 2010 2011 2012

58,138

Tenke Fungurume Total

2008 Information – The Tenke Fungurume Mining development project began commissioning activities in 2009.

Canada and Others Total

219,646 185,641 205,489 330,374 268,166 31,869

41,511 101,813

91,144

51,231

74,816

78,787

56,925

99,495 130,680 132,306 18,881

24,591

33,186

22,760

342,504 333,507 440,192 620,644 593,163 2012 SUSTAINABILIT Y REPORT

17

Environmental Responsibility Lundin Mining recognizes that its operations can have significant economic, social and environmental impacts on local communities throughout the life cycle of our mining operations.

Neves-Corvo

Material Inputs Mining and metallurgical operations consume considerable quantities of materials. Lundin Mining recognizes that material intensity is both an environmental and a financial consideration. We continuously seek ways to improve both material efficiency and the costs associated with material flows.

Some of these impacts include land use changes, environmental degradation and population influx, offset by increased economic opportunities and development in the areas of infrastructure, health and education. We operate under the Precautionary Principle throughout the life of a mine. This involves the use of baseline assessment tools and conducting environmental and social impact assessments; evaluating how to avoid, mitigate or control potentially significant impacts; implementing appropriate monitoring and management systems; and addressing the requirements for mine closure early in the life of the mine. All activities of the Company must be carried out in accordance with the requirements of the HSEC Management System. Annually, an audit plan is developed and carried out to ensure that HSEC practices in the sites are following the requirements of the Group HSEC Standards and Procedures. Results of the audits, including actions to address any deficiencies, are reported to the HSEC Committee of the Board.

18

Lundin Mining

The Lundin Mining HSEC Management System applies throughout the full mining cycle from exploration to closure. To ensure that any impacts relating to exploration work are recognized and minimized, the Exploration Group has prepared a HSEC Manual to be used as a practical workplace guidebook. The Guidebook contains procedures to be followed by Exploration staff to conform to the Lundin Mining Group HSEC Policy and Standards, and advice and guidance on various aspects of safety and environmental management important for exploration activities. The Guidebook draws on the advice contained in the Prospectors and Developers Association of Canada E3-Plus Framework for Responsible Exploration and represents industry leading practices. The Exploration Guidebook includes requirements for environmental protection, such as how to manage stream crossings and protect watercourses, as well as safety requirements, e.g. safe operation of drill rigs, diamond saws and other exploration equipment. The Guidebook

is shared with, and is followed by, contractors. The Exploration Group actively encourages feedback on our activities from the local community. Lundin Mining is committed to achieving operational excellence in all aspects of its activities. This is achieved through ensuring we have effective systems, well designed operations, qualified, experienced staff, effective risk identification processes and robust operating and safety procedures. However, we recognize that, no matter how well our operations are designed and built or how effective our procedures are, there is always the possibility of an adverse event occurring. In accordance with leading industry practice, Lundin Mining has developed, and will maintain and regularly test, a crisis management plan in order to mitigate the impacts of any significant adverse event on the public, its employees and the environment. The crisis management plan is integrated with emergency response plans maintained and regularly tested at our mine sites.

The principal raw material input for a mining company is the ore mined. Other major raw materials are explosives, fuel and mill supplies, which are quantified in this report. Mill supplies include chemicals and reagents used to separate metal minerals from gangue minerals in the concentration process and to treat water used in the process to improve its environmental quality. Grinding balls are steel balls used to pulverise the ore to a fine powder to liberate and allow extraction of the metallic minerals. Large quantities of lubricating oils and grease are used in the mill and processing plants as well as in mobile equipment in the mines.

Mill and Concentrator Supplies Reagents Lime and and Grinding Cement Chemicals balls

tonne/year tonne/year tonne/year

2009 25,141 5,879 5,882 2010 33,626 7,515 6,567 2011 27,993 5,303 6,094 2012 26,057 8,573 6,189 Lubricants

Lubricating Oil

litre/year

Grease

kg/year

2009 667,988 33,197 2010 649,009 37,253 2011 732,179 35,327 2012 699,733 31,830

Explosives (Tonnes)

2008

2009

2010

2011

2012

Neves-Corvo ANFO 1,128 802 224 41 36 Emulsion/Gel 429 1,086 2,365 3,889 3,894 Zinkgruvan ANFO 283 127 139 111 30 Emulsion/Gel 578 791 990 926 966 Aguablanca ANFO 3,089 1,958 4,180 103 336 Emulsion/Gel 476 275 464 616 4,035 Galmoy ANFO – – – – – Emulsion/Gel 421 102 83 124 57 Total ANFO 4,500 2,887 4,544 256 402 Emulsion/Gel 1,904 2,254 3,901 5,555 8,951


19

Energy and Carbon Emissions

GHG INTENSITY IN 2010, 2011 AND 2012 (Tonne CO2 per Tonne of Concentrate Produced)

DIRECT AND INDIRECT CO2 EMISSIONS IN 2012 (Tonnes CO2) 180,000

1.2

160,000 1.0

140,000 120,000

0.8

Energy Use Energy costs continue to represent one of our most significant operating expenditures. Consequently, improving energy efficiency is not only good for the environment in reducing the emission of greenhouse gases but equally improves our competitive positioning in a resource-constrained environment. Our electricity consumption in 2012 was slightly higher than the previous year, largely due to recommencement of milling operations at Aguablanca. Our direct energy consumption comes from diesel and fuel oil used on-site for moving rock, transporting product to port and heating mine ventilation air in the winter. As with electricity consumption, the total amount of diesel used in production and transport rose significantly in 2012, attributable to Aguablanca’s renewed open pit mining operations. After a decrease in diesel consumption on-site in 2011, it was back around 2010 levels in 2012 as a result of activity at Aguablanca. All other sites achieved a reduction this year. Neves-Corvo achieved its reduction through greater control of diesel used by contractors. Diesel used in the transport of product rose slightly at all sites.

ELECTRICITY CONSUMPTION (GJ)

100,000 0.6

1,400,000

80,000

1,200,000

40,000 0.2

800,000

20,000

600,000

Neves-Corvo

200,000

2010

Zinkgruvan

2011

Aguablanca

Total

Neves- Zinkgruvan Aguablanca Galmoy Corvo

2012

Direct Emissions

Total

Total 2011 Total 2010

Indirect Emissions

0 2008

Neves-Corvo

2009

2010

Zinkgruvan

2011

Aguablanca

2012

Galmoy

Total

DIESEL USED IN PRODUCTION AND TRANSPORT ( Million L)

20 15

Electricity is used on our mine sites to hoist rock up shafts, to provide ventilation and power pumps and machinery. In the mills, it is used for conveyors, crushers and grinding mills, flotation cells, thickeners and filters necessary for the process.

10 5 0 2008

Neves-Corvo

2009

Greenhouse Gas Emissions Greenhouse gas (“GHG”) emissions from our mines derive from two main sources: • Carbon dioxide released from the burning of fuels such as coal and diesel used to generate the electricity provided to us through the national electricity grids and known as “indirect sources.”

25

2010

Zinkgruvan

Aguablanca

2011

2012

Galmoy

Total

Diesel used ON - SITE (‘000 litres)

Zinkgruvan

1,573 1,705 2,564 3,142 2,786

180,000

Aguablanca

9,307 7,143 12,511 2,485 11,810

160,000

775 401 350 460 321

140,000

16,947 14,341 21,421 13,740 21,958

120,000

80,000

2008 2009 2010 2011 2012

60,000

Neves-Corvo

1,414 1,560 894 1,478 1,591

40,000

Zinkgruvan

338 319 325 432 516

20,000

Aguablanca

323 337 335

Galmoy

466 254 2 3 5

Total

– 76

2,541 2,469 1,556 1,913 2,188

Therefore, the GHG intensity (the amount of GHG produced per tonne of concentrate produced) is significantly lower for Zinkgruvan than for our other mines. The GHG intensity of Aguablanca is necessarily greater than our other mines, due to the amount of diesel required to haul rock out of the open pit and the lower grade ore. Furthermore, after suspension of operations in 2011, the start-up in 2012 involved stripping of waste rock all year (with the associated diesel consumption), whereas concentrates were not produced until August when the processing plant commenced operating. The inevitable result was a GHG intensity (CO2 per tonne of concentrate produced) that was significantly higher than that of our other sites in 2012. Overall, our GHG emissions increased in 2012, largely on account of recommencement of operations at Aguablanca. The increases were derived from both indirect sources and direct sources on account of the mine activity increasing across all areas including electricity usage, diesel for transport and explosives.

100,000

Diesel used in Transport of Product (‘000 litres)

The primary influence on the total GHG emissions associated with our activities is the source of electrical power supplied to our mines. This “grid efficiency factor” can vary significantly depending on the source of electricity. For example, Zinkgruvan takes its electricity from the Swedish electrical grid which is supplied to a large extent by hydro power. In southern Europe, most power comes from fossil fuel burning power stations.

CO2 EMISSIONS (Tonnes CO2)

5,292 5,092 5,996 7,654 7,041

Total

• Carbon dioxide from the combustion of diesel used on-site to power rock loading and haulage equipment and to provide heat. This is referred to as a “direct source” of GHGs. Explosives used to break rock will also generate GHGs when detonated and are a direct source.

2008 2009 2010 2011 2012

Neves-Corvo

Galmoy

Lundin Mining

0

0.0

400,000

20

60,000

0.4

1,000,000

0 2008

Neves-Corvo

2009

Zinkgruvan

2010

Aguablanca

2011

2012

Galmoy

Total


21

Energy and Carbon Emissions

Implications of Climate Change Risks and opportunities associated with climate change (particularly those with significant potential financial implications) at our southern European operations have been explicitly considered. The potential influence of these changes on our operations is described below. The Neves-Corvo underground mine is located in a semi-arid region in southern Portugal. The mine has a positive water balance and during the winter months the site discharges water. While the site had previously considered the possibility of becoming a zero discharge facility, the regional changes in rainfall over the past two years has rendered this objective no longer feasible.

Zinkgruvan

Energy Conservation Measures Lundin Mining’s long-term objective is to reduce the energy intensity of our mines to improve their efficiency and profitability and to reduce GHG emissions. Both Zinkgruvan and Neves-Corvo have several years of experience with energy audits and operating in accordance with approved five-year energy reduction plans.

Zinkgruvan Zinkgruvan has been working to improve energy efficiency in accordance with an Energy Management Plan since 2004. The updated Plan was approved in 2011 and a study was carried out to define a five-year schedule (2012–2016). In 2012, Zinkgruvan has made significant improvements, reducing its electricity consumption to 46.3 kWh/t ore, an 8.1 kWh/t ore reduction compared to 2011 and a 28.7 kWh/t ore reduction compared to 2004 when improvement measures were started. Energy-saving measures in 2012 included the introduction of heat recovery using condenser heat from variable speed

22

Lundin Mining

Neves-Corvo

drives for the grinding mills. Energy efficient lighting initiatives have been installed in a number of areas around the site, and the mine has also focused on further developing a culture of energy efficiency amongst employees. Plans are in place to optimize the mine ventilation system and to make the mine air heating system more efficient during 2013. A study is also under way to recover heat from sources such as mine water and exhaust ventilation air. Power consumption will be reduced by using voltage regulated lighting and by reducing losses in the compressed air system underground.

Neves-Corvo As part of the approved Energy Consumption Rationalisation Plan (2009–2014), further energy conservation measures were introduced at Neves-Corvo, such as the replacement of compressed air and mechanical stirrers in the backfill plant and the installation of a command system for 47 mine auxilliary fans.

A study to identify means of reducing the consumption of compressed air has continued. An audit was performed to measure the consumption of each area relying on compressed air, and ultra sound equipment was acquired to allow the detection of leaks in piping. The energy use reduction target for 2012 was not achieved and the energy consumed (kWt/t extracted material) increased by around 2% between 2011 and 2012. This was largely due to the extraction of deeper and more distant ore from the main mine infrastructure necessitating more ventilation and conveying power, together with the start-up of the expanded zinc plant.

Aguablanca Optimization of mining and processing have necessarily been key areas of focus as Aguablanca recommenced operations in 2012. The mine will be in a position to address energy efficiency as operations continue to be optimized in the future.

Reduced rainfall and increased evaporation in the summer months will likely result in a drop in water level at the Santa Clara Reservoir which is a source of clean process water for the mine. Demands on the diminished resource by other users of the reservoir may result in reduced access by Neves-Corvo. While the long-term prediction is for reduced annual rainfall in southern Portugal, heavy rainfall events are expected with increased frequency during the winter months. Dependency on fresh water from Santa Clara reservoir is being reduced by maximizing the recirculation of industrial water at the mine and improvements to on-site water treatment to produce additional water for the copper and zinc plants. A new industrial water dam is under construction as part of the paste tailings disposal project and when complete in 2014 will provide greater flexibility in on-site water management. The Aguablanca open pit mine is located in an arid region of southern Spain north of Seville. The mine is currently designed to be a zero water discharge facility. Observed changes and long-term forecasts are for significantly reduced rainfall and higher evaporation rates. This will result in greater pressure being placed on available water supplies by all users in the region, including agricultural and municipal users. This may create difficulties for the mine to ensure sufficient access to water to operate the mill. Reduced rainfall may

also affect mine site restoration activities by inhibiting the growth of plant covers on reclaimed areas and waste rock piles. As with Neves-Corvo, while overall precipitation will decline, the increased frequency of extreme rainfall events in the winter months in the Iberian Peninsula may cause accumulation of water in the pit which could affect mine production. This situation was experienced in the winter of 2009/10 causing pit flooding as well as the first snowfall in the area in 50 years. Again, dependency on the current fresh water supplies is being reduced by increased recirculation from the tailings dam and applications for permits for water from other sources, such as nearby abandoned mines. The Zinkgruvan mine is located in south-central Sweden. The Commission on Climate and Vulnerability appointed by the Swedish Government to assess the impacts of global climate change on Swedish society concluded that Sweden will become warmer and wetter. Temperature will rise more in Sweden and Scandinavia than the global mean with model scenarios pointing to the average temperature in Sweden rising by 3 to 5 degrees by the 2080s in comparison with the period 1960−1990. Precipitation patterns will also change. Precipitation will increase in most of the country during the fall, winter and spring. In summertime, the climate will be warmer and drier, particularly in southern Sweden, where Zinkgruvan is located, with potential implications for water access. Targets have been set to increase the recycling of industrial water to 54% to better manage drier conditions, and for extreme storm events, the current decant tower is dimensioned to manage 1 in 100,000 year flows. Zinkgruvan has also initiated a review of its TMF consequence classification that will be finalized in 2013, and had a high flow scenario dam failure training exercise in 2012 together with the local municipality.

Aguablanca

Glossy Ibis (Plegadis falcinellus), Neves-Corvo

Indirect consequences of climate change or legislation designed to limit its effects, such as requirements for participation in Emissions Trading Systems or other political influences, remain uncertain at this time and are being tracked closely.


23

Water Management

Water Management

Water Management: Availability, Use, Recycling and Discharge Large volumes of water are used in the extraction and processing of minerals and metals. A key operational issue is the design and planning of facilities to provide sufficient water to support our mining operations. Water is scarce and competition among users for access to water is significant in the regions in which we mine in Portugal and Spain. At Lundin Mining, we plan in order to balance our operational needs with the needs of local communities, while recognizing and managing potential impacts on sensitive ecosystems.

Water Availability Water management has become an increasingly important concern for our operations. Disruption of normal weather patterns has been experienced across Europe in the past few years, with the unpredictability of rainfall complicating water management on-site.

Water Use and Recycling In 2012, our fresh water use slightly exceeded that in 2011 at just under an estimated 5.2 million cubic metres, representing a steadily increasing trend in consumption over the past several years. This in part was due to the restart of milling operations at Aguablanca. In 2012, there has been a particular improvement in the proportion of recycled water used in the mill and concentrator processes compared to recent years, with Neves-Corvo achieving 75% recycling and Aguablanca 56%. Water Use Intensity Water use intensity (measured as cubic metres of water used per tonne of concentrate produced) shows an overall decrease in 2012, attributable to the increased use of recycled water.

Primary Source of Water

Lake Vättern

Aguablanca

Waste water from Monesterio, water from closed mines and boreholes, Aguablanca Stream

Zero Discharge

Galmoy

Mine

River Goul

80% 60% 40%

WATER DISCHARGED TO THE ENVIRONMENT (million m3/year)

20% 0%

12

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

10

Percentage of Permitted Limit

Limit (100%)

8

NITRATE DISCHARGED TO THE AQUATIC ENVIRONMENT AT NEVES-CORVO 2008

2009

2010

2011

2012

12.0 10.0

Neves-Corvo

Aguablanca

Zinkgruvan

Galmoy

Total

Treated mine effluent from Neves-Corvo is discharged into the Oeiras River as required, with discharge taking place for approximately 9 months of 2012. The key quality parameters of potential concern are metals, sulphate and various compounds of nitrogen.

6.0 4.0 2.0

2009

2010

2011

2012

Recycled Water

Fresh Water Mine Water

WATER USE INTENSITY (m3 Water Used/Tonne of Concentrate Produced) 30 25

In 2012, there was some non-compliance for the following parameters: sulphate, total nitrogen (reflected also in high nitrate and nitrite) and, more occasionally, chloride, Kjeldhal nitrogen and dissolved oxygen. Although nitrogen compounds (total nitrogen and nitrites) have recently attracted attention due to non-compliance, this has been identified as being directly related to the use of explosives at the mine, and operational measures are being put in place to manage this issue. The significant reduction in nitrate discharge over the past four years is the result of changing the type of explosive used for rock breaking. Following non-compliances relating to the discharge flow rate, Neves-Corvo requested an increase in the discharge rate limit. With regard to the surface water in the ultimate receiving freshwater environment, there were no impacts on the Guadiana River, but there was some biological impact in the areas close to the discharge point in the Oeiras River.

20 15 10 5 0 2008

2009

Fresh Water

140% 120% 100% 80% 60%

8.0

2008

Lundin Mining

100%

0

0.0

24

120%

2

14.0

Neves-Corvo Santa Clara Reservoir Oeiras River Lake Trysjon

140%

4

WATER CONSUMPTION (million m3/year)

Discharge Receiving Body

Zinkgruvan

SULPHATE DISCHARGED TO THE AQUATIC ENVIRONMENT AT NEVES-CORVO

6

Sources of Water and POINT OF Discharge Receiving BODIES OF WATER Site

Water Discharges Our environmental management systems are designed to protect natural water sources. We actively monitor water quality to ensure that any off-site discharges do not adversely affect the environment. We additionally treat waste water to remove potentially harmful substances, such as metals, nitrogen compounds, sulphates or suspended solids.

2010

Mine Water

2011

Recycled Water

40% 20% 0%

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012


Limit (100%)

COPPER DISCHARGED TO THE AQUATIC ENVIRONMENT AT NEVES-CORVO 140% 120% 100% 80% 60% 40% 20% 0%

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012


Limit (100%)

2012

Total Water


25

Water Management

Water Management

At Zinkgruvan, permit requirements are based on the annual amount of metal discharged to the environment. Zinkgruvan had two periods in 2012 when the zinc level in the final effluent discharge exceeded the monthly guideline value. In both cases, investigations were conducted as a matter of urgency and revealed the underlying causes. Measures, including remedial works, modified water management circuitry, pH adjustment and extended sampling, were put in place to bring the discharge back into compliance. Subsequent to year-end, the recycling of tailings dam seepage water back to the tailings management facility successfully reduced the zinc level in the final effluent discharge to well below compliance levels. At Galmoy in December, minor breaches to the consent limits occurred for the zinc concentration and mass emissions in the final discharge. In addition, there were a number of occasions between January and September when suspended solids levels exceeded those permitted in the discharge. Procedures were reviewed to reduce the potential for repeat occurrences in the future. In March 2013, all pumping from the underground mine ceased as part of the mine closure plan. At Aguablanca, water is pumped from the open pit and underground exploration ramp to a fresh water dam for storage prior to re-use. In 2011, the administrative body for water considered that this water stream should be designated as a discharge. As a result, a water treatment plant has been constructed upstream of the dam and a permit, which will designate this as a formal discharge and will detail discharge limits, is currently being agreed.

Åmmeberg on Lake Vättern near Zinkgruvan

Discharges, Neves - Corvo (kg/year) 2008 2009 2010 2011 2012

Zinc 51 32 319 171 99 Lead 20 17 25 36 26 Cadmium 4 3 5 7 5 Copper 40 42 186 174 119 Chromium 31 26 40 57 42 Arsenic 44 26 68 62 48 Ammonia 2,464 5,370 6,054 13,314 14,141 Nitrate 11,784 27,281 38,169 56,886 30,740 Nitrite 1,521 5,233 8,658 12,352 9,721 Total Nitrogen

21,721

19,215

24,772

31,338

28,336

Phosphorus 110 83 671 642 474 Susp. Solids

7,300

11,027

56,267

15,415

15,482

Discharges, Zinkgruvan (kg/year) 2008 2009 2010 2011 2012

Zinc 652 456 826 1,019 2,025 Lead 115 83 128 130 100 Cadmium

< 1

–

< 1

< 1

1

Copper 2 < 1 2 8 2 Arsenic 6 3 5 17 16 Ammonia 3,939 4,807 5,618 5,929 4,852 Total Nitrogen

13,903

13,238

15,908

19,089

13,752

Phosphorus 17 10 31 23 22 Susp. Solids DISCHARGE OF ZINC TO THE AQUATIC ENVIRONMENT AT ZINKGRUVAN

DISCHARGE OF LEAD TO THE AQUATIC ENVIRONMENT AT ZINKGRUVAN

6,488

6,396

9,090

9,206

9,889

Discharges, Galmoy (kg/year)

140%

140%

120%

120%

100%

100%

Zinc 515 884 448 235 369

80%

80%

Lead 55 35 28 41 16

60%

60%

40%

40%

Nickel 149 275 258 254 319

20%

20%

0%

0%

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012


Limit (100%)

Based on annual average in mg/l compared to a regulatory limit of 0.5 mg/l.

2008 2009 2010 2011 2012

Cobalt 50 95 77 77 116 Arsenic 29 24 36 45 41 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012


Limit (100%)

Based on annual average in µg/l compared to a regulatory limit of 75 µg/l.

Ammonia 4,965 4,605 2,815 1,683 431 Nitrate 86,529 92,527 59,981 50,184 47,871 Nitrite 2,023 2,147 1,303 1,156 245 Sulphate 1,899,095 2,244,750 1,135,201 909,505 963,550 Phosphorus 37 49 46 48 51 Susp. Solids

26

Lundin Mining

29,087

33,598

45,249

33,552

43,795


27

Environmental Management

Oeiras River, Neves-Corvo

Rehabilitated Tailings, Galmoy

28

Lundin Mining


Environmental Incidents and Public Complaints Lundin Mining maintains a reporting system for environmental incidents. These are classified on a five-point severity scale that takes into account the impact on the environment, regulatory non-compliance, or potential concern to communities. Incidents of sufficient concern to rate a Level III ranking or above, are reported to the Board. Examples of incidents that are reported to the Board include: loss of containment of a hazardous material causing off-site environmental impact or non-compliance with permit conditions that could result in prosecution. There were two reportable releases during 2012, one at Neves-Corvo and one at Galmoy. On January 22, 2012, personnel at Neves-Corvo observed that a fish kill had occurred downstream of the treated minewater discharge point in the Oeiras River. The discharge was immediately suspended and the authorities informed. The incident was evident along an approximate 2 km length of the river and initial investigations suggested that low dissolved oxygen content in the final discharged effluent was the cause. Following comprehensive in-house and independent investigations, it was considered probable that the fish kill resulted from a combination of factors, namely an unusually high pH in the receiving water that acted to increase greatly the toxicity of ammonia that was present in the discharge (in concentrations that were below the permitted maximum concentration); a reduction in dissolved oxygen concentration downstream of the discharge point caused by the discharge of water with a very low concentration of dissolved oxygen; and a relatively low flow in the Oeiras River which meant that little dilution of the discharge was available.

Suitable water management options to reduce the risk of future fish kills were identified. As a result, the mine is evaluating the feasibility of removing (or at least greatly reducing) at source the factors that were identified as potential causative agents in the fish kill. Should removal at source be unfeasible, the potential for managing the water discharge to reduce the risk of a potential fish kill will be evaluated; and should effective management of the discharge be considered insufficient or impractical, options for water treatment to improve the quality of the discharge water will be assessed. The reportable incident at Galmoy occurred in March 2012, when sulphur dioxide (“SO2”) was released through a ventilation shaft (SO2 is an emission that was not specified in the site’s environmental licence) causing minor damage to surrounding vegetation on the company’s land. The Irish Environmental Protection Agency was informed and kept updated throughout the following months. Mining had recommenced in the G-orebody in October 2011 and it is believed that the SO2 was being produced from the oxidation of marcasite (FeS2) in the mine. Corrective actions included installation of a demist system underground, close to the SO2 source area in the orebody, to scrub the gas from the air stream prior to emission to the atmosphere through the ventilation shaft. As mining progressed, void spaces were filled using limestone waste rock and pea gravel, with the suspected source area of the gas being targeted to minimize air flow and associated oxidation processes. Continuous monitoring was undertaken at three surface locations to confirm minimal impact on the environment. The tunnel that was the last exhaust way for the gas underground was sealed off with a shotcreted barricade in September 2012 and mining ceased in all areas of the underground workings in October 2012, with backfilling continuing from the surface.

Electro-fishing, Oeiras River, Neves-Corvo

Each of our sites also tracks public complaints and concerns. During 2012, three complaints were received regarding noise from a ventilation fan at Zinkgruvan. The site has previously successfully controlled noise from one ventilation shaft by erecting engineered noise barriers; similar barriers are proposed for this shaft after works in 2013 to increase its capacity. Also at Zinkgruvan, following a complaint from neighbours regarding dust from the copper ore stockpile, dust suppression was successfully achieved after the installation of water sprinklers. A meeting was held following a complaint in relation to vibration from blasting during December, and no further action was deemed necessary. Also at Zinkgruvan, nighttime noise emissions have exceeded statutory limits at the property boundary. A substantial waste rock berm has been constructed along the boundary resulting in compliant noise levels.

At Neves-Corvo, the Natural Park of Guadiana Valley’s Direction submitted a complaint related to the absence of fish in the Oeiras River. After evaluation by an independent organization, including sediment sampling, it was determined that there have been no significant changes compared with 2010 and 2011, with only the areas near the discharge point being impacted. A meeting is planned for early 2013 to evaluate mitigation measures. With regard to exploration, environmental complaints were only received in relation to our operations in Co. Clare, Ireland. This is in part due to the close proximity of drilling rigs and activities to the local community, which is not the case at our other exploration projects. There is an open door policy at the office and members of the public in the village and wider farming community are encouraged to report any positive or negative environmental comments.

Two community complaints about noise from drilling rigs were resolved by increased sound proofing of rigs and by ceasing moving drill rigs at night. Three community complaints were also received relating to access to private land and also the condition in which tracks and roadways were left by exploration teams. These issues were resolved through improved communication and making good of tracks and roadways. SPILLS & RELEASES

Number of Number of Category I Category III, and II Spills IV and V Spills (Non-reportable) (Reportable)

2006 6

1

2007 6

2

2008 5

2

2009 4

–

2010 7

1

2011 11

2

2012 11

2


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Air emissions Mine sites conduct regular monitoring of ambient air quality and generally meet permitted guidelines. Neves-Corvo, Zinkgruvan and Aguablanca have programs and processes in place to reduce these emissions to well below permitted limits.

Aguablanca

Neves-Corvo is the only site with significant NOx /SOx air emissions. However, these are in full compliance with permit limits. Particulate matter is routinely measured to assess any impact from Neves-Corvo’s operations in the neighbouring villages of Graça, Corvo and Neves. Measurements mostly complied with the applicable maximum permissible value. Non-compliances in Corvo in March due to the handling and transport of waste rock were successfully addressed by altering the schedule for dust suppression watering. A noncompliance in Neves in July was due to an increase in the stockpile of copper concentrate since maintenance work on the railway prevented transport of the concentrate to Setúbal.

Measurements of ventilation air are made at Zinkgruvan every third year. The 2012 data were, again, well below permitted limits. Aguablanca calculates its particulate emissions each year using nationally established guidelines for extractive industries. Although the site was in compliance with the permit for daily dust levels, the total volume of dust from the site was in excess of the limit. It is believed that the longer waste haul to the new east waste rock dump at the site is the reason and additional dust suppression initiatives have now been started. Neves - Corvo Air Emissions

NOx SOx (kg/year) (kg/year)

2007

186 4

2008

354 18

2009

437 109

2010

284 5

2011

133 19

2012

122 6

Acid Rock Drainage ( “ARD” ) An important environmental consideration for mines is the generation of acid when metal sulphides, such as pyrite, are exposed to moisture and air. These acidic discharges, known as acid rock drainage, or ARD, can adversely affect waterways or groundwater by lowering the pH or by leaching out metals and other chemicals that may be environmentally toxic.

Zinkgruvan has tested its wastes for ARD and these have been found to pose no immediate or long-term acid generating potential, owing to their low sulphide content and high pH buffering from calcareous minerals. This low ARD potential has also been demonstrated in the historic Åmmeberg tailings and through experience on-site to date.

At Neves-Corvo, waste rock has been tested for ARD and the results obtained show that generally the waste is “likely ARD generating.” Where possible, waste rock that contains elevated levels of pyrite remains underground. Tailings contain pyrite, a sulphide mineral, and are ARD generating. Having been deposited sub-aqueously until 2010, tailings are now deposited in paste form. The new paste disposal facility accommodates waste rock that is brought to the surface and tailings in the same area as part of a comprehensive Waste Management plan to mitigate the risks imposed by ARD.

At Galmoy, the host rock is carboniferous limestone, with the calcium carbonate providing significant buffering potential. Acid-Base Accounting of tailings material demonstrated that ARD is not a concern and this is borne out with experience on-site.

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Waste rock at Aguablanca has relatively low sulphide concentrations, and ARD discharge is not a significant issue of concern. Management of ARD is not required.

Mine Closure Planning for mine closure starts at the earliest stages of developing a new mine. All Lundin Mining mine sites have a closure plan that includes financial provision for mine closure and site restoration. Closure plans are updated periodically, usually every five years, to reflect changes in mining methods or sequencing of mining as well as new developments in closure technology. Details concerning closure related provisioning and accruals are provided in Lundin Mining’s latest web-posted Annual Financial Report. Wherever possible, reclamation is carried out while mining is still active. For example, waste rock is used underground at Zinkgruvan and Neves-Corvo to fill mined out stopes or to create berms on tailings storage areas. At Aguablanca, waste rock piles are contoured, covered and re-vegetated as soon as a section has reached capacity in order to restore the landscape as soon as practicable. Lundin Mining was managing two closed mines during 2012. The Storliden Mine in northern Sweden was closed in 2008, with disposal of all waste rock underground, sealing of the access drift, removal of surface structures, and re-vegetation. Final bioeffects monitoring was conducted in 2012, and showed comparable data to the baseline study in 1999. An additional sampling exercise will be taken in 2016 for reassurance that no delayed effects occur. The results have been submitted to the relevant authorities and the land will be sold to be used for commercial forestry. The Las Vueltas del Rio Mine in Honduras was acquired by Lundin Mining as part of the Rio Narcea purchase in July 2007. This open pit, heap leach gold mine operated between 2001 and 2004. Some remediation work had been done prior to the acquisition of the site by Lundin Mining but further work was required. A closure plan was presented

Vueltas del Rio Heap Leach

to the Honduran Government in late 2010, and with regulatory approval being granted in 2011, work commenced and progressed well in 2012. The former process ponds have been effectively remediated and re-vegetated and a new passive water treatment system has been constructed to manage ARD from the pit prior to release to the receiving environment. Considerable work has been undertaken to improve the stability of the waste rock dumps, including re-contouring, terracing, covering, re-vegetating, buttressing and drainage works. The key remaining activities planned for 2013 to achieve closure of the mine are: completion of the open pit restoration program; minimizing acid generation from sulfide outcrops; maintenance of over 20 hectares of re-vegetated land; implementation of the water control and monitoring program and agreement of the Environmental Release Certificate with the authorities. Proposals have been made to the government for the provision of three years of care and maintenance of the acid drainage treatment system, and then a commitment to refurbish the system to ensure it can be effective for at least three more years. The Directorate of Environmental Evaluation

and Monitoring have issued an opinion saying that Lundin Mining’s proposal was acceptable, and Lundin Mining is currently awaiting the Legal Department and General Secretary to issue the final resolution. Active reclamation is also under way at Galmoy mine in Ireland. Although the process plant had been previously closed and dismantled, mining of remnant high grade ore continued at Galmoy until October 2012. All mined ore has been transported to an adjacent mine and stockpiled for treatment during 2013. The mine closure and restoration work at Galmoy is progressing well in accordance with the approved closure plan. Following many years of trials, capping and re-vegetation of Phase 1 of the Tailings Management Facility (TMF) began in 2010, with subsequent monitoring of performance through the collection and analysis of soil and vegetation samples. After a successful grazing trial on the capped/grassed surface of Phase 1 in 2011 to confirm the agronomic value of the rehabilitated cap, a second similar trial was carried out in 2012 to assess management of the capped and vegetated area and also to further demonstrate its agronomic use.


31



Livestock on Phase 1 of Galmoy Tailings Management Facility

Fifteen yearling heifers were purchased in March 2012 and were housed off-site being fed on forage which was harvested from Phase 1 TMF the previous year. Once weather conditions were favourable, the livestock were then brought onto Phase 1 TMF in May 2012. At the end of the trial, analysis was conducted on grass and on cattle blood, liver, kidney and muscle tissue. Based on the experience, observations and information gained both throughout the rehabilitation process and the subsequent livestock grazing trials of 2011 and 2012, it can be concluded that Phase 1 of the TMF has been successfully rehabilitated to an agronomic end use. The organic material and glacial till substrate have provided a growing medium to support a natural and vibrant vegetation cover which from analysis has been proven to be of consistent quality as forage for livestock. The live weight gains achieved in both trials compare favourably with the national average. The practical experience and analytical information from the grazing trials highlights the ability of the grassed cap to support livestock which at slaughter meet all the relevant regulatory requirements for those animals to safely enter the food chain. The objective of achieving a stable

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Lundin Mining

and sustainable end use for the TMF can be achieved in the long term, ensuring that the TMF will blend into the rural landscape which existed prior to mining. Closure plans consider social concerns as well as aspects of environmental remediation. For example, at Galmoy considerable effort has been taken to find closure solutions that attempt to maintain employment in the area and that provide useful land use for the local community. At Las Vueltas del Rio in Honduras, Lundin Mining is also providing community support to three local schools, including paving footpaths, providing electricity for lights and fans, and the purchase of books. Lundin Mining retains responsibility for a legacy site at Zinkgruvan where mining started in 1857. The original ore processing facilities were not at the mine site as they are today, but were located 10 km distant at Åmmeberg, situated adjacent to Lake Vättern, the second largest lake in Sweden. Tailings were pumped directly into Kärrafjärden, an arm of Lake Vättern. In 1977, the concentrator at Åmmeberg was closed and, following discussions with the regulatory authorities and other

stakeholders on the preferred approach for the restoration of the old disposal area, plans were put in place to develop the majority of the land area for recreational purposes. The site continues to be a thriving vacation community, including a golf course and a popular marina which provides employment opportunities for local residents. In 2012, the Company and its advisers carried out sampling to assess a zone of elevated zinc on and around the old mill property, in accordance with a program agreed with the regulatory authorities. The sampling program is now complete and results are being compiled and interpreted. The preliminary results show some local pockets of elevated zinc and lead levels associated with tailings dating back to the 19th century. A final report will be submitted to the authorities during 2013. Lundin Mining continues to participate in a multi-disciplinary and multi-sponsored program of monitoring of a range of environmental parameters in Kärrafjärden Bay. These studies show that the water quality in the northern section of Lake Vättern has not been subject to any major negative impact and the fish populations have not been adversely affected and are suitable for human consumption.

Product Responsibility Marketing initiatives focus on being the supplier of choice by providing quality products, technical and marketing support and dependable on-time delivery at competitive prices. The Company generally deals directly with end-users of concentrates, i.e. non-ferrous smelting companies. Concentrates are sold and transported in accordance with EU and international regulations and shipments are always accompanied by appropriate documentation. Health and Safety impacts are evaluated for production of raw materials and base metal ores and concentrates to ensure that the health of employees is not affected. Assessments continue with an evaluation of risks associated with beneficiation and with transportation of concentrates. Safety Data Sheets providing information on the health, safety and environmental hazards of our concentrates are provided for each shipment to customers and to those shipping our products. Concentrates are moved by truck and railcar to ports close to the mines where they are exported to smelters within the EU or to Asian and South American markets. Trucks and railcars used for transporting concentrate are covered to prevent dust being released before leaving the mine site. The port facility at Setúbal in southern Portugal is owned and operated by Lundin Mining. Ports at Otterbäcken in Sweden and Huelva in southern Spain

Environmental Expenditure The Company spent in excess of $19.0 million on direct environmental management during 2012. Sound environmental management is intrinsic to operating a mine effectively and many environmental costs are included in the mine’s normal operational budgets. Different budgeting practices at the mines and different environmental issues that need to be managed make it difficult to undertake direct comparisons on environmental expenditure between the sites. Tailings management was a major environmental investment for our operations, particularly at Neves-Corvo with the continued development of paste deposition. More than $10.2 million were spent to maintain, improve, rehabilitate and monitor tailings impoundments across all the sites. Site water management required an additional expenditure in excess of $4.2 million.

are operated under contract. Regular audits, including HSEC aspects, are carried out at ports that are used for shipping concentrates. Following an audit of Otterbäcken in October 2012, the decision was taken to initiate a project to improve the warehousing and loading facilities at the port. An audit was also made of the facilities at Huelva and it was decided to investigate an alternative solution to the present set-up to reduce dusting. Emerging regulatory requirements are reviewed routinely and updated as part of the Company’s HSEC Issues Management process. During 2012, the Company went through the process of classifying its concentrates under the Globally Harmonized System (“GHS”), a classification that is required to comply with the Marpol Annex V regulations for ocean shipping of nonferrous concentrates and which came into force on January 1, 2013. The Company’s copper and zinc concentrates are not classified as “Harmful to the Marine Environment” (“HME”). The lead concentrates are the only ones classified as HME. There have been no incidents of non-compliance with regulations and voluntary codes concerning health and safety impacts of products and services. Similarly, there have been no complaints regarding breaches of customer privacy or losses of customer data. There have also been no fines for non-compliance with laws and regulations concerning the provision and use of our products.

2012 Environmental Expenditures ($’000s) Neves-Corvo 12,672 Zinkgruvan 4,205 Aguablanca 423 Galmoy 2,216 Total 19,516 Note: Expenditure for Galmoy includes rehabilitation of tailings as opposed to tailings storage.


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Waste Management

Waste Management

Waste Rock Waste rock, along with tailings, account for the majority of waste by volume generated by mining operations. Waste quantities in this category cannot be reduced without reducing production volumes. It is therefore necessary to ensure that these wastes are managed to reduce the site’s environmental impact as much as possible.

Ore Stockpiles, Neves-Corvo

Aguablanca Mine

Waste Management Our operations have waste management plans that describe how to handle hazardous waste, non-hazardous waste and mine-specific waste. Plans also include actions for minimizing waste and improving recycling.

The amount of waste produced in 2012 was over 1,000 tonnes lower than in 2011 but the proportion of non-hazardous waste being recycled was slightly lower than the 2011 high. Zinkgruvan has had effective recycling programs for several years, typically diverting around 90% of non-hazardous waste away from landfill. Neves-Corvo has continued to achieve high levels of recycling for industrial waste material. During 2012, the site has also successfully improved the infrastructure and rationalized the management of

The main classes of hazardous waste produced at our operations include used oil and oil filters, grease, used reagents, other chemical products such as paints and laboratory reagents, used batteries and worn tires from mobile equipment. Mine-specific waste includes used mining equipment and resin plastic. Some waste is kept underground but all hazardous waste, municipal waste and organic waste is brought to surface and disposed of or recycled in accordance with waste regulations and site waste management plans.

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Lundin Mining

wastes. Revenue generated from the sale of recyclable material continues to be used to fund waste management activities at the mine and the profits generated fully covered the cost of the treatment of hazardous wastes including transport, manpower and equipment needed to maintain the system. Galmoy generated much less waste in 2012 with the completion of demolition associated with mine closure, and recycled almost 70% of non-hazardous waste produced.

TOTAL WASTE PRODUCED (Tonnes) Non- Non- % Non Hazardous Hazardous Hazardous Total Non- Hazardous Waste to Waste to Waste Hazardous waste Landfill Landfill Recycled Waste recycled

2008 100 305 2,020 2,325

87

2009 351 1,934 4,066 6,000

68

2010 392 1,294 3,864 5,158

75

2011 353 483 5,019 5,502 2012 229 593 3,456 4,050

At Neves-Corvo, waste rock is temporarily stockpiled on the surface. Most of the waste rock will ultimately be used in the tailings management facility for construction of dykes and cell covers or used inside the mine to stabilize worked out areas. The temporary piles of waste rock are carefully managed and monitored to prevent environmental problems associated with ARD. There will be no rock left on the surface on mine closure and the present rock storage area will be cleaned and recovered.

Aguablanca is an open pit mine and consequently produces very large volumes of waste rock. Aguablanca is progressively restoring rock piles by re-vegetating them with local plant species. During 2012, the west waste rock dump reached capacity and has been covered with topsoil and re-vegetated. Deposition of waste rock subsequently commenced at the east waste rock dump. Zinkgruvan does not maintain waste rock piles – all waste rock is returned underground to stabilize worked-out stopes. With the decline in mining activity at Galmoy, 114,000 tonnes of waste rock were imported into the mine to provide rockfill to stabilize mined areas.

Neves - Corvo Production (‘000 Tonnes per Year)

Aguablanca Mine

Aguablanca Production (‘000 Tonnes per Year)

Waste Paste to Ore Rock Tailings Mine


2008

2,803 572 2,449 291

2008

1,752 19,771 1,710

–

2009

2,506 546 2,252 244

2009

1,442 11,294 1,786

–

2010

2,612 777 2,284 266

2010

1,349 20,092 1,331

–

2011

3,212 1,045 2,948 429

2011

2012

3,037 1,242 2,747 378

2012

Zinkgruvan Production (‘000 Tonnes per Year)

24 525 – – 755 16,740

542

–

Galmoy Production (‘000 Tonnes per Year)



91

2008

895 466 736 363

2008

509 33 389 145

85

2009

1,028 280 869 352

2009

195

2010

1,023 608 839 376

2010

156 5 – –

2011

1,109 459 924 334

2011

288 – – –

2012

1,143 397 936 273

2012

140 – – –

2 128 66


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Waste Management

Waste Management

Zinkgruvan At Zinkgruvan, the tailings management program is based on the SveMin Dam Safety Guidelines which incorporate cross-audit by SveMin member companies to ensure that standards are applied. Dams are inspected at least annually by independent, expert consultants on dam design to ensure their continuing integrity and to ensure that rigorous programs of ongoing monitoring are in place at all sites. In 2017, the existing tailings facility at Zinkgruvan will reach capacity. Plans are under way to seek permitting for an adjacent facility and for the closure, capping and re-vegetation of the existing tailings facility. Work to raise the walls of the tailings facility has continued, with some areas reaching their final height during 2012. Considerable works have been undertaken as this facility approaches capacity, not only to manage tailings deposition towards closure but to also allow comprehensive monitoring of porewater within the facility. Works to place waste rock at the dam base have been undertaken to further enhance the safety of the dam. Tailings Management Facility, Neves-Corvo

Tailings Management Active tailings impoundments represent one of the larger environmental risks for the mining industry and, in keeping with best industry practice, Lundin Mining takes considerable care to ensure tailings facilities are well designed, built to exacting standards, are well maintained and are monitored carefully. Tailings facilities are managed in accordance with international standards and standards in the national jurisdiction.

Neves-Corvo At Neves-Corvo, the Tailings Management System incorporates requirements from the EU Mine Safety Directive, International Commission of Large Dams (“ICOLD”) and Portuguese national legislation.

The tailings disposal system at Neves-Corvo has provided safe and reliable storage of tailings for many years, but since the tailings facility only had capacity for continued sub-aqueous deposition until the first quarter of 2011, innovative paste tailings technology was developed and implemented. Paste tailings are tailings that have been dewatered and can be stacked so that a greater volume can be stored in the tailings management facility. As there is little water in the tails to allow them to flow, there is a reduced risk of environmental damage if a breach of a tailings embankment should occur. Also, seepage of contaminated water from the stored paste tailings is reduced

or eliminated. The thickened and dewatered tailings are deposited on top of the existing subaqueous tailings with the paste being retained by berms constructed of mine waste rock within the tailings basin. The volume of tailings that needs to be stored is further reduced by placing as much as possible underground as paste backfill to support worked out areas of the mine. In September 2012, a second thickener was commissioned in the tailings paste plant, which allowed the thickening of all tailings and their deposition as paste in the tailings facility.

Aguablanca The Aguablanca tailings management facility was designed to meet the EU Mine Safety Directive, ICOLD and Spanish national legislation standards. The dam, which has an ultimate design capacity of in excess of 20 million tonnes of tailings, is raised in a series of 6 metre high lifts. The dam comprises downstream walls constructed from and buttressed against waste rock from the open pit. It is fully lined with an HDPE liner and decant water from the facility is recycled back to the processing plant using barge mounted pumps. The dam is subjected to quarterly independent third party inspections.

Galmoy At Galmoy, the closed tailings facilities are undergoing remediation and are being covered to create land for grazing. Planting hedgerows and local species of grasses and wildflowers will create a sustainable, mixed environment which will increase the biodiversity in the area. Cattle raising trials on the pasture growing on top of the remediated tailings were repeated during 2012. These trials were again extremely successful with the cattle producing high quality beef fit for human consumption. The tailings facility continues to be inspected annually by an external expert and extensive monitoring programs are in place.

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Lundin Mining


37

biodiv ersity Photographs of some of the animals and plants living on the mine property at Neves-Corvo taken by José Godinho, the site’s Biodiversity Officer.

At Lundin Mining, management of Biodiversity is an integral part of the Environmental Management System.

Land Use and Biodiversity

Biodiversity is often defined as “the variability among living organisms from all sources, including terrestrial, marine and other aquatic ecosystems and the ecological complexes of which they are a part; this includes diversity within species, between species and of ecosystems.”


Understanding the biodiversity and ecosystem surrounding our mines Before considering acquisition of a new property, Lundin Mining conducts a duediligence assessment to understand the environment in which it is located and to consider the potential impacts that mining activities might have on the environment to ensure that mining can be carried out in accordance with our company standards.

Industrial and intensive agricultural practices in Europe, where our mines are located, have resulted in severely altered and degraded conditions for wild-living species, changes in the distribution of ecosystems and a highly fragmented landscape. This prompted the political goal to take action to conserve and restore biodiversity in Europe with a target to halt further biodiversity loss by 2010 established in the Natura 2000 initiative. Habitat quality and the connectivity between areas where species can survive is steadily decreasing and becoming more and more fragmented, making survival more difficult. Natura 2000 provides an EU-wide network of nature protection areas established under the 1992 Habitats Directive and the 1979 Birds Directive. Natura 2000 is not a system of strict nature reserves where all human activities are excluded. Most of the land is privately owned and the emphasis is on ensuring that future management is sustainable, both ecologically and economically. It covers 17% of the EU’s territory and is the largest network of protected areas in the world.

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Lundin Mining

Lundin Mining’s Biodiversity Strategy aims to : • Understand the biodiversity and ecosystem surrounding our mines. • Minimize our footprint and restore disturbed land as quickly as possible. • Increase biodiversity where possible. • Consider biodiversity objectives in mine closure planning. • Work with local organizations to assist with conservation and biodiversity initiatives.

Some of these important Natura 2000 conservation areas lie close to our operations. For example, Neves-Corvo is situated close to areas with special protection status such as the Guadiana Protection Zone. Here there are plains of dryland crops, holm oak woodlands and valleys of the Guadiana River system including its tributary, the Oeiras River (which skirts our mine property). Our neighbouring municipality of Castro Verde contains a Special Protection Area for endangered species of steppe birds such as the Great Bustard and Lesser Kestrel. Within 1.5 km of Galmoy mine is the Galmoy Fen, an Area of Special Interest to the Irish National Parks and Wildlife Service. This bog supports a rich vegetation of rushes, sedges and

mosses and has been carefully evaluated by Galmoy mines to ensure no negative impact from mine operations. Inevitably, exploration and mining will have some effect on landscapes as land disturbance is an unavoidable consequence of mining. This consequence has the potential to have a negative impact on biodiversity if activities are not planned and executed in a thoughtful and responsible manner. Lundin Mining recognizes this need and is committed, through its Biodiversity Strategy, to assess the environmental effects of its activities and integrate these considerations into the Company’s planning, operational decisions and processes throughout the life of our mines.

An environmental impact assessment is carried out before developing a new mine or when major changes are made to existing operations. This includes baseline surveys to identify and record the existing biodiversity of the site and determine whether any threatened species, including species listed on the International Union for the Conservation of Nature (“IUCN”) Red List, or vulnerable ecosystems are present. Our Exploration and New Business Development environmental standards include required practices to minimize the disturbance of ground, protection of watercourses from pollution, special precautions to be taken at stream crossings and protection of habitat and archaeological sites. During site selection studies undertaken by Zinkgruvan for a future tailings facility, ecological surveys were conducted to assess conservation value and identify vulnerable and protected species at potential sites. At our operating mines, inventories of animals and plants are established and regular monitoring studies are conducted to ensure that the mine’s activities are not having an adverse effect on the natural environment. At Galmoy, an annual assessment is made of the health of the River Goul, which receives the mine’s water discharge, and of local wetlands. Also, Galmoy conducts regular bird surveys of the tailings facilities which have identified many Red List

species and birds rare in this part of Ireland, attracted by the unique habitats, such as open water in the tailings ponds created by mining activities. Zinkgruvan has conducted a study of the biodiversity of water bodies and related habitat potentially impacted by water discharge or run-off from site, and has built an inventory of species in areas of forest near the tailings facility. Although the area has been strongly affected by forestry, the large element of wetlands results in relatively high conservation value for mosses, fungi and lichen. Aguablanca commissions an annual biodiversity study of the fish and invertebrate life in the adjacent Cala River, and undertakes fauna monitoring. An annual report of possible effects on natural parks located near the mine continues to provide assurance that our operations are not having a negative impact. Neves-Corvo is located at a biodiversity area of interest in the Guadiana River catchment and has a full time Biodiversity Officer to coordinate activities with respect to the natural environment on and around the site. The site collaborates with a number of agencies and universities to monitor the health of the Oeiras River, including the Institute of Marine Research, and Lisbon University’s Faculty of Science. Site personnel have continued to build an inventory of the full range of biodiversity on the Neves-Corvo site and biomonitoring has been introduced to evaluate aquatic macroinvertebrates, fish, birds, shellfish and flora, along with routine water quality monitoring. In 2011, a report was produced by the Life Sciences Department of the University of Coimbra of the mine’s activities in support of biodiversity over the past 25 years. A project to publish a book on the site’s biodiversity, in collaboration with the University of Lisbon, has progressed with fieldwork and photography, and activities for 2013 have been agreed upon.

Where habitat removal is unavoidable, such as at Neves-Corvo where oak trees needed to be removed to allow the construction of a new reservoir, the Company follows strict procedures, with minimization of the area of disturbance, tagging and seeking authorization, granted by the National Forestry Authority in August 2012. Knowledge about the biodiversity within and surrounding our sites allows us to actively manage impact on biodiversity through initiatives implemented as part of our routine operations. For example, at Neves-Corvo the Company aims to reduce the potential to impact on biodiversity in the Oeiras River in a number of ways, including: reusing around 66% of wastewater in site operations, thereby minimizing the discharge to the river; suspension of the discharge during approximately 4 to 6 months per year when there is no flow in the Oeiras River; gradually substituting ANFO-based explosives with emulsion-based explosives to reduce the levels of ammonium nitrate in the mine waters; and commissioning a study, in collaboration with the Technical University of Lisbon, for optimization of the process wastewater treatment with regard to improving the quality of effluent from the mine. Furthermore, Neves-Corvo has a hunting management policy which aims to preserve and improve biodiversity. Since 1990, on 40% of the lands owned by the Company, hunting is forbidden in order to promote the development of indigenous species. Another 49% of the lands owned are included in the limited tourist hunting reserve, and just 11% are given over to free hunting in order to allow anyone in the region to participate in this activity. Also at Neves-Corvo, the Company has an agreement with local farmers to maintain traditional agricultural practices on around 50% of the lands owned by the company.


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Minimize our footprint and restore disturbed land as quickly as possible Lundin Mining strives to be a responsible steward of the lands that it manages. In total, we currently own, lease or manage 3,276 hectares of land. As of year-end 2012, our footprint of disturbed and not yet rehabilitated land comprised 1,101 hectares.

Impacts on land affected by mining are minimized by removing as little topsoil and vegetation as possible and by rehabilitating sites (or part of a site) as soon as possible after activity has ceased. Waste rock dumps are covered and contoured to reduce the likelihood of ARD and to match local topography. At Aguablanca, progressive reclamation of waste rock dumps is practised and local plant species have been used to successfully re-vegetate the slopes of the dumps. Holm oak trees are being raised in a nursery on-site to recreate the natural woodland of the area.


Increase biodiversity where possible While mining can be disruptive to the environment, it can also provide opportunities to add to biodiversity through the creation of habitat that is different from the general landscape. This is particularly the case in agricultural areas where broad areas of land may be under monoculture or where the use of pesticides or livestock grazing limit the ability of local wild species to thrive. Water management is an important aspect of mining operations and, particularly in arid or semi-arid regions, provides opportunities for increasing biodiversity by creating standing bodies of water such as tailings ponds and process water ponds. Where possible, Lundin Mining’s operations attempt to enhance the biodiversity value of these special areas.

Consider biodiversity objectives in mine closure planning Particular care and thought is given to enhancing biodiversity in our mine closure activities. Galmoy mine is undergoing active closure and remediation, and biodiversity objectives have been considered in the closure plan. The tailings will support pasture, in keeping with the local land use pattern. The pasture will be broken up by hedgerows made up of local species which will provide habitat for birds and small mammals. A water catchment area will be retained adjacent to the tailings area which is expected to be attractive to waders and wildfowl. Red-Legged Partridge, Neves-Corvo

Tree Nursery, Aguablanca

which attract bird communities, especially as resting areas during spring and autumn migrations. The tailings facility is the only known breeding site in Ireland for the Little Ringed Plover, an IUCN Red List species. At Aguablanca, nest boxes have been installed in the power line to promote the presence of the Peregrine Falcon in the Parque Natural Sierra de Aracena y Picos de Aroche.

At Neves-Corvo, seepage ponds at the base of the tailings dams provide a rich habitat for water life, insects and birds. The site has created artificial nests and duck shelters and has worked with local naturalist groups to build nesting sites for storks and raptors on the power line right-of-way. At Galmoy, the tailings provide a variety of habitats not commonly found in the interior of Ireland

Neves-Corvo works closely with many neighbouring organizations to support the Natura 2000 objective of “stopping biodiversity loss” in southern Portugal.

Land Management (Hectares) Neves-Corvo Zinkgruvan Aguablanca

Galmoy

Total

Total amount of land owned, leased or managed

1,619

1,048

364

245

3,276

Total land disturbed and yet not rehabilitated (Opening Balance)

788

144

147

38

1,117

Total amount of land newly disturbed within the reporting period

–

–

43

–

43

Total amount of land newly rehabilitated within the reporting period to the agreed upon end use

–

–

56

3

59

Total land disturbed and yet not rehabilitated (Closing Balance)

788

144

134

35

1,101

42

Lundin Mining

Work with local organizations to assist with conservation and biodiversity initiatives Lundin Mining recognizes the importance of working with local conservation groups, universities and regulatory agencies to identify valued ecosystem components and to assist with conservation and biodiversity initiatives in and around our mine sites.

• The site provides financial support to the LIFE Project, a conservation project for open grassland birds, including three endangered species of birds prioritized by the EU: the Great Bustard, Little Bustard and Lesser Kestrel in the arable grasslands of the Baixo Alentejo region.

• The mine participated in the development of a biodiversity management plan for the Guadiana Valley at the invitation of the Institute of Nature and Biodiversity Conservation. With a view to the conservation of aquatic communities in accordance with the Management Plan of the Natural Park of the Guadiana Valley, Neves-Corvo has introduced ecological quality assessment of the Oeiras River through a biomonitoring program. • Working in cooperation with the Foundation of the Faculty of Sciences of the University of Lisbon, the site continues to support work on the evaluation of the biodiversity of lichens and vascular plants in the area surrounding the Neves-Corvo mine. • Neves-Corvo continues to participate in the Saramugo minnow conservation project in collaboration with the Institute of Nature and Biodiversity Conservation. This minnow is found in Spain and Portugal and has been Red Listed by the IUCN as endangered.

• The Company will continue to provide support pledged through the signing of a protocol in 2009 with ICNB (Institute for the Conservation of Nature and Biodiversity) / PNVG (Parque Natural do Vale do Guadiana) for a sub-project concerning conservation of fish in the Guadiana River. Zinkgruvan has been a major financial contributor to the Lake Vättern Society of Water Conservation that regularly monitors the chemistry and the biological health of Lake Vättern, the second largest lake in Sweden. At Aguablanca a very special partnership continues with Aprosuba 1, an organization providing personal, educational and job-skills support to people with developmental disabilities in the nearby town of Zafra and its surrounds. A team from Aprosuba 1 manages the nursery at Aguablanca, raising holm and cork oaks from acorns and tending relocated mature trees so that the site can be restored to its natural state after closure.


43

Social Responsibility Lundin Mining aims to create sustainable value in host communities and countries in which we operate.

Tailings Management Facility, Neves-Corvo

Stakeholder Concerns During 2012, there were no disputes relating to customary rights of local communities or Indigenous Peoples. Lundin Mining’s wholly owned operations do not feature involuntary resettlement or challenges associated with artisanal mining. There have been no significant concerns from communities of interest in respect of HSEC management at Lundin Mining or its sites. The Tenke Fungurume Mine in the DRC (operated by FreeportMcMoRan Copper & Gold) is discussed later in this report.

We recognize that our operations can have significant economic, social and environmental impacts on local communities throughout the life cycle of our mining projects. Our approach to leveraging positive impacts, including local hiring and procurement, is shown in the Economic Responsibility section of this report. In this section, we have detailed our approach to stakeholder engagement; employment and labour practices; health, safety and wellness; investments in community infrastructure, and human rights.

44

Lundin Mining

Stakeholder Engagement Lundin Mining recognizes that effective stakeholder engagement can both create value and manage risk by building a climate of mutual trust and respect. Beyond risk management, effective stakeholder engagement helps us learn by identifying emerging issues that may influence evolving community perceptions, business operations and market conditions. Strategically, effective engagement is critical to establishing credibility as a partner of choice. Lundin Mining believes it is essential to conduct dialogue in a spirit of openness, transparency and good faith, to be active listeners, and to follow up conscientiously on outstanding or unresolved issues.

In late 2011, Aguablanca commenced a formal land expropriation process for a 500 metre safety perimeter around the open pit mine, and to undertake a diversion of the Aguablanca stream. The procedure was conducted with the approval of the Industry and Energy Division of the Badajoz Ministry of Industry but the two affected land owners objected. Resolution of the formal expropriation process is anticipated during 2013. Issues regarding noise and dust from the surface ore dressing area and noise from a ventilation shaft have been raised by a small number of neighbours at the Zinkgruvan mine during 2012. At Aguablanca, a neighbour initiated a legal challenge to the rerouting and lining of a local stream despite the work having received all appropriate approvals.

At Galmoy, a complaint was made to the national Environmental Protection Agency about a perceived lack of information on the mine closure. All complaints were addressed by site management and have been reported to the HSEC Committee of the Board. At Neves-Corvo, the Guadiana Valley Nature Reserve has complained about the absence of fish in the Oeiras River. It was agreed to have a third party evaluate the condition of the river and studies have been carried out by the University of Coimbra on the macroinvertebrate and fish populations, and on the metals and pH in sediments. Each site has a Community Communication Plan that describes the main communities of interest for the mine and the site’s assessment of the best ways to meet their various information needs. These include direct contact with community representatives, newsletters, mine visits and tours. Neves-Corvo has a public relations department that promotes contact with all local stakeholders, particularly municipalities, industrial associations and other associations so as to allow a full understanding of the local concerns about the environment. Neves-Corvo maintains a copy of an Environmental Report at the main mine gate office available to any interested party to view.


45

Social Responsibility


STAKEHOLDER ENGAGEMENT

Employees and Contractors Health and safety on-site

Detailed HSEC Management System applicable to employees and contractors

Employment and Labour Practices At the end of 2012, Lundin Mining had 1,654 employees of which 235 were women.

Working conditions

Improved safety and housekeeping standards, and regular workplace risk assessments

Turnover of the workforce during 2012 was 5%.

Career advancement

Regular employee performance reviews and appropriate development

Governments Fiscal and regulatory frameworks

Regular consultation with, and adherence to, government directives

Communications with embassy staff

Environmental compliance

Regular environmental reporting and applications for environmental permits associated with expansions

Hiring of local labour

Training and skills development

Local Communities

Environmental and social impacts of operations

Community meetings

Local employment and procurement

Open houses, open tendering and job postings

Community infrastructure

Newsletters

STAKEHOLDER

KEY INTERESTS AND CONCERNS

METHOD OF ENGAGEMENT

Customers

Reliable supplies

Regular discussions on quantities and times of delivery

High quality products

Regular discussions on product qualities

Information on any hazards

Provision of health and safety data on products

Labour Unions Workers’ interests

Working in partnership. Supported by a mixture of individual and collective agreements

Collective bargaining

Respect for the right of each employee to freely choose to join a union

Non-Governmental Social and environmental Organizations performance of operations

Engagement with national and international NGOs primarily through involvement with industry associations and attendance at special forums on CSR related to the mining industry

Annual Sustainability Report

Shareholders

Corporate governance

Continued vigilance with respect to business ethics

Financial performance

Analyst and investor briefings and financial reports

Risk assessment and mitigation

Technical reports and other public disclosures

Financial Institutions Enhanced sustainability reporting

Responses to requests for information on HSEC performance

Annual Sustainability Report

46

Lundin Mining

The ratio of average men’s to women’s salaries at the operating sites ranged from 78% to 173% in 2012. This broad range is primarily caused by differences in the seniority of women employed at the mines. For example, at Neves-Corvo, the number of female employees is small but their average seniority is high, with women employed in managerial and senior technical, highly paid roles. At Aguablanca, approximately 20% of the workforce is female, the majority of which are in support roles. At Galmoy, there were no female blue collar workers during 2012. There were no complaints about any form of discrimination in the workplace in 2012. The Company received services from approximately 1,300 contract employees, primarily engaged in maintenance, mine development and mining work. There were another 300 contractors engaged in capital growth projects at the end of 2012. Contractors are held to the same safety standards as Lundin Mining employees and in this respect are treated equally. Ninety-one percent of all employees across the Company have union representation. All employees working at mine sites, except Galmoy that is undergoing closure, are covered by local collective agreements.

Underground at Zinkgruvan

LUNDIN MINING Workforce Demographics 2011 2012

Permanent workers 1,374 1,361 Temporary / fixed term contract workers 194 293 Total employees 1,568 1,654 Full-time employees Part-time employees

1,550 18

1,641 13

Male employees Female employees

1,351 217

1,419 235

Contractors excluding capital growth projects Contractors engaged in capital growth projects

1,261 251

1,324 313

Employees aged < 30 years Employees aged 30-50 years Employees aged > 50 years

247 891 430

276 956 422

1,441

1,512

Non-managerial employees covered by collective agreements


47



At Zinkgruvan, training and education contributed to a safe working environment while fostering team spirit. A comprehensive training campaign was launched, focusing on process technology and safety for all mill employees. All Zinkgruvan employees attended a specially themed “Safety Day,” covering topics such as shift roster effects, defibrillator training, an introduction to the new safety system and environmental information. Preventative maintenance leadership training was also provided. At Aguablanca, comprehensive safety training was provided to all employees returning to work after a temporary layoff. Certain employees also received specialized Mine Rescue Team training in underground rescue techniques such as fire extinguishment and oxygen chemical degeneration.

Aguablanca Mine Rescue Team

Our mines enjoyed other notable achievements. Neves-Corvo seamlessly implemented continuous shifts in the underground area with the help of effective leadership and the cooperation and commitment of workers. Neves-Corvo also continued to be exemplary in its low absenteeism rate of 2% in 2012, significantly below the Portuguese national average of 7 to 8%. Although the year at Aguablanca began with a temporary layoff because of open pit instability, operations were fully functioning by July 2012, three months ahead of schedule. Aguablanca maintained a focused and committed workforce and did not lose any working hours to industrial action.

Neves - Corvo

Zinkgruvan

2009 2010 2011 2012

Male employees

767

834

865

82

88

97

849

922

962

1,008

Female employees Total employees

2009 2010 2011 2012

904

Male employees

247

104

Female employees 58 62 65 65

283

305

334

348

359

Employee turnover (%) 7

7

10

8

Non-managerial workforce covered by collective bargaining (%) 100 100 100 100

Non-managerial workforce covered by collective bargaining (%) 100 100 100 100 Galmoy

2009 2010 2011 2012

Male employees

120

Male employees

Female employees

130

135

145

2009 2010 2011 2012

32

41

46

Employees are represented on safety matters through local Joint Health and Safety Committees at all mine sites. Training at our mines continued to be a priority throughout 2012. At Neves-Corvo, safety-related training was ongoing; special attention was also given to risk assessment, first aid, fire fighting and prevention, as well as to strong leadership and effective communication. Individualized safety awareness was provided to middle management and positively influenced safety performance.

18

37

37

35

39

Female employees 6 7 12 6

157

167

170

184

Total employees 38 48 58 24


12

11

4

Total employees

Non-managerial workforce covered by collective bargaining (%) 78 77 77 79


4

10

104

Non-managerial workforce covered by collective bargaining (%) 100 100 n/a n/a

2012 Neves-Corvo Zinkgruvan Aguablanca

HOURS WORKED BY LUNDIN MINING AND CONTRACTOR EMPLOYEES IN 2012

294

Employee turnover (%) 5 4 4 2

Aguablanca

Total employees

272

Galmoy

Ratio of basic salary of men to women (total employees)

78%

99%

119%

131%

3,000,000

Ratio of basic salary of men to women (management, technical and administration employees)

138%

121%

173%

145%

2,500,000

Ratio of basic salary of men to women (blue collar employees, operators and miners)

122%

105%

109%

n/a

2,000,000

1,500,000

1,000,000

500,000

0 Neves- Zinkgruvan Aguablanca Galmoy Corvo

Lundin Mining Employees Contractors

48

Lundin Mining

Other

Total

Underground Neves-Corvo

John Stapleton, Environmental Manager, Galmoy


49

Safety

Safety

Health All mine sites provide occupational health services to their employees. Pre-employment health medical assessments are conducted for all employees and regular further assessments during employment are carried out. Each mine site maintains an industrial hygiene program to conduct assessments of workplace exposure to hazardous substances such as silica, arsenic, lead, cadmium and mercury. Workplace chemical exposures are controlled within regulated limits at all mine sites and employees are provided with, and trained in the use of, personal protective equipment, such as dust masks, to provide an extra level of protection.

Underground Zinkgruvan

Underground Zinkgruvan

SAFETY At Lundin Mining, line managers are held accountable for safety performance and the management team at each operating site is supported by professional safety staff. All employees are expected to be engaged in maintaining safe working conditions through involvement in health and safety committee meetings, through conducting safety inspections and raising any safety concerns with their supervisors.

High Consequence Protocols are prepared for tasks that are intrinsically hazardous and where strict adherence to procedures is necessary to reduce the risk to acceptable levels. They address activities such as energy isolation and lock-out/tag-out, confined space entry, working at heights, hot work, working with and around moving machinery, vehicular safety, ground control, lifting and rigging, and use of explosives.

Employees are given safety training at the commencement of their employment and regularly throughout their career with the Company. Each operating site maintains a Joint Health and Safety Committee (“JHSC”) which provides advice to management on addressing new regulations, site procedures and actions to improve health and safety. JHSCs are an important and valued component of our sites’ organization for safety. Employees are responsible for performing all tasks in accordance with HSEC Site Procedures, in order to be able to maintain safe working conditions.

Adherence to the requirements set out in High Consequence Protocols is mandatory at all sites and they will form the basis for Life-Saving Rules, that must be followed at all times, by all employees at a site. The Life-Saving Rules require a commitment from all employees to never: • Work on equipment unless energy sources have been locked out. • Enter confined spaces without a permit and an attendant. • Work under unsupported ground in mines.

50

Lundin Mining

• Work at height without fall restraint or fall arrest equipment. • Handle or use explosives unless trained and authorized to do so. • Operate equipment unless trained and authorized to do so. • Conduct lifting or rigging activities unless trained and authorized to do so. Sites have in place processes for understanding the risks associated with their operations including hazard identification and risk assessment. Each site is required to maintain a Risk Register. Significant risks at Lundin Mining sites include: falls of ground, chemical hazards, use of explosives, noise, electricity and moving equipment, especially heavy equipment, and slips and falls on uneven surfaces. Aguablanca’s safety management system is registered to OHSAS 18001. At the other sites, similar safety systems are in place but the decision has been made not to seek certification although the Company’s HSEC Management System is fully compatible with the requirements of ISO.

Mine sites also have an active audiometric program to pick up the earliest signs of noise-induced hearing loss or other hearing problems. Few cases are identified, reflecting the effectiveness of the sites’ hearing protection programs, including the use of appropriate Personal Protective Equipment. Regular biological monitoring is conducted to assess exposure to heavy metals such as lead or contaminants in ore such as arsenic. Sites have protocols in place to provide protective reassignment to any employee who shows blood metal levels that reach an action level. There were no reported cases of occupational disease at our operations during 2012.

Employees receive regular occupational health checkups. Annelie Ryberg checks the blood pressure of a miner at Zinkgruvan.

Neves-Corvo maintains a medical centre located in the plant complex under the direction of an occupational health physician. The medical centre is well equipped and includes separate rooms for surgery, emergency treatment and recovery. The clinic is well equipped for diagnostic testing. This includes X-ray, ECG, hearing and lung function testing. A similar clinic is maintained at Zinkgruvan. The site maintains a medical surveillance program with all employees seeing the nurse and physician on a three-year cycle. Vision, hearing and lung function are tested along with lifestyle counselling. Employees exposed to dust receive a chest X-ray every six years. At the smaller Aguablanca mine, medical assessments are conducted annually by an outside service provider using exposure-based protocols. Workplace exposures are also assessed regularly by an outside consultant.

Underground Rescue Chamber

At each mine site, Lundin Mining has training, counselling, prevention and risk-control programs in place to assist the workforce and their family members with health and safety concerns. Public health resources in the countries where we currently operate are of a high standard and are readily accessible to community members.


51

Safety

Safety

The chart below shows LTIF performance from 2008 to the end of 2011 on an annual basis and then year to date for each month of 2012, for each of our mines. LUNDIN MINING LTIF 2012 14

Safety Performance Lundin Mining tracks safety performance at the corporate level, maintains statistics on safety performance, and reports to the Board all incidents that result in lost time from work or which require medical aid (according to the US OSHA criteria). This “Total Recordable Incident Frequency” (“TRIF”) allows comparison of performance between operations in different parts of the world where different social support systems or workers’ compensation requirements may distort an indicator based only on Lost Time incidents. Statistics are normalized to 200,000 hours of work. Unfortunately, this last year showed a reversal of the trend in improving safety performance. In 2012, there was a 55% increase in Total Recordable incidents from the previous year with a TRIF of 2.50 compared with a TRIF of 1.61 in 2011. Similarly, a 44% increase in the “Lost Time Incident Frequency” (“LTIF”) occurred, increasing from 0.75 in 2011 to 1.10 in 2012. This trend in poor

12

safety performance was consistent across all the operations. In reporting safety statistics Lundin Mining does not differentiate between full-time staff and contractor, and the trend was the same for both staff and contractors.

10 8 6

Although none of the incidents were critical and the 2012 results still approximate the industry average, Lundin Mining management has viewed the level to be unacceptable. Management changes have been made that provide a sharper focus on health and safety, and measures have been introduced to strengthen the program, including having safety performance introduced as a key performance indicator in the management short-term (annual) incentive program. So far in 2013 these changes are showing positive results.

4 2 0 07

08

09

Galmoy

10

11

Jan ’12

Aguablanca

Feb ’12

Mar ’12

Apr ’12

Neves-Corvo

May ’12

Jun ’12

Jul ’12

Zinkgruvan

Aug ’12

Sep ’12

Oct ’12

Nov ’12

Dec ’12

Lundin Mining

The chart below shows the TRIF performance from 2008 to the end of 2011 on an annual basis and then year to date for each month of 2012, for each of our mines.

The bar chart below shows each of medical aid frequency and LTIF to give a total recordable frequency per year from 2008 to the end of 2012, for all of Lundin Mining.

LUNDIN MINING TRIF 2012 25

20

LUNDIN MINING TRIF & LTIF

15

6 10 5 5 4 0

3

07

08

09

10

11

Jan ’12

Feb ’12

Mar ’12

Apr ’12

May ’12

Jun ’12

Jul ’12

Aug ’12

Sep ’12

Oct ’12

Nov ’12

Dec ’12

2

1

2007

2008

LTIF

Lundin Mining

Aguablanca

Zinkgruvan

Lundin Mining

Neves-Corvo 2012 Target

Most accidents in Lundin Mining’s operations are the result of slips, trips and falls resulting from the uneven work surfaces found in mines.

0

52

Galmoy

2009

2010

2011

2012

TRIF


53

Human Rights

Safety

Emergency Preparedness Each mine site maintains an emergency response capability suited to its working environment and risks. Neves-Corvo has a strong emergency response capability with three surface and three underground mine rescue teams, each comprising six and seven members, respectively. All the teams are staffed by volunteers from across the mine and plant departments, including miners, electricians and mechanics. They receive monthly, inhouse training where fires, accidents and evacuations are simulated. In addition to the monthly in-house training, each team undergoes annual external training to ensure that their skills are maintained. The emergency response capability at Neves-Corvo includes a fleet of emergency vehicles, with three fire trucks

and three ambulances, two of which are based underground. A helipad is available for evacuation in the case of medical emergencies. In Sweden, legal constraints dictate that community emergency services have the responsibility to respond to surface and underground emergencies. Zinkgruvan works closely with local services to ensure that they are familiar with the surface and underground layout of the mine and are able to effectively respond to emergencies on-site. The site trains and equips a group of employees to act as guides to the community rescue services in the event of an underground emergency. Annually, the community fire department trains with mine personnel to practice underground firefighting.

Lundin Mining’s operating sites are in Europe, where human rights are constitutionally protected by host governments.

Aguablanca, although currently an open pit mine, has recently established an underground mine rescue team that provides cover for any activities undertaken in the underground exploration ramp, and potentially, for future underground mining options. The Company’s underground mines are equipped with underground emergency facilities, including refuge chambers strategically located throughout the underground workings. Each chamber is equipped with close circuit breathing apparatus, complete mine rescue kits and communication capability with the surface. Galmoy no longer maintains an active mine rescue team, but maintains access to mine rescue services from a neighbouring facility and key personnel remain fully trained.

Public Open Day Visit to Zinkgruvan

With respect to risks of child or forced labour, our recruitment and employment policies are aligned fully with the legal framework of the countries in which we operate. Freedom of association and collective bargaining enjoy similar protections and there are no operations in which the right to exercise freedom of association and collective bargaining may be at risk. There have been no recorded incidents of discrimination at our operating sites during the reporting period. Notwithstanding these protections, the Company believes that the dignity of every human being must be protected and we are fully committed to demonstrating respect and creating an atmosphere of tolerance for our employees, contractors, neighbours, local communities and host governments.

The Aprosuba 1 team at the Aguablanca Nursery

We believe this is the foundation of human rights. To guide us in our efforts, we recognize and seek to implement the principles found in the United Nations’ Universal Declaration on Human Rights. Our values require that all of our employees are treated with respect and dignity, and we are committed to providing equal opportunity and freedom from discrimination for all of our employees and contractors. No operations are at risk for incidents of child labour and/or young workers exposed to hazardous conditions. Similarly, our operations are not at risk for incidents of compulsory labour. There were no reported incidents of discrimination, forced or child labour practices at our operations.

Lundin Mining is supportive of the Voluntary Principles on Security and Human Rights, which provide guidance to companies in maintaining the safety and security of their operations within an operating framework that ensures respect for human rights and fundamental freedoms. Our involvement in the Tenke project in the DRC, coupled with expansion opportunities in developing countries, has sharpened our focus on risks related to human rights and business ethics. Related aspects are discussed in the context of our involvement in the Tenke project in the next section.

Joachim Pereira (4th from Left), the Head of the Safety Department at Neves-Corvo, Practises with the Mine Rescue Team

54

Lundin Mining


55

Tenke Fungurume

Aerial View of Tenke Fungurume

TFM offers a vital source of revenue for regional and national development. The mine is operated by our partner, Freeport-McMoRan Copper & Gold Inc. (“FCX” or “Freeport”). The DRC is a challenging operating environment and Lundin Mining has been a proactive partner in the design, financing, implementation, and monitoring of health, safety, environmental, and community aspects of this world-class operation. The project operates in alignment with the International Finance Corporation (“IFC”) Performance Standards on Social and Environmental Sustainability amongst a number of other international standards applicable to mining activities in developing countries. Responding to frequently asked questions related to conflict minerals, distribution of project benefits, materials stewardship, human rights, and artisanal mining, the company has included details of TFM’s approach and activities in the pages that follow.

Tenke Fungurume Mining (“TFM”), in which Lundin Mining holds a 24% stake, is the largest private foreign investment in the Democratic Republic of Congo (“DRC”).

New Auditorium Built in Fungurume Village

Product Control at TFM TFM recognizes the international concern over trade in minerals that are being sold in the DRC by rebel groups and used to buy weapons to support regional military conflicts and acts of violence against civilians. The minerals commonly referred to as “conflict minerals” include tin, tantalum, tungsten and gold. TFM is a copper and cobalt mine and does not purchase any minerals sourced from the DRC and only processes those minerals (copper and cobalt) that originate in the TFM concession. To help address stakeholder inquiries, Freeport requested independent assurance of TFM’s product control and custody procedures during its ICMM assurance in the first quarter of 2012. Subject to the limitations of this review, Corporate Integrity, an independent, responsible business performance consultancy based in the UK, supported TFM’s conclusion that it does not mine any product identified as a conflict mineral under US law.

Tenke Fungurume

Artisanal Mining Artisanal mining activities occur throughout the DRC and within the TFM concession, where it is considered illegal under DRC law. TFM continues to engage with authorities and local communities to stem illegal mining, including the installation of control measures at the entry and exit points of the concession to intercept shipments of illegal product. Security posts have been established on deposits where illegal miners operate or are likely to operate, and signs indicating the prohibition of artisanal mining activity and the dangers associated with it have been installed. TFM also conducts sensitization campaigns via its Community Liaison team to educate the community on the health and safety risks associated with artisanal mining and the fact that artisanal mining is illegal on the TFM concession. TFM’s strategy is to promote the long-term economic development of the region to provide communities with alternative means of livelihood. TFM welcomes all community members to participate in its skills training, small business and agriculture programs. The Voluntary Principles on Security and Human Rights The Voluntary Principles provide guidance to extractive companies on maintaining the safety and security of their operations within an operating framework that ensures respect for human rights and fundamental freedoms. Freeport has been a member of the Voluntary Principles since it was first established in 2000.

Engagement with Stakeholders on Country Implementation TFM actively supports implementation of the Voluntary Principles at the international, national, provincial and local level. In 2012, TFM facilitated monthly meetings of a Security and Human Rights Discussion Group attended by security managers from other mining companies in Katanga Province, host government security personnel, international organizations and NGOs. This group discusses security issues as they relate to the mining industry, as well as to provide a forum for discussion on the Voluntary Principles and human rights issues, and share best practices and resources. TFM is the only company in this group who is a member of the Voluntary Principles, so it is also a forum to promote awareness of the Voluntary Principles with non-members. In 2012, TFM contracted two private security contractors. Contracts with private security providers include specific language related to the Voluntary Principles, and state that contractors are required to comply with the Company’s human rights policy and the Voluntary Principles. In addition, all contract employees undergo background checks, using the same procedures as applied for TFM security personnel. One of the contractors has become a signatory to the International Code of Conduct for Private Security Providers. TFM has also entered into a Memorandum of Understanding (“MoU”) with the Mines Police assigned by the state to maintain public security in the TFM concession area. The MoU details the working relationship between the Company and the Mines Police, including areas of support, coordination and commitment.

In 2012, 13 human rights allegations were reported to and recorded by the TFM Human Rights Compliance Officer. Out of the total cases reported, five were physical assault, four were verbal/sexual harassment cases, two were criminal matters, one was a case of intimidation and one was related to housing. All cases were documented, reviewed and closed, or are in the process of being followed up by the TFM Human Rights Compliance Officer or investigated by government authorities. One of the assault cases related to a security incident involving personnel from a TFM security contractor who apprehended an individual in a restricted area of company property. After being taken to the TFM Security Office, the individual complained of injury and was transferred to the site clinic for medical care. He was later transferred to a hospital for surgical consultation. Although initially successful, the individual passed away 24 hours after surgery. The contractor security personnel involved in the incident were removed from their positions at TFM. The incident is still under investigation by the National Police.

Process Plant Control Room, Tenke Fungurume

56

Lundin Mining


57

Tenke Fungurume

Tenke Fungurume

Resettlement TFM developed and implemented a Resettlement Action Plan (“RAP”) from 2007 through 2009 and successfully resettled 379 households impacted by the initial project phase. The plan was developed in accordance with national DRC law and international best practice. In a community-based participatory process, local community members and leaders were directly involved in the program to ensure that the new village locations and house construction met the desires expressed by the community. The results of the program include not only improved housing, but access to clean water, health centres and schools, and provide a significant improvement in the quality of life and set a new standard for resettlement projects in the region. The RAP is also committed to livelihood restoration for any household that was economically displaced, including provision of replacement farmland, material and technical assistance support, and training to provide new and improved skills development.

TFM Agronomist with a Local Farmer

58

Lundin Mining

In 2010, TFM commenced working on an addendum to the 2007 Environmental and Social Impact Assessment that would include an expansion of the TFM plant and mining operations to the Tenke-Fwaulu ore deposits. This Environmental and Social Impact Assessment (“ESIA”) process was completed in the first quarter of 2011 and includes an update to the socio-economic baseline study for the affected communities, public consultation on the project, as well as the development of a RAP. As part of these mitigation efforts, TFM completed the resettlement of 70 peri-urban households to a new location near Tenke called “Joli Site” in 2012. In addition, for any impacts to farmland and livelihoods, TFM has committed to livelihood restoration support, and as conducted with the first RAP, TFM will monitor the income levels of project-affected people to measure the effectiveness of livelihood restoration activities. Planning for the Oxides Project expansion advanced in 2012 with TFM continuing the ESIA process. The first community

A Local Chief in Front of his House in Joli Site Relocation Village, Tenke Fungurume

scheduled to be impacted within the Oxides Project footprint is Bloc Mitumba and planning is under way to develop an area-specific RAP for this community’s physical and economic displacement. TFM also finalized a Land Access, Compensation, and Resettlement Policy Framework in November 2012 (http://www.fcx.com/operations/ AfricaTenke.htm). This policy is a public document that sets out principles, procedures, entitlements, eligibility criteria and organizational arrangements that govern TFM’s compensation for physical and economic resettlement impacts. The principles and procedures outlined apply to all land acquired or affected by project development by TFM or its contractors. This document provides a framework for the further development and implementation of resettlement action plans as mine development continues. TFM conducts internal and external monitoring of its RAP implementation, including an annual third party review.

Extractive Industries Transparency Initiative Lundin Mining shares a belief that the prudent use of natural resource wealth should be an important engine for sustainable economic growth that contributes to poverty reduction but, if not managed properly, can create negative economic and social impacts. The Company further understands the importance of transparency by companies and governments in the extractive industries and the need to enhance public financial management and accountability. The DRC is an often cited example of the so-called “paradox of plenty.” Extremely rich in natural resources (47% of world cobalt reserves and 10% of world copper reserves), but the population suffers from extreme poverty (80% of the Congolese population lives on less than $1.00 a day). The Government of the DRC identified the Extractive Industries Transparency Initiative (“EITI”) as a tool to resolve the paradox of plenty and was accepted as an EITI Candidate Country at the board meeting in Accra in February 2008. In December 2010, the EITI Board designated the DRC as an EITI Candidate country that is “Close to Compliant” and granted the country an extension to complete the remedial actions needed to achieve compliance. TFM actively participates in the country level EITI process and has submitted data for the DRC’s EITI reporting. TFM also voluntarily publishes its payments to government, including taxes, royalties, and other administrative payments and fees, on a quarterly basis through a public press release.

Economic Benefits TFM values its role as a model for successful foreign investment in the DRC: an investor who stands by its commitment to build a world-class operation and infrastructure, fulfills its financial obligations, provides employment and development opportunities for the national workforce, and operates in an environmentally and socially responsible manner. In honoring these commitments, TFM is a leading example, attracting other foreign investors to the DRC, generating revenues for the nation from taxes, royalties, and other payments, increasing employment and developing the nation’s resources, economies and infrastructure in a sustainable manner. TFM’s direct contributions through the payment of taxes and other fees from the project’s inception in 2006 through

Process Plant, Tenke Fungurume

December 2012 totalled more than $718 million. The Company has also funded a total of $57 million in social development projects over the same time period. It should be further noted that when economic benefits from the provision of local services are included, more than two-thirds of the project’s benefits remain in the country. By measure of sector benefits in other major mining countries around the world, this performance represents a progressive model in terms of fostering national economic development by an extractive industry. TFM commenced production in 2009 and exceeded its initial name plate capacity of 115,000 tonnes of copper cathode in 2010. In 2011, an $850 million Phase II expansion was initiated to raise the

capacity of the mine to 195,000 and 15,000 tonnes of copper and cobalt, respectively. In 2012, elements of this expansion were completed enabling full year production to achieve 157,671 tonnes of copper and 11,669 tonnes of cobalt. Freeport continues to engage in drilling activities, exploration analyses and metallurgical testing on mixed and sulphide ores to evaluate the full potential of the highly prospective minerals district at Tenke Fungurume. These analyses are being incorporated in the evaluation of several further phases of expansion. Future expansions are subject to a number of factors, including economic and market conditions, and the business and investment climate in the DRC.


59

Tenke Fungurume

Tenke Fungurume

Employee Training, Tenke Fungurume

Main Feed Conveyor, Tenke Fungurume

Employment The TFM concession area comprises a rapidly growing host community of an estimated 150,000 residents, living in two urban, and over 60 rural, village communities. As of the end of 2012, the project provided employment to approximately 3,300 full-time operational workers and 4,500 contractors of which 800 contractors and TFM employees were dedicated to the Phase II Expansion construction. Approximately 98% of the TFM operational employees are DRC citizens. TFM supports collective bargaining and 100% of full-time employees belong to a labour union.

Infrastructure In addition to construction of infrastructure for its operations and numerous community facilities in its mining concession, TFM has invested in major infrastructure improvement projects that will bring benefits at the provincial and national level. TFM has invested $140 million in the refurbishment of turbines and two transformers at the N’Seke Power Station, an improvement with far-reaching regional impact.

TFM prioritizes the hiring of workers from the communities closest to the operations. However, due to a shortage of skilled workers in the area, training and development programs have been established to ready non-employees from the local communities for future work opportunities. Hundreds of individuals have participated in company-provided training programs, including a basic skills program and an apprenticeship program.

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Lundin Mining

TFM has directly funded repair and refurbishment of the National Highway between the towns of Likasi and Fungurume in Katanga. Ongoing activities focus on maintenance and dust control on the highway.

Social Benefits TFM contributes 0.3% of net metal sales revenue to the TFM Social Community Fund, and since the commencement of commercial production to the end of December 2012, these contributions have totalled $11.2 million. The TFM Social Community Fund aims to improve quality of life for residents by investing in sustainable community development projects supporting infrastructure and relevant services including health, education and agriculture. The Fund is a Congolese non-governmental organization, governed by a Board of Directors consisting of a representative appointed by the provincial government, two representatives nominated by the local community and four TFM representatives. A Stakeholder Forum consisting of community leaders and representatives advises the Board on community priorities and project funding decisions. As of the end of 2012, the Fund was financing 28 projects, ranging from education and health infrastructure, to capacity building training with civil society. To date, a total of over $6 million has been allocated to specific projects on the concession. In all of its projects, the Fund prioritizes local procurement as well as the use of local contractors and local organizations as partners in order to maximize the economic benefits to the local community. Education and Training TFM has constructed six elementary schools. The schools are managed in partnership with the government and local education providers and they serve approximately 2,650 students. Furthermore, construction and renovation of three high schools has been completed in Fungurume in addition to a fourth in Tenke. Furthermore, the TFM Social Community Fund is constructing seven primary schools and rehabilitating an eighth school; these schools are scattered throughout the TFM concession.

Capacity Building Program for Agricultural Entrepreneurs, Tenke Fungurume

A Company-Supported School, Tenke Fungurume

TFM continues to provide preparatory mathematics and language training for children from the local community, culminating in company-funded scholarships to attend Mutoshi Technical Institute in Kolwezi for four years. There are currently 55 local youth receiving scholarships. Construction of a technical school in Bunkeya continued in 2012. The administration building and ablution blocks were near complete at the end of 2012 and the foundations were laid for a workshop and four classrooms. Once complete, the school will improve access to higher education in the region in partnership with other mining companies.


61

Forward-Looking Statements

Tenke Fungurume

Water Quality Monitoring, Tenke Fungurume

Clean Water Taps in Tenke Village

Community Health TFM continues to support clean water, sanitation and hygiene programs in coordination with the Fungurume Health Zone, including a “Clean Village Program” consisting of community participatory construction of sanitation facilities. In 2012, the TFM Social Community Fund drilled 15 additional boreholes in the TFM concession for a total of 94 wells constructed with TFM’s support since 2007. Furthermore, following the success of an initial river cleaning project (Dipeta River) in 2011 by TFM, the Fund invested in the cleaning of another local river (Kelangile River). These projects resulted in a dramatic improvement of river sanitation, increasing river flow and reducing risks of diseases such as cholera and malaria. TFM continues to implement an integrated malaria control program in the mine area to reduce malaria infection for the workforce and the communities in the area. Along with indoor residual insecticide spraying of dwellings to control mosquito malaria vectors, the program has also included monitoring and treatment of mosquito breeding sites, distribution of insecticide-treated bed nets, awareness and education on malaria prevention measures, and treatment. This has led to a nearly 71% decrease in disease prevalence in the community since 2007. In late 2012, a pilot study was launched on home- and school-based malaria management in one health area with high malaria prevalence. The objective is to contribute to the sustainability and significant reduction in community malaria morbidity and mortality in conjunction with integrated vector control measures. TFM works in cooperation with the local government to strengthen the infrastructure and capacity of the Fungurume Health Zone services. TFM also supports rural health outreach

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Lundin Mining

through provision of a mobile clinic that is operated in coordination with the Fungurume Health Zone focused on providing primary mother and child health services. TFM also continues to provide support for employees and their families through a robust HIV/AIDS prevention, counselling and treatment program. New in 2012, TFM entered a public–private partnership with USAID and Program for Appropriate Technology in Health (“PATH”) concerning HIV prevention and mitigation for the community within its concession and high-risk population groups, such as truck drivers from southern Africa.

Livelihoods TFM supports small and medium enterprises (“SMEs”) via access to credit and technical support and training. These SMEs in turn generate local employment. Sixty local entrepreneurs participated in a business development workshop in 2012, followed by coaching visits for one-on-one capacity building. TFM also expanded its in-kind farmers’ corn credit program from 500 to 640 hectares for the 2012–13 agriculture season and benefits 560 households with improved seeds and fertilizers as well as technical assistance. TFM also seeks opportunities to maximize the procurement of goods and services from local suppliers and contractors, and TFM has held supplier summits to share information on how local businesses can work with TFM. SMEs supported by TFM’s Economic Development programs in 2011 were among the winners of the TFM Social Community Fund’s bid to build schools and health centres on the TFM Concession in 2012, making the Fund a significant contributor to local employment in 2012.

This sustainability report and documents incorporated herein by reference contain “forward-looking statements” within the meaning of applicable Canadian securities legislation. All statements, other than statements of historical fact, are forwardlooking statements. Forward-looking statements include, but are not limited to, statements with respect to the estimation of commodity prices, mineral reserves and resources, the success of exploration activities, permitting time lines, currency exchange rate fluctuations, requirements for additional capital, government regulation of mining activities, environmental risks, unanticipated reclamation expenses, title disputes or claims and limitations on insurance coverage. Generally, these forwardlooking statements can be identified by the use of forward-looking terminology such as “plans,” “expects” or “does not expect,” “is expected,” “budget,” “scheduled,” “estimates,” “forecasts,” “intends,” “anticipates” or “does not anticipate,” or “believes,” or variations of such words and phrases or state that certain actions, events or results “may,” “could,” “would,” “might” or “will be taken,” “occur” or “be achieved.” Forward-looking statements are subject to known and unknown risks, uncertainties and other factors that may cause the actual results, level of activity, performance or achievements of the Corporation to be materially different from those expressed or implied by such forward-looking statements, including but not limited to: risks and uncertainties relating to, among other things, changes in commodity prices, currency fluctuation, financing, unanticipated reserve and resource grades, infrastructure, results of exploration activities, cost overruns, availability of materials and equipment, timeliness of government approvals, taxation, political risk and related economic risk and unanticipated environmental impact on operations, as well as other factors discussed in this report. Although the Corporation has attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking statements, there may be other factors that cause results not to be as anticipated, estimated or intended. There can be no assurance that such statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking statements. The Corporation does not undertake to update any forward-looking statements that are incorporated by reference herein, except in accordance with applicable securities laws.


63

Glossary

Accident An unplanned event that causes injury, loss or damage to people, equipment, property or the environment. Acid Rock Drainage (“ARD”) Acid Rock Drainage (“ARD”), also referred to as Acid Mine Drainage (“AMD”), is the outflow of acidic water from mining operations including waste rock, tailings, and exposed surfaces in open pits and underground workings. ARD forms as a result of the dissolution of sulphide minerals, mainly pyrite and pyrrhotite under oxidizing conditions in air and water.

Direct CO2 Emissions Direct CO2 emissions are emissions from sources that are owned or controlled by the company. The primary sources of direct emission are fuel oil and explosives. Full-Time Equivalent Employee (“FTE”) Total staff numbers expressed as the equivalent full-time positions (e.g. two half-time positions are counted as one full-time). Gigajoule (“GJ”) A measure of energy. One GJ equals 1 billion joules. This is equivalent to approximately 278 kilowatt hours or the energy content of 25 litres of gasoline.

ANFO A type of explosive made up of a mixture of ammonium nitrate and fuel oil which is mixed in the mine just before injection into bore holes.

Goal A long-term strategic position that needs to be attained to satisfactorily manage a health, safety or environmental issue.

Audit A systematic and documented verification process of objectively obtaining and evaluating evidence to determine whether an operation conforms to explicit criteria or requirements established by an organization.

Greenhouse Gas (“GHG”) Any of the atmospheric gases that contribute to the greenhouse effect by absorbing infrared radiation produced by solar warming of the Earth’s surface. They include carbon dioxide (“CO2”), methane (“CH4”), nitrous oxide (“NO2”) and water vapour.

Biodiversity Biodiversity is the variation of life forms within a given ecosystem. Biodiversity is often used as a measure of the health of a biological system. Corporate Social Responsibility (“CSR”) A voluntary approach that a business takes to meet stakeholder expectations by integrating social, ethical and environmental concerns together with the usual measures of revenue, profit and legal obligation.

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Lundin Mining

Group Standards HSEC Group Standards set out the minimum expectations that are placed on sites for HSEC performance. Requirements described in standards are mandatory and must be conformed to, although the means by which this is achieved is left to the discretion of the Site Manager.

Hazard The potential for a substance, object or situation to cause harm to people, property or the environment.

Lost Time Incident Frequency (“LTIF”) The number of accidents resulting in time away from work per 200,000 hours worked.

Hazardous Material Any material that, because of its quantity, concentration, or physical or chemical characteristics, may pose a real hazard to human health or the environment. Hazardous materials include the following categories:

Lost Time Injury An occupational accident or illness occurring at the workplace which results in the loss of a day or more from regularly scheduled work following the day of the accident. Time lost on the day of the accident is not counted as a lost day.

• Flammable and Combustible Material • Toxic Material • Corrosive Material • Oxidizers • Aerosols • Compressed Gases

Management System Management processes that collectively provide a systematic framework with the aim that tasks are performed correctly, consistently and effectively to achieve a specified outcome and to drive continual improvement in HSEC performance. A systems approach to management requires: an assessment of what needs to be done; planning to achieve the objective; implementation of the plan; and review of performance in meeting the set objective. A management system also considers necessary personnel, resources and documentation requirements.

HSEC Policy The Lundin Mining Corporation HSEC Policy approved by the Board of Directors. Incident Any occurrence that has resulted in, or has the potential to result in, adverse consequences to people, the environment, the community or property, including significant deviations from standard operating procedures. Indirect CO2 Emissions Indirect CO2 emissions are emissions that are a consequence of the activities of the reporting entity, but occur at sources owned or controlled by another entity. Intensity The amount of energy, water or other raw material used or the amount of CO2 or other pollutant produced per unit of production. Lundin Mining has chosen to use tonnes of concentrate produced as its indicator of intensity.

Recordable Injury An occupational accident or illness occurring at the workplace which results in fatality, a lost time injury or medical aid injury. Risk Assessment The systematic evaluation of the degree of risk posed by an activity of operation.

Site A location where the exploration, development, mining, distribution and administrative activities of the Company are carried out. Stakeholders Any person or group that has a legitimate concern with the financial or safety, health and environment performance of the Company. Significant communities of interest include: employees, management, governments and government departments, neighbours of our sites, etc. Standard A controlled document that sets out the minimum expectations placed on sites for health, safety and environmental performance. Requirements described in Standards must be conformed to, although the means by which this is achieved is left to the discretion of the Site Manager. Tailings The remaining portion of a metal-bearing ore consisting of finely ground rock and process liquid after some or all of the metal, such as copper, lead or zinc, has been extracted in the concentration process. Total Recordable Incident Frequency (“TRIF”) The number of fatalities, lost time incidents and incidents requiring medical aid per 200,000 hours worked.


65

Global Reporting Initiative Content Index INDICATOR

DESCRIPTION

PAGE REFERENCE OR ANSWER

INDICATOR

3. REPORT PARAMETERS

Profile Disclosure

Profile Disclosure

Strategy and Analysis.

Pages 2–3

1.2

Key Impacts, Risks, and Opportunities.

Pages 2–3

3.5

Process for defining report content.

Peer review, management and expert judgement

3.6–3.8

Report Boundaries, Limitations, and Basis for Reporting.

Page 1

3.9

Data measurement techniques.

Aligned with GRI and good industry practice

3.10

Re-statements of information.

No Material Re-Statements

3.11

Significant changes from previous reporting periods.

No Material Changes

3.12

Table identifying the location of the Standard Disclosures in the report.

This table

3.13

Policy and current practice with regard to seeking external assurance.

Page 1

2. ORGANIZATIONAL PROFILE Profile Disclosure Name of Organization, Products, Organizational Structure, Headquarters.

Page 7

Countries of Operation, Ownership, Markets, Organizational Scale.

Pages 8–11

2.9

Significant Changes.

No Material Changes

2.10

Awards Received.

No Awards During Reporting Period

2.1–2.4

Neves-Corvo Mine 2.5–2.8

This addendum is a supplement to Lundin Mining`s 2012 Sustainability Report, based on the reporting framework of the Global Reporting Initiative (GRI). The GRI Content Index provides details on G3 disclosures (including the Mining and Minerals Supplement) specifically addressed in our report. The Content Index also assists in specifying the GRI Application level. Lundin Mining has self-declared at GRI Application Level B. Questions or comments related to Lundin Mining`s Sustainability Report or GRI Content Index should be directed to: [email protected].

C+

G3 Performance Indicators & Sector Supplement Performance Indicators

OUTPUT OUTPUT

G3 Management Approach Disclosures

Report on a minimum of 10 Performance Indicators, including at least one from each of: Economic, Social and Environmental.

A

A+

3. REPORT PARAMETERS Profile Disclosure

Same as requirement for Level B

Management Approach Disclosures for each Indicator Category

Report on a minimum of 20 Performance Indicators, at least one from each of Economic, Environmental, Human rights, Labor, Society, Product Responsibility.

Management Approach Disclosures for each Indicator Category

Report on each core G3 and Sector Supplement* Indicator with due regard to the Materiality Principle by either: a) reporting on the Indicator or b) explaining the reason for its omission.

4. GOVERNANCE, COMMITMENTS AND ENGAGEMENT

Reporting period (e.g., fiscal/calendar year) for information provided.

Page 1

3.2

Date of most recent previous report (if any).

2011

3.3

Reporting cycle (annual, biennial, etc.).

Annual

3.4

Contact point for questions regarding the report or its contents.

3.1

1.2 3.9, 3.13 4.5 – 4.13, 4.16 – 4.17

Report Externally Assured

OUTPUT

1.1 2.1 – 2.10 3.1 – 3.8, 3.10 – 3.12 4.1 – 4.4, 4.14 – 4.15

Not Required

B+

Report on all criteria listed for Level C plus:

Report on: G3 Profile Disclosures

B


C


GRI APPLICATION LEVEL TABLE

DESCRIPTION

1. STRATEGY AND ANALYSIS

1.1


[email protected]

Profile Disclosure 4.1–4.3

Governance structure, board independence, committee structure.

Pages 12–13

4.4

Shareholder and Employee Communication.

Pages 44–49

4.5

Executive Compensation and Performance.

Page 12

4.6–4.10

Board Qualifications, Code of Conduct, Conflict of Interest, Oversight, Performance.

Pages 12–13

*Sector supplement in final version

66

Lundin Mining


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Global Reporting Initiative Content Index

INDICATOR

DESCRIPTION


INDICATOR

DESCRIPTION

4. GOVERNANCE, COMMITMENTS AND ENGAGEMENT

ENVIRONMENTAL RESPONSIBILITY

Profile Disclosure

DMA EN

4.11

Application of precautionary approach.


Disclosure on Management Approach EN.

Pages 14–15, Page 18

EN1

Materials used by weight or volume.

Page 19

EN2

Percentage of materials used that are recycled input materials.

Not reported

EN3–EN4

Direct and indirect energy consumption by primary energy source.

Page 20

EN5–EN7

Energy conservation and efficiency improvements.

Page 22

Page 18

Materials 4.12–4.13

External Initiatives and Memberships.

Page 3, Page 13

4.14–4.17

Key stakeholders, concerns, and engagement approach.

Pages 44–46

Disclosure on Management Approach EN.

Page 16, Page 44

EC1

Direct economic value generated and distributed.

Pages 16–17

EC2

Financial implications of climate change.

Page 23

EC3

Coverage of the organization's defined benefit plan obligations.

Not reported

EC4

Significant financial assistance received from government.

None

Ratios of standard entry level wage compared to local minimum wage.

Not reported

EC6

Local procurement.

Pages 16–17

EC7

Local hiring.

Pages 16–17

EC8

Infrastructure Development.

Page 60

EC9

Significant indirect economic impacts, including the extent of impacts.

Pages 56–62

EC5

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Lundin Mining

Water Total water withdrawal by source.

Page 24

EN9

Water sources significantly affected by withdrawal of water.

Pages 25–27

Percentage and total volume of water recycled and reused.

Page 24

Location and size of land owned, leased, managed in, or adjacent to, protected areas and areas of high biodiversity value outside protected areas.

Page 42

Significant impacts of activities on biodiversity in protected areas and areas of high biodiversity value outside protected areas.

Page 40–41

Amount of land (owned or leased, and managed for production activities or extractive use) disturbed or rehabilitated.

Page 42

EN12

MM1

DESCRIPTION


Biodiversity

Emissions, effluents and waste

EN13

Habitats protected or restored.

Page 42–43

EN23

Total number and volume of significant spills.

Page 5, Page 29

EN14

Strategies, current actions, and future plans for managing impacts on biodiversity.

Page 42–43

EN24

Weight of transported, imported, exported, or treated waste deemed hazardous.

Page 34

MM2

Number and percentage of total sites identified as requiring biodiversity management plans.

Page 5

EN25

Pages 25–27

EN15

Number of IUCN Red List species and national conservation list species with habitats in areas affected by operations, by level of extinction risk.

Page 43–44

Identity, size, protected status, and biodiversity value of water bodies and related habitats significantly affected by the reporting organization's discharges of water.

Products and services

Total direct and indirect greenhouse gas emissions by weight.

Page 21

EN17

Other relevant indirect greenhouse gas emissions by weight.

Not reported

EN18

Initiatives to reduce greenhouse gas emissions and reductions achieved.

Page 22

EN19

Emissions of ozonedepleting substances by weight.

Not reported

EN20

NOx, SOx, and other significant air emissions by type and weight.

Page 30

EN21

Total water discharge by quality and destination.

Page 25–27

EN22

Total weight of waste by type and disposal method.

Page 34

MM3

Total amounts of overburden, rock, tailings, and sludges and their associated risks.

Pages 35–37

EN16

Biodiversity EN11

INDICATOR

EN26

Initiatives to mitigate environmental impacts of products and services, and extent of impact mitigation.

Page 33

EN27

Percentage of products sold and their packaging materials that are reclaimed by category.

Not reported

Emissions, effluents and waste

EN8

EN10

DESCRIPTION



Energy

ECONOMIC RESPONSIBILITY DMA EC

INDICATOR


Compliance EN28

Monetary value of significant fines and total number of nonmonetary sanctions for non-compliance with environmental laws and regulations.

Not reported

Significant environmental impacts of transporting products and other goods and materials used for the organization's operations.

Page 33

Total environmental protection expenditures and investments by type.

Page 33

Transport EN29

Overall EN30


69


INDICATOR

DESCRIPTION


LABOUR PRACTICES, OCCUPATIONAL HEALTH AND SAFETY DMA – LA

INDICATOR

LABOUR PRACTICES, OCCUPATIONAL HEALTH AND SAFETY

Disclosure on Management Approach LA.

Pages 47–54

Total workforce by employment type, employment contract, and region.

Page 47

Total number and rate of employee turnover by age group, gender, and region.

Page 49

Benefits provided to full-time employees that are not provided to temporary or part-time employees, by major operations.

Not reported

LA8

LA2

LA3

LA4

Percentage of employees covered by collective bargaining agreements.

Page 47

LA5

Minimum notice period(s) regarding significant operational changes, including whether it is specified in collective agreements.

No minimum period defined

Number of strikes and lock-outs exceeding one week's duration, by country.

Page 48

LA7

70

Not reported

Rates of injury, occupational diseases, lost days, and absenteeism, and number of workrelated fatalities by region.

Pages 52–53

Lundin Mining


Health and safety topics covered in formal agreements with trade unions.

Not reported

LA11

Programs for skills management and lifelong learning that support the continued employability of employees and assist them in managing career endings.

Not reported

LA12

Percentage of employees receiving regular performance and career development reviews.

Page 2

INDICATOR

Disclosure on Management Approach HR.

Page 55

Page 47

HR6

Not reported

HR2

Percentage of significant suppliers and contractors that have undergone screening on human rights and actions taken.

Not reported

HR3

Total hours of employee training on policies and procedures concerning aspects of human rights that are relevant to operations, including the percentage of employees trained.

Not reported

Total number of incidents of discrimination and actions taken.

Ratio of basic salary of men to women by employee category.

Page 49

Operations identified in which the right to exercise freedom of association and collective bargaining may be at significant risk, and actions taken to support these rights.

Operations identified as having significant risk for incidents of child labour, and measures taken to contribute to the elimination of child labour.

Page 55

Forced and compulsory labor HR7

Operations identified as having significant risk for incidents of forced or compulsory labour, and measures to contribute to the elimination of forced or compulsory labor.

Page 55

Security practices HR8

Percentage of security personnel trained in the organization's policies or procedures concerning aspects of human rights that are relevant to operations.

Page 57

Indigenous rights

Non-discrimination

HR5

DESCRIPTION

Child labor

Page 55

MM5

Total number of operations taking place in or adjacent to Indigenous Peoples' territories, and number and percentage of operations or sites where there are formal agreements with Indigenous Peoples' communities.

None recorded

HR9

Total number of incidents of violations involving rights of indigenous people and actions taken.

None recorded

Freedom of association and collective bargaining

Composition of governance bodies and breakdown of employees per category according to gender, age group, minority group membership, and other indicators of diversity.


HUMAN RIGHTS

Percentage and total number of significant investment agreements that include human rights clauses or that have undergone human rights screening.

HR4

Diversity and equal opportunity

LA14

DESCRIPTION

Diversity and equal opportunity HR1

Not reported

LA13

Percentage of total workforce represented in formal joint managementworker health and safety committees.

Education, training, counseling, prevention, and risk-control programs in place to assist workforce members, their families, or community members regarding serious diseases.

Average hours of training per year per employee by employee category.

Occupational health and safety LA6

DMA HR

Training and education LA10

Labor/management relations

MM4

LA9

INDICATOR


HUMAN RIGHTS

Occupational health and safety

Employment LA1

DESCRIPTION


Page 55


71


INDICATOR

DESCRIPTION



SOCIAL RESPONSIBILITY DME SO

Disclosure on Management Approach SO

Pages 44–46

INDICATOR

MM6

MM7


Number and description of significant disputes relating to land use, customary rights of local communities and Indigenous Peoples.

Page 45

The extent to which grievance mechanisms were used to resolve disputes relating to land use, customary rights of local communities and Indigenous Peoples, and the outcomes.

Not reported

Closure planning

DMA PR

Number (and percentage) or company operating sites where artisanal and small-scale mining (ASM) takes place.

Page 57

Sites where resettlements took place, the number of households resettled in each, and how their livelihoods were affected in the process.

Page 58

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Lundin Mining

All producing operations

Page 12

SO3

Percentage of employees trained in organization's anti-corruption policies and procedures.

Not reported

SO4

Actions taken in response to incidents of corruption.

None recorded

SO5

Public policy positions and participation in public policy development and lobbying.

Not reported

SO6

Total value of financial and in-kind contributions to political parties, politicians, and related institutions by country.

Page 12

Programs and progress relating to materials stewardship.

Page 13

Page 33

PR2

Total number of incidents of non-compliance with regulations and voluntary codes concerning health and safety impacts of products and services during their life cycle, by type of outcomes.

Page 33

Monetary value of significant fines and total number of non-monetary sanctions for non-compliance with laws and regulations.

Page 13

PR6

Programs for adherence to laws, standards, and voluntary codes related to marketing communications, including advertising, promotion, and sponsorship.

Not recorded

PR7

Total number of incidents of non-compliance with regulations and voluntary codes concerning marketing communications, including advertising, promotion, and sponsorship by type of outcomes.

Not recorded

Customer privacy PR8

Product and service labelling

PR4

Compliance

PR5

DESCRIPTION

Marketing communications

Not reported

Life cycle stages in which health and safety impacts of products and services are assessed for improvement.

Anti-competitive behavior

SO8

Page 33

PR1

PR3

Total number of legal actions for anti-competitive behavior, anti-trust, and monopoly practices and their outcomes.

INDICATOR


PRODUCT RESPONSIBILITY

Customer health and safety

Public policy

SO7

Disclosure on Management Approach PR.


Materials Stewardship MM11

Percentage and total number of business units analyzed for risks related to corruption.

SO2

Resettlement MM9

Number and percentage of operations with closure plans.

Corruption

Artisanal and small-scale mining MM8

DESCRIPTION

PRODUCT RESPONSIBILITY

MM10

Nature, scope, and effectiveness of any programs and practices that assess and manage the impacts of operations on communities, including entering, operating, and exiting.

INDICATOR

SOCIAL RESPONSIBILITY

Community SO1

DESCRIPTION


Type of product and service information required by procedures, and percentage of significant products and services subject to such information requirements.

page 33

Total number of incidents of non-compliance with regulations and voluntary codes concerning product and service information and labeling, by type of outcomes.

None recorded

Practices related to customer satisfaction, including results of surveys measuring customer satisfaction.

None recorded

Total number of substantiated complaints regarding breaches of customer privacy and losses of customer data.

Page 33

Monetary value of significant fines for non-compliance with laws and regulations concerning the provision and use of products and services.

Page 33

Compliance PR9

Key/Acronyms 1.1 Core Indicator HR8 Additional Indicator MM1 Indicator from GRI’s MMSS Closure* DMA from MMSS DMA Disclosure of Management Practices


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