LUNDIN MINING NI 43-101 TECHNICAL REPORT FOR THE … · 2018. 2. 18. · lundin mining ni 43-101 technical report for the zinkgruvan mine, sweden november 2017

LUNDIN MINING

NI 43-101 TECHNICAL REPORT FOR THE ZINKGRUVAN MINE, SWEDEN

November 2017

Wardell Armstrong InternationalBaldhu House, Wheal Jane Earth Science Park, Baldhu, Truro, Cornwall, TR3 6EH, United KingdomTelephone: +44 (0)1872 560738 www.wardell-armstrong.com

Wardell Armstrong is the trading name of Wardell Armstrong International Ltd,Registered in England No. 3813172.

Registered office: Sir Henry Doulton House, Forge Lane, Etruria, Stoke-on-Trent, ST1 5BD, United Kingdom

UK Offices: Stoke-on-Trent, Cardiff, Carlisle, Edinburgh, Greater Manchester, London, Newcastle upon Tyne,Sheffield, Taunton, Truro, West Bromwich. International Offices: Almaty, Moscow

ENERGY AND CLIMATE CHANGE

ENVIRONMENT AND SUSTAINABILITY

INFRASTRUCTURE AND UTILITIES

LAND AND PROPERTY

MINING AND MINERAL PROCESSING

MINERAL ESTATES

WASTE RESOURCE MANAGEMENT

DATE ISSUED: 30 November 2017

JOB NUMBER: ZT61-1659

VERSION:

REPORT NUMBER:

STATUS:

V2.0

MM1185

Final


November 2017

PREPARED BY:

Tim Daffern Consultant Mining Engineer

Richard Ellis Principal Resource Geologist

Philip King Technical Director of Process Engineering

Stuart Richardson

Edvard Glücksman

Andrew Beveridge

Senior Mining Engineer

Senior Environmental and Social Specialist

Principal Geotechnical Engineer

APPROVED BY:

Dr. P S Newall Managing Director of WAI

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CONTENTS

1 SUMMARY........................................................................................................................... 8

1.1 Introduction ...............................................................................................................................8

1.2 Description & Location...............................................................................................................8

1.3 Geological Setting & Mineralisation ..........................................................................................9

1.4 Exploration.................................................................................................................................9

1.5 Mineral Resource Estimates ......................................................................................................9

1.6 Mining and Mineral Reserves ..................................................................................................10

1.7 Mineral Processing, Metallurgical Testing and Recovery Methods.........................................12

1.8 Infrastructure...........................................................................................................................12

1.9 Environmental Studies, Permitting and Social or Community Impact ....................................13

1.10 Capital and Operating Costs..................................................................................................13

1.11 Economic Analysis Results ....................................................................................................14

2 INTRODUCTION ................................................................................................................. 15

2.1 Independent Consultants.........................................................................................................15

2.2 Qualified Persons, WAI Review and Site Visit..........................................................................16

2.3 Units and Currency ..................................................................................................................17

3 RELIANCE ON OTHER EXPERTS............................................................................................ 18

4 PROPERTY DESCRIPTION AND LOCATION............................................................................ 19

4.1 Mineral Tenure ........................................................................................................................20

4.2 Surface Rights ..........................................................................................................................25

4.3 Royalties...................................................................................................................................25

4.4 Environmental Aspects ............................................................................................................26

4.5 Permits .....................................................................................................................................26

5 ACCESSIBILITY, CLIMATE, LOCAL RESOURCES, INFRASTRUCTURE AND PHYSIOGRAPHY ........ 27

5.1 Accessibility..............................................................................................................................27

5.2 Climate .....................................................................................................................................27

5.3 Local Resources & Infrastructure.............................................................................................27

5.4 Physiography............................................................................................................................28

6 HISTORY ............................................................................................................................ 29

6.1 Ownership History ...................................................................................................................29

6.2 Exploration History ..................................................................................................................30

6.3 Historical Mineral Resources and Mineral Reserves ...............................................................31

6.4 Production................................................................................................................................32

7 GEOLOGICAL SETTING AND MINERALISATION..................................................................... 33

7.1 Regional Geology .....................................................................................................................33

7.2 Property Geology .....................................................................................................................34

7.3 Description of Mineralised Zones ............................................................................................37

8 DEPOSIT TYPES .................................................................................................................. 42

8.1 Mineral Deposit Type...............................................................................................................42

8.2 Exploration Model ...................................................................................................................43

9 EXPLORATION.................................................................................................................... 44

9.1 Near Mine Exploration.............................................................................................................44

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9.2 Regional Exploration ................................................................................................................44

9.3 Future Exploration ...................................................................................................................44

10 DRILLING ........................................................................................................................... 45

10.1 Drilling by Vieille Montagne (1857-1990) and Union Miniere (1990-Late 1995) .................46

10.2 Drilling by North Limited (Late 1995-August 2000) ..............................................................47

10.3 Drilling by Rio Tinto (August 2000-June 2004)......................................................................47

10.4 Drilling by Lundin Mining (June 2004-2017) .........................................................................47

10.5 Drill Core Diameter ...............................................................................................................47

10.6 Drill Core Recovery................................................................................................................47

10.7 Extent of Drilling ...................................................................................................................48

10.8 Drill Hole Collar Surveys........................................................................................................48

10.9 Downhole Surveys.................................................................................................................48

10.10 Drill Sections......................................................................................................................48

11 SAMPLE PREPARATION, ANALYSES, AND SECURITY............................................................. 50

11.1 Core Sampling .......................................................................................................................50

11.2 Bulk Density Determination..................................................................................................52

11.3 Sample Preparation ..............................................................................................................52

11.4 Analysis .................................................................................................................................52

11.5 Sample Security and Chain of Custody .................................................................................53

11.6 Quality Assurance and Quality Control Programmes ...........................................................54

11.7 Adequacy of Procedures .......................................................................................................66

12 DATA VERIFICATION........................................................................................................... 67

13 MINERAL PROCESSING AND METALLURGICAL TESTING ....................................................... 70

14 MINERAL RESOURCE ESTIMATES ........................................................................................ 71

14.1 Introduction ..........................................................................................................................71

14.2 Mineral Resource Estimate Data ..........................................................................................71

14.1 Geological Interpretation and Domaining ............................................................................73

14.2 Drill Hole Data Processing.....................................................................................................76

14.3 Grade Capping.......................................................................................................................76

14.4 Compositing ..........................................................................................................................78

14.5 Continuity Analysis................................................................................................................79

14.6 Variography...........................................................................................................................80

14.7 Volumetric Modelling ...........................................................................................................81

14.8 Density ..................................................................................................................................82

14.9 Grade Estimation ..................................................................................................................84

14.10 Grade Estimation Validation .............................................................................................86

14.11 Mineral Resource Reconciliation ......................................................................................87

14.12 Mineral Resource Depletion and Non-Recoverable Mineral Resources ..........................90

14.13 Cut-Off Grades for Evaluation...........................................................................................90

14.14 Mineral Resource Classification ........................................................................................90

14.15 Mineral Resource Statement ............................................................................................91

14.16 Comparison to Previous Estimates ...................................................................................92

15 MINERAL RESERVE ESTIMATES ........................................................................................... 94

15.1 Methodology.........................................................................................................................94

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15.2 Mineral Reserve Statement ..................................................................................................96

15.3 Mining Modifying Factors .....................................................................................................98

15.4 Reconciliation........................................................................................................................99

15.5 WAI Review ...........................................................................................................................99

16 MINING METHODS........................................................................................................... 102

16.1 Access and Infrastructure ...................................................................................................103

16.2 Rock Mass Characterisation................................................................................................103

16.3 Underground Mine Layout..................................................................................................112

16.4 Mining Methodologies........................................................................................................113

16.5 Drill and Blast, Design and Operations ...............................................................................114

16.6 Ore and Waste Handling .....................................................................................................115

16.7 Production Schedule ...........................................................................................................115

16.8 Mine Infrastructure.............................................................................................................119

16.9 Mine Services ......................................................................................................................121

16.10 Equipment.......................................................................................................................123

16.11 Human Resource Arrangements.....................................................................................125

16.12 Health and Safety Management .....................................................................................125

17 RECOVERY METHODS....................................................................................................... 127

17.1 Flowsheet Description ........................................................................................................127

17.2 Process Plant Consumables ................................................................................................133

17.3 Plant Sampling ....................................................................................................................133

17.4 Mill Labour ..........................................................................................................................134

17.5 Assay Laboratory.................................................................................................................134

17.6 Historic Production Data.....................................................................................................135

17.7 Concentrate Storage and Transport ...................................................................................139

18 PROJECT INFRASTRUCTURE .............................................................................................. 141

18.1 Energy .................................................................................................................................141

18.2 Water ..................................................................................................................................141

18.3 Tailings Storage Facility.......................................................................................................141

19 MARKET STUDIES AND CONTRACTS.................................................................................. 145

20 ENVIRONMENTAL STUDIES, PERMITTING AND SOCIAL OR COMMUNITY IMPACT............... 146

20.1 Environmental & Social Setting and Context ......................................................................146

20.2 Method of study and information sources .........................................................................146

20.3 Access to the Site ................................................................................................................148

20.4 Water Resources.................................................................................................................148

20.5 Infrastructure and Communications...................................................................................149

20.6 Project Status, Activities, Effects, Releases and Controls ...................................................149

20.7 Energy Consumption and Source........................................................................................151

20.8 Mine Waste.........................................................................................................................151

20.9 Water Management and Effluents .....................................................................................152

20.10 Air Quality .......................................................................................................................152

20.11 Noise and Vibration ........................................................................................................153

20.12 Hazardous Materials Storage and Handling....................................................................153

20.13 Biodiversity and Ecosystem Services ..............................................................................153

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20.14 Fire Safety .......................................................................................................................154

20.15 Environmental and Social Impact Assessment ...............................................................154

20.16 Environmental Management ..........................................................................................154

20.17 Social and Community Management..............................................................................156

20.18 Health & Safety ...............................................................................................................158

20.19 Mine closure plans ..........................................................................................................158

21 CAPITAL AND OPERATING COSTS...................................................................................... 159

21.1 Mining Costs........................................................................................................................159

21.2 Mineral Process Plant Operating Costs...............................................................................159

21.3 Total Operating Costs..........................................................................................................160

21.4 Mining Capital Costs ...........................................................................................................161

21.5 Mineral Process Plant Capital Costs....................................................................................161

21.6 Total Capital Costs...............................................................................................................162

22 ECONOMIC ANALYSIS....................................................................................................... 163

23 ADJACENT PROPERTIES .................................................................................................... 164

24 OTHER RELEVANT DATA AND INFORMATION.................................................................... 165

25 INTERPRETATION AND CONCLUSIONS .............................................................................. 166

26 RECOMMENDATIONS....................................................................................................... 168

26.1 Geology and Mineral Resources .........................................................................................168

26.2 Mining and Mineral Reserves .............................................................................................168

26.3 Mineral Processing..............................................................................................................168

26.4 Environmental Studies, Permitting and Social or Community Impact................................168

27 REFERENCES .................................................................................................................... 170

TABLES

Table 1.1: Total Mineral Resources for Zinc Zones at Zinkgruvan ........................................................10

Table 1.2: Total Mineral Resources for Copper Zones at Zinkgruvan...................................................10

Table 1.3: Total Mineral Reserves for Zinc Zones at Zinkgruvan ..........................................................11

Table 1.4: Total Mineral Reserves for Copper Zones at Zinkgruvan.....................................................11

Table 2.1: Authors Responsibilities.......................................................................................................16

Table 4.1: Coordinates of the Zinkgruvan Mining Concession .............................................................21

Table 4.2: Coordinates of the Klara Mining Concession .......................................................................22

Table 4.3: Coordinates of the Marketop Mining Concession ...............................................................22

Table 4.4: Coordinates of the Dalby Hytta nr 1 Exploration Concession..............................................23

Table 4.5: Coordinates of the Flaxen nr 1 Exploration Concession ......................................................24

Table 4.6: Coordinates of the Hjortronmossen nr 1 Exploration Concession ......................................24

Table 4.7: Coordinates of the Orkaren nr 2 Exploration Concession....................................................25

Table 4.8: Coordinates of the Hövdingamon nr 2 Exploration Concession ..........................................25

Table 6.1: History of Exploration Drilling by Company .........................................................................31

Table 6.2: Zinkgruvan Production by Year from 1994 ..........................................................................32

Table 9.1: Exploration Budget for 2017 and 2018 ................................................................................44

Table 10.1: Summary of Drilling at Zinkgruvan.....................................................................................46

Table 11.1: Summary of Stratigraphic Sequence and Lithology Codes ................................................51

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Table 11.2: Zinkgruvan Analytical Laboratory - AAS Detection Limits For Geological Samples ...........53

Table 11.3: ACME ICP-ES Method Detection Limits..............................................................................53

Table 11.4: GeoStats Standard Reference Materials and Reference Values ........................................61

Table 12.1: Summary of Drill Holes within Mineralised Zone Wireframes...........................................68

Table 14.1: Drill Hole Data used for Mineral Resource Estimation ......................................................72

Table 14.2: Summary of Zinkgruvan Search Parameters......................................................................85

Table 14.3: Summary of Annual Reconciliation (July 2016 to June 2017) ............................................88

Table 14.4: Total Mineral Resources for Zinc-Lead Zones at Zinkgruvan .............................................92

Table 14.5: Total Mineral Resources for Copper Zones at Zinkgruvan.................................................92

Table 15.1: Total Mineral Reserves for Zinc Zones at Zinkgruvan ........................................................96

Table 15.2: Total Mineral Reserves for Copper Zones at Zinkgruvan...................................................96

Table 15.3: Mining Factors 2017...........................................................................................................98

Table 15.4: Reconciliation: Average 2017 Stope Mining Factors (%) ...................................................99

Table 16.1: In Situ Stress Measurements............................................................................................104

Table 16.2: Geological Strength Index (GSI) .......................................................................................105

Table 16.3: Rock Strengths .................................................................................................................105

Table 16.4: Stope Dimensions for the 5-year Mine Plan ....................................................................108

Table 16.5: Production Drilling Design................................................................................................114

Table 16.6: Five Years Planned Production.........................................................................................116

Table 16.7: Underground Equipment List (Owned)............................................................................124

Table 16.8: Underground Equipment List (Contractor) ......................................................................124

Table 17.1: Plant Consumables 2016..................................................................................................133

Table 17.2: Mill Labour 2017 ..............................................................................................................134

Table 17.3: Copper Plant Historic Data...............................................................................................137

Table 17.4: Concentrate Analyses.......................................................................................................139

Table 21.1: ZMAB Mining Operating Cost - Forecast 2018 to 2022 ...................................................159

Table 21.2: ZMAB Process Operating Cost – Plan/Forecast 2018 to 2022 .........................................160

Table 21.3: ZMAB Total Operating Cost – Forecast 2018 to 2022......................................................160

Table 21.4: Summary of Mine Sustaining Capital Plan from 2018 to 2022 ........................................161

Table 21.5: Summary of Mineral Processing Plant Sustaining Capital Plan from 2018 to 2022.........161

Table 21.6: Summary of Sustaining Capital Plan from 2018 to 2022 .................................................162

FIGURES

Figure 4.1: Property Location Map (Geology.com)...............................................................................19

Figure 4.2: Location of Licence Areas (SWEREF 99 TM Coordinate System) ........................................20

Figure 6.1: Comparison of Zinkgruvan Mineral Resources from 1982 to 2017 and Rate of Mining

Production.............................................................................................................................................31

Figure 7.1: Location of Zinkgruvan and Regional Geology....................................................................33

Figure 7.2: Geology of the Zinkgruvan Area .........................................................................................34

Figure 7.3: Stratigraphic Sequence at Zinkgruvan ................................................................................35

Figure 7.4: Location of Mineralised Zones at Nygruvan and Knalla Areas of Zinkgruvan.....................37

Figure 7.5: Plan View showing the Geology of Nygruvan Area.............................................................39

Figure 7.6: Geological Cross Section through Nygruvan Area ..............................................................39

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Figure 7.7: Plan View showing the Geology of Burkland Zone including Copper Stockwork ...............41

Figure 7.8: Geological Cross Section through Lindängen and Sävsjön Zones.......................................41

Figure 8.1: Genetic Model for the Zinkgruvan Deposit (Jansson et al., (2017)) ...................................42

Figure 10.1: Plan Views Showing Location of Drill Holes and a) Mining and Exploration Concessions and

b) Inset of a) Showing Near Mine Area Only ........................................................................................49

Figure 11.1: Internal Pulp Duplicate Analysis Plots for Zinc .................................................................56

Figure 11.2: Internal Pulp Duplicate Analysis Plots for Lead ................................................................57

Figure 11.3: Internal Pulp Duplicate Analysis Plots for Silver ...............................................................58

Figure 11.4: Internal Pulp Duplicate Analysis Plots for Copper ............................................................59

Figure 11.5: Blank Sample Analysis for Zinc, Lead, Silver and Copper..................................................60

Figure 11.6: SRM Sample Analysis for Zinc, Lead, Silver and Copper for 309-16 .................................62

Figure 11.7: External Pulp Duplicate Analysis Plots for Zinc – ACME vs ALS CHEMEX .........................63

Figure 11.8: External Pulp Duplicate Analysis Plots for Lead – ACME vs ALS CHEMEX ........................64

Figure 11.9: External Pulp Duplicate Analysis Plots for Silver – ACME vs ALS CHEMEX .......................65

Figure 11.10: External Pulp Duplicate Analysis Plots for Silver – ACME vs ALS CHEMEX .....................66

Figure 14.1: Location of Drill Holes in the ZMAB Drill Hole Database ..................................................73

Figure 14.2: Mineralised Zones at Zinkgruvan......................................................................................75

Figure 14.3: Log Probability Plots of Zinc-Lead Mineralisation for Selected Samples for a) Zinc, b) Lead,

c) Silver and d) Copper..........................................................................................................................77

Figure 14.4: Log Probability Plots of Burkland Zone Copper Stockwork Mineralisation for Selected

Samples for a) Zinc, b) Lead, c) Silver and d) Copper............................................................................78

Figure 14.5: Histogram showing Sample Lengths for a) Zinc-Lead Mineralisation and b) Copper

Stockwork Mineralisation .....................................................................................................................79

Figure 14.6: Example Continuity Map of Zinc Grades at Burkland .......................................................80

Figure 14.7: Example of Modelled Variograms for Zinc Grades at Burkland........................................81

Figure 14.8: Plots of Density for Zinc-Lead Mineralisation a) Histogram of Density Measurements, b)

Histogram of Calculated Density Values Calculated from Zn, Pb and Ag Grades, and c) Q-Q Plot of

Measured Density against Calculated Density......................................................................................83

Figure 14.9: Histogram of Density Measurements for Burkland Copper Stockwork Zone...................84

Figure 14.10: Example SWATH Analysis for Zn in Burkland Zinc-Lead Mineralisation -1125m to -960m

Levels.....................................................................................................................................................87

Figure 14.11: Zinc-Lead Mineralisation Reconciliation for July 2016 to June 2017..............................89

Figure 14.12: Long Section through Zinkgruvan showing Resource Classification (ZMAB, 2017)........91

Figure 15.1: Long Section Through Nygruvan Area Showing Mineral Reserve Classification ..............97

Figure 15.2: Long Section Through Knalla Area Showing Mineral Reserve Classification ....................97

Figure 15.3: Long Section Through Copper Area Showing Mineral Reserve Classification ..................98

Figure 16.1: Location of Current Mining Areas...................................................................................102

Figure 16.2: Schematic Flow Sheet of the Paste Plant........................................................................110

Figure 16.3: Schematic Paste Distribution System .............................................................................111

Figure 16.4: Control Panel View of Paste Distribution System Control ..............................................111

Figure 16.5: Long-Section Through Nygruvan Zone Showing Mining Plan for 2018 - 2022 ...............117

Figure 16.6: Long-Section Through Sävsjön Zone Showing Mining Plan for 2018 - 2022 ..................117

Figure 16.7: Long-Section Through Western Areas Showing Mining Plan for 2018 – 2022...............118

Figure 16.8: Long-Section Through Burkland Zone Showing Mining Plan for 2018 - 2022 ................118

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Figure 16.9: Long-Section Through Burkland Copper Stockwork Zone Showing Mining Areas for 2018 -

2022 ....................................................................................................................................................119

Figure 16.10: Schematic Ventilation system.......................................................................................121

Figure 16.11: Schematic Drill Water (2017)........................................................................................122

Figure 16.12: Schematic Mine Water Management (2017) ...............................................................123

Figure 17.1: Crushing Flowsheet.........................................................................................................128

Figure 17.2: Grinding Circuit ...............................................................................................................130

Figure 17.3: Zinc-Lead and Copper Flotation Flowsheets..................................................................131

Figure 17.4: Zinc-Lead Ore Plant Throughput and Head Grade.........................................................135

Figure 17.5: Zinc-Lead Ore Recoveries of Zinc and Lead ....................................................................136

Figure 17.6: Zinc and Lead Concentrate Grades .................................................................................136

Figure 17.7: Copper Plant Throughput and Head Grade ....................................................................137

Figure 17.8: Copper Plant Recovery and Concentrate Grade.............................................................138

Figure 18.1: Location of Enemossen TSF ............................................................................................142

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1 SUMMARY

1.1 Introduction

Wardell Armstrong International Limited (“WAI”) was commissioned by Lundin Mining Corporation

(“Lundin”) to prepare an updated Technical Report in accordance with the disclosure requirements of

Canadian Securities Administrators’National Instrument 43-101, Standard of Disclosure for Mineral

Projects (“NI 43-101”) to disclose recent information about the Zinkgruvan underground polymetallic

base metal mine (“Zinkgruvan”), located in south-central Sweden. This includes an updated Mineral

Resources and Mineral Reserves estimate.

WAI undertook a technical due diligence of the Zinkgruvan mine and this study considered all aspects

of the Mineral Resources and Mineral Reserves estimates, including licencing, exploration, geology,

mining, processing, economics, and environmental and social issues, in accordance with guidelines of

the Canadian Institute of Mining, Metallurgy and Petroleum (“CIM”) “CIM Definition Standards For

Mineral Resources and Mineral Reserves” 2014.

Lundin is a base metals mining company that produces copper, nickel, zinc and lead at four mines

operated by indirect subsidiaries in Portugal (Neves-Corvo Mine), Chile (Candelaria Mining Complex),

United States of America (Eagle Mine) and Sweden (Zinkgruvan Mine). In addition, Lundin indirectly

holds an equity stake in the Freeport Cobalt Oy business which includes a cobalt refinery located in

Kokkola, Finland. The Zinkgruvan mine is owned and operated by Zinkgruvan Mining AB (“ZMAB”) a

100% subsidiary of Lundin.

1.2 Description & Location

The Zinkgruvan polymetallic base metal mine is located in south-central Sweden, 175km west-

southwest of Stockholm and 210km northeast of Göteborg. The mine is situated in the southwest of

the Bergslagen mining district and is located 15km southeast of the town of Askersund. The Zinkgruvan

mine has a long history of production dating back to 1857 and the area has an excellent transport

network with international airports at Stockholm and Göteborg.

ZMAB holds three mining concessions and comprise the Zinkgruvan Mining Concession, the

neighbouring Klara Mining Concession and the Marketop Mining Concession. The Zinkgruvan Mining

Concession and the Klara Mining Concession cover the deposit and its immediate area. The Marketop

Mining Concession is located 40km east of Zinkgruvan, however no recent exploration or exploitation

has been undertaken on this mining concession. ZMAB also holds five exploration concessions which

surround the Zinkgruvan property and comprise the Dalby Hytta nr 1 Exploration Concession, the

Flaxen nr 1 Exploration Concession, the Hjortonmossen nr 1 Exploration Concession, the Orkaren nr 2

Exploration Concession and the Hövdingamon nr 2 Exploration Concession.

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1.3 Geological Setting & Mineralisation

The Zinkgruvan deposit is located in the southern part of the Bergslagen province of south-central

Sweden. The province comprises a Proterozoic aged (1.9 Ga) greenstone belt and hosts massive Zn-

Pb, Cu and Ag sulphide ores and banded iron formations. The supracrustal rocks are dominated by

felsic metavolcanics successions with limestones and calcsilicates commonly found within the

metavolcanics. The province was folded and metamorphosed to upper amphibolite facies during the

Svecofennian orogeny (1.9-1.8 Ga).

The Zinkgruvan deposit comprises a stratiform, massive Zn-Pb deposit situated in an east-west striking

synclinal structure within the lower Proterozoic Svecofennian supracrustal sequence (1.90 Ga - 1.88

Ga). The deposit exhibits distinctive stratification and extends for more than 5,000m along strike and

to depths of 1,600m. The orebody thickness ranges from 3m to 40m. In the central part of the deposit

the zinc-lead mineralisation is stratigraphically underlain by a substratiform copper stockwork.

Deformation during the Svecofennian orogeny included isoclinal folding resulting in the stratigraphy

of the area being overturned. A regional north-northeast to south-southwest trending fault (the Knalla

fault) is present in the centre of the property and separates the deposit into two areas. The Nygruvan

area, which provided most of the historical mine production, is located to the east and strikes

northwest to southeast and dips subvertically to the northeast. The Knalla area is located to the west

of the fault and strikes northeast to southwest and dips variably to the northwest. The Knalla area is

further sub-divided into the following areas from northeast to southwest: Burkland, Lindängen (now

predominantly depleted by mining), Sävsjön, Mellanby, Dalby, Cecilia and Borta Bakom.

1.4 Exploration

To date a total of 3,908 underground drill holes for 580,938m and a total of 193 surface drill holes for

113,037m have been completed. The drilling has defined nine mineralised zones comprising Nygruvan,

Burkland, Burkland Copper Stockwork Zone, Lindängen, Sävsjön, Mellanby, Dalby, Cecilia and Borta

Bakom. All drilling is by diamond core drilling.

1.5 Mineral Resource Estimates

Mineral Resource estimation for the purpose of this Technical Report was undertaken by ZMAB and

reviewed by WAI. Mineral Resource estimation involved the usage of drill hole and geological mapping

data to construct three dimensional wireframes to define mineralised domains. Samples were

selected inside these wireframes, coded and composited. Boundaries were treated as hard with

statistical and geostatistical analysis conducted on composites identified in individual domains. Grades

were estimated into a geological block model representing each mineralised domain. Grade

estimation was carried out predominantly by ordinary kriging. Estimated grades were validated

globally, locally, and visually prior to tabulation of the Mineral Resource estimates. Reconciliation

indicates that the resource models perform well when compared to plant production data.

Mineral Resources are as defined by the CIM. The effective date of the Mineral Resource estimate is

June 30, 2017. A summary of the Mineral Resource statement is shown in Table 1.1 and Table 1.2.

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The stated Mineral Resource estimates are not materially affected by any known environmental,

permitting, legal, title, taxation, socio-economic, marketing, political or other relevant issues, to the

best knowledge of the authors. There are no known mining, metallurgical, infrastructure, or other

factors that materially affect this Mineral Resource estimate, at this time.

Table 1.1: Total Mineral Resources for Zinc Zones at Zinkgruvan

(Average Cut-Off Grade of 3.68% Zn Equivalent)

ResourceClassification

Tonnage(Kt)

Grade Metal

Zn(%)

Pb(%)

Ag(g/t)

Zn(Kt)

Pb(Kt)

Ag(Moz)

Measured 7,269 10.0 3.8 86 727 276 20

Indicated 8,399 8.7 3.7 82 731 311 22

Measured +Indicated

15,668 9.3 3.7 84 1,458 587 42

Inferred 9,431 8.5 3.5 81 802 330 25Notes:

1. Mineral Resources are reported in accordance with the guidelines of the CIM Definition Standards for Mineral Resources and Mineral Reserves (2014);

2. Mineral Resources are reported using a zinc equivalent cut-off grade based on a NSR breakeven price;

3. Metal prices used in the NSR evaluation are US$2.75/lb for copper, US$1.00/lb for zinc, US$1.00/lb for lead, and US$15.0/oz for silver. A silver price of $4.11/oz is used in the

calculation of NSR to reflect the royalty payment to Silver Wheaton;

4. Mineral Resources are not Mineral Reserves until they have demonstrated economic viability based on a feasibility study or pre-feasibility study;

5. Mineral Resources are reported inclusive of any Mineral Reserves;

6. Grade represents estimated contained metal in the ground and has not been adjusted for metallurgical recovery and;

7. Numbers may not add due to rounding.

Table 1.2: Total Mineral Resources for Copper Zones at Zinkgruvan

(Cut-Off Grade of 1.0% Cu)


Tonnage(Kt)

Grade Metal

Cu(%)

Zn(%)

Ag(g/t)

Cu(Kt)

Zn(Kt)

Ag(Moz)

Measured 4,357 2.3 0.3 32 100 13 4

Indicated 619 2.1 0.4 36 13 2 1

Measured +Indicated

4,976 2.3 0.3 32 113 16 5

Inferred 193 2.3 0.3 25 4 1 0.2Notes:

1. Mineral Resources are reported in accordance with the guidelines of the CIM Definition Standards for Mineral Resources and Mineral Reserves (2014);

2. Mineral Resources are not Mineral Reserves until they have demonstrated economic viability based on a feasibility study or pre-feasibility study;

3. Mineral Resources are reported inclusive of any Mineral Reserves;

4. Grade represents estimated contained metal in the ground and has not been adjusted for metallurgical recovery and;


1.6 Mining and Mineral Reserves

Mineral Reserves

The Mineral Reserve estimate for the Zinkgruvan deposit is classified in accordance with the CIM

Definition Standards for Mineral Resources and Mineral Reserves (2014). The effective date of the

Mineral Reserve estimate is June 30, 2017. A summary of the Mineral Reserve statement is shown in

Table 1.3 and Table 1.4.

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Table 1.3: Total Mineral Reserves for Zinc Zones at Zinkgruvan

(Average Cut-Off Grade of 3.68% Zn Equivalent)


Tonnage(Kt)

Grade Metal

Zn(%)

Pb(%)

Ag(g/t)

Zn(Kt)

Pb(Kt)

Ag(Moz)

Proven 8,100 7.4 3.0 68 602 241 18

Probable 3,801 6.7 2.7 51 253 101 6

Proven +Probable

11,901 7.2 2.9 63 855 342 24

Notes:

1. Mineral Reserves are as defined by CIM Definition Standards for Mineral Resources and Mineral Reserves (2014);

2. Mineral Reserves are reported using a zinc equivalent cut-off grade based on a NSR breakeven price;

3. Metal prices used in the NSR evaluation are US$2.75/lb for copper, US$1.00/lb for zinc, US$1.00/lb for lead, and US$15.0/oz for silver. A silver price of $4.11/oz is used in the

calculation of NSR to reflect the royalty payment to Silver Wheaton;

4. Modifying factors used include the use of NSR and mining cut-off values in defining the extraction (stope) shapes, along with dilution and recovery in the mining process;

5. The NSR is calculated on a recovered payable basis taking in to account copper, lead, zinc and silver grades, metallurgical recoveries, prices and realisation costs;

6. Mining, processing and administrative costs were estimated based on actual costs; and


Table 1.4: Total Mineral Reserves for Copper Zones at Zinkgruvan

(Cut-Off Grade of 1.5% Cu)


Tonnage(Kt)

Grade Metal

Cu(%)

Zn(%)

Ag(g/t)

Cu(Kt)

Zn(Kt)

Ag(Moz)

Proven 4,375 1.8 0.2 25 78 9 4

Probable 877 2.0 0.2 29 18 2 1

Proven +Probable

5,252 1.8 0.2 26 96 11 4

Notes:

1. Mineral Reserves are as defined by CIM Definition Standards for Mineral Resources and Mineral Reserves (2014);

2. Modifying factors used include the use of mining cut-off values in defining the extraction (stope) shapes, along with dilution and recovery in the mining process;

3. Mining, processing and administrative costs were estimated based on actual costs; and


Mine Engineering

The Zinkgruvan mine was developed in 1857 as an underground mine with the orebody at that time

outcropping at surface. It is currently known to extend to 1,600m below surface and is open at depth.

Mine access is currently via three shafts, with the principal P2 shaft providing ore and waste rock

hoisting and labour access to the -800m and -850m levels. The “daylight” ramp connects the surface

and the underground working through the “western areas”, providing direct vehicle access to the

mine.

A system of internal ramps is employed to access and hence exploit Mineral Reserve below the shaft.

The shafts and ramps provide for ventilation, electrical and compressed air reticulation, materials

handling and ore and waste handling.

The mine is highly mechanised, uses the best available technologies to control operations and uses

longhole panel and sub level bench stoping throughout the mine. All stopes are backfilled with either

cemented paste tailings or waste rock. Mining has reached the -1,300m level.

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1.7 Mineral Processing, Metallurgical Testing and Recovery Methods

The existing plant has been treating zinc-lead ores since 1977 and uses the conventional processing

technologies of crushing, grinding, flotation and concentrate dewatering to produce separate lead and

zinc concentrates. In 2010, a copper circuit was commissioned to produce copper concentrate using a

separate grinding, flotation and dewatering circuit.

The plant also produces paste from the tailings for underground backfill.

The zinc-lead and the copper ores are both relatively easy to process and have resulted in good

metallurgical performances. The zinc-lead ore responds favourably to beneficiation with recoveries of

zinc and lead being typically 90% and 83%, respectively. Copper recovery from the copper ore has

been in excess of 88% since the circuit was commissioned. The quality of all concentrate is uniformly

high and they are readily accepted by customers, although silica levels in the zinc concentrate have

been penalised on occasion and have, at times, neared the maximum range stated in some of the

smelting agreements.

Significant improvements have been made to the crushing plant in recent years by simplifying the

circuit and de-coupling the plant from the mine hoist system. A significant proportion of the zinc-lead

ore is now fed to the AG mill as is, without the need for pre-screening and pebble crushing.

In 2017 a second AG mill was installed which can treat either copper or zinc-lead ores. Copper ore

throughput is 60-65 tph and commissioning trials of the second SAG mill with the zinc-lead ore were

in progress during the WAI site visit. Daily peak tonnages of over 4,000 tpd, while processing zinc-lead

ore through both AG mills have been registered since then.

The ores to the west of the Knalla area are reported to contain a more iron rich sphalerite which may

result in slightly lower zinc grade in the zinc concentrate produced. Testwork programmes are being

undertaken to determine what modifications to the plant’s reagent regime may be required to

optimally treat these ores.

1.8 Infrastructure

The site is serviced by high quality state roads, secure high voltage electricity supply, fresh water,

telecommunications, and operations are supported by a local and national logistics supply chain

ensuring highly efficient site activities with minimal need for site based warehousing. The integration

of suppliers extends to delivery of goods directly to the underground logictics hubs.

Tailings

The annual production of tailings is approximately 1.1Mtpa with 35% used as mine backfill and 65%

disposed at the Enemossen Tailings Storage Facility (TSF), located about 4km south from the

processing plant,

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A new TSF has been constructed directly east of the existing TSF, known as the Enemossen East TSF

which was designed and constructed under the supervision of Knight Piésold Ltd.

1.9 Environmental Studies, Permitting and Social or Community Impact

The mining licence for Zinkgruvan has recently been extended for the extraction and processing of up

to 1.5Mtpa (with a maximum of 1.2Mtpa of zinc-lead ore and 0.5Mtpa of copper ore).

ZMAB has established plans for the continuous monitoring and management of water, waste, air

quality, biodiversity, Health and Safety and stakeholder engagement. These plans are updated to

reflect changes to business needs and Lundin corporate-level standards for environmental and social

management, which are commensurate with international best practice standards.

The operations infrastructure, including access roads and energy sources, meets best practice

requirements and general housekeeping, safety and security standards at the mine are compliant with

international best practice. ZMAB maintain positive relations with local communities through informal

and formal stakeholder engagement activities, including through community initiatives and

continuous interaction via social media.

1.10 Capital and Operating Costs

The forecast operating cost for 2018 for the mine is 278.1SEK/t. The operating cost is therefore

US$34.8/t at an exchange rate of US$0.125 per 1SEK.

The forecast operating cost for 2018 for the mineral processing plant is 132.9SEK/t. The operating cost

is therefore US$16.6/t at an exchange rate of US$0.125 per 1SEK.

As part of maintaining an efficient and effective operating plant, ZMAB have allocated a sustaining

capital budget of 22,500 KSEK between 2018 and 2022. The budget estimate is to an accuracy of +/-

25% and is based on ZMAB in-house experience. The sustaining capital budget includes a provision for

an upgrade to the backfill paste plant and distribution lines, ongoing raises of the Enemossen East TSF,

upgrades to the concentrate handling facilities and continued noise reduction programmes. The

budgeted processing plant capital expenditures for the 2013 and 2016 period as set out in the previous

Technical Report included addition of a new AG grinding mill, which has been successfully installed as

a second hand unit. The construction of a new TSF has also been completed.

Sustaining capital in the mine includes on-going horizontal and vertical development necessary to

achieve the mine schedule, infill diamond drilling, together with mobile and other equipment

replacement programmes. A total of 1,180,379 KSEK is forecast to be spent over the next 5 years. This

is an increase from the previous 5 years, reflecting both increased renewal of mine equipment and

the expansion of mine operations in the western areas of the underground operations.

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1.11 Economic Analysis Results

Companies which are active and current producers of saleable product issuing a NI 43-101 Technical

Report may exclude the information required under Section 22 for Technical Reports on properties

unless the Technical Report includes a material expansion of current production. The Lundin Annual

Report can be found at: http://www.lundinmining.com/s/Investors.asp

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2 INTRODUCTION

This Technical Report has been prepared by WAI in accordance with the disclosure requirements of NI

43-101 to disclose recent information about the Zinkgruvan mine, located in south-central Sweden.

This includes an updated Mineral Resources and Mineral Reserves estimate.

Lundin is a base metals mining company that produces copper, nickel, zinc and lead at four mines

operated by indirect subsidiaries in Portugal (Neves-Corvo), Chile (Candelaria Mining Complex), United

States of America (Eagle Mine) and Sweden (Zinkgruvan Mine). In addition, Lundin indirectly holds an

equity stake in the Freeport Cobalt Oy business which includes a cobalt refinery located in Kokkola,

Finland. The Zinkgruvan mine is operated by ZMAB a 100% subsidiary of Lundin.

A technical due diligence of the Zinkgruvan operation was undertaken by WAI. This study considered

all aspects of the mine including licencing, geology, exploration, mining, mineral processing,

economics, and environmental and social issues. Mineral Resource and Mineral Reserve estimation,

for the purposes of this Technical Report, was undertaken by ZMAB and reviewed by WAI. The Mineral

Resource and Mineral Reserve estimates are reported in accordance with the CIM standard

referenced in NI 43-101. This Technical Report has been prepared in accordance with the

requirements of Form 43-101F1.

2.1 Independent Consultants

WAI has provided the mineral industry with specialised geological, mining and mineral processing

expertise since 1987, initially as an independent company, but from 1999 as part of the Wardell

Armstrong Group (WA). WAI’s experience is worldwide and has been developed in the coal and

metalliferous mining sector.

Our parent company is a mining engineering/environmental consultancy that services the industrial

minerals sector from nine regional offices in the UK and international offices in Almaty, Kazakhstan

and Moscow. Total worldwide staff compliment is in excess of 400.

WAI, its directors, employees and associates neither has nor holds:

Any rights to subscribe for shares in Lundin either now or in the future;

Any vested interests in any mining or exploration concessions (“licences”) held by

Lundin;

Any rights to subscribe to any interests in any of the licences held by Lundin either

now or in the future;

Any vested interests in either any licences held by Lundin or any adjacent licences; or

Any right to subscribe to any interests or licences adjacent to those held by Lundin,

either now or in the future.

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WAI’s only financial interest is the right to charge professional fees at normal commercial rates, plus

normal overhead costs, for work carried out in connection with the investigations reported here.

Payment of professional fees is not dependent either on project success or project financing.

WAI has a demonstrated track record in undertaking independent assessments of Mineral Resources

and Mineral Reserve estimates, project evaluations and audits, MERs and independent feasibility

evaluations to bankable standards on behalf of exploration and mining companies and financial

institutions worldwide.

2.2 Qualified Persons, WAI Review and Site Visit

Qualified Persons from WAI who have reviewed the Mineral Resource and Mineral Reserve estimates

and supervised the production of this report are as follows:

Richard Ellis, BSc, MSc (MCSM), CGeol, EurGeol, FGS, Principal Resource Geologist;

Philip King, BSc, CEng, FIMMM, Technical Director of Mineral Processing; and

Tim Daffern, BEng, CEng, MBA, FIMMM, FAusIMM, MSME, MCIM, ACSM, Consulting

Engineer

These consultants are considered to be independent Qualified Persons according to the definitions

given in NI 43-101. The responsibilities of WAI during the preparation of the different sections of this

Technical Report are shown in Table 2.1.

Table 2.1: Authors Responsibilities

Author Responsible for Preparation of Section/s

Richard Ellis 1. Summary; 2. Introduction; 3. Reliance on Other Experts; 4. Property

Description and Location; 5. Accessibility, Climate, Local Resources,

Infrastructure and Physiography; 6. History; 7. Geological Setting and

Mineralisation; 8. Deposit Types; 9. Exploration; 10. Drilling; 11. Sample

Preparation, Analyses and Security; 12. Data Verification; 14. Mineral Resource

Estimates; 23. Adjacent Properties; 24. Other Relevant Data and Information;

25. Interpretation and Conclusions; 26. Recommendations; 27. References

Philip King 1. Summary; 13. Mineral Processing and Metallurgical Testing; 17. Recovery

Methods; 18. Project Infrastructure; 19. Market Studies and Contracts; 24.

Other Relevant Data and Information; 25. Interpretation and Conclusions; 26.

Recommendations; 27. References

Tim Daffern 1. Summary; 15. Mineral Reserve Estimates; 16. Mining Methods; 18. Project

Infrastructure; 19. Market Studies and Contracts; 20. Environmental Studies,

Permitting and Social or Community Impact; 21. Capital and Operating Costs;

22. Economic Analysis; 24. Other Relevant Data and Information; 25.

Interpretation and Conclusions; 26. Recommendations; 27. References

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Other WAI consultants who contributed to this report included:

Stuart Richardson, BSc MSc IEng ACSM MCSM, Senior Mining Engineer;

Edvard Glücksman, BA, BSc, MSc, PhD, CSci, GradMIMMM, Senior Environmental and

Social Specialist; and

Andrew Beveridge, BSc, ACSM, FGS, MAusIMM, Principal Geotechnical Engineer.

A site visit to the Zinkgruvan Property was undertaken by Richard Ellis, Philip King, Tim Daffern and

Edvard Glücksman between October 10 to October 11, 2017, covering aspects related to licencing,

geology, exploration, QA/QC, mineralogy, mining, laboratory testwork, mineral processing, access and

infrastructure and environmental and social issues.

2.3 Units and Currency

All units of measurement used in this report are metric unless otherwise stated. Tonnages are

reported as metric tonnes (“t”), precious metal values in grams per tonne (“g/t”) or parts per million

(“ppm”).

Unless otherwise stated, all references to currency or “US$” are to United States Dollars (US$).

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3 RELIANCE ON OTHER EXPERTS

This Technical Report has been prepared by WAI on behalf of Lundin Mining Corporation (“Lundin”)

for which WAI has wholly relied upon the data presented by Lundin Mining Corporation in formulating

its opinion. The information, conclusions, opinions, and estimates contained herein are based on:

Information made available to WAI by Lundin and ZMAB at the time of preparing this

Technical Report including previous internal and external reports (on the varied

disciplines) prepared by or for Lundin on Zinkgruvan; and

Assumptions, conditions, and qualifications as set forth in this Technical Report.

WAI have not carried out any independent exploration work, drilled any holes or carried out any

sampling and assaying at the various project areas.

The authors have not reviewed the land tenure situation and have not independently verified the legal

status or ownership of the properties or any agreements that pertain to the licence areas. The results

and opinions expressed in this report are based on the authors’field observations and assessment of

the technical data supplied by Lundin.

The metallurgical, geological, mineralisation, exploration techniques and certain procedural

descriptions, figures and tables used in this report are taken from reports prepared by others and

provided to WAI by Lundin.

Though WAI is confident that the opinions presented are reasonable, a substantial amount of data has

been accepted in good faith. Whilst WAI has endeavoured to validate as much of the information as

possible, WAI cannot be held responsible for any omissions, errors or inadequacies of the data

received. WAI has not conducted any independent verification or quality control sampling, or drilling.

WAI has not undertaken any accounting, financial or legal due diligence of Zinkgruvan or the

associated company structures and the comments and opinions contained in this Technical Report are

restricted to technical and economic aspects associated with Zinkgruvan.

WAI has not undertaken any independent testing, analyses or calculations beyond limited high level

checks intended to give WAI comfort in the material accuracy of the data provided. WAI cannot accept

any liability, either direct or consequential for the validity of information that has been accepted in

good faith.

Except for the purposes legislated under applicable Canadian securities laws, any use of this Technical

Report by any third party are at that party’s sole risk.

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4 PROPERTY DESCRIPTION AND LOCATION

The Zinkgruvan mine is located in south-central Sweden in Närke County at approximately 58°49’N

latitude, 15°06’E longitude. The mine is situated 175km west-southwest of Stockholm and 210km

northeast of Göteborg. While there is a small village called Zinkgruvan surrounding the mine, the

nearest significant communities are Åmmeberg and Askersund, 10km and 15km NW respectively from

the mine. These towns house the majority of the mine employees. Askersund is located at the north

end of Lake Vättern, the second largest lake in Sweden. The largest lake in the country, Lake Vänern,

is some 50km due west of Askersund. The location of the Zinkgruvan property is shown in Figure 4.1.

Figure 4.1: Property Location Map (Geology.com)

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4.1 Mineral Tenure

ZMAB holds three mining concessions, the Zinkgruvan Mining Concession, the neighbouring Klara

Mining Concession and the Marketop Mining Concession. The Zinkgruvan Mining Concession and the

Klara Mining Concession cover the deposit and its immediate area. The Marketop Mining Concession

is located 40km east of Zinkgruvan, however no recent exploration or exploitation has been

undertaken on this mining concession. ZMAB also holds five exploration concessions which surround

the Zinkgruvan property and comprise the Dalby Hytta nr 1 Exploration Concession, the Flaxen nr 1

Exploration Concession, the Hjortonmossen nr 1 Exploration Concession, the Orkaren nr 2 Exploration

Concession and the Hövdingamon nr 2 Exploration Concession. The extent of the licence areas is

shown in Figure 4.2.

Figure 4.2: Location of Licence Areas (SWEREF 99 TM Coordinate System)

Mining Concessions

4.1.1.1 Zinkgruvan Mining Concession

The Zinkgruvan Mining Concession, initially consisted originally of a large number of small mining

rights but was consolidated in 2000 into one concession covering an area of 2.54km2 and is valid until

01 January 2025. If mining continues after these years, the concessions can be extended for periods

of 10 years. The concession provides the rights to extract and process lead, copper, silver and zinc in

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ores. A summary of the licence coordinate locations in the Swedish Coordinate System 1990 (RT90 2.5

gon V) is shown in Table 4.1.

Table 4.1: Coordinates of the Zinkgruvan Mining Concession

Coordinate Point Easting (m) (RT90 2.5 gon V) Northing (m) (RT90 2.5 gon V)

1 1,457,822.1 6,520,732.1

2 1,457,764.9 6,520,905.1

3 1,457,882.0 6,521,127.0

4 1,458,092.0 6,521,201.0

5 1,458,252.0 6,521,673.0

6 1,458,496.7 6,522,047.1

7 1,458,822.1 6,522,071.2

8 1,458,876.1 6,522,158.3

9 1,459,107.8 6,522,624.9

10 1,459,379.4 6,522,488.7

11 1,459,312.0 6,522,345.0

12 1,459,383.0 6,522,310.0

13 1,459,333.0 6,522,204.0

14 1,459,356.0 6,522,081.0

15 1,459,423.0 6,522,061.0

16 1,459,420.0 6,522,055.0

17 1,459,554.0 6,521,991.0

18 1,459,478.0 6,521,832.0

19 1,459,844.0 6,521,675.0

20 1,460,150.0 6,522,400.0

21 1,460,688.1 6,521,345.6

22 1,460,599.2 6,521,349.3

23 1,460,593.7 6,521,229.5

24 1,460,757.8 6,521,157.9

25 1,460,836.5 6,520,974.0

26 1,460,872.3 6,520,989.5

27 1,460,909.1 6,520,807.7

28 1,460,385.2 6,520,700.3

29 1,460,158.7 6,520,807.6

30 1,459,992.7 6,520,744.2

31 1,459,740.8 6,521,410.3

32 1,459,403.6 6,521,286.5

33 1,459,342.1 6,521,453.4

34 1,459,072.5 6,521,591.1

35 1,458,888.6 6,521,292.4

36 1,458,825.3 6,521,269.5

37 1,458,852.2 6,521,185.9

38 1,458,685.5 6,521,127.6

39 1,458,713.6 6,521,042.3

4.1.1.2 Klara Mining Concession

The Klara Mining Concession was granted in 2002 and covers 3.55km2, mainly over the western part

of the deposit and is valid until 18 December 2027. If mining continues after these years, the

concessions can be extended for periods of 10 years. The Klara Mining Concession includes a

restriction stipulating that mining must always be done with a minimum rock cover of at least 150m

and in planned residential areas the cover has to be 400m. This restriction has no impact on mining

because the ore zones in the Klara concession are found at depths below 400m. The concession

provides the rights to extract and process zinc, lead, copper, silver, gold, cobalt and nickel in ores. A

summary of the licence coordinate locations in the Swedish Coordinate System 1990 (RT90 2.5 gon V)

is shown in Table 4.2.

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Table 4.2: Coordinates of the Klara Mining Concession


1 1,457,010.00 6,522,120.00

2 1,458,480.22 6,523,152.74

3 1,459,426.54 6,523,388.86

4 1,459,733.00 6,523,235.50

5 1,459,555.00 6,522,860.00

6 1,460,150.00 6,522,400.00

7 1,459,844.00 6,521,675.00

8 1,459,478.00 6,521,832.00

9 1,459,554.00 6,521,991.00

10 1,459,420.00 6,522,055.00

11 1,459,423.00 6,522,061.00

12 1,459,356.00 6,522,081.00

13 1,459,333.00 6,522,204.00

14 1,459,383.00 6,522,310.00

15 1,459,312.00 6,522,345.00

16 1,459,379.40 6,522,488.70

17 1,459,107.80 6,522,624.90

18 1,458,876.10 6,522,158.30

19 1,458,822.10 6,522,071.20

20 1,458,496.72 6,522,047.10

21 1,458,359.00 6,521,842.00

22 1,458,252.00 6,521,673.00

23 1,458,092.00 6,521,201.00

24 1,457,882.00 6,521,127.00

25 1,457,764.90 6,520,905.10

26 1,457,460.00 6,520,800.00

4.1.1.3 Marketop Mining Concession

The Marketop Mining Concession lies 40km due east of Zinkgruvan, covers an area of 0.70km2 and is

valid until 06 March 2026. No recent exploration or exploitation has been conducted within this

concession. The concession provides the rights to extract and process lead, gold, copper, silver and

zinc in ores. A summary of the licence coordinate locations in the Swedish Coordinate System 1990

(RT90 2.5 gon V) is shown in Table 4.3.

Table 4.3: Coordinates of the Marketop Mining Concession


1 1,497,858 6,524,654

2 1,499,095 6,523,817

3 1,499,014 6,523,698

4 1,499,472 6,523,388

5 1,499,315 6,523,154

6 1,498,084 6,523,986

7 1,498,172 6,524,122

8 1,497,709 6,524,434

Exploration Concessions

The Swedish exploration permit system allows three renewals following the initial granting of an

exploration concession. The initial exploration concession is valid for three years (years 1-3). During

this time if the holder wishes to extend the concession period an application to the Mining

Inspectorate should be submitted. If adequate exploration has deemed to have been undertaken by

the Mining Inspectorate within the concession during the initial three years then a first renewal of the

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concession can be applied for. The first renewal period is for three years (years 4-6). A second renewal

of up to 4 years (years 7-10) can then be applied for if special reasons for the second renewal can be

demonstrated by the applicant (e.g the applicant can demonstrate successful exploration within the

concession). A third renewal of up to 5 years (years 11-15) can be granted by the Mining Inspectorate

if exceptional reasons can be demonstrated and that extensive work has been undertaken within the

concession and that further exploration will likely result in a mining concession.

The holder of an exploration concession can, at any point, withdraw the permit or decide not to renew

the permit. The area of the exploration concession will then be under a one year moratorium period.

During that year no other company can claim that area for exploration purposes.

The holder must by law report all results (drilling results, analyses, geophysical data, soil sampling data

etc.) from exploration to the Mining Inspectorate within three months after termination of the

exploration permit. If requested the exploration data cannot be disclosed by the Mining Inspectorate

for a maximum of four years. After four years the exploration data is made public.

Although not a requirement of the Mining Inspectorate, ZMAB holds a meeting once a year with the

Mining Inspectorate to inform them of ongoing exploration projects.

4.1.2.1 Dalby Hytta nr 1 Exploration Concession

Dalby Hytta nr 1 Exploration Concession covers an area of 7.80km2 and is valid until 1 July 2018. A

summary of the licence coordinate locations in the Swedish Coordinate System 1990 (RT90 2.5 gon V)


Table 4.4: Coordinates of the Dalby Hytta nr 1 Exploration Concession


1 1,455,776.00 6,525,000.00

2 1,455,782.00 6,525,140.00

3 1,455,736.00 6,525,295.00

4 1,455,327.00 6,526,324.00

5 1,455,000.00 6,527,000.00

6 1,455,600.00 6,527,620.00

7 1,456,520.00 6,527,060.00

8 1,458,480.22 6,523,152.74

9 1,457,089.00 6,522,177.00

10 1,456,560.00 6,523,030.00

11 1,456,137.00 6,525,000.00

Zinkgruvan is actively drilling on the Dalby Hytta nr 1 Exploration Concession and will be submitting

an application to convert a large part of the concession to a Mining Concession in early 2018.

4.1.2.2 Flaxen nr 1 Exploration Concession

The Flaxen nr 1 Exploration Concession covers an area of 19.8km2 and is valid until 15 September 2019.

A summary of the licence coordinate locations in the Swedish Coordinate System 1990 (RT90 2.5 g V)


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Table 4.5: Coordinates of the Flaxen nr 1 Exploration Concession

Coordinate Point Easting (m) (RT90 2.5 g V) Northing (m) (RT90 2.5 g V)

1 1,458,480.22 6,523,152.74

2 1,458,133.58 6,523,835.24

3 1,459,550.00 6,525,000.00

4 1,461,430.00 6,523,090.00

5 1,462,360.00 6,523,460.00

6 1,463,600.00 6,523,180.00

7 1,463,420.00 6,522,680.00

8 1,464,360.00 6,520,900.00

9 1,462,765.00 6,519,050.00

10 1,462,035.00 6,517,690.00

11 1,462,825.00 6,517,000.00

12 1,462,825.00 6,516,450.00

13 1,461,660.00 6,517,375.00

14 1,461,180.00 6,518,580.00

15 1,460,575.00 6,518,990.00

16 1,459,992.70 6,520,744.20

17 1,460,158.70 6,520,807.60

18 1,460,385.20 6,520,700.30

19 1,460,909.10 6,520,807.70

20 1,460,872.30 6,520,989.50

21 1,460,836.50 6,520,974.00

22 1,460,757.80 6,521,157.90

23 1,460,593.70 6,521,229.50

24 1,460,599.20 6,521,349.30

25 1,460,688.10 6,521,345.60

26 1,460,150.00 6,522,400.00

27 1,459,555.00 6,522,860.00

28 1,459,733.00 6,523,235.50

29 1,459,426.54 6,523,388.86

Hjortronmossen nr 1 Exploration Concession

The Hjortronmossen nr 1 Exploration Concession covers an area of 5.3km2 and is valid until 24 April

2018. A summary of the licence coordinate locations in the Swedish Reference Frame Coordinate

System 1999, Transverse Mercator (SWEREF 99 TM) is shown in Table 4.6.

Table 4.6: Coordinates of the Hjortronmossen nr 1 Exploration Concession

Coordinate Point Easting (m) (SWEREF 99 TM) Northing (m) (SWEREF 99 TM)

1 498,713 6,530,412

2 499,456 6,529,352

3 499,724 6,529,495

4 500,030 6,529,029

5 500,311 6,527,253

6 499,544 6,527,034

7 497,955 6,527,824

8 497,934 6,529,553

Orkaren nr 2 Exploration Concession

The Orkaren nr 2 Exploration Concession covers an area of 18.9km2 and is valid until 29 September



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Table 4.7: Coordinates of the Orkaren nr 2 Exploration Concession


1 504,190.00 6,528,430.00

2 510,102.32 6,521,042.97

3 508,859.56 6,521,307.90

4 507,934.48 6,520,926.89

5 506,032.42 6,522,813.32

6 504,633.15 6,521,638.07

7 502,982.72 6,524,837.61

8 503,679.10 6,525,240.00

9 503,789.30 6,525,823.00

10 504,424.70 6,525,655.00

11 505,292.50 6,526,154.00

12 503,814.15 6,528,159.29

Hövdingamon nr 2 Exploration Concession

The Hövdingamon nr 2 Exploration Concession covers an area of 5.2km2 and is valid until 29 September



Table 4.8: Coordinates of the Hövdingamon nr 2 Exploration Concession


1 501,460.62 6,524,757.54

2 501,795.60 6,524,085.82

3 502,216.78 6,523,062.26

4 502,264.62 6,522,907.89

5 502,260.31 6,522,767.89

6 502,621.13 6,522,772.23

7 503,067.63 6,520,808.31

8 503,606.63 6,519,962.10

9 503,528.35 6,519,904.18

10 503,994.01 6,518,590.26

11 503,711.00 6,518,860.00

12 503,567.00 6,519,252.00

13 503,209.00 6,519,444.00

14 502,844.00 6,519,227.00

15 501,940.00 6,520,780.00

16 501,292.00 6,523,298.00

17 501,284.00 6,524,653.00

4.2 Surface Rights

The surface land in the concessions areas belong mainly to private individuals. The regulations of the

exploitation concessions involve no particular restrictions on the mining operation.

4.3 Royalties

ZMAB does not pay any mining royalties to the Swedish State.

Under an agreement with Wheaton Precious Metals (formerly Silver Wheaton), the Company has

agreed to deliver all future production of silver contained in concentrate produced from the

Zinkgruvan mine. The Wheaton Precious Metals agreement with the Zinkgruvan mine includes a

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guaranteed minimum delivery of 40 million ounces of silver over an initial 25 year term. If at the end

of the initial term the Company has not met its minimum obligation, it must pay Wheaton Precious

Metals $1.00 for each ounce of silver not delivered. An aggregate total of approximately 21.6 million

ounces has been delivered since the inception of the contract in 2004.

Mining Tax

The corporate taxation rate in Sweden is 22%.

4.4 Environmental Aspects

A summary of the valid environmental permits obtained by ZMAB are detailed in Section 20.

The reclamation provision at the Zinkgruvan mine at December 31, 2016 was $17.1 million (2015 -

$16.1 million). This provision is based on future reclamation costs being settled between 2021 and

2051. The Company has obtained letters of credit related to its site restoration provision.

4.5 Permits

The mine is currently operated under an Environmental Licence granted by the Swedish authorities

for mine life extension and a new tailings management facility at Enemossen East. The application was

submitted to authorities in August 2012 (2015-01-30, case M 2927-12 and case 1421-11) and approved

in January 2015 for the extraction and processing of 1.5Mtpa of ore, including a maximum of 1.2Mtpa

of zinc-lead ore and 0.5Mtpa of copper ore.

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5 ACCESSIBILITY, CLIMATE, LOCAL RESOURCES, INFRASTRUCTURE AND PHYSIOGRAPHY

5.1 Accessibility

The Zinkgruvan property can be reached from Stockholm along highway E18 in a westerly direction

for a distance of 200km to Örebro; from Örebro southward on highway E20 and County Road 50 for a

distance of 50km to Askersund, and then by a secondary paved road for a further 15km through

Åmmeberg to Zinkgruvan. Access to Örebro is also possible by rail and by aircraft on scheduled flights

from Copenhagen amongst other locations.

Askersund is located at the north end of Lake Vättern, the second largest lake in Sweden. The largest

lake in the country, Lake Vänern, is some 50km due west of Askersund. The port of Otterbäcken on

Lake Vänern is about 100km from Zinkgruvan by road. The port of Göteborg on Sweden's west coast

is accessible by lake and canal from Otterbäcken, a distance of some 200km.

There are no major centres of population close to the mine, although several small villages with

populations numbered in the hundreds lie within the Mining Concessions.

5.2 Climate

The warm Gulf Stream in the Atlantic gives Sweden a milder climate than other areas at the same

latitude. Stockholm, the capital, is at almost the same latitude as southern Greenland but has an

average temperature of 18°C in July. The winter temperatures average slightly below freezing and

snowfall is moderate.

Temperature records for Zinkgruvan show that the mean annual temperature is 5.5°C. Mean monthly

temperatures are below freezing from December through March. The coldest month is February, with

an average maximum temperature of -4.1°C and an average minimum of -11.1°C. The warmest month

is August with an average maximum temperature of 18.2°C and an average minimum of 12.2°C. Annual

precipitation is about 750mm, ranging from a low of 11mm in March to a high of 144mm in August.

5.3 Local Resources & Infrastructure

The community of Askersund has a population of about 14,000. The village of Zinkgruvan has about

290 inhabitants. Zinkgruvan is the largest private employer in the municipality with about 340

employees and approximately 100 contractors. Other local economic activities include agriculture,

construction and light service industries. The town of Askersund has a modest tourist industry in the

summer and is a full service community.

The nearest airport is in Örebro with flights to Copenhagen and other centres. Örebro also hosts a

university and considerable light and heavy industry. As with virtually all of southern Sweden there is

an extensive network of paved highways, rail service, excellent telecommunications facilities, national

grid electricity, an ample supply of water and a highly educated work force.

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5.4 Physiography

The property is located in very gently rolling terrain at about 175m above mean sea level ("masl") and

relief in the area is 30m to 50m. The land is largely forest

Documents

LUNDIN MINING NI 43-101 TECHNICAL REPORT FOR THE … · 2018. 2. 18. · lundin mining ni 43-101 technical report for the zinkgruvan mine, sweden november 2017