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TSX: LUN NYSE: LMC OMX: LUMI

TSX: LUN NYSE: LMC OMX: LUMI. 2008 Second Quarter Results. Cautionary Statements. Caution Regarding Forward Looking Statements

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TSX: LUN NYSE: LMC OMX: LUMI

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  1. TSX: LUNNYSE: LMCOMX: LUMI 2008 Second Quarter Results

  2. Cautionary Statements Caution Regarding Forward Looking Statements This presentation contains forward-looking statements. These forward-looking statements are not based on historical facts, but rather on current expectations and projections about future events. These forward-looking statements are subject to risks and uncertainties. These risks and uncertainties could cause actual results to differ materially from the future results expressed or implied by the forward-looking statements. Caution Regarding Inferred Resources This presentation uses the terms "Measured", "Indicated" and "Inferred" Resources. U.S. investors are advised that while such terms are recognized and required by Canadian regulations, the Securities and Exchange Commission does not recognize them. "Inferred Resources" have a great amount of uncertainty as to their existence, and great uncertainty as to their economic and legal feasibility. It cannot be assumed that all or any part of an inferred resource will ever be upgraded to a higher category. Under Canadian rules, estimated of Inferred Resources may not form the basis of feasibility or other economic studies. U.S. investors are cautioned not to assume that all or any part of Measured or Indicated Resources will ever be converted into reserves. Corporate Operations Projects Exploration Growth

  3. PHIL WRIGHT PRESIDENT & CEO ANDERS HAKER VP & CFO JOAO CARRELO EXEC. VP & COO NEIL O’BRIEN SR. VP EXPL. & BUS. DEV. Presenter Questions Corporate Operations Projects Exploration Growth

  4. Significant Highlights • First half operating earnings of $320 million exceeds internal expectations by 8% • Production, excluding Aljustrel, exceeds internal expectations – 2008 production forecast to be revised upwards • Copper 65% of revenue for first half 2008 • Zinc and nickel prices fallen substantially • Large price adjustments affecting comparison quarter to quarter • Non-cash impairment charge of $165 million related to write down of Aljustrel results in net loss for the quarter of $108 million • Major new zinc-copper discovery at Neves-Corvo – potential to be largest combined zinc-copper deposit at this mine Corporate Operations Projects Exploration Growth

  5. Non-Cash Impairment Charge Aljustrel in pre-production phase High cost zinc mine in a low zinc price environment Write down of carrying value to net $nil Impairment charge of $165 million (153 million + future income tax expense of $12 million) The write down expenses the previously written-down figure of $27 million, 2008 capex; pre-production start up costs; and makes provision for contractual obligations if closed Studying potential for early extraction of copper resources Decision on the future of Aljustrel is expected before year end Corporate Operations Projects Exploration Growth

  6. Production & Metal Prices: Q2’08 and Q2’07 Corporate Operations Projects Exploration Growth

  7. Change In Production Q1’08 to Q2’08 30,000 50,000 46,452 991 (234) 2,701 9 (986) 24,939 42,994 (484) 23,478 Contained metal (tonnes) Contained metal (tonnes) Throughput Throughput Recovery Recovery Grade Grade Cu Zn Q2 08 Q1 08 Q2 08 Q1 08 207 (86) (16) 1,954 14,000 449 (578) 2,000 1,884 12,577 (51) 12,397 Contained metal (tonnes) Contained metal (tonnes) Throughput Throughput Recovery Recovery Grade Grade Pb Ni Q1 08 Q2 08 Q1 08 Q2 08 Corporate Operations Projects Exploration Growth

  8. Second Quarter: Financial Results $ MillionsQ2’08 Q2’08 Q2’07 (incl. impairment) Sales 294 294 320 Operating Earnings 137 137 219 Add (deduct): General Exploration (10) (10) (8) Amortization (55) (55) (35) Derivatives 7 7 (28) Forex (2) (2) (9) Interest and Other Items (4) (4) 6 Investments (1) (1) 50 Impairment - (165) - Earnings Before Income Tax 71 (81) 195 Net Earnings 56 (108) 154 Corporate Operations Projects Exploration Growth

  9. Change in Pre-Tax Earnings Q1’08 to Q2’08 Pre-Impairment 140 120 109.4 (68.7) 100 41.7 (11.1) US$ (million) 80 5.0 71.4 (4.3) Costs Forex Other 60 40 Price & price adjustments Sales Volume 20 0 Pretax earnings Q1 08 Pretax earnings Q2 08 Corporate Operations Projects Exploration Growth

  10. Effect of Price Adjustments on ReportingIndicative only Q2’08 Q1’08 Net Sales Reported 294.1 305.7 Price Adjustments 11.3 (42.5) Restated Actuals 305.4 263.2 Q2’08 Q1’08 Operating Earnings Reported 137.2 182.9 Price Adjustments 11.3 (42.5) Restated Actuals 148.5 140.4 Corporate Operations Projects Exploration Growth

  11. Project Progress Tenke Copper Project • Construction progress improved significantly • First copper expected 2nd half 2009 • Expansion planning underway • No developments in contract review process Ozernoe Project • In discussion with partners. No progress to report Zinkgruvan Copper Project • On-budget (in EUR) and on schedule • Targeting 2010 for first copper • Project improves zinc mining flexibility Corporate Operations Projects Exploration Growth

  12. Tenke Construction Progress Corporate Operations Projects Exploration Growth

  13. Iberian Projects Neves-Corvo Expansion • New zinc-copper deposit discovered: thick, high-grade zinc intersections with good copper potential • Presently assessing doubling zinc production from existing ore bodies to 1 million tpa ore (+ 50,000 tpa zinc in concentrate) • Also studying large-scale development utilizing Lombador deposit. Pre-feasibility studies expected by end of year. Aguablanca • Assessing underground expansion Aljustrel • Assessing copper portential Corporate Operations Projects Exploration Growth

  14. Growing Our Reserves and Resources Exploration Expenditure - $millions • Neves-Corvo: 9,198 m drilled, major new Lombador East zinc/copper discovery • Aljustrel: 6,035 m drilled, expansion and delineation of Feitais copper resource • Aguablanca: 7,853 m drilled, expansion of nickel/copper mineralization to northwest and south • Zinkgruvan: 5,340 m drilled, encouraging results Approx. two-thirds is near-mine & one-third is regional exploration Highlights Corporate Operations Projects Exploration Growth

  15. Outlook • Contained metal production outlook: 96,000 (92,000) tonnes copper, 181,000 (202,000) tonnes zinc, 45,000 (47,000) tonnes of lead and 7,000 (6,800) tonnes nickel. (Previous forecasts in brackets) • Aljustrel and Ozernoe under review • 2008 Capital expenditure expected to be $400 to $450 million, result of paste deposition at Neves-Corvo and weaker US Dollar • Balance sheet remains strong • Positioning ourselves for potentially tough few years in zinc/lead; focusing on developing resource base and expansion of existing operations • Continue to assess opportunities created by present market conditions Corporate Operations Projects Exploration Growth

  16. PHIL WRIGHT PRESIDENT & CEO ANDERS HAKER VP & CFO JOAO CARRELO EXEC. VP & COO NEIL O’BRIEN SR. VP EXPL. & BUS. DEV. Questions Corporate Operations Projects Exploration Growth

  17. TSX: LUNNYSE: LMCOMX: LUMI

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