Good day, ladies and gentlemen, welcome to the Lundin Mining fourth quarter and full year 2022 results call and webcast. At this time, all lines are in a listen-only mode. Following the presentation, we will conduct a question-and-answer session. If at any time during this call you require immediate assistance, please press star zero for the operator. This call is being recorded on Thursday, February 23rd, 2023. I would now like to turn the conference over to CEO, Peter Rockandel. Please go ahead.
Thank you, operator. Thank you everyone for joining us today. I will draw your attention to the cautionary statements on slide 2, as we will be making several forward-looking statements during the prepared remarks and likely during the Q&A. On the call to assist with the presentation and answer questions are Teitur Poulsen, our Senior Vice President and Chief Financial Officer, and Juan Andrés Morel, our Senior Vice President and Chief Operating Officer. Beginning on slide 4, I want to touch on a few of our 2022 achievements as they position Lundin Mining well to deliver on our strategy and industry leading returns in the years ahead. We delivered solid production results in 2022. We substantially met our copper production guidance of 250,000 tons, and we achieved the upper end of our production guidance ranges for both nickel and gold.
Our portfolio of high-quality operations produced over 400,000 tons of copper equivalent metal. We generated significant adjusted EBITDA, operating cash flow, and free cash flow from our operations, despite challenging inflationary conditions and lower year-on-year metal prices. Throughout 2022, we made good progress advancing our many growth initiatives. While ramp-up of the Neves-Corvo Zinc expansion project was slower than planned, it delivered sequential quarterly production improvements and is tracking well to our plans this year. At Candelaria, study work evaluating expansion of the underground mines to add roughly 20,000 tons of copper per year to the production profile has been completed. With the potential changes to mining royalties and taxation in Chile being moderated from earlier proposals, we're looking forward to a potential investment decision upon approval of the 2040 EIA. We announced the first mineral resource estimate for the Saúva deposit earlier this month.
The maiden estimate is for nearly 180 million tons of indicated resource, containing 1.3 billion pounds of copper and 1.1 million ounces of gold. We expect the estimate to increase with ongoing exploration efforts and influence our plans of how best to expand production at Chapada. The Upper Keel zone at Eagle and the sequential flotation project at Zinkgruvan are now incorporated into our life of mine plans. With the Upper Keel zone included, Eagle's mine life now extends into 2027. Zinkgruvan's recoveries and concentrate grades are expected to increase later this year with the completion of the sequential flotation project. We made good progress in 2022 advancing our large-scale Josemaria copper gold project. Detailed engineering is now approximately 40% complete, and we are on track to deliver an updated technical report in the second half of this year.
We remain focused on value creation through disciplined growth and the prudent allocation of our shareholders' capital. Yesterday, our board of directors declared a regular quarterly dividend of CAD 0.09 per share. The annualized dividend of CAD 0.36 continues to be a leading return amongst our peers. We directly returned over $275 million in dividends in 2022 and indirectly returned a further $60 million to shareholders with the opportunistic repurchase of 10.8 million shares under our normal course issuer bid. Further, we increased the strategic and technical strength of our team this year with the addition of experienced and proven leaders to our executive and operational teams, as well as our board of directors.
In short, Lundin Mining is well positioned and focused on delivering on our strategy of operating, upgrading, and growing a base metal portfolio that provides leading returns throughout the cycle. Moving to slide 5, I'll speak briefly to some of the details provided in our full results yesterday. We produced 250,000 tons of copper in 2022, including over 56,000 tons in the fourth quarter, substantially meeting our production guidance. Chapada and Eagle met guidance, while Candelaria and Neves-Corvo were modestly below. Candelaria's and Neves-Corvo's fourth quarter production were both impacted by throughput and, to a lesser extent, grade, partially offset by better than planned recoveries at Candelaria. Chapada had a strong second half, recovering from the weather and COVID absenteeism, which impacted the start of 2022.
We produced roughly 160,000 tons of zinc or within 5% of our guidance. While below plan, ZEP delivered its 4th quarter of sequential production improvement and overall increased zinc production 25% over that of 2021. The ramp-up of ZEP this year is tracking well to plan. Zinkgruvan's 4th quarter zinc production was impacted by lower than planned zinc head grades and short-term re-sequencing of the mine plans in the Nygruvan area. Eagle continues its reliable performance, producing over 17,000 tons of nickel in 2022 and achieving the upper end of the guidance range. The upper end of the guidance range was also achieved for gold with production of over 154,000 ounces. Candelaria met and Chapada exceeded their gold production guidance ranges.
Similar to copper, Chapada had a strong second half of the year, achieving better than planned gold recoveries in the fourth quarter. I will now turn the call over to Teitur to provide a summary of our financial results.
Okay, thank you, Peter, and good morning, everybody.
Moving to slide 6, as Peter mentioned, we generated significant adjusted EBITDA operating cash flow and free cash flow from operations in 2022, despite the lower year-on-year average metal prices and inflationary conditions that we have experienced. Starting with the top line, we generated $3 billion in sales for the year, including over $810 million in the fourth quarter as metal prices strengthened. This compares to the record-setting $3.3 billion for the full year in 2021. Our sales remain predominantly leveraged to copper, with the metal generating 63% of the year's revenue. Zinc and nickel contributed 12% each, while gold contributed 7%. Other revenues include sales from lead, cobalt, PGMs, iron, and other by-product metals from our operations.
With metal prices finishing the year on a strong note, 2022's revenue was positively impacted by $30 million of prior period price adjustments, including nearly $75 million of positive adjustments for the fourth quarter. A summary of realized copper, zinc, and nickel prices for the year are presented in the bar charts on this slide. Ultimately, we realized prices of $3.75 per pound of copper, $1.50 per pound of zinc, and $12.15 per pound of nickel for the year, including the adjustments. At the end of the fourth quarter, approximately 90,000 ton of copper were provisionally priced at $3.79 per pound and remained open for final pricing adjustment, as did over 36,000 tons of zinc at $1.35 per pound and nearly 5,000 ton of nickel at $13.60 per pound.
Moving to slide seven, production costs totaled close to $1.7 billion for 2022 and were approximately 20% higher than last year. The increase that we have seen this year has largely been a result of broad inflationary impacts on prices of consumables, particularly diesel and electricity, primarily at Candelaria, Chapada, and Neves-Corvo. The chart on this slide presents the relative impact of key drivers to the total operating and capital costs by each operation for the full year. Candelaria's full-year cash cost was impacted by the successful early agreement of labor contracts in the fourth quarter, as well as higher energy and maintenance costs and lower production volumes than forecast. New three-year labor agreements were reached with three of the unions late in the fourth quarter, well ahead of expiry of the existing agreements occurring this year.
Candelaria's fourth quarter production costs and cash flow were impacted by $20 million with the pulling forward of the agreement bonuses. On a cash cost basis, this represents $0.06 per copper for the year and $0.27 per pound for the fourth quarter. Candelaria's costs are to benefit from the roughly 50% lower electricity rate under our new power purchase agreement, which commenced on first of January. The new power purchase agreement also ensures a minimum of 80% renewables in the energy mix, prioritizing wind and solar. Cash cost guidance is for $1.80 per pound to $1.95 of copper in 2023 and includes the savings from the new power purchase agreement. Chapada's full-year cash cost was better than guidance, benefiting from greater than planned gold volumes in the fourth quarter.
Cash cost guidance is for $2.55-$2.75 per pound of copper in 2023, mainly reflecting the expectation of higher year-on-year average consumable costs and the forecast lower production volumes. Neves-Corvo's full-year cash cost was above guidance, largely driven by a lower than planned volume of copper and zinc, as well as cost inflation, particularly for electricity. Cash cost guidance is for $2.10-$2.30 per pound of copper in 2023, with improvements expected as zinc and lead production volumes increase with the continued ramp-up of ZEP towards nameplate. Eagle's full-year cash cost was above guidance, primarily due to lower by-product copper volumes and prices than forecast, combined with inflationary increases in operating costs.
Cash cost guidance is for $1.50-$1.65 per pound of nickel in 2023, with the expected year-on-year increase primarily a reflection of the planned lower production volumes. Zinkgruvan's full-year cash cost of $0.32 per pound of zinc was 40% better than guidance, owing mainly to greater lead and copper by-product credits and more favorable foreign exchange than planned. Cash cost guidance is for $0.60-$0.65 per pound of zinc in 2023, net of the lead and copper by-product credits. Total capital expenditure track well to our guidance with sustaining CapEx of $640 million compared to guidance of $670 million, and total CapEx of $845 million, including expansionary capital on ZEP and to advance the Josemaria project.
Lastly on this slide, we've begun to realize the benefits of our foreign exchange hedging program intended to provide better visibility on our U.S. dollar funding requirements of future operating costs and CapEx. In the fourth quarter, we realized a gain of $6 million and an unrealized gain of $63 million on our FX hedging contracts. Details of the program are available in the year-end financials. Our full year and fourth quarter key financial metrics are presented on this slide 8. Full year revenue, as I said, was over $3 billion, the fourth quarter revenue was over $810 million. We generated adjusted EBITDA of $1.3 billion for the year, including nearly $355 million in the fourth quarter, which is greater than the adjusted EBITDA generated over the previous two quarters combined.
Full year adjusted earnings were over $480 million. Adjusted operating cash flow was nearly $1 billion. Free cash flow from operations was over $380 million. Details of the adjustments are broken down in our MD&A. We remain in a strong financial position. We finished the year in a very modest net debt position. Today we remain in a modest net debt position of roughly $14 million. We have significant liquidity of approximately $1.7 billion today. Recently received commitments from our leading lending syndicate to extend the term of our revolver by 1 year to April 2028, along with a modest reduction in our borrowing rate spreads. Slide 9 presents greater detail as to the sources and uses of cash in 2022.
Before changes in working capital, our operations generated nearly $1 billion in 2022, net of approximately $66 million expense on the Josemaria project in the second and third quarters, and just over $300 million of cash taxes relating to prior year settlement, as well as tax installments for 2022. Cash and cash equivalent at year-end were approximately $190 million, a decrease of roughly $400 million, with cash flow from operations used to fund investments in our assets, the acquisition of Josemaria, shareholder dividends of $275 million, and share buybacks of nearly $60 million. With that, I'll turn the call back to Peter. Thank you.
Thank you, Teitur. Slide 10 highlights the meaningful scale and material growth potential of our copper portfolio. Yesterday evening, we filed an updated technical report for our Candelaria, Neves-Corvo, and Eagle operations. The reports each underpin our current guidance for the operations and the updated mineral resource and reserve statements announced earlier this month. Candelaria's life of mine has been extended to 2046, reflecting the base case plan and operating cash cost forecast in the current price environment. The base case plan does not yet contemplate the Candelaria underground expansion project known as CUGEP, which has the potential to add roughly 20,000 tons of copper production per year, nor does it include the potential restart of the Alcaparrosa mine.
We announced the maiden indicated resource estimate for the Saúva discovery in early February and view it as the first of many iterations of increasing mineral estimates to come. We continue to evaluate potential expansion opportunities at Chapada to best exploit the significant mineral resource base and the growing Saúva deposit. I'll speak more to Saúva on the next slide. We continue to make good progress on our world-class Josemaria copper-gold project. Detailed engineering is now approximately 40% complete, and an updated technical report remains on track to be published in the second half of this year. The project is being advanced in a deliberate and disciplined manner to minimize the risk and progress towards a construction decision at the appropriate time.
Slide 11 shows the conceptual open pit outlines of the maiden Saúva mineral resource estimate, as well as highlights, some of the assays received during the fourth quarter. The maiden indicated mineral resource is estimated to be nearly 180 million tons, grading 0.32% copper and 0.2 grams per ton gold, containing 1.3 billion pounds of copper and 1.1 million ounces of gold. Within the 180 million tons is a zone of 109 million tons at 0.42% copper and 0.29 grams per ton gold, which is 0.54 copper equivalent. This compares to the average head grade Chapada processed in 2022 of 0.26% copper and 0.16 grams per ton gold.
We continue to be very excited about this discovery and believe it supports our view that many opportunities exist to increase the size and quality of our mineral resource base at Chapada. The deposit remains open, we expect the resource estimate to continue to grow with our ongoing exploration efforts. Subsequent to the estimate cut-off date, over 8,500 meters were completed by year-end. Our 2023 exploration program is focused on increasing mineral resource and testing step-out anomalies along the broader Sauva-Formiga trend and is to include 55,000 meters of further drilling. The potential implications this system may have for our ongoing expansion studies are being evaluated as Saúva continues to evolve with drilling. Moving to slide 12, Lundin Mining is a top 15 producer of zinc and concentrate globally and well-positioned on the industry cost curve.
With the ramp-up of ZEP to nameplate capacity and improvements at Zinkgruvan, zinc production is forecast to increase a further 45%-50% to 225,000-240,000 times by 2025. As mentioned yesterday, an updated technical report was filed for Neves-Corvo. The report supports our ZEP ramp-up expectations, our guidance for the operation and the updated mineral resource and reserve estimates released earlier this month. Neves-Corvo's production is forecast to increase over the course of this year as initiatives to enable ZEP to consistently achieve nameplate capacity are executed and resulting in improved overall throughput and metal recovery rates.
Zinkgruvan and zinc production is forecast to increase over the next 3 years as head grades are to increase, excuse me, on mine sequencing and metal recovery rates and concentrate grades are to improve the completion of the sequential flotation project this year. On slide 13, we also filed an updated technical report for Eagle, incorporating the upper keel zone into the life of mine plans and extending the life of the operation into 2027. Development of the upper keel is underway, having begun in early January of this year, and first ore is anticipated in 2024. We are evaluating the potential of including the mineralization of the lower keel zone into production plans, as well as evaluating potential options to include a considerable amount of lower grade mineralization in the upper keel zone.
While a smaller program than our other sites, we plan to complete over 15,000 meters of highly efficient drilling from underground at Eagle this year, with a focus on extending the life of mine by targeting conduits linked with Eagle East. Josemaria, Chapada and Saúva offer not only material copper growth potential, but significant gold production growth as well. With the development of Josemaria, gold production is set to increase by over 130% further with potential expansions at Chapada and the development of Saúva. On slide 14, we have a very desirable portfolio of quality mines and are advancing meaningful growth projects. Despite the inflationary macroeconomic environment and site-specific challenges, we delivered solid performance, leading to strong operating cash flows and a strong financial position from which to grow.
We remain well-positioned, both operationally and financially, to deliver on our strategy of operating, upgrading, and growing a base metal portfolio that provides leading returns for our shareholders throughout this cycle. With that, operator, I would like to open the lines for questions.
Thank you. Ladies and gentlemen, we will now begin the question-and-answer session. Should you have a question, please press star followed by the 1 on your touch-tone phone. You will hear a three-tone prompt acknowledging your request. Should you wish to decline from the polling process, please press the star followed by the 2. If you're using a speakerphone, please lift the handset before pressing any keys. One moment please for your first question. The first question comes from Orest Wowkodaw of Scotiabank. Please go ahead.
Hi, good morning. Hi, Peter. Can you please give us an update of basically what kind of milestones we should expect to see with respect to Josemaria in terms of what needs to happen in order to reach that sanctioning decision? Then I'm also curious on where the current thinking is on an ideal partnership structure with respect to ownership for Lundin Mining.
Thanks, Orest. I guess answering that a couple of ways as we point or mentioned in the presentation. We are working towards having the updated technical report out on the second half of the year. Right now, we're at about 40% on the engineering front. You know, most of the money this year is being spent on further engineering, a couple of small, if you will, long-lead items, but upgrading to the roads, geotech work, some permitting, areas of that nature. You know, we won't really put out news on those specific items. I think the biggest milestone will be when we come out with the updated technical report in the second half.
You know, I can say that we are working very much in parallel at the same time with a lot of the discussions on the partnerships, and it hasn't really deviated from, you know, at the beginning, if you will, on who the ideal partners would be. Carrying on a lot of those conversations, some of which will be occurring even next week, you can probably figure out where we are and then throughout the year. A lot of people have made their way to come see us. There seems to be a lot of interest in the project, but it's hard to predict until we start going and getting a bit more engineering, quite frankly, that we can deliver to them as well to see where they stand.
Just as a follow-up, though, what about in terms of agreements with the government, with respect to being able to repatriate cash and those kind of milestones?
Nothing's changed from what we have reported earlier. You know, we announced Decree 234 previously, and so that did change our ability to... I think historically, you could only keep 20% of the capital outside of the country. Where we stand now is 60%. That being said, there are still a lot of items that we're working on with the government as we work towards this back half of the year. You know, going back to your question on the partnerships, I would say arguably it's mainly our focus has been on 2 areas, if you will. I mean, there's 3 different opportunities, but our focus has been on 2, which would be kind of the well-known trading houses.
You could probably figure out the short list of ones that are most interested and then a handful of larger global mining companies as well.
Okay. Thank you very much.
No problem.
Thank you. The next question comes from Daniel Major of UBS. Please go ahead.
Hi there. Yeah, thanks. Thanks so much for the questions. First question's on Candelaria. You've obviously indicated 20,000 tons upside from the expansion relative to the CapEx profile. Sorry, from the underground. Related to the CapEx profile in the technical report, can you give us any sense of, you know, ballpark, how much additional capital would be required for that 20,000 tons incremental? Secondly, a kind of a reminder of the upsides if Alcaparrosa comes back into the mine plan. That's the first question.
Thanks, Daniel. Yeah, on Josemaria, I would say that, you know, we obviously put a ballpark number in there, but it was 20 to probably 22,000 tons is what our initial studies are showing as far as that, what that could add. I don't think we've disclosed yet what the CapEx would be. We have a few different kind of options, if you will, on how to fund that, whether it be internally or externally. We haven't disclosed what that number is yet. With respect to Alcaparrosa, you know, we have had a lot of support, which often doesn't make its way back to North America. We were actually on the front page of the national paper down there last month with the Minister of Mining.
They're very supportive, actually trying to get Alcaparrosa open, but there are some things that we need to do from the technical side, from the permitting side. You know, if we were able to get that back up and running or start the process in the next couple of months, you'd probably be talking in the range of 4,000-6,000 tons that could be added for 2023.
Okay, thanks. I'm assuming that would be consistent across the profile around 5,000 tons, you know, over the profile of the future years. Is that correct?
Yeah, that's probably an accurate number to assume.
Okay, cool. Thanks. The second question on Neves-Corvo, looking at the operating cost profile from the technical report. You got, I guess, some implied improvement, 2024, 2025 in ore, costs per ton of ore milled as volumes lift, but absolute level of costs is reasonably stable. What sort of assumptions are you making within that, on power cost normalization in Portugal?
A couple of things. One, which, I'm just gonna grab the tech report and maybe get Mark to help on that one. What I will say as well, we are right now, are closely reviewing the possibility of implementing solar. There's a couple of proposals that are coming in, and, you know, we'll see how those trade off against some of the long-term pricing that we're able to get in Portugal. We are currently seeing relief on some of the longer-term pricing, but it has been extremely volatile, so it's difficult to, you know, to come up with a year number, if you will. On the tech report, I know Mark was just grabbing a specific number.
Yeah. Hey, Dan, I think in the tech report, we do outline the electricity costs, the assumptions there. You know, we're talking about EUR 16 million for 2023, and you can see it does normalize and come down from there. It does assume, and we're taking, you know, certain strategies, as Peter was talking about, to make sure we do, I'll call it normalize it or bring it down to maybe not quite historic levels, but certainly not the levels from the average of last year. It does partially include that. I'd say the majority of the gains, though, do come through really the economies of scale and actually hitting production volumes there. We have, you know, the people on site, the costs on site.
really, as you pointed out, the overall cost, in aggregate should not be changing drastically, but we should be diluting that with greater production volumes.
Okay, great. Thanks. I didn't have quite time to sit through the 226 pages of the report to look at all the details.
We're here when you have it.
Yeah. Thanks. Then just final one more, if I could, on Josemaria. When we think about the capital budget and the parameters you've or the guidance you've given so far, is it fair to assume that the spend this year is in addition to, you know, the final capital budget that you set?
Well, I think it would be part of the budget.
Okay.
Yeah, it's not gonna be in excess of the budget.
No, I mean, we've guided $400 million for spend in 2023. As you can see in our Q4 report, we spent around $170 million all in 2022. Obviously, once the final investment decision is taken, we will guide a new number on a point-forward basis from that decision point.
Okay, thanks a lot.
No problem.
Thank you. The next question comes from Stefan Ioannou of Cormark Securities. Please go ahead.
Great. Thanks very much, guys. I just kinda curious anyway, the guidance for this year is, you know, across the portfolio, $1.1 billion spent on CapEx. Just wondering if you could maybe provide some sort of thoughts on maybe the cadence of that spending and how that's gonna dovetail with your cash flow and maybe what you think about in terms of potentially drawing down your RCF?
Yeah, I mean, clearly this year's CapEx program has quite a lot of expansionary CapEx included in it, as I said, $400 million and then a little bit on ZEP as well. If you take 2022 as a proxy, you know, we generated $1 billion, you know, from our operations. That, by the way, actually includes $160 million spent on cash tax, which relates to 2021 sort of final tax settlements.
Mm-hmm.
It also includes an expenditure of $66 million on Josemaria. You know, so in what was a relatively challenging year, we still generated, you know, when you adjust for these items, over $1 billion in cash flow from our producing assets. In that context, you know, when you look at the CapEx we have and then exploration expenditure and then also the dividend, I mean, it's very doable, the capital allocation program that we have. Also considering the strong balance sheet and the fact that we have $1.7 billion of undrawn credit lines, I think we're in a good position to motor ahead on this program.
I would add that, just further to your question, from a cadence perspective, it is pretty equal. Like, you're talking about probably a quarter. Q1, I think is gonna be the high.
Okay.
You know, we're talking, I believe, you know, over just over 300, and then you're gonna get, lower as you're through the year. It's pretty Q2, three and four are pretty equal.
Okay. Okay. No, that's super helpful. Just maybe housekeeping, just on the Josemaria spend itself, is it fair to assume then all of it's gonna be actually capitalized this year? I know some of it was expensed last year.
Yeah. I think for all intents and purposes, the vast majority of it will be. There might be a few expense items.
Sure.
By and large, it'll be capitalized, yes.
Okay, great. That's super helpful. Thanks very much, guys.
No problem.
Thank you. Once again, ladies and gentlemen, if you do have a question, please press star 1 at this time. The next question comes from Ioannis Masvoulas of Morgan Stanley. Please go ahead.
Great. Good morning, and thank you for the presentation, Peter and team. A few questions left from my side. The first one, if we look at the production profile on slide 10, you show the Chapada expansion with Saúva there adding perhaps 50,000-60,000 tons. Is that the right sort of ballpark? What, what about gold?
Sorry, I was just looking at the page. It's hard to put that specifically to scale, so I think it's to be determined. I mean, what we have right now is we have, as you've seen, the, you know, pretty good sized resource there. It's open in all directions. I think I mentioned that if you take the more higher grade core, it's 109 million tons of, call it 0.54 copper equivalent. Quite a bit more than what we're currently mining there at Chapada. We've got a backlog of about 8,500 meters right now with a lot of good results. There's one on the page that we've included that was quite recent. I think that's hole 238.
We've hit, you know, 90 meters of over 2% copper equivalent, and that's, you know, near surface. We've got another 55,000 meters we'll be drilling this year. I'd say it's a bit premature, unfortunately, to determine what that incremental production rate would be.
Okay. Okay, understood. Thank you. Second question, just on some non-recurring items for 2022. Sinkhole costs $63 million. Is how much are you budgeting for 2023? Then if you can comment on the inventory write down and the underlying reasons, that'd be very useful. Thank you.
Yeah. I mean, on the sinkhole, we have expensed $63 million in 2022, of which around about $20 million is actually a cash cost incurred. The rest is an accrual for work we have to do through 2023, so remediation work on the sinkhole itself. We've also accrued for an element of potential fines within that number. On the stockpile on Chapada, this really relates to, you know, higher input costs into the stockpile and also higher movement cost looking forward with an assumed higher diesel cost in particular. That triggered an impairment of just over $60 million.
Yeah. This was a big debate, I would say, with the auditors, 'cause trying to determine a diesel price on a long-term stockpile is not the easiest thing to figure out. In any case, they had their opinions and, you know, diesel comes down, you can see that get a write-up back again.
Understood. It's very clear. Maybe if I can squeeze one more on the Candelaria technical report. You have extended the mine life to 2024-2026, there is a meaningful step down in copper recoveries in the latter years. What explains that? I think it's about 10 percentage points drop in recoveries.
Go ahead.
Sorry, Ioannis, I mean, it is really driven by the metallurgical models there. I mean, as we get towards, call it, the latter years of that current mine plan, and we're processing more stockpile, that would really be the bulk of what's driving the expected recoveries at that time. I'd say again, that's the current plan. As we look to add potentially back Alcaparrosa and extend some of those mine lives, the further we can push those stockpiles on, I think the better, you know, recoveries we'd have for longer as well too.
Great. Thanks so much.
Thank you.
Thank you. The next question comes from Daniel Major of UBS. Please go ahead.
Hey, guys. Really quick follow-up, just coming from Ioannis' question. Just on the working capital, you built some working capital again in the fourth quarter. I suspect that's associated with provisional pricing to an extent. On this, on the sinkhole, P&L costs versus the accrual. Is that like sort of $40 million, $50 million of cash expected to flow out in 2022 with respect to the sinkhole? Will that be sort of be flowing through as a working capital line?
Yeah. I mean, as I said, we spent already $20 million and also in 2022 we impaired around about $5 million, which also sits within that $63 million. I think the potential cash element, I mean, this is an accrual, so it's not confirmed yet, but this is around about $38 million, I think, of cash impact for 2023 as we have currently accrued for. You know, the work is still to be executed, and let's see where we end up.
Okay. Just to follow up on that, on sort of broader working capital, you know, you saw an overall build last year. How would you expect the progression over 2023 all else equal in terms of kind of pricing?
Yeah. I mean, I think as a general rule of thumb, I think we can say in an increasing pricing environment, you tend to build off receivable and therefore you tend to build a working capital position, which is a nice thing, of course. When prices weakens again, then you tend to unwind that working capital. These are timing differences, and we tend to see $100 million ± swings from quarter to quarter on these items.
Great. Thanks a lot.
Thank you. The next question comes from Jackie Przybylowski of BMO Capital Markets. Please go ahead.
All right. Thanks very much for taking my question. Congratulations on the quarter. I just wanted to ask, I know, you guys have talked about this before, but it's in the MD&A now, that you're moving your head office to Vancouver in the second half of the year. Can you just talk a little bit about what you expect in terms of timing and personnel, if you're expecting sort of any major changes to the head office team? Thanks.
Hi, Jackie. Yeah. Some people have already made their way out, and they're kind of working between both offices as we speak. I think the majority of the transition will happen towards the end of August. There's been good buy-in from, you know, the key people within the company. There are some people for specific positions that will remain in Toronto, as well as we have begun a process in Vancouver with a very strong reception, hiring some other people that won't be able to make the transition. You know, I can get into it in a bit more detail maybe on a separate call, but hopefully that answers your question.
Yeah. Thanks very much, Peter. That's great.
No problem.
Thank you. There are no further questions at this time. Please continue with closing remarks.
Okay. Well, thank you, operator, and thank you everyone for joining today's call. As you can see, I think Lundin Mining had a very strong 2022, and I believe that we're in an excellent position as we enter 2023 and well positioned to achieve our milestones. We look forward to updating everyone on our next call. Should anyone have any questions in the interim, please feel free to reach out. Thank you very much, everyone.
Ladies and gentlemen, this does conclude the conference call for today. We thank you for your participation and ask that you please disconnect your lines.