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  Aug 13, 2004 - 05:19 ET
Lundin Mining Corporation: Second Quarter Report

 
NEWS RELEASE TRANSMITTED BY CCNMatthews

FOR:  LUNDIN MINING CORPORATION

TSX SYMBOL:  LUN

AUGUST 13, 2004 - 05:19 ET

Lundin Mining Corporation: Second Quarter Report

VANCOUVER, BRITISH COLUMBIA--(CCNMatthews - Aug. 13, 2004) -  


/T/

Lundin Mining Corporation (formerly South Atlantic Ventures Ltd.)
Interim Report
Six Month Period Ended June 30, 2004

Operating and Financial Highlights
(Amounts in Canadian Dollars unless otherwise indicated)

Acquisition of Zinkgruvan Zinc/Lead/Silver Mine Completed
 - Zinkgruvan mine is the largest zinc producer in Sweden.
 - Lundin Mining Corporation transformed into mid-tier base metals
   mining company.
 - Acquisition financed by issuance of 20 million shares at $8 per
   share for net proceeds of approximately $152 million.
 - First six months production from Zinkgruvan mine totaled 33,600
   tonnes of zinc metal, 12,900 tonnes of lead and 0.8 million ounces
   of silver.
 - Ore treated 390,000 tonnes, average grade 9.3% zinc, 3.9% lead and
   84 grams per ton silver.

Strong Cash Flow
 - Cash as at June 30, 2004 was $31 million, an increase of $22
   million from the beginning of the period.
 - Cash flow from operating activities for the three and six months
   ended June 30, 2004 was $3 million and $2 million, respectively.
   This includes only one month of operating activities from the
   Zinkgruvan mine.
 - The Company has no long term debt as at June 30, 2004.
 - A production problem in the mine during June delayed shipments of
   concentrate and reduced the revenue in the quarter by
   approximately $ 3 million. Actions have been taken to reduce the
   risk of any similar problems going forward.

Name Change to Lundin Mining Corporation
 - Listing on Toronto Stock Exchange ("TSX") effective on August 12,
   2004 concurrent with the name change to Lundin Mining Corporation.
   New trading symbol is "LUN" on TSX and "LUMI" on Nya Marknaden at
   the Stockholm Stock Exchange (Stockholmsborsen).
 - Listing of Swedish Depository Receipts at Stockholm Stock Exchange
   to be upgraded to "O List".

Selected Financial Information

--------------------------------------------------------------------
--------------------------------------------------------------------
                                                       PRO-     PRO-
                                                      FORMA    FORMA
                  THREE    THREE      SIX      SIX      SIX    THREE
                 MONTHS   MONTHS   MONTHS   MONTHS   MONTHS   MONTHS
                  ENDED    ENDED    ENDED    ENDED    ENDED    ENDED
                JUNE 30, JUNE 30, JUNE 30, JUNE 30, JUNE 30, JUNE 30,
ITEM               2004     2003     2004     2003   2004(i)  2004(i)
--------------------------------------------------------------------
Sales ($'000)     2,968        -    2,968        -   41,413   19,819
--------------------------------------------------------------------
Cost of Sales
 ($'000)         (2,989)       -   (2,989)       -  (22,703) (13,530)
--------------------------------------------------------------------
Depreciation and
 amortization
 ($'000)         (1,693)       -   (1,693)       -  (11,233)  (4,452)
--------------------------------------------------------------------
Gross margin
 ($'000)         (1,714)       -   (1,714)       -    7,477    1,838
--------------------------------------------------------------------
General
 exploration
 and project
 investigation
 ($'000)           (529)    (441)  (1,468)    (572)  (2,391)  (1,248)
--------------------------------------------------------------------
Net income
 (loss) for the
 period ($'000)     202       78       62      287    4,535    1,073
--------------------------------------------------------------------
Operating Cash
 Flow ($'000)     3,089     (558)   2,186     (616)  23,251   11,962
--------------------------------------------------------------------
--------------------------------------------------------------------

/T/

The acquisition of Zinkgruvan mine was completed on June 2, 2004 
and the Company's income statement includes Zinkgruvan operations 
from this date. 

(i) Pro-forma information including the Zinkgruvan mine, which 
assumes that the mine was acquired on January 1, 2004. 

Zinkgruvan Mine 

The acquisition of Zinkgruvan mine, located in south-central 
Sweden, has transformed Lundin Mining Corporation from a junior 
exploration company to a mid-tier base metals producing mining 
company, creating a new base metal investment vehicle in Canada 
and Europe with strong, steady cash flow. 

The acquisition was completed on June 2, 2004 and the Company's 
income statement reflects Zinkgruvan mine operations from this 
date, representing only 29 days of the financial results of 
Zinkgruvan mine. The Company's third quarter report will be the 
first to include the mine's operation for a full quarter. 

The Company acquired a 100% interest in the Zinkgruvan mine from 
Rio Tinto Plc ("Rio Tinto"). The purchase price was US$100 
million in cash plus payments of Swedish Kronor ("SEK") 
39,699,129 for working capital and a US$1 million non-refundable 
deposit. The acquisition was financed through a public equity 
offering in Canada and Sweden. The Company issued 20 million 
common shares at a price of $8 per common share for net proceeds 
of approximately $152 million. 

Currently, approximately 800,000 tonnes of ore is mined per year 
from Zinkgruvan with grades averaging 8.9% zinc, 4.6% lead and 
115 grams per tonne silver. The production plan for 2004 is 
approximately 66,000 tonnes zinc metal in concentrate and 34,000 
tonnes lead metal in concentrate which contains 2 million oz. of 
silver. 

Zinkgruvan mine is an underground mining operation located in 
south-central Sweden and is one of the largest underground mines 
in Europe. It has been producing zinc, lead and silver on a 
continuous basis since 1857. The mine's production costs have 
been in the lowest quartile of zinc producers globally for nine 
out of the last ten years. 

Mining is conducted at depths ranging from 350 metre to 
approximately 1,000 meters. The current mine plan is based on 
proven and probable reserves sufficient for supporting an 11 year 
mine life. Conversion of estimated resources to reserves by 
continued definition drilling is expected to add another 9-10 
years mine life at the current mining rate. 

The Zinkgruvan mine and concentrator have significant 
opportunities to increase production. The concentrator has a 
900,000 tonnes per annum ("tpa") capacity with considerable room 
for expansion. The main hoisting shaft has a 1.4 million tonnes 
per annum ("mtpa") capacity compared to current utilization of 
700,000 to 800,000 tpa. 

In addition to zinc, lead and silver reserves and resources, 
there is a copper resource of approximately 3.5 million tonnes 
("mt") at 3.1% copper adjacent to the existing main zinc orebody 
from the 650 metre level to the 950 metre level. 

Management of the Company are giving high priority to a 
feasibility study for determining the viability of exploiting 
this new copper deposit. If viable, it is anticipated the copper 
project would include mining and milling of about 300,000 to 
500,000 tonnes of ore per year for a period of ten years. An 
existing scoping study by the previous owner will be used as the 
basis for the feasibility study. 

There are a number of highly prospective exploration targets in 
the area surrounding the Zinkgruvan mine. Applications for 
exploration permits covering these targets are currently being 
made. 

The Norrbotten Gold-Copper Project 

By an agreement formally executed on March 31, 2004, the Company 
acquired an option on certain gold-copper properties located in 
the Kiruna mining district of northern Sweden from Anglo American 
Exploration BV ("Anglo") and Rio Tinto Mining and Exploration 
Limited ("Rio"). The properties cover approximately 22,000 
hectares and include the copper-gold mineralization found by 
Anglo-Rio in the Discovery Zone at Rakkurijarvi. 

These properties form part of the Company's Norrbotten 
copper/gold exploration project which now encompasses an area of 
approximately 117,000 hectares making the Company the largest 
landholder in a district which is seeing considerable recent 
activity by major companies in search of gold-copper 
mineralization hosted in iron-oxide rocks ("IOCG" deposits"). 

During the year to date, the Company has focused exploration on 
the Rakkurijarvi Discovery Zone. The Company has completed a 
successful 3,920 metre drilling program which expanded the known 
Rakkurijarvi copper/gold zone. Mineralized intercepts include 
40.5 meters grading 1.4% copper and 0.3 g/t gold and 19.8 meters 
grading 1.6% copper and 0.4 g/t gold. A second drill program is 
scheduled to commence later this year to further delineate the 
deposit. This program will begin as soon as weather and ground 
conditions permit. 

The mineralization at Rakkurijarvi is characterized by massive, 
sometimes brecciated, magnetite, with stockworks and veins of 
chalcopyrite and pyrite. The objective of the drilling is to 
define a mineral resource amenable to open-pit mining methods. 
The Company is highly encouraged by results obtained to date. A 
total of 26 drill holes have been completed, the results of which 
are available on the Company's website www.lundinmining.com and 
reported in news releases dated April 5, 2004 and June 1, 2004. 

In addition to the Rakkurijarvi deposit, the Company has several 
other targets in the district which are being examined by an 
ongoing mapping and surveying program designed to define targets 
for drilling. 

Storliden Zinc/Copper Mine 

The Company owns 37% of North Atlantic Natural Resources AB 
("NAN"), a publicly traded Swedish company, which holds a 100% 
interest in the producing Storliden zinc-copper mine located in 
northern Sweden. 

Production from the Storliden Mine during the first six months of 
the year totaled 4,035 tonnes of copper and 10,502 tonnes of 
zinc. NAN's revenue for the period was $23 million (SEK 128.1 
million) and operating cash flow was $6.8 million (SEK 38.1 
million). Net income to NAN was $2.9 million (SEK 16.1 million) 
or $0.09 per share (SEK 0.52 per share). 

The Storliden mine is a volcanogenic massive sulphide copper zinc 
deposit located eight kilometres northeast of the town of Mala in 
Vasterbotten County, Sweden. It was discovered by NAN in 1998 and 
has been in production in April 2002. As of January 1, 2004 
remaining reserves were calculated at 1.1 mt of ore grading 9.8% 
Zinc and 3.5% copper. 

The deposit is being developed pursuant to a joint venture 
agreement whereby Boliden Mineral AB is acting as main contractor 
and operator. Ore is being processed at the Boliden Area 
Operations (BAO) mill, some ninety kilometres from the mine. 

Metal Prices 

Metal prices improved significantly during the first half of 
2004. It is generally anticipated that metal prices will continue 
to improve as global demand increases, especially in China. 


/T/

-------------------------------------------
-------------------------------------------
                 SECOND       SIX    SECOND
                QUARTER    MONTHS   QUARTER
PRICES             2004      2004      2003
-------------------------------------------
Zinc US$/lb        0.47      0.48      0.35
-------------------------------------------
Lead US$/lb        0.38      0.37      0.21
-------------------------------------------
Silver US$/oz      6.25      6.47      4.63
-------------------------------------------
-------------------------------------------

/T/

Hedging 

The Company currently has no hedging in place for either metal 
production or currency variations. 

Strengthened Management team 

The management team of the Company has been strengthened by the 
addition of Karl-Axel Waplan as Executive VP Operations in May of 
this year. Mr. Waplan has considerable expertise in the Swedish, 
as well as international, mining and marketing. In addition, Mr. 
Lars-Gunnar Huldt joined the Company in August as Finance Manager 
of the Company and Chief Financial Officer of the Swedish 
subsidiary, Lundin Mining AB. Mr. Huldt has considerable 
experience in accounting and financial management of 
international companies in Sweden. Both men are based in the 
Company's offices in Stockholm. 


/T/

LUNDIN MINING CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION
(Amounts in Canadian Dollars unless otherwise indicated)
SIX MONTHS ENDED JUNE 30, 2004

/T/

The following discussion and analysis of the results of 
operations and financial condition ("MD&A") for Lundin Mining 
Corporation (which, together with its subsidiaries, is 
collectively referred to as the "Company") should be read in 
conjunction with the unaudited interim consolidated financial 
statements for the six months ended June 30, 2004 and related 
notes thereto. 

The financial information in this MD&A is derived from the 
Company's consolidated financial statements prepared in 
accordance with Canadian generally accepted accounting 
principles. The effective date of this MD&A is August 12, 2004. 

The acquisition of Zinkgruvan mine was completed on June 2, 2004 
and the Company's income statement includes Zinkgruvan operations 
from this date. The Company's third quarter report will be the 
first to include the mine's operation for a full quarter. 

Additional information about the Company and its business 
activities is available on SEDAR at www.sedar.com. 

Name Change and Listing on the Toronto Stock Exchange ("TSX") 

At the Annual General Meeting held in Vancouver on June 11, 2004, 
the shareholders approved to change the name of the Company from 
South Atlantic Ventures Ltd. to Lundin Mining Corporation. The 
name change is effective August 12, 2004. 

The Company's application for listing on the TSX has been 
approved by the TSX and is effective August 12, 2004. The 
securities of the Company will be delisted from the TSX Venture 
Exchange at the close of business on August 11, 2004. 

Overview 

The Company has interests in gold, silver and base metals 
properties located in Sweden. Some of these properties are held 
by North Atlantic Natural Resources AB ("NAN"), a publicly traded 
company on the O-list at Stockholmsborsen, in which the Company 
currently has a 37 percent interest or 11,580,000 shares. 

The Zinkgruvan Mine 

On June 2, 2004, the Company acquired the Zinkgruvan mining 
operation by purchasing a 100 percent interest in North Mining 
Svenska AB ("NMS") and a 100 percent indirect interest in 
Zinkgruvan Mining AB ("ZM") from Rio Tinto Plc ("Rio Tinto"). 
This 100% interest comprises all of the outstanding shares of NMS 
and a loan payable by NMS to Rio Tinto. ZM owns the Zinkgruvan 
mine ("Zinkgruvan") located in Southern Sweden. The purchase 
price for NMS and ZM was US$100 million in cash plus payments of 
approximately Swedish Kronor ("SEK") 39.7 million for working 
capital and a US$1 million non-refundable deposit. In addition, 
the Company will pay Rio Tinto a maximum of US$5 million in price 
participation payments based on the performance of zinc, lead and 
silver prices for a period up to two years. 

The acquisition of Zinkgruvan was financed through a public 
equity offering in Canada and Sweden. The Company issued 20 
million common shares at a price of $8 per common share for net 
proceeds of approximately $152 million. The acquisition of 
Zinkgruvan establishes the Company as a mid-tier zinc producer, 
creating a new base metal investment vehicle in Canada and 
Europe. 

Pro-forma results of operations and cash flow 

The following is a summary of selected condensed pro-forma 
information which assumes that the acquisition of Zinkgruvan had 
been made on January 1, 2004. 


/T/

                                  Three months           Six months
                                         ended                ended
                                 June 30, 2004        June 30, 2004
                                 -------------        -------------

Sales                            $  19,819,997        $  41,413,746
Cost of sales                      (13,530,020)         (22,702,771)
Depreciation and amortization       (4,452,429)         (11,233,498)
                                 -------------        -------------
Gross margin                     $   1,837,458        $   7,477,477
                                 -------------        -------------
                                 -------------        -------------

General exploration and
 project investigation           $   1,248,426        $   2,390,837
                                 -------------        -------------
                                 -------------        -------------

Net (loss) income for the period $  (1,073,106)       $   4,534,679
                                 -------------        -------------
                                 -------------        -------------

Cash flow from operating
 activities                      $  11,962,185        $  23,251,408
                                 -------------        -------------
                                 -------------        -------------

/T/

The Norrbotten Gold-Copper Project 

By agreement dated March 31, 2004, the Company acquired a 
copper-gold property located in the Kiruna mining district in 
northern Sweden from Anglo American Exploration BV ("Anglo") and 
Rio Tinto Mining and Exploration Limited ("Rio") (collectively, 
"Anglo-Rio"). The Company can earn a 100 percent interest in the 
property by expending a minimum of US$1 million in the first year 
and a total of US$6 million over a period of three years, and 
issuing 187,214 shares in the Company with a fair value of 
US$500,000 to Anglo-Rio. The shares have been issued. The Company 
has granted a four-year buy back right to Anglo-Rio for the 
purchase of 60 percent of any proven copper-gold deposit which 
meets a threshold equivalent to three million tonnes of contained 
copper (for example, 300 million tonnes at 1 percent Cu). The 
buy-back right will be at a price equal to three times the 
expenditures incurred by the Company. Any deposit developed that 
does not meet this threshold will carry a 2.25 percent NSR 
royalty to be paid to Anglo-Rio by the Company. 

Results of operations 

The Company's net income for the second quarter and the six 
months ended June 30, 2004 was $202,000 and $62,000, 
respectively, as compared to an income of $78,000 and $287,000 
for the same periods of 2003. Results for the three months and 
six months ended June 30, 2004 were primarily affected by the 
acquisition of Zinkgruvan. The Company's consolidated results of 
operations included revenues and expenses from Zinkgruvan from 
June 2, the date of acquisition, to June 30, 2004. 

Revenues from Zinkgruvan from June 2, 2004 to June 30, 2004 were 
$ 3 million. Operating expenses were $ 5.4 million. Depreciation 
and amortization expenses were $ 1.7 million. The revenue from 
Zinkgruvan was impacted by a technical problem in the mine and 
delays of two planned shipments of concentrate during the month 
of June 2004. The problem in the mine was the result of a hang up 
in ore passes and a resultant rock fall. As a consequence, the 
Company was uncertain as to when material would be available for 
shipment and two shipments of concentrate were therefore 
postponed until July. The incident in the mine will also have 
some influence on the earnings in the 3rd quarter as the total 
ore production will also be reduced in the early part of the 3rd 
quarter as a result of the incident. Actions have been taken and 
continue to be taken to reduce the risk for this kind of incident 
and any resultant production problems going forward. Operating 
expenses increased also to some extent during the month of June 
2004 due to above mentioned incident. The net negative impact of 
the incident on the revenues for June are estimated to be 
approximately $ 3 million out of which approximately $ 1.7 
million is due to the delayed shipments which will be recovered 
in the month of July. 


/T/

----------------------------------------------------------------
                   One month      Six months       Twelve months
Metal                  ended           ended               ended
Production     June 30, 2004   June 30, 2004   December 31, 2003
----------------------------------------------------------------
Zinc (tonnes)          3,900          33,600              66,000
Lead (tonnes)          1,700          12,900              32,000
Silver (oz.)          97,000         749,000           1,800,000
----------------------------------------------------------------

/T/

The Company's equity in the net income of NAN for the second 
quarter and six months of 2004 was $13,000 and $1.1 million 
respectively, as compared to equity income of $875,000 and $1.4 
million for the same period in 2003. NAN generated revenues for 
the second quarter and six months of 2004 of $9.2 million (SEK 
51.4 million) and $23 million (SEK 128.1 million) respectively as 
compared to $12.7 million (SEK 70.6 million) and $24.4 million 
(SEK 135.9 million) respectively for 2003. 

NAN's net earnings were $36,000 (SEK 0.2 million) for the quarter 
ended June 30, 2004 as compared to $2.4 million (SEK 13.1 
million) for 2003. For the six months ended June 30, 2004, NAN's 
net earnings were $2.9 million (SEK 16.1 million) as compared to 
$3.8 million (SEK 20.9 million) for 2003. 

NAN's net earnings for the second quarter ended June 30, 2004 
were less than expected due to a delay in the development of the 
Eastern Zone at the Storliden Mine, resulting in lower 
concentrate production than planned due to less tonnes processed 
and lower feed grades. The shortfall from the Eastern Zone has to 
an extent been compensated with tonnage from the Lower Western 
Zone which has lower head grades and is also harder to grind. 
This, coupled with lower metal prices than realized in the first 
quarter of 2004, has had a comparatively negative affect on 
revenue for the second quarter and the initial part of the third 
quarter. It is anticipated results will improve in the fourth 
quarter when measures now being taken are in effect and higher 
grade portions of the orebody are mined and processed. 


/T/

--------------------------------------------------------------------
                  Three months  Six months  Three months  Six months
                         ended       ended         ended       ended
                       June 30,    June 30,      June 30,    June 30,
NAN's Production          2004        2004          2003        2003
--------------------------------------------------------------------
Copper metal in
 concentrates (tonnes)   1,619       4,035         3,620       6,359
Zinc metal in
 concentrates (tonnes)   4,748      10,502         9,461      18,096
--------------------------------------------------------------------

/T/

Included in the net income for the three months ended June 30, 
2004 was a gain of $873,020 on the sale of 400,000 shares of NAN. 
The reason for the sale was to comply with the Stockholmsborsen 
ownership concentration requirement. According to the 
requirement, at least 25% of the shares and 10% of the votes 
shall be publicly owned. 

General and administrative expenses for the second quarter and 
six months ended June 30, 2004 were $960,000 and $1.18 million 
respectively, as compared to $110,000 and $279,000 for 2003, 
representing an increase of $850,000 and $904,000 respectively. 
The increase is primarily due to the increased in the level of 
corporate activities and the acquisition of Zinkgruvan. In 
particular, wages and benefits increased by $415,000 and $459,000 
respectively and office and general increased by $208,000 and 
$189,000 respectively compared to the second quarter and six 
month ended June 30, 2003. General exploration and project 
investigation expenses were $529,000 and $1.468 million 
respectively, as compared to $441,000 and $572,000 for 2003, 
representing an increase of $88,000 and $896,000 respectively. 

Interest income for the second quarter and six months ended June 
30, 2004 was $239,000 and $291,000 respectively as compared to 
$38,000 and $197,000 respectively for 2003. The increase in 
interest income is primarily due to the increase in cash from the 
equity financing completed in June 2004. 

Interest and bank charges were $122,000 and $131,000 respectively 
for the second quarter and six months ended June 30, 2004 as 
compared to $70,000 and $138,000 respectively for 2003. This 
increase is primarily due to short-term liabilities of 
Zinkgruvan. 

Exchange gains for the second quarter and six month ended June 
30, 2004 was $1.68 million and $1.70 million respectively, an 
increase of $1.76 million and $1.80 million respectively compared 
to 2003, mainly due to the re-evaluation of provisions for 
pensions, provisions for assets retirement obligation, and future 
income tax liabilities of Zinkgruvan. 

Financial Condition, Liquidity and Capital Resources 

Working Capital 

At June 30, 2004, the Company had working capital of $28 million 
as compared to working capital of $8.4 million at December 31, 
2003 including cash of $31.03 million as compared to $9.10 
million respectively. The improvement in the working capital is 
primarily due to the equity financing completed during June 2004 
and cash flows from operations. 

Accounts receivable 

The accounts receivable increased to $4.09 million as at June 30, 
2004 from $124,000 at December 31, 2003, primarily as a result of 
the acquired receivables from Zinkgruvan. 

Total assets 

Total assets increased to $254.15 million as at June 30, 2004 
from $18.83 million at December 31, 2003. This large increase is 
primarily due to the acquired inventory and properties, plant and 
equipment associated with the acquisition of Zinkgruvan. 

Current liabilities 

Current liabilities increased to $15.74 million as at June 30, 
2004 from $1.8 million at December 31, 2003 due to acquired 
liabilities of Zinkgruvan. Furthermore the extended credit 
facility to NAN was repaid during the second quarter. 

Long-term liabilities 

Long-term liabilities have increased to $84.5 million as at June 
30, 2004 from $2.8 million at December 31, 2003 due to the 
acquisition of Zinkgruvan which has large provisions for 
pensions, provisions for assets retirement obligation and future 
income tax liabilities in Zinkgruvan. 

Management of the Company believes that the working capital at 
June 30, 2004, together with cash flows from operations, is 
sufficient to fund the Company's normal operating requirements, 
and its exploration and development expenditures. 

Restatement 

The Company has restated its unaudited interim consolidated 
financial statements for the three and six months ended June 30, 
2003 to correct for its accounting for income taxes. The 
restatement had the effect of reducing income tax expense by 
$256,000, increasing net income by the same amount and increasing 
basic and diluted earnings per share by $0.03. 

The Company has also restated the interim consolidated statement 
of cash flows for the three and six months ended June 30, 2003. 
This restatement had the effect of increasing cash flow from 
operating activities by $86,000, decreasing cash flow from 
financing activities by $75,000 and decreasing cash flow from 
investing activities by $12,000. 

The Company has also restated its unaudited interim consolidated 
financial statements for the three and six months ended June 30, 
2003 for the retroactive effect of the change in accounting 
policy for exploration expenses discuss below. 

Related Party Transactions 

The Company has transactions with related parties that are 
disclosed in Note 6 of the consolidated financial statements. 

Critical Accounting Policies 

These unaudited interim consolidated financial statements have 
been prepared in accordance with Canadian generally accepted 
accounting principles ("GAAP") for interim financial information 
and they follow the same accounting policies and methods of 
application as the audited consolidated financial statements of 
the Company for the year ended December 31, 2003 except as noted 
below. 

Stock-based compensation 

Effective January 1, 2004, the Company adopted the amended 
recommendations of the CICA Handbook Section 3870, "Stock-based 
Compensation and Other Stock-based Payments". Under the amended 
standards of this Section, the fair value of all stock-based 
awards granted are estimated using the Black-Scholes model and 
are recorded in operations over their vesting periods. The 
compensation costs related to stock options granted after January 
1, 2004 is recorded in operations. 

Previously, the Company provided note disclosure of pro forma net 
earnings and pro forma earnings per share as if the fair value 
based method had been used to account for stock options granted 
to employees, directors and officers after January 1, 2002. The 
amended recommendations have been applied retroactively from 
January 1, 2002 without restatement of prior periods. 

No stock options were granted in the six months ended June 30, 
2004 or 2003. 

Asset Retirement Obligations 

On January 1, 2004, the Company adopted the recommendations of 
the CICA Handbook Section 3110, "Asset Retirement Obligations", 
which requires that the fair value of liabilities for asset 
retirement obligations be recognized in the period in which they 
are incurred. A corresponding increase to the carrying amount of 
the related assets is generally recorded and depreciated over the 
life of the asset. The amount of the liability is subject to 
re-measurement at each reporting period. The effect of the change 
has no material impact on the Company's consolidated financial 
statements. 

Exploration expenses 

The Company has retroactively changed its accounting policy for 
exploration costs, to be consistent with ZM. Exploration costs 
are now expensed instead of being deferred. The effect of this 
change was to decrease the net income for the three and six 
months ended June 30, 2004 by $279,310 ($0.02 per share) and 
$1,217,509 ($0.11 per share), respectively, and to decrease 
mineral properties and increase the deficit as at December 31, 
2003 by $1,136,598. 

Comparative figures 

Certain of the comparative figures have been reclassified to 
conform with the current year's presentation. 

As a result of the acquisition of Zinkgruvan, the Company has 
also adopted the following accounting policies during the six 
months ended June 30, 2004. 

Inventories 

Consumables have been valued at weighted average cost less 
allowances for obsolescence. Ore and Concentrate stocks have been 
valued at the lower of production cost and net realizable value. 

Properties, plant and equipment 

Tangible fixed assets are recognized as an asset in the balance 
sheet when, based on available information, it is probable that 
the future economic benefits associated with the asset will flow 
to the Company and the cost of the asset can be measured 
reliably. 

Provision for pensions 

ZM has a defined benefit pension plan, which is unfunded. The 
provision for future benefits is in accordance with Canadian 
GAAP, using management's best estimate of expected salary 
escalation and retirement ages. 

Depreciation and depletion 

Depreciation is provided on a straight line basis over the 
estimated economic life of the assets as follow: 


/T/

Buildings                    20-50 years
Plant and machinery           5-20 years
Equipment                        5 years

/T/

Depletion of mining properties is made on a unit-of-production 
basis. 

Other Provisions 

A provision, i.e. assets retirement obligation, is recognized in 
the balance sheet when the Company has a legal or constructive 
obligation as a result of a past event, and it is probable that 
an outflow of resources will be required to settle the obligation 
and a reliable estimate of the amount can be made. 

Selected Quarterly Information 


/T/

---------------------------------------------------------------------
Financial Data
 for 8 Quarters
---------------------------------------------------------------------
Three Months
 Ended        Jun-04 Mar-04 Dec-03 Sep-03 Jun-03 Mar-03 Dec-02 Sep-02
---------------------------------------------------------------------
A. Total
 revenue
 (loss)
 ($'000)(i)    3,288  1,166    655    950    935    710    259    380
---------------------------------------------------------------------
B. Income (loss)
 before
 extraordinary
 items
 ($'000)(ii)     202   (139)  (935) 1,040     78    209   (256)  (104)
---------------------------------------------------------------------
C. Net income
 (loss)
 ($'000)(ii)     202   (139)  (935) 1,040     78    209   (256)  (104)
---------------------------------------------------------------------
D. Basis and
 diluted
 income
 (loss) per
 share ($)(ii)  0.01  (0.01) (0.13)  0.13   0.01   0.03  (0.04) (0.02)
---------------------------------------------------------------------

(i)  Consists of sales, interest income, management fee and other
     income and the equity in the income (loss) of the significantly
     influenced investee.

(ii) Has been restated - see Notes 1 and 2 to the financial
     statements.

/T/

Outstanding Share Data 

As at August 12, 2004, the Company had 30,539,971 common shares 
outstanding and 305,000 share options outstanding under its 
stock-based incentive plans. As at the same date, the Company had 
702,500 share purchase warrants outstanding. 

Outlook 

Metal Prices 

Metal prices improved significantly during the first half of 
2004. It is generally anticipated that metal prices will continue 
to improve as global demand increases, especially in China. 


/T/

-------------------------------------------
-------------------------------------------
                 SECOND       SIX    SECOND
                QUARTER    MONTHS   QUARTER
PRICES             2004      2004      2003
-------------------------------------------
Zinc US$/lb        0.47      0.48      0.35
-------------------------------------------
Lead US$/lb        0.38      0.37      0.21
-------------------------------------------
Silver US$/oz      6.25      6.47      4.63
-------------------------------------------
-------------------------------------------


Hedging

The Company currently has no hedging in place for either metal
production or currency variations.


LUNDIN MINING CORPORATION
INTERIM CONSOLIDATED BALANCE SHEET
(in Canadian Dollars)

                                            June 30,     December 31,
                                               2004             2003
                                      -------------    -------------
                                      -------------    -------------
                                         (Unaudited)       (Restated
                                                            - Note 1)
ASSETS
Current assets
 Cash                                 $  31,027,432    $   9,097,530
 Accounts receivable                      4,086,427          124,200
 Income taxes receivable                    653,667                -
 Loan receivable from North
  Atlantic Natural Resources AB                   -          925,316
 Inventories                              7,428,184                -
 Prepaid expenses                           519,872           11,657
 Other short term receivables                10,154                -
                                      -------------    -------------
                                         43,725,735       10,158,703

Long-term receivables                       711,048                -
Investment in North Atlantic
 Natural Resources AB                     8,970,744        8,492,814
Properties, plant and equipment
 Mining properties (Note 3)             177,052,567          178,420
 Machinery and other technical
  equipment                              20,064,793                -
Future income tax assets                  3,622,416                -
                                      -------------    -------------

                                      $ 254,147,302    $  18,829,937
                                      -------------    -------------
                                      -------------    -------------

LIABILITIES
Current liabilities
 Accounts payable and other
  accrued liabilities                 $   8,327,308    $     775,852
 Accrued expenses                         3,769,137                -
 Due to related parties (Note 6)            150,073        1,026,705
 Other current liabilities                3,495,475                -
                                      -------------    -------------
                                         15,741,993        1,802,557

Capital lease obligations                   652,687                -
Provisions for pensions                  15,277,463                -
Other provisions                         13,084,208                -
Future income tax liabilities            39,744,896        1,023,990
                                      -------------    -------------
                                         84,501,248        2,826,547
                                      -------------    -------------
SHAREHOLDERS' EQUITY
Share capital (Note 5)                  181,302,924       27,016,912
Contributed surplus                         446,695          211,808
Deficit (Notes 1(a) and (c))            (11,919,340)     (11,340,261)
Cumulative translation adjustments         (184,226)         114,931
                                      -------------    -------------
                                        169,646,053       16,003,390
                                      -------------    -------------

                                      $ 254,147,302    $  18,829,937
                                      -------------    -------------
                                      -------------    -------------

Approved by the board:

"John H. Craig" (signed)             "Brian D. Edgar" (signed)
-----------------------              ------------------------
Director                             Director


LUNDIN MINING CORPORATION
INTERIM CONSOLIDATED STATEMENTS OF OPERATIONS
(in Canadian Dollars)
(Unaudited)

             Three months ended June 30,     Six months ended June 30,
                     2004          2003            2004          2003
             ------------  ------------    ------------  ------------
             ------------  ------------    ------------  ------------
                              (Restated -                   (Restated -
                                Notes 1                       Notes 1
                                  and 2)                        and 2)

Sales        $  2,967,861  $          -    $  2,967,861  $          -

Cost of
 sales         (4,682,324)            -      (4,682,324)            -

             ------------  ------------    ------------  ------------
Gross margin   (1,714,463)            -      (1,714,463)            -
             ------------  ------------    ------------  ------------

Expenses
 General
  exploration
  and project
  investigation  (529,411)     (440,747)     (1,467,610)     (571,736)
 Management
  fees            (48,000)      (36,000)        (96,000)      (72,000)
 Office and
  general        (239,160)      (30,690)       (247,434)      (58,660)
 Professional
  fees            (24,557)       (8,140)        (82,760)      (41,905)
 Consulting       (33,227)            -         (33,227)            -
 Promotion
  and public
  relations       (82,787)         (487)        (96,056)      (27,422)
 Stock
  exchange and
  filing fees     (60,553)       (1,895)        (81,547)      (18,912)
 Telephone
  and
  facsimile       (10,924)       (1,207)        (12,938)       (1,386)
 Transfer
  agent and
  share
  information     (24,978)      (11,001)        (29,866)      (14,993)
 Wages and
  benefits       (435,855)      (20,976)       (503,063)      (43,621)
             ------------  ------------    ------------  ------------
               (1,489,452)     (551,143)     (2,650,501)     (850,635)
             ------------  ------------    ------------  ------------

Other income
 (expenses)
 Management
  fees             20,393        20,976          40,160        43,621
 Interest
  income          239,515        38,182         291,046       197,242
 Other income      46,783             -          46,783             -
 Other
  expense         (52,731)            -         (52,731)            -
 Listing on
  Stockholm
  Exchange        (16,204)            -         (30,626)            -
 Interest and
  bank charges   (122,320)      (70,058)       (130,899)     (138,405)
 Foreign
  exchange
  gains
  (losses)      1,679,190       (66,610)      1,699,492       (99,775)
             ------------  ------------    ------------  ------------
                1,794,626       (77,510)      1,863,225         2,683
             ------------  ------------    ------------  ------------

Loss before
 the
 undernoted    (1,409,289)     (628,653)     (2,501,739)     (847,952)

Gain on sale
 of investment
 in North
 Atlantic
 Natural
 Resources AB     873,020             -         873,020             -
Equity in
 income of
 significantly
 influenced
 investee          13,469       875,482       1,107,997     1,404,259
             ------------  ------------    ------------  ------------

(Loss)
 income
 before
 income taxes    (522,800)      246,829        (520,722)      556,307

Future
 income tax
 (expense)/
 recovery         724,469      (169,055)        582,643      (269,030)
             ------------  ------------    ------------  ------------

Net Income
 (Loss) for
 the period  $    201,669  $     77,774    $     61,921  $    287,277
             ------------  ------------    ------------  ------------
             ------------  ------------    ------------  ------------

Basic and
 diluted
 income per
 share       $       0.01  $      (0.01)   $       0.00  $       0.04
             ------------  ------------    ------------  ------------
             ------------  ------------    ------------  ------------

Basic
 weighted
 average
 number of
 shares
 outstanding   16,393,870     7,709,957      13,123,055     7,709,957
             ------------  ------------    ------------  ------------
             ------------  ------------    ------------  ------------

Diluted
 weighted
 average
 number of
 shares
 outstanding   17,301,370     7,709,957      14,030,555     7,709,957
             ------------  ------------    ------------  ------------
             ------------  ------------    ------------  ------------


LUNDIN MINING CORPORATION
INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS
(in Canadian Dollars)
(Unaudited)

             Three months ended June 30,     Six months ended June 30,
                     2004          2003            2004          2003
             ------------  ------------    ------------  ------------
             ------------  ------------    ------------  ------------
                              (Restated -                   (Restated -
                                Notes 1                       Notes 1
                                  and 2)                        and 2)
Cash flow
 from (for)
 operating
 activities
 Net income
  (loss) for
  the period $    201,669  $     77,774    $     61,921  $    287,277
  Add non-cash
   items
   Accrued
    interest on
    notes
    receivables         -      (144,753)              -      (126,104)
   Depreciation
    and
    amortiza-
    tion        1,693,278             -       1,693,278             -
   Gain on sale
    of
    investment   (873,020)                     (873,020)
   Equity in
    income of
    significantly
    influenced
    investee      (13,469)     (875,482)     (1,107,997)   (1,404,259)
   Future
    income taxes (724,469)      169,055        (582,643)      524,540
   Provision
    for pensions
    and other    (181,305)            -        (181,305)            -
   Unrealized
    foreign
    currency
    transla-
    tion       (1,548,080)      209,000      (1,548,080)      115,470

 Net changes
  in non-cash
  working
  capital
  items
  Accounts
   receivable
   and other
   current
   assets       4,229,878        (4,496)      4,140,468       (26,620)
  Accounts
   payable and
   other
   current
   liabilities    304,571        11,298         583,859        13,468
             ------------  ------------    ------------  ------------
                3,089,054      (557,604)      2,186,482      (616,228)
             ------------  ------------    ------------  ------------

Cash flows
 from (for)
 financing
 activities
  Common
   shares
   issued     151,661,499             -     151,854,249             -
  Due to
   related
   parties       (331,530)      (83,215)       (876,632)     (119,649)
  Loans
   payable              -        21,949               -        21,397
             ------------  ------------    ------------  ------------
              151,329,969       (61,266)    150,977,617       (98,252)
             ------------  ------------    ------------  ------------

Cash flow
 from (for)
 investing
 activities
  Acquisition
   of
   subsidiary,
   net of
   cash
   acquired
   (Note
   3(a))     (132,278,252)            -    (132,535,499)            -
  Mining
   properties
   and related
   expenditures  (848,377)        2,587        (848,377)     (230,952)
  Repayment of
   loan
   receivable     469,103         8,103         925,316        52,320
  Proceeds
   from
   sale of
   mineral
   property             -             -               -       367,000
  Proceeds
   from sales
   of shares    1,224,363             -       1,224,363             -
             ------------  ------------    ------------  ------------
             (131,433,163)       10,690    (131,234,197)      188,368
             ------------  ------------    ------------  ------------

Increase
 (decrease)
 in cash       22,985,860      (608,180)     21,929,902      (526,112)

Cash,
 beginning of
 the period     8,041,572     1,662,948       9,097,530     1,580,880
             ------------  ------------    ------------  ------------

Cash, end of
 period      $ 31,027,432  $  1,054,768    $ 31,027,432  $  1,054,768
             ------------  ------------    ------------  ------------
             ------------  ------------    ------------  ------------

 Supplementary
  information
  regarding
  non-cash
  transactions
   Investing
    activities
     Common
      shares
      issued for
      mineral
      property
      acquisi-
      tion   $    655,249  $          -    $    655,249  $          -
     Common
      shares
      issued for
      acquisition
      expense   1,370,400             -       1,370,400             -
             ------------  ------------    ------------  ------------
             $  2,025,649  $          -    $  2,025,649  $          -
             ------------  ------------    ------------  ------------
             ------------  ------------    ------------  ------------

Other
 supplementary
 information
 Interest
  paid       $    122,320  $     18,918    $    130,899  $     58,045
             ------------  ------------    ------------  ------------
             ------------  ------------    ------------  ------------


LUNDIN MINING CORPORATION
STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
FOR THE SIX MONTHS ENDED JUNE 30, 2004
(in Canadian Dollars)
(unaudited)

                                 Share    Contributed
                               Capital        Surplus        Deficit
                          ------------------------------------------
As at December 31, 2003   $ 27,016,912       $211,808  ($ 10,203,663)

Cumulative effect of
 change in accounting
 policy (Note 1 (c))                 -              -     (1,136,598)

                          ---------------------------   ------------
As at December 31,
 2003, as adjusted        $ 27,016,912   $    211,808    (11,340,261)

Cumulative effect of
 change in accounting
 policy (Note 1(a))             52,713        588,287       (641,000)

Exercise of stock
 options and warrants          854,250              -              -

Transfer of contributed
 surplus on
 exercise of stock
 options                       353,400       (353,400)             -

New share issue            153,025,649              -              -

Translation adjustment
 for the period                      -              -              -

Net income for the
 period                              -              -         61,921

                          ---------------------------   ------------
As at June 30, 2004       $181,302,924   $    446,695  ($ 11,919,340)
                          ---------------------------   ------------
                          ---------------------------   ------------


                                           Cumulative
                                          Translation
                                          Adjustments          Total
                          ------------------------------------------
As at December 31, 2003                  $    114,931   $ 17,139,988

Cumulative effect of
 change in accounting
 policy (Note 1 (c))                                -     (1,136,598)
                                         ------------   ------------
As at December 31,
 2003, as adjusted                       $    114,931   $ 16,003,390

Cumulative effect of
 change in accounting
 policy (Note 1(a))                                 -              -

Exercise of stock
 options and warrants                               -        854,250

Transfer of contributed
 surplus on exercise of
 stock options                                      -              -

New share issue                                     -    153,025,649

Translation adjustment
 for the period                              (299,157)      (299,157)

Net income for the
 period                                             -         61,921

                                         ------------   ------------
As at June 30, 2004                     ($    184,226)  $169,646,053
                                         ------------   ------------
                                         ------------   ------------


LUNDIN MINING CORPORATION
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2004
(in Canadian Dollars)
(Unaudited)

/T/

1. Basis of Presentation 

The unaudited interim consolidated financial statements of Lundin 
Mining Corporation (the "Company") are prepared in accordance 
with Canadian generally accepted accounting principles using the 
same accounting policies and methods of application as those 
disclosed in Note 2 to the Company's consolidated financial 
statements for the year ended December 31, 2003, except as 
described below. 

These interim consolidated financial statements do not contain 
all of the information required by Canadian generally accepted 
accounting principles for annual financial statements and 
therefore should be read in conjunction with the Company's 2003 
annual audited consolidated financial statements. 

The acquisition of Zinkgruvan mine was completed on June 2, 2004 
and the Company's income statement reflects Zinkgruvan operations 
from this date. The Company's third quarter report will be the 
first to include the mine's operation for a full quarter. 

During the six months ended June 30, 2004, the Company made 
changes to its accounting policies. 

(a) Stock-based compensation 

Effective January 1, 2004, the Company adopted the amended 
recommendations of the CICA Handbook Section 3870, "Stock-based 
Compensation and Other Stock-based Payments". Under the amended 
standards of this Section, the fair value of all stock-based 
awards granted are estimated using the Black-Scholes model and 
are recorded in operations over their vesting periods. The 
compensation costs related to stock options granted after January 
1, 2004 is recorded in operations. 

Previously, the Company provided note disclosure of pro forma net 
earnings and pro forma earnings per share as if the fair value 
based method had been used to account for stock options granted 
to employees, directors and officers after January 1, 2002. The 
amended recommendations have been applied retroactively from 
January 1, 2002 without restatement of prior periods. 

No stock options were granted in the six months ended June 30, 
2004 or 2003. 

(b) Asset Retirement Obligations 

On January 1, 2004, the Company adopted the recommendations of 
the CICA Handbook Section 3110, "Asset Retirement Obligations", 
which requires that the fair value of liabilities for asset 
retirement obligations be recognized in the period in which they 
are incurred. A corresponding increase to the carrying amount of 
the related assets is generally recorded and depreciated over the 
life of the asset. The amount of the liability is subject to 
re-measurement at each reporting period. The effect of the change 
has no material impact on the Company's consolidated financial 
statements. 

(c) Exploration expenses 

The Company has retroactively changed its accounting policy for 
exploration costs, to be consistent with Zinkgruvan Mining AB 
("ZM"). Exploration costs are now expensed instead of being 
deferred. The effect of this change was to decrease the net 
income for the three and six months ended June 30, 2004 by 
$279,310 ($0.02 per share) and $1,217,509 ($0.11 per share), 
respectively, and to decrease mineral properties and increase the 
deficit as at December 31, 2003 by $1,136,598. 

(d) Certain of the comparative figures have been reclassified to 
conform with the current year's presentation. 

As a result of the acquisition of Zinkgruvan, the Company has 
also adopted the following accounting policies during the six 
months ended June 30, 2004. 

(e) Inventories 

Consumables have been valued at weighted average cost less 
allowances for obsolescence. Ore and Concentrate stocks have been 
valued at the lower of production cost and net realizable value. 

(f) Properties, plant and equipment 

Tangible fixed assets are recognized as an asset in the balance 
sheet when, based on available information, it is probable that 
the future economic benefits associated with the asset will flow 
to the Company and the cost of the asset can be measured 
reliably. 

(g) Provision for pensions 

ZM has a defined benefit pension plan, which is unfunded. The 
provision for future benefits is in accordance with Canadian 
GAAP, using management's best estimate of expected salary 
escalation and retirement ages. 

(h) Depreciation and depletion 

Depreciation is provided on a straight line basis over the 
estimated economic life of the assets as follow: 


/T/

Buildings                    20-50 years
Plant and machinery           5-20 years
Equipment                        5 years

/T/

Depletion of mining properties is made on a unit-of-production 
basis. 

(i) Other Provisions 

A provision, i.e. assets retirement obligation, is recognized in 
the balance sheet when the Company has a legal or constructive 
obligation as a result of a past event, and it is probable that 
an outflow of resources will be required to settle the obligation 
and a reliable estimate of the amount can be made. 

2. Restatement 

The Company has restated its unaudited interim consolidated 
financial statements for the three and six months ended June 30, 
2003 to correct for its accounting for income taxes. This 
restatement had the effect of reducing income tax expense by 
$255,510, increasing net income by the same amount and increasing 
basic and diluted earnings per share by $0.03. 

The Company has also restated the interim consolidated statement 
of cash flows for the three and six months ended June 30, 2003. 
This restatement had the effect of increasing cash flow from 
operating activities by $86,258, decreasing cash flow from 
financing activities by $74,512 and decreasing cash flow from 
investing activities by $11,746. 

The Company has also restated its unaudited interim consolidated 
financial statements for the three and six months ended June 30, 
2003 for the retroactive effect of the change in accounting 
policy for exploration expenses (Note 1 (c)). 

3. Acquisitions 

(a) Zinkgruvan Mine 

The Company acquired, on June 2, 2004, a 100 percent interest in 
North Mining Svenska AB ("NMS") and a 100 percent indirect 
interest in ZM from Rio Tinto Plc ("Rio Tinto"). This 100% 
interest comprises all of the outstanding shares of NMS and a 
loan payable by NMS to Rio Tinto. ZM owns the Zinkgruvan mine 
located in Southern Sweden. The purchase price for NMS and ZM was 
US$100 million in cash plus payments of SEK 39,699,129 for 
working capital and a US$1 million non-refundable deposit. In 
addition, the Company will pay Rio Tinto a maximum of US$5 
million in price participation payments based on the performance 
of zinc, lead and silver prices for a period up to two years. The 
acquisition of Zinkgruvan establishes the Company as a mid-tier 
zinc producer, creating a new base metal investment vehicle in 
Canada and Europe. 

The acquisition was financed through a public equity offering in 
Canada and Sweden. The Company issued 20 million common shares at 
a price of $8 per common share for net proceeds of approximately 
$152 million. 

The acquisition has been accounted for using the purchase method. 
The current estimate of the purchase price and the fair value of 
the net assets acquired are as follows: 


/T/

Purchase price:  
 Cash paid                                    $ 144,694,970
 Acquisition expenses paid with new shares        1,370,400
 Acquisition expenses paid in first quarter         257,247
 Acquisition expenses paid in second quarter      1,872,353
                                              -------------
                                              $ 148,194,970
                                              -------------
                                              -------------

Net assets acquired:
 Cash                                         $  14,289,071
 Working capital                                  2,470,706
 Mining properties                              174,929,143
 Plant and equipment                             21,546,761
 Future income tax assets                         3,865,891
 Other long-term receivables                        709,237
 Future income tax liabilities                  (40,247,827)
 Provisions for pensions                        (15,919,768)
 Other provisions                               (13,448,244)
                                              -------------
                                              $ 148,194,970
                                              -------------
                                              -------------

/T/

The allocation of the purchase price is preliminary in nature and 
will be amended for events and information that comes to light 
subsequent to the date of these interim financial statements. 

(b) Norrbotten Property 

By agreement dated March 31, 2004, the Company acquired a 
copper-gold property located in the Kiruna mining district in 
northern Sweden from Anglo American Exploration BV ("Anglo") and 
Rio Tinto Mining and Exploration Limited ("Rio") (collectively, 
"Anglo-Rio"). The Company can earn a 100 percent interest in the 
property by expending a minimum of US$1 million in the first year 
and a total of US$6 million over a period of three years, and 
issuing 187,214 shares in the Company with a fair value of 
US$500,000 to Anglo-Rio. The shares have been issued. The Company 
has granted a four-year buy back right to Anglo-Rio for the 
purchase of 60 percent of any proven copper-gold deposit which 
meets a threshold equivalent to three million tonnes of contained 
copper (for example, 300 million tonnes at 1 percent Cu). The 
buy-back right will be at a price equal to three times the 
expenditures incurred by the Company. Any deposit developed that 
does not meet this threshold will carry a 2.25 percent NSR 
royalty to be paid to Anglo-Rio by the Company. 

4. Pro-forma result of operations 

The following is a pro-forma condensed consolidated financial 
information, which assumes that the acquisition of NMS and ZM had 
been made on January 1, 2004. 


/T/

                                         Three months      Six months
                                                ended           ended
                                              June 30,        June 30,
                                                 2004            2004
                                         ------------    ------------
Sales                                    $ 19,819,997    $ 41,413,746
Cost of sales                             (17,982,449)    (33,936,269)
                                         ------------    ------------
Gross margin                                1,837,548       7,477,477
Administrative expenses                    (1,836,741)     (3,393,568)
General exploration and project
 investigation                             (1,248,426)     (2,390,837)
Other income                                1,744,743       2,094,422
                                         ------------    ------------
Income before the undernoted                  497,125       3,787,495
Gain on sale of investment in NAN             873,020         873,020
Equity in income of significantly
 influenced investee                           13,469       1,107,997
                                         ------------    ------------
Income before income taxes                  1,383,614       5,768,512
Future income tax expense                    (310,507)     (1,233,832)
                                         ------------    ------------
Net income for the period                $  1,073,107    $  4,534,680
                                         ------------    ------------
                                         ------------    ------------

Basic and diluted income per share       $       0.04    $       0.15
                                         ------------    ------------
                                         ------------    ------------

Weighted average number of
 shares outstanding                        30,368,671      30,368,671
                                         ------------    ------------
                                         ------------    ------------

Cash Flow from operating activities        11,962,185      23,251,408
Cash Flow from financing activities           329,969         (22,383)
Cash Flow from investing activities           137,201      (2,588,644)

/T/

This pro-forma information is not necessarily indicative of the 
results of operations that may be obtained in the future. 

General exploration and project investigation expenses for the 
second quarter ended June 30, 2004 were $969,116 for ZM and 
$279,310 for Norrbotten and for the six months ended June 30, 
2004 were $1,173,328 for ZM and $1,217,509 for Norrbotten. 

5. Share capital 

The authorized and issued share capital is as follows: 

(a) Authorized: 

Unlimited number of common shares with no par value and one 
special share with no par value. 


/T/

--------------------------------------------------------------------
                                             Number of
                                                shares        Amount
--------------------------------------------------------------------
Common shares issued and outstanding:

Balance, December 31, 2003                   9,776,457  $ 27,016,912
Cumulative effect of change in
 accounting policy (Note 1(a))                       -        52,713
Equity financing, net of
 financing expenses (Note 3(a))             20,000,000   151,000,000
Common shares issued for
 acquisition expense                           171,300     1,370,400
Shares issued to acquire a mineral
 property (Note 3(b))                          187,214       655,249
Stock options exercised                        380,000       798,000
Warrants exercised                              25,000        56,250
Transfer of contributed surplus on
 exercise of stock options                           -       353,400
--------------------------------------------------------------------
Balance, June 30, 2004                      30,539,971  $181,302,924
--------------------------------------------------------------------
--------------------------------------------------------------------


(b) Incentive stock options outstanding and held by directors,
officers and employees of the Company are as follows:

                                     Number of      Weighted-Average
Options                                 Shares        Exercise Price
-------                              ---------      ----------------
Outstanding at December 31, 2003       585,000                 $3.14
Exercised in the first quarter 2004    (65,000)                $2.10
Exercised in the second quarter 2004  (315,000)                $2.10
                                     ---------      ----------------
Outstanding at June 30, 2004           205,000                 $5.00
                                     ---------      ----------------
                                     ---------      ----------------

As at June 30, 2004, the 205,000 options outstanding expire on
December 4, 2005.

(c) Share purchase warrants outstanding as at June 30, 2004:

Number of            Exercise
Warrants                Price         Expiry Date
---------            --------         -----------

360,000                 $2.25   December 16, 2004
342,500                 $2.25   December 19, 2004
-------
702,500
-------
-------

/T/

6. Other related party transactions 

(a) Charges from related parties 

During the six months ended June 30, 2004 and 2003, charges from 
a company owned by the Chairman of the Company for management and 
administrative services were $96,000 and $72,000, respectively, 
of which $150,173 was unpaid at June 30, 2004. 

(b) The Company earned $40,160 and $43,621 during the six months 
ended June 30, 2004 and 2003, respectively, in management fees 
for providing management services to NAN for a fee of US$5,000 
per month. 

7. Segmented Information 

The Company is currently engaged in one operating segment, the 
acquisition, exploration and development of mineral properties, 
primarily in Canada and Sweden. Geographic segmented information 
is as follows: 


/T/

-----------------------------------------------------------
                         Six months ended  Six months ended
                            June 30, 2004     June 30, 2003
-----------------------------------------------------------
Revenues (i)
Sweden                        $ 4,383,999       $ 1,518,596
Canada                             69,848           126,526
-----------------------------------------------------------
                              $ 4,453,847       $ 1,645,122
-----------------------------------------------------------
-----------------------------------------------------------

(i) Consists of sales, interest income, management fee and
    other income, and the equity in the income (loss) of the
    significantly influenced investee.

/T/

The Company's properties, plant and equipment are located in 
Sweden and have a carrying value of $197,117,360 at June 30, 2004 
(December 31, 2003 - $178,420). The increase in properties, plant 
and equipment is mainly due to the acquisition of ZM. 

8. Employee future benefits 

The recovery of pension costs for the defined benefit pensions 
plan for the three and six months ended June 30, 2004 were 
$206,944. The positive outcome is related to a decrease in the 
provision for pensions due to changes in estimated mortality 
rates. 

9. Name Change and Listing on the Toronto Stock Exchange ("TSX") 

At the Annual General Meeting held in Vancouver on June 11, 2004, 
the shareholders approved to change the name of the Company from 
South Atlantic Ventures Ltd. to Lundin Mining Corporation. The 
name change is effective August 12, 2004. 

The Company's application for listing on the TSX has been 
approved by the TSX and is effective August 12, 2004. The 
securities of the Company will be delisted from the TSX Venture 
Exchange at the close of business on August 11, 2004. 


/T/

LUNDIN MINING CORPORATION
SUPPLEMENTARY INFORMATION
TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED JUNE 30, 2004
(in Canadian Dollars)

1. Key Financial Data

--------------------------------------------------------------------
                                                 January 1 - June 30
                                                   2004         2003
--------------------------------------------------------------------
Shareholders' equity per share(1)           $      5.55   $     0.77
Basic and diluted income per share          $     (0.01)  $     0.04
Dividends                                           NIL          NIL
Number of shares outstanding at period end   30,539,971    7,709,957
--------------------------------------------------------------------
(1) Shareholders' equity per share is defined as the Company's
    shareholders' equity divided by the number of shares outstanding
    at period end.

2. LIST OF DIRECTORS AND OFFICERS AT JUNE 30, 2004:

(a) Directors:
                Brian D. Edgar
                Edward F. Posey
                John H. Craig
                Lukas H. Lundin
                Pierre Besuchet
                William A. Rand

(b) Officers:
                Lukas H. Lundin, Chairman
                Edward F. Posey, President
                Karl-Axel Waplan, Executive Vice President Operations
                Wanda Lee, Chief Financial Officer
                Jean R. Florendo, Corporate Secretary

3. FINANCIAL INFORMATION

John Craig and Brian D. Edgar, directors of the Company, signed this 
report on August 12, 2004.

The report for the third quarter 2004 will be published November 11, 
2004.

4. OTHER INFORMATION

Address (Vancouver office):
Lundin Mining Corporation
Suite 2101
885 West Georgia Street
Vancouver B.C. V6C 3E8
Canada

Telephone: +1 604 689 78 42
Fax: +1 604 689 42 50

Address (Sweden office):
Lundin Mining AB
Hovslagargatan 5
SE-111 48 Stockholm
Sweden

Telephone: +46 8 545 074 70
Fax: +46 8 545 074 71

Website: www.lundinmining.com

The corporate number of the Company is 306723-8.

/T/

-30-


FOR FURTHER INFORMATION PLEASE CONTACT:

Lundin Mining Corporation
Sophia Shane
Corporate Development
(604) 689-7842
Website: www.lundinmining.com