Lundin Mining Corp
TSX:LUN
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Good day, ladies and gentlemen, and 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. [Operator Instructions] This call is being recorded on Thursday, February 23, 2023.
I would now like to turn the conference over to CEO, Peter Rockandel. Please go ahead.
Thank you, operator, and 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 Andres 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 tonnes 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 tonnes 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 tonnes of copper per year to 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 Sauva deposit earlier month. The maiden estimate is for nearly 180 million tonnes of indicated resource containing 1.3 billion pounds copper and 1.1 million ounces of gold. We expect the estimate to increase with ongoing exploration efforts and influence our plan 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 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 CAD0.09 per share. The annualized dividend of CAD0.36 million continues to be a leading return amongst our peers. We directly returned over $275 million dividends in 2022 and indirectly returned to 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 improvement 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, we previously released our production results earlier this year, so I'll speak briefly to some of the details provided in our full results yesterday. We produced 250,000 tonnes of copper in 2022, including over 56,000 tonnes in the fourth quarter, substantially meeting our production guidance. Chapada and Eagle net guidance while Candelaria and Neves-Corvo were modestly below.
Candelaria 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 tonnes of zinc or within 5% of our guidance.
While below plan, ZEP delivered its fourth quarter of sequential production improvement and overall increasing production 25% over that of 2021. The ramp up of ZEP this year is tracking well to plan. Zinkgruvan's fourth quarter zinc production was impacted by lower than planned zinc head grades and short term resequencing of the mine plan to the Zinkgruvan area.
Eagle continues its reliable performance producing over 17,000 tonnes 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 byproduct metals from our operations. With metal prices finishing the year on a strong note, 2020'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 tonnes 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 7, production costs totaled close to $1.7 billion for 2022 and were approximately 20% higher than last year. The increase that we've 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. The 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 the benefit from the roughly 50% lower electricity rate under our new power purchase agreement, which commenced on January 1. The new power purchase agreement also ensures a minimum of 80% renewables 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 gold volumes in the fourth quarter. Cash cost guidance is for $2.55 to $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 to $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 byproduct copper, volumes and prices than forecast, combined with inflationary increases in operating costs. Cash cost guidance is for $1.50 to $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 than copper byproduct credits and more favorable foreign exchange than planned. Cash cost guidance is for $0.60 to $0.65 per pound of zinc in 2023, net of the lead and copper wire product credits.
Total capital expenditure tracked 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 change 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 and 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 and 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. And today, we remain in a modest net debt position of roughly $14 million. We have significant liquidity of approximately $1.7 billion today and recently received commitments from our leading syndicate -- lending syndicate to extend the term of our revolver by a 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 equivalents 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 have 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 tonnes 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 Sauva 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 Sauva deposit. I'll speak more to Sauva 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 outline of the maiden Sauva 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 tonnes, grading 0.32% copper and 0.2 grams per tonne gold, containing 1.3 billion pounds of copper and 1.1 million ounces of gold.
Within the 180 million tonnes, this is a zone of 109 million tonnes at 0.42 copper and 0.29 grams per tonne gold, which is 0.5 for (ph)copper equivalent. This compares to the average headgrade Chapada processed in 2022 of 0.26 copper and 0.16 grams per tonne 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, and we expect the resource estimate to continue to grow with our ongoing exploration efforts. Subsequent to the estimate cutoff 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 for mega (ph) trend and is to include 50,000 meter -- 55,000 meters, excuse me, of further drilling. The potential implications this system may have for our ongoing expansion studies are being evaluated as Sauva 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 nameplate capacity and improvements at Zinkgruvan, zinc production is forecast to increase a further 45% to 50% to 225,000 to 240,000 tonnes 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 reduction 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 in metal recovery rates. Zinkgruvan zinc production is forecast to increase over the next three years as head grades are able -- 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 courts and [Technical Difficulty] extending the life of the operation into 2027. Development of the Upper Keel is underway and having begun in early January of this year and first order 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 undergrounded Eagle this year with a focus on extending the life of mine by targeting conduits linked with Eagle East.
Lastly, Josemaria, Chapada and Sauva 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% and then further with potential expansions at Chapada and the development of Sauva.
In conclusion 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 the cycle.
And 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. [Operator Instructions] 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 you need -- what needs to happen in order to reach that sanctioning decision? And 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'll just answer that a couple of ways. As we point or mentioned in the presentation. So 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. 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. But we won't really put out news on those specific items. So I think the biggest milestone will be when we come out with the updated technical report in the second half.
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 the beginning, if you will, on who the ideal partners would be. So carrying a lot of the conversations, some of which will be occurring even next week, you can probably figure out where we are and then throughout the year. So 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 -- 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 has changed from what we have reported earlier. So we announced [indiscernible] previously. And so that did change our ability to -- I think, historically, you can 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.
And going back to your question on the partnerships, I would say, arguably, it's mainly -- our focus has been on two areas, if you will. I mean there's three different opportunities but our focus has been on two, 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.
Welcome.
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 is on Candelaria. You've obviously indicated 20,000 tonnes upside from the expansion relative to the CapEx profile -- sorry, from the underground relative to the CapEx profile and the technical report. Can you give us any sense of ballpark how much additional capital would be required for that 20,000 tonnes incremental? And secondly, kind of a reminder of the upside if Alcaparrosa comes back into the mine plan. That's the first question.
Thanks, Daniel. So, yeah, on CUGEP, I would say that we obviously put a ballpark number in there, but it was 20,000 to probably 22,000 tonnes is what our initial studies are showing as far as 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, but we haven't disclosed what that number is yet.
With respect to Alcaparrosa, we have had a lot of support, which often doesn't make its way back to North America. But we were actually on the front page of the national paper down there last month with the Minister of Mines. 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. If we were able to get that back up and running in the next -- or start the process in the next couple of months, you'd probably be talking in the range of 4,000 to 6,000 tonnes that could be added for 2023.
Okay. Thanks. So I'm assuming that would be consistent across the profile of around 5,000 tonnes over the profile of the future years. Is that correct?
Yeah, that's probably an accurate number to assume.
Okay. Cool. Thanks. And then my second question on Neves-Corvo looking at the operating cost profile from the technical report. You got, I guess, some implied improvement in 2024, 2025 in -- or cost per ton of ore milled as volumes left, but absolute level of cost is reasonably stable. What sort of assumptions are you making within that on power cost normalization in Portugal?
Yeah. So a couple of things. One, which I just going to grab the tech report and maybe have Mark help on that one. But what I will say as well, we are right now are closely reviewing the possibility of implementing solar. And so there's a couple of proposals that are coming in, and 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 come up with a year number, if you will. On the tech report, I know Mark was describing a specific number.
Yeah. Hey, Dan, I think in the tech report, we do outline the electricity costs, the assumptions there. So we're talking about EUR16 million for 2023. I mean you can see it does normalize and come down from there. So it does assuming we're taking 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 [Technical Difficulty] average of last year. So it does -- it 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 the people on site, the cost on site. So 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 quiet time to sit through the 226 pages of the report. [Multiple Speakers] Yeah. Thanks. And then just final one more, if I could. On the -- 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 the final capital budget that you set?
Well, I think it would be part of the budget. Yeah, it's not going to be in excess of the budget. I mean, we've guided $400 million for spend in 2023. And as you can see in our Q4 report, we expect about $70 million all in, in 2022. So obviously, with also final investment decision is taken, we will guide a new number on a point-forward basis from that decision in.
Okay. Thanks a lot.
No problem.
Thank you. The next question comes from Stefan Ioannou of Cormark Securities. Please go ahead.
Hey, great. Thanks very much guys. I just kind of curious, the guidance for this year is across the portfolio, $1.1 billion spend on CapEx. Just wondering if you could maybe provide some sort of thoughts on maybe the cadence of that spending and how that's going to dovetail with your cash flow and maybe what you think about in terms of potentially drawing down your ICF?
Yeah. I mean, clearly, this year CapEx program has quite a lot of expansionary comps included in, as I said, $400 million and then a little bit of ZEP as well. But if you take 2022 as a proxy, we generated $1 billion from our operations. And that, by the way, actually includes $160 million spent on cash tax, which relates to 2021 sort of final tax settlements. And it also includes an expenditure of $66 million on Josemaria. So in what was a relatively challenging year, we still generated, when you adjust for these items, over $1 billion in cash flow from our producing assets.
So in that context, when you look at the CapEx we have and then exploration expenditure and also the dividend, I mean it's very doable. The capital allocation program that we have and also considering the strong balance sheet and the fact that we have $1 billion undrawn credit lines, I think we're in a good position to meter ahead on this program.
And Stefan, 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 going to be the high. So we're talking, I believe, just over 300, and then you're going to get lower as you're through the year. But it's pretty -- Q2, 3 and 4 are pretty equal.
Okay. Okay. No, that's super helpful. And then just maybe a housekeeping, just on the Josemaria spend itself, is it fair to assume that all of it is going to be actually capitalized this year because 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 sites, I'm sure, by and large, to be costs.
Okay. Great. That’s super helpful. Thanks very much guys.
Thank you. [Operator Instructions] 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 Sauva there, adding perhaps 50,000 to 60,000 tonnes. Is that the right sort of ballpark and then what about gold?
Yeah. Sorry, I was just looking at the page. Yeah, 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 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 tonnes of call it, 0.54 copper equivalent. So quite a bit more than what we're currently mining there at Chapada.
And 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. So we've hit 90 meters of over 2% copper equivalent, and that's near surface. And then we've got another 55,000 meters we'll be drilling this year. But I'd say it's a bit premature, unfortunately, to determine what that incremental production rate would be.
Okay. Understood. Second question, just on some nonrecurring items for 2022. Sinkhole costs $63 million. Is how much are you budgeting for 2023? And then, if you can comment on the inventory write-down and the underlying reasons, that would be very useful. Thank you.
Yes. I mean, on the sinkhole, we have expensed $63 million in 2022, of which around about $20 million is actually a cash cost incurred. And the rest is an accrual for work we have to do through 2023. So remediation work on the sinkhole itself. And we have also accrued for an element of potential fines within that number.
On the stockpile on Chapada, this really relates to higher input cost into the stockpile and also a higher movement cost looking forward with unassumed higher diesel cost in particular. So that triggered an impairment of just over $60 million.
Yeah. This was a big debate, I would say, with the auditors because trying to determine a diesel price on a long-term stockpile is not the easiest thing to figure out. But in any case, they had their opinions and diesel comes down, you can see that get right up back again.
Understood. Very clear. And maybe if I can squeeze one more on the Candelaria technical report. You have extended the mine life to 2046, but there is a meaningful step down in copper recoveries in the later years. What explains that? I think it's about 10 percentage point drop in recoveries.
Yeah, Peter. It is really driven by the metallurgical models there. So I mean, as we get to the words, call it, the latter years of that current mine plant and we're processing more stockpile, that would really be the bulk of what's driving the expected recoveries at that time. But I'd say, again, that's the current plan. So as we looked at potentially back Alcaparrosa and extend some of those mine lives, the further we can push those stockpiles on. I think the better recoveries we have for longer as well do.
Great. Thanks so much.
Thank you.
Thank you. The next question comes from Daniel Major of UBS. Please go ahead.
Hey, guys. Sorry, really quick follow-up, just on 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. But 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 2020 with respect to the sinkhole? And will that sort of be flowing through as a working capital line?
Yeah. I mean, as I said, we spent already $20 million. And also in '22, we impaired around about $5 million, which also sits within the $63 million. So I think the potential cash element, I mean, this is an accrual, it's not confirmed yet, but it's around about $38 million, I think, of cash impact for 2023 as we are currently accrued for, but the work is still to be executed and let's see where we end up.
Okay. And just a follow up on that on sort of broader working capital. You saw an overall build last year. How would you expect the progression over 2023 or 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 working capital position and when which is a nice thing, of course. And then when prices weakens again, then you tend to unwind that working capital. So these are timing differences in we tend to see $100 million plus or minus swings from quarter-to-quarter on these items.
All right. Thanks a lot.
Thank you. The next question comes from Jackie Przybylowski of BMO Capital Markets. Please go ahead.
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, yes. So 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. And there's been good buy-in from 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. So I can get into it in a bit more detail maybe on a separate call, but hopefully that answers your question.
Yes. Thanks very much Peter.
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. So we look forward to updating everyone on our next call. And 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.