Equity Research 8 June 2022North America Metals & Mining Routes to emission reductions Our coverage is targeting Scope 1+2 emission cuts of ~24% by 2030. We model a reduction of only 6%. We think currently articulated carbon reduction projects can be achieved without a carbon price and without destroying value. But not all companies have a plan, and companies like TECK are already facing higher carbon taxes. The goal: greening metals supply. Most experts agree that the 2020s are the decisive decade for climate action. Customers and governments are scrutinizing the carbon intensity of every product. The focus invariably turns upstream. We think it is incumbent upon the mining sector to decarbonize the metals supply as much as possible, for both competitive and environmental reasons. First power, then processes. Zero emission power supply appears the easiest route to emission reduction, in theory enabling a 50% reduction in Scope 1+2 emissions. FCX would appear to have the greatest potential emission reduction here if it can get off coal, followed by NEM and FM. The next steps are more difficult. We think reducing diesel consumption and process innovation will play out over at least a 10 year time frame. Production growth creates challenges. Targets disclosed by our companies add up to a Scope 1+2 emission cut of ~24% by 2030, and ~69% by 2050. However, we see production growth as likely to put continued upward pressure on emissions. We run several emission scenarios and forecast an absolute Scope 1+2 emission reduction of only 6% through 2030. Based on announced emission reduction projects, we see GOLD and NEM achieving the most significant absolute reductions in the gold space, while TECK, FM, and FCX lead in the base metal space. Integrating carbon in our models. We believe the first ~30% of Scope 1+2 carbon emission reductions could be break-even from an NPV perspective, before assuming any carbon price. We do not forecast incremental capex to reduce emissions, as we assume transition capex can be covered by existing sustaining capex forecasts and outsourcing. We generally see PPAs for renewable energy dominating integrated projects, however it remains to be seen if non-integrated structures can come to dominate in other areas as well (for example, battery or hydrogen as a service). We have added carbon prices to our models. The liability as a percentage of NAV is in the region of 1 to 12%. TECK is most significantly affected given relatively high near-term carbon taxes in Canada and long-lived assets. We reduce our price targets for TECK 7%, GMEXICO by 4%, SCCO by 2%, AEM by 1% and NEM by 1%. Barclays Capital Inc. and/or one of its affiliates does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their investment decision. This research report has been prepared in whole or in part by equity research analysts based outside the US who are not registered/qualified as research analysts with FINRA. Please see analyst certifications and important disclosures beginning on page 90 .FOCUS #ESGTransition North America Metals & Mining Matthew Murphy, CFA +1 416 863 8963 matthew.murphy@barclays.com BCCI, Canada David Hove, CFA +1 416 863 8935 david.hove@barclays.com BCCI, Canada European Metals & Mining Ian Rossouw, CFA +44 (0)20 3555 2620 ian.rossouw@barclays.com Barclays, UKNorth America Metals & Mining NEUTRAL UnchangedCompleted: 08-Jun-22, 03:52 GMTReleased: 08-Jun-22, 04:10 GMTRestricted - External 8 June 20222Barclays | North America Metals & Mining Summary of our Ratings, Price Targets and Earning EstimatesRatingPrice TargetEPS FY1 (E)EPS FY2 (E)CompanyOldNewDatePriceOldNew%ChgOldNew%ChgOldNew%ChgNorth America Metals & MiningNeuNeuAgnico Eagle Mines Ltd. (AEM)OWOW6-Jun-2253.4071.0070.00-12.172.17-1.411.41-Barrick Gold Corp. (GOLD)OWOW6-Jun-2220.5128.0028.00-1.031.03-0.690.69-Ero Copper Corp. (ERO.TO/ERO CT)OWOW7-Jun-2215.7221.0021.00-1.701.70-1.071.07-First Quantum (FM.TO/FM CN)UWUW3-Jun-2238.0027.0027.00-2.372.37-1.151.15-Franco-Nevada Corp. (FNV)EWEW6-Jun-22144.10130.00130.00-4.254.25-3.933.93-Freeport-McMoRan Inc. (FCX)UWUW7-Jun-2243.3929.0029.00-3.383.38-1.741.74-Grupo Mexico SAB de CV (GMEXICOB.MX/GMEXICOB MM)EWEW6-Jun-2299.9999.0095.00-40.400.40-0.270.27-Hudbay Minerals Inc. (HBM.TO/HBM)EWEW7-Jun-227.639.009.00-0.660.66-0.550.55-Kinross Gold Corp. (KGC)OWOW7-Jun-224.517.007.00-0.390.39-0.260.26-Lundin Mining Corp. (LUN.TO/LUN CN)EWEW7-Jun-2211.3211.0011.00-1.211.21-0.790.79-Newmont Mining Corp. (NEM)EWEW6-Jun-2267.8669.0068.00-13.293.29-2.412.41-OceanaGold Corp. (OGC.TO/OGC CT)EWEW7-Jun-223.013.503.50-0.300.30-0.170.17-Royal Gold Inc. (RGLD)EWEW7-Jun-22116.48130.00130.00-3.943.94-3.493.49-Southern Copper Corp. (SCCO)EWEW6-Jun-2264.0862.0061.00-23.923.92-2.592.59-Teck Resource