Fruta del Norte achieves record gold production of 269,752 oz
and AISC¹ of $765 per oz sold in the
first half of 2023
VANCOUVER, BC, Aug. 9, 2023
/CNW/ - Lundin Gold Inc. (TSX: LUG) (Nasdaq Stockholm: LUG)
(OTCQX: LUGDF) ("Lundin Gold" or the "Company") today
reports results for the second quarter and first half of 2023,
highlighted by Q2 production of 129,731 ounces ("oz") of gold and
sales of 128,958 oz, at a cash operating cost1 of
$644 per oz sold and all-in
sustaining cost ("AISC")1 of $802 per oz sold. For the first half of 2023,
Lundin Gold produced 269,752 oz and
sold 263,649 of gold at an AISC of $765 per oz. Lundin
Gold generated $132 million in
free cash flow1 over the three-month period, the highest
quarterly free cash flow1 achieved to date. All amounts
are in U.S. dollars unless otherwise indicated. View PDF
version.
Based on very strong performance during the first half of 2023,
the Company has increased its 2023 production guidance to 450,000
to 485,000 oz. In addition, the Company has reduced its 2023 cash
operating cost1 guidance to $650 to $700 per oz
sold and AISC1 to $820 to
$870 per oz sold. This is compared to
previous production guidance of 425,000 to 475,000 oz, cash
operating cost1 guidance of $700 to $760 per oz
sold and AISC1 guidance of $870 to $940 per oz
sold.
Ron Hochstein, President and CEO
commented, "As a result of strong operating results in the first
half of 2023 and confidence that our team can continue to deliver
excellent performance, we are increasing production guidance and
reducing cash operating cost1 and AISC1
guidance. Specifically, we are pleased that the bottom of our
original cost guidance range is now the top of our revised cost
guidance range. We've said that Lundin
Gold is a cash flow story for some time now, and our free
cash flow generated during the second quarter highlights that. This
free cash flow enables us to fund future highly prospective
exploration programs, pay down our debt, pay dividends, and look at
potential expansion opportunities. The Company is in a strong
position, and I am excited to take this momentum into the second
half of the year."
______________________________
|
1 Certain
additional disclosures for these specified financial measures have
been incorporated by reference and can be found on pages 13 to 16
of the Company's MD&A for the three and six months ended June
30, 2023 available on SEDAR
|
OPERATING AND FINANCIAL RESULTS SUMMARY
The following two tables provide an overview of key operating
and financial results.
|
Three months
ended
June
30,
|
Six months
ended
June
30,
|
|
2023
|
2022
|
2023
|
2022
|
Tonnes ore
mined
|
404,408
|
369,430
|
832,143
|
749,059
|
Tonnes ore
milled
|
418,373
|
385,675
|
810,705
|
759,082
|
Average head grade
(g/t)
|
11.0
|
10.3
|
11.6
|
10.8
|
Average
recovery
|
88.0 %
|
87.6 %
|
89.3 %
|
88.9 %
|
Average mill throughput
(tpd)
|
4,598
|
4,238
|
4,479
|
4,194
|
Gold ounces
produced
|
129,731
|
111,890
|
269,752
|
233,555
|
Gold ounces
sold
|
128,958
|
96,291
|
263,649
|
215,573
|
|
Three months
ended
June
30,
|
Six months
ended
June
30,
|
|
2023
|
2022
|
2023
|
2022
|
Net revenues
($'000)
|
243,930
|
177,808
|
500,658
|
394,280
|
Income from mining
operations ($'000)
|
124,801
|
82,522
|
257,509
|
193,729
|
Earnings before
interest, taxes, depreciation, and amortization
($'000)1
|
149,900
|
144,704
|
293,532
|
243,526
|
Adjusted earnings
before interest, taxes, depreciation, and amortization
($'000)1
|
149,579
|
104,718
|
308,645
|
238,264
|
Net income
($'000)
|
63,148
|
55,962
|
114,613
|
79,144
|
Basic income per share
($)
|
0.27
|
0.24
|
0.48
|
0.34
|
Cash provided by
operating activities ($'000)
|
162,352
|
60,686
|
306,791
|
188,016
|
Free cash flow
($'000)1
|
131,859
|
21,248
|
120,206
|
113,054
|
Free cash flow per
share ($)1
|
0.56
|
0.09
|
0.51
|
0.48
|
Average realized gold
price ($/oz sold)1
|
1,942
|
1,907
|
1,947
|
1,882
|
Cash operating cost
($/oz sold)1
|
644
|
702
|
644
|
656
|
All-in sustaining costs
($/oz sold)1
|
802
|
864
|
765
|
771
|
Adjusted net earnings
($'000)1
|
59,387
|
13,490
|
126,401
|
71,040
|
Adjusted net earnings
per share ($)1
|
0.25
|
0.06
|
0.53
|
0.30
|
Dividends paid per
share ($)
|
0.10
|
-
|
0.20
|
-
|
SECOND QUARTER HIGHLIGHTS
Financial Results – Highest Ever Quarterly Free Cash Flow
Generation
- The Company sold a total of 128,958 oz of gold, consisting of
84,679 oz of concentrate and 44,279 oz of doré at an average
realized gold price1 of $1,942 per oz for total gross revenues from gold
sales of $250 million. Net of
treatment and refining charges, revenues were $244 million.
- Cash operating costs1 and AISC1 were
$644 and $802 per oz of gold sold, respectively. While
cash operating costs1 per oz sold remained consistent
with the previous quarter, the ramp up of sustaining capital
activities resulted in a higher AISC1 albeit still below
expected levels for the quarter.
- The Company generated cash flow of $162
million from operations and record free cash
flow1 of $132 million or
$0.56 per share resulting in a cash
balance of $275 million at
June 30, 2023.
- Earnings before interest, taxes, depreciation, and
amortization1 ("EBITDA") and adjusted EBITDA1
were $149.9 million and $149.6 million, respectively with the difference
resulting from derivative gains recognized in the quarter.
- Net income was $63.1 million
including a derivative gain of $0.3
million, and net of corporate, exploration, finance costs,
and associated taxes on earnings. Adjusted earnings1,
which exclude the derivative gain and related taxes, were
$59.4 million, or $0.25 per share.
___________________________
|
1 Certain
additional disclosures for these specified financial measures have
been incorporated by reference and can be found on pages 13 to 16
of the Company's MD&A for the three and six months ended June
30, 2023 available on SEDAR
|
Production Results – Strong Grades and Throughput Offset Weaker
Recoveries
- Mine production of 404,408 tonnes of ore at an average grade of
9.0 grams per tonne.
- The mill processed 418,373 tonnes of ore at an average
throughput rate of 4,598 tpd. Inclusive of the relining of the SAG
and ball mills during the first quarter, the mill has averaged a
throughput rate of 4,479 tpd during the first half of 2023.
- The average grade of ore milled was 11.0 grams per tonne with
average recovery at 88.0%. Recoveries were affected by processing
of ore from sectors that contain higher levels of finely
disseminated sulphide minerals which are impacting both gravity and
flotation recovery.
- Gold production was 129,731 oz which was comprised of 85,395 oz
in concentrate and 44,336 oz as doré.
Liquidity and Capital Resources
At the end of the second quarter of 2023, the Company is in a
strong financial position.
(in thousands of
U.S. dollars)
|
As at June
30,
2023
|
As at December
31,
2022
|
Financial
Position:
|
|
|
Cash
|
274,968
|
363,400
|
Working
capital
|
268,095
|
194,804
|
Total assets
|
1,508,831
|
1,668,865
|
|
|
|
Long-term
debt
|
|
|
Senior debt
facility
|
91,676
|
172,854
|
Fair value of stream
credit facility and offtake
|
304,912
|
287,666
|
Fair value of gold
prepay credit facility
|
-
|
207,446
|
Total long-term
debt
|
396,588
|
667,966
|
The change in cash during the 2023 Period was primarily due to the
full repayment of the gold prepay facility of $208 million; principal repayments, interest and
finance charges, including associated taxes, under the stream
credit facility totaling $39.0
million; interest and principal repayments under the senior
debt of $91.1 million; dividends of
$47.4 million; and cash outflows of
$20.4 million relating to sustaining
capital expenditures. This is offset by cash generated from
operating activities of $307 million
and proceeds from the exercise of stock options and anti-dilution
rights totaling $9.8 million.
Capital Expenditures
- Sustaining Capital:
-
- Construction of the fourth raise of the tailings dam advanced
during the second quarter with progress to date consistent with
plan. Completion during the fourth quarter of 2023 remains as
expected.
- The new warehouse was completed during the second quarter and
is now operational.
- The underground mine maintenance facility is expected to be
completed during the third quarter which will provide additional
efficiencies.
- Other sustaining capital projects such as sewage treatment
plant upgrades, purchase of mobile equipment, and other efficiency
improvement projects continue to ramp up during the remainder of
the year.
- The 2023 conversion drilling program continues to advance in
distinct sectors of the FDN resource. During the quarter, the
program focused on the southern extension with approximately 3,211
metres across 20 drill holes completed. Most drill holes confirmed
the continuity of mineralization in the drilled areas. Results have
pointed to a vein type mineralization in this part of the deposit,
with narrower higher-grade intervals. Some of the conversion
drilling results for the southern extension remain pending. A
complete table of results received to date can be found in
Lundin Gold's press release dated
August 3, 2023.
Health and Safety
During the second quarter there were no Lost Time Incidents
("LTIs") and no Medical Aid Incident ("MAIs"). The Total Recordable
Incident Rate across exploration and operations was 0.00 per
200,000 hours worked for the quarter and 0.07 for the first six
months of 2023. In early July 2023,
FDN operations surpassed 365 days without an LTI or MAI with over
5.1 million hours worked.
Community
Various community projects supported by the Company continued to
progress in the second quarter including support for micro
businesses established by local entrepreneurs in conjunction with
the Lundin Foundation. The local textile manufacturer, fire
extinguisher maintenance company, and pest control / fumigation
company continue to work with the mine. Feasibility studies of
potential new areas for local businesses continue. Efforts have
continued to ensure that local farmers retain access to local,
national, and international markets.
Longstanding projects such as road maintenance, educational
support to promote access to higher education, efficiency
improvements in the agricultural sector and addressing
infrastructure challenges remain on track.
The Company continues to engage with local indigenous people,
especially the Shuar Federation of Zamora Chinchipe, to jointly
implement projects that promote economic opportunities and the
Shuar culture. In the second quarter, the Shuar tourism company
continued in its efforts to diversify its lines of business and to
create additional employment opportunities.
Corporate
The Company paid a quarterly dividend of $0.10 per share on June
27, 2023 (June 30 for shares
trading on Nasdaq Stockholm) based on a record date of June 13, 2023, for a total of $23.7 million. With the release of its second
quarter 2023 results, the Company has declared a cash dividend of
$0.10 per share, which is payable on
September 26, 2023 (September 29 for shares trading on Nasdaq
Stockholm) to shareholders of record on September 11, 2023.
At the Company's annual shareholders' meeting on May 15, 2023, Ms. Angelina Mehta was elected as a director,
replacing Ms. Chantal Gosselin who
did not stand for re-election.
The Company's second TCFD-aligned climate change report and
seventh annual sustainability report were published in May. Based
on publicly available data from 152 gold mines that reported their
Scopes 1 and 2 greenhouse gas emissions in 2021 and on Lundin Gold's 2022 emissions performance, the
emissions intensity of Fruta del Norte is among the lowest in the
industry. The Company has set a target to be carbon neutral by 2030
with respect to its Scopes 1 and 2 emissions based on its current
life of mine plan.
EXPLORATION – CONTINUING TO MAKE PROGRESS
Near-Mine Exploration Program
The near mine
drilling program continues to explore extensions of major
controlling structures surrounding the FDN deposit. In the second
quarter, a total of 8,609 metres across sixteen drill holes, from
surface and underground, were completed at several targets near
FDN.
- The surface drilling program continues along the south
extension of the East Fault, where the FDN South ("FDNS") and Bonza
Sur targets were identified in the previous quarter. During the
quarter, twelve surface drill holes were completed and indicated
continuity of mineralization at Bonza Sur and FDNS. An exploratory
hole was also completed along the north extension of the Fruta del
Norte deposit. Four surface rigs are currently drilling with two
rigs at Bonza Sur, one at FDNS, and the fourth testing new near
mine sectors.
-
- At FDNS, six surface drill holes were completed,
confirming continuity of mineralization and defining a new geometry
for the vein system in this sector. Drilling results indicate a
series of subparallel epithermal veins in a
northeastern-southwestern direction that remain open for expansion
along strike and at depth.
- At Bonza Sur, located one kilometre from FDN, five surface
drill holes were completed and continue to confirm mineralization.
Drilling results recorded multiple positive intersections and
demonstrated the occurrence of three distinct mineralized zones
represented by veins/veinlets of quartz and minor chalcedony and
manganoan-carbonate associated to the occurrences of sulfides.
Mineralization currently extends 500 metres along strike to the
north-south and 300 metres along the downdip and remains open in
all directions.
- Drilling testing new near mine sectors was recently initiated.
This drilling aims to explore the extensions of major structures
at FDN with the first drill hole completed along the northern
extension of FDN. Results are pending.
- The underground drill program continues to explore the
continuity of the FDN deposit at depth and beyond the major faults.
Four drill holes were completed and intercepted structures and
hydrothermal alteration beyond the FDN limits. In the central part
of FDN, two drill holes confirmed the hydrothermal alteration zones
at depth with low-grade gold values. Two other drill holes
intercepted zones of hydrothermal alteration with vein/veinlets
hosted on volcanic rocks or intrusive rocks to the east of the FDN
East Fault. Results are pending.
A complete table of results received to date can be found in
Lundin Gold's press release dated
August 3, 2023.
Regional Exploration Program
The regional
drilling program continues to advance in distinct sectors along the
southwestern border of the Suarez basin and a total of 2,264 metres
across three drill holes were completed in the second quarter. The
program focused on the Quebrada La Negra and the newly defined
Crisbel targets, where detailed geological interpretation of
exploration data and additional surface works identified major
structures and zones of hydrothermal alteration.
- At Quebrada La Negra, two drill holes were completed which
intercepted wide zones of hydrothermal alteration with breccias
and/or veins and disseminated sulfides. Drill results returned low
values of gold associated with epithermal pathfinder elements, such
as zinc and lead, and a recent interpretation point to new areas
for further detailing farther north.
- At Crisbel, one drill hole was completed testing an unexplored
geochemical soil anomaly (gold and epithermal pathfinder elements
such as antimony and arsenic) disposed along the contact between
the Suarez Border and the volcanic sequence. The drill hole
intercepted hydrothermal alteration zones with important quantities
of sulfides hosted in brecciated volcanic rocks. Results are
pending.
Newcrest Earn-In Agreement
On the concessions
held by the Company's subsidiary, SurNorte S.A., a second phase of
scout drilling commenced at the Gamora Project, located in
southeast Ecuador. This work is
being conducted by Newcrest Mining Limited ("Newcrest") as the
operator under an earn-in agreement with Lundin Gold pursuant to which Newcrest can earn
up to a 50% interest in eight exploration concessions located to
the north and south of Fruta del Norte. A second phase of scout
drilling was completed in the quarter at the Gamora Project,
which was focused on testing priority copper-gold targets in the
Mirador copper porphyry district.
OUTLOOK – GUIDANCE INCREASED FOLLOWING STRONG FIRST
HALF
Achievements during the first half of 2023 provide the Company
with a positive outlook for the remainder of the year and as a
result, production guidance is increased to 450,000 to 485,000 oz
while cost guidance is decreased for both cash operating cost and
AISC to $650 to $700 per oz sold and $820 to $870 per oz
sold, respectively. Production for the second half of 2023 is
expected to decrease relative to the first half of the year driven
by a combination of lower grades and lower recoveries due to
processing of ore from certain sectors of the mine with less
favourable geology.
In addition, AISC1 is expected to increase with continued ramp
up of sustaining capital activities and lower expected gold
production levels. Sustaining capital is expected to increase
substantially during the second half driven by construction of the
fourth raise of the tailings dam as well as several other capital
projects. In addition, the conversion drilling program, aiming to
convert Inferred to Indicated Mineral Resources, is planned to
continue with results expected to be incorporated into the
geological model and in the new resource estimate in the first
quarter of 2024.
The near mine drilling program plans to continue to delineate
the FDNS and Bonza Sur targets, where systems of epithermal
veins/veinlets have been identified and remain open. Three rigs are
dedicated to the detailing and expansion of the mineralized zones
at depth and along strike. Another surface rig and underground rig
continue to explore for major discoveries in the near mine district
targeting the extension of major controlling structures at FDN in
new sectors. The near mine program is expected to comprise a total
of 23,000 metres of drilling for 2023.
The regional drilling program continues to focus on the southern
Suarez Basin, advancing along the eastern and western borders of
the Basin. A second rig is expected to be added to advance numerous
target areas identified during the previous quarters. The regional
drilling program continues to be expected to comprise a total of
12,500 metres for the year, with two rigs currently operating. The
combined near mine and regional exploration budget for 2023 remains
at $24.6 million.
The Company anticipates declaring quarterly dividends of
$0.10 per share, equivalent to
approximately $100 million annually,
based on currently issued and outstanding shares.
________________________
|
1 Certain additional disclosures for
these specified financial measures have been incorporated by
reference and can be found on pages 13 to 16 of the Company's
MD&A for the three and six months ended June 30,
2023 available on SEDAR
|
Qualified Persons
The technical information relating to FDN contained in this News
Release has been reviewed and approved by Ron Hochstein P. Eng, Lundin Gold's President and CEO who is a
Qualified Person under NI 43-101. The disclosure of exploration
information contained in this press release was prepared by
Andre Oliveira, P.Geo, Lundin Gold's V.P. Exploration, who is a
Qualified Person in accordance with the requirements of NI
43-101.
Webcast and Conference Call
The Company will host a conference call and webcast to discuss
its results on Thursday, August 10 at
7:00 a.m. PT, 10:00 a.m. ET, 4:00 p.m.
CET.
Conference Call Dial-In Numbers:
Participant Dial-In
North America:
|
+1
416-764-8659
|
Toll-Free Participant
Dial-In North America:
|
+1
888-664-6392
|
Participant Dial-In
Sweden:
|
0200899189
|
Conference
ID:
|
Lundin Gold /
61558460
|
A link to the webcast will be available on the Company's website,
www.lundingold.com.
A replay of the conference call will be available two hours
after the completion of the call until August 24, 2023.
Toll Free North America
Replay Number:
|
+1
888-390-0541
|
International Replay
Number:
|
+1
416-764-8677
|
Replay
passcode:
|
558460 #
|
About Lundin Gold
Lundin Gold, headquartered
in Vancouver, Canada, owns
the Fruta del Norte gold mine in southeast Ecuador and a large
exploration land package that hosts the Fruta del Norte deposit at
its northern edge. Fruta del Norte is among the highest-grade
operating gold mines in the world.
The Company's board and management team have extensive expertise
in mine operations and are dedicated to operating Fruta del Norte
responsibly. The Company operates with transparency and in
accordance with international best practices. Lundin Gold is committed to delivering value to
its shareholders, while simultaneously providing economic and
social benefits to impacted communities, fostering a healthy and
safe workplace and minimizing the environmental impact. The Company
believes that the value created through the development of Fruta
del Norte will benefit its shareholders, the Government and the
citizens of Ecuador.
Non-IFRS Measures
This news release refers to certain financial measures, such as
average realized gold price per oz sold, EBITDA, adjusted EBITDA,
cash operating cost per oz sold, all-in sustaining cost, free cash
flow, free cash flow per share, and adjusted earnings, which are
not measures recognized under IFRS and do not have a standardized
meaning prescribed by IFRS. These measures may differ from those
made by other companies and accordingly may not be comparable to
such measures as reported by other companies. These measures have
been derived from the Company's financial statements because the
Company believes that, with the achievement of commercial
production, they are of assistance in the understanding of the
results of operations and its financial position. Certain
additional disclosures for these specified financial measures have
been incorporated by reference and can be found on page 13 of
the Company's MD&A for the three and six months ended
June 30, 2023 available on
SEDAR.
Additional Information
The information in this release is subject to the disclosure
requirements of Lundin Gold under
the EU Market Abuse Regulation. This information was publicly
communicated on August 9, 2023 at
5:00 p.m. Pacific Time through the
contact persons set out below.
Caution Regarding Forward-Looking Information and
Statements
Certain of the information and statements in this press
release are considered "forward-looking information" or
"forward-looking statements" as those terms are defined under
Canadian securities laws (collectively referred to as
"forward-looking statements"). Any statements that express or
involve discussions with respect to predictions, expectations,
beliefs, plans, projections, objectives, assumptions or future
events or performance (often, but not always, identified by words
or phrases such as "believes", "anticipates", "expects", "is
expected", "scheduled", "estimates", "pending", "intends", "plans",
"forecasts", "targets", or "hopes", or variations of such words and
phrases or statements that certain actions, events or results
"may", "could", "would", "will", "should" "might", "will be taken",
or "occur" and similar expressions) are not statements of
historical fact and may be forward-looking statements. By their
nature, forward-looking statements and information involve
assumptions, inherent risks and uncertainties, many of which are
difficult to predict, and are usually beyond the control of
management, that could cause actual results to be materially
different from those expressed by these forward-looking statements
and information. Lundin Gold
believes that the expectations reflected in this forward-looking
information are reasonable, but no assurance can be given that
these expectations will prove to be correct. Forward-looking
information should not be unduly relied upon. This information
speaks only as of the date of this press release, and the Company
will not necessarily update this information, unless required to do
so by securities laws.
This press release contains forward-looking information in
several places, such as in statements relating to the Company's
2023 production outlook, including estimates of gold production,
grades recoveries and AISC; operating plans; expected sales
receipts, cash flow forecasts and financing obligations; its
estimated capital costs; benefits of the Company's community
programs; the Company's declaration and payment of dividends
pursuant to its dividend policy; the timing and the success of its
drill program at Fruta del Norte and its other exploration
activities; and estimates of Mineral Resources and Reserves at
Fruta del Norte. There can be no assurance that such statements
will prove to be accurate, as Lundin
Gold's actual results and future events could
differ materially from those anticipated in this forward-looking
information as a result of the factors discussed in the "Risk
Factors" section in Lundin
Gold's Annual Information Form dated March 31, 2023, which is available at
www.lundingold.com or on SEDAR.
Lundin Gold's actual results
could differ materially from those anticipated. Factors that could
cause actual results to differ materially from any forward-looking
statement or that could have a material impact on the Company or
the trading price of its shares include: risks related to
political and economic instability in Ecuador; risks associated with the
Company's community relationships; risks related to estimates of
production, cash flows and costs; risks inherent to mining
operations; shortages of critical supplies; the cost of
non-compliance and compliance costs; control of the Company's
largest shareholders; volatility in the price of gold; failure of
the Company to maintain its obligations under its debt facilities;
risks related to Lundin Gold's
compliance with environmental laws and liability for environmental
contamination; the lack of availability of infrastructure; the
Company's reliance on one mine; security risks to the Company, its
assets and its personnel; risks related to illegal mining;
exploration and development risks; the impacts of a pandemic virus
outbreak; risks related to the Company's ability to obtain,
maintain or renew regulatory approvals, permits and licenses;
uncertainty with and changes to the tax regime in Ecuador; the reliance of the Company on its
information systems and the risk of cyber-attacks on those systems;
the imprecision of Mineral Reserve and Resource estimates;
deficient or vulnerable title to concessions, easements and surface
rights; inherent safety hazards and risk to the health and safety
of the Company's employees and contractors; risks related to the
Company's workforce and its labour relations; key talent
recruitment and retention of key personnel; volatility in the
market price of the Company's shares; measures to protect
endangered species and critical habitats; social media and
reputation; the adequacy of the Company's insurance; risks relating
to the declaration of dividends; uncertainty as to reclamation and
decommissioning; the ability of Lundin Gold to ensure
compliance with anti-bribery and anti-corruption laws; the
uncertainty regarding risks posed by climate change; limits of
disclosure and internal controls; the potential for litigation; and
risks due to conflicts of interest.
SOURCE Lundin Gold Inc.