LUNDIN GOLD ANNOUNCES STRONG THIRD QUARTER RESULTS AND IS FIRMLY ON TRACK TO ACHIEVE HIGH END OF GOLD PRODUCTION GUIDANCE FOR 2022 Fruta del Norte achieves gold production of 355,190 oz and an AISC¹ of $785/oz sold in the first nine months of 2022
NEWS RELEASE
Vancouver, November 8, 2022
Lundin Gold Inc. 885 West Georgia Street, Suite 2000 Phone: +1 604 689 7842 lundingold.com
Vancouver, BC, V6C 3E8 Fax: +1 604 689 4250 Email: [email protected]
LUNDIN GOLD ANNOUNCES STRONG THIRD QUARTER RESULTS AND IS FIRMLY ON
TRACK TO ACHIEVE HIGH END OF GOLD PRODUCTION GUIDANCE FOR 2022
Fruta del Norte achieves gold production of 355,190 oz and an AISC¹ of $785/oz sold
in the first nine months of 2022
Lundin Gold Inc. (TSX: LUG; Nasdaq Stockholm: LUG; OTCQX: LUGDF) ("Lundin Gold" or the "Company") today
reports results for the third quarter of 2022, highlighted by Q3 production of 121,635 ounces (“oz”) of gold and
sales of 134,640 oz at a cash operating cost 1 of $656 per oz sold and all-in sustaining cost (“AISC”)1 of $807 per
oz sold. For the first nine months of 2022, Lundin Gold produced 355,190 oz and sold 350,213 oz of gold at an
AISC1 of $785 per oz sold, putting the Company firmly on track to meet the upper end of its production guidance
of 430,000 to 460,000 oz and lower end of or slightly below its AISC1 guidance of $820 to $870 per oz sold . All
amounts are in U.S. dollars unless otherwise indicated.
In the third quarter, Lundin Gold generated net revenues of $210 million, adjusted earnings1 of $20.4 million and
free cash flow 1 of $65.2 million, resulting in a cash balance of $30 4 million at quarter end . With operations at
Fruta del Norte (“FDN”) generating sizeable free cash flow and considering the Company’s existing cash balance,
Lundin Gold paid an inaugural semi-annual dividend of $0.20 per share on September 13, 2022 (Septemb er 15
for shares trading on Nasdaq Stockholm) based on a record date of August 24, 2022. Under its recently
established dividend policy, Lundin Gold anticipates continuing to pay dividends of at least $0.40 per share
annually, equivalent to approximately $100 million, based on current gold prices , expected production levels,
and current issued and outstanding shares.
Ron Hochstein, President and CEO of Lundin Gold commented, “Once again, I am pleased to report another
fantastic quarter for Lundin Gold. We continue to strive for operational excellence at Fruta del Norte, and remain
focused on further optimization, improved efficiencies and lowering costs. Now that the South Ventilation Raise
is complete, we will have more flexibility to mine on all levels, allowing us to continue generating strong results.
Payment of our first dividend was a great milestone, and we see potential to create further shareholder value
through the significant free cash flow we are generating from this tier one asset. With this cash flow we will
continue to evaluate restructuring and paying down our debt, funding exploration, evaluating throughput
expansion and M&A opportunities.”
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 nine months ended September 30, 2022 available on SEDAR
2
Third Quarter of 2022 Financial Overview
• The Company sold a total of 134,640 oz of gold, consisting of 88,083 oz of concentrate and 46,557 oz of
doré at an average realized gold price 1 of $1,618 per oz for total gross revenues from gold sales of $218
million. Net of treatment and refining charges, revenues were $210 million. As a result of the recent decline
in the gold price, revenues from concentrate sales reflect a gold price adjustment of $10.8 million for sales
whose provisional gold price is settled after quarter end. This adjustment is esti mated using the forward
gold price at quarter end for the expected month of settlement of each individual sale.
• Cash operating costs1 and AISC1 were $656 and $807 per oz of gold sold, respectively. Sustaining capital is
expected to remain high in the last quarter of the year due to the ongoing construction of the third tailings
dam raise and other site infrastructure projects.
• Income from mining operations was $83.9 million. The Company generated cash flow of $105 million from
operations and ended the quarter with a cash balance of $304 million. Free cash flow1 for the quarter was
$65.2 million or $0.28 per share.
• Earnings before interest, taxes, depreciation, and amortization1 (“EBITDA”) and adjusted EBITDA1 were $159
million and $117 million, respectively. The difference is the derivative gain of $41.8 million in the quarter.
• Net income was $62.7 million including a derivative gain of $41.8 million, and net of corporate, exploration,
finance costs, and associated taxes on earnings. Adjusted earnings1, which exclude derivative gains, were
$20.4 million, or $0.09 per share. Net income was positively impacted by the recording of gold sales from
the delay of shipments of gold concentrate from the second quarter, offset by the lower gold price realized
on sales in Q3 2022.
While quarterly revenues were affected by the declining gold price, they were positively impacted by the sale of
additional ounces produced late in the second quarter but not shipped and sold until the third quarter. This was
due to blockades on some of Ecuador’s major highways during a national strike in the country, which ended on
June 30th and resulted in a positive impact on revenues, income from mining operations, earnings, and cash flow
in Q3 2022.
Third Quarter of 2022 Production Overview
• Mine production was 377,921 tonnes of ore at an average grade of 12.4 grams per tonne. Consistent with
the previous quarter, efforts are underway to reduce the ore stockpile in order to minimize future potential
oxidization of ore as it affects mill recoveries.
• The mill processed 379,258 tonnes of ore at an average throughput rate of 4,122 tpd, slightly below design
capacity due to an earlier than planned SAG and ball mill re-lining completed in late September.
• The average grade of ore milled was 11.0 grams per tonne with average recovery at 90.3%. Recoveries in
the third quarter were positively impacted by the higher grade and improved blending strategies put in
place to reduce the impact of oxidized ore.
• Gold production was 121,635 oz, comprised of 81,607 oz of concentrate and 40,028 oz of doré.
Third Quarter of 2022 Operating and Financial Highlights
The following two tables provide an overview of key operating and financial results during the third quarter and
first nine months of 2022.
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 nine months ended September 30, 2022 available on SEDAR.
3
Three months ended
September 30,
Nine months ended
September 30,
2022 2021 2022 2021
Tonnes ore mined 377,921 382,667 1,126,980 1,145,778
Tonnes ore milled 379,258 365,316 1,138,340 1,036,468
Average head grade (g/t) 11.0 10.3 10.9 10.9
Average recovery 90.3% 88.8% 89.4% 88.2%
Average mill throughput (tpd) 4,122 3,971 4,170 3,797
Gold ounces produced 121,635 107,663 355,190 320,599
Gold ounces sold 134,640 111,605 350,213 318,822
Three months ended
September 30,
Nine months ended
September 30,
2022 2021 2022 2021
Net revenues ($’000) 210,425 190,753 604,705 546,889
Income from mining operations ($’000) 83,930 89,431 277,659 264,066
Earnings before interest, taxes, depreciation, and amortization ($’000)1 158,876 112,832 402,386 352,475
Adjusted earnings before interest, taxes, depreciation, and amortization ($’000)1 117,038 113,468 355,286 327,187
Net income ($’000) 62,673 56,673 141,817 192,637
Free cash flow ($’000)1 65,202 47,114 178,256 193,689
Average realized gold price ($/oz sold)1 1,618 1,769 1,781 1,770
Cash operating cost ($/oz sold)1 656 650 656 635
All-in sustaining costs ($/oz sold)1 807 804 785 778
Free cash flow per share ($)1 0.28 0.20 0.76 0.84
Adjusted net earnings ($‘000)1 20,379 58,796 91,419 171,005
Adjusted net earnings per share ($)1 0.09 0.25 0.39 0.74
Liquidity and Capital Resources
At the end of the third quarter of 2022, the Company is in a strong financial position.
(in thousands of U.S. dollars) As at September 30,
2022
As at December 31,
2021
Financial Position:
Cash 303,639 262,608
Working capital 253,673 217,221
Total assets 1,634,590 1,685,113
Long-term debt 589,919 739,977
As at September 30, 2022, the Company had cash of $304 million and a working capital balance of $254 million
compared to cash of $263 million and a working capital balance of $217 million at December 31, 2021. The
change in cash during the nine months ended Sep tember 30, 2022 was primarily due to cash generated from
operating activities of $293 million and proceeds from the exercise of stock options, warrants, and anti-dilution
rights of $9.4 million. This is offset by principal repayments, interest, and finance charges, including associated
taxes, under the gold prepay and stream credit facilities totaling $89.1 million, interest and principal repayments
under the senior debt of $72.5 million, dividends of $47 .0 million and cash outflows of $44.6 million for capital
expenditures, which include costs for the South Ventilation Raise (“SVR”) and sustaining capital.
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 nine months ended September 30, 2022 available on SEDAR.
4
The Company’s strong operating cash flow during the first nine months of 2022 is expected to continue for the
remainder of the year based on its production and AISC guidance. This strong operating cash flow will continue
to support aggressive debt repayments, regional and near mine exploration, conversion drilling at FDN, planned
capital expenditures, growth initiatives and regular dividend payment s under the dividend policy approved in
the second quarter of this year.
Capital Expenditures
• South Ventilation Raise: Following the end of the quarter, Lundin Gold announced that the SVR at Fruta del
Norte is now complete and operational. As a result of the completion of the SVR, ventilation in the mine
will increase from 180 m3/s to 350 m3/s resulting in improved efficiencies and enabling mining activities on
all levels.
• Sustaining Capital: The third raise of the tailings dam started during the second quarter , continued in the
third, and construction is anticipated to be completed in Q4. Conversion drilling at Fruta del Norte is now
complete for 2022 , and final results were received during the quarter . The results of the 18,341 metre
conversion drilling campaign will provide a significant improvement in the current deposit geological model
by enabling better delineation of the distribution of and controls on higher grade mineralized zones within
the known resource. A new resource model is underway , and the Company anticipates updating its
estimates of Mineral Resources and Reserves at Fruta del Norte before the end of Q1 2023. E xpenditures
for other sustaining capital projects , such as construction of a new warehouse and improvements in the
sewage treatment plants, will ramp up during the remainder of the year.
Health and Safety
With the Company’s success in facilitating the provision of COVID-19 vaccines to its workforce and sub-contractor
personnel, including booster shots, COVID -19 protocols have been essentially eliminated. Through vaccination
campaigns by Ecuador’s Ministry o f Public Health, 100% of the Company’s employees and on -site contractors
were vaccinated and, as at September 30, 2022, 97.8% had received at least one booster shot.
During the quarter there was one Lost Time Incident and no Medical Aid Incidents. The Total Recordable Incident
Rate was 0.33 per 200,000 hours worked during the nine months ended September 30, 2022.
Community
Various community projects supported by the Company are under way, including sponsoring the establishment
of micro businesses providing ancillary services to Fruta del Norte and the community, such as a textile
manufacturer, fire extinguisher maintenance, and pest control. These are in addition to the ongoing projects
such as road maintenance, education projects, and broader -based development, with a focus upon the
agricultural sector and infrastructure challenges.
The Company continues to implement a rang e of initiatives. They include working with Shuar indigenous
communities to promote improved agricultural practices, as well as the further development of a Shuar-owned
company. Together with the NGO Junior Achievement Ecuador, efforts to prepare local students for the national
high school exit exam (and thus access to post-secondary education) continue to show very strong results. Efforts
to address social challenges in the local community have continued, for example through the ongoing
implementation of after-school activities.
5
Exploration
Near Mine Exploration Program
The Company’s 2022 near mine exploration started in Q3 2022 with two rigs testing potential targets both at
depth and to the south of Fruta del Norte. During the third quarter of 2022, a total of 3,936 metres were drilled
across eight holes.
• 1,953 metres were completed across five underground drill holes testing FDN’s continuity at depth in the
southern portion of the mine. All the holes intercepted similar hydrothermal alteration zones consistent with
the Fruta del Norte deposit (silicification, chalcedony and marcasite, veins, and veinlets or breccias), with
different intensities and thickness.
• 1,983 metres were completed across three surface drill holes to test the southern continuity of the main
controlling structures of the Fruta del Norte deposit. Drilling intercepted a wide zone of intense hydrothermal
alteration represented by silicification, chalcedony veins, pyrite and marcasite.
Results are pending. Drilling is continuing with a third rig now added to test the east structure of Fruta del Norte.
Regional Exploration Program
The Company’s 2022 regional exploration continued on the Barbasco target and at new targets Capullo and
Barbasco Norte with three drill rigs turning. During the third quarter of 2022, a total of 6,187 metres were drilled
across nine holes, mainly at Barbasco and Capullo.
• Two drill holes were completed at Barbasco Norte for a total of 1,327 metres to test a continuous
geochemical gold soil anomaly at the edge of the Suarez Basin. Drilling intercepted a narrow hydrothermal
alteration zone with quartz veins and illite-smectite-carbonate alteration, similar to that found in epithermal
systems like Fruta del Norte.
• At Barbasco, drilling continued to explore beneath the thick sequence of finely laminated silica on top of the
volcanic rocks in the Santiago Formation, a proximal indicator of epithermal systems. Three drill holes were
completed for a total of 2,700 metres with limited hydrothermal alteration intercepted.
• At Capullo, a total of 2,159 metres were drilled across four holes. Drilling tested a major geological fault,
associated with anomalous geochemical values for gold and epithermal pathfinder elements in rock samples.
The first hole intersected a hydrothermal alteration zone containing a one meter breccia zone with silica,
carbonate veinlets, enveloped by a wider 15 metre silica alteration with disseminated sulfides. Other follow
up drill holes intersected narrower zones.
Results are pending. Drilling is continuing with two drill rigs, one at Barbasco Norte and one to test other targets
such as Capullo and Quebrada La Negra before the end of the year.
Newcrest Earn-In Agreement
Newcrest International Pty Ltd. (“Newcrest”), a wholly owned subsidiary of Newcrest Mining Limited, met the
first expenditure requirement of $4.0 million under the Earn-In Agreement covering eight of Lundin Gold’s early-
stage concessions to the north and s outh of Fruta del Norte and exercised its option to proceed to the second
stage of the earn -in in Q2 2022. Through completion of the second stage, which requires the expenditure of a
further $6.0 million, Newcrest would earn an initial 25% interest in the eight concessions indirectly through a
subsidiary of Lundin Gold. Newcrest is advancing the planning of a new program focused on drill testing priority
copper-gold porphyry targets which to date detected low -level porphyry style copper mineralization. Dril ling is
anticipated to restart in late Q4 2022.
6
Outlook
Lundin Gold’s strong performance in the first nine months of 2022 points to a strong overall result for the year.
Management is confident that the Company’s production will be at or near the high end of its guidance of
430,000 to 460,000 oz and at the low end of or slightly below its AISC1 guidance of $820 to $870 per oz gold sold.
The SVR, the last remaining scope of work under the original FDN construction project , was completed shortly
after the end of the third quarter. As a result, ventilation in the mine will increase from 180 m 3/s to 350 m 3/s
resulting in improved efficiencies and enabling mining activities on all levels.
Sustaining capital will continue to be high for the last quarter of 2022 with completion of construction of the
third raise of the TSF and several other capital projects underway or planned for 2022.
The conversion drilling program at Fruta del Norte is now complete for 2022. All results were returned, data
review and the design of a new geological model is underway and is planned to be completed in the last quarter
of 2022. The Company is working on an update to its estimates of Mineral Resources and Reserves and
anticipates filing an updated technical report prepared in accordance with National Instrument 43-101 (“NI 43-
101”) for the Fruta del Norte deposit before the end of Q1 2023.
The regional and near mine exploration drill programs are continuing with a total of five rigs operating. Targets
of interest on the regional program currently are Barbasco Norte, Capullo, Puma and Quebrada La Negra. Results
are pending on drilling carried out during Q3 2022. Under the near mine drill program, one rig is o perating
underground to test extension of the deposit at depth and to the east and west of the current edges of the
deposit. On surface, drilling is continuing to test potential mineralization along the structural trend to the south
of FDN and a second surface rig will be moved from the regional program to test the east structure of Fruta del
Norte.
Qualified Persons
The technical information relating to Fruta del Norte 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 National
Instrument 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 Wednesday, November 9, 2022 at
7:00 a.m. PT, 10:00 a.m. ET, 4:00 p.m. CET.
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 nine months ended September 30, 2022 available on SEDAR.
7
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 / 93837422
A link to the webcast is 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 November 23, 2022.
Toll Free North America Replay Number: +1 888-390-0541
International Replay Number: +1 -416-764-8677
Replay passcode: 837422 #
About Lundin Gold
Lundin Gold, headquartered in Vancouver, Canada, owns the Fruta del Norte gold mine in southeast Ecuador.
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 commi tted 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 they are of assistance in the understanding
of the results of operations and its financial position. Please refer to the Company's MD&A for the third quarter
of 2022 for an explanation of non-IFRS measures used.
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 November 8, 2022 at 2:30 p.m. Pacific Time
through the contact persons set out below.
For more information, please contact
Ron F. Hochstein Finlay Heppenstall
President and CEO Director, Investor Relations
Tel (Ecuador): +593 2-299-6400 Tel: +1 604 806 3089
Tel (Canada): +1-604-806-3589 [email protected]
8
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 un certainties, 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 fo rward-
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 a number of places, such as in statements relating to Company’s 2022
production outlook, including estimates of gold production, grades recoveries and AISC; expected sales receipts, cash flow forec asts and
financing obligations; its estimated capital costs, the benefits of increased ventilation in the mine, the recovery of VAT; t he 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; plans to update estimates of mineral resources and reserves at Fruta del Norte and file a related technical
report; and the Company’s efforts to protect its workforce from COVID -19. 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 2 1,
2022, 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 relating
to the impacts of a pandemic virus outbreak, political and economic instability in Ecuador, production estimates, mining operations, the
Company's community relationships, ability to maintain obligations or comply with debt, financing requirements, volatility in the price of
gold, shortages of critical supplies, compliance with environmental laws and liability for environmental contamination, lack of availability
of infrastructure, the Company's reliance on one mine, deficient or vulnerable title to concessions, easements and surface rights,
uncertainty with the tax regime in Ecuador, the Company’s workforce and its labour relations, inherent safety hazards and risks to the
health and safety of the Company’s employees and contractors, the Company’s ability to obtain, maintain or renew regulatory approvals,
permits and licenses, the imprecision of mineral reserve and resource estimates, key talent recruitment and retention of key personnel,
volatility in the market price of the shares, the potential influence of the Company's largest shareholders, measures to protect endangered
species and critical habitats, the reliance of the Company on its information systems and the risk of cyber -attacks on those systems, the
cost of non -compliance and compliance costs, exploration and development risks, risks related to illegal mining , the adequacy of the
Company’s insurance, uncertainty as to reclamation and decommissioning, the ability of Lundin Gold to ensure compliance with a nti-
bribery and anti- corruption laws, the uncertainty regarding risks posed by climate change, the potential for litigation, limits of disclosure
and internal controls, security risks to the Company, its assets and its personnel, conflicts of interest, risks that the Company will not declare
dividends and social media and reputation.