Lundin GOLD Inc. Reports Third Quarter 2017 Results
NEWS RELEASE
LUNDIN GOLD INC. REPORTS THIRD QUARTER 2017 RESULTS
November 7, 2017 (Vancouver, Canada) Lundin Gold Inc. ("Lundin Gold" or the "Company")
(TSX: “LUG”, Nasdaq Stockholm: “LUG”) is pleased to announce its results for the three and
nine months ended September 30, 2017. All amounts in this release are in U.S. dollars unless
otherwise indicated.
During the quarter , Lundin Gold ramp ed up construction at the Fruta del Norte gold project
(“Fruta del Norte” or “the Project”) and there are now approximately 800 people at site ,
including contractors. The Company also advanced exploration targets to prepare for drill
testing, which is expected to begin later this year.
“We have made a remarkable amount of progress in a short period of time and are well into
the construction phase at Fruta del Norte,” said Ron Hochstein, Lundin Gold’s President and
Chief Executive Officer. “We plan to hit hard rock before the end of the year in the underground
mine, keeping the critical path on track, and we are making ex cellent progress on the
procurement and design of both the process plant and powerline, both of which are key to the
advancement of the Project.”
Highlights
Fruta del Norte
• Mine portals were completed and soft tunneling is well advanced.
• Key infrastructure at site to support mine development was completed.
• Detailed engineering contracts for the process plant, tailings facility and water
management were awarded and work began on all areas.
• Long-lead time process plant equipment was ordered.
• Engineering, procurement and construction (“EPC”) contract for the power
transmission line from the Bomboiza substation to the site was awarded.
• Major earthworks activities are progressing and work on the process plant area started.
Exploration
• Targets in preparation for drill testing were better defined, with geochemical sampling
and mapping completed on the Barbasco and Puente -Princesa epithermal gold-silver
targets within the Suarez pull-apart basin (the “Basin”) that hosts the Fruta del Norte.
Both targets are located approximately 7 kilometers south of the Project.
2
Financial Results
(in thousands, except per share
amounts)
Three months ended
September 30,
Nine months ended
September 30,
2017 2016 2017 2016
Results of Operations:
Net loss for the period $ (16,032) $ (11,785) $ (21,635) $ (38,925)
Basic and diluted loss per share (0.13) (0.10) (0.18) (0.37)
(in thousands)
As at
September
30, 2017
As at
December
31, 2016
Financial Position:
Cash 62,951 8,503
Working capital 66,196 1,022
Property, plant and equipment 87,312 7,822
Mineral properties 245,669 236,874
Total assets 434,198 278,906
Long-term liabilities 170,738 974
Note: the complete analysis of the Q3 2017 financial results can be found in the MD&A and financial statements
dated November 7, 2017 filed on SEDAR.
The Company’s net loss in the current quarter is higher compared to the net loss during the
third quarter of 2016 mainly due to a derivative loss of $8.3 million from the fair value
revaluation of its long-term debt at September 30, 2017. This balance is valued using Monte
Carlo simulation valuation models. The key inputs used by the Monte Carlo simulation include:
the gold and silver forward curve based on Comex futures, the Company’s expectation about
long-term gold yields, gold a nd silver volatility, risk -free rate of return, non -performance risk,
and production expectations.
The loss in the nine months ended September 30, 2017 is lower compared to that of the nine
months ended September 30, 2016 due to the commencement of capitalization of expenses
which is offset by a derivative loss from the revaluation of the Company’s long-term debt.
Liquidity and Capital Resources
As at September 30, 2017, the Company had cash of $63.0 million and a working capital of
$66.7 million compared to cash of $8.5 million and a working capital balance of $1.0 million at
December 31, 2016. The change in cash was primarily due to proceeds from a project finance
package of $ 300 million (the “Financing”) with Orion Mine Finance Group and Blackstone
Tactical Opportunities (the “Lenders”) of which $150 million has been drawn to date, offset by
costs incurred for the development of the Project of $67.8 million and exploration expenditures
of $4.7 million.
3
The Financing
On May 30, 2017, the Company's operating subsidiary, Aurelian Ecuador S.A. ("Aurelian"),
which holds Fruta del Norte, closed the Financing comprised of a gold prepay credit facility for
$150 million, a stream loan credit facility of $150 million and an offtake agreement. The
Lenders also committed to participate in future equity financings of the Company required to
fund the Project, in an aggregate amount of not less than $100 million and not more than $150
million, as and when initiated by the Company and subject to minimum financing thresholds.
Outlook
The third quarter of 2017 marked the commencement of construction at the Fruta del Norte
Project. The Company’s focus now is on advancing the Project through to first gold production
in 2019. To achieve that goal, the following activities are planned over the next twelve months:
• Completion of all Early Works activities by the end of the year.
• Completion of soft tunnelling and commence ment of underground hard rock
development in 2017.
• Advancement of detailed engineering of the process plant, tailings storage facility and
site-wide water management into 2018.
• Ordering of remaining process plant equipment and electrical packages and m obile
mine equipment in 2017.
• Approval of the Mountain Pass Quarry EIA and signing of an exploitation agreement
for the quarry to permit the extraction of construction materials in 2018.
• Continuation of e arthworks activities, including the clearing of the plant site ,
construction of the North Access and River Roads and site preparation for the tailings
dam.
• Commencement of concrete work on the process plant in 2018.
• Commencement of construction of the Bomboiza / Fruta del Norte powerline in 2018.
During the next several months, the Company will also continue to work with its financial
advisors to put in place the remaining funding for the construction of Fruta del Norte, including
continuing advanced discussions with a syndicate of banks.
A helicopter Z -Tipper Axis Electromagnetic resistivity geophysical survey of the Basin and
surrounding terrain is planned to take place by the end of 2017. Soil sampling has been
completed on most of the Company’s concessions in the Basin, and geological mapping is
continuing on selected targets; targets will be prioritized for drilling scheduled to begin before
the end of 2017.
Qualified Person
The technical information relating to the Fruta del Norte Project contained in this news release
has been reviewed and approved by Ron Hochstein P. Eng, Lundin Gold’s President & CEO
who is a Qualified Person under National Instrument 43-101 (“NI 43-101”). The disclosure of
exploration information contained in this press release was prepared by Steve Leary,
MAusIMM CP(Geo), a consultant to the Company, who is a Qualified Person under NI 43-101.
Full details of the Feasibility Study can be found in a technical report entitled "Fruta del Norte
- NI 43-101 Technical Report on Feasibility Study" which has an effective date of April 30,
4
2016. The Technical Report is available for review under the Company's profile on SEDAR
(www.sedar.com) and on the Company's website (www.lundingold.com).
Additional Information
The Company’s consolidated financial statements for the three months and nine months ended
September 30, 2017 and related management’s discussion and analysis are available on the
Company’s website at www.lundingold.com or under its profile on SEDAR at www.sedar.com.
The information in this release is subject to the disclosure requirements of Lundin Gold under
the EU Market Abuse Regulation and the Swedish Securities Markets Act. This information
was publicly communicated on November 7, 2017 at 2:30 pm PT.
About Lundin Gold
Lundin Gold, headquartered in Vancouver, Canada, is developing its wholly -owned Fruta del
Norte gold project in southeast Ecuador. Fruta del Norte is one of the largest, highest-grade
gold projects currently under construction. The Company's board and management team have
extensive expertise in mine construction and operations, and are dedicated to advancing this
project through to first gold production in 2019.
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 people of Ecuador.
For more information, please contact
Lundin Gold Inc.
Ron F. Hochstein
President and CEO
+593 2-299-6400
+604-806-3589
Lundin Gold Inc.
Sabina Srubiski
Manager, Investor Relations
+1-604-806-3089
www.lundingold.com
Caution Regarding Forward-Looking Information and Statements
Certain of the information and statements in this press release are considere d “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 predic tions, 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
5
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 re asonable, 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
pertaining to: the timing and success of the Early Works and construction programs, the success of the
Company’s exploration plans and activities, exploration and development expenditures and reclamation
costs, timing and success of permitting and regulatory approvals, p roject financing and future sources
of liquidity, capital expenditures and requirements, the results of the project update and, development,
construction and operation of the Fruta del Norte Project, future tax payments and rates, cash flows and
their uses.
Lundin Gold’s actual results could differ materially from those anticipated. Management has identified
the following risk factors which could have a material impact on the Company or the trading price of its
shares: the ability to arrange financing a nd the risk to shareholders of dilution from future equity
financings; risks related to carrying on business in an emerging market such as possible government
instability and civil turmoil and economic instability; volatility in the price of gold; the time ly receipt of
regulatory approvals, permits and licenses; risks associated with the performance of the Company’s
contractors; risks inherent in the development of an underground mine; deficient or vulnerable title to
mining concessions and surface rights; shortages of resources, such as labour, and the dependence on
key personnel; risks associated with the Company’s community relationships; unreliable infrastructure
and local opposition to mining; volatility in the market price of the Company’s shares; unce rtainty with
the tax regime in Ecuador; measures required to protect endangered species; difficulty complying with
changing government regulations and policies, including without limitation, compliance with
environment, health and safety regulations, and t he cost of compliance or failure to comply with
applicable laws; exploration and development risks; the accuracy of the Mineral Reserve and Resource
estimates for FDN and the Company’s reliance on one project; liabilities; the Company’s lack of
operating history in Ecuador; illegal mining; uncertainty as to reclamation and decommissioning; adverse
global economic conditions; risks associated with the Company’s information systems; the inadequacy
of insurance; risks of bribery or corruption; the potential fo r litigation; limits of disclosure and internal
controls; and the potential influence of the Company’s largest shareholders.
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 for the financial year ended December 2016, which is available on SEDAR at www.sedar.com.