Lundin GOLD Reports First Quarter 2018 Results
NEWS RELEASE
LUNDIN GOLD REPORTS FIRST QUARTER 2018 RESULTS
May 11, 2018 (Vancouver, Canada) Lundin Gold Inc. ("Lundin Gold" or the "C ompany")
(TSX: “LUG” , Nasdaq Stockholm: “LUG”) is pleased to announce its results for the three
months ended March 31, 2018. All amounts in this release are in U.S. dollars unless otherwise
indicated.
”During the first quarter of this year the Company achieved major milestones at Fruta del Norte
and significantly de-risked the Project. We completed a $400 million equity private placement,
secured commitment for a $350 million senior secured project finance facility and began hard
rock underground mine development,” said Ron Hochstein, President and CEO of Lundin
Gold. “With the financing for Fruta del Norte near complete, our engineering and construction
teams can continue to pursue first gold in the fourth quarter of next year.”
Highlights
Fruta del Norte
• Overall engineering was 26% complete and construction 16% complete by the end of
the quarter.
• The cumulative advance in the K’isa and Kuri declines exceeded one kilometre (“km”).
• Process plant excavation progressed to over 65% complete.
• Process plant SAG and ball mill foundation bases were poured.
• River Road construction was completed, directly connecting Las Peñas camp (the
“Camp”) with the Project site.
• North Access road was 42% complete.
• Tailing storage facility access road construction began and was 75% complete.
• The Environmental Licence for the power transmission line from Bomboiza substation
to the Project was granted.
Financing
• Drew the final $110 million under the gold prepay and stream credit facilities (the “2017
Financing”) with Orion Mine Finance Group (“Orion”) and Blackstone Tactical
Opportunities.
• Received commitments from a syndicate of seven lenders for a senior secured project
finance facility (the "Facility") of $350 million.
• Closed a $400 million equity private placement financing (the “Private Placement”).
Subscribers to the Private Placement included Newcrest Mining Limited (“Newcrest”),
Zebra Holdings and Investments S.à.r.l. and Lorito Holdings S.à.r.l. (the “Lundin Family
Trusts”) and Orion.
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Exploration
• Drilling on the El Puma target, located in the southern Suarez Basin, continued testing
below an area of altered basin sediments anomalous in the epithermal pathfinder
elements arsenic and antimony.
• On February 25, 201 8, the Company signed a binding heads of agreement with
Newcrest to form a joint vent ure company to explore eight early stage concessions.
These concessions are to the north and south of Fruta del Norte and exclude the large
block of concessions surrounding the Fruta del Norte deposit. Newcrest can earn up
to a 50% interest in the joint venture company by spending $20 million over a five year
period.
Financial Results
(in thousands, except per share
amounts)
Three months ended
March 31,
2018 2017
Results of Operations:
Net loss for the period $ (25,588) $ (6,387)
Basic and diluted loss per share (0.20) (0.05)
(in thousands)
As at
March 31,
2018
As at
December
31, 2017
Financial Position:
Cash 475,667 35,018
Working capital 460,329 26,794
Property, plant and equipment 208,207 142,598
Mineral properties 249,369 246,387
Total assets 988,889 481,729
Long-term liabilities 376,218 217,940
Note: the complete analysis of the Q1 2018 financial results can be found in the MD&A and financial statements
dated May 11, 2018 filed on SEDAR.
The Company’s net loss in the first quarter of 2018 is higher compared to the net loss during
the first quarter of 2017 mainly due to a derivative loss of $22.9 million from the fair value
revaluation of its long -term debt at March 31, 2018. This is offset by other income of $6.4
million which is largely driven by an unrealized gain on account of foreign exchange. The gain
is generated by the substantial holdings of U.S. dollars at the parent company level.
The Company’s long -term debt balance is comprised of financial liabilities measured at fair
value on a quarterly basis. This balance is valued using Monte Carlo simulation valuation
models. The key inputs include: the gold and silver forward curve based on Comex futures,
the Company’s expectation about long-term gold yields, gold and silver volatility, risk-free rate
of return, non -performance risk, and production expectations. Relatively small va riations in
these inputs can give rise to significant variations in the fair value of financial liabilities; hence,
the large derivative losses recorded in the accounts to date.
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Liquidity and Capital Resources
As at March 31, 2018, the Company had cash of $475.7 million and a working capital of $460.3
million compared to cash of $35.0 million and a working capital balance of $26.8 million at
December 31, 2017. The change in cash was primarily due to net proceeds from the Private
Placement of $396.5 mill ion and the final drawdown under the Company’s 2017 Financing,
comprising the gold prepay credit facility for $35 million and stream loan credit facility for $75
million. This is offset by costs incurred for the development of the Fruta del Norte Project of
$55.7 million, general and administration costs of $4.3 million and exploration expenditures of
$2.6 million.
The Private Placement
On March 26, 2018, the Company closed the Private Placement in the aggregate amount of
$400 million, which resulted in the issuance of 69,284,065 common shares at a price of
CAD$5.50 per share and 24,213,075 common shares at a price of CAD$5.25 per share. With
the closing of the Private Placement, Newcrest owns 27.1% of the Company’s outstanding
shares; the Lundin Family Trusts collectively own 22.3%; and Orion owns 11.4%.
The total gross proceeds raised under the Private Placement was $400 million. Share issue
costs of $3.5 million were incurred, resulting in net proceeds of $396.5 million received by the
Company in relation to the Private Placement.
In addition to the Private Placement, the Company has received commitments from a syndicate
of seven lenders for the Facility of $350 million. The Facility is subject to completion of
definitive documentation, which will include customary project finance terms, fees and
conditions, a comprehensive intercreditor agreement, a guarantee from an export credit
agency for a $100 million portion of the Facility, and completion of ongoing due diligence.
Outlook
The Company is focused on advancing the Project on schedule through to first gold production
in 2019. To achieve that goal, the following activities are planned over the next twelve months:
• Completing detailed engineering of the process plant, tailings storage facility and site-
wide water management.
• Completing the North Access road.
• Completing process plant earthworks, substantially completing the process plant
concrete foundations and advancing steel and equipment erection.
• Advancing construction of the site infrastructure buildings such as the laboratory,
reagent storage, mine dry and administration.
• Continuing to advance underground mine development, as well as the underground
services and facilities.
• Completing the acquisition of surface rights, obtaining requisite permits and then
substantially completing construction of the 42 km, 230 kilovolt power transmission line
to connect to the national grid.
• Receiving approval of the Mountain Pass Quarry environmental permit, receiving the
Environmental License and developing the quarry.
• Awarding the contracts for the design and supply of the paste plant and water treatment
plant and advancing the related engineering and procurement contracts.
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• Starting construction of the paste and water treatment plants.
• Receiving the majority of the process plant equipment and mine mobile equipment
onsite.
• Advancing construction of the tailings storage facility.
• Acquiring lands and starting engineering and construction for the Zamora River bridge
near Los Encuentros.
During the next few months, the Company also expects to complete the definitive
documentation of the Facility.
Exploration is currently focused on the diamond drilling of the El Puma target. Other targets
may be drill tested during 2018 depending on results and permitting. Mapping and
geochemical sampling will continue on selected targets to aid drill targeting and prioritization.
Qualified Person
The technical information relating to the Fruta del Norte Project contained in this Press Release
has been reviewed and approved by Ron Hochstein P. Eng, Lundin Gold’s President & CEO
who is a Qualified Person under NI 43-101. The disclosure of exploration information contained
in this MD&A was prepared by Stephen Leary, MAusIMM CP(Geo), a consultant to the
Company, who is a Qualified Person in accordance with the requirements of NI 43-101.
Additional Information
The Company’s consolidated financial statements for the three months ended March 31, 2018
and related management’s discussion and analysis are avail able 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. This information was submitted for publication on May 11,
2018 at 3:30 pm PT through the contact persons set out below.
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 world’s largest, highest-
grade gold projects currently under construction. The Comp any'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 Compa ny believes that the value
created through the development of Fruta del Norte will benefit its shareholders, the
Government and the people of Ecuador.
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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
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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, inh erent 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 info rmation 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 of first production and the progress of the development, construction and
operation of the Project, improvements to site logistics and completion of Camp infrastructure and the
acquisition of land and surface rights, t he success of the Company’s exploration plans and activities,
exploration and development expenditures and reclamation costs, timing and success of permitting and
regulatory approvals, project financing and future sources of liquidity, capital expenditures and
requirements, 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 and the risk to shareholders of dilution from future equity
financings; the ability to maintain its obligations under the 2017 Financing, the Facility and other debt;
risks related to carrying on business in Ecuador; volatility in the price of gold; the timely receipt of
regulatory approvals, permits and licenses; risks associated with t he 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 critical resources, labour and key executive
personnel, such as inpu t commodities, equipment and skilled labour, and the dependence on key
personnel; risks associated with the Company's community relationships; unreliable infrastructure;
volatility in the market price of the Company's shares; the potential influence of th e Company's largest
shareholders; uncertainty with the tax regime in Ecuador; measures required to protect endangered
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species; the cost of compliance or failure to comply with applicable laws; exploration and development
risks; the accuracy of the Mineral Reserve and Resource estimates for the Fruta del Norte Project; the
Company's reliance on one project; risks related to artisanal and illegal mining; uncertainty as to
reclamation and decommissioning; risks associated with the Company's information system s;
competition in the mining industry; the ability to obtain adequate insurance; risks of bribery or corruption;
the potential for litigation; and limits of disclosure and internal controls.
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 under the heading “Risk Factors” in the AIF available at
www.sedar.com.