LUNDIN GOLD REPORTS FIRST QUARTER OF 2021 RESULTS Record quarterly production underpins strong financial performance
NEWS RELEASE
Vancouver, May 12, 2021
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 REPORTS FIRST QUARTER OF 2021 RESULTS
Record quarterly production underpins strong financial performance
Lundin Gold Inc. (TSX: LUG; Nasdaq Stockholm: LUG) ("Lundin Gold" or the "Company") today reports results
for the first quarter of 2021, a quarter marking the first anniversary of the achievement of commercial
production at Fruta del Norte. Highlights for the quarter include production of 104,137 ounces (“oz”) of gold and
sales of 81,805 oz during the quarter, at an average all-in sustaining cost (“AISC”) 1 of $830 per oz sold. From this,
net revenues, adjusted earnings 1, and cash flow from operations of $140.0 million, $ 37.4 million, and $ 75.1
million, respectively, were realized. All amounts are in U.S. dollars unless otherwise indicated.
Ron Hochstein, President and CEO commented, “2021 is off to a great start for Lundin Gold, with record quarterly
production. Much of our very strong March production was sold during April. Had these sales occurred in the
quarter, quarterly financial results such as net income, operating cash flow and AISC would have been even
stronger. Since the restart of operations in the third quarter of 2020 , operating results have met or exceed ed
expectations, and these excellent results have continued into this year. Operational excellence is only one of our
four pillars of value creation though, and as such, we continue to advance, on time and on budget, our throughput
expansion program, the Fruta del Norte resource expansion program, and the recently commence d regional
exploration program, with a drill now turning at the Barbasco target. I am excited for further developments and
updates in 2021 and believe that the Company has positioned itself well to continue generating strong
shareholder value in the future.”
The Company is on track to meet its 2021 guidance of 380,000 to 420,000 oz of gold produced. AISC for the year
is projected between $770 and $830 per oz of gold sold, calculated on a basis consistent with prior periods.
First Quarter of 2021 Operating and Financial Highlights
The following two tables provide an overview of key operating and financial results during the f irst quarter of
2021.
Three months ended
March 31, 2021
Three months ended
March 31, 20202
Tonnes mined (tonnes) 365,471 198,000
Tonnes milled (tonnes) 324,591 244,000
Average head grade (g/t) 11.4 7.9
Average recovery (%) 87.8% 82.8%
Average mill throughput (tpd) 3,607 3,056
Gold ounces produced 104,137 51,320
Gold ounces sold 81,805 59,317
1 Refer to “Non-IFRS Measures” section.
2 The figures presented are for the three months ended March 31, 2020 which include the two-month ramp up period before achievement of
commercial production.
2
Three months ended
March 31, 2021
Three months ended
March 31, 2020
Net revenues ($’000) 139,991 36,8561
Income from mining operations ($’000) 64,031 10,3361
Net income (loss) ($’000) 85,980 (9,331)
Operating cash flow ($’000) 75,083 13,836
Average realized gold price ($/oz sold)2 1,765 1,5641
Cash operating cost ($/oz sold)2 672 8391
All-in sustaining costs ($/oz sold)2 830 908
Operating cash flow per share ($)2 0.33 0.06
Adjusted net earnings ($‘000)2 37,409 (3,399)
Adjusted net earnings per share ($)2 0.16 (0.02)
The difference between net income and adjusted earnings during the first quarter of 2021 is due to non -cash
derivative gains of $51.5 million associated with fair value accounting for the gold prepay and stream facilities.
These non-cash items are driven by numerous factors including anticipated forward gold prices and yields. Non-
cash derivative gains (or losses) associated with anticipated decreasing (or increasing) forward gold prices are
recorded in the statement of operations, while non -cash derivative gains (or losses) associated with increasing
(or decreasing) yields are recorded in the statement of other comprehensive income. These non -cash gains or
losses are derived from complex valuation modelling and accounting treatment which are explained in more
detail in the first quarter of 2021 MD&A. Revaluation of these obligations may result in considerable period-to-
period volatility in the Company’s net income, comprehensive income, current and long term liabilities and do
not necessarily reflect the amounts that will actually be repaid when the obligations become due.
(in thousands of U.S. dollars) As at March 31,
2021
As at December 31,
2020
Financial Position:
Cash 94,358 79,592
Working capital 57,571 56,603
Total assets 1,502,715 1,505,360
Long-term debt 776,881 857,094
First Quarter of 2021 Production Overview
• Mine operating performance was in line with expectations with 365,471 tonnes mined, which is consistent
with the fourth quarter of 2020.
• Underground mine development also continued as planned with a total of 2,450 metres of development
completed with development rates averaging 27.2 metres per day in the first quarter.
• The mill processed 324,591 tonnes of ore at an average throughput of 3,607 tonnes per day (“tpd”).
• The average grade of ore milled was 11.4 grams per tonne with average recovery at 87.8%.
• Gold production was 104,137 oz, comprised of 70,642 oz of concentrate and 33,675 oz of doré.
1 Amount relates to the period after achievement of commercial production.
2 Refer to “Non-IFRS Measures” section.
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First Quarter of 2021 Financial Overview
• The Company sold a total of 81,805 oz of gold, consisting of 49,198 oz of concentrate and 32,607 oz of doré
at an average realized gold price1 of $1,765 per oz for total gross revenues from gold sales of $144.4 million.
Net of treatment and refining charges, revenues were $140.0 million. The difference between oz. produced
and oz. sold was principally due to mining and processing very high grade ore during the latter part of the
first quarter resulting in double the amount of gold inventory at March 31, 2021 compared to December
31, 2020. These ounces produced late in the first quarter were sold subsequent to quarter end.
• Cash operating costs 1 and AISC1 for the quarter were $672 and $830 per oz of gold sold, respectively. Cash
operating costs were higher than the previous quarter due to scheduled maintenance at the mill during the
quarter. In addition, AISC was affected by higher sustaining capital expenditures which were deferred in
2020 due to the COVID-19 pandemic such as the first raise of the Fruta del Norte tailings dam as well as the
disparity between gold produced and gold sold due to timing as explained above.
• Income from mining operations was $ 64.0 million and the Company generated cash flow of $ 75.1 million
from operations, or $0.33 per share1.
• Net income was $ 86.0 million, inclusive of derivative gains and after deducting corporate, exploration ,
finance costs, and associated taxes on earnings. Adjusted earnings¹ for the quarter, which exclude derivative
gains, were $37.4 million, or $0.16 per share.
Liquidity and Capital Resources
As at March 31, 2021, Lundin Gold had cash of $94.4 million and a working capital balance of $ 57.6 million
compared to cash of $79.6 million and a working capital balance of $56.6 million at December 31, 2020. The
change in cash during the first quarter of 2021 was primarily due to cash g enerated from operating activities of
$75.1 million and proceeds from stock option exercises of $5.2 million. This is offset by principal and interest
repayments under the loan facilities totalling $52.2 million and cash outflows of $12.9 million for capit al
expenditures including costs for remaining initial construction activities, the expansion project, and sustaining
capital. Scheduled variable quarterly principal repayments of the senior debt facilities will total $35.0 million for
the remainder of 2021.
The Company expects to generate strong operating cash flow during 2021 based on its production and AISC
guidance. This strong operating cash flow will support debt repayments, regional exploration and underground
expansion drilling at F ruta del Norte , and planned capital expenditures, including the expansion project to
increase the mill throughput from 3,500 to 4,200 tonnes per day.
Capital Expenditures
• South Ventilation Raise: Work on the South Ventilation Raise is continuing with additional grout filling and
drainage holes being drilled. Raise boring is expected to commence with completion of the S outh
Ventilation Raise expected during the third quarter of 2021. The timing of this work does not impact planned
production for 2021.
• Zamora River bridge: Construction of the Company’s Zamora River bridge is progressing according to plan
with installation of the main suspension cables completed as well as the launching platform , from which
the bridge platform modules are placed . Completion is expected before the end of the second quarter of
2021.
1 Refer to “Non-IFRS Measures” section.
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• Expansion Project: The 4,200 tpd expansion project is continuing on schedule and on budget with detailed
engineering and procurement of equipment and materials completed during the quarter. The civil
contractor was mobilized during the quarter and earthworks and civil works have commenced on site.
• Sustaining Capital: Sustaining capital during the first quarter of 2021 mainly focused on the first raise of
the Fruta del Norte tailings dam.
Health and Safety
The health and safety of personnel at site is of paramount importance, and stringent procedures remain in place
to minimize the impact of COVID -19 and related variants on the workforce. These procedures include off -site
quarantine followed by a Polymerase Chain Reaction (PCR) test for all employees and contractors before
accessing Fruta del Norte, a second PCR test four days after entering site, mandatory use of masks, health
monitoring, physical distancing, and enhanced disinfection and restricted access to common areas.
One lost time incident and two medical aid incidents were recorded during the first quarter of 2021. The Total
Recordable Incident Rate during this same time period was 0.53 per 200,000 hours worked.
Community
During the first quarter of 2021, a connectivity project was launched in order to improve Internet infrastructure
in communities surrounding Fruta del Norte and to provide teachers and children enrolled in local schools with
the necessary equipment and training to facilitate online learning in light of local schools continuing to be closed
due to the COVID-19 pandemic. The Company also continues to support local government and Ministry of Health
initiatives relating to the COVID -19 pandemic including donations of medical s upplies to local hospitals,
disinfection equipment to local authorities , and transportation services helping doctors to reach rural areas.
Moreover, Lundin Gold also provides essential equipment to frontline workers in the communities surrounding
the mine.
The Company, in partnership with two other mining companies, has committed to purchase and install an
intensive care unit (“ICU”) at the Yantzaza hospital in order to improve intensive care capabilities in the Province
of Zamora Chinchipe. All required equipment was purchased in the first quarter of 2021 and the ICU was
inaugurated in April 2021.
Progress is also being made with regards to construction of the public bridge over the Zamora River. This is being
undertaken under the authority of the provincial government to replace the bridge that collapsed during the
fourth quarter of 2020. Lundin Gold has provided t he funding for this work to date, estimated at $3.0 million.
The Company has also been supporting the affected communities by assisting with transportation of people and
supplies.
Exploration
The Company’s 9,000 metre drilling campaign began at the end of March 2021, with strict COVID -19 protocols
in place. The regional exploration program is focused on two high priority targets, Barbasco and Puente-Princesa,
to test for mineralization in a geological setting very similar to that of Fruta del Norte. The first hole on the
Barbasco target is in progress and a second rig has now begun drilling. Initial results are expected in the third
quarter of this year.
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Outlook
Guidance for 2021 remains unchanged with production of 380,000 to 420,000 oz of gold expected at Fruta del
Norte based on an average head grade of 10.4 g/t and average gold recovery of 90%. AISC guidance for 2021 is
also unchanged at between $770 and $830 per oz of gold sold, calculated on a basis consistent with prior periods.
Under its sustaining capital activities for 2021, the Company remains on schedule with its planned 10,000 metre
drill program targeting conversion and expansion of the Fruta del Norte mineral resource, and completion of
the second raise of the Fruta del Norte tailings dam.
The following capital project activities, which are still part of the construction scope of Fruta del Norte, are also
nearing completion:
• the construction of the Company’s bridge over the Zamora River, to be complete by the end of the second
quarter of 2021; and.
• the South Ventilation Raise, which is anticipated to be completed during the third quarter of 2021.
Engineering, procurement and construction are underway on the expansion program to increase the mill
throughput from 3,500 to 4,200 tpd, which is expected to be completed before the end of 2021. The throughput
expansion modifications are also expected to improve mill recoveries through the addition of retention time in
the flotation process of the plant.
Furthermore, drillin g has commenced on the Barbasco target as part of Company’s 9,000 metre regional
exploration drilling campaign. The program is focused on the high priority Barbasco and Puente-Princesa targets.
Initial results are expected in the third quarter of 2021.
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.
Webcast and Conference Call
The Company will host a conference call and webcast to discuss its results on Thursday, May 13 at 8:00 a.m. PT,
11:00 a.m. ET, 5:00 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 / 74362954
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 June 27, 2021.
Toll Free North America Replay Number: +1 888-390-0541
International Replay Number: +1 -416-764-8677
Replay passcode: 362954 #
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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, cash
operating cost per oz sold, all-in sustaining cost, operating cash flow per share, and adjusted net 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 product ion, 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 first quarter of 2021 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 May 12 , 2021 at 2:00 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]
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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, 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 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 estimates of gold
production, grades and recoveries, expected sales receipts, cash flow forecasts and financing obligations, its capital costs and the expected
timing of completion of capital projects including the south ventilation raise , the Company's bridge over the Zamora River and the
throughput expansion project, the timing and the success of its drill program at Fruta del Norte and its oth er exploration activities, the
completion of construction 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 d iffer 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, 2021, 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 c ompliance with anti -
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.