Lundin GOLD Reports Fourth Quarter and Full Year Results
NEWS RELEASE
Vancouver, February 24, 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 FOURTH QUARTER AND FULL YEAR RESULTS
Lundin Gold Inc. (TSX: LUG; Nasdaq Stockholm: LUG) ("Lundin Gold" or the "Company") today reports results
for the fourth quarter and year ended December 31, 2020 (the “2020 Year”) . These are highlighted by gold
production of 96,830 ounces (“oz”) during the quarter and 242,400 oz during the 2020 Year, and average all-in
sustaining costs (“AISC”) of $747 and $773 per oz of gold sold1 during the same periods, respectively. Cash flow
from operations was $95.0 million in the fourth quarter and $113.6 million in the 2020 Year, and the Company
made scheduled principal and interest payments under its debt facilities totalling $77.7 million in the 2020 Year.
Since the restart of operations in July 2020, Fruta del Norte generated revenues, net income after tax, and cash
flow from operations of $308.2 million, $ 26.5 million, and $118.4 million, respectively . All amounts are in U.S.
dollars unless otherwise indicated.
Ron Hochstein, President and CEO commented, “This is a very exciting time for Lundin Gold, and despite the
challenges faced as a result of the ongoing COVID-19 pandemic, we performed remarkably well during our first
year of commercial production, as reflected in our operating and financial results. Momentum is expected to
continue through 2021, as we undertake our throughput expansion program, as well as complete and announce
results from the resource expansion and regional exploration drilling programs. I believe these, and other capital
investments, have positioned the Company to deliver many years of strong production and significant free cash
flow generation.”
Fourth Quarter and Full-Year Operating and Financial Highlights
The following two tables provide an overview of key operating and financial results during the fourth quarter of
2020 and the 2020 Year. In addition, operating results are provided for the ten -month operating period from
March 1, 2020, following declaration of commercial production, to December 31, 2020 (the “2020 Operating
Period”).
Three months ended
December 31, 2020 2020 Operating Period
Tonnes mined (tonnes) 350,474 672,906
Tonnes milled (tonnes) 337,146 724,007
Average head grade (g/t) 10.1 10.0
Average recovery (%) 88.6 87.2
Average mill throughput (tpd) 3,665 3,448
Gold ounces produced 96,830 202,830
Gold ounces sold 106,190 199,256
During the 2020 Year, which includes the pre -commercial production period from January 1 to February 28, a
total of 242,400 oz of gold was produced and 234,464 oz were sold, including 35,208 oz sold prior to declaration
of commercial production.
1 Refer to “Non-IFRS Measures” section.
2
Three months ended
December 31, 2020
Year ended
December 31, 2020
Net revenues ($’000) 189,250 358,1561
Income from mining operations ($’000) 94,857 172,3861
Net loss ($’000) (1,233) (47,158)
Operating cash flow ($’000) 95,019 113,644
Average gold sale price ($/oz sold)2 1,850 1,8661
Average cash operating cost ($/oz sold)2 627 6671
Average all-in sustaining costs ($/oz sold)2 747 773
Operating cash flow per share ($)2 0.41 0.50
Adjusted net earnings ($‘000)2 76,224 105,914
Adjusted net earnings per share ($)2 0.33 0.47
(in thousands of U.S. dollars) As at December 31,
2020
As at December 31,
2019
Financial Position:
Cash $ 79,592 $ 75,684
Working capital $ 56,603 $ 32,800
Total assets $ 1,505,360 $ 1,408,961
Long-term debt $ 857,094 $ 878,586
Fourth Quarter and 2020 Operating Period Production Overview
• Gold production during the fourth quarter of 2020 totalled 96,830 oz, comprised of 56,900 oz of
concentrate and 39,930 oz of doré . Gold production during the 2020 Operating Peri od totalled 202,830
oz, comprised of 133,153 oz of concentrate and 69,677 oz of doré.
• During the fourth quarter, the mine continued to operate according to plan, resulting in 350,474 tonnes
of ore mined, while, over the 2020 Operating Period, the mine delivered a combined 672,906 tonnes of
ore to the plant or stockpile.
• Underground mine development also continued as planned, advancing a total of 2,201 meters during the
fourth quarter of 2020, versus 1,556 meters in the third quarter, and development rates averaging 23.9
meters per day in December. A total of 4,808 meters of development were completed during the 2020
Operating Period. Good ground conditions allowed conversion from drift and fill mining methods to long-
hole stoping in key high-grade areas.
• Mill operations in the fourth quarter achieved similar processing results to those achieved in the third
quarter of 2020, with 337,146 tonnes of ore milled at an average throughput of 3,665 tonnes per day
(“tpd”). During the 2020 Operating Period, the mill operated at an average throughput of 3, 448 tpd,
resulting in a total of 724,00 7 tonnes milled. Engineering and procurement of additional equipment are
underway on the expansion project designed to increase the mill throughput from 3,500 to 4,200 tpd.
• The average grade of ore milled was 10.1 grams per tonne (“g/t”) for the fourth quarter of 2020, with
average recovery at 88.6%, which continues to grow quarter -by-quarter. For the 2020 Operating Period,
the average grade of ore milled was 10.0 g/t with average recovery at 87.2%. The Company continues to
review the mill process to optimize recoveries.
1 Amount relates to the 2020 Operating Period.
2 Refer to “Non-IFRS Measures” section.
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Fourth Quarter and Full-Year 2020 Financial Overview
• During the fourth quarter, the Company sold a total of 106,190 oz of gold, consisting of 70,540 oz of
concentrate and 35,650 oz of doré, at an average realized gold price 1 of $1,850 per oz for total gross
revenues from gold sales of $196 million. During the 2020 Operating Period, the Company sold a total of
199,256 oz of gold, consisting of 136,756 oz of concentrate and 62,500 oz of doré , at an average realized
gold price1 of $1,866 per oz for total revenues from gold sales of $371.8 million.
• Net of treatment and refining charges, revenues achieved in the fourth quarter and 2020 Operating Period
were $189.3 million and $358.2 million, respectively.
• Cash operating costs 1 and AISC 1 for the quarter were $627 and $747 per oz of gold sold, respectively.
Higher than planned recovery rates combined with the processing of high grade ore during the quarter
contributed to these good results. Cash operating costs 1 and AISC 1 for the 2020 Oper ating Period were
$667 and $773 per oz of gold sold, respectively.
• Income from mining operations was $94.9 million in the fourth quarter, and the Company generated cash
flow from operations of $95.0 million, or $0.41 per share 1. Income from mining operations was $172.4
million during the 2020 Operating period, and the Company generated cash flow of $113.6 million from
operations or $0.50 per share1 for the 2020 Year.
• Net loss after tax in the fourth quarter was $1.2 million, after deducting corporate, exploration and finance
costs, and derivative losses , partially offset by the income tax recovery recognized during the period .
Adjusted earnings 1 for the quarter , which exclude s derivative losses, were $76.2 million, or $0.33 per
share.
• During the 2020 Year, t he Company recorded a net loss of $ 47.2 million, after deducting finance,
corporate, exploration and other costs of $66.5 million, as well as derivative losses of $137.0 million and
suspension of operations of $29.3 million , from income from mining operations and offset by a deferred
income tax recovery of $13.2 million.
• Adjusted earning s1 during the 2020 Year, which exclude suspension of operations costs and derivative
losses, were $105.9 million, or $0.47 per share.
Results for the year are impacted by non -cash derivative gains and losses 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 losses associated with anticipated increasing
forward gold prices are recorded in the statement of operations, while non-cash derivative gains associated with
increasing yields are recorded in the statement of other comprehensive income. These non-cash gains and losses
are derived from complex valuation modelling and accounting treatment which are more fully explained in the
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.
Liquidity and Capital Resources
Following the re -start of operations in early July, the Company gener ated $118.4 million of net cash from its
operating activities, which also involved an increase in working capital while at the same time satisfying planned
capital expenditures and loan facilities obligations. For the 2020 Year, the Company made scheduled principal
and interest payments under its debt facilities totalling $77.7 million, which included monthly payments under
the stream facility that commenced in February 2020 and totalled $18.0 million. In December, a payment under
the gold prepay facility totalling $18.3 million and principal repayments totalling $22.8 million under the senior
1 Refer to “Non-IFRS Measures” section.
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debt facilities were also made, as scheduled. Repayments of the gold prepay and senior debt facilities are due
quarterly.
The Company expects to generate strong operating cash flow during 2021 based on its production and AISC
guidance at current gold prices. This strong operating cash flow will support debt repayments, exploration
program costs, and planned capital expenditures, including an expansion project to increase the mill
throughput from 3,500 to 4,200 tonnes per day.
Increase in Probable Mineral Reserves1
In conjunction with the update to the life -of-mine plan, Lundin Gold updated its estimates of Probabl e Mineral
Reserves for Fruta del Norte (“2020 Reserve”) to 5.41 million oz, an increase of 427,000 oz compared to its 2019
year-end reconciliation of Probable Mineral Reserves. The 2020 Reserve is effective as of July 31, 2020 and
reflects mill feed to July 31, 2020; the update is primarily the result of con verting a significant portion of drift
and fill mineable orebody sections to long-hole stoping, as a result of the good ground conditions experienced
in the mine to date. Alongside the reserve increase, these changes also resulted in a slight increase to d ilution
and decrease in average grade. Mineral Resource estimates at Fruta del Norte were not affected.
December 31, 2019 2020 Reserve
Mt 17.6 20.8
Au (g/t) 8.74 8.1
Au (Moz) 4.99 5.41
Ag (g/t) 12.1 11.8
Ag (Moz) 6.92 7.68
The Company’s 2020 year -end reconciliation of Probable Mineral Reserves for Fruta del Norte as adjusted by
production will be incorporated in its Annual Information Form for the financial year ended December 31, 2020.
Health and Safety
The health and saf ety of personnel at site is of paramount importance, and stringent procedures were put in
place prior to the re-start of operations in July 2020, so as to minimize the impact of COVID-19 on the workforce.
These enhanced protocols remain in place currently. To date, only 34 cases have been identified at site, and
none since August 2020.
Two lost time incidents and five medical aid incidents were recorded during the 2020 Year. The Total Recordable
Incident Rate during this same time period was 0.41 per 200,000 hours worked.
Community
During the fourth quarter of 2020, a public bridge over the Zamora River which connected local communities
and was used in part for access to Fruta del Norte collapsed, with no reported injuries. Lundin Gold is supporting
the affected communities by assisting with transportation of people and supplies and has reaffirmed its
commitment to fund the replacement of the public bridge being constructed under the authority of the
provincial government, estimated at $3.0 million.
1 The 2020 Reserve has been estimated in accordance with the standards of the Canadian Institute of Mining, Metallurgy and Petroleum
("CIM") and NI 43-101. Additional information on Mineral Resource and Mineral Reserve estimates for Fruta del Norte is contained in
the Fruta del Norte Project Ecuador NI 43-101 Technical Report on Feasibility Study dated June 15, 2016, which is available under the
Company's profile at www.sedar.com. The assumptions, parameters and risks associated with the Company's Probable Mineral Reserve
estimates above are set out in the Company’s MD&A dated February 24, 2021, which is available under the Company's profile
at www.sedar.com.
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Following the collapse of the bridge, a group of local residents erected a n illegal blockade on the public road
used to access Fruta del Norte. A resolution was reached through the efforts of the Company and the national
government, and the blockade was removed after 15 days. The blockade had little impact on site operations.
Exploration
In September, the Company received the permit for drilling two of its priority targets, Barbasco and Puente -
Princesa, located 7 kilometers (“km”) from Fruta del Norte along the 16 km long Suarez Pull -Apart Basin
structure. Plans for a 9,000 metre drilling campaign, which involves establishing COVID -19 protocols for these
activities, are underway. The Company is targeting a start date for this regional explora tion in the first quarter
of 2021.
Outlook
Guidance for 2021 remains unchanged with expected production of 380,000 to 420,000 oz of gold at Fruta del
Norte based on an average head grade of 10.4 g/t and average gold recovery of 90%. AISC is forecasted between
$770 and $830 per oz of gold sold, calculated on a basis consistent with prior periods.
The following capital project activities, which are still part of the construction scope of Fruta del Norte, are
planned for completion in 2021:
• the construction of the Company’s bridge over the Zamora River early in the second quarter of 2021.
• the south ventilation raise for the mine in the second quarter of 2021.
Engineering and procurement of additional equipment are underway on the expansion project designed 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 modif ications are also expected to improve mill recoveries through the addition of
retention time in the flotation process of the plant.
Under its sustaining capital activities for 2021, the Company has also planned a 10,000 met re drill program,
targeting conversion and expansion of the Fruta del Norte mineral resource, and the completion of the first and
second raises of the Fruta del Norte tailings dam.
Furthermore, the reactivation of the exploration program, focused on drilling the Barbasco and Puente-Princesa
targets, has commenced and drilling of these targets is expected to start in the first quarter of 2021.
Qualified Persons
The technical information relating to Fruta del Norte contained in this News Release, including the 2020 Reserve,
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, February 25 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
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Conference ID: Lundin Gold / 45657932
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 Thursday, March
11, 2021.
Toll Free North America Replay Number: +1 888-390-0541
International Replay Number: +1 -416-764-8677
Replay passcode: 657932 #
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 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, 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 production, they are of
assistance in the understanding of the results of opera tions and its financial position. Please refer to the
Company's MD&A for the year ended December 31, 2020 for an explanation of non-IFRS measures used.
Additional Information
The information in this release is subject to the disclosure requirements of Lu ndin Gold under the EU Market
Abuse Regulation. This information was publicly communicated on February 24, 2021 at 6:30 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]
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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, object ives,
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 u pdate 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 differ materially from those an ticipated in
this forward-looking information as a result of the factors discussed in the "Risk Factors" section in Lundin Gold's Management Discussion
and Analysis dated February 24, 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 instabi lity 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
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.