LUNDIN GOLD REPORTS FOURTH QUARTER AND FULL YEAR RESULTS Production and Cost Performance Beats Guidance for Second Year Running
NEWS RELEASE
Vancouver, February 23, 2023
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
Production and Cost Performance Beats Guidance for Second Year Running
Lundin Gold Inc. (TSX: LUG) (Nasdaq Stockholm: LUG) (OTCQX: LUGDF) ("Lundin Gold" or the "Company") is
pleased to report results for the fourth quarter and year ended December 31, 202 2 (the “2022 Year”). Lundin
Gold’s year is highlighted by its production of 476,329 oz of gold at an all-in sustaining cost (“AISC”)1 of $805 per
oz, beating production guidance of 430,000 to 460,000 oz and AISC guidance of $820 to $870 per oz, respectively,
and resulting in free cash flow ¹ of $269 million for the year. All amounts are in U.S. dollars unless otherwise
indicated.
Ron Hochstein, President and CEO commented, “I am proud to announce that for a second consecutive year ,
Lundin Gold has beaten its production and cost guidance. In a short two and a half years of operations, the
Company has increased average annual throughput at Fruta del Norte (“FDN”) from an initial design capacity of
3,500 tonnes per day (“ tpd”) to 4,272 tpd with recoveries now averaging close to 90%. With the gold prepay
facility paid back in full and the South Ventilation Raise complete, the Company is firmly positioned to continue
generating significant cash flow and creating shareholder value in the years to come.”
OPERATING AND FINANCIAL RESULTS SUMMARY
The following two tables provide an overview of key operating and financial results.
Three months ended
December 31
Year ended
December 31
2022 2021 2022 2021
Tonnes ore mined 365,250 412,081 1,492,230 1,557,859
Tonnes ore milled 420,838 379,166 1,559,178 1,415,634
Average mill head grade (g/t) 10.0 9.9 10.6 10.6
Average recovery 89.6% 89.7% 89.5% 88.6%
Average mill throughput (tpd) 4,574 4,121 4,272 3,878
Gold ounces produced 121,139 107,915 476,329 428,514
Gold ounces sold 119,890 108,476 470,103 427,298
1 Certain additional disclosures for these specified financial measures have been incorporated by reference and can be found on
page 15 of the Company's MD&A for the year ended December 31, 2022 available on SEDAR.
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Three months ended
December 31
Year ended
December 31
2022 2021 2022 2021
Revenues ($’000) 210,961 186,440 815,666 733,329
Income from mining operations ($’000) 92,095 91,646 369,754 355,712
Earnings before interest, taxes,
depreciation, and amortization ($’000)1 141,274 63,113 543,660 415,588
Adjusted earnings before interest, taxes,
depreciation, and amortization ($’000)1 112,057 108,819 467,343 436,006
Net income (loss) ($’000) (68,259) 28,789 73,558 221,426
Cash flow from operations ($’000) 133,390 108,006 426,145 417,752
Free cash flow ($’000)1 91,179 74,681 269,435 268,370
Average realized gold price ($/oz sold)1 1,814 1,779 1,789 1,772
Cash operating cost ($/oz sold)1 713 625 671 632
All-in sustaining costs ($/oz sold)1 865 715 805 762
Free cash flow per share ($)1 0.39 0.32 1.15 1.16
Adjusted net earnings ($‘000)1 33,584 77,902 125,003 248,907
Adjusted net earnings per share ($)1 0.14 0.33 0.53 1.07
FOURTH QUARTER AND FULL YEAR 2022 HIGHLIGHTS
Financial Results – Strong Free Cash Flow1 Generation Highlights Strength of FDN
• Fourth quarter sales of 119,890 oz gold, consisting of 77,622 oz of concentrate and 42,268 oz of doré, at an
average realized gold price1 of $1,814 per oz for total gross revenues from gold sales of $ 217 million. For
2022, sales totalled 470,103 oz gold and total revenues from gold sales amounted to $841 million.
• Net of treatment and refining charges, revenues in the fourth quarter and 2022 were $211 million and $816
million, respectively.
• Cash operating costs1 and AISC1 for the quarter were $ 713 and $865 per oz of gold sold, respectively. For
2022, cash operating costs1 were $671 and AISC1 was $805 per oz of gold sold.
• Income from mining operations was $9 2.1 million in the fourth quarter, and the Company generated free
cash flow1 of $91.2 million from operations, or $0.39 per share. For 2022, income from mining operations
was $370 million, and the Company generated free cash flow1 of $269 million, or $1.15 per share.
• A loss of $68.3 million was incurred in the fourth quarter, after deducting corporate, exploration and finance
costs of $142 million, net of derivative gains of $29.2 million, and an income tax expense of $18.3 million.
As a result of the early repayment of the gold prepay facility, r esults for the quarter were im pacted by a
one-time accrued finance charge, partially offset by a related derivative gain. In addition, net income was
affected by a one -time adjustment to deferred income taxes of $24.1 million relating to a revised
interpretation of the application of certain tax laws in Ecuador. Net income of $73.6 million was generated
in 2022.
• Adjusted earnings1 for the quarter, which exclude the accrued, one-time finance charge on the repayment
of the gold prepay facility and derivative gain, were $33.6 million, or $0.14 per share. Adjusted earnings1
during 2022 were $125 million, or $0.53 per share.
1 Certain additional disclosures for these specified financial measures have been incorporated by reference and can be found on
page 15 of the Company's MD&A for the year ended December 31, 2022 available on SEDAR.
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• At the end of the 2022 Year, the Company had a cash balance of $363 million.
Production Results – Continuing to Beat Expectations
• Gold production during the fourth quarter totalled 121,139 oz, comprised of 78,756 oz of concentrate and
42,383 oz of doré. Gold production for 2022 totalled 476,329 oz.
• The mine delivered 365,250 tonnes of ore to the stockpile and mil l in Q4. The mining rate was reduced
during the quarter to better manage ore stockpiles and reduce the impact of oxidation on mill recoveries.
The average throughput at the mill this quarter was 4,574 tpd, its highest since the beginning of operations.
• The average ore grade milled in the fourth quarter was 10.0 g/t, with average recovery at 89.6%. For 2022,
the average grade of ore milled was 10.6 g/t with average recovery at 89.5%.
Early Repayment in Full of the Gold Prepay Facility
• In late December, Lundin Gold delivered an irrevocable notice to fully repay the gold prepay facility. On
January 5, 2023, the Company settled amounts due under the gold prepay facility by paying a total of $207.5
million, inclusive of applicable taxes of $16.2 million and interest of $0.1 million accrued between December
31, 2022 and January 5, 2023.
• The repayment amount of the gold prepay facility was the product of (a) the gold price on a pre-determined
date in late December 2022, and (b) an amount of equivalent gold ounces, which was a negotiated number
between 9,775 and 11,500 oz per quarter for the last ten remaining quarters to maturity of the facility, plus
applicable taxes.
• The early repayment of the gold prepay facility resulted in the one-time accrual of a finance charge of $128
million and a derivative gain of $71 million in 2022. No future payments at the then-applicable gold prices
will be due under this facility going forward, including inter est and finance charges that would have been
incurred over the next ten quarters until its originally scheduled maturity.
• Payment was made early in the first quarter of 2023, from the Company’s strong treasury of $363 million
at year end . This strategic tr ansaction is expected to result in increased net cash flows, to provide the
Company with greater exposure to the positive outlook on gold price , and to give Lundin Gold greater
flexibility in its capital structure to pursue operational and corporate opport unities for the benefit of the
Company and its shareholders.
Liquidity and Capital Resources
At the end of 2022, the Company is in a strong financial position:
(in thousands of U.S. dollars) As at December 31,
2022
As at December 31,
2021
Financial Position:
Cash 363,400 262,608
Working capital 237,187 217,221
Total assets 1,668,865 1,685,113
Long-term debt 667,966 739,977
The increase in cash during the 2022 Year was primarily due to cash generated from operating activities of $426
million and proceeds from the exercise of stock options, warrants and anti-dilution rights of $11.2 million. This is
offset by scheduled principal, interest and finance charges paid under the loan facilities totalling $228 million,
dividends of $47 million, and cash outflows of $60.1 million for capital expenditures which include sustaining
capital of $35.5 million and costs for completion of the SVR.
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Capital Expenditures
• South Ventilation Raise (“SVR”): The SVR was completed and fully commissioned in the fourth quarter,
bringing the last element of FDN’s original construction project to its conclusion. As a result, ventilation in
the mine has increased significantly resulting in improved efficiencies and enabling mining activities on all
levels.
• Sustaining Capital:
o The third raise of the tailings dam w as completed during the fourth quarter at a cost of approximately
$19.9 million.
o The 2022 conversion drilling program at FDN was completed during the third quarter, and final assay
results have been received. This conversion drilling campaign provide d additional data for an updated
geological model. The Company anticipates announcing an updated estimate of Mineral Resources and
Reserves for FDN and filing a technical report prepared in accordance with National Instrument 43-101
(“NI_43-101”) before the end of Q1 2023. Based on the new geological model, further conversion drilling
targets will be defined for 2023 and 2024.
o Other sustaining capital projects, such as construction of a new warehouse and improvements in the
sewage treatment plants, were initiated in 2022 and will continue in 2023.
Health and Safety
During the fourth quarter there were no Lost Time Incidents (“LTIs”) and Medical Aid Incident s (“MAIs”). For
2022, the Company recorded two LTIs and four MAIs. The Total Recordable Incident Rate for 2022 was a very low
0.24 per 200,000 hours worked.
As a result of the Company’s success in facilitating the provision of COVID -19 vaccines to its workforce and
subcontractor personnel, including booster shots, COVID -19 protocols were essentially eliminated as 2022
progressed.
Community
Various community projects supported by the Company have progressed over the course of 2022. Several new
micro businesses have been established by local entrepreneurs and supported to facilitate the process of
becoming a supplier to FDN. A local textile manufactur er, fire extinguisher maintenance company, and pest
control/fumigation company have all secured contracts with Lundin Gold. Additional efforts to promote the
integration of local farmers into the FDN supply chain are also in place to create local benefits.
Longstanding projects such as road maintenance, educational support to promote access to higher education,
improving the efficiency of the agricultural sector and addressing infrastructure challenges also progressed
through the year.
The Company continu es to engage with local indigenous peoples, especially the Shuar Federation of Zamora
Chinchipe, to jointly implement projects that promote economic opportunities and the Shuar culture.
Corporate
The Company paid an inaugural dividend of $0.20 per share on September 13, 2022 for a total of $47.0 million
under its newly established dividend. With the release of its 2022 year end results, the Company has declared a
cash dividend of $0.10 per share which is payable on March 31, 2023 (April 4, 2023 for shares trading on Nasdaq
Stockholm) to shareholders of record on March 13, 2023. The Company anticipates declaring quarterly dividends
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of at least $0.10 per share, equivalent to approximately $100 million annually based on currently issued and
outstanding shares.
Near the end of Q2 2022, the Company upgraded the trading of common shares in the U.S. to the OTCQX Market
under the symbol LUGDF. In Q3 2022, its common shares also became eligible for electronic clearing and
settlement in the U.S. through the Depository Trust Company simplifying the process of trading with the objective
of enhancing the liquidity of Lundin Gold shares.
During 2022 and in line with the conclusion of the FDN construction and expansion projects, Mr. Dave Dicaire,
the Company’s Vice President Projects, departed Lundin Gold. After the end of the year, Iliana Rodriguez, Vice
President Human Resources, also left the Company.
EXPLORATION - VALUE CREATION AND UPSIDE OPTIONALITY UNDERPINNING FDN
Near-Mine Exploration Program
The near-mine exploration program commenced in the third quarter of 2022 and has focused on expanding the
FDN mineral resource envelope and testing several unexplored sectors near the mine site. In 2022, approximately
8,600 metres were drilled across 16 holes, from surface and underground.
• The surface drilling program completed nine drill holes in 2022. Its objective is to explore sectors along the
two main controlling structures of the FDN deposit, the East and West faults. Along the southern extension
of the East fault a new mineralized zone has been intercepted. Initial promising results suggest continuity
of the epithermal system in this southern direction as most of the drill holes intercepted wide hydrothermal
alteration zones of similar characteristics to those found at FDN deposit. This zone remains open at depth,
along strike to the north and to the south. The 2023 surface drilling program has already started, with two
rigs drilling on this new zone.
• The underground drilling program focused on the continuity of the FDN deposit and west structure at depth.
A total of seven drill holes were completed under the southern portion of the FDN mineral resource
envelope. Most of the results obtained from underground drilling exhibit the same mineral hydrothermal
alteration to that related to mineralization in the southern extension of FDN’s Mineral Resource and confirm
the continuity of the deposit at depth, below the current resource. Underground drilling is being expanded
in 2023 to continue to explore at depth. The initial focus will be to the north -central sector, with one rig
currently drilling, below the highest -grade port ion of the mineral deposit, where the mine is currently
operating.
Regional Exploration Program
A total of 17,600 metres across 25 drill holes were drilled under the 2022 regional program, of which
approximately 4,490 metres across seven holes were drilled in the fourth quarter. The program has successfully
advanced in the identification of important indicators that point toward the presence of buried epithermal
deposits in the southern basin. Through a detailed geological interpretation of explorati on data and additional
surface works, several targets of interest have been identified, tested and resulted in locating new potentially
mineralized structures. They include:
• Along the southwestern basin border, the Quebrada La Negra and Puente Princesa targets were investigated
with a total 6,987 metres drilled across nine holes. At Quebrada La Negra, the drilling program identified a
new structure associated to the west borde r, represented by wide hydrothermal alteration zones with
breccias and/or veins and disseminated sulfides. The program also drilled an arsenic soil anomaly, where
drilling intercepted a major structure with quartz veins, hydrothermal carbonate-silica breccias and sulfides
hosted in the Santiago formation, which is also the FDN hosting sequence. This hydrothermal alteration
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zone possibly represents the north continuity of the Puente Princesa structure, defined in the second
quarter and located one kilometre (km) further south. All results are pending.
• Four drill holes were completed at Barbasco Norte for a total of 2,123 metres to test a continuous
geochemical gold soil anomaly at the eastern edge of the Suarez Basin. The drilling program intercepted low
grade values of gold and the epithermal pathfinder element arsenic in narrow hydrothermal alteration
zones of similar composition to that found in epithermal systems like FDN. The obtained geological data
suggests an increase of the hydrothermal alteration toward the east, close to the basin border and where
additional drilling is being planned in 2023.
• At Barbasco, the program explored for several indicators of epithermal systems in distinct sectors of the
target. Nine drill holes for a total of 6,351 metres were completed. Drilling only intercepted few and limited
zones of hydrothermal alteration at depth and the current interpretation suggests additional drilling is
required to explore untested sectors located further east.
Newcrest Earn-In Agreement
Early in the second quarter, 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 south of FDN. Newcrest exercised its option to
proceed to the second stage of the earn -in on May 28, 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. To date, drill testing of two copper -gold porphyry
targets has detected low-level porphyry style copper mineralization. This work is being conducted by Newcrest
as the operator under the earn-in agreement. The next phase of drilling will focus on testing priority copper-gold
porphyry targets starting in the first quarter of 2023.
OUTLOOK – POSITIONED TO GENERATE STRONG SHAREHOLDER VALUE FOR YEARS TO COME
Consistent with previously announced guidance, gold production at FDN for 2023 is estimated to be between
425,000 to 475,000 oz based on an average throughput rate of 4,400 tpd, an increase from the average
throughput of 4,274 tpd achieved in 2022. T he head grade is estimated to average 9.67 g/t, with fluctuations
expected during the year as different sections of the ore body are mined. Average mill recovery for the year is
estimated at 90%.
Cash operating costs1 are estimated to range between $700 and $760 per oz of gold sold in 2023, with variability
expected during the year. Sustaining capital for 2023 is estimated at $45 to $55 million and AISC1 is expected to
range between $870 and $940 per oz of gold sold, based on an assumed gold price of $1,650 per oz and silver
price of $18.50 per oz. The projected increase in AISC 1 in 2023 can be attributed principally to higher unit costs
compared to 2022 due to mining and milling ore with lower grade, inflationary pressures resulting in increased
costs of consumables and transportation, higher maintenance requirements as equipment ages and higher
sustaining capital expenditures.
The early repayment of the gold prepay facility is expected to result in increased net cash flow, providing Lundin
Gold with greater flexibility to pursue operational and corporate opportunities for the benefit of the Company
and its shareholders.
The Company is also continuing i ts regional and near mine exploration drilling programs with a total of 28,000
metres of drilling planned for 2023. The near-mine program will include underground and surface drilling to
further investigate the significant potential for the extension of FDN Mineral Resources. At depth, the initial focus
1 Certain additional disclosures for these specified financial measures have been incorporated by reference and can be found on
page 15 of the Company's MD&A for the year ended December 31, 2022 available on SEDAR.
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will be below the north -central sector of the FDN deposit, the highest -grade portion of the mineral deposit.
Surface drilling will continue to investigate a potential extension of FDN to the east, west and south of the current
mineral resource envelope. The 2023 near-mine program is targeting at least 15,500 metres of drilling with an
estimated cost of $9.4 million. The regional drilling program will consist of approximately 12,500 of drilling with
an estimated cost of $11.7 million and focus on the southern basin, advancing toward the east and west border
sectors. Its objective is to follow up on the numerous target areas identified during the 2022 program and test
new and unexplored targets.
In 2023, divide nds of at least $0.10 per share are expected to be declared on a quarterly basis totalling
approximately $100 million for the year. The first quarterly dividend in 2023 is payable on March 31, 2023 (April
4, 2023 for shares trading on Nasdaq Stockholm) based on record date of March 13, 2023.
The Company anticipates updating its estimates of Mineral Resources and Reserves and filing a technical report
prepared in accordance with NI 43-101 before the end of Q1 2023.
Qualified Persons
The technical information relating to FDN 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 NI 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 Friday, February 24 at 7:00 a.m. PT,
10:00 a.m. ET, 4:00 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 / 39587818
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 Friday, March 10,
2023.
Toll Free North America Replay Number: +1 888-390-0541
International Replay Number: +1 416-764-8677
Replay passcode: 587818 #
About Lundin Gold
Lundin Gold, headquartered in Vancouver, Canada, owns the Fruta del Norte gold mine in southeast Ecuador and
a large exploration land package that hosts the Fruta del Norte deposit at its northern edge. 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
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international best practices. Lundin Gold is committed to delivering value to its share holders, 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 me asures 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 operations and its financial position.
Certain additional disclosures for t hese specified financial measures have been incorporated by reference and
can be found on page 15 of the Company's MD&A for the year ended December 31, 2022 available on SEDAR.
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 February 23, 2023 at 4:30 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]
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 202 3
production outlook, including estimates of gold production, grades recoveries and AISC; expected sales receipts, cash flow fo recasts and
financing obligations; the benefits to be derived from the early payment of the gold prepay facility; its estimated capital costs, the benefits
of increased ventilation in the mine, the Company’s declaration and payment of dividends pursuant to its dividend policy; the timing and
the success of its drill program at FDN and its other exploration activities; plans to update estimates of mineral resources and reserves at
FDN; the benefits from its community investment, and the Company’s efforts to protect its workforce from COVID -19. There can be no
assurance that such sta tements 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
Management Discussion & Analysis dated February 23, 2023, which is available at www.lundingold.com or on SEDAR.