LUNDIN GOLD REPORTS THIRD QUARTER 2023 RESULTS AND ELECTS TO FULLY REPAY ITS SENIOR DEBT FACILITY Robust free cash flow generation underpins decision to extinguish bank debt
NEWS RELEASE
Vancouver, November 8, 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 THIRD QUARTER 2023 RESULTS AND ELECTS TO FULLY REPAY
ITS SENIOR DEBT FACILITY
Robust free cash flow generation underpins decision to extinguish bank debt
Lundin Gold Inc. (TSX: LUG; Nasdaq Stockholm: LUG; OTCQX: LUGDF) ("Lundin Gold" or the "Company") today
reports results for the third quarter of 2023, highlighted by Q3 production of 112,212 ounces (“oz”) of gold and
sales of 112,711 oz, at a cash operating cost1 of $704 per oz sold and all-in sustaining cost (“AISC”)1 of $907 per
oz sold. All amounts are in U.S. dollars unless otherwise indicated.
Lundin Gold’s track record of generating strong free cash flow1 continued during the third quarter of 2023 with
free cash flow 1 of $80.9 million or $0.34 per share achieved resulting in a cash balance of $302 million at
September 30, 2023. Given this robust cash balance at quarter end and forecasted cash requirements, the
Company has elected to fully repay the remaining principal balance of $70.5 million plus accrued interest under
its senior debt facility (the “Senior Facility”) on November 14, 2023, well in advance of the original maturity date
of June 2026. Upon completion of this repayment, the Company will have extinguished two of its project finance
facilities, being the gold prepay credit facility and Senior Facility , which had an original combined principal
amount of $500 million, after only three years of operations.
Ron Hochstein, President and CEO commented, “ After another strong quarter of free cash flow generation, we
are advancing our debt reduction strategy with the repayment in full of the remaining balance of our senior debt
facility. We are firmly on track to meet our revised AISC1 guidance of $820 to $870 per oz sold and expect to be
near the upper end of our revised production guidance of 450,000 to 485,000 oz. I am also very excited about the
continued expansion of our near -mine exploration program , which is yielding very positive results going into
2024.”
1 Certain additional disclosures for these specified financial measures have been incorporated by reference and can be found on pages
14 to 17 of the Company's MD&A for the three and nine months ended September 30, 2023 available on SEDAR+.
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OPERATING AND FINANCIAL RESULTS SUMMARY
The following two tables provide an overview of key operating and financial results.
Three months ended
September 30,
Nine months ended
September 30,
2023 2022 2023 2022
Tonnes ore mined 397,702 377,921 1,229,845 1,126,980
Tonnes ore milled 416,072 379,258 1,226,777 1,138,340
Average head grade (g/t) 9.7 11.0 10.9 10.9
Average recovery 86.5% 90.3% 88.5% 89.4%
Average mill throughput (tpd) 4,523 4,122 4,494 4,170
Gold ounces produced 112,212 121,635 381,964 355,190
Gold ounces sold 112,711 134,640 376,360 350,213
Three months ended
September 30,
Nine months ended
September 30,
2023 2022 2023 2022
Net revenues ($’000) 211,172 210,425 711,830 604,705
Income from mining operations ($’000) 99,620 83,930 357,129 277,659
Earnings before interest, taxes, depreciation, and amortization ($’000)1 133,170 158,877 426,702 402,403
Adjusted earnings before interest, taxes, depreciation, and amortization ($’000)1 121,492 117,039 430,137 355,303
Net income ($’000) 53,782 62,673 168,395 141,817
Basic income per share ($) 0.23 0.27 0.71 0.60
Cash provided by operating activities ($’000) 120,030 104,739 426,821 292,755
Free cash flow ($’000)1 80,937 65,202 201,143 178,256
Free cash flow per share ($)1 0.34 0.28 0.85 0.76
Average realized gold price ($/oz sold)1 1,931 1,618 1,942 1,781
Cash operating cost ($/oz sold)1 704 656 662 656
All-in sustaining costs ($/oz sold)1 907 807 807 785
Adjusted net earnings ($‘000)1 44,673 20,379 171,074 91,419
Adjusted net earnings per share ($)1 0.19 0.09 0.72 0.39
Dividends paid per share ($) 0.10 0.20 0.30 0.20
THIRD QUARTER HIGHLIGHTS
Financial Results – Strong Free Cash Flow Generation Enables Deleveraging Strategy
• Gold sales of 112,711 oz of gold, consisting of 70,981 oz in concentrate and 41,730 oz as doré, resulted in
gross revenues of $218 million at an average realized gold price 1 of $1,931 per oz. Net of treatment and
refining charges, revenues were $211 million.
• Cash operating costs1 and AISC1 were $704 and $907 per oz of gold sold, respectively, which are both higher
than previous periods albeit in line with expectations . Cash operating costs 1 per oz sold was impacted by
lower gold production due to expected lower grade and recoveries partially offset by increased mill
throughput, while the higher AISC 1 also reflects the increase in sustaining capital activities during the
quarter.
• The Company generated cash from operating activities of $120 million and free cash flow1 of $80.9 million
or $0.34 per share resulting in a cash balance of $302 million at September 30, 2023.
1 Certain additional disclosures for these specified financial measures have been incorporated by reference and can be found on pages
14 to 17 of the Company's MD&A for the three and nine months ended September 30, 2023 available on SEDAR+.
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• Earnings before interest, taxes, depreciation, and amortization1 (“EBITDA”) and adjusted EBITDA1 were $133
million and $121 million, respectively, with the difference resulting from derivative gains recognized in the
quarter.
• Net income was $53.8 million including a derivative gain of $11.7 million, and net of corporate, exploration,
finance costs, and associated taxes. Adjusted earnings1, which exclude the derivative gain and related taxes,
were $44.7 million, or $0.19 per share.
Production Results – Focussing on Improving Recoveries
• Mine ore production was 397,702 tonnes at an average grade of 9.3 grams per tonne, a reduction in
production compared to previous periods , which was planned in order to reduce the ore stockpiled on
surface.
• The mill processed 416,072 tonnes of ore at an average throughput rate of 4,523 tpd which is consistent
with the throughput rate achieved during the second quarter.
• The average grade of ore milled was 9.7 grams per tonne with average recovery at 86.5%. Recoveries were
affected this quarter by processing of ore from sectors that contain higher levels of finely disseminated
sulphide minerals which are impacting flotation recovery.
• Gold production was 112,212 oz which was comprised of 71,902 oz in concentrate and 40,310 oz as doré.
Liquidity and Capital Resources
At the end of the third quarter of 2023, the Company is in a strong financial position.
(in thousands of U.S. dollars) As at September 30,
2023
As at December 31,
2022
Financial Position:
Cash 302,465 363,400
Working capital 313,794 194,804
Total assets 1,516,866 1,668,865
Long-term debt
Senior debt facility
Principal and accrued interest 71,369 183,638
Deferred transaction costs (5,392) (10,784)
Fair value of stream credit facility and offtake 295,132 287,666
Fair value of gold prepay credit facility - 207,446
Total long-term debt 361,109 667,966
As at September 30, 2023, the Company had cash of $302 million and a working capital balance of $314 million
compared to cash of $363 million and a working capital balance of $195 million at December 31, 2022. The
change in cash during the nine months ended September 30, 2023 was primarily due to the full repayment of
the gold prepay credit facility of $208 million; principal repayments, interest and finance charges, including
associated taxes, under the stream credit facility totalling $61.2 million; interest and principal repayments under
the Senior Facility of $121 million; dividends of $71.1 million; and cash outflows of $39.7 million relating to
sustaining capital expenditures. This is offset by cash generated from operating activities of $427 million and
proceeds from the exercise of stock options and anti-dilution rights totalling $12.6 million.
1 Certain additional disclosures for these specified financial measures have been incorporated by reference and can be found on
pages 14 to 17 of the Company’s MD&A for the three and nine months ended September 30, 2023 available on SEDAR+.
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The Senior Facility had a principal balance of $70.5 million and accrued interest of $0.9 million as at September
30, 2023. With the strong liquidity position of Lundin Gold, the Company has exercised its right to fully repay this
remaining balance on November 14, 2023 leaving the stream credit facility as the last remaining debt on its
balance sheet. The Company has the option to repay (i) 50% of the stream facility outstanding on June 30, 2024
for $150 million and / or (ii) the other 50% outstanding on June 30, 2026 for $225 million.
Capital Expenditures
Sustaining Capital
o Significant progress was made on the construction of the fourth raise of the tailings dam with completion
expected in the latter half of the fourth quarter.
o Commissioning of the underground mine maintenance facility has commenced, which is expected to
provide additional efficiencies and cost savings.
o Other sustaining capital projects such as extending two underground levels to the south for the 2024
conversion drill program, implementation of a mine dispatch system, upgrades to the sewage treatment
plants, purchase of mobile equipment, and other efficiency improvement projects are expected to ramp
up during the remainder of the year, with some projects carrying over to 2024.
o The 2023 conversion drilling program continued to advance during the third quarter in distinct sectors
of the FDN deposit. The program focused on the northern -central and southern extension with
approximately 6,203 metres across 46 holes completed. During the nine months ended September 30,
2023, 10,814 metres across 74 holes have been completed.
o In the southern sector, 27 drill holes were completed and mostly intercepted the mineralized
zones associated with manganoan carbonate, chalcedony veins and sulphides.
o In the north -central sector, 19 drill holes were completed and positive assay results are
associated with zones of hydrothermal breccias along the downdip extension of FDN.
Health and Safety
During the third quarter there were no Lost Time Incidents (“LTIs”) and no Medical Aid Incident (“MAIs”). The
Total Recordable Incident Rate across exploration and operations was 0. 00 per 200,000 hours worked for the
quarter and 0.05 for the first nine months of 2023. FDN operations has had more than 1 year without an LTI or
MAI with over 6.3 million hours worked, since the last LTI, as of September 30, 2023
Community
Various community projects supported by the Company progressed well in the third quarter, including initiatives
focused on community health and education. Lundin Gold continued to support an innovative program which
provides mental health services to local community members. Education programs sponsored by the Company
which improve local student access to higher education continued to show success as a cohort of local students
prepare to graduate from university in the coming months, a significant milestone for the Los Encuentros Parish.
Infrastructure investment continues to be a priority for Lundin Gold. In addition to the Company’s long-
standing commitment to support road maintenance, Lundin Gold co-funded with the Ministry of Education
the rehabilitation of the local school, which more than 1,300 children from the Los Encuentros Parish
attend. Work on this project was nearing completion at the end of the quarter.
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Lundin Gold continued to support local micro businesses in conjunction with the Lundin Foundation during the
quarter, including women -led businesses through the program “Soy Emprendadora”. Among the supported
businesses, the local textile manufacturer, fire extinguisher maintenance company, and pest control/fumigation
company all increased their business activity in the quarter with Lundin Gold as an anchor client. Efforts have
continued to ensure that local farmers retain access to local, national, and international markets. The Company
also continued to engage with local indigenous people, especially the Shuar Federation of Zamora Chinchipe, to
jointly implement projects that promote economic opportunities and the Shuar culture.
Following the election of new local authorities, the round table dialogue process restarted during the third
quarter, with high participation rates by local community members.
During the quarter, Lundin Gold was recognized for its sustainable business practices by CERES Ecuador, a non-
profit organization committed to social responsibility in Ecuador.
Corporate
The Company paid a quarterly dividend of $0.10 per share on September 26, 2023 ( September 29 for shares
trading on Nasdaq Stockholm) based on a record date of September 11, 2023, for a total of $23.8 million. With
the release of its third quarter 2023 results, the Company has declared a cash dividend of $0.10 per share, which
is payable on December 22, 2023 ( December 29 for shares trading on Nasdaq Stockholm) to shareholders of
record on December 7, 2023.
Near the end of the quarter, Mr. Nathan Monash, Vice President, Sustainability departed Lundin Gold. Ms. Sheila
Colman has taken on the role and is now Vice President, Legal and Sustainability and Corporate Secretary.
Upon the acquisition of the Company’s largest shareholder, Newcrest Mining Limited (“Newcrest”), by Newmont
Corporation (“Newmont”) on November 6, 2023 , the Company appointed two new directors to the Board as
Newmont nominees: Ms. Melissa Harmon and Mr. Scott Langley. Ms. Harmon has a mine engineering degree
and an MBA. She has been employed with Newmont for over 20 years in increasingly senior roles in operations
and is currently Group Head, Non -Managed Operating Joint Ventures. Mr. Langley is currently Vice President,
Corporate Development at Newmont and worked in investment banking for more than 15 years prior to joining
Newmont. Mr. Craig Jones and Ms. Jill Terry, the former Newcrest nominees, resigned from the Board on the
same day.
EXPLORATION
Near-Mine Exploration Program
In the third quarter, the Company completed a total of 9,664 metres across 14 holes from surface and
underground. Drilling from underground explored to the east, west and at depth of the FDN deposit, while
drilling from surface tested along the extensions of the controlling structures of the FDN deposit.
• The surface drilling program continues along the south extension of the East Fault, where Bonza Sur and
the FDN South (“FDNS”) targets were identified. During the third quarter, 10 surface drill holes were
completed, mostly at Bonza Sur where the drilling program continues to indicate the continuity of the
mineralization. Exploratory holes were also completed along the north and south extensions of the FDN
deposit. Five surface rigs are currently drilli ng, two of them exploring Bonza Sur, two along the south
and north extensions of FDN respectively, and one at FDN East.
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o At Bonza Sur, located only one kilometre from FDN, seven surface drill holes were completed
and continue to expand the recently discovered epithermal system. Drilling continues to record
multiple positive intersections which extend along strike and at dept h. The mineralized zones
are represented by veins/veinlets of quartz and minor chalcedony and manganoan -carbonate
associated with the occurrences of sulphides. This epithermal system has already been identified
for more than 700 metres along the north -south strike and for at least 500 metres along the
downdip and remain open in all directions.
o At FDNS, two surface drill holes were completed along the south extension and both intercepted
narrow hydrothermal alteration zones with no significant results. This vein system remains open
for expansion along the northeastern-southwestern direction and at depth.
o As part of the exploratory program aiming to explore new sectors within the near mine area,
one hole was completed along the north extension of the FDN deposit, which intercepted a
narrow hydrothermal alteration zone. Results are pending.
• The underground drilling program continues to explore the continuity of the FDN deposit at depth and
beyond the major east and west faults. Four drill holes were completed and all intercepted structures,
zones of hydrothermal alteration, and gold mineralization beyond the current limits of the FDN resource
boundary. At depth i n the north part of FDN, one drill hole confirmed hydrothermal alteration zones
related to breccias and veins, below the mineral envelope of FDN. In the central part, another drill hole
intercepted hydrothermal alteration zones along the downdip extension. Furthermore, two drill holes
completed at the FDN East targ et intercepted a new mineralized zone represented by breccias, veins
and veinlets with sulphides hosted on porphyritic intrusive rocks or in volcanic rocks.
A complete table of results received to date can be found in Lundin Gold’s press release date d November 1,
2023.
Regional Exploration Program
The regional drilling program continues to advance in distinct sectors along the southeastern and southwestern
borders of the Suarez basin and a total of 2,544 metres across four drill holes were completed in the third
quarter. Regional drilling focused on the Crisbel target, where detailed geological interpretation of exploration
data and additional surface works identified major structures and zones of hydrothermal alteration.
• At the Crisbel target, three drill holes were completed testing an unexplored geochemical soil anomaly
(gold and epithermal pathfinder elements such as Sb, As) along the southwest contact between the
Suarez Border and the volcanic sequence. All drill holes intercepted hydrothermal alteration zones with
important quantities of sulphides hosted on brecciated volcanic rocks. One drill hole returned low grade
values of gold. Results remain pending for the other drill holes.
• At Barbasco SE, one drill hole was completed and tested the extension of the FDN East Fault along the
southeastern extension of the Suarez basin. No significant zone of hydrothermal alteration was
intercepted. Results remain pending.
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Newcrest Earn-In Agreement
On the concessions held by the Company’s subsidiary, Surnorte S.A., a second phase of scout drilling has been
completed at the Gamora Project, located in southeast Ecuador. This work is being conducted by Newcrest
(subsidiary of Newmont) as the operator under an earn -in agreement with Lundin Gold pursuant to which
Newcrest can earn up to a 50% interest in eight exploration concessions located to the north and south of Fruta
del Norte. A total of 3,247 metres of diamond core drilling was completed . The program focused on testing
priority copper -gold targets in the Mirador copper porphyry district. The results obtained did not return
significant intercepts on any of the copper -gold or epithermal targets that were tested. Newcrest has met the
expenditure requirement under the first option of the earn -in agreement and has until early December to
exercise its option to acquire 25% of Surnorte S.A.
OUTLOOK – ON TRACK FOR ANNUAL PRODUCTION TO BE NEAR THE UPPER END OF REVISED GUIDANCE
Operating performance during the nine months ended September 30, 2023 puts the Company on track to
achieve full year production near the upper end of its revised guidance of 450,000 to 485,000 oz and firmly on
track to meet its revised AISC 1 guidance of $820 to $870 per oz sold. Solutions to improve mill recoveries
continued to be evaluated. Some operational modifications are being made and detailed engineering is
underway for the installation of new flotation technology to deal with the finely disseminated sulphide minerals.
The modifications to the flotation circuit are anticipated to be completed within the next 12 months. The
Company completed basic engineering at quarter end and is moving forward to detailed engineering for a
possible expansion to further increase mill throughput to 5,000 tpd.
The near mine drilling program is expected to continue to delineate the Bonza Sur target, where the recently
discovered epithermal system remains open. Two rigs are expected to continue to be dedicated to the detailing
and expansion of the mineralized zones at depth and along strike at this target. The near mine drilling program
will also continue to explore the extension of FDN mineralization along the south -southwestern and north
directions. The underground drilling program is expected to continue to expl ore for new discoveries and
extensions of the FDN resource envelope.
In light of continued success of the near mine program, the Company has expanded the program twice during
the nine months ended September 30, 2023. The near mine program was originally planned for 15,500 metres
and was most recently expanded in the third quarter to drill 30,000 metres in 2023. Six rigs (one underground
and five on surface) are currently operating on the near-mine program.
The regional drilling program continues to focus on the southern Suarez Basin, advancing along the eastern and
western borders of the Basin. A second rig was added to the program to advance on the follow up of numerous
target areas identified during previo us quarters. The regional drilling program is now expected to complete a
minimum of 9,000 metres for the year, with two rigs currently operating.
A minimum of 50,000 metres of drilling is planned across the conversion, near -mine and regional programs in
2023. This represents the largest drill program in the district since FDN’s discovery. As a result of improved
productivities in the field, the expanded near-mine and regional drilling programs are expected to be completed
within the revised total budget of $24.6 million announced earlier this year.
The Company has elected to fully repay the remaining principal balance of $70.5 million plus accrued interest
under its Senior Facility on November 14, 2023. The extinguishment of the Senior Facility, which had an
original principal amount of $350 million and a maturity date of June 2026, is intended to provide Lundin
1 Certain additional disclosures for these specified financial measures have been incorporated by reference and can be found on
pages 14 to 17 of the Company's MD&A for the three and nine months ended September 30, 2023 available on SEDAR+.
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Gold with improved free cash flow margins and increased capital allocation flexibility for the benefit of the
Company and its shareholders.
The Company anticipates continuing to declare quarterly dividends of $0.10 per share, equivalent to
approximately $100 million annually, based on currently issued and outstanding shares.
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 Thursday, November 9 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 / 52687438
A link to the webcast will be available on the Company’s website, www.lundingold.com.
A replay of the conference call will be available two hours after its completion until November 23, 2023.
Toll Free North America Replay Number: +1 888-390-0541
International Replay Number: +1 416-764-8677
Replay passcode: 687438 #
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
international best practices. Lundin Gold is committed to delivering value to its shareholders, while
simultaneously providing economic and social benefits to impac ted 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,