Results Provide Strong Foundation to Meet 2024 Guidance
Lundin Gold Inc. (TSX: LUG) (Nasdaq Stockholm: LUG) (OTCQX: LUGDF) is pleased to report results for the first quarter of 2024, highlighted by gold production of 111,572 ounces and gold sales of 108,916 oz at a cash operating cost[1] of $735 per oz sold and all-in sustaining cost1 of $868 per oz sold from its Fruta del Norte gold mine located in southeastern Ecuador. Bolstered by strong operating performance, reduced debt servicing costs and record high gold prices, Fruta del Norte generated in excess of $100 million cash from operating activities in the first quarter, and free cash flow1 of $82.3 million or $0.35 per share, resulting in a cash balance of $324 million as at March 31, 2024. All amounts are in U.S. dollars unless otherwise indicated.
“I’m pleased to report another great start to the year for Lundin Gold. Operations are running consistently, including cost performance and production which is weighted to the second half of the year. Our Process Plant Expansion Project to deliver increased throughput and recoveries is on track for year-end completion. As a result of our conversion drilling, we announced the replacement of our Mineral Reserves and continue to focus on organic growth opportunities.” Ron Hochstein, President and CEO commented, “With the buy out of the stream credit facility and offtake agreement, we are poised to repay the final piece of the Fruta del Norte project finance debt by the end of the second quarter, and are looking forward to further margin expansion in addition to unencumbered exposure to rising gold prices. 2024 is shaping up to be a great year with our continued focus on operational excellence, near-term production growth and very exciting exploration throughout the Fruta del Norte district.”
OPERATING AND FINANCIAL RESULTS SUMMARY
The following two tables provide an overview of key operating and financial results.
Three months ended
March 31 |
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2024 | 2023 | |
Tonnes ore mined | 419,758 | 427,735 |
Tonnes ore milled | 413,596 | 392,332 |
Average mill throughput (tpd) | 4,545 | 4,359 |
Average mill head grade (g/t) | 9.5 | 12.3 |
Average recovery | 88.3 % | 90.6 % |
Gold ounces produced | 111,572 | 140,021 |
Gold ounces sold | 108,916 | 134,691 |
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1 Certain additional disclosures for these specified financial measures have been incorporated by reference and can be found on pages 13 to 16 of the Company’s MD&A for the first quarter ended March 31, 2024 available on SEDAR+.
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Three months ended
March 31 |
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2024 | 2023 | |
Revenues ($’000) | 226,741 | 256,728 |
Income from mining operations ($’000) | 113,237 | 132,708 |
Earnings before interest, taxes, depreciation, and amortization ($’000)1 | 111,612 | 143,632 |
Adjusted earnings before interest, taxes, depreciation, and amortization ($’000)1 | 131,456 | 159,066 |
Net income ($’000) | 41,897 | 51,465 |
Basic income per share ($) | 0.18 | 0.22 |
Cash provided by operating activities ($’000) | 107,914 | 144,439 |
Free cash flow ($’000)1 | 82,259 | (11,653) |
Free cash flow per share ($)1 | 0.35 | (0.05) |
Average realized gold price ($/oz sold)1 | 2,141 | 1,952 |
Cash operating cost ($/oz sold)1 | 735 | 644 |
All-in sustaining costs ($/oz sold)1 | 868 | 728 |
Adjusted earnings ($’000)1 | 57,796 | 67,014 |
Adjusted earnings per share ($)1 | 0.24 | 0.28 |
Dividends paid per share ($) | 0.10 | 0.10 |
FIRST QUARTER HIGHLIGHTS – FDN STRONGLY POSITIONED TO PROFIT FROM RISING GOLD PRICES
Financial Results
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1 Certain additional disclosures for these specified financial measures have been incorporated by reference and can be found on pages 13 to 16 of the Company’s MD&A for the first quarter ended March 31, 2024 available on SEDAR+. |
Production Results
Outlook
Liquidity and Capital Resources
At the end of the first quarter of 2024, the Company is in a strong financial position:
(in thousands of U.S. dollars) | As at March 31,
2024 |
As at December 31,
2023 |
Financial Position: | ||
Cash | 323,935 | 268,025 |
Working capital | 413,528 | 346,859 |
Total assets | 1,508,987 | 1,468,209 |
Long-term debt | ||
Fair value of stream credit facility and offtake | 326,791 | 305,647 |
_____________________________________ | ||
1 Certain additional disclosures for these specified financial measures have been incorporated by reference and can be found on pages 13 to 16 of the Company’s MD&A for the first quarter ended March 31, 2024 available on SEDAR+. |
The change in cash during the first quarter was primarily due to cash generated from operating activities of $108 million and proceeds from the exercise of stock options totalling $4.3 million. This is offset by principal repayments, interest and finance charges, including associated taxes, under the stream credit facility totalling $15.1 million; dividends of $23.9 million; cash outflows of $13.6 million relating to sustaining and plant expansion capital spending; and settlement of vested share units with cash of $3.6 million.
The Stream Facility was the last remaining debt on the Company’s balance sheet following the full repayment of both the gold prepay credit facility and senior debt facility during 2023. On April 25, 2024, the Company announced that it had entered into an agreement with Newmont to buy out 100% of the balance of the Stream Facility and offtake agreement for total consideration of $330 million[4].
Capital Expenditures
Health and Safety
During the first quarter there were two Lost Time Incidents and three Medical Aid Incidents. The Total Recordable Incident Rate across exploration and operations was 0.63 per 200,000 hours worked for the quarter.
Community
Lundin Gold continued to support several community projects in the first quarter of 2024, including initiatives focused on community health and education. The mental health and well-being program run by Educación para Compartir, an international non-profit organization, continued with increased participation by local community members. The program has expanded to incorporate extra-curricular activities for young people and extended to rural communities close to Fruta del Norte. Company sponsored education programs, which aim to improve local student access to higher education, continued to show success. At quarter end, there were more than 200 students from the nearby town of Los Encuentros enrolled at public and private universities.
Infrastructure investment continued to be a priority for Lundin Gold in the quarter. In line with the Company’s long-standing commitment to support road maintenance, Lundin Gold reached an agreement with local authorities to participate in a road paving initiative, which when completed will benefit more than 200 residents.
During the first quarter of 2024, two series of dialogue round tables occurred, with high participation rates by local community members.
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1 The Transaction constitutes a “related party transaction”, as defined under Multilateral Instrument 61-101 (“MI 61-101”). The Transaction is exempt from the formal valuation and minority shareholder approval requirements of MI 61-101 as the consideration paid pursuant to the Transaction does not exceed 25% of the Company’s market capitalization. |
EXPLORATION
Near-Mine Exploration Program
During the first quarter of 2024, the Company completed a total of 12,331 metres across 26 holes from surface and underground. Drilling from underground explored mainly the FDN deposit at depth while drilling from surface continued to test sectors located along the extensions of the controlling structures of the FDN deposit, such as Bonza Sur and FDN East.
Regional Exploration Program
The 2024 regional program continues to advance the identification of important indicators that point toward the presence of buried epithermal deposits in the southern basin. New sectors have been identified along the south border of the Suarez basin. A total of 10,000 metres of drilling is planned to be completed in 2024.
During the quarter, exploration fieldwork activities were completed on the Robles and Lupita targets, located to the south of the Suarez Basin. Detailed geological interpretation of exploration data and additional fieldwork were completed and aimed at identifying major structures and zones of hydrothermal alteration. The regional drilling program commenced at the Robles target in April.
CORPORATE – QUARTERLY DIVIDEND OF $0.10 PER SHARE PAID AND DECLARED
The Company paid its quarterly dividend of $0.10 per share on March 25, 2024 (March 28 for shares trading on Nasdaq Stockholm) based on a record date of March 8, 2024, for a total of $23.9 million. With the release of its first quarter 2024 results, the Company has declared a cash dividend of $0.10 per share, which is payable on June 25, 2024 (June 28 for shares trading on Nasdaq Stockholm) to shareholders of record on June 10, 2024.
Qualified Persons
The technical information relating to FDN contained in this News Release has been reviewed and approved by Terry Smith P. Eng, Lundin Gold’s COO 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.
About Lundin Gold
Lundin Gold, headquartered in Vancouver, Canada, is committed to positive and long-lasting impact on our host communities, while delivering significant value to stakeholders through operational excellence, cash flow generation and focused growth. Lundin Gold currently operates its 100% owned Fruta del Norte gold mine in southeast Ecuador, which is one of the highest-grade gold mines in production in the world today. The Company also owns a portfolio of prospective exploration properties close to FDN.
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