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Lundin Gold Inc. (TSX: LUG) (Nasdaq Stockholm: LUG) (OTCQX: LUGDF)  is pleased to announce that it has entered into an agreement with Newmont Corporation to buy out 100% of the balance of the stream credit facility and offtake agreement for its 100% owned Fruta del Norte gold mine in Ecuador for total consideration of $330 million. All amounts are in U.S. dollars unless otherwise indicated.


Ron Hochstein, President and CEO commented, “I’m very pleased to announce the buy out of the Stream Facility and Offtake. With this milestone complete, Lundin Gold will have repaid in full all of its project finance debt only four years after achieving commercial production at Fruta del Norte. Upon closing, the Company will be debt free and have increased exposure to rising gold prices, resulting in increased amounts of free cash flow1 to support capital allocation initiatives, including further growth and shareholder returns.”


The Stream Facility and Offtake were established in 2017 as part of a project financing package to fund the development and construction of Fruta del Norte. The Stream Facility was repayable in variable monthly instalments equivalent to the value of 7.75% of gold production less $408 per oz. and 100% of the silver production less $4.08 per oz. up to a maximum of 350,000 oz. of gold and six million oz. of silver. The Offtake provided Newmont the option to purchase 50% of Fruta del Norte’s gold production up to a maximum of 2.5 million ounces at a price based on a defined quotational period. Under the terms of the Stream Facility agreement, Lundin Gold had the option to buy back (i) 50% of the remaining Stream Facility on June 30, 2024 for $150 million and/or (ii) buy back the other 50% of the Stream Facility on June 30, 2026 for $225 million.


The negotiated purchase price for the Stream Facility and the Offtake of $330 million is payable in cash, with the first tranche of $180 million due on closing of the transaction which is targeted on June 28, 2024. Payments and deliveries will continue in accordance with the terms of the Stream Facility and Offtake until and including the Effective Date. The final tranche of the purchase price of $150 million is due on or before the end of the third quarter of 2024.


1 See Non-GAAP Financial Measures


Non-GAAP Financial Measures


This news release refers to certain financial measures, such as free cash flow, 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 they are of assistance in the understanding of the results of operations and its financial position. Certain additional disclosures for these specified financial measures have been incorporated by reference and can be found on page 16 of the Company’s MD&A for the year ended December 31, 2023 available on SEDAR+.


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.


Posted April 25, 2024

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