Lundin Gold Three Year Outlook Anticipates Continued Growth in Gold Production from Fruta del Norte
2023 production estimated between 425,000 to 475,000 ounces
Vancouver, BC, Nov. 29, 2022 /CNW/ - Lundin Gold Inc. (TSX: LUG) (Nasdaq Stockholm: LUG) (OTCQX: LUGDF) ("Lundin Gold" or the "Company") is pleased to announce its 2023 guidance and three-year gold production outlook. All amounts are in U.S. dollars unless otherwise indicated.
Highlights:
- 2023 production is estimated between 425,000 to 475,000 ounces (“oz”).
- Cash operating costs¹ and all-in sustaining costs1 (“AISC”) for 2023 are expected to range between $700 and $760 and $870 and $940 per oz gold sold, respectively.
- Total sustaining capital in 2023 is estimated at $45 to $55 million.
- 28,000 metres is planned to be drilled under the 2023 near mine and regional exploration programs.
The Company’s outlook for production, sustaining capital and AISC for the next three years is provided in the table below.
| 2023 | 2024 | 2025 | |
| Gold Production (oz) | 425,000 – 475,000 | 450,000 – 500,000 | 465,000 – 515,000 |
| Sustaining Capital ($ million) | 45 – 55 | 25 – 35 | 45 – 55 |
| Cash operating cost ($/oz)¹ | 700 – 760 | 650 – 710 | 640 – 700 |
| AISC ($/oz)¹ | 870 – 940 | 780 – 850 | 800 – 870 |
- Gold/silver price per oz assumptions for the three years are $1,650/$18.50, respectively.
Ron Hochstein, President and CEO commented, “Now that the South Ventilation Raise has been completed, the additional ventilation will allow us to increase the rate of mining to 4,400 tonnes per day, to match the expected throughput of the mill. At current gold prices and considering the low cost nature of this mine notwithstanding inflationary pressure, we look forward to continuing generating strong free cash flow for years to come with a production forecast well in excess of 400,000 oz.”
2023 Guidance and 2023-2025 Outlook
Gold production at Fruta del Norte for 2023 is estimated to be between 425,000 to 475,000 oz based on an average throughput rate of 4,400 tpd. The 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 costs are estimated to range between $700 and $760 per oz of gold sold in 2023, with variability expected during the year. AISC for 2023 is expected to range between $870 and $940 per oz of gold sold, based on an assumed gold price of $1,650 / oz and silver price of $18.50 / oz. These reflect “steady-state” operations with 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, and higher maintenance requirements as equipment ages.
Total sustaining capital in 2023 is estimated at $45 to $55 million and will include the fourth tailings dam raise, a few items that were not completed in 2022 such as a new warehouse, as well as new projects such as a new sewage water treatment plant and several efficiency improvements projects in the mine and plant.
The anticipated fluctuation in gold production over the three years is principally due to expected variations in the grade of ore mined and milled. Except for variations in gold price and possible continuing inflationary pressure which impact cash operating cost and AISC, the other significant factor affecting AISC is sustaining capital which is expected to be higher in the years when a tailings dam lift is planned (2023 and 2025).
Other 2023 Activities
Consistent with the dividend policy approved in Q2 2022, the Company is planning to continue to pay dividends, moving to quarterly dividends of at least $0.10 per share starting in March 2023 following release of the annual results.
Lundin Gold also expects to continue its near mine and regional exploration programs and is planning 28,000 metres of drilling utilizing a minimum of five rigs in 2023 as compared to 22,500 metres in 2022.
The near-mine program will focus on underground and surface drilling at or near Fruta del Norte. Indications from drilling in 2022 suggests significant potential for the extension of the Fruta del Norte resources at depth as well as to east, west and south of the current resource envelope. The 2023 near mine program is estimated to cost $9.4 million and intends to drill 15,500 metres. Drilling is aimed at confirming indications of both a potentially larger Fruta del Norte mineralized envelope and the existence of satellite deposits.
The regional program will focus on several exploration targets located in the 16km long Suarez Basin, with the objective of identifying another Fruta del Norte. The 2023 regional program is estimated to cost $11.7 million and will drill 12,500 metres.
Non-GAAP Financial Measures
This news release refers to certain financial measures, such as cash operating costs and AISC, 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 calculated on a basis consistent with historical periods. Please refer to the Company's MD&A filed on SEDAR under the Company’s profile at www.sedar.com, pages 13 to 16, for the third quarter of 2022 for an explanation of non-IFRS measures used.
Qualified Persons
The technical information relating to Fruta del Norte 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 National Instrument 43-101.
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 November 29, 2022 at 2:00 p.m. Pacific Time through the contact persons set out below.
____________________________
1See Non-GAAP Financial Measures below.
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 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 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 its 2023 production outlook, including estimates of gold production, grades and recoveries, and its expectations regarding AISC, cash operating costs, free cash flow and capital costs, benefits of increased ventilation in the mine, plans to declare and pay dividend and the Company’s exploration plans and success. 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 anticipated in this forward-looking information as a result of the factors discussed in the "Risk Factors" section in Lundin Gold's Annual Information Form dated March 21, 2022, 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 associated with the Company's community relationships; risks related to political and economic instability in Ecuador; risks related to estimates of production, cash flows and costs; the impacts of a pandemic virus outbreak; risks inherent to mining operations; failure of the Company to maintain its obligations under its debt facilities; shortages of critical supplies; control of the Company's largest shareholders; risks related to Lundin Gold’s compliance with environmental laws and liability for environmental contamination; the lack of availability of infrastructure; the Company's reliance on one mine; exploration and development risks; risks related to the Company’s ability to obtain, maintain or renew regulatory approvals, permits and licenses; uncertainty with the tax regime in Ecuador; risks related to the Company’s workforce and its labour relations; volatility in the price of gold; the reliance of the Company on its information systems and the risk of cyber-attacks on those systems; deficient or vulnerable title to concessions, easements and surface rights; inherent safety hazards and risk to the health and safety of the Company’s employees and contractors; the imprecision of Mineral Reserve and Resource estimates; key talent recruitment and retention of key personnel; volatility in the market price of the Company’s shares; measures to protect endangered species and critical habitats; social media and reputation; the cost of non-compliance and compliance costs; risks related to illegal mining; the adequacy of the Company’s insurance; risks relating to the declaration of dividends; 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; limits of disclosure and internal controls; security risks to the Company, its assets and its personnel; the potential for litigation; and risks due to conflicts of interest.