Lundin Gold Reconfirms Project Schedule and Lowers All-In Sustaining Cost Estimate to US$583 per Ounce for its Fruta del Norte gold project

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Overig advies 19/09/2018 15:39
VANCOUVER, Sept. 19, 2018 /CNW/ - Lundin Gold Inc. ("Lundin Gold" or the "Company") (TSX: LUG, Nasdaq Stockholm: LUG) is pleased to announce the results of its update of the project estimate ("UPE") for its Fruta del Norte gold project ("Fruta del Norte" or the "Project"). The UPE involved a thorough review of the mine plan, capital and operating cost re-estimate and an update to the Project schedule. All amounts are in U.S. dollars unless otherwise indicated. This update should be read in conjunction with the Technical Report entitled "Fruta del Norte - NI 43-101 Technical Report on Feasibility Study" (the "Technical Report") filed by the Company in June 2016, with an effective date of April 30, 2016, and the Company's project update press release dated May 30, 2017.

UPE Highlights:

Reconfirmed construction schedule with first mine production planned in Q2 2019 and first gold production planned in Q4 2019.
Reduced period of capital payback to 3.5 years from 4 years with improved IRR to 17.5% from 16.3%.
A 10% increase in NPV 5% to $786 million from $717 million.
Estimated all-in sustaining cost ("AISC") reduced to $583 per ounce of gold from $609 per ounce of gold.
Estimated operating cost per tonne decreased 7.3% from $111.84 to $103.65.
Estimated total gold production increased by 73,000 ounces to 4.6 million ounces over a 15 year mine life.
Total estimated capital expenditures increased only 1.2% from $684 million to $692 million.

"At the end of August we had committed 63% of planned capital expenditure, and construction is 27% complete. The UPE demonstrates that we are on track to build Fruta del Norte on budget and on schedule which is a credit to our Project team," said Ron Hochstein, Lundin Gold's President and CEO. "We were able to lower the estimated AISC through improvements in the mine plan, refinement of processing costs and negotiation of smelting contracts for the concentrate. This further demonstrates the robustness of our high-grade Fruta del Norte gold deposit."

Fruta del Norte Update:
As at August 31, 2018, a total of 2.9 kilometres ("km") had been achieved including declines and auxiliary development, with 1.4 km and 1.5 km achieved in the Kuri and K'isa declines, respectively.
Daily August average advance rates were 6.1 metres ("m") for both Kuri and K'isa, versus a target of 4.7 m and 4.3 m per day, respectively.
Both declines have now crossed the Machinaza Fault and have gone under the Machinaza River, with no water inflows.
Grinding building steel erection is underway, and process plant concrete is 30% complete.
Mill process equipment is arriving on site, and the grinding mills are currently en route.
The two construction fronts on the North Access Road have met, and the road is expected to be complete by the end of September.
The Environmental Licence was received for the Mountain Pass Quarry, and negotiation of the Quarry Exploitation Agreement with the Yantzaza municipality is well underway.
Construction of the powerline, both onsite and offsite, is proceeding.
Construction of the Tailings Storage Facility is ongoing.
63% of planned capital expenditure is now committed or incurred, of which 36% of planned capital expenditure has been incurred. Project engineering is now 60% complete.
Activities have commenced to prepare for operations including the hiring of the general manager and mill manager.

Update of the Project Estimate Details

Probable Mineral Reserve Estimates

The Company has increased its estimates for Probable Mineral Reserves slightly by 80,000 ounces when compared to the Project update annouced on May 30, 2017 (the "PPR") and by 204,000 ounces when compared to the estimates contained in the Technical Report.

Table 1. Probable Mineral Reserves(1)
Technical Report

Mt 15.5 16.8 17.8
Au (g/t) 9.67 9.16 8.74
Au (Moz) 4.82 4.94 5.02
Ag (g/t) 12.7 12.6 12.1
Ag (Moz) 6.34 6.79 6.95

See "Additional Technical Information" below for further information regarding the Probable Mineral Reserve Data.

Mine Plan Review

As a result of the UPE, Fruta del Norte's mine plan has been improved, and a strategic decision was made to utilize primary-secondary sequencing versus end-slicing. Implementing this methodology provides greater operational flexibility with access to more areas of the ore body simultaneously and reduced backfill costs due to longer cure times and less binder requirements.

Other changes to the mine plan included:

Lower cut-off grade from 4.1 gram per tonne gold ("g/t gold") to 3.8 g/t gold for transverse stoping and from 5.1 g/t gold to 5.0 g/t gold for the drift and fill stopes.
Better balancing of mining methods with a slight increase in transverse stoping from 72% to 75% of ore removed. The remainder will be mined using drift and fill techniques.
Total capital development, including owner and contractor, reduced from 19.0 km to 14.7 km.

Capital Cost Estimate

Revised pre-production capital cost is now estimated to be $692 million, inclusive of contingency and pre-production expenses and revenues and net of taxes. This represents a slight increase of $8 million, or 1.2% over the PPR estimate, which totalled $684 million. This increase is mainly due to infrastructure costs and community and environmental monitoring being higher in the UPE than the PPR.

Operating Cost Estimate

Operating costs estimate is down 7.3% or $8.19 in the UPE to $103.65 on a per tonne basis compared to the PPR, and 3.7% or $15.89 to $408.20 on a per ounce basis. This is a result of the optimized mining methods, which reduced the mining costs, and reduced reagent consumption estimates based on the most recent metallurgical test work.

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