Fruta del Norte achieves gold production of 355,190 oz and an AISC¹ of $785/oz sold in the first nine months of 2022
VANCOUVER, BC, Nov. 8, 2022 /CNW/ - Lundin Gold Inc. (TSX: LUG) (Nasdaq Stockholm: LUG) (OTCQX: LUGDF) ("Lundin Gold" or the "Company") today reports results for the third quarter of 2022, highlighted by Q3 production of 121,635 ounces ("oz") of gold and sales of 134,640 oz at a cash operating cost1 of $656 per oz sold and all-in sustaining cost ("AISC")1 of $807 per oz sold. For the first nine months of 2022, Lundin Gold produced 355,190 oz and sold 350,213 oz of gold at an AISC1 of $785 per oz sold, putting the Company firmly on track to meet the upper end of its production guidance of 430,000 to 460,000 oz and lower end of or slightly below its AISC1 guidance of $820 to $870 per oz sold. All amounts are in U.S. dollars unless otherwise indicated. PDF version.
In the third quarter, Lundin Gold generated net revenues of $210 million, adjusted earnings1 of $20.4 million and free cash flow1 of $65.2 million, resulting in a cash balance of $304 million at quarter end. With operations at Fruta del Norte ("FDN") generating sizeable free cash flow and considering the Company's existing cash balance, Lundin Gold paid an inaugural semi-annual dividend of $0.20 per share on September 13, 2022 (September 15 for shares trading on Nasdaq Stockholm) based on a record date of August 24, 2022. Under its recently established dividend policy, Lundin Gold anticipates continuing to pay dividends of at least $0.40 per share annually, equivalent to approximately $100 million, based on current gold prices, expected production levels, and current issued and outstanding shares.
Ron Hochstein, President and CEO of Lundin Gold commented, "Once again, I am pleased to report another fantastic quarter for Lundin Gold. We continue to strive for operational excellence at Fruta del Norte, and remain focused on further optimization, improved efficiencies and lowering costs. Now that the South Ventilation Raise is complete, we will have more flexibility to mine
on all levels, allowing us to continue generating strong results. Payment of our first dividend was a great milestone, and we see potential to create further shareholder value through the significant free cash flow we are generating from this tier one asset. With this cash flow we will continue to evaluate restructuring and paying down our debt, funding exploration, evaluating throughput expansion and M&A opportunities."
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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 three and nine months ended September 30, 2022 available on SEDAR.
Third Quarter of 2022 Financial Overview
The Company sold a total of 134,640 oz of gold, consisting of 88,083 oz of concentrate and 46,557 oz of doré at an average realized gold price1 of $1,618 per oz for total gross revenues from gold sales of $218 million. Net of treatment and refining charges, revenues were $210 million. As a result of the recent decline in the gold price, revenues from concentrate sales reflect a gold price adjustment of $10.8 million for sales whose provisional gold price is settled after quarter end. This adjustment is estimated using the forward gold price at quarter end for the expected month of settlement of each individual sale.
Cash operating costs1 and AISC1 were $656 and $807 per oz of gold sold, respectively. Sustaining capital is expected to remain high in the last quarter of the year due to the ongoing construction of the third tailings dam raise and other site infrastructure projects.
Income from mining operations was $83.9 million. The Company generated cash flow of $105 million from operations and ended the quarter with a cash balance of $304 million. Free cash flow1 for the quarter was $65.2 million or $0.28 per share.
Earnings before interest, taxes, depreciation, and amortization1 ("EBITDA") and adjusted EBITDA1 were $159 million and $117 million, respectively. The difference is the derivative gain of $41.8 million in the quarter.
Net income was $62.7 million including a derivative gain of $41.8 million, and net of corporate, exploration, finance costs, and associated taxes on earnings. Adjusted earnings1, which exclude derivative gains, were $20.4 million, or $0.09 per share. Net income was positively impacted by the recording of gold sales from the delay of shipments of gold concentrate from the second quarter, offset by the lower gold price realized on sales in Q3 2022.
While quarterly revenues were affected by the declining gold price, they were positively impacted by the sale of additional ounces produced late in the second quarter but not shipped and sold until the third quarter. This was due to blockades on some of Ecuador's major highways during a national strike in the country, which ended on June 30th and resulted in a positive impact on revenues, income from mining operations, earnings, and cash flow in Q3 2022.
Third Quarter of 2022 Production Overview
Mine production was 377,921 tonnes of ore at an average grade of 12.4 grams per tonne. Consistent with the previous quarter, efforts are underway to reduce the ore stockpile in order to minimize future potential oxidization of ore as it affects mill recoveries.
The mill processed 379,258 tonnes of ore at an average throughput rate of 4,122 tpd, slightly below design capacity due to an earlier than planned SAG and ball mill re-lining completed in late September.
The average grade of ore milled was 11.0 grams per tonne with average recovery at 90.3%. Recoveries in the third quarter were positively impacted by the higher grade and improved blending strategies put in place to reduce the impact of oxidized ore.
Gold production was 121,635 oz, comprised of 81,607 oz of concentrate and 40,028 oz of doré.
Third Quarter of 2022 Operating and Financial Highlights
The following two tables provide an overview of key operating and financial results during the third quarter and first nine months of 2022.
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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 three and nine months ended September 30, 2022 available on SEDAR.
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