2022 production estimated between 405,000 to 445,000
ounces
VANCOUVER, BC, Dec. 14, 2021 /CNW/ - Lundin Gold Inc.
(TSX: LUG); (Nasdaq Stockholm: LUG) ("Lundin Gold" or the
"Company") is pleased to announce its 2022 guidance and
three-year gold production outlook with an estimated average
exceeding 400,000 oz annually. All amounts are in U.S.
dollars unless otherwise indicated.
Highlights:
- 2022 production is estimated between 405,000 to 445,000 ounces
("oz").
- Cash operating costs¹ and all-in sustaining
costs1 ("AISC") for 2022 are expected to range
between $710 and $780 and $860 and
$930 per oz gold sold,
respectively.
- Total sustaining capital in 2022 is estimated at $40 to $45
million.
- 2022 regional exploration drilling program will consist of
16,500 metres of drilling at Barbasco and Puente Princesa, costing an estimated
$14 million.
Ron Hochstein, President and CEO
commented, "With an estimated average gold production above
400,000 oz per year for the next three years, we look forward to
continuing to generate strong free cash flow at current gold
prices. This increasing cash position will allow us to consider a
variety of opportunities, including future growth, further debt
reduction, and shareholders' distributions. We are also evaluating
the potential to increase production beyond the current 4,200
tpd."
2022 Guidance and 2023-2024 Outlook
Gold production at Fruta del Norte for 2022 is estimated to be
between 405,000 to 445,000 oz based on an average throughput rate
of 4,200 tpd. The head grade is estimated to average 9.79 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 89%.
Cash operating costs are estimated to range between $710 and $780 per
oz of gold sold in 2022, with variability expected during the year.
AISC for 2022 is expected to range between $860 and $930 per
oz of gold sold, based on an assumed gold price of $1,750 / oz and silver price of $22.50 / oz. The projected increase in AISC in
2022 can be attributed principally to the following factors:
- a decrease in head grade of the ore processed through the plant
compared to 2021;
- an approximate 7% increase in operating costs compared to 2021
due to higher transportation costs, increased maintenance for
mining equipment and general inflationary pressures experienced to
date on various consumables: and
- higher sustaining capital, mainly due to the planned
construction of the third raise of the tailings dam, which is
larger than the initial two raises completed in 2021.
- These are expected to be offset by higher throughput and
reduced COVID-19 related costs compared to 2021, and lower
royalties based on the assumed gold price of $1,750 in 2022.
____________________
|
1 See
Non-GAAP Financial Measures below.
|
Total sustaining capital in 2022 is estimated at $40 to $45 million,
of which $22.9 million is for
tailings dam construction, $7.4
million for surface infrastructure, inclusive of a new
warehouse and an expanded ore pad to accommodate ore blending,
$3.6 million for replacement mobile
equipment and $2.5 million for the
continuing resource expansion drilling program. The remainder is
for underground infrastructure, technology, efficiency improvements
and additional small projects in the plant.
The Company's outlook for production, sustaining capital and
AISC for the next three years is provided in the table below.
|
2022
|
2023
|
2024
|
Gold Production
(oz)
|
405,000-445,000
|
390,000-430,000
|
400,000-440,000
|
Sustaining Capital ($
million)
|
40 - 45
|
30 - 35
|
7 - 12
|
Cash operating cost
($/oz)¹
|
710 – 780
|
700 – 775
|
675 – 745
|
AISC
($/oz)¹
|
860 - 930
|
850 - 915
|
750 - 810
|
1. Gold/silver
price per oz assumption, based on analyst estimates, is 2022:
$1,750/$22.50; 2023: $1,715/$23.81; 2024: $1,642/$22.43
|
The variance in gold production is mainly impacted by the grade
of ore mined and recoveries. 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 higher in the years when a
tailings dam lift is planned (2022 and 2023).
Other 2022 Activities
The Company continues to expect to complete the South
Ventilation Raise by the end of the second quarter of 2022, at a
cost of $6.2 million.
Lundin Gold also expects to continue its regional
exploration drilling program at an estimated cost of $14 million and is planning 16,500 metres of
drilling at its two high priority targets, Barbasco and
Puente-Princesa, which are located in the Suarez Pull-Apart Basin
and are approximately seven kilometres from Fruta del Norte.
Non-GAAP Financial Measures
This news release refers to certain financial measures, such as
cash operating costs, AISC and 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 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 11 to 14, for the third
quarter of 2021 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.
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.
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 December 14 2021, at
4:00 p.m. Pacific Time through the
contact persons set out 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 to its 2022
production outlook, including estimates of gold production, grades
and recoveries, and its expectations regarding AISC, cash operating
costs, free cash flow, capital costs, the timing of completion of
the South Ventilation Raise and its exploration plans. 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 2, 2021, 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 relating to the
impacts of a pandemic virus outbreak, political and economic
instability in Ecuador, production
estimates, mining operations, the Company's community
relationships, ability to maintain obligations or comply with debt,
financing requirements, volatility in the price of gold, shortages
of critical supplies, compliance with environmental laws and
liability for environmental contamination, lack of availability of
infrastructure, the Company's reliance on one mine, deficient or
vulnerable title to concessions, easements and surface rights,
uncertainty with the tax regime in Ecuador, the Company's workforce and its
labour relations, inherent safety hazards and risks to the health
and safety of the Company's employees and contractors, the
Company's ability to obtain, maintain or renew regulatory
approvals, permits and licenses, the imprecision of mineral reserve
and resource estimates, key talent recruitment and retention of key
personnel, volatility in the market price of the shares, the
potential influence of the Company's largest shareholders, measures
to protect endangered species and critical habitats, the reliance
of the Company on its information systems and the risk of
cyber-attacks on those systems, the cost of non-compliance and
compliance costs, exploration and development risks, risks related
to illegal mining, the adequacy of the Company's insurance,
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, the potential for
litigation, limits of disclosure and internal controls, security
risks to the Company, its assets and its personnel, conflicts of
interest, risks that the Company will not declare dividends and
social media and reputation.
SOURCE Lundin Gold Inc.