Production and Cost Performance Beats Guidance,
Resulting in Free Cash Flow of $268 million Generated in 2021
VANCOUVER, BC, Feb. 23, 2022 /CNW/ - Lundin Gold
Inc. (TSX: LUG) (Nasdaq Stockholm: LUG) ("Lundin Gold" or
the "Company") today reports results for the fourth
quarter and year ended December 31,
2021 (the "2021 Year"). Lundin
Gold's excellent year is highlighted by its production of
428,514 oz of gold at an All-in Sustaining Cost (AISC)¹ of
$762 per oz, beating guidance of
380,000 to 420,000 oz and AISC of $770 to $830 per
oz, respectively, and resulting in free cash flow¹ of $268 million for the year. All amounts are
in U.S. dollars unless otherwise indicated. PDF version.
Ron Hochstein, President and CEO
commented, "During Fruta del Norte's first full year of
operations, our operating and financial results have consistently
highlighted what a fantastic tier one asset this mine is. Not
only did we beat 2021 guidance, but we are now generating
substantial free cash flow1. With completion achieved
under our senior debt facilities, we have flexibility to pursue a
variety of ways to generate shareholder value, including initiating
distribution to shareholders, accelerating debt repayment
strategies and future growth through further expansion of the mine
and mill, exploration at FDN and regionally, and other
opportunities. I am optimistic about the outlook for Lundin Gold."
Fourth Quarter and Full-Year 2021 Financial Overview
- During the fourth quarter, the Company sold a total of 108,476
oz of gold, consisting of 76,869 oz of concentrate and 31,607 oz of
doré, at an average realized gold price1 of $1,779 per oz for total gross revenues from gold
sales of $193 million. For 2021, the
Company sold a total of 427,298 oz of gold, consisting of 284,804
oz of concentrate and 142,494 oz of doré, at an average realized
gold price1 of $1,772 per
oz for total revenues from gold sales of $757.2 million.
- Net of treatment and refining charges, revenues achieved in the
fourth quarter and 2021 were $186.4
million and $733.3 million,
respectively.
- Cash operating costs1 and AISC1 for the
quarter were $625 and $715 per oz of gold sold, respectively. For 2021,
cash operating costs1 were $632 per gold sold and AISC1 was
$762 per oz of gold sold.
- Income from mining operations was $91.6
million in the fourth quarter, and the Company generated
free cash flow1 of $74.7
million from operations, or $0.32 per share. For 2021, income from mining
operations was $355.7 million, and
the Company generated free cash flow1 of $268.4 million, or $1.16 per share.
__________________________________
|
1 Certain additional disclosures for
these specified financial measures have been incorporated by
reference and can be found on page 14 of the Company's MD&A for
the year ended December 31, 2021 available on
SEDAR.
|
- Net income after tax in the fourth quarter was $28.8 million, after deducting corporate,
exploration, finance costs and derivative losses. Adjusted
earnings1 for the quarter, which exclude a one-time
special government levy and derivative losses, were $77.9 million, or $0.33 per share.
- Adjusted earnings1 during 2021, which exclude a
one-time special government levy, derivative losses, and related
deferred income tax expense, were $248.9
million, or $1.07 per
share.
- During the year, the Company's cash position increased by
$183 million to $263 million while its long-term debt decreased
by over $117 million.
Fourth Quarter and Full-Year 2021 Production Overview
- Gold production during the fourth quarter of 2021 totalled
107,915 oz, comprised of 75,299 oz of concentrate and 32,616 oz of
doré. Gold production for 2021 totalled 428,514 oz, comprised of
289,499 oz of concentrate and 139,015 oz of doré.
- During the fourth quarter, the mine delivered record
performance resulting in 412,081 tonnes of ore mined, or 4,479 tpd,
while the mill processed 379,166 tonnes of ore at an average
throughput of 4,121 tpd. During the latter half of 2021, mine and
mill operations ramped up as part of the expansion project to
increase throughput from 3,500 to 4,200 tpd, resulting in 1,557,859
tonnes of ore mined and 1,415,634 tonnes of ore processed.
- Underground mine development advanced a total of 2,223 meters
during the fourth quarter. For 2021, development exceeded budget
with a total of 9,194 meters of development completed.
- The average ore grade milled in the fourth quarter of 2021 was
9.9 grams per tonne ("g/t"), with average recovery at 89.7%, which
continues to improve quarter-by-quarter. For 2021, the average
grade of ore milled was 10.6 g/t with average recovery at
88.6%.
Fourth Quarter and Full-Year Operating and Financial
Highlights
The following two tables provide an overview of key operating
and financial results.
|
Three months
ended December
31
|
Year
ended December
31
|
|
2021
|
2020
|
2021
|
20202
|
Tonnes mined
(tonnes)
|
412,081
|
350,474
|
1,557,859
|
813,446
|
Tonnes milled
(tonnes)
|
379,166
|
337,146
|
1,415,634
|
905,780
|
Average mill head
grade (g/t)
|
9.9
|
10.1
|
10.6
|
9.5
|
Average recovery
(%)
|
89.7%
|
88.6%
|
88.6%
|
85.9%
|
Average mill
throughput (tpd)
|
4,121
|
3,665
|
3,878
|
3,355
|
Gold ounces
produced
|
107,915
|
96,830
|
428,514
|
242,400
|
Gold ounces
sold
|
108,476
|
106,190
|
427,298
|
234,464
|
______________________________
|
1 Certain additional disclosures for
these specified financial measures have been incorporated by
reference and can be found on page 14 of the Company's MD&A for
the year ended December 31, 2021 available on
SEDAR.
|
2 The
figures presented are for the entire year ended December 31, 2020
which include the two-month ramp up period before achieving
commercial production. It should be noted that the operations at
Fruta del Norte were suspended during Q2 2020 due to the COVID-19
pandemic.
|
|
|
|
|
|
|
Three months
ended December
31
|
Year
ended December
31
|
|
2021
|
2020
|
2021
|
2020
|
Net revenues
($'000)
|
186,440
|
189,250
|
733,329
|
358,1561
|
Income from mining
operations ($'000)
|
91,646
|
94,857
|
355,712
|
172,3861
|
Earnings before
interest, taxes, depreciation, and amortization
($'000)2
|
63,113
|
26,327
|
415,588
|
39,979
|
Adjusted earnings
before interest, taxes, depreciation, and amortization
($'000)2
|
108,819
|
117,000
|
436,006
|
206,267
|
Net income (loss)
($'000)
|
28,789
|
(1,233)
|
221,426
|
(47,158)
|
Free cash flow
($'000)2
|
74,681
|
43,252
|
268,370
|
(8,294)
|
Average realized gold
price ($/oz sold)2
|
1,779
|
1,850
|
1,772
|
1,8661
|
Cash operating cost
($/oz sold)2
|
625
|
627
|
632
|
6671
|
All-in sustaining
costs ($/oz sold)2
|
715
|
747
|
762
|
7731
|
Free cash flow per
share ($)2
|
0.32
|
0.19
|
1.16
|
(0.04)
|
Adjusted net earnings
($'000)2
|
77,902
|
76,224
|
248,907
|
105,914
|
Adjusted net earnings
per share ($)2
|
0.33
|
0.33
|
1.07
|
0.47
|
Liquidity and Capital Resources
At the end of 2021, the Company is in a strong financial
position
(in thousands of
U.S. dollars)
|
As at December
31,
2021
|
As at December
31,
2020
|
Financial
Position:
|
|
|
Cash
|
262,608
|
79,592
|
Working
capital
|
217,221
|
56,603
|
Total
assets
|
1,685,113
|
1,505,360
|
Long-term
debt
|
739,977
|
857,094
|
The change in cash during 2021 was primarily due to cash
generated from operating activities of $417.8 million and proceeds from the exercise of
stock options and anti-dilution rights of $18.9 million. This is offset by principal,
interest, and finance charge paid under the loan facilities
totalling $190.0 million and cash
outflows of $63.1 million for capital
expenditures which include costs for remaining initial construction
activities, the expansion project, and sustaining capital.
The Company has generated strong operating cash flow during 2021
and expects to continue to do so in 2022 based on its production
and AISC guidance. This strong operating cash flow will support
accelerated debt repayments, regional exploration, planned capital
expenditures, and evaluation of further growth opportunities.
Capital Expenditures
- Zamora River Bridge: The
Company's private Zamora River bridge was completed and inaugurated
during the second quarter and is now being used to access
site.
- South Ventilation Raise ("SVR"): The work plan for the
SVR was revised during the year to include a smaller diameter 2.1
metre raise followed by slashing to 5.1 metres and concrete lining.
Raise boring and shotcreting of the 2.1 metres raise was completed
early in the fourth quarter. Contractor award was completed during
the fourth quarter and mobilization is in progress. Completion of
the SVR is expected near the end of the second quarter of
2022.
______________________________
|
1 Amount relates to the period after
achievement of commercial production.
|
2 Certain additional disclosures for
these specified financial measures have been incorporated by
reference and can be found on page 14 of the Company's
MD&A for the year ended December 31, 2021 available on
SEDAR.
|
- Expansion Project: With the expansion project
substantially completed on time and on budget in the fourth
quarter, the mine and mill operated at or near the higher 4,200 tpd
production level during the fourth quarter of 2021.
- Sustaining Capital: The first and second raise of the
tailings dam were completed during the year. Resource expansion
drilling at Fruta del Norte advanced during the year and focused on
the expansion of estimated inferred mineral resources at the south
end of the deposit
Health and Safety
The health and safety of personnel at site is of paramount
importance, and stringent procedures remain in place to minimize
the impact of COVID-19 on the workforce. Through vaccination
campaigns by Ecuador's Ministry of
Public Health, 99.9% of the Company's employees and on-site
contractors were fully vaccinated as at December 31, 2021. At year end, 5.9% of the
Company's employees had received a booster shot.
During the fourth quarter there were zero Lost Time Incidents
and one Medical Aid Incident. FDN reached over 4 million hours
worked without a Lost Time Incident by the end of the year. The
Total Recordable Incident Rate was 0.46 per 200,000 hours worked as
of the end of 2021.
Community
The internet connectivity project for 21 local communities was
completed in October 2021. Teachers
now have high speed internet connection in the school, students in
local communities are equipped with a tablet, and internet speed
has been upgraded in the local communities using fibre optic
infrastructure. This project addresses the challenges that local
schools continue to face due to the COVID-19 pandemic.
This quarter, construction, under the authority of the
provincial government, of the public bridge over the Zamora River
to replace the bridge that collapsed during the fourth quarter of
2020, is nearing completion. Lundin
Gold has provided the funding for this work to date.
Lundin Gold has also been supporting
the affected communities by assisting with transportation of people
and supplies.
Financing
Project Completion as defined under the Company's senior debt
facilities was achieved during the fourth quarter of 2021.
Exploration
The Company's regional exploration completed the year with
11,136 metres drilled in twelve drill holes spread over targets at
Barbasco and Puente Princesa. A
summary of results from drilling at Barbasco and Puente Princesa can be found in the news release
dated February 16, 2022.
Outlook
Consistent with previously announced guidance, 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 9.8 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 costs1 are estimated to range between
$710 and $780 per oz of gold sold in 2022, with
variability expected during the year. AISC1 for 2022 is
expected to range between $860 and
$930 per oz of gold sold, based on an
assumed gold price of $1,750 per oz
and silver price of $22.50 per oz.
The projected increase in AISC1 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, as well as
the continuation of the resource expansion drilling program.
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.
The SVR is the last remaining scope of work under the original
FDN construction project, which remains on track for completion by
the end of the second quarter of 2022.
The Company is also continuing its regional exploration drilling
program with 16,500 metres of drilling planned 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.
Qualified Persons
The technical information relating to Fruta del Norte contained
in this press release has been reviewed and approved by
Ron Hochstein P. Eng, Lundin Gold's President & CEO who is a
Qualified Person under NI 43-101. The disclosure of exploration
information contained in this press release was prepared by
Stephen Leary, MAusIMM CP(Geo), a
consultant to the Company, who is a Qualified Person in accordance
with the requirements of NI 43-101.
Webcast and Conference Call
The Company will host a conference call and webcast to discuss
its results on Thursday, February 24
at 8:00 a.m. PT, 11:00 a.m. ET, 5:00 p.m.
CET.
Conference Call Dial-In Numbers:
Participant Dial-In
North America:
|
+1
416-764-8659
|
Toll-Free Participant
Dial-In North America:
|
+1
888-664-6392
|
Participant Dial-In
Sweden:
|
0200899189
|
Conference
ID:
|
Lundin Gold /
69613782
|
A link to the webcast is available on the Company's website,
www.lundingold.com.
_________________________
|
1 Certain additional disclosures for
these specified financial measures have been incorporated by
reference and can be found on page 14 of the Company's MD&A for
the year ended December 31, 2021 available on SEDAR.
|
A replay of the conference call will be available two hours
after the completion of the call until Thursday, March 11, 2021.
Toll Free North
America Replay Number:
|
+1
888-390-0541
|
International Replay
Number:
|
+1
416-764-8677
|
Replay
passcode:
|
613782 #
|
About Lundin Gold
Lundin Gold, headquartered
in Vancouver, Canada, owns
the Fruta del Norte gold mine in southeast Ecuador and a large
exploration land package that hosts the Fruta del Norte deposit at
its northern edge. 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.
Non-IFRS Measures
This news release refers to certain financial measures, such as
average realized gold price per oz sold, EBITDA, adjusted EBITDA,
cash operating cost per oz sold, all-in sustaining cost, free cash
flow, free cash flow per share, and adjusted earnings, 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, with the achievement of commercial
production, 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 14 of
the Company's MD&A for the year ended December 31, 2021 available on SEDAR.
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 February 23, 2022 at
5:00 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 estimates
of gold production, grades and recoveries, expected sales receipts,
cash flow forecasts and financing obligations, its capital costs
and the expected timing of completion of capital projects including
the SVR, the timing and the success of its drill program at Fruta
del Norte and its other exploration activities, and the
Company's efforts to protect its workforce from COVID-19. 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 Management Discussion and
Analysis dated February 23, 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.
SOURCE Lundin Gold Inc.