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Lundin Gold beats production and cost guidance in 2022; net income down to $73.6 million

Kitco News

(Kitco News) - Lundin Gold (TSX: LUG) reported Thursday that its 2022 production of 476,329 oz of gold at an all-in sustaining cost ("AISC") of $805 per oz beat production guidance of 430,000 to 460,000 oz and AISC guidance of $820 to $870 per oz, respectively.

For 2022, the company's sales totalled 470,103 oz gold and total revenues from gold sales amounted to $841 million. For 2022, cash operating costs were $671 (2021 - $632) and AISC was $805 (2021 - $762) per oz of gold sold.

For 2022, income from mining operations was $370 million (2021 – $356 million), and the company generated free cash flow of $269 million (2021 - $268 million), or $1.15 per share.

Lundin Gold said it generated net income of $73.6 million in 2022 (2021 – net income of $221.4 million). Adjusted earnings during 2022 were $125 million (2021 – adjusted earnings of $249 million), or $0.53 per share.

The company noted that a loss of $68.3 million was incurred in the fourth quarter, after deducting corporate, exploration and finance costs of $142 million, net of derivative gains of $29.2 million, and an income tax expense of $18.3 million.

"As a result of the early repayment of the gold prepay facility, results for the quarter were impacted by a one-time accrued finance charge, partially offset by a related derivative gain. In addition, net income was affected by a one-time adjustment to deferred income taxes of $24.1 million relating to a revised interpretation of the application of certain tax laws in Ecuador," it added.

Lundin Gold also announced that its Board of Directors has declared a quarterly cash dividend of US$0.10 per common share. The dividend will be payable on March 31, 2023, to shareholders of record at the close of business on March 13, 2023.

President and CEO Ron Hochstein commented, "I am proud to announce that for a second consecutive year, Lundin Gold has beaten its production and cost guidance. In a short two and a half years of operations, the company has increased average annual throughput at Fruta del Norte from an initial design capacity of 3,500 tonnes per day ("tpd") to 4,272 tpd with recoveries now averaging close to 90%.

"With the gold prepay facility paid back in full and the South Ventilation Raise complete, the company is firmly positioned to continue generating significant cash flow and creating shareholder value in the years to come."

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, an increase from the average throughput of 4,274 tpd achieved in 2022.

AISC is expected to range between $870 and $940 per oz of gold sold, based on an assumed gold price of $1,650 per oz and silver price of $18.50 per oz.

The company said that the projected increase in AISC in 2023 can be attributed principally to 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, higher maintenance requirements as equipment ages and higher sustaining capital expenditures.

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.

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