12:43:08 EDT Thu 28 Mar 2024
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Lundin Gold Inc
Symbol LUG
Shares Issued 118,819,824
Close 2017-05-15 C$ 6.08
Market Cap C$ 722,424,530
Recent Sedar Documents

Lundin Gold has cash of $8.41M (U.S.) at March 31

2017-05-15 17:38 ET - News Release

Mr. Ron Hochstein reports

LUNDIN GOLD INC. REPORTS Q1 2017 RESULTS

Lundin Gold Inc. has released its results for the three months ended March 31, 2017. All amounts in this release are in U.S. dollars unless otherwise indicated.

Highlights

Fruta del Norte project

  • The company continued to progress its early works program focusing on completion of basic engineering and continuation of site capture activities to maintain the project critical path.
  • On Feb. 22, 2017, the company awarded the mine development contract for the portals and soft tunnelling work, and the development of the twin declines and the mine, in preparation for operations. The mine development contractor has now mobilized to site and construction of the mine portals has begun.

Financing

  • On Jan. 16, 2017, the company secured a $35-million short-term credit facility from an insider of the company. As at March 31, 2017, $19-million was drawn down and outstanding.

Exploration

  • Exploration activities focused on target definition, advancing inside and outside of the southern extension of the Suarez Pull-Apart basin hosting the Fruta del Norte deposit. New epithermal gold targets include Puma and Gata Salvaje.

Corporate

  • On March 16, 2017, Chantal Gosselin was appointed to the board of directors. Ms. Gosselin brings over 25 years of combined experience in the mining industry and capital markets.

"The start of the portal work at the Fruta del Norte project is a significant milestone as we begin transitioning from the early works program to the start of construction," said Lundin Gold president and chief executive officer Ron Hochstein. "In addition, we are pleased with the progress made on the project update and financing initiatives, both of which are on track with completion anticipated before the end of the second quarter."

                                       FINANCIAL RESULTS
                          (in thousands, except per share amounts)    
 
                                                              Three months ended March 31,
                                                           2017                      2016

Net (loss) for the period                               $(6,387)                 $(14,710)
Basic and diluted (loss) per share                        (0.05)                    (0.15)

                                           As at March 31, 2017       As at Dec. 31, 2016

Cash                                                     $8,415                    $8,503
Working capital                                         (18,776)                    1,022
Property, plant and equipment                            22,569                     7,822
Mineral properties                                      239,020                   236,874
Total assets                                            295,795                   278,906
Long-term liabilities                                     3,170                       974

Note: The complete analysis of the first quarter 2017 financial results can be found in the MD&A and financial statements dated May 15, 2017, filed on SEDAR.

The current quarter's net loss is lower compared with the first quarter of 2016 mainly due to the commencement of capitalization of expenses relating to the development of the Fruta del Norte project in accordance to the company's accounting policy. This resulted in the reduction of project evaluation expenditures. In addition, the company incurred finance fees relating to the facility.

Liquidity and capital resources

As at March 31, 2017, the company had cash of $8.4-million and a working capital deficit of $18.8-million compared with cash of $8.5-million and a working capital balance of $1.0-million at Dec. 31, 2016. The change in cash was primarily due to costs incurred for the development of the Fruta del Norte project of $14.6-million and exploration expenditures of $2.9-million offset by drawdowns from the facility.

Short-term credit facility

On Jan. 16, 2017, the company secured a short-term $35-million credit facility from an insider of the company. As at March 31, 2017, $19-million was drawn down and outstanding.

The facility is evidenced by a debenture which is unsecured and is due on the earlier of the closing of a financing by the company or May 31, 2017. No interest is payable in cash during the term of the debenture. Any amount of the facility remaining unpaid and outstanding on or after the maturity date bears interest at a rate of 5.00 per cent per annum until repaid in full.

The company issued an aggregate of 60,000 common shares on Jan. 16, 2017, as consideration for the facility in lieu of fees. The company will also issue an additional 1,700 common shares per month for each $1-million of the facility drawn down and outstanding until the maturity date. As at March 31, 2017, 11,818 common shares have been issued for amounts drawn down and outstanding under the facility. All securities issued in conjunction with the facility are subject to a four-month hold period under applicable securities law.

Outlook

The Fruta del Norte project remains on track with its early works program, the highlight of which was the start of the mine portals on May 1, 2017. Work will progress on the portal and soft tunnelling after which underground development in rock is targeted to commence early in the fourth quarter of 2017.

Key activities at the Fruta del Norte project over the next 12 months are expected to include:

  • Process plant earthworks and start of process plant foundations by the first quarter of 2018;
  • Completion of the construction camp in the first quarter 2018;
  • Commencement of tailings dam construction in the first quarter of 2018;
  • Approval of the power line environmental impact assessment by the end of 2017 and approval of the new Mountain Pass quarry EIA in the first quarter 2018;
  • Progressing work on the North Access Road and Zamora River bridge.

The project update, which includes basic engineering on some facilities, will be finalized in the second quarter of 2017 and will form the baseline for the project and detailed engineering, which is expected to start in July, 2017. Design work is expected to be substantially complete by the third quarter of 2018. Plant and mine equipment procurement is expected to start in the second quarter of 2017.

The company is engaged in advanced discussions with a number of parties, including financial institutions, strategic and other potential investors on project financing. During the next 12 months, the company will continue to work with its financial advisers to put in place the financing for the construction of the Fruta del Norte project. Financing for the construction and development of the Fruta del Norte project could include various financing transactions or arrangements, including equity financing, debt financing, stream financing, joint venturing or other means.

During the second quarter, the exploration group plans to continue to advance existing targets to be drill ready late this year. An airborne resistivity survey is planned to better define targets in the Pull-Apart basin, and an airborne MAG/RAD survey will be carried out on outlying concessions to facilitate reconnaissance in those areas.

Qualified person

The technical information relating to the Fruta del Norte contained in this press release has been reviewed and approved by Ron Hochstein, PEng, Lundin Gold's president and chief executive officer, and Nicholas Teasdale, MAusIMM, CP (Geo), Lundin Gold's vice-president, exploration, both of whom are qualified persons under National Instrument 43-101.

Full details of the feasibility study can be found in a technical report entitled "Fruta del Norte -- NI 43-101 Technical Report on Feasibility Study" which has an effective date of April 30, 2016. The technical report is available for review under the company's profile on SEDAR and on the company's website.

Additional information

The company's consolidated financial statements for the three months ended March 31, 2017, and related management's discussion and analysis are available on the company's website or under its profile on SEDAR.

The information in this release is subject to the disclosure requirements of Lundin Gold under the European Union market abuse regulation and the Swedish Securities Market Act.

About the company

Lundin Gold owns the Fruta del Norte (FDN) gold project located in southeast Ecuador. FDN is one of the largest and highest-grade undeveloped gold projects in the world. The company is advancing FDN in order to realize the significant potential of this asset.

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