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2016-05-16

LUNDIN GOLD INC. REPORTS Q1 2016 RESULTS

D INC. REPORTS Q1 2016 RESULTS

May 16, 2016 (Vancouver, Canada)… Lundin Gold Inc. ("Lundin Gold" or the
"Company") (TSX: “LUG”, Nasdaq Stockholm: “LUG”) is pleased to announce its
results for the three months ended March 31, 2016. All amounts in this release
are in U.S. dollars.

Highlights

-- On January 14, 2016, the Company announced the completion of negotiations
of the definitive form of the exploitation agreement (the “Definitive EA”)
for the Fruta del Norte Project with the Government of Ecuador. Once
signed, the Definitive EA, combined with existing laws and regulations,
establishes the fiscal terms and conditions for the development of the
Fruta del Norte Project.

-- ?
The feasibility study activities continued during the first quarter of 2016
with anticipated release of the feasibility study results in the second
quarter of 2016.

-- Progress continued on the environmental aspects of the Fruta del Norte
Project. An amendment to the mine Environmental Impact Assessment (“EIA”)
to include the anticipated plant and infrastructure was submitted to the
Ministry of Environment in April. The next step is a public participation
process, which is anticipated to take approximately sixty days, after which
the final EIA may be submitted. The EIA process remains on schedule along
with other permits required for development and exploration.

-- The Company continued exploration activities on some of its higher priority
concessions near the Fruta del Norte Project. During the first quarter,
field programs were carried out including soil geochemical surveys,
detailed mapping and prospecting. These programs have helped to optimize
existing high priority drilling targets and define new areas of interest.
A 10,500 metre drilling program focused on the high priority targets began
on April 26, 2016.

-- The Company hired Mr. David Dicaire as Project Director in April 2016 to
further strengthen the management team. David has over 35 years of
experience in the mining, engineering and construction industry on a
variety of global projects leading both the Owners and EPCM teams.

"We are pleased with the progress made on the feasbility study during the first
quarter and are happy to be on track and in the homestretch, with completion
anticipated before the end of the second quarter,” said Lundin Gold President
and CEO, Ron Hochstein. “At the same time, we are excited by the start of our
exploration drilling program and look forward to a successful program that
could lead to the discovery of a mining district in Southern Ecuador.”

Financial Results

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(in thousands, except per share amounts) Three months ended
March 31,
2016 2015
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Results of Operations:
Operating expenses $ (14,501) $ (8,265)
Other income (expense) (209) 3,203
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Net loss for the period (14,710) (5,062)

Basic and diluted loss per share (0.15) (0.05)

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(in thousands) As at March 31, 2016 As at December 31, 2015
Financial Position:
Cash 7,809 21,360
Working capital 2,922 16,314
Property, plant and equipment 8,305 8,557
Mineral properties 236,874 236,874
Total assets 253,617 267,400
Long-term liabilities 893 867

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The current quarter’s net loss is higher compared to the first quarter of 2015
as a result of project evaluation expenditures of $11.6 million incurred on the
feasibility study and at the FDN Project. Project evaluation expenditures are
$6.5 million higher compared to the same period in 2015 because activities
relating to the feasibility study increased significantly in the first quarter
of 2016. The Company also incurred general and administrative expenditures of
$2.6 million, which includes $0.8 million in professional fees in connection
with the negotiations with the Government of Ecuador and financing initiatives.
Exploration expenditures of $0.3 million were also incurred during the first
quarter of 2016 as the Company increased exploration activities on its higher
priority concessions near the FDN Project.

Liquidity and Capital Resources

As at March 31, 2016, the Company had cash of $7.8 million and a working
capital surplus of $2.9 million compared to cash of $21.4 million and a working
capital surplus of $16.3 million at December 31, 2015. The decrease in cash of
$13.6 million was primarily due to $11.6 million of project evaluation
expenditures relating to the feasibility study.

Any potential development activities at the FDN Project or other concessions
require substantial additional capital. As the Company does not have any
sources of revenue, the Company expects to pursue various financing
transactions or arrangements, including equity financing, debt financing,
stream financing, joint venturing or other means. There can be no assurance
that such financing will be available to the Company or, if available, that it
will be offered on terms acceptable to Lundin Gold. Moreover, Lundin Gold may
not be successful in locating suitable financing when required or at all. A
failure to raise capital when needed would have a material adverse effect on
Lundin Gold’s business, financial condition and results of operations.

Outlook

The Company is on the verge of finalizing and issuing the results of the
feasibility study in the second quarter of 2016. In addition, the Company
expects to submit the final EIA to the Ministry of the Environment in the third
quarter following the public participation process and anticipates obtaining
the approval of the EIA in the third quarter of 2016 and receipt of the
Environmental License shortly thereafter. A production decision by the Company
is anticipated by late 2016 or early 2017.

By June 17, 2016, the Company must submit the Phase Change Application. The
Government of Ecuador then has up to sixty (60) days to approve the Phase
Change Application. Once the Phase Change Application is approved, the Company
has up to six months to execute the exploitation agreement with the Government
of Ecuador.

During 2016, the Company intends to work with its financial advisors and legal
advisors to evaluate and put in place the financing for the construction of the
FDN Project. The Company intends to have its financing in place coincident
with its production decision.

The Company may also undertake certain early works activities in order to
optimize certain aspects of the project and carry out field activities to
facilitate a construction start in the second quarter of 2017.

An exploration drilling campaign has begun to test high priority concessions
near the FDN Project. The staged 10,500 metre campaign will drill five high
priority targets outside of the La Zarza Concession which hosts the FDN
deposit. The Company may also undertake an exploration geophysical program
(IP) during the fourth quarter of 2016, which will target new areas of interest
identified from the completed geochemical survey.

Qualified Person

The technical information relating to the Fruta del Norte Project contained in
this press release has been reviewed and approved by Anthony George P. Eng, a
mining engineer and Lundin Gold’s Vice-President Project Development, and
Nicholas Teasdale, MAusIMM CP(Geo), Lundin Gold’s Vice-President Exploration,
both of whom are Qualified Persons under NI 43-101.

Annual General Meeting

The Company announces that its Annual General Meeting of Shareholders will be
held at Suite 2600, 595 Burrard Street, Vancouver, British Columbia, V7X 1L3 on
Thursday, June 23, 2016, at 11:00 a.m. (Vancouver time), for the following
purposes:

1. to receive the consolidated audited financial statements of the Company
for the year ended December 31, 2015 together with the report of the auditors
thereon;

2. to elect the directors to the Board for the ensuing year;

3. to reappoint PricewaterhouseCoopers LLP as auditor of the Company for
the ensuing year and to authorize the directors to fix the remuneration of the
auditor; and

4. to transact such further or other business as may properly come before
the meeting or any adjournment or adjournments thereof.

The record date for the Annual General Meeting is Monday, May 16, 2016.

Additional Information

The Company’s consolidated financial statements for the three months ended
March 31, 2016 and related management’s discussion and analysis are available
on the Company’s website at www.lundingold.com or under its profile on SEDAR at
www.sedar.com.

The information in this release is subject to the disclosure requirements of
Lundin Gold under the Swedish Securities Market Act and/or the Swedish
Financial Instruments Trading Act. This information was publicly communicated
on May 16, 2016 at 5:00 a.m. Pacific Time.

About the Company:

Lundin Gold Inc. 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 and is currently working on the FDN
feasibility study scheduled to be completed in Q2 2016.

The Company believes that the value created will...

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