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2017-05-16

LUNDIN GOLD INC. REPORTS Q1 2017 RESULTS

INC. REPORTS Q1 2017 RESULTS
May 15, 2017 (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, 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
February 22, 2017, the Company awarded the mine development contract for
the portals and soft tunneling 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 January 16, 2017, the Company secured a $35
million short-term credit facility from an insider of the Company (the
"Facility"). 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,
Ms. 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
CEO, 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
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----------------------------------------------------------------- Results
of Operations: Net loss for the period $ (6,387) $ (14,710) Basic and
diluted loss per share (0.05) (0.15)
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(in thousands) As at March 31, 2017 As at December 31, 2016 Financial
Position: 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
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Note: the complete analysis of the Q1 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 to 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 to cash of $8.5 million and a working capital
balance of $1.0 million at December 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 (see below). Short-term credit
facility On January 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 (the “Debenture”) which is unsecured and is due on the earlier of
the closing of a financing by the Company or May 31, 2017 (the "Maturity
Date"). 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 annum until repaid in
full. The Company issued an aggregate of 60,000 common shares on January
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
tunneling 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 EIA by the end of 2017 and approval of the new
Mountain Pass quarry EIA in the first quarter 2018; and

--

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
advisors to put in place the financing for the construction of the Fruta
del Norte Project. Funding 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 FDN
contained in this press release has been reviewed and approved by Ron
Hochstein P. Eng, Lundin Gold’s President & CEO, and Nicholas Teasdale,
MAusIMM CP(Geo), Lundin Gold’s Vice-President Exploration, both of whom are
Qualified Persons under NI 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" (the “Technical Report”) which has
an effective date of April 30, 2016. The Technical Report is available for
review under the Company's profile on SEDAR (www.sedar.com) and on the
Company's website (www.lundingold.com). 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 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 Inc. under the EU
Market Abuse Regulation and the Swedish Securities Market Act. The
information was submitted for publication by the persons below at 2:30 p.m.
Vancouver time on May 15, 2017. 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. The Company believes that the value created will
not only greatly benefit shareholders, but also the Government and people
of Ecuador who are the Company's most important stakeholders in this
project. Lundin Gold views its commitment to corporate social
responsibility as a strategic advantage that enables it both to access and
effectively manage business opportunities in increasingly complex
environments. Lundin Gold is committed to addressing the challenge of
sustainability - delivering value to its shareholders, while simultaneously
providing economic and social benefits to impacted communities and
minimizing its environmental footprint. For more information, please
contact Lundin Gold Inc. Ron F. Hochstein President and CEO 593 2-299-6400
604-806-3589 Lundin Gold Inc. Sophia Shane Corporate Development
604-689-7842 604-689-4250 (FAX) info@lundingold.com www.lundingold.com
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...

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