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2017-11-08

LUNDIN GOLD INC. REPORTS THIRD QUARTER 2017 RESULTS

Lundin Gold Inc. Interimsrapport LUNDIN GOLD INC. REPORTS THIRD QUARTER
2017 RESULTS November 7, 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 and nine months ended September 30,
2017. All amounts in this release are in U.S. dollars unless otherwise
indicated. During the quarter, Lundin Gold ramped up construction at the
Fruta del Norte gold project (“Fruta del Norte” or “the Project”) and there
are now approximately 800 people at site, including contractors. The
Company also advanced exploration targets to prepare for drill testing,
which is expected to begin later this year. “We have made a remarkable
amount of progress in a short period of time and are well into the
construction phase at Fruta del Norte,” said Ron Hochstein, Lundin Gold’s
President and Chief Executive Officer. “We plan to hit hard rock before the
end of the year in the underground mine, keeping the critical path on
track, and we are making excellent progress on the procurement and design
of both the process plant and powerline, both of which are key to the
advancement of the Project.” Highlights Fruta del Norte --

Mine portals were completed and soft tunneling is well advanced.

--

Key infrastructure at site to support mine development was completed.

--

Detailed engineering contracts for the process plant, tailings facility and
water management were awarded and work began on all areas.

--

Long-lead time process plant equipment was ordered.

--

Engineering, procurement and construction (“EPC”) contract for the power
transmission line from the Bomboiza substation to the site was awarded.

--

Major earthworks activities are progressing and work on the process plant
area started.

Exploration -- Targets in preparation for drill testing were better
defined, with geochemical sampling and mapping completed on the Barbasco
and Puente-Princesa epithermal gold-silver targets within the Suarez
pull-apart basin (the “Basin”) that hosts the Fruta del Norte. Both targets
are located approximately 7 kilometers south of the Project. Financial
Results
--------------------------------------------------------------------------------
(in thousands, except per Three months ended Nine months ended share
amounts) September 30, September 30, 2017 2016 2017 2016
-----------------------------------------------------------------------------
--------------------------------------------------------------------------------
Results of Operations: Net loss for the period $ (16,032) $ (11,785) $
(21,635) $ (38,925) Basic and diluted loss per (0.13) (0.10) (0.18) (0.37)
share
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
(in thousands) As at September 30, 2017 As at December 31, 2016 Financial
Position: Cash 62,951 8,503 Working capital 66,196 1,022 Property, plant
and equipment 87,312 7,822 Mineral properties 245,669 236,874 Total assets
434,198 278,906 Long-term liabilities 170,738 974
--------------------------------------------------------------------------------
Note: the complete analysis of the Q3 2017 financial results can be found
in the MD&A and financial statements dated November 7, 2017 filed on SEDAR.
The Company’s net loss in the current quarter is higher compared to the net
loss during the third quarter of 2016 mainly due to a derivative loss of
$8.3 million from the fair value revaluation of its long-term debt at
September 30, 2017. This balance is valued using Monte Carlo simulation
valuation models. The key inputs used by the Monte Carlo simulation
include: the gold and silver forward curve based on Comex futures, the
Company’s expectation about long-term gold yields, gold and silver
volatility, risk-free rate of return, non-performance risk, and production
expectations. The loss in the nine months ended September 30, 2017 is lower
compared to that of the nine months ended September 30, 2016 due to the
commencement of capitalization of expenses which is offset by a derivative
loss from the revaluation of the Company’s long-term debt. Liquidity and
Capital Resources As at September 30, 2017, the Company had cash of $63.0
million and a working capital of $66.7 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 proceeds from a project finance
package of $300 million (the “Financing”) with Orion Mine Finance Group and
Blackstone Tactical Opportunities (the “Lenders”) of which $150 million has
been drawn to date, offset by costs incurred for the development of the
Project of $67.8 million and exploration expenditures of $4.7 million. The
Financing On May 30, 2017, the Company's operating subsidiary, Aurelian
Ecuador S.A. ("Aurelian"), which holds Fruta del Norte, closed the
Financing comprised of a gold prepay credit facility for $150 million, a
stream loan credit facility of $150 million and an offtake agreement. The
Lenders also committed to participate in future equity financings of the
Company required to fund the Project, in an aggregate amount of not less
than $100 million and not more than $150 million, as and when initiated by
the Company and subject to minimum financing thresholds. Outlook The third
quarter of 2017 marked the commencement of construction at the Fruta del
Norte Project. The Company’s focus now is on advancing the Project through
to first gold production in 2019. To achieve that goal, the following
activities are planned over the next twelve months: --

Completion of all Early Works activities by the end of the year.

--

Completion of soft tunnelling and commencement of underground hard rock
development in 2017.

--

Advancement of detailed engineering of the process plant, tailings storage
facility and site-wide water management into 2018.

--

Ordering of remaining process plant equipment and electrical packages and
mobile mine equipment in 2017.

--

Approval of the Mountain Pass Quarry EIA and signing of an exploitation
agreement for the quarry to permit the extraction of construction materials
in 2018.

--

Continuation of earthworks activities, including the clearing of the plant
site, construction of the North Access and River Roads and site preparation
for the tailings dam.

--

Commencement of concrete work on the process plant in 2018.

--

Commencement of construction of the Bomboiza / Fruta del Norte powerline in
2018.

During the next several months, the Company will also continue to work with
its financial advisors to put in place the remaining funding for the
construction of Fruta del Norte, including continuing advanced discussions
with a syndicate of banks. A helicopter Z-Tipper Axis Electromagnetic
resistivity geophysical survey of the Basin and surrounding terrain is
planned to take place by the end of 2017. Soil sampling has been completed
on most of the Company’s concessions in the Basin, and geological mapping
is continuing on selected targets; targets will be prioritized for drilling
scheduled to begin before the end of 2017. Qualified Person The technical
information relating to the Fruta del Norte Project contained in this news
release has been reviewed and approved by Ron Hochstein P. Eng, Lundin
Gold’s President & CEO who is a Qualified Person under National Instrument
43-101 (“NI 43-101”). The disclosure of exploration information contained
in this press release was prepared by Steve Leary, MAusIMM CP(Geo), a
consultant to the Company, who is a Qualified Person 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" 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 and nine months ended September 30, 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 under the EU Market Abuse Regulation and the Swedish Securities
Markets Act. This information was publicly communicated on November 7, 2017
at 2:30 pm PT. About Lundin Gold Lundin Gold, headquartered in Vancouver,
Canada, is developing its wholly-owned Fruta del Norte gold project in
southeast Ecuador. Fruta del Norte is one of the largest, highest-grade
gold projects currently under construction. The Company's board and
management team have extensive expertise in mine construction and
operations, and are dedicated to advancing this project through to first
gold production in 2019. 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 people of Ecuador.
For more information, please contact Lundin Gold Inc. Ron F. Hochstein
President and CEO +593 2-299-6400 +604-806-3589 Lundin Gold Inc. Sabina
Srubiski Manager, Investor Relations +1-604-806-3089 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, forwar...

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