Lundin Gold Inc. · TSX:LUG
Lundin Gold — Investor Presentation (September 2016)
37 slides from Lundin Gold's investor presentation, September 2016
Slide 1: Fruta del Norte
Gold Miner. Community Builder. Fruta del Norte A new gold mine is coming…
Slide 2: Fruta del Norte is a large gold deposit located in Ecuador
Fruta del Norte is a large gold deposit located in Ecuador Fruta del Norte is within a major mineralized trend 2
Slide 3: We are comfortable and confident working in Ecuador
We are comfortable and confident working in Ecuador • Favourable and robust agreements with the government • Ecuador is a much improved mining jurisdiction • Local communities are in favour of the Fruta del Norte development 3
Slide 4: A lot of gold at Fruta del Norte
A lot of gold at Fruta del Norte Resources of… 7.4 million + 2.1 million ounces Indicated ounces Inferred Reserves of… 4.8 million ounces 4
Slide 5: Average grade much higher than the majors
Average grade much higher than the majors Source: Metals Focus Data, Company Presentations 5
Slide 6: Reserves, Resources and Grade
Reserves, Resources and Grade Contained Reserves (000 oz Au) Contained Reserves & Resources (000 oz) Gold Grade, Reserves (g/t) 22500 9.7 8.4 7.7 6.9 6.3 20000 17500 3.9 THOUSAND OUNCES Au 15000 1.6 1.5 1.4 12500 1.2 1.0 1.0 10000 0.7 0.8 0.8 0.8 0.7 7500 5000 2500 ITH PVG SSP NGD LUG CNL SBB BSX MA
Slide 7: And we've just scratched the surface
And we’ve just scratched the surface 70,000 of prospective exploration acreage on trend with Fruta del Norte 10,500 metre drill program on 5 big targets 7
Slide 8: Fruta del Norte will be an underground mine producing over 340,000 ounces per year
Fruta del Norte will be an underground mine producing over 340,000 ounces per year for at least 13 years Camp TSF Quarry Quarry infrastructure Plant Water Treatment Waste North Portal 4 km River Paste Plant 8
Slide 9: Construction start expected mid 2017 with first gold anticipated early 2020
Construction start expected mid 2017 with first gold anticipated early 2020 $669 million (includes contingency) 9
Slide 10: Fruta del Norte will produce both gold doré and gold concentrate
Fruta del Norte will produce both gold doré and gold concentrate 10
Slide 11: Low cost per ounce of gold
Low cost per ounce of gold $623 per ounce AISC AISC is All-In Sustaining Costs (total cash costs plus other expenses) 11
Slide 12: Our AISC is amongst the lowest
Our AISC is amongst the lowest Base case gold price $1,250/oz $623/oz AISC Source: Metals Focus Data, Company Presentations 12
Slide 13: Infrastructure such as power, roads and water are being finalized or in hand
Infrastructure such as power, roads and water are being finalized or in hand – including export utilizing two existing excellent ports 13
Slide 14: Environmental approvals and licenses are being finalized or in hand
Environmental approvals and licenses are being finalized or in hand 14
Slide 15: Project Milestones
Project Milestones Feasibility Study A Environmental Permitting (Q4) —| Submittal of Phase Change Application (06/16) A Review of Phase Change Application a Approval of Application (07/16) A Signing of EA (01/17) A Early Works Sy First Production (Q1 2020) A LUNDINGOLD
Slide 16: We're not just miners, we are part of the community
We’re not just miners, we are part of the community Lundin Gold’s vision for community investment is to create shared value for host communities in coordination with local and national governments 16
Slide 17: One of the best pedigrees in the mining sector
One of the best pedigrees in the mining sector Experienced top management with Lukas H. Lundin a successful track record Chairman and Director Ron F. Hochstein Alessandro Bitelli Dave Dicaire Nicholas Teasdale President, CEO & Director Executive VP, CFO VP, Projects VP, Exploration 17
Slide 18: We bought the asset at the low point in the cycle
We bought the asset at the low point in the cycle We paid $240 million in 2014 18
Slide 19: Lundin Family is investing in Fruta del Norte
Lundin Family is investing in Fruta del Norte Lundin Gold Inc. 118 million shares outstanding 122 million shares fully diluted Recently raised Cdn$95 million for early construction works Lundin Family are the largest shareholders at 30.4% 19
Slide 20: Fruta del Norte – one of the last of the great gold discoveries
Fruta del Norte – one of the last of the great gold discoveries Large, high grade gold resources, low cost Significant resource and development upside 20
Slide 21: Price to net asset value
Price to net asset value P/NAV (5% DISCOUNT RATE) TMAC Resources Inc. 1.42x MAG Silver Corp. 1.29x DEVELOPMENT AND EXPLORATION COMPANIES NovaGold Corp. 1.00x Pilot Gold Corp. 0.83x Orezone Gold Corp. 0.75x Average 0.71x Atlantic Gold Corp. 0.63x Almaden Minerals Ltd. 0.61x Belo Sun Mining Corp. 0.58
Slide 22: Investment timing is right
Investment timing is right LUG – TSX LUG – Nasdaq Stockholm www.lundingold.com Thank You 22
Slide 23: Disclaimers
Disclaimers Forward-Looking Statements This presentation contains “forward-looking” statements within the meaning of Canadian securities legislation and the United States Private Securities Litigation Reform Act of 1995. Forward-looking statements relate to future events or the anticipated performan
Slide 24: Appendix
Appendix 24
Slide 25: Feasibility Study Details
Feasibility Study Details Before Lundin Gold optimizes mine development 25
Slide 26: Resource and Reserve Details
Resource and Reserve Details 26
Slide 27: Fruta del Norte – General Social Context
Fruta del Norte – General Social Context ► Zamora-Chinchipe is among the least developed provinces of Ecuador. ► There is little existing industry. Prominent economic activities are coffee, plantains, cocoa, dairy, and artisanal mining. ► There are strong levels of community support for the developm
Slide 28: LOM Annual Production and Initial Capex
PRIMARY AXIS ANNUAL PRODUCTION SECONDARY AXES INITIAL CAPEX 700 LOM ANNUAL PRODUCTION AND INITIAL CAPEX 3000 LOM Yearly Production (oz Au) CapEx (US$M) 600 2500 LOM ANNUAL GOLD PRODUCTION (koz) 500 2000 INITIAL CAPEX (US$M) 400 1500 300 1000 200 500 100 0 0 Source: Company Filings; SNL 28
Slide 29: Lundin Gold provides excellent leverage to gold
Lundin Gold provides excellent leverage to gold because valuation remains attractive at current market cap of $694 million 29
Slide 30: Will generate positive free cash flow in first full year of production
Will generate positive free cash flow in first full year of production at $1,250 per ounce gold price Average Years 2020 2021 2022 1-10 LOM Cash Flow $(129) $198 $279 $174 $1,449 after tax million million million million million 30
Slide 31: Low capex per ounce gold
Low capex per ounce gold Source: Company Filings; SNL 250 CAPITAL COST PER GOLD OUNCE IN THE GROUND INITIAL CAPEX PER OUNCE Au, R&R (US$/oz) 200 150 100 50 $71/oz 0 DEVELOPMENT STAGE PROJECTS • FdN Capex= $669 million • FdN Reserve and Resource = 9,480,000 ounces • Capex/Ounce = $669million/9.48mill
Slide 32: Sensitivities
Sensitivities SENSITIVITY OF NPV @ 5% AFTER TAX SENSITIVITY OF IRR AFTER TAX 1,400 25% NPV @ 5% ($US MILLION) 1,200 1,000 20% IRR (%) 800 15% 600 400 10% 200 0 5% -30% -20% -10% 0% 10% 20% 30% -30% -20% -10% 0% 10% 20% 30% Capital Costs Operating Costs Au price Labour Capital Costs Operating Costs A
Slide 33: Mining Design and Engineering
Mining Design and Engineering ► Mine infrastructure – to the east of the deposit due to better Mine Development Layout Looking geotechnical conditions. Northeast ► Ore Production – Mining methods dependent on geotechnical conditions ► Transverse Open Stoping with paste backfill ► Drift and Fill mini
Slide 34: Production Plan
Production Plan Processing Plant Feed 1500 15 ► LOM = 15.5 Mt @ 9.67gpt Au (4.8 MMoz) 1000 10 k tonnes gpt Au ► 12 month plant ramp-up 500 5 ► First 3 yrs ~3200tpd 0 0 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 ► Steady state ~3500tpd Ore processed (kt) Au g
Slide 35: Capital Cost Breakdown
Capital Cost Breakdown Description Amount (000’s USD) ► Initial Capital: US$668.7 million Underground Mine 120,471 ► VAT / taxes: US$91.2 million (mostly recoverable) Ore Handling 7,477 ► Total: US$759.9 million Process Plant 74,331 Tailings / Reclaim Water Facilities 30,792 On-Site Infrastructure 1
Slide 36: Operating Cost Breakdown
Operating Cost Breakdown Total Cost Opex by Area G&A, 13% ($ per tonne processed) Mining 60 Surface Infrastructure, 8% Process 34 Surface Infrastructure 9 Mining, 51% G&A 15 Process, 28% Total 118 Cash Cost Area Expenses Freight Taxes & ($ per oz Au) 3% Lease 4% 2% On site operating costs 422 Servic
Slide 37: Analyst Coverage
Analyst Coverage Rating (CAD) Modeling (USD) LoM Avg. Au Target Price Production Mine Life Cash Cost AISC NAV Broker Date (CAD) Rating CAPEX ($M) (koz) (years) ($/oz) ($/oz) ($M) ABG*' 29-Jul-16 $7.38 Buy $750 370 18 $413 $512 $752 BMO' 10-Aug-16 $8.00 Buy $800 321 10 $543 n/a $1,080 Cormark 8-Jun-1