Lundin Gold Inc. · TSX:LUG
Lundin Gold — Investor Presentation (January 2017)
39 slides from Lundin Gold's investor presentation, January 2017
Slide 1: Fruta del Norte: A new gold mine is coming
Gold Miner. Community Builder. Fruta del Norte A new gold mine is coming… Investor Update - January 2017
Slide 2: 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 3: Fruta del Norte is a large gold deposit located in Ecuador
Fruta del Norte is a large gold deposit located in Ecuador Bonza Alejandro Puente Princesa Rio Blanco Emperador Robles Fruta del Norte is within a major mineralized trend 3
Slide 4: We are comfortable and confident working in Ecuador
We are comfortable and confident working in Ecuador • Favourable and robust agreements signed with the government • Ecuador is a much improved mining jurisdiction • Local communities are in favour of the Fruta del Norte development 4
Slide 5: Agreements for FDN Development are Signed
Agreements for FDN Development are Signed • Exploitation Agreement for La Zarza Concession signed December 14, 2016 • Investment Protection Agreement signed December 19, 2016 5
Slide 6: 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 Resource estimates are reported inclusive of Reserves. Source: 2016 Fruta del Norte Technical Report 6
Slide 7: Compact Orebody
Compact Orebody South Domain (mostly inferred resources), not fully defined to FDN - Main Area South of Reserves and Resources Grade of Ore Blocks 3.5 – 5.0 ppm Au 5.0 – 10 ppm Au >10 ppm Au 7
Slide 8: Average grade much higher than the majors
Average grade much higher than the majors Source: Metals Focus Data, Company Presentations 8
Slide 9: 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 10: And we've just scratched the surface
And we’ve just scratched the surface 70,000 ha of prospective exploration acreage including the Bonza Las Peñas trend which hosts FDN Pull-Apart Basin extended 16 km south of FDN doubling most prospective trend Numerous key targets with epithermal geochemical signatures along the trend have yet to b
Slide 11: Fruta del Norte will be an underground mine producing about 340,000 ounces per year
Fruta del Norte will be an underground mine producing about 340,000 ounces per year for at least 13 years 11
Slide 12: Low Tonnage / High Production
Low Tonnage / High Production Source: Company Filings, SNL and 2016 Fruta 12 del Norte Technical Report
Slide 13: Construction start expected mid 2017 with first gold anticipated early 2020
Construction start expected mid 2017 with first gold anticipated early 2020 Capex: $669 million (includes contingency) 13
Slide 14: Fruta del Norte will produce both gold doré and gold concentrate
Fruta del Norte will produce both gold doré and gold concentrate 14
Slide 15: 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) 15
Slide 16: 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 16
Slide 17: Significant investment by government in infrastructure
Significant investment by government in infrastructure such as power, roads, ports and communications Agreements for power supply are being finalized 17
Slide 18: Key Environmental approvals and licenses are in hand
Key Environmental approvals and licenses are in hand 18
Slide 19: Project Milestones
Project Milestones Phase Change Application Approved (07.16) EIS & Environmental License Granted (11.16) Exploitation Agreement Signed (12.16) Investment Protection Agreement Signed (12.16) Early Works Program Initiated (11.16) Project Financing (Present – 3rd qtr 2017) Start of Construction (Mid 20
Slide 20: Early Works Program
Early Works Program • Field investigations (Mine, TSF, Process Plant, Aggregate Quarry) • Environmental biotic rescue, deforestation & monitoring • Earthworks for north portal, mine dump, site roads & ponds • Start of new access road and bridge • Basic engineering of process and surface facilities •
Slide 21: Building a Team for Next Phases
Building a Team for Next Phases • Engineering resources in place • Ausenco – plant and surface • NCL, SRK, Patterson Cooke – mine & geotech • Klohn Crippen Berger – tailings & surface Geotech • SRK – water management • G Mining engaged to augment Company project and construction team • Same team tha
Slide 22: 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 22
Slide 23: 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 Lundin Family is the largest shareholder at 30.4% 23
Slide 24: 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 24
Slide 25: Investment timing is right
Investment timing is right LUG – TSX LUG – Nasdaq Stockholm www.lundingold.com Thank You 25
Slide 26: Appendix
Appendix LUNDINGOLD a oe a
Slide 27: Feasibility Study Details
Feasibility Study Details Optimization Program is underway Source: 2016 Fruta del Norte Technical Report 27
Slide 28: Resource and Reserve Details
Resource and Reserve Details 28
Slide 29: 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 developmen
Slide 30: LOM Annual Gold 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$M) 400 1500 300 1000 200 500 100 0 0 Source: Company Filings; SNL 30
Slide 31: Low capex per ounce gold
Low capex per ounce gold Source: Company Filings; SNL 250 CAPITAL COST PER GOLD OUNCE IN THE GROUND INITIAL CAPEX PER OUNCE Au, R&R (US$/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 = $669million/9.48mill
Slide 32: Sensitivities: NPV @ 5% and IRR
Sensitivities SENSITIVITY OF NPV @ 5% AFTER TAX SENSITIVITY OF IRR AFTER TAX 1,400 25% NPV @ 5% ($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 geotechnical conditions. ► Ore Production – Mining methods dependent on geotechnical conditions ► Transverse Open Stoping with paste backfill ► Drift and Fill mining with cemented rock fill (CRF) ► Water –
Slide 34: Production Plan
Production Plan Processing Plant Feed ► LOM = 15.5 Mt @ 9.67gpt 1500 15 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: Offsite Infrastructure - Access Road
Offsite Infrastructure - Access Road 35
Slide 36: Offsite Infrastructure – Power Supply
Offsite Infrastructure – Power Supply ►Agreement in principle with CELEC ►Proceeding with basic engineering ►EIA Baseline started ►Defining execution strategy (EPC/EPCM) 36
Slide 37: 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$759.9 million Process Plant 74,331 Tailings / Reclaim Water Facilities 30,792 On-Site Infrastructure 121
Slide 38: Operating Cost Breakdown
Operating Cost Breakdown Total Cost Opex by Area G&A, 13% ($ 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 39: 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 CIBC 31-Oct-16 $7