Lundin Gold lifts gold guidance, costs for Fruta del Norte

Canadian precious metals miner Lundin Gold (TSX: LUG) has revised up its gold production guidance for the Fruta del Norte (FDN) underground mine in southeast Ecuador.

The company now expects to produce 475,000–525,000 oz. gold next year, up from its 2024 target of 450,000–500,000 ounces. Cash operating costs are projected at US$730–US$790 per ounce of gold sold, while all-in sustaining costs are estimated at US$935–$US995 per ounce.

Lundin also plans to allocate US$75–US$85 million for total sustaining capital in 2025, including 15,000 metres of drilling under its resource conversion program.

“The commissioning of the plant expansion project is going well, which is expected to increase plant throughput to 5,000 tonnes per day and to improve gold recovery,” president and chief executive Ron Hochstein said Tuesday in a statement.

The Vancouver-based miner highlighted several investments that have enhanced operations at Fruta del Norte. A new dispatch system and reconfigured mill have created opportunities to debottleneck processes and boost average throughput to 5,500 tonnes per day starting in 2026.

“By maximizing the potential of FDN through our operational excellence program to increase efficiencies and reduce costs, combined with a strong gold price environment, we are confident in our ability to continue generating meaningful free cash flow,” Hochstein added.

Boosting exploration

Building on recent exploration success, Lundin is expanding its near-mine exploration program and plans to drill 65,000 metres. The company also unveiled a three-year greenfield exploration strategy targeting an unexplored 500 sq. km land package as part of its regional program.

In 2026 and 2027, Lundin anticipates maintaining production levels in the range of 475,000–525,000 ounces. Costs are expected to increase slightly in 2026, alongside improved mill throughput, which is projected to climb to 5,500 tonnes per day in 2026 from 5,000 tonnes per day in 2025.

BMO analyst Brian Quast said that while Lundin’s three-year production guidance aligns with expectations, cost projections were higher than anticipated. He attributed the increases to elevated sustaining capital expenditures and higher metal prices, which affect royalties and employee profit-sharing.

The analyst downgraded the stock to market perform from market outperform, saying that the valuation was at, or near, a ceiling for a single asset producer.

Shares in the company fell almost 5% on the news, and closed at $33.75 each on Tuesday. This leaves the miner with a market capitalization of $8.1 billion.

Lundin Gold acquired Fruta del Norte in late 2014 from fellow Canadian miner Kinross Gold (TSX: K, NYSE: KGC), which had to halt operations after failing to reach an agreement with Ecuadorian authorities on development terms.

Construction began in July 2017, and the first gold was poured in November 2019. Commercial production commenced in February 2020, making Fruta del Norte Ecuador’s first large-scale gold mine.

Later in 2020, Lundin approved an US$18.6 million mine expansion.

Growing sector

Ecuador’s mining sector generated slightly over US$2.4 billion in exports through September, according to the Ministry of Energy and Mines. This made mining the country’s leading non-traditional export sector, contributing 9.49% of exports and US$704.79 million in taxes.

However, authorities expect a decline in mining exports by year-end due to the ongoing energy crisis, which has caused daily blackouts of up to 14 hours since mid-September. These blackouts have disrupted mining production.

Last year, Ecuador set a historical record for mining exports, reaching US$3.324 billion—19% more than in 2022.