Lundin Gold raises production forecast for the year

Lundin Gold (TSX: LUG) has raised its production guidance and decreased its cost estimates for 2022, based on strong results in the first half of the year.

The Vancouver-based miner now expects to produce between 430,000 and 460,000 ounces of gold, from a previous guidance of 405,000 to 445,000 ounces.

All-in sustaining costs (AISC) are forecast to be in the US$820 to US$930 per oz. range, down from a previously expected US$860 to US$930 per ounce.

Lundin’s Fruta del Norte gold-silver mine in Ecuador, the company’s only mining operation and the South American nation’s largest, produced 111,890 ounces of gold in the three months ended June 30.

While production was not affected by a national strike in Ecuador, which ended at the end of June, blockades on some of the country’s major highways hindered gold shipments and sales planned for the month.

An estimated 16,000 oz. were delayed into July, which resulted in the deferral of some revenues from the second quarter to this year’s third, affecting the level of income from mining operations, earnings, and cash flow in the second quarter.

Mine production was reduced slightly near the end of the quarter to allow the mill to process more tonnes and reduce the run of mine stockpiles, the company said. This measure was taken to manage the oxidation of the ore, which has been impacting mill recoveries, Lundin noted.

The company noted that underground mine development continues as planned with a total of 2,190 metres completed. Development rates averaged 24 metres per day in the second quarter, it said.

Lundin Gold acquired the project in 2014 for $240 million from fellow Canadian miner Kinross Gold (TSX: K; NYSE: KGC), which had to halt operations after being unable to reach an agreement with authorities regarding the terms for developing the asset.

The underground gold and silver mine, discovered in 2006, contains six of Lundin’s 29 mining concessions in Ecuador and covers 70,000 hectares of land.

Located in southeastern Zamora Chinchipe province, the 700-sq.-km Fruta del Norte is considered one the largest and highest-grade gold projects in the world currently in production.

It is slated to produce almost 4.8 million ounces of gold over a 14-year mine life. Shares in Lundin Gold were trading 1.86% higher in Toronto at the opening, giving the miner a market capitalization of $2.3 billion.