Q3 2025 Lundin Gold Inc Earnings Call
Speaker #1: Good morning , ladies and gentlemen , and welcome to London Gold S Q3 2025 financial Results call . At this time , all lines are in listen only mode .
Speaker #1: Following the presentation , we will conduct a question and answer session . If at any time during this call , you require immediate assistance , please press star zero .
Speaker #1: For the operator . This call is being recorded on Friday , November 7th , 2025 . I would now like to turn the conference over to Ronald Hochstein .
Speaker #1: Please go ahead .
Speaker #2: Thank you . Natasha and good morning everyone . Thank you all for joining us today . I'm joined by Jamie Beck , lending Gold's new president and CEO , Terry Smith , chief operating officer .
Speaker #2: And Chester See, our Chief Financial Officer. We are going to take you through our results for the third quarter of 2025.
Speaker #2: Please note , lending goals , disclaimers on this slide . This discussion includes forward looking information . Actual future results may differ from expected results for a variety of reasons described in the caution regarding forward looking information and statements section of our press release .
Speaker #2: Lending gold is a US dollar reporting entity and all amounts in this presentation refer to US dollars unless otherwise indicated . As many of you know , I resigned as president and CEO of Lending Gold yesterday to pursue another opportunity within the lending group .
Speaker #2: It is my honor to participate in this conference call and discuss Lending Gold's third quarter results . It is also my privilege to formally introduce you to Jamie Beck .
Speaker #2: Jamie , a long standing member of the lending group of companies and most recently CEO of Filo , is , as of today , the new president and CEO of Lending Gold .
Speaker #2: I have worked with Jamie for many years , including working together on the due diligence to purchase fruit Del Norte . I can't think of a more capable person to build on the legacy that began with the vision of Lucas Lundin back in 2014 .
Speaker #2: Thank you, Ron, for.
Speaker #3: That generous introduction . But more notably for your decade of visionary leadership . It is my honor and privilege to formally step into the role of president and CEO of Lundin Gold .
Speaker #3: Today . I'm incredibly excited to take the helm at this pivotal moment . Ron and the team have built a world class operation , and we are now entering a major growth phase , driven by both continued operational excellence and exploration success .
Speaker #3: We will maintain the relentless focus on maximizing value at Fruta del Norte through optimization and efficiency . Built on a strong foundation of responsible mining .
Speaker #3: We will also aggressively advance our high potential exploration pipeline , ensuring we realize the immense , immense growth potential within this highly prospective district .
Speaker #3: We also remain unwavering in our commitment to returning capital to shareholders through our robust dividend policy and commitment of creating shared value in Ecuador .
Speaker #3: I look forward to working closely with our team and connecting with all of you . Our investors and partners , in the coming months .
Speaker #3: Now , I'll turn the to Ron to continue with the quarterly results .
Speaker #2: Thanks , Jamie . This was another excellent quarter for lending gold . We produced over 122,000oz of gold and sold approximately 125,000oz . Average grade of our milled was 8.9g per ton , with an average recovery of 88.2% .
Speaker #2: Our mining and milling throughput both hit records , and with our average mill throughput achieving 5264 tons per day . With this production performance to date , we are reconfirming our revised guidance of 490,000 to 525,000oz .
Speaker #2: Record gold prices continued to drive our financial results , but they also have an impact on our costs , royalties and statutory employee profit sharing are impacted by the gold price and are included in our cash operating costs and all in sustaining costs .
Speaker #2: Our original guidance was based on an average gold price of $2,500 per ounce. With our year-to-date realized price of $3,400.
Speaker #2: This translates to an approximate $90 per ounce increase in costs . A direct reflection of higher gold values . Despite these pressures , our cost performance remained strong , with cash operating costs per ounce of $861 and all costs $1,036 per ounce sold .
Speaker #2: This, combined with an average realized gold price of $3,600, resulted in an ASIC margin of 71%. Supported by another quarter of strong operations and record gold prices.
Speaker #2: We generated $216 million in cash flow from operations , and $191 million in free cash flow . This robust free cash flow enabled our board to declare a total dividend of $0.80 per share , approximately 193 million , consisting of our fixed dividend of $0.30 and a variable dividend of $0.50 per share .
Speaker #2: We increased the variable component this quarter to reflect 100% of normalized free cash flow from the policy's minimum of 50%. Chester will provide more detail on this shortly.
Speaker #2: On the exploration front , we've had another very active quarter . We recently released results on our copper gold porphyry systems at Loma San Diego and Castillo , and we continue to see this quarter emerge .
Speaker #2: And this mineralized district continued to impress . Based on these recent results , we have further expanded the 2025 exploration program for from an original 80,000m to a minimum of 120,000m .
Speaker #2: Our conversion drilling at Ftns is wrapping up for the year. Expansionary drilling continues, and our exploration drilling at East also continues. We'll be providing the results of these programs in the next couple of weeks.
Speaker #2: Our financial performance continues to improve compared to 2020 . For revenue was up 38% to 447 million , net income hit a record high of $208 million , up 53% .
Speaker #2: Earnings per share also achieved a record high of $0.86 , up 51% , and free cash flow was up 5% . Our ASIC margin per increased by 49% to $2,598 in Q3 , reflecting our enhanced profitability .
Speaker #2: With that , I'd now like to turn the call over to Terry to discuss our operations in more detail . Thanks , Ron , and good morning all .
Speaker #2: Starting with safety. In Q3, we had a few first aids and medical incidents that I would characterize as having a low potential for serious injury.
Speaker #2: And we continue to have a very low total recordable incident rate , which is great . However , looking at some of our leading indicators , we we did see an uptick in incidents that had serious potential , and we took the time to investigate these .
Speaker #2: We found some areas to improve, including some gaps in our training and procedures. A need to get better at recognizing hazards and behaviors, like rushing or improvising.
Speaker #2: Work that contributed to these events , working on leading indicators and improving as a result is where we want to be with our safety program .
Speaker #2: Thanks to the team for their continued passion and commitment for safe production . Moving to our production performance , I'm pleased to report that we had another strong quarter achieving both record mining and milling rates .
Speaker #2: Mill throughput averaged 5264 tons per day , showing consistent increases every quarter this year through successful debottlenecking of the mill . Mill recovery was slightly lower than the last quarter as we processed , oxidized door , which impacted flotation recoveries .
Speaker #2: As we look ahead to the last quarter of the year , I'd like to point out that we anticipate slightly better grades than Q3 .
Speaker #2: But lower relative to the first half of the year , per our current mine plan , recovery is expected to be about the same as Q3 .
Speaker #2: We also expect to see continued increases in mill throughput as we optimize the mine and mill to work towards our goal of averaging 5,500 tons per day in 2026.
Speaker #2: Finally , although we've already completed a couple of key projects this year , like a new batch plant , camp upgrades , and an expansion to our diesel power generation system , you should expect to see our sustaining capital expenditures increase in the last quarter .
Speaker #2: This will be driven by the ongoing ramp up of our fifth tailings dam . Raise significant upgrades to our water treatment plant , mining equipment and other planned site infrastructure improvement projects .
Speaker #2: Before turning the call over to Chester , I wanted to highlight our progress on Ftns in mid 2023 , we made the decision to invest in two levels of underground development to support exploration south of FTN .
Speaker #2: Then the exploration team discovered Ftns back in Q2 of 2024 and subsequently announced a maiden inferred resource of over 2,000,000 oz earlier this year.
Speaker #2: We've been busy on the engineering front with Geotech mine planning and metallurgy . While the drills continue turning on infill drilling through the year , we are .
Speaker #2: We are on target to establish an initial reserve at Ftns in Q1 next year . This is remarkable progress and a testament to what our team can deliver .
Speaker #2: I'm looking forward to discussing this further next year . Once we complete our work . With that , I'd like to now turn the call over to Chester to discuss our financial results .
Speaker #2: Thanks , Terry .
Speaker #4: And good morning , everyone . For the third quarter of 2025 , Lundin Gold achieved revenues of $447 million from the sale of approximately 125,000oz of gold at an average realized gold price of 3634 per ounce .
Speaker #4: This average realized price includes 3446 per ounce of gross price received , and a favorable impact of $188 per ounce mark to market on provisionally priced sales .
Speaker #4: Our income from mining operations was 305 million , a significant increase from the same period last year , primarily driven by the higher gold price .
Speaker #4: This strong performance translated to earnings of 208 million , or $0.86 per share , and EBITDA of 312 million . The continued strengthening of gold prices supported this quarter's cash generation .
Speaker #4: We generated generated 216 million in net cash from operating activities and 191 million in free cash flow , or $0.79 per share , during the quarter , compared to 181 million , or $0.76 per share , in the third quarter of 2020 .
Speaker #4: For while free cash flow was up 5% , it's important to note that in addition to monthly corporate income tax , installment payments , the company remitted 50.6 million to the Government of Ecuador as a partial payment against its annual income taxes due in April 2026 .
Speaker #4: This partial payment was completed voluntarily as a tax efficient method to repatriate capital to fund dividends , and to support the Government of Ecuador .
Speaker #4: Excluding the impact of this partial payment , which will improve our free cash flow next year , our underlying cash flow was exceptionally strong relative to last year .
Speaker #4: We ended the quarter with a very strong cash position , 494 million , up from 349 million at the beginning of the year .
Speaker #4: We generated $665 million from operating activities, paid out $471 million in dividends, and reinvested $67 million, with a continued positive outlook on gold prices.
Speaker #4: Combined with our production and cost guidance , the free cash flow outlook for the company continues to look positive . Now turning to our capital allocation strategy and dividend policy .
Speaker #4: I am very pleased to announce another strong dividend for our shareholders following another quarter of strong free cash flow generation . Our Board of Directors has declared a quarterly dividend totaling $0.88 per share , comprised of our regular dividend of $0.30 and a dividend of $0.50 per share .
Speaker #4: We exercised the flexibility in our dividend policy by setting the variable dividend at 100% of our normalized free cash flow remaining after payment of dividends this quarter, which is well above the minimum policy threshold of 50%.
Speaker #4: This distribution , totaling approximately 193 million , is a direct reflection of our Q3 performance and strong future outlook . To calculate this normalized free cash flow , we made an additional adjustment .
Speaker #4: This quarter . The early tax payment of 51 million made in Q3 has been spread equally across the last half of the year .
Speaker #4: Subtracting 25.3 million in each of Q3 and Q4 . This robust payout reflects our commitment to return significant value to our shareholders , while maintaining the flexibility to invest strategically in our long term growth initiatives .
Speaker #4: For a more detailed discussion of our dividend and financial results , I encourage you to read our MDA . Now , I'd like to turn the call back over to Ron .
Speaker #2: Thank you, Chester. I would like to point out a significant milestone that we achieved in the company's history with this latest dividend announcement.
Speaker #2: We will have returned approximately $950 million in total dividends, a sum that exceeds the $861 million in equity raised to acquire and develop Fruta del Norte.
Speaker #2: In other words, the project has officially paid back the entire original equity investment. Moving forward, every dollar of cash flow generated by Del Norte is essentially a net return on capital for our shareholders.
Speaker #2: This is a testament to the world class quality of the asset . The team's focus on operational excellence and focus on maximizing long term value and continuing to turn continuing to return capital to shareholders .
Speaker #2: Now over to Jamie to speak to exploration.
Speaker #3: Thanks , Ron . On the exploration front , we're excited to share some significant updates on our exploration and growth initiatives . Our top priority remains Fenn's and our work here is twofold .
Speaker #3: Growing the resource and increasing our confidence in the inferred resource. Our 2025 Conversion Drilling program has recently completed, and we are awaiting final assays while exploratory drilling continues.
Speaker #3: The discovery and rapid delineation of a multi-million ounce gold deposit is a remarkable technical achievement for our exploration and operating teams and demonstrates the high value potential neighboring and importantly , we continue to see significant upside as the deposit remains open and is showing strong signs for further growth .
Speaker #3: Exploratory drilling on FTN East is also ongoing and is currently exploring the mineralization continuity in the central portion of this target , similar to Fenn's , it is in close proximity to Fruta del Norte , approximately 100m away , and has high potential to add significant value to current operations as we continue to advance our understanding of the target .
Speaker #3: We will be reporting on phones and east drilling programs in the next few weeks. Earlier this week, we shared a release highlighting our emerging copper-gold porphyries.
Speaker #3: The results we report reported confirmed the large scale potential of this system with our best grades to date . All found in very close proximity to the main fen deposit .
Speaker #3: We are now actively exploring three compelling porphyries Sandia , Loma and Castillo . All three show immense potential and critically , they all remain open in all directions with the potential for additional porphyry deposits to be found at Sandia .
Speaker #3: Our step out drilling has confirmed a continuously mineralized zone that extends for nearly 1000m along strike is 500m wide and reaches 800m at depth .
Speaker #3: This has revealed a large mineral envelope that remains wide open . Significantly , we reported the highest grade times width intercept yet in our porphyry program .
Speaker #3: Approximately 607m at 0.59% copper equivalent . Starting just 21m below the surface . Moving to Loma . Since its discovery earlier this year , drilling has defined a wide and continuous copper gold mineralized zone starting at surface .
Speaker #3: This zone extends for 1000m along strike is 650m wide and goes down to 1000m at depth . Like Sandia , a very large mineral envelope has emerged and remains open in all directions with special note to the two kilometers between Sandia and Loma .
Speaker #3: Within that five kilometer corridor that have yet to be drilled . Finally , at Castillo , we made a shallow , high grade copper gold discovery just two kilometres south of FTN with the intercept being approximately 224m at a copper equivalent grade of 0.71% .
Speaker #3: The mineralization is covered by only about 100m of overlying conglomerates , which is very favorable . This initial discovery strongly suggests the potential for additional porphyry centers to be found in the area .
Speaker #3: Back to you, Ron.
Speaker #2: Thanks , Jamie . In summary , as we revisit our 2025 objectives , the message is clear we are delivering our core value of safety and environmental stewardship remains non-negotiable , supported by 0.20 Total recordable injury rate year to date , which we will constantly strive to improve .
Speaker #2: Operationally, the plant optimization has successfully delivered a record Q3 throughput of 5,264 tons per day, giving us high confidence in achieving the 5,500 ton per day average in 2026.
Speaker #2: This success supports our confirmed production guidance of 500 and 490,000 to 525,000oz , while unit costs are expected at the high end . This is a direct result of the impact of higher gold prices on our royalty structure , our largest ever exploration program is firing on all cylinders with over 100,000m drilled to date at fans .
Speaker #2: Conversion drilling is complete and we eagerly await the final assays , which will feed into our initial reserve estimate anticipated early next year .
Speaker #2: Furthermore , the emerging potential at East and the increasingly defined porphyry corridor , including Tricholoma , Sandia and Castillo is exceptionally encouraging for future growth .
Speaker #2: Finally , we have significantly surpassed our initial capital return target , having returned and announced approximately 663 million to our shareholders . Year to date .
Speaker #2: In closing , we are executing on our production targets , demonstrating excellence in exploration and delivering substantial value to our shareholders . We look forward to carrying out this robust momentum throughout the final quarter and into 2026 and beyond .
Speaker #2: Before we move to questions , please allow me a final personal reflection . This is my last quarterly conference call , and after ten years , it has been the highest honor and privilege of my career to be part of this exceptional story .
Speaker #2: The success we've achieved is truly a collective effort , and I want to offer my heartfelt thanks to the many people who made it possible to our investors and the analyst community .
Speaker #2: Thank you for your commitment, your tough questions, and your belief in our vision. Most importantly, thank you to our employees and contractors.
Speaker #2: Your dedication, ingenuity, and passion for safety are the foundation of everything we do and for the people of Ecuador. Thank you for your partnership and for allowing us to operate in your beautiful country. Your trust is something we value above all else.
Speaker #2: Thank you all for joining us and joining me over the last ten years on these calls . With that , we will now open the call to questions .
Speaker #2: Over to you , Natasha .
Speaker #1: Thank you . Ladies and gentlemen . We will now begin the question and answer session . Should you have a question , please press the star , followed by the one on your touch tone phone .
Speaker #1: You will hear a prompt when your hand has been raised. Should you wish to decline from the polling process, please press the star followed by the two.
Speaker #1: If you are using a speaker phone , please lift the handset before pressing any keys . One moment please , for your first question , your first question comes from Fahad Tariq with Jefferies .
Speaker #1: Please go ahead .
Speaker #5: Hi . Thanks for taking my question on the gold recoveries . There was a comment made on the third quarter pre-release that there was maybe room for improvement on gold recoveries , and I think on this call , unless I misunderstood , I think the outlook was maybe recoveries will be more or less flat in the fourth quarter .
Speaker #5: Just trying to get a better sense of whether recoveries can go even higher from these levels . Thanks .
Speaker #2: Yeah . Thanks . Fahad . As I mentioned in the in the script , we saw some oxidized ore in the third quarter .
Speaker #2: And and that impacts our flotation recoveries and the efficiency of the circuit . You know , this is all part of a real geo metallurgy program where we're trying to understand where that material sits and how we can treat it differently in our plants .
Speaker #2: And and we're making good progress on that . I won't bore you with all the technical details , but we feel pretty strongly that moving forward , we will will have better recoveries .
Speaker #2: We just can't foresee , you know , those arriving as early as Q4 . But we will work hard on on maximizing recoveries every day .
Speaker #2: Of course .
Speaker #5: Okay . That's clear . And then , Jamie , maybe just I know it's day one for you , but just thinking about the strategy for the company , just thoughts on what your area of focus will be , whether it's proving out the porphyry potential external M&A .
Speaker #5: Any thoughts? They would be really helpful. Thanks.
Speaker #3: Yeah , I think this company is is incredibly well positioned to be able to advance on a number of initiatives at the same time .
Speaker #3: First and foremost is , I think , maintaining operational excellence and the incredible work that we're we're doing at FTN and in country and delivering that value back to shareholders , clearly excited about the work that's happening with exploration .
Speaker #3: And you can see that in our continued investment, actual increased investments. I think we talked about almost 50% more meters planned for this year than were originally budgeted for.
Speaker #3: I think , you know , on the M&A front , no , no real change to our strategy . We continue to be disciplined and patient .
Speaker #3: But we'll certainly be opportunistic . Should should good opportunities present themselves .
Speaker #5: Okay. Great. Thank you.
Speaker #1: Thank you . As a reminder , if you wish to ask a question , please press star one . Your next question comes from Don DeMarco with National Bank .
Speaker #1: Please go ahead .
Speaker #6: Yeah . Thank you . Operator . And first of all , Ron , thank you for the kind words . And welcome to Jamie .
Speaker #6: So yeah , I see it's another quarter where a high percentage of your free cash flow is paid out as dividend . And as Chester mentioned in Q3 , the company elected to increase that variable portion to 100% .
Speaker #6: So what were the thoughts behind this increase ? And is it viewed as a one off or might this be a new norm if the quarter and the outlook remains strong ?
Speaker #3: Don , it's Jamie here . I think , you know , we'll evaluate this on a quarter by quarter basis . And always be , you know , willing to adjust that variable portion of the dividend up or up or down , as we see needed .
Speaker #3: I think specifically this quarter , some of that is driven by sort of where our where our cash balance sits . And keeping that at a , at a comfortable level for us , and also being able to return all of that free cash flow this quarter back to back to shareholders .
Speaker #3: So , you know , I think you can see that similar strategy , you know , moving forward , obviously growth initiatives or capital needs that perhaps change in the future could , you know , adjust our our board of directors and management's thinking on how we would view that variable dividend going forward .
Speaker #3: But certainly for the for the short term , I see that as being a focus on continuing to return capital to shareholders .
Speaker #6: Okay . Yeah . Because I mean , as I see it , there's somewhat competing objectives of building up your balance sheet to fund your growth strategy .
Speaker #6: And you've got these great porphyry targets that may require some development CapEx . Several years out . And then returning the capital to shareholders .
Speaker #6: So is there a certain kind of cash balance target that you might be thinking about over , over a certain period of time in order to to have that Treasury in order to fund growth ?
Speaker #3: Yeah , I don't think there's a there's a magic number . Don . I think we continue to evaluate it . As I say , on a quarter by quarter basis , as the porphyry exploration advances .
Speaker #3: And should we start thinking about putting some engineering studies around that and understanding what maybe our capital needs , then , of course , that would that would be a catalyst for us to think about how that how that cash balance potentially funds that future growth .
Speaker #3: I'd also say that , you know , the fact that the asset is is completely unencumbered . Now allows us to look at what kind of capital strategy might be used for any future growth activities as well .
Speaker #3: So I think we're in a pretty incredible position to have lots of various options available to us should the need for additional funding arise.
Speaker #6: Okay , great . And maybe just as a final question , then I'll pivot over to the porphyry targets . Both Sandy and Coloma are showing these large mineralized volumes .
Speaker #6: It's still early , but but what's drilling showing you at this point in terms of the continuity of mineralization ? Maybe a potential development approaches ?
Speaker #6: And what might the timing be of a first resource estimate ?
Speaker #3: Yeah , I think too early at this point in time to sort of put a pin in calendars around resource estimates . What we can say is that we are pretty encouraged by what we're seeing for potential continuity here .
Speaker #3: Again , I think I caution that it's still early days . You know , Sandy , we've got two holes into it effectively .
Speaker #3: And what we see are evident is evidence on surface from from soil sampling , evidence from the geochemistry , evidence , you know , that we're seeing through the drilling that there's really high potential for this to be quite a significant continuously mineralized envelope .
Speaker #3: But stay tuned . I think for for results from the drill bit , that's the that's the only way we will truly find out what's going on .
Speaker #6: Okay , great . Well , that's all for me . Thank you for taking my questions and good luck with the rest of the quarter .
Speaker #1: Again , as a reminder , if you wish to ask a question , please press Star followed by the one . There are no further questions at this time .
Speaker #1: So I will now turn the call over to Ronald Hochstein for closing remarks. Please continue.
Speaker #2: Thanks , Natasha and thanks again . As I said earlier , thank you all the analysts and investors for your continued support . And as I mentioned in the press release , the future is very bright .
Speaker #2: Companies are very good hands and I'll be an active spectator going forward . Thanks everybody and have a great weekend .