Lundin Gold Inc. (TSX: LUG) recently reported its third quarter performance in 2024, driven by favorable gold prices, increased production, and strong financial discipline at its Fruta del Norte (FDN) mine in Ecuador. Revenue for Q3 2024 soared to $323 million, representing a 53% increase from $211 million in Q3 2023 and a notable rise from $287 million in Q2 2024.
This revenue boost reflects both an increase in gold ounces sold and a significantly higher realized gold price, which averaged $2,615 per ounce this quarter compared to $1,931 per ounce in Q3 2023 and $2,405 in the previous quarter.
Operating cash flow also reached new highs, hitting $218 million, up from $120 million in Q3 2023 and slightly improved over $210 million in Q2 2024. Adjusted free cash flow doubled year-over-year, reaching $182 million, or $0.76 per share, compared to $81 million or $0.34 per share in Q3 2023.
In terms of profitability, Lundin Gold’s Q3 earnings before interest, taxes, depreciation, and amortization (EBITDA) stood at $220 million, a striking 65% increase from $133 million in Q3 2023 and up slightly from $215 million in Q2 2024. The AISC per ounce was $877 in Q3 2024, down from $907 in Q3 2023, indicating a successful cost-reduction effort, but increased from $863 in Q2 2024, suggesting escalating costs that could impact profitability if gold prices soften.
The company’s bottom line showed significant improvement, with net income reaching $136 million, up from $54 million in Q3 2023 and up 5% from $129 million in Q2 2024. Basic earnings per share (EPS) followed a similar trajectory, increasing to $0.57 from $0.23 in Q3 2023 and $0.55 in Q2 2024.
Production levels in Q3 2024 also highlighted both positive momentum and underlying concerns. The FDN mine produced 122,154 ounces of gold, a 9% increase over the 112,212 ounces produced in Q3 2023 but relatively flat compared to the 121,783 ounces produced in Q2 2024. The average head grade of the ore processed was 10.3 grams per tonne (g/t), up from 9.7 g/t in Q3 2023 but unchanged from Q2 2024, indicating consistent ore quality.
On the cost side, Lundin Gold’s cash operating costs per ounce sold improved, coming in at $681 in Q3 2024 compared to $704 in Q3 2023, though it slightly increased from $675 in Q2 2024.
The company’s liquidity position remains strong, with $226 million in cash as of September 30, 2024, down from $268 million at the end of 2023 but up from $214 million at the end of Q2 2024. This cash balance was maintained despite the company’s substantial capital commitments, including $330 million used to buy out the Stream Facility and Offtake Agreement by the end of Q2, which alleviated future obligations.
The expansion of the FDN process plant to a targeted 5,000 tonnes per day remains on schedule and is expected to complete by the end of 2024. Lundin Gold has projected that the additional Jameson cells will enhance gold recovery, addressing recent challenges related to finely disseminated sulphide minerals in the ore, which reduced recoveries to 86.8% from the typical 88-89%.
Looking ahead, Lundin Gold expects to hit the high end of its production guidance of 450,000 to 500,000 ounces for 2024 and anticipates an AISC toward the upper end of its guidance range of $820 to $890 per ounce.
Lundin Gold last traded at $31.91 on the TSX.
Information for this briefing was found via Sedar and the companies mentioned. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
