Lundin Gold (TSX: LUG) has issued guidance for 2023 with an output of 425,000 to 475,000 oz. of gold, based on an average throughput rate of 4,400 t/d from its Fruta Del Norta gold mine in Ecuador. Then in 2024, the number will rise to 450,000 to 500,000 oz. and in 2025 reach 465,000 to 515,000 oz. of gold.
In 2023 the head grade will average 9.67 g/t, with fluctuations expected during the year as different sections of the orebody are mined. Average mill recovery for the year is estimated at 90%.
Cash operating costs are estimated to range between $700 and $760 per oz. of gold sold in 2023, with variability expected during the year. According to the company, all-in-sustaining costs (AISC) for 2023 is expected to range between $870 and $940 per oz., based on an assumed gold price of C$1,650 per oz. and a silver price of $18.50 per oz.
These reflect steady-state operations with higher unit costs compared to 2022 due to mining and milling ore with lower grade; inflationary pressures resulting in increased costs of consumables and transportation; and higher maintenance requirements as equipment ages.
Total sustaining capital in 2023 is estimated at $45 million to $55 million and will include the fourth tailings dam raise, a few items that were not completed in 2022 such as a new warehouse, as well as new projects such as a new sewage water treatment plant and several efficiency improvements projects in the mine and plant.
The anticipated fluctuation in gold production over the three years is principally due to expected variations in the grade of ore mined and milled. Except for variations in gold price and possible continuing inflationary pressure which impact cash operating cost and AISC, the other significant factor affecting AISC is sustaining capital which is expected to be higher in the years when a tailings dam lift is planned (2023 and 2025).
Lundin Gold also expects to continue its near mine and regional exploration programs and is planning 28,000 metres of drilling utilizing a minimum of five rigs in 2023 as compared to 22,500 metres in 2022. The 2023 near mine program is estimated to cost $9.4 million and intends to drill 15,500 metres. The regional program is estimated to cost $11.7 million and will drill 12,500 metres.
“Now that the South ventilation raise has been completed, the additional ventilation will allow us to increase the rate of mining to 4,400 tonnes per day, to match the expected throughput of the mill,” CEO Ron Hochstein said in a media statement.
“At current gold prices and considering the low-cost nature of this mine, notwithstanding inflationary pressure, we look forward to continuing generating strong free cash flow for years to come with a production forecast well in excess of 400,000 oz.,” Hochstein said.