Lundin’s Fruta del Norte Continues to Grow
Largest exploration program in company’s history paying off
Lundin Gold Inc (TSX: LUG) says its 133,000m drilling program is continuing to increase the scale of the broader Fruta del Norte district in Ecuador.
Last month, the company reported new epithermal and porphyry exploration results.
Drilling at FDNS returned a best result of 11.75m at 108.61 grams per tonne gold from 177.8m, including 0.4m at 2030g/t gold, while FDN East returned a best-ever result of 3.95m at 236.62g/t gold from 280.75m, including 1m at 933g/t gold.
“Given that the FDN East’s footprint now extends approximately 500m east-west by 800m north-south and remains open in all directions, we’ve chosen to begin development into the ore body to accelerate our conversion and exploration drilling programs,” Lundin CEO Jamie Beck said during a conference call on Friday.
The company’s porphyry exploration program identified two additional copper-gold porphyry systems at Sandia Northeast and Sandia Southeast, increasing the total number of porphyry discoveries on the FDN concessions to seven.
The Sandia porphyry returned 551.3m at 0.42% copper, 0.08g/t gold, 1.62g/t silver and 17.05 parts per million molybdenum, or 0.5% copper equivalent, from 67m, including 307.95m at 0.51% copper, 0.11g/t gold, 1.71g/t silver and 14.14ppm molybdenum, or 0.61% CuEq.
Sandia is currently the largest and highest-grade porphyry system identified on the FDN concessions and now measures around 1.6km in strike, 700m in width and 1km depth and remains open to the north, east and at depth.
“The development of a maiden mineral resource at Sandia is currently underway, and we plan to release the results of that work in early 2027,” Beck said.
“We are nearly halfway through a record 133,000m of planned drilling in 2026, with approximately 54,000m completed to date, and our regional program is set to ramp up in the second half.”
FDN on track
FDN produced 118,994 ounces of gold in the June quarter at cash operating costs of US$1016 an ounce and all‑in sustaining costs of US$1176/oz.
“The second quarter finished strong, with Fruita del Norte delivering another quarter of solid operating performance,” Beck said.
“We expect Q2 to be the lowest production quarter of the year, and with the first half representing 48% of the midpoint of our guidance, we are well on track for the full year. “Second quarter production of approximately 119,000oz of gold brings our year-to-date production to approximately 239,000oz of gold.”
Full-year guidance was maintained at 475,000-525,000oz of gold at AISC of US$1110-1170/oz.
Gold sales were 110,385oz at an average realised price of US$4359/oz, generating revenue of US$478 million.
Adjusted earnings for the quarter were US$202 million, while operating cashflow was US$125 million and free cashflow was US$96 million.
Lundin ended the quarter with cash and equivalents of US$507 million, after returning US$293 million to shareholders through dividends and making annual government profit-sharing and income tax payments of US$221 million.
“We declared a second quarter dividend of US$1.08 per share, bringing this year’s total cash dividend to US$2.29 per share, and marking another quarter of returning 100% of normalised free cashflow to our shareholders,” Beck said.
“In addition to the cash dividend, we completed the silver stream for equity transaction with LunR Royalties, which was announced in the first quarter, the proceeds of the stream sale were distributed to shareholders as a dividend-in-kind following closing.”
The company plans to use its cash to start repurchasing shares under its buyback.
A mine-to-mill expansion study, which is evaluating opportunities to increase plant throughput beyond 5500 tonnes per day, will be completed later this year.
“Overall, we enter the second half in a strong position, and our operations, growth, and exploration programs, in addition to capital returns, all remain firmly on track,” Beck said.