Earnings call transcript: Lundin Gold Q3 2025 beats expectations, stock rises

Lundin Gold Inc. reported strong financial results for the third quarter of 2025, surpassing analyst expectations with an earnings per share (EPS) of $0.86, compared to the forecasted $0.756. The company also reported revenue of $447 million against a forecast of $422.58 million. Following the announcement, Lundin Gold's stock price increased by 2.19% in after-hours trading, reflecting investor optimism over the company's performance and future prospects.

Key Takeaways

• Lundin Gold's EPS of $0.86 exceeded forecasts by 13.76%.
• Revenue reached $447 million, a 5.81% surprise over expectations.
• Stock price rose by 2.19% in after-hours trading.
• The company experienced a 38% year-over-year revenue increase.
• Strong operational performance with record mining and milling rates.

Company Performance

Lundin Gold demonstrated robust growth in Q3 2025, with a 38% increase in revenue compared to the same period last year. The company's net income rose by 53%, driven by higher gold prices and improved operational efficiencies. The average realized gold price was significantly above the original guidance, contributing to the strong financial performance.

Financial Highlights

• Revenue: $447 million, up 38% year-over-year.
• Net Income: $208 million, a 53% increase.
• Earnings per share: $0.86, a 51% increase.
• Free Cash Flow: $191 million, up 5%.

Earnings vs. Forecast

Lundin Gold's EPS of $0.86 was 13.76% higher than the forecast of $0.756, while revenue exceeded expectations by 5.81%, reaching $447 million. This marks a significant earnings beat, highlighting the company's ability to capitalize on favorable gold prices and operational efficiencies.

Market Reaction

Following the earnings announcement, Lundin Gold's stock price rose by 2.19% in after-hours trading. The stock's performance aligns with the company's positive earnings surprise and strong operational results. The price increase places the stock closer to its 52-week high of $116.2, indicating strong investor confidence.

Outlook & Guidance

Lundin Gold confirmed its 2025 production guidance of 490,000 to 525,000 ounces of gold. The company anticipates slightly better grades in the fourth quarter and continues to focus on exploration and resource expansion. The expanded exploration program and upcoming project completions suggest a positive outlook for future growth.

Executive Commentary

Outgoing CEO Ron Hochstein stated, "The project has officially paid back the entire original equity investment," signifying the company's strong financial position. New CEO Jamie Beck emphasized a disciplined yet opportunistic approach, reflecting confidence in the company's strategic direction.

Risks and Challenges

• Fluctuating gold prices could impact future revenue.
• Operational costs may rise due to increased gold prices.
• Exploration and project development carry inherent risks.
• Global economic conditions could affect market demand.
• Regulatory changes in mining regions may pose challenges.

Q&A

During the earnings call, analysts inquired about gold recovery challenges with oxidized ore and the company's dividend strategy. Executives highlighted the potential of porphyry exploration targets, underscoring the company's growth prospects in new mineral deposits.

Full transcript - Lundin Gold Inc (LUG) Q3 2025:

Natasha, Conference Call Operator: Good morning, ladies and gentlemen, and welcome to Lundin Gold's Q3 2025 financial results call. At this time, all lines are in listen-only mode. 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 for the operator. This call is being recorded on Friday, November 7th, 2025. I would now like to turn the conference over to Ron Hochstein. Please go ahead.

Ron Hochstein, Outgoing President and CEO, Lundin Gold: Thank you, Natasha, and good morning, everyone. Thank you all for joining us today. I'm joined by Jamie Beck, Lundin Gold's new President and CEO; Terry Smith, Chief Operating Officer; and Chester See, our Chief Financial Officer. We're going to take you through our results for the third quarter of 2025. Please note Lundin Gold's 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. Lundin Gold is a U.S. dollar reporting entity, and all amounts in this presentation refer to U.S. dollars unless otherwise indicated. As many of you know, I resigned as President and CEO of Lundin Gold yesterday to pursue another opportunity within the Lundin Group.

It is my honor to participate in this conference call and discuss Lundin Gold's third-quarter results. It is also my privilege to formally introduce you to Jamie Beck. Jamie, a longstanding member of the Lundin Group of Companies and most recently CEO of Filo, is, as of today, the new President and CEO of Lundin Gold. I have worked with Jamie for many years, including working together on the due diligence to purchase Fruit of 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.

Jamie Beck, New President and CEO, Lundin Gold: Thank you, Ron, for 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 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. We will maintain the relentless focus on maximizing value at Fruit of Del Norte through optimization and efficiency built on a strong foundation of responsible mining. We will also aggressively advance our high-potential exploration pipeline, ensuring we realize the immense growth potential within this highly prospective district. 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.

I look forward to working closely with our team and connecting with all of you, our investors and partners, in the coming months. Now, I'll turn the call back to Ron to continue with the quarterly results.

Ron Hochstein, Outgoing President and CEO, Lundin Gold: Thanks, Jamie. This was another excellent quarter for Lundin Gold. We produced over 122,000 ounces of gold and sold approximately 125,000 ounces. The average grade of our milled was 8.9 grams per ton, with an average recovery of 88.2%. Our mining and milling throughput both hit records, with our average mill throughput achieving 5,264 tons per day. With this production performance to date, we are reconfirming our revised guidance of 490,000-525,000 ounces. Record gold prices continue 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 cost and all-in sustaining cost. 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, this translates to an approximate $90 per ounce increase in cost, a direct reflection of higher gold values. Despite these pressures, our cost performance remains strong, with cash operating cost per ounce of $861 and all-in sustaining cost $1,036 per ounce sold. 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, 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. 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. On the exploration front, we've had another very active quarter. We recently released results on our copper-gold porphyry systems at Tranquiloma, Sandia, and Castillo, and we continue to see this quarter emerge and this mineralized district continue to impress. Based on these recent results, we have further expanded the 2025 exploration program from an original 80,000 meters to a minimum of 120,000 meters. Our conversion drilling at FDNS is wrapping up for the year. Expansionary drilling continues, and our exploration drilling at FDN East also continues. We will be providing the results of these programs in the next couple of weeks. Our financial performance continues to improve. Compared to 2024, revenue was up 38% to $447 million. Net income hit a record high of $208 million, up 53%.

Earnings per share also achieved a record high of $0.86, up 51%, and free cash flow was up 5%. Our ASIC margin per ounce increased by 49% to $2,598 in Q3, reflecting our enhanced profitability. With that, I'd now like to turn the call over to Terry to discuss our operations in more detail.

Terry Smith, Chief Operating Officer, Lundin Gold: Thanks, Ron, and good morning, all. Starting with safety, in Q3, we had a few first aids and medical incidents that I would characterize as low potential for serious injury, and we continue to have a very low total recordable incident rate, which is great. However, looking at some of our leading indicators, we did see an uptick in incidents that had serious potential, and we took the time to investigate these. 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 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. 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 hit another strong quarter, achieving both record mining and milling rates. Mill throughput averaged 5,264 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 ore, which impacted flotation recoveries. 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, 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. 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.

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. 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 plant site infrastructure improvement projects. Before turning the call over to Chester, I wanted to highlight our progress on FDNS. In mid-2023, we made the decision to invest in two levels of underground development to support exploration south of FDN. The exploration team discovered FDNS back in Q2 of 2024 and subsequently announced a maiden inferred resource of over 2 million ounces earlier this year.

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 on target to establish an initial reserve at FDNS in Q1 next year. This is remarkable progress and a testament to what our team can deliver. 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.

Chester See, Chief Financial Officer, Lundin Gold: Thanks, Terry, and good morning, everyone. For the third quarter of 2025, Lundin Gold achieved revenues of $447 million from the sale of approximately 125,000 ounces of gold at an average realized gold price of $3,634 per ounce. This average realized price includes $3,446 per ounce of gross price received and a favorable impact of $188 per ounce marked to market on provisionally priced sales. Our income from mining operations was $305 million, a significant increase from the same period last year, primarily driven by the higher gold price. 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.

We 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 2024. 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. This partial payment was completed voluntarily as a tax-efficient method to repatriate capital to fund dividends and to support the government of Ecuador. 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.

We ended the quarter with a very strong cash position, $494 million, up from $349 million at the beginning of the year. 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, 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, 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 $0.80 per share, comprised of our regular fixed dividend of $0.30 and a variable dividend of $0.50 per share.

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 fixed dividends this quarter, which is well above the minimum policy threshold of 50%. 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 this quarter. The early tax payment of $51 million made in Q3 has been spread equally across the last half of the year, subtracting $25.3 million in each of Q3 and Q4. This robust payout reflects our commitment to returning significant value to our shareholders while maintaining the flexibility to invest strategically in our long-term growth initiatives. For a more detailed discussion of our dividend and financial results, I encourage you to read our MD&A.

Now, I'd like to turn the call back over to Ron.

Ron Hochstein, Outgoing President and CEO, Lundin Gold: 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, we will have returned approximately $950 million in total dividends, a sum that exceeds the $861 million in equity raised to acquire and develop Fruit of Del Norte. In other words, the project has officially paid back the entire original equity investment. Moving forward, every dollar of cash flow generated by Fruit of Del Norte is essentially a net return on capital for our shareholders. 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 return capital to shareholders. Now, over to Jamie to speak to exploration.

Jamie Beck, New President and CEO, Lundin Gold: Thanks, Ron. On the exploration front, we're excited to share some significant updates on our exploration and growth initiatives. Our top priority remains FDNS, and our work here is twofold: 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. 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 FDN, and importantly, we continue to see significant upside as the deposit remains open and is showing strong signs for further growth. Exploratory drilling on FDN East is also ongoing and is currently exploring the mineralization continuity in the central portion of this target.

Similar to FDNS, it is in close proximity to Fruit of Del Norte, approximately 100 meters away, and has high potential to add significant value to current operations as we continue to advance our understanding of the target. We will be reporting on FDNS and FDN East drilling programs in the next few weeks. Earlier this week, we issued a release highlighting our emerging copper-gold porphyries. The results we reported confirmed the large-scale potential of this system, with our best grades to date all found in very close proximity to the main FDN deposit. We are now actively exploring three compelling porphyries: Sandia, Tranquiloma, 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, our step-out drilling has confirmed a continuously mineralized zone that extends for nearly 1,000 meters along strike, is 500 meters wide, and reaches 800 meters at depth. 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, approximately 607 meters at 0.59% copper equivalent, starting just 21 meters below the surface. Moving to Tranquiloma, since its discovery earlier this year, drilling has defined a wide and continuous copper-gold mineralized zone starting right at surface. This zone extends for 1,000 meters along strike, is 650 meters wide, and goes down to 1,000 meters at depth. Like Sandia, a very large mineral envelope has emerged and remains open in all directions, with special note to the 2 kilometers between Sandia and Tranquiloma within that 5-kilometer corridor that have yet to be drilled.

Finally, at Castillo, we made a shallow high-grade copper-gold discovery just 2 kilometers south of FDN, with the intercept being approximately 224 meters at a copper-equivalent grade of 0.71%. The mineralization is covered by only about 100 meters of overlying conglomerates, which is very favorable. This initial discovery strongly suggests the potential for additional porphyry centers to be found in the area. Back to you, Ron.

Ron Hochstein, Outgoing President and CEO, Lundin Gold: 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 a 0.20 total recordable injury rate year to date, which we will constantly strive to improve. 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. This success supports our confirmed production guidance of 490,000-525,000 ounces. 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 100,000 meters drilled to date.

At FDNS, conversion drilling is complete, and we eagerly await the final assays, which will feed into our initial reserve estimate anticipated early next year. Furthermore, the emerging potential at FDN East and the increasingly defined porphyry corridor, including Tranquiloma, Sandia, and Castillo, is exceptionally encouraging for future growth. Finally, we have significantly surpassed our initial capital return target, having returned and announced approximately $663 million to our shareholders year to date. 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. Before we move to questions, please allow me a final personal reflection.

This is my last quarterly conference call, and after 10 years, it has been the highest honor and privilege of my career to be part of this exceptional story. The success we have 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, thank you for your commitment, your tough questions, and your belief in our vision. Most importantly, to our employees and contractors, your dedication, ingenuity, and passion for safety are the foundation of everything we do. To 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. Thank you all for joining us and joining me over the last 10 years on these calls.

With that, we will now open the call to questions. Over to you, Natasha.

Natasha, Conference Call Operator: 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 1 on your touch-tone phone. You will hear a prompt on your hand has been raised. Should you wish to decline from the polling process, please press the star followed by the 2. If you're using a speakerphone, please lift the handset before pressing any keys. One moment, please, for your first question. Your first question comes from Fahad Tariq with Jefferies. Please go ahead.

Fahad Tariq, Analyst, Jefferies: 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. 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. Just trying to get a better sense of whether recoveries can go even higher from these levels. Thanks.

Jamie Beck, New President and CEO, Lundin Gold: Yeah, thanks, Fahad. As I mentioned in the script, we saw some oxidized ore in the third quarter, and that impacts our flotation recoveries and the efficiency of the circuit. This is all part of a real geometallurgy program where we're trying to understand where that material sits and how we can treat it differently in our plants. 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'll have better recoveries. We just can't foresee those arriving as early as Q4, but we will work hard on maximizing recoveries every day, of course.

Don DeMarco, Analyst, National Bank: Okay, that's clear. 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, any thoughts there would be really helpful. Thanks.

Jamie Beck, New President and CEO, Lundin Gold: Yeah, I think this company is incredibly well-positioned to be able to advance on a number of initiatives at the same time. First and foremost is, I think, maintaining operational excellence and the incredible work that we're doing at FDN and in country and delivering that value back to shareholders. Clearly excited about the work that's happening with exploration, and you can see that in our continued investment, actual increased investment. I think we talked about almost 50% more meters planned for this year than what were originally budgeted for. I think on the M&A front, no real change to our strategy. We continue to be disciplined and patient, but we'll certainly be opportunistic should good opportunities present themselves.

Don DeMarco, Analyst, National Bank: Okay, great. Thank you.

Natasha, Conference Call Operator: Thank you. As a reminder, if you wish to ask a question, please press star 1. Your next question comes from Don DeMarco with National Bank. Please go ahead.

Jamie Beck, New President and CEO, Lundin Gold: Yeah, thank you, Operator. First of all, Ron, thank you for the kind words, and welcome to Jamie. I see it's another quarter where a high percentage of your free cash was paid out as a dividend. As Chester mentioned, in Q3, the company elected to increase that variable portion to 100%. What were the thoughts behind this increase? Is it viewed as a one-off, or might this be a new norm if the quarter and the outlook remain strong?

Yeah, Don, it's Jamie here. I think we'll evaluate this on a quarter-by-quarter basis and always be willing to adjust that variable portion of the dividend up or down as we see needed. I think specifically this quarter, some of that is driven by sort of where our cash balance sits and keeping that at a comfortable level for us and also being able to return all of that free cash flow this quarter back to shareholders. I think you can see that similar strategy moving forward. Obviously, growth initiatives or capital needs that perhaps change in the future could adjust our board of directors and management's thinking on how we would view that variable dividend going forward. Certainly for the short term, I see that as being a focus on continuing to return capital to shareholders.

Don DeMarco, Analyst, National Bank: 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, and you've got these great porphyry targets that may require some development CapEx several years out and then returning the capital to shareholders. Is there a certain kind of cash balance target that you might be thinking about over a certain period of time in order to have that treasury in order to fund growth?

Jamie Beck, New President and CEO, Lundin Gold: Yeah, I do not think there is 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. Should we start thinking about putting some engineering studies around that and understanding what maybe our capital needs, then of course, that would be a catalyst for us to think about how that cash balance potentially funds that future growth. I would also say that the fact that the asset is completely unencumbered now allows us to look at what kind of capital strategy might be used for any future growth activities as well. I think we are in a pretty incredible position to have lots of various options available to us should the need for additional funding arise.

Don DeMarco, Analyst, National Bank: Okay, great. Maybe just as a final question, I'll pivot over to the porphyry targets. Both Sandia and Tranquiloma are showing these large mineralized volumes. It's still early, but what's drilling showing you at this point in terms of the continuity of mineralization, maybe potential development approaches? What might the timing be of a first resource estimate?

Jamie Beck, New President and CEO, Lundin Gold: 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. Again, I think I caution that it's still being early days. Sandia, we've got two holes into it effectively. What we see is evidence on surface from soil sampling, evidence from the geochemistry, evidence that we're seeing through the drilling that there's really high potential for this to be quite a significant continuously mineralized envelope. Stay tuned, I think, for results from the drill bit. That's the only way we'll truly find out what's going on.

Don DeMarco, Analyst, National Bank: Okay, great. That is all for me. Thank you for taking my questions, and good luck with the rest of the quarter.

Natasha, Conference Call Operator: Again, as a reminder, if you wish to ask a question, please press star followed by the 1. There are no further questions at this time, so I will now turn the call over to Ron Hochstein for closing remarks. Please continue.

Thanks, Natasha. Thanks again, as I said earlier, thank you all the analysts and investors for your continued support. As I mentioned in the press release, the future is very bright. The company's in very good hands, and I'll be an active spectator going forward. Thanks, everybody, and have a great weekend.

Ladies and gentlemen, this concludes today's conference call. Thank you for your participation.

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