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Lundin Gold

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September 16, 2024 at 11:00 AM (MDT)|Broadmoor Hotel & Resort

Ron Hochstein

President & CEO

Ron has a wealth of experience in the mining industry. Mr. Hochstein has worked for the Lundin family directly and as a consultant for over twenty years. Prior to becoming President and CEO of Lundin Gold, Mr. Hochstein served as President and CEO of Denison Mines Corp. (TSX, NYSE MKT) for seven years, having joined a predecessor company to Denison in 1999. Earlier in his career, Mr. Hochstein was a Project Manager with Simons Mining Group and worked at Noranda Minerals as a metallurgical engineer. Mr. Hochstein has a B.Sc. in metallurgical engineering and an MBA. Mr. Hochstein became President and Chief Executive Officer in 2014 and was instrumental in the acquisition of Fruta del Norte.

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Our next presentation is from L Gold. Presenting today is Ron Hochstein, the company's president and CEO. I don't see the company here. So just bear with me for one second and we'll bring up LG. OK. As mentioned. Our next presentation is from Lending Gold Presenting today is Ron Hochstein, the company's president and CEO. Great. Thank you very much. Sorry for being a bit late and stuck with an investor. Thank you for taking the time to hear a little bit about the London Gold story. Actually, we're just coming up on 10 years of being in the country, December 2014 is when we signed a deal to purchase this asset from Kinross. I will be making some forward-looking statements, but really, it's been another strong year 2024. Shaping up to be a good 1. 2023 we met our guidance. We continued to pay down our debt. We generated free cash flow of just over 260 million paying dividends and continue through our conversion drilling program to replace ounces and grow the resources for 2024 Our guidance is 450 to 500,000 ounces. We're well on our way there expanding the plant. We are now as of the end of June debt-free with the buyback of the stream from Newmont. And we announced just recently where we are going to be doubling our dividends from 10 cents a share to 20 cents a share. So for the first half, we produced just under 245,000 ounces. You can see mill throughput has continued to increase through the bottle KN K. And overall it was a good Q two and a good first half. And we're well on our way to meeting our guidance, we are one of the lowest pure cost gold operations today through Q two, we are $875 all in sustaining for the first half, 877. So it's continued to show that this operation. Part of it obviously is great, but part of it is Ecuador. We're not seeing the inflation that many other countries in South America. Us Australia are seeing, our power is connected to the grid. So we are not seeing and it's mostly hydro, so we're not seeing increases there. And I think the big thing where a lot of companies are facing cost inflation in those other countries is due to wage inflation. Mining is a new industry in Ecuador. We are the first Western responsible mine operating. And as a result, we, the wage pool is quite large and people want to come work for the mining industry. So we're not seeing that wage inflation, like many other companies are seeing here's our 24 guidance. As I mentioned, we're well on our way to meeting that guidance both from an all and sustaining and, and production 25 and 26. You see here, we will be updating that that in a couple of months, but generally don't anticipate significant changes for 2526. Then we'll be announcing 2027 guidance as well. I mentioned with those costs and that production, we're generating a lot of free cash. So last, just the last half, we generated just under 200 million in the first half and last year was 260 million. So we're on track again to this, this now that the debts paid off to even generating more free cash flow. So what are we doing to continue to create that value for shareholders through generating cash and focusing on operations and growth with regards to operations. The key is operational excellence. So again, we are always focusing on costs, always looking at trying to bring our costs down. But we also have our second expansion under way to take us from 4500 ton per day to 5000 ton per day. And we're putting in a new technology for us. It's not new technology in the industry. Jake Jamison sells, the cells are on site where steel's going up. Our issue to date has been more been our recoveries have been lower than anticipated because we're losing the gold, they very fine grain sulfides. These Jamison cells will be the answer for that. So we anticipate a significant improvement in our recoveries. In addition to throughput debt repayment has been a key focus I mentioned. As of the end of June, we're now debt-free. We made the decision first at the beginning of last year to pay down the gold prepay gold prices at that point were around $1800 an ounce. So that has been a very positive decision to get rid of that at that price versus today's prices. Then at the end of last year, our debt was down to 72 million. So we paid it off in full without any penalties. And then with the acquisition of Newcrest by Newmont, it provide us with the opportunity to approach Newmont about would they be interested in essentially selling the entire stream? We had under the agreements, the right to be able to buy 50% of it in June of this year for 100 and 50. But we approached them and they said, make us an offer which we did. And as a result, now we've been able to buy the whole stream and the offtake for 330 million. And as a result now are debt free. Next decision we made is let's take some of that cash. We used to be paying our debt holders and return to shareholders. So as I mentioned earlier, we were paying a dividend of 10 cents per share per quarter, which was roughly 100 million annually. And we made the decision now to double that to 200 million. So 20 cents per share per quarter, which puts us as one of the better yielding gold stocks in the industry. Today, we get questioned a lot. Why didn't we do a flexible dividend tied to cash flow percentage of cash flow or gold price or something? But our philosophy has been, we will do something that's sustainable. So say we do something on the M and a front issue, more equity. We can still pay this dividend, supposed the gold prices fall significantly. We can still pay this dividend. We still have significant cash flow to pursue growth and pay this dividend. So for us, that was the key is to be able to say to our shareholders that this is a sustainable level and still give us a lot of opportunities. One of those opportunities for growth is exploration. You have to remember that this land package was put together by a lion back in the early nineties and they started drilling in the late nineties and in 2006 discovered Fruta Del Norte, but they had limited budget and they had a lot of surface work. There had been very little exploration done in this whole area. So they had a lot of surface work they did and then they started drilling and they hit Fruta Del Norte on whole 51. Well, the thing is, you know, it's like dogs chasing a ball or something like that. You go squirrel and they all just right away, focused on fruit and rightly. So Fruita today is arguably still one of the best gold discoveries in recent history. Kinross acquired a re and then in 2008 and obviously they did it for Fruta focused on Fruta. We acquired it in 2014. Our focus was on building Fruta. So this very large land package of over 60,000 hectares in a very prospective area has actually seen very little exploration. So we currently have three programs conversion which is focusing on the resources near mine in and around Fruta. And our regional program, which to date has been focused on the Suarez Basin. We are now drilling the largest program ever done on this land package and close to 80,000 m this year. When you compare conversion near mine and the regional program, our conversion program has shown some great results. We are going to be updating our mineral reserves in Q one of next year. But if we look at what we did, we were able to do last year. After a couple of years of conversion drilling, we not only replaced all the depleted ounces but increased our reserves and we're continuing that conversion program through this year and our reserves are just a small portion of our overall resources. So there's still a lot of opportunities to bring more reserves in to replace depletion. Here's some, some of the drilling we've done this year. We've really focused on the, the southern but the northern extension, this part hadn't really been drilled before and it's essentially very near our existing workings. And we've had some very good results like 77 m at 6.95 g per ton, 69 m at 8 g per ton. It's really opened up that northern part and this is was in with the original resource envelope, but I'm going to allow us to bring those resources into reserves. You can also see we've extended to levels the 1011 70 the 1080 quite a ways out to the south that's enabled us to drill those Southern resources which you can see in the blue from those declines much more efficiently. So currently, we have 11 rakes turning eight surface and three underground. Two of the underground are drilling on conversion. They'll be finished by the end of this month and they'll then move to exploration underground and the eight surface rakes, most of them are for half of them are focused on Bonzo sur which I'm going to talk about shortly and then the others are on FDN East FDN North. So in and around Fruta Del Marte, this is arguably one of the largest exploration programs in South America today. Other part of interest here is the south portal. This was a portal that Kinross had started. They were originally going to come into the ore body from the south and anticipated being able to get access to the ore sooner and, and help their development schedule. We're now dewatering that portal to be able to use that potentially for ventilation but also exp drill stations for exploration. Let's look now at the near my program. So here you see the graphic, you can see where the plant currently is. The tailings should be about four kilometers to the west. You see our quarry which is just below the FDN depth extension and camp, which is just right next to Bonza se but you can see the work that we're doing in and around through to Del Norte. So to the east, these are some drill, we're hitting new veins further to the east and I'll talk a little bit about Geophysics program that we've just completed F DNS is within the current resource envelope. But we're finding that the mineralization to the south is changing. Fruta is very much a brea work stock work system as we go south, it's becoming more like a traditional epidermal with some of these several vein structures at very high grades. And then as we move further to the south, we've hit Bonza Sewer. The reason we drilled at Bonza. So where there were 12 gold surface anomalies that had been identified by Kinross but never drilled. This was the first one that we decided to drill. We put our first hole in Bonza. So in January of last year, and we're anticipating, being able to put a resource estimate together and a pe within a year, this is F DNS. So you can see that it is essentially still part of the existing reef, but it's very different from Fruta Del Marte. So this will be kind of a new evaluation of this Southern resource. But you can see some pretty spectacular grades here, 4 m at 5 g 9 m at 7 g including 2 m at 29 and 30 m at 27 g per ton. This is, it's a different structure but extremely interesting. And this could be part of our, our resource estimate that we put out in Q one as part of FDN or may get added a little later. But again, you can see that it's going to be very easy to access this from our existing workings. Then you look at FDN East, we're not that far to the east. And again, some very interesting intersections here and this, we're drilling from both surface and underground that at depth. There's a lot of opportunities. We're seeing that everyone thought that FDN was cut off at depth. And what we're seeing is we're drilling our conversion program. We're seeing that these reso these higher grade resources are extending further to depth. So we're drilling now outside of the resource, anomaly with one of those underground rigs. So there's a lot of opportunities just with around FDN. But then when you include Bonza Sewer and others, this is what we're very excited about about the or granite organic growth opportunities for lending gold in this area. This is a long section of Bonzo Sewer. The gap there in the middle is because there's a bit of a creek that runs through there. So we haven't drilled there. We're drilling there now, but you can see some very high grade intercepts and that this is right on surface. This is a little, this is different than FDN, which was buried. So this is right at surface and this is something we're looking at. Now. We're having a session at the end of October of the team to bring together to do a bit of a blue sky session. What does Fruta Del Norte camp look like in five years? And this could possibly be a new open pit operation. The metallurgy here is different, very good recoveries on floatation probably wouldn't need Ac Il Circuit. So it's much simpler and this potentially could be the next step change for lending gold in this area. Currently, I believe we have four or five of our surface rigs drilling this right now to drill this out in preparation of being able to put together a resource estimate in next year. And then the regional program, this is just showing all the work that's been done to date, but very little exploration. Again, we're just scratching the surface of what we're seeing at Fruti Del Norte. And in the large land package I mentioned earlier, the Geophysical Survey, first time this has been done over this area. Again, everyone focused on fruit and started drilling and you can see just to the east, some very interesting anomalies, some near surface. So some great opportunities for us to further explore to the east. This is what we continue to look for is this triangle to populate this triangle and move things to up on both sides. We've kind of put this together as to broker this triangle out now and to maximize FDN and the FDN system or district. And now we're trying to really try to push both sides up to sort of continue to expand FDN but create further growth opportunities. Part of our success at Fruta Del Marte was the culture of the lending group. This isn't just lending gold, this is part of the culture of the entire group of the lending companies. And that is ESG focus focus on local hiring, local procurement, health and safety and doing things to generate wealth for the local communities. This is our current sustainability strategy and our eight pillars that make up that strategy. We have KPIS for every year and for the five year strategy for all management, including myself. And this is what we're starting to see in Ecuador and what the government in Ecuador are seeing. This is just for 2023 we produced just under 482,000 ounces at over 900 million in exports. Remember, Ecuador is a US dollar exports are extremely important to create, to generate those US dollars. We had 3100 employees direct and indirect Zamar in Chip, the province we're in now has there's two mines operating, there's a Chinese mine to the north of us. It used to be the Old Oriente Meridor and they now are expanding from 60 to 100 and 40,000 ton a day. So Z March and Chip has only the two only real large mines operating. So March and Chip has gone from one of the lowest average salaries, average salaries for the province to number two. In 2023 greater multiplier effect. 201 million procurement just in Ecuador, 110 million paid to the government in terms of royalties, taxes, et cetera. In total. A very important program is showing the Ecuadorian government what responsible mining can mean? Meridor and Fruta Del Norte are now the number combined are the number four taxpayer in the country. So in closing as with every lending group company, we are focused on shareholder value, creating shareholder value, not just for the Lund family, but for all shareholders. Next year, I will have worked 30 years for the family. And the reason I've stayed that long is because of their dedication to the minority shareholders. How do we do that? Operational excellence? It's a great our body. We can't rest on our laurels. I'm so proud of our team at sight because every time I go to site, I was just there last week, I always hear about areas where we can further reduce cost or improve productivity to ultimately reduce cost to produce more ounces by doing that. We're generating significant cash flow. We've got rid of the debt holders. Now we're returning that capital to shareholders and still be able to pursue. I think as you've heard some very exciting growth opportunities and none of this would be possible without the strong ESG culture that has been instilled in the lending group from the very start a off lending on that close. I don't know if we have time for any questions or Ron. Thank you very much for the presentation. Thank you. Thank you, everyone.


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