Key Points
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Record Q3 productionreached about 154,000 ounces, supported by record mining and processing volumes and higher-grade ore. Lundin Gold expects production to moderate in Q4 but remains on track for its 2026 guidance of 475,000–525,000 ounces.
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The company generated $331 million in free cash flowand ended the quarter with $574 million in cash. Its $1.14-per-share dividend represents 100% of normalized quarterly free cash flow.
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Lundin Gold expects to decide in Q4 whether to proceed with an integrated mine and mill expansion; it also reported a new gold discovery at Quebrada Dorada. A dispute with Ecuador over a sovereign adjustment remains unresolved, with mediation likely early next year.
Lundin Gold (TSE:LUG) reported record third-quarter gold production of approximately 154,000 ounces, helped by accelerated mining and higher-grade ore accessed earlier than planned. The company said output would moderate in the fourth quarter but that it remained on track to meet its full-year production guidance.
President and CEO Jamie Beck said the company also expects to make an investment decision in the fourth quarter on an integrated mine and mill expansion, after advancing engineering and preparing capital estimates for development at FDNS.
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Production for the first nine months of 2026 totaled approximately 392,000 ounces. Chief Operating Officer Terry Smith said Lundin Gold remained on track to meet its annual guidance of 475,000 to 525,000 ounces.
Record throughput and strong cash generation
Smith said the company mined a record 555,000 tons and processed a record 535,000 tons during the quarter. The mill averaged about 5,800 tons per day, with an average head grade of 10.1 grams per ton and recoveries of just over 88%.
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Fourth-quarter production is expected to ease as grades normalize with the mine sequence and following a planned process plant maintenance shutdown completed in early October, executives said.
Chief Financial Officer Chester See said third-quarter revenue was $633 million and income from mining operations was $468 million, based on sales of 148,000 ounces. Year-to-date sales have trailed production because of shipment timing, and the company expects to sell the majority of those ounces in the fourth quarter.
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Cash operating costs averaged $862 per ounce, while all-in sustaining costs averaged $1,037 per ounce, producing an all-in sustaining cost margin of approximately 76%, See said. Operating cash flow was $377 million, and free cash flow was $331 million, or $1.37 per share. Lundin Gold ended the quarter with $574 million in cash and $477 million in working capital.
Dividend and expansion decision
The board declared a third-quarter dividend of $1.14 per share, comprising a fixed payment of $0.30 and a variable payment of $0.84. See said the dividend represents 100% of normalized quarterly free cash flow, above the company's policy minimum of 50%. It is payable December 23 to shareholders of record December 8.
Beck said Lundin Gold returned $261 million through cash dividends during the quarter, bringing the year-to-date total to $832 million, excluding its LunR equity dividend. The company also repurchased 49,500 shares for $3 million during the quarter.
Smith said the planned expansion decision will consider optimized mining rates at FDN and FDNS alongside increased processing capacity. The company expects to provide capital cost and timing details after the decision.
Asked about the potential for further expansion, Beck said the contemplated project would bring the operation close to what management considers the limits of underground material movement and the plant's SAG mill. Further expansion would be more challenging and would probably require a significant new discovery, he said.
Exploration and sovereign adjustment
Beck said Lundin Gold discovered a new epithermal gold deposit, Quebrada Dorada, which he said doubles the strike length of the identified epithermal gold trend from four to eight kilometers. Two rigs are drilling at the deposit.
Drilling also advanced at FDNS, FDN East and Bonza Sur. Beck said Bonza Sur results confirmed discrete higher-grade veins within a larger disseminated zone, providing potential for underground development. Lundin Gold plans to release a maiden mineral resource estimate for its Sandia copper-gold porphyry deposit in early 2027.
In response to an analyst's question about the sovereign adjustment, Beck said Lundin Gold and the Ecuadorian government differ on aspects of the calculation. He said the company is prepared to pay the adjustment but wants the payment to align with its agreements. Mediation is likely to begin early in the new year, he said, while declining to provide a timeline for resolution.
About Lundin Gold (TSE:LUG)
Lundin Gold, headquartered in Vancouver, Canada, owns the Fruta del Norte gold mine in southeast Ecuador. Fruta del Norte is among the highest-grade operating gold mines in the world. The Company's board and management team have extensive expertise and are dedicated to operating Fruta del Norte responsibly. The Company operates with transparency and in accordance with international best practices. Lundin Gold is committed to delivering value to its shareholders through operational excellence and growth, while simultaneously providing economic and social benefits to impacted communities, fostering a healthy and safe workplace and minimizing the environmental impact.
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The article " What Lundin Gold (LUG) Said on Its Q3 Earnings Call " was originally published by MarketBeat.
