Lundin Gold (TSE:LUG) said its Fruta del Norte mine delivered steady operating results in the second quarter of 2026, producing approximately 119,000 ounces of gold and keeping the company on track to meet its full-year production guidance.
President and CEO Jamie Beck said the quarter was expected to be the company’s lowest-production period of the year. First-half production totaled about 239,000 ounces, representing 48% of the midpoint of Lundin Gold’s full-year guidance range of 475,000 to 525,000 ounces.
Operations and costs
Chief Operating Officer Terry Smith said Fruta del Norte processed ore at an average head grade of 8.3 grams per tonne during the quarter and achieved recoveries of slightly more than 89%. The plant averaged approximately 5,500 tonnes per day, consistent with the company’s annual throughput guidance.
Smith said June was a stronger month, with the mill averaging closer to 6,000 tonnes per day. However, he clarified during the question-and-answer session that Lundin Gold continues to guide for an average of 5,500 tonnes per day over the balance of the year.
The company recorded zero lost-time injuries and two medical treatment incidents during the quarter, Smith said.
Cash operating costs averaged $1,016 per ounce, while all-in sustaining costs were $1,176 per ounce. Chief Financial Officer Chester See said the company generated an all-in sustaining cost margin of about 73%.
Beck said the company is working to improve recoveries by classifying ore into more distinct ore types and improving blending practices. He added that projects being evaluated as part of the company’s mine-to-mill expansion study could also support future recovery gains.
Cash flow, dividends and LunR transaction
Lundin Gold reported net revenue of $478 million and income from mining operations of $337 million for the second quarter. Adjusted earnings totaled $202 million, or $0.84 per share, while adjusted EBITDA was $347 million.
Free cash flow was $96 million, or $0.40 per share, after annual tax and statutory profit-sharing payments totaling $221 million. See said those payments were higher than in the prior year because of the company’s financial performance in 2025.
The company generated $125 million in operating cash flow during the quarter and ended the first half with $507 million of cash and $445 million in working capital. Cash generated by operating activities totaled $495 million in the first six months of 2026.
Lundin Gold returned $293 million to shareholders through cash dividends in the second quarter and $571 million during the first half. The board declared a quarterly dividend of $1.08 per share, comprising a $0.30 fixed dividend and a $0.78 variable dividend. The dividend represents 100% of normalized free cash flow for the quarter and is scheduled to be paid Sept. 25 to shareholders of record on Sept. 10.
The company also completed its previously announced silver stream-for-equity transaction with LunR Royalties, distributing the proceeds to shareholders as a dividend in kind. See said Lundin Gold recorded a one-time, non-cash fair-value loss of approximately $75 million on LunR shares received and distributed, offset by a non-cash gain of about $127 million from revaluing the silver stream obligation.
He said future revaluations of the silver stream obligation could cause quarter-to-quarter volatility in reported earnings, primarily based on silver prices and long-term production and mine-plan assumptions. Lundin Gold also intends to begin purchases under its normal course issuer bid in the near term.
Expansion and exploration work advances
Lundin Gold said its mine-to-mill expansion study remains on track for completion by year-end. The study is evaluating sustained higher throughput rates and the integration of the Fruta del Norte South, or FDNS, deposit into the mine plan.
During the quarter, the company completed 370 metres of underground development at FDNS from the south portal and from the 1170 level at Fruta del Norte. Development toward the FDN East ore body began in July to provide access for conversion and exploration drilling.
Beck said higher throughput in the future is intended primarily to help sustain the company’s production profile as grades move closer to reserve grade later in the mine life, rather than to create a major increase above its approximate 500,000-ounce annual production level.
Exploration drilling at FDNS continued to demonstrate continuity of high-grade zones, with reported conversion-drilling highlights including 6.9 metres grading 199.9 grams per tonne of gold and 4.5 metres grading 196.8 grams per tonne. At FDN East, the company reported an interval of 4 metres grading 236.6 grams per tonne of gold, including 1 metre grading 933 grams per tonne.
The company also reported the discovery of two additional copper-gold porphyry centers, bringing the property total to seven. At the Sandia target, Lundin Gold said it expanded the deposit footprint and extended higher-grade mineralization northward. The company plans to release a maiden mineral resource for Sandia in early 2027.
Beck said Lundin Gold had completed approximately 54,000 metres of its planned 133,000-metre drilling program for 2026 and expects regional exploration activity to increase in the second half of the year.
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.
