Lundin Gold Inc.

Thank you, Veronica. Good morning, everyone.

And thank you for joining us for our first conference call to report Lundin Gold's quarterly results. All activities were suspended this past quarter.

We think it is important to review what we accomplished during the first half of this year in anticipation of reporting full operating results next quarter. Participating with me today is Alessandro Bitelli, Executive Vice President and Chief Financial Officer.

I'll start with a brief preview of the highlights for the quarter and first half of the year. Following that Alessandro will speak to the financial results, and then I'll give an update on operation at Fruta del Norte.

Afterwards, there will be a time for questions and answers. 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 statement section of our press release. All amounts are in US dollars unless otherwise indicated.

To say that the second quarter of 2020 was challenging is an understatement. And I'm very happy that it is in the past and that we can look forward to two strong operating quarters for the balance of 2020.

That said, a lot was accomplished under difficult circumstances. This quarter was truly unique for Lundin Gold and just about every aspect has great milestones in the first quarter, such as achieving commercial production two months early and on budget are quickly followed by the suspension of operations due to the impacts of the COVID 19 pandemic in Ecuador.

The suspension of operations was driven by fear of the virus in the local and provincial communities near Fruta del Norte. Due to these local concerns, transportation of goods and personnel to site acquired cooperation's became very difficult.

In May, the company worked with the national government to reopen the transportation corridors. It was only then that we were able to restart bringing in supplies to our mine site and shipping concentrate held at site.

In June, following the acceptance of a national protocol for the mining industry, and the implementation of our own protocols, we were able to resume personnel rotations. In Ecuador, the number of cases of COVID-19 are relatively flat with a focus shifting from Guayaquil to Quito.

In the provinces of Zamora-Chinchipe where Fruta del Norte is located, cases remain relatively low by comparison to the rest of the country. Based on the results from our own testing campaign, which is conducted prior to admission this site, about 7% of our employees and contractors are testing positive and cannot go to site.

As of July 31, there have only been six cases of COVID-19 confirmed at Fruta del Norte, all of whom have fully recovered. Over the last six months, the company has been working to support local communities in their fight against COVID-19.

Our support has entailed the purchase of disinfection equipment for local police, army and governments, neighborhood doctor programs, purchase of food parcels for families in difficult economic situations and purchase of medical and PPE supplies for local governments and the Ministry of Health. At site, there is not one procedure that has not been affected by COVID-19.

And Lundin Gold spent the second quarter of 2020 adapting our operations in response to the pandemic. Strict protocols were implemented, which include an offsite quarantine period, followed by a PCR test for all employees and contractors prior to access to Fruta del Norte, mandatory use of PPE, health monitoring, physical distancing, and enhanced disinfection and restricted access to common areas.

Along with implementing COVID-19 protocols, the team that remained at site during the suspension carried out a number of activities. Limited mine development and stroke drilling were carried out to facilitate the restarted mine production.

And maintenance of mine infrastructures such as roads, power, ventilation and dewatering systems was also completed. Production plant maintenance was carried out and we remined the SAG mill as well as other maintenance.

All of this enabled us to resume operations quickly and safely at the beginning of July. Mine and mill ramp up is ahead of schedule.

And I'll provide an update on this later in the call. On the health safety front, the total recordable incident rate for the first half of the year was 0.41 for 200,000 hours work, and there were no recordable incidents during the quarter.

I would like to take this opportunity to again thank everyone at Lundin Gold for their efforts and dedication during these challenging times. Their work and dedication were critical to ensuring a safe restarting of operations.

Now I'd like to turn the call over to Alessandro for a more detailed look at the financial results. Alessandro?

Thank you, Ron. Good morning everyone.

Lundin Gold achieved commercial production in late February and started recognizing revenues on March 1st. Since then, and to June 30th, the company recognized net revenues of $50 million based on sales of 30,906 ounces of gold at an average realized gold price of $1,680 per ounce of gold sold.

This is in addition to 35,208 ounces of gold sold in January and February prior to achieving commercial production. These net proceeds of $52 million were recorded as a credit towards capitalized construction cost.

Effectively, we sold over 66,000 ounces of gold in the first six months of the year, notwithstanding being in a commissioning and ramp up mode early in the year. And we suspended operations in the second quarter.

Of the 30,000 ounces sold between March 1 and June 30, 10,727 ounces of gold was in dore and 20,179 ounces of gold was in concentrate. This includes 20,430 ounces in dore and 4,367 ounces in concentrate that were produced in the first quarter prior to the onset of the temporary suspension and were held at site during the suspension.

Cash operating costs were $876 per ounce for the 4-month period from March 1 to June 30 after the achievement of commercial production. All in sustaining costs for the same period, were $952 per ounce.

We calculate these non-IFRS measures based on gold ounces sold. For reference, all in sustaining costs include operating cost, royalties, corporate social responsibility cost, treatment and refining charges, accretion of restoration provision and sustaining capital all net of silver revenue.

Suspension costs are not included in this calculation. As to our results for the period, I naturally need to emphasize the two unique elements that account for our loss of $73 million in the first half of 2020, suspension costs of $29 million and a derivative loss of $28 million.

Let me first address the derivative loss. This is not a finance cost, and certainly not occurring cash cost.

Rather is the result of the application of complex accounting principles. Two of the three elements of the Fruta del Norte project finance debt, the gold prepay and the stream are accounted for at fair value.

This fair value is linked to specific gold equivalent ounces under the loan and to the gold price and more specifically to the forward gold price. During periods of increasing gold prices like we have now, forecast forward prices will also generally increase.

This combined with a factor for volatility, results in a higher estimated fair value of the debt obligations on the balance sheet and the recognition of derivative losses. It will ultimately result in a higher cost of debt if and only if gold prices remain high at time of loan repayments.

That said, notwithstanding this potentially higher future costs of debt, there is nothing to complain about higher gold prices. These would also increase the amount of revenues that will be generated from production during the same future period when the debt obligation will be repaid.

And this revenue impact given our production horizon will be exponentially greater than their higher cost of debt. As to the suspension cost, they are onetime costs as we have now returned to operations.

They may appear high, but one must consider that we had to carry the wage burden of our full employee base due to Ecuadorian Labor Laws. And that was $30 million over the almost three and half months of suspensions.

In addition, our site care and maintenance programs were very active in all areas from the mine to the plant and ongoing site services as previously mentioned by Ron. We wanted Fruta del Norte to be in the best possible position to quickly and safely restart operations.

And Ron will talk to this next. In addition, with new health and safety protocols in place, we have incurred and for the time being will continue to incur COVID-19 related costs.

Considering that we have yet to fully unpack operations since achieving commercial production and in light of current gold prices, an estimated operating costs per ounce based on forecast production during the second half of 2020, the majority of which we estimate would be sold within the same period, we look forward to very strong operating results between now and the end of the year. As a final note about achieving commercial production, with this milestone, we also commenced recording interest expenses in the income statement, $16.7 million since March 1st while making scheduled principal and interest payment of $14.4 million against our long-term debt.

A final comment as to our liquidity. Despite this difficult quarter our treasury was sufficient to support our activities and meet our existing loan obligation.

As of June 30th, the company had cash of $74 million, which includes $41 million from the financing that closed in early June. This treasury is more than adequate to fund our restart of operations.

And as we move into the fourth quarter and then into 2021, we anticipate generating next sale receipts well in excess of the obligations will be - which will become due in the next 12 months. For a more detailed discussion of our financial results, I refer you to our MD&A.

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

Thank you, Alessandro. As you know, Fruta del Norte restarted its operations in early July.

And so far, things have gone very well. Regular concentrate and glory shipments have restarted and shifts to port Ecuador weekly with concentrate.

In the last month, the mill has processed ore at an average daily rate of 3,250 tons per day while mill recoveries were higher than planned in July. Further optimization still needs to be done in order to reach design levels.

Mine development is also going well. And in accordance with the mine plan we are now extracting one of the high-grade zones, which was converted from drift and fill to grant transfers local scoping.

In July, the mine extracted 25% more ore than planned. With the second quarter in our rear-view mirror as Alessandro alluded to, we're looking ahead and see a bright future for Lundin Gold.

At this point, we are comfortable, reconfirming our gold production forecasts for Fruta del Norte for the second half of 2020 in a range of 150,000 to 170,000 ounces, together with actual production achieved prior to the onsite of the temporary suspension, total 2020 gold production is estimated to be between 200,000 and 220,000 ounces. This is based on an average mill production of 3,200 ton per day, at an average head grade of 10 grams per ton in the second half of 2020.

Average gold recovery is anticipated to be approximately 85% during this time. All-in sustaining costs for the second half of 2020 is expected to range between $770 and $850 per ounce of gold sold.

The gold prices near all-time highs Lundin Gold is well positioned to generate strong operating cash flow in the second half of this year. Work on completing the South Ventilation Raise resumed in June.

Due to a localized ground fall raise had to be filled with concrete. We're now setting up to grout the raise prior to the restart of raise boring.

Despite this setback, we still anticipate being able to use a South Ventilation Raise by the end of the year. We are also currently studying the feasibility of increasing production from the current capacity of 3,500 tons of ore per day.

These studies targeting increased mine and mill production are proceeding well, and we're currently evaluating the potential implementation of these improvements for 2021. We will have more information on this initiative within the next few weeks.

In addition to the potential increase in throughput, we're also planning a resource expansion drilling program, which we anticipate starting late this year. This will be an addition to our regional exploration program.

Finally, I would like to thank Tamara Brown for the valuable service and contributions during her time on our board and wish her all the best in her new endeavor. I would also like to welcome Bob Thiele to our Board, who has replaced Tamara as Newcrest representative.

Bob has over 35 years of operational and corporate project and mining experience and currently serves as General Manager, Technical Services and Business Improvement for Newcrest. Thank you everyone for attending.

And now I will open the call to questions. But prior to opening the call to questions, I do want to mention that Dave Dicaire is also on the line here.

He serves some technical questions. And I just wanted to publicly thank Dave for his commitment and dedication, the incident site since March, I will be heading to Ecuador shortly to give him a bit of a break, but he's been a key player in our excess - successful startup on Fruta del Norte.

So just want to say thank you, Dave for everything you've done. And now Veronica, we'll open it up to questions.

Yes, Ron. I guess a housekeeping question to start.

You talked about the recoveries you're expecting in the second half and obviously that that's going to move up towards your targeted level next year. What's the difference between the 85% you're looking for and what takes you back to 92%?

Thanks, Trevor for the question. Yes, we have made some modifications.

They were small things during suspension, all things such as just improving the flotation reagent distribution and the refer cells. What we think the biggest issue now we need to focus on is retention time in the flotation area, Trevor.

And so we're looking at the configuration of ourselves with the existing bank, we have to try and look at increasing retention. That's probably one of the biggest areas we see right now.

And then another is just tweaking in terms of the CIL and gravity.

So, it's more configuration. It's not as if you - in worst case scenario, would you have to add a bit of capacity for retention?

That's the worst-case scenario that's right Trevor. But we're not talking about full banks, we're talking about just a few cells.

The team's making a lot of progress. And even, we mentioned that recoveries were much better than anticipated in July, even in August, we've seen a 2% to 3% improvement in recoveries.

So, the team are getting more comfortable with everything. So, yes, we're not talking about anything significant.

Okay, understood. And then the only other question I had was with respect to the comments in the MD&A with respect to starting to develop more of the long-haul stopes versus, say cut and fill.

And I was wondering also, as you look at expansion and optimization, is there an opportunity for you, now that you've got some experience with the ground conditions and you're in there, to perhaps move more of the mine plan towards long haul? And would that be something that we would expect to see in some of these technical studies that you have underway?

Yes, Trevor. The 2020 life of mine plan that we've published for this year's budget, we still had drift and fill.

So, we will see the opportunity, particularly in this one area that we're in right now. And that's a fairly significant area, and we will be converting that to long haul stopping.

So, we will start to see that those economies in 2021 life of mine plan. In terms of the other drift and fill areas, they are deeper at different parts of the mine.

So, until we get down there, we won't know whether we can convert or not.

Okay, no problem. Fingers crossed.

Thanks, Rob.

Yes.

Thanks, operator. Ron or maybe Dave, do you have your man power at the site now at the levels that you need?

Are you at full capacity with your employees? Or are you still needing to add a few people because you have people to 7% that can't come to work basically?

Dave, if you want to go ahead and answer that, because you've better feeling over staffing plans?

Yes, thanks, Kerry. We are staffed up to be able to fully operate.

We do have as part of our original ramp-up plan, more mine operators and people coming on into mine. So, we're in the process of recruiting those.

We have a small percentage that are working from home office administrative, technical type, that don't need to be on site. But right now, we have about 700 people on site and we're adequately staffed and we probably need to add about another 100 to 150 people over the next couple months.

But it's not an issue of recruiting, it's just meeting the ramp up schedule and the mine requirements.

Okay, so…

Kerry, just to add to that, it was one thing we kind of learned early on is, when you're looking at your staff then you do have to allow now for these potential positive cases. And you may have to bring more people on when you do lose, some people come up positive.

So it was part of the learning experience early on.

Right. And so you're not expecting any issues to hire this extra, call it 150 people?

I guess a lot of them are - they're not tradespeople, they're operators, I guess or they are laborers?

Dave, do you want to answer that?

That's combination of operators, labors, tradespeople. And we're finding the markets right now for recruiting very capable.

We have done a significant amount of recruiting in the last couple of months and we're finding a lot availability in country and in the region to fill the positions.

Okay, great. And then Ron, I don't know.

Can you comment about the actual recovery that you realized in July, just so I can benchmark it against the 85% that you're expecting for the second half?

The numbers - the preliminary numbers that we've got, we were in the 82%, 83% range, Kerry, when our original plan was 70%. So yes, the team there doing jobs, but still more work to do, but we're getting there.

Okay, that's great. That's all my questions.

Thank you.

Thanks, Kerry.

Hi, Ron. Thanks for taking my question.

Just curious if you could walk me through a little bit what permitting might look like for an expansion, would just be an amendment to existing permitting? I realize you'd be kind of trailblazing there a little bit too.

So can you tell me a little bit about that?

Thanks for the question, it's a good question. Yes, we are trailblazing.

We're working as we've done from the start with Fruta del Norte. We're having to work hand in hand with the governments.

Obviously, what we're showing is that the - we're looking at this as sort of a two phased expansion. First phase potentially impacting 2021.

Our initial results from our internal studies and everything show there really are very insignificant impacts. And that's what we've started the discussion with the appropriate ministries regarding that.

And initial indications are that this would just be essentially showing no significant impact and it would be just an approval from the Ministry of Environment to move forward and then filing with the Ministry of Mines, the appropriate revised work plans. The higher phase two in that may require some amendments to our environmental management plan.

But at this point in time, based on what we're seeing, we do not see a need to do an EIA or anything like that based on the scope and the impacts of the expansions.

Okay, thanks. And just one other.

Would you be looking at adding any more cushion in terms of financing in the next six months or so or in near term with coal prices high? But I understand you said basically you're banking on cash flow to be sufficient to cover your needs.

Any thoughts there?

Alessandro, do you want to take that one.

Sure. The answer is quite simple, obviously, we have $74 million in the bank.

And we expect that to be quite adequate to satisfy our short term needs as we restart operations. Cash flow will take care of the rest.

We have no immediate plans to raise additional funds at this point in time.

All right. Thanks, Ron and Alessandro.

Okay, thanks, Veronica. Once again, thank you everybody for attending our first quarterly call.

And as always, if there are further questions, please feel free to contact either myself or Sabina. And again, thank you, everybody.

Be safe, be healthy, and have a great day. Thank you, Veronica.