Lundin Gold Inc.

Thanks, Sylvie, and good morning, everyone. I hope you're all safe and healthy wherever you may be.

Thank you for joining us on this conference call today, where Alessandro Bitelli, Executive Vice President and Chief Financial Officer, and I are going to take you through our results for the fourth quarter and full year 2020. To begin with, I will provide an overview of our fourth quarter and full year 2020 achievements followed by an update on operations at Fruta del Norte.

Alessandro will then discuss our financial results in more detail before I finish things off by discussing several key value-driving catalysts to keep an eye on in 2021. After this, we will open the floor for questions.

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.

Before discussing our fourth quarter and full year 2020 results, I would like to first talk about the challenges the company faced this year and how the company shaped its strategy in response to the COVID-19 pandemic. Throughout 2020, Lundin Gold has continued to invest in local development with a wide range of partners.

But due to the COVID-19 pandemic, priority shifted early in the year. Since March 2020, our focus has been on direct COVID-19 response and mitigating its impacts on local communities.

From the beginning of the pandemic, Lundin Gold has worked closely with political and health authorities at the national, provincial and local levels and has contributed to the response effort through a variety of donations and investments. A few examples of these include medical supplies donated to local hospitals, disinfection equipment to local authorities, transportation services for doctors to reach rural areas, and food support for vulnerable groups.

These efforts to help our local communities were amplified through our communication campaign ran during the year in conjunction with local government to promote COVID-19 protective measures in communities. Together with local communities, Lundin Gold has long-prioritized actions to improve the quality of local education.

Unfortunately, as a result of COVID-19, local schools have been forced to close and have not yet reopened. Local Internet infrastructure is quite weak outside of large communities, and many families also struggled to provide children with required devices to access the Internet.

Lundin Gold, therefore, developed a response, together with the local education authorities, the national government and local stakeholders, towards which the company contributed - will contribute more than $500,000. In line with this, all children enrolled in a local school will be provided a tablet while teachers will be training to use tablets to deliver lessons, assign homework and review each student's progress.

Not only this but Internet capability at the local school in Los Encuentros will also be improved, and rural communities that currently lack Internet access will be connected. Each community will have a free WiFi connection point, and the national telephone company will provide discounted rates for individual connections.

We continue to work on this ongoing project and look forward to providing updates on its development and rollout throughout 2021. Open dialogue is essential for Lundin Gold to understand local priorities and challenges and to integrate a wide range of partners into local planning.

Regular meetings of community roundtables have played an important role in facilitating our dialogue with local stakeholders over the last 5 years. In February 2020, the pandemic impacted this essential tool when face-to-face meetings could no longer take place.

Out of necessity, the company adopted more challenging bilateral engagement with stakeholders. I'm happy to report that through the implementation of protocols, in December 2020, the multiparty community roundtable process recommenced with the local government now taking the lead.

Two full sets of roundtables have been held, and participation, with many participating virtually, has been strong. The topics represent the priorities of local communities, such as local employment, local procurement, infrastructure, agricultural development and environmental stewardship.

This form of participatory dialogue is an important facet of our sustainability strategy. Now let's shift to FDN.

The health and safety of personnel on site is of utmost importance at Lundin Gold, and stringent protocols remain in place at Fruta del Norte to minimize the impact of COVID-19 on the workforce. To date, only 34 cases have been identified at site, with no cases identified since August of 2020.

On the safety front, 2 lost time incidents and 5 medical aid incidents were reported during the year. And the total recordable incident rate for 200,000 hours worked was at a low 0.41.

2020 was a year of 2 parts for Lundin Gold. In the first half of the year, Fruta del Norte operations ramped up, and we declared commercial production in February, ahead of schedule.

Unfortunately, less than 1 month later, operations were temporarily suspended in response to the COVID-19 pandemic. On July 1, mining and milling restarted at site with strict COVID-19 protocols in place.

And since then, Fruta del Norte has achieved excellent results, highlighted by the production of 191,080 ounces and sale of 168,345 ounces of gold at an average all-in sustaining cost of only $740 per ounce of gold sold. As a result, both gold production and all-in sustaining costs exceeded our second half 2020 guidance of 150,000 to 170,000 ounces and all-in sustaining cost of $7.70 to $8.50 per ounce.

Furthermore, late in the second half of 2020, Lundin Gold made 2 key announcements. The first was our plan to expand throughput at Fruta del Norte from 3,500 tonne per day to 4,200 tonne per day.

We expect to reach the higher throughput rate through the mill in Q4 of this year. Additionally, we announced an 8% increase of probable mineral reserves for Fruta del Norte to 5.41 million ounces as compared to the probable mineral reserves as at December 2019.

This next slide lists some of our operational achievements during the fourth quarter and 2020 operating period, which ran over the 10-month period from March 1, 2020, following declaration of commercial production, to December 31. The mine continues to operate according to plan, 350,474 tonnes of ore were mined in the fourth quarter.

And a combined 672,906 tonnes of ore were delivered to the plant for stockpiles during the 2020 operating period. Alongside this, underground mine development is progressing well, and 2.2 kilometers of development were completed during the quarter, bringing total development during the 2020 operating period to 4,808 meters, well in line with our plans.

Very importantly, we've been able to convert a significant portion of key high-grade areas from drift and fill mining methods to long-hole stopping due to good ground conditions, reducing our associated costs and increasing productivity. The mill also operated particularly well throughout the year, exceeding our expectations in most areas.

During the 2020 operating period, the mill operated an average throughput of 3,448 tonnes per day, resulting in 724,007 tonnes milled. While during the fourth quarter, average throughput totaled a robust 3,665 tonnes per day, processing 337,146 tonnes of ore.

The average grade of ore milled in the fourth quarter was 10.1 grams per tonne and 10 grams per tonne during the 2020 operating period. Average recovery has been improving throughout 2020.

Recovery averaged 87.2% over the 2020 operating period, while 88.6% was reported in the fourth quarter, higher than previous periods. We continue to fine-tune primarily the flotation circuit to improve recoveries as we mine and process different types of ore.

Fruta del Norte produced 202,830 ounces of gold comprised of 133,153 ounces of concentrate and 69,677 ounces as doré during the 2020 operating period. 96,830 ounces of gold were produced in the fourth quarter, consisting of 56,900 ounces in concentrate and 39,930 ounces as doré.

Effectively, Fruta del Norte delivered another strong quarter to close out 2020 with grades mined, recoveries and average throughput all better than expected. Overall, Fruta del Norte has exceeded operational expectations.

And as a result, we were able to beat our second half of 2020 guidance across all metrics. I'm very proud of the operational results the team has achieved since operations restarted in July and believe that exceeding the upper end of our gold production guidance at a cost less than the lower end of our ASIC guidance is a testament to the hard work and dedication of the Lundin Gold team.

With the first year of production now behind us, the company is focused on delivering strong operating results again in 2021 by continuing to optimize our operations, still under strict COVID protocols. For 2021, gold production at Fruta is estimated to be between 380,000 to 420,000 ounces.

Mill production is estimated at an average rate of 3,500 tonne per day until the fourth quarter when production is expected to ramp up to 4,200 tonnes per day, following completion of the planned mill expansion. The head grade is estimated to average 10.4 grams per tonne, with variations expected during the year as these sections of the ore body are mined.

And average mill recovery for the year is estimated at 90%. Our 2021 all-in sustaining cost is expected to range between $770 and $830 per ounce of gold sold, including ongoing COVID costs estimated at $27 per ounce.

Sustaining capital expenditures of $32 million include 2 raises of the tailings dam, the underground resource expansion drilling campaign, and other onetime improvements at the mine site, some of which had to be deferred to this year due to COVID-19. Before I hand over to Alessandro, I'd like to highlight 2 ongoing construction projects.

First, construction of Lundin Gold Zamora River bridge has commenced with strict COVID-19 protocols in place to minimize health risk to the nearby communities. The bridge is expected to be completed in the second quarter of 2021.

Also, redrilling of the South Ventilation Raise pilot hole continues. Progress is slower than anticipated, but we are still confident of achieving completion in Q2 of this year.

Completion is not expected to impact current mine production or future production plans but is required to achieve expanded mining rates. Now I'd like to turn the call over to Alessandro for a more detailed look at the financial results.

Alessandro?

Thank you, Ron, and hello, everyone. 2020 marked the start of mining operations at Fruta del Norte, which resulted in net revenues of $358 million based on sales of 199,000 ounces of gold, consisting of almost 137,000 ounces of concentrate and 62,500 ounces of doré at an average realized gold price of $1,866 per ounce.

After deducting cost of goods sold of $116 million, the company generated income from mining operations of $172 million. It is important to remember that revenues and net income from mining operations for 2020 were limited to the period between March 1 following declaration of commercial production and December 31, which we refer to as our 2020 operating period.

In addition, operations were significantly impacted by the suspension of operations for the entire second quarter of 2020 due to the COVID-19 pandemic. Net revenues achieved by the company in the fourth quarter totaled $189 million, resulting from 106,190 ounces of gold sold, consisting of 70,540 ounces of concentrate and 35,650 ounces of doré at an average realized gold price of $1,850 per ounce.

Cost of goods sold during the quarter totaled $94 million comprised of operating expense of $55.5 million, royalties of $11 million and depletion and amortization of $28 million. As a result, income from mining operations during the quarter was $95 million.

During this first year of commercial production, the company generated significant cash flow notwithstanding operating for effectively only half of the year. During 2020, cash flow from operations was almost $114 million, driven by a strong fourth quarter financial performance, during which the company generated cash flow of $95 million after reaching normal operating levels of working capital in the third quarter following the restart of operation in early July.

The operating cash flow generated in the fourth quarter represents a significant proportion of the full year total or more specifically $0.41 per share out of $0.50 per share achieved during 2020. The cash flow achieved during this fourth quarter shows the significant steady-state cash flow generative potential of Fruta del Norte over its current 14-year mine life at current gold prices.

Cash operating cost per ounce of gold were $627 and $667, respectively, for the quarter and for the 2020 operating period and include operating expenses, royalty expenses from March 1, 2020, after achievement of commercial production. All-in sustaining cost per ounce of gold was $747 and $773, respectively, for the quarter and the 2020 operating period.

For both cash operating cost and all-in sustaining cost, higher-than-planned recovery rates combined with the processing of high-grade ore during the fourth quarter contributed to these good results. We calculate these non-IFRS measures based on gold ounces sold.

For reference, all-in sustaining costs include operating costs, royalties, corporate social responsibility costs, treatment and refining charges, accretion of restoration provision, and sustaining capital all net of silver revenue. I cannot end the review of 2020 operating results without referring to the impact of increasing forward gold prices and market yields on the fair value of our gold prepay and stream facilities.

Under the complex accounting principles applied to these debt obligations, the much higher forward gold prices compared to the previous year, resulted in the company reporting a large noncash derivative loss in the streaming of operations. At the same time, the higher yields affected the company's risk-adjusted discount rate, resulting in an offsetting and similarly leveraged noncash derivative gain, this one reported in the statement of other comprehensive income.

After accounting for the repayment made in the year, these opposites and individually large noncash derivative impacts resulted in a much smaller net $10.5 million increase in the fair value of this debt obligation during 2020. The fair value accounting for these debt obligations creates significant volatility in the amount of the gold prepay and the stream facilities every period, reflected in noncash derivative gains or losses in the statement of operations and other comprehensive income.

However, I want to highlight 2 key concepts tied to commodity prices: First, actual debt repayments are based on a set number of balances multiplied by the gold or silver prices at time of repayment. Therefore, high future gold prices will result in higher debt repayment obligation, and this is reflected in the current high fair values of these facilities.

Conversely, decreasing future gold prices will result in lower future debt obligations with an expected reversal of derivative losses booked to date. Now there is an often-overlooked flip side to this when analyzing our debt on the balance sheet.

The same projected high future gold prices, if realized in the future, would in parallel also generate high revenues based on expected future production at Fruta del Norte. This would result in a potentially significant positive effect on the company's future cash flow and earnings during the repayment period of these obligations.

This is because the net - the set number of ounces, which determine the debt repayment obligations are but a relatively small percentage of the forecast production from FDN. Keeping this in mind, the company adjusted net earnings for the fourth quarter and the 2020 year were $76 million and $106 million, respectively after adjusting for the impact of the derivative losses of $91 million for the fourth quarter and $137 million for the full year and cost of $29 million incurred during the suspension of operations in the second quarter of 2020.

On a per share basis, adjusted net earnings for the last quarter are $0.33 per share and $0.47 per share for 2020. These 2020 results include a finance expense of $45 million compared to a finance income of $1.8 million in 2019 as the company began expensing the cost of its loan facilities after reaching commercial production in the first quarter.

Finance costs were previously capitalized during the construction period. I briefly touched upon earlier - as briefly touched upon earlier, the company generated positive operating cash flows in 2020, which was effectively limited to the second half of the year following the restart of operations in early July.

With the restart of operations, the company built steady-state working capital while at the same time satisfied plant expenditures, capital and exploration and loan facility obligations. In 2020, the company made scheduled principal interest and fee payments under its debt facilities totaling almost $78 million.

This included monthly payments under the stream facilities that commenced in February 2020 and totaled $18 million. In December, we made the first of 19 quarterly payments under the gold prepay facility totaling $18.3 million and principal repayment totaling $22.8 million under the senior debt facilities as scheduled.

Repayment of the gold prepays and senior debt facilities will continue quarterly, while the repayment of the stream facility will continue monthly. Senior debt quarterly repayments are variable with larger payment during the first and last quarter of 2021 and smaller ones in the second and third quarter.

As discussed earlier, the repayment amount of the gold prepays and stream facilities will depend on the price of gold during the year. The company ended the year in a good financial position, and we believe we will be in an even stronger one in this time next year.

Based on current gold prices and our production and ASIC guidance, the company expects to generate strong operating cash flow in 2021. As a result, we estimate that this cash flow will not only be more than sufficient to meet our obligations under our debt but will also support exploration and the completion of current and planned capital expenditures, including our throughput expansion project while at the same time building a more substantial cash balance by the end of 2021.

I think the future looks very bright for Lundin Gold. A more detailed discussion of our financial results can be found in the MD&A, and I refer you to this document for more information.

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

Thank you, Alessandro. Looking towards 2021 and further into the future, we at Lundin Gold have identified 4 key pillars to drive shareholder value.

The first is operational excellence. As I already outlined, we've guided towards 2021 production between 380,000 and 420,000 ounces based on average head grade of 10.4 gram per tonne gold and average gold recovery of 90% whilst also estimating 2021 ASIC of between $770 and $830 per ounce gold.

We always strive to maximize production and minimize costs. And we will continue to push the mine towards what we believe is achievable.

Our second pillar for value creation is throughput expansion. This, the capital project, aims at increasing - the capital project for expansion aims at increasing mine and mill throughput 20% from 3,500 tonne per day to 4,200 tonne per day.

This entails a relatively small capital expenditure of $18.6 million, and construction and tie-in will have no impact on operations. All key pieces of equipment required for this project have been already ordered.

The program is well underway and is planned to be completed in the fourth quarter of 2021. The throughput expansion modifications are also expected to take flotation performance through additional retention time.

We also see an opportunity to increase our current resources to provide further upside. In line with this, a 10,000 meter underground drill program is underway at FDN and aims to define additional indicated resources focusing on the southern extension of FDN, currently only an inferred mineral resource, and on areas within the existing current reserve boundaries with the opportunity to convert existing resources into reserves and also increased resources.

Finally, Fruta del Norte is at the north end of a major under-explored mineralized trend, and significant exploration potential upside exists with our extensive land package. Now that we have all the necessary permits in place, we will initiate a 9,000 meter drill program in the first quarter of this year, targeting Barbasco and nearby Puente-Princesa, 2 high priority targets located 7 kilometers south of Fruta del Norte, along the 16-kilometer long Suarez Pull-Apart Basin structure.

Our objective, discover another Fruta del Norte. At Barbasco, we have identified similar surface expressions, structural location and orientation within the basin to Fruta del Norte.

And so I'm extremely excited to start drilling there. Before finishing, I would like to take this time to mention that I'm very proud of what this Lundin Gold team has achieved in 2020.

But more than that, I'm proud of what Fruta del Norte has been able to provide local communities, benefiting them both economically and socially. Furthermore, mining now plays a key role in Ecuador's economic growth, and I believe that Lundin Gold is a vital piece of that puzzle.

Our company is committed to delivering value to our shareholders while simultaneously providing economic and social benefits to local communities and fostering a healthy and safe workplace. Our 4 pillars of value creation offer all stakeholders great upside and opportunities for growth.

The future is very bright for Lundin Gold. Thank you.

And I'll now open the call to questions. Back to you, Sylvie.

Hey, Ron, I just wanted to talk a little bit about the mine expansion that you're going through this year and if you could talk a little bit about how it plays out through the year. I assume that some of the increased mining capacity is potentially dependent a little bit on equipment delivery.

I know you were enhancing your mining fleet and I just wonder when that might be expected. But then also, I was wondering how much, if at all, it's dependent on the South Vent Raise as well.

So maybe if you could just talk about how you see the mining rate kind of increasing through the year. And then again, on procurement for things at the mill, kind of how you see the mill capacity ramping up through the year as well.

Okay. Thanks, Trevor, and thanks for the question.

I'll cover the mine and Dave Dicaire is on the phone as well, and Dave is pretty close to what's going on with the mill. And I'll get him to answer that part.

On the mine, the key - for 2021, actually, all we need is 1 of the 2 trucks, and that's anticipated to be delivered in June. The key really for the mine is the South Vent Raise, Trevor.

We need that because when we will open up more levels, we are actually mining now on 2 different levels. And so ventilation is becoming a little bit more of an issue, but we're managing it well.

The - but in order to really ramp up to the 4,200, it is that South Vent Raise. So we're continuing to drill the pilot hole.

Right now, we anticipate that we will wrap that up by the - in the Q2. And we have a little bit of flexibility there, Trevor, because under our current plan, the mine was actually going to ramp up to the 4,200 tonne per day more or less the start of Q3, and the mill is not until the start of Q4.

So we were planning to build up stockpile. So we have a little bit of flexibility there, and then we may just not have as much stockpile as planned available.

So the mine, it's at South Vent Raise, not as much procurement. Dave, do you want to talk to the mill, where we're at with procurement and how much we're going to roll out?

Sure. Good morning.

Yes. The mill expansion is driven by 3 key pieces of equipment, the floatation cells, an additional concentrate filter and an additional gravity screen.

All those pieces of equipment have been ordered and are in fabrication, and they're scheduled to all be delivered about midyear, July and August time frame. The rest of the materials, steel, concrete, things like that, rebar, have been ordered and are en route to site.

And we will start excavation and concrete work in March on that. So we're all on track to get the mill expansion done according to schedule.

Thanks. Congratulations on a great 2020.

Just two quick ones from me. First, just in regarding to the senior debt facility.

I read in the financials, you're going to start accelerated repayments, which is going to be about 30% of the free cash flow. Is that number like required?

Or is that just kind of flexible based on what you want to pay? And when is that expected to start?

Alessandro, do you want to handle that one?

Yes, happy to. The senior debt actually requires us to make those payments based on the 30% of free cash flow that will accelerate the scheduled repayments.

And the trigger date to commence those additional repayments is the so-called completion, which is a time when certain guarantees fall off and then we see that considerably construction project effectively complete. We are expecting that to occur in the second half of this year.

Whether it's Q3 or Q4, we'll see, depending on the determinations by the senior lenders as well.

Okay. That's great.

And then just last -

It's an obligation. It's not voluntary, to be more - very precise.

Okay. And then just lastly, Ron.

On Sunday, the 2 candidates for the Ecuador elections were finalized. Both, to me, appear to be pro mining, which is good for the country in general.

Can you just talk either about your relationship with the candidates or just kind of your view on the elections now that we're expected to have kind of a pro mining government

Yes. No, that's a good question, Arun.

Yes, the - it's - there is still a challenge at Yaku Pérez, who was the - at the night of the election was in second place but based on a recount has dropped to third. He still has a challenge but the gap has really widened.

So I think the odds are pretty slim that he would be able to overturn that. So both - you're correct.

Both Lasso and Arauz have been fairly pro mining in their policies to date. We have met with both the teams.

And I actually had the opportunity last week of being on a roundtable with Mr. Arauz.

And he answered - there was quite a bit about mining because they do see this as a key part, as I stated earlier, in terms of the Ecuadorian - a key part in order for Ecuador to maintain the U.S. dollar.

And yes. I think we'll know on April 11, but we feel that both these candidates are strong pro mining and they know what they have to focus on, which is the opening of the cadaster and resolving all these issues around consultation, which is many governments around the world are facing.

But yes, I think - as I said earlier, I think the future is bright for mining in Ecuador with the way the elections have gone.

Okay. Great.

Well, thanks, everyone, for taking the time to hear - talk to us this morning. And as always, if some questions come up, please feel free to reach out to myself or Finlay Heppenstall, and we'd be happy to answer questions.

And thanks very much. Stay safe.

Stay healthy. And we look forward to chatting with you in a couple - in a few months on Q1.

Thank you.